Corn production in the United States has increased significantly in the past several years as result of the rapidly growing ethanol industry. Corn production rose from nearly 9.5 billion bushels in marketing year 2002-&rsquo;03 to more than 13 billion bushels in 2010-'11. This increase can be attributed to two factors: higher corn yield and more acres of planted corn.
According to the USDA, corn yield increased from 129 bushels per acre in 2002-&rsquo;03 to 152 bushels in 2010-&rsquo;11 as a result of a number of technological improvements, including new seed varieties, fertilizers, pesticides and machinery, together with better production practices such as reduced tillage, irrigation, crop rotations and pest management systems. Increases in corn acreage on the other hand, came about as a result of shifting land from other crops and the use of additional nonfarmed lands for corn production. The sources of previously farmed land according to the USDA included pasture, fallow and acreage returning to production from expiring Conservation Reserve Program contracts. As a result, planted corn increased from almost 70 million acres in 2002-&rsquo;03 to more than 80 million acres in 2010-&rsquo;11. Siting Effects While no one can miss the increase in ethanol production that led to the surge in corn production, there is a question regarding how corn farmers respond to ethanol plant siting. How does corn supply change in a region where a new ethanol plant is introduced? Previous research is silent on this issue, but recent analysis at North Carolina State University by my colleague, Walter Thurman, and me begins to unravel this effect.
One rational expectation would be that when a corn-based ethanol plant begins to produce, it changes the corn supply and demand balance in its region. Craving for corn to produce ethanol, the plant increases local demand for the grain, thus high corn transportation costs from distant locations can be avoided. As there was no corresponding increase in corn supply, this excess demand by the new plant would raise the local corn price. Farmers will capitalize on this opportunity, however, by growing more corn in the next planting season.
What is unknown, beyond this general tendency for farmers to produce more corn in response to a plant&rsquo;s siting, is the size of the effect. In the Fatal and Thurman study, we conclude that an additional 1 million gallons of annual ethanol capacity increases planted corn by 5.21 acres in the county in which the plant is located. Furthermore, the ethanol capacity effect on planted corn in surrounding counties depends on distance between the plant and the county. The effect diminishes linearly to zero as the distance between the plant and other counties approaches 286 miles. The study employs advanced spatial econometric methods and uses county-level data for 48 contiguous states for the years 2002 to 2008. The results suggest that when new ethanol plants start up, their need for corn triggers an increase in planted corn up to 286 miles away.
Applied Results To illustrate the application of the results, consider Advanced Bioenergy&rsquo;s corn-based ethanol plant in Fillmore County, Neb. This 100 MMgy plant started production on October 2007. There are 348 counties within a 286 mile radius from the plant. We estimate that the plant stimulated a total of 64,623 acres of planted corn for all these surrounding counties.&nbsp; Assuming an average yield of 150 bushels per acre, these additional acres resulted in almost 10 million additional bushels of corn. Putting this reaction into context, 10 million bushels of corn account for approximately 26 percent of the plant corn needs to operate full capacity. Equivalently, the Advanced Bioenergy plant stimulated about one-fourth of its corn needs, which means the other three-fourths were shifted from other corn uses. Why Does This Matter? Understanding how ethanol plant siting affects planted corn is important for several reasons. First, knowing the local corn supply adjustment to the introduction of new ethanol plants provides useful information to ethanol producers as they plan capacity, coordinate logistics, project future corn procurement costs and evaluate the consequences of a competitor plant&rsquo;s market entry on their business. Further, understanding where future corn will come from has its own advantage. The shorter the distance between corn source and plant, the lower the transport costs and the smaller the uncertainty of having corn in time for ethanol production.&nbsp;
Second, the results help other corn users besides ethanol producers, such as feedlots owners and corn exporters, to better position their business when competing with ethanol producers for corn. U.S. policymakers can use these results to better understand the effects of their biofuel production and incentives policies. Understanding the relationship between ethanol and corn production is vital when enacting new agricultural and energy policies in order to avoid conflict of interests.
Finally, using the results from this study, together with a study evaluating the spatial effect of ethanol plant siting on corn prices, can reveal the implications for corn farmers&rsquo; revenue. This in return, can be used by policymakers to update crop insurance programs and subsidies.
As a closing thought, as location patterns for ethanol plants change, so do corn demand locations, spatial corn price patterns, and the movement patterns of corn within the United States. Because corn accounts for 50 to 70 percent of ethanol input cost (depending on corn price), understanding the reaction of corn growers to an ethanol plant siting is crucial in understanding plant profitability. Author: Yehushua Shay Fatal, PhD Research Project Manager North Carolina State University &ndash; Solar Center ysfatal@ncsu.edu
&nbsp;
ON THE WEB &ldquo;The Response of Corn Acreage to Ethanol Plant Siting&rdquo; by Fatal and Thurman, 2012, can be found at the following link:&nbsp;
<a href="http://www4.ncsu.edu/unity/lockers/users/v/vukina/AG_ECO_Workshop/Fall_2011/Shay_Fatal.pdf">http://www4.ncsu.edu/unity/lockers/users/v/vukina/AG_ECO_Workshop/Fall_2011/Shay_Fatal.pdf</a>
&nbsp;
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

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Researchers conclude an ethanol plant siting impacts corn supplies within a 286-mile radius. This map shows how far that reaches around Advanced Bioenergyâ€™s plant in Fillmore County, Neb.

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Land use shifts seen in up to a 286-mile radius

Corn Farmers Respond to  Ethanol Plant Siting

My dad&rsquo;s a farmer and will turn 80 this year. His marketing method is very effective although not high-tech; he stores grain in his own bins for a couple of years or more until he&rsquo;s ready to sell. This year, he&rsquo;ll be emptying those bins. But, I work with ethanol plants. I know corn prices are not fabulous for the ethanol business. What to do? Well, maybe ethanol plants can also reap the benefits of what&rsquo;s in the &ldquo;bin.&rdquo;
The key is to generate revenue without taking on business endeavors far-removed from ethanol production.
There are many who have developed ways to salvage and create value-added products from the byproducts of ethanol production, some with great success. How did they move from concept to marketability? By buying waste streams from ethanol production plants at very low prices for their research, and, perhaps by continuing to pay little for those waste streams as inputs into their own products. So what&rsquo;s wrong with that? Well, nothing, really, except that when a marketable product produces its own revenue stream, the ethanol producer should be able to share in the revenue. Sure, the market drivers of supply and demand will eventually drive up the price of the waste stream. But why should the plant providing the waste stream have to forego or wait for its share?
Clairvoyance would be helpful in knowing what research will pay off. Most of us don&rsquo;t have that gift. Yet the possibility of sharing the wealth&mdash;selling the stuff in the &ldquo;bin&rdquo;&mdash;is not unattainable. There are ways to capture the revenue stream of new products that require ethanol production waste inputs before either party even knows what the research will show. Following are some things to consider about the key strategies: 1.&nbsp; Sole Supplier Agreement: Capture new revenue by entering into a sole supplier agreement before research begins. If the other party creates a marketable product that requires a waste stream, your plant will benefit from being the supplier of up to its entire waste stream. Include terms to allow the other party to purchase from other sources only if yours cannot meet demand and terms that provide you favorable market pricing for the waste stream. &nbsp; 2.&nbsp; Research and Development Agreement: Partner up with the other party to assist in development of the product. This may mean tweaking your process to create more desirable waste stream profiles, providing equipment or personnel to assist in testing, treating the stream in some way before it ships, or collaborating on ways to achieve the project goal. Cooperative development often results in jointly owned intellectual property. This agreement must have terms addressing commercialization of joint developments, how each party will benefit and conditions allowing either party to transfer its interest in the developments. Whether research results in a trade secret or patent protection, these terms are key to a profitable endeavor.
3.&nbsp; Independent Contractor Development: No doubt many involved in the plant have agronomy backgrounds. Great ideas are probably walking around the plant in employees&rsquo; heads, trapped there forever because, well, ethanol plants are not equipped to develop improvements except to ethanol production. Consider creating a program to reward employees for disclosing those ideas. Hire independent contractors to assess the viability of submitted ideas and then pursue the most viable. The right contractor may be interested in conducting research in exchange for a first option on the results. Alternatively, researchers are available at hourly or project fees to design and conduct the research to obtain data. But be careful! Ownership of inventions defaults to the researcher. Therefore, the contractor&rsquo;s agreement must include assignment to the ethanol producer of all work products. Then, license/sell the intellectual property to a company with a solid presence in a relevant market, collect the revenue and retain the focus on ethanol production. And that&rsquo;s how to reap the benefits of what&rsquo;s in the &ldquo;bin.&rdquo; Author:&nbsp;Camille Urban Attorney, Patents, Trademarks and Copyrights BrownWinick Law Firm (515) 242-2451 curban@brownwinick.com

Strategies for Collaboration in  Innovation

1. Alfa Laval Inc. appointed John Piazza as senior vice president of its process technology division. In his new position, Piazza leads the company&rsquo;s sales and marketing efforts. Piazza joined Alfa Laval in 1994 as the regional sales manager of North America. He has also held the positions of business development manager and regional sales manager at Alfa Laval. Most recently, he served as the company&rsquo;s North American regional business manager for the global vegetable oil segment. Prior to joining Alfa Laval, Piazza was responsible for technology sales to the food, power, refinery, inorganic chemicals, environment and telecommunications industries. 2. Sen. Ben Nelson, D-Neb., was presented with the Merle Anderson Award at the 25th Annual American Coalition for Ethanol Conference and Trade Show, held this year in Omaha. The Merle Anderson Award is named after the founder and first President of ACE. Each year it is presented to an individual in public service who has made significant contributions to the advancement of ethanol. Nelson has a proud record of supporting and encouraging the biofuel and renewable energy industries, first as governor of Nebraska, and now as a U.S. Senator representing the state. During his tenure as governor, Nelson started the Governor&rsquo;s Ethanol Coalition to promote ethanol use nationwide. As a senator, Nelson was part of the successful effort to place the first energy title in a farm bill, and helped pass the renewable fuel standard into law.&nbsp;
3. Mississauga, Ontario-based cellulosic ethanol company Woodland Biofuels Inc. has added William White as chief operating officer. White formerly served as president of DuPont Canada, and spent more than 30 years with the global DuPont company, where he held positions in operations, marketing engineering and leadership of global business units. As a long-time champion of sustainability, White has recently worked extensively with developing businesses as a board member of MaRS, the advisory board of the Sustainable Chemistry Alliance. Woodland is constructing a cellulosic ethanol demonstration plant in Sarnia, Ontario. The facility is scheduled to be complete this year. 4. Syngenta has signed trial agreements with Iowa-based Golden Grain Energy LLC and Nebraska-based Siouxland Ethanol LLC to demonstrate the value of Enogen trait technology for ethanol production. Each plant has signed on to complete a three-month trial of bio-engineered corn grain that is designed to enable more efficient, cost-effective, environmentally-friendly ethanol production. Enogen trait technology allows corn to express the alpha amylase enzyme necessary for dry grind ethanol production directly in the endosperm of the grain, eliminating the need to add liquid alpha amylase. Use of Enogen corn can increase throughput while potentially reducing costs in energy, gas and water usage. 5. France-based yeast company Lesaffre, and its business unit Fermentis, which is dedicated to the development and sales of yeast to the fuel ethanol industry, acquired Butalco&rsquo;s xylose isomerase (XI) technology. Butalco is a Swiss company that develops yeasts for the production of biofuels and biobased chemicals produced using lignocellulsoic feedstock. With the new technology, Fermentis can finalize the construction of an industrial yeast strain suitable for cellulosic ethanol production. In addition, the sale of the XI technology to Fesaffre enables Butalco to invest more resources in other research and development programs, including yeasts for butanol production or xylose transporters. 6. Archer Daniels Midland Co. has appointed Todd Werpy as vice president of research and development. Werpy previously served as the company&rsquo;s vice president of chemicals and advanced biofuels. In his new position, Werpy is responsible for all corporate research and development functions, and will help drive value for customers and shareholders by overseeing ADM&rsquo;s efforts to expand its product portfolio. He will also work to strengthen research partnerships with government agencies, academic institutions and corporations. Before joining ADM, Werpy was employed by Pacific Northwest National Laboratory. ADM&rsquo;s board of directors also appointed Marschall Smith as senior vice president, general counsel and secretary. Smith formerly served as senior vice president of legal affairs and general counsel at 3M Co.&nbsp; 7. The Brazilian Bioethanol Science and Technology Laboratory in Campinas, S&atilde;o Paulo, Brazil, selected AdvanceBio Systems LLC&rsquo;s SuPR2G Laboratory Scale Pretreatment Reactor to conduct basis research and development work related to the production of fermentable sugars, biofuels, and chemicals from lignocellulosic feedstock. The SuPR2G reactor will incorporate AdvanceBio Systems&rsquo; latest developments, including the &ldquo;zero hold-up discharger,&rdquo; which is capable of operating in either slurry or pneumatic product removal modes. 8. New York Energy LLC purchased ICM Inc.&rsquo;s Selective Milling Technology, which includes the license fee, equipment and installation. The technology increases plant efficiency while maintaining throughput. Specifically, the process can increase ethanol yields, reduce enzyme use, decrease centrifuge and dryer load, and increase oil recovery. ICM also signed a contract with ACA Bio Cooperative Limitada to design a 40 MMgy dry-mill corn plant in Argentina. The facility is expected to be complete by the first quarter of 2014. 9. The American Coalition for Ethanol elected three new members to its board of directors, including Paul Enstad, Doug Punke and John Christenson. Enstad is board of governors chairman for Granite Falls Energy LLC, a 60 MMgy plant in Granite Falls, Minn. Punke is CEO of Renewable Products Marketing Group, and ethanol marketing company in Shakopee, Minn. Christenson is a certified public accountant and partner at Christianson and Associates, an accounting firm that specializes in consulting for biofuel producers and rural businesses. 10. ExperTune Inc. announced that the new CompareMap tool for its PlantTriage Control Loop Monitoring system tool is now available. The new tool helps plant operators focus attention on changing plant conditions. It highlights the biggest changes in plant performance, and provides drill-down into corrective actions. CompareMap compares plant performance from two periods of time and highlights performance improvements and deterioration. The high-level plant graphic is based on Tree Map technology, which was developed by the University of Maryland as a way to visualize large amounts of data. When applied to real-time process control data, Tree Maps can be used to provide a snapshot to pinpoint trouble-spots in plant performance. 11. Peru-based Maple Energy plc completed its first export sale of ethanol to Mitsui &amp; Co. Ltd. under an existing sales and distribution agreement. The shipment consisted of approximately 5,900 cubic meters (1.56 million gallons) of ethanol, which was shipped to the EU. Maple Energy&rsquo;s 35 MMgy sugarcane ethanol began operations in March. The project includes a sugarcane plantation, ethanol plant, and a 37 MW power plant. The agreement with Mitsui was formed in 2010. Under the agreement, Maple Energy will sell Mitsui all of its ethanol production for a period of 5 years, with the exception of 20 percent of the plant&rsquo;s production, which can be sold by Maple Energy domestically.
12. In mid-August, the Federal Circuit Court of Appeals reversed a court order by the U.S. District Court of Delaware that had temporarily prevented Gevo Inc. from selling its biobased isobutanol into the automotive fuel blendstock market. The court order preventing Gevo from selling its output into the fuel market was originally put in place while Butamax Advanced Biofuels LLC appealed the court&rsquo;s decision to dismiss its motion for a preliminary injection. Gevo is now free to sell fuel into the transportation fuel markets, as well as the chemical, jet fuel, marine fuel and small engine fuel markets. 13. Leaders of eight biofuel industry organizations recently announced the formation of the Biofuel Producers Coordinating Council to jointly advocate for national policy for increased energy security through domestic biofuel projection. The new council includes Michael McAdams of the Advanced Biofuels Association, Brooke Coleman of the Advanced Ethanol Council, Mary Rosenthal of the Algae Biomass Organization, Brian Jennings of the American Coalition for Ethanol, Brent Erickson of the Biotechnology Industry Organization, Tom Buis of Growth Energy, Anne Steckel of the National Biodiesel Board, and Bob Dinneen of the Renewable Fuels Association. 14. Eco-Energy Holdings Inc. announced a partnership with NuStar Terminals Operations Partnership LP to develop an ethanol unit train and storage facility, including outbound truck loading, at NuStar&rsquo;s facility in Dumfries, Va. Under the partnership, each party will bear its own development and refurbishment costs in the facility, which will serve the northern Virginia and Washington, D.C., region. The terminal is expected to open in the fall of 2013. Once complete, the ethanol unit train terminal will feature approximately 6.5 million gallons of ethanol storage capacity and will be capable of distributing more than 16.8 million gallons of ethanol per month.
&nbsp;
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 evoegele@bbiinternational.com. Please include your name and telephone number in all correspondence.

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Founded the Governorâ€™s Ethanol Coalition. 

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Formerly led Alfa Lavalâ€™s U.S. biodiesel business. 

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Business Briefs

The ethanol industry saw it coming long before it actually happened. Although Todd Becker, president and CEO of Green Plains Renewable Energy Inc., doesn&rsquo;t believe an RFS waiver is necessary or will have the intended effect of lowering corn prices, he wasn&rsquo;t surprised when official RFS waiver requests were filed with the U.S. EPA mid-August. &ldquo;I think it&rsquo;s a little early before we even have a corn crop harvest for somebody to say that they need relief,&rdquo; he told Ethanol Producer Magazine. &ldquo;Obviously blaming ethanol for all of their problems is a bit shortsighted. The drought is causing all of the problems in the United States, not the renewable fuel standard.&rdquo;
In the face of tight margins and high corn prices, some ethanol producers are idling temporarily or slowing production rates. That's a sign, the industry has been quick to point out, that it is already sharing in corn rationing and that the market is naturally rebalancing. Green Plains, which reduced its production volumes this spring at two of its nine ethanol plants by about 30 percent, or about 7 percent of its total production capacity, has maintained that run rate, Becker said in mid-August. Another example is Valero Energy Corp., which temporarily idled two 120 MMgy ethanol plants this summer and cut back run rates at its remaining eight facilities, announcing in mid-August that it was producing about half of its total combined capacity of 1.2 billion gallons per year.
According to figures from the Renewable Fuels Association, about 26 ethanol plants representing 1.5 billion gallons of capacity are sitting idle, some idled recently and some that have been idle for several years. &ldquo;In recent weeks, we&rsquo;ve been running at a rate that is about 12 percent below the industry run rate in early June and about 15 percent below where we were running at the beginning of this year,&rdquo; said Geoff Cooper, vice president of research and analysis for the Renewable Fuels Association, during an August conference call about the drought and the RFS.
That&rsquo;s not to say every ethanol production facility is in danger of shutting down. In fact, in Pennsylvania, one ethanol plant actually started back up again in the midst of drought after nearly a year in hot idle. Pennsylvania Grain Processing LLC, a 110 MMgy ethanol plant located in Clearfield, started taking in corn the end of June, well after drought concerns cropped up, and began corn grind in mid-July. The former Bionol Clearfield facility was purchased at auction this spring after the former owners applied for Chapter 7 bankruptcy.
Eric Meeuwsen, general manager of the plant, acknowledged that corn supplies were going to be tight this year, but pointed out that the crop in the vicinity of this plant was looking pretty good. While the former owners of the plant purchased about 55 percent of corn supplies locally, the new company plans to increase that percentage. In addition, the facility has the advantage of location&mdash;although it&rsquo;s not in the Corn Belt there is a good supply of local corn and it has the ability to sell all of its ethanol to local markets in nearby population centers, such as Pittsburgh, which is only about 100 miles away.
Green Plains previously predicted a down third quarter but still expects to pull off a profitable fourth quarter, partially due to hedging ethanol production, Becker said. The company has done a lot of things to improve profitability at its ethanol plants, including working to increase production and yield efficiencies, adding corn oil and fine grind as well as efforts to strengthen its non-ethanol operating income.
The fact remains, however, that there&rsquo;s simply not going to be enough corn to go around to all corn users&mdash;rationing is expected. The Aug. 10 World Agriculture Supply and Demand Estimates report trimmed U.S. corn production to 10.8 billion bushels, the lowest since the 2006-&rsquo;07 crop. The national average corn yield was projected at 123.4 bushels per acre, 22.6 bushels per acre lower than what was predicted in the previous report and 42.6 bushels lower than the projections in the June and July reports. Total corn use was estimated to decline 984.2 million bushels compared to last year, with feed use dropping 472.4 million bushels, ethanol use 500 million bushels and exports 248 million bushels.
The weekly crop progress report compiled by the National Agricultural Statistics Service, Agricultural Statistics Board and USDA also reflects a serious decline in corn quality. Looking at the average of 18 states, which make up 92 percent of the 2011 corn acreage, the Aug. 13 report pegged 51 percent of the corn crop in the poor or very poor category and only 3 percent excellent. That&rsquo;s in stark contrast to the previous year, when only 15 percent of the corn crop was poor or very poor and 14 percent was excellent. Zeroing in on the Midwest states with the poorest corn crop conditions shows that more than 70 percent of the corn crop in Illinois and Indiana is poor or very poor&mdash;two states with more than 10 ethanol plants each. There are some bright spots, however. Minnesota&rsquo;s corn crop is 77 percent fair or good and North Dakota is not far behind, with 72 percent in the fair or good category. Waiver Effects Official petitions to waive the RFS were first filed by Arkansas Gov. Mike Beebe and North Carolina Gov. Beverly Perdue. The waiver request opened it up for public comment which were set to close Sept. 26 but were later extended to Oct. 11. Lisa Jackson, administrator of the EPA, in consultation with the secretaries of energy and agriculture, does have the ability to waive the RFS in whole or in part, according to section 211(o)(7) of the Clean Air Act. However, to do that it must determine &ldquo;that implementation of the RFS requirements would severely harm the economy or environment of a state, a region, or the United States.&rdquo; A 2008 waiver request filed by Texas Gov. Rick Perry was denied, the EPA said, because the evidence didn&rsquo;t support the determination that the RFS caused severe harm to the economy during the time period in question.
RFA, Growth Energy and the American Coalition for Ethanol have been working in cooperation to combat those leveraging emotions to claim a waiver is needed. &ldquo;These are the same groups that have been gunning for the RFS for a number of years,&rdquo; Cooper said. Notably, Tom Vilsack, secretary of agriculture, has repeatedly spoken out in continued support of biofuels and the RFS, including on the same day that the August WASDE report was released. &ldquo;We don&rsquo;t want to turn our backs on this industry right now,&rdquo; he said at ACE&rsquo;s annual conference. &ldquo;We are right on the cusp of some exciting things.&rdquo;
The ethanol industry has repeatedly said that a waiver is not necessary and that the corn and ethanol markets have the ability to adjust naturally to price signals. One major point is that flexibility is already built into the RFS through the ability of obligated parties to use banked renewable identification numbers (RINs) to meet possible shortfalls in the blending mandate. Because ethanol blending has been in excess of the mandate, there&rsquo;s an estimated 2.5 or 2.6 billion RINs available, Cooper said. As a result, there won&rsquo;t be a problem in meeting the 2012 RFS requirements. If the ethanol market gets tight, refiners can draw on ethanol stocks that have built up in the previous months and/or draw on excess RINs, he said. For these reasons, if the RFS is waived it would have little impact on corn price, no discernible impact on retail food prices and only a minor, short-term impact on ethanol output. Finally, it will send a chilling signal to investors considering the advanced biofuels industry, he added.
Two papers were recently published that examine many of those same points, one by the Center for Agricultural and Rural Development (CARD) and the second by Farm Foundation and Purdue University. The August CARD policy brief was titled &ldquo;Updated Assessment of the Drought&rsquo;s Impacts on Crop Prices and Biofuel Production&rdquo; and was written by Bruce Babcock, a professor of economics at Iowa State University. Three Purdue University professors, Wallace Tyner, Farzad Taheripour and Chris Hurt, wrote &ldquo;Potential Impacts of a Partial Waiver of the Ethanol Blending Rules.&rdquo; The two papers utilized different assumptions and models to come to somewhat different conclusions on what the impact a RFS waiver would have on the price of corn.
The CARD policy brief estimated that if the RFS ethanol mandate were waived, it would have only a modest impact on the corn and ethanol markets, decreasing corn prices by only 58 cents per bushel and ethanol prices 15 cents per gallon with only a 500 million gallon drop in ethanol production. Babcock pointed to ethanol demand, stating that at average domestic consumption of 11.4 billion gallons, ethanol is at par with wholesale gasoline. &ldquo;This high valuation of ethanol is consistent with the current price of ethanol relative to gasoline, and perhaps reflects a large value of ethanol in allowing refineries to produce a below-octane gasoline that when blended with 10 percent ethanol results in an 87-octane blend,&rdquo; he said, cautioning that if the value of ethanol to blenders is overstated in his estimated demand curve, the effects of waiving the RFS would be larger.
Further, a 500 million gallon drop in ethanol supply could potentially increase the value of ethanol in the marketplace, supporting 11.5 billion gallons of production and maintaining high corn prices, he said. Prices are also stimulated in response to the waiver request itself. &ldquo;The desire by livestock groups to see additional flexibility on ethanol mandates may not result in as large a drop in feed costs as they hope,&rdquo; he said, adding that the analysis shouldn&rsquo;t be interpreted as saying that ethanol prices have no impact on corn prices. Although there is no mechanism for implementing a ban on corn ethanol, banning its production would result in an average price of $2.67 per bushel of corn. The use of excess RINs to meet the RFS mandate also factored into his conclusions. Compared to the assumption that no flexibility exists in the RFS, accounting for flexibility decreases the average corn price by 91 cents per bushel and a 25-cent per-gallon drop in ethanol prices, he said.
The results of the Purdue paper were discussed during a webinar Aug. 17. Tyner pointed out that the economic harm is a result of the drought and that the EPA can&rsquo;t change that&mdash;it can only redistribute it among the effected parties. An RFS waiver would help livestock producers, he said, but would also penalize ethanol and corn producers and could have longer-term implications that were not examined in the paper. A waiver is not a &ldquo;stroke of the pen&rdquo; solution, as it was characterized in a New York Times editorial published the end of July, he said. The EPA must consider many complicated factors when weighing whether to waive the RFS, including oil prices, corn prices, final corn production numbers, the flexibility of oil refiners and blenders and the potential use of RINs.
The Purdue professors clearly state in the paper that they do not believe the EPA will issue a waiver for 2012 and that the more important question is whether a partial waiver will be put in place in 2013, when the ethanol blending obligation increases to 13.8 billion gallons. Typically, the EPA issues a decision on the blending levels of the RFS in November of the year before the mandates are applied, giving the agency until October to gather information on whether the RFS would cause economic harm. &ldquo;EPA will have to determine what impact a waiver actually would have given the way the market functions,&rdquo; it concluded. &ldquo;The most likely technical outcome is that refiners and blenders could and probably would reduce ethanol use to some extent, but how much is uncertain for 2013.&rdquo;
Whether oil refiners and blenders would utilize RINs was considered at length. There are no financial incentives for blenders to use RINs to meet RFS obligations if the ethanol price is below that of reformulated blendstock for oxygenated blending (RBOB) and RINs will not be used until they have the economic incentive to do so, it said. Like the CARD policy brief, it referenced refiners&rsquo; use of ethanol to increase the octane level of 84 octane gas to 87 octane gas, necessary for retail sale. &ldquo;In other words, for technical and economic reasons, the waiver could have little or no near-term impact, but it is hard to predict how refineries and blenders would respond,&rdquo; the paper said, adding that if refiners and blenders have limited flexibility in the near term the impact of a waiver would be small or nonexistent.
If the full RFS is left in place and no prior-year RINs are used, the corn price could range between $7.02 and $8.57, depending on the ultimate outcome of the drought. However, in a scenario where no waiver is approved, but RINs are carried forward, ethanol blending could be reduced to 11.8 billion gallons, potentially dropping corn prices about 67 cents a bushel. With flexibility to reduce ethanol usage in the short term, use of RINs credits and/or a waiver could reduce corn prices from 47 cents a bushel for a modest waiver and $1.30 for a large waiver. &ldquo;The waiver decision clearly depends to a large degree on the flexibility of refiners,&rdquo; Tyner said.
Although it wasn&rsquo;t examined in depth, the paper did point out that if exports are reduced, it could lead to some reduction in corn prices. In addition, as corn prices continue to increase, bringing the ethanol price with it, ethanol production rates have already been falling. &ldquo;This shows that markets can and do adjust, with less corn being used for ethanol,&rdquo; it said. Author: Holly Jessen Features Editor of Ethanol Producer Magazine (701) 738-4946 hjessen@bbiinternational.com
&nbsp;
How Bad is the Drought? This year&rsquo;s drought has been such a constant topic of conversation that it&rsquo;s easy to lose sight of the basic facts in the midst of information overload. Here&rsquo;s a snapshot of relevant weather conditions across the U.S.
July was the all-time warmest month on record, according to the National Oceanic and Atmospheric Administration&rsquo;s National Climatic Data Center. The average temperature was 77.6 degrees, 3.3 degrees higher than the previous record set in July 1936. Hot and dry conditions in most of the central U.S. expanded the drought to 63 percent of the nation in July, NOAA said. The nationally averaged precipitation total was drier than average and Nebraska, Iowa and Missouri&rsquo;s precipitation totals ranked among the states&rsquo; ten driest months on record.
By the time the heat began to let up and some rain fell in some areas, it was already too late for many drought-stricken corn fields. The USDA announced Aug. 15 that a total of 1,792 counties had been declared disaster areas&mdash;1,670 due to drought. In addition to other measures intended to take the pressure off food and livestock producers impacted by drought, the agency announced it would purchase up to $170 million of pork, lamb, chicken and catfish for federal food nutrition assistance programs.

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Eric Meeuwsen, general manager of Pennsylvania Grain Processing LLC, tells EPM the corn crop around Clearfield, Pa., looks good. The 110 MMgy ethanol plant restarted during widespread drought after sitting idle for nearly a year. 

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The U.S. Drought Monitor focuses on broad-scale conditions. Local conditions may vary. For more information, see 
http://droughtmonitor.unl.edu.

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What many are calling the worst drought in 50 years has magnified
scrutiny of the renewable fuel standard (RFS). 

RFS Under Scrutiny

Summer 2012 was a trying one for corn producers, with many of them watching helplessly as parched crops sizzled in hot, dry conditions. To make matters worse, drought-weakened fields are more susceptible to fungal contaminations, which kept Hurburgh&rsquo;s phone ringing throughout the summer. Hurburgh talks about how the drought played out on his farm, how improved genetics saved this year&rsquo;s crop from being a total loss and how critics have missed the contributions to increased corn yields, stimulated in part by increased demand from ethanol producers. First things first, you have some corn acres in central Iowa. How do things look there? We are in a fairly good area, relatively speaking.&nbsp; I&rsquo;d say we&rsquo;ll probably net 140 bushels per acre down from a more normal 200 to 220 bushels.&nbsp; Our kernels are small but modern genetics really hang tough in the face of stress, more so than many people outside agriculture understand. When was the last time you saw conditions this dry? 1988 I think but even then it was not this bad.&nbsp; This is the longest dry period I really can remember.&nbsp; My dad said we plowed up the corn in 1956 but I can&rsquo;t remember that. The drought, falling corn harvest estimates and the ethanol mandate have been national news this summer and the subject of much debate. Did anything about the debate surprise you? Not really.&nbsp; There were many people who did not understand the growth curve that corn production was, and still is, on and therefore were looking for a reason to say we are using too much corn for fuel.&nbsp; How much more drought-tolerant are the corn hybrids typically grown today? For instance, how much more devastating would this summer&rsquo;s weather have been on corn seed with genetics from 20 years ago? Well, I don&rsquo;t know that I could give it a percentage, but this has been a gradual trend over the last 10 or 15 years and most of us in farming have noticed this, that the falloff in yield has been decreasing, and at the same time we&rsquo;re increasing our plant population. There has been a steady increase in the ability of corn to go a long time without moisture without experiencing a large yield loss. This year, it&rsquo;s not just a question of going a while, its going almost a whole season without moisture. Even now, we may end up with 120 or 140 bushels per acre and it hasn&rsquo;t really rained since June. That&rsquo;s pretty good.&nbsp; Without modern traits, I think fields would have been dead by Aug. 1 or earlier in most areas, with virtually no yield.
 Mainstream interest in agriculture continues to escalate with books about food production sitting atop bestseller lists. In his book &ldquo;Omnivore&rsquo;s Dilemma,&rdquo; Michael Pollan is pretty critical of monocultures and modern corn production. What is the best argument for our current production approach? With scientific management, fertility continues to increase.&nbsp; The high prices are actually a benefit in this regard because of fertilizer loss, and application of extra inputs is more expensive now than before.&nbsp; To answer the question, there is an exploding demand for calories in the world, for food, feed and fuel.&nbsp; That is not going to stop. If we do not keep creating new energy for whatever use, the net impact would be shortage, higher-yet prices and most likely war.&nbsp; There seems to be a belief that we would be better-off to go back to a lower tech, more crop diversity, with a greater focus on local markets.&nbsp; With that approach, total output would fall and someone would have to pay the price.&nbsp; It&rsquo;s sort of elitist to think that we could have a social system that serves us without intrusion from others who would not be so fortunate.&nbsp; The higher prices for agricultural products are creating more potential wealth for farmers everywhere, although other places struggle to distribute not only the grain but, more importantly, the wealth. Could an argument be made that the increased demand for corn for ethanol production has led to increased research in yield and corn vitality, thereby ultimately increasing the amount of corn available for feed and food usage, instead of decreasing it as industry critics often suggest? Absolutely. Ethanol increased the demand for corn, which then increased the price for corn, making it possible to invest more R&amp;D dollars into a whole bunch of things including precision farming, chemical placement, fertilizer placement and so on. All of those things cost money to develop and they cost money to do. We now have the money to do them. There is no question our yield increase curve is supported by the higher value of the crop that was originally driven there by the ethanol industry. As an example, we couldn&rsquo;t pay the price we paid out for a bag of seed with the traits we now have if we were getting the buck fifty per bushel we used to get from the market and 50 cents from the government, we just couldn&rsquo;t have done that. How are ethanol plants currently handling inbound grain inspection? How should they be? Corn quality makes more difference than it gets credit for. Protein, oil, mold damage and, of course, mycotoxins affect both ethanol yield and DDGS quality.&nbsp; When you receive 100-200 trucks per day, it&rsquo;s sometimes hard to think about inspection beyond moisture and test weight, which comes with moisture.&nbsp; That&rsquo;s typical and sometimes the buying side expects the processing side to just take whatever can be bought and make the best of it.&nbsp;&nbsp; Anyone in the ethanol business needs to be screening their inbound grain. There is just no question that this year there will be some aflatoxin in corn supplies. Producers need to know if it is in their particular area, as it will be regional. Ethanol plants that serve export or dairy markets are the producers that will need to be most cognizant of aflatoxin levels in their inbound corn. You have spoken about a cap on corn-derived ethanol being a mistake, as ethanol would be a great candidate to continue to provide a market for ever-growing corn crops. In light of that, as we build more demand for corn, whether in an ethanol plant&nbsp; or for other uses, how do we reconcile years like this one when harvest falls short of demand? Absolutely true.&nbsp; Every system has variations. A system that is fundamentally driven by the weather can have large variations, as we&rsquo;ve seen this year.&nbsp; Yet, at the recent Farm Progress Show, the stars of the show were the increased drought-resistant corn hybrids.&nbsp; The long-term trend is steadily up in corn yields and in potential acres planted to corn, both in areas now (seeded) in other crops or in no crops (not seeded) whatsoever.&nbsp; Corn is the most efficient converter we have of sunlight to readily useable energy and yields more units of grain per acre than any other choice.

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Iowa State University's resident grain quality expert Charlie Hurburgh looks at corn quality, corn genetics and the role ethanol will play in the future of corn through the lens of the most devastating drought in his memory.

Q&A - Corn's Cruel Summer

For corn breeders working on drought resistance, 2012 is a year to see just how good the new varieties have become. The three big seed companies&mdash;Syngenta, Monsanto Co. and Pioneer&mdash;all have widespread farm plots of their new drought-resistant varieties being put to the test. None are claiming their varieties will grow with no rain but all are hoping farmers get a chance to see just what these varieties can do under stress.
Improved drought resistance has long been a goal for the corn seed industry. The big three all launched intensive programs a decade ago to bring better drought-tolerance traits forward. Not long after Pioneer started the effort, the company ran an experiment that showed the improvements that had been made up to that point. &ldquo;We can recreate any hybrids we&rsquo;ve ever sold, because we keep the inbreds,&rdquo; explains Jeff Schussler, senior research manager for maize stress product development at Pioneer. &ldquo;We took the top three products Pioneer sold in each decade from the 1930s through the past decade and grew them in the same experiment in California under extreme drought like we experienced this year.&rdquo; The results were reported as bushels of grain produced per inch of water. &ldquo;We found hybrids in the '30s and '40s could produce roughly 3 bushels of corn per inch of water applied,&rdquo; he says. &ldquo;The hybrids in the '90s and 2000s produced about 9 to 10 bushels per inch.&rdquo;
A three-fold increase over 70 years of breeding is impressive but the new class of drought-resistant corn varieties is leaving those numbers in the dust. After decades of seeing 1 percent yield increases in hybrid advances year over year, the companies are now reporting yield increases of 7 or 15 percent.
Pioneer was the first to release its new crop of drought-resistant hybrids, marketed as Optimum Aquamax, offering five hybrids in 2011 and a total of 25 hybrids in 2012. Around 2 million acres were seeded this spring. While 2012 results won&rsquo;t be in until after harvest, Pioneer analyzed the drought-stressed locations from more than 8,000 on-farm trails in 2011. &ldquo;We found in those dry locations where we proved there was a significant drought stress&mdash;680 locations in 2011&mdash;our Aquamax varieties were out-yielding other hybrids and competitors by 7.1 percent,&rdquo; Schussler says. &ldquo;In those other 7,000-plus locations, where it was high yield and there wasn&rsquo;t a water limitation, the Aquamax products were yielding about 3 percent more than other hybrids it was compared to.&rdquo;
The improvements with these new varieties are far better than previously expected. &ldquo;We used to be happy with 1 percent [yield improvement] per year,&rdquo; says Wayne Fithian, technical product lead at Syngenta.&nbsp; &ldquo;Part of it was due to improved yield potential but also improved stability. We didn&rsquo;t approach drought resistance directly because we had the problem of losing top-end potential.&rdquo;
Syngenta launched its Agrisure Artesian line this year, with 800 plots grown by corn farmers across the Corn Belt from Colorado to Ohio and Kentucky to Minnesota. Syngenta&rsquo;s Gene Blueprinting program has advanced hybrids with an impressive drought record. &ldquo;Our promise is up to 15 percent improvement in yield potential in fields affected by moderate to severe drought,&rdquo; Fithian says. &ldquo;So in a field that will typically yield 150 bushels and the drought knocks it back to 80 bushels, we&rsquo;d expect our Artesian hybrid to get 90 to 94 bushels.&rdquo;
The dramatic improvement in corn yield potential builds on the past work of corn breeders and the advances in molecular biology and genomics, which have recently become far more accessible. Othmar Pfannes, CEO of Genedata AG, a Swiss-headquartered software company, explains that when his company started working with the pharmaceutical industry to analyze gene sequencing data, the technology was extremely expensive. &ldquo;Ten years ago, to do a genome sequence was a year&rsquo;s research budget for an entire organization,&rdquo; he explains. &ldquo;Now you can do it for a day or two day&rsquo;s budget. You can sequence on a regular basis and do individual strains.&rdquo;&nbsp; That comes with an explosion in data, which his software company specializes in analyzing, combining comparisons of genome sequences of chosen individuals with public domain data and cross checking with other company&rsquo;s intellectual property. In corn breeding, that means the genetic makeup of plants that are performing well can be compared to the genetics of a closely related, poorly performing plant&mdash;with the goal of identifying the key genes involved. Breeding Approaches New understanding of molecular biology and gene technology has transformed the breeding industry, making it possible for both Syngenta and Pioneer to identify native genes important to drought response and successfully transfer them to new inbred lines, which are the basis of their new hybrids. Both companies are also now working on genetically modified (GM) varieties. On the other hand, Monsanto began its drought development work with GM traits.
Monsanto&rsquo;s approach to drought resistance is based on its trail-blazing work in inserting transgenetic material into corn, developing herbicide- and insect-resistant corn. The success of those very visible traits, however, creates a bit of a problem for the new drought trait.&nbsp; With Roundup Ready corn, visually, it can be seen that weeds die while the corn lives, says Mark Edge, marketing lead for DroughtGard Hybrids.&nbsp; In Monsanto&rsquo;s drought and stress resistance work&mdash;a collaboration with BASF, a global chemical company&mdash;&ldquo;there&rsquo;s not a clear delineation of whether the gene is having a direct effect.&rdquo; In other words, there isn&rsquo;t a visual difference between corn plants with and without the drought trait. &ldquo;The effect isn&rsquo;t seen in the leaves,&rdquo; he says. &ldquo;What really matters is not how green or tall or how beautiful the plant looks, but what&rsquo;s on the ear.&rdquo; The company selected a gene that affects the plant&rsquo;s utilization of water, Edge explains, so when the plant is under stress, the sap flow is reduced. &ldquo;It is pulling less water out of the soil profile and using that water more efficiently.&rdquo;&nbsp; The single transgenic trait was added to their best varieties, which will include Monsanto's Roundup Ready and insect resistant traits.
Monsanto&rsquo;s DroughtGard Hybrids were approved this year for use in the U.S. (and pending international import approvals), and are in precommercial testing by 250 growers on about 10,000 acres across the western Great Plains from South Dakota to Texas. Until the federal approval of the GM trait, the company was required to isolate its test plots and destroy the crop following harvest. Monsanto is targeting a 2013 commercial rollout of the new varieties in the western Grain Plains, which experiences more drought stress on a frequent basis, although it will also be available for testing across the Corn Belt.
Syngenta&rsquo;s program started 10 years ago when it asked scientists to nominate a set of genes that would improve yield potential of corn under drought. A dozen of those genes were validated and the work began to back cross and forward breed, creating new inbreds to use in hybrid development. Syngenta calls its process Gene Blueprinting. &ldquo;It&rsquo;s similar to GM in that we are working at the gene level,&rdquo; Fithian says. &ldquo;These genes are already in corn, but they are genes that are not widely expressed and not widely expressed in combination.&rdquo;&nbsp; The 12 genes in their Agrisure Artesian hybrids provide multiple modes of action. &ldquo;The neat thing is when you can produce multiple modes of action, you have season-long protection. It doesn&rsquo;t matter when the drought is,&rdquo; he explains.&nbsp; The selected genes help the plant make proteins and sugars, even when the plant is dehydrated. It also slows down leaf scorching and hastens maturity responses, ultimately helping the plants stay intact for another two or three weeks in drought conditions.&nbsp;
Pioneer&rsquo;s investments in testing facilities highlights another dimension of developing drought-tolerant varieties&mdash;the challenge of screening for drought when Mother Nature is so unpredictable. &ldquo;It&rsquo;s typical whenever you try to do these drought experiments in the field, you can be in the most typically dryland area in the world, and if you put a drought experiment there, you get rainfall,&rdquo; Schussler says wryly. Over a decade ago, Pioneer established a research facility in California&rsquo;s Central Valley which grows great corn, but only if irrigated. That lack of rain, however, facilitates drought research for which the timing and amount of water applied can be controlled. A similar facility in Chile allows year-round testing.&nbsp; The research plots in such dry climates, Schussler says, &ldquo;allows us to get a core set of drought data every year for advancing hybrids.&rdquo; Those lines can then be validated in Pioneer&rsquo;s original dryland research center in York, Neb., established in the 1950s, along with newer facilities in Texas, Kansas, Colorado and North Carolina. Using whole genome prediction, he says, &ldquo;We can make predictions of which hybrid cross would be the best for drought, based on the history of the inbred parents and all of our drought data over the past 80 years.&rdquo; Picking the cream of the crop, &ldquo;we take them to these field evaluation sites and confirm that these predictions are real and the products are really performing.&rdquo;
Pioneer has found that the Aquamax varieties maintain green leaf area longer. &ldquo;In extreme heat conditions, that&rsquo;s important to keep the plant fixing carbon and make sugar that makes grain,&rdquo; he says. The varieties are slow in leaf rolling under heat conditions and instead slow down water loss by regulating the stomates&mdash;the small holes in the leaves. Another important trait is rapid silking, helping to extend the critically short pollination period that ranges from five days to two weeks. &ldquo;One of the vulnerabilities of corn is that it has a discrete period when a lot of yield potential is determined very quickly,&rdquo; he adds.
The goal of all three breeding programs is to enhance the corn plant&rsquo;s ability to hang in there a little bit longer, in the hopes of catching rain in another two or three weeks. Developing hybrids that perform well under drought stress but didn&rsquo;t lose top-end yield potential when moisture conditions are perfect has proved just as important. Every year, at some time and some place, corn crops suffer from moisture stress.&nbsp; &ldquo;Even with the beautiful soils we&rsquo;ve been blessed with in the heart of the Corn Belt, we can have years like this, with drought, or fields that are not as consistent in water-holding capacity,&rdquo; says Syngenta&rsquo;s Fithian. And all companies are looking at the global market, where water is the most limiting factor in most places growing corn.
Setting proper expectations is important, though, says Monsanto&rsquo;s Edge. &ldquo;We didn&rsquo;t create a corn that acts like a cactus, or that you can grow in the Sahara.&rdquo; Author: Susanne Retka Schill Contributions Editor, Ethanol Producer Magazine (701) 738-4922 sretkaschill@bbiinternational.com

Monsantoâ€™s DroughtGard hybrids include a gene that affects the plantâ€™s ability to utilize scarce moisture. Though it doesnâ€™t improve the corn plantâ€™s green looks, it can still set kernels and fill an ear. This photo was taken in July just pri

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Syngenta's Agrisure Artesian hybrid, right, in a comparison trial in New Paris, Ohio, is less susceptible to leaf curl under stress. 

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The conventional hybrid, left, and the Pioneer Aquamax variety, right, are shown under drought conditions in Kansas in 2010. 

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A decade's worth of work is tested this season.

Boosting Corn's Drought Performance

Recent severe weather events such as last spring&rsquo;s flooding and ponding in fields and this summer&rsquo;s heat stress and drought pose a challenge to grain buyers at ethanol plants. The geographic diversity of the U.S. Corn Belt provides a natural hedge against catastrophic national crop failures, putting the risk to corn supply chains squarely at the subregional level. Satellite imagery algorithms, originally developed by the University of Illinois at Chicago to refute overstated land use change claims set forth by many academics and regulators against biofuels production, are now being used in a novel way to protect corn supply chains for ethanol plants.
In 2007, many academics and regulators produced analyses concluding that then-emerging biofuels policies, including the current renewable fuel standard, would result in conversion of large amounts of native lands to crop land. Satellite imagery was used to support these claims. At that time, two of us from the University of Illinois at Chicago disagreed and published a string of reports in sensible support of biofuels production (Mueller and Copenhaver, 2009a). These reports laid out the proper use of satellite algorithms and data-vetting routines to accurately determine land use and land use change (Mueller and Copenhaver, 2009b; Mueller, Copenhaver, Begert, 2012).&nbsp; What originally helped assuage the tense land use policy debate has now become a capable tool to help ethanol plants assess real-time corn availability and manage supply chain risk.
In the past, grain buyers have watched and relied heavily on USDA reports that are generated throughout the growing season including the weekly Crop Progress Reports, the Preliminary Acreage Report (usually released end of June) and the USDA Crop Report (usually released the second week of August). While these reports provide helpful benchmarks, they themselves influence market price movements. This means that by the time the reports are released, it is challenging to adjust risk management strategies. Also, the spatial resolution of the reports focuses on the larger interregional level (the August crop report releases only state-wide data) whereas ethanol plants and grain buyers benefit from county and even subcounty-level data. Since USDA relies heavily on farmer survey data (combined with some satellite imagery analysis), county- level acreage and yield data is only released in the spring following the growing season of interest. Also, the fixed release schedule for some of the key reports set by USDA months in advance may render some of the information less meaningful. For example, in an early planting year like this one, releasing preliminary yield estimates close to mid-August trails the emerging knowledge in the fields.
The research products developed at UIC have shown that satellite imagery can fill the spatial and temporal information void and provide useful and reliable information for grain buyers such as ethanol plants. Roughly 200,000 acres of corn are needed in a tight radius to supply a 100 MMgy plant (although the distillers grains feed coproducts offset half of that acreage). As shown in the 2008 National Corn Ethanol Survey (Mueller, 2010), ethanol plants, on average, source grain within a 50-mile area from their plants but the individual corn supply radii vary widely. In fact, many ethanol plants draw corn from skewed polygon areas rather than circular ones. Besides transportation logistics, the reasons for that variation are different cropping rotations (amount of double cropping in the vicinity), prevailing yields in the area, disease pressure, and, influencing all of these: local weather patterns. Reliable in-season, subregional data allows ethanol plants to determine early the proper supply radius (or polygon structure) and those clusters of growers or grain elevators that are affected by above- or below-average yields. The weather patterns of the past two years (floodings of 2011 and the heat pattern of 2012) accentuate the trend to move towards subregional data information sources.
In comes the LandViewer geospatial platform developed by UIC. LandViewer allows a very localized view of an ethanol plant&rsquo;s corn supply area. It calls on proprietary software algorithms to rapidly process new satellite imagery and weather station data for comparison with databases of vegetation, climate and planting history. Three types of satellite imagery at different resolutions are used to calibrate the yield and acreage models. Additional ground verification (ground-truthing) is performed during scouting trips in early June by cataloguing the coordinates of corn fields for input to the satellite acreage model and in late July during scouting trips by agronomists for input to the yield model. The highest resolution satellite data is also used to work closely with key growers delivering to the plants. Then, in a series of meetings with the ethanol plants and their key growers, the LandViewer team provides several information products: near-infrared field conditions (Figure 1), vegetation vigor in corn draw area (Figure 2), acreage estimates (Figure 3), yield estimates (Figure 4) and localized weather conditions (Figure 5).
The meetings with the ethanol plants are strategically scheduled throughout the growing season to optimize the plants&rsquo; risk management strategies. Currently, LandViewer technologies are used by three independent ethanol plant operators operating six plants across Illinois and Iowa. The research effort, now in its second season, provides valuable and timely information to the plants. The results from the first season showed accurate yield and acreage prediction prior to USDA report releases. Rick Schwarck, CEO of Absolute Energy in Iowa states: &ldquo;The information provided to us by the UIC LandViewer research team is very valuable since it constitutes an independent information data source specifically tailored to our corn supply area and our risk management schedule.&rdquo;
The LandViewer team has recently completed substantial automation and programming efforts and is now in the process of rolling out the technology on a national scale. The yield and acreage models and the data display are protected by a provisional patent held by UIC. The information hub for the LandViewer Platforms is provided at http://www.landviewer.uic.edu/. Talks are in progress to commercialize the technology.
Outside of this LandViewer effort, the research team has a long tradition of support from the agricultural community including recently funded efforts by Monsanto, the Illinois Corn Marketing Board and the Iowa Corn Promotions Board. Authors: Steffen Mueller Principal Economist University of Illinois at Chicago Energy Resources Center muellers@uic.edu (312) 316-3498 Ken Copenhaver Senior Research Engineer University of Illinois at Chicago Energy Resources Center kcopenha@uic.edu (217) 377-0071 References: Mueller, S. and Ken Copenhaver (2009a). Letter to the Honorable Lisa Jackson, U.S. EPA, dated September 21, 2009, filed in Docket ID No. EPA-HQ-OAR-2005-0161 as part of the Renewable Fuel Standard 2 Program. Mueller, Steffen and Copenhaver, Kenneth &ldquo;Use of Remote Sensing to Measure Land Use Change from Biofuel Production, published in &ldquo;The bulletin of the Program in Arms Control, Disarmament, and International Security&rdquo;; University of Illinois at Urbana&ndash;Champaign, Volume XVII / No. 2 / Summer 2009b. Mueller, S. &ldquo;2008 National dry mill corn ethanol survey&rdquo;; Biotechnol Lett DOI 10.1007/s10529-010-0296-7, May 15, 2010. Mueller, S., Ken Copenhaver, and Dan Begert &ldquo;An Assessment of Available Lands for Biofuels Production in the United States Using USDA Cropland Data Layers&rdquo;, Journal of Agricultural Extension and Rural Development, 2012.
&nbsp;
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

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View your grain supply chain in higher definition


Satellite Technologies Aid  Localized Planning

Despite widespread drought, there are some areas of the U.S. that will bring in good, quality corn. Some regions received sufficient rain while others pulled through, thanks to location in irrigation zones. The average corn grower and ethanol producer located in the grain belt, however, has never seen anything like it and hopes to never see it again. &ldquo;For a lot of folks, this is going to be a very different crop,&rdquo; predicated Edgar Seward of DuPont said, while addressing an audience at the American Coalition for Ethanol conference held Aug. 8-10 in Omaha.
Most people recognize that heat during pollination will impact corn kernel production. What isn&rsquo;t as commonly known is that heat during fill also causes problems, potentially impacting the amount of starch produced in the kernel, he said. In addition, the kernels themselves will likely be smaller, look more like popcorn and contain less floury endosperm, meaning they could be harder to grind, requiring more horsepower for hammer mills. &ldquo;It&rsquo;s just going to look different, it&rsquo;s going to mill different,&rdquo; said Seward, DuPont director of North American sales, biorefineries.
With such extreme heat stress, mycotoxins, such as aflatoxin, are likely to be a more widespread problem as well.&nbsp; That&rsquo;s going to require vigilance and testing of inbound grain, Seward said. It&rsquo;s something Illinois River Energy LLC, a 110 MMgy plant in Rochelle, Ill., is certainly concerned about, Neal Jakel, the plant&rsquo;s general manager, told EPM. In fact, in early August, the company had already ordered 1,500 aflatoxin test kits and had started preharvest testing in the fields from which the ethanol plant typically sources corn. &ldquo;Aflatoxin is going to be a major, major issue to deal with,&rdquo; Jakel says.
Illinois River Energy has data to back up the fact that corn quality negatively impacts yield.&nbsp; In 2010, the company paid for a study conducted by the National Corn-to-Ethanol Research Center, in which six mashes containing zero to 100 percent damaged corn were evaluated for yield. NCERC used 2009-&rsquo;10 season corn collected by staff at the ethanol plant, including moldy corn and corn damaged by heat due to aggressive drying. The 100 percent undamaged corn yielded 3 percent more ethanol, or about 0.08 gallons per bushel. Combining 8 percent damaged corn, the maximum allowed for No. 2 corn, resulted in a 0.014-gallons-per-bushel yield decrease while 22 percent damaged corn, the maximum allowed for No. 5 corn, added up to a 0.032-gallons-per-bushel yield loss. The study showed that, up to a certain point, it didn&rsquo;t hurt to utilize damaged corn as an ethanol feedstock&mdash;as long as the plant purchased it at a discounted rate, said Sabrina Trupia, assistant director of biological research for NCREC, one of two people who prepared a 13-page report on the research. As the mixture reached 50-50 ratio, however, it did start to matter, she added.
Interestingly, there was no difference in starch content between the corn with no damage and the 100 percent damaged corn, indicating that there was something else about the damaged corn that inhibited yield, she said. Other study conclusions were that mass was lower in 100 percent damaged corn and moisture content of damaged corn was lower than that of nondamaged corn.
Although&nbsp; 2009-&rsquo;10 was a wet year and 2012-&rsquo;13 a hot, dry year, it&rsquo;s possible corn quality issues will be similar because both years resulted in over-dried corn, one year due to aggressive drying and the second due to drought, Jakel hypothesized. However, in order to have a more concrete idea how drought will affect ethanol yield, the study should be repeated with corn from this year's crop, Trupia said. NCERC would be interested in continuing research in this area but would need a partner to make it happen. Further study on the effect of corn quality on ethanol yield would help ethanol producers come up with a good discount schedule.
In fact, besides just confirming a suspicion, developing a discount schedule is the reason Illinois River Energy asked NCERC to conduct the study in the first place. Ethanol producers need to educate area growers about what the ethanol industry is looking for in corn and how that is different from what is needed for the export or feedlot markets, which may not be as concerned about lower test weight or starch content, Jakel said. On the other hand, discounting corn too heavily will result in corn growers taking their product elsewhere. &ldquo;It&rsquo;s a balancing act,&rdquo; he said. Opportunities, Tools In such a challenging year, it&rsquo;s important to look for bright spots, Seward told ACE conference attendees during a panel presentation titled &ldquo;Feedstock Quality and Its Impact on Profitability.&rdquo; One is that drought-damaged corn containing less starch will contain more protein, oil and fiber. Another possible positive of extreme heat is that much of the corn crop will come off the field wicked dry and won&rsquo;t require additional drying.
Another area of opportunity is the motivation factor. He sees wide variation in ethanol yield, with about 90 percent of plants in the 2.6 to 2.8 gallons of undenatured ethanol per bushel of corn, and a few yield superstars at 2.88, just short of that 3-gallon-theoretical yield number. &ldquo;It&rsquo;s going to be a challenging year but I&rsquo;m probably more positive this year than I would be in any given year because I think it helps us as an industry,&rdquo; he said. &ldquo;When we were making 20 to 30 cents a gallon, we didn&rsquo;t look for half a penny a gallon, honestly, a lot of plants didn&rsquo;t even care. Half a penny a gallon is a lot of money right now. So what you are finding is lots of people are entering into the equation, asking more questions&mdash;what can I do to look like that 2.88 plant?&rdquo;
The clich&eacute; about necessity being the mother of invention also applies. &ldquo;You&rsquo;re going to see people do things this year that normally they wouldn&rsquo;t consider,&rdquo; he said. DuPont is hearing from ethanol producers on the hunt for the cheapest starch available. That&rsquo;s prompting questions about grinding 30 percent wheat or adding sorghum to the mix at plants that were previously relying completely on corn.&nbsp;
Pioneer, now owned by DuPont, has two tools ethanol producers can use to source the best quality grain. Fellow ACE conference presenter Shane Frantum, a biofuels key accounts manager for Pioneer, talked about how QualiTrak System and Dynamic Pricing Platform provide opportunities for ethanol producers. QualiTrak, an analytical tool, measures quality load by load, and summarizes that information monthly. &ldquo;From top to bottom, you know exactly who is delivering the quality,&rdquo; he said. &ldquo;That gives you some real transparency and an opportunity to go after more of that grain.&rdquo; DPP, on the other hand, can be used to aggressively go after the corn from growers or geographical regions with higher quality.
Frantum and Paula Emberland, business analyst for Christianson and Associates PLLP, also talked about the difference between sourcing grain from commercial elevators versus corn growers. Commercial elevators are good at blending corn, for fairly consistent quality year round while farmer-direct bushels show much greater variability, Frantum said. Corn sourced from farmers follows seasonal patterns, with the peak quality crop available when the new crop is harvested. Quality starts to dip in the spring and takes a hard dive throughout the summer. Although grain sourced from commercial elevators does play an important role, ethanol producers can&mdash;by purchasing more farmer-direct corn&mdash;capture value through a higher potential for ethanol yield. &ldquo;When things start to dip, someone out there probably has some good quality corn,&rdquo; he said. &ldquo;And those are the guys that you want to hone in on and make sure that those relationships are well established and that you are going to get as much of that moving through the summer months as you can. That&rsquo;s where the impact to the bottom line really comes.&rdquo;
Frantum showed, using modeling, that a 100 MMgy ethanol plant could save money by going after more farmer-owned corn. In the first example he gave, a plant going from 100 percent commercial corn to 75 percent commercial and 25 percent from the farmer could save 15 cents a bushel, however ethanol yield stayed constant. If the plant increased farmer-direct bushels to 50 percent, however, it could save 10 cents a bushel while providing farmers with an incentive to deliver high-quality corn. By doing that, the facility could potentially enjoy a bump in ethanol yield from 2.782 gallons per bushel to 2.799. The difference between the two scenarios, he said, was creating a market signal for farmers. &ldquo;The growers need to know that quality matters,&rdquo; he said. &nbsp; Author: Holly Jessen Features Editor of Ethanol Producer Magazine (701) 738-4946 hjessen@bbiinternational.com

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Feedstock from grain elevators shows very little potential ethanol yield above the 2.85 gallons of ethanol per bushel of corn, top. In comparison, corn sourced directly from farmers, below, is widely variable. 

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Hot, dry growing conditions could very well translate into lowered ethanol yield in the coming year.

Yield Wild Card

In last month&rsquo;s column, I wrote that the record drought in the U.S.A. has put the food versus fuel debate back on the table making biofuels bashing fashionable again, as in 2008. To be expected, of course. This time, the food/fuel issue has turned into a grim political fight in the U.S. and is much more of an issue than in the EU. That was quite different in 2008, when food/fuel was the talk of the day in Europe. Overall, the appetite for the food/fuel controversy is less than it was in 2008. We haven&rsquo;t seen (yet, anyway) the spinning reports from the World Bank and all sorts of other international organizations as we did before. It could well be these organizations learned their lesson. The accusation that biofuels were driving up food prices, causing hunger, was proven wrong. Higher oil prices and speculation in commodities were the main drivers for the problems then. But some people seem to have an ultra short memory. Mr. Brabeck from Nestle is, of course, one of them but many NGOs have the problem of amnesia, too.
What irritates me most about the food/fuel "debate" is that again the same accusations are made against the ethanol sector and the same silly solution (no more biofuels) is proposed as was four years ago&mdash;as if all the facts are no longer facts and the evidence that biofuels were not causing the problem has evaporated.
It annoys me to read what total nonsense organizations like Actionaid are spreading&mdash;citing nonpublished and nonpeer-reviewed studies, presenting fabrications as facts, ignoring and effectively denying the laws of supply and demand&mdash;taking the moral higher ground and suggesting that the world doesn&rsquo;t want biofuels. The credo seems to be: it doesn&rsquo;t matter what we say, as long as it will incriminate biofuel producers and blow up biofuel policy, especially in the U.S. and Europe.
It annoys me that the fact that biofuel production is far more than just biofuel production is being completely ignored, almost on purpose. Is it so difficult to acknowledge and publish that at least one-third of the grains used eventually go to food and feed and that those coproducts have a high nutritional value?
If a magazine like the Economist is writing that the U.S.A. uses 40 percent of its corn for the production of biodiesel (yes, he said biodiesel), you wonder if the journalist really went any further than using just the cut and paste function of his computer. I have the strong feeling that most, if not all, of the journalists who cover food/fuel don&rsquo;t do any research at all and are merely stating their own political view.
And then there are the politicians who see an opportunity to gain political brownies, such as the German minister of development affairs who recently called for an immediate stop on the distribution of E10 because this fuel increases world hunger. Now, the facts. Only in 12 percent of all gasoline in Germany is there E10. This might be 100 million liters (26 million gallons) of pure alcohol per year, 60 percent of it made from grains (mainly wheat), which would be around 150,000 tons of wheat, or 0.1 percent of the total EU annual wheat production. Yes, minister, you are right: stopping E10 in Germany will indeed reduce hunger substantially in the world. Oh yes, and don&rsquo;t bother about the 50 percent of food that is being wasted in the EU. Those 89 million tons per year of foodstuff wasted, as shown in a European Commission report, are peanuts compared to what we use for E10.
The food/fuel issue is deeply rooted and I fear that we as biofuel producers will have to live with this. The food/fuel controversy will not be taken from the antibiofuel menu until the moment biofuels are no longer &ldquo;served.&rdquo; We can only do one thing, and that is continue to educate and tell the true story on food and biofuel. The people with common sense will understand the story we tell.
Author: Robert Vierhout Secretary-general, ePURE Vierhout@epure.org

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Food vs Fuel: Can We Get it  Off the Table?

Next month, farmers will wrap up corn harvest, the U.S. EPA will respond to petitions to waive the renewable fuel standard (RFS), and Americans will elect a president and Congress. As much as the corn supply/demand balance sheet and EPA&rsquo;s waiver decision concern the ethanol industry, I believe more is at stake for us in the election.
Farmers will harvest as many bushels as they can, signaling to our industry and other corn customers how much rationing must occur going forward. I&rsquo;m confident EPA will deny the RFS waiver requests based on ethanol&rsquo;s small role in feed and food prices, and its big role in moderating gas prices.&nbsp;
Who we elect to represent us in Washington, D.C., and how they will vote on the RFS in 2013 remains an open question. Without a doubt, votes will be cast in Congress next year regarding the fate of the RFS.
What we have going for us is that ethanol has a compelling story to tell. We can and should go on offense. The RFS costs taxpayers nothing and is doing exactly what Congress intended. Foreign oil imports are below 50 percent, thanks primarily to the RFS. Americans are saving upwards of $1 or more at the pump because of ethanol. High-skill, high-wage jobs that can&rsquo;t be outsourced have been created by our industry. This record of accomplishment means the RFS is working. But we can&rsquo;t sit idly by, we&rsquo;ve got to start at the grassroots level and educate our friends, neighbors and local elected officials about how ethanol is improving the lives of all Americans.&nbsp;
You and I may not have enough money to match the campaign contributions of ethanol opponents such as C. Larry Pope of Smithfield Foods or Rex W. Tillerson of ExxonMobil, but we have the same influence they do in the ballot box. Our vote is as powerful as theirs.
I recognize most of us aren&rsquo;t single-issue voters, but given what&rsquo;s at stake for our industry, we have no other choice but to take our responsibility to vote in November seriously and to make our vote for ethanol nonnegotiable. The RFS is the only variable we have to level the playing field with oil companies. If we lose the RFS, we lose E15, our industry never sees the day when E30 and E85 are available on a widespread basis, and the promise of advanced biofuel vanishes.
As former Navy SEAL and U.S. Senator Bob Kerrey remarked at the American Coalition for Ethanol&rsquo;s 25th anniversary conference in Omaha, the best thing we can do as an industry to get the attention of politicians is to make it clear we won&rsquo;t vote for them unless they support the RFS.
To help inform ethanol supporters where certain candidates stand on the RFS, ACE has published voter guide information available on our website, www.ethanol.org. Please take the time to educate yourself on the candidates&rsquo; RFS positions.
Given the gravity of the situation, it isn&rsquo;t good enough to simply elect politicians who tell us they support the RFS. We need elected officials who are willing to stand up on the floor of the U.S. Senate and House of Representatives and speak out forcefully and effectively for ethanol in debates. We need members of Congress who will convince their colleagues to stand with us on RFS votes next year.
Make no mistake: our opponents are motivated to elect politicians who will vote to strike down the RFS next year. The stakes don&rsquo;t get any higher. We must uncompromisingly elect candidates to Congress who vow to stand and successfully fight with us in support of the RFS. Author: Brian Jennings Executive Vice President, American Coalition for Ethanol (605) 334-3381 bjennings@ethanol.org

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The Industry's Stake  in this Election

Recently, a number of media outlets have been focused on Big Food and their endless calls to waive the renewable fuel standard (RFS) to prevent the rising cost of food. The only problem is that waiving the RFS is unnecessary. Our critics have been propagating misinformation, playing on people&rsquo;s fears and an Act of God, namely the drought, to make wild assumptions and foolish claims.
No one has said that the current drought the United States is facing won&rsquo;t have an effect on the agricultural community or food prices. But to attempt to use the drought as a mechanism to pursue a misguided policy agenda is shameless. American family farmers and ethanol producers deserve better.
Corporations like Smithfield Foods are asking America&rsquo;s grain farmers in a time of need, when crop yields are diminished, to sell their crops at a lower price&mdash;completely disregarding the livelihood of the family farmer&mdash;to feed their corporate greed, building on the $1.5 billion annual profit from last year. The reality is that Big Food conglomerates are more worried about their own bottom line and they have no intention of passing any savings on to the American farmer or American consumer. If they want more taxpayer dollars to fill their coffers, they should be straightforward and ask, instead of smearing biofuels and taking advantage of a severe drought to mask the real agenda.
Earlier this summer, General Mills CEO Ken Powell estimated that food prices would increase by 2 to 3 percent, compared to an increase of more than 10 percent last year, noting &ldquo;consumers should see generally stable prices.&rdquo; The USDA recently predicted that food prices may rise somewhere between 3 and 4 percent by 2013. To suggest that ethanol production is the leading cause of increasing food prices is just plain wrong. Ethanol production has no say over whether it rains or not, so the industry should not be inaccurately accused of rising commodity costs&mdash;that is Mother Nature.
Ethanol critics believe that trying to tie rising food costs to ethanol production is a clever way to drive his policy agenda and roll back the RFS. The problem is, the facts do not support the claims. The RFS has been the only successful energy policy this nation has implemented in the past 40 years, and since its enactment, imports of foreign oil have decreased by 25 percent. It is the only energy policy that has helped reduce our dependence on foreign oil and spur economic growth, creating and supporting more than 400,000 jobs.
The RFS is working and was built with a certain level of flexibility to manage difficult times or events, such as this drought. Under the free market, ethanol production has slowed and producers are facing rising commodity prices and tighter margins. With slower production, an 850,000-gallon surplus and 2.5 billion RFS credits available, there is no reason obligated parties cannot meet the 2012 RFS volume goals. The current decline in production, the surplus on hand and the availability of RFS credits, can be equated to roughly 3 billion bushels of corn that will be freed up for livestock and poultry needs.
Big Food neglects to mention energy is used to transport, package, process and store food as it makes its way from the farm to the market&mdash;higher oil and gas prices are the true culprits of higher food prices. Additionally, blaming farmers for the cost of their commodity is misguided. When you look at the food dollar, the farmer&rsquo;s share is only 14.1 cents, the rest is tied up in the marketing share, including those costs to process and bring the products to market.
Big Food&rsquo;s policy objectives would put America down a path of further dependence on foreign oil from nations like Venezuela and groups like OPEC, costing Americans $360 billion annually and hundreds of thousands of jobs. This would be a mandate on the status quo, denying consumers a choice of a less-expensive, homegrown renewable fuel that is cleaner burning and better for our environment.
For far too many years, Big Food has gorged itself at the trough of government-subsidized corn. If Big Food believes that the government should continue to pay farmers to produce corn at a loss instead of participating in the free market, they should just say so, instead of making unsubstantiated attacks against the ethanol industry&mdash;a true American success story that is helping our economy grow and contributing to our energy security. Author: Tom Buis CEO, Growth Energy (202)545-4000 tbuis@growthenergy.org

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Big Food is  Full of Baloney

This summer&rsquo;s drought is taking a toll on America.&nbsp; It has hemmed in the productive power of American farmers.&nbsp; It has brought cries of doom and gloom for livestock and poultry producers.&nbsp; And, it has caused knee-jerk, emotionally charged reactions for Capitol Hill and state capitols all across the country.&nbsp;&nbsp;
The events of this summer have brought an avalanche of calls to end America&rsquo;s production and use of renewable fuels like ethanol.&nbsp; In the name of livestock industry profits, we must stop ethanol production today, or so we are told.&nbsp; Hiding behind claims of concern for consumer pocketbooks, corporate livestock interests, factory poultry operations and food manufacturers have petitioned the U.S. EPA to waive the requirements of the renewable fuel standard (RFS) to prevent higher prices for consumers.&nbsp; That is quite magnanimous of these industries.
The fact is that consumers would be much worse off if the calls to end domestic ethanol production were heeded.&nbsp; Not only would tens of thousands of jobs all across rural America be in jeopardy, but consumers would begin to see immediate spikes in gasoline prices if ethanol&mdash; today 10 percent of the gasoline supply and 50 to 60 cents cheaper than gasoline&mdash;were eliminated from the marketplace.&nbsp;
Simply put, waiving the RFS likely would result in a net increase in annual household spending of at least $24 to $85 in 2013. This increased burden on the family budget would be particularly unwelcome at a time when unemployment remains high and economic recovery remains sluggish.
Here&rsquo;s how:&nbsp; if EPA waived the RFS for next year, food inflation might reach 3.35 to 3.44 percent instead of 3.5 percent, according to USDA, and average household food expenditures for 2013 might fall to $6,533 to $6,527 instead of $6,536. In other words, waiving the RFS might save $3 to $9 per household for the full year, or roughly 0.8 to 2.5 cents per day. Yet, eliminating ethanol from the gasoline supply would put upward pressure on prices at the pump.&nbsp; According to the Energy Information Administration, the average household consumes approximately 1,100 gallons of gasoline annually. Research from Iowa State University, Purdue University, Louisiana State University and others suggests that a potential 500 million to 1.4 billion gallon reduction in ethanol under a waiver would result in an increase in gas prices of 3 to 8 cents per gallon.&nbsp; Therefore, waiving the RFS would increase average household gasoline expenditures by at least $33 to $88 for the year, offsetting the miniscule savings a waiver might produce on food expenditures.
The renewable fuel standard waiver language clearly states that EPA must look at the whole economy in conducting research for the waiver requests and come to a finding of severe economic harm resulting from the implementation of the RFS.&nbsp; Clearly, comparing just consumer food prices to consumer gasoline price demonstrates more harm than good would come from granting a waiver.&nbsp; Moreover, when the cost of gasoline is considered as a factor in the overall price for food in grocery stores, it&rsquo;s obvious that eliminating ethanol use would not only cause pain at the pump, but erase any miniscule savings that might have resulted from a lower corn prices as a result of less ethanol production.
EPA, Congress and governors across the country would do well to keep a broader economic picture in mind than narrowly focusing on the profit margins of a few select industries.
Author: Bob Dinneen President and CEO, Renewable Fuels Association (202) 289-3835

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Consumers Get Short-changed in RFS Debate

The U.S. drought, disastrous as it is, does not signal Armageddon for food prices, biofuels and the poor. First, one needs to understand that the main drivers behind rising corn prices, even in today&rsquo;s drought conditions, are the market speculators and hedge fund managers. Over the past 10 years, they have done more to spike the price of corn than any drought or natural plague and made millions of dollars in the process. Second, the price of oil is right behind these speculators in terms of causing a rise in food prices. The cost of petroleum-based fertilizer, planting, harvesting, transportation and processing are all adversely affected by the price of oil.
A corn crop of 10.8 billion bushels, while down roughly 13 percent, is an enormous crop, and one that will completely satisfy the domestic and export needs of America. It&rsquo;s the sixth largest corn crop in U.S. history. Market speculators send the message that the sky is falling and make millions terrorizing people. America has been through this Chicken Little scenario time and time again and we, and the world, keep falling for it.
There is also an important point to be made regarding biofuels using 40 percent of the corn crop. That is a mischaracterization of the facts. More than one-third of the corn used in the production of biofuels is put back into the market as the high protein feed supplement distillers grains, used extensively in feeding cattle, dairy, hogs and poultry. Only the corn&rsquo;s low-feed-value starch is used in the production of biofuels; all the protein and other nutrients are processed into animal feed. So the 40 percent figure that is bandied about is, in reality, significantly lower, with some projections showing the actual amount of corn value removed from the market is less than 20 percent. The world is protein poor, not starch poor. It seems that this fact is almost always inadvertently, or intentionally, lost in the reporting.
The drought has presented an opportunity for those opposed to biofuels in the U.S.&nbsp; and other western countries, to mount an aggressive campaign to minimize or even stop its use. The U.S. biofuels program has reduced the price of gasoline consumers pay at the pump by 40 cents per gallon, using the most conservative estimate, created more than 400,000 jobs and pumped billions of dollars into the U.S.&nbsp; economy and now replaces fully 10 percent of all the gasoline used in America.
Congress needs to be very careful not to fall for this erroneous and mindless assassination of biofuels over food versus fuel when the economic, energy, environmental and security benefits of the biofuels industry are so enormous.
That&rsquo;s the way I see it.
Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com

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Market Speculators, Oil  Drive High Food Prices

If an industry is shaped by what it overcomes, the 2012 drought will make the U.S. ethanol industry stronger, smarter and more efficient. Like the roots of a dry plant reaching deeper into the soil for sustenance, ethanol producers are digging in for a tough fourth quarter and an uncertain 2013.&nbsp;&nbsp;&nbsp;
At press time, the U.S. EPA was about 20 days from closing the comment period on the renewable fuel standard (RFS) waiver request, with calls for an extension unanswered. Regardless of whether more time for comments is allowed, the EPA won&rsquo;t likely decide the matter until early next year&mdash;after the harvest results are known, after the presidential election and after the holidays.
Until then, however, producers aren&rsquo;t just waiting around. Acting independently, they have been proactive in their response to the drought and this year&rsquo;s resultant high corn prices. As Holly Jessen&rsquo;s page 30 lead story, &ldquo;RFS Under Scrutiny,&rdquo; points out, more than two dozen U.S. ethanol plants are now idle and the industry is running at least 12 percent below its achievable capacity. In fact, Jessen&rsquo;s story points out that the ethanol industry will cut its corn consumption by a projected 260 million to 500 million bushels in 2013, leading a global demand rationing effort without protest.&nbsp;
One of the current ironies of RFS opposition argument, veiled mostly as an anti-mandate campaign, is that the market is driving both corn demand rationing and ethanol blending. The high price of corn is pressuring ethanol producers and livestock producers alike to adjust production, and the high price of gasoline is encouraging discretionary ethanol blending nationwide. Businesses are making these decisions, not the government.&nbsp;
Food versus fuel, the other principal RFS opposition argument, is similarly ironic, given the ethanol industry&rsquo;s role in driving new investments in corn breeding that has resulted in drought-resistant hybrids that improved this year&rsquo;s U.S. crop performance. As Sue Retka Schill reports in her page-40 feature, &ldquo;Boosting Corn&rsquo;s Drought Performance,&rdquo; 15 percent yield gains over nondrought-resistant corn, for some growers this year, was the difference between 150-bushel yield expectations being knocked back to 80 bushels per acre or 95 bushels per acre. You don&rsquo;t have to be a farmer to understand the importance of those numbers.
Finally, this month, be sure to read Jessen&rsquo;s other corn-focused feature, &ldquo;Yield Wild Card,&rdquo; on page 46, which addresses concerns about the effect of the drought on corn kernel quality and milling characteristics. Importantly, the story points out how producers are responding to the increased risk of aflatoxin that is likely to be present in the 2012 corn crop, and how some producers are examining discount schedules and alternative corn procurement strategies in the wake of the 2012 drought.
In the past decade, expanded ethanol production has stimulated corn production. That, combined with the improved varieties, will mean this year&rsquo;s crop will still be sixth largest ever, if August&rsquo;s projections hold up. That is quite remarkable, given this summer&rsquo;s drought is ranked among the worst in American agriculture&rsquo;s history. We expect that sort of resilience, as well, from the ethanol industry.
Tom Bryan, PRESIDENT &amp; EDITOR IN CHIEF tbryan@bbiinternational.com
&nbsp;
CORRECTION &ldquo;Testing for Traces,&rdquo; a story published in the August issue of EPM, contained two errors. FermGuard Xtreme, a product marketed by FermSolutions Inc., does not contain multiple antibiotics. Its active ingredient is 100 percent erythromycin with no fillers. Also, although virginiamycin did at one time have a letter of no objection from the Food and Drug Administration, that is no longer the case.

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Resilience in the Face of Uncertainty

Biomass-to-energy projects often fail to attract investors and debt partners because of their inability to demonstrate a reliable and consistent feedstock plan along with some assurance of long-term price stability. Coupled with the fact that large volumes of biomass feedstocks often found well away from major population centers, it becomes readily apparent why biomass-to-energy projects often struggle to move beyond the conceptual stage.
 Viewed in that context, municipal solid waste is a veritable dynamo as a feedstock. The U.S. EPA estimates that on average, every American generates nearly 4.5 pounds of waste each day. When it comes to waste, feedstock availability and population&mdash;and energy demand, by extension&mdash;are highly correlated. Waste also has a well-established, robust and efficient collection system that is paid for by collection tipping fees.
 Why then, does the U.S. lag so far behind other parts of the world in waste to energy? The International Solid Waste Association reports that Europe boasts nearly five times more waste-to-energy (WtE) facilities than the U.S.&nbsp; Perhaps the abundance of available land to dispose of waste plays a role. Waste professionals often talk of a mythical place known as &ldquo;away,&rdquo; a location that the public believes is the final destination for its refuse. When attempts are made to retrieve this valuable feedstock from &ldquo;away&rdquo; and produce energy from it, however, public outcry often begins. Opponents of WtE facilities quickly hang the &ldquo;garbage burner&rdquo; label on a project and developers find themselves forced into a public education role to keep their project moving forward.
 This month&rsquo;s issue of Biomass Magazine is nothing if not a firm reminder that the WtE industry in this country continues to innovate and evolve in spite of the rampant misinformation that persists about its technologies and environmental footprint. Anna Simet&rsquo;s feature &ldquo;Maximizing Metal Recovery&rdquo; highlights the value delivered to WtE facilities and the general public through the continued advances made in front- and back-end metal recovery at these facilities. Luke Geiver&rsquo;s feature on downdraft gasification is not only a compelling technology feature, but also reinforces how WtE projects so often solve multiple problems simultaneously.
 Waste does not go &ldquo;away,&rdquo; nor should it. In all forms it carries energy, and because of its long list of advantages as a feedstock, developers will continue to eye it for conversion into power, thermal energy and, increasingly, liquid fuels. While the general public can wring their hands, our industry knows that a refusal to capture energy from this ubiquitous feedstock would be an incredible waste.

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On Not Wasting the Energy Potential in Waste

This fall&mdash;as the season is in most years that are divisible by four&mdash;is full of uncertainty for Congress, as the attention of Washington, D.C., is focused on one thing only: the presidential race. The capitol city will be a ghost town as congressional incumbents and their staffers head back to their districts to campaign for most of October.
 Under these circumstances, we don&rsquo;t expect much upcoming legislation that will affect the biomass industry through the end of the 112th Congress. Nevertheless, we held our annual Biomass Power Association fly-in in mid-September to remind our legislators in Washington, D.C., about our many important economic and environmental contributions, and the things we need as an industry for continued success.&nbsp;
 Over three days, our member companies met with members of Congress, senators and regulators. We told stories of the 15,000 men and women who work hard for our industry, the public-private partnerships that are saving forests while generating clean energy, and towns like Berlin, N.H., which have new beginnings thanks to biomass. We recounted time and again the regulations, policies and legislation we need to continue operating in light of falling natural gas prices, rising fuel prices and incentives that often don&rsquo;t apply to existing infrastructure.
 And we showed appreciation to those elected officials who have stood by us at times when it hasn&rsquo;t been the most popular thing to do. Sen. Debbie Stabenow, D-Mich., received the Friend of Biomass award for her continued efforts to advocate on our behalf for legislation that will keep us afloat. On receiving the award, Stabenow pointed out that the biomass industry supports&nbsp; Michigan businesses using products grown in the state to produce energy. &ldquo;I am honored to receive this recognition on behalf of the hard-working men and women who keep our forests healthy and provide renewable energy for homes and businesses throughout our state,&rdquo; she said. &ldquo;I will continue leading the effort to help our businesses spur new biomass and bio-manufacturing jobs, both in Michigan and across the country.&rdquo;
 While we don&rsquo;t expect a lot of legislating in Congress this fall, there are a few areas where we might see some progress.
 One is the Section 45 Production Tax Credit. It is up for renewal next year, and we are working with other baseload energy sources to encourage Congress to extend the placed-in-service date. This would be a temporary fix to our long-term tax parity challenges, but it would help dozens more facilities qualify for the upfront funding that they need to attract investors and ensure a successful project.&nbsp;
 We are also keeping an eye on a potential&mdash;although not very likely&mdash;House vote on the 2012 Farm Bill that has already been approved by the Senate. The bill includes close to $200 million in funding for the Biomass Crop Assistance Program over the next five years.
 &nbsp;Regardless of the outcome of the presidential, House and Senate races&mdash;and the congressional activities for the rest of 2012&mdash;we are laying the groundwork for favorable policies in the future. Author: Bob Cleaves President and CEO, Biomass Power Association www.USABiomass.org bob@biomasspowerassociation.com

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Legislation until Lame Duck Session: A Look Ahead

October means many things to many people, including baseball, budgets and biomass. While the boys of October battle for a pennant, the heating season has the biomass industry reflecting on the progress in 2012, and projecting for 2013 budgets and priorities. We would like to share our reflection of the state of the biomass thermal industry, as well as progress the Biomass Thermal Energy Council has made in 2012 and how our achievements will shape the new year.
 &nbsp;We are proud to report that the association reached a record 100 members and stands strong with proven staff and numerous biomass thermal initiatives at the state and federal levels, a reflection of BTEC's persistence and determination over several years. This progress has been hard-earned, due in large part to the financial resources and talent BTEC members and associates have contributed in support of the organization's agenda to advance biomass thermal.&nbsp;
 &nbsp;Federal policy remains a pillar of BTEC's activities, despite the apparent gridlock in Congress and the looming presidential election. Working with Senate Energy Committee Chair Jeff Bingaman, BTEC helped draft S. 3352, an investment tax credit for highly-efficient commercial and industrial biomass heating systems. This first-of-its-kind bill would level the playing field for biomass thermal technologies with other renewable energy pathways and open the door for existing federal programs. Two other priorities include extension of the credit for residential biomass heating systems and shaping the next Farm Bill (complete with its suite of biomass energy programs). In addition to legislation, BTEC co-hosted multiple congressional biomass briefings that addressed the overlooked opportunity of biomass thermal energy.
 &nbsp;BTEC's efforts to promote thermal policies are extending beyond the federal level to state legislatures and agencies. The tireless work of advocates in the Northeast, the Midwest and the Pacific Northeast, to name a few regions, have helped change state-level policy emphasis on biomass heating. BTEC has submitted letters of support, notified local leaders, and spread the good news on these achievements far and wide, planting the seeds of success beyond state lines. As an example, the inclusion of thermal energy in New Hampshire and Maryland&rsquo;s renewable portfolio standards (RPS), and the study of thermal in Massachusetts&rsquo; RPS, will create markets for your equipment, fuels and services. BTEC cannot replace grassroots state associations, but our resources can amplify and accelerate the message.
 &nbsp;This year's educational and outreach activities have gone hand-in-hand with the association's policy priorities.&nbsp; In March, BTEC successfully concluded a major outreach effort, supported by the U.S. Forest Service's Wood Education and Resource Center, that funded many webinars, factsheets and interviews. Volunteer contributions from BTEC members helped reach the following impressive metrics:
 &bull; 8,000-plus views of the BTEC webinar page, with 1,373 views of the live recordings.
 &bull; 2,458 webinar attendees with an average webinar rating of 3.8 out of a possible 5.
 &bull; 1,300 views of the factsheet resources webpage.
 &bull; 700 visits to the audio interview webpage.
 &bull; 24 virtual tours of biomass thermal installations.
 A separate grant from WERC that seeks to better engage architects and engineers on biomass heating is reaching new audiences, including the U.S. DOE and biomass energy manufacturers. This grant will continue into 2013.&nbsp;&nbsp;
 With a promising start to 2012, the remaining months bring both opportunity and strategic reflection. In the fall, BTEC staff will launch a registry and provide plaques for new biomass thermal installations to bring greater public visibility to successful projects. Also, BTEC will engage members for an industry survey and produce several webinars on new biomass thermal markets. The fall season will also see changes to the association's 2013 program plan and election of new board members and officers. Input will help guide and position BTEC's leadership and resources in an ever-changing business and policy environments.
 &nbsp;We can say unequivocally that BTEC's hard work has led to widespread recognition of biomass thermal as a vital element of our nation's energy policy. It is remarkable to think how far we have progressed in less than four years since our founding. We know there are serious needs in the biomass thermal industry: financial, regulatory, public acceptance and education. BTEC was founded with the sole mission of advancing the use of biomass for thermal energy applications, and support of the association helps meet those vital industry needs. Now is the time to add your voice to this growing biomass momentum.
 Authors: Joseph Seymour Executive director, Biomass Thermal Energy Council Charlie Niebling Chairman, Biomass Thermal Energy Council www.biomassthermal.org

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The State of Biomass Heat:  A 2012 Reflection

Biomass developers are experts at using heat to make power. A very different method of doing so&mdash;one that elicits no combustion&mdash; hails from a free fuel source and may be the next frontier for the veterans of the biomass industry.
 Waste-heat-to-power (WHP) is the generation of emissions-free electricity from heat that is the byproduct of industrial processing. Some typical applications include steel or paper mills, chemical manufacturing facilities and glass manufacturers. In addition to traditional industrial manufacturing, oil and gas processing facilities are also home to sources of waste heat. Such energy-intensive industries require high-temperature heat to process and refine their products. For example, a facility might use 3,000-degree-Fahrenheit heat to refine their product. Once the refining has been done, energy is still left in the heat, which is perhaps reduced to 400 F or lower. Such low-temperature heat is often cast aside and regarded as worthless.&nbsp; This is waste heat, and is in fact an extremely valuable commodity, a source for baseload, emissions-free electricity.
 In addition to energy-intensive manufacturing facilities, gas compression stations and landfill gas facilities serve as ideal hosts for capturing waste heat. Both of these types of facilities employ the use of turbines or engines, and during the process emit capturable heat from their exhaust streams. Gas compression stations are often in remote locations and are responsible for compressing gas to keep it flowing along pipelines across the country. All power generated from WHP on compression stations and landfill gas facilities must interconnect into the grid, which is different than power generated from waste heat on industrial sites, as it may be used to reduce the site&rsquo;s overall power needs. In states that value waste heat as a renewable equivalent, this can be a lucrative investment.&nbsp;
 Advanced WHP technologies are being used today in the WHP, biomass, geothermal, and solar thermal markets. These technologies include Organic Rankine Cycle, Kalina cycle, Sterling engine, and the newest variation, thermoelectrics. Such technologies are capable of capturing heat as low as 195 F, and some may be able to reach lower temperatures. Innovation of such technologies is making what has always been considered waste a very valuable prospect.
 WHP potential is gaining momentum. In May, the governor of Ohio added WHP to the state&rsquo;s renewable resource and energy efficiency standards, and 13 states currently recognize WHP as a renewable equivalent (defined as heat that is the byproduct of a process whose primary purpose is not the generation of electricity from a fossil fuel). Bipartisan bill H.R. 2812&mdash; The Heat is Power Act&mdash;has been introduced in Congress to offer WHP equal tax treatment with other sources of renewable energy, and a recent paper published by the U.S. EPA in August estimates a potential market size of about 10 GW.
 The possibility for 10 million American homes to be powered by emissions-free electricity from something currently disappearing into thin air is too good to waste. The WHP industry looks forward to welcoming more developers to the frontier and recognizes that the veterans of the biomass industry may very well be our next pioneers. Heat is powerâ€•let&rsquo;s capture it!
 Author: Kelsey Southerland Executive director, Heat is Power Association 979.571.8094 ksoutherland@tas.com www.heatispower.org

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A New Frontier

LS9 announces new hire, board appointment Jon Foster has joined LS9 Inc. as the company&rsquo;s chief financial officer. In his new position, Foster is responsible for management of LS9&rsquo;s financial and related functions. He has worked in leadership roles in Silicon Valley companies for 14 years, previously serving as CFO and executive vice president of corporate development at Atempo Inc. Foster has also served as a deputy director in the White House Office of Science and Technology Policy. LS9 also recently appointed Tjerk de Ruiter to its board of directors, which elected him as its chairman. He spent 12 years at Dansico, with the last five serving as CEO of its Genencor division. 
FirmGreen CEO attends White House meeting FirmGreen Inc. CEO Steve Wilburn, along with 12 other business leaders, met with Fred Hochberg, chairman of the U.S. Export-Import Bank , and several senior administration officials at a White House Business Council meeting in August. The focus of the meeting was to discuss ways the government can assist the private sector to create jobs and help stimulate the economy through the export of U.S. manufactured products. FirmGreen is doing just that via a biogas project it is completing in Brazil. The company is exporting its green technology and startup services to develop the G&aacute;s Verde biogas processing facility at the former Jardim Gruamacho landfill. 
Japanese company invests in U.S. biopower Tokoyo-based IHI Inc., a subsidiary of IHI Corp., has acquired shares in five biomass-based power facilities from Chicago-based Exelon Corp. All five facilities are located in California and have been designated by the Federal Energy Regulatory Commission as qualified renewable energy generation plants. Each facility also has a power purchase agreement in place with investor-owned utilities. IHI will gain 70 MW of generating capacity through the transaction. According to IHI, it acquired a 50 percent stake in four plants; two in Bakersfield, one in Lincoln, and one in Frenso. The company also acquired a 45 percent stake in a plant in Jamestown. Codexis appoints new executive officer Codexis Inc. has added David O&rsquo;Toole as senior vice president and chief financial officer. According to Codexis, O&rsquo;Toole will bring a wealth of financial experience in the life sciences sector to his new position. O&rsquo;Toole most recently served as vice president and chief financial officer of Response Genetics Inc., where he managed the finance and accounting department and was responsible for investor relations and information technologies. During his time there, O&rsquo;Toole implemented policies and procedures that resulted in significant cost savings and operational efficiencies. He also successfully completed a number of equity financings. 
Hawaiian algae producer recognized by the EPA U.S. EPA Regional Administrator Jared Blumenfeld recognized Hawaii-based Kuehnle AgroSystems Inc. in August for its innovative work in algae production for use in biofuels as part of the Pacific Southwest region&rsquo;s environmental awards program. The company has built a system to continuously produce algae for biofuel that pipes carbon dioxide and waste water from an oil refinery into tanks that accelerate algae growth. Kuehnle AgroSystems demonstrated its technology at Chevron&rsquo;s Hawaii oil refinery in 2011 and has done significant work with the U.S. military to grow algae for biofuels.

LS9 Inc. CFO Jon Foster is a member of the California Energy Fund board of directors.

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LS9 Inc. Chairman of the Board Tjerk de Ruiter has a proven track record in industrial biotechnology. 

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Massachusetts&rsquo; renewable portfolio standard (RPS) is divided into two classes. The Class I standard applies to new resources and requires 15 percent renewable energy by 2020, with an additional 1 percent for each following year. The Class II standard applies to existing resources and requires 3.9 percent renewables and 3.5 percent waste-to-energy in 2009 and thereafter. The state made announcements regarding each class in August.
 More than two years after the process began, the Massachusetts Department of Energy Resources published its final regulation pertaining to the eligibility of renewable biomass for Class I of its RPS program, ending the moratorium on new biomass projects that was put into place in 2009. Indications are the regulations will make stand-alone biomass power within the state infeasible.&nbsp;
 A few days later, the DOER began a different moratorium on the qualification of wood biomass units for the state&rsquo;s Class II RPS program and kicked off a rulemaking process on the RPS Class regulation to incorporate carbon emission limits and accounting from biomass plants in a manner consistent with the final regulations for the RPS Class I program.

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Mass. takes action with RPS  woody biomass regulations 

The Montpelier, Vt., city council has elected to move forward with a district heating project that will replace an old, state-owned plant with a new biomass plant, but the road to approval was not simple.
 The council originally voted in favor of the new plant in June 2011, but rescinded its plans in a 4-2 vote Aug. 22, citing concerns about financial risks. The local community was not happy with the decision. According to Gwendolyn Hallsmith, director of planning and community development for Montpelier, the city council experienced significant voter outrage due to its decision to axe the project.
 The negative public reaction prompted Mayor John Hollar to call a special meeting Aug. 29, where the city council reversed its decision and voted to continue with the project, including changes to address financial concerns. Final determination of the project size will be made after construction bids are received in November.

Montpelier approves district heating project

NatureWorks LLC is expanding its Blair, Neb., facility from 140,000&nbsp; to 150,000 metric tons-per-year production capacity. Sulzer Ltd. recently shipped proprietary production equipment to the plant. The new equipment will allow NatureWorks to increase production of its Ingeo biopolymer and produce new, high-performance resins and lactides. The equipment is scheduled to be installed in the first quarter of 2013, with the increased capacity and new products becoming available in the second quarter.
 The new technology will enable NatureWorks to introduce new high-performance Ingeo resin grades in the injection molding and fibers arenas. The upgrades will also allow NatureWorks to become the world&rsquo;s first company to offer commercial quantities of a high-purity, polymer-grade lactide rich in the stereoisomer meso-lactide, which will be used as an intermediate for copolymers, amorphous resins, grafted substrates, resin additive/modifiers, adhesives, coatings, elastomers, surfactants, thermosets and solvents.

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NatureWorks expands facility, product offerings

The U.S. EPA awarded Colorado-based TDA Research Inc. with a $300,000 contract under its Small Business Innovation Research program competition to support the demonstration of a proprietary biogas purification technology. The award is for Phase II work. TDA was awarded funding for Phase I of the program by EPA in 2011.
 The technology is a vacuum swing adsorption system that upgrades biogas to pipeline specification. The process uses a novel, low-cost, high capacity CO2 adsorbent. The system features low methane loss, as more than 95 percent of the methane that enters the system is sent to the pipeline. Additional features of the system include low capital and operating costs.
 TDA developed the proprietary adsorbent over several years. It is specifically designed to remove CO2 from gas steams. The technology has been shown to remove 95 to 98 percent of the CO2 from biomass. The material also removes water from the biogas stream, bringing the moisture content down to 150 parts-per-million.

TDA Research wins EPA award for biogas technology

BioNitrogen Corp. has signed a three-year, non-exclusive agreement with PRM Energy Systems Inc. for the construction of gasification units for its proposed biobased urea plants. The company also recently signed an agreement to purchase biomass from a 40-acre parcel of land in Hardee County, Fla., where it plans to build its first commercial facility. In addition, BioNitrogen has committed to sell the urea fertilizer produced at its initial plant to United Suppliers.
 Once complete, the plant will produce 124,000 tons per year of urea via a biomass gasification process. Traditional urea plants take in natural gas as feedstock. BioNitrogen&rsquo;s process, however, utilizes biobased syngas.
 The company plans to use locally-sourced biomass for each of its future plants. The initial plant in Florida will take in a mix of waste vegetation, tree clippings and waste orange trees. The process can also be optimized to take in sorted municipal solid waste, agricultural waste, energy crops and other types of vegetation.

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BioNitrogen moves forward with plans for biobased urea plant

Rather than working to more efficiently break down lignin, several scientists are working to reduce the quantity of it produced by plants.
 University of Georgia researchers partnered with researchers at the U.S. DOE-funded BioEnergy Science Center to identify a previously uncharacterized gene, GXMT1, which plays a major role in cell wall development of Arabidopis plants. The gene is responsible for a key step in the development of xylan, a polymer that makes woody biomass resistant to biofuel conversion.
 Scientists at the DOE&rsquo;s Brookhaven National Laboratory have created a new enzyme that masks the synthetic precursors of lignin. When expressed in plants, the enzyme substantially reduces lignin content in the cell wall, increasing the digestibility of cell wall biomass. The new enzyme reduced the lignin content of Arabidopsis plants by up to 24 percent, leading to a 21 percent increase in the release of cell wall sugars.

Reducing lignin to improve biomass

President Barack Obama has signed an executive order to facilitate investment in energy efficiency at industrial facilities. The order focuses on expanding the use of combined-heat-and-power (CHP) and could provide benefit to the biomass industry.
 The order directs several federal agencies to coordinate to achieve a nation-wide goal to establish 40 gigawatts of industrial CHP by the end of 2020.The specified agencies will coordinate policies to encourage investment in industrial efficiency in order to reduce costs for industrial users, improve U.S. competitiveness, create jobs and reduce air pollution.
 One of the first initiatives will be to convene stakeholders though a series of public workshops in order to develop, and encourage the use of, best practice state models and investment models, which will address the multiple barriers to investment in industrial energy efficiency and CHP.
 The executive order coincided with the release of a U.S. DOE report, titled &ldquo;Combined Heat and Power, a Clean Energy Solution.&rdquo; As of last year, approximately 500 biomass-fueled CHP systems were in operation in the U.S.

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Obama signs executive order,  biomass may benefit

Algae oil producer Sapphire Energy Inc. has completed the first phase of its commercial demonstration algae-to-energy facility, the Green Crude Farm. Construction of the first phase began in June 2011 and was completed on time and on budget.
 The phase one cultivation area consists of groupings of 1.1 acre and 2.2 acre ponds, which are one-eighth of a mile long. The initial phase also included the installation of all the necessary mechanical and processing equipment needed to harvest and extract algae and recycle water for entire site. Once complete, the Green Crude Farm will produce 1.5 million gallons of algae oil per year, and consist of approximately 300 acres of algae cultivation ponds and processing facilities.
 The facility was funded with both private and public funds, including $85 million in private investment from Sapphire. The project was also backed by a USDA loan guarantee and a $50 million U.S. DOE grant.

Sapphire Energy marks  new milestone

E van Chrapko is a country kid from Alberta, Canada, and he isn't afraid of going big. He&rsquo;s built and sold a dot-com company for $811 million, helped turn around a startup web-based firm before selling it to DoubleClick (later purchased by Google) and, with the help of his brother Shane and members of an Oakley, Kan., ethanol plant, developed the largest biogas plant in North America through their company Himark BioGas.
 He&rsquo;s a software patent holder. He&rsquo;s a technology guru who&rsquo;s won the same award as the inventor of Java and the co-founder of eBay. He&rsquo;s an investor and a technology guru. And, he believes renewable energy investment should not only happen close to where people live, but that the investment should be in biogas. Although Chrapko and his team at Himark have only two installations to speak of in North America, the company believes it has created an advanced, financially attractive and replicable anaerobic digester (AD) model that can be installed next to ethanol facilities or in remote Asian villages. The Himark vision for the waste-to-energy industry is anything but small, as evidenced in how Evan describes the roles he and his brother have taken in the company&rsquo;s growth plan. &ldquo;Shane and I split the world, into the developed world and the developing world.&rdquo;
 From Canadian Oil Sands to Kansas Prairie
 There are several reasons Chrapko and his team are so high on their AD technology and visions for global expansion. For starters, there is the amount of investment put forth by the team. According to Evan, the company has invested double-digit millions into lawyer fees to protect the company&rsquo;s technology patents and what Evan calls, Himark&rsquo;s &ldquo;head start.&rdquo;
 The Integrated Biomass Utilization System, or IMUS, is a multi-faceted AD system. The system allows for multi-feedstock inputs and uses a patented high-solids-in-feed setup that creates an optimal mix of solid and liquid waste into a digester core or vessel. The digester core features several separate digestersâ€•a primary, secondary and tertiary. The core is heated and also employs a continuous maintenance feature that doesn&rsquo;t interrupt the biogas production process.
 Although the Kansas ethanol facility, Western Plains Energy LLC, utilizes animal manure from adjacent feedlots for AD feedstock, Himark has also developed another version of the technology that is rated for tough-to-digest waste streams typically associated with hospitals, slaughterhouses or food processing facilities. The technology can digest pathogens and toxins created in those streams.
 But it&rsquo;s not just the advanced technology or the money spent in protecting the patents that has the team excited, Evan says. It's using that head start, which can be linked to the oil sands of Alberta. As Evan explains it, several years ago, the Alberta government wanted to repair the black eye created from the unpopular sight of the oil sands (which can be seen from satellite imagery). &ldquo;The ministry of energy started pouring lots of money into the (waste-to-energy) issues that we are talking about,&rdquo; he says. Because the oil sands recovery industry is in the billions of dollars, Evan says it was a natural fit for the government to find a global-class solution. The solution, seen in Himark&rsquo;s biogas technology, is at an advantage because, as he implies, the scientists and engineers who designed it came from a billion-dollar industry, not a million-dollar industry. &ldquo;They (the scientists and engineers) were operating on a bigger scale,&rdquo; and because of that, so can Himark.
 Since starting the Himark brand, the Chrapkos have contributed to the $8.4 million BioWaste-to-Energy for Canada Integration Initiative Corp., a not-for-profit center that helps other firms like energy-focused Himark enter the bioenergy sector in Canada. The initiative has already attracted 8 members.
 Western Plains Energy CEO Steve McNich is so high on the Himark technology package, that he recently provided an overview of the process and why it will benefit other ethanol facilities at an American Coalition for Ethanol conference in Iowa. During his presentation, McNich outlined the savings created from the AD technology. A 50 MMgy ethanol plant can replace existing boilers or natural gas usage for a savings of roughly $5 million per year. That same plant can also reduce electricity costs by installing the biopower generation portion of the system for a savings of nearly $3.3 million. If, and this may be a big if, that ethanol plant is using grain sorghum (milo) as a feedstock, the plant would also qualify for advanced biofuel D5 RINs, which in combination with the other savings, would add $35 million per year to the bottom line of that 50 MMgy ethanol facility. The yearly operations costs for the AD system co-located at the ethanol facility would total roughly $3 million, according to Western Plains Energy.
 The Global Appeal of Waste to Energy
 The potential for Himark&rsquo;s presence in North America is large, according to Chrapko, but the company believes it has first-hand knowledge to justify its global aspirations. Several members of the team operate out of overseas offices and have seen the need for waste-to-energy applications. Evan also has his own perspective on the need for waste to energy. During a research trip overseas, he says a scene at a hospital caused him to write a lengthy, late-night email to his co-workers.
 &ldquo;I saw a woman on a step of a hospital in desperate need of care,&rdquo; he explains, &ldquo;and the doors were locked and the power was off. I wrote that night that if we only put in one-half of 1 MW, then we will have done a heck of a lot more than Silicon Valley or Wall Street put together.&rdquo;
 In addition to witnessing a scene Chrapko says happens too often in too many places, the company also has an analogy it believes explains the potential for waste to energy. Think of it, he says, in comparison to the lifespan of the phone practices applied by most today. Developing countries waited to install the infrastructure to provide large-scale, widely distributed power. In some ways, he believes, those countries are similar to cellphone users of today who skip landline phone service altogether and go straight to cellphone for all phone applications. The same is happening with power production in many places. Many areas waited to install the infrastructure to produce and distribute power, and now, because those areas need power and waste-to-energy applications are available, companies like Himark can thrive.
 Not all companies are like Himark, however, a reality that Chrapko believes acts as an advantage. &ldquo;We find our European and American competitors at a disadvantage,&rdquo; he says. &ldquo;They are trying to force their equipment in a setting.&rdquo; Chrapko says his company does just the opposite, looking to manufacture engines, vessels or other modules in the country of operation. &ldquo;Adding more hoops to the equation doesn&rsquo;t help anyone,&rdquo; he says of companies trying to force an application specific technology on a project developer.
 Working with multinational corporations, local economic development offices and former bridge builders or power plant construction firms, has helped boost the reputation of Himark, Chrapko adds. Himark will still use its own case-specific project designs, but it won&rsquo;t use a certain product if it will create added stress to the community employing the AD system. Currently, the company is working on more than two dozen projects overseas. As good as that may sound however, Evan says because they are huge projects, they will take years. But he&rsquo;s not worried, for one simple reason.
 Himark invests in its own projects, deploys hundreds of man-hours to design a feasible project and performs feasibility studies. With all of the success of the Chrapko brothers, the company still hasn&rsquo;t gone public, an element that allows the company to do what it wants without reporting to anyone, an element that also helps land large projects globally. &ldquo;We have the supreme luxury of taking an ultra-long-term view,&rdquo; he says, and foreign governments like that.&nbsp;
 That same view has also allowed the company to develop other companies, unnamed and not public yet, that can develop other AD system technology, including a bolt-on technology that he says will address what every AD operation will someday have, an algae nutrient processing piece.
 No matter what, the Himark team believes in biogas because it takes a negative and turns it into a positive, Evan says. Between renewable energy development, software patents and selling companies for hundreds of millions, Chrapko won&rsquo;t admit to loving one over the other, but if the company&rsquo;s desire to know more about waste-to-energy's potential (and its $25 million R&amp;D budget) isn&rsquo;t enough to show why Evan isn&rsquo;t, in fact, afraid to go big for biogas, then maybe it&rsquo;s the excitement in his voice when he talks about an unnamed project that the company will soon announce. If the Oakley, Kan., installation looks big because it can replace 90 percent of the ethanol facility&rsquo;s fossil fuel usage, then just wait. The project Evan really wants to talk about but can&rsquo;t just yet, a project led in part by GE, will be the biggest biogas installation in the world, Chrapko says, &ldquo;probably by a factor of two or three.&rdquo;
 Author: Luke Geiver Features Editor, Biomass Magazine (701) 738-4944 <a href="mailto:lgeiver@bbiinternational.com">lgeiver@bbiinternational.com</a>

BIOENERGY BROTHERS: Evan (left) and Shane (right) Chrapko are using the success of their biogas technology at a Kansas ethanol facility as a springboard for global growth.

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MILO MAGIC: Himark BioGas is hoping other ethanol production plants will see the value of combining milo 
feedstock and onsite biogas power production, a value that could equal roughly $35 million per year. 


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A Canadian company is creating a global presence with its advanced waste-to-energy technology.

Betting Big on Biogas

David Gordon&rsquo;s resume may show he&rsquo;s a veterinarian by trade or the mayor of a small town in western Tennessee, but after his involvement with an innovative downdraft gasification project, he might have to add a new title to the list: waste-to-energy spokesman.
 Through a partnership with Tennessee-based, two-and-a-half-year-old, PHG Energy, Gordon conquered the complex balancing act of wastewater remediation, biosludge removal, wood waste utilization and the always ballooning landfill tipping fees and transportation costs associated with all three. The city of Covington is already known as the Charm Pops capital of the world, Gordon says, and is the future home of the world&rsquo;s largest ice cream production facility. But those catchy claims are already losing ground to the city&rsquo;s project that utilizes a series of modular downdraft gasification units designed to produce electricity from a combined feedstock of woody biomass and biosludge that until PHG Energy came around, would have cost the city time and money to dispose of.
 Surrounding communities faced with similar waste-based issues are taking notice, Gordon says, calling for information on how the veterinarian mayor of Covington turned his self-proclaimed interest in technical stuff, into a model of converting dirty into dollars. Money saved from the $2.25 million project paid for through a bond issuance from the Tennessee Municipal Bond Fund and a grant from the Clean Tennessee Energy Grant program offered by the state&rsquo;s Department of Environment and Conservation, will pay for some things any mayor would gladly promote: new soccer fields, baseball fields and a walking trail for the city of 9,000.
 &ldquo;I&rsquo;m already getting contacts from municipalities that want to see how this is working,&rdquo; he says of the close-to-construction project, some calls coming from nearly 500 miles away. The excess revenue generated through the tipping fees and in-house electrical generation is nice, he says, adding however, that &ldquo;the project is positive for other reasons.&rdquo;
 Pursuing Renewable Revenue
 The city of Covington currently transports wastewater and dewatered sludge to a landfill that requires a two-hour round trip. Wood waste created in the city is also hauled out of the city, requiring a one-hour trip. Because of the costs associated with hauling and disposal, Gordon began looking into better alternatives for the city. &ldquo;When I first heard about biomass gasification, I was at a Tennessee Renewable Energy and Economic Development Corp&rsquo;s seminar,&rdquo; he says. &ldquo;I listened to a gentlemen talk about biomass gasification and it really got my interest.&rdquo;
 Through a mutual business acquaintance and more research, Wilson got in touch with the team from PHG Energy. There were other firms he spoke with and even other options discussed for utilizing the waste, one that included converting the sludge to a class A sludge, which would allow the city more leniency for disposal methods. Now, Gordon and the team at PHG Energy can point to several takeaways from the Covington project and why downdraft gasification not only won out in the small Tennessee town, but why it can succeed in other places at larger scales.
 The most glaring reason downdraft gasification makes sense is that it fits into a popular belief in the biomass industry, that conversion technology should be feedstock flexible. Turns out, mayors like that idea as well. &ldquo;In Covington,&rdquo; says Chris Koczaja, vice president of sales and engineering for PHG Energy, &ldquo;the biosolids alone would not work.&rdquo; By taking a gasification approach, however, PHG was able to combine the biosolids with wood waste to create an acceptable feedstock, a situation Koczaja says helps to highlight PHG&rsquo;s technology offering.
 &ldquo;If we put a gasifier on the ground and someone says I have a bunch of woodchips that I want to gasify today, but three years from now I have this other opportunity waste stream, the equipment doesn&rsquo;t have to change,&rdquo; Koczaja says. That facet of the conversion approach helps not only PHG but other similar companies pursue projects, allowing users to hedge not just on what is available today, but what the future may bring as well. &ldquo;That is one of the big pieces that I think people grab hold of,&rdquo; he says. &ldquo;It&rsquo;s not just what is in front of me today, but what may be in front of me tomorrow.&rdquo;
 The feedstock flexibility of the technology played only one part in Gordon&rsquo;s decision. PHG Energy outperformed expectations, he says. In addition to helping Gordon land a state grant worth $250,000 (PHG is also helping Gordon seek out more), the company provided a plethora of information to Gordon to make the project make sense. Along with several emails, phone calls, information packets, directions to websites, and a trip to Florida to see the Organic Rankine Cycle generator that will be used to create electricity, Gordon says the PHG team found a way to make complex concepts manageable from an operational viewpoint, and most importantly, an economic standpoint.
 &ldquo;This had to make economic sense,&rdquo; Gordon says, &ldquo;I couldn&rsquo;t go into it just as an environmental program that was going to be nice and fuzzy and warm.&rdquo; To do that, PHG provided Gordon with adaptable spreadsheets that allowed him to change variables or inputs into a financial equation, and, information that allowed him to show the city alderman proof that the process would pay for itself over time. Because of all the research and time devoted toward understanding the merits of downdraft gasification, Gordon now says he tells people, &ldquo;I haven&rsquo;t made it to geek status, but I&rsquo;m a confirmed nerd.&rdquo;
 The first iteration of the project involved the Tennessee Valley Authority, Wilson says. The project would have provided 1 MW of electricity to TVA in return for 3 cents per kilowatt (kW) for 10 years. Unyielding construction deadline clauses didn&rsquo;t allow Gordon to pursue the project, but on the fifth iteration, PHG and Gordon finally found a way to make it all work.
 In November, construction will begin at the current wastewater treatment facility where a system will be installed that includes a downdraft gasifer, thermal oxidizer and an 125 kW ORC generator that will produce electricity for the wastewater facility and heat to dry the woody biomass portion of the feedstock used in the process. Koczaja says the electricity will offset the facility&rsquo;s utility bill, and the overall footprint of the facility will be roughly one and a half acres.
 Every day, 12 tons of biomass will be converted, biomass that would otherwise be landfilled, according to Mike Webb, business development director at PHG. Roughly 360 tons of waste will be deflected from the landfill per month. The gasifiers can convert feedstock blends up to 35 percent moisture, but the team prefers to convert at 25 percent. The mixture also has to have a minimum organic compound percentage.
 Webb says each gasifier consumes 8 tons of feedstock per day, producing roughly 4 million Btu per hour. The noise of the units will be very little, allowing for casual conversation while standing next to the system, he says. The part of the equipment that people can see is clean (something that surprises most people Webb points out) and nothing like incineration. There are air blowers and air compressors, and a cyclone to handle particulates (mostly carbon fines) created in the closed loop process. The majority of the maintenance will be on the feedstock handling side, in addition to general work to inspect valve seats and conditions. The producer gas, as PHG calls it, combusts at a lower temperature than natural gas, so there is reduced thermal nitrogen oxide potential.
 Koczaja says the project team looked at several possibilities for the Covington location, but in the end decided to work on what made the most sense for the city inside the fences of the wastewater treatment plant. After holding several city meetings with the public, Gordon says his city is excited about being out in front of the waste-to-energy opportunity he and PHG believe exists in the region.
 The Downdraft Secret
 Most of Koczaja&rsquo;s sentences describing the benefit of PHG&rsquo;s technology begin with &ldquo;the beauty of,&rdquo; but, there is proof behind the PHG technology. At a brick production facility in Gleason, Tenn., PHG was able to put an early version of its technology to the test. At the facility, which has since gone under but graciously allowed PHG to continue operations of its six gasification units as a pseudo R&amp;D lab and feedstock testing facility, PHG was able to prove the benefits of a gravity-based system.
 &ldquo;We have taken the proven downdraft gasifier and made two significant changes,&rdquo; he says. First, the team converted the technology to allow for industrial use by implementing SiC refractory lining in the entire gasifier box and stainless steel for the grate and residue box. Second, the team made the whole system scaleable by creating modular units. According to Koczaja, the scalability is related to the ability of up to three or four units to run off one materials-handling operation. The same handling operation needed to run one, can run four.
 The downdraft nature of the units also allows for greater conversion rates, as gravity forces the material to flow through the entire gasification chamber, which, Koczaja also says, can reach very high temperatures. The process creates biochar, but only 2 percent by weight of the feedstock. Because the feedstock travels through the entire chamber due to the downward path, the producer gas is much cleaner, according to Webb, and doesn&rsquo;t require the need for gas cleanup typically used in fluidized bed or updraft gasifiers.
 The secret to PHG&rsquo;s success isn&rsquo;t just its technology. They&rsquo;ve also developed an application strategy that is used for every project. &ldquo;There are two big things we look at for every project,&rdquo; he says. &ldquo;What is the feedstock and what is the application? That is how we kind of tailor our offerings to that specific project.&rdquo;
 In Gleason, the downdraft gasifiers weren&rsquo;t used to take advantage of a waste stream, they were used to offset the costs of another energy application: natural gas. Brick kilns, which require a high volume of natural gas for heat production created in the long corridors that turn liquid mixtures into solid bricks, can benefit from woody biomass. PHG used wood waste from a nearby hardwood flooring manufacturer as a feedstock to feed the gasifiers, which in return created thermal heat for the kilns.
 The price for natural gas has since dropped (drastically), and although PHG is looking at projects interested in a different energy application as opposed to propane or fuel oil, the waste-based energy crop (as Webb calls it) is where the company sees a huge market. &ldquo;A lot of things are not what people think of as energy crops,&rdquo; Koczaja says. &ldquo;Once you start asking the questions and you start looking, there is a lot more biomass available than initially meets the eye.&rdquo; When Webb talks about the number of feedstocks they've tested, he says with a chuckle, &ldquo;several.&rdquo;
 The company performs the majority of the work required in a waste-to-energy project in-house, but does contract out some engineering and feedstock analysis testing, Webb says. And although the company doesn&rsquo;t want to &ldquo;outrun its headlights,&rdquo; Koczaja explains that more people like Gordon are calling all the time about downdraft gasification technology. A customer in the Caribbean will produce 5 MW from agricultural waste with PHG&rsquo;s technology and forest waste from federal land thinning will utilize downdraft gasification, potentially supplied by PHG. As Koczaja would say, that is the beauty of waste-to-energy technology. The waste-based portion provides flexibility of feedstock now and in the future for project applications from the Caribbean to the Blow Pop capitals of the world.
 Author: Luke Geiver Features Editor, Biomass Magazine (701) 738-4944 <a href="mailto:lgeiver@bbiinternational.com">lgeiver@bbiinternational.com</a>

ONE FOR ALL: The downdraft gasification approach allows multiple gasifiers to run off one feedstock handling and supply set-up. 


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TEST-CENTER GOLD: A brick kiln production facility in Gleason, Tenn., offered PHG Energy the chance to test and prove-out its modular, feedstock flexible downdraft gasification set-up.

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VICTORY FOR THE MAYOR: The contracts have all been signed and this fall, PHG Energy will put Mayor Gordonâ€™s (pictured left) waste-to-energy vision on full display. 


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Waste to energy requires feedstock flexibility, but offers economic opportunity.

The Upside of Downdraft Gasification

Covanta Energy&rsquo;s Steve Bossotti has worked in the energy-from-waste (EfW) industry since its inception and has performed virtually every role a plant requires. He was in the business when most plants were built in the 1980s and &lsquo;90s, he says, and over the years has witnessed drastic innovation.
 One year ago, he became vice president of Covanta&rsquo;s Organic Growth and Innovation Group, a company segment that focuses on fostering new ideas and embracing new market technologies. Two of the group&rsquo;s main initiatives are to improve and maximize metal recovery efforts, as well as engage in beneficial ash reuse projects, Bossotti says, and those are things he&rsquo;d like to see happen before he hangs up his hardhat. &ldquo;In Europe it [ash] is widely used in roadbeds and construction materials, but in the states we haven&rsquo;t been successful doing that,&rdquo; he says. &ldquo;There was some experimentation back in the 1980s, but it hasn&rsquo;t come to fruition.&rdquo;
 Ash reuse is a longer-term goal than metal recovery, Bossotti says, but the latter needs to be done in order for the former to happen. That means removing the tiny bits of ferrous and nonferrous metal from the ash, a pursuit that may sound insignificant but can make a big difference at an EfW plant. From Bossotti&rsquo;s perspective, it&rsquo;s &ldquo;all about sizing and separation.&rdquo;
 Metal Recovery ABCs
 When municipal solid waste (MSW) is hauled into a Covanta EfW plant, waste is dumped on the floor and bulky items are removed. &ldquo;You might see a refrigerator, but things are a lot different today than they were 20 years ago,&rdquo; Bossotti says. &ldquo;In the old days you could pay a garbage guy $10 and he&rsquo;d take your refrigerator, but you can&rsquo;t do that anymore, though we still get our share of bulky items.&rdquo;
 With metals separation, there are two things a plant wishes to accomplish: remove as much clean metal on the front end as possible, and remove bulky items that won&rsquo;t burn. Once that&rsquo;s done, the remaining MSW is sent through the boilers. &ldquo;It goes into a pit, we fluff it and feed it into the unit and create energy,&rdquo; Bossotti explains. &ldquo;It then comes out the back end of the boiler onto a conveyor, and at that point it&rsquo;s 23 percent by weight of what it was when it went in, and one-tenth of the volume of waste.&rdquo;
 The vibrating conveyor, or grizzly feeder, levels out the waste stream making metal extraction easier. The material is screened to remove bigger pieces, and what&rsquo;s left goes through a second screen before exposure to a magnet that captures all of the ferrous materials&mdash;such as steel and iron&mdash;left in the ash.&nbsp; &ldquo;The magnet size depends on the plant size; some are six-foot diameter drums,&rdquo; Bossotti says. These drums roll above the conveyors and capture metals that jump to it and stick. Everything that does not adhere to the ferrous magnet continues to another conveyor, where it&rsquo;s traditionally screened to three-eighths of an inch and greater and passed over an Eddy Current Separator, which utilizes rare earth magnets. &ldquo;That&rsquo;s where we recover what we call the large nonferrous,&rdquo; Bossotti says. Nonferrous metals consist of precious metals such as gold, silver and copper, as well as aluminum, magnesium and lead.
 Right now, roughly 30 percent of Covanta&rsquo;s EfW plants have nonferrous metal removal systems that recover materials larger than three-eighths of an inch. In an effort to improve upon that, the company has partnered with Steinert U.S. Inc., to upgrade its technology to pick up even smaller materials. &ldquo;The technology difference is that it uses double the poll changes,&rdquo; Bossotti says. &ldquo;The ionic charge on the particle gets confused and jumps away from the machine, or is repelled.&rdquo;
 Covanta&rsquo;s Fairfax, Va., plant has installed the technology and is now recovering twice the amount of nonferrous metals. By adding an additional step that sends materials that fall through the last screen through another specially-designed Eddy Current Separator, very small, nonferrous particles are captured. &ldquo;Materials pass over a rotating drum in a casing,&rdquo; Bossotti explains. &ldquo;By changing the charge on the particles several times it confuses them so they repel away, shooting into an area that we hold them in.&rdquo;
 &nbsp;The rejects or ash left over is mixed with fly ash on the back end of the boiler, and is then sent out as a combined product and disposed of in monofills. Nonferrous metals are stored in a clean area away from ash, and are shipped for sale roughly once a week. Ferrous metals are hauled out nearly six days a week. To put that into perspective, Bossotti says that some plants produce about 30,000 tons per year of ferrous metals, and one container can hold 20-30 tons maximum. &ldquo;That&rsquo;s a lot of trucks,&rdquo; he says. &ldquo;All of our plants together process up to 400,000 tons of metal per year.&rdquo;&nbsp;
 Covanta Energy isn&rsquo;t the only EfW giant working to improve its metal recovery efforts, however. Waste Management-owned Wheelabrator Technologies Inc. has a plan to increase its recovered scrap metal volumes over the next five years through better existing metal recovery system performance and the deployment of new recovery technologies.
 A Second Perspective
 &ldquo;Recovering scrap metals for recycling has always been part of our standard operating procedure at Wheelabrator waste-to-energy plants,&rdquo; says Mark Lyons, senior manager of business development at Wheelabrator.&nbsp; &ldquo;We began recovering scrap ferrous metals&mdash;iron and steel&mdash;from ash residues at our first waste-to-energy plant in Saugus, Mass., when it started up in 1975. Our original metal recovery systems were designed with screens and magnets to recover only ferrous metals, but our current metal recovery efforts include recovering both ferrous metals and nonferrous metals from the ash our facilities produce.&rdquo;
 &nbsp;A metals recovery system doesn&rsquo;t have a significant impact on waste-to-energy plant operational performance, Lyons says, rather, the most important performance issue is that a metals recovery system needs to be properly maintained and operated so that it can continuously process the ash produced by the facility during operations and recover scrap metals. &ldquo;Most waste-to-energy plant metal recovery systems are installed with some level of bypass functionality,&rdquo; he explains. &ldquo;This means that if a particular component of the metal recovery system is down for repair or maintenance, one or more elements of the system can be bypassed so that the ash being generated by a facility can still be moved through the system to the ash load-out building for disposal. However, the operational goal is to minimize metals recovery system bypass time in order to maximize the amount of scrap metal that is recovered and recycled.&rdquo;
 On recent technological improvements, Lyons says the biggest has been in the efficiency and power of Eddy Current Separators. Wheelabrator is currently designing several metal recovery systems that will take advantage of that. Aside from technology, he notes the importance of metal recovery systems on the economics and sustainability of EfW plants. &ldquo;When most of our facilities originally came online, scrap metal prices were much lower than they are today,&rdquo; he says. &ldquo;Since then, metal prices have generally trended higher, while electric power rates and disposal fees have trended lower. Today, scrap metal sales represent a much more significant fraction of a facility&rsquo;s total revenue.&rdquo;
 Bossotti agrees. &ldquo;It&rsquo;s no mystery that the metals market has been performing very well, and recovery technologies have advanced from when most plants were built,&rdquo; he says, adding that what ends up in the trash is quite surprising.&nbsp; &ldquo;We have one plant that pulls a large number of coins out of the ash each year; it&rsquo;s astounding.&rdquo;
 Not all plant owner/operator models that extract ferrous and nonferrous metals allocate revenue the same way. &ldquo;The receipt of revenues from the sale of recovered scrap metals at the publicly-owned plants that we operate varies from plant to plant,&rdquo; Lyons says. &ldquo;At some publicly-owned plants, Wheelabrator and the owner share the revenues. At other publicly-owned plants, the owner keeps all the revenues.&rdquo;
 Bossotti says that many client-based plants have sharing arrangements with Covanta. One main factor in such an arrangement is who is paying to get rid of the ash, because the operator is saving the client ash disposal costs for each ton of metal removed. &ldquo;If there&rsquo;s metal in there at the end destination, they don&rsquo;t know the difference, but our goal is to remove as much as we can,&rdquo; Bossotti says.
 Further Improvement
 In an initiative to improve its ferrous metal products, Covanta is working to recover more of it on the front end, as they are cleaner and more valuable at that point. &ldquo;At one particular plant we&rsquo;re taking front-end ferrous and running it through a silo through which we blow air,&rdquo; Bossotti says. &ldquo;That separates out paper and plastics that might be in the waste and creates quite a clean product, and returns that waste to where it started.&rdquo;
 Some of the company&rsquo;s plants are much smaller than others&mdash;950,000 tons of waste per year versus 200,000&mdash;so another area of focus is regional processing facilities. At one location, Covanta is building a metal recovery system at the monofill in which three of its plants in the region dispose ash. &ldquo;We still extract ash before it goes into the monofill, but instead of building three systems at each plant, we will do one,&rdquo; Bossotti says.
 Covanta has also teamed up with Germany-based Tartech for the recovery and recycling of metals from EfW ash monofills. Covanta Tartech will utilize a proprietary and highly specialized technology provided by Tartech for recovering both ferrous and nonferrous metals remaining in ash that has already been deposited in monofills.&nbsp; The joint venture will develop projects at Covanta ash monofills and will look to partner with various municipal and commercial ash monofill owners.
 Covanta will have 10 or more metal recovery projects completed in 2013. Not all plants will be getting the same upgrades, Bossotti says. Some plants never had non-ferrous systems and will eventually be installing new systems, while others will be getting ferrous or non-ferrous system upgrades. &ldquo;Each plant is looking at its options and making the best decisions upon where to improve.&rdquo;
 &nbsp; Author: Anna Simet Contributions Editor, Biomass Magazine (701) 751-2756 <a href="mailto:asimet@bbiinternational.com">asimet@bbiinternational.com</a>

METAL in MOTION: A rotating metal drum magnet picks up pieces of iron, steel and other ferrous metals.

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RECOVERY TIME: Nonferrous metals collected at Wheelabrator Gloucester in Westville, N.J.


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NEW STREAM: Covanta's Fairfax, Va., plant's new metals recovery system can extract very small particles of non-ferrous metals from the ash stream. 


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Energy-from-waste technologies have dramatically advanced since most plants were built, providing new revenue streams and enhanced waste disposal methods.

Maximizing  Metal  Recovery 

Increased talk about the use of woody biomass for energy in the U.S. has many people wondering how best to assure that the fuel and feedstock used by wood energy firms is harvested sustainably. The forest products industry&mdash;sawmills and pulp mills, in particular&mdash;has been down this road for more than 15 years and many have turned to the major forest certification systems available in the U.S., namely the Sustainable Forestry Initiative, the Forest Stewardship Council and the American Tree Farm System. These systems may or may not be the best way to demonstrate the sustainability of feedstock harvesting for the woody biomass energy sector. In the end, your customers&rsquo; needs and your company values should drive what you do about forest sustainability.
 The Forest Certification Systems
 SFI, FSC and ATFS are private, non-governmental programs, all of which are part of one of two major forest certification systems in the world: the Forest Stewardship Council and Programme for the Endorsement of Forest Certification. In the U.S., the FSC system is part of the Forest Stewardship Council international program, whereas SFI and ATFS are part of PEFC.
 Collectively, the three certification systems currently have 92 million acres certified in the U.S. Some of those acres are certified to both SFI and FSC and are therefore double counted, and further confusing, FSC does not allow for reciprocity with SFI or ATFS, and vice versa.&nbsp; Importantly, SFI and ATFS do allow reciprocity between their systems because they are both part of PEFC.&nbsp; SFI is for larger ownerships, over 20,000 acres, while ATFS is for ownerships smaller than 20,000 acres.&nbsp; Most tree farms are much smaller and average just over 200 acres.
 So what do these systems do?&nbsp; In a nutshell, each of the FSC, SFI and ATFS systems has a standard&mdash; a series of detailed requirements for how a forest property must be managed&mdash;under which a landowner must manage in order to become certified.&nbsp; An outside accredited entity sends an auditor to conduct a third-part audit to determine conformance with the many detailed criteria in the standard.&nbsp;
The audit will be conducted by an entity that has no direct affiliation with the company or landowner being audited, ensuring that there are no conflicts of interest.&nbsp; If landowners pass the initial and subsequent annual audits, they can make claims about products relative to their certification program.&nbsp; They can also label their product with the logo of the program, if they get a companion certification to the system&rsquo;s chain of custody. A CoC system essentially assures that a product indeed came from a certified forest when a landowner makes that claim.
 A Bit of History
 Concerns over rainforest destruction lead to the Statement of Forest Principles at the 1992 Earth Summit in Rio de Janeiro. The forest principles laid out the definition of a sustainably managed forest, which was further refined through the Montreal Process.&nbsp; Ultimately, this led to the formation of the FSC in 1993 by a group of people from environmental organizations, social sciences and the forest industry.&nbsp;
 The SFI was created one year later by the American Forest and Paper Association, the national trade group of the U.S. forest products industry.&nbsp; Originally a self-verification system, SFI changed into a full third-party system by the late 1990s. SFI only covers the U.S. and Canada, but similar country-based forest certification systems from around the world became aligned under another international umbrella system called PEFC. SFI and ATFS had to pass the requirements of PEFC to be recognized as part of that system; SFI in 2005 and ATFS in 2008. Notably, ATFS was created for U.S. landowners in the 1940s and only changed to a third-party certification system within the past 10 years.
 Energy Plants and Sustainability 
 Energy producing plants that use wood as feedstock, whether they are producing electricity, heat, pellets or biofuel, generally have one thing in common:&nbsp; they do not own the forestland from which their feedstock timber is harvested. As a result, they tend to have little direct control over where and how their feedstock is produced in the woods. Some sawmills and pulp mills are similar in that regard, but even those that own forestland in large acreages do not own enough to rely solely on their own land for feedstock.
 SFI, FSC and ATFS help address the challenge of accountability when sourcing feedstock from forests owned by outside parties. In each case, certified entities are allowed to make public claims about sustainability, based on the premise that being certified to the rigorous third-party audited standard is an indication that they are managing in a sustainable way. If a wood-using energy plant were able to obtain the vast majority of its wood supply from certified forest land, it could use a CoC system to claim that its wood supply comes from sustainably harvested forests. This, however, is where the rub is. Most places in the U.S. simply do not have enough certified acreage to allow a manufacturing plant to make this claim, and the relatively low-value landowners receive from harvesting wood for energy purposes&mdash;as opposed to lumber, etc.&mdash;means that biomass users have limited opportunity to incentivize new certified acreage. Exceptions might include parts of Maine and Wisconsin, where substantial acreage is already certified to one or more of the systems. But if you aren&rsquo;t located in Maine and Wisconsin or some other pocket of certified forest, what do you do?&nbsp;
 SFI has an option called fiber sourcing certification, which uses a different standard than the regular land management SFI standard. Fiber sourcing certifies the entire wood procurement system of the facility.&nbsp; It is a less rigorous system, but it reaches out to all the forest landowners who provide woody feedstock.&nbsp;
 Another Approach: Design Your Own System
 In some cases, it might not be feasible or practical to use SFI, FSC or ATFS to demonstrate your commitment to forest sustainability, especially if your customers are not demanding it. In this case, there are ways to design your own system. One approach Innovative Natural Resource Solutions has used with clients is developing a tracking system for wood sources. With this approach, it can be useful to show information about where your wood comes from, the amount that comes from certified forests, or the amount that was harvested with a licensed or certified forester and/or logger involved.&nbsp; There are many other ways to add additional components to a self-designed system. In the end, the system should do what you and your customers need it to do.
 Authors: Charles A. Levesque President, Innovative Natural Resource Solutions LLC <a href="mailto:levesque@inrsllc.com">levesque@inrsllc.com </a> Eric W. Kingsley Vice president, Innovative Natural Resource Solutions LLC <a href="mailto:kingsley@inrsllc.com">kingsley@inrsllc.com </a> <a href="http://www.inrsllc.com">www.inrsllc.com </a>
&nbsp;
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biodiesel Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

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More customers and policymakers seek assurances that the forest-derived fuel or feedstock they purchase is harvested in a sustainable manner. 

October 2012

Business Briefs

Business Briefs

Business Briefs

Columns

Strategies for Collaboration in Innovation

Food vs Fuel: Can We Get it Off the Table?

The Industry's Stake in this Election

Big Food is Full of Baloney

Consumers Get Short-changed in RFS Debate

Market Speculators, Oil Drive High Food Prices

Resilience in the Face of Uncertainty

On Not Wasting the Energy Potential in Waste

Legislation until Lame Duck Session: A Look Ahead

The State of Biomass Heat: A 2012 Reflection

A New Frontier

Featured

RFS Under Scrutiny

Q&A - Corn's Cruel Summer

Boosting Corn's Drought Performance

Yield Wild Card

Betting Big on Biogas

The Upside of Downdraft Gasification

Maximizing Metal Recovery

Contributions

Corn Farmers Respond to Ethanol Plant Siting

Satellite Technologies Aid Localized Planning

Verifying Forest Sustainability

October 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

Columns

Strategies for Collaboration in Innovation

Food vs Fuel: Can We Get it Off the Table?

The Industry's Stake in this Election

Big Food is Full of Baloney

Consumers Get Short-changed in RFS Debate

Market Speculators, Oil Drive High Food Prices

Resilience in the Face of Uncertainty

On Not Wasting the Energy Potential in Waste

Legislation until Lame Duck Session: A Look Ahead

The State of Biomass Heat: A 2012 Reflection

A New Frontier

Featured

RFS Under Scrutiny

Q&A - Corn's Cruel Summer

Boosting Corn's Drought Performance

Yield Wild Card

Betting Big on Biogas

The Upside of Downdraft Gasification

Maximizing Metal Recovery

Contributions

Corn Farmers Respond to Ethanol Plant Siting

Satellite Technologies Aid Localized Planning

Verifying Forest Sustainability

October 2012