November 2023 Ethanol Producer Magazine

Chemistry that goes beyond the lab

At CTE Global, we believe that strong relationships are just as important as the science behind our advanced enzyme and yeast products.

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EDITORIAL

President & Editor

Tom Bryan tbryan@bbiinternational.com

Online News Editor Erin Voegele evoegele@bbiinternational.com

Staff Writer Katie Schroeder katie.schroeder@bbiinternational.com

DESIGN

Vice President of Production & Design

Jaci Satterlund jsatterlund@bbiinternational.com

Graphic Designer

Raquel Boushee rboushee@bbiinternational.com

PUBLISHING & SALES

CEO

Joe Bryan jbryan@bbiinternational.com

Vice President of Operations/Marketing & Sales

John Nelson jnelson@bbiinternational.com

Senior Account Manager/Bioenergy Team Leader

Chip Shereck cshereck@bbiinternational.com

Account Manager

Bob Brown bbrown@bbiinternational.com

Circulation Manager

Jessica Tiller jtiller@bbiinternational.com

Marketing & Advertising Manager

Marla DeFoe mdefoe@bbiinternational.com

EDITORIAL BOARD

Ringneck Energy Walter Wendland

Little Sioux Corn Processors Steve Roe

Commonwealth Agri-Energy Mick Henderson

Aemetis Advanced Fuels Eric McAfee

Western Plains Energy Derek Peine Front Range Energy Dan Sanders Jr.

Upcoming Events

2023 National Carbon Capture Conference & Expo

November 7-8, 2023

Iowa Events Center | Des Moines, IA

(866) 746-8385 | www.nationalcarboncaptureconference.com

The National Carbon Capture Conference & Expo is a two-day event designed specifically for companies and organizations advancing technologies and policy that support the removal of carbon dioxide (CO2) from all sources, including fossil fuel-based power plants, ethanol production plants and industrial processes, as well as directly from the atmosphere. The program will focus on research, data, trends and information on all aspects of CCUS with the goal to help companies build knowledge, connect with others, and better understand the market and carbon utilization.

2024 International Biomass Conference & Expo

March 4-6, 2024

Greater Richmond Convention Center | Richmond, VA (866) 746-8385 | www.biomassconference.com

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

2024 International Fuel Ethanol Workshop & Expo

June 10-12, 2024

Minneapolis Convention Center | Minneapolis, MN (866) 746-8385 | www.fuelethanolworkshop.com

Celebrating its 40th year, the FEW provides the ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. As the largest, longest running ethanol conference in the world, the FEW is renowned for its superb programming—powered by Ethanol Producer Magazine—that maintains a strong focus on commercial-scale ethanol production, new technology, and near-term research and development. The event draws more than 2,000 people from over 31 countries and from nearly every ethanol plant in the United States and Canada.

2024 North American SAF Conference & Expo

September 11-12, 2024

Saint Paul RiverCentre | Saint Paul, MN (866) 746-8385 | www.safconference.com

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Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge for anyone outside the United States. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.com. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at 866-7468385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to editor@bbiinternational. com. Please include your name, address and phone number. Letters may be edited for clarity and/or space. TM

The North American SAF Conference & Expo, produced by SAF Magazine, in collaboration with the Commercial Aviation Alternative Fuels Initiative (CAAFI) will showcase the latest strategies for aviation fuel decarbonization, solutions for key industry challenges, and highlight the current opportunities for airlines, corporations and fuel producers. The North American SAF Conference & Expo is designed to promote the development and adoption of practical solutions to produce SAF and decarbonize the aviation sector.

Batteries, Blends and Bugs

I’ve heard trade publications struggle to find fresh content from time to time, but Ethanol Producer Magazine never does—we’re spoiled with choices. New things just keep happening in ethanol, which makes our style of advocacy journalism possible, and a privilege to direct. This month, our writers nailed their assignments on thermal energy storage, the rise of all-renewable E85, ACE’s annual conference, the return of a familiar face, and a wild new use for distillers grains that might have you squirming with interest.

Our cover piece, “Bringing Heat,” on page 12, looks at a West Coast startup delivering thermal energy storage to industries moving away from fossil-based heat and power. Rondo Energy’s technology uses ceramic bricks—a centuries old medium—to retain and more flexibly deploy heat generated from solar and wind power. Technologies like this should make intermittent renewable energy sources more dispatchable for ethanol plants pursing decarbonization, and the first commercial installation of Rondo’s technology, a demo unit, is up and running at Calgren Renewable Fuels in Pixley, California.

Next, we see how upstream CI-reduction translates into marketplace value in “Pushing the 100% Renewable Option,” on page 20, which revisits Pearson Fuels’ accomplishment of bringing all-renewable E85 to California consumers. A year ago, we introduced readers to the company’s entirely biobased fuel (save denaturant), which is a blend of ethanol and renewable naphtha, a byproduct of renewable diesel production. The all-bio blend already makes up a third of all the E85 Pearson sells in California, and the plan is to blend all of its E85 with naphtha as the byproduct becomes more widely available at spec.

Our focus stays on low-CI ethanol and markets for higher blends in our page-26 review of the American Coalition for Ethanol’s 36th Annual Conference. In “When It All Matters,” we deliver the highlights from the event’s general session—themed “Everything Counts”—covering policy priorities, higher blends, and the state of global oil markets and refining. ACE leadership hit on the importance of advocacy on the Hill that helps define our industry’s role in the clean energy transition, wins support for year-round E15 and shapes policy that rewards low-carbon farming.

The subject of our page-34 feature is no stranger to these and other battles being fought on behalf of ethanol producers and American farmers. Tom Buis, the former head of Growth Energy, has come out of semi-retirement to work on what could be the most defining issue of the decade for ethanol. Buis is now the CEO of the American Carbon Alliance, a group formed to bring greater awareness to the benefits and practicality of carbon capture. In “Back In the Fight,” we find out what Buis is up to—he’s walking the halls of Congress again—to set the narrative straight on CCS.

Finally, if you like stories with a little crunch, be sure to read “New Use Generates Buzz,” on page 38. When the news broke about the possibility of a North Dakota ethanol plant supplying distillers grains to a commercial fly larvaeto-protein operation, we just had to take our own swat at it.

Chart your path

The future of the ethanol industry depends on decarbonization.

Novozymes Fiberex®: Enable your plant’s diversification towards high-value, low carbon cellulosic ethanol production and significantly enhance corn oil recovery.

Brian Jennings CEO American Coalition for Ethanol 605.334.3381

bjennings@ethanol.org

Taking Inventory of Advocacy

ACE’s grassroots advocacy is focused on expanding ethanol use. As we close the year, let’s take inventory of these efforts.

During last year’s record high pump prices, E15 saved drivers an average of 15 cents per gallon compared to regular. Attractive blending economics remain today, and we are grateful EPA issued temporary waivers this summer to capitalize on E15’s ability to reduce prices. Nevertheless, we cannot continue to rely on emergency steps to secure E15 market access. That’s why Midwest governors petitioned EPA to remove the outdated RVP roadblock to year-round E15, while employing the Clean Air Act to document how E15 cuts emissions during the summer.

The Clean Air Act requires a response by EPA within 90 days, but the agency didn’t get around to proposing to remove the RVP roadblock until this spring. This foot-dragging prompted the attorneys general of two of the petitioning states—Iowa and Nebraska—to file a lawsuit compelling the agency to act before the 2024 summer driving season.

Our ultimate goal is permanent, nationwide E15 availability. Bipartisan bills are making progress in Congress and ACE is working to identify ways to get a bill over the finish line this year.

If EPA follows the law, the RFS can be a powerful tool for increasing ethanol demand. Having worked in the U.S. Senate as the RFS was developed, I argue EPA continues to misunderstand the importance of the program. The RFS was enacted because Congress knew refiners would not voluntarily supply the market with low-cost, low-carbon renewable fuels to displace the petroleum products they make. Congress intended for the RFS to be transformational, to disrupt the status-quo grip refiners had on the marketplace and provide consumer access to cleaner and lower-cost fuels.

EPA had an opportunity to use this new phase of the program to unleash the RFS to be transformational, but the agency’s final rule reduced volume obligations for 2024 and 2025, and set underwhelming totals for biomass-based diesel, steps which not only slow progress toward the Administration’s climate goals, but also enable excess biodiesel production to spill into the D6 RIN pool of the RFS, and potentially displace physical blending of E15 and E85.

We must remain a vigilant watchdog over EPA implementation of the RFS, but we must do much more, beyond the RFS, to increase ethanol demand well into the future.

Many ACE members have taken significant strides to reduce energy use, produce cellulosic gallons, or invest in technologies to capture and permanently sequester CO2. The common thread for this investment activity is appreciation for the fact that everything counts, from how the bushels of corn are produced, to the Btus powering your facility: counting carbon is the name of the game.

To prove that both ethanol production and farming are part of the climate solution, we need to lean into the clean, low carbon benefits of both. We are helping farmers adopt practices such as conservation tillage, 4R nutrient management and cover crops to reduce the carbon intensity of their corn. We have created calculators (visit ethanol.org) to do the math on what technology investments and climate-smart farming practices are worth. And we’re collaborating with scientists to properly monitor and measure the GHG benefits resulting from climate-smart ag practices.

The value of all this activity? Market and policy support for the low carbon benefits you deliver every day—and premiums paid for cleaner gallons of ethanol sold in the future.

Emily Skor CEO, Growth Energy 202.545.4000 eskor@growthenergy.org

Administration’s Commitment to Biofuels On Display at Growth Energy Biofuels Summit

In September, Growth Energy welcomed its members from across the U.S. to Washington, D.C., for the 14th annual Growth Energy Biofuels Summit, one of our industry’s most important advocacy events.

While in D.C., attendees met with their elected senators and representatives to tell the industry’s story and advocate for pro-biofuels policy priorities. Their dialogue with lawmakers centered around opportunities to lower fuel prices— and, of course, carbon emissions— by securing year-round E15, building a strong sustainable aviation fuel (SAF) market by using the GREET lifecycle analysis model to apply tax credits from the Inflation Reduction Act, and investing in infrastructure to ensure that biofuels can continue to play a role in addressing climate challenges.

Attendees heard from U.S. Department of Agriculture Secretary Tom Vilsack, who emphasized the importance of seizing opportunities for biofuels, especially those related to SAF. Throughout his remarks, Vilsack demonstrated his ardent commitment to the issues that matter most to biofuels producers and their farm partners. He talked about the diversified, profitable and sustainable future of American agriculture, and how SAF “is a critically important component of that.” He stressed that the biofuels industry needs to continue to work on finding ways to bring down the carbon intensity of its products to be attractive to the airline companies looking to expand their use of SAF. The airlines have made it clear they want SAF produced with a wide variety of feedstocks, and the Administration wants it too.

“This is a critical moment, a make-or-break moment,” Vilsack said. “If it’s not seized and not taken full advantage of, there will be a different kind of conversation years from now.”

Summit participants also heard from U.S. Department of Energy Deputy Assistant Secretary Michael Berube, U.S. Sen. Deb Fischer (R-Neb.), U.S. Rep. Nikki Budzinski (D-Ill.), and White House National Climate Advisor Ali Zaidi, who, much like Vilsack, highlighted the Administration’s commitment to including biofuels in its efforts to combat climate change.

It was encouraging to hear high-profile representatives of the current Administration express that biofuels have a necessary role to play in the energy transition and in meeting climate goals. Today, with the right policies, biofuels can take up a larger part of our nation’s fuel supply to lower emissions; tomorrow, with the right modeling, farm-based biofuels will serve as the cornerstone feedstock for SAF, dramatically decarbonizing the aviation sector. Vilsack, Berube and Zaidi made it clear that this Administration understands that potential.

Having wrapped up another successful summit, now comes the most important step—taking concrete actions to ensure America doesn’t miss this opportunity for homegrown biofuels to lead us into a low-carbon future. The industry is ready, and we look forward to partnering with this White House, and with our champions on the Hill, to follow through on solidifying farm-based bioethanol’s place as a next-generation climate solution.

Andrea Kent Board Member, Renewable Industries Canada Vice President of Industry and Government Affairs, Greenfield Global andrea.kent@greenfield.com

Urgency Mounts After the Hottest Summer Ever

The summer of 2023 was the hottest in recorded history—and by a lot. Hundreds of thousands suffered through heatwaves in Europe and the southwestern United States. Phoenix endured 54 days of temperatures soaring to 110 degrees Fahrenheit, including an unbroken streak of 31 days in July. The 2023 wildfire season in Canada left a trail of devastation, burning an area larger than Greece with smoke reaching as far as Norway while turning the skies above New York City in an eerie orange hue. This record-breaking summer reminds us that natural disasters do not respect national borders, and none of us are immune.

As concerning as the summer was for many, it is still possible to limit global warming to safer levels. A March report from the Intergovernmental Panel on Climate Change said that doing so will require industrialized nations to slash greenhouse gases roughly in half by 2030. It is a sizeable challenge only possible with low-carbon transportation fuels like ethanol.

Canada and the U.S. have renewable fuel standards as crucial policies to reduce carbon emissions in the transportation sector. Both nations also have new investment-orientated biofuel policies like the Canadian Clean Fuel Regulations (CFR) and its credit market, and the U.S. Inflation Reduction Act (IRA). However, as this summer demonstrated, time is truly of the essence, and decisions—like how these and other policies are designed and implemented—carry significant weight.

First and foremost, implementation is crucial. The signatories of the Paris Agreement, including Canada and the U.S., have committed to their climate ambitions. Now, the focus must shift to implementing these commitments, which requires both technical and political effort. One of the constant challenges is balancing the cost concerns of specific carbon-cutting policies and the opportunities our sector can provide. As an industry, we must continually highlight how ethanol drives economic activity, remains affordable, provides value to consumers, and delivers significant carbon reductions here and now.

Second, certainty is a driving force for capital. Policy has played and continues to play a crucial role in the utilization of ethanol and the advancement of biofuel technology. In addition to renewable fuel standards, new industry-based policies incentivize attracting capital and mitigate investment risks. Embedded in the U.S. IRA, the Canadian CFR and its credit market, for example, are mechanisms that acknowledge ethanol as a legitimate and valuable contributor to reducing greenhouse gas emissions in transportation fuels. These credit markets are vital for attracting capital and local investments in carbon-cutting technologies. In short, addressing carbon takes capital, and effective climate policy must now also be investment policy.

Next, the focus should be on lifecycle carbon, not simply combustion. Canada aims to achieve net-zero emissions by 2050. Ethanol, with its approximately 50 percent lower greenhouse emissions than traditional gasoline, plays a significant role in this effort. By using existing technologies and implementing proper lifecycle carbon assessment and accounting, ethanol has the potential to become a fuel with no carbon emissions. Correctly measuring emissions throughout the entire fuel lifecycle, rather than focusing solely on tailpipe emissions, is vital to ensure environmentally effective and commercially viable net-zero policies.

Finally, much depends on the policy choices of this decade. Time is a valuable tool when used effectively, but there can be dire consequences when it is squandered. Ethanol presents various opportunities to contribute to the energy transition our planet and economies need. Specifically, ethanol is a unique and efficient low-carbon solution today with a pathway toward achieving a net-zero carbon future. And it's precisely the practical and straightforward solution we need to make summers of extreme weather become the exception and not the norm.

Bringing

Heat

Wrapping innovation around existing tech, a California startup’s thermal batteries could offer ethanol producers a new lane for carbon reduction.

By Katie Schroeder

Rondo Energy can help ethanol producers drastically decarbonize their plants with an innovative technology that uses a well-understood material: ceramic bricks. Jeremy Keller, senior vice president of business development and head of sales with Rondo, explains that the Alameda, California, company views its technology as “an engineering project, not a science project.”

The cofounders of the Bay Area startup, John O’Donnell and Pete von Behrens, worked in the solar energy sector for 15 years, developing solar power for industrial heat. They realized that solar power’s intermittent energy production needed to be converted into a consistent output of energy. “The key thing with being able to scale

and deliver commercial technology is trying to do as little that’s novel as possible,” Keller says. “The system really is pulling together triedand-true materials into a new solution that is innovative in how it’s packaged, but not innovative in any of its fundamental material science.”

Jeremy Keller Senior Vice President of Business Development

The well-understood materials in Rondo’s technology are ceramic bricks that have been used for thermal energy storage and steam blast furnaces for two centuries. Each brick can store as much energy as the battery system in a Tesla Model 3. The bricks are stacked together in an insulated chamber and heated to high temperatures using

FIELD TESTING: In March, the first commercial installation of Rondo Energy’s thermal energy battery, a demonstration-scale unit, was integrated into Calgren Renewable Fuels’ biorefinery in Pixley, California.

PHOTO: RONDO ENERGY

renewable electricity from wind or solar. The energy is stored in the bricks as heat, then air is blown across the bricks to a boiler, where it creates steam. The steam can then be used for heat as well as electricity via a steam turbine. Keller explains that this serves as a drop-in option for ethanol plants to replace their existing steam generation process—“a full replacement for a natural gas boiler.”

The materials used in Rondo’s heat batteries are “off-the-shelf” components, keeping the price reasonable for buyers, five-times cheaper than lithium ion batteries. “Our boiler [is essentially] the same boiler that’s used in a cogeneration gas turbine system. So, we’re not doing anything interesting on the boiler,” Keller says, explaining that the system uses standard industrial refractory insulation. “[It’s] really just about pulling all of that together into a package that is low-cost, reliable and safe.”

Plant Integration

The use of heat batteries should improve ethanol plant efficiency, as most natural gas boilers are only 80 to 85 percent efficient. Rondo’s system, on the other hand, is 98 percent efficient in steam production and 96 percent efficient when used for both steam and electricity generation, the latter losing a couple percentage points due to the turbine. “It’s really very efficient,” Keller says. “And the real value is that we’re taking this intermittent electricity source [and] converting it into a very highly dispatchable and reliable resource—” Renewable energy is a more viable option for decarbonization than a decade ago, as prices have dropped 90 percent in the last ten years.

The energy output of Rondo’s RHB300 battery is designed to be competitive with a natural gas boiler. To convert over to heat batteries, an ethanol producer would need

the same number of RHB300s as conventionally sized boilers currently in use.

The carbon intensity (CI) score reduction of these added efficiencies—on top of a renewable energy source—is significant, Keller says. Conversion from natural gas

THE POWER BEHIND PROGRESS

boilers over to heat batteries can reduce an ethanol producer’s CI score by 22 to 23 points. The area needed for these heat batteries is about the size of a typical ethanol plant’s boiler area.

The first commercial installation of Rondo’s technology is a small demonstration unit integrated into Calgren Renewable Fuels’ biorefinery in Pixley, California. Installed in March 2023, the demonstration unit has proven to be a good investment.

ENERGY BLOCKS: Rondo’s technology utilizes ceramic brick structures, shown here at the manufacturing plant. In use, the bricks are heated to high temperatures using renewable electricity. Air is blown across them to a boiler, creating steam, which can be used for both heat and power.

“We really like the idea of storing excess wind or solar energy in a thermal battery; we think that’s just perfect for ethanol plants,” says former Calgren CEO Lyle Schlyer, who is currently in the process of retiring.

The integration of the demonstrationsize heat battery into Calgren’s system was efficient, with no major production time lost. “For Calgren, we were able to install that system with no downtime for the ethanol plant,” Keller says. “For these projects, it’s going to be very similar in that we can do all of our construction work and testing with very minimal interruption to the ethanol plants.”

PHOTO: RONDO ENERGY

The Pixley plant produces some energy onsite and sells some of it to Rondo in place of what would be renewable energy, which is then run through the heat battery and returned to the plant as thermal energy. “The easiest way to integrate that small unit was to heat boiler feed water, so that’s what we’re doing,” Schlyer says. This easy-to-measure setup allows Calgren and Rondo to confirm that the process works properly. Schlyer explains that Calgren plans to move forward with installing full-size units in the future, potentially at both the Pixley biorefinery and its sister plant in Kansas, Pratt Energy LLC.

Renewable Sources

Rondo’s batteries don’t necessarily need renewable energy, but coupling thermal energy storage with wind or solar maximizes the carbon reduction potential of the technology. At some sites, producers may need to build infrastructure to power the heat battery. A 100 MMgy ethanol plant with 8 to 12 megawatts of power load and 200 pounds of steam per hour would need to build 140 to 200 megawatts of solar or wind, Keller explains. The amount of energy production infrastructure would be on the higher end for solar and the lower end for wind. Building this scale of energy production can be a challenge due to permitting and community concerns.

However, Keller explains that many plants in the windy Midwest may be able to take advantage of curtailment to access renewable energy instead of building their own energy production. Curtailment is the practice of shutting down electricity production for a period when production is too high. “When it’s really windy, it’s windy across broad swaths, and all those wind farms kind of produce at the same time,” Keller explains. “So, about 30 percent of the hours of the year across the Midwest, electricity prices are actually negative. When prices are negative, and for legal liability reasons, those wind farms will actually be told to produce less than they [can], or even shut down.”

Creating a new load in these areas would be valuable to both wind farmers and ethanol producers, as the electricity would not go to waste and ethanol producers would not have to build their own renewable power infrastructure. The project timeline for developing renewable electricity projects is about five years, but Rondo is capable of more than halving the project development time. “One of the really compelling things about our systems and our projects is that we [can] shorten that [timeline] to two years,” Keller says. “So, you don’t need to take that really big solar and wind field and interconnect it to the grid. We can actually just manage it off grid.” The project development timeline is important because it allows ethanol producers to take advantage of the three-year window of 45Z credits by trying to get things done in 2025 or 2026.

Schlyer explains that accessing existing power supply may be possible at the Pratt Energy plant in Kansas since there are a lot of wind power sources fairly close to the plant. This remains uncertain at the California location, where renewable energy evaluations are ongoing. But as of now, Schlyer says, it looks like Calgren might have to build solar energy infrastructure from scratch in Pixley.

Producer Opportunities

For ethanol producers looking for options to reduce their CI scores to pursue lucrative incentives and new markets, Rondo’s technology might have substantial appeal.

“Right now, the technology exists to turn ethanol into a lot of different things, but the carbon intensity needs to be very low,” Schlyer says. He points to opportunities such as using ethanol to make green ethylene, an intermediate to jet fuel and other products.

Rondo’s technology also has the potential to mesh well with other carbon reduction strategies such as carbon capture and sequestration. “If your total [CI score] is 51, carbon capture [and sequestration]— the carbon pipelines—are going to get you about halfway down, and we can get you another 40 percent,” Keller says. “Then you just have to do one more thing [to reduce carbon], and all of a sudden ethanol has a net-zero or a negative carbon intensity.”

Calgren is considering the use of CCS technology as part of its carbon reduction strategy at both locations, which will get its facilities “awfully close to ethanol zero,” Schlyer explains.

Low-carbon fuel markets, namely California, represent a huge opportunity for

STEPPING UP FIRST: Calgren Renewable Fuels is an experienced host for Rondo's themal energy demonstration. With twin plants in California and Kansas, the company has been an early adopter of carbon-reduction technologies and diversified biorefining concepts like biodiesel and RNG production.

PHOTO: CALGREN

producers, but Schlyer explains that these credit values have been depressed somewhat due to the amount of ethanol and renewable diesel being supplied through the program. Both Keller and Schlyer point to Canada as another opportunity for ethanol producers seeking low-carbon fuel markets. The country has as much fuel consumption as the state of California and recently adopted a low-carbon fuel program.

“And we think that this is a wide-open field right now, but only if you’re low CI,” Schlyer says. “[If] you’re not low CI, I don’t think you get to play the game.”

Author: Katie Schroeder Contact: katie.schroeder@bbiinternational.com

BUILT FASTER: The project timeline for developing renewable electricity projects is often as long as five years, but Rondo Energy may be capable of shortening projects to about two years by averting large, complex solar and wind power interconnects to the grid.

PHOTO: RONDO ENERGY

PRIORITIZING PURE: This Mobil station in Encinitas, California, is one of several locations in the state where Pearson Fuels is offering it's all-renewable E85.

PHOTO: PEARSON FUELS

Pushing the 100% Renewable Option

California's top E85 distributor is experiencing remarkable success with all-renewable E85—a lower-price, ultra-low-CI fuel that’s in high demand in the Golden State.

By Katie Schroeder

In 2022, Ethanol Producer Magazine spoke with Pearson Fuels about its completely renewable liquid fuel, made up of ethanol and renewable naphtha. Over a year later, EPM speaks with Jeff Wilkerson about Pearson Fuels’ ongoing efforts to expand E85 use in California, and the challenges of scaling its all-renewable offering

Pearson Fuels started as a fueling location based in San Diego, California, one of the first high-volume alternative fuels providers in the city. The company now supplies E85 to 329 retail sites across the state of California and adds around 50 sites every year. “These are partnerships where we help the retail station install the infrastructure capable of dispensing E85, and then they take the fuel, they price the fuel, and they sell it to the customer,” Wilkerson says. Pearson’s two products are E85 blended with gasoline and a completely renewable fuel made up of E85 and renewable naphtha, which makes up one-third of the volume sold. Renewable naphtha is a byproduct of renewable diesel production and does not have many uses in the market. Renewable naphtha has relatively low octane, but that’s offset by the ethanol in E85 (83 percent of the finished blend in California), which has very high octane, Wilkerson explains. Where renewable naphtha shines, however, is in its low car-

bon intensity (CI), which helps bring down the overall CI of the finished gallon.

The significant price difference between E85 and standard gasoline has boosted public awareness of the fuel in California. When consumers see retail gas station signs regularly listing E85 for as much as $1.50 less than gasoline, they notice, Wilkerson explains. “The state is going to inten-

sify its LCFS targets, and that is probably going to make ethanol even more price advantageous than gasoline,” Wilkerson says. “You know, price is a great educator; the more people that see that price sign, the more [they become] aware of what E85 is.” Pearson has a mobile app that shows consumers where the company’s fuel is available, and at what price. If push notifications

LOWEST PRICE: The E85 Pearson Fuels supplies is often priced at least $1.50 per gallon less than regular. Here, on a recent summer day in San Gabriel, California, E85 is shown priced $2.10 cheaper than regular at a 76 station.

PHOTO: PEARSON FUELS

STEEP GROWTH: The volume of E85 used in California has set 16 records in 17 years, growing from virtually nothing to over 100 million gallons annually.

are enabled, the company can also inform customers of grand openings, E85 specials or flash sales in their area.

Although California plans to effectively ban the sale of new internal combustion engine (ICE) vehicles in 2035, the harsh

reality of diminishing numbers of flex-fuel vehicles (FFVs) on the road have prepared Pearson Fuels’ for the shift. Ironically, the company has been growing amid extreme reductions in flex-fuel vehicle manufacturing due to the disappearance of federal in-

Continous, real-time process analysis

centives for their production. “[So it] isn’t as looming of a deadline as it is for people who are looking at E15, right, because we already know that [new] flex-fuel vehicle offerings, by then, are going to be minimal,” he says.

And there’s a chance that vehicles made to run on all-renewable E85 will be an exception to California’s virtual ban on ICE vehicles. As the state moves toward “zeroemission vehicles,” liquid fuel without any gasoline may be a great alternative to an electric vehicle. Using cellulosic ethanol and renewable naphtha derived from waste oil or tallow, Pearson is able to make fuel that has an 80 percent CI reduction compared to gasoline. “The Low Carbon Fuel Standard naturally puts dirtier fuels like gasoline in a deficit generation mode, so we’re continually working to get cleaner and cleaner and cleaner,” Wilkerson says. “The renewable naphtha allows us to get basically a completely renewable gallon of fuel, and when we talk to legislators in San Francisco, that’s really advantageous, because we’re trying to make it as clean as possible. But we also know that the transition to electrification is going to be extremely challenging over the next 10 to 20 years.”

PHOTO: PEARSON FUELS

To better tell this story to legislators, Pearson is directing its lowest-CI ethanol to Sacramento. “I just think from a sustainability standpoint, this really gives us some good staying power here,” he says. The volume of E85 used in California is growing, Wilkerson explains, the state has set 16 records in 17 years. Pearson hopes to encourage expansion of E85 through the use of flex-fuel conversion kits. The company is in talks with the California Air Resources Board to get a kit approved that would allow standard vehicles, which are currently only capable of running on E10 or E15, to run on E85. Use of these kits would also ease the economic pressure of rising gas prices, Wilkerson explains. “But it’s going to be a process of doing the testing and ensuring that CARB is comfortable giving the green light to something like this.”

The state plans to reduce oil consumption by 94 percent by 2045, which would require the replacement of over 2 billion gallons of gasoline, Wilkerson explains. E85 could be a viable long-term solution in place of fossil-based gasoline. “There really aren’t that many alternatives,” he says. “And we’re certainly not going to get past 2 billion gallons with E15, something like E85—where you’re combining ethanol and

renewable naphtha—is something that can easily achieve that goal.”

Although a bill was introduced in the U.S. Senate this year that would revitalize FFV production, it remains to be seen whether that legislation will make headway. For now, conversion kits are the “next best option” to the renewed production of FFVs.

The main challenge of expanding Pearson’s all-renewable E85 fuel is establishing the long-term availability of renewable naphtha at consistently high volume and quality. Most of the renewable diesel volume in the U.S. goes to California because of the LCFS, Wilkerson explains. As other

states, such as Oregon and Washington, begin to implement their own clean fuel standards, the volume of renewable naphtha is likely to grow, which will make it easier for Pearson to make larger volumes of its ultralow-CI fuel. If Pearson can find naphtha suppliers that have the volume and quality it needs, the company plans to transition its entire E85 output to a renewable naphtha blend.

With all the buzz around opportunities like sustainable aviation fuel, it can be easy for ethanol markets to get lost in the conversation, but ethanol is still needed in the gas tank. “I think people underestimate how big the market in California is for ethanol, it’s one of the billion-gallon markets we have here,” Wilkerson says. “And we move a lot of ethanol through E85 out here because it’s at that maximum 83 percent ethanol range. So, there are a lot of incentives ... across the country through E15 and sustainable aviation fuel—certainly understand that—that but we’re still growing the marketplace here for ethanol, and we’re doing it through E85 that’s already in the marketplace.”

Author: Katie Schroeder

Contact: katie.schroeder@bbiinternational.com

'I think people underestimate how big the market in California is for ethanol. '

—Jeff Wilkerson, Pearson Fuels

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ALL THINGS CONSIDERED: At the American Coalition for Ethanol's annual conference in late August, ACE CEO Brian Jennings laid out the group's policy priorities: year-round E15, implementation of the Next Generation Fuels Act, stewardship of the RFS, and climate policy that includes ethanol producers and farmers. "Future demand is going to hinge on driving down our carbon score,” he said.

PHOTO: ZIMMCOMM NEW MEDIA

When It All Matters

High-profile speakers at ACE’s annual conference discussed policy, the future of higher ethanol blends, oil markets, refining trends and more.

By Katie Schroeder

In August, the American Coalition for Ethanol held its 36th Annual Conference, themed “Everything Counts,” featuring speakers covering topics ranging from selling higher blends of ethanol to export markets and decarbonization.

Members of ACE leadership, Dave Sovereign, board president; Brian Jennings, CEO; and Ron Lamberty, CMO; updated attendees on policy developments, ethanol markets and a hybrid efficiency flex-fuel vehicle study. Sovereign discussed the savings he has seen from higher ethanol blends at his local gas station in Iowa, ranging from E15 to E85.

Both he and Jennings emphasized the importance of ethanol producer advocacy in Washington D.C., and the value of informing politicians about the industry’s

needs, position and potential in the clean energy transition. Jennings explained how the industry’s policy priorities were conveyed to lawmakers on the Hill during the 2023 ACE Fly-In; ACE delegates met with members of Congress about securing yearround E15, the roll-out of the Next Generation Fuels Act, proper implementation of the RFS, and ensuring that farmers and ethanol producers are considered in climate policy decision making. “These priorities remain vital as we meet here today, and the motivation behind our advocacy for these priorities is really not very complicated at all—we’re trying to expand ethanol use,” Jennings said. “We need to expand ethanol use.”

The battle for year-round E15 usage in the Midwest has lasted much longer than it needed to, Jennings said. “What should have been a straightforward undertaking to allow retailers in Midwest states to permanently sell E15 ... turned into a 16-month

odyssey,” he said. “The foot-dragging has led the attorneys general of two of these states, Iowa and Nebraska, to file a lawsuit [in early August] to compel [EPA] to

act—and we applaud their proactive leadership—but it shouldn’t come to this.”

Jennings also addressed the volume target decrease EPA instituted in the RFS Set ruling earlier this year in response to comments from the oil industry, and he emphasized vigilance in making sure the RFS is implemented the way Congress intended. He explained that ethanol producers need to lean into the low carbon appeal of their product to expand the market. “Many of you have already taken important strides in this direction,” Jennings said. “Think about the investments you have made, or are considering, to diversify in operations and position yourself as a low carbon producer: innovations and equipment designed to reduce energy use—virtually every plant in this room has done that—or to reuse or recycle critically important and sometimes expensive inputs.”

To help farmers and ethanol producers quantify the value of climate-smart farming

beg your

AT HOME AND ON THE HILL: ACE Board President Dave Sovereign spoke about the popularity of higher ethanol blends in Iowa, and he emphasized the importance of continuing to inform politicians about the industry’s needs, position and potential in the clean energy transition.

practices, ACE plans to build a non-proprietary tool that allows anyone in the industry to see what carbon credits certain farming practices—low- and no-till farming, for example—should receive. “In short, future demand is going to hinge on driving down our carbon score,” Jennings said.

Higher Blends, HEFF

Lamberty took the stage to discuss ACE’s efforts to help retailers learn how to access federal funding from the Higher Blends Infrastructure Incentive Program for renewable fuels infrastructure. The program has $450 million available for retailers, divided over five quarters. Retailers that own less than 10 stations are able to get 75 percent of their costs reimbursed, and larger chains are able to get a 50 percent reimbursement. ACE’s Flex Fuel Forward website provides information on the HBIIP program and has been getting a lot of traffic. “Every retailer wants to be first

DEMAND FOR DECADES: Speaking about ethanol's role in a future predicted to be full of electric vehicles, ACE CMO Ron Lamberty said even the most optimistic predictions about EVs put them at making up just one-fourth of the cars on the road by 2035. “So, even if electric cars do take off, and there’s a place for them … we’ll still have a lot of room for our fuel,” he said.

to be second, so now that a lot of people have gotten HBIIP money, the rest of the

industry realizes it’s real,” Lamberty said. “And I can tell you from trade shows we’ve

PHOTO: ZIMMCOMM NEW MEDIA

gone to, people are understanding that this money is out there.”

He also discussed the misconceptions that Americans have about how widespread electric vehicles really are. One poll demonstrated that one-fifth of Americans believe that 20 percent of vehicles on the road are electric, when the reality is much lower— less than 1 percent, according to J.D. Power.

“Even the most optimistic predictions say that by 2035, 75 million of 295 million cars will be electric,” Lamberty said. “So, even if electric cars do take off, and there’s a place for them … we’ll still have a lot of room for our fuel.”

ACE has sought to demonstrate the value of ethanol through its Hybrid Electric Flex Fuel (HEFF) project, which took a hybrid Ford Fusion and converted it to use E85 instead of E10 or gasoline not blended with ethanol. Lamberty talked about his experience driving the vehicle and shared that he saved nearly $150 using E85 in the hybrid over the course of one test period. “The beauty of this thing, the eFlexFuel converter, is keeping us from where we’re

only losing 17 percent [or], on the high end, 20 percent using a fuel that has about 25 percent to 28 percent less Btu content,” Lamberty said.

Oil Outlook and Demand

The event’s keynote speaker, Tom Kloza, global head of energy analysis with Oil Price Information Services, or OPIS, outlined the petroleum price outlook and discussed some of its impacts on ethanol markets. “It strikes

me, standing before you today, that there has never been a better period of advocacy for using corn based [fuel] ... than there has in the last couple years with everything going on, with the Ukraine invasion [and] the subsequent rally in oil prices to $120 to $130—$5 [and] $6 gasoline, $6 and $7 diesel,” Kloza said. He urged ethanol producers to keep in mind that world petroleum data is myopic, and predictions vary greatly depending on each party’s interests.

Kloza explained that although some market projections see oil prices and demand declining in the future, he believes such projections are inaccurate because they do not account for the planet’s estimated population growth of 1 billion people over the next decade. Three refineries across the U.S. with a total capacity of about 428,500 barrels per day (bpd) have closed or are in the process of doing so; five others are in the process of starting up with capacity totaling about 480,000 bpd, representing almost negligible growth in domestic refining capacity. Globally, several large refineries are starting up with a total new capacity of nearly 3 million barrels per day; however, Kloza believes that many of

PERFECT STORM: The event’s keynote speaker, Tom Kloza, global head of energy analysis with Oil Price Information Services, said the tight state of oil refining, high fuel prices and, unfortunately, the ongoing war in Ukraine, should keep ethanol demand, and prices, strong in the coming months.

PHOTO: ZIMMCOMM NEW MEDIA

CATCHING UP: The ACE annual conference, always held in the Upper Midwest, is among the longestrunning and most revered annual events in the U.S. ethanol industry.

PHOTO: ZIMMCOMM NEW MEDIA

these refineries will actually begin production in 2024. Including U.S. closures, the global supply lost roughly 2 million barrels per day of capacity this year. Despite the added capacity on the way, Kloza explained that oil refining is probably going to be tight in the coming years, and producers will likely see high margins moving forward.

Most of the U.S. oil supply is light shale oil, which is good for gasoline, but not as efficient for turning into diesel, the oil industry’s most lucrative product right now. Kloza explained that it takes roughly 3 million barrels of shale oil to make 1 million barrels of diesel. “Refineries can make more gasoline than they want and much less diesel than they want,” he said. With OPEC implementing cuts primarily on medium and heavy distillate oil, the market for renewable diesel is “incredibly fertile.”

The volume of gasoline usage in the U.S. seems to have peaked between 2016

and 2019, Kloza said. “We averaged 9.3 million barrels a day in gasoline demand in those years; we’re probably going to average about 8.8 or 8.9 this year,” he said. Improved mileage, lower numbers of commuters and higher vehicle miles traveled (i.e., less short-distance, urban driving) are all contributing to this shift.

California is a challenging location for oil refiners, Kloza explained, citing the fact that the state is in the process of developing a methodology for determining if refiners are making an unreasonable profit. He said it’s likely that some refiners may choose to close their plants and leave California due to the hostile regulatory environment. “There’s probably a really compelling case that could be made for more ethanol in California fuel,” he said. “But they seem absolutely averse to considering that.”

Kloza also made the case for the Gulf of Mexico being the newest chokepoint for world oil supply, explaining that the

volume of product moving through that area has grown since Hurricane Katrina, and a powerful hurricane would cause the price of gasoline, diesel and jet fuel to skyrocket. In closing, Kloza explained that he believes gasoline margins will be “very, very high” in the fourth quarter of 2023.

ACE’s first session provided producers with updates and information on the state of policy, the liquid fuels market as a whole and the expansion of the higher blends, illustrating just how important “everything” is to growing the ethanol market.

Author: Katie Schroeder Contact: katie.schroeder@bbiinternational.com

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BACK IN THE GAME

By Luke Geiver

The American Carbon Alliance formed in July to act as a unified voice for carbon capture pipelines, ethanol producers, landowners, farmers, construction trade workers and citizens that embrace a new energy future for America. To lead the effort, the ACA tapped a proven voice, one long connected to America’s energy story, to be the association’s head. Tom Buis, the onetime Indiana farmer turned aid to former South Dakota Senator Tom Daschle before leading the Farmers Union and then one of the big three ethanol groups—Growth Energy—is now spearheading the work of the ACA. Buis, who still owns farmland in Indiana, was, in his own words, semiretired before the formation of the new group. “People started calling me and asking if I was aware of what was going on in the Midwest with capturing carbon,” Buis says. “The more I looked into it, the more I wanted to get back in the game.”

We spoke with Buis about his new role with the ACA, what his team hopes to accomplish soon and why he believes getting the carbon capture story right, across the

country and throughout the ethanol industry, has transformative potential.

Getting the Story Straight

Just a few months since its formation, the ACA is busy working to transform the way people affected by carbon capture— which is potentially everyone—think and talk about it. Along with Buis, Collin Peterson, a former Minnesota congressman and an instrumental shaper and steward of the Farm Bill during his tenure, has joined the team as a senior advisor. Nick Ryan, an Iowa business owner and the CEO of Concordia Group, is also an ACA senior advisor.

The team has created policy maps, fact sheets and data sets, white papers and more. The ACA is not competing with other groups, Buis says, noting that the American Coalition for Ethanol, Growth Energy and the Renewable Fuels Association are now members. The team has issued press releases on the GREET model, sustainable aviation fuel policy and, of course, data related to carbon capture. Buis now spends much of his time talking to producers, or on the Hill informing lawmakers about carbon capture.

“I just spent a week out in D.C. walking the halls of Congress. I think most people

there understand the benefits of carbon capture,” he says. “I think we’ve started to raise awareness, but we have a long way to go.”

A big part of the education gap occurring with carbon capture stems from its age. Buis beleives the topic—not the practice or technology linked to capture—is still new to most people, which brings natural challenges. In addition to that newness factor, Buis believes there is misinformation on the negative, and a lack of fact-based information on the positive.

He points to new polling and survey work on carbon capture pipelines as anecdotal evidence. While the perception of carbon pipelines might be negative, a silent majority of those impacted by such pipelines would show a different story. One recently conducted poll cited by the ACA shows that of those surveyed about their support or disapproval of a carbon pipeline, only 18 percent of respondents voiced disapproval.

“I often tell people that carbon capture in rural America is the first player at bat and everyone is watching, including those who don’t want us to succeed. It’s really the first big effort to capture carbon,” he says.

A big goal of the ACA is to ensure that the first swing at the carbon capture story

Tom Buis, a longtime voice for ethanol producers, is now at the helm of the American Carbon Alliance, a strong new advocate for carbon capture.

HAPPY TO HELP AGAIN: Tom Buis, a long-time farm and rural America advocate that led Growth Energy for seven years, is once again leading an effort that could have a huge impact on the ethanol sector. Since July, he has been the acting CEO of the American Carbon Alliance.

PHOTO: AMERICAN CARBON ALLIANCE

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BUIS PERSPECTIVE: EXPERIENCE AND CHANGE

Q: What has changed across the ethanol industry?

A: I think what has changed, and the thing that has been so impressive, is the efficiency. If you go back a long time, we weren’t as energy or economically efficient as today. We also have so many coproducts.

Q: Why are you right for the ACA?

A: I’ve seen what happens to rural America when you have too much supply and not enough demand for rural commodities. If you look at our farm in Indiana, the only time you could make a good [profit] was if you produced well but another state didn’t. I experienced that, and also dealing with misinformation while trying to tell an important story.

Q: Why is the economic benefit of carbon capture so important to ethanol?

A: If you just look at corn, yields are going up. Ethanol production is not keeping pace. Demand is not keeping pace with the ability to produce record yields of corn and ethanol alike. At almost every ethanol plant I’ve ever been to I’ve heard the CEO say they are producing more than nameplate. The industry is always trying to increase the blend capabilities, but that takes time. Just as ethanol created consistent demand for corn, carbon can be that demand driver now, and do it much faster.

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is a home run, Buis says. To do that, the team is trying to highlight the benefits of carbon capture and dispel the negatives fueled by misinformation. Those who want internal combustion engines to disappear will reject CO2 pipelines—and generally oppose ethanol production itself—no matter where a project happens, he adds. The process of telling the best story with accurate information is one Buis has experience with. In fact, he likens the process of clarifying the carbon capture story to a similar process he had to deal with while leading Growth Energy: food vs. fuel. In his Growth Energy days, Buis says that working to set the narrative straight on the food vs. fuel debate was one of his primary battles. Now, with the ACA, his

aim is similar. This time, the battle is about explaining the positive economic impact of carbon capture and the transformational role it should or could have for rural America, the ethanol industry, and potentially the entire U.S. energy sector.

Sharing Carbon Capture Benefits

For ethanol to continue to be a major demand driver for U.S. corn and, more broadly, American agriculture, it has to become a highly qualified low-carbon fuel or feedstock, Buis says. Any participation in a carbon capture market will help make that scenario a reality for ethanol and its downstream takers. At one time, ethanol reshaped the rural landscape by creating a

greater demand for corn, Buis explains as he details days gone past in Indiana when there was more supply than demand for corn and farmers were sometimes spending more to produce corn then they were getting in return. Part of the carbon capture story is linked to continuing the development of a rural scenario that benefits from the production of a commodity, but this time its carbon, Buis says. And to take that stance one step further, carbon can be a commodity in a greater market.

That is part of the ACA’s role, Buis says. People need to understand that carbon is going to be part of a worldwide market. “Either we get the market, or some other country gets the market,” he says.

The ACA team believes the carbon market has presented the ethanol industry and rural America with a market opportunity not seen since the creation of the Renewable Fuel Standard. Although Buis is happy to talk about hard numbers, data and policy that back up the opportunity for producers and consumers alike in rural America, he’s more of a messaging guy. It’s partly why he was asked to lead the ACA. He’s been in situations like this before, he says, when an industry needed a voice to champion the upside of an industry’s story in the face of what Buis says is misinformation.

“We need vision down the road, not just the end of our nose,” he says.

Peterson echoed the sentiment of Buis in a statement issued early on through the ACA. “The ability for biofuels to now help lead the way as America decarbonizes the energy sector is not only exciting but brings with it all sorts of opportunities to revitalize rural America while also helping the nation become more energy independent.”

For those that really need to see the numbers, the ACA and others have plenty, Buis says. The 45Z and 45Q tax credits related to carbon capture have a net value

WHAT MORE COULD YOU ASK FOR?

of $1.56 billion to South Dakota’s ethanol producers, alone, from 2025 through 2034, according to a comprehensive study completed by the Dakota Institute. Over ten years, state GDP for South Dakota would increase by $956 million, the study also says. Those numbers are only for one ethanol-producing state. North Dakota, Iowa and others could also see a heavy presence of carbon capture additions that bring massive economic benefits, Buis says.

In the weeks ahead, Buis and his team will be busy focusing on delivering the key message related to numbers like those of the Dakota Institute study. “People need to know how important this is and what carbon capture will do for rural America,” he says.

To the business owners, ethanol producers and others across the Midwest that may have stayed silent to this point on carbon capture, the time to voice support is now, at least according to Buis, the former Indiana farmer who admits retirement from fighting for farmers, ethanol producers and rural America might never be a part of any game he plays.

Author: Luke Geiver Contact: writer@bbiinternational.com

'I often tell people that carbon capture in rural America is the first player at bat and everyone is watching, including those who don’t want us to succeed. '

NEW USE GENERATES BUZZ

Nexus PMG and Chapul Farms have paired up to make insect-based protein. They plan to feed distillers grains to bug larvae, which, in turn, will become livestock feed.

By Luke Geiver

The sustainable investment sector’s tepid interest in ethanol production rarely shows up in the news. But when big capital players back real projects that involve ethanol plants and the products biorefineries make—and when it’s about something as strange as insect farming—headlines are made.

That’s what happened earlier this year when Nexus PMG, an international sustainable infrastructure advisory, development and investment firm with connections to bigname funds like Goldman Sachs and Generate Capital, began working with Chapul Farms, a commercial-scale waste-to-value developer in Oregon that specializes in insect cultivation technology. The partnership unlocked an opportunity to link insect farming practices to ethanol’s primary coproduct—distillers grains. Now, Chapul Farms is focused on pairing its insect farming ca-

pabilities adjacent to an ethanol plant in North Dakota. An insect production plant is under development and, so far, it appears the buzz (and there’s been a lot) could be warranted.

Connecting Insects to Ethanol

Chapul Farms transforms waste into feed and fertilizer products with natural insect technology. The company builds customized insect facilities that symbiotically integrate biology and engineering. Its insect of choice: black soldier fly larvae (BSFL). The BSFL convert organic waste streams into valuable byproducts. The small larvae have a voracious appetite and can feed on a wide range of materials, from manure to food

scraps. Over time, the larvae can eat up to 50 times their mass, sometimes in one day. Fullgrown flies only live a few days, but a mating pair can produce up to 800 eggs. Rapid production of BSFL is not an issue.

Their eating habits help convert biomass into high-quality proteins, lipids and both macro and micronutrients, along with their feces—known as frass—which is a nutrient-rich residue. In most cases, the frass (a mixture of feces, shed exoskeletons and substrate residue) is the prized output. According to Chapul Farms, frass is not only an effective fertilizer, rich in nitrogen, phosphorus and potassium, but is also alive with a diverse and prolific microbial community. In addition to all of that, frass helps increase

Pat Crowley CEO, Chapul Farms

Ben Hubbard CEO, Nexus PMG

PEST TO PROTEIN: Full-grown black soldier flies only live a few days, but a mating pair can produce up to 800 eggs, making commercial production of larvae-based feed viable.

PHOTO: STOCK

Coproduct

soil water retention rates while acting as a key element in the support of soil rehabilitation and the reduction of chemical fertilizer needs.

“It turns out that dried distillers grains are a really great balanced diet for these larvae,” says Ben Hubbard, CEO of Nexus PMG. Because of that, Hubbard adds, Chapul is partnering with ethanol producers to help utilize their principal coproduct while positively impacting their carbon intensity. In many smaller BSFL operations, spent brewers yeast and byproduct is a popular feedstock to give the BSFL.

Many ethanol producers are looking for alternative markets for their distillers grains that reduce their operating cost and CI score, Hubbard says. Chapul Farms offers a colocated approach to doing so, which often reduces the cost of transportation and energy consumption associated with drying the coproduct. According to Hubbard, his team at Nexus PMG has learned that the ability of Chapul’s insect technology approach is very appealing to many ethanol producers, particularly those located in geographies outside the Midwest where distillers grains markets may not be as readily available to serve or transport product to.

Chapul is using a modular design to produce BSFL at commercial scale. The company performs a wide range of services for clients and partners—in this case, ethanol producers. To start, Chapul provides feedstock analysis and development that looks at optimized feedstock formulations, bioconversion evaluation and a preliminary economic analysis. Next, the team does front-end engineering and design work. That process looks at project execution, design and scheduling variables. It also includes a procurement and contract plan, project control estimate and commercial pilot facility design. From there, Chapul can perform full system build-out and operation. Included in the services package is insect and frass distribution, operating and maintenance services, platform optimization and biotechnology support.

“Chapul Farms’ waste-to-value approach is really incredible because of its circularity,” Hubbard explains. “A lot of

projects we work on at Nexus PMG involve all these sustainable infrastructure segments that are making meaningful impacts, but there are very few you run into that you can say operate in a 100-percent closed loop.”

In the case of ethanol, Chapul will create a closed-loop scenario that transforms a coproduct stream (distillers grains) into a food source for its BSFL. The resulting high-protein frass could be used in animal food products. For the past few years, the Chapul team has focused on optimizing feedstock and identifying food sources that increase the larvae’s protein levels. “I’m excited to share that they have successfully come to a conclusion and are in late-stage development of their first major commercial-scale facility,” Hubbard says.

Although Chapul and Nexus PMG aren’t quite ready to make it official, they

have announced that their first major commercial facility will be in North Dakota in coordination with an ethanol production facility.

The North Dakota Agricultural Products Utilization Commission has already awarded Chapul Farms with $197,500 to complete engineering, design and an environmental assessment of one of its insect facilities in the Spiritwood Energy Park Association’s industrial park next to Dakota Spirit Ethanol, a 70 MMgy ethanol plant. Earlier this year, Cory Shevlin, CEO of the Jamestown/Stutsman Development Corporation that represents the area where an insect facility would exist, visited the Chapul team in McMinnville, Oregon.

Hubbard said that, at the moment, the team anticipates the facility should take in

WELL-FED FEED: By consuming biomass waste or the coproducts of fermentation, like distillers grains, fly larvae become rich in high-quality proteins, lipids and other nutrients. Their excrement, known as frass, is also a nutrient-rich residue with multiple high-value uses.

PHOTO: STOCK/CHAPUL FAMRS

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about 50,000 tons of feedstock per year and should produce roughly 5,000 tons of dry larvae and about the same amount of frass (as a soil amendment).

From Buzz to Big Benefits

Turning a BSFL commercial production facility from an idea the size of a fly on the wall to a full-blown industrial site, has taken a combination of players. Chapul Farms and its leader Patrick Crowley, CEO, have always had a vision and the conviction to see it through. Led by Crowley, Chapul has appeared on Shark Tank and earned praise—and investment—from Mark Cuban and Kind Bar founder Daniel Lubetzky. After starting in 2012, performing some serious bootstrapping before landing Cuban and others as investors, Chapul is now amid a Series A investment round of $10 million.

Nexus PMG, like it has done with other major projects or sustainable players, has taken on an important role with Chapul. Nexus PMG covers multiple areas of expertise, from financing to technical design and operations. The team advises businesses on how to decarbonize some of the

trickiest large-scale infrastructure projects. Beyond byproduct value optimization, the team also advises on projects for sustainable aviation fuels, carbon capture, renewable natural gas, hydrogen and more.

One of the defining projects to date for Nexus has been its BioNorth Energy project in northern British Columbia. In a joint partnership with the Arrow Group of Companies and the Nak’azdli Development Corporation, Nexus acquired and revived the Forth St. James Green Energy Project, a 40-megawatt biomass power plant, to help the province transition to a low-carbon economy while bringing jobs and clean energy to the region.

“We see ourselves fitting into the gap where businesses and corporations are committed to taking big leaps toward a lowcarbon transition but may be struggling to figure out how to do this at scale,” Hubbard says. “Nexus PMG has been advising companies on low-carbon infrastructure for the past decade and has served as the go-to expert at the intersection of finance, technical and commercial development for all our partners. We see our role growing larger as clean energy incentives and regu-

ELEVATED PERSPECTIVE: Prior to its involvement with Chapul Farms, Nexus PMG helped revive this 40-megawatt biomass power plant in northern British Columbia.

PHOTO: NEXUS PMG

lations encourage corporations to move toward a more sustainable future.”

Nexus has proven to be the near-perfect partner to help bring Chapul farms insect technology to major industry. “Chapul Farms started out by receiving an investment from Mark Cuban on Shark Tank via the production of grasshopper protein bars, and they have transformed the business into a leader in the insect agriculture sector that has significant tailwinds behind it,” Hubbard says. “The partnership between Chapul Farms and Nexus PMG showcases the impact that deeply rooted subject matter experts in technology and biological processes can have when married up with highly skilled developers and project finance experts.”

Chapul Farms' Crowley has earned the description of subject matter expert. He has worked with the National Science Foun-

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dation, Texas A&M University, Mississippi State University, and several other recognizable research institutions. Out of Oregon, the Chapul team operates an innovation center used to test BSFL feedstock and perform other critical research that will help optimize a set-up for multiple scenarios. The innovation center is located on a 600-acre regenerative farm in collaboration with Tainable and the Soil Food Web, all projects created to showcase the potential of regenerative agriculture and from there, it turns out, to create a process that generates enough buzz that even global sustainable investment advisors, Shark Tank personalities or North Dakota ethanol producers can’t ignore.

Author: Luke Geiver Contact: writer@bbiinternational.com

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POTENTIAL PARTNER: While Chapul Farms and Nexus PMG have not named the North Dakota ethanol plant they intend to source distillers grains from, they have received state funding to assess locating the operation at an energy park in Spiritwood, N.D., where Dakota Spirit AgEnergy, a 70 MMgy facility, is the anchor tenant.

PHOTO: DAKOTA SPIRIT AGENERGY