Ethanol Producer - June 2012

INSIDE: WOMEN BREAK GROUND IN NEXT-GEN PROJECTSJUNE 2012

An American-Style, Corn-Ethanol Plant Comes Online in HungaryPage 42

Hungary for EthanolPage 70 Page 76

Industry Makes Seaweed Shows Progress on E15 Promise as High-Yield Implementation Ethanol Feedstock Freedom Ethanol plants prime Documentary candidates for carbon Illustrates Power of sequestration Information Page 84Page 62 www.ethanolproducer.com

ALSO

AMERICA, START YOUR ENGINES.American Ethanol is proud to power NASCAR . When No. 3 American Ethanol

Chevy driver Austin Dillon takes the wheel, he is racing for Americas energy independence. American Ethanols partnership with NASCAR tells our industrys story to millions of Americans. Find out how you can get involved at AmericanEthanolRacing.com. AMERICAN GROWN. AMERICAN MADE. POWERING NASCAR.

The NASCAR American Ethanol logo and word mark are used under license by the National Association for Stock Car Auto Racing, Inc. and Growth Energy. Austin Dillon and Austin Dillons autograph are trademarks of Austin Dillon. All trademarks and the likeness of the No. 3 race car are used under license from their owners. NASCAR is a registered trademark of the National Association of Stock Car Auto Racing, Inc.

contents

fEAturES42

JUNE issUE 2012 VOL. 18 issUE 6

42 iNTERNATiONAL

Hungary for Ethanol

An American-style corn ethanol plant comes online in Europe BY HOllY JESSEN

52 WOMEN

Next-generation projects offer opportunities for women BY HOllY JESSEN

Groundbreakers: Women in Biofuels

62 ENViRONMENTALisM

Information is freedom

Film maker has change of heart about ethanol BY HOllY JESSEN

70 MARKETs

Whats Left?

62

E15 ready to roll in some states, work continues BY KRIS BEVIll

76 FEEDsTOCK

Offshore Ethanol

Seaweed examined for feedstock potential BY KRIS BEVIll

84 CARBON

Ethanol produces quality CO2 for sequestration BY KRIS BEVIll

Prime Candidates

4 | Ethanol Producer Magazine | JUNE 2012

contents

CONtrIButIONS

JUNE issUE 2012 VOL. 18 issUE 6

100

DEPARTMENTS8 Editors NoteThe Reward of Big Issues By SuSanne Retka Schill

9 12

Ad Index the Way I See ItThanks to Minnesotas 3 Amigos By Mike BRyan Upcoming Conferences & Trade Shows

13

Events Calendar

16

All Eyes on EPA By BoB dinneen

View from the Hill

18

Ethanol Fuels NASCAR, Helps the Environment By RichaRd childReSS

Drive

Spotlight on Brazil

92 BRAZiL

100 TRAINING

20

Insights on Brazil ethanol prospects from london event BY DANIEl COElHO BARBOSA

State initiates training program on ethanol fires BY DAN BAKER

Ethanol Emergencies: New York Meets the Challenge

Delivering the Message on Capitol Hill By BRian JenningS Getting the label Right By RoB VieRhout How Well Do You Know Your D&O? By RichaRd k. uPdegRaFF

Grassroots Voice

22

Europe Calling

104 CONTAMiNANTs

Case study sniffs out contaminant problem BY DENNIS BAYROCK

fusel Oil recycleA Silent, Odorous Killer

108 CENTRIFUGES

Delving into the details of power regeneration in motor controller BY BRENDEN R. FRITz

Matrix Converter Creates New Opportunities for Centrifuge retrofit

24

Business Matters

26 30 34

Business Briefs Commodities report Distilled

How to fight the Not in My Back Yard Syndrome

112 COMMUNiTY RELATiONsBuilding a database of supporters a key component BY Al MAIORINO

Developing Corn Stover as the Next Agricultural Commodity

116 sTOVER

Groundwork laid in Iowa to sustainably harvest stover BY ANDY HEGGENSTAllER

122 MarketplaceINSIDE: WOMEN BREAK GROUND IN NEXT-GEN PROJECTSJUNE 2012

An American-Style, Corn-Ethanol Plant Comes Online in HungaryPage 42

Hungary for EthanolPage 70 Page 76

Industry Makes Seaweed Shows Progress on E15 Promise as High-Yield Implementation Ethanol Feedstock Freedom Ethanol plants prime Documentary candidates for carbon Illustrates Power of sequestration Information Page 84Page 62 www.ethanolproducer.com

ALSO

Ethanol Producer Magazine: (UsPs No. 023-974) June 2012, Vol. 18, issue 6. Ethanol Producer Magazine is published monthly by BBi international. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

ON tHE COVEr


Pannonia Ethanol, located on the Danube River south of Budapest, Hungary, began producing this spring.PHOTO: ZOLTAN sCHAFER

editors note

tHE rEWArD Of BIG ISSuES

Worlds Largest and Longest Running Ethanol Conference & Expo

SuSanne Retka Schill, [email protected]

While its a challenge to produce a large issue such as this June ePM, the reward comes in being able to offer many great stories. Ever since hearing about Fagen Inc.s first Euro-

SAVE THE DATE: June 10-13, 2013 Americas Center St. Louis, Missouri

pean ethanol project, weve looked forward to learning more. in our cover story, associate editor holly Jessen writes about Pannonia ethanol, an american-style corn ethanol plant on the Danube river in hungary. Jessens other contributions this month take a look at women in biofuels and the impact of a documentary on ethanol education. associate editor kris bevill updates us on the campaign to implement e15 and describes efforts to demonstrate ethanols carbon sequestration potential. bevill also examines the ethanol industrys answer to the buzz about algae in the biodiesel industryseaweed. Yes, seaweed for ethanol production shows great promise, but presents challenges as well. as this issue, and editorial staff, goes to the international Fuel ethanol Workshop in minneapolis, well have more opportunities to learn about the latest innovation and look for more great stories.

Network with Ethanol Producers

LETTERsDear Editor: My wife recently needed a new car, so we looked into many options and found the Toyota Prius computer is capable of using E85 with no problems. My wife asked the dealer if she could run E85 and he said it would void the warranty. Even though the dealership has no way of telling what fuel is used, she refuses to even put one gallon of ethanol in her new car, even though I have a 2000 Saturn SW that has run 60,000 miles on 50/50 ethanol/petrol. I believe the real problem for ethanol usage is that the oil companies have done too good a job of disinformation. If I were living in Sutherland, Neb.the town where a small ethanol plant temporarily idled in FebruaryI would convert my Saturn to be optimized to run on ethanol with NO gasoline for use in and around the Sutherland. Local usage should be encouraged and highly promoted by the community. The other car would be set up to run on gasoline for travel to areas not as ethanol-friendly. It is time to encourage local consumption to support your local community. Harold sanders Northlake, Ill.

Contact us today! 866-746-8385 [email protected] Follow Us: twitter.com/EthanolMagazine

CLARiFiCATiONIn the Steel in the Ground feature article in the May issue, a couple of numbers need clarification on the Beta Renewables project. The Crescentino, Italy, plant will being producing 40,000 tons of cellulosic ethanol, growing to 60,000 tons (20 MMgy). The project is on track to produce ethanol with a cash cost of about $1.50 per gallon, and a capital cost of $5 per gallon, which is expected to go down with subsequent projects.

Produced by:

FOR INDUSTRY NEWS.8 | Ethanol Producer Magazine | JUNE 2012

FOllOW US: tWIttEr.COM/EtHANOLMAGAzINE

EDItOrIALSusanne retka Schill [email protected]

AdIndex125 50-51 99 2012 Algae Biomass Summit 2012 international Fuel Ethanol Workshop & Expo 2012 National Advanced Biofuels Conference & Expo 2013 international Biomass Conference & Expo 2013 international Fuel Ethanol Workshop & Expo ACE American Coalition For Ethanol Aggreko Agra Industries Angel Yeast Co., LTD Ashland Hercules Water Technologies BBI Consulting Services BetaTec Hop Products BrownWinick Law Firm Buckman Burns & McDonell Butamax Advanced Biofuels, LLC Cellencor inc. Cereal Process Technologies Cloud/Sellers Cleaning Systems CPM Roskamp Champion Crown Iron Works Company Dedert Corporation DuPont Fermasure DuPont industrial Biosciences Eco-Energy Inc. Eide Bailly, LLP Ethanol Producer Magazine ETs Laboratories Fagen Inc. Ferm solutions Fermentis - Divison of S.I. Lesaffre Flottweg Separation Technology Freez-it-Cleen GEA Westfalia Separator Gorge Analytical Growth Energy Hammertek Himark bioGas Hitachi Zoen U.s.A. Ltd. 40 57 5 10-11 45 121 46 103 66 19 60 89 95 114 58 127 117 14 15 74 68 94 81 67 107 78 87 96 82 115 69 23 79 97 80 33 55 72 120 35 65 102 HPD Hydro-Klean LLC iCM, inc. inbicon Indeck Power Equipment Co. iNEOs Bio Interra Global Corporation iNTL FCstone inc. Kelso Technologies, Inc. Lallemand Ethanol Technology Liquid Controls Louis Dreyfus Mist Chemical & Supply Company Nalco Natwick Associates Appraisal North American Bioproducts Corp. Perten instruments, inc. Phibro Ethanol Group Pioneer Hi-Bred international, inc. POET-DSM Advanced Biofuels Premium Plant Services, Inc. ProQuip, inc. Protectoseal Company R3 Fusion Renewable Fuels Association Roeslein & Associates, Inc. RPMG, Inc. Sud-Chemie AG Sukup Manufacturing Co. Sulzer Process Pumps (US) Inc. Syngenta: Enogen Tranter Phe U.S. Grains Council U.S. Water Services Vecoplan LLC Verenium - Ethanol Vogelbusch USA, Inc. Wabash Power Equip. Co. West salem WCR incorporated WiNBCO Zoechem LLC

EDITOR

ASSOCIATE EDITORSHolly Jessen [email protected] Kris Bevill [email protected]

COPY EDITORJan tellmann [email protected]

ArtART DIRECTORJaci Satterlund [email protected]

61 8 32 118 54 & 90 110 39 75 25 37 36 91 29 38 113 27 47 106 111 41 3, 17, 59, 128 28 86 126 88 7 64 83

GRAPHIC DESIGNERLindsey Noble [email protected]

PuBLISHINGCHAIRMANMike Bryan [email protected]

CEOJoe Bryan [email protected]

VICE PRESIDENTtom Bryan [email protected]

SALESVICE PRESIDENT, SAlES & MARKETINGMatthew Spoor [email protected]

EXECUTIVE ACCOUNT MANAGERHoward Brockhouse [email protected]

SENIOR ACCOUNT MANAGERJeremy Hanson [email protected]

ACCOUNT MANAGERSMarty Steen [email protected] Bob Brown [email protected] Andrea Anderson [email protected] Dave Austin [email protected]

CIRCUlATION MANAGERJessica Beaudry [email protected]

ADVERTISING COORDINATORMarla Defoe [email protected]

SENIOR MARKETING MANAGERJohn Nelson [email protected]

EDItOrIAL BOArDMike Jerke, Chippewa Valley Ethanol Co. lllP Jeremy Wilhelm, Cilion Inc. Mick Henderson, Commonwealth Agri-Energy llC Keith Kor, Pinal Energy llC Walter Wendland, Golden Grain Energy llC Neal Jakel Illinois River Energy llC Bert farrish lifeline Foods llC Eric Mosebey lincolnland Agri-Energy llC Steve roe little Sioux Corn Processors lP

Customer Service Please call 1-866-746-8385 or email us at [email protected]. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (866) 746-8385 or [email protected]. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at (866) 746-8385 or [email protected]. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to [email protected]. Please include your name, address and phone number. letters may be edited for clarity and/ or space.

101 98 119 48 2 44 21 49

Please recycle this magazine and remove inserts or samples before recycling

COPYRIGHT 2012 by BBI InternationalTM

JUNE 2012 | Ethanol Producer Magazine | 9

Pow Power your old Theres more to ethanol plant etha The New Ethanol with New Ethanol with than ethanol. production. prod

the way i see it

Thanks to Minnesotas 3 AmigosBy Mike Bryan it seems incredible that this is the 28th international Fuel ethanol Workshop & expo, and what a fitting place to have it.Minnesota was a key state in passing legislation to mandate the use of ethanol statewide, a leader in education and promotion and it boasted some of the most important pioneers in the industry. Larry Johnson, Kathy Bryan, Ralph Groshen the Three Minnesota Amigos, who helped carve a path to the future of this industry. Larry Johnson, The Ethanol Answer Man, did more to educate Minnesotans and folks in other states than perhaps anyone. He drove the Ethanol Answer Van covering thousands of miles speaking at farmer meetings and any event he could to spread the ethanol story. Larry has a wealth of knowledge and is still consulting in the ethanol industry and probably will continue to do so, even if someday it means using an ethanol powered walker. Kathy Bryan helped build the very first Fuel Ethanol Workshop. She was a leader not only in Minnesota but nationally. She walked the halls of the Minnesota State Legislature with Ralph and Larry, lobbying legislators on ethanol. On the national scene, she made many trips to Washington, D.C., often teaming up with farmers from around the country to lobby Congress. She was the co-founder of BBI international. Kathy passed away in 2009 and is deeply missed. Ralph Groshen, well, we simply cant say enough about Ralph. He was instrumental in convincing the Minnesota state legislature to mandate the use of ethanol. Ralph was one who simply never accepted that something could not be done for ethanol. What he accomplished while at the Minnesota Department of Agriculture for the advancement of ethanol, is difficult to put into words. Ralph retired last year, finally hanging up his ethanol spurs. One of his claim-to-fame moments was the writing of the song, Its a Grand Old Fuel. He does sing it on special request, with payment for his singing usually made in beer. it was a time in the history of the industry where we had to take the gloves off and fight fire with fire. Promotions at self-serve gas stations, where farmers filled up the tanks of customers and gave them a nickel for every gallon of ethanolblended fuel they put in the tank along with a brochure on ethanol. Thousands of business cards in florescent orange were handed out to stations that had no ethanol in our gas signs, saying Shame on youfor not selling ethanol. Green cards were given to stations selling ethanol that said Thanks for selling ethanol blends. I know, it sounds corny, but it worked against the oil industry which was hell-bent on destroying ethanol. So, coming back to Minnesota this year holds a special place in the hearts of many. Most of those in the Minnesota ethanol industry, and even more on the national level, either personally know, or know of, the Three Amigos. They are just three Minnesotan pioneers, among many pioneers in the industry for whom we are forever grateful. so, welcome to Minnesota and the 28th Fuel Ethanol Workshop, a state and a workshop that helped pioneer ethanol in America. Thats the way i see it.

author: Mike Bryan Chairman, BBi international [email protected]


eVents caLendar

Algae Biomass Summit September 24-27, 2012 Sheraton Denver Downtown Hotel Denver, Colorado

Domestic production of advanced biofuels and biobased chemicals will be the focus of the 2012 National Advanced Biofuels Conference & Expo to be held at the Hilton AmericasHouston, in November. Produced by BBI International, the conference and expo will unite existing and future advanced biofuels producers with strategic petrochemical and agribusiness partners, government officials, investors and project finance professionals, technology and biomass supply-chain service companies. The event was successfully launched in 2011 as the International Biorefining Conference & Trade Show. In consultation with sponsors and supporting organizations, BBI changed the name of the event to highlight its critical role in helping the U.S. bioenergy and refining industries meet Americas explicit advanced biofuels quest. RFS2 requires 21 billion gallons of advanced biofuels to be blended into the U.S. transportation fuel supply by 2022, says Joe Bryan, CEO of BBI International. We have now aligned the conference and expo with that national mission. The National Advanced Biofuels Conference & Expo will continue to focus on the scale-up, commercialization and market development of both advanced biofuels and biobased chemicals. Presentations will focus predominantly on domestic production, research and development, and project development. International industry issues, such as exports and imports, foreign biofuels production and policy, and feedstock issues, will be covered from a domestic viewpoint. The two-day agenda will answer critical questions facing the industry and will offer conference attendees an unparalleled opportunity to gain a broad understanding of where the U.S. advanced biofuels industry is, what challenges it faces, and where it is headed. This event will bring the entire industry together under one canopy, says Matt Spoor, vice president of sales and marketing at BBI International. The name change exemplifies the new direction of the program. It also speaks to the all-of-the-above strategy thats needed to meet our national advanced biofuels targets. Drop-in biofuels, advanced and cellulosic ethanol, biobased chemicalswere bringing it all together in Houston.

Advancing Technologies and Markets Derived from Algae Organized by the Algal Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. Register today for the worlds premier educational and networking junction for the algae industry.(866)746-8385 | www.algaebiomasssummit.org

National Advanced Biofuels Conference & Expo November 27-29, 2012 Hilton Americas - Houston Houston, Texasnext generation Fuels and chemicals Make plans to attend the 2012 National Advanced Biofuels Conference & Expo in Houston, Texas. Understand the latest techniques being developed in the industry and continue building relationships that last. Contact a knowledgeable account representative to reserve booth space now.(866)746-8385 | www.advancedbiofuelsconference.com

International Biomass Conference & Expo April 8-10, 2013 Minneapolis Convention Center Minneapolis, Minnesota

Building on Innovation Organized by BBI International and produced by Biomass Power & Thermal, the international Biomass Conference & Expo program will include 30-plus panels and more than 100 speakers, including 90 technical presentations on topics ranging from anaerobic digestion and gasification to pyrolysis and combined heat and power. This dynamic event unites industry professionals from all sectors of the worlds interconnected biomass utilization industriesbiobased power, thermal energy, fuels and chemicals.(866)746-8385 | www.biomassconference.com

International fuel Ethanol Workshop & Expo June 10-13, 2013 Americas Center St. louis, Missouri

Now in its 29th year, the FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. The FEW is the largest, longest running ethanol conference in the worldand the only event powered by Ethanol Producer Magazine.(866)746-8385 | www.fuelethanolworkshop.com


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View from the hiLL

All Eyes on EPABy Bob Dinneen

capitol hill has become an increasingly frustrating place for many who wish to see thoughtful, forward-looking legislation put into law. In that context, many havecome to think of Washington as a place where nothing of consequence can happen, particularly in even-numbered election years. For Americas ethanol industry, that is not necessarily the case. Since the beginning of 2012, Washington has been a very busy place for biofuels. It is true that little is happening in Congress with respect to biofuels. But elsewhere inside the Beltway, biofuels are garnering a great deal of attention. Nowhere is this truer than the offices of the Ariel Rios Buildinghome to the mobile source division of the U.S. EPA. Without a close second, EPAs forward march with respect to E15 will have the greatest impact on ethanol producers. With the finalization of the E15 partial waiver in January, the adoption of the health effects testing and misfueling mitigation plan, and registrations from ethanol producers and fuel supplies being accepted, EPA has been ground zero for

the expansion of domestic ethanol use and the fight for more fuel choice at the pump. It is no secret that a move to E15 in Americas fuel supply will have profound impacts on our domestic ethanol industry, fuel consumers, and our nation as a whole. it will increase demand for a domestically produced renewable fuel, reduce the amount of petroleum needed to fuel our vehicles and lower the price for all driving Americans. The importance of E15 is why the RFA has spent considerable time and resources in assuring a smooth transition to E15 from the federal level on down. With all federal requirements now met, E15 marches on to the states and, hopefully, to corner gas stations near you. Expanding ethanol markets isnt the only influence EPA is having on our industry. The continued implementation of the renewable fuel standard, including the current lawsuit surrounding the 2012 volumes, is creating numerous opportunities for EPA to have an impact on existing ethanol producers and new technology developers alike. Likewise, greenhouse gas regulations such as those included in what is known as EPAs Tailoring rule could put new and unnecessary regulatory burdens on ethanol producers. The changes being contemplated by EPA could force existing ethanol producers to install costly new technologies simply to come into compliance with arbitrary greenhouse gas limits set by EPA. The list doesnt stop there. New fuel standards and vehicle emission regulations may seem to be the province of automakers, but if constituted

correctly, could present opportunities for ethanol and biofuels by creating demand for clean octane to power Americas automotive fleet. Even though Congress seems unable to pass much in the way of legislation, it doesnt mean all is clear for ethanol. Our industry must remain engaged at the regulatory level to inform regulators about the realities of the industry on the ground and the very real world impacts their proposed regulations will have. I encourage all of you to remain abreast of these issues and use the RFA website, www.ethanolrfa.org, as a resource. All of the activities being contemplated at EPA and other federal agencies have the potential to impact our industry. We must remain vigilant and ensure these regulations are crafted to encourage the maximum amount of domestic ethanol use as possible.author: Bob Dinneen President and CEO of the Renewable Fuels Association (202) 289-3835


driVe

Ethanol Fuels NASCAR, Helps the EnvironmentBy Richard Childress

Some may question how the owner of a NASCAR racing team can promote air quality with a straight face. After all, for years, mybusiness has been burning rubber and racing fuel in front of massive crowds that leave a lot of litter behind. But times are changing. And the sport of NASCAR, including my team, Richard Childress Racing, has changed with them. Today, were deeply involved in efforts to make our sport more environmentally friendlyfrom recycling motor fluids, to reducing carbon emissions from our racing fuel, to using alternative power sources all under the NASCAR green umbrella. i do all this because im a conservationist who wants to see his grandkids grow up with clean air, clean water and green spaces. And one of the efforts that im most proud of is the introduction of American ethanol to racing as a means of cutting our emissions with a clean, renewable alternative fuel. Todays ethanol industry probably doesnt look anything like most people imagine. Its not a guy in a seed cap with a pot-still in the machine shed. Those days are long gone. Instead, todays ethanol producers are investing hundreds

of millions of dollars in cutting edge technology, biosciences, precision farming and smarter engineering. Todays ethanol is made in a plant that has cut water use and its reliance on fossil fuels by capturing heat in the plant, or using power from wind, methane and other renewable sources. Between better farming practices and advances at the plant, todays ethanol producers are able to reduce emissions compared to gasoline by nearly 60 percent. Producing ethanol also adds jobs right here in the U.S. In NASCAR, we are using Sunoco Green E15, a blend of 15 percent ethanol and 85 percent gasoline. Last year, the U.S. EPA approved E15 for all vehicles built in the past decade, which is more than 80 percent of the cars and trucks on the roads today. I like to think that if E15 is good enough for my racing team, its certainly good enough for everyday street cars. in fact, NAsCAR has accumulated more than 2 million miles of drivingin practice, qualifying and racing lapson E15, without a hitch, in what can only be described as a seamless transition. Plus, weve also seen enhanced performance. Many of the teams have reported an increase in horsepower. in my mind, this proves that E15 is a viable alternative to regular gasoline. One of the things that many people dont know about ethanol is that it is 113 octane, and has been in our fuel mix since Henry Ford built the first Model T. so ethanol not only offers us a

clean, renewable alternative to gasoline from foreign oil, it also offers us more horsepower, and better efficiency in todays high-compression engines with clean octane. By pumping E15, we are reducing not only carbon emissions, but we are also reducing lots of other toxins that would otherwise be pumped out the exhaust. Those toxins dont only degrade our health, but also the streams, lakes and forests where my family and I like to fish and hunt. Next time you see a NASCAR race on TV, i hope you see a sport that is not only competitive and fun, but also upholding American values. Among those values, I include conservation of our soil, air and water, for our health today and for the health of our kids and grandkids in the future.author: Richard Childress President, CEO, Richard Childress Racing Board Member, Growth Energy (336) 731-3334 [email protected]


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Grassroots Voice

By Brian Jennings

Delivering the Message on Capitol Hill

the american coalition for Ethanol recently organized a grassroots advocacy effort in the nations capitol. ACE sponsors anannual DC fly-in because no one is better qualified to promote the benefits of ethanol than our membersgrassroots advocates. Over the course of two days, 60 members of ACE, the National Corn Growers Association and others from 14 different states met with nearly 200 members of Congress and staff representing 47 states. Thanks to ACEmember Absolute Energy LLC, we distributed packets of No. 2 yellow corn and distillers grains to Congress, showing them that ethanol results in food and fuel. Timing is everything, and on the same day the U.S. Senate was debating the future of oil tax subsidies, our members were able to walk into congressional offices and explain how, unlike oil, ethanol isnt subsidized and still trades for about $1 dollar less than gasoline on a wholesale level. By all reports, ethanols ability to save consumers money at the pump, and to do so without help from Uncle Sam (again, unlike oil), was a very convincing talking point that impressed even members of Congress who arent strong supporters of ethanol.

Our fly-in isnt geared toward preaching to the choir, indeed we met with several lawmakers who dont appreciate or support ethanol. Many of our meetings were with lawmakers who voted against allowing the U.S. EPA to proceed with implementation of E15, allowing USDA to help assist with blender pump installation or the Volumetric Ethanol Excise Tax Credit. With gas prices at their highest level ever for the presummer driving season, Congress is looking for ways to provide some relief at the pump. Our members were able to describe how consumers using E10 are saving on average at least 9.5 cents per gallon compared to regular unleaded, saving around $1 billion dollars per month nationwide and nearly $12 billion dollars a year. We also educated Congress on the benefits of E15 as a safe and affordable new fuel choice. At todays prices, consumers choosing E15 could save about 15 cents per gallon compared to regular unleaded. ACE members helped elected officials understand that E15 has undergone more technical scrutiny than any other fuel on the market today, and is an option, not a requirement. Most importantly, ACE members made it clear that the renewable fuels standard (RFS) is effectively doing its job at moderating gasoline prices, reducing oil imports and making the U.S. more energy secure. As part of the effort to educate Congress about the RFS, ACE created an infographic entitled Its Working providing a vivid depiction of how the RFS

and ethanol are reducing oil imports and saving Americans money at the pump. in order to demonstrate broad support for keeping the RFS intact, ACE also wrote and hand delivered to Congress a letter that was cosigned by the Advanced Ethanol Council, National Corn Growers Association, Renewable Fuels Association, Growth Energy, Biotechnology Industry Organization, 25x25 Alliance, and Energy Future Coalition. The RFs has played an instrumental role in the build-out of more than 200 U.s. ethanol facilities capable of producing nearly 15 billion gallons of clean, highoctane renewable fuel. The RFs is also an essential catalyst for commercialization of cellulosic and advanced biofuel. Congress should reject attempts to alter, amend or waive it. Thanks to all the ethanol producers and others who took the time to participate in our fly-in. Thanks to you, we are able to educate members of Congress, build relationships in Capitol Hill, and begin reshaping ethanol policy to ensure longterm success for our members. We are grateful for so many committed grassroots voices in support of the ethanol industry.author: Brian Jennings Executive Vice President, American Coalition for Ethanol (605) 334-3381 [email protected]


europe caLLinG

Getting the label RightBy Robert Vierhout

Just over one year ago I wrote about the E10 hysteria in Germany. i mentioned how the oil andcar industries were rather successful in causing serious problems around the introduction of 10 percent ethanol in gasoline, whereas in France the process went smoothly and without any public outcry. Fourteen months later, the German E10 market is still like a stuttering engine, with only 13 percent share of the biggest gasoline market in all of Europe (there are three gasoline grades in Germany). In France, however, it is already at 20 percent. I am certain, though, that the share will increase especially now that gasoline prices are at record heights. The consumer tends to forget quickly all his concerns about (the never proven) food, sustainability and engine damage once the gasoline price is 1.70 per liter ($8.40 per gallon!) as it is now. The European energy commissioner, German national Gnther Oettinger, received many letters from concerned fellow countrymen a year ago (mainly NGOs members) on the E10 problems mainly related to environment and food. Plus, being a former president of the state, where the German car industry is seated he is taking the issue of potential engine damage seriously. Recently he launched an initiative to get the discussion going on

(bio)fuel labelling by organizing what is nowadays very common in Brussels regulatory circlesa stakeholder meeting. The commission more or less justifies the initiative by stating that for consumers the fuel market has an even worse reputation than the secondhand car market, which is already quite bad. Well, for sure that is one way of getting all interested parties around the table. Certainly, one can make jokes about this, but the commissioner is absolutely right that some action is needed for several reasons. First, fossil fuel can be traded freely throughout the EU; that should also apply to fossil fuel with a bio component. Second, it can be beneficial for the biofuel industrys marketing efforts if a label clearly states that there is a sustainable biofuel in the fossil fuel. Third, by having identical fuel labels everywhere in the EU, consumers feel more secure that the fuel is safe to be used (even if they cannot read Polish or Hungarian). There are some difficult questions to be resolved before we will have a uniform labelling system in the EU, starting with what type of actions are necessary, possible and by when. Once that is agreed upon, the next big step is to get agreement among all stakeholders whether action should be taken at the EU level via a law or at the member state level through coordination among countries, or at the fuel/biofuel/car industry level through voluntary measures. I think that answering the first questions will not be too difficult. Getting

agreement on the type of label and the information is after all not rocket science. in France, the ethanol industry has already done some detailed work that could be easily considered a ready-tocopy best practice. Good work has also been done in the U.s. by the Renewable Fuels Association. Its E15 Retailer Handbook could certainly be used to showcase how detailed and professional information can be provided to retailers once they have to handle midlevel blends. The level at which action should be undertaken will be more controversial. Most likely the oil industry will opt for voluntary actions and measures, assuring that they can become the master of the game. For the rather small biofuels industry, a harmonized regulatory initiative in the EU would be much better to guarantee a balance of power among market operators. The price to pay for that, however, is that the process will take more time before the stickers can be glued to the pump. For the ethanol industry, it is critical that this whole process should not take too long. As more countries move towards E10, a certain urgency is needed. Having the customers confidence that an E10 fuel is a good and reliable fuel is crucial in building, maintaining and even going beyond this market. We better get the label right, and soon.author: Robert Vierhout Secretary-general, ePURE [email protected]


business matters

How Well Do You Know Your D&O?By Richard K. Updegraff Directors and officers (D&O) insurance is a form of liability protection available to persons who agree to serve as directors, officers and even employees of business entities to guard them from liability and costs of defense that may arise from claims made by persons who feel aggrieved by their actions while doing business. There are several importantpoints for boards to consider as they evaluate different D&O insurance policies. D&O insurance helps protect the personal net worth of those individuals who are involved in the management of the company. it is important to recall that the liability imposed upon directors and officers is personal. In many states it can be joint and several, that is, all defendants are equally liable and, therefore, each bears the entire risk, not simply a proportionate share. This insurance also protects the company from certain claims made against the directors and officers that the company has agreed to indemnify. Most D&O policies are claims-made contracts. A frequent misconception is that companies that are not publicly traded do not benefit from D&O insurance, while, in fact, many cases have arisen from disputes involving private companies. Directors and officers of private companies face the same liability as those on public boards, usually with fewer alternatives available to disgruntled plaintiffs. In addition, private companies generally have less capability to indemnify and protect members of their boards. Some of the largest claims that have occurred in the past several years24 | Ethanol Producer Magazine | JUNE 2012

have been within the context of privately owned companies with few shareholders. In addition, some persons believe they are protected by what is known as the business judgment rule. While this court-created doctrine protects directors and officers from liability for misjudgments made in good faith, it is not an all-inclusive immunity. Directors and officers must first show they acted in good faith and not in their own self-interest. When dealing with smaller companies, with few owners, it becomes very difficult to distinguish the line between the companys interest and the individual investor/board members interest. For these reasons, the protection of directors and officers liability insurance is just as vital for smaller private companies as for larger publicly traded ones. One of many differences in policies relates to an indemnity policy versus a reimbursement policy. Under an indemnity policy, the carrier is obligated to pay loss and to advance defense costs. Under a reimbursement policy, the carrier is obligated to reimburse the insured as the claim proceeds. The indemnity policy is much more favorable to the insured. One of the most widely divergent insuring clauses relates to claims based upon the offer and sale of securities of the company. For companies just beginning to raise capital and get organized, the coverage with respect to the sale of securities is paramount. Once companies have been operating for some time, the risk shifts from securities liability to operational liabilities. There are some insurance policies that provide coverage for all securities offerings. These policies are few in number and are the most expensive.

Another type of policy provides coverage for securities offerings that are exempt under the securities Act of 1933 that is acceptable for companies considering only such securities. If, however, the company intends to participate in the sale of nonexempt securities, then the policy needs to provide appropriate coverage to protect against claims related to registered offerings. Some policies obligate the carrier to give a quote for coverage of other securities claims; other policies are strictly limited to those exempt under the 1933 Act. Some policies exclude coverage for any securities claims. Those polices should be avoided. Other variations include: Coverage for punitive damage claims. Exclusions if there has been a final adjudication of deliberate misrepresentation. Limitations on refusal to accept settlements. Because each carrier writes its own D&O coverage with no uniformity among policies, it is vital to consult an attorney to determine whether the coverage is adequate. Directors and officers protection is not something that should be overlooked simply because of the belief that nothing will ever go wrong.author: Richard Updegraff Attorney, BrownWinick Law Firm (515) 242-2413 [email protected]

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BuSINESS BRIEFSPeople, Partnerships & Dealsrecovery From ethanol Production. David Winsness, chief technology officer added in the announcement, Greenshift has pledged to protect the competitive advantage of its licensees and the additional protection is extremely important to our licensees and shareholders. Feedpail is a new website launched to connect feed manufacturers and livestock producers. southern minnesotan ryan cooney wanted to create a quicker, easier and more enjoyable way to buy and sell feed ingredients. the free service offers a list of about 40 ingredients, including distillers dried grains options. Users can search by feed ingredient and geography to find prices and availability. once a quantity and price are agreed to, the contact information of the buyer and seller is shared so they can complete the transaction. all sales are kept confidential and are subject to each partys terms, conditions and policies. Visit www. feedpail.com. ExperTune Inc., a process control software provider, has added interactive on-line training including hands-on practice using expertunes virtual classroom and coaching from a live instructor. control technicians and engineers can select courses on basic control loop tuning theory and practice, dealing with valve problems such as hysteresis and stiction, as well as classes specific to the companys PlantTriage software. students log in via the internet to the expertune Virtual classroom. there, they have access to course materials, a dedicated simulator and all the software needed. Verenium Corp. announced the repurchase of all its outstanding convertible senior notes, totaling $34.9 million. this is an important milestone for Verenium, said Jeff Black, chief financial officer. By eliminating the debt overhang on the company, we now have a more flexible capital structure that will allow us to invest in areas critical to grow our business and create future shareholder value.Lincoln Energy Solutions is expanding its storage capacity at Belton, S.C. The newly constructed tanks will provide storage for 1.5 million gallons of ethanol and 400,000 gallons for biodiesel. Additionally, a 225,000 gallon water tank is being built as part of a foam fire suppression system. Expected to be completed June 1, the facility improvements will expedite the off-loading process of 80-car unit trains for quicker and more efficient turns, completing off-loads in only 48 hours and cutting the previous time required by nearly half. Lincoln Energy Solutions receives its ethanol supply through a strategic business relationship with Archer Daniels Midlands Co.

Jeff Lautt was named ceo of Poet LLC, stepping up from the position as president that he was named to last year. he succeeds Jeff Broin who steps down after 25 years. broin will continue leading the companys board as executive chairman and guide the activities of his newly created foundation, teach a man to Fish. Jerry Taylor, ceo of MFA Oil, a farmer-owned energy cooperative in columbia, mo., was recognized by the White house for being a champion of change. mFa oil entered the renewable fuels markets in the 1960s when it purchased an ethanol plant to make gasohol, and currently invests in oil refining and biodiesel production, as well as distributing ethanol and biodiesel blends. mFa oil biomass, a partnership with aloterra energy, was started in 2011 to capitalize on the unique qualities of miscanthus as an energy crop. taylor is on the board of national Cooperative Refinery Association and mid-america biofuels. american coalition for ethanol Vice President ron lamberty noted that taylor and mFa have distributed tens of thousands of the brochure, Why is ethanol Good for my car, in the last decade. mFa oil was recognized by ace in 2006 for its efforts in marketing ethanol. Telvent GIT SA has launched Dtn Fuel admin, a unique dashboard solution to improve bill-to-cash cycle for fuel market26 | Ethanol Producer Magazine | JUNE 2012

ers. complex bill of ladings (bols), delivered from varying sources and on varying schedules, create administrative hassles for fuel marketers and impede the bill-to-cash cycle. Using Fuel admin, users now have the capacity to receive streamlined, accurate electronic bills of lading and can rely on delivery within minutes of load completion. in addition, the new solution improves efficiency and profitability for marketers by providing standardized, easy to read ebols. Arisdyne Systems Inc. received patent approval for the apparatus and method of increasing alcohol yield from grain using controlled flow cavitation. We have worked diligently, with the help of our engineering and scientific teams, to develop sound intellectual property around our hydrodynamic controlled flow cavitation technology, said Oleg Kozyuk, chief technology officer and founder of arisdyne. the patent, issued by the [U.S. Patent and Trademark Office], validates the unique nature of our company and the approaches we are taking to improve ethanol yield through simple, small-footprint, energy-efficient, retrofit solutions. We will continue to expand patent portfolio coverage as we develop more inventions. GreenShift Corp. received a fifth patent covering its corn oil extraction processes. U.s. Patent number 8,168,037 is titled method and systems for enhancing oil

business briefsSponsored by

Chicago-based Gold Eagle Co., a producer and distributor of aftermarket fluids and additives, recently created a userfriendly tool to help educate consumers on ethanol-blended fuels. the abcs and e of ethanol, available at www.goldeagle.com/engine_care/411onethanol, shares background history about ethanol and the pros and cons of the biofuel. We recognized that many of our consumers were confused about ethanol, and we wanted to create a resource to help provide some clarity, said tom bingham, director of marketing.

sistance Program to support construction of its anaerobic digester to power the 50 mmgy nebraska-based plant in oakley, kan. Rayeman Elements Inc. is producing 100 percent distillers grains supplemental products for forage animals, compressing the DGs into cubes with minimal fines. Tennessee-based ethanol marketing firm Eco-Energy Holdings Inc. is developing

an ethanol unit train and storage facility to serve the atlanta, Ga., area, similar to one just completed in Denton, n.c.share your industry briefs to be included in business briefs, send information (including photos and logos if available) to: business briefs, Ethanol Producer Magazine, 308 second ave. n., suite 304, Grand forks nd 58203. you may also fax information to (701) 7468385, or email it to [email protected]. please include your name and telephone number in all correspondence.

Tankman

Sellers 360

Fluid Quip Process Technologies LLC announced the sale of four selective Grind technology systems. the two systems purchased by Greenfield Ethanol Inc. will improve ethanol yield at its Johnstown, ontario, and Varennes, Quebec, facilities. center ethanol co. llc, sauget, ill., has also purchased a system. the fourth sale, to an undisclosed facility, will be the first 100 MMgy sGt installation. the technology improves ethanol yield by grinding grit starch while also improving oil yield by grinding germ. in a roundup of news headlines from the past month: Pacific Ethanol Columbia LLC has signed on to use Mascoma Grain Technology yeast product at its 40 mmgy corn ethanol plant in boardman, ore. Montana Advanced Biofuels recently received the air permit for its proposed 115 mmgy plant in Great Falls, mont.; the project awaits U.s. Doe loan guarantee. Kinder Morgan Energy Partners LP put its 16inch dedicated ethanol pipeline into service between its linden, n.J., unit train facility and its largest new York harbor terminal. Western Plains Energy LLC received $5 million from the UsDa repowering as-

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For more information, stop by the Butamax Booth #1515 at FEW or contact Dennis Magyar at (302) 695-7106. www.butamax.com

COMMODItIESNatural Gas Report

Natural gas grows as a transportation fuelapril 24the market dynamics of natural gas as a transportation fuel are so compelling that its important to discuss, even in a magazine focused on a competing fuel. the accompanying chart tells the story. the value of natural gas is less than 10 percent of the value of diesel fuel or gasoline on a gasoline gallon equivalent (GGe) basis. in addition, natural gas is a north american fuel with fewer security concerns and its use improves the U.s. balance of payments with other countries. its a compelling story both economically and politically. Unfortunately, switching to natural gas as a transportation fuel is costly and complicated. that said, the economics are so dramatic that we are seeing a mad rush to convert fleets. each year, engine manufacturers are developing and producing more engine options for heavy trucks, the largest unit consumers of liquid fuels. Vehicle manufacturers are rolling out new products such as the chevy silverado biFuel pickup that will run on both cnG and liquid fuel. on the infrastructure side, chesapeake energy has committed $150 million to build natural gas fueling facilities at interstate highway truck stops. With roughly $3 per gallon fuel savings, public and private fleets can justify spending capital dollars on fueling facilities to capture the operational cost savings. natural gas for transportation fuel use is growing at a more rapid pace than any other industry segmentaveraging 9 percent an-

BY CASEY WHELAN

nually over the past three years. We expect that to continue and that transportation use will be an increasingly important component of overall natural gas usage.

Corn Report

Choppy corn market reacts to projections, liquidationapril 24the corn market experienced choppiness as liquidation occurred in midapril, testing $6 on the nearby, as the market absorbed ideas of a bigger new crop, rapid planting and concerns of a world economic slowdown, particularly in china. old crop should be supported at $6, when considering tight domestic cash corn as reflected by improving basis, and an inversion in the nearby corn spreads. in addition, corn buying by china supports the market as it rebuilds inventories. argentina production continued to decrease with the UsDa projecting 21.5 mmt of production versus 23.6 mmt last year and many analysts expecting further deterioration. not only is corn production projected lower, soybeans are much lower in all of south america, supporting corn and wheat markets in general. The U.S. is expected to fulfill the30 | Ethanol Producer Magazine | JUNE 2012

BY JASON SAGEBIEL

global void until harvest in the southern hemisphere. the march 30 planting intentions report indicates farmers expect to seed 95.9 million acres of corn. the new crop corn-soy spread improved in favor of soybeans, which will entice more soybean acres. the question becomes was the march 30 corn planting number the highest we will see? the next planting intentions report is due June 30. the accompanying chart illustrates the nearby corn futures contract that averaged close to $5 over the past five years. Corn values had a setback in march/april, though support

around the $6 mark is illustrated. any weather issues ahead that could impact corn yield will toggle future supply and demand scenarios.

REpoRtDDGS Report

Regional Ethanol PricesFront Month Futures (AC) $2.148 REGION West Coast Midwest East Coast SPOT $2.305 $2.140 $2.260 RACK $2.560 $2.400 $2.550SOURCE: DTN

Regional Gasoline PricesFront Month Futures Price (RBOB) $3.143 REGION West Coast Midwest SPOT $3.152 $3.058 $3.078 RACK $3.298 $3.302 $2.978SOURCE: DTN

DDGS price pressure expectedBY SEAN BRODERICK

April 23DDGS prices were firm through April as plants scheduled spring maintenance. Local trucks were at a premium, and the predominance of hand-tomouth buying kept prices above normal springtime levels. The Chicago container market demand was steady, and bid that way for most of the summer. The barge market was very tight for last-half April, and first-half May, as boats sold in February and March loaded. In the gulf, the price of DDGS was on the high side of the normal range versus corn. In the Midwest, pork and cattle profitability dropped. Most of the DDGS that moved east headed to container ports, and not to the poultry or hog markets, both of which are using imported feed wheat. In the South-

west, DDGS competes with low-priced corn gluten feed, and will probably soon compete with what looks to be a pretty good wheat crop. Milk profitability has dropped to below break even, so dairymen are feeding just to maintain, and not for maximum productionbad news for DDGS sales in Texas, New Mexico and California. We generally feel price pressure in May and June. The uncertainty of the Chinese antidumping case, along with the tight old crop corn supplies, should make this summer different than most, in that there is plenty to keep the buyer and seller waiting to execute their needs. The planting season got off to a good start and attention shifts to moisture supplies.

East Coast

DDGS Prices ($/ton)lOCATION Minnesota Chicago Buffalo, N.Y. Central Calif. Central Fla. JUN 2012 210 226 229 258 236 MAY 2012 203 222 225 258 232 MAY 2011 195 203 220 244 240SOURCE: CHS Inc.

Corn Futures PricesDATE Apr. 24, 2012 Mar. 23, 2012 Apr. 25, 2011 HIGH 6.21 3/4 6.50 1/4 7.71 1/4

(July Futures, $/bushel) lOw 6.05 6.40 1/4 7.53 1/4 ClOSE 6.08 6.44 1/2 7.68 1/2SOURCE: FCStone

Cash Sorghum Prices ($/bushel)lOCATION

Ethanol Report

APR 20, 2012

MAR 23, 2012

APR 27, 2011

Superior, Neb. Beatrice, Neb. Sublette, Kan. Salina, Kan. Triangle, Texas Gulf, Texas

5.48 5.69 5.88 5.48 6.01 6.96

6.14 6.09 6.22 5.91 6.47 6.84

6.77 6.72 6.62 6.60 6.97 7.30

Summer is approaching, will gasoline/ ethanol demand flop? BY RICK KMENTApril 23The direction of the gasoline and ethanol markets over the past weeks has been interesting to watch, but increasingly hard to understand. At a time when RBOB gasoline prices typically move higher in anticipation of strong late spring and summer demand, the gasoline market has fallen over 20 cents per gallon in a month. This is due to uncertainty of future consumer demand for gasoline through the traditional driving season. With retail gasoline hovering around the $4 per gallon level, there are increasing questions about whether summer plans will still materialize if the gas market holds its previous pattern. In addition, not only has there been significant pressure in commercial buying activity, but investment traders are starting to back away from the energy market, which has been their refuge, given economic uncertainty. With additional support in the stock market and other financial sectors of the economy, traders are slowly liquidating commodity contracts in energy and moving toward more financial-based markets. Ethanol futures fell significantly over the past several weeks, based solely on the wide price shifts in corn prices and expected tight corn supply over the summer months. Rack ethanol pricesethanol prices most closely associated with retail marketsmoved little in the past month, creating additional support and potential stability for the ethanol market through the early summer months.

SOURCE: Sorghum Synergies

Natural Gas PriceslOCATIONAPR 13, 2012

($/MMBtu)APR 1, 2012 MAY 1, 2011

NYMEX NNG Ventura CA Citygate

1.981.85 2.37

2.19 1.87 2.75

4.38 4.85 4.47

SOURCE: U.S. Energy Services Inc.

U.S. Ethanol ProductionPER DAY Feb. 2012 Jan. 2012 Feb. 2011 919 938 907

(1,000 barrels)

MONTH 26,653 29,063 25,400

END STOCKS 22,572 21,753 20,809

SOURCE: U.S. Energy Information Administration


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distilledRevving Up for ProductionA 420 MMly (110 MMgy) wheat-to-ethanol plant in Hull, England, is expected to provide one third of the U.K.s forecasted biofuel demand once fully operational. Construction on the Vivergo Fuels Ltd. ethanol plant was in the final stages and commissioning had begun in early April. The Vivergo biorefinery, which will be one of the largest in Europe, will start production in late spring 2012, the company says. The $458 million project is a joint venture between three companies, including BP and Dupontboth of which have been involved in the biofuels sector. The third, ABSugar, is a sugar and ethanol producer. The companys first ethanol facility started up in 2007 in Wissington, U.K., producing up to 70 MMly next to a sugar factory. ABSugar is also a seed technology supplier and sells renewable electricity to the grid from its combined heat and power generation systems at its beet and sugar cane plants. The Vivergo ethanol plant will take in 1.1 million tons of local feed-grade wheat, meaning the company will become the U.K.s largest single wheat tipping point. The first loads of wheat were delivered to the facility in late March. The companys sole wheat supplier is Frontier Agriculture, which runs the Humber Gold club made up of area wheat farmers, according to Anja Hazebroek, communications manager for Vivergo Fuels. This represents a landmark milestone for farmers, the company says. Humber Gold adds up to a great opportunity for farmers, according to the Frontier Ag website. Club members can take advantage of a 17 percent maximum moisture content requirement. In addition, the companys iTrac service offers farmers the ability to view details of their load weight and analysis online or by text message within 30 minutes of delivery. The ethanol plant is also expected to be the largest single source supplier of animal feed in the U.K., producing about 500,000 metric tons of distillers grains yearly. The coproducts produced, including dry pelleted and34 | Ethanol Producer Magazine | JUNE 2012

Ethanol News & Trends

Vivergo Fuels U.K. plant in commissioning stage

Commissioning Under Way Vivergo Fuels, one of the largest ethanol production facilities in Europe, is a joint venture of BP, DuPont and ABSugar.

Wheat Tipping Vivergo will become Englands single largest wheat tipping point.

moist meal distillers grains as well as liquid solubles, will provide the protein requirements for more than 340,000 dairy cows daily, about 18 percent of the national dairy herd. Marketing and distribution of the companys coproducts will be handled by AB Agri.

The plant creates about 80 permanent, full-time jobs. Another more than 1,000 jobs will be supported throughout the companys supply chain. The ethanol produced will save more than 50 percent greenhouse gas emissions, compared to gasoline. Holly Jessen

PHOTO: VIVERGO FUELS

PHOTO: VIVERGO FUELS

distilledPHOTO: OFFICIAL WHITE HOUSE PHOTO BY PETE SOUZA

Preparing for PartnershipWhile exports of Brazilian ethanol are expected to stay down in the short term, a March report predicts the country will increase its ethanol market share in the U.S. in the coming decades. And, if recent high-level talks are any indication, the two countries are preparing for that possibility. A forum, Brazil-U.S.: Partnership for the 21st Century, was held April 9 in Washington, D.C. President Barack Obama and Brazil President Dilma Rousseff met to discuss the countrys ongoing relationship. During the event, they noted the adoption of a BrazilU.S. Action Plan on Science and Technology Cooperation, which addressed several areas, including advanced biofuels. They also pointed to the launch of the Strategic Energy Dialogue, which calls for increased cooperation on oil and gas, biofuels, renewable energy and other categories. During another portion of the event, Petrobras CEO Maria das Gracas Silva Foster was a speaker on the Partnership in Energy panel. She talked about the companys projected growth in Brazil in oil as well as the ethanol and biofuels markets. Oil prices may open new opportunities for alternative fuels, she said. I believe we will lead ethanol production in Brazil in five years. Just a few days before, Sen. Barbara Boxer, D-Calif., visited the Brazilian headquarters of UNICA, the countrys sugarcane industry association. Brazil has played, and continues to play, an important role in favor of the global progress of the ethanol industry as well as in the creation of better conditions to structure this market on a global level, Boxer said. Adhemar Altieri, UNICAs corporate communications director, pointed to Boxers support of free trade. Sen. Boxer is part of a now significant share of U.S. legislators who are well-equipped to better evaluate essential questions, such as energy, in a more pragmatic manner, without bowing to specific interests, he said. At the same time, the administration has remained supportive of the U.S. biofuels industry. On April 18, Heather Zichal, deputy assistant to the president for energy and climate change, spoke at the Renewable Fuels

obama, Rousseff participate in BrazilUS forumAssociations Washington Legislative Forum in Washington, D.C. One of those most promising [clean energy] industries has been American biofuels, she said, adding that theres a need to continue supporting the expansion of the U.S. biofuels industry. She also talked about the Obama Trust Building Brazilian President Dilma Rousseff speaks to administrations commitment to infrastruc- President Barack Obama in March 2011, when the president and his family visited Brazil. A year later, the two presidents met in the ture for biofuels. U.S. to discuss their countries many partnerships. In mid-April, UNICA issued its projection for the 2012-13 sugarcane harvest outlook. It highlighted the end of the import in south-central Brazil with a 3.19 percent in- tariff and renewable fuels standard as creating crease. While sugar exports are expected to rise, a favorable scenario for the commercialization ethanol exports are projected to drop. UNICA of sugarcane ethanol in the U.S. in the middle estimates Brazil will need to double sugarcane and long term. In the short term, the counproduction to 1.2 billion tons by 2020 to main- try will continue to focus on ethanol productain market share and meet demand. tion for use domesticallya situation that has Earlier, the Rabobank report The Fu- opened the Brazilian market for U.S. ethanol in ture of Ethanol, reinforced the sugarcane recent years. Holly Jessen

Call


distilled

Here Today, Gone TomorrowWyoming takes back promised tax creditDuring the 2012 budget session, the Wyoming Legislature voted to let a 40-cent-per-gallon tax credit for ethanol lapse on July 1, 2015. The bad news islegislators originally said the tax credit would remain in place until 2020, but the good news is, that talk of cutting the tax credit at the end of 2013 didnt materialize. It gives us a little bit of time to formulate some plans and implement some actions to survive, says Terry Oldfield, CEO of Renova Energy, which operates Wyoming Ethanol, a 10 MMgy corn-ethanol plant in Torrington, Wyo. Wyoming Ethanol and the tax credit both came into existence in 1995. Thats what brought the plant to fruition, Oldfield says of the tax credit. Although there is a 0.5 MMgy sugarcane bagasse ethanol plant in Upton, Wyo., Wyoming Ethanol is the states only full-scale commercial facility and its only corn-based ethanol plant. It started out as a 2 MMgy ethanol plant and was later expanded to 5 MMgy. In the meantime, the company had been returning to the legislature, asking for a more long-term extension to the five-year tax credit. In 2006, the company asked for an extension to 2022 in exchange for a commitment to spend $15 million to double the size of the plant. An extension was granted and the company shelled out $17 million bringing the plants nameplate capacity up to 10 MMgy. And then they decided that the company didnt need [the tax credit] anymore, this last session, Oldfield says. Although lawmakers decision to let it sunset is disappointing, Renova Energy is relieved its going to happen in 2015 instead of 2013. Oldfield had told the Wyoming Legislature that if the tax credit were cut off in 2013 he didnt see how the ethanol plant could keep operating. But, with a little more time on the clock, the company is going to give it their best shot. We certainly havent given up, he tells EPM. We plan on keeping the plant going. A requirement that the company purchase a minimum of 25 percent local corn will also lapse with the tax credit. Depending on market conditions at the time, that may mean the ethanol plant will start shipping in corn from other areas, since it currently pays a premium for local corn. If you talk to the agricultural people in Goshen County, Wyoming, theyll acknowledge that a bushel of corn, after the plant started operating, appreciated by about 30 to 40 cents a bushel, he says. Holly Jessen

Western Producer The Wyoming Ethanol plant in Torrington, Wyo., started operating in 1995 as a 2 MMgy plant.

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Inbicon kicks up licensing plansAfter spending the past three years developing a licensing package and process guarantee, Inbicon A/S, cellulosic ethanol technology developer and subsidiary of Denmarks DONG Energy A/S, is now actively marketing its technology in North America through newly formed Leifmark LLC. Named for Scandinavian explorer Leif Ericson (the first European to land in North America) and the Danish word for fieldmarkLeifmark had nine Inbicon projects in various stages of development by mid-April, two of which are co-location projects with existing ethanol producers, according to founding partner Tom Corle. He and fellow Leifmark partner Paul Kamp will spend the rest of 2012 advancing those projects and focusing on integrating Inbicons cellulosic ethanol/power generation technology at more ethanol plants and power companies in the U.S. and Canada. Inbicons technology utilizes agricultural residues like wheat straw and corn stover or energy crops to produce cellulosic ethanol, C5 molasses and lignin. A typical project would convert approximately Working Example Inbicons operating demonstration-scale cellulosic ethanol facility 1,320 metric tons of in Kalundborg, Denmark, employs some of the same technology that is now being biomass per day into marketed throughout North America by newly formed Leifmark LLC. 20 MMgy of ethanol. Corle says Leifmark projects. Tight financing situations have made has identified 80 of the existing 209 U.S. corn it difficult to expand over the past few years, ethanol plants as being the best candidates to but Corle says he believes that environment is integrate Inbicons technology, based on the beginning to loosen up, allowing more ethaproximity of available biomass to the ethanol nol producers to explore cellulosic ethanol plant. production. Inbicon is also able to obtain loan Inbicon has operated a 4 metric ton-per- guarantees through a Denmark export fund hour demonstration-scale facility in Denmark for equipment imported to the host country since 2009 and has more than a decade of ex- for its projects, he says. perience in biomass logistics there, Corle says. Leifmark is also currently seeking to exHes been working with Inbicon for years and pand its team to broaden its project develophelped put together the commercial licens- ment. We have a product and now we need ing and process guarantee package, which, to make sure we have the marketing team to he says, will help position major commercial accelerate the projects, he says. Kris BevillPHOTO: INBICON

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Anticipating AsiaConditions are ripe for biofuels demand and production to boom in Asia over the next few years, as steady growth in countries such as China, India and Japan will prompt an astronomical rise in fuel demand, says Tammy Klein, assistant vice president of global consulting firm Hart Energy. Ethanol and biodiesel demand in Asia for 2011 totaled 1.6 billion gallons, but by 2015, Hart Energy analysts expect that number to increase to nearly 2.6 billion gallons. Ethanol demand alone is expected to increase by 500 million gallons during that time frame. For U.S. technology developers, the region offers an abundance of feedstocks such as agricultural wastes and sugarcane, but those seeking to prove their technologies will also need to confront a host of issues that could complicate the process. Many countries in Asia are still developing, and governments change hands every few years, so long-term regulatory support is hard to come by, according to Huiming Li, Asia director at Hart Energy, who also points out that there are no policies yet that compare to the U.S. renewable fuel standard. Policies that are in place are often created to benefit local producers, so U.S. companies would be well-served to form joint ventures with companies in targeted countries. Lack of infrastructure is another major issue that needs to be taken into consid-

Asian biofuels consumption expected to grow substantiallyeration. It is a major, major issue that I do not think anybody in this space has paid due attention to, whether they be developing nextgeneration biofuels projects or first-generation biofuels projects, Klein says. Unlike the U.S., where consumer access to fuels is the largest infrastructure issue, developers looking to Asia may also have to factor in such basic issues as adequate roads and electricity availability at the plant site. Still, the benefits of developing a project in Asia could outweigh the disadvantages if the economics of the overall project are solid, Li says. Like other regions of the world, countries in Asia are eager to advance next-generation biofuels production. China and Japan have the largest gasoline consumption in the region and are leading the push for cellulosic ethanol, but companies there are facing the same technological issues with scale-up as elsewhere and are looking to the U.S. for any available guidance, Li says. Because China is one of the largest agricultural countries in the world, agricultural wastes are particularly attractive potential feedstocks. They are already using biomass for other applications like biogas combustion purposes, but they are also hoping to make use of the resources to produce cellulosic ethanol, she says. Li expects China, India and Southeast Asia to be the main investment areas in the region because of the availability of agricultural waste and other energy crops. Hart Energy plans to release updated biofuels demand numbers for Asia in July. For now, ethanol development in that region is anybodys game, Li says. Klein agrees and says that despite its challenges, Asia offers a lot of potential for expansion. Conditions are ripe to do projects there, she says. Kris Bevill

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Hungary for EthanolU.S. contractor Fagen Inc. was key to building a corn-ethanol plant in HungaryBY HOllY JESSEN

Dunafoldvar, Hungary, reminds John Handel of certain areas in the Midwest. There are expanses of really nice agriculturalland, the project manager of Fagen Europe LLC tells EPM. It is pretty well suited for corn production. Besides that, like many other areas of the United States and the world, Hungary needs jobs and economic activity. Enter Pannonia Ethanol, a corn-to-ethanol plant, which began production this spring, that will produce up to 240 MMly (63.4 MMgy.) The facility was built by Ethanol Europe Renewables Ltd., a joint venture of the Fagen and Turley families, says Eric Sievers, CEO of Ethanol Europe. Our plan is to develop, own and operate Fagan ethanol plants in Europe, he adds. Fagen builds ICM Inc.-designed ethanol plants. The development company has already announced its intention to build a second ethanol plant in Mohacs, Hungary, about an hour away from the first plant. Construction at Mohacs, which will be the same size as the first, is expected to begin this summer. From there, the company has identified about a half dozen additional sites, located both in Hungary and in neighboring countries. Hopefully, by the end of the summer we will be ready to announce our third [location], which is not in Hungary, Sievers says. Mark Turley, the catalyst behind the development company, started out selling cars in Dublin and had built a successful international real estate business before exiting prior to the market crash. According to Seivers, Turley determined his next step would be investing in renewable energy. He took a year to study everything from solar energy, wind power and biofuels before ultimately setting his investment sights on ethanol.JUNE 2012 | Ethanol Producer Magazine | 43

Shipping by Barge Located adjacent to the Danube River, Pannonia Ethanol in Dunafoldvar, Hungary, can load ethanol and distillers grains directly onto barges. The river flows southeast from Germany though four central and eastern European capitals before emptying into the Black Sea.PHOTO: ZOLTAN SCHAFER

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HUNGARYMohacs Dunafoldvar

Landlocked Hungary is bordered by Slovakia and Ukraine to the north, Romania to the east, Serbia to the south and Slovenia and Austria to the west. Budapest is the capital and largest city of Hungary.

In searching for a partner, Turley had only one man in mind. There was a decision made early on, that if we could get Ron Fagen to agree to build a plant in Europe, we would go ahead and create Ethanol Europe, Sievers said. And if he wouldnt agree to that, there was no need to even form the company and no need to do a project. So, step No. 1 in our entire business was to figure out a way to get Fagen over to Europe. Ethanol Europe is one of only a few investors working on building greenfield ethanol plants in Europe, confirms Rob Vierhout, sec-

retary general of ePURE, the European Producers Union of Renewable Ethanol. In the United Kingdom, Vivergo Fuels, a 420 MMly feed wheat-to-ethanol production facility, began commissioning in April. More progress is needed, however. The EUs ethanol industry has production capacity for only about half the 14 billion liters needed to fulfill the Renewable Energy Directive. Passed in 2009, it sets what the European Commission describes as ambitious targets for all EU member statesaiming for 20 percent renewable energy, which includes 10 percent specifically in the transportation market, by 2020. The results, so far, have been lackluster, Sievers says. It was supposed to lead to the type of investment boom that you saw in the U.S. in 2005 and it just didnt happen, he says. Whats the hold up? Vierhout lists four reasons, the first of which is the economic crisis. There is simply less capital around, he says. Second, the biofuels sector is completely under political control, which makes its future unknown. Finally, he points to the unsolved indirect land use change issue and the risk of imports from ethanolproducing countries. Sievers, on the other hand, identifies ethanol price versus cost of production as the main thing holding prospective investors from diving into ethanol. The prevailing ethanol prices in Europe are not attractive to European producers, whereas, with a Fagen ethanol plant, the prices look attractive, he says.

Down to the Last Detail

Site work began on the Dunafoldvar ethanol plant in summer 2010, with Fagen Europe employees mobilizing in the third quarter, Handel says. The plant is a typical 50 MMgy ICM/Fagen ethanol plant. In all, 16 Fagen employees each spent about a year in Hungary. A few, like Handel, brought families with them but the majority did not. While the Fagen employees brought experience building etha-

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nol plants, they also worked hand-in-hand with around 10 Hungarian nationals who made key contributions as well. These workers helped the Fagen employees navigate factors such as the language barrier and meeting European safety and electrical standards, for example. Some changes had to be made to the design to make it fit those standards. Some of them are significant, some of them arent that noticeable, he says. ICM worked with Fagen on the project in the same capacity it has in U.S. plants, providing process design and equipment, says Mark McCorkle, ICM project manager for the Dunafoldvar plant. Typically, an ICM employee comes to the site before it starts up. With the project in Hungary, the company sent an employee to the site to answer questions and provide guidance beginning in late January. A second employee later took his place and remained in Hungary until mid-May. Two other employees took trips to Hungary to help oversee the installation of the dryer system. In addition, about 15 Pannonia employees traveled to Lamberton, Minn., for ICM-led classroom and hands-on training in January. This is our very first European project, and it has provided many challenges as well as opportunities, McCorkle says, adding that the team members did a tremendous job of learning how to work within EU requirements. That knowledge will come in handy for the Mohacs project, he adds. The ethanol plant is already poised to double capacity, with substantial groundwork in place, Sievers says, estimating that a quarter to

Cold and Snowy The Pannonia Ethanol plant is surrounde

Ethanol Producer - June 2012

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