Since startup in 2008, 10 percent or more of the ethanol produced at Patriot Renewable Fuels LLC has been exported. Judd Hulting, plant commodity manager, emphasizes the plant&rsquo;s proactive strategy to exports. It&rsquo;s an approach he believes more ethanol producers need to adopt. &ldquo;We need to be more proactive and do what we can to open new markets, expand markets and educate, whether it&rsquo;s the consumer in America or the consumer in any of these destination markets,&rdquo; he says. The 130 MMgy plant exports the majority of the distillers grains produced there and the amount of fuel ethanol exported is growing. To handle production of anhydrous ethanol for export markets and also meet domestic specifications, the company has installed additional mole sieves. &ldquo;We continue to believe exports are very important, not only for our business but for the whole ethanol industry,&rdquo; he says. Patriot Renewable Fuels has participated in U.S. Grains Council-led trade missions overseas and has hosted foreign distillers grains buyers at its plant, something Hulting would like to also offer to fuel ethanol buyers from other countries. &ldquo;You&rsquo;ve got to go out there and meet those customers, face to face, shake their hand, and at the same time, welcome them back to your plant and your local community and develop that trust,&rdquo; he says.&nbsp; Green Plains Inc. is another ethanol producer that sells its fuel into the export market. During the company&rsquo;s Oct. 28 third-quarter financial results call, Todd Becker, president and CEO, said a minimum of 15 percent of its fourth-quarter ethanol production had already been sold into export markets. &ldquo;We have volumes sold and destined to India, the Philippines, Brazil and other developing countries, along with our normal buyers like Canada and others,&rdquo; he said. &ldquo;Interestingly enough, we're booking export sales into 2015, extending into the third quarter.&rdquo; This is not typical, he said, adding that Green Plains has more gallons booked ahead for export than it&rsquo;s had in the history of the company. Becker also talked about how the specs for export gallons actually result in slower production speeds for Green Plains. &ldquo;I don't think people think about that, but there is definitely an inverse relationship because of the water spec that we have to produce,&rdquo; he said during the call.&nbsp; Ideal Combination It&rsquo;s been an interesting year for exports for the industry as a whole.&nbsp; &ldquo;We have seen demand growth in a number of existing markets, places where we have been exporting for the last several years, but we have also seen the emergence of several new markets,&rdquo; says Geoff Cooper, senior vice president of the Renewable Fuels Association. Looking at the data through October, the latest numbers available at press time, year-to-date exports sat at 669.3 million gallons, roughly 40 percent higher than exports through October in 2013. By the end of the year, the U.S. ethanol industry is expected to export about 803 million gallons, the RFA estimated, considering that exports are typically up in the fourth quarter, following seasonal patterns. &ldquo;I think we could be as high as 825 or 830 million gallons, somewhere in that range,&rdquo; Cooper said in December, adding he expects continued growth in 2015. &ldquo;Based on what we know today, we would expect 2015 to be quite similar to what we saw this year, or maybe a couple hundred millions higher. We could end up seeing about a billion gallons of exports.&rdquo;&nbsp; On the import side, only 67.5 million gallons of ethanol from other countries had come into the U.S., through October. In fact, imports have averaged less than 7 million gallons per month. This puts the U.S. in the net exporter category, a title it had held 14 months consecutively at that time.&nbsp; Cooper pointed to two factors for growth in exports. One is the price of ethanol, which created favorable blending economics for the high-octane fuel. A second stimulant is demand created in countries with renewable energy programs. &ldquo;In many cases, their local or domestic capacity isn&rsquo;t adequate to meet the requirements or targets of those programs so the alternative is to import from countries that have surplus capacity,&rdquo; he says. Max Thomasson, director of global ethanol trading at CHS Inc., sees the same thing. &ldquo;There&rsquo;s been an increase in exports with the cheap price of ethanol on the forward curve, which is brought about mostly by relatively cheap corn,&rdquo; he says. CHS has offices in Brazil, Switzerland and Singapore, and exports U.S. ethanol to Brazil and Asia, primarily the Philippines. &ldquo;That demand has grown by about 12 percent, year on year, for the last three years, which is driven by government mandates in the Philippines,&rdquo; he says, adding that the company has exclusive marketing agreements with eight ethanol plants and also owns the 133 MMgy plant in Rochelle, Illinois. After first sourcing from those nine plants, CHS purchases ethanol from third-party sellers for export. By the Numbers Like last year, Canada is on pace to be the No. 1 export destination for U.S. ethanol, Cooper says. Through October, the nation&rsquo;s neighbor to the north was the destination for 44 percent of total U.S. exports. Brazil was in the No. 2 slot, importing nearly 80 million gallons through October, nearly double the total for last year. &ldquo;We don&rsquo;t really know exactly how things are going to go with Brazil until we know what their sugar crop looks like every year, and their market dynamics, whereas Canada has been much more consistent,&rdquo; he says. Exports to Canada, Brazil and the European Union helped the U.S. cross the record-setting 1 billion gallon mark in 2011. In all, about 800 million gallons went to those three markets alone, Cooper says. Then, exports dropped 38 percent from 2011 to 2012 and another 16 percent from 2012 to 2013. Two of the biggest impacts were a rebound in the Brazilian sugar and ethanol sector and the EU tariff placed on ethanol imported from the U.S. Interestingly, U.S. ethanol is still making its way to the EU, most of it via Peru, which doesn&rsquo;t have to pay the tariff, Cooper says. In 2013, Peru was the fifth largest market for U.S. ethanol. Although the numbers are down somewhat this year, the country does continue to import U.S. ethanol, the majority of which then ends up in the EU. It&rsquo;s a pattern of shuffling products around that develops as a result of trade barriers and restrictions on free trade. &ldquo;Obviously the solution would be to not have any of those tariffs or trade barriers and let ethanol flow to where it makes sense, based on the economics,&rdquo; he says. Despite the tariff, a small but growing number of gallons is going directly from the U.S. to the EU. By the end of this year it&rsquo;s expected to end up at about 50 million gallons. &ldquo;That&rsquo;s almost double from where we were last year, but still a long way from the high-water mark,&rdquo; Cooper says, adding that 250 million gallons of U.S. ethanol were exported to the EU in 2011. Looking ahead, lower gas prices at the end of the year may erode demand in export markets where ethanol was being blended due to the price, Cooper says. However, ethanol is also blended for its octane content. For example, through October, the United Arab Emirates had imported 68 million gallons of U.S. ethanol. &ldquo;That&rsquo;s about twice what they did last year, so they very likely will be the No. 3 market in 2014,&rdquo; he says, adding that the catalyst is the country&rsquo;s oxygenated fuel requirement. Ironically, the country is a member of OPEC and has its own crude oil resources. In addition, a handful of countries are rapidly opening up as new markets for U.S. ethanol, Cooper says. On the top of that list is South Korea. In 2013, the country imported 4 million gallons of ethanol and it&rsquo;s on pace to bring in 31 million gallons by the end of this year. Tunisia is another interesting new market. Until October, when the country imported 11.3 million gallons of U.S. ethanol, Tunisia had only imported U.S. ethanol in three separate months. Cooper believes there is plenty of opportunity for future growth both in existing markets like Canada and new and emerging markets. One example of the latter is China. It&rsquo;s the second largest market for gasoline in the world, second only to the U.S. &ldquo;They&rsquo;ve put their toe in the water on ethanol imports, and we just think there is a huge opportunity to forge a long-term trade relationship with China,&rdquo; he says. He also mentioned Singapore as a market to watch. It&rsquo;s a major crude oil refining hub for Southeast Asia. &ldquo;If we can get more U.S. ethanol into Singapore, where gas is formulated for that part of the world, I think that&rsquo;s a big opportunity,&rdquo; he says. Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 hjessen@bbiinternational.com &nbsp;

ACCESS TO RAIL:  Patriot Renewable Fuels, located near Annawan, Illinois, less than 150 miles from Chicago, is situated on an Iowa interstate short line that connects to Class I railroads. Its products, some for export, ship to the Gulf Coast and the

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SPECIAL DELIVERY:  CHS Inc. contracts with independent ship owners to transport ethanol to overseas markets. The tankers, like the one shown here, delivering to Brazil, haul a mixture of vegetable oils, ethanol, caustic soda and other chemicals. 

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Year-end U.S. fuel ethanol exports are expected to exceed 800 million gallons, second only to the record-breaking 1.19 billion gallons exported in 2011.   

Regaining Ground

The past several years have been a wild ride in the corn market, from the record high prices in 2010, 2011 and 2012 to the record high production of 2013 and 2014. It&rsquo;s been a tale of swings, in both supply and demand. One of the demand areas that has swung the most is export demand. As the U.S. is the world&rsquo;s major producer of corn, often the rest of the world looks to the U.S. to source its feed grains. But several factors have come together to limit potential corn exports. Global supplies have grown, more players have entered the export markets, and global demand is precarious, as much of the global economy is still moving more slowly than expected. As Table 1 outlines, global corn production has increased dramatically over the past few years. Those record high prices from 2010 to 2012 created a strong incentive for producers around the world to grow more corn and the producers responded. World corn supplies are up nearly 20 percent over the past five years. And the expansion has truly been global with the U.S., Brazil, China, EU, Russia, South Africa and Ukraine all experiencing double-digit growth. In fact, the corn expansion in the Black Sea region has been tremendous, with corn production more than doubling in the region. World corn production has reached record levels the past two years. Thus, global corn markets are dealing with a lot more corn than usual. And, much of this added production has been targeted for export markets. Argentina and Brazil ramped up corn exports to fill in the hole left in the global corn market by the drought in the U.S. in 2012. Russia is projected to export roughly 25 percent of its corn crop. Ukraine will likely export over half of its corn production. So the global marketplace has a number of new important shops open for business. At the same time, many of the major corn importers have raised more of their own corn as well, limiting the amount of corn needed to be brought in country. Factors Limiting Growth As Figure 1 on the next page shows, U.S. corn exports this year are running slightly behind last year&rsquo;s pace. The U.S. corn market saw a drastic pullback in export demand with the 2012 crop, given the drought and the $7-per-bushel price that accompanied it. Since then, the rebound in corn exports has been significant, but the market is still well below record levels. Global corn consumers have come back to U.S. corn, but the availability of corn from other markets dampened the response. The record year for corn exports was 2007-&rsquo;08, when roughly 2.4 billion bushels crossed the U.S. border. Current estimates for the 2014-&rsquo;15 crop year put exports in the 1.75 billion bushel range. So there is a lot of potential room for growth in export demand. But record global supplies and increased competition are limiting that growth. Another factor working against U.S. corn exports is the strength of the dollar. As corn and energy prices have weakened over the summer and fall, the dollar has been strengthening. Since July, the U.S. dollar index has increased by approximately 10 percent. That strength is coming from concerns about the growth of global economies. As economies around the world slow, investors look for a safe haven, and the dollar is still seen as that. As the dollar strengthens, it makes U.S. goods, like corn and ethanol, look more expensive relative to the same products from other countries. However, the impact of the dollar is not uniform across the globe. Some countries do not feel the swings in the value of the dollar as they fix or peg the currency exchange rate. These countries are mainly smaller economies from Asia and Africa, but China was the last major economy to peg its exchange rate. Most countries and economies, however, do feel the value swings in the dollar and, therefore, react to the strengthening of the dollar via lower export demand. A third factor working against U.S. corn exports over the past year has been the trade dispute between China and the U.S. over genetically modified corn. While that dispute is coming to an end, it was a significant disruption to the corn export market. In the fall and early winter of 2013, China was the third-largest export market for U.S. corn, accounting for roughly 10 percent of exports at the time. The dispute reduced China&rsquo;s corn purchase from the U.S. to near zero, as Figure 2 shows. The temporary loss of the Chinese market limited the potential for export growth. Factors Promoting Growth There have been other factors, however, that are promoting growth in U.S. corn exports. The major one at the moment is the expansion of trade with partners under trade agreements. Trade agreements with Asian and Central and South American countries continue to pay dividends for corn exports. Just as Mexico grew to be a major corn trade partner after the signing of the North American Free Trade Agreement, Colombia, Peru and South Korea are growing corn markets for the U.S. after the signing of trade agreements with those countries. And, the general reduction in U.S. corn prices over the past two years has boosted export prospects. In the short term, the corn outlook is for a slight reduction in corn exports for the 2014 marketing year (Sept. 1, 2014, to Aug. 31, 2015), with the large global supplies and the strength of the dollar being the overriding factors. But longer term, U.S. corn exports are projected to rise during the next decade. In mid-December, USDA released a preliminary view of its long-term agricultural projections.&nbsp; Those projections showed corn exports growing from 1.75 billion bushels for the 2014 marketing year to 2.5 billion bushels in 2024. Much of this projected growth is based on improving global economic conditions, larger populations and slowly rising corn prices and production. On a percentage basis, we currently export about 12 percent of the total U.S. corn crop. By 2024, USDA projects we&rsquo;ll export roughly 17 percent of the crop. The U.S. is still the dominant player in the global corn market. We produce approximately one-third of the world&rsquo;s corn. And as the USDA projections indicate, export markets will remain a crucial outlet for U.S. corn for years to come. Author: Chad E. Hart Associate Professor of Economics/Extension Economist Iowa State University chart@iastate.edu 515-294-9911

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FIGURE 2:  U.S. Corn Export Sales for 2014/15

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Record global supplies and increased competition limit growth for U.S. corn exports in the short-term.

Swings in Corn Supply, Demand Impact Global Markets 

In the past four years, U.S. ethanol exports have increased 47 percent. If you're one of the many producers who sell ethanol internationally, you may qualify for the Interest Charge-Domestic International Sales Corp. export incentive. To encourage export activity in the global market, the government incentive rewards businesses for global reach and impact by offering up to a 20 percent lower tax rate for certain types of products sold internationally. The export incentive is a great way to manage tax impact and preserve cash, ultimately returning value to shareholders. Under this tax strategy, the exporter pays commissions to the IC-DISC. The commissions are deductible as an ordinary business expense by the exporter. The IC-DISC then pays a qualified dividend to the shareholder or shareholders of the IC-DISC. Generally, the ordinary tax rate for income on exports of inventory items is about 34 percent. The IC-DISC lowers this, generating approximately 15 percent savings, an incredible strategy for selling a product in the global market. While a huge benefit, the rules are complex. There are qualifications that must be met in order for international sales to qualify as export sales eligible for IC-DISC treatment, as well as certain thresholds that must be met and maintained as they relate to classes of stock, minimum capital, asset levels, etc. It is important to know and understand all the details, but also important to remember that once you understand them, it is not hard to create and maintain the IC-DISC structure to maximize the tax benefits associated with it.
The IC-DISC benefit is recognized by the Internal Revenue Service and has withstood scrutiny in the past. Like all good things seen as too good to be true, it comes under attack occasionally and is therefore targeted for repeal. So far, the benefit has been accepted widely enough to withstand the attacks. If you are exporting just once or inconsistently, the incentive might not be a good option for your business. But for those producing a product manufactured in the U.S. and exported&mdash;and can prove it was exported&mdash;it could be considered a qualifying activity. For instance, one K-Coe Isom ethanol client began exporting several years ago. We monitored export activity for about three years and, when the plant reached a significant export volume level, we recommended they implement the IC-DISC strategy. Currently, the company exports about 35 percent, or about 40 million gallons, of its total production and is maximizing its tax savings. Given the trend, K-Coe Isom expects ethanol export activity to continue at varying levels based on competitive market conditions, making this incentive a viable option for even more ethanol producers. We are working with many clients who export due to ethanol being such an attractive,&nbsp; low-cost, carbon molecule. By helping establish the right structure, and ensuring they are complying with the rules and regulations as defined by the IRS, they are realizing the tax advantages of the export incentive.
To determine the benefit for your specific circumstance and if the export incentive is worth pursuing, consult with your financial services partner. &nbsp; Authors: Donna Funk, CPA Principal, K-Coe Isom 800-303-3241 funk@kcoe.com

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Ethanol producers exporting product may want to look into the Interest Charge-Domestic International Sales Corp. export incentive, which could qualify them for a 20 percent lower tax rate, writes Donna Funk of K-Coe Isom.

Export Incentive Viable Option For Producers

The Volkwagen Gol is a subcompact with admirable capabilities. It runs on any blend ethanol up to E100, automatically adjusting the engine for differing blends. Plus, a unique system solves the problem with cold starts on straight ethanol. VW calls it a TotalFlex vehicle. Unfortunately for U.S. ethanol supporters, it&rsquo;s only available in Brazil and handful of neighboring countries. John Voelcker is one American who&rsquo;s gotten a close look at the Gol. The editor of Green Car Reports, he test-drove the Gol in Brazil. &ldquo;Given that this was a smaller and simpler vehicle for an audience that is less demanding in some ways than wealthier North American buyers, I was curious to see if there were compromises,&rdquo; he says. &ldquo;I couldn&rsquo;t find any. It behaved exactly as I expected it to. The responsiveness, the engine behavior did exactly what it should do. There was no stumbling, none of that&mdash;it&rsquo;s a perfectly modern car that was able to accommodate different liquids in its tank. I think that&rsquo;s a huge accomplishment.&rdquo; In writing about his trip to Brazil to test drive the Volkswagen, Voelcker told his readers, &ldquo;While many North Americans may not know it, Brazil presently leads the world in deploying biofuels for road vehicles. Specifically, a majority of cars sold in Brazil&mdash;especially lower-price, high-volume models built in the country&mdash;can run either on gasoline or pure ethanol.&rdquo;&nbsp; That wasn&rsquo;t always the case. &ldquo;Brazil has had two waves of ethanol cars,&rdquo; Voelcker tells Ethanol Producer Magazine. &ldquo;The first ones in the late &rsquo;70s and early &rsquo;80s were pretty substandard compared to today&rsquo;s cars and to gasoline cars at the time.&rdquo; Most used carburetors or poor fuel injection systems when compared to today&rsquo;s fuel injectors that benefit from 30 years of improvements in computer software, microprocessing speed and sensors, he explains. &ldquo;You couldn&rsquo;t have made the car we have today, 30 years ago. Those cars were only ethanol, they weren&rsquo;t flex fuel.&nbsp; Wave two has been flex fuel, which in the states we define as E85 but in Brazil can be up to E100.&rdquo; The base fuel in Brazil is anywhere from E20 to E25, he adds. &ldquo;I didn&rsquo;t ask about G100 [straight gasoline], because it wasn&rsquo;t relevant.&rdquo; When Brazil adopted stricter emissions controls, VW moved away from carburetors to fuel injection and catalytic converters. &ldquo;That technology enabled the flex-fuel capability, but still they&rsquo;re doing it as inexpensively as they can, while maintaining reliability,&rdquo; he explains. &ldquo;The goal was to make a car that could run on gasoline or ethanol or any combination of the two without the driver really noticing. What has enabled that is modern sensors and engine control software.&rdquo; &nbsp;&ldquo;Modern emissions control equipment on engines is really remarkably sophisticated,&rdquo; he continues. &ldquo;You have three-way catalytic converters that monitor each combustion cycle, in effect, and adjust on the fly.&rdquo; The current Gol can discern what fuel is coming into the engine and adjust its combustion programming accordingly. &ldquo;Two lambda sensors in the exhaust system&mdash;one before the catalytic converter, one after&mdash;continuously monitor the oxygen content of the exhaust. Their input lets the engine-control system choose one of roughly 2,000 different combustion maps to optimize power, smoothness, and fuel efficiency. And the car remembers what fuel it has in its tank, so it effectively resets its engine programming after each fill-up.&rdquo; The first wave of ethanol cars were known to be temperamental starters in cold temperatures, and most included a small, ancillary gasoline tank for cold starts that consumers would forget to keep full. VW eliminated that by building a heating element directly into the fuel-injection rail. In cold weather, as soon as the driver&rsquo;s door opens, the car uses battery energy to heat up the element even before the driver turns the key. It heats up the fuel enough to eliminate the problem with ethanol starts.&nbsp;&nbsp;&nbsp; A Volkswagen do Brasil spokesman explains the Gol was developed for the Brazilian market, where the lowest temperature observed is about minus 5 Celsius (23 degrees Fahrenheit). At that temperature and using hydrated ethanol, the VW Gol starts within two seconds. Hydrated ethanol, he goes on to explain, is used for cars designed to handle E100. It contains between 4 and 5 percent water. &ldquo;Obviously, this water is not burnt in the combustion of ethanol, but its presence increases the octane number of the fuel, which allows for a higher compression ratio, increasing the performance and efficiency of the vehicle. However, the presence of water also increases the corrosion of ethanol, forcing the use of stronger metals.&rdquo;&nbsp; Built since 1980, the VW Gol has been Brazil&rsquo;s most popular vehicle for 27 years, Voelcker reports, with Volkswagen do Brasil building more than 7.5 million.&nbsp; &ldquo;The one thing to remember about Brazil is that it is not as affluent a car market as the U.S., so the Gol, which is extremely popular in Brazil, is what we would consider a subcompact that does not include a number of the safety or entertainment features we would expect in even a low-priced subcompact,&rdquo; the Green Car Reports editor says. &ldquo;It&rsquo;s a car designed specifically for Brazil and a handful of nearby markets.&rdquo; Author: Susanne Retka Schill Senior Editor, Ethanol Producer Magazine 701-738-4922 sretkaschill@bbiinternational.com

BASIC POPULARITY:  Volkswagen do Brasil has built the Gol since 1980. The economical subcompact meets the needs of Brazilian consumers, including running on any blend of ethanol, up to E100. 

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NO G100:  Basic fuel in Brazil ranges from E20 to E25. 

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SURE START:  The heating element for the engine fuel rail in a Volkswagen Gol enables easy starting on E100 in cold weather in Brazil.   

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Volkwagen Gol sets shining example for flex-fuel vehicles, running on any blend of ethanol up to E100 in Brazil. 

TotalFlex Capabilities

The U.S. Grains Council is teaming up with Growth Energy, the Renewable Fuels Association and the USDA Foreign Agriculture Service on a new four-way partnership in ethanol export market development. There&rsquo;s a big difference between trade and market development, says Tom Sleight, CEO of the U.S. Grains Council. &ldquo;Marketing is seizing on current activity. There are some curious markets that have developed in the current ethanol scheme that are quite good, but somewhat built on curiosities in market access. For instance, the Philippines brings in ethanol and sends some of that blended fuel up to China, which actually has a current ban on the importation of ethanol as ethanol. The United Arab Emirates is a big, strong importer of ethanol right now, mainly because of octane reasons. Norway is a fairly good market right now, because of some of the curiosities of biofuel policies in the European Union. All these current markets are very important. We want to maintain them. But we want to get after those core constraints that exist in markets that prohibit them from growing.&rdquo;&nbsp; Those may be trade barriers, internal policies or other market constraints, he explains. By year-end, three trade teams organized by the U.S. Grains Council visited six countries to assess those opportunities and constraints: Japan, Korea, Panama, Peru, Singapore and Philippines. Eric Mosbey, general manager of Lincolnland Agri-Energy LLC, was on the team that visited Japan and Korea. &ldquo;The purpose was to learn as much as possible about market opportunities in these countries. I think we learned there are potential opportunities, but we do have a lot of work to do, just as we do here in the U.S., on education and selling the benefits of our product. There are potential doors to open, but they&rsquo;re not going to open on their own.&rdquo;&nbsp;&nbsp; Alex Marquis, logistics manager at Marquis Energy LLC, was part of the team that visited Peru and Panama. Opening channels of communication is an important first step, he says, &ldquo;developing relationships and connections with the key players, be it government officials or private entities, in Peru, Panama and these other areas where the U.S. Grains Council is sending representatives on these trade missions. Being able to share information and outline where things are and where things need to go.&rdquo; The initiative has been in the making for two or three years, Sleight says. &ldquo;It&rsquo;s been an ongoing conversation with our constituents, corn states, agribusiness members and the ethanol industry, including Growth Energy and the Renewable Fuels Association.&rdquo;&nbsp; The big corn harvests of the past two years, growing year-end stocks and increased competition globally for corn exports entered the conversation, he says. &ldquo;A lot of discussion within the corn sector started to gravitate towards, &lsquo;should we be looking a lot more aggressively at export market development for ethanol?&rsquo;&rdquo; Long a promoter of distillers grains exports around the world, the USGC needed two more things to happen. First, the Farm Bill had to make it through Congress to reauthorize and fund the Market Access Program, a public-private partnership for export market development through the USDA Foreign Agriculture Service. The final piece was the formal authorization that FAS resources and MAP funding could be used for biofuels, announced by Secretary of Agriculture Tom Vilsack at the Commodity Classic last winter. A steering committee was formed to cement the four-way partnership among USGC, FAS, Growth Energy and RFA and an advisory committee of USGC members was formed with Ray Defenbaugh, CEO of Big River Resources LLC, appointed chair.&nbsp; &ldquo;We have been working on this for a considerable amount of time as an effort between the ethanol producer organizations, independent producers as well as the grains council,&rdquo; Defenbaugh says. &ldquo;We could see it coming.&rdquo; Unusual weather events, primarily the drought, shortened the corn crop, he recalls, taking the pressure off for a couple years. &ldquo;But we knew that wouldn&rsquo;t last and when we got back to normal, we would have a surplus of grains. A good use of that is for value-added products such as ethanol.&rdquo; &nbsp;The grains council was ready to move. &ldquo;We started in April,&rdquo; says Ashley Kongs, manager of ethanol export programs at USGC, &ldquo;putting together a list of countries and creating profiles as to where they currently stand with biofuels policies, if they&rsquo;re exporting, if they have a mandate, what the environment for renewable energy is there, how focused they are on looking for alternative sources of energy. We created this map of the ethanol markets that we wanted to look at and, from there, we decided to highlight some of the countries that most interested us in the initial stage of exploring the markets.&rdquo; The three trade missions were planned for the end of the year, plus USGC was able to add an ethanol component to a USDA market development mission to China conducted in May. The trade teams have been quite small, just five or six people. The list includes Kongs, a USGC regional or country director, an ethanol producer or two, and a staff member from an ethanol organization partner. The groups have met with academics, government officials and potential buyers in each of the countries.&nbsp; First Look The trip to Japan and Korea was first. Korea uses industrial ethanol, but no fuel ethanol, says Kongs. &ldquo;We talked to policy marketers and researchers in Korea about why that is.&rdquo; Japan has an E3 blend limit, not a mandate, she continues, but has done little ethanol blending. &ldquo;They&rsquo;ve done a limited-scale ethanol trial in Okinawa. They have about 100 filling stations where E3 gasoline is on sale. But it&rsquo;s only in that one area and it hasn&rsquo;t spread to the rest of the country.&rdquo; Food security is a big issue for densely populated countries like Japan and Korea, says Mosbey. &ldquo;The spike in prices all the way back in 2008 really turned those countries off,&rdquo; he says. &ldquo;We&rsquo;ve had a lot of improvements and efficiency gains in the industry in the last five to seven years, but they&rsquo;re still using old, outdated information.&rdquo; Ethanol can help these two densely populated countries with other issues, Mosbey suggests. &ldquo;The one thing those countries do need is a cleaner fuel, and carbon emissions are definitely on their minds. Ethanol has to stay in the conversation for them because of that.&rdquo;&nbsp;&nbsp;&nbsp; Peru and Panama have very different dynamics regarding biofuels. Panama adopted an E5 mandate in 2013 that has since been suspended, leaving a sour taste with the public when it emerged that some government officials might have personal interests in Panama&rsquo;s sole ethanol plant. Panama&rsquo;s past experience with ethanol also left some unfavorable impressions. There was a price disconnect that put the price of ethanol too high, Marquis reports. The key to introducing ethanol more successfully will be education of the general public and government officials on the benefits of ethanol and what it can do, he says, benefits such as clean emissions, high octane, the potential price benefits and the boost it gives to transportation fuels. Where Panama is using no ethanol right now, Peru has a 7.8 percent blend rate. &ldquo;They&rsquo;re using ethanol, they&rsquo;re importing it,&rdquo; Marquis says. &ldquo;It&rsquo;s encouraging that there&rsquo;s a base to build off. Coming from Marquis Energy where we produce and ship ethanol domestically and globally, we want to see that 7.8 percent grow.&rdquo; The trade mission&rsquo;s task was to learn more about Peru&rsquo;s industry and trade. Peru&rsquo;s domestic ethanol production has grown in recent years, though it still doesn&rsquo;t meet the country&rsquo;s needs. On top of that shortfall, Peru&rsquo;s sugarcane-based ethanol&rsquo;s low-carbon rating attracts European buyers, making room for imported ethanol from the U.S. While countries like Japan and Korea could benefit from the lower carbon scores of U.S. ethanol, the benefits of ethanol imports wouldn&rsquo;t be as significant for Peru in that area, given the low-carbon scores of its own production, Marquis says, though ethanol might be attractive for another reason. &ldquo;The benefits might be seen for the refiners and also for the consumers more on the octane rating,&rdquo; he says. &ldquo;We learned the refiners are blending their gasoline to a 95 octane rating before blending in the ethanol.&rdquo; The last trade mission in December sought to learn more about what appears to be a very promising Southeast Asian market with visits to Singapore and the Philippines. Singapore, for instance, is a refining hub and trade center for the region and could potentially become a destination for more U.S. ethanol. The Philippines has an enforced E10 mandate that its four ethanol producers fall short of meeting. Last year, the country imported 51 million gallons of U.S. ethanol, making it the second largest market after Canada. The country&rsquo;s domestic industry lacks the scale and efficiencies necessary to be competitive in the global ethanol market, and availability of feedstock remains one of its largest constraints. The USGC reports the Philippine Department of Energy has ambitious plans to continue to ramp up the ethanol blend rate which has moved from E5 to E10 over the past two years and is set to reach E20 by 2020. Steps Ahead Sleight explains the market assessment initiative for ethanol follows the formula the council has successfully used since it began in 1960 to develop a coordinated, strategic market development strategy. &ldquo;We go and start talking to our contacts, the current people who may be importing, talking about policy barriers and constraints to market access, be that price or policy or whatever,&rdquo; he says. He is pleased with the initiative&rsquo;s progress in the first year. &ldquo;It&rsquo;s happening quickly, it&rsquo;s going well, and it&rsquo;s going better than I thought it would be. It&rsquo;s going faster than I thought it would,&rdquo; Sleight says. The next steps for the steering committee representing the four partners&mdash;USGC, FAS, Growth Energy and RFA&mdash;will be to evaluate what&rsquo;s been learned, decide whether a few more countries need initial assessment missions and where to focus 2015 efforts, as well as plan for 2016. &ldquo;When the U.S. Grains Council builds market develop programs, our directors overseas are always taught to think strategically,&rdquo; Sleight says, &ldquo;to think in sequential steps, identify constraints and plan activities to address those constraints and implement those. It&rsquo;s a marriage between our ability to create export market development strategies combined with RFA and Growth&rsquo;s technical and marketing expertise. It makes a really strong partnership.&rdquo; The USGC used about $125,000 worth of programming for fiscal year 2014, which ended Sept. 30, and has earmarked about $500,000 for export market development activities in 2015. The budget and goals for 2016 will be determined in the next few months as well.&nbsp;&nbsp; Recalling his several trips with the USGC in promoting distillers grains exports around the world, Defenbaugh adds, &ldquo;I would encourage any producer to participate in these trade missions that they&rsquo;re going to have. That&rsquo;s where the expertise comes from and that&rsquo;s what the grains council is relying upon. Having the expertise to represent us well is important.&rdquo; &ldquo;It&rsquo;s been really great to take producers and ethanol industry folks on these missions,&rdquo; Kongs concurs. &ldquo;It&rsquo;s been really helpful to be able to involve them in discussions when we go and meet with policymakers in Korea or trading houses or groups in Japan and Peru and Panama. It&rsquo;s been really helpful to have that hands-on experience in the room.&rdquo; Author: Susanne Retka Schill Senior Editor, Ethanol Producer Magazine 701-738-4922 sretkaschill@bbiinternational.com
&nbsp;
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USGC Ethanol A-Team
Ray Defenbaugh, Big River Resources LLC, chairman Chad Willis, Minnesota Corn Research &amp; Promotion Council Joel Williams, Archer Daniels Midland Co. Keith Truckor, Illinois Corn Marketing Board Phil Thornton, Illinois Corn Marketing Board David Spickler, Blue Flint Ethanol LLC Rick Schwarck, Absolute Energy LLC Darrel McAlexander, Iowa Corn Promotion Board Alex Marquis, Marquis Grain Inc. Duane Kristensen, Chief Ethanol Fuel Inc. Greg Krissek, Kansas Corn Commission Kent Kleinschmidt, Illinois Corn Marketing Board Paul Jeschke, Illinois Corn Marketing Board Jim Galvin, Lakeview Energy LLC Kathy Frahm, Farm Credit Services of America Jay Fischer, Missouri Corn Merchandising Council Dale Drachenberg, Didion Inc. Greg Dare, Illinois Corn Processing LLC Kimberly Clark, Nebraska Corn Board Steve Bleyl, Green Plains Inc. Eric Baukol, Heron Lake BioEnergy LLC Erick Erickson, USGC Jim Stuever, Missouri Corn Merchandising Council Dick Gallagher, Iowa Corn Promotion Board
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ETHANOL AFLOAT:  Located on the Illinois River, Marquis Energy (shown at the back left) utilizes barges to ship its ethanol down the Mississippi River system, through Houston and on to international destinations.   

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Trade missions set out to identify opportunities and constraints in ethanol export markets.

Opening Channels For Export

The prospect of China reissuing distillers grains import permits bodes well for the product's American exporters, but Randy Ives isn't ready to gloat about it. &ldquo;We have to be cautious,&rdquo; says the longtime DDGS marketer and director of ethanol services at Gavilon. &ldquo;The uncertainty from China has put the industry in a tough position in the past. Collectively, we need to take additional steps to manage the contract performance risk that&rsquo;s been an issue before.&rdquo; Ives and other DDGS exporters are necessarily guarded about China&rsquo;s decision in late December to lift its ban on Syngenta&rsquo;s MIR 162, the genetically modified grain trait at the center of the country&rsquo;s three-month-long constriction on U.S. corn and DDGS. &ldquo;Of course, it&rsquo;s huge news for distillers grains, but that doesn&rsquo;t instantly return them to the pedestal of being an important trade partner to the ethanol industry and to the U.S. ag industry as a whole,&rdquo; Ives says. Ives is one of many U.S. DDGS marketers who greeted the late-December announcement from China with incredulity and a stern vow to not get stung again. Less than two years after carrying out a questionable anti-dumping probe that severely disrupted the international DDGS market, China&rsquo;s feed regulators claimed to have discovered traces of then-banned MIR 162 in cargos of both corn and DDGS in late 2013 and throughout 2014. By mid-September, China was fully enforcing the ban, quarantining large quantities of U.S. corn and DDGS on its docks and turning shipments away at sea. American exporters, logistics providers and Chinese importers together lost millions as communication was lost, contracts were broken and DDGS prices slid more than $100 a ton. By October, imports to China were nil as the commodities world waited for a resolution.&nbsp;&nbsp; As painful as China&rsquo;s fourth-quarter DDGS timeout was, Ives says, the market displayed incredible resilience and American traders remained buoyant through it all. &ldquo;Our product&rsquo;s global market is larger, more distributed and more stable than it used to be,&rdquo; Ives says. &ldquo;We have buyers in 80 countries now, so when China stepped out last fall, customers in other nations stepped in and have stayed. On top of that, we knew China would come back. We just didn&rsquo;t know when.&rdquo; China&rsquo;s sudden acceptance of MIR 162 was reportedly accelerated by pressure from the U.S. government as well as an internal push from China's feed millers. Whatever the cause of the decision, it is clearly welcome news for American producers and marketers of distillers grains. By Christmas, the announcement&rsquo;s buzz alone had caused DDGS prices to rise $70 a ton. Traders warn, however, that the&nbsp; MIR 162 resolution is not a panacea for every challenge they face in China. &ldquo;There are other problems, other barriers, in play yet,&rdquo; Ives says. &ldquo;We&rsquo;re still trying to figure out what the running rules are and what other technicalities we will have to abide by.&rdquo; Ives says selling DDGS into China could change. Some exporters might start demanding deposits, for example, asking for up to 20 percent down before shipment. Changes on China&rsquo;s end may include volume requirements, or DDGS import allocations. In the past, importers have sought and received permits based on shipment orders they had already placed. &ldquo;That could possibly change, where importers could be required to have an import permit in hand before buying the product,&rdquo; Ives says, explaining that tighter control over permits could buy China time to work through its grain reserves. Still, the end of the MIR 162 ban does mean that DDGS exports in 2015 have the potential to exceed the record volumes sold in 2014, according to Alvaro Cordero, manager of global trade at the U.S. Grains Council. &ldquo;Despite how 2014 ended in China, distillers grains had a fabulous year&mdash;a record year&mdash;and we&rsquo;ll probably do it again,&rdquo; says Cordero. &ldquo;By October, when China started to shut down, we had already achieved higher annual DDGS export sales than we had for the entire previous year.&rdquo; In fact, DDGS exports for calendar year 2014 not only set a new annual record, but surpassed the long-anticipated 10 million metric-ton mark for the first time in history. While November and December sales were not available at press time, DDGS exports had already reached 9.96 million metric tons&mdash;more than any previous year&rsquo;s total by almost 200,000 metric tons and more than a quarter of the nearly 37 million metric tons produced in the U.S. last year. Sales of DDGS exclusively to China reached 4.24 million metric tons, just 5 percent short of the record set in 2013. &ldquo;That&rsquo;s remarkable considering that it happened in less than 9 months,&rdquo; Cordero says.&nbsp; Cordero, a former commodities trader, says he understands the unease DDGS marketers have about losses they incurred because of China&rsquo;s actions. However, he says, the wide margins made on DDGS sales in early 2014 more than offset those hits. &ldquo;If you sum up the money that was made when prices were good, bad and ugly in 2014, the industry came out of it in a positive position,&rdquo; Cordero says. &ldquo;Yes, it was hard for a while, but put this in perspective: It was a few bad months.&rdquo; Marketers like Sean Broderick of CHS Inc. were somewhat reticent about the DDGS market prior to China&rsquo;s acceptance of MIR 162. Those bearish positions started to flip when the ban was lifted, Broderick says, telling Ethanol Producer Magazine before Christmas that DDGS marketers were bullish but treading carefully. &ldquo;We are cautiously optimistic about this&nbsp; having seen the pitfalls of pricing ourselves out of so many markets,&rdquo; Broderick says. &ldquo;Any distillers grains that gets into China right now is going to be valuable. Their desire to bring it in is going to be pretty huge, but it&rsquo;s going to contrast with our desire to protect ourselves. The industry will probably load a lot of boats to China this year, but we also have to keep the interests of our other customers in mind.&rdquo; At peak, China was importing almost 20 percent of all distillers grains produced in dry form in the United States. &ldquo;That&rsquo;s sort of insane,&rdquo; Ives says. &ldquo;If we want to do what&rsquo;s best for the industry, we need to continue to diversify our demand base.&rdquo; Broderick says, however, that diversification is hard when China is willing to pay more for DDGS than the rest of the world. &ldquo;You just can&rsquo;t ignore it despite your best efforts,&rdquo; he says. Huge Price Swings&nbsp; DDGS exporters are entering 2015 with a wind at their backs, having worked fervently to find new destinations for DDGS when China wasn&rsquo;t accepting the product in the fourth quarter of last year. Losing the China market spurred traders, under pressure, to sell the product at whatever prices worked for opportunistic buyers. At its lowest price point last year, DDGS was available for 70 percent the price of corn. That was a stark contrast to the product&rsquo;s market value before China blocked imports. &ldquo;We were in a very tight year where protein was high-priced and people were willing to pay a premium for distillers,&rdquo; Ives explains. &ldquo;We weren&rsquo;t 85, 95 or 105 percent the price of corn, we were 150 percent the price of corn on some spot sales.&rdquo; Those big prices&mdash;at times hitting $350 per ton FOB to New Orleans&mdash;drew criticism from both new and established buyers. &ldquo;The domestic guys had a problem with it. Thailand had a problem with it. It was hard to blame them for pushing back, but all we could say was &lsquo;China will take it,&rsquo;&rdquo; Ives says. &ldquo;The demand was that huge.&rdquo;&nbsp;&nbsp; Before China virtually stopped importing DDGS in October, it was averaging nearly 500,000 tons a month through August and trending toward 6 million metric tons on the year. By September, restrictions had tightened and just 167,000 tons officially got through customs before rejections started in earnest the following month. By the time it was over, every major U.S. exporter had been adversely effected. Chinese importers also took big hits. Some traders estimate that as much as $600 million worth of DDGS was stranded in quarantine on Chinese docks in the thick of the restrictions. Back in the U.S., marketers worked their contacts hard and gradually sold down about&nbsp; 1.5 million metric tons of DDGS originally contracted for China. &ldquo;It all happened pretty fast,&rdquo; Ives explains. &ldquo;Marketers that owned product at $200 a ton at the plant were faced with buyers in China that couldn&rsquo;t perform on their contracts. It was difficult to find destinations for DDGS and financial losses incurred were considerable.&rdquo; Today, U.S. DDGS exporters are hinting at taking action to go after those broken contracts in China. &ldquo;Regardless of what happened, they still bought it and we still have a valid contract that says we owe them a bunch of distillers at that price,&rdquo; Ives says. &ldquo;We intend to negotiate some sort of payment for it.&rdquo; &nbsp;&nbsp; Predictable Comeback&nbsp;&nbsp; Prior to China&rsquo;s acceptance of MIR 162, DDGS values &ldquo;at the plant,&rdquo; or the contracted prices paid to producers, had already rebounded to $125 to $150 a ton. &ldquo;The Northern Hemisphere market is actually quite strong,&rdquo; Jason Charles, senior trading manager with Purina Animal Nutrition LLC, said in mid-December, explaining that the DDGS market was in a state of improving health even without the help of its largest foreign customer. &ldquo;When China went away, we had a half million tons of distillers to do something with. Somehow, some way, it all started moving.&rdquo; Charles said the industry went through about 60 days of &ldquo;not knowing what direction it was going&rdquo; as DDGS initially contracted for China slowly found buyers elsewhere. &ldquo;Thirty days ago, the bid-ask CIF NOLA was $130 on $155. Today, it&rsquo;s $215 on $230,&rdquo; Charles said in December, explaining that prices at the time were already lifting as China showed signs of opening back up. Looking back, Broderick agrees that the removal of excess DDGS from the market, along with improved logistics and a general sense of optimism was boosting prices before China lifted its ban on MIR 162. Broderick says the sheer speculation that China would start issuing import permits in the spring was giving DDGS a boost. Just before and immediately after the MIR 162 announcement, DDGS prices shot straight up. &ldquo;We&rsquo;re already back where we were when China was going full bore,&rdquo; Broderick says. &ldquo;In mid- to late-December, we went from $110 FOB-Illinois to $185. &ldquo;That&rsquo;s a huge move, and it was driven by bulk shipments out of the Gulf (of Mexico).&rdquo;&nbsp;&nbsp; Before the Dec. 22 announcement about MIR 162, China&rsquo;s commodities import inspection agency, the General Administration of Quality Supervision, Inspection and Quarantine, gave no outward indication that it was preparing to allow U.S. corn and DDGS back into the country. However, Ethanol Producer Magazine learned in late December that one major U.S. exporter had been allowed to ship 50,000 tons of DDGS to China, a vessel originating out of the Gulf. Several more shipments were planned for January. That limited activity got people talking. &ldquo;Our importers called us and said a resolution was coming but nobody really had facts. It was all innuendo,&rdquo; Ives says. &ldquo;I really didn&rsquo;t expect anything to happen until spring and then there it was.&rdquo; Portfolio Broadens China&rsquo;s renewed acceptance of DDGS represents a huge opening for the product's global market, but exporters are applying a disciplined approach to the opportunity. While China consumes 50 percent of all DDGS exports, Cordero says it is important to remember how critical other large, medium and small markets are. Since October, for example, Mexico has been the world&rsquo;s top DDGS importer as China momentarily left the picture. In fact, America&rsquo;s free-trade partner to the south was trending toward 1.5 million metric tons of DDGS imports at the end of 2014. &ldquo;Mexico stepped up pretty seriously in the fourth quarter,&rdquo; Broderick says. Cordero says 13 of the world&rsquo;s top 15 DDGS importers increased their consumption of the product last year. &ldquo;Mexico was up 21 percent. Japan was up 36 percent. Korea ended up more than 70 percent,&rdquo; he says. &ldquo;Look around the world. Look at exports to the U.K., Columbia, Thailand and Indonesia. They&rsquo;re all up by two digits.&rdquo; Charles says North Africa is another bright spot for DDGS exports. &ldquo;Algiers, Algeria and Morocco are getting additional traction,&rdquo; he says. Egypt, too, is a growing market for distillers grains. Cordero says importing corn into Egypt has opened a door for more DDGS. &ldquo;Once corn starts moving into these markets, combination cargos become a reality,&rdquo; he says, explaining that low corn prices allow exporters of DDGS to enter markets where they have been losing market share to other feeds in recent years. &ldquo;Once we walk in with corn, we&rsquo;re going to walk in with those combination cargos that include distillers,&rdquo; he says. In Europe, where DDGS is difficult to import because of EU restrictions on genetically modified corn, only Ireland, Turkey and Spain remain significant buyers of the product. Turkey, however, rejected three shipments of DDGS in late November and early December, supposedly on the basis of the cargos being contaminated with an unapproved genetic corn trait. Ireland made a resurgence in buying when DDGS prices came down to 80 percent the price of corn in October. &ldquo;Those low prices really brought back customers,&rdquo; Ives says. &ldquo;It&rsquo;s amazing how fast everyone started putting on new sales around the world when the prices came down. Customers in countries that hadn&rsquo;t used a pound of DDGS in six to nine months came back pretty quickly.&rdquo; Bargain DDGS prices, while short-lived, may have even gained the attention of buyers in prospective markets like the southern states of Mexico where, Cordero says, there is a large untapped market. &ldquo;The potential there is enormous at more than 1 million metric tons of DDGS,&rdquo; he says. &ldquo;They have 4 million head of cattle or more.&rdquo; Nicaraugua, too, has huge growth potential with more than 5 million head of cattle. &ldquo;They already buy DDGS&mdash;very little and just for poultry&mdash;so we just need to educate their beef industry,&rdquo; Cordero says. &ldquo;These almost untouched markets, which are barely on our charts today, could bring a lot of stability to our industry.&rdquo; The global DDGS market will be much less susceptible to disruptions if the USGC can successfully build more midsize markets outside of China. &ldquo;Japan and South Korea are consistent 500,000-metric-ton markets,&rdquo; Cordero says. &ldquo;Those steady buyers help us sustain drops like the one we just experienced.&rdquo; In fact, Ives says, every DDGS-importing nation is critical to the market&rsquo;s total non-U.S. sales volume. &ldquo;Somebody cares about every one of those countries, all the way down to the bottom of the list,&rdquo; he says. &ldquo;Somebody is trading to Panama, even though they only take 12,000 tons a year.&rdquo; Cordero agrees, saying that the USGC&rsquo;s principal goal is to build a broader global marketplace, as well as a larger one. &ldquo;Some of these nations that buy DDGS are individually small, but they all add up,&rdquo; he says. &ldquo;And most of them are growing their purchases.&rdquo; In fact, the only notable nongrowers in 2014 were Canada and Morocco. Canada, typically a top-three international buyer of DDGS, only imported 327,000 metric tons through October and was surpassed by South Korea, Vietnam, Japan and Turkey. Canada&rsquo;s 2014 buying was down 20 percent while Morocco had dipped by nearly a third.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Another Big Year Marketers of DDGS expect the product's price to stay around 110 to 120 percent the price of corn in 2015, but they&rsquo;re remaining conservative with their predictions. &ldquo;I am not really bullish on any feed or coarse grain going into the next six months,&rdquo; Charles says. &ldquo;It all comes down to feedstock and in the U.S. we are going to have close to a 2 billion-bushel corn carryout and a 400 to 425 million-bushel bean carryout into August. This in itself is bearish enough, but when looking at massive global stocks, one becomes additionally bearish. We are harvesting every ninety days around the globe. It&rsquo;s a revolving door. Things change often and volatility calls for vigilance.&rdquo; Broderick says the global demand for distillers grains will stay strong in 2015 and the market will be ready to supply China when it starts issuing new import permits and fully reenters the market. &ldquo;In the end, it all depends on their reserves,&rdquo; he says. &ldquo;They have the ability to switch things on and off very quickly. The demand is over there and it sounds like the demand exists right now for it.&rdquo; Cordero believes that, with low corn prices encouraging combination cargoes, this year&rsquo;s DDGS exports could easily match 2014 numbers. &ldquo;If you ask me, that would be a great thing,&rdquo; he says. &ldquo;With the way we ended last year, it would be awesome if we achieved the same or better numbers in 2015.&rdquo; Author: Tom Bryan Editor In Chief, Ethanol Producer Magazine 701-746-8385 tbryan@bbiinternational.com

GOING FORWARD:  Randy Ives, director of ethanol services at Gavilon, says the industry must manage contract performance risk on future DDGS exports to China.  

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CLIMBING AGAIN:  Sean Broderick, left, and Steve Markham of CHS Inc. look at DDGS prices as the product's market value sprang up in December before and after China dropped its ban on MIR 162.   

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SOMEHOW, SOME WAY:  Purina Animal Nutrition's Jason Charles says the DDGS market was in a state of improving health even before China positioned itself to resume imports.     

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TRADE TALK:  Alvaro Cordero of the U.S. Grains Council says profits from high DDGS prices in early 2014 should have made up for losses later in the year.  

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After halting distillers grains imports late last year, the world's top DDGS buyer is poised to resume business, but on what terms?    

Beyond Boats To China

DuPont has upgraded its membership to the Renewable Fuels Association and will now sit on the RFA governing board. DuPont has been an associate RFA member for more than 10 years.&nbsp;&nbsp; Rockwell Automation Inc. has purchased the assets of ESC Services Inc., a global hazardous energy control provider of lockout-tagout services and solutions. Franklin, Wisconsin-based ESC Services will be integrated into Rockwell Automation&rsquo;s Control Products &amp; Solutions segment as part of its customer support and maintenance business unit. The government of India&rsquo;s Department of Biotechnology, Indian corporate leaders and Washington University in St. Louis have invested $2.5 million to launch the Indo-U.S. Advanced Bioenergy Consortium for Second Generation Biofuels, a joint binational center led by Jawaharlal Nehru University, the Indian Institute of Technology in Bombay and Washington University. &nbsp;&nbsp;&nbsp;&nbsp; U.S. Water Services Inc. has been recognized by the California Governor&rsquo;s Office of Business and Economic Development with the California Game Changer Company of the Year Award. California facilities are aiming to reduce water use by 20 percent by 2020 in an effort to conserve freshwater resources. U.S. Water has been working with California agriculture, medical centers and businesses to integrate solutions that combine chemical, equipment, engineering, automation and service to help facilities achieve water reduction goals. The award recognizes individuals and companies that have made a significant impact on the state. &nbsp;&nbsp; Louis Dreyfus Commodities has announced the appointment of Mayo Schmidt as CEO, effective Jan. 5. Schmidt will succeed interim CEO Claude Ehlinger, who will continue in his existing roles of chief financial officer of Louis Dreyfus Commodities and nonexecutive chairman of the board of Biosev. Ehlinger will also serve as deputy CEO of Louis Dreyfus Commodities. Schmidt previously served as president and CEO of Viterra Inc. and has held positions at ConAgra Foods and General Mills. &nbsp;&nbsp;&nbsp; The National Corn Growers Association has promoted Joe Hodes to director of development. Hodes served as marketing manager at the NCGA for seven years. In his new roles, Hodes will oversee the organization&rsquo;s development, industry relations, grassroots advocacy and membership service functions, including serving as staff lead for the Grower Services Action Team and the NCGA Agri-Industrial Council. In addition, Rita Abney has joined NCGA as the marketing administrative assistant in the St. Louis office. Abney recently served as group sales manager for the Hilton St. Louis Frontenac and will support Hodes and others in projects related to development, state relations, membership, NASCAR and grassroots activism.&nbsp; &nbsp;&nbsp; The International Association for Continuing Education and Training has awarded reaccreditation status to Siemens. IACET authorized providers are the only organizations approved to offer IACET continuing education units. The accreditation period extends for five years, and includes all programs offered or created during that time. &nbsp;&nbsp; The Iowa Renewable Fuels Association has honored three Iowa state legislators leaving their posts in 2014 with the Lifetime Champion of Renewable Fuels award for their long, distinguished careers and steadfast support of renewable fuels. The recognized legislatures include state Sens. Daryl Beall, Nancy Boettger, and Hubert Houser. &nbsp;&nbsp;&nbsp; Alex Toro has been named director of engineering at Aventine Renewable Energy Inc. He will lead the engineering departments of the company&rsquo;s four ethanol plants, including a 100 MMgy wet mill plant and a 60 MMgy dry mill plant in Pekin, Illinois, and a 110 MMgy dry mill plant and a 45 MMgy dry mill plant in Aurora, Nebraska. Toro serves as a technical resource in all aspects of operations, project engineering, capital investment, environmental compliance, process improvements and expansion projects. Most recently he served as director of process engineering for Solazyme Inc. He also previously worked for Aventine, which was then known as Williams Bio Energy. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ag Growth International, a manufacturer of portable and stationary grain handlings, storage and conditioning equipment, has launched a multilingual version of its website, providing information in both English and Russian. The site allows customers to flip easily from both languages while accessing AGI&rsquo;s complete product portfolio as well as information on worldwide site installation projects the company has participated in. Visitors to the site will also be able to easily access details to reach the right sales person for their inquiries. AGI&rsquo;s website will soon be available in Portuguese and Spanish as well. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dynamic Recycling LLC has announced it has made several upgrades to its distilled spirits plant in Abingdon, Virginia. The company revamped the facility&rsquo;s distillation column reboiler process and increased flow through the facility&rsquo;s mechanical vapor recompression evaporator. The plant converts liquid wastes, including waste beverages, into renewable fuels.&nbsp;&nbsp;

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Business Briefs

The title above is stolen from a story in the satirical newspaper, The Onion, about a guy who is disgusted that he&rsquo;s hugely fat, and is even more disappointed that no one&mdash;not the government, medicine or people working at fast-food joints&mdash;seems to be doing anything to make him thin. And while I would love for someone to make me thin, this column is about the attitude displayed in that story, not the subject. You&rsquo;ll see. I promise. The series of events that drew that story from my memory bank started with a really good deal I got on a used car. I drove it to work to check it out before I let one of my kids have it, but that made me unsure I wanted to give it up. It&rsquo;s really fast, has a great sound system, rear wheel drive and manual transmission, and driving a stick makes me feel superior to all the less accomplished drivers on the road. But that feeling of superiority disappeared when I got the car stuck in a snowbank recently. We got some snow at the American Coalition for Ethanol headquarters one day, and that evening, two drifts formed at the top of the driveway coming out of our garage. I got the car unstuck from one drift just in time to promptly get stuck in the other nearby drift. And when I eventually rocked the car loose from that one, I slid down the driveway and was engulfed by a much larger snowbank. Fortunately, I joined AMCM Motor Club a couple weeks earlier, and I called them to come and pull me out of the snowbank. I didn&rsquo;t want to admit to family and friends that I can no longer handle my rig in a minor snowstorm. For those unfamiliar with AMCM, they are the auto club that, along with affiliated company Travelers Motor Club, issued a press release last fall, saying that despite AAA&rsquo;s &ldquo;warnings&rdquo; and anti-E15 efforts over the past two and a half years, not one of the 18 million members of AMCM or Travelers auto clubs had ever reported a problem with E15. They even encouraged anyone with a car approved by the U.S. EPA or the manufacturer to use E15, to buy it with confidence.&nbsp; Sitting in the car, waiting for a tow truck, I had an opportunity to try one more time to form a civil answer to an infuriating question that I had started and stopped answering several times that day. A member had asked for some reasons and, or statistics to convince other ethanol supporters to join AMCM Motor Club instead of AAA. Hell, that was my best reason&mdash;AMCM isn&rsquo;t AAA. AMCM motor club costs $35 a year for four drivers, and AAA charges four or five times that much. And how about these stats: Number of AMCM press releases telling drivers not to use E15: Zero. Number of dollars AMCM has spent lobbying Congress to stop E15: Zero. Number of times the AMCM CEO has testified to Congress urging suspension of E15 sales: Zero. When AMCM and Travelers Motor Clubs first talked to us about their E15 findings, we encouraged them to publicize it. Ethanol supporters need that information to refute AAA&rsquo;s E15 disaster &ldquo;predictions,&rdquo; (not a single one of which has proven to be correct, by the way). I also thought&mdash;given the number of ethanol folks who were infuriated about AAA&rsquo;s anti-E15 statements and other ethanol opponents&rsquo; exploitation of those statements&mdash;that literally thousands of ethanol supporters would jump at the chance to dump AAA (if they hadn&rsquo;t already) and join AMCM Motor Club. When I confidently asked AMCM how many people had taken advantage of the biofuels discount a couple weeks after AMCM&rsquo;s announcement of its support for E15, it wasn&rsquo;t the thousands I had hoped. It wasn&rsquo;t hundreds either. It wasn&rsquo;t even one hundred. It was embarrassing. In fact, the number of new AMCM &ldquo;biofuels members&rdquo; was less than one-third the number of emails I received over the past two years that said, &ldquo;I wish someone would do something about how mad I am at AAA.&rdquo; Fortunately, the tow truck arrived 38 minutes sooner than I was told it would get there. The driver hooked me up and pulled me out of the snowbank, giving me the answer to the last concern some people have mentioned. Service. AMCM&rsquo;s service worked just fine. Now, I wish someone would do something to thank AMCM for their support of E15. Author: Ron Lamberty Senior Vice President American Coalition for Ethanol 605-334-3381 rlamberty@ethanol.org

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AMCM Motor Club and affiliated company Travelers Motor Club have been supportive of E15 and the ethanol industry. Why hasn't that translated into more people dumping AAA and take advantage of the other club's biofuels discount? 

“I Wish Someone Would  Do Something About  How Fat I Am” 

In unity there is strength, and there is tremendous unity within the ethanol industry. As a proud partner of the Fuels America coalition, Growth Energy is working closely with all stakeholders in the industry to succeed and break though the blendwall. Our industry is also coming together to make 2015 the year of E15. First-generation producers, second-generation producers, farm groups, seed companies, equipment manufacturers, enzyme companies and a whole host of others have joined together in pursuit of a common goal&mdash;improving our nation&rsquo;s energy security, national security, environment and economy. All this while giving consumers a choice and savings at the pump. No one individual can accomplish these ambitious goals alone. It takes a team and, unquestionably, we have the best. Each day, the strength of our voice and the reach of our story grows. Hardworking individuals in the Heartland are being heard from Washington state to Washington, D.C., as we have engaged in grassroots activism with top officials and lawmakers. You took part in our Step Up to the Plate campaign, as well as other grassroots campaigns, which energized and encouraged farmers, vendors, consumers and community leaders who benefit from our industry to speak up and advocate for ethanol. Many of you even made the journey to Capitol Hill to sit down and share our industry&rsquo;s story with policymakers in person. It is essential that Congress understands how important the renewable fuel standard (RFS) is for our nation, and no one communicates this message better than you. You are the heart of our industry, and I&rsquo;d like to thank everyone who took the time out of a busy schedule to advocate for the industry. It truly made a difference. With our combined efforts, no legislative changes were made to the RFS in 2014. Additionally, a terrible proposed rule from the U.S. EPA regarding the 2014 RFS renewable volume obligation (RVO) numbers was sent back to the drawing board after our industry overwhelmingly rose in unity against a shortsighted policy. That proposal would have taken our nation backward. Although the delay in announcing the 2014 RVOs is disappointing and the uncertainty created by it is frustrating, the most important part is that EPA gets it right. We commend the agency for listening to all stakeholders and revisiting the rule. The momentum for high-performance, low-cost renewable fuels is unstoppable. Stations offering E15 will continue to pop up across the nation as we work together to make it a standard offering at the pump. Nationwide, moving to E15 will create another 136,000 American jobs that can&rsquo;t be outsourced, reduce our demand for foreign oil by 7 billion gallons and reduce greenhouse gas emissions relative to regular gasoline, all while saving consumers between 5 and 15 cents per gallon at the pump.
Currently, E15 is available at more than 100 stations in 15 states: Alabama, Arkansas, Florida, Illinois, Iowa, Kansas, Michigan, Minnesota, Missouri, North Carolina, North Dakota, Nebraska, Ohio, South Dakota and Wisconsin. We know that it&rsquo;s only a matter of time before E15 is offered in every state in the nation, and we know that we&rsquo;re going to get to that point by working together. Through efforts, like Prime the Pump, our industry is working to get higher blends into the marketplace. 2015 is going to be the year we are going to see E15 break through and break down the blendwall. Market development is critical and we are seeing continual growth and adaption of E15 by savvy retailers who understand that consumer choice and savings will drive more business to their stores. We are united by an unwavering belief in the U.S. ethanol industry and its ability to feed the world and fuel America. Together we will continue to grow, enter into new markets, create new coproducts and break down that mythical blendwall once and for all. Our friends in the oil industry may have deep pocketbooks, but we have the facts, the momentum and the numbers on our side. When we put all of our energy and resources toward a common goal, there is nothing that can stop us. All of our accomplishments would not have been possible without each and every one of our members and industry supporters, and for that, I am deeply thankful. It is a true privilege to work with such a passionate, talented and driven group of people. The dedication and determination of our industry is unmatched and will take us far. I can&rsquo;t wait to see what great things we will accomplish together in 2015! Author: Tom Buis CEO, Growth Energy 202-545-4000 tbuis@growthenergy.org

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E15 is available at more than 100 stations in 15 states and it's only a matter of time before E15 is offered in every state in the nation, writes Tom Buis of Growth Energy. The industry got to that point by working together. 

2015 – The Year of E15

Policy wonks and regulatory agencies have long had an affinity for predictive computer models. The allure is understandable. Assumptions and hypothetical scenarios chosen by the user can be fed into a model, processed through a series of complex equations and algorithms, and&mdash;voila&mdash;tidy results are spit out the back end. Certainly, these models can be useful in guiding policy and regulatory development. But too often, regulators treat these models as &ldquo;answer machines&rdquo; and use them as tools for rigid regulatory enforcement. And, frequently, the results from these models just don&rsquo;t make any sense when compared to real-world data and observations. Two prime examples of the disconnect between model results and reality have surfaced in recent months. First, a new study by economists at Iowa State University exposed the absurdity of the results from economic models used by the California Air Resources Board to estimate indirect land use change (ILUC) emissions for biofuels regulated under the Low Carbon Fuel Standard. The Iowa State study found that farmers around the world have responded to higher crop prices in the past decade mainly by using existing land resources more efficiently, not by converting forest and grassland into cropland. According to the paper, &ldquo;the primary land use change response of the world&rsquo;s farmers in the last 10 years has been to use available land resources more efficiently rather than to expand the amount of land brought into production. This finding is not new ... however, this finding has not been recognized by regulators who calculate indirect land use.&rdquo; In response, CARB staff told stakeholders that looking at real-world land use data is &ldquo;not productive.&rdquo; In other words, the agency would rather regulate biofuels based on predictive model results rather than real-world outcomes. Indeed, CARB recently proposed new ILUC penalties for biofuels that entirely ignore the results of the Iowa State research in favor of new computer modeling results. Because every point of carbon intensity under the LCFS means dollars and cents to ethanol producers, CARB&rsquo;s blind faith in computer modeling has real financial consequences for our industry. Fortunately, Oregon regulators working on their own LCFS program seem to understand that the real world matters. They recently elected to exclude ILUC, stating that &ldquo;recent data has shown that both food (human and animal) and fuel production has increased while the amount of land farmed has stayed constant.&rdquo; The second recent example of trusting models over real-world experience is a paper published by University of Minnesota researchers. Using a black box computer model and a series of questionable assumptions, the study asserts that increased ethanol use would cause higher emissions of ozone and fine particulates (PM2.5). But there&rsquo;s one little problem with this finding: actual data from 222 U.S. EPA air sensor sites show that ozone and PM2.5 concentrations have trended downward during the period in which the use of ethanol-blended gasoline has dramatically increased. Ozone concentrations have fallen 33 percent since 1980, while PM2.5 is down 34 percent since 2000. In recent years, both ground-level ozone and PM2.5 emissions have dropped below their respective national standards, according to EPA. Further, there is a substantial body of evidence based on actual tailpipe testing that shows ethanol reduces both exhaust hydrocarbons and carbon monoxide emissions, and thus can help reduce the formation of ground-level ozone. After all, ethanol&rsquo;s high oxygen content and ability to reduce exhaust hydrocarbons and carbon monoxide emissions is the primary reason it is used as an important component of reformulated gasoline in cities with high smog levels. In addition, studies have shown that increasing the oxygen content in gasoline reduces primary PM2.5 from the tailpipe. Again, I&rsquo;m not suggesting that all computer models are useless and should be ignored. Model results can be instructive, but they should be validated with empirical data whenever possible. Computer models can and should be used to fill knowledge and data gaps, but where concrete real-world data and observations exist, they should take precedence. Sound policymaking and regulation must be grounded in reality, not hypothetical fancy. If there are data points available on actual global land use responses to higher crop prices during the biofuels era, why not see what we can learn from them? If we have air quality data from air sensors across the country, and results from actual tailpipe emissions studies, why not use that information to shape our understanding of ethanol&rsquo;s impact on air quality? Models are fine, but insight and wisdom gained from real-world data and experience are simply irreplaceable.
Author: Bob Dinneen President and CEO, Renewable Fuels Association 202-289-3835

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Predictive computer models have their place, writes Bob Dinneen of the RFA, but where concrete real-world data and observations exist, they should take precedence. Sound policymaking and regulation must be grounded in reality, not hypothetical fancy.

Time For a Reality Check  On Computer Models 

Ground Hog Day is Feb. 2 and it will be Punxsutawney Phil's 129th prognostication. No matter what the outcome, spring is just around the corner. Farmers across America will be getting equipment ready, buying seed and planning their planting regime for the coming year. When businesses start up, expand or undertake a new venture, one of the key factors is an analysis of risk vs. reward. Farming is one of the few industries where the risk-reward ratio often does not apply. Yet, if we think about it, farming is one industry we literally could not live without. The risk farmers take every spring is almost like taking a trip to Vegas and putting everything they own on the craps table. Despite the risk, agriculture has been one of the greatest success stories in the history of the world. The ethanol industry has been, and continues to be, the bearer of criticism for using corn as its primary feedstock. Yet with very few exceptions over the past 30 years, American agriculture has risen to the challenge of increased demand for food and fuel. American agriculture has played a significant role in reducing our dependence on foreign oil and improving our environment. In 1900, the U.S. population was just over 76 million and it took 41 percent of our workforce as farmers to feed that population. Today the population is nearly 320 million and it takes about 1.5 percent of our workforce as farmers to feed us. In the early 1900s, as many as 116 million acres were planted to corn to help feed those 76 million people. In 2014, 84 million acres of corn were planted to help feed 320 million people, plus exported worldwide to feed millions more, as well as make a significant contribution to our nation&rsquo;s fuel supply. So, if you are looking for a success story, look no further. Agriculture is America&rsquo;s (the world's) winning hand, despite the risk. It is important to add that all of this has been done with far fewer chemicals and less water consumption than before, farming practices that minimize erosion and research that continues to produce better and better hybrids. So, whenever I read something about food vs. fuel, it riles the hell out of me, because I know that American agriculture will, as it has for the past hundred-plus years, rise to the occasion. Every spring, farmers roll the dice and bet against the odds, and every year, food finds its way to the supermarket shelves to feed a growing global population. Ethanol has been a great boon, not only to America as a whole, but to the American farmer. It has helped stabilize prices, helped rural communities survive and helped make farming just a little less risky. So I say, hats off to the American farmer. May 2015 be a year of great success. May the rains fall, the sun shine brightly and your harvest be bountiful. That&rsquo;s the way I see it.
Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com

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Agriculture has been one of the greatest success stories, writes Mike Bryan of BBI International. And, through the ethanol industry, the ag industry has has played a role in reducing our dependence on foreign oil and improving our environment. 

Hats Off to the American Farmer

There are a lot drivers behind today&rsquo;s robust ethanol and distillers grains exports, but the abundance of cheap U.S. corn tops the list.&nbsp; Inexpensive corn, after all, yields competitively priced ethanol that easily competes in a global market hungry for octane and renewables. And because distillers grains is frequently shipped in combination cargos that include corn, ethanol&rsquo;s principal coproduct often enjoys ride-along sales when corn is sold overseas. In our cover story, <a href="http://www.ethanolproducer.com/articles/11810/opening-channels-for-export" target="_blank">&ldquo;Opening Channels for Export,&rdquo;</a> we learn that America&rsquo;s last two corn harvests&mdash;both huge&mdash;played into the U.S. Grains Council&rsquo;s decision to pursue federal funding and authorization to promote biofuels exports. EPM Senior Editor Susanne Retka Schill explains how and why the USGC teamed up in 2014 with the Renewable Fuels Association, Growth Energy and the USDA Foreign Agriculture Service to build global markets for U.S. ethanol. The landmark effort just got under way and it began with trips to Japan, South Korea, Panama, Peru, Singapore and Philippines. In fact, Southeast Asia, writ large, is showing tremendous potential as a destination for U.S. ethanol exports, which are projected to top 800 million gallons in 2014 and could reach 1 billion gallons next year. In our feature, <a href="http://www.ethanolproducer.com/articles/11812/regaining-ground" target="_blank">&ldquo;Regaining Ground,&rdquo;</a> EPM Managing Editor Holly Jessen reports that Canada and Brazil remain the top takers of U.S. ethanol, but unlikely customers like United Arab Emirates and Peru, which sells ethanol into the EU, have significantly boosted their purchasing. Notably, ethanol producers that export, like Illinois-based Patriot Renewable Fuels LLC, seem to share an understanding that exporting ethanol isn&rsquo;t just a discretionary, side market of their primary product, but a critical outlet for the industry as a whole. Our feature on distillers grains exports, <a href="http://www.ethanolproducer.com/articles/11811/beyond-boats-to-china" target="_blank">&ldquo;Beyond Boats to China,&rdquo;</a> gauges the reactions of American traders following China&rsquo;s late-2014 acceptance of MIR 162, the genetically modified corn trait at the center of the country&rsquo;s temporary pseudo ban on DDGS last year. Coming off a record 10 million metric-ton-exports year, DDGS marketers say it is great news that China is poised to buy the industry&rsquo;s main coproduct again, but they&rsquo;re also calling out their top foreign customer for being unreliable. Trust issues aside, the end of China&rsquo;s DDGS timeout means the global market for the product is bullish once more, and prices reflect it. No doubt about it, China&rsquo;s renewed acceptance of DDGS represents a rebound for the product's global market, but exporters are applying a disciplined approach to this vast opportunity. Simply put, marketers don&rsquo;t want to get stung by China again, and many of them now refuse to blindly overserve the world&rsquo;s top DDGS importer at the expense of steady foreign and domestic buyers.&nbsp;
Author: Tom Bryan President &amp; Editor in Chief tbryan@bbiinternational.com

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The February issue of Ethanol Producer Magazine has an exports theme and includes stories about trade missions overseas to build global markets for U.S. ethanol as well as the biggest export markets for U.S. DDGS and ethanol, writes Tom Bryan.

More Volume, More Places 

For energy crops, or even crop residues harvested for energy production, to ever establish themselves as widely grown agricultural commodities the equipment necessary for their cultivation and harvest must be available at a cost that works economically for farmers. Fortunately for farmers and the prospective buyers of miscanthus, arundo donax, energy sorghums, fast growing willows and other energy crops currently under development this reality is a guiding principle for the original equipment manufacturers (OEMs) who have served them for over a century. AGCO Maynard Herron is one of AGCO&rsquo;s 17,000 global employees and, as manager of product proving in the company&rsquo;s Hesston, Kansas, location, well-versed in the iterative nature of AGCO&rsquo;s product development approach. &ldquo;I grew up as a farmer. I was always interested in the mechanical side of farming,&rdquo; Herron says. &ldquo;I have a bachelor&rsquo;s degree in mechanical engineering and I got a master&rsquo;s degree in agricultural engineering, which tied it all together well for me. I&rsquo;m very interested in what people are doing to make a living with equipment on their farm.&rdquo; Herron and his team spend their time developing solutions for markets not yet fully commercialized, markets that the company expects may generate real demand perhaps five to eight years down the road including energy crops. &ldquo;I don&rsquo;t claim that we have a group of people who can look into the future and know where our products need to be at a certain point in time,&rdquo; Herron says. &ldquo;But we have an innovative group of people who we&rsquo;ve given a little bit of freedom.&rdquo; With well-developed market share in both the grain and hay segments, AGCO is actively working to adapt and modify existing products to capture future orders from farmers looking to bale corn stover or energy perennials with hay-like characteristics. With an eye on developing a prototype that can be engineered to what Herron calls a &ldquo;manufacturable state,&rdquo; Herron&rsquo;s team is using existing AGCO modules as a starting point. &ldquo;I would say 80 percent or more of the functional modules of the machine already exist,&rdquo; Herron says. &ldquo;It&rsquo;s not unusual for us to take a machine and add two or three functional modules to it that are from another machine just to get started.&rdquo; Once a prototype is fabricated, Herron and his team observe and modify based on what they see. Herron notes that while AGCO&rsquo;s tradition of engineers working the field with wrenches and hammers has changed, the practice was certainly used as AGCO eyed the coming biomass-to-energy market. &ldquo;An army mechanic I had the opportunity to work with used to say, &lsquo;We&rsquo;ll weld it on here and if we don&rsquo;t like it we&rsquo;ll cut it off and weld it on somewhere else,'" Herron remembers. He credits this mentor with changing his idea about the iterative work his team does every day. &ldquo;He taught me to not see things as failures. Instead, he saw each idea that didn&rsquo;t work as an elimination of one of the total range of possible solutions,&rdquo; Herron says. &ldquo;And that was success.&rdquo; Also fundamental to Herron and his team&rsquo;s approach is to continue pushing toward an answer to the root question of &ldquo;why?&rdquo; He cites his early experiences working on corn stover baler concepts for the DuPont cellulosic ethanol facility in Nevada, Iowa. &ldquo;When we started the program, the whole industry wanted to see higher-density bales,&rdquo; says Herron. At the heart of the matter was that with lower-density bales, trucks were making trips from field to plant well below their carrying capacity, introducing inefficiencies that had to be eliminated. &ldquo;We improved the density of the bales to the point of coming out of the field with large square bales that would fill a legal-size truck to the legal highway load limit in most cases.&rdquo; Once a particular design problem is overcome, another usually follows. Once Herron and his team solved the bale-density problem for the DuPont project, they moved on to throughput and bale size. &ldquo;They never even stopped to take a breath,&rdquo; he remembers. This exhaustive and iterative process is beginning to bear fruit as nearly 40 AGCO balers were brought online to bale corn stover in the Nevada area this fall. New Holland Another instantly recognizable ag-machinery brand actively developing equipment solutions for the prospective energy crop market is New Holland Agriculture, part of the multinational ag and construction equipment giant CNH Industrial. The organization&rsquo;s R&amp;D efforts are housed in the company&rsquo;s New Holland, Pennsylvania, location led in part by John Posselius, innovation and technology manager. Posselius and his team are responsible for developing the next generation of both New Holland&rsquo;s agricultural and construction equipment offerings. Like AGCO, New Holland works to keep Posselius and his team focused on markets they feel may come to fruition on a four- to eight-year horizon. &ldquo;The advanced technology group has some leeway, but there&rsquo;s a good bit of involvement from senior management,&rdquo; Posselius says. &ldquo;Everything we work on gets approved by senior management. We&rsquo;ve got what I call dangerously smart farm boys. Lots of our guys and gals have PhDs&rdquo; Posselius credits his team&rsquo;s understanding of agricultural and agricultural technology for the trust that company management has in their efforts, even if the immediate need isn&rsquo;t readily apparent. To keep their pipeline of development work full, the company leverages its global presence to keep in tune with emergent trends in agriculture, whether they are bubble up in Europe, Asia or South America. Another constituency that New Holland maintains close relationships with are the agronomy departments at universities around the world. They stay up to speed with the research trends they see and let those trends inform where they spend time and resources. &ldquo;In 2004 or so, we caught wind of some of the work that Dr. Tim Volk of the State University of New York, College of Environmental Science and Forestry, was doing with willows,&rdquo; Posselius says. &ldquo;It intrigued us.&rdquo; Posselius and his team learned that early efforts to harvest willow were utilizing existing sugar cane and forage harvesters. With both of those products already in their portfolio, willow seemed to provide a new market opportunity that fit nicely into what the company was already doing. &ldquo;After getting in touch with Tim, we started bootlegging some things and tried several approaches with engineering equipment that we already had on the fast growing willow,&rdquo; Posselius says. &ldquo;We had a pretty fair level of success. The initial efforts were successful enough to win an approval from management to expend more time and energy on developing solutions for a crop not yet widely grown. Still, when considering willow&rsquo;s potential and the existing platform New Holland already had in sugarcane and forage harvesters together, the opportunity proved too good to pass up. &ldquo;When we can take advantage of a current product with no or minimal modification that opens up a new market for us, that&rsquo;s a positive situation,&rdquo; Posselius says. This same logic applies to the New Holland&rsquo;s continued interest in perennial energy grasses like miscanthus. The company sees its existing hay and forage platform as a common sense departure point from which to compete in this category should it become commercially viable for farmers to grow those crops. In addition to the overcoming the technical burden of harvesting willow, or miscanthus, or corn stover, Posselius and his team must also consider the economics during the design phase. Speaking specifically about their work developing a coppice header capable of effectively harvesting willow, Posselius says, &ldquo;We need to develop a header that comes in at a price point that we can afford to build, that our customers can buy and can produce chips at a price an end user can pay.&rdquo; Ready For Production Both Herron and Posselius eventually have to let go of their projects, either because a decision has been made to cease research efforts or a prototype is ready to move into full-scale production. Designing a machine that can effectively bale corn stover with low ash content is a completely different endeavor than engineering it so that it can be manufactured and deliver a profit not only to the company, but ultimately to the farmer that buys it. Posselius and his team ultimately release their concepts to a product design group responsible for getting that product built and released to the waiting farm community. Is it difficult for Posselius to let go of a project he&rsquo;s worked so hard on, sometimes for years? &ldquo;It takes a particular type of person to do the upfront work,&rdquo; says Posselius. &ldquo;For some engineers, it would drive them nuts to not take a project all the way to the finish line of having a saleable product. Some people like to prove concepts, some like to build product.&rdquo; Fortunately for Posselius, he&rsquo;s the former. Author: Tim Portz Executive Editor, Biomass Magazine 701-738-4969 <a href="mailto:tporz@bbiinternational.com" target="_blank">tporz@bbiinternational.com</a>

TRY, TRY AGAIN: During a demonstration harvest of miscanthus in Illinois, AGCO engineers put this Razor Bar harvesting head through its paces. This model included the â€œbiomass option,â€� which is the auger above the head. 

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Field Adjustments: A team of CNH Industrial Engineers make adjustments on a prototype in upstate New York while working with the State University of New York. 

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Long before farmers are ready to buy the implements required to grow and harvest energy crops, leading OEMs leverage robust research and development organizations to get them engineered.

Dangerously Smart Farm Boys

The recent fall in oil prices has everybody talking about the prospects for advanced biofuels. Will commercialization be delayed? Will research and development continue? Can the industry survive $60 per barrel crude? In the not too distant past, a precipitous drop in fossil fuels and energy prices could stall or even kill off years of progress in alternative energy R&amp;D. Just ask someone familiar with the wind and solar industries in the '70s and '80s, or even the early algal fuels research programs in the late '80s and early '90s. There's good reason to believe that the paths forward for biomass and biofuels will be different this time around. I doubt very much that technology advances will halt.
 The commercialization strategies of today&rsquo;s advanced biofuel ventures&mdash;particularly those that are developing new biomass feedstocks&mdash;are substantially different from earlier waves of alternative energy technologies. Perhaps most significantly, many are no longer solely dependent on revenue from fuels or energy sales to be sustainable as a business. Instead, they are looking to attack multiple markets. Some examples include biomass-derived plastics, fertilizers, feeds, nutritional supplements, water treatment services, pharmaceuticals, specialty chemicals and more, in addition to fuels or fuel feedstocks that can replace petroleum or palm oil feedstocks. This flexibility justifies the technical and infrastructure investments needed today to see companies through initial commercialization over the next two to three years. In the algae biomass industry, Cellana is one of the companies that have led the multi-market approach to commercialization. The company's multiproduct business model is based on two fractionations of harvested algae biomass to produce three product streams: algal crude oil, Omega-3 nutritional oils and protein-rich algae meal for aquaculture or livestock feeds.&nbsp; All three fractions are used to provide economic sustainability to complement the inherent environmental sustainability of the highest-yielding &ldquo;crop&rdquo; on earth&mdash;algae. Initially, Cellana expects revenues from fuel and feed to be a small percentage of overall product revenue, which will be driven by the high-value Omega-3s and, to a lesser extent, the feed product stream, both of which can be produced today with good financial margins at relatively small commercial scales.&nbsp; Profitable initial commercialization will introduce a phase of improved yields, technology advances and greater economies of scale. In turn, lower unit-production costs will enable more sales into higher volume feed markets. As prices for animal feed rise with expected global demand, and production costs decline, the company can add capacity to address solely the feed and fuel markets&mdash;a final phase of commercialization that does not rely on revenues from higher-value product streams like Omega-3s. In the algae space, advanced biofuel pioneer Sapphire Energy is also diversifying its product portfolio, and Algenol Biofuels has added an algae crude stream to its advanced ethanol platform. Other algae companies are following a similar strategy, and even the U.S. Department of Energy has recognized the advantages. The DOE's Bioenergy Technologies Office funding opportunity, titled Targeted Algal Biofuels and Products, announced by David Danielson, DOE assistant secretary, at the 2014 Algae Biomass Summit, specifically incents the development of coproducts, crop protection and carbon utilization technologies with algae. The end goal is not to create a new source of fishmeal or animal feeds, however. Rather, it is to enhance the state of the art and ultimately drive down the cost of algal fuels by enabling companies to produce multiple revenue streams from the same biomass feedstocks. Much like corn, soybeans and other traditional biomass crops, which serve multiple end markets, the advantages of algae's market flexibility will drive advances even during today's crude oil glut. Companies that are currently focused on a single product also stand to benefit from feedstock flexibility. A company that can successfully scale algal oil production will have technical knowledge (and likely a whole lot of biomass) that will be valuable in other applications, making for a possible wave of strategic partnerships as more algae-derived products hit the market. In either case, the effect will be a commercialization pathway that marches through a number of markets with economics driven by many more factors than the price of oil alone. The path is simple: Advance the technology and infrastructure through to initial commercialization, find revenues in new and bigger markets, repeat.
 Low oil prices might alter the pace or the direction of this cycle but they will not derail progress. In fact, a growing economy, booming populations the world over, and more pressing security challenges mean governments and investors that keep the pace of R&amp;D up will be rewarded in the near term by high revenues from feed, food and nutritional products, and will be doubly rewarded over the longer term when fossil energy again becomes expensive&mdash;which it most certainly will. Author: Matt Carr Executive Director, Algae Biomass Organization <a href="http://www.algaebiomass.org" target="_blank">www.algaebiomass.org</a> 877-531-5512

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The recent fall in oil prices has everybody talking about the prospects for advanced biofuels. Carr says many of today's ventures no longer solely depend on revenue from fuels or energy sales, but instead are looking to attack multiple markets. 

Low Oil Price Won't Put Brakes on Biomass Future

Anaerobic digesters (AD) are usually fed manure or food waste, yet other options are being tested and used in the biogas industry. On the expanding menu of feedstock possibilities are crops grown specifically for the purpose. Research conducted in Ontario, Canada, at the University of Guelph Ridgetown Campus explores the possibility of growing perennial energy crops and native grasses for biogas production. Energy crops are being considered in the biogas market for their environmental benefits, high-yielding rates and reliability. The U of G-Ridgetown teamed up with New Energy Farms and Seacliff Energy for a project exploring energy crop potential in biogas production. Right now, the focus is on the methane yield at lab level, but the hope is to eventually test perennial feedstock crops in a 250-kW digester located at a campus research facility. &ldquo;The main takeaway of the things we&rsquo;ve tested so far is that some of them provide really high yields in the field, but they don&rsquo;t convert very easily to biogas,&rdquo; says Brandon Gilroyed, assistant professor School of Environmental Sciences at the U of G-Ridgetown. &ldquo;We need to, for our future research, place more emphasis on pretreatment and things like that to unlock more of that energy.&rdquo; Paul Carver, CEO of New Energy Farms, says, &ldquo;We identified a need for perennial biogas crops for a number of reasons.&rdquo; NEF is involved in providing suitable cultivars of different energy crops, established through its CEEDS system and production testing. The Crop, Expansion, Encapsulation and Delivery System, creates a proxy for seed in vegetative crops, such as miscanthus, napier grass and arundo donax. The system was developed to make planting energy grasses and other vegetative crops as simple as conventional arable crops. &ldquo;In areas where biogas projects have expanded rapidly, such as Germany, there is now saturation of annual biogas crops on arable land,&rdquo; Carver says. Germany has been using predominantly corn silage, among other streams, for biogas production. The plants that NEF is exploring are suitable for nonfood-quality land, which subsequently allows new plantings to occur without affecting food production. Another contributing factor to energy crop implementation is that biogas byproduct disposal requires a land base. &ldquo;Sites with perennial crops on them for 10 years or more create a good logistical system for this recirculation of nutrients,&rdquo; Carver says.
 The last factor resides in the fact that new biogas projects need secure sources of feedstock. A proportion of perennial grasses can provide feedstock for 10 years, according to Carver. Crops like these usually take time to establish, however. &ldquo;I think there will be some ways of dual cropping, or things like that, to help with those initial establishment years, but that is an issue for sure with the whole concept,&rdquo; Gilroyed says. Presently, most in the space see energy crops&rsquo; role in the production of biogas as supplemental; a side choice to the main dish on the menu. NEF believes the menu should have a variety of sides suitable for biogas and different growing conditions. &ldquo;These would be crops like napier grass, arundo donax and miscanthus, which support production from Canada down to Florida,&rdquo; Carver says. &ldquo;We have also found that some of the energy crops have a much wider harvest window, and so improving the logistics of the feedstock supply. With this range of crops it would be possible to get year-round supply.&rdquo; A sustainable feedstock supply is crucial for biogas producers. &ldquo;A big part of the impetus for us looking into it is the biogas market right now; it&rsquo;s really hard to find high-quality feedstocks,&rdquo; Gilroyed says. &ldquo;There is so much competition, and if we want to see this sort of model work at the farm-scale, so smaller digesters, I think that they&rsquo;re going to have to have some options where they are able to independently create at least a portion of the diet they feed, because the volatility is too much to handle.&rdquo;
 Perennial energy crops and grasses have the added opportunity to generate cellulosic renewable information numbers (RINs). The U.S. EPA announced in July a final rule for the renewable fuel standard (RFS) program that expanded pathways for biogas-based fuel to help boost cellulosic and advanced fuel numbers. Allowing biogas transportation fuel pathways to generate RFS cellulosic credits brings opportunity for further biogas project development. NEF&rsquo;s collaboration with the U of G-Ridgetown and Seacliff is not upgrading the biogas to transportation fuel, but NEF recognizes the opportunity it presents. &ldquo;We see a very strong growth potential for this area as biogas can be used for heat, electricity and road fuels,&rdquo; Carver says. &ldquo;We feel there is a substantial commercial opportunity to apply the high-yield perennial grasses to this market.&rdquo; One project under development in Missouri will create biogas-based fuel. Roeslein Alternative Energy LLC is developing and constructing the project in collaboration with Murphy-Brown of Missouri LLC, the livestock production subsidiary of Smithfield Foods Inc. The goal of the $80 million project is to produce 50 million diesel gallon equivalents by the end of the decade using biogas derived from hog manure, energy crops and cover crops harvested between growing seasons. &ldquo;This project can be a model to show how both economic and environmental benefits can be gained by using manure in a different way," says Rudi Roeslein, president of RAE and CEO of Roeslein &amp; Associates. The project will not only clean and compress biogas for transportation fuel, but will help with efforts to replant and restore native grassland and prairie on marginal land.
 Roeslein Northern Missouri Real Estate has been restoring land with grassy prairies on it&rsquo;s 1,600-acre farm located within the project area.&nbsp; Already 400 acres of prairie has been planted that could be used for testing the potential feedstock. The massive project is being implemented in phases. The installation of high-density polyethylene covers on an initial 19 lagoons at MBM&rsquo;s Valley View and South Meadows farms in Northern Missouri is complete. The biogas that rises to the top of the lagoons will be collected for further conditioning, while the leftover indigestible solid residue can be used as a natural fertilizer, and water can be safely used for irrigation. "There is value in the gas we capture as alternative vehicle fuel,&rdquo; Roeslein says. &ldquo;There is even more value to the environment from reduced greenhouse gas emissions, eliminating rainfall effects on treatment systems and odor reduction." Next on the project timeline is installing biogas cleaning and conditioning equipment to produce renewable natural gas (RNG), and establishing a network of distribution centers to provide the RNG to vehicle fleets. The project has the potential to create several hundred million cubic feet of RNG annually for regional distribution. RNG production is slated to begin this year. The third phase includes a demonstration of using aboveground AD systems to process a combination of manure and perennial feedstocks. Now that biogas-based transportation fuel projects can sell either advanced biofuel or cellulosic compliance credits, an increase in project development in the U.S. biogas industry may become apparent. Grassland and perennial crop establishment has a developing market opportunity with biogas, and potential to become an appealing, high-yielding and reliable side choice for producers. Author: Katie Fletcher Staff Writer, Biomass Magazine <a href="mailto:kfletcher@bbiinternational.com" target="_blank">kfletcher@bbiinternational.com</a> 701-738-4920

CODIGESTION POTENTIAL: The University of Guelph Ridgetown campus in Ontario has a 250-kW digester housed at the CARES, or Center for Agricultural Renewable Energy and Sustainability, research facility. 

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ONE POSSIBILITY: Arundo donax is one energy crop New Energy Farms is providing suitable cultivars for with its CEEDS artificial seed system. NEF is testing this crop and others for biogas potential with 20 acres of trials dedicated to the work.

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STARTING SMALL: Brandon Gilroyed, assistant professor at the University of Guelph-Ridgetown, says all perennial crop work so far at the university, has been done using a lab-scale digester.

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INNOVATIVE APPROACH: Roeslein Alternative Energyâ€™s biogas project will involve a total of 88 covered hog lagoons, such as this one being installed at Murphy Brownâ€™s South Meadows Farm in Missouri. 

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Grassland and perennial biomass streams are being tapped for conversion as supplemental feedstock in anaerobic digesters. These streams are considered in the biogas market for their environmental benefits, high-yielding rates and reliability.

Grass to Gas

Biogas projects come in all shapes and sizes and are implemented across a variety of industrial, municipal and agricultural applications. For a biogas project, there is no &ldquo;one size fits all&rdquo;. The variety of biogas feedstock sources and end-use applications sets it apart from other biomass project configurations. However, the variations among operational and potential biogas projects make it difficult to adequately access the resource potential for this underutilized renewable energy resource. Individual states are taking the lead to better evaluate and assess potential biogas projects. In the past year, the state of Iowa has worked to assess their biogas resource. I recently participated in a webinar where the Iowa Biogas Assessment Model was profiled. The model is an online, GIS, interactive map where a user can click on different layers of data to study&nbsp; the biogas resource or conduct an initial screen of where a potential project could be sited based on feedstock and infrastructure availability within a certain geography. IBAM was developed by EcoEngineers under contract with the Iowa Economic Development Authority. The tool is available at www.ecoengineers.us/ibam. The IBAM tool provides a wide variety of biogas-based feedstock data. Users can assess the feedstock availability of animal manure, crop residue and potential substrates or identify colocation opportunities with existing biodiesel, ethanol, food and paper manufacturers. In addition to the feedstock data, there is also energy infrastructure data on the locations of natural gas pipelines, electric and gas service territories, and existing power plant locations. Users can also identify the locations of operational biogas projects at agricultural, landfill or wastewater treatment facilities. A complementary tool to the GIS map is a preliminary economic assessment spreadsheet. The downloadable spreadsheet provides users the availability to modify inputs and assumptions to conduct a preliminary economic evaluation for a potential biogas project. Both the IBAM map and spreadsheet will require more robust analysis and engineering designs for any project moving forward, but these publically available tools can help users from the private and government sectors to conduct an initial project screen or quantify the potential for biogas projects in Iowa. The Iowa tools build on work previously done by the state of Wisconsin to develop a user-friendly biogas resource map and economic analysis for potential biogas projects. Having these tools available provides critical information to biogas proponents and project developers to assess resource potential, describe the location and nature of potential projects, and identify specific locations for future projects. In addition to Wisconsin, there are examples from other states and U.S. regions that have developed similar tools and economic assessments. To further enable increased development of biogas projects, it is essential that we continue to use data and visual tools to better evaluate the biogas resource. These tools can provide critical information in the early formation of a potential project. They also help biogas proponents to categorize the resource potential in the context of other renewable energy options or waste management decisions. The diversity of biogas project configurations and feedstock sources is a real asset because every city, town, or rural area has some sort of potential for a biogas project, but without tools and data like those developed by Iowa, Wisconsin or other states, it would be more difficult to move projects from potential to operational. Author: Amanda Bilek Government Affairs Manager, Great Plains Institute 612-278-7118 <a href="mailto:abilek@gpisd.net" target="_blank">abilek@gpisd.net</a>

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Variations among biogas projects make it difficult to adequately access resource potential. Bilek says it is essential to continue to use data and visual tools, like the Iowa Biogas Assessment Model, to better evaluate the biogas resource.

Data and Tools to Better Evaluate Biogas Potential

Biomass thermal projects are becoming increasingly popular and it is important to make sure that they are done correctly. Project financiers, be they equity partners or bankers, will require carefully thought-out contracts that will enable the project to get paid and address potential problems. One of the most important components of the contract is the offtake agreement.&nbsp; They establish how much the project will get paid, what factors could impact those payments and more.&nbsp; Most offtake agreements are long-term contracts, often matching the length of any debt term, in order to ensure that there will be revenue available to pay the debt service and usually include renewals.&nbsp; They are binding upon signing, but often include early termination provisions to allow either party to get out of the deal, such as allowing the seller (project owner) to terminate if they cannot arrange financing for the project. Along those same lines, the agreements usually include conditions precedent, or events that have to take place before either party is obligated to perform.&nbsp; Common conditions include final granting of permits, feedstock agreements, and financing for the seller and any regulatory approvals for the buyer. Milestones are an important part of any project development and are often part of an offtake agreement, mostly because the buyer may be relying on the project to come online at a certain time in order to meet their own requirements.&nbsp; Often, there are penalties for missing milestones, though a seller should negotiate that penalties be waived if the project comes online by the commercial operation date. The commercial operation date (COD) is the date when the plant is capable of delivering the thermal energy to the buyer.&nbsp; The COD is a critical piece of the agreement and the seller will face significant penalties if the project is not operational by the COD.&nbsp; Determining the right criteria for the COD is important to all parties to the project. Before the plant is in commercial operation, issues of the delivery of the thermal energy, such as when and where does the ownership of the thermal energy transfer from the seller to the buyer must be answered.&nbsp; Much of that depends on how the thermal energy is delivered to the buyer, such as colocation, district energy or steam pipelines, but sellers will generally want the transfer, and thus the sale, to occur once the thermal energy leaves its plant.&nbsp; Pricing is one of the most important aspects of a thermal energy project and pricing will generally be based on equivalent thermal energy costs, plus any premium for &ldquo;green&rdquo; thermal energy.&nbsp; Pricing is either fixed, with escalators, or based on market indexes.&nbsp; It is critical for the seller to have a complete understanding of their costs before agreeing to final pricing.&nbsp; Financing parties will be sure to run the numbers.&nbsp; It may help to think of it as a financial mass balance.&nbsp; Curtailment is one of the issues the financiers dislike, but is usually a part of an offtake.&nbsp; Curtailment means that in certain circumstances the buyer has the right to refuse delivery of the thermal energy.&nbsp; In these cases, sellers want the buyer to continue to pay the regular price and count the curtailed thermal energy towards their requirement.&nbsp; Buyers understandably want to minimize paying for thermal energy they are not using and the parties usually reach a compromise, which could include capping the payments, having the energy count towards the requirement or other options. Tax credits and renewable energy credits, where and when available, can be significant factors in the viability of a thermal energy project.&nbsp; Determining who gets the credits and how they can impact the bottom line pricing for the thermal energy is critical. Performance guarantees are usually required by the buyer and normally amount to the seller guaranteeing that it will deliver a certain minimum amount of thermal energy to a buyer each year. Unexcused failures to deliver result in significant penalties or even rights to terminate. Sellers need to be sure that their construction and technology partners are able to build the plant to meet these guarantees. Financing partners will closely scrutinize performance guarantees and may require independent financial support such as credit enhancements in the form of standby letters of credit.&nbsp; Connected to performance guarantees, the parties will try to limit their liability to damages from a breach while at the same time maximizing the liability of the other party. Thermal energy offtake agreements are complex legal documents that also need to be drafted in the context of the entire project. Take care, plan early and consult experienced advisors before getting started. Author: Todd Taylor Clean Technology &amp; Sustainability Chair, Fredrikson &amp; Byron, P.A. <a href="http://www.fredlaw.com" target="_blank">www.fredlaw.com</a> <a href="mailto:ttaylor@fredlaw.com" target="_blank">ttaylor@fredlaw.com</a>

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Biomass thermal projects are becoming increasingly popular. Taylor says thermal energy offtake agreements are an important component and complex. He advises to take care, plan early and consult experienced advisors before getting started.

Legal Issues for Biomass Thermal Offtake Contracts

For the past several years, my students and I have been experimenting with making fuel pellets from invasive species. The projects have been funded by Michigan&rsquo;s Biomass Energy Office, the U.S. Department of Agriculture and most recently the Great Lakes Restoration Initiative. We have also collaborated with Michigan State University and Bay Mills Community College. Most recently we have been working with Loyola University Chicago, DePaul University and the University of Michigan. Loyola is the lead on the current project. While performing our research, we have learned that invasive species present unique opportunities and challenges as a feedstock for fuel pellets. Feasibility Our first study was to examine the Btu yield of unmanaged reed canary grass and whether it would be energy efficient to harvest and process it into pellets, and burn it in a multiuse stove. The math worked out. A 3-acre patch of reed canary grass could provide in pellets the Btu equivalent of 800 gallons of propane with 32 times more energy return than the energy required to harvest and pelletize it. Most rural properties in our area have some stands of reed canary grass. We then purchased a hammer mill, a small pellet press and a multifuel pellet stove to put the idea into practice. Like many others, we were able to make reed canary grass pellets and we found that they burned well in the multifuel stove. Our trials then extended to invasive phragmites. Because of its high proportion of stem, it ground up nicely and pelletized quite well. In contrast, the high proportion of leaf material in the reed canary grass results in very fine material that interferes with mixing in the pelletizing process. Phragmites is not as common in our immediate vicinity as reed canary grass but is, unfortunately, quite common in other areas of this region. Our most recent work involves harvesting and pelletizing invasive cattail (Typha x glauca), which is also quite common. Compared to purpose-grown biomass, the primary objective of using invasive species is reducing the vigor of the plants. In the case of cattails, another objective is removing phosphorous from the wetland. For reducing vigor of the plant, a harvest just before flowering, when storage carbohydrates are at their lowest level in the year, would be ideal. For removal of nutrients, harvest prior to the time in which the plants translocate nutrients to the crowns in preparation of shoot dieback would be best. In contrast, for sustainable harvesting, just after shoot dieback is best. Late fall harvesting also provides dried material, which can be ground with no further need for drying and the energy and effort it requires. It is important to remember that the goal of biomass from invasive species isn&rsquo;t necessarily to be most efficient. The biomass is a side-benefit of the biomass removal. If some economic value could accrue from the biomass, that could help fund the removal of the invasives. Harvesting In addition to timing of the harvest, the actual harvest procedure for invasive species represents some challenges compared to purpose-grown biomass. In our work in the former hayfield, we simply used a tractor-mounted, sickle-bar mower. In our phragmites sites, we used hand harvesting since the sites were small. We tied the phragmites in bundles with twine, then cut the base with a battery-operated hedge trimmer (more or less a hand-held, sickle-bar mower). The bundles were then convenient to carry to a trailer. Our current project involves biomass removal from wetlands. Thus, one additional step was securing a permit from the Michigan Department of Environmental Quality. The joint permit was quite straightforward and not at all a barrier, partly because we had data from a previous study by Loyola University that removal of invasive species can help restore biodiversity to wetlands. One of the potential issues with the permit was that we had to show that we would not disturb the wetland soil. We were to harvest large acreages, thus we needed to use mechanical harvesting. Our project will be using a tracked vehicle for the harvest operation and we will carefully maneuver on the site, so we anticipate no undue impact on the wetland soils. Site access is also an issue. Native wetlands often do not have easy road access like a farm field would. In our case, the wetlands are near enough to roads, and the topography will allow our tracked vehicle to access the sites, but not all sites with invasive species do. We will be harvesting the cattails in midseason, while they are green. The water content of the cattails will add challenges in terms of weight of the material and, perhaps, the need to dry them out to an optimal moisture level for pelletizing. Pelletizing We have had good results in pelletizing both reed canary grass and phragmites. We have only done one run of cattails and were able to make good pellets with green material (no water added) and without binder. But we have not fired these pellets to check for their burn characteristics. We have been working on scaling up the pellet production process from demo-scale (several pounds) to production level (several tons). We are still developing the processes for material handling, grinding and pelletizing, and trying to establish a consistent mixture of ground grass, water and binder. Ambient temperature and humidity all seem to add variation to the production process and thus to the quality and economic value of the finished product. Our brief experience with cattails reveals some additional challenges, one of which is that the cattail fibers can clog the screen of the grinder. We know that water content and soil picked up in the harvest process will be issues. I&rsquo;m sure we will find other difficulties as we go along. Use of Pellets Other uses beyond pellet stove fuel may bring economic benefits to invasive removal projects. Pellets from purpose, grown grasses may be marketable as feed, animal bedding or even compost. Pellets from invasives might not be marketable as feed, but bedding and compost could be alternative markets. Our work so far confirms that invasive plant removal can have an added benefit of pellet production. Our current project is to restore biodiversity of the wetlands with a side benefit of economic value from the biomass. We want to be clear that we are not suggesting that reed canary grass, the invasive genotype of phragmites, or the invasive cattails should be planted for biomass production. The currently available stands of these plants provide a ready supply that we hope will decrease over the coming years with successful control efforts. In the meantime, we have an opportunity to improve the economics of control efforts and to provide a more carbon neutral fuel source or other valuable products, if we use some slightly different than we would with purpose-grown biomass.
 Author: Gregory Zimmerman Professor of Biology, Lake Superior State University <a href="mailto:gzimmerman@lssu.edu" target="_blank">gzimmerman@lssu.edu</a> 906-635-2470
_________________________________________________________________________________________________________________ CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

Pelletizing A Problem: Gregory Zimmerman (far right), Professor of Biology at Lake Superior State University feeds a small pellet press as students look on.

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Harvesting cattails and other wetland plants may control their presence in the landscape and serve as a biomass source too. 

Invasive Plants as Pellet Feedstock

&ldquo;I see the handwriting on the wall&rdquo;&nbsp; (The Staples Singers, 1978.) Incumbency proved popular among Maine voters in November. Our plain-spoken governor was returned to office with significantly more votes than when first elected four years ago.&nbsp; At the same time, southern Maine&rsquo;s member of Congress, a stalwart member of the Progressive Caucus, easily withstood the tide that swept a Republican into the previously Democrat-held open Congressional seat in northern Maine.&nbsp; Gov. Paul LePage&rsquo;s re-election campaign had placed considerable emphasis on reducing our state&rsquo;s high energy costs, which he cites as a major barrier to bringing manufacturing jobs to our rural state. Our growing pellet industry will continue to count on the Governor&rsquo;s support for biomass heat produced from Maine&rsquo;s forests.
 The most resounding, and most expected, election victory was achieved by U.S. Senator Susan Collins, who received almost 70 percent of the vote in our decidedly &ldquo;purple&rdquo; state. With endorsements ranging from the trade unions at Bath Iron Works shipyard&nbsp; to that of fellow Sen. Angus King, who caucuses with the Democrats, Collins carried virtually every one of Maine&rsquo;s nearly 500 municipalities. First elected to the Senate in 1996, Collins has never missed a recorded roll call vote and is respected as a workhorse. This work has always included attentiveness to Maine&rsquo;s important forest products industry. A strong supporter of the Clean Air Act authored by Maine&rsquo;s Sen. Ed Muskie four decades ago, and one of the few members of her party endorsed by the League of Conservation Voters this past year, Collins has also at times intervened with EPA to seek revision of proposed air quality rules. One such instance has involved EPA&rsquo;s rules for industrial boilers like those employed in Maine&rsquo;s paper industry. Another has been her letter, co-authored with King last March, expressing concern about EPA&rsquo;s proposed Source Performance standards for wood and pellet stoves. Note that all Jotul wood stoves sold in North America are now manufactured in Gorham, Maine. Most important to our pellet boiler industry has been Collins&rsquo; successful dialogue with the U.S. Department of Housing and Urban Development to have wood pellet boilers classified as &ldquo;an acceptable primary heating source for the purpose of federal housing administration (FHA) financing.&rdquo; This nationally important change in FHA rules was accomplished when Collins was the ranking minority member of the Senate Appropriations Subcommittee overseeing HUD expenditures. She will now chair the Subcommittee. Other support provided by Collins, whose family has for many decades managed a lumber business in northern Maine, has included her early co-sponsorship of King's BTU Act. The measure, if enacted, will make homeowner expenditures for biomass heating eligible for the same federal tax credits as solar and other renewable energy systems. Our industry&rsquo;s Biomass Thermal Energy Council in Washington will be working to have this legislation reintroduced early in this session of Congress. Addressing a gathering of heating industry members in Strong, Maine, home of Geneva Woods Fuels&rsquo; pellet manufacturing facility, Collins called upon the attendees to &ldquo;unleash the power of the pellet&rdquo;. Our Maine industry now looks forward to the increased &ldquo;Power of Collins.&rdquo; Meanwhile, back at the Maine legislature, conventional wisdom is that the Republican takeover of the Maine senate will benefit the business community, including our sector. It&rsquo;s never that simple, of course. The current director of the governor&rsquo;s energy office, whose advocacy on behalf of reducing Mainers&rsquo; heating costs has advanced our industry, is rumored to be in line for appointment to our Public Utilities Commission, where bright minds have been known to disappear in regulatory detail. A legislative proposal to streamline requirements for installation of pellet heating systems could get bogged down with objections from fuel oil licensees. More telling is a recent announcement by Tim Heutz, vice president of our Maine Pellet Fuels Association. Heutz, manager of the well-established Heutz Oil Co. in Lewiston, Maine, and also of Heutz Pellet Systems, tells us that Heutz Oil is being sold. He&rsquo;s now &ldquo;all in&rdquo;, in his words, with pellet heating. Handwriting on the wall, indeed.&nbsp;&nbsp;&nbsp; Author: Bill Bell Executive Director, Maine Pellet Fuels Association <a href="mailto:feedalliance@gwi.net" target="_blank">feedalliance@gwi.net</a> <a href="http://www.mainepelletheat.com" target="_blank">www.mainepelletheat.com</a>

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The most resounding, and most expected, election victory was achieved by U.S. Senator Susan Collins, who received almost 70 percent of the vote in Maine. Bell shares Collins' efforts in the biomass industry and other legislative impacts.

Handwriting on the Wall

Crops take time to establish. Not only do proper planting and harvesting practices need instituting, but an end market must exist. Southeast-Asia originated Miscanthus &times; giganteus serves as one among a variety of energy crops studied in Iowa. Over the past few years, two miscanthus test plots have been planted in Iowa; 12 acres in the spring of 2013 in Muscatine County, and another 16 acres near Iowa City the following spring. Now with planting protocol explored at both sites, the initial harvest of the 2013 test plot is just around the corner. The harvested miscanthus will be one of several options cofired with coal in two solid-fuel boilers at the university, in an effort to reach its 40 percent renewable energy commitment by 2020. The university has provided the end market for the first two growers to participate in its biomass fuel project. Although preliminary efforts have revealed substantial data on miscanthus, more research and test runs must be done before outreach to a few early adopters turns into a mass-marketing effort. Early Adopters Growing miscanthus is not a pioneering operation everywhere. Europe has been planting the crop since the 1980s, primarily for combustion in power plants. In the continental U.S. South, farmers grow the perennial for a poultry-bedding end market. A few other states have grown miscanthus, but, overall, miscanthus is in its early stages in the U.S., and only a few early adopters have begun looking into incorporating it, and other perennials and grasslands, into farming operations. &nbsp;&ldquo;I&rsquo;m always looking to diversify our portfolio of crops,&rdquo; says Steve Schomberg, the first grower participating in the biomass fuel project in 2013. &ldquo;I think it has a great future, as a landowner and farmer you don&rsquo;t want to put all of your eggs in one basket.&rdquo; This is perhaps why over coffee with a friend Schomberg&rsquo;s ears perked up when he heard about UI&rsquo;s project. Another Iowa grower followed in 2014. &ldquo;The concept of growing fuel is pretty interesting,&rdquo; says Dan Black, owner of the 2014 pilot plot. These two growers knocked on the university&rsquo;s door, and are now helping spread the word to others interested in leasing sections of land for the project&rsquo;s purpose. &ldquo;We want to have 2,500 acres in production to support our 2020 goal,&rdquo; says Ferman Milster, principal engineer of renewables at UI.&nbsp; &ldquo;We&rsquo;re going to be ramping up 200 acres this coming year, and then much more than that in the years to come.&rdquo; As a predominantly liberal arts and sciences school, UI turned to the agricultural expertise of Iowa State University for support. This is when Emily Heaton, assistant professor and extension biomass specialist at ISU, got involved. &ldquo;It&rsquo;s a fantastic partnership,&rdquo; Heaton says. &ldquo;Their university is taking the risk on transitioning their power plant, and Iowa State is taking the risk on understanding the agronomic implications of the crops they choose, trying to do all the testing for them at a research scale to understand what they should start implementing.&rdquo; Both universities work together with outreach and extension to Iowa growers. &ldquo;We&rsquo;ve been working since 2012 to answer questions they (UI) have, and the questions of their farmers, as well as getting the word out to farmers and getting more of the crop adopted in the Iowa City area,&rdquo; Heaton says. Growers and the universities are optimistic they will easily obtain more land for miscanthus. &ldquo;There has been quite a bit of interest bottom line; everybody is very curious,&rdquo; Black says. &ldquo;I&rsquo;ve had quite a bit of interest&mdash;just roadside interest&mdash;the local guys talking to me about it,&rdquo; Schomberg says. Lessons Learned All involved with the project work closely with one another through each step, but UI is bearing a majority of the risk. UI leases the land from both Schomberg and Black, and then turns around and hires them to manage the plot while it pays for the planting cost, field preparation, time and labor. &ldquo;There is not a lot of risk for me on my side of this deal because they&rsquo;ve taken on so much of the risk, and so much of the responsibility of getting the crop in,&rdquo; Black says. UI issued a request for proposals for the planting both years. In 2013, New Energy Farms was chosen, and in 2014 Repreve Renewables was selected. Miscanthus does not produce a harvestable yield during the first year of growth. Usually the first harvest occurs in late winter or early spring after the second growing season. Schomberg&rsquo;s test plot was planted during adverse circumstances, but is scheduled to be harvested during that time frame based on snow cover and climate. &ldquo;It was really a combination of the late planting, which stressed the rhizomes, and then the drought, which stressed them, and then the extremely long winter we had, which provided further stress,&rdquo; Milster says. &ldquo;Out of the planted acres, three acres did survive and look very good.&rdquo; Heaton expects the acreage to yield 8 to 10 tons per acre on average once the miscanthus is fully matured, which takes about three years.&nbsp; Heaton compares miscanthus to children; they are expensive to have, and the first few years of upbringing are critical. &ldquo;We generally talk about miscanthus as being a very low-input crop, and that&rsquo;s true especially when you look at it over a 20- to 30- year lifespan of the crop, but you don&rsquo;t want to mess around in those first few years,&rdquo; Heaton says. &ldquo;It&rsquo;s an expensive crop to plant, just like kids are expensive to have, so we do recommend diligent management in the first two years. Like children, if you do a poor job in its juvenile phase, it will never recover.&rdquo; Although miscanthus can flourish on marginal land, the soil needs proper preparation. Both primary and secondary tillage is needed to loosen the dirt enough to dig trenches for the rhizomes. &ldquo;One of the secrets to a successful establishment, to effective planting, is field prep,&rdquo; Milster says. &ldquo;In both cases, we really had to put extra effort in to prepare the soil.&rdquo; Rhizome planting is based on potato planting. Black says the planter used by Repreve, in essence, has the bones of a potato planter, but is highly modified to plant the rhizomes. When Miscanthus Makes Sense Miscanthus must be carefully planted, but after it is established little upkeep is required. Heaton and others at ISU are working with farmers to understand when utilizing the benefits of miscanthus, prairie and other grasslands could make sense to a grower, not only environmentally, but also economically. &ldquo;Our vision at Iowa State and the University of Iowa is to have a suite of perennials integrated into the crop landscape,&rdquo; Heaton says. &ldquo;The reason I would include miscanthus in a diversified crop portfolio in the Midwest is really pretty straightforward: its yield.&rdquo; Heaton and others at ISU are trying to identify at a subfield scale where a grower should integrate perennials, like miscanthus, to improve profitability of corn in Iowa. &ldquo;I would like to see 15 percent of land in Iowa fields transitioned to perennials, and I&rsquo;d like to see those perennials be a diverse portfolio,&rdquo; Heaton says. &ldquo;It wouldn&rsquo;t take much miscanthus to make a meaningful difference to our energy needs in the state.&rdquo; Heaton says landscape management is analogous to healthcare, in a sense. Imagine if you could identify all the smokers in a population. Heaton asks, &ldquo;Would you want to insure them at the same rate, with the same premiums that you are insuring a healthier portion of the population?&rdquo; Heaton, as many others posed that question, says probably not. &ldquo;What we&rsquo;re considering here is that we finally have data that allows us to ask the same question for parts of land,&rdquo; Heaton says. &ldquo;We don&rsquo;t want to invest the same resources, either insurance resources from a taxpayer or actual farm input from a farmer, on areas of land that are not going to respond, not going to be profitable, not going to produce grain, etc.&rdquo; Miscanthus &times; giganteus, the sterile type of miscanthus UI and ISU are using, is an attractive option for a few reasons. It is unable to produce seed, so this helps to avoid unintended movement of the crop from planted areas. Further, the perennial can help manage poorly drained fields and underperforming areas. Miscanthus also helps mitigate soil and other nutrients from water. &ldquo;Planting dedicated energy crops is the single, most-effective measure you can take to help with nutrient runoff,&rdquo; Milster says. This is why researchers believe miscanthus makes sense in poorly drained soils, and might be a good option to plant in lower corn suitability rating (CSR) ground where a grower would typically lose money planting other commodities. Schomberg says medium-fertility soils around 40 to 70 CSR is the range being considered for miscanthus. Black and Schomberg believe growers interested in implementing miscanthus need to both understand and think about what the right conditions are for planting miscanthus. These test plots and subsequent research are helping reach that understanding. Establishing End Market &ldquo;Anyone with the long-term investment in their land knows, they need to take care of certain portions of it differently than other portions, it is a no-brainer for them,&rdquo; Heaton says. &ldquo;The challenge has always been the economics, and that challenge still exists.&rdquo; One problem is the lack of a crop insurance program for miscanthus. &ldquo;Banks don&rsquo;t understand miscanthus, so getting a loan for those early years is difficult,&rdquo; Heaton says. As an extension biomass specialist, Heaton believes in the future her work could include helping banks understand the return schedule for perennial crops. Right now the federal government&rsquo;s Biomass Crop Assistance Program recognizes these crops take time to mature, but not everyone can get BCAP subsidies, according to Heaton. Programs like BCAP can help with developing markets. Milster believes miscanthus can be competitive on $5 a bushel corn, especially on marginal land, for UI&rsquo;s end market. UI&rsquo;s main power plant currently cofires oat hulls with coal in two boilers. The oat hulls come from a partnership with Quaker Oats in Cedar Rapids, Iowa. Other ready-to-burn biomass streams under consideration, along with miscanthus, are expired corn seeds, poplar wood chips, switchgrass and reed canary grass. The university calculated prices for these options at the power plant. The prices are calculated to give an energy cost of $5 MMBtu, which is comparable to current coal costs. Miscanthus grass calculations showed that at 10 percent moisture content, it would have a heat value of 7,200 Btu per pound, yielding $72 per ton at $5 MMBtu and 113,000 tons equal to the 2020 goal. UI brings the market, removing the market risk. Other markets also exist or are emerging such as poultry bedding and feedstock for cellulosic ethanol production. &ldquo;I think the markets will come, and hopefully we can get out there and establish a protocol for growing it, and best management practices for growing it that will be replicated as the market expands,&rdquo; Milster says. Since the university&rsquo;s miscanthus market is in its early beginnings, &ldquo;we want to work very closely with a small number of farmers to make sure every story is a success story,&rdquo; Heaton says. Schomberg and Black hope that in the near future with results from their test plots they can help establish where the opportunities lie in diversifying predominantly corn and soybean Iowa cropland. &ldquo;Miscanthus, any new crop like this, will take a while to establish,&rdquo; Schomberg says. &ldquo;There will be early adopters, like we are, and then we&rsquo;ll get experience, become more efficient, become more cost-efficient. We will learn from mistakes we make so we can help people that follow in our footsteps into a better job.&rdquo; Author: Katie Fletcher Staff Writer, Biomass Magazine 701-738-4920 <a href="mailto:kfletcher@bbiinternational.com" target="_blank">kfletcher@bbiinternational.com</a>

ESTABLISHING ENERGY CROPS: Miscanthus Ã— giganteus for the University of Iowaâ€™s biomass project was planted with rhizomes last year using Repreve Renewables ACCU Yield System. 

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GENUINE INTEREST: As an employee at MidWestOne Bank in Iowa City, Dan Black no longer farms full-time, but his interest was piqued to plant after attending Iowa State Extension meetings on miscanthus. 

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GENERATING INTEREST: Public field days have been held on Dan Blackâ€™s farm. Repreve Renewables and the University of Iowa hosted a planting day event, and Iowa Learning Farmers hosted a field day after the miscanthus was planted. 

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END MARKET: The University of Iowaâ€™s main power plant currently cofires oat hulls with coal in two boilers generating 170,000 pounds an hour at 750 degrees Fahrenheit, 500-pound force per square inch gauge. 

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PIONEER PLANTER: Steve Schombergâ€™s plot was planted in the spring of 2013, and this picture features fall 2014 miscanthus growth. The plot will be harvested in late winter or early spring this year. 

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PERENNIAL POWER: Emily Heaton, Iowa State University biomass extension specialist, says miscanthus is the highest yielding perennial crop option per unit input in the upper Midwest. 

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COFIRING: Miscanthus is being tested in a densified pellet form for cofiring with coal in the University of Iowaâ€™s boilers. In a miscanthus pellet trial burn, overall, it demonstrated higher heat input potential by densifying grasses. 

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The University of Iowa is searching for the right biomass feedstock to cofire with coal at its power plant, and miscanthus is one option a few early adopters are testing. 

Pioneering Perennials in Iowa Soil

Is Washington capable of change? Historically (and understandably), the oil and gas lobby has been, well, all about oil and gas. However, there are some signs that this could be changing in favor of an &ldquo;all of the above&rdquo; policy that recognizes the role that renewable energy sources play. The signs of change were on full display last week at American Petroleum Institute&rsquo;s State of American Energy summit. At a well-attended lunch, the oil-and-gas association launched its annual report on the role of oil and gas in American energy. Only this time, the report devoted about 40 percent of its 50 pages (according to the news outlet Associations Now) to analysis of renewable energy sources and their future in American energy policy. At the invitation of API, Biomass Power Association contributed its own chapter to the report, along with other renewable energy trade associations. &ldquo;Rather than focus solely on the oil and natural gas industry, API this year is pleased to partner with organizations representing various energy sectors to highlight the contributions of each toward America&rsquo;s current and future economic well-being, and collectively stress the importance of adopting a lasting &lsquo;all of the above&rsquo; energy strategy,&rdquo; API&rsquo;s President and CEO, Jack Gerard, wrote in the introduction to the State of American Energy 2015 report. This was an interesting development for the biomass sector. Not only is it significant that biomass is recognized as one of the foremost, essential energy sources in a report like API&rsquo;s&mdash;a nod that may not have occurred as recently as a couple of years ago. But the report also shows that we stack up well when compared to other energy sources, both renewable and fossil. Interestingly, rather than simply competing with traditional energy sources, biomass can also benefit, particularly when the result is more affordable transportation fuels. Probably more than any other renewable form of energy, biomass benefits favorably from lower priced transportation fuels. The reason is that, unlike other renewables, biomass generators pay for fuel, and a significant component of that expense is transporting the fuel from forests and farms to an energy facility. In fact, recent studies have shown that for every $1.00 a gallon increase in diesel, the average cost of wood increases $4.20 a ton. By bringing cheaper natural gas into the market, the shale gas revolution introduced the prospect of converting diesel to compressed natural gas (CNG)&mdash;an attractive idea given that CNG, on a gasoline gallon equivalent, is $1.61. But to everyone&rsquo;s surprise, advances in natural gas exploration not only yield domestic, affordable natural gas, but significantly cheaper petroleum, at least for now. The dramatic drop in diesel has had an immediate and positive effect on the economics of biomass fuel deliveries. As an industry, we can&rsquo;t claim to be an entirely domestic, homegrown energy source if our fuel suppliers are forced to rely on foreign oil producers. Thankfully, diesel and natural gas used for transporting our fuels are now as homegrown as the electricity we produce. The success of the domestic oil and gas industry becomes our success. And that&rsquo;s a good thing. Author: Bob Cleaves President and CEO, Biomass Power Association <a href="http://www.biomasspowerassociation.com" target="_blank">www.biomasspowerassociation.com</a> <a href="mailto:bob@biomasspowerassociation.com" target="_blank">bob@biomasspowerassociation.com</a>

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The oil-and-gas association launched its annual report on the role of oil and gas in American energy. This time the report recognized renewable energy sources, which Cleaves says is an interesting development in the biomass sector.

Biomass, Oil and Gas

Valmet adds executive Bertel Karlstedt has been appointed president of the pulp and energy business line at Valmet Corp. He most recently served as president and CEO of Nordkalk Corp. and previously held positions at Valmet and Metso. The AVA Group adds industry expert The AVA Group, a Switzerland-based biotechnology company that offers solutions for the sustainable use of sewage and other biomass, has welcomed Stefan Krawielitzki to its team as an organic chemistry expert. Krawielitzki led Synthon for four years and previously served as head of research and development and deputy head of analytics at the Ehrenstorfer-Sch&auml;fers&rsquo; laboratory. He also recently served as manager of business development at Aurigon Life Science GmbH, where he was responsible for advising clients in the pharmaceutical and chemical industries. Gainesville Renewable Energy Center achieves FSC certification The Gainesville Renewable Energy Center, a 102.5-MW power facility located in Gainesville, Florida, has received certification from the Forest Stewardship Council, affirming that GREC&rsquo;s purchase procedures for its waste wood fuels conform to the FSC chain of custody standard. The certification assessment was conducted by SCS Global Services. Brookfield Renewable to acquire bioenergy capacity in Brazil Brookfield Renewable Energy Partners LP has announced an agreement to acquire a 488-MW multi-technology renewable portfolio in Brazil from Energisa S.A. that includes 175 MW of biomass capacity. The acquisition will be funded through available capital from Brookfield Renewable and its institutional partners. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the first quarter of this year. Siemens awarded reaccreditation from IACET The International Association for Continuing Education and Training has awarded reaccreditation status to Siemens. IACET authorized providers are the only organizations approved to offer IACET continuing education units. The accreditation period extends for five years, and includes all programs offered or created during that time. Amyris appoints chief financial officer Amyris Inc. has appointed Raffi Asadorian as the company&rsquo;s chief financial officer. Prior to joining Amyris, Asadorian served as chief financial officer at Unilabs, a private equity-owned medical diagnostics company based in Switzerland. He previously held a senior executive finance role at Barr Pharmaceuticals and was a partner at PricewaterhouseCoopers in its transactions services group. Paulo Diniz, who previously served as interim chief financial officer of Amyris, will transition to a new role as chairman of Amyris Brasil. Rentech names new leadership Rentech Inc. has announced that D. Hunt Ramsbottom has resigned as CEO and president of Rentech and CEO of the general partner of Rentech Nitrogen Partners LP to pursue other opportunities. Ramsbottom has also resigned as a member of the board of directors for both companies. Keith Forman, a member of Rentech Nitrogen&rsquo;s board since October 2011, has been appointed as CEO and president of Rentech and CEO of the general partner of Rentech Nitrogen. He has also joined the board of Rentech. Forman has a background in master limited partnerships. He previously served as chief financial officer of Crestwood Midstream Partners LP. He also served as senior vice president for El Paso Corp., and chief financial officer of GulfTerra Energy Partners LP. Forman currently serves on the board of Capital Product Partners LP. Enel adds biomass capacity to existing geothermal plant Enel Green Power has started construction at the Cornia 2 geothermal power plant in Castelnuovo Val di Cecina, Italy. The facility will use biomass to heat geothermal steam in order to increase the energy efficiency and electricity output of the geothermal cycle. The existing geothermal plant will be supplemented by a small plant powered with locally sourced virgin forest biomass. According to the company, 5 MW of capacity from biomass will be added to a geothermal plant that currently has an installed capacity of 13 MW. The geothermal plant&rsquo;s annual power output will be boosted by approximately 37 GWh. ASU professor recognized Several of Arizona State University&rsquo;s faculty members were recently appointed university professors, including Roy Curtiss, a professor in the School of Life Sciences and the director of the Centers for Infectious Diseases and Vaccinology and Microbial Genetic Engineering in the Biodesign Institute. His research uses microbial genetic manipulation to address problems of global concern. Some of his recent research emphasizes the design and construction of cyanobacterial strains to maximize production of biofuels and biofuel precursors. Drax appoints executive Drax Group plc has announced the appointment of Philip Cox as a nonexecutive director and chairman designate, effective Jan. 1. He will succeed Charles Berry as chairman following his previously announced retirement, scheduled for April. Cox previously served as CEO of International Power, where he led the growth and development of a substantial global power generation business. Fecon launches new website Fecon Inc. has launched a new website. New Features include a customizable bull hog rotor module that allows the user to build and display three different rotor options and nine different tooling options, then choose the combination that fits their application best. The new &ldquo;compare&rdquo; section shows specifications of the different tracked carriers and attachment products, side by side, helping the user find the exact model they are looking for. In addition, product lines have been broken down into more user friendly categories to help the customer quickly find the product information they need.&nbsp; Alaska CHP project to feature cofiring capability The University of Alaska-Fairbanks has selected Stanley Consultants to design a new combined heat and power (CHP) plant. The facility will use two circulating fluidized-bed boilers to provide up to 280,000 pounds per hour of steam to heat both the Fairbanks campus and produce up to 22 MW of electric power using a steam turbine. It will be located adjacent to the existing coal-fired Ben Atkinson Heat and Power Plant and work in conjunction with it. The facility will be fueled&nbsp; by coal and have the ability to utilize up to 15 percent biomass. The efficient new boilers will result in a marked decrease in regulated emissions including a significant drop in particulates. Cardia Bioplastics announces new patents Cardia Bioplastics Ltd. has secured patent protection for its Cardia Compostable, Biohybrid and PPC-starch resin and finished products from Japan, Australia, New Zealand and China patent and trademark offices. Seven new patents were granted during 2014 for Cardia&rsquo;s bioplastics resin formulations and production processes. These new patents expand Cardia Bioplastics growing intellectual property portfolio of 11 patent families, with 19 patents so far granted in U.S., Australia, China, Japan, New Zealand and South Africa. The patents protect the composition formulation and manufacturing process invented by Cardia&rsquo;s research and development team.&nbsp; Viridis subsidiary renews agreement with Ekman Viridis Energy Inc. has announced its subsidiary, Scotia Atlantic Biomass Co., has renewed its distribution agreement with Ekman &amp; Co AB. for an additional three-year period. Ekman has served as Scotia Atlantic&rsquo;s worldwide agent, to arrange short-term and multiyear offtake agreements for its industrial wood pellet production, with European power generators that cofire with wood pellets or have fully converted to biomass. The renewal agreement provides for volume discounts on commissions and fees and expanded volumes in Nova Scotia. Global Bioenergies produces biochemicals via fermentation Global Bioenergies has announced it succeeded in producing biosourced propylene by direct fermentation. According to the company, it created a proprietary prototype strain able to convert glucose into propylene at laboratory scale. The company also recently announced it succeeded in producing bio-sourced butadiene via direct fermentation. Schutte-Buffalo Hammermill under new ownership Martin Berardi has acquired Schutte-Buffalo Hammermill. Berardi, the incoming CEO, is a recent retiree from Moog Inc., where he served in a variety of roles over 34 years. Ownership of the company has transferred from Thomas Warne and James Guarino, who purchased the company in 2004 following a merger with Buffalo Hammermill Corp. Ceres adds board member Ceres Inc. has announced that Aflalo Guimaraes joined its board of directors. He succeeds Raymond Debbane, who retired from the board. Aflalo Guimaraes is a managing director of The Invus Group LLC, an affiliate of Artal Luxembourg S.A. Prior to joining Invus in 1998, he was a manager at Marakon Associates. He also previously worked in the U.S. Federal Reserve. GTI joins ABO The Algae Biomass Organization has announced the Gas Technology Institute has joined the organization as a new corporate member. Based in Des Plaines, Illinois, GTI is a leading research, development and training organization that has been addressing the nation&rsquo;s energy and environmental challenges by developing technology-based solutions for consumers, industry, and government for more than 70 years. The company has a long record of supporting the development and deployment of biomass conversion technologies for biofuels and other applications. NuState announces carbon credit capture application NuState Energy Holdings Inc. has developed a carbon credit capture application to enhance its portfolio of the Global Asset Tracking solution GPSTrax. This new product will validate, compile, certify and present for trade the carbon credits available from the clean energy projects the company has identified. These include projects in biomass, hydropower, solar and wind all across the globe.

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There are 328,672 acres of farmland in Johnson County, Iowa, and just 28 of those acres are now being actively managed for energy crop production.&nbsp; Compared to the 136,000 acres planted to corn, these 28 acres hardly seem worth a mention. Still, Katie Fletcher&rsquo;s feature, &ldquo;<a href="http://biomassmagazine.com/articles/11473/pioneering-perennials-in-iowa-soil">Pioneering Perennials in Iowa Soil</a>,&rdquo; clearly establishes that two of the state&rsquo;s public universities are working diligently to determine a pathway to these crop&rsquo;s economic viability. In a county with historical corn yields around 170 bushels per acre, it is fair to wonder why any farmer would deviate from a traditional corn/soybean rotation. Fletcher talked to Steve Schomberg, the first grower successfully recruited by the University of Iowa to grow miscanthus as the university looks to cofire intentionally grown biomass in its campus power station. &ldquo;I&rsquo;m always looking to diversify our portfolio of crops,&rdquo; he said. &ldquo;I think it has a great future, and as a landowner and farmer you don&rsquo;t want to put all of your eggs in one basket.&rdquo; While introducing miscanthus to his operation has diversified Schomberg&rsquo;s farm, the end markets available for the biomass tonnage he will harvest from the stand are anything but diversified. For now, the university is the only likely buyer, and because of this must lease Schomberg&rsquo;s acres and hire him to plant and care for the crop as it gets established. For dedicated energy crops to really gain momentum, more uses for the resultant biomass must continue to be identified and perfected. Reassuringly, research continues in nearly every sector of the biomass industry to make use of the yield advantages offered by dedicated energy crops. Fletcher&rsquo;s, &ldquo;<a href="http://biomassmagazine.com/articles/11468/grass-to-gas">Grass to Gas</a>,&rdquo; article outlines the University of Guelph&rsquo;s work on codigesting energy crops with manure in anaerobic digesters, and a page-18 contribution from Lake Superior State University&rsquo;s Greg Zimmerman outlines the research being done on the notion of pelletizing reed canary grass. In Zimmerman&rsquo;s case, reed canary grass is decidedly an unintentionally grown crop, and converting it into a source of thermal energy may serve as a means of funding its control. Finally, as I discovered writing my feature, &ldquo;<a href="http://biomassmagazine.com/articles/11466/dangerously-smart-farm-boys">Dangerously Smart Farm Boys</a>,&rdquo; implement and original equipment manufacturers (OEMs) aren&rsquo;t waiting for markets to develop. Quite simply, they can&rsquo;t. Instead, both OEMs I interviewed reported robust and active R&amp;D efforts in energy crop cultivation and harvest equipment so that when dozens of acres become tens of thousands, they&rsquo;ll be ready.

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Research continues in nearly every sector of the biomass industry to make use of the yield advantages offered by dedicated energy crops. The February issue highlights projects and R&D efforts across the gamut for developing end markets.

February 2015

Business Briefs

Business Briefs

Columns

Export Incentive Viable Option For Producers

“I Wish Someone Would Do Something About How Fat I Am”

2015 – The Year of E15

Time For a Reality Check On Computer Models

Hats Off to the American Farmer

More Volume, More Places

Low Oil Price Won't Put Brakes on Biomass Future

Data and Tools to Better Evaluate Biogas Potential

Legal Issues for Biomass Thermal Offtake Contracts

Handwriting on the Wall

Biomass, Oil and Gas

Taking Root

Featured

Regaining Ground

TotalFlex Capabilities

Opening Channels For Export

Beyond Boats To China

Dangerously Smart Farm Boys

Pioneering Perennials in Iowa Soil

Contributions

Swings in Corn Supply, Demand Impact Global Markets

Invasive Plants as Pellet Feedstock

Departments

Grass to Gas

February 2015.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Business Briefs

Columns

Export Incentive Viable Option For Producers

“I Wish Someone Would Do Something About How Fat I Am”

2015 – The Year of E15

Time For a Reality Check On Computer Models

Hats Off to the American Farmer

More Volume, More Places

Low Oil Price Won't Put Brakes on Biomass Future

Data and Tools to Better Evaluate Biogas Potential

Legal Issues for Biomass Thermal Offtake Contracts

Handwriting on the Wall

Biomass, Oil and Gas

Taking Root

Featured

Regaining Ground

TotalFlex Capabilities

Opening Channels For Export

Beyond Boats To China

Dangerously Smart Farm Boys

Pioneering Perennials in Iowa Soil

Contributions

Swings in Corn Supply, Demand Impact Global Markets

Invasive Plants as Pellet Feedstock

Departments

Grass to Gas

February 2015