Two transportation fuel booms are happening simultaneously in North Dakota on opposite ends of the fuel spectrum. The western half of the state is in the midst of massive oil production growth, making the state one of the top five oil-producing states in the country. Meanwhile, the state has also more than doubled its usage of renewable fuels in the past year. According to the North Dakota Corn Council, the state consumed just over 167,000 gallons of renewable fuels in the first eight months of 2009. Between January and August this year, that number skyrocketed to more than 351,000 gallons.
 
 Most of the credit for increasing renewable fuels use is being given to greater availability of ethanol-blends through the installation of blender pumps. The North Dakota Department of Commerce says 76 new blender pumps have been installed in the past year through its $2 million biofuels blender pump program, initiated last October. The 12-month program offers retailers $5,000 in addition to tax incentives for each blender pump installed. Applications for reimbursement are being accepted until May 1, 2011. As of Oct. 27, there were 172 pending applications. If all applications are approved, North Dakota could have more blender pumps per capita than any other state.

 
 In addition to the state's incentive, the North Dakota Corn Council has been offering a $2,500 per-pump matching grant. When combined, these incentives cut the retailers' installation costs in half. Tom Lilja, executive director of the North Dakota Corn Council, says the blender pump incentive program could serve as a model for other states to follow. "The blender pump initiative partners our western oil fields with our eastern corn fields and gives our citizens' savings at the fuel pump through competition," he says. "We believe the blender pump initiative, along with investments in all our energy sectors, will provide our nation with a blueprint for energy independence."
 
 Even with incentives, retailers wouldn't install pumps to dispense ethanol blends if they didn't believe the fuel would sell, as evidenced by their response to E15. Therefore some of the credit for the success of blender pumps in North Dakota should be given to consumers. Andrea Holl Pfennig, the commerce department's blender pump program administrator, says North Dakota citizens may be more willing to accept ethanol because many of them are aware of its benefits to the state's corn growers. "But we designed this program to be a win for everyone," she says. "The ethanol producers, the corn growers and the retailers."
 
 Kent Satrang, CEO of Petro Serve USA, says he expects sales of ethanol to dramatically increase at his retail stations as a result of blender pumps. "What we've accomplished in the past year was to build a pipeline right from the corn field to the flex-fuel vehicles of North Dakota," he says. "The sales of ethanol next year in North Dakota are going to skyrocket."

Filling Up A customer fills his flex-fuel vehicle with E30 at a Fargo, N.D., gas station. PHOTO: KRIS BEVILL, BBI INTERNATIONAL

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North Dakota's tremendous growth sets an example

Blender Pump Boom

Posted Dec. 13, 2010

Tax legislation that includes a one-year extension of the blender's credit will move to the U.S. Senate floor before the end of the week.

Senators voted to invoke cloture on Dec. 13, meaning debate of the bill is limited to 30 hours, a time limit that can be decreased or increased by majority vote, according to a Senate spokesperson. Although the vote reached a 60-vote margin before the end of the day, it won't be official until all senators have had the opportunity to vote. Some legislators had trouble getting back to Washington, D.C., after weekend weather difficulties and the vote will be held open for an unspecified period of time to allow them to cast their ballots.

The bill extends key ethanol provisions at their current levels for one year. That puts the Volumetric Ethanol Excise Tax Credit at 45 cents a gallon, the Small Ethanol Producer Tax Credit at 10 cents a gallon and the Secondary Tariff at 54 cents per gallon. It also extends the 30 percent Alternative Vehicle Refueling Property Tax Credit. If passed in the Senate, the bill will still need to pass muster in the U.S. House of Representatives, where the bill has been opposed by Democrats.

The vote to invoke cloture opens the way for a vote on the bill in the Senate before the end of the week, Growth Energy said. "With today's vote, the Senate took a critical step toward reducing our dependence on foreign oil, creating jobs in the U.S., improving our environment, and strengthening our national security," CEO Tom Buis said. "Extending the current ethanol incentives today will give Congress the opportunity to implement longer term solutions, like our Fueling Freedom Plan, next year."

Although it was just a procedural vote, the American Coalition for Ethanol said it signals the Senate will pass the tax bill. "We are hopeful that very soon after the Senate enacts this legislation the U.S. House of Representatives will as well," said Brian Jennings, executive vice president of ACE.

The Renewable Fuels Association pointed out that the cost of extending VEETC through 2011 is equivalent to one week's worth of oil imports. The group encouraged the Senate to pass the bill quickly and said it is "optimistic" that the House will pass the measure before it adjourns for the year. "By extending key tax incentives for ethanol production and use, new and existing ethanol technologies can continue to develop and evolve with some confidence," said Bob Dinneen, president and CEO of RFA. "This one-year extension will provide the industry and lawmakers breathing room to think through responsible reform of ethanol tax policy and all energy tax policy more specifically."

NOTE: Comments from RFA added at the bottom.

UPDATED: Tax bill to go to vote in Senate

Administration officials have recently voiced support for ethanol, but it remains to be seen whether that support will translate into ethanol-friendly Congressional action during the lame duck session. 
 Most outspoken has been Secretary of Agriculture Tom Vilsack, who unveiled a USDA plan in October to cost share on the installation of 10,000 blender pumps in the next five years. He supports an extension of the Volumetric Ethanol Excise Tax Credit and the ethanol import tariff. The revised renewable fuels standard (RFS2) will account for 1 million new jobs, he says. "I believe the state of the rural economy and President Obama's vision for rural America compels us to action now," he explains. "I believe the goals articulated within the RFS2 mandate action now. And I believe the need for energy security, a cleaner environment and better economic opportunity in rural America make the case for action now." Vilsack has urged the U.S. EPA to expand its E15 approval to include vehicle models 2001 and newer and says he expects that approval by the end of this year.
 
 In a recent speech to members of the Renewable Fuels Association, Heather Zichal, deputy assistant to the president for energy and climate change policy, also emphasized the White House's positive view of ethanol. "This administration is working to provide continued support for first-generation corn ethanol, which we believe is a critically important renewable fuel source," she said. "At the same time, we're also looking forward and are working to accelerate the creation and rapid deployment of advanced biofuels, which we think will ultimately become one of the nation's most important industries in the years to come." Zichal told RFA members the administration believes VEETC works, but it is seeking ways to reform it. "I always like to remind people that before President Obama was president, he came from Illinois," she said. "So he's no stranger to biofuels."
 
 Ethanol opponents have waged an aggressive campaign to sway Congressional members away from further ethanol support, citing reports that show a 12-month VEETC extension would cost $6 billion and claiming that increased ethanol usage in older vehicles will result in greater, rather than less, pollution.

Ethanol Booster Secretary of Agriculture Tom Vilsack's support is unequivocal, including a plan for 10,000 blender pumps. 

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Is administration support enough to spur Congress to extend ethanol incentives?

‘Action Now'

Posted Nov. 15, 2010 
 
 Powers Energy of America Inc., a company planning to build a $254 million garbage-to-ethanol plant in Schneider, Ind., expects to have its debt financing in place in December. The company has also executed agreements and established working relationships with three area construction companies, with plans to break ground next summer and complete the project by mid- 2013. 
 
 "Lake County residents and public entities will have no financial liability for any portion of the project before or during construction and operation, or after facility closure," said Ken Bosar, vice president. He added that Powers Energy has a contract with a company for 100 percent debt financing with no private investors and that the funding source will be announced at a later date. 
 
 Powers Energy One of Indiana has a 15-year contract with one 5-year extension with the Lake County Solid Waste Management District to provide municipal solid waste (MSW), the plant's feedstock. The current tipping rates for garbage disposal are $38 to $43 a ton, with rates expected to rise to $49 a ton in 20 years, Jeff Langbehn, executive director of the solid waste district told EPM. The 20-year agreement will allow cities in Lake County that participate to enjoy a significant price reduction as well as receiving host fees. Tipping fees at the ethanol plant will start at $17.50 a ton and reduce to $17.25 once input exceeds 2,000 tons daily. After filling contractual obligations for waste from Lake County, Powers Energy can also take in waste from other communities, including nearby Chicago. 
 

 Powers Energy will utilize INEOS Bio technology to convert MSW into electricity and ethanol. "Our ethanol will have even greater ramifications and benefits as we reduce the need for landfill disposal, and thus, we reduce the potential for landfill emissions such as methane and other organic compounds, and the potential for water contamination from runoff and leachate leakage," Bosar said. 
 
 To start out, the plant will have a capacity of about 42 MMgy. At full scale, the plant will process 8,000 tons of MSW daily for 160 MMgy of ethanol. Metal and glass will be removed and recycled. "The Schneider facility is a closed-loop gasification and ethanol conversion plant that is modular in design to facilitate construction and operational flexibility," Bosar told EPM. "All components of the plant have been used at full scale in the waste, ethanol, and chemical industries for many years, removing the risk of so-called ‘scale-up' concerns."
 
 Supposed controversy surrounding the project has been drummed up by a disgruntled competitor, Langbehn said. A landfill outside of Lake County stands to lose about 80 percent of revenue generated by tipping fees, should the ethanol plant become a reality. In the two years since the solid waste district and Powers Energy signed a contract, the project has been moving steadily forward day by day. "It really is a neat success story project and one that we are very excited about," he said.

Powers Energy moving forward in Indiana

Posted Dec. 10, 2010 
 

 A U.S. Senate bill released the night of Dec. 9 includes key ethanol provisions. The "Reid Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010" extends the Volumetric Ethanol Excise Tax Credit, the Small Ethanol Producer Tax Credit and the Secondary Tariff on ethanol imports at their current levels through 2011. That breaks down to: 
 
 &bull;	45 cents per gallon for VEETC, otherwise known as the blender's credit
 &bull;	10 cents per gallon for small producers
 &bull;	54 cents per gallon tariff on imported ethanol 
 
 Growth Energy issued a statement thanking President Barack Obama and "our Congressional champions" for recognizing the importance of creating jobs, improving the environment and strengthening national security by helping the U.S. be less dependent on foreign oil. "An extension of the credit will give the industry certainty, and Congress the opportunity, to move forward with reforms that will remove the infrastructure barriers to the fuels market, such as our Fueling Freedom plan, next year," said Growth Energy CEO Tom Buis. 
 
 The fact that ethanol provisions were in the bill shows that bipartisan support for ethanol remains strong in Washington, said Brian Jennings, executive vice president of the American Coalition for Ethanol. "Congress and the White House recognize ethanol reduces pump prices for all American motorists and creates domestic jobs," he said. "This one-year extension, if enacted, will provide the ethanol industry the opportunity we asked for to continue identifying the best long-term roadmap for the tax credit and overall ethanol policy reforms."
 
 While the one-year extension wasn't as long as hoped, investing in the ethanol industry is a "proven method" to create jobs and economic opportunities in the U.S., said Bob Dinneen, president and CEO of the Renewable Fuels Association. "We urge Congress to move expeditiously to pass the legislation," he said. "Then, honest and good faith discussions about how we reform all energy tax policy-including for all oil and ethanol technologies-can occur."
 
 The bill also includes an extension through 2011, retroactive for 2010, of the biodiesel tax incentive that expired at the end of last year. Sen. Chuck Grassley had fought "tooth and nail" to get ethanol and biodiesel provisions included in the bill, according to a statement. Ethanol and biodiesel are the most effective way to reduce imports of foreign oil and are the source of hundreds of thousands of U.S. jobs. "Ethanol has proven its value as a homegrown, renewable fuel and, in light of the hundreds of billions of dollars shipped abroad as a result of foreign oil dependence, ethanol is a relative bargain," Grassley said. "Biodiesel also builds energy independence. Our country spends more than $730 million a day on imported petroleum. Letting these items lapse would be a textbook case of penny-wise, pound-foolish legislating." 
 
 The next step is for the Senate and U.S. House of Representatives to vote on whether to advance the bill. The Senate is expected to vote for cloture on Dec. 13. With enough votes for cloture the Senate can limit consideration of a bill to 30 additional hours of debate.

Senate bill calls for 1-year extension of VEETC

Posted Dec. 10, 2010

 
 As soon as word was received that U.S. Senate draft legislation includes a one-year extension to the Volumetric Ethanol Excise Tax Credit, ethanol industry groups began work to convince U.S. House of Representatives members to leave the extension in a final bill. The Senate is expected to vote on its legislation the week of Dec. 13 and the House could vote as early as later that week. 
 
 Growth Energy CEO Tom Buis expressed confidence that the measure will pass the Senate, cautioning that it's still difficult to foretell the outcome with any certainty. Brian Jennings, executive vice president of the American Coalition for Ethanol, said a procedural vote on the overall tax extension bill was held in the Senate late Dec. 9 and passed with 65 votes, indicating that the bill will indeed pass the Senate. "I would predict this passes the U.S. Senate early next week," he said.
 
 The House, however, still presents a fairly significant challenge and that is where emphasis will be placed by the ethanol industry in the coming weeks. ACE reached out to its thousands of members early on Dec. 10, encouraging them to contact their respective legislators and encourage them to support the ethanol credit extensions. The group offers a <a target="_blank" href="http://capwiz.com/ethanol/home/ " rel="external">link </a>through its Legislative Action Center for supporters to express their support for the measure to members of Congress. "We're going to try and mobilize as much grassroots support as we can between now and whenever the Senate and House take this up," Jennings said. "We're going to be in touch with as many House offices as we can to educate them that the ethanol provisions were added, and that that's a better deal."
 
 Growth Energy will also focus on educating House members on the facts behind ethanol production and its impact on the American economy. "I think our target is as many folks as we can reach in the available time, over and over again, to talk about the real issues here and what this means to rural America and our American economy," Buis said. "That's the debate we want to have."
 
 Liberal Democrat members of the House will be the least likely to approve the tax extension package, mostly because they are opposed to other tax cuts unrelated to ethanol. Jennings believes the inclusion of ethanol incentives could help to convince them to support the bill. "I think in the end as it becomes clearer to those Democrats that this is the only way they can extend unemployment benefits and extend the tax credits for the middle class, and as they learn the deal has been improved through provisions like the ethanol tax credits, I think we'll eventually get to that critical mass we need," he said. Growth Energy will be in touch will "all" House representatives, Buis said. "We're going to be out there working and educating people," he added. "A lot of this debate over ethanol policy is based on misinformation. But when we explain the facts to people and to policymakers, they understand it. If this debate occurs on the real facts, we're confident we'll win."
 
 It is unclear when the House might vote on the bill, but there is speculation a vote could occur by Dec. 17, pending a passage in the Senate prior to that date. And while a one-year extension is less than what was originally lobbied for by the ethanol industry, it is long enough to provide time to formulate a long-term reform strategy, industry members said. The Senate inclusion also sends a signal to the industry that ethanol remains supported by government leaders. "There was a hugely important political statement made when the tax incentives extension was included [in the Senate]," Jennings said. "It's a political message to all of those groups that have spent millions to try and demonize ethanol that they can attack ethanol all they want, but the White House and Congress still strongly support ethanol. They understand politically that if you add ethanol provisions to a bill, it's likely you'll attract votes to a bill. I think that lesson will be discovered in the House as well, eventually."

Grassroots effort launched for VEETC 'yes' vote

Posted Dec. 8, 2010
 
 The Brazilian Sugarcane Industry Association, UNICA, said it will encourage the Brazilian government to initiate dispute settlement proceedings at the World Trade Organization if currently proposed legislation to continue the ethanol import tariff passes the U.S. Congress. 
 
 While final details are yet to become available, it is believed that the tax extension package currently being finalized in the U.S. Senate contains language that would continue the Volumetric Ethanol Excise Ethanol Credit at a rate of 36 cents per gallon and would also continue the ethanol import tariff at its current rate of 54 cents per gallon. Joel Velasco, UNICA's chief representative in North America, said this would essentially double the import tariff, making it impossible for Brazilian exports to enter the U.S. market. "The stated rationale for the ethanol import tariff has always been to offset the blenders' tax credit and prevent Americans from subsidizing foreign energy production," he said. "This move would transform it from an offset to a punitive trade barrier."

 
 UNICA has disputed the import tariff for years and lobbied extensively this year for a complete removal of the tariff. UNICA President and CEO Marcos Jank said the continuation of the tariff at what is perceived to be a higher level would leave the association no choice but to seek WTO intervention. "We will have exhausted all options to resolve our differences through informal dialogue and the U.S. legislative process," he said. "It will then be time for the WTO to resolve this matter in accordance with applicable international rights and obligations."
 
 Matt Hartwig, communications director for the Renewable Fuels Association, said UNICA is resorting to scare tactics in order to protect its interests. "This is nothing short of a final p.r. ploy by a desperate foreign industry [with] millions of dollars seeking to tarnish the image of American farmers and ethanol producers while greenwashing its own questionable environmental and labor record," he said.
 
 A final bill has yet to be released and it is unclear when Congress might vote on the legislation. However, Senate Majority Leader Harry Reid has told Senate members that he would like to adjourn by Dec. 17.

UNICA threatens WTO intervention over tariff

Posted Dec. 3, 2010
 
 Attendees of the 7th annual Canadian Renewable Fuels Summit, held Nov. 29 - Dec. 1 in Gatineau, Quebec, spent much of the three-day event discussing a comprehensive path forward for the Canadian biofuels industry. There was no debate that continued support of first-generation biofuels through increased federal blending mandates and financial incentives is necessary. But it was also acknowledged by most speakers and attendees that first-generation support is necessary to spur advanced biofuels development and a robust advanced biofuels and bioproducts industry is required if Canada is to achieve the summit's goal of "Growing Beyond Oil."
 
 Many of the event's speakers represented cellulosic ethanol and advanced biofuels companies, and nearly all mentioned a desire to partner with Canadian firms to advance their production plans. Canada's immense forestry sector presents multiple opportunities for these companies and was the topic of an afternoon session that included speakers from the pulp and paper industry, the Forest Products Association of Canada and UOP, a Honeywell Co.
 

 Paul Lansbergen, director of energy, economics and climate change for the Forest Products Association, presented findings from the association's Bio-Pathways Project, which was conducted in order to assist the forest products industry in determining its best options for transformation. Phase 1 of the project, which was completed last year, identified biorefineries as an ideal reformation for pulp and paper mills because the production processes can be easily combined. "Instead of just making pulp and paper, it could serve its own energy needs through biomass co-generation and it could also make other energy products as well as chemicals," he said. "You can make ethanol, you can make pulp, you can have a paper machine on site, you can make some chemicals such as furfural and lignin, which you can further refine into other niche chemicals." The second phase of the project is focused on analyzing business models and market potential for the identified optimal pathways and will be released in February. 
 
 While there are several cellulosic ethanol companies who plan to use wood and wood wastes as feedstocks, Canada's forestry sector could find more potential partners by focusing on bioproducts and other fuels, according to Omar Irani, senior business manager for Honeywell/UOP. His presentation focused on relaying information UOP has received from its customers, mainly members of the petrochemical industry. Not surprisingly, that industry's "wish list" includes drop-in replacement fuels that can be used in the existing infrastructure. "They want a fuel replacement," he said. "A lot of our customers view ethanol as an additive, that's just the way they see it." UOP acted on its customers' feedback and has formed a partnership with Ensyn Technologies Inc. to produce pyrolysis heating oil, and potentially drop-in ready transport fuels, from woody biomass.
 
 Alain Bourdages, director of energy development and strategy for pulp and paper company AbitibiBowater Inc., painted a slightly broader picture of what the pulp and paper industry is looking for in a partner. He was frank about the shrinking demand for his industry's traditional products and about AbitibiBowater's recent financial difficulties. According to him, biofuels and bioproducts offer an ideal opportunity for pulp and paper companies to diversify away from their traditional products and AbitibiBowater is willing to entertain any product partnership, so long as the potential partner can provide the specific technical expertise. "We're a forest products company," he said. "We're not an IP [intellectual property] developer. We don't do a whole lot of research and development. Our approach is basically to bring what we have to processes that are close to maturity and bring in that extra push of having the feedstock, the security, the infrastructure and other elements. Our interest is bringing as much value out of the forest as we can. So if it's ethanol, it's ethanol. If it's biodiesel, it's biodiesel. If it's chemicals only, it's chemicals only. We're really not that attached to any given product."
 
 But while industry members are well aware of the potential for a Canadian bioproducts industry, policymakers appeared to be caught somewhat off-guard by the concept. When a panel of three parliamentary representatives was asked by an audience member why policy support is focused solely on biofuels rather than bioproducts as well, all three seemed surprised by the question. They said the first step in forming policy to support bioproducts is to inform parliament about the industry.

CRFA attendees focus on next-gen bioindustry

Posted Dec. 16, 2010

Leaders in the biomass industry are urging others to contact state legislators to bring to their attention the dramatic repercussions a section of the near 2,000-page, $1.1 trillion 2011 Omnibus Appropriations Act would have on the industry.

Specifically, the negative effects of slashing funds imperative to the continuation of the Biomass Crop Assistance Program. Section 749 of the omnibus states, "none of the funds appropriated or made available by this or any other act shall be used to pay salaries or expenses of personnel to administer the Biomass Crop Assistance Program as authorized by 9011 of Public Law 107.171 in fiscal year 2011."

While the provision does not specifically remove money for funding the program, it does do so for administrative expenses, which would effectively kill the program since USDA is not allowed to administer a program without a budget, according to Tom Kimmerer, senior scientist at Moore Ventures LLC. "The Omnibus does reduce direct BCAP spending by $134 million, or about half. It also rescinds unobligated funding balances for the Biorefinery Assistance program and Bioenergy Program for Advanced Biofuels [about $84 million]-all of which are USDA programs," he said.

Cuts to other farm bill programs are minimal, Kimmerer pointed out. "So somebody was targeting the biomass industry," he said. "Though the omnibus is not in final form, people concerned about BCAP need to contact their legislators."

Jim Sturdevant, the director of Poet LLC's Project Liberty, said, "The Biomass Crop Assistance Program was designed to help overcome the challenge of securing a steady supply of biomass for cellulosic ethanol. To eliminate an excellent program like BCAP in this manner, with no debate on the merits of the program, would be a travesty. We are doing everything we can to point out that this is a mistake."

Bob Cleaves, president of the Biomass Power Association described the legislation as a "huge mistake. The program provides vitally important financial assistance to the collection and transportation of many kinds of biomass fuels," he said. "In addition to assisting the biomass industry with providing affordable, clean energy for hundreds of thousands of homes, the removal of agricultural waste for biomass fuel contributes significantly to the health of the environment. At a time when Congress is concerned about a fragile economic recovery and energy independence, the very last thing we need is for Congress to cancel programs designed to promote the twin goals of sustaining rural employment and bolstering renewable energy."

If the BCAP program were killed it would also impact biofuels producers. Jim Sturdevant, director of Poet LLC's Project Liberty, said that to eliminate an excellent program like BCAP in this manner, with no debate on the merits of the program, would be a travesty. "We are doing everything we can to point out that this is a mistake," he said.

Senate Majority Leader Harry Reid, D-Nev, has planned a Sunday Senate session to work on the bill, which was released Dec. 14.

To view a copy of the proposed omnibus spending bill, visit http://www.appropriations.senate.gov/news.cfm?method=news.view&id=9ac3518e-7e19-4328-bf52-16a6c2a1d333.

(This article first appeared on www.biomassmagazine.com.)

Omnibus spending bill could kill BCAP

Posted Dec. 16, 2010

The Sierra Club filed a lawsuit in Michigan's Ingham County Circuit Court Dec. 13 against the Michigan Department of Natural Resources and Environment, claiming that the department's air permit approval for the joint Mascoma Corp.-J.M. Longyear commercial-scale cellulosic plant under development in Kinross, Mich., is unlawful.

The environmental group said in its filing that minor source construction permits, such as the air permit in question, is a "sham" permit because it believes the company intends to make changes to its operations after acquiring the permit. The permit issued for the 40 MMgy Frontier Renewable Resources LLC plant allows it to annually emit 132 tons of carbon monoxide, 1.7 tons of sulfur dioxide, 101 tons of nitrogen oxides, 51 tons of particulate matter, 119 tons of volatile organic compounds, less than 10 tons of hazardous air pollutants (HAPs) and less than 25 tons of aggregate HAPs. The Sierra Club said these emissions estimates are not accurate for Frontier's wood-based project because they are based on data from corn ethanol fermentation and because the company plans to eventually double its operating capacity to 80 MMgy, which would greatly increase the amount of emissions produced at the plant. The Sierra Club further argues that the DNRE should have required Mascoma to supply emissions modeling from its pilot-scale wood-to-ethanol facility in Rome, N.Y. to more accurately predict actual emissions from the commercial-scale plant.

By obtaining a permit for a 40 MMgy facility rather than the final 80 MMgy capacity, the group alleges that Frontier is attempting to circumvent more stringent Prevention of Significant Deterioration permitting requirements. The Sierra Club is also challenging the plant's use of natural gas to fuel the production process and claims it will consume nearly one-third more energy than will be contained in the ethanol produced at the plant, making its final product energy negative.

J.M. Longyear CEO Steve Hicks said he couldn't respond directly to ongoing legal proceedings, but stressed that the suit filed by the Sierra Club is a petition to review and doesn't impact the legal validity of the air permit or the company's plans for construction. The permit process was extensive and took approximately 14 months to complete. "A lot of money, time and effort went into this permit, and a lot of open communications with the public agencies and the public as a whole," he said, adding that any expansion of the project beyond 40 MMgy will require a new permitting process. "We've done a very good job of all our diligence and work with the state agencies."

The DNRE said in its air permit approval that it does not believe the company is intentionally attempting to circumvent major source review. It will address the issue of circumvention if Frontier files a future application for the installation of additional equipment at the facility, the agency stated. It admitted that there is a lack of data regarding emissions produced as a result of wood-to-ethanol production, but defended its substitution of corn ethanol emissions estimates by stating that it "is common and accepted practice" to use data from similar processes when specific data is not available.

Construction of the facility is slated to begin sometime in the first half of 2011 with operations expected to begin in 2013.

Sierra Club challenges wood ethanol air permit

Posted Dec. 17, 2010

The U.S. House of Representatives voted 277 to 148 on Dec. 16 to approve the tax bill, which contains the same key ethanol provisions approved by the U.S. Senate. The bill will move on to the White House Dec. 17, where President Barack Obama is expected to sign it into law.

The bill includes one-year extensions of 45 cents per gallon for the Volumetric Ethanol Excise Tax Credit, 10 cents per gallon for the Small Ethanol Producer Credit and 54 cents per gallon tariff on imported ethanol. Also extended for one year was a 30 percent Alternative Vehicle Refueling Property Tax Credit.

Much like what happened in the Senate, the bill escaped last-minute efforts to reduce VEETC. Rep. Lloyd Doggett, D-Texas, circulated a letter signed by 30 other members of Congress, urging House lawmakers to make changes to the energy provisions in the bill. Doggett wanted to reduce VEETC to 36 cents a gallon and add the Advanced Energy Manufacturing Tax Credit to the bill to provide $1 billion for wind and solar projects.

The Renewable Fuels Association, Growth Energy and American Coalition for Ethanol all released statements praising the passage of the bill. "House members have struck a blow to the oil status quo and extended important tax policies that will allow America's ethanol industry to grow and evolve," said Bob Dinneen, president and CEO of the RFA.

A one-year extension will provide certainty in the market and provide time to work on longer-term tax policy reforms, said Growth Energy CEO Tom Buis. "The infrastructure build out proposed in our Fueling Freedom proposal will help open the market to reduce our dependence on foreign oil, improve our environment, create U.S. jobs that can't be outsourced and strengthen our national security," he added.

The industry will pursue policy reforms aiming to increase the number of flex-fuel vehicles and blender pumps in the long term, said Brian Jennings, executive vice president of ACE. "We look forward to working with Congress in the 112th to identify the best path forward for the economic, environmental and energy security benefits of our homegrown fuel," he said.

Dinneen stressed the need for responsible reform, adding that the next year should be used to reform all energy tax policy, not just ethanol policies. He again pointed out that the petroleum industry receives hundreds of billions in taxpayer support. "Now is the time to put all chips on the table and have an honest debate about the merits of all energy incentives," he said. "In such a discussion, ethanol's benefits would be clear."

House passes tax bill: Next stop White House

While the debate rages on about E15's compatibility with U.S. passenger cars and small engines, the National Association for Stock Car Auto Racing has made its choice. An estimated 70,000 gallons of homegrown corn ethanol will be used at three national touring series races next year. NASCAR investigated many fuels, including sugar cane ethanol and cellulosic ethanol, before settling on domestic corn ethanol because it is available immediately. NASCAR team engine builders have been testing the fuel for months, with many reporting ramped up horsepower thanks to E15.

Racing On E15

With E15 approved for 2007 vehicles and newer, what's next? Plenty, say the Renewable Fuels Association and Growth Energy.
 
 It's actually illegal to sell E15 for use in anything other than a flex-fuel vehicle (FFV), even though the U.S. EPA approved a partial waiver for E15 on Oct. 31. "There's a lot of other steps that have to be taken before you'll see E15 in commerce for 2007 and newer vehicles," says Growth Energy CEO Tom Buis. RFA President and CEO Bob Dinneen calls it a "complicated process and one that will not happen overnight." The list of required steps is long, although Dinneen adds that work began months ago.
 

 Growth Energy and RFA are working together to complete health effects testing and the fuel registration process required for any new fuel. The testing, which compares E10 to E15, was expected to be submitted to EPA by mid-November, Buis says. The testing will look at emissions and determine if any new chemicals are created as a result of increased ethanol content. Early testing has confirmed that won't be the case, Dinneen adds. 
 
 RFA's Ethanol Emergency Response Coalition is researching current firefighting tools and whether any techniques are needed to address E15. RFA will also work with local fire marshals, helping to ensure that existing fuel infrastructure can be used with E15.
 
 The Federal Trade Commission and nearly all state laws require a fuel's octane rating be certified—another step for E15 implementation. For comparison, E100 has an octane rating of 109 or more while a standard gallon of unleaded gasoline has an octane rate of 87. RFA is working with ASTM to develop the needed data to complete this, Dinneen says. 
 
 Other technical issues include testing fuel dispenser equipment for E15 and changing various state laws and regulations.
 
 The EPA's proposed E15 label is also a concern. It's critical, Dinneen says, that the label is clear, factual and non-threatening. "The label is meant to instruct consumers on how to the use the fuel, not frighten them away from doing so," he says. 
 
 There's been a lot of chatter about misfueling and liability concerns, Buis says. Growth Energy has been told multiple times by the EPA, that if the fuel pump is labeled, the retailer will not be liable. "I think people need to hold their horses and wait a little while until we get all the clarifications before going out there and saying the sky is falling," he says.
 
 At the same time that the industry works to get E15 to the marketplace, it is continuing to wait for the EPA to approve a waiver for additional model years for the fuel. If E15 is approved for model years 2001-'06 the increased blend could reach another 90 million vehicles. "Collectively that gets you about 55-56 percent of the U.S. fleet," Buis says. But he'd like to see the EPA go even further. Growth Energy requested the waiver for all vehicles with no model year limits. EPA used U.S. DOE testing as the basis of its waiver decision, however, and that organization has only tested model year 2001 and newer. The EPA should start testing legacy vehicles immediately and amend the waiver later, Buis says. 
 
 The EPA is simply ignoring credible scientific data that demonstrates that E15 is safe for all light duty cars and trucks, Dinneen says. For example, a Ricardo Inc. study submitted to EPA shows that using E15 in model years 2000 and older would have no adverse affects. "It is previously unheard of for EPA to deny a waiver request for vehicles that are beyond their EPA-determined useful life, as all model year 2000 and older vehicles will be on Jan. 1," Dinneen adds.

Overkill? EPA?s proposed E15 label is raising concerns about its color and tone. 

3427-1292440156.jpg

RFA, Growth Energy work through multiple implementation steps

For Now, E15 Still Illegal

Posted Dec. 20, 2010

The biomass industry is heaving a sigh of relief for now, since the 2,000-page, $1.1 trillion 2011 Omnibus Appropriations Act will not go to vote in the Senate in its current form. Senate Majority Leader Harry Reid, D-Nev., announced Thursday night he would not bring the omnibus to the floor. The bill not only lacked Republican support, but faced opposition from some anti-earmark Democrats. All Democratic votes and two Republican votes were needed for passage.

The biomass industry has been in a state of panic because a section in the omnibus bill essentially stripped the Biomass Crop Assistance Program of its funding, as well as the Biorefinery Assistance program and Bioenergy Program for Advanced Biofuels. The industry has been scrambling for the past week to get the provision modified or eliminated, and though safe for now, the fight to keep BCAP funding in the bill will resume next year.

"They didn't get 60 votes, so BCAP lives for another day and it's going to be a big part of the BPA (Biomass Power Association) agenda in 2011 to keep that program going," said Bob Cleaves, BPA president and CEO.

Reid announced that he and Sen. Mitch McConnell, R-Ky., would work on a continuing resolution, a shorter-term government funding bill.

While Congress was grappling with the Tax Bill and omnibus bill, the USDA added a number of forms and accompanying information to the BCAP website, including Biomass Conversion Facility registration documents, BCAP project area proposal submissions and instructions, and an updated eligible materials list.

While some long-awaited information is now available, there are still smaller, instructive details that seem to be missing. "At this point, it is unclear how fuel delivered to a conversion facility will be verified as to the sustainability criteria of the eligible fuels list," said Tom Kimmerer, senior scientist for Moore Ventures LLC. "The Sample Purchase List does not indicate how eligibility is determined, nor does the BCAP-1 form require sustainability information. For example, the final rule requires that eligible forest materials must be harvested from forests under a forest management plan or other indicator of sustainable practices. However, the forms do not indicate how to provide information to verify the sustainability criteria. In addition, the BCAP Project Area Environmental Screening Worksheet is basically a repeat of the BCAP-I form with one additional box to check off environmental consideration."

Kimmerer said it appears that FSA posted the new documents before working through all the information that might be required. "Applicants, especially those who are applying for producer areas, should plan on spending considerable time with county or state [Farm Service Agency] agents to clarify these matters." To see more information about the BCAP, visit Kimmerer's blog at www.mooreventures.com/blog/.

Editor's note: The above story is compiled from two that first appeared on the website for Ethanol Producer's sister magazine, Biomass Power & Thermal at www.biomassmagazine.com.

BCAP safe, for now

Posted Dec. 20, 2010

A Dallas-based specialty chemicals company has developed a technology to convert hydrocarbons to industrial ethanol and is exploring the possibility of using its method to also produce fuel ethanol. Celanese Corp. executives told investors Dec. 16 that it has established a team to explore the company's expansion into the fuel ethanol industry, zeroing in on countries that want to reduce their dependence on foreign energy, have access to economically attractive hydrocarbons, and have policies in place that are technology neutral. "In other words, from an economic standpoint, where there's a level playing field and governments aren't selecting winners and losers," Steve Sterin, Celanese senior vice president and chief financial officer, said.

While the company is based in the U.S., the most likely starting point for its expansion into the fuel ethanol industry will be China. Sterin said China meets all of the criteria set forth by Celanese for fuel ethanol expansion and "represents very significant growth potential." The company is already in the process of acquiring approval for up to two commercial-scale industrial ethanol facilities there, stating that the majority of the world's demand for industrial ethanol (used primarily as an ingredient in manufactured solvents) is in China. Demand for fuel ethanol is also expected to increase in China, but Celanese said it also plans to continue to evaluate other countries for fuel ethanol production potential.

Celanese' ethanol production process has been under development for several years, according to the company. It's cost-comparative with fermentation methods, but has the added advantage of not relying on carbohydrates or sugars as feedstock, said CEO David Weidman. "Our process is an innovative, new thermochemical process utilizing basic hydrocarbons such as coal, natural gas, or whatever hydrocarbon is most readily available and most economically advantageous in each region or country," he said. "In the future, raw materials could also include biobased feedstocks or waste as those technologies continue to be developed."

Jim Alder, senior vice president, operations and technical, said the company was "pleasantly surprised" to discover how open the patent space was for thermochemical pathways to ethanol when Celanese first began developing its technology. By the time the company's first commercial-scale industrial ethanol plant opens at Clear Lake, Texas, in 2012, Alder said he expects the technology to protected by more than 3,000 patents worldwide. "We are confident we will have a very strong intellectual property foundation as we pursue commercialization opportunities in the U.S., China or elsewhere," he said.

Chemicals maker develops ethanol process

Posted Dec. 20, 2010

Two challenges to the implementation of the E15 partial waiver have been raised by coalitions, one a request to extend the comment period on E15 regulations and the other a petition asking the U.S. Court of Appeals for the District of Columbia to send the decision back to the U.S. EPA.

The letter to the EPA requesting a 60-day extension of the comment period for proposed regulations designed to prevent misfueling with E15 came from 24 groups. "Misfueling is a serious problem that could cause costly damage to the engines in vehicles and equipment powered by gasoline," said Charles Drevna, president of the National Petrochemical & Refiners Association. "Groups concerned about this require more time to evaluate the problem so they can give EPA their best ideas on how to prevent misfueling." Other groups signing the letter were the Alliance of Automobile Manufacturers, the American Petroleum Institute, the Engine Manufacturers Association, the Environmental Working Group and other marine, snowmobile, motorcycle and outdoor equipment associations.

A few days later, the newly formed Engine Products Group announced it had filed a court petition to block the E15 partial waiver. The new group is comprised of the Alliance of Automobile Manufacturers, the Association of International Automobile Manufacturers Inc., the National Marine Manufacturers Association and the Outdoor Power Equipment Institute.

"Our organizations collectively represent some 400 million engine products used by tens of millions of people every day in the US. The safe and reliable use of those products is paramount to us and our customers, and the legal action we take today is to protect those customers," said Kris Kiser, speaking on behalf of the Engine Products Group.

The petition, filed with the U.S. Court of Appeals for the District of Columbia Circuit, asks that the EPA's decision be sent back to the agency and requests judicial oversight and review.

The petition challenges the ability of the EPA to grant a partial waiver for three specific reasons.


      The Clean Air Act does not authorize the EPA to issue any partial waiver decisions,
      The EPA's own statute passed by Congress in 2007 states that fuels can't be approved for the market that could cause any failures. Yet, E15 has been shown to adversely affect engines in non-road products and later model year vehicles, cause emission failures and increase air pollution due to misfueling. Further, administrative records fail to demonstrate that even new model year motor vehicles (other than flexible fuel vehicles) would not be damaged and result in failures when run on E15, and
      The testing, upon which the EPA made its decision, was put in the administrative record too late to permit meaningful comment or scrutiny from concerned groups and stakeholders.



"AIAM supports renewable fuels, including ethanol. Our concern is that the EPA prematurely granted the partial waiver before critical studies on the effects of E15 use were completed. We want to be sure that any new fuel will not increase air pollution, harm engines or endanger consumer safety," said AIAM's President and CEO, Michael Stanton. "We are pursuing this legal action reluctantly and remain committed to continuing to work with the administration and other stakeholders to establish prospective, performance-based targets to address the challenging issues related to the introduction of new fuels into the marketplace."

"NMMA regrets having to pursue litigation on this matter, but it is clear that EPA has not fulfilled its statutory obligations to ensure the safe introduction of E15," said NMMA President Thom Dammrich. "Consequently, we and our industry partners have determined that it is necessary to seek relief in the courts in order to protect our manufacturers and our consumers."

"The partial waiver for E15 sets a bad precedent of how to introduce a new fuel. This partial waiver would allow fuel to come on the market with inadequate testing, inadequate misfueling controls and without a dedicated legacy fuel for use in those products for which E15 was not approved," said Kris Kiser, executive vice president of the Outdoor Power Equipment Institute.

The ethanol industry responded to the lawsuit by saying E15 is safe. "The scientific evidence demonstrates clearly that E15 is safe not only for newer vehicles- the 2007 and newer approved already by EPA this year-but also for all passenger cars and trucks on the road today," Growth Energy CEO Tom Buis said. "We support the EPA decision to grant the waiver for 2007 and newer vehicles, and we look forward to EPA's action on 2001 to 2006 model year vehicles. Concerns about misfueling are premature, as EPA is drafting a robust labeling rule and will conduct a vigorous public education campaign, and we are confident that the process will be successful."

"EPA could have avoided this kind of market confusion by following all the science to its logical conclusion and allowing the use of E15 for all cars and light duty pickup trucks," the Renewable Fuels Association said in a statement responding to the filing of the lawsuit. "The only way to meet the nation's energy, economic and environmental goals as put forth in the Renewable Fuels Standard is to increase ethanol consumption. Allowing for the use of E15 blends is a safe and appropriate step toward meeting these goals. The RFA will continue to press for the safe and effective use of higher level ethanol blends in both conventional as well as flexible fuel vehicles."

Groups file lawsuit to block E15, request comment extension

Posted Dec. 13, 2010

Marquis Holdings LLC has invested in an ethanol plant located in Necedah, Wis. On Jan. 1 Castle Rock Renewable Fuels LLC will change its name to Marquis Energy - Wisconsin LLC.

The investment deal was made along with a limited number of shareholders, said Mark Marquis, president of Marquis Holdings and Marquis Energy LLC, adding that the company now has a "significant stake" in the plant. Financial details of the equity, management and marketing deal were not released. The company took over operation of the plant in July. The Marquis Management division provides ethanol marketing and Marquis Grain Inc. procures corn for the plant and markets the distillers grains.

Several production enhancements have been made to increase the run rate, conversion rate of corn to ethanol and reduce energy consumption. Overall, the plant's ethanol output increased by 12 percent and resulted in "significant" profit gains. "There are more (operational changes) we will implement over time," he told EPM.

Although Marquis declined to name the production enhancements he did say the plant had gone from a capacity of 50 MMgy to 60 MMgy. "It required some permitting changes and it required some mechanical changes," he said.

Marquis Holdings founded and developed Marquis Energy LLC, a 125 MMgy ethanol plant at Hennepin, Ill. Many of the production efficiencies that contributed to the success of that plant will be implemented at the plant in Wisconsin, the company said.

Marquis Holdings will continue to look for opportunities to expand its management group and invest in ethanol plants. "Our family's additional commitments to the ethanol sector indicate our belief that this high-performing, clean, and renewable fuel will be here to benefit American agriculture, American jobs and American motorists far into the future," Marquis said.

Marquis Holdings wraps up investment deal

Posted Dec. 14, 2010

Sen. Dianne Feinstein, D-Calif., supported by six other senators, said Dec. 13 she intended to file an amendment to the tax bill to lower ethanol's tax credits and the tariff on imports.

At this stage in the game, however, it doesn't appear that Feinstein will be allowed to add on the amendment, said Brian Jennings, executive vice president of the American Coalition for Ethanol. If it does happen, however, ACE will fight very hard to defeat it. "If Sen. Feinstein were serious about curbing oil use, she ought to offer an amendment to take some of the billions of dollars worth of tax breaks and subsidies enjoyed by Big Oil," he said. "Her ongoing attacks on ethanol are short-sighted and only serve to make us more dependent upon oil."

Currently, the tax bill includes a one-year extension for the Volumetric Ethanol Excise Tax Credit at 45 cents a gallon, Small Ethanol Producer Tax Credit at 10 cents a gallon and the tariff at 54 cents a gallon, all 2010 levels. Feinstein's amendment would reduce VEETC to 36 cents per gallon, the small producer tax credit to 8 cents a gallon and the tariff to 36 cents a gallon. The reductions would save about $2 billion in taxpayer dollars and would be used to reduce the deficit as well as extend the Advanced Manufacturing Tax Credit. "The federal government intervenes in the ethanol industry in three ways: requiring ethanol be blended in gasoline, providing a substantial subsidy and slapping tariffs on foreign ethanol imports, making us more dependent on foreign oil," Feinstein said in a statement. "This is bad policy and must be fixed."

Feinstein and six other senators sent a letter Dec. 13 to Majority Leader Harry Reid and Minority Leader Mitch McConnell, requesting the opportunity to file the amendment. The one-year extension of VEETC would pay oil companies $5.3 billion to blend 12 billion gallons of ethanol already required for use by the renewable fuel standard, the senators stated. "We cannot afford to pay industry for following the law," the letter said.

Support for Feinstein's efforts have waned since Nov. 30, when 16 senators joined her in sending a letter requesting that the senate end tariffs and subsidies to ethanol. Of those 16, only Sens. Benjamin Cardin, Barbara Boxer, Jim Webb and Jeanne Shaheen also threw their support behind reducing the tax credits and tariff. Two others, Sens. Jeff Bingaman and Frank Lautenberg signed the Dec. 13 letter about reducing the tax credits and tariff for ethanol but did not sign the earlier letter to end tax credits and tariff.

Growth Energy also spoke out against the amendment. "The President and Congressional leaders have worked to put together a very carefully negotiated bill," said Stephanie Dryer, public affairs associate. "It would be unwise to attempt at this point to rewrite it-particularly a green jobs provision certain to help Rust Belt and Midwestern regions where jobs are scarce."

Matt Hartwig, director of public affairs for the Renewable Fuels Association, added that the current tax bill is a "good faith compromise" that will save biofuels jobs. "Reducing the amount would ultimately result in an increase in gas prices at the pump, as VEETC helps lower the price of ethanol blended fuel for consumers," he said. "We urge the Senate to pass the measure as is and provide America's renewable fuels industry the market stability it needs to continue to expand and incorporate new technologies."

The tariff on imported ethanol doesn't serve as a barrier, he said, as ethanol from foreign countries has competed in domestic markets when it is needed. "How does reducing our investment in ethanol- yet still shoveling billions into the accounts of Big Oil- mean greater energy independence? The oil industry is still the recipient of up to $200 billion per year in tax subsidies- before military expenditures are factored in," he said.

Seven senators call for reduction to VEETC, tariff

News release posted Dec. 15, 2010

Novasep Process and Danisco announced the scale-up of an innovative process for the production of natural betaine. And a new plant will be the first to exploit a new extraction process using vinasse, a byproduct of sugar-beet-derived bioethanol. Its use will enable Danisco to substantially increase the availability of natural betaine, which is globally used as a technical animal feed ingredient and currently in short supply.

Danisco pioneered the research and application of natural betaine in animal nutrition in the early 1990s and has clearly demonstrated superior value compared to synthetic alternatives. Unlike synthetic betaine, natural betaine acts as an osmolyte, improving intestinal health and reducing the negative impact of heat-stress on animal production. Currently, market demand for natural betaine outweighs production. The betaine from the new plant will be sold by Danisco as Betafin.

As well as increasing the availability of betaine, the new process will allow the betaine-extracted bioethanol vinasses (residues) to be further recycled and sold as crop fertilizer. Until now, it was possible to extract natural betaine only from sugar-beet molasses, a side stream of sugar production. The new process will be increasingly valuable as the increase of the bioethanol production using beets will generate more and more vinasses.

Novasep Process is responsible for the engineering of the new plant and will provide the complete process line which combines Danisco's proprietary chromatographic technology, known as NS2P, with membrane and evaporation steps. This project is the latest development of the alliance between Novasep and Danisco in the field of betaine extraction and purification, which has already given birth to several betaine production plants.

"I am delighted about this new milestone in our longstanding relationship with Danisco," said Antoine Baule, president of Novasep Process, the bioprocess division of Novasep. "By playing a key role in this project, Novasep has again demonstrated its leadership in the development or scale-up of innovative processes in the industrial biotech industry, and its ability to collaborate with key customers and engineering partners in the long term through win-win partnerships."

Juhani Kuusisto, director of operations at Danisco in charge of betaine sourcing added: "I am very happy about our cooperation with Novasep Process. This new project demonstrates Danisco's ability to adjust to new market developments and to adapt its NS2P process to new feedstock. This process will substantially increase natural betaine availability on the market place."

Danisco and Novasep will provide technological support for the betaine production plant with De Smet Engineering and Contractors, being in charge of building construction, erection services and auxiliaries supply of the new development. Tereos, a world player in sugar, starch and bioethanol production, will supply the vinasses and operate the plant at its facility in Origny, France.


SOURCE: Novasep/Danisco

Novasep, Danisco develop new coproduct

Posted Dec. 15, 2010

The tax bill passed the U.S. Senate by a vote of 81 to 19 on Dec. 15. The bill extends key ethanol provisions at their current levels through 2011:

&bull; 45 cents per gallon for the Volumetric Ethanol Excise Tax Credit
&bull; 10 cents per gallon for the Small Ethanol Producer Tax Credit
&bull; 54 cents per gallon tariff on imported ethanol

Also extended for one year was the Alternative Vehicle Refueling Property Tax Credit. This tax credit was set at 30 percent.

A last-minute effort by Sen. Dianne Feinstein, D-Calif., to cut VEETC, the tariff and the small producer's tax credit was thwarted. "No amendments were allowed, so the amendment cutting ethanol subsidies and tariffs couldn't pass," she said in a statement, adding that she plans to introduce new legislation on the issue on the first day of the new Congress.

Growth Energy, the Renewable Fuels Association and the American Coalition for Ethanol all praised the Senate's actions. The next step is for the U.S. House of Representatives to consider the measure, which is expected to happen this week. The RFA remains optimistic that the bill will be passed in the House, including the extensions to VEETC and other ethanol provisions, said President and CEO Bob Dinneen.

Brian Jennings, executive vice president of ACE, urged lawmakers in the House to pass the bill on to President Barack Obama as quickly as possible. "ACE has mobilized grassroots support in the House and is hopeful that the legislation will be passed before adjournment," he said.

Tax bill passes Senate, moves to House

Posted Dec. 15, 2010

Surveys show that as many as 75 percent of flex-fuel vehicle (FFV) owners don't know they can fill their vehicles with E85. Now, a new public awareness campaign will aim to change that. "Breaking through the blend wall begins with the 8 million FFVs on the road today, and reaching these drivers to make sure they know they can use ethanol blends up to 85 percent," said Dallas Tonsager, USDA under secretary for rural development. FFVs can use E15 or ethanol blends up to E85, allowing consumers to take advantage of lower prices when available, he added.

On Dec. 14, Clean Fuels Foundation announced that it will be working with the USDA on efforts to increase the use of ethanol blends in FFVs. Initially, efforts of the National FFV Awareness Campaign will focus on areas in Ohio, Florida, Georgia, Texas, Kansas, Nebraska and Washington, D.C. Later, the campaign will be expanded to include areas that already have E85 or blender pumps and areas with high concentrations of FFVs. "There's no sense getting everybody all fired up about FFVs if there is nowhere to get the fuel," said Doug Durante, executive director of the Clean Fuels Development Coalition, which is coordinating the campaign.

The Governors' Biofuels Coalition and the U.S. EPA are also supporting the awareness campaign. "More frequent use of higher blends of ethanol in flex fuel vehicles is one avenue that can further support meeting the volume requirements of the renewable fuel standard, which in turn results in additional greenhouse gas reductions," said Paul Argyropoulos, EPA spokesperson. "When fully implemented, the program will reduce GHG emissions equivalent to taking 27 million cars off the road. This awareness effort is another avenue which federal and private interests can work together to attain these goals."

The idea is to provide the resources needed to spark grassroots, locally driven FFV awareness campaigns. "That's where it's going have to happen," Durante told EPM. "I really believe that."

That could mean coordinating with automotive manufacturers to distribute information at dealerships and working with states to provide information to citizens during registration renewals and at emissions stations. Rallies and special events could also help spread awareness. One example would be to hire college students to place information related to FFVs and E85 on parked vehicles at sports games. Or, signs could be placed on top of blender pumps, prompting drivers to find out if they are driving a FFV and telling them how to do that. "That's exactly what this is about, to try to empower people," he said.

It will be a challenge to educate millions of FFV drivers, but it's a challenge the group is ready to take on. When drivers are informed that their vehicles are FFVs and where they can buy ethanol blends, ethanol sales increase. "Every gallon of renewable ethanol we place in the market means we are displacing predominantly imported petroleum with a renewable, predominantly domestic product that creates jobs here at home and strengthens our energy and national security," he said.

To date, the campaign has the support of the American Coalition for Ethanol, Growth Energy, Chrysler and 22 other organizations. For more information visit www.ffv-awareness.org.

USDA joins effort to increase FFV awareness

Posted Dec. 15, 2010

Canada's 5 percent renewable fuel standard (RFS) officially came into force on Dec. 15, ushering in what the Canadian Renewable Fuels Association and renewable fuel producers hope will be a period of growth and expansion for the country's alternative fuels sector. "It's a start to ensuring that Canada has a diversity of energy supply in the transportation sector, which we previously have not had on a national basis," said CRFA President Gordon Guaiattini. "Five percent of the gasoline that Canadians pump into their vehicles will come from renewable green sources harvested and produced across Canada."

Canada's RFS allows refiners to use ethanol, biodiesel and petroleum-based biofuels to comply with the 5 percent blending requirements. There is a pending amendment that will create a 2 percent renewable diesel mandate beginning in 2011, which would then disallow refiners from using biodiesel and other renewable diesel fuels to meet the 5 percent RFS. Industry members are still awaiting a final decision from the federal government on a start date for the renewable diesel mandate, but Quaiattini is confident government leaders will stick to their original 2011 timeline and issue a start date soon.

About 2 billion liters (528 million gallons) of renewable fuel will be needed to meet the 5 percent mandate. Canada's current ethanol production capacity is approximately 1.7 billion liters. Quaiattini said the initial RFS provides a good pathway forward to expand Canada's current industry and positions the country to become a leading advanced biofuels producer. The CRFA plans to concentrate much of its efforts in 2011 on establishing policy and regulatory support to ensure commercialization of those advanced biofuels. "That's going to take on a particular focus for us," Quaiattini said. "We think the government is committed to do that with us and we asked for them to create a formal industry/government consultative process in which we can start talking about how all that can be achieved."

Canada's RFS comes into force

Posted Dec. 16, 2010

After three years of extensive research, scientists at the U.S. DOE's Brookhaven National Laboratory believe they have uncovered an important piece of the plant cell wall mystery that has previously stumped researchers worldwide and slowed progress in the commercialization of cellulosic ethanol.

The discovery centers around the lignin precursors that form a plant's cell wall. Until now, no one knew how those precursors traveled across a membrane to form the lignin component of the cell wall. The Brookhaven research team, led by Chang-Jun Liu, found that without the addition of ATP, a multifunctional nucleotide that is considered to be molecular "currency" for energy in cells, the precursors were unable to move across cell membranes in their designed assays. This finding revealed that lignin precursors' movement might require the ATP-dependent transporters. The team further confirmed this by applying ATP-dependent transport inhibitors to the mixture of lignin precursors and the prepared membranes, which largely blocked transport of the precursors across cell membranes that would typically play a role in the construction of the cell wall.

Complete details of the team's lignin precursor movement research and discovery were published Dec. 13 in the scientific journal, Proceedings of the National Academy of Sciences of the United States of America. Liu said that the next phase of the research project is already under way and will focus on altering plants to make them easier to break down for processing, including cellulosic ethanol production processes. "The next step will be very critical for us - to identify the particular ATP dependent transporter so that we can control this particular transporter to control the lignin precursor transportation process," he said. So far, the team has attempted to clone the genes and demonstrate their functions to attempt to prove whether they are truly involved in the lignin precursor transportation. Early results have been promising, Liu said.

Liu has spent the past 15 years as a researcher focused on plant secondary metabolisms and phenolic and polyphenolic biosynthesis. He said that while significant progress has been made in that area in the past decades, there remain many mysteries. Liu's four-person team will continue to investigate precursor transportation and manipulation while also focusing on other important unsolved mysteries, including how plant cells control the synthesis of lignin precursors, and how those precursors polymerize or join together to form very complicated polymers.

DOE scientists make cell wall breakthrough

The USDA put a wow factor in the market the day the Oct.10 supply and demand report was released reducing national yield by 8.9 bushels per acre—well below traders' expectations—dropping production 496 million bushels from the previous projection. The demand table was slightly altered as feed demand and export figures declined, due to price rationing. Remember that corn ending stocks were increased at the end of September, which offered some cushion to the punch the USDA delivered Oct. 8. Nonetheless, the December corn contract was 25+ cents higher the day the report was released and traded to a contract high of $5.88 just days later. 
 
 The market will remain volatile going into the winter, with the international market adding to domestic trends. Any perceived production issues during the Brazil or Argentina growing seasons will be a catalyst for a bullish tone in Chicago. Domestically, many producers oversold their corn crop, have plenty of cash and may be more willing to hold onto bushels until after the new year. What does this mean for an ethanol plant or any end user? Basis will be the next piece of the puzzle that will begin to encourage grain flow. The cash market will be short this year, especially in the ECB, and basis, flat price and spreads will need to do the work to get corn to move. Despite the corn market rallying, ethanol prices responded as production margins increase.

3435-1292440165.jpg

Retreat in yield projections stuns market

In early November, distillers grains were trending with corn futures, with the general feeling that prices needed to rally as winter approached. Nearby prices ranged between 70 to 80 percent of corn, and were expected to move to a seasonal 80 to 90 percent of corn values. Traditionally, we see increased feed demand around or just after Thanksgiving, and traders are expecting this year to be no exception. China has continued its record-breaking import pace, with the majority containerized. Some bulk is expected to trade later in the winter, but grains have been getting the lion's share of available bulk elevation in the Gulf and the PNW. With both the Chinese and European crops being poor, the torrid pace of exports will continue.
 
 Domestically, many beef feeders started using wet distillers grains much later than normal, as weather and pastures were good. Now that wet demand is starting, it would be expected that a lot of product previously being dried is now going wet, which will lessen the supply of dry distillers. Also, we have had no real issues with vomitoxin this year, which is a welcome change from last year and which has been bringing the hog market back to full inclusion in its rations.
 
 Futures will have the greater effect on DDGS, but given the increasing importance of exports, logistics will also play a very important part.

3436-1292440167.jpg

Winter wet demand rises

The scope of both the ethanol and grain markets changed significantly in October, with corn futures soaring 86 cents higher on the December futures market through October. This has sparked intense buying activity in ethanol markets, pushing prices 20 to 40 cents higher through the month in all markets. Ethanol producers are struggling to keep margins in positive territory, but buyers are aggressively looking for product and seem to be willing to pass the higher production cost on through the system. The strong rally in corn prices has placed a significant premium in the ethanol market once again while RBOB gasoline prices have remained stable over the past several days and weeks. 
 
 Even though ethanol prices have seemed to move through the roof due to the skyrocketing cost of production associated with corn price gains, energy markets have remained stable over the past month with both the gasoline and crude oil market stuck in a narrow trading range. This lack of fundamental speculative buying support in the market has created stability in the market not seen in several months. This continues to keep energy markets nearly flat lined at the end of the month of October in spite of the sharp gains in the ethanol market price.

3437-1292440168.jpg

Ethanol prices surge on higher corn futures

Now that the U.S. EPA has finalized its Greenhouse Gas Tailoring Rule, attention has shifted to implementation and what will constitute best achievable control technology (BACT) for sources subject to the Prevention of Significant Deterioration Program. On Jan. 2, the greenhouse gas (GHG) PSD program applies to "anyway" sources (sources already subject to demonstrating BACT). Significant questions remain regarding how a BACT analysis and emission measures will look. This process is certain to be difficult and will likely result in litigation and potentially delayed construction of new or modified sources. 
 Unlike the analysis/determination process for many regulated pollutants, it will not be possible to streamline a BACT analysis by referring to the RACT/BACT/LAER Clearinghouse—no BACT guidance yet exists for GHGs, and there are no widely available GHG controls. The lack of precedent has resulted in a wide range of views regarding what may constitute BACT for GHGs, which is a recipe for litigation. 
 
 Recent rulings in lawsuits by environmental groups seeking BACT for GHGs at power plants indicate EPA may require BACT analyses to consider fuel switching, integrated gasification combined cycle, and/or carbon capture and sequestration (CCS). Despite these rulings, EPA recently denied that fuel switching or facility redesign would likely be required to meet BACT, but signaled it could include demand reduction and energy efficiency measures. Other possibilities include co-generation with waste heat, carbon offsets, coal drying and high-efficiency boilers. Energy efficiency is most likely given its lower cost relative to control technologies and BACT's legal parameters.
 

 The Climate Change Work Group's interim Phase I report done in February highlights the difficulties in establishing BACT for GHG sources and the legal challenges that may arise. For example, the work group could not agree on whether: 
 
 >BACT analyses may consider units/processes beyond those undergoing a modification;
 >Production process changes would be permissible considerations;
 >Commercial guarantees are sufficient evidence of technical feasibility;
 >A more stringent emissions limit could be included in a permit under the assumption that a control technology would be available in the future;
 >A source could be required to relocate to an area more favorable to CCS;
 >How widespread CCS must be before it is "demonstrated" or "available;" and
 >What cost-effectiveness threshold, if any, should be used (proposals ranged from $3 to $150 per ton CO2 equivalent). 
 
 One possible solution to the question of what constitutes best practices in a world without mature GHG control technologies is the use of the PSD program's (ICT) waiver. Although rarely used, this provision provides a source that implements an innovative control technology (technology that may achieve greater emissions reductions than a demonstrated technology or similar reductions at lower cost or impact) with a longer time period to meet BACT emissions limits than would be applied to a demonstrated technology. As noted by the work group, it may also be possible to use the existing BACT process to issue permits with a range of permissible emission limits while a technology is optimized. In its August Phase II report, the work group recommended that EPA encourage innovative control technologies through expanded use of the ICT waiver.
 
 No one knows how sources will perform a satisfactory BACT analysis; how permitting authorities will make BACT determinations; the usefulness of EPA's BACT guidance released Nov. 10; or the possible spectrum of GHG BACT that will result from early determinations. Given the numerous, subjective factors that go into a BACT analysis/determination, and the variation in political opinion and expertise within permitting authorities across the country, initial determinations are likely to encompass varied controls/measures, from energy efficiency to CCS. It is also fair to conclude that the initial sources have their work cut out for them and that litigation will result from some of the initial determinations. Perhaps these difficulties will convince Congress to take action, either by terminating the tailoring rule or passing a comprehensive national GHG program.
 
 Author: Eric Triplett
 Attorney, Faegre & Benson 

 (303) 607-3612
 <a href="mailto:etriplett@faegre.com">etriplett@faegre.com</a>

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BACT to the Drawing Board

The eBIO brand is no longer. For five years it served the European fuel alcohol industry well. In those years, the industry has changed. Few players became many players and small players became big players. Fuel ethanol output quadrupled. The European ethanol market underwent a structural change and so did the regulatory framework. 
 
 All these changes, and especially the regulatory, were instrumental in bringing about ePURE, the European Producers Union of Renewable Ethanol. An expansion of eBIO, this new association will have a larger scope, representing traditional markets such as beverage and industrial use in addition to fuel ethanol.
 
 EPURE is the result of a merger of two ethanol associations—eBIO and UEPA. The latter will not be familiar to most EPM readers, it was a much older organization set up in 1959 with a focus on traditional ethanol markets, though not exclusively. As ethanol production in Europe has always been and still is dominated by France, the main driver behind UEPA was the French industry.
 
 In November 2008, the core members of both associations decided that the time was ripe to start talks on a merger. They understood that synergy was possible and necessary, but only through a united, single voice. Having several voices representing the interests of a single industry is not cost-effective, not efficient and often counterproductive. Different messages will be abused by the opponents and confuse the regulators. 
 

 EPURE's structure is very similar to the Renewable Fuels Association. Ethanol producing companies form the core of the association represented by a board of directors. To make the organization lean and mean, however, an executive committee of 10 board members steers ePURE. There are also associate members representing companies with an interest in a strongly developing ethanol sector. Producing and associate members come together once a year in a general assembly. All members can contribute to the policy development of ePURE through several working groups that provide technical input to the board as it makes policy decisions. The organization has a support staff of six, most of them with a solid background in both EU affairs and the ethanol business.
 
 The new association brings together 18 producing members operating in 13 EU member states and having an installed production capacity of close to 5.5 billion liters. This means that ePURE represents around 80 percent of total EU installed production capacity. Producers who are not (yet) members of ePURE are not organized. Some of them are operating in one of the remaining eight countries with production capacity. There are six EU member states that do not produce ethanol at all.
 
 EPURE's mission will be very similar to eBIO's—defending the interests of European ethanol producers. Most of the work will go into lobbying regulators, stakeholders, media and the general public to ensure the formation of policies and rules that promote the beneficial uses of ethanol in Europe. It means that the agenda of ePURE will not be much different from the one eBIO deployed. Most of ePURE's work will revolve around issues related to biofuels, now supported by more producers and all the key players in Europe.
 
 EPM's readership will continue to receive insights on what is brewing in Europe in this column, now renamed "Europe Calling." I will do my very best to keep you well informed. The only thing you need to get used to is the new logo. 
 
 For me, personally, to turn this merger into the same successful endeavour as was eBIO will be a big challenge. It took us some time in Europe to acknowledge the need for this merger but I am convinced this was the only way forward and it will be to the benefit of the ethanol industry. Speaking with one voice makes the sector powerful and heard. We need to pursue this in every country, region and at global scale. We are not there yet. I hope we in Europe have for once set an example in the ethanol industry.
 
 Author: Robert Vierhout
 Secretary-general, ePURE
 <a href="mailto:Vierhout@epure.org">Vierhout@epure.org</a>

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Uniting Producers

Two months ago, the U.S. EPA made a historic announcement. For the first time in more than 30 years, the amount of ethanol that can be blended into our fuel supply will rise from 10 to 15 percent for cars 2007 and newer.
 
 The EPA's decision came in response to Growth Energy's Green Jobs Waiver, a petition we filed in March 2009 to raise the "blend wall"—the artificial limit on the ethanol market—and create new market opportunity for the industry. After exhaustive analysis by the U.S. DOE on the effects of E15 on vehicle emissions, durability and performance, the first round of tests for new models confirmed what we've said and numerous independent studies have shown—that the science supports E15. 
 

 The EPA's initial decision to allow E15 in cars 2007 and newer is unquestionably a good step. It cracks that blend wall and allows us to immediately reduce our dependence on foreign oil, create jobs here in the U.S. and improve our environment. By moving to E15, we can open the fuels market where ethanol can displace foreign oil and take back some of the $300 billion we send overseas each year to import oil. Every dollar spent here on ethanol will create jobs in this country—jobs that cannot be outsourced. Economic studies say that more than 136,000 new jobs will be created and as much as 7 billion gallons of gasoline from imported oil will be displaced when the country moves to E15 for all vehicles. 
 
 The payoff from greater ethanol use goes further than our economy—though the economic impact alone is worth the effort to expand ethanol usage. It extends to our environment and, longer term, our national security. Clean burning ethanol produced from corn can reduce greenhouse gas (GHG) emissions by 59 percent, compared to gas, and innovation in the ethanol industry will soon push that number even higher.
 
 While there are those in the industry who view the EPA's decision from the "glass-is-half-empty" approach, we see this as real change. This is an evolutionary effort by Washington to realize the promise of ethanol to change America's energy future for the better. And although we would have preferred immediate approval of E15 in all vehicles, we know this is just the first domino to fall. 
 
 The decision on 2007 and newer model years applies to 43 million vehicles; that is nearly 20 percent of the current U.S. duty fleet. A decision on cars 2001 to 2006—scheduled for this month—would add an additional 86 million cars, meaning that E15 could be allowed in all the cars manufactured in the past decade (equal to more than 54 percent of all the vehicles on the road today). And this number will only increase as older vehicles are replaced—at the rate of 10 to 15 million new cars each year.
 
 There are many more steps we can take toward achieving our energy security and environmental goals, but every journey starts with a single step. We commend the EPA for setting us on the path toward energy independence and we urge it to quickly approve E15 for all vehicles, so that every American motorist has the opportunity to use a blend of fuel that is proven to be better for our economy, our security and our environment.
 
 Have a safe holiday and a Happy New Year. 
 
 Author: Tom Buis
 CEO, Growth Energy
 (202)545-4000
 <a href="mailto:tbuis@growthenergy.org">tbuis@growthenergy.org</a>

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The First Crack in the Wall

With the first decade of the century coming to a close, our cover story this issue features several industry leaders sharing their outlook and perspectives. Two of them are rooted in the oil industry, two in corn ethanol and two in cellulosic ethanol development—providing an interesting spectrum of views on the opportunities and concerns for the year ahead. Complementing the cover story, Associate Editor Kris Bevill takes a look at the ethanol market, reporting on areas for possible growth, expected infrastructure expansions and the wild card—the impact of E15. In her feature story, Associate Editor Holly Jessen follows up on ethanol plants in transition. It appears that the stabilization of the economy and the ethanol industry has prompted owners and creditors of several ethanol plants to proceed with reorganization and sales.
 
 This issue also introduces a design update for Ethanol Producer Magazine. Most sections have a fresh look, and one is totally revamped. In an age of timely Web-based news and, given our team's Ethanol Week newsletter, we decided to move away from a straight news approach in the Industry News section of the print magazine. Now titled "Distilled," the section will do just that—distill the news of the past month, look for trends, find interesting twists in the news and provide news analysis where appropriate. We've added a new feature at the bottom of this page, with photos and short bios of the authors appearing in each issue, where we'll present a snippet of information about our editors, columnists or contributors each month.
 
 What is not changing is our commitment to covering the ethanol industry in depth, providing accurate and timely updates on policy issues and markets, new technologies and other developments as the ethanol industry matures. At the turn of the century, there were just 54 ethanol plants in the U.S. with an average capacity of 31 MMgy. At the end of this decade, there are 210 plants on our plant list with an average capacity of 64 MMgy. We expect a handful of corn ethanol plants will be built in the years ahead, filling out niches and expanding alternative feedstocks such as beets or sugarcane. As the commercialization of cellulosic ethanol develops, we also expect to be covering many projects that seek to make the ethanol industry more efficient and sustainable in the decade ahead.
 
 ASSOCIATE EDITORS
 Kris Bevill has been a writer and editor for BBI International for three years, specializing in policy and regulations. She currently serves as an associate editor for Ethanol Producer Magazine.

 
 Holly Jessen is an associate editor for Ethanol Producer Magazine. She has been a journalist for 10 years, including two working for BBI International. Her previous experience includes writing for weekly and daily newspapers.

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New Decade, New Look

Posted Nov. 16, 2010 
 
 Only the anaerobic digester will be completed and operated at the site of the former Renova Energy ethanol plant in Heyburn, Idaho. Everything else, from ethanol plant equipment to office furniture, was sold off piece by piece at auction Nov. 10. 
 
 The goal had been to find a buyer to purchase the plant and get it up and running, but that didn't happen. "There were lots of potential purchasers but nobody could ever come up with the money," said James Macdonald, attorney for the liquidating trustee.
 
 Construction on Renova Energy Idaho LLC, a 20 MMgy plant, was suspended in late 2007 after the project's price tag reportedly grew from $45 million to $60 million. Renova Energy Inc., the ethanol plant's former parent company, filed for Chapter 11 bankruptcy in 2008. Renova Energy, an ethanol marketer, and Wyoming Ethanol LLC, a 12 Mmgy ethanol plant owned by Renova, emerged from bankruptcy and are operating today, according to Terry Oldfield, CEO of Renova Energy/Wyoming Ethanol. 
 
 The partially constructed plant had 85 percent of the ethanol plant equipment on site. Only 10 percent of the equipment had been installed, meaning much of it was still packaged in crates. Some items sold for scrap value while others fetched a higher price. "[The centrifuges] actually sold at the original purchase price, amazingly," Macdonald said. 
 
 The anaerobic digester, which was 98 percent complete, was sold to a buyer who wants to operate it. Macdonald was unable to name the buyer and didn't know what the future operational plans were. "We're just trying to get it sold and get the highest return for creditors possible," he said. 
 

 Although the overall results of the auction haven't been calculated, the money won't go very far. "It's not going to result in any meaningful distribution to creditors," he said. 
 
 First in line for the money is a group of creditors that lent money to the estate to cover the costs of administration of the bankruptcy. Next to be paid are the taxes from Minidoka County and the city of Hayburn as well as land-lease payments owed to the city of Burley. Finally, the remaining money will be divided up among the creditors, depending on what they were owed.
 
 NOTE: Sentence added in third paragraph to clarify that Renova Energy emerged from bankruptcy.

Plant sold off piecemeal at auction

Posted Nov. 18, 2010
 
 Approximately 30 representatives from the transportation fuels sector offered testimony to the U.S. EPA regarding its proposed E15 label rule at a public hearing held Nov. 16 in Chicago. Ethanol producers, fuel marketers, engine manufacturers and petroleum industry representatives were on hand to present their ideas to the EPA on how the agency should label E15. Not surprisingly, petroleum representatives, some of whom recently filed a lawsuit challenging the EPA's E15 waiver decision, expressed their opposition to the use of E15 and said a label will do nothing to prevent unauthorized use of the fuel.
 
 "It is inevitable that if E15 is made available at retail stations, many consumers will misfuel," said Gregory Scott, executive vice president and general counsel of the National Petrochemical and Refiners Association. "This misfueling may occur intentionally, due to price differential or a quality perception, or unintentionally, due to consumer confusion or inattention. Such misfueling cannot be avoided merely with a dispenser label."
 
 The ethanol industry also takes issue with the proposed E15 label, but for different reasons. During the hearing, Ron Lamberty, vice president and director of market development for the American Coalition for Ethanol, offered several examples of how labeling has adversely affected ethanol. "The issue of labeling is significant to the ethanol industry, and history shows that ethanol labels cause as many problems - and maybe more problems - than ethanol itself," he said. In Oklahoma, for example, he said some marketers were blending ethanol into gasoline for two years before consumers began to complain about damages. The reported problems with ethanol arose only after labeling was required in 2009. Likewise in Missouri. Lamberty said ethanol was used in that state for years, but complaints regarding the use of ethanol-blended fuel in gasoline didn't occur until after a widely publicized statewide E10 mandate went into effect in 2008. 
 
 The EPA's proposed label is bright orange and prominently displays the word "CAUTION!" at the top of the label. At the bottom of the label is a statement informing consumers that the fuel may cause damage to vehicles not approved for use with E15. Some ethanol industry members take offense to both the proposed color and the proposed language of the label, claiming that it presents E15 as a dangerous fuel choice and will alarm consumers. Suggested changes submitted to the EPA so far include making the label white instead of orange and removing the word "damage" from the legal warning, as there is not yet conclusive evidence proving that E15 would actually damage older vehicles.
 
 An overly cautious E15 label could greatly exasperate the public awareness issues currently being battled by the ethanol industry, as pointed out by Lamberty in his testimony. He told EPA officials that over the course of his 30-year career in the petroleum business as a retailer, marketer and wholesale jobber manager he has never witnessed a greater proliferation of misinformation regarding ethanol than now. "Today, the anti-ethanol sentiment is a direct result of ethanol opponents' efforts to protest the E15 waiver by filling the record with unsubstantiated ethanol ‘spook stories' of what they think might happen, while offering no evidence that any problems would occur with E15," he said.

 
 Lamberty urged ethanol producers and marketers to insist that the EPA's labeling policy fairly treat ethanol and require no more of non-petroleum fuels than it does of petroleum-based fuels. Comments on the EPA's proposed rule are being accepted until Jan. 3. For more information or to submit a comment, visit <a target="_blank" href="http://www.epa.gov/otaq/regs/fuels/additive/e15/index.htm" rel="external">www.epa.gov/otaq/regs/fuels/additive/e15/index.htm</a>.

Industry urges EPA to create fair E15 label

Posted Nov. 18, 2010
 
 Development-stage firm Proterro Inc. has begun its outreach to find a partner to help take its R&D to the next level. Venture-capital backed Proterro has developed a technology using a microorganism grown in a unique bioreactor that secretes fermentable sugars using sunlight, CO2, water and a few commonly available micronutrients. Economic modeling suggests the system should produce fermentable sugars at a lower cost than sugarcane, according to Kef Kasdin, Proterro CEO and a general partner and cofounder of one of the backers, Battelle Ventures LP.
 
 The microorganism used is cyanobacteria that has been engineered to enhance its capabilities to produce sugar. An important point, Kasdin added, is that the organism secretes sugar, unlike most algae systems where the organism is destroyed to extract the biofuel feedstock. The unique design of the bioreactor addresses the Achilles heel of algae systems—the large volumes of water and capital intensive photobioreactors or land requirements for ponds and aeration required to successfully culture algae. 
 
 Proterro's developers turned to nature for a different model and designed a bioreactor based on the leaf. "One of the problems is getting light and carbon dioxide to algae in an efficient way," she explained. The Proterro bioreactor mimics the leaf in growing the microorganism on a fabric surface providing maximum exposure to sunlight while flowing a thin layer of water, CO2 and nutrients underneath, removing the sugar in the process. 
 
 The sugar solution produced includes important nutrients generally added for fermentation in ethanol plants, she added. The company believes the system could be added to an ethanol plant, making use of the plant's CO2, fermentation and distillation systems. 
 

 Proterro has achieved proof of concept and successfully scaled the bioreactor up 40-fold from the initial Petri dish experiments to a square meter system. Kasdin said the next step is to find partners to help finance the development of a larger system. "Our idea is that this would be a modular system, and our belief is this could be a capital efficient process."
 
 "In our view, what's hampering the adoption of biofuels is cost and a lot of the cost is in feedstock ," Kasdin said. "If we can do better than Brazilian sugarcane cost levels, we could have a more economical biofuel. Our approach circumvents a lot of steps to get a significantly lower-cost sugar." The company has trademarked the sugar product as Protose, calling it a fortified fermentation ready feedstock. "We're not taking it all the way to fuel," she added, but expect to partner with others who are in the business of producing ethanol or other products based on sugar processes.
 
 The research has been backed by $5 million in venture capital coming from Braemar Energy Ventures and Battelle Ventures. Braemar is an investor in several cellulosic ethanol development ventures including Verenium Corp., Solazyme Inc. and Enerkem Inc. Battelle Ventures is an independent venture capital firm associated with the Battelle Memorial Institute—manager of the U.S. DOE's six national laboratories. Most of the projects backed by Battelle Ventures in the clean tech sector are in the solar energy, batteries and energy efficiency space. Proterro is its only biofuels project.

Proterro produces low-cost fermentable sugars

Posted Nov. 22, 2010
 

 The California Air Resources Board has decided to re-evaluate its greenhouse gas emission modeling regarding indirect land use change (ILUC) considerations for ethanol. The current model used in the state's low carbon fuel standard (LCFS) includes life cycle analysis calculations which result in a higher carbon rating for corn ethanol than for gasoline. The decision to re-evaluate the model was made during a board meeting held Nov. 18, during which CARB staff determined they should adopt a form of modeling created by Purdue University. 
 
 Purdue's model, which was funded partially by the U.S. DOE and originally presented to CARB by the Renewable Fuels Association in May, reduces corn ethanol's ILUC impact by one half over CARB's current value. The vastly improved carbon rating stems from updated information used by Purdue that was not included in CARB's initial model, including economic data, cropland pasture data, valuation of distillers dried grains, and estimated crop yields.
 
 While the decision to re-evaluate the ILUC model is a win for ethanol producers, it won't be finalized until after the LCFS goes into effect next year. This could cause confusion in the marketplace and complicate compliance with the LCFS, according to the RFA. "We're encouraged that CARB is moving in the right direction and is finally living up to its commitment to use the best available science for the LCFS," RFA President Bob Dinneen said. "However, we're concerned that the changes to ILUC won't be effective until midway through 2011, by which time the LCFS will have been up and running for several months. Why would CARB begin a program on Jan. 1 that is based on ILUC numbers that they now freely admit are wrong and inflated? They have better science and they should use it now - before the 2011 compliance year begins."
 
 CARB has said that 2011 should be considered an "implementation year" for the LCFS. Affected parties will be required to reduce their carbon intensity rates by .25 percent from the baseline carbon intensity of gasoline. Under CARB's current model, corn ethanol produced in dry mills fueled by natural gas has a baseline carbon intensity rating that is nearly 3 points higher than gasoline's baseline. By reconsidering the ILUC calculations for ethanol, the carbon intensity rating will be lowered to a level that will allow refiners to use ethanol to comply with LCFS requirements. "If CARB is going to reduce the land use change penalty, that's going to have a significant effect on the carbon scores of various sources of ethanol," said Geoff Cooper, vice president of research at the RFA. "It could take Midwest corn ethanol from being no better than gasoline or worse than gasoline to being 10 to 20 percent better than gasoline."
 
 Chris Thorne, communications director for Growth Energy, said CARB's decision to reevaluate its ILUC model illustrates the flaws in the notion of ILUC. "What the Expert Working Group and the CARB staff are showing us with these decisions is that there are grave doubts about the entire scheme of indirect land use change, which penalizes clean fuels in America for the pollution created by foreign producers," he said.
 
 UNICA, Brazil's ethanol and sugarcane industry association, also supports CARB's decision to re-evaluate ILUC and said it believes a reconsideration will benefit sugarcane ethanol. "As California regulators have previously confirmed, sugarcane ethanol is a low carbon renewable fuel that can significantly reduce greenhouse gas emissions," said Joel Velasco, UNICA's North America representative. "We are certain that sugarcane's contribution to mitigating climate change will only improve in the years ahead, in part because of policies such as the LCFS that encourage better performance and deployment of cleaner, more sustainable technologies."
 
 CARB has called for its Expert Working Group to conduct additional analysis of yield response to higher crop prices and emissions factors before it determines ethanol's final carbon intensity rating in the spring. The RFA has determined that if CARB adopts the emissions factors used by the U.S. EPA in its revised renewable fuel standard, the overall carbon intensity rating of ethanol will be reduced even further.

CARB to reduce ILUC for corn ethanol

While ethanol prices were lower than gasoline for much of the year, in October that changed. Higher corn prices and growing ethanol demand inverted the relationship, pushing ethanol prices higher than gas prices. 
 
 The effective price of ethanol is still lower than the price of gasoline, however, says Geoff Cooper, vice president of research and analysis for the Renewable Fuels Association. With the Volumetric Ethanol Excise Tax Credit, or as it's commonly known, the blenders credit, gasoline blenders and refiners who mix ethanol with their gasoline claim 45 cents a gallon. "When the value of the tax credit is passed through to the consumer, it translates to a 4.5 cent per gallon savings at the retail level for gasoline containing 10 percent ethanol (E10) compared to gasoline without ethanol," he says. 
 
 Chicago spot prices during the week of Oct. 17 show ethanol selling at 15 cents less than reformulated blendstock for oxygenated blending (RBOB), when VEETC is accounted for. Those numbers add up to a gallon of E10 being 1.5 cents cheaper at a retail store than unleaded gasoline with no ethanol blended into it. "In essence, VEETC is enhancing the ability of ethanol producers to manage sharply higher corn prices, while at the same time ensuring ethanol is priced competitively with gasoline and ultimately saving consumers money," Cooper says.

VEETC is Vital

If concerns about a blend wall aren't enough, U.S. ethanol producers should also keep their collective eye on a rapidly approaching feed wall. 
 

 In the 2010-'11 marketing year, U.S. dry mill ethanol plants are expected to produce 33.5 million metric tons of wet and dry distillers grains, according to Bob Dinneen, president and CEO of the Renewable Fuels Association. Wet mills will produce another 3 million metric tons of corn gluten feed and 500,000 metric tons of corn gluten meal. 
 
 If it weren't for the distillers grains export market, those production numbers would be a problem. The U.S. livestock feed market will likely reach saturation with distillers grains when the industry produces 35 to 45 million metric tons. "You have heard talk of the ethanol blend wall that limits the amount of ethanol that can be used," Dinneen said. "In much the same manner, we are rapidly approaching a feed wall in the U.S."
 
 Dinneen tackled the subject at the Export Exchange, held Oct. 6-8 in Chicago. The joint conference put on by RFA and the U.S. Grains Council attracted nearly 500 producers, suppliers, importers and end-users of U.S. distillers grains and coarse grains. In the long term, he told attendees, distillers grains export growth will allow the industry to grow profitably, maintaining demand and prices and diversifying the customer base. Of the 33.5 million metric tons of distillers grains expected to be produced this year, 24.5 million will be consumed domestically and 9 million metric tons will be exported. 
 
 If E15 is approved, ethanol producers could, theoretically, produce more ethanol—and distillers grains. Not including wet mill products, Dinneen said E15 approval would raise distillers grains production to a maximum 51 million metric tons. However, if the U.S. EPA approves E15 for only certain model years, the impact will be less. Dinneen emphasized these maximums were theoretical, as discussions with fuel retailers suggest that the market share would be much lower.
 
 Finding new markets for distillers grains is vital, Dinneen stressed. "Ethanol production is fuel and feed. It is not either/or. And the success of one has a great impact on the viability of the other."
 
 In related news, a subcommittee of the International Maritime Organization in London approved a U.S. proposal that distillers grains be classified as nonhazardous cargo. The decision is expected to be ratified when the committee meets in December and will become binding in 2013. "This is a major step toward resolving confusion that has emerged about shipping requirements for DDGS," said Erick Erickson, U.S. Grains Council special assistant for planning, evaluation and projects.

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Without exports, U.S. DDGS will reach saturation point

Hitting the Feed Wall

The U.S. DOE's National Renewable Energy Laboratory has expanded its online mapping tool, BioEnergy Atlas. Two layers from the biofuels map are shown here—the dots show E85 stations and in the background the yellow indicates the density of flex-fuel vehicles, with heavier densities appearing in different colors around major metropolitan areas. Other layers can be added to the maps showing feedstocks such as  sugarcane, stover, straw and woody biomass. Additional layers include methane sites, brownfield sites, biopower and biofuels plant locations, and more. The atlas provides an overview of the U.S., but users can also select a state to view more specific information. The USDA, DOE and U.S. EPA provided data for the atlas, which will be periodically updated.

SOURCE: U.S. DOE NATIONAL RENEWABLE ENERGY LABORATORY

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NREL online tool layers industry information on map

At a Glance

The bearishness in the market assumes constrained demand in 2011, which is likely to decrease if weather normalizes, mismatched with supply growth. Supply forecasts are based on pipeline models and the Energy Information Administration survey process. The most recent EIA survey for July showed a very modest month-over-month increase (+0.3 percent) after a significant decrease in June (-1.4 percent). This should have paused the bearishness, but the data is widely viewed as suspect. While in absolute terms the EIA estimate falls between the major providers of pipeline flow estimates for July, the growth rate in the pipeline models suggests much greater supply going forward. Over the past six months, the annualized growth rates were almost double the expectations set by the EIA. 
 
 Supply will dictate price direction in the near and medium term. There are four main supply factors to monitor in forecasting a turning point in production: A) The gas-directed rig count remains inflated, averaging 977 over the past three months. Most analysts project a rig count between 750 and 800 to correct the oversupply, although producer efficiencies may still allow production to grow. For the third straight month, the EIA lowered its 2011 price forecast (-4 percent to $4.58) due to the lingering rig count and a less negative year-over-year supply picture. B) Producers still hold significant inventories of hold-by-production leases. Producer conference calls provide insight into lease inventory levels, expiration dates, and whether producers intend to drill or relinquish their rights. C) Several infrastructure projects will come into service between now and the end of the first quarter, many geared toward releasing bottlenecks in the major shale basins, effectively releasing pent-up gas. The pace and volumes of well completions will become a factor in supply growth. D) The fourth factor suggesting continued production is the seemingly endless stream of joint ventures in which capital is invested to develop a producer's holdings for a percentage return of the revenue over a specified period. The joint ventures typically guarantee continued production as gas sales represent the only revenue stream. Joint ventures, mergers and acquisitions of shale assets have totaled roughly $25 billion during the first half of 2010, and as yet, show no signs of abating.

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Bears dominate as gas supply forecast to grow

The sheer amount of sugarcane bagasse available in Brazil could be enough of an incentive to inspire global collaboration within Brazil's ethanol sector. Petrobras, the country's largest energy corporation, is at the center of collaborative efforts, signing deals recently with Wyoming's KL Energy Corp. and global enzyme manufacturer Novozymes A/S. Through the partnership with Petrobras, Novozymes will continue its ongoing efforts to develop enzymes capable of breaking down the tough lignin in bagasse. Meanwhile, KL Energy will focus on commercializing bagasse-to-ethanol production technology at its demonstration facility in Upton, Wyo. Petrobras will integrate KLE's technology at one of its sugarcane mills before commercializing it at other locations.
 
 Petrobras is just one of several firms competing to become the first to commercialize this technology. Royal Dutch Shell plc is backing Codexis' efforts to develop a method to convert sugarcane bagasse to ethanol, along with Iogen Energy Corp., and recently signed agreements with Cosan S.A. to jointly commercialize bagasse-to-ethanol.
 
 The potential economic benefit for those who can successfully commercialize bagasse-to-ethanol is enormous. According to several estimates, ethanol from bagasse could increase Brazil's ethanol production by up to 40 percent. The country currently harvests about 600 million tons of sugarcane per year, according to Petrobras, and produces about 7 billion gallons of ethanol.

Potential profits are bringing in investments from around the world.

Backing Brazil's Bagasse

The world faces a looming shortage in biofuels supply beginning in 2015, according to a recent study published by Hart Energy Consulting. Worldwide demand for biofuels is expected to increase by more than 100 percent over current demand levels by 2020 in response to increased regulatory requirements. As a result, global ethanol supply may be short by 5 billion gallons in 2020, a stark contrast to the oversupply situation experienced by U.S. producers in recent years.
 
 "We view this as good news for the industry," says Tammy Klein, global study leader and assistant vice president of Hart Energy Consulting. "We are projecting increasing demand for the product in the market and high utilization rates. However, we don't expect a rush of new facilities or additional build-out in the industry. Rather, we think it's more likely the producers will debottleneck, possibly expand facilities and run over nameplate capacity. We expect facilities will improve efficiency and this is meaningful for future potential low carbon fuel standard (LCFS) and renewable fuel standard (RFS) compliance. This is the challenge for producers—to make their process more ‘sustainable' and ‘GHG [greenhouse gas] friendly'—and we think they will rise to that challenge."
 
 Klein says she expects only one billion gallons of U.S. cellulosic ethanol to be produced in the next decade, although she recognizes the situation could change rapidly as technological breakthroughs occur. Poet LLC CEO Jeff Broin says the U.S. ethanol industry has consistently expanded to meet growing demand, and he expects that will remain the same in the future. He is also confident that U.S. cellulosic ethanol producers will rise to the challenge of providing low-carbon fuel to meet regulations. "There is a billion tons of cellulose available for ethanol production in this country and corn yields are projected to double in the next 20 years," he says. "Those factors ensure that there will be plenty of available feedstock to produce the ethanol needed for our country's renewable fuel goals."
 
 But despite the confidence expressed by U.S. producers, Hart Energy's report favors Brazilian sugarcane ethanol as the main source of low-carbon fuel. Ethanol imports to the U.S. from Brazil and through the Caribbean Basin Initiative are expected to ramp up to more than 2 billion gallons by 2020, nearly four times the average amounts imported between 2004 and 2008. Klein says U.S. entities will have to bid against European countries, Japan and China for the sugarcane ethanol. China will become the U.S.'s biggest competitor for Brazilian ethanol, doubling its demand from current rates to 2 billion gallons by 2020. "Obligated parties in the U.S. will find themselves competing for these volumes as never before," says Frederick Potter, Hart Energy Publishing executive vice president. "We expect this to lead to continued price appreciation for sugarcane ethanol over the 2011-'20 period."
 

 To meet increasing demand for its ethanol, Klein anticipates that Brazil will double its supply capacity over the next 10 years. By 2020, she expects Brazil will have the capacity to supply 3.5 billion gallons to the global market. And while most Brazilian producers have been slow to complete the necessary RFS registrations required to import ethanol to the U.S., Klein says that will soon change. "Brazilian sugarcane ethanol in our view will be a key avenue toward compliance with the LCFS," she says.
 
 Hart Energy's report was published prior to the U.S. EPA's partial E15 approval, and it was estimated that market blending of E15 will reach 88 percent by 2020.

Increases Coming Industry analysis predicts that ethanol and biodiesel demand will outpace supply over the next decade, ramping up to an 8.5-million-gallon shortage by 2020. Source: Hart Energy Consulting

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Rising demand for low-carbon, advanced biofuels to ramp up sugarcane-based ethanol demand

Advanced Demand

Long after most people assumed it was dead and gone, VeraSun Energy Corp. is still going after money it paid out two years ago. It raises the question, just who is VeraSun and what does it want? 
 VeraSun and its 24 subsidiaries, 16 of which were ethanol plants, filed for Chapter 11 bankruptcy in 2008. Today, VeraSun exists as a bankruptcy estate, says Todd A. Taylor, co-chair of clean technology group for Minneapolis-based Fredrikson & Byron P.A. All of VeraSun's claims or any assets it still has are controlled by a creditors committee, appointed by the bankruptcy court. 
 
 At the end of September, the VeraSun estate backed off demands that corn producers return money that had been paid out to them during the 90-day look-back period before the company filed for bankruptcy. That doesn't mean the efforts to collect money are over, however. "Really, the company itself won't go away until the very end, all of the claims are settled or dealt with and there's nothing left to be done," Taylor says. "And that could take a long time."
 
 The bankruptcy estate is determining if any preferential claims exist, says Roger McEowen, director of the Iowa State University's Center for Agricultural Law and Taxation. Preferential payments are made within 90 days of the bankruptcy and give preference to certain creditors over others. Under the bankruptcy code, these payments can be taken back and redistributed to creditors on a non-preferential basis, McEowen tells EPM. One defense to this, which corn producers used, is if the payments were made in the ordinary course of business.
 
 Now the VeraSun estate is pursuing vendors and service providers. In the last 10 days of October alone, the bankruptcy estate filed more than 200 court documents, seeking to recover payments from companies that provided services or products such as chemicals, transportation, construction and even garbage services. The goal is to maximize the payment to creditors. "As a general rule, they will be very aggressive in going after any money they think they can get," Taylor says. "They will let a court decide, oftentimes, if it's a marginal issue."

Moving On All 16 former VeraSun plants have new owners. Six plants have increased capacities. SOURCE: BBI INTERNATIONAL 

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Bankrupt company reaches out as if from the grave

VeraSun Lives On

News release posted Nov. 22, 2010 
 
 SEKAB E-Technology and Taurus Energy AB have successfully carried out a three-week long industrial demo scale evaluation of Taurus Energy's yeast. The yeast has been specially developed, and, in contrast to ordinary yeast, it can ferment pentose as well as hexose. Taurus Energy and SEKAB see this as a crucial step on the way towards commercializing a process for producing ethanol from cellulose-based raw materials.

 
 The production of ethanol from cellulose-based raw materials from forestry and agriculture is a technology which has the potential to revolutionize the bioenergy sector, since the raw material is virtually unlimited. The ability to produce ethanol from renewable raw materials which are available in large quantities and which do not compete with food production is an important stage in breaking the dependence of the transport sector on oil.
 
 SEKAB E-Technology has demonstrated that it can achieve the same ethanol yield on an industrial scale as in laboratory experiments. From the cellulose, it has succeeded in fermenting 90 percent of the available pentose, which is an excellent result, said Sune Wännström, research manager. It also means that the company now confident that it can transfer the results from optimization on a laboratory scale to full-scale production. 
 
 The conversion of cellulose-based raw materials to fermentable sugars is a complex process, and utilizing the sugars efficiently has long been a challenge. SEKAB and the Swedish company, Taurus Energy, can now demonstrate a process which has been verified on an industrial demo scale with a very high yield from pentose (xylose), a sugar which is extracted from hemicellulose, and which ordinary yeast strains cannot convert to ethanol. This means that the raw material can be utilized much more efficiently than in the industrial fermentation processes currently in use. 
 
 SEKAB is responsible for the process of using dilute acid and enzymes to convert hemicellulose and cellulose from a range of forestry and agricultural raw materials to pentose (a sugar with five carbon atoms) and hexose (with six carbon atoms). Taurus Energy has developed selective yeast strains which can ferment these and can survive the hostile environment of the process liquid. 
 
 The cultivation of yeast is a challenge in itself, since laboratory cultivation is considerably easier to control, and has none of the problems that can arise in large-scale cultivation. SEKAB has successfully demonstrated that the Taurus yeast can be cultivated in large volumes.
 
 The company is delighted that we have confirmation that our yeast strain is robust enough to perform on an industrial scale, and that the yield is the same as we achieved on a laboratory scale, said Lars Welin, CEO of Taurus Energy. The two essential requirements have now been met. 
 
 The trial, which was co-financed by the Swedish Energy Agency, also proves that the process developed by SEKAB and Taurus Energy in collaboration with researchers from Chalmers University of Technology and the Faculty of Engineering at Lund University, is now capable of producing commercially-viable ethanol yields. The successful trial achieved an ethanol yield of four percent by weight, which is the level required for profitable industrial production. 
 
 Taurus position among the world leaders in the fermentation of pentoses from lignocellulose-based raw materials has been confirmed by the results achieved, said Professor Lisbeth Olsson, director of research at Taurus. The results of the demo scale trial are the fruits of many years of research and development in the lab.
 

 SOURCE: SEKAB, TAURUS

Evaluation proves Taurus Energy yeast

Posted Nov. 29, 2010

 
 On Nov. 29, the U.S. EPA finalized the volume requirements for next year's renewable fuel standard (RFS), reducing the requirements for cellulosic biofuels while maintaining the overall volume requirement.
 
 The EPA said in the final rule it has determined that 6.6 million gallons of cellulosic biofuel, equivalent to 6 million gallons of ethanol, is a high enough target to provide incentive for growth within the industry but low enough to balance the uncertainty surrounding actual production levels. "The task of projecting the volume of cellulosic biofuels that could be produced in 2011 is challenging," the EPA stated in its ruling. "Announcements of new projects, changes in project plans, project delays and cancellations occur with great regularity. Biofuel producers face not only the challenge of the scale-up of innovative, first-of-a-kind technology, but also the challenge of securing funding in a difficult economy." 
 
 The EPA's proposed cellulosic biofuel volume, released this summer, targeted a range of between 5 and 17.1 million actual gallons of cellulosic biofuels for next year's RFS. Six U.S. producers and one Canadian company were initially pegged to contribute cellulosic ethanol next year. In the final rule, the EPA said it now expects only four companies to produce cellulosic biofuels next year - DuPont Danisco Cellulosic Ethanol LLC, Fiberight LLC, KL Energy Corp. and Range Fuels Inc. Newly mentioned in the final rule is potential cellulosic diesel fuel producer KiOR, which the EPA believes could also contribute to next year's cellulosic requirements. 
 
 In order to reach its final cellulosic volume requirements, the EPA combined the U.S. DOE's Energy Information Administration actual volume projections with its own evaluations of what volumes are potentially attainable. In October, the EIA suggested that actual cellulosic biofuels production next year is likely to be 3.94 million gallons, far shy of the EPA's final requirements. The EPA indicated in its rule that it views the EIA's prediction as a floor for production amounts next year and the EPA's 2011 RFS requirements are meant to provide assurance that there will be a market for additional cellulosic biofuels if they come online. "By basing the 2011 cellulosic biofuel standard on the attainable volumes rather than discounting project volumes to account for uncertainty, we aim to avoid the undesirable scenario in which cellulosic biofuel production exceeds the mandated volume," the EPA stated. "Such a scenario would result in weak demand for cellulosic biofuels and RINs [renewable identification numbers]."
 
 The EPA set a price of $1.13 for each 2011 cellulosic biofuel waiver credit, based upon an average gasoline price of $1.97 per gallon over 12 months. Waiver credits for 2011 will only be allowed to be used to meet 2011 cellulosic biofuel requirements and may not be used to meet advanced biofuel or total RFS requirements, unlike cellulosic biofuel RINs.
 
 The EPA also addressed fuel pathways in its final ruling and said it is continuing to evaluate certain pathways and fuels. There is currently no pathway for methanol to generate cellulosic RINs, which is what Range Fuels is currently producing at its Soperton, Ga., facility. The EPA said it has engaged Range Fuels to discuss adding a pathway for its cellulosic methanol. "For the purposes of projecting cellulosic volumes for 2011, we believe that the methanol from Range Fuels has the potential for being approved for generation of cellulosic RINs and is therefore appropriate for being included in the volumes that we believe are potentially attainable in 2011."
 
 
 Over the course of the commentary period, several commenters suggested that the EPA should lower the overall RFS to match a reduction in anticipated cellulosic biofuel volumes. The EPA did not agree with those suggestions and is maintaining an overall volume requirement of 13.95 million gallons. The agency also said it believes there is a sufficient amount of advanced biofuels available, including biodiesel, renewable diesel and sugarcane ethanol, to maintain the initial 1.35 billion gallon requirement. Therefore, the EPA also does not agree with suggestions made by the ethanol industry that seek to allow corn ethanol to make up for any potential shortfall of advanced biofuel production and will not allow corn ethanol to be used for that portion of the RFS. "As a result, the demand for corn ethanol will not be greater as a result of today's action than it would be if all applicable volumes as specified in the statute were used in deriving the 2011 standards," the EPA stated in its final rule.
 
 While the final 2011 cellulosic biofuel volume is drastically less than the original statutory goal of 250 million gallons, the EPA said it "remains optimistic" that the industry will continue to grow. It said it is currently tracking more than 20 facilities representing more than 300 million gallons of production scheduled to come online in 2012.

EPA finalizes 2011 RFS volumes

A quality feed coproduct is vital to the success of an ethanol plant, therefore attention paid to critical sections in the distillers grains drying process is of utmost importance. As in any combustion process, the main objective is to maximize efficiency and in so doing, maximize product quality. 
 
 There are many factors to be considered when improving the efficiency of a dryer—drying time, air temperature and surface temperature—all impacting quality. Some studies have linked the variations in dried distillers grains with solubles (DDGS) moisture content to its digestibility in animals. Moisture content also affects the DDGS shelf life. Better dryer temperature control leads to less variability, more consistent product and better energy efficiency. 
 
 To achieve better dryer performance, air and fuel flows must be controlled precisely and consistently throughout the process. Traditionally, pneumatic actuators have been used to control the various throttling dampers and valves that regulate air and fuel flow, but pneumatic actuators don't have the consistent positioning capabilities required to optimize process control. Many ethanol plants are following the lead of the electric utility industry and installing specialty electric actuators. Choosing the right type of electric actuator capable of continuous modulation control can pay big dividends in terms of improved process control, product quality and efficiency. 
 
 Means for Good Actuation 
 What makes up a superior quality actuator and how can its performance influence the efficiency of a process? Since actuators come in a variety of different designs and sizes, one has to focus on specific application requirements. Actuators required for optimal process control must be capable of continuous modulation and provide consistent, precise positioning of the damper or valve over time and in varying conditions. An actuator needs to provide this control regardless of the number of starts and stops or changes in load and environmental conditions. Furthermore, the response of the actuator should not be affected by stiction (sticking caused by friction) that leads to a stick and slip response which adds dead time and causes overshoot and cycling.
 
 With the inconsistent nature of damper and valve loads, and the simple fact that industrial equipment is not frictionless, pneumatic actuators will typically experience stiction. These actuators use compressible air for balancing dynamic and static loads which tends to trigger irregular control and positioning.

 
 Electric actuators do not typically have issues with stiction. Most designs, however, incorporate induction motors that present another limitation. Every time an induction motor starts there is a high in-rush current that generates a lot of heat. This type of electric actuator design requires built-in thermal protection that turns the motor off if the temperature rises too high. The problem with this motor design is that the actuator's ability to start and stop, or modulate, is limited by motor temperature rise rather than by what is required to optimally control the process. Therefore, in order to maximize control performance, care must be taken to avoid selecting electric actuators that utilize induction motors with duty-cycle limitations, and select an actuator rated for continuous modulating duty.
 
 An electric actuator that can precisely track the closed-loop demand is best suited for modulating applications. The actuator should respond quickly to demand changes without any dead-time, lag or overshoot. This not only requires an actuator capable of continuous duty but also the ability to make small, consistent position adjustments. Many typical electric actuators are incapable of making changes less than 0.5 percent of travel, and pneumatic actuators can be far worse over time combined with the potential effect of changing loads and conditions. Care should be taken to select actuators capable position changes in the range of 0.10-0.15 percent of full actuator travel consistently and under all conditions. This allows the control system to maintain the process demands, avoiding inconsistencies caused by poor positioning of the final control element.
 
 Having good control makes a huge difference in the operating efficiency of a process. Good control is a function of how closely the dampers and valves can follow the demand and depend upon actuators that are capable of tracking the demand. In a combustion process typical of a DDG dryer, optimal control results in lower fuel consumption and more stable product quality. In addition, optimized control leads to less equipment fatigue caused by both mechanical and thermal cycling. Therefore, maintenance costs are reduced and the actuators, dampers and valves will last longer, provide better control and reduce unplanned shutdowns.
 
 If chosen correctly, an electric actuator will respond instantaneously to demand changes without any overshoot or stiction. It will also provide a 100 percent continuous duty motor that never overheats and is capable of unlimited starts and stops. Currently, electric actuators are being used in ethanol plants on many critical damper and valve applications: bleed-off, combustion, recirculation air damper and other fan dampers. These are primarily used for flow and pressure control in the dryers. In some cases, flue gas recirculation dampers are also being controlled by electric actuators to reduce nitrous oxide emissions by recirculating flue gas to the combustion chamber. 
 
 Given that many of the processes in an ethanol plant require precise control, the desire to have a continuous duty actuator that will not coast or over-shoot the demand is extremely important. By regulating flow rates and pressures through various dampers and valves, electric actuators can improve efficiencies on many applications. Besides the dryers, the molecular sieve process and various tanks represent other opportunities for actuator upgrades. These applications involve the controlling of gases and liquids through a multitude of valves, which, if controlled effectively, could increase overall efficiency and reduce operating costs.
 
 With a volatile global economy, one has to look in every direction for potential upgrades and improving automation is one key area. Maximizing returns in an increasingly competitive environment is key to plant success. One of the most critical, but often misunderstood parts of optimizing process control performance and efficiency is selecting the correct actuator. Installing reliable electric actuators that are designed for continuous modulating service, while providing precision positioning consistently over time and changing conditions, is an absolute necessity. In the end, improving a plant's performance can be as simple as investing in better actuator performance for the DDGS drying section of an ethanol plant.
 
 Author: Jay Tannan
 Sales Application Engineer
 Harold Beck and Sons Inc. 
 (215) 968-4600, <a href="mailto:jtannan@haroldbeck.com">jtannan@haroldbeck.com</a>

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Real Time Operating data shows the time lag in responding to demand. Choosing the right actuator permits more precise flow control. SOURCE: Harold Beck 

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Using electric actuators on critical applications improves control and reliability.

Actuator Key to Plant Optimization

There is only one statement that can be made with any certainty regarding the ethanol market in 2011. More ethanol will be produced than will be required to be blended under the renewable fuel standard (RFS). That's an easy prediction to make because the industry is already making more ethanol than refiners are required to use. The total RFS requirement for 2011, which includes all renewable fuels, is 13.95 billion gallons. Current estimates show that the national ethanol capacity is more than 14 billion gallons, and millions of additional gallons are expected to come online next year. Production is not expected to become a concern for several years, and even that is debated by members of the industry who insist that ethanol producers will continue to rise to meet demand at any level. So the million dollar question will continue to be: how do we squeeze more ethanol into the shrinking gasoline pool? 
 
 Market Expansion
 Recently, ethanol usage has grown fairly steadily despite lower overall gasoline consumption. Because the cost of ethanol has remained competitive compared to traditional gasoline, refiners have engaged in significant amounts of discretionary blending in markets that were previously untapped. In addition, new state mandates, particularly California's requirement that increased ethanol blend requirements from 5.7 percent to 10 percent, have also helped increase ethanol demand. Chris Highsmith, senior commodities research and strategy analyst for ethanol marketing firm Eco-Energy Inc., says demand for ethanol increased by about 2 billion gallons in 2010 compared to the previous year. "A lot of markets have picked up," he says. "California going to E10 was instrumental to that. It's the largest gasoline market in the U.S., so that accounted for a big piece of it."
 
 Areas in the Southeast have experienced recent increased demand for ethanol, but Highsmith says Florida and many of the coastal markets are saturated. Parts of Mississippi, Louisiana and much of Alabama, however, offer room for expansion. "You have areas down there that still have growth room that are relatively large gasoline markets, but the impact would come in a place like Texas," he adds. He expects Texas, the second largest gasoline market in the country, to provide a new growth area for ethanol over the next two years. "It's been growing and will probably continue to grow," he says. "If Texas started blending ethanol in all of its gasoline, that would pick up 250-300 million gallons of ethanol." Texas has traditionally been an anti-ethanol state, so the prospects of it implementing an E10 mandate are not likely, but the federal mandate may soon not leave Texas blenders any choice. "Historically, the mandate has been less than 10 percent of the gasoline pool, but that's changing," Highsmith says. "We're ramping up to 15 billion … 15 billion gallons is already over 10 percent of the gasoline pool and that pool is falling."
 
 On a smaller scale, western states such as New Mexico, Utah, Idaho and other relatively remote locations in the Rocky Mountains have been so far been left untapped. Highsmith says these markets lack blending infrastructure and refiners have not had the incentive to begin blending heavily in these markets. But as the blend wall creeps closer "they're going to have to blend ethanol in every gallon they can to meet the RFS2 obligation," he says, and E10 may begin to be utilized those areas as well. The long shot for ethanol blending will continue to be Alaska, which according to some estimates currently uses E10 for only about 10 percent of its total gasoline supply. 
 
 Infrastructure Modifications
 Eco-Energy markets a little more than 1 billion gallons of the ethanol produced in the U.S., according to CEO Chad Martin. In order to ensure that his business, and, consequently, the ethanol industry, continues to grow, Martin says Eco-Energy places an emphasis on overcoming logistical issues in new markets. Eco-Energy had a hand in solving infrastructure problems in large markets on the East Coast such as Washington, D.C., and Atlanta as well as in the Carolinas, he says. The company is now focusing on hurdling logistical barriers in mid-size markets, which Martin believes is the next level that needs infrastructure work. "That's an area of focus for us and our marketing partners, to make sure that we can get their product into some of these markets and create solutions," he says. "If there are logistical constraints or issues, we work with the terminal operator to try and find a solution. If we can't find a solution with the terminal operator, we look for a trans-load operator or a development opportunity to make sure we can get product into some of the more difficult-to-reach markets."
 
 E85 and Mid-Level Blends

 The wild card for ethanol marketing in 2011-'12 will be E15. If the partial waiver for 2007 and newer vehicles is not expanded to include older models, its chances of impacting the ethanol market are slim. Highsmith's early prediction is that, at most, 5 percent of retail stations will offer E15 to their customers. "That's probably even a high number," he adds. "It really depends how fast they can work out some of the liability issues. There will be some parties blending it, maybe some jobbers and smaller stations. But any large operation that guarantees their fuel isn't going to want to put themselves out there for that liability. It also depends on price. If there's incentive, people will find a way to blend it."
 
 Highsmith's sentiment is echoed by Kent Satrang, CEO of Petro Serve USA, a cooperative retail fuel provider that operates about a dozen fueling stations in North Dakota and Minnesota. He says he is considering offering E15 at just one of the company's fleet of stations. "I think E15 is well-intentioned, but it really isn't going to be very effective when it's only for 2007 and newer cars because we have to offer gas to all cars, not just to 2007 and newer," he says. "It's a great first step, but we're going to have to get to where all cars can use E15." He doubts that fuel retailers in North Dakota will offer E15 even if the waiver is extended to include vehicle models 2001 and newer. The problem lies in station infrastructure, he says. Many of Petro Serve's stations have blender pumps, but that doesn't make a decision to add a new blend any easier. "I don't know what we would take out to put in E15," he says. "I've asked a lot of people in the ethanol industry and really haven't gotten a good answer yet. I don't think there really is one." The one station that Satrang will consider offering E15 at has a pump with five dispensers and he would replace E20 with E15. But there are very few stations with equipment that offer so many options.
 
 From a retail perspective, Satrang believes blender pumps will be the ethanol industry's best bet to increase market share. In 2007, Petro Serve had the No. 1 E85-selling station in the U.S., dispensing an average 50,000 gallons of the fuel per month. Following that success, and with the help of a North Dakota legislative incentive, the company began installing blender pumps at its locations last year. The company now offers regular gas, E10, E30 and E85 at most of its stations. The results have been "spectacular," according to Satrang. "It has been amazing," he says. "Where we had E85 before and where we've put in blender pumps, our sales for renewable fuels are up 500 percent."
 
 If the USDA follows through with its recently announced promise to cover half of the costs associated with installing 10,000 blender pumps over five years, success stories like Petro Serve's may become more common. But it will take time. According to Growth Energy, there are currently only about 250 blender pumps nationwide. With more than 150,000 retail fuel stations located in the U.S., there is a clear need for aggressive campaigns to increase blender pump installations, particularly in large markets, and all of the industry's representative groups have waged efforts to do just that. The Renewable Fuels Association and the American Coalition for Ethanol teamed up last year to form the Blend Your Own Ethanol campaign, which is geared toward informing marketers and retailers of the benefits of blender pumps and what incentives are available. Robert White, market development director for the RFA, says blender pumps give fuel retailers a chance to one-up their competition by offering a fuel that others may not have. And what benefits the retailers will, in turn, benefit the ethanol industry. "Between the blender pumps goals of the BYO Ethanol campaign and that of USDA, ethanol blended above 10 percent will be greatly more available in the coming year," he says.
 
 Growth Energy also believes in the power of blender pumps. This summer the group began lobbying for its Freedom Fueling plan, which includes a proposal to incentivize 200,000 blender pumps and to require all vehicles sold in the U.S. be flex-fuel capable.
 
 Uncertainty Remains
 For the short-term, discretionary blending by refiners will continue to be the key for keeping the blend wall at bay. In late October, however, several unresolved factors left room for speculation as to whether price incentives would continue to tempt refiners to overblend. If an extension is not granted for the Volumetric Ethanol Excise Tax Credit, margins may be less attractive and refiners may be less likely to partake in discretionary blending. Likewise for the 54-cent-per-gallon import tariff on Brazilian ethanol. If it's allowed to expire on Dec. 31, it could impact the use of domestic ethanol by refiners. Or, it could not. It all boils down to nickels and pennies for fuel companies. "It really depends on what happens with [Brazil's] currency," Highsmith says. "Their currency has been very high against the U.S. dollar compared to where it's been historically. At that level, their exports don't look so great."
 
 On the flip side, U.S. exports of ethanol reached an all-time high in 2010 and that could continue into next year, but it's doubtful that export levels will increase enough to impact supply and demand issues domestically. The U.S. DOE's Energy Information Administration said in October that the U.S. will consume 35.5 million gallons of ethanol this year, which is just a little more than 10 percent of the total gasoline supplied. For 2011, the EIA predicts a slight increase for both gasoline and ethanol consumption, and virtually no increase in ethanol's percentage of the market. But in a letter sent to U.S. EPA Administrator Lisa Jackson to announce its 2011 predictions, EIA Administrator Richard Newell admits the agency's forecasts are "inherently uncertain" and compares actual 2010 data with predictions made in 2009 to illustrate how the markets can change. Actual gasoline supplied in 2010 decreased by 0.7 percent compared to the EIA's 2009 forecast. Meanwhile, ethanol consumption increased by a full 7 percent, up 55,000 barrels per day over the EIA's 2009 prediction.
 
 Author: Kris Bevill

 Associate Editor, Ethanol Producer Magazine
 (701) 850-2553
 <a href="mailto:kbevill@bbiinternational.com">kbevill@bbiinternational.com</a>

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Filling the Gaps Most of the U.S. is nearing E10 saturation, although a few areas remain underutilized. Texas is probably the largest U.S. market that has not yet been penetrated by ethanol marketers. Less populated areas of the Rocky Mountains, as w

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Expanding Options Lacking infrastructure has kept refiners from blending E10 in some areas of the United States, but that may soon change as blending requirements increase and gasoline demand lags. Photo: MANSFIELD OIL

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Conquering Logistics Eco-Energy Inc. CEO Chad Martin says his company is now focusing on distribution constraints in mid-size markets.

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Analyze This Chris Highsmith, research analyst at Eco-Energy Inc., says there remains a bit of wiggle room in the ethanol blend wall. 

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Though the blend wall is looming and E15 is a wild card, the ethanol industry is finding areas for market growth.

Filling Up

Posted Dec. 9, 2010
 
 ZeaChem Inc. announced it has awarded the engineering, procurement and construction (EPC) contract for its demonstration-scale cellulosic ethanol facility to Burns & McDonnell, an employee-owned engineering firm headquartered in Kansas City, Mo. ZeaChem's 250,000 gallon per year facility will be located in Boardman, Ore., approximately two hours east of Portland. According to ZeaChem, foundations are being poured at the site and construction has already begun on the core unit of the facility. The plant is expected to be operational by the end of 2011.
 
 ZeaChem President and CEO Jim Imbler said Burns & McDonnell signed a guaranteed maximum price agreement for its portion of the project however the details of the agreement were not released. Total program costs, including construction and operational activities, are expected to reach $73 million. 

 
 Imbler said Burns & McDonnell was selected to provide EPC services because the firm has experience in similar industries and is comfortable engineering a small-scale project. "You want to size your EPC for the technical challenge and the economics of the size of your plant," he said. "Burns and Mac certainly goes a lot bigger than this, but they're comfortable doing this size of a plant. If you use the big guys, they struggle with doing something the size of a demo plant."
 
 ZeaChem plans to use a cross between biochemical and thermochemical processes to produce ethanol from various cellulosic feedstocks. The primary feedstock used at the facility will be hybrid poplar trees, which will be obtained from Greenwood Resources, the largest U.S. producer of that feedstock. In May, ZeaChem was approved for a $25 million U.S. DOE grant through the DOE's Office of Energy Efficiency and Renewable Energy Biomass Program, which will be used to fund the cellulosic ethanol production components of the facility. Imbler said the grant agreement calls for the company to experiment with feedstocks other than poplar, so the company plans to also utilize agricultural wastes and wheat straw.
 
 A unique aspect of ZeaChem's technology is that it will not produce unwanted byproducts, such as CO2, Imbler said. It will produce biochemicals, including acetic acid and ethyl acetate, which can be sold on commodities markets. Imbler cautioned that the company doesn't plan to weigh its profitability against those products, however. "Ethyl acetate sells for double what ethanol does, but one of our commercial plants would produce all the ethyl acetate the U.S. needs," he said. "So if you're making a real niche chemical there might be a nice value but the thing people don't realize is if you try to push product into that market you're going to depress the price." 
 
 Imbler said ZeaChem is on track to produce cellulosic ethanol commercially at a cost of less than $1 per gallon. "We believe our competition is oil and if we can produce at that sub $1 cash cost basis we're in good shape and if there's extra incentives then we're in even better shape," he said. "But we're taking a long-term industry focus that we've got to be able to compete with crude."
 
 Construction on a commercial-scale facility is tentatively planned to begin in 2012. ZeaChem would like to locate the commercial plant next to the demo facility in Boardman, however, state incentives will play a role in the company's final location choice.

ZeaChem signs EPC deal for demo plant

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Chuck Woodside, CEO, KAAPA Ethanol PHOTO: Kappa Ethanol

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Model Effort In operation seven years, Kappa Ethanol recently bought a share in a Janesville, Minn., plant. 

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Niels Henriksen, CEO, Inbicon PHOTO: Inbicon

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Bill Day, media relations,Valero PHOTO: VALERO ENERGY CORP.

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Third in Production Valero Renewable Fuels operates 10 ethanol facilities in the U.S., including this 110 MMgy plant in Albert City, Iowa. PHOTO: VALERO ENERGY CORP. 

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Craig Stuart-Paul, CEO, Fiberight PHOTO: FIBERIGHT

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Industry leaders share what's on their minds as a new decade begins. What opportunities and challenges lie ahead?

Outlook and Perspective

Posted Nov. 23, 2010
 
 The U.S. EPA is accepting comments through Dec. 17 on proposed guidance demonstrating how owners and operators can comply with EPA's compatibility requirement for storing ethanol blends greater than 10 percent in underground storage tanks. Research conducted by Underwriters Laboratories Inc. and state agencies suggests that mid-level ethanol blends have a greater potential to degrade components of underground storage systems than E85. As the U.S. moves toward the use of higher ethanol and biodiesel blends, compatible underground storage systems will be critical in protecting the nation's groundwater, the agency said. With the recent partial approval of E15, the EPA anticipates that some owner/operators may begin to store E15 or other mid-level ethanol blends. The proposed guidance is meant to clarify compatibility requirements for those parties.
 
 According to the EPA's proposed guidance, there are at least 607,000 regulated underground storage tanks nationwide. States are the primary implementers of the compliance program, but the EPA must approve each state's program. Typically, owners and operators have been able to prove their compliance by using UL-approved equipment. However, the EPA said many components of underground storage systems currently in use have not been tested by UL for compatibility with higher blends of ethanol. Additionally, the lifespan of an underground system is approximately 30 years, and therefore most systems currently in use were not designed to store ethanol blends greater than 10 percent.
 
 Equipment covered in the compatibility compliance includes all components of the underground storage system, including gaskets, flexible connectors, tank linings and other items. Dispensers are not included, however, because they are not regulated under the federal underground storage tank program. The EPA has asked commenters to provide feedback on what components should be included on the list and whether it's possible to demonstrate compliance for the listed components.
 
 The EPA is proposing three methods for owners and operators to demonstrate compatibility of underground storage tank systems, including: certification or listing by an independent test laboratory, equipment manufacturer approval or another method determined by the implementing state. The EPA would like feedback on whether these proposed compliance methods are appropriate and feasible options for owners or if there are other reasonable compliance methods that should be included.
 

 The EPA's full guidance proposal and information related to submitting comments on the proposal is listed in the <a target="_blank" href="http://www.gpo.gov/fdsys/pkg/FR-2010-11-17/pdf/2010-28968.pdf" rel="external">Federal Register</a>.

EPA seeks input on mid-level ethanol storage

Posted Nov. 23, 2010
 
 The U.S. EPA will wait until the U.S. DOE has completed testing of E15 on vehicle models 2001-'06 before it issues a final ruling on the use of E15 in those vehicles. In October, the agency announced it will allow the use of E15 in vehicle models 2007 and newer. At that time, it was anticipated that the agency would issue a decision on older vehicles by the end of November. However, the need for extended testing at the DOE has delayed the EPA's schedule.
 
 The DOE is extending testing to ensure the accuracy and completeness of the test data used by EPA to make its waiver decision. Some of the vehicles used in the initial tests experienced mechanical failures unrelated to fuel. These problems likely occurred as a result of the age and high number of miles already driven by the vehicles. Additionally, one of the vehicles failed the emissions test when fueled with E15, which was likely due to a spark plug issue unrelated to E15. Non-fuel mechanical breakdowns have caused some delays in the additional testing, according to a DOE official, but both agencies are committed to conducting thorough testing. DOE and EPA officials have confirmed that the additional testing will be complete by the end of December. 
 
 Tom Buis, CEO of Growth Energy, said his group is confident that the additional testing will prove E15 is acceptable for use in older vehicles. "The problem was with the testing process, not the fuel," he said. "This also demonstrates just how committed EPA is to the integrity of the testing; they are doing this right."
 
 The American Petroleum Institute welcomed the news that a decision would be delayed, and recommended that the EPA should delay its ruling even longer. "EPA should extend its review six months or more to allow scientific testing to be completed on the effects of E15 on the engines of these older vehicles," said Bob Greco, director of downstream operations at API. 
 
 The Renewable Fuels Association suggested again that the EPA should extend its review to include all vehicles, rather than models 2001 and newer. "We are encouraged by EPA's commitment to accurate testing for 2001-'06 cars and pickup trucks, particularly given the failures are unrelated to the fuel being tested," said Bob Dinneen, president of the RFA. "While the delay is disappointing, it is understandable. We encourage EPA to extend such due diligence to testing for all cars and pickups, regardless of age."

EPA delays E15 decision to December

Posted Dec. 7, 2010 
 
 It's not just that all National Association of Stock Car Auto Racing races will use E15 that makes last week's partnership announcement exciting for the ethanol industry. Starting next year, NASCAR fans will see the American Ethanol brand prominently displayed on every racecar and every green flag that signals the start of NASCAR races. 
 
 A six-year partnership with NASCAR and American Ethanol was announced Dec. 2 in Las Vegas. A group of nearly 100 different entities, led by Growth Energy, have joined together to promote ethanol through the partnership with NASCAR. Membership is far from complete. "Growth Energy and its partners continue to talk to organizations in ethanol and farming about the opportunity to join American Ethanol and support our industry's goals with NASCAR," said Chris Thorne, public affairs director for Growth Energy. "The American Ethanol partnership will benefit every organization involved in domestic ethanol, from the family farms to the major ethanol producers." 
 
 Although Growth Energy facilitated the partnership with NASCAR, membership to American Ethanol is not limited to Growth Energy members. It is, Thorne said, a "partnership with an entire industry." That's something new in the sports sponsorship world as sponsorships are typically with individual companies. "Here, we are representing every aspect of the domestic ethanol industry," he said. 
 

 There are a few other races that use ethanol. E100 is used for the Iowa Corn Indy 250, the only Indy race to run on corn ethanol. UNICA, the Brazilian Sugarcane Industry Association, provides E100 for the IZOD IndyCar Series. Iogen Energy Corp., the Canadian cellulosic producer, provides ethanol to Drayson Racing for the American Le Mans series and to Ferrari for the Formula One season. 
 
 The difference between those races and NASCAR is the stock cars, Thorne said. NASCAR drivers race in cars that are not that much different from the cars an average person drives. "When it comes down to brass tacks, NASCAR has the biggest fan base of any motor sport in the country," he said. "So when we say that E15 is good enough for all Americans because it's clearly good enough for five-time champion Jimmie Johnson, that is going to have enormous reach."
 
 One of the many partners in American Ethanol is the National Corn Growers Association, which provided funding though the state corn checkoff and membership organizations. "The productivity of America's farmers is unrivaled in the world and our ability to supply corn for food, livestock feed and fuel should be a source of national pride," said Bart Schott, NCGA president and a corn grower in Kulm, N.D. "This exciting new association with the NASCAR nation will help to build that awareness." 
 
 NASCAR put ethanol though a rigorous testing process before deciding to switch to E15, said Brandon Hunnicutt, president of the Nebraska Corn Growers Association. Racing teams and engine builders also tested the fuel and found it increased horsepower and reduced emissions by 20 percent per gallon of fuel. "A marketing partnership between American Ethanol and NASCAR following NASCAR's switch to E15 is clearly a powerful move for the American ethanol industry," he said. "Together we will tell the story of the most successful renewable fuel in history, the cleanest burning fuel available on a wide scale that is made in America from renewable corn."
 
 Novozymes is also proud to support American Ethanol. "NASCAR's move to E15 demonstrates a willingness to help reduce greenhouse gases and reduce our dependence on foreign oil," said Adam Monroe, president, Novozymes North America. "We look forward to a long relationship with NASCAR and Growth Energy to show all Americans the power of biotechnology."
 
 E15 used for NASCAR races will be blended at the Sunoco Inc. facility in Marcus Hook, Pa. Some of the ethanol will come from the 85 MMgy Sunoco ethanol plant in Fulton, N.Y., which Sunoco purchased and restarted in June. The fuel, which is provided to NASCAR teams at no cost, will be pumped directly from tankers at the track.

Ethanol will be a big part of NASCAR races

Every time the biofuels industry thinks it has successfully battled back the food vs. fuel argument, it crops up again. 
 
 The tired old argument resurfaced after an Oct. 8 USDA report forecast dramatic decreases in world coarse grain supplies, including corn. In the following days corn futures prices shot up to a high of $5.79, prompting some to predict food prices would soar.
 
 The American Meat Institute, for example, quickly predicted that increased corn costs would mean increased prices for beef, pork and poultry and producers would pass on higher feed costs to consumers. AMI and other ethanol critics met with the White House Oct. 21 to oppose the extension of ethanol tax credits. "AMI has had longstanding concerns over the negative impact the rapid expansion of the subsidized corn ethanol industry has had on the meat and poultry sector and American food prices," says AMI President and CEO J. Patrick Boyle.
 
 What groups such as AMI ignore, however, is that one-third of the corn that goes into an ethanol plant comes out as distillers grains. In fact, in 2009, the ethanol industry produced the equivalent amount of distillers grains as was fed to cattle at U.S. feedlots last year, says Bob Dinneen, president and CEO of the Renewable Fuels Association. 

 
 Another item that gets filed in the short term memory bank is the World Bank report that came out this summer. Authors John Baffes and Tassos Haniotis conclude that biofuels had a much smaller impact on food prices during the commodity price boom of 2006-'08 than initially reported. It's clear, the report says, that U.S. corn-based ethanol production and, to a lesser extent, EU biodiesel production, affected market balances and land use. Worldwide biofuels only account for about 1.5 percent of the area planted with grain and oilseeds, however. "This raises serious doubts about claims that biofuels account for a big shift in global demand," the report says. It also points out that corn prices didn't change much at all as U.S. ethanol production first started increasing. Notably, prices actually spiked when ethanol use was decreasing in the U.S. 
 
 So what did cause the food price spikes? The report says that demand by developing countries probably didn't put upward pressure on the prices of food commodities. It may have, however, put some upward pressure indirectly through energy prices. It also says the investment funds' use of commodities, or the "so-called financialization of commodities," may have been partly responsible for the food price spike in 2007-'08. Oil prices were a big factor, too. "A stronger link between energy and non-energy commodity prices is likely to be the dominant influence on developments in commodity, and especially food, markets," the paper says. 
 
 Many in the ethanol industry say they have been vindicated. "This report should finally silence those that have blamed the biofuel producers for food shortages, food price increases and for committing a ‘crime against humanity,'" says Rob Vierhout, secretary general of ePURE, the Producers Union of Renewable Ethanol, formerly eBio. "It is about time these people recognize the facts." Tom Buis, CEO of Growth Energy, says the report would dispel myths and lies of food vs. fuel. "I applaud the World Bank for admitting the error of their ways and setting the record straight." 
 
 The question now is when will the food vs. fuel argument actually die?

Food vs. fuel misconception keeps raising its ugly head

Biofuels Blame Game

After the difficulties of 2008, the ethanol industry went from booming construction to a new reality, where greenfield construction is a rarity. No new construction projects broke ground in 2009 or 2010. Instead, the past two years have seen changes to existing plants including a handful of ethanol plant auctions. 
 
 As of late October, the only ethanol plant to actually sell at auction was the 10.5 MMgy Alchem ethanol plant in Grafton, N.D. Minnesota resident Jim Borchart, owner of Borchart Steel Inc., and other investors purchased the idled legacy plant for $577,500 on Sept. 29. After auction, three groups approached him about buying part of the plant to possibly relocate within North Dakota for production of pharmaceutical-grade products, move it out of country or piece it out. "We're basically going to make a decision when we get a clear title," he says, adding that could happen in November. Regardless whether Borchart sells, odds are very large that the plant will be moved from Grafton, he says. The basic configuration of the plant is out of date and it would require complete restructuring to operate again. It hasn't been decided yet if the equipment from the plant, some never used after the last upgrade, will be used to produce ethanol. "I would say 50/50," he says. 
 
 The action the latter part of this year wasn't all about auctions, however. Four idled plants either restarted or were working toward restart, with a fifth plant purchased with no specific plans announced. Finally, three plants, at which construction was halted before startup, saw work resume. 
 
 Some of these plants represent the work of companies clawing their way out of bankruptcy and resuming normal operations, as with Aventine Renewable Energy Holdings LLC and Pacific Ethanol Inc. Other plants were purchased for pennies on the dollar of what it cost to build them. Despite that, is it still positive news to see a once-shuttered ethanol plant on its way to producing ethanol again? The answer depends on who is asked. 
 
 Todd Sneller, administrator for the Nebraska Ethanol Board, sees the bright side. Some good things have been happening in the ethanol industry in that state in the past year. "There's been a little more sunshine on the horizon than there's been a in a little while," he says. It's all part of a trend Sneller sees in Nebraska and believes is representative of what's happening nationally. Idled ethanol plants are being purchased and restarted. Other companies are strategically investing small amounts of capital for greater efficiency or to diversify coproducts. "We're seeing a little more confidence," he says. 
 
 Last summer, three former VeraSun Energy Corp. ethanol plants in Nebraska were acquired and restarted. Green Plains Renewable Energy Inc. purchased plants in Central City and Ord and is now in the process of installing corn oil extraction technology. Valero Renewable Fuels LLC acquired the plant in Albion and has initiated improvements, Sneller said. Another good news story happened this spring, when Aventine emerged from bankruptcy and restarted construction at its Aventine Renewable Energy Aurora West LLC plant in Nebraska, as well as at a plant in Mount Vernon, Ind. 
 

 In fact, Sneller is optimistic that by the end of 2011, all 26 plants in the state will be back up and operating. That includes the idled E3 BioFuels LLC, a 25 MMgy plant in Mead, Neb, which filed for bankruptcy in 2007. Ten months after an auction in 2009, a sale agreement finally worked its way through bankruptcy court. The buyer, AltEn LLC of Kansas, was working on closing the sale in late October and expects to restart the plant. 
 
 Douglas Durante, executive director of the Clean Fuels Development Coalition, doesn't want to be the "old grump" of the group, he says, but he sees things a little differently. Has the past year been a time of more opportunity for the ethanol industry? Talk to two people and get two different answers, Durante says. Does he believe the ethanol industry rebounded? Maybe. Some of the idled ethanol plants may come back online, yes, but overall, Durante advocates a slow deliberate recovery versus the "gold rush mentality" of the past. "Nobody wants to do that again," he says. 
 
 Some describe the renewable fuel standard (RFS) as a floor for ethanol production, not the ceiling. Durante disagrees, saying that he wouldn't want to be the ethanol producer that's producing the gallons over and above what the RFS calls for. "As soon as you get more ethanol than you need, the oil guys, who are the people that buy ethanol, hold the price down," he says.
 
 There's no doubt there are some big issues facing the industry today. It's a time of political uncertainty, tight finances, low oil prices and high commodity prices. In October, after the USDA lowered corn yield estimates, corn futures shot up to nearly $6 at the highest point. "Not to be negative but all of those things are out there," he says. Corn futures climbing up over $5 is one thing that drove the bankruptcies in 2008, Durante points out. Besides that, the industry simply overbuilt, like many other industries such as housing, during the time when it was easy to get a loan. "A lot of stuff was financed that never should have been financed," he says, adding many projects need refinancing. 
 
 Unfortunately, banks are very hesitant. For new projects, banks are requiring much bigger down payments and a much faster payoff rate—terms that are simply not doable. "Lots and lots of banks I talk to just simply aren't interested in running the risk," he says.
 
 When an idled plant is purchased and restarted, it's good news for a variety of reasons, not the least of which is the fact that it gets people back to work. However, Durante says he can't celebrate too much when a plant built for $100 million is purchased for $10 million. "It's just shameful how these plants were devalued," he says. "There was definitely a bad case of people saying, let's see if it gets to be a little lower." 
 
 On the good news side, demand for ethanol still exists. "We've always overcome these challenges as an industry," he says. 
 
 On the subject of profitability, Rob Carringer of CRG Partners says there are three tiers among ethanol industry competitors. The first tier includes ethanol plants built two or three years ago with a debt of $2 to $2.50 a gallon—who struggle to service that debt. The second tier has restructured and carries around 80 cents to 90 cents in debt per gallon. The third tier includes the large companies that have multiple plants and the advantage of scale. It's clear that ethanol plants in the first categories will have a much tougher time remaining profitable than the other two, Carringer points out. 
 
 Restarts

 In Lima, Ohio, the former Greater Ohio Ethanol LLC plant is expected to get new life in 2011. PEA Lima, a wholly owned subsidiary of Paladin Ethanol Acquisition LLC, purchased the plant for $5.75 million in the spring, and this fall the company was approved for a 40 percent, five-year tax credit. In exchange, PEA has committed to operating the 54 MMgy plant continuously for eight years and creating 22 full-time jobs. The goal is to restart the facility in the first half of 2011, says Mourad Yesayan of Paladin Capital Group. In late October, there were 10 employees on site, with a total of 30 to 35 employees expected when the plant is producing again.
 
 In early October, Pacific Ethanol Inc. spent $23.3 million to purchase a 20 percent ownership in New PE Holdco LLC, which owns Pacific Ethanol's four facilities. The move means Pacific Ethanol once again has a controlling ownership and will allow the company to restart its two California plants. The company plans to restart its 60 MMgy Stockton, Calif., plant at the end of the year and have it running at full capacity less than 60 days later, says Paul Koehler, the company's vice president of corporate development. The company also hopes to restart its 40 MMgy plant in Madera, Calif., possibly in the first quarter of 2011. The two other Pacific Ethanol plants, in Burley, Idaho, and Boardman, Ore., were not idled. 
 
 In Morris, Minn., the Denco II LLC plant restarted in October. The 24 MMgy plant was in cold idle for 20 months before being purchased by a group of local investors, many of them farmers. 
 Aventine has been busy too, starting this spring when construction resumed at two 113 MMgy plants in Aurora, Neb., and Mount Vernon, Ind. The projects are expected to wrap up the end of 2010, although reports are the Nebraska plant won't actually restart until spring. In addition, this summer the company purchased the 38 MMgy Riverland Biofuels ethanol plant in Canton, Ill., for $16.5 million. Although company officials have indicated it would be operational again, no timeline for restarting the idle plant has been announced.
 
 Another construction project that was halted before completion is expected to move forward in early 2011 after Murphy Oil Corp. purchased the former Panda Ethanol plant near Hereford, Texas, in mid-September. Construction and a retrofit of the plant, which has been renamed Hereford Renewable Energy LLC, is expected to begin before the end of 2010, says Barry Jeffery, director of investor relations for Murphy Oil. The goal is to start up the plant at its nameplate capacity of 105 MMgy in the first quarter of 2011. "Once we have achieved a stable, reliable operation at nameplate capacity, then we will explore the full capability of the facility and expect to achieve higher rates towards 115 MMgy with improved operational efficiencies," he says. 
 
 On the Auction Block 
 The sale of the Gateway ethanol plant in Pratt, Kan., was still pending in late October. An auction planned for the end of September was cancelled when a potential buyer stepped forward. The buyer, who has expressed interest in restarting the idled 55 MMgy plant, remained anonymous as it worked through its due diligence.
 
 A buyer wasn't found before the Nov. 10 auction date, and Renova Energy Idaho, a partially-constructed 20 MMgy plant in Heyburn, Idaho, was sold in bits and pieces. Another auction set for Feb. 1 is unique because the facility is still operating. North County Ethanol, a 25 MMgy facility in Rosholt, S.D., filed for bankruptcy in October 2008 and has been operating for the past year.
 
 A fifth auction was scheduled this fall for a small ethanol plant in Parker, S.D. Built in 2008 adjacent to a feed lot in Parker, S.D., the 2 to 4 MMgy Genesis Ethanol I plant was operated less than a year, according to Maas Companies, which handled the auction. "Although the micro ethanol plant began operations, it was not able to sustain its momentum with overwhelming external factors affecting the industry as well as some operational issues," Maas explained in its auction brochure.
 

 Author: Holly Jessen 
 Associate Editor, Ethanol Producer Magazine
 (701) 738-4946 
 <a href="mailto:hjessen@bbiinternational.com">hjessen@bbiinternational.com</a>

Give me a Bid Scott Steffes, president of Steffes Auctioneers Inc. of Fargo, N.D. auctions equipment at the former Alchem Ethanol Plant, Grafton, N.D. PHOTO: Jackie Lorentz 

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For Sale The former Alchem ethanol plant was one of several on the auction block this year. Photo: Jackie Lorentz

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Sold! Auctioneer Scott Steffes, owner of Steffes Auctioneer Inc. proceeds with the second day of the former Alchem Ethanol Plant in Grafton, N.D. Photo: Jackie Lorentz 

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Restructuring in the ethanol industry continues with several ethanol plants heading to the auction block and a handful of other plants restarting or preparing to restart.

Plants in Transition

It is no surprise that plenty of research and focus is spent on squeezing as much ethanol as possible out of every bushel of corn. Although not as glamorous, there are ways to squeeze a little more water and energy out of the plant as well. Two projects provide conservation opportunities that require minimal investment with immediate return.

 
 Project 1: Cooling Tower Blowdown
 I am going to bypass the obvious choice to discuss ways to increase cycles of concentration to reduce the amount of blowdown required. All respectable water treatment companies should already be working diligently to maximize cycles of concentration while preventing the adverse impacts of scale and corrosion, as this can deliver significant water and chemical savings. Instead, this discussion deals with the location of the cooling tower blowdown. Are you blowing down relatively hot or cold water?
 
 In some plant configurations, cyclonic filtration is utilized on the cooling tower supply. This makes sense as it reduces the suspended solids loading to the plant, thus reducing the risk of heat exchanger fouling. Sludge build up in the cyclone filter is removed via blowdown. Some plants have utilized this as the primary source of cooling tower blowdown. The downside is relatively cold water gets utilized for cooling tower blowdown.
 
 The cooling tower supply is designed to be at least 10 degrees Fahrenheit cooler than the cooling tower return. However, it is commonly at least 13 F cooler. Assuming the plant requires about 75 gpm of cooling tower blowdown to maintain the appropriate cycles of concentration, blowing down the cooling tower supply that is 13 F cooler wastes 11.71 million Btu per day. The math used to figure that waste appears below and can be applied to your situation.
 
 Since about 1,000 Btu are removed in a cooling tower per pound of water evaporated, this project will conserve 11,709 pounds of water for evaporation each day. This equates to 1,404 gallons per day. Over 365 days, this conserves 512,460 gallons of water for evaporation. Assuming four cycles of concentration, the reduced evaporation also reduces the required blowdown by 468 gallons per day since Blowdown = Evaporation / (Cycles - 1). The cooling tower make-up requirement is reduced by 1,872 gallons per day since Make-up = Evaporation + Blowdown. As a result, this project actually conserves a total of 683,280 gallons of plant water per year. Beyond the water conservation, there is a reduced thermal load on the cooling tower, which may reduce electrical use by the cooling tower fans.
 The goal should be to use the hottest water possible for blowdown to conserve the most water. This project typically requires minimal piping and control changes. 
 
 There is a note of caution when implementing this project. Since the plant will be blowing down warmer water, there is the potential to have an impact on the water discharge permit. This is especially true if the discharge has little retention time prior to being directly discharged.
 
 Project 2: Free Cooling RO Preheater 
 Reverse osmosis (RO) membranes are designed to operate at 77 F. Designers account for machines to operate below 77 F by over-sizing machines or installing cold water membranes. It is normal for an RO to operate with about 55 F water. This project evaluates the opportunity to pre-heat the RO feedwater closer to 77 F, which is very common as the benefits are numerous. The twist discussed here is to utilize cooling tower return as the heat source using a plate and frame heat exchanger.

 
 In order to evaluate the benefits, it is necessary to establish a few assumptions:
 >Current RO feedwater usage is 500,000 gallons per day and some of the RO permeate is used in the cooling tower to increase cycles of concentration. In this example, cooling tower adds about 100 gpm RO permeate.
 >Current RO feedwater temperature is 55 F.
 >Proposed RO feedwater temperature of 70 F.
 
 In this example, there are about 62.55 million Btu available from the cooling tower to be transferred to the RO feedwater. These Btu reflect a "free cooling" opportunity for the cooling tower and a direct load reduction on the tower. As seen in Project 1, reducing the Btu load on the tower can conserve water. One must subtract the Btu increase, however, from the RO permeate added back to this cooling tower to help increase the cycles of concentration and determine the total available free cooling Btu. In this case, it is 18.01 million Btu. As a result, the total available free cooling is 44.54 million Btu.
 
 Since about 1,000 Btu are removed in a cooling tower per pound of water evaporated, this project will conserve 44,540 pounds of water for evaporation each day. This equates to 5,340 gallons per day. Over 365 days, this conserves 1,949,100 gallons of water for evaporation. Assuming four cycles of concentration, the reduced evaporation also reduces the required blowdown by 1,780 gallons per day since Blowdown = Evaporation / (Cycles - 1). The cooling tower make-up requirement is reduced by 7,120 gallons per day since Make-up = Evaporation + Blowdown. As a result, this project actually conserves a total of 2,598,800 gallons of plant water per year.
 
 Although this project conserves more water, it also requires a slightly higher capital investment. In order to make it work, a heat exchanger is required in addition to piping and plumbing. There are plenty of other benefits associated with this project.
 
 Since the RO operates at a higher permeate flow rate as it approaches 77 F, an existing RO will operate for fewer hours to produce the same quantity of water. This reduces the electrical demand for the high pressure RO pump, along with mechanical wear and tear on the machine. Should a new RO be used, the designer can select a smaller unit instead of oversizing. As a result, the initial capital investment is smaller.
 
 Additionally, there is a benefit to having higher temperature RO permeate, assuming it is used for boiler make-up. It should also be stated that if operating an ethanol plant with an RO where the permeate is not used for make-up to the boiler or heat recovery steam generator (HRSG), there may be an even bigger opportunity for savings in the form of increasing boiler cycles of concentration. Increasing the RO permeate from 55-70 F using Btu from the cooling tower means fewer Btu are necessary from natural gas. Assuming the boiler make-up rate is 120 gpm and the boiler efficiency is 80 percent, 27.02 million Btu can be conserved daily. The math is shown below. 
 
 Assuming natural gas cost is about $5 per 1 MMBtu, this also conserves $135.11 daily for natural gas or $49,314 annually. The natural gas reduction for a HRSG may not be as easily calculated due to the nature of the HRSG. If supplemental natural gas is used in the HRSG in order to provide steam load, the natural gas savings would be similar. If the HRSG is only generating steam from the waste heat, a large portion of the Btu may end up exiting the stack.

 
 Increasing ethanol yield in fermentation by 0.1 percent is as thrilling as watching Peyton Manning hit Reggie Wayne on an 80-yard touchdown pass against the Patriots. Neither of these projects will deliver that kind of excitement, but they are fairly simple and inexpensive to implement. Call it the linesman approach. Delivering incremental and continuous improvements in the utility is my goal because saving electricity, water and fuel is good for business and the longevity of the industry. With a thorough understanding of the plant operation, it is possible to maximize every gallon of water, every kilowatt of electricity, every therm of fuel and make the plant work to the last Btu.
 
 Author: Randy McDaniel
 Area Manager, Weas Engineering
 (317) 867-4477.
 <a href="mailto:randy.mcdaniel@weasengineering.com">randy.mcdaniel@weasengineering.com</a>

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Configuring Conservation Fine-tuning water temperatures reaps savings, says Randy McDaniel, area manager, Weas Engineering. 

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Relatively inexpensive modifications to the cooling tower and RO can save energy and water.

Low-Hanging Fruit

The corn market's up, but how much that matters depends on other markets. The relationship between ethanol prices, corn prices and crude oil has evolved and shifted over time. In 2008, ethanol and corn were following crude oil. In 2009, that relationship weakened. This past year, ethanol and corn prices have dipped and risen together while crude oil has stayed relatively flat. The purple line on the bottom of the chart shows how these relationships play out in the profitability of a hypothetical ethanol plant modeled by the Ag Marketing Resource Center at Iowa State University.
 
 This chart is built from several others updated regularly by the Ag Marketing Resource Center.
 
 The converion factor used for Com/bushel to Corn/gallon is 2.8.

Ethanol prices: Ethanol daily price, FOB the plant, converted into monthly average as reported by USDA Ag Market News in the Iowa Ethanol Plant Report.

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Ethanol, Corn, Crude

Green Plains Renewable Energy Inc. CEO Todd Becker credits a successful hedging strategy for much of the company's success in the third quarter of 2010. "We continued to take advantage of opportunities to lock away forward margins as they became available," he told investors during a conference call to announce GPRE's quarterly earnings. "In the past few months, ethanol industry operating margins expanded as ethanol prices increased more than the recent increases in corn prices. As a result, we expect an even stronger fourth quarter."
 
 Net income at GPRE for the third quarter was $7.4 million, up nearly $2 million from the same period last year. The quarter was the sixth consecutive profitable quarter for GPRE. According to Becker, the company had locked in margins for 76.5 million gallons of ethanol production for the next 12 months as of Sept. 30, assuring "price agnostic" operations for the coming year.
 
 Additional production and marketing capacities and coproducts will also contribute to GPRE's profitability in the future, Becker says. In October, GPRE acquired two former Global Ethanol LLC plants, increasing its production capacity to 657 MMgy. The company now also has the capability to market and distribute more than 1 billion gallons of ethanol annually. Within the next six months, corn oil extraction technology will be installed at all of GPRE's existing plants. Becker says the project should generate operating income of $15 million to $19 million annually, based on the production of 75 to 90 million pounds of corn oil.

Betting on Success

One chilly mid-October day, as a steady stream of customers rolled into a Fargo, N.D., gas station, patient members of the Clean Air Coalition stood ready to distribute gift bags to E85 customers and to promote it to flex-fuel vehicle (FFV) drivers who aren't using it. "What does the ‘E' mean?" asked one obviously under-educated FFV driver. He was eventually convinced to try E30. Other drivers opted for regular gasoline despite the 60-cent-per-gallon discount on E85 that day. Some readily took advantage of the price break.
 
 The day-long promotional event was part the National Alternative Fuel Vehicle Day Odyssey, a biennial nationwide educational effort held this year on Oct. 15. More than 100 events were held throughout the U.S., all focused on increasing public awareness about alternative fuels and vehicles. Organized by the National Alternative Fuels Training Consortium, this year's events were funded partially by the American Recovery and Reinvestment Act through a U.S. DOE grant, and by the Clean Cities Learning Program. Retail stations offered discounts on E85, biodiesel and other alternative fuels in addition to hosting educational activities for customers.
 
 In California, Pearson Fuels took the opportunity to give E85 away for two hours at pumps in Sacramento and Ventura. Co-owner Mike Lewis says Pearson sold E85 at $1.85 per gallon for a 12-hour time period at five of its other locations, but decided to give it away at the newer pumps in order to attract customers. "Basically, we're trying to take away every excuse for people not to try it," he says. Pearson pumped about 1,000 gallons of E85 between the two locations that day. "We could have given out much more, but that would have involved getting the word out much more in advance and I was a little leery about causing problems," he says. "If we got the word out too much, traffic could be lined up … You don't want to shut the pump off with 100 people in line."
 
 Lewis says he personally assisted two FFV drivers in fueling with E85 for the first time, potentially turning them into lifelong E85 users. "They just happened to pull up to the pump during the two-hour period that it was being given away, in a flex-fuel vehicle, and they didn't even know what a flex-fuel vehicle was," he says. "That shows you how much market is out there already with FFVs and the need to educate people that are driving cars right now that could be running on alternative fuel."

 
 "There is no easy solution for our addiction to petroleum, the state of our environment or health problems caused by greenhouse gas emissions," Al Ebron, NAFTC executive director, says. "But when we use alternative vehicles powered by fuels such as ethanol, it is a step in the right direction."

Informing millions on the benefits of using alternative fuels

Fueling Up on Education

Pursuit Dynamics PLC has appointed Richard Webster to replace Donald Bell who is retiring as finance director at the end of the year. Webster has held a number of senior finance positions in UK firms as well as serving as non-executive director at the UK Ministry of Defense from 2007 to 2009. Based in the UK with offices in Connecticut, Pursuit Dynamics offers energy efficiency solutions to the biofuels, brewing and other industries. 

 	
 Dallas-based Weaver LLP has re-focused its leadership on specific industries. Assurance partner Wade Watson is assuming responsibility for renewable and energy compliance. He plans to grow the practice through existing services, focusing on new regulations such as the U.S. EPA's mandatory greenhouse gas reporting rule. John Mackel will oversee all of the industry practices. Previously he led Weaver's energy services practice. Other partners in the accounting firm will focus on financial services; manufacturing, distribution and retail; oil and gas; the public sector; real estate and construction; and technology.
 
 CHS Renewable Fuels Marketing has hired John Gray as market access manager to develop downstream logistics and infrastructure enabling CHS Inc. to penetrate markets and establish more efficient and effective market channels for renewable fuels. Gray has nearly 30 years of distribution and logistics development/management experience with biofuels and refined fuels. During his 25-year career with Shell Oil he worked primarily in supply, trading and distribution, including five years with its Motiva Enterprises LLC joint venture. Most recently, he held executive level positions with two biofuels companies. 
 
 Maple Leaf Reforestation Inc. has signed an exclusive agreement to sell rights for unnamed patented ethanol production technologies in China. It has exclusive marketing rights for the cellulosic ethanol process as well as certain rights to a patented process for creating enzymes. China plans to blend 10 million tons of ethanol (3.3 billion gallons) into gasoline by 2020, according to Maple Leaf, but its current annual production rate is about 1.35 million tons, mostly using corn and wheat. China, the world's third largest ethanol producer, expects to increase its non-fossil fuel component to 15 percent of energy demand by 2020, compared to 8 percent last year. Maple Leaf, a publicly traded Canadian company, hopes to pursue biofuel ventures in China, along with tree plantings and other environmental projects.
 

 Perdue BioEnergy, a wholly owned subsidiary of Perdue AgriBusiness Inc. will both supply feedstock and sell coproducts for Bionol Clearfield LLC's 110 MMgy ethanol plant in Clearfield, Pa. Perdue BioEnergy will supply approximately 40 million bushels of corn, purchasing as much corn locally as possible. In addition, Perdue will market and sell the 385,000 tons of the distillers grains to area feed mills serving Pennsylvania dairy, turkey and chicken operations as well as to international markets.
 
 The Andersons Marathon Ethanol LLC, Greenville, Ohio, has agreed to supply CO2 to Continental Carbonic Products Inc. which plans to co-locate a 50,000-square-foot dry ice manufacturing facility at Greenville. The 110 MMgy plant is a partnership between The Andersons Inc. and Marathon Petroleum Company LP. The Greenville plant will be one of CCPI's largest among seven, producing 340 tons of CO2 products each day. The Andersons has a similar agreement with CCPI at its ethanol plant in Albion, Mich.
 
 Algenol Biofuels Inc. celebrated the grand opening Oct. 19 of its 43,000-square-foot research and development center built with the help of a $10 million grant from the Lee County (Florida) board of commissioners. The new facility houses Algenol's advanced biology and engineering laboratories including 40 acres of land containing photobioreactors—containers used for its trademarked Direct to Ethanol process, which generates ethanol from algae, saltwater and carbon dioxide. A year ago, Algenol received a $25 million U.S. DOE grant to develop a pilot-scale, algae-based ethanol biorefinery in Freeport, Texas, in collaboration with Dow Chemical Co. 
 
 Glycos Biotechnologies Inc. has developed a microbial technology platform that can convert fatty acids into ethanol, advanced biofuels and biochemicals. Paul Campbell, chief science officer, explained the company uses both E. coli and other microbes to achieve high conversion rates."We've demonstrated one-to-one conversion, which would be the equivalent of taking one pound of fatty acid and making one pound of ethanol." GlycosBio intends to scale the process up to pilot scale within the next few months at its facility in Houston. 
 
 Verenium Corp. has launched a new glucoamylase enzyme for the saccharification of liquefied starch from multiple substrates including corn, milo, barley, wheat and cassava. "Customers using both Verenium's Fuelzyme(R) alpha-amylase and Deltazym (R) GA L-E5 have reported increased ethanol yields due to demonstrated synergies between the two enzyme products providing fuel ethanol processing plants with superior cost-performance benefits," according to President and CEO Janet Roemer. 

 
 Newly re-opened Denco II has signed on with Mansfield Oil Co.'s C&N Companies for ethanol marketing. Energetix LLC has partnered with the local investment group that purchased the Morris, Minn., plant to oversee the business and facility operations at the 24 MMgy plant. Mick Miller, Energetix president and former Denco manager, will serve as the general manager for Denco II.
 
 O.I. Analytical, College Station, Texas, has completed a brochure on instruments and chemical analyses used in studying and optimizing reactions in producing cellulosic ethanol, which includes a table summarizing the test methods and instruments for each step from pretreatment and hydrolysis through fermentation and final fuel blending.
 
 Trillium FiberFuels Inc. is working with an unidentified out-of-state pulp and paper mill in an attempt to crack the xylose utilization question. The pulp and paper mill is providing hemicellulose, to the Corvallis, Ore., Trillium lab where researchers plan to ramp up tests to 200 liter batches before year's end and 4,000 liters early next year. "What we're trying to do is use conventional yeast that is still tough and basically change the food so they can use it," says Chris Beatty, president and one of four founding members of the company. Starting with an industrial enzyme used to make high fructose corn syrup, the company is working on perfecting its simultaneous isomerization. The patent-pending process converts sugar to a useable food for yeast and ferments at the same time. Trillium is halfway through a U.S. DOE grant period. 

 
 Brazil petrochemical company Braskem A.S. inaugurated a commercial-scale plant in September to produce ethylene from ethanol at its Triunfo complex in the southern state of Rio Grande. The polymerization process converting ethylene into resin is completed at an existing plant in the Triunfo complex. The new plant will consume around 462 million liters (120 million gallons) of ethanol per year. The company is the largest industrial consumer of ethanol in Brazil, absorbing around 700 million liters per year for the production of green polyethylene and the fuel additive ETBE. Braskem contracts with Brazilian ethanol producers will include a code of conduct establishing sustainability criteria.
 
 Motiva Enterprises LLC, a refining, distribution and retail joint venture between Shell Oil Co. and Saudi Refining Inc., has expanded its Doraville, Ga., terminal to allow for delivery of Norfolk Southern Corp. unit trains transporting Midwest ethanol. Motiva said the expansion will enable an 80-car unit train to be off-loaded and returned to the supplier intact and will better serve ethanol producers supplying the Southeast market. "This is a major step in making the Motiva Doraville terminal the low-cost solution for ethanol distribution in the Atlanta metropolitan area," said John Kraemer, Norfolk Southern group vice president. Motiva currently operates ethanol hubs at terminals in New Jersey, Rhode Island, Louisiana and Florida and is considering adding rail capabilities to its ethanol hubs under development at Port Everglades, Fla., and Charlotte, N.C.
 
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Assuring Compliance Wade Watson leads the renewable and energy compliance practice at Weaver. 

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Building Markets John Gray will be applying his experience in distribution to help CHS grow its ethanol reach. 

December 2010

Business Briefs

Business Briefs

Business Briefs

Business Briefs

Columns

BACT to the Drawing Board

Uniting Producers

The First Crack in the Wall

New Decade, New Look

Corn Quality

One Curtain Falls, Another Prepares to Rise

Bogus Logic in E15 Suits

Biomass Poised to Leap Economic, Political, Regulatory Hurdles

Biomass Power: A Lot to Be Thankful For

New Potential “Star” in the Biomass Gasification Realm

Diverse Group

Plant Maintenance and Safety

Featured

Filling Up

Outlook and Perspective

Plants in Transition

Building the Biomass Industry

Show me the Money

Biomass Sweet Spot

Industry Convenes in Biomass Central

Model Fleets

Maintaining Safety and Value

Chemical Safety Matters

Contributions

Actuator Key to Plant Optimization

Low-Hanging Fruit

Biomass Briquettes: Turning Waste Into Energy

Biomass Gasification in the UK—Where are we Now?

Sophisticated Biomass Plant Operations Yield Excellent Economics

Immigration Visas can Help Fund Biomass Projects

December 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 Briefs

Business Briefs

Business Briefs

Columns

BACT to the Drawing Board

Uniting Producers

The First Crack in the Wall

New Decade, New Look

Corn Quality

One Curtain Falls, Another Prepares to Rise

Bogus Logic in E15 Suits

Biomass Poised to Leap Economic, Political, Regulatory Hurdles

Biomass Power: A Lot to Be Thankful For

New Potential “Star” in the Biomass Gasification Realm

Diverse Group

Plant Maintenance and Safety

Featured

Filling Up

Outlook and Perspective

Plants in Transition

Building the Biomass Industry

Show me the Money

Biomass Sweet Spot

Industry Convenes in Biomass Central

Model Fleets

Maintaining Safety and Value

Chemical Safety Matters

Contributions

Actuator Key to Plant Optimization

Low-Hanging Fruit

Biomass Briquettes: Turning Waste Into Energy

Biomass Gasification in the UK—Where are we Now?

Sophisticated Biomass Plant Operations Yield Excellent Economics

Immigration Visas can Help Fund Biomass Projects

December 2010