The U.S. has been a net exporter of ethanol since 2010, when more than 350 million gallons of ethanol going to overseas markets, according to the Renewable Fuels Association. In 2011, U.S. exports reached nearly 900 million gallons, with the European Union one of the top destinations.
The EU has a target of deriving 10 percent of transportation fuel from biofuels by 2020. Thus, ethanol consumption in the EU will increase significantly in the future. The EU 27 Annual Biofuels Report published by USDA&rsquo;s Global Agriculture Information Network states that the consumption of ethanol for conventional and advanced fuels in the EU will reach 1.498 billion gallons in 2011, whereas only 1.271 billion gallons will be produced domestically. The gap has still to be covered by imports. During 2011 and 2012, Germany and France remain the main markets, and Germany will import 30 percent of its ethanol consumption. RED Basics The EU Renewable Energy Directive (Directive 2009/28/EC) establishes a common framework for the promotion of energy from renewable sources in the European Union. In the area of biofuels and liquid biomass for electricity and heat production, the EU set sustainability requirements for renewable fuels to qualify as meeting the mandatory renewable energy targets.&nbsp; With the RED in effect since Dec. 5, 2010, member states must transpose the directive into national legislation. Last July, the EU Commission approved seven certification schemes that companies can use to verify sustainability claims. The national legislation in Germany is based on certification by voluntary certification schemes.
The directive requires the use of sustainable biomass seeking to prevent companies from converting forest, peatlands or biodiverse grassland for the production of biomass for the use in biofuels for the EU market. Carbon-rich areas or areas with a high degree of biodiversity are not allowed to be used for the production of biomass for biofuels or liquid biomass for heat and power generation. If the land use has been changed after January 2008, biomass from this area cannot be certified as sustainable.
Furthermore, an RED requirement states that biofuels must achieve a reduction in greenhouse gases (GHG) of at least 35 percent in comparison to fossil fuels. Beginning in 2017, the GHG emission savings target rises to at least 50 percent, and in 2018 the target is at least 60 percent for biofuels and bioliquids produced in installations in which production started on or after Jan. 1, 2017.
U.S. ethanol producers exporting into the EU can show that they fulfill these sustainability criteria by being certified under the framework of one of the certification schemes for sustainability and GHG emissions approved by the EU Commission. The EU recognized schemes can be used in all 27 member countries.
The seven schemes approved by the EU Commission are Bonsucro EU, Greenergy, International Sustainability and Carbon Certification, Bioenergy Sustainability Assurance (RBSA), Roundtable on Sustainable Biofuels-EU RED, Roundtable on Responsible Soy-EU RED (RTRS) and 2BSvs. The RBSA, Greenergy and 2BSvs are company- or industry-driven schemes. The roundtable initiatives include Bonsucro EU, certifying sugarcane in Brazil; RTRS, targeting soy from Brazil and Argentina; and ISCC, a global multi-stakeholder scheme for all kinds of biomass. The roundtable initiatives include social and ecological criteria that exceed legal requirements. It should be noted, however, that Bonsucro EU as well as 2BSvs are only partially approved and not recognized for biodiverse grassland, one of the basic requirements of the EU RED. Furthermore, it is not possible to do individual GHG-calculations within these schemes. Getting Certified Fully operational since early 2010, ISCC is an international certification system for sustainability and GHG emission savings that can be applied for all kinds of biomass and bioenergy. It was developed through an open stakeholder process involving associations, corporations, research institutions and nongovernmental organizations (NGOs). As a forum for stakeholder dialogue, the association was inaugurated in Berlin in January 2010 and today has 60 members. The member list includes companies such as Archer Daniels Midland Co., Cargill Inc., Bunge, BASF, Bayer and associations like European Bioplastics, Bundesverband Bioenergie, Canola Council of Canada, as well as research institutions like the Kiel Institute for the World Economy and NGOs like the WWF. U.S. members include the Illinois Corn Growers Association, Degart Global LLC&nbsp; and the Morgan Stanley Capital Group Inc.
ISCC can be applied to demonstrate sustainability in the bioenergy sector and additionally on a voluntary basis for food, feed or chemical applications. Around 1,200 companies from 52 countries are already using it. In the U.S., several ethanol producers already seized the opportunity and became ISCC-certified. A full list of certificate holders is available on the ISCC website (www.iscc-system.org). Principles, Process ISCC comprises six principles with respective criteria and does not only aim at the prevention of ecological shortcomings but also at the safekeeping of adequate working conditions and the protection of health of the employees on farms. The verification of the six principles is carried out by the assessment of databases, maps, satellite images, the assessment of internal documents, interviews of personnel, management and stakeholders, as well as visual inspection of company facilities, storage facilities and infrastructure.&nbsp;
Biofuels have a production chain with many links, from farms to distribution of the fuel. Biomass is also transformed into other intermediate and/or final products. Evidence concerning sustainability needs to be documented regarding the raw material and/or intermediate products used. To ensure the fulfillment of sustainability criteria throughout the whole production process, ISCC has developed a transparent procedure that can be verified by independent auditors. ISCC is cooperating with 17 officially recognized international certification bodies, such as T&Uuml;V, SGS and Control Union. A full list is available on the ISCC website.
The process starts at the First Gathering Point&mdash;the company collecting sustainable biomass such as an agricultural cooperative or wholesaler buying biomass. All delivering farmers must provide self-declarations of sustainability, of which a predefined sample will be audited. Group audits of farms are also possible. The auditor&rsquo;s task is to verify onsite that the actual processes match the documentation. Once a certificate is issued, the First Gathering Point can sell and export the certified products to certified wholesalers. The next stage is the certification of the companies doing the biomass conversion to biofuels or other renewable fuels. The certification process can be extended up to the end product reaching the final customer.
In the EU RED, a mass balance method is laid down as the chain-of-custody method to ensure traceability along the entire supply chain. Mass balances use records allowing a quantitative accounting and traceability at all stages of the production and delivery of sustainable biomass. The accounting ensures that the incoming quantity of biomass does not exceed the outgoing quantity.
The certification process also covers the calculation of GHG emissions along the supply chain including both generated GHG emissions and GHG abatement in comparison to the use of fossil energy. This includes emissions from biomass production, conversion processes and transport. The EU RED includes default values for different biomass and biofuel options. Additionally, ISCC offers individual GHG emission calculations for different supply chains. These individual calculations are getting more and more important. Opportunities Sustainability certification is now the norm for exporting ethanol into the EU. In the German biofuels sector, for example, only certified biofuel can be used to meet the quota. There also is a potential for premium prices on certified products.&nbsp; It is a safe assumption that sustainability criteria will apply to other sectors in the future and that voluntary certification makes sense in order to satisfy increasing consumer demand for sustainable products. Sustainability certification of biomass and final biobased products also represents a huge opportunity in general: For the first time, ecological and social standards can be established in the global raw materials markets. It is important to seize this opportunity. Renewable energy producers can lead other sectors in achieving sustainability for future generations. Author: Antje Grzesik System Management, ISCC System GmbH +49 221 37998487 info@iscc-system.org

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How U.S. ethanol producers can become certified

EU Requires Sustainable Biofuels

The approval of new feedstock pathways under the renewable fuels standard (RFS2) is critical to the developing cellulosic ethanol industry. The addition of new pathways expands the library of biomass crops available for conversion into RFS2 compliant biofuels and using approved feedstocks is the only way producers can generate renewable identification numbers (RINs) for the resulting fuel. The approval of specific feedstock pathways is also critical to financing a project, since investors may be less willing to support a project that relies on an unapproved feedstock.
On Jan. 5, the U.S. EPA issued a direct final rule regarding pathways for three grassy biomass crops&mdash;energy cane, giant reed and napiergrass. The agency also published a parallel proposed rule for the pathways on the same day. According to the EPA, it published the direct final rule without a prior proposed rule because it viewed the addition of these new RFS2 pathways as noncontroversial. The EPA explained the new pathway determinations did not require new agricultural sector modeling and involved relatively straightforward analyses that largely relied on work that had already been completed as part of the RFS2 final rulemaking. In the direct final rule, the EPA also noted that the pathways would become effective March 5 unless the agency received adverse comments or a hearing request by Feb. 6. The EPA did receive such comments, and on March 5 published a notice in the Federal Register officially withdrawing the direct final rule.
Several public comments are posted to www.regulations.gov in regard to the direct final rule, some in support of the new pathways, others critical. Robert Bendick, director of U.S. government affairs at the Nature Conservancy, posted a critical comment on behalf of the National Environmental Coalition on Invasive Species. The comment noted that the rule would approve renewable fuel pathways for plant species that are listed as noxious weeds and/or are considered invasive species in the U.S. &ldquo;EPA has not considered how this rulemaking will affect the introduction or spread of these species, nor has it taken action to avoid or minimize these effects,&rdquo; Bendick said in the comment.
However, the EPA&rsquo;s withdrawal of the direct final rule does not mean that the pathways will not be amended to the RFS2. Rather, it will complete the rulemaking process using the parallel proposed rule it published for the pathways. According to the agency, it intends to address all comments in a subsequent final action. The agency also noted that it will not institute a second comment period on the action.
While the pathways for energy cane, giant reed and napiergrass will be delayed, the research community and biofuels industry are continuing the efforts to bring the advanced feedstocks to commercial fruition. Developing the Crops The USDA&rsquo;s Agricultural Research Service is diligently working to improve and develop advanced biofuel feedstocks, including extensive work with napiergrass, energy cane and a wide variety of other bioenergy crops. According to Jeff Steiner, ARS national program leader for Biomass Production Systems, no matter what feedstock an ARS research program focuses on, a primary goal is to reduce inputs while increasing yield. Specifically, ARS researchers work to reduce the use of nitrogen and water. In addition, the research programs also focus on improving the traits of these crops for use by the biorefining industry. &ldquo;The real twist on the whole thing is to try to design the feedstocks so that they are friendly to specific conversion technologies,&rdquo; he said.
Regarding the ARS&rsquo;s work with napiergrass, Steiner notes ARS researchers are looking at a full systems approach to developing napiergrass as a biomass crop. The work, he continues, is led by research geneticist Bill Anderson in Tifton, Ga. &ldquo;[Anderson] is particularly looking at breeding for higher yield and improved production efficiencies along with genetic components that would enhance the conversion ability of the crop into biofuels,&rdquo; he says. While the ARS is continuing work to further improve napiergrass, Steiner says there are varieties of the crop that are ready for commercial deployment. &ldquo;One of those is called Merkeron,&rdquo; he continues. &ldquo;That material is actually in pretty good shape.&rdquo; In dryland conditions, the variety can achieve yields of 8 to 10 dry tons per acre and with some irrigation, the yield can be pushed to 15 dry tons per acre.
The high-yielding, lesser-known napiergrass biomass crop is attracting interest, according to Steiner. &ldquo;We have cooperative research and development agreements with specific companies that are interested in the materials,&rdquo; he says. &ldquo;We are working closely with them. They are helping to set the quality standards for their conversion processes to optimize their systems. We work in that with them, as well as with the general materials to improve yields, reduce input costs and so forth.&rdquo;
The ARS is also working with energy cane. Gail Wisler, ARS national program leader for horticulture and sugar crops, notes that the department&rsquo;s work on energy cane originated with its sugarcane program. &ldquo;In order to improve sugarcane for disease resistance, adaptability to different soils and cold tolerance [our researchers] need to&mdash;by necessity&mdash;bring in a wide variety of parents for crossing,&rdquo; she says. &ldquo;In that process, we used to throw out [resulting varieties] that were very high in fiber and low in sugar. Now, of course, it turns out that many of these sorts of byproducts of the sugarcane industry have been released for initial exploration with the energy cane world.&rdquo; As a result, the ARS has expanded research into energy cane. According to Wisler, promising varieties of the feedstock have been released. They have been trialed in more northern locations, and have done very well, she said. While Louisiana is the northern-most region of the world that currently grows sugarcane commercially, Wisler says that preliminary trials of energy cane have been conducted as far north as North Carolina.
While work is clearly progressing with both feedstocks, Steiner stresses that it is important to understand there isn&rsquo;t a single biomass feedstock that is going to fit the needs of the entire biorefining industry. Rather, different feedstocks will be more appropriate for cultivation in certain regions and conversion with specific technologies. &ldquo;It&rsquo;s going to be how do you optimize these systems based on their agronomy, their production ecology, how it fits into the production cycle of existing crops, as well as how does it fit into the businesses plans and operation plans of the biorefineries that utilize them,&rdquo; he says.
Regarding the potential for some biomass crops to be invasive, Steiner points out that any crop&mdash;not just biomass feedstocks&mdash;could cause some detrimental side effects or unintended consequences, whether biological, environmental or economical. The key will be to grow each biomass crop in the most appropriate environment. For example, there are some regions in which a crop like giant reed might prove invasive, but there are also other locations where it might not cause any unintended consequences. Napiergrass is most appropriately grown in USDA plant hardiness zones 8A, 8B, and 9, as growing it in those zones will help ensure the crop doesn&rsquo;t flower.&nbsp; According to Steiner, it may also be possible to manipulate a particular crop genetically to minimize or eliminate those problems. Industry Perspectives EdeniQ Inc. is one biorefining company planning to employ energy cane as one of its feedstock sources. While EdeniQ CEO Brian Thome notes that his company&rsquo;s near-term development and scale-up plans are focused on the use of agricultural residues, it has also had excellent results converting energy crops, such as energy cane and switchgrass, into cellulosic ethanol. The addition of new feedstock pathways represents significant benefits to future cellulosic biofuel projects. &ldquo;We have spent significant time working with energy cane as a feedsock for our process,&rdquo; Thome says. &ldquo;We have not spent time working with giant reed or napiergrass, but expect similar excellent performance. The approval of new feedstocks [under RFS2] provides EdeniQ and its licensees greater flexibility in the planning of future commercial projects.&rdquo;
Thome also notes that additional pathways are important to the industry as a whole. &ldquo;The financial incentives provided by cellulosic RIN credits, enabled by these pathway approvals, are critical for the cellulosic ethanol industry to justify the considerable investment of the resources needed to develop, scale-up and commercialize new technologies,&rdquo; he says. While the EPA&rsquo;s work on these three new bioenergy feedstocks is a step in the right direction, there are still many feedstocks that are in earlier stages of the pipeline. According to Thome, additional approvals for feedstocks and pathways will provide the industry with greater flexibility, which enables more attractive economics for commercial opportunities.
Brooke Coleman, executive director of the Advanced Ethanol Council, adds that the approval of new feedstock pathways are a critical component of the investment discussions cellulosic ethanol companies are currently having. According to Coleman, his organization would like to see the EPA prioritize and fast track the fuel pathway proposals for feedstocks clearly associated with projects that will be the first to come online with commercial-scale production. Some of these feedstocks include municipal solid waste and dedicated hardwoods, he says. Companies that are nearing commercial production need the EPA to send a signal to the market regarding pathway approvals for their respective feedstocks, Coleman adds. &ldquo;Those pathways need to be fast tracked because if the development plans get ahead of the pathway certification, then you have arrested development that creates a feedback loop into all of the other problems that they are having,&rdquo; he says. Ensuring that the first commercial producers of cellulosic ethanol are able to generate RINs for their fuel will help negate some of the pushback against the RFS2&rsquo;s cellulosic volume targets. Author: Erin Voegele Associate Editor, Biorefining Magazine (701) 540-6986 evoegele@bbiinternational.com

USDA researchers collect samples from giant reed in California.

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Energy cane is essentially a high-fiber, low-sugar variety of sugarcane. 

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EPA evaluates energy cane, giant reed and napiergrass


Advancing Pathways for Advanced Feedstocks

The technology isn&rsquo;t the issue. Clear examples of ethanol production from sugar beets and energy beets already exist. And, yet&mdash;despite the potential of the feedstock&mdash;North America has yet to see a full-scale beet-to-ethanol production facility built.
However, there&rsquo;s been some exciting progress lately. North Dakota-based Green Vision Group is resolutely moving forward with a plan to build multiple 20 MMgy dedicated energy beet plants in the state. The quest began in 2007 and took some big leaps in early 2012, when it received $1 million in funding from the North Dakota Renewable Energy Council and other sources, says Maynard Helgaas, president. Around the same time, North Dakota State University, which has been assisting with the project, submitted an energy beet ethanol life-cycle analysis to the U.S. EPA in an effort to get it qualified as an advanced biofuel. The group has its first location selected, although it hasn&rsquo;t been announced yet, and hopes to begin processing ethanol by fall 2014. &ldquo;It wouldn&rsquo;t take us long once we complete our research to get the most efficient processing out of energy beets&mdash;then we will build the plant,&rdquo; Helgaas tells EPM. &nbsp;&nbsp;&nbsp;
Green Vision Group&rsquo;s vision is ambitious&mdash;they want to build least 12, possibly 16, energy beet-to-ethanol plants in North Dakota. When asked if that&rsquo;s feasible, Cole Gustafson, chair of NDSU&rsquo;s department of Agribusiness and Applied Economics, points to the growth of the corn ethanol industry since 2004. At that time, it might have seemed out of range to imagine more than 200 U.S. ethanol plants, but that&rsquo;s exactly what happened&mdash;and it can happen for energy beet ethanol too. &ldquo;It certainly is a possibility,&rdquo; he says. &ldquo;It&rsquo;s going to take us several years to get there.&rdquo;
More than 3,000 miles due east, Canadian company Atlantec BioEnergy Corp. is building a 79,000 gallon a year energy beet demonstration plant in Cornwall, Prince Edward Island. The plant is expected to begin production of ethanol in July, says Ron Coles, vice president of agricultural resources and public relations for the company. The company is working with some North American groups interested in its closed-loop technology, which includes anaerobic digestion of the leftover beet pulp for power production.
In the meantime, others are waiting and watching, holding off until someone else is successful. &ldquo;It&rsquo;s kind of that idea of who moves first, who takes the first leap,&rdquo; says Carl Christian Radinger, owner of Putsch Group, in a telephone call from Germany. &ldquo;You know, everybody is waiting for somebody to do it to see how the economics really are, not just on paper. There needs to be a reference plant.&rdquo;
Steve Libsack, director of business development and strategic accounts for Betaseed Inc., says the same thing. &ldquo;It&rsquo;s a little bit of a chicken and egg situation in that until the first plant is up and going, it&rsquo;s a little blurry,&rdquo; he says, adding that willing project developers and investors are needed. Compare, Contrast In Europe, some food-grade sugar producers have added ethanol production to their sugar beet processing plants, much like the Brazil sugarcane model, Radinger says. He and his colleagues at Putsch, manufacturer of beet processing equipment, couldn&rsquo;t think of a single, dedicated, energy beet ethanol plant in Europe. Instead, the most common overseas use for energy beets is on-farm biogas production, an attractive option due to high energy prices.
Interest for U.S. ethanol production, on the other hand, is more focused on energy beets. Gustafson just doesn&rsquo;t see U.S. sugar producers adding on ethanol production. For one thing, North Dakota&rsquo;s proposed energy beet-to-ethanol plants will utilize a more efficient processing technology than existing sugar production facilities, he says. Still, it is technically achievable, and becomes more feasible if there are changes to the U.S. sugar program. In that case, granular sugar producers could conceivably convert or augment food-grade sugar plants. &ldquo;It certainly is a possibility,&rdquo; he says, &ldquo;especially if we see changes in national farm legislation.&rdquo;
In other words, it could be done, but it&rsquo;s not likely, Betaseed&rsquo;s Libsack agrees. For one thing, there&rsquo;s not a whole lot of room for expansion in areas of the U.S. where sugar beets are already in production. By going the energy beet route, competition for land can be avoided.
At least one U.S. company is targeting sugar beets, but without following the European model exactly. This spring Iowa-based Energae LP signed a purchase agreement for the idled Alchem ethanol plant in Grafton, N.D., and said it would upgrade the plant for dedicated sugar beet-to-ethanol production, possibly by fall. The energy investment group was working to get sugar beet producers on board and was confident it could secure enough feedstock for the 10 MMgy plant, said Jerry Krause, general partner in Energae, in early March. He didn&rsquo;t discount energy beets altogether but pointed out that sugar beets were already an established crop in that area.
So what&rsquo;s the difference between sugar beets and energy beets? Clearly, either one works for ethanol production. To produce table sugar, producers are looking for sucrose, sucrose and more sucrose. Energy beets, on the other hand, contain multiple sugars, meaning sucrose as well as glucose, fructose and other minor sugars, called invert sugars, Libsack says. To create energy beet hybrids, plant breeders like Betaseed, a wholly owned subsidiary of German company KWS, select for traits such as high sugar yield, not just sucrose production.
Another difference has to do with the front-end processing equipment needed to remove stones and clean the beets. This isn&rsquo;t as rigorous as is necessary for sugar beets, which ultimately end up in sugar shakers and birthday cakes.&nbsp; The company, which operates as Putsch USA in Asheville, N.C., also makes equipment for slicing sugar beets or mashing energy beets as well as juice filtration.&nbsp;&nbsp;&nbsp; High on Sugar Betaseed&rsquo;s energy beet trials are being conducted around North America and prove there are many areas where energy beets would thrive, Libsack says. &ldquo;We&rsquo;ve literally had trials from Nova Scotia to southern California and from Alaska to Florida and I really haven&rsquo;t found a place that I can&rsquo;t grow beets,&rdquo; he tells EPM.
The company has been working with groups looking at energy beet production in the northern states of North Dakota and Minnesota, as well as areas such as Kentucky, Florida and Mississippi. In southern areas, energy beets can be grown as spring and/or winter crops. For example, the Mississippi Delta Region has been identified as an area where energy beets can be grown as a winter crop without displacing or replacing any current crops. &ldquo;We believe that the beet can be harvested on a year-round basis, weather permitting, to give us a year-round supply of feedstock,&rdquo; he says, adding that Betaseed&rsquo;s parent company KWS has a patent-pending technology for beet storage. &ldquo;It isn&rsquo;t for storage of a sugar beet for sugar production&mdash;we&rsquo;ve looked at that for years and it simply doesn&rsquo;t work&mdash;but for energy beets for ethanol production, the beet is very, very stable.&rdquo;
Green Vision Group and NDSU are focusing on energy beets because they believe it will produce a truly green fuel, and they are confident the EPA will agree and bestow the coveted advanced biofuels designation. The group believes North Dakota, in particular, is an ideal place for energy beet-to-ethanol production. &ldquo;This region has the lowest cost of producing sugar, nationwide,&rdquo; Gustafson says.
Green Vision Group is focused on producing low-carbon ethanol, starting in the field all the way to actual production. That means encouraging farmers to utilize farming practices that reduce nitrogen and chemicals used in the field, Gustafson says. It&rsquo;s also why they plan to build smaller-scale ethanol plants, so all feedstock supplies are within a 20-mile radius.
As a crop, energy beets increase soil health due to a deep tap root and are tolerant of drought and alkaline or saline soils, Helgaas points out. As a feedstock for ethanol production, high yields are a big attraction. Energy beet trials conducted in North Dakota demonstrated yields ranging from a high of 37.8 tons per acre on irrigated land, to 25.2 tons per acre on dry land. Overall, the group expects about 75 percent of the land utilized to produce energy beets to have at least some irrigation and average yield of 32 tons would add up to 1,000 gallons of ethanol production in just one acre of land. In other words, energy beets have the power to produce about double the amount of ethanol in one acre, when compared to corn, he says.
Another facet of the project&rsquo;s attractiveness is the efficiency of the ethanol production process it will utilize.&nbsp; As an example, Gustafson points to the partnership with Heartland Renewable Energy of Muscatine, Iowa, which brings a technology to the table to build a &ldquo;self-propelled&rdquo; ethanol plant. The engineering and consulting firm has a patent for a process to create spray powder, which will be used to produce up to 70 percent of the plant&rsquo;s thermal needs. Stillage from the fermentation process will be spray dried&mdash;put through a nozzle at high pressure to evaporate water and produce a dry material, he says.
Besides ethanol, energy beet ethanol plants produce other valuable coproducts, including animal feed from the leftover beet pulp, much like distillers grains. &ldquo;What we are also very excited about is the positives of producing renewable chemicals from these sugars in addition to biofuels,&rdquo; Gustafson says. &ldquo;We have to see what the marketplace is, that&rsquo;s part of the research that we are addressing right now.&rdquo;
Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946 hjessen@bbiinternational.com

A field of energy beet hybrid grown by Betaseed Inc. in Anchorage, Alaska, yielded an impressive 40-plus tons per acre in four months.

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Maynard Helgaas, president of Green Vision Group, speaks at the site of a test plot of energy beets in Oakes, N.D. The field is irrigated.

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Officials of the Canadian government and Atlantec BioEnergy display artist renderings of the research and development facility now under construction in Canada. Ron Coles, vice president of Atlantec BioEnergy, is second from the left. 

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This 2009 map shows sugar beet, corn and sugarcane production areas. Green areas show sugar beet producing country, yellow is corn and red is sugar cane. 

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North American sugar-to-ethanol strategy differs from Brazil's, Europe's


Energy Beets: Who will Leap First?

For industrial processing facilities, energy costs are usually among the top three operating costs, making it a prime area to focus efficiency efforts. Production costs like labor and input costs are somewhat fixed, whereas energy expenses can be reduced without sacrificing production capacity or quality. Finally, the risk of increasing energy cost is higher than ever before. Just look at these 2003 statistics from www.energystar.gov&nbsp; to understand why:
&bull; Global demand for all energy sources is forecast to grow by 57 percent over the next 25 years. &bull; U.S. demand for all types of energy is expected to increase by 31 percent within 25 years. &bull; By 2032, electricity demand in the U.S. will grow by at least 40 percent. To meet this demand increase, new power generation equal to nearly 300 1,000-megawatt power plants will be needed by 2030, and to pay for these new power plants, energy costs will increase. The good news is that companies can reduce overall energy consumption to impact the bottom line.
Opportunities to capture energy management savings are real. If we look at buildings and industrial facilities as a single component of energy use in the U.S., we see some dramatic numbers. The total number of buildings and industrial facilities in the U.S. has grown to over 5 million with an annual energy cost estimated at $202.3 billion. It is further estimated that at least 30 percent of the energy consumed in these buildings is done so either inefficiently or unnecessarily. Certainly there is both reason and opportunity for energy management.
Anyone with a home appliance is sure to have heard of Energy Star. Energy Star also has a program that focuses on buildings and industrial plants. It has developed focus groups, key performance indicators, and best practices for specific industries, such as corn refining, food processing, petrochemical manufacturing and oil refining. Energy Star&rsquo;s seven-step system has helped many industrial facilities achieve 10 to 20 percent savings on energy costs. With electricity bills easily exceeding $100,000 per month for a large processing facility, a conservative 10 percent savings results in annual savings of $120,000 in electricity cost alone.
Good energy management is a process. Single projects will reduce energy costs, but without a process in place to keep them down and monitor them, the costs will creep back up. The metaphor of low-hanging fruit applies. Basic, quick and easy energy reduction projects produce immediate energy savings, but that low-hanging fruit will grow back time and again, if there is not a process to prevent it from doing so. 7-Step Energy Star Program There are three things to do first when making a commitment to continuous improvement, the first of the seven steps. Consider appointing an energy director&mdash;one with a personal passion for energy management&mdash;to take the lead in setting goals, tracking progress and promoting the energy management program. This person is not necessarily a technical expert, but should understand all aspects of your business and how energy management will help achieve both financial and environmental goals. Depending on the size of the organization, the energy director role could be full time or part time. It is common for a facility manager, lead process engineer or a plant manager to fill the role of energy director. Outside consultants could also support this role. With the energy manager identified, form a dedicated energy team to execute the facility&rsquo;s energy management activities and ensure integration of best practices across the facility. Include individuals from all major areas of the facility. Then, institute an energy policy to serve as a vision statement and provide a foundation for future decisions. This policy is the base for setting performance goals and for integrating energy management into the organizations&rsquo; culture and operations.
The second step in the Energy Star program is assessing performance, which requires reliable information. Think about the desired&nbsp; level of detail when considering which data to track. For example, do you want to look at overall service entrance metering for natural gas and electricity or, is submetering specific areas better? Account for all energy sources and uses and gather two years of monthly data, both cost and quantity. In addition, collect facility and operational data such as hours, production, units produced, weather history&mdash;anything impacting energy consumption in the two-year time period. The data may be needed to be normalized, especially if multiple facilities are to be compared.&nbsp; Normalization factors include climate zone, facility size, weather history, hours of operation, product type, etc. Establish a system to store and track the information using any number of tools from a simple spreadsheet to an energy management software package.&nbsp; Utility companies are one resource for such tools. Evaluate the tools for the level of detail, the ease of use and maintenance and ease in reporting.
With data in hand, use it to establish baselines, using metrics that effectively express good energy performance for a facility. This might be per square foot or per unit of production. Evaluate progress using benchmarks such as past performance, performance at other facilities, industry averages, etc. Another approach is to benchmark against best practices, a more qualitative approach. Analyze trends, developing a use profile to measure peaks and valleys. Identify areas of high-cost energy use, and identify data gaps. From a qualitative standpoint, gather information and opinions about lessons learned. Ask others what they believe to be the energy &lsquo;hogs.&rsquo; Review policies and procedures to determine if energy management is addressed in all areas. Technical assessments and audits are commonly outsourced. External advisors often have greater potential to see things overlooked by those close to the process. They also have perspective of other industries and facilities that could help improve your facility.
Setting goals is the third step in the Energy Star program, taking your energy management program to a working level using information and research you have assembled to create tangible working goals. First consider the scope of the goals. Are the goals for the entire organization or a specific facility? What time periods are addressed? A short-term or annual goal may be quite different than a long-term goal. Focus on making specific goals, estimating their potential for improvement and tie it to a defined amount of energy reduction. Some examples of goals would be to reduce energy consumption relative to output by 10 percent or by a specified unit of measurement such as Btu, or to achieve a 20 percent improvement in energy performance within five years. Action, Implementation With goals in place, step four is to create an action plan. Use results from any technical assessments and audits to help identify action items and establish a monitoring system. Ensure the right people are in place and given the responsibility to meet the stated goals. Action plans can include repeated energy audits to build momentum and improvement ideas.
The implementation phase in step five is where a program succeeds or fails. Many great plans end up gathering dust on a shelf somewhere. A good implementation plan includes a good communication plan. Identify key audiences, determine the information they need and how to reach them. Celebrate small wins to maintain momentum. Invest in training to help people understand and implement energy changes. When personnel performance is tied to energy goals, and environmental responsibility is included, people respond.
The process continues in step six with regular progress evaluations.&nbsp; A formal review compares results to the action plan, prompting performance reassessments and the updating of goals and action plans. Be sure to share it with others in your company, and do not allow lessons learned to be missed or overlooked. Use what you have learned to establish best practices.
The final step recognizes it is important to let people know that progress is being made. Look for both internal and external outlets for celebrating accomplishments&mdash;a great motivator for employees, and a great public relations tool to help outside people understand just how important your company thinks it is to care for the environment.
Energy management is a continuous process, not just a single project. It is realistic to save 10 to 20 percent on energy bills through hard work that pays off with better margins and profit.&nbsp; It takes time to address any complex issue. Now is the time to get started before energy costs increase even more. Author: Jaron Vande Hoef, P.E. Senior Project Engineer, Principal, Interstates Engineering jaron.vandehoef@interstates.com

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Commitment to continuous improvement helps small steps 
become 10-20 percent savings

Energy Management: Project or Process

In the past several months, EPA has issued Clean Air Act Section 114 Information Requests to numerous ethanol production facilities across the country, seeking information concerning all aspects of their operations. These requests generally seek historic performance and specification data for different processes, including scrubbers, thermal oxidizers, boilers, dryers, flares, storage tanks and loadout equipment. Some requests appear to highlight venting of pressure relief valves and header connections on certain processes. Due to the nature of these requests and EPA&rsquo;s broad enforcement authority, it is essential that these requests be taken seriously and that facilities respond to the agency&rsquo;s requests in a timely fashion. Failure to do so can result in fines up to $37,500 per day of violation.
In issuing a Section 114 Information Request, EPA may be trying to develop a regulatory scheme for an industry, pursuing enforcement action against a particular company for violations of the Clean Air Act, or simply trying to understand how an industry handles some operational or technical issue. Regardless of the agency&rsquo;s intended use of the information it collects, companies receiving a Section 114 Information Request are advised to seek legal counsel prior to responding.
Section 114 of the Clean Air Act provides EPA broad authority to request information from any person who owns or operates an emission source, who manufactures emission control or process equipment, or any other person the agency believes can assist in achieving its regulatory or enforcement objectives. Section 114 also authorizes EPA to require the recipient to audit processes, install emission monitoring equipment or perform stack testing. EPA has similar authority to request information pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act and the Resource Conservation and Recovery Act.&nbsp;
The agency has been known to ask for information on numerous topics. The range of topics is often dictated by the agency&rsquo;s intended use of the information. For example, if the agency is seeking to pursue enforcement action, a Section 114 Information Request may ask for specific information about a facility&rsquo;s operational history, recent equipment installations and emission monitoring data. Although addressed to one facility, such requests are often issued on an industry-wide basis, indicating EPA has targeted that industry for a regional or national &ldquo;enforcement initiative&rdquo; on a particular regulatory topic. On the other hand, if the agency is seeking to develop a regulatory scheme, a request may be geared toward manufacturers or suppliers of equipment for a particular industry, and may ask for information about the type, size and operational needs of an industry&rsquo;s standard equipment and process lines. Importantly, EPA has been known to use information from manufacturers or suppliers&mdash;including the names of facilities at which certain equipment has been purchased or installed&mdash;to assist in enforcement initiatives.&nbsp;
Section 114 Information Requests often require the recipient to gather and produce information and data that can be years, and sometimes decades, old. All such requests will include detailed instructions for how requested information is to be organized and produced and what, if any, additional narrative explanation is required by the agency to provide context for the data it is receiving. EPA requires that a response be certified by an individual as true and complete. It is essential to remember that, unless it is deemed confidential business information (CBI), everything submitted to EPA becomes subject to Freedom of Information Act requests by the public. Although a person can request certain information be treated as CBI, such a request must be properly substantiated. As such, any information gathered for submittal to EPA must be carefully reviewed to ensure that submittal to the public agency will not waive any other confidentiality, such as attorney-client privilege or work-product.&nbsp;
Aside from data gathering, Section 114 also authorizes EPA to perform on-site facility inspections after receiving consent from the owner or a warrant from a court. Note that many ethanol facilities have been issued Title V air permits that effectively grant EPA consent. EPA inspectors may refuse to undergo site-specific safety training prior to the inspection and could consider such demands as a denial of access to the facility. Authors: Todd Palmer, Attorney, Michael Best &amp; Friedrich LLP (608) 283-4432 tepalmer@michaelbest.com &nbsp; Anna Wildeman Attorney, Michael Best &amp; Friedrich LLP (608) 283-0109 ajwildeman@michaelbest.com

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Ethanol Producers Field EPA 114 Information  Requests

For the average non-European it is difficult to understand why in Europe so many passenger cars run on diesel instead of gasoline. Knowing that trucks, buses, ships, trains and planes all need diesel to get propelled, you could expect that the preferred fuel for lighter modes of transport would be gasoline. The logical result: Europe&rsquo;s supply and demand for fuels is not in balance. We are rather short on diesel and long on gasoline.
The unbalanced tax structure on fuels is making the situation worse by the day. By subsidizing diesel, drivers will not move away from diesel cars. As the diesel price at the pump stays well below the price of gasoline, there is no direct visible incentive to change over to gasoline engines.
Take as an example the country where I live, Belgium. Why do 9 out of 10 passenger cars run on diesel? More miles per gallon and lower costs per gallon are all good for the consumer. But at macro-level there are some real negatives: less income for the state (lower taxes); more environmental costs to adjust the supply shortage and shipping massive volumes of diesel from Russia to Europe;&nbsp; increased health costs as there is an increased risk of heart and respiratory diseases due to more polluting particles in the air.
Looking at the total picture, the case for stimulating diesel is not that obvious at all. As long as regulators refuse to change the dynamics of the fuel market, however, the situation for gasoline demand will continue to decrease. In almost every EU member state we see consumption of gasoline going down. Even in an ethanol/gasoline-loving country like Sweden, diesel cars are becoming more popular by the day.
Of course, the decrease in gasoline consumption is not just due to an increased number of diesel drivers; it is also partly the result of gasoline engines finally becoming more fuel efficient. Also, the fact that smaller cars are getting more popular for economic reasons means less fuel consumption. For the ethanol sector, this is potentially a worrying development: less gasoline volume obviously means less ethanol blended in.
So, is it possible to change the tide and still get more ethanol into the motor fuel stream?
Besides the obvious, but contentious change in taxation structure, there are options such as promoting E85 and going from E10 to E20/25. These higher blend solutions will not be hailed by the oil industry as great solutions. Promoting E85 is most likely a kind of horror scenario for the oil industry. An E20 scenario is possibly a more palatable solution. Due to expected indirect land use change implications, the environmental performance of biodiesel is now under scrutiny. More ethanol use could then compensate for the reduced use of biodiesel.
But there is another solution: getting ethanol into the diesel fleet. This option would kill two birds with one stone: countering the effects of less gasoline demand and contributing to closing the gap in diesel supply. In Europe, there is a good example of such a way forward.
The Swedish truck company, Scania, has shown for a number of years that it is possible to have diesel trucks/buses running on ethanol. A mixture of 95 percent hydrous ethanol and a few chemicals (ignition improver, lubricant additive, corrosion inhibitor) will run in a converted diesel engine. In the Swedish city of Stockholm, over 400 buses use this engine and fuel, in what is viewed as a very successful project.
Scania has plans to roll out more of these engines in the rest of Europe. To my mind this could be a clear win-win situation: more ethanol, less diesel&mdash;looking beyond the obvious. Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org

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Looking Beyond the Obvious

They say the reason a little dog doesn&rsquo;t back down from a big dog in a fight is that dogs don&rsquo;t have mirrors. The little dog knows he&rsquo;s looking at another dog, and in his mind, he&rsquo;s just like that dog. For the same reason, a German shepherd will recoil at the site of a Shih Tzu. The big dog doesn&rsquo;t know he&rsquo;s the big dog.
Sometimes, it&rsquo;s good to not know that you&rsquo;re not the big dog; sometimes it helps to take a look in the mirror.
Each spring, the American Coalition for Ethanol invites our members to gather in Washington, D.C., for a couple of days on Capitol Hill, talking to elected officials about the importance of ethanol to our nation&rsquo;s fuel supply. In preparation for this year&rsquo;s event, we held up a mirror to our industry, convincing our members to size themselves up and recognize the scale of ethanol and beneficial impact it has on our country.
We work in an industry where the big dog looks at himself in the mirror all day, every day&mdash;in that kind of mirror that makes things appear larger, and taller and with bigger shoulders. That view is also the one they use in their advertising and &ldquo;studies,&rdquo; and it&rsquo;s the one they bring to Capitol Hill when they tell Congress that if they just continue to let the Big Dog eat, Big Oil will protect us from everything. Well, everything but high gas prices, pollution, high consumer costs from expensive transportation . . .
But I digress. What ACE saw in the mirror when we looked at the ethanol industry was that, although we&rsquo;re not THE Big Dog, we are A Big Dog. Consider these examples:
The Bakken Oil field is a big deal right now&mdash;lots of jobs, lots of oil.&nbsp; If you took all of that oil and made it into gasoline, and then added U.S. ethanol to it, you&rsquo;d have E85. In other words, U.S ethanol plants provide four times the auto fuel that the Bakken field can produce right now. At its expected peak, gasoline from Bakken oil will be less than half ethanol&rsquo;s volume right now.
Keystone XL pipeline and the Arctic National Wildlife Reserve are also projects put forward as solutions to our nation&rsquo;s energy and employment woes. Those will each carry&mdash;at their expected peak&mdash;700,000 barrels of oil a day. That&rsquo;s very good. That would make 5 billion gallons of gasoline each. Those two, combined with another project the same size, would be about as big as ethanol (assuming no growth in ethanol the 10 years it would take those projects to get to full speed).
We took those facts to the hill, and shared them with friend and foe alike, and told them that they were absolutely right when they passed the renewable fuels standard&mdash;and that they should continue to support it. We mentioned that ethanol is a buck cheaper than gas right now, and that E15 would be about 15 cents less than unleaded gasoline, if everyone who was holding it up would let this medium-sized dog out of its kennel. Most importantly, we reminded them that we are doing all of it without subsidies. We don&rsquo;t eat like the Big Dog eats. The object in your rear view mirror is about as big as it looks. Woof, woof. Author: Ron Lamberty Senior Vice President, American Coalition for Ethanol (605) 334-3381 rlamberty@ethanol.org

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Beware of Dog

The driving season is upon us, and Americans across the country are again feeling the pain of skyrocketing gas prices. Whether it is going to work, school or a well-earned vacation, out-of-control gas prices have a tremendous economic impact on our nation&rsquo;s motorists and our economy. Unfortunately, this time of year also brings us what is fast becoming an unwelcome American tradition&mdash;digging even deeper into family finances to pay for filling the tank with record-priced gasoline. Gas prices are well above $4 a gallon, and in some states could be more than $5 by the summer. High gas prices mean higher transportation and food costs. Yet we have the solution to high gasoline prices right under our noses, in the form of clean, renewable ethanol&mdash;an alternative fuel that delivers higher octane to motor fuel and sells at a buck less a gallon than gasoline on the commodity exchange.
By increasing blends of ethanol into motor fuel, we can reduce overall prices at the pump. Growth Energy is committed to working with all our partners in the industry, including fuel retailers, to deliver E15 to the marketplace. E15 gasoline has been approved by the EPA for all vehicles built since 2001&mdash;or more than 80 percent of the vehicles on the road today&mdash;after exhaustive, rigorous engine and emissions systems testing.
Many retailers and fuel providers are already stepping up to the plate to help lower gas prices by registering to sell E15. While there is some reluctance by retailers to offer E15, mostly as a result of scare tactics by Big Oil, we need to continue to urge the adoption of E15 all across this great nation. E15 can replace up to 7 billion gallons of gasoline, create over 130,000 jobs, improve our environment and offer savings to consumers at the pump.&nbsp;
Not only does E15 save consumers at the pump, at 113 octane, ethanol presents a unique opportunity to increase engine performance with higher-octane fuels, which is an important goal as U.S. automakers manufacture more high-compression engines to increase fuel performance.
Growth Energy has already begun the effort to open the fuels market and give Americans the fuel choice they deserve. In the fight for public opinion, Growth Energy&rsquo;s American Ethanol partnership with NASCAR has shown fans across the country that if ethanol is good enough for NASCAR&rsquo;s racecars, it&rsquo;s good enough for your street cars. NASCAR made the switch to E15 and is nearing two million miles with the fuel without incident.
Ethanol is not a &ldquo;someday&rdquo; solution to our current energy crisis. It is here today. The American ethanol industry has extra capacity that can be used today and, with the development of cellulosic ethanol from biomass feedstocks such as corn cobs or other waste, we can produce enough ethanol right here in America to displace all of our imported oil. But as long as we allow our fuels market to remain captive to foreign oil, our nation will be continue to be exposed to oil shocks&mdash;similar to 2008&mdash;whenever Iran sends boats in the Strait of Hormuz, or oil companies reduce refining capacity, or China puts another million cars on the road. All these things are out of our control, and any one of them will mean that our nation will continue to be held captive to foreign oil. This must change. Author: Tom Buis CEO, Growth Energy (202)545-4000 tbuis@growthenergy.org

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Solution to Today's Energy Crisis is Here Today

America&rsquo;s addiction to foreign oil has had a significant impact on our economy and our national security. The millions of barrels of petroleum imported to the United States not only cost billions of dollars, they also require putting military lives in danger protecting the fuel supply lines. The only effective strategy for improving U.S. energy security is in reducing the nation&rsquo;s oil dependence.
At 10 percent of the U.S. fuel supply, used in 97 percent of the nation&rsquo;s gasoline, ethanol provides a domestic, renewable alternative to imported oil. In 2011, the use of 13.9 billion gallons of American ethanol helped reduce the need for imported oil by 485 million barrels. That is roughly equivalent to 13 percent of total U.S. crude oil imports, saving the American economy $49.7 billion.&nbsp;
Reducing oil import dependency has been a national security priority and policy objective since the 1970s. Yet, only since 2005, the year the renewable fuel standard (RFS) was first enacted, has the U.S. seen a reversal of the long-term trend of increasing oil import dependence. During this time frame, America&rsquo;s oil demand has decreased while imports have fallen from 60 percent to 45 percent, in large part due to the increase in domestic ethanol production. In 2010, U.S. oil imports fell below 50 percent for the first time since 1997. Without ethanol, without the foundation of the RFS, our oil imports would have been 52 percent last year. Maintaining critical policies like the RFS is essential to increasing our national energy security.
While gasoline demand is currently at its lowest point in more than a decade, prices at the pump continue to run up due to the increasing cost of crude oil. Nevertheless, prices of gasoline would undoubtedly be higher without the enormous contribution of ethanol in our fuel.&nbsp; A study by Iowa State University and the University of Wisconsin found that in 2010, domestic ethanol production helped lower gasoline prices by 89 cents per gallon. That means the average American household spent $800 less on gasoline than would have otherwise been the case. The researchers also found that for the first decade of the 21st century, growth in ethanol production and use helped keep gasoline cheaper by an average of 25 cents per gallon. As such, American drivers saved an average of $35 billion annually on gasoline purchases from 2000 to 2010.
The Energy Information Administration recognizes the contribution ethanol has made to increasing national security stating, &ldquo;increases in domestic biofuels production&hellip;played an important role in moderating import dependence.&rdquo; EIA also says ethanol growth since 2005 is &ldquo;helping to displace traditional hydrocarbon fuels and so reducing petroleum import needs.&rdquo;
Ethanol presents the U.S. with a critical opportunity to expand domestic energy production and reduce imports. Today, ethanol is the only commercially viable renewable fuel alternative we have to imported oil. The future of energy independence, and of our security both abroad and at home, is taking place right here, right now, every day, in ethanol plants across this great nation. Author: Bob Dinneen President and CEO of the Renewable Fuels Association (202) 289-3835

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Ethanol: Increasing National Security

The ethanol industry broke some records early this year: record ethanol stocks were reported in the first quarter as well as a record spread between ethanol prices and gasoline for blending, with ethanol more than $1 lower. Those record numbers, plus negative margins and the looming blend wall, raise the question of what it might mean for the industry. Associate Editor Holly Jessen sets out to learn what the industry is saying and reports what she learns in her production feature starting on page 34. While no one has a crystal ball and many express concerns that the ethanol industry needs to make adjustments, all agree the industry has become much stronger in the past five years, since the 2008 downturn, and is applying the lessons learned.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As the first-generation ethanol industry reaches maturity, the cellulosic ethanol industry is readying its commercial debut. In this issue, EPM Associate Editor Kris Bevill takes a closer look at several projects expected to begin producing cellulosic ethanol later this year, including a 13 MMgy facility nearing completion in Crescentino, Italy. Guido Ghisolfi describes the approach his family-held Mossi &amp; Ghisolfi Group is taking to cellulosic ethanol.
For other advanced biofuel developers, a major hurdle to overcome is getting the feedstock of choice approved for the renewable fuel standard. Associate Editor Erin Voegele discusses the work underway to approve the pathways for three such grassy feedstocks: napiergrass, giant reed and energy cane. Jessen interviews several developers of yet another feedstock. While adding ethanol production capacity to sugar-producing plants has been a model in Brazil and Europe, the North American developers Jessen speaks with are looking at energy beets.

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First-Gen  Adjustments, Second-Gen  Developments

The year 2011 turned out to be a good one for ethanol producers. Even with high corn prices the industry was profitable, especially in the fourth quarter, bolstered partially by record exports. Then, in December margins tightened dramatically, and ethanol stocks began to build, setting the stage for a whole new landscape.
As a result, margins were ugly in February and were shaping up pretty poorly in March, said Mike Chisam, president and CEO of Kansas Ethanol LLC, a 55 MMgy plant in Lyons, Kan. On the other hand, the good news is that margin structures can change for the better as rapidly as they fall, he added. Production Reductions In early February, ethanol industry giant, Green Plains Renewable Energy Inc., announced it was slowing production at two of its nine ethanol plants. Although the company didn&rsquo;t specify which plants reduced run rates, it did identify those plants as the most inefficient facilities. Todd Becker, president and CEO of Green Plains, told EPM the company was evaluating the situation on a daily basis, determining if it needed to cut back at additional Green Plains plants, as well as when to return to full production. &ldquo;It will last as long as we need to keep them lower, relative to the earnings power in those plants,&rdquo; he said.&nbsp;
Green Plains was arguably the most notable example of an ethanol producer reacting to tight ethanol margins and high ethanol stocks by reducing run rates. While a handful of other ethanol plants also announced production reductions, experts agree many others were quietly doing the same without making the information public. &ldquo;Everybody has got to at least be thinking about doing it,&rdquo; said Donna Funk of Kennedy and Coe LLC. &ldquo;Some are just at the point to take action quicker than others, due to different philosophies.&rdquo;
While Kansas Ethanol LLC didn&rsquo;t slow its production rates, the company did strategically go into its three-day spring maintenance shutdown early. And, Kansas Ethanol wasn&rsquo;t the only one to make that move, Chisam said. The decision to shut down at the end of February instead of in March, as usual, came about because ethanol production was exceeding demand. &ldquo;Ethanol plants just aren&rsquo;t helping themselves by continuing to crank out product and putting it out in the marketplace,&rdquo; Chisam said.
Although a 20-day supply of ethanol is less than 17 million barrels, ethanol stocks were well above that number at 22 million barrels in February and early March, according to information from the U.S. Energy Information Administration. The March 9 report showed that stocks went from what was at that time a high of 22.1 million barrels back down to 22 million barrels. As of the March 16 EIA report, however, stocks shot back up to a new all-time record of 22.7 million barrels&mdash;equivalent to a 27-day supply. Ethanol production averaged 896,000 barrels per day as of Feb. 24, 906,000 barrels per day as of March 2, 892,000 barrels per day on March 9 and 893,000 barrels per day as of March 16.
Rising ethanol stocks started at the end of 2011, when inventories were thin and margins were very attractive, prompting ethanol producers to churn out as much ethanol as possible. &ldquo;When that environment changed in terms of demand, the industry was slow to react,&rdquo; said Steve McNinch, CEO of Western Plains Energy LLC, a 50 MMgy plant in Oakley, Kan. &ldquo;The industry had record production levels the last week of December the first week of January, at a time of extremely low demand.&rdquo;
Independent of the &ldquo;gross oversupply&rdquo; of ethanol, the first quarter of the year is traditionally a time of tight margins for the ethanol industry. Gasoline demand, and therefore demand for ethanol for blending, slumps after the holidays and doesn&rsquo;t typically pick back up again until the summer driving season hits, McNinch said.
So what&rsquo;s the difference between this first quarter and other first quarters? It&rsquo;s all about contrast. &ldquo;We are running at about the same [profitability] level as we were last year at this time,&rdquo; said Rick Kment, a Telvent DTN biofuels analyst. &ldquo;We saw almost the highest margins ethanol have seen in recent history through the fourth quarter of 2011, so the challenge for ethanol producers is not that we are totally out of line from where we were in the past, but it was such a significant shift from where we were only three months ago,&rdquo; he said in late February.&nbsp;
Kment saw that reflected in the Neeley biofuels hypothetical 50 MMgy ethanol plant, an internal company model used to gauge the health of the ethanol industry. DTN uses cash prices it tracks for corn and ethanol at the rack to calculate net profitability using various assumptions. The hypothetical ethanol plant has no capital debt and would most closely represent an older ethanol plant that started operating before the ethanol bust, he said. While no two plants are alike, the hypothetical plant on paper does give DTN a good measurement tool.
In October and November 2011 the hypothetical model showed a net profitability of 65 to 70 cents, he said. Compare that to the end of February, when the figure had dropped dramatically to a negative 27 cents in net profitability per gallon of ethanol, with a corresponding net operating profit of 4 cents. As of close of markets March 14, the numbers were changed for the better at negative 18.7 cents per gallon net profitability and a net operating profit of 13 cents per gallon.
That trend is likely to continue into spring and summer, said Scott McDermott, partner with Ascendant Partners Inc. &ldquo;Once ethanol stocks come down over the next several months, the ethanol price will likely find more support as gas prices continue to rise, which will eventually result in better ethanol production margins,&rdquo; he said in mid-March. &ldquo;We are not out of the woods, but there is light at the end of the tunnel.&rdquo;
Another potential release of the margin pressure valve for ethanol producers is the next corn crop. If the early growing season looks good, it could be a predictor of a healthy corn harvest. &ldquo;If it appears to be abundant, I think you will start to see corn prices come down, which will immediately help margins,&rdquo; Funk said. What&rsquo;s Gas Got to Do with It? The New Year also brought with it a widening spread between gasoline and ethanol prices. As of the third week in November, reformulated blendstock for oxygenated blending (RBOB) and ethanol futures were virtually the same, Kment said. By the end of February RBOB was trading for $3.04 and ethanol $2.26&mdash;a 78-cent price spread. That gap continued to widen as gas prices kept rising and by close of markets March 14, $2.30 ethanol futures and $3.34 RBOB futures pushed the price spread to more than $1.&nbsp;
That attractive price spread has been promoting discretionary blending in the U.S. at the same time as export demand is also high, said Sander Cohan, analyst at ESAI Inc., which offers energy consulting services to ethanol producers and others. Those factors will continue to send a strong signal for ethanol in the marketplace. &ldquo;What&rsquo;s interesting is that although the prices will favor it, the demand for ethanol is limited by a weak gasoline market and also by limits on discretionary blending,&rdquo; he added.&nbsp;
It&rsquo;s not just a short term situation, either, McDermott said. Average annual gas demand is down more than 10 percent from peak demand in July 2007, according to EIA figures. In addition, projections are that gas demand will drop another 0.34 percent this year and will also be down slightly in 2013.
Although most experts agree low gas demand is a bigger factor, a rush to blend ethanol at the end of 2011&mdash;before the sunset of the Volumetric Ethanol Excise Tax Credit&mdash;did have an impact. &ldquo;It&rsquo;s not the major factor, but I think it&rsquo;s a factor,&rdquo; said Ron Lamberty, senior vice president with the American Coalition for Ethanol. Also the owner of two retail gas stations in South Dakota, Lamberty says he has definitely heard of cases where blenders were purchasing larger amounts of ethanol to ensure they&rsquo;d get the 54-cent tax incentive before it went away. For some the gamble didn&rsquo;t pay out.&nbsp; &ldquo;As it turned out, the price of [ethanol] dropped enough that if they bought it early or middle December they probably lost money on the deal,&rdquo; he said.
In order to take advantage of VEETC, blenders needed two things: to also be a fuel retailer, and to have plenty of storage capacity. Before VEETC expired, Internal Revenue Service-issued guidance said that blenders who sold their own fuel could collect the tax incentive when it was blended, even if it wasn&rsquo;t physically at a retail fueling station, Lamberty said.
That kind of vertical integration is what gives some ethanol producers a distinct advantage over others, said Don Roose, president of U.S. Commodities, a West Des Moines, Iowa, brokerage company that advises ethanol plants. Ethanol plants operated by petroleum companies, such as Valero Energy Corp. and Murphy Oil Corp., can continue to blend ethanol to meet blending requirements, even if margins tighten up at their ethanol facilities. Nonvertically integrated ethanol plants, on the other hand, have to take a look at other options, such as throttling back on production levels. Crystal Ball Although there&rsquo;s no crystal ball guaranteeing the future, many experts believe the ethanol industry will make it through current tough times. Tight margins for two or three months&mdash;especially following strong margins in the late third and fourth quarters&mdash;won&rsquo;t be enough to cause huge distress in the industry, says Green Plains&rsquo; Becker.
Kment agrees. &ldquo;From all appearances now, this is more of a controlled risk management issue, versus a total panic in the market, so I think that&rsquo;s going to continue to help to stabilize the market long term,&rdquo; he says.
It&rsquo;s possible there could be a few bankruptcies and it could lead to more consolidation in the industry, Funk says. But it won&rsquo;t be anything like what happened in 2009. Most ethanol plants today are better situated financially to survive a period of tight margins, having paid down debt. Back in 2008, when corn prices shot up, and in 2009, the time of multiple bankruptcies, there were more brand-new plants that were thinly capitalized and heavy on debt. &ldquo;Some of them were plants that probably never should have had money loaned to them to start with,&rdquo; she says.
As the industry continues to mature, Kment predicts more ethanol plants will model themselves after the ebbs and flows of the animal packing industry. While that industry is producing constantly, rates fluctuate based on seasonal demand, to maximize profits and minimize losses. He believes the ethanol industry will begin to develop its own model of this, rather than running at full production rates year round. The industry will also begin to take a longer-term approach to its contracts for ethanol and distillers grains, depending on seasonal patterns. &ldquo;I do expect that to be a little bit more of a fluid movement in overall demand than what we have seen in the past,&rdquo; he said. Author: Holly Jessen Associate Editor, Ethanol Producer Magazine (701) 738-4946 hjessen@bbiinternational.com

Christianson & Associates track the difference in grind margin between industry leaders and laggards participating in their benchmarking program. Figures for 2012 were not yet available at press time as data is collected quarterly. 

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East Coast, Midwest and overall U.S. ethanol stocks rose dramatically from the first of the year, according to EIA data.  

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Green Plainsâ€™ 120 MMgy ethanol plant in Bluffton, Ind., is one of nine faculties owned by the company. Although the facilities were not identified, two of Green Plains ethanol plants reduced run rates by 30 percent in response to tight margins.

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EIA data shows that ethanol production peaked in January and then dropped slowly as producers reacted to an oversupply in the marketplace.

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The ethanol industry went from booming business to tight and even negative margins in the first quarter

Reining in Production - Hunkering Down as Margins, Supplies Rebalance

An analysis recently conducted by researchers at the University of Montana utilized NASA satellite data to evaluate the bioenergy potential of the U.S. and found that farmers would need to plant biofuel crops on 80 percent of cropland or on 60 percent of current pastureland in order to produce 36 billion gallons of biofuel by 2022 as required by the renewable fuel standard (RFS). The research also suggests, however, that if technologies to produce biofuel from waste feedstocks can be commercialized, currently available agriculture and forestry residues can be utilized to meet up to 80 percent of the total 2022 RFS mandate.
University of Montana doctoral student Bill Smith led the research and co-authored a paper on the findings, titled, &ldquo;Bioenergy Potential of the United States Constrained by Satellite Observations of Existing Productivity,&rdquo; which was published in the American Chemical Society&rsquo;s Environmental Science &amp; Technology journal. He says that while there have been multiple other studies conducted to evaluate the potential of bioenergy production in the U.S., the NASA algorithm used by his group, combined with other meteorological data focused on climate and water constraints, offers a more complete and accurate estimate of the landscape&rsquo;s true production potential. &ldquo;What&rsquo;s different about our analysis is we have this explicit data for every square kilometer of the U.S., versus a lot of previous studies that use plot-level measurements that are fairly localized and have to use methods to extrapolate to different areas,&rdquo; he says. &ldquo;Some of those studies take into account biophysical factors (how they change across various landscapes), but others don&rsquo;t do that as well, so you get a wide range of bioenergy potential estimates.&rdquo;
The researchers made several assumptions when conducting the analysis. One assumption was that crop yields will remain at their current levels. Smith says this assumption was made based on previous studies that compared current productivity rates to natural productivity and found that nature produces the maximum potential. &ldquo;Even with all of our current human management, agricultural productivity is generally less than natural productivity,&rdquo; he says. &ldquo;There are exceptions, usually because of irrigation. If you irrigate in an arid climate, you get production higher than what&rsquo;s natural. [But] our thinking for things like irrigation and fertilizer were that these two factors, particularly in the U.S., are already nearing a point of unsustainability.&rdquo;
Other researchers contributing to the project included co-authors Cory Cleveland, assistant professor of soil sciences at UM, and Steve Running, director of the university&rsquo;s Numerical Terradynamic Simulation Group and Regents professor of ecology. While the results of the analysis indicated that the biofuels industry is on the right track by targeting residues for feedstocks, Running cautions that it is important to continue to focus on establishing attainable production goals. &ldquo;While we encourage the appropriate use of agricultural residues, forest slash and beetle-killed trees for bioenergy, the nation needs realistic targets of the capacity for bioenergy production that would not compete with food production,&rdquo; he says.&nbsp; &mdash;Kris Bevill

Researchers employ satellites to analyze feedstock potential

Looking Down on the Future

Sept. 30 marks the official sunset of Nebraska&rsquo;s long-running Ethanol Production Incentive Credit fund, but ethanol producers in this second-largest ethanol producing state have already earned all of the credits available for the year, essentially ending the program months in advance.
The EPIC fund housed a series of three ethanol incentive programs, the last of which has been paying qualified producers 18 cents per gallon of ethanol produced, capped at 22.5 million gallons per year per producer, since 2003, delivering nearly $180 million to the 10 plants that came online between 2003 and 2008. Funds acquired through grain checkoffs provided half of the money used for the ethanol incentive program; the other half came from the state&rsquo;s general fund.
The goal of the EPIC fund was to encourage companies to establish ethanol facilities in the state. Steve Sorum, ethanol project manager at the Nebraska Ethanol Board, says the program achieved that goal. &ldquo;It was very successful, partly because it was so timely,&rdquo; he says. &ldquo;It was in effect in the building boom of the mid-2000s, so there were companies that were looking to build plants, and Nebraska provided an incentive that made it attractive.&rdquo; Payments provided through the EPIC fund allowed those producers to amortize their projects during a time when acquiring financing was difficult otherwise, he says. While many believe the corn ethanol industry has matured to the point of no longer needing financial incentives, Sorum says there is no doubt that the end of EPIC will affect the cash flow of Nebraska&rsquo;s producers, noting that producers received anywhere from $14 million to $22.5 million over the course of the program.
There are no plans currently to create a new corn ethanol incentive program in Nebraska, but Sorum says there has been discussion by the industry and legislators to form a program focused on cellulosic biofuels production. &ldquo;Because Nebraska has a well-established ethanol structure, it would be perfect for the new era of plants,&rdquo; he says.
Other Midwest states appear to have similar intentions. Last year, Minnesota also ended its ethanol producer incentive program, after providing incentives to corn ethanol producers for nearly 20 years, but wasn&rsquo;t ruling out the possibility of forming a new program for cellulosic producers. Sorum admits that because state revenues have been down in recent years, locating funding for new programs will be difficult, but because the corn ethanol industry has been such a success in states like Nebraska, legislators may find a way to make it work. &ldquo;Ethanol has become an $8 billion industry in Nebraska over the past 30 years and more than half of it happened in the last 10 years,&rdquo; he says. &ldquo;It&rsquo;s been a great addition to the economy in this state and I think it sets the tone for possible future programs.&rdquo;&nbsp; &mdash;Kris Bevill

Nebraska producers receive final incentive payments

Closing the Books on EPIC

In order to decrease enzyme or cellulase costs for lignocellulosic biofuel, such as wood-to-ethanol production, two important factors need to be considered, according to a paper published in the April edition of Biotechnology and Bioengineering. &ldquo;The cost of cellulases is not clear in the literature and should be more widely available,&rdquo; Daniel Klein-Marcuschamer, one of four researcher authors tells EPM. &ldquo;In addition, research must be done to either lower the enzyme loading, or increase the yield of ethanol at the biorefinery.&rdquo;
Klein-Marcuschamer, the director of technoeconomic analysis at the Joint Bioenergy Institute, joined researchers from Lawrence Berkeley National Laboratory, Sandia National Laboratories and the University of California-Berkeley, in publishing &ldquo;The Challenge of Enzyme Cost in the Production of Lignocellulosic Biofuels.&rdquo; The cost contribution of enzymes is a subject of debate, with some calling it a &ldquo;major barrier&rdquo; and others assuming the cost of enzymes will decrease with technological advances. For this paper, researchers said &ldquo;the vast majority of the literature to date has significantly underestimated the contribution of enzyme costs to biofuel production.&rdquo; They concluded that significant effort must be put forth to lower the cost of enzymes, and therefore, the total cost of biofuel production.
The paper examined steam-exploded poplar as a feedstock for cellulase production. &ldquo;Steam explosion is a pretreatment process in which the biomass is put in contact with high-pressure steam, and when the pressure is released, the lignocellulosic components are rendered labile to attack by the cellulases that the fungus [such as Trichoderma reesi] produces.&rdquo; Klein-Marcuschamer says. &ldquo;As the fungus &lsquo;eats&rsquo; the poplar, it produces an excess of cellulases that can be harvested for selling.&rdquo;
After calculating the cost per kilogram of enzyme production, the researchers conceptualized the cost per gallon contribution of enzymes for a corn stover-to-ethanol process. With typical enzyme loading of filter paper unit per gram (FPU/g) of cellulose the researchers calculated a cost range of 68 cents to $1.47 per gallon of ethanol produced. If, on the other hand, enzyme loading was reduced to 5 FPU/g cellulose, the range was calculated at 34 cents to 73 cents per gallon of ethanol. Other studies pegged enzyme costs as low as 10 cents per gallon of ethanol produced to 40 cents per gallon.&nbsp; &mdash;Holly Jessen

Breakdown of the annual operating cost of the designed enzyme production facility. Nearly half of the cost of production is associated with capital investment, including depreciation, insurance, maintenance and other costs.

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It is commonly assumed lower in literature


Researchers Delve  into Enzyme Costs

Research showing consumers are willing to pay a premium for ethanol was published in the March issue of the Journal of Environmental Economics and Management. Soren Anderson, a Michigan State University economist, calculated that when ethanol increased 10 cents per gallon above the price of gasoline, there was only a 12 to 16 percent decrease in demand.
Frankly, Anderson was surprised at what he found. &ldquo;I was expecting to see a sharp reduction in sales of E85 the moment that the price rose above the price of gasoline on an energy-adjusted basis,&rdquo; he tells EPM. &ldquo;But this doesn&rsquo;t seem to be happening. Instead, it appears that many E85 buyers are willing to pay a premium for the fuel, and some fraction of these buyers continue to buy the fuel, even when its price rises above that of gasoline.&rdquo;
Anderson developed a model based on information gathered in Minnesota from 1997 to 2006, during which nearly 5,000 monthly observations of ethanol prices and sales volumes were made at more than 200 retail gas stations. The economic analysis is one of the first to examine the way in which consumers value ethanol, Anderson says. Previous analysis assumed consumers viewed the two fuels in the same way, with ethanol and gasoline considered perfect substitutes after adjusting for the lower gas mileage of ethanol.
The findings have economically significant implications for policy decisions affecting cellulosic ethanol, he says. Looking ahead to 2022, he calculates that the cost of producing cellulosic ethanol will be considerably higher than the projected cost of gasoline. &ldquo;If consumers treat gasoline and ethanol as perfect substitutes, only buying the fuel that gives them the lowest fuel cost per mile, then fuel retailers will need to price ethanol at or below the price of gasoline for consumers to buy ethanol,&rdquo; he says. This means, he adds, that producers will lose money in an attempt to comply with the renewable fuel standard (RFS)&mdash;unless cellulosic ethanol is subsidized or consumers are willing to pay a premium for the fuel.
Despite the encouraging results of his study, Anderson concludes it wasn&rsquo;t enough to justify the ethanol blending mandates contained in the renewable fuel standard. &ldquo;This reduces substantially the simulated efficiency cost of an ethanol content standard, since some households choose ethanol without large subsidies, mitigating deadweight losses,&rdquo; he says, adding that mandating ethanol blending is expensive. Another consideration is the amount of emissions ethanol actually reduces, a topic he notes is hotly debated.
Ethanol industry supporters, on the other hand, point to the role of the RFS in moderating gasoline prices, reducing imports of foreign oil and supporting growth of the advanced and cellulosic biofuels sectors. On March 27, a coalition of eight groups, including the Renewable Fuels Association and Growth Energy, sent a letter to Congressional leaders urging them to reject attempts to reduce, waive or eliminate the RFS. They pointed to a Center for Agriculture and Rural Development study that found that in the decade from 2000 to 2010, ethanol reduced gasoline prices an average of 25 cents per gallon, saving consumers $34 billion yearly. The groups also partially credited the RFS with reducing oil imports below 50 percent for the first time in 2010. Finally, they pointed to the need to bolster the second-generation biofuels industry still in its infancy. &ldquo;Efforts to amend or reform the RFS would send a chilling signal to a marketplace just when the advanced and cellulosic biofuels industries are on the cusp of commercial production to help meet this nation&rsquo;s energy independence and security needs,&rdquo; the letter says.&nbsp; &mdash;Holly Jessen

Economist finds buyers willing to pay more

E85 loyalty

Twice a year, Ethanol Producer Magazine publishes an updated Fuel Ethanol Plant Map, which includes information about both existing ethanol plants and projects under development. The latest plant map&mdash;mailed with the May issue&mdash;shows a steady, small increase in capacity among U.S. ethanol plants. A year ago, the map showed 14.31 billion gallons in capacity, which grew by about 3 percent by the fall map, and by another 3 percent from fall to this springâ€•it now shows 15.19 billion gallons. To clarify, this number includes idled plants, a few of which have been idled for well over a year. Plants stay on the map until it has been verified the facility has been dismantled.
Much of that capacity creep is occurring in the 10 top producing states, which saw a 330 MMgy increase in capacity from spring to fall &rsquo;11 and another 201 MMgy increase from last fall to this spring, a 2.7 percent and 1.6 percent increase respectively. The total increase from a year ago to last fall was 436 million gallons and from fall to this spring, 439 million gallons. From the 2011 spring map to the 2012 spring map only two ethanol plants came online. Both Aventine Renewable Energy-Mount Vernon LLC and Hereford Renewable Energy LLC are plants for which construction had been halted and started up again. The remaining capacity increases can be accounted for as ethanol producers ratchet up production numbers with efficiency gains.&nbsp;
The list of U.S. plants under construction went though some changes from the fall plant map to the current plant map. Aventine&rsquo;s Aurora West facility was listed as under construction. The plant was completed but not commissioned, and as construction is no longer active at the site, it was flipped to the proposed plant list. Of the three remaining starch/sugar plants on the under construction list, AltEn LLC and Aventine/Riverland Biofuels facilities, both previously operated, are now under new ownership and work is ongoing to upgrade and restart them. Renewable Energy Technologies LLC, on the other hand, a 2.2 MMgy beverage, food processing waste-to-ethanol facility is a brand-new facility expected to come online this summer.
Archer Daniels Midland Co. takes the lead in top ethanol producers once again, reporting 1.72 billion gallons of production capacity. ADM doesn&rsquo;t report individual plant capacities, so the plant map reflects a total number rather than individual plant capacities. ADM&rsquo;s capacity includes its rather substantial maximum wet mill capacity, where presumably a large portion of the starch fraction is converted to products other than ethanol.
Given that unknown ADM fuel ethanol number, Poet LLC will most likely continue to carry the standard as the nation&rsquo;s largest dry mill ethanol producer at 1.699 billion gallons. Third largest is Valero Renewable Fuels at 1.2 billion gallons and fourth is Green Plains Renewable Energy at 740 MMgy. If you add the capacity of the 78 ethanol plans run by the top 10 producers, it comprises half the U.S. ethanol industry&rsquo;s capacity, or 7.54 billion gallons.
Corn still leads the pack in first-generation ethanol plants under development, feeding 861 million gallons of corn-only plants and another 250 million gallons using corn and stover and other cellulosic feedstocks. In cellulosic ethanol project development, all forms of woody biomass lead the feedstock choice at 174 MMgy of the existing, under construction and proposed projects on the spring map, or roughly 42 percent. Corn stover and cobs and municipal solid waste are the next most popular at about 20 percent each, or 80 MMgy and 78 MMgy respectively. &mdash;Susanne Retka Schill, Holly Jessen

Corn dominates the list of ethanol plants using the first-generation sugar and starch conversion process, and even dominates among proposed plants, many of which are considering corn plus cellulosic feedstocks.

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Unlike first-generation ethanol plants, no one feedstock stands out in the list of operational, under construction and proposed cellulosic ethanol plants in the U.S. and Canada. 

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EPM map cites 6 percent capacity gain from spring 2011

Capacity Creep

1. Scott Thurlow has been named president of the Canadian Renewable Fuels Association, replacing Gordon Quaiattini who stepped down from the position last year. A lawyer, Thurlow most recently served as vice president with Temple Scott Associates, where he provided strategic government relations advice to businesses and nongovernmental associations. &ldquo;Renewable fuels are already a significant part of Canada&rsquo;s energy mix,&rdquo; Thurlow said. &ldquo;I look forward to collaborating with the CRFA&rsquo;s membership to help them work with all levels of government to promote the use of renewable fuels.&rdquo; 2. Marcos Jank announced in late March that he will step down as president of UNICA, the Brazilian Sugarcane Industry Association. He will remain in the position until a successor is chosen. Jank joined UNICA in 2007 and led a major reform of the organization&rsquo;s objectives and strategy. Under Jank&rsquo;s leadership, UNICA&rsquo;s international work played a key role in two major achievements, according to the organization: the U.S. EPA&rsquo;s 2010 decision to designate sugarcane ethanol as an &ldquo;advanced biofuel,&rdquo; in recognition of its documented ability to sharply reduce CO2 emissions compared to gasoline; and the expiration at the end of 2011 of the 54-cent-per-gallon tariff. 3. Pinnacle Engineering has opened a new office in Omaha, Neb., with Matt Henry transferring from the company&rsquo;s corporate office in Minneapolis to lead the office. Henry is responsible for air quality permits, stack test management and annual compliance services for the renewable energy market.
4. Robert Anderson has joined legal firm Faegre Baker Daniels LLP as a partner. With 30 years of experience helping corporate clients in the energy industry on a wide range of finance and project development efforts, he will lead the renewable energy practice area of the firm&rsquo;s energy, resources and clean tech industry group. With the merger of Faegre &amp; Benson and Baker &amp; Daniels in January, the firm has more than 800 legal and consulting professionals working in the U.S. and internationally. 5. Shawn Easterly has joined Memphis-based Buckman Laboratories Inc. as its new energy center specialist working exclusively with ethanol plants.&nbsp; Buckman offers a wide range of water treatment products and services for the ethanol industry, and with the addition of Easterly&rsquo;s expertise, the company is expanding its technology and services. Most recently, Easterly was with New Age Cryo where he provided energy center consulting services as well as dry ice cleaning in ethanol plants. 6. Blake Moret, senior vice president, control products and solutions, Rockwell Automation, was elected vice chair of The Manufacturing Institute board of trustees. &ldquo;The institute is playing an important role developing our manufacturing workforce, and maximizing the impact of technical innovation,&rdquo; Moret said. &ldquo;We have an opportunity to link related activities between industry, centers of learning and government agencies.&rdquo; 7. Jim Suetholz has been appointed as the central United States sales manager for Stedman Machine Co. He has more than 17 years of experience in capital equipment sales in the mining, steel and various other heavy industries throughout North America. His responsibilities include selling crushing equipment and size reduction systems in the central U.S. 8. Novozymes CEO and President Steen Riisgaard was named the 2012 George Washington Carver Award recipient for innovation in industrial biotechnology by BIO&rsquo;s industrial and environmental section. The award honors the vision of George Washington Carver, an originator of the &ldquo;chemurgy&rdquo; movement who, more than a century ago, achieved world renown by combining agriculture and science to produce everyday biobased products, changing the nature of farm economics and sustainability. Industrial biotechnology is the modern-day equivalent, combining biotech innovations with renewable biomass to create solutions that can revitalize manufacturing and energy, according to BIO. 9. Abe Hughes and Bob Casper have joined the board of directors of Growth Energy. Hughes is the vice president North America for New Holland Agriculture. Casper is the president of Ethanol Products LLC, a subsidiary of Poet Ethanol Products. Growth Energy represents 75 U.S. ethanol producers and 63 associated companies in its advocacy efforts to promote emission reductions, create American jobs and strengthen national security through increased use of ethanol.
10. Following a 36-year career at Archer Daniels Midland Co., John Rice is retiring. Rice joined ADM in 1976 as a tax accountant. In 1993, he was elected a vice president of the company, and subsequently served as president, North American oilseeds and food oils; and senior vice president, global corn processing, bioproducts and food. In 2005, Rice was elected executive vice president, global marketing and risk management; and in 2007, he was named executive vice president, commercial and production. In 2010, Rice was named vice chairman, office of the chairman, a role designed to apply his expertise to an expanded set of strategic challenges including extracting value from existing assets and driving operational excellence. &nbsp; 11. An electrical designer at Epic Systems Inc., Angela Schwartz received the Epic Way Award at the company&rsquo;s annual meeting. Founded in 1995, Epic is a multidiscipline engineering and fabrication firm providing turnkey solutions for modular process plants and systems and other packaging and manufacturing systems. 12. The GEA Group has acquired Nu-Con Ltd. in Auckland, New Zealand, a major global supplier of powder handling components, complete powder handling systems and bulk filling lines. Sales and services in North America for GEA Nu-Con products and solutions will be handled by GEA Process Engineering Inc., which is recognized as a leader in industrial drying, thermal concentration, membrane filtration, powder processing and handling, emission control, and aseptic liquid filling as well as process integration and process automation solutions. 13. Burns &amp; McDonnell has received a Grand Conceptor award from the American Council of Engineering Companies&rsquo; Missouri Chapter for a cellulosic ethanol demonstration project. ZeaChem Inc. hired Burns &amp; McDonnell in 2010 to provide engineering design, procurement and construction management services for its 250,000 gallon-per-year demonstration facility in Boardman, Ore. The Grand Conceptor is the highest recognition given by the ACEC for engineering excellence. 14. Perten Instruments is celebrating its 50 year anniversary. Founded on the commercialization of the now, world standard falling number method to determine sprout damage in grains, Perten is at the forefront of testing and analysis of grains, grain products, feed and food production and provides both functional and compositional forms of analysis. Today&rsquo;s systems include analyzers for in-line/on-line devices, interfacing to plant systems and automation.
=====
Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to (701) 746-8385, or email it to sretkaschill@bbiinternational.com. Please include your name and telephone number in all correspondence.

Jim Suetholz is the new sales manager for Stedman Machine Co. in the central U.S. 

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Shawn Easterly has experience in training, operations and troubleshooting at ethanol plants, including five years with ICM Inc. working on the startup of numerous plants.  

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Coming from the San Francisco office of Foley & Lardner, Robert Anderson joins Faegre Baker Daniels to lead the renewable energy practice.

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CRFAâ€™s new president, Scott Thurlow brings first-hand experience in government affairs, having served as director of parliamentary affairs fro the former Minister of Natural Resources in Canada. 

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Business Briefs

When it comes to offering a place for cellulosic ethanol producers to prosper, Iowa rises to the top of the list. The state lends key assistance on a number of different fronts. From research support to the crucial infrastructure ethanol producers need for operations, state government in Iowa is a willing partner to companies making significant capital investments and creating well-paying, high-quality jobs.
As the nation&rsquo;s top corn-producing state, Iowa leads the U.S. in raw biomass production to fuel the biorenewables industry, with the ability to harvest 15 million to 20 million dry tons of biomass each year. That makes Iowa a natural location for cellulosic ethanol companies looking for a reliable source of feedstock. In cases where corn stover is used as the feedstock, it takes an organized effort to develop and nurture the supply chain, something that partnerships in Iowa have helped build for cellulosic ethanol producers locating operations here.
The concentration of raw materials in Iowa also helps the state lead the way in developing value-added, biomass-based fuels and chemicals. Developing State Government Partnerships With Iowa&rsquo;s choice to be a leader in developing the biosciences, biofuels and bioprocessing sectors, comes attentiveness to their needs. Iowa offers a number of potential partnerships with state government to help cellulosic ethanol developers. Those partnerships could include assistance with the following: &bull; Tax incentives. &bull; Research. &bull; Feedstock supply chain. &bull; Specialized workforce. &bull; Finding plant efficiencies. &bull; Energy sources. &bull; Infrastructure. And, when cellulosic ethanol companies are looking for air and water permits for their facilities or are facing other regulatory issues, Iowa&rsquo;s state government is more focused than ever on making it easier for them to proceed through the regulatory process so they can get on to doing business.
To make the most of partnerships with state government in Iowa, it helps for cellulosic ethanol developers to identify what assistance they might need as they explore locations. A special Iowa working group, made up of state and federal officials, the Iowa Farm Bureau Federation and other organizations, can help provide technical and financial assistance to value-added agricultural businesses. The Value Added Agriculture Support Team has a history of working with ethanol projects and others to add value to Iowa commodities.
The biggest issue VAAST has worked on in the area of cellulosic ethanol producers is the logistics of moving cellulose&mdash;in most cases corn stover&mdash;and building the kind of structure that rewards farmers enough to pay to harvest it and, in turn, transport it. Iowa Advantages One significant advantage Iowa offers qualified cellulosic ethanol producers is its refundable Research Activities Credit for research and development (R&amp;D) investments. The state is one of only a handful that offers a refundable research activities tax credit. Credits may be paid in cash directly to the company when its tax liabilities are met. It is just one of the ways Iowa rewards innovation by companies investing heavily in R&amp;D and in creating cutting-edge advantages in biofuels and other industries. Iowa has been consistent in its support for the credits over the years when federal research credits have fluctuated.
Iowa&rsquo;s High Quality Jobs initiative, administered by the Iowa Economic Development Authority, is another potential source of tax incentives for cellulosic ethanol producers. Qualified companies can earn tax incentives to help offset the costs of locating, expanding or modernizing a facility in Iowa. Incentive packages are flexible to meet the needs of companies and can include tax exemptions, credits or refunds. Businesses must meet wage threshold and other requirements to qualify.
Research is another advantage. Iowa State University, located in the central Iowa community of Ames, has provided significant support to help build a thriving biofuels industry in the state. The BioCentury Research Farm is just one of the many research centers at ISU that are supporting the groundbreaking progress in biofuels. The BioCentury Research Farm assists corn ethanol plants in becoming more efficient and expanding into advanced biorefineries that produce not just fuels, but products that include industrial chemicals, food, feed and biomaterials. Its focus spans the whole system&mdash;from plant genetics to biofuels production.&nbsp;
ISU&rsquo;s BioCentury Research Farm partnered with ethanol producer Poet LLC to study the effects of corn stover harvest on soil quality as Poet&rsquo;s plant in Emmetsburg prepares to produce up to 25 million gallons of cellulosic ethanol every year. Research found that 1.5 to 2 tons of corn stover per acre can be safely harvested. The study is just one recent example of how Iowa state government&mdash;in this case one of its public universities&mdash;is able to team up with private industry to advance the next generation of biofuels.
The BioCentury Research Farm has worked with DuPont Cellulosic Ethanol to develop a supply chain of feedstock corn stover including harvesting, storing, and transporting it. DuPont&rsquo;s 25 million gallon cellulosic ethanol plant to be built nearby in Nevada, Iowa, is expected to use 300,000 tons of feedstock every year.
The research farm is also where start-up Avello Bioenergy, founded by ISU students, is building a demonstration plant to produce petroleum replacement products for precommercial testing. The company&rsquo;s bioasphalt is being used on a demonstration bike path in Des Moines.
Another important research effort at Iowa State University is the Bioeconomy Institute, which brings together efforts across the university to advance the use of biorenewable resources in producing fuels, chemicals, materials and energy. Workforce, Innovation Because of the cluster of biofuel companies and entities doing groundbreaking research, Iowa has a skilled workforce in this area. Besides its public research universities, the state is home to a strong network of community colleges that can partner with private industry to train workers. The Iowa Bioprocess Training Center operated by Indian Hills Community College was designed especially to meet the training needs of the value-added agriculture and bioprocessing industries and works with companies that include Cargill Inc.
A convergence of biofuels companies and research makes Iowa a natural place for innovation to bloom. Iowa can count more than 40 existing ethanol plants, many biodiesel plants and two commercial-size cellulosic ethanol plants coming online&mdash;as well as the cutting-edge collaboration being done at the BioCentury Research Farm
The development of coproducts that can make ethanol production more efficient and cost-effective&mdash;such as biochar in field applications, or other products in livestock feed production&mdash;is another Iowa advantage, with ISU providing the research capacity.
What started out as highly sophisticated wet-mill corn processing plants has grown into a number of additive industries helped by government incentives. In particular, Iowa&rsquo;s research activities tax credit is something that has been a benefit for companies in this area.
It all adds up to create a cluster effect of expertise. Businesses with various skills are brought together where they can learn from each other, perhaps be each others&rsquo; customers and discover something in their own businesses that could be beneficial to another, creating value to their operations.
Cellulosic ethanol projects have unique needs that must be met in order to get their operations off the ground. The state of Iowa, its research entities and other interested groups in the state can lend support to making those types of projects happen. The state of Iowa stands ready to partner with cellulosic ethanol and next generation projects planning on bringing innovative projects and high-quality jobs to Iowa.
Author: Bill Northey Iowa Secretary of Agriculture (515) 281-5321 agri@iowaagriculture.gove

A big issue for the Iowa Value Added Agriculture Support Team has been to aid cellulosic developers in working out supply chain logistics.

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Incentives, research capabilities, workforce development 
among advantages Iowa offers

Iowa Partners to Develop Cellulosic Ethanol Projects

Guido Ghisolfi is a confident man. A chemical engineer by trade, at 55, he&rsquo;s already spent three decades leading research and development (R&amp;D) activities at Italy-based Mossi &amp; Ghisolfi Group, a $3 billion per year chemical firm that ranks as one of the world&rsquo;s largest PET producers (a polymer used in plastic bottles and other products). M&amp;G, which Ghisolfi describes as a family group (Mossi and Ghisolfi are his mother and father), also happens to be constructing the largest cellulosic ethanol production facility in the world to date through its subsidiary, global engineering, procurement and construction company Chemtex. The facility will be mechanically complete this summer and won&rsquo;t begin producing until the third quarter of this year, but Ghisolfi says he already knows the process will work and will be cost-competitive with first-generation ethanol, and he&rsquo;s ready to guarantee it. &ldquo;Chemtex is ready to sell plants,&rdquo; he says. &ldquo;Come and see the plant and I&rsquo;ll sell you one. If you want to buy one now, I&rsquo;m more than happy to sell you the technology with a guarantee, and I can tell you how much it costs.&rdquo;
How is this possible? Ghisolfi traces M&amp;G&rsquo;s path toward cellulosic ethanol back to 2004, when the company acquired Chemtex from Mitsubishi Corp. Along with Chemtex came corn ethanol technology it had acquired from Delta-T Corp., which brought ethanol into Ghisolfi&rsquo;s interests. He began to examine the existing U.S. ethanol industry and quickly concluded that while corn ethanol production was an acceptable practice in the U.S., the process would not be viewed as positively in Europe, where food versus fuel concerns were more widespread. So M&amp;G decided to explore other technologies to produce ethanol in a feedstock agnostic environment from strictly nonfood biomass. The firm also realized immediately that the technology would need to be cost-competitive with first-generation ethanol and other fuels. &ldquo;We did our homework and the family was faced with a not simple situation, that is to say that there is a solution, but the ticket we have to pay to enter into this development path is a very expensive ticket,&rdquo; Ghisolfi says. The company determined the risk was worth the cost, and M&amp;G invested more than $200 million to fully fund its cellulosic ethanol activities, including technology development, the establishment of a pilot plant, developing biomass supplies to properly feed the technology, and, finally, the construction of a 15-20 MMgy production facility.
Of the handful of cellulosic ethanol developers making their way toward commercial cellulosic ethanol production, M&amp;G is the first to make it this far with no outside financial support. Ghisolfi says it is because the company has self-financed everything that it has been able to make such significant progress in a short amount of time. &ldquo;We were not slowed down by lack of funds or the need to raise capital,&rdquo; he says. &ldquo;Once the family had decided to invest a considerable amount of money, we could spend our money according to our initial plan.&rdquo;
That plan includes the commercial-scale facility in Crescentino, Italy, designed to produce up to 20 MMgy of cellulosic ethanol when fully operational. Locally obtained rice straw, wheat straw and Arundo donax will serve as the facility&rsquo;s primary feedstocks, but the trademarked Proesa process technology developed by Chemtex is feedstock agnostic, a quality which Ghisolfi says will be key to the technology&rsquo;s wide-ranging success. &ldquo;We can make cellulosic ethanol starting from any biomass, any grass, any straw,&rdquo; he says. &ldquo;You can run a week with rice straw, a week with corn stover, a week with wheat straw, without changing hardware and without changing enzymes. This gives a lot of flexibility because you can get different types of biomass from the area around the plant depending on the season [and] the cost.&rdquo;
The pretreatment portion of the Proesa technology is also lenient compared to other processes being developed, negating the need to create uniformly sized pieces of biomass, for example. Ghisolfi likens the process to boiling spinach. &ldquo;When you throw the spinach in the pot, you don&rsquo;t measure the size of the spinach,&rdquo; he says. &ldquo;It&rsquo;s the same thing here. You don&rsquo;t need particular pre-handling of the biomass [to make it] one inch by one inch or two inches by two inches.&nbsp; The biomass can be cut by hand or by machine, cut roughly or precisely, depending on the process used by the local farmers.&rdquo; The Proesa technology itself is described by Ghisolfi simply as being composed of &ldquo;a piece of iron that turns.&rdquo; He stresses that the process is low-temperature and doesn&rsquo;t require the use of acids or chemicals. There are also no requirements for rare earth metals, which means the overall cost is lower and the potential deployment area for the technology is larger, he says. The company is partnered with Novozymes to use its enzymes in the production process but, because the technology is chemical-free, Ghisolfi says fewer enzymes are required to be used, which lowers the cost.
The only coproduct produced as a result of this process is lignin, according to Ghisolfi. At Crescentino, the company has invested $50 million to construct boilers to translate that lignin into 15 megawatts of power, enough to serve the production facility with leftover available to sell to the local utility. Because power prices are high in Italy, Ghisolfi says it was easy to determine that adding on that aspect of the project would be a worthwhile investment. It&rsquo;s an optional component, however, so he expects that not everyone will be willing to up the cost of their project by one-third to produce power. He points out that without the boiler costs, the Crescentino project is on track to produce ethanol with a cash cost of production at about $1.50 per gallon, and a cost to build the plant at about&nbsp;$5 per gallon of annual production capacity.&nbsp;Ghisolfi says he expects that price to continue to go down with each consecutive plant that is built.
Ghisolfi hopes to soon see the Proesa technology at use in the U.S., but M&amp;G doesn&rsquo;t plan to operate any of the facilities. Last October, M&amp;G formed a joint venture with TPG Capital and TPG Biotech to create Beta Renewables. The new company, led by Ghisolfi as CEO, was created exclusively to license the Proesa technology. The company is taking over ownership of the Crescentino plant, but the goal is primarily to use the plant as a showcase for the technology. &ldquo;This is a plant that is large enough to be economically viable, but it will be a demonstration plant,&rdquo; Ghisolfi says. &ldquo;The next plants, we want to license, not build.&rdquo;&nbsp;
Ghisolfi sees the most immediate demand for second-generation technology to come from first-generation ethanol producers and blenders in the U.S. who are seeking ways to meet the federal renewable fuel standard&rsquo;s call for increased amounts of cellulosic biofuels. However, because the Proesa technology produces C5 and C6 sugars, the possibilities for end products are broad and applicable to anyone wanting to produce cost-efficient sugars. Ghisolfi predicts that by about 2014, a second wave of customers will come into view, consisting of companies that are already attempting to ferment sugars to produce everything from butadiene to acrylic acid. &ldquo;So far, everybody went to Brazil because they thought there are cheap sugars in Brazil,&rdquo; he says. &ldquo;We hope we can make them change their minds and stay in the U.S. because we can deliver cheap sugars in the U.S. as well.&rdquo; Currently, sugars can be had for about 22 cents a pound at the international level. Ghisolfi says he can beat that price by half, producing sugars using Proesa technology for 10 cents per pound. He admits his claims are met with skepticism, but he is firm in his estimates and says Beta Renewables has already begun to forge partnerships with chemical producers. Around July, when the Crescentino plant begins to continuously produce ethanol, the process will be further proved and the build out can begin in earnest, he says, although he willingly admits that there will soon be others in the same position. &ldquo;I would be very happy to be the first, or one of the first, players in the market,&rdquo; he says. &ldquo;But I don&rsquo;t pretend to have all of the market for me. If they want to buy from someone else, they will, because there will be someone else relatively soon. [But] we have a lot of skin in the game as Chemtex. We bought the plant, so we know how much it costs. I can show steel to people. We&rsquo;re not talking about a hole in the ground. And if someone is, allow me the term, dumb enough to invest $100 million in the R&amp;D for several years and $150 million into a plant, it means that this is going to be working.&rdquo; Indian River Bioenergy Center The first U.S. plant planning to begin operating at a commercial-scale is the Ineos New Planet Bioenergy LLC facility, dubbed the Indian River BioEnergy Center, located near Vero Beach, Fla. The plant will produce 8 MMgy of ethanol and 6 megawatts of power using locally sourced municipal solid waste and vegetative waste, including some waste citrus, beginning in the second half of this year. In mid-March, the project was still on track to be mechanically complete by April and expected to meet the U.S. EPA&rsquo;s expectations of producing about 2 million gallons of cellulosic ethanol this year. Last year, Ineos Bio received a $75 million loan guarantee from the USDA for the Indian River project, helping to alleviate some of the risk associated with being one of the first-of-its-kind projects, but Ineos has also invested heavily in the project and has a lot at stake in making it work. &ldquo;When it comes down to it, the thing that&rsquo;s completely in our control is commissioning this unit and getting it up and running and producing ethanol, and that has to be our primary focus at this moment,&rdquo; says Ineos Bio CEO Peter Williams. Calls from the petroleum industry to dismantle the cellulosic biofuels portion of the renewable fuel standard are not increasing the pressure to produce, he says, adding that the time will soon come when those renewable identification numbers (RINs) will become available to them. Fiberight Other facilities on the U.S. EPA&rsquo;s anticipated producer list for cellulosic ethanol this year include demonstration-scale facilities operated by ZeaChem Inc. and KL Energy Corp as well as American Process Inc., which is nearing completion on a 800,000 gallon per year facility in Alpena, Mich., which will utilize wood hydrolyzate from a nearby hardboard manufacturing facility as its feedstock. The company expects to begin operating the facility in about a month. The only other cellulosic producer expected to contribute to the RFS this year is also the only cellulosic ethanol producer that owns an existing commercial-scale facility. Fiberight LLC purchased a former corn ethanol plant in Blairstown, Iowa, several years ago and has been slowly modifying it to produce ethanol using MSW as a feedstock. CEO Craig Stuart-Paul says that work continues today, and he doesn&rsquo;t expect Blairstown to produce this year, but Fiberight will begin producing batches of ethanol from its demo plant in Lawrenceville, Va., by June. Fuel produced in Virginia will be marketed by Protec Fuel Management LLC to the U.S. Navy. In March, the company was carrying out some process modifications to increase efficiency and conducting small revisions to ensure it receives a $25 million loan guarantee offered by the USDA in January. Stuart-Paul says the &ldquo;post-Solyndra&rdquo; environment has prompted the USDA to require more proof of process at a smaller scale before granting loan guarantees to commercialize, so therefore more emphasis is being placed on operating the demo plant at a precommercial scale for the short term. That streamlining process is expected to be finalized in June, approximately. In March, Stuart-Paul wasn&rsquo;t ready to guarantee that Fiberight could produce all of the 1.6 million gallons of ethanol expected by the EPA this year, but said meeting the agency&rsquo;s target is not his primary concern. &ldquo;We&rsquo;re in a position now where we want to do this right; we don&rsquo;t want to blow it,&rdquo; he says. &ldquo;We will have some production, but the thing is, there is actual steel going into the ground now, we&rsquo;re among them, and there will be gallons produced.&rdquo; According to Stuart-Paul, the number of gallons produced is less important than the fact there will be actual production this year. &ldquo;Once those first few plants begin producing and can produce successfully &hellip; look at what happened in the corn ethanol industry. Once those first few plants produced, you had a massive increase in the amount of overall production nationwide. Everyone was waiting for the first ones to come online.&rdquo;
Author: Kris Bevill Associate Editor, Ethanol Producer Magazine (701) 540-6846 kbevill@bbiinernational.com

The Indian River BioEnergy Center project, shown here in March, continues to progress on track and on budget, according to Ineos Bio, and will produce measurable amounts of cellulosic ethanol this year.

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By late February, many components of M&Gâ€™s 13 MMgy cellulosic ethanol facility in Crescentino, Italy, had been installed, including the reactors for fermentation and hydrolysis (shown far right), beer columns and the lignin boiler and electrical pl

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The largest cellulosic ethanol plants in the world are ready to prove their mettle

Steel in the Ground

When Enviro Energy LLC&rsquo;s founder, Bob Miller, began making pellets in upstate New York, he was a farmer. The same can be said about Kevin Sumner and John Brown, both with Hudson Valley Grass Energy in New York. All three individuals presented a history of their paths from farmer to fuel pellet developers during the Northeast Agricultural Biomass Heating seminar held March 21 in Saratoga Springs, N.Y.
 They all highlighted the growth of the perennial grass and agricultural-based pellet sector. Miller explained how his team engineered a pellet manufacturing facility capable of switching from one feedstock to another in a matter of two hours. The operation, he said, was built with waste parts from junk yards. &ldquo;We didn&rsquo;t really know what would work, but we were thoroughly convinced of what wouldn&rsquo;t.&rdquo;
 Although Miller makes his operation sound amateur, his facility in New York has not only paved the way for others in the region, but it has also attained a high level of success providing bulk pellet options from both grass and woody biomass.
 In Pennsylvania, Ernst Biomass is working with switchgrass to make its pellets. &ldquo;What we tried to do with Ernst Biomass was fill in the gap between the concept of grass energy and realizing it on a commercial scale,&rdquo; said Dan Arnett, manager of Ernst Biomass. The company is building a pellet mill and aims to answer a series of questions, including whether the market will support switchgrass pellets, what the price point will be, and what the required capital will be for building a commercial facility, in comparison with the financial returns.
 Ernst Biomass is also building its facility to meet the heating needs of the region. The plant will produce 35,000 tons of pellets per year from both switchgrass fiber and wood fiber, and will also experiment with a hybrid of the two. Several presenters during the conference noted switchgrass for its difficulty as a pellet feedstock, so Arnett gave a summary of the benefits, including its prevalence. Sumner and Brown presented a $150,000 portable pelleting system for biomass that can be used onsite at farms and energy crop plantations.
 The operation can produce one to two tons per hour, and the pair has tested the system at 10 different farms, making pellets out of feedstock ranging from perennial grasses to soybean stubble. &ldquo;Our goal was to use U.S.-made equipment,&rdquo; Brown says. Most of the equipment used on the system was new, except for the truck, the genset and the pellet mill, all of which were refurbished. &ldquo;Our cost is essentially how much diesel fuel you use in the generator and we use roughly 13 to 14 gallons of diesel per hour.&rdquo; On a per-ton basis at one hour of operation, Brown estimates the total cost for the system at $83 per hour.
 It seems all agricultural pellet projects come with a trial-and-error period. &ldquo;It&rsquo;s been a continual process of finding the weak link in our chain,&rdquo; Sumner said of his project. &ldquo;We upgrade it.&rdquo;
&mdash;Luke Geiver

Farmers discuss their transition to fuel pellet developers

Grass Growth

The 2012 Northeast Biomass Heating Expo in Saratoga Springs, N.Y., March 21-23 featured a keynote address that shed new light on the challenges facing the industry. Carlton Owen, president and CEO of the U.S. Endowment for Forestry and Communities, told the crowd that typical problems like project finance or feedstock availability, are simply &ldquo;local weather events.&rdquo; Those events, he said, are not the real challenges facing the industry.
 Instead, Owen referenced three areas that present the biggest challenges for biomass thermal. The first is that it has too many voices, he said. A veteran of the forest industry, Owen explained that the biomass sector is doing exactly what the traditional forest sector has done. The forest industry has roughly 440 associations that represent it, and while they are all important, he said many are too small and underfunded.
 The second challenge, as he explained, is that many developers are letting the perfect stand in the way of the good. As an example, Owen pointed to a biomass energy project his endowment is funding in Georgia. Opponents of the $60 million project say it is not as efficient as it could be. But he argues that the project is still accomplishing a great task in the county: creating jobs. &ldquo;We need to grow the industry,&rdquo; he added.
 The last challenge Owen discussed is the focus on what and how, not why. Biomass companies need to align themselves and their message to customers with the values of their audience. That message, he added, should be about forest health and sustainability, and job retention. In addition to his sentiments regarding the real challenges facing the industry, Owen said woody biomass projects need to be right-sized to the resource and to the community in which they will operate.
 Along with Owen&rsquo;s address, the opening morning of the Northeast Biomass Heating Expo, hosted by 24 different biomass-based entities and organizations from both the public and private sectors, included remarks from Frank Murray, president and CEO of the New York State Energy Research and Development Authority. He referred to the organization as the mini DOE.
 Murray reminded the audience that although the Northeast is unable to heat with natural gas in most places, and that one-third of the homes are heated with heating oil, there are no quick fixes or silver bullets to provide alternatives. The challenges Murray pointed out for biomass-based thermal applications include competition with low-sulfur diesel heating oil. He added, however, that biomass heating systems will be a part of New York&rsquo;s future heating supply.
 Through a partnership between NYSERDA and the U.S. EPA, Murray said his team are developing a test method for staged combustion thermal storage units. He said the project is emphatically supported by wood pellet boiler manufacturers, and several have already supplied their boilers for testing. NYSERDA is also developing a pneumatic pellet delivery truck that Murray said will help craft a best practices guideline for pellet-based heating systems.
&mdash;Luke Geiver

Keynote speaker Carlton Owen said the traditional hurdles aren't the big ones

A New Perspective

Traditionally, Biomass Power &amp; Thermal has released two Biomass Power Maps each year, one in the spring and one in the fall. But in light of the exponential growth in the pellet sector driven by small policy changes here in the U.S., and more so by huge policy changes overseas, we thought an annual Pellet Mill Map might be necessary for the industry.
 So the Biomass Power &amp; Thermal team researched and compiled detailed information to create the 2012 U.S. &amp; Canada Pellet Mill Map. It is included for you with this issue. We were able to confirm the operational status of 174 mills, idle, proposed, under construction or operating. It turns out the U.S. East is a hotbed of pellet production, spreading a bit into the Midwest. A number of ports in the East, Southeast and in Texas are helping those pellet mills supply European demand. Thirty-eight percent of pellet mills on the map in the U.S. and Canada combined are exporting, have exports in their project proposals, or are export-ready, but lack the customers. With such an evolving industry, I expect big changes for the 2013 map.
 In fact, a recent analysis by Wood Resources International LLC shows that the U.S. and Canada exported equal volumes of wood pellets to Europe in the fourth quarter of 2011. Canada has long been the foremost North American pellet exporter; the U.S. has recently been right on its heels, and now we&rsquo;re in stride.
 The focus of this issue is policy, which has been the main driver in all those pellet exports. Unfortunately, U.S. renewables policies haven&rsquo;t been as steadfast as Europe&rsquo;s. Associate Editor Luke Geiver explores ideas for U.S. developers who might be left high and dry after benefiting from federal incentives, such as the Biomass Crop Assistance Program, that are now on the chopping block. But not to worry. As Luke shows, successful projects are still possible through a number of options, some a bit creative.
 We also get a peek at other financing options from columnists and contributing writers this month. Associate Editor Anna Austin steers away from financial policy and provides an update on state-level renewable energy standards since we last visited them. Other than expansions for qualification in states with existing standards, not much has changed. No race is underway to implement energy standards, as we&rsquo;d hoped.
 But a National Clean Energy Standard is now on the table in Congress and has us wondering how such legislation, if passed, would affect state-level mandates. Anna will clue us in. If you&rsquo;re a developer wondering about the lull in state standards, or looking for new ways to fund projects, you&rsquo;ll want to read this issue cover to cover.

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Maps, Money and Mandates 

Lately, there has been a small controversy surrounding the Department of the Treasury&rsquo;s 1603 Grant Program. Like just about anything relating to the federal budget, the 1603 program is undergoing close scrutiny to determine whether the federal government is getting the most out of its increasingly scarce funds.
 This program provides tax benefits for new and under-construction renewable energy facilities. The vast majority of these grants are awarded to wind and solar projects, but the comparatively small biomass grants added up to about $115 million for our industry last year. While the program is not perfect, it has been instrumental in helping biomass grow and provide power to hundreds of thousands more Americans each year.
 Biomass projects across the country, including in Berlin, N.H., and Gainesville, Fla., have been able to secure 1603 grants, which in turn have strengthened their pitches to private investors and made their projects a reality.
 Now that the presidential election is well underway, much is being made of the nation&rsquo;s current economic situation and how it should be improved. Part of this conversation is whether the renewable energy industry, biomass included, is accountable for the new jobs that were projected from the 1603 program and other similar initiatives. The now-infamous stories about solar failure Solyndra have made the situation worse, creating more skeptics than there ordinarily would have been.
 A Wall Street Journal article last month piled on the issue, pointing out several projects across the renewable spectrum that did not seem to live up to their job creation pledge.
 What the Journal and many other critics of the program have failed to mention, though, is indirect jobs. Biomass projects in particular create and support construction, trucking, logging, supplier and many other jobs in addition to the full-time positions created at the facilities. Some estimates indicate that as many as seven jobs per megawatt are created or supported when a new biomass facility is built.
 Luckily, the U.S. departments of Energy and the Treasury are fighting back against the skepticism of 1603 as a job generator.
 If you have any firsthand stories about jobs created or supported with 1603 grants, I&rsquo;d love to hear them and share them with administration and elected officials. Please contact me. &nbsp; Author: Bob Cleaves President and CEO, Biomass Power Association <a href="http://www.USABiomass.org">www.USABiomass.org</a> <a href="mailto:bob@biomasspowerassociation.com">bob@biomasspowerassociation.com</a>

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Biomass and 1603 Grants

&ldquo;Outstanding sessions. Extremely well-organized event,&rdquo; wrote one attendee. &ldquo;No better opportunity to have focused time with collaborators working to build the infrastructure for biomass heating,&rdquo; wrote another. And one of my favorite comments, &ldquo;Biomass has come a long way in the last 4 conferences...&rdquo;
 These three attendees were among roughly 500 who gathered at the fourth annual Northeast Biomass Heating Expo in Saratoga Springs, N.Y., March 21-23. The success of the three-day heating-centric event speaks to the interest from suppliers, vendors, and customers in the Northeast; attendees arrived from as far as California, 29 other states, three Canadian provinces, and a few European countries. Further, registration increased by 30 percent from 2011&rsquo;s expo, the vendor floor space was doubled to meet exhibitor request, and over 97 percent surveyed reported they would consider attending or would definitely attend a similar show in 2013.
 Numbers are one thing, but content is another. Organizers of the 2012 conference pursued more targeted technical sessions and a different location from the past three shows in Manchester, N.H., and it proved a wise wager. Saratoga Springs offered new opportunities to engage geographically close state partners like the New York Biomass Energy Alliance, Pennsylvania Biomass Energy Association, and the New York State Energy Research and Development Authority, to name a few. From speaker contributions to their presence on the conference program committee, the local delegation brought fresh regional perspectives to the Northeastern view on biomass heating technologies, applications, and fuels.
 As is the case at most conferences, some sessions were better attended than others. The two top-rated sessions involved key principles for biomass boiler sizing and financing. These ratings come as no surprise. Vendors and customers alike often have the same top three questions when it comes to getting biomass thermal projects done: how big a system do I really need? How much will it cost? And how am I going to pay for it? Industry stakeholders should take note of these concerns as they extend far beyond New England states.&nbsp;&nbsp;
 Session attendees also came from a wider array of professional backgrounds than in previous years. For the first time, the conference offered professional development hours for New York state engineers, and many attendees took advantage of them. In one session alone, I personally completed certificates of participation for about 30 attendees pursing technical credit. While a majority of those surveyed reported that the New York state credits were not the sole reason they attended, many inquired about the role of additional industry credits for the 2013 show. Facilitating professional development for separate but related industries and trades helps demonstrate that biomass thermal technologies can compete for installation considerations among other commercial heating options.
 Finally, the enhanced exhibitor floor and outdoor vendor fair brought the expo&rsquo;s case studies and seminar topics to life in ways presentations simply could not convey. Component suppliers, boiler and stove vendors, and manufacturers mingled, networked and connected with competitors and customers alike.&nbsp; Outside, bulk pellet delivery trucks and a slew of commercial and residential heating systems revved up and down, communicating their systems&rsquo; efficiency, cleanliness, and convenience. After seeing the pellet delivery trucks, one passerby approached me and asked about the expo&rsquo;s purpose.
Upon hearing my explanation, she replied, &ldquo;Well I&rsquo;m glad we&rsquo;re manufacturing these things [fuel and equipment] here and not shipping more money overseas.&rdquo; That comment succinctly captured a goal of the Northeast Biomass Heating Expo: demonstrate and reinforce biomass heating&rsquo;s viability, right now, right here.
 I should have asked for the woman&rsquo;s email information, so I could tell her we&rsquo;ll be back. See you in 2013, Saratoga Springs. Author: Joseph Seymour Executive Director, Biomass Thermal Energy Council (202) 596-3974 ext. 302 <a href="mailto:joseph.seymour@biomassthermal.org">joseph.seymour@biomassthermal.org</a>

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Highlights from Saratoga Springs

An entire quarter of 2012 has gone by, and it is time to evaluate where the U.S. is headed with the development of biobased fuels and energy.
 A quick review of news articles could lead one to surmise that bioenergy is in complete disarray because of the sluggish energy economy, a weak set of federal incentives, and a fairly sudden development of huge natural gas resources. Further analysis, however, reveals that the real state of the bioenergy industry is fairly complex and not as bad as it seems.
 Today, the primary driver for biofuels development in the U.S. is the second version of the 2007 U.S. Energy Independence and Security Act, commonly referred to as the Renewable Fuel Standard II (RFS2). The production tax credit incentive for ethanol is gone, and a similar tax credit for biodiesel is set to expire at the end of this year. The RFS2 rule is the only federal incentive remaining for biofuels, and corn ethanol and vegetable oil-derived biodiesel are the only commercially available biofuels in the U.S. Compounding the issue is lower demand in general for gasoline, so naturally the 10 percent blend of ethanol that is in most gasoline today is also in less demand. Overall, there is some amount of disarray in the biobased fuels business this year.
 Biobased electricity is a different story, however, as the level of biopower output/consumption in the U.S. has remained stable for several years. Biomass continues to provide about 3 percent of electricity and heat. The primary driver for biomass power and heat remains individual state-promoted renewable portfolio standards (RPSs). Twenty-nine states mandate renewable energy production by their utilities. That leaves 21 states either with no RPS or an alternate energy production standard which includes energy from biomass technologies or from advanced fossil fuel technologies such as coal gasification. Most renewable electricity production in the country still comes from hydroelectric or wind resources.
 For some states, an RPS has attracted development of&nbsp; baseload biomass power plants between 20 and 50 MW. For other regions, communities have incentivized new biomass plants using local venture drives and grassroots support. These new biomass power plants have essentially replaced older units related to the pulp and paper industry. This offset, or build one close one scenario, is one reason the level of biopower remains at 3 percent nationally.
 One unexpected impact on biomass-derived power is the fairly sudden increase of low-cost natural gas. In some states, RPSs are written to stimulate the development of wind, solar, and hydroelectric power, leaving biopower to compete in the electricity market against well-established coal generation and ever-increasing natural gas combined-cycle generation. With the upswing of low-cost natural gas, biomass has a more ferocious competitor. Some will say that we have seen these upswings and downturns before so nothing is different, but the data being presented seem supportive of a long-term sustained level of growing natural gas supplies with costs remaining stable. Of course, some new wrench could be thrown into this argument tomorrow, and these projections could all become nonsensical.
 The bottom-line message is one of caution, not disarray. RPS incentives and green-minded communities are stirring up business for biomass. At a recent conference, several presenters from the Northeastern U.S. described nine different biopower projects, six of which were all fully funded, all completely permitted and in some phase of construction. In each case, the biomass supply was well resourced at a reasonable cost for sustainable supply; the local communities were behind the projects; pollutant emissions were well within limits and certainly lower than comparable coal or oil-fired plants; and investors were satisfied with the margins of return. In these types of niche opportunities, biomass power systems are finding ground and proving their worth both environmentally and economically. This is not a picture of disarray. Author: Chris Zygarlicke Deputy Associate Director for Research, EERC (701) 777-5123 <a href="mailto:czygarlicke@undeerc.org">czygarlicke@undeerc.org </a>

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Biopower and Biofuels: State of Disarray or Opportunity?

The times of funding biomass-based projects easily are long gone, and project deals have been a hard sell recently. But a new law may make it much easier for companies to find investors. The bipartisan Jumpstart Our Business Startups (JOBS) Act contains some of the most significant changes in decades to the rules governing how small companies raise money
.&nbsp;&nbsp; As a general rule, offerings of securities&nbsp; that are not done through an IPO are prohibited from using any means of&nbsp; general solicitation or general advertising, which includes communications in newspapers, magazines, television, radio, the Internet, public meetings and more. For example, the current rules do not allow the distribution of letters to everyone in a co-op about a new investment opportunity, and violation of the rule can lead to a Securities Exchange Commission or state enforcement action that requires investor money to be returned.&nbsp;
 The JOBS Act removes this barrier for offerings conducted under SEC Rule 506 if all purchasers are accredited investors. Once the SEC adopts the new rules, companies can hold public meetings, advertise, do interviews, post online, and mail letters to large groups. This will make it significantly easier for a company to find and meet with potential investors.
 Crowdfunding generally refers to raising money from lots of people, each contributing a small amount, typically via the Internet. The practice has been used to raise money through donations for nonprofits or artistic projects, but now it can be used for the sale of securities. The JOBS Act allows companies to sell securities, provided four criteria are met: the aggregate amount sold by the issuer during the preceding 12-month period cannot exceed $1 million; the aggregate amount sold to any investor during the preceding 12-month period cannot exceed certain limits tied to the income or net worth of the investor, with a maximum of $100,000; the transaction must be conducted through an intermediary that is either a broker or a funding portal that complies with registration, disclosure and other requirements, and is registered with any applicable stock exchange or self-regulatory organization; and the issuer must comply with various filing and disclosure requirements.
&nbsp; Issuers seeking to take advantage of the crowdfunding exemption must file with the SEC and provide key information about the company and its financial condition, large shareholders, officers, use of proceeds and anything else the SEC deems necessary to protect investors.
 Every crowdfunding offering must also include a minimum amount determined by the issuer that must be reached before any proceeds are delivered to the issuer. This target offering amount must be disclosed to investors, and the intermediary is obligated to ensure that all offering proceeds are provided to the issuer only when the target offering amount is reached.&nbsp;
 The aggregate amount sold to any investor is subject to limits based on the income or net worth of the investor. If either the annual income or the net worth of the investor is less than $100,000, the investor may not purchase more than $2,000 or 5 percent of the annual net income or net worth of the investor. If either the annual income or net worth of the investor is equal to or more than $100,000, the investor may not purchase more than 10 percent of the annual income or net worth of the investor, up to $100,000.&nbsp;
 While the SEC has to write and adopt formal rules for each of these provisions, they are no doubt significant positive changes for companies trying to raise money. While crowdfunding may not help build a large plant, it will help raise seed capital to start developing projects. Permitting, advertising and public meetings for larger offerings will help companies raise the larger equity required to conduct serious research and development, or build plants. Authors: Bert Ranum Shareholder, Fredrikson &amp; Byron (612) 492-7067 <a href="mailto:rranum@fredlaw.com">rranum@fredlaw.com</a> Todd Taylor Attorney, Fredrikson &amp; Byron (612) 492-7355 <a href="mailto:ttaylor@fredlaw.com">ttaylor@fredlaw.com</a>

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Crowdfunding Biomass Projects

Dust Control Technology develops new suppression system Dust Control Technology has introduced a new low-turbulence design dust suppression application. The DustBoss DB-M generates an umbrella-shaped cloud of atomized droplets averaging 50 to 200 microns in size, projecting the mist about 30 feet under calm conditions. The new design features selectable flow settings and the company&rsquo;s proprietary Variable Particle Sizing Technology to improve capture efficiency. Nozzles can be added, removed or resized as the application dictates. An in-line 30 mesh filter stops any solids 600 microns or larger. If using potable water, nozzles can be inspected just once a year.&nbsp; The DB-M can also be supplied with an optional dosing pump for precise metering of odor control additives, surfactants to improve binding to dust particles, or tackifying agents to help seal ground-level dust and prevent it from becoming airborne.&nbsp;
 Fecon announces Northwest regional manager&nbsp;&nbsp;&nbsp; Brian Tinker is Fecon&rsquo;s new regional manager for the Northwest U.S. His territory includes Washington, Oregon, Idaho, Montana, northern California, Alaska, Hawaii and a portion of Nevada. Tinker has extensive experience with new and used equipment in the Northwest and specializes in the recycling and biomass industries.
 Hach Co. introduces biogas monitor Hach Co. has launched in the U.S. its Biogas Titration Manager, designed specifically for monitoring biogas production. The equipment is preprogrammed with three common methods, and has space for seven more user-defined methods, to help biogas plant operators run their plants more efficiently.&nbsp; Hach&rsquo;s Biogas Titration Manager provides real-time onsite analysis. Developed in Germany, the titrator is preprogrammed with a dedicated application package. These features and an intuitive interface guide operators through the testing process for reliable results.
 New pellet press from Dieffenbacher Dieffenbacher has developed a new type of pellet press that will considerably reduce pellet production cost, according to the company. The press will provide a throughput capacity of up to 25 tons per hour in a single unit. It is designed for the higher pressures required when producing wood pellets and provides additional safety systems for pressing torrified materials. The main cost saving features of the Dieffenbacher pellet press include: roller bearings separated from the wood flow and heat, eliminating the need for constant lubrication; a roller featuring a replaceable sleeve with a typical lifetime of more than 2,500 hours, depending on type of raw material pressed; and rollers each equipped with their own metering device to ensure an even wood flow between rollers and die.
 Greensmith offers distributed energy storage systems Greensmith Energy Management Systems has installed its distributed energy storage systems (DESS) for 14 customers, including eight electric utilities. Greensmith's proprietary control software and Battery Operating System (BOS3) technology enable distributed energy system deployments with centralized operations through an online user portal or via machine-to-machine integration.&nbsp; All of Greensmith's turnkey DESS units include the latest BOS3 communication technology and software. In addition, each DESS unit is configurable, modular, and scalable. Greensmith units are often installed alongside distributed grid assets. Their suite of control and communication software integrates with an entire network of ancillary devices for an evolving smart grid.

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As of mid-March, Washington state&rsquo;s biomass energy production facilities that began operating before 1999 are classified as renewable energy producers under the state&rsquo;s renewable portfolio standard (RPS). That sounds like a relatively simple modification to regulations, but the Legacy Biomass bill (Senate Bill 5575) is poised to have a big impact on bioenergy in Washington.
 The first U.S. power plant built to produce electricity from wood is just one facility that will significantly benefit from the new legislation. Avista Corp.&rsquo;s Kettle Falls, Wash., plant began operation in 1983, so it was far from qualifying as a renewable energy producer under the state&rsquo;s RPS, even though it uses hog fuel.
 The RPS, enacted in 2006, requires large utility providers to generate at least 9 percent of their energy from renewable sources by Jan. 1, 2015, and at least 15 percent by 2020. Power facilities built before 1999, however, were not considered renewable energy producers and therefore had difficulty selling power to electric utilities. In addition, electric utilities that own older plants were forced to come up with alternative ways to meet the RPS mandate.
 &nbsp;&ldquo;As a result of Senate Bill 5575, energy generated at Avista&rsquo;s Kettle Falls biomass plant will [now] qualify to meet our renewable requirements in Washington, beginning in 2016,&rdquo; says Anna Scarlett, spokeswoman for Avista Corp.
 &nbsp;Passage of the bill is good news for local communities, particularly those in and around Kettle Falls, according to Scarlett. &ldquo;It will promote employment and preserve jobs at a time when rural economies are suffering,&rdquo; she says. &ldquo;Kettle Falls provides work to local sawmills, fuel delivery businesses, transportation companies and forest workers.&rdquo;
 The plant generates 50 MW of power from biomass&mdash;about 70 tons of wood waste per hour during full operations&mdash;and an additional 6.9 MW through a natural gas-fired combustion turbine. &ldquo;It went online in 1983, and pioneered a technology that has been replicated around the world,&rdquo; Scarlett adds. &ldquo;We&rsquo;re pleased it will finally be given the recognition it deserves.&rdquo;
 Another example of a facility positively impacted by the legislation is Longview Fiber Paper and Packaging Inc. in Longview, Wash., one of the state&rsquo;s largest biomass energy producers. The mill uses waste from its manufacturing process to generate 32 to 35 MW of electricity to power its operations, with excess sold to the grid.
 Sarah Taydas, Longview Fiber Paper and Packaging affairs director, says passage of SB 5575 strengthens the economy of southeast Washington by supporting jobs at its mill site, and the forest products industry across the supply chain. She points out that the bill will keep renewable resources in the state, and also aligns Washington with green energy qualifications in surrounding states&mdash;Oregon and California&mdash;as well as at the federal level.
 The Legacy Biomass bill, which passed with an overwhelming majority, 41-6 in the Senate and 89-9 in the House, takes effect June 1. Not only does it expand qualification for older power production facilities, but also adds materials such as yard and food waste, food processing residues, hog fuel and black liquor generated from pulping and wood manufacturing processes as eligible biomass products.
Senators who sponsored the bill echo the sentiments of the aforementioned companies, saying that without it, hundreds of jobs would have been threatened in communities where double-digit unemployment has been a problem for years.
&mdash;Anna Austin

ELIGIBLE ENERGY: Under the Legacy Biomass bill, Avista Corp.'s Kettle Falls, Wash., plant qualifies as a renewable energy producer.

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A Washington biomass bill is touted as a job-saver, bioenergy booster

Leaving a Legacy  

Add the Excellence in Bioenergy Award to the list of accomplishments in 2011-2012 for William Strauss, president of FutureMetrics, a biomass energy consulting and econometrics firm. For the first time, the International Biomass Conference &amp; Expo included the presentation of industry specific awards, honoring the dynamic policy leaders, members of academia, project developers or organizations that have helped biomass energy establish a presence throughout the country.
 Strauss, chosen by a number of industry peers, received the award based on his role in debunking the inaccurate statements presented in a controversial study completed in 2011 by the Manomet Center for Conservation Sciences. The study found that in some cases, woody biomass used for electrical generation emits more greenhouse gases per unit of energy than coal does because of its debt-than-dividend model. But Strauss provided a comprehensive, accurate view of those assertions and showed the positive benefits of woody biomass.
 But that isn&rsquo;t Strauss&rsquo; only accomplishment. He also played a key role in ensuring Maine and New Hampshire include wood pellet pricing for home heating fuel in weekly energy reports. And Strauss and his team at Maine Energy Systems contributed to the success of a wood pellet boiler installation program in New Hampshire. Several boilers have been installed and more are in the works. And, on top of all of that, Strauss has helped develop a risk assessment and hedging tool for project developers and current biomass facility operators, identifying the role woody biomass prices play in operation, and how to hedge against price risk.
 The Groundbreaker of the Year Award, bestowed on a company or organization that has made meaningful headway on a biomass-to-energy project, went to Ameresco Inc. After two and a half years of development, the company held its ribbon-cutting ceremony in 2011, opening the Savannah River Site Biomass Cogeneration Facility in Aiken, S.C. The 20 MW combined-heat-and-power facility created roughly 800 jobs during construction. The project had a number of partners, including the U.S. DOE and the state of South Carolina.
 &ldquo;Together with the DOE, we&rsquo;ve built an award-winning, large-scale, sustainable power resource,&rdquo; says George Sakellaris, president and CEO of Ameresco.
&mdash;Luke Geiver

BUILDING BIOMASS: The Savannah River Site Biomass Cogeneration Facility in Aiken, S.C., is the recipient of the Grounbreaker of the Year Award.


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A biomass economist and the Savannah River CHP facility win bioenergy awards

And the Awards Go To:

Along with the German Chamber of Commerce, Heinrich Unland, managing director of German technology developer APOS, recently visited the U.S. to survey the country&rsquo;s biomass power market. Aware that the German bioenergy industry is much more mature than that of the U.S., Unland&rsquo;s visit was mainly to determine the potential level of interest in a new biomass boiler tool APOS has developed. Unland says there is a global need for the FuelOPT system, which has been on the market for almost two months.
 When fuel is pushed into a biomass boiler&mdash;whether it&rsquo;s wood chips or hog fuel&mdash;the operator faces the challenge of an ever-changing heating value. &ldquo;That&rsquo;s simply because the material has greatly varying water, sand and ash content,&rdquo; Unland explains, adding that it can have a significant impact on the heating value of the fuel.
 &nbsp;Typically, a boiler management system pushes in a consistent amount of fuel, assuming the heating value is even. &ldquo;The amount of energy going into the boiler varies considerably, however, because of that rapidly changing biomass heating value,&rdquo; Unland says. This creates an unwanted effect on boiler steam production.
 &ldquo;What you want is a turbine running at maximum production all the time to generate the most power to make the most money,&rdquo; Unland says. He was faced with the problem years ago, as managing director of a company that ran biomass power plants in Germany, and never found a technical solution.&nbsp; Unland formed his own team and developed a solution: an optical system that analyzes biomass fuel online without affecting the fuel flow in the power plant. &ldquo;It uses spectrocity as its basis,&rdquo; Unland explains. &ldquo;Light is put on the fuel somewhere in the conveyors during the transportation process, and a reflection comes back that we&rsquo;re able to analyze.&rdquo;
 That reflection or light is displayed on a spectrometer where a statistical analysis is performed. Water and sand content can be identified in real time, as well as other parameters, according to Unland.&nbsp; Using APOS software that is integrated into the existing plant control systems, the heating value is calculated. &ldquo;This enables the plant to decrease the ups and downs that it usually has, allowing for a smoother boiler operation, and at the end of the day, it increases power production using the same amount of fuel.&rdquo;
 While the system could work for any kind of biomass boiler, Unland says it may not make economic sense in small boilers. &ldquo;The payback period isn&rsquo;t as attractive then, and our goal is a period of two years or less. A 5 MW boiler would take five years to reach pay off, so for two years, it would take a 10 MW boiler with an annual consumption of 30,000 metric tons (33,000 tons) of wood fuel.&rdquo;
 Since the FuelOPT has only been on the market a short time, the only installation is a pilot application at a 30 MW power plant in Brunsb&uuml;ttel, Germany, but performance data is available, according to Unland. Interest and feedback from the market has been very positive, he adds. &ldquo;[Varying heating value is] really a core problem of all biomass plants, especially ones running fresh wood, or a combination of fresh wood and demolition wood.&rdquo;
&mdash;Anna Austin

A German company aims to bring biomass power plant innovation to the U.S.

A Handle on Heating Value

The Northeast Agricultural Biomass Heating Seminar kicked off the Northeast Heating Expo, held March 21-23 in Saratoga Springs, N.Y. Seminar attendees wanted to know one thing: how to make agriculture-based biomass in the Northeast more efficient, more economical, and above all, more viable.
 Timothy Volk, a research director from the State University of New York College of Environmental Science and Forestry and a presenter at the event, summed up in one word the key to making perennial grass and crop-based biomass viable on all fronts: yield.
 The event featured presentations and discussions related to developing grass and agricultural biomass as a viable heating fuel, the agronomic&nbsp; and harvest influences on biomass production, how to best utilize grass pellets for thermal applications, and more.
 &ldquo;Driving down the price of production will create an impact,&rdquo; Volk said of agricultural biomass for thermal applications. &ldquo;But that isn&rsquo;t the place we are going to make the greatest gains. Cutting corners on our management in order to squeeze five bucks an acre off the price is not, in my opinion, the way to go, because you are probably going to have other problems in the long run, or you are going to impact your yield.&rdquo;
 Jerry Cherney, a researcher from Cornell University, presented on the effects of agronomics and harvesting practices on feedstock quality, as well as the best ways to burn grass pellets. He named a number of practices that will improve or worsen feedstock quality. &ldquo;You really can&rsquo;t afford losing any yield,&rdquo; he said. &ldquo;We have to be able to deal with a product that is not so good.&rdquo;
 Mike Newtown, a researcher at SUNY Canton, explained his findings from research into several biomass boilers that could be used to fire agricultural pellets. Newtown found that low-ash pellets are rare, and that in most cases, agricultural biomass did the same job a wood pellet could do.
 Closing the event, Dan Conable of Cato Analytics LLC, outlined five key areas grass and other agricultural pellet sectors need to focus on now and in the future: robust equipment, better yields, a better densification process for grass pellets, preprocessing for grass pellets or hybrids of wood and grass pellets, and standardization of grass pellets. All five areas need to be addressed, he said, but eventually the agriculture-based pellet industry will grow and succeed. &ldquo;The industry will take time,&rdquo; he said.
&mdash;Luke Geiver

MIGHTY MISCANTHUS: Perennial grasses and crop-based biomass dominated discussion at the Northeast Agricultural Biomass Heating Seminar.

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The Northeast Heating Expo opened with an agricultural seminar

Heating the Northeast with Ag 

U.S. Endowment for Forestry and Communities Inc. works to maintain forested acres across the country and the communities that depend on those acres. But it&rsquo;s a tough task to carry out.
 &ldquo;We are a very underfunded sector for how important we are,&rdquo; says Carlton Owen, president of the South Carolina-based organization. He says part of that sector includes biomass utilization that could not only help sustain the forested acres in a certain region, but also the pocketbooks of those who live there. The good news for Owen is that the majority of the biomass industry would agree that the sector is important and needs funding streams from the federal and local levels, as well as the private sector. The bad news is much more complex.
 First, a funding source or subsidy provider who recognizes the importance of the biomass sector is needed. That source then has to find a way to navigate through the current political atmosphere and economic climate, and that&rsquo;s a difficult goal. But that&rsquo;s not even the bad news.
 Many federal biomass-based programs that provide financial or project development aid are set to expire or already have. Although Sen. Tom Harkin, D-Iowa, Sen. Kent Conrad, D-N.D., and others have introduced legislation that would continue portions of the energy title under the current Farm Bill, including the Biomass Crop Assistance Program, there are no clear indications of whether the legislation will pass. Currently, BCAP has no funding beyond a mere $17 million allocated for 2012.
 Aloterra Energy has thrived the past two years on its ability to utilize BCAP funding in Ohio, Missouri and Arkansas for its miscanthus fields. Losing that funding is a major concern. &ldquo;We think this is going to be a massive industry,&rdquo; says Scott Coye-Huhn, senior vice president of corporate development and the chief legal officer for Aloterra Energy. The company has made significant progress in its miscanthus development, decreasing the price per acre from thousands of dollars to roughly $750, in just one year. But without BCAP, progress could be stagnant and any further price decline limited.
 Coye-Huhn says the company believes BCAP can transform the energy crop industry into a truly viable market, if only it could stick around to finish what it started. Aloterra has even offered to sign a contract for only three more years of BCAP funding, agreeing to operate without it after that period. &ldquo;We believe more strongly than ever that BCAP is a sleeper program that is really going to change this country,&rdquo; he says.
 Unfortunately, Coye-Huhn and his team at Aloterra may never get a chance to sign that three-year contract. But other options for project funding do exist, and his team has begun to explore a few.
 Say Goodbye to Risk
 William Strauss, president of FutureMetrics LLC, and Eric Kingsley, vice president of Innovative Natural Solutions, have developed a tool to not only predict the risk associated with woody biomass feedstock pricing, but also provide a way to hedge against that risk.
 Kingsley has worked in the biomass industry for more than 17 years and admits he&rsquo;s been part of several large projects that have failed. &ldquo;I&rsquo;ve had a number of perfectly good projects die,&rdquo; he says. So Kingsley decided to figure out what financers really want. He explains that they always want projects with 20-year feedstock supplies from known entities with little risk, but that&rsquo;s not in the cards. &ldquo;You can&rsquo;t have that,&rdquo; he says. &ldquo;It&rsquo;s simply not possible.&rdquo; Instead, he says, those project financers really need to know if they can manage and understand price risk.
 &ldquo;I spent a couple of years looking all over the country to figure out what moved biomass prices and why,&rdquo; Kingsley says. That work helped him uncover six variables that impact biomass prices. Diesel pricing is an obvious one, he says, and the other five are secrets to the tool&rsquo;s accuracy. &ldquo;I took the six variables and put together a mathematical model.&rdquo; That model can predict actual biomass prices out for five to seven years at nearly 94 percent accuracy. Anything over 80 percent is very good, according to Kingsley.
 But a project developer needs more than just a prediction for the price of woody biomass. The hedging aspect of the tool shows an innovative way for project developers to overcome the reduction in federal support. In Kingsley&rsquo;s perspective, programs like BCAP are good, but a left-right pocket strategy is better.
 Each of the six variables used to make the tool effective have an existing over-the-counter hedge, which allows a user to hedge price risk on biomass. For example, a biomass facility operator or developer would buy diesel futures in August. &ldquo;If diesel prices go up, and they may, you would sell that future in August and it would be that much more,&rdquo; Kingsley says. &ldquo;So you would be paying more for your wood out of your left pocket.&rdquo; The higher the diesel price, the higher the wood price, he explains. &ldquo;But at the same time, you would be getting the equivalent sum into your right pocket.&rdquo; That money is made from the difference gained between the August future&rsquo;s price of diesel, and the price of diesel at the time the hedge on diesel is sold. &ldquo;You paid more for the wood, but by using the hedge, you made that money back,&rdquo; he says.&nbsp;
 The important part of a hedge, he adds, is that it works both ways. If diesel prices in the example above turned out differently&mdash;if the price of diesel in August actually dropped below the price of the purchased August diesel future hedge&mdash;then the purchaser is actually paying less for the wood, while losing money when the diesel future is sold. &ldquo;But by putting together the right basket (of hedges), we can show clients how to manage 90-plus percent of the risk involved in biomass purchases,&rdquo; Kingsley explains.
 The tool is designed for large project managers, Kingsley says, and right now some people are using the predictive portion of the tool and others are using some of the hedging aspects. Companies using the hedging must have access to an active trading desk because Kingsley and Strauss can&rsquo;t legally trade for a client. But they are already in talks with a number of brokers to partner on the hedging. Looking for a way to make a project more attractive or save money? There&rsquo;s a tool for that.
 Forget GHGs, Think Jobs
 Not all federal funding for biomass applications face the possibility of expiration. The New Market Tax Credit is one that is enduring. But in order to access NMTCs, project developers need to retune their message from a greenhouse gas benefit and carbon footprint focus, to jobs. &ldquo;You have to keep coming up with new ideas,&rdquo; says John May, managing director at Stern Brothers and Co. His firm is making a new push to help clients access NMTCs for project development. &ldquo;The old ideas just don&rsquo;t work anymore,&rdquo; he says.&nbsp;
 May explains that almost all the tax credits available at the federal level are under attack, and loan guarantees offered by the U.S. DOE and USDA are being questioned. NMTCs, however, are predated before any renewable energy tax package, and perhaps more important, are not predicated on a project&rsquo;s ability to reduce GHG&rsquo;s or produce renewable energy. NMTCs are simply used to provide certain census track areas across the country with economic help to develop jobs and improve the community.
 The truth about NMTCs is that they are on the upper echelon of paperwork complexity, application comprehension and company usability. But, as May says, it&rsquo;s not about how NMTCs work; it&rsquo;s about what they do. &ldquo;Renewable energy has become one of the major industries in the U.S., and green jobs have become one of the major categories of new jobs that are available to people,&rdquo; he says. So, this tax credit offers economic help for renewable energy project developers, as long as the project can create or sustain jobs. And it doesn&rsquo;t matter that the tax credits will be going to a renewable energy project.
 NMTCs aren&rsquo;t just viable for project developers. Both May and Kingsley imply that the tax credit is almost free money. The credits are administered through the U.S. Department of the Treasury every year. The agency accepts applications from community development entities (CDEs). CDEs are essentially brokers or middlemen who take in and review applications from project developers, and allocate the amount of funding the project proposal should be given by the treasury. But it&rsquo;s all based on the project&rsquo;s ability to create jobs in a given census track.
 After an application is approved by the treasury for a given amount, the CDE then finds a private investor, such as a wealthy person, corporation, or hospital. The private partner is then awarded the amount of funding approved for the developer in the form of tax credits that can replace the taxes of the private partner dollar-for-dollar. In addition, the private partner provides a matching fund to the project developer totaling the amount of tax credits allotted to the project developer.
 For project developers, the tax credits behave like free money for several reasons. The money is given as a subordinated loan that doesn&rsquo;t require the developer to relinquish any ownership stake in the project, or any resulting profits from that project. After seven years, the loan is forgiven. &ldquo;The developer doesn&rsquo;t have to pay back the principal amount of the loan,&rdquo; May says. &ldquo;They only have to pay interest.&rdquo; He explains it as a subordinated, forgivable, nondilutive piece of debt subsidized by the federal government that replaces equity that would otherwise have to be raised by a project developer. &ldquo;It is essentially not free money, but it is nearly free.&rdquo;
 The tax credit is best suited for companies that have seed money available, or have received angel funding or an A round of funding, May says. And, aside from the complexities of setting up the tax credit in a way that reduces risk for all parties involved, May says this tax option could be very important to an energy crop developer or a biomass company. &ldquo;Let&rsquo;s say they are struggling to raise equity, not because the money isn&rsquo;t there, but because the economics of their project are such that the returns aren&rsquo;t high enough to interest the equity investor,&rdquo; he says. &ldquo;One way to alleviate that is to take a portion of the capital costs of the project and pay for it with the New Market Tax Credit, which essentially is nearly free money. That boosts the economics of the project, meaning it requires less debt or less equity, or provides a higher return to equity, however you want to look at it.&rdquo;
 May offers yet another perspective. &ldquo;If I say to you, &lsquo;let&rsquo;s go build a project and we can get $5-10 million in free money from the government,&rsquo; you are going to say, &lsquo;we are off to a good start.&rsquo;&rdquo; Parties interested in the NMTC can get help from firms like Stern Brothers and Co. and Innovative Natural Resource Solutions to find out how to utilize the tax credit. For the risk tool, contact Kingsley or Strauss.
 And don&rsquo;t panic. People like Strauss, May and Kingsley will be around to find ways to make projects happen in the absence of federal funding programs. Author: Luke Geiver Associate Editor, Biomass Power &amp; Thermal <a href="mailto:lgeiver@bbiinternational.com">lgeiver@bbiinternational.com</a> (701) 738-4944

A FINE LINE: Aloterra's miscanthus planting has leaned on BCAP, but the funding program's future is uncertain.


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PROGRESS PLUG: Without more BCAP funding, Aloterra's miscanthus advancements would be severely slowed. 

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Several government bioenergy incentives are expiring, but other opportunities remain

Viable Options 

When it comes to renewable energy goals, Colorado keeps raising the bar. It was the first state to implement a renewable energy standard (RES) back in 2004 and has twice raised it, now boasting one of the highest in the nation at 30 percent by 2020.
 While Colorado and over half of the other states have embraced renewable energy goals and continue to raise and polish them, some have not acted at all. That&rsquo;s particularly true in the Southeast. While a few southern states have been quietly investigating the possibilities of their own standards, some will likely never adopt an RES, unless they are required by federal law.
 It is unclear whether that will happen any time soon. It seems more likely that a national clean energy standard (CES) is in the cards, but in the meantime, renewable energy advocates are working to debunk the myths surrounding RESs. According to Richard Caperton, director of clean energy investment at the Center for American Progress, the most common misperception is that RESs raise consumer electricity prices, and it&rsquo;s a big reason that law and policymakers in the south have opposed RES legislation.
 Fact vs. Myth
 &ldquo;Colorado, California and New Jersey are fantastic examples of successful RESs,&rdquo; Caperton says. &ldquo;They have driven a significant amount of investment and renewables there, and there is no data that indicates RESs drive up electricity rates; that is totally a myth, and the most common one.&rdquo;
 John Bonitz, farm outreach and policy advocate for the Southern Alliance for Clean Energy, agrees. &ldquo;They [myths] have all been effectively exposed as half-truths by numerous studies, most recently by researchers from Duke University&rsquo;s Nicholas Institute and the Georgia Institute of Technology,&rdquo; he says. The November 2011 study, &ldquo;Myths and Facts about Electricity in the U.S. South,&rdquo; finds that energy efficiency and renewable energy are able to work hand-in-hand to meet the projected growth of electricity demand in the South without escalating electricity rates. Aside from price increases that would occur over time without an RES, the study&rsquo;s modeling shows that over the next two decades, the average household in the South would see less than a $2 increase in its monthly energy bills under an RES.
 The other most common misperception surrounding an RES is that many states don&rsquo;t have renewable energy sources, according to Caperton. That myth is especially perpetuated in Georgia and parts of the Southeast, where the coal industry has convinced legislators that using traditional resources is the only option.&nbsp;
 Another example is Florida, where forest biomass is said to be inadequate for strong growth in biopower. &ldquo;The myth is that there is not enough biomass, as if the Sunshine State didn&rsquo;t have a 12-month growing season,&rdquo; Bonitz points out. &ldquo;Do Floridians seriously believe that natural gas imports are going to be better for their state economy than home-grown energy crops?&rdquo;
 Aside from myths&mdash;and there are many more&mdash;other factors influence a state&rsquo;s decision to implement an RES, including the requirements utilities must meet to prepare for the future. &ldquo;Most states that haven&rsquo;t deregulated their electricity markets have resource planning for utilities, which is when the public utility commission or state regulator makes utilities plan for different scenarios&mdash;say there&rsquo;s a price on carbon&mdash;and how it would impact the utility and consumers, requiring planning for it,&rdquo; Caperton explains. &ldquo;The states that deregulated electricity markets back in the 1990s don&rsquo;t have that process, so they need other ways for utilities to plan for the future, and that&rsquo;s why every state that has deregulated their electricity market has an RES.&rdquo;
 While the policy to shoot for on a state level is an RES, on a federal level, it seems to be a CES. But would a CES better suit the country than an RES, and would a federal policy outshine state-crafted standards?
 &ldquo;It really depends on your goal,&rdquo; Caperton says. &ldquo;If it&rsquo;s to get more traditional renewable energy built, then an RES will do that better. If your goal is broader investment in all sorts of technologies in the electricity sector and carbon reductions, then a CES may be better. It&rsquo;s also politically different because with a CES you bring in the nuclear and natural gas folks, building a bigger base than with an RES.&rdquo;
 A CES such as the one being considered by Congress wouldn&rsquo;t significantly help renewable energy, according to Bonitz. &ldquo;With natural gas at the lowest prices in a decade, it does not need any help and will only further weaken any opportunities for biomass,&rdquo; he says. &ldquo;What&rsquo;s worse is that energy efficiency is the cheapest and most widely available resource, but the CES is an unlikely policy tool to help the full array of efficiency measures.&rdquo;
 Sen. Tom Bingaman, D-N.M., is the sponsor of recently introduced CES legislation. The Clean Energy Act of 2012 begins at 24 percent clean energy in 2015, increasing by 3 percent per year through 2035 to reach 84 percent. It includes renewables like biomass, biogas and landfill methane, but also natural gas and nuclear power, as Caperton points out. And while some renewables groups seem to be embracing the idea of a CES, others like SACE don&rsquo;t think it&rsquo;s enough. &ldquo;SACE believes the country needs a strong national RES, and until then, it should extend and strengthen the tax credits,&rdquo; Bonitz says. &ldquo;We also need to level the playing field to allow a fair competition of renewables against entrenched subsidized fossil energy sources. In the very near term, the biomass community needs to counter attack against the Farm Bill Energy Title programs, demanding that our senators preserve and strengthen these programs&mdash;for our national security and economic recovery.&rdquo;
 In addition, Bonitz notes that statewide RESs might be the better option in certain circumstances. &ldquo;Our analysis is that North Carolina&rsquo;s (RES), weak as it is, will probably be more effective than any of the national RES proposals we&rsquo;ve seen,&rdquo; he says. &ldquo;And in some national RES scenarios, it&rsquo;s possible that North Carolina might even export some renewable energy or renewable energy credits.&rdquo;&nbsp;
 Under a CES, however, it is likely that natural gas would gain more advantage relative to efficiency and renewables, causing more of North Carolina&rsquo;s dollars to leave the state, Bonitz adds.
 In 2009, the U.S. Energy and Information Administration performed an analysis on the impacts of a national RES of 25 percent by 2030, and its findings were promising. It found that the RES would lead to increased use of renewables and lower electricity sector carbon dioxide emissions, as well as coal and natural gas emissions. The analysis also found that such an RES would not affect national average electricity prices until after 2020, when they would increase by a maximum of 2.7 percent, but fall back to less than 1 percent after 2030.
 Study co-author Christopher Namovicz says the effects of a national RES on electricity prices were minimal in this particular report, but points out that price impacts are largely dependent on the specific policies being proposed.&nbsp;
 A final conclusion of the study names biomass and wind as key fuels that sellers will look to in order to comply with the RES.&nbsp;
 &ldquo;In general, biomass and wind have the best combination of low cost and widespread availability,&rdquo; Namovicz says. &ldquo;Other resources like geothermal or landfill gas may be somewhat lower costs in some locations, but these are not widely available in sufficient quantity&mdash;or quantity at a low cost&mdash;to go very far toward complying with the proposed requirements.&rdquo;
 No federal RES legislation is currently in Congress, and while legislation for a CES has been introduced, it doesn&rsquo;t look as though the bill will pass in the near future.
 Moving Forward
 &ldquo;It&rsquo;s a tough time in Washington to get anything to the president&rsquo;s desk to sign, so it&rsquo;s hard to see that happening,&rdquo; Caperton says. &ldquo;At the same time there is support of the legislation in both the Senate and the House, so I think it would be very reasonable for them to at least vote on it.&rdquo; He believes a CES would be much more likely to pass than an RES, because a CES provides more regional flexibility for states that haven&rsquo;t invested in renewables, such as those in the Southeast. &ldquo;Bringing in a lot of different resources is valuable,&rdquo; Caperton says, adding that the concept of a CES has gotten a broad base of support.
 But what would happen to state policies if a national policy is adopted? &ldquo;There certainly is a fear that some states would say, &lsquo;we have a national policy, we don&rsquo;t need our state policy anymore,&rsquo;&rdquo; Caperton says. &ldquo;That would probably be a mistake, because I think states would tend to have a stronger RES than a federal CES would lead to, and they are seeing a lot of investment and economic benefit through this.&rdquo;
 Regardless of what may happen, work on state-crafted energy policies continues. Bonitz says SACE&rsquo;s allies in South Carolina are striving to get an RES or CES introduced in the state legislature, and efforts continue in Florida. &ldquo;We are hopeful that the myth-perpetuators are beginning to see the beacon of local economic development via off-shore wind and small-scale sustainable biomass, among other clean energy technologies,&rdquo; he says.
 &nbsp;Meanwhile, the states that have implemented an RES will continue to reap the benefits. &ldquo;All of the states that have them are seeing a lot more renewable energy being sold,&rdquo; Caperton says. &ldquo;And that&rsquo;s good for consumers, businesses and workers in those states.&rdquo; Author: Anna Austin Associate Editor, Biomass Power &amp; Thermal <a href="mailto:aaustin@bbiinternational.com">aaustin@bbiinternational.com</a> (701) 751-2756

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While 29 states and Washington, D.C., individually work toward their own renewable energy standards, the U.S. considers a national clean energy standard 

Setting an Energy Standard

The U.S. energy policy can be summed up in two words: cheap energy.&nbsp; For generations, the U.S. business model has been based on securing the flow of cheap fossil fuel. Government policy has avoided taxation schemes that would make those fuels more costly. As a result, for most of our industrial history, we have been insulated from any motivation to become more efficient and to seek alternative energy sources.&nbsp;
 Those days are coming to an end. We seem to be on a one-way, dead-end street. And we continue to look for reprieves from the inevitable consequences of depleting resources in a growing world economy. The natural gas boom is the latest step in prolonging a long history of cheap energy policy and avoiding the price signals that would motivate us to become more efficient and less reliant on depleting resources.
 So after I delivered the keynote address at the International BioEnergy Days (IBED) conference in Lidkoping, Sweden, in late September&mdash;Sweden was chosen because it consistently ranks at the top of lists for energy efficiency and reduced dependence on fossil fuels&mdash;I decided to spend extra time in the country to see what the Swedes have done and are doing.
 My work with bioenergy has taken me many places. But my visit to Sweden was perhaps the most eye-opening. I knew things were different on my first day. On the way from the airport to Lidkoping, we stopped at a Max Burger (a fast food burger shop very similar to McDonald&rsquo;s) and each menu item not only listed the price, but also the carbon footprint it had accumulated on its trip to a food tray.&nbsp;
This was a glimpse into the cultural norms of consumption choices in the country that has been the highest ranked in the world for many years by Germanwatch for its climate change performance. The U.S. is number 52 and China is number 54 in the rankings.&nbsp;
 From listening to our policymakers discuss environmental policy, one would think it is bad for the economy to be good to the environment. In Sweden, that is not at all the case.
 Many of us in the alternative sector understand that the future of our society can be one of greater energy independence, sustainability, and efficiency, all coupled with economic growth and job creation.&nbsp; The U.S. is not there yet and perhaps is not even on the path yet, but in Sweden, that vision of the future is the reality.
 I spent seven days there. The first two were at the IBED conference and the others were spent touring bioenergy facilities and meeting with bioenergy companies and government officials. The IBED conference will be held in the U.S. next year in Minnesota. I would urge those who are in the bioenergy sector to attend.
 My keynote speech at IBED addressed my vision for the Northeastern U.S. and how we at Maine Energy Systems are using European biofuels technology in our corner of the country to lower heating costs, create jobs, increase energy self-sufficiency, and lower carbon footprints. I also spoke about how my company, FutureMetrics, is working with policymakers, community leaders, and industry to facilitate the growth of biomass-fueled heating and combined-heat-and-power (CHP) systems. A number of speakers talked about how Sweden has succeeded with energy policies in moving toward a much reduced reliance on fossil fuels for heating, electricity, and transportation. In the process, the country has also dramatically lowered its carbon footprint.
 Looking Back
 The move away from fossil fuels in Sweden began in the 1970s after the oil shocks. But the more substantive transformation that has brought real structural change began in earnest in 1991 with the implementation of a carbon tax. I realize that in the political climate of the U.S. today, the word tax is a four-letter word. But let&rsquo;s look at what has happened in Sweden.&nbsp;
 The current tax on carbon emissions falls on petroleum-derived products, natural gas, and coal. The cost of wood pellets delivered to Europe is about $185 per ton for cost insurance and freight, which is less than the carbon penalty. Note also that the cost of a ton of coal in Rotterdam is about $120, according to Argus Biomass Markets.&nbsp;
 One might think that these sorts of prices on energy and transportation fuels would cripple an economy.&nbsp; In fact, the Swedish economy did undergo a period of transition after the carbon tax was promulgated. As the use of alternative and renewable energy sources increased, however, the new infrastructure and jobs associated with creating energy from what was once waste, and from other renewable sources, complemented by efficiency gains, drove the Swedish gross domestic product (GDP) per capita to become equal to or greater than the U.S.&rsquo;s by the mid-2000s.&nbsp;
 The policies promulgated after the oil shocks of the 1970s and the carbon taxes started in 1991 have greatly reduced Sweden&rsquo;s reliance on fossil fuels. Energy independence is much closer to reality in Sweden than in the U.S., and a significant portion of that displacement has come from the use of biomass.
 More recent laws require that every town have a biogas filling station for cars and trucks, with the biogas upgraded to at least 97 percent methane and almost no carbon dioxide. Biogas is produced in many local and regional biogas facilities from agricultural and food wastes.&nbsp;
 This has not only created a market for wastes, but also jobs that support energy and transportation. Since biogas does not incur a carbon tax, it is about 30 to 35 percent less expensive to travel the same distance with biogas than with diesel or E85 gasoline. Sweden also provides tangible benefits to biogas vehicle owners, such as free parking, exemption from city gate tolls, special lanes, and significant tax breaks for corporate purchases of biogas vehicles (40 percent reduction on valuation tax).&nbsp; The Volvo factory in Sweden cannot keep up with demand for green cars.
 The byproduct of these policies is what wins Sweden the top ranking in environmental stewardship.
 Real Energy Policy
 So the message is that a real energy policy can work. A real energy policy can not only deliver greater self-sufficiency for the long-term, but also can be done without long-term harm to the economy. For example, a policy with future targets for carbon taxes incrementally applied over a five-year span would provide advanced notice and allow the renewable economy to develop ahead of the crisis.&nbsp;
 A real energy policy requires that energy users have a motivation to become more efficient, to use more of what we might consider waste, and to support an infrastructure for alternatives. But to really notice the dead end on the one-way street, we need to foster an awareness of the consequences of a continued reliance on fossil fuel ingrained as a cultural norm.&nbsp;
 We have a long way to go, but at least we can look elsewhere and see how our future could be different; even from simple acts like making a fast food choice based on minimizing the use of nonrenewable fossil fuel energy. Lowering carbon output is good for the planet&rsquo;s future, but lowering our dependence on fossil fuel energy is good for our economic future.
 Author: William Strauss President, FutureMetrics (207) 824-7428 <a href="mailto:williamstrauss@futuremetrics.com">williamstrauss@futuremetrics.com</a>

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POLICY PIONEER: Sweden's renewable energy ambition has also positioned it as a leader in the development of forest residue harvest machinery.

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2012 Excellence in Bioenergy Award winner William Strauss shares a glimpse into his trip to a country that is light-years ahead of the U.S. in environmental policy

Energy Policy Lessons from Sweden

Grant writers for agriculture and renewable energy projects are often very popular at cocktail parties. Perhaps not the type of parties with ball gowns and tuxedos, but certainly at the after-the-session-free-cocktails-and-snacks sort of events common to trade show functions across the country. Yes, being the person who assists with finding and securing &ldquo;free&rdquo; funds tends to make grant professionals oft-engaged in conversation, if not necessarily the life of the post-session mixer.
 It should be realized, though, that grant writing for biomass projects has its rewards and disappointments. Consultants are certainly rainmakers for many clients when they help secure hundreds of thousands of much needed dollars. But grant professionals can be heartbreakers when they advise against applying for the big federal money because their client&rsquo;s project doesn&rsquo;t meet the guidelines well enough to get an award. No one enjoys that conversation, but it is an essential part of the funding search process.
 It seems everyone is aware of the major grants for biomass projects and can name them easily. Anyone who worked through USDA&rsquo;s Rural Energy for America Program tight grant deadline for 2012 is fully aware of just how many developers and technology providers have been browsing www.grants.gov. That being said, are there really any hidden gems left out there? Or are all of the good grants&mdash;the supposed secret pots of money&mdash;all used up?
 Not Secret, But Underutilized
 There may not be any secrets, but there is one grant that could be considered at least underutilized: USDA&rsquo;s Repowering Assistance Payments to Eligible Biorefineries, commonly called the Repowering Assistance Grant.
 This program, accepting applications now through June 1, has up to $25 million available for eligible entities. Authorized as part of the Food, Conservation and Energy Act of 2009, this year's allotment includes carryover funds from 2011. Individual awards can be up to $10 million and a 50 percent match is required.
 This funding is not exactly for biomass projects, unless you are working with an existing biorefinery. The payments will actually go to the biorefinery, similar to the way BCAP doesn&rsquo;t pay the project developer directly. Sometimes having an order placed by a buyer with guaranteed funds is a grant in and of itself.
 According to Chris Cassidy, national renewable energy coordinator for USDA Rural Development, biomass could be eligible in a variety of ways. &ldquo;Combined-heat-and-power using biomass is an obvious example where a plant could convert to electricity or gas to run the plant,&rdquo; Cassidy says. He also mentioned that anaerobic digestion, pyrolysis, and gasification when using biomass are all technologies that could potentially fit. In reviewing the regulation, one will find that anything besides&nbsp; &ldquo;feedstocks for repowering that are feed grain commodities that received benefits under Title 1 of the Food&nbsp; Conservation and Energy Act of 2009&rdquo; are suitable feedstock sources. Cassidy says hybrid projects could qualify, too, meaning combinations of wind, solar, or geothermal resources with biomass feedstocks could work. &ldquo;The aim is to move to second- and third-generation technologies to power these biorefineries,&rdquo; Cassidy says.
 He adds that the definition of biorefinery is often called into question. Apparently, the definition is intended to mean existing facilities that create liquid transportation fuels using biobased feedstocks such as ethanol and biodiesel plants. Another hang-up for some potential applicants is the word existing. USDA has parameters around this, too. To be eligible for the payments, the biorefinery where the improvements are being installed must have been in operation on or before June 18, 2008.
 Eligible costs for the program are fairly broad and can include just about any capital costs associated with upgrading the existing facility so that it may be repowered with less dependence on fossil fuels. &ldquo;Anyone considering an energy efficiency upgrade to a facility (could) be a good candidate for this program,&rdquo; Cassidy advises, saying he looks forward to good quality, well-researched applications prepared with an eye toward understanding USDA&rsquo;s specific needs for complete application packages.
 Accurate Applications 
 Besides the regulations and a partnership with a facility that has been in business long enough, there are certain hurdles to overcome in the application process. First, good grant writers will advise allowing plenty of time to document and provide the correct detail. The Repowering Assistance Program also requires that an independent feasibility study (consistent with USDA&rsquo;s published feasibility study guidelines) accompany the complete application package. Third-party feasibility documentation, especially the technical component, is critical to approval. Cassidy commonly sees compliance with feasibility study requirements, especially providing the level of detail and sophistication needed for a grant award, as an issue.
 Emphasis on reducing fossil fuel use in liquid transportation fuels production appears to be the original intent of the program. The more fossil fuel the feasibility study indicates can be offset, the higher scoring the application. The guidelines even require a 40 percent reduction to get the minimum score in that category.
 The Repowering Assistance Program may not be the pot of gold at the end of the rainbow, but if your organization&rsquo;s technology can be used by an existing biorefinery, here is a program short on quality applications with $25 million to spend for the right projects. &ldquo;It&rsquo;s rare when we have funds available in these programs and this one has not historically used up its money in any given year,&rdquo; Cassidy says.
 This may be a wide-open door for the right project and technology. When thinking of grants, always have a creative angle in mind and don&rsquo;t overlook partnering with businesses outside your immediate energy focus. For application information, visit www.rurdev.usda.gov/BCP_RepoweringAssistance.html. Author: Sarah Beth Aubrey Certified Grant Administrator, Prosperity Ag &amp; Energy Resources (317) 996-2777 <a href="mailto:sarah@prosperityagenergy.com">sarah@prosperityagenergy.com. </a>

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Even biorefinery-focused programs can offer funding for biomass projects


USDA Repowering Assistance Program:  Underutilized Pot of Gold? 

Algae.Tec Ltd. was founded in 2007 in Perth, Australia, by former Dow Chemical executive Earl McConchie and biofuels and investment specialist Roger Stroud. After conducting extensive laboratory, bench and pilot tests and product scales, the entrepreneurs perfected the core technology, aptly named the McConchie-Stroud System, to deliver high-yield, enclosed and economically competitive algae to produce transport biofuels. R&amp;D into algae species continued at the company&rsquo;s U.S. headquarters, the Algae Research, Development &amp; Manufacturing Centre in Atlanta, originally an 18,200-square-foot fabrication facility that has now expanded to 70,000 square feet. The McConchie-Stroud System is ready for full-scale demonstration as part of the road to commercialization.
The McConchie-Stroud System uses enclosed steel photobioreactors (40-foot shipping containers) that are linked to solar light capture arrays and a carbon dioxide source (a power station or commercial emitter of carbon dioxide). The system provides the ideal algae growing conditions producing biomass and algal oil at prices below crude oil. The algae product is used for the production of green jet fuel and biodiesel.
Importantly, the McConchie-Stroud System does not use human food crop sources as feedstock, and it has a smaller footprint, just 10 percent or less, than the pond methods. The enclosed system enables complete control of the environment, maximizing growing conditions while removing external factors such as wild species, storm and tempest, and evaporation.
The Algae.Tec board of directors comprises a leading team from biofuels research, industry and financial sectors. Peter Hatfull, the managing director and company secretary, has an extensive skill set in the areas of business optimization, capital raising and company restructuring, and brings valuable accounting and business expertise to the company. Roger Stroud, executive chairman, has more than 35 years of experience in business management, and recently moved into building businesses in the renewable fuel sector, primarily in biodiesel. Garnet Earl McConchie, executive director, has more than 35 years of experience over a broad field of chemical engineering and associated technologies, including global markets, bulk chemicals and plastics, differentiated commodities and intermediates, specialty chemicals, polymers and interaction with environmental sectors. Timothy Morrison, the nonexecutive director, helps extend existing research relationships, and to develop new links with business and industry. His history with Murdoch University in commercial and research roles brings insight to the team. This highly skilled team serves as a strong foundation for Algae.Tec.
In 2011, the company listed on the Australian and Frankfurt stock exchanges, and launched an American Depository Receipts program in the U.S. Last June, Algae.Tec signed a collaboration contract with the Manildra Group for the construction of its Australian demonstration facility at Nowra, south of Sydney, Australia. Known as Shoalhaven One, the facility is set up so Algae.Tec&rsquo;s photoreactors sit next to the main facility, taking a carbon dioxide feed from the main ethanol fermenters. The start up of this facility was expected to be late March.&nbsp;
Algae.Tec&rsquo;s success over the past 14 months has attracted considerable interest in the fast-growing biofuels sector and investor circles. It finished 2011 as the top IPO performer on the ASX, and has signed deals and collaborations with some of the world&rsquo;s leading companies in Asia, Europe and the U.S., and has secured $11 million in additional capital (post-IPO).
In December, Algae.Tec signed a collaboration contract to initiate its first algae biofuels production facility in Asia with the Sri Lanka arm of global cement giant Holcim. The staged facility is expected to be fully operational within the next 24 months. &ldquo;The Algae.Tec facility is designed to reduce the cement manufacturing carbon dioxide emissions with an offtake into the algae growth system,&rdquo; said Holcim Lanka CEO Stefan Huber. &ldquo;We look forward to working with Algae.Tec on this exciting development that is aligned with our focus on sustainability and a commitment to the environment. Algae.Tec has a truly innovative technology backed by an expert international engineering team.&rdquo;
Following this, in the same month, Algae.Tec and the major European airline Lufthansa signed a memorandum of understanding (MOU) to jointly evaluate the potential for algae oil to be developed into a sustainable source of green jet fuel.
In January, Algae.Tec signed a binding MOU for a 50/50 equity joint venture (JV) in China with Chinese company the Shandong Kerui Group Holding Ltd. Under this JV, a 250-module algae biofuels facility will be built, the first of its size and type in the world. The Kerui Group, based in Shandong Province, the second largest oil province in China, has extensive business interests in the People&rsquo;s Republic of China, primarily in the manufacturing of oilfield and petroleum industry equipment, and power generation and building facilities. The group has offices in 18 countries outside China. According to the Kerui Group, China has targeted pollution and carbon as part of its current five-year plan from 2011 to 2015, so the Algae.Tec carbon-capture solution is expected to be well-received by carbon-emitting companies and the government. Algae.Tec executive chairman Stroud said, &ldquo;The Algae.Tec technology will reduce unwanted emissions and will convert them into locally produced transport fuels, which will add to fuel independence.&rdquo; This deal positions Algae.Tec for expansion in the fastest growing economy in the world.
Meanwhile, Algae.Tec had been briefing investor groups in the U.S., Asia and Europe and secured working capital of $6.42 million from an investor group in the U.S., then worked with Australia-based Paterson&rsquo;s Securities in a successful placement that raised $5.35 million. The capital will be used to fast-track commercial projects. Stroud said the successful capital raising demonstrates that sophisticated investors are aligned with the need for alternative transport fuel technologies like Algae.Tec&rsquo;s. Biofuels, particularly from nonfood crop sources such as algae, are attracting investor interest around the globe. Algae.Tec is continuing its collaboration and JV strategy with the aim of rolling out biofuels production facilities around the globe. Author: Amy Richardson Account Executive, DMG Media Marketing +61 2 8006 0424 amy@dmgpr.com

With the McConchie-Stroud technology platform and a host of deals in the works, Algae.Tec is helping develop algae's future

The Road to Commercialization

The U.S. algae industry has made great strides toward technology improvement and commercialization, and some federal departments, most notably the Navy, have helped drive growth in this sector. The Navy is preparing to operate a Green Strike Group this year that is fueled with a 50/50 mix of biofuel. The use of algae-based fuel has played a large role in its evaluations. Solazyme was recently credited with delivering more than 95,000 gallons of algae-derived fuel to the Navy.
The U.S. DOE has also shown the sector support, including ongoing research and development under its national laboratory system. It was an important benchmark for the industry when the National Renewable Energy Laboratory revived its shelved aquatic species program. Also, a variety of cooperative research and development agreements (CRADAs) have been formed with private industry to help accelerate technology development.
It is important that biofuels, including those from algae, are supported by several top government officials. In fact, the day after President Obama&rsquo;s State of the Union address, he traveled to Buckley Air Force Base in Aurora, Colo., where he spoke about the defense department&rsquo;s need to transition to cleaner, domestic fuels. Obama specifically called attention to the fact that the Navy made the single largest purchase of biofuel in government history late last year.&nbsp;
There are several specific actions other federal agencies can take, however, to further support algae advancement. One desire raised by many in the industry is to see more involvement by the USDA. A crop insurance program, for example, could help derisk algae cultivation and attract the traditional agricultural community to the industry.
The Navy has always been a force leading new energy technology development, and its role with algae-derived biofuels is no different. In addition to the obvious benefits of having one of the world&rsquo;s largest fuel consumers pulling for your sector, important public relations benefits also stem from the Navy&rsquo;s support of renewable fuels. Navy Secretary Ray Mabus, in particular, has been an outspoken advocate. He has repeatedly&mdash;and patiently&mdash;reiterated the many reasons why the Navy should lead the charge to develop domestically produced biofuels, often pointing out the vulnerabilities and cost variability associated with sourcing petroleum fuels from the global marketplace. For example, during a House Armed Services Committee hearing in February, Mabus was questioned about the relevancy of the &ldquo;strong emphasis&rdquo; the Navy has placed on its biofuels initiative. Mabus once again explained that purchasing oil products on the open market leaves the Navy open to unacceptable vulnerabilities associated with sufficient fuel supplies and price shocks that have increased Navy fuel expenditures by up to $1.1 billion per year.
Mary Rosenthal, executive director of the Algal Biomass Organization, says she appreciates the support that the Navy has offered the sector. &ldquo;The testing, use and procurement of algae-derived fuels by the Navy, for instance, has been a huge help in generating awareness of the quality of these fuels among the aviation community,&rdquo; she said. &ldquo;Continued support in the form of funding, legislation and procurement will only help accelerate commercialization of algae-based fuels. The Department of Defense is a perfect &lsquo;test bed&rsquo; for new technologies and products. DOD&rsquo;s support for algae-derived fuels would be an important seal of approval.&rdquo;
While the Navy has been primarily procuring algae-based fuel from Solazyme, which runs a fermentation production technology, many hope the Navy will expand its procurement to algae fuel from other companies employing different production technologies. &ldquo;[The Navy] has gotten out ahead of the industry and sort of created a market for some of these fuels,&rdquo; says Tim Zenk, Sapphire Energy Inc.&rsquo;s vice president of corporate affairs. &ldquo;Particularly, they have focused on algae generated from sugar. We hope the Navy recognizes that scalability really happens when you get beyond just fermentation and you liken algae production to large-scale agriculture.&rdquo;&nbsp;
The DOE has an extensive network of nearly two dozen national laboratories and technology centers in place. While these entities do extensive work in the realm of scientific research, many also benefit private industry through the development of CRADAs, research partnerships focused on developing commercially deployable processes or technologies.
OriginOil Inc. recently established a CRADA with DOE&rsquo;s Idaho National Laboratory to codevelop an integrated system for direct conversion of raw algae into a renewable crude oil for use by existing petroleum refineries. The technology, dubbed the Biocrude System, would integrate OriginOil&rsquo;s harvesting system with a biomass processing technology being developed under the CRADA. Paul Reep, OriginOil&rsquo;s senior vice president of technology, says this is the second phase of an earlier effort in which INL helped OriginOil develop an understanding of energy balance modeling for its process technology. &ldquo;INL has developed a sophisticated understanding of modeling and simulation technologies over the past several decades through its advanced nuclear energy programs, for commercial power and nuclear Navy program; a particular and recognized strength of the INL,&rdquo; Reep says. &ldquo;We have found INL to be responsive and pragmatic, and a perfect fit for a small company looking to get the exact technical expertise it needs for each specific project, without increased organic/internal staffing. The taxpayers pay for this expertise, and it&rsquo;s industry&rsquo;s opportunity to extract tremendous value from this national resource.&rdquo;
While the ability to leverage the national laboratory system is obviously beneficial to the algae sector, industry leaders would like to see more DOE activity and support. Reep, for example, notes that a DOE-led Manhattan Project kind of effort would represent a big opportunity for the algae industry. Team and leadership are the watchwords that together form the culture needed to foster advancements that realized nuclear energy. &ldquo;The DOE labs have the team&mdash;is there a leader up to the task?&rdquo; he asks.
Rosenthal says the ABO would like to see the DOE continue to support algae R&amp;D but shift focus away from lab-scale work and concentrate on activities that support scale-up and commercialization. &ldquo;Specific areas of focus might include resistant strains, large-scale water and CO2 use, development of large open air ponds, circulating algae, dewatering, harvesting and conversion of wet algae into crude, changing strains effectively on a large scale to fit changing climate conditions, and refining into high-grade fuels,&rdquo; she says.
Tim Burns, CEO of BioProcess Algae LLC, says he would also like to see algae take on a more significant role in the DOE&rsquo;s Biomass Program. &ldquo;[Algae] is going to be a crop,&rdquo; he says, adding that to advance it in a proper fashion, health, productivity and yield advancements must be made.
While algae cultivation differs in important ways compared to traditional row crops, it is still a crop. As demand for algae grows, it&rsquo;s likely the agricultural community will get involved. &ldquo;If you look at what we do well in this country, we have had one surplus in one industry over the past 70 years and it has been in agriculture,&rdquo; Burns says. &ldquo;We are the farmers of the world. We need to take the same approach [with algae], and I think the USDA has great programs and a practical approach to the way it develops programs and gets programs to produce at scale. I think the USDA is a well-suited group to actually move this. Personally, I think it is best positioned to move the advanced fuel and algae spaces.&rdquo;
Zenk says developing a crop insurance program for algae would significantly help the industry reach commercial production. &ldquo;Farmers are a very conservative lot,&rdquo; he says. &ldquo;They also take a great deal of personal risk in that they own their land, and there are things that can wipe out their crops through no fault of their own. Crop insurance is a way to protect the farmer from these circumstances, and the same will be true with algae production, especially those of us who believe there is this nexus between energy, agriculture and biotechnology.&rdquo;
The Biomass Crop Assistance Program is another USDA program that could help fuel expansion in the algae sector. &ldquo;BCAP doesn&rsquo;t treat algae the same way it treats terrestrial crops,&rdquo; Zenk says. &ldquo;We need to get the USDA to fully embrace [algae] as a new form of farming because of its potential to really bring large-scale energy development to the U.S.&rdquo; USDA, he says, has an enormous role in this.
No matter how the specifics play out in the end policy-wise, the support offered by federal entities is clearly benefiting the algae industry. &ldquo;It&rsquo;s absolutely essential that the government continue to maintain the outspoken bravado around algae, and the value to the Department of Defense and the country,&rdquo; Zenk says. &ldquo;It&rsquo;s got to be in our national interest to move the needle, and without that support, it isn&rsquo;t going to happen.&rdquo; Author: Erin Voegele Associate Editor, Algae Technology &amp; Business (701) 540-6986 evoegele@bbiinternational.com

Public Support for Private Advancement

Significant advancements and milestones were made this past year by several algae technology developers. Focused particularly on growth, harvesting and extraction (GHE) links within the supply chain, they are on the verge of supplying their methods and technologies to customers for commercial deployment. Among them is Golden, Colo.-based BioVantage Resources Inc. CEO Sue Kunz says her company&rsquo;s approach to facilitating commercial-scale deployment for its customers doesn&rsquo;t hinge on the traditional thought of metrology, or going from the clich&eacute;d &ldquo;beakers to barrels.&rdquo;
&ldquo;We don&rsquo;t measure productivity on grams per liters per day,&rdquo; Kunz tells Algae Technology &amp; Business. &ldquo;We want to measure it in grams per liter per year because that&rsquo;s the right measure when taking a commercialization approach.&rdquo;
Founded in 2008, BioVantage Resources has a diverse staff with expertise ranging from mechanical engineering to optics. &ldquo;We have a manufacturing and Six Sigma background,&rdquo; Kunz says, &ldquo;so we think along the lines of repeatable, reliable, cost-effective processes. That&rsquo;s our forte.&rdquo;
BioVantage Resources offers three main product lines designed to meet desired specifications by the client. The first, its bubble column reactors (BCR), features capacities designed and tested to perform well in a graduated, sequential scale-up from Erlenmeyer flask to 2-gallon BCR to 9.5-gallon BCR, and up to larger capacity inoculation systems for rapid, high-quality biomass aggregation. The company&rsquo;s BCR offerings fold into its second product line, tank-based reactors for larger volumes of algae growth. The system&rsquo;s modular design comprises up to 20-, 50- or 150-gallon growing tanks, one or more automated medium preparation systems and a system control center. Its third line includes custom aboveground or inground raceway pond designs with capacities of 500-plus gallons. The company also offers fully automated growth media preparation systems and paddlewheel components for open pond configurations.
New York-based algae cultivation technology developer Culture Fuels Inc. is harnessing the inherent benefits of both open pond and photobioreactor configurations through a low-cost, highly productive hybrid growth technology platform trademarked FloatAlgae, capable of cultivating algae strains irrespective of the strain or the final product market. Founded in 2010, Culture Fuels has been operating an outdoor pilot facility at the University of South Florida-Polytechnic in Lakeland testing selected strains of natural algae growth in three separate 100-liter FloatAlgae systems.
Culture Fuels CEO Lawrence Walmsley describes the FloatAlgae system as a closed bioreactor that floats on an open pond with the algae housed inside the reactor featuring an integrated aeration system allowing carbon dioxide to enter. &ldquo;Because it&rsquo;s floating in this heat sink, it holds its temperature so it doesn&rsquo;t get too hot,&rdquo; Walmsley explains, adding that a one-degree difference in outside and inner reactor water temperature can affect growth in certain algae species that are sensitive to temperature. &ldquo;With the same algae strain, we can produce higher productivity than other systems if the water ends up getting too hot in other places.&rdquo;
In addition to its low-capital profile, Walmsley highlighted additional benefits of the FloatAlgae technology: improved thermal control, higher biomass density due to low dewatering costs, reduced propensity for contamination, and scalability. Walmsley says the pilot facility at USFP will be used to showcase its proprietary FloatAlgae reactor system as it seeks institutional funding to complement matching state funds already obtained, for deployment of a demo facility near a one-acre landfill site owned by a Florida municipality. &ldquo;The site is available now,&rdquo; Walmsley says, adding that it has access to water, leachate runoff from the nearby landfill to help cultivate the algae, and carbon dioxide byproduct from the municipality&rsquo;s methane-powered turbines. &ldquo;It&rsquo;s not just any location, but it&rsquo;s a location that I believe is a great example of how this industry should develop.&rdquo; Commercial Clientele Whether it&rsquo;s customized paddlewheels or state-of-the-art centrifuges, developers and vendors say they&rsquo;re experiencing growth in sales to clients interested in applying the equipment for commercial-scale applications. Robert Vitale, president of Franklin, N.C.-based Waterwheel Factory, a paddlewheel designer and supplier, is noticing several domestic and international algae developers moving from demonstration to commercial deployment. The company initially began building custom mechanical waterwheel devices 14 years ago. In 2008, it began supplying sturdy, energy-efficient paddlewheels for open algae ponds. Clients include General Atomics, Sapphire Energy, ExxonMobil, AlgaeVenture, plus universities such as Texas A&amp;M Agrilife Research Center and AlgaeBioTech in Netherlands.
Vitale says most projects he deals with are up to 1,500 acres in scale and a number of them are &ldquo;ready to bite the bullet,&rdquo; he adds. &ldquo;We&rsquo;re at the point now where we&rsquo;re beginning to jump into a serious mindset as to what it&rsquo;s going to take to go commercial.&rdquo;
Waterwheel Factory&rsquo;s services go beyond manufacturing and supplying paddlewheels. It also provides water biochemistry monitoring, remote management and control, site equipment components, installation management consulting and some invaluable pro bono services, Vitale says. &ldquo;We&rsquo;ve been known to act as the client&rsquo;s eyes.&rdquo;
Netherlands-based algae harvesting technology developer Evodos recently announced Algae 2 Omega would be the first to purchase its new Type 250 centrifuge in development. Evodos CEO Marco Brocken says Algae 2 Omega will install the 250 centrifuge by end of year. It&rsquo;s a larger version of Evodos&rsquo; Type 10 and Type 25 centrifuges designed for a flow of 40 cubic meters per hour and a solid discharge capacity of 500 liters per hour. The 250 uses the same spiral plate technology as all other Evodos centrifuges and is amenable for either PBR or open pond configurations. As all of Evodos&rsquo; harvesting machines, the algae are harvested as paste containing only live algae and less than 2 percent extracellular water, which helps extend shelf life. &ldquo;We are talking with several companies that are at the forefront of taking the next step to commercialization,&rdquo; Brocken says, adding that Evodos&rsquo; cheapest harvesting machine costs about $58,000. &ldquo;You can always look at the price of the machine, but it&rsquo;s the investment&mdash;or overall capital expense of the operation&mdash;that&rsquo;s important.&rdquo; Partnerships A foundation of partnerships, collaborations and alliances in industry is essential for algae commercialization. OpenAlgae LLC, a Houston-based algae developer formed in 2008 with help from the University of Texas Center for Electromechanics, has focused on optimizing and scaling three subareas within the GHE supply chain. After algae is harvested and water is recycled, OpenAlgae uses a novel lysing step to separate lipids from the algal cells. Vice President Peter Kipp says Open Algae&rsquo;s approach is unique because it doesn&rsquo;t require drying, hexane extraction or centrifugation steps. &ldquo;We&rsquo;re trying to take technologies that exist and are used at scale in other industries and apply them to algae,&rdquo; Kipp says, &ldquo;rather than try to do something that&rsquo;s totally unorthodox and new. We&rsquo;re trying to base everything on science that we know is scalable and we know we have a good idea of what the cost is.&rdquo;
Another technique that differentiates OpenAlgae as an end-to-end solution, Kipp says, is its oil recovery technique, the final step, where it takes the complex mixture of oily water and broken algal cells (slurry) and pulls away the oil using a membrane separation process, leaving behind a completely de-oiled wet biomass. &ldquo;That allows us to think about algae like a true commodity product,&rdquo; Kipp says, &ldquo;where we&rsquo;ve actually separated the oil from the biomass and both streams maintain full value. That, to us, is where the industry has to go. Algae has to become a commodity if it&rsquo;s going to reach the scale that people want it to reach.&rdquo; In addition to working with UT, Kipp says OpenAlgae collaborates with partners like Waterwheel Factory and various other technology developers, and the company is open to dialogue with more. &ldquo;We&rsquo;re really talking to a lot of the leaders and it&rsquo;s exciting,&rdquo; Kipp says.
Like OpenAlgae, Toronto-based Pond Biofuels Inc. values the concept of partnerships for achieving its commercial-scale objectives. In January, Pond Biofuels launched the piloting of a unique 16,000-liter (4,227-gallon) algae bioreactor production system using LED lighting at St. Mary&rsquo;s Cement with support of the Ontario government. The company is preparing to scale up to a 100,000-liter demo facility, which should be operational by mid-year. A commercial plant is expected to be in operation at St. Mary&rsquo;s by 2014. Steve Martin, CEO and co-founder of Pond Biofuels, says the company&rsquo;s commercialization approach is driven by a &ldquo;pull&rdquo; model&mdash;meaning it pulls together and integrates known, proven technologies that have demonstrated performance at industrial scale&mdash;rather than a &ldquo;push&rdquo; model of innovation. &ldquo;There&rsquo;s a comfort level there in terms of developing the technology in that way,&rdquo; Martin says. &ldquo;We don&rsquo;t propel our ideas out into the marketplace and expect to have acceptance. We go to the market and see what they&rsquo;re interested in accepting now, and we provide those to them as the solution to our project.&rdquo;
As for BioVantage Resources, the company is deeply entrenched in partnerships with a number of private and public parties, including the Colorado School of Mines; Utah State University; Stewart Engineering, a Fort Collins, Colo.-based engineering firm that also tests alternative feedstocks; Evolutionary Genomics, a Lafayette, Colo.-based biotech company that has developed a proprietary adapted traits platform to identify specific genes that can be commercialized; and finally, Bio2 Solution, a Strasburg, Colo.-based algae solutions company that, like BioVantage, is working to develop and commercialize wastewater remediation technology, which uses algae.
&ldquo;There&rsquo;s great stuff going on and we&rsquo;re excited about what we&rsquo;ve seen,&rdquo; Kunz says. &ldquo;No small company can focus on the whole value chain. You&rsquo;ve got to pick what you&rsquo;re going to win at because, if you bite off more than you can chew, you will fail.&rdquo;
Author: Bryan Sims Associate Editor, Algae Technology &amp; Business (701) 738-4974 bsims@bbiinternational.com

Scaling up algae growth, harvesting and extraction technologies, and the companies facilitating commercial deployment

Commercial-Scale Progress

1. Melbourne, Fla.-based PetroAlgae Inc. has changed its name to Parabel Inc. The company said the new name better reflects its strategic changes and commercial milestones. Information issued by Parabel noted that its proprietary technology addresses global demand for new sources of feed, food and fuel. According to the company, its open-pond bioreactor technology enables customer licensees to grow, harvest and process locally available, aquatic microcrops. Parabel&rsquo;s technology is used to cultivate microcrops from the Lemnaceae family, including duckweed. The company filed an IPO registration statement with the U.S. Securities and Exchange Commission August 2010, and amended that registration December 2011. Due to the pending IPO, Parabel is not currently able to offer additional comments on the name change. Parabel operates a demonstration-scale algae production facility in Fellsmere, Fla. 2. Blue Marble Biomaterials formed a partnership with University of Montana to leverage ongoing research by Carrine Blank, a research assistant professor at UM&rsquo;s geosciences department, and Nancy Hinman, a geosciences professor. They discovered a unique class of algal organisms that have exceptional metabolic pathways that can use alternative metabolic resources to produce biomass before photosynthesis occurs. A paper is expected to be published by Blank and Hinman based on the research between UM and Blue Marble. Blue Marble has done extensive work with algal biomass both in remediation and production. Finding ways to incorporate novel algal technologies into its waste recycling system was a key driver behind the decision to partner with UM. 3. Sapphire Energy Inc. has entered into a licensing agreement with Earthrise Nutritionals LLC, a company that has produced spirulina and spirulina-based products for more than 25 years. Spirulina, also known as blue-green algae or cyanobacteria, can be cultivated in a similar fashion to green algae to produce lipids. Sapphire Energy will integrate Earthrise Nutritionals&rsquo; spirulina strain into its growing inventory of cyanobacteria and algae strains for algae-to-energy production. As a result of the agreement, Sapphire Energy said it has significantly improved its operational efficiency by expanding the range of strain choices available for producing its biobased crude, which can be refined into diesel, jet and gasoline fuels. 4. California-based algae technology developer OriginOil Inc. has signed a joint commercial agreement with Aquaviridis Inc. to help develop the multiphase algae production rollout of its Mexicali, Mexico, pilot site. It will serve as the model for future algae sites throughout the North American Free Trade Agreement region, with a focus on desert areas of the American Southwest and Mexico. OriginOil will provide its expertise to help develop growth and harvesting solutions and implement its unique algae growth, harvesting and oil extraction technologies. The facility will also serve as a test bed for OriginOil&rsquo;s ongoing research and development innovations. Backed by private sector funding, Aquaviridis (Latin for &ldquo;green water&rdquo;) has developed a pilot-scale facility south of Mexicali in Ejido Nuevo Leon, Baja California Norte, Mexico, and plans to immediately scale up from research and development to 10 acres of pilot algae production by midyear. Commercial-scale production capacity is expected by the second quarter of 2013. The intent of the project is to develop economical algal crops to exploit opportunities in algal-based human dietary ingredients, while demonstrating scalability of low-cost methods for producing algae as fish meal protein replacements and other high-value animal feed applications. 5. Solazyme Inc. announced the hiring of Mark Warner as senior vice president of engineering. Warner joins Solazyme from Harris Group where he was senior vice president of process industries. In his new role with Solazyme, Warner is responsible for the design and construction of Solazyme&rsquo;s renewable oil and bioproducts production facilities worldwide. Before Harris Group, Warner was responsible for the design and construction of one of the largest biodiesel production facilities in the U.S., Imperium Renewables&rsquo; Grays Harbor facility, as vice president of engineering for Imperium. He also led project development of several advanced biofuel production facilities in the U.S., Argentina, Europe and Asia, according to Solazyme. A professional engineer, Warner has 26 years of experience in business, technical, and management experience in the building and development of renewable energy projects and chemical plant operations.
&nbsp;
Share your industry briefs To be included in Business Briefs, send information (including photos and logos if available) to: Industry Briefs, Algae Technology &amp; Business, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-8385, or e-mail it to rkotrba@bbiinternational.com. Please include your name and telephone number in all correspondence.

In a speech in Florida in late February, President Obama announced support and funding for algae-related research and development, and noted the potential for algae-based biofuels to help America increase its supply of domestic fuel and energy.
While his pronouncement was met with some campaign-year pushback, the timing could not have been better. The national attention on algae put the topic top-of-mind just as we had more than two dozen members descending on the Capitol for our annual legislative fly-in in Washington, D.C. This increased momentum gave us a great entry point for discussions that the Algal Biomass Organization and its members had with nearly 50 members of Congress, staffers and agency representatives in one-to-one meetings, a legislative hearing and an industry reception.
In addition to sharing the benefits of algae for our national security, economic development and energy independence, we also released the results of the ABO&rsquo;s 2012 industry survey, which shed some important light on where the industry stands. What We Heard So what did we hear? We found a wide range of awareness about algae on Capitol Hill but also heard a lot of questions. Many people were eager to discuss detailed precommercial and commercial developments, while others were interested in more greatly understanding the environmental and economic sustainability of this developing agricultural crop. The wide range of questions and interest provided us one more gauge regarding the need for education with advanced biofuels and biobased materials, and especially algae.&nbsp; What We Said We focused on the key 2012 legislative priorities for the algae industry. Perhaps most timely is the proposed amendment (No. 1723) to the &ldquo;MAP 21&rdquo; Transportation Bill, introduced by Sens. Jeff Bingaman, D-N.M., and Bill Nelson, D-Fla. The amendment would rename the cellulosic credit as the second-generation biofuel credit, making both cellulosic and algae-based fuels eligible, and also making relevant production facilities eligible for bonus depreciation benefits. This amendment is similar to legislation introduced last year in the House (the Algae Fuel Parity Act H.R.1149) and in the Senate (the Algae-Based Renewable Fuel Promotion Act of 2011 S.748).
As I write this, two similar amendments to the highway bill have also been introduced by Sens. Debbie Stabenow, D-Mich., and Mitch McConnell, R-Ky. We are fortunate that both of these energy tax amendments include the algae tax parity language supported by ABO.
Algae producers and industry players should also voice support for the Energy Title in the 2012 Farm Bill as well as Fuel for Enhancing National Security Act HR 1847 in the House and S.1079 in the Senate.
I bring this up as a lead-in to my last point&mdash;the results of our industry survey. We received more than 380 responses from all parts of the algae industry value chain, and a few things were made abundantly clear. On policy matters like the ones listed above, consensus was clear: 96 percent of respondents said leveling the playing field for algae would accelerate production. And more than 80 percent said that stable and supportive federal policy would accelerate the industry&rsquo;s growth, increase production and drive job growth.
The survey also told us that 65 percent of respondents are increasing production at new and/or existing facilities this year. Nearly 70 percent believe it is moderately to extremely likely that algae biofuels will be commercially available and competitive with fossil fuels by 2020, with nearly 50 percent projecting algae-based fuels at less than $3 per gallon by then.
So let&rsquo;s keep our foot down on the gas pedal and share our successes and our promise with local, state and federal policymakers to ensure that algae-based fuels can begin playing a significant role in our domestic fuel supply. Author: Mary Rosenthal Executive Director, Algal Biomass Organization (763) 458-0068 mrosenthal@algalbiomass.org

Leveling the Playing Field for Algae

Opportunities for innovation in algal fuel development and production are significant and attracting even presidential attention. With innovation, however, often comes uncertainty, and in the case of algae product development, regulatory uncertainty has tagged along for the ride.
In the face of such uncertainty, algae developers should plan on the front end to satisfy the most obvious regulatory hurdles. Several regulatory schemes likely apply to algal development and production activities. These include: &bull; The U.S. EPA&rsquo;s Toxic Substances Control Act. &bull; The USDA&rsquo;s Plant Protection Act. &bull; The National Environmental Policy Act. &bull; State and local planning and permitting requirements. The Toxic Substances Control Act requires that a manufacturer or importer notify the EPA 90 days before manufacturing or shipping certain new chemical substances, including microorganisms such as microalgae that are a combination of genetic material from organisms of different species. Notification is not required when the microalgae are naturally occurring or when the genetic material from microalgae of the same genus is combined. Sufficient time should be built into development and financing schedules to accommodate this notice requirement if genetically modified algae strains are involved.
Microalgae research and development activities may also be subject to National Institute of Health Guidelines if federal funds are involved. If testing will involve the release of microalgae into the environment, a TSCA Experimental Release Application could be required. Research conducted in a &ldquo;contained structure&rdquo; is generally exempt from reporting requirements.
The USDA&rsquo;s Animal and Plant Health Inspection Service regulates the interstate movement of bioengineered plants and microorganisms deemed &ldquo;plant pests&rdquo; pursuant to the Plant Protection Act. Plant pests are organisms which can directly or indirectly injure or cause disease or damage to any plants or plant products, and include all bioengineered organisms without a known plant pest classification. Plant pests require a permit for import, interstate movement, or environmental release.&nbsp;
Environmental planning and permitting, such as National Pollutant Discharge Elimination System permitting, industrial wastewater discharge authorization, and waste disposal regulations may also come into play. The National Environmental Policy Act requires that federal agencies consider the environmental impacts of &ldquo;federal actions.&rdquo; Federal actions include projects and programs financed, assisted, conducted, regulated, or approved by federal agencies. If an algae project will use federal funds or will require a federal approval, a NEPA environmental assessment may be required prior to project commencement. The NEPA process can take several months to complete and can add costs to a project, so project developers should be sure to factor in the potential for added time and costs during the planning process.
Various state and local laws could apply to algae product development, including state permitting and licensing requirements, which may be complicated by the fact that production of algae products is a hybrid of aquaculture and manufacturing. In addition, states and localities have a patchwork of nonnative species regulations. Although these have focused primarily on algae released by boats and aquaculture, algae fuel developers should plan to put in place containment systems to avoid releasing nonnative algae into the environment.
Project developers should contact state regulatory agencies such as aquaculture and agriculture agencies, departments of natural resources, fish and wildlife departments, water quality and energy regulatory commissions, and economic development agencies, to bring to light any potential issues. These groups may also have access to funding sources such as EPA grants or economic development incentives, making them potentially useful allies as well as regulatory obstacles.&nbsp;
Additionally, zoning requirements can make or break development projects, and project developers should carefully consider land use planning processes and the discretionary authority of local governmental entities prior to selecting a facility location and beginning development.
The applicability of these and other federal, state and local laws and regulations to algae-for-fuel projects depends on the type of algae involved, funding sources (e.g., federal, state or private), whether project activities are taking place indoor or outdoors, and the specific location of the project. As a result, it is crucial to communicate early and often with governmental authorities at all levels to keep projects on schedule and avoid fines or litigation down the road. Authors: Lindsey Hemly, Emily Chad Attorneys, Fredrikson &amp; Byron lhemly@fredlaw.com (612) 492-7454

Good Planning Helps Satisfy Regulatory Hurdles

As part of the National Alliance for Advanced Biofuels and Bioproducts consortia, Honeywell&rsquo;s UOP has been tasked with converting algal oils produced by consortia partners into fungible transportation fuels such as trademarked Green Jet Fuel using the UOP Renewable Jet Fuel process and Green Diesel using the trademarked UOP/ENI Ecofining process. These processes are based upon UOP&rsquo;s more than 90 years of experience and expertise in the petrochemical refining industry and hydrotreating technology. Hydrotreatment utilizes hydrogen at elevated temperatures and pressures, in the presence of a suitable catalyst, to remove hetero-atoms such as oxygen, nitrogen, sulfur, and halides such as chlorine, from organic molecules to produce a purely hydrocarbon fuel.
UOP received a number of algal-derived oils from NAABB partners for evaluation as feedstocks for both the Ecofining and Renewable Jet Fuel processes to produce drop-in hydrocarbon fuels. The analysis of these oils indicated that the level of contaminants such as metals, phosphorous, nitrogen, chlorine and sulfur varied widely depending upon both methods of cultivation and oil extraction. Some oils were obvious candidates for conversion to hydrocarbon fuels whereas other algal oils presented challenges for processing without additional pretreatment. Pretreatment of the algal oils may include processes such as degumming as is commonly used in the pretreatment of vegetable oils. Pretreatment of algal oils not only serves to remove catalyst poisons, it also provides a mechanism by which valuable nutrients such as phosphorous, nitrogen, and divalent cations such as calcium and magnesium can be recycled back to the cultivation ponds from the extracted oils, especially if pretreatment is done near the source of cultivation.
UOP successfully converted three algal oils supplied by NAABB members to hydrocarbon fuels. One of the oils was a fatty acid methyl ester (FAME) oil produced by an NAABB member using a proprietary process to convert whole algal biomass to FAME oil and byproducts. The other two oils were crude triacylglyceride (TAG) oils extracted from algae grown in outdoor ponds. All the algal oils required pretreatment to remove metals and phosphorous before conversion to fuels. A two-step process was used for conversion to produce jet and diesel fuels with the required freeze and cold flow properties. The first step involved removal of oxygen, along with nitrogen and sulfur. This step produced straight-chain normal (n-) alkanes from the fatty acid component of the algal oil. The second step involved the cracking and isomerization of these straight-chain alkanes into a mixture of highly branched (iso-) alkanes. Some of the larger molecular weight paraffins were also cracked into smaller molecular weight paraffins, which increased the amount of material that was in the jet fuel boiling range. This flexibility allows the yield of jet and diesel product to be tuned towards either fuel, depending upon the current market value of jet fuel versus diesel fuel. The treated product was then fractionated by distillation into naphtha, synthetic paraffinic kerosene (SPK) jet fuel and diesel fractions. Along with naphtha, some light fuel gas is also produced. Both of these products have value as fuels, and the naphtha fraction can be a feedstock for a reforming unit for gasoline or polymer-grade olefins.
The SPK fraction from all three algal oils met the recently published ASTM D7566 specifications for bio-SPK jet fuel component for density, freeze point, flash point and distillation profile.
The diesel product made from these algal oils also met the specifications for both the U.S. Navy F-76 Marine Distillate fuel and the ASTM D 975 No. 2-Ultra Low Sulfur Diesel.
Outside of the NAABB project, UOP has converted considerable quantities of heterotrophically produced algal oils to jet and naval distillate fuels. More than 100,000 gallons of finished hydrocarbon fuels have been produced from oils extracted from heterotrophically grown algae. These fuels are currently being evaluated by the U.S. Navy in a number of test demonstrations by naval aircraft and surface ships. UOP is committed to working closely with NAABB partners, as well as other algal oil feedstock producers, to hasten the commercialization of renewable algal jet and renewable algal diesel fuels for both civilian and military use. Author: F. Stephen Lupton Senior Research Associate, Renewable Energy &amp; Chemicals UOP LLC, A Honeywell Company

The Refining of Algal Oils into Fungible Transportation Fuels

High lipid content, ability to thrive on otherwise non-arable land, and high productivity per unit of land mass make algal biomass an attractive second-generation biofuel. Currently, algae contain less than 50 percent lipid, suggesting the coproduct, post-extraction algal residue (PEAR), will be produced in excess of the biofuel. Consequently, capturing value from this coproduct stream impacts the economic feasibility and environmental sustainability of biofuel production from algal biomass.
Approximately one-third of the corn biomass used in ethanol production exits the system as distillers grains, a coproduct currently trading for $225 dollars per ton (dried) or 77 cents per gallon of ethanol produced. Distillers grains have largely been marketed to and utilized by ruminant systems (i.e., beef and dairy cattle) because the ruminant digestive tract is designed to be forgiving and tolerant of the nutritive variance inherent in coproducts. Dependence on a vast microbial metapopulation in the foregut allows ruminants to convert coproducts and other low-quality sources of nutrients into palatable, high-quality meat and dairy products. The capacity of ruminants to utilize coproducts coupled with significant cattle populations (10.1 million head of feedlot cattle, 30.9 million beef cows, and 9.2 million head of dairy cattle) suggests the ability to utilize more than 12 million tons of PEAR per year. The U.S. DOE estimates 4.3 million tons of PEAR is produced per billion gallons of fuel; therefore, cattle are a potential market for PEAR from 3 billion gallons of algal biofuel.
Collection of data to support the development of a feed market for PEAR and the subsequent translation of that data into realistic estimates of market value and use of PEAR have been major components of our research. Initial and ongoing research focuses on describing the nutritive value of unique sources of PEAR in terms and units familiar to agricultural industries. The primary drivers of PEAR value and utilization are protein and residual lipid contents with value discounts occurring for high ash content, mineral imbalances, and mineral concentrations that limit PEAR incorporation into the diets. Processes favoring retention of omega-3 fatty acids in PEAR or as a separate coproduct will add significant value and increase the number of available markets. Upstream processes (methods of biomass cultivation, harvesting, drying, and extracting) and algae species are the major drivers of nutritive value and protocols should be developed to optimize lipid quantity and quality with consideration to how these impact PEAR nutritive value.
Secondly, we have evaluated the palatability of protein supplements containing divergent levels of PEAR from a single source. Our results demonstrated that supplements containing as much as 60 percent PEAR in combination with dried distillers grains or cottonseed meal were readily consumed; however, when a 100 percent PEAR was fed, palatability was reduced. Blending with other feed ingredients clearly improves palatability; however, upstream processes and species of algae are likely significant drivers of palatability that need to be evaluated as additional sources of PEAR become available in sufficient quantities for this type of research.
Our final area of ongoing research is determining the impact of PEAR on digestion and absorption of dietary nutrients in cattle. Ultimately, this data will be coupled with palatability data to create optimal vehicles for delivering PEAR in protein supplements for cattle. One challenge/limitation with our feeding research is the limitation to one source of PEAR. In contrast to ethanol production, which was born from a mature crop (corn) and established processes, algal biofuel production is an emerging industry and is, at this stage, largely characterized by discovery. As algal biofuel production matures into a viable industry, we anticipate significant research on the utilization of PEAR in cattle feed. Continued PEAR research in the developmental stage of algal biofuel is required to steer the industry toward production streams that are optimized for both biofuel production and coproduct value and utilization. Authors: M. L. Drewery, T. A. Wickersham Undergraduate Student, Animal Scientist; Texas A&amp;M tryon@tamu.edu

Cattle: A Potential Market for Post-Extraction Algal Residue

With its two columns in this issue of Algae Technology &amp; Business, the National Alliance for Advanced Biofuels and Bioproducts covers the gamut in commercial product development from algae. Authors M. L. Drewery and T. A. Wickersham from Texas A&amp;M give us, &ldquo;Cattle: A Potential Market for Post-Extraction Algal Residue,&rdquo; an article that delves into the authors&rsquo; ongoing research regarding the nutritive value of post-extraction algal residue (PEAR), and its palatability and effect on digestion and absorption of dietary nutrients in cattle. Read the entire article on page 6.
At the other end of the spectrum, F. Stephen Lupton, a senior research associate with Honeywell&rsquo;s UOP, discusses his company&rsquo;s work in his article, &ldquo;The Refining of Algal Oils into Fungible Transportation Fuels,&rdquo; mainly renewable diesel and biojet. Lupton writes about the hydrotreatment process and coproduction of naptha, light fuel gas, jet fuel and renewable diesel.
Drewery and Wickersham mention in their column that the U.S. DOE estimates 4.3 million tons of PEAR is produced for every billion gallons of fuel, or approximately 3.33 million tons, from algae. It is a wise move to generate data and knowledge of algae residue before high-volume fuel commercialization floods the market with product no one knows what to do with.
&nbsp;
Ron Kotrba, Editor rkotrba@bbiinternational.com

May 2012

Business Briefs

Business Briefs

Business Briefs

Business Briefs

Columns

Ethanol Producers Field EPA 114 Information Requests

Looking Beyond the Obvious

Beware of Dog

Solution to Today's Energy Crisis is Here Today

Ethanol: Increasing National Security

First-Gen Adjustments, Second-Gen Developments

Maps, Money and Mandates

Biomass and 1603 Grants

Highlights from Saratoga Springs

Biopower and Biofuels: State of Disarray or Opportunity?

Crowdfunding Biomass Projects

Leveling the Playing Field for Algae

Good Planning Helps Satisfy Regulatory Hurdles

The Refining of Algal Oils into Fungible Transportation Fuels

Cattle: A Potential Market for Post-Extraction Algal Residue

The Gamut

Featured

Advancing Pathways for Advanced Feedstocks

Energy Beets: Who will Leap First?

Reining in Production - Hunkering Down as Margins, Supplies Rebalance

Steel in the Ground

Viable Options

Setting an Energy Standard

Public Support for Private Advancement

Commercial-Scale Progress

Contributions

EU Requires Sustainable Biofuels

Energy Management: Project or Process

Iowa Partners to Develop Cellulosic Ethanol Projects

Energy Policy Lessons from Sweden

USDA Repowering Assistance Program: Underutilized Pot of Gold?

The Road to Commercialization

May 2012.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

Ethanol Producers Field EPA 114 Information Requests

Looking Beyond the Obvious

Beware of Dog

Solution to Today's Energy Crisis is Here Today

Ethanol: Increasing National Security

First-Gen Adjustments, Second-Gen Developments

Maps, Money and Mandates

Biomass and 1603 Grants

Highlights from Saratoga Springs

Biopower and Biofuels: State of Disarray or Opportunity?

Crowdfunding Biomass Projects

Leveling the Playing Field for Algae

Good Planning Helps Satisfy Regulatory Hurdles

The Refining of Algal Oils into Fungible Transportation Fuels

Cattle: A Potential Market for Post-Extraction Algal Residue

The Gamut

Featured

Advancing Pathways for Advanced Feedstocks

Energy Beets: Who will Leap First?

Reining in Production - Hunkering Down as Margins, Supplies Rebalance

Steel in the Ground

Viable Options

Setting an Energy Standard

Public Support for Private Advancement

Commercial-Scale Progress

Contributions

EU Requires Sustainable Biofuels

Energy Management: Project or Process

Iowa Partners to Develop Cellulosic Ethanol Projects

Energy Policy Lessons from Sweden

USDA Repowering Assistance Program: Underutilized Pot of Gold?

The Road to Commercialization

May 2012