After spending a busy summer at the Renewable Fuels Association, Bob Dinneen asked me to share and reflect on my experience in RFA&rsquo;s St. Louis office. I was very excited when I was given the chance to serve as an intern for RFA. Ethanol isn&rsquo;t new to me, but spending time at RFA really opened my eyes to all the work that goes on behind the scenes on a daily basis to support such a diverse and dynamic industry. My family operates a farm in southern Minnesota and has been directly involved in the ethanol industry for over 20 years.&nbsp; I have been lucky enough to see firsthand the growth in the ethanol industry and how it has benefited the farmers and the local economy in our area.&nbsp;&nbsp; I spent six years seasonally working for Heartland Corn Products in Winthrop, Minn., doing various jobs. During my time at Heartland I was able to see capacity expansions and adoption of new technology. Heartland started as a 10 MMgy facility in the mid-1990s and now produces more than 100 MMgy. This summer, I saw a different side of the industry. I assisted RFA&rsquo;s technical team on a number of projects, including analyzing data that served as the foundation for a report released in July. The report looked at how Big Oil restricts the sale of E85, E15 and other ethanol blends. I was excited to see that study referenced by a senator from my home state, Sen. Amy Klobuchar, as she requested a deeper investigation into the practices of oil companies. Coming from a farm background, I enjoyed analyzing weekly USDA reports for RFA and monitoring the progression of the corn crop this summer. I also helped develop educational materials on ethanol and small engines and worked with the communications staff on social media strategies. Getting the younger generations involved and educated about the role of renewable fuels is very important to the future success of our industry. I have had so many encounters with people my age who just don&rsquo;t know what ethanol is or what it does. That&rsquo;s why the outreach that RFA and others in the industry do through social media is so important. I also had several opportunities to get out of the office this summer. I attended the International Fuel Ethanol Workshop &amp; Expo in Indianapolis, an RFA board of directors meeting in Washington, D.C., and assisted with the RFA &ldquo;Free Fuel Happy Hour&rdquo; ethanol promotions at the Sturgis, South Dakota, motorcycle rally. Meeting general managers and board members from plants around the country at the RFA board meeting was a great experience and reminded me how passionate the people are who work in this industry.&nbsp; Sitting in on the board meeting really put in perspective all of the good that this organization does for its members and the industry as a whole.&nbsp; I knew at a young age that agriculture was the direction that I wanted to go with my life. Ethanol has helped ensure that I can return to the farm after college and pursue my dream. I have seen firsthand the positive impacts of ethanol on the agriculture industry in my area and the ethanol industry has been a big part of my life growing up. Each and every day of my internship at RFA has been a learning experience and has only motivated me more to continue on the career path that I have chosen to follow.
Author: Evan Ludowese Renewable Fuels Association&rsquo;s Summer Intern Renewable Fuels Association 202-289-3835

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Evan Ludowese, a summer intern for the Renewable Fuels Association, reflects with excitement on his experiences working at RFA's St. Louis office. 

RFA Internship Stokes Student's Enthusiasm    

After bringing views from the other side of the pond to readers of Ethanol Producer Magazine since September 2008, it is time for change. This will be my last column, and I&rsquo;m taking the opportunity to look back but also to look forward. Seven years ago the European biofuel community was in full swing, lobbying for what would become, in 2009, the first EU legislation to introduce a mandatory target for the use of biofuels. Even though we had seen a reasonable growth in capacity investments and output, European Union decision makers found that Europe should be more ambitious in getting renewables into the transport sector. The 10 percent target was hailed as a great success, but eventually it came with a high price to pay. It is a tough reality but the EU biofuel sector has underestimated by far the building of an unholy alliance&ndash;&ndash;between green and/or development nongovernmental organizations (NGOs), Big Food and Big Oil&ndash;&ndash;to attack the mandatory target. It is my strong belief that as long as biofuel was a voluntary measure, which it had been since 2003, oil, food and NGOs didn&rsquo;t really bother. But to make its use mandatory was a bridge too far for them. From 2009 onward, the industry became gradually aware it was sitting in a roller coaster, a big one like there are so many of in Disney World. From 2003 until 2010 it was all uphill. And then from 2010 onward, we came into a sort of spin. The indirect land use change spin. The biofuel roller coaster has shown us many vicious bends, curves and steep descending tracks, some of which so dangerous that one felt that derailing was imminent. In my many years of Brussels experience, I haven&rsquo;t seen many campaigns so mean and vicious as the one against biofuels. The bleakest moments were those when our industry was accused of committing a crime against humanity as if we were war criminals, depriving poor people from their food, as if we were speculating with food commodities, and grabbing away land in Africa, as if we were some sort of neo-colonialists. None of the accusations were never proven but still had effects. An industry once heralded as a great solution to addressing car emissions, reducing fossil fuel use and providing new opportunities for farmers was decapitated in less than four years, still six years away from the day that the mandate would take effect. This history deserves a closer analysis by an academic scholar to reveal what forces where really in the drivers seat to kill biofuels in Europe. Still, I feel that we have survived the perfect storm that was orchestrated against us. Unlike the Andrea Gail, a ship lost at sea in 1991, the biofuel industry will not disappear in the waves. The tide is changing to our benefit. It now has become crystal clear that accusations were founded on quicksand. As for the future, I am convinced that the role of ethanol as a motor fuel in Europe and globally will not diminish. On the contrary, ethanol is now a well-established fuel that has earned its place in the mix. There is an abundance of raw material, a strong technological improvement potential and an objective need to reduce our dependency on ever-more polluting and difficult-to-source fossil fuels. But, more than in other jurisdictions, perhaps Brazil excluded, Europe needs to introduce fair taxation for its energy products. As long as ethanol stays the most taxed of any fuels and diesel more favorably taxed than gasoline, ethanol&rsquo;s market share will not increase quickly. The other major challenge in the next five years is to get E10 accepted Europe-wide. Can we build an E10 network that will stretch beyond Finland, France and Germany? Adding major markets like the United Kingdom, Italy, Poland and Spain are essential in turning the big wheel on ethanol consumption in Europe. Hopefully, the past seven years of columns gave the EPM readership some insight into European biofuel issues. I often wrote about topics not that much different from what was dominating the policy and political biofuel agenda in the United States but always with that particular European flavor on how Europeans make decisions. The latter is often difficult to grasp for the non-European, but as a consolation, I can reveal that many Europeans don&rsquo;t understand it either. Still, I hope you have enjoyed reading my comments and views. It has been often fun and, equally often, a challenge, but always a pleasure. What I will probably miss most is no longer having this platform to criticize and nag about the too-numerous antibiofuel forces in Europe. Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org

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Robert Vierhout looks back on nearly a decade of columns written for EPM. European policy decisions may be difficult for the non-European to understand, he writes, but it's not much easier for Europeans to understand either. 

Recapping European  Policy Decision Making 

Green Plains Inc. has appointed Gene Edwards to its board of directors. Edwards served as executive vice president and chief development officer of Valero Energy Corp. until his retirement in April. He spent 32 years at Valero and was a key driver in the company&rsquo;s entry into the ethanol business.&nbsp; The Greenbrier Companies Inc. and Watco Companies LLC have announced a new entity that will create a world-class network of railcar repair shops. The 50/50 joint venture GBW Railcar Services LLC will own and operate Greenbrier&rsquo;s and Watco&rsquo;s respective railcar repair, refurbishment and maintenance businesses. Greenbrier now operates 23 locations and Watco currently operates 15 complementary sites. GBW&rsquo;s combined network will feature 14 tank car repair shops, 10 of which will be from Watco and four from Greenbrier. All will be certified by the Association of American Railroads as required by federal regulations.&nbsp; The Biotechnology Industry Organization has elected 19 of its directors to serve on its board executive committee for the 2014-&lsquo;15 term, including Jerry Flint, vice, president of biotech affairs and regulatory at DuPont. Flint will serve as BIO&rsquo;s food and agriculture section governing board chair. Adam Monroe, president of Novozymes North America, will serve as BIO&rsquo;s industrial and environmental section governing board chair. Christopher Standlee, executive president of institutional relationships and government affairs at Abengoa Bioenergy, will serve as BIO&rsquo;s industrial and environmental section governing board vice chair.&nbsp; The U.S. Patent and Trademark Office has issued Patent No. 8,728,783 to Proterro Inc., protecting its proprietary photobioreactor. Proterro&rsquo;s modular photobioreactor is made from off-the-shelf materials and integrates systems for optimizing light, water supply and sugar collection, providing for the cultivation of the company&rsquo;s patent-protected sugar-producing cyanobacteria and the harvest of a fermentation-ready sucrose stream. Proterro has also received its first international patent. Mexico Patent No. 310854 mirrors the U.S. patent issued to Proterro that protects Proterro&rsquo;s sucrose-producing cyanobacteria. The U.S. Grains Council has added several new ethanol plants as members. Flint Hills Resources Arthur LLC, a subsidiary of Koch Industries, recently joined the USGC. The 110 MMgy ethanol plant, located in Arthur, Iowa, began operations in 2008 and was acquired by Flint Hills Resources in 2013. In addition to ethanol, the facility produces an estimated 330,000 metric tons of distillers dried grains with solubles (DDGS) each year. Hastings,&nbsp; Nebraska-based Chief Ethanol Fuels Inc. also joined the USGC. The 70 MMgy ethanol plant began operations in 1984. In addition to ethanol, the facility produces DDGS, wet distillers grains, and corn oil. In addition, Heron Lake BioEnergy LLC has joined the USGC. The 59 MMgy plant located near Heron Lake, Minnesota., produces approximately 160,000 tons of DDGS each year. Lindsey Blakely has joined the U.S. Grains Council as membership and communications coordinator. Blakely will assist with the needs, planning and preparation of ongoing and future projects for those departments. Lucas Szabo has also joined the USGC as the new global strategies coordinator. He will assist the global strategies and trade policy and biotechnology departments, organize staff and member travel, prepare arrangements for visiting teams, and facilitate program planning, correspondence, reports, information management and contracting. Szabo previously worked as an export sales specialist for an export firm in Washington, D.C. Hopewell, Virginia-based Vireol Bio Energy LLC has joined Growth Energy. The 60 MMgy facility is the former home of Osage Bio Energy. Vireol purchased the facility last year and restarted the plant in May. U.S. Water Services Inc. has announced a merger with ChemCal Inc. ChemCal is one of the largest independent water treatment and equipment solution providers in the U.S. Established in 1985, the company serves the mid-southern U.S. The merger allows Minnesota-based U.S. Water to expand its footprint in mid-market industrial water treatment.&nbsp; Deinove has announced the development of strains of Deinococcus bacteria with especially high performance cellulolytic properties. Deinove&rsquo;s researchers have built a strain using its metabolic engineering platform capable of hydrolyzing cellulose as fast as the reference microorganism, Trichoderma reesei. The engineered Deinococcus has the ability to hydrolyze crystalline cellulose (paper) in approximately seven days. Genera Energy Inc. has hired Lucas Graham as feedstock production and supply manager. He will be responsible for providing agricultural and managerial leadership for the company&rsquo;s feedstock supply, including business strategies to optimize feedstock supply, planning and developing biomass feedstock supply projects and programs, and management of feedstock supply execution. Graham&rsquo;s responsibilities also include developing, implementing, and managing feedstock best practices for commercial energy crop and feedstock production, including land acquisition, establishment, management, harvesting, and site storage of biomass feedstocks. Prior to joining Genera, Graham worked as an agronomist and precision agriculture manager, and a seed treatment facility manager for Helena Chemical Co. Invista and LanzaTech have signed a research and development agreement focused on the development of gas-fermentation process technology for the production of industrial chemicals from carbon dioxide and hydrogen gas using proprietary Invista host organisms and metabolic pathways.

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Business Briefs

In November, all 435 members of Congress and 36 senators are up for re-election. You have undoubtedly seen the ads and received the mailings, postcards and phone calls. As overwhelming and often intrusive as all of these political campaigns can be, they also remind us of what politicians care about most this time of year. You, the voter. This presents us with a unique opportunity to join together to shape candidates&rsquo; legislative priorities and build a coalition of ethanol champions in Congress. As congressional candidates tour their districts asking for your vote, make sure you engage them and ask for their support on the issues you care about. Ask them where they stand on the renewable fuel standard. Ask them how they plan to support homegrown renewable fuels that create jobs, reduce our dangerous dependence on foreign oil and improve our environment. Ask them to advocate for consumer choice and savings at the pump. And, most importantly, let them know that if they will not commit to supporting our industry, you will not support them in their election or re-election efforts. For lack of a better term, these candidates are &ldquo;on the ropes,&rdquo; looking to secure votes and to let their constituents know that they can and will continue to deliver for their home districts. But in order for them to deliver on renewable fuels, you must make your voice heard. Even if you don&rsquo;t consider yourself to be a particularly &ldquo;political&rdquo; person, remember that this fight is personal. Stand up, express your concerns and request support for the policies that impact your job, your livelihood and the economic and energy security of this nation. Your voice, your story and your support can go further than you might imagine. Consider doing the following: 1. Attend a town hall meeting and ask a question. 2. Write a letter to the editor of your local newspaper. 3. Send an email to a Congressional candidate. 4. Spread the message on social media. 5. Make a phone call. 6. Set up a meeting and share your concerns in person. 7. Gather your fellow coworkers and colleagues in the ethanol industry and request a group meeting with all of the candidates from your district to discuss renewable fuels and where they stand on the issue. Make them face multiple voters and go on the record. 8. Host a meet-and-greet or a fundraiser for a candidate who is a steadfast supporter of our industry. 9. Donate to a candidate you know will represent the interests of the renewable fuels industry. Once you&rsquo;ve started the discussion, keep it going. Reach out to your friends, family and community. Inspire and empower people to become involved in the fight and make their voices heard as well. Consumers, farmers, plant employees, investors, vendors and community leaders all have great reasons to advocate for the renewable fuels industry. The importance of grassroots political activities like those listed above are immeasurable. Grassroots involvement takes the power away from Big Oil and their allies and places it in the hands of hardworking Americans who are taking action across the country. Politicians cannot ignore their voting constituents, especially at this critical time of year. The strength of our industry&rsquo;s voice at the local, state and national levels depends on you and your efforts. We have the numbers on our side, and it&rsquo;s time to rally the troops. There&rsquo;s a lot at stake in this battle, the future of our rural communities, nearly 400,000 American jobs that will never be outsourced, the quality of the air we breathe, the ability to chose at the pump and the energy security and national security of this great nation. We are fortunate to be involved in an industry that&rsquo;s doing a lot of good for a lot of people. Let&rsquo;s step up to the plate together, defend what we&rsquo;ve grown and win this fight. Author: Tom Buis CEO, Growth Energy 202-545-4000 tbuis@growthenergy.org

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With 435 members of Congress and 36 senators are up for re-election now is the perfect time to engage with politicians, writes Tom Buis. There are many ways to make your voice heard. 

Engage Politicians Before Midterm Elections

When I first started working for the American Coalition for Ethanol, I put a lot of miles on the flex-fuel vehicle (FFV), traveling to speak at ceremonies celebrating the construction and completion of ethanol plants. Remember those days? Our industry hasn&rsquo;t dug a lot of dirt or cut many ribbons lately, but ACE-member Quad County Corn Processors is bringing the grand opening ceremony back this month when they unveil a technology innovation to convert corn kernel fiber into cellulosic biofuel. Their timing couldn&rsquo;t be better as the future of the renewable fuel standard (RFS) hangs in the balance and our opponents have jumped on the fact that production cellulosic biofuel is behind schedule. Perhaps no other source of fuel has been so anticipated and under such tremendous scrutiny. Consider that some of the biggest and most profitable companies in the world (including oil companies) have tried to perfect the process of converting cellulose to biofuel. But at the end of the day, it wasn&rsquo;t an army of scientists employed by an oil company or venture capital tycoon who figured out how to commercialize cellulosic ethanol first, it was Quad County&rsquo;s plant engineer Travis Brotherson and CEO Delayne Johnson. Travis and Delayne are humble and quick to point out theirs is a team effort. While it may come as a surprise to outsiders, to ACE it makes perfect sense that the 35 employees and 353 farmer shareholders who reside in the Iowa counties of Cherokee, Buena Vista, Ida and Sac will be the first people on the planet to produce two renewable fuels&mdash;corn-starch ethanol and cellulosic biofuel&mdash;from the same feedstock at the same site. That&rsquo;s because the sharpest minds of this industry are the innovative men and women at the grassroots, working at and investing in locally owned ethanol plants that make up the majority of the members of ACE. To help promote the fact Quad County is making cellulosic ethanol technology history, ACE interviewed Travis. (Check out the videos at <a href="http://ethanol.org/people/video-gallery" target="_blank">www.ethanol.org/people/video-gallery</a>) In one of our videos, you&rsquo;ll hear Travis say &ldquo;taking the job as engineer at Quad County Corn Processors was one of the best decisions of my life because it gave my wife and I an opportunity to stay in our homeplace.&rdquo; Here&rsquo;s a guy who earned an aerospace degree and probably could have been living in sunny Florida helping NASA build rockets. What Delayne and the Quad County board of directors provided Travis and his wife, Kristi, were jobs in their homeplace and the freedom to innovate, take chances, and in this case, to make cellulosic ethanol history together (Kristi works as the chief financial officer of Quad County). When our opponents try to portray ethanol as something that&rsquo;ll ruin engines or starve children, our industry frequently responds by dribbling out the latest and greatest data point or statistic. What Travis and Delayne remind us is that ethanol is first and foremost about people, regular people who joined forces to commit their own money and time to rescue their families, neighbors, and communities by building locally owned businesses in their towns. It just so happens that in the case of Quad County, they also happened to crack the code to making cellulosic ethanol a commercial reality before other more well-financed and celebrated entities. Travis and Delayne are the most recent examples of the &ldquo;power by people&rdquo; theme ACE is promoting in our new campaign to help the public better appreciate that ethanol shouldn&rsquo;t just be valued based on the money it saves folks at the pump, but by the human good it delivers as well. And Quad County isn&rsquo;t the only ACE member to take innovative steps to bring back the groundbreaking and ribbon cutting ceremonies either. Adkins Energy, Patriot Renewable Fuels, Prairie Horizon Agri-Energy and East Kansas Agri-Energy are all in the process of breaking ground on or building projects to produce biodiesel or renewable diesel at their plants. As Travis concludes in one of our videos, &ldquo;the spirit of innovation is alive and well.&rdquo; I couldn&rsquo;t say it better myself. &nbsp; Author: Brian Jennings Executive Vice President American Coalition for Ethanol 605-334-3381 bjennings@ethanol.org

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Brian Jennings celebrates the success of Quad County Corn Processors, which unveiled a technology for converting corn fiber into cellulosic ethanol. The ethanol plants' engineer is part of ACE's "power by people" campaign. 

Spirit of Innovation Alive and Well

There is a side to ethanol that transcends politics. A side that seldom enters the discussion anymore but was one of the primary cornerstones of ethanol&rsquo;s development. The real good news story is the economic impact that ethanol production provides to small towns all across the breadbasket of America. A 50 MMgy ethanol plant will generate in ethanol and DDGS sales alone nearly $200 million per year in revenue. A vast majority of that revenue is spent within a 50-mile radius of the plant. Wages, energy, feedstock, local goods and services, taxes and a host of other services are just the tip of the iceberg when it comes to the local and regional distribution of revenue from an ethanol plant. I know many will say, we already know that, and I&rsquo;m sure you do, but I think it&rsquo;s important that from time to time we remind ourselves that ethanol isn&rsquo;t just about the renewable fuels service, rail cars, China exports, Brazil imports and food vs. fuel, but it&rsquo;s also about small towns and farms that dot every country road in America. A 50 MMgy ethanol plant will consume more than 18 million bushels of corn and often pay a premium over market price up to 5 cents per bushel. That creates an additional $900,000 in farm income. That additional farm income is spent on tractors, combines, trucks, equipment and it&rsquo;s mostly spent in a relatively small radius of the farm. Small towns that were limping along trying to keep main-street open have been revitalized. Millions of dollars pumped into the economy not just during the construction phase, but ongoing year after year, decade after decade. When we talk about trickle-down, there probably are few better examples than the money generated from an ethanol plant moving through the community. Ask any mayor of a small town with an ethanol plant and they will vigorously relate the impact the plant has had on the community and the region. When we talk about ethanol, we should always try to weave into the conversation the economic impact it creates. Of course the technical, political and environmental aspects of the industry will require our attention, but there&rsquo;s also a good news story that often goes untold. It&rsquo;s a vitally important part of our story and, frankly, it&rsquo;s a factor that has probably sustained this industry when Congress may have otherwise been inclined to turn its back on ethanol. So while I understand that I may be preaching to the choir, I would challenge everyone involved in this industry to take the time to fully understand the rural economic impacts of ethanol. We should all have that information at the ready and to be able to share when the opportunity presents itself. Perhaps it&rsquo;s time we start getting back to the basics of why we are here in the first place. That&rsquo;s the way I see it. Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com

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It's important to remind ourselves that ethanol is about  revitalizing small towns and farms in rural America, writes Mike Bryan. A 50 MMgy ethanol plant will generate nearly $200 million in yearly revenue in DDGS and ethanol sales alone. 

Getting Back to Basics

There is more corn being produced in the United States today than at any other time in history.&nbsp; Indeed, while this should be good news for the fuel ethanol industry, we haven&rsquo;t been able to benefit to the fullest extent possible. That&rsquo;s because our government has blocked the growth of the ethanol industry, while giving the &ldquo;keys to the kingdom&rdquo; to the petroleum industry. As we know, the petroleum industry produces poor quality fuels and then blames the higher toxic emissions on ethanol. A lesser known fact is that the U.S. EPA also makes ethanol look bad by controlling what fuels are tested and how they are blended. It&rsquo;s a brilliant move by both groups, but one we as an industry have to stand up against. We must push for change when it comes to the way fuels are blended and tested. Right now, certification fuel as defined by the EPA has half of the fine particulate toxic emissions compared to the fuel we buy at the local convenience store. The EPA contracted with the Coordinating Research Council and a Chevron fuel blending engineer to make a lower quality fuel for the blending of higher levels for ethanol in certain tests. This was done so the outcome would demonstrate higher emissions with higher ethanol blends. However, we know that by simply adding ethanol to gasoline, toxic emissions are reduced. This is a big deal because toxic emissions from gasoline are a growing health concern, especially for those living in urban areas. Low income families and children are often the most exposed to high traffic areas, just because of where they live. The primary cause of the toxic emissions is high-boiling aromatics, which are all some type of benzene unnecessarily added to gasoline. These aromatics produce literally hundreds of billions of invisible fine particulates that come out of your tailpipe for every mile driven. The particulates are so small that, when breathed into the lungs, they go directly into your bloodstream. Ethanol can be used to replace a large percentage of aromatics, providing a cleaner-burning fuel and increased octane. This is an area where we as an industry need to put our focus. Cleaning up the way gasoline is blended by using more ethanol will open up the marketplace while benefiting our air quality and our health. It&rsquo;s one more pathway to consider, given the constant hurdles the EPA continues to put in front of our industry. Between ignoring the ethanol and auto industry&rsquo;s recommendations for Tier 3, the proposed reduction in flex-fuel vehicle credits and the proposed cut to the 2014 renewable volume obligations for the renewable fuel standard, it is obvious the EPA is not interested in ethanol.&nbsp; It&rsquo;s a pattern we as an industry need to change; otherwise our business will plateau in the United States. Our opponents have laid their groundwork and are executing their strategy. We need to start executing ours and promote a clean high-octane strategy for today and the future. Author: Dave Vander Griend CEO, ICM Inc. DaveV@icminc.com 316-796-0900

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Blender Wizardly Targets Ethanol: Whoever controls the test blend, controls the test outcome.

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The industry must push for change in the way fuels are blended and tested, writes Dave Vander Griend. Growth of the ethanol industry, producers of a clean high-octane fuel, is being blocked by U.S. EPA policies. 

New Strategy for Clean, High-Octane Ethanol Needed

In June, I moderated a panel on ethanol plant capital planning and shareholder liquidity at the International Fuel Ethanol Workshop &amp; Expo. The speakers explained the actions ethanol plant boards can take to maximize plant value, boost shareholder confidence and achieve uninterrupted liquidity. Ethanol Producer Magazine Managing Editor Holly Jessen was in the room and listening intently. Her notes became the basis for this month&rsquo;s feature, <a href="http://www.ethanolproducer.com/articles/11321/looking-for-liquidity" target="_blank">&ldquo;Looking for Liquidity,&rdquo;</a> one of three pieces on finance in this issue. Jessen reports that the everyday Americans who own ethanol plant shares have the same hopes as other investors: They put money into a business with an expectation of a return. Regardless of margins, there are always some shareholders who want, or need, to cash out. The ability to grant those exit requests&mdash;to pay out when asked&mdash;is liquidity. Fortunately, there are companies like FNC AgStock LLC and AgStockTrade.com that make liquidity easier through online listings of ethanol plant shares that are for sale. If you&rsquo;re on the board of an LLC or any other nonstock-exchange listed ethanol plant, give this story a look.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; It&rsquo;s been a while since we&rsquo;ve looked at banking. Truth is, there hasn&rsquo;t been a lot of lending activity in our space since the downturn. Sometimes, however, a nonstory ends up being a good read. That&rsquo;s the case with our feature, <a href="http://www.ethanolproducer.com/articles/11320/banking-on-biofuels" target="_blank">&ldquo;Banking on Biofuels,&rdquo;</a> a long-awaited catch up with the Farm Credit System lenders who helped facilitate our industry&rsquo;s first build out. EPM Staff Writer Katie Fletcher jumps into the story with a simple question: With ethanol plants experiencing super-strong margins, are lenders lending? The answer is curious (hint: they never really stopped). Lenders are, in fact, engaged with the ethanol industry and actively looking at the capital projects that producers with strong balance sheets are bringing them. However, just because lenders are reengaged with ethanol doesn&rsquo;t mean they&rsquo;re willing to finance cellulosic projects. &ldquo;We like to be on the leading edge, but not the bleeding edge,&rdquo; one banker tells us, underpinning the need to get one big next-gen plant up and running.&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp; The last feature in this month&rsquo;s lineup is our cover story. It&rsquo;s an insightful piece accompanied by great photos. EPM Senior Editor Susanne Retka Schill shares the inside story on<a href="http://www.ethanolproducer.com/articles/11319/dakota-spirit-rising" target="_blank"> North Dakota&rsquo;s 65 MMgy Dakota Spirit AgEnergy LLC</a> project in the town of Spiritwood. The story is interesting for three reasons. First, it&rsquo;s the only U.S. ethanol plant to be built in nearly seven years. We explain why. Second, it is the first plant in the nation fully integrated with a coal-fired combined heat and power facility. And third, its construction was financed largely by foreign investors, which is remarkable.&nbsp; Two big takeaways this month: The U.S. ethanol industry is finding ways to get projects done, through both traditional and alternative investment routes. And, because producers are in great financial shape, the lenders who enabled them to break ground seven to 10 years ago are circling back to support the capital expenditures of ethanol&rsquo;s new era.
Author: Tom Bryan President &amp; Editor in Chief tbryan@bbiinternational.com

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Ethanol Producer Magazine's September issue, which has a project finance theme, features stories about shareholder liquidity, lenders and a North Dakota project to build a corn-ethanol plant largely financed by foreign investors, writes Tom Bryan. 

Oh, They're Good for It

A company that is constructing a new ethanol or other biofuel facility, or that is acquiring an existing facility, must identify compliance with the Process Safety Management standard as a primary aspect of its due diligence. Failure to require this documentation as part of the purchase of an existing facility, or as part of the contract to build or add on to a biofuel facility, could be a very costly oversight. Rebuilding a PSM program in a biofuel facility that is already operational is a daunting and expensive task. The PSM standard is by far the most frequently cited standard in the industry code, *NAICS 325193 (Ethyl Alcohol Manufacturing). It is also the most complicated Occupational Safety and Health Administration standard that exists. What does the PSM standard require? Process Safety Information The PSM program must include comprehensive documentation concerning the chemicals, technology and equipment used during the process. This documentation should include a block flow diagram or a process flow diagram, maximum inventory levels for chemicals used in the process, the system limits, including possible results if those limits are exceeded, and piping and instrument diagrams. Each of those documents just listed, require significant time and expense to prepare at the design stage. The preparation becomes much more costly for plants that have been operating without a compliant PSM program. Process Hazard Analysis This is described in 29 **CFR 1910.119, Appendix C as &ldquo;one of the most important elements of the process safety management program. PHA is an organized and systematic effort to identify and analyze the significance of potential hazards associated with the processing or handling of highly hazardous chemicals.&rdquo; Operating procedures and practices This section of the PSM should accurately reflect the process&rsquo;s standard operating procedures, work flow, required documentation, operating conditions, sampling requirements and health and safety requirements to be followed by the employees. Employee training A clearly defined training program must be established. Employees must be able to demonstrate their knowledge to an acceptable level. This should be documented through written and practical testing or some other mechanism. Contractors A screening process must be established to ensure that any contractors hired by the employer are qualified to perform their jobs under PSM. Contractors should be advised of the PSM plan and prohibited from making changes to the physical plant without verifying that such changes are consistent with the plan and then incorporated into the plan. (See Managing Change below.) Mechanical integrity Routine review of the facility&rsquo;s maintenance programs and schedules should be conducted to ensure the reliability of the equipment used in the process. The equipment to be monitored should include not only those directly in the process, but also those that are considered a primary or secondary line of defense (venting, scrubbers, alarms, sprinklers, overflow, etc.). Managing change The PSM standard defines change to include any modification in equipment, procedure, materials, or conditions, unless it&rsquo;s a &ldquo;replacement in kind.&rdquo; A change management team should study, document and approve all changes. Emergency preparedness and investigation of incidents Procedures must be established to inform employees of their responsibilities in the event of release of highly hazardous chemicals. Local emergency response agencies should be advised of hazards associated with the process and included in emergency planning. Employers must also develop a procedure to investigate any incident that occurs at their facility. The PSM standard applies to most biofuel facilities. Compliance with the standard will take time, expertise and resources. Contracts for construction of facilities should include a warranty that the plant and documents will be compliant with OSHA regulations including PSM. For those acquiring an existing facility, compliance with the above elements should impact the purchase price or be a condition of closing. Therefore, someone with PSM expertise should be included in the due diligence team. * North American Industry Classification System ** Code of Federal Regulations Author: Charles B. Palmer Michael Best &amp; Friedrich LLP 262-956-6518 cbpalmer@michaelbest.com.

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Companies constructing new biofuel plants or acquiring existing plants must not overlook Process Safety Management as part of the due diligence process, writes Charles B.  Palmer. Doing so could be a costly error. 

Building or Buying a Biofuel Plant? Think PSM 

Many eyes are focused on the ethanol plant rising from the prairie at Spiritwood, North Dakota. Highway drivers keep watch on progress on the plant just north of Interstate 94, and on the other side of the world, investors in China can watch as well on the live webcam streaming coverage of the work in progress on the website of Dakota Spirit AgEnergy LLC. Dakota Spirit is unique in many ways. It is the first corn ethanol plant to be built since the Energy Independence and Security Act of 2007 required new corn-based plants to meet a 20 percent greenhouse gas (GHG) reduction requirement&mdash;a process that took 19 months to get approved through the U.S. EPA. The 65 MMgy Dakota Spirit also is the first U.S. plant fully integrated with a coal-fired combined heat and power (CHP) plant. And, equally unique is its financing&mdash;about half came through a little-known immigration program that gives permanent green card status to foreigners making hefty investments in U.S. industries creating new jobs. Dakota Spirit has 150 foreign investors from 10 countries. Dakota Spirit AgEnergy is owned by Midwest AgEnergy Group, which also owns the 65 MMgy Blue Flint Ethanol LLC&nbsp; plant at Underwood, North Dakota. Great River Energy, a wholesale electric cooperative serving 28 Minnesota and Wisconsin distribution cooperatives, is the majority owner of the group. In addition to Great River&rsquo;s equity investment, there is a number of corporate and local farmer investors as well, explains Greg Ridderbusch, president of Midwest AgEnergy. Project development for the ethanol plant at Spiritwood followed a long, winding road. In 2006, the North Dakota governor&rsquo;s office announced plans for a $350 million Spiritwood Industrial Park that would include a 100 MMgy corn ethanol plant to be built by the Newman Group, along with an expansion of the Cargill Malt plant and a coal-fired CHP plant to be built by Great River Energy to power the campus. A little over a year later, in November 2007, the governor presided at the groundbreaking ceremony for Great River&rsquo;s 99 MW CHP plant. About the same time, Cargill Malt began its expansion. The recession, however, torpedoed the Newman Group&rsquo;s plans. But with a newly built CHP plant sitting idle due to the recession and the need for a second steam partner, Great River continued exploring the ethanol option. &ldquo;We seriously looked at cellulosic for a while,&rdquo; Ridderbusch recalls. But with the technology still developmental, and a feedstock study suggesting the proposed 20 MMgy plant would need to draw cellulosic feedstocks from as far as 100 miles, the planning returned to a corn-based facility. &ldquo;By that point, Blue Flint Ethanol had been successful,&rdquo; he continues. &ldquo;We said, we might bolt on cellulosic later, but we let&rsquo;s build Blue Flint No. 2.&rdquo;&nbsp; Early in 2011, Great River made the decision to move forward with Dakota Spirit AgEnergy. GHG Performance The first hurdle was to demonstrate Dakota Spirit would meet the renewable fuels standard (RFS) requirement for any new ethanol plants to reduce GHG emissions by at least 20 percent compared to the baseline. The feedstock portion of the Dakota Spirit life-cycle analysis was based on the existing corn ethanol pathway determined by EPA, but the CHP contribution to GHG reduction was unique. Co-location with a power plant providing steam to the ethanol plant is not unheard of, though not common. Iowa and South Dakota have one ethanol plant each co-located with a power plant. And, Dakota Spirit&rsquo;s sister plant, Blue Flint, is co-located with Great River&rsquo;s Coal Creek Station located along the Missouri River near Underwood. That power plant is a conventional 1,100 MW coal-fired plant sending steam to its neighbor the ethanol plant. Dakota Spirit will be using steam from Great River Energy&rsquo;s 99 MW CHP Spiritwood Station. What is unique about Dakota Spirit, explains Jeff Zueger, chief operating officer, is the full integration&mdash;Dakota Spirit doesn&rsquo;t have a boiler. &ldquo;We are taking their steam directly in our columns and our exchangers and sending the condensate back,&rdquo; he explains. &ldquo;It has inherent risk, but it is a more direct relationship. And, they&rsquo;re relying on us, using that condensate directly in the boiler.&rdquo; The power plant, he adds, does have backup natural gas boilers. The facilities are integrated in other ways, as well, such as the ethanol process water coming through the power plant, eliminating the need for water treatment at the ethanol plant. While Great River is generating power next door, the ethanol plant is connected to the grid, assuring electrical service during maintenance or outages. The CHP integration was critical for meeting the 20 percent GHG reduction requirement, although the benefits had to be clearly demonstrated. &ldquo;It took a team effort,&rdquo; Zueger says. &ldquo;It took us working with the engineering firm (Karges-Faulconbridge Inc.) and the expertise within Great River Energy figuring out how to run the turbine in optimal mode.&rdquo; Besides optimizing the process steam systems, the ethanol side needed additional levels of thermal efficiency to meet the GHG reduction goal. The letter from EPA approving the pathway came through in February 2013. Green Card Financing The final piece of the puzzle, not surprisingly, was financing. It was a very challenging time for project finance during the recession, Ridderbusch explains. &ldquo;But when we looked at international funds, this was a viable project&mdash;we were able to demonstrate the economics. And, there is a different motivator for EB-5 investors.&rdquo; Midwest AgEnergy worked with the CMB Export LLC Regional Center, Rock Island, Illinois, to utilize a program created by Congress to encourage job-creating foreign investment in communities affected by military base closures, which was later expanded to qualify other communities. The EB-5 program requires an immigrant investor to make an at-risk investment of $1 million, or $500,000 in some cases, that creates no fewer than 10 American jobs, thus the name Employment Based 5th Preference Visa (EB-5). The CMB Center did an economic study of the Midwest AgEnergy project to confirm about 80 direct jobs would be created at the power plant and ethanol plant, plus another 70 indirect jobs. &ldquo;We have, for this project, 150 foreign investors, from over 10 countries, most significantly China,&rdquo; Ridderbusch says. &ldquo;Each of them put $500,000 in&mdash;not directly to our project, but into a pooled investment fund managed by the CMB Center. The CMB Center is the lender into our project.&rdquo; In December, Midwest AgEnergy announced the $155 million financial package was completed and construction would now begin. They were pretty confident a few months earlier, however, as the official groundbreaking ceremonies had already been held in August. McGough Construction began work in earnest in January. The dead of winter in North Dakota may not seem to be an ideal time to begin construction, but for pile-driving it was. Even though subzero temperatures made it challenging to keep the pile driver firing, Zueger says, the frozen ground was easier to work on than if work had started in what turned out to be a very wet spring.&nbsp; &ldquo;Because of the soil conditions, piles had to be driven to support load bearing structures like the fermentation and grain tanks,&rdquo; Zueger explains. &ldquo;We have 18 miles of 9.5-inch, 90-foot long piles.&rdquo; Project planners also demonstrated foresight in preparing roadbeds with subgrade development including geomats and substantial amounts of gravel to be able to handle the loaded trucks, in spite of wet conditions.&nbsp;&nbsp;&nbsp; &ldquo;We are on the pathway to have the facility starting up by later winter and into production by the second quarter of next year,&rdquo; Ridderbusch says. At peak, there will be 20 contractors working on all the projects underway around the 40-acre ethanol plant site. Stutsman County is upgrading road access to the Spiritwood Energy Park and the local rural and city water systems are supplying water. Great River and the Jamestown Stutsman Development Corp. each invested land as the base for a rail loop capable of loading and unloading unit trains simultaneously. The hope is to attract other industries to the 500-acre energy park that will use the common track. The final leg in the multiple community partnerships was contributed by the state with a state-level loan guarantee. &ldquo;The community has been such a great partner with us,&rdquo; Ridderbusch says. Zueger is optimistic about the timing for Dakota Spirit, in spite of the talk of the blend wall and the ethanol industry being very close to the 15 billion gallon maximum for corn ethanol under the RFS. &ldquo;If you look through 2015, there are strong margin opportunities for ethanol,&rdquo; he says. &ldquo;We haven&rsquo;t seen that the entire history of operation at Blue Flint. We think we&rsquo;re coming on at a good time. We think markets will find opportunities for all the ethanol that is produced because it is so competitively priced as an energy source globally.&rdquo; &nbsp; Author: Susanne Retka Schill Senior Editor, Ethanol Producer Magazine 701-738-4922 sretkaschill@bbiinternational.com&nbsp;

Great River Energy's Spiritwood Station coal-fired CHP plant, just out of view at bottom left, will provide steam for the ethanol plant under construction. The second steam partner is Cargill Malt, located next to the power plant. 

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Greg Ridderbusch, left, began working on the proposed ethanol project for Great River Energy in 2006 and is now president of Midwest AgEnergy. Jeff Zueger, chief operating officer, will manage Dakota Spirit AgEnergy. 

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Sunny days were rare in the unusually wet spring as construction began in earnest. Extensive subgrade road preparation meant supply delivery and construction could proceed. 

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Two St. Paul, Minnesota-based companies are the design/build team on the project, Karges-Faulconbridge Inc. and McGough Construction Co. Inc. 

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Great River Energy's Spiritwood Station, left, will provide steam for the Cargill Malt plant, right, as well as the ethanol plant, now under construction behind the power station. The photo was taken in August 2013, at the groundbreaking. 

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EPM's archive indicates the last first-generation plants broke ground in 2008, including Bionol Clearfield (now Pennsylvania Grain Processing), Abengoa plants in Indiana and Illinois and Appomattox Bio Energy (now Vireol Bio-Energy). 

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The first corn ethanol plant to be built in more than five years is taking shape in North Dakota.

Dakota Spirit Rising

In good or bad times, there&rsquo;s always a certain number of shareholders looking for liquidity. Whether it&rsquo;s due to a death, divorce or some other need for cash, FNC AgStock LLC or AgStockTrade.com help ethanol plant shareholders by listing all stocks available for sale from participating nonstock-exchange listed or limited liability company (LLC) ethanol plants. Positive ethanol plant margins in recent months have pushed the price of ethanol plant shares up to levels not seen in years. In the second quarter this year,&nbsp; some prices have doubled from what was seen in the first quarter, says Jayson Menke, president and CEO of FNC Ag Stock. One example is Cardinal Ethanol LLC, one of 15 FNC-listed ethanol plants. In mid-July, the ethanol plant had two shares available at a price of $13,000 each, and the most recent sale of Cardinal Ethanol shares was for $12,500 per share. That&rsquo;s about double what the plant&rsquo;s shares were going for in January, at $5,780 to $6,200 per unit. &ldquo;There has been increased sale activity,&rdquo; Menke says, &ldquo;but, in general, for the 16 companies that we work with, we&rsquo;re not seeing as many sellers for all companies.&rdquo; Glacial Lakes Corn Processors, a company listed with Ag Stock Trade, had 15,000 shares sell for $1.51 per share on July 15, according to data posted at AgStockTrade.com. (The variation in share price is due to differences in pricing structure at different ethanol plants.) The plant&rsquo;s shares hit a high point on July 11, when 40,000 shares were available for sale at $1.79 per unit. The prices have made sellers happier, says Greg Wilson, president and CEO of Glacial Lakes, especially considering that shares were available for sale at 60 cents per share in the beginning of the year. The last time shares for the South Dakota-based ethanol producer were over $1 per share was January 2008. In comparison, in 2006, shares ranged from a high of $6.10 to a low of $3.73. &ldquo;Our market is fairly stable, as far as buyers and sellers,&rdquo; Wilson says. &ldquo;Sometimes it&rsquo;s a buyer&rsquo;s market, and sometimes it&rsquo;s a seller&rsquo;s market. But the transaction numbers fluctuate about 20 percent in a good or bad year.&rdquo; Wilson recalls attending meetings back in 2000, when developers were asking community members to become shareholders. The scenario played out with someone at the front of the room asking people to put up money in exchange for dividends paid to shareholders. &ldquo;There&rsquo;s always a guy at the back of the room and he raises his hand and he says, &lsquo;You know, this sounds like a good idea, I&rsquo;m all in support of it but what&rsquo;s my exit strategy?&rsquo;&rdquo; Wilson says. &ldquo;&rsquo;I&rsquo;m 60 years old, what I am going to do when I want to get out?&rsquo;&rdquo; The reality is, in most cases, emphasis was put on bringing shareholders in without any plan for liquidity for members. And, until enough members make that need known, that probably won&rsquo;t change, as the focus is on managing the plant, not managing the members, he said. Wilson and Menke both say there is opportunity for additional ethanol production facilities to sign up for their services. According to Wilson, all LLC ethanol plants should be offering members liquidity, which is required by the U.S. Internal Revenue Service. &ldquo;Every one of them that isn&rsquo;t on my trading system ought to be.&rdquo; Working with what the IRS terms a qualified matching service (QMS) has advantages. One big one is that ethanol producers can trade up to 10 percent of outstanding units in a taxable year without tax implications, Menke says. Without using a QMS, doing it internally, the limit is 2 percent. &ldquo;Within the IRS rules, it allows these companies the greatest amount of liquidity and it allows the companies to have transactions at arm&rsquo;s length,&rdquo; Menke says, adding that it protects companies from crossing a threshold and becoming publically traded entities and also from insider trading. &nbsp; Shareholder Value The topic of alternative trading systems came up at the International Fuel Ethanol Workshop &amp; Expo held in early June. Speakers addressed the topic of how companies can increase shareholder confidence by increasing plant value as well as providing liquidity opportunities. James Eiler of Eiler Capital Advisors LLC said he has talked to ethanol plant boards about providing minority shareholders opportunities for limited reduction on a periodic basis. He suggests boards allocate a certain amount of money to repurchase minority shareholder&rsquo;s shares at a certain percentage of book value, possibly 75 percent, on a quarterly basis. If requests to sell exceed the funds set aside for this, the company could conduct a lottery for that buyback, he said during his presentation. &ldquo;It creates a win-win,&rdquo; he said, adding that minority shareholders are able to get cash while the remaining unit holders have accretive value, with the buyback set at below market value. However, it&rsquo;s important that companies protect themselves by getting a third-party fairness opinion at least annually and consulting its tax advisor. Although it can be complicated, if it is done correctly, implementing a company buyback program can result in tax advantages for an LLC by reducing taxable income, said Donna Funk of Kennedy and Coe LLC. On the other hand, because the purchases are made after taxes, it can be a cash drain on a company. &ldquo;Which is why you would want to set parameters around how much you would want to do each quarter or on an annual basis,&rdquo; she said. Funk also mentioned employee stock ownership programs, or ESOPs. Although it&rsquo;s not commonly utilized in the ethanol industry, there are companies getting to the point of age, liquidity and other factors that could make it an option to consider. It can be very expensive to implement but some of the advantages include using pre-tax dollars for the program as well as a way to offer employees ownership in the plant to create a family type atmosphere as well as an effective incentive for best performance. While it&rsquo;s worth considering, it&rsquo;s not an option that will work for all companies. &ldquo;That&rsquo;s one of those that can be very complicated and would be something that you would want to look at in a lot more detail before saying we&rsquo;re just going to do this, because it doesn&rsquo;t fit for every situation,&rdquo; she said. &ldquo;But it is certainly something that can be utilized as a liquidity option for some of your investors and it can benefit your employees and also can be a retirement plan vehicle or tool.&rdquo; Funk also talked about an often overlooked method of selling shares, which is simply asking. &ldquo;I think sometimes we fall into the mentality of, well, nobody wants to buy units. Well, have we really asked or made known that there might be shares available for sale?&rdquo; she said. &ldquo;Ask around, be more proactive.&rdquo; In cases where someone has a block of shares larger than others want to buy it could be split with no impact on the overall value. Or, people with smaller numbers of shares can combine to create a larger block for someone interested in buying more shares. Scott McDermott of Ascendant Partners Inc. talked about liquidity in the context of positioning the company for the best future possible with strategic and capital planning. With healthy margins, ethanol producers need to think about preparing for future downturns. He also talked about making sure the company has a vision or a story to tell its investor base. &ldquo;All of these things help give shareholders confidence to stick with you in good times and bad,&rdquo; he said, adding that if the industry falls on hard times, lenders may or may not provide funds to keep the plant afloat. &ldquo;Then we&rsquo;ve got to go to shareholders,&rdquo; he said. There are many different strategies for success, McDermott said, adding that hope is not a strategy. &ldquo;If you are not working toward a plan for success, you are almost certainly planning for failure,&rdquo; he said. One tool ethanol plants can use as a performance metric is valuation. When he brings up assessing the value of the business some board members assume that means he&rsquo;s talking about selling it. But valuation is really just a method of keeping score. &ldquo;The best disciplined businesses out there use valuation to think about the return they are giving shareholders, and almost as a measuring stick on how they are doing as a business,&rdquo; he said. Some plants sell for four to six times company earnings before interest, taxes, depreciation and amortization (EBITDA) multiples. That means that if a 55 Mmgy facility with an average EBITDA of 15 cents can improve that number by 5 cents, the plant&rsquo;s valuation increases 33 percent or $11 to $17 million. &ldquo;Not only is the plant more valuable, but it is much better positioned to endure the inevitable market downturn,&rdquo; he said. Essentially, a company is falling behind if it isn&rsquo;t moving down the cost curve or up the EBITDA curve. That drives higher earnings, which translates to higher dividends and better stock value. McDermott has found it interesting to watch the ethanol industry evolving in this area. Boards used to think in terms of the annual budget cycle. Now, however, with nearly a decade or more of experience and with most debt paid off, a different way of thinking about the budget cycle is being utilized. &ldquo;We now begin to think about the capital cycle, the budget cycle, as a more strategic way of how to align the capital of the business to support some combination of my growth objectives or my positioning in the industry but also to give a return back to shareholders in dividends,&rdquo; he said.&nbsp; Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 hjessen@bbiinternational.com

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Alternative trading systems provide shareholders with an exit strategy and protect ethanol production companies from insider trading, among other benefits.

Looking For Liquidity

The ethanol industry has known both sunny and rainy days. Leery of that volatility, many lenders have tended to dip their toes in the water when the skies were clear&mdash;like during the ethanol plant construction heyday of 2004-&rsquo;06&mdash;only to get out when dark clouds emerged. As much as the boom years fueled, and were fueled by, lending exuberance, the 2008-&rsquo;09 downturn caused, and was caused by, an exodus of debt financing amid the financial crisis and resultant recession. Now, however, with the recession over and ethanol plants making money, when will the lending institutions that bankrolled ethanol&rsquo;s first major build-out return to finance its second? The answer, surprisingly, is that some big lenders never really left. &ldquo;This is what we do,&rdquo; says Tom Houser, vice president and lead relationship manager in agribusiness banking with CoBank. &ldquo;We are not just looking to get in and get out in the industry that is in the ups or the downs. We are committed to this in the long term as a bank and a system. We are very much a relationship lender, not a transactional lender.&rdquo; CoBank is considered one of four primary lenders in the traditional corn ethanol space. The others are AgStar Financial Services, AgCountry Farm Credit Services and Farm Credit Services of America. Jeff Kistner, president of Flag Leaf Financial Management Inc. and a former CoBank employee, says during 2005 and 2006 when the exuberance of the industry was peaking, many other financial institutions wanted to lend, and some ultimately did. &ldquo;The core group of lenders stepped to the sideline because of the exuberance,&rdquo; he says. The core lenders in the Farm Credit System avidly watched the industry from the sidelines, however, and because many took conservative approaches with their portfolios, they are still here today. Most of the others left. &ldquo;Many of the lenders that put their toe in the water have exited the industry,&rdquo; says Randy Aberle, senior vice president of agribusiness for AgCountry Farm Credit Services. There&rsquo;s a good chance that today&rsquo;s strong ethanol plant margins could revive lender interest in the space once again, however.&nbsp;&nbsp; Since fourth quarter 2013, the industry has been experiencing favorable weather, literally and figuratively. There has been with a strong export demand and positive plant margins due to record corn crops plus a decrease from the 2012 drought-induced record high corn price of $8 to around $4 at the end of July. &ldquo;What producers and lenders need to be doing right now is using the record margins to amortize their debt, and the one key success factor for all the major producers through the cycle&mdash;a decade of ethanol&mdash;is really having significant amounts of liquidity to weather the storm,&rdquo; says Chris Wu, partner at Carl Marks Advisory Group LLC. &ldquo;It&rsquo;s inevitable that margins will contract and those who have the stronger balance sheets survive.&rdquo; Lenders agree that maintaining a strong balance sheet is important. Currently, advisors and lenders in the space say profits are giving some producers more options than they&rsquo;ve had in a long time. &ldquo;They&rsquo;ve been able to pay down debt and avoid any imminent restructuring that was forced from certain lenders when margins weren&rsquo;t such a great time for these guys,&rdquo; says Scott Chabina, director with Carl Marks Advisory Group. &ldquo;Now they&rsquo;re looking at some capital projects they&rsquo;ve had on their shelves for anywhere between 18 to 24 months&mdash;looking at getting their own house in shape.&rdquo; Profit Purchases Many producers are, as Chabina says, optimizing operations and eyeing new technologies at their current facilities as no new corn ethanol plants are being built with the exception of Dakota Spirt AgEnergy Biorefinery near Spiritwood, North Dakota. Coproducts and new technologies are what profits are funding. &ldquo;You see ethanol producers getting pretty creative, and in a commodity business they have to be really, because it&rsquo;s a pennies game,&rdquo; Chabina says. &ldquo;As long as they can extract every bit of value out of the corn kernel they are going to do so.&rdquo; New coproducts are coming, but corn oil, DDGS and CO2 remain the big three revenue sidestreams. Corn oil is now produced at 80 to 90 percent of corn ethanol plants, and those that aren&rsquo;t extracting it have mostly ruled it out to maintain a niche distillers grains customer base. &ldquo;Corn oil projects have shown a pretty good return on investment and have been pretty widely accepted with most of the plants we&rsquo;ve been working with,&rdquo; says Jason Johnson, vice president and agribusiness team leader with AgStar. &ldquo;New technology is contributing to plant efficiency, and when there is economic payback we are financing that.&rdquo; Even smaller improvements to increase plant efficiency are having an impact. &ldquo;One of the interesting things is there has been production creep, about 1 to 2 percent with existing plants, just based off of the efficiencies they&rsquo;ve been able to obtain, without seeing major expansion or a new plant coming online,&rdquo; Johnson says. Lender Activity Before considering financing, lenders are looking at credit profiles. &ldquo;What we look at is if the existing ethanol plant has had a history of steady production, does it have an industry average yield&mdash;gallon per bushel&mdash;and does its debt profile follow the underwriting criteria as far as having additional capacity, mainly if it has an acceptable debt load,&rdquo; Houser says. &ldquo;Borrowers have to have the profile so they can show the collateral value and the repayment capacity the lenders are comfortable with.&rdquo; Lenders, who after the downturn added new agribusiness customers to their portfolios sparingly, have opened their doors more widely in the past 24 months. &ldquo;We are very much interested in establishing new relationships with companies, in particular refinancing plants that have been up and running,&rdquo; Houser says. The key word, though, is running. Cellulosic ethanol plants and other advanced biorefineries are an area the core lenders are not participating in yet. &ldquo;Lenders loan to existing ethanol plants, known technology, known market channels, known collateral value, but nothing at present on a standalone basis relative to cellulosic,&rdquo; Houser says. Aberle agrees. As a lender in the senior debt position, AgCountry usually waits for technology to be fully established and replicated multiple times before financing. &ldquo;We like to be on the leading edge, but not the bleeding edge,&rdquo; he says. Getting these projects up and running has not been easy. &ldquo;The reason cellulosic and advanced biofuels are having a hard time getting going is, when you look at ethanol price to the margins, right now, the best value on a future cash flow basis is in that 90 cents to $1.20 range and it takes $2 [per gallon] to build,&rdquo; Kistner says. &ldquo;You&rsquo;ll never get that return on investment back.&rdquo; Lending Risks Although they&rsquo;re not currently financing debt on advanced biofuels projects, many lenders are watching and waiting for the technology to develop. Uncertainty about the federal government&rsquo;s position on biofuels is, in no small part, contributing to lender hesitation in the space. &ldquo;Advanced biofuels are a very tricky industry, not only technologically, but also because the higher theme for them is, if you do have a cut to the RFS on conventional ethanol and the advanced side, the fuels that we are supposed to be building towards, it&rsquo;s difficult for people wanting to invest in a space where they may cut the demand, the future market,&rdquo; Chabina says. Larry Johnson, industry veteran and ethanol consultant, echoes Chabina&rsquo;s concern. By waiting to announce the renewable fuel standard&rsquo;s (RFS) 2014 renewable volume obligation (RVO) numbers, he says, the EPA is creating the opposite effect from its ostensible end goal. &ldquo;They said they would like to see more cellulose and advanced biofuels, and everyone agrees with that, except who is going to put money into a still relatively unproven area of cellulosic ethanol when the EPA might cut back on the amount?&rdquo; Kistner agrees that policy uncertainty, and the commodity risk it poses, is deterring lenders from engaging in biofuels today. The bogy, he says, is whether ethanol producers will continue to make financial decisions that yield the sort of liquidity that can supersede the hurdle of government uncertainty, which is out of everyone&rsquo;s hands.&nbsp;&nbsp; Ultimately lenders outside of the Farm Credit Service system are staying away, and those in the system are not lending to advanced biofuels yet. &ldquo;Some of them have been attracted to the industry&rsquo;s currently positive margins, but for many there are still some pretty negative connotations associated with the industry,&rdquo; says Jason Johnson. &ldquo;They have just decided to stay away from it from a policy standpoint at their banks, it is just not an area they are going to return to.&rdquo; Umbrellas at Hand Although the downturn that spurred those negative connotations was half a decade ago, the loss is still fresh in everyone&rsquo;s memory. The ethanol industry is no longer in its infancy, and its maturation challenge will be creating and maintaining value over time, says Kistner.&nbsp; The domestic ethanol market now is near or at a saturation point that could be temporary or long term, depending on the federal government&rsquo;s commitment to the RFS. The industry is producing close to the rate necessary to satisfy the renewable fuel volume of corn ethanol, which is 14.4 billion gallons this year. &ldquo;This is a record rate, next year the RFS caps out at 15 billion gallons from corn,&rdquo; Larry Johnson says. Although there is still uncertainty surrounding the RFS, in a commodity business uncertainty is certain. The core lenders, CoBank, AgStar, AgCountry and Farm Credit Services of America, understand this and have learned how to get comfortable lending to the industry. Plant margins are strong, lenders are engaged, and producers are investing in new technologies. The outlook is bright, but umbrellas are being kept at hand. &ldquo;It&rsquo;s just important to remember that in the sunny days that producers are enjoying now, you actually need to put the money away for a rainy day,&rdquo; Wu says. Author: Katie Fletcher Staff Writer, Ethanol Producer Magazine kfletcher@bbiinternational.com 701-738-4920 &nbsp;

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The industry's principal lenders helped give rise to today's fleet of ethanol plants. Will they help producers with the next stage? 

Banking on Biofuels

Anything from car batteries to tires to toys shows up in residential waste that arrives at the city of Edmonton&rsquo;s waste transfer station. The 25 full-time employees who work on site go to great lengths to make sure all compostable, recyclable and hazardous materials are removed from the waste stream before it reaches its final destination&mdash;Enerkem&rsquo;s cellulosic ethanol production facility, which is located right on site.
 Not only must all nonsuitable materials be separated and repurposed, but fuel arriving via conveyor in Enerkem&rsquo;s 14,000-square-foot storage facility must be appropriately sized and dried, according to contract specifications. &ldquo;When it arrives at our facility, it is already prepared and ready to use,&rdquo; explains Marie-Helene Labrie, senior vice president of government affairs and communications. &ldquo;Under contract, they provide us with 100,000 dry tons per year of nonrecyclable and noncompostable fuel, and we&rsquo;ll convert that into 38 million liters of ethanol per year annually, though methanol is our first product.&rdquo;
 From the storage facility, Enerkem&rsquo;s feeder system sends MSW into its gasifier, Labrie says. Seems simple enough, but the MSW has been rigorously combed through, separated, screened and shredded numerous times before it reaches that point.
 It all starts with the collection trucks, according to Gordon Derick, general supervisor of engineering and technical services. &ldquo;We have a recycle program for which we ask residents to put recyclables in a separate bag,&rdquo; he says. &ldquo;That doesn&rsquo;t always happen, but we do have a sort room.&rdquo;
 There, employees pull out any obvious recyclables or hazardous materials in the waste, such as dry acid batteries and oil filters. &ldquo;They pull out anything that might cause a problem with the rest of the processing equipment&mdash;long, stringy items and bulky items like tires on rims and engine parts,&rdquo; Derick says.
 Waste then continues onto two lines, which begin with 80-foot long, 12-foot diameter trommels, or rotating screens, which host spikes to slash open trash bags, as well as a series of different-sized holes to capture small organics. &ldquo;The first half of the trommel has a set of 2-inch holes&mdash;most organics fall out there, and we do get some nonorganic small stuff. The back half of the trommel is a set of 9-inch holes. The 9-inch material then goes over a 5-inch screen, and the stuff that&rsquo;s smaller than 5 inches goes to the composter along with the 2-inch, and the bigger stuff coming out of the end of the trommel is feed for the RDF facility.&rdquo;
 The material that arrives at the RDF site is mostly paper and plastics, though clothing and other composites that are a mixture of materials&mdash;running shoes and toys&mdash;occasionally makes its way in. First, it is sent past a large magnet equipped with a belt to pick up magnetic material and toss it out of the stream into a bin, to avoid any large pieces of metal going through the primary shredder, which serves two functions.&nbsp; &ldquo;In some cases, not all the bags get opened and emptied when it goes through the trommels, so the primary shredder tears those bags up pretty good to make sure,&rdquo; Derick says. &ldquo;The other purpose is to do a little more sizing, as the primary shredder is set at 6 inches.&rdquo;
 After the primary shredder, material is sent past another type of magnet to get any last bit of metals out, and then split between two large waste screens. &ldquo;One is set at about a 1-inch size&mdash;to get any remaining wet organics out,&rdquo; Derick says, reiterating that Enerkem&rsquo;s fuel specs are between 15 and 20 percent moisture. &ldquo;That&rsquo;s an issue for us,&rdquo; he admits. &ldquo;We are looking into drying options.&rdquo;
 Following the waste screens, the oversized material is sent to landfill and undersized materials to the composter. What remains in the stream is close to making its final journey to Enerkem&rsquo;s storage unit, but not before it enters a wind sifter. &ldquo;Basically, it&rsquo;s a density separation using air,&rdquo; Derick explains.&ldquo;The air is blown through what&rsquo;s called an air knife, a slit the width of the conveyor that uses air pressure to force the lighter materials up. They move to another conveyor, and heavier materials drop out and are routed to a bin where we can send those to landfill as well. That&rsquo;s to ensure things like glass, bricks and any other missed metals can be separated out. We don&rsquo;t want those going to Enerkem.&rdquo;
 Lighter material moves through an additional wind sifter and two Eddy current machines, which use polarity to remove aluminums and lighter metals that get through the density separation. &ldquo;It knocks those materials off the belt,&rdquo; Derick says. Finally, waste goes through two reshredders set at a 2-inch size, once again to meet Enerkem&rsquo;s fuel specs. Once it crosses weigh scales, the material is on its way to Enerkem&rsquo;s storage facility, via a Vecoplan-supplied Vecobelt, an 18-inch diameter, tubular conveyor that uses air to move product. &ldquo;A fan supplies air under the belt,&rdquo; Derick explains. &ldquo;Because it is running on air, there is a lot less wear and tear, and it can run a lot faster than a typical conveyor.&rdquo;
 The fuel arrives at the bunker system, which is comprised of seven different storage compartments to allow Enerkem to mix and match feedstock based on energy content or dryness.
 On challenges in properly prepping feedstock according to contract, Derick says deciding on the right shredding system proved to be difficult. &ldquo;We went through a few different iterations of design&mdash; we originally looked at high-speed shredders, but there are a number of challenges with those in terms of shredding potential explosive materials. There&rsquo;s dust in the waste, because it&rsquo;s got wood and paper, and with a high-speed shredder there is more of a chance, if a piece of metal goes through and you get a spark, of an explosion. We went with low-speed shredders to design for a nonhazardous facility. That saved us some money, otherwise we would have had to have the final shredders in a separate building.&rdquo;
 Overall, Derick says the project, which will divert 90 percent of Edmonton&rsquo;s waste from the landfill, has been very good. &ldquo;Vecoplan was great to work with, and we were able to get project done in specified timeline,&rdquo; he added. &ldquo;It all went well, we were on budget, and it was a good experience.&rdquo; Author: Anna Simet Managing Editor: Biomass Magazine <a href="mailto:asimet@bbiinternational.com">asimet@bbiinternational.com</a> 701-738-4961

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Municipal solid waste that undergoes Enerkem's thermochemical gasification process at its Edmonton, Alberta, plant has made a long and complicated journey before it is converted into liquid fuel.

Pepped to Fuel Prep

In June, the Algae Biomass Organization announced that after an extensive search, it had a new executive director. Matt Carr, formerly a managing director at the Biotechnology Industry Organization, is armed with a doctorate in atmospheric sciences from the University of Washington, a year of experience working as a congressional fellow for Sen. Tom Harkin, D-Iowa, and nine years experience with BIO. Carr offers the ABO the experienced voice in Washington they were hoping to find. While a longer break-in period may have been wished for, Carr went to work on important policy work the day he took the role, while trying to find time to call member companies, schedule appointments with legislators and get up to speed on the association&rsquo;s fast-approaching annual summit.
 What was the most valuable thing you learned from your nine years at BIO?
 Well, it was a learning process the entire time. I started at BIO after two years on the Hill, so I had some exposure to the political process. What I really learned at BIO was that Washington is a place where democracy is at work. And if you do the work, and you rally the voices of support behind your cause, you can bring about change.&nbsp;
 What we were able to do with the advanced biofuels community was bring national security and environmental interests together to create policy that helped launch the advanced biofuels industry. We established the renewable fuels standard, tax incentives and other programs that really helped launch an industry, despite the fact that there really wasn't a large direct constituency out there to advocate for those policies. We didn&rsquo;t yet have an industry or an army of people ready to march on Washington, but we brought together a coalition and made some pretty good things happen.
 What intrigued you about the opportunity with the Algae Biomass Organization?
 During my nine years at BIO, I managed to learn about a wide variety of technologies and a diverse set of business models for producing biofuels, biobased products and renewable chemicals. During that time, I really found the algae story to be a compelling one. Here is a technology that takes some of the most serious criticisms of current biofuels production, whether the food vs. fuel controversy or questions about fresh water use and land use, and turned those challenges on their heads. Algae has a great story to tell, and working on sustainability issues was what brought me to Washington. So when I saw the opportunity to represent the algae industry, I jumped at it.
 What have you spent your first hundred days as the ABO executive director doing?
 The first thing out of the gate is getting to know our member companies. For any trade associations, strength comes from members. I think we've got a really strong team here at the Algae Biomass Organization. It's been a great opportunity for me to get to know the technologies and how far our member companies have advanced toward commercialization.
 At the same time, I've been working hard to get out to Capitol Hill and federal agencies to reintroduce them to the ABO and to tell the algae story.
 How has that reintroduction gone?
 There's a solid core of congressional offices that know and appreciate what algae biomass can do. There's really still a vast universe out there that may have heard of algae, but really don't have a sense of how far algae biomass technology has come over the last decade. We think that there are wide interests that once they hear the algae story, they will become strong champions.
 For example, there are coal state members who are looking for ways to ensure that traditional fossil energy production can continue under a carbon regulation scheme, under the Clean Power Plan that the Obama administration has proposed. Algae is a solution for that. There are other members who are looking to move beyond the first generation of biofuels into a more sustainable model. Algae is a solution for that.
 There are members who are looking to supplement existing supplies of animal feed and human nutrition at a time when feed prices are going up. Algae is the solution for that. So, what we found in these meetings as we reach beyond the community of offices who are familiar with the technology, we have found tremendous enthusiasm.
 What are your goals as you look into the remainder of your first year in the role?
 Right at the top of my list is, having brought the organization headquarters here to Washington, we have a pressing policy issue that I met with pretty much on day one in the form of the Clean Power Plan rules proposed by the Obama administration. This rule making has the potential to really propel investments in algae projects if done right.
 Unfortunately, the initial proposed rules for both new and existing power plants really don't include algae technologies as compliance opportunities for power generators. The rule doesn&rsquo;t really talk about carbon capture and utilization, which is really what algae enables.&nbsp; It is the ability to take CO2 emissions that are pollutants today, capture them, feed the CO2 to algae and produce valuable products such as biofuels and other materials.
 Job number one on the policy front is for us to ensure that the U.S. EPA, which has proposed the rule, understands the opportunity from carbon capture and utilization and includes that as a compliance opportunity in the final rule.
 In addition to that policy goal, I'm looking forward to a strong Algae Biomass Summit in San Diego in September. We're looking forward to hosting some of the top officials from federal agencies with jurisdiction over the technology, as well as meeting researchers and algae biomass developers. Finally, I'm hoping to grow the membership of ABO. We've got a great team, but there is a whole universe of new and emerging technology developers out there, as well as partners throughout the value chain. This includes customers, engineering firms and brand owners, all of whom have an interest in seeing algae succeed and who I would like to help bring in to the organization to strengthen our voice in Washington.
 When you speak with policymakers, what is the first value of the algae industry you ask them to consider?
 I think of algae as a whole new generation of agriculture. I believe when we look back a generation from now we'll say, &ldquo;Thank goodness algae came along when it did.&rdquo; We were increasingly challenged in finding sources of energy and transportation fuel, the demand for food and feed was ever increasing while the population was growing, and fresh water resources were dwindling, which was making both food and energy production increasingly challenging. Algae addressed all of those challenges in a way that brought new economic opportunity to the country. It created jobs, cleaned our air and improved our national security.
 How do you distill the complexities of the algae industry into more palatable thinking and talking points for policymakers and their general public constituents?
 In its simplest form, the algae story is sort of the story of life on earth.&nbsp; When we are looking for solutions to global sustainability challenges, it makes sense to go back to our origins. In its simplest form, algae is also very much like the simplest and earliest forms of agriculture. It's allowing nature&rsquo;s source of fuel for human and animal consumption, or for vehicles, to thrive in controlled environments, and continually designing better ways of doing that. That might be in open ponds, raceways or complex photobioreactors, or simply just trying to maximize algae's natural abilities to convert carbon dioxide and sunlight into energy.
&nbsp;
 What is the most important policy objective for the ABO right now?
 Like any emerging technology, what algae biomass developers need is stable and supportive policy to drive private investment in the technology. From my perspective, the most important thing that we can do is send the signal to investors that algae has a role to play in reducing greenhouse gases and addressing the climate change challenge.
 The EPA Clean Power rules are front and center on that question, and so we have to get those rules right. There is a number of other policies including the renewable fuel standard, tax policies, and support from the defense department that can complement that policy, but unless we get that right, our job in competing for scarce, private capital becomes so much more challenging.
 Does advocating for emerging industries present unique challenges in Washington, D.C., that well-established industries don&rsquo;t confront?
 We do have a unique challenge as an emerging industry, and that is for us to harness the community of voices with an interest in algae&rsquo;s success, in a way that allows our story to be heard. That includes environmental NGOs, for example, who can appreciate the many sustainability benefits that come from algae. That includes utilities that could use algae carbon capture and utilization as part of their compliance with the federal carbon regulations. It also includes state governments that will see the economic opportunity that comes from developing the algae industry, as well as customers such as commercial airlines and others rallying their voices behind our small but important voice here in Washington. A longer version of this interview is available online at www.BiomassMagazine.com

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Matt Carr discusses his first 100 days as the Algae Biomass Organization executive director, experiences on the Hill, and introducing carbon capture and utilization to policymakers.

Algae's New Standard-Bearer

As Congress begins August recess, we can look back through the first eight months of the year and observe that not much at all got done in Washington, D.C., this year, let alone anything helpful to the advanced and cellulosic biofuels industry.&nbsp; In fact, it is easy to argue that this year has essentially been lost to our industry, on several levels.&nbsp;
 First, let's look at the tax code.&nbsp; Similar to 2012, we are now most of the way through the year and companies are functioning without the support of an operating tax credit. The alternative fuels mixture credit, or fuels credit, the biodiesel credit, the renewable diesel credit, and the second generation cellulosic credit all expired Dec. 31. Given production to date in the biomass-based diesel pool, which is more than a billion gallons in six months, clearly some think that the Congress will retroactively enact the biodiesel and renewable diesel credits.&nbsp; Remember, the last time these credits got renewed was in early January 2013.
 This time, the political stakes are higher and more confusing. We could possibly have a new party in control of both chambers of Congress and a resulting change in priorities in the Senate. Even if the Democrats hold the Senate, the new chairman of the Finance Committee, Sen. Ron Wyden, D-Ore., warned that this is the last time he would be extending these credits. At the same time, the outgoing chairman of the House Tax Committee has threatened not to extend any of the biofuels credits. These assertions beg the question of whether Congress, after the midterm elections, will choose to compromise and extend these credits that are so essential to our industry at this time. One theory is that if the Republicans win the Senate, they will want to clear the slate prior to taking over in 2015. Passing the extenders for a couple of years would allow them to move to a more comprehensive tax reform discussion. To the contrary, some argue that they will wait until they control both chambers so that they will not have to compromise on many of the provisions they find distasteful.&nbsp; Time will tell which theory holds true, but the industry&rsquo;s trade organizations are united in seeking to extend the current provisions this year.
 As for the renewable fuel standard (RFS), we are still waiting for the renewable volume obligation (RVO) mandates for 2014. Meanwhile, the U.S. EPA has extended the compliance period for the 2013 mandated number three times, in the latest instance indefinitely, so that the 2014 numbers can be finalized. At this time, it is unclear what the EPA's game plan is for the 2015 RVO numbers, which are due on Nov. 30. By carrying over the mandated numbers from 2013, which were under 900,000 gallons for the cellulosic sector and left the 2013 cellulosic renewable identification number (RIN) credit value unchanged, the cellulosic sector has had no support in terms of driving the market or sending a signal of success to the financial community.&nbsp;&nbsp;
 As for the approval of additional advanced and cellulosic pathways, once again it has not been a good year. While we did see the Pathways II rule finalized, 38 pending pathways still are outstanding. With many of these pending pathways waiting more than two years, it is difficult for those seeking financing to build commercial plants using their first-of-a-kind, innovative technologies. Currently, EPA is reviewing the pathways process, but it&rsquo;s likely this will not be completed until well after we finally fulfill the RVO mandates.&nbsp;
 In regard to specifics of the Pathways II rule, we had a major gain for renewable biogas, and, potentially, the ability to move to liquid transportation fuels in addition to liquid natural gas and compressed natural gas, if EPA is able to move forward on several pending pathways. However, there are still many feedstocks that need determinations to allow a full ramp-up of advanced and cellulosic biofuels production and a significant increase in the gallons, which would go toward meeting any RVO mandates.&nbsp; Furthermore, issues such as colocation must be resolved in order to realize the full potential of renewable crude as a feedstock, which already impacts several companies with operational facilities.&nbsp;
 In addition, the Quality Assurance Program was announced, but many of the day-to-day approval decisions are still awaiting someone to make a final decision on their outcome. In the Quality Assurance Program, we still have a &ldquo;buyer beware&rdquo; approach.&nbsp; However, the final program will still provide smaller companies the opportunity to engage a third party to review their processes and afford the potential purchasers of their RINs with more confidence and an affirmative defense should something go wrong. It is still in its early days, but the reduction in the complexity and the announcement should be extremely helpful to many smaller and midsized companies.&nbsp;
 Last but not least, the year has been full of efforts to open and repeal the RFS. Next year may well be the year Congress takes up consideration of the RFS legislatively. My guess is that should the Republicans take the Senate, it will be one of the first priorities of the new Congress.
 We can&rsquo;t afford another year like this one in 2015. Win, lose or draw, the advanced and cellulosic industries need the federal government to reaffirm its support for this sector and its importance to delivering environmentally sustainable fuels of the future and a balanced energy portfolio for America. Author: Michael McAdams President, Advanced Biofuels Association <a href="mailto:As Congress begins August recess, we can look back through the first eight months of the year and observe that not much at all got done in Washington, D.C., this year, let alone anything helpful to the advanced and cellulosic biofuels industry. In fact, it is easy to argue that this year has essentially been lost to our industry, on several levels. First, let's look at the tax code. Similar to 2012, we are now most of the way through the year and companies are functioning without the support of an operating tax credit. The alternative fuels mixture credit, or fuels credit, the biodiesel credit, the renewable diesel credit, and the second generation cellulosic credit all expired Dec. 31. Given production to date in the biomass-based diesel pool, which is more than a billion gallons in six months, clearly some think that the Congress will retroactively enact the biodiesel and renewable diesel credits. Remember, the last time these credits got renewed was in early January 2013. This time, the political stakes are higher and more confusing. We could possibly have a new party in control of both chambers of Congress and a resulting change in priorities in the Senate. Even if the Democrats hold the Senate, the new chairman of the Finance Committee, Sen. Ron Wyden, D-Ore., warned that this is the last time he would be extending these credits. At the same time, the outgoing chairman of the House Tax Committee has threatened not to extend any of the biofuels credits. These assertions beg the question of whether Congress, after the midterm elections, will choose to compromise and extend these credits that are so essential to our industry at this time. One theory is that if the Republicans win the Senate, they will want to clear the slate prior to taking over in 2015. Passing the extenders for a couple of years would allow them to move to a more comprehensive tax reform discussion. To the contrary, some argue that they will wait until they control both chambers so that they will not have to compromise on many of the provisions they find distasteful. Time will tell which theory holds true, but the industry&rsquo;s trade organizations are united in seeking to extend the current provisions this year. As for the renewable fuel standard (RFS), we are still waiting for the renewable volume obligation (RVO) mandates for 2014. Meanwhile, the U.S. EPA has extended the compliance period for the 2013 mandated number three times, in the latest instance indefinitely, so that the 2014 numbers can be finalized. At this time, it is unclear what the EPA's game plan is for the 2015 RVO numbers, which are due on Nov. 30. By carrying over the mandated numbers from 2013, which were under 900,000 gallons for the cellulosic sector and left the 2013 cellulosic renewable identification number (RIN) credit value unchanged, the cellulosic sector has had no support in terms of driving the market or sending a signal of success to the financial community. As for the approval of additional advanced and cellulosic pathways, once again it has not been a good year. While we did see the Pathways II rule finalized, 38 pending pathways still are outstanding. With many of these pending pathways waiting more than two years, it is difficult for those seeking financing to build commercial plants using their first-of-a-kind, innovative technologies. Currently, EPA is reviewing the pathways process, but it&rsquo;s likely this will not be completed until well after we finally fulfill the RVO mandates. In regard to specifics of the Pathways II rule, we had a major gain for renewable biogas, and, potentially, the ability to move to liquid transportation fuels in addition to liquid natural gas and compressed natural gas, if EPA is able to move forward on several pending pathways. However, there are still many feedstocks that need determinations to allow a full ramp-up of advanced and cellulosic biofuels production and a significant increase in the gallons, which would go toward meeting any RVO mandates. Furthermore, issues such as colocation must be resolved in order to realize the full potential of renewable crude as a feedstock, which already impacts several companies with operational facilities. In addition, the Quality Assurance Program was announced, but many of the day-to-day approval decisions are still awaiting someone to make a final decision on their outcome. In the Quality Assurance Program, we still have a &ldquo;buyer beware&rdquo; approach. However, the final program will still provide smaller companies the opportunity to engage a third party to review their processes and afford the potential purchasers of their RINs with more confidence and an affirmative defense should something go wrong. It is still in its early days, but the reduction in the complexity and the announcement should be extremely helpful to many smaller and midsized companies. Last but not least, the year has been full of efforts to open and repeal the RFS. Next year may well be the year Congress takes up consideration of the RFS legislatively. My guess is that should the Republicans take the Senate, it will be one of the first priorities of the new Congress. We can&rsquo;t afford another year like this one in 2015. Win, lose or draw, the advanced and cellulosic industries need the federal government to reaffirm its support for this sector and its importance to delivering environmentally sustainable fuels of the future and a balanced energy portfolio for America. Author: Michael McAdams President, Advanced Biofuels Association michael.mcadams@hklaw.com www.advancedbiofuelsassiciation.com">michael.mcadams@hklaw.com</a> <a href="http://www.advancedbiofuelsassiciation.com">www.advancedbiofuelsassiciation.com</a>

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We can't afford another year like this one in 2015. Win, lose or draw, the advanced and cellulosic industries need the federal government to reaffirm its support for this sector.

A Long, Tough Year for Advanced Biofuels

Sapphire Energy Inc. has announced that its algae-derived renewable crude project with Sinopec, China&rsquo;s state-owned oil and gas conglomerate, was selected for the U.S.-China EcoPartnerships Program. The project is one of six new U.S.-China partners welcom
ed into the flagship EcoPartnerships Program during a signing ceremony in Beijing on July 10. According to the U.S. Department of State, the EcoPartnerships Program promotes cooperation between U.S. and Chinese sub-national actors who work on clean energy, climate change, and environmental protection, to help address some of the biggest challenges facing our two countries.
 &ldquo;This collaboration between our two companies exemplifies the mutual goal of producing cleaner energy solutions for the U.S. and China,&rdquo; said Synthia Warner, CEO of Sapphire Energy. &ldquo;Together, we will demonstrate that crude oil from algae can be produced with favorable economics; that it can be integrated into existing fuels distribution networks; and that it will deliver substantial advantages for the reduction of CO2 emissions in both nations.&rdquo;

Sapphire Energy, Sinopec project selected  for EcoPartnerships program 

In late June, the U.S. Supreme Court declined to take up a challenge to the Ninth U.S. Circuit Court of Appeal&rsquo;s September 2013 ruling on California&rsquo;s Low Carbon Fuel Standard. That ruling found that the LCFS program is constitutional, overturning a prior ruling that it violates interstate commerce laws. A legal battle over the program has been ongoing for several years.
 The Renewable Fuels Association and Growth Energy were among the groups that petitioned the Supreme Court to review the lower court&rsquo;s decision. &ldquo;We are extremely disappointed that the Supreme Court has declined to review the Ninth Circuit&rsquo;s decision, despite the broad support for the petition&mdash;including 21 states. We will continue our efforts to protect the American biofuel industry and the national interest and will continue to ensure that all consumers have access to low-priced, American-made biofuels,&rdquo; said the RFA and Growth Energy in a joint statement.

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Supreme Court declines review of California's LCFS

Community digesters are built with the intention of creating sustainability within surrounding communities by diverting food scraps and other green waste from landfills and converting it into biogas to create useful commodities like heat, electricity, fertilizers and transportation fuel. Much like humans, community digesters require a balanced diet to maintain health and maximize biogas production.
 AD is commonly used at wastewater treatment plants and dairy and swine farms across the nation. While these facilities use wastewater or manure as a feedstock, adding food and organic green waste to the substrate menu is trending. New digesters are taking in a whole new, eclectic assortment of feedstocks that necessitate a balance of nutrients for optimal biogas production.
 &ldquo;Essentially we are feeding a stomach, a very large one, but we are feeding a stomach nonetheless,&rdquo; says Dean Foor, owner of JC-Biomethane, a biogas plant in Junction City, Oregon. &ldquo;In very simple terms, we are just trying to feed it a balanced diet.&rdquo;
 A digester&rsquo;s balanced diet is not so different than a human&rsquo;s. Community digesters take source-separated organics. Like humans, digesters don&rsquo;t want contaminants in their sustenance, which can and does happen in food waste streams due to human error in the source separation process. Common contaminants include plastic cutlery from cafeterias, glass, hard plastics and other nonbiodegradable components.
 Certain practices, policies and regulations are in place to guide suppliers in making the source-separated organic material as devoid of contaminants as possible, but capacity for them to enter the feedstock stream remains. Hardware and other preprocessing techniques provide the solution, and these tactics are used at some facilities to depackage consumer products.
 CleanWorld Partners, Harvest Power, Novi Energy and JC-Biomethane are just a few U.S. companies that are strategically located in areas that produce large quantities of organic waste.
 On the Menu
 &ldquo;We can take almost 100 different types of feedstocks,&rdquo; Bryan Heiss, plant manager of Novi Energy&rsquo;s Fremont Community Digester in Fremont, Michigan.&nbsp; FCD is a 100,000-ton-per-year, complete mix digester that sends 3 MW of electricity to the grid. A few of its suppliers include rejected batches of baby food from Gerber, high-strength effluent from Short&rsquo;s Brewing Company, McDonalds&rsquo; apple dippers from Peterson Farms, and about 5 percent of the waste comes from manure. The digester can receive whole skids of packaged products.
 CleanWorld&rsquo;s Sacramento BioDigester can also accept fully packaged consumer products. The facility, which is scaling up from 25 to 100 tons per day by the end of the year, is located near the South Area Transfer Station, which Atlas Disposal, a Sacramento-based waste hauler, utilizes as a fueling station of renewable compressed natural gas (CNG) to deliver waste to CleanWorld&rsquo;s facility. Campbell&rsquo;s soup, Hyatt Hotel and HP Hood, the maker of products like Muscle Milk, have been assisted by the facility. While the Sacramento digester may be getting its calcium from varying levels of muscle milk, JC-Biomethane, a 1.5 MW, 25,000-ton-per-year community digester feeds on fractions of ice cream from a local manufacturer. Sugar water from gummy bear production and waste from a biodiesel production facility are amongst other suppliers. The facility&rsquo;s largest supplier, however, is the Portland City Metro, bringing in 450 tons per week of commercial food waste.&nbsp;
 About twice the size of JC-Biomethane is Harvest Power&rsquo;s 50,000-ton food waste community digester near Orlando, Florida. Some waste from Disney World is brought to the facility, including the Ritz-Carlton and JW Marriott hotels at Grande Lakes Orlando.
 Although it appears these digesters can consume anything, there are limits. &ldquo;We take what we can get within guidelines,&rdquo; says Steve Tourigny, senior vice president at CleanWorld. &ldquo;We have a feedstock contract where we explicitly tell customers these are the types of things we absolutely want, these are the things we can tolerate and these are the things we prefer not to have in our feedstock&mdash;we work with them to improve the quality.&rdquo;
 State and federal policies can also impact what ends up at the facilities. One such example is the Metro Central Transfer Station, JC-Biomethane&rsquo;s largest supplier, which is shifting to only accepting food waste. This policy eliminates loads containing regular and waxed cardboard by November. &ldquo;We&rsquo;re not designed to take those kind of materials and do anything with them,&rdquo; Foor says. &ldquo;Making amendments to their acceptability standard is changing things for the market over the next year.&rdquo;
 Bringing in the Trash 
 Wastes are transported through trucking companies, and many try to look at ecological ways to truck in the waste. JC-Biomethane shares trucks with Lane Forest Products, a compost facility located adjacent to the digester. Trucks transport Lane products north and are filled with food waste on the return trip south.&nbsp;
 CleanWorld&rsquo;s Sacramento Biodigester is an example of a facility that converts biogas into RNG and CNG. This effort is part of CleanWorld&rsquo;s closed-loop strategy fueling 10 trucks in Atlas&rsquo; fleet with CNG engines, about 500 diesel gallon equivalents per day. When the facility is 100 tons per day, the biogas produced can fuel up to 40 trucks.
 Getting customers to seamlessly separate the waste picked up from these trucks is a challenge. &ldquo;With source-separated organics, the intent is for them to be all organics, maybe a little bit of paper, cardboard, napkins, some disposable knives and forks, however, the reality is it&rsquo;s only as good as the sorting that&rsquo;s done,&rdquo; says Tourigny. &ldquo;Whenever we have a load, we actually dump it onto a pad and do a visual inspection, because it is not unusual to have a car battery or a bicycle that&rsquo;s been thrown in the wrong bin.&rdquo;
 Preparing the Meal 
 The inevitability of imperfect waste streams has been addressed by development of preprocessing hardware and mechanisms. Although facilities can use a different piece of hardware to clean the waste streams, they all work in relatively the same way.
 JC-Biomethane was the first to employ the Swiss-made Hybag Bioseperator in the U.S. The bioseparator is a horizontally orientated cylinder that consists of 26 blades attached down&nbsp; a shaft in the middle, spinning at around 1,500 revolutions per minute. &ldquo;Essentially what they do is pulverize the food waste, so anything that can lose its shape or reduce its size will do so,&rdquo; Foor says.&nbsp;
 The pulverized material then gets pushed through a series of 5-milimeter screens. &ldquo;Anything that won&rsquo;t reduce its shape, like a stick or a fork or a piece of plastic, gets rejected,&rdquo; Foor says. &ldquo;It&rsquo;s blown out by high-volume air that is blowing through the unit, pushing the light out and the heavy like a fork or knife that don&rsquo;t get chopped up settle to the bottom and get carried out by a conveyor.&rdquo;
 Doda USA Inc., a subsidiary of Doda Snc in Italy, manufacturers another kind of bioseparator employed at CleanWorld Sacramento that depackages and removes contaminants. Trucks carrying the raw or packaged food waste and organic material dump it into a pit, and the fully automated system augurs it right into the bioseparator. &ldquo;Anything that isn&rsquo;t going into our tanks is taken to the local municipal urban recycling facility,&rdquo; Saville says.
 Scotts Equipment Turbo Separator at Harvest Power&rsquo;s facility in Florida works in a similar way as the Doda. The waste is dumped into a receiving pit, where a piece of equipment called a clamshell scoops up batches of the food waste and deposits them into the Turbo Separator, which smashes the material with rotating paddles. The organics fall through an underlying screen, and the contaminants are pushed to a chute with a screw auger that transfers them to a receiving bin to be cleaned.
 The Secret Recipe 
 Once the feedstock is contaminant free, the ingredients are ready to create the digester&rsquo;s meal. Often, the material is pumped into a separate mix tank where material is mixed and held before being fed to the digester. Sometimes, material enters a hydrolysis tank where the waste slurry is not only mixed, but brought up to the required temperature, either mesophilic (95 to 104 degrees Fahrenheit) or thermophilic (131 to 140 degrees F), to begin the digestion process.
 Each facility has a mix of feedstocks based on the ingredients at its disposal, and, in a sense, develops its own secret recipe to keep the AD process running smoothly. Monitoring of the process over multiple weeks can spur biogas producers to change the recipe of the blends, increasing fractions of various high-strength materials or lowering where needed.
 After contaminant removal in Harvest Power Florida&rsquo;s low solids AD process, &ldquo;the mix tank is used to mix some of the fat, oils and grease, food waste and the other types of materials and blend them together so you don&rsquo;t send slugs of one heavy material over another into the digesters,&rdquo; says Brandon Moffatt, senior vice president of energy for Harvest Power. &ldquo;It&rsquo;s trying to have the right mix and always trying to keep that in balance, so we&rsquo;re continuing to optimize our recipe and make sure we have balanced feeding to make sure the system is stable.&rdquo;
 JC-Biomethane&rsquo;s waste is pumped into a homogenization tank. Foor says changes to the digester&rsquo;s diet need to be made carefully. &ldquo;When we are adding high-strength waste water, such as fats, oils and greases, we do it in a very calculated manner,&rdquo; Foor says. &ldquo;We are keeping a very small percent of our overall feed coming from those very energy-dense fractions, because they have lots of energy they can produce lots of gas, but they can also change up our biology quite simply.&rdquo;
 Foor compares the balance to a human&rsquo;s diet. &ldquo;It&rsquo;s a little bit like eating too many potato chips. Eventually, your stomach starts telling you it&rsquo;s a bad idea.&rdquo;
 CleanWorld collects and analyzes feedstock data to understand the nutrients it contains to give feedback to the monitoring software. &ldquo;Every waste stream is analyzed and given an average profile of what it contains,&rdquo; Tourigny says.
 Novi Energy has a lab in-house. &ldquo;We test everything daily as far as the digester, the health of the digester, the product we have coming in,&rdquo; Heiss says. &ldquo;There is some type of recipe that we try to keep it at&mdash;we have a mix of 30 different types of feed that we are given on a daily basis to try to get the maximum amount of gas out of the digester.&rdquo; Author: Katie Fletcher Staff writer, Biomass Magazine <a href="mailto:kfletcher@bbiinternational.com">kfletcher@bbiinternational.com</a> 701-738-4920

SUBSTRATE GROOMING: Food waste is dropped onto a pad at CleanWorldâ€™s Sacramento Biodigester and the Gradall pushes it into the conveyor belt to ready it for the Doda that separates the food waste from the contaminants and plastics.

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FRONT-END TRANSPORTATION: After food scraps are dropped into a receiving pit, a clamshell bucket scoops and transports batches of food waste into the preprocessing equipment.

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While energy-rich and an ideal substrate for digesters, organic waste can be loaded with contaminants.

Balancing Digester Diets 

As the biogas sector grows, it is faced with a new challenge. Biogas systems convert decaying organic material into useable energy and a soil amendment. As more biogas systems come on line in jurisdictions where there are financial incentives for biogas, competition is increasing for organic material, the feedstock that provides these systems with their source of energy and provides a critical revenue stream.
 Securing a steady supply of organic material can be a challenge in jurisdictions where there is a thriving biogas sector, such as Ontario. Ontario&rsquo;s waste diversion policy does not address organic material other than leaf and yard waste, and since organic material can be sent to landfill at very low cost, less of this material is available as feedstock for anaerobic digestion (AD).
 In some landfills, methane from decaying organic material is captured and flared. A small percentage convert methane into useable energy. The greenhouse gas emissions impact of methane released from landfills is significant. Furthermore, organic material sent to landfill cannot be used to enhance agricultural soils, create green jobs or decrease our reliance on conventional fuels.
 Fortunately, policymakers are starting to understand the value of organic material, and are watching what&rsquo;s happening in the U.S. and some Canadian provinces. Momentum is building for restricting the movement of waste organic material. Biogas production provides multiple environmental and economic benefits, and helps enable policymakers to consider organic material as a resource instead of a waste material. Several organizations such as the American Biogas Council and the U.S. Composting Council have worked together to influence state decisionmaking. Progress in the U.S. includes:
 &bull; Connecticut was the first state to ban commercial food waste from landfills. In 2011, it passed a state law requiring generators of two or more tons of food waste per week to recycle the materials rather than sending them to a landfill if located within 20 miles of a suitable recycling facility. In 2013, the state passed a law following in Vermont&rsquo;s footsteps that expanded coverage of its landfill food waste ban to facilities generating a ton of food waste per week, starting in 2020.
 &bull; In Vermont, a 2012 law banned food waste from landfills. Like Connecticut, the law limited the ban to large generators located within 20 miles of a recycling facility. The Vermont law gradually expanded coverage in a series of steps. Only commercial generators of two tons of food waste per week or more were required to comply at first. By 2020, however, all food waste will be banned from Vermont landfills.
 &bull; Massachusetts moved to ban commercial food from landfills by July 2013. At that time, the Massachusetts Department of Environmental Protection proposed requiring commercial food waste generators, defined as those producing a ton or more per week, to donate or repurpose food instead of sending it to the landfill. Any waste that could not be donated would have to be used for composting, anaerobic digesting or animal feed. That ban took effect July 1.
 &bull; Rhode Island is the latest state to restrict the movement of organic material. In June, the government passed a law requiring large producers of food scrap to send it and other organic material to composting facilities and anaerobic digesters instead of to landfill. However, there will be a phase-in period while infrastructure that can process the waste is built. No food waste producer has to comply with the law until there is a composter or anaerobic digester within 15 miles able to accept that producer&rsquo;s material.
 In Canada, progress is more mixed.
 &bull; Nova Scotia banned compostable waste from landfill in 1998. It currently has the highest diversion rate in Canada, at 68 percent, and the lowest per-person waste disposal rate.&nbsp; Most municipalities have curbside organics collection, which is coupled with policies that include mandatory use of clear bags for garbage.
 &bull; While the British Columbia government has not placed restrictions on organic material disposal, some progressive municipalities have moved ahead with policies of their own. For example, Metro Vancouver will have a landfill ban on organics in place by 2015.
 &bull; In Quebec, a graduated waste diversion plan is in place, and organic material will be banned from landfills by 2020.
 Organizations that value organic material should speak up and voice their support for policies such as those listed here, or levies on landfilling organic material. Until progressive policies are in place, these valuable resources will end up in a place where their value can&rsquo;t be accessed, and the organic material won&rsquo;t contribute to lower GHG emissions, green jobs, improved soil and greater energy security and sustainability.
 Author: Stephanie Thorson Associate, Biogas Association 416-489-9388 <a href="mailto:sthorson@biogasassociation.com">sthorson@biogasassociation.com</a>

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As more systems come on line in jurisdictions where there are financial incentives for biogas, competition is increasing for organic material, the feedstock that provides these systems with their source of energy and provides a critical revenue strea

Organic Material Recycling Momentum Builds

Himark BioGas International is expanding its presence in the U.S. through a signed agreement with NEO Energy LLC for the design, construction and start-up of three integrated anaerobic digestion (AD) and fertilizer facilities to convert food waste into fertilizer and renewable energy. Two of the plants will be built in Massachusetts and one in Rhode Island.
 &ldquo;The new environmental laws require businesses to transfer their food waste to energy generating and composting facilities instead of sending them to landfills, so it provided a great economic opportunity for our client to set up the AD facilities,&rdquo; said Ali Aziz, marketing manager with Himark BioGas.
 Under the agreement, Himark BioGas will act as a technology licensor and owner&rsquo;s representative on behalf of NEO Energy during the design, construction and operation stages of the plants. The agreement also covers numerous other potential plants that NEO Energy could develop at a later time.

Himark to build  food waste digesters 

The U.S. EPA is taking action to reduce methane emissions from landfills. In late June, the agency published a proposed rule to update its air standards for new municipal solid waste (MSW) landfills. The same day, the EPA also published an advance notice of proposed rulemaking (ANPR) seeking public input on whether and how to update current emissions guidelines for existing landfills to further reduce their emissions, including methane. According to the EPA, the proposed rule would require certain landfills to capture additional landfill gas, which would reduce methane emissions and help reduce pollution that harms public health. The proposal is part of President Obama&rsquo;s Climate Action Plan&mdash;Strategy to Reduce Methane Emissions, which was released in March. Under the propped rule, certain new landfills would be required to capture two-thirds of their methane and air toxics emissions by 2023. That is a capture level 13 percent higher than that required by current rules. A 60-day comment period on both the proposed rule and ANPR opened July 17.

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EPA releases landfill methane reduction proposal 

Biomass energy encompasses a wide range of installations, from universities to saw mills to large-scale power plants. Unfortunately, with countless varying site specifics and fuel characteristics, there is no one-size-fits-all solution when it comes to moving and delivering fuel into a boiler. Screw, drag and belt conveyors are well-known designs and commonly applied throughout the industry.
Cost-effective and ideal for handling a wide range of materials from wood chips to sludge, screw conveyors provide enclosed transfers while moving materials horizontally, vertically or at an incline, and can deliver materials from one or more inlet points to one or more discharge points. Most economical for transferring fuel short distances and typically requiring more power than other conveyor types, a screw conveyor operates with rotating shafts attached to a longitudinal axis. &ldquo;As the shafts turn, the spiral flight is positioned at an angle such that material is forced down the length of the conveyor,&rdquo; explains Cliff Moss, vice president and director of material handling at ProcessBarron.
 A good choice for transporting unscreened or dusty biomass, or where space is limited, drag chain conveyors consist of chains that pull along the length of the conveyor by sprockets. &ldquo;Attached to the chain or chains are drag flights, that push, or in some cases enhance or support, the material to carry it along,&rdquo; Moss says, adding that there are some different conveying principles with drag conveyors, one of which uses flights to push wood along. Besides &ldquo;bulldozing,&rdquo; drag conveyors can be designed such that flights are placed every five or six feet to push material along, or possess many smaller flights that are placed closer together. &ldquo;The material sits atop them [flights], and because of the cohesion between them, you can pile the material really high&mdash;a foot&mdash;and it is carried along at the same speed as the chain. That&rsquo;s called en masse conveying.&rdquo;
 And nearly as simple as its title, belt conveyors are economical and reliable when needing to transfer biomass over long distances at high capacities. Today&rsquo;s designs vary from simple, open solutions that are recognized as the conventional belt design, to closed systems that use pressurized air to move fuel.
 For Bruks, its nontraditional belt conveyor, the tubulator, has been a great fit at biomass operations requiring long-distance conveying. Pellet plant Green Circle Bio Energy in Florida, Ameresco&rsquo;s biomass cogeneration plant in South Carolina, We Energies&rsquo; biomass power facility in Wisconsin and Mt. Poso Cogeneration in California are all utilizing the technology. &ldquo;Conventional belt conveyors run atop idlers or rollers, but in this case, the belt is actually supported by air,&rdquo; says Daniel Pace, sales engineer at Bruks. &ldquo;The air is blown by fans that are located roughly every 250 feet, and they elevate the belt.&nbsp; It&rsquo;s still driven by a head and tail pulley like a conventional conveyor, but it&rsquo;s a lower-horsepower way of doing it.&rdquo;
 A benefit of this design is that it is fully enclosed, alleviating dusting issues. &ldquo;These are really great when you need to span long distances,&rdquo; Pace adds. &ldquo;We&rsquo;ve had installations go over buildings, roads and bodies of water, and we have cable towers that support these conveyors and can reach as far as 250 feet per cable tower. This is great, opposed to having to have bents every 40 feet with standard conveyors.&rdquo;
 Pace says that the tubulator design is competitive to traditional belt designs, but better priced if dealing with longer distances.
 And yet another conveying innovation is being brought to the industry by Mayfran International, manufacturer of a shuffle drive conveyor that was originally designed for the metals industry. Paul Tamlin says he developed the design in 1988 for stamping plants that were all facing similar problems moving scrap metal, and began with a small system that moved a tray back and forth. &ldquo;This eliminated a lot of parts that existing systems had, so it increased reliability to customers,&rdquo; he says.
 The shuffle drive may be mounted on or located away from the system. Via a connecting rod, it moves the torsion element-supported trays, allowing for a gentle rocking motion that moves material forward.Though the scrap metal industry has kept the company busy, it&rsquo;s making a push into the biomass industry. &ldquo;For example, in Canada, a customer with a pelletizing plant&mdash;one that takes garbage from Toronto suburbs, sorts out recyclables and puts everything left into a pellet&mdash;was considering a system to convey pellets throughout the plant because of the gentle motion of our system. It doesn&rsquo;t cause the pellets to break down&mdash;there&rsquo;s no degradation, and there&rsquo;s no exposure to a belt.&rdquo;
 A fit for pellet plants, what about a biomass heating facilities? &ldquo;We feel it is [a good fit], in a feeder-type situation,&rdquo; Tamlin says. &ldquo;It can handle extremely high loads, where a belt conveyor cannot. We have advantages that way, and there is no place for raw material to get within the conveying mechanism itself, depending on the product type. With straw or cane fiber, those all have the opportunities to get caught within belts and pulleys and cause bearing problems and shut down.&nbsp; We describe it as a beltless conveying system.&rdquo;
 The largest unit size Mayfran offers today is 350 feet long&mdash;the largest installation has been over 1,000 feet&mdash;and maximum system speed is 40 feet per minute. &ldquo;For biomass that might be lower than what they&rsquo;re used to, but we can increase the tray size to increase the flow rate,&rdquo; he says. Mayfran has also designed a vertical conveyor to move product straight up or down in a spiral motion. &ldquo;Sometimes in biomass or pellet handling, they want to dry the product,&rdquo; Tamlin says, &ldquo;so it can also be used as a vertical cooling tower.&rdquo;
 The downside of such a system is that the upfront cost is more than other conveyor designs, he notes.&nbsp; &ldquo;It might be tougher getting into this industry because of that, but in the long run, there&rsquo;s no maintenance.&rdquo;
 Besides up-front cost, with the Mayfran shuffle conveyor and so many other options on the market, much has to be taken into consideration when determining the best set up for a respective operation.
 Considerations
 The material being handled is an obvious and essential project specific. &ldquo;The size, type, volumes, and distance fuel will be traveling should be evaluated,&rdquo; Moss says, as well as the importance of protection of the environment. &ldquo;Lots of plants don&rsquo;t like anything exposed to the atmosphere&mdash;say, dust, for plants near neighborhoods. When it&rsquo;s windy, dust can blow off the bark, and belt conveyors are dusty by nature anyway, so one might want to use a fully enclosed system in that case, which may be a drag conveyor.&nbsp; It&rsquo;s a lot more money, but you&rsquo;ll have a dust-free environment.&rdquo;
 That applies largely to universities, which are more sensitive to environmental causes. &ldquo;They won&rsquo;t want to use any conveyors that aren&rsquo;t completely enclosed, so traditional, standard belt conveyors don&rsquo;t work very well because dust can build up and cause a fire. There, using drag chain, enclosed conveyors or screw conveyors would work best; you&rsquo;ll want to keep&nbsp; any transport ports exposed under a vacuum-type atmosphere where dust is collected at exposure points and run into a bag house or filter.&rdquo;
 University and similar-sized systems are also very compact, so certain conveyors will not work at the high inclines required. &ldquo;It&rsquo;s difficult to go from the ground to 60 feet up in the air, 10 feet away, so you get into issues with selecting a system based on elevation,&rdquo; Moss says.
 Pace reiterates that notion. &ldquo;You definitely need to consider elevations you have to achieve,&rdquo; he says. &ldquo;If you&rsquo;re talking belt vs. chain, you can achieve elevations a lot easier with chain conveyors. When dealing with just biomass, if you have the real estate for a belt conveyor, you might want to go with that. A tubulator would work well there, but it likely comes down to pricing, as it&rsquo;s more competitive over longer distances.&rdquo;
 On the other hand, power plants require higher fuel volumes and woodyards are far away from the power house. &ldquo;Boilers are also bigger, so conveyors are longer by consequence of that,&rdquo; Moss says. &ldquo;They are less sensitive to environmental issues as well. Long conveyors are much more expensive, and you won&rsquo;t have the dust-tight, sexy drag conveyors that can be done at a university. Rather, they&rsquo;ll have belt conveyors that run great distances.&rdquo;
 If a facility is converting to a different fuel&mdash;from coal to biomass&mdash;there will be big differences with volumetric feed rates. &ldquo;It takes a lot more wood than coal,&rdquo; Moss says. &ldquo;Many times these conveyors can be reused, but overhauled to run at faster speeds to handle more volume.&rdquo;
 Coal is much denser than biomass, so belt width may need to be increased, Pace offers. &ldquo;You&rsquo;re definitely going to need more volume.&rdquo;
 While there&rsquo;s a good possibility a facility can use some of the same equipment, some will need modifications or replacement. &ldquo;Coal flows out of hoppers and silos very easily, whereas you can&rsquo;t just pile biomass in a coal bunker&mdash;it would not flow out the bottom,&rdquo; Moss says. &ldquo;That&rsquo;s where the size and type of material come into play. You might be able to cut the bottom off of the bunker and put in a drag or screw reclaimer to force the material out, and place the conveyor below the bunker. A belt conveyor or drag could be reused, but overhauled and sped up. You can definitely reuse or retrofit existing equipment without using a whole new system, and we&rsquo;ve done that over and over with a lot of coal to biomass conversions.&rdquo;
 For other potential scenarios, fuel size is yet another element of the conveyor puzzle&mdash;large pieces of fuel coming into an operation prior to being processed, or construction and demolition waste, won&rsquo;t work on a belt conveyor or standard screw. &ldquo;If it is big biomass that hasn&rsquo;t been ground up yet, you can&rsquo;t just plop it on a belt or screw conveyor, it&rsquo;ll jam it up,&rdquo; Moss says. &ldquo;If it&rsquo;s really fine, you can&rsquo;t use a belt conveyor because it&rsquo;ll blow everywhere. If it&rsquo;s hog fuel, your options are wide open.&rdquo;
 Finally, climate can play a surprisingly influential role in moving material.&nbsp; &ldquo;If you&rsquo;re burning wood pellets, you can&rsquo;t have those rained on, so the environment can play a big factor,&rdquo; Moss says.
 Intertwine moisture with harsh temperatures, and some conveyors may not be adequate for the job. &ldquo;Certain [conveyors] have limits of their degree of incline. If you get a frozen belt, it becomes like an ice hockey table, especially when conveying biomass into the boiler. If you&rsquo;re getting that material from a woodyard, you&rsquo;ll have frozen material and need conveyors that can handle it. It does change your conveying design criteria if it&rsquo;s in a frozen climate.&rdquo;
 In such a climate, with a belt design, an appropriate incline would max out at 15 degrees. On a drag, freezing isn&rsquo;t a problem, so 18 degrees would work, according to Moss. And inclines affect cost. &ldquo;If we have to get to 80 feet, we can get there a lot quicker on a belt of an incline on 18 degrees and save a lot of money,&rdquo; he says. &ldquo;For 14 degrees, a conveyor reaches further back, so that might increase the cost by 20 or 25 percent.&rdquo;
 No matter the project scenario, today&rsquo;s modern conveying technology suppliers are ready and eager to develop custom, innovative systems based on facility needs. &ldquo;Give us your worst case conveying situation in your plant,&rdquo; Tamlin adds. &ldquo;We&rsquo;ll focus on that to solve it.&rdquo; Author: Anna Simet Managing Editor, Biomass Magazine 701-738-4961 <a href="mailto:asimet@bbiinternational.com">asimet@bbiinternational.com</a>

SMOOTH MOVE: Belt conveyors are economical and reliable when needing to transfer biomass over long distances at high capacities and work well at locations that arenâ€™t sensitive to dusting concerns.

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TUBULAR SOLUTION: Bruksâ€™s tubulator conveyors are most economical when moving biomass long distances and can easily extend over barriers in the conveying path.

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EXCELLENT FOR ELEVATION: Drag chain conveyors are ideal conveying mechanisms when a change in elevation is required.

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MOVE OVER METAL: Based on the premise of shaking a tray, Mayfranâ€™s shuffle conveyor was originally designed to move scrap metal, but the company believes Itâ€™s an excellent fit for the biomass industry.

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NO SCREWING AROUND: Choosing the appropriate screw size and motor ensures that a screw conveyor system produces an even fuel flow.

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TUBULAR SOLUTION: The majority of conveyors installed at Green Circle Bio Energyâ€™s pellet manufacturing plant in Cottondale, Florida, are Bruks-supplied tubulator conveyors. Tubulator conveyors are air-supported and built as a closed system of stee

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The best fuel-conveying configuration varies by operation, and today's innovative manufacturers are ready to customize to optimize performance and meet challenges.

All the  Right  Moves

As the wood and pellet stove and boiler industry gets closer to facing new EPA regulations, there is a striking disconnect between industry expectations and the EPA&rsquo;s mandate. For industry, the concept of &ldquo;technology-forcing&rdquo; regulations is anathema, a clear example of a government agency running amok.&nbsp; For many air quality agencies, technology-forcing regulations are the only way to move forward.
 This won&rsquo;t be a technology-forcing rule, even though most stoves will likely be forced to change by 2020. For it to be technology-forcing, the technology needed to achieve the mandated emission standard would not yet exist on a commercial scale.&nbsp; However, some catalytic stoves on the market show that it&rsquo;s already possible to meet the strictest standard proposed by the EPA.
 The wood stove industry has issued hundreds of pages of detailed analysis showing more than 90 percent of stove models would not survive the regulations. However, forcing 90 percent of stoves to change is precisely the goal, not an unintended side effect. They want our country to move to a new generation of cleaner stoves.&nbsp;
 The Alliance for Green Heat agrees that 90 percent of stoves need redesigning. But unlike many air quality agencies and environmental groups, we are a pro-wood heating organization.&nbsp; We believe that the biomass stove and boiler industry can do this and still be profitable, while ensuring its own long-term survival and growth.
 Many stoves may only need minor redesigns. There are plenty of R&amp;D consultants who can help manufacturers if they don&rsquo;t have the internal capacity.&nbsp; Some models may have to be scrapped and redesigned entirely, a pretty expensive process for what are mostly small businesses that don&rsquo;t deal in large quantities. This is why the EPA proposed staggering the implementation of the new rules&mdash;so that companies have time to get cleaner models ready. Some manufacturers may go out of business, especially ones that only make traditional outdoor wood boilers and do not have the capacity to make cleaner units. Other manufacturers will benefit and profit from the rules.
 We agree with the industry that it&rsquo;s too soon to require all stoves to be certified with cordwood, and that such a change could probably not happen for three to five years.&nbsp; We also agree that regulations forcing industry to put catalysts on all stoves are not the answer. This worked for automobiles, but the technology is not yet ready for stoves.&nbsp;
 There is one fundamental question both industry and air quality agencies share: &ldquo;Is the EPA up to the task of regulating wood and pellet heaters?&rdquo;&nbsp;
 Northeastern air agencies have said that the compliance and enforcement office of the EPA is &ldquo;ineffective,&rdquo; and questioned the agency&rsquo;s ability to manage existing stove regulations, much less any new ones.&nbsp; They also cite the private, EPA-certified test labs as having a &ldquo;lack of capacity to independently conduct and certify results&rdquo; of emission tests, the linchpin of ascertaining whether a stove meets EPA requirements. The industry questions the fundamental capacity of the EPA to sufficiently understand and address a broad array of very technical issues.&nbsp;
 We share concerns of both air agencies and industry, but are aware that government agencies are often in this bind. In this case, they appear to be working toward a compromise of stakeholder interests. Their proposal is extremely lenient with cleaner appliances like pellet stoves, and pretty tough for unregulated wood stove and outdoor wood boiler manufacturers.&nbsp; We expect all major players will criticize the regulations for going too far, or not far enough. It&rsquo;s too early to tell if they will strike the right balance.
 The best context to understand this rulemaking comes from the 1990 regulations when EPA first regulated wood heaters. Yes, prices rose modestly. Yes, some manufacturers went out of business and the number of companies shrunk.&nbsp; Yes, millions of old, polluting stoves were grandfathered and are still there. But we ended up with a vibrant industry that makes some of the best and cleanest wood stoves in the world and helps millions of Americans affordably heat their homes using a renewable resource. Those regulations were a lifeline to an industry that was making many very polluting appliances and would have otherwise faced a more complex regulatory landscape at the state level.
 The 1990 regulations may have required a more drastic overhaul of stove designs than this one. Back then, the solution was secondary combustion technology.&nbsp; This time, there will likely be a variety of ways to meet stricter emissions standards, and some automation of air control may be one of the solutions.&nbsp; Ultimately, to get a new fleet of cleaner stoves deployed, we need an EPA that can put in the resources to adequately oversee the process.
 Author: John Ackerly President, Alliance for Green Heat <a href="mailto:jackerly@forgreeheat.org">jackerly@forgreeheat.org</a> 301-841-7755

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As the wood and pellet stove and boiler industry gets closer to facing new EPA regulations, there is a striking disconnect between industry expectations and the EPA's mandate. 

Can the EPA Do Its Job?

The White Earth Nation of the Minnesota Chippewa Tribe was recently issued a minor new source review (NSR) construction permit by the U.S. EPA to install a biomass power system for its Shooting Star Casino and Event Center in Mahnomen, Minnesota.
 The casino is located on the reservation of the White Earth Nation, which owns and operates the facility. Currently on site are two fuel oil-fired boilers and two propane-fired boilers that are used for space heating. The final minor NSR construction permit authorizes the construction of a new, 5 MMBtu/hr Solagen biomass-fired boiler, and establishes annual operating hour limitations on the new and existing boilers at the casino. The new biomass boiler will be used to provide heat to the hotel, casino and event center, while the existing four boilers will serve as a backup to the new biomass-fired boiler.
 Fuel for the facility must be wood chips from conifer or deciduous trees, according to permit data. Mike Triplett, economic development department planner for the White Earth Reservation Tribal Council, said it would likely come from the greater Bemidji, Park Rapids area, but no contracts have been made yet.

Minnesota Casino to install biomass boiler 

A new report published by the U.S. General Services Administration finds wood pellet boilers should be considered at all hot-water heated federal facilities where natural gas is unavailable, particularly in northern regions.
 The GSA&rsquo;s Green Proving Ground just released a study of the retrofit done at the Ketchikan Federal Building in Ketchikan, Alaska, that installed a state-of-the-art, pellet-fired biomass boiler. GPG commissioned researchers from the National Renewable Energy Laboratory to evaluate the efficiency, cost-effectiveness, and operational functionality of the 1-million Btu boiler.

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GSA report finds potential for pellet boilers in federal buildings 

A map of Loblolly Pine range in the southeastern U.S. illustrates that the western fifth of the resource is neatly cleaved from the rest by the Mississippi River. The area without Loblolly Pines forms an isthmus that narrows near Baton Rouge, Louisiana, where Drax Biomass, the U.S.-based pellet production subsidiary of the U.K.&rsquo;s Drax Group LLC, has positioned its production and distribution assets. The Mississippi River links all of it to the Atlantic trade routes, and ultimately, the boilers at Drax&rsquo;s power station.
 For now, Drax is building two pellet production facilities, one on each side of the river. The pellet facility east of the Mississippi is located near Gloster, straight north of Baton Rouge. West of the Mississippi, near the northern border of Louisiana and the town of Bastrop, is Drax&rsquo;s Morehouse production facility. Together, the two plants are expected to produce nearly 1 million metric tons of wood pellets annually. Recognizing that this volume will need a hub to flow through, Drax began to develop a storage and loading terminal in concert with the production facilities. That terminal is the Baton Rouge Transit Facility, located just across the river from downtown Baton Rouge in Port Allen. The facility is being built on property leased from the Port of Greater Baton Rouge, situated at the head of the deep water navigation channel maintained by the U.S. Army Corps of Engineers. The 45-foot deep channel can accommodate Panamax-sized vessels, and is connected to the Gulf Intracoastal Waterway, a 1000-mile barge corridor reaching from Texas to Florida.
 Construction of the facility began in 2013 by Lexington, Kentucky-based design and build firm<a href="http://www.gray.com"> Gray Construction</a>, and is expected to begin commercial operations in the first quarter of 2015. &ldquo;We haven&rsquo;t disclosed the capital cost of the port facility, just our U.S. investment as a whole, which is around &pound;225 million ($375 million) for two pellet plants and a port facility,&rdquo; says Ken Budreau, Drax senior vice president of development. &ldquo;The port investment is the smallest component of Drax&rsquo;s overall U.S. production and distribution effort,&rdquo; he continues.
 Connected to Rail and Road 
 While construction expenses of the port facility may not rival the expenses of the production facilities that will very soon be producing the pellets that flow through it, its efficient operation is vital to Drax&rsquo;s North American pellet supply chain success. Drax&rsquo;s Amite Bioenergy facility in Gloster is within practical truck range and expects to move its production to the Port Allen facility over the road. The Morehouse Bioenergy facility is nearly 200 miles away, and Drax intends to utilize an existing Union Pacific rail line to move finished product to the facility.
 &nbsp;Trucks typically move 25 tons of pellets per load; rail cars move 100 tons per car. The expected production volume from Amite Bioenergy will require 20,000 truck deliveries in a year, or nearly 80 trucks per day, under a Monday through Friday delivery schedule. The facility has been designed to handle and unload at a rate of 10 trucks per hour, with an expected truck-to-truck time of just over four minutes.
 In order to leverage the transportation advantage offered by the rail line that connects the facility with the Morehouse plant, the terminal was built with a rail unloader, which has been designed to unload four rail cars per hour. Working with Llloyd&rsquo;s Register Rail, Drax has designed and patented a rail car specifically engineered for pellet transport, but for now, the plan is to use converted grain wagons to move Morehouse&rsquo;s output.
 A Familiar Skyline
 Once delivered, inbound pellets must immediately be moved to covered storage. Like the power station in Drax, the Baton Rouge Transit Facility skyline is defined by the two storage domes that were built in the spring and summer of this year. Acknowledging that the storage domes link the two facilities visually, Budrea notes, &ldquo;The most obvious similarity between the two locations is the storage domes. We have four slightly larger storage domes at the Drax Power Station site in the U.K., compared to the two at the port, although the actual detail of the technology does differ.&rdquo;
 Capable of holding 40,000 tons each, storage capacity at the facility can accommodate roughly one month of production from the two facilities coming on line. Conveyors capable of moving 1,800 tons of pellets per hour will connect the rail and truck unloading buildings with the domes. The conveyors move pellets to the top of the domes and onto the waiting piles. When it&rsquo;s time to move pellets out of the storage dome and onto a waiting vessel, the pellets will gravity-feed to conveyors situated underneath the domes for final movement to the ship loader. If the pellets stop free flowing for any reason, each dome is equipped with a massive screw reclaimer, capable of moving the remaining pellets along at a rate of 400 tons per hour.
 Once inside the storage domes, careful attention must be paid to the pellets and the pile. &ldquo;The facility will use spark and heat detection together while employing strict operational procedures,&rdquo; Budreau says of the terminal&rsquo;s fire and explosion protection strategy. Fire and explosions are a constant concern for anyone producing or handling wood pellets, and fires have already occurred along the emerging pellet supply chain. As a result, Drax is utilizing multiple technologies to identify sparks and hot spots before they can become a real problem.
 The Final Leg
 The Port of Greater Baton Rouge boasts an impressive 400-acre deepwater complex capable of berthing five different vessels at once. Consequently, the port&rsquo;s robust existing business required Drax&rsquo;s pellet handling facility to be neatly tucked into existing bulk dry storage and liquid fuel infrastructure. The facility has been placed in the third of the deepwater complex that lies north of the Horace Wilkinson Bridge, which carries Interstate 10, towering over 175 feet above the river below. The storage domes are tucked between a sugar cane products warehouse and a fuel terminal tank farm.To load ships, pellets must travel along covered conveyors east toward the river, and finally, over two warehouses that sit alongside Cargo Dock No. 2, where the facility&rsquo;s mobile ship loader is being constructed. The loader, a hulking grey structure built upon rails, will traverse north and south along the quay and the vessels docked alongside it. Once complete, the last sequence of conveyors and the mobile shiploader will be capable of moving 1,200 metric tons of pellets per hour, loading a Panamax carrier in three days without ever having to reposition the vessel. Logistically, time is money, and the mobile shiploader introduced vital efficiencies into the facility&rsquo;s overall plan.
 One million tons of pellets is a significant volume to move. To date, only a small handful of ports have experienced moving that kind of pellet volume, and no ports can rightly claim to have prolonged experience in pellet handling and transport. Drax&rsquo;s entire conversion, however, hinges upon this and other Atlantic and Gulf Coast facilities seamlessly integrating pellet volumes into their operations. While clearly built to enable Drax to effectively move the volumes produced at its own facilities, the terminal has additional capacity. &ldquo;The facility is designed to handle volumes in excess of the output of our two pellets plants under construction,&rdquo; Budreau says.
 While the Drax team may have had an idea that transitioning away from coal inputs to biomass would have widespread impacts, the enormity of the logistical challenge could not have been fully understood. Yorkshire is a long way from the loblolly pine forests of the American South. Fiber harvested from this incredible resource will travel by truck, rail and ship, and efficiency all along this supply chain is paramount to the economic and environmental success of Drax&rsquo;s efforts. Once complete, the Baton Rouge Transit Facility will knit the entire system together, thus playing a vital role in Drax&rsquo;s bid to become the world&rsquo;s largest single-site producer of renewable, baseload power. Author: Tim Portz Executive Editor, Biomass Magazine <a href="mailto:tportz@bbiinternational.com">tportz@bbiinternational.com</a> 701-738-4969

COLOSSAL CONVEYANCE: The Port Allen facility ties three major means of pellet transportation together in one facility with its unique capability to receive pellets by rail, truck and barge, and then load them onto some of the largest ocean going vess

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LINKING RAIL, ROAD AND SEA: Draxâ€™s Port Allen pellet handling facility strategically links the western reaches of the massive loblolly pine inventory in the Southeast with Atlantic sea routes using a complex web of road, rail and barge assets. 

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WHEN GRAVITY FAILS: At the bottom of each of the storage domes is a massive screw reclaimer that will be brought into action once the pellets stop free flowing. This beefy piece of equipment can move 400 metric tons of pellets per hour and efficientl

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TRAVELING SHIP LOADER: With an eye on maximizing efficiency, the design team for the facility decided upon a traversing mobile ship loader that can fully load a 55,000 Panamax vessel in three days without requiring the vessel to reposition.

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With two production facilities nearing completion in Mississippi and Louisiana, the Baton Rouge Transit Facility is a vital link between the fiber resources of the lower Mississippi and a power station in North Yorkshire, England.

Drax's  Mississippi Queen

&ldquo;Future&rsquo;s So Bright I Gotta Wear Shades&hellip;&rdquo; (Timbuk 3, 1986)
 When asked this winter about ongoing incentive funding for pellet boiler installations, Efficiency Maine CEO Mike Stoddard challenged, &ldquo;If the program is a success, ongoing funding will be there.&rdquo; When asked to define success, Stoddard replied, &ldquo;If by the end of June you guys have done 50 installations, we&rsquo;ll be disappointed. If you&rsquo;ve done 100 installs with us, we&rsquo;ll consider that a real success.&rdquo;
 Efficiency Maine recently announced that as of June 30, it had completed financing for 214 pellet boiler installations. Stoddard also announced that his agency&rsquo;s budget for the program that finances these rebates will continue at the present level. While the more than $1 million spent to date on Maine&rsquo;s pellet boiler incentives (at $5,000 per unit) pale in comparison with the $27 million for biomass thermal funding just announced by New York State, these incentives are clearly working.
 Classic stimulus effects are becoming manifest. Iceland&rsquo;s Eimskip shipping container firm, which moved from Virginia to Maine last year, has a new customer as Portland&rsquo;s Interphase Energy LLC brings in Kedel pellet boilers from Denmark. The Heating the Northeast Conference in Portland this spring brought hundreds of visitors to the newly remodeled Westin Hotel. Maine&rsquo;s pellet manufacturers are now running multiple shifts. Incentives work, along with the inherent logic of heating Maine homes with a Maine-grown fuel at half the price of oil.
 The directors of the Finance Authority of Maine recently voted to certify Athens Energy LLC, a sister company of Maine Woods Pellet Co., to receive $12 million in state tax credits. These credits are encouragement for Athens to proceed with a $30 million investment to construct and equip a biomass electricity generator and to expand the pellet manufacturing facility, bringing 200 jobs here. The pellet industry is becoming a substantial Maine employer.
 As this proceeds, consumers are finally recognizing the viability of pellet heat. &ldquo;Especially in areas which are not going to get natural gas, our new customers are telling&nbsp; us &lsquo;we wish we had done this earlier,&rsquo;&rdquo; says an executive of one of the two pellet boiler firms located in Maine.&nbsp;
 Major pellet retailers are also getting it. &ldquo;Until last winter, the big box stores weren&rsquo;t sure we were for real,&rdquo; states one pellet manufacturing firm owner. &ldquo;Now we&rsquo;re getting orders we never had before.&rdquo;
 The Biomass Thermal Energy Council&rsquo;s &ldquo;Heating the Northeast&rdquo; Conference and Expo, held for five years in Manchester, N.H., and then in Saratoga Springs, N.Y., has found a level of public interest in Maine not previously experienced. In Portland, a steady stream of consumers coming in off the street augmented the show&rsquo;s traditional appeal to biomass industry audiences and vendors. This event will return to Portland in April 2015 and will add Friday evening and Saturday morning in order to accommodate the interested public.
 Obstacles to full-blown expansion remain, of course. The Maine Fuel Board regulations for installing pellet boilers are mired in requirements written prior to the appearance of our &ldquo;disruptive technology.&rdquo; To the board&rsquo;s great credit, it created a task force that has initiated reforms. A particularly uncooperative assistant attorney general recently sent this effort back to square one. But the installers will press forward, knowing that we are here to stay.
 And wearing shades.&nbsp; Author: Bill Bell &nbsp;Executive Director, Maine Pellet Fuels Association <a href="mailto:feedalliance@gwi.net">feedalliance@gwi.net</a> <a href="http://www.mainepelletheat.com">www.mainepelletheat.com</a>

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While the more than $1 million spent to date on Maine's pellet boiler incentives (at $5,000 per unit) pale in comparison with the $27 million for biomass thermal funding just announced by New York State, these incentives are clearly working.


Good Things in Store for Pellets

E-Pellets Group LLC recently acquired the Louisiana Pacific OSB mill in Athens, Georgia, and plans to convert it into a 450,000-metric-ton-per-year wood pellet production facility. Pellets produced at the plant will be exported to the European Union for use in power plants. The closed mill was purchased for $13 million and is expected to cost $107 million to convert. The project is expected to be operational by August 2015.
 The closed mill in Athens is not the only underperforming production facility E-Pellets has purchased in Georgia. Sega Biofuels LLC in Nahunta was purchased by the company to expand production volume to 150,000 metric tons. E-Pellets plans to continue this activity in the pellet industry. &ldquo;We see an opportunity to be the largest Georgia-based producer of pellets, taking advantage of the state resources,&rdquo; said Ben Easterlin, developer with the E-Pellets Group.

E-Pellets to expand operations in Georgia 

The European Union has filed its annual biofuels report with the USDA Foreign Agricultural Service&rsquo;s Global Agricultural Information Network, reporting that heat and power production from biomass could account for about 45 percent of renewables in 2020. This includes 37 percent of renewables use in the heating and cooling sector, and 8 percent of renewables use in electricity production.
 Wood pellet demand is expected to grow from 17.5 million metric tons last year to 21 million metric tons in 2015. Pellet imports are also expected to grow, from 6.05 million metric tons in 2013 to 8.5 million metric tons in 2015. According to the report, if trade flows remain consistent with current patterns, the U.S. could supply half of that import volume.
 Germany is currently the EU&rsquo;s top pellet producer, with 2.35 million metric tons expected to be manufactured this year. The U.K., however, is Europe&rsquo;s top pellet consumer, with an estimated 5 million metric tons expected to be consumed this year.

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EU pellet demand to continue increase 

Selecting the best system for storing woody biomass for power or heat generation is not a new challenge, but as renewable energy installations increase, so is interest in weighing different options. The effects wood material characteristics have on a pile in storage include absorption, heat buildup, dissipation and more. The number of fines in a respective fuel pile influences how much water is absorbed, how the pile heats up and how air flows through a pile.
 Isaac Slaven, applied engineering technology faculty in the School of Technology at Eastern Illinois University, says the easiest and best method to identify best storage practices is first-in, first-out (FIFO) inventory management for the same particle size and shape, material, and moisture content. &ldquo;This way, the material loss from fungal and bacterial infestation is reduced by not allowing as much time for these infestations to occur,&rdquo; he says. &ldquo;Additionally, any effect from contaminates is reduced. For a company that has a variety of materials, moisture contents, and particle sizes and shapes, known (or tested) rates of degradation based upon these factors may require a combined schedule to reduce overall material and financial loss can be optimally reduced. Furthermore, the seasonality of some materials (such as corn stover or switchgrass) may complicate this management.&rdquo;
 Since there are so many identifiable variables that can cause chip pile fire, it is difficult to single out only a few things, but Slaven says it is safe to say: Keep it as dry as feasible, keep it as free of contaminates as possible, and move it though inventory as quickly as possible. In a paper he wrote at Purdue University, &ldquo;Properties of Wood Waste Stored for Energy Production,&rdquo; Slaven notes that how chips deteriorate in wood chip piles is not completely understood, but the observed changes in the chips and chip piles are dry matter weight loss, temperature changes, moisture content, heat of combustion, and pH.&nbsp;
 There is no single, easy formula for designing an appropriate storage solution. While most fuel yards share many common elements, some tailoring is almost always required because of differences in fuel type, fuel quality, energy plant operating requirements and local harvesting methods/practices.&ldquo;Although most larger plants in North America rely on wood chips for fuel, smaller heat or CHP projects in the U.S. and a variety of plants in Europe rely on wood pellets,&rdquo; says Chris Lindsey, associate principal at the Antares Group, headquartered in Lanham, Maryland. &ldquo;Fuel yard considerations are very different between these fuels. Some plants rely on very custom yards because of specialty fuels, such as industrial processing residues, material recovered from construction and demolition streams, that they may be using in conjunction with clean wood chips.&rdquo;
 A Sound Strategy
 Industry insiders note that having a fuel storage and inventory management strategy can be a prerequisite to project financing, and therefore must be carefully considered even prior to final design. &ldquo;Deciding how large the storage should be is primarily, but not necessarily entirely, a factor of the size of the energy project being supplied and local climate conditions,&rdquo; Lindsey says. &ldquo;Plants usually shoot to have two to four weeks of fuel on hand to help get through periods when suppliers may have trouble delivering fuel in harsh or muddy weather. Smaller heating plants or smaller pellet fuelled facilities may play their supplies tighter, it just depends on how sensitive they are to interruptions due to temporary supply shortages.&rdquo;
 It is typical for larger plants to rely on piles that are actively managed with&nbsp; loaders, dozers to minimize fire hazards and maintain fuel quality. According to Lindsey, FIFO approaches are normal. Pile reclaim may be done automatically, (under pad reclaim) or manually using loaders and reclaim chutes and hoppers. &ldquo;It is common for storage to include day silos or bins (live storage) in conjunction with piles,&rdquo; he says. &ldquo;The silos or bins allow for one to two days of live storage that can be used to reliably feed the energy conversion unit regardless of upstream issues and allows for yard operations to be shut down for maintenance or operating personnel days off. At smaller, institutional heating plants, conveyance may be simpler and include at-grade or below-grade fuel bunkers, which may be primarily indoors.&rdquo;
 &nbsp;Typical elements to be designed into the system are yard truck traffic control&mdash;sufficient area for truck delivery and turnaround, truck receiving and unloading, either by tippers or walking floor truck, and incorporating scales, initial conveyance to classification stand&mdash;sorting for size and debris, resizing via milling, rejection&mdash;and conveyance to pile storage or live storage. Systems will also include tramp metal removal and real-time weighing at various points to determine flows to storage or, at a minimum, the amount of material leaving live storage to the energy conversion system, usually a boiler. Fuel sampling stations may also be included.
 The View From Alaska
 Amanda Byrd, biomass specialist for the Alaska Center for Energy and Power at the University of Alaska, says the best storage systems have to be covered out of the rain and snow, and have good ventilation for drying, or a drying bin. Keeping the wood off the ground is also important for air circulation and reducing rocks and other unwanted debris. &ldquo;Having a day bin is common practice, and in some places it is a &lsquo;week bin&rsquo; holding enough fuel for a week. Sometimes the wood is chipped at the plant site, and other times it is chipped where felled and the chips transported,&rdquo; she says. &ldquo;We have had some of our biggest wood storage issues happen in winter. For instance, a school in Southeast Alaska received wood chips from a local mill, but the chips were wet and when stored turned to blocks of ice. They since installed a drying bunker for the chips to dry out before being augured into the boiler.&rdquo;
 In Alaska, projects are often very diverse, and one solution is not going to be the best fit for everyone, she adds. &ldquo;We are still in our development stages in Alaska. Often times to keep the costs down, we must use what is available and affordable. So, using a rarely used ice-hockey rink to store wood chips can be the easiest solution at the time,&rdquo; Byrd says. &ldquo;We have economies of scale issue in Alaska&mdash;our needs are quite small, and building large amounts of infrastructure often is not economically feasible.&rdquo;
 Smaller Solutions
 For smaller systems and institutional settings, where the owner or the person who&rsquo;s operating the system wants to spend as little time as possible messing with the fuel storage, Timothy Maker, president and CEO of Community Biomass Systems Inc. in Montpelier, Vermont, says &ldquo;unquestionably, a below-grade bin is the way to go. A concrete bin that can hold at least one-and-a-third tractor-trailer loads of fuel. The bigger the facility, the more storage you want to have,&rdquo; he says. &ldquo;The person who is in charge of the system doesn&rsquo;t want to be worrying about running out of fuel when it&rsquo;s cold. They want to know they&rsquo;ve got a full bin and they&rsquo;ve got a few days of elbow room.&rdquo;
 He adds for indoor storage, the storage facility should not be heated and it should have plenty of ventilation. &ldquo;The reason why you don&rsquo;t want it heated is that in cold weather you don&rsquo;t want to make it more likely that you&rsquo;re going to have moisture leaving the fuel and filling up the air,&rdquo; Maker says. &ldquo;So if the space is well-ventilated when the moisture goes off from the fuel, when it evaporates into the air from the fuel, then it gets out instead of being stuck inside this bin building.&rdquo;
 Challenges Abound
 When dealing with storage solutions, climate is a very important consideration, especially places prone to severe icing or snow. &ldquo;Snow removal must be a factor in the yard traffic design and icing must be considered on any inclines. This includes truck ramps and even conveyor angles,&rdquo; Lindsey says. &ldquo;In the case of the latter, even relatively modest slopes can be problematic at times as conveyor belts will harden up and material may slide back into unwanted places. Lower conveyor angles mean more linear length and higher cost, so there is a balance to be struck. Covered conveyors are also a good idea in places with lots of annual precipitation.&rdquo;
 The polar vortex this past year wreaked havoc at many plants simply because the cold weather pushed conditions beyond design and made it a real challenge for some operations to maintain output. This was not only true of the equipment design, but of maintenance.
 &nbsp;For most biomass fuels, fuel dust is a nuisance factor that can be mitigated, but usually not completely eliminated. Provisions in the design for dealing with dust removal and cleanup of fines throughout the fuel handling and processing system should be considered. This includes clean-out ports in strategic locations and enclosures to protect systems that are sensitive to dust.&nbsp;
 Fuel consistency and quality is always a critical factor in operating a plant. Pelletized fuels have an advantage in this regard. Some plants put in multiple bins or silos to allow fuel blending to maintain desired characteristics.
 Final Thoughts
 Plan on the system requiring fairly regular maintenance and be sure that multiple redundancies are built into the system to deal with unexpected failures in the reclaim/conveyor systems. &ldquo;From my experience, the best systems are the ones where a lot of care was taken during the design process to involve the operator of the system,&rdquo; Maker says, &ldquo;so the operator knows what they&rsquo;re getting. They not only get a chance to talk to the system supplier, but they&rsquo;re actually working with the system supplier during the installation of that equipment, so that they know how to operate it, they know how to troubleshoot it. If all of that is done carefully during the design and the early stages of implementation, when it&rsquo;s actually being constructed, then you get a smooth project.&rdquo;
 Lindsey adds that fuel moisture in most large plants in North America is managed by fuel spec and pile management. Volatile organic compounds do evolve from piles and can change fuel quality over time. &ldquo;Preferably, wood residues stored outside and destined for sustainable energy production should have adequate airflow and should be protected from the rain and snow; however, the costs of protection may be prohibitive,&rdquo; he says. &ldquo;In a world of increasing energy demands, proper management and rapid inventory turnover can help make wood a part of a renewable and sustainable energy portfolio.&rdquo; Author: Keith Loria Freelance writer, Biomass Magazine <a href="mailto:freelancekeith@gmail.com">freelancekeith@gmail.com</a>

STORAGE SAVVY: At Fallmouth Middle School in Falmouth, Maine, wood chips are conveyed from an enclosed fuel storage bunker to a metering bin.

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LONG LOAD: Truck unloads wood chips for use as fuel for the Tracy Biomass Plant in Tracy, California. Large wood-fired power plants typically rely on piles that are actively managed with large loaders and dozers to minimize fire hazards and maintain 

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CHIP SLIP: Clear, dry wood chips are dumped into storage at a wood-fired power plant.


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Selecting the best system for storing woody biomass for power or heat generation is not a new challenge, but as renewable energy installations increase, so is interest in weighing different options.

Surveying Storage  Solutions

Last month, a nonprofit, environmental educational group held a lively roundtable discussion with an innovative, large-scale land restoration company to discuss a white paper on biomass cofiring that the two groups recently collaborated on. (The paper is still in revision, so the groups have asked us not to disclose their names.) The group assembled at the roundtable, which represented government, industry and NGOs, agreed that cofiring could be an important mitigation option to make available to power plants under Section 111(d).
 The paper explored opportunities for cofiring biomass and coal at power plants in both the U.S. and China, saying in the introduction, &ldquo;&hellip;there appears to be scope to bridge the gap between economic and environmental concerns when applying rigorous, well-enforced, yet feasible sustainability requirements to bioenergy programs, particularly when biomass is used to directly offset coal use in a cofiring scenario.&rdquo;
 The U.S. and China were chosen for the study because of the increased focus here on reducing power plant emissions, and because China is the world&rsquo;s largest coal emitter, burning half the world&rsquo;s total coal consumption. It found that &ldquo;&hellip;sustainable biomass, as assessed through a rigorous sustainability framework, has the technical potential to offset 25 and 33 percent of current coal use from the power sector in China and the U.S., respectively.&rdquo;
 While cofiring on a large scale has a long way to go before it becomes commonplace in the U.S., the paper and the roundtable made some insightful points about the biomass industry. It&rsquo;s worth considering cofiring as a potential growth avenue for the industry, particularly if the U.S. government identifies these technologies as a solution for cutting emissions from power plants.
 The paper looked at several methods of cofiring, as well as many factors that would affect the emissions profile of a cofiring scenario. The authors also looked at the possibilities for dedicated energy crops, and emphasized the need to be rigorous about following sustainability practices when sourcing fuel, including replanting trees and maintaining land use.
 The paper cites a number of factors that explain the barriers to increased deployment of cofiring. Cost is a major concern, compounded by the lack of national policy to reduce carbon emissions. On the other hand, the U.S. coal fleet is aging, and, if the Clean Power Plan moves forward, there might be significant opportunities in the coming years to retrofit or rebuild these facilities with potential for cofiring.
 Regardless of any of the practical limitations that exist for large-scale biomass cofiring to become a reality in the near future, it is certainly encouraging for the industry to know that biomass is being considered as a crucial carbon mitigation strategy. Even if cofiring is not universally used, it may still represent one of the most cost-effective mitigation options for many plants. Cofiring could eventually become a growth area for the biomass industry, with the right policies supporting it where it makes sense. Author: Bob Cleaves President and CEO, Biomass Power Association <a href="http://www.biomasspowerassociation.com">www.biomasspowerassociation.com </a> <a href="mailto:bob@biomasspowerassociation.com">bob@biomasspowerassociation.com</a>

September 2014

Business Briefs

Business Briefs

Business Briefs

Columns

RFA Internship Stokes Student's Enthusiasm

Recapping European Policy Decision Making

Engage Politicians Before Midterm Elections

Spirit of Innovation Alive and Well

Getting Back to Basics

New Strategy for Clean, High-Octane Ethanol Needed

Oh, They're Good for It

Building or Buying a Biofuel Plant? Think PSM

A Long, Tough Year for Advanced Biofuels

Organic Material Recycling Momentum Builds

Can the EPA Do Its Job?

Biomass Cofiring: Opportunities to Expand the Industry

Hard to Handle

Featured

Dakota Spirit Rising

Looking For Liquidity

Banking on Biofuels

Balancing Digester Diets

All the Right Moves

Drax's Mississippi Queen

Surveying Storage Solutions

Departments

Pepped to Fuel Prep

Algae's New Standard-Bearer

September 2014.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

Business Briefs

Columns

RFA Internship Stokes Student's Enthusiasm

Recapping European Policy Decision Making

Engage Politicians Before Midterm Elections

Spirit of Innovation Alive and Well

Getting Back to Basics

New Strategy for Clean, High-Octane Ethanol Needed

Oh, They're Good for It

Building or Buying a Biofuel Plant? Think PSM

A Long, Tough Year for Advanced Biofuels

Organic Material Recycling Momentum Builds

Can the EPA Do Its Job?

Biomass Cofiring: Opportunities to Expand the Industry

Hard to Handle

Featured

Dakota Spirit Rising

Looking For Liquidity

Banking on Biofuels

Balancing Digester Diets

All the Right Moves

Drax's Mississippi Queen

Surveying Storage Solutions

Departments

Pepped to Fuel Prep

Algae's New Standard-Bearer

September 2014