November 2008 Ethanol Producer Magazine by BBI International

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inside

NOVEMBER 2008 . VOLUME 14 . ISSUE 11

features What will it take to get farmers to switch from profitable crops such as

86 INNOVATION Furfural: Future Feedstock for Fuels and Chemicals

soybeans and corn to cellulosic ethanol feedstocks? EPM details three

Rising oil prices prompted researchers to take a second look at using biobased

programs aimed at making energy crops more attractive.

furfural to produce cellulosic ethanol and other chemicals.

By Susanne Retka Schill

By Jessica Ebert

62 TECHNOLOGY On Target for 2012

94 POLICY Clearing the Air

Developing the technology required to economically produce cellulosic ethanol

In the first of a two-part series, EPM looks at the current U.S. carbon trading

is more than just a goal at the National Renewable Energy Laboratory—it’s a

platforms and the companies that are generating carbon credits. Although

mandate. By Ryan C. Christiansen

ethanol producers aren’t big players yet, that could change if the country

54 FEEDSTOCK Making the Switch

moves to a mandatory emissions reduction system. By Kris Bevill

Page 54

Page 94

Page 102

70 ENZYMES Second-Generation Enzyme Logistics

102 USE Cruisin’ on E85

Enzyme makers are preparing for the challenges posed by the switch from

A South Dakota biofuel enthusiast’s 2004 Electra Glide Harley-Davidson

corn-based to biomass-based ethanol. By Ron Kotrba

motorcycle runs cooler and smoother on 85 percent ethanol, and it has more power. By Hope Deutscher

78 FRACTIONATION Is Fractionation the Cure for High Corn Prices?

110 EVENT Fueling a Revolution

Higher corn prices have led many ethanol producers to look at ways to reduce

showcased the industry’s accomplishments and addressed its challenges

production costs. In their quest for cost savings, many are considering

head on. By Anna Austin and Erin Voegele

The American Coalition for Ethanol’s 21st Ethanol Conference & Trade Show

fractionation. By Amanda Watkins

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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inside

NOVEMBER 2008 . VOLUME 14 . ISSUE 11

departments

contributors

11 Advertiser Index 14 The Way I See It By Mike Bryan Cellulose Advances with Help from Corn-Based Industry

20 Business & People 24 Commodities 26 A View from the Hill By Bob Dinneen Be Thankful for the Ethanol Industry

27 RFA Update 28 eBIO Insider By Robert Vierhout Is the Tide Changing?

30 Industry News & BIObytes 40 Plant Construction List 48 Drive By Toni Nuernberg Stakeholders Launch Proactive Message

50 Legal Perspectives By Judd W. Vande Voort Risk Management Committees Hedge With Best Practices

154 Events Calendar 156 EPM Marketplace

120 RISK

Tighter Markets Provide Opportunities, Challenges As recent industry events attest, sustained profitability remains uncertain when margins get crunched. Some ethanol companies provide good examples of how to survive the tough times, while others don’t. By Todd Taylor

126 CELLULOSE

The Important Role of Enzymes in Cellulosic Ethanol The commercial-scale production of ethanol from biomass is much more complicated than the corn-to-ethanol process. However, cellulase and hemicellulose enzymes are being developed that could simplify the process while reducing overall costs. By Emmanuel Petiot

132 PROCESS

From the Lab to Production: Direct Steam Injecting Heating of Fibrous Slurries Pretreating and pumping cellulosic materials is a challenging hurdle en route to commercial-scale ethanol production. Direct steam injection may provide a pathway, allowing the process to move off the research table and into a full-scale plant. By Bruce Cincotta

138 PROPAGATION

A Guide to Successful Yeast Propagation One of the initial steps in the fermentation process is propagating yeast. While this step in ethanol production may be simple, it’s success is vital to everything that happens in, and comes out of, the plant. By Patrick Heist

142 OPTIMIZATION

Emerging Energy Optimization Opportunities for Ethanol Facilities Ethanol producers continually look for ways to become more efficient. The second of a three-part series on plant optimization focuses on energy-related changes that improve the ethanol production process or reduce energy costs. By Philip A. Marrone, Kenneth R. Liberty and David J. Turton

148 INDUSTRY

Cellulosic Ethanol Collaborations: Matchmaking Isn’t Easy Creative partnerships are quickly making cellulose-to-ethanol production a reality. However, what happens to an agreement after the initial research initiative is met? By Paul Landen and Jordan Carey

Ethanol Producer Magazine: (USPS No. 023-974) November 2008, Vol. 14, Issue 11. Ethanol Producer Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203. BPA Worldwide Membership Applied for October 2006

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

web ON THE

PODCAST

BLOG

To listen to this podcast and others, visit www.ethanolproducer.com/podcast. Staff Writer Susanne Retka Schill updates our readers with the latest news regarding her October EPM feature, titled “Beefing Up Barley.” One ethanol plant planning to use barley as a feedstock has announced a groundbreaking date in October.

In the ethanol world barley may be corn’s poor cousin, but research efforts have made it an attractive feedstock option in the U.S. mid-Atlantic region.

By Susanne Retka Schill

Beefing Up

Barley

To view this blog and others, visit www.ethanolproducer.com/takingstalk /archive.jsp.

TAKINGSTALK No. 200 on the Horizon Contributions Editor Dave Nilles is keeping an eye on the number of ethanol plants currently on line in the United States. There are 178 operating so far, and the industry may indeed hit No. 200 in 2009.

TOP 10 WEB EXCLUSIVES

Policy, Projects and Life Cycle Standards EthanolProducer.com’s most-read Web exclusive news stories for September

Republicans pass anti-ethanol platform The Republican Party’s 2008 policy platform says the U.S. government “should end mandates for ethanol and let the free market work.”

Mascoma, Dartmouth create high-yielding bacteria Research succeeded in engineering a thermophilic anaerobic bacterium that ferments xylan and biomass-derived sugars to produce ethanol.

Industry responds to GOP’s anti-ethanol policy Several ethanol industry stakeholders espressed concern over the Republican Party’s policy platform the day after it was announced.

McDaniel to become Delta-T CEO An oil industry veteran takes the helm of a company focused on reestablishing its role in the North American ethanol industry.

U.S. sugarcane-to-ethanol projects underway Pacific West Energy LLC and Coskata Inc. are pursuing projects in Hawaii and Florida, respectively, which would use sugarcane as a feedstock.

BioEnergy Africa to build Mozambique plant A British Virgin Islands-based company has raised more than $15 million toward the development of a large-scale ethanol plant in east Africa.

Abengoa receives grant for new Illinois plant The Spain-based company received $4 million for its proposed 88 MMgy plant in Madison, Ill.

Researchers: Standard for life cycle analysis needed Two Nebraska researchers are helping clear up confusion surrounding ethanol, and its greenhouse gas reduction and net energy yield.

VeraSun Energy starts up Dyersville plant Iowa’s 32nd operational ethanol plant was VeraSun’s 14th when it started production Sept. 5.

marine dock mistakenly receives E100 10 California A distribution error led to a refueling dock in southern California mistakenly selling boaters 100 percent ethanol blended down to E40.

For up-to-date Web exclusives, visit www.ethanolproducer.com. 10

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Ad Index 61 2009 International Fuel Ethanol Workshop & Expo 32 Agra Industries Corp. 34 Air Resource Specialists Inc. 4 American Railcar Industries Inc. 6 Anhydro Inc. 117 Aqua Power Inc. 69 Aquatech International 150 Ascendant Partners Inc. 139 Barr-Rosin Inc. 109 BBI International Community Initiative to Improve Energy Sustainability (CITIES) 68, 76 & 125 90 112 46 153 60 166 59 & 165 64 85 31 23 5 35 58 91 57 42 92 128 53 140 74 137 118 38 & 39 124 22 134 130 45 81 12 98 & 136 77 72 135 3 129 131 141 29 116

BBI Project Development Best Energies Inc. BetaTec Hop Products Inc. Biodiesel & Ethanol 101 DVDs Bioenergy Australasia Biofuels Canada Biofuels Recruiting Biomass Magazine Biothane Corp. Buckman Laboratories Inc. Buhler Aeroglide Buhler Inc. Burns & McDonnell Calbrandt Centrisys Corp. Cereal Process Technologies LLC Check-All Valve Mfg. Co. Christianson & Associates PLLP CIT Group Clifton Gunderson LLP Coverall Building Systems Crown Iron Works Co. Crown Iron Works/Harburg Freudenberger Davenport Dryer LLC dbc SMARTsoftware Inc. Delta-T Corp. Distillers Grains Quarterly DuPont Chemical Solution Enterprise Duratech Industries International Inc. Eaton Filtration Eco-Tec Inc. Eisenmann Corp. Electro Sensors ethanol-jobs.com Ethanol Promotion & Information Council ETS Laboratories Exothermics Inc. Fagen Inc. FCStone LLC Fermentis Flottweg Separation Technology Gavilon GEA Ecoflex

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

146 16 & 17 151 2 56 44 101 147 33 18 36 37 127 43 47 52 152 84 108 105 67 133 122 8 99 51 15 168 66 83 100 113 119 65 167 123 49 89 88 145 82 73 75 121 96 & 97 19 114 149 115 80 93 143 106 107 144 104

Genencor International Inc. GreenShift Corp. HEMCO Industries ICM Inc. Indeck Power Equipment Co. Interstates Cos. Intersystems ITT Goulds Kennedy and Coe LLC Lallemand Ethanol Technology Mapcon Technologies Inc. Martrex Inc. Maas Cos. McC Inc. Metso Automation Mettler Toledo Miner Enterprises Inc. National Ethanol Conference Natwick Associates Appraisal Services Nebraska Public Power District Nestec Inc. Nexen Marketing USA Inc. North American Safety Valve Novozymes Petroleum Equipment Institute PhibroChem Pioneer Hi-Bred International Inc. Poet LLC Primafuel Inc. R&R Contracting Inc. R.J. Oâ&#x20AC;&#x2122;Brien & Associates RailWorks Track Systems Inc. Renewable Fuels Association Resonant BioSciences LLC Robert-James Sales Inc. Romer Labs Inc. Ronning Engineering Roskamp Champion/CPM SafeRack LLC Salco Products Inc. Seneca Waste Solutions Smar International Corp. Spraying Systems Co. Strongform Nationwide Industrial Builders Sulzer Chemtech USA Inc. Syngenta TDC Dryers Trico TCWind Inc. Tri-Mer Corp. U.S. Water Services Vaperma Inc. Victory Energy Operations LLC Vogelbusch USA Inc. Volkmann Railroad Builders Inc. W.Soule & Co. WINBCO 11

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E D I TO R I A L

A RT

PUBLISHING & SALES

Jessica Sobolik Managing Editor jsobolik@bbiinternational.com

Jaci Satterlund Art Director jsatterlund@bbiinternational.com

Mike Bryan Publisher & CEO mbryan@bbiinternational.com

Dave Nilles Contributions Editor dnilles@bbiinternational.com

Sam Melquist Graphic Artist smelquist@bbiinternational.com

Kathy Bryan Publisher & President kbryan@bbiinternational.com

Rona Johnson Features Editor rjohnson@bbiinternational.com

Elizabeth Slavens Graphic Artist bslavens@bbiinternational.com

Joe Bryan Vice President of Media & Events jbryan@bbiinternational.com

Ron Kotrba Senior Staff Writer rkotrba@bbiinternational.com

Jack Sitter Graphic Artist jsitter@bbiinternational.com

Tom Bryan Vice President of Communications tbryan@bbiinternational.com

Jerry W. Kram Staff Writer jkram@bbiinternational.com

Matthew Spoor Sales Director mspoor@bbiinternational.com

Susanne Retka Schill Staff Writer sretkaschill@bbiinternational.com

Howard Brockhouse Sales Manager hbrockhouse@bbiinternational.com

Kris Bevill Staff Writer kbevill@bbiinternational.com

Clay Moore Account Manager cmoore@bbiinternational.com

Erin Voegele Staff Writer evoegele@bbiinternational.com

Jeremy Hanson Account Manager jhanson@bbiinternational.com

Anna Austin Staff Writer aaustin@bbiinternational.com

Chip Shereck Account Manager cshereck@bbiinternational.com

Ryan C. Christiansen Staff Writer rchristiansen@bbiinternational.com

Tim Charles Account Manager tcharles@bbiinternational.com

Bryan Sims Staff Writer & Plant List Manager bsims@bbiinternational.com

Chad Ekanger Account Manager cekanger@bbiinternational.com

Hope Deutscher Online Editor hdeutscher@bbiinternational.com

Marty Steen Account Manager msteen@bbiinternational.com

Jan Tellmann Copy Editor jtellmann@bbiinternational.com

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Jessica Beaudry Subscriptions Manager jbeaudry@bbiinternational.com Jason Smith Subscriber Aquisition Manager jsmith@bbiinternational.com Erika Wishart Administrative Assistant ewishart@bbiinternational.com Christie Anderson Administrative Assistant canderson@bbiinternational.com Nicole Zambo Receptionist nzambo@bbiinternational.com

HOW TO REACH US

LETTERS TO THE EDITOR We welcome letters to the editor. Send your letter to: Ethanol Producer Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to jsobolik@bbiinternational.com. Letters should include the writerâ&#x20AC;&#x2122;s full name, address and telephone number, and may be edited for purposes of clarity and space.

SUBSCRIPTIONS Ethanol Producer Magazine is now 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 and Mexico. 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.

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ADVERTISING COPYRIGHT ÂŠ 2008 by BBI International

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ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

The Way I See It Cellulose Advances with Help from Corn-Based Industry

he theme of this issue of EPM is cellulosic ethanol. Many companies involved in the conventional ethanol industry are now turning their attention to cellulose as the renewable fuel of future. In doing so, it seems that corn-based ethanol has unfairly taken it on the chin. As more facts are released, it becomes increasingly clear that corn-based ethanol has not caused global food shortages, the marginalization of women, increases in gas prices, and deforestation. I have been involved in agriculture for well over 30 years, and for the first time in my memory, farmers are actually able to make a decent living and, as a result, are being villainized for doing so. In actuality, farmers are the ones who have been marginalized. Opponents of this industry have done a stellar job trashing corn-based ethanol, and perhaps it’s best to just move on. It does make me wonder, though, what the next issue will be once an increasing amount of ethanol is produced from cellulose. It may be land use, water, energy ... who knows? Trust me, there will be another battle that we will have to fight on the cellulosic front. As you’ll see in the pages of this issue, much progress has been made in the development of cellulosic ethanol, but much more still needs to be done. Feedstock collection and storage, the economic fermentation of C5 sugars and pretreatment options are just part of a list of challenges facing

the industry. These are things that we’ll overcome, however, and out of this will emerge a robust industry that will carry us into the next generation of biofuels. The years ahead will see improvements not only in cellulose-to-ethanol technology but in other technologies, as well. Processes such as pyrolysis, gasification and anaerobic digestion will be part of our future energy mix. So while some concede that the corn-toethanol debate was a battle lost (others may call it a draw), we most certainly have not lost the war. I try to avoid politics in this column, but I have to say that it will be difficult to support any presidential candidate that doesn’t demonstrate a strong commitment to biofuels. They are the future of our transportation infrastructure, and they are in existence now, not in some futuristic dream. Biofuels, along with the development of all domestic energy resources, has to be part of an intelligent energy strategy. We can’t drill our way out of the current energy crisis, and we shouldn't ignore other domestic resources, including billions of gallons of clean renewable energy from grain and cellulose. That’s the way I see it!

Mike Bryan Publisher & CEO mbryan@bbibiofuels.com

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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BUSINESS&PEOPLE

Business& People Ethanol Industry Briefs Business Inbicon, G-Team to market pretreatment technology Range Fuels, Ceres collaborate John Deere adds RIN management to software John Deere Agri Services has incorporated the use of a renewable identification numbers (RINs) registry into its trademarked Agris V9 business management software. The Clean Fuels Clearinghouse is allowing Agris users access to its RIN management capabilities and will enable them to connect seamlessly with Clean Fuels’ RINSTAR Renewable Fuel Registry. The tracking and managing of RINs have been issues for many biofuels producers since the U.S. EPA mandated the use of RINs as a method to track the amount of domestically produced biofuels. Compliance is mandatory, but there is no type of federally regulated method for tracking and regulating numbers. Clean Fuels is the only RIN registry in the United States. EP

Colorado-based Range Fuels Inc., a cellulosic ethanol producer, and Californiabased Ceres Inc., an energy crop seed developer, have formally announced a collaboration to research, develop and commercialize energy crop feedstocks for ethanol production. The two companies began working together during the 2008 spring planting season and plan to continue the collaboration for several years. Range Fuels is building its first commercial-scale cellulosic ethanol production facility near Soperton, Ga. The 20 MMgy facility is scheduled to begin production in 2009, according to a Range Fuels spokeswoman. Woody biomass is the primary feedstock, but the spokeswoman said Range Fuels is considering other biomass feedstocks, as well, and has partnered with Ceres to explore those options. EP

LDC Bioenergia invests in eight ethanol plant LDC Bioenergia, the ethanol business unit of Louis Dreyfus Commodities, has invested $433 million in a new sugar mill and ethanol production plant in Brazil. The facility will have the capacity to refine more than 42 MMgy of ethanol and 340,000 tons of sugar. It is being built in the state of Mato Grosso do Sul, which shares borders with Bolivia and Paraguay. The plant is Louis Dreyfus’ eighth ethanol and sugar facility in Brazil and its third in Mato Grosso do Sul. Louis Dreyfus Commodities is one of the top three sugar merchandisers and traders in the world. EP 20

Share your Industry Briefs To be included in Business & People, send information (including photos or illustrations if available) to: Industry Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-5367, or e-mail it to jsobolik@bbiinternational.com. Please include your name and telephone number in all correspondence.

Danish biofuels company Inbicon announced in August a partnership with GTeam, a U.S.-based marketing and brand building company, to market and license its cellulosic pretreatment technology in North America. The technology pretreats agricultural waste through a hydrothermal process, turning it into liquefied sugars that can be fermented into ethanol. Inbicon has been developing the technology since 2003 and currently uses it on a commercial scale in Denmark. In addition, G-Team is searching for collaborators to create sustainable, carbon-neutral energy parks that would produce renewable electricity, liquid biofuels, livestock feed and high-value foods. EP

MBI, SunEthanol partner to scale up ethanol process SunEthanol Inc. and MBI International have announced a joint venture to scale up a fermentation method that uses SunEthanol’s Q-Microbe to effectively digest and ferment cellulosic feedstocks in order to produce ethanol in a single-step process. Bobby Bringi, president and chief executive officer of MBI, said his company has significant experience in scaling up and de-risking new technologies. In the past, MBI has lent its services to multiple universities and companies such as Cargill Inc. for a polylactic-acid-based biodegradable plastics technology, which is broadly used around the world in clothing, carpets, plastic food containers, garbage bags and car parts. EP

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

BUSINESS&PEOPLE

Sponsored by

People Range Fuels adds to board

Delta-T names CEO

Range Fuels Inc. has appointed Greg King to its board of directors. He currently serves as president of GCK Ventures LLC, a private consulting firm, and was previKing ously president of Valero Energy Corp. “Greg’s extensive experience in the oil-refining business and expertise in transportation fuels logistics will greatly enhance our board of directors’ already deep-rooted understanding of the evolving energy landscape,” said Range Fuels Chief Executive Officer Mitch Mandich. EP

Thomas McDaniel took the helm of Delta-T Corp. in September, replacing Chief Executive Officer Les Ward. As managing director, McDaniel will focus on McDaniel the successful completion of all existing Delta-T contracts, as well as the improvement and expansion of its operating facilities. He will also function as managing director of North and South American operations for Delta-T’s parent company Bateman Litwin NV. EP

Slunecka joins PhibroChem Tom Slunecka, former executive director of the Ethanol Promotion and Information Council, has joined PhibroChem Ltd. as vice president of marSlunecka keting for the company’s Ethanol Performance Group. He will be responsible for expanding PhibroChem’s position within the ethanol industry. PhibroChem produces Lactrol, an antibacterial product that minimizes lactic acid during fermentation. In late 2007, Slunecka left EPIC for KL Process Design Group LLC, where he held positions in marketing and business development. Before joining EPIC, he worked for the National Corn Growers Association. EP

Council names ethanol executives to board Three ethanol plant executives have been named to the board of directors of the newly formed American Ag & Energy Council, an organization that aims to bridge gaps between the agriculture, agribusiness and renewable energy sectors. The ethanol executives are Ray Defenbaugh, president and chief executive officer of Big River Resources LLC in Burlington, Iowa; Bruce Rastetter, chief executive officer of Hawkeye Energy Holdings LLC in Ames, Iowa; and Walter Wendland, president and chief executive officer of Golden Grain Energy LLC in Mason City, Iowa. Defenbaugh, who is also a director for the Renewable Fuels Association, said the council aims to show that it's not just ethanol producers who support ethanol. "When people hear the story from a company that's producing ethanol, they might assume that it's a biased story," he said. “However, we think we've got a very valid story within the ethanol industry, and so we're trying to bring in voices from within the agricultural community that would validate the positive facts that we have to present about ethanol and [distillers grains]." EP

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Ho joins Hudson Clean Energy Hudson Clean Energy Partners LP, a private equity firm that invests in companies focused on renewable power, alternative fuels, energy storage and demandside energy management, has hired Paul Ho as principal to oversee efforts in Hudson’s biofuel and biomass sectors. Previously, he worked for Credit Suisse in New York as alternative energy group director. He has more than 14 years of combined experience in the renewable energy and alternative fuels sectors. EP

Mascoma promotes Schumacher, adds Forrest Mascoma Corp. has promoted Jim Schumacher to senior vice president of corporate development, and has added Richard Forrest to its leadership team as Schumacher vice president and corporate counsel. Schumacher, who has been with Mascoma since 2007, most recently led the establishment of a strategic partnership between Mascoma and auto Forrest manufacturer General Motors Corp. He will be responsible for corporate development activities, such as working on new production facility projects, raising capital and building strategic partnerships. Forrest has experience in representing emerging growth companies. Most recently, he was appointed a lecturer at Harvard Law School to teach a course on legal issues relevant to venture-backed technology companies. EP 21

Standards for tomorrow. We see food, feed, and fuel. What do you see? Fractionation makes it all possible.

www.buhlergroup.com

Buhler has the equipment and process know-how to make it happen: sç Material Handling: truck, train, or ship sç Grain Cleaning sç Fractionation & Milling sç Grinding & Mixing sç Pelleting of Feed & Biomass sç Bulk Loading & Bagging

COMMODITIES REPORT Natural Gas Report

More chaos, uncertainty Sept. 21—Lehman Brothers filed for bankruptcy, American International Group Inc. (AIG) got a big helping hand from the federal government and Warren Buffet’s MidAmerican Energy Holdings Co. swooped in to buy Constellation Energy at a share price not seen in the past five years. It’s a lot of action in one week. What does this mean for the natural gas industry? Lehman Brothers, AIG and Constellation Energy either directly or indirectly account for a significant amount of marketing and trading volumes in the natural gas industry. In fact, Lehman Brothers, Tenaska Marketing Ventures (of which AIG owns 50 percent) and Constellation are all among the top 10 North American marketers in terms of volume, according to the trade publication Natural Gas Intelligence. Collectively, they account for more than 24 billion cubic feet per day in traded volume. To put that number in perspective, average daily natural gas consumption is approximately 60 billion cubic feet per day. Certain financial and possible operational turmoil impacting this degree of market volume and this number of large participants is bound to have an impact on the market. What the impact will be is yet to be seen. During these times of chaos and uncertainty, we have a few recommendations. First, make sure you understand the credit capability of the party supplying your natural gas needs. Second,

By Casey Whelan, U.S. Energy Services Inc.

always have a backup plan in the event that your primary supplier fails to deliver. Finally, determine how much supplier risk you can tolerate, and take action if your exposure level exceeds your comfort level. As always, consider some coverage for this fall and next winter using options or futures structures. EP Casey Whelan, vice president of strategic initiatives, can be contacted at cwhelan@usenergyservices.com.

Corn Report

Corn, crude oil fundamentals change Sept. 22—The corn market has been volatile despite the upcoming harvest season. Outside influences have allowed that volatility to prosper whether due to the energy complex, the U.S. dollar, the financial crisis or the slowing world economy. Nonetheless, each component has complemented one another. The September USDA supply and demand report indicated that there may be a problem with U.S. corn production. The yield was reduced by 2.7 bushels per acre (from 155 to 152.3), equating to a reduction of 216 million bushels compared with the last report, or down 1 billion bushels from one year ago. One thing to note is this will still be the second-highest yield in U.S. history. U.S. demand for exports, food, seed and industrial use was unchanged. However, a reduction of 100 million bushels in feed demand was noted. Therefore, the U.S. carryout now rests unsettled at 1.2 billion bushels (an 8 percent carryout-to-use ratio). From a world perspective, wheat carryout increased by 3.73 million metric tons despite corn carryout being reduced by 2.44 million metric tons. The result is more wheat feeding around the globe. The adjacent graph depicts crude oil and its relationship to corn. Will there be a disconnect between agricultural commodities and ener24

By Jason Sagebiel, FCStone

gies? The relationship between crude oil and corn has been 75 percent since 2007. Going back to 2003, that same correlation is 65 percent. The correlation between soybean oil and crude is 88 percent since 2007. Therefore, the market may have put corn fundamentals into play and may see that spread begin to uncorrelate. EP ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

COMMODITIES REPORT

Regional Ethanol Prices (Monthly averages in cents per gallon)

REGION

DDGS Report By Sean Broderick, CHS Inc.

Market to remain tight Sept. 23—As we entered fall, the DDGS market started to feel the pressure of logistics, at least in the Western markets.. Last month, I said the first to blink would have the market move against them. As they looked at the two weeks of transit time that it was going to take to get product into their feed mills, Southwestern and California buyers determined that they should start ordering early and often. That moved the market upward approximately $15 per ton in around three days. The deferred bids moved an additional $5 to $10, as well. The Gulf numbers have risen, not only because of Western business, but also because overseas buyers are buying the “least-cost” product, which for the most

West Coast

232.833

232.2

262.835

Midwest

223.306

225.59

249.277

East Coast

233.5

----

285.699 Source: OPIS

part has been DDGS. The Eastern market is not quite as bullish, due largely to new plants that have started up in that area, particularly in the Ohio market. Some railcars have shipped “over the top” of Chicago and St. Louis to go to the hotter Western market. This shouldn’t happen in a normal scenario. Looking ahead, the impending cooler weather has sellers looking to maintain the carries in the deferred months and mimic the corn market. The “scare” of ethanol companies reporting large hedging losses, along with minimal margins in the forward months, has buyers looking at potentially explosive supply situations that remind them too much of 2007. Both sides are playing it conservatively, which should keep

Regional Gasoline Prices (Monthly averages in cents per gallon)

REGION

SPOT

RACK

West Coast

291.069

307.313

382.909

Midwest

315.284

312.279

373.46

East Coast

291.469

308.495

367.314

Ethanol Report

Ike spike leaves ethanol behind

By Spencer Kelly, OPIS

Midwest rack prices moved lower through September. Average rack postings in Iowa at $2.29 per gallon dropped more than a dime. Low prices at racks such as Des Moines, Iowa, indicated more slack in the offing, sinking to $2.12 to $2.13 per gallon. Gasoline demand and logistics became a growing concern. Gulf Coast refiners closed down for Gustav and Ike, leading to gasoline supply shortages at some terminals flush with ethanol but no gasoline for blending. Some terminals in the Southeast had railcars backing up with no place to put the ethanol. While ethanol blending economics remained as healthy as ever, concern from ethanol sellers focused on lower gasoline production and demand, which could mean less ethanol demand regardless of economics. EP For more information, contact OPIS Ethanol & Biodiesel Information Service at (888) 301-2645.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

RETAIL

Source: OPIS

DDGS Prices ($/ton) NOV. 2007

NOV. 2008

OCT. 2008

Minnesota

140

135

110

California*

188

180

158

Chicago

120

135

117

Buffalo, N.Y.

147

150

130

Central Florida

176

180

LOCATION

*Central Valley

147 Source: CHS Inc.

Corn Futures Prices (December corn, $/bushel) HIGH

LOW

Sept. 19, 2008

5.48

5.27 1/4

5.42 1/4

Aug. 19, 2008

5.93 1/4

5.61

5.84 1/2

Sept. 19, 2007

3.58 3/4

3.47 1/4

DATE

Sept. 19—Most ethanol spot markets failed to get a boost from the chaos in September gasoline markets drummed up by the hit that Gulf Coast refiners took from Hurricane Ike, which made landfall only weeks after Hurricane Gustav. Houston was in a jumble with short ethanol supply and a storm-related halt to barging into the region. Bulk truck deliveries to Houston fetched prices from $2.50 to $2.58 per gallon for a time with supply trucked in from far-away Midwest sources. However, with prompt spot gasoline prices surging up to $5 per gallon in a buying frenzy, such ethanol prices were almost a footnote. In fact, most ethanol markets remained more closely tied to the fortunes of corn, depressed through most of the month even when gasoline spiked. Chicago spot deals for September averaged between $2.10 and $2.20 per gallon, down 15 cents since the previous month—a price level leaving ethanol producers with little or no margin even as corn prices cooled.

BULK SPLASH/ TRUCK (rack) TOP OFF (rack)

SPOT

3.58 Source: FCStone

Cash Sorghum Prices ($/bushel) Superior, Neb. Beatrice, Neb. Sublette, Kan. Salina, Kan. Triangle, Texas Gulf, Texas

SEPT. 2008

AUG. 2008

SEPT. 2007

4.47 4.42 4.54 4.58 4.57 5.44

4.77 4.82 4.97 5.25 5.21 5.98

3.84 3.65 3.55 4.02 3.66 4.44 Source: Sorghum Synergies

Natural Gas Prices ($/MMBtu) SEPT.22 , 2008 AUG..25 , 2008 SEPT.24 , 2007 NYMEX

7.50

7.82

6.08

N. Ventura

6.19

6.99

5.42

Calif. Border

5.70

7.24

5.08 Source: U.S. Energy Services Inc.

U.S. Ethanol Production Output (barrels/day) June 2008

585,000

May 2008

598,000*

June 2007

418,000

*all-time monthly high

Source: U.S. Energy Information Administration

VIEW FROM

THE HILL

Be Thankful for the Ethanol Industry With the Thanksgiving holiday quickly approaching, many find themselves stopping to reflect on the past year and what they have to be thankful for. While those of you who drive America’s ethanol industry reflect, also take the time to appreciate the contributions you’re making to America’s energy future, for which all of us are thankful. It is ethanol that is reducing our dependence on foreign oil and increasing our ability to control our energy security future. The 6.5 billion gallons of ethanol produced in 2007 displaced the need for 228 million barrels of imported foreign oil. Ethanol is also adding volume to the market at a time when supplies are low and prices are high. For example, Bear Stearns analyst Nicole Decker estimated in early 2008 that the 400,000 barrels of ethanol produced daily in 2007 could displace the gasoline output from two to three average oil refineries. It’s America’s ethanol industry that is creating a nutrient-rich animal feed as a coproduct of ethanol production. According to a recent study, the U.S. ethanol industry provided 23 million metric tons of livestock and poultry feed to the world last year, or nearly three times the amount of wheat, sorghum, barley and oats fed to U.S. livestock in the 2007-’08 marketing year. In other words, the amount of feed produced by the ethanol industry in 2007-’08 is roughly equivalent to the total amount of feed consumed by cattle last year in Texas, Kansas, Nebraska and Colorado—the nation’s four largest feedlot states. Especially important in these troubled times is the ethanol industry’s commitment to rural revitalization. In 2007, the ethanol industry created more than 230,000 jobs across all sectors of the economy, added nearly $48 billion to the nation’s gross domestic product and put an additional $12.3 billion into the pockets of American con-

sumers. Specifically, in a study released by LECG LLC in February, a rural ethanol plant was found to not only create 2,400 local jobs, but also boost local incomes by more than $100 million. Ethanol has several environmental benefits, too. It displaces the use of toxic gasoline components, and is water-soluble, biodegradable and Dinneen completely renewable. It reduces carbon dioxide emissions by up to 29 percent. The 9 billion gallons of ethanol we will produce in 2008 will reduce greenhouse gas emissions by more than 14 million tons, or the equivalent of taking 2.5 million vehicles off the road. Ethanol contains a positive energy balance, and ethanol production is becoming more efficient every day. So as you sit down with your loved ones this holiday season, remember what we as an industry have to be thankful for. Our product reduces dependence on oil from increasingly unstable regions. We’re able to not only provide a renewable, clean fuel that reduces greenhouse gas emissions and has a positive energy balance, but also put a significant portion of animal feed back into our markets, which helps to produce healthy livestock and poultry for a growing domestic population. Moreover, we’re helping to create economic stimulus when our economy needs it the most. As an industry, we truly have much to be thankful for this year.

Bob Dinneen President and CEO Renewable Fuels Association 26

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

RFA UPDATE

RFA analyzes ethanol coproduct production According to an analysis conducted by the Renewable Fuels Association, U.S. ethanol producers made 23 million metric tons of livestock and poultry feed as a coproduct of the ethanol production process last year. In the results released in late September, the RFA also pointed out that approximately 1 billion bushels of corn were displaced by ethanol feed coproducts in 2007-’08, an amount equivalent to roughly 15 percent of total corn use for feed. One-third of every bushel of grain brought into an ethanol plant is turned into animal feed, most often in the form of distillers grains (the most common ethanol feed coproduct), corn gluten feed and corn gluten meal. The RFA also analyzed distillers grains exports, determining that exports will increase to more than 4 million metric tons in 2008, or the equivalent of approximately 160 million bushels of corn. “The livestock feed coproducts of ethanol production are the best kept secret of this industry,” said RFA President Bob Dinneen. “The focus of the public has been on the industry’s production of fuel ethanol as a renewable alternative to imported oil, but the production of a high-quality livestock feed is equally important. Our industry is truly in the business of producing both feed and fuel.” The RFA’s full eight-page analysis, titled “Feeding the Future,” can be found at www .ethanolrfa.org/resource/reports/#EconomicImpacts.

NEC registration opens

RFA ads tout ethanol’s benefits In late September, the RFA launched two advertisements that clearly state the benefits of the domestic renewable fuels industry. Titled “Faces” and “Places,” the 30-second spots feature Americans from Hereford, Texas, who are actively leading America toward a more secure energy future. In “Faces,” local Hereford residents explain why ethanol is critical to America’s energy future. In “Places,” the geographic diversity of America’s ethanol industry is on display since the self-proclaimed “Beef Capital of the World” is also home to two ethanol facilities. Panda Hereford Ethanol LP is building a 115 MMgy facility there, while White Energy Hereford LLC opened a 100 MMgy facility in March. “America’s ethanol producers are on the leading edge of an energy evolution in this country but far too often aren’t given the credit they deserve,” Dinneen said. “As oil supplies peak and jobs are shipped overseas, ethanol is providing much needed energy security and economic opportunity today. This industry is about real people all across the nation committed to doing their part to ensure a brighter energy future for generations to come.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

www.ethanolRFA.org

It’s time to start planning for the RFA’s 14th Annual National Ethanol Conference. Registration is now open for the event, which will be held Feb. 23-25 at the San Antonio Convention Center in San Antonio. This year’s conference is themed “Growing Innovation: America’s Energy Future Starts at Home.” The event, which drew more than 2,100 to Orlando, Fla., in February 2008, will again feature a general session, breakout sessions and a networking reception. A golf tournament will be held at The Club at Sonterra. New this year is an additional networking opportunity that will feature a visit to the Knibbe Ranch, a family-owned working ranch recognized as a Century Heritage Ranch by the state of Texas.

eBIO INSIDER

Is the Tide Changing? By Robert Vierhout

or the European Union biofuels industry, and most likely the American industry, 2007 and the first half of 2008 will be remembered as the nadir of its history. We were blamed for more things than a sensible mind could think of. The U.K. newspaper I read, the Financial Times, was one of the first newspapers that started reporting and commenting almost daily on how bad biofuels were for society. It was as if they invented biofuel bashing. Remarkably, at press time, the Financial Times has not written a single word, negatively or positively, on biofuels since July. It is as if biofuels no longer exist. The paper didn’t even cover the Organization for Economic Cooperation and Development report published in mid-July that heavily criticized the United States and the EU for their biofuel policies. When that happens I’m left wondering if something has changed their stance on biofuels? I could think of a number of reasons that might explain this change. Perhaps it’s the holiday season. Why bother publishing anything if politicians and biofuels detractors are on annual leave? A more cynical explanation could be that after more than 12 months of hammering into people’s minds that biofuels are bad, they consider the mission accomplished. Or could the real reason be the much quicker-than-expected adjustment of agricultural crop prices and the higher yield in almost every region of the world? Could it be that biofuels aren’t the true drivers for the inflated food prices the paper had claimed? They prefer to remain silent instead of admitting that they have been wrong in their analysis. Two other reasons explain this ubiquitous silence. The first was presented in early July. Renewable Fuel Agency Professor Ed Gallagher and his team’s eagerly awaited review on the indirect effects of biofuels, which was requested by the U.K. government, was published. The report concluded that, by definition, biofuels are not bad. They have a role to play in the energy mix, but only if produced in a sustainable way.

Gallagher’s report concluded that the U.K. government should not question the EU target of 10 percent biofuels by 2020 nor abandon its biofuel policy. However, it should adjust its medium-term target. As expected, the U.K. government shared Gallagher’s view. The U.K. government’s debate on biofuels policy and its values has come to an end. The second reason appeared immediately thereafter: BP announced they will construct a wheat-to-ethanol plant in northeast England. The investment is worth $400 million. Since that announcement the U.K. newspapers likely concluded that criticizing biofuels any longer would neither lead to change in government policy nor be appreciated by one of the British industry’s crown jewels. Does this reaction provide a similar picture for the rest of Europe? I must admit that it is beyond my abilities to make any firm statements on all of Europe, but I do notice a similar silence in Brussels-based media and other papers I read. Biofuels might well no longer be the hobbyhorse of the media. It’s too early to tell if the media has turned the corner on biofuels coverage. The final decision on the EU biofuels policy hasn’t been made. The media might try another shot at it before the law is adopted later this year. In any case, this period of silence provides time to prepare for another round of anti-biofuels coverage. Robert Vierhout is the secretary-general of eBIO, the European Bioethanol Fuel Association. Reach him at vierhout@ebio.org.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

BIObytes

INDUSTRYNEWS

Ethanol News Briefs Chrysler announces 2009 FFV lineup Chrysler LLC has released its flexiblefuel vehicle lineup for 2009. The major automaker is now offering 10 vehicle models with three different E85-capable engine sizes for the model year: the smaller 2.7-liter V-6, the midsized 3.3L V-6, and the 4.7L V-8. Chrysler’s 2009 lineup includes the Dodge Avenger, Grand Caravan, Dakota, Ram and Durango; the Chrysler Sebring, Town and Country, and Aspen; and the Jeep Commander and Grand Cherokee. For a complete list of 2009 FFVs, visit www.e85fuel.com.

Northern Ethanol to build Niagara Falls ethanol plant Northern Ethanol LLC, a wholly owned subsidiary of Toronto-based Northern Ethanol Inc., has formed an agreement with Connecticut-based Praxair Inc. to acquire 70 acres for a hydropowered ethanol production facility to be built in Niagara Falls, N.Y. The New York Power Authority approved the 9,000kilowatt project in May. The 108 MMgy ethanol facility is expected to break ground during the second quarter of 2009 and will take approximately 20 months to construct. At press time, the project was waiting to be accepted into the New York State Brownfield Cleanup Program before continuing to move forward.

Sweet potatoes outperform corn Sweet potatoes produced two to three times more carbohydrates for ethanol production compared with corn in studies conducted in Maryland and Alabama, according to researchers with the USDA’s Agricultural Research Service. In a series of trials, carbohydrate production from sweet potatoes was 4.2 tons per acre in Alabama and 5.7 tons per acre in Maryland, compared with corn at 1.5 tons per acre in continued on page 32 30

Energy policies differ in presidential race Energy has been a hot-button issue throughout the 2008 U.S. presidential race with both sides claiming they know the best way to help the United States through its current energy crisis. While there have been some similarities between the Republican and Democratic parties’ solutions, there have also been some glaring differences. Both sides agree that the government needs to continue to support the advancement of domestically produced energy. Both parties are supportive of second-generation biofuels and the development of technologies necessary to make those types of fuel a reality. That’s where the similarities end. The Republican Party made headlines when it passed a party platform during its convention in St. Paul, Minn., that included a call to end all ethanol mandates, breaking from the current administration’s views on ethanol. The Bush administration has been historically pro-ethanol, even playing a role in establishing the current renewable fuels standard that has now been renounced in the party’s new platform. The Republican Party’s platform vow to “let the free market work” was a return to the party’s roots, according to Republican National Committee Chairman Robert “Mike” Duncan. The platform stated it would continue to support the development of cellulosic ethanol and other biofuels, but that coal would play a major role in achieving America’s energy independence, as would the increase of domestic oil drilling. Not all Republicans agreed with the platform. Sens. John Thune, R-S.D., and Saxy Chambliss, R-Ga., spoke out in defense of ethanol at an agriculturally focused gathering during the conference. Chambliss said he was “disappointed” with the platform, but stressed that it was only a platform and not policy. Thune said the ethanol portion of the republican platform was a “big mistake” and illustrated that Republicans aren’t always right. Sen. Chuck Grassley, R-Iowa, a long-time advocate of ethanol, said he disagreed with the ethanol mandate portion but said he couldn’t argue that they’re entirely necessary because ethanol pro-

McCain

Obama

ducers continue to meet mandates ahead of schedule. Secretary of Agriculture Ed Schafer said he raised his eyebrows when he read the portion of the policy concerning the removal of ethanol mandates. However, he also doesn’t believe mandates should remain in place indefinitely. “I believe those incentives ought to stay there until the industry is mature, profits can be made and the infrastructure developed,” he said. From the other side of the Congressional aisle, the democrats passed a party platform during their convention in Denver that commented only briefly on biofuels. According to its platform, the Democratic Party plans to “invest in advanced biofuels like cellulosic ethanol, which will provide American-grown fuel and help free us from the tyranny of oil.” Party platforms are meant to convey the party’s stance on various issues. However, they tend to more closely represent the views of each party’s presidential nominee rather than the party as a whole. “I don’t recall ever once campaigning on a Republican platform that I saw reduced to actual public policy,” Schafer said. Regardless, the issue of energy in this election year has been closely watched by members of the ethanol industry, spurring some organizations to take action when they otherwise would remain neutral. For example, the American Corn Growers Association publicly endorsed democratic nominee Sen. Barack Obama, based on his support for renewable energy and rural communities. This is only the second time in the association’s 20-year history that it has publicly endorsed a presidential candidate. —Kris Bevill

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Capture The Power

INDUSTRYNEWS

Energy prices remained high on Congress’ list of priorities as the current session winded toward a conclusion. However, the Wall Street financial crisis has delayed consideration of new energy legislation to sometime after Election Day. With time to consider new legislation shrinking, the House of Representatives approved House Resolution 6899, the Comprehensive American Energy Security and Consumer Protection Act. While mainly focused on oil production, the bill has several titles dealing with alternative energy, including cellulosic ethanol. The bill passed the house in mid-September by a vote of 236 to 189. Meanwhile, a bipartisan group of 20 senators led by Sens. Kent Conrad, D-N.D., and Saxby Chambliss, R-Ga., launched its own compromise energy bill called the New Energy Reform Act, also known as New ERA, before the financial crisis peaked. In a joint statement, Conrad and Chambliss said, “Unfortunately, with the fiscal crisis unfolding, time to debate a comprehensive energy policy is not available. Instead, we will share our plan with our colleagues and ask that the New ERA bill be among the first orders of business when Congress reconvenes.” The Senate Agriculture Committee has also been active in trying to move ethanol legislation over the past several months. The committee held a field hearing in Omaha, Neb., titled “Food, Feed and Fuel Production.” Jeff Lautt, executive vice president of Poet LLC, spoke in favor of the ethanol industry and told senators that the choice between food, feed and fuel was not one or the other. “Food or fuel is not a choice we have to make,” he said. “It can be both, and it will be both if we have the will to do so.” Lautt listed five positions that would help support the production of cornbased ethanol and ease the introduction of cellulosic ethanol into the marketplace. First, Congress should allow higher-level ethanol blends for use in automobiles

PHOTO: JESSICA SOBOLIK, BBI INTERNATIONAL INC.

Congress plots U.S. energy future

It's unlikely that Congress will pass additional energy legislation this year, but several bills are being developed for further discussion next year.

rather than the 10 percent standard now in place. He also called for all new automobiles to be flexible-fuel vehicles (FFVs), saying that the cost of converting existing models to FFVs is minimal and there was no reason to delay it any further. He also called for the installation of blender pumps at filling stations to give consumers access to higher-level ethanol blends, increased funding for research and development of cellulosic ethanol, and the continuation of the tariff on imported ethanol to ensure that U.S.-based solutions will continue to be developed. Sen. Tom Harkin, D-Iowa, chaired the Omaha hearing and has sponsored several pieces of legislation to aid the ethanol industry in the past. With Sen. Richard Lugar, R-Ind., he introduced legislation aimed at giving ethanol producers access to lower-cost transportation via pipelines by giving pipeline owners the same tax benefits they receive for moving petroleum products. Harkin and Lugar subsequently introduced legislation to expand the availability of FFVs to American consumers by requiring half of all light-duty vehicles manufactured for sale in America to be FFVs by 2011, increasing to 90 percent by 2013. These bills are unlikely to be considered in the waning days of the current Congress but could be incorporated into future legislation when the 111th Congress convenes in January.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

—Jerry W. Kram

PERFECTING THERMAL PROCESSING WORLDWIDE Rotary Driers, Mixback Systems, Advanced Controls for DDGS Visit www.aeroglide.com/ethanol Raleigh, NC USA +1 919 851 2000 Philadelphia, PA USA +1 215 464 6070 England +44 1780 767 007 China +86-21-5132-1880 Malaysia +60 3 6411 9999 31

BIObytes

INDUSTRYNEWS

Ethanol News Briefs continued from page 30

Alabama and 2.5 tons per acre in Maryland. In Alabama, the corn yields were 80 bushels per acre, and in Maryland, they were 102 bushels per acre. The national average corn yield is 151 bushels per acre.

Grant aids distillers grains, E. coli study Kansas State University researchers received a $939,220 grant from the USDA National Research Initiative in Food Safety to study the connection between distillers grains feed and the naturally occurring pathogen E. coli 0157:H7 in cattle. The researchers will study whether feeding varied amounts of distillers grains—dried or wet—has an effect on the prevalence of E. coli in cattle feces. The three-year study will begin in the summer of 2009, the season when the pathogen is typically most prevalent.

Hurricane season brings rain to Corn Belt This year’s hurricane season has brought distress and destruction to coastal states. It has also affected the Corn Belt. Some farmers in the Midwest, who had been continued on page 34

Poet to produce cellulosic ethanol Sioux Falls, S.D.-based Poet LLC announced Aug. 13 that construction of its pilot-scale cellulosic ethanol plant in Scotland, S.D., will be completed by the end of the year. The plant is adjacent to Poet’s pilot-scale, corn-based ethanol production and research facility, and will produce 20,000 gallons of cellulosic ethanol annually. The new addition will allow Poet to further improve its technology before construction begins in 2009 on Project LIBERTY, the company’s commercial-scale cellulosic ethanol production facility to be located in Emmetsburg, Iowa. Project LIBERTY will transform an existing 50 MMgy corn-based ethanol plant into an integrated facility that will produce 100 MMgy of corn-based ethanol and 25 MMgy of cellulosic ethanol. Production at Project LIBERTY is expected to begin in 2011. Poet’s cellulosic technology utilizes corn cobs and corn fiber. According to Chief Executive Officer Jeff Broin, research has determined that corn cobs are a waste product that provides little value when left in the field and they do little to control soil erosion. Broin estimates that approximately 80 gallons

of ethanol can be produced from each ton of corn cobs and fiber. Poet has been working to develop this technology for eight years. In recent months, Poet scientists have been able to produce significant amounts of ethanol in fermentation, improving the yield of ethanol from biomass. In addition, the company is working with farmers and equipment manufactures to develop equipment that will collect both the corn kernels and cobs in one pass without slowing harvest. On Sept. 11, Poet announced that the Iowa Power Fund committed $14 million to Project LIBERTY, which stands for Launch of an Integrated Biorefinery with Ecosustainable and Renewable Technologies in Y2009. It’s estimated that Project LIBERTY will create at least 35 new jobs and benefit local farmers through the sale of corn cobs to the facility, which are currently valued at $30 to $60 per ton. Poet’s long-term plans include adding cellulosic ethanol production to the company’s other existing ethanol facilities. The company may also license its cellulosic technology to other companies. —Erin Voegele

INDUSTRYNEWS

Blender pumps increase; boom prompts EPA caution two unrelated blender pumps opened The proliferation of blender in Olds and Rock Rapids, Iowa. pumps, particularly in Kansas and The recent blender pump boom, Iowa, is giving consumers more access although a positive development for to higher-level blends. However, the the ethanol industry and flexible-fuel increase has also caused some confuvehicle (FFV) owners, has caught the sion on blending practices, which was attention of the EPA. In late July, the quickly addressed by the U.S. EPA EPA issued a letter in response to quesIn Kansas, the Ethanol tions raised by Bob Greco, director of Promotion and Information Council, downstream and industry operations at the state Corn Commission and ICM the American Petroleum Institute. In Inc. announced a statewide initiative the letter, the EPA addressed selfAug. 18 to launch a blender pump prodirected blender pumps at retail outlets gram. The announcement followed an and the risks involved when using fuel ethanol promotion event in Colwich, Blender pumps such as this one have spurred comment from the U.S. EPA. blends containing more than 10 percent Kan., at TJ’s Convenience Store, which offered discounts on E10, E20, E30 and E85 ening our dependence on foreign oil,” said ethanol. “Gasoline containing more than 10 Kansas Corn Commission Chairman Bob percent ethanol may cause damage to certain blends. emissions control devices and systems, and The major initiative of the program is to Timmons. In Iowa, WestMor Industries LLC installed increase emissions from gasoline-only vehicles help fuel station retailers obtain funding and equipment needed to sell higher blends of the state’s first blender pump at Galva Holstein and engines,” the letter stated. “For this reason, ethanol. Currently, there are four blender pumps Ag LLC in Galva, Iowa, at the end of August. the Clean Air Act prohibits retail gasoline stain Kansas, courtesy of a pilot program support- Galva Holstein Ag was awarded a grant from tions from selling gasoline blended with more ed by the state Department of Agriculture. The Iowa’s Renewable Fuel Infrastructure Board in than 10 percent ethanol for use in gasoline-only various groups hope to increase the state’s June, which covered nearly half of the pump vehicles.” The EPA said steps will be taken to blender pump infrastructure by installing a min- and installation costs. Corey Poppe, a investigate retail distribution of noncompliant imum of 100 blender pumps over the next year. spokesman for WestMor Industries, said that by fuel. “Our program will help strengthen our econo- the end of the summer, the company plans to my by encouraging blender pump infrastructure install three more blender pumps in Holstein, —Anna Austin development and take us one step closer to less- Manning and Sibley, Iowa. In early September,

THE ROAD TO SUCCESS IS FILLED WITH TWISTS AND TURNS. FORTUNATELY, WE ALREADY KNOW THE WAY.

The biofuels industry’s accounting, tax and various consulting needs can be nearly as complicated as the refining process itself. Which is why Kennedy and Coe’s knowledge and experience in the industry can help you identify and capitalize on many opportunities that can significantly impact your organization’s cash flow. Our expertise can help you navigate even the most confusing paths, so you can make the most of your operation’s potential.

Call Jesse McCurry at 800-303-3241 or visit us at www.kcoe.com.

Not your average accountants.SM The “e” mark and the “stylized e” are registered service marks of the Ethanol Promotion and Information Council. Used with permission.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008 KAC.10442_EPM_Wnd_7.5x3.375_4C 1

33 7/24/08 11:10:53 AM

BIObytes

INDUSTRYNEWS

Ethanol News Briefs

experiencing drought conditions, welcomed rain caused by hurricanes such as Gustav and Ike. For others, problems occurred when their fields stayed under water longer than expected. Winds gusting from 60 to 70 mph also flattened some crops, according to Ken Reeves, senior meteorologist at AccuWeather Inc.

U.K. agency releases biofuel supply report The United Kingdom’s Renewable Fuels Agency has published its second monthly report on the supply of biofuels under the Renewable Transportation Fuel Obligation, which was implemented April 15. Between May and July, biofuels accounted for 2.92 percent of U.K. road fuel, totaling 2.53 percent for 2008. This meets the European Union’s 2.5 percent target. Greenhouse gas reductions of 46 percent were also achieved, totaling 44 percent this far in 2008, compared with a 40 percent target. However, only 29 percent of biofuels met environmental standards in the latest report, bringing the 2008 total to 24 per continued on page 36

China, U.S. collaborate on sorghum for biofuels The USDA and the Chinese Ministry of Science and Technology signed an accord at the International Conference on Sorghum for Biofuels in Houston in mid-August. The accord formalizes collaboration on biofuels research between scientists in the two countries. Molecular biologist Zonglin “Lewis” Liu is one of the researchers with collaboration underway. In his work at the National Center for Agricultural Utilization Research in Peoria, Ill., Liu has developed stress-tolerant yeast strains that aren’t inhibited by the toxic compounds found in the biomass-to-ethanol process. A Chinese researcher has collaborated on testing the yeast in the systems that he has under development, using corn cobs and sorghum as the substrate. This summer, Liu traveled to China with Gale Buchanan, chief scientist and USDA undersecretary for research, education and economics, where they saw work being done in the development of cold- and drought-tolerant varieties of sweet sorghum for biofuel. “I was very impressed with the progress China has made in its sorghum biofuels research,” Buchanan said in his remarks at the Houston conference. Several scientists from China were present at the event, where the accord was signed Aug. 20.

PHOTO: BLAIR FANNIN, TEXAS AGRILIFE COMMUNICATIONS

continued from page 32

Gale Buchanan, USDA undersecretary for research, education and economics, left, and Liu Yanhua, vice minister of China’s ministry of science and technology, sign a formal accord Aug. 20 to cooperate on biofuels research.

Zhao Lixin of the Chinese Academy of Chemical Engineers said not only has the Chinese government adopted a policy banning the use of food crops for biofuels production, but it has also said no existing arable land will be used for energy crops. Turning to sweet sorghum as a biofuel feedstock, a pilot-scale ethanol plant was built in 2006, which uses a conventional ethanol process in the Heilongjian province of China, he said. Researchers from Tsinghua University are also experimenting with an advanced solid state fermentation technology in Inner Mongolia. —Susanne Retka Schill

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

INDUSTRYNEWS

E85 builds momentum around the world Efforts to increase awareness, availability and use of E85 blends in consumer and commercial fleets are actively underway across the United States and even Antarctica. State officials in Maryland are working to increase the accessibility of E85 for consumers. In August, Gov. Martin O’Malley, joined by Lt. Gov. Anthony Brown and other administration officials, devised a proposal to build four new E85 fuel pumps throughout the state. E85 will also be used by the state transportation fleet, and E85 pumps will be installed at the Maryland State Police barracks and State Highway Administration facilities. In Minnesota, the state’s American Lung Association released statistics that illustrate a change in traditional fuel consumption. Statewide sales of E85 in July were 16 percent higher than sales from one year ago. During that same time period, gasoline sales decreased 10 percent, dropping from approximately 233 million gallons in July 2007 to approximately 211.9 million gallons in July 2008. Monthly sales of E85 are averaging between 2 million and 2.5 million gallons. Additionally, Freedom Valu Centers in the Minneapolis metro area and a Holiday Stationstore in Eagan, Minn., held E85 promotions during the Republican National Convention. For two hours, the Holiday Stationstore pared back the price of E85 by $1 per gallon. The promotion was intended to occur during the RNC and to provide fuel for the fleet of flexible-fuel vehicles that General Motors Corp. made available to RNC officials and guests. One gas station owner was recently cited for not properly handling E85. On Aug. 13, the Iowa attorney general’s office filed a

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

state consumer-protection lawsuit against Jerry Fratzke, owner of Pronto Market gas stations in Sumner and Fairbank, Iowa, for “improperly and fraudulently” selling E85 as regular unleaded gasoline or E10. A temporary restraining order was granted, preventing Fratzke from selling E85. At press time, a hearing was scheduled for Sept. 22. The American Petroleum Institute recently asked the U.S. EPA for clarification on the legalities of selling ethanol blends higher than E10 at the retail level. The EPA’s response stated that the Clean Air Act does not prohibit retail gasoline stations from selling fuel blended with up to 85 percent ethanol for use in flex-fuel vehicles. To prevent errors such as the one in Iowa, the U.S. DOE’s National Renewable Energy Laboratory in Golden, Colo., updated its “Handbook for Handling, Storing and Dispensing of E85.” Published for the DOE’s Clean Cities program, the handbook updates are intended to help E85 blenders, distributors and retailers respond to the rising demand for the fuel. As for performance, E85 will be put to the ultimate test in November when the Moon Regan Trans-Antarctic Expedition puts E85 in the tank of its Concept Ice Vehicle, a propeller-driven, three-skied vehicle. During the expedition, the viscosity of E85— along with the fuel’s flame point at varying temperatures, altitudes and temperatures—will be tested. The CIV will lead a 3,000-mile expedition across Antarctica, which is scheduled to begin Nov. 14. —Bryan Sims

BIObytes

INDUSTRYNEWS

Ethanol News Briefs

cent, compared with a 30 percent target.

Russian miller considers fractionation OJSC PAVA, one of the largest wheat millers in Russia, is planning to build a grain fractionation plant in the Rebrikha district of Altay Territory, Russia. The facility will produce wheat gluten, starches, syrups, compound livestock feed, alcohols of different grades, wheat germ oil and carbon dioxide. Yulia Chebotavera, OJSC PAVA public relations manager, said fuel ethanol production had been a focus of the project, but because of changing market conditions, the company would concentrate on industrial and beverage alcohols instead.

New Jersey governor considers RFS waiver petition New Jersey Gov. Jon Corzine is considering filing a waiver request with the U.S. EPA, asking that the federal renewable fuels standard be reduced or frozen at the 2008 level. A spokeswoman for the governor said “environmental concerns” are a potential reason for a request, but the governor hadn’t decided whether to file the request at press time. EP

USGC identifies additional DDGS markets in Asia The U.S. Grains Council was busy promoting expanded markets for corn and distillers dried grains with solubles (DDGS) this summer. Six members from the 2008 Corn Mission visited Vietnam, Indonesia and Taiwan in August to grow markets for U.S. corn and DDGS. Of the three countries visited, the least-developed market for DDGS is Vietnam, according to the USGC. One particular DDGS market growth opportunity there is aquaculture, specifically catfish and tilapia farms. Mike Callahan, USGC director of international operations in Asia, noted that Vietnam aquaculture can potentially absorb up to 200,000 metric tons of the ethanol coproduct annually. However, concerns were raised over yellowing of catfish flesh when the fish were fed DDGS, according to the USGC, spurring the council to plan DDGS feeding trials on catfish for the near future. Tilapia feeding trials using 15 percent DDGS were previously conducted by the council. Mission members also identified a lack of available credit due to no Export Credit Guarantee Program (GSM-102) in Vietnam and the surrounding regions. The GSM-102 program is administered by the USDA’s Commodity Credit Corp. and helps to establish export credit guarantees to “encourage exports to buyers in countries where credit is necessary to maintain or increase

PHOTO: PEGGY GREB, USDA AGRICULTURAL RESEARCH SERVICE

continued from page 34

Catfish farms in Vietnam have been identified as a potentially large DDGS market by members of the U.S. Grains Council’s 2008 Corn Mission.

U.S. sales, but where financing may not be available without CCC guarantees,” according to the USDA’s Foreign Agricultural Service. In other DDGS news, an eight-member group from the Japanese Feed Industry DDGS Pelleting Team recently attended the Northern Crops Institute’s “DDGS: Nutrition, Use and Feed Manufacturing Short Course” in Fargo, N.D. The team, sponsored by the USGC, attended the short course to learn more about incorporating DDGS into pelleted feed. The team also visited a dairy research program, and both small and large ethanol plants to gain better understanding of why DDGS variability exists, according to Kim Koch, NCI Feed Center manager. —Ron Kotrba

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

INDUSTRYNEWS

U.S. industry renews interest in sugarcane Companies in the coastal and island regions of the United States are moving forward with projects that aim to produce ethanol from sugarcane. Brawley, Calif.-based California Ethanol & Power LLC has enlisted Fagen Inc. in Granite Falls, Minn., to act as the lead contractor for construction of a 60 MMgy sugarcane-to-ethanol plant in California’s Imperial Valley. According to David Rubenstein, chief operating officer for CE&P, Fagen is working diligently to determine construction costs for the project, which has been pre-estimated at $500 million. He said the company is looking at product offerings from Dedini S/A Indústrias de Base in Brazil for processing sugarcane and also ICM Inc. in Colwich, Kan., for producing ethanol. Construction of the plant could begin within a year and is expected to take two years, with the plant slated to go on line in 2011. The facility will be located near Imperial, Calif. More than 37,000 acres of sugarcane will need to be planted to support the facility’s expected capacity, Rubenstein said. Currently, CE&P is growing more than 650 acres of more than 10 varieties of sugar-

cane to be used for seed. The company plans to plant 3,500 acres next year. Rubenstein said the plant will produce more than just ethanol. He said the leftover plant material will be used to heat a boiler that runs generators to produce the plant’s electricity. The generators are expected to produce 50 megawatts, 15 of which will be used by the plant. The company aims to enter into a power sales agreement with San Diego Gas & Electric for the remaining power, he said. A byproduct from the production of ethanol will be used as fertilizer for the sugarcane fields, Rubenstein said, adding that the company plans to sell the fertilizer to other agricultural businesses, as well. Meanwhile, Pacific West Energy LLC in Kaumakani, Hawaii, is in negotiations to lease land and other assets from sugar producer Gay & Robinson Inc. in order to grow sugarcane and produce ethanol from sugar juice and molasses at a proposed 12 MMgy plant on the island of Kauai. After 119 years, Gay & Robinson is closing its doors, according to company President Alan Kennett. It operated a 7,500-acre sugarcane plantation and sugar mill on the

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

island, and produced approximately 50,000 tons of sugar annually. Coskata Inc. in Warrenville, Ill., has been in discussions with Clewiston, Fla.based United States Sugar Corp., the nation’s largest producer of cane sugar, about building a 50 MMgy to 100 MMgy ethanol plant adjacent to United States Sugar’s mill in Clewiston, according to Coskata spokesman Matthew Hargarten. He said Coskata may be interested in building multiple sugarcane-to-ethanol plants in Florida. However, discussions between Coskata and United States Sugar were put on hold in June when United States Sugar announced it was negotiating a $1.75 billion deal with the state of Florida. Under that agreement, United States Sugar would sell its nearly 300 square miles of land south of Lake Okeechobee to the state for Everglades restoration. United States Sugar is continuing to negotiate the deal with the state, which might include allowing some sugar assets to be used for ethanol production. —Ryan C. Christiansen

NEW PROJECT

PROJECT COMPLETE

PLANT EXPANSION

EXPANSION COMPLETE

INDUSTRY

Ethanol Plant Construction Weather, Economics Affect Projects

lants under construction in this month’s issue of EPM are

Despite commodity challenges, six ethanol plants recently completed

exhibiting a tremendous amount of resilience despite hard-

construction: IGPC Ethanol Inc. in Aylmer, Ontario; Indiana Bio-Energy LLC

ships brought on by unpredictable weather conditions during

in Bluffton, Ind.; Pacific Ethanol Stockton LLC in Stockton, Calif.; Platinum

the hurricane season, and rising commodity prices. In addition,

Ethanol LLC in Arthur, Iowa; Poet Biorefining-Fostoria in Fostoria, Ohio; and

crude oil prices experienced their largest one-day point gain since trading

VeraSun Dyersville LLC in Dyersville, Iowa. These facilities represent a

began in 1984, rising more than $16 per barrel to a high of $130 per barrel

combined production capacity of 479 MMgy.

in mid-September. By the end of the month, however, that price dove just below $100, perhaps reflecting the turbulence of today's economy.

As for the projects continuing construction, workers are keeping pace by meeting respective schedules and deadlines, especially in the upper

Two of the biggest ethanol players in the industry—VeraSun Energy

Midwest where preparations for impending winter weather are underway.

Corp. and Aventine Renewable Energy Inc.—have taken the brunt of rising

For example, crews at Highwater Ethanol LLC in Lamberton, Minn., are

commodity prices recently, which could hamper progress on their respec-

making sure they enclose the distillers grains building, energy center and

tive ethanol projects. Aventine, which is building facilities in Aurora, Neb.,

administration building before harsh weather hits. The site will include a

and Mt. Vernon, Ind., stated in a Sept. 17 filing through the U.S. Securities

place for workers to warm up and store excess building materials. Project

and Exchange Commission that it may not have sufficient funds to finish its

Manager Robin Spaude said much of the project’s dirt work should be com-

projects, and it’s reevaluating whether it will delay construction and/or start-

pleted by October before the ground freezes. “The administration building

up at both sites. Similarly, VeraSun confirmed in its Sept. 16 filing through

shell should be up in October,” he added. “The water treatment plant build-

the SEC that it has delayed construction of its plant in Welcome, Minn., and

ing shell and roof should be up in November so that pipefitters can store

is waiting “until market conditions improve” because of profit losses it expe-

their materials in it. Outside work will be a tough time for us this winter, that’s

rienced in the corn futures markets. Construction continues at the compa-

for sure.”

ny’s Janesville, Minn., project with an expected start-up by the end of the year.

—Bryan Sims

To provide updates to this list, contact Bryan Sims at (701) 738-4950 or bsims@bbiinternational.com.

Archer Daniels Midland Co. Location General contractor Process technology Capacity Feedstock

Cedar Rapids, Iowa undeclared

undeclared 275 MMgy corn

Aventine Renewable Energy-Aurora West LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Archer Daniels Midland

undeclared undeclared June 2007 first quarter 2010

Synopsis of progress N/A

Location General contractor Process technology Capacity Feedstock

Synopsis of progress N/A

Ethanol marketer Aventine Renewable Energy Distillers grains marketer Aventine Renewable Energy Carbon dioxide marketer undeclared Broke ground September 2007 Target start-up date first quarter 2009

Synopsis of progress According to a Sept. 17 filing through the U.S. Securities and Exchange Commission, Aventine is “potentially delaying construction or start-up” of its Aurora facility due to limited liquidity of funds to build upon its Phase 1 expansion. No further information was available at press time.

Archer Daniels Midland Co. Location General contractor Process technology Capacity Feedstock

Aurora, Nebraska Kiewit Energy Co. Delta-T Corp. 113 MMgy corn

Columbus, Nebraska undeclared

undeclared 275 MMgy corn

Aventine Renewable Energy-Mt. Vernon LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Archer Daniels Midland

undeclared undeclared July 2007 third quarter 2009

Location General contractor Process technology Capacity Feedstock

Mt. Vernon, Indiana Kiewit Energy Co. Delta-T Corp. 113 MMgy corn

Ethanol marketer Aventine Renewable Energy Distillers grains marketer Aventine/Consolidated Grain and Barge Carbon dioxide marketer undeclared Broke ground September 2007 Target start-up date first quarter 2009

Synopsis of progress According to a Sept. 17 filing through the U.S. Securities and Exchange Commission, Aventine is “potentially delaying construction or start-up” of its Mt. Vernon facility due to limited liquidity of funds to build upon its Phase 1 expansion. No further information was available at press time.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Construction Represents 3.31 Billion Gallons Annually

Bionol Clearfield LLC Location Design/builder Process technology Capacity Feedstock

Clearfield, Pennsylvania Fagen Inc. ICM Inc. 110 MMgy corn

Cilion Inc. Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Location General contractor Process technology Capacity Feedstock

Bionol Clearfield Land Oâ&#x20AC;&#x2122;Lakes N/A February 2008 December 2009

Synopsis of progress Foundations are poured. Water intake and outfall systems are being installed. Grains area is being built.

Keyes, California Harris Construction Praj Industries Ltd. 55 MMgy corn

Bridgeport, Nebraska ICM Inc. ICM Inc. 50 MMgy corn

Clean Burn Fuels LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Colorado Agri Products

undeclared September 2007 October 2008

Location General contractor Process technology Capacity Feedstock

Raeford, North Carolina Biofuels Design/Clean Burn Fuels Katzen International 60 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared undeclared January 2008 September 2009

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A June 2006 first quarter 2009

Synopsis of progress N/A

Cardinal Ethanol LLC Location Design/builder Process technology Capacity Feedstock

Eco-Energy Western Milling N/A July 2006 October 2008

Synopsis of progress N/A

Bridgeport Ethanol LLC Location Design/builder Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Union City, Indiana Fagen Inc. ICM Inc. 100 MMgy corn

E Caruso LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Location General contractor Process technology Capacity Feedstock

Murex CHS Inc. N/A February 2007 fall 2008

Synopsis of progress Permanent power has been turned on. Water main is complete. Cleanup work is being done in the process area. Finishing work is underway in the energy center. Construction of rail loop is complete.

Goodland, Kansas JMC Engineering/Agri-Systems JMC Engineering/Agri-Systems

20 MMgy corn

Synopsis of progress N/A

Ethanol Grain Processors LLC Location Design/builder Process technology Capacity Feedstock

Obion, Tennessee Fagen Inc. ICM Inc. 100 MMgy corn

Ethanol marketer Aventine Renewable Energy Distillers grains marketer undeclared Carbon dioxide marketer N/A Broke ground December 2006 Target start-up date October 2008

PHOTO: CARDINAL ETHANOL LLC

Synopsis of progress At press time, construction was in the final stages, and testing procedures were underway in preparation for startup.

Cardinal Ethanol LLC

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

First United Ethanol LLC Location Design/builder Process technology Capacity Feedstock

Camilla, Georgia Fagen Inc. ICM Inc. 100 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy Palmetto Grain Brokerage

Airgas Inc. January 2007 October 2008

Synopsis of progress At press time, construction was approximately 95 percent complete with finishing touches being applied and start-up scheduled for Oct. 9. Inspections have been conducted, and all process technicians have been hired.

GreenField Ethanol Location General contractor Process technology Capacity Feedstock

Johnstown, Ontario SNC-Lavalin Group ICM Inc. 200 MMly (53 MMgy) corn

Holt County Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

GreenField Ethanol Commercial Alcohols

undeclared October 2006 December 2008

Synopsis of progress Natural gas piping is complete. Siding and roofing work continues. Construction of distillers dried grains building, and installation of truck scale and probe, continue. Fire protection equipment is being installed.

Location General contractor Process technology Capacity Feedstock

Menlo, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Hawkeye Gold LLC undeclared N/A July 2007 fourth quarter 2008

Project Complete

Shell Rock, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Hawkeye Gold LLC undeclared N/A July 2007 first quarter 2009

Synopsis of progress N/A

Lawler, Iowa ICM Inc. ICM Inc. 100 MMgy corn

Ethanol marketer Green Plains Renewable Energy Distillers grains marketer CHS Inc. Carbon dioxide marketer N/A Broke ground May 2007 Target start-up date March 2009

IGPC Ethanol Inc.

Location Aylmer, Ontario General contractor North America Construction Ltd. Process technology ICM Inc. Capacity 150 MMly (40 MMgy) Feedstock corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

Eco-Energy Furst-McNess undeclared August 2007 September 2008

Synopsis of progress All major construction and the first phase of testing is complete. Boilers are operational, and at press time, corn grinding was slated for the end of September. Congratulations IGPC Ethanol Inc.!

Project Complete

Highwater Ethanol LLC Lamberton, Minnesota Fagen Inc. ICM Inc. 55 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

RPMG CHS Inc. N/A November 2007 May 2009

Synopsis of progress Rail construction continues. Electrical substation is nearly complete. All perimeter walls are complete. Construction of administration building is underway. Construction on water treatment building began in September and was slated to run into October before winter hits.

Location Design/builder Process technology Capacity Feedstock

Synopsis of progress Foundation work is complete, and all buildings are erected.

Hawkeye Renewables

Location Design/builder Process technology Capacity Feedstock

undeclared undeclared N/A July 2007 late 2008

Homeland Energy Solutions LLC

Synopsis of progress N/A

Location Designer/builder Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target completion date

Synopsis of progress N/A

Hawkeye Renewables Location Designer/builder Process technology Capacity Feedstock

O'Neill, Nebraska Adams Construction Vogelbusch 100 MMgy corn

Indiana Bio-Energy LLC

Location Design/builder Process technology Capacity Feedstock

Bluffton, Indiana Fagen Inc. ICM Inc. 101 MMgy corn

Ethanol marketer Aventine Renewable Energy Distillers grains marketer Indiana Bio-Energy Carbon dioxide marketer N/A Broke ground November 2006 Start-up date September 2008

Synopsis of progress Corn grinding began Sept. 11. Congratulations Indiana Bio-Energy LLC!

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Kawartha Ethanol Inc. Location General contractor Process technology Capacity Feedstock

Havelock, Ontario Profab International Delta-T Corp. 80 MMly (21 MMgy) corn

One Earth Energy LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared Thompson's Ltd. undeclared October 2007 February 2009

Synopsis of progress Process building, fermentation tanks and distillers grains area are complete.

Lacassine, Louisiana Praj Industries Ltd. Louisiana Green Fuels 25 MMgy sugarcane/sweet sorghum

Project Complete

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared N/A undeclared April 2008 mid-2009

Synopsis of progress Dirt work and preliminary engineering is complete. Foundations for buildings are being poured. One of three equipment shipments is on-site.

Location General contractor Process technology Capacity Feedstock

Atkinson, Nebraska Delta-T Corp. Delta-T Corp. 44 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Eco-Energy Frahm and Deitloff N/A June 2006 October 2008

Location General contractor Process technology Capacity Feedstock

Pacific Ethanol Stockton LLC Stockton, California W.M. Lyles Co. Delta-T Corp. 50 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

Kinergy Marketing Pacific Ag Products LLC

undeclared April 2007 September 2008

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

U.S. Ethanol LLC Lansing Trade Group undeclared November 2006 second quarter 2009

Synopsis of progress N/A

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Hereford, Texas Panda Ethanol Inc. Thermo-Kinetics/Lurgi PSI 105 MMgy corn

Ethanol marketer Aventine Renewable Energy Distillers grains marketer Panda Ethanol Inc. Carbon dioxide marketer undeclared Broke ground September 2006 Target start-up date first quarter 2009

Synopsis of progress This project changed general contractors when construction was approximately 98 percent complete. Remaining construction tasks are being assessed.

Project Complete

Northwest Renewable LLC Longview, Washington Makad Construction Corp. Lurgi Inc. 55 MMgy corn

Eco-Energy Ag Motion Inc. N/A October 2007 March 2009

Panda Hereford Ethanol LP

Synopsis of progress At press time, the company intended to grind corn Oct. 1. Finishing touches on fire safety systems were being applied. Final walk-downs were being conducted.

Location General contractor Process technology Capacity Feedstock

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Synopsis of progress The company announced start-up of this facility Sept. 29. Congratulations Pacific Ethanol Stockton LLC!

NEDAK Ethanol LLC Location General contractor Process technology Capacity Feedstock

Gibson City, Illinois Fagen Inc. ICM Inc. 100 MMgy corn

Synopsis of progress Tank farm, rail and water pipelines are complete. Grain receiving building is erected. Work on distillers grains wet pad continues. Cooling tower foundations are nearly complete.

Louisiana Green Fuels LLC Location General contractor Process technology Capacity Feedstock

Location Design/builder Process technology Capacity Feedstock

Platinum Ethanol LLC Arthur, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

Hawkeye Gold LLC Hawkeye Gold LLC N/A November 2006 September 2008

Synopsis of progress The company began corn grinding in late September. Congratulations Platinum Ethanol LLC!

Poet Biorefining-Marion Location Design/builder Process technology Capacity Feedstock

Marion, Ohio Poet Design & Construction Poet Design & Construction 68 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Poet Ethanol Products Poet Nutrition N/A May 2007 October 2008

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

undeclared undeclared N/A October 2007 November 2008

PHOTO: PLYMOUTH ENERGY LLC

Synopsis of progress No further information was available at press time.

Route 66 Ethanol LLC Location Tucumcari, New Mexico General contractor APS/United Stainless Process Technology Process technology United Stainless Process Technology Capacity 10 MMgy Feedstock corn/milo

Synopsis of progress All foundations are poured, and the grain system is installed and operating. Because of delays in change orders on equipment and supplies, the original target start-up date in September has been pushed back.

Plymouth Energy LLC

Southwest Iowa Renewable Energy LLC

Plymouth Energy LLC Location Merill, Iowa Ethanol marketer C&N Cos. General contractor Delta-T Corp. Distillers grains marketer Plymouth Energy LLC Process technology Delta-T Corp. Carbon dioxide marketer undeclared Capacity 50 MMgy Broke ground May 2007 Feedstock corn Target start-up date October 2008 Synopsis of progress All major buildings are complete. Work on boilers and water treatment is nearly complete. Work on piping, instrumentation and roads is in progress. Grain receiving building is erected, and rail is being laid. Most of the staff is being trained through Delta-T. At press time, start-up was slated for Oct. 28.

Project Complete

Location Design/builder Process technology Capacity Feedstock

Fostoria, Ohio Poet Design & Construction Poet Design & Construction 68 MMgy corn

Council Bluffs, Iowa ICM Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Lansing Ethanol Group

Bunge N/A November 2006 December 2008

Synopsis of progress Administration building is complete and occupied. Testing of grain systems is underway. Energy center walls are erected. Steam building is nearly complete. Start-up is tentatively slated for Dec. 18.

Poet Biorefining-Fostoria

Tharaldson Ethanol LLC Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

Poet Ethanol Products Poet Nutrition N/A August 2007 September 2008

Synopsis of progress At press time, a grand opening ceremony was scheduled for Sept. 30. Congratulations Poet BiorefiningFostoria!

Location Design/builder Process technology Capacity Feedstock

Location General contractor Process technology Capacity Feedstock

Casselton, North Dakota Wanzek/Valley Engineering Vogelbusch 120 MMgy corn

Ethanol marketer Green Plains Renewable Energy Distillers grains marketer Verde Bioproducts Inc. Carbon dioxide marketer N/A Broke ground June 2007 Target start-up date December 2008

Synopsis of progress Most electrical work is complete. Piping is nearly complete.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

PHOTO: SOUTHWEST IOWA RENEWABLE ENERGY LLC

Project Complete

VeraSun Dyersville LLC

Location Design/builder Process technology Capacity Feedstock

Dyersville, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Start-up date

Provista VeraSun Energy undeclared November 2006 September 2008

Synopsis of progress Start-up of this facility was announced Sept. 5. Congratulations VeraSun Dyersville LLC!

VeraSun Janesville LLC Location Design/builder Process technology Capacity Feedstock

Janesville, Iowa Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

Provista VeraSun Energy undeclared January 2007 fourth quarter 2008

Synopsis of progress Construction continues. No further information was available at press time.

Southwest Iowa Renewable Energy LLC

VeraSun Welcome LLC Location Design/builder Process technology Capacity Feedstock

Welcome, Minnesota Fagen Inc. ICM Inc. 110 MMgy corn

Ethanol marketer Distillers grains marketer Carbon dioxide marketer Broke ground Target start-up date

VeraSun Energy VeraSun Energy N/A November 2006 fourth quarter 2008

PHOTO: THARALDSON ETHANOL LLC

Synopsis of progress According to a Sept. 16 filing with the U.S. Securities and Exchange Commission, VeraSun has again delayed construction of this facility "until market conditions improve."

Tharaldson Ethanol LLC

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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: DRIVE 48

Stakeholders Launch Proactive Message By Toni Nuernberg

emember in "Dragnet" when Joe Friday always said he just wanted the facts? American consumers also want the facts, and they are often bombarded with them. Unfortunately, the facts aren’t always what they seem. The ethanol industry experienced this in a fiery round of “environmental blame game” after two studies were posted in mid-February in Science Express. The papers, authored by Timothy Searchinger and Joseph Fargione, reached conclusions regarding the greenhouse gas emissions associated with potential global land-use changes caused by increasing biofuels demand, specifically for corn-based ethanol. Their conclusions were considered debatable and even ridiculous by some in the scientific community. With the studies promoted by forces opposing corn-based ethanol, prominent media outlets from Time to USA Today were quick to pick up on these studies. Unfortunately, these media failed to consult experts in the field of biofuels life-cycle analysis, such as Bruce Dale of Michigan State University and Michael Wang of the U.S. DOE’s Argonne National Laboratory. Both agree that the studies by Searchinger and Fargione raise important issues. However, Dale and Wang questioned many of their assumptions, and termed them “highly speculative and uncertain scenarios for what might happen as a result of increased demand for corn grain.” Following their release, the Ethanol Promotion and Information Council, National Corn Growers Association, Renewable Fuels Association and American Coalition for Ethanol—supported by the

It’s of utmost imporexpertise of Dale and tance that industry memWang—kicked into high bers collectively encourgear individual efforts to age and invest in basic expose the nature of the coordinated energy conclusions and the research in order for motives of the America to achieve enerresearchers authoring the gy independence. New, studies. highly efficient and susNot long after this Nuernberg tainable technologies for flurry of “facts” came the food-versus-fuel assault on ethanol, biofuels production must be the and the corn and ethanol industries result. In addition, research to evaluagain went to work gathering factual ate the economic, environmental information from resources such as and social impact of these new techTexas A&M University, Iowa State nologies by credible experts must be University, the American Farm conducted and promoted as the new Bureau, the USDA and others to technologies are developed and present the true causes of rising introduced. EPIC, the NCGA, the National food prices based on the research of experts in domestic and global food 25x’25 Alliance and Dale, among others, are banding together to production. Through the years, other adopt just such an “offensive” ethanol detractors have distorted the approach to help maintain a long facts to call into question everything and secure future for the biofuels from the use of water for corn and industry. A first step, spearheaded by ethanol production to alleged detrimental environmental impacts of industry leaders joining with coalirow-crop production, fertilizer and tions representing the leading public chemical use, and a myriad of other and private research institutions, and industry and academic organiissues. It’s ironic that some of these zations, was calling on policymakers studies are funded by ethanol to fully commit to the vital role of detractors who remain committed to basic research in solving America’s the status quo. Dominant forces energy crisis. As a result, these industry within the energy industry are reluctant to relinquish any part of this stakeholders will be able to launch market. A lack of public disclosure new and proactive communication on some of the funding of this efforts presenting consistent and research is not in the consumer’s coordinated messages based on sound scientific facts that present best interest. While the collective result of the industry in a responsible, susthese industry organizations’ individ- tainable and positive light. Stay tuned. We’ll keep you ual efforts were successful at providing an objective counterbalance in updated on the efforts and how you defense against detractors’ negative can join them on a local basis. “facts,” there is power in numbers. Therefore, it’s exciting to announce Toni Nuernberg is the executive that organizations and researchers director of the Ethanol Promotion and within the ethanol industry are band- Information Council. Reach her at tnuernberg@epicinfo.org or (402) ing together and moving to an offen932-0567. sive strategy that is both proactive and collective.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

:LEGALPERSPECTIVES 50

Risk Management Committees Hedge With Best Practices By Judd W. Vande Voort oards of directors at operating ethanol plants understand the importance of risk management. In today’s market environment, deciding how to effectively manage costs of goods sold and a facility’s margins often makes the difference between being in the black or the red. Many of our ethanol clients have established risk management committees at the board level consisting of the board members best suited to interact with management on procurement, marketing and hedging decisions. How risk management committees function varies significantly, but they share a common goal: overseeing the procurement and pricing of feedstocks and other inputs, as well as the marketing and pricing of ethanol, distillers grains and other coproducts. How can a particular board determine if the risk management framework in place at their company is adequate? Does it depend entirely on whether the company is making money? What about fiduciary duties and director liability? Has the committee tied

management’s hands or have they delegated too much responsibility to management? The answers to these questions aren’t necessarily clear. Each company has varying degrees of risk management expertise at the board level and the management level, varying personalities and degrees of risk aversion, and varying levels of liquidity available to implement certain strategies. Accordingly, it’s no surprise that each company has its own approach to risk management. Ethanol companies filing periodic reports with the U.S. Securities and Exchange Commission can appreciate the necessity of having certain procedures regarding the use of derivative instruments clearly articulated and documented in their quarterly and annual reports. Further, board members can appreciate the importance of making business decisions in good faith after informing themselves of material facts necessary to exercise good judgment to meet their fiduciary duties to the company. Finally, board members and managers can both appreciate the importance of being able to answer a shareholder’s question about a decision with a well-reasoned and process-oriented response. For these reasons, regardless of whether your ethanol company was in the black or the red last quarter, it is important for your company to have a well-defined process for delegating risk management responsibilities and

assessing performance. Regardless of who is responsible for making trading decisions, whether it’s the risk management committee, the Vande Voort general manager, an in-house commodities manager, a third-party risk management consultant or a combination thereof, each should be acting in accordance with a written risk management policy adopted by the risk management committee. From a best practices perspective, the creation and utilization of a risk management committee consisting of knowledgeable and informed board members—implementing a risk management policy that has been adopted by the company’s board—is the best way to ensure that the board of directors is doing its part to oversee some of the company’s most important decisions. Judd W. Vande Voort is a securities attorney with BrownWinick, a law firm based in Des Moines, Iowa. Reach him at vandevoort@brownwinick.com or (515) 242-2440.

This article is only a general summary for informational purposes and does not constitute legal advice. Consult a qualified and experienced legal advisor for your specific situation or particular questions.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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MAKING THE

SWITCH

The commercial production of cellulosic ethanol will require thousands of tons of biomass. EPM details three programs designed to entice farmers to switch from corn and soybeans to energy crops. By Susanne Retka Schill

hat will it take to convince farmers to plant energy crops when corn and soybean prices are at or near all-time highs? Nationally, all eyes will be on Washington this winter as USDA begins the process of implementing the Biomass Crop Assistance Program initiated in the 2008 Farm Bill. In Minnesota, policy-makers are waiting to piggyback their Reinvest in Minnesota-Clean Energy program onto the new USDA program. Minnesotans have given serious thought to what it will take to get farmers to make the switch from planting corn and soybeans to grass on productive land. Theyâ&#x20AC;&#x2122;ve found that itâ&#x20AC;&#x2122;s not going to be cheap. In southeast-

ern Iowa, the Natural Resource Conservation Service has had some success signing farmers up for a unique application of the USDA Environmental Quality Improvement Program.

Waiting for BCAP to Unfold BCAP was designed to help farmers located near biomass facilities switch part of their acreage to dedicated energy crops. John Moore, a senior attorney with the nonprofit Environmental Law and Policy Center, expects it will be a couple of years before USDA will be signing up acres in the program. Farm Service Agency regulations call for an environmental impact study on any

PHOTO: SAMUEL ROBERTS NOBLE FOUNDATION

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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new programs, which could take from nine to 18 months, in addition to the rule-making process, which includes public hearings. The environmental law and policy nonprofit had hoped USDA would fast-track the implementation of BCAP, possibly even signing up acres in 2009 under a Notice of Funding Availability, which allows a program to be Moore implemented while the rules are being written. ”As long as it takes to get energy crops going—a couple of years at least—and given that the next Farm Bill comes up in 2012, we need to get those dedicated energy crops in the ground soon,” Moore says. The BCAP language in the 2008 Farm Bill provides a framework of the program, but also gives USDA a fair amount of flexibility. The program calls for an application that can be initiated by a group of individuals or a biomass conversion facility. A biomass conversion facility is rather broadly defined to include any facility that will use the biomass to make biobased products or energy—heat, power or advanced biofuels. The application must include a commitment from at least one biomass conversion facility in the area defined in the application to use the biomass in the facility. Moore expects that in practice, the biomass conver-

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

sion facility will apply and then get farmers to sign up, although in a few well-organized states, farmers or economic development groups may take the lead. Biomass crop producers, however, will sign contracts directly with the USDA. Moore expects the first applications to come from projects that are well underway, especially those targeting corn stover and other crop residues as feedstocks, although the incentives for producers utilizing crop residues will probably be lower than for those planting dedicated energy crops. Details of BCAP implementation will unfold as USDA goes through the rule-making process. In the meantime, there are a number of provisions contained in the legislation including: Production Incentives Ag producers in project areas will receive a payment for up to 75 percent of establishment costs to plant energy crops. Incentives also include an annual payment intended to compensate the producer for the opportunity cost associated with growing an energy crop. Land that was formerly planted to row crops will likely garner a larger annual incentive than land that was fallow, or pasture, the ELPC says. The annual payments can continue for up to five years for producers growing perennial grasses and up to 15 years for tree crops. Ag producers are required to implement a conservation plan

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on the enrolled land and to provide information to USDA for research purposes. Logistics Anyone collecting and selling biomass crops or agricultural or forest waste for energy is entitled to receive the harvest, transport, processing and storage payment. The payment is structured to match the amount of money the biomass collector, which doesn’t have to be a farmer, receives from the biomass user. USDA will match dollar for dollar, up to $45 per dry ton. Materials not eligible for this payment include animal waste and byproducts, food and yard waste, and algae. Criteria and Eligibility All biomass production must occur on either agricultural land or industrial private forest land. BCAP excludes all land in federal land protection programs and native sod. BCAP also excludes any crops otherwise eligible for USDA commodity programs covered in Title I of the Farm Bill, along with noxious and invasive species. USDA will determine whether projects meet the minimum threshold for selection, based on criteria in the statute and others to be determined by USDA. The statutory criteria include:

The amount of crops to be produced and the likelihood that those crops will actually be used to produce energy The amount of biomass likely to be available from sources other than the crops grown with support from BCAP The local economic impact of the project The opportunity for local investors to participate in ownership of the facility The participation of beginning or socially disadvantaged farmers The environmental impacts of the proposal The variety of agronomic practices and species— including mixes of different crops—proposed within a BCAP area The range of crops across project areas Organizations such as the ELPC will be paying close attention to the public hearings and rule-making process as they progress. “I expect the agency will establish scoring criteria for a lot of these issues,” he says. “Projects that are more environmentally protective will get more points.” Funding The funding basis for BCAP is not typical of other Farm Bill programs. The funding is mandatory for “such

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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sums as are necessary,” Moore says. Congress did that so projects that qualify will be funded, unlike many other programs that are based on a national competition for limited funds. “The budgeteers estimated it would cost $75 million over four years, but who really knows?” he says. Congress can always establish funding caps in the future or the Office of Management and Budget, which oversees USDA spending, may attempt to limit spending in the program, he adds. The ELPC Web site, www.farmenergy.com, is following the development of BCAP, as well as other programs. It offers details on writing applications for one popular program established in the 2002 Farm Bill—Section 9006, the Renewable Energy Systems and Energy Efficiency Improvements Program. The 2008 Farm Bill expanded the program somewhat and it was renamed the Rural Energy for America Program. REAP was implemented using a NOFA during the two to three years it took to develop the rules, Moore says. He expects the BCAP process will take less time. “BCAP doesn’t have the complexity,” he says.

Enhancing BCAP Minnesotans will be watching BCAP’s development closely, hoping to piggyback a recently-passed state initiative onto the program. The 2007 Minnesota Legislative Session established a Reinvest in Minnesota-Clean Energy program.

The RIM-Clean Energy program builds on the state’s longestablished RIM easement program that paid for easements on targeted environmentally sensitive areas such as wetlands, highly erodible soils and riparian buffer strips. In the two decades the program has been in place, 4,800 conservation easements were enrolled covering 180,000 acres. When Conservation Reserve Program enhancements were authorized in the 1996 Farm Bill, the program piggybacked with CRP contracts to extend the benefits paid to farmers and the contract duration. Hearings have been held and the framework of the RIM-Clean Energy program is in place. A technical committee involving representatives from farm and environmental groups, economic development agencies and industry, served as advisers in the process. However, the state legislature held back on funding the program because the 2008 Farm Bill had not yet passed when they adjourned their last session, says Greg Larson, state soil specialist with the Minnesota Board of Soil and Water Resources, which administers the RIM program. The state hopes to extend the reach and effectiveness of USDA’s BCAP. RIM-Clean Energy is a working lands program where biomass production is equally as important as environmental benefits. The easements are for 20 years, which matches the amortization time of the bonding authority the state will

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Since 1958 West Des Moines, Iowa USA 57

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use to fund the program. The program involves a base payment to landowners of 80 percent of the estimated market value as shown on the land’s tax statement, with an additional payment that increases as more species are planted. There is an additional incentive for enrolled lands that meet local environmental needs such as land protecting a wellhead or an aquifer recharge area, or planting on flood-prone riparian or highly erodible lands. The maximum payment is 105 percent of the estimated market value. The easement payment will be a single payment when the paperwork is completed. In addition, the program will pay 100 percent of the establishment cost for the biomass crop, plus landowners are free to pocket whatever they are paid for their biomass production. The land stays on the tax rolls and the landowner retains control of the access to the land. While that may seem quite generous, Larson says they have learned from the RIM wetlands program administered in recent years that it has taken payments of 140 percent of market value to get farmers to sign up. “This was for land that was much more marginal,” he adds. There was a time in the late 1980s when most of the RIM acres were enrolled at less than market value, but with high commodity prices for corn, soybeans and wheat, Larson anticipates the clean energy incentives will be needed to coax farmers to make the switch. “To go out and entice a landowner who’s been growing corn and soybeans to forsake that known income, we’re going to have to meet [row crop income] dollar for dollar,” he says. Larson acknowledges that in some areas of the state, the payments may amount to several thousand dollars per acre to enroll land, plus the added amount for establishment. He expects the program will start out relatively small, perhaps paying out $5 million the

first year and increasing to $20 million, and will ultimately involve only a few thousand acres. “The idea was never to be the major payer in promoting biomass,” he says. “It is to find strategically located sites where we can show by example how to do this in an environmentally safe way. We’ll take some of the risk away from the energy enterprises, get in, get it started and 20 years later back out.” The RIM-Clean Energy report delivered to the state legislature early in 2008, after a year of public input and technical committee discussions, identified 22 projects in Minnesota that might utilize the program, including two ethanol plants—Central Minnesota Ethanol Co-op in Little Falls, Minn., for boiler fuel for its gasification system and an announced cellulosic ethanol project with SunOpta BioProcess Inc. and Chippewa Valley Ethanol Co. LLLP in Benson, Minn., for a biomass combined-heat-andpower system. Three cellulosic ethanol plants are also included on the list as potential projects—Chisago County Cellulosic, White Earth Cellulosic and Bois Forte Band Cellulosic.

Iowa Gets a Jump-Start Iowa is ahead of the curve when it comes to encouraging farmers to grow energy crops. The Natural Resource Conservation Service in southeast Iowa is using the Environmental Quality Improvement Program to give farmers cost-share and incentive payments to plant switchgrass. Switchgrass production for biomass has been on the drawing board in southeast Iowa for more than a decade. In 1996, Chariton Valley Resource Conservation and Development Inc. received a U.S. DOE grant to investigate the production and use of the native prairie grass for energy production. A number of projects are in various stages of development, ranging from cofiring switchgrass with

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

PHOTO : LYNN BETTS, USDA NRCS

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Contour buffer strips planted to grass, like these in Iowa, could be used for biomass energy crops.

coal in Alliant Energy Corp.’s Ottumwa (Iowa) Generating Station that’s ready to go, to a switchgrass pelletizing project that’s nearing fruition, to a cellulosic ethanol plant that’s still in the talking stage. At the peak of the Iowa switchgrass project, more than 6,000 acres of land were planted to the native perennial grass, which was not even close to the estimated 100,000 acres needed to supply the power plant and other projects being considTrautman ered. “We realized we needed to get serious about the supply side,” says Bruce Trautman, area conservationist for southeast Iowa with the Natural Resource Conservation Service. It took a year to put the components together before farmers were offered EQIP contracts in the 12 southeast Iowa counties that chose to participate. Through EQIP, farmers receive a 50 percent cost-share payment to help with establishment costs, which Trautman says amounted to $60

per acre. In addition, the contract includes an incentive payment of $75 per acre per year to cover additional expenses such as baling, storage and transportation. “We want it to be a working lands program,” Trautman says. The program isn’t as restrictive as other programs such as USDA’s Conservation Reserve Program and producers can harvest the biomass. “We’re getting conservation benefits,” he adds. “It makes very good wildlife habitat because the nature of utilizing switchgrass for biomass means we’re not harvesting until the middle of summer or wintertime.” Trautman admits the 57 contracts worth a total of 2,270 acres of switchgrass may not seem like a lot. “It certainly isn’t enough for what we need,” he says. “But given the climate of high commodity prices and that fact that it’s something new to producers, we think it was a good response.” EP

Biomass Magazine is a trade journal serving companies that use and/or produce power, fuels and chemical feedstocks derived from biomass. Collectively, these biomass utilization industries are positioned to replace nearly every product made from fossil fuels with those derived from plant or waste material. The publication covers a wide array of issues on the leading edge of biomass utilization technologies, from biorefining, dedicated energy crops and cellulosic ethanol to decentralized power, anaerobic digestion and gasification. It’s all here.

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For additional information please contact us at (701) 746-8385 or at advertising@biomassmagazine.com.

Susanne Retka Schill is an Ethanol Producer Magazine staff writer. Reach her at sretkaschill@bbibiinternational.com or (701) 738-4922.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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TECHNOLOGY

2 1 0 2 OR

F T E G R A T ON

The National Renewable Energy Laboratory must help the United States to develop the technology necessary for making cheap fuels from cellulosic biomass by 2012. It’s a goal that’s not negotiable. By Ryan C. Christiansen

PHOTO: PAT CORKERY, NREL

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

TECHNOLOGY

y 2012, cellulosic ethanol production in the United States must be cost-competitive with ethanol produced from corn—such is the goal of the U.S. DOE Office of Energy Efficiency and Renewable Energy's Biomass Program. A key player in the program’s mission is the National Renewable Energy Laboratory in Golden, Colo., and its Alternative Fuels User Facility, which houses the lab’s Bioethanol Pilot Plant, an 8,000-square-foot facility designed to test technologies used to produce ethanol and other fuels from cellulosic biomass. In 2005, NREL co-endorsed a federal report, commonly known as the “Billion Ton” study, which in 2006 prompted the DOE’s “30x’30” initiative to annually produce enough ethanol from biomass to replace 30 percent of the petroleum used for transportation fuel in the United States by 2030. With a $304 million fiscal year 2008 budget, NREL works with industry, academia and other national laboratory partners to research, develop, and demonstrate biochemical and thermochemical technologies that can be used commercially to convert biomass into cost-competitive ethanol and other fuels. NREL is the lead national laboratory of the virtual National Bioenergy Center, which was established in 2000 in Denver to support and coordinate the nation's biomass research activities. NREL’s facilities include a $2.85 million Biomass Surface Characterization Laboratory that opened in 2005, and features advanced research tools to help study chemical and biological reactions at atomic and molecular levels.

Working With the Industry According to John Ashworth, team leader for partnerships and business development at NREL, entering into cooperative research and development agreements is how NREL helps the industry make new discoveries. Cooperative research and development agreements (CRADAs) frequently involve background intellectual property (IP), Ashworth says, which is when a company or the NREL brings some proprietary knowledge to a research project. NREL and the company negotiate licensing agreements for background IP, as well as rights for the company to commercialize any new discoveries found during research activities. Working together means that a company might have researchers working at NREL or NREL staff might work at a company’s lab. Other times, researchers work independently and share information. CRADAs, however, are not the only way industry works with NREL. Ashworth says NREL frequently trains industry researchers how to use analytic methods, for example, how to conduct compositional analysis of biomass. Company researchers can visit the NREL lab and use its equipment to learn processes, or NREL can send consultants to a company to help them get their labs set up. “Our job is to grow the biorefinery industry, but the industry has to do all of this stuff on their own,” Ashworth says. “We don't expect that we're going to do this [training] forever.” Because cellulosic biomass pretreatment reactors are expensive, Ashworth says companies will often ask NREL to produce a ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

PHOTO: DAVE PARSONS, NREL

TECHNOLOGY

The Alternative Fuels User Facility at the National Renewable Energy Laboratory in Golden, Colo., houses the lab’s Bioethanol Pilot Plant, an 8,000square-foot facility designed to test technologies used to produce ethanol and other fuels from cellulosic biomass.

specific amount of pretreated feedstock for testing. Alternatively, he says a company might have positive results for a pretreatment process at the bench scale and then will ask NREL to test the process at the pilot scale. During a large-scale pilot run, NREL collects “an enormous amount of data,” Ashworth says, between 700 and 900 data points such as temperature, pressure, flow rates and

material weights. “A pretreatment run may only last a few days, but the actual analysis of the stuff, developing of the reports and the figuring out what you learned can take weeks,” he says. Other companies might have a process that is working well on a larger scale, Ashworth says, but the process needs to be optimized and they will ask NREL to help with that. “Very frequently, [a company will] want to try and see what the economic impacts of their process improvements are,” he says. “What we will do is take the conditions that were achieved in the experiments, plug them into the model, and see what the resulting cost of the ethanol is.” He says NREL has developed techno-economic models for multiple processes, which companies can modify and use in their own organizations to monitor how close their processes are to market economics.

Biochemical Pretreatment Projects Biochemical conversion involves using a dilute acid pretreatment and enzymatic hydrolysis to convert cellulosic biomass to sugar and other fermentation feedstock. NREL researchers are helping to understand and improve the chemistry that is at work in the pretreatment of biomass and the hydrolysis of hemicelluloses, which includes developing cost-effective enzymes for the process. NREL’s Advanced Pretreatment Project began in 2000 as a partnership with the Biomass Refining Consortium for Applied Fundamentals and Innovation, a USDA- and DOE-funded program to develop comparative information about cellulosic biomass pretreatment among researchers from Auburn University,

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

NREL Expands Biochemical, Thermochemical Research Biochemical conversion research projects at the National Renewable Energy Laboratory were limited until recently because the plant only had one large pretreatment reactor, says John Ashworth, team leader for partnerships and business development at NREL. He says they recently retrofitted equipment to bring a second large pretreatment reactor on line and the U.S. DOE has provided funding to expand the plant. By February 2010, the Bioethanol Pilot Plant at the lab’s Alternative Fuels User Facility should be double in size and NREL will have the ability to work on four major biochemical conversion projects at the same time. The NREL is expanding its thermochemical conversion research and is looking at making multiple fuels from clean synthesis gas. “We're trying to be responsive to what people are looking for,” Ashworth says. There is a resurging interest in algae, he says, “but in our case, it's basic science right now. The stuff that we're working on is nowhere near the marketplace.” The following are some of the projects NREL is cooperatively working on: Chevron: Chevron Technology Ventures LLC, a subsidiary of Chevron Corp., and NREL signed a five-year agreement in October 2007 to develop next-generation processes to convert cellulosic biomass, such as forestry and agricultural wastes, into biofuels such as ethanol and biodiesel. Chevron also recently announced research partnerships with the University of California, Davis and the Georgia Institute of Technology that focus on advanced manufacturing technologies for cellulosic biofuels. So far, Ashworth says, there haven’t been any major cellulosic biomass projects started between NREL and Chevron. Under a separate agreement, he says, NREL is working with Chevron to identify possible species of algae that might be used to produce fuel. ConocoPhillips: In March, ConocoPhillips and Iowa State University agreed to work with NREL to identify the most efficient and cost-effective thermochemical and biochemical cellulosic biomass conversion technologies for converting plant biomass into liquid transportation fuels. The partnership is expected to produce an initial report by January.

In 2007, ConocoPhillips entered into an eight-year, $22.5 million research program with ISU. The research program is studying various biofuel production technologies, conducting technical and economic analyses of different types of biorefineries, and producing crops for biofuels production. The program is also examining the sustainable production of crops and biomass, the harvest, storage and transportation of biomass, and the combustion performance of Juan Luciano, left, business president of hydrocarbons and energy for Dow Chemical biofuels in engines. ConocoPhillips has also Co., shakes hands with Dan Arvizu, director signed a $5 million, multiyear of NREL, during an agreement-signing cereresearch agreement with the mony July 17. Colorado Renewable Energy Collaboratory, which is a joint venture between NREL and others, to develop new ways to convert biomass into lowcarbon transportation fuels. The first project will involve converting algae into fuel. Dow: In July, Dow Chemical Co. and NREL agreed to develop and evaluate a process that uses a mixed alcohol catalyst to convert synthesis gas derived from gasified biomass to ethanol and other chemical building blocks that can be used to produce chemicals and plastics for consumer products. Dow is prepared to produce the catalysts at the commercial scale, according to Jolen Stein, global business communications manager for Dow. She says the company originally developed the catalysts in the 1970s and 1980s for use with coal-derived synthesis gas.

PHOTO: DOW CHEMICAL CO.

TECHNOLOGY

Novozymes’ Enzymes In May 2006 Richard Truly, a former director of the National Renewable Energy Laboratory, filled a vacancy on the Edenspace Systems Corp. board of directors. In January 2007, Edenspace received a $1.9 million U.S. DOE grant to work with NREL, Oklahoma State University and ICM Inc. to develop a hybrid corn feedstock that includes enzymes. In February, ICM enlisted Novozymes’ and Edenspace’s help to develop a demonstration-scale cellulosic ethanol facility in St. Joseph, Mo., which is funded in part by a $30 million DOE grant. Also in February, Novozymes was selected to receive additional funding from the DOE to focus on improving enzyme systems for converting cellulosic material into sugars. Novozymes will use the DOE funding for Project DECREASE (Development of a Commercial-Ready Enzyme Application System for Ethanol).

Dartmouth College, Purdue University, Michigan State University and Texas A&M University. The project included developing an organic solvent-based pretreatment technology dubbed “clean fractionation,” which can be used to produce chemical-grade cel-

lulose, hemicelluloses, sugars and lignin. The project also looked at whether biomass can be converted to free sugars more efficiently using a greater variety of enzymes and less severe pretreatment. The project developed standard methods for analyzing and characterizing biomass samples before and after pretreatment. NREL has helped Genencor, a division of Danisco A/S and also Novozymes to measure the economic performance of using enzymes to convert biomass to sugars. Both companies worked with NREL to achieve significant improvements. Using corn stover as the model feedstock, NREL went on to use those enzymes to develop integrated enzymatic cellulose hydrolysisbased sugar-ethanol platform technologies.

Partnering With DuPont, Genencor NREL’s work with Genencor and later DuPont has led to an ongoing partnership between the lab and those companies. In 2003, NREL entered into a $7.7 million research project with DuPont, Diversa Corp. (now part of Verenium Corp.), Deere

& Co. and Michigan State University to develop a pilot-scale biorefinery to make ethanol from the entire corn plant. In October 2006, Broin Companies (now Poet LLC) and DuPont agreed to develop a corn stover-fed ethanol plant by 2009. A year later, Poet and the DOE agreed to develop a commercial cellulosic ethanol project in Emmetsburg, Iowa. Meanwhile Charles Wyman, who at one time led research and development on cellulosic ethanol at NREL, went on to become a consultant and chairman of the scientific advisory board for Mascoma Corp. In December 2006, Mascoma received a $14.8 million award from the New York State Department of Agriculture and Markets and the New York State Energy Research and Development Authority to build a $20 million 0.5 MMgy biomass-toethanol demonstration plant in Rochester, N.Y., near Genencor’s enzyme manufacturing facility. The facility is now functional and is expected to be fully operational by the end of this year, according to Kate Casolaro, a spokesperson for Mascoma. Late last year, the University of

TECHNOLOGY

Tennessee announced plans to develop a research and business model for biomass conversion, called the Tennessee Biofuels Initiative, and the university announced a partnership with Mascoma to develop a 5 MMgy switchgrass-to-ethanol plant in the Niles Ferry Industrial Park in Vonore, Tenn., about 35 miles south of Knoxville. However, in July the university shifted its partnership from Mascoma to DuPont Danisco Cellulosic Ethanol LLC, a new partnership between DuPont and Genencor, turning away from a potential $26 million award from the DOE for the project. Just two months prior to the switch, NREL announced that it would collaborate with DuPont Danisco to commercialize cellulosic ethanol production and DuPont Danisco announced a $140 million initial investment in the project, which is to integrate the pretreatment process and fermenting organism that was developed with NREL and the enzyme technologies developed by Genencor to convert corn stover and sugar cane bagasse to ethanol. The companies plan to have a pilot plant in operation at the Tennessee site by 2009 and to have a commercial-scale facility operational in three years, according to Jennifer Hutchins, a spokesperson for Genencor. The goal is to create a technology package that can be sold directly to ethanol producers worldwide. Existing ethanol facilities will be able to add the technology, enabling them to use cellulosic feedstocks. The technology package will also serve as the design basis for stand-alone cellulosic facilities.

Market-Competitive by 2012 The DOE has communicated clearly to NREL that it must create automotive fuels from biomass and make them cheap to manufacture, Ashworth says. “We don’t work on fossil fuels,” he says, although the lab frequently receives requests from industry to help with fossil fuels research. Ashworth says while NREL does collect licensing revenues from companies for its work, the fees charged to industry are not about making money for NREL. “The DOE insists that if we license a technology, it has to be used,” he says. “In the licensing agreement it says that you have a certain period of time to test the technology at scale. If you don't do it, we take it back, and license it to somebody else, because the idea is to get the technology out there. We don't want somebody sitting on it and preventing their competitors from having it.” Will NREL be able to help make cellulosic ethanol production in the U.S. cost-competitive by 2012? “That's not a negotiable target,” Ashworth says. “That is written in stone.” EP Ryan C. Christiansen is an Ethanol Producer Magazine staff writer. Reach him at rchristiansen@bbiinternational.com or (701) 373-8042.

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ENZYMES

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ENZYMES

Second-Generation Enzyme Logistics EPM talks with three major enzyme makers about the challenges that lie ahead to cost-effectively manufacture and distribute cellulase and hemicellulase enzymes for biomass-based ethanol production. By Ron Kotrba

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ompared with first-generation U.S. ethanol production currently centralized in the Corn Belt, the emerging secondgeneration industry will exhibit much greater diversity in location, feedstock and process. Feedstock supply and geographic location are naturally tied to each other, and this is displayed in all of the plants dotting the Midwest. There is a subtler but definite connection between process design and location. Standardizing a process design is much more calculable when every project is designed to use the same feedstock. For those processes based on locally or regionally available feedstock supplies, which include wood, stover, straw, dedicated energy crops or hundreds of other lignocellulosics, standardizing any one process for a myriad of potential feedstocks has proven to be more difficult. This is why so many viable processes have emerged in second-generation ethanol project development, including thermochemical, biochemical and hybrid technologies. For biochemical processing, enzymatic hydrolysis can play an important role in overall process design but even within this specified aspect of biochemical conversion, there is no clear-cut image of what the second-generation enzyme manufacturing and supply chain will look like. Those closest to the situation tell EPM there are still a lot of factors that will influence how this particular aspect of a second-generation ethanol industry is likely to unfold. Moving forward, however, it seems evident enzyme manufacturing and delivery will be as varied as project location, feedstock choice and process design. In corn-ethanol production, alpha amylases help break down complex starch carbohydrates into polysaccharides during liquefaction. Then, during saccharification, glucoamylases further deconstruct polysaccharides into simple glucoses ready for fermentation. For first-generation enzymes, centralized production by major enzyme-manufacturers is the norm, followed by transportation and delivery to the various dry-grind

ethanol plants. Novozymes has one enzyme manufacturing plant in the United States, located in Franklinton, N.C., from which it serves U.S. customers as far away as the West Coast. Petiot According to Emmanuel Petiot, Novozymes global business development manager, this centralized model has been successful thus far in first-generation ethanol enzyme production and delivery, but times are changing. “Yes this model has been one that has worked but, because of the increased size of the first-generation ethanol industry, in addition to the volume of enzymes needed for biomass [hydrolysis], we need to get closer to our customers,” he says. “That’s a given.”

The Case for On-Site or NearSite Enzyme Manufacturing Novozymes’ first step in developing what Petiot coins as its near-site model for enzyme production, as compared with its current strategy of centralized manufacturing, is its new enzyme plant project in Blair, Neb. Construction on the enzyme plant is slated to begin late this year, with operations expected to start in late 2010. “Initially, the [Blair] plant will primarily serve first-generation plants,” Petiot says. “But as pilot, demonstration and the first commercial biomass ethanol facilities come on line, we’ll serve these plants as well. The number of biomass plants will be small in the beginning—maybe six, eight or 12 of them by 2012—but it will put us in the position to serve all of the needs of the biomass industry in its first years of development.” In order to deconstruct and hydrolyze the polymeric sugars imbedded in extremely complex structures of lignocellulosic materials, cocktails of cellulases and hemicellulases are required. “The volumes of enzymes required for biomass are going to be much higher than for first-generation ethanol because the feedstocks are much more complex,” Petiot says. Verenium Corp. vice president of research and development, Nelson Barton,

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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cocktails are transported long distances to a biorefinery and the enzymes destabilize en route, how much processing of the enzymes can you afford to do after you’ve produced them in order to stabilize them? Barton furthers this question by asking, “Could you even afford to do any sort of formulations to stabilize them in any way?” He responds to his own question by stating, “The answer is minimal, if any. So really it becomes a matter of being much more amenable to on-site manufacturing of enzymes.” Clearly the enzyme manufacturing and logistics chains will be evolving over time. “Early on it’s going to be on-site production until the industry gets to a point where regional manufacturing makes sense,” Barton says. Verenium plans to supply its own cellulosic ethanol plants with enzymes—the first of its demonstration plants, the 1.4 MMgy facility in Jennings, La., is up and running—and Barton says the company is willing to supply enzymes through regional distribution or on-site production as needed. “If [non-Verenium] plants were to require on-site enzyme production in order to meet their logistics needs, then that is something we can do,” Barton says. Verenium and its specialty enzymes

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agrees. “We are talking very large volumes of enzymes,” Barton tells EPM. “The nature of the lignocellulosic substrate will require more complex enzyme cocktails and, when you start talking about manufacturing very large volumes of enzymes, you’re talking about transporting large volumes of water around as well.” In 2007, Verenium was formed through the merger of Cellunol (formerly BC International) and enzyme-maker Diversa Corp., putting Verenium in the unique position of possessing its own specialty enzymes division. “Out of our Diversa heritage comes our development of process-optimized enzymes,” Barton says. “We do plan to produce a targeted set of [second-generation] enzymes, but we also have the ability to optimize and evolve these enzymes and make them more stable.” Within minimal processing and minimal stabilization models, Verenium is working to process-optimize and stabilize its cellulase and hemicellulase cocktails for biomass hydrolysis. “The farther you need to transport the enzymes, the more you need to start thinking about stability issues during transport,” Barton says. Issues of cost are huge in all aspects of the emerging biomass industry, so if second-generation enzyme

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ENZYMES

division is not the only player advocating enzyme production on-site of a biorefinery complex. Genencor International’s vice president of biorefineries, Jack Huttner, tells EPM there are several well-known challenges to using cellulases for commercial-scale conversion of biomass to ethanol—including the economic and technical challenges of transporting enzyme cocktails. “In general, cost savings through on-site enzyme production would be significant considering shipping and storage costs, as well as the potential to share energy infrastructure costs with the main ethanol plant,” Huttner says. Genencor, a division of Danisco A/S, has what Huttner characterizes as a two-pronged approach to meeting the many challenges facing a biomass-based ethanol industry. One of these “prongs” is called DuPont Danisco Cellulosic Ethanol LLC, a joint venture between DuPont and Genencor. The joint venture’s latest development is a pilot plant and process development project with the University of Tennessee’s Genera Energy LLC, which is focused on two specific feedstocks: corncobs and switchgrass. “DuPont Danisco Cellulosic Ethanol is on a fast-track to develop and license an integrated biorefinery package,” Huttner says. This biorefinery package covers the entire production process from feedstock collection, to pretreatment and hydrolysis, to fermentation and recovery, and will include on-site enzyme production for the licensee. “Producing enzymes at the ethanol production site would allow for

numerous advantages in production time, cost and energy efficiencies, as well as equipment and material quality control,” he says. Genencor’s second avenue to supply enzyme cocktails for the biomass industry is through its more conventional-style merchant enzyme business using a centralized distribution system more resembling first-generation logistics. However, even then Huttner says, “Genencor is willing to discuss on-site enzyme production with potential beorefinery operators, or enzyme supply from one of Genencor’s regional manufacturing plants.” Along with the higher volumes of enzymes needed to hydrolyze biomass and shipping these formulated products there’s another factor to consider, according to Verenium spokeswoman Morgen Grandjean. “It’s also a matter of carbon footprint,” she says. Transporting huge volumes of enzymes entails moving large quantities of water to keep the enzymes stable and active. Grandjean stresses that on-site enzyme production would help keep the carbon footprint of the enzyme industry to a minimum.

The Case Against On-Site Enzyme Manufacturing Petiot admits the topic of making cellulases and hemicellulases on-site of a biorefinery is chic today. “This is something everyone is talking about,” he tells EPM. However, he says Novozymes has not yet reached the conclusion that this is going

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ENZYMES

to be the case—at least for Novozymes. “We believe that manufacturing enzymes is a complex technology,” he says. Because of the complexities involved in the manufacturing of enzyme mixes for a biomass-based ethanol industry, Petiot says it could prove to be difficult to produce everything needed on-site. “Say if your feedstock changes, or if enzyme suppliers find new and more efficient activities, it is not easy to switch from one production strain to another,” he explains. In other words, on a technical basis alone, there may be limits to what can be done with enzyme manufacturing at a biorefinery. First-generation ethanol production from corn requires alpha and gluco amylases, but second-generation hydrolysis of lignocellulosic materials will likely require a minimum of four enzymes: endogluconase, cellobiohydrolase 1, cellobiohydrolase 2 and beta glucosidase for starters. Cocktail formulation depends not entirely on feedstock selection but also on which pretreatment method is incorporated into the overall process design. An enzyme cocktail for a producer using a mild acid pretreatment, which converts the hemicellulose to monomeric sugars, is going to be formulated differently than an enzyme mix for a producer using a more alkaline pretreatment. “An alkaline pretreatment process would require you to add [hemicellulases] to convert hemicellulose to C5 sugars, in which case you’re talking about adding xylanases and hemicellulases to complete that cocktail,” Barton says. “It comes back to

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having your core workhorse enzymes that do a lot of work on the primary cellulose component and, depending on the feedstock preferences and region, the slightly different compositions of your hemicellulose fractions. I could see the need to optimize the basic cocktails by adding accessory enzymes to optimize the performance on a given substrate.” A biorefinery based on the biochemical process platform using enzymatic hydrolysis may have multiple feedstock supply arrangements, which again would require switching to slightly different formulations of proteins and activities. “That is not going to be easy for an on-site production facility to do, whereas in a more centralized site you can switch around these activities more easily because enzyme formulation is all that is done at that location,” Petiot says. “If the industry picks up as we expect, and if we have to build several [near-site] facilities, then those enzyme manufacturing sites will be able to manufacture these complex activities, but also be able to switch them around in a more efficient manner.” EP Ron Kotrba is an Ethanol Producer Magazine senior writer. Reach him at rkotrba@bbibiinternational.com or (701) 738-4942.

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FRACTIONATION

Is Fractionation the Cure for

High Corn Prices? In the wake of recent price hikes in the corn market and rising global food costs, ethanol producers are looking for ways to cut operating costs. One option that is starting to gain traction is fractionation. While the process isnâ&#x20AC;&#x2122;t new, it is becoming an attractive option for ethanol producers who are feeling the financial pinch of this turbulent year. By Amanda Watkins

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

FRACTIONATION

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

FRACTIONATION

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thanol producers have had to shift gears significantly in the past year as the price of corn has reached alltime highs. Producers who are used to corn prices in the $2 per bushel range have recently been faced with prices as high as $6 a bushel and little hope of any near-term price drops. As producers struggle to stay profitable, technologies such as fractionation are available to help overcome this hurdle. Fractionation is a simple process that can help producers realize major benefits by creating a waste-free system. The purpose of the technology is to make use of each part of the corn kernel, rather than the traditional method of extracting only the starch. Fractionation separates the kernel into three sections: the germ, bran and endosperm. The germ contains oil, and is responsible for kernel growth. The bran resides in the fibrous outer layer of the kernel and protects it. The endosperm contains 98 percent of the kernel’s starch, and accounts for 83 percent of its dry weight. The process is designed to isolate the starch for ethanol production, and separate the germ and bran and use both as coproducts. FWS Technologies in Winnipeg, Manitoba, has been developing fractionation systems since 2004. The company has designed a unique technology adapted from grain cleaning and machine milling systems that is sparking the interests of many U.S. and Canadian ethanol producers. Its technology removes nearly half of the oil from the corn kernel to prevent the fermentation process from becoming “sluggish.” According to Rick Chale, chief executive officer at FWS, the process allows the company to keep its costs lower than other fractionation processes. Glen Foster, process engineer at FWS, believes their fractionation system is the “best bang for the buck,” costing one-third to half as much as their competitors.

Separating the Facts According to Chale, the reason for the increased interest in fractionation is simple: cost savings. “A couple years ago all ethanol producers wanted [was] to have capacity … they wanted to make more ethanol,” Chale says.. “That focus has since changed within the 1-866-663-7632 www.uswaterservices.com

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FRACTIONATION

Bisson, left and Chale showcase the FWS Technologies fractionation system at the 2008 International Fuel Ethanol Workshop & Expo.

industry. [The price of] corn has gone up and we’re very much at a break-even scenario for ethanol producers. So now they have to start looking at ways to decrease the cost of production. Fractionation is one of those tools.” FWS’s economic models show that adding a fractionation system to a 190 MMly (50 MMgy) plant can increase its net income between $10 million and $20 million. This increase is a result of revenue from the bran and germ coproducts as well as the production of ethanol. FWS estimates that adding a fractionation system to an ethanol plant could increase a plant’s revenue by $15 million. By removing the nonfermentable products from the starch, the percentage of starch in the slurry increases, which accounts for a 9 percent to 10 percent increase in yield. The addition of germ as a coproduct adds more than $11 million dollars in revenue, while the bran brings in close to $3 million per year. Chale says that those savings are nearly a single year’s profits and that ethanol producers should be reducing their production costs if they aim to remain profitable. “[Ethanol producers] have to learn to get back to earning money and … to lower their production costs,” he says.

Another appeal of fractionation is that producers can attain higher quality distillers grains with solubles (DDGS), which creates additional opportunities. By removing the bran and germ from the DDGS the feed is better suited for the swine industry. Currently, DDGS are not ideal feed for swine, as they prefer a soybean meal diet. The low lysine and poor amino acid concentration in the DDGS make them insufficient for the swine’s nutritional needs. With fractionation, not only do the bran and germ become available to produce other coproducts, but the higher quality DDGS can be sold to a wider market, which includes swine industry. Production costs also decrease due to the potential to reduce energy use in the plant. Drying the wet cake that is later mixed with solubles to create the DDGS is easily the largest energy consumer in a typical ethanol plant. According to Foster, the removal of the nonfermentable products from the dryers reduces the energy use of the facility significantly. Fractionation allows not only for more money to be made by opening up the market with higher quality DDGS, but it also saves the plant money through the removal of products from the drying process.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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FRACTIONATION

The FWS fractionation system separates the corn kernel into three distinct sections, producing more coproducts and higher quality DDGS. SOURCE: FWS TECHNOLOGIES

fiber and can be used as an ingredient in a variety of foods including bread, muffins and cereals. The bran is also valuable as a replacement for natural gas. â&#x20AC;&#x153;[Bran] could be used as part of the processed fuels to produce ethanol, which then reduces the reliance of the facility on natural gas,â&#x20AC;? Chale says. The germ extracted from the corn kernel also has many possible uses. It can be processed into corn oil, which can be sold to the food industry as an additive, used as cooking oil or used in the production of biodiesel. Fractionation has been regarded as the next step toward developing cellulosic ethanol once that technology is perfected. David Vander Griend, chief executive officer at ICM, envisions the steps toward gaining energy independence as starting with the traditional dry-grind ethanol plant, then moving to ethanol production with dry fractionation, and finally to stand-alone cellulosic ethanol plants. According to Vander Griend fractionation is a key step in the advancement of full-scale cellulosic production.

Installing Fractionation in Your Plant A Waste-Free Process The benefits of fractionation extend even further than cost savings. With fractionation nearly the entire corn kernel is used. U.S.-based ICM Inc. is currently marketing its system with the premise that fractionation can provide both food and fuel to the consumer. The food that can be provided comes from the coproducts extracted through fractionation. The bran is high in

Ethanol producers interested in installing a fractionation component to their plant should expect a fairly seamless process once a service provider is found. The fractionation facility should be 100-by-60-feet and about 100 feet high. It must be adjacent to the corn starch silos and would require additional land space for two extra silos where the germ and bran could be sent for processing after being separated from the starch. These silos would

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

FRACTIONATION

have to be separate from one another and the fractionation building. “Instead of the whole corn going into the ethanol plant we would intercept that corn, run it through our mill, and then separate it into three different fractions,” Chale says. “[Then] we would send the endosperm fraction to the ethanol plant and the other two fractions to other silos for further processing or usage.”

industry. The company is currently working on several projects including building a column crushing plant, grain elevators and grain storage. “We’re doing a lot of things in the agricultural industry, we think that’s a good place to be,” Chale says. “We think that fractionation adds another dimension to what we do, and we think it’s going to catch on, and will add a further dimension to our company.” Fractionation has the potential to change how the Canadian ethanol industry progresses. As the price of stock commodities such

as wheat and corn continue to rise, the industry must begin to consider other technologies to remain strong and profitable. EP Amanda Watkins is a Biofuels Canada magazine staff writer. Reach her at awatkins@bbiinternational.com or (519) 576-4500. This article was reprinted from the October 2008 issue of Biofuels Canada.

Considerations for Canadians Chale believes Canadian ethanol producers have a lot of potential to grow if they adopt a fractionation system. One of the main areas for growth is within the corn ethanol industry. In Canada, the main corn producing areas are in southern Ontario, Québec and parts of southern Manitoba. Major corn ethanol plants such as Greenfield Ethanol and Suncor Energy are in southern Ontario, while Husky Energy Inc., in southern Manitoba, recently converted its primary feedstock from wheat to corn. As wheat becomes increasingly expensive (with wheat stocks expected to be their lowest since the late 1970s by the end of the year), more companies continue to depend on corn as a feedstock. Fractionation is not meant for wheat-based ethanol plants and if the Canadian market continues to produce corn-based ethanol, then fractionation will become a more appealing option. Also important for Canadian ethanol producers is the possibility of selling their DDGS to the swine industry. As the DDGS produced from a facility using fractionation are not as high in fiber, both the Canadian swine industry and the ethanol industry stand to benefit from the exchange. FWS is looking forward to what it hopes will be a bright future in the

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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INNOVATION

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

INNOVATION

Furfural: Future Feedstock for Fuels and Chemicals Furfural, a sister chemical to the increasingly popular hydroxymethylfurfural or HMF molecule, is regaining attention as a biobased alternative for the production of everything from cellulosic ethanol and fertilizers to plastics and paints. By Jessica Ebert

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

INNOVATION

ver the past couple of years, several research groups have described approaches to converting six-carbon sugars such as glucose and fructose into a chemical called hydroxymethylfurfural or HMF. This molecule represents a renewable building block for the synthesis of plastics, and industrial and household chemicals. In addition, last October, Avantium, an Amsterdam, the Netherlands-based technology company, announced the results of engine tests of its novel furan-based biofuel derived from HMF. The company dubbed its fuel, Furanics, and reported that various blends of Furanics with regular diesel yielded positive results including smooth engine performance for several hours and significant reductions in soot emissions from vehicle exhaust. Now, a sister chemical to HMF, furfural, is beginning to gain the attention of cellulosic ethanol producers and academic researchers. Furfural is an almond-scented, oily, colorless liquid that turns yellow to dark brown when exposed to air. It is used as a solvent for refining lubricating oils, as a fungicide and weed killer and in the production of tetrahydrofuran, an important industrial solvent. In addition, furfural along with its sister molecule HMF, can serve as a building block for other potential transportation fuels including dimethylfuran and ethyl levulinate. Furfural is produced by removing water from or dehydrating five-carbon sugars such as xylose and arabinose. These pentose sugars are commonly obtained from the hemicellulose fraction of biomass wastes like cornstalks, corncobs and the husks of peanuts and oats. In fact, in the 1920s several tons of furfural was produced each month from the cereal waste stockpiles at the Quaker Oats Co. in Cedar

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‘We regard this technology as being the closest thing to a high-quality biorefinery. We take wood and split it up into its various fractions and get the highest value we can for each of those fractions.’

Rapids, Iowa. But cheap oil prices in the latter part of the 20th century brought domestic production of furfural to a veritable halt. Today, about 90 percent of furfural production capacity is installed in three countries, China, which houses the most at about 74 percent, South Africa and the Dominican Republic, according to SRI Consulting, an international business research service for the chemical industry. However, in this climate of unprecedented high oil prices, interest in producing furfural in the United States is growing. “One of the largest applications of furfural was to convert it into tetrahydrofuran,” explains Kendall Pye, chief scientific officer at Lignol Innovations Ltd., a Canadian developer of biorefining technologies and a subsidiary of Lignol Energy Corp. But the oil industry found a way to make furans from petroleum-based maleic anhydride. However, when oil prices were sky high there was a renewed interest in producing furfural.

A Biorefinery Revenue Stream In the cellulosic ethanol production technology employed by Lignol, furfural represents a “happy coincidence,” a potentially lucrative consequence of the process. “We don’t

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

INNOVATION

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Lignol Innovations Process Diagram

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deliberately make furfural,” Pye explains. “The whole objective of our biorefinery is to cook up wood under pressure and relatively high temperatures to remove lignin.” The process produces a highly pure lignin that can exceed the value of the ethanol that is subsequently produced from glucose obtained from the cellulose. In addition, it turns out that as the hemicellulose fraction of the wood continues to cook, the polymer degrades into the xylose sugars, which under those same process conditions, turns into furfural. “We get furfural as a consequence of the conditions that we use in our process,” Pye says. This up-front, delignification process was first developed by the University of Pennsylvania and General Electric in the early 1970s. Later dubbed the Alcell pulping process, it was commercialized and

applied to the pulp and paper industry in the ’90s. Lignol acquired the technology in 2001 and modified it by recently developing processes for saccharification and fermentation. This summer, the company announced that it has begun building a 100,000-liter (26,000 gallon) ethanol pilot plant on the campus of the British Columbia Institute of Technology in Burnaby, British Columbia. The company also has plans to build a commercial-scale demonstration plant that will be based in Colorado, which will be partially funded by a $30 million U.S. DOE grant. “We regard this technology as being the closest thing to a high-quality biorefinery,” Pye says. “We take wood and split it up into its various fractions and get the highest value we can for each of those fractions.” Although ethanol and lignin will

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WATERLOO, IOWA ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

INNOVATION

Cellulosic Ethanol Technology

SOURCE: RAVEN BIOFUELS

be the primary products of the process, furfural will provide a third source of revenue. The significance of

that money stream, however, will depend on the source of the feedstock. Softwoods like lodgepole pine harbor

less xylose than hardwoods or annual crops such as straw and corn stover. But in a demonstration-size plant that processes hundreds of tons of biomass per day, the proportion of furfural that can be extracted from a softwood feedstock would still be significant, Pye says. For Raven Biofuels International, a New Jersey-based biofuels company, the origin of the feedstock is not a big factor because the companyâ&#x20AC;&#x2122;s technology is tunable to the concentration of sugar in the feedstock. Raven Biofuels uses commercially available technology thatâ&#x20AC;&#x2122;s used in the pulping industry to produce ethanol and furfural from a wide variety of cellulosic feedstocks, including construction waste and wood chips, explains John Sams, chief operating officer of Raven Biofuels. The two-stage process has been tested extensively at the U.S. federal laboratory, Tennessee Valley Authority pilot facility at Muscle Shoals, Ala. Over the past eight years, 32 different feedstocks have been tested and engineering and scale-up data has been generated. In the first step, the biomass feedstock is treated with steam and weak

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sulfuric acid in an anaerobic digestor to break down the wood to the point where various sugar streams can be removed. Under these same conditions of heat and acid, the pentose sugars are dehydrated and subsequently converted into furfural, which is further refined through a distillation process. Meanwhile, the hexose sugars are fermented in a second step to ethanol. “The reason our system is more forgiving is that we can adjust the concentration of the acid, the flow of the acid or the steam to get more of the sugar out if there’s a lower sugar content in the feedstock,” Sams says. In addition, the process allows for the extraction of any remaining fibers that can be sold or put in a boiler to provide process heat for the plant. “In our case we’re removing C-5 sugars in the first stage of the process to make furfural and in the second stage, the C-6 sugars are made into ethanol through a normal fermentation process,” he explains. “The Raven patented technology is centered around the production of furfural in combination with ethanol and for the production of high-level derivative chemicals from furfural.” The first project that Raven Biofuels is developing will be located in Washington state. The plant will produce 7 MMgy of cellulosic ethanol and 4 MMgy of furfural from 500 tons of construction waste per day collected by a company based in the state. Sams says the plant is expected to be in operation by the spring of 2010. “We believe we’re going to the have the first real commercial plant operating in the United States and certainly the first one in the West,” he says. In addition, the company is planning to build a similar plant in British Columbia, which will use wood from pine beetle-infested forestlands.

Along with ethanol, the company can sell the raw furfural or install additional equipment to convert that furfural into derivative chemicals. “The primary thrust of the process is to produce ethanol but furfural is a key part of that because what makes our plant very profitable is that the furfural sells for $4.50 to $5 per gallon,” Sams explains. Although it may be too early to make sweeping predictions about the future of furfural in a biobased economy, it’s clear

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that producers are diversifying and that the production of specialty chemicals and the expansion of those industries will piggyback the growth in cellulosic ethanol production. EP Jessica Ebert is a freelance writer for Ethanol Producer Magazine. Reach her at jebertserp @yahoo.com.

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Clearing the

Air

Prudent ethanol producers have shown an interest in becoming generators of carbon credits and are leading the way for others to follow despite the fact that carbon trading the United State is done on a voluntary basis. This is the first of EPMâ&#x20AC;&#x2122;s two-part look at the current U.S. market and what might be in store for 2009. By Kris Bevill

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he voluntary carbon market in the United States has been functioning efficiently for several years with little involvement from biofuels producers. Time might be of the essence, however, for companies that are tossing around the idea of entering the market. All signs point to a future that includes federally mandated emissions regulations. Early market entry could result in several benefits, including a chance to help shape future mandates and benefits. Generally speaking, corn ethanol facilities are tremendous energy consumers and are currently unable to generate carbon credits without modifying their operations. For producers looking to become more energy efficient, the carbon market offers the perfect reason to install the equipment and/or technology necessary to reduce energy input. It could save producers money in operating costs, help change the industry’s “high energy input” image and give them the opportunity to become leaders in the carbon market.

About Carbon Credits Carbon markets are commodity-based markets that exist for the buying and selling of carbon credits. The term “carbon credit” can be misleading because it’s not just carbon dioxide that’s traded, but rather all pollutants that increase greenhouse gas (GHG) emissions. Included in that category

are carbon dioxide, methane, nitrous oxide and a list of fluorinated gases. GHGs are assigned a number representing their global warming potential (GWP). According to the U.S. EPA, GWP can be defined as “the ratio of heat trapped by one unit mass of the greenhouse gas to that of one unit mass of carbon dioxide over a specified time period.” Therefore emissions are traded on a carbon dioxide equivalent, which leads to the general term “carbon credit.” For example, carbon dioxide has been determined to have a GWP of 1 while methane’s GWP is 21. Therefore one ton of methane emissions reduced equals 21 carbon credits. Nitrous oxide, a major component of corn production, has a GWP of 310. Several emissions trading schemes have been developed to reduce the effects of global warming. Variations include regulatory systems, similar to what is being used in Europe, and voluntary systems, currently at play in the United States. The European Union’s emissions trading scheme is the largest carbon market in the world. It’s a cap-and-trade-system where industrial companies are required to limit GHG emissions to certain levels every year or buy credits from other lesser emitters to make up the difference. The EU’s system may be the largest but it’s not the oldest. Although it’s been in operation since 2005, the U.K. had an emissions trading scheme in place prior to that. The European Union

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scheme follows the framework for GHG reductions set forth in the Kyoto Protocol. In the meantime, other countries have recently announced plans to develop mandatory emissions reduction standards including Japan, Australia and New Zealand. The province of Alberta, Canada, has implemented a regulatory system and because of the oil drilling that is occurring in the tar sands in that province, carbon credits are in high demand. In contrast, the United Statesâ&#x20AC;&#x2122; carbon market is a voluntary system where a multitude of private trades are conducted for a variety of corporate and personal objectives.

Trading on the U.S. Carbon Market There are only a couple of programs in the United States designed to entice businesses to reduce their carbon emissions. Carbon offset programs include the California Climate Action Registry and the Regional Greenhouse Gas Initiative. CCAR is a nonprofit GHG registry established by California as a way to promote early actions taken by members to reduce emissions. Members agree to measure, verify and report GHG emissions and in exchange the state will ensure those members receive adequate consideration for being early actors in the event of future state or federal regulations. As with many other California-based environmental programs, it serves as a leader among rule makers.

Greenhouse Gases Carbon dioxide: a colorless, odorless, incombustible gas, somewhat heavier than air that is a product of respiration and combustion. The only greenhouse gas that is also emitted into the atmosphere through various natural processes, carbon dioxide also enters the atmosphere through the burning of fossil fuels and other chemical reactions. Nature does its part to remove carbon dioxide via the "sequestration" of the compound from the atmosphere by plants. Methane: a colorless, odorless, flammable, gaseous alkane that is emitted into the atmosphere via livestock and various agricultural practices, and by the decay of organic waste from landfills. It is also emitted during the production and transport of fossil fuels. Nitrous oxide: a colorless, nonflammable gas, used as an anesthetic and in aerosols. Agricultural soil management is by far the largest source of nitrous oxide emissions. Other sources include various industrial activities and the combustion of fossil fuels and solid waste. Fluorinated gases: to introduce fluorine into or cause to combine with fluorine. A fluorine is a corrosive, toxic, greenish-yellow gaseous chemical element, one of the halogens and the most reactive nonmetallic element, forming fluorides with almost all known elements and includes three groups of gases: hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride. All are synthetic gases that are referred to as High Global Warming Potential gases due to their potency, even in small amounts. These gases are emitted into the atmosphere through a variety of industrial practices, including at times as a substitute for ozone-depleting substances such as CFCs chlorofluorocarbons.

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Corn Plus has found a way to utilize its corn syrup and CVEC has chosen to focus on biomass gasification, but there are many other methods to reduce input costs and produce carbon credits, including landfill gas utilization and anaerobic digestion. It is up to each plant to choose the method that works best for that particular facility.

Protocols set forth by CCAR are often noted by other carbon offset organizations in the country. The RGGI is a conjunctive effort among 10 Northeastern states— Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont—to mandate a cap on current emissions, and it calls for a 10 percent reduction in emissions by 2018. It is the first mandatory, market-based carbon dioxide emissions reduction program in the United

States, however it was created only to regulate power plants and so does not yet hold relevancy to ethanol producers. Participating states created a model to serve as the basis for each state’s individual regulations. And then there is the voluntary trading market, which is led by the Chicago Climate Exchange (CCX). Established by Richard Sandor in 2003, the CCX is the world’s first and North America’s only voluntary, legally binding integrated trading system to reduce GHG emissions. It was formed to pro-

vide structure, transparency and rules to the carbon market. Members of the CCX agree to an aggregate reduction of GHG emissions by 6 percent between 2000 and 2010. Simply put, the membership as a whole must reduce its emissions by that percentage. Some individual companies may successfully reduce emissions by more than 6 percent and others aren’t so successful—that is where the trading of credits comes into play. The first step for a prospective carbon market member is to have its company analyzed to determine its baseline, which is the amount of GHGs determined to be emitted by that company in 2000. The baseline serves as the starting point for each company to work from when attempting to meet reduction goals and also determines that company’s monetary membership fee. Once a company becomes a member of the exchange, it can begin gen-

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erating, selling or buying carbon credits. Members who reduce emissions by more than the annual requirement generate credits which can be monetized into Carbon Kor Financial Instrument contracts, each one representing the equivalent of 100 metric tons of carbon dioxide emissions reductions, and can be sold on the exchange. Members who fail to meet reduction requirements must buy credits from another exchange member or complete an approved reduction project to negate the emissions being put forth by the company. Membership compliance checkups and verifications are conducted annually by the Financial Industry Regulatory Authority. CCX employs demanding annual independent verification methods that have yielded 100

percent membership compliance with its annual emission goals. At press time, the exchange was on track to trade between 80 million and 100 million tons worth of CFIs, worth an estimated $300 million to $400 million in 2008. At that time, spot pricing for CFIs were firm at $2.50, futures were a bit higher and ranged from $2.70 to $2.80 per contract.

Industry Trendsetters When the CCX was launched in 2003 there were 13 members. Today, there are more than 400 members including the Renewable Fuels Association, Ford Motor Co., Cargill Inc., Monsanto Co., and a multitude of various municipalities, universities and state governments. Each member has its own reason for signing up. Some companies see the value in having an energy audit conducted at their facility and plan to bank it for future use. Other companies join as a way to

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remain in good standing with their shareholders. For many, as clichĂŠ as it sounds, company leaders believe climate change is a major problem and that it's part of their corporate responsibility to take part in reducing GHG emissions. Regardless of their reasons for joining, one common theme shared among members of the exchange is that they believe it is in their best interest to get a jump start on what they perceive will be a requirement in the future, and to lead by example. One canâ&#x20AC;&#x2122;t talk about carbon trading in the ethanol industry without mentioning Corn Plus LLLP. The Winnebago, Minn., company made history earlier this year when it became the first biofuel producer to sell carbon credits on the CCX. The 44 MMgy ethanol plant joined the exchange in August 2007, after it had already installed a fluidized bed boiler to convert leftover corn syrup into energy,

PHOTO: CHIPPEWA VALLEY ETHANOL CO.

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Chippewa Valley Ethanol Co. installed a biomass gasification system in early 2008 at its 47 MMgy ethanol plant near Benson, Minn., as a way to reduce the company’s natural gas costs. The gasification system will also allow the company to become a generator of carbon credits.

thus reducing the facility’s need for natural gas by 52 percent. Plant manager Keith Kor says Corn Plus has always been proactive in finding ways to reduce its operating costs. They began researching the fluidized bed boiler back in 2003 as a way to reduce energy costs as natural gas was about $4 per million Btu (MMBtu). The technology has certainly paid off as natural gas prices have since increased to $7.50 to $8 per MMBtu. The idea of generating carbon credits was an afterthought. After installing the bed, Kor began conferring with Carbon Green LLC, a carbon market consulting and trading firm and realized that Corn Plus could turn its energy-saving techniques into a money maker on the carbon market. “That’s what got the ball rolling,” Kor says. Corn Plus signed on with Carbon Green and began the process of becoming a CCX member. According to Kor, the company paid a $25,000 membership fee to join the CCX and spent many months reviewing years of natural gas intake and other records as part of the analysis, but he says it was worth it. The entire process took nine months, according to Carbon Green president Jim Murphy, a time period he hopes to reduce as more ethanol producers sign up with his company. Kor says Corn Plus will generate 40,000 tons of carbon credits this year and looks to do about the same in 2009. The credits the company sold in March went for a bargain price of $6 per ton. Kor expects that price will continue to rise as more interest is paid to the possibility of a federally-mandated market. Corn Plus plans to hold its credits until the price goes up. “If you look at the price of carbon credits over in Europe, they’re at $20 or $30 per ton,” he says, hinting at the potential of things to come in the United States. Benson, Minn.-based Chippewa Valley Ethanol Co.

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signed on with Carbon Green and its partner, Environmental Credit Corp., in June and is in the process of becoming a carbon credit generator on the CCX. While the end result will be similar, CVEC’s method of reduction is different from the method used by Corn Plus. CVEC chose to install a biomass gasification system, which will burn corn stover, corncobs and other biomass to offset the plant’s natural gas usage. Bill Lee, plant manager, says they became interested in a biomass gasification system for multiple reasons, only one of which was to fit with what they perceive is a move toward a federally regulated carbon emission environment. Lee says the first priority was to reduce the plant’s second-highest input cost—energy. The gasification system has applicability in cellulosic ethanol production, which could serve the facility well in the future. And finally, Lee says the system fit with the plant’s overall desire to move toward a fully renewable process. “More ethanol plants ought to be moving in this direction,” Lee says. CVEC is preparing to become a carbon credit generator, according to Lee. They began working with Carbon Green in late summer and expect to complete the auditing process and become a member of the CCX within a year. Lee says aside from the investment for new technology to consume less energy at the plant, the front-end investment for a plant to become involved in the carbon market is low. Although there is money to be made, selling carbon credits in the current market is modest. But companies like CVEC and Corn Plus aren’t looking for an instant return on their investment. “We’re looking forward to what lies beyond the voluntary market in this country,” Lee says. “A corn ethanol producer needs to be doing something to actually reduce [energy

input]. They either need to make a dramatic improvement in efficiency and/or they actually have to start displacing fossil energy inputs with something of a lower carbon nature.” Corn Plus has found a way to utilize its corn syrup and CVEC has chosen to focus on biomass gasification, but there are many other methods to reduce input costs and produce carbon credits, including landfill gas utilization and anaerobic digestion. It is up to each plant to choose

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

the method that works best for that particular facility. One thing is certain— energy input costs will only increase and ethanol plants will continue to need to find ways of generating revenue. For many the solution might lead to the same place—the U.S. carbon market. EP Kris Bevill is an Ethanol Producer Magazine staff writer. Reach her at kbevill @bbiinternational.com or (701) 373-8044.

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ykota Harle a D th u o Glide p and a S Electra sign Grou 4 e 0 D 0 2 s s e c L Pro mann's mann of K erted Am ol. v n o c Craig Am ip n dealersh n on etha ru n o to s le id c v y a rc D to vidson mo Harley-Da r Deutsche By Hope

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PHOTO: COURTESY OF AMMANN

n the spring of 2007, Craig Ammann took a leap of faith— using Harley-Davidson parts his 2004 Electra Glide HarleyDavidson motorcycle was converted to use E85 as its primary fuel source and, when necessary, premium fuel as its secondary source. “I just kind of started thinking about this concept—wouldn’t it make a great story if we had an American-made bike with an American-made fuel all coming together,” Ammann says. Ammann, who has been riding motorcycles for six years and has worked in sales and marketing the past 15 years, has been interested in the ethanol industry for some time. He joined the renewable fuels industry two years ago when he was hired by Rapid City, S.D.based KL Process Design Group as its director of marketing and distribution in Sioux Falls, S.D. KL Process Design operates corn ethanol plants in South Dakota and Nebraska, and a wood-waste-toethanol plant in Upton, Wyo. Three years ago, Ammann bought a used, but well-cared-for 2004 Electra Glide Harley-Davidson motorcycle, and shortly thereafter, upgraded it. He used a standard big-bore kit to increase the engine size, and added a new exhaust system and a high-performance air intake—all to increase the horsepower and torque. Then, in 2007 he suggested to his boss, David Litzen, an owner of KL Process Design Group, that he would offer up his personal motorcycle to the Black Hills Harley-Davidson dealership in Rapid City to be modified to use an 85 percent ethanol blend. Litzen encouraged Ammann to do it. “I approached the owner of Black

Craig Ammann, KL Process Design Group director of marketing and distribution in Sioux Falls, S.D., worked with a Harley-Davidson dealership to convert his 2004 Electra Glide Harley motorcycle to run on E85.

Hills Harley with the idea and he offered his master technician to do the work on the bike to get it remapped to burn on E85,” Ammann says. “The owner is a big fan of ethanol and was all for what I was proposing.” So, with the help of Chris Myers, a Black Hills Harley-Davidson master service technician, Ammann’s fuel-injected bike was put to

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‘In essence we’re pushing the envelope a little bit, but this gives them a real-life example and scenario and they can see the E85 is not ruining engines, it’s not melting parts and engines aren’t blowing up and overheating.’

the test to see what, if any, affect E85 would have on it. Deep down Ammann told himself it would run fine but if anything happened to the bike, it would be at his own expense. “Basically, being in the industry and knowing ethanol, I had no reservations about doing this with the bike,” Ammann says. “I knew that the ethanol was not going to hurt the bike, if anything it was going to help it run more smoothly and more efficiently. So I said ‘Let’s do this. Let’s put a tank of E85 in, let’s run it and let’s see how it goes.’ So we literally drained the tank and put in a full tank of E85 and just ran the bike, just to see how it would run.”

Modifying the Hog From the first tank of E85—without any initial modifications—Ammann says the bike’s fuel injection system ran rather well. However, he admits, it did choke a little bit at first, due to the difference between premium fuel and E85.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

The fuel-injected bike’s electronic computer module, which is programmed with the engine and fuel type specifications, had to be remapped. “So basically we needed to put the bike on the Dyno (dynamometer machine) and let the technician literally just play with different mapping scenarios to compensate for the alcohol content and adjust the air intake and the fuel injection so that the bike ran smoothly,” Ammann says. Because E85 has a higher ethanol content, it runs at a higher octane level—but Ammann says it runs cleaner and burns more completely. Myers says, like most mechanics, he was skeptical of E85 because of the negative rumors he had heard. However, he was receptive to the idea of modifying Ammann’s motorcycle. After some researching, experimenting, and spending approximately 12 hours adjusting the bike’s computer mapping scenarios to find the best equation for air intake and fuel, Myers was impressed by E85 and how the bike operates on the renewable fuel—which burns

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Ammann’s 2004 Electra Glide Harley was converted to run on E85.

cooler and should burn better in high-compression engines, such as those used in Harley-Davidsons. Although the bike can use both E85 and premium fuel, Myers recommends that for optimal use the bike should operate on a steady diet of E85. Myers admits until E85 is more readily available, he’s reluctant to convert more bikes. He is open and receptive to doing the work, but it’s important that people understand that the long-term affects of using E85 in a modified Harley-Davidson motorcycle are not yet known. “I’m happy to get involved and see where the road takes us,” Myers says. To his knowledge, Ammann says custom bikes using ethanol have been built, but nobody has taken a Harley-Davidson motorcy-

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cle, straight from the factory, and worked with a dealership to convert a bike to use E85. Ammann went through a Harley-Davidson dealership to make the conversion, in part, so they could go to the manufacturer, and say “look, we’ve done this with Harley technicians and Harley parts to make this work—and it’s working just fine.” “I’ve got to believe that within their confidential confines they’ve got some of this testing going on,” Ammann continues. “It’ll be a long time before we have Harley putting their flex-fuel bike out there but it’s got to start somewhere.” Harley-Davidson has given its approval to use E10 and E15. “In essence we’re pushing the envelope a little bit, but this gives them a real-life example and scenario and they can see that the E85 is not ruining engines, it’s not melting parts and engines aren’t blowing up and overheating,” Ammann says. “Ultimately, I’d like to see them develop a flex-fuel computer chip that really requires no Dyno time, that’s just simply a chip that you can buy at the dealership and takes just a little bit of time to download it into the engine and away you go. Or just like the car manufacturers do with a flex-fuel vehicle that comes off the line, it would be a flex-fuel bike, something that would be an added feature to a bike that came right off the factory floor.”

Showing Off the Bike Even though Ammann lives in Sioux Falls, he approached the Black Hills Harley-Davidson dealership because KL Process Group is headquartered in Rapid City and he thought the Sturgis Motorcycle Rally in Sturgis, S.D., which is just north of Rapid City, would be an ideal place and time to promote his bike cruising on ethanol. “The idea was to launch the idea and make noise about it, in conjunction with the Ethanol Promotion and Information Council, at the Sturgis Rally last year,” he says. EPIC also featured its ethanolfueled Indy car. Ammann says the initial reaction from the hundreds of curious motorcyclists who looked over the bike was positive.

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A conversion kit is now available for drivers interested in modifying their motorcycle to use E85. Tony Michael Dabbs, owner and founder of Dabbs Engineering and Design, has produced a conversion kit allowing air-cooled motorcycles to accept E85. He began selling the ALKYHAWG two years ago. “The ALKYHAWG was designed at the request of a customer,” Dabbs says. “Before contacting me, he had called a couple of dealerships, a performance shop and an automotive engineer about converting his bike to E85.” All responded that it was impossible. Dabbs says that when he answered “yes” to the potential customer’s question of “can you convert my [HarleyDavidson] Softail to run on E85?” the phone went silent as the shocked motorcycle rider on the other end contemplated the possibility. Six months later, Dabbs’ first conversion kit was installed on his motorcycle. The reasoning behind the initial request for a conversion kit, and Dabbs’ attempt to design it, was to coax more power from the engine. But since designing the kit, Dabbs says he has become more aware of renewable fuels and the benefits they offer. “Why not feed American hawgs [Harley-Davidsons] with American corn?” he says. “Cleaner burning E85 could add some life to the motorcycles we Americans love.” Although the ALKYHAWG was designed for off-road use with Harley-Davidson motorcycles, Dabbs says he knows customers use his parts on the road everyday. The kit hasn’t been approved by the U.S. EPA and has to be designated for off-road use. However, “clients have run their bikes through state emissions testing and passed,” Dabbs says. He adds that the kit can be easily modified for use with any gasoline-powered engine and he’d be happy to design one for use on imported motorcycles. According to Dabbs, motorcycles currently equipped with the conversion kit are used for racing, so the kit has been constantly

“Everybody thought it was very cool,” he says. “We didn’t have anybody come up and say ‘this is ridiculous’ or ‘you’re wasting your time.’ There is a lot of education to be done with the general public,

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tested. He receives regular feedback from his customers and has used that data to compile performance averages for the kit. He says a basic kit results in 33 percent higher horsepower, a 13 percent increase in torque and a 10 percent gain in mileage, as compared with gasoline-powered stock engines. The conversion kit costs about $2,000. “This may seem high to someone unfamiliar with performance kits for [Harley-Davidson]type engines, but it is much cheaper than kits delivering far fewer power gains,” Dabbs says. He is currently researching ways to lower the cost of the kit without decreasing the quality of the product. For more information interested motorcyclists can contact Dabbs at themotorsickledoc@yahoo.com. —Kris Bevill

PHOTO: TONY MICHAEL DABBS.

E85 Conversion Kit for Motorcycles

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Ammann says. For example at Sturgis there were questions about ethanol causing the engine to overheat and the components to erode—all of which, Ammann says is really misinformation

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“because ethanol really helps the engine run cooler and smoother and burns more completely. So for an air-cooled engine like a Vtwin Harley-Davidson engine, it’s a perfect fuel for it.”

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“The bike has been running for over a year now just fine with ethanol,” Ammann says. “We've pulled the engine apart to a degree and looked at things and there’s nothing to be concerned about.” Ammann says he wasn't expecting any problems because he learned about ethanol's properties since coming on board with KL Process, and he knows that there's a lot of misinformation out there . In fact, Ammann says the bike gets about the same gas mileage, approximately 35 miles per gallon, using E85 as it did running on premium unleaded gasoline—and it has more horsepower and torque. “Basically that’s because the engine, being a high-compression engine, it is able to utilize the efficiencies of the ethanol itself,” Ammann says. “An E85 blend is a 105 to 108 octane fuel straight out of the pump. Anybody who rides a Harley-Davidson, when they hear those kinds of numbers, their ears pick up right away because Harley people want more power and this is one way to get it.” In Sioux Falls, Ammann, says stations carrying E85 are pretty prevalent. However, he’s driven the modified bike around Iowa, Nebraska, Minnesota and Wyoming, and has found that he must do his homework before hitting the pavement. “You have to do a little research in finding where the E85 stations are at, but the beauty of this whole story is that if you have to go back to premium because E85 is not available, the bike still runs fine,” he says. “It might not run as efficiently but the bike still runs on premium fuel so it’s not a situation where if you went to premium fuel because there was no E85 available, that the bike just wouldn’t run.” As Ammann travels back and forth across South Dakota he has had to use both E85 and premium gasoline. Ammann’s friends are also interested in converting their motorcycles to use

ethanol. The only thing stopping them is getting the bike to the Rapid City HarleyDavidson dealership. “I can’t think of any reason why you wouldn’t want to [make the conversion] other than if E85 is not available close to you,” Ammann says. “The biggest thing to remember is that you are in unchartered territory at this point. Sit down with your dealership and see if they are willing to spend the time to do this. Obviously this is in its infancy stages of what we hope to be a kind of revolution of motorcycling with E85.” Being an ethanol believer before he put his motorcycle to the E85 test, Ammann is not surprised by how well the motorcycle has run on the ethanol-blended fuel. “Somebody’s got to get out there and make a difference and test those naysayers’ concepts and negative energy and say ‘Look—here it is. Here is living proof that this works. It’s not bad, it’s not eroding my engine and my engine is running better and cleaner’ and anybody who is a Harley rider who has sat in a parade and felt the heat come off their engine, when they hear about cooler burning fuel, that speaks to them very loudly. And it’s a good thing.” Ammann admits though, that higher blends of ethanol fuels may not work well in all small engines, such as boats and lawnmowers, where he says the plastic, rubber and aluminum parts are a cheaper grade and alcohol may erode them. This winter, Ammann plans to return the bike to the Black Hills Harley-Davidson dealership and let Myers inspect the engine to see if, after using E85 for more than a year, there are any signs of deterioration. “I’m confident there won’t be but it’s the last step, offering visual proof that running on E85 won’t hurt a motorcycle,” Ammann says. EP Hope Deutscher is the Ethanol Producer Magazine online editor. Reach her at hdeutscher@bbiinternational.com or (701) 373-8046.

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Fueling a Revolution

The theme and tenor of the American Coalition for Ethanol's 21st Ethanol Conference & Trade Show clearly signaled that the industry is determined to overcome challenging economic conditions, negative press and misinformation that has plagued the industry. By Anna Austin and Erin Voegele

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he 21st Ethanol Conference & Trade Show attracted nearly 1,200 attendees. The event was held Aug. 12-14 at the Qwest Center in Omaha, Neb. Nebraska Gov. Dave Heineman's enthusiastic welcome address at the conference’s general session in which he expressed his support for the ethanol industry set the tone for the event. “The No. 1 issue is energy,” Heineman said. “It is on the mind of every Nebraskan. It’s on the mind of every American.” For more than 25 years, the federal government has talked about reducing our dependence on foreign oil without taking any real action, Heineman said. “It’s time we did something,” he said. “America needs leadership when it comes to energy, and ethanol is part of that future. We’ve got to quit Heineman talking, and start doing something to reduce our dependence on foreign oil.” Following Heineman’s address three ACE representatives provided updates on the industry and their organization’s initiatives. ACE President Bob Scott encouraged attendees to fight back against the prolifera-

tion of negative press. “Ethanol is the fuel of increasing the nation’s a revolution,” Scott said. “We are the fuel for ethanol consumption. He the revolution. We must continue to fight. also addressed the need for U.S. EPA approval We must fight hard.” Brian Jennings, ACE executive vice that would allow the use president, acknowledged that some people of midlevel blends in thought the event’s theme, “Fueling standard vehicles. “We Revolution,” was too forceful. But the think all cars can be more Tolman phrase accurately describes the current state flexible,” Lamberty said. The conference also featured a panel of the industry, he said. “Let’s face it,” Jennings said. “We are underdogs. We are a discussion on innovations in corn-based ethanol production. National grassroots coalition of farmers Corn Growers Association Chief and ranchers, of entrepreneurs Executive Officer Rick Tolman and investors, of ethanol producbelieves that corn growers can ers and industry vendors who double current yields by 2030 time and time again are out-spent, without increasing planted overlooked—recently relentlessly acreage. He also pointed out that attacked—but, my friends, you a significant amount of corn keep going and you keep winJennings used for ethanol production rening.” Jennings summarized some of the enters the market as livestock feed. Rob industry’s accomplishments and encouraged Nelson, director of technology developattendees to support the industry by writing ment for VeraSun Energy Corp., and Andy their governors, commenting on online arti- Zurn, engineering manager for Chippewa cles, and contributing money to and voting Valley Ethanol Co., participated in that for political candidates who support ethanol. panel discussion. Midlevel blends was a popular topic at the event. Ron Lamberty, ACE vice presi- Revamping the RFS dent of market development, said ethanol The U.S. EPA’s Paul Machiele received a blender pumps and midlevel blends are cru- warm welcome, a response likely generated cial to overcoming the blend wall and from the agency’s Aug. 7 denial of Texas continued on page 114

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Economics of Feeding Distillers Grains Breaking away from the events’ two main themes—cellulosic ethanol and midlevel blends—Terry Klopfenstein, a professor in the Ruminant Nutrition Department at the University of Nebraska, Lincoln, led a breakout session detailing the results of experiments on the economics of using distillers grains as a livestock feed. He also touched on correlations between E. coli and feeding distillers grains rations to cattle. Alan Janzen, owner of Circle Five Beef Inc., concluded the presentation with data collected at his company involving storage and feeding practices of wet distillers grains (WDG). Studies showed that distillers dried grains and modified distillers grains have 115 percent of the feed value of corn, while WDG has 130 percent, Klopfenstein said. “In 2007, if we sold dried distillers [grains] at 84 [percent] or 85 percent of the price of corn, we paid somewhere between 30 [percent] to 40 percent for the cost of drying,” he said. “We pay to dry it, but then there is less feeding value.” Klopfenstein added that while drying may be cheaper for some who have heat recovery systems, his calculations have suggested that considering the higher feed value attributed to extra fat and protein content, using WDG is more economical than feeding DDG. “It does take more loads of wet than dry feeds, but we have tried to account for all of that,” he said. “At this time, we would prefer to not have it dried at all. The economics are favorable.” Recently, studies such as the one performed by Kansas State University suggest that there may be a correlation between distillers grains feed and increased fecal shedding of E. coli O157:H7 in cattle. “It is reasonable to think that what we feed cattle might affect the bacterial population of the hindgut,” Klopfenstein said. “This has already been demonstrated in different studies.” At this point, however, there is no scientific evidence that feeding distillers grains, at least at levels being used commercially, has been the cause of any E. coli food crisis, he said.

However, Klopfenstein said research at Kansas State and the University of Nebraska-Lincoln suggest that under some feeding levels, and a combination of other unknown conditions, there is a possibility that distillers grains may increase fecal shedding of E. coli O157:H7 in cattle. “Response in E. coli shedding to distillers grains feeding may be affected by distillers grains levels and other dietary ingredients such as the corn type,” he said, adding the issue is highly complex and more research is needed to address the many factors involved. “Interventions and research on interventions is much more important than finger pointing at different feedstuffs, especially when data are inconsistent and more research is needed,” Klopfenstein concluded. Janzen provided an overview of Circle Five Beef, a feeding company that has been operating since 1972. With yards in Fairmont and Henderson, Neb., Janzen said his company feeds about 35,000 animals yearly. In 1995, Circle Five Beef began using rations of 10 percent to 15 percent dry matter and WDG for protein supplementation and ration conditioning. “Levels of 25 percent to 40 percent WDG have worked well in rations as a corn replacement when pricing warrants,” Janzen said. “This year we have fed 50 percent WDG rations with the 34 percent dry matter product and 60 percent with the 50 percent dry matter product with good results.” To date, the company has found no negative impacts on carcass quality while feeding different levels of WDG in rations. “In 2008, we have had 74.6 percent choice or better carcasses out of 7,288 cattle sold, finished on 50 percent to 60 percent WDG rations,” Janzen said. Janzen believes the use of WDG for cattle feed will increase as traditional corn exporting areas experience corn deficits.

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Gov. Rick Perry’s request for a 50 percent waiver of the renewable fuels standard (RFS). Machiele, who has been with the EPA for more than 20 years and is currently director for fuel programs for the EPA’s Assessment & Standards Division, touched briefly on the decision. After careful consideration of the 15,000-plus comments received—the EPA didn’t take the situation lightly, he said. The decision was delayed because of the large number of staff members needed to sift through the comments, and because it was the first waiver requested since the original mandate was enforced. Before getting into RFS 2, Machiele went through the details of the original RFS under the 2005 Energy Policy Act. “For RFS 2 we are planning to build on the foundation of RFS 1, continuing the RIN (renewable identification numbers) system, and other various design elements that we struggled to put into place with RFS 1,” he said. He admitted that while there have been growing pains in implementing the new program so quickly, they are already beginning to lessen. “There is now an extensive registration, record keeping and reporting system— if you are an ethanol producer then you know what I’m talking about,” Machiele said. He added that along with the new stan-

dard, many other major modifications have been implemented. Despite the modifications, which have been challenging, Machiele said the value of the RINs have been positive. “The market is up and running, the RIN value has really escalated in the past few months and there is a really viable market.” RINs are the serial numbers assigned by producers to each gallon or batch of renewable fuel produced. The EPA created the system to ensure RFS compliance. RINS can be acquired by blending renewable fuel or they can be purchased to meet blending requirements. Since the December signing of the Energy Independence & Security Act, RIN market values have risen from 0.25 cents per gallon to 5 cents per gallon, Machiele said. While developing the RFS 2 rules has been quite similar to the construction of the RFS 1 policy, slightly different measures will be taken as it is further developed, Machiele said. “We plan to engage early and often with stakeholders throughout the process,” he said. “The main change was the volume, but there are many new obligations and definitions.” The new RFS raised the mandate to 9 billion gallons in 2008; the original policy required 7.5 billion gallons by 2012. “The world changed for us in December when Congress passed the new RFS 2 requirements,” Machiele said. The EPA is currently

evaluating implementation methods and will make the final RFS 2 rule by Dec. 19, which will be effective Jan. 1. “What everyone mainly looks at is the volume requirement—36 billion gallons by 2022,” Machiele said. “This is the main change. Also, there is not one standard, or two standards, but rather four. Within the 36 billion gallons, 1 billion has to be advanced biofuels, and also within that, 17 billion gallons of it has to be biomass-based diesel or cellulosic ethanol. So, they all count toward that total.” Machiele said that in addition to the larger mandate, there are a number of new obligations and definition changes. “Now, there aren’t just gasoline requirements, but requirements for diesel fuel and refiners,” he said. “There are new obligated parties and new customers for the new system. The most unique thing about the new rule is the renewable fuels must now be produced from biomass.” Machiele continued, “There is life-cycle GHG (greenhouse gas) thresholds, grandfathering provisions associated with that, and the new renewable biomass definitions.” He pointed out that conventional biofuels, advanced biofuels, biomass-based diesel and cellulosic biofuel categories are now all required to meet the new GHG reduction

EVENT

Pipeline Projects Progress In the past, the idea of an ethanol-dedicated pipeline has largely been regarded as unachievable. However, representatives from Kinder Morgan Energy Products L.P. and TEPPCO Partners L.P. assured ACE conference attendees that what was once just a pipe dream is now becoming a reality. Dan Ownby, TEPPCO director of business development, said the company’s ethanol pipeline strategy dated back to May 2007. Although the approach seemed small initially— transporting a batch of ethanol just 150 miles from Indianapolis to an Argo, Ill., facility—it was a stepping-stone to larger projects, Ownby said. “We haven’t looked at the long-term effects yet,” he said. After extensive ethanol quality testing, the most significant find was that the fuel turned a dark amber color. Ownby said the color change was due to the heavily oxidized solid hydrocarbons, often referred to as gum, that exist inside the pipes. In early August, TEPPCO began transporting ethanol by truck and barge from its new 5 million gallon storage terminal in Boligee, Mo., Ownby said. In phase two, the company plans to expand its storage capacity to 42 million gallons. Although TEPPCO doesn’t currently have any ethanol pipelines, Ownby believes the logical solution for efficiently transporting ethanol includes pipelines. “Pipeline companies are all working for it, but we need to work together to solve the biggest problem—stress crack corrosion,” he said. “We can’t jeopardize the pipelines until we know exactly why it happens and how it will affect the pipelines. Right now, there is no clear pipeline strategy, but everyone is working on it.” Jim Lelio, director of business development for Kinder

thresholds. Under EISA, fuel life-cycle GHG assessments will be done, which are also called fuel cycle or wheel-to-wheel analyses. The impacts of each fuel through-

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Morgan, which is the second-largest transporter of petroleum in the United States, says the company is working to perfect its pipelines to be ethanol capable. “We focus on where our customers want us to go,” he said. “As our customers look to meet the renewable fuels standard quantity, they will be looking at this—and we will respond to that.” All of Kinder Morgan’s West Coast terminals are ethanol capable and the company is currently evaluating expanding blends from 5.7 percent ethanol to E10, Lelio said. Kinder Morgan also expanded a central Florida pipeline in April. The pipeline is currently handling 25 percent of all ethanol blended in Florida. “We are rapidly expanding ethanol capabilities in the Southeast along primary pipeline delivery system terminals,” Lelio said. He added that a test batch of pure ethanol would be sent through a 16-inch dedicated gasoline line in central Florida in late September 2008. The pipeline stretches for 104 miles between the Port of Tampa and the Orlando Airport in Florida. “There is a lot of preparation going on to get ready for that,” Lelio said. “Tens of thousands of new parts have to be brought in and replaced … valves, pumps and the pipeline.” Kinder Morgan decided to test pure ethanol in the company’s pipelines because the company believed that it would be more successful than other strategies. “It’s what we see in the future. If you’re blending it ahead of time, then there’s more interface—you have to add more tankage and that’s a higher expense.” Lelio said Kinder Morgan plans to be done testing by early January.

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with stakeholders and worldwide industry groups, and work on a number of drafts prior to the submission of the final proposal. Some of those discussions will focus on modeling framework that captures both domestic and international agricultural sector changes and their GHG emission impacts. The agency will collaborate with experts to improve understanding of agricultural nitrous oxide emissions, develop country specific GHG emissions factors associated with land-use change and agricultural practices, and update petroleum baselines and renewable fuel production process data. Every three years the EPA will report to Congress on the RFS impacts. “We will also be doing studies on how these biofuels affect our air quality as a result of these different blend-level requirements,” Machiele said.

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Midlevel Blends Minnesota Department of Agriculture senior market specialist Ralph Groschen, National Renewable Energy Laboratory project leader Steve Przesmitzki, and Lamberty launched the midlevel ethanol blends panel on the final day of the conference. According to Groschen, Minnesota currently produces three times more ethanol than the state can use. To increase ethanol consumption in his state and in the country the E10 blend wall must be overcome, he said. Before that can happen the EPA has to sign off on midlevel blends. Groschen presented information on the process that is required to gain EPA Groschen approval for E20 and outlined the five kinds of data that must be generated, including information on material compatibility, vehicle drivability, vehicle exhaust emission, health effects and durability or mileage. Groschen said Minnesota’s push for E20 approval could benefit the ethanol industry on a national level because EPA approval of a new fuel will not be state specific. The EPA is the biggest hurdle that must be overcome to get a new fuel approved for use,” Przesmitzki said. “Their responsibility is to protect the air quality in the United States, and any program for any fuel has to go through EPA to prove that it is substantially similar to a certification fuel,” he said. Przesmitzki explained that approval of E10 was different because it was done under old rules, while E20 approval falls under a new standard. Before the fuel is approved, it has to be proven that air quality will not be impacted by increased ethanol blends. According to Przesmitzki, the U.S. DOE predicts the E10 market will be saturated by 2013. Two paths can be taken to meet the RFS: quickly expanding the market for E85 or certifying a midlevel ethanol blend. Although the DOE supports expanding

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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the use of flexible-fuel vehicles (FFVs), it is unlikely that the market could grow quickly enough to keep pace with current RFS targets. Only about 6 million of the estimated 220 million vehicles on U.S. roads today are FFVs. Even if automakers push to make 50 percent of their sales FFVs, that would only account for 7 million more on the road each year. These statistics make it unlikely the RFS could be met with increased E85 usage. That being said, midlevel ethanol blends are the likely path to increased ethanol consumption. Przesmitzki summarized various studies currently being conducted on midlevel ethanol blends. He explained that priority has been given to the study of small engines for two reasons. First, it is much easier to detect a change in emissions when working with a small engine when compared with automobile engines. Second, small engines are more affordable to purchase and test than automobiles. However, he assured attendees that testing is also being done on vehicles. According to Przesmitzki, the DOE should soon be issuing an interim report on small, nonroad engines. He also shared some of the preliminary results of a study the national labs have been undertaking using 16 vehicles. He said that they have experienced some decrease in fuel economy, some higher exhaust temperatures and higher catalyst temperatures. So far, the effects have been seen in seven of the 16 vehicles tested. Przesmitzki also addressed the suggestion that FFVs are equipped with the same parts as regular vehicle engines, by assuring attendees that that many engine parts are significantly different. The 22nd ACE Ethanol Conference & Trade Show will be held Aug. 11-13 in Milwaukee, Wis. EP

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Anna Austin and Erin Voegele are Ethanol Producer Magazine staff writers. Reach them at aaustin@bbiinternational.com or (701) 738-4968 and evoegele @bbiinternational.com or (701) 373-8090.

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RISK

Tighter Markets Provide Opportunities, Challenges By Todd Taylor

hen this article was originally written in August, VeraSun Energy Corp., Aventine Renewable Energy Inc. and other large ethanol producers were in relatively good financial condition. However, since midSeptember, VeraSun, Aventine and many other plants have experienced severe financial difficulties whose ramifications remained unknown at press time. Despite these companies' worsening circumstances, the underlying point of this article and the examples used remain valid for other ethanol plants that are struggling to thrive, not just survive. After several years of impressive growth, the soaring expansion of the ethanol industry has been brought back to earth. As a result, ethanol producers are experiencing the strain of reduced profit margins. To weather this business cycle and come out stronger, savvy ethanol producers must take steps to assess and improve their situation. Those that do not may not make it to the industry’s next upswing. Several options are available for ethanol producers feeling the pinch in today’s industry

climate. The most basic step is to cut costs and increase revenue. The least appealing, obviously, is liquidation. Between these two extremes lie other options, such as adding new technologies, refinancing company debts or finding a buyer. An analysis of how other producers are dealing with market changes can offer important lessons for you to determine your own route.

A Multifaceted Response An example of an ethanol company that has developed a multifaceted response to the tightening of margins is VeraSun Energy Co., one of the largest ethanol producers in the nation. By 2008, VeraSun had the capacity to produce 870 million gallons of ethanol annually, and had ambitious plans to expand its market share significantly. According to the company’s 2007 annual report, by the end of 2008, VeraSun projected that it would be operating 16 refineries and have capacity to produce 1.64 billion gallons of ethanol annually. However, market trends have forced a reassessment of that expansion. VeraSun cut

its costs by delaying the opening of new 110 MMgy production facilities in Hankinson, N.D., Welcome, Minn., and Hartley, Iowa. After analyzing its options, the company chose to delay commencing operation at each facility until “the outlook for ethanol selling prices and overall margins improve[d].” On July 22, the Hankinson plant began production after roughly a month delay. On Aug. 14, VeraSun announced start-up of Taylor the Hartley facility. At press time, the Welcome plant was not operating. Though the company remains optimistic about the future of the ethanol production industry, short-term analysis suggested it could protect assets and shareholder value by avoiding the high cost of starting up and operating these new plants in a climate where ethanol was “being sold at a deep discount to unleaded gasoline.” VeraSun has nonetheless continued with production at its other facilities and with the

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

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RISK it, VeraSun is attempting to manage its risks by maximizing its available funds in order to be sure it can achieve continued expansion in the face of current market difficulties. VeraSun’s proactive approach combined a number of strategies, but most important was VeraSun’s strategic approach to analyzing its situation and addressing potential trouble before it became a crisis.

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construction of other projects, such as new production facilities in Janesville, Minn., and Aurora, S.D. This continued construction reflects VeraSun’s strategy of identifying ways to increase revenue while reducing costs. The Aurora project, for example, is an oil extraction facility scheduled to be completed this fall and expected to yield 7 MMgy to 8 MMgy of corn oil annually, extracted from the distillers grains created during ethanol production. The oil will then be sold on the biodiesel market and “is expected to generate increased revenues and improved production economics,” according to Pete Atkins, VeraSun vice president of corporate development. VeraSun’s approach to handling the changing ethanol market goes a step further. In addition to cutting costs and finding new revenue streams, the company has refinanced in order to achieve additional liquidity. According to a June 2 press release, VeraSun entered a new revolving credit facility with UBS Investment Bank allowing maximum borrowings of $125 million, up from a previous secured revolving credit facility of $30 million. Every business expansion carries some inherent risks, especially during an economic downturn, but by refinancing its cred-

Another alternative to consider is looking for a buyer. For some producers, the market downturn has raised the difficult question of whether to continue operations in the face of financial stress or merge with another producer to achieve financial stability. Millennium Ethanol LLC chose the latter when it was purchased by U.S. BioEnergy Corp. in the spring of 2007. Formed in 2005 in Marion, S.D., Millennium Ethanol was affiliated with a large South Dakota farmers’ cooperative, Fremar Farmers Co-op, and was founded with the support of hundreds of local investors. The company’s founding vision was to support the local rural community and be a low-cost ethanol producer. Nevertheless, Millennium merged with the much larger U.S. BioEnergy in 2007, before it had even completed the construction of its 100 MMgy production facility. At the time, U.S. BioEnergy was one of the larger ethanol producers in the nation, with eight facilities and production capabilities of 700 MMgy after the merger with Millennium. (U.S. BioEnergy has since merged with VeraSun). Though founded on the principle of supporting local farmers through community investment, when the opportunity to consolidate with one of the largest production companies in the United States presented itself, Millennium Ethanol decided to go forward with the merger. The company executives examined their strategic options while keeping in mind their fiduciary duties and recognized a chance to “gain access to geographic diversity, management resources and cutting-edge technology... while also gaining access to capital resources and... capitaliz[ing] on the economies of a larger scale,” according to Steve Domm, Millenium Ethanol chief executive officer. While Millennium may have been strong enough to survive and thrive independently, in the end, the board and mem-

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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RISK bers decided to sell and U.S. BioEnergy paid more than $133 million in cash and stock for Millennium Ethanol, most of which came in the form of 11.5 million shares of U.S. BioEnergy stock, according to a report in Minneapolis/St. Paul Business Journal. In order to make these hard decisions, companies such as Millennium need to know where they stand in the marketplace, through benchmarking and other tools that employ hard data to analyze options and carefully assess their options.

Smaller Producer Remains Poised Smaller producers can develop similar strategies for dealing with the market downturn. Central Minnesota Ethanol Co-op successfully weathered similar market difficulties just as the company began production about nine years ago. CMEC was formed in 1994 but spent five years constructing a plant before finally opening its 15 MMgy facility in March 1999. Unfortunately, production commenced during a time of historically low ethanol prices, and substantial construction cost overruns had left the thinly capitalized company highly leveraged. In an industry climate where margins were slim, the companyâ&#x20AC;&#x2122;s revenue was insufficient to service its debts. CMEC decided that its best chance of survival was to engage its lenders in conversations about refinancing. CMEC had some negotiating power because, unless producing ethanol, the value of the property and equipment on which liens could be asserted was minimal. With the help of an experienced attorney, the company was able to restructure a large portion of its secured debt and was in negotiations to do the same with other lenders when ethanol prices began to climb. Because it had carefully weighed its options when facing financial stress, CMEC was able to survive long enough to thrive in that next wave of industry growth. Today, CMEC has a reputation for being forward-thinking. The facility was first in the nation to install biomass gasification technology in 2006 in an effort to become fully energy independent. CMEC is researching the feasibility of creating a chemical catalyst-free cellulosic ethanol plant in collaboration with SunOpta BioProcesses and has applied for a grant to develop technology that will facilitate the extraction of

RISK moisture from wood chips used in the gasification unit for water needs during ethanol production. When times got tough for CMEC, it fought hard to survive and is now implementing new technologies and processes to enhance revenues and ensure its survival for the future.

Worst-Case Scenarios Happen For producers that are slow to respond to market changes, especially those that have turned a blind eye to their troubles, strategies to avert disaster may not be available. Such producers may find themselves unable to finance new revenue-generating strategies, obtain refinancing or find a buyer on favorable terms. Then, facing mounting debts and forced to seek a buyout, such producers will have few choices left. Such was the case for Central Illinois Energy, which was bought out from bankruptcy in March 2008. CIE was formed to build and operate a 37 MMgy cooperative ethanol production facility in Fulton County, Illinois. Construction began in the spring of 2006 and was projected to cost approximately $90 million, $13 million of which was to go toward start-up costs and working capital. CIE was funded, in part, through the investment of 250 local farmers, with the goal of continued economic benefits for the surrounding community. Substantial additional funding came from lender Credit Suisse. However, by December 2007, with the plant nearly finished, construction and startup costs for the production facility had gone up to $130 million. Investors ran out of money, unpaid contractors abandoned the job site and CIE declared Chapter 11 bankruptcy. It was later revealed that the financial problems at the facility went unnoticed due to unorthodox bookkeeping. According to CIE’s bankruptcy attorney, the CIE plant manager had been drawing money from three separate accounts (for the operating company, holding company and cooperative) to pay bills, depending on which account had sufficient funds at the time, according to the Canton, Ill., Daily Ledger. CIE was bought out by a consortium of lenders for $80 million, roughly the amount of the company’s outstanding debts. CIE’s senior lender, Credit Suisse, was a part of the consortium of lenders, along with Whitebox

Advisors, a Minneapolis hedge fund, that bought out CIE. The buyers formed a new entity, New CIE OpCo LLC, and are responsible for $22 million in mechanics liens and the expense of completing the construction of the plant, an estimated $25 million. The original CIE investors lost all of their investment. CIE is a valuable example of the importance of having systems in place for the early detection of financial difficulties. Much like CIE, Wyoming Ethanol LLC and its parent company, Renova Energy, filed for Chapter 11 bankruptcy at the end of June, citing increasing costs of constructing a 20 MMgy facility in Heyburn, Idaho. Ethanex Energy Inc. and

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Convergence Ethanol Inc. went a step further and filed for Chapter 7 liquidation bankruptcy in March 2008 and December 2007, respectively, leaving nothing behind for the equity investors. Unfortunately, many industry experts expect to see more small to mid-size ethanol companies facing severe financial stress as a result of current market pressures. Don’t let yours be one of them. Learn from the experiences of other producers. EP Todd Taylor is the lead shareholder in the biofuels group at the law firm Fredrikson & Byron. Reach him at ttaylor@fredlaw.com or (612) 492-7355.

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CELLULOSE

The Important Role of Enzymes in Cellulosic Ethanol By Emmanuel Petiot

he future of biofuels is getting closer as the industry works tirelessly to turn biomass into economical fuel ethanol, but many questions still need to be answered. One important piece of the puzzle is the enzyme hydrolysis step, which is key to making the feedstock available to allow an efficient fermentation of the lignocellulosic materials cellulose and/or hemicellulose.

The production of ethanol from biomass can be broken down into the steps shown below. Although the process consists of many of the same steps as current starch-based ethanol conversion, it is not as easy to perform and, as yet, no commercial process is available. To develop a successful commercial process, all of these steps need to be integrated because there is a complex interplay between them. One reason why

this process is much more difficult than starch-based conversion is because biomass material is much more complicated than its starch-based counterparts. Biomass contains lignocellulosic fibers, which are composed of three major fractions: cellulose, hemicellulose and lignin. While enzymes are able to attack the polymeric sugar chain in the cellulose and hemicellulose fractions, releasing monomeric

The steps needed to convert lignocellulosic feedstock into ethanol are more complicated than corn-to-ethanol production.

SOURCE: NOVOZYMES

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CELLULOSE sugars for fermentation, they cannot break down the lignin. The presence of this lignin, a complex natural polymer, makes processing biomass more difficult.

Solutions for a Complex Problem It has been noted much in the news that one of the stumbling blocks for transforming biomass into biofuels is the lack of cost-efficient enzymes. Enzyme cost has already been dramatically reduced due to dedicated research, but it needs to be further reduced. This is due to the complexity of the biomass material discussed earlier. To solve this issue, new types of cellulases and hemicellulase activities are being developed. Unfortunately, a complete â&#x20AC;&#x153;one-stop solutionâ&#x20AC;? is not possible as the type of feedstock and its composition, as well as the steps prior to enzymatic hydrolysis, have a lot to do with which enzymes are needed to optimally perform. Pretreatment is needed to open up the fibers and make the lignocellulosic substrate (cellulose and/or hemicellulose) accessible to enzyme action. A variety of pretreatment

AUCTION

methods are available that normally depend on a mechanical and/or chemical disruption of the feedstock. These methods make the cellulose and/or hemicellulose accessible for the enzymatic action, but due to their harshness, loss of material and generation of inhibitory compounds often take place as well. So far there is no clear winner in pretreatment, and the relative severity of these technologies is a difficult concept to master. It is imperative that a maximum amount of sugars be made available without destroying any valuable material. A major complexity to note is that the enzymes must match the selected technologiesâ&#x20AC;&#x201D;the feedstock used as well as the process. For example, if a dilute acid pretreatment is used, most of the hemicellulose is degraded and hemicellulases will not be needed. However, if an alkaline or neutral pretreatment is used, the hemicellulose still needs to be hydrolyzed and hemicellulases will be needed. The enzymes needed for cellulosic conversion must be tailormade to fit the rest of the process. Another difficulty is in the cellulose

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component of the biomass. In order to efficiently break it down, a mixture of several proteins with different activities is required. This cocktail includes three basic types of enzymes. Endoglucanases break bonds between adjacent sugar molecules in a cellulose chain, fragmenting the chain into shorter lengths. Endoglucanases act somewhat randomly along the length of the cellulose chain, although they prefer amorphous regions where the chains are less crystalline. Cellobiohydrolases attack cellulose chains from the ends of the chain. This exo- or processive action releases mainly cellobiose (composed of two glucose sugar units). Because endoglucanases create new ends for cellobiohydrolases to act upon, the two classes interact synergistically. Beta-glucosidases break down short glucose chains, such as the glucose dimer cellobiose, to release glucose, a fermentable sugar. Beta-glucosidases are important as they act on cellobiose, which inhibits the action of the other cellulases as it builds up the hydrolysis reactor. After successful enzymatic hydrolysis has taken place a further challenge is faced at the fermentation stage. The five-carbon sugars produced by the hydrolysis of hemicellulose cannot be fermented by any yeast or microorganism currently in use—at least not in commercially relevant conditions. Research is proceeding to develop organisms that can effectively use these sugars in order to increase ethanol yields and make the whole process cost-efficient.

Sugarcane Bagasse, Corn Stover Sugarcane bagasse is made up of approximately two-thirds carbohydrates. The remaining one-third is lignin and other materials. The second-generation process revolves around accessing the large amounts of cellulosic material blocked within the lignin-based shell and creating ethanol from it. Theoretically, one ton of sugarcane bagasse produces up to 300 liters (79 gallons) of ethanol. In reality the yield depends on a number of parameters such as quality of feedstock and process efficiency. Currently, 6,000 to 7,000 liters (1,600 to 1,800 gallons) of ethanol is produced from one hectare (2.47 acres) of sugarcane, not including the bagasse. When bagasse is included, the amount will as much as double: 12,000 to 15,000 liters per hectare (1,280 to 1,600 gallons per acre). Sugarcane bagasse has the most positive net energy balance of the common feedstocks. Eight times more energy is produced from sugarcane than what is used in its creation, according to the Brazilian Sugarcane Industry Association. When bagasse is included in the equation, it is estimated that the number may increase to as much as 16 times. Corn stover, which in a strict definition only includes leaves and stalks but also cobs when considered more broadly, is another feedstock of choice by some of the early industry movers. It is a relatively widespread feedstock used all over the world, and an abundant source of biomass. One metric ton of corn stover can theoretically be converted ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

CELLULOSE into 375 liters (99 gallons) of ethanol, but the same processing constraints apply as those mentioned earlier for sugarcane bagasse. In practice, the best lab- and pilot-scale plants can only produce approximately 290 liters (77 gallons) worth of ethanol with an aim to be as close as possible to the maximum yield. Corn stover consists of approximately 66 percent carbohydrates, with a good balance between five- and six-carbon sugars, which makes the efficient conversion of the latter as important as the former. One metric ton of harvested corn crop equals one metric ton of available corn stover. At this point, all projects pertaining to this feedstock take into account stringent sustainability criteria. When sourcing the agricultural residue for a given plant, players actually ensure that enough stover is left in the fields to maintain nutrition parameters at appropriate levels and to prevent soil erosion. A lot of work is being put into collection and storage, which remains a challenge as corn stover has a high bulk density. This, by the way, limits the value one can make out of burning corn stover.

Conclusion Although no one has a definitive answer to the question of when cellulosic ethanol will become economically viable, a reasonable answer is about two to three years from now. All of the elements are in place to almost certainly ensure eventual success for the industry. Within this timeframe it is probable that several plants will begin to produce cellulosic ethanol from feedstocks such as agricultural residues, wood residues and industrial waste. Ultimately, they will likely produce this on an industrial basis with 25 MMgy to 50 MMgy plants. Novozymes is putting a lot of effort into making cost-effective lignocellulosic ethanol a reality. Currently, a wide range of cellulase and hemicellulase enzymes are in the experimental stage. Bringing the cost of these enzymes down is the major challenge. An estimate of two to three years to support economically viable processes is realistic. EP Emmanuel Petiot is global biomass business development manager for Novozymes. Reach him at eptt@novozymes.com or (919) 4943022.

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PROCESS

From the Lab to Production: Direct Steam Injection Heating of Fibrous Slurries By Bruce Cincotta

he past five years have witnessed an explosion in the laboratory effort put into finding an economical way to develop pretreatment processes for biomass feedstocks in order to prepare them for conversion to sugar and ethanol. The next step requires taking that base of laboratory knowledge and converting it to on line processes. Because of the high temperatures and high desired-solids levels required for most pretreatment techniques, direct steam injection is the most practical approach to heating the slurry. The following introduces the challenges associated with scaling the lab pretreatment process to production levels, and some practical advantages of developing successful pilot strategies. All structural plant matter is a combination of cellulose, hemicellulose and lignin. Only the direct cellulose is readily convertible to fermentable products. Hemicellulose must be converted to a fermentable form of sugar, and the lignin is generally not convertible and must be

removed. Cellulose is the part of the carbohydrate portion of plants such as grass, corn stover, straw and trees. Like conventional starch conversion to ethanol, hemicellulosic materials can be converted to sugars and fermented to create ethanol, biodiesel or other useful energy products.

The Process In all biomass processing cases, the main technological problem is to free the cellulose material in the plant to allow it to be converted without significantly reducing the yield of the existing cellulose material. This process is generally referred to as â&#x20AC;&#x153;pretreatmentâ&#x20AC;? of the biomass. In the pretreatment step, a slurry of feedstock is treated with heat, time and some type of chemical to convert the hemicellulose to a sugar. Pretreatment could also be used to change the nature of the hemicellulose in order to allow a secondary agent, such as an enzyme, to hydrolyze the cellulose. This step is conducted in either a batch or continuous process. In the batch

process, high-solids (20 percent to 25 percent) slurry of feedstock, usually corn stover, is fed to a high temperature reactor and subjected to high temperature (more than 300 degrees Fahrenheit). A strong chemical such as sulfuric acid, caustic or a solvent may also be present in the reactor. At the conclusion of the pretreatment step an acid or enzyme is added to hydrolyze the cellulose and form sugars. These sugars are then further processed and fermented to create ethanol. The continuous process is another approach to pretreatment taking a pumpable slurry of feedstock and subjecting it to heat and time to soften the hemicellulosic structure. The softened slurry is then treated with acid or alkaline to break down the slurry to a form that can be hydrolyzed with an enzyme to form sugars. This process would be in-line as opposed to batch.

Transition from Lab to Production Most of the current biomass research

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PROCESS work has focused on laboratory techniques to determine the effects of temperature and pH (among others) on the conversion rates. These lab settings resemble the chemistry labs one might have experienced in high school and college. Pretreatment laboratory work is almost exclusively batch-driven given the complexities involved in controlling low flow processes. As a result, there is a general lack of knowledge in the best approaches and potential problems with continuous heating of the biomass feedstock stream during pretreatment in a production process. Factors to consider when scaling up the lab process include: Flow rates will increase and add complexity to fluid transfer Residence times will change from a relatively fixed-hold vessel to a continuous flow The flowability of the slurry is an important factor Piping design and flow dynamics can add and/or change fluid velocities and impact the slurry flow.

Pilot Scale Considerations As with all new process development, technologies need to evolve from the lab stage to production-level processes. This is a significant leap as there is more focus on the chemistry than the mechanical process in most lab settings. The goal is to develop production-level processes that maintain the unique design technology and can be scaled to reach economically feasible production-level processes. For most transitions, a pilot plant stage allows companies to test out actual process components such as conveyors, heat transfer, mixers and pumps. Considerations for developing a pilot plant include: Design to mimic full scale process layouts Use equipment similar to full scale processes Be careful on the compromises from full scale Determine what you are trying to learn Make sure production-level equipment exists similar to pilot scale.

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PROCESS

Flow diagram of a steam sparger

SOURCE: PROSONIX LLC

Unlike grain mash ethanol, there are significant differences in the pretreatment of corn stover, switchgrass and wood fiber. Challenges associated with fiber slurry heating include: Heat exchangers are generally not viable because of processing temps of 300 degrees Fahrenheit or greater Mixing of steam and fiber is challenging Consistencies greater than 14 percent create potential pumping issues Fluid behaves as a pseudo-plastic fluid, limiting mixing in the pipe.

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The Advantages of Direct Steam Injection Direct steam injection has a long track record in challenging slurry heating applications. Steam is readily available and can be inexpensive to produce. Scaling from small to large flows with steam is effective and reliable. Steam can also assist with producing sterile conditions. A number of methods of direct steam injection can be considered. Spargers, fixed eductors and Venturi-style direct steam injection units generally use a fixed nozzle to inject steam. Steam control is attempted via an externally modulated steam control valve. With an externally modulated steam injector, the steam pressure is adjusted to control the flow rate of steam with a control valve. The use of external steam control devices to control the steam flow by modulating the steam pressure can lead to excessive steam hammer and vibration. Steam hammer and vibration often result from poor mixing and condensing of the steam. As temperature demand drops, steam pressure drops, lowering the steam velocity and potentially causing instability. Uncondensed steam bubbles will typically collapse when they come in contact with a cold pipe wall in the liquid piping. When these bubbles collapse, the slurry rushes in to fill the void and impacts the pipe wall. In some cases this will result in some pinging noise and, in severe cases, steam hammer and vibration. Reactor vessels for batch processing are capable of high solids percentage consistencies. They are flexible for hold time, temperature and pressure changes. Reactor heating can also be energy efficient with minimal water usage. Challenges with reactor heating include limitations associated with scaling up for production and their ability to be integrated with continuous production strategies. Reactor heating vessels also have high equipment costs associated with them. Inline direct steam injection is well suited for continuous fiber slurry heating processes. Inline direct steam injection heaters are capable of high temperature rise and can be arranged in a multi-stage layout to allow for precise temperature control and smooth operation. Inline direct steam injection heaters have a low pressure drop across the heater

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

PROCESS which minimizes energy demand on the slur- be given to proper screening and separation ry pumps and limits flow disruptions to the techniques. Preheating of water may be a slurry. practical way to reduce the steam and water demand. Keys to Successful Developing a successful pretreatment Direct Steam Injection strategy is obtainable and can be achieved by One of the key factors to successful using available planning and utilization direct steam injection is maintaining high resources. The integration of heat into the steam velocity for effective mixing and con- pretreatment plant design can be done relidensation of the steam into the fiber slurry. ably and with predictable results. The proInternal modulation allows steam to be inject- cessing of fibrous slurries has a long history ed at sonic velocity to achieve choked flow. in the pulp and paper industry with process Choked flow is the phenomenon of accelerat- fiber flow resources available through organing a vapor to sonic velocity by creating a pres- izations such as the Technical Association of sure differential through an engineered nozzle. By establishing choked flow, the steam mass flow can be metered to precisely control E X O T H the heating of the slurry. This produces predictable results based on position of the stem plug. Through a variable-area steam diffuser, steam flow is metered at the point where steam and liquid first contact and mix. This method eliminates the need for an external steam control valve or downstream mechanical mixing devices. Also: High velocity steam is essential (1,000 feet per second is ideal). Process and steam pressure differential are required. Steam jet characteristics critical to disperse steam and avoid hot spots. Proper sizing is important. Mechanical mixers to blend steam are not practical. Steam injection transfers a tremendous amount of energy and needs to be applied properly for successful results.

the Pulp and Paper Industry. Remember that a well thought out pilot plant plan is essential for identifying and resolving potential bottlenecks in the process. Once the production plant is operational, the pilot plant can continue to pay off by allowing for optimization of process design off line. EP Bruce Cincotta is the chief technical officer and co-owner of ProSonix LLC. Reach him at info@pro-sonix.com or (800) 849-1130.

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Process, Equipment Design Considerations When designing a pilot plant or scaling up for production-level processing, several factors should be considered when integrating direct steam injection for the pretreatment process. Avoid large, single-point steam additions and ensure a means for even steam distribution. Design the pumping and piping process to promote steady and stable slurry flow. Be aware of the pH environment and the potential for corrosion. Abrasives can be present depending on the feedstock, and particulates can be present from the biomass collection process. Some consideration needs to

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PROPAGATION

A Guide to Successful Yeast Propagation By Patrick Heist PHOTO: KEITH WELLER

very ethanol producer understands that active and healthy yeast are an integral part of the fuel ethanol production process. Many of the duties of laboratory and production staff involve monitoring the activities of yeast in propagation and fermentation. One of the first steps to optimal fermentation involves proper yeast propagation, a process that differs in several ways Heist from fermentation. Here we dissect the yeast propagation process, examine its purpose, common problems and how it can be optimized for best results. Yeast propagation holds several purposes. It serves to rehydrate, condition and increase yeast populations using their natural reproduction capabilities as living organisms. Unlike the various chemicals that are used in the process of making fuel ethanol, it is important to appreciate yeast as living

organisms and their requirement for an environment that supports their growth. The first thing to consider before delivering or “pitching” yeast to the propagation tank is the status of the yeast itself. The yeast Saccharomyces cerevisiae is typically used in fuel ethanol production. Check the yeast’s expiration date to make sure it isn’t spoiled or otherwise expired. Make sure the yeast is from a reliable source and has been stored properly, avoiding high temperatures for example. For active dried yeast this means checking that the yeast has remained vacuumsealed to retain viability, and wet cake yeast has been properly refrigerated and does not emit any odors associated with spoilage or rot. Fresh yeast, whether active dried yeast or wet cake, has a characteristic smell that can be equated with bread making with a slight hint of molasses, the substrate most often used to produce yeast on an industrial scale. Once it has been determined that the yeast is of high quality and viability, it can be added to the propagation tank with confidence. Tank size is important for propaga-

tion and is normally between 2 percent and 5 percent of the fermentor size.

Optimal Conditions The conditions of propagation are also critical for optimal yeast production and subsequent fermentation. They include adequate glucose, aeration, temperature and nutrient additions. First, the yeast needs a source of carbon, provided by adding liquefied mash, for cell wall biosynthesis and energy production. Without further enzymatic conversion, liquefied mash is low in glucose, typically below 0.5 percent. Glucose levels are elevated in propagation by adding the enzyme glucoamylase, similar to what occurs in fermentation. Higher polymers of glucose (DP4+, DP3 (maltotriose), and DP2 (maltose)) are converted to individual glucose subunits (saccharification), which are subsequently utilized by the yeast. One major difference between propagation and fermentation is that a much lower level of glucose is preferred in propagation compared to fermentation. Glucose levels should be targeted at or just above 2 percent

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PROPAGATION

at the beginning of propagation because higher glucose concentrations can induce the yeast to produce ethanol, resulting in less

energy production per molecule of glucose, rather than utilizing more of the available energy through aerobic respiration. Saccharomyces yeast is good at producing ethanol, and higher glucose concentrations will cause a default metabolism leading to ethanol production, a process known as the Crabtree effect. The proper amount of glucoamylase to add to the propagation mix to achieve close to 2 percent glucose is dependent on several factors, such as choice of enzyme, solids concentration in the mash, mash-to-water ratio and temperature. For a typical corn-to-ethanol plant with slurry solids measured at 32 percent to 34 percent with a mash-to-water ratio of approximately 70:30, which is standard, the amount of glucoamlyase is typically 0.5 to 1 gallon. Glucoamylase is typically added at the beginning of propagation at the same time as, or just prior to, yeast addition. Although quite easy to maintain at optimal levels, high glucose (5 percent and higher) in propagation is a chronic problem at fuel ethanol plants. One common misconception is that, compared to fermentation, glucose uptake is much slower in propagation. This is some-

what counterintuitive because of the increased energy production per molecule of glucose in propagation compared to fermentation. One must remember that close to 16 times more energy is generated during aerobic respiration per molecule of glucose when compared to fermentation. Another way to explain it is that during fermentation yeast uses only a portion of the energy contained in the glucose molecule, resulting in the high-energy byproduct ethanol, whereas yeast utilize much more of the energy when respiring aerobically during propagation. An analogy is taking only one bite out of a sandwich and leaving the majority behind (fermentation), compared to eating the whole thing (aerobic respiration), which takes more time and provides more energy. In addition to a carbon source, supplied by glucose, additional nutrients above what is naturally provided in the corn are added to optimize growth. Nitrogen in the form of urea is most often used at a rate of between 300 parts per million to 500 parts per million or higher. Although ammonia is also a good nitrogen source for the yeast, it can be inhibitory to yeast during rehydration.

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ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

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PROPAGATION Failure to add additional nitrogen can cause sluggish yeast growth, resulting in abnormally low yeast counts or slower metabolism. Additional ingredients like magnesium and zinc are sometimes added for additional benefit, but it is unclear whether this is necessary as the grain itself contains a certain amount of these elements.

As mentioned earlier, propagation is an aerobic process, thus the propagation tank must be properly aerated to maintain a certain level of dissolved oxygen. Adequate aeration is commonly achieved by air inductors installed on the piping going into the propagation tank that pull air into the propagation mix as the tank fills and during recirculation. The capacity for the propagation mix to retain dissolved oxygen is a function of the amount of air added and the consistency of the mix, which is why water is often added at a ratio of between 50:50 to 90:10 mash to water. â&#x20AC;&#x153;Thickâ&#x20AC;? propagation mixes (80:20 mash-to-water ratio and higher) often require the addition of compressed air to make up for the low-

PHOTO: JERRY KRAM, BBI INTERNATIONAL INC.

Providing Proper Aeration

Yeast propagation is a critical step in ethanol production.

ered capacity for retaining dissolved oxygen. The amount of dissolved oxygen in the propagation mix is also a function of bubble size, so some ethanol plants add air through spargers that produce smaller bubbles compared to air inductors. Along with lower glucose, adequate aeration is impor-

tant to promote aerobic respiration, which differs from the comparably anaerobic environment of fermentation. One sign of inadequate aeration or high glucose concentrations is increased ethanol production in the propagation tank. There will always be some ethanol pro-

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PROPAGATION duced during propagation, but limiting that is a good sign that the yeast is respiring aerobically as should be occurring during propagation.

Time and Temperature Yeast requires a comfortable temperature for growth and metabolism. A good temperature for propagation is between 92 and 94 degrees Fahrenheit. Lower temperatures result in slower metabolism and reduced reproduction, while higher temperatures can cause production of stress compounds and reduced reproduction. Due to the small tank sizes relative to fermentation and the fact that most propagation tanks are indoors and protected from the insult of high summer or low winter temperatures, maintaining optimum temperatures of between 92 and 94 degrees is usually not a problem. Another common question is how long to propagate yeast before adding it to the fermentor. Propagation times vary between ethanol plants, but most often range between six and 10 hours, which corresponds to the time it takes for the yeast to

reach exponential growth phase. Longer propagation cycles can result in the yeast entering stationary phase or a stage of decline due to depletion of nutrients and accumulation of byproducts such as acetic acid, which can cause a subsequent lag in yeast performance once in the fermentor. Shorter propagation cycles do not allow time for adequate doubling or reproduction of the yeast, one of the primary reasons for propagating in the first place. Determining optimal drop times for propagation may involve charting growth under the conditions described above and deciding when the yeast has reached exponential growth in relation to when it enters into the subsequent stationary or rapid decline phases. Bacterial or wild yeast contamination is rarely a problem during propagation because yeast propagation tanks are smaller and can be more easily cleaned than fermentation tanks. Propagation tanks are also indoors, allowing for better temperature control. Another factor contributing to lowered contamination is that propagation takes much less time than fermentation, thus contaminating microorganisms donâ&#x20AC;&#x2122;t

have adequate time to reach significant numbers. In addition, there is less glucose available for contaminating bacteria and wild yeast. If contamination does occur in the propagation tank it is almost always related to inadequate cleaning, malfunctioning or damaged equipment, or other error. Heat exchanger or piping issues are a leading cause of contamination in propagation tanks. Apart from cleaning, antibacterial products are often added to prevent growth of unwanted microbes. Prefermentors at continuous plants are more likely to harbor contaminating microbes due to lengthy periods between cleanings, which can go on for more than a year in some cases. In summary, yeast propagation is an integral part of the fuel ethanol production process. By following the aforementioned guidelines, propagation can be optimized and problems in fermentation minimized. EP Patrick Heist is chief scientific officer for Ferm Solutions Inc. Reach him at eheist @ferm-solutions.com or (606) 218-5429.

OPTIMIZATION

Emerging Energy Optimization Opportunities for Ethanol Facilities By Philip A. Marrone, Kenneth R. Liberty and David J. Turton

n the October issue of EPM, several options for improving ethanol plant operation were presented from a process-related perspective. This article, the second in a three-part series, focuses on energy-related changes that could improve the ethanol production process or reduce energy costs. Many of the energy-related optimization options available are related to fuel choice and efficiency with respect to the heating/cooling and power requirements for running the various unit operations involved in ethanol production. The goal of all of these options is to decrease the net energy requirement (and consequently the associated cost) of fuel ethanol production relative to the standard process in the United States. All of the options yield significant savings but are not yet in widespread use or considered standard. A more detailed discussion of these and additional options can be found in the full-length version of this three-part series, available at www.ethanolproducer.com/articles/Emerg ingOptimizationOpportunities.

Pervaporation, Capillary Distillation The act of purifying ethanol through traditional distillation techniques is the single-largest consumer of energy in ethanol production. Roughly between 50 percent and 60 percent of the energy used in the fermentation process can be accounted for during distillation. Consequently, it's appropriate to examine the distillation process first when identifying energy-saving opportunities. Two techniques for reducing energy consumption during distillation are pervaporation and capillary distillation. Pervaporation involves the separation of two or more components across a membrane by differing rates of diffusion through a thin polymer and an evaporative phase change comparable to a simple flash step. A concentrate and vapor pressure gradient is used to allow one component to preferentially permeate across the membrane. Using such membranes to replace both the rectification column and the molecular sieve unit has been proposed in a conventional process. This process could

save up to 50 percent of the overall energy consumption in distillation while at the same time yielding a 99 percent pure ethanol stream. This technology has been installed on a demonstration scale in an ethanol plant in Chatham, Ontario. Capillary distillation utilizes fractionating plates with capillary-type passages to alter the vapor-liquid equilibrium of two compounds and yield high tray efficiencies. The overall result is a shorter column requirement and less energy input to affect the same separation as conventional columns.

Cogeneration Also referred to as combined heat and power, cogeneration is the combined generation of steam and electricity for use in a plant. In a cogeneration facility, steam is generated in a boiler, passed through a turbine to generate electricity and then sent on to a process that requires heating. Alternatively, the hot flue gases from the fuel combustion can be sent directly to a gas turbine for electricity generation and then to

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a waste heat boiler or other device for further heat recovery. Cogeneration thus allows a plant to eliminate or reduce the need to purchase electricity and allows for a more efficient use of fuel in generating the plantâ&#x20AC;&#x2122;s energy needs. While cogeneration technology isn't new, its application in the ethanol industry hasn't been widely implemented. Most of the ethanol plants that utilize cogeneration are wet mills, likely because of their larger size relative to a typical dry-grind plant. While the capital cost of installing or retrofitting cogeneration isn't insignificant, the benefits of reduced utility costs over time makes this a worthwhile option to consider, particularly as fuel costs continue to rise.

Biomass for Fuel Biomass holds potential not only as an ethanol feedstock but also as a direct fuel source or a feedstock for other fuels that can be used for power generation. Most ethanol plants generate energy for the plant by burning fossil fuels. This is expensive, especially with today's rising fuel prices. The use of low-cost and/or readily available biomass as an alternative fuel can therefore be very attractive. The most obvious source of biomass

for an ethanol plant to consider is that associated with the dead yeast cells and other non-fermentable solids (e.g., protein, fiber) in the stillage. Whether stillage is more valuable as fuel or livestock feed depends on the price of alternative fuel sources (e.g., natural gas) versus the selling price of distillers grains. Other sources of available biomass include agricultural waste (e.g., corn stover), manure and lignin. The most popular ways to convert biomass to fuel are by direct burning, gasification or anaerobic digestion. Direct burning is the simplest way to extract the energy value of biomass. Distillers grains and condensed distillers solubles (i.e., syrup) have a sufficiently high heating value, so they can be burned as fuel to generate steam or operate the drum dryers used to generate distillers dried grains (without solubles). A Minnesota plant that has burned syrup since 2005 has reduced its natural gas use by up to 54 percent. In addition to the energy savings, burning distillers grains or syrup avoids the logistical difficulties in having to store, transport and sell these coproducts, although it also eliminates the income from their sales. If conveniently available, agricultural waste is an ideal fuel or fossil fuel supplement because it provides a use for waste material. Dry manure (less than 20 percent moisture) can also be burned directly. Use of these materials is most economical for ethanol plants located near farms or ranches since transportation costs can outweigh the energy value. Conventional gasification or reforming uses high temperature and steam with limited or no oxygen to break down organic substances into synthesis gas (primarily carbon monoxide and hydrogen). These gaseous products are valuable for use as a fuel by itself or for building larger organic molecules (including ethanol) via a catalytic Fischer-Tropsch synthesis reaction. Gasification isn't a new technology, but its consideration for biomass feeds such as corn stover has only occurred over the past 30 years. Although there has been considerable recent interest in gasification for generating alternative liquid fuels from biomass, use of this technology in an existing ethanol plant at the present time is unknown. Anaerobic digestion is a process where organic matter is decomposed by bacteria in

OPTIMIZATION the absence of oxygen to generate a gaseous mixture (referred to as biogas) consisting primarily of methane. The process is commonly used for wastewater treatment and has been utilized by several ethanol plants for processing relatively small quantities of off-spec fermentation batches. Digestion of the much larger quantities of stillage that are produced in a typical plant would generate a volume of gas that could justify its recovery and use as a fuel within the plant. Several designs where an anaerobic digestion system replaces the centrifuge, evaporator and dryer within an ethanol plant have recently been proposed. Anaerobic digestion can easily accommodate other biomass sources such as agricultural waste and manure. The main hurdle that has prevented widespread use of anaerobic digestion by the ethanol industry has been cost (up to 30 percent greater in capital cost). However, elimination of two critical economic factors in plant operationâ&#x20AC;&#x201D;fuel and distillers dried grains with solubles (DDGS) pricesâ&#x20AC;&#x201D;provides a powerful incentive that may make the initial high cost worthwhile.

Improved Efficiency, Energy Extraction This is a key reason why energy use in ethanol plants has dropped considerably over the past few decades. The most efficient plants are getting at least two uses out of most of their energy inputs. One way to increase energy production efficiency is through cogeneration. Plants have also been reusing waste heat and utilizing regenerative heating. Examples include using hot gaseous effluent from the DDGS drum dryers to heat the thin stillage evaporators and using evaporator waste heat to augment what's needed for distillation. The improved energy costs must be weighed against the higher capital expense and more complex operation. Another strategy to consider is cooperative energy. Excess heat or power can be captured and transferred from a nearby industrial facility to the ethanol plant or vice versa. This synergistic relationship fosters good neighbors and reduces overall energy costs. The downside to this strategy is the dependence on this synergy. For example, if there is a plant shutdown for maintenance, there needs to be a backup plan so

that there is no effect on the collaborating plant. This backup system could result in additional capital costs and maintenance to ensure no disruption to the dependent processes. In addition, pinch technology is a methodology that seeks to maximize heat recovery in a process facility by systematically identifying all heat gradients and then determining the optimum heat recovery scenarios. Many facilities that have applied this methodology have seen energy savings of 20 percent.

Elimination, Minimization of Drying Drying distillers grains and solubles is one of the most energyintensive unit operations in a dry-grind ethanol plant, consuming as much as one-third of a plant's entire energy requirements. Thus, any method of incrementally reducing the energy demand of the drying step can yield substantial savings. Of course, elimination of the dryers and evaporators altogether is the most straightforward solution if there is either a nearby market for distillers wet grains or if the stillage is used for its heating value within the plant. One way to minimize dryer energy costs is to reduce the load of material or water content that is sent to the dryer. This can be accomplished by eliminating or reducing the flow of condensed distillers solubles, or syrup, to the dryer. Elimination of this liquid from the dryer feed can reduce the dryer energy requirement. Another option is to increase the concentration of the syrup before sending to the dryer, decreasing the water load. While the increase in viscosity can make more concentrated syrup difficult to handle without a properly designed evaporator, the downstream dryer energy savings may be considerable. The syrup could also be concentrated by a less energy-intensive method than evaporation by utilizing one of various types of lowtemperature filtration such as reverse osmosis or nanofiltration. Such a system can provide energy savings by both eliminating the evaporator and reducing water load to the dryer.

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OPTIMIZATION Raw Starch Hydrolysis Also referred to as cold saccharification, cold cooking or cold hydrolysis, raw starch hydrolysis is a process that converts starch to glucose directly, without heating. It thus avoids the traditional energyintensive and high-temperature (more than 158 degrees Fahrenheit) liquefaction and saccharification steps. In the raw starch process, ground corn is slurried with water and enzymes at a temperature between 86 and 104 degrees Fahrenheit. This is comparable to the temperature range of fermentation, which follows once the starch has been fully hydrolyzed to glucose. Although work on this process began as far back as the 1940s, it wasn't until 2004 that it became a mature commercial-scale process. A key breakthrough for this process was the development of alpha-amylase and glucoamylase enzymes capable of converting solid starch to sugar without heat. Several companies, most notably Poet LLC and the team of Genencor (Danisco Inc.), ICM Inc., and Fagen Inc., have developed versions of this process. As of early 2006, there were at least 10 ethanol plants employing this technology. However, not all companies are fully convinced that the benefits of raw starch hydrolysis outweigh its drawbacks. The main advantage of the raw starch process is the significant reduction in energy consumption caused by not heating the feed above the temperature of fermentation (i.e., approximately 86 degrees Fahrenheit). The elimination of the liquefaction and saccharification unit operations also provides considerable time and cost savings. Other benefits are reduced water and waste costs, improved conversion efficiency, and increased protein content and quality of feed coproducts. Disadvantages of utilizing a lower temperature include the increased cost and amount of enzymes needed for raw starch hydrolysis, slow conversion, an increased number of undesirable microorganisms and toxins that would normally be destroyed/inactivated by heat, and the incomplete liberation of endosperm starch. While these disadvantages aren't insurmountable, addressing them will minimize the cost savings derived from the process benefits. Each plant needs to weigh the pros

and cons subject to its own unique operating conditions to determine whether raw starch technology is worthwhile to implement.

Summary of Energy Optimization Options Most of the options presented here address energy savings by operation either 1) at lower temperatures, 2) with a more efficient and effective use of energy, or 3) with alternatives to traditional fossil fuels. Many of these options have the initial hurdle of high capital costs but ultimately achieve savings over the long term through decreased energy costs. The key to whether an option is worth implementing for a particular facility will likely depend on how quickly the return on investment is achieved. As energy prices continue to rise, implementation of these energy-saving options may become more favorable. Unlike the process-related optimization options (discussed in the October issue), many of the energy options (e.g., cogeneration, anaerobic digestion, regenerative heat exchange) aren't unique to an ethanol production plant. Many of these options are more fully developed and mature because of their more extensive industrial uses, even if they have yet to be fully embraced by the fuel ethanol production industry. Regardless, the cost of energy plays such a critical role in plant viability that even small improvements can result in significant savings. The next and final installment of this three-part series will focus on waste and coproduct-related options to improve the ethanol production process. EP The authors would like to thank Bryan Yeh of Science Applications International Corp. for his contributions to this article. Philip A. Marrone is a chemical engineer, Kenneth R. Liberty is a biochemical engineer and David J. Turton is a civil engineer with Science Applications International Corp. Reach Marrone at marronep@saic.com or (617) 6184686. Reach Turton at david.j.turton@saic.com or (443) 402-9209.

INDUSTRY

Cellulosic Ethanol Collaborations: Matchmaking Isn’t Easy By Carey Jordan and Paul Landen

oaring oil prices, the concentration of hydrocarbon reserves in countries with unfriendly or unstable regimes, the worldwide push to lower greenhouse gases, and the emerging political concerns regarding food-based biofuels have led some to refer to cellulosic ethanol as a “silver bullet” solution to the energy crisis. The U.S. renewable fuels standard mandates that advanced biofuels, which include cellulosic ethanol, constitute 21 billion gallons of the nation’s gasoline pool by 2022. However, no commercially available cost-effective cellulosic biofuel technology is yet available. Start-up ventures, funded largely by venture capitalists, have taken the early lead in developing cellulosic biofuel technology. In the race to develop cost-effective commercialization of cellulosic biofuels, major oil, chemical and automotive companies, acting as strategic partners, have entered into collaborations with these start-ups. These arrangements, likened by some to the tie-ups between big pharmaceutical and biotechnology companies, provide the start-ups with needed cash and potential

project development, logistics and infrastructure support, and allow the strategic partner to immediately bolster its green credentials and provide key technologies without the delays, risks and costs inherent with in-house development. Recent examples of these include the strategic alliance between BP Amoco PLC and Verenium Corp., the joint venture between DuPont and Genencor, and investments by Marathon Oil Corp. and General Motors Corp. in Mascoma Corp. Left unstated in the glowing press announcements looms the potential for divergent interests between the strategic partner and the start-up. Both parties should choose the other with care and understand the potential areas of misalignment.

Are the Parties Aligned? The start-up will seek to commit the strategic partner to provide financing sufficient to satisfy its investors, as well as to enable the start-up to weather schedule slippages and problems that arise during the pilot process or commercialization. In

addition, the start-up may be looking to the strategic partner for much-needed expertise in project/construction management and plant operation, regulatory compliance, logistics support, marketing to blenders, and/or pursuing and maintaining patent protection on a global basis. The startup will also want to Jordan prevent the strategic partner from foreclosing other options for it to exploit its technology to provide its investors with the quick returns and exit options venture capitalists and hired-in professional manageLanden ment teams seek. The strategic partner’s objectives will in part depend on the nature of the investor. For instance, it's likely that DuPont wants to commercialize and

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license technology that it believes will be useful in the field. GM wants to secure a green source of ethanol production for its next-generation flexible-fuel vehicles but doesn't want to be an ethanol producer. On the other hand, Weyerhaeuser Co. likely sees opportunities for its wood mills and forest plantations as cellulosic ethanol can be produced from wood chips and wood mill tree waste.

Some objectives will be shared by many strategic partners regardless of their nature, and these objectives often are not aligned with the start-up’s objectives. First, the strategic partner won’t want to be locked into a single company or single technology as indicated by GM’s investments in both Mascoma and Coskata, which have different technologies. Additionally, Shell has invested in Choren

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Industries GmbH, a German company focused on producing biofuels from biomass (e.g., wood chips), in addition to taking an approximately 50 percent ownership interest in Iogen Energy, a Canadian firm making biofuels from non-food sources (e.g., wheat straw). Second, a strategic partner will want to control its spending both in the aggregate and year-to-year. Moreover, the strategic partner will seek the flexibility to cut its losses and stop funding if milestones aren’t met or test results are unfavorable. If the technology proves successful, the strategic partner likely has a longer investment horizon than the start-up’s investors and will seek an exploitation plan tailored to its strategic objectives, which likely differ from the start-up’s investors. The introduction of a strategic partner could potentially accentuate divergence in the interests of the start-up constituencies. While the strategic partner likely will be focused on ensuring that the founders and technology gurus of the start-up are properly incentivized to stay, it may have far less interest in protecting the start-up’s professional management and financial backers.

A Range of Collaboration Forms Just as there is an array of potential types of strategic partners, there is a range

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Several high-profile collaborations have impacted the race to commercialize cellulosic ethanol. A few are highlighted here: DuPont and Genencor: In May, the duo formed a 50/50 global joint venture named DuPont Danisco Cellulosic Ethanol LLC. The intent is the develop and commercialize technology for cellulosic ethanol production. The three-year, $140 mil- Verenium Corp. is using its partnership lion investment will initially target corn stover and with BP to commercialize its cellulosic sugarcane bagasse. Future feedstocks include lig- ethanol process. nocellulosic sources, a variety of energy crops and other biomass. The parent companies will license their combined existing intellectual property and patents related to cellulosic ethanol. BP and Verenium: In August, these companies announced a strategic partnership to develop and commercialize cellulosic ethanol. The financial terms of the initial phase of the strategic alliance include $45 million for broad access to Verenium’s cellulosic ethanol technology platform, production facilities, and employee scientific knowledge and expertise. An additional $2.5 million per month over 18 months will cofund Verenium’s various scientific and technical initiatives within the cellulosic field. The companies’ joint efforts will be directed by a joint development agreement. Beyond the initial phase of the alliance, the companies said they expect to negotiate a joint venture to accelerate commercial deployment of the technologies. GM and Mascoma: In May, GM and Mascoma announced a strategic relationship to develop cellulosic ethanol based on Mascoma’s single-step biochemical conversion of non-grain biomass into low-carbon alternative fuels. The relationship includes an undisclosed equity investment by GM. GM said it’s multi-dimensional involvement with Mascoma will include projects to evaluate materials and other fuels for specific engine applications as well as collaborating on Mascoma’s efforts to expand its commercialization projects globally. Marathon and Mascoma: Also in May, Marathon announced a $10 million equity investment in Mascoma, which will go toward the funding of research and development activities at Mascoma, as well as the construction of operating facilities.

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PHOTO: VERENIUM CORP.

Collaborations in the Race to Commercialization

of potential collaborative forms to consider. They are not all mutually exclusive. The most straightforward and least entangling arrangement is a technology license from the start-up to the strategic partner. A variety of commercial arrangements short of a full joint venture are possible. The BP/Verenium strategic alliance is one example. During an initial 18-month “strategic alliance” that is intended to last through development of a pilot plant, the parties license their respective technologies to a newly formed special-purpose entity owned by them 50/50, with the parties retaining ownership of their respective technologies. Jointly developed intellectual property during such a period is owned by the special-purpose entity. Following the strategic alliance, the parties are expecting to negotiate a joint venture for commercial production of cellulosic biofuels. Dupont Danisco Cellulosic Ethanol LLC is illustrative of a robust joint venture. Dupont and Genencor (a division of Danisco AS) announced that they have formed a 50/50 joint venture to which each partner contributed certain technology. The partners have committed to spend a total of $140 million over three years to develop the technology and construct pilot plants with a view to licensing the technology once it is proven successful. In connection with a strategic alliance

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

INDUSTRY or a technology license, the strategic partner may make an equity investment in the startup. The equity investment creates alignment by providing economic reward to the strategic partner for the start-up’s future success. Often the investment will be accompanied by board representation or other governance, access or intellectual property rights. Recent examples include the GM and Marathon investments in Mascoma, GM’s investment in Coskata, and Shell’s investment in Iogen and Choren Industries. The ultimate collaboration is a full acquisition of the start-up by a strategic partner. Once companies develop technologies that are proven to be commercially viable, acquisitions of start-ups by strategic players are expected.

Technology Ownership, Licensing Issues A host of issues, including governance and exit strategies, valuation of relative contributions and other matters are presented by these various collaborative arrangements. Because technology is the core asset of the start-up and the key to unlocking the success of cellulosic ethanol as an industry, the following focuses on a few key technology licensing issues. By virtue of a collaboration with a start-up, the strategic partner is risking not only its cash outlay for unproven technology, but also exposing itself to potential liability for patent infringement if commercializing the start-up’s technology infringes the intellectual property rights of others. In an infringement suit, the strategic partner will be the “deep pocket,” and therefore a target of any potential patent action, which is definitely undesirable as treble damages are possible. Moreover, such risks are real and looming, not only because of the buzz surrounding cellulosic ethanol, but also the sheer number of companies developing technology. Because of these potential risks, it is critical that the strategic partner do the necessary due diligence before entering into a collaboration with the start-up. The diligence should not only evaluate the start-up’s technology and patent portfolio, it should also involve a clearance analysis to identify any other patents that may prove to be blocking patents to the strategic partner’s

commercialization of the start-up’s technology. By performing the due diligence, however, the strategic partner should be aware that if the negotiations fail, it could subject itself to potential claims by the start-up, especially if the strategic partner makes a different investment with another company using similar technology. A key concern for the start-up in any technology licensing arrangement with a strategic partner is how much control the start-up retains over the technology to be able to continue to monetize this primary asset. Ownership of improvements and the start-up’s ability to license those will also be a concern. To protect the start-up’s interests, the agreement could carve out “fields-of-use” (i.e., restricting permitted use to a particular industry or product) to create future licensing paths for development with other players. The strategic partner may insist that these be limited to industries or products outside of its primary field or to companies that are not its key competitors.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Another key negotiating area for both the strategic partner and the start-up will concern what happens to the technology and licensing rights should the collaboration fail. These must be considered.

Choose Carefully, Do Homework Both the constituent members of the start-up and the strategic partner must choose their partners carefully in any collaboration, structure arrangements that meet their specific needs, do their diligence and other homework, go into negotiations with eyes open and develop a negotiation strategy that addresses both the possibilities of future success and potential failures of the collaboration. EP Paul Landen is a partner in the global projects group of Baker Botts LLP. Reach him at paul.landen@bakerbotts.com or (713) 2291173. Carey Jordan is a partner in the intellectual property group of the law firm Baker Botts LLP. Reach her at carey.jordan @bakerbotts.com or (713) 229-1233.

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World Ethanol 2008

Oklahoma Biofuels Conference

Bio-Fuels Thailand

November 3-6, 2008

November 12-13, 2008

Le Meridien Montparnasse Hotel Paris, France

Skirvin Hilton Hotel Conference Center Oklahoma City, Oklahoma

Centara Grand at CentralWorld Bangkok, Thailand

This 11th annual event, hosted by F.O. Licht, will feature top industry experts, including senior representatives from the oil and automotive industries, and assess the outlook for agricultural commodities and nonfood feedstocks. The conference includes an ethanol production workshop, a risk management seminar and an exhibition hall. Last year, the conference attracted more than 800 delegates from 58 countries. +44 (0) 20 7017 7499 www.agra-net.com/worldethanol

This third annual event takes an in-depth look at the latest regulatory, agricultural and technical developments impacting the biofuels industry in Oklahoma. The agenda will offer updates on the Oklahoma Bioenergy Center’s research fields, legislative developments, feedstock options, biorefinery construction, carbon control policies and sustainability. (800) 203-5494 www.growok.com

This seventh annual event’s keynote address will provide a market overview, and address pricing and challenges of ethanol in Thailand. International perspectives will be presented, along with technology strategies and other critical concerns for the biofuels industry. A roundtable panel will discuss E85. A tour of the Thai Agro Energy Ethanol Plant, and PTT Research and Technology Institute, will be available to attendees. (66 02) 254 8321-4 www.abf-asia.com/project/c908($).pdf

EVENTS

CALENDAR

Waste to Energy: International Exhibition & Conference for Energy from Waste and Biomass

National Ethanol Conference February 23-25, 2009

February 25-27, 2009

San Antonio Convention Center San Antonio, Texas

Las Vegas Convention Center Las Vegas, Nevada

D e c e m b e r 1 0 - 11 , 2 0 0 8 Bremen Exhibition & Conference Centre Bremen, Germany This fourth annual event will focus on waste as a resource for the production of biogas, biofuels and more. Agenda topics will include material flow management, separation and sorting, residues, shredding and grinding, and power and biogas plants. A breakout session will address biofuels, including ethanol in particular. +49-421-3505-347 www.wte-expo.com

154

Renewable Energy Technology Conference & Exhibition

This event will cover the industry’s impact on the U.S. economy, the environment, food prices and the international market. A record of nearly 2,500 people attended in 2008. An agenda will be available as the event approaches. (202) 289-3835 www.ethanolrfa.org

This event will include a business conference, a trade show and several side events. The business conference will address the status and outlook of renewable energy. One breakout session in particular will focus on biomass and biofuels. It will address sustainability, feedstocks, financing, ethanol production technology, a global market outlook, engines and fueling stations, and nextgeneration facilities. (805) 290-1338 www.retech2009.com

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Ethanol & Biodiesel Management University

Biofuels Markets Africa November 20-21, 2008

November 19-21, 2008

Table Bay Hotel Cape Town, South Africa

Millennium Knickerbocker Hotel Chicago, Illinois

Canadian Renewable Fuels Summit December 1-3, 2008 Hilton Hotel Lac Leamy Hull, Quebec

The approval of the Biofuel Industrial Strategy for South Africa in December provides fresh impetus for the country’s biofuels market, along with a foundation and road map to advance the market. The initial 2 percent biofuels penetration scenario totaling 105 MMgy will create 25,000 jobs, according to the strategy. This third annual event will bring together executives from across Africa to discuss strategies that will enhance the development of a sustainable, regional biofuels industry. +44 207 801 6333 www.greenpowerconferences.com

Themed “Growing Beyond Oil,” the Canadian Renewable Fuels Association’s fifth annual event will continue discussion of the progress, challenges and opportunities facing the Canadian biofuels market. It will focus on policy and marketing, and will be attended by a number of industry representatives from all levels of the ethanol and biodiesel industries. (519) 576-4500 www.canadianrenewablefuelssummit.com

Canadian Renewable Energy Workshop

Alternative Fuels & Vehicles National Conference + Expo

International Fuel Ethanol Workshop & Expo

M a r c h 9 - 11 , 2 0 0 9

April 19-22, 2009

June 15-18, 2009

Regina, Saskatchewan

Orlando, Florida

Denver Convention Center Denver, Colorado

This second annual conference facilitates the continued development of Canada's renewable energy industry. Presentation abstracts will be accepted until Nov. 10. More information will be available as the event approaches. (719) 539-0300 www.crew2009.com

This 14th annual event will represent all fuels, vehicles and technologies that provide an alternative to petroleum, including ethanol. Information will be disseminated via preconference sessions, a general session and concurrent breakout sessions. There will also be a ride-and-drive event, industry tours and niche market workshops. More information will be available as the event approaches. (702) 254-4180 www.afv2009.com

This three-day conference will focus on the purchasing, handling, hedging and managing of renewable fuels. Agenda topics focusing on ethanol will address supply, demand and policy; imports and exports; feedstocks; coproducts; blending; hedging and risk strategies; credit trading under the federal renewable fuels standard; federal tax law; and cellulosic ethanol. Attendees will also be able to tour CME Group and hear a presentation explaining CME’s ethanol contracts. (866) 620-5940 www.opisnet.com/ethbiouniv

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

This will mark the 25th anniversary of the world’s largest ethanol conference, which was recently recognized by Trade Show Week magazine as one of the Fastest 50 events in the United States for the second consecutive year. More details will be available as the event approaches. (719) 539-0300 www.2009few.com

155

EPM MARKETPLACE Ag Products & Services Grain Origination Services

Fermentis-Division of SI Lesaffre 800-558-7279 www.fermentis.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Heat Exchanger

Agnetic, LLC 317-696-2824

blog.agnetic.com

Hydro-Klean, Inc. 515-283-0500

Hybrid Corn Pioneer Hi-Bred International, Inc. 800-247-6803 www.pioneer.com

Inland Waters 313-841-5800

Stabilized Liquid Yeast, Thermosacc,ﾂｮ Superstart邃｢

API Credit Exchange 202-682-8192

www.api.org/ace

Ethanol Promotion & Information Council (EPIC) 402-932-0567 www.drivingethanol.org

North American Bioproducts Corporation 866-342-7026 www.na-bio.com

Summit Industrial Products 800-749-5823 www.klsummit.com

Cleaning

Hydro-Blasting

Dryer Systems

Hydro-Klean, Inc. 515-283-0500

Chemicals

Hydro-Klean, Inc. 515-283-0500

PhibroChem 800-223-0434

Inland Waters 313-841-5800

www.lactrol.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Associations/Organizations Trade

www.hydro-klean.com

Inland Waters 313-841-5800

www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Anti-Microbial Lallemand Ethanol Technology 800-583-6484 www.ethanoltech.com

Ductwork

North American Bioproducts Corporation 866-342-7026 www.na-bio.com

Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Emergency Spill Response Hydro-Klean, Inc. 515-283-0500 PhibroChem 800-223-0434

www.lactrol.com

Univar USA Inc. 402-733-3266

www.univarusa.com

Fans Hydro-Klean, Inc. 515-283-0500

Desiccant Gordon Technologies 570-279-8086

www.gtsieve.com

Water Treatment Fremont Industries Inc. 952-445-4121

Inland Waters 313-841-5800

www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com www.fremontind.com

Yeast

156

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

CIP

Ferm Solutions 859-402-8707

Inland Waters 313-841-5800

www.hydro-klean.com

Filter Media Hydro-Klean, Inc. 515-283-0500

Plate窶認rame Hydro-Klean, Inc. 515-283-0500

www.hydro-klean.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com www.hydro-klean.com

www.ferm-solutions.com

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

EPM MARKETPLACE Railcars Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

Insulation

Construction Buildings-Modular www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Smoke Stack Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

www.hydro-klean.com

www.inlandwaters.com

Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

Tank Cleaning Equipment Spraying Systems Co. 630-665-5000

Mavo Systems 763-788-7713

www.spray.com

Tank Cleaning Services Hydro-Klean, Inc. 515-283-0500 Inland Waters 313-841-5800

Mayes Coatings, Inc. 866-93MAYES www.mayescoatings.com

www.hydro-klean.com

Miller Insulation Co, Inc. 701-258-4323 www.millerinsulation.com

www.inlandwaters.com

Mechanical

Professional Environmental Cleaning Services 402-212-0949 www.professionalECS.com Seneca Waste Solutions 800-369-5500 www.senecacompanies.com

JIC

Fabrication Macomber Welding & Fabricating, Inc. 616-698-0819 www.macomberwelding.com

EPM MARKETPLACE With all contact information placed in one convenient location, Ethanol Producer Magazine not only contains top editorial content but also a useful directory in each publication. Whether a first-time advertiser wanting to raise awareness of your business or a frequent display advertiser looking for added exposure, EPM Marketplace is the perfect solution.

www.mavo.com

VAL-FAB Inc. 877-482-5322 W. Soule & Company 1-877-976-8531

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www.wsoule.com

Grain Storage Coverall Building Systems 800-268-3768

www.coverall.net

JOULÉ Industrial Contractors

OVER 40 YEARS OF PROVIDING QUALITY COST EFFECTIVE SOLUTIONS TO THE INDUSTRIAL INDUSTRY. We provide: • Experienced Supervision • Multi-craft Staff • Logistical Support For: • Plant Outages • Plant Construction and Expansion • Relocations • Capital Projects • On and off site pipe Fabrication To: • Ethanol and Alternative Fuel Plants • Pharmaceutical Manufacturers • Food Plants • Building Material Facilities Toll Free: (800) 445-6853 email-bbosher@jouleinc.com

JIC ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

157

EPM MARKETPLACE Mid-States Mechanical Services, Inc. 800-950-0279 www.mid-statesmechanical.com W. Soule & Company 1-877-976-8531

www.wsoule.com

Plant Construction Agra Industries, Inc. 715-536-9584

www.agraind.com

Agri-Systems 406-245-6231 CYC Construction 402-333-1652

www.agrisystems.net

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Send resume to energyjobs@mortenson.com or call toll free 1-877-MORTENSON www.mortenson.com Mortenson is an EOE. Reimer Welding Inc. 218-773-0886

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/)( K_`i[ 8m\el\# Cfe^m`\n# N8 0/-*) *-'%+)*%,,(' nnn%a_b\ccp%Zfd

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Wanzek Construction,Inc. 701-282-6171

wanzek.com

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158

R & R Contracting, Inc. 800-872-5975 Railworks 913-888-4091

www.rrcontracting.net

www.railworks.com

Volkmann Railroad Builders, Inc. 262-252-3377 www.volkmannrr.com

Tanks DCI, Inc. 320-252-8200 Eagle Tanks, Inc. 888-678-0698 WINBCO Tank Company 641-683-1855

www.dciinc.com

www.eagletanks.com

www.winbco.com

Consulting Business Plans ICM, Inc. 316-796-0900

www.icminc.com

Environmental Air Resource Specialists,Inc. 970-484-7941 www.air-resource.com

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

EPM MARKETPLACE ICM, Inc. 316-796-0900 Inland Waters 313-841-5800

Plant Optimization

Risk Management

www.icminc.com National Fuel Marketing 303-996-6781 www.NationalFuelMarketing.com www.inlandwaters.com

Education

Seneca Companies 800-369-5500 www.senecacompanies.com TKDA 651-292-4602

Iowa BioDevelopment 641-969-4167 www.iabiodevelopment.com

www.tkda.com

Iowa Biofuels Training International 641-969-4167 www.biofuelstraining.org

Feasibility Studies Granatus Consulting, Inc. 218-773-0005 www.granatusinc.com

Iowa Lakes Community College 800-242-5108 www.iowalakes.edu

Groundwater Services

Harris Group Inc. 206-494-9422

Employment

Leggette, Brashears & Graham, Inc. 651-490-1405 www.lbgweb.com

Terratec Biofuels of Solutia 800-742-1476 www.TerratecBiofuels.com

Personnel Recruiting

Project Development

SearchPath of Chicago 815-261-4403 www.searchpath.com/chicago

Ethanol Productions 813-968-6867

Harris Group Inc. 206-494-9422

www.harrisgroup.com

Recruiting

Harris Group Inc. 206-494-9422

Hobbs & Towne 610-783-4600x108

www.hobbstowne.com

SearchPath of Chicago 815-261-4403 www.searchpath.com/chicago

jim.plautz@verizon.net

The Richmond Group USA - BioEnergy Search Division

804-285-2071

www.trgbioenergy.com

www.harrisgroup.com

Engineering Public Relations

Civil

Lanser Public Affairs, LLC 262-797-7876 www.lanserpublicaffairs.com

Quality Assurance Eurofins Scientific, Inc. 551-580-9140

Antioch International, Inc. 402-289-2217 www.antioch-intl.com TKDA 651-292-4602

www.eurofinsus.com

www.tkda.com

Control Systems Bachelor Controls 785-284-3482

www.bachelorcontrols.com

Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com

Design/Build

Optimize the Value of Your Co-Products

Grading, sampling, mycotoxins, proximates, residues, GMOs. QA / QC Consulting: HACCP, GMPs, SOPs, NIR calibration Co-products: Quality assurance testing; Lot certiﬁcation; Export assistance 504-297-4330 ethanol@euroﬁnsus.com

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Regulatory Air Resource Specialists.Inc. 970-484-7941 www.air-resource.com

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Agra Industries, Inc. 715-536-9584 Agri-Systems 406-245-6231

www.agraind.com

www.agrisystems.net

Delta-T Corporation 757-941-0188

www.deltatcorp.com

ECE Design 312-235-6960

www.ecedesign.com

Ethanol Productions 813-968-6867

jim.plautz@verizon.net

GS CleanTech Corp. 678-566-3588

www.gs-cleantech.com

ICM, Inc. 316-796-0900

www.icminc.com 159

EPM MARKETPLACE Wanzek Construction, Inc. 701-282-6171

wanzek.com

Process Design www.agrisystems.net

ChemSim 781-248-5057

www.chemsim.com

Process Engineering Associates, LLC 865-220-8722 www.processengr.com

www.vogelbusch.com

Equipment & Services Agitation Equipment ProQuip, Inc. 330-468-1850

Control Systems-Distributed www.perten.com Control System Integrators, Inc. 319-377-6538 x19 www.csystemi.com

Blowers & Fans

Agri-Systems 406-245-6231

Vogelbusch USA, Inc. 713-461-7374

Perten Instruments, Inc. 801-936-8165

www.proquipinc.com

Robinson Industries, Inc. 724-452-6121 www.robinsonfans.com

Boiler Systems Factory Sales and Engineering, Inc. 985-867-9150 www.fsela.com Rentech Boiler Systems, Inc. 325-794-5701 www.rentechboilers.com

Catwalks

Conveyors—Enclosed

Lean Technologies LLC 701-352-9620 www.leantechnologiesllc.com

Grisley Components, Inc. 303-756-6474

Centrifuge Repair

Conveyors—Pneumatic

Nosnhoj Services Inc. 317-887-6436

Air Pollution/Odor Control Ceco Abatement Systems, Inc. 630-493-0624 www.cecoenviro.com/Abatement

Centrifuges

ICM, Inc. 316-796-0900

Westfalia Separator,Inc. 201-784-4322

www.icminc.com

www.nosnhojinc.com

www.grisley.com

Blower Engineering 800-388-1339 www.blowerengineering.com Gusmer Enterprises, Inc. 847-277-9785 www.gusmerenterprises.com

www.wsus.com

Decanters

Combustion Equipment Eclipse.Inc. 815-637-7213 John Zink Company LLC 800-421-9242

www.eclipsenet.com

www.johnzink.com

Compressors FlaktWoods 716-845-0900

www.flaktwoods.com

Computer Software dbc SMARTsoftware, Inc. 770-427-7633 www.dbcsmartsoftware.com Encore Business Solutions 204-989-4330 www.encorebusiness.com John Deere Agri Services 770-238-5100 www.johndeereagriservices.com Summit Software, Inc. 800-433-5724 x 181

www.summit-soft.com

Control Systems FeedForward, Inc. 770-426-4422

Analytical Instruments Anton Paar +1-804-550-1051 160

www.anton-paar.com

Distillation Equipment SRS Engineering Corporation 800-497-5841 www.srsengineering.com

Dryers—Flash www.feedforward.com

Barr-Rosin,Inc. 630-659-3980

Kahler Automation Corp. 507-235-6648 www.kahlerautomation.com

Dryers—Fluid Bed

SoftPLC Corporation 512-264-8390

Aeroglide Corporation 919-851-2000

www.softplc.com

www.barr-rosin.com

www.aeroglide.com

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

EPM MARKETPLACE Dryers—Other

Emissions Testing & Reduction

Grain Handling & Storage

Davenport Dryer, LLC 309-786-1500 www.davenportdryer.com

Lantec Products, Inc. 617-265-2171

Sukup Manufacturing Co. 641-892-4222

Dryers—Ring

Evaporators

Barr-Rosin,Inc 630-659-3980

www.barr-rosin.com

www.aeroglide.com

Barr-Rosin,Inc. 630-659-3980

www.sukup.com

Heat Exchangers

GEA NIRO Inc 410-997-8700

www.niroinc.com

Custom Metalcraft Inc. 417-862-0707 www.custom-metalcraft.com

HRS Process Technology, Inc. 623-915-4328 www.hrs-americas.com

Dryers—Rotary Drum Aeroglide Corporation 919-851-2000

www.lantecp.com

www.barr-rosin.com

Fermentation Monitoring ETS Laboratories 707-963-4806

www.etslabs.com

Fermentors WINBCO Tank Company 641-683-1855

www.winbco.com

Filters Eaton Filtration 800-656-3344 ext 581 BruceCLaw@eaton.com Larox 301-543-1200

www.larox.com/cpi

Filtration Equipment BWF America 800-733-2043

www.bwf-america.com

Fluid Engineering 814-453-5014

FEECO International, Inc. 920-468-1000 ICM, Inc. 316-796-0900

W.S. Tyler 1-800-321-6188 www.feeco.com

www.icminc.com

Ronning Engineering Company, Inc. 913-239-8118 www.ronningengineering.com

Emission Monitoring Systems MonitorTech Corp. 866-682-6771

www.fluideng.com

www.monitortechgrp.com

www.wstyler.com

Fractionation—Corn Buhler Inc. 763-847-9900

Munters - Des Champs Products 540-291-1111 www.deschamps.com www.buhlergroup.com/us

Cereal Process Technologies 217-779-2595 www.cerealprocess.com FWS Technologies 204-487-2500 Sturtevant Inc. 781-829-6501

www.fwsgroup.com

www.sturtevantinc.com

Instrumentation Endress+Hauser, 317-535-2174

www.us.endress.com

Instrument Associates 708-597-9880 www.instrumentassociates.com Perten Instruments, Inc. 801-936-8165

www.perten.com

Gas Detectors Continuous Emissions Monitoring Systems Easiest installation, operation and maintenance Meet or exceeds EPA requirements NOx, O2, CO, SO2 and others Turnkey systems for under $100,000.00 P.O. Box 9271, Columbus, Oh 43209 866-682-6771 sales@monitortechcorp.us

UE Systems, Inc. 914-592-1220

Process Sensors Corp. 508-473-9901 www.processsensors.com www.uesystems.com

Gaskets Allegheny Coupling Company 814-723-8150 www.alleghenycoupling.com

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

Shimadzu Scientific Instruments 800-477-1227 www.ssi.shimadzu.com WIKA Instrument Corporation 888-945-2872, x5127

www.wika.com

161

EPM MARKETPLACE CPM/Roskamp Champion 800-366-2563 www.cpmroskamp.com

Insulator Industrial Construction & Engineering 636-970-1650 www.ic-e.cc

Jet Cookers

WINBCO Tank Company 641-683-1855

www.pro-sonix.com

Laboratory-Equipment

Process Control Harris Group Inc. 206-494-9422

Agri-Systems 406-245-6231

Perten Instruments, Inc. 801-936-8165

www.perten.com

Laboratory—Outsourcing SGS North America Inc. 281-479-7170 www.sgs.com/alternativefuels

Laboratory—Supplies

KINEMATICA, INC. 631-750-6653

Pumps ITT Industries Goulds Pumps 315-568-2811 www.gouldspumps.com www.kinematica-inc.com Watson-Marlow Bredel Pumps 800-282-8823 www.watson-marlow.com

Moisture Analyzers Perten Instruments, Inc. 801-936-8165

www.perten.com

Sartorius Mechatronies-Omnimark 800-835-3211 www.sartorius-omnimark.com

www.midlandsci.com

Laboratory—Testing Services Eurofins GeneScan, Inc. 504-297-4330 www.gmotesting.com

Gordon Technologies 570-279-8086 Vaperma, Inc. 418-839-6989 Zeochem, LLC 502-634-7600

www.gtsieve.com

SGS North America, Inc. 281-478-8234 www.sgs.com/alternativefuels

Resource Recovery

Trico TCWind, Incorporated 320-693-6200 www.tricotcwind.com

ISCO Industries 800-345-4726

www.saferack.com

Maintenance Services Joule’ Industrial Contractors bbosher@jouleinc.com www.jouleinc.com

Maintenance Software Mapcon Technologies, Inc. 800-922-4336 www.mapcon.com

Mills—Hammer CBT Wear Parts, Inc. 888-228-3625 162

Eco-Tec, Inc. 905-427-0077

www.eco-tec.com

Safety

Pipe

Loading Equipment

SafeRack 866-761-7225

www.lantecp.com

www.zeochem.com

American Stainless & Supply 800-845-5511 www.americanstainless.com

www.hemcocpm.com

www.phenomenex.com

Lantec Products, Inc. 617-265-2171

Trilogy Analytical Laboratory 636-239-1521 www.trilogylab.com

Hemco Industries, Inc. 877-347-7106

Phenomenex 310-212-0555x3328

www.perten.com

RTO Media

Motors www.romerlabs.com

QA Test Products

www.vaperma.com

www.midwestlabs.com

Romer Labs, Inc. 636-583-8600

Yamada America, Inc. 800-990-7867 www.yamadapump.com

Perten Instruments, Inc. 801-936-8165

Molecular Sieves

Midland Scientific, Inc. 800-642-5263

www.harrisgroup.com

www.agrisystems.net

Mixers

Astoria-Pacific International 800-536-3111 www.astoria-pacific.com

www.winbco.com

www.prater-sterling.com

Millwright

ProSonix Corporation 800-849-1130, x. 801

Midwest Laboratories 402-334-7770

Prater-Sterling 630-679-3254

Pressure Vessels

SimplexGrinnell 800-746-7539

www.simplexgrinnell.com

Seals www.isco-pipe.com

Robert-James Sales, Inc. 800-666-0088

www.rjsales.com

Aesseal Inc. 865-531-0192

www.aesseal.com

Utex Industries, Inc. 432-333-4151/800-873-0946 www.utexind.com

Pipe—Fittings Robert-James Sales, Inc. 800-666-0088

Sensors www.rjsales.com

St. Louis Pipe & Supply 800-737-7473 www.stlpipesupply.com

Pipe—Flanges Robert-James Sales, Inc. 800-666-0088

Electro Sensors 800-328-6170

Separation Equipment Fluid Engineering 814-453-5014

www.rjsales.com

www.electro-sensors.com

www.fluideng.com

Puritan Magnetics, Inc. 248-628-3808 www.puritanmagnetics.com

Pressure & Temperature www.cbtwearparts.com

WIKA Instrument Corporation 888-945-2872, x5127

www.wika.com

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

EPM MARKETPLACE Separators

Thermal Oxidizers

Westfalia Separator,Inc. 201-784-4322

Used Equipment

www.wsus.com

Steel Suppliers Chapel Steel 800-320-6042

davidj@chapelsteel.com

Outokumpu Stainless 847-517-4050

PROVEN RELIABILITY

www.outokumpu.com

for VOC, CO & PM ABATEMENT

Sandmeyer Steel Company 215-464-7100 www.sandmeyersteel.com

Storage—DDGS Laidig Systems, Inc. 574-256-0204

EISENMANN Corporation Crystal Lake, Illinois www.laidig.com

815.455.4100 es.info@eisenmann.com

Structural Fabrication Cherokee Steel Fabricators, Inc. 903-759-3844 www.cherokeesteelfabricators.com

Tanks Agra Industries, Inc. 715-536-9584 Brown-Minneapolis Tank 281-252-9809 CMC Letco Industries 417-831-1528

www.agraind.com

www.bmt-tank.com

www.cmc-letco.com

Federal Equipment Company 800-652-2466 www.fedequip.com Greenberry Industrial 541-757-8458 www.greenberryinc.com

ICM, Inc. 316-796-0900 Pro-Environmental, Inc. 909-989-3010

www.icminc.com

www.pro-env.com

Turbines—Gas Paragon Trailer Sales 800-471-8769 www.paragontrailer.com WINBCO Tank Company 641-683-1855

Kawasaki Gas Turbines 281-970-3255x18 www.kawasakigasturbines.com

American Waste Removal 505-417-9933 www.americanwasteremoval.com

Lantec Products, Inc. 617-265-2171

www.lantecp.com

Valve Actuators Rotork Controls,Inc. 585-247-2304

www.rotork.com

Valves

www.winbco.com

Thermal Energy

VOC Scrubbers

EPM MARKETPLACE With all contact information placed in

Central States Group 800-318-2747 www.centralstatesgroup.com Check-All Valve Mfg. Co. 515-224-2301

www.checkall.com

one convenient location, Ethanol Producer Magazine not only contains top editorial content but also a useful

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directory in each publication. Whether a

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awareness of your business or a

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frequent display advertiser looking for

Metso Automation 508-852-0215

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North American Safety Valve 800-800-8882

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first-time advertiser wanting to raise

added exposure, EPM Marketplace is

Wastewater Treatment Services Biothane Corporation 856-541-3500x501

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the perfect solution.

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

163

EPM MARKETPLACE ERI Solutions, Inc. 316-927-4294

Water Treatment Aquatech International Corporation 724-746-5300 www.aquatech.com Fluid Engineering 814-453-5014

www.fluideng.com

erisolutions.com

Attorneys Lender Representatives Greenman Funding 888-802-7678 greenman.funding@verizon.net

Siemens Water Technologies 800-525-0658 www.siemens.com/water

Mergers & Acquisitions

Ethanol Production

Thomas Group Capital 404-504-6050

Existing Producers

www.dorsey.com

Faegre & Benson, LLP 612-766-6930

www.faegre.com

Stoel Rives LLP 612-373-8800

First Capitol Risk Management 800-884-8290 www.firstcapitolrm.com R.J. O’Brien 800-621-0757

www.syntecbiofuel.com

Finance

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Software—Accounting Encore Business Solutions 204-989-4330 www.encorebusiness.com

Accounting Christianson & Associates PLLP 320-235-5937 www.christiansoncpa.com Kennedy and Coe, LLC 800-303-3241

Dorsey & Whitney LLP 612-343-8275

www.stoel.com/biofuels

Marketing Distillers Grains

Future Producers Syntec Biofuel, Inc. 604-648-2092

BrownWinick Law Firm 515-242-2400 www.biofuellawyers.com

www.thomassec.com

Risk Management

Louis Dreyfus Commodities 402-844-2680 LDCommodities.com

Legal Services

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Appraisals

Summit Software, Inc. 800-433-5724 x 181

CHS, Inc. 651-355-6271

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Gavilon 402-595-5678

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Hawkeye Gold, LLC 515-663-6429

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Fuel Ethanol

Government State

Atlas Renewable Energy, LLC 800-884-8290 www.atlasenergyllc.com C&N Ethanol Marketing Corp. 952-854-6675 www.candncompanies.com Gavilon 402-595-5678

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Noble Americas Corporation 626-585-1705 www.thisisnoble.com Provista Renewable Fuels Marketing 651-355-8519 www.provistafuels.com

Transportation Natwick Associates Appraisal Services 800-279-4757 www.natwick.com

Due Diligence Harris Group Inc. 206-494-9422

Landstar Carrier Group 920-487-3877

www.landstar.com

Rail www.harrisgroup.com

Equity Procurement Greenman Funding 888-802-7678 greenman.funding@verizon.net Jordan, Knauff & Company 312-254-5900 www.jordanknauff.com

Insurance Armor Companies, Inc. 612-501-5654 acline@armorcompanies.com 164

Heavy Highway Transport

Ameritrack RailRoad Contractors, Inc. 765-659-2111 www.ameritrackrailroad.com Blacklands Railroad 903-439-0738 www.blacklandsrailroad.com

Reach your customers Your Solution. Advertise Today.

EPM MARKETPLACE ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

EPM MARKETPLACE Rail Consulting

Utilities Natural Gas

TKDA 651-292-4602

Contact Mark Rundle at marundle@integrysenergy.com or (608) 222-5170.

www.tkda.com

Rail Ties Thompson Industries, Inc. 317-859-8725 www.thompsonindustries.net

Railcar Moving Heyl & Patterson Inc. 412-788-9810

124 W. Broadway, Suite 300 Madison, Wisconsin 53716 www.integrysenergy.com

www.heylpatterson.com

RAILCAR MOVING

Utility Integrys Energy Services 608-235-2547 www.integrysenergy.com

www.BiomassMagazine.com The CUB™ is an electromechanical machine designed to move single railcars or groups of cars. Some advantages of the CUB™ are: •Safety of Personnel •One Person Operation •Little Maintenance Requirements •Low Investment/Operating Costs

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EPM MARKETPLACE With all contact information placed in one convenient location, Ethanol Producer Magazine not only contains top editorial content but also a useful

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412-788-9810

412-788-9822

Shuttlewagon 816-767-0300

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directory in each publication. Whether a first-time advertiser wanting to raise awareness of your business or a frequent display advertiser looking for

Railcar Parts

added exposure, EPM Marketplace is Salco Products, Inc. 630-783-2570

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EPM MARKETPLACE

ETHANOL PRODUCER MAGAZINE NOVEMBER 2008

For additional information please contact us at (701) 746-8385 or at advertising@biomassmagazine.com.

165

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