Biofuels International Jan/Feb 2013

January/February 2013 Issue 1 • volume 7

The 5% equation

international

How is Europe reacting to the EC’s latest transportation fuel proposals?

Double counting Nothing but a headache?

UPM Biofuels

UPM Biofuels Regional focus: biofuels in southeast Asia and Australasia Regional focus: biofuels in Europe

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Issue 1

volume 7

January/February 2013 Horseshoe Media Limited Marshall House 124 Middleton Road, Morden, Surrey SM4 6RW, UK www.biofuels-news.com managing director Peter Patterson Tel: +44 (0)208 648 7082 peter@horseshoemedia.com publisher & Editor Margaret Dunn Tel: +44 (0)208 687 4126 margaret@biofuels-news.com Deputy Editor James Barrett Tel: +44 (0)208 687 4146 james@biofuels-news.com Assistant Editor Keeley Downey Tel: +44 (0)208 687 4183 keeley@horseshoemedia.com INTERNATIONAL Sales MANAGER Shemin Juma +44 (0)203 551 5751 shemin@biofuels-news.com US SALES MANAGER Matt Weidner +1 610 486 6525 mtw@weidcom.com South American sales representative Roberto Bieler +55 21 3268 2553 +55 21 9465 2553 rbieler@farbitec.com PRODUCTION Alison Balmer Tel: +44 (0)1673 876143 alisonbalmer@btconnect.com SUBSCRIPTION RATES £195/€275/$370 for 10 issues per year.

Contact: Lisa Lee Tel: +44 (0)208 687 4160 Fax: +44 (0)208 687 4130 marketing@horseshoemedia.com No part of this publication june be reproduced or stored in any form by any mechanical, electronic, photocopying, recording or other means without the prior written consent of the publisher. Whilst the information and articles in Biofuels International are published in good faith and every effort is made to check accuracy, readers should verify facts and statements direct with official sources before acting on them as the publisher can accept no responsibility in this respect. Any opinions expressed in this magazine should not be construed as those of the publisher.

ISSN 1754-2170

biofuels international

c ntents 2 Comment 4 Bioethanol news 11 Biodiesel news 17 Technology news 22 Incident update 24 Green page 25 Anti-dumping debate continues in Europe

26 Reaping the rewards of the denied US tax bill 28 No Udall-ying on military biofuels future 29 People on the move 30 All change for 2013

The unexpected return of the biodiesel tax subsidy has had reverberating market implications 32 Double counting: nothing but a headache?

33 2013 outlook

Now that the New Year has officially begun Biofuels International gets the thoughts of high-profile producers on what the next 12 months may hold in store for the industry 38 The 5% equation

How Europe is reacting to the reduced first generation ethanol proposal brought to the table by the European Commission late last year 41 Taking an optimistic view

AlcoBioFuels discusses the facility’s future and current renewable energy proposals 42 Plant update: Europe 44 Finance: overcoming that all important hurdle 47 Making biofuels a less risky business

Loren Padelford, general manager of Active Risk, discusses how managing risk at an enterprise level and creating a risk management culture will enable organisations to take smarter risks, drive efficiency and improve operations 48 In or out of the public eye?

Advanced biofuels firms that have remained privately held and raised venture capital funds in the third quarter, are quietly building momentum. Meanwhile, their colleagues who chose the IPO route are hitting a wall 51 A generation of change

The timing couldn’t have been better for last year’s Biofuels International Conference in Antwerp as it took place just after the European Commission released its much talked about proposed changes to its biofuel policy 54 Keeping it renewable

BioMCN’s Eelco Dekker gives his views on how 2013 may pan out for the biomethanol sector

January/February 2013 Issue 1 • volume 7

The 5% equation

international

How is Europe reacting to the EC’s latest transportation fuel proposals?

Double counting Nothing but a headache?

UPM Biofuels

56 Upcoming events Ad index UPM Biofuels Regional focus: biofuels in southeast Asia and Australasia Regional focus: biofuels in Europe

INCLUDES BIOFUELS STORAGE SUPPLEMENT

Front cover courtesy of UPM biofuels: The fuel of the future – from wood-based raw materials

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biofuels comment 2013 is set to be yet another turbulent year for the sector

Seeing double

A

Margaret Dunn Publisher

s a conference organiser one of your biggest worries is the dreaded silence following the ever hopeful phrase: ‘Any questions?’

That awkward silence represents one of two things: that the presentation wasn’t effective enough to spark any interest, or that the networking drinks await!

So, one good thing (possibly the only one for some!) to come out of all this change is that this is no longer an issue. Everyone has an opinion, particularly on the European Commission’s latest proposed changes to the Renewable Energy Directive.

One of the big talking points is the issue of ‘double counting.’ Opinion is divided as to whether it works consistently across member states and whether there may be an altogether better solution for promoting advanced biofuels.

Double counting has existed in some member states’ legislation, such as France, the Netherlands, Germany and Finland since as early as 2010.

However, under the new European Commission

proposals, some nonbiological feedstocks such as algae-based biofuels will now be able to count four times towards greenhouse gas emissions targets.

One noteworthy objection is that by encouraging multiple counting, smaller amounts of sustainable biofuels will be produced, making the market up to four times smaller.

Also, mechanisms such as this are difficult to measure and put into an investment calculator to secure much needed additional funding.

To some extent it is possible to predict the price of oil, but with double/quadruple counting, it’s more difficult, just adding an extra layer of uncertainty. It means producers have to try and guess what their competitors are doing.

Another major stumbling block is the lack of harmonisation between countries using the scheme.

Within this issue we take a closer look at new rules that came in on the first of this year in Germany, and the complications that come with them.

A final factor to try and untangle is the feedstocks that are actually about the benefit from multiple counting. For example if fatty acids from refining are considered as waste they can count double.

However if they’re considered a co-product, they don’t.

Some people argue that the only people to benefit from schemes such as this are the feedstock supplier themselves – used cooking oil is suddenly in huge demand.

One alternative is to introduce a mandatory blending quota specifically for advanced biofuels instead of double counting, something that may be considered in future regulatory reviews.

Undoubtedly this is one issue we’re going to be hearing a lot more about this year, as well as the anti-dumping investigation, the API’s lawsuits and the US biodiesel’s blenders tax credit – to name just a few. We endeavour to keep you updated!

Best wishes, Margaret

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biofuels bioethanol news

Biomass- and coal-derived biofuels set for new research The US Department of Energy (DoE) has agreed to work with the Southern Research Institute to test a method of creating liquid transportation fuels from coal and biomass.

The pair believes an approach, that eliminates the typical Fischer-Tropsch (FT) product upgrading and refining steps, will enhance the ability of coal-to-liquid (CTL) and coalbiomass-to-liquid (CBTL) processes to compete with petroleum-based ones.

‘We hope the project will advance CTL and CBTL processes by demonstrating a cost-effective, novel FT catalyst that selectively converts syngas derived from the gasification of coal and coal biomass mixtures predominantly to petrol and diesel range hydrocarbons, thereby eliminating expensive upgrading operations,’ Southern Research principal investigator Santosh Gangwal

Renewable research: scientists believe CBTL could rival conventional fuels

was quoted as saying.

‘We will evaluate the impact of adding moderate amounts of biomass to coal on CBTL products and process economics, and compare the carbon

footprint of CBTL processes with petroleum-based fuel production processes.’

The Southern Research team includes research partners from Southern Company Services and clean energy

provider Nexant. An existing demonstration-scale coal gasifier at the DoE’s National Carbon Capture Centre in Alabama is set to be used during the project. l

Vivergo picks distributor for future bioethanol deliveries UK-based bioethanol producer Vivergo has awarded its distribution contract to local road tanker operator Lewis Tankers (LT).

The three-year contract will see LT deliver bioethanol produced at Vivergo’s new £350 million (€429 million) facility to refineries throughout the UK. The aim is for the facility in Yorkshire to be producing up to 420 million litres a year.

‘We will be responsible for all Vivergo Fuel’s UK distribution, which, when production reaches full capacity, means we will have a fleet of 20 plus dedicated road tanks delivering over 3.5 million litres of bioethanol every week,’ LT MD Stewart MacDonald was quoted as saying.

Vivergo claims the plant will be operational during the first quarter of 2013. l

Lewis Tankers will transport ethanol from Vivergo’s plant to UK refineries

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biofuels bioethanol news

Woody biofuels production could do more harm than good A new study into the effects of global biofuels production on air pollution has shown negative results.

The report, compiled

by Norwegian and UK researchers, states that trees planted to eventually become wood fuel would release more of a chemical called isoprene, a smaller yet potent pollutant concern.

It is believed that when isoprene is mixed with other pollutants in sunlight, as well as being categorised as a

hydrocarbon in its own right, could also reduce crop yields for farmers.

As an example, the report has estimated that ozone from wood-based energy used to meet the European Union’s 2020 environmental targets would cause up to 1,400 premature deaths a year, costing society €5.4 billion.

The European plan would also reduce the annual value of wheat and maize production by €1.1 billion since ozone impairs crop growth, the study added.

The full report can be found in Nature Climate Change. l

Significant regional support for Scandinavian biorefinery project The Olvi Foundation (OF) has decided to join in the funding of Green Fuel Nordic’s (GFN) biorefinery project.

The decision will represent one of the most significant capital investors into the biorefinery project according to OF CEO Timo Saarelainen.

GFN has spent the last 12 months making different players more aware of bio-oil, its production, applications and benefits. Its board believes the investment commitment of a major capital investor in the project is a signal to all the other players of the strong intent to invest in the future of Scandinavia.

‘We will now continue with the next planning phase for the biorefineries; this phase will include strengthening the project organisation, recruiting key people, and other permit processes. We are currently experiencing a great industrial revolution and our journey to the future bio-economy society will continue to be at least as interesting as it has been so far,’ adds Saarelainen. l

news in brief Flint Hill completes Nebraska ethanol facility acquisition A US ethanol plant in Fairmont has now changed ownership from Advanced Bioenergy to Flint Hills Resources.

The acquisition was announced on 7 December but the finances have not yet been revealed. It is believed that Flint Hill will be looking to appoint four new members of staff at the plant based in Nebraska.

The plant has a capacity of 115 million gallons and can produce more than 320,000 tonnes of dried distilled grains a year.

This is Flint Hill’s second major acquisition in less than two years following its purchase of the Beatrice Biodiesel plant for $5 million (€3.85 million) in 2011.

New barges will increase Brazilian biofuels deliveries on the water Energy giant Petrobras’ logistics division Transpetro is set to transport ethanol via barges from its new shipyard in Aracatuba, Sao Paulo.

Transpetro will spend $400 million (€302.9 million) on 20 new barges to move 45,000 bl along the Tiete-Parana waterway in 2013, although that realisation is two years behind schedule.

The new barges will save approximately 80,000 round-trip truck journeys across southeast Brazil as it delivers biofuels to ports and other consuming markets.

Japanese firm looks to Cambodia for bioethanol production Japanese energy company Idemitsu Kosan has signed a new Memorandum of Understanding to promote biofuel production in southeast Asia.

The agreement was with the Cambodian government and it will aim to produce bioethanol from cassava in the country for sale throughout the region.

It is believed an Idemitsu Kosan office will open in Phnom Penh with ambitions of producing 200,000 litres of bioethanol a year by the turn of the decade.

US ethanol production hits new five month high It has been reported by trading risk management group CME that corn ethanol production in the US rose 4% during the last week of November.

That 4% is a five month high and is represented by 835,000 barrels per day. The group also states that inventories have increased by 8.3% over the past three weeks to 19.3 million barrels. This comes after the country suffered the lowest corn harvests since 1936, thanks mostly to an extremely hot summer.

CME was quoted as saying that this means there is ‘a plentiful supply of newly-harvested corn even though profit margins remain poor’.

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Can these trees be a Poplar feedstock?

Researchers at Clemson University and commercial forestry business ArborGen are to jointly study the potential use of poplar trees for bioenergy and biofuels feedstock in the US. The South Carolina-based project will see the joint venture plant thousands of poplar trees on-site at the university’s Pee Dee Centre.

ArborGen’s southeastern field research manager David Brown says that positive results from this study would give landowners another market for their crops.

‘Clemson’s Pee Dee Centre plays a vital role developing bioenergy markets by growing a variety of bioenergy feedstock,’

‘Great promise’: poplar trees could be an effective raw material for biofuels

Brown adds. ‘In the case of this project, we are working to determine the absolute best tree for bioenergy and have it available to South Carolina forest landowners.’

He explains that four species of poplar were planted a year ago and ‘are now over 20ft tall and showing

Woodland Biofuels to benefit from new venture deal A venture deal has been completed between the Mars Cleantech Fund and Woodland Biofuels as the producer closes in on being North America’s lowest-cost ethanol provider.

Woodland Biofuels makes cellulosic ethanol from woodchips and other agricultural biomass into fuel at its newly opened demonstration plant in Ontario.

‘This fund seeks technologies with the potential to revolutionise the energy sector,’ the co-managing director of Mars, Tom Rand, was quoted as saying.

‘Woodland is on track to become the first company to

biofuels international

profitably make renewable fuels from non-food sources without requiring any form of subsidy. That’s the kind of game-changer we target.’

Rand also notes that liquid fuels – petrol, diesel and jet fuel – are the most difficult components of the fossil fuel infrastructure to replace with renewables.

‘First generation fuels from food are a non-starter – they can’t scale up,’ he adds.

‘There were a few early, highprofile failures in cellulosic fuels, which made investors flee the sector. But if you do your homework, it’s clear not all second generation technologies are equal. With Woodland, we believe we’ve found a technology that can deliver on the promise of renewable fuel.’ l

some great promise’.

Brown and Clemson crop physiologist Jim Frederick also planted 690 varieties of Populus nigra late last year – also known as the black poplar – as they continue to learn which varieties are best suited as both bioenergy stock and as base for making

hybrids with P. deltoides, the local eastern cottonwood that grows in the US. ‘Interest in bioenergy as a whole is the basis for the partnership,’ says Frederick. ‘There’s no big grant involved — just two groups working together for a common cause.’ l

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Ribbon to be cut on new biofuels pilot plant in US A new pilot plant for biofuels production is to open by the US-based LSU AgCenter Audubon Sugar Institute as the culmination of its sustainable bioproducts initiative this January.

The plant will focus on converting sweet sorghum, sugarcane and other grassy feedstocks into sugars and bioporducts to be refined into petrol and

butanol among other things.

The plant is based in St Gabriel, Louisiana and is part of five year project funded by a $17.2 million (€13.1 million) grant from the US Department of Agriculture.

‘This facility can be scaled up to any capacity,’ project director Vadim Kochergin was quoted as saying. ‘We can facilitate projects targeting evaluation and validation of technologies, as well as train both research and operating personnel.’ l

Cutting edge: the new plant is part of a five year project

Norwegian biomass projects get investment boost Advanced biorefinery owners Borregaard has received a multimillion grant from the Research Council of Norway to further wood processing projects.

The grant totals NOK30 million (€4 million) and will be spread across projects over a three year period. Borregaard won the investment after submitting three applications for funding on projects within the areas of lignin products for use in concrete, microfibrillar

cellulose and new specialty cellulose products.

‘We feel the grant from the Research Council is recognition of the research and development work we have done so far, and a positive signal for continued focus on innovation in the wood processing area in Norway,’ says Borregaard CEO Per Sørlie.

Borregaard claim it owns the world’s most advanced biorefinery which uses natural, sustainable raw materials to produce bioethanol, biochemicals, biomaterials and bioethanol that can replace oil-based products.

Borregaard has received investment from the Research Council for Norway

It annually spends over NOK120 million on research and development and around

15% of turnover now comes from products that did not exist five years ago. l

Brussels grants millions to subsidise Dutch biofuels and biomass initiative A consortium is to use a multi-million euro grant to build a large-scale biomass refinery in the Netherlands.

The companies involved are BioMCN, Siemens, Linde, and Visser and Smit Hanab, which received a €199 million NER300 grant to fund the project also known as Woodspirit.

NER300 is a financing instrument, jointly managed by the European Commission (EC), European Investment Bank and member states, that

provides financial resources for largescale renewable energy projects.

The Woodspirit partnership submitted the grant application to the Dutch Ministry of Economic Affairs back in February 2011, and BioMCN CEO Rob Voncken says they are all ‘proud’ to get a positive decision.

‘These grants clearly demonstrate the EC’s support for the availability of more sustainable biofuels and renewable chemical materials,’ Voncken adds. ‘This project will have an important positive impact on the reduction of CO2 emissions and on meeting the 2020 climate objectives.’

The refinery is set to produce bio-based chemicals and biofuels via residues from both the forestry and wood processing industries. After a process of desiccation, reduction and torrefaction, the biomass is fed into a gasification plant. Here the biomass is converted into raw synthesis gas, better known as syngas. After cleaning, the syngas is converted into biomethanol.

‘Woodspirit delivers a significant contribution to the development of biofuels,’ says minister Kamp of Economic Affairs. ‘Moreover, the partnership will boost economic activity in the north of the Netherlands.’ l

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European renewable consumption up by almost 1%

There has been an estimated rise of nearly 1% over 2011, which finished on 13.4%, compared to 2010 on 12.5%.

The report says the increase in renewable energy share across the 27 states can be explained by the combination of a slightly higher gross consumption of final energy from renewable energy sources – 151.1 million tonnes of oil equivlant (mte) (against 148.6 mte in 2010), and by a significant decrease of the total gross final energy consumption of 1126.6 mte in 2011 (against 1184.6 mte in 2010).

‘Gross final energy

consumption from renewable energy sources increased by 1.7% (+2.5 mte) whereas total gross final energy consumption decreased by -4.9% (-58.0 mte).

This important decrease is the consequence of an exceptionally mild winter in Europe, which has contained the need for heating, and of a slowdown in economic activity,’ said an EurObserv’er statement.

‘The relatively small increase of renewable energy consumption in those 27 member states is due to a lower consumption of wood fuel and to a relatively small increase of biofuels consumption. It is not linked to the important decrease of the European hydroelectricity production in 2011, since the calculations presented here are based on a normalised hydroelectricity production and not on effective production.’ l

New biofuels facility receives multi-million dollar backing Renewable fuel producer Fulcrum Bioenergy has received multi-million dollar financing for a new facility in the US. The total amount comes to $175 million (€134 million) and construction of the Sierra Biofuels municipal solid waste to lowcarbon fuels facility represents Fulcrum’s foray into such a plant.

‘The current IPO market environment remains challenging, especially for development stage companies like us,’ says Fulcrum CEO James Macias. ‘Because of this we have secured commitments from alternative capital resources to advance our municipal waste to renewable fuel programme and we have withdrawn our registration statement.’

Once up and running the expected fuel production costs have been stated as less that $0.75 a gallon. l

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Renewable energy watchdog for Europe EurObserv’er has calculated the final gross energy consumption for the 27 European member states.

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biofuels bioethanol news

BP Biofuels to expand operations at Brazil facility The biofuels division of BP is to invest $350 million (€271.1 million) to double its ethanol processing capacity in Brazil.

The facility is operated

by Tropical Energia, which BP Biofuels acquired majority ownership of in 2011, will see its capacity go from 2.5 million to 5 million tonnes of

sugarcane a year.

A new mill is also to be constructed and expected to provide 7,650 permanent and temporary job vacancies.

The increase in feedstock capacity is expected to allow the facility to produce around 450 million litres of ethanol annually. The Brazilian national grid will also benefit to the tune of approximately 340GWh of generated power. l

Bioethanol production begins in Humberside Bioethanol producer Vivergo has started up production at its Humberside, UK wheat facility.

The wheat is being supplied by grain marketing company Frontier via selected farmers under its Humber Gold brand and it has also confirmed that the milling, fermenting

and distilling process has now begun at the plant.

Despite a challenge in providing constantly high quality wheat this season, both Vivergo and Frontier have reiterated their desire to use only UK-sourced feedstock.

The plant is expected to be fully operational before the spring of 2013 when an official opening ceremony will take place. l

DuPont’s new biorefinery starts to take shape Science and engineering giant DuPont has broken ground on its cellulosic ethanol facility in Iowa, US as it moves towards the commercialisation of advanced biofuels.

The plant is expected to be complete before the end of 2014 and cost in excess of $200 million (€154 million).

It will generate 30 million gallons of cellulosic biofuel annually via corn stover residues, a non-food feedstock that consists of corn stalks and leaves. This is more capacity than original estimates called for as data derived from DuPont’s piloting facility in Tennessee has allowed it to further optimise the process and technology.

‘By leveraging our corn production and designing an integrated technology platform, we’ve built an affordable and sustainable entry point into this new industry. We’re committed to continued productivity gains to drive costs down even further for the coming generations of plants, ones based on corn stover as well as other feedstocks,’ says DuPont

Industrial Biosciences president James Collins.

‘We didn’t get to this point alone however. We’ve built partnerships with the state of Iowa, Iowa State University, entrepreneurial growers and a whole host of partners around the country who share our vision of making renewable fuels a commercial reality.’

Collins was joined by Iowa governor Terry Branstad to celebrate the official beginning of construction on the facility at a ceremony held at the site adjacent to grain ethanol facility Lincolnway Energy.

DuPont is set to contract more than 500 local farmers to gather, store and deliver over 375,000 dry tonnes of stover per year, all of whom will be available for collection within a 30 mile radius of the plant.

‘Many of us who have participated in the stover harvest programme with DuPont are already seeing benefits of this alternative residue management strategy, including positive effects on grain yields the following year on our fields,’ says Jim Hill, a corn grower whose stover will be used to supply the facility. l

New partnership to delve into efficient biofuels from non-food biomass A new $7 million (€5.3 million), five year biofuels collaboration has been signed.

International chemical company Johnson Matthey will work with the US Department of Energy’s National Renewable Energy Laboratory (NREL) at producing economical drop-in petrol, diesel and

jet fuel from non-food based biomass.

‘It’s a way of leveraging the expertise of two organisations to solve a pressing national and international problem,’ says NREL senior project leader for partnership development Rich Bolin.

Johnson Matthey has environmental and chemical facilities in over 30 countries and will develop and supply

new catalytic materials to upgrade pyrolysis vapour to biofuels components.

‘The best outcome would be, in five years, to have a new catalytic process which can make petrol, diesel and jet fuel at a price range that is better than, or competitive with, the cost of existing fuels,’ adds Mark Nimlos, NREL research supervisor for molecular sciences. l

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Algae-based biodiesel project sets off in Dubai Dubai-based Lootah Biofuels is set to work with AlgaOil to research using algae for oil extraction outside of man-made ponds.

Lootah will work with the Singapore-based algae cultivator at looking at more natural spaces and resources to create biodiesel from algae, particularly within the untouched desert in the region.

‘The potential of biodiesel

from algae is very big but, as the mindset of people changes, it will take maybe 30 years to perfect as fossil fuel oil declines and renewable energy sources improve,’ Lootah CEO Yousif Saeed was quoted as saying, adding that positive results would also boost greenhouse gas emission savings too.

Lootah has already been successful in creating biofuels from used cooking oil from the food industry since 2010 and has been part of a green car project too. l

bioethanol plants

Jatropha seen as key

by Cuba to increase biodiesel output Experts in Cuba expect an increase in biodiesel production from jatropha as the country looks to move forwards without impacting on food crops grown for human and animal consumption.

There is one facility in eastern Guantanmo currently processing the feedstock and another is going through a testing phase in Sancti Spiritus.

‘This will see the increase in use of non-edible oil plants for humans or animals in the production of energy,’ researcher Jesus Suarez was quoted as saying. ‘It was decided that they will not be traditional monoculture plantations, but associated with food crops too in order to produce integrated energy and food.’

It is also believed that there are plans to construct three more biodiesel facilities throughout the country moving forward. l

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Algae.Tec receives $12.15m from Australian government Australia-based renewable oil from algae company Algae.Tec has received approval from its government for an AU$12.15 million (€9.6 million) cash refund on Australian and overseas development expenditure.

The terms of the payment, covering financial years 30 June 2012 to 30 June 2015, allows for an initial AU$27 million spend on Algae.Tec technology developments, of which the government will reimburse

45% or AU$12.15 million.

The approval is to support the funding of at least three algae bioreactor facilities in Australia, Asia and the US. Algae.Tec MD Peter Hatfull says the company had applied for the approval last year as part of a range of financing options available for future growth plans.

‘It was a rigorous process involving a complete review of our technology and global expansion plans,’ he adds. ‘We see this as an endorsement of our technology and strategic direction, and we are pleased to have the support of our government.’ l

Algae-based biofuels reap most reward of denied US tax bill A bill has been passed by the US House of Representatives to stop set automatic tax increases, which consequently benefits the internal biofuels industry.

The vote was passed by a vote of 257-167 and the bill, tagged the ‘fiscal cliff’ because many believed it would have sent the country back towards recession, is expected to be signed by President Barack Obama in the very near future.

The bill will extend for another two years the $1 (€0.70) per gallon tax credit for biodiesel and biomass-created fuel, with a small argi-biodiesel producer credit of $0.10 per gallon also included.

Producers dabbling in algae-based fuel will also be happy with this outcome as the medium now qualifies under an expanded definition

of cellulosic biofuel production.

Everyone under that umbrella term will continue to recoup 50% of their eligible capital costs in the first year for facilities up and running before the end of 2013.

Another bonus for all firms that produce cellulosic biofuel is that they will be able to continue claiming a $1.01 per gallon production tax credit for another 12 months.

‘We are thankful that Congress and the President support the growth of the biodiesel industry through the reinstatement of the credit and for recognising biodiesel’s important role in energy and food security and job creation. This tax credit provides certainty for our petroleum distributor customers and, in turn, market stability for commercial biodiesel producers,’ says biodiesel producer Renewable Energy Group. l

Green Fuels received ‘royal warrant’ at the start of 2013

Green Fuels now by royal appointment His Royal Highness the Prince of Wales has granted a royal warrant to Green Fuels in recognition of its supply of biofuel and biofuel related equipment.

Royal warrants are granted to companies that have consistently supplied goods or services for no fewer than five years out of the most recent seven to the Queen, the Duke of Edinburgh and the Prince of Wales.

It means Green Fuels can now use the phrase ‘By royal appointment’ in relation to the goods or services it has provided to the royal family.

‘This award is a highlyprized mark of excellence and we were required to demonstrate that we have a sustainable environmental policy and action plan,’ explains Green Fuels CEO James Hygate.

The warrant took effect from 1 January and applies to Green Fuels subsidiaries in the US and Asia as well. l

US biodiesel plant to arrive via Portugal Portugal-based engineering company Incbio is to supply a new biodiesel plant to DC Biofuels located in Washington, US. The deal will see Incbio provide the 7.5 million gallons a year plant that will convert locallysourced cooking and vegetable waste oils into biodiesel, which

DC Biofuels would then sell on to local centrally fuelled public and private fleets.

The deal has been closed through mediation and support from International Procurement Tools but the amount has not been disclosed.

Incbio and DC Biofuels expect the plant to be complete before the end of 2013. l

12 january/february 2013 biofuels international

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UPM scoops investment for potential Francebased biodiesel facility Finland-based bio and forestry business UPM has picked up multi-million investment to aid the construction of a biorefinery in France.

The European Commission has awarded a grant of €170 million as UPM earmarks a wood wasteto-biodiesel facility based in Strasbourg.

‘This decision is recognition in regard to our knowledge in biofuels development work,’ says head of UPM Biofuels Petri Kukkonen. ‘The technology in this field continues to develop strongly and the experience we have gained from our other biorefinery project in Lappeenranta will help us bring this solid wood-based biorefinery to life.’

UPM believe the final assessment on the new project will take place over the next 12 to 18 months as it researches long-term wood availability and market prices, plus which way the EU will go on amendments to biofuels’ raw material-related directives. l

UPM is developing a biodiesel from wood facility in Strasbourg

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Absolute Fuels CEO pleads guilty to fraud Jeffrey Gunselman, the man behind US-based biofuels company Absolute Fuels, has pleaded guilty to several accounts of money laundering and federal fraud in relation to a $42 million (€31.6 million) biodiesel fraud investigation.

He pleaded guilty in federal court in Lubbock, Texas in December to 51 wire fraud counts and 24 of money laundering.

He also further admitted to being guilty on four counts of making false

statements in violation of the US Clean Air Act. The charges were brought to Gunselman after it was discovered he was selling renewable fuel credits without having the actual biodiesel to back them up. Absolute Fuels was closed in mid-October and all employees lost their jobs.

It has been reported that he used his ill gotten gains to fund a lavish lifestyle of mansions, cars and expensive war memorabilia.

Each wire fraud count is punishable by up to 20 years in prison by US law, while each money laundering count carries a 10-year maximum prison sentence. l

news in brief US state cracks down on used cooking oil theft The US state of North Carolina has imposed a new state law to discourage people from stealing used cooking oil, a potential feedstock in the production of biofuels.

It has been revealed by local press that used restaurant grease taken by thieves is a hot commodity as it is proffered to the biofuels market.

However the state’s new grease law now makes the act a misdemeanour and culprits will be hit with a felony charge if found in possession of more than $1,000 (€768) worth of product.

Scorched biodiesel plant in Australia back online Following a fire that occurred almost a year ago to the day, Australiabased biodiesel producer Australian Renewable Fuels (ARF) has recommissioned its Largs North processing and storage facility.

It has cost AU$6.5 million (€5.2 million) to rebuild, but now also includes a fuel-blending facility on-site. The first truck shipped fuel out at the start of December, with ARF officials confident the plant will be fully operational in January.

ARF makes its biodiesel via used cooking oil and tallow, which is stored at the facility, giving it a B20 blend to sell to consumers.

McDonald loves biofuels in Australia A new biodiesel processing facility, supported by fast food brand McDonald’s Australia, was officially launched in December.

The facility, owned by Neutral Fuels (NF), was opened by small business minister Louise Asher in Victoria and is believed to be creating 10 new jobs.

NF worked with the Department of business and Innovation to bring the project to life.

As its first major customer McDonald’s will use converted waste cooking oil as biodiesel for its vehicle fleet in the region, currently 106 restaurants across Victoria. It is believed around 700,000 litres of cooking oil will be converted a year.

Iran business to increase biodiesel production The head of Iran’s Fuel Conservation Company (IFC) has stated that it will start a specialised work group to produce biodiesel in conjunction with the Ministry of Agricultural Jihad.

‘Upon the request of cabinet, a fuel basket was defined recently in which the share of fuel used by diesel cars rose by 17% to hit 24%,’ Abbas Kazzemi, the head of the IFC, was quoted as saying. ‘With regard to increasing the number of diesel vehicles in the country, widespread programs have been defined for meeting this kind of vehicles’ fuel, including production of biodiesel from food processing wastes.’

Kazzemi also revealed that production of bioethanol is underway to meet the requirements of diesel vehicles.

Gunselman confessed to wire fraud and money laundering

14 january/february 2013 biofuels international

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Progress announced in fuel creation from carbon dioxide A working collaboration has revealed the progress in developing an advanced microbiological pathway to convert CO2 to fuels and chemicals.

Synthetic biology researcher Ginkgo BioWorks has validated that its genetically modified microbes can utilise a feedstock of formate produced from CO2 by risk management business DNV. DNV’s input to the process has also met metrics required for commercialisation of the electrolytic production of formic acid and formate salt from CO2.

‘The development of the electrofuels technology is an important advance in the utilisation and recycling of CO2 providing a pathway for sustainability and self-sufficiency’ says Narasi Sridhar, programme director in DNV Research and Innovation. l

US support algae-based biofuels research The US Energy Efficiency and Renewbale Energy department (EERE) is to support research and development into algaebased biofuels by setting aside a funding pot.

Up to $10 million (€7.5 million) will support research projects aimed at boosting the productivity of algae cultivation systems and developing and demonstrating energy-efficient, low-cost algae harvest and processing technologies such as centrifugation and extraction.

In a statement EERE says it

‘encourages applicants from industry, universities, and national laboratories but a cost share of at least 20% of the total project cost is required’.

The main objective of the funding opportunity is to demonstrate, at a process development unit, algal biofuel intermediate yield of 2,500 gallons of biofuel feedstock (or equivalent dry weight basis) per acre per year by 2018.

The Biomass Technologies Office believes this target is an important milestone in reducing the cost of algal biofuels to cost-competitive levels on the way to achieving 5,000 gallons per acre by 2022. l

Sustainable jet fuel project taking off in UK A sustainable jet fuel project named GreenSky London is gaining momentum after stakeholder British Airways (BA) confirmed its financial commitment to the cause.

GreenSky London is a project between BA and fuel researchers Solena that will see the construction of a new facility that will annually convert approximately 500,000 tonnes of waste, normally destined for landfill, into 50,000 tonnes of sustainable low carbon jet fuel, 50,000 tonnes of biodiesel, bionaphtha and renewable power.

BA has committed to purchasing fuel produced by the plant over a 10 year period, which equates to £310 million (€370 million) at today’s prices.

GreenSky London has already signed an exclusive option on a site for the facility

BA will buy the sustainable jet fuel produced at Solena’s plant

and consent work for the site has begun as the partners aim to be operational by 2015. More than 150 jobs will be created to operate the facility, as well as 1,000 construction positions.

Robert Do, president and CEO of Solena, says: ‘This project will provide clean, sustainable fuels at market competitive prices that will help address BA sustainability goals. The BA off-take

agreement represents the largest advanced biofuel commitment ever made by an airline and demonstrates its leadership and vision in achieving its carbon emission reduction targets.’ l

16 january/february 2013 biofuels international

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Bolt-on technology test improves bioethanol yield Renewable energy and agriculture technology provider ICM has completed a test of its 1.5 generation integrated fibre to cellulosic ethanol technology.

ICM engineered a 1,000 hour test run at its pilot plant in Missouri, US and believes it can now save on both operating costs and expenditure over traditional cellulosic ethanol production.

Feedstocks used in the test included corn stover and fibre, wheat and barley fibre, switchgrass, energy sorghum and bagasse.

Results included an additional

ITT ‘pumped’ to buy Bornemann Pumps

7 to 10% increase in ethanol yield per bushel and more than 90% and 80% conversion of C6 and C5 sugars respectively, which could lead to a pathway for second generation production.

ICM claims the technology is a bolt-on product that can be added to existing corn and sorghum ethanol plants.

‘We are grateful for the efforts that our employees performed to make the 1,000-hour run a remarkable success,’ says ICM principle scientist Jeremy Javers.

‘We also extend thanks to the US Department of Energy Biomass Programme, which provided us with sound guidance and support.’ l

Technology solution provider ITT has signed an agreement to acquire Joh. Heinr.

Bornemann GmbH (Bornemann Pumps).

Headquartered in Germany, Bornemann Pumps is a global provider of pumps and systems with an international installed base of multiphase pumping systems for the oil and gas industry. The company’s fiscal 2012 revenue is estimated at €115 million.

The transaction, valued at €206 million, would be funded from the company’s cash.

‘ITT’s president of industrial process business Robert Pagano Jr, says: ‘Bornemann’s twinscrew technology and multiphase applications experience would align strategically with the industrial process business, complement our Goulds Pumps brand and expand ITT’s presence in upstream oil and gas production.’ l

World Energy and Hydro Reactor purchase ‘key’ Dynamics collaborate to bioethanol production for SPR technology claims US sugar producer Biodiesel company World Energy’s business unit WMG Services and Hydro Dynamics, a manufacturer of ShockWave Power Reactor (SPR) technology, have joined forces to expand commercialisation of the SPR for biodiesel applications.

The SPR for biodiesel is said to complete the transesterification reaction within seconds. In continuous or batch systems, the SPR provides biodiesel producers with greater feedstock flexibility and improved quality.

The SPR can improve processes to reduce monoglycerides and lower catalyst utilisation. It was originally commercialised for use in biodiesel applications at World Energy’s US-based biodiesel production plant in Georgia in 2007.

Over 400 million gallons of annual reactor capacity has been installed currently. l

Danish renewable energy company BioGasol is to provide reactor technology to US-based cellulosic sugar producer Sweetwater Energy (SE).

SE will purchase a pretreatment reactor, designed by BioGasol to treat lignocellulosic feedstock before fermentation, as part of a decentralised sugar manufacturing unit for use by Ace Ethanol, a corn ethanol producer.

‘Our use of BioGasol’s technology in a commercial ethanol plant shows introducing lignocellulose-derived sugars into existing biofuel production processes can be low risk and economically feasible,’ says SE CEO Arunas Chesonis.

‘We share a philosophy that smaller, decentralised pretreatment facilities are the key at this stage to making cellulosic biofuels and biochemicals work, and such agreements like this pave the way for the large-scale production of fuel and raw materials for the chemical industry from cellulosic feedstock.’

BioGasol claims the combined unit will generate fermentable sugars for cellulosic ethanol at the Ace plant for up to 16 years. l

Advertising is totally unnecessary. Unless you hope to make money.

Jef I. Richards

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SGS Brookings awarded NOPA official referee lab status

Project creates enzymes for biomass-to-ethanol

SGS Brookings is now recognised as a National Oilseed Processor’s Association Official Referee Laboratory after it was certified by the National Oilseed Processor’s Association (NOPA) – a dedicated programme that certifies labs for referee analysis of soyabean meal quality during the purchase and sale of soyabean meal.

The EU-funded DISCO project, coordinated by VTT Technical Research Centre of Finland, has developed a new enzyme which accelerates plant biomass conversion into sugars and further into products such as bioethanol.

SGS Brookings is one of 14 laboratories in the US and Canada to attain this certification.

Established in 1938, NOPA represents oilseed crushers of soyabean, canola, flaxseed, safflower and sunflower

seed.s The association sets quality standards and trading rules for soyabean meal and other soya products.

Upon transaction, quality deficiencies may arise between soyabean meal buyers and sellers., who may request that a reference sample be run by a NOPA referee laboratory to determine the soyabean quality and claim settlement.

SGS Brookings will use testing methods adopted by the American Oil Chemists’ Society (AOCS) as the official methods of analysis to determine moisture, protein, crude fibre and oil in the referee samples.

The laboratory applied for NOPA approval to better meet the needs of SGS customers in the US. SGS is a leading inspection, verification, testing and certification company. l

The project’s results include lignin-tolerant enzymes and enzyme cocktails for processing spruce, straw, corn cob and wheat bran. Dyadic has begun commercialising these enzymes in the Netherlands.

These enzymes and

enzyme cocktails have been developed to convert agricultural side streams into fermentable sugars and further into products such as bioethanol. Plant biomass was chosen as the raw material for the project, since it contains lignocellulosic biomass, which is an abundant raw material.

The DISCO project produced new knowledge on the inactivating property of lignin, which helped scientists develop enzymes that tolerate lignin better.

New information on enzymes and activities that break down hemicellulose, vital for the efficient exploitation of plant biomass, was also obtained during the project. l

Fluid Imaging to reveal new analysis system for biofuels Laboratory instrumentation manufacturer Fluid Imaging Technologies is soon to unveil its new imaging particle analysis system, suitable for biofuels, chemicals and slurries.

The At-Line Flow Cam ES from Fluid Imaging Technologies

The new self-contained At-Line FlowCam ES automatically extracts, dilutes and runs samples from within the production or processing line to eliminate manual sampling, speed up the process and promote maximum line uptime while removing the risk of human

error in data acquisition.

It detects thousands of particles and microorganisms in seconds before capturing a high resolution, full colour digital image of each one. It communicates their size and shape using more than 30 different measurement parameters, from length, width and ESD to advanced shape characterisation properties.

The FlowCam ES can be monitored and operated remotely and images and data shared via email with colleagues at different locations. It comes preloaded with the company’s particle analysis software, VisualSpreadsheet V3.2. l

18 january/february 2013 biofuels international

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Evogene finishes pilot programme Evogene, a developer of improved plant traits for the biofuel, food and feed industries, has completed a two year pilot programme to identify and use long non-coding RNA (lncRNA) related genes for plant trait improvement.

The pilot programme was initiated in 2011. It used computational genomic technologies in order to identify and characterise novel IncRNAs, their related genes and their effect on key plant traits. A number of these IncRNA related genes are now being validated

by Evogene under various growth conditions. lncRNA is the largest subgroup within ncRNA and exists in high abundance in plant species. Transcribed from DNA regions, previously

known as ‘junk DNA’, these molecules are key in determining complex characteristics which are significant in plant traits.

Identifying these genes has so far focused on DNA regions that encode for proteins. Evogene says the addition of lncRNA related genes as a new gene source could prove significant.

During the programme Evogene achieved: 1. The creation of an accurate lncRNA genomic database from a number of different plant species 2. The development of a discovery platform for accurate identification of lncRNAs and related genes from this database 3. Linking of these lncRNAs to specific plant traits 4. Experimental proof, through the use of Evogene’s model plant validation system, that IncRNA originating from one plant species can significantly affect traits in other plant species. l

Performance enhancements for MFCs Mass flow controllers (MFCs) measure and control the flow of various liquids and gases. In many applications the gases and fluids operate at modest temperatures up to 80°C, but can also include aggressive media flows which necessitate the use of specialised chemical-resistant elastomer seals.

Most gas flow meters are equipped with seals but MFCs need O-ring seals and other custom parts to ensure that they do not swell in the presence of more aggressive chemicals utilised within their wide range of industrial applications.

Sealing specialist Dichtomatik distributes the DuPont Kalrez range of sealing products, designed to give extended performance when operating with a wide range of chemicals in elevated temperature conditions.

Tests show that an MFC fitted with DuPont Kalrez Spectrum 6375 O-rings and custom parts increased reliability of operation and the overall meantime between failures (MTBF) of the equipment.

This increased reliability and reduced production down-times. A logistics saving was also achieved as the standardisation on Kalrez parts for all the site modules led to a reduction in the worldwide inventory of different elastomer seals types for the company. l

US ethanol plant to use modified grain gene process The North American branch of biotechnology company Syngenta has signed a commercial agreement with a Kansas ethanol plant.

The agreement will see Bonanza Bioenergy use grain featuring Enogen trait technology which allows corn to express a robust form of alpha amylase enzyme, the

primary enzyme used in dry grind ethanol production to convert starch to sugars.

Enogen eliminates the need to utilise liquid alpha amylase enzyme in dry grind ethanol production by delivering alpha amylase enzyme in the grain.

‘This technology is available at a critical time for the ethanol industry as margins are tightening,’ says David Witherspoon, head of renewable fuels for Syngenta. ‘By working across

broad ranges of temperature and pH levels, Enogen corn creates flexibility for ethanol plants that helps it capture increased levels of throughput or cost savings based on market conditions.’

Bonanza Bioenergy, a member of Conestoga Energy Partners, completed a successful three month trial of Enogen grain in July. The positive results from that trial led the ethanol plant to sign this commercial agreement. l

Today’s smartest advertising style is tomorrow’s corn.

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De Smet builds corn-to-ethanol plant in Argentina Belgian contracting company De Smet Engineers and Contractors (DSEC) is building a corn processing facility with cogeneration plant for the farmer’s cooperative Asociación de Cooperativas Argentinas (ACA).

Most of the engineering works have been completed and activities have started onsite. The plant is expected to begin operations at the

start of next year when it will produce 125 million litres of ethanol, in addition to 6.5MW of renewable energy and 120,000 tonnes of animal feed.

Most of the ethanol produced at the plant will be sold to the country’s domestic market.

The Argentinean parliament has passed a law that has set a mandatory blend of minimum 5% ethanol into petrol and the country’s government recently provided ethanol quotas that would allow up to 17% blending proportion. l

Civil engineering works are underway at the plant

Camelina research receives funding for bioenergy and biofuels The US Department of Agriculture (USDA) has awarded a multi-million grant to a team of researchers looking at the potential of camelina as a biofuel feedstock.

Novozymes and MBI have received funding for enzymes

Corn stover to biofuels research receives cash injection The US Department of Energy (DoE) has awarded enzyme company Novozymes and biotechnology provider MBI $2.5 million (€1.8 million) to develop new enzymebased technologies to convert corn stover into sugars for subsequent conversion into biofuels.

The collaboration aims to tailor enzymes for MBI’s AFEX-treated biomass, which will in turn enables the production of low-

cost fermentable sugars.

‘There are two major challenges in converting agricultural biomass into bio-based products,’ says Allen Julian, MBI chief business officer.

‘One is the challenge of handling, storing and hauling low-density biomass to the refinery, the other being the challenge of breaking down the biomass cost-effectively into its constituent sugars.’

MBI previously won a $4.3 million DoE award to develop and scale up its AFEX technology and is currently completing the installation of a one tonne per day pilot-scale reactor at its Michigan facility. l

The team, led by Kansas State University professor of grain science and industry Xiuzhi Sun, has received just over $5 million (€3.7 million) and also comprises of researchers from Montana State University, University of Wyoming, StrathKirn, SBT LLC, Montana Gluten Free and Henkel.

‘Although camelina is currently grown in Montana and Wyoming, it will expand to the Northern Great Plains area, and it’s possible that agricultural producers in Kansas might be interested in incorporating the crop into their cropping systems in the future,’ Sun says.

Once harvested and processed, Sun hopes to develop new technologies to chemically convert camelina oil and meal to a variety of adhesives, coatings and composites.

‘The overall goal is to make oilseed camelina a cost-effective bioenergy and bio-based product feedstock,’ she adds. ‘This project will generate information that will build a foundation to make non-food oilseeds a better resource for biofuels, chemicals and bioproducts, with minimal negative impact on food crop systems or the environment.’ l

20 january/february 2013 biofuels international

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FuturaGene and EMBRAPA sign agreement

Ceres and Syngenta collaborate on sweet sorghum market development

FuturaGene, a company working to enhance yield and sustainability of woody crops for the biofuel and biopower industries, has signed a cooperation framework agreement with the Brazilian Ministry of Agriculture research organisation Empresa Brasileira de Pesquisa Agropecuária (EMBRAPA).

The Brazilian subsidiary of agricultural biotechnology company Ceres, Ceres Sementes do Brasil, has signed a sweet sorghum market development agreement with Syngenta.

Under the agreement, FuturaGene and EMBRAPA will establish collaborative research programmes in eucalyptus and other tree species for the enhancement of sustainable development in Brazil and other territories.

The first project to be executed under the agreement will incorporate an aluminiumtolerance gene of EMBRAPA into FuturaGene eucalyptus germplasm to enhance yields in areas affected by aluminium toxicity in the soil.

Together the two organisations will develop new innovations for sustainable agro-forestry and meet the growing agroecological challenges related to productivity.

The agreement was signed at EMBRAPA’s Brazilian headquarters and will focus on the development of genetic technologies for use in Brazil. FuturaGene will apply the technologies developed under the agreement worldwide. l

The companies will work together to introduce sweet sorghum as a source of fermentable sugars at Brazil’s 400 or more ethanol mills.

Under the agreement, Syngenta and Ceres will work together on smallscale trials as well as larger demonstration-scale field evaluations with mills.

Syngenta will provide its agronomy resources to evaluate its portfolio of crop protection products alongside Ceres hybrids, and Ceres will provide both seed and research support. The two companies will coordinate outreach to ethanol mills and develop industry training programmes. l

E.Coli could hold low-cost biofuels key A biofuels research team based at the University of Colorado will use a multimillion dollar grant to look into how to produce costeffective biofuels from E.Coli.

The US Department of Energy has awarded the project $9.2 million (€7 million) and the team will

allegedly use a non-pathogenic strain of E.Coli to pinpoint any part of it that can be used to make biofuels or other chemicals.

The team also includes scientists from the Lawrence Berkeley National Laboratory and the National Renewable Energy Laboratory.

E.Coli is a bacterium most commonly found in the lower intestine of warm-blooded organisms. l

Solazyme fermentation objectives completed in US Renewable oil and bioproducts company Solazyme has completed multiple initial fermentations at Archer Daniels Midland’s (ADM) Iowa, US-based facility.

Solazyme claims to have achieved commercial-scale production metrics, linear scalability of its process from laboratory scale and demonstrated the ability to run large scales without contamination.

The fermentations were conducted in vessels with a capacity

of approximately 500,000 litres, with an annual production target of 20,000 tonnes of oil starting in early 2014 at the ADM facility.

‘Working with ADM’s fermentation team to achieve commercial scale operations at its facility exhibits our ability to scale-in large commercial fermentation facilities quickly,’ says Peter Licari, CTO at Solazyme. ‘We are currently developing commercial facilities in the US, France and Brazil and, with these runs, we have now achieved linear scale-up of over 70,000-fold from our labs.’ l

Doing business without advertising is like winking at a girl in the dark. You know what you are doing but nobody else does.

Stuart Henderson Britt If you are not yet convinced about advertising, give us a call on 020 3551 5751 biofuels international

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biofuels incident update A summary of the recent major explosions, fires and leaks in the biofuels industry Date

Location

10/01/13

Huntingdonshire, UK

09/01/13 Peoria, Illinois, US

Company

Incident information A duel carriageway became badly affected after a chemical tanker overturned and spilled ethanol across all lanes.

The A14 was closed both ways at around 6.30am and did not fully reopen again until 6.30pm that evening.

Fire crews were called to the scene and used adsorbent granules and an environmental grab pack to cover the nearby drains and stop ethanol entering them. The Environment Agency was made aware of the incident.

The majority of the fuel remained inside the overturned tanker and an empty one was requested so the remaining ethanol could be transferred and removed from the scene.

The truck driver suffered a minor head injury and was taken to hospital.

Archer Daniels Midland

03/01/12

Belton, Anderson County, South Carolina, US

30/12/12

Mount Vernon, Illinois, US

25/12/12

Winnebago, Minnesota, US Corn Plus

ADM’s corn processing facility was closed after an early morning explosion and fire caused considerable damage.

Nobody was injured but one person was taken to the hospital as a precaution.

Operations at the site were halted until the full extent of the damage had been assessed. It was later estimated to be around $1 million (€750,000).

Operations at the plant restarted on12 January.

A fire that broke out close to the Belton Tank Farm and ethanol plant has destroyed an outbuilding.

Around 20 fire fighters were called to the scene who stopped the fire from spreading.

A train derailed and spilled thousands of gallons of ethanol from eight tank cars at around 6.30am. At the time of the incident, officials said the spill was under control and nobody had been hurt.

Part of the track had to be repaired following the derailment.

It was estimated that between 3,400 and 5,000 gallons of ethanol spilled from the 30,0000-gallon tank car before crews were able to stop the leak.

A large building attached to Corn Plus’ ethanol plant was badly damaged after an explosion occurred at the factory.

The local fire department received a call at 3.15am and remained at the scene for three hours. No one was injured.

It was discovered that the explosion was in the dryer building and an investigation continues.

Corn Plus did not cease operations at its production plant.

22 january/february 2013 biofuels international

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Ice cream biofuels: a chillingly good idea?

For most of us, it’s still far too chilly to even think about cracking out the ice cream scooper.

But it would appear that one research project doesn’t think so. The joint venture between Turku University in Finland of all places and Manchester University in the UK believe it has found a way to unlock clean fuel from some obscure feedstocks.

A fatty acid compound found in ice cream, which also resides in other items like shampoo and soap, could be a longterm solution to replace fossil fuels through hydrocarbon chemical manipulation.

‘The key is to match up the correct biocatalyst with the specific product you are trying to make,’ says Manchester team leader Nick Turner. ‘Biocatalysts recognise molecules in the way that a

Scoop: would you be hot or cold to the idea of ice cream-based biofuels?

lock recognises a key. They have to fit perfectly together to work but, sometimes, we redesign the lock so that it

Top BI Tweets Here is a selection of interesting things from our Twitterverse! (#biofuelsmag) BioFuelsChat 2013 could be a make or break year for algae fuel Iowa Biodiesel Board We’ve played a major role in biodiesel becoming the only advanced biofuel that has reached nationwide commercialisation in the United States Richard Weiner Brazilian import regulations are hurting US exports of biofuels

can accept a slightly different key allowing us to make even more interesting products.’

Turner and his team believe

it will still take ‘several years’ of development before a working fuel could be utilised from the technique, however. l

The gift that keeps on giving Christmas trees are again set to be renewed as energy in Lithuania, according to local news reports.

Residents across 12 major cities will have the opportunity to drop their trees in specially marked containers, after which the trees will be used for both biofuel

and heat for housing projects.

This is the seventh year the campaign has run for a week in January.

‘The campaign gets more popular every year, so it shows that people’s awareness is growing and fewer Christmas trees are simply thrown away,’ organiser of the campaign Saulius Budrevicius was quoted as saying. l

Sapphire Energy Algae fuel could help solve the Navy’s oil dependence RenewableEnergyWorld UK Green Bank chief plans to allocate £3 billion to clean energy by 2015 Intlcleantech Canada is fast becoming a hotbed for biofuels activity Marla Defoe UC Davis chemists have engineered blue-green algae to grow chemical precursors for fuels and plastics

Lose the bling first: christmas trees are recycled in Lithuania

24 january/february 2013 biofuels international

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Despite avoiding the instigation of a tariff on its ethanol imports into Europe, the US still awaits an overall decision on an ‘anti-dumping’ investigation

US ethanol debate continues in Europe

T

he European Commission (EC) confirmed in December a decision not to apply countervailing duties in an antidumping case involving ethanol imports from the US for the time being.

The proposal, set to introduce an almost 10% tariff on imports from across the Atlantic, was making its way through Europe having been endorsed by an Antidumping Advisory Committee, as part of on-going investigations based on accusations that the US was ‘dumping’ its product into the European market.

Dumping is the term used to describe the influx of cheap and subsidised ethanol imports onto a foreign market. Such US product had been ensconced into the EU market over the past three years, thus driving European ethanol prices down substantially for it to compete.

Despite seemingly having the backing of many European Union members the 9.6%

duty, which would have a five year duration, was not applied at the end of last year but an overall decision on the anti-dumping case is expected by the beginning of March.

The investigation by the EC began in late 2011 after a petition from ePure, the European ethanol trade group, asked it to probe both US biofuel tax incentives and whether US producers were flooding the European market.

At that time ePure’s secretary general Rob Vierhout thanked the EC for ‘its hard work in processing our complaint and for acknowledging the damage the EU industry has suffered’.

‘European ethanol producers have been unfairly undermined by the dumping of US ethanol on the EU market,’ he further added. ‘A positive outcome is not only legitimate compensation for past injury but it also sets a good precedent for challenges that our industry will face in the future.’

A statement shortly after that claim,

jointly written by the US Renewable Fuels Association (RFA) and ethanol association Growth Energy, responded: ‘While we are troubled by the Commission’s preliminary decision to allow this case to progress, we remain convinced that this matter lacks the merit necessary for imposing such a duty, and that when all the facts are considered, the European Union will rightly decide not to impose any antidumping duties on imports of ethanol produced in the US.’ But the RFA and Growth Energy say the decision made by the EC in December was ‘good and right’.

‘We both appreciated the EC’s thoughtfulness and careful consideration of the facts and believe similar conclusion will be drawn on the antidumping investigation,’ they add.

The official vote on the overall case is to be made by EU member countries during February and then sent to the European Union council for approval. l

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biofuels regulations Biofuel production is set to benefit as US steers itself away from the ‘fiscal cliff’

Reaping the rewards of the denied US tax bill

T

he much talked about bill has now been passed by the US House of Representatives to stop a set automatic tax increase, which consequently benefits the internal biofuels and cellulosic ethanol industries.

The American Taxpayer Relief Act of 2012 was passed by a vote of 257-167 and the bill, tagged in the media with the title ‘fiscal cliff package’ because many believed it would’ve sent the country back towards recession, was signed off by President Barack Obama on 2 January.

The bill will extend the $1 (€0.70) per gallon tax credit for biodiesel and biomasscreated fuel up until 2014, with a small argi-biodiesel producer credit of $0.10 per gallon also included. To qualify as a small producer, one must not exceed production capacity of 60 million gallons of any type of agri-biodiesel throughout a tax year, but it is only the first 15 million gallons which are eligible.

Producers dabbling in algaebased fuel will also be happy with this outcome as the medium now qualifies under an expanded definition of cellulosic biofuel production.

Another bonus for all firms that produce cellulosic biofuel is that they will be able to continue claiming a $1.01 per gallon production tax credit for another 12 months.

In addition, all facilities producing cellulosic biofuel can expense 50% of their

eligible capital via an extended provision first created in the 2008 Farm Bill. This bonus depreciation for one additional year is only for facilities placed-in-service before the end of 2013, however.

All of this will boost attempts by the US

Renewable Fuel Standard (RFS) to fulfil a target of 36 billion gallons of biofuel across the entire country’s petrol supply by 2022. The RFS has remained unaffected by the bill, but only 15 billion gallons of that targeted 36 can come from corn feedstock, thus any

benefit to other avenues of production will no doubt be welcomed with open arms.

Study results The biodiesel tax incentive expired on the last the day of 2011 and a recent study by

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global economics consultancy Cardno Entrix showed that the industry could have produced an additional 300 million gallons in 2012 with it in place, which would have supported 19,213 additional jobs throughout the industry.

The study also stated that the industry would support 112,078 jobs nationally with the tax credit in place in 2013, against 81,977 without it. Additionally, the return of the incentive is projected to increase household income by some $1.6 billion next year while supporting an additional $3.1 billion in gross domestic product.

‘It’s been a long year with a lot of missed opportunity and lost jobs in the biodiesel industry. But we’re pleased that Congress has finally approved an extension so that we can get production back on track,’ adds Anne Steckel, VP of federal affairs at the National Biodiesel Board. ‘This is not an abstract issue. In the coming months, because of this decision, we’ll begin to see real economic impacts with companies expanding production and hiring new employees.’

Steckel also emphasised that, along with these economic benefits, biodiesel is helping the US reduce its dependence on imported petroleum and making the country less vulnerable to global petroleum markets that ‘continue to disrupt the economy and threaten our national security’, while significantly reducing tailpipe pollution and greenhouse gas emissions.

Confident support The Renewable Fuels Association (RFA) expanded on those positive remarks by claiming that the one year extension of the cellulosic producer tax credit and accelerated depreciation will provide some measure of certainty to ensure that 2013 will be ‘a year of growth and milestones for the advanced ethanol industry’.

‘In addition, and perhaps

biofuels international

equally significant, is the extension of the alternative fuel infrastructure tax credit which will accelerate E15’s entry into the marketplace this year,’ continues RFA president Bob Dinneen.

And executive VP of BIO’s Industrial and Environmental Section, Brent Erickson,

noted that private investment will still be just as critical in ensuring that advanced biofuels reach commercial scale and become cost-competitive.

‘Private companies have already made significant investments to develop advanced cellulosic and algae biofuels and build

new production capacity.

This investment is part of a wave of innovation in biobased production of fuels and renewable chemicals that is driving employment and economic growth. Tax policies should help to support the continuation of this,’ he adds. l

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biofuels regulations The US military will be able to use sustainably sourced fuel thanks to positive vote taken by the Senate

No Udall-ying on military biofuels future

T

he US senate has voted to repeal certain language being included in section 313 of the annual Defence appropriations bill which concerns the future use of alternative fuels in the US military.

The final vote, taken in late November, was 6237 in favour of prohibiting a proposed clause by Republican senator Jim Inhofe which would have prohibited the Department of Defence (DoD) from buying alternative fuels if they cost more than conventional ones.

If the vote went the other way, the bill would have blocked efforts to develop a commercial supply of costcompetitive advanced biofuels as detailed in a Memorandum of Understanding between the DoD, Department of Energy (DoE), and US Department of Agriculture (USDA).

The proposal was seen as a direct assault on the DoD’s advanced biofuels policy and the Renewable Fuel Standard (RFS), but Democrat senator Mark Udall led the calls to overturn it.

‘Despite increased domestic production of traditional fossil fuels, rising global oil prices and market volatility caused DoD’s fuel bill to rise to more than $19 billion (€118.3 billion) in 2011,’ the senators wrote. ‘Alternative fuels will not supplant fossil fuels entirely; however, replacing even a fraction of the fuel consumed by DoD with domestic alternative fuels has the potential to advance US national security, improve strategic flexibility and insulate the defence

budget against future spikes in the cost of fossil fuels.’

‘This vote was a good test vote for the RFS. Over 60 senators went on record supporting biofuels policy, a very good bi-partisan outcome and a strong signal to investors,’ comments Biotechnology Industry Organisation (BIO) executive VP Brent Erickson.

Rolling out the barrels Novozymes, a global organisation which deals with the conversion of biomass into biofuels, praised the senate for adopting Udall’s amendment that will allow the DoD to purchase advanced biofuels.

‘Biofuels allow American workers to make fuel for American troops,’ says president of Novozymes North America, Adam Monroe. ‘Senator Udall’s amendment will give the DoD back the flexibility to make important strategic decisions when it comes to fuelling our planes, ships and vehicles with domestic, advanced alternative energy.’

Back in May 2012, Novozymes inaugurated the largest enzyme plant

dedicated to biofuels in the US with the opening of its advanced manufacturing plant in Blair, Nebraska. Funded with $200 million in private investment, the plant employs 100 people and created 400 construction jobs while it works with enzymes for both the conventional and advanced biofuel markets.

‘We would like to thank the senate for recognising the critical role biofuels play in our national security and energy independence.

This smart policy should be included in the final version of the Defence Authorisation bill that is sent to be signed by the President,’ he adds.

Further praise for the amendment came from a coalition of organisations that represented farmers who grow energy crops, the advanced biofuels industry which converts these feedstocks into drop-in fuels, the customers who procure the fuels and national security organisations.

‘Adopting advanced dropin biofuels will help both the DoD and the nation achieve broader national security objectives. Over-reliance on oil puts US troops at risk of supply disruptions during

military or humanitarian missions,’ a joint statement by the Advanced Biofuels Association, American Farm Bureau Federation, BIO, Growth Energy, National Biodiesel Board and the Truman Project read.

‘Moreover, the oil market is unpredictable and the price per barrel of oil often fluctuates dramatically, which can have a significant impact on military budgets. In fiscal years 2011 and 2012, for instance, DoD came up $5.6 billion short in its budget for military operations and maintenance because it spent more on fuel than anticipated.

For every $0.25 increase in the price of a gallon of oil, DoD incurs over $1 billion in additional fuel costs.

‘It is increasingly important to find domestically produced crude oil alternatives to improve the country’s energy security, meet global energy demands and provide jobs, while strengthening our military and domestic industry.

The DoD’s partnership with private industry is a critical step towards achieving these goals. This amendment offered by the senators will allow DoD to continue research and testing of fuels that provide US forces with enhanced military capability.’

The US currently spends roughly $15 billion each year to provide the military with fuel for its operations across the world and, although figures are not released by the DoD directly, many analysts believe the military uses approximately between 400,000 and 800,000 barrels of oil a day. l

28 january/february 2013 biofuels international

su St pp ora le ge m en t

January/February 2013

international

Sustainable storage Vopak, Decal and Tepsa are the first to prove sustainability criteria

Terminal update Find out where biofuels are being stored, which facilities are growing and port throughput levels

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Storage Supplement January/February 2013 Horseshoe Media Limited, Marshall House, 124 Middleton Road, Morden, Surrey SM4 6RW, UK. www.biofuels-news.com publisher & Editor Margaret Dunn • Tel: +44 (0)208 687 4126 • margaret@biofuels-news.com

2 Terminal news

South American sales representative Roberto Bieler • Tel: +55 21 3268 2553 • Fax: +55 21 9465 2553 • rbieler@farbitec.com PRODUCTION Alison Balmer • Tel: +44 (0)1673 876143 • alisonbalmer@btconnect.com

Deputy Editor James Barrett • Tel: +44 (0)208 687 4183 • james@biofuels-news.com Assistant editor Keeley Downey • Tel: +44 (0)20 8687 4183 • keeley@horseshoemedia.com INTERNATIONAL Sales MANAGER Shemin Juma • Tel: +44 (0)203 551 5751 • shemin@biofuels-news.com US SALES MANAGER Matt Weidner +1 610 486 6525 mtw@weidcom.com

No part of this publication may be reproduced or stored in any form by any mechanical, electronic, photocopying, recording or other means without the prior written consent of the publisher. Whilst the information and articles in Biofuels International are published in good faith and every effort is made to check accuracy, readers should verify facts and statements direct with official sources before acting on them as the publisher can accept no responsibility in this respect. Any opinions expressed in this magazine should not be construed as those of the publisher.

ISSN 1754-2170

8 Biofuels terminal update 10 Technology news 12 New additives combat stress corrosion cracking 14 Insulating for the future

How can tank operators reduce energy costs and cut CO2 emissions?

16 Sustainable storage

Vopak, Decal and Tepsa lead the way in certifying operations to help customers prove sustainability criteria

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biofuels terminal news

Greenergy North Tess starts fuel supply ADPO’s new Greenergy, a UK-based supplier of There are more than 20 tanks storage terminal at the site and the company has petrol and diesel, has commenced not ruled out construction of diesel, gasoil and kerosene supply in Belgium additional tankage in the future. from its terminal in Teesside.

The North Tees facility was already closed when it was acquired by Greenergy in July 2012, having ceased commercial operation earlier in the year following the Administration of Petroplus Refining Teesside. Since taking over at the terminal Greenergy has undertaken a condition survey and made certain improvements prior to commencing supply.

The company now intends to make further significant investments at the site in order to create an integrated supply system for petrol and diesel in the North East and a new hub for its rail distribution network.

Andrew Owens, Greenergy CEO, comments: ‘Our North Tees terminal will complement our existing petrol manufacturing facilities on Teesside, by adding the infrastructure for a new rail head, our own jetty capable of receiving large diesel ships and product interchange between terminal locations.’

Planned improvements at North Tees over the next 18 months include: • Jetty modifications including conversion to allow a more commercial based multi-product import and export into the terminal • A new pipeline to link Greenergy North Tees to other terminals in the Teesside area. The plan is for the pipeline to carry petrol and diesel • Additional road loading facilities for petrol and diesel • Refurbishment to tankage and road loading facilities • Enhancements to IT. The project at North Tees follows investments by Greenergy in storage and distribution facilities at, among others, Thames Oilport (2012, joint venture between Vopak, Greenergy and Shell), Cardiff (2010) and West Thurrock (2008).

Greenergy continues to supply petrol, diesel and gasoil from Vopak Terminal Teesside. l

Biofuels to feature at upcoming StocExpo event This year’s upcoming Storage Terminal Operators’ Conference and Exhibition (StocExpo) is to be an unmissable event for anyone wanting to keep up-todate with the latest technologies and services relating to the biofuels storage sector.

StocExpo, now in its ninth year, will be held in Antwerp on 19-21 March. Last year more than 180 companies from 29 countries exhibited at the event.

Covering a whole host of categories, including automation, fire protection, leak detection, metering/ measuring, vapour recovery, pumps and valves, tank cleaning and inspection/certification schemes to name but a few, the show provides a platform for terminal operators, traders, regulators and biofuel

equipment suppliers to come together to network and do business.

Running alongside the threeday exhibition will be a jam-packed conference. Chris Hunt, director general of UKPIA, will present on the ‘perfect storm’ facing European refiners today, including the legislative developments such as the Renewable Energy Directive and Fuels Quality Directive. And on day two, Henry Persson, project manager at the SP Technical Research Institute of Sweden, will discuss how to mitigate the risks associated with storage of water miscible products, focusing on the handling and storage of ethanol fuels and ethanol storage tank fires.

Register now to secure your place at Europe’s leading international event for the tank terminal industry and avoid disappointment. Contact Sharé Mason on +44 (0)20 8843 8819. l

Chemical storage company Antwerp Distribution and Products Operations (ADPO) has acquired a new 10-hectare site in the Port of Antwerp on which it will expand its bulk liquid storage capacity.

ADPO already owns 290,000m3 of tank storage capacity at the port, made up of different tank sizes ranging from 150m3 to 5,000m3. Its terminal also receives rail traffic and has a largesized private rail tank car parking area.

The company claims to be the world’s largest single stainless steel storage terminal with a stainless steel tank capacity of 120,000m3.

ADPO says it will break ground on its new storage terminal at the beginning of 2014. Upon completion the facility will be able to handle around 100,000m3 of chemical products. l

Port of Gothenburg name change reflects current trends The Oil Harbour at the Port of Gothenburg has been renamed the Gothenburg Energy Port.

Along with oil the port also handles and produces other fuels, including ethanol and biofuels, and the name change was made to reflect this.

‘We want to highlight the fact that we welcome and encourage the trend towards more renewable fuels,’ said Gothenburg Energy Port commercial director Jill Södervall. ‘Now that both LNG and biogas will be handled at the port in the near future, the change of name is in keeping with the times.

‘Another important part of the re-profiling is that we will now follow up volumes on a much more detailed level in order to monitor and report on developments.’ l

2 january/february 2013 biofuels international supplement

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biofuels international supplement

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biofuels terminal news

REG expands terminal locations Renewable Energy Group (REG), a producer and marketer of biodiesel, has established new biodiesel blending locations at four New York terminal sites.

‘Gaining access to the largest biodiesel terminal network in New York is part of our strategy to expand into the Northeast market as a reliable biodiesel supplier,’ REG president and CEO Daniel Oh says.

These biodiesel distribution points are in New Jersey’s Whippany, and New Hyde Park, Port Chester and Brookhaven in New York, offering quick access for blending biodiesel to enhance heating oil and diesel supplies.

‘REG has biodiesel onsite in New Hyde

Park to allow area distributors and heating oil retailers to increase supply as the New York City biodiesel blend B2 requirement goes back into effect,’ Gary Haer, VP of sales and marketing for REG, adds.

This B2 requirement was scheduled to come into effect on 1 October, however was delayed until 1 December as a result of tight fuel supply issues following Hurricane Sandy.

REG markets its REG-9000 biodiesel and currently producers over 225 million gallons a year. In addition to its new terminal locations in New York and New Jersey, the company also operates from terminal locations in California, Iowa, Illinois, Minnesota, New Mexico, Texas and Ohio. l

Citgo’s biofuel storage tank approved Fuel company Citgo Petroleum has been given the go ahead to build a biofuel storage tank at its existing Quincy Avenue terminal in Braintree, Massachusetts.

Citgo proposed to construct a 270,000 gallon steel biofuel tank at the facility,

which would hold biodiesel made from animal and vegetable fats.

Approval was granted by Braintree’s planning board on a conditional basis. Conditions state that Citgo must monitor the number of trucks headed for the proposed facility.

According to Citgo, the project will have a minimal impact on the town’s traffic. l

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NuStar to build ethanol storage facility and unit train NuStar and biofuel supply chain company Eco-Energy Holdings are to build an ethanol storage facility complete with unit train infrastructure after forming a partnership.

To be located at NuStar’s Dumfries site in Virginia, US, the facility will benefit the northern Virginia and Washington, DC markets. It will comprise ethanol unloading, storage and truck loading solutions.

The terminal will be able to store around 150,000 barrels of ethanol, with a 400,000 barrel-a-month distribution capacity. The unit train facility will be built to receive up to 96 rail car unit trains via CSX Transportation.

Operations at the new facility are slated to begin in the third quarter of 2013, with each company covering its own development, construction and refurbishment investments.

Gwaine Ton, Eco-Energy’s CFO and COO, was reported as saying: ‘This is a large and growing market and this project reflects how multiple partners (Eco-Energy, NuStar and CSX) can work together to develop a long-term supply chain solution that benefits biofuel producers and end users. The site will be open for utilisation by both producers and end users seeking to effectively distribute biofuels in the region.’ l

Odec expands for biofuels

Odec Tankstorage is increasing its storage capacity in a bid to handle more biofuels.

In August last year the company acquired a 9,130m3 terminal area in Södertälje oil harbour, Sweden. The terminal is now under development and, upon completion, will feature four new tanks for biofuels storage.

Phase 1 of this project includes a 6,000m3 insulated tank for biofuels. This tank will be put into operation in mid-2013. l

4 january/february 2013 biofuels international supplement

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Plains All American continues with Yorktown expansion Crude oil transportation, storage and terminalling company Plains All American Pipeline is converting the former Yorktown refinery in Virginia, US into an oil storage terminal.

Based on 600 acres of land with rail and water links, the facility will be able to handle ethanol, biodiesel components, crude oil and butane.

The project, estimated to cost around $35 million (€26.7 million), includes upgrading the terminal’s dock

and related infrastructure to handle multiple products.

This would also help the terminal receive an increased number of vessels in less time.

The existing facility unloaded trains at a rate of up to 130,000 barrels per day, although it did not receive crude oil via rail. Plains All American has since signed an agreement with CSX that will see rail shipments delivered to the Yorktown terminal.

Plains All American acquired the Yorktown refinery from Western Refining in 2011 for $220 million after it was closed the previous year. l

Biox decides against New York Harbour biodiesel plant Renewable energy company Biox has exercised an option which allows it to terminate the land lease agreement with International-Matex Tank Terminals (IMTT) to build a 100mly biodiesel production plant in New York Harbour.

‘Given the significant change in the biodiesel market dynamics since we announced the IMTT agreement in June 2012, terminating the land lease agreement is the responsible decision,’ Kevin Norton, Biox CEO, explains. ‘We believe

the challenges the biodiesel market has endured in 2012 are short-term issues that reflect the maturing of a relatively nascent sector.’

Based on this decision, IMTT has agreed to return the total $4.1 million (€3.1 million) letter of credit related to the proposed tank modifications. Biox will also be reimbursed $1.4 million of the $2.1 million upfront payment it made to IMTT. Exercising the option reduces the term of the tank services agreement from 20 years to five years, with 53 months remaining. Biox is able to utilise the tanks or sub-lease the tank services during the remaining term of the agreement. l

Storage scheduled for Panama islands Melones Oil Terminal will store 2 million barrels of oil under an operational and managing agreement in a fuel free zone on Taboga and Melones islands.

The agreement was passed by the Cabinet Council and the Minister of the Presidency on behalf of the state.

The company is to invest $65 million (€49 million) into the

Lincoln Energy Solutions constructs new storage tanks Biofuels solutions provider Lincoln Energy Solutions (LES) has built new storage tanks at its facility in Belton, South Carolina.

The tanks have increased the facility’s ethanol storage capacity by 1.5 million gallons and its biodiesel capacity by 400,000 gallons. To meet the National Fire Protection

Association (NFPA) standards, a 225,000-gallon water tank was also constructed.

The additional ethanol storage tank allows LES to accelerate the off-loading process of the 80 tanker car unit train to just 48 hours, almost half of the time previously required.

Furthermore, a rail line expansion allows for six additional biodiesel tank cars. l

biofuels international supplement

development in order to operate, maintain and manage a complex of tanks, pumping stations, docks, and ducts for biofuels, crude oil, semi-processed, derivative products, natural gas, petrochemicals and others on the islands.

Throughout the build, the development should create around 200 jobs. Once the project is completed and comes online, a further 50 direct jobs will be created. l

TEPSA triples its storage capacity in Valencia TEPSA has expanded its storage capacity in Valencia. The extension consists of two new plants for biofuels and petroleum products, with the capacities of 61.000m³ and 53.000m³ respectively.

The facility for biofuels and non-flammable products became operational mid2011 and the second facility, designed for petroleum

products, came into action in November 2012.

The expansion included a total of 17 new tanks ranging from 1,000m³ to 17,500m³.

The new area has four loading bays for petroleum products and a mixed bay for charge/discharge for gasoil and methyl esters.

The extension saw TESPA invest around Є17 million, tripling its capacity in Valencia to a total of 161,000m³, making it a key logistical hub in the Mediterranean. l

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biofuels terminal news

Biofuels throughput up in Rotterdam but uncertainty continues into 2013 Although the Port of Rotterdam has not released exact figures for biofuel throughput for the whole of 2012, liquid bulk (not including crude and mineral oil products) rose 4%.

A large part of this was attributed to the opening of Neste Oil’s NExBTLplant at the end of 2011.

The refinery has an annual production capacity of 800,000 tonnes or 1 billion litres of renewable diesel.

Ronald Backers, business developer for bulk cargo and shipping, says liquid bulk throughput has increased from 2011’s figures.

As for this year the Port expects overall throughput to increase by around 2% but, with so much change going on in the biofuels sector, is not able to predict specific throughputs for ethanol and biodiesel.

At the end of December Abengoa’s Rotterdam-based ethanol plant temporarily suspended production for up to three months to carry out maintenance. ‘It may be that this increases ethanol imports into Rotterdam,’ explains Backers.

Regarding the biofuels industry as a whole Backers notes that the recent proposals by the European

An artist’s impression of the bio-based cluster Maasvlakte2 at the Port of Rotterdam

Commission are leading to industry uncertainty.

‘These new proposals, capping first generation biofuels production at 5%, run the risk of leaving existing investments stranded,’ Backers explains.

In other markets, such as the US, a successful first generation market has been built. An advanced biofuels market can then be built based around this. This shows the importance of infrastructure.

‘It is something we try and create at the Port of Rotterdam – we feel that integration is very important. There are three different aspects to a bio-based market: biomass, biofuels and bio-based chemicals’, adds Frans Jan Hellenthal, business

developer biobased industry.

‘All these markets need volumes to be able to succeed and, by integrating them, each is able to benefit from synergies and logistics facilities already present at our Port.

This minimises the need for new investment and helps companies scale up. And we have room for expansion of these industries on the newly constructed Maasvlakte2.’

As for the refining and fuels market in Rotterdam, the Port is also seeing a lot of change. ‘When the Petroplus refineries closed in 2012 refinery margins almost doubled,’ Backers explains.

‘The 10 refineries based in and directly connected to Rotterdam are the basis of

Rotterdam Fuels Hub; they are good for a lot of throughput of crude oil and oil products so we do all we can to support local businesses.’

The storage capacity in Rotterdam grew and Backers sees this continuing into 2013. ‘Additional capacity is coming on stream. And some companies say occupancy is slightly decreasing.’

As Rotterdam is one of the major global storage hub, it is to see what impact this will have in 2013. ‘We haven’t seen any drastic changes, such as Chemoil’s Heliosterminal in Singapore being sold to Oiltanking,’ Backers says, ‘but we continue to have a close eye on ongoing changes in the market.’ l

Eco-Energy to build ethanol storage Eco-Energy, an alternative energy company, says it is to build an ethanol unit train and storage facility which will distribute biofuels to the Atlanta, Georgia area in the US. The train terminal will be able to distribute more than 400,000

barrels of ethanol a month using its automated loading system.

The rail system will be able to receive up to 96 rail car unit trains through the CSX railroad and the terminal will also feature 200,000 barrels of storage.

The facility is expected to come online in the second quarter of 2013.

The project is being built with the Cartersville-Bartow County Department of

Economic Development.

‘Atlanta is a growing market and this project reflects our continued investment in delivering optimal low-cost supply chain solutions to biofuel producers and end users. We also intend to further develop the site to service other industrial related businesses seeking longer term supply chain solutions,’ says Gwaine Ton, Eco-Energy’s CFO. l

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Rotterdam, your world-class Bioport

In Rotterdam’s port and industrial complex, more than 45 chemical companies, 5 oil refineries and several power plants in the port and in the hinterland together form a world-class (petro)chemical cluster. The port also houses ten production companies using renewables as their feedstock. Port of Rotterdam foresees a great future for biofuels, bioenergy and biobased chemicals. Building on the strength of the existing port and industrial cluster, the biobased industry is the way of the future in the Port of Rotterdam. For this we also allocated 80 ha to biobased companies in the plans for Maasvlakte 2.

biofuels international supplement

www.portofrotterdam.com

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biofuels tank terminal update

Biofuels terminal update

NuStar and Eco-Energy Holdings

Citgo Petroleum Location

Quincy Avenue terminal, Braintree, Massachusetts, US Products Biodiesel made from animal and vegetable fats Capacity 270,000 gallon steel storage tank Construction / expansion / Expansion acquisition Project start date Proposal was granted in November 2012

Eco-Energy Holdings Location Products Capacity

Atlanta, Georgia, US Ethanol 200,000 barrels of ethanol storage. In addition, an ethanol unit train facility will be able to receive up to 96 rail car unit trains through the CSX railroad Construction / expansion / Construction acquisition Completion date Q2 2013

Lincoln Energy Solutions Location Products Capacity Construction / expansion / acquisition Completion date Comment

Belton, South Carolina, US Biofuels 1.5 million gallons of ethanol and 400,000 gallons of biodiesel Expansion of its existing facility with the construction of new storage tanks Mid-2012 The rail line was also expanded to allow for six additional biodiesel tank cars

Plains All American Pipeline Location Products Capacity Construction / expansion / acquisition Project end Investment

Yorktown terminal, Virginia, US Biofuels, crude oil, refined productions and LPG 1.05 million m3 Plains All American Pipeline acquired the Yorktown terminal and Jal Pipeline from Western Refining January 2012 (acquisition completed) $220 million (€170 million)

Location Products Capacity

The Dumfries site in Virginia, US Ethanol 150,000 barrels of ethanol with a 400,000 barrel-a-month distribution capacity Construction

Construction / expansion / acquisition Project start date July 2012 (announced) Completion date Q3 2013 Comment The ethanol storage terminal will also comprise ethanol unloading/loading solutions and feature a unit train facility to receive up to 96 rail car unit trains

Odec Tankstorage Location Products Capacity

Södertälje oil harbour, Sweden Biofuels Four tanks with a 9,130m3 storage capacity Construction

Construction / expansion / acquisition Project start date Odec acquired the 9,130m3 terminal area in August 2012 Completion date Mid-2013 Comment Phase I of the project includes a 6,000m3 insulated tank for biofuels storage

Tepsa Location Products Capacity Construction / expansion / acquisition Completion date Investment Comment

Valencia, Spain Biofuels and petroleum products One 53,000m3 biofuels facility and one with a 61,000m3 storage capacity for petroleum products Expansion, which included a total of 17 news tanks ranging from 1,000m3 to 17,500m3. Tepsa’s total storage capacity in Valencia is now 161,000m3 The biofuels facility came online mid-last year and the second was operational in November €17 million The new area also has four loading bays for petroleum products, and a mixed bay for gasoil and methyl esters

*This list is based on information made available to Biofuels International at the time of printing. If you would like to update the list with any additional terminal information for future issues, please email keeley@horseshoemedia.com

8 january/february 2013 biofuels international supplement

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Pumping Innovation in Biofuels at Your Service

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biofuels international supplement

Our customer-focused R&D enables your industrial processes to be as energy efficient, safe and environmentally sustainable as possible.

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biofuels technology news

Tepsa wins Atlante 2012 Bulk liquid storage operator Tepsa (Terminales Portuarias) has been awarded the Atlante 2012 for best training initiatives, information and awareness on the prevention of occupational hazards in the category of small- to medium-sized enterprises.

The prize was awarded by federation sponsor Foment del Treball at its biannual gala to the ‘Drivers Training’ project, a scheme that teaches truck drivers about the risks at terminals and how to operate in safe conditions, applying preventative measures.

In a statement Tepsa said: ‘We constantly monitor safety at our facilities and the people who are working inside. This led us to implement ongoing enhances and new initiatives that will ensure excellent operations.’

Tepsa is located in the main ports of the Spanish port system: Barcelona, Bilbao, Tarragona and Valencia. Its total storage capacity is around 890,000m3. l

Eriks acquires Valve Entreprise Sulzer Pumps opens new service centre in Sweden Sulzer Pumps, a supplier of pumping solutions and related equipment, has opened a new service centre in Sweden for configured pumps and agitators serving the general industry, chemical processing, pulp and paper and power markets.

Based in Vadstena, Sulzer says the new facility is strategically located to serve customers in Sweden and other Nordic countries.

The new service centre is adjacent to the company’s existing pump and agitator manufacturing site offering accessibility to machinery, test facilities and experienced workforce.

Its close proximity to the manufacturing site provides

quick access to spare parts and testing capabilities.

The facility offers a range of services in maintenance support, diagnostics and consulting services, as well as technical and economical optimisations.

The workshop performs repairs, refurbishments and advanced services for centrifugal pumps and agitators, both for the Sulzer range as well as other OEMs. l

Spain-based Valves Entreprise, a manufacturer of dual expanding plug valves, has been acquired by technology company Eriks.

The brand is known among industrial companies in the field of tank storage, refinery, bulk loading, naval and aviation refuelling and metering systems, plus environments for liquid storage and transfer.

The acquisition will see Valves Entreprise renamed ‘Eriks Valves Entreprise’. l

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Krohne introduces new flowmeter Krohne, a developer, manufacturer and distributor of measuring instruments for the process industries, has launched a new mass flowmeter for the energy, chemical, oil and gas, petrochemical and power industries.

The Optimass 6400 twin bent tube Coriolis mass flowmeter is equipped with a new signal converter that features advanced device and process diagnostics,

and has been approved for custody transfers of both liquids and gases.

It also features advanced entrained gas management (EGM), with no loss of measurement with gas entrainment up to 100% of volume.

Available in stainless steel 316L, Hastelloy C22 and Duplex steel, the new flowmeter ranges in size from DN 08 to 250. It operates in high temperatures (up to 400°C) as well as cryogenic applications down to -200°C. It also handles pressures up to 200bar. l

IFT makes first bulk sale of Perfolift BD-3 International Fuel Technology (IFT) has made its first bulk sale of Perfolift BD-3 to a European biodiesel manufacturer.

The Perfolift BD series is a group of scientifically engineered liquid fuel additive formulations specifically designed to provide superior short-term oxidation stability, long-term storage stability and deposit formation control to biodiesel and biodiesel fuel blends of all underlying sources.

The value of the sale exceeds $100,000 (€76,250) and, as part of a supply agreement, the account is expected to generate annual revenues of

approximately $1 million.

The product series has received the ‘No Harm’ certification from the Germanbased Association for the Quality Management of Biodiesel (AGQM) under its ‘No-Harm and Efficiency’ programme. This is the international standard in the biodiesel industry due to the demanding requirements necessary to obtain such certification and, in many countries, is necessary before entering the market.

‘IFT is now selling Perfolift BD-series products to eight European biodiesel producers. In addition, this technology has been recently introduced to the US and Canadian biodiesel industries,’ says Axel Farhi, director of global business development at IFT. l

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Sustainable production of biofuel or biomass The European Directive 2009/28/EC for the use of energy from renewable sources lays down clear sustainability criteria for biofuels and liquid biomass. DEKRA can objectively prove your production of biofuel or biomass. It increases your competitiveness and provides additional advantages: • Time-saving, flexible procedure depending on selection of desired allowances • Simple, inexpensive extension of systems and standards already implemented DEKRA’s services for durably produced Biomass are: ISCC, NTA8080, REDCert, Dutch Double Counting (DDC).

We provide you with practical, uncomplicated and lasting support in the optimisation of your company processes.

A neutral and independent basis. For achieving your goals. www.dekra-certification.com

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biofuels sustainability

New additives combat SCC

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ccording to the API research report API TR 939-D, stress corrosion cracking (SCC) of steel in contact with fuel ethanol has been observed in user terminals, specifically storage tanks and loading/unloading rack piping prior to blending.

SCC is the formation of deep penetrating cracks in a normally sound material caused by interactions of tensile stress, corrosive environment and susceptible materials. It is a failure mode known to exist with handling not only fuel ethanol but fuel ethanol blends as well, and can lead to catastrophic mechanical failure.

In order for companies to know whether internal SCC could be expected in their tanks and pipelines, researchers have been studying the environments that support SCC, metallurgical factors that

affect susceptibility to ethanol SCC, stress conditions that promote crack initiation and growth, and the effectiveness of remedial measures.

Peace of mind starts at the point of ethanol production.

Renewable fuel producers are the first to engineer quality fuel ethanol and the first to protect equipment integrity which is relied upon to store and transport fuel ethanol.

Those receiving fuel ethanol want to know they are getting high quality renewable fuel, and that it will not compromise their pipelines, storage tanks, transfer and loading lines and valves.

The emphasis of transporting fuel ethanol in the existing petroleum pipeline systems is due to the increasing usage of fuel ethanol in transportation fuel that is mandated by EPA and RFS2. RFS2 called for 13.2 billion gallons of ethanol use in 2012, increasing to 15 billion gallons by 2015. Since

most ethanol is currently transported by truck and rail, the industry would welcome the use of a cost-effective pipeline transportation system. Resolving the stress corrosion cracking issue in pipelines can be an important factor in increasing transportation efficiencies, and meeting EPA mandates.

Transporting fuel ethanol in the existing 100,000 miles of petroleum liquids pipelines instead of by truck or rail can significantly reduce transportation costs in many areas of the country. Additionally, renewable fuel stakeholders want to ensure their product does not affect the integrity of the infrastructure set up to transport, store or blend their fuels.

Additive manufacturer MidContinental Chemical Company (MCC) has developed some new additive chemistries to deal with

SCC, a hurdle that must be overcome in order for fuel ethanol to be distributed in existing pipeline systems.

Bench testing using ASTM G129 and other extensive tests on fuel ethanol under simulated stress conditions indicate that fissuring and cracking can actually be halted, keeping harmful components of fuel ethanol from compromising the integrity of pipelines, storage tanks, transfer and loading pipes, valves, and other metallurgy to which the fuel might be exposed.

Furthermore, MCC’s additive technology has been tested for compatibility with drag reducing agents and for jet fuel trailback which would enable the use in multi-component pipelines transporting jet fuel, making ethanol transportation through this existing infrastructure an opportunity for many pipeline operators. l

The National Petroleum Management Association Petro Expo 2013 Conference & Exhibition 23rd-28th June 2013, Washington DC, Hilton Alexandria Mark Centre The Fuelhandler magazine, the official exhibition catalogue for the Petro Expo.

To reach out to all the movers and shakers in the aviation fuelling industry – both military and commercial please contact: Anisha Patel anisha@thefuelhandler.com +44 (0) 203 551 5752

www.npma-fuelnet.org 12 january/february 2013 biofuels international supplement

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biofuels tank heating With the ability to slash CO2 emissions by nearly 50Mt a year, efficient storage tank insulations are proving popular with tank operators who have their eye on the prize

Insulating for the future

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ow can tank operators reduce energy costs and cut CO2 emissions?

Storage tank insulations are becoming more important than ever. Global CO2 emissions have risen dramatically over the past few years and are set to increase by up to 90% by 2050 should industrial emissions remain unchecked.1 Although thermal insulation systems are easily installed and highly cost-effective, studies have revealed that industrial insulations are either poorly maintained or nonexistent, resulting in excessive heat losses2. However, with the EU’s ambitious plans to cut greenhouse gas emissions by 20% compared to its 1990 levels by 20203 and a carbon tax more likely, industrial insulation solutions can play a key role in achieving energy targets.

Energy-saving advantages One of the most obvious advantages of effective thermal insulation is the reduced loss of heat. By wrapping tanks in materials with low thermal conductivity, heat within the tank is retained more effectively.

As a result, tank operator sneed to use considerably less heat-generating equipment to produce the same amount of heat. According to a study commissioned by the European industrial insulation Foundation (EiiF), improving insulation to a cost-effective level would avoid 66% of current heat loss. This in

turn would also have an impact on carbon emissions, resulting in a potential reduction of 49 megatonnes (Mt) of CO2 per year. As prices for energy rise, these cost saving potentials will become even more obvious, making energy-efficient insulations an attractive investment for the future.

Although thermal insulation is primarily used for tanks that store temperaturesensitive materials, it can in fact conserve the quality of many substances and offers an effective protection against frost and fire. Furthermore, it can significantly reduce the effects of thermal stresses on the tank itself, protecting its structure from external forces, such as rain, wind and abrupt temperature fluctuations.

The results are lower energy costs, less maintenance and a prolonged lifespan of contents and equipment.

Finding the right solution One of the traditional materials available is mineral wool. Often used to insulate buildings, pipes and storage tanks, mineral or stone wool has become one of the most common insulation materials. While demonstrating good sound

Pentair’s Trac-Loc panels help reduce carbon emissions

absorption, fire resistance and reasonable thermal behaviour, mineral wool insulations require a complicated and lengthy installation process.

In particular for larger tanks, a complex scaffolding system is required to set up the outer insulation structure.

Conventional tank insulation systems with wool may also require extensive welding of insulation support rings and insulation pins next to the need for installing banding bars and screws that cause increased heat loss and increased tank builder’s costs. While this might not cause major concerns at

the early stages of a project, it does however result in significant downtime once the tank is in service, making it less suitable for retrofit insulations.

To minimise the installation impact on active tanks, some tank terminal operators are turning to polystyrene or polyurethane foam insulations.

Although these foams can be easily sprayed onto the walls of the tank and will provide instant thermal insulation, the lifespan of the material is comparably low. Easily accessible to rodents and birds, spray foam insulation needs to be inspected regularly to ensure the system remains fully sealed. Furthermore, spray foam can only be installed in completely dry conditions and it can encourage mould growth if not applied properly.

Recent findings also suggest that polystyrene foam does not demonstrate the same

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stability as other materials when exposed to fire.4

Loc-ing in the heat An effective and improved alternative to conventional and spray foam systems are prefabricated panels constructed by laminating insulation material to a metal jacket. These are highly robust, double-locking vertical standing seam insulation panels that can be easily fitted around the tank.

Thermal management solution provider Pentair is offering an insulation system to the market under the brand name Trac-Loc. Due to the use of insulation materials with a much lower thermal conductivity value compared to mineral wool or polystyrene foam, the heat loss is highly reduced resulting in substantial energy savings and, in direct relation to that, a reduction of the carbon footprint. The

preferred insulation material is polyisocyanurate (PIR), a none-fibrous closed cell structure material resulting in minimised water/fluids absorption and degeneration, superior low lambda value and long and stable lifetime.

Trac-Loc panels are usually prefabricated offsite in a controlled workshop environment, making the installation less dependent of weather conditions. They are then assembled onsite using a hanging basket or cherry picker, eliminating the use of time-intense scaffolding.

As a result, the installation process is safer and can be completed much quicker than conventional methods.

Time spent onsite will be a deciding factor for many operators, in particular those looking to retrofit terminals.

Insulation panels can be easily fitted during scheduled maintenance work or when

tank contents are being replaced, avoiding costly disruptions. As the panels are tank/client customised and can have lengths up to 12m, the amount of horizontal joints is reduced to the minimum.

The system allows that individual panels can be easily replaced should they get damaged. The fully locked seam system also eliminates water penetration, reducing the occurrence of under insulation corrosion and offering consistent performance levels throughout its lifecycle. As a result, the system hardly requires any maintenance and has a much higher lifespan than conventional systems.

While panel systems may require a higher initial investment, they will amount to considerable cost savings over the system’s lifetime. Their high energy savings potential, short installation time (less field man hours reduces the potential for

safety incidents), low operational costs and durability in the most challenging conditions make them well suited for most storage tank insulation projects.

In particular for large tank terminals with high temperature requirements, the combination of minimised maintenance costs and high energy savings will be significant and have a real impact on future profitability. l For more information: This article was written by Peter Boon, application manager tank terminals, Pentair Thermal Management. www.pentair.com 1) Energy technology perspectives, International Energy Agency, 2010 2010: scenarios and strategies to 2050, Paris: IEA. 2) Climate protection with rapid payback – Energy and CO2 savings potential in industrial insulation in EU27, Ecofys,19 June 2012 3) http://ec.europa.eu/clima/ policies/g-gas/index_en.htm 4) Fire performance of LNG carriers insulated with polystyrene foam, Journal of Hazardous Materials (2008)

Sign up now to receive your FREE weekly newsletter providing up-to-date information on acquisitions, mergers, new terminals and the latest regulations: www.tankstoragemag.com/tsm_newsletter.html If you would like your company’s name to feature in this please contact margaret@tankstoragemag.com (+44 (0)20 8687 4126)

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biofuels sustainability Vopak, Decal and Tepsa are leading the way in certifying their terminal operations to help customers prove sustainability criteria

Sustainable storage

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panish terminals Decal and Tepsa obtained International Sustainability and Carbon Certification (ISCC) certification for their terminals almost a year ago.

Now, Vopak has been awarded a multisite ISCC certification for a number of its storage terminals.

The company certified its first terminal in Rotterdam on 13 December 2011. ‘Rotterdam is the biofuels hub of Europe,’ explains Maurice Houben, Vopak’s sales and marketing manager for global vegoils and biofuels. ‘Many traders and blenders ship their biofuels via the port and were auditing their supply chains, resulting in audit requests for our terminals.’

The multisite certificate applies to five Rotterdambased terminals, two facilities in the Houston area of the US and one in Jakarta, Indonesia. Vopak is already looking to expand on this and announced it is considering adding terminals in Hamburg, Barcelona and Brazil to the certificate in the next 12 months.

The plan is to have a terminal in Singapore certified by July 2013.

‘The certification is another step to further enhance our biofuels terminal network and to remain a reliable partner for both our local and international ethanol and biodiesel customers,’ Vopak says.

The company was guided by Control Union Certifications.

The entire process took about six months.

The time was spent on preparation, setting up the internal ISCC team, creating training documents, incorporating the ISCC internal audit in the general company audit approach and

Despite picking up recent multiple ISCC awards, Vopak is already looking to add more in 2013

executing external audits at the corporate office and three storage locations.

The total cost incurred consisted of external auditing and certification costs on top of the man-hours invested to integrate the certification requirements in Vopak’s standard way of working.

In order for biofuels to

access the European markets and count towards the biofuels blending mandates, specific sustainability requirements must be met by the companies involved in the biofuel supply chain.

Customers that need ISCC certified storage can use Vopak’s terminals without having to worry – it is an

automatic confirmation that they operate according to sustainability standards.

Between 5 and 7.5% EBIT share of Vopak’s total capacity is used for the storage of biofuels and vegetable oils and the company believes that going forward renewable fuels will remain part of the transportation mix. l

Voluntary schemes Voluntary schemes are control systems that certify sustainability of biofuels. Companies importing or producing biofuels have to demonstrate that their biofuels are produced in a sustainable way.

They can do so by asking a scheme to do all the necessary audits to prove that. The EU Commission does not run these schemes itself but opened up the opportunity for private companies and for institutions to play this part.

Since 19 July 2011, the European Commision has recognised voluntary schemes that applies directly in 27 EU member states. These are: 1. ISCC (International Sustainability and Carbon Certification) 2. Bonsucro EU 3. RTRS EU RED (Round Table on Responsible Soy EU RED) 4. RSB EU RED (Roundtable of Sustainable Biofuels EU RED) 5. 2BSvs (Biomass Biofuels voluntary scheme) 6. RBSA (Abengoa RED Bioenergy Sustainability Assurance) 7. Greenergy (Greenergy Brazilian Bioethanol verification programme) 8. Ensus voluntary scheme under RED for Ensus bioethanol production 9. Red Tractor (Red Tractor Farm Assurance Combinable Crops & Sugar Beet Scheme) 10. SQC (Scottish Quality Farm Assured Combinable Crops (SQC) scheme) 11. Red Cert 12. NTA 8080 13. RSPO RED (Roundtable on Sustainable Palm Oil RED)

16 january/february 2013 biofuels international supplement

Outstandic in storage

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WWW.STANDIC.COM E: SAlES@STANDIC.COM T: +31(0)78-6528645

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0 february 2012 biofuels international supplement

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People on the move Jackson leaves EPA ‘sailing in right direction’ The US Environmental Protection Agency (EPA) will be seeking a new administrator after Lisa Jackson stepped down from the position after four years.

It is believed Jackson told President Barack Obama of her decision to leave her post shortly after his reelection in November. Below is the statement that Jackson issued upon her departure: ‘I want to thank President Obama for the honour he bestowed on me and the confidence he placed in me four years ago when he announced my nomination as administrator of the EPA. At the time I spoke about the need to address climate change, but also said: “There is much more on the agenda: air pollution, toxic chemicals and children’s health issues, redevelopment and waste-site cleanup issues, and justice for the communities who bear disproportionate risk”.

‘As the President said earlier this year as he addressed EPA’s employees: “You help make sure the air we breathe, the water we drink, the food we eat are safe. You help protect the environment not just for our children but their children. And you keep us moving toward energy independence…we have made historic progress on all these fronts.” So, I will leave the EPA confident the ship is sailing in the right direction, and ready in my own life for new challenges, time with my family and new opportunities to make a difference.’

It is expected that deputy EPA administrator Robert Perciasepe will fill the position while a long-term successor is deliberated.

biofuels international

moted REG’s Eric Bowen pro G) (RE s up’ Gro rgy Renewable Ene porate cor of r cto dire ive cut former exe legal affairs business development and porate has been promoted to VP, cor l affairs. lega business development and en Bow , REG Prior to his work with and sel die Bio n co-founded Telluria CEO. He served as its president and biodiesel s ital’ Cap ma Sig has also led Eric Bowen, REG up. gro nce project fina biodiesel policy as ting set active in The new VP has also been has ifornia Biodiesel Alliance and a founding member of the Cal the of 2007-12. He was chairman served as its chairman from of the sel Taskforce and a member former San Francisco Biodie l Fue ce Board’s Law Carbon former California Air Resour rd.

Standard Advisory Boa tor degree from the University Bowen received his juris doc and his Bachelor’s degree from of California, Berkeley Law ors College. the Unviersity of Oregon Hon

Sapphire Energy appoints COO and CFO Sapphire Energy, a producer of algaebased green crude oil, has appointed Jeff Webster as chief operating officer (COO), and Thomas Willardson as chief financial officer (CFO).

In his new role, Webster will oversee current and future business operations, business and project development and corporate affairs. He has over 28 years of experience across biotech, renewable energy, agriculture and oil and gas industries.

Prior to Sapphire Energy, Webster served as COO at renewable oil company Solazyme and also served as GVP and GM of Renewable Products – Tyson Foods, a division of Tyson.

Webster holds a B.S. in geophysics from Michigan State University,

and is a graduate of Northwestern’s Executive Development Program.

New CFO Willardson has more than 30 years of experience in leading financial initiatives for public and privately held companies, including serving as CFO for Aurora Algae and Energy

w CEO Deinove announces ne es North America’s ym voz No iot, Emmanuel Pet been appointed as former director of sales, has company Deinove.

CEO of green technology Jacques Biton, who Petiot has taken over from since 2007. Biton is now O CE served as the company’s Advisory Board of Deinove. chairman of the Scientific es, Petiot held a number While working at Novozym rketing, sales and business of executive positions in ma and the US. He was also development, both in Europe of Novozymes and has GM of the French subsidiary emical and Air Liquide. held positions with Dow Ch C and Petiot graduated from EDHE the École Central, Paris.

Recovery, among others.

In his new role he will oversee financial planning, accounting, insurance, legal and investor relations.

He holds a B.S. in finance from Brigham Young University and an MBA from the University of Southern California.

Tribal leader David Lester passes A member of the advisory board for renewable jet fuel company BioJet has died.

David Lester was also the executive director for the Council of Energy Resource Tribes (CERT).

He led CERT for 30 years and, according to a statement from BioJet, was the ‘visionary’ behind the CERT-BioJet initiative, Project Thunderbird – one of the biggest biofuel projects proposed in the US to date. l

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biofuels regulations The unexpected return of the biodiesel tax subsidy has had reverberating market implications

All change for 2013

L

ate last year biodiesel production was expected to be sluggish in early 2013. Now, there are some saying production will pick up much quicker because of the new law retroactively reinstating the $1 (€0.75) blender’s biodiesel tax credit.

‘We all but completely walked away from biodiesel for this year,’ said a biodiesel trade source in the Northeast in early December. She explained many traders simply closed their books for 2012 after gauging that a 1 billion gallon mandate for biomass-based diesel fuel for the year was reached, diminishing an incentive for oil refiners and blenders to buy the renewable product.

Biodiesel producers also reduced output as 2012 was nearing its end on a lack of buying interest by these obligated parties, which include oil refiners, importers and blenders that must offset a portion of their petroleumbased production with a renewable fuel under the Renewable Fuel Standard known as their Renewable Volume Obligation. Atop of the lost buying incentive, costs for some biodiesel producers using fatty acid or grease feedstocks would increase during the cold winter months as they look to ensure product quality.

‘The fact that it is wintertime, and many plants need some portion of their feedstock to be soya to help with cloud point raises their overall feedstock cost,’ explains Kenneth Pete Moss, president of Frazier, Barnes & Associates in Memphis, Tennessee.

In the US, soyabean oil

remains the primary feedstock for biodiesel producers, accounting for 47% of the total of all feedstocks used by the industry through the first nine months of 2012, according to data from the Energy Information Administration. Biodiesel is also produced from other virgin vegetable oils, such as canola and corn oils, used cooking oils, animal fats and non-edible or waste oils.

Additionally, demand for distillate fuels, which include diesel and heating oil fuel

production challenges have taken a toll on Soy Energy and its employees,’ said company CEO Jeff Oestmann, in announcing that it was temporarily suspending production at its 30-million gallon per year biodiesel plant in Mason City, Iowa.

He said to ensure longterm health of the business, ‘we have made the difficult decision to temporarily shut down our facility until market conditions improve.’

In 2012, the RFS mandated 1 billion gallons of demand

As of 31 October there was a total of 1.5 billion biomass-based diesel (D4) RINs generated, with each gallon of biomass-based diesel worth 1.5 D4 RINs grades, have remained weak all year owing to sluggish economic growth. Preliminary data from the EIA shows implied demand for distillates, which refers to product supplied to market, trailed the year-ago pace through early December by 169,000 bpd, or 4.4%. Against the five-year average, implied distillate demand in 2012 through early December is down a steep 264,000 bpd (6.7%).

‘Recent volatile market conditions and continued

for biomass-based diesel.

According to the latest data available from the Environmental Protection Agency, the administrator of the RFS, 984 million gallons of biomass-based diesel fuel was produced in 2012 through the end of October, nearly reaching the target.

To show compliance with the RFS, obligated parties submit Renewable Identification Numbers to the EPA, with RINs created when a renewable fuel is

produced or imported into the US. RINs can be traded in the open market, and up to 20% of an obligated party’s renewable fuels consumption above its RVO can be carried into the following year.

As of 31 October, the latest data available, there was a total of 1.5 billion biomass-based diesel (D4) RINs generated, with each gallon of biomass-based diesel worth 1.5 D4 RINs. For 2013, the EPA increased the RFS for biomass-based diesel fuel to 1.28 billion gallons, using its flexibility under the RFS to hike the federal mandate 280 million gallons above its legislated 1 billion gallons. That would provide greater incentive for biodiesel producers in 2013.

Not everyone agrees with the higher mandate, with the American Fuel and Petrochemical Manufacturers trade association citing greater costs for consumers as one reason arguing against the increase.

‘EPA’s own data estimates that the cost of increasing the biomass-based diesel mandate will add between $253 (€193) and $381 million to consumers’ transportation fuel bill in 2013,’ said AFPM president Charles Drevna.

‘The U.S. economy is still struggling and this increase will hurt the millions who rely on transportation fuels.’

The Washington, D.C.based API trade association in late November filed a lawsuit against the increase in the US Court of Appeals for the District of Columbia against the EPA for its decision to raise the biodiesel mandate to 1.28 billion gallons for 2013.

Bob Greco, API’s downstream director, said the

30 january/february 2013 biofuels international

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Biodiesel renewable indenification numbers

date, over 140 million fraudulent RINs have been sold to unsuspecting refiners concerned with meeting their RFS obligations. That number and the costs associated with the fraud will grow as investigations of additional biodiesel producers continue today.’

The EPA said it is addressing the fraud through a quality assurance plan auditing system, with a proposal to be issued by the end of 2012 followed by a comment period. EPA expects finalisation of QAP by the end of the first quarter, beginning of the second quarter.

‘More biodiesel production is expected to shift from smaller producers to larger producers if additional incentives are not introduced,’ said New Jersey-based Augsburg Energy in a note to clients, highlighting efforts by the industry to reinstate the $1 gallon blender’s credit for mixing biodiesel into petroleum-based diesel. ‘This is in part due to economies of scale as well as RIN integrity concerns.’

Augsburg said,:‘While the new QAP looks promising the costs will likely be prohibitively high for small producers who are most affected by these

hike in the mandate would raise the costs of fuel by as much as $425 million.

‘Furthermore, fraudulent biofuel credits that have plagued the system since last year and have yet to be resolved could inhibit industry’s ability to meet EPA’s higher biodiesel mandate,’ said API, adding the EPA developed the RIN programme without regard for fraud.

EPA has so far identified 140 million fraudulent biodiesel RINs and many in the industry believe there are more lurking about. The RIN fraud has cost obligated parties fines and a requirement to repurchase valid RINs to

biofuels international

replace the fraudulent credits.

The fraud has also harmed small biodiesel producers, with RINs sold by smaller operators forced to sell at a discount because they lack name recognition.

‘The fraudulent RIN problem is having, and will continue to have, significant impacts on the biodiesel marketplace that make it more difficult for companies to comply with EPA’s mandate,’ Greco said.

Drevna said, ‘Before increasing the 2013 volume, EPA must resolve the pervasive problem that exists in the biodiesel market of Renewable Identification Number (RIN) fraud. To

issues. Furthermore, it remains to be seen if QAP verified RINs will attain the full market value of inline producer RINs.’ The broker expects low US biodiesel production in the first quarter until the surplus from 2012 is worked down and the QAP is finalised.

On 1 January Congress passed, and a day later the president signed a bill—the “American Taxpayer Relief Act of 2012” - averting the so called ‘fiscal cliff’ in the US. The new law retroactively reinstated this subsidy (it expired on 31 December, 2011) for 2012 and extended the tax break for all of 2013.

This was not expected. l

For more information: This article was written by Brian Milne, refined fuels editor for Telvent DTN and editor of OilSpot, a weekly TDTN newsletter for fuel marketers, buyers and sellers. Milne has been a journalist and editor for 16 years, focusing on the energy markets for 14 of those, www.telventdtn.com, +1 952 851-7216 • Since this article was written, the US Congress passed legislation the ‘American Taxpayer Relief Act of 2012,’ that retroactively reinstates the Biodiesel Mixture Excise Tax credit for 2012 and through the end of 2013. The tax credit, which expired on 31 December 2011, pays $1 for each gallon of biodiesel or renewable diesel fuel blended into petroleum-based diesel fuel

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biofuels regulations

Double counting – nothing but a headache?

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ithin the EU Renewable Energy Directive 2009/28/ EC (RED) the use of waste and residues is supported as a favourable alternative to traditional commodities-based feedstocks. In order to foster the use of such feedstocks, the RED allows mineral oil companies to blend only half of the biofuel into fossil fuel in order to reach their blending obligations if the respective biofuel was produced from waste (RED, Art.21). This incentive is widely known as double counting. The latest proposal from the EU Commission even asks for a change of this double counting into a fourfold counting.

The RED requires EU member states to create national support schemes and respective framework conditions, which give additional benefits to renewable energy applications such as wastes, residues, non-food cellulosic material and cellulosic material (RED, Art.22). Therefore, one could think that ‘waste to biofuels’ would be a promising business.

This is the case – certainly for biodiesel production from used cooking oil (UCO) or animal oil which does not fall under the EU classification of animal by-products category.

However, this development was mainly possible because the RED cites very positive GHG emission factors for biodiesel produced out of waste vegetable or animal oils.

The GHG emissions savings amount to 75%, enabling UCOME chains to meet the strictest criteria within the RED. Current GHG reduction targets are 35%, increasing to 50% from 1 January 2017 and 60% from 1 January 2018.

The new EU Commission proposal regarding the EU RED taking potential indirect

land use change (ILUC) effects into account does not apply to UCOME chains because UCO does not compete with raw materials for food or even feed production while used for biofuel production.

As Germany has implemented national double counting rules, the latest EU proposals represent certain obstacles for UCOME producers targeting the German market.

From 1 January 2013 all UCOME chains from UCO collectors, UCO processors and all trading companies have to be certified under one of the national standards in Germany, namely ISCC DE or REDcert DE. This restriction is, however, clearly contradictory to the approach of the EU RED and EU Commission, which state that all standards approved by the EU Commission have to be accepted by all EU member states.

A further problem wastebased biofuel chains face is that the German authorities have restricted the sourcing of waste to a specific number of countries, namely: Germany, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Italy, Lithuania, Luxemburg, the Netherlands, Austria, Poland, Sweden, Slovakia, Spain, Czech Republic, Hungary, the UK and Northern Ireland, Norway, Switzerland, Canada, Malaysia, Peru, Cambodia and the US. This restriction is more than questionable as not even all EU member states are included in this list.

Furthermore, even UCO collecting companies have to become certified and therefore have to bear a significant economic burden, not only for the initial certification cost but also for the cost of at least three annual surveillance audits

and the cost of on-site audit of their supplier on a specific sample basis during each audit.

Further investments have to be made by collectors, storage providers and conversion units of UCE due to the fact that UCO certified under one of the German standards is not allowed to be physically mixed with UCO, e.g. certified under any EU standard or with non-sustainable UCO on mass balance basis.

Another significant restriction imposed by the German authorities is that UCO from vegetable or animal oil cannot become eligible for German double counting.

But, with respect to UCO, only product not containing any animal residues is solely permitted feedstock. This means that collecting UCO from restaurants for example has to ensure that vegetable oil, which was used to fry chicken wings for instance, has to be stored separately from vegetable oil which was used for French Fries production.

It remains to be seen if potential higher prices for UCO will be able to overcome these costs. As a result of this, hundreds or even thousands of small UCO collectors could potentially disappear and only medium or large size collectors would be able to stay in business.

Similar but not as strong restrictions for feedstocks or even market access can also be found for example in the Netherlands, France and Italy.

As result of this, companies that want to process biofuels from waste or residues are quickly lost in the non-harmonised regulatory framework of EU member states.

Another reason for this is that a general approval

process for potential wastes or residues is not stated yet in the RED for the entire EU. As a result, companies have to deal with different authorities in each member state as the EU Commission refuses to take any responsibility with respect to this.

The only country having a formalised approval process is the Netherlands within its NTA 8080 scheme for its biofuel market. Due to this situation it might be that in the near future biofuel chains based on waste or residues as feedstock have even to obtain multiple certifications from several standards, e.g. ISCC EU and ISCC DE in order to be enabled to sell their biofuel in all relevant EU markets. However, this would be only possible if feedstocks and products could be accompanied through the whole chain with sustainability documentations for several standards. This further documentation would pose additional burdens to all companies in such chains and would make especially company mass balances very complex and vulnerable.

The former common market for fossil fuels and biofuels does not exist anymore. The only way to overcome this inconvenient situation is that the European Commission starts a real harmonisation process to re-establish this desired common market.

Furthermore, decision makers should think about how the intention to make biofuels based on residues and waste increasingly available as postulated in the EU biofuel targets. This is certainly not the case under the current framework conditions. l For more information: This article was written by Martin Grass, martin.grass@intertek.com

32 january/february 2013 biofuels international

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Now that the New Year has officially begun Biofuels International gets the thoughts of high-profile producers to see what the next 12 months may hold in store for the industry

global outlook Reaching milestones Andre Koltermann Biotech and Renewables Centre, Clariant Headquarters: Switzerland

“

Biofuels have been regarded as the ‘magic bullet’ to reduce greenhouse gases (GHGs) in transportation for years. Nevertheless, recent years has seen criticism for first generation biofuels as GHG savings are seen to be limited and may even further be reduced due to land use change effects due to the ‘food versus fuel’ debate.

Advanced biofuels technology is becoming increasingly mature however, a development necessary to ensure that GHG saving targets can be reached. I believe liquid biofuels will continue to play a major part for increasing sustainability throughout transportation in the EU and worldwide.

The concept of using lignocellulosic feedstock, especially in agricultural residues form, for bio-based chemical and fuel production, such as cellulosic ethanol,

biofuels international

Koltermann says all countries could benefit from cellulosic plant deployment

is interesting and promises to have high potential across the globe. Several technological advances have taken place recently, with some companies on

the brink of commercialising via demonstration plants.

The next couple of years will show which companies are most up for the challenge of competitively producing

cellulosic ethanol.

We have been developing a process for the production of cellulosic ethanol from agricultural residues like cereal straw, corn stover or bagasse and, last July, we reached a milestone in the commercialisation of the technology with the opening of a demonstration plant in Germany. Our next step will be to set up a first commerical production plant to bring this technology to market.

Every region could benefit from the deployment of cellulosic ethanol production plants. In Europe alone around 25% of the EU’s demand for petrol predicted for 2020 could be met by cellulosic ethanol from cereal straw.

The main obstacle is to stimulate investment in this sector. A stable political framework is key for investors’ security, particularly in respect to current debates on indirect land use change regulations, which creates uncertainty for the sector in Europe. A quick and sensible solution to promote biofuels made from cellulosic biomass is needed here, especially one that includes a mandatory blending quota for second generation biofuels.

”

january/february 2013 33

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Ambitious targets Henrik Maimann Vice president new biosolutions, Dong Energy Headquarters: Denmark

“

2012 was an interesting year for the bioethanol sector. The EU Commission presented two new directives that will affect the sector’s opportunities to develop in the European market, plus China has decided to focus more extensively on second generation bioethanol. The outcome of these decisions will start to show in 2013.

Political targets are ambitious across the globe but we see the industry as being ready to deploy technology to support them. To attract the necessary investors needed to develop the industry to the scale required however, and in order to achieve the targets, a political

framework that supports a stable and predictable market for cellulosic bioethanol will be required.

We see positive signs in the cellulosic bioethanol market.

However, we see some differences between regions across the world. We expect Asia, especially China, will move forward fast in 2013 based on strong support from the central Chinese government. Furthermore, we see a market for second generation bioethanol being established in Brazil with focus on using waste biomass from the production of sugar-based bioethanol.

In regard to the main US and EU markets the forecast looks different. Despite intentions by the US federal government we still see challenges in attracting investors in that market. In Europe, 2013 will be the year we will see a new renewable fuel directive taking shape, which will form the basis for the industry to develop.

2013 will show whether the

Maimann expects to see rapid progression in Asia, particularly in China

EU will be able to create a market sufficiently stable for cellulosic bioethanol to develop on a short-term basis.

The bioethanol sector is set for an exciting year, both

for the global industry and for us. The political targets are ambitious but we expect to see a number of projects being initiated during the next 12 months.

Stability is key

2013 – I want to see stability for the industry. The progress Dupont has made over the past five years, when we were just working in our research labs at the start, has been at breakneck speed.

The supply chains that are opening, facilities being built and the technology coming out means the industry is in a good position to push on. With firm regulatory aims to shoot for, the future looks bright.

Looking in-house, construction on our new 30 million gallons a year ethanol plant in Iowa will continue as we look to complete one of the largest cellulosic biofuels plants in the world. We’ve already started ratifying contracts with feedstock providers for the project too. Back at the research labs we will start looking into switchgrass as a potential feedstock, plus one other which will be confirmed later on this year.

Jan Koninckx Global business director for biorefineries, Dupont Headquarters: US

“

Koninckx hopes for a better year for US biofuels production

I’d expect the biofuels industry to start picking up again this year, particularly in regard to second generation production, after a bit of a poor 2012 thanks in no small part to the summer drought and fluctuating corn prices.

I personally was very encouraged by the way the industry fought its corner last year in regard to the proposed halt on the Renewable Fuel Standard. Everything went through a proper process and due diligence, including the complaints filed to the EPA, and a positive outcome was announced for our industry to firm up a little bit of future stability.

That is my key word for

”

”

34 january/february 2013 biofuels international

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Know the rules James Hygate CEO, Green Fuels Headquarters: UK

“

We have seen a definite trend towards smaller, decentralised biodiesel plants over the past few years which can be sited closer to feedstock sources and biodiesel users. I think this trend will continue into 2013 simply because it works.

That means reduced movement for feedstock as local demands increase and customers make biodiesel from local sources, ours tending to favour waste cooking oil. As refineries are being situated closer to the oil wells, rather than as centralised facilities that require feedstock to be shipped to them, the resulting biodiesel is used to meet local demand in road fuel and renewable energy production, creating a highly localised closed loop model.

We think ‘hot areas’ this year are going to be Asia Pacific and South Africa as biodiesel is fast catching on. Anyone who has ever done business

in the Far East however will know that a different set of rules apply to doing business.

If you can master them you can be successful, as community-scale biodiesel production fits in well there, but the rules do require a great deal of understanding.

It seems, interestingly, that there could also be resurgence in North America but, again, the interest seems to be at community scale which, in my opinion, is about right.

Customers are mainly cooperatives or closed loop recycling projects where waste can be used to fuel their fleets. We believe this scale of production can be successful in the US with the current incentives, and gradual movement of yellow grease away from animal feed, in place.

The only worry we have for this year surrounds targets as, although entirely necessary, not many can be realistically met. This is partly because there isn’t enough available feedstock and partly because policies are not in place to

Seeing more interest Pramod Chaudhari Executive chairman, Praj Industries Headquarters: India

“

The bioethanol industry, both in India and the world over, will find 2013 to be a year of consolidation as trends seem to indicate the incorporation of second generation biofuels mandates and dropin fuels building faster. Going forward, I also envisage greater integration of first and second generation biofuels.

In regard to global first generation ethanol mandates, the US has reached a blend wall but we see countries in the emerging economies showing greater commitment to first generation production, including countries in Latin America, south east and southern Asia and Africa. I must emphasise however that mandates need to evaluate sustainability on all fronts before they are implemented. Interestingly, there has also been an even greater interest in second generation biofuels across these

biofuels international

Hygate is enthused by rising small- and community-scale interest in bioenergy

allow them to happen, so there will inevitably be a shortfall. That said we are seeing more localisation of supply and usage which is how we think the industry

regions. Several countries are expected to follow the US’ lead. In my view the US is to second generation biofuels what Brazil was for first generation bioethanol.

Praj itself has been making advancements in second generation ethanol technology and we are now all set to launch a demonstration plant. We will be the first company in the tropical regions to set up such an integrated facility which will be scaled up 100 times when compared to the pilot plant.

As far as feedstocks go, diversity and flexibility will be key and I particularly see great promise in empty fruit bunches as it is integrated with the palm oil industry, a mainstay in the south east Asian region.

The implementation of second generation ethanol mandates with blending incentives needs to be sustained; they should be kept in place or introduced where they do not exist because second generation biofuels will be the foundation of the bio-based economy. My real hope for 2013 is to see ‘true biorefinery’ emerge – that is the crux of a sustainable, net energy positive business.

”

will grow. Overall 2013 needs to see greater utilisation of waste materials, like waste vegetable oil, more sustainable feedstock and more local manufacturing and supply.

”

Chaudhari is hoping for a year of global consolidation

january/february 2013 35

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Obtaining success Robert Johnsen CEO, Primus Green Energy Headquarters: US

“

The biofuels industry is in the midst of a critical transition, one where there is a wave of second generation alternative fuel technologies trying to move out of the laboratory and into commercialisation.

Though there has been some progress, technology companies have had varying degrees of success and, as a result, key strategic and financial partners are now appropriately skeptical.

This mentality is evident in the huge financing gap that exists throughout the industry today, as ambitious biofuel production targets have not been met because production capacity is generally not able to meet demand. The International Air Transport Association (IATA) is one

Johnsen believes the biofuels industry is in a ‘critical transition’

example after it set a goal of producing enough biojet fuel to meet 10% of all jet fuel demand by 2017, or 7

Well worth it

billion gallons per year.

Biojet production capacity currently stands at 400 million gallons per year so

the industry would have to increase capacity by over 6 billion gallons in only four years to meet IATA’s goals. Assuming an average capital expenditure cost of $10 (€7.5) per gallon, this amounts to a total of $62 billion of required financing and strategic investors are not yet at a stage where they are ready to open their wallets wide for alternative fuels.

It is this cautious environment that will define the industry’s operating conditions for 2013, but the good news is that enthusiasm for alternative fuel technologies has not waned – on the contrary, it has grown significantly and, in that spirit, we have developed an alternative fuel technology that converts syngas produced from either biomass or natural gas into a product that is a drop-in substitute for petrol, jet fuel and diesel.

A pilot plant in currently in operation and I expect us to complete construction of our demonstration plant by Q1 2013.”

”

Richards: ‘good biofuels done well’ is key

Dave Richards MD, Vivergo Headquarters: UK

“

The coming year will pose a number of challenges for the European biofuels industry, and I personally would like to see more support from both public and political avenues. The issues we all face in providing more sustainable sources of energy for a growing global population are highly complex, but the positive impact of good biofuels done well is often overlooked. What is clear however is that there is no ‘silver bullet’, by which I mean there is no single source that will solve our energy needs.

The best answer is to have a mix of alternative energy supplies and Vivergo also firmly believes that biofuels can make a material difference to providing more sustainable sources of both fuel and food. As a working example, we take 1.1 million tonnes of the UK’s feed-wheat surplus and convert it into high-value commodities, like bioethanol and animal feed, which the UK would normally import.

Towards the end of the first quarter our 420 million litre wheat-to-bioethanol plant will be fully operational and our investment of £350 million will create and sustain over 1,000 skilled jobs. As the company is so involved in the European biofuels industry, I’m personally looking forward to playing a part in creating support for biofuels done well this year, plus engaging in the wider debate of how to address our energy needs in a more sustainable way.

”

36 january/february 2013 biofuels international

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biofuels regional focus James Barrett takes a look at how Europe is reacting to the reduced first generation ethanol proposal brought to the table by the European Commission late last year

The 5% equation

A

s we all enter a new year, a time for renewed hope and optimism as fresh plans begin to roll out, the European biofuels industry will still have half an eye on future horizons.

As all member states of the EU head towards the end of this decade and the imposed renewable energy targets each has been assigned to hit edge ever closer, several recent shifts on the legislative landscape could mean many producers will be looking at new ways to hit theirs.

One positive piece of news came last year in the shape of research carried out by renewable energy watchdog EurObserv’er as it calculated an almost 1% rise in the final gross renewable energy consumption across the 27 member states for 2011,

up at 13.4%. Biofuels for transportation was reported to be up 3.1% during the same time period.

But the European Commission (EC) published proposals to limit global land conversion for biofuel production in October 2012, and the use of first generation biofuels to meet the 10% renewable energy target of the Renewable Energy Directive (RED) will also be limited to 5% (sometimes referred to as cap and split).

The RED fully replaced an original EU Biofuels Directive in 2011 which was the first attempt at implementing biofuels targets. The terms of the original directive set a first target of 2% renewable fuels in transportation by 2005, but only three countries – Austria, Germany and Sweden – met it.

The only obligation for member

states was to simply report on their progress so, if one missed it, there was no consequence.

According to the European Renewable Ethanol Association (ePure), biofuels use in the EU is currently 4% of overall fuel within the road transport sector.

The other view What is not in doubt is that sustainably produced biofuels is seen by many as the key to locking in reduced greenhouse gas figures from the transport sector moving forwards, with some companies welcoming the EC’s firm stance on the issue.

Back last autumn part of a statement released by the EC read: ‘Our message for post-2020 is we would like biofuels to be produced from non-food feedstocks, like

waste or agricultural residues like straw, as they will not be in competition with food, nor do they require additional land’.

In a rebuttal, ePure stated ‘disappointment’ on behalf of EU farmers and biofuels producers that ‘remain steadfastly opposed to the EC’s proposal to limit biofuels made from certain arable crops and to adding indirect land use change (ILUC) to the renewable energy and fuel quality directives’.

Epure went on to say that the proposal was based upon ‘unfounded and immature ILUC science’ and that a 5% cap would ‘destroy the biofuels industries and related sectors such as crushing and sugar facilities’.

But not everyone has thought the same and Petri Kukkonen, head of biofuels division at Finland-based

Abengoa’s ethanol plant based in Sao Luiz helps it reach a total global production of over 3 billion litres

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UPM, says his company would welcome any new proposals of this nature.

He believes that, although the directive proposal does lack precision in certain aspects, it would enable a sufficient differentiation between conventional and advanced biofuels and therefore support investments into most sustainable versions.

‘The EC´s proposal for amendments to Fuel Quality and Renewable Energy Directives (RED), also known as ILUC, can provide an opportunity to create mechanisms for the promotion of truly sustainable biofuels,’ Kukkonen says.

UPM’s strategy for biofuels production is based on investing in non-food feedstock, using only raw wood material and the proof is in the pudding.

‘Our greenhouse gas savings are around 80% throughout,’ he adds. ‘Producing biofuels from wood-based material, like residues of pulp and paper production or different factions of wood, provides a solution to all producers as one of the few truly sustainable and non-

ILUC affecting opportunities for European biofuels industry.’

Kukkonen does however feel that the most important aspect needed by companies investing into new technologies and feedstocks in this sector is long-term regulatory framework security that goes beyond 2020.

UPM ramped up its interest in second generation biofuels last year and invested into a biorefinery that will produce 100,000 tonnes of wood-based renewable diesel from crude tall oil. The construction of its Lappeenranta biorefinery started last summer and cements the company’s focus down that production path.

Gathering inspiration ‘Any news of investment is pleasing, but it is going to take time for research and development to reach a level in second generation biofuels to really make any change in policy to be truly successful,’ adds the secretary general of European Biomass Industry Association (EUBIA) Giuliano Grassi.

He fears that the cost to

UPM will be exhibiting and participating at the World Biofuels Markets event in Rotterdam, 12 to 14 March – visit them on stand E403

biofuels international

produce cellulosic ethanol, particularly for jet fuel and biodiesel, is currently too prohibitive for mass uptake, with the conversion of necessary sugars for that purpose higher than when taken from food crops.

‘A crop like sugar beet could be a practical solution to the biofuels problem if correctly managed, but cereal crops will see a decline in enthusiastic support thanks to the “food vs fuel” debate and this EC reaction,’ he adds.

But Grassi does not think the EC should be seen as being ‘anti-biofuels’ and points to a lot of useful research it does to try and help the industry along.

‘It must be difficult to get all 27 member states to agree on any single point all at once,’ he laughs before revealing he feels it is a country on the other side of the Atlantic that could give Europe a much needed boost.

‘Europe is at a lower level when compared to the US and this comes down mainly to entrepreneurs and businesses willing to invest in the vision,’ he muses. ‘There seems to be an excitement around the industry over there and we could learn a lot from that. The sheer volume of research, production and projects nudging commercialisation is huge.

‘The huge demand for fuel needed by the US Navy, for example, could not be ignored,’ he continues.

‘Towards the end of 2012, their Senate voted against a proposal that would have stopped the Department of Defence from buying alternative fuels if they cost more than conventional ones.

That is concrete support for their industry right there.’

Another two recent examples of support saw USDA secretary Tom Vilsack present at the January opening of a multiplefeedstock processing facility by cellulosic sugar for biobased markets manufacturer Renmatix, and Danish company BioGasol is set to supply reactor technology to

US-based cellulosic sugar producer Sweetwater Energy.

‘We do have a good understanding of the second generation process and it is great Europe appears to be creating sought after technology, but the industry won’t move forward quickly because it lacks confident investment. This kind of fear factor, especially experienced at private sector level, will not disappear with little to no perceived support from bodies like the EC.’ Long-term vision Spain-based first generation bioethanol producer Abengoa Bioenergy allowed the statement released by ePure, of which it is a member, to fly its public stance on the potential policy changes but its president Javier Salgado tells Biofuels International that the EC maybe fighting a losing battle by trying to change a long-term vision.

‘We think that the proposal will not be hugely supported at stakeholder and parliamentary level as Europe has a strong and consistent commitment to climate change. The mandatory targets for the transport sector to achieve by 2020, as included in the RED, have been laid out by the policies promoted by the EC since 2003,’ he says.

Abengoa Bioenergy has a global footprint and produces 3.7 billion litres of product a year from plants in Spain, Brazil and the US. Within Spain it produces 95% of the country’s fuel ethanol, which is 545 million litres. It uses cereal grain and sugarcane to produce oxygenate petrol additive ETBE or for direct mixing with petrol at various blends from E5 up to E85.

‘Bioethanol through ETBE has remained a stable market in Spain over the past 12 months, but it is a 50/50 split between domestically produced and imported product,’ he continues. ‘Direct blending has remained static

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biofuels regional focus Biofuel consumption for transport in the European Union in 2011* (in toe)

* Pure vegetable oils used for Germany, Poland, Austria, Ireland, biogas fuel for Sweden and Finland.

Source: EurObserv ‘ER 2012 • www.eurobserv-er.org

due to the limitations imposed by targets and lowering it for first generation producers more will not change that situation positively, particularly as the summer period is not conducive to blending.’

Salgado says his company was also pleased that the EC has dealt with a loophole that was exploited by US ethanol exporters that allowed cheap E90 to flood the European market from across the Atlantic. (see page 25 for further explanation).

But Abengoa has not just sat back and waited for outcomes to be determined as it nears completion of a second generation facility in Kansas, US. ‘Our Abengoa Bioenergy Biomass of Kansas (ABBK) project will operate as a biomass-to-ethanol biorefinery which will allow it to use proprietary technology that

has been developed to produce renewable liquid fuel from plant fibre, one of the world’s most abundant organic feedstocks,’ Salgado explains.

The plant will obtain agricultural waste that would not have any value to the farmers that have it to hand, plus from other energy crops grown on marginal areas which, up to now, have been abandoned, to be 100% biomass-fired.

It is expected the biorefinery will have an annual production capacity of 25 million gallons taken from around 350,000 tonnes of feedstock of which 1,100 dry tonnes will be used for ethanol production a day.

‘The residue of that process will be combusted to produce 18MW of electricity,’ Salgado adds. ‘We expect the biorefinery will be online and in full production by the end of this year or early 2014 latest.’

Whose counting?

Neste Oil, one of the continent’s most established producers of renewable fuels, is a firm believer that the cap and split measures proposed by the EC would effectively manage ILUC emission risks and incentivise use of alternative feedstocks and new technology.

‘We support the capping of edible crops and dedicating the reminder of the 10% target to biofuels from raw materials that are free of ILUC emissions,’ says Neste Oil’s VP of renewable fuels Kaisa Hietala.

‘The measure could mean the end of these so-called ILUC factor risks which are neither necessary nor appropriate.’

Neste produces renewable diesel and jet fuel via vegetable oil and animal waste but Hietala believes a single market approach across

all ILUC-free raw materials and residues would be the best overall solution.

‘It was really positive to see the idea of a revisable list of ILUC-free feedstocks presented in the new Annex IX of the RED,’ she expands, which lays out feedstocks that could be considered for multiple-counting purposes including algae, straw and husks. ‘However, that RED list should be complemented by “processing residue” and “agricultural, aquaculture, fisheries and forestry residues” definitions, completed with several feedstocks that are already or likely to be in use.’

Multiple-counting is a system which would see biofuels made through second generation production count double, or even quadruple, that of first generation biofuels to encourage their use. Simply put: if a country’s biofuels target was 400,000 gallons, but it used algae as a feedstock, it would hit its mark by producing a physical amount of only 100,000 gallons.

Hielata feels that any multi-counting of biofuels could be a double-edged sword and should be limited to those that use genuine advanced raw materials or production technologies.

‘The purpose of multicounting should be to accelerate innovation and new investment. Applying it to widely-used waste and residue raw materials will negate the potential to reduce greenhouse gas emissions, result in fewer productive investments and even increase the risk of fraud,’ she adds. ‘A dedicated quota for non-edible feedstock will be a strong incentive in and of itself.’

Another crucial point Hietala highlights is that any penalties a country may suffer for not fulfilling its biomandate need to be higher than the value of multi-countable biofuels, ‘otherwise paying the penalty, and using fossil fuels, will become more attractive than hitting any target’. l

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AlcoBioFuels’ Benoit Verbruggen talks to James Barrett about his views on the facility’s future and current renewable energy proposals

Taking an optimistic view

T

here have been some interesting developments at the Belgium-based bioethanol plant AlcoBioFuel (ABF) over the past couple of years but the proposed amendments to the Renewable Energy Directive (RED) have not been well received.

ABF was founded in 2005 by three shareholders: Alcogroup, a trader, distributer and producer of ethanol for fuel, industrial and beverage applications; Vanden Avenne, which distributes and stores grain, oilseeds and their byproducts; and Aveve, a grain collector and market leader in agricultural supplies in Belgium.

Situated at the port of Ghent, ABF produces and supplies 200,000m3 of bioethanol, part of a continental market of around 6 million m3, from its site at the port of Ghent.

‘The site in Ghent is ideally located in terms of logistics as well as adjacent to the grain silos of our partner Eurosilo and to the oil and chemicals storage terminal Oiltanking,’’ the chairman of the ABF executive committee Benoit Verbruggens says. ‘Besides truck and railcar connections, the canal can accommodate barges and coasters, up to sea-worthy vessels of 60,000 tonnes.’

This is just as well as ABF supplies less than 25% of its bioethanol within Belgium, the rest being distributed to other EU countries like Germany, Sweden, Poland and Finland among others.

The facility’s capacity was 150,000m3 when it opened in 2008 using technology provided by engineering company Katzen, before

biofuels international

improvements on the grain mix and overall process pushed it up to the current figure.

The facility also achieved a ‘world first’ when, in 2010, it became the first plant in the world to be awarded an International Sustainabilty and Carbon Certification.

Future additions There is no resting on its laurels however, as Verbruggen says the facility continuously strives to improve its supply chain sustainability and CO2 savings to keep them above RED targets. But he also reveals another addition to the facility as we approach the spring months.

‘We are starting a cogeneration unit before the end of the first quarter this year, covering all our steam and electricity needs and allowing us to export 6MW electricity to the grid,’ he explains. ‘The first phase will run on natural gas and a second will use some of the by-products to produce biogas in a digester.’

ABF uses a range of grain as feedstock, mostly corn

and wheat and occasionally sorghum, triticale or barley, at 100% or as a mix depending on current market prices and how they fit into the facility process implications.

Verbruggen states that grain is always sourced first from within Belgium and neighboring countries, in the smallest possible radius around the plant: ‘Other countries to the east also offer an option and, occasionally, we take shipments from third countries.’

Market conditions But, as with all producers, a combination of high feedstock purchase prices and lowering ethanol sales prices represent a difficult market situation for ABF. Verbruggen says the plant copes by adhering to the ‘best possible risk management procedures we have in place,’ but he was buoyed by the current EU stance on imported ethanol from the US. ‘The huge import level from across the Atlantic at the beginning of 2012 was very detrimental to our industry. In

Ghent offered ABF many transportation routes that make it simple for feedstock deliveries and product distribution

this respect, we have welcomed the EU classification closing the door on the E90 loophole, as well as the recent anti-dumping duty of 9.6% imposed on US ethanol for five years,’ he adds.

However, the proposed amendment to the RED which would limit conventional biofuels production to 5% (down from 10%) is ‘a step backwards’ according to Verbruggen.

‘The original policy was only introduced three years ago so I’m not in favour of this new proposal. Not only is it damaging for our industry as a whole, but I also feel for all those EU governments that have adopted measures to reach their original 10% targets,’ he adds.

As the future of first generation biofuels remains decidedly wobbly, support and research into second generation remedies will catch more attention, and ABF is no exception to its lure.

‘We are supportive of the developments in second generation ethanol for Europe,’ Verbruggen muses. ‘In fact, we are actively considering the feasibility of constructing a second generation ethanol unit on our site in Ghent, but it will take a long time to become an everyday commodity.’

ABF is awaiting completion of an agronomical report about biomass sourcing within Belgium for the potential unit and will line-up economical and technical studies after that.

‘We do not believe that double or quadruple counting for second generation biofuel will be the best way to further encourage investments in this field however,’ warns Verbruggen. l

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biofuels plant update

Plant update – Europe Assunto Importante

ADM Nederland Location Alternative fuel Feedstock Construction / expansion / acquisition

Project start date

Malbork, Poland Biodiesel Rapeseed ADM Nederland has acquired 100% of Elstar Oils which, in addition to the Malbork biodiesel plant, includes a rapeseed crushing, refining, solid-fat packing and oil bottling facility in Czernin December 2011 (acquisition approved by the Polish Office of Competition and Consumer Protection)

Agri Location Alternative fuel Capacity Feedstock Construction / expansion / acquisition Completion date

Liverpool, UK Biodiesel 16 mly Used cooking oil Construction May 2012

Aqualia Location Alternative fuel Capacity

Chiclana, Spain Biodiesel and biomethane 500 litres a year of biodiesel and 1,500m3 biomethane at a commercial-scale demo plant Feedstock Algae Construction / expansion / Construction acquisition Designer / builder FCC Project start date 2012 Investment €12 million, half of which has been funded by the European Commission Comment According to Aqualia, if 3,000kg of dry algae a day can be produced with an oil content of 20%, the project will be ramped up to commercial-scale size of 10 hectares to produce 200,000 litres of biodiesel a year and 600,000m3 of biomethane - enough to fuel 400 cars

Location Alternative fuel Capacity Feedstock

Sines, Portugal Biodiesel 25,000 tonnes The upgrade will increase the plant’s raw material flexibility Construction / expansion / Upgrade of the existing biodiesel acquisition facility Designer / builder BDI Bioenergy International Project start date October 2012 (BDI awarded the contract)

Cargill Location Bergen op Zoom, the Netherlands Alternative fuel Ethanol Capacity 100 mgy Feedstock 600,000 tonnes of wheat Construction / expansion / Construction acquisition Completion date June 2012 (officially opened)

Clariant Location Alternative fuel Capacity Feedstock Construction / expansion / acquisition Completion date Investment

Straubing, Bavaria, Germany Cellulosic ethanol 1,000 tonnes 4,500 tonnes of wheat straw Construction

Mid-2012 €34 million

EcoMotion France Location Le Havre port, France Alternative fuel Biodiesel Capacity 75,000 t/y Feedstock Waste fats Construction / expansion / Construction acquisition Designer / builder BDI Bioenergy International Project start date Mid-2012 (contract awarded to BDI Bioenergy) Investment BDI Bioenergy’s contract is for €16.4 million

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Ensus Location Alternative fuel Feedstock Construction / expansion / acquisition Completion date Investment

UPM Teesside, UK Bioethanol 1 million tonnes of wheat Reopened

August 2012 (reopened after 15 months of closure) £300 million (€ 360million)

Location Alternative fuel Capacity Feedstock Construction / expansion / acquisition Project start date Completion date Investment Comment

Lappeenranta, Finland Biodeisel 120 million litres a year Woody biomass Construction

Mid-2012 (broke ground) Mid-2014 €150 million. The biorefinery is being constructed without any public funding The plant will be the world’s first woodbased biodiesel refinery

Green Bio Fuel Switzerland Location Alternative fuel Capacity Construction / expansion / acquisition Project start date Completion date Investment

Bad Zurzach, Switzerland Biodiesel 135 mly Construction

Beginning of 2013 Mid-2014 $87.1 million (€65.4 million)

Neste Oil Location Alternative fuel Feedstock Construction / expansion / acquisition Completion date Investment

Porvoo, Finland Microbial oil Agricultural residues such as straw Construction October 2012 €10.3 million

PFP Group Location Alternative fuel Capacity Feedstock Construction / expansion / acquisition Project start date Completion date

Brescia, Italy Biodiesel 70,000 tonnes Used cooking oils and waste fats PFP Group acquired the existing idle biodiesel plant October 2012 (acquired) Early 2013 (start-up expected)

Umeå Energi

UPM Location Alternative fuel Feedstock

Strasbourg, France Renewable diesel Woody biomass such as logging residue or bark Construction / expansion / Construction acquisition

Project start date December 2012 (grant awarded) Investment €170 million grant from the European Commission, of which the final assessment will be made within 12-18 months

Verbio Location

Two projects: one in Germany and one in Hungary Alternative fuel Gas for biomethane Feedstock Straw Construction / expansion / Construction acquisition

Project start date April 2012 (began government talks to expand the straw-to-biomethane project with the construction of two more plants) Investment €150 million (earmarked)

Vivergo Location Alternative fuel Feedstock Construction / expansion / acquisition Completion date

Humberside, UK Bioethanol Wheat Construction

Q2 2013 (official opening ceremony)

Location Alternative fuel

Sweden Algae cultivated at the pilot plant will go on to be used as biodiesel Feedstock Wastewater-derived algae from Umeå’s municipal sewage treatment works and from CO2 taken from its CHP plant, Dåva One Construction / expansion / Construction acquisition Project start date June 2012 (announced) Comment The plant will feature four ponds for containment of waste water, and a new laboratory built onsite

biofuels international

*This list is based on information made available to Biofuels International at the time of printing. If you would like to update the list with any additional plant information for future issues, please email keeley@horseshoemedia.com

january/february 2013 43

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What are the steps needed to secure funding? What is the role of government incentives and programmes in arranging financing? Our experts explain...

Overcoming those important funding hurdles

I

n 1974, US President Richard Nixon announced that by 1980 the US would be dependent on no other country for energy. Every subsequent US president has repeated this pledge in some form.

Growth in unconventional production of oil and gas has renewed discussion of the idea of energy independence.

Despite the promise of new domestic production, the global demand for energy (especially liquid fuels) continues to grow rapidly, driven by unprecedented economic expansion in the developing world.

The quest for new liquid fuels is pressing the edge of our technical abilities, and even the most optimistic production projections assume a future of historically high oil prices. Crude oil remains the key to many geopolitical decisions and relationships and, as long as hydrocarbons dominate energy economics and security/environmental issues worldwide, the motivation for alternatives like biofuels remains very high.

Despite this need for biofuel development, the production market remains challenging.

One key limitation restricting construction of new biofuel facilities is access to the large amounts of necessary capital.

Understanding how capital markets work Most energy projects never get beyond the development process. Among the many reasons, failure to obtain

financing ranks high, having derailed an increasing number of projects over the past few years. The most common reason for funding failures is that fundamental economics of the project do not provide confidence for an adequate return to investors. This threshold must be met for any project to move forward with financial partners, and there is no reasonable hope for obtaining financing for projects where the developer cannot demonstrate sound economics to a potential investor.

Investors come in many forms but are generally broken into a few basic categories. The two basic forms of investment are debt and equity. Debt is money borrowed and the lender expects a full return of the money placed, plus a reasonable interest rate for the cost of using the money. While the appetite for risk varies, it is effectively impossible to obtain debt financing in the current market without assurance that the lender will be repaid. The lender’s expectation is that there is an underlying asset that will serve as a security interest (something to take over and sell) in the event that the borrower defaults, and that the project will have adequate cash flow (debt coverage) to prevent default.

Equity investors own a piece of the company or project.

Theirs is the first money into a project and, if the project fails, the least likely to be recouped (as debt providers are repaid first). As a result, equity

investors expect much higher returns than lenders expect in interest. Equity investors are paid both for the use of money and for the measurable risk of losing that money.

There are other investors that blend these two. These may be referred to as mezzanine financing. The expectation of those investors will likely be greater than that of a traditional lender, but less than that of the traditional equity investor. This might include a preferred return and a subordinate security interest.

Whether a project gets funded by any of these investors turns on the amount to be earned on invested capital for the use of the money, and the risk that it will not be returned. How investors formally and unconsciously measure risk varies, but the explanations for project funding failures seem to always grow out of unrealised risk intolerance. Some risks are obvious, like technology or an electricity buyer’s credit worthiness. However, some risks manifest in less obvious ways. Either way, the economics are critical.

Underlying this basic set of economics will be a financial model for the project. This model will show the economic inputs (revenue) and outputs (costs) of the project over its expected life. The first role of the model is to provide a clear picture as to whether a project is economically viable after using the capital necessary to build and operate the project. The model will also be the basis for lenders

reviewing a project’s ability to generate enough cash flow to pay for the principal and interest on the loan, and should have enough excess cash to absorb contingent costs. This amount, a ratio of debt service to projected cash flow, is referred to as the debt-service coverage ratio.

The model also allows equity investors to test projections and assumptions in order to build adequate confidence in the return of invested capital and an adequate return on their investment.

Understanding the value and limits of government support Policy-based support can come in many forms and it is often a critical piece of the project financing puzzle. But there are limits to incentive and regulatory support, and it is important to understand how these programmes should be utilised and viewed when trying to put a deal together.

These supports take a number of different forms, but the three most important are loan guarantees, regulatory assets (e.g., RINs) and tax support.

Loan guarantees are guaranteed by the full faith and credit of the federal or state government.

Typically these are made by a traditional lender, with a government guarantee to pay the lender in the event that the creditor fails to repay under the terms of the loan.

The result of the guarantee is that the cost of borrowing should be measurably

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reduced since there is virtually no risk with respect to repayment. These guarantees often allow borrowing for projects which otherwise could not acquire debt.

Regulatory assets are intangibles created to provide an additional layer of value, or a separate asset, that can be sold in addition to fuel.

They are based on each unit produced from renewable or clean resources. For biofuels projects these will be RINs. In other markets these will be carbon credits. These programmes carry the dual challenges of policy/regulatory uncertainty (programmes can end), and market uncertainty.

Government programs are subject to the whim of legislatures. If cancelled, the revenue associated with the programme can suddenly disappear, undermining project economics. Alternatively, a series of large projects can flood a market and undermine long-term value for regulatory assets like RINs. (This happened in several US states where markets were overbuilt and the price for renewable energy certificates collapsed.)

Tax benefits have historically been the most stable form of policy support. Looming budget concerns and sovereign debt challenges around the world have added new uncertainty to tax-based incentives as well.

We need to look no further than the sudden, somewhat surprising end to the US federal tax credit for ethanol for an example of this risk. Tax benefits can also be difficult to utilise, since the value is only realised from offsetting taxes owed and not all project owners have adequate ‘tax appetite’ to realise the value of the tax benefits. Tax benefits for renewable fuels have been easier to use than renewable power credits, mainly because the former came in the form of refundable excise taxes, whereas power credits required third party tax investors. There is

biofuels international

also important value from accelerated tax depreciation, but this may require a third party investor along with an engineering analysis and cost segregation study.

The point here is that policy support dollars should not be included in a project’s financing analysis unless there is virtually a 100% certainty of receipt. Policy uncertainty has created many financing misses over the years, and as a result, it is a factor that is normally highly discounted. Even in situations where the commitment is clear, programmes that can be legislated away, or those that have the potential for market disruption, are typically de-valued by lenders

the growth of the industry.

Unfortunately, in today’s business climate, investors are often unwilling to undertake the risk of new technology.

Proof of production and cost certainty are keys since many businesses never make it beyond the research and development stage. Other new technologies fail to deliver profitably as applications move to a larger scale.

Laboratory experimentation that provides positive results can help reduce these concerns, but often not enough to draw full scale project funding. A pilot plant or other demonstration facility that can duplicate the process over a period of time, taking into account variability in

‘It could be the best project I’ve ever seen, however, if it’s the wrong people would never invest’ and investors. There is a growing school of thought that investors must learn to manage policy uncertainty.

However, that ideology has not yet evolved, so a developer’s approach to investors must account for their view of policy risk.

Common barriers to securing investment There are several factors that will affect the lender or investor’s view of a project.

Understanding these factors is critical to obtaining financing for a project. The following are a number of factors that can prevent a project from receiving the debt or equity financing it needs: New technologies: The draw to use new technologies in the biofuels industry is high, as innovation and experimentation are the cornerstones of new product development and vital to

resources and inputs, can further help manage the perception of new technology risk. Documentation of the results, the input variables and other factors over a period of time will provide a higher degree of confidence for investors. This might include positive results over a six month period of time, or for batch flow operations, a significant number of executions.

Production guarantees: Certainty of output is obviously vital for new technologies. However, even for proven technologies, investors may seek projects with adequate size to provide a guarantee that the output volume and quality will be as high as forecast. These guarantees may be provided by the vendor, an insurance company, or even the engineering, procurement and construction (EPC) company.

Obtaining a guarantee of

this nature is typically more expensive than a contract without such guarantee.

While attempting to develop a project without production guarantees might be attractive in preserving resources, it may come at the cost of limiting available debt and equity providers.

Capital cost conundrum: An EPC may view new or newer technology much like an investor, and may have similar risk considerations.

There may be a premium for large construction projects, and certainly for construction financing from either the EPC or a bank. One option is to scale the plant to a smaller size. While smaller plants will cost less and may be easier to fund during construction, the cost per unit increases with higher depreciation costs, lower return on investment and less efficient operations (due to the loss of economies of scale).

Intake and offtake agreements: Having the ability to show you have ‘locked in’ your feedstock, and having agreements for the sale of your products, are significant advantages that go a long way in obtaining financing. Where the output is fuel that will be sold into a liquid commodity market, future price projections may be adequate. However, if the project is working with a limited feedstock or producing a specialty product, an investor may be unwilling to risk that feedstock or buyers may be unavailable during the course of the investment.

These types of agreements are not viewed in a vacuum, as sophisticated investors view them by measuring ‘counterparty risk’. Counterparty risk is the potential inability of a feedstock supplier to provide the agreed feedstock over the term of the agreement, or to adequately compensate for its failure to do so. Sales

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biofuels finance contracts should be supported by data that indicates the purchaser will use the product, or has established contracts to resell the product.

Underlying investment: Having a great project may not always be enough. How much ‘skin is in the game’ is a common question that needs to be addressed. Investors and lenders are less inclined to invest in a project that does not have a significant amount at risk to the developers and early stage capital. Tied to this is the availability of collateral for securing debt, the ability to meet restrictive covenants and the potential for cash flow sweeps related to debt agreements.

Closing the deal – unforeseen challenges More challenging to understand than failed economic fundamentals is the question of why projects with solid financial fundamentals and the returns that adequately reflect risk still do not get funded. Over the past two to three years, there has been consistent discussion about ‘how much money is sitting on the sidelines’ specifically looking for good energy projects. ‘If the project is really that good, it will get financed’ is a common refrain by energy investors, yet projects that appear sound, even very good, sometimes still don’t find financing. Why not?

Presenting the right team is vital to attracting investors.

In a recent conversation I had with a successful energy investor he said: ‘It could be the best project I’ve ever seen, but if it’s with the wrong people, I would never invest’. The person making, or facilitating, the investment in a project has to believe in the people that make up the team. A new or untested team will affect an investor’s view of the potential for execution and operational risk associated with the development

team’s ability to manage the ‘unknown unknowns’ specific to the project.

Project developers are optimists. Investors know this and will likely view a project’s financial assumptions as optimistic. Some investors test project economics by looking at every input assumption in the financial model that is not contractually fixed.

They then increase the cost inputs or reduce the revenue expectations. From another recent investor conversation: ‘…the assumptions are speculative; someone pitching me believes in their story, and so necessarily will make optimistic assumptions, and I correct for those.’ It is important to carefully stresstest pro forma inputs and illustrate that the assumptions are reasonable and well defined, and that project economics work against less optimistic scenarios.

As noted above, policy uncertainty can prove even more challenging than

capital firm for a biomass gasification unit, even using new technology, is probably not the best use of time currently. Similarly, it will be challenging to get a regional bank in Florida to provide financing for a Pennsylvania shale development project.

This is not to say that will not happen (as diversification may be exactly what a particular investor seeks); but matching the ‘ask’ to an investor’s interest is vital if there is a real hope of securing funding. While there are a few investors that will look at any good deal, the experience, interest, portfolio fit and liquid investment capacity will drive most investor or investment facilitator decisions.

How to be successful The best approach for developers to achieve competitive funding is to review the project through the eyes of potential lenders and investors. Developers must

The experience, interest, portfolio fit and liquid investment capacity will drive most investor or investment facilitator decisions market uncertainty. Hedge mechanisms do not really exist for policy uncertainty.

Additionally, the outcome of policy uncertainty is typically binary, representing an ‘all or nothing’ risk with respect to that piece of project economics. While there may be rare instances where a development team could show the ability to affect the policy making process, this risk is generally outside the developer’s control.

The development team needs to know its audience and where to focus time and energy. For example, seeking project funding from a venture

plan in advance for investor expectations and be prepared to help financial partners understand several things: • The risks and rewards, and the processes for minimising them • The capital requirements of the project • The period of time to secure repayment and profit; • Whether the investment is supported by collateral or other guarantees • Return on investment.

The starting point is always to assemble an experienced professional team, in addition to management, to ensure there is a business plan with

a solid, defensible financial model. The internal and external team will be the starting point from which lenders and investors gain some assurances that the project will be on schedule, within budget, and well executed. Equity investors might have a greater appetite for new technology than lenders, but working with proven technology will be much easier to finance in either case, unless the project carves out valuable new parts of the marketplace.

With existing technologies, it is best to use those that have good, verifiable track records. It is best to engage professionals to evaluate technologies. If the project will use some new, cutting edge technology, make certain the results can be clearly documented at limited scale and be ready to prove it will meet the challenges as it moves to commercial scale.

The EPC contractor should be experienced and, if possible, able to support construction term financing and provide necessary guarantees. Capital costs must be defined in a defensible manner, as lenders and investors will both disregard projects that do not allow for contingencies and overruns. Finally, although it may be difficult to lock in feedstock and offtake, it is imperative that as much certainty as reasonably possible be put in place.

Every project is a series of many smaller projects, all interdependent on each other. One must always keep the smaller projects flowing smoothly since this is vital to the success of the overall project. There is simply no substitute for preparation. l For more information: This article was written by Wayne Lee from Lee Enterprises Consulting, www.lee-enterprises.com, Elias Hinckley, partner at the Washington, D.C. office of Kilpatrick, Townsend & Stockton, www.kilpatricktownsend. com and James Schmidt , director of renewable energy for advisory firm Eide Bailly, www.eidebailly.com

46 january/february 2013 biofuels international

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Loren Padelford, general manager of Active Risk discusses how managing risk at an enterprise level and creating a risk management culture will enable organisations to take smarter risks, drive efficiency and improve operations

Making biofuels a less risky business

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uccessful business is all about taking risks.

This is especially so in a sector pioneering the future. If biofuels are to be a viable alternative to fossil fuels the industry will have to contest and win in one of the most hyper competitive and regulated industries in the world. In order to achieve this organisations need the information to take smarter risks.

It is increasingly important for boards to identify the impact of reputational risks. There have been many examples in the last few years where reputational risks have had a catastrophic impact on shareholder value.

In the energy sector risks comes in many shapes and sizes including: • Exploration risk • Health and safety risk • Capital project risk • Sustainability risk management • Commodity pricing risk • Reputation risk Before risk can be reduced it has to be identified, recorded and monitored right across the business. Organisations need a single, rigorous, repeatable process and system for identifying and assessing risks across projects, programmes, departments and operations, in fact across the entire enterprise.

The risk process must help to understand the connection between risks and show how a risk in one area can affect a process in another area. For senior management this new information enables them to see how risks across the business can impact strategy and investment decisions.

biofuels international

Enterprise risk management (ERM) With funding for biofuel projects becoming increasingly difficult to secure the pressure to deliver projects on time and within budget mounts.

Every project, large or small comes with its own set of risks. The ability to anticipate, acknowledge and create an actionable plan to address and reduce these risks becomes one of the most important elements in order to guarantee success, build reputation and attract repeat investment.

Gone are the days when risk management could be carried out in project, department or divisional silos via a plethora of spreadsheets. It is no longer acceptable for risk managers to identify a set of risks and file them on a risk register thinking the job has been done.

A successful business culture should support every manager taking responsibility, not only for identify and managing the risks in their own area, but also for understanding the implications of risk in the wider context of the business.

In today’s modern biofuel companies, risk information should be transparent and available when people need it, 24 hours a day and 7 days a week. It needs to be easily communicated both up and across the entire organisation.

Relevant risk data also needs to be shared with partners and other stakeholders.

An ERM system can record, communicate and manage action plans on risk from the outset and right through their

lifecycle, in a standardised way using a common language.

This will help identify emerging strategic and reputational risks which cannot be seen at lower levels; enable the sharing of best practice in mitigating risks; highlight opportunities and provide more accurate riskadjusted planning and corporate performance measures.

Using an ERM system, biofuel companies can stay ahead of unforeseen risks that can impact critical capital projects, impede production and disrupt strategic plans. With ERM as a core operating principal, unidentified losses can be reduced, risk accountability improved and efficiency increased. While at the same time the company becomes a safer bet for shareholders, community members and the capital markets.

From the top down The single most important factor is that a risk management culture is embedded throughout an organisation. It is common practice for organisations to try and control culture through processes. However, people will be people and even if they know what is expected of them in terms of risk management they may not act in the way

required if it does not fit with their personal beliefs and values, or most importantly if they do not see any value in it.

Developing a risk culture is a journey not an instant solution. It is about making a clear connection in people’s minds that the success of risk management drives both the success of the organisation and helps meet personal objectives.

It often means changing ‘the way we do things around here’ so that talking and thinking about risk becomes part of the DNA. It must become a sign of strength, rather than weakness, for a manager to identify risks in his department or project. However, this change in culture can only be achieved from the top down, both in actions and in communication facilitated by an integrated enterprise risk management system and commitment from senior management.

In the continued search for new resources and the drive to improve old infrastructure, the biofuel industry’s ability to deliver projects on-time and on budget may well be the key to the survival of the industry.

A more advanced focus on risk management is in turn a major key to success. l For more information: www.activerisk.com

Enterprise risk management: • • • • • • •

Reduces risks and surprises Highlights opportunities Positively impacts the bottom line Drives stakeholder confidence Improves relationships with regulators and communities Reduces litigation costs Helps win more business

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biofuels finance Advanced biofuels firms that have remained privately held and raised venture capital funds in the third quarter, are quietly building momentum. Meanwhile, their colleagues who chose the IPO route are hitting a wall

In or out of the public eye?

by Nicholas Zeman

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ast year has demonstrated what can happen to a company that goes public while still in development. Amyris, Solazyme, Codexis and Kior were among some biomass-tobiofuels companies who have had some dangerous months as of late. While the percentage of biofuels companies trading publicly is low, the number of plants and companies that needs financing is not and the performance of public companies can undermine private deals.

‘Venture capitalists and angel investors are still going to base valuations on stock performances in the sector and get a flavour for growth potential from the stock market,’ says Ian Barnett at Ensyn, the wood waste refiner from Ottawa, Canada.

A series of new reports hit the streets in October, shedding light on the kind of financing year it has been for biofuels companies in development.

University of New Hampshire’s Center for Venture Research (CVR) recently released ‘angel’ investment data for the first half of 2012, and clean tech, which has recently been a favoured sector of angel investment, has now fallen to just 5% of total deals. ‘It’s not the only sector that is down,’ says Jeffrey Sohl, director of CVR. ‘But retail and media have maybe looked a little better over the course of the year.’ In a similar report, Bloomberg New Energy Finance said total investment

in clean-tech fell 20% in 2012 to $56.6 billion (€43 billion), and the Clean Tech Group, said venture capital investments in clean tech start-ups were down 30% from the Q3 2011.

‘The market has realised that maybe some of these projects are taking a little longer to materialise than initially projected, and maybe there was some exuberance in 2011,’ Barnett said in response to reports of fall offs in clean-tech investment. ‘The market has come back, but it has come back in favour of dividend paying stocks. It’s still a very risk adverse market.’

One of the most significant challenges that cleantech companies have faced over the last several years is the overall economic recession, Jenkins says. ‘Back in 2006 and 2007, the cleantech industry was really gaining traction in terms of development and seeing strong growth in deployed investment capital into early stage companies. End use customers are becoming more educated about how to use these new technologies and integrate them into their existing products and services – this process takes time. It is just unfortunate that right when many emerging cleantech companies were ready for an early growth phase, the world was hit with a big recession.’

Banks still absent Cellulosic ethanol was supposed to hit 500 million

gallons in 2012. Instead the US EPA has projected it would be 8.65 million gallons (0.006%).

News recently broke that BP has given up on its cellulosic ethanol business. Dozens of companies and start-ups have failed to produce anything commercially viable. But part of this has been caused by the pressures on the industry. For one, biofuels investment markets simply are not very mature and, for the most part, have not conformed to traditional project financing structures.

This is usually considered to be a mixture of equity and debt. After all, venture capital is expensive and should not be overplayed, while the gauntlet of going public already seems to have claimed some victims.

But venture capital, strategic investments and IPOs have been the primary financing structures available. James Eiler at Eiler Capital in Des Moines, Iowa shed some light on this: ‘AgStar, West LB and First National of Omaha were among the only banks with the expertise to underwrite ethanol and biodiesel loans. And they reached their portfolio limits years ago,’ he says. ‘So there is traditional project financing in the biofuels industries, but the amount of syndication and the lack of expertise has made it very hard. It’s a very complex and volatile market and a lot of banks just haven’t gotten involved.’

This fact has maybe pushed some down financing paths that were not good fits and

has put unfair pressure on the sector. ‘If any company is in the development stage and goes public and misses milestones or things like that,’ Barnett says.

‘If it needs to raise more capital, the situation can get very difficult. The public market might be considered a source of cheap equity, but a company can also be held up to ransom by a difficult market.’ That is exactly what has happened to Amyris, Codexis, Solazyme and Kior, which have all been considered the stars of the industry.

Deals done That could be the reason that Illinois-based Elevance pulled its IPO after telling the Security and Exchange Commission that it had raised $104 million in capital from venture and strategic funds. It was one of the biggest venture capital deals in the Chicago area. ‘Lacustrine via Genting Genomics, wholly owned by Genting Berhad, based in Kuala Lumpur, Malaysia led the round. Total Energy Ventures International, based in Paris, France also participated in the financing,’ Elevance said, adding that the funding would help develop biorefineries in Asia and North America.

Ensyn and Elevance have chosen different routes than going public and for good reason. ‘There is probably going to be less of a dilution of equity with venture capital than there is with going public,’ says Ernie Goss, professor of economics

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at Creighton University in Omaha, Nebraska. ‘You can structure a venture capital investment to limit dilution of equity. If you go public through an IPO you have no idea what the price is going to be.’

Unlike many small technology companies, Ensyn has not faced pressure from venture capitalists or public shareholders for immediate results. There are several reasons for this, Barnett says. ‘Ensyn has financed its renewable fuels business through a series of strategic and venture capital investments.

Recently the company partnered with Brazilian pulp and paper firm, Fibria, who pushed a fresh $20 million into Ensyn’s cause to expand its renewable fuel oil business.

‘Ensyn shows the benefits of finding a commercial technology early on, a platform technology that has applications

across several industries,’ Barnett says. The company has used its wood waste conversion technology to develop a profitable business since the late 1980s, developing products for the food ingredient and petroleum industries. Ivanhoe Energy paid $100 million to license Ensyn’s technology in 2005. ‘That was a major capital event and our products have helped pay our way in developing our fuels business.’

Cleantech companies need to focus more on driving revenue growth and profitability, Jenkins says. ‘If you can produce that, smart investors will find you and your business will thrive, regardless of what other failures are happening in the industry.’

The firms that did close financing deals in 2012 show some striking similarities.

Elevance also has a wide range of product streams from waxes and personal care

products to polymers and coatings. ‘Green gasoline’ company Sundrop Fuels headquartered in Lakewood, Colorado is operating on a gasification technology platform, raised $56.3 million to lead all companies in Colorado during the third quarter. Oak Investment Partners led the round, and Exxon Mobil recently invested technologies in Sundrop. Ensyn and Elevance are not ethanol or biodiesel companies but instead focus on ‘drop-in’ fuels: green petrol or renewable diesel fuel that can be blended seamlessly with petroleum products to leverage existing pipeline and refinery infrastructure. All three also have strategic investments from a major oil company.

Total Ventures, the venture capital arm of French oil major Total SA, was part of $100 million in Series C financing at Elevance. Exxon is investing

technology in Sundrop and Ensyn has an investment from Honeywell UOP. Finally, Ensyn and Elevance received capital injections from FELDA and Genting Genomics. These are both Malaysian companies with stakes in the palm oil industry.

As Eiler indicated, the absence of the banks from the biofuels sector has perhaps pushed some companies in the IPO direction prematurely.

The downward pressure this has put on biofuels stocks has also affected private financing deals. The firms that have had success in this atmosphere are focused on drop-in fuels, feature major support from the traditional petrochemical sector, and possess the ability to obtain a mix of venture capital, strategic partners and revenue streams with bankable features. These features are what capital markets seem to be starting to reward. l

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biofuels heading Free weekly bioenergy news!

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Updates will cover new pellet, biogas and biopower plants, new types of

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regulations.

Early Rate Ends February 28! r e t s i g e R 104th AOCS Annual ! w No Meeting & Expo April 28–May 1, 2013

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Short Courses 7 Applied Fundamentals in Interfacial Phenomena (April 27) 7 Fundamentals of Edible Oil Processing and Refining (April 27) 7 Lecithin Functions in Technology and Nutrition (April 27–28) 7 Analytical Techniques: Quality Control, Process Control, and Refinery Optimization (April 27–28)

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The timing couldn’t have been better for last year’s Biofuels International Conference in Antwerp, which took place in November, just after the European Commission released its much talked about proposed changes to its biofuel policy

A generation of change

Ø

yvind Vessia, policy officer for Renewables and CCS policy for DG Energy at the European Commission opened the fifth annual event, leading the debate into the effects these changes would have on existing and future potential producers.

What is clear is that the Commission will not support first generation biofuels post 2020. Therefore it is limiting the amount of first

generation biofuels that count towards the Renewable Energy Directive to current consumption levels of 5%.

‘Unlike first generation biofuels, second generation fuels made from waste resources have the potential to be cheaper than fossil fuels, so we must focus on this market,’ he explained.

‘There will be no public support for first generation biofuels after 2020, and we can’t continue to use public money to support such technologies forever.’

This means that after 2020 biofuels will only receive financial support if they lead to substantial greenhouse

The plant with the bad name Sriram Srinivasan, chief financial officer for JOil (S) Pte, took delegates through an insight into what went wrong with the much failed ‘supercrop’.

There was a lack of understanding, he explained, and expectations were far too high at the early stages of development.

However he assured delegates there is still a future for the sustainable feedstock.

Jatropha yields can be tripled through breeding, genetic modification and best planting practices.

And if planned investments can be realised jatropha oil supply can reach between 2.6 and 4.8 million tonnes by 2020.

biofuels international

gas (GHG) savings and are not produced from crops used for food and feed.

‘Doing nothing was not an option given the seriousness of the indirect land use change impact,’ Vessia told delegates.

‘We are trying to set the framework for advanced biofuels that could be part of 2050 reality, while trying to respect the investments that have already been made.

No more change Regulatory certainty, or lack of it, was one of the big concerns raised at the event.

Just two years after the Renewable Energy Directive

(RED) came into play, massive changes have emerged, further reviews will take place this year, evidence regarding indirect land use change (ILUC) will be considered again in 2017 and 2020 will see the major crossroads.

Yet many feel that having a 10% target for renewable energy in the transport sector by 2020 is as certain as an industry like this is going to get.

A lack of post-2020 targets, however, is understandably creating nervousness. Many people worry that even the 10% target cannot be met, as large scale second generation biofuels cannot realistically be

If planned investments can be realised, the jatropha oil supply can reach between 2.6 and 4.8 million tonnes by 2020 What this implies for the airline industry • Jatropha oil can become a relevant feedstock in the coming years – today only limited volumes (25,000 t) • Oil production forecast (million t) • For 2015 between 1.2 and 1.8 • For 2020 betweet 2.6 and 4.8 • Different scenarios calculated according to yield expectations and growth path • But: Extension of farms requires significant investment – we assume appr. 2 bn USD until 2015 to realise the 2015-2020 oil volumes

january/february 2013 51 November 19, 2012

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biofuels event review deployed before the end of the decade. A full commercial scale plant is often considered to be 160,000 tonnes.

Take the anaology of bread: most people can bake homemade bread very effectively at home, but does this automatically mean they could open a full blown bakery?

A demo plant requires tens of millions of dollars on investment, a pilot plants needs hundreds of millions, but to up this to a commercial scale plant takes a 10-fold increase in investment sums.

One person confident to show this is possible was Sari Mannonen, director of business relations and marketing at UPM Biofuels.

The company has invested

€150 million in a commercial scale industrial plant, capable of producing 100,000 tonnes a year of advanced biodiesel.

The plant, which will be ready in 2014 will process crude tall-oil, a residue of pulp production process, to renewable diesel.

The biofuel produced will reduce GHG emissions by as much as 80% when compared with fossil fuels, and will be able to contribute around 25% of Finland’s biofuels target if sold domestically.

UPM has achieved this without subsidies or grants.

Michelle Marrone, business development manager at Beta Renewables, was another speaker to showcase its example.

The company’s plant, a

€250 million joint venture between Italian engineering and chemicals group Mossi & Ghisolfi and the TPG part of Beta Renewables, is a full scale commercial plant, she told the audience.

The plant will produce 60,000 tonnes of bioethanol a year from a giant reed, arunda donax, as well as rice husks, and wheat stalks.

‘A second geneation idea proven on a pilot is not going to convince bankers or investors at all,’ she explained.

A large demonstration plant is needed to have confidence in the process from an engineering standpoint.

Scaling up de-risks second generation technologies.

As such Beta Renewables has succeeded in creating

Don’t miss out on the March/April issue!

competitive and attractive economics without subsidies.

What is the answer?

Conferences such as this are the ideal opportunity for companies and producers to put their thoughts and ideas forward.

Sadly, it will be impossible to keep everyone happy.

It is anything but a black and white issue – just because a technology uses advanced biofuels, for example, does not make it sustainable.

With continual debate, however, it will hopefully be possible to reach a solution whereby truly sustainable biofuels are produced on a large scale and the market is able to meet the European Commission’s targets. l

Next issue

Editorial to cover: Regional distribution: South America Feedstock focus: Sugarcane Enzymes Retrofit technology Aviation Quality monitoring Lifecycle analysis Cellulosic ethanol Oil seed extraction Plant cleaning technologies Oil majors moving into biofuels Bonus distribution: ILTA conference and tradeshow, Houston, Texas (May) Petro Expo, Washington, US European Algae Biomass 2013

Deadline contributions for advertising: 1st March

For details on advertising please contact Shemin Juma, +44 (0)203 551 5751, shemin@biofuels-news.com For details on editorial contribution please contact Margaret Dunn, margaret@biofuels-news.com, +44 (0)208 687 4126

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driven by nature

BioMCN, first in second generation biofuels BioMCN is the largest second generation biofuels producer in the world. With a current capacity of 250 million liters of bio-methanol per year it is already more than sufficient to fulfil the entire 2010 Dutch biofuel obligation for gasoline.

This makes bio-methanol ideally suited to play an important and lasting role in the transition to sustainable transportation fuels with low CO2 emissions. It can be used as a raw material for other biofuels and fuel additives (e.g. MTBE), and also as a fuel in its own right.

Through an innovative process, bio-methanol is made from crude glycerine- a residue resulting from processing vegetable oils and animal fats. Because bio-methanol is made from a residue, its renewable energy content is entitled to be counted twice in accordance with the Renewable Energy Directive.

BioMCN aims to expand its role as leading producer of second generation biofuels, and to promote the importance of biomethanol as a sustainable source of energy, both in Europe as well as in other parts of the world.

In comparison to regular methanol, bio-methanol reduces CO2 emissions by 78%.

For more information about BioMCN and bio-methanol, please visit our website: www.biomcn.eu

biofuels international

BioMCN, Oosterhorn 10, NL – 9936 HD Farmsum T +31 (0)596 64 77 00

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biofuels biomethanol BioMCN’s Eelco Dekker gives his views on how 2013 may pan out for the biomethanol sector

Keeping it renewable

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ioMCN, the Netherlandsbased biomethenol producer, believes 2013 will be an interesting year for the advancement of its core business.

It has been enjoying increased business from clients and has been part of new renewable energy projects which have advanced during the latter stages of 2012.

‘We’ve seen a double digit increase in demand for biomethanol over the past 12 months,’ says BioMCN’s chief marketing officer Eelco Dekker. ‘It has not only been for the production for our BioMtbe product, an oxygenate created by a reaction between isobutylene and methanol used mainly to raise octane levels in petrol, but also for direct blending with ethanol too.

‘The UK, Germany and the Netherlands have solidified themselves as important markets for biomethanol, but intrigued consumers from Italy and many Scandinavian countries are becoming more apparent, along with more interest coming our way from eastern Europe,’ he adds.

‘I can only reveal that our client base has expanded, via both long-term contracts and spot purchases, and we are confident this will continue for 2013.’

Dekker says that non-fuel applications are also starting to pick up on biomethanol’s potential as the chemical industry seeks moves towards using more biobased building blocks, and BioMCN itself has become heavily involved in using more renewable energy outlets too.

One such initiative is now providing BioMCN with biogas which can then be turned

The Suiker Unie facility has been providing BioMCN with biogas for further biomethanol production since November

into biomethanol for use as fuel, plastics and paints. The biogas comes from a new facility owned by fellow Dutch company Suiker Unie, which opened last November and is expected to deliver 10 million m3 of biogas a year.

‘The biogas will be produced from around 100,000 tonnes of vegetable residues leftover from turning sugar beet into sugars,’ Dekker says, while adding that the first deliveries of biogas via logistics company GasTerra commenced as planned.

BioMCN also revealed that another initiative, known as the Woodspirit project, has received monetary support from the European Commission’s NER300 fund.

Dekker says this support confirms that the EC has confidence in the company’s strategic direction.

‘The proposed changes to the Renewable Energy Directive, potentially capping food crop-based biofuels production from 10% to 5%,

means we are justified on focusing on waste and residues as feedstock,’ reveals Dekker, who thinks a concern that may arise from a long debate could be the increase of non-certified products entering the European Union ‘through the back door’.

‘We are having discussions with several member states that may need to change the way they go about producing their biofuels,’ he adds.

Woodspirit, which was borne from a consortium consisting of BioMCN, Siemens, Linde, and Visser and Smit Hanab, has received €199 million in NER300 grants to help with the construction of the largescale biomass refinery.

‘The application for this grant was submitted via the Dutch Ministry of Economic Affairs in 2011, so it was great to get conformation,’ says Dekker.

‘We are confident this will make a significant contribution to the availability of sustainable and advanced biofuels in the Netherlands. It will also have a

positive impact in reducing CO2 emissions and on meeting the 2020 EU climate objectives.’

Despite all these new projects going on BioMCN is keeping the internal research going to find new ways of developing biomethanol.

‘Procurement of crude glycerine is an ongoing commercial process-based business with a range of international suppliers,’ Dekker explains. ‘But, besides optimising our crude glycerine process, we continuously research additional and alternative feedstock supplies that can be converted into biomethanol.’

Dekker also adds that the company is to broaden its range of waste and residue streams, plus other forms of sustainable renewable carbon sources, as it will ‘enable us to enhance our current and future capacity while ensuring more flexibility to better manage fluctuations in price and availability.’ l

54 january/february 2013 biofuels international

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