Equustock Virginia Inc., a midsized wood pellet manufacturer in southern Virginia, produces five different types of pellet products at a single, unique manufacturing facility. Pellets for fuel, animal bedding and cat litter are produced for its marketing partner Equustock LLC, with customers mainly in the United States as well as export destinations in Italy, Australia, Korea, the U.K. and Taiwan.
 A can-do attitude, coupled with the partners&rsquo; unique backgrounds, perspective and approach, helps overcome never-ending issues. This pellet maker has not only survived in a time when neighboring mills were closing their doors, but has expanded capacity.
 Brenda Robinson, partner at Equustock Virginia Inc., spoke with Pellet Mill Magazine about the company's processes and products, reasons for its success, and challenges it has overcome and is still facing.
 Profitable Processes and Markets
 Equustock Virginia began operations in 2007 and recently doubled its capacity with the addition of a second milling machine. Now able to produce 80,000 tons of pellets per year, the company operates around the clock, in two 12-hour shifts. Robinson says that additional capacity was added in response to and in preparation for the markets they serve.
 Producing Big Heat Fuel Pellets at Equustock involves running raw materials through screens and hammermills, reducing the particles to a size that allows them to flow into a pellet mill, where they are extruded through a die to form the pellets. Robinson describes their proprietary milling processes as an art not a science, noting that how the raw materials are combined and how the equipment is used affects the pellets&rsquo; performance and quality.
 In addition to fuel pellets, Equustock's diverse and complimentary product line includes Guardian Horse Bedding, Guardian Angel Litter for small animals, Guardian Angel Cat Litter, and Absorb&amp;Clean, an absorbent used for spill cleanup.
 These are more than skilled artists who are doing something right. As Robinson discusses the reasons for her success, it becomes apparent that each story of overcoming a challenge has also been or continues to be an area of concern, where learning has occurred.
 Location Offers Multiple Benefits
 Equustock Virginia's production facility is situated in the Sustainability Park on the James River in Chester, near Richmond in southeast Virginia.
 The Sustainability Park houses several business that turn recyclable waste or byproducts into usable new products, including glass and construction recycling.
 Robinson attributes part of the pellet mill&rsquo;s success to being located at this facility. As a tenant, the company fits the facility&rsquo;s purpose, which is to support the creation&nbsp; of new products from recycled raw materials instead of filling landfills.
 The park&rsquo;s 400,000 square feet of manufacturing space, loading docks, scales, and other infrastructure, which is needed for large-scale manufacturing at this 140-plus acre plant that formerly housed an old Brown &amp; Williamson tobacco plant, provides Equustock the opportunity for growth and flexible operations.
 The park also contains a water treatment system with 2 million gallons of water. Robinson says having water located on-site provides extra protection against the risk of fire, which pellet mill regulators are focused on minimizing.
 In addition to being a partner in Equustock, Robinson owns the Sustainability Park.
 Her background is in the environment and energy; Robinson came from the boiler world, where coal was used to make electricity from steam and used for domestic heat. She was attracted to the industry because of regulatory issues driving biomass as a coal replacement. There is no doubt that her &ldquo;evolution&rdquo; to wood products also has been a major factor to Equustock&rsquo;s success.
 Regional Sourcing andFeedstock Alternatives
 &ldquo;Critical to our success has been learning how to manage our suppliers and transportation,&rdquo; Robinson says. &ldquo;It&rsquo;s important that we learned how to receive and keep moving.&rdquo;
 Equustock pellet feedstock is raw wood materials that would otherwise have been deposited in a landfill. The materials are&nbsp; delivered by tractor trailer and unloaded directly from a box trailer. &ldquo;Since we are using byproducts, we&rsquo;re dependent on the lumber and sawmill industry and all of their links to the construction industry,&rdquo; Robinson says. &ldquo;We&rsquo;ve got established suppliers and know where to pull from to manage the supply.&rdquo;
 &ldquo;Depending on how concentrated the mills are, it could be hard to get enough to feed everyone,&rdquo; she says. &ldquo;We source regionally; you can&rsquo;t go 400 miles to bring it in.&rdquo;
 Raw material supply has been a concern, and is one reason Equustock is evaluating alternate feedstock materials for producing pellets. Its current fuel pellets are produced with soft woods, such as pine, and also use some hardwoods and soft/hard wood blends.&nbsp;
 Equustock has investigated using multiple materials for pellets. &ldquo;Currently we are running initial evaluations and testing hardwoods for pellet making,&rdquo; Robinson says. &ldquo;Understanding the flexibility of what can be used is also key to our success.&rdquo;
 Multiple Processes at One Location
 In addition to producing different grades of fuel pellets at the Virginia mills, Equustock also manufactures pellets that serve different needs from fuel pellets, including pellets for horse bedding. These pellets are designed to expand into soft, dry bedding when exposed to moisture and are more absorbent and durable than pellets used for fuel.
 Horse bedding pellets are made from soft wood pine shavings using different processing steps than fuel pellet production, including kiln drying, treating with high heat, double screening, aspiration, and vacuuming for dust and particle texture control before going through proprietary compression processes that form the expanding pellets.
 The bedding is also packaged differently from fuel pellets. To save space, they are ultracompressed in vacuum packages, in contrast to most fuel pellets, which are packaged in bags of various sizes for residential, retail and international customers, or super sacks or bulk delivery for industrial facilities, boilers or utility companies.
 Other products milled at the facility also are packaged differently and may not be produced in pellet form. Loose wood absorbents for example, are packaged in plastic containers, and small animal litter in pellet or cobble form is packaged in buckets. Managing equipment and maximizing throughput with the complexities of running multiple processes, products, and packages at a single facility is also critical to their success, Robinson says.
 Still to Understand
 Robinson says they are still working to understand many aspects of this emerging industry, such as the supply chain, the flexibility of what feedstock can be used, and regulatory issues. Shipping continues to be an issue in these uncertain economic times, she says. They have learned how to get their materials into containers and on to ships for export but notes that the cost of fuel for land deliveries and its volatility remains a challenge, making logistics costs harder to deal with and to predict.&nbsp;
 Equustock has seen individual truck drivers who offered price advantages over larger shipping companies go out of business in the recent economy, despite a higher demand for their services, Equustock Virginia recently completed a market survey, and successful testing and sampling rounds that have given Robinson confidence that their current capacity with their second pellet mill machine will soon be filled. She says the company is looking at a third machine, and sees &ldquo;lots of domestic opportunity and ready, large, growing markets in Europe.&rdquo; Author: Debbie Sniderman Freelance Writer <a href="mailto:Debbie.Sniderman@vivllc.com">Debbie.Sniderman@vivllc.com</a>

PELLET PRODUCERS: Lori Tiller, Equustock Virginia director, and Frank Perry, plant operations engineer, survey an incoming load of fiber at the plant. 

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Overcoming the challenges of an industry in its infancy involves understanding logistics, shipping, raw material supply, the art of manufacturing and entering the right markets.

A Pellet Maker's Successes, Solutions  and Challenges

It's no wonder Canada is a world leader in forestry and wood products. The country has 10 provinces, three territories and endless shorelines along the Atlantic and Pacific oceans. In between its coastal boundaries, Canada boasts 981 million acres of forest, making up 10 percent of the world&rsquo;s wood reserves.&nbsp;
 The wood pellet industry has increased significantly over the past few years due to improved technology and export capabilities.
 The country&rsquo;s pellet industry is represented by the Wood Pellet Association of Canada, which is funded largely by the pellet producers. WPAC&rsquo;s mandate is to foster good working relationships between the pellet industry, government and the public, to provide safety certification and quality standardization and to research the enhancement of pellet fuel potential.
 Although forestry is a prominent business in Canada, pellet manufacturers are not clear-cutting trees and destroying the environment, says Gordon Murray, WPAC executive director, who stresses that pellet companies have created a sustainable industry out of material that was previously considered waste.&nbsp;
 The fuel is manufactured from forestry leftovers including fired logs, beetle-killed timber and residues. Vaughan Bassett, vice president of sales and logistics at Pinnacle Renewable Energy, says its facilities primarily use forest and sawmill residuals to produce pellets. Pinnacle is the largest pellet manufacturer in the world, according to Bassett, and operates six plants in British Columbia, where raw materials are abundant.
 Forests in British Columbia have suffered from a serious invasion of mountain pine beetles, which have devastated the pine tree population. Because beetle-killed timber tends to develop cracks, it cannot be used for sawmilling without creating significant waste wood, but it is suitable for pelletizing. When harvesting beetle-killed timber, the resultant cleared areas promote new timber growth and reduce methane emissions from the rotting residue. This is only possible if the extracted beetle-killed timber finds an economic home, which it can in the pellet mills.
 It is important to understand the environmental impact of the pellet combustion process. &ldquo;The pellet industry has good green credentials,&rdquo; Bassett says. Unlike coal, when wood is burned, the carbon released is recaptured by photosynthesis, thereby closing the loop sustainably without atmospheric change, he adds.
 The Canadian industry primarily sells pellets to utilities for power production, but pellets are equally useful in industrial or residential thermal applications. Bassett believes the pellet industry has the potential to replace hydrocarbons for heating purposes, especially in remote areas, or in areas that are off the gas grid.&nbsp;
 The bottom line is that, &ldquo;energy policy means making tough decisions, weighing costs and benefits and even judging the next turn in the financial road,&rdquo; according to Pinnacle. &ldquo;Pellet fuel can put North America ahead in all those areas. It will encourage the economic and energy independence of your communities, reduce costs and clean the air.&rdquo;
 Robust Canadian Industry
 North America is leading the pellet export race, with Canada and the U.S. surpassing Sweden as leaders in pellet production capacity. With strong global demand for wood pellets in Europe due to government initiatives, Canadian capacity has risen sharply. &ldquo;Capacity has grown more than one-third over the last year, from 2 [million] to nearly 3 million metric tons,&rdquo; Murray says.&nbsp;
 In 2010, Canada had 30 operating pellet plants and 24 in the construction or development phase. The country produced about 1.5 million metric tons of wood pellets in 2010, with British Columbia accounting for 64 percent of that total. Today, the country has 37 pellet plants in operation.
 An internal dichotomy exists between the pellet industries in Western and Eastern Canada. Plants in the West focus on industrial pellets for export from the British Columbia ports of Vancouver and Prince Rupert to Europe and Asia, and plants in the East market their pellets locally and in the Northeast U.S.&nbsp;
 Murray notes that a 1 million metric ton pellet capacity in the East competes for 100,000 metric tons in demand. Most of the product is bagged and used for residential heating. Only three of the 21 plants in Eastern Canada ship overseas from ports in Halifax, Nova Scotia, and Belledune, New Brunswick. Operating in the far western expanses of Canada, Pinnacle produces and exports 1.1 million metric tons of wood pellets annually, according to Bassett.
 Policy and Pellets
 Pinnacle and other Canadian pellet manufacturers are well-aware that the new demand is being triggered by energy policy. Europe is leading the way, using sweeping national policies to reduce greenhouse gas (GHG) emissions, setting a goal of producing 20 percent of its energy from renewables by 2020.
 Meanwhile, North American governments have been slow to introduce national renewable energy policies. North America is highly reliant on fossil fuels and is resistant to change. &ldquo;It is a lifestyle issue,&rdquo; Murray says.
 The U.S. oil industry is huge, with large companies employing significant numbers of people. The companies also utilize serious lobbying power and dollars to expand their business. Government subsidies for fossil fuels alone substantially outnumber revenues from the pellet industry. Murray also believes many in North America don&rsquo;t take global warming seriously.
 The Canadian government has recently taken steps in the right direction with a policy to reduce the use of coal and convert to biomass fuels and natural gas. To stay on top of technology, the WPAC has spearheaded an investigation and study into available coal alternatives such as cofiring and torrefaction.&nbsp;
 As Canada and the U.S. initiate sustainability directives, Murray predicts that demand for wood pellets will increase in domestic markets. Pellets may be the best way for countries to satisfy policy requirements in a cost-efficient way. They are also easy to transport and store, and require minimal technology and modification for coal conversion purposes.&nbsp;
 Canadian Exports
 To satisfy government emissions directives across the Atlantic, experts have projected that European wood pellet demand could increase from nearly 10 million metric tons in 2009 to more than 50 million by 2020, according to the WPAC. Murray warns, however, that forecasting future European consumption may prove difficult because it&rsquo;s not clear yet how the reduction in national deficits will impact renewable energy subsidies.&nbsp;
 What is clear, however, is that European demand is strong, and Canadian companies are trying to capitalize on their established export capabilities.&nbsp;&nbsp; Murray says Canadian pellet exports to Europe currently consist of 1.7 million metric tons annually.
 European countries use pellets for power and thermal applications with Belgium, the Netherlands, and England as the main power markets, while Scandinavia uses pellets for area heating, often in conjunction with power generation. Germany and Italy are large markets for residential heating applications.&nbsp;
 Approximately two-thirds of Canada&rsquo;s total pellet production capacity is in Western Canada, where manufacturers can take advantage of backhaul rates, filling empty ships with pellets for export. Backhauling allows western producers to export at only marginally higher costs than eastern companies from Atlantic ports.
 Because European pellet consumers prefer receiving small quantities at a time, pellets are transshipped, meaning they are off-loaded into smaller carriers, Murray says. The port of Rotterdam, Netherlands, Europe&rsquo;s largest port, is one of the most popular transshipping locations. Murray says that significant amounts of cargo are processed at Rotterdam, specifically 430 million metric tons of dry and liquid bulk cargo, compared with the relatively small Canadian ports of Vancouver and Halifax at 75 million and 12 million metric tons, respectively.
 Transportation and handling make up the highest proportion of the total wood pellet cost for producers.
 Expanding Markets
 By constantly targeting emerging markets such as Europe and most recently Asia, Canada is leading the pellet export race. The governments of South Korea and Japan recognize the need to reduce GHGs and are setting environmental policy that is more advanced than in North America, thereby fostering pellet demand.
 Although China is behind in emission reduction legislation, Murray says that Canadian companies have had early discussions with the highly industrialized country, which could also provide potential sales for pellet producers.
 To stay on top of the market, Murray and the large wood pellet producers traveled to South Korea to promote and gauge the country&rsquo;s interest in Canadian wood pellets.&nbsp;
 South Korea is committed to reduce GHGs 30 percent by 2020. The country&rsquo;s energy target is 10 percent renewables by 2022, which could translate into more than 4 million tons of wood pellets. Korea is the 10th largest energy consumer in the world, ranking fifth in oil and second in coal imports. Its high coal consumption makes cofiring with wood pellets an excellent way to meet the country&rsquo;s emissions directives.
 British Columbia is the closest province to Korea, and it is twice as far from the Vancouver port to Rotterdam than to South Korea. Pinnacle understands the potential for pellet imports to Asia, and Bassett expects increased trade activity in Korea, Japan and even China. Author: Matt Soberg Associate Editor, Biomass Power &amp; Thermal <a href="mailto:msoberg@bbiinternational.com">msoberg@bbiinternational.com</a> &nbsp;(701) 746-8385

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With vast expanses of renewable resources and a well-established pellet industry, Canada is ready to fill the needs of an expanding global market.

Positioned for Growth 

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With an abundance of raw materials and easy access to export markets, Estonia, Latvia and Lithuania are major league players in wood pellet production. 

Big in the Baltics

The replacement of fossil fuels with renewable fuels impacts fire safety issues in many ways. In particular, the use of solid biofuels presents new risks and challenges for the industry and first responders alike. One common type of refined solid biofuel is wood pellets, which are often stored in large silos after production or shipping. In the case of a silo fire, it is important to understand the nature of the fire and to use appropriate response tactics.&nbsp;
 In the past 10 years, the use of solid biofuels, and in particular wood pellets, has increased dramatically. In 2000, the annual production of wood pellets in Europe and North America was about 1.5 million tons, while the expected production for 2010 was about 16 million tons. Sweden is the largest wood pellet consumer with a consumption of about 2.3 million tons in 2010. The production of wood pellets in Sweden was about 1.65 million tons, while the remaining part is imported by ships, typically from North America and in the Baltic states. Pellets consumption is increasing dramatically in several other European countries as well, however, and as a consequence, handling and storage of wood pellets is also increasing.
 To improve the knowledge of fire development, detection and extinction techniques in silos, two main test series have been conducted at the SP Technical Research Institute of Sweden. Experience from these projects has resulted in recommendations concerning proper extinguishing practices.
 Silo Extinguishing Tests
 The main purpose of the first project conducted in 2006 was to study fire extinction techniques in silos and to provide a basis for guidelines concerning the tactics to be used. The project also provided valuable information about the initial fire development of a simulated spontaneous ignition in the stored material and the possibility for early detection of such fires.
 The silo used for the tests was 1 meter (3.28 feet) in diameter and 6 meters high. Close to the base of the silo, a ventilation duct was installed, which was used both to provide ventilation to the silo during the &ldquo;pre-burn&rdquo; phase and for infection of inert gas during the extinguishing phase. The silo was filled with wood pellets up to a height of 5 meters during the tests. Local auto-ignition was simulated using a coiled heating wire placed in the pellets, located centrally in the silo.
 The experimental results from one of four tests are summarized in Figure 1. The extension of the pyrolysis zone was mainly downwards, towards the air inlet, where a heat/moisture wave, with a temperature less than 100 degrees Celsius (212 degrees Fahrenheit), slowly moved upward (see Figure 2). Although the distance from the point of ignition to the pellet surface was only about 2.5 meters, it took about 20 hours before the fire could be detected by gas analysis in the top of the silo, clearly indicating the problems of early fire detection of smoldering fires in silos.
 Gas Filling Tests
 The purpose of the second project, conducted in 2008, was to investigate how nitrogen should be injected into a real silo during extinction to achieve optimal gas distribution. The experiments were performed in a 300-cubic-meter steel silo with a diameter of 6 meters and a height of 10.5 meters and filled with about 260 cubic meters of wood pellets. In total, five gas filling tests were conducted where the gas was injected from the center of the base of the silo, or alternatively at one point along the silo wall. All tests were conducted in a cold (no fire) silo as the main focus was to study the gas distribution in the bulk material. The tests showed that the gas distribution was significantly influenced by the gas flow rate, the location of the inlet and the properties of the bulk, showing the need for several distributed gas inlets when inerting large diameter silos.
 Real Fire Experience
 The results from the first silo project have successfully been applied to several real silo fires in Sweden. In one fire incident, auto-ignition occurred in a silo, 47 meters high and 8 meters in diameter, filled to about 40 meters with wood pellets. Elevated temperatures had been noted for some time and the plan was to empty the silo within the next few days. However, before such action could be taken, smoke was seen emerging from the top of the silo and the fire brigade was called. Initially, extinction was attempted using the application of liquid carbon dioxide to the top volume of the silo.
Approximately 35 tons of carbon dioxide were applied intermittently over a period of approximately 18 hours. The application seemed to control the fire but it was not possible to verify how much of the gas penetrated into the bulk. Consequently, it was not possible to determine when a discharge operation could be safely started.
 Nitrogen was therefore, injected close to the silo base according to the recommendations from the silo experiments in order to control the effect of the gas injection, temperatures and concentrations of carbon monoxide, carbon dioxide and oxygen were measured in the top of the silo. In total, nitrogen injection continued for almost 65 hours without interruption until the silo content was discharged.
Approximately 14 tons of nitrogen was used, which gives total gas consumption of approximately 5.6 kilograms per cubic meter, well in line with the recommendations from the research project. Summarized Guidelines
 Based on both the results of the research projects and practical experience of real silo fires, the following recommendations are given:
 &bull; Make an initial risk assessment of the situation. Concentrations of carbon monoxide in indoor areas in the vicinity of the silo may be dangerously high. Further, consider the risk for dust and gas explosions in the silo and associated systems.
 &bull; Close all openings to the silo and turn off ventilation so that air entrainment into the silo is minimized. A release hatch or similar opening in the silo top for gas and pressure relief should be present while still preventing any inflow of air.
 &bull; Inject nitrogen close to the bottom of the silo. A large diameter silo will require several gas inlets. The nitrogen should be injected in gaseous phase, and an evaporator must be used. Assume an injection rate of 5 kilograms per cubic meter hour (cross-sectional area) and a total gas consumption of 5-15 kilograms per cubic meter (gross volume) of the silo.
 &bull; If possible, measure the concentration of carbon monoxide and oxygen at the top of the silo during the entire extinguishing and discharge operation.
 &bull; Do not begin discharging the silo until there are clear signs (low levels of carbon monoxide and oxygen) that the fire is under control.
 &bull; Be aware that the discharge capacity might be considerably reduced compared to a normal situation and that the discharge operation might take several days to complete.
 &bull; The discharged pellets must be inspected for slowing or burning material and extinguished with water if necessary.
 &bull; The gas injection should continue during the entire discharge process. Some important things to remember are:
 &bull; Do not open the silo during the fire fighting operation. This will cause air entrainment, which will increase the fire intensity and might cause dust and gas explosions and an escalation of the fire situation.
 &bull; Do not use water inside a silo filled with wood pellets. Water application will cause considerable swelling of the pellets, which could both damage the silo construction and cause significant problems for the discharge operation. Author: Henry Persson Project Leader Fire Dynamics Section, SP Swedish Technical Research Institute <a href="mailto:Henry.persson@sp.se">Henry.persson@sp.se</a> +46 10 516 5198

STEEL STORAGE: A 300-cubic-meter test silo was used for the gas distribution tests. 

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HEATING UP: Visualization of the recorded temperatures inside the silo during one of the fire tests

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AFTER BURN: Photos taken during dismantling of the silo showed that the pellets formed a congealed pile in the top part of the silo (left), and the pyrolysis zone about 1.5 meters below the ignition source (right).

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As the use of wood pellets for biomass and thermal energy increases, it's important to learn more about how fires develop, are detected and extinguished in storage silos.

Silo Fires Require Specific Response Tactics 

This is the second edition of Pellet Mill Magazine and, as usual, the editors had no trouble coming up with content. A new addition to this issue is a regular column (see page 10) from Seth Ginther, executive director of the U.S. Industrial Pellet Association.
 Although we cover all aspects of the pellet industry, all eyes are currently on global demand and how that demand is going to be filled.
 Word on the street is that the global demand for wood pellets, which is currently estimated at 10 million metric tons, could increase sixfold by 2020, with much of that growth anticipated in the European Union. The U.K. has several biomass power plant projects in development and there are many coal-to-biomass conversions taking place, including one that&rsquo;s being billed as the largest conversion of its kind in the world. The Rodenhuize Biomass Power Station in Belgium now produces 180 megawatts of biomass-based power, enough to run 320,000 households for a year. The plant is owned by Electrabel, a subsidiary of GDF Suez, and Ackermans &amp; van Haaren.
 This growth potential has prompted Anglo-Dutch power and gas exchange APX-Endex and the port of Rotterdam, Europe&rsquo;s biggest port, to start a biomass exchange. The wood pellet futures contracts are listed on Trayport&rsquo;s Global Vision Trading Gateway.
 Asia is also starting to get into the market, with South Korea calling for a 30 percent reduction in greenhouse gases, which has some estimating that the country&rsquo;s wood pellet demand could increase from 0 to 5 million tons in the next 10 years.
 With new demand expected in the European Union and in Asia, there are plenty of plants being developed all over the world. The latest announcement came out of Brazil, where Suzano Energia Renovavel, a subsidiary of Brazilian pulp and paper company Suzano Papel e Celulose, plans to build two pellet mills with total production capacity of 2 million tons per year.
 Projects have also been announced in the Southeast U.S., and you can bet Canada is preparing for industry growth as well.
 In the U.S., the USDA recently announced payments to more than 160 bioenergy producers in 41 states, which included several pellet mills (Rocky Mountain Pellet Co. Inc., Appling County Pellets LLC, Rocky Canyon Pellet Co. LLC, Southern Kentucky Pellet Mill Inc., Enviva LP, Corinth Wood Pellets LLC, Geneva Wood Fuels LLC, Maine Woods Pellet Co. LLC, New England Wood Pellet LLC and others.) The individual grants to pellet mills ranged from $1,193.26 to $240,837.45.
 Of course, there is room for caution here as many countries are experiencing budget shortfalls, which could lead to reductions in support for renewable energy. Let&rsquo;s hope world leaders understand the economic benefits and job creation opportunities involved in all aspects of pellet production before they start the budget cutting process.&nbsp;

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Pellet Industry Gears Up for Rising Demand

Ships that pass in the night, and speak each other in passing, only a signal shown, and a distant voice in the darkness; So on the ocean of life, we pass and speak one another, only a look and a voice, then darkness again and a silence.&mdash;Henry Wadsworth Longfellow
 Somewhere out in the Atlantic Ocean, two ships pass in the night. Both loaded with energy, bound to a distant port. Both voyages a result of government policies and incentives designed to encourage the energy market in a particular direction.&nbsp;
 But, the sad news is that only one of these cargoes is sustainable, and it is not going to my country, but is leaving my country. The cargo bound for my country, is not from my friends, but may, in some cases, be from the country of my sometimes and future enemies. The cargo from my country, and my friends in Canada, is full of renewable wood pellets, but it is bound for Europe and the U.K. The cargo bound to my country, especially to the Northeast of my country, and to Eastern Canada, is crude oil.&nbsp;
 One cargo represents the energy future, and one, the energy past. One represents a sustainable future, and the other does not. Our two countries in North America are just not confronting the obvious, which is that for heating oil (and propane), one of the characteristics that make them so useful&mdash;the ability to transport them long distances, and store them for long periods&mdash;is also their long-term vulnerability.
 In the case of heating oil, we are dealing with a product similar to diesel fuel. Known as a &ldquo;midlevel&rdquo; distillate, it comes from the same portion of the refinery column as diesel. Every day, thousands of new diesel-burning trucks roll off assembly lines all over the world. Households, schools and businesses that burn fuel oil for heat are competing with every trucker in the world for this fuel. Who do you think will ultimately win? At some point in the future, our children will be incredulous that we used this transport fuel for heat. &ldquo;Didn&rsquo;t you have anything else to burn,&rdquo; they&rsquo;ll ask? Of course the answer is, &ldquo;yes, actually, we did have something else to burn that is reasonably stable, easy to store, burn and transport, but we shipped most of it, wood pellets, to Europe.&rdquo;&nbsp;&nbsp;
&nbsp; The bottom line is that the ships of oil will not always come our way, at least without changes in the cost structure. In the case of natural gas, we are already seeing some of the license applications for imported liquid natural gas terminals of the past decade, being altered and resubmitted as export terminals.&nbsp; There may even be a few propane cargoes headed &ldquo;outbound&rdquo; in special circumstances and times of the year. Certainly the idea that we in the U.S. and Canada can use any fuel for heating we wish, and set the price of that fuel on the world market, is either dead, or will soon be. The two key fossil fuels that heat most of North America not connected to natural gas, are increasingly part of a tightening global market, which must inevitably impact all other sources of thermal energy, including biomass.
 I am indebted to Charlie Niebling of New England Wood Pellet for the image of the two ships passing in the night. He used this during the exporting session at the Pellet Fuels Institute Annual Conference in July, and it&rsquo;s stuck with me ever since.
 When I think of my children&rsquo;s future, I can only hope that someday North America will come to its senses, and stop encouraging the use of oil for heat, and instead, use wood pellets. It will be interesting how many dollars we send to the Middle East and Venezuela before we come to our senses.
 Someday, we will take the right path toward sustainable, biomass, pellet heat, and as a result, the ships will no longer pass in the night. Author: John Crouch Director of Public Affairs Pellet Fuels Institute <a href="mailto:crouch@pelletheat.org">crouch@pelletheat.org</a> <a href="http://www.pelletheat.org">www.pelletheat.org</a>

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Two Ships Passing in the Night

As I write this column, the Pellet Fuels Institute and the American Lumber Standards Committee are nearing completion of an agreement that will dramatically improve the quality of pelletized fuels throughout the United States. This agreement is the direct result of nearly seven years of hard work carried on the backs of dozens of volunteers, thousands of man-hours, and ultimately the heavy hand of the U.S. EPA. During this period, the European Union developed numerous standards for solid biofuels that are now being converted to ISO standards for use around the world and the European Pellet Council has developed and implemented the EN plus certification scheme on an international basis.&nbsp; Finally, many of the largest European wood pellet buyers have come together to develop a standard specification for industrial wood pellets. This process is also nearing completion. We are nearing the end of an era where consumers have had to question &ldquo;what is in the bag&rdquo; and where producers take great risk selling into markets with requirements that may be poorly defined, but carry great penalties for noncompliance.
 I, personally, take great pride in having been part of making this transition a reality. At times, these efforts have been highly contentious and, believe me, supporting standardization hasn&rsquo;t always been a good political position to be in. However, as these initiatives have progressed, I have witnessed a large shift in the attitudes of many people from vehement rejection to acceptance and even ultimately embracing standardization. This transition has been most apparent when I speak at conferences and is manifested in the tone of the audience. Years ago, other standards developers and I would kid each other over who gets to wear the bull&rsquo;s eye this time, when deliberating who would give the next standards update at a conference. By contrast, in the past year I often find myself on the podium defending why the standards aren&rsquo;t stricter. I consider this a welcome transition and the end of an era where we need to convince people that standardization is a necessity.
 This is also the end of an era for me personally. As many of you know I have been a long-time figure at Twin Ports Testing in Superior, Wis. After 12 years of service, I have moved on to the next phase of my professional career.&nbsp; I am now the manager of Biomass Energy Laboratory, which is a joint venture between Timber Products Inspection and Control Union USA. I will also be managing all biomass energy services for Timber Products Inspection including auditing and quality management consulting services. The purpose for my transition is to develop a model for the industry that provides biomass fuel producers and users with all of the services they need to comply with any of these standards and/or certification systems, both domestically and internationally.&nbsp; This is being developed under the umbrellas of BEL, Timber Products Inspection and Control Union USA and includes third-party testing, inspection, auditing, quality management consulting, QA/QC sampling, logistics and sustainability. I will still maintain my role as co-chair of the PFI Standards Committee as well as my participation on the U.S. Technical Advisory Group for ISO TC 238 and other various initiatives I have been part of in the past.&nbsp;
 I have enjoyed being part of the development of this industry and look forward to continuing my involvement long into the future. I, for one, am ready for the end of an era and the beginning of a new one. Author: Chis Wiberg Manager, Biomass Energy Laboratory (218) 428-3583 <a href="mailto:cwiberg@tpinspection.com">cwiberg@tpinspection.com</a>

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The “End of an Era”

The recent annual meeting of our Maine Pellet Fuels Association brought forth unanimity on an important point: the economic success of the four pellet manufacturing firms in our state is to considerable extent dependent upon the success of the firms installing pellet heating equipment. Our manufacturing firms are therefore fully behind association efforts to open more doors for installers One effort has already met with significant success, and is of national significance. As of late September, Maine law now prohibits the state Commissioner of Public Safety from having any rule which would disallow &ldquo;the connection of a solid-fuel burning appliance to a chimney flue to which another appliance burning oil or solid fuel is connected.&rdquo; In other words, it is now, in Maine, OK to have a pellet stove or central heating system hooked into the same chimney flue as an oil burner. The earlier law prohibiting dual connections exists in many states, and is based upon a model law set forth in the mid-1990s by the National Fire Protection Association. Since that time, the technology surrounding heating systems has changed markedly, particularly with regard to high-efficiency pellet heating systems. Maine&rsquo;s fire marshal, while opposing the change in Maine law, was unable to come up with any instance in which an accident could be attributed to dual connections involving pellet heat.
The new law, of course, contains safeguards, such as assurance of sufficient draft, a carbon monoxide detector in or near any bedroom, and&mdash;most important to our industry&mdash;approval of pellet heating appliances by Underwriter Laboratories Inc. or a similar organization, and installation according to manufacturers standards. This means that manufacturers will need to modify their current prohibitions, set forth in their manuals in accordance with the National Fire Protection Association model, against installation into an existing oil burner flue system. Some manufacturers are now doing so, in view of Maine&rsquo;s new law, and others will no doubt follow suit if requested by the heating firms installing their equipment.
 In many instances, this change in Maine law considerably reduces the cost of installing a pellet heating system. Another barrier to conversions is, of course, the huge question of financing. Many states have enacted a Property Assessed Clean Energy or PACE legislation approach, whereby the financing takes place through the municipality and is rolled into the homeowner&rsquo;s property tax bill. However, this mechanism has come up against many roadblocks, with lenders and regulators having all-too-vivid memories of the 2008 meltdown in homeowner financing instruments. Our Maine Pellet Fuels Association is working to find ways around the roadblocks.
 A third roadblock to residential and small commercial conversions from oil to pellet heat is the pellet distribution system. The distribution dilemma is classic to the introduction of many new technologies. Bulk delivery is clearly the cost-efficient system of the future, but how to get to that point? It&rsquo;s our understanding that in Upper Austria&mdash;our best model&mdash;pellet heat was first installed in large facilities taking bulk deliveries, so that a distribution network was readily established to serve homeowners as well. Not so in Maine, although we are being helped by having a number of public buildings converted thanks to $13 million in federal Recovery Act financing provided through the Maine Forest Service. We&rsquo;re looking to new delivery and pellet storage technologies to help solve distribution questions.
 And who has a superb system, with the confidence of homeowners, and trucks going into every neighborhood? Our friends selling home heating oil, of course, and we are welcoming increased collaboration with those oil dealers now thinking of their firms as fuel suppliers, delivering pellets as well. Author: Bill Bell Executive Director Maine Pellet Fuels Association <a href="mailto:feedalliance@gwi.net">feedalliance@gwi.net </a>

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Maine Removes a Roadblock  to Pellet Heating Systems

Firing industrial wood pellets in traditional coal-fired power plants in Europe is an environmentally sound means of reducing the amount of greenhouse gases produced by electricity generation. Wood pellets are also economical, efficient and available on demand, meaning they can be used to generate dispatchable, firm-capacity power. Empirical analyses of the carbon footprint of wood pellets manufactured from woody biomass harvested and processed in the United States and transported to Europe, including all leakage within the supply chain, manufacturing operations and shipping logistics, demonstrate that electricity produced from wood pellets can reduce greenhouse gas emissions by approximately 80 percent when compared to electricity produced from coal. Most recently, a study published by the University of Washington comparing biomass power to coal power shows biomass emits just 4 percent of the carbon dioxide emitted by coal.
 Many pellet manufacturing facilities are located in the Southeastern United States. This region is advantaged in a number of ways, most notably the density of raw materials and the well-established forest products and timber industry that, for more than 100 years, has developed this sustainable and rich wood basket.&nbsp; Wood fiber is abundant in this region, and the growth-to-drain ratio (the amount of new tree growth compared to the amount removed for use in paper mills, sawmills, biomass energy, etc.) has remained greater than one. Data from the USDA Forest Service confirms the quantity of timber growing in the Southeast United States has roughly doubled over the past 60 years, and this trend continues today.
 A key driver of this growth has been the development of the robust system of sustainable forestry practices applied throughout the region. Sustainability is not a new concept for U.S. foresters; it is a method of growing and managing timber and fiber resources developed over decades. This ensures that more U.S. forests will exist tomorrow than do today, and that careful and precise silviculture practices preserve and protect the environment, including water and air quality.&nbsp; This can only be done when a commercial outlet exists for healthy forest products to ensure wildlife and biodiversity, and to help reduce the risk of wildfire, disease and infestation. The use of woody biomass for energy creates an economic value that secures the continued existence of forests, without which the likelihood of conversion of such timberland to nonforest use would be high.
 Many U.S. pellet facilities will be Green Gold Label certified to ensure the sustainability of the biomass sourcing. In addition to GGL, there are several other well-respected groups that work to protect, preserve and ensure the health and future of the forest, including the Sustainable Forestry Initiative, Forest Stewardship Council and Programme for the Endorsement of Forest Certification. Industrial wood pellet manufacturers embrace these stringent third-party standards and certifications, which are achieved through rigorous audit processes and build upon existing U.S. forestry sustainability initiatives such as those in their own operations and supply chains.
 As the conversation about energy and the environment grows alongside demand for industrial wood pellets, we must consider the facts about the role these environmentally beneficial fuels play in forest health and diversity, in addition to the substantial improvements in the greenhouse gas emissions profile of energy generation. The United States Industrial Pellet Association was formed in early 2011 to address, among other topics, the importance of environmental sustainability of our industry from forest to furnace. We understand the fundamental need to ensure the continued healthy development of our forests as an integral part of our environment and a way to help meet our current and future energy needs. Author: M. Seth Ginther Executive Director U.S. Industrial Pellet Association (804) 771-9540 <a href="http://www.theusipa.org">www.theusipa.org </a>

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The Case for Importing Sustainable Industrial Wood Pellets from the US

Timber Creek Farms to Partner with CellMark Energy in Brazil Timber Creek Farms Industrial has signed a marketing agreement with CellMark Energy (division of CellMark AB, Gothenburg, Sweden) for 100 percent of the output of its upcoming wood pellet manufacturing facility in Pien, Brazil. CellMark Energy will handle the sales and marketing functions for TCF as well as provide all logistic solutions for the company. Pien is currently the site of intense activity as TCF finalizes the construction and installation of pellet equipment that will transform wood resources from the Paranagua region into renewable fuel. The company expects shipments at the 90,000-ton facility to begin in the first quarter of 2012. CellMark Energy is finalizing sales agreements with major European utilities.
 Jennifer Hedrick appointed PFI executive director The Pellet Fuels Institute board of directors has appointed Jennifer Hedrick as its executive director. Hedrick's appointment marks the first time in its 26-year history that PFI, a trade association dedicated to advancing the use of densified biomass fuel, will have a full-time executive director. Hedrick has been with PFI since 2008, serving first as the association manager before being appointed acting executive director in July 2011. As association manager, Hedrick was the point person for PFI's standards program, as well as the PFI annual conference. She played a key role in the association's overall management, strategic development, and membership outreach. Prior to joining PFI, Hedrick worked for a public policy initiative at Georgetown University Law Center that focused on workplace flexibility.
 CPM and Pellet Technology form strategic alliance CPM and Pellet Technology LLC, have formed a strategic alliance to help bring sustainable, renewable energy to electric utilities and biofuels producers. Pellet Technology has developed a complete supply chain solution for biomass users that includes feedstock supply contracting, harvest management and patent-pending production technology to turn corn stover into PowerPellets. Under the agreement, the two companies will work together to market Pellet Technology&rsquo;s biomass engineering processes along with CPM&rsquo;s hammermills and pellet mills.&nbsp; Together, they will implement a&nbsp; &ldquo;field-to-fuel&rdquo; program that provides electric utilities and biofuels producers with an affordable and reliable source of renewable energy.
 CBI introduces new equipment Adding to its line of portable grinders and chippers, Continental Biomass Industries Inc. has introduced the Magnum Force Disc Chipper 754 and the Flail 604 debarker/delimber. This integrated, high-capacity chipping system was designed specifically for logging contractors who want to maximize throughput, minimize downtime, increase production and lower operating costs. The Magnum Force Flail 604 is a four-roll flail design that has been engineered for high-volume debarking while reducing fiber loss, chain wear, and fuel consumption. The heavy-duty units were designed to work together as one in the field and built to be legally transportable.
 Buhler acquires pelleting die manufacturer Tijdhof The Buhler Technology Group acquired Tijdhof Persmatrijzen with headquarters in Oldenzaal, Netherlands. This manufacturer of dies and rollers for feed pellet mills will be integrated in the Feed &amp; Biomass business unit. Tijdhof Persmatrijzen, which was set up 30 years ago, specializes in the manufacture of pelleting dies and rollers, which it supplies to the animal feed and biomass industries worldwide. The management and roughly 20 employees will be retained in the company, which will be continued under the Buhler Tijdhof product brand. The acquisition allows Buhler to supply its customers with all the wear and spare parts of a pellet mill from its own single in-house source, including consulting services.
 Viridis begins shipping pellets to Europe Viridis Energy Inc. has begun shipping wood pellets to Italy via an off-take agreement arranged through its strategic alliance with Abellon Clean Energy Ltd. that was signed recently. The agreement marks Viridis&rsquo; second major off-take agreement in Europe. In addition, the Viridis/Abellon joint alliance is scheduled to begin shipping wood pellets to Switzerland. Abellon Clean Energy is an integrated sustainable energy solutions provider based in Ahmedabad, India, with operations in the U.S., Canada, Europe, U.K., India and Africa. Viridis commenced its collaboration with Abellon in August to identify and secure supply agreements for the company&rsquo;s existing production, partner on the proposed acquisition of Monte Lake property and the development of a production facility, and to provide a strategic investment in Viridis by Abellon.

Jennifer Hedrick has been appointed to serve as the first-ever full-time PFI executive director. 

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HEAVY METAL: CBI's new chipper and flail were designed to maximize production and lower operating costs. 

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Business Briefs

&ldquo;Come on in. The water&rsquo;s fine.&rdquo;
 The phrase was a warm welcome to prospective wood pellet exporters, uttered by Harold Arnold, president and CEO of Georgia-based pellet producer and exporter Fram Renewable Fuels, at the inaugural North American Biomass Pellet Export Conference in New Orleans. &ldquo;I think it&rsquo;s a great business to be in,&rdquo; he added.
 The event, held Sept. 8-9, was a learning tool for stakeholders in many aspects of the pellet industry, from mill building and raw material supply, to production, quality standards and sales. Focused for the most part on exporting to European industrial pellet users, the conference also offered insight into Asia&rsquo;s emerging pellet market, as well as predictions from industry experts about how and where the markets will develop in the future. Relevant topics and speakers chosen by the U.S. Industrial Pellet Association, the event&rsquo;s organizer, helped paint a clear picture of the global market opportunities, challenges and facets of the pellet business.
 Supply Side
 &ldquo;I see you as the supply side,&rdquo; Henry Pease, in biofuels development for RWE Supply &amp; Trading in Geneva, told the crowd of about 200 people during the event&rsquo;s first panel, a roundtable of European utilities and other experts. Utility representatives such as Pease offered an invaluable take on what they and their industry expect from producers and in product quality. RWE has a multitude of power plants using biomass in Europe, and Pease said the continent sees biomass power generation as a low-cost, reliable and 24/7 renewable energy source. &ldquo;We like it in Europe because the price is right,&rdquo; he said, adding that baseload power is crucial. &ldquo;We see a huge role for [all renewables] but biomass is very important.&rdquo;
 Speaking from the end-user&rsquo;s perspective, Pease said Europe&rsquo;s utilities will buy what the U.S. producers manufacture. &ldquo;We can commit to buying what you supply,&rdquo; he said. &ldquo;But we can&rsquo;t trust you&rsquo;ll make it,&rdquo; he said later, drawing laughter from the crowd.
 The export conference wouldn&rsquo;t have been possible a year earlier, Pease said, because of the lack of a solid pellet industry infrastructure in the U.S. Today, however, a number of pellet companies are working the market, he added. &ldquo;The U.S. is on the map in a way that it wasn&rsquo;t before.&rdquo;
 And wood products group The Westervelt Co. is adding itself to that map, with a business plan to produce 1 million tons of pellets from existing byproducts of forestry thinning and harvesting operations on its 520,000 plus acres, as well as residues from saw and timber mills. &ldquo;Pellets are an obvious choice for us,&rdquo; said Mike Williams, director of strategy for Westervelt. The company plans to sell its pellets to European utilities.
 And it isn&rsquo;t alone. Biomass is expected to play a sizeable role in the tremendous renewable energy growth anticipated in Europe, according to Nicolas Denis, partner with consulting firm McKinsey &amp; Co. &ldquo;Most but not all European regions theoretically have sufficient biomass to fulfill their mandates domestically,&rdquo; he said, adding that it is unlikely much of that biomass can be successfully mobilized. North America and Brazil are best situated to supply Europe&rsquo;s growing demand, he said.
 Not surprisingly, utility Danish Oil and Natural Gas (DONG) Energy had a presence at the show, as 60 percent of all energy consumption last year in Denmark came from biomass. But the demand there is still growing and resources in the small country cannot support it, said Niels Bojer J&oslash;rgensen, head of procurement for DONG Energy. In 2009, 90 percent of biomass consumption was imported, he said, from the Baltics, North America and Europe. &ldquo;I think we&rsquo;re in all markets,&rdquo; he said. Although the Baltics represent an ideal location to supply all Denmark&rsquo;s biomass needs, icy waters during Denmark&rsquo;s prime biomass use months can interrupt the supply chain, he said.
 For Baltic producers, major markets include the U.K., Scandinavia, the Netherlands and Belgium, said Simon Rodian Christensen, principal for commodity broker Copenhagen Merchants Group. Different buyers have different product parameters, he said, and even color can be a significant aspect in some residential markets. &ldquo;As a producer, you should try to meet and understand all the specs possible,&rdquo; he told the conference attendees.
 But with globalization of the biomass industry, issues such as sustainability will come into play, Denis said. &ldquo;The headline against all of this is sustainability, and that means nothing and everything at the same time,&rdquo; said John Keppler, CEO of Enviva LP.
 Sustainability was a theme throughout the event and was the focus during the final panel. It is the core of pellet production, according to Morten Neraas, CEO of Florida-based pellet producer Green Circle Bio Energy Inc., and without it, the business is not successful. Arnold added that sustainability here in the U.S. is even a growing concern in the sought-after European pellet markets.&nbsp;
 Reliability and Accountability
 Ensuring the reliability of producers is yet another crucial supply issue addressed by many of the event&rsquo;s speakers. &ldquo;We are going to hold you accountable for delivering on your promise,&rdquo; Pease said. Reliability, along with sustainability, is among the key criteria for &ldquo;culling the herd&rdquo; of pellet manufacturers, according to Carl Williams, principal of private equity firm Riverstone Holdings. Ranking up there with it are health and safety, and product quality. &ldquo;When you say a shipment of pellets will show up, it sure as hell better show up,&rdquo; Williams said.&nbsp;
 He and Justin DeAngelis, a director for Denham Capital Management LP, offered conference attendees the view from a crucial vantage point: private equity firms. Pellet exporting is a difficult business, they both agreed. The two were not the only speakers who referred to the pellet export industry as nascent and fragmented. Economies of scale and scope are crucial, and it&rsquo;s difficult to realize &ldquo;cash-on-cash&rdquo; returns, according to Williams. &ldquo;I will tell you that it is possible to do that in this business, but it is extremely difficult,&rdquo; he said.&nbsp;
 To be completely successful, the pellet industry needs to become a mini coal industry, DeAngelis said, because power companies want to burn coal. In addition, pellets need to become a real commodity, instead of the nascent product it is today. &ldquo;Basically, people want to deal with coal at the end of the day,&rdquo; he said. The survivors in the industry will be those that look like coal companies, he added, saying he wouldn&rsquo;t be surprised if coal companies are making pellets 10 years from now.
 DeAngelis added that a global strategy for a pellet business provides for the highest potential value. &ldquo;We believe if you have a truly global footprint &hellip; it allows you to supply current demand, but also to switch when the market picks up elsewhere.&rdquo;
 Opportunities in Asia
 And that switch, or at least some rapid growth, could be coming out of Asia. Todd Bush, of P&ouml;yry Management Consulting Inc., shifted the focus from European to Asian pellet market potential. Bush briefly addressed conference attendees during lunch the first day of the conference, discussing the sometimes overlooked potential for pellets in Asia. He singled out Korea, saying plans are uncertain for Japan after the Fukushima disaster, and China has ample agricultural residues to feed its biomass power plants.
 Dedicated biomass power, as well as cofiring with biomass are both incentivized in Korea through renewable energy certificates, he said, calling bioenergy Korea&rsquo;s &ldquo;low-hanging fruit.&rdquo; Pellets, he assured, will be a large portion of bioenergy generation in Korea.
 Currently, Malaysia, Canada and Chile are supplying biomass pellets to Korea, he said, but demand will grow rapidly. &ldquo;Korea is going to become a competitive market,&rdquo; he said.
 Contract Considerations 
 Pellet producers who have not gotten into export markets may not realize the multitude of factors they&rsquo;ll need to specify in sales and shipping contracts. Roderick W. Simmons of law firm Hirschler Fleischer was on hand to address aspects of international contracts that concern producers. To begin, Simmons introduced the International Commercial Terms, or Incoterms, which define the roles and responsibilities of buyers and sellers, including the division of costs such as insurance. The two most common sets of Incoterms Simmons said he&rsquo;s encountered are free on board (FOB) and cost, insurance and freight (CIF). Under an FOB contract, sellers are only responsible for getting the pellets to the ship, the subsequent responsibilities of the transaction falling upon the buyers&rsquo; shoulders. Under CIF contracts, however, the seller maintains responsibility for the pellets until they are discharged off the ship at their destination.&nbsp;
 Simmons continued through a list of contract aspects, beginning with basic commercial terms that will need to be agreed upon between supplier and buyer. Those include tonnage, price, contract term, pellet specifications, and number and frequency of shipments over the life of the contract. &ldquo;In the purely shipping mechanics arena there are a number of things that need to be ironed out,&rdquo; he said, listing nomination of port and of vessel, loading and discharge rates, and several other factors. Delivery-related terms include weight determination, payment, sampling and analysis, and acceptance and rejection.
 Nonperformance aspects that need to be considered include remedies upon contract breach, termination provisions and credit support. Simmons also discussed the inclusion of allocation of certain risks into contract negotiations. That includes sustainability criteria, warranty limitations and liability limitations.
 The panel also included Henrik Christiansen, president of shipping company Oldendorff Carriers Inc., who informed attendees about the shipping industry as it relates to pellet exports. &ldquo;We are the biggest carrier, I believe, of pellets for the last five years,&rdquo; he said.
 Pellets are still a &ldquo;new&rdquo; commodity, he said, and have experienced just in the past three years the weeding out of what Christiansen called &ldquo;cowboys,&rdquo; those who called themselves producers but were ill-equipped to enter the pellet market. It was commonplace for prospective producers to underestimate storage, logistics, construction and more, he said, adding that the industry environment has improved. &ldquo;Today is much better,&rdquo; he said. &ldquo;People in the industry know what they&rsquo;re doing and it&rsquo;s much more professional.&rdquo;
 Most of the 1.3 million metric tons of pellets Oldendorff has shipped in the past three years went to Europe, with the U.K. emerging as a strong pellet user. But pellet shipping can be tricky, Christiansen cautioned. &ldquo;In the beginning, ship owners were scared of pellets,&rdquo; he said. The stowage factor of pellets is larger than that of coal, he said, pellets can&rsquo;t get wet, and the temperature in the cargo hold needs to be monitored.&nbsp;
 Much like the shipping aspect of the pellet export business, the supply side carries challenges, and Mike Williams of The Westervelt Co. focused briefly on them, including resistance from industries such as power, and pulp and paper. He also emphasized the continued resistance from environmental and other opposition groups, and the need to keep them properly informed about what&rsquo;s really happening in the industry. &ldquo;We can&rsquo;t afford any major slip-ups,&rdquo; he said. &ldquo;The unfortunate thing is they&rsquo;re more organized than we are and they have more funding than we do.&rdquo;
 But a robust commodity futures market will emerge, Williams predicted. And that will open the doors for more profit possibilities in an industry already making a name for itself in clean energy.
 &ldquo;Just because we&rsquo;re doing something good doesn&rsquo;t mean we can&rsquo;t do it well and profitably,&rdquo; Keppler said. &ldquo;We have a fantastic, fact-based story to tell here.&rdquo; &nbsp;&nbsp;&nbsp; Author: Lisa Gibson Associate Editor, Pellet Mill Magazine (701) 738-4952 <a href="mailto:lgibson@bbiinternational.com">lgibson@bbiinternational.com</a>

SHIPSHAPE: Pellets destined for the export market are poured into a ship's holding area at the Port of Vancouver.  

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September's North American Biomass Pellet Export Conference offered valuable insight into the global pellet industry and connected buyers and sellers. 

Exporting  Expertise

In 2005, the British Columbia forestry industry had a fatality count of 43, well over its annual average of 20. The unacceptably high figure prompted a public outcry and the formation of a safety task force to evaluate and implement preventative measures. The industry has now been working under an independently audited safety certification program and has brought down its yearly fatality average to 10. So far this year, the number is four.
 The British Columbia Forest Safety Council, a not-for-profit group formed after 2005&rsquo;s disturbing number of deaths in the forestry industry, is that auditing agency. The organization is funded through a levy collected from the industry and has played a pivotal role in the safety improvements of the sector. This year&rsquo;s goal was zero forestry-related deaths, according to Stephen Chaplin, director of training and program development for the BC Forest Safety Council, and while that won&rsquo;t be met, the number is substantially lower than 2005&rsquo;s because of the systems the safety council has put in place. &ldquo;Things have gotten much better,&rdquo; he says.
 &ldquo;I wouldn&rsquo;t say it&rsquo;s a direct result of the BC Forest Safety Council,&rdquo; he adds. &ldquo;I would say it&rsquo;s a shared responsibility with government, health and safety associations, and industry all working together putting safety in the forefront.&rdquo;
 The 2005 safety task force&rsquo;s action plan was based on four key pillars: cultural change: the development of sector-wide health and safety accord; assured capacity: the development of a sector-wide health and safety assurance; shared responsibility: promotion and implementation of cascading responsibilities; and rigorous implementation: creation of an implementation team. The BC Forest Safety Council has taken on the implementation team role and was integral in developing the audit and certification program, which begins with a basic audit questionnaire that includes eight elements. The first is management leadership, including many aspects such as company health and safety policies, and health and safety responsibilities such as the communication to workers of their specific safety responsibilities and evaluation by the manager of the company&rsquo;s safety program. Next is hazard identification and risk control, which include inspections and risk management.
 Third, the audit questionnaire addresses standards, procedures and work instructions. Those questions draw information about a company&rsquo;s safety rules, regulatory compliance and emergency response. Training, education and certification come next, evaluating, as the name suggests, training, education, orientations and certification. Next on the questionnaire is the section dedicated to health and safety communication systems including safety meetings and documentation. Incident reporting and investigation systems follow, addressing recommendations and follow-up actions.
 Nonprime contractor management includes questions about selection criteria, as does the next section of the questionnaire about prime contractor management. The final questions concern injury management and return to work programs and include aspects such as return to work policy, management and leadership, and communications. Following the main audit areas are technical audit modules, where companies answer questions only relevant to their industries.&nbsp;
 With accidents such as explosions and fires on the rise in Canada&rsquo;s pellet mills, could this all-encompassing safety action plan be broadened to include other forestry-related industries, such as the wood pellet sector?
 Chaplin is confident it can.
 Addressing the Pellet Industry 
 While the need for change in the forestry industry came about because of the high number of fatalities, the impetus in the pellet industry is high insurance rates resulting from an increase in the number of accidents, sometimes causing deaths. Most accidents are related to dust explosions and fires, self-heating and spontaneous combustion, and hazardous emissions.
 &ldquo;They have wood dust explosions,&rdquo; Chaplin says. &ldquo;They're catastrophic. We don&rsquo;t see a lot of fatalities, although there are some, but mostly we see explosions.&rdquo;
 Because of a large number of incidents and insurance claims from Canadian pellet mills, two insurers have already left the pellet sector. &ldquo;If that keeps going and other insurers follow their lead, we&rsquo;ll be in trouble, won&rsquo;t we?&rdquo; says Gordon Murray, executive director of the Wood Pellet Association of Canada. The few insurers who remain, have implemented astronomical rates, restrictive terms and provide less capacity.
 Unless a best practices plan incorporating risk management and risk control is put in place, insurance may not be available to some Canadian pellet manufacturers, Murray worries. One letter to the Canadian pellet industry from the Lumbermen&rsquo;s Underwriting Alliance, which has since pulled out of the pellet industry altogether, reads, &ldquo;We have incurred an inordinate number of claims &hellip; causing us to pay out far more in settlements than we ever charged in premiums.&rdquo;
 Such concerns prompted Murray to approach the BC Forest Safety Council, Chaplin recalls, wondering if its success in reducing accidents could be transferred and used just as efficiently in the pellet industry. &ldquo;The answer is yes,&rdquo; Chaplin says.
 &ldquo;They&rsquo;ve been through this before in the harvesting sector,&rdquo; Murray explains. &ldquo;We have to decide as an industry that this is unacceptable and we have to change our culture here.&rdquo; Development of a similar system for the pellet industry does include a whole new set of concerns and aspects, Chaplin cautions, including contractors, how the product is received and the different processes.
 So with the help of Canadian insurance broker Aon, the safety council and pellet association developed a pellet mill-specific audit questionnaire to accompany the basic audit already developed for the forestry industry. &ldquo;We&rsquo;ve developed these questionnaires through every part of the process from grinding through drying, pelletizing and cooling,&rdquo; Murray says. The questionnaires convey the importance of measures such as spark detection and isolation of fire hazards. &ldquo;It&rsquo;s going to become an audit system and if [mills] pass, they&rsquo;ll be certified as safe,&rdquo; he adds. Just as it is in the forestry industry, the BC Forest Safety Council will be the safety auditing and certification body for the pellet mill industry.
 The pellet addendum to the program also includes an important insurability audit to help in the qualification for lower insurance costs. &ldquo;So when folks build a new plant, they can take those measures into account,&rdquo; Chaplin says. &ldquo;Or if they already have an existing plant, if they follow those things &hellip; the hope is, if they&rsquo;ve done the audit and they&rsquo;ve done the insurability audit, that they&rsquo;ll be able to have lower rates.&rdquo;
 The insurance aspect, catering to wary insurers and developed with the help of Aon, asks specific questions, such as whether the fiber pile sits at least 30 meters away from any major building on-site, whether multiple fiber piles are at least 10 meters apart, and whether the maximum size of fiber piles is less than 150 meters by 100 meters by 20 meters. The questionnaire also includes inquiries about mobile equipment and their fire suppression systems and preventative maintenance systems for daily inspection and cleaning of mobile equipment used for transporting fiber. Process-related questions regarding primary building construction are accounted for also, including dust isolation, fire suppression systems, fiber in-feed, fiber sizing, fiber drying, pelletizing, cooling, finished product storage, and dust collection and ventilation.
 Important technical audit subjects for pellet mills would also include off-gassing, hot works, lockout, working at heights, respiratory protection and combustible dusts, Murray says.
 The pellet mill safety system integrates both the safety and business models, Chaplin explains. &ldquo;By doing that, you have high productivity, good morale, good culture, good safety and good business,&rdquo; he says.
 Implementation
 &nbsp;Murray planned to&nbsp; present the finished system proposal, complete with estimated costs, to the Wood Pellet Association of Canada board of directors on Oct. 26. The board will make the final decision as to whether participation in the audit and certification system will be required for Canada&rsquo;s pellet industry. &ldquo;So far, my board has been supportive of all this, but they&rsquo;ve stopped short of making the absolute requirement for certification,&rdquo; Murray says, adding that the October meeting could end with a vote on implementation of the system, or the board could decide to study it further and vote at a later date. &ldquo;I just can&rsquo;t say for sure,&rdquo; he says.
 The safety program implemented in British Columbia&rsquo;s forestry sector has indeed led to a decrease in insurance claims registered (see table above), while providing the even more necessary benefit of reducing deaths. With the pellet addendum, it could be used all over the world in both the forestry and pellet sectors, Chaplin says. &ldquo;It&rsquo;s about sharing of learning and partnerships and we&rsquo;re happy to share anything. Potentially, I could see that it could apply anywhere.&rdquo;
 Together, the BC Forest Safety Council, Aon and the Wood Pellet Association of Canada have identified their insurance and safety issues through pellet plant visits, and have gained grassroots support for their effort to create a meaningful and audited safety certification program.
 &ldquo;It just makes you feel good in your belly when you can go out and help make a difference,&rdquo; Chaplin says. &nbsp;&nbsp;&nbsp; Author: Lisa Gibson Associate Editor, Pellet Mill Magazine <a href="mailto:lgibson@bbiinternational.com">lgibson@bbiinternational.com</a> (701) 738-4952

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A collaboration between the British Columbia Forest Safety Council and the Wood Pellet Association of Canada could help reduce safety issues and incidents in the pellet sector. 

For Safety's Sake

About 240 pellet fuel industry stakeholders gathered at the Sawgrass Marriott in Ponte Vedra Beach, Fla., this summer to network and gain a stronger grip on the pertinent issues impacting their industry. The Pellet Fuels Institute Annual Conference provided a venue to discuss pellet plant safety, fire prevention, government affairs, plant optimization, and the ongoing development of PFI&rsquo;s third-party verification standards system, among other topics. And of course, golf enthusiasts got a chance to play the famous TPC Sawgrass course, just a short jaunt from the PGA Tour headquarters.
 But getting down to business, the U.S., despite being years behind Europe in the commercial and industrial use of pellets for heating and power, is still under that continent's watchful eye. Players in Europe&rsquo;s better-developed pellet markets are still interested in what the U.S. has to offer, curious about fiber and shipping costs. Some are looking for opportunities to build plants here, but their interest could also be yet another indication of the potential for pellet exports from U.S. producers.
 Exploring Exporting
 The pellet export market is in for a wild ride in the next 10 years, and Harold Arnold, president and CEO of Georgia-based Fram Renewable Fuels LLC, recommended industry stakeholders hold on to their hats.
 &ldquo;The industry will see wild growth over the next few years,&rdquo; he told conference attendees. &ldquo;Expect the unexpected. For some, these changes will be good; for some, they&rsquo;ll be bad, but either way, we&rsquo;re in for a wild ride.&rdquo;
 Fram Renewable Fuels operates a 230,000-metric-ton pellet mill that uses about 460,000 metric tons of raw materials. Drawing from his export experience and observations, Arnold said the 2011 export market has been stronger than usual. That strength could be influenced by extreme cold in the Baltics and resulting difficulties in exporting from Estonia. Spot sales, however, are a different story and pricing is an ongoing struggle, he said, even though demand continues.
 Arnold referred to a P&ouml;yry study that estimates current worldwide demand for pellets at 16 million metric tons, but he added that the number is one of the more conservative. Not surprisingly, Western Europe dominates current use, but markets are growing in Asia. That doesn&rsquo;t necessarily mean, though, that all Asian countries will begin to import massive amounts of pellets. Instead, it is likely that some, such as China, will use primarily their own materials, according to Arnold.
 Global capacity is around 32 million metric tons, and both global production and demand are expected to grow. Still, that doesn&rsquo;t mean all pellet mills will enter the export sector. &ldquo;Many facilities may never get into exporting because of logistics,&rdquo; Arnold said. He refers to logistics as &ldquo;the great equalizer,&rdquo; citing problems encountered in the U.S., such as a lack of discounts, few suitable ports and limited port storage.
 Europe is a policy-driven market, fellow speaker Seth Walker, associate economist in timber and bioenergy for RISI, told attendees, and 75 percent of demand could come from the U.K. alone in the next few years. The growing European market opens up an enormous window of opportunity for pellet producers in the Southern U.S. That region is the largest timber producer in the world, Walker said, and also has port availability and a close proximity to Europe, relative to other regions of the world. The final speaker on the panel, Joanne Littlefair, international trade specialist with the U.S.
Department of Commerce, discussed three main goals of the department related to exporting: trade advocacy and promotion, access to financing, and reducing trade barriers and enforcing trade laws. The department has 107 global U.S. Export Assistance centers to promote trade and answer questions producers may have, Littlefair said. Reducing trade barriers and enforcing trade laws is crucial, she emphasized, to ensure that global export market participants are &ldquo;playing by the rules.&rdquo;
 And as always, financing is a vital aspect of exporting and Littlefair named a few helpful programs the Department of Commerce operates, including Export Express loans, the Export Working Capital Program, and the International Trade Loan Platform. Littlefair also mentioned the Export-Import Bank, and the financial assistance it can offer.
 An important new export market development Arnold emphasized is the European standards expected to come out within the next year. As sustainability is a growing concern for European Union utilities, a buyers group is currently working to develop a sustainability certification program. Arnold recommended that pellet manufacturers looking to export plan how they source, track and certify their pellet fuel.
 A Standards Update 
 In forming its standards, PFI will keep a close eye on the European standards, leaving as few gaps and discrepancies as possible in the major areas, according to John Crouch, PFI&rsquo;s director of public affairs. And the process hasn&rsquo;t come without an enormous amount of work.
 When speaker Chris Wiberg, co-chair of PFI&rsquo;s Standards Committee, was introduced it was said that he has spent thousands of hours on the ongoing project. Taking the stage, Wiberg, who currently manages the Biomass Energy Laboratory in Conyers, Ga., said he wished it were an exaggeration.&nbsp; During his presentation, Wiberg outlined changes to the standards that have come about since their initial draft release in October 2010. That draft outlines three fuel grades: premium, standard and utility. It specifies parameters for a number of properties including ash content, diameter, durability, fines, moisture and chloride content, among others.
 But perhaps the most important aspect of the system is the third-party audit of those parameters. PFI proposes a three-level verification system, beginning with the pellet mill itself. The second verification comes from on-site visits by inspectors who are well-versed in the timber industry, doing other forest product inspections such as lumber grading. Finally, the inspectors&rsquo; assessments will be audited by the accreditation body, which Wiberg announced at the annual conference will be the American Lumber Standard Committee. &ldquo;I&rsquo;m feeling confident that they are the right body,&rdquo; he said. The internationally recognized group is experienced in such dealings, he told conference attendees, and already accredits several auditing agencies.&nbsp;
 Also, internal laboratories at mills are no longer required, he announced, the standards specification document has been restructured, and the inspection and re-inspection criteria have been altered. Now, a product must be within 95 percent compliance for grade qualification.
 Undoubtedly, pellet producers will wonder how much it will cost them to comply, but Wiberg said it will differ mill by mill. Influential factors include the PFI enrollment and operations fee, internal lab quality assessment and quality control program development, third-party lab and testing services, auditing services and ALSC&rsquo;s cost to administer the program. Roughly, though, Wiberg estimated it will cost 50 to 70 cents per ton.
 The last portion of the conference was a four-hour symposium detailing the standards and compliance for pellet manufacturers. Eventually, PFI hopes that the standards will be adopted by appliance manufacturers who will outline the use of certain grades and void warranties where the specifications aren&rsquo;t followed.
 In the future, the standards committee will finalize the language in the formal agreement with ALCS; and ALCS and PFI boards will need to review, approve and sign the agreement. With such involved process steps still on the horizon, a timeline for the release and implementation of the standards is hard to nail down.
 Optimization and Efficiency
 Besides broad industry topics such as standards and export markets, the conference also touched on more specialized areas such as individual pellet plant efficiency and optimization, crucial factors that received input from two speakers. Plant optimization and efficiency can hinge on multiple factors, not the least of which being raw material variances and the use of proper machinery.
 In his 30-minute presentation, Clyde Stearns, vice president of engineering for Zilkha Biomass Energy and biomass and wood pelleting expert for equipment manufacturer Buhler Inc., emphasized minimizing raw material variance. &ldquo;You have to have really intimate knowledge of your raw material,&rdquo; he said. Showing a map of the U.S. and the varying available wood types, he explained, &ldquo;The U.S. is not homogenous at all for wood species.&rdquo; The external selection of raw material is important, making it crucial for a pellet company to understand the different types of wood it will use, and what form it will be in.
 Subsequently, internal homogenization requires constant material supply characteristics. Stearns included in his presentation a fact-versus-fiction element of pelleting, saying that contrary to popular belief, a complicated and expensive mixing system is not essential in a mixed-species wood pellet plant. A basic system is sufficient, he assured, but chip size and variance need to be relatively uniform.
 He also addressed minimizing moisture and equalization in a pellet mill, discussing drying time and predrying. &ldquo;In an ideal world, I would recommend covered chip storage,&rdquo; he said. &ldquo;If that can be done, it dramatically improves the drying operation.&rdquo;
 Stearns also discussed wet material sizing, complemented later by the presenter who followed him. Cole Martin, sales manager at Dieffenbacher Inc., described the company&rsquo;s two new sizing technologies being used in Europe today.
 The first, The Eco Pulser, is a noncontact sizing machine that uses shock waves designed to minimize the wood size, he said. The material is fed into the machine through the middle, and into the counter-rotating motors. Any sand, stone or similar material is powdered, and contaminants such as plastics and metals are detected through frequencies within the process and released for disposal. The system, which has installations in Germany, uses less power than traditional sizing equipment, emits no pollutants and makes little noise, he said. The Eco Pulser, however, is not for absolute sizing. Dieffenbacher&rsquo;s ClassiSizer is a better fit for that. While it is an impact sizer, it uses no hammers, knives or flakers, Martin said. The system has been used in wood chip processing and residential wood processing and is breaking into the pellet mill market with one installation a
lready and another in the near future. &ldquo;It&rsquo;s used in a number of different industries,&rdquo; Martin said. Because there is no cutting of the chips, the system experiences little wear. It is also insensitive to contaminants and is low maintenance. It functions through a rotor that throws the wood at a screen, Martin explained. Some goes through and is sized, while other material comes back to be thrown again. The process requires half the energy of a traditional hammermill and can handle frozen material.
 The presentations were crucial for prospective pellet manufacturers, as they offered an overview of efficiency factors, as well as an explanation of the equipment that can enhance them.&nbsp;&nbsp;
 Overall, attendance at the conference was similar to past years, and offered well-balanced content and extensive networking opportunities, according to Jennifer Hedrick, PFI&rsquo;s executive director. &ldquo;We were quite pleased,&rdquo; she said. &ldquo;From the staff perspective and from the comments we received from members alike, [there was] a lot of feedback on the balance of the conference.&rdquo; The program&rsquo;s &ldquo;nuts and bolts&rdquo; aspects in topics such as plant safety nicely complemented the big picture topics regarding industry status, she said. &ldquo;People really want to know that type of information.&rdquo;
 Attendees also appreciated the networking opportunities such events offer, to bolster business. &ldquo;People really use this as a place of business to grow and develop,&rdquo; Hedrick said. &ldquo;This provides an opportunity for that.&rdquo;
 For more information on the conference and speakers, visit the PFI website: www. pelletheat.org. Author: Lisa Gibson Associate Editor, Pellet Mill Magazine <a href="mailto:lgibson@bbiinternational.com">lgibson@bbiinternational.com</a> (701) 738-4952

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Chris Wiberg, manager of the Biomass Energy Laboratory, has been integral in the development of PFI's wood pellet standards. 

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PFI Executive Director Jennifer Hedrick says the PFI Annual Conference offered attendees well-balanced content and opportunities to network.


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The Pellet Fuels Institute Annual Conference drew pellet industry players to Florida to learn more about issues relevant to their industry, including PFI's new fuel standards.

Conference Addresses Burning Questions

The U.S. imports more products than it exports and the Obama administration has been vocal about the importance of enhancing export opportunities. The president directed the National Export Initiative in 2010 seeking to double U.S. exports within five years, aimed at putting more Americans to work.&nbsp; &ldquo;Creating jobs in the United States and ensuring a return to sustainable economic growth is the top priority for my administration,&rdquo; Obama said. &ldquo;A critical component of stimulating economic growth in the United States is ensuring that U.S. businesses can actively participate in international markets by increasing their exports of goods, services and agricultural products. Improved export performance will, in turn, create good high-paying jobs.&rdquo;
 As governments in Europe and Asia initiate policies to reduce greenhouse gas emissions, those regions need renewable fuels and technology. That has prompted a flurry of activity in the U.S. pellet industry, and the U.S. government has zeroed in on the potential for pellet exports as one way to make up for its trade deficit.
 Subsequent to the NEI, the Renewable Energy and Energy Efficient Export Initiative (RE41), a coordinated effort to promote renewable energy exports in the U.S., targeted wood pellets as one of the most promising export markets and indicated that the USDA would expand its analysis of exporting wood pellets and chips in relevant countries. The purpose of the analysis was to provide U.S. industry and policymakers with information on the sector&rsquo;s growth, export opportunities in emerging markets and policy updates.&nbsp;
 The government&rsquo;s emphasis on wood pellet exports was good news for the biomass industry. As a result of the NEI, seven federal agencies, including the U.S. DOE, USDA, Department of Commerce and others, collaborated on the RE41 project.&nbsp;
 With various government agencies involved in producing pellet-directed reports, multiple sources exist for company research and information. The questions now are, what happened with the NEI, what are agencies doing and where can the information they have generated be found? National Export Initiative The NEI created a national export cabinet to develop and coordinate its implementation. This cabinet includes the secretaries of state, agriculture, commerce and other officials. According to the NEI, various department officials continue to be engaged in interagency coordination of export promotion efforts.
 When launching the NEI, the president noted that 95 percent of the world&rsquo;s customers and fastest-growing markets are outside U.S. borders. He mentioned that our exporters have faced the obstacle that the federal government, frankly, just hasn&rsquo;t done a good enough job advocating for them abroad&mdash;at least compared to the advocacy that other countries are engaging, and that is why the U.S. must go to bat for businesses.
 Understanding the need to focus on energy, in light of the NEI, the Trade Promotion Coordinating Committee&rsquo;s Renewable Energy and Energy Efficiency working group was formed. Sally Klusaritz, USDA director of public affairs and executive correspondence, says the group&rsquo;s mission is to support the NEI by developing an export strategy to guide the U.S. government programs that support U.S. renewable energy and energy efficiency companies wishing to compete for sales abroad.
 The TPCC is an interagency task force formed to coordinate and develop a government-wide export promotion plan. Made up of 20 agencies, the core partners include the Department of Commerce, Export-Import Bank, Overseas Private Investment Corp., U.S. Trade and Development Agency, Small Business Administration, Department of State and the USDA. The working group&rsquo;s main initiatives include training specialists, marketing exports, integration of export programs and education to provide U.S. companies with the most accurate service and information quickly.
 As mentioned earlier, the working group&rsquo;s export strategy, RE41, which was released in December, demonstrates the commitment started by the NEI, and is the country&rsquo;s first-ever attempt to coordinate U.S. government programs in support of renewable energy exports, according to U.S. Secretary of Commerce Gary Locke. The initiative was launched with 23 commitments from eight different U.S. government agencies and was modeled to proceed without any further funding or taxpayer cost. A specific example of the RE41 commitments includes an online portal for RE41 access, which provides news, events and market research at www.export.gov/reee.
 Pellet Policy
 Subsequent to the NEI, the wood pellet industry achieved government exposure in the RE41, when it targeted wood pellet exports as a high-growth sector.
 In the RE41, the USDA pledged to support the efforts of the working group as follows: &ldquo;USDA will also expand its biofuels annual reports to cover biomass in the form of wood pellets and wood chips in relevant countries so as to provide much-needed information to the U.S. biomass industry and policy makers. This reporting will provide information on the sector&rsquo;s growth, export opportunities in emerging markets, and policy updates.&rdquo;&nbsp;
 In addition, the RE41 provided that the USDA would &ldquo;seek to identify an appropriate U.S. wood pellet industry partner to undertake foreign market development and export promotion activities under the Foreign Agricultural Service&rsquo;s Market Access Program and Foreign Market Development programs.&rdquo; The government&rsquo;s target of wood pellet exports seems to be well-timed, if not overdue. Since the publication of RE41, Klusaritz says the USDA has fulfilled its commitments by improving the reporting guidelines for the &ldquo;Biomass for Heat and Power&rdquo; section of the annual biofuels report of the USDA Foreign Agricultural Service Global Policy Analysis Division.&nbsp;
 The expanded report now includes production, consumption and trade statistics for wood pellets. FAS analysts in Europe, Canada and Russia have reported on wood pellets in the past, but the new instructions will harmonize and expand the knowledge of the biomass industry, and the wood pellet industry in particular, according to Klusaritz.
 The USDA reports that in 2010, the U.S. exported $128 million (736,000 metric tons) of wood pellets, which was a 37 percent increase from 2009. USDA representatives in foreign countries submit reports on biofuels developments in their countries, which are called Global Agricultural Information Network reports.&nbsp;
 For example, the 2011 GAIN report on Canada, published in July, provided information on wood pellets under its analysis of biomass for heat and power. The analyst in Canada recognized the country&rsquo;s plan to take advantage of Europe&rsquo;s current pellet demand. According to the report, &ldquo;there is interest in exporting wood pellets from Canada to Europe to meet the increased demand for biofuels in European countries.&nbsp; The E.U. has increased funding for renewable production, including doubling the financial contribution to renewable energy in 2007 for 2010 targets.&rdquo;
 The report continued by providing statistics on Canada&rsquo;s pellet production, stating the wood pellet industry in Canada, especially in the West, has grown at an annual average rate of more than 20 percent over the past five years due to a steady supply of wood residues, and increasing demand from Europe. In 2010, Canada&rsquo;s plants produced about 1.3 million metrics tons of pellets per year, the USDA said.
 The GAIN reports analyze specific export and import statistics for each country researched. Canada imported more than 365,000 metric tons of pellets from the U.S. in 2007 compared to 531,000 in 2010, which was approximately 98 percent to 99 percent of its total imports. For 2007 exports, Canada shipped more than 1.2 million metric tons of pellets, with 647,000 to the U.S. (51 percent) and 245,000 to Europe (19 percent).&nbsp; Things changed in 2010, however, with Canada exporting a total of 1.6 million metric tons. Of the total, Canada now sends 368,000 to the U.S. (22 percent) and 1.1 million metric tons to Europe (71 percent).&nbsp;
 Although the USDA has reported on pellets in the past, and intends to follow through with the NEI, it appears limited current information exists about pellets. It is likely increased reports will be published now that the global market is more active. U.S. companies can use GAIN reports to track trends of competitors and follow market opportunities once the information is available. A GAIN report search engine exists that is particular to countries, topics and time frames and can be found at www.gain.fas.usda.gov/Pages/Default.aspx.&nbsp;
 In addition to GAIN, the USDA welcomed its first biomass energy cooperator into the Cooperator Program in 2011, according to Klusaritz. The American Biomass Trade Cooperative, a new agricultural marketing group representing domestic producers of biomass energy products, received its FAS Market Access Program startup on Jan. 1.&nbsp;
 The ABTC is a nonprofit trade association comprised of commercial biomass growers, manufacturers and industry specialists from all across the U.S., with the primary purpose of promoting common interests in those engaged in the industry, and more particularly those in the woody biomass and wood pellet industry. The ABTC adds that it is solely focused on the development of biomass as a major staple in America&rsquo;s export portfolio. This year, the group was charged with conducting market research activities in the EU to better understand that growing market.&nbsp;
 &ldquo;The European Union is the primary market for U.S. biomass pellet exports,&rdquo; Klusaritz says.
 Practical Effect
 With the launch of the export initiative, and agencies such as the USDA trying to follow through with commitments in 2011, the practical impact of the pellet policy for U.S. exports cannot yet be sufficiently determined. Sometimes the wheels of government turn slowly.&nbsp;
 Well-established U.S. companies are exporting significant amounts of pellets overseas. For example, Florida-based Green Circle Bio Energy is producing at capacity, approximately 500,000 metric tons of wood pellets annually, and exports 100 percent of its production, according to president and CEO Morten Neraas. The company targets European markets, primarily utility companies in the U.K., Holland, Belgium and Scandinavia.&nbsp;
 Neraas says that for the most part, wood pellet exporters are already aware of market trends and pellet market opportunities worldwide.
 Other considerations, such as the current exchange rates between currencies, could significantly impact expansion plans of pellet exporters and existing European plants, according to Neraas. He says that government help for pellet exports would best be in the form of information on where to find export-friendly financing, lowering tax rates for manufacturers or providing education for the workforce to improve quality and efficiency. Companies are not seeking subsidies, but they are looking for assistance with financing opportunities.
 The National Export-Import Bank is the official Export Credit Agency of the U.S. government and its mission is to promote and finance the export of U.S. goods and services and to increase jobs. The bank has a mandate to support renewable energy and tripled its support in 2010.
&nbsp; The bank does not compete with private lenders, but assists projects and fills in the gaps left open by trade financing. The bank provides working capital guarantees (pre-export financing), export credit insurance, and loan guarantees and direct loans (buyer financing).&nbsp;
 The bank provides financing for various exporters, including bioenergy companies, and further information can be found at www.exim.gov/index.cfm. Author: Matt Soberg Associate Editor, Biomass Power &amp; Thermal <a href="mailto:msoberg@bbiinternational.com">msoberg@bbiinternational.com</a> &nbsp;(701) 746-8385

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The U.S. government is pooling its resources to tackle the nation's trade deficit, and wood pellets may be the solution.

Trade Talk

The crackling and colorful fireworks in Washington went well beyond this year&rsquo;s Independence Day celebration on Capitol Hill and are proving to be more of a distraction to our nation&rsquo;s progress, especially when it comes to transforming the energy policy of the United States to one of renewable, clean technologies like those of advanced biofuels. The political back and forth and uncertain future of public policies and regulations are leaving our country vulnerable to the steady progress of other nations and competitors like China.
A recent Pew Environment Group report, Who&rsquo;s Winning the Clean Energy Race?, found clean energy investments in China reached $34.6 billion last year, more than any other country, almost doubling the U.S. investment of $18.6 billion. Now that&rsquo;s something worth shooting off rhetorical fireworks in Washington rather than the political jabs we&rsquo;re certain to see more of leading into a presidential election year.
Last month, members of the Advanced Biofuels Association met on Capitol Hill and were fortunate to get a glimpse of the thoughtful leadership our nation needs to fortify our technology and economic defenses against the Chinese and others. But even with the encouraging discussions we had with leaders and the pragmatic solutions offered, the domestic advanced biofuels industry still faces a near-term future of diminished policy support from Washington.
While lawmakers look at every program to slice and dice for cost savings, one of the most promising economic engines, the domestic biofuels industry, could be in desperate need of a tune-up by the end of the year as numerous tax policies and incentives are set to expire along with a downward trend of policy support. You had better have a seat, because here is what I&rsquo;m talking about: &bull; The renewable diesel credit it set to expire Dec. 31. &bull; The biodiesel credit is set to expire Dec. 31. &bull; The alternative fuels mixture credit is set to expire Dec. 31. &bull; The advanced alcohol tax credits as part of the VEETC are set to expire Dec. 31. &bull; In another year, the cellulosic biofuels production tax credit will expire on Dec. 31, 2012. In other policy developments in Washington&rsquo;s questionable support of our burgeoning industry, the House of Representatives recently passed legislation in support of a coal-to-liquids program, and there is a lack of funding for the reverse auction at the U.S. DOE, as well as a reduction in funding for the Biomass Program, Integrated Biorefining and ARPA-E at DOE.
The verdict is still out on the fate of the Biomass Crop Assistance Program, which reduces risk for producers who volunteer to grow new energy crops, and should be reauthorized in the next Farm Bill.
The decisions Congress makes today on renewable energy will undoubtedly guide our nation for generations. Yesterday&rsquo;s answers simply will not fit the new equation of the future. Now is the time for Washington to consider smarter investments based on performance, for example, not a lifetime of subsidized assistance.
Our transition to clean, renewable energy alternatives is well under way but our sluggish economic circumstances demand short-term and consistent policies that will encourage market certainty and ultimately accelerate the commercial deployment of advanced and cellulosic biofuels. So it is essential that Washington explore a new set of solutions for its next steps in renewable energy policy, one that provides short-term certainty, strengthens our economic security and puts folks back to work.
A new Gallup poll shows that Americans&rsquo; satisfaction with the direction the United States is going hit a two-year low in July, dropping from 20 percent in June to just 16 percent last month. Now is not the time for the distraction of political fireworks. Bold leadership is needed to capitalize on the American ingenuity that will help drive a global revolution in clean energy using advanced biofuels technologies. The burden is on our industry to take a step back from the politics and come together to strategically reassess the appropriate role the federal government should play in supporting and further developing the advanced and cellulosic companies in the United States. Author: Michael McAdams President, Advanced Biofuels Association (202) 469-5140 <a href="mailto:Michael.McAdams@hklaw.com">Michael.McAdams@hklaw.com</a>

As a slew of tax incentives approach final sunset, new solutions are needed on Capitol Hill 

Washington's Fireworks: More Distraction than Democracy

Biobased jet fuel is poised for takeoff in the commercial market as the ASTM International Committee on Petroleum Products and Lubricants has approved the addition of an annex to the biojet fuel specification D7566. Titled &ldquo;Standard Specification for Aviation Turbine Fuel Containing Synthesized Hydrocarbons,&rdquo; the annex will set fuel properties for hydroprocessed esters and fatty acids fuel derived from biomass feedstocks such as camelina, jatropha or algae, as well as production control criteria of the fuel for aviation use.
The vote concludes the technical review process, and final issuance of the revised specification was released in early July.Airlines can use a 50 percent blend of biofuel in their planes immediately.
ASTM&rsquo;s decision to amend the jet fuel specification was welcomed by various stakeholders within the aviation fuel supply chain, most notably the Air Transport Association of America Inc., the industry trade organization for the leading U.S. airlines. According to John Heimlich, vice president and chief economist for the ATA, it will take time for significant volumes of biojet fuel to enter the market due to competitive hurdles, petroleum price volatility and scarcity of financing for fuel production facilities and other factors, &ldquo;but there are reasons to expect up to 1 billion gallons of biofuel to be in annual production by 2020,&rdquo; he says in an email correspondence. Heimlich says that the worldwide airline industry is projected to spend approximately $176 billion on conventional jet fuel this year.
&ldquo;A plethora of U.S. and non-U.S. airlines have worked tirelessly together and with the military to facilitate the development and deployment of alternative avia&shy;tion fuels,&rdquo; Heimlich says. &ldquo;That work has clearly paid off.&rdquo;
While the latest ASTM certification will undoubtedly help end-users such as airlines to use a cleaner-burning fuel in their engines, it will also play an important role in opening the market for prominent biobased jet fuel producers and technology players. Honeywell&rsquo;s UOP, for example, has played an active role in supplying its fuel for testing by various original equipment manufacturers airlines, airports and other participating stakeholders for several years within the aviation fuel supply chain.
According to Jim Rekoske, UOP&rsquo;s vice president for renewable energy and chemicals, UOP intends to continue its commitment of providing biobased jet fuel and of being proactive in addressing the demand by opening discussions with domestic and international parties interested in potentially licensing its technology to build, own and operate biobased jet fuel production facilities in North America, Asia, Europe and India.
&ldquo;The demand signal is now coming from the backend of [the aviation fuel supply chain] and it&rsquo;s now coming in force with the ASTM approval,&rdquo; Rekoske tells Biodiesel Magazine. &ldquo;What it&rsquo;s going to take is some time for that demand signal to work its way forward into the front part of the chain so that the raw materials can be readily acces&shy;sible, the conversion facilities can be built and operational and so on. That&rsquo;s really the lag we&rsquo;re working with.&rdquo; More Competition? 
With the ASTM approval, some in the biorefining industry may wonder if it will foster increased competition among existing participants, like UOP, within the aviation fuel supply chain. Rekoske believes it will, and he doesn&rsquo;t think that is a bad thing and expects direct competitors to create new business opportunities and collectively establish a competitive market.
&ldquo;We welcome the competition to be able to go after these markets together,&rdquo; Rekoske says. &ldquo;They&rsquo;re big markets&hellip;there&rsquo;s 55 billion gallons of jet fuel consumed annually in the U.S. alone. That&rsquo;s a lot of jet fuel and it&rsquo;s going to take a lot of facilities, so I think there&rsquo;s room for a lot of different technologies to thrive and succeed.&rdquo;
Not only should it be a boon for companies like UOP, but it should also embolden other companies to move forward more quickly with their own certification efforts. Companies, including Amyris Inc., Gevo Inc., Terrabon Inc., Virent Energy Systems and Solazyme Inc., target a biobased jet fuel product from different processes and molecules not covered under the latest ASTM approval. This is a promising sign as a collaborative effort is underway among airlines, engine and airframe manufacturers, airports, the Federal Aviation Administration, the military and others to certify and approve pathways for processes that convert sugars and lignocellulosic feedstocks to jet fuel.
According to Aaron Imrie, Virent&rsquo;s commercial manager of fuels and lubricants, who also represents the company within the ASTM committee, the company is in the initial stages of getting its biobased jet fuel approved by independent third-party valuators. Wright Patterson Air Force Base is currently evaluating the physical properties of Virent's product from its pilot facility in Madison, Wis.
&ldquo;Once everyone is comfortable sharing the information, we&rsquo;ll start to share that data as part of the ASTM body,&rdquo; Imrie says. &ldquo;That&rsquo;s the next step.&rdquo;
Gary Luce, CEO of Houston-based Terrabon says his company has been trying to get its alcohol-based jet fuel certified through ASTM for about a year and a half now. Terrabon&rsquo;s cellulosic gasoline product, made at its demonstration facility in Bryan, Texas, is a viable drop-in renewable gasoline blendstock that looks similar to cracked gasoline coming off the fluid catalytic cracking conversion process, Luce says, a pathway commonly used by today&rsquo;s petroleum refiners.
&ldquo;So far, we&rsquo;ve gone through 100-liter tests and, by next year, we&rsquo;ll make about 6,000 liters that will be going into these further tests,&rdquo; Luce says. Terrabon is currently working with Logos Technologies to help it get its fuel qualified with the military and other potential end-users.
Challenges Still Looming 
The ASTM&rsquo;s decision presumably sets a meaningful precedent on the world stage for incorporating biobased jet fuel into the fossil aviation fuel supply. In 2009, ASTM approved the now widely used Fischer-Tropsch process under the alternative jet fuel specification, and no other company knows this better than California-based Rentech Inc.
Rentech operates a demonstration-scale facility in Commerce City, Colo., deploying its synthetic fuels technology that has produced more than 40,000 gallons of biobased jet fuels. Last year, a commercial flight flew on a blend of RenJet (the company&rsquo;s trademarked, renewable, certified jet fuel) and conventional Jet-A with no difference in performance when compared to conventional jet fuel, according to President and CEO Hunt Ramsbottom. Rentech employs a proprietary process based on Fisher-Tropsch chemistry that, together with gasification and upgrading, is capable of converting syngas from biomass and fossil sources into hydrocarbons that are subsequently upgraded with technology from a UOP alliance.
Rentech is heavily involved in deploying its biojet fuel process technology. Earlier this year, the company received approval by the Province of Ontario, Canada, to obtain a long-term supply of up to 1.3 million tons per year of Crown timber for the company&rsquo;s planned biobased jet fuel project, Project Olympiad, located in the Township of White River, Ontario. Last year, Rentech forged partnership Solena Group Inc. to integrate its Fischer-Tropsch synthetic fuel technology platform in Solena&rsquo;s proposed BioJetFuel project&mdash;called GreenSky&mdash;in the United Kingdom. Ramsbottom added that Rentech plans to produce biojet fuel from sugarcane bagasse and wood sources out of its demonstration unit located in Commerce City.
Ramsbottom contests that ASTM certification may somewhat weaken the barrier for entry by biobased jet fuels such as HEFA and other alcohol-based jet fuels. Long-term sustainable and economic production of the product remains in question, particularly when it comes to feedstock sourcing and price competition against crude oil.
&ldquo;It all comes down to economics,&rdquo; Ramsbottom says. &ldquo;I think the airlines to date haven&rsquo;t wanted to recognize the benefits of green fuels in terms of the pricing and I think they&rsquo;re constrained through their economics on what they can pay for fuels. I also think there has to be, at some point, a meeting of the minds as to energy security and green attributes, and if it has to compete head on with the price of crude oil, it&rsquo;s going to be a long day until there&rsquo;s a supply of this product.&rdquo; He adds, &ldquo;For us being approved two years ago, we&rsquo;re at that stage now where the entire supply chain needs to come together and move forward with increasing supply in order to satisfy the demand.&rdquo; Author: Bryan Sims Associate Editor, Biorefining Magazine (701) 738-4974 <a href="mailto:bsims@bbiinternational.com">bsims@bbiinternational.com</a>

Hydroprocessed biojet achieves a significant milestone toward commercialization

ASTM Approval

If Steve Kyryk wants to get in touch, you&rsquo;d better be ready to talk. As the vice president for Hobbs &amp; Towne, a leading clean energy executive search firm based in Philadelphia, Kyryk&rsquo;s list of clients sounds more like a directory of renewable energy companies than a Rolodex of past clients. The only letters missing in his list of energy and clean technology companies are J, X and Y. &ldquo;We&rsquo;ve been in the cleantech space as long as anybody,&rdquo; he says. Those 14 years for Kyryk and his team have given them a &ldquo;rather unique experience,&rdquo; he says. A call from Kyryk could mean he&rsquo;s looking for the next senior vice president of manufacturing and processing for a startup biobased chemical producer or an advanced biofuel firm. When he calls, Kyryk probably already knows all of your job history (including that lawn mowing gig) and probably, all of your future job aspirations. He&rsquo;ll want to know everything from what time you set your alarm, to how well you mingle on the manufacturing or processing floor.
Biorefining Magazine spoke with Kyryk, and others in the field with similar experiences, not to find out what time senior executives at companies like Cobalt Technologies or Genomatica wake up in the morning but, instead, to find out how those senior executives earned their titles, where they came from before leading their respective cleantech ventures, and most importantly, what those &ldquo;rather unique experiences&rdquo; that Kyryk speaks about relating to the renewable energy industry mean for the growth of our own biorefining industry. The Challenge
Kyryk&rsquo;s company began recruiting and placing executive level employees soon after the corn ethanol boom ended, but, he says, the job wasn&rsquo;t easy. It&rsquo;s a lot harder to find someone to lead a team of researchers trying create a new approach to energy production than it is to, say, find a lawyer to represent you in a personal injury lawsuit. The pool for attorneys is nearly as big as two oceans, but for companies in need of that senior vice president of manufacturing and processing of, for instance, a biobased chemical never used before, the pool of experienced recruits might only be as big as a mud puddle. &ldquo;We began doing a lot of recruiting into those early stage ventures,&rdquo; he says, &ldquo;and it was difficult&hellip;it is a challenge when there is a very small population that can even spell some of the science.&rdquo;
The short list of talent available to fill a biorefining company&rsquo;s executive team isn&rsquo;t the only challenge facing Kyryk and other companies like his. Andrew Cartland, managing director for Acre Resources, an executive recruitment and search firm based in London whose clients include everyone from Shell to Nike, specializes in environmental and sustainability type recruits. Cartland agrees with Kyryk on the difficulty of finding talent for a relatively new industry, but for Cartland it&rsquo;s also about competing with other existing and semiparallel industries (petrochemical). &ldquo;These established firms offer generous salary and benefit packages, which can be hard to compete against,&rdquo; he says. And, in addition to the difficulty of matching a salary, &ldquo;depending on the exact technology,&rdquo; Cartland adds, &ldquo;there is likely to be some perceived risk around accepting a position with the organization,&rdquo; especially &ldquo;if the technology is unproven in a commercial sphere, and this is the case for many new technologies.&rdquo;
On top of all those difficulties is another hurdle Kyryk has identified in the process, one that actually stems from a good thing. Kyryk worked with several companies at once, all of which received their first round of funding and were excited about expanding their ventures, and needed that hire which is &ldquo;so critical to the future success of the company.&rdquo; The only problem with multiple companies receiving their funding all in a relatively short period of time, he says, is that it only squeezes the talent pool tighter.
But that was a few years ago. &ldquo;What is challenging now,&rdquo; Kyryk says, &ldquo;is that the ventures that have survived and are moving ahead, and they are entering the first commercial technology deployment phase of their operation,&rdquo; are still in need of recruits&mdash;but the pool is still small. And with the big energy houses beginning to take a more active role in renewables (more than just writing checks, he says), the commercial facilities need people who know how to build first-of-their-kind production facilities, &ldquo;which, aside from in China, not a whole lot has gone on in this country.&rdquo; Staffing Executives
For both Cartland and Kyryk, their jobs may be difficult, and they are not only managing, but they are doing well. Sentiments from Cartland show why. &ldquo;In startup companies,&rdquo; he explains, &ldquo;excellence is required.&rdquo; From Cartland&rsquo;s perspective, it is very difficult to get a new business off the ground with mediocre staff as that business is likely to be competing with more established firms that he says will have an advantage: more cash, an existing profile, more reputation and more clients. &ldquo;The best people are often being actively retained by their current employer,&nbsp; and [they hold the] experience you may be looking for.&rdquo; To find that experience, mainstream sources most likely won&rsquo;t suffice.
The process of finding the right person for a job, as many would assume, starts with the petrochemical industry. But there are other places to start, like the major chemical companies. Mark Niedershulte, chief operating officer of Ineos Bio, says that in addition to the petrochemical world (nearly the entire Ineos Bio team worked for BP at one time), his team has also looked to source new hires from the ethanol sector as well as the steel industry because of a frontend process Ineos Bio employs at its Florida facility that utilizes a high-temperature gasifying unit.
At Ineos Bio, there is a three-step approach to finding new hires. First, Niedershulte says, &ldquo;We always look internal; sometimes we are surprised of the background of the people within Ineos. Some people,&rdquo; he says, &ldquo;have some very unique backgrounds and experiences that are relevant to what we are trying to do.&rdquo;
Next, the company will try the public forums like Monster.com, and if neither of those work, he will bring in people like Kyryk, people who he says have sourced roughly 80 to 90 percent of their new hires.
For Kyryk and his team, the challenge of assessing a possible executive who can operate in a small, early stage environment is &ldquo;a little science and a little art,&rdquo; most of which comes down to personality, given that most applicants don&rsquo;t have an overwhelmingly large advantage of experience. He looks for the &ldquo;intrepreneurs&rdquo; (entrepreneurs already employed in a company), the recruits that have already worked on new projects in their current role, or volunteered for the &ldquo;wacky&rdquo; projects that no one else wants to do in those big companies. &ldquo;They understand how to bootstrap, they understand how to fight for resources,&rdquo; he says. &ldquo;That stuff translates really well to fighting for resources at an early-stage venture and fundraising and managing revenue.&rdquo; These things, he adds, &ldquo;are things you can talk about and evaluate.&rdquo;
To find the potential boot-strappers, Kyryk and his team perform a detailed review and series of discussions with a company&rsquo;s search committee and stakeholders. The team goes onsite to get a sense of the company they will be hiring for, all to understand the culture. &ldquo;Do they like to work hard and play hard, or, is it more like a big company environment where it is expected to be 9 to 5,&rdquo; he says. After that, they set out on their search. &nbsp;&nbsp;&nbsp; Search Results
There is a lot to glean from the work that executive search firms like Hobbs &amp; Towne or Acre Resources have done in the past few years. For starters, as Kyryk says, &ldquo;everything is manageable.&rdquo; From the sticky situation of a founder unwilling to relinquish control of a company to the business building experts ready to move past startup stage into the commercial realm, to what at first glance appears to be a small pool of talent to run a biorefining based company. In fact, some companies are well past that point; already forming a board of directors with some exceptionally big names (Condoleezza Rice at Kior, former U.S. Sen. Byron Dorgan at Codexis or former New Mexico Gov. Bill Richardson at Abengoa).
But although some companies have found their CEOs and other executives and have moved on to building the board of directors, there is still something to consider. From Kyryk&rsquo;s perspective, the industry is in an in-between stage. &ldquo;We aren&rsquo;t looking for this professional corporate board member because these companies aren&rsquo;t established enough yet,&rdquo; but, he says, &ldquo;we are looking for active board members from the commercial sector,&rdquo; a move he says will help to transition a startup&rsquo;s board away from all investors.
Even with a handful of companies already reaping the benefits of big name board members and the network of outside resources those big names bring, that situation isn&rsquo;t the current norm in the industry, but it will grow, says Kyryk, and there&rsquo;s more. For all of the intricacies and details that executive search firms deal with everyday, there is a larger, more positive theme to their work that bears attention. The talent pool may be competitive now, but listen to Niedershulte. &ldquo;What we have found [in the hiring practice] is that there is a lot of interest in the biospace. There are people when we post these jobs,&rdquo; he says, &ldquo;that have contacted us and said they have been following us.&rdquo; Those people have been waiting for the opportunity to work with a company like Ineos Bio, he says.
Cartland shares the same sentiment regarding the renewable energy space. Although not in the same volume of the oil and gas industries, he says &ldquo;the jobs definitely exist,&rdquo; adding that &ldquo;we believe that there is an increase in the number of jobs within the renewable energy sector,&rdquo; that although has happened slower than expected, will still happen.
But Kyryk might have the best perspective on the growth of the industry and the need for executive-level positions. &ldquo;We see it as an opportunity as the sector matures,&rdquo; he says&mdash;a sector he believes is clearly doing so. &ldquo;I think it will go mainstream and it will be kind of like the tide, there is a big sandy beach and then you turn back and look back and then the water is up to your knees.&rdquo; Someday, he says, &ldquo;You won&rsquo;t remember how the water got there.&rdquo; Author: Luke Geiver Associate Editor, Biorefining Magazine (701) 738-4944 <a href="mailto:lgeiver@bbiinternational.com">lgeiver@bbiinternational.com </a>

Could the quest for top executives reveal the growth path of the industry?

Searching for Leaders

In mid-June, the U.S. EPA issued proposed 2012 volume requirements for all four nested fuel categories defined by the RFS2 program, as well as 2013 volume requirements for biomass-based diesel. While it remains to be seen if the targets for cellulosic fuel will be finalized at levels above and beyond the target set for 2011, representatives of industry agree that the agency is working diligently to ensure mandated volumes match up with actual production. If all four categories are implemented as proposed, the program&rsquo;s 2012 volume requirement would increase the amount of renewable fuels that must be blended into our nation&rsquo;s fuel supply by 1.25 billion gallons when compared to 2011 targets. Much of that increase can be attributed to the advanced biofuel category of the RFS2.
For 2011, the EPA proposed a cellulosic volume requirement in the range of 5 to 17.1 million gallons, with a final target set at 6.6 million gallons. Volume requirements for advanced biofuel, biomass-based diesel and total renewable fuels were proposed and finalized at the respective levels of 1.35 billion, 800 million, and 13.95 billion gallons. For 2012, the agency is proposing to establish a volume requirement for cellulosic biofuels in the range of 3.45 million to 12.9 million gallons. While the proposed range for the year is lower than what was proposed last year, the final mandated volume could demonstrate an increase over&nbsp; the 6.6 million gallon target set for 2011. The industry will find out for certain after the public comment period ends and the agency releases final targets in November. The proposed 2012 volumes for advanced biofuel and biomass-based diesel have been respectively set at 2 billion and 1 billion gallons, bringing the total proposed volume of renewable fuels to 15.2 billion gallons. In addition, the EPA has proposed to set the 2013 target for biomass-based diesel at 1.28 billion gallons.
The 2012 proposed volume range for cellulosic biofuels is not only lower than the range proposed last year, it also represents a significant deficit when compared with the 500 million gallon target set by the Energy Independence and Security Act of 2007, which established the RFS2 program. According to the EPA, the agency will continue to evaluate the market as it works to finalize the cellulosic standard for next year, and remains optimistic that the commercial availability will continue to grow in the years ahead.
Brent Erickson, executive vice president of the Biotechnology Industry Organization, explains that the lower cellulosic range for this year can be attributed to several elements, including the fact that the EPA has had to eliminate a few biofuels companies from its calculations due to the economic climate. &ldquo;The recession, the lack of capital, and the unwillingness of institutional investors to tolerate risk associated with new technologies have really impacted the plans of cellulosic biofuel producers,&rdquo; Erickson says. &ldquo;However, EPA does predict a number of new companies will begin to produce measurable amounts beginning in 2012. USDA loan guarantees for the first commercial biorefineries will help to demonstrate the technology and reduce the perceived risk for investors. The overall to reducing risk for investors is maintenance of the renewable fuel standard.&rdquo;
Erickson also notes that the goals for cellulosic ethanol production set forth by EISA are appropriately aggressive. It will likely take some time for the industry to catch up with those goals, however. &ldquo;It would take a huge amount of capital to construct the biorefineries needed to hit [those] numbers,&rdquo; he says. &ldquo;Everyone expects that cellulosic biofuel production will expand rapidly, as long as the policy support remains stable at the federal level.&rdquo;
Evaluating Cellulosic Potential
According to the EPA, it has researched all potential production sources of cellulosic biofuel that could be made available within the U.S. in 2012 by both company and facility. This includes more than 100 facilities that are still in the planning stages, have begun construction or are already producing cellulosic biofuels. However the agency also notes facilities that are primarily focused on research and development activities&mdash;and have no intention of marketing the cellulosic fuels that are produced&mdash;have not been addressed in its assessment. The final volume requirement set for 2012 will be based on actual volume of cellulosic fuel that is expected to be produced next year by the companies and facilities identified and assessed by the EPA. While it is possible that cellulosic biofuels could be imported into the U.S. from abroad, the agency has not considered these volumes in its estimates as those fuels are overwhelmingly likely to be used locally.
The EPA has identified eight companies, representing nine facilities, that are expected to produce cellulosic fuels in 2012. DuPont Danisco Cellulosic Ethanol LLC, Fiberight LLC, Fulcrom Bioenergy Inc., INEOS Bio, KL Energy Corp., and ZeaChem Inc. are listed as expected producers of cellulosic ethanol. KiOR Inc. and Terrabon Inc. are listed as expected producers of drop-in cellulosic biofuels. If each facility and company produces at the rate expected, that would mean that 15.7 million gallons of cellulosic biofuels would enter the market next year. The agency stresses that none of the facilities on its list are currently producing at these levels, however, and that there are uncertainties associated with each facility&rsquo;s projected volumes that could result in lower production in 2012.
Four new companies have been added to the EPA&rsquo;s list of likely cellulosic producers since last year, while one has been removed from this year&rsquo;s list. In other words, the number of companies that expected to reach commercial production has nearly doubled in the past year, which shows clear progress in the industry. Companies the EPA has identified as likely to produce in both 2011 and 2012 include DuPont Dansico Cellulosic Ethanol, Fiberight, KiOR and KL Energy. Fulcrom Bioenergy, Ineos Bio, ZeaChem and Terrabon are new companies that have been added to the list this year. Although Range Fuels was identified by the EPA as a likely producer in its 2011 rulemaking, the company is not currently expected to produce cellulosic fuels in 2012. According to the agency, the company started up its facility in January, but soon was forced to shut down in order to work through technical difficulties that had been experienced. The EPA notes that while it will continue to monitor development at the plant, no timeline has been provided for the facility&rsquo;s restart. Therefore, the agency is not projecting the plant will produce any cellulosic biofuel in 2012.
In addition to the biorefineries that are expected to operate commercially next year, the EPA has also notes that EdeniQ&rsquo;s enzyme technology is another possible source of cellulosic biofuel in 2012. Rather than build its own plants, the company intends to license its technology to third parties. According to the EPA, the agency has not included volumes of the company&rsquo;s fuel in its estimates because EdeniQ has yet to announce any licensing agreements. The EPA says it will continue to monitor the company&rsquo;s progress and will include possible volumes from its technology in the final 2012 volume requirements if appropriate. The agency is also actively watching companies and facilities on track to commence cellulosic biofuel production in 2013, including Coskata, Enerkem and Poet. A Bright Future
Fiberight CEO Craig Stuart-Paul says he thinks the EPA&rsquo;s projections for cellulosic biofuel production are possible to achieve. His company is currently working to finalize the design of its first commercial-scale plant, and will be breaking ground this summer. &ldquo;We anticipate producing low levels of cellulosic ethanol by the end of this year,&rdquo; he said, noting that depending on how the initial phase of production goes, the facility could conceivably expand quickly enough to fulfill the EPA&rsquo;s current expectations for his company. However, he also notes that the cellulosic biofuels industry is defined by uncertainty. &ldquo;As with everything in the cellulosic industry, it is an emerging industry,&rdquo; he says. &ldquo;It&rsquo;s very hard to promise&hellip;but if everything goes well, we could do that amount.&rdquo;
Stuart-Paul also notes that he has found the EPA to be highly involved in what is going on the cellulosic biofuels sector. &ldquo;They&rsquo;ve taken the time to look into it, they take the time to engage with us and they are very open with us if we have any questions,&rdquo; he adds. &ldquo;I think we are all learning together&hellip;This is very much a fledgling industry, and as every year goes by and as every additional plant gets built, we&rsquo;ll get better at forecasting&hellip;but I can report that we think the EPA is doing its best to get an accurate score.&rdquo;
While the economic situation has presented an enormous challenge to the cellulosic industry the past few years, Stuart-Paul says the future seems to be looking up. The one thing all cellulosic plants have in common is that they are expensive to build, and it became impossible to procure funding after the economic crisis hit. &ldquo;[These plants] are risky, and raising the capital in this kind of funding environment has been very difficult,&rdquo; he continues. &ldquo;So many projects&mdash;including ours&mdash;that we would have hoped to be in full operation by now were delayed because we just couldn&rsquo;t get the money.&rdquo;
However, that seems to be changing. Stuart-Paul notes that certain sources of funding, such as angel funds, seem to be getting back into the cellulosic space. &ldquo;Providing that continues and there is not another financial meltdown, we think&hellip;more of these types of facilities will get built. I just get the feeling that 2012 is going to be the year that a lot starts happening from a variety of people.&rdquo;
Dan Cummings, vice president of Ineos Bio, agrees that the cellulosic industry is showing promise.
&ldquo;You are starting to see projects like ours come online,&rdquo; he says. As there is access to capital through programs like the USDA loan guarantee program, you are going to see an acceleration [of development] and additional projects break ground and start being constructed in 2012.&rdquo;
Cummings also stresses how important the RFS2 program is to the cellulosic biofuel sector. &ldquo;The volume requirements are important, and it gives expectation&mdash;along with rest of the programs out there&mdash;to build out the entire industry.&rdquo; However, he notes that the RFS2 is only one component of the entire portfolio of federal policy that the industry needs to expedite its growth. &ldquo;I think that short-term areas, like an extension of the production tax credit and additional authorization for money for the USDA loan guarantee program in the next round of the Farm Bill, will only help to improve and accelerate the market.&rdquo;
Erickson agrees that the RFS2 program is key to ensuring the market for cellulosic fuels remains open, and notes that there are several other actions that can be taken to help expedite development of the cellulosic and advanced biofuels sectors. &ldquo;Continued funding of federal loan guarantee programs will help get the first few biorefineries constructed and raise the confidence level of investors waiting on the sidelines,&rdquo; Erickson says. &ldquo;Extension of tax credits, ensuring that advanced alcohols such as butanol retain tax credits, and making other advanced biofuels, such as algae, eligible for them will help to move new advanced technologies along with cellulsoics.&rdquo;
Michael McAdams, president of the Advanced Biofuels Association, says that the EPA&rsquo;s proposal shows clear progress in the cellulosic and advanced biofuel sectors. &ldquo;I think we&rsquo;ve got plenty of gallons and it shows great improvement in a very quick period of time,&rdquo; he says. &ldquo;When you look at that contextually, it took the corn ethanol industry 20 years to deliver 2 billion gallons, so from a contextual standpoint for advanced biofuels to be able to deliver 2 billion gallons just four years after the statute was enacted would be a great accomplishment.&rdquo; Author: Erin Voegele Associate Editor, Biorefining Magazine (701) 540-6986 <a href="mailto:evoegele@bbiinternational.com">evoegele@bbiinternational.com</a>

EPA's proposed RFS2 volume requirements could increase the mandate for renewable fuels by 1.25 billion gallons

RFS2: Working Towards 2012

After seven years of research and development, Battelle&rsquo;s bioproducts division had plans to license its patented process to produce soy oil-based polyols (a chemical used to make foams, coatings and adhesives typically made with a petro base), but according to Richard Hegg, senior market manager for bioproducts at Battelle, there was one major roadblock. According to Hegg, the team at Battelle needed to find a licensee &ldquo;who was familiar and comfortable with using ozone in a chemical process.&rdquo;
Battelle&rsquo;s process that produces soy-based polyols started in 2004 and has since been patented, and involves the ozonolysis of a triglyceride or its derivatives containing unsaturated sites (double bonds) in the presence on an initial polyol such as glycerin, according to Hegg. So what does that mean? Ozone, or trioxygen, is a much less stable version of oxygen that is also an effective oxidizing agent. During Battelle&rsquo;s process, the initial polyols reacts with the ozone intermediates to create a finished product that is 25 to 40 percent glycerin.
To bring the ozonolysis process to the commercial landscape, Battelle found one of the world&rsquo;s largest oleochemical producers, Emery OleoChemical LLC, manufacturing plants in North America, Germany and Malaysia. To this point, Hegg says testing is still ongoing in a number of applications including for flexible and rigid foams. And although the patented process hasn&rsquo;t taken over the market yet, Battelle and Hegg have reason to be pleased with their licensee.
&ldquo;Battelle searched for companies that had experience with ozone and that we thought would be interested in developing a new line polyols for commercial use,&rdquo; Hegg says. &ldquo;Emery OleoChemicals was the choice for us since their experience in ozone technology is more advanced than anyone else&rsquo;s.&rdquo; Emery will now have exclusive rights to produce the soy-based polyol in North and South America as well as Western Europe. In addition to foams, polyols are also used for polyurethanes and polyesters and, according to Battelle, as a starting point for high-performance ester lubricants.
While Hegg says Battelle has leaped the initial roadblock and found a capable licensee, he also said his team struggled with the long testing and qualification cycles to get new-to-the-world chemistry into commercial applications. But, it appears Hegg and his team won&rsquo;t have to worry and can start on new projects, now that &ldquo;Emery is currently in this phase of development.&rdquo;&nbsp;
&mdash;Luke Geiver

Battelle figured out the chemistry, Emery OleoChemicals will take it from there 

A Successful Soy-Based Polyol Handoff

Deploying technology from the laboratory to demonstration- or commercial-scale can be a challenge for any emerging biorefining firm, but Thesis Chemistry is finding that, with determination and calculated haste, the process is achievable. The Ohio-based biotechnology firm selected Smet Construction Services as its design/build partner for the construction of its future commercial biobased chemical biorefineries.
According to Chris Forslund, CEO of Thesis Chemistry, partnering with Smet was an ideal choice for his company because of Smet&rsquo;s proven track record of executing large industrial projects.
&ldquo;That&rsquo;s a key for not just for a stand-alone biorefinery,&rdquo; Forslund says, &ldquo;but also [Smet] is a partner we can look to for the long-term as we build our first biorefinery and also subsequent facilities thereafter.&rdquo;
Since 2007, Thesis Chemistry invested in the development of cutting-edge technologies that allow for the conversion of lignocellulosic biomass into biobased chemicals, such as benzenes, phenols and creosols that can be used in the pharmaceutical, agribusiness, fragrance, plastics and food production industries.
According to Forslund, Thesis Chemistry is conducting its due diligence of site selection for its first biorefinery, and a site should be officially identified later this year. The facility is projected to come online in 2013 with an estimated annual chemical output of about 2,500 tons once it achieves full production by 2014, he says.&nbsp;
&mdash;Bryan Sims

Thesis Chemistry partners with EPC firm to build first biorefinery

From Lab to Commercialization

Japanese researcher Koichi Tamano is not living in his home of Tsukuba, Japan, after the earthquake in March destroyed his lab, but he&rsquo;s found a new home at the Pacific Northwest Laboratory. As a researcher at the National Institute of Advanced Industrial Science and Technology (AIST), Tamano also works at PNNL through a program called the Alternate Sponsored Fellowship. During the earthquake and tsunami coverage that dominated the airwaves in March, Tamano could only watch the devastation thousands of miles away because his fellowship had brought him to Richland, Wash. Fortunately for Tamano, his wife and young child were also in Richland at the time of the disaster. &ldquo;My wife called her parents and confirmed their safety,&rdquo; he says, adding, &ldquo;two days after the earthquake, I received an e-mail from one of the AIST-lab members and knew no one was injured. But, I was informed the damage of the building and experimental facilities was terrible.&rdquo;
After arriving in October, Tamano expected to return to Japan in March. Now, PNNL has extended an invitation to Tamano, allowing him to continue his work in Richland until January.
Scott Baker, a researcher at PNNL and coworker of Tamano&rsquo;s says the ASF is a &ldquo;fantastic program which allows PNNL the ability to effectively collaborate with other labs with common goals.&rdquo; For Baker&rsquo;s lab and Tamano&rsquo;s lab in Japan, part of that common work deals with fatty acid production in aspergillus oryzae, a fungus commonly used in the production of soy sauce. &ldquo;Our PNNL biotechnology group is focused on accelerating the generation of fungal cell factories that produce biofuels, renewable chemicals and enzymes,&rdquo; Baker says, adding that in order to do that, his team &ldquo;not only needs to understand the basic biology underlying the pathways which produce these things,&rdquo; but also the ability to perform a scale-up of production.&nbsp;
In Japan, Baker explains, koji processes (which use the fungi to inoculate the rice grain), &ldquo;have been very impressively scaled up.&rdquo; Much of the biology behind the fungi, Baker also says, was researched by Tamano&rsquo;s lab led by Masauki Machida. &ldquo;It was natural for us to think about collaborating so that we could leverage each research group&rsquo;s capabilities for mutual benefit,&rdquo; Baker says.
Along with Tamano, Machida is also in Richland working on the fungus. But, Machida was not in the same situation as Tamano was, miles from home watching the disaster with no way to help. Machida was actually in the lab when the earthquake hit but, along with 3,000 other workers at the lab, escaped injury.
From Baker&rsquo;s perspective, keeping Tamano on staff for an extended time won&rsquo;t be a problem even though the lab in Japan is back online, albeit in limited capacity yet. &ldquo;Shortly after he (Tamano) arrived, we were able to have Kochi complete our comprehensive safety training and he very quickly started interacting with the rest of the group here,&rdquo; Baker says of Tamano&rsquo;s arrival in October. &ldquo;While Koichi&rsquo;s home institution is AIST, we consider him a member of our research team as well.&rdquo; Koichi shares the same enthusiasm for the lab. &ldquo;I love the atmosphere at PNNL,&rdquo; he says.&nbsp;
&mdash;Luke Geiver

Earthquake separates scientist from JaÂ­pan, but not his research

Tragic Reason for an Extended Stay

Lignol Energy Corp. may someday be a leader in woody biomass to cellulosic ethanol production. The same might be said about Poet LLC and corn stover, and for wheat straw, Inbicon might already be there. Regardless of feedstock, there is, however, one constant that has helped each prospective company approach their bioenergy milestones. We know Novozymes, the enzyme cocktail supplier to all three companies. But for the research teams and company executives, the company from Denmark may be the best possible partner in the bioenergy industry to date. Sure, those enzyme cocktails are &ldquo;uber&rdquo; productive, but in an industry where words like testing, piloting and commercializing dominate, there might be nothing more valuable than a partner who has been there from the beginning, has the experience and numbers and understanding of all that work, and above all, has just as much time and money invested into the industry as anyone.&nbsp;
As an example, Novozymes recently joined Lignol on the Vancouver-based firm&rsquo;s industrial consortium, funded by the Sustainable Development Technology Canada. &ldquo;In the past two years we have made significant progress with Novozymes,&rdquo; says Ross MacLachlan, president and CEO of Lignol. &ldquo;We are very pleased&rdquo; that Novozymes is committed to the success of Lignol as the company &ldquo;embarks on the final stages of commercialization,&rdquo; he adds. Fortunately for the biorefining industry, several other companies might share that sentiment.&nbsp;
&mdash;Luke Geiver

All enzymes aside, time and investment mean the most

A Solid Bioenergy Partner

The aviation industry is ripe for the taking for biorefining firms to supply their biofuels in commercial flights. Englewood, Colo.-based isobutanol developer Gevo Inc. is on the fast track for seizing that opportunity.
In June, Gevo presented positive test results from &ldquo;fit for purpose&rdquo; testing of its biojet fuel to ASTM&rsquo;s alcohol-to-jet task force, a group that consists of technical experts from a variety of stakeholders in the aviation supply chain, including jet engine manufacturers, government bodies, fuel manufacturers, third-party testing laboratories, academia and airframe manufacturers. Upon reviewing the results of the test, which was conducted by a nationally recognized research and development laboratory and the Air Force Research Laboratory, the task force had no objection to Gevo proceeding to jet engine testing, the next phase in the certification process. Mustang Engineering LP will convert Gevo&rsquo;s isobutanol to biojet fuel. The engineering and consulting agreement with Mustang will focus on the downstream processing of isobutanol to biojet fuel for jet engine testing, airline suitability and advancing commercial deployment. According to Chris Ryan, president and chief operating officer, full certification of Gevo&rsquo;s biojet fuel is expected in 2013.
&ldquo;I can tell you that the data was perfectly in line with a drop-in fuel product and Gevo is excited about it,&rdquo; Ryan tells Biorefining Magazine.
In July, the aviation industry reached a significant milestone with the approved revision of ASTM D7566, titled &ldquo;Standard Specification for Aviation Turbine Fuel Containing Synthesized Hydrocarbons.&rdquo; The approved annex, called &ldquo;Hydroprocessed Esters and Fatty Acids&rdquo; (HEFA), allows up to a 50/50 blend of biobased components derived from biomass such as camelina, jatropha or algae, with conventional jet fuel. If approved, Gevo&rsquo;s biojet fuel would fall under the same specification in an alcohol-based pathway as obutanol. Although not its primary target market, Ryan says he&rsquo;s confident that Gevo&rsquo;s alcohol-to-jet pathway will follow on the successful revision the latest HEFA component received.
&ldquo;It&rsquo;s one of the key markets we&rsquo;re pursuing,&rdquo; Ryan says. Gevo is also targeting drop-in ready isobutanol for the transportation and chemicals markets. Ryan adds that end-users of its biojet fuel have already expressed interest once certification is complete. Gevo signed a letter of interest with United Airlines to purchase its future biojet fuel once it becomes certified. &ldquo;We&rsquo;re working with United Airlines to convert that into a definitive agreement,&rdquo; Ryan says.&nbsp;
&mdash;Bryan Sims

Gevo progresses with ASTM biojet fuel testing as planned, on schedule

Ready for Take Off

With institutional lending and venture capital investment appearing to show signs of reemergence from the economic recession, coupled with a declared commitment by the U.S. government to support advanced biofuels development, momentum is certainly on the side for cellulosic ethanol developers as many achieved significant milestones this year in their respective projects.
BlueFire Renewables Inc. announced it had completed initial site preparation in June for its 19 MMgy cellulosic ethanol project near Fulton, Calif., which will utilize wood waste in the region as feedstock. Century Construction completed clearing and grubbing, placed geo-grid and fabric across the site, brought the site to grade level, and installed drainage structures prior to completion of final rough grading. Grass and mulch were applied to establish the necessary growth for erosion control until plant construction begins.
&ldquo;With support from the County of Itawanba and the City of Fulton and excellent work done by Century Construction, the Fulton site is ready for facility construction,&rdquo; says Arnold Klann, CEO of BlueFire Renewables, adding that the firm is working on &ldquo;multiple pathways&rdquo; for financing the project, including a pending loan guarantee application through the USDA.
Coskata Inc. issued a letter of intent with Fagen Inc. and Harris Group Inc. for engineering, procurement and construction services for the construction of Coskata&rsquo;s first commercial cellulosic ethanol plant located in Boligee, Ala., using wood biomass as feedstock.
&ldquo;We are confident that together with Fagen and Harris Group, we will demonstrate the value potential and long-term benefits of the Coskata technology in this exciting project,&rdquo; says William Roe, CEO of Coskata.
Nevada, Iowa, is the future home of DuPont Danisco Cellulosic Ethanol LLC&rsquo;s 50 MMgy cellulosic ethanol facility, adjacent to Lincolnway Energy LLC&rsquo;s corn-ethanol plant. Dried cobs, stalks and leaves left after grain harvesting will be used as feedstock. DDCE is successfully producing cellulosic ethanol at its demonstration facility in Vonore, Tenn., and is scaling up the process to globally license its end-to-end production system. In addition to corn stover, DDCE&rsquo;s process technology is capable of converting other cellulosic biomass, such as wheat or switchgrass, into ethanol.
Finally, the U.S. DOE made its first conditional commitment for a loan guarantee to Poet LLC, a $105 million loan guarantee to help cover the cost of its 25 MMgy corn cob-to-ethanol facility, dubbed Project Liberty, at Emmetsberg, Iowa. Construction of the facility, which will be co-located with Poet&rsquo;s 57 MMgy corn-based facility in Emmetsberg, is expected to begin in August, according to the DOE. Production is slated to begin in May 2013.
&ldquo;Projects like [Project Liberty] show that our investments in next generation biofuels are paying off,&rdquo; according to USDA Secretary Tom Vilsack. &ldquo;This project is an important step in the Obama Administration&rsquo;s effort to break our nation&rsquo;s unsustainable dependence on foreign oil and move toward a clean energy economy.&rdquo;&nbsp;
&mdash;Bryan Sims

Advanced biofuel is getting closer to becoming a reality

Cellulosic Charge

Sustainability and energy efficiency took on a whole new shape for Blue Marble Biomaterials when the biobased specialty chemical firm based in Seattle opened its first commercial biobased chemical facility in Missoula, Mont. According to President and CEO Kelly Ogilvie, the new biorefinery is projected to produce more than 72 tons of fine and specialty chemicals annually from a variety of cellulosic and lignocellulosic biomass, such as agricultural residues, coffee grounds, spent brewery waste or wood waste, using a proprietary supercritical fluid extraction and fermentation-based technology developed in-house by the company.
&ldquo;The real value isn&rsquo;t really in the equipment,&rdquo; Ogilvie tells Biorefining Magazine, &ldquo;it&rsquo;s in the intellectual property of the microbes. The intellectual property of the company is bound up in the cell walls of the mircroorganisms and the broad range of molecules they can express is what gives us that competitive advantage.&rdquo;
Target product offerings for Blue Marble include carboxylic acids and esters, such as ethyl butyrate for the food and flavoring market, and propyl butyrate for the cosmetics and fragrances markets.
In addition to the suite of biochemical offerings Blue Marble intends to produce, Ogilvie stresses the importance of how his company will create value-added products from the waste produced at the facility, which features novel recycling systems, such as a photobioreactor that contains algae for purifying wastewater and waste gases from its fermentation system. Solid waste from the spent feedstock is dried and pelletized for use in wood-burning furnaces and stoves.
&nbsp;&ldquo;Our ultimate goal is to be completely off the grid and have zero waste coming out of that facility,&rdquo; Ogilvie says.&nbsp;
&mdash;Bryan Sims

Montana is home to world's first zero-waste biorefinery

Carbon-Neutral Solution

The National Advanced Biofuels Consortium&rsquo;s new Biomass Deconstruction team, led by researchers at NREL, wants to be right in the middle of biochemical conversion and thermochemical conversion. The team has a plan to maintain the selectivity achieved via enzyme use in a biochemical conversion process, and lower residence time associated with processes like pyrolysis or gasification all while converting both the carbohydrate and lignin fractions in the biomass.
For the carbohydrates, the researchers will work on solid, recyclable catalysts for acid hydrolysis of glycosidic linkages &ldquo;that can operate at higher temperatures than biological catalysts can,&rdquo; according to the NABC. The challenge with current catalysts, the NABC said in its explanation of the research, is that most are &ldquo;inherently limited by interfacial contact between the catalyst and substrate.&rdquo; The team will test a wide range of new catalysts, but the work won&rsquo;t end there.&nbsp;
&mdash;Luke Geiver

Forget about commercial-ready technology, this team cares about deconstruction

NABC's Extra Credit

Relying on the expertise and business savvy of large chemical manufacturers is a critical component for many emerging biobased chemical developers to introduce their product offerings to market as a supplement or replacement to petroleum-based counterparts. The same is true for Avantium as the Dutch biotech outfit, specializing in advanced high-throughput catalysis research and development of biobased chemicals and furnanics-based hydrocarbon fuels from its &ldquo;YXY&rdquo; platform, locked up deals with two of the world&rsquo;s leading chemical companies.
Avantium&rsquo;s first agreement is a collaborative venture with Japanese chemical manufacturer Sekisui Chemical Co. that will allow Sekisui Chemical to access Avantium&rsquo;s proprietary technologies and experts as part of the suite of tools used in its development of catalysts and process optimization. While the company couldn&rsquo;t disclose the process or application, Avantium spokesman Anniek Gielkens confirms that the deal isn&rsquo;t related to its YXY technology.
In a subsequent deal, Avantium entered into a multiyear partnership with Solvay Specialty Polymers to jointly explore the commercial potential of engineering plastics derived from high-performance polyamides using biobased feedstock, such as starches or sugars, on the basis of Avantium&rsquo;s YXY building blocks. Solvay will test the polyamides for engineering applications such as for nylons and Kevlar that can be used in automotive and electronic components.
&ldquo;We expect that these new materials will be competitive in price and performance compared to petroleum-based products, but will have a significantly enhanced environmental footprint,&rdquo; Gielkens says. In addition to exploring the market for biobased polyamides, Avantium is also focused on the development of biobased polyethylene furanoate (PEF), a biobased alternative to petroleum-based polyethylene-terephthalate (PET).&nbsp;
&mdash;Bryan Sims

Partnering with big-name chemical firms is only the beginning for Avantium

Alignment of Interests

China&rsquo;s rapidly growing economy has a unique characteristic: its growth is occur&shy;ring across all sectors. The country&rsquo;s business environment can be overwhelmingly hard to navigate, however, particularly for foreign entities. &ldquo;There is a level of confusion around the way China works and the level of innovation that exists in [the country],&rdquo; says Chris Hartshom, vice president of research at Lux Research. &ldquo;The need that we are serving is to uncover innovative ideas and potential partners in China that will allow companies to enter [the space] more effectively and also find technologies they can deploy in other parts of the world.&rdquo;
&ldquo;No other nation in the world shares China&rsquo;s unique mix of strong R&amp;D, vast manufacturing resources, supportive government policies and domestic market demand,&rdquo; says Lux Research CEO Dennis Philbin. &ldquo;Consequently, foreign tech developers simply cannot afford to ignore its potential for commerce and open innovation, yet they will need reliable, up-to-date intelligence in order to proceed decisively and intelligently. That&rsquo;s precisely what we designed the China Innovation service to provide.&rdquo;
According to Hartshom, when his group first began looking into the Chinese marketplace, they weren&rsquo;t exactly sure what they would uncover. &ldquo;What we found is a tremendous amount of very interesting research and very interesting technology that is under development in China today, and that will be relevant on a global basis.&rdquo;
While there is a perception that intellectual property (IP) in China is not valued and that the region is like the &ldquo;wild wild west&rdquo; when it comes to IP protection, Hartshom notes that a current legal battle taking place in the country seems to indicate otherwise. There are actually two biofuels companies currently engaged in a legal battle regarding IP protection, which demonstrates it might be time for some of those perceptions to change.
When looking to become engaged in the Chinese biofuels sector, Hartshom says it is important to note there have been some challenges in the past. While the country did establish a B5 mandate, that mandate didn&rsquo;t translate into retail sales of biofuel. &ldquo;Even though they had the infrastructure, the delivery mechanism and all the rest, the block they reached was key players,&rsquo;&rsquo; he continues. The key oil and gas players were just not engaging,&rdquo; and unless big market players in the country engage with the policy and have &ldquo;horse in the race&rdquo; they tend to ignore some of the guidance that is passed down by government. &ldquo;There is a bit of a problem there in that you have to get the large players onboard for any of these emerging technologies to actually take off and start reaching the market, even if there are quality policies that are actually put in place,&rdquo; Harshom says.
On the scouting side, Harshom says Lux Research and its products can help its clients to effectively engage in China, build market channels, forge strong partnerships and mitigate risk. The company also actively scouts technology developments coming out of China&rsquo;s research institutions and universities. For many companies entering the biobased industry in China, it will also be important to identify partners that have existing government relationships to leverage.
No matter how U.S. entities choose to engage with the biobased industry in China, it is incredibly important they do so, says Harshom. &ldquo;For any company not engaged in China and is not actively looking for technology opportunities and technology-based partnerships in China&mdash;if you are not looking right now, you are falling behind,&rdquo; he stresses.&nbsp;
&mdash;Erin Voegele

Lux Research launches China Innovation Intelligence service

Shedding Light on China

1. EdeniQ Inc. and IKA Works Inc., a subsidiary of German firm IKA Werke GmbH Co. KG, have agreed on a mutually exclusive global agreement for the supply of biomass mixing and milling technology for the advanced biofuels and biochemical markets, and for the ongoing development of biomass milling process technologies. EdeniQ and IKA first formalized their partnership in 2009 with the signing of an exclusive manufacturing agreement for a proprietary milling device trademarked by EdeniQ as the Cellunator. The Cellunator has been installed by EdeniQ at corn-ethanol plants across the country. As the collaboration evolved, both companies decided to formalize their ongoing research and development efforts with a focus on offering milling and mixing equipment specifically for biomass conversion. The development work with focus on EdeniQ&rsquo;s proprietary pretreatment process, including an enhanced version of the Cellunator, is designed for processing cellulosic biomass under the development moniker Super Cellunator. 2. The U.S. DOE has finally made its first conditional commitment for a loan guarantee for cellulosic ethanol. On July 7, the agency announced it is offering a conditional commitment for a $105 million loan guarantee to Poet LLC for the development of its 25 MMgy corn cob-to-ethanol facility, dubbed Project Liberty, at Emmetsberg, Iowa. Construction of the facility, which will be co-located with Poet&rsquo;s 57 MMgy corn-based facility in Emmetsberg, is expected to begin in August, according to the DOE. Production is slated to begin in May 2013.The DOE has been heavily criticized for its lack of loan guarantee offerings to cellulosic biofuels projects. Since the program&rsquo;s inception in 2005, multiple applications have been filed by would-be cellulosic ethanol producers, but until now none have made it through the arduous application process successfully. The total project cost for Project Liberty is $261.2 million, according to the DOE. Initially, ethanol produced at the facility is expected to cost approximately 50 cents more per gallon than gasoline, but those costs are expected to be reduced over time. 3. Cupertino, Calif.-based advanced biofuel producer AE Biofuels Inc. bolstered its technology portfolio by acquiring Zymetis Inc., a privately-owned biobased chemical and fuel developer headquartered in College Park, Md. As a result of the acquisition, Zymetis will continue as a wholly-owned subsidiary of AE Biofuels. Zymetis holds four granted patents and more than 10 pending patents centered on the core of its trademarked Z-microbe, a marine organism that was originally discovered to consume plant cellulose at a high rate in the Chesapeake Bay. The genome of the bacterium, Saccharophagus degradans, has been fully sequenced by researchers at the University of Maryland. Zymetis researchers have successfully engineered the microbe to produce approximately 90 enzymes to rapidly convert sugar, starch and cellulose into saleable biochemicals and biofuels via its Zymetis Integrated Process. 4. Royal DSM may have the tests to prove that the company&rsquo;s yeast technology can convert 90 percent of hydrolyzed biomass in the cellulosic ethanol process, but that hasn&rsquo;t stopped the life sciences company from strengthening its yeast technology. DSM has purchased the Netherlands-based C5 Yeast Co., for an undisclosed amount. Although DSM has created a microorganism that can convert both the C6 and C5 biomass sugars produced by enzymes in a typical cellulosic process, the company noted the importance of C5 Yeast Co.&rsquo;s ability to specifically convert the difficult C5 sugar fractions. The move will increase the position of DSM in area of fermentation technology. The area of second-generation biofuels is one that DSM believes will be huge in the U.S., with an expected market size of more than $1 billion by 2020, mostly related to the enzymes and yeast needed to convert agricultural residues and other wastes to biofuels.
5. OPX Biotechnologies Inc. raised $36.5 million in a Series C round of private equity financing to accelerate the development and commercialization of its first target product offering, a biobased alternative to acrylic acid, called BioAcrylic. The financing was led by US Renewables Group, which also included new investor DBL Investors. The round also saw strong participation from existing investors Mohr Davidow Ventures, Braemar Energy Ventures, Altira Group and X/Seed Capital. During an 18-month pilot-scale program completed in February, OPXBIO demonstrated the scale-up efficiency of its proprietary Efficiency Directed Genome Engineering (EDGE) technology to make performance-equivalent BioAcrylic that is lower cost and more sustainable than petroleum-based acrylic acid. In April, OPXBIO and Dow Chemical Co. signed a joint development agreement to prove the technical and economic viability of an industrial-scale process to produce BioAcrylic using a fermentable sugar (such as corn and/or cane sugar) as feedstock. OPXBIO anticipates full commercialization of its BioAcrylic within three to five years. 6. Dupont Danisco Cellulosic Ethanol, a wholly-owned subsidiary of DuPont, has entered into an agreement to purchase a parcel of land in Nevada, Iowa, adjacent to Lincolnway Energy LLC&rsquo;s conventional ethanol plant. It is DDCE&rsquo;s next step toward building one of the world&rsquo;s first commercial-scale biorefineries to produce fuel-grade ethanol from cellulose, in this case stover&mdash;dried cobs, stalks and leaves left after grain harvesting. DDCE is successfully producing cellulosic ethanol at its precommercial facility in Vonore, Tenn., and is scaling up the process to globally license its end-to-end production system. DDCE also is launching its 2011 Stover Collection Program to enable a cost-effective supply of stover for the biorefinery project. The company is working closely with local grain producers to obtain commitments and collect thousands of tons of stover from Iowa fields this fall. DDCE is collaborating with Pioneer Hi-Bred, also a DuPont Company, and Iowa State University, to establish best practices in harvesting, storage, and transportation, and assure the agronomic and environmental integrity of cornfields. 7. California-based Genencor, a division of Danisco A/S, has announced the release of a new enzyme product, Accellerase TRIO. The new project is designed to enable biorefinery companies to more cost-effectively manufacture cellulosic fuels from a wide range of feedstocks, including switchgrass, wheat straw, corn stover and municipal solid waste. The new product allows for low enzyme dosage to produce ethanol, which helps to improve the economics of cellulosic biofuel production. According to Genencor, Accellerase TRIO includes a cocktail of enzymes that breakdown the glucan (C6) and zylan (C5) found in cellulosic feedstocks into fermentable sugars, which increases the yield per unit of feedstock. Data indicates a two-fold lower dose of enzymes is needed when compared to the performance of Accellerase DUET. 8. Forming partnerships continues to be the name of the game for Amyris Inc. as the Emeryville, Calif.-based biotech, and Asia-based agribusiness giant Wilmar International Ltd., plan to jointly develop and commercialize a family of surfactants derived from Amryis&rsquo;s biobased farnesene, Biofene, for use in a range of products, including consumer packaged goods, personal care products and industrial applications. The proposed collaboration would engage in a feasibility study to complete the technical development of the surfactants, engage in testing activities to validate product performance and customer acceptance and secure necessary regulatory approvals for manufacture and sale of the products. Upon completion of the feasibility study and subject to the execution of definitive agreements, Amyris and Wilmar anticipate forming a joint venture entity, through which they would manufacture the products to be marketed by Wilmar through its established channels. The joint venture may produce its own Biofene for captive use. Both companies expect that biobased surfactants will be effective replacements for nonylphenol ethoxylate surfactants (NPEs), the use of which is currently being phased out or severely restricted by regulatory agencies around the world due to health and environmental concerns. The current market for NPEs exceeds $1 billion annually.
9. Wankei Wan, a professor of biochemical engineering at the University of Western Ontario in London, Ontario, discovered that exposing microalgae to static magnetic fields could be another viable route for optimizing growth rate and lipid production in microalgae. According to Wan, his research team designed and built a lab-scale raceway pond featuring a paddle wheel that gently agitated the fluid, and they began growing a common species of single-celled algae called Chlorella kessleri. They then took a small side stream off the main reactor and passed it through a static magnetic field all the while measuring the growth rate and oil production of the algae. What Wan observed, which will soon be published in a paper to be submitted in the journal Bioelectromagnetics, wasn&rsquo;t short of being &ldquo;an interesting phenomenon,&rdquo; he says. By exposing algae to magnetic fields, Wan and his team were able to double the growth rate and double the lipid oil production, essentially economizing the overall process by four-fold. &ldquo;It&rsquo;s quite a significant improvement,&rdquo; Wan says. 10. Biorefining firms like Genomatica and BioAmber recognize the impact their research and development activities will someday have, and so does the U.S. EPA. On June 20 in Washington, D.C., the nation&rsquo;s environmental regulatory agency, in conjunction with the American Chemical Society, honored both companies with the Presidential Green Chemistry Challenge Award for their respective achievements in breakthrough technology development. San Diego-based Genomatica received an award for &ldquo;Production of High-Volume Chemicals from Renewable Feedstocks at Lower Cost&rdquo; under the &ldquo;greener synthetic pathways&rdquo; category. The award recognized both the breadth of Genomatica&rsquo;s potential industry impact and the tangible commercialization milestones for its first target product offering, 1,4 butanediol (Bio-BDO) made from renewable sources. The global market for 1,4 butanediol is worth approximately $4 billion. BioAmber earned an award for &ldquo;Integrated Production and Downstream Applications of Biobased Succinic Acid&rdquo; under the small business category. BioAmber is recognized for integrated production and downstream applications of biobased succinic acid and for creating a portfolio of renewable chemicals and polymers that are derived from succinic acid. Its portfolio includes modified polybutylene succinate (mPBS), a novel, high-temperature biopolymer.
Share your industry briefs: To be included in Business Briefs, send information (including photos and logos if available) to: Industry Briefs, Biorefining, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-8385, or e-mail it to <a href="mailto:rkotrba@bbiinternational.com">rkotrba@bbiinternational.com</a>. Please include your name and telephone number in all correspondence.

Mergers and acquisitions can be accomplished using a variety of structures that involve the acquisition by one party, the acquirer, of one or more business entities or lines of business of another party, the acquiree or target. Planning for a merger or acquisition requires consideration by each party of alternative structures for the transaction that will maximize the benefit to the party and its equity holders while retaining the attractiveness of the deal for possible merger or acquisition partners.&nbsp;
Typical reasons for choosing one or another structure focus on the tax consequences of the transaction, the preservation of tax or accounting advantages, the ability to selectively acquire a portion of the business, assets and liabilities of the target and the avoidance of the necessity to secure consents from third parties that have existing contractual or business relationships with one of the parties to the transaction.&nbsp;
The three principal structural alternatives for a merger or acquisition transaction are the statutory merger, acquisition of assets and acquisition of stock or other form of equity of the target. Statutory Merger&nbsp; 
A statutory merger is completed in accordance with the state laws that govern the organization of the parties to the transaction. Whether the parties are corporations, limited liability companies, partnerships, cooperatives or other entity forms, most state laws are now flexible enough to allow two different entity types to combine by merger of one into the other or by merger of one with a subsidiary of the other.&nbsp;
A two-party or &ldquo;simple&rdquo; merger occurs when the acquired company merges with the acquiring company, typically with the shareholders of the acquired company receiving stock or other securities of the acquiring company, cash or a combination of securities and cash. A &ldquo;triangular&rdquo; merger occurs when the acquiring company forms a subsidiary for the purposes of the transaction and the acquired company is merged with the subsidiary rather than into the acquiring company, but the shareholders of the acquired company still receive cash and/or securities of the acquiring parent. Schematically, the three parties and their relationships in the transaction form a triangle.&nbsp;
When the target merges into the acquirer or into a subsidiary of the acquirer, the merger is generally called a &ldquo;forward&rdquo; merger. Often, however, it is advantageous to structure the transaction as a &ldquo;reverse&rdquo; merger, where the acquiring company (at least from an economic standpoint) or subsidiary merge into the target. A reverse triangular merger occurs when the subsidiary of the acquiring parent merges into the acquired company, the opposite of the forward triangular merger. The shareholders of the acquired company still receive securities and/or cash from the acquiring parent and the parent&rsquo;s shares in its subsidiary are converted into shares of the acquired company, making the acquired company a subsidiary of the parent.&nbsp;
In the forward triangular merger, the subsidiary formed for the transaction is the surviving company following the transaction and the acquired company is merged out of existence, with all of its assets and liabilities passing to the subsidiary. In the reverse triangular merger, the acquired company is the surviving company and the separate existence of the subsidiary disappears. In that case, the acquired company continues to hold its own assets and liabilities but it continues existence as a subsidiary of the acquirer.&nbsp; Acquisition of Assets&nbsp; 
In an acquisition of assets, the acquiring company purchases some or all of the business and assets of the target and may assume specified liabilities of the target. The acquirer generally acquires only those liabilities of the target that it specifically agrees to assume, subject to &ldquo;successor liability&rdquo; doctrines imposed by law and court decisions such as liability for preexisting environmental issues. Following an acquisition of assets, the target may sell any remaining assets, satisfy its remaining liabilities and distribute the cash or securities received in the acquisition to its equity holders. Or, it may continue business with the lines of business and assets not sold in the acquisition.&nbsp;&nbsp;&nbsp; Acquisition of Stock, Other Equity Interests&nbsp; 
If the transaction is structured as an acquisition of equity interests, the transaction is conducted with the owners of the target rather than the target itself. The consideration provided by the acquirer can be cash or securities, or a combination of cash and securities, but cash is the most common form of consideration in stock acquisitions. In the case of a closely held target, the acquirer might successfully negotiate the simultaneous purchase of all of the outstanding equity. Where the equity of the target is more broadly held, the transaction might be conducted as a friendly or hostile &ldquo;tender-offer,&rdquo; in which the acquirer offers to purchase the equity of willing sellers, usually subject to a controlling percentage of the equity being tendered for sale. If a minority interest remains after an initial equity purchase, the acquirer will often conduct a second-stage &ldquo;squeeze-out&rdquo; or &ldquo;freeze-out&rdquo; merger, subject to state law, by which it would eliminate the minority interest for cash.&nbsp; Advantages, Disadvantages of Acquisition Forms&nbsp; 
Other than tax considerations associated with the different forms in which a merger or acquisition can be accomplished, there are a number of reasons why one form may be preferred for a given transaction. An acquirer often prefers an acquisition of assets because it can pick and choose what assets it wishes to acquire and avoid assuming some or all of the liabilities of the target. Avoiding liabilities is particularly important if there may be unknown or contingent liabilities that could have an adverse effect on the acquirer after closing. In the case of a merger or purchase of stock, the acquirer or its subsidiary will have all of the target&rsquo;s assets and liabilities after the transaction. The advantage of a merger or stock purchase is the assurance that all of the assets of the target will be acquired, even if not clearly identified.&nbsp;
A merger or sale of all or substantially all of the assets of a target will normally require the approval of the target&rsquo;s equity holders, by majority vote or higher percentage specified by statute or the target&rsquo;s organizational documents. A simple merger will also usually require a vote by the equity holders of the acquirer. A triangular merger may avoid a vote by the acquirer&rsquo;s equity holders unless the transaction is sufficiently material that organizational documents, applicable stock exchange rules or the necessity to authorize additional securities to be issued in the transaction make such a vote necessary. A direct purchase of stock of the target will not require a formal vote of the target&rsquo;s equity holders, but may not result in the acquisition of sufficient target stock to successfully complete the transaction.&nbsp;
In an acquisition of assets, most governmental permits and any agreements with prohibitions on assignment will require the parties to obtain new permits and consents so the acquirer can continue the target&rsquo;s business. Diligence review of all permits and contracts is essential to determine what new permits or consents are necessary. Consents are normally obtained prior to closing; permits sometimes cannot be obtained until after closing. In the case of a forward merger, whether simple or triangular, even though the applicable law normally provides that the surviving company in the merger succeeds to ownership of all assets and contractual rights, there may be permits and some contracts that treat a merger as a prohibited transfer; in that case, new permits and consents may still be required. In a reverse merger, however, since there is no change in the assets or liabilities of the acquired company, in most cases its permits, contractual relationships and the like will not be affected. In that case, unless there is a change of control prohibition or language that specifically addresses the situation, typically no new permit applications or consents would be required. Tax Consequences of the Transaction
The tax consequences to the parties to a merger or acquisition and to their equity holders are major and often deciding factors in determining the structure and attractiveness of any transaction. The tax consequences will depend primarily on four principal variables: (i) the organizational form of the parties, which might be quite different; (ii) the structure of the transaction, which can be quite complex; (iii) the consideration to be exchanged in the transaction; and (iv) the pre-existing tax circumstances of each of the parties and their equity holders.&nbsp;
For entities taxed as corporations, Section 368 of the Internal Revenue Code, allows a transaction to be accomplished without an immediate recognition of gain or loss by equity holders in certain carefully defined circumstances, all of which involve the continuation of an equity interest in the resulting enterprise. Often called &ldquo;tax-free reorganizations,&rdquo; these transactions actually defer tax on any gain at the time of the transaction, typically allowing capital gains treatment of tax on the gain when the equity is ultimately sold. If the equity holders receive cash, or if the transaction fails to meet the specific requirements for tax-deferred treatment, tax on any gain to the date of closing may be due, whether or not the transaction results in any cash distribution to the equity holders.&nbsp;&nbsp;&nbsp;
Because Section 368 does not apply to entities taxed as partnerships, including limited partnerships and limited liability companies, transactions involving such entities may have taxable or tax deferred consequences to their equity holders based on other rules and analyses. Forward mergers, reverse triangular mergers and asset purchases are subject to different analytical processes and the form of consideration, such as securities, cash or a combination of securities and cash will dictate different results.&nbsp;&nbsp;
The ultimate tax impact on equity holders will in large part be determined by the tax basis of their investment in the parties to the transaction. In the case of limited liability companies or partnerships, a transaction may also result in the recapture of losses previously recognized for tax purposes by the equity holders, the impact of which may differ among the holders. An acquirer will also be interested in specific tax aspects of the transaction, such as the ability to step-up the tax basis of assets in an asset purchase and the possibility of preserving net operating loss carry-forwards of the target. Author: Dean R. Edstrom Partner Attorney, Lindquist &amp; Vennum PLLP (612) 371-3955 <a href="mailto:dedstrom@lindquist.com">dedstrom@lindquist.com</a>

Knowledge, planning and professional assistance required to understand tax consequences from M&A transactions

Mergers & Acquisitions: Structure and Tax Basics

10/24. What more appropriate place is there for a conference about an aquatic feedstock like algae than Minnesota, the Land of 10,000 Lakes? The 5th annual Algae Biomass Summit will take place Oct. 24-27 at the Hyatt Regency in Minneapolis.
This event unites industry professionals from all sectors of the world&rsquo;s algae utilization industries including financing, algal ecology, genetic systems, carbon partitioning, engineering and analysis, biofuels, animal feeds, fertilizers, bioplastics, supplements, foods and more.
Organized by the Algal Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. The event is considered a world-leading educational and networking junction for all algae industries.
Educational tracks at the event focus on biology, engineering, analysis, commercial activities, policy and financing; but education is only one of several reasons to attend. The summit is where future and existing producers of algae products go to network with other industry suppliers and technology providers. It&rsquo;s where project developers converse with utility executives, where researchers and technology developers network with venture capitalists, and where Fortune 500 executives and influential policy makers sit side-by-side with project developers.
The event is the largest, fastest-growing algae conference of its kind. This year&rsquo;s event is expected to draw nearly 900 attendees and exceed the previous year&rsquo;s attendance by almost 20 percent. This growth is powered by the current strength of the industry and the positive outlook for future algae producers.
The summit will help youâ€•algae industry stakeholdersâ€•identify and evaluate technical and economic solutions that fit your operation. Get your plane ticket, reserve your hotel room and register for the conference today.

Algae Biomass Summit in Minneapolis

Biorefining Magazine is coming to Houston, the epicenter of the oil&mdash;and more and more the biorefining&mdash;industry, Sept. 14-16 for the International Biorefining Conference &amp; Trade Show. Oil, gas and chemical refiners know their future lies in diversifying feedstock portfolios away from crude petroleum and into renewables, evidenced by the high volume of activity the oil majors are taking in biorefining investment, research, project development and scale-up. The conference&rsquo;s general session, titled Oil Industry Perspectives on Biorefining, will discuss this very topic.
If you&rsquo;re an oil person, you&rsquo;ll want to be there to learn about the latest trends in biorefining and find out what your oil competitors are doing in this space. Biorefiners, Houston is becoming the place to be for your peers, as we find more biorefining companies headquartered in Houston than anywhere else. Shake hands and network with those in the oil business who may just be waiting for the right opportunity to come along. Investors, this is your chance to vet, in person, those companies you&rsquo;ve heard so much about to make informed decisions on where your money should go in this sector. This is the time to get into advanced biorefining, while it&rsquo;s young. Get in on the ground floor. For those who do not recognize how big a role advanced biofuels and biobased chemicals will play in our future, here are a few things to consider.
RFS2 mandates 36 billion gallons of renewable fuel by 2022, and only 15 billion of that will come from corn ethanol. Up to a few billion gallons of that will also be methyl ester biodiesel, maybe more. This leaves roughly 20 billion gallons of advanced renewable fuels to be refined in just more than 10 years. That&rsquo;s essentially building out, in a decade, an industry the size and capacity of the U.S. corn ethanol industry that took nearly four decades to develop.
And it&rsquo;s not only going to be cellulosic ethanol contributing to these markets, as largely thought when the legislation was passed. In fact, cellulosic ethanol capacity in 2022 may be a gross minority when positioned next to the other advanced biofuels&mdash;biojet, renewable diesel, green gasoline, various butanols, other nonethanol cellulosic biofuels&mdash;which are trending toward rapid development. And this only considers the U.S. mandated market. Virtually every region of the world will have advanced biofuel agendas, mandates or incentives. To fly into Europe in the future, planes will have to fuel up on blends of biojet to hit greenhouse gas reductions. The jet fuel market is huge. Biocrude from companies like KiOR and several others is a no-brainer replacement or supplement to crude petroleum that can be run through the existing refining industry.
&nbsp;
Author: Ron Kotrba Editor, Biorefining Magazine <a href="mailto:rkotrba@bbiinternational.com">rkotrba@bbiinternational.com</a>

Fall 2011

Business Briefs

Business Briefs

Business Briefs

Columns

Pellet Industry Gears Up for Rising Demand

Two Ships Passing in the Night

The “End of an Era”

Maine Removes a Roadblock to Pellet Heating Systems

The Case for Importing Sustainable Industrial Wood Pellets from the US

Washington's Fireworks: More Distraction than Democracy

Mergers & Acquisitions: Structure and Tax Basics

Major Growth

Featured

A Pellet Maker's Successes, Solutions and Challenges

Positioned for Growth

Big in the Baltics

Exporting Expertise

For Safety's Sake

Conference Addresses Burning Questions

Trade Talk

ASTM Approval

Searching for Leaders

RFS2: Working Towards 2012

Contributions

Silo Fires Require Specific Response Tactics

Fall 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

Columns

Pellet Industry Gears Up for Rising Demand

Two Ships Passing in the Night

The “End of an Era”

Maine Removes a Roadblock to Pellet Heating Systems

The Case for Importing Sustainable Industrial Wood Pellets from the US

Washington's Fireworks: More Distraction than Democracy

Mergers & Acquisitions: Structure and Tax Basics

Major Growth

Featured

A Pellet Maker's Successes, Solutions and Challenges

Positioned for Growth

Big in the Baltics

Exporting Expertise

For Safety's Sake

Conference Addresses Burning Questions

Trade Talk

ASTM Approval

Searching for Leaders

RFS2: Working Towards 2012

Contributions

Silo Fires Require Specific Response Tactics

Fall 2011