The bad news is that the infrastructure for utilizing crop residues for bioenergy production has a ways to go before it can be cost effective for large commercial-scale plants. The good news is that there are a lot of smart, experienced people working on this and I&rsquo;m confident they will succeed.
 Before this can happen thoughâ€•and I&rsquo;ve said this a million timesâ€•farmers must be convinced that this is a profitable use of their time and energy. It&rsquo;s difficult right now to make the case because farm income is high and they aren&rsquo;t really looking for ways to enhance their income. But this could change in a heartbeat as farming success largely depends on the weather, federal farm policy and input costs (fuel, fertilizer, seed, etc.). Although we can&rsquo;t predict the weather, we can presume that the new Congress will likely make cuts to all federal programs including the Farm Bill, which expires in 2012, and input costs aren&rsquo;t likely to drop anytime soon.
 This means that the biomass industry must be prepared for the time when farmers are actively seeking ways to supplement their income, and is why this month&rsquo;s magazine is dedicated to the collection, transport, storage and densification of crop residues.
 According to a USDA study, &ldquo;Biomass from Crop Residues Cost and Supply Estimates,&rdquo; crop residues have the potential to displace 12.5 percent of petroleum imports or 5 percent of electricity consumption in today&rsquo;s markets. The study found that the total biomass supply in the high-density crop production areas of the country ranges from 297 billion to 313 billion pounds, depending on the price level. The researchers also surmised that this figure could grow to 500 billion pounds in the next two decades based on trends from the past two decades of increased crop yields and declining livestock demand for forage.
 The study also concluded that crop residues are probably the lowest cost form of biomass supply. &ldquo;Throughout the Corn Belt, residue costs have a narrow price range, from $16 to $18 per ton, even after making allowances for delivery to a large plant,&rdquo; according to the study. &ldquo;The range of costs is wider in the Great Plains due to diverse growing conditions, conservation requirements, and forage demands. The eastern section of the spring wheat area has extensive residue supplies at moderate costs. Also, the eastern section of the winter Wheat Belt has a cost advantage when feed grain residues, wheat straw, and residues diverted from feed are combined.&rdquo;
 Of course, the researchers took into account the impact of crop residue removal on soil fertility and the farmer&rsquo;s bottom line. They deduced that reduced tillage and partial residue harvest may maintain soil quality and increase producer profits. Several researchers at colleges and universities across the U.S. have done studies on this and have made recommendations based on the conditions in the areas where the crops are produced. I would suggest if you are looking for that type of information that you reach out to your local institutions of higher learning.
 The USDA study has a lot of information that I couldn&rsquo;t possibly fit in this column, so if you are looking for more details, go to www.usda.gov/oce/reports/energy/AER819.pdf.

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Solving the Crop Residue Conundrum

The 112th Congress is hardly in gear, and already pundits in Washington are speculating about the future of a national energy policy. The debate was heightened with the president&rsquo;s State of the Union speech, which called for a national goal of 80 percent &ldquo;clean energy&rdquo; by 2035. So what exactly is clean energy and what role will biomass play in the legislative debate?
 First, let&rsquo;s talk about clean as opposed to renewable. In the last Congress, Biomass Power Association joined with solar, wind, waste to energy and other renewable trade associations to advocate for a strong renewable energy standard. As we all know, the House passed an aggressive standard, along with cap-and-trade legislation, which failed to get traction in the Senate. Indeed, many new members of Congress ran on an anti-cap-and-trade platform. Significantly, this legislation disqualified any nonrenewable energy such as nuclear or coal with carbon capture and sequestration, thus alienating political support from coal states and the Southeast. In addition, those opposing a federal renewable energy standard claimed that the initiative would end up costing consumers at a time when the economy could ill afford higher energy costs.
 What has changed? Well, the November elections, for starters, created a new political landscape that must be negotiated. No matter who occupies the role of Speaker of the House, promoting alternative energy sources is a bipartisan issue that enjoys widespread support across the political spectrum.
Surely, cap and traders and those who support a rigid definition of renewable have lost the political debate for the time being. David Hamilton, director of global warming and energy programs at the Sierra Club, perhaps said it best: &ldquo;As an environmental group we don&rsquo;t have the luxury of being one-dimensional about what is clean energy or not.&rdquo; (This sounds strangely similar to what we have been saying all along when it comes to a broad and common sense definition of biomass. But I digress.)
 So, we suspect that if a national energy policy is to receive Congressional support, it must be broad, and the definition of clean must incorporate a wide array of sources. That means all the traditional renewables including biomass, but also nonrenewable and low- or no-carbon sources such as nuclear.
 As advocates of biomass, we intend to support a national energy policy, and assure that the policy fully embraces our form of energy while promoting other clean sources. At the same time, we want to make sure the policy is meaningful and will serve as a catalyst for growth, which means taking a hard look at what is considered clean and to make sure that valuable state programs are not eliminated. The definition of clean energy should remain broad; there is plenty of space for many different types of energy. As a nation, we need an energy policy that moves forward, and promotes energy independence cost-effectively and cleanly. Author: Bob Cleaves President and CEO, Biomass Power Association <a href="http://www.USABiomass.org">www.USABiomass.org</a>

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A National Clean Energy Standard

U.S. DOE Biomass Program officials tell us candidly that policy directives limit their activities to liquid transportation fuels development and electricity generation or combined heat and power. They claim not to be authorized to offer more than verbal support for advancement of other biomass energy technologies, regardless of the potential for energy self-reliance, cost reduction, local employment, climate change mitigation or wildfire danger reduction.&nbsp;
&nbsp;&nbsp; The agency&rsquo;s limited focus neglects other opportunities, notably the commercialization of the low-hanging fruit of sustainable and local biomass energy: advanced combustion of biomass materials for heat, service hot water and direct cooling for buildings and process heat for industry. This potential was described and highlighted in the article &ldquo;Wood Energy in America&rdquo; published March 2009 as the Policy Forum in Science. It would be valuable for the DOE to explain why biomass thermal is unsupported since no other renewable energy technology offers the short-term recovery of invested capital or long-term benefits including jobs and reduced dependence on imported fossil energy.
 The DOE&rsquo;s research and development focus is critical here. Recent research shows a need to overcome barriers of perception and systems integration to gain mainstream acceptance of the professionals who specify heating and cooling equipment1. The concept has support from energy design professionals; 78 percent of respondents to a recent survey said they would like more information on using wood energy to heat and cool commercial class buildings. Most were energy engineers&mdash;and members of the Association of Energy Engineers or the American Society of Agricultural and Biological Engineers.&nbsp;
 Agency support is needed to both help the biomass thermal energy industry respond and adapt to concerns identified by the heating, ventilation and air conditioning (HVAC) design engineer respondents.&nbsp;&nbsp;
 The logical placement for building heat and cooling applications for biomass is within the DOE&rsquo;s Energy Efficiency and Renewable Energy commercial buildings section alongside solar thermal, conservation and efficiency improvement. DOE officials stated specifically: To reach DOE target energy consumption and carbon emissions limits in renovated building stock by 2030, the U.S. will need more than just solar thermal, wind electric, photovoltaic, insulation and HVAC controls upgrades. Wood and agricultural residues combustion can help solve this problem and save money. But when asked about biomass applications, these officials had no answers because they were unaware that the technology had applicability to the sector.
 Both wood and agricultural residues are, by definition, carbon-neutral, stored forms of solar energy. Although some refinements are needed in combustion process, controls and operating practices, that is all the more reason for DOE research and development support in importing and licensing demonstrated technologies or adapting them as needed by site in this country. What can wood energy advocates do to help themselves?
 &bull; Do not say &ldquo;I&rsquo;m in biomass.&rdquo; Be clear when telling people what you do. If you efficiently convert wood fuels into clean heat for buildings and process, use that as your tag line.&nbsp;&nbsp;&nbsp;
 &bull; Join associations working to benefit your industry, such as BTEC, through which elected officials, regulators and reporters get a unified picture of what you need to grow and the value to them if you are successful.
 &bull; Work with energy design professionals by joining associations where you can meet, influence and learn from the energy design professionals trusted by developers and owners to specify heat and cooling equipment for buildings.
 The Heating the Northeast with Renewable Biomass Conference in April (www.heatne.com) will provide opportunities to discuss and begin moving ahead on these and other issues. Consider attending and urging participation by your elected officials and their staffs. They depend on you for information they do not get from the DOE. Perhaps we can help change that. 1Karakash and Richter, 2010. Report of Key Findings: Architects and Energy Professionals&mdash;The Missing Link in Wood Energy Authors: Charlie Niebling Chairman, Biomass Thermal Energy Council John Karakash Founder, Resource Professionals Group <a href="http://www.biomassthermal.org">www.biomassthermal.org</a>

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The DOE Biomass Program: A New Focus?

The Energy &amp; Environmental Research Center is developing distributed biomass gasification systems for a variety of applications, the most common of which is electricity production. The EERC has investigated system designs that employ internal combustion engines, high-temperature fuel cells and microturbines.
 This article summarizes our experience with internal combustion engines. Future articles will discuss our experience with high-temperature fuel cells and microturbines.
 The system designs originated during World War II, when the shortage of petroleum fuel in Europe sparked a wave of innovation on ways to use locally available biomass, primarily chunk wood, to fuel internal combustion engines for transportation. Those designs are still being employed to power internal combustion gensets.
 Biomass is gasified in a downdraft gasifier, which is then wet-scrubbed to condense tars and reduce syngas temperature for the internal combustion engine. A series of filters is used to reduce particulates before the engine generator. A downdraft gasifier is often employed because it produces the lowest amount of tars of all the gasifier types.
 This system is simple and has worked to produce power from syngas for more than 50 years. However, even after a half-century of development, key techno-economic barriers have yet to be resolved that would make it commercially viable.
 The first is environmental. While downdraft gasifiers produce the lowest amount of tars of all the gasifier types, they still produce tars. These have to be scrubbed out or they eventually plug the piping. The problem is that scrubbing the tars does not get rid of them. It produces a tarry effluent, much like oily water, that must be disposed of. Oftentimes, this can be a deal breaker for a small commercial entity hoping to convert its waste wood into power.
 Another issue is that the syngas has high nitrogen dilution when air is used for the gasification process. This reduces the energy content to approximately 110 Btu per standard cubic feet (scf). Most modern engine generators are rated for 300&ndash;1,000 Btu per scf. Trying to operate the engine generator on 110 Btu per scf derates the engine by more than 75 percent. This means a 100-kilowatt (kW) engine generator will produce only approximately 25 kW when run on syngas alone. It also significantly reduces the reliability of the system.
 Any drop in syngas quality shuts down the generator, requiring manual restart. This requires an operator to constantly watch the system, which significantly increases the operating costs of a distributed-power system. One method to overcome this latter barrier is to cofire the engine generator with petroleum fuel. When this is done, both engine reliability and power increase. However, the economics must now account for the cost of petroleum fuel, and the overall system is not as &ldquo;green&rdquo; as it would have been with just biomass alone.
 While these barriers are significant, the EERC is working with Cummins Power to develop an engine generator designed to operate on low-Btu syngas. If this project is successful, one of the largest barriers for this type of system in 50 years will be overcome. Author: Phil Hutton Research Manager, Energy &amp; Environmental Research Center (701) 777-5204 <a href="mailto:phutton@undeerc.org">phutton@undeerc.org</a>

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Powering an Engine Generator  with a Biomass Gasifier

Today's push to bring biomass energy projects on line and changes in environmental regulations have created some uncertainty for parties seeking to secure waste/fuel supply agreements.
 For example, the U.S. EPA's newly proposed definition of &ldquo;solid waste&rdquo; may reveal issues that may warrant consideration by the project developer (see 75 FR 31,844, Proposed June 4).
 Concurrently with the boiler MACT proposal, the EPA proposed a new definition of solid waste. The definition is key to distinguishing between &ldquo;industrial commercial and institutional boilers and process heaters&rdquo; and &ldquo;commercial and industrial solid waste incinerators&rdquo; because the Clean Air Act requires the EPA to regulate as an incinerator &ldquo;any facility which combusts any solid waste.&rdquo; The relevant definition of solid waste is in the Resource Conservation and Recovery Act and covers &ldquo;any discarded material.&rdquo;&nbsp;
 Though initially drafted to limit against &ldquo;sham&rdquo; fuels, wherein the combustion or use of certain materials as an ingredient or component of a power facility's fuel supply is nothing more than waste disposal. In response, the EPA created new limitations on biomass materials that can be used as fuel. Understanding how this rule distinguishes between "traditional fuel," "legitimate fuel" and solid waste is critical to distinguishing between biomass that can be used as a fuel in an industrial boiler (subject to MACT) and biomass considered a solid waste (subject to Incinerator New Source Performance Standard and MACT). Solid waste cannot be used in commercial or industrial boilers, including power plant boilers.
 This reconfigured definition of solid waste can impact a project's fuel/waste supply agreements and material-handling activities.
 In brief, traditional fuels are not considered solid waste, and include not only fossil fuels, but also "clean cellulosic biomass." The EPA provides a list of clean cellulosic biomass materials that qualify as a traditional fuel, described as materials that have not been altered, such that they contain contaminants at concentrations normally associated with virgin biomass materials.
 EPA&rsquo;s proposal seeks to clarify whether solid waste includes certain nonhazardous &ldquo;secondary materials&rdquo;&mdash;materials that are not the primary product of a manufacturing or commercial process that may be discarded but later reused as fuel or ingredients in another process. EPA&rsquo;s proposed rule would exclude secondary materials from the definition of solid waste if they are combusted by the generator, used as ingredients in another manufacturing process or processed into a fuel or an ingredient. Sources must also meet &ldquo;legitimacy criteria,&rdquo; confirming that use of the material is not a sham for disposal, or submit a petition to EPA for a nonwaste determination.
 &ldquo;Legitimate fuel" is nonhazardous secondary materials that are not the primary product of a manufacturing or commercial process that may be discarded but later reused as fuel or ingredients in another process. Such secondary materials are not considered solid waste and are excluded if they are either combusted by the generator, used as ingredients in another manufacturing process, or processed into a fuel or an ingredient. Additional legitimacy criteria must be met to confirm that use of the material is not a sham for disposal.
 If determined to be solid waste, the material is subject to handling and reporting requirements promulgated by the RCRA. Further, such materials can only be combusted in regulated solid waste incinerators. Using solid waste improperly as a fuel may result in a fine or an order to cease production.
 The above determinations are not easily made, and a full analysis of the applicable decision tree is beyond the scope of this article. An analysis should be performed, however, so that allocating the underlying risks associated with acquiring off-site materials and setting forth appropriate representations and warranties in one's fuel/waste supply agreement is managed accordingly. Author: John Eustermann Partner, Stoel Rives LLP (208) 387-4218. <a href="mailto:jmeustermann@stoel.com">jmeustermann@stoel.com</a>

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Learn What Regulations  Apply to Your Project

Vermeer enters whole-tree chipper market Vermeer Corp. has introduced the WC2300 whole-tree chipper designed specifically to produce chips for the growing biomass industry. The WC2300 features many proven technologies developed by Vermeer. The heart of the WC2300 is its innovative in-feed system that includes variable-speed, dual in-feed conveyor chains, a conveyor head pulley with integral grip bars and an aggressive large-diameter in-feed roller with crush capability. These design elements provide efficient feeding of difficult material types, reducing the number of times an operator has to handle the material. In addition, the in-feed conveyor chains are individually tensioned to accommodate unequal chain wear, allowing the operator to replace a single chain at a time. ADI Group creates new position Hollis Cole, CEO of ADI Group Inc., announced the addition of Jos&eacute;f Le&atilde;o to the ADI team. ADI Group created the new position of manager of biogas applications for ADI Systems Inc., one of the ADI Group of companies. This position allows ADI to place greater emphasis on worldwide opportunities of utilizing biogas, a viable source of green energy. Le&atilde;o comes to ADI with more than 30 years experience in engineering, logistics and operations plus strong academic and professional credentials. Fluent in six languages, his background in biogas utilization and green energy systems complements the technical abilities of existing ADI staff. Metso to supply biomass plant in Estonia Metso will supply O&uuml; Helme Energia with a biomass power plant for combined-heat-and-power production in the township of Helme, Estonia. The power plant will be delivered by the Metso-W&auml;rtsil&auml; joint venture MW Power. The value of the order is more than &euro;15 million ($20.7 million). Scheduled for start-up the third quarter of 2012, the&nbsp; plant will utilize bubbling fluidized bed technology using a combination of spruce bark, chipped logging residue and wood chips or milled peat as the main fuels. The plant will produce 15 megawatts (MW) of heat and 6.4 MW of electricity, which will partly be utilized in the customer&rsquo;s own pellet factory and the rest will be distributed into the national grid. O&uuml; Helme Energia is a subsidiary of AS Graanul Invest, which is a private capital-based company dealing with bioenergy and renewable energy production. Natgun and Dyk merge and form DN Tanks Natgun Corp., Wakefield, Mass., and Dyk Inc., El Cajon, Calif., jointly announced the merger of their companies and the formation of their new parent company DN Tanks Inc. Both companies specialize in the design and construction of prestressed concrete storage tanks used for potable water, wastewater, chilled water and other liquids. The merger of the two companies, with more than 130 years of combined experience, creates the largest producer of wire and strand-wound prestressed concrete tanks in the world. Initially, Natgun and Dyk will operate under their existing names, as divisions of DN Tanks. As the integration process takes place, they will evolve into a single operating company. A four-member board of directors, comprised of Charles Crowley, William Hendrickson, William Crowley, and David Gourley, will lead DN Tanks. Charles Crowley and Hendrickson will serve as co-CEOs. Howard joins Ze-gen as CEO Ze-gen Inc., a developer and integrator of advanced gasification technology to convert waste streams into synthesis gas, has hired Walter Howard as CEO, replacing Bill Davis who founded Ze-gen in 2004. An industry veteran, with more than 30 years of global power project development experience, Howard has held executive positions with utility leaders. Davis will remain on Ze-gen's board of directors and stay actively involved as an adviser to Ze-gen focused on special projects. DP CleanTech appoints board chair, extends European manufacturing capacity Zhang Shengman was appointed chairman of the board for DP CleanTech Group Ltd. Shengman is the chairman of Citigroup in the Asia Pacific, which employs more than 50,000 people in 19 countries generating revenues approaching $15 billion. Shengman is also on the board of directors of Guangdong Development Bank. DP CleanTech recently made its first significant investment in Poland by building a workshop in JÄ™drzej&oacute;w to manufacture boilers and pressure parts to serve the European biomass and waste-to-energy market. The investment is a reflection of the increasing demand for DP CleanTech&rsquo;s products in Europe. Biomass power has been identified as an effective and affordable means for meeting renewable energy targets in Eastern European countries and DP CleanTech is developing several projects. NEF, Spriggers Choice develop miscanthus production equipment New Energy Farms, a miscanthus developer, and Spriggers Choice, a Georgia-based manufacturer of sprig and rhizome harvesting and planting equipment, have developed equipment for growers to lift and plant miscanthus rhizomes. NEF is developing miscanthus as an energy crop for combustion and liquid biofuel uses across North America and the European Union. Spriggers Choice has been developing and manufacturing sprig and rhizome harvesters and planters for 22 years, embodying the knowledge acquired from 26 years of experience in the custom sprig and rhizome harvesting and planting business. Successful collaboration has resulted in the development of two new machines to lift and plant miscanthus rhizomes, which will be available in time for the current rhizome planting season. &nbsp; SACE relocates headquarters After more than five years on the 100 block of Gay Street in downtown Knoxville, Tenn., the Southern Alliance for Clean Energy&rsquo;s headquarters has moved to 3804 Middlebrook Pike. The recently purchased office provides more space for SACE&rsquo;s expanding staff, and allows for SACE to demonstrate energy efficient technology and renewable energy generation. SACE has begun instituting energy efficient retrofits, and will showcase a clean and efficient businesses operation. Updates on the building modifications will be available through SACE&rsquo;s website, www.cleanenergy.org. MHG provides Bioenergy ERP to Spain&rsquo;s largest biomass supplier MHG Systems Ltd. has started the first phase of MHG Bioenergy ERP implementation with FactorVerde SA, the largest biomass supplier in Spain. With MHG Bioenergy ERP, FactorVerde will be able to control and monitor the whole biomass delivery chain from small roadside storages, through transportation and terminals, all the way to the power plant silos. FactorVerde CEO Roberto De Antonio Garcia says the company chose MHG Bioenergy ERP, because of the strong bioenergy focus of the system and possibilities to control and manage the scattered workforce in an easy and reliable manner. Capstone&rsquo;s Crouse appointed to REEE advisory committee Capstone Turbine Corp., a manufacturer of microturbine energy systems, announced that U.S. Secretary of Commerce Gary Locke recently named Capstone Executive Vice President Jim Crouse to a national advisory committee that will promote U.S. exports of renewable energy and energy efficient technologies. The 29-member Renewable Energy and Energy Efficiency advisory committee will advise Locke on the development and implementation of programs and policies to help expand the competitiveness of the U.S. renewable energy and energy efficiency industries. Crouse and other committee members also will develop strategies to identify and expand export markets for the industries, both in the short- and long-term. NY Biomass Energy Alliance selects new leadership The New York Biomass Energy Alliance has selected a new slate of officers to advance low-value wood, biomass crops and waste material as an affordable source of local energy to meet the state&rsquo;s heat, power and fuel needs. Jim Waters, executive director of the Catskill Forest Association, will serve as the organization&rsquo;s chair. The organization&rsquo;s new president is Charlie Niebling, general manager of New England Wood Pellet, a supplier of biomass fuel, with two pellet production facilities in New York. Joseph Visalli will serve as the organization&rsquo;s issues coordinator. The New York Biomass Energy Alliance is a membership organization, operating under the formal sponsorship of the New York Farm Viability Institute in Syracuse. For more information, go to www.newyorkbiomass.org.

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ENERGY CROP INNOVATIONS: An energy crop company and an equipment manufacturer have developed equipment to plant and harvest miscanthus.

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Jim Waters is is executive director of the Catskill Forest Association, a nonprofit dedicated to enhancing all aspects of forest in the state's Catskill region.  

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Charlie Niebling is general manager of New England Wood Pellet, which has manufacturing plants in Schuyler and Jaffrey, N.Y. 

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Business Briefs

Peter Goldmark, commissioner of Public Lands for the Washington Department of Natural Resources, kicked off the Pacific West Biomass Conference &amp; Trade Show Jan. 11 in Seattle by announcing phase two of his Forest Biomass Initiative.
 Goldmark said he planned to roll out a bill for an aviation biofuel pilot facility. The project will use biomass from state trust lands and help clean up emissions from an industry that continues to grow exponentially. &ldquo;There&rsquo;s ample market here, folks,&rdquo; he said, citing increased numbers of airline passengers and amounts of fuel used.
 The bill will not only establish an aviation biofuel pilot facility, but will mobilize stakeholders in developing a woody biomass supply chain. Phase one of the initiative involved the establishment of four pilot projects, two of which have been successful. One is a combined-heat-and-power plant at the Port Angeles Nippon paper mill and the other, in Borgford, produces wood oil through pyrolysis. The others hit insurmountable challenges and are not proceeding, Goldmark said. The initiative was launched with multiple goals in mind including job creation and clean energy production.
 Goldmark also took advantage of the opportunity to announce a supply study by Washington State University. &ldquo;It will help landowners realize how much they can use sustainably,&rdquo; he said. &ldquo;And I say that word &lsquo;sustainably&rsquo; over and over again.&rdquo;
 &mdash;Lisa Gibson

REFUELING WITH BIOMASS: Goldmark announced a bill to build an aviation biofuel pilot facility that would use biomass from state trust lands and help clean up emissions from a growing aviation industry. 

2011/02/1298406083245.jpg

Washington's commissioner of public lands announces aviation biofuel project during biomass conference keynote.

Bio-Initiative

The handwriting is on the wall for renewable energy, and the message indicates that the clean energy industry is in need of employees with a strong understanding of sustainable energy, according to Alan Hardcastle, senior research associate at Washington State University.
 Hardcastle and the other speakers who formed a panel, titled Higher Education as Industry Catalyst: Bioenergy Education in the Pacific West, suggested that while the bioenergy economy is growing, the labor force needed for the industry may be falling behind.
 &ldquo;There is a concern that there is a lack of renewable education at all levels,&rdquo; Hardcastle said, and employers are starting to voice that concern. Several renewable energy companies and other organizations are making an effort to become more sustainable and that has created a &ldquo;green&rdquo; skill set he called the new basics. &ldquo;A green job may require more skills and an understanding of knowing what is going on in clean renewable energy and this will be an important trend in our universities,&rdquo; he said. Fortunately, educational facilities will benefit from the new skill set required by some employers.
 Rob Costello, the dean for trades and technology at Bellingham Technical College, spoke about a new sustainable energy certificate offered to all students. Technicians will leave the program with an enhanced skill set in sustainable energy that includes the fundamentals of sustainable energy along with an understanding of various technologies, he said. The school has partnered with Washington State University on a project aimed at anaerobic digester operational and maintenance skills. &ldquo;A lot of students say they want to be in renewable energy without having an idea of what that means,&rdquo; Costello said. The certificate program will help students gain a better, more applicable knowledge of what sustainable energy means.
 Like Costello, Daniel Schwartz, the director of the bioresource-based energy for sustainable societies interdisciplinary doctoral program at the University of Washington, is working with students to develop bioenergy-related skills. Schwartz has started a doctoral program for students that could be similar to a biomass consulting company. During one project, the students performed feasibility studies on sourcing biomass for a cogeneration facility that would use wood waste. The group also performed biomass assessments and biomass cost estimations during the project.
 Candis Claiborn, dean of the college of engineering and architecture at Washington State, explained the university&rsquo;s efforts to develop students capable of working at an integrated biorefinery. The program includes work on fungal catalyst development, algal biomass, feedstock pretreatment, thermochemical conversion approaches and several other biorefinery-specific areas. Claiborn also said the school has instituted an entrepreneur-in-residence program that helps students developing innovative products or processes to meet other entrepreneurs in the community, all of which will help the bioenergy industry grow.
&mdash;Luke Geiver

LEARNING CURVE: Schwartz (left to right), Costello, Claiborn and Hardcastle discussed the importance of preparing an educated workforce for the growing renewable energy industry.

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Colleges and universities need to prepare students for employment in the renewable energy industry. 

Bioenergy Basics

Emissions are no longer an issue when building waste-to-energy (WTE) facilities today, thanks to technological innovations. Rather, one of the most challenging issues today is public perception and/or NIMBYism (not in my back yard).
 That was one of the key points made during the plenary panel called Maximizing an Embattled Biomass Stream: Waste-to-Energy Developments in the Pacific West.
 Panelists discussed the benefits and advancements of WTE and the nation&rsquo;s increasing demand for it, the challenges involved, and some examples of successful projects and investments.
 Panel moderator Robert Grott, executive director of the Northwest Environmental Business Council, said that many landfills in the Pacific West and across the country are at or nearing capacity and options to reduce waste are limited. &ldquo;We have technologies in development to convert trash into chemicals, heat, fuel and power but we face regulatory environments that make deployment of them nearly impossible,&rdquo; he said. So for now, and some time to come, WTE is the best available option.
 Self-proclaimed garbage engineer Damon Taam, system contract manager for the Spokane (Wash.) Regional Solid Waste System, said Spokane accounts for about 300,000 tons of the 5 million tons of waste Washington generates each year. Taam has spent more than 30 years in the WTE industry and played a significant role in the development of Spokane&rsquo;s WTE facility, one of only three in the state. &ldquo;It is very clean and very efficient and solves multiple problems for Spokane,&rdquo; he said.
 Taam said garbage is an attractive renewable energy resource for developers. &ldquo;It is [attractive] because people pay you to take it, and you get energy from it and then people pay you for that,&rdquo; he said. &ldquo;The development of renewable energy costs money and this is a way to generate extra revenue.&rdquo;
 With garbage there are constraints, Taam said, but these have to be overcome because the population is increasing and so is the amount of waste generated. &ldquo;It&rsquo;s a lot like a wastewater plant&mdash;it&rsquo;s coming down the pipe, and you better take care of it,&rdquo; he said.
 Waste Management-Pacific Northwest Area Vice President Dean Kattler discussed the company&rsquo;s current waste-to-energy capacity, its investments in emerging technologies and plans for the future. Waste Management&rsquo;s Wheelabrator division currently operates 17 WTE facilities across the U.S. The company is also involved in 124 landfill gas projects, is co-owner of the largest landfill gas-to-liquid natural gas plant in the country, and has investments in or partnerships with five WTE technology companies in North America.
 One of the investments is a partnership with plasma-enhanced melter technology company InEnTec, to form joint venture company S4 Energy Solutions. Together the companies have constructed a 25-ton-per-day (tpd) pilot facility in Arlington, Ore., at a Waste Management landfill, which will open for testing this year.
 The facility may be small, but Kettler says that with WTE comes trial and error. &ldquo;Scalability is a major concern with plasma gasification, so that&rsquo;s why we&rsquo;re taking very small steps with a 25-tpd facility,&rdquo; he said. &ldquo;You might have heard that plasma gasification is becoming the buzzword and there are some plants being built that are 200, 300 and 400 tpd, but we truly believe they are not sustainable and that technology isn&rsquo;t ready for that size of commercial application at this stage.&rdquo;
 The final presenter, Conrad Fichtner of AECOM, discussed a study the company performed for Metro Vancouver looking at waste treatment, energy recovery and disposal solutions. Several options were explored, he said, including mechanical biological treatment, WTE (mass burn), a new, remote landfill 200 miles away and various combinations.
 AECOM found that WTE was the most economical option, and provided the best carbon dioxide benefits compared to landfilling. &ldquo;Can you build a WTE facility in a big city? You bet you can,&rdquo; Fichtner said. &ldquo;We don&rsquo;t need to be afraid of WTE from an emissions perspective anymore. There&rsquo;s this perception that we kill babies, but we don&rsquo;t. In Canada, it isn&rsquo;t regulatory issues, it is public perception.&rdquo;
 On regulations, Taam said the U.S. EPA is now a proponent of WTE facilities, rather than a hindrance. He said he gives more than 300 presentations a year to the public to inform them of the benefits of WTE. &ldquo;We have to educate, educate, educate,&rdquo; he said. &ldquo;The community first needs to make the decision that this is a positive thing.&rdquo;&nbsp;
 &mdash;Anna Austin

ENERGIZING WASTE: Grott (left to right) moderated a panel consisting of Taam, Kattler and Fichtner, who shared their insight into waste-to-energy development in the Pacific West.  

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Convincing NIMBYs that WTE project emissions aren't harmful is a labor-intensive task.

Emission Remission

Weaving their way through a maze of piping, knobs and gauges, tour participants at the Pacific West Biomass Conference &amp; Trade Show saw firsthand how steam is produced and distributed to more than 200 downtown Seattle buildings.
 Seattle Steam is a privately owned district heating system that supplies 600,000 pounds of steam per hour to hospitals, hotels and other structures through an 18-mile pipeline to Seattle Central Business District and First Hill Neighborhoods. The plant uses a 60 percent waste wood feedstock, the rest comprised of natural gas and oil.
 During the tour, Seattle Steam President Stan Gent took the participants to the large, round combustion chamber, warning them of the high temperature even on the outside of the chamber. &ldquo;The combustion of the fuel is probably the easiest part of what we do,&rdquo; Gent said.
 Participants also got a look at the plant&rsquo;s storage, handling, grinding and screening processes located across the street from the plant. A grey silo dwarfing all the buildings around it holds 250 tons of wood, roughly one day&rsquo;s worth of feedstock. Each truck load brings in 20 to 25 tons, emptying it inside the cemented and unheated drop-off area adjacent to the silo. The facility also controls odor and dust, Gent said.
 Attendees descended a grated stairway into an area where machines grind and screen the biomass until all the material is three inches or smaller. From there, the tour continued through a tunnel where the feedstock is blown under the street to the combustion chamber. The pressure, power and force of the equipment could be felt through vibrations throughout the room.
 Seattle Steam also has a natural gas-fired plant just blocks away that Gent hopes will be an operating combined-heat-and-power plant by 2012. The company has a federal grant for $19 million to help with the costs and hopes to produce 35 megawatts of electricity and 25 megawatts of heat at about 90 percent efficiency, he said.
&mdash;Lisa Gibson

PRESSURE COOKER: Seattle Steam is a privately owned district heating system with the capacity to supply 600,000 pounds of steam per hour to local hospitals, hotels and other businesses through an 18-mile pipeline. 


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District heating system supplies steam to several downtown buildings.

Steam for Seattle

In Washington&rsquo;s Tualco Valley, the Qualco Energy Corp. anaerobic digester in Snohomish County has come a long way since the project was conceived in 2003.
 Qualco Energy Corp., a nonprofit organization formed by representatives from the Sno/Sky Agricultural Alliance, Northwest Chinook Recovery and the Tulalip Tribes, began operating the digester in 2008. The digester was first proposed to help consume waste from local dairy operations and to prevent runoff into salmon streams on land that formerly housed a correctional facility.
 According to Daryl Williams, environmental liaison for the Tulalip Tribes, Qualco uses a modified mixed plug flow mesophyllic digester capable of producing 600 cubic feet per minute of biogas that powers its 450-kilowatt generator. Manure is collected from Werkhoven Dairy&rsquo;s three farms and piped to Qualco&rsquo;s 2 million gallon digester tank.
 Qualco sells electricity to Puget Sound Energy Corp. and is negotiating a power-purchase agreement with the Snohomish County Public Utility District.
 The solids left over from the anaerobic digestion process are used as compost material, Williams said. Qualco currently gives its digestate material away for free, but they will charge a fee once a market for it is found. &ldquo;We&rsquo;ll hopefully sell the solids for about $10 per yard,&rdquo; Williams said.
 Waste liquid from the digester gets piped to a nearby lagoon and is utilized for irrigation.
 Qualco was awarded a $500,000 grant from the U.S. DOE to conduct an environmental assessment and feasibility study in 2005, and received $500,000 from the USDA to help pay for the digester. Williams said the economic and environmental impact of the anaerobic digester has been a boon for the county, adding that Qualco intends to expand operations to include more generators and solar panels.
&mdash;Bryan Sims

COW POWER: The anaerobic digester at Qualco Energy Corp. in Washingtonâ€™s Tualco Valley uses manure from area dairy farms and other waste material such as expired beer and soda, and waste trap grease.  


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Anaerobic digestion project in Washington's Tualco Valley is paying off.

Biogas Benefits

Significantly different than the 111th Congress, the new Republican-controlled 112th Congress will likely implement many changes to the country&rsquo;s renewable energy policies. This is largely because there are different committee leaders, many new members and key staff in positions relevant to the renewable energy and biomass sector, and that Obama is moving to the middle in preparation for 2012 elections, according to Patrick Rita, founder and principal of Orion Advocates, a Washington, D.C.-based government relations consulting firm.
 Rita explained his outlook during a webinar held by the Biomass Thermal Energy Council in January. &nbsp;A priority of the new Congress will be oversight, according to Rita. &ldquo;Already, Chairman of the Subcommittee on Energy and Power Ed Whitfield from Kentucky, a coal-state legislator, is expected to summon [U.S.] EPA to the hill shortly to defend their efforts to regulate greenhouse gases under the Clean Air Act,&rdquo; he said. &ldquo;That issue will be hotly debated with lots of legislation already in the hopper.&rdquo; Another key issue will be how new energy programs are funded. &ldquo;Under the Democratic-controlled Congress, funding for programs was pay as you go,&rdquo; Rita said. &ldquo;The funding mechanism now will be spending cuts identified in existing programs.&rdquo;
 So what can such a divided government produce? Not any sort of sweeping climate and energy laws like we saw in the 111th Congress, according to Rita. &ldquo;What we&rsquo;re seeing is some real interest in the concept of a clean energy standard, unlike a renewable energy standard, it would include coal carbon capture and storage technology, nuclear power, natural gas and the like.&rdquo;&nbsp;
 Tax reform is also a priority, Rita said. &ldquo;We&rsquo;re hearing there is an effort to get back to the concept of moving away from tax incentives that attempt to pick winners and losers, and more toward an outcome-based tax policy. &rdquo;
 Rita said it appears as though the 1603 Program will not be renewed for 2012, and the Farm Bill will be heavy-laden with renewable energy programs such as the Biomass Crop Assistance Program. The definition of biomass will also be at large, he said, and boiler Maximum Achievable Control Technology will continue to take center stage. &ldquo;The EPA was granted a one-month reprieve, and we don&rsquo;t know what the reconsideration process will yield, but the EPA will be exploring a legislative fix,&rdquo; he said. &ldquo;A major issue coming down the pipe is the utility MACT, and I think that will have a major effect on all players in the renewable energy space.&rdquo;&nbsp;
&mdash;Anna Austin

ON THE HILL: A new Congress could mean changes to federal renewable energy policies and the way they are funded.  

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The new Republican Congress will likely make changes to federal renewable energy policies.

Potential Game Changer

To replace the system in which renewable heating process equipment is purchased through capital grants, the U.K.&rsquo;s Department of Energy and Climate Change is developing the Renewable Heat Incentive to encourage the purchases through tariffs.
 Implementation of the program is expected in June, and while final details have yet to be released, the public consultation document outlines its key aspects:
 &bull; Support a range of technologies including air- and ground-source heat pumps, solar thermal, biomass boilers, renewable combined heat and power; and use of biogas, bioliquids and the injection of biomethane into the natural gas grid.
 &bull; Support heating at all scales including households, businesses, offices, public-sector buildings and industrial processes in large factories.
 &bull; Tariff levels have been calculated to bridge the financial gap between the cost of conventional and renewable heat systems at all scales, with additional compensation for certain technologies for an element of the nonfinancial cost; and a rate of return of 12 percent on the additional cost of renewables, with 6 percent for solar thermal.
 &ldquo;I certainly expect it to have a significant impact on the use of heat,&rdquo; says Geoff Hogan, information officer and researcher for the U.K.&rsquo;s Biomass Energy Centre. &ldquo;It obviously depends on how generous it is, but if it&rsquo;s reasonably generous, as figures suggest, then we do expect quite a reasonable incentive for people to install renewable heat of one kind or another.&rdquo;
 The DECC does, however, specifically propose the exclusion of wood-burning stoves, saying they present practical difficulties such as monitoring how much they are used and to what extent they are used with renewable fuel rather than coal. Under the current proposals, qualifying systems completed after July 15, 2009, will be able to claim the RHI, according to the consultation. The document also specifies that payments can only be made to the owner of the renewable heating plant, to a producer of biogas or biomethane or to a producer of biofuel for generating heat. The DECC also proposes that RHI beneficiaries receive support over a number of years rather than in the form of a single upfront payment, encouraging owners to keep their equipment operating and well-maintained.
 For small-scale applications of up to 45 kilowatts (kW), the agency recommends 9 pence per kilowatt hour (kWh) for solid biomass and a tariff lifetime of 15 years, and 5.5 pence per kWh for biogas on-site combustion for a lifetime of 10 years. For large-scale applications of 500 kW and above, the DECC proposes between 1.6 and 2.5 pence per kWh with a tariff lifetime of 15 years. For qualifying applications in between, solid biomass would receive 6.5 pence per kWh for 15 years, with on-site biogas receiving 5.5 for 10 years, as proposed.
 &ldquo;We are trying to meet various commitments to our lower carbon future,&rdquo; Hogan says. The U.K. has a renewable energy goal of 15 percent by 2020, aiming for 80 percent carbon emissions reduction by 2050, as well as other international obligations. In 2009, the U.K. used more than 895,000 metric tons (986,500 tons) of oil equivalent from biomass to generate renewable heat, according to statistics compiled by the DECC.
 &ldquo;We&rsquo;re not as advanced as many other European countries in terms of percentage of heat generated,&rdquo; Hogan says, explaining that the country has an extensive gas grid, along with cheap gas prices and cheaper gas combustion equipment compared to solid fuel combustion equipment. &ldquo;So without some sort of incentive, we haven&rsquo;t had the extensive rollout of biomass heat that they have in other countries.&rdquo;&nbsp;
&mdash;Lisa Gibson

The U.K. is developing a program to incentivize renewable heat generation and use.

Turning Up the Heat

Soon, Mississippi may be known as a biomass energy hub, as its wide availability of low-cost resources is being highly recognized and developing projects are plentiful.
 For example, a biomass power project proposed in Port Gibson in southwestern Mississippi has generated a lot of attention. National Clean Fuels Inc. has partnered with the Center for Environment, Commerce &amp; Energy and the City of Port Gibson to build a 10-megawatt biomass power facility that will gasify sawdust and wood chips.
 With this and many other biomass projects, Mississippi officials have realized there eventually needs to be a cap on its resources to ensure sustainability. Currently, there is no estimate to quantify the capacity potential of biomass energy in the state. To remedy that situation, the Mississippi Development Authority&rsquo;s Energy Division announced it was making $400,000 available to develop a biomass feasibility study. Submission of proposals were due in December; the final report is due in 2012.
 According to the Mississippi Technology Alliance Strategic Biomass Initiative, an organization that tracks renewable energy and energy efficiency projects, there are almost 50 biomass-related projects in the state, says director Sumesh Arora.
 Brent Bailey of the 25 x &rsquo;25 Alliance says the major biomass resource in Mississippi is its forestlands, which covers about 65 percent of the state&rsquo;s land area. &ldquo;Other resources include municipal solid waste, animal manure, agricultural products and residues, and poultry litter, as nearly 8,000 poultry houses exist around in the state,&rdquo; he says.
 Biomass developers are also attracted to Mississippi because of its excellent transportation system. The state is surrounded by waterways&mdash;the Mississippi River, the Tennessee-Tombigbee Waterway and the Gulf of Mexico. Each has superior port and navigational attributes that are key for material import and export, says Pete Weisenberger, president of the Mississippi Biomass Renewable Energy Council. Weisenberger says the state has outstanding university research support and several state incentive programs have been developed to spur research, development and commercially viable utilization of renewables.
 In order to attract the private equity capital needed to support the industry, Weisenberger says investors must be able to pencil in solid and stable rates of return on investment. &ldquo;The state&rsquo;s taxpayers have demonstrated their willingness to tee it up and front the costs of attracting many of these companies to Mississippi, putting us at the forefront of the industry,&rdquo; he says. &ldquo;In the long run, private investment has to take the lead and run with it.&rdquo;
 In short, Mississippi needs a long-term, comprehensive energy plan that makes biomass a significant component of the state&rsquo;s energy portfolio. &ldquo;Mississippi and the mid-South is the sweet spot for biomass resources, and we have the people, the raw material, the research facilities, the know-how and the willingness to put all the parts together for success in this industry,&rdquo; Bailey says.
&mdash;Anna Austin

Mississippi is poised to take advantage of its abundant biomass resources.

Mighty Mississippi 

Greenleaf Power LLC has accumulated a biomass power portfolio of just more than 100 megawatts through the purchase of three operating plants in California. Although it is one of a few companies with a business plan that focuses on acquiring existing plants in lieu of building, Greenleaf President Hugh Smith says he doesn&rsquo;t see an industry-wide trend of consolidation.&nbsp;
 It&rsquo;s opportunistic, he says, and John Eustermann, partner with firm Stoel Rives LLP, agrees. &ldquo;They&rsquo;re doing it because I think they have the ability to balance-sheet finance it and the ability to either take over good PPAs (power purchase agreements) or acquire good PPAs from those entities that want to make sure they&rsquo;re in compliance with the RPS (renewable portfolio standard),&rdquo; Eustermann says of the numerous companies pursuing the acquisition strategy.
 He adds that he hesitates to think a consolidation is brewing, but it wouldn&rsquo;t be bad to create a portfolio of assets in a state subject to an RPS. Smith echoes that opinion, saying a state RPS, like California&rsquo;s of 33 percent by 2020, undoubtedly plays a crucial role in deciding which plants to purchase. Greenleaf is open to purchasing plants all across North America but has remained in California because opportunities so far have been there, Smith explains.
 Smith has seen no apparent trend in the reasons why companies choose to sell their plants, simply revealing that plants often don&rsquo;t fit the core interests of the company. That&rsquo;s not to say Greenleaf hasn&rsquo;t had to work to improve aspects of its acquired plants such as operations, feedstock contracts or PPAs, but each has been capable of continued operation at the time of purchase.
 &ldquo;We&rsquo;re very pleased with the progress we&rsquo;ve made to date,&rdquo; he says. &ldquo;We haven&rsquo;t accomplished everything we&rsquo;re hoping to accomplish at those three, but we&rsquo;re working both on improving the operations of those facilities while continuing to look for additional opportunities in the market as well.&rdquo;
&mdash;Lisa Gibson

CALIFORNIA CONNECTIONS: Greenleaf Power LLC has purchased three California biomass power plants, including this one in Mecca. 

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Despite a number of energy companies purchasing biomass power plants, a consolidation trend is likely not on the horizon.

Acquisitions Atmosphere 

PowerStock founders and affiliates, who were instrumental in helping to build Oregon&rsquo;s straw export market and the Western U.S. hay industry, formed the company to address a growing demand for agricultural biomass as an energy source.
 With more than 25 years of experience in collecting, baling, shipping and storing agricultural residues, parent company Pacific Ag Solutions, the largest ag residue and forage harvest company in the country, realized that it was uniquely positioned to provide supply chain solutions to the biomass energy sector. In fact, members of the company&rsquo;s senior management team have spent the bulk of their careers in ag or ag-related industries. Bill Levy, president of Pacific Ag Solutions and PowerStock and a fourth-generation Oregon farmer, founded the company in 1998 while attending college at Oregon State University. The company's vice president of operations, Rod Phelan, has been in the business since the 1980s and has harvested millions of tons of ag residue in his career, sending it through a supply chain to Asian markets.
 While supplying biomass for energy production is different than supplying it to the customers and markets that Pacific Ag Solutions traditionally serves, each supply chain segment comes with benefits, not just for the company but also the economy, says Harrison Pettit, PowerStock&rsquo;s vice president of business development, who joined the company early last year, after working at Pacific Ethanol Inc.
 One of those benefits is massive job creation. An element of the ag biomass industry that has not been widely understood is the economic impact just from employment around harvest, collection and storage of biomass for a large-scale project, Pettit says. &ldquo;For example, a big project using corn stover could easily require 400 to 500 employees just for the harvest portion. It&rsquo;s almost 10 times the amount of conversion jobs&mdash;sure they&rsquo;re not as well-paid or as highly skilled&mdash;but it&rsquo;s a very large number of people.&rdquo;
 Harvesting also requires a lot of machinery. &ldquo;We currently have the nation's largest single entity fleet of large square balers at 18,&rdquo; Pettit says. &ldquo;That number is small compared to what a full-scale biofuels or bioenergy project would require, so it speaks to the fractured nature of the traditional Western export feed and forage industry. It also speaks to the importance of having a good working relationship with equipment manufacturers so that we can make sure to have the right amount of equipment when it is needed.&rdquo;
 Demand Leads to Supply
 Thus far, the company has been hired mainly by large-scale project developers or technology providers rather than individual farmers, but there&rsquo;s a reason for that, according to Pettit. &ldquo;The demand side for the project needs to exist in order to develop that supply chain,&rdquo; he says. &ldquo;The corn stover exists because the corn is being raised, but there needs to be more substantiation in harvest and delivering it.&rdquo; On the flip side, supply uncertainty must be reduced.
 In the biofuels sector, PowerStock is currently engaged in a few commercial-scale projects. One is the Spiritwood Energy Project in Jamestown, N.D., which is a 20 MMgy cellulosic ethanol plant that will use an as of yet undecided biomass feedstock gathered from a 70-mile radius around the plant. Last fall, PowerStock and North Dakota State University in Fargo completed a feedstock feasibility study for the project.&nbsp;
 On the power production side, PowerStock has done some work with Portland General Electric, which operates a 585-megawatt coal-fired power plant in eastern Oregon. &ldquo;It&rsquo;s the only [coal-fired power plant] in the state, so it&rsquo;s a bit of a lightening rod,&rdquo; Pettit says. &ldquo;PGE has an agreement with the [U.S.] EPA and the Oregon Department of Environmental Quality to close this plant by 2020, so we&rsquo;re working with them to figure out if they can convert some or all of this facility to biomass.&rdquo; So far, PowerStock has helped PGE test-fire corn stover pellets at the facility at blend rates of 3, 5 and 7 percent.
 In smaller projects, PowerStock is working with Novus Pacific, which secured a USDA Rural Energy for America Program loan for an anaerobic digestion facility that may be sited at the Port of Morrow in eastern Oregon. The digester will utilize local crop biomass and a small amount of livestock manure to generate 1,000 MMBtu of methane gas to heat an existing ethanol plant, according to Pettit.
 Step-by-Step Process&nbsp; 
 The development of feedstock supply chains for these projects must be carried out similarly to technology processes, going from bench to pilot to demo to commercial stages, Pettit says. &ldquo;The same phased development has to occur when building a large-scale feedstock supply&mdash;[the project developer] can&rsquo;t just get 100,000 acres under contract and know the cost of delivering that in a year,&rdquo; he says. &ldquo;It&rsquo;s a multiyear process where you increase the scale each year to find out where the sensitivities are and where you can reduce cost.&rdquo;
 Another caveat when developing a supply chain is that despite the great amount of anticipated demand for ag biomass, there&rsquo;s still no infrastructure. &ldquo;You couldn&rsquo;t have coal-fired plants if you didn&rsquo;t have railroads,&rdquo; Pettit says. &ldquo;This infrastructure still needs to be created, and the first stage is to build these first plants and demonstrate a system. There will be a commodity market for ag biomass just like there is right now with wood biomass.&rdquo;
 The first step in developing a supply chain is performing a feasibility study prior to an experimental harvest. Developers need to study the composition of the harvested feedstock during storage to determine how it weathers and how much degradation is occurring. The constituent matter in the stored material must also be indentified and then harmonized to the end use, whether that involves collecting and storing feedstock for a digester, a cellulosic ethanol plant or for combustion at a power plant, Pettit says. &ldquo;It&rsquo;s often not well understood. Each has its own requirements based on maximizing the value of the feedstock for the end use. For example, for the fermentation process for fuels, you don&rsquo;t want anything nonfermentable in that bale. You&rsquo;re just carrying something of no value, or negative value. If you&rsquo;re going for a power process, you&rsquo;re looking for Btu.&rdquo;&nbsp;
 &nbsp;Another issue is that existing harvesting and collecting equipment wasn&rsquo;t developed for bioenergy, rather it was designed for the feed and forage industry. &ldquo;While our understanding can make a significant difference, the equipment will need to adapted,&rdquo; Pettit says, adding that the company works closely with equipment manufacturers when making modifications. &ldquo;Equipment alone is a huge potential area of optimization and cost savings,&rdquo; he says. &ldquo;That&rsquo;s somewhat obvious, but a very important variable is the density of the material you&rsquo;re handling, and that&rsquo;s very much related to equipment.&rdquo;
 When formulating a supply chain, project developers also need to consider the distance from the fields to the plant, or size of the project radius. &ldquo;Acreage has a big influence on project feasibility,&rdquo; Pettit says, as well as the participation of local growers. &ldquo;The further you go, the more miles you have to go to deliver it. It also spreads your equipment out and you&rsquo;re less efficient in your asset utilization&mdash;you&rsquo;ll need more, which adds to the cost. It really all comes down to the number of acres required, but there are a lot of variables that affect a delivered dry ton and it changes with every project.&rdquo;&nbsp;
 PowerStock also offers a proprietary design for storing large, square bales of ag residue, which it has coined StackPad. Its design involves a storage base that is built up so the bales aren&rsquo;t contaminated from the ground and are stacked in a stable fashion, Pettit says. The company has also developed a tarping system that protects the feedstock. &ldquo;We&rsquo;ve developed this system over many years of doing this, making plenty of mistakes along the way,&rdquo; he says. &ldquo;It is not really a technology, rather, it is know-how.&rdquo;
 Building Momentum
 In terms of future activity, Pettit says the company&rsquo;s legacy business remains strong, but PowerStock is mainly focusing on the bioenergy industry. &ldquo;That&rsquo;s the larger opportunity, and we really see the momentum starting to build on projects,&rdquo; he says.
 PowerStock predicts that a lot will happen in terms of facility development in 2013 and 2014. &ldquo;On the feedstock supply side, 2011 will be very busy, especially in the Midwest,&rdquo; he says.
 That potential for activity is largely dependent on government policy, Pettit says. &ldquo;We&rsquo;d like to see more clarity, less uncertainty and stronger policy signals,&rdquo; he says, adding that the company is supportive of the Biomass Crop Assistance Program.&nbsp; However, uncertainty regarding the funding and duration of the program could erase some of its initial benefits. &ldquo;You can&rsquo;t build a 20-year asset based on a program that lasts two years,&rdquo; he says. &ldquo;It may be very helpful in the early years of a project, and it&rsquo;s better to have it than not to have it, but you can&rsquo;t build a project with the assumption that something will be there&mdash;you&rsquo;ve got to have other possible financing to support your project.&rdquo;&nbsp;
 Perhaps most importantly, according to Pettit, for a project to move forward successfully, everyone&mdash;the growers, the harvesting companies, the project developers&mdash;needs to be rowing in the same direction. &ldquo;Our main emphasis is that we can utilize our experiences of scale, understanding the logistics, the handling, and operating practices of what was traditionally a feed and forage industry, and apply them to new, unique market requirements,&rdquo; he adds. &ldquo;Because of the potential scale, it&rsquo;ll be a much larger one. To us, it&rsquo;s another leg on our forage and fiber markets stool.&rdquo; Author: Anna Austin Associate Editor, Biomass Power &amp; Thermal <a href="mailto:aaustin@bbiinternational.com">aaustin@bbiinternational.com</a> (701) 738-4968

CORN STOVER BALES: PowerStock has 18 balers, which is currently the nation's largest single entity fleet. 

2011/02/12984088864997.jpg

RESIDUE RECOVERY: Harvesting corn stover is labor-intensive and would benefit local economies by providing much-needed jobs.


2011/02/1298408953851.jpg

When it comes to harvesting, collecting, storing and transporting agricultural biomass, PowerStock has decades of experience.

Supply Chain Champs

None of the customers interested in licensing pelletizing systems from Nebraska-based Pellet Technology will be pelletizing wood. Instead they will be pelletizing a resource that is more abundant, cheaper and requires less manpower to harvest. Corn stover, along with some other agricultural residues, is becoming more plentiful with the increase in yields of traditional crops. Pellet Technology has equipment capable of pelletizing wood, switchgrass, wheat and soybean stubble but corn stover is by far the company&rsquo;s primary material.
 Every pound of corn leaves a little more than a pound of biomass, says Russ Zeeck, Pellet Technology president and COO, and harvesting that residue can help farmers solve build-up problems that come with excessive accumulation. &ldquo;We can pelletize wood for those people who want it, but with the numbers and cost, users are focused on stover,&rdquo; he says. The company serves industrial cogeneration users, mainly in Europe.
 Process, Pricing and Equipment
 While pellet mill processes are generally similar, the inner workings can differ with the type of feedstock. &ldquo;Ours is patented and a completely different design,&rdquo; Zeeck says of Pellet Technology&rsquo;s proprietary system. &ldquo;While you still have a pellet mill machine, th
e die and feed system of that pellet machine vary [with wood versus crop residue feedstock].&rdquo; The equipment requirements in handling systems are different for the two raw materials, and added drying equipment is necessary at most wood pellet plants. Because of those variations on the basic design, wood pelletizing facilities have a capital cost around 40 percent higher than that of agricultural residues, Zeeck says. Ballparking, he says a 175,000 ton-per-year wood pellet plant could cost between $20 million and $25 million, compared with $15 million to $17 million for a similar-sized stover pelletizing plant.
 Subsequent to contrasts in essential equipment comes a change in permitting requirements and timelines. The lack of drying systems in a corn stover pellet plant means those facilities can be permitted in 90 days. &ldquo;You have a much more limited permitting requirement,&rdquo; Zeeck says.
 Those benefits and others, including price stability, influenced heavily by demand in existing and future markets, contributed to Pellet Technology&rsquo;s decision to feature corn stover in its applications.For example, raw wood feedstocks currently have competition in the pulp and paper industry as well as the housing industry and off-shore uses, Zeeck explains. &ldquo;That puts a lot of pressure on a feedstock,&rdquo; he says. &ldquo;And if you step back and look at the volume needed, and if we were to complete 50 percent of the liquid fuel pilot plants that have been announced, that biomass demand shoots up dramatically.&rdquo; On the other hand, though, with that wood demand and multiple end uses comes a market that&rsquo;s better developed.
 But corn stover&rsquo;s superior price stability comes into play once again when considering financing for plant construction. The feedstock takes at least one risk variable out of the development process with its longer-term price security. &ldquo;We can work with customers and lock stover in for a secure price for seven years,&rdquo; Zeeck says. &ldquo;Our financing groups like that because of the fact that the feedstock has a fixed price.&rdquo; Wood prices become difficult to secure past one or two years because of their variability, he adds.
 Energy and Ash
 If that doesn&rsquo;t satisfy curiosity about Pellet Technology&rsquo;s choice to feature corn stover systems, Zeeck would add that the feedstock brings with it a consistent chemistry profile that helps stabilize the entire pelletizing process. &ldquo;If you take a White Scotch Pine that is in Arkansas versus one that is in Oregon, you are going to have a totally different chemistry makeup of the wood itself because they bring their nutrients from the soil,&rdquo; he says. But farmers maintain a certain chemistry profile for their corn, regardless of the state it&rsquo;s grown in, translating to stabilized per pound Btu values between 7,100 and 7,300. &ldquo;All this comes down to the chemistry, especially in the combustion world,&rdquo; he says. &ldquo;For the past three years, we&rsquo;ve stayed very consistent on that Btu value.&rdquo; In addition, corn stover feedstock realizes an 85 percent net Btu gain between energy going into the pelletizing process and energy coming out, as it uses about 60 to 70 percent of the energy required in wood pelletizing processes.
 But neither wood nor corn stover wins the comparison across the board. While stover offers consistency in Btu, that value falls well short of some wood species. Not to be outdone, wood can offer a Btu value of between 7,000 and 11,000, according to Jim Brown, salesman with Wood Grain Mill Works and former project manager of Atlas Pellets. &ldquo;Almost all wood fiber has higher Btu content than agricultural pellets,&rdquo; he says. &ldquo;There may be some switchgrass varieties that come close, but typically wood has more Btu.&rdquo; In addition, wood pellets have consistently lower ash content.
 Earthtech Energy Inc. ran into problems with ash content in most of the recipes it concocted for ag residue pellets, according to CEO Marion Mast. &ldquo;Most of them burned but would not come to the 1 percent ash requirement,&rdquo; he says, adding that issues in transporting the crop residues to the plant can make the feedstock unusable. The company had a list of resources it had hoped to use at its own crop residue pellet plant, but hit a wall with the U.S. EPA when trying to sell to district heating companies, he says. The EPA requires a stack test for all new formulas and each test needs about 200 tons of feedstock. Because of that and other factors, Earthtech does not make its own pellets. Instead, the company offers consultation on processes and equipment for solid biofuels.
 As Earthtech Energy learned, pelletizing agricultural residue isn&rsquo;t always as simple as pelletizing wood. Corn stover is particularly hard to densify because of its light bulk density once it is ground, Zeeck explains. &ldquo;It&rsquo;s kind of a unique animal,&rdquo; he says, adding that a multitude of attempts by numerous companies to pelletize the material have failed. &ldquo;We&rsquo;ve been able to come up with a design that allows a process to pelletize seven days a week, 24 hours a day, 365 days a year, which is really what is needed, especially in liquid fuels and electric utility industries,&rdquo; he explains. &ldquo;They need a product that&rsquo;s at their door seven days a week, 24 hours a day.&rdquo; The company&rsquo;s proprietary process also makes particle sizing customization possible, which is crucial for a consistent quality parameter, he adds.
 Lagging Behind
 Even with such efficient systems available, the U.S. has yet to realize a substantial uptake in the pellet market beyond residential use. Europe has the most extensive industrial and commercial pellet use and Asia is following suit. &ldquo;There is very little commercial or industrial use of pellets in the Americas,&rdquo; Brown laments, adding that the U.S. government incentives currently favor liquid biofuels over other biomass applications. &ldquo;There seems to be very little help in the biomass area and until that attitude changes; until natural gas triples its current pricing, there probably won&rsquo;t be much commercial or industrial pellet use. So I don&rsquo;t see a big need for agricultural pellets.&rdquo;
 Mast echoes the complaint about meager government investments of both money and effort, saying the lack of a solid biofuels infrastructure is the U.S.&rsquo;s shortfall, stemming from resistance to promote them on a government level. &ldquo;There is huge potential in solid biofuels but also some yellow flags that need to be addressed [including] maintaining commodity pricing, EPA testing, service centers and certification of products,&rdquo; he says, adding that it will take more than just one person or company to establish the necessary infrastructure.
 But in the meantime, slow progress is better than none and more feedstock options could help develop that infrastructure and increase pellet use in electrical and thermal applications. Infrastructure is not so much an issue with corn stover pellets, as they can use existing storage and transportation means, Zeeck says. &ldquo;Once this product is pelletized, that allows easy transportation through existing corn grain infrastructure systems,&rdquo; he says.
 An increase in biofuel facilities will increase demand for pellets from both wood and agricultural feedstocks, and the supply needs to be closely evaluated and reviewed, Zeeck cautions. He adds that Pellet Technology evaluates projects on a case-by-case basis to determine which feedstock is appropriate.
 While residential users would undoubtedly see more benefits with wood pellets because of their higher Btu value and less ash, industrial users will want to weigh those factors against the cheaper cost of crop residue pellets, Brown says. &ldquo;You&rsquo;re going to have to buy ag pellets at &lsquo;x&rsquo; amount cheaper to justify higher ash and lower Btu.&rdquo;
 It&rsquo;s clear that pellets made from wood and those from crop residue take turns leading the race to an efficient and desirable feedstock, but they seem to finish neck and neck. &ldquo;There are a lot of positives both ways,&rdquo; Zeeck says. Author: Lisa Gibson Associate Editor, Biomass Power &amp; Thermal &nbsp;(701) 738-4952 <a href="mailto:lgibson@bbiinternational.com">lgibson@bbiinternational.com</a>

MILLING AROUND: While pellet mills are generally similar, the die and feed systems vary when making pellets from crop residues versus wood. 

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RIPPED TO SHREDS: The front-end system for a crop residue pelleting facility requires the use of shredders to rip up bales of crop residue before they are pelletized. 

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PELLETIZING PRACTICE: Pellet Technology designed its proprietary pellet system specifically for crop residue because the company says it is more  abundant, cheaper and requires less manpower to harvest.


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While wood and crop residue pellets have largely the same end uses, vast differences surface in comparing their energy content, feedstock pricing and production components.

Pellet Ingenuity

From sewage sludge to food waste to grass clippings, it seems every organic waste stream under the sun is or has been a potential candidate for anaerobic digestion (AD). The whole process isn&rsquo;t as simple as dumping any amount of manure or food waste into a pit, however. Adequate ratios and the right mix of each feedstock must first be determined in order for a digester to achieve maximum performance.
 Researchers today are working to determine what that recipe is, and how AD systems can be improved and optimized to generate the most energy while allowing for flexibility in feedstock input capabilities, including the use of cellulosic biomass such as crop residue.
According to Jun Zhu, professor of renewable energy and environmental engineering at the University of Minnesota , there are issues associated with using&nbsp; manure alone for AD, due to its low carbon to nitrogen (C/N) ratio. Introducing crop residues into the mix can not only enhance methane production, but at the same time reduce the volume of residue materials for disposal, he says.
 Zhu&rsquo;s conclusions were determined through experiments with three crop residues&mdash;corn stalks, wheat straw and oat straw. When added to swine manure, all increased the total daily volume of methane gas production, though corn stalks performed the best, followed by oat straw. The only preparation done to any of the feedstocks was the chopping of the straw to allow it to be passed through a 40 mesh sieve, which has 40 wires per inch.
 Zhu says the optimum amounts of crop materials added to swine manure were determined by the desired C/N ratios of the mixture, but the ratios change with the amount of manure&mdash;the nitrogen source&mdash;and each type of ag residue&mdash;the carbon source. The importance of getting the C/N ratio right is that the microbes that eat the substrates, or feedstock, need a sufficient concentration of each to achieve optimum growth for the digestion process, hence producing the most methane in the shortest period of time.
 &nbsp;Typically, somewhere between a 16-1 to a 30-1 C/N ratio is the AD microbial sweet spot. &ldquo;We tested C/N ratios of 16-1, 20-1, and 25-1, and found that 20-1 was the best,&rdquo; Zhu says.
 There are at least two characteristics of these feedstocks that make them perform better than wheat straw, Zhu says. &ldquo;Since wheat straw has significantly higher carbon content than corn stalks and oat straw&mdash;46 percent versus 39 percent&mdash;the quantity of wheat straw added is less than those of corn stalks and oat straw,&rdquo; he says. The quantity reduction for wheat straw means a reduction in the amount of easily degraded materials&mdash;or food&mdash;for digestion, hence resulting in reduced biogas productivity.
 The second reason is because crop residues are primarily composed of cellulose, hemicelluloses and lignin, among which lignin is the least degradable material in AD. This is due to the shielding effect of lignin resulting from the intense cross-linking with cellulose and hemicelluloses. &ldquo;As such, crop residues with higher lignin content will limit the degradation of such fibers,&rdquo; Zhu explains. &ldquo;According to [information published by academics] the lignin content in wheat straw, corn stalks and oat straw is 18, 8.4, and 13 percent, respectively. The high lignin content in wheat straw makes its sugars more difficult to use by microbes than that of the other two residues, leading to lower productivity of biogas and methane. Interestingly, the lignin content of these crop residues appears to well explain why corn stalks performed the best in biogas and methane production, followed by oat and wheat straws.&rdquo;&nbsp;
 While adding crop residue to a digester may seem like a simple concept, it isn&rsquo;t that easy, as most digesters on the market today are traditional liquid-state digesters and are not designed to handle more than 15 percent solids. G&uuml;nther Bochmann, a project manager at the Biogas Research &amp; Consulting Group in Austria, says he thinks the biggest factor in utilizing ag residues or energy crops in livestock AD systems is process engineering. &ldquo;Here, a lot of mistakes can be done,&rdquo; he says.
&ldquo;Some plant manufacturers think they know everything, and that all plants match to every substrate.&rdquo; A researcher at Ohio State University is taking AD system engineering to a new level, by developing a (patent-pending) AD technology that integrates a traditional liquid anaerobic digester with a solid-state anaerobic digester to allow for the expanded use of cellulosic biomass feedstocks such as crop waste and yard clippings, as well as a substantial increase in digester performance.
 A Step Further
 Assistant professor Yebo Li, who works in OSU&rsquo;s Department of Food, Agricultural and Biological Engineering, has more than 15 years of experience with process and system development for the production of biofuels and biobased products. He recently scored a $2 million grant from the state of Ohio&rsquo;s Third Frontier Advanced Energy Program to further develop his system, dubbed integrated anaerobic digestion system or iADs.
 Explaining how the technology works, Li says the effluent from the liquid anaerobic digester (less than 15 percent solids) is mixed with lignocellulosic biomass such as corn stover and yard waste and fed into the dry digester. Before being put into the system, the cellulosic biomass generally needs to be shredded or ground to around 1-inch particle size. &ldquo;The effluent from the liquid anaerobic digester is performed as inoculum and a nutrient amendment for the dry digestion,&rdquo; he says. In other words, the effluent left over from the liquid AD process is used to treat the solid waste in the solid-state digester. &ldquo;Most of the lignocellulosic biomass has a high carbon content, and needs a nutrient amendment&mdash;supplementation of nitrogen.&rdquo;
 AD systems on the U.S. market today can only process up to 14 percent solids compared to Li&rsquo;s, which has demonstrated capabilities of processing from 20 to 40 percent solids, resulting in substantially increased biogas production.
 &nbsp;&ldquo;The finished material of the dry digester is stackable and like compost, and the biogas produced in the solid-state digester can be combined with that from the liquid phase digester to be converted in one combined-heat and-power unit,&rdquo; Li says.
 Importantly, the system allows for the use of various sources of cellulosic biomass such as yard trimmings and crop residue. &ldquo;If we can include lignocellulosic biomass into the digester, it will increase the available amount of feedstocks within a specific transportation range,&rdquo; Li says. Among feedstocks tested in the iADs, crop residue such as corn stover and wheat straw performed better than yard waste, he says. Like Zhu, Li adds that the composition of the cellulosic biomass influences the performance of the digester. &ldquo;High cellulose and hemicellulose content will be beneficial, while high lignin content will have a negative impact,&rdquo; he says.
 Other benefits of the system include the elimination of effluent management, and the solids that are left over in the process can be sold as natural fertilizer.
 In order to demonstrate the technology on a large scale, Li and OSU have partnered with Ohio-based biogas company quasar energy group, formerly known as Schmack Biogas, to install it at one of the company&rsquo;s facilities.
 &ldquo;What we came to realize last year, when Dr. Li approached us about the technology, is that it will increase the feedstock types that we can accept in our systems, and it will pretty much double the energy output of a typical system,&rdquo; says Caroline Henry of quasar. &ldquo;We&rsquo;ll be able to accept cellulosic biomass, which in a regular liquid digester we can&rsquo;t.&rdquo;
 Henry says the initial plan was to install the iADs in its facility in Wooster, Ohio, where the company has an operating digester on the OSU campus, but it will likely be moved to its plant in Zanesville, Ohio, instead. Quasar also has an operating facility in Akron, Ohio, a facility under construction in Columbus, Ohio, and has designed a project for an ongoing five-farm digester project in Rutland, Mass.
 Henry was unsure of the distance from the facility the crop waste could be hauled and remain economical, but says feedstocks typically accepted at quasar&rsquo;s facilities come from a maximum of 60 miles, usually between 40 and 50 miles, to be cost-effective. She says the state&rsquo;s Third Frontier Advanced Energy Program, which is providing the $2 million grant to fund Li&rsquo;s research and quasar&rsquo;s project, will help make that and similar determinations as the technology is commercialized.
 Current plans are to initiate installation of the digester this year, according to Henry, and some of the initial planning and engineering has been done already. When complete, the integrated system will be able to process more than 30,000 wet tons of biomass annually and produce more than 750 kilowatts of electricity.
 Henry adds that crop waste is abundant in Ohio, where quasar has sited all of its facilities. &ldquo;The Ohio agriculture industry produces nearly 5.3 million dry tons of sustainable corn and wheat crop residues annually,&rdquo; she says. &ldquo;That&rsquo;s waste that we can start accepting and using in the iADs.&rdquo; Author: Anna Austin Associate Editor, Biomass Power &amp; Thermal (701) 738-4968 <a href="mailto:aaustin@bbiinternational.com">aaustin@bbiinternational.com</a>

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METHANE BOOST: Adding corn stalks to swine manure produced the most methane per day, compared to oat and wheat straw.

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DIGESTER DEVELOPMENT: Quasar energy group plans to install an innovative AD technology at its biogas plant in Zanesville, Ohio.

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Research shows that codigesting crop residue with manure can boost methane production, and new technology is expanding its use in digester systems.

Codigesting Crop Residues

Eastern China&rsquo;s prime cropland and agriculture-friendly climate make it a great place to farm traditional crops such as wheat, rice, corn and cotton. Is it possible, then, that the region could represent a prime location for centralized power facilities that run on crop residues?
 Apparently so, as numerous plants have sprung up there and around the country, jump-starting a growing market for the raw material. Power solutions provider DP Cleantech has helped establish 25 power plants in China that are currently operating on ag residues, mostly straw from cotton, corn, wheat and rice. Keeping the development alive and speedy, the company is offering solutions for several more similar facilities across the country. DP Cleantech is one of a few engineering, procurement and construction contractors to break into the elusive Chinese bioenergy sector, with an 85 percent market share, and sees almost endless potential for the 800 million tons of agricultural residues produced in the country annually.
 Crop residues in China are traditionally collected and burned in the open, used in animal husbandry or in rural households for cooking and heating. In the past few years, however, centralized power facilities are offering a better, cleaner and more profitable solution for disposing of agricultural wastes.
 Studying the Impact
 &ldquo;The Chinese biomass markets are excelling rapidly such that I think it&rsquo;s realistic to assume that there will be anywhere from 22 to 35 plants contracted to start work this year,&rdquo; says Simon Parker, CEO of DP Cleantech. Besides the 25 operating power plants&mdash;nine 12-megawatt (MW) and 16 30-MW&mdash;the company is contracting 12 more that are under construction currently, along with two 30-MW facilities in active development stages for Zunhua City in Hebei Province and Sihong City in Jiangsu Province, both in eastern China. Those plants are expected to consume around 250,000 tons of local crop residues each year.
 The potential for these facilities, especially in productive, rural areas, is enormous, but will not come without a high cost, according to &ldquo;An economic analysis of using crop residues for energy in China.&rdquo; Additionally, that study says 60 percent of China&rsquo;s crop residues are already used in rural households to replace coal in cooking and heating appliances, and new centralized facilities would cut into that supply. On the other hand, though, they would provide an extra source of revenue for farmers.
 &ldquo;The rural parts of China have been using crop residues for years,&rdquo; says Robert Mendelsohn, study co-author and professor of forestry at the Yale School of Forestry and Environmental Studies. &ldquo;Now there&rsquo;s an opportunity cost where you&rsquo;re taking away from something that already has a use.&rdquo; But Parker says that problem is not one of the main issues DP Cleantech and its partners have faced in establishing centralized facilities. &ldquo;A lot of that fuel is used in rural China and whenever you find a higher-value use for it, that would potentially take away from that other source, but that&rsquo;s not our primary challenge.&rdquo; He also reiterates Mendelsohn&rsquo;s point that as residents of rural China begin to realize higher disposable incomes, household use of those residues decreases, and the fact that farmers are paid for their residues further increases that disposable income.
 &nbsp;Instead, the biggest challenge is collecting the fuel, Parker says. &ldquo;It&rsquo;s quite expensive to collect because there isn&rsquo;t industrialized farming in China in the same way there is in other countries,&rdquo; he explains. The lack of industrial baling machinery means that work has to be done by hand, far less productively than could be accomplished with machinery. Parker says the ag residue harvest machinery sector in China is &ldquo;absolutely negligible&rdquo; and an order for a mere 60 balers would more than double the existing capacity of baling equipment in the country. &ldquo;That&rsquo;s why the price of crop residue is higher than the competing use in households,&rdquo; he says.
 The logistics for that residue supply vary for existing centralized biomass plants, Parker says. Some operate through a middleman who helps harvest residues and then transports them to the collection centers, usually owned by the plant operator. Increasingly common though, is the development of cooperatives to eliminate the middleman and ensure that more of the profit goes to the farmer.
 A Little Figuring
 China contains 96 million hectares (237 million acres) of cropland, most of which is concentrated in the Eastern portion of the country along fertile river valleys, according to Mendelsohn&rsquo;s study, which he cautions is only representative of rural, highly-productive areas in China. Specifically, it revolves around one village: Sunyang Village of Jiangsu Province. The province lies in the northern subtropics along the Yangtze River and belongs to one of the major agricultural production zones of China with prime ag land and rich water resources. &ldquo;We argue that although only a humble starting point, the study makes a serious contribution by providing at least a first estimate of biomass production potential and cost,&rdquo; the authors write.
 Centered on possible carbon mitigation above the baseline already mitigated by replacing coal in household appliances, the study examines using crop residues in a 100-kilowatt trigeneration village facility, as well as a 40-MW centralized electrical plant with commercial or near-commercial technology. The village facility would produce gas for cooking, hot water for heating, and electricity for the grid.
 The study recommends growing wheat and corn to produce the most residues possible, but also takes into account costs and carbon mitigation of wheat and rice residues, as well as growing trees for energy on prime agricultural land. Needless to say, transportation costs are nonexistent with household use of wheat, corn and rice, but jumps to $4.80 per ton for a village trigeneration facility, and $9.60 for a centralized power plant. Transportation costs for wood are just half that, although wood has an added drying and storage cost of $2.70 per ton in both scenarios. &ldquo;Transportation costs are higher for the larger facility because it needs more fuel and therefore the crop residue has to be gathered from a larger circle,&rdquo; Mendelsohn says. &ldquo;We looked at least-cost options for transport.&rdquo;
 The centralized facility would require about 240,000 tons of residues and about 30,000 hectares of cropland. So assuming that 75 percent of the land around the facility is cropland, supplies would have to be drawn from a 10-kilometer (6.2-mile) radius, the study cites. In comparison, 600 tons of crop residues would be necessary for the village facility and, under the same assumption, that could be sourced from a 0.6 kilometer circle around the plant. Parker says most operating centralized biomass power plants in China target an area of about 40 to 50 kilometers, depending of course on the calorific value and density of the fuel.
 But don&rsquo;t jump on the village plant bandwagon just yet. It would possess an electrical efficiency of just 20 percent, 10 percent lower than that of the centralized facility. &ldquo;The additional efficiency gain of the centralized facility outweighs the increased transportation costs compared to the village option,&rdquo; Mendelsohn says.
 Furthermore, using wheat and rice in the village facility would replace 1.6 tons of carbon per hectare and the centralized facility would replace 2.4 tons per hectare. Subtracting the amount already mitigated by household use, that yields a net contribution of 0.2 tons of carbon per hectare and 1 ton of carbon per hectare respectively, according to the authors&rsquo; calculations. For wheat and corn, the net contributions are even greater, at 1 ton for a village facility and 2.2 for the centralized plant.
 Taking costs and carbon mitigation into account, the study found that using wheat and rice residue in a village facility instead of households would come with a marginal cost of $192 per ton of carbon. Wheat and corn in a village facility in lieu of households would come with a marginal cost of $195 per ton of carbon. Figures for the centralized facility are considerably lower, at $77 for wheat and rice and $117 for wheat and corn.&nbsp;
 &ldquo;These do not look like attractive options for China,&rdquo; Mendelsohn says. &ldquo;The current social benefit of removing carbon is estimated to be between $10 and $30 per ton of carbon so spending $77 to $190 per ton is high for the moment.&rdquo;
 In addition to high costs, Bill Holmberg, chairman of the Biomass Coordinating Council, predicts densifying all that crop residue for centralized or village facilities would be a barrier. But on the contrary, Parker says densification is, in fact, not a problem at all, as China is installing more efficient systems that don&rsquo;t require it. Instead, raw residues are fed directly into the systems, completely bypassing the need for energy intensive pelletizing processes. &ldquo;If you can actually take the raw fuel and burn it as is, it&rsquo;s a more efficient system and that&rsquo;s what all the power plants in China are moving toward,&rdquo; he says.
 The Chinese government is pushing the efficient use of centralized systems around 30 or 40 MW, located strategically to prevent transporting the electricity over long distances to reach rural China, Parker says. Thus far, that push has been effective and Parker says the growth rate is explosive, giving way to a rapidly maturing market that is beginning to gain notice from other China-based contractors and developers. Author: Lisa Gibson Associate Editor, Biomass Power &amp; Thermal (701) 738-4952 <a href="mailto:lgibson@bbiinternational.com">lgibson@bbiinternational.com</a>

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Although using crop residues for centralized power facilities in China would bring higher costs than their continued use in households, the prospect has enormous potential that is already being realized. 

China's  Crop Residue  Capacity

Crop residues, such as corn stover (leaves and stalks of corn plants left in the field after harvest), are poised to be a significant source as a feedstock for biofuel production and as biomass for creation of electricity, but prohibitively high collection and transportation costs are often cited as major impediments to completion of projects. Despite these issues, crop residues offer significant benefits as a feedstock. First, crop residues are, as the name suggests, waste that is left over after harvesting the primary crop. This waste can be significant. Corn stover, for example, makes up about half of the yield of a corn crop. Second, use of the crop residue, rather than the primary crop, avoids the food vs. fuel debate. Third, the feedstock can come from a variety of crops (including corn, wheat or sorghum, just to name a few).
 Any biomass project requires a reliable, long-term and economically viable feedstock agreement. To ensure a significant and reliable feedstock supply, developers looking to utilize crop residues must develop close, cooperative-like relationships with local farmers. Project developers often utilize a spoke and hub arrangement for the collection and storage of crop residues. The costs associated with transportation necessitate that the end user (or intermediate collection facility) be centrally located in the heart of a biomass zone. In general terms, transportation of crop residues in excess of 100 miles will likely be cost prohibitive.&nbsp;
 Availability and Pricing
 Since crop residue is a byproduct of the primary crop, the quantity available from any given grower is dependent upon the success of the harvest.&nbsp; Further, a certain amount of crop residue must be left on the ground to ensure soil health. The amount of residue that must be left behind is somewhere between 40 percent and 70 percent, depending on the type of crop and yield, topography, climate, management and&nbsp; tillage practices, soil type and other factors. Further, many growers find that leaving the entire residual amount in the field every few years or so offers additional soil enrichment benefits. Farmers must also factor in crop rotation (some crop residues yield more biomass than others), delay in fall tillage, erosion, decreased habitat for wildlife (especially game birds), soil nutrient issues and the alternative uses of crop residue, such as feed for livestock, when considering the amount of feedstock the farmer can supply and the purchase price. A 2008 report by the Biomass Research Development Board estimated that farmers will need to receive between $40 and $60 per dry ton of crop residue biomass. Densified crop residue would likely be closer to $60, if not higher.&nbsp; Further, issues such as baling and hauling responsibilities must obviously be factored into pricing.&nbsp;
 Collection
 Satellite processing may save costs by allowing certain preprocessing of crop residue feedstock to occur before transportation to the biorefinery or conversion facility.&nbsp; Drying and densification of the feedstock with mobile equipment that can be located close to the feedstock can reduce transportation costs. The establishment of regional processing centers that aggregate, process, store and supply biomass to the region could also provide significant cost reductions. In addition to drying and densification, regional aggregators could perform other preprocessing procedures to homogenize feedstock from several sources. Project developers often find that using a combination of crop residues offers significant benefits. For example, combining wheat straw and corn stover creates a higher yield biomass. Further, having a second source of feedstock protects the end user against crop failure and provides the logistical benefits associated with a broader harvest window, such as decreased storage costs. Larger developers may be able to decrease expenses associated with having multiple feedstock agreements. The aggregator, given its size, may be able to provide a more reliable supply, as a result of the large quantities it can handle.
 Denser fuel pellets can offer some cost savings in transportation and storage but the drawback is that often the pelletization process results in feedstock loss. At the same time, the storage and transportation costs of denser pellets are significantly lower than other options, such as baling. Corn stover is typically compacted into large, round bales on the farm. The cost of a round baler is actually significantly less than the cost of a standard small, square baler. Further, developing synergies between harvest and transport, for example by using self-compacting wagons for both harvesting and transportation, may also provide cost savings.
 Depending on the size of the end user and the feedstock involved, storage may be needed anywhere from six months to one year. In addition, storage issues will depend largely upon the climate. In the Midwest, crop residue must weather ice, rain, snow and humidity. Wrapping large, round bales with mesh offers some protection from the elements. Water tends to bead up and roll off the mesh-wrapped bales. If the bales are stacked, some of this water repellant effect is lost, so a tarp over the top bales may add additional protection. The mesh wrap and tarps obviously add additional cost, but the avoided feedstock loss may offset the costs. Indoor storage is another option, although that usually results in more densely packed bales, which increases the risk of loss due to fire. Improper storage techniques can result in potentially significant biomass loss. The longer dry biomass sits, loss due to aerobic biodegradation will occur. If the biomass gets wet, you will also have loss, including methane. These emissions, when added to the energy expended in harvest, collection and transportation can result in significant greenhouse gas emissions. In addition to feedstock loss and emissions, wet bales can heat up to the point that fire becomes a realistic concern.
 Transportation and Delivery 
 Transportation is arguably the single most important cost factor in the entire biomass supply chain. The transportation costs can make or break a project&rsquo;s margin. Transportation cost is directly associated with the form of feedstock, with pellets, bundles, bags and bales offering more efficiencies than loose feedstock. Transportation may occur in stages, such as from field to aggregator and then aggregator to end user. Transportation by tractor-trailer is most common, although train or water as the primary transport mechanism should also be considered.&nbsp;
 Delivery schedules must be negotiated and will depend upon the requirements of the purchaser, its storage capacity and the type of feedstock. Further, if large round bales are being delivered, the receiving area must be large enough and organized in a way that avoids truck congestion. The parties involved should consider how emergency deliveries will be handled and whether either party has the right to cancel or postpone a regularly scheduled delivery. Further, the time of day during which delivery will occur must be considered so that deliveries do not disrupt operations. Depending upon the facility design, the type of feedstock and the storage capacity of the facility, deliveries may be to a storage area or a staging area. The facility may want some flexibility in delivery location depending upon the time of year or other factors, such as facility maintenance or use of a secondary feedstock.&nbsp;&nbsp;&nbsp;
 Conclusion
 Because crop residue is a byproduct of the grower&rsquo;s primary business, it is not often the focus of a grower&rsquo;s attention and business plan. As such, growers may be less willing to make changes to their underlying business and practices simply to develop a supply of crop residues. Therefore, purchasers of crop residues must be willing to work with growers to determine what collection and transportation options will work best. Depending on the underlying feedstock and its geographic location, different collection and transportation techniques may be needed. Author: Kate Bechen Attorney, Michael Best &amp; Friedrich LLP&rsquo;s Energy &amp; Sustainability Industry Group <a href="mailto:klbechen@michaelbest.com">klbechen@michaelbest.com</a> (414) 225-4956

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Bioenergy producers looking to purchase crop residues must understand and be willing to work with farmers to determine the most viable options for harvesting the feedstock.

Crop Residues: Issues Relating to Collection, Transportation and Storage

On a January morning in Soperton, Ga., farmers mingled with academics and investors in a large steel-beamed barn, sipping coffee and brainstorming biomass. As they chatted about the search for clean energy, thermometers registered a rare (for south Georgia) 27 degrees, at-the-pump gas prices hovered just under $3 per gallon and deepwater oil drilling lawsuits dotted the headlines. But among those gathered for Repreve Renewable&rsquo;s first-ever field day, optimism was palpable.
 A joint venture between sod entrepreneur Phillip Jennings and publicly traded textile company UNIFI Manufacturing Inc., Repreve holds the exclusive license to Freedom Giant Miscanthus. A handful of people&mdash;among them Jill Stuckey, director of the Georgia Center of Innovation for Industry&mdash;believe that this particular strain of miscanthus could be America&rsquo;s most promising energy solution.
 &ldquo;This is all about tons per acre per year,&rdquo; Stuckey says, adding that with the resources used to grow those tons&mdash;the water and fossil fuels&mdash;and planting and harvesting costs, Freedom could yield more tons per acre with less inputs than other energy crops, she says.
 A perennial grass native to the Asian Pacific region, giant miscanthus has been a popular source of energy in Europe for decades. In addition to copowering the largest coal-fired generator in the U.K., it&rsquo;s used extensively in Denmark and Sweden. Worldwide, at least a dozen countries are experimenting with miscanthus as a premium biomass feedstock.
 &ldquo;If you&rsquo;re looking for a crop that reaches heights of 10 to 12 feet and you don&rsquo;t want that 15-year lag time, this is it,&rdquo; says Brian Baldwin, a researcher with Mississippi State University&rsquo;s Agricultural and Forestry Experiment Station and the developer of the Freedom strain. &ldquo;In every test I&rsquo;ve performed or read about, the yield on giant miscanthus doubles that of switchgrass.&rdquo;
 There are other strains of miscanthus, but in the sandy soil and subtropical climate of the Southeastern U.S., Freedom has higher yields and dried quicker&mdash;a bonus because dry harvests are cheaper to transport and process. In its best year, Baldwin&rsquo;s oldest test plot yielded 20 tons an acre. Twenty-five tons is enough energy to power two U.S. households for an entire year.
 Giant miscanthus has additional advantages, as well. A single planting yields about 20 years of harvest, the species thrives in and even enriches low-grade soil, it increases biodiversity by providing animal habitat, and it tolerates drought, cold and excessive rain.
 Despite its benefits, U.S. growers have plenty of questions.
 &ldquo;People contact me asking if equipment even exists to harvest such a tall grass,&rdquo; Jennings says. &ldquo;Part of why we set up this field day is to show people how to plant giant miscanthus, and that yes, it can be harvested, it can be baled.&rdquo;
 Giant miscanthus reproduces via rhizome division so it won&rsquo;t become an invasive species the way that fertile-seed strains of miscanthus would. It also means giant miscanthus is more difficult to plant. &ldquo;We had field demonstrations, we had presentations from big equipment people, reps from companies like AGCO and Case IH,&rdquo; Jennings says. &ldquo;And we have video. So now no one can say, &lsquo;you can&rsquo;t get that out of the field.&rsquo;&rdquo;
 Developing a Market
 Many of the farmers and investors who attended the field day shared a more immediate concern. &ldquo;I&rsquo;m interested in planting our old timber land with miscanthus,&rdquo; says Wade Reese, a farmer from Whitesville, Ga., who attended the event. &ldquo;But who&rsquo;s going to buy it?&rdquo;
 Even Jennings admits that the industry has a lack of &ldquo;off-takers,&rdquo; or external buyers. &ldquo;But we&rsquo;ve come a long way in a short time,&rdquo; he says. &ldquo;The field day was about getting these concepts together&mdash;farmers, government, financiers. We continue to put money into commercializing this thing. We know a lot more than we knew a year ago.&rdquo;
 And a growing collection of investors and entrepreneurs refuse to be deterred.
 &ldquo;We are making this economically viable,&rdquo; says Bruce Meyer of Georgia Clean Energy Solutions, who works as a consultant and liaison between growers and end users.
 &ldquo;End users go beyond utility companies,&rdquo; he says. &ldquo;They include any energy-intensive business that runs solid-fuel boilers. But for the industry to view this as a viable fuel there has to be a reliable supply chain. Farmers have to organize and make a commitment to plant enough acres each year to meet a supply contract. And the utility needs to be willing to enter into an eight- to 10-year contract. Right now in the state of Georgia, we&rsquo;re spending huge amounts buying coal from other states. We could keep that money in-state and even have a multiplier effect, while reducing our carbon footprint.&rdquo; &ldquo;The end users are ultimately everybody here,&rdquo; Baldwin says.
 Government Support
 For now, the industry&rsquo;s success is partially dictated by government policy. Until 2012, the federal Biomass Crop Assistance Program will offer matching payments and establishment and annual payments to approved growers.
 &ldquo;We have government incentives,&rdquo; says Craig Patterson, Repreve&rsquo;s manager of commercial operations. &ldquo;These are not long-term subsidies. If you want to take advantage of BCAP, the time is now.&rdquo;
 &nbsp;&ldquo;It all comes down to government policy,&rdquo; says Chase Kasper, director of technology commercialization at Mississippi State University. &ldquo;Do we want to drill off our shores? Do we want to burn clean fuel and get off foreign oil? Once the government supports the initial investment, the market accepts it, and it takes off on its own.&rdquo;
 &ldquo;If you look at individual clean-energy mandates state by state, they reach their peak in the early &rsquo;20s. 2022 is the date of the federal mandate,&rdquo; says Ronald Smith, CFO of both UNIFI and Repreve. &ldquo;Right now we have significant demand and not a lot of supply. We&rsquo;re participating in the market at a premium.&rdquo;
 Stucky agrees.
 &ldquo;The infrastructure is already in place,&rdquo; she says. &ldquo;I&rsquo;m dealing with seven companies right now that turn biomass into transportation fuel. These systems can work with any kind of dry biomass, and they are actively seeking suppliers.&rdquo;
 UNIFI considers itself a socially responsible operation, but Smith is upfront about the company&rsquo;s primary interest&mdash;Freedom&rsquo;s eventual financial payoff.
 &ldquo;UNIFI is a publicly traded company,&rdquo; he says. &ldquo;So if we&rsquo;re participating in this, we have to believe in the return. We made this investment because the literature strongly suggests that perennial grasses are going to support world energy demands of the future. And among perennial grasses, Freedom is the best option out there.&rdquo; Author: Cheree Franco Writer, Office of Agricultural Communications, Mississippi State University <a href="mailto:cfranco@ext.msstate.edu">cfranco@ext.msstate.edu</a>

GIANT GRASS: Freedom Giant Miscanthus was developed at Mississippi State University and is licensed exclusively to Repreve Renewables, a joint venture between sod entrepreneur Phillip Jennings and publicly traded textile company UNIFI Manufacturing.

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ROOTING IN: Freedom Giant Miscanthus reproduces via rhizome division. Freedom field day participants learned about planting procedures and handled the rhizomes. 

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Miscanthus field day attendees learn how to plant, grow and harvest the perennial grass, a popular source of energy in Europe that has great potential in the Southeast U.S.  

Field Day Explores Energy Crop Production 

Solazyme Inc. announced the hiring of Mark Warner as senior vice president of engineering. Warner joins Solazyme from Harris Group where he was senior vice president of process industries. In his new role with Solazyme, Warner is responsible for the design and construction of Solazyme&rsquo;s renewable oil and bioproducts production facilities worldwide. Before Harris Group, Warner was responsible for the design and construction of one of the largest biodiesel production facilities in the U.S., Imperium Renewables&rsquo; Grays Harbor facility, as vice president of engineering for Imperium. Warner is a professional engineer with 26 years of broad-ranging business, technical, and management experience in the building and development of renewable energy projects and chemical plant operations.
 OPW Engineered Systems, a division of OPW Fluid Transfer Group, offers its trademarked Endura Series Dual Split Flange Swivel Joint specifically designed to transfer acids, solvents, petrochemicals and other toxic fluids. With no ball bearings to remove, Endura Swivel Joints feature reduced maintenance time and costs&mdash;simply unbolt the sealing flanges to access the seals. The Endura&rsquo;s bearing module also allows for easy replacement and rebuild options. Because of its easy maintenance, Endura Swivel Joints feature a longer life and lower total cost of ownership when compared with other available swivel joints. One of the most distinctive design features of the Endura Swivel Joint is its redundant sealing, meaning that it incorporates a main seal, back-up seal and an environmental seal. If the main product seal ever leaks due to normal wear, the back-up seal contains the fluid. OPW Endura Swivel Joints are available in 2, 3 and 4-inch sizes. Standard seal materials include Buna-N, fluorocarbon, PTFE, EPDM and Neoprene.
 BBI International and NEAtech announced in January a joint venture to develop a new international consulting service called BBI Consulting Services. Utilizing existing resources, the service will allow BBI International and NEAtech to deliver additional expertise to customers who are conceptualizing, developing or refining their bioenergy projects. By combining their experience and BBI International&rsquo;s broadcast spectrum, the new venture will have the ability to offer a breadth of bioenergy consulting to thousands of companies and organizations worldwide, as well as state and federal departments in the U.S. Leading the consulting group are two experienced bioenergy consultants, Rafael Nieves and Mark Yancey of NEAtech. Nieves has worked in the bioenergy sector for more than 28 years and has experience managing international bioenergy projects. Yancey has 35 years of experience in the fields of bioenergy and environmental engineering.
 Elm Street Ventures, an early-stage venture capital firm based in New Haven, Conn., has provided financing for the formation of a new company, P2 Science, which aims to usher in a new class of high-performance surfactants, called C-glycosides (CGs), derived from renewable feedstocks. P2 Science will utilize a patent-pending technology developed by Patrick Foley at Yale University&rsquo;s Center for Green Chemistry and Green Engineering. Foley joined P2 Science as the company&rsquo;s chief scientific officer. The biobased CGs will be positioned primarily as co-surfactants to enhance the performance properties of primary surfactants that exist in the market today, such as linear alkybenzene sulfonic acid, sodium alkyl sulfates, alcohol ethoxylates and other similar products.
 Bradley J. Bell has joined Virent&rsquo;s board of directors. As part of his responsibilities, Bell will chair Virent&rsquo;s audit committee and serve as a member of its compensation committee. Bell served as executive vice president and chief financial officer (CFO) of Nalco Co. from October 2003 through 2010. For six years prior to joining Nalco, Bell was senior vice president and CFO of Rohm and Haas Co., now part of Dow Chemical. His previous experience included executive roles at both Whirlpool Corp. and Bundy Corp. Earning a bachelor&rsquo;s degree in finance, Bell graduated with high honors from the University of Illinois. He holds a master&rsquo;s degree in business administration, conferred with distinction, from Harvard University Graduate School of Business.

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BIODIESEL BELIEVER: Community Fuels CEO Lisa Mortenson says her plant is expanding its infrastructure and hopes to hit full production capacity this year. 

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AMERICAN FUEL: Ryan Seacrest is host of Fox's American Idol, which recently started its 11th season with a bus tour fueled by biodiesel. 

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MARKETING SUCCESS: Beth Mathias, who joined Pacific Biodiesel in August as a marketing associate, was recently promoted to be the firm's marketing director. 

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FINANCES FIRST: Kimberly Vanderlaan was recently hired by Pacific Biodiesel as its chief financial officer. 

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The National Biodiesel Board recognized six biodiesel champions at the annual Eye on Biodiesel awards presentation at the National Biodiesel Conference &amp; Expo held recently in Phoenix.
 &ldquo;The biodiesel industry is blessed with many champions and true believers,&rdquo; said Joe Jobe, CEO of the NBB. &ldquo;Each of these winners has helped carry the biodiesel torch, fostering understanding, mentoring others and encouraging broader use of a cleaner burning, sustainable fuel.&rdquo;
 The NBB's 2011 Eye on Biodiesel award categories and winners:
 Inspiration: Deer Valley Unified School District. This Arizona school district began its biodiesel program in 1999, long before the fuel was a known quantity. Now the district uses biodiesel blends from B5 to B50 in all 236 school buses. Transportation Director Nick Portonova says he routinely takes calls from across the nation, helping answer questions that other fleets have. Portonova added the biggest benefit of using biodiesel is the healthier choice they are making for their students.
 Industry Partnership: Nebraska Soybean Board. The board has been a leader among state soybean organizations in its support of biodiesel. Staff and farmer leaders participated in Bioheat tours in Boston and New York and hosted an oilheat industry delegation. They introduced new state soybean organizations to the biodiesel industry and continue to support the industry through major investments in biodiesel projects.&nbsp;
 Influence: City of New York, New York City Department of Sanitation, and New York City Department of Parks and Recreation. N.Y. Mayor Michael Bloomberg signed landmark air quality legislation that includes a provision requiring all heating oil sold within the city to contain at least 2 percent biodiesel by Oct. 1, 2012. By moving to environmentally friendly Bioheat, the City will annually replace approximately 20 million gallons of petroleum-based heating fuel. The sanitation department uses biodiesel blends of B5 to B20 in its 4,000 diesel vehicles, which include many large trucks and snow plows. Parks and recreation has operated its diverse fleet of vehicles as well as more than 130 buildings on B20 to B100 blends since 2006. Because of these two departments&rsquo; commitment to cleaner fuels, New York City is the nation&rsquo;s largest municipal user of biodiesel.
 Impact: Ford Motor Co. As a leader in the automotive industry, Ford has again stepped to the forefront with its support and promotion of biodiesel. The full line of 2011 Ford Super Duty diesel trucks is approved for B20 blends and features a large silver B20 emblem on the side. This continued support leads to greater consumer confidence in biodiesel.
 Initiative: NBB Grassroots Team Captains. The NBB grassroots initiative empowers biodiesel industry leaders and supporters to influence public discussion. The successful program centers on the team captains who carry out targeted objectives in their states. Since November 2009, the team captains have rallied contacts in key states to support the push to extend the biodiesel tax incentive. In that time, their volunteer efforts led to more than 125 earned media placements, successful sight visits, and thousands of calls and letters to elected leaders.
 Innovation: Disneyland Resort. The resort is a national landmark, where efforts to reduce emissions through biodiesel use displace 200,000 gallons a year of petroleum diesel. The innovative solution saved its iconic steam trains and is a shining example of biodiesel use.

The â€œEye on Biodiesel Awardsâ€� honor champions in the biodiesel industry.


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Deer Valley Unified School District has used biodiesel in its fleet since 1999.


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Highest biodiesel honors awarded at national conference

We live in a world of cautious, canned statements where people are hesitant to tell you what they really think about the issues. And then there&rsquo;s Peter Brown.
 In case you don&rsquo;t know who he is, Brown is co-founder of International Procurement Tools, a company that says if you have a permitted site and a building with a concrete slab, it will build you a 60 MMgy pipe-to-pipe biodiesel processing unit for $6 million. That&rsquo;s 10 cents per gallon of installed capacity. The systems are based on the horizontal waterless process developed at the University of Kassel in Europe, the same technology on which Greenline Industries, a biodiesel hardware vendor that went out of business two years ago, based its equipment.
 I had a long conversation with Brown, whose brother started Greenline Industries. While Brown was never officially employed by Greenline, he handled public relations for the company at arm&rsquo;s length, along with international sales. In our conversation, which can be read in the Q-and-A on page 22, titled, &ldquo;Whatever it Takes,&rdquo; Brown discusses what happened to Greenline Industries, and how lessons learned from that spectacular failure will help keep his new company from making similar mistakes.
 &ldquo;I had a bird&rsquo;s eye view and a worm&rsquo;s eye view of the company,&rdquo; Brown told me. &ldquo;You and I sat in that press conference at the 2009 National Biodiesel Conference and, to me, that was probably the highlight and the lowlight of the company. They lost focus at that point of what they were up to. They had gone through a very successful round of financing and picked up $20 million, and by then they did what every single dot.com in Silicon Valley did&mdash;they started spending the money on things that were not relevant to the business. They forgot that what they were was a hardware vendor.&rdquo;
 Brown also offers a broader perspective on some serious, important issues facing the biodiesel industry today, such as how to increase U.S. domestic demand for biodiesel, what really happened to the German biodiesel industry and market, where he sees the most promise for biodiesel activity globally, and much more.
 I hope you find Brown&rsquo;s straight talk as refreshing as I do.

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Straight Talk

If you are involved in a new renewable energy company, you know it requires many resources, not the least of which is money. Prior to project financing, you have to rely on selling stock or debt of the company to fund the company. Whether you rely on family and friends, angel investors, venture, or some other avenue to raise your initial capital, you need to be aware of the many potential issues when offering and selling securities and be armed with information to deal with any such issues.
 A security is more than just common stock. While the formal definition is lengthy and technical, a security is basically any investment of money or services into a company or project where investors are relying on someone else (typically the company, but can be a partnership or joint venture) to produce profits in which such investors will share. Therefore, even money from your mother, brother and friends for founders stock and one-page promissory notes is a security and subject to these regulations.
 All securities issued by a company, in whatever form, must be registered with the U.S. Securities and Exchange Commission unless either the securities transaction is, or the securities themselves are, exempt from registration. The federal securities laws and SEC rules provide several specific exemptions from registration. The most widely utilized exemption from registration is what is known as the private placement exemption, or Reg D exemption, which is the focus of the remainder of this article. In addition to the private placement exemption, there are several additional exemptions described in the federal securities laws and SEC rules that are not discussed in this article, but may be available in specific situations.
The Reg D exemption is available to companies selling securities in private transactions to accredited investors.
 For an offering to qualify as private, a company may not use any form of general solicitation or advertisement to communicate the offer to potential investors. Companies may, however, hire licensed broker-dealers to assist in private transactions, which may help a company connect with potential investors. Using unlicensed broker-dealers, called finders, is very problematic and their involvement can often make an exemption unavailable. In our current social environment, which is becoming heavily influenced by social media&mdash;think Twitter, LinkedIn and Facebook&mdash;companies may be tempted to communicate offers to purchase securities in this way. Unfortunately, the use of social media may be deemed to be general solicitation, and may violate private placement rules. At this time, there is little judicial guidance regarding the use of social media for securities offerings, but companies should avoid social media as an avenue for offering securities. Other things to avoid are mailings to or meetings with people with whom the business principals do not have an pre-existing business relationship. For example, a company that is developing a new biomass harvester cannot send letters to every implement dealer in the area asking for an investment.
 The types of investors that qualify as accredited investors most commonly include a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; a director, executive officer or general partner of the company; a natural person whose individual net worth, or joint net worth with that person&rsquo;s spouse, exceeds $1million (exclusive of primary residence) at the time of the purchase; a natural person with income in excess of $200,000 in each of the two most recent years (or $300,000 joint income with such person&rsquo;s spouse); any trust with total assets in excess of $5 million not formed for the specific purpose of acquiring the securities; or an entity in which all the equity owners are accredited investors as defined above.&nbsp;
 In addition to the federal securities laws, companies issuing securities are required to comply with state securities laws, commonly called blue-sky laws. Securities issued pursuant to Reg D exemptions are considered covered securities and are not subject to registration in the states as long as the company complies with the notice provisions of any and all states in which securities are sold, not just the state in which the company conducts its operations. States&rsquo; notice requirements typically require a company to file a notice of sale with the state within a set amount of time after the first sale of securities in that state.
 The initial financing of a company can be very exciting, but can also be filled with pitfalls. It is important to be well advised regarding the potential risks when formulating a financing plan upfront, and to stick to that plan.
&nbsp;
Todd A. Taylor and Zachary D. Olson Attorneys, Fredrikson &amp; Byron P.A. <a href="mailto:ttaylor@fredlaw.com">ttaylor@fredlaw.com</a> <a href="mailto:zolson@fredlaw.com">zolson@fredlaw.com</a>

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Using Private Placements for Initial Financing

The Sierra Club's David Brower once said, &ldquo;There is no business to be done on a dead planet.&rdquo; Some in the biofuel business may agree. The challenge in biofuels, however, is that they are also a business. And so we might add this corollary, &ldquo;There is no business to be sustained without monitoring gross margins.&rdquo;
 Gross margins can be established to reflect business metrics that act as a barometer of a business&rsquo; health and competitiveness when compared to the rest of the industry. Increasingly the biofuels industry is finding itself like any other. Despite a huge potential global demand for the fuel, if the processing costs of a business become too high and cannot be passed along to the ultimate buyer (exclusive of blending and tax credits), then that biofuel business is likely to be unsustainable.
 In preparing a biofuel business for funding, we explore management&rsquo;s thinking and pinpoint the strengths and weaknesses of their business plan. The SWOT is a tool we include in every business review. Locating the strengths, weaknesses, opportunities and threats, provide valuable insights, but no measurable tools to run or improve the business.
 The biofuel industry is being impacted by the speed of communication and innovation at least as much as other global industries. Those increases are forcing changes in how it will manage information. Success there will mirror their financial successes. To address the speed of change up front, we recently revised our review process to include discussion about monitoring ongoing pricing and profitability. In essence, we are replicating the system advocated by John Mullins and Randy Komisar in their book, &ldquo;Getting to Plan B: Breaking Through to a Better Business Model.&rdquo;
 Komisar, a partner in the legendary venture capital firm Kleiner Perkins Caufield &amp; Byers in Palo Alto, Calif., began noticing that most original business plans failed. The home run ideas that produced big, sustainable profits resulted from reworking a core innovation. The breakthrough of Plan B often identified a new niche or totally different application. Plan B usually proved to be the better investment.
 The gross margin model supports the success of Plan B. It represents the &ldquo;best of&rdquo; in four elements of a process of getting to Plan B. There are two types of models to explore. The analog is a broad industry approach to a market. Comparing say, the iPhone and the Droid benefits might be the analog for your new smartphone concept. The antilog represents those company approaches and new solutions that were risky&mdash;but worked. A good example here is Netflix, which is shattering the model for delivery of timely home video entertainment. Considering your analog and antilog models unearths new thinking and insights about your processes and customer behavior. Additionally though, it spurs the iterative steps of rethinking a product to distinctiveness.
 The assumptions about industry standards and customer habits give way to the leap of faith. This is the third element. It tests a new idea and leads to its refinement. Your revised approach works. It doesn&rsquo;t. Or, it&rsquo;s back to the drawing board.
 The process of refinement continues through to the creation of the fourth element, dashboards. Dashboards in themselves represent the process of developing useful metrics for increasing gross margins. Answers that surface on your dashboard might address the following questions. How low can we drive our costs? How high can we price our products? Are there other ways to manage the margins of each of our products? How can we adjust our gross margin model to give us a competitive advantage in ways that others in the industry lack?
 An industry comprised of many engineers can anticipate flexibility, adaptiveness, and precision. What is new here is the deliberate driving of process technologies into actual cost advantages. Furthermore, your company is distinguishable for its value-adding competence for regular, measurable innovation and quality improvement.
 It may be enough to simply live another day to supply the market with green fuels and byproducts. For those who want more, correlations to the gross margin represent quality and business sustainability. That may be what you need to identify your own Plan B.
&nbsp;
Robert M. Bailey Biofuel Financing Advisor/Broker, Trusted Advisory (646) 472-5213 <a href="mailto:rbailey@trustedadvisory.com">rbailey@trustedadvisory.com </a>

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Deliberately Profitable Biofuel 

The U.S. is recovering from the financial downturn, but minimizing costs is still a primary concern for those considering new biodiesel projects. A strategic alliance formed between California-based R.C. Costello &amp; Associates and Texas-based Certified Technical Services aims to make project development convenient and less costly for biodiesel producers.
According to Rocky Costello, president of R.C. Costello &amp; Associates, customers can save up to 15 percent on construction rates by purchasing a skid-mounted biodiesel facility. This is because shop rates are significantly lower than field-construction rates. Certified Technical Services&rsquo; location also means that project developers can expedite a project during winter months when weather conditions in northern states may cause costly construction delays.
 The companies have previously worked together designing and building numerous skid-mounted systems for biofuels, chemical and the oil and gas industries. The strategic alliance simply formalizes the relationship.
 Costello notes that there are several reasons his engineering company has chosen Certified Technical Services as its partner. &ldquo;Their facility is a one-stop-shop in that they manufacturer vessels and skid mounted process plants,&rdquo; he says. &ldquo;They also have extensive knowledge in the proper layout of equipment and instruments and controls. They have such a good background in the field, they&rsquo;ve done so many skids, it&rsquo;s our benefit to use them because we don&rsquo;t have to go to multiple vendors to get a complete process plant.&rdquo;
 Under the strategic alliance, R.C. Costello &amp; Associates will complete the engineering for projects developed under the alliance, while Certified Technical Services will construct facility and handle design and construction of the skids.
 In addition to offering greater affordability, Costello notes that there are several other advantages of skid-mounted processors. When working to expand or modify an existing facility, skid-mounted systems allow for a reduced interruption to existing operations. Since initial testing can be done in the warehouse before the system is shipped, the time needed for onsite commissioning can also be reduced. In addition, skid-mounted systems offer important construction advantages when establishing a plant in a remote location.
 &ldquo;The complementary strengths of the two firms will provide a simple and seamless experience for our customers,&rdquo; Costello says. &ldquo;When design and construction work together from the beginning of the project, fewer last-minute engineering changes occur and less contractor personnel are needed during on-site installation.&rdquo;

UNIT TRAIN: R.C. Costello & Associates recently partnered with Certified Technical Services to build skid-mounted biodiesel processing units available to the industry.

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Costello partners with CTS to design, construct skid-mounted units

Aligning for Greater Affordability

As the biodiesel industry ramps up production to help fulfill the 800-billion-gallon biomass-based diesel mandate under RFS2, efficient and cost-effective routes are underway for glycerol utilization, other than the traditional pharmaceutical and industrial routes currently being applied. Keerthi Venkataramanan, a graduate student at the University of Alabama-Huntsville&rsquo;s biotechnology doctoral program, may have unlocked a novel glycerin application route for producers to tap into.
 In his research, Venkataramanan used a strain of bacteria commonly found in soil, called Clostridium pasteurianum, which feeds on glycerol as its sole carbon source whereby it can biologically produce a range of useful byproducts such as butanol, 1,3 propanediol and ethanol, in addition to trace amounts of acetic and butyric acid. Venkataramanan admits he&rsquo;s not the first to study glycerol conversion processes like this. Since other firms, including DuPont, have developed a proven process that produces 1,3 propanediol from glycerol using a genetically engineered strain of E. coli, Venkataramanan decided to focus on butanol extraction instead.
 &ldquo;In our bacteria strain on glycerol, we can produce about 30 to 40 percent butanol and another 25 to 30 percent into chemical intermediates,&rdquo; Venkataramanan tells Biodiesel Magazine. &ldquo;These studies are all batch fermentations so the yield varies comparatively between each batch. The maximum we&rsquo;ve got is 40 percent and the average was around 22 percent; in other words, 22 grams of butanol per 100 grams of glycerol.&rdquo;
 Unlike other commonly used bacteria strains, such as Citrobacter, that are highly pathogenic in nature, Clostridium bacteria is an anaerobe that is nonpathogenic, according to Venkataramanan, adding that he&rsquo;s finding more productive strains that can be bioengineered.
 &ldquo;The bacteria make butanol to a greater extent, but at the same time there are challenges,&rdquo; he says, &ldquo;because butanol is toxic to the cells and any of its cell growth at higher concentrations. We&rsquo;re focusing on overcoming those challenges in terms of increasing butanol yield.&rdquo;
 In addition to producing butanol and other biochemicals using the Clostridium bacteria, Venkataramanan adds that he&rsquo;s also successfully extracted butanol from the methyl ester itself. &ldquo;Blending butanol in biodiesel would actually increase the calorific&mdash;or fuel value&mdash;of biodiesel,&rdquo; he says. &ldquo;[A biodiesel producer] wouldn&rsquo;t have to go outside the biodiesel plant to carry out the synthesis. You can integrate it into biodiesel plants so that you can blend butanol with biodiesel again.&rdquo;
 Venkataramanan points out another advantage of using the Clostridium bacteria. &ldquo;When you scale up an anaerobic process, it&rsquo;s economically favorable comparable to aerobic processes by a margin of 40 percent,&rdquo; he says. &ldquo;Many biodiesel companies will be restarting or contemplating restarting and that means, eventually, there will be more glycerin out there. If there&rsquo;s going to be more glycerol out there and they have problems of disposing of it, you need to come up with a viable solution like a biological conversion.&rdquo;

UNIVERSITY UTILIZATION: Venkataramanan found a bacteria in soil, called Clostridium pasteuranum, which is being studied for its ability to convert glycerol into a range of biochemicals. 

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New glycerin use efforts are expected to keep pace with increased supply

Waste Not, Want Not 

Although relatively young, the National Alliance for Advanced Biofuels and Bioproducts has already achieved a lot and proven that a long name can yield big results. In November, it released news that the program, formed to develop and evaluate new algal biofuels technology, had done its job and produced algae biodiesel through collaboration that brought catalyst providers to algae cultivators together. With 14 major universities, three national labs and several other private parties helping the NAABB to achieve its goals including Solix Biofuels, Targeted Growth Inc. and UOP, it&rsquo;s safe to say the program was doing just fine even before a major participant, the Donald Danforth Plant Science Center in St. Louis, received a $70 million grant from the Danforth Foundation. The grant, which incoming President James Carrington says will &ldquo;add critical expertise and new technologies,&rdquo; will also help &ldquo;accelerate the transition of basic discoveries into commercial applications.&rdquo; Five new investigators will be added to the center because of the grant, and the bioinformatics and biocomputing capabilities of the facility will grow.

How an acclaimed federal algae consortium may become even more successful

The Good Gets Better

It started in 2007, when researchers began collecting an extensive library of jatropha genetic material in Central America, featuring thousands of genotypes that put SG Biofuels on the map as a bioenergy crop company. Now, the San Diego-based firm aims to extend its jatropha seed development and breeding expertise into Brazil with the launch of an R&amp;D center to bring its JMax Jatropha Optimization Platform online through a newly created subsidiary, SG Biofuels Brasil Ltd. in Sao Paulo. Fernando Reinach was named senior advisor to help lead the initiative.
 SG Biofuels found Brazil to be an enticing location to establish relations with area farmers in the northeast region to grow jatropha on dry nonfood land, says Brian Brokowski, vice president. The jatropha will be an ideal and readily available feedstock for biodiesel producers in the region, he says.
 &ldquo;Obviously, jatropha is very well-suited for biodiesel and there&rsquo;s a strong market in Brazil for biodiesel,&rdquo; Brokowski tells Biodiesel Magazine. &ldquo;One of the advantages of jatropha is that there is a mandate in Brazil where biofuel producers have to secure 30 percent of their feedstock from community farms. Many growers are struggling to meet that requirement. Jatropha provides a solid option for growers to meet that mandate through community farming initiatives.&rdquo;
 While its first priority is R&amp;D, SG Biofuels intends to leverage its existing partnership with global oilseed crushing firm Bunge North America to aid in the downstream market of its jatropha to biodiesel producers.
 &ldquo;We need to be looking at the complete value chain,&rdquo; Brokowski says. &ldquo;Not only the crop science and plantation development, but all the way through to downstream logistics and processing. Bunge will be working with us to establish a model for efficient processing in Brazil and other markets we&rsquo;re working in.&rdquo;
 In addition to Bunge, SG Biofuels has worked with Life Technologies Corp. on a genome sequencing project to identify different jatropha gene characteristics, and has also created cultivar of jatropha that SG Biofuels claims it can provide 100 percent greater yields when used in Guatemalan growing conditions.&nbsp;&nbsp;&nbsp;
 &ldquo;[Brazil] is an area that, just based on soil conditions, isn&rsquo;t optimal for food production,&rdquo; Brokowski says. &ldquo;There&rsquo;s a significant need for alternative crops and energy crops, and we really think jatropha could be a viable crop in that region.&rdquo;

PLANTING POTENTIAL: SG Biofuels plans to launch R&D facilities similar to its operations previously established in Central America. 

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How increased jatropha oil availability is coming to Brazil

Primed for Growth

With funding provided by the Michigan Pre-Seed Capital Fund and Automation Alley, Detroit-based biodiesel technology developer NextCAT Inc. is closer to bringing its novel process technology to market.
According to President Charles Salley, the funds will be used for pilot-scale testing of the technology with plans to build a demo unit in an existing retrofitted facility later this year.
 Developed by the National Biofuels Energy Lab at Wayne State University, NextCAT&rsquo;s technology involves the use of a heterogeneous solid metal oxide catalyst capable of performing esterification and transesterification steps in a single pass without consuming the catalyst in the reaction. &ldquo;It&rsquo;ll handle high free fatty acid feedstocks and triglycerides in a single step without forming the soaps and other waste byproducts that are incident in current first-gen technology,&rdquo; Salley says.
 &nbsp;NextCAT has partnered with a catalyst manufacturing firm to aid in its scale-up initiatives, but the company hopes to lock up similar partnerships with biodiesel equipment suppliers that can integrate its process technology into existing biodiesel assets, Salley says. &ldquo;Since many of these facilities have been designed for refined vegetable oil, we think there&rsquo;s a major opportunity to upgrade them to handle higher FFA feedstocks.&rdquo;

BRIGHT MINDS: NextCAT Inc. founders, from left, Simon Ng and Charles and Steven Salley, are excited to build a demo plant later this year. 

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Capital funds aid commercialization efforts in Michigan

The Hand That Feeds

California-based Springboard Biodiesel LLC has reached a new benchmark. More than 50 universities and school systems in the U.S. have now installed its BioPro biodiesel processing equipment. The latest system has been installed at Arkansas State University, where it will be used for both educational and research purposes.
 The BioPro processor is housed in a research lab located on ASU&rsquo;s farm. According to Kevin Humphrey, the university&rsquo;s director of agricultural education and a researcher focused on biofuels and biobased products, there are several reasons he chose to install a BioPro system in his lab. He says he needed something that was automated, featured durable components, and was self-contained.
 Since students will be interacting with the system, safety was also a key concern. Humphrey notes that the system&rsquo;s control of hazardous&nbsp; ingredients was particularly attractive. Special attention has been paid to the safety parameters of the BioPro system, says Springboard CEO Mark Roberts. &ldquo;The units are made out of stainless steel,&rdquo; Roberts says. &ldquo;They are designed with safety in mind, so all the motors are explosion proof. It&rsquo;s a fully automated system. The way it&rsquo;s constructed you don&rsquo;t have to interact with caustic chemicals after you&rsquo;ve loaded the machine. It&rsquo;s well ventilated.&rdquo;
 ASU&rsquo;s system will be used to process a wide range of feedstocks into biodiesel. Some feedstocks, such as soybeans, camelina and canola, can be sourced directly from the university&rsquo;s farm. &ldquo;I have storage capacity now that can auger the feedstocks into my lab, and then clean and crush them to produce oil&mdash;which is pure clean oil,&rdquo; Humphrey says. &ldquo;At the same time, I am working on a system to pick up used oil [in a similar fashion].&rdquo; Used cooking oil to feed the processor will be sourced from local restaurants. It is also possible that crop-based feedstocks could be purchased from local farmers.
 Humphrey&rsquo;s lab also includes an engine testing cell. Some of the biodiesel produced at the lab will be used for testing purchases in small diesel engines. We also plan to use the fuel in some of our on-farm equipment, Humphrey says. In addition, there are plans to approach ASU&rsquo;s facility management team in hopes of running the fuel in some on-campus vehicles.
 The BioPro system will also be used as an educational tool for students. One benefit of the system Humphrey is building in his lab is that students will be able see a complete biorefining system in action&mdash;from cultivating feedstocks, to processing the resulting oils into a finished product.
 The biodiesel production equipment will also help Humphrey meet his goal of supplying more skill-based knowledge to students. &ldquo;A couple of the other professors and I are trying to get a whole lot more applied skills to our students,&rdquo; he says. &ldquo;It&rsquo;s good to have theory&mdash;you need to have theory&mdash;but the marriage of theory and applied [skills] is really important to us. We&rsquo;re really trying to build up our [renewable energy technology] program in the College of Agriculture and Technology, and provide these types of applied skill opportunities to our students.&rdquo;

GOT SKILLS: An Arkansas State University student gains applied skills in ASU Director of Agricultural Education Kevin Humphreyâ€™s lab. 

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A new biodiesel processor is installed at Arkansas State University

Springing Towards Applied Skills 

Estonia-based Biodiesel Paldiski AS is slated to be auctioned off Feb. 16. Bidding will open at &euro;7 million ($9.5 million). The plant was originally offered for sale in September, with the opening bid set at &euro;24 million. Biodiesel Paldiski was founded in 2004. The 100,000 ton (30 MMgy) plant began operations in 2007and was idled in early 2009.
 According to information posted to the auctioneer&rsquo;s website, the company&rsquo;s consolidated assets will be sold jointly. This includes a ground lease term of 30 years, which was established by Biodiesel Paldiski with the Port of Tallinn. The biodiesel plant is located within the port. The property also includes production equipment leased from SEB Bank. The purchase price does not reflect the EU's Value Added Tax.
 The auction listing also states it is possible for the buyer to acquire additional assets that were excluded from the bankruptcy estate. This includes a 3,000 square-meter tank owned by AS APL Production, and heat production equipment owned by Fortum Termest AS.
 Parties participating in the auction are required to pay a deposit equivalent to 10 percent of the starting price. This equates to approximately &euro;700,000. The deposit of the winning bidder will be applied to the final purchase price, while the deposits of other participants will be returned within one business day of the tender date.

A bankrupt biodiesel plant in Europe goes up for auction

Going Once, Going Twice, Sold!

Roger Stroud is optimistic that people will like the story of Algae.Tec. The CEO of the Australian-based algae-to-energy process developer that has created what they call the McConchie-Stroud system is so confident in his story that he decided to avoid any help from venture capitalist funding, or &ldquo;vulture capitalists,&rdquo; as he calls them. &ldquo;Some people ask us why we didn&rsquo;t go see a venture capitalist,&rdquo; Stroud says. &ldquo;We thought a better way to go would be to share it with a lot of shareholders rather than one group that just had a lot of money.&rdquo; Stroud and his team did just that, in part, because the investment world at the time of the decision &ldquo;had been thrown on its ear.&rdquo; Algae.Tec is now one of only a handful of cleantech companies to list on the Australian Stock Exchange. In the U.S.or U.K. markets, the stock would be considered a penny stock, but with 600 shareholders already, Stroud says Algae.Tec is the acorn and &ldquo;the oak tree has yet to grow, but overtime we hope to have several thousand stock holders.&rdquo;
 The early funding will be used to further develop the McConchie-Stroud system at a demonstration facility just outside of Sidney. &ldquo;We want to be the masters of our own destiny,&rdquo; Stroud says, and to do so they will have to prove that the internal testing the team ran on its system, and the years spent researching how to turn algae into energy, will translate at the demo plant.
 The system, created by Stroud and colleague Bill McConchie, a former Dow Chemical Co. employee and Texas A&amp;M alum, utilizes what Stroud calls a &ldquo;honeycomb&rdquo; effect. In large, modified 40-foot shipping containers, the system uses a synthetic material shaped in a honeycomb pattern within the container that Stroud says creates a more sufficient surface area to grow algae. The containers also allow for algae growth deep within containers and, according to the firm, uses one-tenth of the land when the open-pond method for growing is used. The energy source to grow the algae is solar, and every day the containers are rotated to maximize the amount of sun energy in any one day, Stroud explains.
 The company has an MOU with a group based in Hong Kong, says Stroud, and the construction for the demonstration facility should begin by the end of this year. &ldquo;Any shareholder coming in now is coming in at the early stage of the total development, and,&rdquo; he adds, &ldquo;as they say, the early bird gets the worm.&rdquo;

SYSTEM PROVIDER:  Roger Stroud, CEO, helped develop the Algae.Tec approach to growing algae, which involves use of a honeycomb structure to increase surface area. 

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FULLY CONTAINED: The 40-foot modified shipping containers are a critical element of the McChonchie-Stroud system. 

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Algae.Tec doesn't believe in VC—but the company does believe in its own story 	

A Hopeful Developer

From Heritage High School in Washington to Galway High School in New York, a growing number of secondary schools across the country have incorporated biodiesel curriculums within their education programs, and many more are considering them. Students and faculty members recognize biodiesel as being a viable alternative fuel and state officials are listening.
 On Jan. 14, Sen. Maria Cantwell toured Heritage High School&rsquo;s biodiesel lab in Vancouver, Wash., in an effort to encourage student interest in science, technology, engineering and math education. According to principal Anne Sosky, the school&rsquo;s biodiesel lab is a culmination of two years of work by its students and faculty who participated in designing the processors, which are capable of producing batches of biodiesel from used cooking oil supplied by area restaurants.
 &ldquo;[The processors] couldn&rsquo;t be something that you push a button because it&rsquo;s not a learning experience,&rdquo; Sosky says. &ldquo;The whole idea that got kids hooked were that they built the biodiesel processor. We said we wanted it to be a processor that kids think about and work on so they have ownership in the learning experience.&rdquo;

LESSONS LEARNED: U.S. Sen. Maria Cantwell talks with Heritage High School junior Jason Aurand about a sample of biodiesel during her Jan. 14 visit to the school.

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High schools see biodiesel as an important sector of education

Youth of the Industry  

If there were ever a state-by-state competition for renewable diesel, Louisiana would be winning. Already home to the highly-touted, first-of-its-kind renewable diesel facility in Geismar known as Dynamic Fuels, the state will someday feature another facility as well. The U.S. DOE has offered a conditional commitment in a $241 million loan guarantee to Diamond Green Diesel LLC, the joint venture project between Valero Energy Corp. and Darling International Inc. that will combine Valero&rsquo;s expertise in designing, constructing and running a refinery, with Darling&rsquo;s ability to provide what so many projects lack&mdash;a consistent feedstock supply. On the project, energy secretary Steven Chu says that &ldquo;strong biofuels projects like Diamond Green Diesel&rdquo; can strengthen an economy and grow jobs. Chu wasn&rsquo;t kidding. The project is expected to create more than 700 jobs during construction and employ at least 60 when operational.
 USDA Secretary Tom Vilsack says the loan guarantee demonstrates the dedication by the current administration to support advanced biofuels, and Lisa P. Jackson, U.S. EPA administrator, says the announcement showed that &ldquo;we can protect our health, preserve our environment and improve our economy at the same time.&rdquo; U.S. Sen. Mary Landrieu, D-La., says the project will not only help Louisiana, but also the nation. UOP will be providing its patented Ecofining process, which hydrogenates triglycerides or free fatty acid feedstocks. The resulting paraffins are then isomerized to create the renewable diesel product, one that Louisiana will soon be very familiar with.

LOOK AT THIS: Dynamic Fuels may be the first renewable diesel producer in Louisiana, but with a $241 million U.S. DOE loan guarantee, the Darling/Valero venture will be another new biorefinery to watch out for. 

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Already home to one facility, the state has DOE support for another

Louisiana's Bright Renewable Diesel Future

I recently visited with a biodiesel producer about the state of their business and our industry&rsquo;s future. There is, after all, no better way to keep your finger on the pulse of what is happening in the marketplace. As the conversation progressed, this member noted that 2010 was akin to a rollercoaster ride for both him and the industry.&nbsp; I, like most associated with our industry, wholeheartedly agree with this apt description.
 Turning the calendar from 2010 to 2011 provides a good opportunity to not only take stock of where we have been, but more importantly, to look forward at where we are going. Without question, 2010 was a turbulent year. That said, there is good reason to be optimistic about 2011 and beyond.
 Those who are successful over time&mdash;be they companies, trade associations, entrepreneurs, or sports franchises&mdash;have one thing in common. Their long-term viability is the result of a larger vision that establishes a framework for future success. Such is the case with the leadership of the U.S. biodiesel industry. In the 1990s, the industry recognized that the consumers must have confidence in the quality of our fuel. As a result, the National Biodiesel Board formulated and implemented an aggressive effort to secure U.S. EPA health effects data; worked at ASTM to put in place a biodiesel fuel specification upon which the marketplace could depend; and has worked constructively with engine manufacturers and auto makers to warranty the use of biodiesel. The results speak for themselves. Biodiesel is the best tested, most reliable advanced biofuel available in the commercial marketplace today.
 Our industry&rsquo;s leadership also saw the importance of favorable federal policy. History has clearly demonstrated that the success or failure of various areas of the energy sector, particularly nascent industries, is directly affected by the legislative, regulatory, and legal framework at the federal level. By any objective measure, there are significant economic, energy security and environmental benefits associated with displacing petroleum diesel fuel with biodiesel. At the beginning of the last decade, however, the policy framework simply was not in place for the nation to accrue the benefits associated with expanded production and use of biodiesel.
 To help make biodiesel price competitive in the marketplace, the NBB and its allies moved forward with a plan to advocate for and ultimately enact a tax incentive that would help offset the inherent price advantage petroleum diesel fuel enjoys in the marketplace. The result of this effort was enactment of the biodiesel tax incentive in 2004.&nbsp;
 The big picture goal of the biodiesel tax incentive was to encourage expanded production and use of biodiesel, and by that measure, the tax credit has been an overwhelming success. When the credit was enacted in 2004, the U.S. industry produced a mere 25 million gallons of biodiesel. In the five years that the credit was seamlessly in place, we built the production capacity to become America&rsquo;s first commercial-scale advanced biofuel and produced more than 2 billion gallons of fuel.
 Even with the tax incentive in place, it was readily apparent that to get significant penetration in the U.S. diesel fuel marketplace, the renewable fuel standard&mdash;an existing program that provided for a minimum renewable content in the nation&rsquo;s transportation fuel&mdash;had to be structured to accommodate biodiesel. Again, the biodiesel industry&rsquo;s leaders took decisive steps to address the long-term interests of U.S. biodiesel stakeholders. An internal task force carefully analyzed available feedstock and market dynamics, and based on this work, proposed the inclusion of an aggressive yet attainable biodiesel volume requirement as part of the renewable fuel standard. This volume schedule became the basis of the NBB&rsquo;s lobbying efforts in Washington and, as a result of these advocacy efforts, the 2007 energy bill expanded the renewable fuel standard (RFS2) and for the first time provided a renewable component in U.S. diesel fuel&mdash;a renewable demand that the U.S. biodiesel industry is ideally situated to meet.
 Our industry again rose to meet a great challenge during the RFS2 rulemaking process. The EPA, the federal agency charged with implementing the RFS2 program, initially proposed an unworkable rule that would have disqualified domestic vegetable oils from qualifying as biomass-based diesel. The NBB marshaled technical resources to demonstrate shortcomings in the EPA&rsquo;s life-cycle analysis; legal assets to justify a program structure that was optimal for the U.S. biodiesel industry; lobbying efforts to keep elected officials engaged; and perhaps most importantly, grassroots initiatives that yielded thousands of favorable comments to the EPA. The result was a final rule that works for the U.S. biodiesel industry and fulfills the vision of a RFS2 program that displaces petroleum diesel fuel with biodiesel. The 800 million gallon 2011 biomass-based diesel volume obligation published by the EPA in November and the unanimous decision by the D.C. Circuit to reject litigation lodged by the petroleum industry to stymie RFS2 implementation further reinforces the reality of this important and worthwhile program.
 Without question, the lapse of the biodiesel tax incentive at the end of 2009 had a detrimental impact on the U.S. biodiesel industry. The absence of the incentive combined with marketplace uncertainty had a predictable impact. U.S. biodiesel production dropped significantly, plants mothballed or, in worst case scenarios, went out of business altogether, and thousands of workers lost their jobs. The chattering class wondered if this was the end of the U.S. biodiesel industry.
 To borrow from an old adage, I am pleased to state that reports of the U.S. biodiesel industry&rsquo;s demise have been greatly exaggerated. Last year was without question a tough year, but we have weathered the storm, and the policy framework is in place for a robust 2011.
 The federal tax incentive has been reinstated through 2011, and, as it has previously, will help make biodiesel price competitive with petroleum diesel in the marketplace. Going forward, the NBB&mdash;consistent with the sentiment of its membership&mdash;will work to achieve the certainty and reliability that comes from a long-term extension of a biodiesel tax incentive that is restructured as a production excise tax credit. This will focus the credit&rsquo;s benefit on the domestic industry and help the entrepreneurs who are the heart and soul of this dynamic industry make the long-term business decisions that will yield future growth and prosperity.
 In 2011, the U.S. biodiesel industry has both the production capacity and available feedstock to meet and exceed the 800 million gallon RFS2 biomass-based diesel requirement. Beyond 2012, the RFS2 program gives the EPA administrator the ability to responsibly grow the biomass-based diesel program beyond the 1 billion gallon requirement provided by law. Already, an NBB task force is analyzing the data that will be crucial to demonstrating our ability to produce increasing amounts of advanced biofuel going into the future, and as we have in the past, the NBB will bring a host of assets to bear to make the RFS2 program work in an optimal way for the U.S. biodiesel industry.
 By any objective measure, the U.S. biodiesel industry has come a long way. Through good times and bad, the long-term perseverance and vision of the industry&rsquo;s leadership has benefited not only biodiesel stakeholders, but the nation as a whole. As a result, we are poised to accomplish great things in 2011 and beyond. Without question, our best days lie ahead.
 Manning Feraci, vice president of federal affairs, National Biodiesel Board&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;
1993 NBB is established as the trade association for the biodiesel industry 1999 The U.S. biodiesel industry produces 500,000 gallons 2001 Decemberâ€•ASTM approves full standard for biodiesel (D-6751) through NBB technical efforts 2004 The U.S. biodiesel industry produces 25 million gallons 2004 Oct. 22â€•Biodiesel tax incentive first enacted as part of H.R. 4520, the American Jobs Creation Act of 2004 (P.L. 108-357) 2005 Biodiesel tax incentive extended through Dec. 31, 2008, as part of H.R. 6, the Energy Policy Act of 2005 (P.L. 109-058) 2007 Dec. 19â€•H.R. 6, the Energy Independence and Security Act of 2007 (P.L. 110-140) is signed into law.&nbsp; Legislation expands Renewable Fuel Standard (RFS2) to provide for renewable component in U.S. diesel fuel 2008 H.R. 1424, the Emergency Economic Stabilization Act of 2008, (P.L. 110-343) extends the biodiesel tax incentive through Dec. 31, 2009 2008 The U.S. biodiesel industry produces 700 million gallons 2009 May 26â€•EPA publishes proposed RFS2 rulemaking in the Federal Register 2009 June-Septemberâ€•NBB grassroots efforts orchestrate more than 8,000 comments to the EPA on the RFS2 proposed rule 2009 Sept. 25â€•NBB submits formal comments to EPA on the RFS2 proposed rule 2009 Dec. 31â€•Biodiesel tax incentive lapses 2010 March 26â€•Final RFS2 rule published in Federal Register: NBB technical, legal, and grassroots efforts yield workable RFS2 program that qualifies biodiesel as an advanced biofuel 2010 Nov. 23â€•EPA administrator signs rule requiring the use of 800 million gallons of biodiesel under the RFS2 program in 2011 2010 Dec. 17â€•H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, (P.L. 111-312) is signed in to law. The bill retroactively extends the biodiesel tax incentive through Dec. 31, 2011 2010 Dec. 21â€•D.C. Circuit court unanimously rejects litigation lodged by petroleum industry against the RFS2 program 2011 U.S. biodiesel is the only commercial-scale advanced biofuel in America, as defined by the EPA

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Framework in Place for a Bright Future

The backbone of any successful industry is quality, and the BQ-9000 Program is integral in building and maintaining consumer confidence in biodiesel. BQ-9000 is a voluntary program in the U.S. and Canada, in which producers, marketers and laboratories adhere to a comprehensive quality manual built upon the foundation of ASTM D6751. OEMs and bid proposals are increasingly requiring BQ-9000-accredited companies for supply of biodiesel. This demand has caused the BQ-9000 program to grow more than 15 percent in 2010, and 2011 has already seen a huge increase in applications.&nbsp;
 The National Biodiesel Accreditation Commission consists of a diverse group of producers, farmers, marketers, engine manufacturers, fleet managers, renderers and technical experts who design and implement the BQ-9000 program elements. Last August the commission began to revise the Program Requirements of the BQ-9000 Quality Management System.&nbsp;
 The main objective was to enhance the clarity of the program requirements to ensure clear interpretation of each element, making it easier for BQ-9000-designated companies to comply. After several meetings and discussions, the revised program elements were sent out for a comprehensive peer review. This review included stakeholders from all areas of the industry including biodiesel consumers. The NBAC studied each reviewer&rsquo;s comment individually to see if changes or adjustments needed to be made to the proposed revisions.&nbsp;
 The revised program elements became effective Feb. 1. The manuals for Producer, Marketer, and Laboratory now include a Part B, which contains all of the pertinent policies used by the NBAC. This includes explanation of the audit certification process, certification suspension and revocation, reconsideration and appeal processes, provisional status, status of idle facilities and change of ownership, BQF-1 Form, and Recertification form.
 These revisions have made it much more convenient for accredited and prospective organizations and is another step in the continued goal of improving biodiesel fuel quality.
 For more information or to inquire about becoming a BQ-9000 Accredited Organization, contact Kyle Anderson at the National Biodiesel Board office.

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New BQ-9000 program elements take effect

Part of the role of National Biodiesel Board members is to define the long-term objectives and programs for their trade association. The No. 1 priority of the February membership meeting was to finalize the FY2012 program plan. The final vote on the program plan was an important step in setting the direction of the industry.
 As a member organization, the entire process of developing the program plan is carried out by the membership. Through technical, marketing and regulatory meetings, the process identifies opportunities, as well as issues facing the industry. There are many ways NBB members can provide input to the program plan including committee meetings, direct member input, an online survey, and a formal webinar meeting. This wide variety of mediums allows for maximum member input, and includes many levels of participation.
 Gathering member input allows NBB to prepare a clear direction to ensure the trade association continues to meet members&rsquo; needs.
 &ldquo;In order for the industry to meet the challenges ahead, we must have a comprehensive plan,&rdquo; said NBB Vice Chair Ed Ulch. &ldquo;The NBB Program Plan encompasses technical, marketing, legislative and regulatory priorities and is the key mechanism to make sure the NBB is serving its members in the best way possible.&rdquo;
 The planning process captures member input and is a way to share association priorities with members. NBB staff and contractors are constantly interacting with biodiesel companies, regulators, users, engine and vehicle companies and distributors to better understand the needs and priorities of the industry.

NBB members finalize program plan, set direction for the industry

Peter Brown, co-founder of International Procurement Tools, talks with Biodiesel Magazine about everything from the failure of his brother's company, Greenline Industries, to predictions on what's in store for the industry in coming years.

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A candid conversation with Peter Brown, co-founder of International Procurement Tools

Whatever It Takes

Tom McGurk wasn&rsquo;t always in the business of bubbles. The current CEO and president of Advanced Biofuel Solutions, McGurk currently heads a team responsible for creating a controlled cavitation reactor that harnesses the power of bubbles, the same reactor that just might solve a complex issue related to biodiesel production: monoglycerides. &ldquo;We had a chemical company for years,&rdquo; McGurk says, &ldquo;and then we got into biodiesel.&rdquo; Compared to making industrial chemicals, &ldquo;producing biodiesel was very difficult because the feedstock varied from load to load.&rdquo; A former chemical engineer, McGurk now spends his time in Rome, Ga., the home of the ShockWave Power Biodiesel Reactor, which he explains could transform the industry through its ability to deal with monoglycerides.
 But to fully understand why Georgia, of all places, and why McGurk&rsquo;s technology based on cavitation (and other similar reactors) may be important to the industry now more than ever, consider ASTM&rsquo;s main committee ballot that proposed a two-grade system for biodiesel. The ballot, which has since been voted down, originally presented a two-grade system that would include a grade of biodiesel suitable for cold climates, a grade that would ultimately be determined by monoglyceride levels present in the fuel.
 &ldquo;There are probably many reasons why it failed,&rdquo; Robert McCormick, principal engineer of fuels performance at the National Renewable Energy Laboratory in Golden, Colo., tells Biodiesel Magazine. Proposed in June, the ballot met its end in a main committee-level vote in December. &ldquo;I think after people had six more months to think about it and really understand where they are going with it, the proposal wasn&rsquo;t really ready," he says. It's not over yet for a system that would mimic the petro diesel system that features several grades of fuel though. &ldquo;I think there is a consensus, however, that we need to move to these two-grades of biodiesel,&rdquo; he says.
 The proposal&rsquo;s sticking points, McCormick says, included different levels of total monoglycerides for biodiesel in different ranges of cloud point. &ldquo;As you went to biodiesel that had a higher cloud point, it required a lower level of total monoglycerides,&rdquo; he says. When you look at the precision of the cloud point measurement, and then the precision of the total amount of monoglycerides, it was hard to make a case that these requirements (a lower monoglycerides spec) really meant anything. Along with the confusion over what exactly the cloud point measurements showed, McCormick says the ballot also faltered due to a lack of an official ASTM test for monoglyceride levels, and because &ldquo;everybody agreed that what we needed to limit was the concentration of saturated monoglycerides, not total monoglycerides.&rdquo;
 As McCormick suggested, any confusion created from the first attempt to create a two-grade system will someday find clarity. When that time comes, and monoglyceride levels act as the line between grade one and two, what can the industry do to meet the new standards? Distillation, for one thing. It is the &ldquo;sledgehammer,&rdquo; as McCormick says. &ldquo;It&rsquo;s going to work&rdquo; but, he adds, it&rsquo;s also expensive to build and use. &ldquo;Distilled biodiesel, if properly stabilized is at an extremely high quality,&rdquo; he says. &ldquo;But, for many producers, I&rsquo;m not sure that is going to make economic sense.&rdquo;
 Controlled Cavitation
 McGurk says cavitation is a physical phenomenon that creates low-pressure bubbles within the fluid that cannot self-sustain and eventually implode. When they burst, a shock wave sends cavitation bubbles out&nbsp; into the fluid. If those shock waves are left unchecked, the heat and mixing power of the bursting bubbles can create a lot of equipment damage. &ldquo;Conventionally, engineers are taught to avoid cavitation,&rdquo; he says. McGurk found a pathway that allows him to harness that energy, to control it, a technology that drives a reaction in a matter of seconds versus the minutes or hours typically seen in a continuous stir tank reactor. As an example of just how damaging some methods of cavitation can be, McGurk sites a retrofit project his team worked on in a chemical plant considering switching to biodiesel production. The plant was using a stir tank reactor set-up with cavitation. The system required the sparging of air into the tanks and when combined with the cavitation, the bubbles were so powerful they &ldquo;ate through the walls at several points&rdquo; and caused the two-story reactor tanks to lift off the floor.
 The ShockWave Power Biodiesel Reactor employs the &ldquo;controlled&rdquo; approach and uses a spinning rotor with depressions in it. As the device spins, cavitation bubbles are formed in the depressions, and as the fluid flows over the depressions the bubbles burst, sending out a massive wave of energy and heat that drives futher reaction of the materials. The amount of energy created by the bubbles breaks down the material into smaller pieces, creating more surface area for the reactants to take place, a situation McGurk says also helps to reduce side or reverse reactions.
 Already used in eight different biodiesel plants, including one of the largest production facilities in the country, the ShockWave Power Biodiesel Reactor is an option for producers who, McGurk says, don&rsquo;t want&mdash;or can&rsquo;t afford&mdash;distillation. Some producers have sent McGurk samples of biodiesel that showed only a .19 monoglyceride content with a total glycerin content of .055, he says. &ldquo;You are looking at a fifth of the total glycerin and that is with waste cooking oil, and many plants aren&rsquo;t able to handle that in their transesterification process.&rdquo;
 The idea of cavitation as a means to solve high mono levels in biodiesel produced from beef tallow or waste vegetable oil isn&rsquo;t a new one though. Companies like Ultrasonic Power Corp. out of Freeport, Ill., employ a sound wave, or ultrasonic-based cavitation approach to biodiesel production. While cavitation approaches vary, the ultrasonic unit at Freeport, like the mechanical version, can reduce the one- to four-hour process to less than 30 seconds, while effectively dispersing nanoparticles and deconglomerating coalesced materials in the fluid.
 Mike Kass from Oak Ridge National Laboratory even recently investigated using ultrasonic acoustic energy (similar to that of Ultrasonic Power Corp.&rsquo;s version) to remove precipitate formation in biodiesel. The rationale, Kass says, was that the application of ultrasound would concentrate heating at the precipitate-liquid interfacial region. &ldquo;The advantage of this approach is that you can focus the heating on the precipitate itself rather than heating the bulk solution.&rdquo;
 To test the theory that ultrasonic cavitation does, in fact, reduce precipitates, Kass and his team, which includes Sam Lewis and Maggie Connatser, performed a modified version of the ASTM D7501 Cold Soak Filtration Test. The team used a sample of SoyGold 1000 biodiesel that was first tested and filtered, then spiked with precipitate precursors and remeasured for filtration time. The team then chilled the biodiesel overnight and let the sample return to room temperature. &ldquo;We ran the filtration test on the spiked sample and the filtration time increased as you would expect with the formation of precipitates,&rdquo; Kass says. The team sonicated the spiked sample and the filtration time decreased to the original time of the spiked sample. The team also evaluated a sample that was heated conventionally, and the bulk heating was not found to reduce precipitates.
 So how does this technology solve the issues of producers for whom the two-grade system could eventually be a reality? Kass says while it is not necessary to induce cavitation to reduce or eliminate precipitates, &ldquo;you do need an ultrasonic field.&rdquo; The bottom line, he says, is that many of the issues dogging the biodiesel industry &ldquo;may be mitigated with the use of ultrasonication.&rdquo; As McGurk&rsquo;s sentiments show, that is a real benefit to the industry. &ldquo;If you can replace or augment your reactors with a system that can provide many of the same quality characteristics of distilled products at a fraction of the cost in a much simpler installation,&rdquo; he says, &ldquo;then it will allow companies that may decide to stop producing or reduce their production targets to rethink their goals.&rdquo;
 A Serious Need
 With the working group still reformulating the definition of that highly-contested winter grade of biodiesel, McCormick provides his idea on what to expect. What he suspects is the working group will come forward with a more modest proposal, something that for the winter grade is more restrictive than what is in place for all grades. More than likely, he says, the new ballot will &ldquo;directionally&rdquo; correct the problem, but there will still be several people who don&rsquo;t feel it goes far enough. But he notes, as time goes by, &ldquo;We will be able to collect more data&rdquo; and &ldquo;improve the test methods for monoglyceride levels.&rdquo; That might not necessarily eliminate all biodiesel that is going to have these unexpected low-temperature operability problems, McCormick says, but it would limit a lot of them.
 There is a possibility, he also says, that if a new ballot goes out in April, and earns approval in June, before winter there could be a two-grade system in place. While that is still unlikely, &ldquo;that is the fastest a change could be made.&rdquo; McGurk says they&rsquo;ve already seen customers who were waiting for the tax credit to come back before pulling the trigger on retrofit purchases.
 The dollar being back for this year doesn&rsquo;t mean the biodiesel industry is free of all impediments. A two-grade system may still be on the way and, with it, new quality issues that several producers will have to face. And, although it might already be well understood, as McGurk says, &ldquo;The ability to use lower quality feedstocks and still achieve an extremely high level of quality could make the difference in success or failure in many biodiesel plants.&rdquo; Author: Luke Geiver Associate Editor, Biodiesel Magazine (701) 738-4944 <a href="mailto:lgeiver@bbiinternational.com">lgeiver@bbiinternational.com</a>

SHOCKING TECHNOLOGY:  Cavitation-based reactors may offer an answer for tougher biodiesel standards.

2011/02/1297288538482.jpg

A two-grade system would force the industry to respond. Luckily, cavitation technology is here. 

Ready to Burst

When the U.S. Senate failed to extend the $1 per gallon U.S. biodiesel blender tax credit at the end of 2009, it also failed to factor in the impact it would have on the industry in 2010. Left in its wake was an industry of producers running their plants at reduced rates, furloughed personnel, stockpiles of fuel inventories, and production facilities shutting down operations left and right. To put it lightly, 2010 was a year the biodiesel industry would like to forget.
 Despite the plight suffered, however, the industry scored two big victories in late December that put it in a stronger position heading into this year. First, President Barack Obama signed an $850 billion tax package that included an extension of the U.S. biodiesel blender tax credit through 2011, which also made the credit retroactive for blended biodiesel sold in 2010. Shortly after the tax credit was reinstated, the industry received more good news when the U.S. District Appeals Court for the District of Columbia rejected a petition filed by the National Petrochemical Refiners Association and the American Petroleum Institute in March on the U.S. EPA&rsquo;s combined RFS2 volume requirements for 2009-&lsquo;10.
 While many were ecstatic to see the tax credit back for another year, the majority of industry reaction was mixed. Some expressed short-term relief with ambitions of potentially restarting operations, upgrading processing equipment or even expanding staff. &ldquo;We continued to blend fuel through 2010 so we were actually very happy that they extended the tax credit retroactively, because we had a lot of blended fuel we were able to cash in on,&rdquo; says Donna Belcher, spokeswoman at Rio Valley Biofuels LLC, a 1 MMgy plant in Anthony, N.M.
 Conversely, some believe the extension is simply too short a timeframe to build any long-term investment beyond this year, according to Ben Wooten, president and owner of Keystone Biofuels Inc., a 20 MMgy facility in Shiremanstown, Penn.
 &ldquo;The inconsistency of that federal policy hurt us [in 2010] and it continues to hurt us,&rdquo; Wooten says. &ldquo;With the inconsistency of that public policy, it&rsquo;s not really helping us long-term by attracting confidence from investors or from the banking industry, especially for the banking industry to secure the necessary capital that we need to do what we do here in the country.&rdquo;
 Todd Hill, managing principle and founder of Promethean Biofuels Cooperative Corp., a 1.5 MMgy facility in Temecula, Calif., believes the reinstatement of the tax credit may be more burdensome for the industry than beneficial. &ldquo;We feel that the real economic struggle is just beginning,&rdquo; Hill tells Biodiesel Magazine. &ldquo;If feedstock prices remain constrained and we as an industry forget how many plants stood idle even when the tax credit was in place, speculation may hurt the industry more than help it.&rdquo;
 While 2010 was a year that financially strapped a majority of biodiesel operations, the unfavorable economic climate brought with it the value of the renewable identification number (RIN) credit price. Not only did producers find RIN credits to be an effective market mechanism for generating incremental value for their product and offset cost for customers, but they also became financially savvy in the process, having to understand the entire supply chain dynamic in order to survive in 2010.
 RIN Around the Market
 Prior to the reinstatement of the tax credit, RIN prices traded at all-time highs, hitting 96 cents per RIN at one point, effectively providing a snapshot of what a biodiesel market would look like absent the tax credit. Since each gallon of biodiesel produced generates 1.5 RINs, that translated into $1.44 per gallon, which more than offset the lost value of the expired tax credit. Many trace the spike in RIN prices back to the RFS2 standard that went effective in July, which requires 1.35 billion gallons of advanced biofuel to be consumed this year. Of that number, 800 million gallons must be biomass-based diesel. Obligated parties, the petroleum refiners, are required to retire a specified amount of biodiesel RINs, proving that the fuel has been used. They can do this either by blending it themselves or by paying nonobligated parties who use biodiesel on their behalf.
 Although RINs are characterized by volatility against other commodity prices, such as feedstock prices, RIN prices aren't expected to bottom out in 2011, according to Sam Gray, a renewable fuels trader with Ft. Worth, Texas-based VICNRG LLC, a leading marketer of biodiesel blends, glycerin and refined petroleum products. Gray notes that RINs stood at a low of about 45 cents per RIN shortly after the credit was extended, but then jumped to 75 cents not long after.
 &ldquo;High-priced feedstock is going to put pressure on RIN prices,&rdquo; Gray says. &ldquo;Without feedstock taking a U-turn, it&rsquo;s not anticipated that this pressure is going to ease, which means you can&rsquo;t really count on a RIN price increase that&rsquo;s independent of feedstock prices.&rdquo;
 Prior to when the tax credit was reinstated, prices for yellow grease and tallows hovered around 33 to 34 cents per pound. Shortly after the tax credit extension, yellow grease prices increased about 10 cents per pound, according to Gray.
 &ldquo;It appears that feedstock prices have taken a large percentage of the dollar, exerting even more pressure on the 2011 biodiesel RIN value based on the higher prices for feedstock,&rdquo; Gray says. &ldquo;Since the announcement that the credit was coming back, commodities in general, especially the lower-priced commodities like yellow grease and tallow, have rallied to about 70 cents per gallon.&rdquo; Gray continues, &ldquo;It&rsquo;s going to be a very interesting year to see how this debate goes with the tax credit, but the evidence is indisputable, that feedstock prices have eaten about 70 percent of that dollar so far.
Many that are against extending the credit after 2011 will have that evidence to point to and say that the market purely functions with the RINs. Only that should be how we keep score in the RFS2 rather than just having both the tax credit and the 1.5-RIN for biodiesel.&rdquo;
 Like other producers, relying solely on the RIN market was one of the factors that forced Seattle-based General Biodiesel Inc. to become much more financially savvy and gain a better understanding of the entire supply chain dynamics, according to president Cameron Hewes. &ldquo;For us, the key comes down to being vertically integrated into the feedstock business,&rdquo; Hewes says. &ldquo;We&rsquo;ve always had that approach. That was helpful to us in 2010 given where the tax credit came out. That just underscored for us the importance of that strategy going forward.&rdquo;
 Likewise, Chris Glynos, president and general manager of Bio-Pur Inc., a 1 MMgy facility in Bethlehem, Conn., credits the RIN market for not only helping it maintain operations, but also for securing its waste cooking oil feedstock. &ldquo;Unless you become your own customer, your own producer and own supplier, it&rsquo;s hard to be at the whims of the market,&rdquo; Glynos says.
 Building a New Wave
 The extension of the tax credit is expected to draw additional upgrade and retrofit activity from engineering firms and technology providers. According to Mike Shook, co-owner of Stuttgart, Ark.-based Agri Process Innovations, existing and previously idled plants already sought API&rsquo;s services to restart their plants or increase their output capacity. API can conduct affordable assessments for clients that are considering restarting a plant. Depending on the size of the facility, Shook says, cost estimates for an assessment typically range between $15,000 and $25,000.
 &ldquo;From there, we provide a detailed report describing what we recommend along with an estimate for a budget to do it,&rdquo; Shook says. &ldquo;Then, the customer can take that and get the financing to do it. Depending on the specific upgrades they need, the total capital cost can be between $50,000 and $1 million. We&rsquo;ve had some plants get back up for as little as $50,000. A lot of the [plants] lost their key maintenance staff, so they just need training and parts, and they&rsquo;re ready to go.&rdquo;
 Given that the credit is only extended until the end of the year, many wonder if it&rsquo;s worth it for plants that have been mothballed in the past year to try and come back online. According to Raj Mosali, CEO of Miamisburg, Ohio-based biodiesel producer and technology provider Jatrodiesel Inc., the company is not only getting orders from potential clients to upgrade existing biodiesel assets, but it&rsquo;s also getting requests from would-be biodiesel companies looking to Jatrodiesel&rsquo;s novel technology that is capable of converting inedible oil crops like pennycress or camelina into biodiesel. &ldquo;We did a lot of assessments in October last year,&rdquo; Masoli says. &ldquo;It kind of surprised us to see that.&rdquo; Author: Bryan Sims Associate Editor, Biodiesel Magazine (701) 738-4974 <a href="mailto:bsims@bbiinternational.com">bsims@bbiinternational.com</a>

The biodiesel tax credit is back for another year. What will 2011 bring for the industry?

March 2011

Business Briefs

Business Briefs

Business Briefs

The Hand That Feeds

Columns

Solving the Crop Residue Conundrum

A National Clean Energy Standard

The DOE Biomass Program: A New Focus?

Powering an Engine Generator with a Biomass Gasifier

Learn What Regulations Apply to Your Project

Straight Talk

Using Private Placements for Initial Financing

Deliberately Profitable Biofuel

Featured

Supply Chain Champs

Pellet Ingenuity

Codigesting Crop Residues

China's Crop Residue Capacity

Whatever It Takes

Ready to Burst

Bouncing Back With the Buck

Contributions

Crop Residues: Issues Relating to Collection, Transportation and Storage

Field Day Explores Energy Crop Production

March 2011.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Business Briefs

Business Briefs

The Hand That Feeds

Columns

Solving the Crop Residue Conundrum

A National Clean Energy Standard

The DOE Biomass Program: A New Focus?

Powering an Engine Generator with a Biomass Gasifier

Learn What Regulations Apply to Your Project

Straight Talk

Using Private Placements for Initial Financing

Deliberately Profitable Biofuel

Featured

Supply Chain Champs

Pellet Ingenuity

Codigesting Crop Residues

China's Crop Residue Capacity

Whatever It Takes

Ready to Burst

Bouncing Back With the Buck

Contributions

Crop Residues: Issues Relating to Collection, Transportation and Storage

Field Day Explores Energy Crop Production

March 2011