Biofuels International November/December 2016

November/December 2016 Issue 6 • Volume 10

international

Reaching for the stars

Main obstacles facing the biorefining industry

Changing the point of obligation in the RFS Why biofuels advocates should care

Regional focus: biofuels in southeasxxxxxralasia Regional focus: biodiesel in North America

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November/December 2016 Woodcote 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@woodcotemedia.com EDITOR Liz Gyekye Tel: +44 (0)208 687 4183 liz@woodcotemedia.com DEPUTY EDITOR Ilari Kauppila Tel: +44 (0)208 687 4126 ilari@woodcotemedia.com INTERNATIONAL SALES MANAGER Matthew Clifton +44 (0)203 551 5751 matthew@biofuels-news.com US SALES MANAGER Matt Weidner +1 610 486 6525 mtw@weidcom.com PRODUCTION Alison Balmer Tel: +44 (0)1673 876143 alisonbalmer@btconnect.com SUBSCRIPTION RATES A one-year, 6-issue subscription costs £150/€210/$275 Contact: Lisa Lee Tel: +44 (0)208 687 4160 Fax: +44 (0)208 687 4130 marketing@woodcotemedia.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

biofuels international

c ntents 3 News 11 Incident report 12 Plant update 14 Current price index 16 Market analysis 18 Better off together

Integrating purchasing into a maintenance management system makes for a much more streamlined process 20 Big Interview

A UK-based start-up company is recycling waste coffee grounds into advanced biofuels 22 Synthesised solutions

Advanced catalysis technologies will help bring biofuels production to the next level 24 Understanding biodiesel

What goes into making biodiesel happen?

26 Going for gold

The US biodiesel industry faces challenges, but also holds big potential 28 Changing the point of obligation in the RFS

Joe Jobe gives his opinion on why biofuels advocates should care about it 32 Biorefining: Adding value to fractions and sidestreams

The process of biorefining is not only about fuel outputs 35 Green conversion

Catalysing global bioeconomy post-Paris Agreement 36 Reaching for the stars

Main obstacles facing the biorefining industry 38 Post-2020 EU vision

The great and the good met in Ghent, Belgium, at the Biofuels International Conference

November/December 2016 Issue 6 • Volume 10

international

Reaching for the stars

Main obstacles facing the biorefining industry

Changing the point of obligation in the RFS Why biofuels advocates should care

40 How to find the fund

The options to consider when looking for project funding

Regional focus: biofuels in southeasxxxxxralasia Regional focus: biodiesel in North America

Front cover image: ©jankovoy. Image from bigstockphoto.com

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biofuels comment

A year of the unexpected

Liz Gyekye Editor

I

n life, expect the unexpected. This was a quote that BBC journalist Nick Robinson wrote in a newspaper column last year on his predictions for 2016, and true to form his phrase has lived up to expectations.

Donald Trump’s US presidential victory took everybody by surprise in November. Within hours of Trump’s triumph, congratulatory messages poured in from leaders around the world, both friend and foe alike, even as security councils convened emergency meetings and dumbfounded diplomats struggled to understand the implications of Trump’s win.

His victory will loom large over the UN climate talks.

The President-elect has previously said he does not believe in climate change science, and has promised to pull the US out of the Paris Climate Agreement, which came into force November.

At the same time as the agreement was unveiled, a number of the largest oil companies, including Royal Dutch Shell and BP had come together to commit to spend £1bn (€900m) over the next ten years to help fight climate change.

Withdrawing from the Paris Agreement is something

Trump has promised to do in his first 100 days, though experts believe it would take at least four years to unpick it because the accord is now law. Campaigners warned that the US risked being left behind on the economic opportunities of switching to clean energy.

“Trump’s election is a disaster, but it cannot be the end of the international climate process,” said May Boeve, executive director of environmental group 350. org. “We’re not giving up the fight and neither should the international community.

Trump will try and slam the brakes on climate action, which means we need to throw all of our weight on the accelerator.”

Nevertheless, many innovations and great things are happening within the biofuels sphere, and Trump’s backing of economic nationalism might help the biofuels’ sector in the US as he backs home-grown biofuels. Some US-based biofuels experts have welcomed his presidency.

Bob Dinneen, president and CEO of the Renewable Fuels Association, said Trump has “repeatedly” expressed strong support for both ethanol and the Renewable Fuel Standard (RFS). He added: “He understands the importance

Connect with more than 1,440 members on Biofuels International’s Linkedin page

of clean, domestic energy resources and the economic power of value-added agriculture. We are confident Trump will continue to support the expanded production and use of fuel ethanol.”

Ethanol industry’s trade association Growth Energy’s CEO Emily Skor echoed Dinneen’s views, but also extended a hand to Clinton.

“Trump has publicly supported the RFS throughout his campaign, and consistently opposed any efforts to roll back this policy. In fact, the RFS was one issue where both candidates found common ground, and we applaud their recognition of the importance that biofuels, like ethanol, play in fuelling our country,” said Skor.

Adam Monroe, president for Americas at Danish bio-solutions developer Novozymes, said the company supports Trump’s “ambitions” and that he understands the need for “good policy”.

These are uncertain times. Yet, one thing that is for certain is that Biofuels International will continue to update you on all the interesting aspects of the industry.

Best wishes, Liz

Join 1,000 followers of Biofuels International at @biofuelsmag

2 november/december 2016 biofuels international

bioethanol news Shell: Oil could peak in five years A senior executive for oil giant Royal Dutch Shell claimed demand could reach its peak as early as 2021, much sooner than anticipated by other analysts.

“We’ve long been of the opinion that demand will peak before supply,” Simon Henry, Shell’s CFO said. “And that peak may be somewhere between 5 and 15 years hence, and it will be driven by efficiency and substitution, more than offsetting the new demand for transport.”

If renewable energy and other disruptive

technologies such as electric cars continue their rapid advance, petroleum use will peak in 2030, the World Energy Council has forecast. Michael Liebreich, founder of Bloomberg New Energy Finance, predicts a peak in 2025 and decline in the 2030s.

“For the first time, oil companies have to think seriously about the future,” Alastair Syme, an oil analyst at Citigroup told Bloomberg.

Drillers that even a couple of years ago believed “every molecule of oil we produce will have a market,” have come to realise they “can afford to bring on only the

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most competitive assets.”

However, Shell’s outlook is at odds with some of its biggest competitors, who are still commenting about decades of growth. Exxon Mobil, the largest publicly traded oil company, said in its annual outlook that “global demand for oil and other liquids is projected to rise by about 20% from 2014 to 2040.” Saudi Arabia, the biggest producer, with enough reserves to last it 70 years, has said demand will continue to grow, boosted by consumption in emerging markets.

Henry said that Shell will be in business for “many

reliability

decades to come” because it is focusing more on natural gas and expanding its newenergy businesses including biofuels and hydrogen.

“Even if oil demand declines, its replacements will be in products that we are very well placed to supply one way or the other, so we need to be the energy major of the 2050s,” Henry said. “That underpins our strategic thinking. It’s part of the switch to gas, it’s part of what we do in biofuels, both now and in the future.”

Shell sees “oil and gas as being part of the energy mix for many decades to come,” it said in a statement. l

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bioethanol news BP invests $30m in Fulcrum BioEnergy Fulcrum BioEnergy, a US-based wasteto-jet fuel specialist, and oil giant BP have signed a major strategic partnership that includes a $30 million (€27m) equity investment in Fulcrum by BP. With Fulcrum’s first plant under construction, the company says the partnership accelerates the construction schedule for its next renewable jet fuel plants.

Fulcrum and Air BP, the aviation division of BP, have also agreed to terms on a 500 million gallon jet fuel offtake agreement that will provide Air BP with 50 million gallons per year of lowcarbon, drop-in jet fuel.

Air BP will also have the opportunity to provide fuel supply chain services for the blending, certification,

and delivery of Fulcrum’s jet fuel to commercial and military aviation customers.

The transaction represents Fulcrum’s fourth major corporate investment and partnership following similar deals with United Airlines, Waste Management, and Cathay Pacific.

“Entering into this strategic relationship with a global oil and gas company enhances the value of Fulcrum’s waste to fuel platform,” said E. James Macias, Fulcrum’s president and CEO. “This allows us to accelerate development of our second and third plants. With BP’s expertise in refining and fuel services, their partnership provides value beyond the investment, fuel offtake, and logistic services,” he added.

With the support of BP and its other strategic partners, Fulcrum is accelerating the development of additional, larger-scale projects across

(L-R) Jim Macias, Fulcrum President and CEO, and David Gilmour, BP VP technology, commercialisation and ventures announcing new strategic partnership

North America that will have the capacity to produce more than 300 million gallons annually of renewable transportation fuels.

Jet fuel produced from Fulcrum’s plants will be costcompetitive with fossil jet fuel, providing airlines with

an attractive, low-carbon alternative, the company said.

Fulcrum’s jet fuel can also provide significant environmental and sustainability benefits, including reducing greenhouse gas emissions by more than 80% compared to fossil jet fuel. l

Peru imposes anti-dumping tariffs on Argentine biodiesel Peru is the latest country to place anti-dumping tariffs on imports of biodiesel from Argentina for a period of five years after complaints of unfair competition, Peru’s market regulator, Indecopi, said.

According to Reuters, Peru, the second-largest export market for Argentine biodiesel, passed the measure “to prevent the imports of the biofuel to continue harming national production,” said Indecopi.

Under the instruction, different companies will be charged different rates, with the Argentine subsidiaries of Cargill, Bunge and Noble being charged $134.70 (€123.44) per tonne, $141.40 per tonne, and $152.70 per tonne, respectively.

Louis Dreyfus, along with others, will be charged the highest rate of $191.60.

According to Reuters, the Argentine In 2013, the EU imposed definitive Biofuels Chamber called the rule a anti-dumping duties on imports of “protectionist measure against the biodiesel from Argentina and Indonesia.

World Trade Organization’s (WTO) However, in September 2016, an EU international norms” and said it would court annulled anti-dumping tariffs the take legal action to force the Peruvian bloc had applied to Argentine biodiesel government to reverse its decision. imports, after the WTO ruled in favour “We are the main supplier of biodiesel of the South American country, calling for Peruvian transport, and this unjustified the measures protectionist. Court cases decision will have consequences for are still continuing on the matter. l their economy since domestic prices for fuel will rise,” said Luis Zubizarreta, the group’s president.

Argentina and Indonesia were responsible for about 90% of the biodiesel imports to the European Union (EU) in 2012. By mid-2012, the EU accused Argentina and Indonesia of dumping their biodiesel into the EU. Peru complains of unfair biodiesel competion from Argentina

4 november/december 2016 biofuels international

bioethanol news Gevo produces wood-waste derived jet fuel Gevo has announced that it has produced the world’s first cellulosic renewable jet fuel that is specified for use on commercial flights.

The advanced biofuels company produced more than 1,000 gallons of alcohol-to-jet fuel (ATJ) fuel by converting renewable isobutanol made from cellulosic sugars derived from wood waste by using its patented technologies.

Gevo said that ATJ is in line with the ASTM D7566 specification that allows its usage on commercial flights.

Using the cellulosic jet fuel, Alaska Airlines is expected to run the first commercial flight in the next few months.

Gevo CEO Patrick Gruber said: “Gevo’s production of this cellulosic ATJ removes all doubt that cellulosic sugars can be successfully converted into isobutanol using Gevo’s technology. Gevo’s ATJ technology then reliably converts isobutanol into renewable jet fuel, regardless of the sugar source. I’m looking forward to seeing this fuel power an Alaska Airlines flight in the near future.”

Alaska Airlines has already flown two commercial flights on Gevo’s ATJ in June of this year.

For the June flights, the ATJ was derived from isobutanol

produced at Gevo’s Luverne production facility.

Gevo has produced the cellulosic ATJ by partnering with the Northwest Advanced Renewables Alliance

(NARA), which supplied the sugars that were derived from forest residuals in the Pacific Northwest.

NARA is a five-year project supported by the US

Department of Agriculture, National Institute of Food and Agriculture, and is comprised of 33 member organisations from industry, academia and government laboratories. l

Dr. Jeremy Javers, Ph.D. Research & Development St. Joseph, MO

Cellulosic Technology

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When you’re looking for new technologies in the race to maintain your competitive advantage, you’re looking for something that is proven – something with clear results. That’s why Jeremy and the rest of ICM’s Research and Development team were the first in the market to develop Generation 1.5 Grain Fiber to Cellulosic Ethanol. It’s just another way ICM is continuing to add value to the feedstock already being processed in existing ethanol plants. That’s where we put our energy.

icminc.com/biofuels Gevo has produced more than 1,000 gallons of alcohol-to -jet fuel

biofuels international

november/december 2016 5

bioethanol news Trump victory rattles biofuel market US President-elect Donald Trump’s victory in the country’s presidential election sent biofuels shares tumbling in early November, while propping up oil refiners’ stocks.

Shares of US independent refiners jumped, including CVR Refining, which saw the largest upturn (26% to $8.55 (€7.8) in its share prices in the company’s history.

Renewable fuel producers, such as Green Plains and Renewable Energy Group, took a dive, along with the Renewable Identification Number (RIN) prices.

Investors are speculating that the Trump victory might bring further upset to US biofuel market, as he might seeks to change the Renewable Fuel Standard (RFS) to get rid of the RIN compliance credits.

Oil refiners have long opposed the costs of compliance with the Environmental Protection Agency (EPA) programme, and in September Trump campaign said he

would look into abolishing the system of buying and selling biofuel blending credits.

However, the statement has since then been retracted, and according to Bloomberg Trump himself has said he supports ethanol.

The President-elect has received congratulations and approval from the US biofuels industry. The RIN system has few friends within the oil refiners, and people such as Carl Icahn, owner of CVR Refining, has repeatedly called for its elimination.

“The government shouldn’t be going in and deciding what business should go out of business as the EPA does in the refineries,” Icahn told Bloomberg TV. “They should not be doing that, but they should be going in and helping you in a lot of ways.”

The Trump administration could use waivers to reduce costs for refiners to comply with the programme, said Timothy Cheung, VP at ClearView Energy Partners in Washington.

“Donald Trump’s victory increases the odds that the RFS will be reformed,”

World’s first biological foam control for sugarcane ethanol launched Danish biological solutions developer Novozymes has launched the Fermax enzyme protease that prevents foam development during sugarcane ethanol fermentation while delivering improved control and replacing chemicals.

For an average size plant, trialling partners also experienced a cost reduction of up to 20% when using Fermax, as compared with use of chemicals, Novozymes reported.

“This is the first ever biological solution that prevents foam development during the fermentation process, which is a critical issue for producers,” said Daniel Cardinali, Novozymes head of sugarcane platform and biorefining for Latin America.

“With Fermax, sugarcane ethanol producers can use sustainable enzyme technology to lower their costs, reduce the need for harsh chemicals, and increase the amount of ethanol they can produce in their fermentation tanks,” he added.

In the fermentation process, the yeast produces ethanol and carbon dioxide, which creates foam that can cause overflow of the fermentation tank and lead to production losses. l

Rob Barnett, an analyst at Bloomberg Intelligence in Washington, said. “Trump spoke favourably of the RFS during his campaign, but many Republican lawmakers in Congress have been pushing both repeal and reform bills.” l

US President-elect Donald Trump

ORNL turns CO2 into ethanol

In a new twist to waste-to-fuel technology, scientists at the US Department of Energy’s Oak Ridge National Laboratory (ORNL) have developed a new way to turn CO2 into ethanol.

The finding involves nanofabrication and catalysis science, using an electrochemical process that produces tiny spikes of carbon and copper to transform greenhouse gas into biofuel.

“We discovered somewhat by accident that this material worked,” said ORNL’s Adam Rondinone, lead author of the team’s study published in ChemistrySelect.

“We were trying to study the first step of a proposed reaction when we realised that the catalyst was doing the entire reaction on its own,” he added.

The team used a catalyst made of carbon, copper, and nitrogen and applied voltage to trigger a complicated chemical reaction that essentially reverses the combustion process.

With the help of the nanotechnology-based catalyst, which contains multiple reaction sites, the solution of CO2 dissolved in water turned into ethanol with a yield of 63%.

Typically, this type of electrochemical reaction results in a mix of several different products in small amounts. l

6 november/december 2016 biofuels international

biodiesel news Two Florida men given lengthy prison sentences for biodiesel fraud

Two Florida men were each sentenced to more than a decade in prison in a more than $46 million (â‚Ź41m) biodiesel fraud scheme, the US Department of Justice reported.

Thomas Davanzo of Estero and Robert Fedyna of Naples were sentenced in November for a scheme with co-conspirators at Gen-X Energy Group in Pasco, Washington, and subsidiary Southern Resources and Commodities in Dublin, Georgia, the Justice Department said in a statement.

The sentencing comes as the White House reviews a plan from environmental regulators on the amount of renewable fuel that companies must use next year.

The sentencing is the latest in a string of such cases involving the national biofuel programme.

Davanzo and Fedyna were accused of buying fuel that had already been sold with compliance credits known as Renewable Identification Numbers, or RINs, used for the country’s biofuel programme. The conspirators fraudulently claimed more credits on the fuel, the statement said.

Davanzo and Fedyna were sentenced to 121 months and 135 months in prison, respectively. Gen-X did not respond immediately to a request for comment. Southern Resources and Commodities could not be reached as Biofuels International went to press.

From March 2013 to March 2014, the Justice Department statement said, the conspirators generated at least 60 million fraudulent biofuel compliance credits. Oil companies use RINs to prove they are meeting government mandates to use biofuels including ethanol and biodiesel.

Sale of those fraudulent credits to third parties netted the conspirators

biofuels international

at least $42 million. Gen-X received another $4.4 million in false tax credits for the fuel, the Justice Department said.

The US government in recent weeks has announced a string of sentencings and settlements due to RIN fraud. Last month, two men pleaded guilty in one of the most recent examples of such fraud.

The case was investigated by the US Secret Service, the Environmental Protection Agency, and the Internal Revenue Service.

However, the announcement of the jail sentences may trigger criticism of the US Renewable Fuel Standard. Opponents of the programme say the RIN market is susceptible to such fraud. l

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biodiesel news Role of sustainable biodiesel in Europe debated The European Oilseed Alliance, the European Biodiesel Board, and the Vegetable Oil and Protein Meal Industry (FEDIOL) have discussed the role of sustainable biodiesel in the low-carbon economy post-2020 at a dinner debate held at the European Parliament.

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The event, held in early October, allowed EU stakeholders and policymakers to share Californian experiences through the participation of Professor Stephen Kaffka from the University of California.

Opening the discussions, MEP Françoise Grossetête, VP of the EPP Group in the European Parliament, brought up the challenges that the EU biodiesel producers and farmers are facing following the European Commission’s announcement of a gradual phase-out of crop-based biofuels.

“The long-term stability of the regulatory and policy framework is essential to secure the investments that were made in the European biodiesel sector – whose development was encouraged by the European legislator – and for promoting the development of advanced

technologies,” she said.

European farmers also expressed their serious concerns over the proposed phasing out of first-generation biofuels. “In times of dramatic and existential challenges for EU agriculture, taking away the outlet of biodiesel for oilseed production would represent a new blow for European farmers, especially in less productive regions,” said Arnaud Rousseau, chair of the Oilseed and Protein Crops Working Party of COPACOGECA. “Furthermore, the biodiesel outlet helps reduce oilseed price volatility, while safeguarding biodiversity.”

European biodiesel production was developed mainly on mandatory setaside lands. This has allowed to significantly reduce the EU protein deficit and to guarantee an income for farmers, while producing ILUC-free biodiesel. As such, Yves Madre, co-founder of the think tank FarmEurope, underlined that the large majority of biodiesel produced from European feedstocks has not had any ILUC emissions.

Moreover, he pointed out, “European-feedstocksourced biodiesel induces the production of 7 million metric tonnes of additional protein feed materials annually, thus reducing feed imports and attributing an ILUC credit to biodiesel.” l

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8 november/december 2016 biofuels international

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Four famous fans From multi-million dollar investment to biodieselpowered muscle cars, celebrities are getting onto the biofuel wagon

By Ilari Kauppila Biofuels have come a long way. They’ve gone from being a small, relatively underground business to a recognised and debated part of mainstream energy and fuel markets. While biofuels are not actually yet implemented anywhere near as much as the industry would like to see, it would take a very hard-line opponent to deny that biofuels have made it out there. They might not be soaring yet, but the wings are most definitely flapping.

It is no surprise, therefore, that biofuels have also found their ways to the knowledge of the celebrated and the famous. While it would not be hard to find high-profile opponents, there are also those who have taken a shine to biofuels and are supporting them, one way or the other.

But who are the famous faces in the biofuels club?

Gates invested $14 million (€12.4m) in US biofuels specialist Renmatix. The self-made billionaire is no stranger to environmental causes as he has – among other things – pledged $2 billion of his personal wealth to combating climate change.

His affiliate company Gates Ventures also invested $15 million in waste-to-biofuel firm KiOR in 2013. Gates has also backed algae fuel company Sapphire Energy and ethanol producer Pacific Ethanol.

“To effectively address climate change, we need to develop an energy infrastructure that doesn’t emit greenhouse gas and is cost competitive. A critical component in this effort must be to decarbonise the industrial sector,” Gates said back in September.

“Another is the possibility of cost competitive biofuels.

Renmatix provides an innovative process that is an exciting pathway to pursue.”

pledged to invest 100% of the profits of his transport companies over the next ten years into clean fuels, renewable energy and sustainable development.

His pledge has borne fruit.

The Virgin Green Fund, set up to invest in green energy and resource efficiency, has been an active supporter of renewable jet fuel. In 2008 Virgin Atlantic became the first commercial airline to fly a biofuel-powered flight. In 2016, the airline announced with its partner Lanzatech a breakthrough in producing jet fuel from waste gas in what Branson described as a “game changer for aviation”.

Daryl Hannah

Daryl Hannah

Willie Nelson

Willie Nelson

Sir Richard Branson

Sir Richard Branson

Bill Gates

Bill Gates One member of the biofuels superclub is business magnate and Microsoft co-founder Bill Gates. Last September,

biofuels international

Number two on our list is entrepreneur, investor, world record holder, and who-knows-what-else Richard Branson. The businessman’s environmental and sustainability ventures are nearly as diverse as the companies in his Virgin network. In 2006, Branson

biodiesel’s potential, Nelson and his wife became partners in two Pacific Biodiesel plants. In 2005, Willie Nelson Biodiesel was founded and in 2012, Nelson reached an agreement to start production and distribution of BioWillie with Pacific Biodiesel.

American country musician and poet Willie Nelson is known for many things. He was one of the leading figures in the development of the outlaw country genre of music, owed a multimillion dollar debt to the US Internal Revenue Service in the early 90s, and is an active advocate of the legalisation of marijuana. He also owns his own biodiesel company producing the BioWillie brand fuel.

Nelson originally became interested in biofuels in 2004, when his wife Annie D’Angelo bought a diesel-powered car that she fuelled exclusively with biodiesel. Impressed by

Actress Daryl Hannah is best known for her roles in Blade Runner, Roxanne, and Kill Bill. She is also a long-time supporter of environmental causes, and an avid advocate of biofuels. In fact, she used to be famous for driving a matte-black 1983 Chevrolet El Camino running on B100 biodiesel. She sold the car in 2007, but the buyer auctioned the bio-beast off again 2011 due to the car not exactly being one to accommodate a growing family. Who knows, maybe it’ll pop up back on the market again in a year or two?

Hannah has driven the El Camino and now she is driving biofuel development. In 2006, alongside other biofuels advocates, she founded Sustainable Biodiesel Alliance (SBA) to promote sustainable biodiesel practices, including the harvesting, production, and distribution of biodiesel fuels. SBA has created a certification process for evaluation and branding of sustainable biodiesel production. l

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biofuels business brief

People on the move Henrik Erämetsä from Neste to co-chair EU initiative for advanced biofuels in aviation Henrik Erämetsä, head of aviation regulation at Neste, has been appointed co-chair of the “European Advanced Biofuels Flightpath” EU initiative as a representative of the biofuels industry.

Erämetsä will co-chair together with Ruben Alblas from KLM Royal Dutch Airlines.

“Aviation is the most rapidly growing segment of traffic.

Sustainable biofuels along with reduced fuel consumption of aeroplanes and increased operational efficiency offer us means to lower the carbon footprint caused by increased aviation in the EU. I am glad to be able to use my expertise in pursuing the targets,” said Erämetsä.

The initiative supports the goals of the Paris Climate Agreement and the EU targets set for reduction of greenhouse gas emissions.

It was launched in 2011 by the European Commission,

Airbus, leading European airlines, and biofuel producers to promote the production, distribution, storage, and use of sustainably produced and technicallycertified aviation biofuels.

The initiative aims at getting biofuels to the market faster, through the construction of advanced biofuel production plants in Europe, and at setting a target level to the amount of sustainable biofuels used in European civil aviation.

Biofuel companies taking part in the initiative at the moment are Neste, Biochemtex, Honeywell UOP, Swedish Biofuels, and Total.

Airlines involved in the scheme include KLM, Air France, British Airways, and Lufthansa.

Vivergo Fuels appoints Richard Royal as new head of government affairs Hull-based Vivergo Fuels, the UK’s largest producer of bioethanol and high protein animal feed, has appointed

of Renewable Fuel Association appoints 2017 board directors’ officers The Renewable Fuels Association (RFA) has elected the officers US. for its board of directors at its annual meeting in Minneapolis, at er manag l genera rson, Hende Mick The RFA elected Commonwealth Agri-Energy, as chairman of the board. ky, Henderson’s ethanol plant, located in Hopkinsville, Kentuc of s bushel produces 35 million gpy of ethanol from 12 million corn. es The facility, which began production in 2004, also produc tonnes 0 110,00 grains, dried s 107,000 tonnes per year of distiller rade per year of CO2, and 3,000 tonnes per year of animal feed-g distillers’ corn oil.

Henderson has been with Commonwealth Agri-Energy since 2006.

2003 and has served on the RFA board of directors since the as “I am humbled that my peers have selected me Renewable Fuels Association chairman of the board of directors,” said Henderson. “The RFA’s vast resources and knowledge will continue to be essential as we fight back against our well-funded critics.”

Additionally, RFA elected Neil Koehler of Pacific Ethanol as vice chairman, Jim Seurer of Glacial Lakes Energy as treasurer, and Bob Dinneen of RFA as president.

Richard Royal, new head of government affairs at Vivergo

Richard Royal as its head of government affairs.

Royal will spearhead the company’s ongoing call to government for the swift, coordinated rollout of E10 petrol in 2017.

Originally from East Yorkshire, Royal, who was also a parliamentary candidate at the 2015 General Election, brings more than 15 years’ experience in public affairs to Vivergo Fuels.

He has worked in seniorlevel roles with the Royal Pharmaceutical Society, the Food and Drink Federation, Britvic, and Ladbrokes.

Commenting on the appointment, Mark Chesworth, managing diretor at Vivergo Fuels, said: “It is a crucial time for E10 and we’re delighted to welcome Richard to the company. His expertise and extensive political knowledge will be vital as we continue to call on the government for the swift, coordinated rollout of E10 to benefit both the environment and the economy.”

Alongside his professional background, Royal is a competitive swimmer who recently swam the English Channel as part of a relay team which raised more than £12,000 for spinal injury charity Aspire.

NBB appoints Donnell Rehagen as CEO The National Biodiesel Board (NBB) has named Donnell Rehagen as the

trade group’s new CEO. Rehagen was named interim CEO in June after serving 12 years as NBB’s chief operating officer (COO).

As COO, Rehagen managed the implementation and execution of NBB’s budget and the day-to-day responsibility of managing the organisation’s programme managers, staff, and contractors.

Additionally, Rehagen has led the annual National Biodiesel Conference & Expo, NBB’s signature event.

Prior to joining NBB in 2004, Rehagen was the fleet administrator for the Missouri Department of Transportation, where he was responsible for all aspects of the department’s $400 million (€365.3m) fleet including implementation of their biodiesel (B20) use programme.

“I have a passion for this industry,” Rehagen said. “I’m proud to be a part of the team that has helped lead biodiesel’s growth to become the first advanced biofuel to reach full commercialisation, but I also recognise the challenges we face. It is incumbent upon us as an organisation to define and manage a path that ensures we continue the industry’s ascent.”

Rehagen has a Master’s in public administration from the University of Missouri – Columbia and a Bachelor’s Degree in computer information systems from Southwest Missouri State University. l

Donnell Rehagen is the fourth CEO of NBB’s 25-year history

10 november/december 2016 biofuels international

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

Location

21/10/2016 Thailand

Company

Incident information

Rajburi Ethanol Co.

In Thailand, the government’s Pollution Control Department (PCD) is suing Rajburi Ethanol for allowing molasses wastewater to leak into the Mae Klon River, devastating the waterway’s giant stingray population.

According to the PCD, tests have indicated that wastewater leaked into the river in Ban Pong district of Ratchaburi, polluting it and killing aquatic life including many native giant stingrays between 1 and 7 October.

An illegal ethanol warehouse in Harare, Zimbabwe, went up in flames, leaving eight people, including three firemen, critically injured.

Officials considered flying the firemen to South Africa to receive special treatment due to the severity of their injuries.

Biofuels International was unable to confirm the status of the other five injured or whether the company would face prosecution.

16/10/2016

Harare, Zimbabwe

N/A

12/10/2016

Indiana, US

Triton Energy

11/10/2016

Ontario, Canada

N/A

A truck transporting ethanol and diesel fuel rolled over after hitting a central reservation, near London, Ontario.

The driver was ejected from the vehicle and killed in the accident that caused both fuel tanks to rupture.

7/10/2016 Iowa, US

Southwest Iowa Renewable Energy

A truck driver was critically injured at a Council Bluffs, Iowa, ethanol plant after his truck burst into flames as it was being loaded with ethanol.

The driver died of his injuries later in the month. The plant was not seriously damaged.

The cause of the fire was not known as Biofuels International went to press.

4/10/2016 Iowa, US

Western Dubuque Biodiesel

Western Dubuque (WDB) has agreed to pay $6 million (€5.3m) to resolve Renewable Fuel Standard programme violations for generating renewable identification numbers (RINs) using unapproved feedstocks.

In 2011, WDB reprocessed already sold biodiesel purchased from NGL Crude Logistics, generating a second fraudulent set of RINs. NGL is currently undergoing a legal complaint process for its part in the fraud.

biofuels international

The owners of an Indiana biofuel producer pleaded guilty to conspiracy, fraud, and false statements for participating in a scheme that generated more than $60 million (€54m) in fraudulent tax credits and Renewable Identification Numbers (RINs).

Fred Witmer and Gary Jury pleaded guilty, with Witmer agreeing to a 57 months and Jury to 30 months incarceration.

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biofuels plant update

Biodiesel in North America Ag Processing Location Sioux City, Nebraska, US End product Biodiesel Feedstock Soybean Capacity 30 million gpy Construction / expansion / Ag Processing, a Nebraska, US-based acquisition soyabean processor, is set to expand its biodiesel plant near Sioux City Project start date November 2015 Investment $38 million (€35.7m) Comment Ag Processing’s Port Neal plant was the first commercial-scale biodiesel plant in the US in 1996

Biodico Westside Location Five Points, California, US End product Biodiesel Feedstock Fats and oils Capacity 20 million gpy Construction / expansion / Biodico Westside, a California-based acquisition biorefinery producer, has opened its 20 million gpy biodiesel production facility Completion date December 2015

Biox Location Sombra, Ontario, Canada End product Biodiesel Feedstock Animal fat, used cooking oil Capacity 50 million lpy Construction / expansion / Biox has acquired the Sombra biodiesel acquisition facility from Methes Energies Canada Completion date June 2016 Investment $4.5 million (€3.9m) Comment Biox is planning to upgrade the facility to improve production efficiencies

Co-op Power Location Greenfield, Massachusetts, US End product Biodiesel Feedstock Used cooking oil Capacity 3.5 million gpy Construction / expansion / Co-op Power, a consumer-owned acquisition sustainable energy cooperative, has brought online its new biodiesel plant in Greenfield Completion date January 2016 Investment $3.5 million (€3.1m)

Crimson Renewable Energy Location End product Feedstock Capacity Construction / expansion / acquisition

Completion date

Kern County, California, US Biodiesel Used cooking oil, inedible materials 24 million gpy Crimson Renewable Energy has completed the expansion of its ultralow-carbon biodiesel production facility that the company hopes will lead to a tripling of production October 2016

Flint Hills Resources Location Beatrice, Nebraska, US End product Biodiesel Feedstock High FFA materials Capacity 50 million gpy Construction / expansion / Flint Hills Resources is preparing for the acquisition launch of its Duonix plant in Nebraska Project start date November 2015

Biox/World Energy Location Houston, Texas, US End product Biodiesel Capacity 90 million gpy Construction / expansion / Biox Corp. and Boston-based acquisition biodiesel company World Energy have entered into a 50/50 joint venture to acquire and operate a Houston biodiesel production facility Designer/builder Green Earth Fuels Project start date July 2016 Investment $20 million (€18m)

Hero BX Location Moundville, Alabama, US End product Biodiesel Capacity 15 million gpy Construction / expansion / Hero BX, a US biodiesel producer, acquisition has acquired the assets of the former Veros Energy biodiesel refinery and plans to expand the facility Project start date November 2015 Completion date Early 2016

12 november/december 2016 biofuels international

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Jatrodiesel Location Annawan, Illinois, US End product Biodiesel Feedstock Distillers’ corn oil Capacity 5 million gpy Construction / expansion / A supercritical biodiesel plant in acquisition Illinois, US, designed and built by Jatrodiesel, has been commissioned and is now operational Completion date November 2015

Kolmar Location Connecticut, US End product Biodiesel Capacity 15 million gpy Construction / expansion / Kolmar Group, a Switzerlandacquisition based petrochemicals specialist, has acquired a Greenleaf Biofuels biodiesel plant in Connecticut Completion date January 2016

Terra Biodiesel Holding Location St. Joseph, Missouri, US End product Biodiesel Construction / expansion / Terra Biodiesel Holding has closed the acquisition sale of its Missouri, US, biodiesel plant to an undisclosed strategic buyer Completion date July 2016

World Energy Location Natchez, Mississippi, US End product Biodiesel Capacity 72 million gpy Construction / expansion / US biodiesel producer World Energy acquisition has acquired from Elevance Natchez (ENI) a 72 million gpy biorefinery located on the Mississippi River Completion date September 2016

Renewable Energy Group Location Madison, Wisconsin, US End product Biodiesel Capacity 20 million gpy Construction / expansion / Renewable Energy Group has formally acquisition opened its REG Madison biorefinery and also announced upgrades to the plant Designer/builder Sanimax Energy Completion date April 2016 Investment $7 million (appr. â‚Ź6.2m) Comment REG signed agreement to purchase the plant from Sanimax in February

SBI BioEnergy Location Edmonton, Alberta, Canada End product Biodiesel Feedstock Canola oil, animal fat Capacity 10 million lpy Construction / expansion / SBI BioEnergy plans to commercially acquisition produce a new biofuel capable of completely replacing diesel at a demonstration facility Project start date March 2016 Completion date Late 2016 Comment SBI hopes to have a full-scale 240 million lpy plant up by 2018

biofuels international

University of Kentucky Center for Applied Energy Research Location End product Construction / expansion / acquisition

Designer/builder Project start date

Zhengzhou, China Algae Investment The University of Kentucky is constructing a five-acre algae production facility to test new photobioreactor and provide feedstock for biofuels Lianhenghui Investment February 2016

*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 liz@woodcotemedia.com

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biofuels market analysis SCB Commodity Brokers global biofuels prices Prices quoted: 31/10/16 Product

Mid price

URL: www.starcb.com

Product

Mid price

EU biodiesel RED ($/mt)

US biodiesel B100 ($/gal)

FOB ARA RME

1,015.25

Houston SME

3.276

FOB ARA SME

990.25

Houston TME

3.226

FOB ARA PME

950.25

NY Harbour SME

3.346

FOB ARA FAME 0

975.25

NY Harbour TME

3.286

Mid West SME

3.266

FOB ARA FAME -10

1,015.25

EU biodiesel non-RED ($/mt)

US ethanol ($/gal)

FOB ARA RME

1,000.25

NY Harbour Barges

1.785

FOB ARA SME

975.25

Argo ITT Illinois

1.680

FOB ARA PME

935.25

FOB USGC

1.700

FOB ARA FAME 0

960.25

Rule 11 TWS (Railcar)

1.680

1,000.25

Rule 11 NWS (Railcar)

1.660

FOB ARA FAME -10

EU ethanol (€/m )

RINs ($/RIN)

T2 FOB Rotterdam

485.00

2016 Ethanol (D6)

0.900

CIF Duisburg 60% GHG

480.00

2016 Biodiesel (D4)

1.033

3

2016 Advanced (D5) US ethanol ($/m ) 3

FOB US ANP

466.26

Emission credits ($/mt)

FOB Santos

575.00

LCFS Credits

1.020

91.50

Current price index

A

s we move into the winter months, we have witnessed the usual divergence in the spread between RME and FAME 0c from near parity that we saw over the summer. As a result, RME production margins in Northern Europe are now at multi-month highs, but the continued backwardation in the market means the best returns are only available on the spot market.

In another boost for domestic producers, the European Commission (EC) launched an appeal against the World Trade Organization (WTO) ruling that anti-dumping duties were unlawful. Although this does not finalise proceedings, it does shield the European market from Indonesian and

Argentinian imports for another few months. With Peru now implementing countervailing duties on its fellow South Americans, the Argentines are now focusing on exports to the US, where we are all waiting and guessing what will happen in 2017. The mandate is in place in the US, but we are yet to have any indication of what will happen with regards to the tax credit.

European demand has held up well despite the move to winter specs across much of the continent, no doubt part of this due to the recent rally in gasoil, which has helped blending economics. German buyers, who have traditionally maximised their consumption over the summer, are still buying Q4 volumes as they anticipate higher blending percentages into 2017. The

UK is now looking at winter UCOME cargoes, whilst both France and Spain continue to maximise their FAME blends into the winter months.

The EU ethanol market saw a considerable slide in prices during the Q3 2016, shaking off some €150/m3 as we plunged from a mark of €570 at the end of June to €420/m3 in the beginning of September.

The return of some European production, including CropEnergies’ Ensus plant in the UK and the Alcodis’ plant in Rotterdam in the second quarter of 2016, had played its part in such a steep correction. By mid-September, however, the trend picked up again seeing a steady rise in prices, which climbed back to €470 in October.

The price jump coincided with the market talk about

maintenance at the newly acquired Rotterdam plant by Alcodis, as the company was seen in the market looking for product and sellers were scarce. It also remained unclear what output the Ensus plant has been running at in the recent months, which altogether continued to add up to the ongoing uncertainty about the existing ethanol stocks in Europe. Lack of physical offers in recent days continued to keep participants nervous and November levels started to look flat to October.

The rest of the curve, however, continued to see a hefty inverse, as Nov/Dec and Dec/ Jan maintained more than €10 backwardation each. Q1 also remained at a big discount to Q4 months, with offers still showing €440s and Q4 value staying in mid-€460s. l

14 november/december 2016 biofuels international

heading biofuels

Have you done your homework?

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Research gives you a clear advantage over your competitors. You can get the very latest information on new plants, projects, innovations and legislative updates all from one source‌www.biofuels-news.com Get an A* and get online today.

biofuels international

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biofuels market analysis The US biodiesel industry is, like so many times before, overwhelmed with uncertainty

Steering a route through troubled times

by Brian Milne have pushed otherwise promising companies that lack protracted financial durability out of business or into distressed sales. Indeed, the industry continues to consolidate and that defines its maturing status as much as it demonstrates the risk in government dependence.

Brian Milne, product manager, Schneider Electric

T

he higher cost of biodiesel compared with petroleumbased diesel fuel, especially in the third year of low global crude oil prices, requires a bridge to incentivise demand, and for several years the biodiesel industry in the US has had those incentives amid multiple government programmes. Indeed, the US biodiesel industry ratcheted up production from 20 million gallons in 2003 to 2.1 billion gallons in 2015, according to the National Biodiesel Board (NBB), with an increasing amount of output - 24.5% of the 2015 total - renewable diesel. NBB, the industry’s national trade organisation, also reports 2.1 billion gallons of biodiesel was used in the US in 2015.

The US biodiesel industry is an exceptional growth story, but also a challenging one that has seen a large number of bankruptcies and frustrated traders when federal programmes lapse or lack clear direction on how they will be implemented.

These waiting games

NYMEX ULSD futures spot continuous chart

RFS volumes In early November, the US biodiesel industry awaits the finalised mandate for renewable fuel demand for 2017, and the renewal of a tax incentive to encourage blending. Even as clarity is sought on these two programmes, a stream of news releases from the US Department of Justice highlights the fraud seemingly endemic in government programmes and so frequently twinned with unintended consequences.

The US Environmental Protection Agency (EPA) appears to be on target in meeting its end of November deadline in issuing the volume obligation for renewable fuels under the Renewable Fuel Standard (RFS) for 2017, having submitted its finalised Renewable Volume Obligation (RVO) to the White House Office of Management and Budget (OMB) in mid-October. OMB reviews such government diktats to ensure conformity with the administration’s goals and policies.

The law establishing the current mandate, which is known as RFS2, lists

EPA qualified biomass-based diesel production

Market analysis spot prices

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the volume of renewables obligated parties must use every year, which vary across several nested categories of renewables, and increase annually through 2022.

However, the EPA, the administrator of the RFS, must review the market to ensure there will be enough supply to meet the mandate, and that pushing this supply into the market does not cause serious harm to the economy or environment.

The legislated mandate for 2017 is 24 billion gallons of renewables in five categories of varying quantities to be used in lieu of petroleumbased products. However, the EPA proposal of 18.8 billion gallons released in spring is well below the target due to an inadequate supply of cellulosic fuels and limited space in the petrol pool based on current fuel specifications, auto manufacturer restrictions, and consumer choice. Of that 18.8 billion gallons, biomass-based diesel fuel accounts for 2.0 billion gallons, with biodiesel also able to satisfy the advanced biofuel mandate proposed for 2017 at 1.68 billion gallons.

A fraudster’s paradise Oil refiners and importers must meet their RVO, whether through blending or buying a compliance credit in the market known as a Renewable Identification Number (RIN).

RINs vary in inherent value based on the renewable they

were generated by, with D4 RINs satisfying the biomassbased diesel nested category trading over $1 gallon from late September through the full month of October. A finalised RVO above the proposal would likely trigger a higher RIN value in response in December, with RIN valuations projected to climb in 2017 as obligated parties struggle to squeeze more ethanol into the US petrol pool.

The RIN is a critical component in a producer’s income stream. Since a RIN can be separated from the renewable as it moves through the supply chain and is sold in an open market, speculators have done the math and have squeezed RIN prices higher, knowing the RIN market will continue to tighten.

There has also been a considerable amount of fraud around the RIN programme that has harmed obligated parties amid the EPA’s buyer beware policy. Doug Parker, president of E&W Strategies and a former director of EPA’s Criminal Investigation Division who oversaw investigations into the Deepwater Horizon disaster and Volkswagen’s device fraud case among others, says current RFS-related fraud cases reflect $271 million (€246.5m) in documented fraud and another $71 million in seizures of illicit profits.

“In my experience this represents a fraction of the actual overall fraud impact, and significantly larger losses

will be formally identified in upcoming court filings,” said Parker in a white paper issued early September, commissioned by Valero Corp.

RINs associated with the fraud will be retired, and parties that bought those RINs will be forced back into the market to reacquire a compliance credit, further tightening the RIN market.

Credit or no credit?

A tax credit that pays $1 per gallon for blending biodiesel into a petroleum-based fuel known as the blender’s credit expires at year’s end, and has stymied forward term transactions for biodiesel because of the uncertainty on whether the credit will be passed by the US Congress for another year or more.

The tax credit has been allowed to expire four times over the past ten years, and has been made retroactive at times, creating windfall profits. Yet the uncertainty has challenged business planning and trading activity.

A bitterly divided Congress adds another layer of concern on whether the tax credit will again be extended and in what form. The blender’s credit has been criticised since imports can also qualify for the tax subsidy, with one estimate forecasting US biodiesel imports would reach 800 million gallons this year. There have been calls to move the credit from the blending level to producers.

JOIN THE DISCUSSION…

A bill to extend the credit, H.R. 5994 Biodiesel and Renewable Diesel Incentive Extension Act of 2016, was assigned to a committee in mid-September that will consider sending it to the House or Senate for a vote.

PredictGov gives the bill a 1% chance of being enacted.

Producers ramped up production in August and September, with EPA qualified biomass-based diesel output at 1.79 billion gallons for the first three quarters of 2016, which compares with 1.81 billion gallons for all of 2015 when not accounting renewable diesel. Renewable diesel uses the same feedstocks as biodiesel but employs a different technology.

Spot transactions for biodiesel remain limited early in the fourth quarter, but when completed are primarily transacted in a differential against ultra-low sulphur diesel fuel (USDL) futures contracts that trade on the New York Mercantile Exchange. After a rally from September lows into October, ULSD futures were range bound until a sell-off in closing out the month. l For more information: This article was written by Brian Milne, who manages the refined fuel’s editorial content, spot price discovery activity and cast market analysis for Schneider Electric. Milne has nearly 20 year’s experience in the energy industry as an analyst, journalist and editor. Tel: +1 952 851 7216

Twitter @Biofuelsmag

LinkedIn www.linkedin.com/groups/2549636

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biofuels plant software Integrating purchasing into a maintenance management system makes for a much more streamlined process

Better off together

T

hese days, many ethanol plants are searching for systems that combine purchasing and maintenance management into one.

For the past twenty years, Mapcon Technologies has offered purchasing within its computerised maintenance management systems (CMMS). Purchasing was integrated into the software to help companies enforce spending controls while reducing the time it takes from requisition to purchase order.

Lincolnland Agri Energy, located in Palestine, Illinois, has been a part of the Mapcon family since early 2007. They have found purchasing within the CMMS to be very helpful.

According to maintenance and purchasing coordinator Candace Kincaid, not only is it convenient, but it also saves them time and money. The majority of their purchasing comes from the maintenance department, so Kincaid thinks the integration of CMMS and purchasing just makes sense. Also, since the maintenance staff already knows how to use Mapcon, there is no additional training for employees needed to complete the purchasing process, which is definitely more efficient.

Mapcon’s CMMS can integrate directly with many accounting systems, which prevents employees from needing to enter vendor and purchase order information twice. The accounting department at Lincolnland uses Microsoft Dynamics GP, which integrates with the Mapcon system. “It was integrated a couple of

For the past twenty years, Mapcon Technologies has offered purchasing within its computerised maintenance management systems (CMMS)

years ago and so far it has worked great between the two systems. It is nice for our accounting clerk to not have to enter all of the information twice,� Kincaid states.

The purchasing process Previously, ethanol plant managers needed to closely monitor their parts and make sure more were ordered once the minimum number required was reached. Since this was a manual process, errors could be made and things could easily be missed.

Also, manually tracking and reordering parts can be time consuming. Mapcon has automated that process, which not only saves managers time, but it also ensures that parts are always available when they are needed, and that the repairs

will not be delayed because a part was not ordered.

Users can set a minimum and optimum number required for each part. When a technician issues a part to a work order, it is tracked. When the minimum number of parts has been reached, a purchase requisition is automatically created to order enough parts to reach the optimum number set, and a notification is sent to the proper manager for approval. Users can also change the settings so that the economic order quantity (EOQ) is reached, which can help save the plant money.

Users that also have Mapcon Mobile will receive a notification on their smartphone or tablet letting them know that their approval is required. Receiving an email or a notification right away can save time by getting the

approval process started almost instantly. Once the purchase order is approved, it can be automatically emailed to the vendor.

When the parts are received, users can log into Mapcon and enter the parts into the system. A notification can then be sent to employees that need to know when the part is received so work can begin. After the parts are added, a stocking report can be generated.

This report shows employees in the receiving department exactly where the parts need to be stored. Having this report handy saves receiving from having to ask supervisors where to put the parts. Users can also easily print barcodes and attach them to the newly received parts at this point.

Invoices can be entered into Mapcon, and the information

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will flow over to the plant’s accounting interface. Adding the invoices to Mapcon first is helpful because the pricing information within the CMMS will be updated if it is incorrect.

Managing money In Mapcon, a purchase order can be issued directly to a location, work order, or piece of equipment. This is useful for when a part is needed that is not kept in stock.

Purchasing a part directly to a piece of equipment or a work order is also useful when tracking repair costs, as it will be evident what parts were purchased specifically for that equipment and what the costs were.

When vendor information, such as the address and phone number, is saved in Mapcon, it will populate when a purchase requisition or purchase order is created.

This not only saves time, but it also helps prevent simple mistakes. Since the information does not have to be entered each time, typos and other mistakes, which can delay the order, can be avoided. Pricing information is also kept within the CMMS. Kincaid says that having pricing information for parts also stored in Mapcon helps ensure that plants are being charged correctly.

There is also a purchase order history within the system so employees can see exactly what parts were requested, how many, and what the charge was for past orders. Vendor terms, such as when payment is required, can also be added.

If a vendor gives a discount for receiving payment early, that can be tracked and added to the purchase order and the invoice.

Ethanol plants can also use the purchasing part of their CMMS to track the cost of different projects. Mapcon allows users to create different projects and write

biofuels international

purchase orders to them, thus tracking the costs. Currently Lincolnland has several projects going on that they need to track the cost of. They are in the process of adding a fifth fermenter and a fourth grain bin. They need to track how much has been spent on the contractors installing both pieces of equipment as well

as any other costs that arise, expected or unexpected.

Tracking these costs will help them plan for the future, in case another new fermenter or grain bin is needed.

Since most of the costs accrued in an ethanol plant are maintenance related, it just makes sense to combine maintenance management

and purchasing into one system that integrates with the plants existing accounting system. Mapcon did this more than 20 years ago, and has not looked back since. l For more information: This article was written by Heather Wilkerson, marketing coordinator at Mapcon Technologies.

Visit: www.mapcon.com

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biofuels big interview

Coffee boost

S

eventy million. That is the average number of cups of coffee the UK drinks every day.

That equals a lot of waste, but a young entrepreneur has found a solution to tackle the problem. In fact, Arthur Kay, founder of green start-up Biobean, is on a mission to take coffee waste and turn it into biofuels. After just three years, Bio-bean is set to transform 10% of the country’s coffee waste – 50,000 tonnes – into energy this year. That will fuel 15,000 homes. Liz Gyekye, editor of Biofuels International, takes a few moments to catch up with Kay. Can you tell me a bit about your company?

Bio-bean is a clean technology firm. We work with a range of waste management companies across the UK to collect thousands of tonnes of leftover coffee grounds from outlets in varying sizes, including cafes, coffee shops, restaurants and instant coffee factories.

We collect these grounds, bulk them up and put them into huge skips which are transported to our factory based in Cambridgeshire.

We take the oil out of these grounds and this oil can be turned into biodiesel.

We also take the residual biomass and compress it into a coffee log or turn it into briquettes. It takes quite a lot of coordination to get all of this together and there is quite a lot of technology behind it.

How did you come up with this idea?

I am not a chemist or chemical engineer and my background is not in waste management. I studied Architecture at university and was given the task of designing a coffee shop and coffee factory. I was

Founder of Bio-bean Arthur Kay

particularly interested in how you could create sustainable cities. As I did my research, I got more interested in the waste being produced in this building. Basically, I came up with the idea from there.

London produces around 200,000 tonnes of coffee waste every year and the UK as a whole produces around 500,000 tonnes of coffee waste. In the UK, we drink 70 million cups of the coffee per day. It’s a massive habit.

This is something that many people do not pick up on because not many people see the scale of the waste.

The majority of coffee is either in instant coffee form or disposed of from behind the counter. So, you get handed your coffee which is obviously liquid but the waste coffee grounds are 100% solid. The volume is massive and historically this waste

has been sent to landfill. Our main premise as a company is to save on costs, both in terms of waste disposal and fuel consumption. We want to be cheaper than any other fuel on the market. So, we produce a high performance fuel and a sustainable one.

How much waste can your factory process?

We have a factory in Cambridgeshire which is 50,000 sq. ft., that can process 50,000 tonnes of waste coffee grounds a year. That is roughly one in ten cups of coffee drunk in the UK. We are around the 10% mark in terms of capacity today and we want to increase that capacity by fivefold by the end of this decade. We produce more coffee logs than oil. It can be used on the fireplace and it’s very highly calorific, compared

to wood as a fuel source. In fact, there is twice the amount of energy contained in our material compared to wood.

This is down to the clever engineers in our company and the fundamental properties of coffee. Uncompressed wood is around the 10-15 gigajoules a tonne mark and the coffee logs are around the 20-22 gigajoules mark. This makes our product highly competitive within the bioenergy market.

What markets do you cater for?

The biomass pellets go to standard biomass boilers instead of wood and this makes it a cheaper energy source than wood. We also make these biomass briquettes, which can be used in wood-burning stoves and open fires. The oil produced from the waste coffee grounds smells delicious and the

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diesel smells of coffee, but sadly the logs themselves are pretty much odourless.

What is your view on second-generation biofuels?

Advanced biofuels are definitely where the future needs to be, especially from a carbon and economic perspective. However, there is the challenge of how one can compete on a scale with conventional diesel and firstgeneration biofuels. Broadly speaking, conventional liquid transport fuels have a shelf life of around 50 to 100 years before they become phased out from main stream usage.

Yet, the time horizons for some second-generation biofuels are still some years beyond that. This is a problem that some governments have struggled with, so they become reluctant to invest in a sector that has not justified why it should be invested in. Advanced biofuels have often been overlooked in discussions, as the focus seems to be on electrification and hydrogen fuel sources. The industry needs a PR and policy push.

It needs a lot of work from us as an industry body on how we communicate the benefits of biofuels and get our voices heard.

What further opportunities do you see for Bio-bean and biofuels in the current economic and political climate?

We are team of around 40 people. We have raised more than several million pounds in financing just to get to where we are.

There are opportunities with Brexit and the newly-formed Department for Business, Energy and Industrial Strategy.

There are also opportunities with the circular economy.

It would be great if the UK government could grab this opportunity by the horns and run with it. The UK bioenergy market is world

biofuels international

leading and could give us a competitive advantage at this tricky time. It could be the missing jigsaw in so many pieces of a wide puzzle, ranging from sustainability to UK manufacturing and energy security to waste management. It ticks all the right boxes and has got strong backing in terms of education and public support.

It’s ours to lose. The new

Cylinders of compressed coffee grounds burn really well. Around 25 cups of coffee go into this single log.

For each bag you get 16 logs. It’s the cheapest fuel on the market, burns much hotter than wood and for longer. Our product is totally unsubsidised but we can still make it cheaper than anyone else in the market.

Elsewhere, subsidies are

We produce a sustainable and high performance fuel department will have a quick and easy win if they invest properly in this sector for the next three or four years.

This is a massive opportunity for the UK. I just hope they don’t mess it up.

What is on your agenda for 2017?

The opportunity with our coffee logs is massive. There is a massive market there. We cut down trees all over the country and import woody biomass from across the Atlantic. So, the opportunity to displace the imported fuels that cost us a lot of money as well as to cut CO2 in the process is our number one priority.

very nice. However, from a commercial perspective you cannot rely on these all the time. We have seen the challenges that the solar, wind, and anaerobic digestion markets have gone through leaning too heavily on subsidies. We are learning from those experiences to make sure it doesn’t happen to us.

We are always looking to expand our built infrastructure.

We are looking at sites in Northern Europe and the UK to build future factories.

However, the real focus is on the bird in the hand and the big opportunities offered with coffee logs. There is a massive

market out there that is really ripe for disruption. Currently, the traditional fuels that are used in fireplaces like coal are dirty and mainly imported.

We have this sustainable, locally manufactured product to use, which is much better than using coal and wood.

What can the government do to help the industry to move along?

The government could help support funding for big capital expenditure projects. A big example of that is the advanced biofuels demonstration competition. It was a pioneering competition run by the UK’s Department of Transport to help support the development of the advanced biofuels industry.

The scheme awarded capital grants to projects, supported by significant private sector investment, to construct demonstrationscale advanced biofuel plants.

Something like this is great for the UK and shows how the UK can pave the way to help the industry. The US business innovation and transport sectors have been looking at running similar competitions. This has also been discussed at a European Parliament level. It’s a real testament to the previous administration for getting a scheme like this through. l

Around 25 cups of coffee go into making Bio-bean’s coffee logs

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biofuels biomass to liquid

One of the main research streams at Teesside University’s School of Science and Engineering is the production of synthetic fuels via thermocatalytic routes

Advanced catalysis technologies will help bring biofuels production to the next level

Synthesised solutions

A

s the world runs out of oil and gas, it urgently needs to find alternative fuel supplies. Research at Teesside University holds some of the answers. For the past ten years, Maria Olea, a professor in chemical engineering and catalysis, has been working on a number of research projects, which can be summarised as “advanced catalysis to sustainable technologies”.

Advanced catalysis means the combination of preparation, experiments, and simulations that brings catalytic studies from micro-and meso-level

to macro-level or massive commercialisation. Examples include the conversion of biomass and municipal solid waste into fuel.

Developing sustainable technologies is a massive agenda, of course. Such innovation is needed to address the big challenges of the 21st Century, namely energy demand, resource allocation, water, and pollution. By reducing energy and resources, this will help everyone protect the environment and to reuse/recycle resources.

Today, 80% of energy usage

comes from fossil fuels such as petroleum, natural gas, and coal. While fossil fuels are still being created by underground heat and pressure, they are being consumed more rapidly than they will ever be regenerated. Although there is no consensus for how long these natural resources will last, there is complete agreement that to avoid their complete depletion, renewable resources should be used.

Biomass, hydro, wind, solar, geothermal, marine, and hydrogen will unquestionably play an important role in providing for future industrial

and domestic energy needs.

Biomass and waste, being readily available renewable energy sources that reduce sulphur dioxide and carbon dioxide emissions, are attractive options as a raw material to be converted into transportation fuel and as a fuel for power generation.

Developed catalysts One of the main research streams at Teesside University’s School of Science and Engineering is the production of synthetic fuels via thermocatalytic

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routes, mainly biomass and waste-to-fuel routes. One of the main thermocatalytic routes is pyrolysis, which is a potential value-added technology for the treatment of biomass/organic waste, with the possibility of producing gases with appreciable fuel value, useful liquid oils, and agriculturally applicable biochar.

The development of catalysts with high activity and selectivity for sustainable catalytic processes was, and still is, a first priority for the Teesside team. As such, newly-developed technically advanced catalysts were prepared for several different applications.

Nickel-based catalysts, supported on mesoporous silica, SBA-15, were designed, synthesised, and tested, and their activity was found to be higher than that of any other catalyst used so far for creating syngas. Syngas is already a synthetic fuel as it can be used in a gas engine to produce steam and electricity.

However, to comply with the engine’s specifications, syngas has to be cleaned. A different class of nickel-based catalysts were developed and scaled-up (from mg to kg) for this application.

This was the task of the University’s EU-funded Pyrochar (pyrolysis-based process to convert small WWTP sewage sludge into useful biochar) project.

The Pyrochar project was supported by a consortium of small and medium-sized enterprises and research centres dedicated to the design and development of a process to convert sewage sludge into useful biochar and synthetic gas.

The catalysts were used in the pilot plant unit built by the consortium and proved to have better performance than the commercial catalysts used as benchmark catalysts.

The laboratory is one of the few in the world which is able to shape and scale-up

biofuels international

catalysts without diminished activity as compared with the powder used for the shaping.

Conversion through FischerTropsch catalytic process of syngas into long-chain hydrocarbons that act as substitutes for diesel fuels also requires catalysts.

Although catalysts with high activity have been developed, increasing of their selectivity is still a challenge. Therefore, the research team has concentrated its efforts on preparation and testing of new or newly-developed catalysts, which were expected to have a high selectivity along with a high activity.

Cobalt and iron catalysts supported on a mesoporous

showing high activity even at room temperature.

This is a promising alternative to minimising energy consumption in catalytic reactions.

Environmentally-benign conversions Utilisation of CO2 by chemical conversion is a valuable idea, which is envisaged to provide answers to other two burning questions of the 21st Century, namely global warming and fossil fuel depletion. Chemical conversion of CO2 into other useful chemicals not only provides a tangible solution to curb the ever increasing amount of greenhouse

Utilisation of CO2 by chemical conversion is a valuable idea silica support, i.e., SBA15, were obtained and characterised by different techniques (SEM/EDX, TEM, XRD, XAS, N2- adsorption isotherms, and Catlab, respectively). Some of these displayed a high activity as well as a high selectivity.

In order to get a better understanding of their structure-activity-selectivity relationship, Temporal Analysis of Products measurements were performed during Olea’s research, which took her to the University of Tokyo.

For reconversion of waste polymers into chemicals and fuels, solid acid catalysts – mesoporous aluminosilicatesbased catalysts – were developed and they were proved again to have high activity. Catalysts have also been developed for the elimination of volatile organic compounds (VOCs) to improve the quality of indoor air. Mesoporous silica (SBA-15)-supported nanogold particles were developed and tested for different VOCs model molecules,

gases in the Earth’s atmosphere, it also serves CO2 as a cheap, abundant and natural C1 feedstock.

CO2 is a highly stable compound, which requires a substantial amount of energy for its conversion into other compounds. Several chemical conversions of CO2 are being studied under the field of heterogeneous catalysis. Among them, dry reforming, tri-reforming, and polymerisation to polycarbonates and polyurethanes are the most environmentally benign conversions. The biggest merit of CO2 polymerisation over other conversions is that it provides a nonphosgeneous route for the preparation of polycarbonates and polyurethanes (synthetic leather). Reaction of an alkyl halide with CO2 in the presence of NH3 is the most environmentallyfriendly conversion, which leads to the formation of organic carbamates, precursors of polyurethanes.

Vanadium-based catalysts,

supported into MCM41 mesoporous silica, have being synthesised and their characterisation will follow.

The last, but by no means least application that Olea is involved with is the synthesis of heterogeneous catalysts for the conversion of waste oil into biodiesel. Ti-based catalysts, supported on mesoporous silica, SBA-15, have been prepared and the Teesside University research team hopes that they will have high activity and as such, they will successfully replace the homogeneous acid/base catalysts, which are harmful for the environment when discharged.

Future goals Olea and her chemical engineering team have established an international reputation for their work on heterogeneous catalysis in their quest to save the planet for future generations. They are now planning to develop catalysts for the conversion of pyrolysis oil into valuable chemicals. The nano-gold/ SBA-15 catalysts already developed have proved to be active for this catalytic process. Along with the catalyst’s development, the researchers are interested in modelling, designing, and building microreactors as one of the most significant process intensification alternatives to be used by coating with the best catalysts developed.

Olea’s ultimate goal is “zero waste, zero emissions” and she is confident they are not far away from achieving that. Improved catalysts and processes for cost-effective conversion of a wide range of feed-stocks – including biomass, sludge from the wastewater treatment plants, waste plastics, and waste oil – to a tailored range of gas and liquid fuels and chemicals, mainly through syngas chemistry, have been designed, developed, and most importantly proven. l

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biofuels biodiesel focus What goes into making biodiesel happen?

Understanding biodiesel

T

he smartest technologies in a society deliver benefits to multiple interests, including improved economy, and produce a positive impact on the environment. Biodiesel is one of several alternative fuels designed to extend the usefulness of petroleum, and focuses on the longevity and cleanliness of diesel engines.

SRS International designs and builds processing equipment for the manufacture of fatty acid methyl esters (FAME), which are known as biodiesel. The company has built plants that have used a wide variety of feedstocks from virgin vegetable oils like soy, canola, and palm to waste cooking oils, food processing waste fats, and fatty acids from many sources. Each biodiesel plant is specifically designed to process the combination of feedstocks that is available to the customer.

Changes in feedstocks can be accommodated with adjustments of the reactor processing conditions.

Raw material requirements The oils used to produce biodiesel must be clean and free of water, proteins, and other solids. The type of oil determines the final quality of the biodiesel to a great extent. Oils and fats with high amounts of saturated fats like stearic acid will have high pour points and will have to be blended with petroleum diesel. Removal of the proteins and water is done before proceeding to make biodiesel. Proteins are the source of the phosphorous

and sulphur contaminants that show up in product testing.

Small amounts (<5ppm) of these contaminants are normally removed during the biodiesel production process.

Commercial vegetable oils with low free fatty acids (FFA) can be transesterified directly without pretreatment, provided there is no water or solids present. More than 1% FFA can be tolerated in the transesterification step, but allowances should be made for extra soap and water being formed during the process. SRS has developed a proprietary method of converting standard 15% FFA. Transesterification

The methanol and catalyst are mixed and metered into the oil and pumped into the reactor with mixing while heating to reaction temperatures. The temperatures will vary from 60 to 82°C or greater depending on the feedstocks and other variables. Various ranges in pressure will speed up the reaction, thus minimising equipment size and cost.

The system is sealed to prevent loss of methanol.

It is desirable to remove some of the glycerin that is formed during processing to expedite the reaction.

Additional methanol-catalyst is added as required to replace losses during glycerin removal.

The process is terminated by adding acid, thus separating the glycerin, soaps, catalyst and some methanol, and filtering or distilling the biodiesel and methanol portion to specifications. The excess methanol is refined and recycled. The glycerin

Advantages and disadvantages The future of biofuels, while advantageous, does contain a few disadvantages too. Consumers need to weigh the pros and cons of biofuels to determine whether they feel comfortable with this resource as an alternative to traditional fuels.

Advantages of biodiesel: 1. Biodiesel is extracted or produced from renewable resources 2. It causes less air pollution when compared to normal diesel fuel 3. Engines designed to work on biodiesel produce less pollution when compared with normal diesel engines 4. Biodiesel can be mixed with fossil fuel diesel 5. It is a biodegradable fuel and hence reduces the possibility of soil and underground water contamination during transportation, storage, or use Disadvantages of biodiesel: 1. Biodiesel is more expensive than normal diesel 2. Biodiesel usage is less suitable for low temperatures 3. Biodiesel attracts moisture, which will create problems in cold weather and also increases the risk of microbial growth in the engine that can clog engine filters

by-product is stripped of methanol for recovery.

Pretreatment or esterification Clean, dry feedstock that contains up to 100% FFA needs to be esterified before the oil can be sent to the transesterification step. The esterification step converts the FFA directly to biodiesel, leaving the rest of the oil ready for the transesterification step.

The methanol and catalyst are mixed and added to the FFA-oil feed and heated in the closed reactor up to 93°C with agitation. Some of the water from the reaction is removed during the process and more methanol-acid is added to replace losses, depending on the amount of FFA present. Glycerin is added when the desired acid value (AV) is reached to remove the catalyst and water.

A total of 100% FFA feeds will produce 100% biodiesel without transesterification. The biodiesel-oil feed is adjusted to the desired methanolcatalyst content and sent to the transesterification unit.

In today’s market, having a multi-feedstock capable plant is not only a competitive advantage – it is a business necessity. At a plant designed to use only refined oils, adding high FFA pretreatment opens up a world of new feedstock opportunities. Whether it be animal fat-based feedstocks, such as beef tallow or chicken fats, or one of the new emerging feedstocks such as algae oil or jatropha, they all share one thing in common.

They all have FFA too high for base transesterification and thus require pretreatment. l For more information: This article was written by Janie Raubenheimer, project manager at SRS International. Visit: www.srsintl.com

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biofuels regional focus: biodiesel in North America Last year, the US saw more than 2.1 billion gallons of biomass-based diesel cut GHG emissions by 18 million tonnes

The US biodiesel industry faces challenges, but also holds big potential

Going for gold

T

he North American biodiesel industry is currently in a strong position for tremendous growth. We continue to see bi-partisan support in Congress, science again affirmed biodiesel as a viable option for reducing harmful greenhouse gas (GHG) emissions, and state policies that will continue to drive demand were expanded and upheld. Yet challenges still remain.

Last year, the US saw more than 2.1 billion gallons of biomass-based diesel cut GHG emissions by 18 million tonnes, or the equivalent CO2 emissions of 3.8 million cars. This was through both biodiesel and renewable hydrocarbon diesel use, supporting some $8.4 billion (€7.7bn) in economic impact, nearly 48,000 jobs, and $1.9 billion in wages paid. However, at slightly more than 5% of the

on-road diesel pool, there is significant room for growth.

This spring, the US Environmental Protection Agency (EPA) proposed Renewable Fuel Standard (RFS) volumes with minimal growth in the biomass-based diesel category. While EPA proposed 2.1 billion gallons for the category’s 2018 proposal, the National Biodiesel Board (NBB) is seeking at least 2.5

billion gallons. This summer a group of 40 US Senators, of the 100 total, sent a letter to EPA echoing NBB’s call for stronger biodiesel volumes.

The senators emphasised that biodiesel and renewable diesel are leading the way in delivering advanced biofuels under the RFS and EPA should do more to encourage their growth. EPA’s decision is expected to be finalised and announced at the end of November. The RFS – a bipartisan policy passed in 2005 and signed into law

by President George W. Bush – requires increasing volumes of renewable fuels in the US fuel stream, and specifically calls for increasing volumes of advanced biofuels in the coming years.

Tax policy

National Biodiesel Board CEO Donnell Rehagen

Another significant issue facing the biodiesel industry

is tax policy. Like any industry, stability within the tax code is key to making financial and management decisions.

With the biodiesel tax credit potentially expiring at the end of 2016, biodiesel producers are again facing uncertainty and instability that hampers their business. However, NBB and its supporters in Congress are working to enact legislation to extend the incentive through 2019 and provide a key reform to a domestic production credit versus a blenders’ credit.

Chuck Grassley, a Senator for Iowa and a Republican (R) Party member, and Maria Cantwell, a Senator for Washington and a member of the Democratic (D) Party, introduced legislation in the Senate this summer that follows similar legislation introduced previously, including last year when it cleared the Senate Finance Committee without objection.

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There is also companion legislation in the House sponsored by Representatives Kristi Noem, R-South Dakota, and Bill Pascrell, D-New Jersey.

The change to a domestic production credit has been a priority for the US biodiesel industry for many years. This change would appropriately reform the incentive by structuring it in a manner that promotes domestic biodiesel production. The Senators noted when introducing the bill that US tax laws should not incentivise foreign fuel, and this bill would address that issue. In 2015 alone, some 670 million gallons of biodiesel and renewable diesel was imported to the US. The trendsetters Carbon emissions from biofuels continue to decline relative to petroleum, and confidence in these results

grows with additional study.

A new consensus report from the Coordinating Research Council is the latest evidence in support of biodiesel as a low-carbon fuel and supports the conclusions of noteworthy

at the state and regional level.

Just this year, we saw significant developments in California, Minnesota, and New York City. California Governor Jerry Brown signed legislation requiring the state

Biodiesel is a low-carbon fuel already being used in California to reduce emissions analysis conducted by the National Renewable Energy Laboratory, Argonne National Laboratory, EPA, US Department of Agriculture, and the California Air Resources Board. Each of these institutions has affirmed that US biodiesel reduces GHG emissions by at least 50% and often as much as 85% compared to petroleum diesel fuel. This assurance has helped lead biodiesel’s growth

to reduce GHG emissions to 40% below 1990 levels by 2030. Biodiesel is a low-carbon fuel already being used in the state to reduce emissions and it is expected to be a key part of efforts moving forward. In Minnesota, a District Court ruled in biodiesel’s favour in a legal challenge to the state’s blending requirement. This ruling allows the current B10 and future move to B20 state-

wide to stand and maintains Minnesota as a leader in biodiesel use. The City of New York passed new legislation to incrementally displace 20% of the heating oil sold within the city with cleaner-burning, sustainable biodiesel. This is a significant step in reducing the region’s carbon footprint and provides consumers with the nation’s cleanest heating oil.

These three policies alone have the potential to drive more than a billion gallons of biodiesel demand in the near future. Biodiesel is well positioned as an advanced biofuel, replacing petroleum diesel with a cleaner-burning, renewable option, with lots of potential for growth in the near future. l

For more information: This article was written by Donnell Rehagen, CEO at National Biodiesel Board. Visit: www.biodiesel.org

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biofuels opinion

Changing the point of obligation in the RFS Why biofuels advocates should care about it

by Joe Jobe

Joe Jobe, founder and president of Rock House Advisors

O

ne of the most talked about issues related to the Renewable Fuel Standard (RFS) in recent months is the debate over whether to change the point of obligation (PO). That is to say to change the point in the fuel supply chain in which a party becomes obligated to comply with the RFS requirements.

This can be accomplished through a regulatory process by changing the definition of obligated party. When passing the Energy Independence and Security Act of 2007 (EISA) Congress left it to the EPA to define an obligated party.

EPA defined an obligated party in its initial rulemaking as a refiner or importer and EPA explained then that they considered placing the PO at the terminal. The agency stated that this issue may need to be reconsidered in the future if experience informs us otherwise.

Well, that future is here and a growing coalition is asking EPA to reconsider the placement of the PO due to the emergence of disproportionate compliance burdens for some and windfall profits for others. In the last two months, articles and op-eds on this topic have

appeared in publications such as OPIS, Politico, The Hill, Forbes, Wall Street Journal, and others. Biofuels advocates have mostly not weighed in on this debate. When they have, it has usually been out of an understandable concern that the discussion itself was generating unwanted criticism of the RFS. There has also been a suspicion that this was yet another tactic in the broader war by RFS opponents to point out the flaws in and therefore undermine the programme.

Many have been operating under a mistaken impression that the change would require congressional action and

awareness of the ramifications of changing or not changing the PO have led most biofuels supporters to conclude that “it is not our issue”. As one of the longest serving advocates for biofuels in the United States, my purpose for writing this article is to make the case for why changing the PO is indeed our issue. Changing the PO to “rack seller” at the terminal is the right thing for the RFS programme and for the biofuels industries, which remain dependent on it functioning well. Most importantly, changing the PO will go to the heart of addressing the real reason that EPA proposed using

Anything that impedes the progress toward repeal of the RFS should be considered very carefully by biofuels advocates have resisted it based on the mantra of “Don’t mess with the RFS.” In fact, a change in the PO, does not require that we “mess with the RFS”, is not overlycomplicated to administer, is not a nefarious plot to weaken and ultimately repeal the RFS, it will not increase the number of obligated parties under the programme1, and does not threaten the growth or stability of the RFS. Biofuels producers by and large are not currently the recipients of either the windfall profits or the undue compliance burdens that are occurring. That fact combined with a general lack of

its waiver authority in 2013, delayed finalising three years of rules, and ultimately set low volume obligations in all categories of biofuels moving forward (Hint: It’s not really “the ethanol blend wall.”) .

The great divide “In all debates, let truth be thy aim, not victory or an unjust interest,” said Britishborn real estate entrepreneur William Penn (1644-1718).

In the search for truth in the PO debate, it is instructive to observe who the debaters are, what their interests and what their arguments are. In full disclosure, as an independent

consultant I have been asked to provide advise on this issue for an independent refiner, but the majority of my current consulting work is for biofuels groups, including advising on this issue. I have concluded that changing the PO would be beneficial to biofuels, as well as most other stakeholders, consumers, and the RFS in general.

While biofuels groups have been mostly agnostic, viewpoints from the oil industry have broken into two opposing sides. The two sides include merchant refiners (entities whose business is primarily that of purchasing crude oil and refining it into finished petroleum products) small independent retailers, and some pipeline companies on one side. Many in this group are members of the American Fuels and Petroleum Manufacturers Association (AFPM) who are advocating a change in the PO. And on the other side are large retailers, large truck stop operators, and large integrated oil companies (who are vertically integrated in the supply chain from extraction to retail).

Many of these players are members of the American Petroleum Institute (API) who oppose a change in the PO. Most of API’s members fall in the camp of the entities who are reaping the windfall RIN profits. API has scolded AFPM for supporting the change in PO stating that it is a distraction from their efforts to repeal the RFS. While advocates of changing the PO have effectively argued that it would dramatically improve the programme

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by fixing an inherent flaw that is creating unintended consequences, API members have said that they donâ&#x20AC;&#x2122;t want to do anything that fixes the programme because it would hinder their ability to repeal it. In a recent media call, an API spokesman stated that they have been making real progress in their long effort to repeal the RFS and all of the focus on changing the PO has been a distraction that is impeding that progress.

In my view, anything that impedes the progress toward repeal of the RFS should be considered very carefully by biofuels advocates.

For many years and for reasons unrelated to the RFS, the large integrated oil majors have been reducing their emphasis on refining, focusing their businesses to an ever greater extent on upstream exploration and downstream distribution and retail. This now leaves them with a relatively small obligation under the RFS associated with their small refining footprints relative to their large distribution and retail activities. These downstream assets are key to enabling the blending of ethanol into petrol and biodiesel into diesel. With low compliance requirements and high blending capabilities, most integrated oil majors are generating large net RIN surpluses, which have become for them significant new profit centres. They also end up RIN-long on biodiesel, which disincentives them from making any infrastructure investments to expand their blending capability.

Merchant refiners, on the other hand, whose core business is refining, are the primary obligated parties under the programme. Yet because of where they reside in the supply chain, independent refiners have the most limited ability to actually blend biofuels in order to comply with their obligation. Refiners make finished products and

biofuels international

originate them to the pipeline for their customers, who then ship them to downstream terminals. Pipelines though, have not traditionally been accessible to biofuels and have been almost exclusively the domain of pure petrol and pure diesel with nearly

A recent Wall Street Journal article laid out the inequities under this system, with some parties becoming enriched, while other parties burdened to the point of pending potential insolvency.2 These imbalances were never meant to be and they do

Most integrated oil majors are generating large net RIN surpluses all biofuels blending being forced to occur at the terminal or retail levels rather than at the refinery or pipeline head.

Truck stop operators As a result, independent refiners have limited ability to meet their blending obligations by actually blending biofuels.

Their only other option then is to purchase RINs from the large integrated oil companies or large diesel retailers (truck stops). The oil majors end up with their RINs by blending E10 into their petrol like they had been doing before RFS2.

Truck stop operators, who are not obligated parties, generate a large number of RINs to sell to obligated parties generating huge profits. For biodiesel, about a third of the RINs come from imported biodiesel, almost all of which is subsidised by foreign governments before entering the US. The imported biodiesel is advantaged over domestic biodiesel because the imports can also take the blenderâ&#x20AC;&#x2122;s tax credit, and the value of the RIN, creating a significant windfall for truck stop operators.

not need to continue. For us in the biofuels community, they create significant market inefficiencies and are destabilising throughout the supply chain.

Thankfully, the solutions are easily available to us through an EPA administrative change in the PO. Similarly, a modest tweak in the biodiesel tax credit from one directed at blenders to one available to domestic producers will allow for a system in which the RFS requirements are filled to a much greater extent by domestically produced product. Neither of these solutions is beyond our collective reach, and producers of American fuels, both petroleum and renewable, should work together to achieve them.

Windfall RIN profits One of the most potent arguments by the large integrated oil companies is that the advocates for a change in PO are simply parties who did not make the proper investments to comply with the RFS, and now they want to be

EPA defined an obligated party in its initial rulemaking as a refiner or importer

bailed out by punishing those parties that did make the proper investments.

A closer look reveals a different picture. As I laid out before, this is not the case because the large integrated oil companies and truck stops did not make major infrastructure investments to receive their windfall RIN profits, at least not the types of investments that would be required of refiners to blend more biofuels. Since biofuels are almost exclusively blended at or below the rack, merchant refiners reside in the point of the supply chain that is most limited to blend biofuels.

In order to blend enough biofuels to meet their obligation, merchant refiners would not simply be required to invest in some additional tanks, pipes or pumps. If that were all that was required they would have done it already. No, in order to meet their obligations by actually blending biofuels, they would have to buy up whole new businesses at a different part of the supply chain which have little to do with their core business, and then invest in the additional tanks, pipes, and pumps. Specifically, they would have to buy up wholesale distributorships that are integrated or aligned with retail stations. That is the point in the supply chain where blending occurs, and RINs are separated and sold. Not surprisingly then, this has become the place where RFS value has been concentrated. And because of the current PO, these RINs are sold at an artificially high price back to the merchant refiners who have no choice but to buy them.

Think about this for a moment â&#x20AC;&#x201C; because of one rather obscure ruling (definition of obligated party) in a large and very worthy government programme, regulated entities are expected not just to make modest investment upgrades in order to comply with the law, but

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biofuels opinion would have to buy up entirely new integrated businesses that are not necessarily even for sale, and then make investment upgrades in order to comply with the law.

Effectively, if merchant refiners want to comply with the biofuel blending requirements by actually blending biofuels, which is the point of the law, they would need to vertically integrate.

They would have to buy up integrated downstream assets, which would cause them to become an integrated oil company and compete with the oil majors in that business.

This is simply not a realistic option. Even if it was realistic, and even if the Federal Trade Commission were to allow it, it would not be a desirable goal for the programme, consumers, or the country. We don’t want to disadvantage independent refiners and independent small retailers in favour of the big oil companies, who already have enough advantages going for them. It is an unintended consequence of setting the PO in the wrong place, a situation that can be corrected by the EPA without overhauling the programme or unfairly harming anyone, while realising significant benefits in reaching the worthwhile goals of the RFS. We know the oil majors haven’t made major investments in blending infrastructure because a) they say they haven’t in their investor reports and other

Regulations should aim to strengthen competition, not weaken it public documents3, and b) because they are calling for a repeal of the RFS. If they had made major investments in biofuels or blending infrastructure, they would likely not want to strand those investments. Merchant refiners on the other hand have made investments in biofuels, and favour changing PO over repeal.4 Also, merchant refiners are mostly publicly traded companies, who have been forced to report to their investors the harm that has been done because of their limited ability to comply with the RFS other than buying artificially highpriced RINs. Their stock prices have suffered from this.5 But if all refineries share the cost of compliance proportional to their refinery capacity, aren’t they all on a level playing field competitively? No, because independent refineries have to compete with the refineries of the majors, who have a smaller refinery footprint than they have a distribution and retail footprint. This is not because they designed their businesses this way to take advantage of and obscure definition in the RFS that was promulgated in 2011, this is the way they have been for many years. Because big oil

Merchant refiners are the primary obligated parties under the RFS

companies are blending E10 anyway, they end up RIN-long, so they don’t have to buy RINs, they are able to use their own RINs to comply with their obligation. Then they even get to sell their surplus RINs for a windfall profit back to their competitor merchant refiners.6 This contradicts two fundamental principles of good government regulation.

First, regulations should aim to strengthen competition not weaken it. Second, effective regulation must be careful to place requirements on the proper parties who have the ability to comply, otherwise the incentives to accomplish the regulatory goals are misaligned.

Unintended consequences of inaction The RFS2 is a good law and it is currently working to achieve the goal of drawing biofuels into the marketplace. But it would work much better if the PO was changed to the terminal, because it would not only address the flaws discussed above, it would benefit biofuel producers in the following six ways: 1. EPA has stated that the “ethanol blend wall” is the primary reason for delayed rules and lower proposed volumes in all categories. (See number 6 below.) The current point of obligation incentivises RIN-long parties (the oil majors and large retailers) to not invest in ways that push through the blend wall because it would reduce the value of their RIN inventory. To the extent that there is an ethanol blend wall, moving the PO to the rack would help push through it by incenting the promotion of higher blends by obligated

parties who will need offtake for their blended wet gallons.

2. It would incentivise investment in biodiesel blending infrastructure at terminals. Rack sellers pulling diesel fuel off the pipeline would now have a proportional obligation attached to those diesel gallons. The most cost-effective way to meet that obligation would be to blend actual wet gallons right there at the terminal, incentivising rack seller obligated parties to collectively invest in biodiesel blending infrastructure. Available blending infrastructure at terminals across the country dramatically improve the logistics and economies of scale for biodiesel. It also has advantages for local and regional biodiesel producers over importers.

3. Aligning the point of obligation at the point where actual compliance (blending) occurs makes the burden of compliance more proportional so that no parties are overly burdened and no parties are overly enriched. This is the same way that federal excise tax is administered. This maximises the amount of compliance that occurs through the actual blending of wet gallons.

Ultimately, obligated parties’ RIN activity could possibly be integrated into the ExSTARS system (Excise Summary Terminal Activity Reporting System) to marry up fuel excise taxes and RIN activity and reporting, further strengthening the efficiency of the programme. This will result in more transparency and less RIN speculation, increasing the demand for actual gallons of biofuels at terminals making biofuel prices higher while making RIN prices lower. Lower and more stable RIN prices will reduce the overall compliance cost of the programme – something OMB and EPA have indicated is one of their top considerations in setting RVOs.

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4. The California Low Carbon Fuel Standard (LCFS) has the PO at the rack with obligated parties defined as Rack Sellers, the same as merchant refiners are proposing. None of the negative unintended consequences that opponents claim would occur with this change in PO in the RFS, have occurred with the LCFS. 5. RIN integrity would be improved. Robust measures to address RIN fraud by the biodiesel sector, the EPA, and the petroleum sector did much to address most of the RIN fraud that occurred in 2011-2013. However, based on some more isolated cased of fraud activity from 2014-2016, it has not been eliminated entirely. If the PO had been placed with the rack seller, much of the fraud would not have occurred.

This is because much more of the compliance by obligated parties would have taken place by blending actual wet gallons of biofuels at the terminal, separating the RIN and using that RIN to meet their obligation. The PO set at the refiner level forced more compliance by buying RINs in a then immature and opaque market, where the PO (refinery) was separated so far in the supply chain and the chain of custody from the point of compliance (below the rack).

Changing PO to the rack will benefit RIN integrity for both biodiesel and new fuels that come on line in the future.

6. Earlier, I stated that I would explain how changing the PO would get to the heart of the real reason for the EPA’s dramatic use of waivers, delays in the programme, and now a trend of finalising very modest, even tepid increases in annual volumes.

I will close this article with that explanation. The ultimate unintended consequence of inaction is best illustrated by a drama that is predictable because we have seen it play out before. In 2013, RIN prices

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went from 5 cents to $1.50 in six months, a phenomenon referred to as “RIN-sanity”.

Media leak In October 2013, an excerpt of EPA’s proposed volume obligations for 2014 was leaked to the media, which revealed the EPA’s intention to cut ethanol volumes and to freeze biodiesel volumes.

Biofuel advocates organised the largest and most intense campaign ever to fight this move. Yet in November of 2013 the cutbacks from the leaked proposal were published in the 2014 proposed rule. The 2014 volumes did not get finalised until November of 2015, two years later (three years behind the statutory deadline in the case of biodiesel), which left the biofuels industries in limbo for two and a half years, doing untold damage to biofuels businesses, many of which failed in that time period. It also cost the collective biofuels industries millions in advocacy costs.

This inexplicable move on the part of the administration would have remained a mystery were it not for two articles published by Reuters in May of 2014.7 The articles documented in surprising detail how the administration was persuaded by two East Coast merchant refiners owned by the Carlyle Group and Delta Airlines that they were in serious danger of going bankrupt because of the high RIN prices. The administration was convinced of the financial threat these companies were facing.

The administration was convinced that the bankruptcy and shut-down of two refineries in close proximity in the Mid-Atlantic region was imminent without taking some action, and would create fuel shortages to the East Coast as well as the loss of hundreds of union jobs. I bring up this unpleasant story to point out that the most painful chapter in RFS history was

more directly related to an unintentionally misaligned PO than it was an ethanol blend wall. Had the PO been placed at the terminal, making the burden of compliance proportional to every gallon of hydrocarbon pulled off the pipeline and eliminating the inequities that we have discussed here, the two refiners would not have been threatened with insolvency.

When talking to biofuels advocates I often hear, “point of obligation is not our issue”.

Isn’t it? Or in response to the notion that if refiners cannot get PO changed, they will be forced to spend all of their resources repealing the RFS or lowering the RVOs: “Let them fight the RFS, it hasn’t gotten them anything so far.” Hasn’t it?

Merchant refiners are suffering real financial harm by the sustained high RIN prices.

It can be remedied by placing the point of obligation at the same place as fuel excise taxes, and ultimately perhaps folded into the ExSTARS system. Biofuel advocates have the opportunity to partner with merchant refiners, small retailers, and pipeline companies to make this common sense adjustment.

It is an opportunity for biofuel advocates to align ourselves with a broader coalition of stakeholders, including the merchant refiners who generally favour improving the RFS over repealing it. If we don’t do this, we have seen what happens from the political fallout from refineries being threatened with shutdown. Except this time, it is not two merchant refiners that are being harmed, it is all of them. We should join with them to support the solution.

Otherwise the unintended consequences of inaction will be predictably significant.

About the author Joe Jobe served for 19 years with the National Biodiesel Board, 17 years as the CEO.

During Jobe’s tenure, he helped lead the industry from about 200,000 gallons of production in 1999 to 2 billion gallons today. Jobe was instrumental in the development, passage and implementation of major federal and state biofuel policy initiatives including the biodiesel tax credit, RFS1 and RFS2. He is a recognised author and thought leader in energy, environmental, agricultural, and sustainability issues, and has given major speeches in ten countries. l

For more information: Visit www.rockhouseadvisorsllc.com

References: 1 According to Attachment D of Valero Energy’s Petition to open a rulemaking considering PO, an analysis was done to look at the number of rack sellers currently. The analysis looked at 1) OPIS terminal Price Posting, 2) OPIS Active Supplier List, 3) Valero’s market research on bulk and rack activity, 4) Review of federal excise tax forms (637S), and 5) Market information received by Valero from others in the business. The analysis found the number of rack sellers to be 202, and if subsidiaries and joint ventures were combined, the number would be well below 200. The EPA has stated in various places that the current number of obligated parties is between 200-230. The analysis also showed that under a change in the point of obligation to rack seller, approximately 90% of the new obligated parties would be the same as the old obligated parties.

2 See Wall Street Journal article October 27, 2016 “Big Oil Companies Reap Windfall from Ethanol Rules.”

3 In a September 9, 2016 letter to the EPA on the PO, Marathon indicates that they are not adding E15 infrastructure or other investments to increase their biofuel blending capabilities.

4 http://www.forbes.com/sites/ realspin/2016/10/10/make-therenewable-fuel-standard-more-fairand-effective/#554cc4016455 5 A June 2016 Goldman Sachs report downgraded the stock of several merchant refiners because of their large RFS obligation, their limited ability to blend wet gallons, forcing them to buy RINs that have sustained a high price.

6 A September 2016 OPIS Carbon Market Report identified a broad range of RIN exposure among various refiners according to Barclays Capital.

7 http://www.reuters.com/article/ us-oil-ethanol-lobby-timelineidUSBREA4B01T20140512

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biofuels biorefining The process of biorefining is not only about fuel outputs

Biorefining: Adding value to fractions and sidestreams

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By Paul Gander

nlike biorefining, petrochemical refining has had many wellfunded decades to optimise downstream processes and by-products, turning non-core fractions and sidestreams into valued outputs to complement bulk fuel production. This is an area where researchers are still working hard to find equivalent solutions for the different types of biomass used as biorefinery feedstock.

The answers they come up with will help boost the balance sheets of commercial biorefineries in years to come.

Kristiina Kruus is a research professor in the enzymology of renewable biomass at the VTT Technical Research Centre of Finland. VTT’s approach to bioeconomy involves finding the highest-value end use for every fraction and sidestream.

Although it claims to be “agnostic” about feedstock sources, like other Nordic research organisations it has historically had strong links with the forestry sector.

“It’s very difficult to make the conversion of biomass to bioethanol profitable without looking at what other byproducts you can extract from

the process,” says Kruus.

“In cellulosic bioethanol production, that means being able to utilise the lignin stream, which can account for up to 30% of the [wood] biomass.”

At the University of Warwick in the UK, professor of biological chemistry Tim Bugg makes a similar point.

“Profit margins are very tight in this sector, but they can be improved through the production of addedvalue chemicals,” he says.

Part of Sweden’s RISE cluster of research institutes, Innventia has worked for many years with the country’s forestry sector, in particular looking at ways of optimising the value of lignin, principally as a product of kraft pulp mills. R&D team leader Per Tomani says that when Innventia started its research, lignin was evaluated as a potential source of biofuel.

“It makes a good biofuel, but in fact we now know that there are higher-value end uses for it,” says Tomani.

“Some businesses are looking at developing lignin into transportation or jet fuel, but you need other applications in order to increase overall value.”

In other words, in the context

of a biorefinery, the value from lignin can help offset costs elsewhere in the operation.

Peter Axegård, VP of bioeconomy strategy at Innventia, points out that one of the reasons why industry R&D has focused on biorefinery linked to pulp mills is to do with set-up and running costs.

“Quite often, a standalone biorefinery has longer-term problems with profitability because of the need for dedicated utilities and so on,” he says. But he also agrees that a biorefinery co-located with – and dependent on – a pulp plant might be limited in terms of scale and output.

Working with wood One solution could be to apply some of the addedvalue processes and outputs achievable on a smaller scale to upscale dedicated standalone biorefineries based on wood biomass. However, obtaining pure lignin from the bioethanol refining process remains a challenge in its own right. Where the cellulose is dissolved as part of this process, lignin tends to end up as part of a complex and “dirty” fibre residue. This

explains why it is still typically used as part of a low-value fuel feedstock for heat and power.

In its purest form, Innventia points out, lignin can be used to produce carbon fibre, which is highly valued for structures of different kinds because of its impressive strength-to-weight ratio.

Tomani is now coordinating an EU project involving eight other organisations looking at ways of developing markets using carbon fibre from kraft lignin to produce reinforced plastics composites.

Innventia has also looked at using lignin as a feedstock for producing aromatic chemicals such as phenolics.

For its part, VTT is currently converting lignin into adhesives and resins, which can be used in the production of composites. For example, it can also be used as a rheology-modifier, to act as a plasticiser in concrete to stop it from solidifying too quickly.

In fact, VTT has become something of a specialist in utilising sidestreams from biorefinery as media for adapting rheology.

Principal research scientist at VTT, Anna Suurnäkki, indicates a number of potentially

Harvested algae (left) with material it can be produced into (pellets, green crude, oil and ethanol).

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Horizontal tubular photobioreactor at Algaeparc – a pact between Wageningen Uni and other industry partners

valuable end uses that the organisation has developed with regard to cellulosic fibres.

One of these sees the fibres used to generate foams, which can be applied to papermaking to replace water and so reduce drying and energy requirements. Versions of these foams can also be utilised as a matrix to combine a wide range of materials.

“This is a completely novel technology for materials processing,” Suurnäkki says.

“It can be applied to paper, but also to composites involving plastics or wood fibre, for example, or insulation materials.”

Kruus adds: “Hemicellulosic materials are already used as thickening and emulsifying agents in food.” Nanocellulose is also a good rheology modifier in foods, and the same may well turn out to be true of cellulose-derived foams, she suggests.

With the lignin extracted from lignocellulose, an alternative approach is to produce cellulose-derived fibre, which can be used for textiles. In this connection, Suurnäkki points to the questions hanging over the sustainability of

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Lab-scale algae cultivation using photobioreactor

For now, low fossil fuel prices are making potential investors wary about any type of investment focused on biofuels cotton cultivation. “In 15 or 20 years, we may well see a shortage of cotton, and we will need to replace it,” she says. “Cellulose can be further refined and dissolved to create a cellulose polymer from which fibres can be regenerated.”

Innventia’s Axegård agrees that wood-derived fibre for textiles is an “interesting area” where a market already exists. “Brands such as H&M and Ikea in Sweden would like to improve their environmental footprint for textiles, and are keen to stay ahead of the curve,” he says. But he cautions that although R&D to date has been encouraging, the technologies required are still not yet at a commercial stage.

Other avenues Of course, European researchers are looking at

much more than wood pulp.

Bugg at Warwick University has studied the biocatalysis of lignin from different sources.

One current joint project, part-funded by the UK’s Biotechnology and Biological Sciences Research Council (BBSRC), involves work with Brazilian partners to valorise lignin from cellulosic ethanol plants based on grass and sugarcane bagasse. In this case, the aim is to use biocatalytic conversion of the lignin via ferulic acid to higher-value chemicals.

“Valorising the lignin component from bioethanol production is the big unresolved element in the process,” Bugg argues. In the 1980s, work was done on fungal degradation of lignin to produce extra-cellular enzymes, he reports, but this was never commercialised.

In 2008, his own research

group followed up on subsequent evidence that bacterial enzymes could perform a similar function.

“Half of what we’ve been doing is identifying enzymes which could be used as biocatalysts,” he says.

“We’ve also been looking for aromatic metabolytes. The intermediates produced don’t accumulate in large quantities.

But if you understand the pathways, you can intercept them with gene-knockout and capture the intermediate.”

He adds: “Complexity is one of the challenges with lignin valorisation. You have to separate the various strands out, and microbial conversion can help to reduce that complexity.”

Three years ago, Bugg’s team produced vanillin, which is used in the food industry.

But since there are other established chemical routes to the same end product, he did not pursue this. Since last year, Warwick University researchers have worked with Biome Bioplastics in the UK to develop ways of converting lignocellulose to polyesters via terephthalic acid, using rhodococcus as an enzymatic catalyst. One target end-product could be the biodegradable polymer polybutyrate (PBAT).

Approaching algae When research centres on a renewable resource that is not yet in plentiful supply, the challenges around valorisation are stood on their head. With algae, for example, the possibility of producing biofuels in the future is understood and taken for granted. The focus for research has to be on the smaller-volume, higher-value outputs which could justify starting to produce and refine algae in the first place, and then in ever-larger quantities.

Corjan van den Berg, assistant professor in biorefinery working with the bioprocess engineering group

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biofuels biorefining at Wageningen University in the Netherlands, explains: “Global algae production accounts for around 15,000 tonnes of dry matter per year, but a single [commerciallyviable] bioethanol plant would require just under 20 times this volume.”

Van den Berg, who has in the past worked with fuel companies such as Total, concentrates his research on autotrophic algae. Within this area, the priority has to be on end products that command a relatively high market value and that cannot be readily provided by cheaper biomass sources.

The hierarchy being followed in current research starts with pigments and lipid fractions used in cosmetic and healthcare markets and cascades over time and potential volume increases down to food ingredients, higher-value chemicals,

Algaeparc algae cultivation pilot facilities

pigments and “fish oils” – and only then to biofuels.

For now, low fossil fuel prices are making potential investors wary about any type of investment focused on biofuels, especially algaederived biofuels. But van den Berg has some good news: “Evidence from Spain shows that the production

costs associated with algae have come down from €6/ kg in 2011 to €3.4 in 2016.”

The case for biofuel businesses to get involved with pre-commercial research of this kind is a strong one, and the universities and institutes with expertise in biorefinering appear keen to work with

the industry. For example, as part of its exploration of bioeconomy, VTT has established the Bioruukki pilot facility on the south coast of Finland. The plant has already started applying gasification and pyrolysis to different types of biomass, including forestry residues and municipal waste. Further types of energy-storage and biomass fractionation will be explored there over the next couple of years.

“We like to think of Bioruukki as an openaccess area for our partners, including those from industry, who want to work with us,” says Kruus.

There are many other R&D opportunities, with a range of partners, where access could be more “selective” than “open”, with the potential for real competitive advantage for those with an eye on the medium and longer term. l

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34 november/december 2016 biofuels international

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Catalysing global bioeconomy post-Paris Agreement

Green conversion

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ctober marked a pivotal month for climate action, with nearly 90 nations supporting the Paris Agreement and allowing it to officially enter into force on 4 November, 2016. In a historical first, countries from around the globe convened with a significant portion of them agreeing to curb greenhouse gas (GHG) emissions and limit temperature increase to 1.5°C above pre-industrial levels. In an effort to prevent the most catastrophic consequences of climate change, this agreement represents a critical moment for the energy industry as nations accelerate the transition to a new cleaner, more efficient energy paradigm.

To meet the goals outlined in the Paris Agreement, governments and industries alike are exploring a portfolio of energy strategies to rein in emissions. Bioenergy is expected to play an integral role in the phase-out of fossil fuels. Already, bioenergy capacity has doubled in the last 15 years in the EU and is expected to grow by another 30% by 2020. Transparency Market Research projects the global biofuels market to reach $246.52 billion (€222.28bn) by 2024. Climate change mitigation and localised energy security are key drivers for global biofuels market growth.

Despite an increase in bioenergy over the years, the industry has faced a scaling problem. Incumbent biomass conversion technologies have largely been cost-prohibitive and, thus, not adopted in mass-market applications.

While earlier conversion approaches were important stepping-stones towards mainstream success, these technologies relied on acids or

biofuels international

enzymes to convert biomass into sugars. These multi-day processing methods proved largely capital-intensive and, as a result, prohibitive. Acids require high alloy reactors or expensive recovery systems, and enzymes demand extensive pretreatment and large volume sterile systems.

Other processes have added solvents to try and improve the use of enzymes or acids, but have simply traded one high cost for another.

The new method

In contrast to these technologies, Renmatix was established to forge a new path in which plants economically obsolete petroleum. The Plantrose process is the first conversion technology to compete with fossil fuels on price. Using supercritical water – water at elevated temperatures and pressures – Renmatix economically deconstructs biomass into useful, cellulosic sugars, lignin polymers, and other fractions. While it also has a favourable footprint over competing technologies, it uses no significant consumables, includes rapid reactions in small reactors, and can process any number of feedstocks, reinforcing its position as a globally relevant and scalable solution. In turn, profitable conversion technologies can serve Renmatix bioflex conversion unit

significant bioenergy market demand and begin to provide large-scale, meaningful volumes as an alternative to incumbent petroleumderived fuels and chemicals.

Though the innovation is technical in origin, Plantrose generates an economically compelling impact on the evolving ecosystem for this burgeoning global bioeconomy. Access to these low-cost sugars creates a compounding domino effect up and down the supply chain, enabling the broad scale-up of biochemical, cellulosic ethanol, and advanced biofuels markets worldwide. Cellulosic sugar is an enabling feedstock for petroleum alternatives used in the global biochemical and biofuels markets. By utilising the Plantrose process, key players, like BASF and Total, are diverging from an era of relying solely on oil-based chemistry to one reinvented as sugar-based via modern technology. The economic breakthrough encompassed by this new process means a lower cost starting point for bioenergy, enabling it to cost-effectively compete with conventional petroleum alternatives.

With global energy demand projected to grow by 56% by 2040, according to the US Energy Information Administration, there is a need for solutions that can

be tailored to meet the needs of diverse markets. Because Plantrose technology is feedstock agnostic, there are multiple feedstocks that can be utilised, including woody biomass, agri-residues, municipal solid waste, and others. As more countries move towards a new energy paradigm, Plantrose can supplant traditional energy generation methods and further displace nonrenewable energy sources as scaling hinges on its economic viability and a flexible conversion platform.

Open the gates To drive further development in the sector, Bill Gates alongside French energy giant Total - recently invested $14 million in Renmatix. The investment, which will go towards commercialising Plantrose, will help drive towards the first wave of Plantrose-enabled biorefineries in diverse global markets like Canada, India, Malaysia, the US, and elsewhere. This most recent investment gives further commercial momentum to the sector as the biomarket continues to scale.

While government mandates were essential in initially spurring bioenergy, the industry is entering an era where biofuel and biochemical production is competitive with petro-based approaches. This breakthrough in cost will truly accelerate the growth of the global bioeconomy, and help nations achieve their GHG reduction goals ratified under the Paris Agreement. l For more information: This article was written by Mark Schweiker, former Governor of Pennsylvania and senior VP at Renmatix. Visit: www.renmatix.com

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biofuels company profile Main obstacles facing the biorefining industry

Reaching for the stars

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hile the realisation of the bioeconomy is well underway, there remain vital needs in order for this budding industry to grow in the most carefully considered way. It has a high potential to bring positive benefits to people and the environment while being capable of maintaining profitability in the long run.

Today, many biomaterial producers depend on energyintensive technologies (e.g. burning/vaporisation of biomass through pyrolysis or gasification), which have a negative effect on their carbon footprint. Other technologies accept only certain feedstocks.

For example, fermentation to ethanol requires sugars, which are expensive. Seeking to address these issues, Mercurius Biorefining is developing a first-of-its-kind process, which not only reduces environmental impacts but can efficiently produce a range of biomaterials at significantly lower capital and operational costs.

Changing the game Mercurius Biorefining aims to bring to market a novel biorefinery process, REACH (renewable acid-hydrolysis condensation hydrotreating), which transforms low-value, non-food cellulosic waste material into drop-in diesel, jet fuel, and renewable chemicals.

The patented REACH technology has a number of competitive advantages.

While other technologies use sugars as a feedstock, REACH skips the sugar-fromcellulose step entirely by accepting raw biomass input.

It can operate in non-extreme processing conditions of

low-temperature and pressure and is a significantly faster process than fermentation, reducing production time from days to hours. The REACH process is liquidphase and catalytic in nature, which decreases equipment size and therefore reduces capital expenditure (CapEx).

Feedstock flexibility and the lack of need for expensive enzymes greatly reduce operational expenditure (OpEx).

High-value by-products include FDCA (furan-2,5-dicarboxylic acid), levulinic acid, and formic acid. It is particularly important to note that REACH combines existing and proven technologies from the pulp and paper, as well as the petroleum refining industries, allowing for quicker scaleup to full capacity while also lowering investment risk.

Process overview Once cellulosic waste feedstock (e.g. agricultural and forestry residues, biomassderived MSW) is procured and delivered to the biorefinery, the production process can begin. Non-food biomass is treated in an acid-hydrolysis unit (similar to pulp and paper mills), creating a mixture of non-sugar intermediates in high yields. At this stage, several other high-value byproducts can be produced, including FDCA, biochar, levulinic acid, formic acid, and furfural. For fuel production, intermediates are processed through a condensation reaction step, resulting in carbon chains required for the desired liquid fuel. The final step deoxygenates the intermediates, resulting in fuel products that are drop-in- and blend-ready for use in the general liquid fuels market.

Mercurius has patented the REACH technology and processes that can, for the first time, make production of cellulosic biofuels economically viable and profitable, filling the market need for lower-cost biomaterials, which achieve progress towards greenhouse gas reduction goals. At this time, Mercurius estimates that REACH-produced liquid fuel and other bioproducts would have approximately 2-3 times the cost reduction in CapEx over competing technologies, as well as significantly lower OpEx. The economics of the process would be viable even if crude oil prices drop as low as $40 (€36.42) per barrel.

Initial price estimates, based on corn stover feedstock, show promising results (Fig 1).

Achieving these low price points is the result of the REACH technology’s combination of non-extreme processing and feedstock flexibility. Reduced CapEx is the result of the liquidphase catalytic process’ decreased equipment size when compared to pyrolysis and gasification technologies,

which require large vapour volumes and therefore need larger equipment resulting in higher CapEx. The faster REACH process, with a residence time of mere hours, versus fermentation processes that have a residence time of several days, also contributes to lower CapEx. Reduction of OpEx is primarily owed to the capability of REACH to accept a plethora of cellulosic waste feedstock inputs, including those of high moisture content such as yard waste and agricultural residues. Additionally, low OpEx is achieved by the REACH process’s low sensitivity to feedstock impurities as it does not use delicate enzymes or bacteria.

Each tonne of biomass could yield approximately 80 gallons of fuel.

Market demand is in place As there is momentum in the aviation fuel industry, with many airlines committing to source sustainable fuel and convert to cellulosic aviation

CapEx:

$

3-5

/annual gal capacity

For example, a 15 mil gal plant at $4/annual gal capacity would cost $60 million

OpEx:

$

1.06

/gal excluding capital charges

$

1.62

/gal including capital charges

Figure 1

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Pilot facility for testing production of biomaterials at the University of Maine

fuel, it is clear that there is large-scale interest to move away from traditional fuels and towards advanced fuels using non-food feedstocks.

Concurrently, there is a large interest from property management companies to divert waste from landfills, a potential source of feedstock for REACH. Regarding demand from government entities, Mercurius could likely play a key role in achieving goals outlined in the US federal government’s Federal Alternative Jet Fuels Research and Development Strategy. Both the US Navy and the Air Force have publicly stated they will purchase cellulosic drop-in fuels as soon as they become commercially available. The Department of Defense has committed to having 50% of all fuel be nonpetroleum based by 2020.

As mentioned earlier, REACH also has the capability to produce the FDCA monomer, a key component of the recyclable polymer PEF (polyethylene furanoate) with a wide range of applications including fibres and plastic containers. PEF is a promising replacement for PET (polyethylene terephthalate), a widely used polymer for consumer products signified by the plastics recycling code “1”. Therefore, Mercurius can be considered a “onestop shop” for those looking to invest in multiple aspects of the bio-economy.

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Environmental benefits From initial results using corn stover feedstock, greenhouse gas emissions for aviation fuel could be reduced by at least 82% in comparison

to the fossil fuel equivalent.

Contributing to this high GHG savings figure, REACH uses non-burn techniques and waste feedstocks. Thus, CO2 emissions are not produced, unlike with fermentation and gasification processes.

To further reduce impact, hydrogen for the process could be sourced from a local biogas source, and the biochar by-product could be used as an energy source.

Bringing even the best ideas to fruition requires an enormous amount of time, funding, and coordination, and the apparent shortage of support for start-ups may perhaps be the largest obstacle to progressing beyond earlystage testing. To improve the situation, implementing mechanisms to bring together investors interested

in promising biomaterial technologies currently at the R&D and scale-up stage and opportunities for grant recipients to bring awareness of their need to match funds would help immensely.

Mercurius Biorefining received a $4.6 million (€4.1m) grant from the US Department of Energy Biotechnology Technologies Office in April 2012. Mercurius was awarded this grant for R&D and to build its pilot plant. The company also extends credit to its project partners Purdue University, the University of Maine, and the University of California, Davis. l

For more information: This article was written by Anne Uyeda, sustainability and public relations specialist at Mercurius Biorefining.

Visit: www.mercuriusbiorefining.com

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biofuels event The great and the good met in Ghent, Belgium, at the Biofuels International Conference

Post-2020 EU vision

by Liz Gyekye and Colin Ley

B

iofuel heavyweights from all over the world converged on Ghent for the 9th Biofuels International Conference & Expo from 20-22 September, 2016. One topic on everyone’s lips was the issue of the EU’s post-2030 biofuels plan – or rather the lack of one. By 2020, the EU aims to have 10% of the transport fuel of every EU country come from renewable sources, such as biofuels. However, what is the industry’s long-term vision?

Speaking to Biofuels International at the sidelines of the conference, Raf Verdonck, consultant at TOTCO, says: “Nobody knows what the 2030 landscape will look like.

It is difficult to predict. What you could hope for is that we will develop really good second-generation biofuels and technologies that are not really established today.

There might be support to help their development. Currently, you have double-counting incentive support for used cooking oil and fatty acid methyl esters (FAME). There could be similar incentives for new technologies.”

Verdonck adds that he believes that crop-based biofuels would still be present in 2030 because “they are part of what Europe needs to support a good agricultural policy”.

‘Change the world’ He goes on: “20-30 years ago, subsidies were spent to encourage farmers not to produce anything. That sounds crazy to me. Why not spend money to have them produce something

St1 Biofuels’ head of business development and sales Patrick Pitkänen giving a talk on St1’s new Kajaani second-generation plant at the Biofuels International Conference

that lowers our energy bills and contributes to a better environment. I guess we will have the traditional biofuels around in 2030 and I hope we have a lot of new products coming from new technologies.

I also hope we will reach our 10% target by then.

“Today, collectively in Europe we are around 5%. So, 10% is a long way to go. We (Europe) have been working on biofuels for around ten years now and we are still short of our 10% target. We have plateaued at around 5% for a number of years now. In order to get further than this, there needs to be political will.Otherwise we are going to stay where we are. 2030 is 14 years away. We are not going to change the world in 14 years, but we can go a lot further than 10%.”

Brecht Vanlerberghe, R&D manager at Bio Base Europe, concurs with Verdonck and says that there is still no clarity on a 2030 biofuels world. However, he says that compressed natural gas (CNG) could be part of a green future.

He explains: “Today, CNG is fossil-fuel based but there is no reason why it shouldn’t be bio-based. The technology is being developed to convert biogas into biomethane.

CNG is widely used in Italy.

“Ideally, we can shift from biofuels to higher added value chemicals to generate more value from the biomass, but biofuels are key in making this happen. Biofuel applications are very important to get over a lot of hurdles blocking the development of the bioeconomy. These challenges include organising the supply chain and commoditising feedstocks, reaching economical scale of operation, co-product valorisation, and standardisation of sustainability criteria.”

Methanol used in fuel cells Bo Gleerup, co-founder of biomethanol specialist Nordic Green, says that after 2030 there will be a focus on developing electrofuels.

He says methanol used in combination with fuel cells (a battery used in electric vehicles) will be more prominent as electric vehicles become more popular with the consumer and adds that fuel cells produce electricity from hydrogen, but hydrogen “is a nightmare to transport”.

Gleerup explains: “Hydrogen is easy to handle in a fuel cell.

It is also easy to store and transport. People will fill their cars up with methanol if they need a top up. The fuel cell will change that into electricity, so that drivers can continue to drive. Therefore, you will not have the ‘long charging hours’ issue that you have with Tesla.

That will be the 2030 future.”

Gleerup also says that Nordic countries such as Sweden and Finland have pushed ahead with vast tax incentives to make biofuels more affordable to producers. “The countries that have come the furthest are the ones who have had governments that push the furthest,” he concludes.

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Biofuels International also caught up with other leading representatives from the biofuels industry to find out what they thought of the conference

Ian Waller, lead auditor at FiveBarGate

Matthew Stone, MD at Prima Markets

Matthew Stone, managing director at Prima Markets, says: “The conference for me highlighted the fact that we still don’t know, as an industry, what’s going on in relation to EU policy. In fact, if anything, uncertainty across the biofuels sector is getting worse on this issue.

“We’re told that the industry needs to be demand-driven, but when you talk to people from across the trading deck, they really have very little idea what shape policies are going to take next year or the year after, let alone during the post-2020 period. Even the European Commission doesn’t have a detailed idea of the policies it wants to pursue, beyond voicing grand overarching plans on carbon reduction.

“As a result, we keep returning to the eternal problem of market fragmentation, caused by a lack of consistency on policies which is creating huge headaches for businesses as they try to meet emission reduction targets in the most efficient way possible.

“If we could resolve this situation it would be better for the environment, better for the industry and ultimately better for policy makers.”

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Ian Waller, lead auditor at FiveBarGate, says: “The interesting thing about this conference was to get a fresh view of the debate we’ve had over the last few years between the competing interests of first, second and third generation fuels, a discussion which finally seems to be becoming a little more mature.

“The different sectors represented in Ghent, in fact, appeared to be starting to understand that there should be sufficient crumbs on the plate for us all to eat reasonably well, so long as nobody gets too greedy.

“In the past, people were so concerned at the prospect of the industry plate shrinking that everyone focused on fighting for their share. There now seems be an appreciation that the plate itself might be big enough for us to focus instead on how to work it out between us. As such, the debate is becoming a bit more positive and forwardthinking and a little less protectionist, which has to be good for us all.”

Kevin McGeeney, CEO at SCB Group, says: “This is my third Biofuels International conference and the reason I keep coming back is that the event attracts an audience of people who are very active in the biofuels space. There were therefore very few uncommitted people involved in Ghent. As a result, whenever I moved from one group to another during networking sessions I always ended up talking to someone who had been in

Kevin McGeeney, CEO at SCB

the industry for a considerable period of time and had a deep knowledge of a specific part of the biofuels business.

“During one such session, for example, I learned a ton of stuff about molecular sieves. Now, will I ever need to know anything about molecular sieves? Maybe not, but if I do then I now know who to ask.

“To get that depth of diversity and experience in one place is extremely valuable. Everyone was an expert in something and to be surrounded by 60 experts was brilliant.” l

Jari Tielinen, head of business development, Finpro, Invest in Finland, says: “The conference gave me the chance to talk to many well-informed people across the biofuels sector, getting their input on how the market is developing and their views on how it is likely to progress in the future. Being in Ghent was therefore very useful.”

Jari Tielinen, head of business development at Finpro, Invest in Finland

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biofuels securing project financing The options to consider when looking for project funding

How to find the fund

T

oday’s biofuels market is a race to improve efficiencies and expand production.

Producers are constantly evaluating new technology options, equipment additions, and process changes.

All these projects require funding, of course, and although most facilities have ample working capital, the threat of continued tight margins has plants seeking alternative financing options.

Whether current funds are not an option or the company has simply chosen to evaluate other alternatives for a particular project, all alternatives must be reviewed to choose the best funding source. Detail in the research stage is critical, as project organisers must determine the project’s total cost, scope, and timeline, including all contingencies.

After assessing the scope, the team must identify alternatives for capital funding, review eligibility and availability, and summarise expected costs associated with each source of funding.

While a project may qualify for multiple options, certain types of funding are more costadvantageous than others, and not all funding types are a good fit for each project.

Sources of funding A single project may be funded from multiple sources, including the traditional source – bank financing. This is a solid option for many projects, as interest rates are at record lows and lenders are interested.

Good candidates for lender financing are projects that have low technology risk and short payback periods, as well as projects that improve efficiencies.

Several different state and federal programmes are available that offer grant funding and loan guarantees Technology providers may also serve as a source of “funding.” Several technology providers have been willing to finance new equipment in the form of lease financing, so plants that are willing to test innovations may benefit from this option.

Depending on the type of project, facility location, and eligibility, several different state and federal programmes are available that offer grant funding and loan guarantees. The US Department of Agricultural and Rural Development (USDA) offers several grants and loan guarantees. Projects in the research and development stage can qualify for USDA planning grants called Value Added Producer Grants.

This programme also offers a working capital grant, which provides matching funds to pay for up to 50% of actual total project costs.

The USDA also offers grant funding through its Rural Energy for America Program (REAP) Renewable Energy & Energy Efficiency Improvement Loans & Grant. REAP grants and loan guarantees funding for projects which do one of two things, namely increase biofuels production capacity or increase operational efficiencies in the facility.

REAP grants can fund up to 25% of total eligible project costs, while loan guarantees may be offered up to 75% of total eligible project costs.

The Repowering Assistance Program is another USDA

programme, which covers up to 50% of project cost up to $500,000 (€456,600), and can be used on technology designed to replace fossil fuel use (for heat or power at the facility) with renewable biomass heat-and-power systems, or to install technology that produces new energy from renewable biomass.

Grants funds are also available from the US Department of Energy, for projects using new technology and innovative processes.

The Renewable Energy Systems Grant offers $2,500 to $500,000 for biofuels production expansion. The Energy Efficiency Grant provides $1,500 to $250,000 to improve energy use in a biofuels production facility.

Taking the alternative Research on alternative financing sources should also include opportunities at the project’s specific location.

State departments of energy, departments of agriculture, corn growers associations, or even local utilities may offer grants or loan guarantees for particular locations.

Other location-based potential capital sources include industrial revenue bonds (IRBs), municipal bonds, and tax increment financing. IRBs are sponsored by a government entity, but relinquish capital proceeds to a private business for a specific project. IRBs are limited in total to $10 million. In addition to

this, total capital expenditure at the project may not exceed $20 million, and total IRBs outstanding at the company cannot exceed $40 million.

IRBs are repaid through future revenue generated from the biofuels facility.

Municipal bonds are a similar funding source, which are a general obligation issued and secured by the municipality in which the project is located. This type of financing is guaranteed by the issuing municipality.

Tax Increment Financing (TIF) is a public financing method, which is used to fund projects by diverting future property tax increases to a project. Funds are repaid through future real estate tax assessment of the facility.

Other programmes can be examined depending on project specifics, so again thorough project description and scope is important when researching and pursuing funding. For instance, the EB-5 Immigration Investor Program funds commercial enterprise in the US to create and preserve ten permanent full-time jobs for qualified US workers, so although not specific to biofuels production, it may be worth reviewing to determine if a particular project may qualify.

A compelling and detailed project summary is also useful for one final source of funding that should be included in the funding research process: individual angel investors and venture capital organisations. Project summaries may be submitted to such investors, who may provide capital in exchange for ownership equity. l For more information: This is an article written by Sherry Jean Larson, assurance and advisory services manager for Christianson & Associates.

Visit: www.christiansoncpa.com

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