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com
APRIL 2014
INSIDE: MEETING THE DEMAND FOR HIGH-PURITY LIGNIN
Looking
Up
Americas First Big
Cellulosic Ethanol Plants
Rise to Completion
Page 28
Plus:
KiORs Teachable
Startup Experience
Page 34
And:
New and Novel
Sugars Arrive
Page 38
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GROWTH ENERGY.
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validating higher ethanol blends through NASCAR
, to
calling out Big Oil with a national television campaign,
Growth Energy is there for the producers and
supporters of the ethanol industry.
We know were in a battle, but were ready for the ght.
Learn more at GrowthEnergy.org
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Contact your Lallemand Biofuels & Distilled Spirits or Mascoma respresentative or visit
www.lallemandbds.com for more information.
2014 LALLEMAND BIOFUELS AND DISTILLED SPIRITS. TRANSFERM IS A TRADEMARK OF LALLEMAND BIOFUELS AND DISTILLED SPIRITS AND MASCOMA CORPORATION.
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4 | Ethanol Producer Magazine | APRIL 2014
APRIL 2014 VOLUME 20 ISSUE 4 CONTENTS
DEPARTMENTS
6 EDITOR'S NOTE
Here We Go
By Tom Bryan
7 AD INDEX
10 THE WAY I SEE IT
It's Time to Focus on the
Elephant in the Corner
By Mike Bryan
11 EVENTS CALENDAR
12 VIEW FROM THE HILL
Moving Toward a Clean
and Renewable Future
By Bob Dinneen
14 DRIVE
The Real Cost of Food
By Tom Buis
16 GRASSROOTS VOICE
How RINs Really Work, and
Why Big Oil Hates Them
By Ron Lamberty
18 EUROPE CALLING
EUs Struggle for E10
By Robert Vierhout
20 BUSINESS BRIEFS
22 COMMODITIES
24 DISTILLED
44 BUSINESS MATTERS
Legal Argument Challenges
EPA Authority to Change RFS
By Alexander F. Logemann
46 MARKETPLACE
Ethanol Producer Magazine: (USPS No. 023-974) April 2014, Vol. 20, Issue 4. Ethanol Producer Magazine is published monthly by BBI International. Principal Offce: 308 Second Ave. N., Suite 304, Grand
Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offces. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave.
N., Suite 304, Grand Forks, North Dakota 58203.
CONSTRUCTION
Early Risers
Americas frst big cellulosic ethanol plants
will start up in succession this year.
By Chris Hanson
PROCESS
Optimization Outlays
KiOR isnt an ethanol producer, but its
successes and setbacks are informing.
By Ron Kotrba
INNOVATION
The Sugar Producers
Existing ethanol producers are sizing up
some sweet next-generation feedstocks.
By Susanne Retka Schill
BIOREFINING
Lignins Big Leap
The market wants high-purity lignin.
Canadas Lignol still aims to make it.
By Tom Bryan
28 34
38 42
FEATURES
ON THE COVER
Welders work on
a distillers grains
silo at Poet-DSMs
Emmetsburg, Iowa,
cellulosic plant.
PHOTO: POET-DSM
6 | Ethanol Producer Magazine | APRIL 2014
FOR INDUSTRY NEWS: WWW.ETHANOLPRODUCER.COM OR FOLLOW US: TWITTER.COM/ETHANOLMAGAZINE
Finally, its about to happen. Two of Americas frst big
cellulosic ethanol plantsthe kind weve all been waiting years to
seeare now substantially fnished and in startup. I dont want to jinx
their commissioning by overstating their completion, but Abengoa Bioenergy and Poet-
DSM Advanced Biofuelsand later, DuPontwill be producing big volumes of ethanol
from corn residue this year.
Taking nothing away from the accomplishments of other cellulosic ethanol plants
now operating or being commissioned, the sheer size of these high-profle facilities in
Iowa and Kansas simply merits excitement. As we report in Early Risers, on page 28,
by the end of the second quarter, both Abengoa and Poet-DSM will have their plants
onlineproducing 25 million gallons apieceand America will be on its way to producing
50 million to 60 million gallons of cellulosic ethanol annually. DuPont is expected to
follow, adding another 30 million gallons of capacity by years end.
History tells us it wont be simple. To date, there have only been a few large-scale
cellulosic biofuel plants commissioned worldwide, and each has faced steep operational
hurdles. The Beta Renewables cellulosic ethanol plant in Crescentino, Italy, and Ineos
Bios Indian River BioEnergy Center, for example, continue to wade through optimization
challenges.
For context, our page-34 story, Optimization Outlays, examines the scale-up
learning curve thats being experienced by KiOR in Columbus, Miss. Its not ethanol that
KiOR makes, but rather cellulosic gasoline and diesel fuel from Southern Yellow Pine. We
report that the company is working to increase the operational output of its plant, and
from the look of its fourth-quarter production numbers, making progress.
Examining other advanced biofuel aspirations, we profle two companies employing
widely different approaches to produce sugars for next-generation ethanol. The Sugar
Producers, on page 38, explains that Sweetwater Energy and Proterro are pursuing
unrelated platforms that strive for similar ends: supplementing ethanol plant fermentation
broths with sugar water. Sweetwater has offtake agreements in place with ethanol plants
and is much further along than Proterra, but both platforms are promising.
Finally, this month, we revisit the company that essentially introduced the U.S.
biofuels industry to the latent value of high-purity lignin. In Lignins Big Leap, on page
42, we report that Canada-based Lignol Innovations Ltd. is still intent on scaling up its
biorefning process and creating a market for its super-clean lignin. But like so many other
biobased products, the real challenge is not selling the stuff, but making it.
.
EDITOR'S NOTE
Here We Go
Tom Bryan
President & Editor in Chief
tbryan@bbiinternational.com
APRIL 2014 | Ethanol Producer Magazine | 7
FOR INDUSTRY NEWS: WWW.ETHANOLPRODUCER.COM OR FOLLOW US: TWITTER.COM/ETHANOLMAGAZINE
TM
EDITORIAL
President & Editor in Chief
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Pleaserecyclethis magazineand remove
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VOLUME 20 ISSUE 4
ADVERTISER INDEX
2014 International Fuel Ethanol Workshop & Expo 8-9
2014 National Advanced Biofuels Conference & Expo 45
2014 National Ethanol Conference 15
BetaTec Hop Products 19
Bilfnger Water Technologies 21
Buckman 30
Cashco, Inc. 24
DuPont Industrial Biosciences 48
Enerkem 37
Fagen, Inc. 5
Fluid Quip Process Technologies, LLC 41
Greenbelt Resources Corporation 36
Growth Energy 2
ICM, Inc. 11
Iowa Economic Development Authority 47
Lallemand Biofuels & Distilled Spirits 3
Nalco, an Ecolab Company 33
Novozymes 17
POET-DSM Advanced Biofuels 13
Sulzer Pumps Solutions, Inc. 25
Tower Performance, Inc. 43
Vecoplan LLC 26
Vogelbusch USA, Inc. 31
Wabash Power Equipment Co. 32
West Salem Machinery Co. 20
WINBCO 27
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10 | Ethanol Producer Magazine | APRIL 2014
Debate rages over the renewable fuel
standard (RFS) that mandates the use of
biofuels such as ethanol and biodiesel. At the
same time, we have had a market mandate for fossil fuels, in
particular gasoline, for more than 100 years because there was
no competition.
We have gone from sending ships out from Nantucket,
Mass., to kill whales for their oil to burning million-year-old
dead vegetation buried deep in the earth in the form of oil
and coal.
It doesnt seem like much progress has been made in terms
of energy, but in reality, its the natural progression of things.
The sun can generate more power than we could ever use and
creates the wind that can generate enormous energy when
harnessed. There are billions of tons of biomass energy that
go largely untapped and powerful oceans that create enough
energy to stagger the imagination. Yet, we plod along, debating
whether we should mandate the use of renewable fuels like
ethanol and biodiesel as if that were really important in the
scheme of things.
The world is heating up, and anyone who thinks that
human activity is not at the root of that trend is simply ignoring
science. Its time to think big, to think on a global scale, to stop
focusing on the gnat on the table when there is an elephant
standing in the corner.
Ethanol is a transitional fuel, just like fossil fuels have
provided a transition from whale oil and wood. But frst, we
have to let go of the past and accept the transition to a new
era of renewable, cleaner energy. At some point in the future,
the ethanol industry may even have to accept the eventual
transition from corn-based ethanol to cellulosic ethanol and,
eventually, to an entirely new type of fuel altogether.
Its natural to cling to the past, but its time to let go, open
our arms to the future and embrace the wonderful energy gifts
that nature has laid at our feetthe sun, the wind, the oceans,
biomass and geothermal energy. I imagine our great-great-
grandchildren will wonder why we continued to pollute their
earth with fossil fuels when there was so much clean energy
at our disposal. They will be amazed at our lack of energy
ingenuity, just as we are stunned that we actually killed whales
by the thousands for their oil.
In time, automobiles can and will be powered with
electricity generated by natures clean resources. Its time to get
past the debate about the RFS and accept the fact that ethanol
and biodiesel are just logical steps in the energy transition from
where we are today, to where we need to be tomorrow.
Thats the way I see it!
Its Time to Focus on the
Elephant in the Corner
By Mike Bryan
Author: Mike Bryan
Chairman, BBI International
mbryan@bbiinternational.com
THE WAY I SEE IT
International Fuel Ethanol
Workshop & Expo
June 9-12, 2014
Indiana Convention Center
Indianapolis, Indiana
Now in its 30th year, the FEW provides the global
ethanol industry with cutting-edge content and
unparalleled networking opportunities in a dynamic
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largest, longest running ethanol conference in the
worldand the only event powered by Ethanol Producer
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866-746-8385 | www.fuelethanolworkshop.com
National Advanced Biofuels
Conference & Expo
October 13-15, 2014
Hyatt Minneapolis
Minneapolis, Minnesota
Produced by BBI International, this event will feature the
world of advanced biofuels and biobased chemicals
technology scale-up, project fnance, policy, national
markets and morewith a core focus on the industrial,
petroleum and agribusiness alliances defning the
national advanced biofuels industry. With a vertically
integrated program and audience, this event is tailored
for industry professionals engaged in producing,
developing and deploying advanced biofuels, biobased
platform chemicals, polymers and other renewable
molecules that have the potential to meet or exceed the
performance of petroleum-derived products.
866-746-8385 | www.advancedbiofuelsconference.com
National Ethanol Conference
February 18-20, 2015
Gaylord Texan Resort &
Convention Center
Grapevine, Texas
The NEC provides attendees with timely information on
critical regulatory, marketing and policy issues facing
the ethanol industry. Experts will speak to the current
market situation, and address how we as an industry can
continue to grow through innovation, new technologies
and feedstocks, and by developing more diverse and
global markets.
International Biomass
Conference & Expo
April 20-22, 2015
Minneapolis Convention Center,
Minneapolis, Minnesota
Organized by BBI International and produced by
Biomass Magazine, this event brings current and future
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with waste generators, energy crop growers, municipal
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premier educational and networking junction for all
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EVENTS CALENDAR
12 | Ethanol Producer Magazine | APRIL 2014
The year 1970 marked a distinct turning point
in the way Americans view the environment.
Wisconsin Sen. Gaylord Nelson, along with concerned
citizens across the country, began the Earth Day movement
that changed Americas priorities for the next 44 years. The
creation of Earth Day on April 22, 1970, began to shift the way
we think about environmental policies, forcing us to consider
the ecological consequences of fossil fuel production and the
clean energy potential of renewable fuels.
Flash forward to today. Its now 2014 and the push for
clean renewable fuels is in full swing. Ethanol has taken off
and is now blended into 97 percent of U.S. gasoline, effectively
replacing 476 million barrels of imported oil. A new study
conducted by Life Cycle Associates, and commissioned by
the Renewable Fuels Association, recently found that, As the
average carbon intensity of petroleum is gradually increasing,
the carbon intensity of corn ethanol is declining.
The study delves deeper into the numbers, fnding that
corn ethanol reduces greenhouse gas (GHG) emissions by
32 percent compared to gasoline, including indirect land use
change. Additionally, corn ethanol reduces GHG emissions
by 37 percent compared to tight oil from fracking and 40
percent compared to tar sands. Sen. Nelson would have been
proud of these environmental enhancing accomplishments.
But we wont stop there. Out of the different feedstocks that
produce ethanol, cellulosic is the least carbon intensive of all.
Therefore, as we expand and move toward a cleaner, greener
future, the commercial success of cellulosic ethanol is critical
to both political and market success for all renewables.
As we speak, Ineos Bio is producing ethanol out
of vegetative, yard and municipal solid waste. Abengoa
BioEnergy and Poet-DSM are expected to start cellulosic
ethanol production early this year. Additional facilities are
under construction including DuPont Cellulosic Ethanol and
Quad County Corn Processors bolt-on facility.
While we see success both in reducing greenhouse gas
emissions and advancement into next generation biofuels, the
ethanol industry is under attack today. The U.S. EPA is pushing
to reduce the levels of ethanol blended into gasoline. The 2007
passage of the Energy Independence and Security Act led to
dramatic expansion of corn-based ethanol. That success laid
the foundation for the advancements in cellulosic and advanced
ethanol. We will continue fghting to keep the renewable fuel
standard at the levels Congress intended so there is stability
and growth in the ethanol market and increased investment in
next-generation biofuels.
Sen. Nelson stated on the 25th anniversary of Earth Day,
"The opportunity for a gradual but complete break with our
destructive environmental history and a new beginning is at
hand. We can measure up to the challenge if we have the will
to do sothat is the only question. I am optimistic that this
generation will have the foresight and the will to begin the task
of forging a sustainable society."
Yes, Sen. Nelson, we are up to the challenge. Is the EPA?
Moving Toward a Clean
and Renewable Future
By Bob Dinneen
Author: Bob Dinneen
President and CEO,
Renewable Fuels Association
202-289-3835
VIEW FROM THE HILL
THANK YOU TO OUR SPONSORS!
FEBRUARY 17-19, 2014 JW MARRIOTT ORLANDO
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14 | Ethanol Producer Magazine | APRIL 2014
The Real Cost of Food
By Tom Buis
Time and again, we have heard the claims
about how ethanol is the cause of rising food
prices. The ethanol industry has been accused of driving up
costs for everything from chicken wings to tortillas. Some of these
tall tales have even gained traction in the press. Big Oil and some
food special interest groups continue to use misinformation to try
to convince consumers that they are paying higher prices for food
because of the renewable fuel standard (RFS) despite the facts.
Corn, the major feedstock for U.S. ethanol production, is only
a fraction of overall food and grain costs. For every $1 spent at
the grocery store, more than 85.5 cents goes to pay for secondary
operations such as processing, packaging and marketing. The less
than 15.5 cents remaining goes to farmers and, of that, about 3
pennies to corn producers.
Digging deeper, it is obvious the falsehoods about the price
of food are even more off base. No. 2 yellow corn used in the
ethanol process is primarily used for livestock and poultry feed.
Ethanol production uses only the starch from the corn kernel and
for every bushel of corn used to produce ethanol, 33 percent goes
back into the livestock feed chain in the form of a high-protein,
competitively priced animal feed product. This coproduct replaces
corn and soybean acreage that would otherwise be devoted to
animal feed production. According to analysis by Air Improvement
Resource Inc., only 17.5 percent of net corn acres are used to
produce ethanol, not the 40 percent claimed by the antiethanol
crowd.
So, if corn isnt driving the cost of food, as special interest
groups would like you to believe, what is? Well, the answer is
quite simpleenergy costs. According to the World Bank,
United Nations, USDA and countless other objective economic
studies, energy costs are the leading contributor to rising food
prices. Ethanol is actually reducing fuel costs for consumers and
renewable fuels can help constrain the energy costs associated with
food production, processing and merchandizing, while reducing
our addiction to foreign oil.
The consumer price index for food since the RFS was
implemented in 2008 has very closely tracked the increases in the
overall index, growing at about 3 percent per year. In 2014, the
indices are expected to continue to grow at similar rates. Consumer
gasoline prices, however, have increased by more than 25 percent
on average per year over the same period. In effect, consumers are
getting hit twice by high fuel prices. First, they pay for the gasoline
they need for family transportation. Then, they pay higher prices
for the food they purchase because of energy costs.
Food costs will only drop if Big Food is willing to pass
a portion of its high profts on to the consumers. Despite their
accusations of unbearable food costs resulting from our renewable
energy policy, the National Restaurant Association acknowledged
its members have a long record of growth, and expect to reach
$683.4 billion in sales in 2014 alone, nearly double their sales in
2000.
The most damaging fact to Big Oils and Big Foods false
claims is the price of corn itself. Though outside factors, such as
adverse weather, can cause price spikes from time to time, farm
prices for corn have historically been near the cost of production
and the current year is no exception to this trend. Dont be fooled,
the oil and food industries that seek to limit consumer options at
the pump and abolish the renewable fuel standard are doing so to
protect their control over our food and energy markets, plain and
simple. When you peel back all the rhetoric and hype, this is simply
a battle about market shareno more, no less, and Big Oil and Big
Food will say and do anything to maintain their record profts and
near monopolistic control.
When the truth is laid out in an open and honest fashion,
consumers should realize they dont have to choose between high
quality, affordable food and renewable energy that is reducing their
gas bills.
First-generation ethanol reduces our dependence on foreign
oil, revitalizes our rural communities, improves our environment
and employs nearly 400,000 workers while driving down fuel costs
for consumers. The next generation will make an even greater
impact. Americas farm families will continue to feed us while
American workers in the U.S. ethanol industry produce the fuel to
power our cars.
Author: Tom Buis
CEO, Growth Energy
202-545-4000
tbuis@growthenergy.org
DRIVE
16 | Ethanol Producer Magazine | APRIL 2014
How RINs Really Work, and
Why Big Oil Hates Them
By Ron Lamberty
One of the central characters in Big Oils
misinformation campaign on the renewable fuel
standard (RFS) continues to be the RINshort
for renewable identifcation number. As most of you
reading this know, a RIN is a 38-digit number that serves as a proof
of purchase seal for oil companies to submit to the U.S. EPA as
proof theyve complied with terms of the RFS. Unfortunately,
the Big Oil PR machine has so thoroughly demonized and
mischaracterized RINs that even really smart people who should
understand basic principles of economics have completely bought
in to the myth that increased RIN prices equal increased prices at
the pump. The truth is, RINs can only increase the price of fuel that
does not contain ethanol, because ethanol blends come complete
with their own RIN attachedno extra charge.
In the real world, over the past 15 months, higher RIN prices
helped independent gas station and convenience store owners sell
more renewable fuel than theyve ever sold, well above Big Oils
imaginary 10 percent blend wallat pump prices well below
lower-octane nonblended fuels. Marketers who have sold E85 for
years priced more aggressively, knowing that the RINs they would
receive would more than make up for lower pump prices. More
new E85 fueling locations were added last year than in any of the
past fve years. Increased RIN prices helped expand the availability
of renewable fuels as station owners did the math and realized that
an investment in equipment to sell more renewable fuels would
have a quick payback. The number of retailers offering E15 and
higher ethanol blends continues to expand this year, despite Big Oil
contract restrictions and fear of the mythical liability bogeyman,
because independent station owners recognize the opportunities
offered by RINs and greater renewable fuel sales.
The ability for independent fuel marketers to sell renewable
fuels at lower prices while improving proft margins by selling
RINs, has given independent fuel marketers something they have
never had before: an advantage over Big Oil.
If Joes Corner Convenience Store and Exxon/Mobil each get
8,000 gallons of E10, they each get 800 RINs. Exxon/Mobil has
to turn theirs in to EPA. Joe doesnt refne products that harm the
environment, so he can sell his RINs. So far this year, Joes RINs
would be worth about 400 bucks. That means he could sell his
E10 for 5 cents less than the oil company or pass 3 cents along
to customers and make 2 cents more proft. Or he could put $400
toward a pump upgrade to sell E15 or E85 or any other blend to
get him more RINs. Either way, until Exxon/Mobil sells more
renewables than the RFS requires, it cant compete with Joe.
And thats why Big Oil hates RINs. This is not a position
familiar to them, and not one I imagine they see themselves in
much longer.
A couple of years ago, West Virginia Sen. Jay Rockefeller
became exasperated at the CEOs of the Big Five oil companies
in a Senate hearing, and told them they were Deeply, profoundly
out of touch, and deeply and profoundly committed to sharing
nothing." Rockefeller said the Big Oil execs got that way because
You never lose. You've never lost. You always prevail. You always
prevail in the halls of Congress, and you do that for a whole variety
of reasons, because of your lobbyists, because of your friends,
because of all the places where you do business. And I don't really
know any other business that never loses," he said.
Big Oil knows they dont have to lose on RINs, either. With
a minimal commitment to E15 and/or E85, oil companies would
have all the RINs they need and extras for future years. RIN prices
would retreat to the levels of two years agothe last time Big
Oil bought more renewables than the RFS required. But Big Oil
wont do that, because even minimal E15 exposes 5 percent of a
market that Big Oil currently does not have to worry about winning
or losing. It may be hubris to amend John D. Standard Oil
Rockefellers great-grandsons analysis of oil company behavior,
but I would suggest that the main reason Big Oil doesnt lose is that
they very rarely have to play the game.
Author: Ron Lamberty
Senior Vice President,
American Coalition for Ethanol
605-334-3381
rlamberty@ethanol.org
GRASSROOTS VOICE
Avantec
2 Llhanol Yield lmprovemenl
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18 | Ethanol Producer Magazine | APRIL 2014
EUs Struggle for E10
By Robert Vierhout
We all know how much the American industry
is struggling to get E15 onto the market. The
powerful opposition of fossil fuel, automobile and food industries
is effectively blocking the rollout, scaremongering car owners that
E15 is bad for their engines. Even though E15 is probably the most
tested fuel in the U.S., this idea that E15 could harm has an effect.
Only a shred of doubt seems to be enough to make consumers
concerned and sceptical.
For European ethanol producers, E15 is still a distant dream.
For us, the struggle is to get from E5 to E10. The legislation to offer
E10 has been in place since 2009 but its use, even fve years after the
legislation came into force, is still very disappointing.
There are only three countries in Europe where one can buy
E10: France, Germany and Finland. Sweden, the Netherlands,
Belgium, Lithuania, Bulgaria and the U.K. are considering E10
in the future, but the accidents that occurred when E10 was
introduced in Germany are not yet forgotten and explain the slow
pace of implementation elsewhere.
The argument revolving around potential engine damage from
E10 was used by the German car and oil industries. It resonates
with the average motorist who gets scared that one day his car will
stop if he flls up with E10. Not surprisingly, E10 sales had a poor
start in Germany when the fuel was introduced in early 2011. But
remarkably, its share is continuously increasing and now stands at
around 17 percent of gasoline salesnot entirely bad for a fuel
that was held with such suspicion. E10 is not only cheaper, but it
performs well too. Since its introduction, not a single car failure has
been reported. So much for the scaremongering.
In France, the E10 share is now close to 30 percent of gasoline
sales. And, as in Germany, the growth is on the back of shrinking
gasoline consumption. France is topping Germany because the E10
introduction was handled better by the government and car/fuel
stakeholders.
In the U.K., the government postponed the introduction of
E10, referring to the problems in Germany (what problems?) and
saying indirect land use change policy should be resolved frst at the
EU level.
Now a new witch hunt has started. A U.K. car magazine
measured fuel consumption and emissions from cars running on
E10. Tests on four cars found that compared to 100 percent fossil
gasoline, the average fuel consumption was 7.7 percent higher
higher with E10, and as a consequence, increased tailpipe emissions.
This contrasts markedly with Finnish research from 2011 that
found little difference between E5 and E10 consumption. Some
basic errors must have been committed during the U.K. tests; fuel
consumption cannot rise that much when using E10 as suggested
by this research. The higher tailpipe emissions are understandable,
but do not refect the true lifecycle emissions of the two fuels. Only
if the emissions of biofuels are measured on a well-to-wheel basis
can we have accurate data on the greenhouse gas emissions of
biofuels compared to fossil fuels.
The writers of the U.K. magazine article gave the fnal blow
to E10 by using the old argument: "The new E10 fuel will cost
U.K. motorists more." But the article didn't indicate in any way
how much that additional cost would be. The messages they gave
were clear: More fuel consumption, more emissions and more
expensive. Let's forget about E10.
Why did the writers not bother looking at other EU countries
that have introduced E10? If they had done so, they would see that
E10 is cheaper, there are no car damages reported and a Finnish
study concluded E10 fuel consumption is just 1.5 percent higher
compared to E5. Also, several very technical studies demonstrate
ethanols higher octane delivers benefts to engine performance,
improves the combustion process and increases fuel effciency.
The negative E10 story, however, fts well with the many other
supposed negative impacts of biofuels that appear in the media,
of which most, if not all, have been proven to be false. Just like
the myths that biofuels cause food price infation, massive land use
effects and land grabbingthe U.K. E10-study is bogus, too.
Author: Robert Vierhout
Secretary-general, ePURE
Vierhout@epure.org
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32 | Ethanol Producer Magazine | APRIL 2014
CONSTRUCTION
Farmer Followings
One of the most daunting tasks in
creating a cellulosic facility might not be
so much the technology and equipment
challenges, but the procurement of feed-
stock. Weve built numerous ethanol
plants of our own and we know what the
construction process is like, Standlee said.
We know our technology works, were
comfortable with our ability to handle the
product once its there, but one of the big-
gest challenges is the massive amounts of
feedstocks that you have to deal with.
For the past four years, Abengoa had
experts in Hugoton, negotiating and visit-
ing with growers to develop a mutual un-
derstanding about how to be good stew-
ards of the land and avoid overharvesting
corn stover. We certainly dont want to
spend hundreds of millions of dollars
building a facility and shoot ourselves in
the foot by having a farmer fnd out hes
taking too much stover off his land and
didnt leave enough to stop erosion and
(needed to) leave some of the nitrogen
and nutrients back in the soil, Standlee
said.
PHOTO: POET-DSM ADVANCED BIOFUELS
PHOTO: ABENGOA BIOENERGY CORP.
SHAPING UP: (top photo) Poet-DSM has secured corn residue from 200 farmers near Emmetsburg, Iowa.
(lower photo) Abengoa needs less than 15 percent of the corn residue available within about 50 miles of
Hugoton, Kan. Both companies secured about 100,000 tons of biomass in the 2013-14 harvest.
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CONSTRUCTION
In addition to the summer construc-
tion push, Abengoas other milestone was
being able to harvest more than 100,000
tons of stover by the end of November.
As you imagine, that is a massive amount
of feedstock that required a lot of coordi-
nation to get it off the land and into some
sort of storage. Were very proud of that
milestone, Standlee said. Abengoas plant
is able to operate on less than 15 percent
of the available corn stover within a 50-mile
radius, which allows the facility to exist in a
noncaptive market situation, he added.
For Poet-DSM and DuPont, feedstock
procurement has also been a massive, mul-
tiyear undertaking. A group called Poet Bio-
mass has worked for Poet-DSMs outreach
the past seven years to develop the stover
collection procedures and has been step-
ping up its efforts each year to collect ad-
ditional biomass, Hartig said. This year, we
have about 200 farmers under contract to
supply biomass and weve harvested about
100,000 tons of biomass, he explainied.
Thats enough to get us really up and run-
ning through the next harvest. Its going
well, but its taken a lot of time because its
a new crop.
Poet-DSM has established multiple
lanes of outreach to local farmers in or-
der to secure its corn stover. In addition
to brochures and informational videos for
farmers dropping off corn at the neighbor-
ing ethanol plant, the company has worked
with university researchers to study corn
stover harvesting and manages booths at
local county fairs to meet growers and local
residents. Its a lot of different outreach,
teaching and talking, Hartig said.
Leveraging its existing grower relation-
ships through Pioneer, DuPont also had a
successful year securing corn stover for its
cellulosic ethanol plant, with more than
200 farmers participating in its procure-
ment process. This is our fourth harvest
and we have had incredible responses year
over year, Rosen said. The best thing I
can say about it is that we practically have
a 100 percent return rate on folks that have
participated the year before.
DuPont is on track to have enough
feedstock supply once the plant opens.
When we license this technology, a lot
of potential licensees and customers will
feel really solid about our expertise in the
supply chain piece, Rosen said. That is a
very complicated piece in this whole puzzle,
which is fguring how to build a sustainable
supply chain to fuel a plant that is going to
be producing 30 million gallons of fuel per
year. Its a big deal.
Author: Chris Hanson
Staff Writer, Ethanol Producer Magazine
chanson@bbiinternational.com
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34 | Ethanol Producer Magazine | APRIL 2014
Optimization Outlays
Learning while producing, KiOR plans to invest another $10 million to maximize production at its
commercial-scale cellulosic biofuel plant in Mississippi.
By Ron Kotrba
PROCESS
LEARNING CURVE: KiOR's 15 MMgy cellulosic gasoline and diesel plant in Columbus, Miss., has been operating for a year, but at far less than capacity. A series of optimization
efforts are scheduled to boost performance, yield and output.
PHOTO: KIOR INC.
APRIL 2014 | Ethanol Producer Magazine | 35
In a world where Big Oil thinks of cellulosic
biofuel as imaginary pixie dust, KiOR Inc.
is among the few companies proving early,
and convincingly, that the fuel can be made at
commercial scale.
The Pasadena, Texas-based company produces commercial
volumes of not ethanol but cellulosic gasoline and diesel fuel from
Southern Yellow Pine at its 15 MMgy refnery in Columbus, Miss.
Its the frst of several plants the company hopes to replicate with
its copy exact strategy.
Before construction was complete on the Columbus facility
in 2012, KiOR signed offtake agreements with Hunt Refning,
Catchlight Energya joint venture between Chevron Corp. and
Weyerhaeuser Co.and FedEx Corporate Services. KiOR and
Catchlight Energy also have a feedstock supply agreement for the
facility. The engineering, procurement and construction frm in
Columbus was KBR.
While KiORs drop-in fuels are not directly subject to the
highly contentious ethanol blend-wall debate, the company does
fnd kinship with corn ethanol producers and cellulosic project
developers in its stance against the U.S. EPAs 2014 renewable
volume obligation (RVO) proposal under the federal renewable
fuel standard (RFS). The EPAs 2014 RVO proposal is one of
the biggest obstacles our industry currently faces when it comes
to expansion and development, says Fred Cannon, KiORs
president and CEO. The EPAs current proposal has the potential
to signifcantly hamper the industrys ability to obtain affordable
capital to grow and compete with conventional fuels. A stable
regulatory policy is of vital importance for the continued growth
and advancement of the renewable fuels industry.
Its not just the investment-blocking regulatory uncertainty
that impedes the progress of KiOR, not to mention every other
advanced biofuel project under development. Technical obstacles
encountered on the commercial scale-up learning curve abound as
well. This story is all too familiar to cellulosic ethanol producers,
whose commercial realization perpetually seems just a few years
away. But these kinds of hindrances can be expected when working
to revolutionize the worlds energy production paradigm.
On a recent operational update conference call, Cannon
spoke about his companys plan to increase the performance and
operational output of the Columbus facility. He opened the call
with an overview of KiORs 2013 biofuel production. During the
fourth quarter of 2013, Cannon said KiOR produced 385,000
gallons of fuel, 41 percent of which was cellulosic gasoline,
37 percent cellulosic diesel, and 22 percent fuel oil. Total fuel
production for 2013 was 597,000 gallonsfar less than the plants
15 MMgy nameplate capacity. To boost performance, the company
plans to complete a series of optimization projects and upgrades.
KiOR will also continue its research and development efforts
aimed at increasing yields while improving operational effciency
and operational economics.
KiORs technology works similarly to an oil refnery, which
involves catalytic cracking and hydrotreating, but instead of using
petroleum crude as feedstock, it uses woody biomass. KiORs
biomass fuid catalytic cracking unit (BFCC) is similar in concept
to the fuid catalytic cracking (FCC) unit in a refnery, but has been
modifed to accommodate a solid feed rather than a liquid feed,
Cannon tells EPM. KiOR has a proprietary catalyst with physical
properties similar to a typical FCC catalyst to promote the desired
reactions needed to convert the solid biomass into a liquid fuel.
According to Cannon, the biomass contacts a hot catalyst, vaporizes
and forms coke and both noncondensable and condensable gases.
PROCESS
MOVING PRODUCT: In the fourth quarter of last year, KiOR moved 385,000 gallons of product, including cellulosic gasoline, diesel and fuel oil. This was more than half its
production for all of 2013.
PHOTO: KIOR INC.
BIOMASS TRANSFER: When operating at nameplate capacity, the Columbus facility should be able to process
500 bone-dry tons a day of Southern Yellow Pine.
The coke stays on the catalyst and is
burned off in the regenerator to provide
heat for the process, he explains. The
noncondensable gases are burned in a
waste heat boiler and turn a steam turbine
generator to provide electricity for the
process. The condensable gases are
separated and result in renewable crude,
which we upgrade into our cellulosic
fuels.
The optimization projects to be made
this year include making changes to the
BFCC unit, hydrotreater and wood yard
to eliminate bottlenecks. The Columbus
facility can currently process between 250
and 300 tons of biomass daily, yielding
around 30 gallons per ton. When operating
at nameplate capacity, the facility should
be able to process 500 bone-dry tons daily
with signifcantly higher yields.
Optimization to the BFCC unit will
include integration of next-generation
catalysts. We have relationships with
multiple catalyst suppliers and work
closely with them to manufacture our
catalyst while guarding our intellectual
property, Cannon says. Our world-class
team of scientists works around the clock
on different types of catalysts along with
tweaks on existing platforms.
At KiORs research and development
facilities in Pasadena, the company has
multiple hydrotreaters that it uses to
conduct research. More specifcally,
Cannon says, KiOR is building
optimization know-how that yields
minimum volumes of fuel oil and off-
spec product.
Furthermore, the company intends
to reduce its natural gas consumption at
the Columbus facility through more heat
integration throughout the plant and, in
the case of natural gas used for hydrogen
generation, reduced consumption of
hydrogen at the hydrotreater itself. More
broadly, wherever natural gas is solely
used for heat duty, it can be replaced
with biomass, like in the case of biomass-
powered dryers and other sorts of
technology present in the forest products
industry today, Cannon says.
He continues, We expect the various
projectswhich we have determined
are necessary to optimize the facility
based on our operating experience and
learnings over the last yearwill require
approximately $10 million of capital
investment over the course of 2014. We
are actively pursuing a number of ways to
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APRIL 2014 | Ethanol Producer Magazine | 37
KiOR is looking at developing its fagship
facility, scaled at three times the size of its
Columbus plant, in Natchez, Miss.
KiORs process works, and it works
well, based on thousands of hours of
research and development at our lab,
pilot- and demonstration-scale facilities
in Pasadena, Cannon says. Since its
inception, KiORs pilot facility has accrued
more than 10,000 hours of operation and
evaluated more than 250 catalyst systems.
Its demonstration plant has 400 times the
processing capacity of its pilot plant and
produces 15 barrels of renewable crude a
day.
The companys copy exact strategy
is not quite what it seems, though. Rather
than duplicating the Columbus facility,
which contains the BFCC technology to
convert woody biomass to renewable crude
and hydrotreating to upgrade the crude oil
to diesel and gasoline, the copy exact
strategy intends to develop multiple BFCC
facilities that deliver renewable crude oil to
a centralized upgrading processing plant.
Developing a new technology is
always a challenge, and we are learning
more about our technology every day,
Cannon says. Our commitment to
innovation and research and developments
has been, and will continue to be, what
drives our progress and success.
When asked what advice he could
share with other cellulosic biofuel project
developers from experiences gained in
commercial scale up, Cannon says he has
nothing to add. Let them learn the hard
way like we have, he says. As for what the
company has learned in its commercial
experiences to optimize its own production,
Cannon says, Weve learned that creating
a strong foundation is the best way to
generate sustainable, long-term success.
Weve learned that continued research and
development efforts are a great way to
improve yields, operational effciency and
the economics for our existing and future
commercial facilities.
Author: Ron Kotrba
Editor, Biodiesel Magazine
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38 | Ethanol Producer Magazine | APRIL 2014
The Sugar Producers
Sweetwater Energy and Proterro aim for low-cost sugar that may give todays corn ethanol plants a
glide path into advanced ethanol production.
By Susanne Retka Schill
INNOVATION
NEW PATHS: Sweetwater Energy hosted tours of its demonstration facility, incorporating a Wizard of Oz theme to lead guests along a yellow brick road with color-coded
tanks. It helps people remember, says CEO Arunas Chesonis.
PHOTO: SWEETWATER ENERGY
APRIL 2014 | Ethanol Producer Magazine | 39
Fundamentally, ethanol production is about
feeding the insatiable sweet tooth of the actual
ethanol produceryeast. Two companies using widely
different approaches, Sweetwater Energy Inc. and Proterro Inc.,
are pursuing business models to supplement fermentation broths
with sugar water. Sweetwater promises to soon deliver C5 and C6
sugars derived from cellulosic feedstocks while Proterro intends
to bring ethanol producers sucrose produced by its patented
cyanobacteria.
Sweetwater is reaching the commercialization stage, with a
demonstration plant in place at its Rochester, N.Y., headquarters.
The company has teamed up with Naturally Scientifc Technologies
Ltd. to build a commercial facility in the Eastman Business Park in
Rochester. The details of the project are close to fnalization and
construction could begin soon.
Simultaneously, Sweetwater expects to break ground this
spring on a commercial-scale facility in Wisconsin, followed by
two others. The company has signed long-term offtake agreements
with Ace Ethanol LLC in Stanley, Wis., Front Range Energy LLC
in Windsor, Colo., and Pacifc Ethanol Stockton LLC, in Stockton,
Calif. It has completed the permitting process for a facility to be
located on 10 acres next to Ace Ethanol, and the land purchase
was being fnalized in January. A petition to create a pathway for
the cellulosic sugars-to-ethanol process has been fled with the U.S.
EPA.
CEO Arunas Chesonis says the Wisconsin project represents
$25 million in capital investment and will employ around 15 people,
producing cellulosic sugars that will displace up to 7 percent
of Ace Ethanols corn purchases. Permitting for the other two
projects will begin this spring. While the facility in Colorado will
be in the same business park as Front Range, a site has not been
fnalized in California, although it will be within 50 miles of the
Stockton-based ethanol plant. All of the plants are located in areas
with multiple feedstocks. You want to be in places where you
can get different kinds of woods and the climate allows different
feedstocks, Chesonis says, explaining that Sweetwaters process is
feedstock neutral.
Sweetwater is using cellulosic pretreatment technology from
Denmark-based BioGasol ApS that uses a dilute acid, he explains.
Its a pretty good system for reducing particle size that allows us
to not to have to use heavy acids or very high temperatures. That
is followed by enzymatic hydrolysis, using enzymes developed by
others. Sweetwaters proprietary technology lies in the separation
of C5 and C6 sugars. We squeeze out the C5s right in the frst
hour of the process, and then spend the next two or three days
breaking out the C6s from the fber and the lignin, Chesonis
says. Ethanol producers are expected to initially use just the easily
fermentable C6 sugars. If Ace doesnt have a cofermenting yeast
it is comfortable with, getting the same economics as the one used
today, and it doesnt have the acceptance by the folks who they sell
their DDGS to, then well take the C5 out, he explains. That will
drop the corn displacement from 7 to about 5 percent, he adds.
The C5 fraction will initially be shipped to New York to be used in
the Naturally Scientifc process, until a customer base for cellulosic
sugars is built. Sweetwater intends to build production facilities to
serve multiple customers.
The $250 million joint venture with Naturally Scientifc has
other synergies. For one, Sweetwater will be supplying its cellulosic
sugars to Naturally Scientifc to convert into higher-value oils for
use as feedstocks for diesel or jet fuel production or in biochemical
facilities. Both companies have tested their processes at
INNOVATION
BALLOONING REACTION: Proterros photobioreactor is made from off-the-shelf components. The Orlando pilot project includes four full-size units that measure 5 meters
long by 1 meter in diameter.
PHOTO: PROTERRO
40 | Ethanol Producer Magazine | APRIL 2014
demonstration scaleNaturally Scientifcs
demo plant in Nottingham, U.K., has been
operational for two years, and Sweetwater
completed its demo in Rochester, N.Y.,
about a year ago. They also plan to build
a commercial facility in Rochester, which
Naturally Scientifc will use to scale up its
other new technology that converts carbon
dioxide into C3 sugars.
As the fnal details for both the
Wisconsin and New York projects are
fnalized, Chesonis says his team is
making the fnal push on raising money.
The company also expects to receive a
loan guarantee through the export bank
of Denmark, due to the use of Danish
technology.
Raising capital and launching startups
is not new to Chesonis. My [chief
fnancial offcer] and I raised $4 billion
in our last company, he says, but then
adds, Any time its a new technology that
hasnt been proven at scale yet, its always
a challenge. Chesonis comes from the
telecommunications sector, where he
led and sold two successful companies.
He brought key executive offcers with
him when he took on the leadership at
Sweetwater as they decided to shift focus
to cleantech. One reason, he explains, was
to avoid the sort of market dynamics that
drove the telecomm prices down 75 percent
over a decade, although commodity markets
have their own headaches, he admits.
The companys goal is to be able to
produce its sugars for 10 to 12 cents per
pound and, including the return to investors,
sell them for 17 to 18 cents per pound,
Chesonis says. That will be competitive
with the price of dextrose, which is in the
low 20-cent range, although he adds his
company is currently paying 25 to 30 cents
per pound for dextrose to supplement its
cellulosic sugars for Naturally Scientifcs
development work.
Mimicking Nature
Proterros ambition is to provide an
even lower-cost sugar. Its unique sugar
platform harnesses the power of the sun in
a photobioreactor where microbes convert
carbon dioxide and nutrients into easily
fermentable sucrose. CEO Kef Kasdin
says the companys economic projections
indicate a production cost around 5 cents
per pound. A pilot facility with four full-
size reactors has been in operation since
September in Orlando, Fla., collecting data
to confrm those projections.
The Proterro bioreactor mimics a leaf
by growing cyanobacteria microorganisms
on a fabric surface, providing maximum
exposure to sunlight while a thin layer of
water and nutrients fows across the surface.
The fabric is enclosed in a polyethylene
balloon flled with air and carbon dioxide.
At ambient temperatures, the cyanobacteria
secrete sugars which are carried away in the
fowing water. That sugar water could go
directly into ethanol production or we may
need to further concentrate it, Kasdin
explains.
Using off-the-shelf components
plastic, the special fabric and plumbing
the capital cost for the photobioreactors
is very different from the typical
biorefnery system. The entire research
and development program has cost $9
million to date, according to Kasdin. It
looks more like agriculture and not at all
like a chemical plant, she adds. While the
modular system is relatively simple, what
will contribute to the cost is the number
of photobioreactors needed and the land
area to support them. Current estimates
are that a system of photobioreactors
would produce the same amount of sugar
as sugarcane on one-thirtieth of the land.
With a minimum temperature of 50
degrees Fahrenheit needed for the microbes
to be productive, the outdoor systems are
not meant for winter climates, although
power or chemical plants would be able to
utilize waste heat and CO
2
in the systems,
potentially extending their reach from the
far south. Kasdin says the sugar water
produced in the South can be concentrated
for shipment to northern ethanol plants,
INNOVATION
SIMPLIFYING THE PROCESS: Chief technology offcer John Aikens, co-inventor of Proterro technology and a co-
founder of the company, shows the bioreactor in collapsed form.
PHOTO: PROTERRO
APRIL 2014 | Ethanol Producer Magazine | 41
INNOVATION
plus the company is looking at the Brazilian
industry for potential customers. The
advantages to the Proterro system will be
its low cost and the modular approach
that will allow incremental expansion, plus
the ability to use waste carbon dioxide to
produce a clean sucrose that contains no
inhibitors.
As the pilot work continues, Proterro
is now raising capital to fnance a
demonstration-scale project and looking
for potential partners with waste carbon
dioxide to host it. Proterros R&D efforts
to date have been backed by Battelle
Ventures, Braemar Energy Ventures,
Cultivian Ventures and Middleland Capital.
With patents in place on the latest
designs and the demonstration phase
approaching, the company is laying the
groundwork to clear the regulatory hurdles.
The use of a genetically modifed organism
requires preparing a Microbial Commercial
Activity Notice for review by the EPA.
The company will have to describe any
potential problems should there be an
accidental escape of organisms, although
Kasdin says the cyanobacteria are quite
safe, producing sugar and no toxins, and
multiple conditions would have to be
just right for them to survive outside the
reactor.
Future Thinking
Both executives say that while the
ethanol industry is their initial target, they
are looking toward broader applications
in the future. Ethanols the big existing
market for turning sugar into an industrial
product, Kasdin explains. Others would
include a number of second-generation
fuels, biochemicals or even the production
of amino acids for the feed market.
The people who have the volume
now that can use cellulosic sugar on a drop-
in basis are the ethanol guys, Chesonis
agrees. While the ethanol industry can
provide a base to build a supply and
establish a price, the ultimate target is
biobased chemical production. His vision
is that his ethanol customers will be part
of that transition. The initial agreements
with the three ethanol producers call for
displacing 7 percent of their feedstock
with sweetwater, but he expects that will
grow to 30 to 50 percent within a few
years, and ultimately, the ethanol producers
will redirect production into higher value
chemicals. Thats the program for us, but
that takes time, Chesonis says. Were
doing an aggressive research program
here and at MIT where we come up with
customized products with our sugars
so that we can have that as [intellectual
property], so we can convert people from
ethanol to chemicals in the future. But
thats another story.
Author: Susanne Retka Schill
Senior Editor, Ethanol Producer Magazine
sretkaschill@bbiinternational.com
701-738-4922
720-422-441
www.fuicuip.ccm
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42 | Ethanol Producer Magazine | APRIL 2014
Lignins Big Leap
Still seeking commercial-scale opportunities, Lignol continues to collaborate with companies that
are eager to buy its product in bulk.
By Tom Bryan
Lignin has long been
considered an abundant, low-
value byproduct of pulp and
paper milling, and somewhat of a
burden to biorefning, but Lignols
Mike Rushton remains confdent
that the substance is poised for
new and higher uses. As research is
conducted globally to fnd ways to mitigate the
challenges of separating lignin from the most
prized parts of biomasscellulosic sugars
Rushton says industrial buyers are ready and
waiting for big volumes of a super clean
product no one is currently making.
There arent any commercial producers
of high-purity lignin, and we arent one either,
yet, Rushton admits. Were aspiring to be.
So for now, the most common use for
existing lignins remains decidedly low-techits
often a boiler fuel for mills and biorefneries
but the promise of large volumes of new and
better lignin products, along with a plethora
of markets for them, is alive and well. In
North Carolina, researchers have developed
an inexpensive technique for removing lignin
from plant material used to make ethanol. In
Belgium, scientists are modifying the lignin
in poplar trees, through biosynthesis, to
more readily extract sugars. And in Finland,
one company is developing ways to isolate
lignin and produce myriad products from the
ubiquitous organic substance.
Years ago, before the current swell of
lignin research began, Lignol Energy Corp. and
its wholly owned subsidiary Lignol Innovations
Ltd. introduced the American biofuels industry
to the enticing idea of high-purity lignin as a
coproduct of cellulosic ethanol production.
While ethanol is no longer LILs target, the
Burnaby, British Columbia-based company
remains committed to its vision of building an
industrial-scale biorefnery: a plant that would
consume wood and turn out large quantities of
high-purity lignin and biobased chemicals.
Rushton calls the companys process its
big differentiator because it allows lignin to
emerge as a pure product thats distinct from
lignins produced through conventional pulp
and paper milling and even other biorefnering
techniques. The characteristics of lignin
are determined by how it is extracted from
biomass, chemically. LIL uses an organic
solvent rather than an inorganic one, Rushton
says, and the companys process operates in a
mildly acidic pH range rather than running at
high alkalinity. The lignin we make is quite
different from other lignins that are out there,
he says, explaining that most lignins produced
from the kraft and sulfte pulping processes
contain sulfur and inorganic materials
sodium, magnesium and calciumthat are
baked into the product. Our lignin contains
virtually no sulfur and very low ash content.
According to the International Lignin
Institute, between 40 million and 50 million
tons of lignin are produced globally each year,
mostly as noncommercial waste. Rushton says
there are, in fact, sulfur-free lignins on the market
today that are exclusively made by pulp and
paper mills using sulfte processes. While those
products are relatively free of sulfur, theyre
not absent of other inorganics. Sulfur isnt the
only issue, nor the only obstacle, Rushton says,
explaining that the value of lignin is relative to
BIOREFINING
DEMO DAYS: Lignol began running its demonstration-scale biorefnery in 2009. Multiple years of production enabled the company to produce ample inventories of
high-purity lignin, which the company now shares with collaborators.
PHOTO: LIGNOL ENERGY CORP.
its end-use compatibilities. The name of the
game with lignin is to fnd applications where
the product will work with other chemicals
in varied formulations. Typically using it as
a substitute for petrochemicals is the main
goal.
In industrial terms, lignin is an aromatic
compound made of benzene rings, varied
molecular structures that typically have six
carbon atoms surrounded by six hydrogen
atoms. Different types of plants contain
different types of lignin, Rushton says.
These structures vary a lot, and theyre
ultimately responsible for how lignin behaves.
The appearance and consistency of
lignin are also quite variable and highly
contingent on process. Kraft lignin is brown
in color and has the consistency of powdered
instant coffee. Its particle size is typically
around 20 microns, so its quite fne, Rushton
says, adding that the so-called organosolv
lignin that results from LILs process is also
a brown powder. Lignosulfonatesa product
that comes out of sulfte pulping processes
is water soluble and the type of lignin sold in
the largest volumes globally.
While the markets for future lignin
products are nearly endless, using high-purity
lignin as a petrochemical substitution in resin
manufacturing is particularly promising.
Phenolic resins, or phenol formaldehydes,
which are produced from benzene and
natural gas, are used in a wide range of
products including coatings, adhesives and
molding compounds. Its a product with a
fairly high carbon footprint, so if you could
substitute high volumes of phenol with lignin,
you could produce a much greener product,
Rushton says. But you have to be able to do
it at a competitive price and without loss of
performance. Thats the opportunity were
working on.
With a virtual sea of applications awaiting
high-purity lignin in manufacturing, material
science, agriculture and even human health
industries, the market opportunity is huge.
It is certainly a billion-dollar business, and
probably bigger than that, Rushton says. We
see the market for our lignin being hundreds
of thousands of tons per year in a short time.
Once we have the material available, there are
lots of places where we believe well be able to
sell itwhere it will be a good substitute for
petrochemicals at a competitive price.
Still on path to commercial-scale
production, LIL continues to share its lignin
with collaborators. Starting in 2009, the
company built up large lignin inventories
through production campaigns at its
Burnaby demonstration plant, which remains
operational. The next step is to build a large-
scale plant, which we are hoping to do with
partners, Ruston says. We have quite a few
active project opportunities at the moment.
If and when LILs large-scale plant
gets built, it will likely consume 300 to 400
tons of woody biomass and produce about
20,000 tons of lignin per year. As many as
30 companies worldwide have tested LILs
lignins, including Kingspan, a manufacturer
of rigid foam insulation; Huntsman, a maker
of polyurethanes; and AJ International,
a producer of resins used in the foundry
industry. Almost universally, theyre waiting
for us to be able to sell them the stuff,
Rushton says. Thats the hurdle for us. To
develop a commercial supply.
Author: Tom Bryan
Editor In Chief, Ethanol Producer Magazine
tbryan@bbiinternational.com
701-738-4916
FINE STUFF: The characteristics of each lignin product are variable and contingent on process. Lignols product
is light brown and about the consistency of powdered instant coffee.
PHOTO: LIGNOL ENERGY CORP.
44 | Ethanol Producer Magazine | APRIL 2014
The U.S. EPAs decision to propose a 2014
renewable fuel standard (RFS) below the statutorily
mandated volumes has generated vigorous debate. For
those in the ethanol industry, it is important to understand the legal
objections to EPAs proposal, not just the public policy objections,
because the legal arguments may determine the outcome of the dispute
and set the legal precedent that limits the agencys ability to adjust the
RFS in the future.
Section 211(o)(2)(B) of the Clean Air Act expressly states the RFS
mandated volume of renewable fuel to be included in gasoline: The
total for 2014 is 18.15 billion gallons. However, section 211(o)(7)(A)(ii)
provides a general waiver authority under which the EPA may modify
these amounts if there is an inadequate domestic supply.
On Nov. 29, the EPA proposed reducing the total renewable fuel
volume to 15.21 billion gallons. EPA specifcally found that there was
an inadequate domestic supply and asserted the phrase is ambiguous.
According to EPA, this ambiguity empowers the agency to consider not
only the production of renewable fuels, but also factors affecting the
ability to distribute, blend, dispense and consume those renewable fuels
when assessing supply. Relying on this broader interpretation, EPA
contends that current limitations regarding the ability to incorporate
ethanol fuels into gasoline for consumers (the ethanol blend wall) justify
the proposed volumetric reductions.
Iowa Attorney General Thomas J. Miller submitted comments to
the proposal outlining several objections to EPAs interpretation of the
waiver authority, based on the well-known Chevron test used by the
courts to assess a federal agencys interpretation of a statute: 1) If the
statute is clear, the court must enforce the laws unambiguous language;
and 2) If the statute is not clear, the agencys interpretation must be
permissible.
Miller argues that the statute unambiguously prohibits EPA
from considering the distribution capacity of blended fuel. Under
section 211(o)(7)(A)(ii), the term supply unambiguously refers to
the quantity of renewable fuel required under section 211(o)(2).
Therefore, in order to reduce the RFS for total renewable fuel, EPA
must fnd that there is an inadequate domestic supply of renewable
fuel. The term renewable fuel means fuel that is produced from
renewable biomass and used to replace or reduce the quantity of
fossil fuel present in a transportation fuel. Because this defnition
does not include blended fuel, EPA cannot consider the distribution
capacity of blended fuel when assessing the adequacy of the supply.
This interpretation is buttressed by the fact that the term distribution
capacity is expressly included in other parts of section 211, as well as
legislative history demonstrating that the U.S. Senate removed the term
distribution capacity from the legislation.
To the second point, Miller further argues EPAs interpretation
is not permissible. The purpose of enacting the RFS is to move the
United States towards greater energy independence and security and
to increase the production of clean renewable fuels. The statutory
RFS achieves these objectives by incrementally increasing renewable
fuel volumes so that the fuel industry may adapt. By lowering the RFS
due to distribution capacity rather than supply, EPA manipulates this
framework and undermines the statutory objective of changing the
countrys fuel composition.
Anticipating the objections to its interpretation of the waiver
authority, the EPA provided preemptive counterarguments. The agency
disputes that supply modifes only the renewable fuel categories in
section 211(o)(2), and asserts that the word is best understood in terms
of the person or place using the product. Accordingly, EPA contends
that it may consider factors that affect the supply of renewable fuel
before it reaches consumers. EPA distinguishes other subsections of
the statute that include a mandate to consider distribution capacity,
and argues these provisions highlight the ambiguity in section 211(o)
(7)(A)(ii). EPA also dismisses the legislative history of section 211(o)
(7)(A)(ii) as having minimal interpretative value because there is no
explanation accompanying the Senates alteration of the operative
provisions during the legislative process.
The 2014 RFS rule may bring disputes regarding EPAs authority to
alter the statutorily mandated renewable fuel volumes to a head. Other
aspects, such as the advanced biofuels mandate, are also generating
serious legal and public policy pushback. Given that EPAs critics have
solid legal arguments, the fnal rule may prompt a judicial response
that impacts the agencys discretion when setting renewable fuel
volumes in the future. Iowas attorney general has left the door open
to that possibility. Miller has had considerable success leading multistate
litigation in his eight terms as a state attorney general.
Author: Alexander Logemann
Associate, Faegre Baker Daniels LLP environmental group
303-607-3748
alexander.logemann@FaegreBD.com
Contributing Author: Andrew Ehrlich, principal, Faegre Baker Daniels Consulting
Legal Argument Challenges
EPA Authority to Change RFS
BUSINESS MATTERS
By Alexander F. Logemann
APRIL 2014 | Ethanol Producer Magazine | 45
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