September 2010 Ethanol Producer Magazine

SEPTEMBER 2010

INSIDE: GROWING INTEREST IN FRACTIONATION

WWW.ETHANOLPRODUCER.COM

Turbulent Times In Policy Work

Studies, New Ideas Fuel Ethanol Subsidy Debate

Enhancing biofuel design since 1977.

Finding the right alternative energy source can be challenging. It takes more than a one-size-fits-all, Band-Aid approach. Burns & McDonnell — with more than

30 years of biofuels experience — will engineer the right energy-efficient, sustainable solution for your facility with the follow-through and support you need.

E n g i n e e r i n g , A r c h i t e c t u r e , C o n s t r u c t i o n , E n v i r o n m e n t a l a n d C o n s u l t i n g S o l u t i o n s

For more information:Ron [email protected]

Comprehensive Services

Ethanol? Gas-to-Liquid? Biodiesel?

Need refueling? Build it better with Burns & McDonnell.

For more information, visit www.fermentis.com or email [email protected]

Our fermentationexperts offer cus-

tom made recom-mendations to adapt

to your process, yourneeds & your economics.

From the selection of the yeaststrain to the definition of its format

up to onsite training of your staff, Fermentis offers yourethanol plant a global fermentation approach to maximizeyour efficiency & profitability.

Grap

hic

desi

gn ss

Mar

ie R

IO

ETHANOL PRODUCER MAGAZINE September 2010 4

54

vol. 16 no. 9

42 FRACTIONATION Unlocking the Power of Corn Th e time may have come when more plants will take a serious look at adding front-end fractionation.–By Holly Jessen

48 POLICYWeathering the VEETC Storm A fl urry of contradictory reports and a new policy proposal have complicated the tax incentive extension eff ort.–By Holly Jessen

54 PROFILE Fueling a New Market LPP Combustion has developed a process to gasify ethanol or other liquid fuels for use as a natural gas substitute.–By Kris Bevill

features

contents

Ethanol Producer Magazine: (USPS No. 023-974) September 2010, Vol. 16, Issue 9. Ethanol Producer Magazine is published monthly. Principal Of-fi ce: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offi ces. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

8 Editor’s Note It’s About the Message By Susanne Retka Schill

9 Advertiser Index

10 Events Calendar

14 The Way I See It Examine VEETC Impact, Extend Blends Now By Mike Bryan

16 View From the Hill Lessons from the Front Lines By Nathan Kimpel

18 Drive Fueling Freedom By Tom Buis

20 eBio ILUC Debate in Europe—The Saga Continues By Rob Vierhoust

24 Business Matters Recent Legal Challenges to EPA’s RFS2 By Andrew Anderson and Jess Phelps

26 Business & People

28 Commodities

20 BIObytes

32 Industry News

62 Marketplace

departments

contents

6

contributions

6060 CARBON DIOXIDE CO2 Increasingly Important to Ethanol Ethanol producers can benefi t by tapping into the best available carbon dioxide market, although future policy and climate needs may drive sequestration eff orts. –By Sam Rushing

ETHANOL PRODUCER MAGAZINE September 2010

Let Novozymes

show you a

winning strategy

HIT THE JACKPOTIN ETHANOL PRODUCTION

Why take a

chance with lower

performance?

More ethanol means more profi t. Our new Spirizyme® Excel converts more starch than ever and can take your ethanol production to new heights. Designed to give consistent performance across variable mash conditions and production processes, this robust enzyme enables you to get the most from your corn.

Partner with us to stay ahead of the competition. As the industry leader in experience and expertise, we’re committed to providing you with advanced technologies and the customized support to make them work for you.Find out more at www.bioenergy.novozymes.com


It’s About the Message

eading through this EPM issue, one can’t help but notice the turbulence in the etha-nol industry. Extension of the ethanol tax credit is by no means assured. New reports

continue to come out both damaging and favorable to ethanol. The mainstream press continues its tirades, although there was a glimmer of hope of better balance in a Bloomberg New Energy Finance report on how oil subsidies are 12 times greater than renewables (and written permanently into the tax code). More troubling, however, is the divergence of policy strategies among the ethanol industry’s advocacy groups. Holly Jessen was ready to begin digging into the blenders tax credit for her feature story when Growth Energy announced its Fueling Freedom plan. Needless to say, her story took on new dimensions, looking at that plan and the reactions to it, along with several new reports examin-ing the subsidy issue. Nearly every columnist in this issue addresses the controversy as well.

The best means to further ethanol is the root is-sue. One hopes that through this tension and diversity of thought, new synergies will emerge and ultimately strengthen the industry.

On a related note, Merle Anderson, chairman emeritus of the American Coalition for Ethanol from Climax, Minn., shared some number crunching in defense of ethanol that formed the core of a letter to the editor he recently submitted to local and regional publications. It makes me think it might be time to re-call the calculations of a simpler day, before life-cycle analyses and indirect land use theories muddied the waters. He focuses on the fossil energy used in grow-ing corn, starting with national averages for yields and fi eld inputs. The result: One acre of corn produces 165 bushels with an ethanol yield of 2.7 gallons per bushel which computes to 445.5 gallons of ethanol produced per acre on the average. If you fi gure 5 gallons of fos-sil fuel used per acre for traditional farming practices, 89 gallons of ethanol is produced for every gallon of fossil fuel. “Now that is a high gain in replacing foreign oil,” Anderson says.

He ran the numbers again, this time assuming a 200 bushel corn yield (higher than the average, but still not as high as some corn producers routinely get) and a lower fossil fuel use to refl ect no-till farm-

ing practices. He based his calculations on a quarter-section fi eld of corn.

160 acres of corn times 200 bushels per acre equals 32,000 bushels.

Most ethanol plants yield 3 gallons per bushel for a yield of 96,000 gallons per quarter section.

3 gallons of fossil fuel used for planting, harvest-ing and transporting the crop requires a total of 480 gallons per 160 acres.

96,000 gallons of renewable fuel divided by 480 gallons of fossil fuel used equals 200 gallons of etha-nol produced for each gallon of fossil fuel.

That yield goes a long way in replacing oil im-ports.

Anderson explains he doesn’t include the energy used to produce ethanol, because that comes from domestic supplies. “By using natural gas and electric-ity, we are simply trading in commerce and it is only good for the country,” he says. Ethanol only uses the starch from the corn kernel, he adds, leaving other nutrients to be used for food and feed. “With our oil im-ports at nearly 70 percent, we in agriculture can play a huge role to help our economic problem, job creation, and help keep our money in our nation’s heartland in-stead of sending money to countries that support ter-rorism.”

Merle may be onto something. Turning public opinion around may require simplifying the argument and illustrating points with concrete examples. Keep encouraging folks in corn country to continue explain-ing to anyone who will listen how ethanol benefi ts their local community and the country. Keep it simple. Keep it concrete.

Susanne Retka Schill, [email protected]

R

Susanne Retka Schill Editor's Note

w w w . E t h a n o l P r o d u c e r . c o m

P U B L I S H I N G & S A L E S

Mike Bryan

Joe Bryan

Tom Bryan

Matthew Spoor

Howard Brockhouse

Jeremy Hanson

Chip Shereck

Marty Steen

Bob Brown

Gary Shields

Jessica Beaudry

Jason Smith

Marla DeFoe

[email protected]

[email protected]

Vice President [email protected]

Vice President, Sales & [email protected]

Executive Account [email protected]

Senior Account Manager [email protected]

Account Manager [email protected]

Account Manager [email protected]

Account [email protected]

Account [email protected]

Subscriptions [email protected]

Subscriber Acquisition [email protected]

Advertising [email protected]

A R T

Jaci Satterlund

Sam Melquist

Elizabeth Burslie

Art [email protected]

Graphic [email protected]

Graphic [email protected]

E D I T O R I A L

Susanne Retka Schill

Holly Jessen

Kris Bevill

Jan Tellmann

[email protected]

Associate [email protected]

Associate [email protected]

Copy [email protected]

Ethanol Producer Magazine is now free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www.Etha-nolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367.

Select back issues are available for $3.95 each, plus shipping. To place an order, contact Subscriptions at (701) 746-8385 or [email protected]. Article reprints are also available for a fee.

For advertising rates and our editorial calendar, visit www.EthanolProducer.com or call (866) 746-8385.

We welcome letters to the editor. Send your letter to: Ethanol Producer Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to [email protected]. Letters should include the writer’s full name, address and telephone number, and may be edited for purposes of clarity and space.

SUBSCRIPTIONS

BACK ISSUES AND REPRINTS

ADVERTISING

LETTERS TO THE EDITOR

Please send correspondence to:Ethanol Producer Magazine308 Second Ave. N., Suite 304Grand Forks, ND USA 58203Phone: (701) 746-8385Fax: (701) 738-4927

Advertising information online:www.EthanolProducer.com

2010 Southeast BIOMASS Conference & Trade Show

2011 International Fuel Ethanol Workshop & Expo

2011 National Ethanol Conference

2011 Pacifi c West BIOMASS Conference & Trade Show

Agra Industries Inc.

BetaTec Hop Products

Biomass Magazine

BrownWinick Law Firm

Burns & McDonnell

CPM Roskamp Champion

Crown Iron Works Co.

EISENMANN Corp.

ethanol-jobs.com

Fagen Inc.

Fermentis - Division of S.I. Lesaffre

Gavilon

Genencor® - A Danisco Division

HEMCO Industries

Hydro-Klean Inc.

ICM, Inc.

Inbicon

Indeck Power Equipment Co.

Kennedy & Coe LLC

Nalco Co.

Natwick Associates Appraisal Services

Novozymes

Pioneer Hi-Bred International Inc.

POET LLC

Renewable Fuels Association

Victory Energy Operations, LLC

Vogelbusch USA, Inc.

Wabash Power Equipment Co.

19 & 67

25

17

66

44

47

23

41

2

45

46

51

36

37

3

52

15 & 21

53

38 & 39

5

10 & 11

40

35

58

56

7

13

68

59

57

34

50

AdIndex

COPYRIGHT © 2010 by BBI InternationalETHANOL PRODUCER MAGAZINE September 2010 9

E D I T O R I A L B O A R D

Mike Jerke

Jeremy Wilhelm

Mick Henderson

Keith Kor

Walter Wendland

Neal Jakel

Bert Farrish

Eric Mosebey

Steve Roe

Bernie Punt

Chippewa Valley Ethanol Co. LLLP

Cilion Inc.

Commonwealth Agri-Energy LLC

Corn Plus LLLP

Golden Grain Energy LLC

Illinois River Energy LLC

LifeLine Foods LLC

Lincolnland Agri-Energy LLC

Little Sioux Corn Processors LP

Siouxland Energy & Livestock Co-op

Today’s path

to 16,000,000,000

gallons of The

New Ethanol.™

12 ETHANOL PRODUCER MAGAZINE September 2010

ETHANOL EVENTSExport Exchange 2010October 6-8, 2010Hyatt Regency McCormick Place HotelChicago, IllinoisThe U.S. Grains Council and Renewable Fuels Association are cosponsoring this international trade conference focused around the export of U.S. distillers dried grains and coarse grains. The focus will be on connecting international buyers of DDGS and coarse grains with the U.S. market. USGC is sponsoring targeted trade teams from more than 25 countries. The conference will address critical issues facing U.S. exports and seek to educate and build awareness among international buyers.www.grains.org

International Biorefi ning Conference & Trade ShowNovember 16-18, 2010David L. Lawrence Convention CenterPittsburgh, PennsylvaniaWith a focus on strategies to accelerate the growth of the global biorefi ning in-dustry, this forum will allow technology developers to connect with investors and strategic partners, putting them on a path toward deployment. Organized by BBI International and produced by Biorefi ning Magazine, this event will include panels on project fi nance, market development, technology scale-up and more, all focused on the advanced biofuels and biobased chemicals space.www.biorefi ningconference.com

Pacifi c West BIOMASS Conference & Trade ShowJanuary 10-12, 2011Sheraton Seattle HotelSeattle, Washington With an exclusive focus on biomass utilization in California, Oregon, Washing-ton, Idaho and Nevada, the Pacifi c West BIOMASS Conference & Trade Show is one of three distinct regional offshoots of Biomass Magazine’s International BIOMASS Conference & Expo. The program will focus on the vast potential for biomass utilization in the Pacifi c West, featuring more than 60 speakers within four tracks: electricity generation; industrial heat and power; biorefi ning; and biomass project development and fi nance. Speaker abstracts are now being accepted online. www.biomassconference.com/pacifi cwest

International BIOMASS Conference & ExpoMay 2-5, 2011America’s CenterSt. Louis, MissouriThe International BIOMASS Conference & Expo is the biomass industry’s largest, fastest-growing event. In 2010, BIOMASS was attended by 1,700 in-dustry professionals from 49 states and 25 nations representing nearly every geographical region and sector of the world’s interconnected biomass utiliza-tion industries—power, thermal energy, fuels and chemicals. With six tracks, 38 panels, 120 speakers, 400 exhibitors and an anticipated 2,500 attendees in 2011, BIOMASS will continue to be the industry’s leading educational, net-working and business development forum. Speaker abstracts are now being accepted online.www.biomassconference.com

Southeast BIOMASS Conference & Trade ShowNovember 2-4, 2010Hyatt Regency Atlanta Atlanta, GeorgiaWith an exclusive focus on biomass utilization in the Southeast—from the Vir-ginias to the Gulf Coast—the Southeast BIOMASS Conference & Trade Show is one of three distinct regional offshoots of Biomass Magazine’s International BIOMASS Conference & Expo. The program will feature more than 60 speak-ers within four tracks: electricity generation; industrial heat and power; biorefi n-ing; and biomass project development and fi nance. Speaker abstracts are now being accepted online.www.biomassconference.com/southeast

7th Canadian Renewable Fuels SummitNovember 29-December 1, 2010Hilton Lac-Leamy HotelGatineau, QuebecNetwork with the leaders of government and industry at the Canadian Renew-able Fuels Association’s seventh annual summit to be held this year in the na-tion’s capital. The summit attracts participants from across North America and around the world and is open to members and non-members alike, comprised of representatives from all levels of the biofuels industry including grain and cellulosic ethanol producers, biodiesel producers, Canada’s leading petroleum companies and agriculture associations.www.crfs2010.com

National Ethanol ConferenceFebruary 20-22, 2011JW Marriott Desert RidgePhoenix, ArizonaSpeakers and sessions will focus on opportunities facing the ethanol industry, including policy impacts, decisions, and updates, climate change, and other critical factors shaping the industry. www.nationalethanolconference.com

International Fuel Ethanol Workshop & ExpoJune 27-30, 2011Indiana Convention CenterIndianapolis, Indiana Entering its 27th year, the FEW is the largest, longest running ethanol confer-ence in the world. The FEW is renowned for its superb programming which remains focused on commercial-scale ethanol production—both grain and cellulosic—operational effi ciencies, plant management, energy use, and near-term research and development. With fi ve tracks, 32 panels, 100 speakers, 400 exhibitors and an anticipated 2,500 attendees in 2011, the FEW remains the ethanol industry’s leading production-oriented, educational, networking and business development forum. Speaker abstracts are now being accepted on-line.www.fuelethanolworkshop.com

®, TM, SM Trademarks and service marks of Pioneer Hi-Bred. All purchases are subject to the terms of labeling and purchase documents.© 2009 PHII BIOFL015738P238AVA

Access toMore Farmers

and Bushels

More Ethanolper Bushel

Better Grain Quality

PioneerMarketPoint®

Resource

PioneerQualiTrak®

System

Measuringthe Results

Right feedstock. Right value.


The Way I See It

Mike BryanChairman

[email protected]

Examine VEETC Impact, Extend Blends NowThe issues currently on the table for review by Congress

are critically important to the future of the domestic ethanol industry. The weeks and months ahead could prove to be a dramatic turning point in the history of ethanol.

Some of the major decisions include whether to: Extend the present Volumetric Ethanol Tax Credit or

terminate it over time and possibly introduce other options. Increase the blend levels from 10 percent to 15 per-

cent or an interim step of 12 percent. Eliminate or continue the tariff on imported Brazil-

ian ethanol.These are, indeed, game changing decisions that will ei-

ther secure the future of ethanol or call its future into ques-tion. It’s no secret that there is division within the ethanol industry on some of these issues. Unfortunately, divisiveness at this critical time is the worst of all possible scenarios.

On the issue of whether to extend the current excise tax credits, I believe we need time to make sure that all the vari-ous alternatives have been thoroughly vetted before calling for it to be rescinded. We need time to come together and discuss the options and ramifi cations such actions may have on both current and future producers. We need to examine the impact that these policy changes would have on estab-lished plants that are carrying low or no debt versus plants that are newer and are still carrying a high debt load. If this means extending the current VEETC program for a shorter than desired period, to allow for these discussions to take place, then so be it.

Increasing the blend levels to 15 percent is virtually a no-brainer. The reason the 10 percent blend level was set in the fi rst place had little to do with technical issues, and much more to do with the ease of calculating the blend ratio. This,

of course, was before in-line blending was common place. Going to a 12 per-cent blend may seem like a good interim step, but may end up being a level that we stay at for years to come. There simply is no technical reason why we could not go directly to 15 percent, in fact, there seems little reason why we couldn’t go to a 20 percent blend, but that battle can be saved for another day. Even if we have to hold tight for a little longer in order to get to a full 15 percent, in my opinion, that’s what we should do.

Before any decision on the reduction or lifting of tariffs for imported ethanol takes place, the legislative and tax re-lated future of the domestic industry needs to be thoroughly sorted out. To even consider doing so prior to these matters being settled would be premature at best and at its worst, could be disastrous to the ethanol industry.

These are challenging times, times that will set the course for the domestic ethanol industry for years to come. Togeth-er, as a united coalition, we have built an industry that has withstood the test of time and together, in that same united spirit, we now need to come together to build our future.

That’s the way I see it.


n nearly three decades of experience helping to develop poli-cies and establish markets for American-made ethanol, I am truly proud of, but certainly not surprised at, what we have ac-complished. Since the beginning, America’s ethanol industry

has lived by the mantra that a rising tide will lift all boats. The indus-try has fought back efforts from oil companies to limit the use of our product. We have projected a unifi ed voice to members of Congress beginning in the Jimmy Carter administration to win legislative and regulatory victories that have created new markets and allowed for the incredible diversity and innovation in the industry today. Due to this success, and a perceived lack of unity today, we have attracted a plethora of new enemies that smell the proverbial blood in the water. I am here to tell you that this scenario has played out before. Each time, the industry ultimately stood strongly together.

This is not the fi rst time that critics have challenged ethanol. Almost from day one, Chicken Littles from across the globe have warned that using grain starch to produce ethanol will lead to wide-spread starvation and skyrocketing food prices. Neither have come to pass. Instead, American farmers have dramatically increased their productivity. Since New Energy’s beginning in 1984, corn used for feed is up 30 percent and exports are up 59 percent. We etha-nol producers have improved our effi ciencies, increased our yields, and provided improved coproducts that turn each bushel of corn into more than just renewable fuel.

Nor is this the fi rst time we have had to fi ght oil interests on Capitol Hill, in the administration, and in state capitals all across the country to ensure the market monopolized by oil was opened to re-newable fuels. Each time, we have been successful. I have no doubt we will prevail again.

And, while it may seem that we face an uphill battle in extending key tax incentives, we have seen this hill before. Despite repeated warnings about our addiction to imported oil, it strikes me as foolish that permanent subsidies for the oil industry are imbedded in the tax code while renewable technologies such as ethanol must come before Congress with hat in hand every few years. Nevertheless, we

have been successful because we all meticulously spelled out the benefi ts domestic ethanol production offers. Current perception of an industry divided on this issue make the current effort more com-plex, yet I still believe the industry will coalesce around policies that provide the most good for the most people, and we will see federal investment continue.

Retiring from an industry about which I feel a sense of paternal-ism is bittersweet. I am extraordinarily proud of the ethanol industry, my fellow members of the Renewable Fuels Association, and our champions on Capitol Hill for their perseverance and dedication to an industry we truly believe is doing the right thing.

While I feel pride looking back, I am excited for what is to come. The industry is just now beginning to gets its feet underneath it. It is deciding what it wants to be when it grows up and is pursuing those policies and technologies that will make it happen. Now is a critical time in the industry’s history. We cannot afford to let disagreements over 10 percent of the industry’s agenda detract from the important 90 percent on which we all agree. What this industry is trying to ac-complish, together with our friends in agriculture, is too important to allow it to be derailed. I strongly urge my colleagues to seek out that middle ground, rediscover that important unifi ed voice, and always keep a long term perspective in mind. They say history repeats itself. In the case of America’s ethanol industry, I certainly hope that is the case.

Nathan Kimpel, New Energy Corp., South Bend, Ind., is a retiring RFA board member. Reach him through RFA at (202) 289-3825.

Lessons from the Front LinesBy Nathan Kimpel

(Note: Throughout my 22 years with the RFA, I have benefi ted from the counsel of those in the industry who are on the front lines produc-ing and marketing ethanol. Nathan Kimpel, one of the founders of the RFA and a long-time board member, is retiring soon. I thought it appropriate for him to take this space this month to share his counsel with you.—Bob Dinneen)

VIEW FROM THE HILL

I

JW Marriott Desert Ridge

Phoenix, ArizonaJW Marriott Desert Ridge February 20-22, 2011

Mark Your Calendar!

www.nationalethanolconference.com


n July, Growth Energy proposed a change in federal energy policy to address the biggest challenge the ethanol industry faces—access to a fair, open and competitive market. We pro-posed a market-based solution, by modernizing current policies

which would result in the permanent elimination of the blend wall. Growth Energy’s Fueling Freedom proposal would gradually redirect the supports that initially helped ethanol grow—and put in its place a market-driven solution where ethanol can compete, and succeed, on its own. The Growth Energy plan would redirect a portion of the current Volumetric Ethanol Excise Tax Credit to support the build-out of the distribution infrastructure—namely, 200,000 blender pumps, and as many as 120 million fl ex-fuel vehicles—to give Americans access to an alternative fuel at the pump.

Currently, federal regulation mandates that all fuel be at least 90 percent gasoline, two-thirds of which is refi ned from imported oil. This 10 percent ethanol-gasoline blend wall restricts the ethanol industry’s access to the fuel market and ultimately will threaten our ability to meet the federal mandate of 36 billion gallons of biofuel production by 2022 as enacted in the 2007 Energy Independence and Security Act.

By eliminating market barriers as outlined in the Fueling Free-dom plan, we can create an open market where all fuels compete. In that scenario, domestic ethanol can win. The benefi ts of building out this infrastructure include an expanded fuel supply, which should help lower the price of fuel for consumers, as well as an invigorated economy in our rural communities and thousands of new jobs cre-ated here in the U.S. Expanded access to ethanol would also help decrease our dependence on foreign oil, improve our environment and strengthen our economic and national security. In 2009 alone, the production and use of 10.6 billion gallons of ethanol eliminated the need to import at least 364 million barrels of oil, reduced CO2-equivalent greenhouse gas emissions by approximately 16.5 million tons and supported more than 400,000 jobs here in the U.S.

There is no question that our plan will benefi t the American tax-payer, and every American over time, due to ethanol’s economic, environmental and political benefi ts. We have seen strong support from consumers, lawmakers, and industry groups who want to see a lasting impact of federal investment in biofuels such as ethanol.

In August, Sens. Tom Harkin, D-Iowa, and Richard Lugar, R-Ind., offered an amendment that would mandate the production of fl ex-fuel vehicles and require the installation of blender pumps—

both provisions included in the Fueling Freedom Plan. We support their amendment and will work to get it adopted in energy legislation when Congress returns in September.

Americans deserve the freedom to choose their fuel and if giv-en the opportunity, will choose America’s fuel, ethanol.

As an industry, we must continually evolve. Today, we no longer have a problem producing ethanol—in fact, we now overproduce. Our challenge is access to the market. For this reason, we must modernize federal ethanol policies to address today’s challenges. Will these changes be easy to get adopted? No. Are they worth pur-suing? Yes!

At Growth Energy, we believe in the entrepreneurial spirit of America. We know that ethanol is the most competitive fuel on the planet because the marketplace will affi rm it, despite academic the-ory to the contrary. And, if artifi cial suppression of demand can be removed, ethanol can fl ourish far beyond today’s artifi cial govern-ment “caps”. But, we must evolve. We must believe in the unlimited potential of our product.

Although accomplishing anything in an election year is diffi cult, it is never too late to stand up for the best interests of our industry. To stay silent while Congress debates an energy bill that does not address the challenges facing our industry would be shortsighted. Every other industry involved in energy is part of the debate, ethanol should be too. The status quo will no longer suffi ce.

We will continue to speak out for the need for reform of federal energy policies that reduce our dependence on foreign oil, create jobs right here in America, and improve our nation’s environment by expanding the market for ethanol.

I invite you to stand with us.

Tom Buis is CEO of Growth Energy. He can be reached at [email protected] or (202) 545-4000.

Fueling Freedom By Tom Buis

DRIVE

IBuis


ILUC Debate in Europe—The Saga ContinuesBy Robert Vierhout

n Europe, we have now entered the next phase of the de-bate on indirect land use change (ILUC). The European Commission has just issued a three-page consultation doc-ument seeking input from stakeholders on four questions. It is the second public consultation on ILUC. The fi rst a year

ago was euphemistically called a “pre-consultation.” The views expressed then will probably not vary much from those that will be voiced in this new consultation.

One year ago, environmental non-governmental organiza-tions (NGOs) and green politicians were advocating the precau-tionary principle be applied with an ILUC factor high enough to make all biofuels impossible to produce with the exception of those produced from cellulosic material or crops grown on mar-ginal land. We, the industry, said there is no sound scientifi c evi-dence to justify such punitive ILUC penalties. In the year since, a growing number of researchers have cast serious doubt on the hallucinating emission numbers made up by people like Search-inger et al.

The new consultation document raises (again) all the usual questions, including very sensitive ones that need answers.

The fi rst question is crucial, asking if the analytical work carried out to date “provides a good basis for determining how signifi cant ILUC resulting from the production of biofuels is.” The commission could have stopped there, but instead is soliciting comments on important factors such as the split between fi rst-and second-generation biofuels by 2020, the composition of the vehicle fl eet, the diesel/gasoline split, crop yields, land use data and coproducts. By adding this list of variables, it is as if the com-mission is saying it is not all that obvious. On the other hand, the question implies that ILUC occurs and that the real issue is to fi nd out the reasons why it occurs and whether it is big or small.

The three remaining questions are much more sensitive and political in nature. Question two asks whether the available evidence is persuasive enough to take regulatory steps. Ques-tion three asks if such action is taken, is there any relationship between the produced biofuel, the feedstock used, the region the biofuel comes from and the way land is managed? The answers given to the fi rst three questions will provide the answer to ques-

tion four which seeks input on policy options. The commission poses four options: a) No action, just monitoring; b) Encourage certain biofuels; c) Discourage certain biofuels; d) Some other action.

Two interesting remarks conclude the questionnaire. First, all responses must be justifi ed by reference to available science, meaning that the commission will discard political discourses im-mediately. That makes sense. A lot of environmental NGOs tend to present only their own biased and unbalanced “science” which all too often refl ects ideology rather than actual science. Second, responses may be submitted confi dentially. This is remarkable knowing that the commission has been criticized before by sev-eral NGOs and the media for a lack of transparency. However, it will certainly lower the threshold for some respondents to sug-gest approaches that are too controversial or too economically sensitive to be put into the public domain.

Overall the document is predictable in both the issues that it raises and the way in which these are presented. Probably so will the answers that will be handed in by stakeholders.

My personal belief is that the commission is conducting the consultation for reasons of justifi cation only. At the end of this year when the commission publishes its report, it cannot be ac-cused of not having sought stakeholder input. It is highly unlikely that the commission expects anything new from this exercise. The state of the science is known and so are the positions of the most important stakeholders.

I am certain that just like the external stakeholders, the vari-ous commission services fi ghting internally over the issue made up their minds a long time ago. They might change their posi-tion marginally, but not because of what is being presented in this consultation. If the commission services changes its view on ILUC, it will either be because there are scientifi c breakthroughs (not to be expected) or because the political tide has changed. On the latter, we are working hard.

Robert Vierhout is the secretary-general of eBIO, the Euro-pean Bioethanol Fuel Association. Reach him at [email protected].

I

eBIO INSIDER

Vierhout

September 13-15, 2011

Hilton Americas - HoustonHouston, Texas

Coproduced byFor more information:[email protected]

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

www.BiomassMagazine.com

For additional informationplease contact us at (701) 746-8385 or at [email protected]


Recent Legal Challenges to EPA’s RFS2 By Andrew Anderson and Jess Phelps

he U.S. EPA’s regulations regarding the expanded renew-able fuel standards (RFS2) have recently come under at-tack from both environmental nonprofi ts as well as the oil industry. Both challenges could have an impact on the

future direction of the biofuels industry and will be closely watched over the coming months as courts begin to wrestle with this compli-cated and ofttimes contentious rulemaking.

The Environmental ChallengeOn May 25, the Clean Air Task Force challenged the RFS2 on

behalf of the environmental group Friends of the Earth. This dispute relates back to Congress’ expansion of the RFS in 2007, which re-quired EPA to analyze biofuels to ensure that each alternative fuel source provided specifi ed reductions in greenhouse gas (GHG) emissions as compared to conventional fuels. This mandate also required EPA to establish safeguards to protect prairies and other natural ecosystems from being converted to cropland in response to the RFS. In its March fi nal rule, after extensive debate, EPA deter-mined that all existing biofuels—including corn ethanol—achieved the applicable emissions reductions goals as required under the biofuels mandate.

The Clean Air Task Force, however, is now challenging EPA’s conclusions regarding the emissions impacts of existing forms of biofuels arguing that “EPA’s rule is seriously fl awed because it will actually increase greenhouse gas emissions from the transportation sector in the near term.” The Clean Air Task Force also argues that EPA failed to consider the “global rebound effect” when analyzing the life-cycle GHG from biofuels. In the Clean Air Task Force’s view, the RFS2, by displacing gasoline from the U.S. market, will reduce overall demand for petroleum, which will lead to cheaper petroleum and, in turn, more use and more GHG emissions globally. According to the Clean Air Task Force, if EPA had considered this impact, only a few existing forms of biofuels would have met the emissions re-

ductions requirements. This assertion or allegation has been highly controversial. Lastly, the Clean Air Task Force has also asked EPA to reconsider its assumption that the RFS2 will not cause natural ecosystems to be converted to cropland.

The Oil Industry ChallengeThe National Petroleum and Refi ners Association and the

American Petroleum Institute have also challenged the RFS2, using a more narrowly tailored argument. According to the oil industry rep-resentatives, “EPA made the rule effective on July 1, 2010 … while setting unreasonable mandates on refi ners that reach back to 2009 for bio-based diesel and to Jan. 1 for the other advanced biofuels.” In short, the oil industry believes the retroactive application of the RFS2 is unreasonable and unsupported. To challenge this retroac-tive application, API fi led a legal challenge in the D.C. Circuit Court of Appeals on March 29, shortly after EPA’s rules were fi nalized.

Both challenges could potentially impact the future of the RFS2. Overall, the Clean Air Task Force suit is likely the more seri-ous threat (as the oil industry challenge is limited in scope) but it is questionable whether this suit will be able to gain any traction under the administrative law principle of deference to the agency. Regard-less, both suits are worth tracking as the EPA begins to apply the new rules to the biofuels industry.

The authors are attorneys with Faegre & Benson. Andrew Ander-son is head of the fi rm’s corporate group in Iowa. Reach him at 515-447-4703 or [email protected]. Jess Phelps focuses on international trade issues involving antidumping and counter-vailing duty litigation. Reach him at 515-447-4721 or [email protected].

T

BUSINESS MATTERS

PhelpsAnderson


REX Stores Corp. an-nounced in June that it had changed its name to REX Ameri-can Resources Corp. and the company’s stock trading symbol on the New York Stock Ex-change is now REX. CEO Stuart Rose said the name change bet-ter refl ects the company’s pri-mary business, assets and focus. REX currently has interests in six ethanol production facilities, rep-resenting 144 million gallons of annual ethanol production.

Additionally, the company’s board of directors has named Zafar Rizvi as president and chief operating offi cer. Rizvi has served for 18 years as REX’s vice president, most recently over-seeing the company’s alternative energy interests. “Zafar Rizvi’s appointment to the roles of pres-ident and chief operating offi cer acknowledges the strong contri-butions he has made as we tran-sitioned the company to focus on alternative energy,” Rose said.

Maple Energy plc an-nounced it has acquired the equity necessary to pursue its $254 mil-lion proposed ethanol project in Peru. The company acquired the fi nal $28 million necessary from shareholders in June and plans to begin commercial operations at the plant, which is located in the Piura region on the northwest coast of Peru, in mid-2011.

Yokogawa Electric Corp. has released the latest version of the FAST/TOOLS web-based SCADA system, which enables users to perform remote engineer-ing and maintenance. The system can be utilized for process moni-toring and asset management in a variety of industries, according to the company. Benefi ts of the system include reduced operating costs and optimized sharing and exchange of information, as well as a higher level of management effi ciency.

Biotechnology fi rm Dy-adic International Inc. has hired consulting fi rm The Abraham Group to provide strategic ad-vice and assistance to Dyadic as it pursues global licensing and collaboration opportunities. The Abraham Group is led by former U.S. Energy Secretary Spencer Abraham, who will also serve as Dyadic’s senior advisor. Anne Whitehead, executive director of strategic alliances at Dyadic, said the consulting group will help Dy-adic enhance its strategy to team with international energy groups that are committed to commer-cializing cellulosic ethanol.

Merrick & Co., an em-ployee-owned engineering, archi-

tecture, design-build, surveying and geospatial solutions fi rm, has elected Jill Tietjan to its board of directors. Tietjen is president and CEO of a consulting fi rm that serves the electric utility indus-try and has more than 30 years of experi-ence in the electric util-ity industry. She serves on the board of directors of Georgia Transmis-sion Corp. and has authored sev-eral technical papers for electric utility publications. In May, Mer-rick & Co. formed a consultancy unit focused on the energy mar-ket, including renewable, refi ning and utilities.

Indianapolis-based bio-engineering fi rm Xylogenics Inc. has named three people to its board of directors. William Parry is an attorney with exten-sive expertise in patent law and mergers and acquisitions. He served as vice president, general counsel, for Nalco Chemical Co. from 1995 to 2000 and previous-ly worked for UOP, a Honeywell company. Joseph Prochaska Jr. has served on internal regulatory boards for more than 25 years, and has held executive positions for several companies, including MetLife Inc. and Aon Financial Services Group Inc. He currently serves on the boards of Baird & Warner Inc. and the audit com-

mittee and advisory council of the Hesburgh Libraries at the University of Notre Dame. An-thony Hubbard serves as the fi nancial advisor and general manager for Stanbio Life Sci-ences and has more than 15 years of experience in management, operations and business devel-opment in emerging technology related to ventures. Chairman Butch Mercer said the trio will as-sist the company in its objective to develop and market propri-etary bioengineered yeast strains and cellulosic ethanol technology to ethanol facilities.

Elevator components manufacturer 4B Components Ltd. has made available a Class II, Division 1 approved bearing tem-perature sensor that is designed to allow the depth of the probe to be adjusted depending on its application. The ADB series is available with probe lengths of two, four or eight inches, and can be screwed directly into a bear-ing housing through the existing threaded grease zerk. The sensors are designed for continuous tem-perature monitoring.

Genera Energy LLC, a for-profi t company formed by the University of Tennessee Research Foundation, recently broke ground on a fi rst-of-its-kind biomass processing center. The Biomass Innovation Park will be co-located with the Gen-era-DuPont Danisco Cellulosic Ethanol demonstration-scale plant near Vonore, Tenn., and

&Business PeopleEthanol Industry Briefs

Tietjan


Sponsored by

will begin processing switchgrass for ethanol production by the end of the year. Located on 21 acres, the facility will provide harvest-ing, handling, storage, densifi ca-tion, pre-processing and trans-portation for multiple feedstocks. Genera President and CEO Kelly Tiller said the biomass facility will initially process up to 50,000 tons of switchgrass, which the com-pany has contracted farmers to grow this season.

Onset Computer Corp., a supplier of data loggers, has a new energy and environmen-tal monitoring product catalog available. The 75-page catalog provides product descriptions, technical specifi cations, and pric-ing for the company’s full line of trademarked HOBO data logging solutions. The company expand-ed the range of measurement op-tions for its line of HOBO U12 data loggers offered for energy and environmental monitoring. Specifi cally, multi-channel ver-sions of the U12 data loggers can now measure and record kilo-watts, air velocity, gauge pressure, differential pressure, DC current and other energy and environ-mental parameters.

Dallas-based Evolution Fuels Inc. has retained Bloom-field Advisors to assist in struc-turing and fi nancing it’s prototype fueling station of the future. As the initial phase of its plan, man-agement plans to build out one to three prototype fueling stations. The company envisions a brand

that incorporates a broad selec-tion of alternative fuels, a store built with recycled materials and utilyzing solar power, and offer-ing health food and beverages along with fuel.

ExperTune’s PlantTriage Control System Monitoring Soft-ware now has tools to diagnose the health of instruments, valves and controls. For years, ExperTune’s patented “Control Loop Health” approach has identifi ed problem control loops. Now. several new tools provide more specifi c per-formance metrics and diagnostics for each control loop component: the instrument, the valve and the controller. The Valve Health mea-surement, for example, combines information about control valve sizing, application,and mechani-cal performance. The new tools are included in the latest release of ExperTune’s PlantTriage soft-ware.

A new biofuels busi-ness with products and services for corn-based ethanol plants has been launched by Pursuit Dynamics plc. Validation tests indicate plants utilizing the new PDX Ethanol Reactor System can expect improved produc-tion yields, reduced operating costs and substantial throughput improvements. Marquis Energy LLC, a 100 MMgy plant in Hen-nepin, Ill., and Pacifi c Ethanol Columbia LLC, a 40 MMgy plant in Boardman, Ore., are participating in the operational validation of the new ERS.

The new MINIDIS ADXpert analyzer from Grab-ner Instruments is an alternative to classical ASTM D86 testing, according to the company. The unit has about twice the resolu-tion as D86 distillation units, yielding results that are well with-in ASTM D86r/R requirements. MINIDIS also performs accord-ing to the new D7344 standard for atmospheric distillation. The MINIDIS development team focused on several design goals: automation, miniaturization and ease of use. Like the D86 meth-od, the ADXpert performs a true atmospheric distillation but on a much smaller scale. It re-quires as little as 6mL of sample and is much faster.

The sixth edition of the Ethanol Fact Book has been published by the Clean Fuels Development Coalition and is being distributed through the Ethanol Across America cam-paign. The book addresses is-sues regarding the ethanol tax incentive, energy security and oil import reductions, economic impacts and benefi ts to the U.S. Treasury, greenhouse gas reduc-tion and environmental benefi ts, advancements in cellulose conver-sion technologies, developments in fl ex-fuel vehicle production and high level blends. “Through the Ethanol Across America edu-cation program, we are getting the facts out and believe when people understand the wide range of benefi ts ethanol provides they will continue to support it,” said

U.S. Sen. Ben Nelson, D-Neb., co-chair of the Ethanol Across America campaign.

Propel, which builds, owns and operates a network of clean fueling points on the West Coast, added four people to its management team in July. Matt Horton is the company’s CEO. His experience has spanned a broad spectrum of investment activities and board responsibili-ties most recently with @Ven-tures, a cleantech-focused venture capital fi rm specializing in early-stage companies. As a certifi ed public accountant and chief fi -nancial offi cer, Andy Wynne will lead the company’s fi nancial plan-ning and accounting functions including capital strategy, budget-ing, and new market analysis for Propel’s growing renewable fuel network. Jim Cannon is the new vice president of construction and development and oversees Propel’s expanding network of green-built fueling stations. Jim Iacoponi is the vice president of operations and leads the com-pany’s efforts to source the most sustainable fuels, grow sales and product lines. EP

SHARE YOUR INDUSTRY BRIEFS To be included in Business & People, send infor-mation (including photos and logos if avail-able) to: Industry Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to (701) 746-8385, or e-mail it to [email protected]. Please include your name and telephone number in all correspondence.

COMMODITIES REPORT

Natural Gas Report

Corn Report

By Brad Smith, U.S. Energy Services Inc.

By Jason Sagebiel, FCStone

Aug. 2—The Dodd-Frank Wall Street Reform and Consumer Protection Act that President Obama signed into law July 21 is the fi rst bill, or initiative, to authorize the CFTC and SEC to regulate all over-the-counter derivatives trading. Many energy trading fi rms are expected to be subject to new capital, margin, reporting, and position limits that were formerly free of regulatory oversight. After all the political self-congratulations, one concern is that only three Republi-cans in the House and three Republicans in the Senate voted for the bill. The other area of concern is that the wording of the 2,300 page bill is, in many cases, ambiguous, turning the interpretation and rule-making authority over to the regulatory agencies.

The real work of crafting rules that theoretically match the in-tent of the bill will take place over the coming year. This will likely be a heavily lobbied and under-reported process that determines the fi nal outcome. The CFTC has broadly outlined the need for 60 rule-making endeavors (processes) to determine, among other things, the basis for who is a swap dealer or “major swap participant,” a frame-work for determining capital and margin requirements, timelines and processes for derivatives reporting, the appropriate levels at which to

set position limits within each respective market without signifi cantly reducing liquidity and the timelines for compliance.

During the initial 360 days, the CFTC will attempt to push through its rule-making process. The proposed rules are to be pub-lished between 90 and 360 days after the bill becomes law. This will be quite an endeavor as the bill contains more than 350 mandates and the CFTC expects to conduct about a dozen studies, reports, or memoranda of understanding. As for the impact on your fi nan-cial trading partners, the bill will undoubtedly raise costs that will be passed through to consumers. With that said, a reasonable overview of the bill suggests that end-users taking delivery should be little af-fected. There is a stated exemption for hedging with forwards, and a stated intent to protect fi nancial hedgers. The real risk is that the bill will raise costs for some market participants to the point that they exit the business, stifl ing liquidity or effectively killing some markets. While defi ning the new world will take time, it is clear the era of deregulation is over. EP

Aug. 2—The U.S. corn crop is progressing well with ample moisture. Production problems in Eastern Europe and drought in Russia, however, have led to wheat market volatility and ral-lied U.S. commodities. World traders express great concern over smaller world wheat production, suggesting greater demand for U.S. wheat and corn. Despite a near 50 percent carry-out-to-use ratio for U.S. wheat, the market has rallied, leading new crop corn to test $4. In the July supply and demand report, USDA placed old crop carry-out at 1.478 billion bushels and new crop carry-out estimates at 1.373 billion bushels. A projected yield of 163.5 bushels per acre with acreage 900,000 acres less than previously thought results in production estimates of 13.245 billion bushels. Corn used for livestock feed, ethanol production and other food, seed, and industrial usage was left unchanged and export demand for next year was lowered by 50 million bushels to 1.950 billion, although that is likely to change.

Excess world wheat supply for 2010-’11 was projected at 187.05 million metric tons (mmt) but that number will erode. World corn ending inventory decreased from June to July to 141.08 mmt, though still up from 2009-’10. With U.S. produc-tion in no threat today, any harvest delays may make an already spooked market susceptible to price spikes. Ultimately corn prices seem overvalued. Ethanol crush values may come under pressure

if corn prices continue to rally as energy prices stayed subdued.The accompanying graph shows world coarse grain carry-out.

The bull run that began in 2006 led by wheat had a carry-out of less than 140 mmt with a carry-out-to-use ratio of 14.96 percent. July’s projection was 16 percent and is expected to decline. EP

Final impact of Wall Street reforms will depend on the rules

Corn market subject to spooking


COMMODITIES REPORT

DDGS Report

Ethanol Report

By Sean Broderick, CHS Inc.

By Rick Kment, DTN Biofuels Analyst

DDGS demand seeing seasonal softness

Corn price rally sparks ethanol surge

Aug. 2—DDGS looks as though it is beginning a price disconnect to corn. The hot Gulf barge market of late July appears to be logistics related. Reports of four or fi ve boats—more than 100,000 metric tons—to arrive in early August set off a scramble. Nor-mally shipments are more spread out, and contracted barges being loaded the last half of July might not have made it in time.

Domestically, prices have been stagnant, making smaller moves as the corn futures fl uctuate. Hog produc-ers are eagerly awaiting new crop corn, with its potential to have fewer Vomi-toxin problems than last year. There is a lot of wet distillers grains being made and, combined with unusual moisture in typically dry areas, cattle demand has decreased versus normal years.

Ethanol margins have been near breakeven for almost a month, and there are signs of late summer plant slowdowns. The resulting decrease in DDGS supply should offset the lack-luster summer domestic demand.

Bad weather in Europe and China is generating interest for DDGS, with China looking for offers seemingly every week. Container demand is still strong in spite of increasing bulk ship-ments, with the only hitch being con-tainer supply. The Superior port has seen increased business, which coin-cides with the last bulk boat out of the PNW for the season.

The amount of DDGS on the market, combined with the low de-mand season, will make exports more important than ever. EP

Aug. 2—Ethanol prices have fol-lowed corn futures step by step this spring and summer. In July, ethanol prices jumped 15 cents per gallon as corn prices increased nearly 60 cents per bushel. At the moment, grain mar-kets are on another sharp rally with corn prices jumping 30 cents per bushel over the past three trading sessions. Although this may be temporary in a market hit by uncertain planting levels, weather, as well as global production problems, has traders actively looking for renewed investor interest. Accordingly, ethanol futures are making very few directional moves on their own account due to the tight connection between ethanol production costs and corn prices. This trend is likely to continue over the next

several weeks and or months, as the market may become much more vola-tile before calm returns.

At the same time ethanol prices ral-lied, gasoline markets slipped lower as the summer driving season waned. This will likely continue to limit additional commercial and noncommercial buying activity into the gasoline markets due to expected demand slumps through the end of the year. The soft economy is not helping matters, with jobless rates still double digit, and consumers weary of hoping that the end of hard times is just around the corner. RBOB gasoline prices have fallen 6 cents since the end of June and are currently contained in a moderate trading range. EP

Regional Ethanol Prices ($/gallon on July 30) Front Month Futures (AC) $1.706

Regional Gasoline Prices ($/gallon on July 30) Front Month Futures (RBOB) $2.1066

DDGS Prices ($/ton)

Corn Futures Prices (Dec. corn, $/bushel)

Natural Gas Prices ($/MMBtu)

U.S. Ethanol Production Output (1,000 barrels)

Cash Sorghum Prices ($/bushel)

REGION

West Coast

Midwest

East Coast

REGION

West Coast

Midwest

East Coast

LOCATIONMinnesota

Chicago

Buffalo, N.Y.

Central Calif.

Central Florida

DATEAugust 2, 2010

July 2, 2010

August 3, 2009

NYMEX

N. Ventura

Calif. Border

May 2010

April 2010

May 2009

Superior, Neb.Beatrice, Neb.Sublette, Kan.Salina, Kan.Triangle, TexasGulf, Texas

SPOT

1.780

1.680

1.805

SPOT

2.197

2.143

2.061

SEPT. 201095

12

105

152

138

HIGH4.18

3.86 3/4

3.75 1/4

JULY 1, 20104.717

4.630

4.560

Per day847832

678

Month 26,24424,962

21,024

End stocks19,72119,682

14,173

AUG. 3, 20103.443.403.143.703.443.84

RACK

1.950

1.800

1.920

RACK

2.376

2.107

2.132

AUG. 201095

115

110

147

136

LOW4.03 1/4

3.81 1/4

3.60 1/2

JUNE 1, 20104.155

4.090

3.930

JUNE 25, 20102.762.882.673.203.043.20

SEPT. 200990

116

110

124

114

CLOSE4.04 1/2

3.84 1/2

3.69

JULY 1, 20093.949

3.360

3.270

JULY 19, 20092.722.742.332.722.433.47

SOURCE: DTN

SOURCE: DTN

SOURCE: CHS Inc.

SOURCE: FCStone

SOURCE: Sorghum Synergies

SOURCE: U.S. Energy Services Inc.

SOURCE: U.S. Energy Information Administration



In June, Archer Daniels Midland Co. received a $99.2 million grant from the U.S. DOE for a commercial-scale carbon capture and sequestra-tion project which will capture and store 1 million tons of CO2 produced annually at the compa-ny’s ethanol facility in Decatur, Ill. The $163.9 million project will demonstrate commercial-scale carbon capture and storage

through the operation of a col-lection, compression and dehy-dration facility. Processed CO2 will be delivered to the nearby Mount Simon Sandstone for-mation, where it will be stored approximately 7,000 feet below ground. The project is expected to conclude in the third quarter of 2015.

ADM receives carbon capture fundingValley Dairy owner Monica Musich, left, was recognized by ACE’s Brian Jennings and Merle Anderson for opening the fi rst blender pump in Grand Forks, N.D.

Thanks to funding from state, federal and private sourc-es, 75 additional E85 dispensers will be installed in California by Propel Fuels Inc., a West coast-based owner and operator of alternative fueling stations. The California Energy Commission approved a $4 million grant while the DOE is providing $6.9 million in stimulus funding.

Propel itself is pitching in $16.2 million in private equity funds. Other partners in the project include the California’s Depart-ment of General Services, the nation’s largest fl eet of state-owned vehicles, the East Bay Clean Cities Coalition, Calstart and the Local Conservation Corps of California.

Gilbarco Veeder-Root and Dresser Wayne, two fuel dispenser companies, received offi cial Underwriter’s Labora-tory certifi cation for company-specifi c E85 fuel dispensers in June. These were the fi rst UL-approved fuel dispensers for E85, following UL approval of E25 fuel dispensers this spring.

For E25 and lower blends, fuel dispensers can be certifi ed separately from the hanging hardware. However, for E85, UL has withheld certifi cation of any fuel dispensing equip-ment until it is all certifi ed to-gether at one time, said John Drengenberg, director of con-sumer safety for UL. The orga-nization granted fi nal certifi ca-tion to the two fuel dispensers only after the fi nal components of the hanging hardware were submitted, he said. By late July, Gilbarco Veeder-Root had UL-approval for a total of 22 dispenser confi gurations and all of Dresser Wayne’s eco fuel

products received approval. OPW Fueling Components also announced that it received UL certifi cation for its new trademarked nozzles, ethanol swivels, breakaways and emer-gency shut-off valves for use in applications containing ethanol concentrations up to E85.

The next anticipated step is UL certifi cation of a blender pump. Dengenberg said he couldn’t give out specifi cs but confi rmed that a UL testing program of blender pumps has been established. Mean-while, retailers continue to install blender pumps in loca-tions across the nation. In late July the American Coalition for Ethanol recognized the fi rst blender pump installed in Grand Forks, N.D. Brian Jen-nings, ACE executive vice pres-ident, and ACE founder Merle Anderson, Climax, Minn., con-gratulated Valley Dairy owner Monica Musich at a brief event July 20.

E85 dispensers get UL approval

BIObytes Ethanol News Briefs

Funding awarded for E85 dispensers

In June, Greenshift Corp. and YA Global Investments LP executed several agreements de-signed to reduce and restructure Greenshift’s debt to YA Global. The companies formed a joint venture—YA Corn Oil Systems LLC—into which Greenshift will transfer up to fi ve of its corn oil extraction facilities in exchange for a reduction of up to $11.7 million in convertible

debt by YA Global. Greenshift will receive a 20 percent equity stake in the joint venture and will provide management services to the company in exchange for management and brokerage fees, as well as earnings-based perfor-mance bonuses paid in the form of up to an additional $6 million reduction in debt owed to YA Global.

Greenshift restructures debt

PHO

TO: S

UE

RET

KA S

CH

ILL,

BBI

INTE

RN

ATIO

NAL


The Renewable Fuels Asso-ciation and the U.S. Grains Coun-cil are co-sponsoring Export Exchange 2010, a conference fo-cused around the export of U.S. dried distillers grains with solu-ables (DDGS) and coarse grains. The event is set for Oct. 6-9 in Chicago, Ill, and will focus on

connecting international buyers with the U.S. market. The USGC will sponsor the attendance of international trade teams from more than 25 countries, repre-senting nearly 80 percent of the global export market for DDGS.

DDGS conference planned for October

A study recently released by Informa Economics Inc. reports that the ethanol indus-try is the single most important factor supporting the growth of the agricultural sector in Indiana. The study, which was sponsored by the Indiana Corn Marketing Council and Growth Energy, measured the ethanol

industry’s contribution to Indi-ana’s gross state product (GSP), household incomes and employ-ment rates. Results showed that ethanol has created more than 3,000 full-time jobs in Indiana, added $499 million to the GSP, and increased overall household income by $255 million.

Study highlights ethanol’s impact in Indiana

Between 2004 and 2009 the renewable energy produced in the U.S. increased by about 23 percent, according to a report issued by the 25x’25 Alliance. The 32-page analysis released in June details the advances made since the group set its goal of meeting 25 percent of the na-tion’s energy needs with renew-able sources by 2025. In the bio-energy market, the report states that the market “has enormous growth potential both in the U.S. and around the world” but is limited by a number of fac-tors, including policy, the blend wall and insuffi cient infrastruc-ture. “The bottom line is that

signifi cant progress has been made,” the report says, “but there is more to be done and major challenges to overcome.”

25x’25 Alliance releases report

New Zealand-based Lan-zaTech Ltd. has partnered with Baosteel Metal, China’s largest steel and iron conglomerate, to commercialize its fl ue gas-to-ethanol technology. LanzaTech has been operating a pilot-scale facility in New Zealand since 2008 using bacteria to convert steel mill fl ue gas to ethanol. Baosteel and LanzaTech will now construct a demonstra-tion-scale facility at one of Baosteel’s steel mills which is expected to be operational in 2011. The Chinese Academy of Sciences will work with the companies to accelerate the technology and collaborate on

research and development of related technologies.

Additionally, Chinese ven-ture capital fi rm Qiming Ven-tures was the leading investor in LanzaTech’s Series B fi nancing drive and said LanzaTech rep-resents a great opportunity for China. “The signifi cance of this technology means that fuel can be produced with no impact on food supply or land use,” said Gary Rieschel, managing direc-tor of Qiming. “Using industri-al waste gases curbs greenhouse gas emissions and so maintains manufacturing sustainability in China.”

NZ fl ue gas-to-ethanol company strikes deal in China


The challenges to greenhouse regula-tions and the understanding of complex GHG interactions continue to unfold.

EPA denies petitionsIn July, the U.S. EPA denied 10 peti-

tions challenging the controversial 2009 en-dangerment fi nding regarding greenhouse gases (GHGs), saying climate change is real and threatens human health and environ-ment. The petitions claimed that climate science cannot be trusted. “The endanger-ment fi nding is based on years of science from the U.S. and around the world. These petitions—based as they are on selectively edited, out-of-context data and a manufac-tured controversy—provide no evidence to undermine our determination. Excess green-house gases are a threat to our health and welfare,” said Lisa Jackson, EPA administra-tor. These cases are not closed, however, as all the petitioners also fi led legal challenges in the U.S. Court of Appeals for the District of Columbia. If the court rules for the pe-titioners, the EPA could be prevented from regulating GHG emissions.

Challenge to Calif. lawIn California, AB32, the law that re-

quires the state to reduce GHG levels back to 1990 levels by 2020, will go to voters in November. The law has been vigorously opposed by many in the energy sector and 800,000 signed a petition to suspend the law due to concerns about economic impact. “We believe that the aggregate net jobs im-pact in the near term is likely to be negative, even after recognizing that many of the [Cal-ifornia Air Resources Board Scoping Plan] programs phase in over time,” said a report from the California Legislative Analyst’s Of-

fi ce, a non-partisan fi scal and policy analyzer in the state. Opponents have also raised the issue of the appropriateness of state-specifi c laws for such energy policy.

Meanwhile, two new reports released this summer demonstrate the complexity of quantifying and comparing GHG emis-sions. Researchers from the University of Nebraska-Lincoln examined emissions by U.S. military operations to protect oil im-ports from the Middle East, and Stanford Earth scientists found high-yield agriculture has prevented massive amounts of GHGs from being released.

Indirect military emissions

The UNL report was completed by Adam Liska and Richard Perrin, who esti-mate that the war in Iraq releases 43.3 mil-lion metric tons of carbon dioxide equiva-lent (CO2e) annually. Military protection of supertankers in the Persian Gulf amounts to another 34.4 million metric tons of CO2e annually. When gasoline’s impact is evaluated by regulators, the report points out, only direct emissions are counted as part of its environmental impact. Not so for biofuels. Under the 2007 Energy and Independence Act, biofuels are required to meet specifi c GHG reductions, from 20 to 60 percent under gasoline, including direct and indirect emissions. “Our conservative estimate of emissions from military security alone raises the greenhouse gas intensity of gasoline de-rived from imported Middle Eastern oil by 8 to 18 percent,” Liska said. “In order to have a balanced assessment of the climate change impacts of substituting biofuels for gasoline, a comparison of all direct and indirect emis-sions from both types of fuel is required.”

Yield intensifi cation impactThe other study, published online in

the Proceedings of the National Academy of Sci-ences, shows that yield improvements have reduced the need to convert land to crops.” Every time forest or shrub land is cleared for farming, the carbon that was tied up in the biomass is released and rapidly makes its way into the atmosphere—usually by being burned,” said Jennifer Burney, lead author of the paper describing the study. “Yield inten-sifi cation has lessened the pressure to clear land and reduced emissions by up to 13 bil-lion tons of carbon dioxide a year.” Plus, for every $1 spent on agriculture research and development since 1961, the emissions of methane, nitrous oxide and carbon dioxide, all GHGs, were reduced by about a quar-ter of a ton of CO2. “When we look at the costs of the research and development that went into these improvements, we fi nd that funding agricultural research ranks among the cheapest ways to prevent greenhouse gas emissions,” said Steven Davis, co-researcher along with David Lobell. Increasing yield alone isn’t enough to guarantee lower emis-sions from land use change, the authors said, adding that it must go along with efforts in conservation and development. It is, how-ever, a big factor. “The striking thing is that all of these climate benefi ts were not the ex-plicit intention of historical investments in agriculture. This was simply a side benefi t of efforts to feed the world,” Burney said. “If climate policy intentionally rewarded these kinds of efforts, it could make an even big-ger difference. The question going forward is how climate policy might be designed to achieve that.”

—Holly Jessen

GHG regulations forge ahead despite protests


To meet the renewable fuels standard goal of 21 billion gallons of advanced biofuels, 527 biorefi neries averaging 40 MMgy will need to be built at an estimated cost of $168 billion, according to a USDA report released in June. The “Regional Roadmap to Meeting the Bio-fuels Goals of the Renewable Fuels Standard” is intended to provoke discussion and further work on what the report calls an issue that “may prove to be one of the most important of the 21st century.”

The objectives of the 21-page report are to identify challenges and opportunities for the biofuels industry as well as to come up with solutions. Job creation is one benefi t from biofuels, with the USDA estimating 40 direct jobs created for each 100 MMgy ethanol facil-ity. In order to build biorefi neries in areas of economic distress, the USDA suggests regional strategies will allow for proper leveraging of transportation, labor and feedstock resources. “USDA recognized that different regions of the country have a comprehensive advantage to the type of feedstock that can be produced and utilized in biofuel production,” the report states.

The report begins by acknowledging the role of corn starch ethanol in approaching the 15 billion gallon goal set by the renewable fu-els standard (RFS2) for conventional biofuels. “The current ethanol industry provides a solid foundation to build upon and reach the 36 bil-lion gallon goal,” USDA Secretary of Agricul-ture Tom Vilsack said. “I am confi dent that we can meet the threshold of producing 36 billion gallons of biofuel annually by 2022.”

The USDA roadmap examines the re-gional potential for producing the additional 21 billion gallons of advanced biofuels. It identi-fi es the Southeast states and Hawaii, including Alabama, Arkansas, Florida, Georgia, Hawaii, Kentucky, Louisiana, Mississippi, North Caro-lina, South Carolina, Tennessee and Texas, as having the greatest potential with up to 50

percent of the advanced biofuels volume com-ing from these states due to their long, robust growing seasons. The east central region, which includes Delaware, Iowa, Illinois, Indiana, Kan-sas, Missouri, Ohio, Oklahoma, Maryland, Minnesota, Nebraska, North Dakota, Pennsyl-vania, South Dakota, Wisconsin and Virginia, is right behind at 43.3 percent of potential ad-vanced biofuels production. The Northwest and Western regions trail far behind, with only 4.6 percent and less than 1 percent respectively of expected biofuels volume.

The report notes that the U.S. EPA and USDA differ on the expected gallons from various feedstocks. By 2022, the EPA expects switchgrass to provide 7.9 billion gallons; soy biodiesel and corn oil, 1.34 billion gallons; crop residues, 5.5 billion gallons; woody biomass, 100 million gallons; other, such as municipal solid waste, 2.6 billion gallons; algae, 100 mil-lion gallons; and imports, 2.2 billion gallons. The USDA, on the other hand, estimates dedicated energy crops at 13.4 billion gallons, oilseeds at 500 million gallons, crop residues at 4.3 billion gallons and woody biomass (logging residue only) at 2.8 billion gallons.

The report concludes that in order to meet cellulosic ethanol targets, a rapid build-up and substantial investment will be needed. U.S. farms are capable of producing many types of feedstocks to make the biofuels industry a true national effort, but there are multiple in-frastructure needs. “A process for identifying bottlenecks and barriers related to locating

biorefi neries involving the federal government, Congress, states, the industry and interested stakeholders can help facilitate a biorefi nery system that is national in scope,” the report says. “While we expect the market to respond to the infrastructure needs of a growing indus-try, we recognize that the path from production to actual consumption presents challenges that will need to be anticipated and addressed.”

Among the bottlenecks is the limited numbers of fl ex-fuel vehicles (FFVs) that are primarily located in the Midwest. In addition, those FFVs actually use more gasoline than E85 or other ethanol blends due to their limited availability. The USDA suggests that California, Texas and Florida should be the primary tar-gets for blender pumps and FFVs in the future. Blender pumps infrastructure is one area where USDA could provide immediate assistance the report adds, citing the anticipated EPA decision on a higher blend waiver.

Another infrastructure challenge is the need for rail and truck transportation of etha-nol, blending terminals and storage, all factors that can affect decisions on where biorefi neries are built. The EPA has projected that 40 unit train rail receipt facilities will be needed, with a cost of more than $12 billion, to distribute the additional volumes of ethanol targeted in the RFS2. This equals 6.9 cents per gallon of ad-ditional costs for shipping ethanol. “Develop-ing unit train destinations is a time-consuming process, usually taking three to fi ve years,” the report says. “The industry has responded to this challenge by developing rail-to-truck trans-loading facilities for smaller-than-unit train shipments of ethanol.”

—Holly Jessen

USDA projects 527 biorefi neries needed


EPA expected to lower 2011 cellulosic biofuels volume

After evaluating the market availability of cellulosic biofuels, the U.S. EPA said in July that only fi ve producers are expected to contribute cellulosic ethanol to the overall volume next year and that it might reduce the cellulosic target by as much as 240 million gallons from its original goal. The renewable fuel stan-dard established in the Energy Independence and Security Act of 2007 called for 250 million gallons of cellulosic biofuels to be produced in 2011, but the EPA is predicting a much lower actual achievable volume of between 5 million and 17.1 million gallons.

The EPA said it evaluated both domestic and foreign sources of cellulosic biofuel before issuing its proposed volume standard. The agency found only fi ve U.S. cellulosic ethanol pro-ducers with the potential to contribute next year, including: AE Biofuels, Agresti Biofuels, DuPont Danisco Cellulosic Ethanol, Fiberight LLC and KL Energy Corp. Ontario-based Iogen Corp. was the sole Canadian producer with the potential to export cel-lulosic biofuel into the U.S. in 2011. A handful of producers ques-tioned the EPA’s method of reaching those determinations, but the agency stood by its analysis. EPA senior press offi cer Cathy Milbourn said producers were encouraged to submit any produc-tion changes to the EPA during the proposed volume standard comment period. The EPA would then re-evaluate before issuing its fi nal standard in November.

According to the proposed standard, Fiberight is pegged

to be the largest cellulosic ethanol contributor next year. The company is expected to ramp up its Blairstown, Iowa, facility to its full production capacity of 5.7 MMgy by late 2011 and the EPA said it could produce as much as 2.8 million gallons of cel-lulosic ethanol next year. Craig Stuart-Paul, Fiberight CEO, said that production estimate is “doable” and the company has been rapidly installing necessary production equipment at the facility.

Agresti Biofuels is expected to contribute 1 million gallons of cellulosic ethanol from a 20 MMgy municipal solid waste-to-ethanol facility to be located in Pike County, Ky. The company is currently in the fi nal stages of setting up a demonstration-scale facility in Vietnam, according to program director Zig Resiak, and won’t begin construction on the Kentucky plant until the Vietnam plant is up and running. “Everything is dependent on Vietnam,” he said. “It all comes down to that fi rst demonstra-tion project.” Resiak said the Kentucky site has been cleared and is ready for construction to begin as soon as the Vietnam plant comes online in the fourth quarter of this year. According to Resiak, 1 million gallons of cellulosic ethanol from Agresti next year is an “absolutely” attainable goal and he believes the com-pany can produce more than its allotted share.

The EPA expects AE Biofuels to produce 500,000 gallons of cellulosic ethanol from a corn-based ethanol plant in Keyes, Calif. The AE Advanced Fuels Keyes facility is anticipated to be-gin producing late this year using starch-based feedstock, but the

www.vogelbusch.com [email protected]

(713) 461-7374


EPA said the plant will transition to some cellulosic feedstock beginning in mid-2011. The company plans to eventually use up to 25 percent cellulosic feedstock at the 55 MMgy facility.

Wyoming-based KL Energy Corp. has been slowly ramping up its 1.5 MMgy cellulosic facility in Upton, Wyo., since 2007. According to the EPA, KL Energy said it intends to produce 400,000 gallons of cellulosic ethanol next year from wood chips and wood waste.

DuPont Danisco Cellulosic Ethanol’s 250,000 gallon per year demonstration-scale facility at Vonore, Tenn., will be ex-pected to contribute all of the cellulosic ethanol it produces next year to the overall volume. DDCE told the EPA it doesn’t plan to produce more than 150,000 gallons in 2011.

The EPA stated that while it is uncertain whether Canadian producers would export cellulosic ethanol, Iogen Corp. is pro-ducing cellulosic ethanol at its demonstration-scale facility now and could potentially participate in the RFS2 program next year. According to the EPA’s proposal, while all of the ethanol pro-duced to date at Iogen’s 500,000 gallon per year facility has been sold locally, the company is exploring the possibility of exporting in 2011 and could contribute up to 250,000 gallons of fuel to the total volume requirement. However, Iogen Executive Vice Presi-dent Jeff Passmore said the company has no current plans to export large amounts of fuel to the U.S. in 2011. Additionally, he said Iogen doesn’t plan to produce 250,000 gallons of fuel at its facility next year. “We have no plans to export,” he said. “We’re using our fuel for demonstration purposes. Some might get sent to the U.S. for small fuel demonstrations such as car races, but we

don’t have any plans for major exports.” Passmore said Iogen has delivered approximately 8,000 gallons of cellulosic ethanol to the U.S. this year, all of which was used for racing applications, and he anticipates a similar scenario to occur next year.

Several notable projects were left out of the EPA’s expected producer list because they are not scheduled to be complete until 2012. The EPA said it will continue to monitor proposed proj-ects and it anticipates signifi cantly increased cellulosic ethanol production beginning in 2012. However, none of the expectant 2011 producers are currently producing cellulosic biofuel at the rates they project for 2011. The EPA noted that several signifi -cant hurdles need to be overcome before the anticipated pro-duction rates can be achieved, including outstanding issues in the areas of technology, funding and construction. Producers on the EPA’s list were not surprised that the agency expects a lower production volume than initially anticipated and said it refl ects the current state of the industry. “The reality of the marketplace is that there are not that many people producing [cellulosic etha-nol] right now,” Fiberight’s Stuart-Paul said.

“Nobody’s breaking ground at the moment,” pointed out Iogen’s Passmore. “It takes over a year to build these plants, so I think it refl ects the commercialization challenges that the cel-lulosic ethanol industry faces. Those challenges need to be ad-dressed by Congress if we’re serious about achieving the tar-gets.”

—Kris Bevill

There are financial parasites within every business that

would like nothing better than to feed off of your blood,

sweat and tears. We’re not your average accountants.

We know wha t ’s i n f e s t i ng you r i n ves t i ng .

K C O E . C O M o r 8 0 0 . 3 0 3 . 3 2 4 1


Companies make progress in cellulosic arena As the U.S. EPA slashed its targeted vol-

ume standard for 2011 cellulosic ethanol pro-duction (see previous story), a report from the U.S. Governmental Accountability Offi ce report shed light on one of the causes for the slower-than-expected build out of cellulosic capacity. The GAO report released in late July found fl aws with the U.S. DOE Loan Guar-antee Program. With a current loan guarantee authority of $77 billion, the DOE had only issued one loan guarantee for $535 million as of April and made nine conditional commit-ments. The GAO, which was mandated by Congress to conduct the review, found that the DOE treated applicants inconsistently and lacked a mechanism for appeals or feedback. It also recommended that the DOE come up with more performance goals for the Loan Guarantee Program. The DOE didn’t take is-sue with the fi ndings and said it is taking steps to address the GOA’s concerns.

Two oil majors made moves this summer to bolster their efforts in cellulosic ethanol developments. In July, BP Biofuels purchased Verenium Corp.’s cellulosic biofuels business for $98.3 million. Included in the deal are the pilot plant and demonstration-scale facilities in Jennings, La. Verenium will continue in its core commercial enzyme business and will transition out of its research and development facilities in San Diego, Calif., during the next two years. BP will pay Verenium another $10.8 million in cash to be released upon assignment of its lease for that facility. “By acquiring Ve-renium’s cellulosic biofuels technologies, BP Biofuels should be well placed to accelerate the delivery of low-cost, low-carbon, sustain-able biofuels, at scale,” said Philip New, CEO of BP Biofuels.

Following the BP announcement, Ve-renium promoted Executive Vice President Janet Roemer to president and chief operat-

ing offi cer of Vereni-um’s enzymes business. She joined Verenium in 2008, moving over from BP Group where she had held several po-sitions.

In a similar move, a Royal Dutch Shell plc. executive will be taking over direction of Iogen Energy, a 50-50 joint venture of Shell and Iogen Corp. In early July, Duncan Macleod was appointed chief operating offi cer of Io-gen Energy and on Sept. 30 he will step in as president and CEO. Brian Foody, found-ing president and current CEO, will take on the duties of chairman of Iogen Energy and continue to serve as president and CEO of Iogen Corp.

Janet Roemerexecutive vice president, Verenium

Several other big-name cellulosic ethanol companies received funding or otherwise moved ahead on proj-ects during June and July. ICM Inc. signed a cooperative agreement with the DOE, receiving $25 million to construct and operate a cellulosic

ethanol pilot in St. Joseph, Mo. The company plans to modify its existing pilot plant at Life-Line Foods LLC to produce fuel from corn fi ber, switchgrass and energy sorghum. ICM will contribute $6 million of its own funds to compete the project.

BlueFire Ethanol Fuels Inc. announced that it had completed Phase I of the DOE loan guarantee program and was moving on to Phase II. The company has applied for a

$230 loan guarantee to build a 19 MMgy facil-ity to produce cellulosic ethanol from woody biomass, mill residue and other cellulosic waste in Fullton, Miss.

INEOS Bio made two announcements recently concerning projects here and abroad. The company was awarded $11.6 million in grant money to build a 7.9 MMgy ethanol plant in England to convert biodegradable household and commercial waste to ethanol. INEOS New Planet BioEnergy, a joint ven-ture between INEOS Bio and Florida-based New Planet Energy LLC, said it offi cially took ownership of a former juice factory, located next to a Florida landfi ll in Indian River Coun-ty. When completed, the ethanol plant will produce 8 MMgy from renewable biomass including yard, wood and vegetative wastes.

Another company concentrating on mu-nicipal solid waste (MSW), Fiberight LLC, hopes to have its second MSW-to-ethanol

demonstration plant up and running by the end of August. The company, which com-pleted its fi rst plant in Blairstown, Iowa, in May, will install a second demonstration plant in Lawrenceville, Va., the current location of the company’s pilot plant. Fiberight is working with CleanTech Biofuels Inc. which will install its patented biomass recovery process at the Lawrenceville plant using steam and pressure to clean and separate MSW into biomass and recyclables. The biomass will then be pro-cessed into cellulosic ethanol using Fiberight’s targeted fuel extraction process. CleanTech announced in early July that it had received a patent for its process from the U.S. Patent and Trademark Offi ce.

—Holly Jessen

Duncan MacleodCEO, Iogen Energy

Plants change hands, reorganize fi nancialsThe summer of 2010 has been a busy one for many ethanol

producers, with several plants acquiring new owners and others re-organizing.

In June, petroleum refi ner Sunoco Inc. began operations at the former Northeast Biofuels LLC plant near Fulton, N.Y. Sunoco purchased the 100 MMgy facility in 2009 for $8.5 million through a bankruptcy auction and hired ICM Inc. to install upgrades worth $25 million. Sunoco Fulton Ethanol Facility may soon be operating at full capacity for the fi rst time since its initial construction. Sunoco expects the plant will supply up to 20 percent of the company’s gasoline blending requirements.

On June 29, Poet LLC completed the purchase of a 90 MMgy plant near Cloverdale, Ind., previously operated by Altra Biofuels, in-creasing Poet’s total capacity to 1.7 billion gallons per year. Poet now owns and operates 27 ethanol plants throughout the Midwest. The company plans to spend $30 million in upgrades, including its patent-pending fermentation process, a water recovery system and new pol-lution control equipment. Poet expects to reopen the facility by April 2011. “This plant has all the ingredients we need to put together a top operation: a steady corn supply, rail access, a great workforce and productive farmers,” CEO Jeff Broin said. “The ample corn supply

in the area includes signifi cant quantities of agricultural waste, mak-ing the plant a likely location for cellulosic ethanol production in the future.”

REX American Resources Corp., a relative newcomer to the ethanol industry, acquired a 48 percent ownership interest in the 100 MMgy NuGen Energy LLC plant near Marion, S.D. The former elec-tronics company, which just last year switched its focus to alternative energy, now has interests in seven ethanol facilities representing a total annual nameplate capacity of 632 million gallons. The company owns 191 million gallons of annual nameplate capacity. “The NuGen investment furthers REX’s strategy to prudently deploy its strong balance sheet for new investments in ethanol production facilities or other attractively valued renewable resources or industrial project opportunities,” REX CEO Stuart Rose said. REX acquired the own-ership stake in NuGen for $9.2 million with a commitment of up to an additional $6.5 million based on the plant’s profi tability.

Hawkeye Renewables LLC also received new ownership inter-ests, but under less ideal circumstances. The company announced June 18 that it had successfully emerged from bankruptcy with new equity owners for the Hawkeye facilities in Iowa Falls and Fairbank, Iowa. The names of the new owners are not being publicly disclosed,

LEADERSHIP,

Dependable Service 24/7

Hydroblasting Services

Tank Cleaning & Inspection

according to spokeswoman Victoria Weld. However, the equity own-ers have no plans to sell the facilities and Hawkeye will continue to manage operations at both plants. “It is important for farmers and producers who sell corn to Hawkeye Renewables to know that both plants are emerging from this process with signifi cant working capi-tal, minimal debt and a new balance sheet,” said Jim Continenza, Hawkeye Renewables board chairman. “We believe the fi nancial fu-ture of the two plants has been stabilized and the two plants will continue to make positive contributions to their local communities.”

Hawkeye Renewables continues to own and operate its remaining ethanol facilities in Menlo and Shell Rock, Iowa.

On the East Coast, Bionol Clearfi eld LLC, which brought its 100 MMgy plant in Pennsylvania on line earlier this year, has been working through a breach of contract issue with its marketing con-tractor. Bionol claims Getty Petroleum Marketing Inc., a subsidiary of OAO Lukoil, defaulted on its billion dollar ethanol contract with Bionol in June. The companies had entered into a fi ve-year contract in which Getty was to purchase all of the Clearfi eld plant’s ethanol for a set price. Bionol said that after just two months, Getty began paying less than the agreed-upon price for the plant’s ethanol, claim-ing that the contract price is not valid. The dispute will be taken to ar-bitration with a decision not expected for months. In the meantime, Getty continues to distribute ethanol from the facility.

Further down the coast, Praxair Inc. has signed a 15-year con-tract with Osage Bio Energy to purchase CO2 from the company’s Appomattox Bio Energy ethanol plant near Hopewell, Va. Praxair is constructing a $15 million industrial gas facility to be co-located with the 65 MMgy barley-to-ethanol plant to capture 190,000 tons of CO2 annually, beginning at the end of 2011, for use in food processing and beverage applications.

—Kris Bevill

AT YOUR SERVICE!

Emergency Response

Wet /Dry Industrial Vacuum

ServicesDryer Cleaning

Waste Collection,

Transport & Disposal

Phone (515) 283-0500

www.hydro-klean.com

R

Dry Ice Blasting

Several ethanol facilities have recently come under new ownership.

DOE fi nds ethanol pipeline feasible, with conditionsThe U.S. DOE recently completed a study to determine the fea-

sibility of constructing and using a pipeline to transport ethanol from the Midwest to the East Coast. The agency concluded that while a dedicated ethanol pipeline would reduce the burden of transport on railroads, enhance fuel delivery infrastructure and reduce greenhouse gas emissions, ethanol volume must be increased signifi cantly before a pipeline could be economically viable.

According to the study, the ethanol volume expected to be pipe-lined from producers in the Midwest to demand centers in the East Coast is approximately 2.8 billion gallons per year. This estimate is based on current consumption projections and includes demand for E10 and E85. Using an assumed pipeline construction cost of $4.25 billion, the DOE determined that a pipeline tariff would average 28 cents per gallon. Comparatively, other modes of transport along the same corridor currently charge an average tariff of 19 cents per gal-lon. Therefore, in order for the ethanol pipeline to be cost competitive with truck, barge and rail options, the DOE found the pipeline would need to transport approximately 4.1 billion gallons of ethanol annu-ally. The DOE stated that this increased volume can only be achieved through a signifi cant increased demand for E85 or widespread use of ethanol blends greater than E10. Even if pipeline construction costs

were lowered by $50 million, the agency said signifi cant fi nancial incen-tives would still be required to make the pipeline feasible if ethanol demand is not increased.

Aside from fi nancial considerations, other risks associated with an ethanol pipeline focus mainly on policy issues. The DOE stated that if current supportive policy measures were removed, including the re-newable fuels standard mandate, the Volumetric Ethanol Excise Tax Credit or the ethanol tariff, the pipeline’s feasibility would face serious consequences. “Government policy is likely to play an integral role in the commercial viability of the asset throughout its operating life,” the report stated.

Additionally, advanced biofuels and other non-ethanol alternative fuels could decrease the demand for ethanol if they become commer-cially available. However, the DOE stated that ethanol pipelines could potentially be used to transport those other biofuels as well.

The hypothetical pipeline used in the DOE’s feasibility study was based on a pipeline project proposed in 2008 by Magellan Midstream Partners LP and Buckeye Partners LP. The pipeline would gather etha-nol produced in the Corn Belt and transport it to demand centers in New England, the Central Atlantic and the Virginias. The DOE stated that this is the most likely path for an ethanol pipeline, but other routes

would also be possible and would carry similar risks and investment requirements. The West Coast represents the least feasible end-point for a pipeline due to increased costs associated with terrain and the ad-ditional distance between supplier and demand center.

Magellan and Poet LLC are developing a project similar to the DOE’s hypothetical pipeline, seeking to construct a pipeline to trans-

port ethanol from the Midwest to a distribution center in New Jersey. The companies said their project differs somewhat from the DOE’s hypothetical pipeline and has been found economically viable in their own analysis. It is based on a smaller capital cost of $3.55 billion and is estimated to have transport rates 15 percent lower than rail rates. The pipeline would have an annual capacity of 3.5 billion gallons.

The companies said they were pleased with the DOE study’s over-all results and said the report will be valuable to Congress as it considers energy legislation. “We believe the DOE’s conclusions are directionally correct: a large-scale pipeline project is feasible under certain conditions and that a federal loan guarantee is necessary to move forward,” the companies said in a statement. “In addition, the DOE confi rms that transporting energy via pipelines has multiple benefi ts such as reduc-ing congested highway and rail systems while reducing greenhouse gas emissions when compared to other modes of transportation.”

Sen. Tom Harkin, D-Iowa, and Reps. Leonard Boswell, D-Iowa, and Lee Terry, R-Neb., have been working to expand DOE loan guar-antee funding to qualify a renewable fuel pipeline as an eligible project. Terry said the DOE study proves that an ethanol pipeline cannot be-come a reality without the aid of legislation.

—Kris Bevill

A U.S. DOE feasibility study found that an ethanol pipeline would not be economically viable unless ethanol demand were signifi cantly increased.

FRACTIONATION

Fractionation—long considered an interesting but expensive add-on—may fi nally gain traction in the ethanol industry.

By Holly Jessen



FRACTIONATION


Front-end fractionation can help ethanol plants diversify coprod-uct streams for increased rev-enue. As Jeff Scharping, direc-

tor of product management and sales for ICM Inc., says, “Fractionation unlocks the power of corn.” He’s not alone in admir-ing the technology. “I’m a huge believer in fractionation,” says Neal Jakel, general manager of Illinois River Energy LLC in Rochelle, Ill. “Fractionation will change this industry. It makes us much more prof-itable, diversifi es our risk. It is worth the investment, no doubt about that. You will see in the next two to fi ve years, a lot more investments in this. I know it, I feel it.”

Jakel and Scharping, along with Mi-chael Regier, technical director at Cereal Process Technologies LLC, gave presen-tations about the technology at the 2010 International Fuel Ethanol Workshop & Expo. All agreed fractionation is a proven technology that, when implemented cor-rectly, can provide myriad benefi ts for an ethanol plant. Scharping says corn-to-eth-anol production hasn’t been close to utiliz-ing corn to its full potential. With fraction-ation, and the ability to use corn bran as a cellulosic ethanol feedstock, the ethanol

industry can take corn-based ethanol to the next generation, he says.

Interest in fractionation has been re-newed since the U.S. EPA identifi ed it as one of the advanced technologies ethanol plants can use to reduce greenhouse gas (GHG) emissions, says Pete Moss, vice president of marketing for CPT. While ethanol plants under construction prior to the passage of the Energy Independence and Security Act of 2007 were grandfa-thered in, new ethanol plants and new pro-duction capacity at grandfathered plants have to meet at least a 20 percent reduc-tion in GHG emissions. The inclusion of indirect land use impacts in the calculation of GHG reductions for the revised renew-able fuels standard (RFS2) will make this a tough hurdle. The EPA says that corn etha-nol plants using natural gas or biomass for process heat and installing new, more ef-fi cient technologies will meet GHG goals for conventional biofuels. “Fractionation is one of those technologies,” Moss says. According to the company’s initial evalu-ation, CPT fractionation can help an etha-nol plant reduce GHGs by 23 percent.

Benefi ts of Fractionation Dry fractionation is the mechanical

separation of corn, Regier explains. The endosperm, or the higher starch portion, is used for ethanol production. Removing the non-starch fraction results in energy savings for the plant due to more effi cient fermentation, less fouling due to the re-moval of corn oil and decreased energy requirements to dry the distillers grains. “Traditionally the germ and bran just go along for the ride throughout the ethanol plant and don’t do anything for the ethanol product, other than require more energy to dry that product and require more pump horsepower to transport that product,” Reiger says.

New coproducts providing ethanol plants with new revenue streams help pro-ducers diversify and provide risk mitiga-tion, Scharping says. ICM’s President and CEO Dave Vander Griend believes the ethanol industry can provide both food and fuel for the world, Scharping explains.

FRACTIONATION

AGRA is your turnkey source for design, fabrication, erection, and general contracting for a wide variety of agricultural applications.Whether you are building an entirely new facility or adding on, our services are provided from the ground up.

PATENTED TANK DESIGNAGRA Industries’ patent pending tank design can be erected at your location in a single day, dramatically reducing construction costs by cutting on-site assembly time by up to 50%.

Our tanks are all fabricated in wall-segments constructed of durable stainless steel in a controlled indoor facility. The segments are then delivered on-site and assembled by our experienced construction division.

AGRAdurability by design.™

800-842-8033WWW.AGRAIND.COM

Neal Jakel general manager, Illinois River Energy

Jeff Scharping product management, sales director, ICM

Michael Regier technical director, CPT

Pete Mossvice president marketing, CPT


“We look at dry fractionation as a front door to that.” Germ is the high oil por-tion and can result in food-grade corn oil or nonfood-grade oil suitable as a biodiesel feedstock. Fiber can be used in a variety of ways, including burning for steam gen-eration, as a feed ingredient or potentially for cellulosic ethanol production. In ad-dition, at the end of the process, ethanol producers will have higher protein levels in

their distillers grains making it better suited for monogastric feeding in swine, poultry and aquaculture operations. CPT is also working with a company that is interested in producing anhydrous ammonia from bran.

Ultimately, fractionation provides fl exibility, Reiger says, and transforms eth-anol producers into agricultural processing facilities, able to diversify and take advan-

FRACTIONATION

ICM illustrates the products derived from its Total Kernel Optimization process.

CPT fractionation technology is installed in one ethanol plant and three other non-biofuel facilities.

If you’re transporting DDG asmeal, you’re losing profits everyday. Put that money back in yourpocket with a CPM pellet mill.Get increased energy savings,flowability and dust control withless cleanup from the only pelletmill with a gear drive train.Durable, energy efficient andtrouble-free with parts made andwarehoused in the USA to serveyou faster. Call for your FREEcost analysis today.

FROM PROBLEMS TOPELLETS TO PROFITS

800-428-0846 | 765-362-2600 WWW.CPM.NET

CRAWFORDSVILLE, INDIANA

PH

OTO

: CP

T


tage of market fl uctuations. “It’s not only about the ethanol yield per bushel now, it’s also about the coproduct revenue per bush-el,” Regier says. “In an ag processing mindset, you want to maximize your highest revenue streams.”

While the CPT system provides the fl ex-ibility to produce more corn oil when prices are good, maintaining consistency in the pro-tein content of the distillers grains produced is important too. To maintain 40 to 42 per-cent protein content in the distillers grains, CPT performance data shows that a balanced starch/oil yield is approximately 59 to 63 per-

cent oil from the germ stream and 93 to 95 percent from starch. “That’s what the mar-ketplace wants, they want consistency,” Moss adds.

CPT’s fractionation system has been proved on a large scale at one ethanol plant—the Valero Energy Corp. plant in Jefferson, Wis. In addition, the same system is installed at three other locations that produce prod-ucts for the industrial and food-grade indus-tries. In the near future, it will be installed at the National Corn-to-Ethanol Research Cen-ter for additional testing.

ICM’s fractionation technology has

been in place for more than three years at LifeLine Foods LLC in St. Joseph, Mo., Scharping says. In early June, the company announced that it would receive $25 mil-lion from the U.S. DOE to build a cellu-losic ethanol pilot plant at that location, where ICM will modify the existing dry fractionation operation to incorporate cel-lulosic ethanol production from corn fi -ber, switchgrass and energy sorghum.

For producers looking for a frac-tionation process with lower capital costs, ICM is developing solvent fractionation. This system will provide food-grade corn oil, fi ber for cellulosic production, food-grade protein, grits with 50 percent pro-tein, clear starch and feed-grade protein. The company plans to complete a pilot plant by the end of the summer and a demonstration plant in 2011.

Due Diligence PointersAlthough fractionation offers etha-

nol producers many positive possibilities, Jakel cautions producers to do their re-search before selecting a technology. It’s a big investment and it’s critical that produc-ers ask the right questions as they evaluate fractionation, he says. Although Illinois River Energy doesn’t have a fractionation system installed, Jakel has experience in designing and optimizing fractionation in previous jobs. A turnkey fractionation system including building and utilities for a 100 MMgy plant can cost $30 million to $60 million. Further complicating the issue is that there are many wet and dry fractionation technologies out there. Jakel says he has counted 14 fractionation com-panies, and there are likely more. “Every single technology is different,” he says.

One factor to examine closely is co-product quality. What kind of distillers grains will the technology produce? Dif-ferent companies have used different pro-tein percentage numbers, varying from 30 to 40 percent, depending on how the plant is run and whether syrup is added. The impact distillers grains has is a huge driver, Jakel says, since it is a premium product and the potential loss to the plant is large. “It has a dramatic effect on the bottom

FRACTIONATION

FRACTIONATION • EXTRACTION • OIL PROCESSING • BIODIESEL • CO2 EXTRACTION • PILOT PLANT

Additional offices in Argentina, Brazil, China, England, Honduras, India, Mexico, Russia and Ukraine.

CROWN IRON WORKS COMPANY2500 West County Road C • Roseville, MN 55113 • USA

Call today at 1.651.639.8900 or visit us online at www.crowniron.com

Adding Value to your Ethanol Process.

The Crown Fractionation system was designed to give the ethanol industrymeans to improve plant efficiency and provide more profitable co-products.

Crown Fractionation, Extraction and Oil Refining.

Crown's Extraction and Oil Refiningtechnologies convert the germ into premium products, animal feed and edible oil.


Next on the list are available resources, such as what kind of training and start-up services the company provides. What about break-downs? Does the company offer 24-hour service? Does it have spare parts on hand?

An engineer can help an ethanol plant as it is evaluating new technologies, Jakel says. For those companies without an in-house engineer, he recommends contracting with an engineer. “I can’t stress enough, when you are investing this kind of money on these technologies, spending money on someone who understands this industry, who under-

stands corn, is well worth the due diligence effort from you,” he says.

Despite Jakel’s long list of factors to consider, he’s still very much a proponent of fractionation. “It really is that key technology that opens the door to many more things,” he says. “It opens up the door, but you have got to fi nd out, what’s behind the door.” EP

Holly Jessen is associate editor of Ethanol Producer Magazine. Reach her at (701) 738-4946 or [email protected].

line.” A savvy producer will also ask what kind of bran a certain fractionation tech-nology produces. Is it fi ne or whole? Will it need additional grinding? What is the starch content of the bran produced? Germ quality will impact pricing, and corn oil with high free fatty acid content will be dramatically discounted. “With some of the technologies out there, you will have a hard time extracting (corn oil),” Jakel adds. “All germ is not created equally.”

Other markets ethanol producers can access with fractionation, such as fer-tilizers or pet foods, can be tricky. While the margins are good in pet food, for example, it’s an even pickier market than livestock feed. “People are willing to pay a premium, but man, you’d better make sure it’s the highest quality-controlled product you’ve got in your facility,” Jakel says.

It’s also important to be realistic, he cautions. Different fractionation com-panies are promising widely different throughput increases, from 8 to 20 per-cent. “Can your plant even do it?” Jakel asks. “I know for sure that at my plant right now, we are running full out at 115 MMgy, I cannot get 10 percent more ca-pacity unless I invest another 20 or 30 mil-lion dollars.”

Corn is another major consideration. A front-end fractionation system requires more corn to produce the same amount of ethanol. Again, the numbers Jakel has heard are all over the board, from 3 percent up to 30 percent more corn. Al-though the added coproducts mean addi-tional revenue, the increased cost of corn must be taken into account. Corn logistics need to be considered as well. With more corn coming in, additional on-site storage bins may be needed and more man hours needed to cover additional corn-receiving operations.

The list of points Jakel recommends be covered in vetting a fractionation pro-cess is long. Other questions include the type of performance data the company has for its technology and whether it has been tested or verifi ed by a third party. It’s also a good idea to ask about the fi -nancial backing of the company, he says.

FRACTIONATION

With IsoStabTM naturally derived antimicrobial

Pump more profit per bushel…naturallyIsoStabTM is made from natural acids found in hops. It’s the naturally derived way to effectively control gram-positive bacteria in fermentation.

Eliminate antibiotics and harsh chemicals. Forget problems with resistant bacteria. Add value to your co-products with antibiotic-free DDGS. Plus, many have experienced yield increases using this naturally derived, thermally stable, pH tolerant antibiotic alternative.

Drive your plant to higher productivity with IsoStabTM. You’ll find your map to increased profits at: www.bthp.info

5185 MacArthur Blvd., Suite 300Washington, DC 20016-33441202-777-4827Fax: 202-777-4893

POLICY


Weathering Contradictory reports and new policy proposals are causing turbulence in efforts to extend the ethanol blenders tax credit, set to expire in December.

By Holly Jessen

the VEETC Storm


POLICY


While both are in the business of promoting the ethanol industry, Growth Energy and the Renewable Fuels

Association don’t always agree on the best way to proceed. That was especially apparent in July, when the two groups diverged on the best course of action in the fi ght to extend the Volumetric Ethanol Excise Tax Credit.

On July 15, Growth Energy proposed a strategic shift in policy, setting off waves in the ethanol industry. The group unveiled its Fueling Freedom Plan, suggesting some incentives be diverted to support infrastruc-ture such as blender pumps and pipelines and requiring all new vehicles to be fl ex fuel. The plan would lead to an open market and eventually allow the phasing out of govern-ment support for the industry, the group said. Growth Energy had been considering various options for several months before unveiling its Fueling Free-dom Plan, CEO Tom Buis says. The lapse of the biodiesel blend-ers credit fi gured in the discussion as did the multiple delays in getting an E15 waiver approved. Growth Energy’s goal is to look at what is best for the industry, Buis says, not only today, but also in the future.

The RFA, joined by the American Coalition for Ethanol, the National Corn Growers Association and the National Sorghum Producers, re-acted swiftly, throwing their support behind the legislation introduced in the U.S. House of Representatives and U.S. Senate to extend ethanol tax incentives. “There’s very little time left for this Congress to do much,” RFA President and CEO Bob Dinneen tells EPM, “which is why we are trying to stay the course and make sure we keep it simple, because complexity is the enemy right now.” Although Din-neen agrees that certain parts of the proposal are very attractive, changing the U.S. renewable fuels strategy isn’t something that can or should be done quickly.

Conversely, Growth Energy contends that the time is right to discuss changes. A change this big won’t happen overnight, Buis

says, and the group wants to get its ideas out there for discussion before the energy debate in Congress, although it is not clear that will happen this year. A Senate energy bill was introduced July 27 that, notably, ignores bio-fuels completely.

With Growth Energy going one direc-tion and RFA advocating another, will that be a problem for the industry as a whole? It is a valid concern, Dinneen says. “Is it one that will keep us from doing what we want to do?” he asked. “I don’t know yet.”

At the American Coalition for Ethanol Conference & Trade Show in August in Au-gust, representatives from ACE and the Na-tional Corn Growers talked about holding a face-to-face industry meeting with RFA and Growth Energy, as soon as possible. Darrin Ihnen, president of NCGA, which has long called for cooperation among ethanol indus-

try groups, said that NCGA has been serving as a “babysitter,”, at-tempting to get the three groups, ACE, RFA and Growth Energy, to at least agree in public.

Raymond Defenbaugh, president, CEO and chairman of Big River Resources LLC in West Burlington, Iowa, commented from the audience that what the industry needs is one voice of support for ethanol from all three

groups. ACE, RFA and Growth Energy may have different strategies, but they are united in support of ethanol. “We might be us-

ing different tools,” he said. “We might even have a different time-line on using those tools.” Big River Resources is the only U.S. ethanol plant that is a member of ACE, RFA and Growth Energy. Defenbaugh has exactly the right message, and the organizations need to do what is necessary to make that happen, said Brian Jen-nings, ACE’s executive vice presi-dent. “The truth is that we have so much more in common than

we are apart,” he said. Ron Fagen, president and CEO of Fa-

gan Inc., said that he doesn’t see a problem with having three separate ethanol industry groups. Although those groups do need to deliver the same message, having multiple

POLICY

Bob Dinneen president, CEO,Renewable Fuels Association

Tim BuisCEO, Growth Energy

••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••

•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••

•••••••

•••••••••••••••••••••••••••••

••••••••••••••••••••••••••••

•••••••••••••••••••••••••••••

BOILERSSELL•RENT•LEASE

IMMEDIATE DELIVERYCALL:800-704-2002

24 / 7 EMERGENCY SERVICE

wabash444 Carpenter Avenue, Wheeling, IL 60090

POWEREQUIPMENT CO.

10HP TO 250,000#/hr250,000#/hr Nebraska 750 psig 750OTTF

150,000#/hr Nebraska 1025 psig 900OTTF


150,000#/hr Nebraska 350 psig



80,000#/hr Erie City 2000 psig 800OTTF





20,000#/hr Erie City 200 psig

10-1000HP Firetube 15-600 psig

ALL PRESSURE AND TEMPERATURECOMBINATIONS SUPERHEATED

AND SATURATED

RENTAL FLEET OF MOBILETRAILER-MOUNTED BOILERS

75,000#/hr. Nebraska 350 psig

75,000#/hr. Optimus 750 psig 750°TTF





75-300HP Firetube 15-600 psig

ALL BOILERS ARE COMBINATION GAS/OIL

ENGINEERING • START-UP

FULL LINE OF BOILER AUXILIARYSUPPORT EQUIPMENT.

Electric Generators:• 50KW-30,000KW

WEB SITE: www.wabashpower.com847-541-5600 • FAX: 847-541-1279

E-mail: [email protected]


voices is actually a strength. “We all have our allies,” he said. “We all get along better with certain politicians that we do others.”

Larry Johnson of LLJ Consulting and Business Development reminded the con-ference that there was a lot of arguing in the 1980s over the Clean Air Act. The NCGA was in the same middleman position it is in right now, he said. And yet, despite the fi ght-ing, the ethanol industry won because it was fi ghting for a worthy cause. “I’m not really worried about this,” he said.

For its part, if the Fueling Freedom Plan isn’t adopted, Growth Energy says it will sup-port a straight extension of the VEETC, add-ing that, without an open market, decreasing the value of the VEETC would not be good for the industry. Several big players back the Fueling Freedom Plan. Jeff Broin, CEO of Poet LLC, the second largest ethanol pro-ducer in the U.S., the largest dry-mill ethanol producer and a founder of Growth Energy, is a big supporter. Green Plains Renewable

Energy Inc., the fourth largest ethanol pro-ducer and also a Growth Energy founding member, has expressed its support.

Valero Energy Corp., the third largest ethanol producer in the U.S. and—ironi-cally—a blender, commented on the issue in late July. A top offi cial said in an inves-tor/media conference call that it would not make a difference to its ethanol business if the blenders credit were not extended. Gene Edwards, executive vice president of corpo-rate development and strategic planning, said with current prices and a blending margin of 30 cents per gallon, the VEETC is “ir-relevant” to Valero’s ethanol business. “You would not see blending bat down one barrel because of the credit being gone,” he said.

While there are multiple bills proposed in the House and the Senate, the one furthest along in late July was released by the House of Representatives Committee on Ways and Means. A pared down version of the bill introduced by Reps. Earl Pomeroy, D-N.D.,

POLICY

The Environmental Law Institute used information from the Internal Revenue Service, U.S. DOE, Congressional Joint Committee on Taxation, Offi ce of Management and Budget and USDA to compile this pie chart showing the relative subisidies to renewable energy and fossil fuels. The ELI study found that the majority of government subsidies support energy sources that emit high levels of greenhouse gases. Fossil fuels enjoy the largest portion of subsidies, coming from just a handful of tax breaks.


and John Shimkus, R-Ill., the current bill calls for a one-year extension of the VEETC with a 9-cent reduction of the current 45-cent blend-ers credit. “The tax credit is a bridge to a fu-ture where renewable fuels standards create the market without requiring the tax credit drawing on the federal treasury,” Pomeroy tells EPM. “However, we aren’t there yet. We’re going to continue to press as hard as we can to get it ex-tended.”

What’s in an Incentive? Getting biodiesel’s blenders credit ex-

tended has been fraught with diffi culties. At-tempts prior to its lapse on Dec. 31 failed, and multiple amendments to bills have since died in Congress. In July, with the Unemployment Ex-tension Act passing without a biodiesel exten-sion, the effort started over with new amend-ments being attached to bills in both houses. In the meantime, the biodiesel industry has been “knocked on its back,” says Renewable Energy Group Inc.’s CEO Jeff Stroburg. Many biod-iesel plants, including REG, have cut back on

production or are standing idle. Some are tee-tering on the edge of bankruptcy. REG, the largest U.S. biodiesel producer, has a capacity of 360 MMgy, including fuel both produced and marketed for others. “More than half of our capacity is shut down, although we may not have plants that are totally mothballed like other companies,” he tells EPM, adding that getting the tax credit reinstated would mean many re-stored jobs industry wide.

If the VEETC were not extended, would the same thing happen to the ethanol industry?

The RFA has been very vocal that failing to extend the VEETC would mean closed ethanol plants and lost jobs. This spring, John M. Ur-banchuk of Entrix Inc., released a report com-missioned by the RFA showing that without the VEETC, the equivalent of two out of every fi ve plants would close, resulting in more than 112,000 lost jobs, both direct and indirect.

The Food and Agricultural Policy Research Institute at the University of Missouri also says the ethanol industry would suffer without the VEETC—although less severely than RFA pre-

dicts. In its yearly report, FAPRI says U.S. fuel ethanol and biodiesel production would be cut by 10 percent if biofuels tax credits expire.

Others aren’t so sure. A staff report re-leased in July by Bruce A. Babcock, director of Iowa’s Center for Agricultural and Rural Development, projects the expiration of the blenders credit and import tariff would not have dramatic, adverse effects on the U.S. etha-nol industry. Furthermore, if supports lapse, it would save tax dollars annually and decrease prices at the pump. The renewable fuel stan-dard is the primary driver of ethanol demand and U.S. production will increase to 14.5 billion gallons by 2014 even without the tax credit and tariff. Finally, if the supports were not extend-ed, it would only result in 300 lost jobs in 2014, according to CARD.

Growth Energy points out Babcock’s pa-per assumes the U.S. EPA increases the blend limit to E15, supporting the Growth Energy argument that if the ethanol industry gets ac-cess to a bigger share of the market, govern-ment supports like the blenders credit aren’t as important. However, without that open mar-ket, the VEETC is still vital, Growth Energy admits.

A Congressional Budget Offi ce study on biofuel tax credits released in mid-July stirred the debate further, highlighting differences in the tax incentives for ethanol, cellulosic etha-nol and biodiesel. Adjusting for energy content and petroleum used for production, the CBO determined that corn ethanol producers re-ceive 73 cents for every unit with the energy equivalent of one gallon of gas. By the same reckoning, incentives for cellulosic ethanol were $1.62 and biodiesel $1.08 per unit. To reduce gas consumption with corn ethanol by one gallon, it costs taxpayers $1, the report said. For cellulosic ethanol the number is $3. To reduce greenhouse gas (GHG) emissions through tax credits, it costs $750 per metric ton of carbon dioxide equivalent (CO2e) for corn ethanol and $275 per metric ton of CO2e for cellulosic ethanol.

The RFA countered that the CBO report failed to give credit for coproducts and relied on worst-case, pessimistic and debatable as-sumptions. The industry group said the report likely overestimates the cost of displacing pe-troleum with ethanol by a factor of three to four and overestimates the cost of reducing GHG emissions by a factor of six to eight. In

Your Trusted Margin Management PartnerWith our long history spanning nearly a century in the agricultural and energy industry, Gavilon is a trusted partner when it comes to renewable fuels. We offer unparalleled scale, scope and capability in feedstock procurement, along with physical distribution and merchandising of agricultural and energy products. Backed by our fi nancial strength, industry expertise and robust economic research group, you can trust Gavilon to support your business. Let us simplify your complex risk management and logistical challenges with an integrated solution to help you maximize margins today.

L O G I S T I C S

M A R K E T I N G

M A R G I N M A N A G E M E N T

www.Gav i lon . com 402.889.4300

POLICY


877.854.2507 toll [email protected] · hemcoepm.com

2408 KarbachHouston, Texas 77092

GANGWAYS

ACCESS RAMPS

LOADING RACKS

LIFELINES

HOSE & LOADING ARMS

SAFE ACCESS FOR LOADING TRUCK AND RAIL CARS

Loading operators, project engineers, and plant management all know how important safety is to us at HEMCO. Our safety record proves they can rely on us for fall protection from accidents. Because we’ve been there for you since 1956, we’ll be there for you tomorrow.

addition, the RFA pointed out that CBO didn’t compare biofuel incentives with other energy tax incentives—particularly oil subsidies.

Last year, the Environmental Law Insti-tute did just that and found that energy sub-sidies are “black, not green.” The institute looked at fossil fuel and renewable energy sub-sidies from 2002 through 2008. Subsidies to fossil fuels totaled about $72 billion over those seven years, while subsidies for renewable en-ergy added up to $29 billion. Of that amount, only $16.8 billion went to corn ethanol, with the remainder going to wind, solar, geothermal and hydro power sources. The results were surprising, says John Pendergrass, a senior at-torney for ELI. “It did seem like the provisions to encourage oil and gas and coal, some of which have been around for 80 and 90 years, would not be necessary for a mature industry,” he tells EPM. “It raised questions for us. Is it really needed for a mature industry, compared to a relatively new industry of renewables?” In general, subsidies for fossil fuels increased over the study period. Funding for renewables increased as well, but dropped steeply in 2006-'07. An exception was in 2008, when subsidies to fossil fuels decreased and subsidies for re-newables increased. For Pendergrass, another eyebrow raiser was how much of the subsidies to big oil come in the form of direct spending. A total of $16.3 billion in direct spending went to fossil fuels, nearly as much as the total of tax breaks and direct spending for corn etha-nol combined. In addition, the largest subsidies to fossil fuels are permanently written into the U.S. Tax Code, which is changed only as legisla-tors decide to amend it. “By comparison, many subsidies for renewables are time-limited initia-tives implemented through energy bills, with expiration dates that limit their usefulness to the renewables industry,” the report says.

Those words have never rung truer for the ethanol and biodiesel industry than right now. While the ELI paper indicated some hesitation to fully embrace corn ethanol, Pendergrass says he certainly believes it is time to reconsider all incentives. “We think that Congress should revisit and carefully consider the amount of money being spent,” he says. “I think there is inertia.”

While movement in Congress has been slow, the debate has fueled another round of negative editorials. The week before the ways and means committee released its draft bill for

a one-year, 36-cent tax incentive for ethanol, three major newspapers ran editorials bashing the fuel, three days in a row. The Chicago Tri-bune started off July 23, calling for an elimina-tion of the tax credit, saying that “heavy subsi-dies and protectionism” are a bad mix. Then, the Washington Post chimed in, also calling for an elimination of the VEETC, vaguely claiming that “there are certainly more effective ways to reduce oil consumption and greenhouse emis-sions.” The last editorial from the Wall Street Journal bitingly argued that the cost of ethanol subsidies is too high compared to the amount of carbon it replaces in fossil fuels. The industry responded swiftly. In a letter published in The Washington Post, Dinneen called the editorial misleading and pointed out that it offered read-ers no alternative to ethanol. “Calling for an end to tax credits for ethanol while ignoring the bil-lions of dollars of tax subsidies for Big Oil is as inequitable as it is shortsighted,” he wrote.

Pomeroy has heard plenty of ethanol backlash too. “The past few years, ethanol has lost a lot of public support, at least in the halls

of Congress,” he says. “I don’t fully understand why.” Although ethanol was not the cause for increased food prices, reshaping opinion has been diffi cult. And, unfortunately, many envi-ronmentalists continue to use fl awed science to tear down the fuel. “I don’t have an understand-ing of what their end game is,” he adds. “I guess they’d put us all on bicycles and call it a day.”

Ethanol, as many industry supporters are fond of repeating, is here today. Production is over 10 billion gallons yearly and continues to increase, cutting a chunk out of the amount of fossil fuel the U.S. imports from the Middle East. It’s created 119,000 direct and indirect jobs. “Ethanol is a success story,” Pomeroy says. “In the early years we had to justify ethanol based on theory, now the evidence is in, and it is working in a big way.” EP

Holly Jessen is associate editor of Ethanol Producer Magazine. Reach her at (701) 738-4946 or [email protected].

POLICY


Fueling a New Market

A mid-Atlantic company may have developed a solution for two of ethanol producers’ main problems: natural gas usage and how to increase demand for their product.

By Kris Bevill

PROFILE

PHOTO: LPP COMBUSTION LCC


PROFILE


Chances are that if ethanol pro-ducers had to name one opera-tional cost they wish they could reduce or eliminate entirely, the

unanimous answer would be “natural gas.” According to this year’s Christianson & As-sociates PLLP biofuels benchmarking report, 92 percent of non-electrical energy con-sumed by plants participating in the survey is natural gas. It is the most expensive input in ethanol production after corn and because of this, ongoing research is being conducted to fi nd sustainable replacements for natural gas in the ethanol industry.

LPP Combustion LLC may have the an-swer to the ethanol industry’s search. The Co-lumbia, Md.-based technology company has developed a system that can convert ethanol and other liquid fuels into a natural gas sub-stitute, which can then be used in gas turbines and boilers in a number of industries.

Leo Eskin, president and chief operat-ing offi cer of LPP Combustion, describes his company’s technology as being a fairly basic conversion process. “What it does is it chang-es liquid fuels into a type of gas called LPP [lean, pre-mixed, pre-vaporized] gas. The way we do that is simply by heating the liquid and combining it with a background diluents—we use nitrogen from the air—and, basically, we dilute the liquid vapor down. The LPP gas looks and acts just like natural gas and can be burned in hardware and burners that are designed for natural gas.”

Benefi ts of Burning EthanolThis technology could provide a boost

for ethanol producers on two fronts: it pro-vides a new use for their biofuel while simul-taneously reducing their need for natural gas. LPP leaders saw the opportunity for ethanol producers early on in their development pro-

cess. So far, however, they have struggled to sign up multiple ethanol producers for the system. “It came to mind to our group that these guys are using power off the grid or natural gas or other fossil fuels and they’re trying to be a ‘green’ facility,” Eskin says. “We’ve tried to approach them to see if there might be an opportunity, but the market has been challenged. There hasn’t been a lot of new construction recently and they’re pretty tight on cash [so] we haven’t been able to take that forward as quickly as I had hoped.”

Financing issues may be preventing a widespread launch of LPP technology at ethanol plants, but it hasn’t been a total shut-out. Caseus Energy and its subsidiary, Dubay Biofuel-Greenwood LLC, are very interested in the possibilities of utilizing LPP’s technol-ogy. Caseus Energy has been sending ethanol samples from the Dubay Biofuel demonstra-tion-scale, cheese whey-to-ethanol facility in Wisconsin to LPP to determine “basically, how much green electricity we can produce from our ethanol and which form of etha-nol should be used to produce maximum electricity,” says Eduard Zaydman, Caseus Energy’s business development and market-ing manager. Caseus Energy is constructing a commercial-scale facility near its demonstra-tion plant and plans to bring it online in 2011, possibly with LPP equipment installed. Zayd-man says engineers from both companies are collaborating to determine if and how the equipment will work at that facility. “Once we fi nalize the tests and know exactly how much ethanol [is needed], we can deploy that system,” he says. “We’re defi nitely interested in that.”

Ideally, Caseus Energy would employ LPP technology to utilize the over-capacity ethanol produced at the plant. “For example, if our plant produces 3 million gallons of

PROFILE

LPP Combustion LLC's technology converts any number of liquid fuels into natural gas substitute.ILLUSTRATION: LPP COMBUSTION LLC

1-800-279-4757

Call us for a free, no-obligationconsulation today.

Natwick Associates Appraisal Services1205 4th Ave. S., Fargo, ND 58103

[email protected]

The Specialistin Biofuels Plant

Appraisals• Valuation for financing

• Establishing an asking price

• Expert witness testimony

• Partial interest valuation

Few certified appraisers in the United States specialize in ethanol plant and relatedbiofuels properties. The firm of Natwick Associates offers more than 50 years of worldwide experience. Your appraisal will be completed by a certified general appraiser and conformto all state and federal appraisal standards.

ETHANOL PRODUCER MAGAZINE September 2010

ethanol a year and we can produce, let’s say, three and a half, we can use that half a million gallons a year towards electricity production,” Zaydman says. “So we’ll use electricity gen-erally in the plant, saving some money and capturing green credits.”

Green ElectricityEskin says the opportunity for users to

reduce their emissions is an important benefi t of LPP’s technology, adding that, depending on the feedstock used to produce the biodie-sel/ethanol, the LPP gas could be CO2 neu-tral. “The work that we’ve done with a small gas turbine actually showed that the biofuels burned had lower emissions of CO [carbon monoxide] than even natural gas,” he says. “These small industrial settings put out a fair bit of CO2. A 10 or 25 megawatt gas turbine is probably one of their main sources of CO2 emissions, so [they] can make a great savings in CO2 emissions all at one time.”

In addition to the Wisconsin plant, Ca-seus Energy is pursuing projects in South America and Europe, where producing etha-nol for clean energy generation is a bigger at-traction than using it for transportation fuel. According to Zaydman, areas where cap and trade programs are in place have greater de-mands for clean electricity and, in general,

ethanol as a transportation fuel is not as pop-ular in those areas as it is in the U.S. “They are really interested in producing electricity only,” he says. “We have developments going on right now in Argentina, we’re cooperat-ing with Brazil, we’ll have a project in Italy, and we’re hoping to deploy LPP technology in those places.” Caseus Energy will use its whey-to-ethanol technology to produce etha-nol for all of the projects. Zaydman says Italy is the largest of the three proposed projects and therefore may also produce some ethanol for transportation.

Another reason to produce ethanol for electricity generation, according to Zaydman, is that a lower grade of alcohol can be used, which reduces the amount of costly equip-ment needed at the production facility. Eskin says LPP has tested the technology with a range of fuels and found that it works well even when low-grade fuels are used. “We’re very actively pursuing all of these opportuni-ties for low-grade fuels, like the water in the ethanol or liquid natural gas condensates—things that are normally thrown away or fl ared because they can’t sell them—we’re looking to turn those into a natural gas replacement and create electricity with them,” Eskin says. “For example, we’ve tested ethanol with a very substantial amount of water in the ethanol.

PROFILE

LPP Combustion LLC's equipment is skid-based and is approximately one-sixth the size of an industrial-scale gas turbine, according to the company.ILLUSTRATION: LPP COMBUSTION LLC

Air Separation Unit


We can burn with the 5 percent, we’ve actually burned ethanol with signifi cantly more water than 5 percent, more than 20 to 25 percent water.”

Eskin says LPP’s technology costs ap-proximately 10 cents per gallon so the cost comparison between LPP gas and natural gas relies heavily on the cost of the liquid fuel used. “It’s not a large cost of conversion,” he says. “That’s why it’s very important that we don’t need transportation-grade.”

The equipment used in the system is skid-based and is not large—between one-sixth and one-fi fth the size of an industrial-scale

gas turbine according to Eskin. The system can be installed during new construction or as a retrofi t. “Our piece of equipment goes just upstream from where the natural gas comes in,” Eskin explains. “The liquid fuel storage tanks or pipeline would come in to our skid-based piece of equipment. We try to do the vaporization fairly close to the combustion device because we have to keep the piping hot enough to make sure the liquid stays in the gaseous form. The liquid goes in one side and hot LPP gas comes out a pipe on the other side and gets piped into whatever the piece of equipment is.”

New Market PossibilitiesWhile many ethanol producers may not

be in the fi nancial position to install LPP’s technology at their own plants, they could fi nd a market in supplying fuel to other fa-cilities that are able to utilize the substitute natural gas. “One of the types of groups that we’re actively partnering with is fuel suppliers, because they’re the ones that have the ability to produce liquid fuel at a reduced grade,” Es-kin says.

According to Eskin’s estimates, a mas-sive amount of ethanol would be required to operate a commercial-scale turbine. “A good rule of thumb is that an 80 megawatt gas tur-bine would use something on the order of 50 million gallons per year of diesel,” he says. “You would use almost twice that amount of ethanol. That’s actually a good thing in many respects because now you’ve got a guaranteed offtake for these clients.”

While LPP’s technology is fuel agnostic, users need to determine if they are going to use ethanol or other fuels before installing the system. Because ethanol has a lower Btu con-tent than biodiesel and requires more fuel, the pipe sizes need to be larger for ethanol-fueled systems and more heat would be required to gasify the ethanol. “It would be hard to tran-sition from diesel fuel to ethanol,” Eskin ad-mits. “If you knew you wanted to use ethanol, you would make sure that you designed for the heaters and things to be properly sized for the ethanol requirements.”

LPP is currently operating a 30 kilowatt Capstone gas turbine at its demonstration-scale facility in Columbia, Md., and Eskin says the company is developing several industrial-and utility-scale projects throughout the U.S. “Utilities tend to be slow to make decisions, so we’re certainly in discussions with utilities but our expectation is that other smaller opportu-nities will come to pass more quickly,” he says. “There are over 300 university presidents that have made announcements that they plan to reduce their carbon footprints signifi cantly, and many of these universities tend to have 10 to 20 megawatt gas turbines. Those are very good opportunities for us.” EP

Kris Bevill is an associate editor at Ethanol Producer Magazine. Reach her at [email protected] or (701) 850-2553.

Environmental Sustainability,ro ess E ien y

3D TRASAR® technology – Detect conditions, Determine action, Deliver results…automatically.

847-452-4745e-mail: [email protected]

www.nalco.com/ethanol

You know Ethanol.We know Water.

Essential Expertise

for Water, Energy and Air

SM

TRASAR

PROFILE

Since 1981, the Renewable Fuels Association (RFA) has been the

authoritative voice of the ethanol industry. Our efforts have yielded an unequaled record of legislative and

regulatory victories. But we consider our track record just the beginning, and are expanding our efforts with a

focus on market development.

The RFA is a trusted source for reliable

the industry, policymakers, and media alike. The RFA is the leading expert on ethanol standards and guidelines

for safety. We are also the preeminent authority on E10 and E85.

The RFA is a member-centered, member-driven organization. Join

with us to help build a strong future for the industry. For more

information, visit www.ethanolrfa.org, or call (202) 289-3835.

Renewable Fuels Association, One Massachusetts Avenue NW - Suite 820 - Washington, DC 20001 - (202) 289-3835.

RFAThe voice of the ethanol industry.


CO2 is a friend and foe of the ethanol industry. The friend, of course, is the increasingly important byproduct providing a revenue stream. As an envi-ronmental foe, the greenhouse gas is somewhat of a Pandora’s box and a daunting challenge to reduce and control. By some estimates, more than 75 million metric tons of CO2 are emitted globally each day; with perhaps one-third absorbed by natural oceanic activity and photosyn-thesis. This leaves more than 50 million tons of CO2 being

emitted each day, with a negli-gible global effort to stem the tide. While an increase in average world temperatures of 2 degrees Fahrenheit may seem modest, it may well result in a major loss of species, habitats—both human and animal—and a change in the world as we know it.

Markets, Old and NewCO2 markets are often

referred to as captive, niche, merchant and sequestration. A captive market would be an enhanced oil recovery project

(EOR), or series of projects served by one or more sources, typically via pipeline due to size. One such project is the Dakota Gasifi cation project in Beulah, N.D., which supplies the Encana and Apache EOR projects in Saskatchewan with up to 10,000 tons of crude CO2 daily from coal gasifi cation. Other exam-ples would be carbon dioxide for chemical production of sodium bicarbonate, methanol or urea. An example of a niche market is a group of large poultry proces-sors that use hundreds of tons

of CO2 daily for cryogenic freez-ing and refrigeration.

About 40 percent of the North American merchant mar-ket for CO2 is sourced from etha-nol plants. This sector includes all forms of CO2 sold to industry—liquid being the primary form, followed by dry ice. These mar-kets include the manufacturing of soft drinks, beer and frozen foods, and multiple industrial uses such as grain fumigation, pH reduction of municipal water and effl uent, welding, metallurgy, rub-ber manufacturing and chemical

CO2 Increasingly Important to EthanolCarbon dioxide must be properly developed economically in order to yield the greatest return, while the implications for an ever-warming globe and the ultimate reduction of greenhouse gas emissions must also be considered.

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

CARBON DIOXIDE. BY SAM RUSHING

Contribution


production, to name a few. Food and beverage uses require high purity, driven by the standards of the International Society of Bev-erage Technologists.

Ethanol’s CO2 market share is likely to grow, despite the recent ethanol industry upset and linger-ing recession. The lion’s share of recent source agreements involve ethanol, primarily due to the cost effectiveness of ethanol-sourced CO2. Other major sources in-clude natural wells and anhydrous ammonia production. Anhydrous ammonia sources almost disap-peared when natural gas prices approached $10 per million Btu. Natural well sources also have their problems, with a potential for contamination with radon gas, sulfur compounds and other organics. Other sources include fl ue gas and various energy and chemical projects.

In addition to the grain-based ethanol industry, second-genera-tion biofuels promise to become a new carbon dioxide source. A key consideration for the many technologies for cellulosic ethanol under the microscope today, and those that have reached pilot and demonstration phases, is making them competitive with grain-based ethanol. Subsidies will help, as will implementation of energy and/or climate legislation that gives CO2 recovery and seques-tration an economic value. We are still some distance away from signifi cant volumes of ethanol and CO2 from cellulosic sources being produced, but in the future, the market will likely be driven by cellulosic, algae and syngas sourc-es for renewable fuels.

Pricing FactorsA full understanding of

market factors is key in realizing the best possible price for car-bon dioxide, with strategic loca-tion being top on the list. Many of the strong markets in the U.S. sell for more than $100 per ton to the consuming plant. Since the direct-to-customer market yields the best selling price, it is entirely possible to consider the direct market as the actual cus-tomer base for marketing CO2 from a biofuels venture. Should a full evaluation of the markets, re-quirements, margins, competitors and options show promise com-pared to selling raw gas to the refi ners, then the direct approach would be a fi ne moneymaking choice for the biofuels producer. In some cases, however, selling it to the industrial gas companies as a raw gas can be best. Other op-tions can be agreements with dis-tributors of CO2 to the liquid (or dry ice) markets, or joint ventures or other arrangements outside of a long-term raw gas contract. Utilizing CO2 expertise for the evaluation of markets, process requirements, costs and allied in-formation, can help identify the best available options to the etha-nol project to maximize revenues and reduce risk.

The Midwest is currently well supplied with merchant CO2, although there still may be profi t-able niche markets in this rather large geographical region. Other regions requiring strategically lo-cated new CO2 sources include the Northeast, mid-Atlantic, Flor-ida, Northwest, and certain areas of the Southeast, Midsouth, West Coast and Southwest. Canadian regional markets have their own

source requirements, along with different merchant gas operating philosophies.

Gas companies contracting for raw CO2 have traditionally been considered the base market for ethanol plants capturing and selling the gas, yet the negotiated prices are often fully inadequate in these raw-CO2 sales arrange-ments. An industry expert can often negotiate the best arrange-ment on behalf of the ethanol producer, and in some specifi c situations CO2 can be sold direct-ly to a niche customer at a greater value. While only some ethanol plants supply the direct merchant markets, there are good opportu-nities in select regional markets and markets with the right com-bination of price, market content and competition. Proper investi-gation, evaluation and develop-ment of CO2 markets are crucial to the long term health of the ethanol producer. A dollar or two more per ton from the CO2 reve-nue stream can represent millions of dollars of revenue lost over the years if due diligence and the proper evaluation and develop-ment of the markets were not achieved.

Environmental Incentives

Overshadowing the sale of carbon dioxide are the environ-mental factors and the prospect for regulation. The fi nal structure of policy incentives to deal with the environmental impact of CO2 is still unknown at this time. Envi-ronmental and energy bills are not moving along through the U.S. Senate, but have, at least, made progress in the House of Rep-resentatives. It is inevitable that

greenhouse gas (GHG) legislation in some form will be passed. The how and when of serious GHG reduction efforts won’t be solely driven by politics—big business will have a role, too. The electric power sector is the worst GHG offender, for example, with CO2 comprising the largest volume in emissions followed by methane.

Ultimately, sequestration will take a greater role in reducing GHG emissions. Several promis-ing technologies are being inves-tigated, including growing algae with CO2, sunlight, water and nutrients with a goal of creating biofuels from the algae oil and biomass. Another means of se-questering carbon is to inject CO2 into aquifers or other geological formations. Other technologies under development incorporate CO2 into new products, such as fuels or plastics. These processes convert CO2 into a form that can-not enter the atmosphere again, unless the manufactured product decomposes or is changed signifi -cantly.

In the end, carbon dioxide is a friend and a foe, and it must be properly developed in economic terms in order to yield the great-est bang for the buck as a friend. As a foe, we need to consider all of the implications with respect to an ever-warming globe, and ultimately a reduction of carbon dioxide emissions. EP

Sam A. Rushing is president of Advanced Cryogenics, Ltd., a chemist and a CO2 consultant. Reach him at 305-852-2597 or [email protected]; www.carbondioxideconsultants.com


EPM MARKETPLACE

Associations/OrganizationsGrowth Energy202-545-4000 www.growthenergy.org

Clean Cities

Red River Valley Clean Cities651-227-8014 www.CleanAirChoice.org

Twin Cities Clean Cities Coalition651-223-9568 www.CleanAirChoice.org

ChemicalsAnti-Microbial

Ferm Solutions859-402-8707 www.ferm-solutions.com

Desiccant

Interra Global847-292-8600 www.interraglobal.com

Enzymes

CTE Global, Inc.847-564-5770 www.cte-global.com

Novozymes919-494-3101 www.novozymes.com

Yeast

Ferm Solutions859-402-8707 www.ferm-solutions.com

Martrex,Inc.952-933-5000 Ext 18 www.martrexinc.com

CleaningDryer Systems

Hydro-Klean, Inc.515-283-0500 www.hydro-klean.com

Premium Plant Services, Inc.888-549-1869 www.premiumplantservices.com

Seneca Companies800-369-5500 www.senecaco.com

Ductwork


Emergency Spill Response



Evaporators



Fans



Filter Media


Heat Exchanger



Hydro-Blasting


Plate-Frame


Railcar Spill Response


Railcars


Scrubbers


Smoke Stack


Tank Cleaning Equipment

Cloud/Sellers Cleaning Systems800-234-5650 www.sellersclean.com

Gamajet Cleaning Systems Inc877-GAMAJET www.gamajet.com

Reach your customers

Your Solution. Advertise Today.

EPM MARKETPLACE


EPM MARKETPLACE

Tank Cleaning Services



ConstructionFabrication

Agra Industries, Inc.715-536-9584 www.agraind.com

Andy J.Egan Co.616-791-9952 www.andyegan.com

Plant Construction


Railroad Tracks:

Tanks


ATEC Steel620-856-3488 www.atecsteel.com

J.C. Ramsdell Enviro Services, Inc.877-658-5571 www.jcramsdell.com

Westmor Industries320-589-2100 www.westmor.biz

ConsultingEnvironmental

Aquaterra Environmental Solutions, Inc.877-913-8200 www.aquaterra-env.com

Cantley Inc.865-360-4080

Golden Specialty888-472-9898 www.goldenspecialty.com

ICM, Inc.877-456-8588 www.icminc.com


Feasibility Studies

Harris Group Inc.206-494-9422 www.harrisgroup.com

Management Services


Plant Optimization



Project Development


Safety

Rail Safe Training, Inc.712-212-4145 www.railsafetraining.com

EmploymentRecruiting

RenewableEnergy-Careers.com815-261-4480,x111 RenewableEnergy-Careers.com

S.E Weinstein Company800-258-1701 www.seweinstein.com

SearchPath of Chicago815-261-4403, x100 www.searchpathofchicago.com

EngineeringDesign/Build


Process Design

ADF Engineering Inc.937-847-2700 adfengineering.com


Equipment & ServicesAnalytical Instruments

Perten Instruments, Inc.801-936-8165 www.perten.com

Biogas Scrubbers

Eco-Tec, Inc.905-427-0077 www.eco-tec.com

Blowers & Fans

FlaktWoods716-845-0900 www.fl aktwoods.com

Centrifuges

Aaron Equipment630-350-2200 www.aaronequipment.com

Control Systems



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

Conveyors–Drag

Intersystems800-228-1483 www.intersystems.net

Conveyors–Mechanical

Superior Industries320-589-2406 www.superior-ind.com

Cooling Towers

Delta Cooling Towers, Inc.800-BUY-DELTA www.deltacooling.com

Corn Oil Recovery



EPM MARKETPLACE

DDGS Diesel

Total-Yield Diesel from Distillers402-640-8925 www.total-yield.com

Distillation Equipment

SRS Engineering Corpration951-526-2239 www.srsbiodiesel.com

Dryers-Fluid Bed

Buhler Aeroglide919-851-2000 www.aeroglide.com

Dryers-Rotary Drum


Dryers-Rotary Steam Tube


Quality Kiln and Dryer Inc318-335-2001 www.qualitykilnanddryer.com

Fermentors

WINBCO Tank Company641-683-1855 www.winbco.com

Filtration Equipment

Fluid Engineering814-453-5014 www.fl uideng.com

Fractionation-Corn

Buhler Inc.763-847-9900 www.buhlergroup.com/us

Cereal Process Technologies217-779-2595 www.cerealprocess.com


Grain Handling & Storage


Instrumentation


Insulator

DG Skouse Company816-779-7427 [email protected]

Miller Insulation Co., INC701-297-8813 www.millerinsulation.com

Laboratory-Equipment


Laboratory-Testing Services

Midwest Laboratories, Inc.402-829-9877 www.midwestlabs.com

Loading Equipment

Determan Brownie, Inc.800-835-6074 www.determan.com

Maintenance Software


Millwright


Moisture Analyzers


Molecular Sieves

Grace Davison Renewable Technologies410-531-8731 www.gracebiofuels.com


Parts & Services


Process Control


Productivity Enhancements


Pumps

PeopleFlo Manufacturing847-929-4774 www.peoplefl o.com

QA Test Products


Sensors

Structural Fabrication


Custom Rotary Driers for DDGS & Biomass Feedstocks

With rotary drying technology by Ronning Engineering

www.aeroglide.com/ethanolor call +1 919-851-2000

www.binmaster.com402-434-9102

[email protected]

3DLevelScanner

From simple point level controls to advanced computer-based

inventory management

3DLevelScanner Smart ob otary Diap ragm S itc ibrating ods apacitance Probes ilt S itc eration Dust Flo Detection


EPM MARKETPLACE

Tanks


ATEC Steel620-856-3488 www.atecsteel.com

Spokane Industries Inc.509-921-8868 www.spokanemetalproducts.com

Thermal Oxidizers

Wastewater Treatment Services

ADI Systems Inc.1-506-452-7307 www.adisystemsinc.com



Water Treatment

H2O INNOVATION763-566-8961 www.H2OINNOVATION.com

FinanceAppraisals

Natwick Associates Appraisal Services800-279-4757 www.natwick.com

Due Diligence


Insurance

ERI Solutions, Inc.316-927-4294 erisolutions.com

Mergers & Acquisitions

Moglia Advisors847-884-8282 www.mogliaadvisors.com

Legal ServicesAttorneys

WOHLSIFER & ASSOCIATES, P.A.850-219-8888 www.wohlsifer.com

MarketingFuel Ethanol

CHS Renewable Fuels651-355-6271 www.chsinc.com

Miscellaneous

Maas Companies507-424-2640 www.maascompanies.com

Research & DevelopmentEngine Testing

Roush Industries734-779-7736 www.roush.com

TransportationMarine

Odin Marine, Inc.203-969-3400 www.odingroup.com

Rail

Ameritrack RailRoad Contractors, Inc.765-659-2111 www.ameritrackrailroad.com

Rail Consulting

Rail Safe Training, Inc.712-212-4145 www.railsafetraining.com

Railcar Gate Openers

The Arnold Company800-245-7505 www.arnoldcompany.com

EPM MARKETPLACE

With all contact information placed

in one convenient location, Ethanol

Producer Magazine not only contains

top editorial content but also a useful

directory in each publication. Whether

a fi rst-time advertiser wanting to raise

awareness of your business or a fre-

quent display advertiser looking for

added exposure, EPM Marketplace is

the perfect solution.

[email protected]

PROVENRELIABILITYfor VOC, CO & PM

ABATEMENT

EISENMANN CorporationCrystal Lake, Illinois

Reach your customers

Your Solution. Advertise Today.

EPM MARKETPLACE

PACIFIC WEST EVENT

January 10-12, 2011Sheraton Seattle HotelSeattle, Washington

EST

uarrato

Sea

T

12Ho

ngt

CIF

J , 2l

n

www.biomassconference.com/pacificwest

November 2 - 4, 2010Hyatt Regency AtlantaAtlanta, Georgia

www.biomassconference.com/southeast

With an exclusive focus on biomass utilization in the Southeast – from the Virginias to the Gulf Coast – the Southeast Biomass Conference & Trade Show is a dynamic regional offshoot of Biomass Magazine’s International Biomass Conference & Expo, the largest event of it’s kind in the world.

www.biomassconference.com/[email protected]

ATTEND.EXHIBIT.SPONSOR.

Date post:	25-Mar-2016
Category:	Documents
Upload:	bbi-international
View:	216 times
Download:	2 times

September 2010 Ethanol Producer Magazine

Documents