February 2010 Ethanol Producer Magazine

FEBRUARY 2010

INSIDE: CANADIAN RENEWABLE FUELS SUMMIT REVIEW

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ETHANOL PRODUCER MAGAZINE February 2010 4


54

vol. 16 no. 2

38 USEDriving Up Demand While increasing the national mandate for ethanol use is vital to sustaining the ethanol industry, it is not the only way ethanol demand can be extended. Eff orts are also underway to increase the use of fl ex-fuel vehicles and E85 throughout the United States. –By Erin Voegele

44 MANDATESIncentives: It’s All About Location, Location, Location Many states have taken measures beyond the national requirements to incentivize the production and use of ethanol. EPM explores various state programs and mandates that benefi t ethanol producers.–By Erin Voegele

50 ADVANCEMENTSSearching for the Next Iowa As national demand for ethanol grows, the U.S. industry is expanding its production base beyond the Midwest to include areas that have great demand for ethanol but no local producers. –By Kris Bevill

54 EVENTDelivering Renewable Results Th e Canadian Renewable Fuels Summit off ered industry members the opportunity to share success stories and positive outlooks for 2010.–By Susanne Retka Schill

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ETHANOL PRODUCER MAGAZINE February 2010

Ethanol Producer Magazine: (USPS No. 023-974) February 2010, Vol. 16, Issue 2. Ethanol Producer Magazine is published monthly. Principal Of-fi ce: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offi ces. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

8 Advertiser Index

10 The Way I See It The Industry Demands Greater Demand By Mike Bryan

14 Business & People

18 Commodities

20 View From the Hill If Past is Prologue … By Bob Dinneen

21 RFA Update

22 BIObytes

24 Industry News

32 Drive Green Jobs Waiver is Necessary for Market Expansion By Tom Buis

34 Legal Perspective State of the Industry—2010 and Beyond By Gregory J. Lynch and Porter J. Martin

36 eBIO Insider Can Europe Solve the E85 Chicken-and-Egg Problem? By Robert Vierhout

64 Events Calendar

65 Marketplace

departments

contents

7

contributions

58

60

58 TECHNOLOGY Nanotech Products Increase Effi ciency and Energy Saving Nanotechnology-derived coatings can provide energy effi cient, environmen-tally friendly methods of insulation on tanks, piping and other ethanol-related equipment.–By Khatereh A. Pishro and Francesca M. Crolley

60 RESEARCH The Proof is in the Profi t Th e National Corn-to-Ethanol Re-search Center operates a pilot plant that off ers biofuel industry members the opportunity to validate new process technology, products and equipment.–By Terry Lash

AdIndex

26 & 61

37

49

46

48

29

2

17

42

28

63

30

31

3

53

47

11

68

40

4

12 & 13

52

43

33

27

57

56

41

6

35

59

2010 International BIOMASS Conference & Expo

2010 International Fuel Ethanol Workshop & Expo

2011 National Ethanol Conference

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BrownWinick Law Firm

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Cereal Process Technologies

CH2M Hill

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Fagen Inc.

FCStone, LLC

Fermentis - Division of S.I. Lesaffre

Gavilon

Gamajet Cleaning Systems Inc.

Genencor® - A Danisco Division

Growth Energy

Hydro-Klean Inc.

ICM Inc.

Inbicon

Indeck Power Equipment Co.

Interstates Co.

Lallemand Ethanol Technology

Martrex Inc.

Mist Chemical & Supply Co.

Nalco Co.

Natwick Associates Appraisal Services

Novozymes

Renewable Fuels Asociation

Vogelbusch USA Inc.



EDITORIAL

Kris Bevill [email protected]

Craig A. Johnson Contributions [email protected]

Erin Voegele Associate [email protected]

Jan Tellmann Copy [email protected]

ART

Jaci Satterlund Art [email protected]

Sam Melquist Graphic [email protected]

Elizabeth Slavens Graphic [email protected]

PUBLISHING & SALES

Mike Bryan [email protected]

Joe Bryan [email protected]

Tom Bryan Vice President, Content [email protected]

Matthew Spoor Sales [email protected]

Marla DeFoe Advertising [email protected]

Howard Brockhouse Sales Manager, Media & [email protected]

Jeremy Hanson Senior Account [email protected]

Marty Steen Account [email protected]

Bob Brown Account [email protected]

Jessica Beaudry Subscriptions [email protected]

Jason Smith Subscriber Aquisition [email protected]

HOW TO REACH US

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The Way I See It

The Industry Demands Greater Demand2010 will be a pivotal year for many ethanol pro-

ducers. The need for increased ethanol demand is at the breaking point and, for many in the industry, greater de-mand for their product can’t happen too soon.

While we wait for the U.S. EPA’s decision on E15, the industry is working to increase demand in other ar-eas. The Renewable Fuels Association and the American Coalition for Ethanol have teamed up to expand fueling infrastructure by promoting the installation of blender pumps throughout the U.S., and E85 pumps are opening in parts of the country, such as California, where they have been lacking until recently. U.S. automakers say that they won’t produce more fl ex-fuel vehicles until E85 in-frastructure is increased, so the industry is taking the ini-tiative to make that happen.

State mandates and related ethanol programs will also impact demand for ethanol this year. Associate Edi-tor Erin Voegele explores many state renewable fuel stan-dards in her article, “Incentives: It’s All About Location, Location, Location.” At least 32 states currently have some form of ethanol-specifi c incentive and more will take effect in 2011. As often happens, the states will lead the way for federal programs and should also guide the EPA to greater ethanol utilization.

Editor Kris Bevill tackles the topic of industry ex-pansion in her article, “Searching for the Next Iowa.” She spoke with several potential ethanol producers who plan to locate in Florida for one main reason: demand for their product. As the Midwest market becomes satu-

rated, producers are moving into parts of the country that do not have a local supply of ethanol, and Florida is one of the hot spots.

The EPA began working on labeling requirements for E15 in December, which gives a strong indication that it will approve the new blend by mid-year. And while approv-ing the waiver is essential to moving the blend wall, the industry won’t sit idly by and wait for a federal agency to dictate demand for its product. The 2010 energy outlook from the U.S. Energy Information Administration pre-dicted that biofuels will account for the entire growth of U.S. liquid fuel consumption between 2008 and 2035 and that renewable fuel standard targets will be exceeded by 2035. Pending commercial cellulosic ethanol production, combined with greater productivity from the corn-based plants, will help the industry exceed these expectations, proving that the supply is there to meet the demand.

That’s the way I see it.

Mike BryanChairman

[email protected]

Open house at the new home for The New Ethanol™.

In November we opened the first Inbicon Biomass Refinery. Customers came to Kalundborg from Europe, Japan, and the United States. More international visitors stopped by during the climate summit in Copenhagen. “It doesn’t look like any ethanol plant we’ve ever seen,” they said. It doesn’t because it isn’t. Here we’re spinning 30,000 metric tons of wheat straw a year into 1.4 million gallons of The New Ethanol. Our process also produces a lignin so clean it can be

used by power generation plants without further treatment to replace coal and produce greener electric-ity. In return, the power plant supplies waste steam to cook the refinery’s straw. This energy exchange

Inbicon Biomass Refinery. Making ethanol work for the world.™

creates a dramatic boost in the efficiency of both plants. The Danish modern design also houses the new Inbicon Biomass Technology Campus. It’s home to R&D as well as our client and partner center. Here we’ll foster worldwide collaboration with scientists, owners, financiers, and construc-tion executives on everything from quality control to revenue enhancement to staff training. Join us in the knowledge exchange that keeps us continuously improving our process. By spring, we’ll have the plant in full operation, continuing to optimize it. So if you didn’t come for the opening, come for the open house we’ll arrange just for you. Call Thomas Corle at 01.717.626.0557 or e-mail [email protected].

© 2009 Inbicon, Kraftværksvej 53-Skærbæk, 7000 Fredericia, Tel +45 76 22 20 00 The New Ethanol™ and Inbicon Biomass Refinery™ are trademarks of Inbicon A/S and DONG Energy A/S. www.inbicon.com

14 ETHANOL PRODUCER MAGAZINE • March 2010

Hawkeye Renewables LLC fi led for Chapter 11 bank-ruptcy the end of 2009. The company, which is a subsidiary of Hawkeye Energy Holdings LLC, owns and operates two Iowa-based ethanol plants; a 100 MMgy facility in Iowa Falls, Iowa, and a 115 MMgy facility in Fairbank, Iowa.

Operations are continuing normally at both ethanol plants. Hawkeye Energy’s other sub-sidiaries, Hawkeye Growth and Hawkeye Gold, are not a part of the reorganization and are unaffected by the fi ling. Hawk-eye Growth owns and oper-ates two other Iowa ethanol plants in Menlo and Shell Rock. Hawkeye Gold is responsible for marketing the ethanol and distillers grains produced at all four plants.

Bion Environmental Technologies Inc. is develop-ing a large-scale integrated beef cattle fi nishing plant and closed-loop ethanol project that has received the unanimous sup-port of the Schroeppel, N.Y., town board. The fi rst phase will include fi nishing facilities for 72,000 beef cattle, ethanol pro-duction and an associated beef processing plant. The company will use a patented, proprietary, waste treatment system. Bion expects that as much as 25,000 acres of previously abandoned, or under-utilized farm land will

be needed to provide inputs for the project. The pre-construc-tion phase is expected to take as long as two years.

A 55 MMgy ethanol plant in Maricopa, Ariz., has plans to market branded E85 under the trademarks Arizona E85 and AZE85. Pinal En-ergy LLC is adding storage for the higher grade gasoline need-ed for blending E85 along with metering equipment for inline blending. Pinal Energy’s sister company, Pinal Jet, will sell the branded E85 in the regional market. The company plans to offer its trademarked E85 to lo-cal government, taxi and rental car fl eets, as well as to retailers. “Our main selling point is that it’s a cleaner burning fuel,” said General Manager John Skelly. “And it’s a U.S. produced prod-uct.”

GreenShift Corp. has granted an ethanol plant in La-kota, Iowa, the right to use a GreenShift patented corn oil extraction technology. Global Ethanol LLC operates a 100 MMgy ethanol plant. The ex-

traction technology “drills” into the back-end of fi rst generation corn ethanol plants, tapping into the existing reserve of in-edible crude corn oil. Global Ethanol will fi nance, build, own and operate a facility based on GreenShift’s technology in ex-change for an ongoing royalty payment of roughly 20 percent of the market price of the ex-tracted corn oil at the time of shipment.

Blackmer, an operating company within Dover Corp.’s Pump Solutions Group, has cre-ated a new brochure specifi cally for the liquid terminals market. The brochure describes how the incorporation of Blackmer’s rotary sliding vane and centrifu-gal pumping technologies can help liquid-terminal operators improve the effi ciencies and re-liability of their transfer, blend-ing/mixing and transportation applications. The brochure in-cludes an application matrix and schematic drawing that depicts where specifi c Blackmer pump

types fi t into traditional liquid-terminal operations.

A Michigan-based ag-ricultural and transportation company has purchased its fi rst ethanol facility. Zeeland Farm Services formed a subsidiary, Nebraska Corn Processing LLC to purchase the 44 MMgy Mid America Agri Products/Hori-zon LLC (MAAP/H) in Cam-bridge, Neb., for $30.1 million during a Dec. 17 bankruptcy auction. The facility, which orig-inally began producing ethanol in 2007, has been idle since Jan-uary 2009. MAAP/H fi led for bankruptcy on June 3 and laid off all employees. At press time, the sale to Nebraska Corn Pro-cessing was expected to fi nal by early February.

Praj Industries Ltd. and Novozymes AS an-nounced a plan to work together on advanced biofuels. The two companies have worked togeth-er for several years within con-ventional biofuels. The goal of

&Business PeopleEthanol Industry Briefs

ETHANOL PRODUCER MAGAZINE • March 2010 15

Sponsored by

a new collaboration agreement will be to optimize the enzymat-ic hydrolysis processes and the use of enzymes in the produc-tion of advanced biofuel. Praj is completing pilot trials of its cel-lulose-to-ethanol technology in India. The company has used a variety of feedstocks, including sugarcane bagasse, corn cobs, straw, wood chips and grasses, according to Pramod Chaud-hari, chairman of Praj.

The Energy & Envi-ronmental Research Center (EERC) Foundation and Whole Energy Fuels Corp. are poised to commercialize cellulosic bio-fuel technology developed at the EERC. Whole Energy is receiv-ing global, exclusive licensing rights to EERC Foundation’s technology, which converts bio-mass and other recycled mate-rial into liquid biofuels. EERC is located at the University of North Dakota and Whole En-ergy Foods is headquartered in Bellingham, Wash.

The Louisiana State University Agricultural Center is working to establish the Louisiana Institute for Bio-fuels and Bioprocessing (LIBBi), a research, education and out-

reach initiative within the Ag-Center. The Board of Regents initially approved the project to create a “virtual center” for one year. Initially, the LIBBi will encompass all ongoing research projects within the AgCenter, including those involving the conversion of bagasse, sweet sorghum, switchgrass and algae to biofuels, polymers and spe-cialty chemicals. “As the exter-nal advisory board develops and corporate partners emerge, we hope to expand the breadth and depth of our programs,” said John Russin, AgCenter associ-ate vice chancellor and institute director.

Codexis Inc. has fi led a registration statement with the U.S. Securities and Exchange Commission in preparation for an initial public offering of shares of its common stock. California-based Codexis has developed a proprietary tech-nology platform which enables the creation of optimized bio-catalysts that make existing in-dustrial processes faster, cleaner and more effi cient that current methods, according to the com-pany’s registration statement. The company believes its tech-nology platform will enable the development of biocatalysts that can be used to produce commercially viable, cellulose-derived biofuels.

Fred Zeidman joined XRoads Solutions Group as a principal focused on growing the fi rm’s global energy practice and spearheading other growth initia-tives. Zeidman was CEO, president and chairman of Seitel Inc., most recently served as chief re-structuring offi cer of Transmeridian Exploration Inc. and was interim president of Nova Biosource Fuels Inc. Also, notably, President George W. Bush appointed him as chair-man of the United States Holo-caust Memorial Council in 2002. “As one of the country’s leading energy turnaround experts and a proven thought leader in the industry his expertise will be a valuable addition to the fi rm’s capabilities,” said Dennis Si-mon, managing principal.

Two ADF Engineering Inc. employees passed the Ohio Profes-sional Engineer exam in Chemical Engineering. Matt Williamson is a process depart-ment manager and has been with ADF Engineering since May 2008. Beth Hery is a senior

process engineer and has been with the company since 2005. ADF Engineering has corpo-

rate headquarters in Miamisburg, Ohio. The company is an engineer-ing and consulting fi rm serving the food-feed-fuel and bioscience in-dustries in the United States and Canada.

Weaver, an indepen-dent certifi ed public account-ing (CPA) fi rm, has launched “The Weaver Renewable and Clean Energy Source” energy blog. William Newman, CPA and partner, and Wade Wat-son, CPA, CFE and partner, post articles relating to gasoline and transportation fuel regula-tions and how they relate to the energy industry. Some of the topics covered include the E15 ruling to RFS2.The blog

can be found at www.weaverllp.com/energy-blog. “ O f f e r i n g this energy blog gives our current and poten-tial clients additional and informative information as it becomes available,” said John J. Mackel III, CPA, director of energy services and partner for assurance services. EP

Zeidman

Hery

Williamson


&Business PeopleEthanol Industry Briefs

SHARE YOUR INDUSTRY BRIEFS To be included in Business & People, send infor-mation (including photos and logos if avail-able) to: Industry Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to (701) 746-8385, or e-mail it to [email protected]. Please include your name and telephone number in all correspondence.

18 ETHANOL PRODUCER MAGAZINE • February 2010

COMMODITIES REPORT

Natural Gas Report

Corn Report

By Brad Smith, U.S. Energy Services Inc.

By Jason Sagebiel, FCStone

Dec. 15—2009 began with predictions of a fl ood of liquefi ed natural gas (LNG) imports to the U.S. However, global delays and production curtailments, the NBP (United Kingdom) premium to Nymex prices, and continued domestic oversupply combined to prove those predictions wrong. Lack of prior success in predicting LNG imports and the complexity involved has led many analysts to rely on short-term forecasts from specialists. But there are fac-tors signaling a growing likelihood of increased U.S. LNG imports in 2010.

Current LNG capacity is around 33 billion cubic feet per day with another 4 billion cubic feet per day expected to come online by March. While the vast majority of LNG is under long-term con-tracts, much of the new capacity is spot cargo, free to export at the highest achievable netback.

In 2010, supplies from Asia and the Middle East will likely out-strip rising Asian demand. Excess existing and new capacity is likely

to sail into the Atlantic where fundamentals between Europe and North America will infl uence prices and eventual offl oad locations. Prices have plummeted in the UK and last year the UK eclipsed the U.S. in imported volumes. But Europe is faced with a storage situation similar to the U.S. and an industrial demand expectation likely to lag the U.S. Increased LNG volumes in the Atlantic will face NBP prices that are currently under Nymex through Septem-ber 2010.

Prices for LNG are determined under bilateral agreements with undisclosed terms. And while European and U.S. LNG prices trade at a premium or discount to NBP/Nymex, the spread can fl uctuate signifi cantly. Based on shipping and ancillary cost estimates, Nymex prices need to exceed NBP prices by only about 70 cents or $1.30 to divert African and Middle Eastern cargoes, respectively. EP

Brad Smith, price risk manager, can be contacted at [email protected].

Dec. 18—The corn market had a very interesting fall which could impact how corn is marketed through the new year. A slow, wet harvest offered much support to the corn market with lingering concerns of bushels remaining unharvested. Another concern that will arise as warmer weather approaches is the quality of the corn with high moisture content that was stored away during the fall. This may impact corn basis levels.

Another factor that could impact corn and ethanol crush mar-gins is the ramping up of ethanol production. The market expects to see more ethanol production in mid-2010, which could impact corn demand and ethanol supply, pressuring margins. Today, the USDA projects the U.S. ethanol industry to consume 4.2 billion bushels of the corn crop, or approximately 32 percent of this year’s corn pro-duction.

However, placing fundamental issues aside, corn will continue to encounter volatile markets due to commodities being used as an investment tool. Rebalancing of commodity asset class by the funds will make 2010 interesting. This type of volatile price action that can occur could place pressure on ethanol margins.

The accompanying graphic of March CBOT corn futures and

the seasonality of that contract illustrates how March corn futures seasonally begin to rally in mid-December. Look for corn to be chop-py and expect to see wide price moves. The South American soybean crop and U.S. dollar index will be major factors to consider with what direction the corn market may want to take. EP

Current oversupply won’t last

Fall conditions could impact spring markets

ETHANOL PRODUCER MAGAZINE • February 2010 19

COMMODITIES REPORT

DDGS Report

Ethanol Report

By Sean Broderick, CHS Inc.

By Rick Kment, DTN Biofuels Analyst

Vomitoxin scare impacts rail market

Commercial buying supports price outlook

Dec. 22—The recent theme of the DDGS market has been logistics. The vomitoxin scare caused many hog producers to lower distillers grains inclusion rates, which pushed more product into the rail market. This in-creased demand for railcars, depressed local truck markets and tightened up rail markets. Prices have not changed much in the West, but a trade was just made for four unit trains to be sent to Asia for mid-February, which is going to drastically decrease the supply of unit trains.

Ironically, the cheaper local truck prices may incent hog producers to fi gure out a way to increase their dis-tillers grain inclusion rates via “toxin binders” or ration changes.

Export markets are in the spot time frame, with few buyers looking

out further than a month at a time. The near-bys have been tight, and deferreds have been a big discount. Containers have been very strong lately, but they usually drop off after Christmas, so expect January demand to drop in comparison with Decem-ber. Mexico demand is steady, but that market must pay premiums to offset the added transit time for railcars. Eu-rope approved the last variety of corn that was holding up U.S. DDG impor-tation, so that should eventually come into play on the demand side.

Future focus is on the CBOT and the weather in South America. Etha-nol margins will also dictate run times and corresponding DDGS produc-tion. Overseas demand could possibly improve which should help DDGS prices for the winter. EP

Dec. 18—Strong investment buying in the energy markets eased throughout the fi rst half of Decem-ber, but late-month buying activity returned to the crude oil and gaso-line markets. This could lead to an additional round of upward moving markets as renewed buying activity may be triggered by predictions of better economic times after Jan. 1. This could continue to drive the mar-ket both higher and lower in a nar-row range over the next few weeks. Gasoline prices on the futures market slipped nearly 15 cents per gallon by Dec. 18, but recent developments in the Middle East may add an additional spark to the already contentious en-ergy markets.

Although gasoline demand re-mains relatively stable, ethanol de-mand is beginning to fall throughout most of the country, except for the West Coast. California’s E10 mandate could limit supply across the entire West Coast. Prices through most of the country fell 20 to 35 cents per gal-lon over the past month and with more production expected to return to the market in early 2010, it is likely that the price spread between gasoline and ethanol markets will remain relatively tight. The weakness in overall demand for ethanol as well as the possibility of additional support in corn prices over the next several weeks could signifi -cantly decrease ethanol plant margins from where they currently are. EP

Regional Ethanol Prices ($/gallon as of Dec. 18)

Regional Gasoline Prices ($/gallon as of Dec. 18)

DDGS Prices ($/ton)

Corn Futures Prices (Dec. corn, $/bushel)

Natural Gas Prices ($/MMBtu)

U.S. Ethanol Production Output (barrels/day)

Cash Sorghum Prices ($/bushel)

REGION

West Coast

Midwest

East Coast

REGION

West Coast

Midwest

East Coast

LOCATIONMinnesota

California*

Chicago

Buffalo, N.Y.

Central Florida*Central Valley

DATEDec. 18, 2009

Nov. 18, 2009

Dec. 18, 2008

NYMEX

N. Ventura

Calif. Border

August 2009

July 2009

August 2008

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

SPOT

2.045

1.94

1.985

SPOT

2.0025

1.9102

1.8845

DEC. 2009105

171

133

135

152

HIGH4.01 1/4

4.25

3.91

DEC. 20094.486

4.92

4.79

725,000

727,000

640,000

DEC. 18, 20093.433.333.063.483.404.18

RACK

2.30

2.15

2.19

RACK

2.12

1.9567

1.9589

NOV. 2009110

170

135

145

153

LOW3.91

4.13

3.80 1/2

NOV. 20094.289

4.81

4.62

NOV. 19, 20093.443.383.173.473.503.93

DEC. 2008120

152

95

115

136

CLOSE3.97 3/4

4.13 3/4

3.89 1/2

DEC. 20086.88

6.68

5.51

DEC. 19, 20082.892.712.953.062.833.67

SOURCE: DTN

SOURCE: DTN

SOURCE: CHS Inc.

SOURCE: FCStone

SOURCE: Sorghum Synergies

SOURCE: U.S. Energy Services Inc.

SOURCE: U.S. Energy Information Administration


VIEW FROM THE HILL

If Past is Prologue …“History is a guide to navigation in perilous

times. History is who we are and why we are the way we are.” So says famed author of “1776” Da-vid McCullough. America’s ethanol industry has just endured what may have been the most perilous year many in the industry can remember. No one is going to suggest that all the dangers have now passed.

It is at this precise time that it behooves us all to step back, take stock of the remarkable achieve-ments we have made as an industry, and gain a greater appreciation of the strong foundation we have built that will ensure this industry’s long term viability and success.

Since 2000, American ethanol has grown from a mere 1.6 billion gallons of ethanol production a year to a capacity to produce nearly 12 billion gal-lons this year. The industry has migrated beyond the Corn Belt, and today the majority of states are home to at least one ethanol production facility.

Equally as impressive has been the develop-ment of ethanol-blending infrastructure and the greater availability of ethanol all across the coun-try. Eight out of every 10 gallons of gasoline sold in the U.S. now contain at least 5.6 percent ethanol. More than 2,300 gas stations today offer a blend higher than E10 and a growing number are install-ing blender pumps featuring E20, E30 and E85.

Perhaps in no other arena has the industry been more successful than in securing strong and consistent public policies that have led to unprec-

edented growth of the renewable fuels industry. In the past 10 years, industry members have worked tirelessly with policymakers and legislators at all levels of government to secure a strong future for ethanol. The industry has worked to modify gaso-line regulations that have led to increased ethanol blending. We have successfully defended the ne-cessity of the tax incentive for ethanol blenders to expand the marketplace. The list goes on and on.

But in the past fi ve years, the unparalleled com-mitment of those in the industry who believe that a rising tide lifts all boats have achieved what few other industries dare to dream. We have opened up lines of communication with our petroleum indus-try customers who once sought only to stand in our way. We have unashamedly defended the indus-try against unfair criticism and unfounded attacks. And we twice helped pass historic legislation that demands a growing market for renewable fuels in place of traditional, unsustainable fossil fuels.

All of these achievements, challenges and ob-stacles have led to one defi ning moment in time. Today, we sit upon unparalleled opportunities and technological breakthroughs that stand ripened af-ter three decades of hard work.

Margaret Fairless Barber once wrote, “To look backward for a while is to refresh the eye, to restore it, and to render it the more fi t for its prime func-tion of looking forward.” So be proud. Enjoy your accomplishments. And prepare to return our focus to that next horizon.

Bob DinneenPresident and CEO

Renewable Fuels Association


RFA UPDATEwww.ethanolRFA.org

Absence of EPA renewable volume obligations could disrupt production

In late December, the U.S. EPA submitted its fi nal rule for the expanded renewable fuel standard (RFS2) to the Offi ce of Management and Budget—the fi nal step before it takes effect. However, the EPA has yet to issue the 2010 renewable volume obligations (RVOs) which specify the percentage of an obligated party’s transportation fuel that must be comprised of renewable fuels. In 2009, the law called for 11.1 billion gallons of renewable fuel use. In 2010, the law calls for the blending and sale of 12.95 billion gal-lons of renewable fuel.

The EPA has signaled that the 2010 RVOs will be specifi ed in the fi nal rule and that the obligations will be retroactive to Jan. 1, 2010. However, to avoid disruptions in the ethanol blending market, obligated parties would bene-fi t from knowing what the RVOs will be for the coming year. EPA was required to issue volume requirements for 2010 blending by Dec. 1. In both 2008 and 2009, the EPA issued these requirements in the absence of full RFS implemen-tation. Despite the lack of published RVOs, obligated par-ties under the RFS are still required to increasingly blend renewable fuels.

According to EPA public statements, the RFS is likely to be approved in the mid-January timeframe. It takes an additional 60 days for the approved rule to take effect.

RFA applauds House restoration of biofuel loan guarantee funds

The U.S. House of Representatives voted Dec. 16 to restore $2 billion to an alternative loan guarantee program that was borrowed to fund the “cash for clunkers” program. The Renewable Fuels Association is pleased to see the House vote to return those funds.

“This is an important step and one the Senate should replicate as soon as possible,” said RFA President Bob Din-neen. “Restoring these funds is just the fi rst step. Making sure the shovel-ready advanced biofuel projects can gain access to these loan guarantees is vital for them to begin construction and production commercial volumes of next generation renewable fuels. ”

“Advanced biofuel technologies are too close to [the] fi nish line to pull the plug and shift attention to other prom-ising, yet unproven, technologies,” Dinneen said. “As a senator and candidate, President [Barack] Obama spoke clearly about the need to bring next-generation biofuel technologies to the market. Now is the time to match that rhetoric with action. With a fi nal push, cellulosic and other advanced technologies can begin commercial production of biofuels that will greatly help efforts to mitigate climate change, provide jobs, and continue reducing our reliance on imported oil.”

The RFA sent a letter to the U.S. DOE in October, pointing out the diffi culties advanced biofuel companies were experiencing in obtaining funds. “A fundamental fl aw of the loan guarantee program is that DOE is weighing the applications of emerging technology projects such as cel-lulosic ethanol using the same criteria as mature technol-ogy projects, and against more mature technologies, such as wind and solar, that have been commercialized in other countries,” the letter stated. “The challenges facing next generation advanced biofuels are simply much different than those of the renewable power sector.”


Annual world biofuels production has surpassed 100 billion liters (26 billion gal-lons), displacing 1.15 million barrels of crude oil per day that create 215 million tons of greenhouse gas (GHG) emissions annually, according to a study commissioned by the Global Renewable Fuels Alliance released before the Climate Change Conference in Copenhagen, Denmark. The study documented biofu-els production in major pro-

ducing countries along with estimates of GHG emissions. Those were compared to the amount of emissions avoided from displaced petroleum. GRFA did not include in-direct emissions, explaining there are no credible assess-ments for indirect effects of petroleum and available data for indirect effects of biofuels cannot be independently ana-lyzed or verifi ed. The report is available at www.globalrfa.org.

Petrobras, its subsidiary Petrobras Biocombustível S.A. (PBio), and Petrochina International Co. Ltd.. recent-ly signed a six-month memo-randum of understanding. Joint studies will assess the economic and technical feasi-bility of new ethanol produc-tion in Brazil and exporting

ethanol to China, according to a Petrobas press release. China intends to both pursue ethanol production on home soil as well as invest in Bra-zilian production of ethanol, because China is unable to supply its own market solely with local production.

Brazilian companies sign MOU

BIObytes Ethanol News Briefs

In response to 8.3 percent reduced ethanol production in Brazil’s Center South, the government reduced its ethanol blend mandate from 25 percent to 20 percent. The three month reduc-tion will last through April.

Ethanol production dropped due to heavy rains plus increased demand for sugar imported to India, said Joel Velasco, UNICA’s chief representative for North America. The Brazil sugar cane industry isn’t startled by the reduction and will simply produce less anhydrous ethanol, which is mixed with gasoline and more hydrous ethanol, which has 4 percent water and is burned 100 percent in Brazilian vehicles.

Brazil lowers ethanol blend

EPA deems GHGs public health threat

Caption?

New Mexico Gov. Bill Richardson and the state’s con-gressional delegation launched an initiative in December to make New Mexico a leader in the biofuels industry. Approxi-mately 50 experts representing industry, science, education, ag-riculture, nonprofi t and govern-ment attended the fi rst meet-ing entitled, “Toward a New Mexico State Plan for Biofuels

Leadership.” The goal of the meeting was to create a road-map that capitalizes on New Mexico’s human and natural resources. By focusing on New Mexico’s unique combination of climate and natural resourc-es, scientifi c expertise, business infrastructure and economic policies, Richardson said, “we are perfectly positioned to lead the country in the development

N.M. set for biofuels leadership


Caption

Europe’s largest wheat-based ethanol plant began full scale production in January at Wilton, Teesside, U.K. Owned by Ensus Ltd., the facility’s annual production capacity will reach106 MMgy of ethanol and 386,000 tons of distillers grains. According to Ensus CEO Alwyn Hughes, more than 300,000 tons of carbon dioxide produced at the plant will be captured for use in the food and beverage industries in an ef-fort to improve the plant’s carbon footprint.

Ensus opens wheat ethanol plant

The government of India recently approved a national biofuels policy. According to information released by the government, the policy aims to make biofuels a major com-ponent of the country’s energy and transportation sectors, while contributing to energy security, climate change mitigation and job creation. The policy empha-sizes the use of next-generation

technologies that utilize non-traditional, indigenous biomass feedstocks for the production of biofuels. As part of the

policy, appropriate fi nancial and fi scal measures in the form of subsidies and grants will be considered to support the de-

velopment of biofuels. India expects 20 percent of its fuel be comprised of biodiesel and ethanol by 2017.

Scientists at the U.S. DOE’s Brookhaven National Laboratory have successfully engineered an enzyme to aid in the conversion of plant mate-rial into cellulosic ethanol. The enzyme breaks down lignin in a plant’s cell walls. Biochemist Chang-Jun Liu, whose work has focused on lignin alteration said the ultimate goal is to apply the enzyme to feedstocks, making

the plants more easily digested and fermentable. Liu’s team compared the genetic code of the new enzyme with informa-tion from enzymes involved in lignin synthesis to build the new model. Liu said Brookhaven’s engineered enzyme is “totally changed,” adding that the team still needs time to determine how the enzyme will affect lignin biosynthesis.

DOE engineers new enzyme

India promotes non-traditional feedstocks

Bunge Ltd. entered into an agreement to purchase a Brazilian-based holding com-pany, Usina Moema Participa-coes S.A. (Moema Par). which has one wholly-owned sugar-cane mill and ownership in-terest in fi ve additional mills. The six mills have a combined

crushing capacity of 15.4 mil-lion metric tons, according to Bunge. When fi nalized, Bunge will own a 60 percent share of Moema Par’s total capac-ity. The mills produce both raw and crystallized sugar as well as hydrous and anhydrous ethanol.

Bunge purchases mills in Brazil


Fiberight LLC recently purchased the former Xethanol LLC ethanol production facility in Blairstown, Iowa, with plans to produce cellulosic ethanol at a demonstra-tion scale. The plant was acquired for $1.65 million and Fiberight is in the process of converting it to handle municipal solid waste (MSW). Once completed, this would be one of the fi rst facilities in the U.S. to use MSW as a feedstock for ethanol production.

“We’ve been operating in stealth mode because we don’t want to make claims un-til we can prove them,” CEO Craig Stuart-Paul said. He told EPM that the technology is now at the point where it can be scaled up to a commercial scale and Fiberight plans to demonstrate that in Blairstown.

Fiberight’s plan to quietly develop its technology has taken the company most of the past three years. Its process, enhanced fi ber separation technology, is designed to run in a “mini mill.” Fiberight’s production model involves building numerous plants adjacent to cities with populations greater than 100,000. Each plant would produce around 10 MMgy of ethanol from locally-

derived MSW, a plan the company believes creates a platform for around 450 produc-tion plants.

“Our plans will make sense to commu-nities consisting of about 150,000 people within a 25-mile radius, of which there over 400 in this country,” Stuart-Paul said. Fi-beright intends to construct the mini-mills at a cost of $30 million to $50 million.

Fiberight’s unique process begins with the fractionation and homogenization of the MSW, creating a uniform feedstock for the plant. This step is seen as a major hurdle as other proposed MSW processes have not been able to achieve uniformity of the feed-stock.

Next, Fiberight has developed a propri-etary process for reusing its enzymes. Cap-turing the recycled enzymes lowers the cost of production and helps Fiberight achieve economies of scale that allow the company to produce ethanol from MSW profi tably and with less risk.

Plastics, a common hazard in dealing with MSW, are separated from the waste stream in the company’s multi-stage process.

Removing and subsequently depolymerizing the 10 percent plastic in the waste stream to create synthetic oil allows the company to power the entire facility without the need for fossil fuels.

The remaining pulp will consist of approximately 65 percent cellulose and 20 percent hemicellulose, with the remainder being ash and other unusables. Stuart-Paul plans to convert the cellulose to ethanol and the hemicellulose to biochemicals, which can be used in the plastics industry. The company chose to diversify in this manner because, according to Stuart-Paul, biochem-ical products from C5 sugars is currently a more economical, fi nancially secure conver-sion solution for hemicellulose than ethanol production.

Fiberight opened a 50,000-square-foot plant in Lawrenceville, Va., in February to prove its proprietary process for converting MSW into ethanol. The Virginia plant also demonstrates the successful commercializa-tion of its waste extraction processes.

—Craig A. Johnson

Fiberight to produce MSW-based ethanol

Fiberight LLC plans to produce cellulosic ethanol as well as synthetic oil and biochemicals from municipal solid waste.

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The Energy & Environmental Research Center (EERC) Foundation has developed a new approach to producing cellulosic etha-nol in a process that converts biomass and other recycled material into liquid biofuels. The process will be the centerpiece of a new plant design to be used by Mercurius Bio-fuels, a company formed by Whole Energy Fuels Corp., headquartered in Bellingham, Wash.

According to Atul Deshmane, CEO and president of Whole Energy, the EERC part-nership will accelerate the process bringing the technology to fruition. “Partnering with the EERC and obtaining a technology license from the EERC Foundation will jump start Mercurius Biofuels, a new company formed with our help to develop and commercialize advanced biofuel technologies,” Deshmane said. “Mercurius is developing the technol-ogy with the intent of building and operat-ing a pilot plant to demonstrate what may be the most energy- and carbon-effi cient process for making a cellulosic fuel.”

According to Karl Seck, president of Mercurius Biofuels, the process the EERC

has developed does not depend on changes to the enzymes, fermentation or extreme operating conditions when compared to existing ethanol plants. “This technology is more in line with the petroleum refi ning model and will benefi t from many of the same effi ciencies,” he said.

According to senior research advisor Ed Olson, “This project presents an excit-ing opportunity for the EERC, as it is one of the very fi rst involving the production of advanced fuel additives from cellulosic feedstocks. This technology will ultimately be used to improve engine performance us-ing a renewable product, both in gasoline and diesel engines. In the case of diesel fuel, our additives will boost the cetane levels, improve fl ow properties and, most impor-tantly, reduce particulate emissions.”

The plant will be located in a retrofi tted ethanol plant. Mercurius is in the process of applying for federal assistance to prove the technology and expects the project to come to fruition in the next two years.

Cellulosic materials that will be utilized by the company include wood, grasses, and

the nonedible parts of crops including wheat straw, soybean hulls and corn cobs. Such diverse feedstocks will allow the company more fl exibility compared to fi rst-generation feedstocks such as corn or sugarcane.

Utilizing cellulosic materials as the pri-mary feedstock for biofuels could give the fl agging ethanol industry an advantage in that the feedstock is expected to sharply re-duce costs and greenhouse gas emissions. In addition, cellulosic feedstocks are often seen as desirable because they are anticipated to be easier to source and may be derived from multiple materials, lessening an ethanol plant’s dependence on a single feedstock, thereby reducing the company’s risk.

The current federal renewable fuel standard requires that 36 million gallons of biofuels must be used in transportation fuel by 2022, including at least 21 billion gallons of advanced biofuels and 16 billion gallons of cellulosic biofuels.

—Craig A. Johnson

EERC develops advanced biofuel process

The Energy & Environmental Research Center headquarters in Grand Forks, N.D.

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On Dec. 1, the U.S. EPA announced it would delay its decision on the E15 fuel waiver until mid-2010. The fuel waiver request was submit-ted by Growth Energy in March 2009. Under the Clean Air Act, the EPA was required to respond to the waiver by Dec. 1.

In a letter addressed to leaders of Growth Energy, the EPA said more time was needed to complete vehicle testing. “As we are evaluating your E15 waiver petition, we want to make sure we have all necessary science to make the right decision,” said the EPA in the letter. “Although all of the studies have not been completed, our engineering assessment to date indicates that the robust fuel, engine and emissions control sys-tems of newer vehicles (likely 2001 and newer model years) will likely be able to accommodate higher ethanol blends, such as E15.”

According to the letter, the U.S. DOE is currently studying E15’s ef-fect on component durability. As part of the study, the department will examine the impacts of higher ethanol blends on 19 vehicles. Testing is expected to be complete by August. The EPA expects testing to be complete on 14 of those vehicles by May.

“Should the tests remain supportive and provide the necessary ba-

EPA delays E15 fuel waiver rule

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SAVE THE DATE!

The U.S. EPA is expected to issue its decision on the E15 fuel waiver in mid-2010. If approved, the waiver would allow fuel with up to 15 percent ethanol to be used in standard vehicles, effectively increasing the potential market for ethanol by 50 percent.

sis, we would be in a position to approve E15 for 2001 and newer vehicles in the mid-year timeframe,” said the EPA in its letter. “Of course, if the data highlight potential problems, then the decision may need to be delayed until all testing is received and reviewed.”

In addition, the EPA said it has begun crafting the labeling requirements that will be necessary if the blending limit is raised.

Growth Energy described the EPA’s announcement as a strong signal that the agency is preparing to approve E15. “We are confi dent the ongoing tests will further confi rm the data we sub-mitted in the Growth Energy Green Jobs Waiver and silence those critics, allowing for more American-produced energy to enter the market,” Growth Energy CEO Tom Buis said.

The American Coalition for Ethanol also expressed confi -dence that E15 will be approved. “While we would have strongly preferred that EPA approved E15 today for all vehicles, we’re pleased that progress is being made toward this goal,” said Brian Jennings, ACE’s executive vice president. “We are confi dent that in the long run the data will demonstrate that E15 and higher etha-nol blends, such as E20 and E30, can effectively be used in all vehicles.”

The Renewable Fuels Association, however, noted that the EPA’s delay in approving the waiver could negatively affect the

ethanol industry. “This delay threatens to paralyze the continued evolution of America’s ethanol industry,” said RFA President and CEO Bob Dinneen. “As EPA itself indicated, the scientifi c data to date has demonstrated no ill-effects of increased ethanol use in any vehicle currently on the road. Moreover, this delay will chill investment in advanced biofuel technologies at a critical time in their development and commercialization.” Dinneen suggested the EPA immediately approve an intermediate ethanol blend while the agency evaluates the waiver request.

According to the Union of Concerned Scientists, the EPA’s delayed decision on the waiver request demonstrates the agency’s commitment to put science fi rst. “The Obama administration is respecting the role of science and resisting industry pressure to put private interests ahead of public health and the environment,” said Jeremy Martin, a senior scientist in UCS’ clean vehicles pro-gram. “Raising ethanol blend percentages without testing what it would do to air quality and vehicle engines is like going in for surgery before getting a diagnosis. It wouldn’t be good for the industry or the environment to rush ahead only to fi nd out later that we guessed wrong.”

—Erin Voegele


EPA evaluates ethanol as GHG source category

The U.S. EPA’s decision to require thousands of industrial facilities to begin reporting greenhouse gas (GHG) emissions in 2010 created much confusion in the ethanol industry as producers tried to determine if their facilities would be affected by the rule. The EPA’s fi nal rule states that any facility that emits more than 25,000 tons per year of carbon dioxide equivalent (CO2e) from stationary combustion sources is required to report emissions to the EPA. However, initial reports that ethanol had been omitted from the EPA’s list of source categories led some producers to believe they had been exempted from the reporting requirements.

During a Nov. 19 training session conducted by the EPA for etha-nol industry members, agency offi cials clarifi ed that ethanol was only temporarily exempted as a source category while it continues to review industry practices, specifi cally those including co-location with landfi lls. The 11 source categories under review, including ethanol, are expected to be source categories in the future, according to the EPA, and offi cials made clear to producers that if they do not have to report emissions in The U.S. EPA says it plans to include ethanol as a source category for

its greenhouse gas emissions reporting program in the future, possibly as early as 2011.

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2010, they should reassess the rule for 2011 as they will probably be added to the list of source categories for that year.

It remained unclear in mid-December exactly how many etha-nol facilities will be required to report emissions in 2010. Estimates ranged from just 84 facilities to nearly all 184 plants. The EPA cre-ated an online estimating tool to aid in determining if specifi c facili-ties would be required to participate and provided calculations that determine what stationary combustion units will emit 25,000 tons of CO2e annually during its training session. Trigger amounts for various units include:

• A coal-fi red unit that uses 10,800 tons of fuel annually• A fuel oil unit that uses 2.3 million gallons of fuel annually• A natural gas unit that consumes 460 million cubic feet of

fuel annuallyProducers who determined their facilities met one of the

25,000 tons of CO2e triggers were required to begin data collection using the best available monitoring methods on Jan. 1. By March 31, all participants must begin using the EPA’s required monitoring methods. Data collection must be complete at the end of 2010, certifi cates of representation need to be fi led with the EPA by Jan. 30, 2011 and 2010 emissions reports are due on March 31, 2011.

During the ethanol-specifi c training session, several questions

were posed to the EPA on the use of fl ow meters as a method of calculating GHG emissions. While all emissions from station-ary combustion sources must be accounted for, EPA offi cials con-fi rmed that there are provisions in the rule that allow standard bill-ing meters to be used to determine the amount of gas used and GHG emissions can be calculated based upon those readings. Be-cause of that provision, producers are not required to install fl ow meters on every stationary gas source, because the billing meter will measure the intake of gas.

Additionally, direct emissions of CO2 into the atmosphere as a result of the ethanol fermentation process will not have to be re-ported, according to EPA offi cials. There is no methodology for re-porting emissions from fermentation, so the only instance in which a producer would be required to report those emissions would be as a supplier of CO2—either via sequestration or by transferring it to a facility off-site. If the ethanol producer utilizes the CO2 for an on-site process, it will not be required to include those CO2 emis-sions in its report.

To monitor the EPA’s assessment of ethanol as a source cat-egory for GHG emissions reporting, visit www.epa.gov.

—Kris Bevill

29

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US DOE, USDA invest $600 million in cellulosic

On Dec. 4, the USDA and U.S. DOE jointly announced the se-lection of 19 biorefi nery projects to receive nearly $600 million from the American Recovery and Reinvestment Act for the purpose of constructing and operating pilot, demonstration and commercial-scale facilities. Projects were selected for their ability to validate refi ning tech-nologies and lay the foundation for commercial-scale biomass industry development in the U.S., according to the DOE, and are part of the government’s efforts to reduce U.S. dependence on foreign oil and to create domestic jobs.

Of the $564 million awarded, up to $483 million will go toward 14 pilot-scale and 4 demonstration-scale biorefi nery projects. The remain-ing $81 million will be used to accelerate construction of projects that have previously received funding. Recipients of the awards will col-lectively contribute more than $700 million in private and non-federal cost-share funds.

Many of the projects selected to receive funding plan to build out cellulosic ethanol production facilities, and all of the 19 projects select-ed for funding plan to ultimately produce biobased chemicals and/or drop-in replacement fuels. In response to EPM’s inquiry about a pos-sible shift in focus away from ethanol entirely, the DOE said it supports

The U.S. DOE and USDA have selected 19 biorefi neries to receive nearly $600 million in American Recovery and Reinvestment Act funds to accelerate the commercialization of advanced biofuels, including cellulosic ethanol.


all biofuels that meet renewable fuel standard (RFS) defi nitions, adding that the RFS includes 16 billion gallons of cellulosic biofuels in 2022.

One of the projects to receive funding was a collaborative ef-fort between Ineos Bio and New Planet Energy LLC. The Ineos New Planet BioEnergy joint venture received $50 million for its pro-posed 8 MMgy waste-to-ethanol facility to be located in Indian River County, Fla. Ineos Bio chief operating offi cer Mark Niederschulte said he hasn’t received any indication that the DOE is moving away from ethanol. “I think [it’s] focus right now is having someone produce commercial-scale cellulosic ethanol,” he said. “Certainly, they’d like to see quick follow-on of people building cellulosic gasoline, butanol or jet fuel or something, but right now they just want cellulosic ethanol at a commercial scale.” Ineos anticipates beginning construction on its commercial-scale facility in the by mid-year and to be fully operational at the end of 2011.

ZeaChem Inc., which broke ground in November on its semi-commercial scale cellulosic production facility in Oregon, received $25 million to further its project. “This award accelerates deployment of ZeaChem’s integrated biorefi nery and our progress to commercial production of advanced biofuels and biobased chemicals,” ZeaChem President and CEO Jim Imbler said.

BlueFire Ethanol Fuels Inc. received $81 million as the second installment of DOE funding given to the company for its commercial-scale project. The DOE’s total investment in the company is now ap-proximately $88 million. President and CEO Arnold Klann said the

company will use the money for Phase II of its Fulton, Miss., project, which will utilize BlueFire’s patented concentrated acid hydrolysis pro-cess to produce ethanol from waste wood and trash.

ICM Inc. was selected to receive $25 million for its project to mod-ify LifeLine Foods’ 1 MMgy St. Joseph, Mo., facility to produce ethanol from switchgrass and sorghum. According to ICM, the co-location of the cellulosic demonstration facility with LifeLine’s corn-based facility will demonstrate the capability of corn ethanol production facilities to increase total renewable fuels capacity by also producing ethanol from nonfood cellulosic materials.

EdeniQ Inc. and Logos Technologies Inc. were awarded $20.4 million to modify and operate EdeniQ’s refi nery site in Visalia, Ca-lif., as a cellulosic ethanol facility, using corn stover and switchgrass as feedstocks. Logos will manage the project and EdeniQ will provide the technology. The companies’ cost share for the project is approximately $5 million.

The U.S. subsidiary of Montreal-based Enerkem Corp. received $50 million to further its waste-to-biofuels facility in Pontotoc, Miss., which is projected to initially produce 10 MMgy of cellulosic ethanol but will be doubled in size once fully operational.

Finally, Algenol Biofuels Inc. was awarded $25 million for its proj-ect to use algae to produce ethanol from carbon dioxide and seawater.

—Kris Bevill

31


he United States has more than 300 million gal-lons of planned cellulosic ethanol production ca-pacity waiting to come online. But that fuel pro-duction is stalled, partially because of the lack of an available domestic market, due to the regula-

tory cap on the amount of ethanol that can be blended into gasoline.

The E15 Green Jobs Waiver, fi led with the U.S. EPA by Growth Energy, would raise the regulatory cap by 50 percent, opening the market for ethanol and drawing fresh investment into cellulosic projects.

One thing is certain: if this nation is ever going to ad-vance to cellulosic ethanol, it must raise the market for all ethanol. Without E15, there is no market for cellulosic ethanol. And without grain ethanol producers, there would be no cellu-losic ethanol producers, because it is the grain producers who are leading the cellulosic development.

How important is cellulosic ethanol to our industry? For many, it is crucial because of its low-carbon qualities. The U.S. DOE’s Argonne National Laboratory has found that cellulosic ethanol promises to reduce carbon emissions by 86 percent compared to gasoline. That is a remarkable feat, and the more that the American public learns, the more it will drive up de-mand for this low-carbon fuel.

At Growth Energy, we have launched several initiatives in Washington, to expand the market for both corn-based and cellulosic ethanol.

As many of you know, the EPA declared it will make a fi nal decision on the Green Jobs Waiver seeking E15 by mid-year, but indicated that engine testing data was proving that today’s cars could run just fi ne on E15. We see it as a strong signal that the EPA intends to raise the blend wall.

Growth Energy has also engaged in a robust effort to move public opinion back in favor of ethanol by making clear

the facts about cellulosic ethanol’s low-carbon properties and its potential to create green-collar jobs in regions of the coun-try that do not yet produce ethanol.

Another of our efforts deals with the renewable fuel stan-dard (RFS). Growth Energy’s position is that Congress should maintain and implement RFS regulatory rules and supporting programs to help ethanol producers meet the nation’s long-term goal of utilizing 10 percent of U.S. transportation fuel de-rived from cellulosic biofuels by 2022.

Growth Energy is also devoted to extending the blender’s tax credit and tariff on foreign-subsidized ethanol, and has al-ready begun speaking with members of Congress about these important items. The blender’s tax credit just makes sense. Ethanol competes with an oil industry that has received ap-proximately $150 billion in tax incentives since 1968. Extend-ing the import tariff on ethanol is crucial to ensuring a domes-tic demand for U.S. ethanol. Maintaining both the credit and tariff will help ensure market success for ethanol and spur the continuing investment necessary to commercialize cellulosic ethanol.

Ethanol—whether corn-based or cellulosic—has an im-portant role in our country’s future. Every gallon of ethanol produced in the U.S. helps reduce our dependence on foreign oil, cleans our environment, and creates jobs that can never be outsourced.

But if we are to have a strong ethanol industry capable of doing all these things, we must raise the regulatory cap on our clean, renewable fuel and expand the market for ethanol. Growth Energy is committed to that goal.

Tom Buis is the CEO of Growth Energy. Reach him at [email protected] or (402) 932-0567.

Green Jobs Waiver is Necessary for Market Expansion By Tom Buis

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State of the Ethanol Industry–2010 and BeyondBy Gregory J. Lynch and Porter J. Martin

hat a difference a year makes. Twelve months ago the ethanol industry, like the fi nancial markets, ap-peared to face a very uncertain future. Negative margins and bankruptcies were the big news. One year later, things appear to have changed. Ethanol

margins have turned positive and many plants are able to show several months of positive earnings. We believe the following three major trends that were manifested during 2009 will continue in 2010 and beyond.

Oil Enters the Industry Perhaps the biggest news of 2009 was that the oil industry

jumped into ethanol in a major way. Valero Energy Corp., the na-tion’s second largest oil refi ner, is also now the third largest pro-ducer of ethanol in the United States with over one billion gallons of ethanol capacity.

Valero’s entry also provides a new twist on a successful etha-nol business model. Many of the most successful ethanol plants already had some type of vertical integration in the form of owner-ship by agricultural companies or producers. This structure created a built-in hedge against corn price fl uctuations. Valero is achieving similar vertical integration on the oil refi ning side, helping to hedge against negative gasoline prices and provide it with a competitive advantage compared to other refi ners. Valero also directly bene-fi ts from the blenders tax credit. We believe it is possible that other refi ners or oil companies will become active in acquiring ethanol capacity.

Improving Margins and Plant Values Increased ethanol margins and plant values were also expe-

rienced in 2009.Despite some challenging times in the fi rst half of 2009, most ethanol companies were in the black for the last quar-ter of 2009 and look to continue to be so into 2010.

Ethanol company valuations also improved in 2009. The bot-tom could perhaps be traced to the VeraSun Energy Corp. bank-

ruptcy sale to Valero in which Valero acquired 760 MMgy of pro-duction capacity for less than 63 cents per gallon. Other bankrupt plants were sold for a higher nominal amount, but many buyers did not have to put any money down and assumed only a portion of the former debt.

Unlike the housing market, valuations appear to have in-creased as well. In December, Valero announced the acquisition of three more plants with 330 MMgy of production capacity. Vale-ro paid 91 cents per gallon for the two most directly comparable plants. Although this valuation is still below replacement cost, it represents approximately a 45 percent increase from comparable valuations earlier in the year.

Investment in Next-Generation Biofuels Considering the fi nancial factors of 2009, it is not surprising

that there was not much investment in new fi rst-generation ethanol plants. In contrast, the U.S. DOE and USDA recently announced awards of nearly $600 million to 19 next-generation biofuels proj-ects. The renewable fuel standard calls for 2 billion gallons of ad-vanced biofuels by 2012, which creates tremendous opportunities for companies that can cross the technical and economical com-mercialization hurdles within three years.

2009 proved to be a tale of two halves for the ethanol indus-try. The fi rst half was a continuation of a very challenging 2008. However, the second half (and especially the last quarter) showed strong signs of positive momentum for both fi rst- and second-gen-eration ethanol companies, trends which will continue in 2010 and beyond.

Gregory J. Lynch is co-chair of the renewable fuels group and managing partner of the Madison offi ce of Michael Best & Friedrich LLP. Reach him at (608) 283-2240, [email protected] or http://twitter.com/Renewable_Energ. Porter J. Martin is a partner with the law fi rm of Michael Best & Friedrich LLP and is a founding member of the fi rm’s renewable energy group. Reach him at (608) 283-0116 or [email protected].

W

MartinLynch

LEGAL PERSPECTIVE

Since 1981, the Renewable Fuels Association (RFA) has been the

authoritative voice of the ethanol industry. Our efforts have yielded an unequaled record of legislative and

regulatory victories. But we consider our track record just the beginning, and are expanding our efforts with a

focus on market development.

The RFA is a trusted source for reliable

the industry, policymakers, and media alike. The RFA is the leading expert on ethanol standards and guidelines

for safety. We are also the preeminent authority on E10 and E85.

The RFA is a member-centered, member-driven organization. Join

with us to help build a strong future for the industry. For more

information, visit www.ethanolrfa.org, or call (202) 289-3835.

Renewable Fuels Association, One Massachusetts Avenue NW - Suite 820 - Washington, DC 20001 - (202) 289-3835.

RFAThe voice of the ethanol industry.


Can Europe Solve the E85 Chicken-and-Egg Problem?

weden excluded, E85 cars in the European Union are a rare phenomenon. The E85 market is expanding very slowly and could be nonexis-tent within a few years if proposed rules on the monitoring of vehicle emissions materialize. Why

is E85 in Europe such a slow business and why is there a risk it could stop altogether?

The main reason is the gasoline-to-diesel fuel use ra-tio. Europeans love diesel engines. We all know diesel cars are smelly, noisy and emit a lot of particles (and therefore are not good for public health), but at the same time, car-bon dioxide emission reduction performance is unbeatable. Not that the average consumer really cares about emissions reduction. For the driver, it’s all about taxes. The popular-ity of diesel engines is caused by high fuel effi ciency com-bined with low fuel prices, thanks to diesel’s lower fuel tax. These lower taxes were introduced to decrease costs for the economically important trucking sector in countries such as Germany, France, Belgium, Spain and the Netherlands. But because the fuelling logistics between trucks and pas-senger cars are not separated, the consumer can enjoy the same low taxation of the fuel. The low diesel price trig-gered a strong increase in demand for diesel cars and auto manufacturers invested substantial money into the produc-tion of more fuel effi cient diesel engines rather than gaso-line engines. As a result, there are many more diesel-fueled vehicles in Europe. In Belgium, for example, 90 percent of passenger vehicles are diesels. Europe imports around 25 million tons of diesel fuel annually, mainly from Russia.

Another reason we could see a decrease in E85 use or even see consumption halt has to do with proposed Euro-pean rules on measuring car emissions. Earlier this year the EU set tough emissions standards for vehicles. Most of the saving needs to come from improved fuel effi ciency. How-ever, the rules also allow part of the savings to be achieved

through the use of biofuels. For auto manufacturers, this could be a way to achieve a substantial saving, but only if E85 is available. Here is where the dilemma lies: oil com-panies have no interest in expanding the network of E85 fi lling pumps hence the European Commission argues no emissions credit for fl ex-fuel vehicle (FFV) manufacturers. The commission’s logic is that giving a credit upfront to an FFV will result in massive FFV production whereas the fuel will not be there. Therefore, the commission proposed to measure FFV emissions as if the car would be running on gasoline only.

The proposed rules underline once more the chicken-and-egg problem we face. There are no FFVs, so no need for E85 and there is no E85 so no need to manufacture FFVs. Instead of making the future of E85 impossible, the proposed rules should be changed to assume that every FFV runs on E85. The emissions benefi ts auto manufactur-ers can claim will result in greater FFV production and, most likely, greater pressure from automakers on oil companies to increase the number of E85 fi lling pumps. The oil com-panies in return could insist that car manufacturers produce more fuel-effi cient gasoline cars so that this type of vehicle becomes more attractive for consumers.

The 27 EU member states need to determine how to measure emissions. If they support the commission’s view, it will mean a slow and certain death for FFVs because auto manufacturers will only produce FFVs if they can get the emissions benefi ts that E85 deserves. Governments also need to undo the discrimination between the taxation of die-sel and gasoline. If this big wheel can be turned, the E85 chicken-and-egg problem will be solved one day as well.

Robert Vierhout is the secretary-general of eBIO, the European Bioethanol Fuel Association. Reach him at [email protected].

S

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eBIO INSIDER

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SAVE THE DATE

USE


DemandOvercoming the E10 blend wall and increasing the market for ethanol-blended fuels is not only important in sustaining fi rst-generation producers, but is also vital to ensuring industry growth and support for second- and third-generation producers. An important component in lifting the blend wall is increased use of fl ex-fuel vehicles and E85.

By Erin Voegele


USE

Driving Up

In the preamble to its proposed rule for the second stage of the renew-able fuels standard (RFS2), the U.S. EPA explored ways in which the

U.S. fuel market can absorb the immense biofuels mandates that were established by the Energy Independence and Security Act of 2007. According to the EPA, the U.S. will reach the E10 blend wall when annual ethanol production reaches 14.5 billion gallons per year, assuming 100 percent E10 utilization nationwide. Using these parameters, the agency estimates the blend wall will be reached by 2013. However, the EPA also states this bench-mark could be reached sooner if demand for gasoline falls or if E10 cannot be dis-tributed nationwide.

While the approval of a midlevel blend such as E15 could postpone reach-ing the blend wall, the EPA states that it will not provide a way to completely over-come it. Current estimates show imple-mentation of E15 could delay the blend wall issue by one to six years, depending on how quickly E15 is adopted by fuel re-tailers. This indicates that an E15 waiver will offer more time to instigate greater utilization of fl ex-fuel vehicles (FFVs) and E85, but will not offer a total solu-tion for meeting EISA mandates.

Putting More FFVs on the Road

Although the number of FFVs on American roadways has increased ex-ponentially in recent years, overall E85 utilization is extremely low. The EPA es-timates that 7 million FFVs were on the road in 2007, but only about 12 million gallons of E85 was sold at retail during that year. This means that on average in 2007, each FFV utilized only approxi-mately 1.7 gallons of E85.

The U.S. DOE’s Alternative Fu-els and Advanced Vehicles Data Center (AFDC) estimates there are nearly 8 mil-lion FFVs on the road today. According to the AFDC, 36 models of FFVs were offered for sale in the U.S. during model year 2009, which is a substantial increase from the 6 FFV models that were avail-

able 10 years ago. The number of FFV models is expected to continue to grow as Ford Motor Co., General Motors Corp. and the Chrysler Group LLC move for-ward with their commitment to produce 50 percent FFVs by 2012. But the ques-tion of whether those vehicles will be fu-eled with E85 remains.

According to Peter Hardigan, man-ager of Ford’s sustainable business strat-egy group, although his company is con-tinuously increasing its FFV offerings, Ford hasn’t seen much consumer interest in FFVs outside of the few regions in the U.S. that are heavily saturated with E85.

Mary Beth Stanek, GM’s director of energy and environmental policy, says most of the company’s new models are fl ex-fuel capable. However, she says it is diffi cult to gauge whether consumer in-terest in those vehicles is related to their E85 capability because consumers make purchase decisions for a wide range of reasons. “Our fl ex fuel offerings are on very popular models,” Stanek says. “Ev-ery individual is different, so it’s diffi cult to say if the distinctive purchase reason was for fl ex-fuel capability.”

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While the approval of a midlevel blend such as E15 could postpone reaching the blend wall, the EPA states that it will not provide a way to completely overcome it.

Adding Infrastructure, ValueAlthough Ford and GM are working

to put more FFVs on the road, E85 sales statistics show that most FFV owners are not taking advantage of their vehicles’ fl ex-fuel capability. Stanek and Hardigan agree that more fueling infrastructure and a better price point is necessary to increase E85 utilization.

“I think one important piece of the puzzle is making [E85] available to more consumers,” Hardigan says. It’s also im-portant to make sure there is a clear value for consumers in buying the fuel. This means ensuring the price of E85 refl ects the true energy content of the fuel in relation to standard gasoline. “Over the past year, I've seen where E85 is priced a penny or two below gasoline, and that is

not providing value to customers,” Har-digan says. “It’s not just making the fuel available. It’s making sure there is a value there for consumers.”

Stanek says that fuel is a commodity purchase. “If you have E85 priced cor-rectly in FFV dense markets, sales and consideration will go up a lot,” she says. “Truly, I think you need to have gasoline over $3 per gallon to really see a substan-tial switch from one fuel choice to the other. That’s when we’ve really begun to see increased consideration.”

Although a few more E85 stations have come online recently, Stanek says the truth is that many more E85 locations are needed in areas of the country with high concentrations of FFVs. “We have quite a few underserved markets for choice,”

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The Chevrolet Malibu is one of GM's FFV offerings for model year 2010.

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she says. “We need to get more stations to offer the fuel, we really do. I think that will increase use more than anything.”

If E85 availability expands suffi ciently

in the future, it may even be possible for vehicle manufacturers to optimize FFVs to run on ethanol. However, before that would happen, there needs to be consistent and

widespread E85 infrastructure, Hardigan says. “It’s clearly doable, but we wouldn’t head down that path until there is [increased E85] availability,” he continues.

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4 million - 6 million registered vehicles

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8 millin - 10 million registered vehicles

More than 10 million registered vehicles

Black - Number of E85 Stations

Beige - Number of blender pump locations

* Vehicle registeration data sourced from U.S. DOT, 2007 registrations * E85 location data sourced from the National Ethanol Vehicle Coalition * Blender pumps data sourced from the American Coalition for Ethanol

“It’s clear that we need biofuels,” Har-digan says. “We are a big supporter of bio-fuels.” However, he also notes that to get enough FFVs on the road to meet EISA’s mandates, other vehicle manufacturers need to produce FFVs as well. “It’s going to take more than just the commitments by Ford, GM and Chrysler,” he says. “It’s going to take all automakers getting into the mix.”

BYOethanolWhile auto manufacturers continue to

produce more FFVs, a new campaign jointly spearheaded by the American Coalition for Ethanol and the Renewable Fuels Associa-tion aims to expand fueling infrastructure. That initiative, the BYOethanol campaign,

seeks to install 5,000 ethanol blender pumps nationwide over the next three years.

Unlike earlier blender pump and E85 initiatives, the BYOethanol campaign does not directly provide funding to petroleum marketers to install pumps. Instead, the campaign aims to educate fuel marketers on why it makes fi nancial sense to install them. To this end, the group has established a website that serves as a central clearing-house for information of interest to pe-troleum marketers, including information on existing infrastructure incentives, taxes, E10, E85, midlevel blends, equipment, laws and renewable identifi cation numbers. Es-sentially, the site is designed to answer any questions a fuel marketer might have about selling ethanol.

According to Ron Lamberty, ACE’s president of market development, the ini-tiative’s goal is to educate petroleum mar-keters while dispelling many of the ethanol myths they might believe to be true. “What we’ve found as we’ve talked to [petroleum marketers] is that they think this BYOetha-nol program is all about putting E30 in standard vehicles and breaking the law, and that’s NOT what it’s all about,” he says. “We’re really talking about giving [FFV] owners some options.” While FFV own-ers have traditionally only had the choice of fi lling up on E85 or standard gasoline, Lamberty says ACE has found that in plac-

es where alternative blenders such as E20 or E30, are offered those options tend to sell better than E85.

The BYOethanol campaign stresses the economics of ethanol blender pumps. Un-like dedicated E85 pumps, blender pumps allow petroleum marketers to recoup the costs of the pump through the fuel they sell. This is because a blender pump can of-fer standard gasoline, E85, or any ethanol fuel blend in between. This option allows petroleum marketers more fl exibility in the types of fuel they sell, while offering cus-tomers a wider range of fuels. In addition to allowing station owners to economically supply their FFV customers with E85 or a midlevel blend, those who install blender pumps will also be equipped to sell alter-native fuel blends to the general public in the event the E15 waiver is approved by the EPA. “If you are looking at putting new pumps in at a gas station, there really isn’t a good reason not to put in blender pumps,” Lamberty says. EP

Erin Voegele is a BBI International as-sociate editor. Reach her at [email protected] or (701) 850-2551.

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ELECTRICAL CONSTRUCTION • ELECTRICAL ENGINEERING • AUTOMATION • INSTRUMENTATIONETHANOL PRODUCER MAGAZINE February 2010 43

'It’s going to take more than just the commitments by Ford, GM and Chrysler. It’s going to take all automakers getting into the mix.'

Peter Hardigan, Ford Motor Co.

MANDATES

Incentives: It’s All About


Location, Location, Location

Although federal programs and policies that support the production, distribution and use of ethanol are crucial to the continued development of the industry, many states have taken additional measures to ensure ethanol’s success.

By Erin Voegele


MANDATES

Ethanol producers are well aware of the federal programs that have been implemented to support the growth of the indus-try. Federal programs, however, are not the only incentives available to aid the ethanol industry. In recent years, many

state governments have passed laws that establish a variety of programs designed to make the production, distribution and use of ethanol more feasible within their borders.

These state programs can generally be divided into three broad groups: state renewable fuel mandates, infrastructure incentives for equipment to distribute E85, and incentives that directly benefi t etha-nol producers. At least 32 states currently employ some type of ethanol incentive, according to information provided by the American Coalition for Ethanol.

To date, 10 states have passed legislation to establish state-specifi c RFS programs, including Florida, Hawaii, Iowa, Kansas, Louisiana, Min-nesota, Missouri, Montana, Oregon and Washington. Pennsylvania has enacted a mandate for cellulosic ethanol. The use of ethanol is also es-sentially required in California because the state has enacted a low carbon fuel standard that gives preference to biofuels over gasoline.

Several other states have attempted to establish an RFS, including Colorado, Indiana and Wisconsin. However, the legislation either failed to gain the traction needed to become law or was vetoed by the gover-nor.

Twelve states currently offer incentives designed to aid in the estab-lishment of retail infrastructure for ethanol-blended fuels, while 22 states provide some type of incentive to ethanol producers. Only Hawaii, Min-nesota and Kansas currently offer all three types of incentives.

State StandardsAlthough the federal RFS currently requires

the blending of 36 billion gallons of renewable fuel into the national fuel supply by 2022, the standard does not specify how much renewable fuel must be used in each state.

According to Ron Lamberty, ACE president of market development, many of the ethanol mandates that have been established on the state level date back to when the federal RFS program was fi rst established by the Energy Policy Act of 2005. At that time, the standard, which has since been expanded by the Energy Independence and

Security Act of 2007, required the use of substantially less renewable fuel.

“I think that most of the states that passed E10 mandates did it earlier to make sure that they got a bigger ethanol share of the RFS,” Lamberty says. “With an 8 billion gallon mandate, there was a possibility that whole sections of the country would just decide not to [participate in the program].” By enacting state ethanol mandates, certain states es-sentially ensured they would take part in the RFS program, he says.

Even though the federal RFS has expanded signifi cantly since the time when most state ethanol mandates were established, Lamberty says state policies are still helpful in supporting infrastructure development.

According to Lamberty, the biggest advantage of state ethanol

mandates—whether they require the use of E10, E15 or E20—is that the state government is sending a strong indicator that ethanol-blended fuels must be made available to the public. “E10 mandates…help estab-lish a market that allows the infrastructure and equipment to be put into place,” Lamberty says.

Showing the EPA the WayAs the U.S. works to meet the RFS goals, the likelihood will increase

that a mid-level ethanol blend, such as E15, will be approved for use in standard vehicles. While many state ethanol mandates require the use of traditional blends of ethanol, such as E10, several mandates require the use of more substantial quantities of the fuel, despite the U.S. EPA’s hesi-tation to approve higher ethanol blends for use. In these states, higher ethanol mandates may help spur the development of additional infra-structure that will be needed to meet the sizable federal standard.

Minnesota was one of the fi rst states to enact ethanol legislation, implementing an E10 mandate beginning in 2003. In 2005, its Ethanol Use Standard was amended to declare that if ethanol did not already comprise at least 20 percent of all gasoline consumed within the state by Dec. 31, 2010, a mandate would be triggered to require gasoline blends to contain at least 20 percent ethanol by Aug. 20, 2013. The amended law is contingent, however, upon EPA approval of E20 for use in standard vehicles.

In 2006, Iowa passed legislation requiring renewable fuels to replace 25 percent of gasoline used within the state by Jan. 1, 2020. The mandate began by requiring the use of 10 percent renewable fuel in 2009. The percentage is then to be increased on an annual basis through 2020.

Kansas also enacted an incremental RFS that began with a 10 per-cent renewable mandate in 2009, which while increasing at a slower pace, essentially requires fuel to contain 25 percent renewable content by 2024.

In some states, a trigger must be met before a mandate takes effect. Louisiana’s Ethanol Use Standard requires ethanol to comprise 2 percent of the state’s total gasoline sales within six months of in-state ethanol production reaching 50 MMgy. The fuel must also be produced from state-produced feedstock.

Similarly, Montana’s Ethanol Use Standard will take effect once 40 million gallons of ethanol have been produced within the state on an an-nualized basis for three months. Once the trigger is met, all gasoline sold within the state is required to contain 10 percent ethanol.

Florida’s Ethanol Use Standard is currently expected to be the next state ethanol mandate to take effect. Beginning Dec. 31, 2010, the pro-gram requires that all gasoline offered for sale within the state be blended gasoline. The standard defi nes “blended gasoline” as a fuel mixture con-taining 90 to 91 percent gasoline and 9 to 10 percent ethanol.

The mandate is signifi cant because Florida consumes approximately 8.7 billion gallons of gasoline annually. However, according to Jim Smith, president and CEO of the Florida Petroleum Marketers & Convenience Store Association, the pending E10 mandate isn’t expected to have a sig-nifi cant impact on Florida petroleum marketers. “We’ve already started implementing it,” he says. “Almost all of the gasoline sold in Florida now is E10.”

Smith says at least 90 percent of petroleum marketers in Florida

Ron Lambertypresident of market development, American Coalition for Ethanol

are already offering ethanol-blended fuels. “The only place in the state where you do not have a consistent supply of E10 is in the panhandle, but it is sparsely populated,” he says.

Cellulosic IncentivesWhile only 10 states have

enacted mandates to spur the increased consumption of ethanol, ACE estimates that at least 22 states offer some sort of incentive for ethanol pro-duction. These programs are generally designed to make the state a more attractive place for potential ethanol producers to locate. Although several of the programs benefi t producers of traditional corn-based ethanol, some programs have been de-signed specifi cally to attract cel-lulosic development.

Indiana’s Production Incen-tive program offers benefi ts to producers of both cellulosic and corn ethanol. A tax credit of $2 million is available for companies producing between 40 MMgy and 60 MMgy of grain ethanol. The tax credit increases to up to $3 million for those that produce more than 60 MMgy. For cellu-losic ethanol, a tax credit of $20 million is available for the pro-duction of at least 20 MMgy.

The Ethanol Production Tax Credit in Kentucky cur-rently allows producers of cel-lulosic ethanol to be eligible for a $1-per-gallon tax credit. The program has an annual cap of $5 million. In the event the cap is reached, the tax credit would then be pro-rated among all eli-gible producers. The state also currently offers a $1-per-gallon tax credit for grain-based etha-nol, which caps at $10 million.

Virginia’s Advanced Biofuel Production Incentive program allows qualifi ed producers of

MANDATES


Alabama x

Alaska x

Arizona

Arkansas x

California* x

Colorado

Connecticut

Delaware

Florida x

Georgia

Hawaii x x x

Idaho x

Illinois x x

Indiana x

Iowa x x

Kansas x x x

Kentucky x

Louisiana x

Maine x x

Maryland x

Massachusetts

Michigan x

Minnesota x x x

Mississippi x

Missouri x x

Montana x x

Nebraska x

Nevada

New Hampshire

New Jersey

New Mexico

New York x

North Carolina

North Dakota x

Ohio

Oklahoma x x

Oregon x

Pennsylvania x

Rhode Island

South Carolina x x

South Dakota x x

Tennessee

Texas x

Utah

Vermont

Virginia x

Washington x

West Virginia

Wisconsin

Wyoming x

* (low carbon fuel standard)

(cellulosic ethanol standard)

Information sourced from the

American Coalition for Ethanol's Status ‘09 handbook

State

RFSStates

Incentives

for retail

pumps

distributing

ethanol

Incentives

for ethanol

producers

advanced biofuels to receive an incentive grant of 10.5 cents per gal-lon of advanced biofuel that is sold. Under the program, “advanced biofuel” is defi ned as a fuel derived from cellulose, hemicellulose or lignin that is derived from renewable biomass or algae.

Unique IncentivesRather than offer producers a benefi t based on the quantity of

fuel produced or sold, several states offer unique incentives that can benefi t those working to develop advanced biofuel projects. Michi-gan has developed a tax incentive designed to incent the purchase of agricultural machinery that can be used to harvest biomass specifi -cally for energy production.

In Maryland, a tax credit is available for individuals and business-es that invest in cellulosic ethanol technology and development. The credit covers10 percent of the qualifi ed expenses paid or incurred by an individual or corporation during the previous tax year.

South Carolina offers a similar research and development (R&D) tax credit that began in 2007 and will be available for the tax-able years until 2012. The credit can be used for up to 25 percent of qualifi ed R&D expenses in feedstock and production development for cellulosic processes. A tax credit can also be claimed for up to 25 percent of the cost of constructing or renovating a commercial biofuels plant.

In North Dakota, a recently established incentive program al-lows the state board of higher education to establish biomass energy centers at institutions of higher learning. In addition, a state program also appropriates funds that are available to carry out certain renew-able energy development activities. Various forms of assistance are available, including grants or loans that can be used to complete fea-sibility studies, apply research, and develop demonstration projects.

Virginia has put in a place a program that may also spur job growth. The state currently provides corporations an income tax credit of up to $700 for each full-time clean fuel vehicle job created. Qualifying jobs include those in the manufacturing of vehicles that are designed to operate on clean special fuels, as well as the manufac-turing of components that allow these vehicles to be converted to operate on clean fuels.

The credit can also be claimed for jobs that are created in the manufacturing of components that are designed to produce, store or dispense these kinds of fuels. The tax credit, which will expire on Dec. 31, 2011, can be used in the taxable year in which the job was created, as well as each of the following two years as long as the job is continued.

While federal incentive programs will remain vastly important to the continued development and expansion of the ethanol industry, incentives offered on a state level are likely to play an important role as well. EP

Erin Voegele is a BBI International associate editor. Reach her at [email protected] or (701) 850-2551.

MANDATES

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ADVANCEMENTS

As the number of corn ethanol producers stabilizes, companies are expanding their efforts out of the Corn Belt and into regions of the country that currently use ethanol, but do not produce it. Florida has many proposed projects and a massive market for ethanol, but no local producers. Could the Citrus State be poised to become the next Iowa?

By Kris Bevill


Searching for the Next Iowa


ADVANCEMENTS

In recent years, Iowa has become primarily known in other parts of the U.S. for two things: corn and ethanol. The state is home to 39

ethanol production facilities and boasts more than 3 billion gallons of annual production capacity, according to the Iowa Renewable Fuels Association. The most recent data from the Iowa Corn Growers Association shows that in 2008, 2.1 billion bushels of corn—82 percent of the entire U.S. crop—were harvested from Iowa fi elds. Iowa has earned its reputation for corn and etha-nol and the two have served the state well. But while corn yields continue to increase year to year, the number of corn ethanol plants is expected to sta-bilize. The plants that exist now will probably continue to produce corn-based ethanol for many years, and at in-creasing levels as technologies improve. The demand for ethanol, however, spe-cifi cally cellulosic ethanol, will increase at a faster rate, which means Iowa and other Corn Belt states may soon share the ethanol spotlight with some unex-pected candidates.

Market-Friendly As the fi fth largest consumer

of transportation fuels in the nation, Florida represents a gigantic distribu-tion market, but currently lacks any homegrown production. The state uses 8.7 billion gallons of gasoline annually and is implementing an E10 mandate in 2011, but without in-state produc-tion it will have to rely on other states for its ethanol supply. This scenario led state leaders to begin exploring alterna-tives years ago and continues to drive the state’s interest in ethanol and other alternative fuels.

Florida began to expand its energy and fuel portfolio in 2005 when then-Gov. Jeb Bush signed an executive or-der calling for the state to develop an energy plan that would include, among other elements, an analysis of the state’s ability to generate, store and distribute fuel, including ethanol. The resulting offi cial Energy Plan, released in 2006, demonstrated Florida’s near-total reli-ance on other states and nations for its fuel supply. According to the state’s fi ndings, Florida’s transportation fuel needs in 2006 were approximately 28.1

million gallons per day and were expect-ed to increase to 32.3 million gallons per day by 2016. At the time of the report’s release, there were no publicly available ethanol fi lling stations in the state.

In the report, energy recommen-dations made by the state’s Department of Environmental Protection were: to raise public awareness for alternative fuel vehicles, to provide grant funding for research and development projects associated with alternative fuel vehicles and other emerging technologies, and to provide corporate sales and income tax incentives to improve production, develop distribution infrastructure and increase availability of clean fuels, in-cluding biodiesel and ethanol.

That same year, the Florida legisla-ture created the Florida Energy Com-mission, to be housed with the envi-ronmental protection offi ce, to provide further recommendation for the state’s energy policy. The commission’s fi rst report was released to the legislature on Dec. 31, 2007. It showed some signs of progress (the number of retail stations selling E10 had increased from 0 to 50, for instance), but also pointed out again

that there were no operational ethanol facili-ties in the state.

In 2008, state legislators unanimously passed energy policy that included a renew-able fuel standard mandating the use of E10 beginning in 2011, in addition to expanding the grants programs meant to encourage de-velopment in alternative fuel and energy tech-nologies.

Incentivizing SuccessThe Florida legislature established a Re-

newable Energy Technologies Grants pro-gram in 2006 as a method of stimulating capi-tal investment in the state and to promote and enhance statewide utilization of renewable technologies. The environmental protection agency was initially in charge of distributing grant money and received 183 proposals seek-ing nearly $215 million, nearly 15 times more than the $15 million that was allocated for the 2006-’07 program, in response to its fi rst solicitation. A similar number of applications were received in response to the state’s 2007-’08 and ’08-‘09 grant programs.

To date, more than $67 million in fund-

ing has been provided by Florida for renew-able energy projects. Additionally, the state energy offi ce controls the $126 million Flor-ida received through the American Recovery and Reinvestment Act of 2009 and has many incentives plans and grant programs planned that could benefi t renewable energy projects.

Market Makes the DifferenceDespite the state's efforts to supply grants

to alternative fuel projects, plentiful grant pro-grams may not be Florida’s key to successfully establishing a local ethanol supply. While all of the projects making progress in Florida have received state funding, most company leaders say the No. 1 factor leading to their decision to locate in Florida is the available market for their product, followed closely by the avail-ability of feedstock.

“One of the obvious things that we wanted to do was fi nd a location that had a good market for the ethanol and Florida cer-tainly meets that criteria,” says Mark Nieder-schulte, chief operating offi cer for INEOS Bio. INEOS and New Planet Energy LLC recently formed a joint venture, INEOS New

Planet BioEnergy, which will break ground on an 8 MMgy waste-to-ethanol plant in Florida by the second half of this year and be fully operational at the end of 2011. “There’s a large market, a renewable fuel standard and no ethanol producer, so the state relies on ‘imported’ ethanol, which provides a logistical advantage,” Niederschulte continues. “From a feedstock perspective, we’re looking at the ability to take really any kind of biomass to stick into the front end of the production process. Florida meets that criteria quite well because it has a large quantity of varying types of biomass, not just pine trees or something like that. It has everything from sugarcane ba-gasse to trees and other kinds of vegetative waste.”

According to Jay Levenstein, deputy com-missioner of Florida’s agriculture department, the state represents between 7 percent and 10 percent of U.S. biomass resources avail-able to be used for renewable fuel or power generation. “I don’t know how much beyond the grants that we’ve really done to entice companies to come here other than there’s a market,” he says. “Depending on who’s tech-

ADVANCEMENTS

created to utilize Florida-grown biomass, such as citrus or sweet sorghum, rather than bio-mass that will most likely need to be shipped in from the Midwest. “As we get into the ethanol business, it’s going to be next-generation and advanced biofuels that come out of Florida, not corn ethanol,” he says.

Leon Dupree Hatch Jr., secretary for East Coast Ethanol LLC’s board of directors and Florida project manager, says it has been more diffi cult to establish its corn-based project in Florida than in Georgia, South Carolina or North Carolina, where the company is also working to develop corn-based production facilties. “State government offi cials haven’t really knocked our doors down to try to help us because it seems the objective in Florida is to look at second-generation biofuels,” he says. “I think that has hindered us some.”

The fact that Florida lacks corn produc-tion can also be a contributing factor to the state’s delayed entry into ethanol production. “The challenge with these projects is, we’re not

Iowa,” Levenstein says. “It’s not an off-the-shelf plant, where the model is already there. [Corn ethanol producers] have been doing it for decades and they’ve pretty much got all the questions answered. With what we’re doing, it’s all new. There’s more unknowns and it’s not been proven at a commercial scale yet.”

Having said that, Levenstein says Florida has enormous potential to become the next Iowa as far as ethanol production, “empha-sis on ‘potential’,” he says. “Admittedly, we’re not at the point today where we had hoped we would be fi ve years ago. We’ve created the demand, now it’s just a question of whether we’ll be able to fi ll our own demand with pro-duction facilities in the state.” EP

Kris Bevill is the editor of Ethanol Pro-ducer Magazine Reach her at [email protected] or (701) 850-2553.

nology and what feedstock they’re using, there’s certainly availability here.”

Several proposed Florida projects plan to take advantage of the state’s climate to supply them with tropical feedstocks. Southeast Renewable Fuels LLC will use sweet sorghum to produce ethanol at its facilities. In December, the company en-tered into the permitting process for a 20 MMgy sweet sorghum-to-ethanol facility to be located in Hendry County near Clewis-ton and is also reviewing sites for two addi-tional plants, for a total production capacity of 100 MMgy. “We believe we can get all of those sited in Florida,” says executive vice president and chief operating offi cer Don Markley. “Feedstock is everything. [Florida] is where we believe we can get the acreage to grow sweet sorghum in the quantities that are needed to support the facilities.” Markley says Southeast Renewable Fuels expects to use 1.1 million tons of sweet sor-ghum annually for a 20 MMgy facility and that the company has preliminary feedstock procurement agreements in place.

U.S. EnviroFuels LLC is also plan-ning to utilize sweet sorghum, as well as sugarcane, for its 30 MMgy Highlands En-viroFuels LLC plant in Highlands County. President Brad Krohn says the company completed Phase 1 process engineering in December and plans to break ground on the facility this year. He says that if some-one is interested in cellulosic biomass, Flor-ida has the supply. His company has the ability to bolt on cellulosic capabilities to utilize sugarcane bagasse in the future, but the company remains focused on produc-ing sugar-based ethanol in the near-term. “The technology is low-risk [and] we be-lieve sugar-based ethanol can be a bridge to cellulosic,” he says.

INEOS, Southeast Renewable Fuels and U.S. EnviroFuels have all received state grants to further their projects. Other well-known projects to receive state funding in-clude the Verenium Corp.-BP plc joint ven-ture, Vercipia Biofuels, and Coskata Inc.

No Room for CornOne specifi c type of ethanol project

notably missing from Florida’s list of grant recipients is corn-based ethanol. Levenstein says this is because the grant programs were

ADVANCEMENTS

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EVENT

Delivering Renewable ResultsSolid Canadian backing for renewable fuels mandates and positive benefi ts from biofuels energized the Canadian Renewable Fuels Summit.

Story and photos by Susanne Retka Schill


single phrase captures the es-sence of the Canadian biofuels industry—“We’re delivering,” said Canadian Renewable Fu-

els Association President Gordon Quaiat-tini at the organization’s annual summit held in Vancouver, British Columbia, in early December. “We’re delivering the jobs and growth that Canadians so badly need. We’re delivering greenhouse gas (GHG) reduc-tions that Canada requires. We’re delivering for farm families looking to diversify. We’re delivering for the forestry sector that sees re-newable fuels as a new source of growth and vitality and we’re delivering for all those who worry about the security and abundance of clean and affordable transportation fuels.” Quaiattini cited three recent reports sup-porting his claim.

The day the summit opened, the CRFA released an analysis of the economic ben-efi ts from the southwestern Ontario farmer-owned corn ethanol plant, Integrated Grain Processors Cooperative. When it was being built, the IGPC plant had a net job creation of 1,152 “person years” and a direct invest-ment in the region of $276 million. Local governments gained $7.7 million in direct benefi ts to the municipal tax base while the provincial government benefi tted $44.24 million and the federal government close to $70 million. With the 150 MMly (40 MMgy) plant in production since fall 2008, it now provides 55 jobs and $53.7 million in addi-tional local spending each year, according to the economic analysis done by Doyletech of Ottawa. The municipality realizes reduced

welfare costs and increased property taxes totaling $629,000 annually while the provin-cial and federal governments see benefi ts of $5.2 million each.

Quaiattini also cited a life-cycle analy-sis (LCA) conducted on renewable fuel production from Canadian plants between April 2008 and March 2009. Ontario-based Cheminfo Services Inc. used the GHGe-nious model to conduct the analysis and found that ethanol reduced GHG emissions by 62 percent compared to traditional fossils. Eight corn- and wheat-based ethanol plants representing 648 MMly of ethanol produc-tion, about 65 percent of the country’s active ethanol capacity, were analyzed during the data reporting period.

Such results have earned impressive support for renewable fuels, as illustrated by a public opinion survey released by CRFA at the summit. The survey, conducted by Praxi-cus Public Strategies, showed 89 percent of Canadians believe renewable fuels are part of a move toward a low-carbon economy; 84 percent recognize renewable fuels boost economic activity and employment in rural communities; 82 percent believe any plan to tackle climate change should include re-newable fuels to lower GHGs; and 85 per-cent view renewable fuels as a source of value-added production and new high-tech employment. Support for a renewable fuels standard was only slightly lower at 78 per-cent, while 86 percent of Canadians believe the country needs a long-term plan to boost production of renewable fuels in Canada. “I’ve worked in politics for over 20 years,”

Quaiattini added, “and these are numbers any politician would die for.”

Politicians Voice SupportTwo government offi cials addressing

the summit demonstrated the degree of public support is understood by politicians. The British Columbia Minister of Energy, Mines and Petroleum Resources, Blair Lek-strom, voiced strong support for Canadian biofuels in his welcoming remarks. “Any-time we work towards diversifying markets for our agricultural sector, it is a good thing,” he said.

Lisa Raitt, the Canadian Minister of Natural Resources, also expressed support for biofuels in a videotaped presentation to the summit. She pointed to the stakeholder roundtables her department hosted in 2009 as the government began to implement its $2.2 billion investment in a renewable fuels strategy. Of the 57 applicants to the ecoEnergy program, 23 agreements have been signed, she said, supporting existing Canadian producers and new projects under development.

The Canadian renewable fuels standard takes effect in September, mandating a 5 per-cent renewable content in gasoline, followed by a 2 percent renewable content in diesel and heating oil in 2012. In a panel discussing the political landscape in Ottawa, Scott Reid, a partner in Feschuk-Reid, referred to the government support—the mandates and $2 billion in fi nancing—as “monster wins” with both conservatives and liberals includ-ing renewables in their platforms. “Your

A

Incoming Canadian Renewable Fuels Association Chair Doug Hooper, CEO of Canadian Bioenergy Corp., tells conference attendees that "green protectionism is going to be normal" during the 2009 Canadian Renewable Fuels Summit.


EVENT

fundamental job is to remind and reinforce that [supporting renewable fuels] is good politics,” he told the Canadian industry. Reid’s fellow panel-ist, Tim Power, Summa Strategies, echoed that, adding that in the next election cycle “biofuels need to frame themselves in the economic dis-cussion rather than the environmental.”

Expansion AnticipatedThe mood among ethanol producers at the summit was upbeat.

“Prices have recovered, relative profi tability is not too bad,” said Tim LaFrance, president of Terra Grain Fuels, a 150 MMly wheat ethanol plant at Belle Plaine, Saskatchewan. “The ethanol industry is looking for-ward to September 2010 when the E5 mandate creates a market for 2 billion liters a year,” said Jeff Passmore, executive vice president public affairs for Iogen Corp. and the outgoing chairman of CRFA. “We need 400 million liters of new capacity to cover that.” He expects most of that will come from grain-based ethanol because the Canadian standard has no carve out for cellulosic ethanol, unlike the U.S. However, while so much of Canadian biofuel policy and industry development lags behind the U.S., the Canadian cellulosic ethanol industry is on an equal footing with its neighbors to the south. “We are at the same stage in both coun-tries,” said Vincent Chornet, CEO of Enerkem Inc. Several companies at the summit described their technology developments occurring on both sides of the border, and spoke of the disadvantage to Canadian production when U.S. policies, such as the Biomass Crop Assistance Program, provide new areas of support to U.S. projects. As Passmore pointed out during the conference, the Canadian industry is dwarfed by its neighbor. U.S. ethanol production alone is about the same size as Canada’s entire gasoline consumption. The Canadians are also well aware that the debates surrounding land use issues and GHG reduction esti-mates would impact their industry, with presentations from several U.S. speakers, including Bob Dinneen from the Renewable Fuels Association, covering the controversy and the industry response.

Global UpdateDespite the controversies surrounding biofuels, a recent market

analysis conducted by the Global Biofuels Centre concluded ethanol will see an 80 percent increase in demand worldwide from 2009 to 2015. Tammy Klein, executive director of the Global Biofuels Centre for Hart Energy Consulting, said the growth drivers are not just the U.S. and Europe. “Many countries see biofuels the same way as Canada and the U.S.—supporting rural economic development, reducing greenhouse gases and also, many of these countries are energy insecure.” With next generation biofuels not likely to be available commercially in suffi cient quantities by 2015 to meet GHG-driven biofuels targets, she expects expansion of sugarcane-based ethanol in not only South America but in the Asia Pacifi c region as well. The ethanol share of the market is expected to reach a 30 percent penetration in Latin America, with Bra-zil continuing to supply 89 percent of the exportable surplus. In North America, gasoline demand is expected to decline by 2015 driven by gains

EVENT


Company executives brought the CRFS up to date on their progress towards advanced biofuels. From left, Tim Haig , Biox Corp.; Vincent Chornet, Enerkem Inc.; Ross MacLachlan, Lignol Energy; Christian Morgen, Inbicon.

in fuel effi ciency. Ethanol’s penetration into the North American market could increase with intermediate blends. Brazil is likely to quadruple etha-nol exports to the U.S. to help meet renewable fuels standards that won’t be attainable with advanced biofuels produced domestically, she added.

As for Europe, Klein said the standards in development ultimately may exclude most imports. “We don’t know how the EU can meet its renewable energy directive targets,” she said. She also predicted that the anticipated EU sustainability standards for biofuels will be challenged in the World Trade Organization as a protectionist trade barrier. At a recent international meeting, she noted “the change in tenor was astonishing” from the European Commission representative who openly admitted they would have to consider WTO implications. “Brazil is watching the EC closely,” she added, “and Brazil has a history of winning WTO cas-es.” If a WTO suit successfully challenges Europe’s sustainable biofuels policy, it could also impact U.S. policy as well.

Klein urged the group of Canadian Renewable Fuels Association

members to be proactive about involvement in policy development and the work being done on sustainability standards, not only in dialoguing with nongovernmental organizations but engaging with governments and organizations such as the Roundtable for Sustainable Biofuels. “The complaint from the RSB is they don’t have enough industry participa-tion, and not enough producer involvement,” she said.

Perspectives on the Decade Ahead In his remarks, CRFA’s incoming chairman, Doug Hooper, CEO

of Canadian Bioenergy Corp., refl ected on the state of the Canadian in-dustry at the close of a decade. “This has been the coming of age decade for biofuels with capacity being built,” he said. “We got the attention of government and held on to it.” In the next 10 years, the energy sector will be transformed with emerging carbon policies presenting opportunities and challenges, he said, predicting that trade disputes will grow over dif-ferent views on the proper carbon accounting. “Green protectionism is going to be normal,” he said.

Avrim Lazar, CEO of the Forest Products Association of Cana-da, also described a progression in the development of climate change policy that indicates where the discussion surrounding renewable energy is headed. The fi rst generation of climate change responses involved fi nger pointing, platitudes and good will gestures, followed by a second generation of policy development. “Kyoto was second generation be-cause it was done in slices,” he said. “Cap and trade offsets are a second generation response because it’s like paying someone else to diet,” he added. The third generation response is beginning to emerge now, and ultimately requires “a deep retooling of the economy, the changing of the fuel source.” The third generation will be holistic, including total car-bon accounting and incorporating nature’s cycles, he predicted. “If any industry is well situated [for the third generation of climate change policy developments], it is this industry,” he said. EP

Susanne Retka Schill is an editor at BBI International. Reach her at [email protected] or (701) 738-4922.

EVENT

Avrim Lazar, CEO of the Forest Products Association of Canada, says the third generation of climate change response will include a deep retooling of the economy.


The biofuel industry has been on a roller coaster ride lately. Those in the indus-

try are now in survival mode, working to keep plants and fa-cilities profi table, reducing costs and protecting assets while they await a predicted upswing in the market. Despite the current con-dition of the industry, experts at Pike Research expect biodiesel and ethanol markets to triple by 2020, utilizing fuels based upon advanced feedstocks.

A potential solution is found in one of today’s newest scienc-es—nanotechnology, which is the

study of the control of matter on an atomic or molecular scale. Nanotechnology generally deals with structures 100 nanometers or smaller and involves the devel-opment of materials or devices of that size. Nanotechnology is very diverse, ranging from novel extensions of conventional de-vice physics, to completely new approaches based upon molecu-lar self-assembly, to developing new materials with dimensions on the nanoscale, even to specu-lation on whether scientists can directly control matter on the atomic level.

Nansulate coatings, patented

and manufactured by Indus-trial Nanotech Inc., are materials based on nanotechnology that offer combined benefi ts not pos-sible with conventional materi-als. The coatings offer an energy effi cient and environmentally friendly method to insulate, pre-vent corrosion and even reduce carbon emissions on all types of tanks, piping and equipment such as boilers, steam lines, heat exchangers and processing tanks. But better yet, they are afford-able, meaning the payback time is short (typically reported between 6 and 18 months), and can be implemented incrementally.

How Nansulate Works Nansulate coatings incorpo-

rate a nanocomposite with an ex-tremely low thermal conductivity. Passage of thermal energy through an insulating material is an attempt by hotter, fast-vibrating molecules to transfer energy to cooler, slow-vibrating molecules in order to reach equilibrium. It occurs in three ways: solid conductivity, gas-eous conductivity, and radiative (in-frared) transmission. The total of these is the thermal conductivity of the patented material.

Thermal conduction through the solid portion is hindered by the tiny size of the connections

Nanotech Products Increase Efficiency and Energy SavingMore than 800 manufacturer-identifi ed nanotech products are publicly available, with three to four new ones hitting the market each week.

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily refl ect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

TECHNOLOGY. BY KHATEREH A. PISHRO & FRANCESCA M. CROLLEY

Contribution

A worker applies a coat of Nansulate thermal paint to a pipe at the Grupo Modelo Brewery in Mexico.

PH

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between the particles making up the conduction path and the sol-ids that are present, which consist of very small particles linked in a three-dimensional network (with many “dead-ends”). Therefore, thermal transfer through the sol-id portion occurs through a very complicated maze and is not very effective. Air and gas in the mate-rial can inherently also transport thermal energy, but the gas mole-cules within the matrix experience what is known as the Knudsen ef-fect, and the exchange of energy is virtually eliminated.

Conduction is limited be-cause the “tunnels” are only the size of the mean-free path for molecular collisions; (smaller than a wave of light), and molecules collide with the solid network as frequently as they collide with each other. The unique structure, comprised of nanometer-sized cells, pores, and particles results in poor thermal conduction. Ra-diative conduction is low due to small mass fractions and large surface areas.

The properties that make the material a poor heat conduc-tor make it an effective insulation that can be coated onto a variety

of surfaces to reduce heat loss or gain and energy consumption.

Three coats of Nansulate re-duce thermal fl ow by 34.8 percent in laboratory tests. In addition, Nansulate has excellent corrosion protection, and when used in ap-plications on metal eliminates the corrosion under installation (CUI) problem that many other traditional insulations cause.

Evaporation/VaporizationNansulate patented technol-

ogy can also be an effective insu-lation in a high humidity environ-ment. One large petrochemical facility needed to prevent corro-sion of carbon steel tanks and stop vaporization of methanol by insulating tanks effi ciently. Meth-anol evaporates at 64.7 degrees Celsius (148 degrees Fahrenheit). When the methanol reaches the storage tanks, the temperature of the liquid is 15 C and the goal is that it should not exceed 33 C. The chemical plant’s location in the Middle East, where humid-ity levels are between 75 percent and 90 percent, makes traditional insulation materials impractical to use because fast absorption of moisture would cause CUI. A

layered application of two coats of Nansulate High Heat and one application of Nansulate Top Coat (tinted blue) was spray-ap-plied to the large methanol tanks. Nansulate stopped vaporization of methanol and offered corro-sion protection and resistance to moisture penetration.

Implementing this type of insulating material in biofuel production facilities noticeably reduces surface temperature to safer levels in addition to reducing heat loss, thereby saving money and energy. Spray-applying Nan-sulate paint to hot water pipelines or tanks, insulates and provides corrosion protection under in-sulation and moisture resistance at the same time. Energy and cost savings are the main reasons manufacturers in the textile in-dustry and many others are utiliz-ing this technology in their plants, and planning to coat equipment, walls and ceilings to save on heat-ing and cooling costs. Nansulate has proven to be an energy saving solution for more than fi ve years. Industrial customers receive pay-back on their investment in as little as 6 to 18 months on average and energy-savings are documented at

an average of 20 percent. Afford-ability and the fact that the tech-nology is green and low in volatile organic compounds, make it one that every plant manager should consider for cost savings.

Biofuel companies looking for solutions to keep their doors open and their facilities running while waiting out the economic storm can benefi t from the com-bination of solutions this tech-nology provides: reduced energy costs, reduced product evapora-tion and corrosion resistance. With payback being seen so quickly, the technology offers an attractive and easy-to-apply solu-tion for many who are in need of fast fi xes to return their plants to profi tability. EP

Khatereh A. Pishro is a biopro-cess & chemical engineer and co-founder and R&D manager at Nanofan Industrial Coatings, F.Z.E. Reach her at [email protected]

Francesca M. Crolley is vice president of business develop-ment at Industrial Nanotech, Inc. Reach her at [email protected]

VOGELBUSCHThe Bioprocess Company

Designing state-of-the-art ethanol plants in the U.S. for over 30 yearsWe Make Biotechnology Work

Vogelbusch USA, Inc. • 1810 Snake River Road • Katy, TX 77449 • (713) 461-7374 • [email protected]


The National Corn-to-Ethanol Research Center in Ed-wardsville, Ill., operates a round-the-clock pilot plant facility for producing and analyzing biofuels and their coproducts. Public and private entities such as biofuel manufacturers, seed-trait pro-ducers, enzyme manufacturers, equipment providers, and other clients use the NCERC.

The Center’s core mis-sion is demonstration research for the validation of new pro-cess technologies, products, and equipment that could potentially improve biofuel production and optimize the value of coproducts such as distillers dried grains. The facility’s clients use the data gen-erated from the piloting studies to make their own processes more

effi cient and productive. The NCERC’s 36,000-

square-foot facility contains re-search labs where ideas can be tested and perfected on a small scale before being scaled-up in the pilot plant. In addition the Center has provided laboratory and process training to more than 500 people. NCERC is continu-ally searching for and implement-ing new state-of-the-art laborato-ry analytical methods and process measurement technologies to expand and improve the quality of the data the center provides the client.

Ethanol Distillation Process

Rapid feedback on changes in distillation performance is im-

portant for the successful opera-tion of fuel ethanol plants. Any upset in the purity of the fi nal product can be detrimental to the plant’s smooth operation and its profi ts.

The distillation unit opera-tors in fuel ethanol plants typically depend on a semi-hourly hydrom-eter to determine the proof or al-cohol concentration of the fi nal product. This method involves drawing an alcohol sample and using a hydrometer to determine the specifi c gravity of the fl uid. To determine the ethanol con-centration from a specifi c gravity measurement, the operators must measure the temperature and consult a table to determine the alcohol concentration.

On a more infrequent basis,

laboratory personnel will use the Karl Fischer titration method to determine the alcohol concentra-tion. The accuracy and precision of this laboratory bench method is excellent, but the time needed to collect and analyze the sam-ples can be problematic when operators are troubleshooting distillation unit problems. The lag time between a change in the reported ethanol concentration and the plant operators being notifi ed to make adjustments to bring the distillation unit under control can be substantial.

A drop in ethanol proof can occur for many reasons. For ex-ample, fl ooding of the rectifying column may cause material that is not fully distilled to be carried over into the plant’s 190 proof

The Proof Is In the ProfitEthanol research center investigates new technologies to benefi t the biofuel industry

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily refl ect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

PROFIT. BY TERRY LASH

Contribution

The National Corn-to-Ethanol Research Center provides ethanol industry members the opportunity to test new methods of production.


tank or molecular sieves. The molecular sieves are designed to remove water from a 95% pure ethanol stream. So, a carryover of incompletely distilled ethanol can cause the molecular sieves to become overloaded and unable to absorb the excess water.

Lower ethanol proof can also result from a failure within the molecular sieve system itself. For instance, failure of a purge valve would prevent removal of the water collected in the sieve material during the regenera-tion cycle, which would inhibit the absorption of water when the next absorption cycle begins. Also over time, the molecular sieve’s ability to absorb moisture can decline due to foreign mate-rial clogging the pores.

EconomicsAnother concern for etha-

nol producers is to manufacture ethanol with an acceptable water content, which is specifi ed by the ethanol buyer. The situa-tion of producing ethanol with a higher concentration of alco-hol than required can be a major cost to the plant. For example, if a 50 MMgy plant sells ethanol at $1.75 a gallon and produces ethanol that is 0.1 proof (.05 percent) higher than required by their contract, the plant will lose about $0.000875 per gallon. This is approximately $44,000 per year or $88,000 per 0.1 proof in a 100 MMgy plant. This savings goes straight to the bottom line.

Distillation Unit Performance Monitoring

As a fermentation pilot-ing facility, NCERC performs many dissimilar fermentations to optimize a process during a research trial. Typically the com-plete fermentation of a material takes place between 40 and 80 hours depending on the organ-ism and the feedstock. Fermen-tation research can involve ad-justing some parameter in each fermenter set to fi nd out which process condition results in the best alcohol yield. The ferment-er batches containing different levels of alcohol are pumped to a distillation unit to remove the alcohol and send the remaining solids and water for further pro-cessing into coproducts.

In one test, plant operators

needed a method to continu-ously monitor the performance of the plant’s distillation unit. NCERC chose a novel approach to continuously monitor alcohol concentration of its distillate using a Coriolis type mass fl ow meter. Providers of Coriolis fl ow measurement technology (density, mass fl ow) can provide an optional software program-ming function that allows the process engineer to program the instrument with data tables that relate temperature, density and concentration data. NCERC en-gineering wanted to validate and apply this technology to turn the instrument into a proof-meter to relieve the plant operations team of the responsibility of measur-ing the alcohol content using the manual hydrometer method and temperature reference chart.

INTERNATIONAL

MAY 4-6, 2010MINNEAPOLISCONVENTION CENTERMINNEAPOLIS, MINNESOTA

SAVE THE DATE!


An Endress+Hauser Pro-mass 83F mass fl ow measuring system was supplied to NCERC with the “special density” calibra-tion option, which optimizes the density measurement so that the fl ow meter can also be used as a densitometer. With this calibra-tion, if the process fl uid chang-es, the special density calibration compensates for the temperature effect on both meter and fl uid. The instrument manufacturer then also programmed the unit to measure alcohol proof using ATF tables, and the fl ow meter was programmed to indicate and transmit concentration, density, and temperature.

Validating Method for Proof Measurement

NCERC installed the Pro-

mass instrument in a pumped recirculation loop on the plant’s shift tank containing 200 proof alcohol. As the 200 proof alco-hol circulated through the instru-ment, the displayed data indica-tions for density, concentration and temperature were logged. At the same time, a sample was collected, and the ethanol con-centration was measured by Karl Fischer titration and the density was measured using an Anton Paar densitometer.

The laboratory measure-ments of concentration and den-sity were compared to the Pro-mass values. The temperature of the 200 proof alcohol was varied over time and multiple data sets were collected from the Corio-lis instrument, the Karl Fischer titration and Anton Paar labora-

tory density instrument. The al-cohol was then diluted with wa-ter progressively over time, and the Coriolis meter temperature, concentration and density read-ings were compared with the laboratory measurements. Data was collected at eight concentra-tions ranging from 200 to 195 proof (100 percent to 97.5 per-cent) and a map relating ethanol concentration to temperature and density data was generated.

AnalysisIn Figure 1, the pilot test

showed that the Promass Corio-lis meter achieved accurate and repeatable density readings com-pared to the Anton Parr labora-tory instrument, with the original calibration coeffi cients entered by the instrument manufacturer.

The average offset between the two densities was 0.0004 gm/cc, which is within the Cori-olis instrument manufactures specifi cation of 0.0005 gm/cc maximum measuring error for density. This average offset was then used to adjust the density coeffi cient within the meter to obtain a more accurate reading.

Figure 2 compares the etha-nol concentration displayed by the Promass meter to the con-centration calculated using Karl Fischer titration, which is the laboratory standard for the in-dustry. The average error was 0.12 percent (v/v), which corre-sponds to about 0.24 proof. This demonstrates that once properly calibrated, the Promass 83F is capable of determining ethanol proof with acceptable accuracy. The immediate feedback that the instrument can provide to operations staff should improve overall distillation performance in the typical ethanol plant.

Experiencing 199-Proof Results

These tests show that a Coriolis-based mass fl ow and density instrument equipped with special software has the ac-curacy and repeatability compa-rable to established laboratory methods. Therefore, this tech-nology is a reliable solution for on-line proof measurement.

While this instrument will not replace established labora-tory methods for determining ethanol proof, it is a valuable supplement to these methods. This instant on-line measure-ment will give the producer bet-ter information to control their alcohol content in the ethanol, which is especially important in light of tight profi t margins. For the plant operations and main-tenance staff, it will serve as an excellent troubleshooting tool by providing an earlier indication of process upsets than current in-dustry methods. This technology also has the potential to cut pro-duction costs by identifying up-sets sooner, thus saving time and money by reducing the amount of rework required to correct an off-spec ethanol stream.

Other applications of this measurement technology can be applied in an ethanol plant:

• Monitor the solids level of syrup produced in the evapora-tors

• Monitor the solids level of the corn slurry

• Monitor the sodium hy-droxide concentration for clean in place fl uids. EP

Terry Lash is a research engineer with the National Corn to Ethanol Research Center. Reach him at [email protected]

PROFIT. BY TERRY LASH

Figure 1 Ethanol Density from Promass 83 vs. Anton Paar

Figure 2 Ethanol Concentration from Promass 83 vs. Karl Fischer

Developing and Commercializing Next Generation BiofuelsFebruary 9-11, 2010 Kingsway Hall HotelLondonThe conference focus will be on utilizing new tech-nologies to deliver increased cost effi ciency and greenhouse gas savings of ethanol and other bio-fuels. Attendees will also examine the prospects for bringing next-generation biofuels to market.

www.agra-net.com/portal/marlin/system/render.jsp?siteid=20000000062&marketingid=20001839302&MarlinViewType=MARKT_EFFORT

National Ethanol ConferenceFebruary 15-17, 2010Gaylord Palms Resort & Convention CenterOrlando, FloridaSpeakers and sessions will focus on historic op-portunities facing the ethanol industry, including climate change, the increase of ethanol’s market-share and technology practices.

www.nationalethanolconference.com/

EVENTS CALENDAR

Agricultural Outlook Forum 2010February 18-19, 2010Crystal Gateway MarriottArlington, VirginiaThe forum, hosted by the USDA, will include ses-sion tracks focused on developments in renewable and clean energies, global commerce, climate change, rural communities, conservation, sustain-ability and food price trends and farm income.

www.usda.gov/oce/forum/

World Biofuels MarketsMarch 15-17, 2010 Amsterdam, The NetherlandsTopics will include algae fuels, energy crops, policy, indirect land use change and biobased products. An introductory course in transport biofuels will also be available.

www.worldbiofuelsmarkets.com/index.html

New Energy Finance SummitMarch 17-19, 2010InterContinental London Park Lane HotelLondonSessions will focus on clean energy, carbon mar-kets and innovation in the areas of advanced trans-portation, bioenergy, wind and solar.

www.newenergyfi nancesummit.com/

64 ETHANOL PRODUCER MAGAZINE February 2010

Feb Mar


EPM MARKETPLACE

Associations/OrganizationsEPPIC Environmental Index334-277-1364 www.eppicenv.com

ChemicalsAnti-Microbial

Bio-Cide International.Inc405-329-5556 www.bio-cide.com

Resonant BioSciences, LLC.866-933-0408 www.puremash.com

Enzymes

CTE Global, Inc.847-564-5770 www.cte-global.com

Genencor585-256-5249 www.genencor.com

Novozymes919-494-3101 www.novozymes.com

Water Treatment

Buckman Laboratories, Inc.901-278-0330 www.buckman.com

Yeast

Martrex,Inc.952-933-5000 Ext 18 www.martrexinc.com

CleaningDryer Systems

Hydro-Klean, Inc.515-283-0500 www.hydro-klean.com

Premium Plant Services, Inc.888-549-1869 www.premiumplantservices.com

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Tank Cleaning Equipment

Gamajet Cleaning Systems Inc877-GAMAJET www.gamajet.com

Spraying Systems Co.630-665-5000 www.spray.com

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ConstructionFabrication

Andy J.Egan Co.616-791-9952 www.andyegan.com

VAL-FAB Inc.877-482-5322 www.valfab.com

Insulation

Petrochem Insulation707-644-7455 www.petrocheminc.com

Management

Marcus Construction Company800-367-3424 www.marcusconstruction.com

Railroad Tracks

Tanks

ATEC Steel620-856-3488 www.atecsteel.com

Westmor Industries320-589-2100 www.westmor.biz


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ConsultingEnvironmental

Aquaterra Environmental Solutions, Inc.877-913-8200 www.aquaterra-env.com

ICM, Inc.877-456-8588 www.icminc.com

Feasibility Studies

Harris Group Inc.206-494-9422 www.harrisgroup.com

Plant Optimization



Project Development


EmploymentRecruiting

SearchPath of Chicago815-261-4403, x100 www.searchpath.com/chicago

EngineeringDesign/Build

Process Design


Process Engineering Associates, LLC865-220-8722 www.processengr.com

Equipment & ServicesAnalytical Instruments

Perten Instruments, Inc.801-936-8165 www.perten.com

Boiler Systems

Hurst Boiler & Welding Co., Inc.800-666-6414 www.hurstboiler.com

Control Systems


Revere Control Systems800-536-2525 www.reverecontrol.com

Conveyors–Drag

Intersystems800-228-1483 www.intersystems.net

Conveyors–Mechanical

Superior Industries320-589-2406 www.superior-ind.com

U.S. Tsubaki847-459-9500 www.ustsubaki.com

Conveyors–Pneumatic

MAC Equipment, Inc.816-891-9300 www.macequipment.com

Corn Oil Recovery


DDGS Diesel

Total-Yield Diesel from Distillers402-640-8925 www.total-yield.com

Distillation Equipment

SRS Engineering Corpration951-526-2239 www.srsbiodiesel.com

Dryers-Rotary Drum


Dryers-Rotary Steam Tube


Dust Control Systems

MAC Equipment, Inc.816-891-9300 www.macequipment.com

Fermentors

WINBCO Tank Company641-683-1855 www.winbco.com

Filtration Equipment

Fluid Engineering814-453-5014 www.fl uideng.com

Fire Suppression

FLAMEX Inc.336-299-2933 fl [email protected]

Fractionation-Corn

Cereal Process Technologies217-779-2595 www.cerealprocess.com

Crown Iron Works651-639-8900 www.crowniron.com


MOR Technology, LLC618-522-8324 www.mortechnology.com

Grain Handling & Storage

McC, Inc.763-477-4774 www.mccormickconstruction.com

Instrumentation


Insulator

Miller Insulation Co., INC701-297-8813 www.millerinsulation.com

Laboratory-Equipment


Loading Equipment

Carbis, Inc.800-845-2387 www.carbis.net

Determan Brownie, Inc.800-835-6074 www.determan.com

Maintenance Software


Moisture Analyzers


Molecular Sieves


Parts & Services


Alaqua Inc.Evaporators, Crystallizers, Distillation, Columns, Solvent

Recovery, Heat-Exchangers, Process Engineering

7004 Boulevard East, Ste.28A Guttenberg, NJ 07093 USATel: 201.758.1577 Fax: 201.758.1522

[email protected]

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VFTechnical Services, LLC423-794-6747 www.vftechserv.com

Pumps

PeopleFlo Manufacturing847-929-4774 www.peoplefl o.com

Valley Equipment Co. Inc.423-753-3541 www.valleyequipment.com

QA Test Products


Scales-Truck

Weigh-Tec Inc.1-800-461-4153 www.truck-scales.com

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Pro-Environmental, Inc.909-989-3010 www.pro-env.com

Valves

Check-All Valve Mfg. Co.515-224-2301 www.checkall.com

Wastewater Treatment Services

ADI Systems Inc.1-506-452-7307 www.adisystemsinc.com



UEM, Inc.561-385-7515 www.uemgroup.com

Yield Enhancement

EdneiQ, Inc.310-592-4158 www.EdeniQ.com

FinanceAppraisals

Natwick Associates Appraisal Services800-279-4757 www.natwick.com

Due Diligence


Insurance

ERI Solutions, Inc.316-927-4294 erisolutions.com

Mergers & Acquisitions

Moglia Advisors847-884-8282 www.mogliaadvisors.com

Legal ServicesAttorneys

BrownWinick Law Firm515-242-2400 www.biofuellawyers.com

MarketingFuel Ethanol

CHS Renewable Fuels651-355-6271 www.chsinc.com

Miscellaneous

Maas Companies507-424-2640 www.maascompanies.com

Nelson Ink Promotional Products218-222-3831 www.nelsonink.com

Research & DevelopmentDynamometer Testing

Roush Industries734-779-7736 www.roush.com

TransportationRail

Ameritrack RailRoad Contractors, Inc.765-659-2111 www.ameritrackrailroad.com

Railcar Parts

Salco Products, Inc.630-783-2570 www.salcoproducts.com

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EPM MARKETPLACE

WE ARE GROWTH ENERGY.YOU ARE, TOO.

Growth Energy means business. We’ve taken a forceful stand on the food industry’s “food vs. fuel” smear

campaign. Now we’ve set our sights on a bigger goal: raising the regulatory cap on ethanol. This work

won’t be easy. But together, we can grow our industry to where it needs to be, helping our nation become

energy independent while creating jobs at home and a cleaner environment for future generations.

Ethanol is clean, green, high-tech and homegrown. Help spread this word to opinion leaders, policy makers

and Americans from coast to coast. Go to GrowthEnergy.org today and see how you can get involved.

Together, we can keep ethanol growing.

WE’RE A GROUP OF LEADING ETHANOL COMPANIES DEDICATED TO FUELING

AND FEEDING THE WORLD THROUGH ETHANOL AND AGRICULTURE.

GrowthEnergy.org

Growth Energy means business. We led the ght against the food industry’s “food vs. fuel” smear

campaign. And we are leading the effort to raise the regulatory cap on ethanol. It is not easy work. But

together, we can grow our industry, help our nation become energy independent and create jobs while

cleaning the environment for our children and grandchildren.

Ethanol is clean, green, high-tech and homegrown. Help spread this word to opinion leaders, policy

makers and Americans from coast to coast. Go to GrowthEnergy.org today and see how you can get

involved. Together, we can keep ethanol growing.

February 2010 Ethanol Producer Magazine

Documents

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u t i o n sfor

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ethanol use

benefi t ethanol producers