Ethanol Plants Producing to Protect

The U.S. ethanol industry saw a shift during the pandemic, as many plants sold or donated ethanol to be used in hand sanitizer production. While the temporary market provided cash flow for some, helping the nation in a time of need motivated all.
By Lisa Gibson | June 10, 2020

The prison system in Iowa has multiple advantages that make it ideal to produce hand sanitizer during a pandemic, says Cord Overton, communications director for the Iowa Department of Corrections. And through donations of ethanol and biodiesel from members of the Iowa Renewable Fuels Association, more than 25,000 gallons—equivalent to 46 million doses—of hand sanitizer have been produced and donated to state agencies and institutions that need it most.

It started in March when Iowa Prison Industries was exploring options to prevent and reduce outbreaks of COVID-19 in its prisons. Gov. Kim Reynolds connected IPI with IRFA. “That got the ball rolling on how we can start to maneuver through the different regulatory hurdles that need to be overcome in order for an entity like IPI to start making hand sanitizer,” Overton says. “IRFA really helped us better understand the regulations. Between the two entities, IPI and IRFA, we were able to make contact with the partners we needed to in order to get the proper permits to produce the product.”

The Iowa partnership isn’t the only avenue ethanol plants have taken to produce hand sanitizer during the pandemic. Producers across the country are donating or selling ethanol into this temporary market to help meet demand as the industry shows signs of recovering from a dramatic production downturn in April that idled or reduced production at nearly half of all U.S. plants.

Process and Regulations
When the pandemic hit earlier this year and ethanol plants saw an opportunity for 190 or 200 proof, the regulations were unclear.

“There was a lot of confusion very early on about everything from [World Health Organization] guidance, to [Alcohol and Tobacco Tax and Trade Bureau (TTB)] taxes and registration requirements, and then you have the [Food and Drug Administration’s] guidance and emergency formulas,” says Monte Shaw, executive director of IRFA.

Emergency guidance from FDA allowed ethanol from fuel plants to be used, provided it met certain specs. “It wasn’t just willy nilly,” Shaw says.

New guidance was released in April and plants scrambled to qualify. Commonwealth Agri-Energy in Hopkinsville, Kentucky, received approval from FDA for its 200 proof to be sold to local distilleries making hand sanitizer, but Commonwealth General Manager Mick Henderson says the FDA’s components threshold is unclear. “We can operate well below that threshold. We just don’t know where it is.”

The analysis includes gas chromatography, Henderson says, as well as breakdowns of alcohols and other components. Initially, the regulatory relief issued by FDA released some “bad actors” that didn’t separate well enough and sold product that retained some conventional denaturant, Henderson says. “If you didn’t separate, you’re one of those bad actors. You’re giving us a bad reputation.”

At least one large ethanol producer has expressed concern about the liability of supplying fuel ethanol for hand sanitizer, but producers doing it say the way the product is correctly denatured makes it suitable for this emergency use. Brian Kletscher, CEO of Highwater Ethanol LLC in Lamberton, Minnesota, says the denaturant his plant uses for ethanol going into hand sanitizer is different from a fuel market denaturant, suiting TTB requirements. Hand sanitizer producers he’s selling to know the ethanol product they have and follow FDA and TTB regulations. “As long as everybody’s following guidelines, our opinion is it’s safe for the hand sanitizer market and we’re happy to be part of the solution for COVID-19,” Kletscher says.

Prison Products
Overton says IPI is grateful to be part of the COVID-19 solution, too. At the Iowa Correctional Center for Women, ethanol comes to the production floor and inmates begin the process of blending the right amount of raw materials to produce hand sanitizer. The product is put in one-gallon jugs, each containing thousands of doses, and sent to end users.

Those end users are across the state of Iowa, mostly major state agencies that have supervision of people who are at high risk of infection, such as IPI, the Iowa Department of Human Services and the Iowa Veterans Home. “We made sure we got their needs met right away,” Overton says.

Then focus switched to the rest of the state, distributed through the state’s emergency center. “We’ve been shipping thousands of gallons of hand sanitizer from our production floor at the women’s prison to the state distribution warehouse, where it is going to hospitals, day cares, jails,” Overton says.
The hand sanitizer is provided free of charge to all the end users. IPI is working to receive grant funding through homeland security to be reimbursed for the cost of production, Overton says. “Generally, vital products like this are covered for FEMA reimbursement during federal disaster proclamations.”

But the production costs are lower because IRFA donated the ethanol. The association paid some producers for their ethanol, while other producers donated, Shaw says. “At least to date, we’ve been able to provide the glycerin and the denatured ethanol to the state as a donation.

“Some of our first ethanol came from Absolute Energy and they also provided one of their technical people to work with IPI,” Shaw says. “We wanted to make sure all the safety precautions were taken and people understood what they were dealing with. I was proud that the industry also stepped up with that technical guidance, as well.”

Beyond hand sanitizer made with Iowa’s ethanol, IPI has been producing personal protection equipment (PPE), as well. “Throughout this process, IPI has been looking at a variety of products they can produce because we have very specialized abilities to shift production to produce what’s needed, and it’s done all the time in our prisons,” Overton says.

During the pandemic, the Fort Dodge Correctional facility has churned out more than 15,000 PPE gowns. At Anamosa State Penitentiary, more than 12,000 face shields have been produced. The Iowa State Penitentiary has produced 85,000 masks. It’s all been donated, Overton says. “During a time of crisis like this, it’s important the people on the front lines get the things they need.

“Part of the reason we’re able to make gowns so quickly at the Fort Dodge prison is they have a very robust textile program, making uniforms for police officers, for correctional officers and fire fighters across the state of Iowa, as they place those orders,” Overton says. “So simply pivoting our production from uniforms toward making gowns wasn’t a huge shift in their production lines.

“There’s also a desire by those that are incarcerated to do the work,” he says, adding that the inmates receive an allowance for their work. “That’s also kind of unique, that you have this group of people who want to step up and help out. … They’re just happy to be able to provide something that’s needed in Iowa’s communities.”

Cord says all entities involved, from producers to regulatory agencies, were willing to “bend over backwards” to make the hand sanitizer production a possibility. “That’s how we were able to get it done so fast.”

Keeping Up
Toward the beginning of the pandemic, Highwater Ethanol slowed production, then ramped back up when it found its hand sanitizer market. “We weren’t able to keep up with the demand,” Kletscher says. Now, the demand has leveled out a bit, as commercial production has been able to start catching up.

“We were down for approximately 10 days on our first initial drop in production and when 190 demand started, we ramped back up for about a week and we’ve started leveling off and feeling the market, understanding where it goes and how much is desired from our end users right now.”

Highwater has dropped overall production by about 25% and is selling 35% to 40% of its entire production as 190 proof for the hand sanitizer market. It doesn’t change the process at all, he says. “We’ve been able to make our 190 proof meet the specs that everybody desires right now.”

Highwater has used brokers, and sold directly to manufacturers. “We’ve been all over the board,” Kletscher says. “We’ve tried to narrow it down to two end users and let them do the bulk of the handling of it and they’ve been doing a great job of that for us.” The product goes out in tanker trucks.

Kletscher attributes Highwater’s ability to stay open during the pandemic to the hand sanitizer market. “We’re able to cash flow it, or I wouldn’t be doing it because it’s a lot of extra work for my team,” he says. “But in the end, we believe we’re doing the right thing. … For Highwater, it works. There are a lot of plants it probably wouldn’t work for.”

Shaw agrees. “I don’t want to say it’s a hassle, but you have to do it differently,” he says. “You have to be careful with things and make sure you’re doing it right.”

Spirits and Sanitizer
Commonwealth has been able to do it right and make it work. The plant sends between 14 and 16 truckloads of 200 proof to three small, local distilleries. It started when Fort Campbell Army post asked for a supply to make its own sanitizer, Henderson says. The first batch was made with a copper tube in a barrel, a design the Commonwealth team had come up with and sent in for analysis a few years earlier. “As much of a moonshiner process you’ve ever seen, we pulled it off and knew we needed to have a little more rigorous heat exchange for this process,” Henderson says. “With hoses and a heat exchanger borrowed from another part of the process that had been shut down, we got it in service.”

Henderson provided the ethanol for the post, and then discussed opportunities with the distilleries, initially supplying each with a free tote of 200 proof to try the WHO formula for hand sanitizer. “Three free totes became four totes a day by the end of the first week,” Henderson says. “Now those three are each doing four to six totes a day, selling online, selling to businesses.”

The partnerships are working so well, Henderson says plans are in the works to ramp up sale of the FDA-approved 200 proof. The plant has been approved for $250,000 in funding to enhance the tankage and loadout process, allowing for a longer-term production process, post-pandemic. The revoked FDA guidance for fuel ethanol in hand sanitizer won’t affect the plan, Henderson says.

Similarly, Overton hopes to maintain a relationship with IRFA, even after the partners stop their good-will hand sanitizer production. “It’s so ‘Iowa nice,’” he says of the partnership. “I haven’t seen another state form a partnership with ethanol like we have. I think we have some life-long partners over there.”

Shaw says credit goes to Gov. Reynolds and IPI. IPI took a “get it done” approach to the project, working around regulatory hurdles to make it happen. 

“It all worked out and they’ve produced literally millions and millions and millions of doses of the sanitizer, so I just can’t help but think that somewhere, at least one person has been protected from the virus through this project,” Shaw says. “It’s probably more than that, but even if it’s one person, it’s pretty cool to be able to be a part of that.”

Author: Lisa Gibson
Editor, Ethanol Produce Magazine
701.738.4920
lgibson@bbiinternational.com