With cellulosic ethanol plants developed by Abengoa, IneosBio, Poet-DSM, Dupont Cellulosic Ethanol currently or soon to be in commercial operation, and companies such as American Process, Chemtex, Enerkem, Fiberight, Sweetwater Energy, and others poised to enter the market, the production of advanced biofuels is expected to accelerate in the future. These second-generation biofuels are generally a fuel additive like ethanol, but made from plant materials other than corn starch. The cellulosic or advanced biofuel can be ethanol, butanol, jet fuel biodiesel or renewable diesel, to name a few. What resources are needed to attract one of these mega-projects to your community? First and foremost is the feedstock&mdash;the organic material or biomass that will be converted into a biofuel. Common feedstocks for advanced biofuels include corn stover, rice straw, switchgrass and miscanthus, among other energy crops and crop residues. Woody biomass, urban wood waste and even garbage (municipal solid waste) are also good candidates. The accompanying biomass resource map published by the National Renewable Energy Laboratory shows concentrations of crop, forest and mill residues, plus urban wood wastes by county within the U.S. As you can see, there are very large amounts of biomass available within the U.S., except in very mountainous or arid areas. How Much Feedstock? The available feedstock needed to manufacture biofuel depends on the feedstock type and the conversion technology used. Theoretical yields of ethanol from a biochemical process for various types of biomass are shown in the accompanying table. A corn stover ethanol plant with a yield of 80 gallons per dry ton of stover (about 70 percent of theoretical) would require 12,500 dry tons of stover for each million gallons of ethanol produced. A 25 MMgy corn stover-to-ethanol plant will require 312,500 dry tons of stover each year (about 850 tons per day). On average, the dry matter weight of a corn plant is split equally between the grain and stover. Many counties in the Corn Belt produce more than 20 million bushels of corn each year, yielding about 476,000 dry tons of stover.&nbsp; While it is not advisable to remove all of the stover from a corn field, two or three high-corn producing counties could easily supply enough corn stover feedstock for a 25 MMgy cellulosic ethanol plant. At a delivered price of $70 per dry ton, the stover feedstock for one such facility would create over $20 million in direct economic impact. Similar scenarios are possible for other crop residues, woody biomass, energy crops and other biomass feedstocks appropriate for a given area. While there is plenty of biomass available for the production of advanced biofuels in most areas, the logistics and cost of delivering large quantities of biomass to a plant are still being debated. The U.S. DOE has said the success of the U.S. bioenergy industry relies on many factors, &ldquo;including a reliable, adequate supply of high-quality biomass, available at a cost that enables meeting business profitability targets.&rdquo; DOE is supporting the development of a logistics system concept that incorporates distributed biomass preprocessing depots located near biomass production sites. Processing technologies such as milling or densification can reduce variability early in the feedstock logistics chain. The biomass depot concept is gaining acceptance in the private sector. Ethanol Producer Magazine reported that one such company, Chip Energy, broke ground in mid-2013 on a biomass recycling and pelletizing plant. Once complete, the prototype plant will be capable of producing 100 tons per day of densified biomass from a variety of feedstocks, including wood waste, purpose-grown energy crops, and agricultural residues. Several biomass depots could be built to support an advanced biofuels plant in your community. Most communities have the other resources required to attract an advanced biofuels project&mdash;a trainable workforce, water, natural gas and electricity. Large advanced biofuels projects may also need access to rail or barge to ship products to more distant markets. Another local resource that can be very critical to attracting an advanced biofuels project to your community is human capital, defined as the knowledge, talents, skills, abilities, experience, intelligence, training, judgment and wisdom possessed individually and collectively by individuals in a community. There are many successful biofuel plants in the U.S. that came to be because of a local project champion&mdash;an individual or individuals that worked hard to bring that project to their community. Economic development agencies can spearhead or be the catalyst for an advanced biofuels project. A feasibility study done early on can document the biomass resources available in your area and match the resource to the appropriate technologies and products. This will give you a head start on developing a viable business concept and creating local interest in the project.&nbsp; Developing a large advanced biofuels project will not be easy, but the path is fairly well-established, based on past successes. Author: Mark Yancey Vice President, Project Development &nbsp;BBI International 701-738-4924 myancey@bbiinternational.com

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SOURCE: U.S. DOE Biomass Program, Theoretical Ethanol Yield Calculator and Biomass Feedstock Composition and Property Database

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Advanced biofuel projects present significant economic development opportunities.

Attract a Megaproject to a Community Near You

If your boss asked you to guarantee that your company would never suffer a data breach, would you do it? That may be a little extreme, but what if he simply wanted your assurance that every reasonable step had been taken to prepare for, prevent, or respond to a breach? Could you give it?&nbsp;&nbsp; If you answered no to the second question, you're not alone.&nbsp; If any good has come from the high-profile data breaches over the past year, it is that more companies are recognizing that no company and no sector of the economy is immune from the threat of a compromise. The prospect of class action litigation, regulatory action, harm to reputation and significant financial losses are just a few consequences. But even with the many reports of breaches, as well as the increasing and unpredictable threats to data security, many companies have still not done enough to prepare for, prevent, and respond to an incident. Today, technology seems to be everywhere. From agriculture to energy to retail to financial institutions and health care, technology influences how we produce energy, grow food, work, communicate, and live our daily lives. These technological advances may not only save time and improve productivity, but many can help make us more secure or save our lives.&nbsp; But what about the information that is gathered, analyzed, used, and stored by all this technology? The same technology that can help a farmer produce more or better crops, an energy company develop or market energy resources, or a financial institution quickly manage corporate accounts could itself be compromised in a data security incident, potentially jeopardizing the security of sensitive, confidential, or proprietary information. For many companies, this could not only damage their competitive edge, but open them up to extensive legal liability or regulatory action. For their customers or employees whose information may have been compromised, a breach can bring long-term anxiety over identity theft or stolen funds and destroy consumer confidence. Over the past year, a number of American businesses and consumers have seen firsthand these and other results of significant data breaches.&nbsp; As companies have worked to respond and recover from such breaches, some important lessons have been learned along the way.&nbsp; Regardless of the sector of the economy in which a company operates, regardless of its size or success, it could be at risk for a data security incident. It&rsquo;s smart to be proactive. Identify the threat landscape as it applies to your company&rsquo;s specific business model. Assess the risk. Ask basic questions about the very information that could be subject to compromise. Who is collecting the data?&nbsp; For what purpose?&nbsp; What specific information is being collected?&nbsp; Is it business or personal? What is being done with the data?&nbsp; How will it be used&mdash;for marketing, regulatory, or other government purposes? Who has access to it?&nbsp; Will it be stored, and if so, for how long? Will it be shared with the government or with third parties? Are there legitimate privacy concerns that must be considered, and if so, what is the reasonable response? Are there tangible measures that can and should be taken to reduce the impact on privacy?&nbsp; Why are these questions important? Because the answers will help you shape and implement reasonable and responsible measures to reduce the risk and effects of a compromise, long before such an incident occurs. Some of those measures might include: identifying and setting appropriate limits on the type of information collected; specifically assessing who should have access to the information, and then defining that category; clarifying under what conditions data may be shared more broadly; stating clearly how long it will be retained, and developing a clear and effective incident response plan. There should be effective policies and procedures in place that guide and inform how a company acts to prevent or mitigate the risk of a compromise.&nbsp; As we have learned from recent data breaches, a proactive and responsible approach by individual companies to think through risk and compliance issues before a breach occurs will put a company on much better legal, regulatory, and technical footing if a breach does, in fact, occur. This not only benefits the company as it looks to rebuild its reputation, but its customers, shareholders, and employees as well. And it means that when your boss asks you how well-prepared your organization is, you can finally give him that assurance he's looking for.&nbsp; &nbsp; &nbsp; Author: Kathleen Rice senior director, FaegreBD Consulting 574-239-1958 kathleen.rice@FaegreBD.com Contributors: Mary Bono and Andy Ehrlich, FaegreBD Consulting

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The same technology that can help an energy company develop or market energy resources, or a financial institution manage accounts could be compromised in a data security incident, potentially jeopardizing information security, writes Kathleen Rice. 

Data Breach: No Company Immune

The new yeasts being developed for cellulosic ethanol face confusing and somewhat puzzling hurdles, starting with the regulatory language. Agencies don&rsquo;t approve genetically modified organisms (GMOs). The U.S. EPA reviews the Microbial Commercial Activity Notices that developers are required to submit, and if the agency has no questions, the submission is &ldquo;dropped from review.&rdquo; For yeasts that will end up in feed, the Food and Drug Administration also doesn&rsquo;t call it an approval in the Generally Recognized as Safe program, known as GRAS, but rather says, &ldquo;FDA has no questions,&rdquo; or, in the opposite case: &ldquo;The notice does not provide a basis for a GRAS determination.&rdquo; Digging further into the regulations raises even more complexities. Kristi Smedley, vice president of the Center for Regulatory Services Inc., helps companies navigate the FDA regulatory process. &ldquo;FDA has put the ethanol industry on notice that anything that goes into ethanol production, in which the DDGS is used for feed, should be cleared or authorized as a feed ingredient,&rdquo; she says. She adds that microorganisms and other processing aids for converting feedstocks like corn stover&mdash;with no coproducts going into animal feed&mdash;are not regulated by FDA. Regulatory approval&mdash;ahem, clearance&mdash;is a big issue, however, for first-generation corn ethanol plants considering bolt-on cellulosic processes that coferment or return the solids left after fermentation to the distillers grain stream. Currently, cellulosic process developers are talking about using the standard yeast and getting a smaller yield boost from the liberated C6 sugars (glucose) in the corn fiber fraction, until such time that modified yeasts or new C5 fermenters are cleared for use in feed.&nbsp;&nbsp;&nbsp; The most formal of the three paths toward getting a new feed ingredient recognized is a food additive petition through the FDA, which includes a notice of filing published in the Federal Register and a formal review process. &ldquo;You end up with a regulation in the Code of Federal Regulations,&rdquo; Smedley says. A more informal, and thus more popular, route starts with applying for a new feed definition with the Association of American Feed Control Officials, which leads many to initially think they can circumvent FDA entirely. &ldquo;That&rsquo;s not the case at all,&rdquo; Smedley says. While a more informal process, the memorandums of understanding between AAFCO and FDA put the agency in the driver&rsquo;s seat. FDA provides the scientific review function, decides whether an application is suitable for the AAFCO process and makes its recommendations to the AFFCO Ingredient Definitions Committee. The AAFCO submission is extensive, Smedley says. &ldquo;You have to submit a significant amount of information to FDA to prove that your product is safe for the intended use. Safety is defined as safe for the animal that is consuming the product and safe for the human that would consume the eggs, meat or milk from animals that have consumed the product.&rdquo; The company has to show the manufacturing process is safe as well and that the new ingredient is consistently produced. For yeast, that means the organism is stable&mdash;the yeast produced two years ago was the same a year ago and this year. The AAFCO submission has to cover all of the same points that must be addressed for a feed additive petition, she adds, &ldquo;but the feed additive petition is just a little more rigorous and there&rsquo;s also an environmental component.&rdquo; Going For GRAS The FDA&rsquo;s voluntary notification program for GRAS determination is quite different, and wrongly considered a shortcut by some, Smedley says. &ldquo;There is no prescriptive way of doing it,&rdquo; she explains, turning to the language of the regulation that says &ldquo;generally recognized as safe may be based on the views of experts qualified by scientific training and experience to evaluate the safety of substances directly or indirectly added to food.&rdquo; Part B of that section goes on to say the scientific procedures used for GRAS &ldquo;shall require the same quantity and quality of scientific evidence as required to obtain approval of food additive regulation.&rdquo; In practice, FDA has interpreted the expert view to include information published in peer-reviewed scientific literature, which is primarily used for ingredients that have been developed through academic research. Another way people have historically demonstrated expert agreement on a new ingredient is to put together a panel, Smedley continues. In the case of a modified yeast, that panel might include experts in the ethanol industry and its coproducts, a microbiologist and someone understanding the safety concerns. The panel could review a company&rsquo;s documentation or even help draft a dossier demonstrating the product is safe. &ldquo;The bottom line is there is no prescriptive way. FDA hasn&rsquo;t said this is how you make a GRAS determination. Under the law, you can market products backed on that GRAS determination.&rdquo;&nbsp; That includes self-determined GRAS. Within the ethanol industry, insiders have noted, self-determined GRAS has been the most popular route taken for a number of additives that end up in distillers grains. The acceptance of self-determined GRAS is dependent upon a high degree of comfort level within the industry that there&rsquo;s little risk of a liability issue. But, with genetic traits already an issue in new varieties of corn and DDGS exports embargoed in foreign ports on the basis of GMO contamination, it&rsquo;s no surprise that the industry wants some assurance that GM yeasts will be considered safe, if they end up in the feed. FDA has a voluntary GRAS determination notification program, where companies submit their documentation for review, Smedley says, &ldquo;to see if they raise questions&mdash;not if they would agree to it.&rdquo; The human food side, the Center for Food Safety and Applied Nutrition, listed its first GRAS notification in 1998 and has entered 562 ingredients since then. About 40 of those are pending and 420 received FDA letters saying the agency had no questions. The feed side under the Center for Veterinary Medicine started the voluntary GRAS determination program in 2010 and since then there have been 18 applications, of which three are pending. Five determinations say: &ldquo;FDA has no questions,&rdquo; five say: &ldquo;Notice does not provide a basis for a GRAS determination,&rdquo; and the other five were withdrawn. Smedley explains the regulators on the food side have adopted the practice of phoning the applicant if questions were arising, rather than continuing the practice of publishing a negative letter explaining what was lacking, thus giving the applicant a chance to withdraw the notice. When the agency&rsquo;s feed side began reviewing GRAS notifications, the regulators didn&rsquo;t give any notice of pending questions and, instead, published detailed, negative letters outlining deficiencies in the GRAS determinations that Smedley says frankly, shocked the industry. &ldquo;What business would want to get a negative letter like that?&rdquo; In 2011, the notices that didn&rsquo;t receive negative letters were withdrawn and it wasn&rsquo;t until late 2012 before an enzyme notification cleared the FDA with no questions. Nearly a year later, another enzyme cleared and since then, three other notifications have been filed. One of those pending is a modified Saccharomyces cerevisiae to be used in the fermentation of corn to produce ethanol, filed by DSM Nutritional Products. Whether that yeast is intended for first- or second-generation processes is not indicated. Mascoma has gone the route of getting its modified S. cerevisiae yeasts approved via the AAFCO/FDA process. In February 2012, EPM reported Mascoma&rsquo;s bioengineered yeast had received a new feed ingredient definition. At the time, Mascoma CEO Bill Grady said he believed it was the first bioengineered yeast accepted for use in corn ethanol production of distillers coproducts for animal feed. Lallemand, Mascoma&rsquo;s manufacturing and marketing partner, acquired Mascoma late last year and two months later, in early January, AAFCO added another GM yeast from Mascoma to the definitions list. Both yeasts produce enzymes intended for yield enhancements in first-generation corn ethanol plants. The AAFCO definitions name the modified organisms and the organisms used as the source of the genetic insertions to express named enzymes. The definition also states that distillers products for use in animal feed contain no live bioengineered yeast. The small number of yeasts successfully reviewed or pending might be an indication the tide is about turn for the new yeasts, but for two huge unknowns. Smedley explains that GRAS determinations on the human food side of FDA have become highly controversial and one opposition group has won a lawsuit that may force changes to the system. That process may take a couple of years to play out, but whatever happens will eventually impact the animal food GRAS process. Just as big, or potentially bigger, is FDA&rsquo;s final rule for the Food Safety Modernization Act, due out in August. The rule is expected to include new good manufacturing practice regulations affecting everyone in the feed industry. No one in the industry is predicting what changes the FSMA rule might bring to new ingredient approvals. Some say it is quite early in the FSMA process and changes affecting the introduction of novel yeasts and new processing aids may be further down the road. Some are hoping, though, that any changes will make the process less confusing.
EPA&rsquo;s Microbrial Review Companies about to introduce GM microorganisms must file a Microbial Commercial Activity Notice with the U.S. EPA under the Biotechnology Program in the Toxic Substances Control Act. Since 1998, just over 50 MCANs have been dropped from review, clearing the organism for manufacture. There is a second review process for environmental release applications, which do require approval from EPA, and there are exemptions for R&amp;D in contained structures.&nbsp; Most MCANs listed on the EPA website are for modified organisms producing various enzymes, many from well-known companies offering familiar enzymes to the ethanol industry. Details on the microbial strains and, in many cases, the company names themselves are withheld as confidential business information. In addition to ethanol process enzymes, other microbial products are intended for the manufacturing of detergents or unspecified chemicals. About half the MCANs listed show a date for the required notice of commencement of manufacture&mdash;nearly all for enzyme production and just two yeasts. While it may seem that the agency is efficient in publishing determinations within 90 days of listing, an ethanol industry insider points out that if the agency has a question, the 90 days starts over, and a second question might reset the clock. 
Author: Susanne Retka Schill Senior Editor, Ethanol Producer Magazine 701-738-4922 sretkaschill@bbiinternational.com

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What's holding up approvals for modified microorganisms?  

Yearning For New Yeasts

The momentum for E15 was set in motion six years ago when Growth Energy filed the Green Jobs Waiver with the U.S. EPA. After 6 million miles of testing by the Department of Energy on 86 vehicles, the EPA approved the fuel for commercial use. Now, just a few short years later, E15 is being offered across America. In 2011, NASCAR selected Sunoco Green E15 as its official racing fuel, and now the sport is entering its fifth year running on E15 After millions of miles on the road and on the track, the force behind E15 has become unstoppable, and the fuel retail world has taken notice. Major players like Mapco, Minnoco, Murphy USA, Protec, Zarco USA, Petro Serve USA and Cenex recognized the competitive advantage E15 offers, responded to strong consumer demand for a low-cost, high-performance fuel and added E15 to their offerings at the pump. This growing excitement and energy confirms something our industry has long known to be true&mdash;E15 is a win for consumers, for retailers and for America. We reached out to a number of retailers across the country that are selling E15 and asked them to candidly share their experiences with us. The feedback we received was glowing&mdash;business is up, consumers are satisfied and everyone is excited to help local economies, improve the environment and reduce our nation&rsquo;s addiction to foreign oil. Here are a few highlights from our retailer interviews. &nbsp;&nbsp;&nbsp; &bull; &ldquo;Adding higher ethanol blends like E15 is the best thing I've done in 20-plus years of station ownership. It gives me a competitive price advantage and my customers like the new fuel. We've had zero customer complaints.&rdquo; &bull; &ldquo;E15 has given us a competitive advantage in an industry that&rsquo;s severely lacking any product differentiation. All fueling stations fight for the same customers by offering essentially the same product. E15 has allowed us to separate from our competitors by offering a fuel that is nearly identical in performance to regular unleaded (E10) for less money.&rdquo; &bull; &ldquo;We have customers very excited about our adding E15. As soon as they heard we were adding higher blends of ethanol, they started walking in the door of our store asking when the new products will be available. We've only been offering E15 for about three weeks but business has been very good for us.&rdquo; &bull; &ldquo;My business has been selling E15 for 13 months and we have had zero misfuelings and zero issues with customer vehicles related to using E15. The customers that are using E15 have noticed no mileage loss, the same engine performance and savings at the pump. It's a win-win for the consumer, the retailer and the environment.&rdquo; These firsthand accounts are supported by the latest data we&rsquo;ve received from participating retailers. In January, E15 sales accounted for 18 percent of their total sales, which is tremendous. This percentage has been steadily growing, up from 13.85 percent in November and 16.47 percent in December. In the first months of this year alone, we&rsquo;ve charted new territories and have seen the footprint of E15 expand to Mountain Express in the heart of Georgia and Caraf Oil by the beaches of Miami. E15 will soon be expanding throughout North Carolina with Sheetz and the suburbs of Houston and Chicago with Murphy USA. E15 is currently available at more than 100 stations across the nation in 17 states: Alabama, Arkansas, Florida, Georgia, Illinois, Iowa, Kansas, Michigan, Minnesota, Missouri, North Carolina, North Dakota, Nebraska, Ohio, South Dakota, Texas and Wisconsin. It&rsquo;s been a resounding success with retailers that add the fuel and we know it&rsquo;s only a matter of time before E15 is offered in every state in the nation. We commend these leaders in the fuel retail marketplace for their pioneering spirit and for their efforts to expand consumer access to higher blends of renewable fuels that improve the environment, create jobs at home and strengthen our energy and national security. By introducing more homegrown, renewable fuels into the marketplaces, they&rsquo;re making it convenient for consumers to make a difference and make 2015 the year of E15. Author: Tom Buis CEO, Growth Energy 202-545-4000 tbuis@growthenergy.org

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Retailers selling E15 say business is up, consumers are satisfied and everyone is excited to help local economies, improve the environment and reduce our nation's addiction to foreign oil, writes Tom Buis of Growth Energy. 

E15 A Winner For â€¨ Retailers, Consumers 

California&rsquo;s Low Carbon Fuel Standard changed global biofuels markets forever in 2011 when it became the first market-based approach to lowering transportation fuel emissions. By mandating fuel producers reduce carbon intensity (CI) 10 percent from a 1990 baseline by 2020, the LCFS displaced roughly 2.14 billion gallons of gasoline and 77 million gallon-equivalents of diesel with low-carbon transportation fuels through 2013, according to the University of California-Davis&rsquo; Institute of Transportation. But California&rsquo;s Air Resources Board is proposing major LCFS system revisions and their outcome will impact ethanol industry fortunes. So how could re-adoption play out, what&rsquo;s changing and what can ethanol producers expect as a result? LCFS readoption began in 2013 when the California Court of Appeals ordered CARB to remedy legal defects from the initial adoption process. CARB proposed amendments, solicited comments, held a public hearing and a re-adoption vote may occur as soon as summer 2015. While the details won&rsquo;t be known until the final vote, the outcome will impact America&rsquo;s largest single transportation fuels market, as well as states like Oregon and Washington, which are launching their own LCFS. Proposed amendments have focused on three major biofuel-related topics:
Revised CI targets:&nbsp; Overall, transportation fuel CI scores have only fallen around 1 percent since 2011, meaning annual CI reduction goals will likely need upward curve smoothing for 2016-2020, depending on projected fuel availability. CARB may also increase its post-2020 CI targets above 10 percent. CI regulatory changes currently center on lifecycle emissions, the overall well to wheel emissions footprint of transportation fuel. CARB proposed updating their model for calculating lifecycle CI values to a newer one based on Argonne National Laboratory&rsquo;s GREET model. CARB opted to use average electricity mix for production facilities as part of biofuels life-cycle emissions instead of the marginal electricity mix. While this tweak would empower U.S.-based facilities to more accurately calculate their CI through region-specific power supplies, UNICA has urged CARB to reconsider this change, as it does not include emissions reductions from electricity cogeneration at Brazil&rsquo;s sugarcane mills. Indirect land use change formula improvements were also proposed by CARB to better measure emissions associated with the conversion of land to agricultural use for biofuel production. UNICA has supported this proposal, as it will allow more accurate identification of how pastures and forests respond to cropland expansion and more realistically represents crop expansion dynamics in regions with large pasture and forest stocks, but we have urged CARB to capture double-crop systems when measuring crop production expansion. Some stakeholders have warned new CI values will prevent sufficient biofuel supplies from reaching market. CARB projects corn ethanol supplies will decrease as CI standards tighten toward 2020, but sugarcane ethanol volumes and electric vehicles are projected to fill the gap. Two-tiered biofuels system:&nbsp; CARB is proposing a two-tiered CI system for fuel pathways and producer facility certification and registration. Under this system, first-generation biofuels like corn and sugarcane ethanol are placed in tier one and next-generation advanced biofuels in tier two, with any fuel using innovative production methods falling into tier two.&nbsp; Cost-containment provision:&nbsp; Several revisions arose during stakeholder workshops and were added to the re-adoption proposal, including two cost-containment approaches to increase market certainty about the maximum cost of compliance, provide investment and production incentives, and create additional compliance options. Under the first approach, a credit clearance market would allow LCFS participants to carry credit deficits into the next compliance period.&nbsp; All required credits must be purchased during a credit clearance period at the end of compliance years where participants with excess credits sell their supply in a reverse auction format. CARB also proposed a price cap starting at $200 per credit in 2016, indexed to inflation. The second proposed approach would create a credit window approach where LCFS participants who are unable to purchase sufficient credits on the open market may buy compliance-only credits from CARB at set prices, with proceeds going toward the California Air Pollution Control Fund. Regardless of the outcome, CARB&rsquo;s proposed revisions are a step forward for clean renewable fuels like sugarcane ethanol. As LCFS re-adoption plays out over 2015, Brazil remains committed to help reduce transportation fuel emissions through reliable biofuel supplies, even as fuel demand rises and carbon intensities fall. Author: Leticia Phillips North American Representative, Brazilian Sugarcane Industry Association, UNICA 202-506-5299 leticia@unica.com.br

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UNICA's Leticia Phillips outlines proposed major revisions to California's Low Carbon Fuel Standard and the Brazilian Sugarcane Industry Association's take on them. 

Big Biofuel Implications In LCFS Readoption

I&rsquo;m conflicted over the sturm und drang that has resulted from revelations that some of the story-telling of NBC News&rsquo; anchorman, Brian Williams, was, in fact, the kind usually introduced with a disclaimer saying &ldquo;based on a true story.&rdquo; On one hand, if I were in the second helicopter in a formation of four flying in&mdash;or even near&mdash;a war zone, and any one of those four got fired at, I think I would probably tell people that someone fired at &ldquo;us.&rdquo; And if I were making $10 million a year for telling colorful stories about what I saw during hurricanes, near-hurricanes, and wars, I would look pretty hard for an entertaining way to say, &ldquo;Yeah, I was there, but nothing really happened where we were,&rdquo; if I was, and nothing did.&nbsp; But I wasn&rsquo;t. And neither were most of the people skewering Williams over his above-average-height tales. On the other hand, I was glad to see some media hand-wringing and self-flagellation over inaccuracy in reporting, and the tendency of today&rsquo;s media to report controversy rather than doing the actual work of being a journalist by discovering the actual truth of a story. A couple weeks earlier, some &ldquo;news&rdquo; channels thought it was good news when a media scorecard showed that statements by pundits on the most accurate TV news outlets were &ldquo;rated as half true or better,&rdquo; 80 percent of the time. To me, that seems like a massive failure, since the news media&rsquo;s only job is to find the truth, 100 percent of the time. Even when it&rsquo;s not the truth they find most interesting. I&rsquo;m not confident &ldquo;the media&rdquo; will get the real message of its current self-examination. Most of the ongoing discussion is&mdash;predictably&mdash;about what reporters should say about themselves, not whether they are ever going to get back to the work of finding and confirming facts rather than just accepting and printing dueling public relations department statements on controversial topics. I&rsquo;ve got some ideas that an actual journalist could start with: As legislators continue to attack the renewable fuel standard (RFS), calling it a &ldquo;failed policy,&rdquo; or &ldquo;broken,&rdquo; and saying it needs to be &ldquo;fixed,&rdquo; can someone just ask a few representatives or senators exactly what they want to fix?&nbsp; Since the RFS was passed, we&rsquo;ve seen increased fuel availability, hundreds of thousands of new energy jobs, improved air quality and pump prices that are the lowest they&rsquo;ve been since early this century, all stated goals of the energy bill and RFS2 when it was passed eight years ago. So, what is the fix they&rsquo;re hoping for? Do they want lower production? Fewer jobs? More pollution? Higher prices?&nbsp; Or maybe elected officials have their own Brian Williams problem? They&rsquo;ve repeated anti-ethanol stories that they believed were true, while embellishing them so the storyteller will be considered relevant and colorful. Would the media ever give as much attention to those stories as they&rsquo;ve given to their cannibalism of Williams? Maybe they could ask about the &ldquo;ethanol uses 40 percent of the corn crop&rdquo; lie that was only true during one drought year. Or the &ldquo;blend wall&rdquo; claim that said cars couldn&rsquo;t use more than 13 billion gallons of ethanol, during a year they used 14 billion gallons. Perhaps they could ask oil companies why they ban the sale of E15 at branded stations, or check into E15 auto warranties.
Take any of those you want, eager journalist, but do yourself a favor: Don&rsquo;t take my word for it. Don&rsquo;t take anyone&rsquo;s word for it. Look it up. Fact check. Do your job.&nbsp;&nbsp; Author: Ron Lamberty Senior Vice President American Coalition for Ethanol 605-334-3381 rlamberty@ethanol.org

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The news media's only job is to find the truth, 100 percent of the time. Even when it's not the truth they find most interesting, writes Ron Lamberty of the American Coalition for Ethanol.

If It Ain't Broke, Fix It Until It Is

Adhesives, chemicals, resins, acids and carbon fibers are just a few of the potential coproducts that could, someday, be produced at a cellulosic ethanol biorefinery. Poet-DSM Advanced Biofuels, Abengoa Bioenergy and DuPont all tell Ethanol Producer Magazine they are keeping a close eye on the future. But for now, all three companies see value in lignin. Poet-DSM and Abengoa both plan to burn the lignin produced at their facilities, to provide on-site power, with small differences in the two company&rsquo;s strategies. In contrast, DuPont&rsquo;s facility is natural-gas powered and the company is marketing its lignin-rich coproduct to third-party customers. Lignin burned at the Project Liberty cellulosic ethanol plant in Emmetsberg, Iowa, will produce process steam for that facility and the colocated corn-ethanol plant.&nbsp; &ldquo;We know it works, it&rsquo;s proven technology,&rdquo; says Steve Hartig, calling it the easy solution. The company also has an on-site anaerobic digester, which will produce methane from the liquid lignin stream. &ldquo;Between the two of them, it&rsquo;s a significant energy cost savings,&rdquo; he says. At the time Hartig spoke to EPM, he was general manager of licensing for Poet-DSM. In mid-February, prior to press time, it was announced that he would pursue a a career outside Poet-DSM.&nbsp; At Abengoa&rsquo;s facility in Hugoton, Kansas, lignin-fired boilers will produce steam and electricity to power the plant, and additional electricity to sell to the electrical grid. Although the company continues to consider other possible markets for lignin or other potential coproducts, for right now, the highest-value use is to power the plant. &ldquo;We&rsquo;re pretty much an island when it comes to energy needs,&rdquo; says Chris Standlee, executive vice president of Abengoa Bioenergy. &ldquo;We are self-sufficient and that is primarily because we use that lignin for the fuel.&rdquo; DuPont, on the other hand, is approaching lignin a little differently at its facility in Nevada, Iowa. Although the company believes burning lignin for onsite power is a good option, the goal is to offer those interested in licensing its technology flexibility, says Steve Ogle, cellulosic ethanol commercial leader with DuPont Cellulosic Ethanol. Taking this path allows DuPont to demonstrate the sale of the lignin-rich material to third-party customers. Another option is that a producer may want to use the material for power generation at an alternate location.&nbsp; &ldquo;We believe that our coproducts strategy really helps to differentiate us from our competition,&rdquo; he says, adding that future licensing partners may already have alternate means of powering a cellulosic ethanol plant. Depending on where it is taken off the process, the lignin-rich material produced at the DuPont facility takes on two main forms. One is wet filter cake, which is dried and pressed, and the other is liquid syrup. These two coproducts can be combined in various ways to create a customized granular form, depending on the customer&rsquo;s needs.&nbsp; &ldquo;We have found that there is interest in all three varieties at this point,&rdquo; Ogle says. Currently, DuPont has &ldquo;opportunities for a significant volume&rdquo; of the lignin-rich material produced at its facility, and is working on offtake agreements for the remaining amount. Among DuPont and its customers, there&rsquo;s a lot excitement about using the material to lower greenhouse gas emissions by replacing fossil fuels, Ogle says. Although the initial application is burning the material to produce power, DuPont does have some other ideas as well.&nbsp; &ldquo;The more that we evaluate and develop our coproducts, the more we understand the wide variety and the potential of these coproducts,&rdquo; he says, adding that he is unable to get into specifics due to confidentiality agreements. Other Products Burning lignin produces ash, which also has potential beneficial uses, says Hartig. While there&rsquo;s some work yet to be done, Poet-DSM believes analysis will show it is safe to use as a soil amendment for farmland. &ldquo;We expect it to have some advantages because it has some of the minerals that are coming from the corn stover, which can go back on the land,&rdquo; he said. Other potential coproduct ideas might be interesting, but still a generation or two away from becoming a reality. Another possible challenge is the size of the market for a particular product. For example, Hartig says, there&rsquo;s some R&amp;D into carbon fiber that&rsquo;s lower performance and lower cost. &ldquo;The challenge at an ethanol plant is that about three or four days of our lignin could produce all the carbon fiber you could use in your lifetime,&rdquo; he says. &ldquo;So it could be a nice application but it&rsquo;s not really going to drive anything from the cellulosic ethanol side.&rdquo; He also mentioned Borregaard Group, an overseas company that produces pure lignin for building materials and other products as well as a small amount of ethanol. Other companies are investigating the idea of producing aromatic compounds. &ldquo;We don&rsquo;t see that as something that we need to invest in directly, but we are watching companies that are investing in that, and talking to them,&rdquo; he said. &ldquo;If one of those succeeds, it could certainly become an opportunity.&rdquo; Although Abengoa is currently focused on getting its facility up to full ethanol-production levels and producing cellulosic ethanol, the company is open to wherever the market leads it in the future.&nbsp; &ldquo;What we are doing most of our work on, frankly,&rdquo; Standlee tells EPM, &ldquo;is diversifying our ultimate end products, taking the cellulosic sugars and looking to turn that into some other product besides ethanol.&rdquo; While ethanol is the easiest conversion, there are other possibilities. &ldquo;We are interested in finding new and different chemicals that are currently made from petroleum bases that we can make from renewable sugars,&rdquo; he says. &ldquo;We think there&rsquo;s potentially a huge market for that.&rdquo; Although it would most likely be an either or proposition, with the company transitioning to a completely new end-product, Abengoa has also talked about the possibility of adding on a tail-end processing facility for chemical production. The idea is to add product diversification in a way that would allow the company to produce cellulosic ethanol or another product and flip back and forth as efficiently as possible, depending on market drivers, Standlee says. Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 hjessen@bbiinternational.com &nbsp;

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BIOPOWER:  Using steam produced from burning lignin, Abengoaâ€™s electric-cogeneration facility produces enough power for its cellulosic ethanol plant as well as some excess for the grid. 

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MULTIPLE COPRODUCT FORMS:  Depending on where it is taken off in the process, DuPontâ€™s lignin-rich coproduct has different forms. From top left are syrup, wet cake and the granulated form, which is a mixture of varying amounts of the other forms. 

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STEAM FREEWAY:  Poet-DSMâ€™s strategy is to produce process steam by burning lignin at its cellulosic ethanol plant. Excess steam is piped to the corn-ethanol plant from the cellulosic ethanol facility. 

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The three big U.S. cellulosic ethanol producers have different approaches to lignin and future coproduct possibilities.  

Fired Up â€¨By Lignin

The American Coalition for Ethanol board of directors has elected Ron Alverson of Dakota Ethanol LLC as president; Duane Kristensen of Chief Ethanol Fuels Inc. as vice president; Dave Sovereign of Golden Grain Energy LLC as secretary; and Owen Jones of Full Circle Ag Cooperative as treasurer. In addition, Lars Herseth of the Herseth Ranch and Scott Parsley of East River Electric Cooperative, have been elected to serve on the ACE executive committee. Abengoa has appointed Ignacio Garcia Alvear co-chief financial officer responsible for investor relations and capital markets, effective Feb. 1. Alvear previously served as chief financial officer of Abengoa Bioenergy. He replaces Barbara Zubiria. Alvear joined Abengoa in 1995. Abengoa&rsquo;s board of directors has also appointed current CEO Manuel S&aacute;nchez Ortega as first vice chairman , replacing Jos&eacute; B. Terceiro. Independent director Antonio Fornieles Melero was selected to be lead director, second vice chairman and a member of the audit committee and the appointments and remuneration committee. Green Biologics Ltd. has closed on a $42 million follow-on equity funding round coled by existing investors Swire Pacific Ltd. and Sofinnova Partners. Additionally, in conjunction with the closing of the Central MN Ethanol Co-op acquisition, certain CMEC shareholders elected to receive their sale proceeds in a debt and equity investment in Central MN Renewables LLC through a new surviving entity, Renewable Partners LLC. Ocean Park Advisors acted as a financial advisor to CMEC on the CMR consideration election structuring and process. Ener-Core Inc. has won the 2014 New Economy Award for Best Air and Environment Solutions, which recognizes forerunners in the clean tech and renewable energy sectors. The company is a provider of power oxidation technology and equipment that generates clean power from low-quality waste gases. Pacific Ethanol recently entered into a contract with Dresser-Rand for two 1.75 MW gas turbines that utilizes Ener-Core technology to convert waste gases into on-site power for the ethanol plant. Esker has announced the acquisition of TermSync, a cloud-based accounts receivable platform. TermSync develops and markets an innovative, collaborative portal enabling businesses to modernize their accounts receivable processes.&nbsp; Allete Inc. has signed a definitive agreement to purchase U.S. Water Services Inc. Allete will initially purchase 87 percent of U.S. Water for $168 million, based on a total implied enterprise value of $194 million. Current employees and management of U.S. Water will continue to own the remaining 13 percent. Allete will purchase the remaining the 13 percent interest in the future for a contingent amount based on U.S. Water&rsquo;s future earnings.&nbsp;&nbsp; Microvi Biotechnologies Inc. has closed Series B funding that will help accelerate its growth as it continues commercial projects utilizing its innovative solutions in the water, wastewater and biobased products industries. SKion GmbH, the investment firm of German entrepreneur Susanne Klatten, acquired a minority stake in Microvi. The firm invests in cutting-edge technology in sectors such as material sciences and water.&nbsp;&nbsp; Dyadic International Inc. has appointed Michael Tarnok as chairman of the board of directors. He will also continue to serve on the company&rsquo;s audit and compensation committees. He is the current chairman and former interim CEO of Keryx Biopharmaceuticals Inc. and a former senior executive of manufacturing and finance at Pfizer.&nbsp; Green Biologics Ltd. has appointed James J. Hohman to a nonexecutive director position on its board of directors.&nbsp; Hohman was formerly president of Omnova Solutions&rsquo; performance chemicals business unit and a corporate senior vice president of Omnova. He has also held general management, business and marketing management positions with BP Chemicals and BFGoodrich.&nbsp; Lallemand Inc. has appointed Antoine Chagnon as president and CEO and William Nankervis as executive vice president and chief operating officer. Antoine Chagnon succeeds his father Jean Chagnon, who has served as CEO the past 34 years and will remain a board member and continue to support the company&rsquo;s leadership team as one of its senior vice presidents and special advisors. Antoine Chagnon previously worked at Audi and at Siemens AG. Nankervis joined Anchor Yeast in 1992 and was serving as director of bakers yeast and baking specialities business when the company was acquired by Lallemand in 2006. Dan Cummings has been appointed president of Poet-DSM Advanced Biofuels. Cummings will oversee day-to-day operations of Poet-DSM, represent the joint venture publicly, and coordinate functions between the parent companies. He will also act as the central point of contact for external relations, which includes all technology licensing activities for Poet-DSM worldwide. Cummings joins Poet-DSM after serving as president and director of INEOS New Planet BioEnergy, and as global vice president of commercial and external affairs for INEOS Bio. Previously he held senior business, corporate and legal positions at INEOS and BP. &nbsp; Evogene Ltd. has announced that its recently developed comprehensive gene optimization program is being incorporated into its multiyear collaboration with Monsanto Co. The addition of these new capabilities, which have been designed to optimize desired trait efficacy and potentially accelerate product development, follows the successful identification and validation by Evogene of more than 1,000 genes that have entered Monsanto's product development pipeline. The collaboration, which was initiated in 2008 and extended in 2013, is focused on transgenic approaches for improved yield and enhanced stress tolerance in corn, soybean, cotton and canola. Bob Gilmore has been appointed managing director and chief sales officer at Vecoplan LLC. He joins Len Beusse, managing director and chief operating officer, on the strategic planning team charged with positioning Vecoplan for sustainable long-term growth, as well as day-to-day management of the company. Gilmore&rsquo;s responsibilities also include the supervision of all internal and external sales staff, and overseeing the expansion of Vecoplan markets.&nbsp;&nbsp;

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Business Briefs

Cellulosic biofuel production took a giant leap in 2014, mostly from renewable natural gas and not so much from the two commercial-scale ethanol facilities brought online last year. In July, the U.S. EPA announced that cellulosic biogas used as transportation fuel could earn D3 RINs and in one month&rsquo;s time, D3 RINs generation soared from the 4,000 recorded for July to 3.49 million for August. In September, that more than doubled to 7.56 million. The total for the year stood at 33.02 million D3 RINs. Of that, 683,000 came from cellulosic ethanol. RINs are the renewable identification numbers used to identify and track biofuel production that obligated parties need to demonstrate blending for compliance with the renewable fuel standard (RFS). D3 is the RIN code for cellulosic biofuel, which includes ethanol, renewable diesel and, now, renewable natural gas.&nbsp;&nbsp; Biogas is nothing new. For more than 30 years, large landfills have been capturing methane emitted by decomposing organic material. Some wastewater treatment facilities, large farms and dairies, and food processing plants also produce biogas through anaerobic digestion. Historically, raw or minimally cleaned biogas has mostly been used to generate electricity to power the facility or sold to the grid. Green power earns renewable energy certificates (RECs), traded in both voluntary markets and in markets with state-level renewable portfolio standards requiring power companies to use specified levels of renewable power.&nbsp; In recent years, rising diesel prices prompted some biogas facilities to upgrade their biogas, removing CO2 and impurities to bring the methane content up to the same specifications required of fossil-based natural gas. The resulting high-Btu biogas is pipeline quality and can be used for transportation fuel when compressed (CNG) or liquefied (LNG). CNG has been the most common fuel used by fleets where medium-duty trucks are close to the fueling station, such as city fleets, local delivery trucks and waste haulers. LNG is typically used for heavy-duty trucks traveling along the growing network of LNG fueling stations. RNG and high-Btu biogas are terms being adopted by the industry to differentiate from natural gas, explains Johannes Escudero, executive director of the Coalition for Renewable Natural Gas. &ldquo;Chemically or molecularly, fossil natural gas and renewable natural gas are the same; they are primarily methane and carbon, with the primary distinction between the two being the source.&rdquo; The potential for RNG growth is substantial, he adds. &ldquo;Nationwide, there are 1,750 landfills that have not been developed. There are 17,000 wastewater treatment facilities that have potential to be RNG production facilities that have not been developed. There are more than 8,000 large farms and dairies and an average 66.5 million tons of food waste each year.&rdquo; If all those resources were converted into RNG, he estimates it would displace 7 billion gallons of diesel fuel. But, only a small fraction has been tapped to date. There are about 1,200 wastewater treatment facilities producing low-grade biogas, 240 anaerobic digesters at agricultural facilities and 636 landfills capturing gas. The landfills with high-Btu RNG facilities number just 42. The biggest barrier to biogas project development has been the $5 to $12 per million Btu (MMBtu) needed to develop a high-Btu project. &ldquo;When you compare the cost of RNG to fossil natural gas, especially with the current low rate of $3.50 or so Henry Hub pricing, how do you make those costs up in order to develop these projects?&rdquo; Escudero asks. &ldquo;The industry needs the incentives offered by policy programs like the federal renewable fuel standard and the state-level, low-carbon, clean fuel programs.&rdquo;&nbsp; The RNG coalition he leads spearheaded the effort to get EPA to approve RNG transportation fuel as a cellulosic biofuel generating D3 RINs. &ldquo;Last year, we testified before the U.S. EPA that there would be upwards of 100 million ethanol gallon equivalents of biogas generated for fuel purposes in 2014,&rdquo; Escudero says. &ldquo;The delayed RVO (renewable volume obligation) has impacted that, and reduced that number.&rdquo; The coalition recently surveyed its members and reported to EPA in a late-February meeting that they expect to produce 212 million ethanol equivalent gallons in 2015 and 363 million ethanol equivalent gallons in 2016. Market Dynamics The ability to earn D3 RINs has significantly improved the economics for high-Btu RNG, says Randy Lack, chief marketing director for Element Markets LLC. The company specializes in the marketing of environmental commodities such as renewable energy credits, emissions, greenhouse gasses, renewable fuel credits and biogas. &ldquo;We essentially partner up with biogas producers to take the biogas at the tailgate and do everything needed to realize the value,&rdquo; Lack says. Municipalities and small producers, he explains, generally do not have the capacity to handle all the details. Element Markets manages the agreements to generate renewable portfolio or renewable fuel credits. It manages the marketing of the RINs and hires the QAP (quality assurance) required by EPA for verification. Also, it can be difficult for a single player to establish itself with a large oil refiner looking to buy D3 RINs to fulfill its RVO quota. With its work in multiple environmental commodities, Element Markets has developed those relationships. &ldquo;I know that the market is still waiting on the RVO to be set, especially for 2015 and 2016,&rdquo; he says. &ldquo;We haven&rsquo;t seen the buying interest by the refiners pick up to the extent that it will, once the RVO is published.&rdquo; Refiners can meet their cellulosic obligation by buying and blending the fuel, buying D3 RINs or buying D5 RINs and paying the waiver price set by EPA. Thus the base value of a D3 RIN is a D5 plus the waiver credit, which is set in the RFS and adjusted based on the consumer price index. The traded value of D3 RINs is much more difficult to determine. &ldquo;Most of the transactions have been private party transactions and the D3 market isn&rsquo;t a quoted market,&rdquo; Lack says. &ldquo;A reason for that is that in 2014, there were 33 million D3 RINs generated in a market that needs 18 billion-plus RINs for all types.&nbsp; This is a very small sliver of a refiner&rsquo;s compliance. And it&rsquo;s a small enough amount of RINs that you are not going to see a bid-offer spread from a broker on a daily basis.&rdquo; The RINs value is a strong incentive. The average landfill site produces around 2,000 dekatherms a day, Lack says. (Each dekatherm earns about 11.73 RINs and 1 dekatherm equals 1 MMBtu). Thus, an average site would generate about 8.5 million RINs per year, if all the production were going to renewable transportation fuels. But the cost of extraction per MMBtu is highly variable and dependent upon not only the volume of gas produced, but its quality, and the proximity to a pipeline and the pipeline&rsquo;s quality specifications. California, for instance, has tight pipeline specifications that double the capital expense for a project, compared to other states. How fast RNG for transportation will grow also depends upon multiple factors in the power market. &ldquo;In the old days, when we had high electric prices, high natural gas and high-priced RECs, you were getting really nice long-term power purchase agreements,&rdquo; Lack says. Today, especially in the Midwest and Southeast markets, there are no good long-term price contracts for renewable power. The large CAPEX for high-Btu is another factor. &ldquo;In power, you can scale very well,&rdquo; Lack says. &ldquo;You put on one engine or two engines or more.&rdquo; There&rsquo;s an absolute economy of scale for gas upgrades, however. &ldquo;You cannot realistically do a high-Btu project, meaning into a pipeline, on a small-scale landfill project.&rdquo; &ldquo;The move to D3 is certainly motivating new development of biogas, but it&rsquo;s going to be hard to develop these facilities,&rdquo; he says. The lack of long-term offtakes is one factor, as well as RFS uncertainties. &ldquo;It takes a company with a large balance sheet and the ability to take on some regulatory and legislative risk to come in and develop these projects and make the investment, predicated upon selling RINs.&rdquo; The market for RNG is there, he adds. &ldquo;When diesel prices were higher, there was a tremendous adoption of CNG and LNG structure across the U.S. It happened pretty quickly, led by companies like UPS and Waste Management and Republic Waste. A lot of larger fleets made conversions and are using significant amounts of CNG or LNG.&nbsp;&nbsp; And that far outstrips the biogas supply.&rdquo; In supplying renewable content to natural gas, RNG is not competing with other biofuels, Lack points out, and the biogas and cellulosic ethanol producers have become brethren. &ldquo;We&rsquo;re not fighting. We&rsquo;re not keeping information from each other. We&rsquo;re at the table together. We want the cellulosic program to stay.&rdquo; Indeed, cellulosic biogas has instantly boosted the volume of cellulosic biofuel, muting the critics somewhat. &ldquo;We&rsquo;re going to give the cellulosic ethanol industry more time to ramp up and get to larger production volumes,&rdquo; Lack says. &ldquo;We&rsquo;re producing a zero carbon fuel, which EPA loves, into what has been an undersupplied and criticized market. I think the efforts of the biogas industry are going to do a lot to ensure the cellulosic market is functioning well.&rdquo;&nbsp; &nbsp; Author: Susanne Retka Schill Senior Editor, Ethanol Producer Magazine 701-738-4922 sretkaschill@bbiinternational.com

DRIVING ON LANDFILL GAS:  Since September 2009, Waste Management trucks around San Francisco have been filling up with LNG at the Altamont landfill. 

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Corporate greening efforts often turn to planting trees, but Clean Energy Fuels says a company would need to plant enough trees to fill 11 football fields to equal the greenhouse gas reduction from switching one heavy-duty truck to RNG. 

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FUELING UP:  Clean Energy Fuels, a member of the Coalition for Renewable Natural Gas,  is building a natural gas fueling station network. 

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FUELING UP:  Clean Energy Fuels, a member of the Coalition for Renewable Natural Gas,  is building a natural gas fueling station network.

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UPGRADING GAS:   The CAPEX for developing high-Btu RNG facilties, such as the one pictured here, ranges anywhere from $5 to $12 per MMBtu, depending on multiple factors.   

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Introducing renewable natural gas, the new player in the cellulosic RINs market.

The 2014  D3 RIN Leap—For Biogas

By harnessing CO2, sunlight, saltwater and algae, Algenol&rsquo;s technology takes only 25 days to produce maximum concentrations of ethanol. Imagine trying to replicate that timeline in the corn-ethanol industry, including planting, harvest and ethanol production. &ldquo;It&rsquo;s not possible,&rdquo; says Paul Woods, founder and CEO of the company. &ldquo;But it is possible with algae, because it grows so fast.&rdquo;
How fast does algae grow? Woods likes to tell people in Florida that all they need to do is turn off their pool pumps to witness the power of algae.&nbsp; The technology also uses significantly fewer acres of land than corn-ethanol production. At a yield of 170 bushels per acre and 2.8 gallons per bushel, a corn ethanol plant produces 476 gallons of ethanol per acre of corn. A corn stover cellulosic facility will be able to sustainably remove 2 or more tons of corn stover per acre, which will yield 140 gallons of ethanol, according to an industry expert. Algenol&rsquo;s technology, on the other hand, can produce, on average, 8,000 gallons of ethanol per acre in a year, Woods says, adding that at peak production in the sunny summer months, Algenol produced more than 10,000 gallons of ethanol.&nbsp;
 How It Works&nbsp;&nbsp; The clear plastic bags used in the direct-to-ethanol technology look like giant hanging file folders, Woods says. Each bag is 10 feet by four feet, 2 inches deep and has capacity of 50 liters. The bag is filled with saltwater, which is inoculated with algae culture. All green plants, including algae, take in water and CO2 from the atmosphere, and combine those elements as a precursor to sugar, which, with Algenol&rsquo;s two-step direct-to-ethanol process, is immediately converted to ethanol. In the end, approximately 85 percent of the carbon consumed produces ethanol and other fuels.
When that process is complete, a simple centrifuge is used for separation, Woods says. Spent algae goes one way and liquid goes another. Next comes a two-step ethanol purification process, the first of which is patented by Algenol and the second is no different than the method used by the corn-ethanol industry, he adds. The remaining biomass, or spent algae, is turned into green crude in a six-minute process, which can potentially be sent to a refinery to produce mostly gasoline or diesel and some jet fuel. The four fuels can be produced for about $1.30 a gallon each, the company says. At Algenol&rsquo;s demonstration facility near Fort Meyers, Florida, the CO2 feedstock arrives in tanks. The company is focusing first on colocation with carbon dioxide emitters in Florida and Arizona. &ldquo;We are going to take CO2 that is about to be emitted into the atmosphere and instead we&rsquo;re going to capture that carbon and recycle it or reuse it,&rdquo; Woods says, adding that the CO2 is collected by a giant straw at the stack, transported by fans and blowers and injected into the algae-inoculated bags. &ldquo;We&rsquo;re actually going to turn these emissions into something that is a very useful and valuable product.&rdquo; The company has already demonstrated that CO2 collection works, by building a machine to gather and compress it. The next step was to see if there was anything in the flue gas that would be detrimental. Although there were concerns, four tests show the algae actually performed 3 to 5 percent better on flue gas than bottled compressed CO2. It turns out that post-combustion gas is significantly depleted in oxygen, resulting in faster and more efficient photosynthesis. In Florida, there are three types of CO2 sources, the first two of which are natural gas- or coal-fired power plants. Algenol has already signed a 24-year supply agreement with a natural gas-fired power plant in which it agreed to pay the company $1 per ton. Compared to the approximately $40 a ton charge for pure CO2 from a pipeline, Algenol is scoring a cheap feedstock, Woods says. Plus, that $1 flows back to the power plant&rsquo;s electric customers. The goal is to announce the name of the facility this spring and break ground this year. Algenol wants to eventually expand to 8,000 acres of algae-producing modules, with a target production of 8,000 gallons of ethanol per acre, per year, or about 64 MMgy. &ldquo;We&rsquo;re not there yet,&rdquo; he says, adding that the project is currently in the planning and engineering phase. &ldquo;We&rsquo;re really evaluating all of the costs and making sure that it really can be done on this land. There&rsquo;s a lot of moving parts.&rdquo; The third CO2 source in Florida, is the DOE-funded carbon capture program, which Woods is very interested in having access to someday. Underground carbon storage is very expensive, adding up to somewhere between $40 and $100 per ton and most likely on the higher end of the scale. &ldquo;That is ugly,&rdquo; he says, adding that Algenol offers a very different approach to carbon mitigation or reduction strategies. Complement Vs Competition In case there&rsquo;s any confusion, Woods clarifies that he sees Algenol&rsquo;s second-generation technology as a complement to the first-generation industry. &ldquo;I get asked all the time, &lsquo;Are you guys competitors to corn and are you going to destroy the corn ethanol market?&rsquo;&rdquo; he says, the day after returning from a trip to the White House to talk policy needs, including a functioning renewable fuel standard. &ldquo;I&rsquo;ve got to tell you, I think that is disappointing that people think that. In my opinion, there wouldn&rsquo;t be an ethanol market without corn producers.&rdquo; So what about a partnership with corn-ethanol plants? Could Algenol colocate with a first-generation facility and capture CO2 to produce more ethanol? The idea does have limitations, particularly in the Midwest. &ldquo;The problem is, of course, you can&rsquo;t freeze algae cultures,&rdquo; he says, adding that algae grows best in areas where it is hot and the sun shines year-round. Woods also doesn&rsquo;t believe it makes sense to build on valuable and viable farmers&rsquo; fields. &ldquo;I&rsquo;ve got to say, I think algae is really suited for the lowest-quality land,&rdquo; he says. Still, there are some places, such as California, where colocation with an ethanol plant could work, depending on available land. &ldquo;The CO2 that comes off fermentation is damn near pure, so the thought is really fantastic,&rdquo; he says, adding he believes that there will be a time when Algenol&rsquo;s feedstock could be captured at ethanol plants and transported by pipeline or rail for conversion at an Algenol facility. Author: Holly Jessen Managing Editor, Ethanol Producer Magazine 701-738-4946 hjessen@bbiinternational.com

GROWING GREEN:  There are about 3,600 ethanol-producing algae bags per acre of land, Paul Woods says.   

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GREENBACKS:  Even in hot, sunny places like Florida, there are still seasons when production slows 
down due to weather.   

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A Florida  algae-to-ethanol operation is poised to go commercial scale with a project colocated with a natural-gas-fired power plant.   

Green Expectations

&ldquo;Be not the first by whom the new are tried, nor yet the last to lay the old aside.&rdquo; I&rsquo;ve heard that smooth Alexander Pope quote used a few times over the years to describe the mindset ethanol producers have about taking early risks on new technologies. It turns out that Pope&rsquo;s advice&mdash;and he had lots of it&mdash;applies perfectly to how America&rsquo;s first major cellulosic ethanol players are looking at novel coproducts. In the spirit of Pope&rsquo;s words, they&rsquo;re holding off on anything that&rsquo;s uncertain. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In <a href="http://www.ethanolproducer.com/articles/12006/fired-up-undefinedby-lignin" target="_blank">&ldquo;Fired Up By Lignin,&rdquo;</a>&nbsp;we learn that Abengoa Bioenergy, Poet-DSM and DuPont are each taking safe approaches to cellulosic ethanol coproducts. EPM Managing Editor Holly Jessen reports that, for now, the vast array of high-value products that could accompany cellulosic ethanol production are being placed on the back burner while producers get past startup and meet volume expectations. Rather than chasing chemicals, resins, acids or fibers from the lignin that&rsquo;s left over when corn stover and cobs are converted to ethanol, Poet-DSM and Abengoa are simply burning their lignin for power; and DuPont is going to sell its lignin to a third-party buyer. Anything is possible, though, and even substituting ethanol itself for a more valuable product is on the table in the future.&nbsp;&nbsp; The subject of our cover story, <a href="http://www.ethanolproducer.com/articles/12005/green-expectations" target="_blank">&ldquo;Green Expectations,&rdquo;</a> has all but ignored Pope&rsquo;s eloquent counsel. As Jessen explains, Algenol CEO Paul Woods is quite comfortable being &ldquo;the first by whom the new&rdquo; is tried. Algenol has engineered and brought to market a technology that harnesses carbon dioxide, sunlight and saltwater to make algae which, in turn, yields ethanol and green crude oil. You&rsquo;ll enjoy this story because the company&rsquo;s platform is so different than anything else being done today to make ethanol. We look at more original things being tried in <a href="http://www.ethanolproducer.com/articles/12004/yearning-for-new-yeasts" target="_blank">&ldquo;Yearning For New Yeasts,&rdquo;</a>&nbsp;EPM Senior Editor Susanne Retka Schill reports that the genetically modified yeasts being developed for cellulosic ethanol are not actually subject to approval by the federal government but rather just cleared from review. Essentially, when the U.S. EPA and Food and Drug Administration stop asking questions about these new microorganisms, the road to market is at hand. Navigating this acronym-laden pathway to GM yeast approval is complicated and fraught with uncertainty, but the fact that a few yeasts have now been successfully reviewed is a positive sign for the whole industry. Finally, this month, we take a look at the instructive world of renewable identification numbers (RINs) for biogas, which has been the hottest segment of the cellulosic, or D3 RINs market lately. In less than a year, D3 RINs associated with cellulosic biogas used as a transportation fuel have soared from almost nothing to more than 32 million units. Our story, <a href="http://www.ethanolproducer.com/articles/12003/the-2014-d3-rin-leapundefinedfor-biogas" target="_blank">&ldquo;The 2014 D3 RIN Leap&mdash;for Biogas,&rdquo;</a> also by Retka Schill, provides valuable insight on the current dynamics of the exciting D3 market. 
Author: Tom Bryan President &amp; Editor in Chief tbryan@bbiinternational.com

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The April issue of EPM contains articles about lignin, algae-to-ethanol production, the process to develop new yeasts for cellulosic ethanol production and biogas entering the D3 RIN market, writes Tom Bryan of BBI International. 

Being First Is Risky

This year&rsquo;s National Ethanol Conference struck on a theme that I think is often overlooked. The overriding theme was not one of hope, but one of sheer commitment to press forward with a spirit of unfaltering determination. While Bob Dinneen, president and CEO of the Renewable Fuels Association, very effectively set the tone of the conference as, &ldquo;We are here to stay,&rdquo; it was clear speakers and attendees alike felt the same. It reminded me of one of my favorite quotes from Winston Churchill, &ldquo;Never give in. Never give in. Never, never, never&mdash;in nothing, great or small, large or petty&mdash;never give in, except to convictions of honor and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy.&rdquo; Jeff Broin, co-chair of Growth Energy, urged the industry to move ahead and move faster at this years&rsquo; Growth Energy Annual Leadership Conference. These are not words of a depressed industry, but words of determination and grit.&nbsp; I think that pretty well sums up the attitude of this industry and those who represent this industry not only in Washington, but all across the country. We have come too far, worked too hard and given so much of ourselves that we will never, ever give up. That message needs to resonate loudly and clearly throughout the halls of Congress, and to the lawmakers in all 50 states. The oil industry continues to receive at least $5 billion a year in federal subsidies. While indeed challenging, losing our tax subsidies was not the death knell it was expected to be, it only made us more determined to press forward. When you have a product that&rsquo;s less expensive, environmentally superior and is easily assimilated into the market, it&rsquo;s difficult for even the most ardent opponent to find reasons not to use it. I have written on several occasions that we are in an awkward position of having our customer (the oil industry) as our greatest adversary. I was wrong about that. The oil industry is not our customer. The consumer is our customer, the environment is our customer and the planet is our customer. The oil industry is merely our distributor. In order to meet growing environmental regulations, the oil industry has few options, with ethanol providing the greatest opportunity at the lowest possible cost. The RFS is critically important because it keeps the feet of an otherwise recalcitrant industry to the fire. The ethanol industry generates over $80 billion in gross domestic product annually, directly employs over 84,000 people and has investment dollars from tens of thousands of farmers all across the country. The contribution ethanol makes to the environment, the economy and to our national security is beyond question. Are we too big to fail? No. Will we ever let failure be an option? As Winston Churchill said, never, never, never! That&rsquo;s the way I see it.
Author: Mike Bryan Chairman, BBI International mbryan@bbiinternational.com

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Is the ethanol industry too big to fail? No, writes Mike Bryan of BBI International. Will it ever let failure be an option? As Winston Churchill said, never, never, never!

Failure Is Not An Option

The mathematician Shakuntala Devi once said, &ldquo;Numbers have life; they&rsquo;re not just symbols on paper.&rdquo; That is particularly true when the numbers are telling the story of the U.S. ethanol industry.&nbsp;
John Urbanchuk of ABF Economics recently unveiled a study titled &ldquo;Contribution of the Ethanol Industry to the Economy of the United States in 2014.&rdquo; The report, produced on behalf of the Renewable Fuels Association, is chock-full of vital and important information that gives a comprehensive overview of the ethanol industry and highlights its benefits to local communities, the national economy and our country&rsquo;s energy security. The study shows that last year ethanol production hit an all-time high of 14.3 billion gallons, which upheld 83,949 direct jobs, 148,684 indirect jobs and 146,582 induced jobs. The study details the $52.7 billion the industry added to the national GDP in 2014, the $5.7 billion in federal taxes, $4.6 billion in state and local taxes, and $26.7 billion to family incomes. Moreover, the ethanol industry&rsquo;s 14.3 billion gallons saved the country nearly $49 billion by replacing 515 million barrels of petroleum. The RFA used these numbers to shine a spotlight on the value-added benefit of ethanol production showing that every $1 spent on the input feedstock to produce ethanol yielded $1.83 in finished product and DDGS. Numbers have life and these numbers are a reflection of the personal stories and ways the industry is impacting individuals and communities alike. The numbers reflect the confidence of an employee as they get out of bed each morning and head to a wellpaying, stable job.&nbsp; The numbers reflect the relief in a parent&rsquo;s eye whose stable income allows them to afford school supplies for their children. The numbers reflect the joy of a young person who can move back to the community they love because an ethanol plant opened, creating jobs and supporting farm incomes. The numbers reflect the hustle and bustle of a busy street in a rural town where businesses were shutting down before an ethanol plant came to town. Iowa realtor Reed Kuper put it like this: &ldquo;The ethanol industry has been very positive to the entire Midwest. The communities that were once becoming ghost towns are now thriving, and I am seeing young people interested in agriculture again.&rdquo; Heartland Bank&rsquo;s President and CEO Kevin Black put it another way, &ldquo;I have witnessed firsthand the positive impact that renewable fuels have created for my bank customers and the local economies. The amount of misinformation by those interests wanting to see an end to renewable fuels is extremely troubling and damaging to the consumer and our overall economy.&rdquo; It is unconscionable that while realtors, bank presidents, parents and teachers understand and appreciate the impact the ethanol industry has on communities and individuals all across America, many politicians and naysayers choose to ignore both the numbers and the personal stories and as they continue their attacks on the industry. We will fight against these attacks as the numbers and personal stories continue to grow.&nbsp;
Author: Bob Dinneen President and CEO, Renewable Fuels Association 202-289-3835

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While both numbers and personal stories show the benefits of the ethanol industry many politicians and naysayers are continuing their attacks on the industry, writes Bob Dinneen of the Renewable Fuels Association. 

More Than Simply Numbers 

Public-private partnerships that conduct essential research, commercialize technology, and institutionalize new operating practices are vital to several economic sectors, including energy. There are numerous examples of early and ongoing public investment&mdash;matched with private investment&mdash;that have led to significant changes in the energy sector. Biobased projects, including biogas, need public-private partnerships to bring the potential resource to scale. Public-private partnerships for biogas project deployment are at a critical juncture. The U.S. biogas industry is going through a period of tremendous growth, but growth is uneven from state to state. State and local efforts to implement public-private partnerships could increase biogas project deployment where growth appears to be stagnant. Although several biogas projects are finding ways into the market, many proposed projects still struggle with access to capital and project financing. A new proposal by the Minnesota Metropolitan Council is aiming to help projects secure access to low-cost capital and develop a stronger partnership between the municipal and industrial sources of biogas. The Metropolitan Council is the regional policymaking body, planning agency, and provider of essential services for the Twin Cities metropolitan region. Metropolitan Council Environmental Services is a division of the Metropolitan Council and provides wastewater collection and treatment services for approximately 2.7 million residents in 108 communities in the seven-county Twin Cities region. Beyond the barrier of access to low-cost capital, some communities are encountering capacity constraints at their municipal wastewater treatment facilities. Capacity limitations can hinder economic development of commercial and industrial facilities in these communities. Municipalities are faced with costly decisions about expansions and upgrades. A proposal from the MCES would work with current industrial customers who are sending high-strength solids to the municipal wastewater facility to instead treat high-strength solids and wastewater on-site.&nbsp; MCES is proposing to help finance pretreatment technologies such as anaerobic digestion to be installed at the industrial facility. Industrial facilities would have access to low-cost public financing and would be able to reduce or eliminate strength charges currently paid to MCES. Eligible industrial facilities must currently send wastewater to the municipal plant for treatment. Industrial customers are required to submit an application to MCES for program participation. There are several steps in the project application and execution process that require the private facility and the public entity (MCES) to work closely together to design the project, secure financing, execute service contracts, and monitor the successes and challenges associated with the project. If this model is successful, the Metropolitan Council could avoid significant investments that would increase the capacity of wastewater treatment facilities, saving taxpayers money. At a minimum, MCES should be able to decrease some operating costs if they are able to reduce the volume of high-strength wastewater sent to the municipal system. The industrial facility could see a positive return on investment for an anaerobic digestion project by utilizing low-cost public financing and potentially add revenue to their operation by offsetting energy costs. There are also positive environmental benefits by reducing reliance on fossil fuel energy sources at the municipal or industrial facility. MCES has described this program as a triple win with benefits to the council, industrial facilities, and the environment. I agree.&nbsp; This program could potentially serve as a national model for public-private partnerships to effectively deploy anaerobic digestion projects. The program is gearing up for implementation over the summer, and I hope to be writing about its enormous success in a future column. Author: Amanda Bilek Government Affairs Manager, Great Plains Institute 612-278-7118 <a href="mailto:abilek@gpisd.net">abilek@gpisd.net</a>

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Great Plains Institute's Amanda Bilek discusses the benefits that public-private partnerships can bring to the biogas industry. 

Public-Private Partnerships Enable Project Success

Use of biomass heating systems has been spreading throughout Europe for over half a century. Boiler manufacturers have sprung up from Switzerland and Austria to Denmark and Sweden. Often starting as small and family-owned, these enterprises have grown into large production companies supplying markets worldwide. Schmid, Fr&ouml;ling, Kedel and HS Tarm join other European brands that have navigated through the sea of trade requirements to North America. While hundreds of employees work on these technologies overseas in large manufacturing and distribution facilities, the distribution companies in the U.S. are often quite small. These companies commonly employ around a dozen people and focus on supplying quality products to customers in their native territory. Some boiler providers, viewing the grass as greener on the other side of the pond, decided to bring the proven technology stateside, while others merely acted on an opportunity. Although some may refute that European technology is better, the manufacture and marketplace of the appliances is more extensive and established. Fr&ouml;ling, located in Grieskirchen, Austria, has been a family-owned business since 1960. Similarly, Schmid energy systems, headquartered in Eschlikon, Switzerland, is family-owned and has been in business for over 75 years. HS Tarm and Kedel (NBE) wood and pellet boilers hail from another Nordic country&mdash;Denmark. HS Tarm manufactured its first boiler in 1927. The family-owned company was founded by Rasmus Soerensen, who later handed the business down to his son, Hans. NBE is a more recently established company that brought another Danish technology to the market just before the millennium. NBE manufactures small commercial and residential wood pellet boiler systems, getting its start when two friends began experimenting with alternative fuels and burner technologies out of a garage in North Jutland, Denmark. Today, the company has garnered 60 to 70 percent of the market share in Denmark, and 10 percent of global unit sales. Besides going from small startups to household names, another common denominator of these four companies is export activities. After achieving success in their homelands, all reached a point where they felt comfortable infiltrating the budding North American market. Oversea Opportunists North America has a younger, smaller biomass heating market and similarly sized distribution companies. Tarm Biomass has been in it from nearly the beginning&mdash;over 30 years. This third-generation, family-owned business was acquired in 1995 by Scott Nichols, now president of Tarm USA Inc., when his uncle and father passed away shortly after purchasing the company in 1994. In 2008, the company expanded its inventory to offer Fr&ouml;ling products, which allowed it to sell commercial boilers and a broader line of pellet boilers, in addition to the imported HS Tarm products. Tarm USA also added the Scandinavian company LK Armatur&rsquo;s product line, which includes valves, components and prefabricated products for the heating market. Nichols says adding the product lines was a natural progression for the business, and that Tarm USA didn&rsquo;t want to be a company that relied upon the success of one company to dictate its own. &ldquo;It was important for us to have more than one line,&rdquo; he says. Around the time Tarm USA added the Fr&ouml;ling line, McCormick Energy Systems and Interphase Energy were entering the U.S. biomass heating scene with plans to import. With 2008 came opportunity for biomass energy, as oil peaked at $150 per barrel and consumers were seeking alternatives. &ldquo;Our phone was ringing off the hook,&rdquo; says Michael McCormick, CEO and principal in charge of McCormick Energy Solutions. As McCormick was looking at alternative energies, biomass came to the forefront as a promising opportunity for the company. He says MES had experience with geothermal, solar and other renewable energy projects, but being located in Maine, one of the most heavily forested states in the U.S., adding biomass to the company&rsquo;s offerings just made sense. &ldquo;We looked in the U.S. and Canada for biomass boiler manufacturers, but high-efficiency units and the experience in biomass were not to be found,&rdquo; McCormick says. &ldquo;It was a struggle to find any manufacturers, and I just knew from my experience that what I really needed to find was the European technology&mdash; they are 30-plus years ahead of us.&rdquo; After much investigation in Europe, MES landed an opportunity with Viessmann Manufacturing Co. Inc. as an independent manufacturer&rsquo;s representative for the northern New England territory. McCormick was seeking a closer partnership with an overseas manufacturer, however, one that would allow him more control and influence to expand his territory. His answer came when MES signed an operating agreement in Switzerland with Schmid energy solutions in the summer of 2014. &ldquo;Any Schmid project in North America comes through us, which is the kind of arrangement I was looking for,&rdquo; McCormick says. Interphase Energy LLC was another company in Maine looking for high-efficiency biomass units in Europe. While MES offers purely commercial-sized units, Interphase was focused on bringing residential and light commercial sizes to the marketplace, which made importing the NBE technology a good fit. It began in 2007, when a few of the initial members of Interphase Energy founded a company called Revision Energy, which today is focused on solar installations in Maine, but in the early days installed wood and pellet boilers. In 2008, the boiler division of the company expanded into Revision Heat, which continued installations of biomass systems with a focus on reducing the use of fossil fuels. The systems were expensive, however, and a better solution was needed. The answer was pursued overseas. &ldquo;We searched high and low for a product that had all of the features and capabilities that the typical U.S. consumer was looking for in a stand-alone central heating system,&rdquo; says Jacob Roberson, managing partner with Interphase. This is when NBE came into the picture, a serendipitous encounter, as Roberson recalls. Interphase was created to bring NBE&rsquo;s pellet boiler technology to the North American market as Kedel around 2012. &ldquo;They&rsquo;ve done all the life-cycle testing that is necessary; they really have a stable product line,&rdquo; Roberson says. &ldquo;That puts a startup company like ours in a really strong position to start importing, because we know what we&rsquo;re getting, and, ultimately, that&rsquo;s the crux of it.&rdquo; Proven Is Primary One thing importers can agree upon is the confidence boost they receive by knowing they are bringing, to North American soil, technology that has been demonstrated to work for years via thousands of installations across Europe. &ldquo;The single most important thing for us in selecting a product was that the product had to already be proven in the marketplace,&rdquo; Roberson says. &ldquo;As an importer, we were able to go to a company that says &lsquo;we have 50,000 units in the field,&rsquo; and so we knew that we were stepping into technology that was proven and well supported.&rdquo; Besides years of in-field experience, these European boiler companies had designed boiler features appealing to the U.S. importers. Experience in sizing boilers and material handling were two important components to McCormick when selecting a partner. &ldquo;Selecting the appropriate size output is not as simple as with fossil fuels,&rdquo; he says. &ldquo;Typically we don&rsquo;t size biomass the same way as oil or gas. Biomass reacts differently, longer to get to temperature and slower to cool down. And on this side of the pond, we tend to not run biomass for the entire heating season.&rdquo; McCormick says a common goal is to offset at least 80 percent, sometimes more than 90 percent, of an existing fuel source, but rarely 100 percent. &ldquo;There is no reason we cannot deliver 100 percent, but users are not totally comfortable with the newness of biomass in North America,&rdquo; McCormick says. &ldquo;And experience with the handling of the fuel type from the storage silo to the boiler is critical. That is why we chose Schmid. They have 80 years of nothing but biomass experience with thousands of installations all over the world.&rdquo; McCormick also attests to the European technology&rsquo;s quality. &ldquo;They are built to last,&rdquo; he says. &ldquo;This is a very important point when performing long-term payback for biomass projects.&rdquo; He adds that the U.S. is more focused on profits and shareholders by providing multiple levels of product quality at different price points. McCormick says you can buy cheap, thin metal, and cheap ball bearings, and if the average person doesn&rsquo;t know what he wants, he will look at price. &ldquo;We have the short-term view of capital expenditures in the U.S.&mdash;Europe doesn&rsquo;t have that,&rdquo; McCormick says. &ldquo;You don&rsquo;t have to have a lot of inventory on the shelf, because you&rsquo;re not going to have a lot of failures with European boilers.&rdquo; In the event of a failure, it&rsquo;s more likely to concern the electrical board rather than a full-system failure, as power spikes and brown outages are hard on the electronics of the system. Therefore, McCormick keeps a few boards handy in the U.S. Importing companies keep some inventory on hand, but even if they have to order, they don&rsquo;t see the logistics associated with importation as an issue. They are full-service distributors, and don&rsquo;t rely on incoming shipments to fulfill day-to-day orders. &ldquo;I have to keep a lot of inventory in stock for the residential sizes. Bigger boilers&mdash;over 500,000 Btu&mdash;I stock fewer of, and most are ordered as needed,&rdquo; Nichols says. Shipping varies from company to company, anywhere from a few weeks to a few months. Interphase has a relationship with the Icelandic shipping company Eimskip. Located in Portland, Maine, the company is conveniently situated on Eimskip&rsquo;s port of call in the U.S., which cuts shipping time to two to four weeks by water. Once deliveries reach the shore, little assembly is required, varying slightly based on the unit size. &ldquo;It would take a huge amount of product line to justify any amount of assembly here,&rdquo; Nichols says. &ldquo;If you look at the product production line at Fr&ouml;ling, it looks like Ford Auto Co. It's just massive, and there is no way that I can hire a couple of employees to swing together a few boiler jackets when they have that kind of economy of scale over there.&rdquo; Although manufacturing these boiler brands on U.S. soil doesn&rsquo;t make economic sense now, many hope that is a direction they can go in the future. &ldquo;Really, the best approach is to leverage the technology that is already proven elsewhere in the world, grow the marketplace domestically, and then start to look at manufacturing opportunities stateside,&rdquo; Roberson says. &ldquo;They&rsquo;ve had the time in the marketplace to stabilize the product, to develop features, to continually test them, to garner feedback from end-users and installers, to try different types of fuel. Truthfully, they are way ahead of the game, globally. It makes a lot of sense to learn from what these manufacturers are doing and to leverage that technology, so that as this industry is getting off the ground in the U.S. and Canada, we&rsquo;re getting off on the right foot.&rdquo; Roberson adds that the worst thing distributors can do to the industry is stumble and fall and bring poor products into the marketplace that aren&rsquo;t well-supported. &ldquo;Ultimately, that is going to tilt consumer confidence and the industry will be a nonstart,&rdquo; he says. Nichols believes it is also important for a European exporter to have a belief in the North American market, to really want to infiltrate and make it part of their business plan. Charting The Waters As the industry in the U.S. is still fairly new, there is really no central guidance on how to get imported technology approved. Most of the certifications must be met on a state-by-state or province-by-province basis in North America. The U.S. EPA standards, UL standards and ASME&rsquo;s boiler and pressure vessel code (BPVC) are three big areas in the import/export process. &ldquo;Representing products takes a long time; it&rsquo;s not easy, and sometimes just when you feel like you have the bull by the horns and your job is done on a particular project, the regulations will change,&rdquo; Nichols says. &ldquo;If it was easy, everyone would do it and succeed. The more complex the number of products you import, the harder it gets.&rdquo; Meeting UL standards is one of the first requirements. UL is a global, independent safety science company. Boilers must be UL listed as a whole, as well as each of their components. There is now the UL Standard 2523, which Nichols says is more of an all-encompassing biomass boiler safety standard, whereas before it was a collection of oil burner and wood stove codes that were used as an umbrella for wood and pellet-burning boilers. Now with this safety code, Nichols believes it will help with the approval of local jurisdictions. UL standards are, for the most part, reciprocal between Canada and the U.S. ASME&rsquo;s BPVC is the code that dictates aspects of the boiler like thickness of steel, welding prep, quality of steel, tubes and vessels. ASME BPVC has the European equivalent EN-305, which is what the European pressure vessels are tested to. Even if a product line is listed and certified through EN-305, it is not necessarily accepted in all states&mdash;some require the ASME standard. Additionally, in Canada, there is a separate pressure vessel standard, so an ASME boiler must be accepted by each province individually. As for the EPA, there is some variance of efficiency and emissions across the states. Even requirements pertaining to how installed boilers can take part in state subsidy programs can add a layer of complexity. &ldquo;That can be difficult, not only for companies like ours, but also for the contractors who are out there installing these systems and navigating the programmatic details of state subsidy programs,&rdquo; Roberson says. &ldquo;Installers are absolute experts on the installation, service and maintenance of these systems, but the expectations of some states around what&rsquo;s needed to qualify a project for state funds can be quite complex, time- and capital-intensive. That&rsquo;s sometimes enough to make qualified installers uninterested in the technology.&rdquo; Time and money are spent certifying products and getting them tested in laboratories. Biomass boilers must undergo both a European and U.S. certification process, inspected and tested through both. While there are a handful of test labs in the U.S. accredited to do inspections, Nichols says that there is a bit of a bottleneck, so one is at the mercy of the labs. Some approval areas and technology modifications may become easier as the technology exchange increases. Interphase no longer has to make changes for power distribution, as everything is coming to the U.S. in 110 volts alternating current (VAC). According to Interphase, international manufacturers are changing product lines to fit market requirements in North America, as well as heavily investing in testing and EPA certifications. Still, there is some hesitation amongst European boiler providers about crossing the Atlantic. &ldquo;European manufacturers are not in a big rush to come to the U.S.,&rdquo; McCormick says. &ldquo;There is a reason for that, and it&rsquo;s called lawyers. The U.S. has more lawsuit claims than any other country in the world.&rdquo; He adds that European manufacturers want to be here, but are approaching it slowly and cautiously. &ldquo;They don&rsquo;t want to be caught in the legal dragnet, so if they stay on their own shores and don&rsquo;t have a business entity on our turf they remain isolated, it would be very difficult for a harmed American consumer to go after a European boiler company. I think our legal system really is a restriction for them,&rdquo; Nichols says. Low oil prices makes it hard to predict what lies ahead for the North American wood heat industry, but importers see growing market potential. &ldquo;Unquestionably, I see the North American market becoming favorable for European suppliers,&rdquo; Roberson says. In fact, Nichols believes &ldquo;the U.S. market should absolutely be the biggest market for European suppliers.&rdquo; Nichols says that one reason growth of biomass heating in the U.S. is a challenge is that energy policy is still thought of at the federal level, which is nearly impossible to make work because every region of the country has different energy needs. Nevertheless, &ldquo;I think it&rsquo;s a growing industry, that&rsquo;s why I continue to forge ahead,&rdquo; McCormick adds. &ldquo;I think it will come, I just keep looking at the European model, and someday we are going to be as progressive as those people in regard to energy.&rdquo; Author: Katie Fletcher Staff Writer, Biomass Magazine <a href="mailto:kfletcher@bbiinternational.com" target="_blank">kfletcher@bbiinternational.com</a> 701-738-4920

Kedel pellet burners head into the production line at NBE headquarters in Saeby, Denmark. Kedel is available in three sizes with Btu outputs ranging from 54,000 to 170,000.

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Schmid energy solutions is distributed by McCormick Energy Solutions in North America. In addition to its headquarters, the Schmid Group comprises two more offices in Switzerland as well as subsidiaries in Germany, France, Italy, Austria and Poland. 

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FrÃ¶ling has manufacturing factories in Austria and Germany. For mass production, robotic steel plate storage racks and robotic cutters are used. From the raw steel plate form, the steel is only touched by humans after the cut pieces are fully comple

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Schmid wood-firing systems have a user-friendly control unit called PersonalTouch. All important data, including setting values, measured values, events and statistics, can be obtained with this control panel.

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Attempting to expand the North American wood heat sector, U.S. distributors seek proven European technology to further foster market development.

Navigating the Sea of Approval

Thanks to 6,000 years of expanding human settlement, conflict and industrialization, the United Kingdom is currently the world&rsquo;s third largest net importer of wood, with just 12 percent of the country remaining forested. This is well above the less than five percent cover that followed the massive demand triggered by Word War I, but is still just one-third of the European average of 36 percent of land area. As for meeting our own energy needs, between 1980 and 2003, the U.K. was self-sufficient, thanks to reserves of North Sea. However, it&rsquo;s now 12 years since the U.K. became import dependent once again, and just over three years since the launch of the transformative support scheme, the Renewable Heat Incentive, or RHI.&nbsp; So what does all this mean for the U.K.&rsquo;s booming biomass sector? Introduced in November 2011, the RHI has triggered exponential growth in the biomass heat industry, and by March of this year, some 7,900 new commercial biomass systems were accredited. This is around 2.5 times the total number installed in the period prior to the RHI, as records show the U.K. had fewer than 2,800 installed commercial systems then. As one might expect, such rapid growth has created problems in both parts of the supply chain&mdash;installations and&nbsp; fuel supply, with the availability of experienced installers and good-quality fuel supplies proving to be two of the biggest challenges to successful growth. One of the most important observed trends in this booming market has been the dominance of pellet boilers, and certainly from re:heat&rsquo;s experience of supplying over 200 systems in 2014, pellet systems made up around 75 percent of sales. The newness of biomass technology to most U.K. heating engineers, coupled with the perceived convenience of pellets as a source of fuel from customers&rsquo; perspective, has meant that pellets have become the dominant fuel type used in RHI-supported boilers. This is particularly true of boilers supported under the small biomass tariff, which covers systems up to 200 kilowatts (kW) or 680,000 Btu, a sector that has become almost fully commoditized from an installation perspective. Above 200 kW, the picture is more mixed, and chips are certainly the prevalent fuel type in large systems of 2 MW and greater. The middle ground, however, is arguably where the greatest opportunity for pellet imports lies. With domestically produced chip prices between 3.75 and 6.7 cents per kWh, depending on volumes, moisture content, distance travelled and mode of delivery, the economics for imported pellets in the U.K. renewable heat supply chain are good, particularly given the 20-year price support conferred by the RHI. Imports from Portugal, Spain and various Baltic states are already playing a part, while pellets from the U.S. and Canada typically only find their way into the lower-paying power markets at present. It&rsquo;s widely understood that modes and distance of transport, loading and unloading can impact dramatically on the quality of pellets reaching the U.K., which places North American producers at a disadvantage over those closer to home. That said, with heat accounting for around 55 percent of the total energy (including electricity and transport) consumed in business and industry in the U.K., the scale of the market is huge, and with larger boilers comes greater fuel quality tolerance. This is something that has clearly occurred to Drax, which, in March, acquired Billington Bioenergy, the U.K.&rsquo;s second largest pellet distributor that serves domestic and commercial customers. The rapid growth in the sub-200 kW range has not been mirrored by huge numbers of boiler installations in the 200 kW-plus range, with just 620 systems accredited above 200 kW, one-tenth of the number of smaller systems.&nbsp; Clearly, the costs and development timeline for larger projects are greater, but a huge and almost untapped potential exists for the biomass industry to meet the needs of large-scale process heat users in the U.K. The fact that the RHI is payable over 20 years and is index-linked effectively means the U.K. government is providing fuel subsidies, and thereby underpinning business competitiveness for two decades. With continued volatility and uncertainty in fossil fuel markets, as well as pressure to reduce carbon emissions from customers and government, the generous support being offered to U.K. businesses to make the move to biomass is sure to continue driving the market for some time to come. &nbsp; Author: Neil Harrison Director, re:heat; Vice Chairman, Wood Heat Association <a href="http://www.reheat.uk.com" target="_blank">www.reheat.uk.com</a>, <a href="http://www.woodheatassociation.org.uk" target="_blank">www.woodheatassociation.org.uk</a> <a href="mailto:neil@reheat.uk.com" target="_blank">neil@reheat.uk.com</a>

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 Neil Harrison, vice chairman of the Wood Heat Association, discusses major market drivers and trends in the U.K. heating market.

The UK's Untapped Market Potential

Within 60 days of fall 2014, the two trade associations that represent North American pellet producers active in the export market held their annual events, and both opened with bullish market forecasts for good reason. The wood pellet industry has shown quarterly production increases each quarter since 2011, and according to the Food and Agricultural Organization of the United Nations, 2013 global pellet production surpassed 22 million metric tons. Over half of this volume is traded internationally, with European countries consuming over 80 percent of current production. This strong period of industry growth is powered in part by the European Union&rsquo;s Renewable Energy Directive, a binding framework engineered to move the region to an energy mix that includes 20 percent renewables by 2020, as well as strong growth in the use of pellets as a residential heat source. Forecasting the industry&rsquo;s potential emerged as the unofficial theme of the fall conference swing, and while industry experts were split on predicted future volumes, there was a unanimous belief that the industry&rsquo;s enviable era of growth was likely to continue for the next several years. Seth Walker, bioenergy economist from forest products information company RISI, shared with attendees of both events a market forecast that shows global pellet production climbing steadily to 50 million tons by 2024. In Miami, at the U.S. Industrial Pellet Association&rsquo;s Exporting Pellet conference, this prediction was met with skepticism, and, in some instances, was pointedly criticized. Matthew Rivers, director of fuel procurement at Drax, suggested the forecast offered &ldquo;future expectations without foundation.&rdquo; The dynamics between Walker&rsquo;s forecast and Rivers&rsquo;s reaction to it aptly illustrates the paradox the pellet industry finds itself in. As the industry continues to grow, public attention, scrutiny and misinformation campaigns create a drag on growth and stability that stakeholders in the sector would like to avoid. While market forecasts in the sector will likely continue to generate passionate debates, producers, associations, project developers, investors and industry vendors are hungry for guidance on where the market is headed. There are currently over 3 million tons of new production capacity under construction, with at least that many tons in earlier stages of development. Whether this era of sustained growth will continue hinges largely on four factors&mdash;cementing policy support for the use of biomass to achieve emission reductions goals, establishing a single sustainability criteria applicable to all pellet-buying countries, the emergence and establishment of new, non-European pellet markets, and the continued growth of the global thermal market. Policy Bedrock The period of growth the pellet industry currently finds itself in can be traced back to 2007 when the European Commission launched its Renewable Energy Directive, an ambitious plan to grow the region&rsquo;s share of renewable energy to 20 percent of total energy production by 2020. The plan was central to the commission&rsquo;s long-term strategy to drive down the carbon intensity of energy production within European member states. Each member nation received a target and was left to develop its own policy mechanisms to achieve the goal. One of the more cost-effective approaches to reduce the carbon intensity of power production was to replace a percentage of the coal burned in power stations with biomass, predominantly with wood pellets. Policymakers were attracted to this option because it would deliver results at scale more quickly than wind, solar and geothermal deployments. In the United Kingdom, policymakers deployed the Renewables Obligation program, and later, a contracts-for-difference (CfD) mechanism that guaranteed a profit to producers on power they produced in a low-carbon manner. In the Netherlands, a similar program known initially as the MEP and now the SDE-plus were introduced.&nbsp; These programs, especially those in the U.K., attracted the attention of energy companies and gave rise to the first coal plant conversions that introduced the first real market demand for industrial pellets. These conversion stories&mdash;in particular, the conversion at Drax Power Station&mdash;are widely known in the industry, and, almost singlehandedly, have generated millions of dollars in investments in pellet production assets, port and rail infrastructure. As these power stations conversions have gained momentum and come on line, however, they&rsquo;ve also fomented significant public scrutiny. Opposition to this approach has been voiced by nongovernmental&nbsp; environmental organizations warning of widespread deforestation, as well as scientific and policy community members who question the notion that power produced by wood pellets achieves the goals it has set out to. The science and economics of this strategy continue to draw scrutiny and investigation. In February, the European Commission announced it would investigate the U.K.&rsquo;s plan to subsidize the conversion of a coal station in Lynemouth, Northumberland, England, to wood pellets, with an aim to ensure that the plan aligns with European Union state aid rules and does not result in the overcompensation of the plant nor distort global pellet prices and demand. On top of this scrutiny, the U.K. has established a program called the Levy Control Framework, which will limit the amount of the money the government can spend on the carbon reduction programs, in order to protect ratepayers against large increases in energy costs. The pellet industry relies heavily upon policies that make the production of energy from lower-carbon inputs economically attractive. To continue on its march to 50 million tons, support for these subsidies must continue. Without them, a return to the low-cost fossil fuel incumbents is likely inevitable, and continued growth in the industry will&nbsp; sputter. The Court Of Public Opinion Policymakers&rsquo; response to constituents, and, ultimately, their support of the industry, is contingent upon the general public&rsquo;s consensus of whether the investment in renewable energy is both necessary and being done in a sustainable way. At the U.S. Industrial Pellet Association&rsquo;s Exporting Pellets conference in Miami, Matthew Rivers from Drax said, &ldquo;The sector depends upon the license to operate.&rdquo; If the public does not believe in the value proposition of making electricity from wood pellets, it is only matter of time before policymakers no longer support the programs the industry relies upon. This debate is regular, robust and ongoing. Blogs, expos&eacute;s, newspaper articles and letters to the editor about the use of wood pellets to produce electric power are published on a daily basis in media outlets across the globe. Most recently, the Washington Post published an editorial that blasted the practice and urged the U.S. EPA to not make the &ldquo;same mistake&rdquo; as European power producers. The editorial generated rebuttals from virtually every corner of the forest products and biomass industries. Critics of the industry suggest that continued support of the policies that drive this industry will result in widespread deforestation. Industry proponents counter that the biggest threat to forest is not more market opportunities for its fiber, but fewer. &ldquo;I think the big thing that we need to be doing is educating policymakers and others within the overall forest products industry that when you compare the sustainable wood fiber usage in our industry to the available fiber within the broader forest products sector it is absolutely, positively a drop in the bucket,&rdquo; says Seth Ginther, executive director of the U.S. Industrial Pellet Association. &ldquo;We need to find a better a way to better articulate that, and I think that is as critical to this industry&rsquo;s long-term success as anything else.&rdquo; Proving Sustainability To satisfy the skeptical fraction of their constituencies, the governments most aggressively supporting biomass-derived energy are introducing sustainability requirements that energy producers and their feedstock suppliers must comply with in order to receive subsidies. While the intentions of these measures are clear, the means of arriving at clear rules is not. Moreover, standards are currently being developed within multiple markets and may be different from one another, introducing bottlenecks and inefficiencies into the marketplace. Finally, at the center of many sustainability programs is some level of certification, which can introduce an administrative expense to landowners and pellet producers, making the economics of pellet production even more challenging. This marketplace reality is most recently playing out in the Netherlands, as the Dutch try to find consensus between the pellet-buying power producers and the environmental NGOs. The NGOs are pushing hard for requiring all pellets bought by Dutch power companies come from certified forests. The power companies, with guidance from the pellet industry, argue that the requisite volume of certified feedstocks simply isn&rsquo;t available and is not likely to be within the policy&rsquo;s timeframe. &ldquo;I think it is certainly a little bit of a setback for the harmonization of standards, but I wouldn&rsquo;t say this is the end of harmonization,&rdquo; Walker says. &ldquo;They are obviously going to be setting a new high-water mark.&rdquo; Harmonization is a concept the pellet industry has been forwarding as necessary to the establishment of an efficient pellet marketplace. Simply put, the industry supports sustainability requirements as long as there is one global standard they must adhere to. Having to satisfy a different sustainability standard for each market they intend to sell into would overwhelm producers, they argue. &ldquo;I think that harmonization of sustainability criteria is key,&rdquo; Ginther says. &ldquo;We think that the Sustainable Biomass Partnership is a linchpin in all of that.&rdquo; The Sustainable Biomass Partnership was established by the pellet-buying power companies in Europe as a proactive effort to simplify and unify a fractured set of sustainability criteria that were emerging across the region. &ldquo;To a certain extent, the average pellet producer need not concern themselves with the ins and outs of each one of the (European) member states&rsquo; regulations and criteria, because if the Sustainable Biomass Partnership does its job, their certification will literally be a one-stop shop,&rdquo; Walker says. For the Sustainable Biomass Partnership&rsquo;s plan to work, a sustainability framework must be built. Not only one that is workable for pellet producers, but also robust enough to satisfy each and every government introducing sustainability criteria within their policy support schemes, eliminating the need for unique, country-specific criteria. With a blend of optimism and pragmatism, Ginther says, &ldquo;If you fast forward three or five years from now, I think we will be on a harmonized certification program.&rdquo; Toward Marketplace Diversity While the pellet industry has grown impressively for nearly five solid years, it is hardly a global commodity. In fact, 80 percent of the wood pellet market can be attributed to European buyers; 15 percent to North American buyers. Industry analysts believe that those markets will see continued growth, but any forecast of a 50 million-ton-per-year pellet industry includes a prediction of the establishment and steady growth of an Asian pellet market. In fact, Walker&rsquo;s oft-cited market forecast of a 50 million-ton market by 2024 shows Asian demand growing to nearly 8 million tons per year, with nearly all of that volume going to power production. Asian governments, including policymakers in South Korea and Japan, are also working to increase the share of renewables in their energy mix and are eyeing biomass cogeneration as well. Because of its impressive potential, the Asian marketplace has been the subject of speculation and interest for years without any real activity. In 2014, pellet sales in Asia finally began to occur in volumes that suggest this new market may finally be coming to fruition.&nbsp; While no producer currently holds a long-term contract from an Asian buyer, spot market activity is picking up. In the second quarter of 2014, South Korean generators bought nearly 400,000 tons of pellets, largely from Canadian producers in British Columbia. For now, South Korean generators see pellet cofiring as the most cost-effective means of achieving their renewable portfolio targets. Can producers count on this developing market? This remains to be seen. So far, Asian buyers are reluctant to sign long-term contracts, thus making it difficult for developers of North American pellet assets to convince investors of the economic viability of new projects. &ldquo;I think the key for the Asian market over a time horizon is getting the generation companies to a place where they are comfortable undertaking long-term contracts,&rdquo; Ginther says. The Forgotten Market Lost in all of the excitement and debate about the use of pellets to produce electric power is the market that gave rise to the production of wood pellets in the first place&mdash;the heat market.&nbsp; While the use of pellets to produce electric power is the fastest-growing segment of the overall market, for now, more pellets are used in Europe to create heat than electricity, and the vast majority of pellets sold in North America are purchased to produce heat. It can be argued that the continued deployment and growth of the heating market is vital to the industry, because it carries far less risk than the power markets. In many European countries, wood pellets are the lowest-cost provider of space heat. As the industry continues along its path to 50 million tons, a strong focus on continued growth of these markets in Europe and North America can be expected. The pellet sector is in its heyday and is the envy of the broader bioenergy space for good reason. Quarter-over-quarter production growth for nearly five consecutive years is a condition every industry would like to find itself in, bioenergy or otherwise. Still, as the industry grows and momentum builds, so does opposition and scrutiny. This is a pattern the bioenergy space has seen before in the biofuels category, and will only be amplified as greater percentages of market share are won from the incumbent. Defending its position within the energy market will require the industry to continue to closely align itself with its feedstock constituents, aggressively counter misinformation and bad science, and build broad support among policymakers around the world looking for a proven means to a lower-carbon energy future.
Author: Tim Portz Executive Editor, Biomass Magazine 701-738-4969 <a href="mailto:tportz@bbiinternational.com" target="_blank">tportz@bbiinternational.com</a>

A cargo vessel is loaded with pellets at the Port of Brunswick in Georgia. This increasingly common occurrence in southeastern U.S. ports will continue as long as the industry proponents can continue to convey the unique value proposition of woody bi

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The Fibreco pellet terminal in Port of Vancouver, British Columbia, connects the provinceâ€™s pellet production capacity with global markets.  For the pellet industry to grow to forecasted volumes, the pellet markets in the Pacific Rim need to become

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The pellet industry has grown each quarter for nearly five years. For this trend to continue, however, the sector must navigate numerous challenges, not least of which is its own success.

An Industry Looks at 50

The World Resources Institute recently published a working paper, &ldquo;Avoiding Bioenergy Competition for Food Crops and Land.&rdquo; We strongly disagree with its perspective on the industrial wood pellet sector, as well as its inaccurate characterization of how the sector causes a net negative impact on global carbon emissions.&nbsp; The authors do not appear to grasp the size and scope of the forest product industry in North America, where more than a billion acres of land are forested. Most are &ldquo;working forests&rdquo; that have been managed for generations and are in a continuous growth state so that in any given year, only a small portion is harvested.&nbsp; The strategy is to have a near-continuous supply of healthy, fully grown trees that provide large-diameter logs desirable to the sawmilling sector. Most forest landowners can be considered tree farmers with crops that take 15 to 50 years to grow.&nbsp; Their primary product is sawlogs, the larger-diameter, lower sections of a tree that are used to make lumber and generate the majority of landowners&rsquo; income.&nbsp; The middle part of the tree stem, the pulpwood or pellet feedstock portion, is much less valuable. The upper tree parts have little value and are most often left in the woods. Forestry business models would fail if the whole mature tree was sold into the pellet sector. Forest landowners will never sell sawlog-quality wood to pellet mills, which cannot afford to pay for feedstock at sawlog prices. The WRI report&rsquo;s authors seem to have ignored the entire tree farming sector. Working forests are not old growth stands. They are managed to maintain or increase tree stock over time, and provide a sustainable source of materials to the forest products industries (including the pellet sector) and sustainable income to landowners. Vast, forested lands in North America have produced raw material for the wood products industries for generations. These are trees of all ages, from new trees replacing a recent harvest, to mature stands ready to provide benefits to the end-users with products including boards, cardboard, and toilet tissue.&nbsp; Those forests also provide benefits to the landowners, forestry workers and mill workers as income.&nbsp;&nbsp; Assume the annual growth rate for a working forest is 2 tons per acre, and that the landowner is managing 1 million acres. Yearly, that land produces 2 million tons of new growth, or 5,480 tons daily. If the daily maximum allowable cut is set at 4,500 tons and 50 percent of that harvest was used for pellet production, that one landowner would supply enough wood fiber to make about 430,000 tons of pellets annually. Suppose those pellets are supplied to a power plant that has converted from coal to pellets. It would consume 1,180 tons of pellet fuel daily, instead of about 900 tons of coal.&nbsp; Daily, the 5,480 tons of new growth on the 1 million acres of forestland will absorb more carbon than what is released in the combustion of those pellets.&nbsp; As long as the harvest and consumption of wood to make pellets do not exceed growth rates, no new net carbon is released.&nbsp; In fact, since the forester in our example set a significant buffer between the actual growth rate and the harvest rate, the forest is a carbon sink. The U.K.&rsquo;s Drax power station uses pellets in two of six lines.&nbsp; For the coal supply chain, from mining and extraction to delivery to Drax&rsquo;s power station, about 150 kilograms (kg) of CO2 per megawatt-hour of electricity (MWhe) is generated. Pellets produce about 45 kg/MWhe more CO2 in the supply chain.&nbsp; But unlike coal, pellets sourced from forests that are managed so growth rates exceed harvest rates are carbon neutral in combustion. Each MWhe Drax generates from coal produces almost 1,000 kg of new atmospheric CO2.&nbsp; Including the supply chain carbon footprints of coal and pellets, that is nearly six times more CO2 from coal than from pellets for the same power output. FutureMetrics does not think the WRI authors willfully ignored the facts about how wood pellets are made and used.&nbsp; The only explanation for their inaccurate analysis and conclusions on wood pellets is that they simply failed to do their research. Significant carbon benefits are provided to the power industry and all of the planet&rsquo;s stakeholders by substituting some or all of the coal used at some of the world&rsquo;s power plants with wood pellets produced from continuously renewing forests. This strategy should be an important component of any country&rsquo;s policy to address climate change. Author: William Strauss President, Future Metrics <a href="http://www.futuremetrics.com" target="_blank">www.futuremetrics.com</a> <a href="mailto:williamstrauss@futuremetrics.com" target="_blank">williamstrauss@futuremetrics.com</a>

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FutureMetric's William Strauss counters  findings of a paper released by the World Resource Institute.

WRI Wrong On Wood Pellets

Greg Smith is a guy U.S. biomass equipment and project exporters want on their side. When he founded Global Energy Solutions Inc. in 1997, the company served as a manufacturer&rsquo;s representative for multiple HVAC and boiler system product lines. Over the course of two decades, Smith developed what he describes as a niche interest in remote and rural locations, and views his role as a collaborative facilitator who works with project owners and community leaders, legislators, and citizen groups to address unusual energy and power concerns. Today, GES is a renewable energy program management firm that works closely with equipment manufacturers such as Hurst Boiler, specializing in biomass energy.&nbsp; And about 90 percent of the company&rsquo;s business is exports, according to Smith. Having a keen interest in these kinds of projects isn&rsquo;t the driving force behind GES&rsquo;s over-the-border endeavors, however. First and foremost, its support of biomass energy in general, he says. &ldquo;Except for the exchange rates, Canada is a really good place [for projects] because they support biomass very heavily. They believe in it, they understand it, and that&rsquo;s not prevalent in the U.S.&rdquo; Not surprisingly, Smith, who recently visited the U.K., names the country as another very strong export location. His company, along with Hurst Boiler, is considering opening an office overseas, he says. And perhaps not as obvious, opportunity in Africa is developing, Smith points out, largely due to the U.S.&rsquo;s Power Africa initiative. The ultimate goal of the program is to increase the number of people with access to power in sub-Saharan Africa by adding more than 30,000 MW of clean, more-efficient electricity generation. Also active is Mexico, where Smith says Hurst has done a lot of business, particularly because of the abundance of spent agave material that makes an ideal boiler fuel. And, in recent years, the country has become much easier to do business within, due to a combination of government renewable energy goals and the opening up of its previously restricted electricity market. Whether it is Canada, the U.K., Africa or Mexico, Smith says he can always count on the U.S. Department of Commerce&rsquo;s International Trade Administration renewable energy division to assist. Tooling Up Established in 2010 when President Barack Obama announced the National Export Initiative, which aimed to double exports within five years, the Renewable Energy and Energy Efficiency Export Initiative is overseen by the Office of Energy and Environmental Industries, and largely serves to make life easier for exporters of renewable U.S. goods and services. &ldquo;They&rsquo;ll go to bat for us&mdash;they&rsquo;re very helpful,&rdquo; Smith says.&nbsp; &ldquo;As an example, sometimes we&rsquo;ll go to different countries and the requirements might be different on the certification of the equipment, say European Conformity (CE) in the U.K. or EU, or the British standard that is in play in some areas. We just did a project in New Zealand and they had a mix of British standard and ASME, which is very odd. Meeting regulations isn&rsquo;t the issue&mdash;it&rsquo;s trying to decipher them, it can take a lot of time. We look to the trade group to help us out, and they usually do. &rdquo; While the department declined an interview with Biomass Magazine citing a reason of short staffing, Cora Dickson, senior international trade specialist for the OEEI, says that an updated version of Renewable Energy Top Markets Study&mdash;a market assessment tool for U.S. exporters that was released in February 2014 and included analysis for ethanol and wood pellet exports&mdash;was expected to be available in May. This time around, according to Dickson, it will be split into two different reports&mdash;one for electricity and one for fuels. And another new tool for exporters is currently in development&mdash;an interactive app that will serve as a mobile business directory for U.S. clean energy exports. The app will highlight sustainability improvements at U.S. diplomatic missions and provide potential business partners around the globe with a searchable interface to find information on U.S. technology and service providers. Biofuels and renewable energy equipment are among goods and services the app will showcase. Often working closely with the OEEI is another resource renewable energy exporters like Smith and Hurst might take advantage of&mdash;the Import-Export Bank of the U.S. The official export credit agency of the U.S. government, Ex-Im finances the export of U.S.-made goods and services with a special focus on renewable energy, including biomass, wind, solar and hydro. Ex-Im stands ready to help U.S. exporters, says Craig O&rsquo;Connor, director of Ex-Im&rsquo;s Office of Renewable Energy &amp; Environmental Exports. &ldquo;We provide financing when financing otherwise wouldn&rsquo;t be available on economically beneficial terms.&rdquo; Besides direct loans, Ex-Im also provides loan guarantees, export credit insurance, and, particularly helpful to small companies needing cash to build their product, working capital. &ldquo;If you&rsquo;re a small business needing that working capital and your local bank is nervous because the source of payment is an overseas sales contract, Ex-Im can give the bank a guarantee to make a loan to the U.S. exporter to build out the system for export,&rdquo; O&rsquo;Connor says. While Ex-Im more commonly aids U.S. exporters, it also serves to provide assistance to international buyers of U.S. goods and services. In that case, on top of assurance that U.S. technology providers have been identified&mdash;such as harvesting equipment and boilers&mdash;buyer creditworthiness confirmation, and identification of the type of financing desired, location is an immediate detail Ex-Im will evaluate. &ldquo;We do have a country limitation schedule,&rdquo; O&rsquo;Connor says. &ldquo;This shows where we&rsquo;re open, and where we&rsquo;re not. On biomass power projects specifically, O&rsquo;Connor says the challenge is that they tend to be small. &ldquo;An [effective] approach would be to structure the project like you would the sale of machinery,&rdquo; he advises. &ldquo;Don&rsquo;t look at it as project finance. The sponsor might say, &lsquo;We want to repay the loan based on sales of electricity,&rsquo; but that becomes tough, particularly to prove that they have a supply of biomass, which becomes difficult to do over long periods. Secondly, with smaller-scale projects, there are also due-diligence costs that can also be incurred&mdash;financial due diligence, legal due diligence, Ex-Im bank will hire its own engineer to tell us about project specifics&mdash;and these transaction costs&nbsp; work against these smaller-scale projects. &ldquo; If the international buyer is creditworthy and&nbsp; is willing to take on the project risk but could use financing for the equipment to get&nbsp; things going, O&rsquo;Connor recommends structuring it this way&mdash;as a trade finance or corporate finance loan verses a project finance loan. &ldquo;It&rsquo;s probably more advantageous,&rdquo; he explains. On renewable exports in general, a current challenge is the strengthening U.S. dollar, O&rsquo;Connor says, and that&rsquo;s something Smith can attest to&mdash;as of mid-December, the U.S. dollar index was trading just under 89 cents, the highest level since March 2009. &ldquo;It helps most Americans, but it doesn&rsquo;t help exporters,&rdquo; Smith says. &ldquo;When it&rsquo;s strong against the euro or British pound, it means our product is a lot more expensive to buy. In Canada, some projects there may get stopped or cancelled because a year ago, Canadian dollar was on par or $1.05, now it&rsquo;s 77 cents. You want the dollar to do well, but when it costs more to buy a U.S. product than from somewhere else, that&rsquo;s a detriment.&rdquo; &ldquo;It does get tougher,&rdquo; O&rsquo;Connor reiterates. &ldquo;If you&rsquo;re an international buyer and all of a sudden you have to spend more to buy the machine you want from the U.S., that exporter may lose the sale or face lowering the price.&rdquo; While Ex-Im&rsquo;s biomass energy financing is quite small in comparison to wind or solar, O&rsquo;Connor points out that the bank is demand-driven and available. &ldquo;We don&rsquo;t say, &lsquo;here&rsquo;s your line of credit for the year&rsquo;; we stand ready to help, whether it&rsquo;s the export of wood pellets or machinery. If you look at the trade numbers&nbsp; in terms of renewables, solar has been the biggest followed by wind, and biomass tends to be smaller. In terms of machinery,&nbsp; I&rsquo;m not sure that we export more than $50 million a year, but we&rsquo;d love to do more, we definitely would.&rdquo; Smith highlights the benefits exporting has on the U.S. economy&mdash;in particular, jobs. &ldquo;I&rsquo;ve heard some different metrics as to how increasing exports as the fastest way to increase [jobs]&mdash;dealing with existing companies and increasing their output&mdash;and I think that&rsquo;s definitely true,&rdquo; he says. &ldquo;If you look at an old-line company like Hurst, they never used to export at all. They began as a regional manufacturer when they started, grew substantially, and is one of the last twenty-some boiler companies left in the U.S. as far as industrial and commercial, and really close to 50 percent or more exports.&rdquo; &ldquo;A lot of places, most places we've been, love U.S. products,&rdquo; Smith adds. &ldquo;They may say they don&rsquo;t like certain things about our country, but our products are tried and true and have a tremendous reputation, and that helps greatly when we&rsquo;re doing business overseas.&rdquo; Author: Anna Simet Managing Editor, Biomass Magazine 701-738-4961 <a href="mailto:asimet@bbiinternational.com" target="_blank">asimet@bbiinternational.com</a>

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A Hurst unit is transported to a wharf to be shipped to New Zealand.

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About 90 percent of Global Energy Solutions' business is exports, such as this project in the Ukraine with Hurst Boiler.

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Resources made available by the International Trade Administration equip companies with the tools, financing and knowhow required to increase renewable exports.

Empowering Exporters

Investing 1.5 billion euros ($1.64 billion) in NExBTL refining capacity, importing waste-based and virgin feedstock from around the world, and exporting renewable diesel to many of those same overseas markets are capital-intense endeavors&mdash;but they&rsquo;re also highly profitable. Last year, Neste Oil&rsquo;s operating profit for its renewable diesel division was 238 million euros, says Kaisa Hietala, executive vice president of renewable products for Neste Oil Corp. &ldquo;That&rsquo;s around 40 percent of Neste Oil Group&rsquo;s total profit,&rdquo; she tells Biomass Magazine. The company produced 2.1 million metric tons (more than 680 million gallons) of renewable diesel last year from its two NExBTL refineries in Singapore and Rotterdam, each of which has a nameplate capacity of 800,000 tons per year, and its Porvoo oil refinery in Finland, where two 190,000-ton-per-year NExBTL units were commissioned in 2007 and 2009. The Singapore and Rotterdam NExBTL refineries came online in 2010 and 2011, respectively. All three sites can produce biojet fuel and renewable diesel. In 2014, Neste Oil&rsquo;s average run rate for NExBTL was an impressive 98 percent. While 2014 was a very profitable year for the company&rsquo;s renewable diesel business, it couldn&rsquo;t match the record year of 2013 from which the division&rsquo;s comparable operating profit was 273 million euros. Feedstock Procurement As the world&rsquo;s largest producer of renewable diesel, Neste Oil&rsquo;s reach for adequate volumes of feedstock must be truly global, particularly as the company positions itself to rely more heavily on waste- and residue-based inputs as a result of political directives in destination markets to reduce greenhouse gas emissions and indirect land use change. In 2014, Africa and Antarctica were the only two of the world&rsquo;s seven continents from which Neste Oil did not secure renewable feedstock. &ldquo;We have successfully searched for waste and residue volumes for our production, and last year their share was already over 60 percent,&rdquo; Hietala says. Of the 2.1 million tons of renewable diesel produced last year, 1.3 million tons were from waste- and residue-based materials, or roughly 62 percent of its feedstock consumption. That&rsquo;s up from 52 percent in 2013, and 35 percent in 2012. In 2014, the company sourced its waste and residues such as animal fat, waste fish fat, palm and other vegetable oil fatty acid distillates, distillers corn oil, spent bleaching earth oil and other waste-based materials from Australasia, South America, Europe, Southeast Asia and North America. Used cooking oil became a part of the company&rsquo;s feedstock base for the first time last year. &ldquo;This is work that needs to be done on several fronts, as new feedstock must be validated for our pretreatment and production process, and relevant volumes must be found,&rdquo; Hietala says. Neste Oil&rsquo;s pretreatment process is based on a bleaching unit to reduce impurities that would otherwise foul the catalyst in the hydrotreatment unit. The bleaching process begins with the addition of an acid to form a salt, and then removal of that salt by precipitation. The feedstock is subsequently fed through silica or bleaching earth, which act as adsorbents for further reduction of impurities. &ldquo;Then there are vendor audits and traceability,&rdquo; she says. &ldquo;As an example, in the case of waste animal fat, we source on five continents and are clearly the largest buyer in the world. Our aim is to be able to use only wastes and residues by the end on 2017 if we so choose.&rdquo; Historically, Neste Oil has relied on crude palm to make its renewable diesel, but as its use of waste feedstocks increases, its reliance on palm oil has waned considerably. In 2012, 65 percent of Neste Oil&rsquo;s feedstock was palm. That dropped to 47 percent in 2013 and 38 percent last year. In 2014, the company sourced its palm oil from 212 plantations in Malaysia and Indonesia. Palm oil is one of the most contentious feedstocks for biofuel, particularly in less developed countries where there are concerns of deforestation to establish palm plantations that provide much-needed economic relief where there would otherwise be little. Simo Honkanen, senior vice president of sustainability and public affairs for Neste Oil, says the fuel industry is the most regulated of all using palm oil. &ldquo;Regulations are setting strict requirements on traceability, environmental performance, land use, greenhouse gas emissions and reporting,&rdquo; he says. &ldquo;Our palm oil supply chain is fully certified and it is audited on a regular basis by external auditors. All our suppliers have to pass a sustainability due-diligence assessment before they sign a supply contract with Neste Oil. We review their land use history, production procedures and certification status, as well as their policies concerning deforestation. We only buy from old estates. Neste Oil believes in continuous improvements. Therefore, we have a dedicated team only focused on palm oil sustainability work with our producers. This work is much easier for us because we know the supplying estates in detail.&rdquo;&nbsp;&nbsp; Honkanen says Neste Oil&rsquo;s sustainability system is based on careful vendor selection, traceable supply chains, third-party auditing, legal requirements and continuous development. &ldquo;We comply with U.S. EPA requirements as well as EU biofuels sustainability requirements,&rdquo; he says. &ldquo;We are actively promoting sustainability in the Roundtable on Sustainable Palm Oil and contributing to developing legislation on sustainability issues.&rdquo;&nbsp; The company&rsquo;s three renewable diesel production facilities in Singapore, Rotterdam and Finland use different feedstocks at different times, Hietala says, and the suppliers and countries from which those plants import feedstock varies. &ldquo;We optimize our feedstock according to price and markets,&rdquo; she says. &ldquo;Our NExBTL technology is very flexible and we can use a dozen different feeds. On top of product quality, this is our key competitive edge.&rdquo; Export Markets Europe and North America are Neste Oil&rsquo;s key markets, &ldquo;but we are actively looking into other markets too,&rdquo; Hietala says. Europe receives the lion&rsquo;s share of NExBTL, followed by North America and Asia-Pacific. &ldquo;Our sales volume increased by 9 percent from the previous year,&rdquo; says Neste Oil&rsquo;s President and CEO Matti Lievonen. &ldquo;A significantly higher share, 73 percent of the volume, was allocated to the European market in 2014. The volume allocation reflected the margin situation and continued regulatory uncertainty in the U.S. The decision to reintroduce the U.S. Blender&rsquo;s Tax Credit for 2014 was confirmed in late December. It had almost a 90 million euros positive impact on the segment&rsquo;s comparable operating profit.&rdquo; Of the nearly half a billion gallons of NExBTL entering Europe last year, Hietala wouldn&rsquo;t disclose which EU countries were the largest recipients. &ldquo;Neste Oil is an active player in many markets in EU,&rdquo; she says. &ldquo;We have estimated that NExBTL-blended in fossil diesel is being used by several million customers EU-wide.&rdquo; Hietala says about one-fifth of Neste Oil&rsquo;s NExBTL production quantities for 2014 was shipped to North America. This equates to roughly 136 million gallons. &ldquo;Both the U.S. and Canada are our markets,&rdquo; she says, not disclosing how much product goes to Canada versus the U.S. The incentive for Neste Oil to send its fuel to the U.S. is strong, given the added economic incentive of generating renewable identification numbers (RINs) under the federal renewable fuel standard (RFS). Moreover, for NExBTL product entering the U.S., the California market specifically is an even stronger lure due to the added incentive of low carbon fuel standard credit generation. Again, Heitala would not say how much product sent to North America is destined for the California market. &ldquo;We do not disclose these figures, but as a leading state decarbonizing its transport, California is very important also to us,&rdquo; she says. Palm-based renewable diesel does not qualify for D4 biomass-based diesel RIN generation in the U.S. because EPA has not determined that it meets the 50 percent GHG reduction threshold required to satisfy qualification as a biomass-based diesel. Palm-based diesel does, however, qualify for D6 renewable fuel generation as it satisfies the 20 percent GHG reduction threshold for that category. Neste Oil is registered to produce &ldquo;non-ester renewable diesel&rdquo; with a RIN equivalence of 1.7 for both D4 and D6 RINs, depending on the feedstock. When asked how much of its NExBTL entering the U.S. qualified for D4 RINs versus D6 RINs, Hietala would only say, &ldquo;Our primary market in the U.S. has been and is the D4 market.&rdquo; EPA&rsquo;s 2014 EMTS data shows that nearly 320 million gallons of non-ester renewable diesel qualified to generate D4 RINs in 2014, and more than 151 million gallons of non-ester renewable diesel qualified to generate D6 RINs. Some of the D4 non-ester RINs were generated domestically by Diamond Green Diesel (130 MMgy capacity) in Norco, Louisiana, and Renewable Energy Group at its Geismar, Louisiana, biorefinery (75 MMgy capacity). The rest was from Neste Oil and other importers. Some sources have suggested to Biomass Magazine that most, if not all, of the non-ester renewable diesel generating D6 RINs came from Neste Oil&rsquo;s palm-based NExBTL but the numbers don&rsquo;t quite add up, and there is no way for this to be determined with certainty. Neste Oil&rsquo;s first shipment of its NExBTL renewable diesel to the U.S. landed in 2012. According to a corporate press release issued April 26, 2012, the fuel qualified as an advanced biofuel and was produced at its Porvoo refinery in Finland from waste fats. &ldquo;We are very pleased to see that legislation on renewable fuels and our ability to meet the import regulations for these types of fuels are progressing in various markets,&rdquo; said Matti Lehmus, Neste Oil&rsquo;s executive vice president of oil products and renewables, in 2012. &ldquo;This enables us to participate and contribute to the greenhouse gas reduction efforts around the world.&rdquo; &ldquo;It is a demanding and time-consuming process to get these certifications for feedstock, supply chain and refineries,&rdquo; Hietala says. &ldquo;We started the work early and have been cleared for them for over two years now. The registration process is different for EU and the U.S., and therefore a global player like Neste Oil is required to meet specific requirements for each cargo we sell. Differences occur in areas like the approval process, documentation, reporting, certification systems and more.&rdquo; She says renewable fuels programs &ldquo;create the market, so they are important,&rdquo; and help determine into which markets the company sells its renewable product. &ldquo;Countries and regions have them in order to fight climate change, and high-quality renewable fuels such as our NExBTL renewable diesel are readily available for this cause.&rdquo; As far as how important tax incentives are in playing a role in determining export markets, she says, &ldquo;We do not speculate on tax incentives&mdash;they either exist or they don&rsquo;t.&rdquo; Neste Oil plans to increase its renewable diesel production capacity to 2.6 million tons by 2017. &ldquo;This is mainly debottlenecking some parts of our process and learning to operate the refineries better,&rdquo; Hietala says. &ldquo;No major investments are needed.&rdquo; She adds that the company is constantly looking for new markets, and it is a strong possibility that new applications, such as low-level blends of biojet fuel or biobased chemicals, will increase the demand of NExBTL &ldquo;considerably.&rdquo; Author: Ron Kotrba Senior Editor, Biomass Magazine 218-746-8347 <a href="mailto: rkotrba@bbiinternational.com">rkotrba@bbiinternational.com</a>

Neste Oil shipped its first cargo of NExBTL renewable diesel to the U.S. in 2012 where it qualified as an advanced biofuel and D4 RIN generation under the federal renewable fuel standard.

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Neste Oil is leveraging waste- and residue-based feedstocks more and more to comply with increasingly stringent political directives in its destination markets. Last year, 62 percent of its renewable diesel was produced from waste-based materials.  

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Neste Oilâ€™s Rotterdam NExBTL production facility has a nameplate capacity of 800,000 tons per year and came on line in 2011 as its newest renewable diesel facility. 

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Simo Honkanen, Neste Oilâ€™s senior vice president of sustainability and public affairs, says of all the industries that use palm oil, the fuel industry is the most heavily regulated. He says all its palm suppliers must pass a sustainability due dili

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Neste Oil imports feedstock from five continents to process renewable diesel in Singapore, Rotterdam and Finland, then ships its fuel to destination markets in the EU, North America and Asia-Pacific. 

Feedstock  Importer, Renewable Diesel Exporter

For the ethanol industry, 2015 is about &ldquo;moving ahead and moving faster,&rdquo; Growth Energy Co-chairman Jeff Broin told attendees in his opening remarks at Growth Energy's sixth annual Executive Leadership Conference Feb. 26-27 in Phoenix. Broin outlined the current state of the industry, pointing out that producers in 2014 saw the best margins in some time. He also thanked the industry for responding to the call to fight back on the U.S. EPA's proposed write-down of the renewable volume obligations. &ldquo;Thousands of letters poured into the EPA,&rdquo; he said. &ldquo;And EPA heard.&rdquo;&nbsp; Following Broin's opening remarks, Growth Energy CEO Tom Buis highlighted the accomplishments of the industry this past year, saying the number of retailers offering E15 has doubled. &ldquo;It&rsquo;s only a matter of time before 2015 becomes the year of E15,&rdquo; he said. Buis described E15 as the low-hanging fruit that promises to bring more ethanol into the marketplace. Other priorities for the year ahead will include defending the renewable fuel standard (RFS) and engaging with members of Congress and candidates. There will be a particular focus on Iowa, he added. &ldquo;We want to get them on the record regarding their support for the RFS.&rdquo; Progress toward cellulosic ethanol commercialization was the focus of another panel, comprised of the leadership of the four major Corn Belt projects. Jeff Lautt, chairman of Poet-DSM Advanced Biofuels described the company's 25 MMgy Project Liberty in Emmetsburg, Iowa, that converts 770 tons of corn stover per day. &ldquo;We've demonstrated when running full out, that's one round bale per minute,&rdquo; he said. Feedstock collection, an area where the company anticipated having issues, has gone smoothly, he reported. Last year, stover was collected from 175,000 acres in a three-week time frame. The plant itself has been working through an unanticipated issue with the flow of biomass in the pretreatment side. &ldquo;We've been working with our partner Andritz through the challenges,&rdquo; he said. &ldquo;We knew it was going to be an extended commissioning period.&rdquo; Bill Feehery, president of DuPont Industrial Biosciences, reviewed progress at its commercial-scale cellulosic ethanol facility nearing completion at Nevada, Iowa. DuPont sees cellulosic ethanol as the first step in a long-term strategy, he said, &ldquo;which is the beginning of a bioeconomy where we'll replace oil with sugar.&rdquo;&nbsp; The company has an agreement in place with Procter &amp; Gamble to providecellulosic ethanol for use in Tide detergent, and the company is developing a project in Macedonia ultimately aimed at serving Europe with both cellulosic biofuel and bioplastics. Chris Standlee, executive vice president of global affairs with Abengoa Bioenergy, put some numbers to the cost reductions being realized. Since 2010, Abengoa has seen its proprietary enzyme costs drop from $1.85 per gallon to 50 cents per gallon in 2014. Yeast costs have dropped from 10 cents to 9 cents per gallon between 2010 and 2014, while yields have risen from 55 gallons to 75 gallons of ethanol per ton of biomass. The company expects to see further improvements in the next few years. &ldquo;The Hugoton startup has gone very well,&rdquo; Standlee said of the company's first commercial-scale facility in Kansas. "So far, we've just have minor mechanical issues that we've been able to overcome." Abengoa's second planned facility in Brazil just received a letter of intent for financing from BNDES, the Brazilian development bank, he reported, and the company is actively pursuing a waste-to-ethanol project in a major U.S. city. &ldquo;We're also looking to develop other products such as butanols and acids,&rdquo; Standlee said. Author: Susanne Retka Schill Senior Editor, Biomass Magazine 701-738-4922 <a href="mailto:sretkaschill@bbiinternational.com" target="_blank">sretkaschill@bbiinternational.com</a>

Growth Energy CEO Tom Buis says priorities for the next year include defending the renewable fuel standard and engaging with Congress.

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Ethanol advocate and retired U.S. Army General Wesley Clarke is co-chairman of Growth Energy.

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Poet founder and Growth Energy Co-chairman Jeff Broin discusses successes the industry experienced over the past year.

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Poetâ€™s Jeff Broin answers questions from brothers Darren and Brian Hefty in a live broadcast of AgPhD Radio.

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Novozymesâ€™ donated enzymes netted $210,000 for Growth Energyâ€™s silent auction fundraiser.

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Abengoa Bioenergyâ€™s Christopher Standlee, DuPont Industrial Biosciencesâ€™ Bill Feehery, Quad County Corn Processorsâ€™ Delayne Johnson and Jeff Lautt of Poet-DSM Advanced Biofuels discuss progress toward cellulosic ethanol commercialization.

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Biomass Magazine Executive Editor Tim Portz introduces the cellulosic ethanol developers speaking on the Next 
Generation panel.

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In his keynote address, U.S. Secretary of Agriculture Tom Vilsack asks for the ethanol industry's support for the Trans-Pacific Partnership.

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Growth Energy's 6th Annual Leadership Conference made evident that progress over the last year has trumped challenges.

Riding it Out

How often do worries about low gas prices, chaos over impending climate regulations and uncertainty over just about every policy in Washington, D.C., keep entrepreneurs in the algae industry up at night? To figure it out, we asked them. Every year, the Algae Biomass Organization surveys its members and industry experts about their expectations for the future of algae biomass and related products. This year, we heard from more than 230 people in all corners of the industry and found surprisingly strong&mdash;and broad&mdash;optimism about the coming commercialization of a new wave of technologies. Large majorities feel that algae fuels, feeds, plastics and other products will be price-competitive with incumbent products within the decade, if not sooner. Producers of algal biomass and associated products report that their production and hiring across departments would increase in both the short and long term. A majority report strong interest from elected officials, and the vast majority reported that federal policy could be a potent accelerant for efforts to commercialize algae-derived products that can be made domestically and sustainably. One figure I found particularly compelling was that 91 percent of algal fuel producers believe that they could get prices below $5 per gallon by 2020. That may seem like an uncompetitive price now, but if the recent drop in oil prices proves anything, it is that what we pay at the pump can change remarkably fast. I think the $5-mark will be very close to price competitiveness in 2020, and, ultimately, it will be the downward trend of algae prices that attracts the interest of big players in the fuel markets. After all, fossil oil reserves will only diminish, while biomass from algae keeps on growing. Applications for algae biomass beyond fuel and energy were viewed even more favorably; 93 percent of respondents believe algae-derived plastics and chemicals will be cost-competitive by 2020, and 97 percent of respondents say the same for algae-based feeds. Some are already competing for market share. You don't need to look any further than the nutritional aisle of the local supermarket, where algal Omega-3s are taking up more and more space. When industry participants are asked what they think about the future, nothing but enthusiasm is expressed by these dedicated entrepreneurs and scientists who are tackling some of the world's biggest challenges, creating new jobs and new sources of fuel, feed and other products we need to power a modern economy. You can visit ABO's website for an executive summary of our survey's findings.&nbsp; Take a look, and see for yourself that the algae industry is keeping its head down and working hard, regardless of the uncertainties that are piled on by petroleum markets or fickle policy deliberations. Full steam ahead. Author: Matt Carr Executive Director, Algae Biomass Organization <a href="http://www.algaebiomass.org" target="_blank">www.algaebiomass.org</a> 877-531-5512

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Algae Biomass Organization's Matt Carr discusses the algae industry's confidence in its ability to producie biofuel that is price-competitive with oil.  

Today's Uncertainties No Match For Tomorrow's Promise

At the turn of the 21st century, Germany became a leader in the biogas industry, as aggressive policy framework and sudden business opportunities drove many biogas companies to open headquarters in the country. At its peak, the industry had over 8,000 installations. According to the U.S. EPA, the net number of cellulosic biofuel or D3 renewable identification numbers (RINs) generated in 2014 was nearly 33 million. EPA&rsquo;s renewable fuel standard (RFS2) data for the total production of biogas-based transportation fuel in 2014 by total volume in gallons and quantity of RINs was nearly 15 million for compressed natural gas (CNG) and over 17 million for liquid natural gas (LNG). In December alone, 8.5 million D3 RINs, the highest reported number for any single month in 2014, were generated. Needless to say, biogas-to-fuel project activity is increasingly occupying the industry. Many, if not all, developing biogas projects that chose transportation fuel over power as the end product did so because of the opportunity to generate RINs. In fact, some say the reason was, &ldquo;100 percent,&rdquo; says Mike Silva, civil engineer and project manager with CR&amp;R Environmental Services. &ldquo;RINs and low carbon fuel standard credits really helped us make the decision to go to transportation fuel versus electricity.&rdquo; The problem is that policies, as they often do, changed over the past decade in Germany, and opportunities there began to quickly dry up. This has resulted in many of these companies looking to North America, a place where the biogas industry is still budding, for new work. Over the past year or so, this has resulted in an influx biogas technology and development companies headquartered outside of the U.S. to actively pursue and win opportunities throughout North America. GICON Bioenergie GmbH, headquartered in Dresden, Germany, invests heavily in R&amp;D in order to develop new technologies in a wide variety of sectors, including offshore wind, algae production, ecological surveying and environmental remediation. Therefore, the company is less susceptible to downturns in one particular market, since it is not dependent on one technology or feedstock and has managed to avoid the fate that has befallen some of its competitors in the German market after the renewable energy law expired.&nbsp; &nbsp;&ldquo;The expanse of opportunities in the U.S. and Canada is definitely a factor in our decision to pursue work in North America, as is the relative weakness in the German biogas market at the moment,&rdquo; says Wayne Brown, vice president of GICON Engineering&rsquo;s North American operations. &ldquo;For GICON, though, the main reason to enter the North American market was not just related to anaerobic digestion. The U.S. and Canada are potential markets for several of our technologies and processes, and the decision to enter this market was based on the overall suite of technologies that could find traction there.&rdquo; The company had initial success in the North American biogas market, in 2009 finding a project development partner with whom it worked successfully and exclusively until 2013. &ldquo;The transition from exclusive technology provider to independent provider has taken some time, but we have since developed a long list of firms with whom we pursue individual projects,&rdquo; Brown says. &ldquo;There are upsides and downsides to both types of cooperation and its impact on pursuing and winning projects, but I think after almost six years in the North American biogas market, we have established ourselves as one of the leading providers of anaerobic digestion technology.&rdquo; Dairies And Digesters Some states have programs and policies to provide financial incentives to dairymen to build a digester, and German biogas companies are capitalizing on these opportunities. For instance, New York has recently awarded New York State Energy Research Development Authority grants for digesters, while Vermont has passed laws that encourage dairy farmers to make use of them. Steve McGlynn, U.S. general manager for the Germany-based EnviTec-Biogas AG, notes that, historically, the introduction of anaerobic digesters on dairy farms has been plagued with inadequate designs and a less-than-full understanding of what is required to design, construct and manage a digester. With the arrival of the German firms and their vast experience with anaerobic digesters, he has noticed an increase in interest and confidence in the technology, and the market has improved over the past 24 years. &ldquo;Dairy men are very cautious and, for the most part, have heard more negative comments than positive ones from their colleagues,&rdquo; McGlynn says. &ldquo;Two primary problems have been the plug-flow design resulting in settling of sand and grit in the digesters and inadequate digester designs to reduce the levels of hydrogen sulfide in the biogas,&rdquo; he says. &ldquo;The EnviTec-Biogas digesters are designed to prevent settling and reduce hydrogen sulfide to acceptable levels (less than 500 ppm). Of course, a major impact on future projects is the price of milk. When the price of milk is above $20 per hundredweight, we see more interest as the farms have money to invest in capital projects.&rdquo; In the U.S., Envitec-Biogas&rsquo; focus is dairy farms with an emphasis on codigestion of cow manure and food waste. The company has a full-service division and is open to designing, building and operating digesters. &ldquo;We have over 300 employees worldwide with great support from specialists in biology, chemistry, engineering and agricultural systems,&rdquo; McGlynn says. &ldquo;Delivering a top-quality digester and assisting the owner in operating his or her digester is our specialty.&rdquo; View From Canada Of course, not all companies jumped on the Germany bandwagon. PlanET Biogas Solutions Inc., based in St. Catharines, Ontario, entered into the North American market early in 2006 as part of a fundamental diversification strategy. &ldquo;It was always our intent to stay in North America, regardless of the biogas climate in Germany,&rdquo; says Derek Hundert, general manager for PlanET Biogas Solutions Inc. &ldquo;Certainly, the downturn in the European markets has increased the focus here, but we were already established in North America before the urgency in the German market.&rdquo; When the company began operations and pursued biogas work in North America, its main challenge was selling the concept of biogas and bringing this new industry to the general public. &ldquo;Recently, public perception of biogas has become more familiar,&rdquo; Hundert says. &ldquo;Biogas is becoming more of a household name, and we are now starting to further refine ourselves to be able to speak to individual differences between biogas companies and biogas opportunities. The biogas industry has more momentum now, more interest. We are trying to reach out to less people these days, as more people are coming to us.&rdquo; Key To North America According to McGlynn, one of the chief ways to be successful in the U.S. is understanding which states have the incentives for renewable energy from digesters, and a big part of that is understanding the dairy business and the dairy culture.&nbsp; &ldquo;Networking is the most important aspect,&rdquo; he says. &ldquo;Barn chatter communication is faster than the cell phone. What is said about your company and your product between dairy men is critical.&rdquo; McGlynn believes investing in the U.S. is a savvy move, but that results are not paying off as fast as the company hoped. Hundert agrees that a lot of opportunities in the U.S. biogas market are made through establishing networks and getting in front of large groups to show the viability of the technology as a means to solve waste problems. &ldquo;When it comes to winning the work, a lot of it derives from having proven technology and demonstrating we have a mastery of applying and servicing that technology,&rdquo; he says. &ldquo;Our roots are based in biogas from agricultural sources. PlanET has grown up with on-farm plants, and ag comprises the majority of our applications to date. We don&rsquo;t prefer any approach over another, aside from we like plants that really do solve waste problems and have the best chance for long-term success.&rdquo; On The Job Currently, Envitec-Biogas is working actively in the Northeast with three potential projects in the grant application phase and three more projects in the feasibility phase. These are spread out around the country in areas in California, Nebraska, Maryland, Wisconsin and the Northeast. &ldquo;We completed our first project in 2014 at Lawnhurst Farms in Stanley, New York,&rdquo; McGlynn says. &ldquo;It was a complete mix digester codigesting food waste and cow manure. The project won the American Biogas Project of the Year,&rdquo; McGlynn says. In December, the company installed its second complete mix digester for Noblehurst Dairy in Linwood, New York. &ldquo;It was a unique dairy operation that included the dairy farm, our digester and a milk processing plant,&rdquo; he says. In the U.S., PlanET Biogas has several on-farm applications in various stages of development, from preliminary concept and detailed engineering to construction. The majority of its interests are currently in the Northeast. The company is also moving into wastewater and industrial applications in both the U.S. and Canada. &ldquo;We recently completed our second project in Alberta, Canada,&rdquo; Hundert says. &ldquo;The project was based on a large potato farming operation, and this was a new application of our technology in some respects. It will open new doors for us into large-scale produce farming.&rdquo; For biogas production, GICON has developed the patented (in both the U.S. and Canada) GICON Process for high solids anaerobic digestion, and offers wet reliable fermentation technologies with dozens of references as well.&ldquo;We are currently working with partners to develop projects in New England, California, and several locations in Canada,&rdquo; Brown says. &ldquo;We are also laying the foundations to introduce the North American market to other renewable energy technologies that we have developed, including the GICON SOF (floating offshore foundation)&mdash;floating offshore foundation for wind turbines, and the GICON PBR, an algae photobioreactor.&rdquo; Perhaps its most noteworthy project was the Harvest Energy Garden in Richmond, British Columbia, which, at the time of its commissioning, was one of the first industrial-scale facilities in North America.&nbsp; &ldquo;There is no question that the successful completion of commercial projects provides a bump in terms of competitive positioning for future projects,&rdquo; he says. &ldquo;Especially with regard to HSAD plants for organic waste, GICON was willing to take the risk and was one of the first biogas companies to enter the North American market as the industry was just getting off the ground in 2009.&rdquo;&nbsp;&nbsp; Political Climate Every political environment shifts; this is normal on federal and state levels. For PlanET Biogas Solutions, Hundert says, what gives it confidence is the public opinion and perception that this is something that they should be pursuing. &ldquo;The masses are looking for renewable clean energy, and this gives us confidence at a macro level,&rdquo; he says. When it comes to the current policy environment in the U.S. and Canada, Mc-Glynn feels the jury is still out on both countries. &ldquo;The political power will determine if the U.S. and Canada provide support for renewable energy, carbon emission reductions and reduction of food waste disposal in landfills,&rdquo; he says. &ldquo;If the political party in control does not believe climate change is occurring or due to human activity, then the likelihood of new opportunities for renewable energy are lessened dramatically.&rdquo; Final Say Whether coming from Germany or elsewhere, investing in biogas in the U.S. and Canada has become a must-do proposition for most biogas companies. &ldquo;Investing in North America is absolutely paying off,&rdquo; Hundert says. &ldquo;We now are working on building our 14th biogas plant and have contracts in-hand to build several other facilities. Our early investment has allowed us to establish the foundation of a North American presence, which is paying off in our ability to develop the market.&rdquo; Brown says despite the relative lack of commercial plants, there are several established biogas companies&mdash;many of which are from Germany&mdash;that, like GICON, are investing significant capital into penetrating the North American market, and some have been successful. &ldquo;Therefore, having the advantage of a reference facility is no guarantee of competitive success for future projects, and GICON will continue to rely on the intrinsic advantages of the technology and the effectiveness of our partners for acquiring projects,&rdquo; he says. &ldquo;There are some states and provinces that have very progressive policies toward organics diversion and the use of renewable energies, and those are the locations where we are focusing our business development resources. As the number of successful projects demonstrating the technical and economic efficacy of anaerobic digestion as a waste management tool grows, the legislative climate will improve in other areas of North America as well. How long that will take is anybody&rsquo;s guess.&rdquo; Author: Keith Loria Freelance Writer, Biomass Magazine <a href="mailto:freelancekeith@gmail.com" target="_blank">freelancekeith@gmail.com</a>

Biogas companies from around the world are pursuing opportunities in the U.S. and Canada.

April 2015

Business Briefs

Business Briefs

Columns

Data Breach: No Company Immune

E15 A Winner For â€¨ Retailers, Consumers

Big Biofuel Implications In LCFS Readoption

If It Ain't Broke, Fix It Until It Is

Being First Is Risky

Failure Is Not An Option

More Than Simply Numbers

Public-Private Partnerships Enable Project Success

The UK's Untapped Market Potential

WRI Wrong On Wood Pellets

Today's Uncertainties No Match For Tomorrow's Promise

Proving Biomass Power Economics

Playing A Global Game

Featured

Yearning For New Yeasts

Fired Up â€¨By Lignin

The 2014 D3 RIN Leap—For Biogas

Green Expectations

Navigating the Sea of Approval

An Industry Looks at 50

Empowering Exporters

Feedstock Importer, Renewable Diesel Exporter

Riding it Out

All Roads Lead to North America

Contributions

Attract a Megaproject to a Community Near You

April 2015.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

Columns

Data Breach: No Company Immune

E15 A Winner For â€¨ Retailers, Consumers

Big Biofuel Implications In LCFS Readoption

If It Ain't Broke, Fix It Until It Is

Being First Is Risky

Failure Is Not An Option

More Than Simply Numbers

Public-Private Partnerships Enable Project Success

The UK's Untapped Market Potential

WRI Wrong On Wood Pellets

Today's Uncertainties No Match For Tomorrow's Promise

Proving Biomass Power Economics

Playing A Global Game

Featured

Yearning For New Yeasts

Fired Up â€¨By Lignin

The 2014 D3 RIN Leap—For Biogas

Green Expectations

Navigating the Sea of Approval

An Industry Looks at 50

Empowering Exporters

Feedstock Importer, Renewable Diesel Exporter

Riding it Out

All Roads Lead to North America

Contributions

Attract a Megaproject to a Community Near You

April 2015