Domestic Fuel

The new year brings in new hope, and it’s no different for the ethanol and biodiesel industries in this country.

You couldn’t blame the folks who make biofuels in the U.S. if they just wanted to forget about 2009 … especially when you consider the fights over food versus fuel, delays of regulatory implementations that would have helped both ethanol and biodiesel, indirect land use issues, and to cap it off, the loss of the $1-a-gallon federal biodiesel blender’s tax incentive.

But, as I said, a new year brings new hope, and the people who represent ethanol and biodiesel in this country, are hopeful they’ll see a new Renewable Fuels Standard (RFS-2) soon, and the green fuels industries will bounce back.

In this edition of the Domestic Fuel Cast, listen in on my conversations with Tom Buis, the CEO of Growth Energy, a group representing America’s ethanol producers; the Renewable Fuels Association’s Matt Hartwig; and Joe Jobe, Chief Executive Officer of the National Biodiesel Board, as they discuss how they believe each of their respective industries moves forward in 2010.

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Blendstar, LLC has announced the launch of a biofuel transload terminal to distribute ethanol and biodiesel in Bossier City, Louisiana, a suburb of Shreveport. The facility is expected to open late this month with capacity to serve the local market as well as future growth related to increased demand as a result of higher blends of biofuels in the U.S. fuel supply.

According to the Blendstar press release, fuel distributors in Northern Louisiana, Southern Arkansas and Eastern Texas will be able to obtain high-quality ethanol and biodiesel at the terminal, located on 4800 Viking Drive, Bossier City, LA. The Bossier City facility will be a common stock terminal with direct rail access via the Kansas City Southern Railroad and will offer rail to truck offload services, as well as customized services dependent on customer needs.

“We are committed to providing the most cost-effective access to biofuels to our customers so they in turn meet the demands of their customers,” said Matt Griswold, president of Blendstar, LLC. “With Bossier City and other strategic terminal locations across the Southern U.S., Blendstar is able to extend our ethanol and biodiesel offerings to improve blending efficiencies in numerous markets.”

With the addition of the Bossier City terminal, Blendstar will soon operate nine biofuel terminals in seven states. The Bossier City terminal will be open 24 hours, 7 days a week.

The nation that leads the clean energy economy will be the country that leads the global clean economy and America must be that nation,” said President Obama tonight during his first State of the Union address. “I will not accept second place.”

There were several major focuses of his speech including the support of small businesses, building a stronger financial institution and the creation of new jobs, especially in the clean tech sector. “We need to put more Americans to work building clean energy systems,” said Obama. He also wants to give incentives to consumers who add energy efficiency technologies to their homes, the purchase of these will help to support clean energy industry, he explained.

Obama continued that the House has already passed a bill that will do some of these things, and expressed hope that the Senate would as well. “I want a jobs bill on my desk without delay.”

In anticipation for Obama’s support of clean tech jobs, Renewable Fuels Association (RFA) President, Bob Dinneen sent out a statement saying, “America’s ethanol producers stand with the President, ready to provide good paying jobs and economic opportunity in a cleaner and more sustainable manner. “In just the past 10 years, ethanol production has helped create hundreds of thousands of new jobs for engineers, construction workers, chemists, accountants, maintenance supervisors, and countless others. With new technologies on the precipice of commercialization, this industry is once again poised to bring unparalleled economic opportunity to small, rural communities all across the nation.”

Obama continued, “No area is more ripe for investments than energy…but to create more of these clean energy jobs, we meed more production, more efficiencies and more incentives. He then laid of some of the elements that are needed to create the clean energy industry including continued investments in advanced biofuels. Finally he said, “And yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy profitable energy.”
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A recent study that contends algae-based biodiesel is no more environmentally friendly than conventional row-crop feedstocks has generated some controversy, as well as quite a few comments. And even the algal-biofuel industry seems to be split on the issue.

As you might remember from my story last week, University of Virginia researchers have concluded that algae’s environmental footprint is larger than other terrestrial crops, and the environmental impact of algal-based biofuels needs to be better studied before major investments in algae production are made.

The Algal Biomass Organization has taken exception with the study with the group’s executive director, Mary Rosenthal, pointing out several concerns about the report:

· Assumptions about algae growth systems. The report uses a first generation, raceway-style pond system as its benchmark. Many leading algae companies abandoned that approach years ago and have a variety of more advanced cultivation systems, some of which are unrelated to the methods the authors sought to assess.
· Assumptions about co-location. By assuming the production facility is not co-located with a large CO2 emitter, calculations for sourcing CO2 are flawed, resulting in a higher attribution of CO2 for algae plants. Most commercial-scale algae projects are being developed alongside major emitters in order to beneficially reuse CO2 that will take the place of equivalent carbon emissions from petroleum fuels.
· Assumptions about water use. The study assumes fresh water and non-potable salt water are equal. A sustainable industrial algae production model uses non-potable, non-agricultural water in the process of making liquid fuels.

While agreeing with ABO’s contentions with the study, Riggs Eckelberry, CEO of algae-biofuel maker Origin Oil, says the research does prove that the old way of turning algae into biodiesel is not a valid method anymore. And it’s not a method his company practices.

“It basically puts a tombstone on those earlier approaches [to algal-biodiesel production].”

Eckelberry says the Virginia study confirms earlier research that OriginOil did that found you need to co-locate algae-growing operations with other CO2 producers, you can’t use vast amounts of land, and non-potable water must be used, among other things. But Eckelberry says the algae industry has done a poor job getting that word out, with his own company’s research all but ignored months ago. He hopes this will serve as a wake-up call for the algae industry’s advocacy group.

“I think they’ve been looking for a focus and some traction as an organization. And from the e-mails I’ve received and forwarded [from the ABO's Rosenthal], I think they’ve found it.”

Eckelberry says he’s forwarding his information to the ABO in hopes the industry can work together to show that algae-based biofuels are truly the greenest fuels on the planet.

You can hear my entire conversation with Riggs here: Riggsinterview.mp3

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The USDA and the Department of the Navy (DoN) have agreed to work together to develop advanced biofuels and other renewable energy systems.

This USDA press release says the agreement is part of the government’s plan to build a clean energy economy, create new jobs and reduce American dependence on foreign oil, while building a strike force that will run on green power in the near future:

Secretary of the Navy, Ray Mabus emphasized how partnering with USDA supports his vision for energy reform. Mabus’ overarching goal is to increase warfighting capability. “In order to secure the strategic energy future of the United States, create a more nimble and effective fighting force, and protect our planet from destabilizing climate changes, I have committed the Navy and Marine Corps to meet aggressive energy targets that go far beyond previous measures.”

From a strategic perspective the objective is to reduce reliance on fossil fuels from volatile areas of the world. Tactically, on the battlefield, the costs of transporting fuel is exponentially increased; in extreme cases a gallon of gasoline could cost up to $400. Mabus continued “Even more serious and sobering, we are putting our Sailors and Marines in harms way as fuel convoys often meet a lethal enemy.”

In two years, the Navy wants to have a Green Strike Group composed of nuclear vessels and ships powered by biofuel and a Great Green Fleet that has nuclear ships, surface combatants equipped with hybrid electric alternative power systems running on biofuel, and aircraft running on biofuel by 2016.

I recently wrote about the potential of energy crops for biofuels, but there are many more opportunities including the biofuels value of planting winter crops or double crops. Last week during the AG CONNECT Expo, I spoke with Dr. Tom Richard, associate professor with Pennsylvania State University, who discussed the opportunities for biofuels and agriculture through the planting and harvesting of winter crops and double crops.

For many decades farmers have been encouraged to plant cover crops as an effort to reduce soil erosion, capture nutrients and improve soil quality. These cover crops are left on the ground and not marketed. The only difference with a double crop, explained Richard, is that it is marketed and becomes a second crop for the year.

“What we’re finding now with the biofuels industry is there’s potential to use what we’ve thought of as cover crops as double crops and actually market the material,” said Richard. “The above ground biomass could be a winter grain like winter rye, winter wheat or winter barley or could be an oil seed like winter canola or could be summer crop.”

Richard also explained that by going to a double crop or a winter crop, you will increase the net energy of the biofuel produced. The reason for this is that you are taking advantage of the sunlight and nutrients for a wider, longer growing season and a farmer can actually increase the productivity of that single piece of land by around 20 percent.

There are also advantages of planting winter or double crops from an environmental perspective. Most notably the roots are taking up nutrients and preventing erosion during the time of year that gets a lot of rain in many places throughout the country. The plants are also adding organic matter to the soil.

I asked Richard what the country needs to do to encourage farmers to begin growing these double or winter crops and he noted that subsidy programs are not enough. “We think a combination of some environmental subsidies plus a market for that second feedstock, that energy crop, will combine to make it a very attractive option.”

Listen to my interview with Tom below.

AG CONNECT Expo Photo Album

One of the biggest challenges for our country lies in the issue of how to create effective public policies that will grow the biofuels industry and reduce our dependence on foreign oil. Dr. Antonio Bento, associate professor in the Applied Economics and Management Program at Cornell University, has been researching exactly how to do this and he shared his results during the AG CONNECT Expo last week.

First we must take a step back to take two steps forward. There are several policies in place that mandate the production of biofuels with the Energy Independence & Security Act having one of the greatest impacts. This act requires 36 billion gallons of biofuels by 2022 with 15 billion coming from corn-ethanol. Bento noted that the country is well on its way to meeting this goal yet surprisingly, “While a lot of public press has blamed the increasing food prices due to these mandates, we find very little effect. Indeed, we find the bulk of the increase in food prices comes from the fluctuation in crude oil prices and our dependence on foreign oil, and less on the land we are devoting for the production of biofuels.”

Speaking of land, Bento also notes that biofuels are disproportionately being blamed for indirect land use effects. This has to do with the fact his framework, unlike a lot of the other models out there, is really accounting for the dynamics. “In other words, we really account for the fact that overtime yields will improve, we account for the fact there’s multiple land use that could adjust and we account for the fact there will be technology progress in the industry,” said Bento.
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Homegrown biofuels production could power a robust local economy and improve the water quality of the Chesapeake Bay by significantly reducing pollution runoff to the Bay’s local waterways.

That’s the primary finding in a report released today by the Chesapeake Bay Commission and the Commonwealth of Pennsylvania.

“This report clearly highlights the real and quantifiable benefits a next-generation biofuels industry presents to the Bay region, and outlines very near-term policy decisions each state could – and should – take to enhance an already growing economic opportunity for the region and get it right so that the industry can grow in a way that is environmentally sustainable,” said Maryland Delegate and project advisory panel chairman Jim Hubbard.

The report found that producing next-generation ethanol and other biofuels from growing plants in the Chesapeake Bay watershed such as switchgrass, barley and rye, and fast-growing trees like willow and poplar could create 18,000 jobs and 500 million gallons of fuel.

This morning Novozymes held is annual 2009 4th quarter sales call and earning report and overall it was favorable. While 2009 began with a rocky start for Novozymes and the majority of the ethanol industry, with effective management the company was able to finish off the year on a positive note.

Steen Riisgaard, President and CEO, noted, “After a shaky start to 2009, I’m very pleased with the way we managed our business throughout the year. We were able to deliver on our earnings guidance communicated at the beginning of the year by responding rapidly to the challenging market conditions. Looking at 2010, we expect a positive development but with continued low visibility. And even with the current market conditions, we see very favorable long-term trends for Novozymes and remain confident of our ability to deliver on our long-term targets.”

Overall, in 2009 the company’s sales were up by 4 percent with an increase in 7 percent just during the 4th quarter as compared to 2008. Some of this can be attributed the company’s commitment to developing more effective enzymes for biofuels production, with enzyme sales to the biofuel industry up 7 percent and Novozymes maintained a market share of more than 60 percent throughout 2009. In addition, its partnership with leading technology companies who are currently producing first generation biofuels and are developing second and third generation biofuels have had a positive impact.

For 2010, Novozymes expects both of its enzyme business and biobusiness to grow between 2-6 percent.

To access the full earnings report, click here.

In the growing field of biomass conversion to fuel there’s a plant that Mississippi State University thinks will help farmers and all Americans. It’s Giant Miscanthus and you can follow it on Twitter @GiantMiscanthus. They’ve actually licensed the product which is Freedom Giant Miscanthus that’s being marketed by Sunbelt Biofuels LLC. On the show floor at AG CONNECT Expo last week to talk about it were John Holmes (l) and Sunbelt’s Chairman Phil Jennings (r).

Phil says they’re taking the product commercial for MSU. He says they’ve been in the turf grass business for years and this new product caught their attention. He says they’re off to a great start and expect to see a lot of acres signed up in the next couple years as the demand for cellulosic ethanol production increases. John says Freedom is a play on words to denote the ability to become independent of foreign produced oil. Phil says “We know of no other plant that is a perennial, that is renewable as fast as it is that can give us the masses of biomass that we’re looking for.” He says Freedom provides four times the yield per acre of switchgrass.

You can listen to my interview with Phil and John below:

AG CONNECT Expo Photo Album

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Joule Biotechnologies announced today that they have signed a lease agreement to build its first pilot plant to be located in Leander, Texas. The plant will be the testing ground to further develop and test its transformative system for the production of renewable solar fuels and is expected to be online within the first half of 2010. The site was selected due to its high solar insolation and logistically convenient location.

The first test product will be ethanol which will be produced, in part with its SolarConverter™ system. This system incorporates product-specific organisms to produce solar fuels and chemicals via the same process. So far, the company has successfully achieved the production of both ethanol and diesel at lab scale, with the former already reaching productivity rates exceeding 6,000 gallons/acre/year. At full-scale production, via future commercial sites, the company estimates the potential to deliver 25,000 gallons/acre/year of ethanol and 15,000 gallons/acre/year of diesel at highly competitive market pricing.

Bill Sims, President and CEO of Joule Biotechnolgoies stated in a news release, “We are excited to take the next step with pilot-scale development of our renewable solar fuels, following our progress in the lab and also in outdoor testing. Our combined advances in genome engineering, bioprocessing and systems engineering have enabled a first-of-its-kind platform for the production of direct solar fuels, including ethanol and diesel. Now we have the opportunity to test and optimize our processes on a larger scale, driving towards our productivity targets while also demonstrating the ease with which our system can scale up.”

According to the company, their process will achieve high net energy balance without the use of fresh water, crops or the depletion of arable land. The company’s secret is their Helioculture™ technology, which leverages abundant solar energy and genome-engineered organisms to convert waste CO₂ directly into multiple solar fuels and chemicals. The continuous production process requires no biomass intermediates, removing resource limitations and costly processing from the equation.

Global Ethanol recently received the rights to use new corn oil extraction technologies at a 100 million gallon ethanol plant in Lakota, Iowa.

The technology, patented by GreenShift Corporation allows first generation corn ethanol plants to tap into the existing reserve of inedible crude corn oil with an estimated industry-wide output of about 20 million barrels per year. This corn oil normally comes out in the distillers grain co-product of ethanol production, but once extracted it can be used in the production of next generation fuels, such as biodiesel, biojet fuel, and renewable diesel, thereby enhancing total fuel production from corn and increasing ethanol plant profits.

Under the terms of the agreement, Global will directly finance, build, own and operate a facility based on GreenShift’s patented corn oil extraction technologies designed to extract more than 2.2 million gallons per year of corn oil in return for an ongoing royalty payment to GreenShift equal to more than about 20 percent of the market price of the extracted corn oil at the time of shipment.

It an effort to turn-around its struggling renewable fuels operations, Kinder Morgan Energy Partners has agreed to purchase three ethanol terminals for nearly $195 million in a joint venture with U.S. Development Group as reported by the Wall Street Journal. Kinder Morgan Energy has more than 28,000 miles of pipelines and 170 terminals and estimates that with this new deal, will handle around 218,000 barrels of ethanol per day in 2010.

U.S. Development Group, a storage and distribution company, in partnership with Kinder Morgan Energy, will create a nationwide network of ethanol-handling facilities that are connected via various modes of transportation including rail and pipelines. Ultimately, this network will provide easier access for major markets. Despite the current Obama administration’s support of alternative energy, such as second and third generation biofuels, most pipeline companies are sitting by the sidelines waiting for the ethanol play to be executed.

In addition to this new deal, the Journal reports that Kinder Morgan Energy, the division that oversees their renewable fuels strategies, has spent now spent approximately $500 million to build its ethanol and biodiesel business through facility acquisitions, upgrades and expansion projects. While biofuels are still considered a small part of their business “the company said that higher revenue from biofuels for its Central Florida Pipeline and West Coast facilities had “positively impacted” earnings in the third quarter.”

In another effort to improve the distribution of ethanol, Poet LLC and Magellan Midstream Partners announced that they would be building a 1,800 mile ethanol pipeline from South Dakota to Linden, New Jersey. The project is expected to cost $4 billion and be completed in 2014.

Money from the American Recovery and Reinvestment Act … aka the Stimulus Bill … will go to fund research on algae-based biofuels.

This press release from the U.S. Department of Energy’s Pacific Northwest National Laboratory says the lab will get about $14.2 million for its role in two biofuels research consortia:

[Energy Secretary Steven] Chu funded the consortia with nearly $80 million of American Recovery and Reinvestment Act funds with the goal of bringing new biofuels to the market and developing a cleaner and more sustainable transportation sector, as well as reducing dependence on foreign oil sources …

“We’ll be calling upon our entire suite of disciplines and capabilities in our support to these consortia,” said John Holladay, PNNL biomass manager. “We are positioned to address the entire spectrum of scientific challenges associated with developing a sustainable biofuels transportation sector – from fundamental research to applied processes.”

The press release goes on to say that the lab has several capabilities … proteomics, gasification and catalysis research… critical to biomass fuel conversion.

While researchers continue work on miscanthus’s viability to produce cellulosic ethanol, and growers now have a way to plant and harvest the feedstock more efficiently. After years of collaboration and research, a miscanthus rhizome regeneration harvester and planter system has been developed. The unveiling took place during the Bioenergy Feedstocks Symposium held at the University of Illinois (U of I). Typically, miscanthus is a labor-intensive crop requiring multiple machines, and costly manual selection and grading – but not any longer.

The new machine is the result of a three-year collaboration between U of I, Tomax Ltd and Bermuda King USA. According to a news release from U of I, this machinery can lower the cost of miscanthus rhizome production by up to 40 percent and create opportunities for miscanthus to be used more widely as a high-yield bioenergy crop.

Gavin Maxwell, Tomax Ltd Senior Bioenergy Consultant, said, “Bioenergy feedstock processors require security for supply and unless we dealt with regeneration and planting issues for miscanthus, we simply couldn’t make progress. The collaboration team had a very clear objective when beginning the design process of the harvester and planter. Our goal was to remove manual labor, integrate the digging and grading process, increase soil separation and improve both quality and volume to substantially reduce the cost of vegetative rootstock propagation.”

In recent U.S. trials, the machine has demonstrated a 200 percent increase in rhizome collection over manual systems. this allows, says the research team, the opportunity for regional nurseries to more efficiently expand to meet the demand for both solid and liquid fuel conversion. The harvester and planter package will be available beginning this year and will be available for expanded grower crops in time for the 2011 season.