Posted Sept. 8, 2010 
 
 If a buyer for Renova Energy Idaho LLC isn't found before an auction set for Nov. 10, the 20 MMgy ethanol plant will be sold off in bits and pieces. Up for sale in Heyburn, Idaho, is the partially constructed ethanol plant, its equipment, a nearly complete anaerobic digestion system and land. 
 
 "We have a couple of serious buyers that are looking at it right now," said Ford Elsaesser, a bankrupt attorney serving as trustee for the creditor owners of the plant. "We're hopeful that we can sell it in its current condition, for someone that would be able to complete both the biogas and ethanol plant."

 
 This is the third announced ethanol plant auction in three weeks. Gateway Ethanol, a 100 MMgy ethanol plant in Pratt, Kan., and Genesis Ethanol I, a 2 to 4 MMgy plant in Parker, S.D., have separate auctions set for Sept. 24. 
 
 The deadline to purchase the Renova Energy Idaho plant as a whole is two weeks before the Nov. 10 sale, said Allison Guyton, director of operations for Maas Companies Inc., which has been hired to auction the plant. Much of the equipment for the ethanol plant was never installed and remains crated and packaged. The anaerobic digester, on the other hand, is about 90 percent installed. 
 
 The bulk of the ethanol plant is on leased property owned by the city of Burley, Elsaesser said. The creditors own the land where the anaerobic digester is located. The plan was to use waste material from a nearby cheese plant for biogas production. Another possible source of waste is a potato processor that is currently constructing a new plant very near to the anaerobic digester. 
 
 Renova Energy Idaho suspended construction on the plant in late 2007. The project's price tag reportedly grew from $45 million to $60 million. That, plus other factors led to bankruptcy. "That was right in the heart of the financial crises," Elsaesser told EPM. 
 
 Renova Energy Inc., the ethanol plant's former parent company, filed for Chapter 11 bankruptcy in 2008 and is no longer associated with Renova Energy Idaho. The creditors of the Heyburn plant spent about $1.5 million to bring it out of bankruptcy and put it in a trust. The creditors have until Dec. 31 to sell or liquidate the assets and pay off the debts. 
 
 That money, along with about $500,000 owed in back taxes to Heyburn and the county plus outstanding land-lease payments, adds up to about $2 million. "That's a rough number, it could be off either way a little bit," he said. Any amount generated from the sale in excess of that $2 million will go to other creditors in the form of a dividend, he added. 
 
 Besides the Idaho plant, Maas Companies Inc. is also conducting the auction of the Parker, S.D., ethanol plant. Unlike the Idaho plant, the South Dakota auction will be conducted by a sealed bid, Guyton told EPM. The winning bid may be selected the day of the auction, Sept. 24, or the top five bidders could continue in a limited live auction Oct. 8. 
 
 Ascendant Partners is auctioning the third plant, located in Kansas. If a good offer comes in before the auction, the owners plan to accept it. The plant started producing in October 2007 and shut down once for repairs after storm damage and again after working capital ran short. The company filed for bankruptcy in October 2008 and was taken over by the new owners on June 30.

Idaho ethanol plant heading for auction block

News release posted Sept. 2, 2010
 

 Cambridge, Mass. - Verenium Corp., a pioneer in the development and commercialization of high-performance industrial enzyme solutions, announced Sept. 2 the closing of the sale of its cellulosic biofuels business to BP Biofuels North America for $98.3 million, subject to the additional financial terms of the transaction announced on July 15, 2010. 
 
 In the transaction, BP acquired the company's facilities in Jennings, La., including the pilot plant and demonstration-scale facility, the San Diego, Calif., R&D facilities, as well as cellulosic biofuels and cellulosic enzyme technology and related IP [intellectual property]. In addition, BP retained select personnel needed to continue the cellulosic biofuels development program. BP also became the sole owner of Vercipia Biofuels and Galaxy Biofuels, the 50-50 joint ventures created by the company and BP. 
 
 Verenium retains its commercial enzyme business, including its biofuels enzyme products, and has the right to develop its own cellulosic enzyme program. Verenium also retains select R&D capabilities, as well as the potential option to access select biofuels technology developed by BP using the technology acquired from Verenium through this transaction. 
 
 UBS Investment Bank acted as financial advisor to Verenium in connection with this transaction. 
 
 The material terms of the transaction are described in greater detail in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on July 19, 2010. 
 
 SOURCE: VERENIUM CORP.

Verenium closes biofuels business sale to BP

Posted Sept. 3, 3010

 
 Lebanon, N.H.-based Mascoma Corp. announced Sept. 1 that it has acquired Canada's SunOpta BioProcess Inc., a division of SunOpta Inc., for $51 million. SunOpta BioProcess Inc. will now operate as a subsidiary of Mascoma under the name Mascoma Canada.
 
 Mascoma has spent the past five years developing its consolidated bioprocessing (CBP) technology, which is a hydrolysis and fermentation process that utilizes genetically modified microorganisms to convert cellulosic fibers to sugar and produce alcohol in one step, without the addition of enzymes. SunOpta's technology is a first-step pretreatment process which exposes the cellulosic fibers of various materials, including woody biomass, switchgrass or agricultural waste, for further conversion to biofuels. The combination of CBP and SunOpta's technology should allow Mascoma to complete the entire cellulose-to-ethanol process more efficiently and economically, according to Mascoma CEO Bill Brady.
 
 "We have put together a larger, more powerful company with comprehensive, end-to-end capabilities which are well proven," he said. "Our intention is to get to market faster and [reduce] the cost curve faster because of this combination. There are only a few players in the pretreatment technology business. What we like about SunOpta is that is a steam explosion technology, so it uses no harsh chemicals, no acids and has a great environmental footprint."
 
 Included with Mascoma's purchase of SunOpta's technology are SunOpta's Canadian laboratory, offices and pilot plant. Brady said Mascoma has no plans to close any of those facilities and he expects Mascoma will have an increased presence in Canada because of the acquisition. Mascoma has previously been involved in development projects in Canada and is also active in the South American market. SunOpta has development partners in China and India, and announced earlier this year that it had secured a major fiber pretreatment technology supply contract with a new energy company in China. Mascoma is also moving ahead with its first proposed commercial scale facility in Kinross, Mich., which is expected to undergo construction in mid-2011 and should begin producing cellulosic ethanol in 2013. The 20 to 40 MMgy plant will be operated by Mascoma's project partner, Michigan-based timber company J.M. Longyear.
 
 Immediate actions taken after the acquisition include research to determine how best to modify SunOpta's pretreatment method so that Mascoma's microorganisms can effectively attack the cellulosic to produce high yields of ethanol. Research is being conducted at Mascoma's Rome, N.Y., demonstration facility and the company is currently conducting involved, extended production runs to validate the production process, according to Brady.
 
 Brady said he anticipates the coming decade to be a very active build-out time for cellulosic ethanol plants as producers scale-up to meet the expanding renewable fuels standard. With the acquisition of SunOpta, Mascoma is positioning itself to be one of the top technology licensors in the industry. "There are a lot of very good technology companies in the biofuels sector but very few of them are addressing the most important issue, which is unlocking the cellulose in wood, grasses or agricultural waste in a low cost, sustainable way," he said. "It's a very difficult thing, but that is what has to happen to enable the whole industry. There are many technologies focused on what happens after that step, but Mascoma is focused on that fundamental issue."

Mascoma acquires pre-treatment technology

Posted Sept. 8, 2010
 
 As pressure to produce cellulosic ethanol at a commercial scale increases, research continues to be conducted into what sources of biomass can create the highest yields of fuel. The USDA and U.S. DOE recently announced a joint program aimed at improving genetic breeding programs to create plants for this purpose and is investing $8.9 million in nine projects to explore several possibilities.
 

 The USDA will spend $2 million on two sorghum projects. Texas A&M University will receive $1 million to use genomics and genetics to increase the yield and improve the composition of energy sorghum. The University of Illinois will also receive $1 million for its project to improve sorghum yields by delaying the flowering time of the plant. 
 
 The DOE will provide the remaining $6.9 million for seven projects. The University of Georgia will receive the largest award and plans to use the $1.3 million to study how certain proteins in wood-forming tissues regulate the distribution of sucrose, which is utilized by the plant for lignocellulose production. The University of California, Berkeley was granted $793,000 to identify and genetically characterize types of corn that possess altered cell wall compositions, which could be of value when processing corn stover for biofuel production.
 
 "Cost-effective, sustainable biofuels are crucial to building a clean energy economy," Energy Secretary Steven Chu said. "By harnessing the power of science and technology, this joint effort between DOE and USDA will help accelerate research in the critical area of plant feedstocks, spurring the creation of the domestic bio-industry while creating jobs and reducing our dependence on foreign oil."
 
 For a detailed list of the projects funded by this program, visit <a target="_blank" href="http://genomicscience.energy.gov/research/DOEUSDA/awards.shtml#2010awards" rel="external">http://genomicscience.energy.gov/research/DOEUSDA/awards.shtml#2010awards.</a>

DOE, USDA fund energy crop research

Posted Sept. 10, 2010

 
 As expected USDA lowers its corn crop estimates in the Sept. 10 World Agricultural Supply and Demand Estimates report, although it is still expecting a record crop. It boosted its estimates for the season-average farm price for corn by 50 cents per bushel on the bottom end of the range to 70 cents higher on the top end, projecting $4 to $4.80 per bushel, compared with $3.50 to $4.10 last month.
 
 Beginning stocks for corn are projected 40 million bushels lower with higher 2009-'10 corn use for ethanol and a small increase in exports. Corn production for 2010-'11 is forecast at 13,160 million bushels, down 205 million from the previous month's report, but still the largest crop on record. The national average yield is forecast at 162.5 bushels per acre, down 2.5 bushels. The largest reductions in forecast yields are for the eastern Corn Belt, which account for more than half of the reduction in total output. 
 
 Domestic corn use for 2010-'11 is lowered 100 million bushels with lower expected feed and residual use as higher prices trim feeding demand and the smaller crop reduces residual disappearance. Projected exports are raised 50 million bushels with rising world demand for coarse grains, particularly corn. U.S. corn ending stocks are expected to decline to 1.1 billion bushels, down 196 million bushels. At this level, 2010-'11 carryout would be the lowest since 2003-'04. Stocks as a percentage of total use would be the lowest since 1995-'96. 
 
 Global projections
 Global coarse grain supplies for 2010-'11 are projected down 8.7 million tons with reduced foreign and U.S. production. Most of the foreign reductions this month are in EU-27 and FSU-12 (former Soviet Union) countries. A 10.3-million-ton reduction in world coarse grain production for 2010-'11 is partly offset by larger corn beginning stocks for Brazil with a 1.8-million-ton increase in 2009-'10 corn production. Lower U.S. and EU-27 corn production account for more than half of the reduction in 2010-'11 global coarse grain output. EU-27 corn production is reduced 1.2 million tons with lower reported area and yields for France and Germany and lower reported yields for Italy, Austria, and Spain
 
 Global coarse grain trade is increased this month with U.S. corn exports raised 1.3 million tons. A 0.5-million-ton reduction for EU-27 corn exports is offset by a 0.5-million-ton increase for Ukraine. Corn imports are raised 2.0 million tons for EU-27 as corn partly replaces wheat in feeding. Russia corn imports are raised 0.7 million tons helping to offset reduced supplies of feed barley. Global corn consumption is lowered as reduced prospects for corn feeding in the United States and Ukraine more than offset higher expected corn feeding in EU-27, Russia, Mexico, and Canada. Global corn ending stocks are projected 3.6 million tons lower.
 
 Soybean projections
 U.S. oilseed production for 2010-'11 is projected at 104.8 million tons, up 1.5 million from last month. Soybean production is forecast at a record 3.483 billion bushels, up 50 million from last month based on an increase in the projected yield to a record 44.7 bushels per acre. 
 

 Soybean exports for 2010-'11 are increased 50 million bushels to 1.485 billion reflecting strong early season sales and a projected increase in global import demand, especially for China. Soybean ending stocks are projected at 350 million bushels, down 10 million from last month as higher export demand more than offsets the increased supply. 
 
 Soybean exports for 2009-'10 are projected at a record 1.495 billion bushels, up 25 million from last month reflecting strong shipments in the final weeks of the marketing year. The increase is partly offset with a lower residual, leaving ending stocks projected at 150 million bushels, down 10 million. Other changes for 2009-'10 include reduced use of soybean oil for biodiesel and increased soybean oil exports. Season ending soybean oil stocks are projected record high at 3.21 billion pounds.

WASDE: Slightly smaller crop still a record

Posted Sept. 10, 2010
 
 Rex American Resources Corp. recently announced that its net sales and revenue for the second quarter of fiscal year 2010 had increased by $48 million over the same period last year. The substantial increase was attributed to the company's alternative energy segment, which includes interests in seven ethanol plants with a combined capacity of 632 million gallons.
 
 Of the seven plants in which Rex has invested, it currently owns a majority share of two facilities. Rex owns a 74 percent share in One Earth Energy LLC, a 100 MMgy facility in Gibson City, Ill., and a 56 percent share of the 40 MMgy Levelland Hockley County Ethanol LLC plant in Texas. Doug Bruggeman, chief financial officer at Rex, said the company's increase in net sales this year compared to the second quarter of 2009 is due to One Earth being fully operational this year. Combined sales of ethanol and distillers grains from One Earth and Levelland totaled nearly $65 million for second quarter 2010, compared to $17 million for the same three months last year.
 
 Other facilities in which Rex has invested include Patriot Renewable Fuels LLC in Annawan, Ill., the Big River Resources LLC plants in West Burlington, Iowa, and Galva, Ill., and Big River United Energy LLC in Dyersville, Iowa. On June 30, Rex acquired a 48 percent interest in NuGen Energy LLC in Marion, S.D. According to Zafar Rizvi, Rex president and chief operating officer, the company paid $9 million for its share, with an additional $6 million to be paid contigent on profits at the plant. The company also has the option to purchase an additional 2 percent interest, which would give it controlling interest in the plant, pending bank approval. "Once we have that bank approval we probably will own 51 percent of that company," Rizvi said.
 
 Rex first invested in the ethanol industry in 2006. The company's previous majority interests were in electronics retail stores, but operations in that segment were becoming increasingly difficult to operate profitably, according to Bruggeman. The company had made some investments in the synthetic fuel industry in 1999 and had a positive experience, so the decision was made to focus again in that area and it was ultimately determined that ethanol offered the best opportunity for investment. Interestingly, the company's first ethanol investment was in the NuGen facility, which was then known as Millennium Ethanol LLC. Rizvi said Rex originally invested $16 million in the plant. It was then sold to U.S. BioEnergy Corp. and Rex received a net gain of $26 million on its investment. The company now again stands to gain a majority share of the same plant, this time for about $15 million. 
 
 Rex said it is interested in continuing to invest in ethanol plants, but likely would explore acquiring at least 51 percent of controlling interest. The company's three main criteria in an ethanol investment are local corn availability and net returns from ethanol and distillers grains, according to Rizvi. "Those are the three things that are very important to see," he said. The company has examined some cellulosic projects but is not considering any cellulosic investments at this time due to concerns regarding the length of time before it would experience a return on investment.

Rex net sales jump due to ethanol

News release posted Sept. 10, 2010

 
 WASHINGTON, DC - After lawmakers withdrew $1.5 billion from the Department of Energy's Renewable Energy Loan Guarantee Program (LGP) last month, Growth Energy, the coalition of U.S. ethanol supporters, and seven other industry groups Sept. 9 sent a letter to DOE Secretary Steven Chu urging him to restore the funding and address the shortcomings of the program. 
 
 To date, Congress has "borrowed" $3.5 billion from the Loan Guarantee Program to pay for emergency shortfalls in state revenues and the 2009 "Cash for Clunkers" program. The removal of these funds has left the LGP at 60 percent below the level that Congress originally appropriated.
 
 Congress was able to take the funding from the LGP because the DOE has been slow in dispersing its resources. According to a July 12, 2010 U.S. Government Accountability Office (GAO) report, since the LGP was established in 2005, it has issued only one loan guarantee as of April, 2010.
 
 If delays continue at DOE, there is great risk that more of the funds will be drained from this vital program.
 
 In the letter, the groups wrote, "Our members have spent many years and billions of dollars collectively developing renewable energy technologies. Many projects are ready to be deployed, but due to the collapse of the global financial markets and the innovative nature of some of the technologies, they are having difficulty securing the necessary financing. The LGP was specifically designed to overcome these obstacles and its inaction sends the signal that the government is no longer a willing partner to the industry… we urge you to fix the shortcomings of the LGP so that we can continue to work together for a clean energy future in America."
 
 The other seven groups that signed the letter are: the Renewable Fuels Association; Clean Fuels Development Coalition; Solar Energy Industries Association; American Council on Renewable Energy; Biomass Coordinating Council, American Council On Renewable; Biotechnology Industry Organization and American Wind Energy Association.
 
 A <a target="_blank" href="http://www.growthenergy.org/news-media-center/releases/growth-energy-and-industry-groups-call-on-doe-to-restore-funding-fix-shortcomings-in-energy-loan-pr/" rel="external">full copy of the letter </a>is at the Growth Energy website. 
 

 SOURCE: Growth Energy

Industry groups ask DOE to restore funding, fix shortcomings in Energy Loan Program

Posted Sept. 10, 2010
 
 South Dakota has begun testing E30 in some of the state fleet's flex-fuel vehicles (FFVs) as part of a yearlong study to determine the most cost-effective fuel blend for those vehicles. A test pool of 86 model year 2009 Chevrolet Impalas is being used to compare the cost per operating mile of higher blends of ethanol and E10. Half of the pool is being fueled with E10 for the entire year while the remaining 43 vehicles were fueled for six months with E85 and will use E30 for the remainder of the study. 
 
 Test results from the E85 portion of the study showed that the fuel did not improve operating costs per mile. While E85 cost 23 cents per gallon less than E10 during the six-month test period, it resulted in a 23 percent decrease in miles per gallon, equating to a nearly even operating cost per mile when compared to E10. The state began using E30 in the test group in July and has so far not compiled any preliminary results of E30 versus E10 or E85.
 
 Mike Mueller, public information officer for South Dakota's Bureau of Administration, said test pool vehicles that are being fueled with E30 at state fueling stations will continue to use E85 if they need to be refueled at commercial fueling stations. The state is not discouraging the use of E85, he said, but is merely attempting to identify the optimum fuel blend. "All other state employees are encouraged to use the high blend that's in the tank or E85 at a commercial location regardless," he said. 
 
 Approximately half of the state's fleet, 1,290 vehicles, are FFVs, according to Mueller. In fiscal year 2010, 81 percent of all gasoline used in state vehicles was an ethanol blend. "We're testing these higher blends, but E10 is by far the most used fuel in state vehicles," he said. "We have a big commitment for ethanol. The test is just to determine the blend that optimizes both the ethanol and state tax dollars. That's what we're focused on right now. We acknowledge that the use of renewable ethanol has a benefit beyond just how it is affected in the engine, but those variables are not taken into account in the study we're doing."
 
 Mueller added that the state would like to acquire more FFVs, but no new vehicles have been purchased since the 2009 model year due to budget constraints.

S.D. tests E30 in state FFVs

Posted Sept. 10, 2010
 
 Twenty employees have now been hired to work at the Denco II LLC plant in Morris, Minn.—many of whom are returning workers from before the plant shut down. The company plans to hire another 10 workers and restart ethanol production by Oct. 1, Mick Miller, general manager told EPM. "We are actively looking for the remaining team members and we hope to be fully staffed in the next couple weeks," he said. 

 
 The 24 MMgy plant has been in cold idle for 20 months. The plant was purchased by a group of local investors, many of them local farmers, in late August. "We're extremely excited about having an opportunity to work with local investors to bring this plant up from a restart standpoint," he said, adding that the ethanol plant will be good for the local economy and the environment. "It's good for the local producers, the whole nine yards."
 
 Miller is a familiar face to many in Morris. He worked there previously as plant manager from 1999 until 2005, when he left to work at Red Tail Energy LLC in Richardton, N.D. He's a partner with Energetics, a company co-founded in 2007 by Mitch Miller and Jason Jerke. The company is now a shareholder in the plant and will operate it. 
 
 Employees are working on full mechanical inspections and plan to do water trials soon, Mick Miller said. No big expenditures are expected to get the plant in working order. "We do have plans to make facility improvements as we go," he said, "but for right now the plant is in really good condition, and ready for start up."
 
 The plant has gone through many changes in the past 10 years. Morris Ag Energy Inc., was purchased in 1999 by Diversified Energy Company LLC, known as Denco. The company then upgraded the plant from 7 MMgy to 17 MMgy. In January 2006 the plant was purchased by Big Island Grain LLC, an Australian company, which kept the Denco name. 
 
 Although it's unfortunate that the ethanol industry has gone through some difficult financial times, Mick Miller said, things have been looking up lately. The flip side of plants shutting down is that it has created opportunities, like this one, for other groups to come in and restart the facilities. "It's just exciting to be part of it," he said. 
 
 Blaine Hill, city manager in Morris, a town of 5,200, said he's happy to hear the Denco plant will be restarting. "Anytime you lose jobs it's not a good deal, it will be nice to have people back out there, working," he told EPM. "Personally, I think it's a great idea, using local recourses to produce a renewable fuel."

Minnesota plant getting ready to restart

Posted Sept. 14, 2010 
 
 Lincolnway Energy LLC, a 55 MMgy ethanol plant in Nevada, Iowa, will receive a $1.9 million repowering grant from the USDA. The money will be used to purchase biomass, which will be burned in an existing boiler to offset the plant's use of coal. "I think we'll be able to substantially reduce our coal usage," said Rick Brehm, the plant's president and CEO.
 

 Secretary of Agriculture Tom Vilsack announced Sept. 9 that Lincolnway was selected for the Repowering Assistance Program. Authorized under the 2008 Farm Bill, it allows the USDA to make payments to eligible biorefineries for the use of biomass as a replacement fuel source for fossil fuels. Biorefineries that use biomass to provide process heat or power and were operating when the bill was enacted on June 18, 2008, are eligible to apply. 
 
 Receiving grant approval is the culmination of 18 months of work, Brehm said. "We felt that the ethanol industry is a green industry and if there is a way that we could be more green and more renewable we wanted to attempt to move that direction," he said. 
 
 A feasibility study that concluded last summer identified tree trimmings as the best feedstock for the boiler. The tree trimmings would be gathered from local communities. "We're in close proximity to the city of Des Moines, and every year there are tons and tons of tree branches of trees that are taken down," he said. 
 
 However, a lot of things have happened in the biomass industry in the last 18 months. Lincolnway is now in the process of re-evaluating types of feedstocks and potential suppliers. "We want to make sure conditions have not changed dramatically from when we did the study," he said.
 
 Other possible feedstocks include ag residues, such as corn stover or soybean stalks. The company is also evaluating using other wood-based materials, such as old wooden pallets that are no longer able to be reconstructed. 
 
 The company is now working out a timeline for the project. The goal, Brehm said, is to have storage, conveyance and ejection equipment installed in the next year to a year and a half. The grant of $1.9 million will be paid in installments for the cost of biomass, with the majority of the equipment costs left up to Lincolnway. "We would anticipate that our cost would be somewhere about $2 million invested," he said.

Lincolnway embarks on biomass project

Posted Sept. 14, 2010 
 
 In the nearly three years since Blue Flint Ethanol LLC started producing in Underwood, N.D., more and more area farmers are growing corn and selling it to the ethanol plant. That growth made for a good news/bad news situation. "We've got a lot of corn being produced in the area and there really isn't a lot of infrastructure in the area to dry corn," Jeff Zueger, general manager told EPM. 
 
 Now, the ethanol plant is working on a project to remedy the problem. Dirt work started in early August to add storage for 600,000 bushels of corn and a natural gas-powered dryer with a capacity of 4,000 bushels per hour. Construction should wrap up by mid-October. "So it should be just in time for this year's harvest," Zueger said. 

 
 Great River Energy and Headwaters Inc., the owners of Blue Flint, partnered with Knorr Farms, a large family operation in the area, to build it. Zueger was unable to release information about the cost of the project, he said. 
 
 In particular, last year's harvest highlighted the need for more corn storage and drying infrastructure across the U.S. Delayed planting in the spring meant a delayed harvest, which added up to a lot of high moisture corn. Last year's final crop progress report from the National Agricultural Statistics Service came in unusually late on Dec. 22. At that time, 95 percent of the U.S. corn crop was estimated to be harvested, with 5 percent remaining in the field. North Dakota, which was hit the hardest by a late planting season and delayed harvest, only had 68 percent of its corn crop harvested by Christmas and a lot of corn was left in the field over the winter. 
 
 Despite these problems, Zueger said Blue Flint didn't have big problems with corn quality. Although the plant saw lower test weights than usual, there wasn't a lot of wet or damaged corn coming in. "We have had decent corn throughout the year," he said. "It didn't have a significant impact on our production." 
 
 Still, he's excited about the new corn storage and drying capacity currently being installed at Blue Flint. It gives area corn producers much needed infrastructure to dry corn and it provides an opportunity for additional corn production in the area. "We think it's great for the plant," he said. 
 
 Blue Flint is co-located with Great River Energy's Coal Creek power station. The ethanol plant is directly integrated into the power plant and has no boiler. Instead, it uses primarily waste heat from steam generated at the power station.

Corn dryer under construction near N.D. plant

Posted Sept. 15, 2010
 
 A long-term research project being funded by Britain's Biotechnology and Biological Sciences Research Council achieved a significant breakthrough recently when researchers successfully modified plant genes to more easily access the sugars locked inside lignocellulose. The finding could result in more cost-effective cellulosic ethanol conversion from plant matter such as corn stover and miscanthus, as well as woody biomass.
 
 The research team's discovery centered around the modification of enzymes that control xylan, one of the main components of lignocellulose. Approximately one-third of a plant's sugars that could be used for ethanol production are locked away inside the xylan, according to lead researcher and University of Cambridge professor Paul Dupree. Until the discovery, it has been problematic for researchers to determine how to access those sugars. "We don't understand how that sugar is locked away and why it's difficult to release sugar that can be fermented," Dupree said. "What we have discovered is one of the ways that the plant makes it difficult for us and how to overcome that. The consequences are that when this is deployed it should be cheaper and use less energy to release the sugars from maize stover, wheat straw, wood, and that makes [ethanol production] more economically viable."
 

 After identifying the two enzymes that appeared to control the xylan portion of lignocellulose in plants, the University of Cambridge research team, which is part of the BBSRC's sustainable bioenergy center, experimented with growing Arabidopsis plants that lacked those two enzymes. "What we didn't want to do was end up with floppy plants that can't grow properly, so it was important to find a way of making xylan easier to break down without having any major effects," Dupree said. Surprisingly, what they discovered was that the altered plants functioned just as well as the traditional plants. "If you put them side-by-side, you wouldn't be able to see any difference at all," he said. "We can detect some difference, but it's not a large difference. So one of the important discoveries is that it is possible to change the structure to make it easier to extract the sugars and you don't necessarily end up with severely weakened plants. It makes it worthwhile trying to improve the plant material."
 
 Work will immediately begin on using this knowledge to access sugars located in willow trees and, eventually, energy crops such as miscanthus and corn stover. Dupree's team will focus on willow research because it can be readily grown in the U.K. and harvested in three-year cycles, he said. 
 
 The results of this scientific breakthrough could be applied in several ways, according to Dupree. The first is breeding of new plant varieties that lack the xylan-controlling enzymes. Creating genetically modified crops is also an option. Finally, it could also lead to an alteration of the enzymes used in cellulosic ethanol production. "So now we know how the plant has locked the sugars away a little bit more, perhaps in the processing process where we extract the sugars we can use that knowledge to modify our processing," he said. "That could also be faster than modifying the plants themselves." 
 
 Dupree said the next stage of research will include close collaboration with industrial partners to determine how quickly research results can be translated into real applications for transportation fuels.

British researchers unlock sugar secret

Posted Sept. 15, 2010
 
 A study recently completed by international automotive engineering and consulting firm Ricardo Inc. shows that the use of E15 in vehicles produced in model years 1994 through 2000 poses minimal risk of damage to those automobiles. The study, funded by the Renewable Fuels Association, was conducted to demonstrate that a partial U.S. EPA waiver to allow E15 use only in vehicle models 2001 or newer is not necessary and that E15 can be used in older model vehicles with no adverse effects.
 
 During a news conference to announce the study results, RFA President Bob Dinneen said the organization has been making its case for a full E15 waiver for months, but current indications are that the EPA will grant a partial waiver because the data it has received focuses only on newer vehicles. The EPA is expected to issue its decision sometime in September and RFA intends to make the results of this latest study available to the agency before it makes the final waiver decision.
 
 The ethanol blend wall continues to be one of the most difficult challenges facing the ethanol industry and a partial waiver will not provide enough relief on supply issues, Dinneen said. Additionally, allowing E15 use only for certain vehicles will likely cause confusion among consumers. "We've been concerned about a partial waiver," he said during the news conference. "We have very deep concerns for the confusion that it might create in the marketplace for consumers and certainly for gasoline marketers, and we are concerned that as a consequence the market opportunity for ethanol resulting from a partial waiver would not really be what we need. … The bottom line is if the agency is going to allow E15 to be used because of their evaluation of 2007 and newer or 2001 and newer vehicles, that the change from E10 to E15 is just not significant enough to not allow that for older vehicles as well. There's simply no need to issue only a partial waiver."
 
 According to Ricardo, vehicles manufactured during model years 1994 through 2000 represent roughly 25 percent of all U.S. light duty vehicles currently in use. Ricardo identified six manufacturers that represented the majority of vehicle sales for that time period and focused on the top 10 selling platforms from those manufacturers for its study. The firm then evaluated several technical areas, including fuel system changes, various emission and diagnostic regulation levels and certification data, after-treatment systems, and vehicle calibrations. Physical fuel system parts were also obtained and evaluated for evidence of deterioration.

 
 The primary risk of using E15 rather than E10 is the potential for leaks in the vehicle's fuel system due to metal corrosion, swelling in elastomers and/or hardening of plastics. Ricardo's study concluded that vehicles produced during the 1994-2000 time period would not experience negative changes if the vehicle were to be fueled with E15. In fact, Luke Cruff of Ricardo U.S.' gasoline and spark ignited product group said physical fuel system components acquired for the study showed greater deterioration of equipment on the outside, stemming from forces such as salt and moisture. The portions of the fuel systems that were exposed to E10 showed little deterioration and Ricardo said it expected no further degradation would be experienced when similar systems are exposed to E15.
 
 The 89-page report can be viewed in its entirety at <a target="_blank" href="http://ethanolrfa.3cdn.net/934abeccc70545542f_96m6bugqf.pdf" rel="external">http://ethanolrfa.3cdn.net/934abeccc70545542f_96m6bugqf.pdf</a>.

Study: E15 poses little risk to older vehicles

Posted Sept. 16, 2010 
 
 A study of the future of next-generation biofuels in Europe determined that a first priority for policy makers is to introduce a European Union-wide mandate—similar to the U.S. Renewable Fuels Standard. 
 
 "Next-generation Ethanol and Biochemicals: What's in it for Europe" was released Sept. 14 by Bloomberg New Energy Finance with the support of Novozymes A/S and Royal DSM NV. The study concluded that, using agricultural residues to create biofuels and biochemicals, the 27 EU member countries could create up to one million jobs and replace between 52 and 62 percent of its annual gasoline consumption over the next decade. Beyond that, next-generation biofuels, if implemented on a large scale, will spur economic growth and reduce CO2 emissions, it said. 
 
 "The study is making a strong case for a bio-based economy," said Stephan Tanda, member of DSM's managing board. "At a time with low global growth rates, the biochemical industry could provide a significant green stimulus to the European economy with revenue of EUR 31 billion [$40.5 billion] in 2020. We think it sends a strong signal to European policy-makers that action is required." 
 
 The authors point to ag residues as a feedstock but assume that 75 percent of would be left on the field. Of the 25 percent collected, 10 percent would be used for power production, 20 percent for animal husbandry and the remaining 70 percent would be available for bioproducts, such as cellulosic ethanol. By 2020, the study saw ag residues contributing 80 percent of biomass, forestry residues would contribute 3 percent and municipal solid wastes could contribute 17 percent. "Today next-to-none of this biomass resource is harvested for bioproduct conversion," the study said. "The challenge for European policymakers will be to incentivize the collection of this biomass resource."
 

 The Renewable Energy Directive does mandate the consumption of next-generation biofuels, the study said. However, the mandate is very small compared to the RFS2 in the U.S. "The U.S. government has definitively supported the development of its next-generation biofuels industry," it said. "The challenge will be for the EU27 member states to do something similar in the coming decade." 
 
 Optimistically, by 2020, the EU will replace 2.8 billion liters (740 million) of its annual gasoline demand with cellulosic ethanol. On the other hand, if the RFS2 is fulfilled, the U.S. could eventually be consuming between 40 and 57 billion liters, which adds up to 11 percent of its yearly transport fuel requirements. 
 
 Bloomberg New Energy Finance determined that there are 31 next-generation biofuel projects in the EU27 region—either already commissioned or in the pipeline. The U.S. has 74 such projects. "In the past five years, the U.S. government has been very proactive in its support of the next-generation biofuels industry. Developers have responded positively to this government initiative, which has resulted in twice as many projects being on the drawing board as in EU27," the study said. 
 
 The study acknowledged that attracting private capital is a difficulty in both the U.S. and the EU. "Investors are not comfortable with next-generation ethanol project risk," the study said. "This risk aversion should be surmountable once the first ten EU27 biorefineries are commissioned. The reduction in risk will open the doors to a wider investor base, which at the same time will bring the capital cost of plants closer to those now achieved by the first generation industry." 
 
 The top EU countries for next-generation ethanol supply are identified in order as France, Germany, Spain, United Kingdom, Italy and Poland. Conservatively, France was identified as having the potential to produce 15 billion liters of ethanol from biomass by 2020. This is significant because, if France has reached its demand floor for gasoline, it will consume only 12 billion liters of gas in the same year. If, however, gas consumption in the country continues to decline at the historic rate, annual gas demand could be as low as 8 billion liters. "France could therefore comfortably replace-on an energy equivalent basis-its fossil gasoline requirements with next-generation ethanol," the study said. "The EU27 biomass potential suggests most countries could begin to partially move away from fossil fuel dependence if the region supports the development of a next-generation bioproducts industry."
 
 The study avoided the indirect land use change (ILUC) debate completely by focusing on biomass and cellulosic ethanol. "Next-generation technologies open the opportunity to avoid ILUC altogether by efficiently using all the hectares of land already used in food production and by using a small part of the residues produced in the process instead of using the food part of the crop," it said.

EU study points to U.S. RFS2 for success

Posted Sept. 17, 2010
 
 Norway-based Statoil, one of the world's largest oil and gas production companies, has formed a strategic partnership with California-based Bio Architecture Lab Inc. for a three-year project to produce ethanol from seaweed using BAL's consolidated bioprocessing technology. Pilot- and demonstration-scale projects will be carried out in Norway, using native seaweed acquired from coastal salmon farms. Statoil will fund research and development activities as well as the demonstration project and will be responsible for managing the seaweed aquafarming operations. BAL will develop the technology and conversion process specific to Norwegian seaweed and will consult with Statoil on aquafarming procedures. Upon successful completion of a demonstration project in Norway, the companies will explore commercial operations in Norway and other parts of Europe.
 
 BAL CEO Daniel Trunfio called the agreement with Statoil a game-changing partnership and said it will allow his company to accelerate the commercialization of its technology. "The significant commitment of resources and funds from Statoil further validates BAL's market opportunity and pus us with an elite group of companies in our industry who have partnered with established oil and gas companies to bring technology to market," he said.

 
 BAL is also involved in a similar seaweed-to-ethanol project in Chile. The company is partnered there with Chile's national petroleum refining company, ENAP, and received a $7.3 million grant from the Chilean Economic Development Agency to support its efforts. In the U.S., BAL and DuPont are working to commercialize BAL's seaweed conversion technology to produce butanol rather than ethanol. That project received a $9 million grant from the U.S. DOE's ARPA-E program earlier this year. Butamax Advanced Biofuels LLC, DuPont's joint venture with BP, will commercialize technology produced as a result of the BAL-DuPont collaboration.
 
 In November 2009, Statoil's venture capital segment, Energy Capital Management, invested in BAL in order to accelerate the company's seaweed, or macroalgae, conversion technology. Following the investment, Lars Nordii, Statoil's vice president for biofuels, said BAL's technology matched Statoil's mission to provide energy to the world in a responsible manner. "Having surveyed many possible biofuel technologies, we believe that macroalgae is a low-cost, scalable, and sustainable biomass that has large potential both in Norway and internationally," he said. "Potential cooperation with Bio Architecture Lab will give us the opportunity to supply Statoil's customers with a high-end sustainable biofuel." Statoil did not release the amount it expects to invest in the strategic partnership, but said funding will follow a stepwise approach subject to BAL meeting certain milestones.
 
 In addition to BAL's activities, Statoil has financial interests in two other European cellulosic ethanol projects. It has provided funding to Weyland BioEthanol A/S, which will use an acid hydrolysis process to convert feedstocks such as wood residues, corn stover, sawdust and switchgrass at a rate of up to 2 metric tons per day. The pilot plant in Bergen, Norway, is set to begin operations in October, according to Statoil. The company is also a partner in the Kalundborg Cellulosic Ethanol Project, which is focused on commercializing Inbicon A/S cellulosic technology. Other partners in that project include DONG Energy, Royal DSM, the German Biomass Research Center and several universities.

Norway oil giant backs seaweed-to-ethanol

Posted Sept. 17, 2010 
 
 An educational nonprofit prize organization and a car insurance company awarded an E85 vehicle the top monetary award in a super fuel-efficient vehicle competition. The E85 vehicle received $5 million on Sept. 16 while two battery electric vehicles were awarded $2.5 million each from the X PRIZE Foundation and Progressive Insurance. 
 
 The E85 vehicle was the mainstream class winner with a fuel economy of 102.5 miles per gallon equivalent (MPGe). The Edison2 "Very Light Car #98" hailed from Charlottesville, Va. "Boasting the lowest drag coefficient of any car with four wheels tested in the GM wind tunnel and at the Chrysler Proving Grounds, this vehicle demonstrated over 100 MPGe on the test track, and verified in the lab, under stringent testing conditions using a highly innovative small displacement engine," the press release said. "Its low weight of just 830 pounds is a tribute to its use of light weight materials, reduced engine displacement and a host of other weight-saving innovations." 
 
 The Li-ion Motors Corp. of Mooresville, N.C., battery electric car has a fuel economy of 187 MPGe. It weighs 2,176 pounds and has a range of more than 100 miles in a real-world driving cycle. The alternative tandem class winner was the X-Tracer Team Switzerland from Winterthur, Switzerland, and has a fuel economy of 205.3 MPGe. At 1,436 pounds, this battery electric also has more than 100 miles in range and achieved a zero-to-60 mph acceleration time of just 6.6 seconds.
 
 The three teams emerged from rigorous testing from 111 competing teams, representing 136 vehicle entries from around the world. The $10 million in prize money was awarded at the Historical Society of Washington, D.C., with a variety of award ceremony participants, including Speaker of the House Nancy Pelosi; Rep. Edward Markey, chairman of the House Energy and Environment Committee; Cathy Zoi, assistant secretary for Energy Efficiency and Renewable Energy; and Sen. Mark Warner.

 
 "Throughout our nation's history, our progress has been defined by the creativity of technological pioneers; by scientists and innovators willing to take risks, experiment, and chart new paths forward for the benefit of others," Pelosi said. "Today, the X PRIZE builds on that tradition. … In inspiring teams of entrepreneurs, students, and engineers to build the fuel-efficient cars of tomorrow, you are revolutionizing the automotive industry and establishing the building blocks of green jobs and a clean energy economy." 
 
 The winning teams will go on to leverage their awards to bring their vehicles to the consumer market, the press release said. Qualified prize competitors will receive funding for access to test facilities through a U.S. DOE-funded technical assistance program. "We've seen a shift in the market since we first launched this competition, and a greater awareness by people everywhere to think more seriously about the actions we take, and how they affect our environment," said Peter Diamandis, Chairman and CEO of the X PRIZE Foundation. "Gas mileage ranks as one of our top concerns when purchasing a new vehicle and I believe strongly that the innovations showcased throughout the life of this competition will continue to impact and improve our car buying options for the future."

E85 vehicle wins $5 million for fuel efficiency

Posted Sept. 17, 2010
 
 BBI International, a leader in globally recognized bioenergy events and trade magazines, has launched a new magazine and international conference. Biorefining magazine and the aligned International Biorefining Conference & Trade Show will provide a new communications avenue for the emergent global industry of advanced biofuel and biobased chemical production.
 
 "With this dedicated biorefining publication and corresponding event, we're producing highly focused, vertically integrated editorial content and conference programming," says Ron Kotrba, editor of Biorefining. "Starting in October, Biomass Magazine will be rebranded as Biomass Power & Thermal to illustrate the three-year-old publication's exclusive editorial focus on the biobased electricity and heat generation sectors. At the same time, the editors of Biorefining will focus on advanced biofuels and biobased chemicals. This strategy will allow us to serve our readers even more effectively."
 
 Biorefining provides in-depth coverage of advanced biomass refining—technology scale-up, project finance, policy and markets—with a core focus on the industrial, refining and agribusiness alliances defining the industry. The publication is tailored for industry professionals engaged in producing, developing and deploying advanced biofuels and biobased chemicals. Monthly, the magazine will reach more than 5,000 readers including producers, future producers and developers of advanced biofuels and biobased chemicals; investors; owners and managers of existing industrial facilities; petroleum refining executives; agricultural processing leaders; waste management executives; government and military officials; municipal decision makers; researchers and other professionals in the biorefining sector. The inaugural issue will be mailed to 15,000 industry professionals. The contents of that issue, along with daily industry news coverage, can now be viewed online at www.biorefiningmagazine.com. 
 
 "We're at the forefront of the next generation of biorefining, and our readers, advertisers, attendees, and exhibitors are excited about the direction we're taking to better serve them," says Joe Bryan, CEO of BBI International. "They face unique challenges and opportunities with biobased chemicals and advanced biofuels, and we're glad to play a role as a vital information and market intelligence conduit for key stakeholders in this industry."
 

 The International Biorefining Conference & Trade Show will be held November 16-18, 2010, at the Omni William Penn Hotel in Pittsburgh, Pennsylvania. It will feature more than 50 speakers within more than a dozen panels. More information can be found online at www.biorefiningconference.com.
 
 About BBI International
 BBI International produces globally recognized bioenergy events and trade magazines. In addition to the International Biorefining Conference & Trade Show, BBI owns and operates the International Biomass Conference & Expo and its allied regional events, as well as the largest, longest-running ethanol conference in the world—the International Fuel Ethanol Workshop & Expo (FEW). The company publishes Biorefining magazine, Biomass Power & Thermal magazine, Ethanol Producer Magazine, and Biodiesel Magazine, as well as a number of ancillary products including maps, directories, e-newsletters and other Web-based industry resources.

BBI International launches Biorefining magazine and conference

Posted Sept. 17, 2010
 
 Murphy Oil USA, a subsidiary of Murphy Oil Corp., has purchased the shuttered ethanol plant near Hereford, Texas, formerly owned by Panda Ethanol Inc. The 105 MMgy Panda Hereford Ethanol LP plant was 90 percent complete before construction was halted last year when the company filed for bankruptcy. Murphy Oil Corp. treasurer Mindy West said the company plans to increase the plant's capacity to 115 MMgy after necessary retrofits are complete.
 
 "We have a little ways to go before it's up and ready to run, but we hope to have it fully operational in the first quarter of next year," she said, adding that only minor modifications are needed to make the plant functional. "It's mostly just electrical and instrumentation work, some paving has to take place, and then of course we have to hire and train a work force."
 

 When Panda Ethanol began constructing the facility several years ago, it planned to use cow manure from nearby stockyards to power the plant and claimed it would be one of the largest biomass-fired ethanol plants in the U.S. The possibility of utilizing manure as an energy source for the plant still exists, West said, but Murphy Oil does not intend to run the facility in that fashion, "at least at the start." 
 
 The purchase of the Hereford facility doubles Murphy's ethanol production capacity. Last October, the company bought its first ethanol plant, a former VeraSun Energy Corp. plant in Hankinson, N.D., for $92 million. The 120 MMgy plant supplies Murphy Oil with 25 percent of its ethanol needs, according to West. With the addition of the Hereford plant, the company will now be able to fill approximately half of its ethanol requirements with in-house supply.
 
 West was unable to disclose the purchase price for the facility, which was acquired last year by Panda Ethanol's lead creditor, Societe Generale, for $25 million in credit following the company's bankruptcy filing.

Murphy Oil doubles its ethanol capacity

Posted Sept. 20, 2010 
 
 Although it's frequently overlooked, research and development of next-generation fuels should be done in conjunction with development of engines, according to a Sandia National Laboratories report released Sept. 15. "The oil companies and the automobile and truck engine companies have engaged in a dialogue and collaboration on fuel and engine issues for almost 100 years," said Ron Stoltz, manager of Sandia's Advanced Energy Initiatives. "But the same cannot be said for the majority of biofuel start-up companies, especially those that are thinking ‘beyond ethanol'. The report highlights how fragmented the biofuels industry is today and how, by putting serious thought behind some key issues like fuel chemistry linked to engine performance, great strides can be made."
 
 The 40-page report was based on the results of a November 2009 workshop that was underwritten with help from Chevron. Participating were researchers from the U.S. DOE's Combustion Research Facility and Joint BioEnergy Institute, as well as representatives from biofuel developers, oil companies and engine manufactures. In addition, there were a variety of experts from universities, regulatory agencies and laboratory communities. 
 
 The goal of the workshop, Stoltz said, was to bring together researchers and experts in an effort to find ways to accelerate the transition to biofuels. The group came up with a list of key attributes to make next-generation fuels a reality. Biofuels must be: 
 •	Clean (at or below U.S. EPA-designated pollutants criteria);
 •	Sustainable (a CO2 footprint below that of the petroleum-based fuels being displaced); and
 •	Compatible (with current and future engine designs, and with current and future distribution infrastructure).

 
 Among other things, the group agreed that a consolidated federally funded research program should focus on biofuels and advanced engines. Currently, there are two separate DOE program offices to fund research on these two topics. "A consolidated research program would accelerate the transition to biofuels for the transportation sector," the report said. 
 
 Workshop participants also came up with four key recommended actions: 
 1.	Modernize the testing, specification, and certification of all fuels;
 2.	Plan and integrate the research and development of next-generation biofuels in conjunction with the development of advanced engines;
 3.	Develop specific guidelines, roadmaps, and objectives for co-development of next-generation biofuels and advanced engines; and
 4.	Convene an International Fuels and Engines Summit, sponsored by industry with government and university participation, to ratify a fuels/engine strategy and implementation framework.
 
 Another suggestion by the group is that biofuels policy should shift from rural development to energy security. "This would change the incentive framework and the potential evolution of the U.S. fuels industry," the report said. 
 
 The report also contained a short article called "Designing Spark Injection Engines to Take Advantage of Ethanol" by Magnus Sjoberg of Sandia. "One effective technique for increasing the fuel mileage of vehicles powered by gasoline type spark ignition piston engines is to apply engine downsizing," Sjoberg wrote. "The reduction can be achieved by reducing the number of cylinders and/or by reducing the swept volume of each cylinder." 
 
 The article went on to say that if nothing else is done, the increased fuel mileage will come at the expense of peak torque and power. To maintain both power and torque intake, pressure boost can be applied by the use of a turbocharger or mechanical supercharger. The next hurdle, he said, is engine knock, about which auto-ignition data indicates that ethanol has superior resistance to knock for highly boosted operation. "In summary," Sjoberg said, "ethanol has a clear potential to enable increased engine efficiency through its good high pressure performance and true single- stage auto ignition characteristics, while simultaneously replacing petroleum by being a renewable fuel."
 
 To view the entire report, see <a href="http://www.sandia.gov/news/publications/white-papers/BioFuels7-19V5.pdf">http://www.sandia.gov/news/publications/white-papers/BioFuels7-19V5.pdf</a>.

Report calls for development of advanced combustion engines for success of biofuels

Posted Sept. 20, 2010 

 
 A 10.5 MMgy ethanol plant in Grafton, N.D., which will be auctioned off Sept. 29, has been sitting idle for several years. However, millions of dollars in upgrades completed after it was shut down make it an attractive buy for someone looking for a sweet deal, according to Scott Steffes, president of Steffes Auctioneers Inc. "That property is going to sell for pennies on the dollar just on the upgrades alone," he told EPM. 
 
 Steffes Auctioneers will hold an absolute auction for the ethanol plant, meaning there is no minimum bid amount to purchase the plant. "It's being sold to the highest bidder regardless of price, with no reserve," he said. 
 
 Also for sale is personal property, which will be auctioned the following day, Sept. 30. This includes a large variety of parts, accessories, shop equipment and office furniture. 
 
 The facility started out as a potato flake plant and began producing 3.5 MMgy of fuel ethanol in 1983. Alchem first utilized parsley potatoes as a feedstock, then wheat, before settling on corn. 
 
 Harold Newman of the Newman Group was one of eight investors until the mid- to late- 1990s, when he bought out the other shareholders. By August 2007 the plant had increased its capacity to 10.5 MMgy but was only producing 8.5 MMgy. At that time Newman hinted to EPM that there was talk of expanding to 18 MMgy. By October 2007, however, the plant had shut down due to the high cost of corn and low price of ethanol. 
 
 Upgrades to the plant include an automation system for the coal-fired boilers and a steam generating system. It has a thermal oxidizer system that has never been operated, a methonator system, a C02 scrubber and other items. 
 
 The real estate includes about 111,000 square feet of buildings, including a scale building, office area, and a coal shed with more than 700 tons of coal. A portion of the building caved in and was damaged due to snow the winter of 2009-'10. "The property will be sold in its present condition," according to Steffes Auctioneers.

Alchem plant up for grabs at Sept. 29 auction

Posted Sept. 20, 2010
 

 The U.S. EPA is in the process of evaluating comments it received in response to a call for information regarding the inclusion of biogenic emissions when accounting for a facility's total amount of greenhouse gas (GHG) emissions. Earlier this year, the EPA finalized its Tailoring Rule, which set in motion the process of holding facilities accountable for GHG emissions in addition to pollutants already regulated by the agency. When the Tailoring Rule was initially proposed, the EPA exempted biogenic emissions—emissions that occur as a result of the combustion or decomposition of biological materials—from GHG accounting approaches. But when the final rule was announced, the EPA had reversed its stance and included those emissions in its accounting framework.
 
 Hundreds of comments were submitted to the EPA offering opinion and technical information regarding this decision. Many comments were from concerned citizens, some who support exempting biogenic emissions and others who believe there is no such thing as a carbon-neutral emission. Representatives from affected sources, including landfills, wastewater treatment facilities, livestock management facilities and ethanol production facilities, also filed comments to argue that biogenic emissions have been historically excluded from GHG emission calculations and deviating from that standard would disrupt an internationally acceptable protocol.
 
 The Renewable Fuels Association commented that the EPA's own long-standing policy has been to exclude biogenic emissions from regulations that require accounting and reporting of GHG emissions. Geoff Cooper, RFA's vice president of research, said including biogenic emissions in GHG calculations would be major blow for every ethanol producer in the U.S. because the majority of CO2 emissions produced at ethanol facilities occur as a result of fermenting corn. "Every bushel of corn produced releases 17 pounds of CO2, so they are significant emissions and including them in the Tailoring Rule or any other greenhouse gas accounting framework greatly exaggerates the carbon intensity of our industry," he said.
 
 The Tailoring Rule already subjects many of the country's large ethanol facilities—100 MMgy or larger—to the EPA's Title V and Prevention of Significant Deterioration permitting process because those facilities produce more than 100,000 tons per year of GHG emissions through fossil fuel use. But if the EPA's decision stands to include biogenic emissions in GHG accounting practices, "virtually the entire industry is going to be affected," Cooper said. Even medium-size facilities, those with production capacities of between 40 and 60 MMgy, would have GHG emission levels that far exceed the 100,000 ton threshold.
 
 It is not clear when the EPA might conclude its analysis of comments regarding biogenic emissions calculations and either recant its decision or maintain the rule as it was finalized. The deadline to file comments was Sept. 13, but the agency has not set a deadline for completion of its analysis, according to Cooper. 
 
 The RFA is hopeful that the EPA will realize accounting for CO2 emissions from biological materials is counterproductive and will negatively impact all biomass-using industries. "The inclusion of biogenic emissions annihilates any rationale for doing a renewable electricity standard, so it's a much broader issue than just biofuels," he said. The possibilities for hampering a growing renewable energy industry become even greater if the EPA's regulations were to be carried over into some type of national cap and trade system, he added. "If an ethanol producer has to have offsets for biogenic emissions, then it hits everybody hard. That's why this was such an important issue for us. The implications go far beyond a Tailoring Rule."
 
 Some commenters argued that not only should biogenic emissions from fermentation be accounted for, the entire life cycle of the crop should also be included. This life-cycle analysis suggestion has been introduced previously, and has largely been discredited by the industry as an inconceivable notion. "There are some folks who are advocating following these carbon molecules from the very beginning of the life cycle through the very end," Cooper said. "Obviously, that is not practical, it's not scientifically justified and, frankly, it's lunacy to think our industry could do something like that." So far, fossil fuel producers are not being subjected to the same type of lifecycle emissions scrutiny as biofuels. Cooper said that highlights the inconsistent treatment of the two types of fuels. "We're talking about recycled emissions when we talk about biogenic emissions—carbon that was recently in the atmosphere and is then temporarily sequestered and re-released. It's very different than carbon that has been sequestered for millions of years and would remain there if it were not being taken out to burn for gasoline. But right now, EPA and the environmental movement are so dialed in on the carbon cycle of biofuels that petroleum continues to get a free pass."
 
 While including biogenic emissions in GHG calculations could have a devastating impact on the biofuels industry, maintaining the international status quo and continuing to exempt those emissions could jumpstart a movement toward utilizing renewable sources for energy at facilities. Cooper said he believes maintaining the carbon neutrality of biomass will serve as a catalyst for the ethanol industry to use biomass sources rather than fossil fuels such as natural gas in their boilers. "Particularly if you're a plant that's just over the 100,000-ton threshold, if you can get under that threshold by augmenting your fossil fuels with a little bit of biomass, there's a good reason to do that," he said. "If they don't exempt biogenic emissions, there's no reason to do that and we'll see the industry use more fossil fuels."

EPA ponders biogenic emissions reporting

News release posted Sept. 20, 2010

 
 BlueFire Renewables Inc., a company focused on changing the world's transportation fuel paradigm through the production of renewable fuels from non-food cellulosic wastes, has announced an off-take agreement with Tenaska BioFuels LLC (TBF) for the purchase and sale of all ethanol produced at BlueFire's planned cellulosic ethanol facility in Fulton, Miss. 
 
 "This off-take agreement is a significant step forward for BlueFire. It provides immediate revenue once our plant is on-line. Also, it will move BlueFire closer to a debt financing agreement with the Department of Energy and U.S. Department of Agriculture," stated Arnold Klann, CEO of BlueFire Renewables Inc. "This is one of the first cellulosic ethanol contracts of its kind in the United States establishing BlueFire as a clear leader in the industry." 
 
 Pricing of the 15-year contract follows a market-based formula structured to capture the premium allowed for cellulosic ethanol compared to corn-based ethanol giving BlueFire a credit worthy contract to support financing of the project. Despite the long-term nature of the contract, BlueFire is not precluded from the upside in the coming years as fuel prices rise.
 
 TBF, a marketing affiliate of Tenaska, provides procurement and marketing, supply chain management, physical delivery, and financial services to customers in the agriculture and energy markets, including the ethanol and biodiesel industries. In business since 1987, Tenaska is one of the largest independent power producers. 
 
 "We look forward to a long-term relationship with BlueFire and to collaborating on off-take agreements for future plants as BlueFire continues to expand and bring valuable biofuels to the markets that need it most," stated Dave Neubauer, TBF general manager and vice president.
 
 The Fulton, Miss., project will allow BlueFire to use green and wood wastes available in the region as feedstock for the ethanol plant, which is designed to produce approximately 19-million gallons of ethanol per year. Another fully permitted and shovel-ready facility in Lancaster, Calif., will use post-sorted cellulosic wastes diverted from Southern California's landfills to produce approximately 3.9 million gallons of fuel-grade ethanol per year. 
 
 SOURCE: BLUEFIRE RENEWABLES INC.

BlueFire secures off-take agreement with Tenaska

News release posted Sept. 20, 2010

 
 Christianson & Associates PLLP, a developer of enterprise resources planning (ERP) software implementation for biofuels producers, announced Didion Milling Inc., a producer of both fuel ethanol and food-grade milling products has successfully implemented Intellego Grain software at their processing plant in Cambria, Wis. Intellego is proprietary software that nests within Microsoft Dynamics GP, a popular mid-range accounting and financial management tool.
 
 The addition of the Intellego Grain module now provides Didion with a single, fully integrated grain management and financial management software system. Three immediate benefits to Didion of this implementation are (1) enhanced financial reporting capabilities, (2) the integration of all inventory items into a single unified inventory system, and (3) a better tool to establish risk management strategies that allow them to lock in margin when available. 
 
 Fred Gould, Manager of C&A's Technology Group notes that the implementation process went extremely smoothly for two main reasons: "One was a clear and well thought out implementation plan. And second was the effort put forth by both the Didion and the C&A teams. Didion's team, led by Luke Burmeister, Didion's CFO, took ownership of the project from the beginning and tested all of the critical business processes. The C&A team provided guidance on the best use of the Intellego's functionality. By both teams taking responsibility for their part of the implementation, this was the smoothest go-live I have ever seen." 
 
 Luke Burmeister had this to say: "We currently engage in operations that dramatically exceed industry standards. Our employees have a wealth of knowledge and experience in grain merchandising, grain manufacturing, logistics, ethanol, engineering, and software development. My core team partnering with C & A has developed a fully automated ERP system from the procurement of corn to the production and traceability of food and fuel to the delivery of financial statements." 
 
 The Intellego system is an extension of the core Dynamics ERP system. Based on its vast R & D experience in the corn industry, Didion Milling has built one of the most technologically advanced and efficient corn facilities in the world. Didion has a great story to tell in that they produce both food and fuel out of the same kernel of corn. Burmeister stated "we will continue to diversify our customer base, add product mix, and reduce our overall costs and carbon footprint through a reduction in energy taking us to the next level in our food AND fuel vision. It is all about adding value to the kernel of corn. We intend to leverage our high-quality workforce and extensive process and software development experience working with the leader in the industry in developing and enhancing the most efficient automated software system in the renewable fuels industry."

 
 Christianson & Associates, a CPA firm and Technology provider, was founded in 1987 on the principle of solving problems for rural businesses and farmers. Growing up on a Minnesota farm, John Christianson understood the challenges that his neighbors faced. Using his talents for accounting and business, he set out to help others successfully grow their businesses and protect their assets. Whether working with a small, local company, an ethanol production startup, or a large corporation, Christianson & Associates brings the quality and expertise our clients depend on.
 
 Over the years, as new challenges and opportunities for the rural and agricultural industry come to light and Christianson & Associates rises to the challenge, developing new skills and expertise to meet your needs. Accuracy, confidentiality, and fast response are all built in to our culture. New business development and new industries keep us on the cutting edge while rural, small town values keep us rooted in our tradition of service. For More information, contact: Fred Gould, Christianson & Associates, PLLP 302 Fifth Street Southwest Willmar, MN 56201, 320-441-5541.
 
 SOURCE: Christianson & Associates

Didion installs Intellego Grain software

Posted Sept. 22, 2010 
 
 Texas-based Glycos Biotechnologies Inc. recently announced it has created a microbial technology platform that can convert fatty acids into ethanol, advanced biofuels and biochemcials. The new platform is similar to GlycosBio's glycerin conversion technology, but targets a different, low-value feedstock. 
 

 "What we do is use metabolic engineering to design microorganisms that produce specific chemicals," said Paul Campbell, GlycosBio's chief science officer. "We do use E. coli, the traditional workhorse bacterial for most biotechnology, but we also use other microbial strains-ones that have a very strong history of use in industrial-scale fermentation."
 
 One significant benefit of GlycosBio's new technology platform is that it produces high product yields. In the ethanol production process, one pound of sugar only creates about a half pound of fuel. "In the case of fatty acids, we've already demonstrated the one-to-one conversion, which would be the equivalent of taking one pound of fatty acid and making one pound of ethanol. Additional benefits of the technology include the ability to produce complex molecules, and the process does not require a highly purified feedstock, Campbell said. 
 
 While the platform is capable of producing renewable fuels, such as ethanol and biobutanol, Campbell said the long-term goal of his company is to produce biobased chemicals, including acetate, acetone, isopropanol, succinate and propionate from fatty acids. 
 
 To date, the new microbial platform has been tested at the lab scale. According to Campbell, GlycosBio's intends to scale up to pilot production within the next few months. The pilot-scale demonstration will take place at the company's facility in Houston. Although a wide range of products can be manufactured using the new platform, GlycosBio is still in the process of determining which chemical should be brought to market fist. 
 
 Research on the new platform was completed in collaboration with Rice University Professor Ramon Gonzalez and his team. According to Campbell, Gonzalez and his team also developed GlycosBio's initial glycerin conversion technology. Results of the latest component of the research were published in Applied and Environmental Microbiology, a research journal published by the American Society for Microbiology. 
 
 This article originally appeared at <a target="_blank" href="http://www.biorefiningmagazine.com" rel="external">http://www.biorefiningmagazine.com</a>

GlycosBio develops new microbial platform

Posted Sept. 21, 2010 
 
 Several months into a year-long study on the effects of E15, researcher Craig Hoff just doesn't see how the U.S. EPA can make a decision on higher ethanol blends by this fall. "Too many technical questions have not been answered," he said, "and it takes time to organize and run the studies."

 
 Hoff and Greg Davis, both professors of mechanical engineering at Kettering University, are using a $125,000 U.S. DOE grant to study the effects of E15 on mid-1990 era vehicles. Testing started in May, with a minimum goal of 800 hours. "We are likely to have many additional hours, assuming that we don't run into any difficulties," Hoff said. 
 
 The E15 study is one of many others currently under way. In fact, it's "a very small piece of a much larger plan," he said. 
 
 The EPA has already delayed approving E15 twice. It previously indicated that a decision would be made this fall, perhaps beginning with model year 2007 and newer in September and 2001 and newer in November. 
 
 Hoff is one of those recommending caution before moving to E15. Although he's "optimistic" that most fuel systems will work fine with E15, he's advocating a slow and careful approach to avoid potentially costly mistakes. Still, that doesn't mean he isn't an ethanol supporter. "I personally think that moving from E10 to E15 is a good idea for helping to make the country more energy independent," he told EPM. 
 
 Researchers will test the fuel components of the Chevrolet Lumina, Ford Taurus and Toyota Camry, one set with E10 and the second with E15. The study uses test rigs, or stainless steel storage tanks with sensors to monitor fuel temperature, flow rate and pressure, to test for signs of damage in the fuel pump and injectors. "We'll be monitoring the pump flow rate and pressures while the system is operating, to be sure that the pumps are operating properly," he said. "Periodically, we'll take the fuel injectors off the test rig and test their operation on a fuel injector test bench. Upon completion of the testing, we will be examining all of the parts for visible signs of damage." 
 
 Following the conclusion of testing in May 2011, the researchers will submit a report to the DOE. They also plan to publish a paper through the Society of Automotive Engineers. 
 
 This isn't the first time Hoff has studied the effects of ethanol blends on vehicles. A previous study concluded that E10 was safe for use in classic cars, as long as the vehicles have rebuilt carburetors using modern seals and gaskets and that owners regularly monitor for fuel leakage. "When we inspected the parts after testing, we found some minor issues, [such as] minor tarnishing, but nothing suggested the imminent failure of the components," he said. He also added that most classic cars already have rebuilt carburetors and that if a classic car owner doesn't regularly monitor for fuel leakage, they should.

Researchers in midst of E15 engine study

Posted Sept. 9, 2010

 
 Future waste-to-ethanol producer Fulcrum BioEnergy Inc. announced it has begun engineering, procurement and construction (EPC) activities at its Sierra Biofuels Plant near Reno, Nev. The company plans to begin producing cellulosic ethanol at the plant in mid-2012. The $120 million project will use a thermochemical process to convert approximately 90,000 tons of locally sourced post-recycled municipal solid waste into 10.5 MMgy of cellulosic ethanol. Additionally, the facility will generate 15 megawatts of electricity annually, which will be used to power the plant.
 
 Fulcrum President and CEO Jim Macias said engineering work began earlier this quarter, which was later than the company had initially expected. "It took us longer to raise the capital in this very tough market, but we're very pleased to get this project going and demonstrate the commercial viability, not just for our project but for the industry," he said. Fulcrum awarded the EPC contract to a subsidiary of Fluor Corp. because, according to Macias, it has expertise in gasification and alcohol synthesis and has a proven track record on energy projects. "They have assembled for us an outstanding team to construct Sierra BioFuels and we look forward to working closely with Fluor on the successful completion of this important project," he said.
 
 Fulcrum's thermochemical production process will utilize very high temperatures to break down the feedstock molecules for conversion to syngas. Macias said only a small amount of natural gas is required for approximately one half-hour to begin the gasification process. "It's very energy positive, so it's self-sustaining and needs no additional energy to run it," he said. "We generate all our own power for the facility." The Sierra Biofuels Plant is being designed to utilize all power produced at the facility, but Macias said the possibility exists to produce extra power to sell to the grid.
 
 In addition to beginning engineering work, Fulcrum has secured its long-term feedstock needs by signing contracts to obtain MSW that is currently being sent to landfills in the Reno-Lake Tahoe basin.
 
 Fulcrum is also moving ahead with proposed commercial-scale MSW-to-ethanol plants in Colorado, Florida, New England, Oklahoma, Tennessee and Houston, according to Macias. "Houston's a very good market," he said. "There's a lot of infrastructure there [and] there's a big demand for the fuel for local blending." Macias said there's no target start-up date for a Houston facility yet, but the plant's initial capacity is expected to be 30 MMgy. The company is in the process of exploring specific sites in the other areas and plans to eventually have the capacity to produce 1 billion gallons of ethanol per year.

Engineering underway at Nev. cellulosic site

Posted Sept. 9, 2010
 
 Corn farmers that received payment for corn deliveries to now-bankrupt VeraSun Energy Corp. ethanol plants have been surprised to receive letters asking for some of that money back. 
 
 In South Dakota, a public meeting has been set for Sept. 14 in Sioux Falls to discuss options. Patrick Glover is one of two attorneys from Sioux Falls-based law firm Meierhenry and Sargent LLP that will be there. "The meeting is to inform area producers who were ‘lucky' enough to get one of the letters, what the situation is, what their rights are, and should they choose to have our office represent them, what the plan would be moving forward," Glover said. 
 

 Although corn farmers make up the largest group, the letters have gone out to anyone that received a payment from VeraSun in the 90 days before it filed for Chapter 11 bankruptcy in 2008. A settlement offer gives until Sept. 30 to repay 80 percent of the payment. Of the letters Glover has seen, that's a chunk of change—ranging from $5,000 to $185,000. 
 
 Although it's not known exactly how many letters have been sent out, likely more than 1,000 corn producers have been affected across the country, said Lisa Richardson, executive director of the South Dakota Corn Growers Association. "Unfortunately I think it's leading to a lot of fear and uncertainty for corn producers," she said. 
 
 When it filed for bankruptcy VeraSun was the second largest U.S. ethanol producer, with 16 plants in eight states. It owed more than 1,700 creditors approximately $1.5 billion, according to its bankruptcy filing. 
 
 The letters were mailed out by legal counsel for the reorganized debtors of VeraSun in late August. The next legal step, should the settlement offers not be taken, is for VeraSun's reorganized debtors to file with bankruptcy court and take part in hearings, Glover said. 
 
 Iowa State University's Center for Agricultural Law and Taxation posted information on its website on the topic. Written by Roger McEowen, the document cautioned sellers from ignoring the letter, as failure to respond could result in the bankruptcy court authorizing full repayment. 
 
 At issue is whether the payments made by VeraSun between Aug. 3, 2008, and Oct. 31, 2008, were preferential or in the ordinary course of business. A preference payment is when a creditor is paid in the look-back period that allows the creditor to recover more money than if the bankruptcy estate had distributed the creditor money after the bankruptcy. For most suppliers, McEowen wrote, the look-back period is 90 days and it is one year for insiders. On the other hand, a transaction that occurs in the ordinary course of business cannot be avoided. 
 
 Some suppliers will have a strong defense that what they were paid was in the ordinary course of business, McEowen predicted. Others may have partial defenses and can negotiate lower repayments. However, some may not have a good defense and could have to repay the full amount. 
 
 The preferential treatment law is in place to make sure that everybody gets a fair slice of the pie, Glover said. Otherwise, a company might be able to pick and choose among its creditors, paying three in full and ignoring seven others. The trustee looks at those decisions and determines if the three creditors were treated with preference, and if so, redistributes the money to all creditors evenly. "It's a good law, but there are exceptions too, and I think these producers fit under the exception," he said. In other words, if VeraSun paid the corn farmers in the ordinary course of business, those farmers will not be required to pay back the money. "That, at least in my opinion, is pretty clear that it's a yes," he added.

Meeting planned in S.D. on VeraSun letters

Aug. 2—DDGS looks as though it is beginning a price disconnect to corn. The hot Gulf barge market of late July appears to be logistics related. Reports of four or five boats—more than 100,000 metric tons—to arrive in early August set off a scramble. Normally shipments are more spread out, and contracted barges being loaded the last half of July might not have made it in time.
 
 Domestically, prices have been stagnant, making smaller moves as the corn futures fluctuate. Hog producers are eagerly awaiting new crop corn, with its potential to have fewer Vomitoxin problems than last year. There is a lot of wet distillers grains being made and, combined with unusual moisture in typically dry areas, cattle demand has decreased versus normal years.
 
 Ethanol margins have been near breakeven for almost a month, and there are signs of late summer plant slowdowns. The resulting decrease in DDGS supply should offset the lackluster summer domestic demand.
 

 Bad weather in Europe and China is generating interest for DDGS, with China looking for offers seemingly every week. Container demand is still strong in spite of increasing bulk shipments, with the only hitch being container supply. The Superior port has seen increased business, which coincides with the last bulk boat out of the PNW for the season.
 
 The amount of DDGS on the market, combined with the low demand season, will make exports more important than ever.

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DDGS demand seeing seasonal softness

Posted Aug. 27, 2010
 
 The comment period has ended for the U.S. EPA's 2011 proposed renewable fuel standards and it appears that most producers agree that the agency's proposal to lower next year's cellulosic biofuels target to between 5 and 17.1 million gallons is an accurate goal. However, several producers submitted comments stating that continued lowering of the RFS2 mandate could severely hamper the expansion of cellulosic ethanol production.
 
 The EPA didn't include Soperton, Ga.-based Range Fuels Inc. as one of next year's cellulosic ethanol producers in its proposed rule. In a comment filed with the agency, Bill Schafer, Range Fuels senior vice president of business development and government affairs, said the EPA committed an error in omitting Range Fuels from its list and stated that the company will indeed be producing cellulosic ethanol as early as later this year. "The EPA never contacted Range Fuels in 2010 to discuss plans for producing cellulosic biofuels from its Soperton Plant in 2011," Schafer said in his comment, adding that the EPA's information regarding the plant was inaccurate.
 
 According to Schafer's comment to the EPA, the first phase of construction at the Soperton facility was completed in the first quarter of this year and it will begin producing cellulosic methanol this quarter using wood chips as a feedstock. Range Fuels will also experiment with other types of woody biomass, miscanthus and switchgrass as feedstocks and will begin commissioning the plant to produce ethanol in September. "The company plans to begin producing fuel-grade ethanol from this system and selling this cellulosic ethanol as a transportation fuel into the gasoline blendstock market in the third quarter 2010 following commission," Schafer stated. "The company also plans to continue production and sales of fuel-grade ethanol produced by Phase 1 operations into transportation fuel markets in 2011."
 
 Range Fuels communications director Patrick Wright said the company is not yet able to release a specific cellulosic ethanol production volume for 2010-'11. "With a first-of-a-kind technology such as is being used at Soperton we'd expect there to be unique startup and operating challenges not encountered by mature technologies and, as such, it's difficult to predict how much we might produce in 2010 and 2011," he said.
 
 Schafer also suggested in his comment to the EPA that it should reconsider qualifying methanol as a renewable fuel. "If the U.S. is to meet the mandates of the RFS2 program, the EPA should consider expanding the set of transportation fuels qualifying as renewable fuels under RFS2 beyond just ethanol and a handful of other drop-in fuels," he stated. "We have seen this limitation contribute to the EPA's resetting of annual cellulosic biofuels mandates for 2010 and 2011 far below originally established levels, which we believe only diminishes confidence among the public and investment community in the country's ability to produce cellulosic biofuels that meaningfully contribute to reducing our dependence on foreign oil supplies and to lowering greenhouse gas production from transportation fuels."

 
 Christopher Standlee, executive vice president of Abengoa Bioenergy U.S. Holding Inc., said in his comment that Abengoa believes the EPA's estimate for a reduced cellulosic biofuel volume next year is accurate. However, Abengoa is concerned that ongoing reductions in the mandate will weaken support for cellulosic ethanol. "If the RFS is not treated as a true mandate and does not receive consistent governmental support, then financing and construction of new biorefineries will become even more difficult, and the entire industry will suffer," he stated. Standlee recommended that the EPA also lower the advanced biofuels target for 2011 in order to prevent an influx of imported sugarcane-based ethanol and foreign biodiesel. "We also believe that these foreign-produced fuels will be in short supply and will be difficult to import in the necessary quantities, potentially resulting in a failure to meet the overall advanced biofuels requirement - a result which would be devastating to the entire biofuels industry and to the RFS program as a whole," he said. Starch-based ethanol can fill the gap in advanced biofuels and cellulosic biofuels supplies, according to Standlee, and therefore the EPA should maintain next year's overall mandate of 13.95 billion gallons.
 
 DuPont Danisco Cellulosic Ethanol was listed in the EPA's proposal to contribute 150,000 gallons of cellulosic ethanol to next year's volume. In her comment to the EPA, corporate communications director Jennifer Hutchins thanked the agency for its continued support of DDCE and said the proposed volume range for 2011 appears to be accurate. But while the estimate may be correct, she also expressed DDCE's concern over the continued lowering of the cellulosic target and said it threatens to slow the progress of the entire cellulosic ethanol industry. "The RFS2 program must maintain the volume requirements to continue to drive private investment, ensure that we can meet the long-term production volume requirements, and fulfill EPA and national objectives for renewable fuels, energy security and domestic economic development," Hutchins stated. "The industry is currently entering the commercial build-out phase, and the continual lowering of cellulosic biofuel volumes threatens to push timelines forward even further."
 
 The EPA is scheduled to issue its final 2011 volume requirements in November.

Cellulosic producers comment on RFS2 target

The U.S. EPA's regulations regarding the expanded renewable fuel standards (RFS2) have recently come under attack from both environmental nonprofits as well as the oil industry. Both challenges could have an impact on the future direction of the biofuels industry and will be closely watched over the coming months as courts begin to wrestle with this complicated and ofttimes contentious rulemaking. 
 
 The Environmental Challenge
 On May 25, the Clean Air Task Force challenged the RFS2 on behalf of the environmental group Friends of the Earth. This dispute relates back to Congress' expansion of the RFS in 2007, which required EPA to analyze biofuels to ensure that each alternative fuel source provided specified reductions in greenhouse gas (GHG) emissions as compared to conventional fuels. This mandate also required EPA to establish safeguards to protect prairies and other natural ecosystems from being converted to cropland in response to the RFS. In its March final rule, after extensive debate, EPA determined that all existing biofuels—including corn ethanol—achieved the applicable emissions reductions goals as required under the biofuels mandate. 
 
 The Clean Air Task Force, however, is now challenging EPA's conclusions regarding the emissions impacts of existing forms of biofuels arguing that "EPA's rule is seriously flawed because it will actually increase greenhouse gas emissions from the transportation sector in the near term." The Clean Air Task Force also argues that EPA failed to consider the "global rebound effect" when analyzing the life-cycle GHG from biofuels. In the Clean Air Task Force's view, the RFS2, by displacing gasoline from the U.S. market, will reduce overall demand for petroleum, which will lead to cheaper petroleum and, in turn, more use and more GHG emissions globally. According to the Clean Air Task Force, if EPA had considered this impact, only a few existing forms of biofuels would have met the emissions reductions requirements. This assertion or allegation has been highly controversial. Lastly, the Clean Air Task Force has also asked EPA to reconsider its assumption that the RFS2 will not cause natural ecosystems to be converted to cropland. 
 
 The Oil Industry Challenge
 The National Petroleum and Refiners Association and the American Petroleum Institute have also challenged the RFS2, using a more narrowly tailored argument. According to the oil industry representatives, "EPA made the rule effective on July 1, 2010 … while setting unreasonable mandates on refiners that reach back to 2009 for bio-based diesel and to Jan. 1 for the other advanced biofuels." In short, the oil industry believes the retroactive application of the RFS2 is unreasonable and unsupported. To challenge this retroactive application, API filed a legal challenge in the D.C. Circuit Court of Appeals on March 29, shortly after EPA's rules were finalized.
 

 Both challenges could potentially impact the future of the RFS2. Overall, the Clean Air Task Force suit is likely the more serious threat (as the oil industry challenge is limited in scope) but it is questionable whether this suit will be able to gain any traction under the administrative law principle of deference to the agency. Regardless, both suits are worth tracking as the EPA begins to apply the new rules to the biofuels industry.
 
 The authors are attorneys with Faegre & Benson. Andrew Anderson is head of the firm's corporate group in Iowa. Reach him at 515-447-4703 or AAnderson@faegre.com. Jess Phelps focuses on international trade issues involving antidumping and countervailing duty litigation. Reach him at 515-447-4721 or <a href="mailto:JPhelps@faegre.com">JPhelps@faegre.com</a>.

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Recent Legal Challenges to EPA's RFS2

The issues currently on the table for review by Congress are critically important to the future of the domestic ethanol industry. The weeks and months ahead could prove to be a dramatic turning point in the history of ethanol.
 
 Some of the major decisions include whether to: 
 4Extend the present Volumetric Ethanol Tax Credit or terminate it over time and possibly introduce other options. 
 
 4Increase the blend levels from 10 percent to 15 percent or an interim step of 12 percent. 
 
 4Eliminate or continue the tariff on imported Brazilian ethanol.
 
 These are, indeed, game changing decisions that will either secure the future of ethanol or call its future into question. It's no secret that there is division within the ethanol industry on some of these issues. Unfortunately, divisiveness at this critical time is the worst of all possible scenarios. 
 

 On the issue of whether to extend the current excise tax credits, I believe we need time to make sure that all the various alternatives have been thoroughly vetted before calling for it to be rescinded. We need time to come together and discuss the options and ramifications such actions may have on both current and future producers. We need to examine the impact that these policy changes would have on established plants that are carrying low or no debt versus plants that are newer and are still carrying a high debt load. If this means extending the current VEETC program for a shorter than desired period, to allow for these discussions to take place, then so be it.
 
 Increasing the blend levels to 15 percent is virtually a no-brainer. The reason the 10 percent blend level was set in the first place had little to do with technical issues, and much more to do with the ease of calculating the blend ratio. This, of course, was before inline blending was common place. Going to a 12 percent blend may seem like a good interim step, but may end up being a level that we stay at for years to come. There simply is no technical reason why we could not go directly to 15 percent, in fact, there seems little reason why we couldn't go to a 20 percent blend, but that battle can be saved for another day. Even if we have to hold tight for a little longer in order to get to a full 15 percent, in my opinion, that's what we should do.
 
 Before any decision on the reduction or lifting of tariffs for imported ethanol takes place, the legislative and tax related future of the domestic industry needs to be thoroughly sorted out. To even consider doing so prior to these matters being settled would be premature at best and at its worst, could be disastrous to the ethanol industry.
 
 These are challenging times, times that will set the course for the domestic ethanol industry for years to come. Together, as a united coalition, we have built an industry that has withstood the test of time and together, in that same united spirit, we now need to come together to build our future. 
 
 That's the way I see it.

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Examine VEETC Impact, Extend Blends Now

Posted Aug. 27, 2010 
 
 Although they're not releasing a specific price tag, Cedar Rapids and Iowa City Railway Co. is spending several million dollars to install a new 9,000-foot track in Cedar Rapids, Iowa. The railway, commonly known as CRANDIC, initiated the project due to the Archer Daniels Midland Co. ethanol plant located just a few miles from the new track. 
 
 "ADM has already got a very large wet mill in Cedar Rapids, which obviously keeps us very busy," said Jeff Woods, marketing manager for the railway. "We do expect once the [second] ADM plant is fully operational to see an increase in unit train traffic in and out of Cedar Rapids."

 
 ADM's new Cedar Rapids plant, a 300 MMgy dry mill, is co-located with an existing 420 MMgy wet mill. Production has begun at the plant and the company has said it will be "fully operational" at the end of August. 
 
 The 9,000-foot track will parallel an existing line and will help speed the interchange of cars. It will simplify the process of getting unit trains sorted and ready to go. "That's going to save a lot of time," Woods told EPM. 
 
 The track will carry mostly coal, corn, distillers dried grains and ethanol, as well as some general freight. Dirt work started in August, later in the year than had been planned, and will be completed sometime this winter. "We've had so much rain here the project has actually been held up," he said. 
 
 The railway has stayed in close contact with ADM employees, both at its corporate offices and the Cedar Rapids plant, on the topic of increased traffic and what will need to be done to handle it. Last year the railway added another track in its yard to support ADM's railway needs. That project greatly reduced congestion in the railway yard, Woods said.
 
 Note: The story was edited to reflect the fact that production had begun at the new Cedar Rapids plant.

New rail line under construction

Between 2004 and 2009 the renewable energy produced in the U.S. increased by about 23 percent, according to a report issued by the 25x'25 Alliance. The 32-page analysis released in June details the advances made since the group set its goal of meeting 25 percent of the nation's energy needs with renewable sources by 2025. In the bioenergy market, the report states that the market "has enormous growth potential both in the U.S. and around the world" but is limited by a number of factors, including policy, the blend wall and insufficient infrastructure. "The bottom line is that significant progress has been made," the report says, "but there is more to be done and major challenges to overcome."

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25x'25 Alliance releases report

Posted Aug. 27, 2010
 
 Wyoming-based KL Energy Corp. (KLE) has signed an agreement to collaborate with major Brazilian energy firm Petrobras to develop and commercialize cellulosic ethanol technology for sugarcane bagasse feedstock. KLE will provide technological expertise and will optimize the process at its Upton, Wyo., facility, which will be upgraded to utilize sugarcane bagasse and other feedstocks using KLE's fourth-generation process technology. Petrobras will provide $11 million for facility modifications, process optimization and technology licensing.
 
 KLE CEO Peter Gross said his company plans to be at the forefront of the Brazilian cellulosic ethanol market. "Brazil is the global leader in the production of affordable biofuels and biomass, and we believe that bagasse is a perfect feedstock for our process," he said. Sugarcane bagasse for the optimization project in Upton will be acquired from the southern U.S.
 
 Petrobras and KLE will also work together to integrate a commercial bagasse-to-ethanol project at one of Petrobras Group's Brazilian sugarcane mills. The project is expected to be complete in 2013 and will produce approximately 4 MMgy.
 
 According to Petrobras Biocombustivel CEO Miguel Rossetto, Petrobras believes cellulosic ethanol has the potential to increase its ethanol output by 40 percent without requiring additional land use and with the added benefit of further reducing the carbon footprint of its sugarcane mills. Petrobras said it was attracted to KLE as a development partner because it has an existing demonstration plant where research is already being conducted on ethanol production from wood waste. Petrobras has been conducting research on sugarcane bagasse-to-ethanol at its own pilot plant since 2007 and will contribute its experience to the project. "This partnership will capitalize on the experience of both companies, speeding up the process of mastering this technology to produce lignocellulosic ethanol and, depending on the test results, advance the project for a commercial-scale cellulosic ethanol project in Brazil," the company said in a statement to EPM. 
 
 Gross said the U.S. also remains a target market for KLE. The company is working on projects in Michigan and Oregon that will utilize hard and soft woods and hybrid poplar, respectively, as feedstocks. According to the KLE's website, both facilities are expected to become operational in 2012. Aside from the Petrobras collaboration, KLE has projects under development in South America that will utilize bamboo, eucalyptus and green bananas as feedstocks. All of the projects are expected to be complete by 2013.

 
 KLE is so far Petrobras' only U.S. cellulosic partner and the only collaborator for cellulosic ethanol technology. According to Petrobras, its other cellulosic partnership is with Dutch company BIOeCON to develop a technology called Bi-Chem (biomass chemical conversion) for converting lignocellulosic biomass into advanced biofuels. Petrobras is also researching biomass gasification to produce energy or convert to synthetic biofuels and other products.

KLE, Petrobras partner for bagasse-to-ethanol

The U.S. DOE recently completed a study to determine the feasibility of constructing and using a pipeline to transport ethanol from the Midwest to the East Coast. The agency concluded that while a dedicated ethanol pipeline would reduce the burden of transport on railroads, enhance fuel delivery infrastructure and reduce greenhouse gas emissions, ethanol volume must be increased significantly before a pipeline could be economically viable.
 
 According to the study, the ethanol volume expected to be pipelined from producers in the Midwest to demand centers in the East Coast is approximately 2.8 billion gallons per year. This estimate is based on current consumption projections and includes demand for E10 and E85. Using an assumed pipeline construction cost of $4.25 billion, the DOE determined that a pipeline tariff would average 28 cents per gallon. Comparatively, other modes of transport along the same corridor currently charge an average tariff of 19 cents per gallon. Therefore, in order for the ethanol pipeline to be cost competitive with truck, barge and rail options, the DOE found the pipeline would need to transport approximately 4.1 billion gallons of ethanol annually. The DOE stated that this increased volume can only be achieved through a significant increased demand for E85 or widespread use of ethanol blends greater than E10. Even if pipeline construction costs were lowered by $50 million, the agency said significant financial incentives would still be required to make the pipeline feasible if ethanol demand is not increased.
 
 Aside from financial considerations, other risks associated with an ethanol pipeline focus mainly on policy issues. The DOE stated that if current supportive policy measures were removed, including the renewable fuels standard mandate, the Volumetric Ethanol Excise Tax Credit or the ethanol tariff, the pipeline's feasibility would face serious consequences. "Government policy is likely to play an integral role in the commercial viability of the asset throughout its operating life," the report stated.
 
 Additionally, advanced biofuels and other non-ethanol alternative fuels could decrease the demand for ethanol if they become commercially available. However, the DOE stated that ethanol pipelines could potentially be used to transport those other biofuels as well.
 
 The hypothetical pipeline used in the DOE's feasibility study was based on a pipeline project proposed in 2008 by Magellan Midstream Partners LP and Buckeye Partners LP. The pipeline would gather ethanol produced in the Corn Belt and transport it to demand centers in New England, the Central Atlantic and the Virginias. The DOE stated that this is the most likely path for an ethanol pipeline, but other routes would also be possible and would carry similar risks and investment requirements. The West Coast represents the least feasible end-point for a pipeline due to increased costs associated with terrain and the additional distance between supplier and demand center. 
 
 Magellan and Poet LLC are developing a project similar to the DOE's hypothetical pipeline, seeking to construct a pipeline to transport ethanol from the Midwest to a distribution center in New Jersey. The companies said their project differs somewhat from the DOE's hypothetical pipeline and has been found economically viable in their own analysis. It is based on a smaller capital cost of $3.55 billion and is estimated to have transport rates 15 percent lower than rail rates. The pipeline would have an annual capacity of 3.5 billion gallons.
 
 The companies said they were pleased with the DOE study's overall results and said the report will be valuable to Congress as it considers energy legislation. "We believe the DOE's conclusions are directionally correct: a large-scale pipeline project is feasible under certain conditions and that a federal loan guarantee is necessary to move forward," the companies said in a statement. "In addition, the DOE confirms that transporting energy via pipelines has multiple benefits such as reducing congested highway and rail systems while reducing greenhouse gas emissions when compared to other modes of transportation."
 

 Sen. Tom Harkin, D-Iowa, and Reps. Leonard Boswell, D-Iowa, and Lee Terry, R-Neb., have been working to expand DOE loan guarantee funding to qualify a renewable fuel pipeline as an eligible project. Terry said the DOE study proves that an ethanol pipeline cannot become a reality without the aid of legislation.

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

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DOE finds ethanol pipeline feasible, with conditions

In June, Archer Daniels Midland Co. received a $99.2 million grant from the U.S. DOE for a commercial-scale carbon capture and sequestration project which will capture and store 1 million tons of CO2 produced annually at the company's ethanol facility in Decatur, Ill. The $163.9 million project will demonstrate commercial-scale carbon capture and storage through the operation of a collection, compression and dehydration facility. Processed CO2  will be delivered to the nearby Mount Simon Sandstone formation, where it will be stored approximately 7,000 feet below ground. The project is expected to conclude in the third quarter of 2015.

ADM receives carbon capture funding

Aug. 2—The Dodd-Frank Wall Street Reform and Consumer Protection Act that President Obama signed into law July 21 is the first bill, or initiative, to authorize the CFTC and SEC to regulate all over-the-counter derivatives trading. Many energy trading firms are expected to be subject to new capital, margin, reporting, and position limits that were formerly free of regulatory oversight. After all the political self-congratulations, one concern is that only three Republicans in the House and three Republicans in the Senate voted for the bill. The other area of concern is that the wording of the 2,300 page bill is, in many cases, ambiguous, turning the interpretation and rule-making authority over to the regulatory agencies.
 
 The real work of crafting rules that theoretically match the intent of the bill will take place over the coming year. This will likely be a heavily lobbied and under-reported process that determines the final outcome. The CFTC has broadly outlined the need for 60 rulemaking endeavors (processes) to determine, among other things, the basis for who is a swap dealer or "major swap participant," a framework for determining capital and margin requirements, timelines and processes for derivatives reporting, the appropriate levels at which to set position limits within each respective market without significantly reducing liquidity and the timelines for compliance. 
 
 During the initial 360 days, the CFTC will attempt to push through its rule-making process. The proposed rules are to be published between 90 and 360 days after the bill becomes law. This will be quite an endeavor as the bill contains more than 350 mandates and the CFTC expects to conduct about a dozen studies, reports, or memoranda of understanding. As for the impact on your financial trading partners, the bill will undoubtedly raise costs that will be passed through to consumers. With that said, a reasonable overview of the bill suggests that end-users taking delivery should be little affected. There is a stated exemption for hedging with forwards, and a stated intent to protect financial hedgers. The real risk is that the bill will raise costs for some market participants to the point that they exit the business, stifling liquidity or effectively killing some markets. While defining the new world will take time, it is clear the era of deregulation is over.

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Final impact of Wall Street reforms will depend on the rules

Aug. 2—The U.S. corn crop is progressing well with ample moisture. Production problems in Eastern Europe and drought in Russia, however, have led to wheat market volatility and rallied U.S. commodities. World traders express great concern over smaller world wheat production, suggesting greater demand for U.S. wheat and corn. Despite a near 50 percent carry-out-to-use ratio for U.S. wheat, the market has rallied, leading new crop corn to test $4. In the July supply and demand report, USDA placed old crop carry-out at 1.478 billion bushels and new crop carry-out estimates at 1.373 billion bushels. A projected yield of 163.5 bushels per acre with acreage 900,000 acres less than previously thought results in production estimates of 13.245 billion bushels. Corn used for livestock feed, ethanol production and other food, seed, and industrial usage was left unchanged and export demand for next year was lowered by 50 million bushels to 1.950 billion, although that is likely to change.
 
 Excess world wheat supply for 2010-'11 was projected at 187.05 million metric tons (mmt) but that number will erode. World corn ending inventory decreased from June to July to 141.08 mmt, though still up from 2009-'10. With U.S. production in no threat today, any harvest delays may make an already spooked market susceptible to price spikes. Ultimately corn prices seem overvalued. Ethanol crush values may come under pressure if corn prices continue to rally as energy prices stayed subdued.
 
 The accompanying graph shows world coarse grain carry-out. The bull run that began in 2006 led by wheat had a carry-out of less than 140 mmt with a carry-out-to-use ratio of 14.96 percent. July's projection was 16 percent and is expected to decline.

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Corn market subject to spooking

Posted Aug. 31, 2010
 
 The U.S. EPA and the U.S. Department of Transportation are proposing to overhaul the fuel economy labels which are displayed on every new vehicle for sale in the U.S. During a news conference to discuss the proposed new labels, EPA Assistant Administrator Gina McCarthy said the alterations will be the broadest changes made to the labels since their debut more than 30 years ago. "As new fuel savings and emissions cutting technologies emerge from the laboratory and start appearing on showroom floors and in driveways across America, we think a new label is absolutely necessary to help consumers make the right decision for their wallets and for the environment," she said.
 
 The agencies offer two design options in their proposal. The first design features a letter grade, which will reflect the vehicle's combined fuel economy and greenhouse gas (GHG) emissions performance. The second design option is similar to the current label, but adds fuel consumption and emissions information and includes a slider bar to illustrate the car's performance compared to other vehicles.
 
 Flex fuel vehicles (FFVs) have specific labeling requirements, which require the vehicle to be identified as a FFV, list the fuels that can be used in the vehicle and indicate the fuel economy of the vehicle when operated on gasoline. In its proposal for new labeling requirements, the agencies have suggested three options for FFV labels. 
 
 The first proposed option is to continue with the current labeling requirements. This would result in FFV labels listing a lower fuel economy for E85 than gasoline. The second option would require the labels to include fuel economy values calculated in miles per gallon. The EPA acknowledges that this approach would result in a label stating that E85 results in fewer miles per gallon than gasoline, so it suggests adding text to the label that says: "While the E85 MPG values are lower than the gasoline MPG values, the use of E85 is typically slightly more energy efficient than the use of gasoline." Additionally, the EPA said it could add CO2 emission rates, which would be lower for E85 than gasoline, and fuel costs. The EPA's third suggestion is to list the vehicle's fuel economy in miles per gallon of gasoline-equivalent, which it said would illustrate the slightly higher miles per unit of energy that a vehicle fueled with E85 rather than gasoline would achieve.

 
 The EPA's goal to combine fuel economy and GHG emissions performance into one rating admittedly presents a problem when labeling FFVs, because those vehicles can be operated on more than one type of fuel. In its proposal, the EPA said that "empirical evidence" shows that 99 percent of FFV owners use gasoline instead of E85 and therefore it proposes to base combined fuel economy-GHG emissions ratings for FFVs on gasoline. "However, if a manufacturer can demonstrate that some of its FFVs are in fact using E85 fuel in use, then the merged values can be based in part on E85 performance, prorated based on the percentage of the fleet using E85 in the field," the agency wrote in its proposal.
 
 The EPA is accepting comments on all of its proposed labeling changes, including the trio of FFV options and the proposal to base merged ratings for FFVs on gasoline use rather than E85. Comments will be accepted for 60 days following the proposal's publication in the Federal Register. A public hearing will also be scheduled in the coming weeks. For information on submitting comments or to view the entire proposed rule, visit <a target="_blank" href="http://www.epa.gov/fueleconomy/" rel="external">www.epa.gov/fueleconomy/</a>.

EPA seeks comments on FFV fuel label

To meet the renewable fuels standard goal of 21 billion gallons of advanced biofuels, 527 biorefineries averaging 40 MMgy will need to be built at an estimated cost of $168 billion, according to a USDA report released in June. The "Regional Roadmap to Meeting the Biofuels Goals of the Renewable Fuels Standard" is intended to provoke discussion and further work on what the report calls an issue that "may prove to be one of the most important of the 21st century."
 
 The objectives of the 21-page report are to identify challenges and opportunities for the biofuels industry as well as to come up with solutions. Job creation is one benefit from biofuels, with the USDA estimating 40 direct jobs created for each 100 MMgy ethanol facility. In order to build biorefineries in areas of economic distress, the USDA suggests regional strategies will allow for proper leveraging of transportation, labor and feedstock resources. "USDA recognized that different regions of the country have a comprehensive advantage to the type of feedstock that can be produced and utilized in biofuel production," the report states.
 
 The report begins by acknowledging the role of corn starch ethanol in approaching the 15 billion gallon goal set by the renewable fuels standard (RFS2) for conventional biofuels. "The current ethanol industry provides a solid foundation to build upon and reach the 36 billion gallon goal," USDA Secretary of Agriculture Tom Vilsack said. "I am confident that we can meet the threshold of producing 36 billion gallons of biofuel annually by 2022." 
 
 The USDA roadmap examines the regional potential for producing the additional 21 billion gallons of advanced biofuels. It identifies the Southeast states and Hawaii, including Alabama, Arkansas, Florida, Georgia, Hawaii, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas, as having the greatest potential with up to 50 percent of the advanced biofuels volume coming from these states due to their long, robust growing seasons. The east central region, which includes Delaware, Iowa, Illinois, Indiana, Kansas, Missouri, Ohio, Oklahoma, Maryland, Minnesota, Nebraska, North Dakota, Pennsylvania, South Dakota, Wisconsin and Virginia, is right behind at 43.3 percent of potential advanced biofuels production. The Northwest and Western regions trail far behind, with only 4.6 percent and less than 1 percent respectively of expected biofuels volume. 
 
 The report notes that the U.S. EPA and USDA differ on the expected gallons from various feedstocks. By 2022, the EPA expects switchgrass to provide 7.9 billion gallons; soy biodiesel and corn oil, 1.34 billion gallons; crop residues, 5.5 billion gallons; woody biomass, 100 million gallons; other, such as municipal solid waste, 2.6 billion gallons; algae, 100 million gallons; and imports, 2.2 billion gallons. The USDA, on the other hand, estimates dedicated energy crops at 13.4 billion gallons, oilseeds at 500 million gallons, crop residues at 4.3 billion gallons and woody biomass (logging residue only) at 2.8 billion gallons.

 
 The report concludes that in order to meet cellulosic ethanol targets, a rapid build-up and substantial investment will be needed. U.S. farms are capable of producing many types of feedstocks to make the biofuels industry a true national effort, but there are multiple infrastructure needs. "A process for identifying bottlenecks and barriers related to locating biorefineries involving the federal government, Congress, states, the industry and interested stakeholders can help facilitate a biorefinery system that is national in scope," the report says. "While we expect the market to respond to the infrastructure needs of a growing industry, we recognize that the path from production to actual consumption presents challenges that will need to be anticipated and addressed."
 
 Among the bottlenecks is the limited numbers of flex-fuel vehicles (FFVs) that are primarily located in the Midwest. In addition, those FFVs actually use more gasoline than E85 or other ethanol blends due to their limited availability. The USDA suggests that California, Texas and Florida should be the primary targets for blender pumps and FFVs in the future. Blender pumps infrastructure is one area where USDA could provide immediate assistance the report adds, citing the anticipated EPA decision on a higher blend waiver.
 
 Another infrastructure challenge is the need for rail and truck transportation of ethanol, blending terminals and storage, all factors that can affect decisions on where biorefineries are built. The EPA has projected that 40 unit train rail receipt facilities will be needed, with a cost of more than $12 billion, to distribute the additional volumes of ethanol targeted in the RFS2. This equals 6.9 cents per gallon of additional costs for shipping ethanol. "Developing unit train destinations is a time-consuming process, usually taking three to five years," the report says. "The industry has responded to this challenge by developing rail-to-truck transloading facilities for smaller-than-unit train shipments of ethanol."

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USDA projects 527 biorefineries needed

While both are in the business of promoting the ethanol industry, Growth Energy and the Renewable Fuels Association don't always agree on the best way to proceed. That was especially apparent in July, when the two groups diverged on the best course of action in the fight to extend the Volumetric Ethanol Excise Tax Credit. 
 
 On July 15, Growth Energy proposed a strategic shift in policy, setting off waves in the ethanol industry. The group unveiled its Fueling Freedom Plan, suggesting some incentives be diverted to support infrastructure such as blender pumps and pipelines and requiring all new vehicles to be flex fuel. The plan would lead to an open market and eventually allow the phasing out of government support for the industry, the group said. Growth Energy had been considering various options for several months before unveiling its Fueling Freedom Plan, CEO Tom Buis says. The lapse of the biodiesel blenders credit figured in the discussion as did the multiple delays in getting an E15 waiver approved. Growth Energy's goal is to look at what is best for the industry, Buis says, not only today, but also in the future. 
 
 The RFA, joined by the American Coalition for Ethanol, the National Corn Growers Association and the National Sorghum Producers, reacted swiftly, throwing their support behind the legislation introduced in the U.S. House of Representatives and U.S. Senate to extend ethanol tax incentives. "There's very little time left for this Congress to do much," RFA President and CEO Bob Dinneen tells EPM, "which is why we are trying to stay the course and make sure we keep it simple, because complexity is the enemy right now." Although Dinneen agrees that certain parts of the proposal are very attractive, changing the U.S. renewable fuels strategy isn't something that can or should be done quickly. 
 
 Conversely, Growth Energy contends that the time is right to discuss changes. A change this big won't happen overnight, Buis says, and the group wants to get its ideas out there for discussion before the energy debate in Congress, although it is not clear that will happen this year. A Senate energy bill was introduced July 27 that, notably, ignores biofuels completely. 
 
 With Growth Energy going one direction and RFA advocating another, will that be a problem for the industry as a whole? It is a valid concern, Dinneen says. "Is it one that will keep us from doing what we want to do?" he asked. "I don't know yet."
 
 At the American Coalition for Ethanol Conference & Trade Show in August in August, representatives from ACE and the National Corn Growers talked about holding a face-to-face industry meeting with RFA and Growth Energy, as soon as possible. Darrin Ihnen, president of NCGA, which has long called for cooperation among ethanol industry groups, said that NCGA has been serving as a "babysitter,", attempting to get the three groups, ACE, RFA and Growth Energy, to at least agree in public. 

 
 Raymond Defenbaugh, president, CEO and chairman of Big River Resources LLC in West Burlington, Iowa, commented from the audience that what the industry needs is one voice of support for ethanol from all three groups. ACE, RFA and Growth Energy may have different strategies, but they are united in support of ethanol. "We might be using different tools," he said. "We might even have a different timeline on using those tools." Big River Resources is the only U.S. ethanol plant that is a member of ACE, RFA and Growth Energy. Defenbaugh has exactly the right message, and the organizations need to do what is necessary to make that happen, said Brian Jennings, ACE's executive vice president. "The truth is that we have so much more in common than we are apart," he said.
 
 Ron Fagen, president and CEO of Fagan Inc., said that he doesn't see a problem with having three separate ethanol industry groups. Although those groups do need to deliver the same message, having multiple voices is actually a strength. "We all have our allies," he said. "We all get along better with certain politicians that we do others." 
 
 Larry Johnson of LLJ Consulting and Business Development reminded the conference that there was a lot of arguing in the 1980s over the Clean Air Act. The NCGA was in the same middleman position it is in right now, he said. And yet, despite the fighting, the ethanol industry won because it was fighting for a worthy cause. "I'm not really worried about this," he said. 
 
 For its part, if the Fueling Freedom Plan isn't adopted, Growth Energy says it will support a straight extension of the VEETC, adding that, without an open market, decreasing the value of the VEETC would not be good for the industry. Several big players back the Fueling Freedom Plan. Jeff Broin, CEO of Poet LLC, the second largest ethanol producer in the U.S., the largest dry-mill ethanol producer and a founder of Growth Energy, is a big supporter. Green Plains Renewable Energy Inc., the fourth largest ethanol producer and also a Growth Energy founding member, has expressed its support. 
 
 Valero Energy Corp., the third largest ethanol producer in the U.S. and—ironically—a blender, commented on the issue in late July. A top official said in an investor/media conference call that it would not make a difference to its ethanol business if the blenders credit were not extended. Gene Edwards, executive vice president of corporate development and strategic planning, said with current prices and a blending margin of 30 cents per gallon, the VEETC is "irrelevant" to Valero's ethanol business. "You would not see blending bat down one barrel because of the credit being gone," he said. 
 
 While there are multiple bills proposed in the House and the Senate, the one furthest along in late July was released by the House of Representatives Committee on Ways and Means. A pared down version of the bill introduced by Reps. Earl Pomeroy, D-N.D., and John Shimkus, R-Ill., the current bill calls for a one-year extension of the VEETC with a 9-cent reduction of the current 45-cent blenders credit. "The tax credit is a bridge to a future where renewable fuels standards create the market without requiring the tax credit drawing on the federal treasury," Pomeroy tells EPM. "However, we aren't there yet. We're going to continue to press as hard as we can to get it extended."
 
 What's in an Incentive? 
 Getting biodiesel's blenders credit extended has been fraught with difficulties. Attempts prior to its lapse on Dec. 31 failed, and multiple amendments to bills have since died in Congress. In July, with the Unemployment Extension Act passing without a biodiesel extension, the effort started over with new amendments being attached to bills in both houses. In the meantime, the biodiesel industry has been "knocked on its back," says Renewable Energy Group Inc.'s CEO Jeff Stroburg. Many biodiesel plants, including REG, have cut back on production or are standing idle. Some are teetering on the edge of bankruptcy. REG, the largest U.S. biodiesel producer, has a capacity of 360 MMgy, including fuel both produced and marketed for others. "More than half of our capacity is shut down, although we may not have plants that are totally mothballed like other companies," he tells EPM, adding that getting the tax credit reinstated would mean many restored jobs industry wide. 
 

 If the VEETC were not extended, would the same thing happen to the ethanol industry? 
 The RFA has been very vocal that failing to extend the VEETC would mean closed ethanol plants and lost jobs. This spring, John M. Urbanchuk of Entrix Inc., released a report commissioned by the RFA showing that without the VEETC, the equivalent of two out of every five plants would close, resulting in more than 112,000 lost jobs, both direct and indirect.
 
 The Food and Agricultural Policy Research Institute at the University of Missouri also says the ethanol industry would suffer without the VEETC—although less severely than RFA predicts. In its yearly report, FAPRI says U.S. fuel ethanol and biodiesel production would be cut by 10 percent if biofuels tax credits expire.
 
 Others aren't so sure. A staff report released in July by Bruce A. Babcock, director of Iowa's Center for Agricultural and Rural Development, projects the expiration of the blenders credit and import tariff would not have dramatic, adverse effects on the U.S. ethanol industry. Furthermore, if supports lapse, it would save tax dollars annually and decrease prices at the pump. The renewable fuel standard is the primary driver of ethanol demand and U.S. production will increase to 14.5 billion gallons by 2014 even without the tax credit and tariff. Finally, if the supports were not extended, it would only result in 300 lost jobs in 2014, according to CARD.
 
 Growth Energy points out Babcock's paper assumes the U.S. EPA increases the blend limit to E15, supporting the Growth Energy argument that if the ethanol industry gets access to a bigger share of the market, government supports like the blenders credit aren't as important. However, without that open market, the VEETC is still vital, Growth Energy admits.
 
 A Congressional Budget Office study on biofuel tax credits released in mid-July stirred the debate further, highlighting differences in the tax incentives for ethanol, cellulosic ethanol and biodiesel. Adjusting for energy content and petroleum used for production, the CBO determined that corn ethanol producers receive 73 cents for every unit with the energy equivalent of one gallon of gas. By the same reckoning, incentives for cellulosic ethanol were $1.62 and biodiesel $1.08 per unit. To reduce gas consumption with corn ethanol by one gallon, it costs taxpayers $1, the report said. For cellulosic ethanol the number is $3. To reduce greenhouse gas (GHG) emissions through tax credits, it costs $750 per metric ton of carbon dioxide equivalent (CO2e) for corn ethanol and $275 per metric ton of CO2e for cellulosic ethanol.
 The RFA countered that the CBO report failed to give credit for coproducts and relied on worst-case, pessimistic and debatable assumptions. The industry group said the report likely overestimates the cost of displacing petroleum with ethanol by a factor of three to four and overestimates the cost of reducing GHG emissions by a factor of six to eight. In addition, the RFA pointed out that CBO didn't compare biofuel incentives with other energy tax incentives—particularly oil subsidies.
 
 Last year, the Environmental Law Institute did just that and found that energy subsidies are "black, not green." The institute looked at fossil fuel and renewable energy subsidies from 2002 through 2008. Subsidies to fossil fuels totaled about $72 billion over those seven years, while subsidies for renewable energy added up to $29 billion. Of that amount, only $16.8 billion went to corn ethanol, with the remainder going to wind, solar, geothermal and hydro power sources. The results were surprising, says John Pendergrass, a senior attorney for ELI. "It did seem like the provisions to encourage oil and gas and coal, some of which have been around for 80 and 90 years, would not be necessary for a mature industry," he tells EPM. "It raised questions for us. Is it really needed for a mature industry, compared to a relatively new industry of renewables?" In general, subsidies for fossil fuels increased over the study period. Funding for renewables increased as well, but dropped steeply in 2006-'07. An exception was in 2008, when subsidies to fossil fuels decreased and subsidies for renewables increased. For Pendergrass, another eyebrow raiser was how much of the subsidies to big oil come in the form of direct spending. A total of $16.3 billion in direct spending went to fossil fuels, nearly as much as the total of tax breaks and direct spending for corn ethanol combined. In addition, the largest subsidies to fossil fuels are permanently written into the U.S. Tax Code, which is changed only as legislators decide to amend it. "By comparison, many subsidies for renewables are time-limited initiatives implemented through energy bills, with expiration dates that limit their usefulness to the renewables industry," the report says.
 
 Those words have never rung truer for the ethanol and biodiesel industry than right now. While the ELI paper indicated some hesitation to fully embrace corn ethanol, Pendergrass says he certainly believes it is time to reconsider all incentives. "We think that Congress should revisit and carefully consider the amount of money being spent," he says. "I think there is inertia."
 

 While movement in Congress has been slow, the debate has fueled another round of negative editorials. The week before the ways and means committee released its draft bill for a one-year, 36-cent tax incentive for ethanol, three major newspapers ran editorials bashing the fuel, three days in a row. The Chicago Tribune started off July 23, calling for an elimination of the tax credit, saying that "heavy subsidies and protectionism" are a bad mix. Then, the Washington Post chimed in, also calling for an elimination of the VEETC, vaguely claiming that "there are certainly more effective ways to reduce oil consumption and greenhouse emissions." The last editorial from the Wall Street Journal bitingly argued that the cost of ethanol subsidies is too high compared to the amount of carbon it replaces in fossil fuels. The industry responded swiftly. In a letter published in The Washington Post, Dinneen called the editorial misleading and pointed out that it offered readers no alternative to ethanol. "Calling for an end to tax credits for ethanol while ignoring the billions of dollars of tax subsidies for Big Oil is as inequitable as it is shortsighted," he wrote. 
 
 Pomeroy has heard plenty of ethanol backlash too. "The past few years, ethanol has lost a lot of public support, at least in the halls of Congress," he says. "I don't fully understand why." Although ethanol was not the cause for increased food prices, reshaping opinion has been difficult. And, unfortunately, many environmentalists continue to use flawed science to tear down the fuel. "I don't have an understanding of what their end game is," he adds. "I guess they'd put us all on bicycles and call it a day."
 
 Ethanol, as many industry supporters are fond of repeating, is here today. Production is over 10 billion gallons yearly and continues to increase, cutting a chunk out of the amount of fossil fuel the U.S. imports from the Middle East. It's created 119,000 direct and indirect jobs. "Ethanol is a success story," Pomeroy says. "In the early years we had to justify ethanol based on theory, now the evidence is in, and it is working in a big way."
 
 Holly Jessen is associate editor of Ethanol Producer Magazine. Reach her at (701) 738-4946 or <a href="mailto:hjessen@bbiinternational.com">hjessen@bbiinternational.com</a>.

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The Environmental Law Institute used information from the Internal Revenue Service, U.S. DOE, Congressional Joint Committee on Taxation, Office of Management and Budget and USDA to compile this pie chart showing the relative subisidies to renewable e

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

Weathering the VEETC Storm

Front-end fractionation can help ethanol plants diversify coproduct streams for increased revenue. As Jeff Scharping, director of product management and sales for ICM Inc., says, "Fractionation unlocks the power of corn." He's not alone in admiring the technology. "I'm a huge believer in fractionation," says Neal Jakel, general manager of Illinois River Energy LLC in Rochelle, Ill. "Fractionation will change this industry. It makes us much more profitable, diversifies our risk. It is worth the investment, no doubt about that. You will see in the next two to five years, a lot more investments in this. I know it, I feel it."
 Jakel and Scharping, along with Michael Regier, technical director at Cereal Process Technologies LLC, gave presentations about the technology at the 2010 International Fuel Ethanol Workshop & Expo. All agreed fractionation is a proven technology that, when implemented correctly, can provide myriad benefits for an ethanol plant. Scharping says corn-to-ethanol production hasn't been close to utilizing corn to its full potential. With fractionation, and the ability to use corn bran as a cellulosic ethanol feedstock, the ethanol industry can take corn-based ethanol to the next generation, he says.

 
 Interest in fractionation has been renewed since the U.S. EPA identified it as one of the advanced technologies ethanol plants can use to reduce greenhouse gas (GHG) emissions, says Pete Moss, vice president of marketing for CPT. While ethanol plants under construction prior to the passage of the Energy Independence and Security Act of 2007 were grandfathered in, new ethanol plants and new production capacity at grandfathered plants have to meet at least a 20 percent reduction in GHG emissions. The inclusion of indirect land use impacts in the calculation of GHG reductions for the revised renewable fuels standard (RFS2) will make this a tough hurdle. The EPA says that corn ethanol plants using natural gas or biomass for process heat and installing new, more efficient technologies will meet GHG goals for conventional biofuels. "Fractionation is one of those technologies," Moss says. According to the company's initial evaluation, CPT fractionation can help an ethanol plant reduce GHGs by 23 percent. 
 
 Benefits of Fractionation 
 Dry fractionation is the mechanical separation of corn, Regier explains. The endosperm, or the higher starch portion, is used for ethanol production. Removing the non-starch fraction results in energy savings for the plant due to more efficient fermentation, less fouling due to the removal of corn oil and decreased energy requirements to dry the distillers grains. "Traditionally the germ and bran just go along for the ride throughout the ethanol plant and don't do anything for the ethanol product, other than require more energy to dry that product and require more pump horsepower to transport that product," Reiger says.
 
 New coproducts providing ethanol plants with new revenue streams help producers diversify and provide risk mitigation, Scharping says. ICM's President and CEO Dave Vander Griend believes the ethanol industry can provide both food and fuel for the world, Scharping explains. "We look at dry fractionation as a front door to that." Germ is the high oil portion and can result in food-grade corn oil or nonfood-grade oil suitable as a biodiesel feedstock. Fiber can be used in a variety of ways, including burning for steam generation, as a feed ingredient or potentially for cellulosic ethanol production. In addition, at the end of the process, ethanol producers will have higher protein levels in their distillers grains making it better suited for monogastric feeding in swine, poultry and aquaculture operations. CPT is also working with a company that is interested in producing anhydrous ammonia from bran. 
 
 Ultimately, fractionation provides flexibility, Reiger says, and transforms ethanol producers into agricultural processing facilities, able to diversify and take advantage of market fluctuations. "It's not only about the ethanol yield per bushel now, it's also about the coproduct revenue per bushel," Regier says. "In an ag processing mindset, you want to maximize your highest revenue streams."
 
 While the CPT system provides the flexibility to produce more corn oil when prices are good, maintaining consistency in the protein content of the distillers grains produced is important too. To maintain 40 to 42 percent protein content in the distillers grains, CPT performance data shows that a balanced starch/oil yield is approximately 59 to 63 percent oil from the germ stream and 93 to 95 percent from starch. "That's what the marketplace wants, they want consistency," Moss adds.
 
 CPT's fractionation system has been proved on a large scale at one ethanol plant—the Valero Energy Corp. plant in Jefferson, Wis. In addition, the same system is installed at three other locations that produce products for the industrial and food-grade industries. In the near future, it will be installed at the National Corn-to-Ethanol Research Center for additional testing.
 
 ICM's fractionation technology has been in place for more than three years at LifeLine Foods LLC in St. Joseph, Mo., Scharping says. In early June, the company announced that it would receive $25 million from the U.S. DOE to build a cellulosic ethanol pilot plant at that location, where ICM will modify the existing dry fractionation operation to incorporate cellulosic ethanol production from corn fiber, switchgrass and energy sorghum. 
 

 For producers looking for a fractionation process with lower capital costs, ICM is developing solvent fractionation. This system will provide food-grade corn oil, fiber for cellulosic production, food-grade protein, grits with 50 percent protein, clear starch and feed-grade protein. The company plans to complete a pilot plant by the end of the summer and a demonstration plant in 2011. 
 
 Due Diligence Pointers
 Although fractionation offers ethanol producers many positive possibilities, Jakel cautions producers to do their research before selecting a technology. It's a big investment and it's critical that producers ask the right questions as they evaluate fractionation, he says. Although Illinois River Energy doesn't have a fractionation system installed, Jakel has experience in designing and optimizing fractionation in previous jobs. A turnkey fractionation system including building and utilities for a 100 MMgy plant can cost $30 million to $60 million. Further complicating the issue is that there are many wet and dry fractionation technologies out there. Jakel says he has counted 14 fractionation companies, and there are likely more. "Every single technology is different," he says.
 
 One factor to examine closely is coproduct quality. What kind of distillers grains will the technology produce? Different companies have used different protein percentage numbers, varying from 30 to 40 percent, depending on how the plant is run and whether syrup is added. The impact distillers grains has is a huge driver, Jakel says, since it is a premium product and the potential loss to the plant is large. "It has a dramatic effect on the bottom line." A savvy producer will also ask what kind of bran a certain fractionation technology produces. Is it fine or whole? Will it need additional grinding? What is the starch content of the bran produced? Germ quality will impact pricing, and corn oil with high free fatty acid content will be dramatically discounted. "With some of the technologies out there, you will have a hard time extracting (corn oil)," Jakel adds. "All germ is not created equally." 
 
 Other markets ethanol producers can access with fractionation, such as fertilizers or pet foods, can be tricky. While the margins are good in pet food, for example, it's an even pickier market than livestock feed. "People are willing to pay a premium, but man, you'd better make sure it's the highest quality-controlled product you've got in your facility," Jakel says.
 
 It's also important to be realistic, he cautions. Different fractionation companies are promising widely different throughput increases, from 8 to 20 percent. "Can your plant even do it?" Jakel asks. "I know for sure that at my plant right now, we are running full out at 115 MMgy, I cannot get 10 percent more capacity unless I invest another 20 or 30 million dollars."
 
 Corn is another major consideration. A front-end fractionation system requires more corn to produce the same amount of ethanol. Again, the numbers Jakel has heard are all over the board, from 3 percent up to 30 percent more corn. Although the added coproducts mean additional revenue, the increased cost of corn must be taken into account. Corn logistics need to be considered as well. With more corn coming in, additional on-site storage bins may be needed and more man hours needed to cover additional corn-receiving operations.
 
 The list of points Jakel recommends be covered in vetting a fractionation process is long. Other questions include the type of performance data the company has for its technology and whether it has been tested or verified by a third party. It's also a good idea to ask about the financial backing of the company, he says. Next on the list are available resources, such as what kind of training and start-up services the company provides. What about break-downs? Does the company offer 24-hour service? Does it have spare parts on hand? 
 

 An engineer can help an ethanol plant as it is evaluating new technologies, Jakel says. For those companies without an in-house engineer, he recommends contracting with an engineer. "I can't stress enough, when you are investing this kind of money on these technologies, spending money on someone who understands this industry, who understands corn, is well worth the due diligence effort from you," he says.
 
 Despite Jakel's long list of factors to consider, he's still very much a proponent of fractionation. "It really is that key technology that opens the door to many more things," he says. "It opens up the door, but you have got to find out, what's behind the door."
 
 Holly Jessen is associate editor of Ethanol Producer Magazine. Reach her at (701) 738-4946 or <a href="mailto:hjessen@bbiinternational.com">hjessen@bbiinternational.com</a>.

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

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

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

Unlocking the Power of Corn

Thanks to funding from state, federal and private sources, 75 additional E85 dispensers will be installed in California by Propel Fuels Inc., a West coast-based owner and operator of alternative fueling stations. The California Energy Commission approved a $4 million grant while the DOE is providing $6.9 million in stimulus funding. Propel itself is pitching in $16.2 million in private equity funds. Other partners in the project include the California's Department of General Services, the nation's largest fleet of state-owned vehicles, the East Bay Clean Cities Coalition, Calstart and the Local Conservation Corps of California.

Funding awarded for E85 dispensers

Chances are that if ethanol producers had to name one operational cost they wish they could reduce or eliminate entirely, the unanimous answer would be "natural gas." According to this year's Christianson & Associates PLLP biofuels benchmarking report, 92 percent of non-electrical energy consumed by plants participating in the survey is natural gas. It is the most expensive input in ethanol production after corn and because of this, ongoing research is being conducted to find sustainable replacements for natural gas in the ethanol industry.
 
 LPP Combustion LLC may have the answer to the ethanol industry's search. The Columbia, Md.-based technology company has developed a system that can convert ethanol and other liquid fuels into a natural gas substitute, which can then be used in gas turbines and boilers in a number of industries.
 
 Leo Eskin, president and chief operating officer of LPP Combustion, describes his company's technology as being a fairly basic conversion process. "What it does is it changes liquid fuels into a type of gas called LPP [lean, pre-mixed, pre-vaporized] gas. The way we do that is simply by heating the liquid and combining it with a background diluents—we use nitrogen from the air—and, basically, we dilute the liquid vapor down. The LPP gas looks and acts just like natural gas and can be burned in hardware and burners that are designed for natural gas."
 
 Benefits of Burning Ethanol

 This technology could provide a boost for ethanol producers on two fronts: it provides a new use for their biofuel while simultaneously reducing their need for natural gas. LPP leaders saw the opportunity for ethanol producers early on in their development process. So far, however, they have struggled to sign up multiple ethanol producers for the system. "It came to mind to our group that these guys are using power off the grid or natural gas or other fossil fuels and they're trying to be a ‘green' facility," Eskin says. "We've tried to approach them to see if there might be an opportunity, but the market has been challenged. There hasn't been a lot of new construction recently and they're pretty tight on cash [so] we haven't been able to take that forward as quickly as I had hoped."
 
 Financing issues may be preventing a widespread launch of LPP technology at ethanol plants, but it hasn't been a total shut-out. Caseus Energy and its subsidiary, Dubay Biofuel-Greenwood LLC, are very interested in the possibilities of utilizing LPP's technology. Caseus Energy has been sending ethanol samples from the Dubay Biofuel demonstration-scale, cheese whey-to-ethanol facility in Wisconsin to LPP to determine "basically, how much green electricity we can produce from our ethanol and which form of ethanol should be used to produce maximum electricity," says Eduard Zaydman, Caseus Energy's business development and marketing manager. Caseus Energy is constructing a commercial-scale facility near its demonstration plant and plans to bring it online in 2011, possibly with LPP equipment installed. Zaydman says engineers from both companies are collaborating to determine if and how the equipment will work at that facility. "Once we finalize the tests and know exactly how much ethanol [is needed], we can deploy that system," he says. "We're definitely interested in that."
 
 Ideally, Caseus Energy would employ LPP technology to utilize the over-capacity ethanol produced at the plant. "For example, if our plant produces 3 million gallons of ethanol a year and we can produce, let's say, three and a half, we can use that half a million gallons a year towards electricity production," Zaydman says. "So we'll use electricity generally in the plant, saving some money and capturing green credits."
 
 Green Electricity
 Eskin says the opportunity for users to reduce their emissions is an important benefit of LPP's technology, adding that, depending on the feedstock used to produce the biodiesel/ethanol, the LPP gas could be CO2 neutral. "The work that we've done with a small gas turbine actually showed that the biofuels burned had lower emissions of CO [carbon monoxide] than even natural gas," he says. "These small industrial settings put out a fair bit of CO2. A 10 or 25 megawatt gas turbine is probably one of their main sources of CO2 emissions, so [they] can make a great savings in CO2 emissions all at one time."
 In addition to the Wisconsin plant, Caseus Energy is pursuing projects in South America and Europe, where producing ethanol for clean energy generation is a bigger attraction than using it for transportation fuel. According to Zaydman, areas where cap and trade programs are in place have greater demands for clean electricity and, in general, ethanol as a transportation fuel is not as popular in those areas as it is in the U.S. "They are really interested in producing electricity only," he says. "We have developments going on right now in Argentina, we're cooperating with Brazil, we'll have a project in Italy, and we're hoping to deploy LPP technology in those places." Caseus Energy will use its whey-to-ethanol technology to produce ethanol for all of the projects. Zaydman says Italy is the largest of the three proposed projects and therefore may also produce some ethanol for transportation.
 
 Another reason to produce ethanol for electricity generation, according to Zaydman, is that a lower grade of alcohol can be used, which reduces the amount of costly equipment needed at the production facility. Eskin says LPP has tested the technology with a range of fuels and found that it works well even when low-grade fuels are used. "We're very actively pursuing all of these opportunities for low-grade fuels, like the water in the ethanol or liquid natural gas condensates—things that are normally thrown away or flared because they can't sell them—we're looking to turn those into a natural gas replacement and create electricity with them," Eskin says. "For example, we've tested ethanol with a very substantial amount of water in the ethanol. We can burn with the 5 percent, we've actually burned ethanol with significantly more water than 5 percent, more than 20 to 25 percent water."
 
 Eskin says LPP's technology costs approximately 10 cents per gallon so the cost comparison between LPP gas and natural gas relies heavily on the cost of the liquid fuel used. "It's not a large cost of conversion," he says. "That's why it's very important that we don't need transportation-grade."
 
 The equipment used in the system is skid-based and is not large—between one-sixth and one-fifth the size of an industrial-scale gas turbine according to Eskin. The system can be installed during new construction or as a retrofit. "Our piece of equipment goes just upstream from where the natural gas comes in," Eskin explains. "The liquid fuel storage tanks or pipeline would come in to our skid-based piece of equipment. We try to do the vaporization fairly close to the combustion device because we have to keep the piping hot enough to make sure the liquid stays in the gaseous form. The liquid goes in one side and hot LPP gas comes out a pipe on the other side and gets piped into whatever the piece of equipment is."
 

 New Market Possibilities
 While many ethanol producers may not be in the financial position to install LPP's technology at their own plants, they could find a market in supplying fuel to other facilities that are able to utilize the substitute natural gas. "One of the types of groups that we're actively partnering with is fuel suppliers, because they're the ones that have the ability to produce liquid fuel at a reduced grade," Eskin says. 
 According to Eskin's estimates, a massive amount of ethanol would be required to operate a commercial-scale turbine. "A good rule of thumb is that an 80 megawatt gas turbine would use something on the order of 50 million gallons per year of diesel," he says. "You would use almost twice that amount of ethanol. That's actually a good thing in many respects because now you've got a guaranteed offtake for these clients."
 
 While LPP's technology is fuel agnostic, users need to determine if they are going to use ethanol or other fuels before installing the system. Because ethanol has a lower Btu content than biodiesel and requires more fuel, the pipe sizes need to be larger for ethanol-fueled systems and more heat would be required to gasify the ethanol. "It would be hard to transition from diesel fuel to ethanol," Eskin admits. "If you knew you wanted to use ethanol, you would make sure that you designed for the heaters and things to be properly sized for the ethanol requirements."
 
 LPP is currently operating a 30 kilowatt Capstone gas turbine at its demonstration-scale facility in Columbia, Md., and Eskin says the company is developing several industrial-and utility-scale projects throughout the U.S. "Utilities tend to be slow to make decisions, so we're certainly in discussions with utilities but our expectation is that other smaller opportunities will come to pass more quickly," he says. "There are over 300 university presidents that have made announcements that they plan to reduce their carbon footprints significantly, and many of these universities tend to have 10 to 20 megawatt gas turbines. Those are very good opportunities for us."
 
 Kris Bevill is an associate editor at Ethanol Producer Magazine. Reach her at <a href="mailto:kbevill@bbiinternational.com">kbevill@bbiinternational.com</a> or (701) 850-2553.

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

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

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

Fueling a New Market

CO2 is a friend and foe of the ethanol industry. The friend, of course, is the increasingly important byproduct providing a revenue stream. As an environmental foe, the greenhouse gas is somewhat of a Pandora's box and a daunting challenge to reduce and control. By some estimates, more than 75 million metric tons of CO2 are emitted globally each day; with perhaps one-third absorbed by natural oceanic activity and photosynthesis. This leaves more than 50 million tons of CO2 being emitted each day, with a negligible global effort to stem the tide. While an increase in average world temperatures of 2 degrees Fahrenheit may seem modest, it may well result in a major loss of species, habitats—both human and animal—and a change in the world as we know it. 
 
 Markets, Old and New
 CO2 markets are often referred to as captive, niche, merchant and sequestration. A captive market would be an enhanced oil recovery project (EOR), or series of projects served by one or more sources, typically via pipeline due to size. One such project is the Dakota Gasification project in Beulah, N.D., which supplies the Encana and Apache EOR projects in Saskatchewan with up to 10,000 tons of crude CO2 daily from coal gasification. Other examples would be carbon dioxide for chemical production of sodium bicarbonate, methanol or urea. An example of a niche market is a group of large poultry processors that use hundreds of tons of CO2 daily for cryogenic freezing and refrigeration.

 
 About 40 percent of the North American merchant market for CO2 is sourced from ethanol plants. This sector includes all forms of CO2 sold to industry—liquid being the primary form, followed by dry ice. These markets include the manufacturing of soft drinks, beer and frozen foods, and multiple industrial uses such as grain fumigation, pH reduction of municipal water and effluent, welding, metallurgy, rubber manufacturing and chemical production, to name a few. Food and beverage uses require high purity, driven by the standards of the International Society of Beverage Technologists.
 
 Ethanol's CO2 market share is likely to grow, despite the recent ethanol industry upset and lingering recession. The lion's share of recent source agreements involve ethanol, primarily due to the cost effectiveness of ethanol-sourced CO2. Other major sources include natural wells and anhydrous ammonia production. Anhydrous ammonia sources almost disappeared when natural gas prices approached $10 per million Btu. Natural well sources also have their problems, with a potential for contamination with radon gas, sulfur compounds and other organics. Other sources include flue gas and various energy and chemical projects.
 
 In addition to the grain-based ethanol industry, second-generation biofuels promise to become a new carbon dioxide source. A key consideration for the many technologies for cellulosic ethanol under the microscope today, and those that have reached pilot and demonstration phases, is making them competitive with grain-based ethanol. Subsidies will help, as will implementation of energy and/or climate legislation that gives CO2 recovery and sequestration an economic value. We are still some distance away from significant volumes of ethanol and CO2 from cellulosic sources being produced, but in the future, the market will likely be driven by cellulosic, algae and syngas sources for renewable fuels. 
 
 Pricing Factors
 A full understanding of market factors is key in realizing the best possible price for carbon dioxide, with strategic location being top on the list. Many of the strong markets in the U.S. sell for more than $100 per ton to the consuming plant. Since the direct-to-customer market yields the best selling price, it is entirely possible to consider the direct market as the actual customer base for marketing CO2 from a biofuels venture. Should a full evaluation of the markets, requirements, margins, competitors and options show promise compared to selling raw gas to the refiners, then the direct approach would be a fine moneymaking choice for the biofuels producer. In some cases, however, selling it to the industrial gas companies as a raw gas can be best. Other options can be agreements with distributors of CO2 to the liquid (or dry ice) markets, or joint ventures or other arrangements outside of a long-term raw gas contract. Utilizing CO2 expertise for the evaluation of markets, process requirements, costs and allied information, can help identify the best available options to the ethanol project to maximize revenues and reduce risk.
 
 The Midwest is currently well supplied with merchant CO2, although there still may be profitable niche markets in this rather large geographical region. Other regions requiring strategically located new CO2 sources include the Northeast, mid-Atlantic, Florida, Northwest, and certain areas of the Southeast, Midsouth, West Coast and Southwest. Canadian regional markets have their own source requirements, along with different merchant gas operating philosophies.
 
 Gas companies contracting for raw CO2 have traditionally been considered the base market for ethanol plants capturing and selling the gas, yet the negotiated prices are often fully inadequate in these raw-CO2 sales arrangements. An industry expert can often negotiate the best arrangement on behalf of the ethanol producer, and in some specific situations CO2 can be sold directly to a niche customer at a greater value. While only some ethanol plants supply the direct merchant markets, there are good opportunities in select regional markets and markets with the right combination of price, market content and competition. Proper investigation, evaluation and development of CO2 markets are crucial to the long term health of the ethanol producer. A dollar or two more per ton from the CO2 revenue stream can represent millions of dollars of revenue lost over the years if due diligence and the proper evaluation and development of the markets were not achieved.
 
 Environmental Incentives

 Overshadowing the sale of carbon dioxide are the environmental factors and the prospect for regulation. The final structure of policy incentives to deal with the environmental impact of CO2 is still unknown at this time. Environmental and energy bills are not moving along through the U.S. Senate, but have, at least, made progress in the House of Representatives. It is inevitable that greenhouse gas (GHG) legislation in some form will be passed. The how and when of serious GHG reduction efforts won't be solely driven by politics—big business will have a role, too. The electric power sector is the worst GHG offender, for example, with CO2 comprising the largest volume in emissions followed by methane.
 
 Ultimately, sequestration will take a greater role in reducing GHG emissions. Several promising technologies are being investigated, including growing algae with CO2, sunlight, water and nutrients with a goal of creating biofuels from the algae oil and biomass. Another means of sequestering carbon is to inject CO2 into aquifers or other geological formations. Other technologies under development incorporate CO2 into new products, such as fuels or plastics. These processes convert CO2 into a form that cannot enter the atmosphere again, unless the manufactured product decomposes or is changed significantly. 
 In the end, carbon dioxide is a friend and a foe, and it must be properly developed in economic terms in order to yield the greatest bang for the buck as a friend. As a foe, we need to consider all of the implications with respect to an ever-warming globe, and ultimately a reduction of carbon dioxide emissions.
 
 Sam A. Rushing is president of Advanced Cryogenics, Ltd., a chemist and a CO2 consultant. Reach him at 305-852-2597 or <a href="mailto:rushing@terranova.net">rushing@terranova.net</a>; www.carbondioxideconsultants.com

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

CO2 Increasingly Important to Ethanol

The challenges to greenhouse regulations and the understanding of complex GHG interactions continue to unfold. 
 
 EPA denies petitions
 In July, the U.S. EPA denied 10 petitions challenging the controversial 2009 endangerment finding regarding greenhouse gases (GHGs), saying climate change is real and threatens human health and environment. The petitions claimed that climate science cannot be trusted. "The endangerment finding is based on years of science from the U.S. and around the world. These petitions—based as they are on selectively edited, out-of-context data and a manufactured controversy—provide no evidence to undermine our determination. Excess greenhouse gases are a threat to our health and welfare," said Lisa Jackson, EPA administrator. These cases are not closed, however, as all the petitioners also filed legal challenges in the U.S. Court of Appeals for the District of Columbia. If the court rules for the petitioners, the EPA could be prevented from regulating GHG emissions. 
 
 Challenge to Calif. law
 In California, AB32, the law that requires the state to reduce GHG levels back to 1990 levels by 2020, will go to voters in November. The law has been vigorously opposed by many in the energy sector and 800,000 signed a petition to suspend the law due to concerns about economic impact. "We believe that the aggregate net jobs impact in the near term is likely to be negative, even after recognizing that many of the [California Air Resources Board Scoping Plan] programs phase in over time," said a report from the California Legislative Analyst's Office, a non-partisan fiscal and policy analyzer in the state. Opponents have also raised the issue of the appropriateness of state-specific laws for such energy policy.
 

 Meanwhile, two new reports released this summer demonstrate the complexity of quantifying and comparing GHG emissions. Researchers from the University of Nebraska-Lincoln examined emissions by U.S. military operations to protect oil imports from the Middle East, and Stanford Earth scientists found high-yield agriculture has prevented massive amounts of GHGs from being released.
 
 Indirect military emissions
 The UNL report was completed by Adam Liska and Richard Perrin, who estimate that the war in Iraq releases 43.3 million metric tons of carbon dioxide equivalent (CO2e) annually. Military protection of supertankers in the Persian Gulf amounts to another 34.4 million metric tons of CO2e annually. When gasoline's impact is evaluated by regulators, the report points out, only direct emissions are counted as part of its environmental impact. Not so for biofuels. Under the 2007 Energy and Independence Act, biofuels are required to meet specific GHG reductions, from 20 to 60 percent under gasoline, including direct and indirect emissions. "Our conservative estimate of emissions from military security alone raises the greenhouse gas intensity of gasoline derived from imported Middle Eastern oil by 8 to 18 percent," Liska said. "In order to have a balanced assessment of the climate change impacts of substituting biofuels for gasoline, a comparison of all direct and indirect emissions from both types of fuel is required."
 
 Yield intensification impact
 The other study, published online in the Proceedings of the National Academy of Sciences, shows that yield improvements have reduced the need to convert land to crops." Every time forest or shrub land is cleared for farming, the carbon that was tied up in the biomass is released and rapidly makes its way into the atmosphere—usually by being burned," said Jennifer Burney, lead author of the paper describing the study. "Yield intensification has lessened the pressure to clear land and reduced emissions by up to 13 billion tons of carbon dioxide a year." Plus, for every $1 spent on agriculture research and development since 1961, the emissions of methane, nitrous oxide and carbon dioxide, all GHGs, were reduced by about a quarter of a ton of CO2. "When we look at the costs of the research and development that went into these improvements, we find that funding agricultural research ranks among the cheapest ways to prevent greenhouse gas emissions," said Steven Davis, co-researcher along with David Lobell. Increasing yield alone isn't enough to guarantee lower emissions from land use change, the authors said, adding that it must go along with efforts in conservation and development. It is, however, a big factor. "The striking thing is that all of these climate benefits were not the explicit intention of historical investments in agriculture. This was simply a side benefit of efforts to feed the world," Burney said. "If climate policy intentionally rewarded these kinds of efforts, it could make an even bigger difference. The question going forward is how climate policy might be designed to achieve that."

GHG regulations forge ahead despite protests

After evaluating the market availability of cellulosic biofuels, the U.S. EPA said in July that only five producers are expected to contribute cellulosic ethanol to the overall volume next year and that it might reduce the cellulosic target by as much as 240 million gallons from its original goal. The renewable fuel standard established in the Energy Independence and Security Act of 2007 called for 250 million gallons of cellulosic biofuels to be produced in 2011, but the EPA is predicting a much lower actual achievable volume of between 5 million and 17.1 million gallons.
 
 The EPA said it evaluated both domestic and foreign sources of cellulosic biofuel before issuing its proposed volume standard. The agency found only five U.S. cellulosic ethanol producers with the potential to contribute next year, including: AE Biofuels, Agresti Biofuels, DuPont Danisco Cellulosic Ethanol, Fiberight LLC and KL Energy Corp. Ontario-based Iogen Corp. was the sole Canadian producer with the potential to export cellulosic biofuel into the U.S. in 2011. A handful of producers questioned the EPA's method of reaching those determinations, but the agency stood by its analysis. EPA senior press officer Cathy Milbourn said producers were encouraged to submit any production changes to the EPA during the proposed volume standard comment period. The EPA would then re-evaluate before issuing its final standard in November.
 
 According to the proposed standard, Fiberight is pegged to be the largest cellulosic ethanol contributor next year. The company is expected to ramp up its Blairstown, Iowa, facility to its full production capacity of 5.7 MMgy by late 2011 and the EPA said it could produce as much as 2.8 million gallons of cellulosic ethanol next year. Craig Stuart-Paul, Fiberight CEO, said that production estimate is "doable" and the company has been rapidly installing necessary production equipment at the facility.
 
 Agresti Biofuels is expected to contribute 1 million gallons of cellulosic ethanol from a 20 MMgy municipal solid waste-to-ethanol facility to be located in Pike County, Ky. The company is currently in the final stages of setting up a demonstration-scale facility in Vietnam, according to program director Zig Resiak, and won't begin construction on the Kentucky plant until the Vietnam plant is up and running. "Everything is dependent on Vietnam," he said. "It all comes down to that first demonstration project." Resiak said the Kentucky site has been cleared and is ready for construction to begin as soon as the Vietnam plant comes online in the fourth quarter of this year. According to Resiak, 1 million gallons of cellulosic ethanol from Agresti next year is an "absolutely" attainable goal and he believes the company can produce more than its allotted share. 
 
 The EPA expects AE Biofuels to produce 500,000 gallons of cellulosic ethanol from a corn-based ethanol plant in Keyes, Calif. The AE Advanced Fuels Keyes facility is anticipated to begin producing late this year using starch-based feedstock, but the EPA said the plant will transition to some cellulosic feedstock beginning in mid-2011. The company plans to eventually use up to 25 percent cellulosic feedstock at the 55 MMgy facility.

 
 Wyoming-based KL Energy Corp. has been slowly ramping up its 1.5 MMgy cellulosic facility in Upton, Wyo., since 2007. According to the EPA, KL Energy said it intends to produce 400,000 gallons of cellulosic ethanol next year from wood chips and wood waste.
 
 DuPont Danisco Cellulosic Ethanol's 250,000 gallon per year demonstration-scale facility at Vonore, Tenn., will be expected to contribute all of the cellulosic ethanol it produces next year to the overall volume. DDCE told the EPA it doesn't plan to produce more than 150,000 gallons in 2011.
 
 The EPA stated that while it is uncertain whether Canadian producers would export cellulosic ethanol, Iogen Corp. is producing cellulosic ethanol at its demonstration-scale facility now and could potentially participate in the RFS2 program next year. According to the EPA's proposal, while all of the ethanol produced to date at Iogen's 500,000 gallon per year facility has been sold locally, the company is exploring the possibility of exporting in 2011 and could contribute up to 250,000 gallons of fuel to the total volume requirement. However, Iogen Executive Vice President Jeff Passmore said the company has no current plans to export large amounts of fuel to the U.S. in 2011. Additionally, he said Iogen doesn't plan to produce 250,000 gallons of fuel at its facility next year. "We have no plans to export," he said. "We're using our fuel for demonstration purposes. Some might get sent to the U.S. for small fuel demonstrations such as car races, but we don't have any plans for major exports." Passmore said Iogen has delivered approximately 8,000 gallons of cellulosic ethanol to the U.S. this year, all of which was used for racing applications, and he anticipates a similar scenario to occur next year.
 
 Several notable projects were left out of the EPA's expected producer list because they are not scheduled to be complete until 2012. The EPA said it will continue to monitor proposed projects and it anticipates significantly increased cellulosic ethanol production beginning in 2012. However, none of the expectant 2011 producers are currently producing cellulosic biofuel at the rates they project for 2011. The EPA noted that several significant hurdles need to be overcome before the anticipated production rates can be achieved, including outstanding issues in the areas of technology, funding and construction. Producers on the EPA's list were not surprised that the agency expects a lower production volume than initially anticipated and said it reflects the current state of the industry. "The reality of the marketplace is that there are not that many people producing [cellulosic ethanol] right now," Fiberight's Stuart-Paul said.
 
 "Nobody's breaking ground at the moment," pointed out Iogen's Passmore. "It takes over a year to build these plants, so I think it reflects the commercialization challenges that the cellulosic ethanol industry faces. Those challenges need to be addressed by Congress if we're serious about achieving the targets."

EPA expected to lower 2011 cellulosic biofuels volume

As the U.S. EPA slashed its targeted volume standard for 2011 cellulosic ethanol production (see previous story), a report from the U.S. Governmental Accountability Office report shed light on one of the causes for the slower-than-expected build out of cellulosic capacity. The GAO report released in late July found flaws with the U.S. DOE Loan Guarantee Program. With a current loan guarantee authority of $77 billion, the DOE had only issued one loan guarantee for $535 million as of April and made nine conditional commitments. The GAO, which was mandated by Congress to conduct the review, found that the DOE treated applicants inconsistently and lacked a mechanism for appeals or feedback. It also recommended that the DOE come up with more performance goals for the Loan Guarantee Program. The DOE didn't take issue with the findings and said it is taking steps to address the GOA's concerns. 
 
 Two oil majors made moves this summer to bolster their efforts in cellulosic ethanol developments. In July, BP Biofuels purchased Verenium Corp.'s cellulosic biofuels business for $98.3 million. Included in the deal are the pilot plant and demonstration-scale facilities in Jennings, La. Verenium will continue in its core commercial enzyme business and will transition out of its research and development facilities in San Diego, Calif., during the next two years. BP will pay Verenium another $10.8 million in cash to be released upon assignment of its lease for that facility. "By acquiring Verenium's cellulosic biofuels technologies, BP Biofuels should be well placed to accelerate the delivery of low-cost, low-carbon, sustainable biofuels, at scale," said Philip New, CEO of BP Biofuels. 
 
 Following the BP announcement, Verenium promoted Executive Vice President Janet Roemer to president and chief operating officer of Verenium's enzymes business. She joined Verenium in 2008, moving over from BP Group where she had held several positions. 
 
 In a similar move, a Royal Dutch Shell plc. executive will be taking over direction of Iogen Energy, a 50-50 joint venture of Shell and Iogen Corp. In early July, Duncan Macleod was appointed chief operating officer of Iogen Energy and on Sept. 30 he will step in as president and CEO. Brian Foody, founding president and current CEO, will take on the duties of chairman of Iogen Energy and continue to serve as president and CEO of Iogen Corp.
 

 Several other big-name cellulosic ethanol companies received funding or otherwise moved ahead on projects during June and July. ICM Inc. signed a cooperative agreement with the DOE, receiving $25 million to construct and operate a cellulosic ethanol pilot in St. Joseph, Mo. The company plans to modify its existing pilot plant at LifeLine Foods LLC to produce fuel from corn fiber, switchgrass and energy sorghum. ICM will contribute $6 million of its own funds to compete the project. 
 
 BlueFire Ethanol Fuels Inc. announced that it had completed Phase I of the DOE loan guarantee program and was moving on to Phase II. The company has applied for a $230 loan guarantee to build a 19 MMgy facility to produce cellulosic ethanol from woody biomass, mill residue and other cellulosic waste in Fullton, Miss.
 
 INEOS Bio made two announcements recently concerning projects here and abroad. The company was awarded $11.6 million in grant money to build a 7.9 MMgy ethanol plant in England to convert biodegradable household and commercial waste to ethanol. INEOS New Planet BioEnergy, a joint venture between INEOS Bio and Florida-based New Planet Energy LLC, said it officially took ownership of a former juice factory, located next to a Florida landfill in Indian River County. When completed, the ethanol plant will produce 8 MMgy from renewable biomass including yard, wood and vegetative wastes. 
 Another company concentrating on municipal solid waste (MSW), Fiberight LLC, hopes to have its second MSW-to-ethanol demonstration plant up and running by the end of August. The company, which completed its first plant in Blairstown, Iowa, in May, will install a second demonstration plant in Lawrenceville, Va., the current location of the company's pilot plant. Fiberight is working with CleanTech Biofuels Inc. which will install its patented biomass recovery process at the Lawrenceville plant using steam and pressure to clean and separate MSW into biomass and recyclables. The biomass will then be processed into cellulosic ethanol using Fiberight's targeted fuel extraction process. CleanTech announced in early July that it had received a patent for its process from the U.S. Patent and Trademark Office.

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Companies make progress in cellulosic arena

Gilbarco Veeder-Root and Dresser Wayne, two fuel dispenser companies, received official Underwriter's Laboratory certification for company-specific E85 fuel dispensers in June. These were the first UL-approved fuel dispensers for E85, following UL approval of E25 fuel dispensers this spring. 
 
 For E25 and lower blends, fuel dispensers can be certified separately from the hanging hardware. However, for E85, UL has withheld certification of any fuel dispensing equipment until it is all certified together at one time, said John Drengenberg, director of consumer safety for UL. The organization granted final certification to the two fuel dispensers only after the final components of the hanging hardware were submitted, he said. By late July, Gilbarco Veeder-Root had UL-approval for a total of 22 dispenser configurations and all of Dresser Wayne's eco fuel products received approval. OPW Fueling Components also announced that it received UL certification for its new trademarked nozzles, ethanol swivels, breakaways and emergency shut-off valves for use in applications containing ethanol concentrations up to E85.
 
 The next anticipated step is UL certification of a blender pump. Dengenberg said he couldn't give out specifics but confirmed that a UL testing program of blender pumps has been established. Meanwhile, retailers continue to install blender pumps in locations across the nation. In late July the American Coalition for Ethanol recognized the first blender pump installed in Grand Forks, N.D. Brian Jennings, ACE executive vice president, and ACE founder Merle Anderson, Climax, Minn., congratulated Valley Dairy owner Monica Musich at a brief event July 20.

Valley Dairy owner Monica Musich, left, was recognized by ACE's Brian Jennings and Merle Anderson for opening the first blender pump in Grand Forks, N.D. PHOTO: SUE RETKA SCHILL, BBI INTERNATIONAL

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E85 dispensers get UL approval

In June, Greenshift Corp. and YA Global Investments LP executed several agreements designed to reduce and restructure Greenshift's debt to YA Global. The companies formed a joint venture—YA Corn Oil Systems LLC—into which Greenshift will transfer up to five of its corn oil extraction facilities in exchange for a reduction of up to $11.7 million in convertible debt by YA Global. Greenshift will receive a 20 percent equity stake in the joint venture and will provide management services to the company in exchange for management and brokerage fees, as well as earnings-based performance bonuses paid in the form of up to an additional $6 million reduction in debt owed to YA Global.

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Greenshift restructures debt

A study recently released by Informa Economics Inc. reports that the ethanol industry is the single most important factor supporting the growth of the agricultural sector in Indiana. The study, which was sponsored by the Indiana Corn Marketing Council and Growth Energy, measured the ethanol industry's contribution to Indiana's gross state product (GSP), household incomes and employment rates. Results showed that ethanol has created more than 3,000 full-time jobs in Indiana, added $499 million to the GSP, and increased overall household income by $255 million.

Study highlights ethanol's impact in Indiana

The Renewable Fuels Association and the U.S. Grains Council are co-sponsoring Export Exchange 2010, a conference focused around the export of U.S. dried distillers grains with soluables (DDGS) and coarse grains. The event is set for Oct. 6-9 in Chicago, Ill, and will focus on connecting international buyers with the U.S. market. The USGC    will sponsor the attendance of international trade teams from more than 25 countries, representing nearly 80 percent of the global export market for DDGS.

DDGS conference planned for October

New Zealand-based LanzaTech Ltd. has partnered with Baosteel Metal, China's largest steel and iron conglomerate, to commercialize its flue gas-to-ethanol technology. LanzaTech has been operating a pilot-scale facility in New Zealand since 2008 using bacteria to convert steel mill flue gas to ethanol. Baosteel and LanzaTech will now construct a demonstration-scale facility at one of Baosteel's steel mills which is expected to be operational in 2011. The Chinese Academy of Sciences will work with the companies to accelerate the technology and collaborate on research and development of related technologies.
 
 Additionally, Chinese venture capital firm Qiming Ventures was the leading investor in LanzaTech's Series B financing drive and said LanzaTech represents a great opportunity for China. "The significance of this technology means that fuel can be produced with no impact on food supply or land use," said Gary Rieschel, managing director of Qiming. "Using industrial waste gases curbs greenhouse gas emissions and so maintains manufacturing sustainability in China."

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NZ flue gas-to-ethanol company strikes deal in China

Aug. 2—Ethanol prices have followed corn futures step by step this spring and summer. In July, ethanol prices jumped 15 cents per gallon as corn prices increased nearly 60 cents per bushel. At the moment, grain markets are on another sharp rally with corn prices jumping 30 cents per bushel over the past three trading sessions. Although this may be temporary in a market hit by uncertain planting levels, weather, as well as global production problems, has traders actively looking for renewed investor interest. Accordingly, ethanol futures are making very few directional moves on their own account due to the tight connection between ethanol production costs and corn prices. This trend is likely to continue over the next several weeks and or months, as the market may become much more volatile before calm returns. 
 
 At the same time ethanol prices rallied, gasoline markets slipped lower as the summer driving season waned. This will likely continue to limit additional commercial and noncommercial buying activity into the gasoline markets due to expected demand slumps through the end of the year. The soft economy is not helping matters, with jobless rates still double digit, and consumers weary of hoping that the end of hard times is just around the corner. RBOB gasoline prices have fallen 6 cents since the end of June and are currently contained in a moderate trading range.

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Corn price rally sparks ethanol surge

>REX Stores Corp. announced in June that it had changed its name to REX American Resources Corp. and the company's stock trading symbol on the New York Stock Exchange is now REX. CEO Stuart Rose said the name change better reflects the company's primary business, assets and focus. REX currently has interests in six ethanol production facilities, representing 144 million gallons of annual ethanol production.
 
 Additionally, the company's board of directors has named Zafar Rizvi as president and chief operating officer. Rizvi has served for 18 years as REX's vice president, most recently overseeing the company's alternative energy interests. "Zafar Rizvi's appointment to the roles of president and chief operating officer acknowledges the strong contributions he has made as we transitioned the company to focus on alternative energy," Rose said. 
 
 >Maple Energy plc announced it has acquired the equity necessary to pursue its $254 million proposed ethanol project in Peru. The company acquired the final $28 million necessary from shareholders in June and plans to begin commercial operations at the plant, which is located in the Piura region on the northwest coast of Peru, in mid-2011.

 
 >Yokogawa Electric Corp. has released the latest version of the FAST/TOOLS web-based SCADA system, which enables users to perform remote engineering and maintenance. The system can be utilized for process monitoring and asset management in a variety of industries, according to the company. Benefits of the system include reduced operating costs and optimized sharing and exchange of information, as well as a higher level of management efficiency.
 
 >Biotechnology firm Dyadic International Inc. has hired consulting firm The Abraham Group to provide strategic advice and assistance to Dyadic as it pursues global licensing and collaboration opportunities. The Abraham Group is led by former U.S. Energy Secretary Spencer Abraham, who will also serve as Dyadic's senior advisor. Anne Whitehead, executive director of strategic alliances at Dyadic, said the consulting group will help Dyadic enhance its strategy to team with international energy groups that are committed to commercializing cellulosic ethanol.
 
 >Merrick & Co., an employee-owned engineering, architecture, design-build, surveying and geospatial solutions firm, has elected Jill Tietjan to its board of directors. Tietjen is president and CEO of a consulting firm that serves the electric utility industry and has more than 30 years of experience in the electric utility industry. She serves on the board of directors of Georgia Transmission Corp. and has authored several technical papers for electric utility publications. In May, Merrick & Co. formed a consultancy unit focused on the energy market, including renewable, refining and utilities. 

 
 >Indianapolis-based bioengineering firm Xylogenics Inc. has named three people to its board of directors. William Parry is an attorney with extensive expertise in patent law and mergers and acquisitions. He served as vice president, general counsel, for Nalco Chemical Co. from 1995 to 2000 and previously worked for UOP, a Honeywell company. Joseph Prochaska Jr. has served on internal regulatory boards for more than 25 years, and has held executive positions for several companies, including MetLife Inc. and Aon Financial Services Group Inc. He currently serves on the boards of Baird & Warner Inc. and the audit committee and advisory council of the Hesburgh Libraries at the University of Notre Dame. Anthony Hubbard serves as the financial advisor and general manager for Stanbio Life Sciences and has more than 15 years of experience in management, operations and business development in emerging technology related to ventures. Chairman Butch Mercer said the trio will assist the company in its objective to develop and market proprietary bioengineered yeast strains and cellulosic ethanol technology to ethanol facilities.
 
 >Elevator components manufacturer 4B Components Ltd. has made available a Class II, Division 1 approved bearing temperature sensor that is designed to allow the depth of the probe to be adjusted depending on its application. The ADB series is available with probe lengths of two, four or eight inches, and can be screwed directly into a bearing housing through the existing threaded grease zerk. The sensors are designed for continuous temperature monitoring. 
 

 >Genera Energy LLC, a for-profit company formed by the University of Tennessee Research Foundation, recently broke ground on a first-of-its-kind biomass processing center. The Biomass Innovation Park will be co-located with the Genera-DuPont Danisco Cellulosic Ethanol demonstration-scale plant near Vonore, Tenn., and will begin processing switchgrass for ethanol production by the end of the year. Located on 21 acres, the facility will provide harvesting, handling, storage, densification, pre-processing and transportation for multiple feedstocks. Genera President and CEO Kelly Tiller said the biomass facility will initially process up to 50,000 tons of switchgrass, which the company has contracted farmers to grow this season.
 
 >Onset Computer Corp., a supplier of data loggers, has a new energy and environmental monitoring product catalog available. The 75-page catalog provides product descriptions, technical specifications, and pricing for the company's full line of trademarked HOBO data logging solutions. The company expanded the range of measurement options for its line of HOBO U12 data loggers offered for energy and environmental monitoring. Specifically, multi-channel versions of the U12 data loggers can now measure and record kilowatts, air velocity, gauge pressure, differential pressure, DC current and other energy and environmental parameters. 
 
 >Dallas-based Evolution Fuels Inc. has retained Bloomfield Advisors to assist in structuring and financing it's prototype fueling station of the future. As the initial phase of its plan, management plans to build out one to three prototype fueling stations. The company envisions a brand that incorporates a broad selection of alternative fuels, a store built with recycled materials and utilyzing solar power, and offering health food and beverages along with fuel. 
 
 >ExperTune's PlantTriage Control System Monitoring Software now has tools to diagnose the health of instruments, valves and controls. For years, ExperTune's patented "Control Loop Health" approach has identified problem control loops. Now. several new tools provide more specific performance metrics and diagnostics for each control loop component: the instrument, the valve and the controller. The Valve Health measurement, for example, combines information about control valve sizing, application,and mechanical performance. The new tools are included in the latest release of ExperTune's PlantTriage software. 

 
 >A new biofuels business with products and services for corn-based ethanol plants has been launched by Pursuit Dynamics plc. Validation tests indicate plants utilizing the new PDX Ethanol Reactor System can expect improved production yields, reduced operating costs and substantial throughput improvements. Marquis Energy LLC, a 100 MMgy plant in Hennepin, Ill., and Pacific Ethanol Columbia LLC, a 40 MMgy plant in Boardman, Ore., are participating in the operational validation of the new ERS.
 
 >The new MINIDIS ADXpert analyzer from Grabner Instruments is an alternative to classical ASTM D86 testing, according to the company. The unit has about twice the resolution as D86 distillation units, yielding results that are well within ASTM D86r/R requirements. MINIDIS also performs according to the new D7344 standard for atmospheric distillation. The MINIDIS development team focused on several design goals: automation, miniaturization and ease of use. Like the D86 method, the ADXpert performs a true atmospheric distillation but on a much smaller scale. It requires as little as 6mL of sample and is much faster.
 
 >The sixth edition of the Ethanol Fact Book has been published by the Clean Fuels Development Coalition and is being distributed through the Ethanol Across America campaign. The book addresses issues regarding the ethanol tax incentive, energy security and oil import reductions, economic impacts and benefits to the U.S. Treasury, greenhouse gas reduction and environmental benefits, advancements in cellulose conversion technologies, developments in flex-fuel vehicle production and high level blends. "Through the Ethanol Across America education program, we are getting the facts out and believe when people understand the wide range of benefits ethanol provides they will continue to support it," said U.S. Sen. Ben Nelson, D-Neb., co-chair of the Ethanol Across America campaign. 
 
 >Propel, which builds, owns and operates a network of clean fueling points on the West Coast, added four people to its management team in July. Matt Horton is the company's CEO. His experience has spanned a broad spectrum of investment activities and board responsibilities most recently with @Ventures, a cleantech-focused venture capital firm specializing in early-stage companies. As a certified public accountant and chief financial officer, Andy Wynne will lead the company's financial planning and accounting functions including capital strategy, budgeting, and new market analysis for Propel's growing renewable fuel network. Jim Cannon is the new vice president of construction and development and oversees Propel's expanding network of green-built fueling stations. Jim Iacoponi is the vice president of operations and leads the company's efforts to source the most sustainable fuels, grow sales and product lines. 

 
 Share your industry briefs To be included in Business & People, send information (including photos and logos if available) to: Industry Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to (701) 746-8385, or e-mail it to <a href="mailto:sretkaschill@bbiinternational.com">sretkaschill@bbiinternational.com</a>. Please include your name and telephone number in all correspondence.

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Business and People

In Europe, we have now entered the next phase of the debate on indirect land use change (ILUC). The European Commission has just issued a three-page consultation document seeking input from stakeholders on four questions. It is the second public consultation on ILUC. The first a year ago was euphemistically called a "pre-consultation." The views expressed then will probably not vary much from those that will be voiced in this new consultation. 
 
 One year ago, environmental non-governmental organizations (NGOs) and green politicians were advocating the precautionary principle be applied with an ILUC factor high enough to make all biofuels impossible to produce with the exception of those produced from cellulosic material or crops grown on marginal land. We, the industry, said there is no sound scientific evidence to justify such punitive ILUC penalties. In the year since, a growing number of researchers have cast serious doubt on the hallucinating emission numbers made up by people like Searchinger et al.
 The new consultation document raises (again) all the usual questions, including very sensitive ones that need answers. 
 
 The first question is crucial, asking if the analytical work carried out to date "provides a good basis for determining how significant ILUC resulting from the production of biofuels is." The commission could have stopped there, but instead is soliciting comments on important factors such as the split between first-and second-generation biofuels by 2020, the composition of the vehicle fleet, the diesel/gasoline split, crop yields, land use data and coproducts. By adding this list of variables, it is as if the commission is saying it is not all that obvious. On the other hand, the question implies that ILUC occurs and that the real issue is to find out the reasons why it occurs and whether it is big or small.
 
 The three remaining questions are much more sensitive and political in nature. Question two asks whether the available evidence is persuasive enough to take regulatory steps. Question three asks if such action is taken, is there any relationship between the produced biofuel, the feedstock used, the region the biofuel comes from and the way land is managed? The answers given to the first three questions will provide the answer to question four which seeks input on policy options. The commission poses four options: a) No action, just monitoring; b) Encourage certain biofuels; c) Discourage certain biofuels; d)Some other action.
 
 Two interesting remarks conclude the questionnaire. First, all responses must be justified by reference to available science, meaning that the commission will discard political discourses immediately. That makes sense. A lot of environmental NGOs tend to present only their own biased and unbalanced "science" which all too often reflects ideology rather than actual science. Second, responses may be submitted confidentially. This is remarkable knowing that the commission has been criticized before by several NGOs and the media for a lack of transparency. However, it will certainly lower the threshold for some respondents to suggest approaches that are too controversial or too economically sensitive to be put into the public domain.
 
 Overall the document is predictable in both the issues that it raises and the way in which these are presented. Probably so will the answers that will be handed in by stakeholders.

 
 My personal belief is that the commission is conducting the consultation for reasons of justification only. At the end of this year when the commission publishes its report, it cannot be accused of not having sought stakeholder input. It is highly unlikely that the commission expects anything new from this exercise. The state of the science is known and so are the positions of the most important stakeholders.
 I am certain that just like the external stakeholders, the various commission services fighting internally over the issue made up their minds a long time ago. They might change their position marginally, but not because of what is being presented in this consultation. If the commission services changes its view on ILUC, it will either be because there are scientific breakthroughs (not to be expected) or because the political tide has changed. On the latter, we are working hard.
 
 Robert Vierhout is the secretary-general of eBIO, the European Bioethanol Fuel Association. Reach him at <a href="mailto:vierhout@ebio.org">vierhout@ebio.org</a>.

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ILUC Debate in Europe—The Saga Continues

In July, Growth Energy proposed a change in federal energy policy to address the biggest challenge the ethanol industry faces—access to a fair, open and competitive market. We proposed a market-based solution, by modernizing current policies which would result in the permanent elimination of the blend wall. Growth Energy's Fueling Freedom proposal would gradually redirect the supports that initially helped ethanol grow—and put in its place a market-driven solution where ethanol can compete, and succeed, on its own. The Growth Energy plan would redirect a portion of the current Volumetric Ethanol Excise Tax Credit to support the build-out of the distribution infrastructure—namely, 200,000 blender pumps, and as many as 120 million flex-fuel vehicles—to give Americans access to an alternative fuel at the pump. 
 Currently, federal regulation mandates that all fuel be at least 90 percent gasoline, two-thirds of which is refined from imported oil. This 10 percent ethanol-gasoline blend wall restricts the ethanol industry's access to the fuel market and ultimately will threaten our ability to meet the federal mandate of 36 billion gallons of biofuel production by 2022 as enacted in the 2007 Energy Independence and Security Act. 
 By eliminating market barriers as outlined in the Fueling Freedom plan, we can create an open market where all fuels compete. In that scenario, domestic ethanol can win. The benefits of building out this infrastructure include an expanded fuel supply, which should help lower the price of fuel for consumers, as well as an invigorated economy in our rural communities and thousands of new jobs created here in the U.S. Expanded access to ethanol would also help decrease our dependence on foreign oil, improve our environment and strengthen our economic and national security. In 2009 alone, the production and use of 10.6 billion gallons of ethanol eliminated the need to import at least 364 million barrels of oil, reduced CO2-equivalent greenhouse gas emissions by approximately 16.5 million tons and supported more than 400,000 jobs here in the U.S. 
 
 There is no question that our plan will benefit the American taxpayer, and every American over time, due to ethanol's economic, environmental and political benefits. We have seen strong support from consumers, lawmakers, and industry groups who want to see a lasting impact of federal investment in biofuels such as ethanol. 
 
 In August, Sens. Tom Harkin, D-Iowa, and Richard Lugar, R-Ind., offered an amendment that would mandate the production of flex-fuel vehicles and require the installation of blender pumps—both provisions included in the Fueling Freedom Plan. We support their amendment and will work to get it adopted in energy legislation when Congress returns in September. 
 
 Americans deserve the freedom to choose their fuel and if given the opportunity, will choose America's fuel, ethanol. 
 
 As an industry, we must continually evolve. Today, we no longer have a problem producing ethanol—in fact, we now overproduce. Our challenge is access to the market. For this reason, we must modernize federal ethanol policies to address today's challenges. Will these changes be easy to get adopted? No. Are they worth pursuing? Yes! 

 
 At Growth Energy, we believe in the entrepreneurial spirit of America. We know that ethanol is the most competitive fuel on the planet because the marketplace will affirm it, despite academic theory to the contrary. And, if artificial suppression of demand can be removed, ethanol can flourish far beyond today's artificial government "caps". But, we must evolve. We must believe in the unlimited potential of our product. 
 
 Although accomplishing anything in an election year is difficult, it is never too late to stand up for the best interests of our industry. To stay silent while Congress debates an energy bill that does not address the challenges facing our industry would be shortsighted. Every other industry involved in energy is part of the debate, ethanol should be too. The status quo will no longer suffice.
 
 We will continue to speak out for the need for reform of federal energy policies that reduce our dependence on foreign oil, create jobs right here in America, and improve our nation's environment by expanding the market for ethanol.
 
 I invite you to stand with us.
 
 Tom Buis is CEO of Growth Energy. He can be reached at <a href="mailto:tbuis@growthenergy.org ">tbuis@growthenergy.org </a>or (202) 545-4000.

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Fueling Freedom

In nearly three decades of experience helping to develop policies and establish markets for American-made ethanol, I am truly proud of, but certainly not surprised at, what we have accomplished. Since the beginning, America's ethanol industry has lived by the mantra that a rising tide will lift all boats. The industry has fought back efforts from oil companies to limit the use of our product. We have projected a unified voice to members of Congress beginning in the Jimmy Carter administration to win legislative and regulatory victories that have created new markets and allowed for the incredible diversity and innovation in the industry today. Due to this success, and a perceived lack of unity today, we have attracted a plethora of new enemies that smell the proverbial blood in the water. I am here to tell you that this scenario has played out before. Each time, the industry ultimately stood strongly together.
 
 This is not the first time that critics have challenged ethanol. Almost from day one, Chicken Littles from across the globe have warned that using grain starch to produce ethanol will lead to widespread starvation and skyrocketing food prices. Neither have come to pass. Instead, American farmers have dramatically increased their productivity. Since New Energy's beginning in 1984, corn used for feed is up 30 percent and exports are up 59 percent. We ethanol producers have improved our efficiencies, increased our yields, and provided improved coproducts that turn each bushel of corn into more than just renewable fuel. 
 
 Nor is this the first time we have had to fight oil interests on Capitol Hill, in the administration, and in state capitals all across the country to ensure the market monopolized by oil was opened to renewable fuels. Each time, we have been successful. I have no doubt we will prevail again.
 

 And, while it may seem that we face an uphill battle in extending key tax incentives, we have seen this hill before. Despite repeated warnings about our addiction to imported oil, it strikes me as foolish that permanent subsidies for the oil industry are imbedded in the tax code while renewable technologies such as ethanol must come before Congress with hat in hand every few years. Nevertheless, we have been successful because we all meticulously spelled out the benefits domestic ethanol production offers. Current perception of an industry divided on this issue make the current effort more complex, yet I still believe the industry will coalesce around policies that provide the most good for the most people, and we will see federal investment continue.
 
 Retiring from an industry about which I feel a sense of paternalism is bittersweet. I am extraordinarily proud of the ethanol industry, my fellow members of the Renewable Fuels Association, and our champions on Capitol Hill for their perseverance and dedication to an industry we truly believe is doing the right thing.
 
 While I feel pride looking back, I am excited for what is to come. The industry is just now beginning to gets its feet underneath it. It is deciding what it wants to be when it grows up and is pursuing those policies and technologies that will make it happen. Now is a critical time in the industry's history. We cannot afford to let disagreements over 10 percent of the industry's agenda detract from the important 90 percent on which we all agree. What this industry is trying to accomplish, together with our friends in agriculture, is too important to allow it to be derailed. I strongly urge my colleagues to seek out that middle ground, rediscover that important unified voice, and always keep a long term perspective in mind. They say history repeats itself. In the case of America's ethanol industry, I certainly hope that is the case. 
 
 Nathan Kimpel, New Energy Corp., South Bend, Ind., is a retiring RFA board member. Reach him through RFA at (202) 289-3825.

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

Lessons from the Front Lines

Reading through this EPM issue, one can't help but notice the turbulence in the ethanol industry. Extension of the ethanol tax credit is by no means assured. New reports continue to come out both damaging and favorable to ethanol. The mainstream press continues its tirades, although there was a glimmer of hope of better balance in a Bloomberg New Energy Finance report on how oil subsidies are 12 times greater than renewables (and written permanently into the tax code). More troubling, however, is the divergence of policy strategies among the ethanol industry's advocacy groups. Holly Jessen was ready to begin digging into the blenders tax credit for her feature story when Growth Energy announced its Fueling Freedom plan. Needless to say, her story took on new dimensions, looking at that plan and the reactions to it, along with several new reports examining the subsidy issue. Nearly every columnist in this issue addresses the controversy as well.
 
 The best means to further ethanol is the root issue. One hopes that through this tension and diversity of thought, new synergies will emerge and ultimately strengthen the industry. 
 
 On a related note, Merle Anderson, chairman emeritus of the American Coalition for Ethanol from Climax, Minn., shared some number crunching in defense of ethanol that formed the core of a letter to the editor he recently submitted to local and regional publications. It makes me think it might be time to recall the calculations of a simpler day, before life-cycle analyses and indirect land use theories muddied the waters. He focuses on the fossil energy used in growing corn, starting with national averages for yields and field inputs. The result: One acre of corn produces 165 bushels with an ethanol yield of 2.7 gallons per bushel which computes to 445.5 gallons of ethanol produced per acre on the average. If you figure 5 gallons of fossil fuel used per acre for traditional farming practices, 89 gallons of ethanol is produced for every gallon of fossil fuel. "Now that is a high gain in replacing foreign oil," Anderson says.
 He ran the numbers again, this time assuming a 200 bushel corn yield (higher than the average, but still not as high as some corn producers routinely get) and a lower fossil fuel use to reflect no-till farming practices. He based his calculations on a quarter-section field of corn.
 
 160 acres of corn times 200 bushels per acre equals 32,000 bushels.
 

 Most ethanol plants yield 3 gallons per bushel for a yield of 96,000 gallons per quarter section.
 
 3 gallons of fossil fuel used for planting, harvesting and transporting the crop requires a total of 480 gallons per 160 acres.
 
 96,000 gallons of renewable fuel divided by 480 gallons of fossil fuel used equals 200 gallons of ethanol produced for each gallon of fossil fuel.
 
 That yield goes a long way in replacing oil imports.
 
 Anderson explains he doesn't include the energy used to produce ethanol, because that comes from domestic supplies. "By using natural gas and electricity, we are simply trading in commerce and it is only good for the country," he says. Ethanol only uses the starch from the corn kernel, he adds, leaving other nutrients to be used for food and feed. "With our oil imports at nearly 70 percent, we in agriculture can play a huge role to help our economic problem, job creation, and help keep our money in our nation's heartland instead of sending money to countries that support terrorism."
 
 Merle may be onto something. Turning public opinion around may require simplifying the argument and illustrating points with concrete examples. Keep encouraging folks in corn country to continue explaining to anyone who will listen how ethanol benefits their local community and the country. Keep it simple. Keep it concrete.

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It's About the Message

News release posted Sept. 1, 2010 
 

 BOONE, Iowa - Sept. 1 at the 2010 Farm Progress Show, Growth Energy CEO Tom Buis and Iowa Agriculture Secretary Bill Northey held a panel discussion to talk about Growth Energy's Fueling Freedom Plan, the upcoming energy bill and EPA's pending decision on the E15 waiver.
 
 At the panel, Buis and Northey discussed the critical need for the EPA to approve E15 and open the market for ethanol in order to revitalize our rural economies, clean our skies and support the continued innovation in the ethanol industry. 
 
 Approval of the E15 waiver would create 136,000 new green jobs, reduce green house gas emissions equivalent to removing 10.5 million cars off the road and open the market for cellulosic ethanol. 
 
 "We don't have a production problem, we have an access to the market problem," Buis said. "By moving to E15 and eliminating the artificial barriers to the fuel market we can create a market for all ethanol to reduce our dependence on oil, strengthen our economy and improve our environment."
 
 "It is vital that Congress and the EPA move forward and approve these needed long-term policy proposals," Northey said. "It is important that we send a signal to the industry and investors that support structures that will remain in place and allow the industry to continue to advance and adopt new technologies including eventually cellulosic ethanol." 
 
 EPA has announced that they will complete testing on cars 2007 and newer in September and cars 2001 and newer in November. 
 
 In order to open the market for ethanol we need to build out the ethanol fueling structure in this country - a proposal outlined in Growth Energy's Fueling Freedom Plan. The plan, introduced on July 15th, calls for the installation of 200,000 blender pumps and production of as many as 120 million flex fuel vehicles to help open the transportation fuel market and give consumers a choice at the pump. 
 
 Growth Energy's Fueling Freedom plan, if implemented, would create a genuinely free market where consumers can choose between gasoline and renewable, homegrown ethanol.
 
 "No one thought that we could produce this much ethanol, but just like farmers, we have figured out a way to overproduce. Now we need the opportunity to put that ethanol in the market. We have our challenges but we are confident that in an open market, we can succeed," Buis added. 

 
 SOURCE: Growth Energy

E15 discussed at 2010 Farm Progress Show

News release posted Sept. 2, 2010
 
 The Glacial Lakes Corn Processors Board of Directors declared and authorized repayment of the $0.06 per share non-qualified unit retain assessed to its shareholders two years ago. The action will result in over $11.1 million returned to its investors, the majority of which are South Dakota residents. The repayment will be made in one or more installments during the company's 2011 fiscal year which runs from Sept. 1 to Aug. 31, 2011. Although the dates of the repayment during fiscal year 2011 have not been established, the repayment will be made to shareholders of record on August 31.
 
 GLCP Board Chairman Mark Schmidt considers this an important juncture for GLCP investors, South Dakota's value added agriculture industry, and corn producers in the draw areas of the company's Watertown and Mina, SD plants. "In 2008, after GLCP as well as others in the industry encountered serious financial difficulties, we had two options, neither of which was desirable. One was to declare bankruptcy and the other was to approach our shareholders and ask for their help. We chose the latter," states Schmidt. "Our board and management believe this action demonstrates our continued success in restoring the financial health and viability of our company and we believe the time has come to repay our investors. This provides our investors reassurance that our strategic initiatives are working and we will aggressively continue our efforts to complete strategic plan goals and objectives. At the same time, we will remain careful and cautious as we move forward."
 
 As a South Dakota cooperative, GLCP was able to assess a $0.06 per share prepaid unit retain and the response provided $11.1 million at a time when working capital was critically needed to honor producer corn contracts and help the company survive. "We had an outstanding response rate of 99 percent from approximately 4,200 GLCP investors. This provided inspiration for our directors, management and employees and underscored the importance on what we needed to do to turn this company around," states Chief Executive Officer Jim Seurer. "First and foremost, we owe our existence to the GLCP investors who put more funds at risk at a time when it was difficult to do so." Although quick to acknowledge that the return of favorable market conditions played a major role, Seurer says a dedicated and focused effort by the directors, management, and employees also made a critical difference. "It has been a unified effort since Day One, from the GLCP shareholder all the way to the employees, all of whom are committed to same mission: adding value to South Dakota agriculture and preserving the financial viability of the GLCP investment."
 
 Looking forward, management expects 2011 to be a challenging year but optimism remains. GLCP's financial forecast points to narrow corn to ethanol margins and a tight supply of corn in the Mina plant draw area. "Even with these issues, we believe we have the financial stability and it is appropriate to return these funds to our shareholders. Just as we have in the past, we will find a way to work through these challenges," says CEO Seurer.
 
 SOURCE: Glacial Lakes Corn Processors

Glacial Lakes repays shareholders $11 million

Posted Aug. 31, 2010 
 
 A groundbreaking ceremony held Aug. 31 in Edmonton, Alberta, was the culmination of many words—painting a picture of possibilities, visions and ideas for a waste-to-biofuels project, said Vincent Chornet, president and CEO of Enerkem Inc. "This morning, we put our words in action," he said. 

 
 Enerkem is starting construction with its partners, the City of Edmonton and the Government of Alberta. The $80 million project will produce 10 MMgy of cellulosic ethanol from municipal solid waste (MSW). That's enough ethanol to fuel more than 400,000 vehicles yearly with E5, Chornet said. "This plant is the genesis of a world transformation where our non-recyclable garbage will power the vehicles we drive and reduce carbon emissions," he added. 
 
 The project is the result of many years of planning and will have a positive effect on the environment, said Ed Stelmach, premier of Alberta. It will help Canada reach long-term emission reduction targets. "This is truly an investment in our environment, our economy, and most importantly, our future," he said. 
 
 The plant, which is expected to be completed in 2011, will be built, owned and operated by a wholly-owned subsidiary of Enerkem, Enerkem Alberta Biofuels LP. Edmonton has signed a 25-year agreement to convert 100,000 metric tons of the city's MSW yearly, all of which cannot be recycled or composted. The project was awarded $23 million in funding from the Government of Alberta and the City of Edmonton.
 
 The facility will reduce Alberta's CO2 emissions by 6 million metric tons over the next 25 years by replacing a portion of petroleum fuels and avoiding methane emissions that happen during waste decomposition in landfills, the company said. Besides biofuels production, the facility will also include an advanced research facility and a municipal waste processing and transfer facility. The research facility will focus on developing and demonstrating technologies to convert biomass into biofuels and biochemicals. 
 
 Enerkem, which is headquartered in Montreal, operates a pilot facility in Sherbrooke, Quebec, and a 1.3 MMgy wood-waste plant in Westbury, Quebec. The company also hopes to build in the U.S. and has proposed a 20 MMgy waste-to-ethanol plant in Pontotoc, Miss.

Groundbreaking held for waste-to-fuel facility

News release posted Aug. 30, 2010 
 
 Milwaukee, Wis. - Ace Ethanol, LLC, a founding member of the Wisconsin Bio Industry Alliance (WBIA), is receiving $595,000 in funding to expand its operations in Stanley, Wis.
 
 The funds, part of the federal American Recovery and Reinvestment Act and distributed through the Wisconsin State Energy Program, will go towards the installation of heat exchange equipment to reduce waste heat and make the facility more efficient. The $850,000 project will help retain 40 jobs in Stanley.
 

 The announcement was made Thursday by Wisconsin Department of Commerce Secretary Aaron Olver on behalf of Gov. Jim Doyle.
 
 "This is great news for Ace Ethanol and Wisconsin's ethanol industry as a whole," said Joshua Morby, executive director of the WBIA. "As the industry continues to grow, reducing energy costs and improving efficiency remains a key priority for plants across the state."
 
 Completed in June 2002, the Ace facility was the first large-scale ethanol plant in Wisconsin, and currently produces over 40 million gallons of the fuel every year. Ace also produces wet and dry distillers grain with solubles and carbon dioxide as co-products of the ethanol production process.
 
 "The ethanol industry has contributed over a billion dollars to our state economy, and it is vitally important that we keep this industry growing and thriving in our state," Morby said. "Biofuel production not only creates good jobs in Wisconsin, but also creates a home-grown alternative to traditional gasoline that keeps energy dollars here in the state."
 
 The Wisconsin Bio Industry Alliance is a diverse group of businesses, environmental groups, and statewide and local organizations that have come together to build both public and legislative awareness of the Bio Industry in Wisconsin.
 
 For more information about the Alliance, or to find out how to join, please visit our website: http://www.wisconsinbioindustry.com.
 
 SOURCE: WBIA

Ace Ethanol receives funding for expansion

Posted Aug. 31, 2010
 
 Cincinnati-based engineering and consulting firm AdvanceBio LLC has developed a process that it says will eliminate the vinasse typically produced as a byproduct of sugar-based ethanol production. 
 
 Unlike corn-ethanol plants, which produce marketable distillers grains during the ethanol process, sugar-based plants produce vinasse, which consists mostly of water with a small amount of organic material and has little market value. Advance Bio principal Dale Monceaux said Brazilian plants typically truck vinasse to fields where it is used for irrigation and a nutrient boost. That application is acceptable at smaller plants and in rural areas, but for large plants located in populated areas, such as would likely be the case in the southern U.S., dumping vinasse in area fields poses serious environmental concerns. "Historically, that's the big problem with sugar-based alcohol," Monceaux said. "It's not that it's a hazardous pollutant. It's a highly digestible organic that creates a BOD [biochemical oxygen demand] if it ever hits a waterway." If rainfall were to occur shortly after vinasse was emptied into fields, the runoff could pollute waterways and cause a reduction in oxygen levels, which would inevitably result in fish kills, he said.
 

 In addition to eliminating vinasse production, AdvanceBio's technology could also offer improvements to the overall sugar-based production process. Typically, sugar-based feedstocks require significant pre-processing, according to Monceaux. Sugarcane, for example, must be washed, cut into workable strips and put through a sugar extraction process, which can be either a sugar press or a diffusion technology. The resulting diluted sugar stream includes between 10 and 20 percent fermentable sugars, depending on the variety of feedstock used, Monceaux said. "What we do is take that material and, through a series of pretreatment steps, we'll concentrate it before it goes to the alcohol plant," he said. "That provides some stability of storage and allows us to reach significantly higher ethanol concentrations, which provides energy efficiency in the alcohol plant." 
 
 AdvanceBio engineers have tested the technology and said they found it to be twice as efficient as current starch-based ethanol production technologies. "Our engineers and technologies employed rigorous process simulation modeling to optimize the ethanol plant design and develop overall plant efficiency, energy and water requirements and emissions criteria, integrating these closely with the sugar milling processes," Monceaux said. In addition to improved ethanol concentrations and the elimination of vinasse, bagasse residue could be utilized to provide power for the facilities, as is typically done in Brazil, which would further reduce the plant's carbon footprint.
 
 Monceaux said the technology AdvanceBio offers is similar to other currently available Brazilian technologies, with the exception of the vinasse elimination process. The technology is compatible with any sugar processing technique and could adapt to any front-end process, he said. But while Brazil is currently the world leader in sugar-to-ethanol production and the U.S. has yet to bring a Brazilian-style plant online, Advance Bio will market its technology primarily to U.S. customers rather than international producers. Developing countries have the bulk of the sugar sources, but, "their environmental regulations are a little lax, so there's a not a big incentive for this," he said. "They typically go to the lowest cost solution, not necessarily the best solution." 
 
 AdvanceBio is consulting with three U.S. groups and has done significant work for two projects, which could possibly come online in 2012. "The challenge is the sugar extraction side," he said. "It's fairly capital intensive. We're hoping that by eliminating the environmental concerns of sugar-based alcohol, by eliminating that vinasse issue, it will give [investors] some incentive."

Process rids sugar-based ethanol of vinasse

Posted Sept. 1, 2010
 
 After seven years of research and development, Novera Protein Inc. has launched itself into the commercial animal feed product industry with a newly patented process that converts wet distillers grains (WDGs) and/or syrup into a unique animal feed. "We have developed a brand new class of protein products for animal agriculture," Tom Haschen, Novera president and CEO said. The company recently received a patent for its process and is in negotiations with several ethanol facilities to acquire their WDGs and syrup as well as possibly co-locate an animal feed production facility with the ethanol plant.
 
 Haschen said Novera's process can utilize wet brewers grains, WDGs, syrup, or a combination of any of the two. Other protein sources are then added to enable the alteration of the amino acid structure of the final protein. The resulting product is a bypass protein ideal for ruminant animals. Haschen said the product is deemed "bypass" because the protein passed through the animal's rumin and is digested in the lower intestinal track. The specific make-up of the final product can differ from location to location, depending on the variation of animal diets in each region. "That's one of the beauties of our process, is that we can vary that to suit regional needs," he said. Unlike WDGs, Novera's animal feed is not perishable. Haschen said the final product will be 47 percent crude protein, compared with an average 26 percent crude protein in distillers dried grains.
 
 Ideal locations for Novera's plants, according to Haschen, will be near wet mill ethanol plants in regions that have large cattle populations, preferably 400,000 head of cattle within 250 miles of the plant. While the process can utilize brewers grains, Haschen said it's likely Novera will work with WDGs because ethanol plants are more conveniently located in areas with large concentrations of cattle. "Interestingly enough, if you overlay ethanol facilities with where the dairy and beef markets are, they're quite compatible," he said. "As it ends up, we're probably going to have 4 to 6 plants around the country."
 
 Ethanol producers that are considering supplying Novera with their byproducts are interested in acquiring a new income source for the plant, according to Haschen. "We look at this as a means of being some assistance in adding additional income to an ethanol facility," he said. "[Producers] see this as a ready means to move syrup. In some parts of the country, syrup is a bane - very difficult to get rid of - and something that facilities want to move. This provides a means of doing so." Allowing Novera to co-locate its production facility within an ethanol plant would provide yet another revenue source for the ethanol producer, "We'd utilize their byproducts and produce our products and market them out of that location, providing a double-income source for them," Haschen said.

Company wants wet mill waste for feed product

The summer of 2010 has been a busy one for many ethanol producers, with several plants acquiring new owners and others reorganizing.
 
 In June, petroleum refiner Sunoco Inc. began operations at the former Northeast Biofuels LLC plant near Fulton, N.Y. Sunoco purchased the 100 MMgy facility in 2009 for $8.5 million through a bankruptcy auction and hired ICM Inc. to install upgrades worth $25 million. Sunoco Fulton Ethanol Facility may soon be operating at full capacity for the first time since its initial construction. Sunoco expects the plant will supply up to 20 percent of the company's gasoline blending requirements.
 
 On June 29, Poet LLC completed the purchase of a 90 MMgy plant near Cloverdale, Ind., previously operated by Altra Biofuels, increasing Poet's total capacity to 1.7 billion gallons per year. Poet now owns and operates 27 ethanol plants throughout the Midwest. The company plans to spend $30 million in upgrades, including its patent-pending fermentation process, a water recovery system and new pollution control equipment. Poet expects to reopen the facility by April 2011. "This plant has all the ingredients we need to put together a top operation: a steady corn supply, rail access, a great workforce and productive farmers," CEO Jeff Broin said. "The ample corn supply in the area includes significant quantities of agricultural waste, making the plant a likely location for cellulosic ethanol production in the future."
 
 REX American Resources Corp., a relative newcomer to the ethanol industry, acquired a 48 percent ownership interest in the 100 MMgy NuGen Energy LLC plant near Marion, S.D. The former electronics company, which just last year switched its focus to alternative energy, now has interests in seven ethanol facilities representing a total annual nameplate capacity of 632 million gallons. The company owns 191 million gallons of annual nameplate capacity. "The NuGen investment furthers REX's strategy to prudently deploy its strong balance sheet for new investments in ethanol production facilities or other attractively valued renewable resources or industrial project opportunities," REX CEO Stuart Rose said. REX acquired the ownership stake in NuGen for $9.2 million with a commitment of up to an additional $6.5 million based on the plant's profitability.
 
 Hawkeye Renewables LLC also received new ownership interests, but under less ideal circumstances. The company announced June 18 that it had successfully emerged from bankruptcy with new equity owners for the Hawkeye facilities in Iowa Falls and Fairbank, Iowa. The names of the new owners are not being publicly disclosed, according to spokeswoman Victoria Weld. However, the equity owners have no plans to sell the facilities and Hawkeye will continue to manage operations at both plants. "It is important for farmers and producers who sell corn to Hawkeye Renewables to know that both plants are emerging from this process with significant working capital, minimal debt and a new balance sheet," said Jim Continenza, Hawkeye Renewables board chairman. "We believe the financial future of the two plants has been stabilized and the two plants will continue to make positive contributions to their local communities." Hawkeye Renewables continues to own and operate its remaining ethanol facilities in Menlo and Shell Rock, Iowa.
 
 On the East Coast, Bionol Clearfield LLC, which brought its 100 MMgy plant in Pennsylvania on line earlier this year, has been working through a breach of contract issue with its marketing contractor. Bionol claims Getty Petroleum Marketing Inc., a subsidiary of OAO Lukoil, defaulted on its billion dollar ethanol contract with Bionol in June. The companies had entered into a five-year contract in which Getty was to purchase all of the Clearfield plant's ethanol for a set price. Bionol said that after just two months, Getty began paying less than the agreed-upon price for the plant's ethanol, claiming that the contract price is not valid. The dispute will be taken to arbitration with a decision not expected for months. In the meantime, Getty continues to distribute ethanol from the facility.
 

 Further down the coast, Praxair Inc. has signed a 15-year contract with Osage Bio Energy to purchase CO2 from the company's Appomattox Bio Energy ethanol plant near Hopewell, Va. Praxair is constructing a $15 million industrial gas facility to be co-located with the 65 MMgy barley-to-ethanol plant to capture 190,000 tons of CO2 annually, beginning at the end of 2011, for use in food processing and beverage applications.

Plants change hands, reorganize financials

Posted Sept. 1, 2010
 
 Once again, various industry groups are doing what they can to slow the implementation of E15. And once again, Growth Energy, the Renewable Fuels Association and the American Coalition for Ethanol, are responding swiftly to back the blend increase. 
 
 The push against approving E15 has heated up in recent weeks. The U.S. EPA delayed the E15 decision until sometime this fall and industry groups on both sides of the issue have been waiting on pins and needles for the answer. 
 
 On Aug. 25 a group of 39 industries, including motor vehicle, energy, food, power equipment and recreational industry representatives, sent letters requesting Congressional hearings on E15, saying there was a need for thorough and objective scientific testing before allowing a blend increase. As of Sept. 1, a meeting had yet to be scheduled. 
 
 By Aug. 31 the American Petroleum Institute, one of the 39 groups that sent the letters, has released a study it commissioned to support its argument against E15. The study, called "Identification and Review of State/Federal Legislative and Regulatory Changes Required for the Introduction of New Transportation Fuels" was conducted by Sierra Research. 
 

 "Our study found that the introduction of higher-level blends into the marketplace is not simple or straightforward," said Jim Lyons, a senior partner at Sierra Research " There are many changes that need to be made to federal, state, and local requirements as well as issues with vehicle warranties and the country's fuel distribution and marketing infrastructure. EPA needs to recognize and consider these issues in addition to waiting for all of the emissions and performance data to be collected." 
 
 Using E10 as an example, the study concluded that there are nine steps required before a "widespread introduction" of E15. They are: 
 
 1. A waiver of Clean Air Act pre-emption under Section 211(f); 
 2. Registration of the fuel with EPA; 
 3. Changes to EPA Reformulated Gasoline regulations; 
 4. Changes to EPA Gasoline Detergent Additive regulations; 
 5. Changes to the Clean Air Act and EPA regulations if the Reid Vapor Pressure (RVP) Allowance granted to E10 is going to be provided to E10+ blends; 
 6. Changes to federal fuel rating and labeling requirements; 
 7. Changes to ASTM and National Institute of Standards and Technology specifications for commercial fuels; 
 8. Changes to a myriad of state fuel requirements, with the number and nature of those changes varying from state to state; and 
 9. Changes in equipment and operating practices in the gasoline transportation and distribution system, including pipelines, storage tanks, and retail dispensing facilities. 
 
 "Many of these changes must occur prior to the initial sale of a new transportation fuel, while a few can be subsequently addressed," the study said. "The period of time estimated to be required for the completion of all of the above changes is on the order of several years."
 
 Growth Energy responded that the EPA must first approve the fuel before state laws and regulations are updated. "In the meantime, we are not surprised that the people profiting from the status quo want to keep it that way," said Tom Buis, CEO of Growth Energy. "We have been dependent on foreign oil for 40 years—sending $300 billion a year overseas to other countries' economies—and these delays will only perpetuate our addiction." 

 
 He also reiterated that the Growth Energy Green Jobs Waiver submitted to EPA for the E15 waiver contained sound science that supports the use of E15 in existing vehicles. "In fact, there has been more testing of E15 than there has been of any other fuel additive in the history of the EPA waiver process," he said. "Curiously, API's report did not offer any evidence to the contrary."
 
 Matt Hartwig, communications director for RFA, disagreed that the EPA should wait until the nine steps are completed before it can approve the use of E15. Instead, those actions need to be taken before the fuel can be marketed and are already being worked on. "They can attempt to drag their feet until the cows come home but it won't change the fact that E15 is a safe and effective fuel for vehicle use," he said. "Instead of constantly referring to the few challenges that can easily be overcome, it would be far more effective for Big Oil to work with ethanol producers to address them in a timely fashion - that is assuming they truly want to act in the best interests of American consumers."
 
 Brian Jennings, executive vice president of ACE, injected some humor into the situation. "I am shocked, shocked that a study paid for by Big Oil suggests there are ‘concerns' with the introduction of E15 to the fuel system and that EPA should further delay their decision on E15," he said. "Big Oil, the junk food lobby, and other special interests who benefit from the status quo of limiting the use of ethanol in gasoline will pull out all the stops to prevent consumers from having a meaningful fuel choice. ACE remains confident that all cars should be approved to use E15 and we encourage EPA to render such a decision sooner rather than later."

Big Oil, other industries work to delay E15

Posted Aug. 31, 2010 
 
 Between now and Sept. 24, interested buyers can bid on a 55 MMgy ethanol plant in Kansas. But if a good offer comes in before Sept. 24, the new owners reserve the right to take it. "The bids are being considered as received," said Kirk Martin, managing partner of Ascendant Partners, a business and financial advisory firm that is working with the owners to find buyers for the plant. 
 
 Gateway Ethanol cost $100 million to build and started producing ethanol in October 2007. The plant shut down once for repairs after storm damage and again after working capital ran short. In October 2008 the company filed for bankruptcy. 
 
 The new owners are a bank group made up of the original lenders and other banks that aren't interested in operating the plant themselves. The group took possession of the plant and its related assets on June 30, which for legal purposes is now called Gateway Plant. Gateway Ethanol, on the other hand, is still working to resolve the bankruptcy issue. 
 
 The ethanol plant has been maintained in the more than two years it has been idle. A small staff has kept it clean, turned valves and drained fluids in an effort to keep it ready for resumed operations. "It has been maintained on a 24-7 basis, during the period it was idle," Martin said. In addition, the county taxes and monthly water payments have been paid and the facility's permits have been kept updated. 

 
 The ethanol plant has a nameplate capacity of 55 MMgy and will process 20 million bushels of corn and sorghum into ethanol, 160,000 tons of dried distillers grains and 140,000 tons of CO2. There are a number of oil and gas fields located near the plant that have an interest in using CO2 from the facility for enhanced oil recovery. 
 
 The plant sits on 363 acres of land and has another 259 acres located adjacent to the facility. A Union Pacific main line railroad runs past the plant. For more information, see <a target="_blank" href="http://www.gatewayethanol.com/" rel="external">www.gatewayethanol.com</a> or contact Ascendant Partners.

Idled ethanol plant for sale in Pratt, Kan.

Posted October 1, 2010, at 11:25 a.m. CST Mendel Biotechnology and Ohio-based coal mining company Oxford Resource Partners will team up for a pilot project that will experiment with growing Mendel's proprietary miscanthus varieties on Oxford's reclaimed mining lands. A small trial has been planted this year in eastern Ohio to establish a baseline performance for miscanthus and to provide a crop stand to conduct studies into the potential of the perennial grass on the nutrient-poor lands, according to Rasto Ivanic, senior director of business development for Mendel. Reclaimed lands offer opportunities for energy crops on several levels, Ivanic said. First, the land is less productive in traditional food agriculture, making a low-input crop like miscanthus an attractive option. The lands are also surrounded by a working transportation infrastructure, allowing efficient production and delivery to power plants. Finally, perennial crops such as miscanthus establish extensive root structures in the soil, which stabilize the reclaimed land and help to reduce erosion, he said. The root structures also enrich the soil with carbon, contributing to a favorable carbon profile of biomass production in general, but particularly in reclaimed lands. The crops in the trial will be used for testing by Mendel and its partners, but if the project succeeds in developing a robust biomass production system, they could be used in renewable energy production, Ivanic said. The multiyear project and its scale up will be determined by the needs and objectives of the project and partners. Ohio is a great location for the pilot because of its temperate climate and abundant rainfall. "Moreover, Ohio also has a strong agricultural tradition and is home to some of the leading energy companies active in renewable energy, both of which will be important in developing a sustainable biomass industry," Ivanic said. Partnerships like this help end-users and crop developers gain experience with miscanthus in a bioenergy industry that's still in its early stages with many unknowns, he said. "We see this Mendel-Oxford trial as an opportunity to connect traditional energy with renewable energy in a way that creates new opportunities rather than being a 'zero-sum-game.' We believe the production of energy crops on reclaimed mining land would be a win-win-win opportunity for existing energy infrastructure, the Ohio agricultural community and the environment."

A small miscanthus trial has been planted this year in eastern Ohio to establish a baseline performance for the energy crop and to provide a crop stand to conduct studies into the potential of the perennial grass on the nutrient-poor lands

2010/10/128647923178.jpg

Mendel Biotechnology and Ohio-based coal mining company Oxford Resource Partners will team up for a pilot project that will experiment with growing Mendel's proprietary miscanthus varieties on Oxford's reclaimed mining lands. 


Mendel plants miscanthus on reclaimed mining lands

Posted October 5, 2010, at 4:19 p.m. CST The Northeast Biomass Thermal Working Group (NEBTWG) on Oct. 5 called on legislators and state officials in the Northeastern U.S. to begin work on meeting 25 percent of the region's heating needs with renewable energy. The group's plan, Heating the Northeast with Renewable Biomass: A Bold Vision for 2025, details the path toward a 25 percent replacement of the Northeast's fossil fuel use in heating with renewable sources of energy. The plan was developed by the Biomass Thermal Energy Council, the New York Biomass Energy Alliance, the Maine Pellet Fuels Association, the Alliance for Green Heat and the Pellet Fuels Institute. As a result of the vision, the NEBTWG was formed to advance the use of biomass for thermal energy in the six New England states and New York. "The Northeastern U.S. relies heavily on fuel oil and other fossil fuels to meet heating demand in the region," said Charles Niebling, general manager of New England Wood Pellet and a member of the NEBTWG steering committee. "This vision presents a common-sense path forward-a path that keeps dollars and jobs in our communities by promoting the switch to renewable, highly efficient sources of thermal energy. For example, Northeastern states consume 5.5 billion gallons of heating oil each year, sending almost $10 billion in economic wealth overseas to foreign nations. Imagine the value to our economy if we could keep a portion of that wealth at home." In an effort to raise awareness of the opportunity for renewable heating in the Northeast, NEBTWG distributed the vision with members of Congress, governors, and officials from state energy, forestry and economic development agencies. More information on NEBTWG and the vision can be found at www.nebioheat.org. Information on the third annual Heating the Northeast With Renewable Biomass conference, being held April 13-14 in Manchester, N.H., can be found at www.heatne.com. "We have an ambitious goal, but with careful attention to forest sustainability and development of the potential of dedicated energy crops, such a transition to heating with renewable biomass can be done," said Dan Conable, executive director of the New York Biomass Energy Alliance and a member of the NEBTWG steering committee. "Scandinavia and western Europe give us clear, cost-effective examples of the kind of dramatic transformations that are possible, moving away from fossil fuel heating to biomass heating in the residential, commercial, and industrial sectors." SOURCE: NEBTWG

The Northeast Biomass Thermal Working Group (NEBTWG) on Oct. 5 called on legislators and state officials in the Northeastern U.S. to begin work on meeting 25 percent of the region's heating needs with renewable energy.

NEBTWG: More heat from renewables in NE

The Northeast Biomass Conference & Expo held Aug. 4-6 in Boston was everything we had hoped it would be. What we didn't expect was the diversity of the attendees. According to Jim Sampson, BBI International's registration manager, eight different countries and 38 states plus the District of Columbia were represented&#8213;not bad for a regional event.
 
 I suspect that it was the subject matter and the first plenary session regarding the carbon neutrality and sustainability of woody biomass that drove attendance. The session was well-attended but unfortunately we weren't able to open it up to comments from the audience as I had earlier thought we would. I thought the dialogue amongst the participants-Moderator Dwayne Breger, director of renewable and alternative energy development for the Massachusetts Department of Energy Resources; Dave Tenny, president and CEO of the National Alliance of Forest Owners; Tom Walker, consultant/team lead for the Manomet Center for Conservation Sciences; Bob Perschel, northeast region director of the Forest Guild; and Michael Goergen, executive vice president and CEO of the Society of American Foresters-however, made up for the lack of audience participation.
 
 It was obvious the presenters had differing views on the use of woody biomass, but instead of arguing they were respectful of one another and at the same time made their views known.
 
 What I found most interesting was the discussion about forest landowners and the fact that they are able to do a better job of perpetuating forest lands when they have more options and markets. This goes against the claims that the use of woody biomass for renewable energy will lead to clear-cutting of forests. Why would forest landowners destroy all of their income in one fell swoop? That‘s akin to the idea that farmers aren't concerned about soil erosion and quality. If they don't take care of their land, then their land won't be as productive and they won't get the yields they need to profit. 
 
 I also attended all of the panel sessions in the biomass project development and finance track, most of which basically concluded that projects without abundant, affordable biomass supplies probably will have a tough time getting financing. 
 
 I was told that protestors had applied to local law enforcement to hold a demonstration and also that some people were handing out fliers, but I personally never saw or heard any of it. I would have been surprised if there had been a huge demonstration, however, as apparently the people against the use of woody biomass for renewable energy production have already gotten what they wanted in the form of the Manomet Center study, the Massachusetts Executive Office of Energy and Environmental Affairs' request for swift policy changes to the state's renewable portfolio standard in light of the study's findings, and the public meetings held regarding the study. 
 
 I just hope the policymakers in Massachusetts don't forget about the forest landowners, loggers and biomass project developers, and the potential for economic development the industry could bring to the state when they are making their decisions.

1602-1286340930.jpg

Event Tackles Controversial Topics

Things are looking up for the biomass industry. 
 
 After a couple months of challenging assumptions made in mischaracterized studies, we scored a huge victory in July as 114 influential environment and energy scientists from prestigious universities and environmental centers rallied around biomass. They urged key members of Congress to view biofuels as the valuable renewable energy source that they are. And they implored the U.S. EPA to reconsider its Tailoring Rules that equate biomass energy with that of fossil fuels.
 
 Most important, the scientists explained-in scientific detail that was still easy for laymen to understand-how they account for biomass' "carbon neutral" status and its lack of greenhouse gas (GHG) emissions. They even went so far as to say that biomass energy is good for the environment:
 
 "Forests are our nation's primary source of renewable materials and second-largest source of renewable energy after hydropower," they wrote. "Sustainable development of new and traditional uses of our forests helps reduce GHG emissions and has the important benefit of providing economic incentives for keeping lands forested and reducing the motivation for land conversion.
 
 "When wood removals are used to produce both renewable materials as well as bio-energy," the scientists continued, "the carbon stored in forest products continues to grow year after year, more than off-setting any processing emissions while at the same time permanently substituting for fossil fuel intensive materials displacing their emissions." 
 
 This letter could not have been timed better; in Massachusetts, misperceptions continue to spread. 
 
 Ian Bowles, Massachusetts secretary for energy and environmental affairs, recently wrote a letter instructing the state's Department of Energy Resources to draft new regulations that would impose stricter standards for biomass projects seeking to qualify for Massachusetts incentives. The proposal by Secretary Bowles, among other things, would require that biomass power projects provide significant near-term greenhouse gas dividends and includes a proposal that the state develop new carbon accounting rules for biomass power. Bowles' letter also calls for a clear definition of residues and waste woods and proposes that the greatest support be thrown behind plants that produce both heat and power.
 
 Unfortunately, the secretary's letter does little to stop the misinformation spreading about biomass; instead, it continues to spread dangerous myths about our industry. These mischaracterizations must stop if we are to not only reach our energy potential, but to stay alive in the renewable energy game. It seems that while we know that biomass power is an energy source that derives from waste debris, such as branches and waste residue from timber harvests, and that biomass power is a renewable source that is carbon neutral, we need to continue to project the truths about biomass to fix the inaccurate view some have of our industry. 
 
 This letter from top scientists across the country was an encouraging sign for the biomass industry and the 14,000 men and women in this country who are employed by our industry. These scientists' ability to articulate why biomass is beneficial to the environment will work to quell the misinformation circulating about the industry and increase knowledge about what we do and, most importantly, why biomass power is an important energy source. 
 
 We must continue the fight. Biomass power associations and facility leaders must stress to media contacts and elected officials the many positive facts about biomass power to solidify our role in renewable energy. I, for one, fully believe we are capable of righting the myths and showing America that biomass power is both renewable and necessary in our country's energy conversations. 
 
 
 Bob Cleaves is president and CEO of the Biomass Power Association. To learn more about biomass power, please visit <a href="http://www.USABiomass.org">www.USABiomass.org</a>.

September 2010

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Recent Legal Challenges to EPA's RFS2

Examine VEETC Impact, Extend Blends Now

ILUC Debate in Europe—The Saga Continues

Fueling Freedom

Lessons from the Front Lines

It's About the Message

Event Tackles Controversial Topics

Biomass Power: A Power to be Defended

EERC's Biomass '10 Workshop Discusses Breakthrough Technologies

Playtime is Over: Why September Means Biomass Advocacy or the Consequences of Inaction

Global Biodiesel Production: A Different Perspective

Biodiesel Interest High in Boston

Featured

Weathering the VEETC Storm

Unlocking the Power of Corn

Fueling a New Market

Cheers to Biomass in Boston

An Algal Dream Team

A New Start

Beyond the Hype

Global Biodiesel Production and Market Report

Biodiesel-Powered Jetcar

Contributions

CO2 Increasingly Important to Ethanol

Patenting Carbon Credit Trading: Dodging Certainty

September 2010.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Business and People

Business Briefs

Business Briefs

Columns

Recent Legal Challenges to EPA's RFS2

Examine VEETC Impact, Extend Blends Now

ILUC Debate in Europe—The Saga Continues

Fueling Freedom

Lessons from the Front Lines

It's About the Message

Event Tackles Controversial Topics

Biomass Power: A Power to be Defended

EERC's Biomass '10 Workshop Discusses Breakthrough Technologies

Playtime is Over: Why September Means Biomass Advocacy or the Consequences of Inaction

Global Biodiesel Production: A Different Perspective

Biodiesel Interest High in Boston

Featured

Weathering the VEETC Storm

Unlocking the Power of Corn

Fueling a New Market

Cheers to Biomass in Boston

An Algal Dream Team

A New Start

Beyond the Hype

Global Biodiesel Production and Market Report

Biodiesel-Powered Jetcar

Contributions

CO2 Increasingly Important to Ethanol

Patenting Carbon Credit Trading: Dodging Certainty

September 2010