I&rsquo;ve heard the term up-and-coming used to describe the wood pellet industry in the U.S., but from my perspective, it&rsquo;s already here. At this point, I would say it&rsquo;s simply continuing to expand.
 Export markets and global demand that North American pellet mills are expected to satisfy seem to increase a bit with each new study released. Development in the Southeast U.S. is explosive and port authorities are taking notice, expanding their own capabilities to accommodate the new opportunities afforded to them through the pellet industry&rsquo;s growth.
While multiple producers are positioning themselves to take advantage of the massive foreign demand, even more are happy with the domestic market they supply here, mainly in residential heating applications. In the West, pellet mills are using wood that has fallen victim to the pine beetle infestation, helping to remove dead and dying material that could interfere with forest health. Read more about the epidemic and its causes in a feature article by Associate Editor Anna Austin beginning on page 14.
 In the Northeast U.S., some state-level policies and reports are illustrating current and projected pellet popularity. Both New Hampshire and Maine have added wood pellets to their fuel price reports, and a residential pellet boiler subsidy program in Berlin, N.H., has been extended indefinitely. The program aims to assist with installations of residential boilers for homeowners switching to pellet fuel. Its organizers say interest in pellet heat is growing in the Northeast and the program can help more people save money on heating bills.
 And pellets are in the spotlight even on the federal level. In March, the U.S. Department of Housing and Urban Development announced that wood pellet boilers will be classified as a conventional, primary heating source, and therefore will qualify for Federal Housing Authority funding, provided they meet the other guidelines. HUD officials admitted the agency was perhaps behind the times in recognizing pellet boilers as a qualifying technology and promised that the handbooks would be updated to reflect the new classification.
 As the industry continues to evolve from its already-healthy position, there is no shortage of new ideas and ingenuity. Starting on page 28, Associate Editor Luke Geiver showcases some innovative pellet boiler installations that set themselves apart in areas ranging from feedstock handling to overall design and appearance.
 The pellet industry has arrived and is continuing its U.S. growth in both the domestic and export markets. Producers here are recognized as major players on the world stage.
 And they&rsquo;re prepared to provide millions of tons of pellets to keep that stage warm and bright.

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Building on Success

A headwind is approaching the biomass energy sector, and it&rsquo;s called cheap natural gas. Fracking has dramatically changed the supply outlook for natural gas in North America for the foreseeable future and biomass proponents who fail to factor it into their planning will regret it.
 The impact on the economics of proposed projects is obvious, but I think the impact on the political process could be even more profound. The decrease in heating energy costs will predominantly impact our urban communities, and it may also widen the gulf between urban and rural energy costs in both the U.S. and Canada.&nbsp;&nbsp;&nbsp;
 Although the rise in the price of oil is getting all the press, the wholesale price of natural gas has sharply declined in real terms over the past three years, as a direct result of fracking. Shale gas fracking is being explored all around the world. Just a few years ago, we were debating the licensing of natural gas import terminals in the United States. In an amazingly short time, many of those applications have been resubmitted as export terminals&nbsp;&nbsp;&nbsp;
 Shipping and transport have never been a strong point for natural gas. It is essentially a stranded fuel and is generally utilized on the continent in which it is produced, which has always benefited North American consumers. Oil and propane, on the other hand, are transportable, but that is a long-term weakness from a price volatility standpoint, as they are world commodities. Maine and Alaska are the U.S. states most dependent on heating oil, and most alarmed by the future prospects for the price of that fuel.
 A future of declining real gas prices may have two important impacts on the biomass industry, specifically pellets. First, rural institutions and businesses must be weaned off heating oil, but will need significant financial assistance to support the installation of the hundreds of new boilers. The second potential impact is that NG is a cheap method to generate electricity, and this may change the dynamics of biomass electrical generation, or at least make it even more dependent on renewable energy credits and state renewable portfolio standards. That may change the competition for feedstock.
 The fundamental challenge facing pellets will not be cheap gas, however, but its availability to a majority of homes, and the resultant impact on votes. According to the American Gas Association, more than 55 percent of American households heat with natural gas, which means that these households (voters) may not see much change in their energy bills this decade. Consequently, the majority of the electorate will not view home energy costs as an issue. Meanwhile, the rural minority will be &ldquo;dying on the vine,&rdquo; potentially strangled by increasing thermal energy costs that eviscerate budgets of households, school districts and rural hospitals.
 And abundant natural gas changes the political landscape for all alternatives. Most incentive programs could be imperiled by an electorate that is dominated by households using cheap gas. Our current successes in building political momentum for biomass thermal, and our hopes for much more, may not last, as the cost of heating fades as an issue for the majority of energy users. All of us who are committed to pellets and thermal biomass need to redouble our cooperative efforts in the political arena right now.
 The energy crisis may be over, at least for home heating in the urban majority. That means the political window for incentive programs, sales tax exemptions, new loans, and grant programs is closing. Even the once unimaginable possibility of the roll back of state portfolio standards may rear its ugly head in the face of economic hard times and cheap natural gas. So for those of you who are sitting back, focused on your own projects, I encourage you to get involved at the state and national levels in existing initiatives supporting the biomass thermal industry. Once the electorate no longer sees a crisis, it moves on to other issues, and it could be a long, cold decade for folks who provide pellet fuel. Author: John Crouch Director of Public Affairs Pellet Fuels Institute (916) 536-2390 <a href="mailto:crouch@pelletheat.org">crouch@pelletheat.org</a> <a href="http://www.pelletheat.org">www.pelletheat.org</a>

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Fracking Changes Everything 

In my last column, titled &ldquo;The End of an Era,&rdquo; I described a fundamental shift that I observed over the past year pertaining to standardization of the pellet fuels industry. Essentially, the industry has generally accepted that standardization is upon us and it is now time to implement programs that have long been in the works.
 Since the last issue of Pellet Mill Magazine was published, the Pellet Fuels Institute and the American Lumber Standard Committee have finalized an agreement, and ALSC has accredited several auditing agencies and testing labs for the purpose of implementing the domestic residential/commercial densified fuel standards program. The European Pellet Council continues to add to its list of countries that are implementing the EN plus pellet certification scheme on an international basis. In addition, the Industrial Wood Pellet Buyers initiative in Europe to develop standard specification for industrial wood pellets has progressed by opening the door to U.S. pellet producer feedback through the U.S. Industrial Pellet Association. This provides collaboration critical in the implementation of a mutually acceptable standard for international shipments to European utilities.
 Along with standardization, we anticipate better consistency within our fuel streams, better performance for the combustion appliances and mechanical handling systems, and of course, happier customers. Unfortunately, standardization is likely to result in some growing pains, as well. As an active participant in all of these standards development initiatives, I feel obligated to make you aware of a common theme that the industry as a whole needs to understand. These are new programs and will need to be refined as we identify shortcomings during their implementation. I am not trying to imply that they have not been thoroughly researched. Quite the contrary, but I think we can all relate to two concepts: there is always room for improvement, and it doesn&rsquo;t always work as well in practice as it did on paper. The implementation of standards is much like the scaling up of any new technology to commercialization. As you ramp up, you identify problems and then modify the design as necessary until it works the way it is intended. The difference is that when standards are specified in contracts, they become legally binding. We need to be very careful that in an effort to grow consistency and reliability within the industry we don&rsquo;t create a situation where producers are left holding the bag (or ship, literally) or worse yet, recalling it due to an unforeseen yet preventable issue. That is why it is essential for every fuel producer to fully understand any standard it intends to implement and to have a solid plan for implementation.
 The best advice is to do your homework beforehand. All of these standards programs are well-defined. Take the time to read them carefully and relate them back to your process. Ask yourself if the standard is achievable for your facility, and how confident you are taking on the implementation.&nbsp; If you are not sure, then do more research or ask for help.&nbsp; Also, do not be afraid to bring questions or concerns with any of these standards back to the standards developers. In all cases, I can assure you that they are eager for feedback and want to improve them.
 &nbsp;You should also carefully consider your quality team. Make sure your quality manager knows this is a primary responsibility and not just an additional duty. Select people who know and understand quality management or who have sufficient background and/or capabilities to be trained into the role. A meticulous mindset is very helpful here. In short, get the right people on your quality team. This also applies to your external support companies such as auditors, laboratories, logistics coordinators, and others. When in doubt, these entities should be able to answer your questions. If they cannot, you are probably working with the wrong people.
 In a perfect world, there would be a simple step-by-step guide that everyone could use to gain compliance with these new standards, but every facility is unique with its specific feedstock materials, equipment, people, intended markets, etc. Compliance will need to be achieved one production facility at a time, each with its own unique circumstances. It&rsquo;s a step toward strengthening this industry through which we all will find growth. Proceed, but be informed and have a solid plan. Author: Chris Wiberg Manager, Biomass Energy Laboratory (218) 428-3583 <a href="mailto:cwiberg@tpinspection.com">cwiberg@tpinspection.com</a>

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Proceed, But be Informed and Have a Solid Plan

&ldquo;Wood Pellet Producers Ask Federal Government for Help.&rdquo; So read the unfortunate headline of the Bangor Daily News article describing a February meeting of Maine&rsquo;s pellet industry leaders with USDA Rural Development Undersecretary Dallas Tonsager.
 A predictable reader reaction in the comments blog accompanying the online version of the newspaper was &ldquo;Great, another industry looking for a handout.&rdquo; Of greater concern was the fact that of the 129 posted comments, this particular response was &ldquo;liked&rdquo; by 78 viewers, far more than the response to any other set of remarks.&nbsp;
 Even allowing for the infantile nature of many commenters and their respondents, this reaction needs to be recognized for what it is. Our industry needs to adjust for the fact that federal energy assistance programs are now going to be &ldquo;Solyndra-shy.&rdquo; Add to this the fact that one of our biomass champions, U.S. Sen. Olympia Snowe, R-Maine, has announced that she will not be seeking re-election. Add to all that the fossil fuel industry&rsquo;s success in getting the &ldquo;government shouldn&rsquo;t pick winners and losers&rdquo; mantra adopted in many circles.&nbsp;&nbsp;
 We need to ask of government only that which clearly makes sense to virtually every consumer and voter.
 In many states, common-sense concerns about the cost of constructing new electrical generating facilities has led to a very modest systems benefit charge added to every electric bill. Those funds are then used to bring about significant efficiencies, and reductions in electricity consumption, to electricity consumers of all classes.
 Concerned citizens, legislators, and public utility regulators in half of our states have used somewhat the same electricity-oriented approach to establish renewable portfolio standards mandating that a percentage of the electricity delivered in those states come from renewable sources. In Maine, however, a yellow light has just flicked on. The attempt by environmental groups to place on the November ballot an increase in the required renewables has fallen short of the required petition signatures, and is postponed for a year.
 Public measures to promote pellet heat will succeed only if they are seen by the consumers as truly cost-saving. The best thing happening now, in terms of public support for fuel-switching, is the media advertising presently taking place in Maine by both stove retailers and a major pellet boiler firm, all stressing that pellets are half the price of oil. Once this simple claim becomes widely accepted as fact, arguments about climate change, economic benefits of keeping fuel dollars in-state, and increased employment in the forest products industry suddenly carry much more weight.
 But let&rsquo;s be careful what we wish for. Short-term subsidies such as the very successful Maine Forest Service grants to schools installing pellet heat are enduring only if they can inspire other school officials, architects, heating consultants, and local taxpayers to make similar investments without grant assistance. Public financing for wood heating systems will be successful if it is in the form not of outright taxpayer expenditures, but instead of loan guarantees such as those USDA already provides for a myriad of rural development purposes.
 Maine&rsquo;s energy agencies are currently considering a pilot project that will enable 500 clients of the Low Income Home Energy Assistance Program to install pellet stoves, getting them off the ever-escalating oil treadmill. This has potentially great value both for our industry and for the community action agencies administering the LIHEAP program. It will show taxpayer funds being channeled to purchase a local fuel and provide jobs to Maine workers, while helping needy persons get through the winter.
 There is, of course, one request of public officials that generally engenders strong public support: sensible regulation. In response to a strong request from Dutch Dresser, president of the Maine Pellet Fuels Association, Sen. Susan Collins, R-Maine, and the U.S. Secretary Housing and Urban Development announced March 2 that pellet heating systems are now to be accepted as a primary heating source for FHA financing. &ldquo;There are moments when the federal government can be a little behind the cutting edge in terms of new technology,&rdquo; HUD Secretary Shaun Donovan conceded. This recognition of pellet heat removes what has been a major roadblock for heating installers.
 Government support: not a good request. Fair treatment for pellet heating customers: a popular goal. Go figure. Author: Bill Bell Executive Director Maine Pellet Fuels Association (207) 752-1392 <a href="mailto:feedalliance@gwi.net">feedalliance@gwi.net </a>

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Government Assistance: Double-Edged Sword?

Wood resources for bioenergy, specifically industrial wood pellets, are carbon neutral. When used for energy, the release of carbon into the atmosphere never exceeds the amount of carbon that was absorbed during the life of the tree.&nbsp; In fact, trees in their growth phase absorb carbon at a faster rate than older, mature trees and this is particularly true for forests in the Southeastern U.S.,&nbsp; where the climate is warm and conducive to faster growth.&nbsp; The U.S. Southeast is actually home to some of the most robust forests in the world, where many species naturally propagate multiple tree saplings for every one tree harvested, which means more carbon sequestration overall.&nbsp;
 Well-managed forests that provide raw materials for the industrial pellet industry and other forest products continue to have positive growth-to-drain ratios (greater than one) where forest growth exceeds harvests and carbon absorption rates increase year after year. The practice of sustainable rotational harvesting means that there will be a continuous cycle of new growth in the forest.Moreover, trees in their growth phase absorb carbon at a faster rate than older, mature trees.&nbsp; Accordingly, the practice of sustainable rotational harvesting means that there will be a continuous cycle of new growth of the forest.
 Managed forests have trees of various ages and species, sequester more carbon than older growth stands, and continually accumulate carbon and maintain stable carbon stocks.&nbsp; Indeed, the regular removal of woody biomass maintains and improves a forest&rsquo;s health. It improves wildlife habitat and biodiversity; it gives forest stands the light needed to not only survive, but thrive.&nbsp;
 The majority of forestland in the Southeast U.S. is owned by small forest owners, who have owned their land for generations and live on the revenue it generates.&nbsp; Strong timber markets ensure that these land owners will maintain their forests as forests and not sell or convert.&nbsp;&nbsp; If forest landowners see new markets (e.g. bioenergy from industrial wood pellets) for the trees they are growing, they will respond by growing more.
 Finally, the wood pellet industry is one of the few growing industries in today&rsquo;s challenged economy. It provides direct manufacturing jobs and indirect supply chain jobs in rural areas, an economic channel for forest/land owners, and wood pellet export is helping to rebalance the U.S. trade deficit. The industry model is founded on sound, sustainable forestry practices, without which the industry could not and would not succeed or survive. 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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Industrial Wood Pellet Industry is Sustainable and Carbon Neutral

Vecoplan introduces new wood waste grinder
 Vecoplan has added the VAZ 1300 to its selection of wood waste grinders. The system incorporates elements that improve performance, increase durability and decrease maintenance time.
 Cardan shaft drives eliminate drive belts, lower maintenance costs and decrease overall machine base widths. Double sidewalls reduce wear, eliminate contamination of bearings, as well as heat transfer to bearings, and increase durability. Reversible counter knives deliver twice the life, and hydraulic swing-up screen carriages provide quick and easy access to the rotor for cutter replacements, tramp metal removal, and other routine maintenance. Rotatable screens can be turned 180 degrees, increasing wear life by a factor of 1.5, and externally adjustable counter knives allow the operator to maintain optimal cutting tolerances quickly and easily.
&nbsp;
 Alliance for Green Heat launches wood stove design challenge
 The Alliance for Green Heat has publicly launched its Next Generation Wood Stove Design Challenge. The program will highlight and promote innovation in wood stoves.
 Organizations supporting the challenge include Popular Mechanics magazine, the Washington State Department of Ecology, the New York State Energy Research &amp; Development Authority, and the Global Alliance for Clean Cookstoves.
 The deadline for initial applications is Dec. 20 and the finalists will bring their stoves to Washington for the Decathlon in November 2013. The winning design will receive $25,000 and coverage in Popular Mechanics. Second place winners will share a $10,000 award. For rules and more information about the Wood Stove Design Challenge, visit www.forgreenheat.org/stovedesign.
 Eucalyptus and pine log prices in Brazil neared all-time highs in 2011
 Eucalyptus log prices in Brazil reached a peak in the third quarter of 2011, but fell almost 8 percent in the fourth quarter in U.S. dollar terms, according to Wood Resources International LLC.
 Prices for Eucalyptus pulpwood traded in the open market are high not only from a historical perspective, but also as compared to many other regions around the world. Only pulp mills in Europe and Australia had higher hardwood fiber costs than Brazil in late 2011, while North America, Chile, Russia and Indonesia all had lower hardwood log prices than Brazil, the world&rsquo;s largest market pulp exporter, Wood Resources International reported. Wood fiber cost is by far the most important cost component for Brazilian pulpmills, more so than for most other pulp mills in the world.
 Fecon celebrates 20 years
 Feb. 17 marked Fecon Inc.&rsquo;s 20th anniversary in the forestry mulching business. The company will host a Field Day/Open House on April 26 featuring live demonstrations, machine displays, factory tours, a night out at the ballpark, and more.
 Fecon started in 1992 to serve the growing needs of the organic resource recovery industry. Its first Bull Hog was sold 20 years ago and is still running today with more than 20,000 hours on it. Today, with 107 employees, Fecon calls its 111,000-square-foot factory in Lebanon, Ohio, home. For more information on the event, visit www.fecon.com/field-day.
 Jansen announces new senior consultant 
 Jansen Combustion and Boiler Technologies Inc. has hired Roger Lawton as a senior consultant. Lawton began his work with the company Feb. 27 out of the Atlanta, Ga., area.
 He brings to his position with Jansen more than 35 years of experience in the areas of chemical recovery and biomass boilers. Lawton holds a bachelor&rsquo;s of science degree in civil engineering and a master&rsquo;s degree in business administration finance. He earned both from the University of Connecticut.
&nbsp;

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Business Briefs

Letting nature take its course has historically been one of the most effective ways to deal with natural disasters, as oftentimes these matters are out of the hands of mankind. Occasionally, however, there are ways to mitigate these occurrences while drawing value from them.
 The great pine beetle outbreak of the Rocky Mountain West is a good example. The epidemic has swept across the forests of Colorado and Wyoming, devouring more than 3.5 million acres of forests, and it stretches all the way from Mexico to British Columbia, where more than 40 million acres are infested.
 While there&rsquo;s been no way to stop the epidemic, the worst in recorded history, huge efforts are being made to manage the affected forests to prevent forest fires. The harvested beetle-killed wood is being used for a variety of applications, including unique furniture, wood chips and wood pellets for heat and power production&nbsp;
 &nbsp;Daniel Tinker, forest ecologist for the University of Wyoming, says there are three main reasons for such a rampant epidemic, and while some of the materials should be removed and used for bioenergy and other purposes, some should be left alone.
 Beetle Basics
 Four primary species of bark beetle are active in the Rocky Mountain West, according to Tinker. &ldquo;They are all specific on different trees, so pretty much all trees have a bark beetle attacking them right now,&rdquo; he says.
 Adult pine beetles, precisely the size of a grain of rice, enter the trees during the summer and dig birthing galleries, where they lay their eggs. This happens just underneath the bark in the layer of the tree called the phloem, where nutrient transport takes place, Tinker explains. Once the eggs hatch into larvae, they feed on the phloem layer, essentially interrupting the transport of nutrients up and down the tree. &ldquo;More importantly, the beetle introduces a fungus into the tree,&rdquo; he says. &ldquo;It&rsquo;s a symbiotic fungus that relies on the bark beetle, and the larvae feed on the spores of that fungus during the winter.&rdquo;
 Blue stain fungus is its common name, and it clogs up the water conducting field, or xylem. Within about 60 days, the tree is dying of thirst and can&rsquo;t transport water from the roots to the leaves, so it dies.
 So what&rsquo;s the reason for an epidemic of such a caliber? &ldquo;Conventional wisdom is that there are three reasons, and one is that we don&rsquo;t have as cold of winter temperatures as we have had historically,&rdquo; Tinker says. &ldquo;If the winter temperatures get cold enough at the right times of the year, in early November or late April, and stay cold for several days, it can kill the larvae. We don&rsquo;t have those temperatures as frequently anymore.&rdquo;
 The second reason is the fact that the West is coming out of about 10 years of drought, so the trees are already stressed. &ldquo;A lot of the time they can fight the beetle off, if they&rsquo;re healthy and have plenty of resources and water,&rdquo; Tinker says. &ldquo;As the beetles drill in, they&rsquo;ll produce a lot of pitch and sap and (they pitch) the beetle right back out of the hole, but they can&rsquo;t do that when they are drought stressed.&rdquo;
 Last, many of the trees across the West are just the right age and size and in the right kind of forest structure to support this kind of an epidemic. From Tinker&rsquo;s perspective, there&rsquo;s really nothing that can be done to stop it, but the state of the forests should begin improving. &ldquo;It&rsquo;s kind of running it&rsquo;s course now,&rdquo; he says. &ldquo;The beetles are running out of resources and we&rsquo;re having some wetter winters and springs, so the trees&rsquo; health is improving a little. I&rsquo;m not sure we can prevent it from happening again&mdash;beetles come in about 30-year cycles&mdash;but we haven&rsquo;t seen one to this extent in recorded history.&rdquo;
 Many people believe the pine beetle problem can be resolved by intentionally managing the forests so they are not as dense. Tinker says that isn&rsquo;t necessarily true. &ldquo;Forests kind of do that on their own,&rdquo; he says. &ldquo;And some papers have printed that we&rsquo;ll lose the lodge pole pine in North America, but that&rsquo;s just not true.&rdquo;
 Moving it Out 
 There&rsquo;s a good mixture of trees left in the wake of the pine beetle epidemic, as some are tall, old trees and many are young. &ldquo;So we&rsquo;ll have a nice mix of ages and species, though some areas will shift to a dominant species,&rdquo; Tinker says. &ldquo;In my opinion ecologically, it&rsquo;s been catastrophic in some ways, but it&rsquo;s a big natural thinning event that probably needed to happen.&rdquo;
 A lot of the forest material is dead, however, and in some places it needs to be removed, especially hazard areas. &ldquo;I don&rsquo;t think we need to go in and clear all the dead wood out to try to prevent fires,&rdquo; Tinker says. &ldquo;A lot of times fires are inevitable, and some dead wood is important to the ground and small animals. But, there is an opportunity to get it out in a lot of places and make use out of it, including bioenergy purposes.&rdquo;
 Mike Eckhoff, a forest scientist at Colorado State University, points out that biomass is the one renewable energy source that can hurt people if it&rsquo;s not used. &ldquo;Colorado has been at the forefront in using the material for bioenergy,&rdquo; he says. &ldquo;We see a lot of push towards biomass electricity, but for Colorado, thermal makes sense. With the cold weather and rural communities, it&rsquo;s a critical point that needs to be made.&rdquo;
 Managing for an epidemic that is now 3.3 million acres in size&mdash;or just slightly smaller than the state of Connecticut&mdash;is significant, particularly from a public health standpoint and in light of the energy crunch we&rsquo;re facing, from Eckhoff&rsquo;s perspective. &ldquo;If there is a way to address both, by using that material to burn in pellet stoves or something else, it makes a lot of sense.&rdquo;
 Confluence Energy, a pellet manufacturer outside of Kremmling, Colo., is one company doing just that. Pine Beetle Pellets Confluence Energy is one of a few pellet plants in the state using exclusively pine beetle-killed wood, and has been since 2008. CEO Mark Mathis says that while the sentiment may be that there is an excess supply of free or cheap pine beetle-killed wood for the taking, that&rsquo;s not the case.
 &ldquo;There was a bit of a misnomer out there. People came into [some projects] thinking that there&rsquo;s so much of it that it must be free, but that&rsquo;s just not true,&rdquo; he says. &ldquo;We actually had a bit of a shortfall of wood last fall when they started pulling firewood. Part of it&rsquo;s an infrastructure issue, and since the material is often small diameter and cracked, the yields on the saw end of things aren&rsquo;t very high because there are limitations on what you can do with it for higher value. The pellet side is the low-value utilization.&rdquo;
 So is there ever a point where the wood is so damaged it can&rsquo;t be used for pellets? &ldquo;The nice thing is that a lot of it stays standing vertical, and as long as it does that, it&rsquo;s suitable for pellets for about five years,&rdquo; Mathis says.
 Confluence Energy is able to contract about 35 to 40 percent of its feedstock, and the rest is paid according to market price flow, Mathis says. And while the pellet business is rumored to be lucrative, he says right now there&rsquo;s an over-capacity in Colorado, roughly 200,000-plus tons, while the whole residential market demand is about 70,000 tons. &ldquo;When the pellet mills began in Colorado a few years ago it was great times, but as the cost of energy went up and more people entered the field, eventually there was this glut,&rdquo; Mathis says. &ldquo;It&rsquo;s been kind of a boom-and-bust cycle, and the warmer winters certainly aren&rsquo;t helping. The trick is learning where your markets are and adapting to those conditions. Pellets make sense from an energy perspective and public perspective, but there are other uses for this material that compliment the energy perspective, and they should be included.&rdquo;
 For some, vast opportunity may lie in exporting their pellets to overseas customers, but Mathis says that concept isn&rsquo;t equal across the board, at least not for those located in states like Colorado. &ldquo;One can only transport pellets so far, and because we&rsquo;re landlocked, exporting into Europe where the market is big is not really viable,&rdquo; he explains. &ldquo;We may have a little cheaper feedstock, but that&rsquo;s cancelled out trying to get closer to a port. Here, pellets aren&rsquo;t a viable export market, and there&rsquo;s only so much residential application. It&rsquo;s a seasonal business, and it&rsquo;s tough to run a plant 40 percent of the time and make any money.&rdquo;
 Along with building a pellet or bioenergy industry based on that material in Colorado come concerns about a temporary feedstock running out. &ldquo;There has always been the sentiment that if you build a biomass energy industry, eventually you&rsquo;re feeding the beast, but that hasn&rsquo;t materialized as of yet,&rdquo; Eckhoff says.&nbsp;
 In fact, there is actually too much material being left in the woods, according to Joe Duda, deputy state forester at Colorado State Forest Service.
 Accessibility and More
 &nbsp;&ldquo;One important thing to know is that the total U.S. Forest Service landownership is about 10 million forest acres, and generally only about 2.8 million are used for harvesting,&rdquo; Duda says. &ldquo;In all reality, the vast majority of the mountain pine beetle-affected timber is in some form of landownership where it probably won&rsquo;t be harvested. If we were extremely optimistic, we&rsquo;d say maybe 20 percent will get treated, but it&rsquo;s probably close to half of that.&rdquo;
 That can be attributed to a number of factors, including land allocation, wilderness, lack of roads, steep slopes, and unstable soil. Overall, about one-third of the state is forested, and about three out of four of those acres are publicly owned and federally managed, according to Eckhoff. &ldquo;So about 75 percent of the epidemic is on public lands,&rdquo; he says.
 And as Duda mentioned, Eckhoff says there are many factors that affect retrieval of the wood, factors that make utilizing it uneconomical. &ldquo;There are supplies being made available, but we&rsquo;ve had a number of contracts go no-bid because while the material there is relatively inexpensive, accessing, harvesting and bringing it back for manufacture and distribution is prohibitively expensive, especially with rising fuel prices,&rdquo; he says. Typically you&rsquo;ll find the material is so low value, doing anything with it beyond a 15-mile radius is problematic.&rdquo;
 In Duda&rsquo;s professional opinion, there needs to be much more action than there has been on the lands that are available. &ldquo;That&rsquo;s whether they are private or federal, because we can make a difference,&rdquo; he says.
 &nbsp;And if the pine beetle-affected states really want to be effective in creating a market for the wood, harnessing all possible value, that means making a broad array of products, everything from bioenergy to higher value use, Duda adds. &ldquo;We just need to capture all the value we can.&rdquo; &nbsp;&nbsp;&nbsp; Author:Anna Austin Associate Editor, Pellet Mill Magazine (701) 751-2756 <a href="mailto:aaustin@bbiinternational.com">aaustin@bbiinternational.com </a>

SEA OF GRAY: A pine tree forest north of Breckenridge, Colo., shows more signs of beetle damage than of forest health. 

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SUITABLE STOCK: Damaged wood that remains upright is still usable for pellet production. 

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FALLEN FORESTS: A large swath of trees topples from pine beetle attacks.

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PATHS OF PESTS: The destruction pine beetles cause can be clearly seen on tree trunks.

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DOTTED DEVASTATION: Dead trees in the affected areas often turn purple or red from the damage.

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SAD SCENERY: Beetle-killed trees are common in Colorado's Rocky Mountains.

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PELLET PILES: Confluence Energy uses pine beetle-killed trees to make wood pellets.

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SPREADING SICKNESS: Dead and dying trees surround a patch of forest still green and growing.

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An exploration of the mountain pine beetle infestation reveals its depth, possible ways to combat it, and uses for millions of acres of dead wood

Energy-Charged Epidemic 

Cecilia Huapaya has a vision of a clean planet where everyone has access to a good job that affords sturdy housing in a healthy, interlaced community. With the help of several companies and people who share her vision, she is working to make it a reality.
 Huapaya is the president of CJ Consortium, a group of 26 companies, including equipment and other product manufacturers, that has helped develop a business model to build homes and produce pellets for gasification and subsequent power generation, as well as bunker oil, carbon black, fertilizer, and pollozonic ash. But these pellets and co-products won&rsquo;t come from wood or agricultural biomass. They will come from landfills and the municipal solid waste (MSW) that rots there. Whatever isn&rsquo;t used for those products will be recycled to allow 98 to 99 percent cleanup of pollutant-emitting landfills in the world, according to Lucas Delorraine, vice president of international relations for True Green Energy Group. TGEG recently partnered with CJ Consortium to bring the project model to the Philippines. &ldquo;Nothing goes to waste,&rdquo; Delorraine says.
 The structure includes the construction of low-cost, energy-saving homes that can be purchased with low-interest mortgages by residents who will be working at the plants. For areas such as the Philippines with overflowing, decomposing landfills and electricity shortages, it could be the all-inclusive answer.
 &ldquo;Our concept is very different from everybody else,&rdquo; Delorraine says.
 Powering the Philippines
 TGEG began work on its pellet production and gasification project in San Fernando, Philippines, about five years ago, Delorraine says.&nbsp;Chairman and Founder&nbsp;Ronald Flynn wanted to clean up landfills, while powering off-grid sites. Most areas in the country use oil, but constant power supply is a luxury afforded almost exclusively to larger municipalities. The shortage is particularly clear in the Mindanao grid, where brownouts have been frequent since the beginning of January, according to the Philippines Department of Energy.
 &ldquo;By doing this, we&rsquo;ll be able to provide better quality of life,&rdquo; Delorraine says. &ldquo;Even if the place that we are putting the gasifier doesn&rsquo;t have enough waste to produce pellets, we can ship the pellets and the gasifier can produce 24/7 electricity for the island.&rdquo;
 The gasification system that will be used for the projects was developed by Beltran Technologies and can use either pellets or shredded MSW. TGEG produces pellets because the mill was already set up when the company chose Beltran's system. The project site in San Fernando is already producing test batches of pellets and is awaiting installation of its gasifier, which should be operational in September.
The process begins with the deposit of garbage into a large bin, where it is sprayed with a disinfecting enzyme and left overnight, Delorraine says. The next morning, the garbage heads to a manual separation line where roughly 50 employees pick out contaminants and recyclables. The remaining material, mostly plastics and organics, is shredded, mixed with limestone, and fed into a dryer that reaches 150 degrees Celsius and continues the limestone mixing step. The high drying temperature and limestone mixing, which traps heavy metals and removes contaminants, are the secret to the innovative project model, Delorraine says. They help produce a material with merely 8 percent moisture that can then be transformed into a squared pellet-type product sized somewhere between traditional pellets and briquettes.
 &ldquo;At this point, we don&rsquo;t call it MSW anymore,&rdquo; he says. &ldquo;It is RDF (refuse-derived fuel). The pellets come out really, really good.&rdquo; The properties of the resulting densified products are currently being tested, but Delorraine expects they&rsquo;ll have a calorific value of between 25 and 30 percent. &ldquo;If the pellets come up with a high calorific value, then we have an almost perfect pellet. Not only can this pellet now be used by us, it can be used by a lot of other industries.&rdquo;
 The San Fernando site will have more pellets than it will need for its gasifier, so the excess will be sold, and numerous companies have expressed interest in purchasing, Delorraine says. Currently, the operation processes 400 metric tons (440 tons) of MSW per day, and the gasifier will require 25 metric tons per day of feedstock. By July, the San Fernando mill will produce 1,000 metric tons of pellets per day.
 The syngas from gasifying a product made from garbage can&rsquo;t be expected to come out clean, but Beltran&rsquo;s process utilizes a fiber filter, electrostatic precipitator, and a scrubber to convert the dirty, red syngas into a gas that emits a clean blue flame when burned, Delorraine explains. &ldquo;What you get out is just steam. No pollution at all.&rdquo; The project, and each identical system installed around the world, will be able to produce 2 megawatt hours of power for local communities.
 The Philippines does have emissions regulations, but not as strict as those in other countries. Delorraine isn&rsquo;t concerned, however, comforted by the fact that a Beltran gasifier in England sits next to a college dormitory. &ldquo;England is really, really regulated and if it works for England, I believe it will work anywhere.&rdquo; He adds that the system would pass even U.S. emissions requirements.
 The San Fernando operation has made pellets from industrial, residential and separated qualified waste, but for now, most areas employing the system will provide more residential waste than other types.
 The idea is a perfect fit for integration with CJ Consortium&rsquo;s home-building strategy, benefiting both organizations, as well as local communities. &ldquo;We&rsquo;re pretty much the answer for them, and they&rsquo;re pretty much the answer for us,&rdquo; Delorraine says.
 Putting it All Together
 &ldquo;We have made a joint venture with TGEG and we are now looking for a solution to the problem of waste in the world,&rdquo; Cecilia Huapaya says. Speaking in Spanish with a translator, Al Serrano, executive sales director for CJ Consortium, Huapaya explains how delighted she was when she first met with TGEG&rsquo;s Ronald Flynn and discovered they shared the same passion for cleaning up waste and simultaneously advancing humanity&rsquo;s existence. &ldquo;I was happy to find when I reached the Philippines that Ronald Flynn had the same interest in taking to all the Third World countries the latest technology,&rdquo; she says. &ldquo;All countries have huge problems with landfills polluting the Earth.&rdquo;
 Each project site around the world will be located near a landfill and will provide housing for any homeless people who count on them to survive. &ldquo;These houses will be sold because these people that are living around there, like beggers and peasants, they&rsquo;re living off the garbage; they&rsquo;re eating the garbage,&rdquo; Serrano says, adding that the strategy will modernize those poverty-ridden areas. &ldquo;They will have a good job, they will have health care and they will have an opportunity to own their own homes, so they&rsquo;ll be proud.&rdquo;&nbsp;
 Serrano is clear in pointing out that the housing and job creation will bring prosperity for the residents and for the countries they inhabit. CJ Consortium is financing the projects as they develop, with the help of many local governments and banks offering 30- to 40-year mortgages with interest as low as 1 percent. &ldquo;So these people can afford to have a much better quality of life,&rdquo; Serrano says. &ldquo;We&rsquo;re going to give them work, we&rsquo;re going to give them education, and we&rsquo;re going to give them decent housing.&rdquo;
 In addition, the project partners will give a percentage of revenue back to the communities, depending on the amount of revenue each project brings in. Serrano emphasizes that the money can be used to build schools, parks, libraries and fire stations.
 For the Future 
 San Fernando is expected to host the first fully operational integrated project, but negotiations are ongoing with the Philippine city of Manila. &ldquo;We are going to clean up the Smokey Mountain landfill in Manila,&rdquo; Delorraine excitedly shares. The enormous landfill causes numerous problems, including for the health of surrounding citizens. &ldquo;So the government is very interested in our project,&rdquo; he says.&nbsp;
 &ldquo;Definitely there is potential for waste-to-energy projects,&rdquo; says Romeo Marcos Galamgam, senior science research specialist in the Philippines DOE Biomass Energy Management Division. &ldquo;It was pegged that .3 [kilograms] of MSW per person per day is being generated. In Metro Manila alone, it can generate 6,200 metric tons of MSW per day.&rdquo; He adds that the Philippines&rsquo; National Solid Waste Management Commission is pushing waste-to-energy technologies similar to the one developing in San Fernando to address the quickly filling landfills. The San Fernando project has been confirmed by the DOE, but not yet registered, he adds.
 And national-level officials and groups aren&rsquo;t the only ones offering support. &ldquo;All the local governments in the project areas are joining us in the struggle to maintain a green planet and conserve our resources,&rdquo; Serrano says.
 Outside the Philippines, Huapaya is working on two contracts in Brazil, as well as others in Peru, the Dominican Republic and several countries in Africa. &ldquo;We have people waiting in line, but we can only go at a certain pace,&rdquo; Serrano explains, adding that the project model can be implemented anywhere and will soon be employed in the U.S., also. &ldquo;We intend to start in South Caroline and Virginia.&rdquo;
 Although the pellet production aspect of the San Fernando project is the only one completed and hasn&rsquo;t been scaled up, excitement among the developers is palpable. &ldquo;This company, within five years, will have 20 to 25 plants worldwide,&rdquo; Delorraine says.
 &ldquo;I&rsquo;ve been in the oil industry a long time,&rdquo; he adds. &ldquo;To be quite honest, this is a beautiful project. I&rsquo;ve never seen anything like it in my life.&rdquo;
 Author: Lisa Gibson Editor, Pellet Mill Magazine <a href="mailto:lgibson@bbiinternational.com">lgibson@bbiinternational.com</a> (701) 738-4952

POWER PRODUCTS: A project in San Fernando, Philippines, is making pellets from MSW for gasification and power production. 

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HELPING HANDS: The manual separation line employs up to 50 people.

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AMASSING MSW: Before the pelletizing process, feedstock is put into a bin and sprayed with a disinfecting enzyme.

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FULL-FLEDGED FACTORY: The gasification system should be fully operational and ready to take pellets in September.

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A novel and intricate project model will bring housing, jobs and clean energy to communities around the world

Pellets and Power for All

The Windsor Village Elderly Housing facility in Windsor, Vt., occupies what used to be the state&rsquo;s oldest prison, and had all of the old basement jail cells intact until recently. With the installation of a biomass boiler, a few changes had to be made.&nbsp;
 The housing facility allowed its tenants to use the basement cells as secure storage units, but now the converted building, dating back to 1808, is almost jail cell-free. &ldquo;We commandeered two groups of five (cells),&rdquo; David Frank, co-founder of Vermont-based biomass project integrator and developer SunWood Biomass, says of his team&rsquo;s work in transforming the historic building. He and his workers knocked down the walls between the cells with a jack hammer to create a long trough that would eventually feature a V-bottom interior storage design for wood pellets.
 &ldquo;We almost lost that project because of the historical preservation folks,&rdquo; Frank says. Those folks, he explains, did not want the grounds outside the two-century-old building to feature a storage silo for the pellet feedstock. So SunWood got creative.
 The team adapted a run of pneumatic piping into six filling ports that opened into the jail cell trough. Roughly 100 feet separated the filling ports from the pellet delivery location. The piping is traditionally used in the food industry to move product between storage and processing because it offers the least amount of friction and resistance.
 &nbsp;SunWood had to determine what air volumes and pressures were required to send the pellets from the truck to the six ports, Frank explains. &ldquo;We used a couple of suppliers to help us run the test in a warehouse to see if it could be done and if the pellets wouldn&rsquo;t be damaged.&rdquo; They proved it was possible, and the pellets weren&rsquo;t damaged, making the hidden project a success without any impact on the old facility&rsquo;s character.
 Today, SunWood Biomass is working on six other historic preservation sites where silos cannot be used. Project developers like Frank have plenty of similar stories about projects in the wood pellet industry. It&rsquo;s an industry with a surplus of ingenuity, creativity and innovation.
 Equipment Ingenuity 
 Averill Cook of Massachusetts-based Biomass Commodities, is in Serbia helping Michelin Tire develop an effective practice to pelletize its tires. Cook knows all about the impact creative thinking can have on a difficult project, having already completed roughly 25 pellet boiler installation jobs with his team. &ldquo;I think that the industry is getting more installations and being more recognized, and the concept is growing,&rdquo; he says.
 The availability of biomass boilers in the U.S. is indeed growing and that is where Cook sees the most innovation in the industry. Cook and his team are working with an engineering firm to install a boiler system at a community college in the Northeast. He hopes the project will start a new market. &ldquo;The system is unique because it pulverizes the pellets into dust and sprays them in,&rdquo; he explains.&nbsp;
Although this type of boiler has been around for some time, Cook says clients looking for district heating applications could benefit from employing it. The technology can be more easily retrofitted into existing boilers than a standard pellet system, and is more versatile and efficient because it is dual fuel, he explains. Operators can play the market by running different types of fuel or pellets. Tom Miles, founder of T.R. Miles Technical Consultants Inc., shares Cook&rsquo;s sentiments about the evolving landscape of biomass boilers.
 &ldquo;One thing that is kind of striking or compelling is the success of what they have been calling in places like Alaska the boiler in the box,&rdquo; he says. The set-up utilizes a boiler placed in a durable container and installed over a poured slab roughly 15 feet by 20 feet. The simple installation can be done efficiently and economically, Miles says, citing an application at an airport in Oregon.
 The boiler-in-a-box option saves money because it doesn&rsquo;t require a developer to build a separate building for a boiler, or to shoehorn one next to an existing heating appliance, Miles says. &ldquo;I think that these kinds of easy-to-install, lower-cost pellet boilers are probably a good bulk market expansion strategy for these pellet producers.&rdquo;
 Miles hopes further innovations in boiler set-ups can correlate to the use of lower-grade fuel pellets. &ldquo;The reality is, to be practical and economical, we need to be able to handle pellets that don&rsquo;t necessarily meet the residential standard,&rdquo; he says. &ldquo;If boilers were designed with staged combustion and staged gasification that would handle higher ash fuel&hellip;you could open up potentially lower-cost fuel markets.&rdquo;&nbsp;
 Miles, Frank and Cook all believe access to boilers manufactured in the U.S. offer their clients more options for projects in North America. And they all agree that innovation plays a huge role in biomass boiler development and conveyor system designs, whether they&rsquo;re for a jail cell or underneath a parking lot.
 Like boilers, pellet conveyor and delivery system installations can also use a little ingenuity. Cook has completed a project that required moving pellets on a conveyor belt underground, below a parking lot. Biomass Commodities also has a number of projects where storage silos are more than 200 feet from the boiler room. Such challenges can be overcome, but the most difficulty comes when engineers and architects don&rsquo;t understand fuel pellet handlings. &ldquo;When they do a drawing with a right angle on a fuel conveyor, you have to tell them, &lsquo;That is not going to work,&rsquo;&rdquo; Cook says.&nbsp;
 Frank and Cook are always discovering innovative ways to move pellets and fortunately, pellet delivery trucks in the Northeast U.S. have evolved. When Frank first started helping clients bring in pellets, the norm was to use grain delivery trucks that featured a conventional airlock system. Today he uses trucks developed in Europe specifically for pellets that reduce breakage during delivery.
 Enviva LP is yet another leader in pellet industry revolution. Its Port of Chesapeake, Va., storage silo dome, 157 feet tall and 175 feet wide, can withstand hurricane force winds and earthquakes, while maintaining a controlled temperature for optimal pellet quality. It allows storage of up to 50,000 metric tons of wood pellets. &ldquo;It is critical for us to have a storage system that is designed specifically for wood pellets,&rdquo; says Elizabeth Woodworth, the company&rsquo;s director of marketing, communications and sustainability. The system, she says, includes more than 100 temperature sensors that allow an operator to monitor the temperature of the stored pellets at any time via computer screen. That operator, she adds, can control the temperature of the dome by switching a ventilation system on or off. Woodworth says there is virtually no chance of fire or sparks because Enviva is currently installing an injection system to put out any sparks. Of all the elements that make the system innovative and unique, Woodworth says safety is the number one aspect the company was focused on when it designed the dome.
 Clearly, pellet use today is a combination of creative thought and remarkable implementation skills. In the Northeast alone, Frank and Cook have completed installations at churches, garages, schools, old prisons, and firehouses. Frank also has projects in Utah, Alaska and elsewhere. &ldquo;We completed a project with a fire department where they didn&rsquo;t want the sight of a silo outside a brand new modern-looking building,&rdquo; Frank says. So he and his team crafted an artificial tower, similar to those used for hose drying, for pellet storage.
 People are Talking
 Cook says such ingenuity in the pellet industry is drumming up more discussion. &ldquo;The culture is starting to turn and with the higher oil prices people are going to start looking more at this,&rdquo; he says. That means school districts looking to save money, new hospitals looking to secure future heating costs at a stable price, or the engineers who help design the projects. &ldquo;The engineering firms keep on coming back,&rdquo; he adds. &ldquo;They are excited about [pellet projects] and they are very proud of it. They start to tell more people about it and the snowball is getting big.&rdquo; And with oil prices rising, that snowball is only going to roll faster.&nbsp;
 Frank would agree. &ldquo;The initial adoption curve was very steep, but now it is becoming fairly prolific in terms of acceptance, and engineers are even suggesting planning [pellet boilers] into a project.&rdquo; He attributes that turn of events, in part, to the fact that the necessary equipment already exists, even though each job will bring new project planning and implementation strategies. And with further innovation still coming down the pike, the job will only get easier, and busier. Author: Luke Geiver Associate Editor, Pellet Mill Magazine (701) 738-4944 <a href="mailto:lgeiver@bbiinternational.com">lgeiver@bbiinternational.com </a>

DOME DESIGN: Enviva LP's Port of Chesapeake pellet storage facility is a giant white dome that can withstand earthquakes and hurricane force winds.

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CLEVER CONCEPTION: An artificial hose drying tower disguises pellet storage at the East Montpelier, Vt., fire hall.

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HISTORICAL HOUSE: A red schoolhouse at Vermont Technical College is equipped with a pellet boiler and basement feedstock storage to avoid impact on the historic building's appearance.

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SHROUDED STORAGE: The hollow tower hides pellet feedstock from view and keeps the fire hall silo-free.

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The pellet industry is not lacking in creativity, evidenced by a number of novel project strategies

Obvious Originality

The surge in energy costs, the new direction toward renewable energy sources, and European initiatives to limit carbon emissions all have created a tremendous opportunity for North American wood pellets.
 In the wood products industry, however, you can&rsquo;t go very far without hearing the word green. Customers are demanding assurances that the wood products they buy are from legal and sustainable sources. And they often purchase with a preference or requirement for wood products that are independently certified to a recognized forest certification standard.
 But forest certification is an alphabet soup of standards, claims and labels, all of which can be confusing and overwhelming to those in the pellet industry who have other demands on their time. Thankfully, help is available from standard-setting organizations, trade associations and consultants.
 Demand for Pellets
 RISI projects that by 2014, demand for North American wood resources for pellet production will grow to around 30 million green tons.
 In 2008, more than 80 percent of U.S. pellets were used domestically, while 90 percent of Canadian pellets were exported to Europe, according to the U.S. Forest Service.&nbsp; Interest in North American pellets continues to grow because of constrained wood supplies in Europe and regulatory mandates to increase the use of renewable fuels.&nbsp; Because wood pellets are cheaper than solar and wind power, demand for them is expected to explode.&nbsp;
 The use of wood for pellets, however, is causing concern among environmental activists, government agencies and competing sectors of the forest and paper industries. A study by a team of environmental organizations, including the National Wildlife Federation and the Southern Environmental Law Center, says the atmospheric impact of biomass production, at least in the short term, is not carbon neutral. But a number of studies argue otherwise.
 While early domestic pellet demand was mostly bags for fireplace inserts and free-standing stoves, bulk delivery is increasing with greater demand for industrial boiler feedstock. In Europe, bulk deliveries to electric power plants are common, as power generators are under pressure to increase their use of renewable fuels by up to 20 percent.
 Pellets are an excellent supplement to coal in power plants and can reduce carbon emissions by about 15 percent without disrupting current power plants and industrial processes, according to the February study &ldquo;Biomass Supply and Carbon Accounting for Southeastern Forests.&rdquo;&nbsp; With about half of the electricity in the U.S. produced by coal plants, a domestic switch to wood pellets represents another huge market opportunity.
 Certification
 As with any fuel source, customers want to know where the feedstock comes from and if it is sustainable. Third-party certification is a valuable tool to reassure them that pellets come from sustainably managed forests, eliminating the need to continually justify that the resource is renewable. It is a growing criterion for export to Europe, where numerous policies mandate renewable energy production.
 The Sustainable Forestry Initiative, American Tree Farm System, Forest Stewardship Council, and Program for the Endorsement of Forest Certification are the largest forest certification standard organizations and systems in the world. SFI and FSC are recognized in the U.S., while FSC and PEFC have solid reputations in Europe.&nbsp; Moreover, PEFC recognizes the SFI and American Tree Farm Standards as criterion for its Chain of Custody program.
 All major certification programs include chain-of-custody standards and land management standards. The latter require protection of water, wildlife, visual quality, special sites and other important resources. Chain-of-custody standards allow consuming mills to track wood inputs back to independently certified forests. All programs mandate compliance with national laws and regulations, as well as different balances between social, environmental and economic considerations.
 About 19 percent of U.S. commercial forestland is certified to three major U.S. standards, but certified lands are not evenly distributed. Most are located in the lake states, in the midst of large state and county public ownerships, while the majority of forestlands in the south are owned by small private family owners and are not widely certified. The challenge for the U.S. in general is the roughly 10 million fiercely independent family forest owners who own 60 percent of the forest land.&nbsp;
 SFI incorporates a third approach to its standards: the certified sourcing claim, by which consuming mills that procure wood can also be third-party certified to use the SFI claim and label. While not a chain-of-custody certification, the certified sourcing procurement standard requires promotion of sustainable forestry with those that own the forests, but does not require that landowners undergo separate third-party audits of their forests.&nbsp;
 To make a chain-of-custody claim where certified and uncertified wood is mixed together, the uncertified portion of the wood supply must be from sources that meet the respective FSC controlled wood and/or the SFI and PEFC noncontroversial criteria.&nbsp;
 The FSC controlled wood standard dictates five categories that must be avoided: illegally harvested wood; wood harvested in violation of traditional or civil rights; wood harvested in forests where high conservation values are threatened by management activities; wood harvested in forests being converted to plantations or non-forest use; and wood harvested from forests that contain genetically modified trees.
 Claims and Labels
 The home or bagged pellet market offers a real opportunity to prominently affix an on-product label to packages. That creates, in theory, demand pull where discriminating consumers look for the certified pellets the next time they shop. The most common on-product labels are attractive and help communicate certification efforts to the customer. Each standard has rules for the use of its trademarks and labels.
 Wood products customers have adopted procurement policies seeking to weed out wood that is not legally sourced or from sustainably managed forests. The European Commission recently adopted a regulation that will require operators, including importers, to exercise due diligence to assure legality. &ldquo;Certification has been one of the tools to encourage the sustainability of forest management and allow consumers to discriminate positively in favor of wood products originating from sustainably managed forests,&rdquo; reads a statement from the European Commission.
 But some customers do not understand the different and often competing certification standards. It is also understandable that pellet manufacturers don&rsquo;t know where to start and are equally confused by the array of standards, claims and labels. Many procurement policies support major certification schemes to ensure maximum availability of certified wood inputs.
 Companies in other sectors of the wood and paper industry can attest that without substantial assistance, they would not be able to achieve certification in a timely and efficient manner. Because pellet manufacturers are in the middle of the supply chain between their customers and the wood supply base, it is critical to understand which certification standards are the best.&nbsp;
 So, what&rsquo;s a pellet company to do to satisfy its customer base and ensure market access? Clearly, pellet producers need to take steps to address the new market realties dictated by the increasing demand for renewable, certified products.&nbsp;
 Certification Process
 Pellet producers interested in certification should first conduct an internal gap analysis addressing demand for certified product, type of certification needed (chain-of-custody or certified sourcing), availability of certified wood inputs, market opportunity to label product, and whether customers are willing to pay a premium for certified wood pellets.
 Next, producers need to compare their situation to the standards in order to determine which certification protocol best fits their objectives. Discussions with the standard-setting bodies, trade associations and specialized, experienced consultants can simplify the process.&nbsp;&nbsp;
 The U.S. wood pellet industry is no longer below the radar. While hurdles such as wood supply, transportation and markets still linger, certification removes consumer and environmental group concerns, perhaps before they even develop, and favorably positions the pellet industry squarely in the renewable clean fuel camp.
 Those pellet producers who get ahead of the learning curve have a better chance at being successful. Those who do not address customer concerns about the sustainability of the forest could face a number of jarring speed bumps along the way.&nbsp;
 Producers should ensure that they know more about forest certification issues and applicable standards, claims and labels than their customers do, and that they are prepared to assure customers that their wood pellets are legally and sustainably sourced. Authors: Scott Berg R.S. Berg &amp; Associates, Inc. (904) 277-4596 <a href="mailto:RSBergAssoc@aol.com">RSBergAssoc@aol.com</a> Ron Lovaglio Ron Lovaglio, LLC (207) 660-8561 <a href="mailto:RonLovaglio@roadrunner.com">RonLovaglio@roadrunner.com&nbsp; </a>

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North American Wood Biomass Demand
Includes wood use among projects with confirmed start dates.


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Forest certification standards are increasingly important in the pellet industry, but can be confusing to producers and customers alike

Forest Certification: Opportunity and Challenge for the Wood Pellet Industry

It&rsquo;s something we&rsquo;ve seen and heard a lot in the past few years. A corn ethanol plant hosts new, demonstration-scale cellulosic technology or algae propagation systems. A biodiesel plant integrates biobased chemical production. A pilot algae project works out a deal with a utility company to use the plethora of carbon dioxide from the combustion of coal on which the algae can feed to grow.
 These sorts of integrative projects, largely pilot or demo units today, almost always involve two or more companies, various patented intellectual properties, trade secrets, EPC firms, contract negotiations and terms, and&mdash;you guessed it&mdash;lawyers. But there&rsquo;s something else the project needs: a host that is willing to accept the risk.
 Associate Editor Bryan Sims talks to several EPC contractors in his feature article, &ldquo;Navigating the Nuances of Integration.&rdquo; Doug Dudgeon, vice president of process industries for Harris Group Inc., tells Sims that a challenging aspect every EPC firm confronts during a project&mdash;whether an &ldquo;inside the fence&rdquo; retrofit or an &ldquo;outside the fence&rdquo; co-location approach is taken&mdash;is that the host facility is being asked to do something that&rsquo;s not core to what it already does. Dudgeon continues, telling Sims, &ldquo;They don&rsquo;t know the market, they don&rsquo;t know the process and it&rsquo;s pretty hard to come up with a good reason for them to say, &lsquo;Yeah, I&rsquo;ll take the risk.&rsquo;&rdquo; Check out the full story on page 14 of this issue.

Project  Integration

As Washington reawakens, let me begin by suggesting that a little common sense would go a long way right about now. It has been four years since Congress passed the revised RFS2 legislation creating a 36 billion gallon mandate for conventional and advanced biofuels. For all you partisans out there, don&rsquo;t forget this was negotiated and signed by President George W. Bush, not Barrack Obama. So politically lumping in the RFS2 with the Obama renewable energy policy as reason enough to walk away from a promising and growing industry does not hold water.
 Let&rsquo;s first ask ourselves, what was the purpose and reason the Congress passed the RFS2 in the first place? Well, as I remember, it was to &ldquo;break the addiction to foreign oil.&rdquo; Is that not still an issue today? For many on the Democratic side of the aisle, in 2007, the issue was also to reduce the carbon footprint of our transportation fuels. That is why the RFS2 is the only federal statute that mandates some kind of greenhouse gas reduction component (i.e. the 20 percent, 50 percent and 60 percent requirements for the fuels&rsquo; respective categories). For whatever the reason, in the end the House of Representatives voted a whopping 314 to 100 and the Senate 86 to 8 in favor of passing the Energy Independence and Security Act that created the RFS2.&nbsp;
 We have not seen a bipartisan vote like that on a major piece of legislation in a very long time. But today, I find myself answering numerous questions from reporters about the EPA&rsquo;s recent announcement of the mandated gallons for 2012. Oddly enough, I always have to remind them that it took 20 years to deliver the first 2 billion gallons of ethanol after having support dating back to 1978. So far, we are not doing a bad job in terms of meeting the advanced and biomass-based diesel pool numbers. But the shortsightedness of our 24/7 news cycle has most media pronouncing the RFS a failure solely because the cellulosic numbers were not met.
 This is simply not the case. We are moving technologies along at an encouraging pace in all the various categories of technology platforms, some are just closer to producing barrels than others. It would be nice if Congress could mandate desired scientific accomplishment and market development deployment, but it simply does not work that way. We must stay the course and the RFS2 is the most important, powerful mechanism to achieve the goals that Congress intended four years ago.&nbsp;
 Those who are erroneously calling the RFS2 a failure and calling for a repeal of the statute must be ignored. This misleading rhetoric demands that our industry work together to make our case as to why the RFS should remain a fundamental piece of U.S. energy policy.
 Don&rsquo;t get me wrong, the statute is not perfect. Sure, it could use changes to ensure certainty of feedstocks, process technologies and molecules, and it would be nice if the process of certifying fuels were a little more streamlined and expeditious. We should have a presumption that fuels that replace foreign oil and foreign products be covered under RFS2 for RINs. Instead, we now have a program that requires those who are attempting to meet the overarching goals prove a never-ending list of convoluted requirements. We have gotten so smart and complicated that we are now standing in the way of commonsense decisions.
 Whether it is a woody biomass that complies as a nonregenerative wood, slash or thinning, or whether it is a &ldquo;waste,&rdquo; these determinations should not be such complicated decisions as to stand in the way of developing a wide range of technology platforms including cellulosic gallons. Yes, I know, the statute limits the ability of the agency to make commonsense decisions. Well, maybe so, but the entire country and the policymakers who had a vision for producing biofuels, as a component piece of America&rsquo;s energy strategy, did not intend the process to create the confusion and uncertainty that it ultimately created.
 It is hard to argue against our success and milestones met since the bill was passed. But we can, and must, do more. It will clearly take the support of Capitol Hill and the White House, together, to agree that biofuels are essential to America&rsquo;s long-term energy policy for us to deliver on the promise of the original intent of RFS2. Let&rsquo;s get it right, not focus on the shortcomings, and by all means let&rsquo;s make it easier to call a duck a duck, and a renewable fuel a renewable fuel. Author: Michael McAdams President, Advanced Biofuels Association (202) 469-5140 <a href="mailto:Michael.McAdams@hklaw.com">Michael.McAdams@hklaw.com</a>

RFS2 detractors must be ignored, even though the program is not perfect 

Keeping Our  Eye on the Ball 

Whether improving an existing plant or building a new biorefinery, the chemical process consultant should be your first stop. In existing plants, yield improvements, energy efficiency and solvent recovery are the most common projects. When properly scoped and executed, these projects tend to have immediate impact on efficiency and economics. The consultant identifies the opportunity and scopes, and often manages the project. A couple of typical projects are outlined below.
 Methanol Recovery: A biodiesel facility was losing 150 pounds of methanol an hour to the vent operated at a slight vacuum, and the originally designed cooling water condenser was only partially effective. Enhanced Biofuels used a combination of process simulation and analytical data to confirm the magnitude of the losses and recommended a chilled water condenser. Given space limitations, a low-footprint condenser with small pressure drop was recommended and installed. Methanol losses were minimized and the project had a payout of a few months.&nbsp;
 Heat Recovery, Additional Capacity: A plant needed additional capacity and one of the distillation columns was identified as the bottleneck. One of our engineers tackled the problem by performing an energy balance and hydraulic review to uncover that the bottleneck was two-fold. The product pump was undersized and the heat requirement could not be met by the existing heater. Heater replacement was prohibitively expensive. Process simulation was used to show that product heat recovery could be used to cost-effectively add the required heat to increase capacity. A feed bottoms heat exchanger was recommended and installed with new bottom pumps. At the completion of the project, the distillation operated at higher capacity and lower energy consumption per pound of product.&nbsp;
 Technology improvements are a special type of project where the plant is expected to perform better than it was originally designed for. Examples include using a different feedstock, changes in product specification, changes in equipment design, and large increases in capacity. An important role of the chemical process consultant in this type of project is technology review and selection.
 Dryer Specification, Throughput: In a newly built plant, a fluidized bed dryer was not meeting design throughput or moisture specifications. We used a bench-scale dryer and worked closely with the plant to collect operating data. As a result, addition and modification of the dryer internal baffles was recommended to increase dryer throughput and achieve moisture specification. The dryer now operates at 20 percent higher throughput.
 When facing the challenge of a new biorefinery, one should consider bringing on board a chemical process consultant to act as an &ldquo;owner&rsquo;s representative,&rdquo; a technology- and business-savvy project manager who will help manage the project development process.
 Feasibility Study, Alternative Review: This provides preliminary capital cost and pro forma, and vets the business model, identifies major risks and reviews alternative technologies, sites, feedstock choices, utility types. The owner&rsquo;s representative may undertake or oversee the feasibility study. Front-End Engineering, Design: FEED defines and freezes the project scope, and process equipment. Long lead items will be specified as ready to purchase. The cost estimate might be refined to plus or minus 10 percent. The owner&rsquo;s representative will help to choose and supervise the engineering company.
 Detailed Engineering: This refines the project documents to &ldquo;ready for construction&rdquo; with detailed design of equipment, foundations, structures, electrical and piping routing, instruments, etc. The owner&rsquo;s representative will facilitate communications and manage scope, cost and schedule. Procurement: Typically led by the engineering company and the general contractor. Long delivery and special technology items may be procured by the owner&rsquo;s representative.
 Construction: Led by the engineering company and the general contractor. The owner&rsquo;s representative is least involved in the construction of the project.
 Startup, Performance: This phase starts by ensuring that operating and maintenance manuals are ready and operators are properly trained. Once mechanically complete, the unit will go through a shakedown period until it reaches nameplate capacity and product specification. At this point, a third party will usually be brought in to certify performance. The owner&rsquo;s representative is intimately involved in this stage of the project.
 Optimization: This is adjustments as a result of changes in market conditions, utility prices, product specifications, and feedstock changes. The owner&rsquo;s representative may stay involved with optimization efforts given the expertise developed during the project.
 Author: Roman Wolff President, Enhanced Biofuels (713) 301-8660 <a href="mailto:rwolff@enhancedbiofuels.com">rwolff@enhancedbiofuels.com</a>

An experienced consultant can save your project money and increase performance

The Chemical Process Consultant's Role

Communications between a client and their attorney(s) are generally protected by the well-recognized attorney-client privilege. Importantly, however, the attorney-client privilege, along with other recognized privileges, are only as strong as the confidentialities (or expectations of privacy) associated with the communications. For instance, courts generally recognize that if a third party is present while an exchange of privileged, confidential information is made with an attorney and the third party is not an agent of the attorney, any privilege that may have existed is waived. In other words, a court will likely find that a privilege does not exist if a third party is either present or has access to the privileged information.
 While advances in technology have streamlined the ability for clients and their attorneys to communicate worldwide 24/7 with the simple click of a button, the same technology has opened the door to new challenges regarding the scope and applicability of the attorney-client privilege. For example, when an employee uses work email, as opposed to a personal, password protected email, to communicate otherwise privileged information with their personal attorney, is that email communication privileged? What about if the employee&rsquo;s work computer and email system are monitored by the employer, is the communication still privileged? Further complicating matters, what if the employer has a policy that bans personal use of the company computer and information technology (IT) systems? What if IT staff and others are granted access to the employee&rsquo;s email account as a matter of company policy? Under which of these scenarios, if any, will the employee&rsquo;s email communication remain privileged? Conversely, under which scenario may the employee have opened the door for their adversary&mdash;in a litigation setting&mdash;to obtain the employer&rsquo;s records as well as copies of the employee&rsquo;s emails despite the fact they may have been sent to the employee&rsquo;s personal attorney?
 These same questions and issues can also apply to disputing business owners. For example, suppose that A and B are the sole owners in ABC business entity and that A is suing B for breach of fiduciary duty. Further suppose that before and during the litigation A and B use their business&rsquo;s email account to communicate with their respective personal attorneys regarding the dispute. Suppose also that A is responsible for keeping up ABC&rsquo;s IT systems and has complete access to the business&rsquo; email, which B knew or should have known. Are B&rsquo;s emails to his attorney privileged or has the privilege been waived? What if A has reviewed B&rsquo;s emails while maintaining ABC&rsquo;s IT system, are B&rsquo;s emails still privileged? What about A&rsquo;s emails?
 These and other unique questions are being litigated more and more in courts across the U.S. And not surprisingly, a bright-line rule has yet to surface. Even so, several courts have applied what have become known as the Asia Global factors to determine whether a privilege exists in some of the unique scenarios described above. Generally, the four Asia Global factors are: Does the employer or business maintain a policy banning personal use of emails? Does the employer or business monitor the use of its computer or email? Does the employer or business have access to the computer or emails? Did the employer or business notify the employee about these policies? In addition to these four factors, some courts have applied a fifth factor, which is: How did the employer or business interpret its computer usage policy?
 According to certain courts and the opinion cited above, these factors are used to determine whether an employee or person has a reasonable, subjective expectation of privacy in their communication that society is willing to accept as objectively reasonable. If, upon applying these factors, they have a subjective expectation of privacy that is objectively reasonable, then certain courts have found email communications should remain privileged. Conversely, if the expectation of privacy is not reasonable, or it is something that society does not accept as objectively reasonable, then the email communications will not be protected by the privilege.&nbsp;
 While this area of the law is continually changing and remains unsettled, a licensed attorney in your jurisdiction versed in this area of the law should be able to provide guidance on this and other similarly related privilege issues.
 Author: Matthew H. McKinney Attorney, BrownWinick Law Firm &nbsp;(515) 242-2468 <a href="mailto:mckinney@brownwinick.com">mckinney@brownwinick.com</a>

The digital age opens new questions about attorney-client privilege


Are Your Communications Privileged?

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

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

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

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

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

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The demand for biobased materials for a range of products derived from their chemical building blocks is seemingly reaching an all-time peak. Clearly, momentum is on the side of biorefining companies such as Netherlands-based DSM N.V. and France-based starch and polyols producer Roquette Freres, which are currently targeting production of biobased succinic acid, a prized chemical building block for the production of polyurethanes, resins, polybutylene succinate and plasticizers, as well as a precursor for other chemicals such as 1,4 butanediol.
 Since 2007, DSM and Roquette have been developing a novel conversion route to biosuccinic acid&mdash;trademarked Biosuccinium&mdash;derived from nongenetically modified corn as today&rsquo;s feedstock. Now, through the formation of their joint venture entity Reverdia VOF, both are making significant progress on the construction of a 10 kiloton per year commercial-scale biosuccinic acid production facility located at the Roquette starch manufacturing site in Cassano, Italy. It is expected to come online by the second half this year. In 2010, the two companies brought online a demonstration-scale biosuccinic acid production unit in France. The Reverdia joint venture was approved by the European Commission in December.
 According to Will van den Tweel, general manager of Reverdia, the potential for biobased succinic acid is huge. The alignment of DSM&rsquo;s strength in yeast, enzymes and biotechnology alongside Roquette&rsquo;s expertise in feedstock sourcing and established market presence are what van den Tweel says prompted both companies to unite and create Reverdia.
 &ldquo;Both companies have a strong sustainability strategy with DSM having the No. 1 position in the Dow Jones Sustainability Index and Roquette being a member of the United Nations Global Compact,&rdquo; he says.
 The commercialization of biosuccinic acid via the Reverdia joint venture, according to James Iademarco, vice president of biobased chemicals and materials for DSM, will broaden the company&rsquo;s product portfolio offering while strengthening its experience securing strategic partnerships that complement core competencies.
 &nbsp; &ldquo;Biosuccinium is the front-runner for our biobased chemical and material portfolio and therefore adds to our experience base to know what it takes to successfully bring a biobased product to commercial scale in an integrated biorefinery,&rdquo; Iademarco says. &ldquo;Companies invest a lot in technology, but one also needs to invest in collaborative relationships along these new value chains.&rdquo;
 Based on this strong pact, according to van den Tweel, the companies employ a proprietary yeast-based fermentation pathway to produce biosuccinic acid, which, he adds, operates at a low pH in contrast to other competing processes, allowing the use of other feedstocks such as sugarcane. Reverdia intends to eventually utilize lignocellulosic feedstocks.
 &ldquo;We evaluated bacteria and yeast options and concluded the low pH yeast option to be the most cost- and energy-effective way to produce biobased succinic acid,&rdquo; van den Tweel says, adding that the process sequesters carbon dioxide throughout the production cycle. &ldquo;The technology requires fewer steps than, for example, bacterial technology. Bacteria-based processes produce intermediate succinic salts, which require extra processing, additional equipment and additional energy to convert salts into succinic acid.&rdquo;
 Reverdia is scoping the landscape for the best option of a second commercial-scale biosuccinic facility, &ldquo;which we plan to have in place by 2015,&rdquo; van den Tweel, says.
&mdash;Bryan Sims

Why DSM, Roquette are closer to bringing biosuccinic acid to market

Strengthening the Ties

In January, more than 300 members of the biomass industry met in San Francisco to network, conduct business and learn about new achievements in regional biobased economy. The 2012 Pacific West Biomass Conference &amp; Tradeshow attracted a wide variety of professionals representing the biofuel, biochemical and biopower sectors.
 Project finance and investment were strong themes at this year&rsquo;s event. Bill Lemon, senior vice president of investment banking at Source Capital Group Inc., spoke to attendees about the importance of seeking out the right type of investor at each phase of a company&rsquo;s development. For example, he said that debt investors are not going to want to invest in a risky project, even if the technology has the potential to be hugely successful. This is because the potential payoff is not big enough to offset the potential risk as the debt inventor will only recoup principle and interest no matter how successful the project becomes.
 Technology risk is not the only risk investors in the biorefining industry must face. John May, managing director at Stern Brothers and Co., pointed out that feedstock related risks are also huge. Biomass feedstock is the bane of investment bankers, he said, because volatile or rising feedstock prices can severely impact the margins of a developer.&nbsp;
 Financial investors are not the only mechanism available, however, to support the scale-up of biorefining projects. Strategic investors can offer many advantages above and beyond financial support. During a breakout session at the conference, Eric Darmstaedter, president of ClearFuels Technologies Inc., spoke to attendees about the partnership his company formed with Rentech to scale-up its unique gasification process.
 ClearFuels was ready to scale-up to demonstration-scale production in 2009, but lacked the capital to do so, Darmstaedter said. Rentech, which is now the majority owner of ClearFuels, signed on as a strategic investor, allowing the project to move forward. Darmstaedter said it turned out to be a great match. &ldquo;Being able to co-locate at an existing facility saved us a lot of time and money,&rdquo; he added. &ldquo;They have a strong balance sheet, which is helpful. They had experience operating and had scientists, engineers and technicians who understood what we were doing.&rdquo; As a result, a 20 ton per day demonstration plant was completed in November.
&mdash;Erin Voegele

Project finance, scale-up hot topics at California biomass event

Enabling Expansion   

A unique noncatalytic thermal-cracking technology developed under the Sustainable Energy Research Initiative and Supporting Education supercluster program at the University of North Dakota is poised for commercialization. UND has received patent approval for the invention titled &ldquo;Methods to Produce Short Chain Carboxylic Acids and Esters from Biomass.&rdquo;
 Wayne Seames, professor of chemical engineering and director of the SUNRISE program, says the technology &ldquo;cracks&rdquo; triacylglyceride (TG) oils that are inherently found in a variety of oilseed crops as well as other high oil-bearing organic materials like algae, microbes and waste cooking oils, into long- and short-chain fatty acids. These fatty acids can then be extracted from the reactor using water or a base and then purified into a range of commercial-grade biobased chemicals.
 &ldquo;There are a lot of uses for these chemicals and a lot of it depends on how long the fatty acid chain is,&rdquo; Seames tells Biorefining Magazine. &ldquo;The very short ones are really good for polymers because they form lots of repeating units, which you want in polymers.&rdquo; The smallest of the short-chain fatty acids is acetic acid, the primary acid in vinegar. &ldquo;Some plants, algae and bacteria naturally store excess energy in TG oils,&rdquo; Seames says. Additional uses of the TG oils include transforming them into a class of fatty acid esters, many of which are naturally synthesized in nature.
 The technology is also capable of making advanced hydrocarbon distillate fuels and cuts of naphtha. &ldquo;If you take say a gallon of your inlet TG oil and crack it, it will make 50 to 60 percent of that inlet oil into fuel and 20 to 30 percent into these acids,&rdquo; Seames says. &ldquo;The short-chain fatty acids have higher sales prices than the fuel products, so by recovering and purifying the acids, you now have a more economical facility. It&rsquo;s truly a biorefinery, as it has multiple products that you&rsquo;re making.&rdquo;
 Seames says a number of outside entities have expressed interest in licensing the technology. &ldquo;We&rsquo;re looking for that one great partner that has the vision, the financial backing and a good business team in place that can take these technologies big time,&rdquo; he says.
&mdash;Bryan Sims

How one university is poised to introduce revolutionary biorefining technology


Patently Making Progress

Computer aided design (CAD) tools have long been used by architects, engineers and others to design buildings, circuits and a wide range of additional products. Now researchers at the U.S. DOE&rsquo;s Joint BioEnergy Institute are using CAD-type models and simulations of Ribonucleic acid (RNA) molecules to engineer biological components that control gene expression in microbes. The researchers refer to these components as RNA devices. According to the DOE, this type of device could allow scientists to develop new strains of E. coli that can better digest cellulosic biomass, which could bring down the cost to produce advanced drop-in biofuels, such as biobased gasoline, diesel and jet fuel.
 The research team focused on the RNA sequences that can fold into complicated three-dimensional shapes called ribozymes and aptazymes. According to the research team, these RNA sequences can catalyze reactions and control gene expression in bacteria, yeast, and other cells. Using the models and simulations, the researchers were able to create complex RNA-based control systems that are able to program a large number of genes. The DOE further notes that the &ldquo;commands&rdquo; that are sent into the cell of a microorganism are processed by these RNA control systems, which enable the production of desired products.
 &ldquo;This is a perfect example of how our investments in basic science innovations can pave the way for future industries and solutions to our nation&rsquo;s most important challenges,&rdquo; says Energy Secretary Steven Chu. &ldquo;This breakthrough at the Joint BioEnergy Institute holds enormous potential for the sustainable production of advanced biofuels and countless other valuable goods.&rdquo;
 The work could also have important implications in the biochemical field. &ldquo;In addition to advanced biofuels, we&rsquo;re also looking into engineering microbes to produce chemicals from renewable feedstocks that are difficult to produce cheaply and in high yield using traditional organic chemistry technology,&rdquo; says JBEI bioengineer James Carothers.
&mdash;Erin Voegele

RNA devices could lead to cheaper advance biofuels

Genetic Advancement  

Whether it&rsquo;s co-locating a stand-alone biorefinery at an existing industrial asset to bolster supply chain dynamics, or retrofitting an existing industrial facility with new process technology to improve operational efficiency, each approach strengthens the host operations and mutually benefits all parties involved. Today, the advantages of co-locating or retrofitting are realized at a number of industrial facilities, including corn ethanol plants, biodiesel facilities and pulp and paper mills, and more assets are being targeted as potential biorefineries to produce advanced biofuels, biochemicals and green power. For the EPC firms facilitating these critical project activities, each respective approach may appear simple, but establishing this sort of project can be complex, says Ron Jones, director of biofuels development at Burns &amp; McDonnell.
 &ldquo;There are a whole host of business and legal issues that have to be worked through, such as if the bolt-on or the co-located unit is going to be owned by somebody else or if it&rsquo;s some form of a joint venture,&rdquo; Jones tells Biorefining Magazine. &ldquo;Even if it&rsquo;s a third-party technology, there are acceptance issues in addition to liability concerns, ownership and the framework of the commercial deal have to be taken into consideration.&rdquo;
 Since June, Burns &amp; McDonnell has been working with Colorado-based ZeaChem Inc. on the engineering, design and build of its 250,000 gallon per year integrated biorefinery located near Boardman, Ore. In January, Burns &amp; McDonnell completed ZeaChem&rsquo;s core technology on time and under budget. ZeaChem&rsquo;s future commercial-scale facility, which will be co-located onsite of its demonstration plant in Boardman, is expected to have an annual production rate of about 25 MMgy. According to Jones, Burns &amp; McDonnell is working on similar projects in the U.S., Asia and Europe, with even more in the queue. &ldquo;We&rsquo;re pretty bullish on this business,&rdquo; Jones says.
 A challenging aspect that every EPC firm confronts during a project&mdash;whether an &ldquo;inside the fence&rdquo; retrofit or an &ldquo;outside the fence&rdquo; co-location approach is taken&mdash;is that the host facility is being asked to do something that&rsquo;s not core to what it already does, says Doug Dudgeon, vice president of process industries for Harris Group Inc.
 &ldquo;They don&rsquo;t know the market, they don&rsquo;t know the process and it&rsquo;s pretty hard to come up with a good reason for them to say, &lsquo;Yeah, I&rsquo;ll take the risk,&rsquo;&rdquo; Dudgeon says. Harris Group has a respected reputation in the pulp and paper industry with successful integration of combined heat-and-power (CHP) technologies, but the company is also actively engaged in helping emerging biorefining companies, such as cellulosic ethanol and biochemical technology developer Coskata Inc., scale-up process technology for potential co-location or retrofitting.
 &ldquo;Even though [pulp and paper mills] have embraced CHP, that was a big deal to them,&rdquo; Dudgeon says. &ldquo;A lot of them know it now, but they didn&rsquo;t at first. It&rsquo;s the same thing if you try to bring in cellulosic ethanol into a pulp mill, for example. We can show people things on paper that make this look great, but they have a tendency to stick to doing what they were originally designed and built to do.&rdquo;
 While these types of projects have their risks and rewards, a successful co-location or retrofit understands the size and scope of the footprint considered for integration, says Chris Scott-Kerr, vice president of projects for global engineering and design firm Poyry Inc. With expertise in upgrading pulp mills by outfitting them with heat and power technologies, the company is also targeting existing corn ethanol plants to integrate cellulosic ethanol production technology. Poyry is providing design and engineering services for Canadian biorefining firm Lignol Energy Corp., which intends to co-locate or bolt on its novel cellulosic ethanol and biochemical conversion technology with existing industrial assets, when commercially ready.
 &ldquo;You want to start off with something that&rsquo;s manageable and quite small at the demonstration scale,&rdquo; Scott-Kerr says. &ldquo;Some are coming in and what they&rsquo;re doing has a massive impact on the host plant. You need to find a way to come in at a scale that allows them to integrate without completely disrupting everything.&rdquo;
 If a host facility is not receptive to the idea of a co-location or retrofit project, the interface between the EPC firm and host site is critical in order to communicate to host staff what should be done and how the EPC firm can complete the project as smoothly as possible, without disrupting ongoing operations.
 &ldquo;Our people work very closely with the host site,&rdquo; Jones says. &ldquo;They understand what the particulars of that operation are and what the client is looking for in terms of performance. Similar to the design itself, it&rsquo;s an integrated approach with the existing staff on site to make sure everybody is on the same page, and so everyone knows what to expect during the development of the project.&rdquo;
 Things to Keep in Mind
 As mentioned, several key business issues must be communicated between the EPC firm and host management staff before such a project can even begin. One item is to carefully examine contractual agreements between the licensee and the licensor of existing process technology at a host site when a retrofit activity, in particular, is considered, says Alan Propp, business development manager for Merrick &amp; Co. In 1996, Merrick designed and built an ethanol production unit on the property of Coors Brewing Co.&rsquo;s brewery in Golden, Colo. The plant recovers off-spec brewery residuals and, at an annual maximum production rate of 3 MMgy, serves as the prototype for Merrick &amp; Co. to replicate similar projects at existing breweries, or at other first-generation biofuel assets.
 Propp says he&rsquo;s aware of contracts that have specific clauses in them that allow licensors of corn ethanol process technology, if a particular piece of equipment or process technology is installed, to have direct access to the technology for use anywhere they desire. &ldquo;This is a complete nonstarter for most technology providers that want to integrate with an ethanol plant,&rdquo; Propp says, adding that he&rsquo;s aware of five or six existing corn ethanol technology providers that have clauses like these in their contracts. &ldquo;In this case, it&rsquo;s a requirement that you do it outside the fence. By doing that, the technology provider doesn&rsquo;t incur any liability to their intellectual property.&rdquo;
 Additionally, Propp says it&rsquo;s important to be on the lookout for provisions in a licensor contract that may prohibit certain engineering firms to partake in the project.
 &ldquo;If you&rsquo;ve got your favorite engineering firm that you want to work with, you want to make sure before you go too far down the road that you&rsquo;re not contractually prohibited from doing so,&rdquo; Propp says. When it comes to a retrofit, Dudgeon says it&rsquo;s important to consider available space that might be required to install incoming biorefining equipment. &ldquo;If you&rsquo;re trying to fit in an existing facility, you may have some long piping runs, for example. Whatever you do, it&rsquo;s going to be suboptimal and you just have to accept that.&rdquo;
 &nbsp;Finally, according to Propp, it&rsquo;s important to involve EPC firms like Merrick early in the front-end engineering and design (FEED)of a proposed co-location or retrofit project because they&rsquo;re more likely to be corrected if they&rsquo;re caught ahead of time, rather than later.
 &ldquo;Doing proper FEED is key in these projects because that&rsquo;s when engineers can have the greatest positive impact on the cost, schedule and performance of the system,&rdquo; Propp says.
 Like No Other
 While no co-location or retrofit project is easy, EPC firms recognize they simply can&rsquo;t apply a &ldquo;cookie-cutter&rdquo; approach because each demands a certain degree of individualized planning, human and financial resources, partnerships and business acumen to make the venture mutually beneficial for all involved. While EPC firms may leverage their experience from prior projects on how to facilitate the project more efficiently, they all start on a clean sheet of paper, says Poonima Sharma, vice president of process technology and engineering for Technip USA Inc. In 2008, Technip Italy was awarded contracts by Neste Oil to act as the lead EPC firm to build its renewable diesel production plants in Singapore and Rotterdam, both of which are currently operating.
 &ldquo;We say the strength of a company like Technip is in customization to match the project drivers from the client side,&rdquo; Sharma says.
 &nbsp;A good co-location or retrofit project cannot be accomplished without outside partnerships. &ldquo;In all of these projects there are multiple entities involved,&rdquo; Jones says, &ldquo;and being able to manage that is a little bit different compared to traditional capital projects with a large owner where it&rsquo;s basically the EPC contractor and the owner. In this case, you&rsquo;ve got technology suppliers, module vendors and a whole host of different parties that come to play, so it&rsquo;s really a team-based activity and one that requires a different mindset and a different approach to managing the effort.&rdquo;
 &ldquo;The trick,&rdquo; he adds, &ldquo;is how to manage that to stay focused on a path, as opposed to letting it become a diversion. As long as you have good folks running the effort, it will happen.&rdquo; Author: Bryan Sims Associate Editor, Biorefining Magazine (701) 738-4974 <a href="mailto:bsims@bbiinternational.com">bsims@bbiinternational.com</a>

Experts discuss important considerations in co-location and retrofit projects

Navigating the Nuances of Integration 

Many biorefining companies engineer more than equipment and mechanical processes in technology development. They also engineer, design or breed microorganisms, whether algae, yeast or bacteria. To design the most efficient, cost-effective process technology possible, these companies must ensure that the microorganisms they employ are highly effective at performing whatever conversion necessary. This often involves extensive work with gene sequencing and analysis.
 These operations can result in a huge amount of raw data that needs to be organized and analyzed. A variety of software solutions&mdash;on the market and in open-source formats&mdash;are available to aid researchers in analyzing genetic data sets. However, a unique software solution offered by Denmark-based CLC bio is proving to be the best software solution for a variety of biorefining companies, including Sapphire Energy Inc., BioGasol ApS, and Synthetic Genomics Inc.
 One common way CLC bio&rsquo;s bioinformatics solutions is used by industry, says Cecilie Boysen, the company&rsquo;s senior consulting manager of the Americas, is that scientists identify a gene they want to optimize to make a particular organism perform better under industrial conditions. A company working with algae might want to optimize its ability to produce oil or grow under very specific conditions. Similarly, a company developing a cellulosic fermentation production technology may need to optimize its yeast or bacteria to produce under certain temperature variables.
 The technologies and processes to perform this type of selection activity generally result in an overwhelming amount of data. Many companies have traditionally spent days or weeks analyzing it in a semi-automated fashion using several stand-alone software packages. In some cases, fully manual work is also completed using Excel spreadsheets. According to Boysen, the bioinformatics solution offered by CLC bio essentially serves as a pipeline that automates all of these activities. The result is an analysis process that is significantly less time-intensive, and less prone to human error.&nbsp;
 CLC bio has been offering bioinformatics solutions since its founding in January 2005. According to Lasse G&ouml;rlitz, the company&rsquo;s director of communications, CLC bio was established by two brothers in Denmark. &ldquo;The original idea was to make some powerful analysis tools and put them into the hands of scientists who can interpret the resulting data,&rdquo; he says. In the past, molecular biologists and other researchers had to collaborate with programmers to analyze genetic data. This is because the algorithms used were not in the form of a graphical interface. Rather, they needed to be scripted and programmed, not only in the beginning, but throughout the analysis process assuming that the algorithms had to be tweaked to better perform. &ldquo;You had to be able to script and program to actually run these analyses,&rdquo; G&ouml;rlitz said. &ldquo;We wanted to be able to put the tools in the hands of those who actually had the knowledge to interpret the data.&rdquo;
 In the first three years of the company&rsquo;s existence, approximately 1 million users downloaded the program. Considering the relatively small size of the scientific community needing this type of analysis tool, G&ouml;rlitz calls the reach of the program outstanding and formerly unheard of in the sector. When next-generation gene sequencing became available in 2007, CLC bio decided to also serve that need in the scientific community. Next-gen sequencing is vastly less expensive than traditional methods and results in even greater amounts of data. CLC bio&rsquo;s decision to service that need has paid off, says G&ouml;rlitz, as the company&rsquo;s software sales grew more than 30 percent last year, with profits growing by more than 50 percent.
 Traditionally, the bioinformatics solution has been widely used by those in several sectors, including plant research, but interest from the biorefining community is relatively new. G&ouml;rlitz stresses that his company is confident its presence in the sector will continue to grow dramatically.
 Capabilities 
 G&ouml;rlitz says CLC bio&rsquo;s bioinformatics solution is organism-agnostic. Any living organism with a DNA code has genes that can be sequenced. If the genes can be sequenced, CLC bio&rsquo;s product can analyze and assemble the data. &ldquo;One of the key strengths of our platform is that it caters to the agricultural sector, specifically plant genomes,&rdquo; G&ouml;rlitz adds. &ldquo;While it might sound strange, plant genomes are typically a lot bigger than those of mammals. So, some of these plant species actually require some very sophisticated lab-scale setups to handle and analyze all of these large genomes, and to interpret that data.&rdquo;
 The system is an open platform, G&ouml;rlitz says, which means that a customer can integrate almost any system into it. This includes open-source algorithms that some researchers may be using to analyze data. It could also be third-party solutions that are already installed in a lab. The bioinformatics solution essentially integrates the flow of data between all of these systems. &ldquo;Our architecture is extremely flexible in that way,&rdquo; he adds. &ldquo;We can go into virtually any organization, look at what they already have, look at what their needs are, and then add our platform and tailor it so everything is strung together&rdquo; into a pipeline the organization can tweak on its own.
 Our system focuses on sequence analysis, G&ouml;rlitz says. &ldquo;You used to have to use a lot of different software packages to do different types of analyses. That is what we have actually integrated into our platform. Once you are doing sequence analysis, you are pretty much staying within our software platform&hellip;If a customer has developed its own specific tool, we can just integrate that with the platform. You are still using the same framework and you don&rsquo;t have to import/export or convert data, which are tedious tasks. You can actually focus on the science and being productive.&rdquo;
 Benefits, Industry Feedback
 The platform not only increases the accuracy of analysis, it also vastly speeds up the process. G&ouml;rlitz points out that whenever people have to perform repetitive manual tasks, errors occur. If those tasks are completed by a computer, the potential for inconsistencies is reduced.
 The benefits of speed are even more pronounced. &ldquo;The speed is actually something that is very unique about our software,&rdquo; G&ouml;rlitz says. A good example of this is with the human genome. A common open-source algorithm used to analyze the human genome is called ABYSS. &ldquo;If you want to use that to assemble a human genome, you would have to have it running on 20 computers for seven days. If you use our algorithm, you can do it on a single computer in about seven hours.&rdquo; And these are not super computers, he stresses, just relatively standard computers already installed in most laboratory operations.
 The speed is &ldquo;a tremendous advantage&rdquo; for biofuel companies that are &ldquo;in pipeline mode,&rdquo; G&ouml;rlitz says, &ldquo;where you simply have a lot of data all the time, and you keep procuring data and you want to analyze it. Time is money.&rdquo;
 In December, CLC bio announced that Sapphire Energy installed its bioinformatics solution. &ldquo;At the core of our science operations and biology operations here, we institute a high throughput of biology capabilities, meaning we look at thousands and thousands of different traits simultaneously,&rdquo; says Tim Zenk, Sapphire Energy&rsquo;s vice president of corporate affairs. &ldquo;Our objective in working with CLC bio was to bring the biotechnology informatics capability in-house so we can categorize and speed up the process of identifying traits and genes that we are looking for.&rdquo;
 According to Zenk, the solution implemented at Sapphire Energy required minimal customization and allowed Sapphire Energy employees to immediately go to work on a relatively standard platform they were already used to. While some customization was required to accommodate the specific genes his company is looking for, Zenk says implementation of the solution required very little work on the side of Sapphire Energy. &ldquo;We implemented our internal intrascience intranet that enables our scientists to access it through the enterprise network,&rdquo; he says. &ldquo;CLC bio customized the software to meet our particular high-throughput biology needs, focused in on the algae genomes that we are looking for.&rdquo;
 BioGasol also recently installed a bioinformatics solution. The cellulosic ethanol company is working to develop a thermophilic strain of bacteria. According to Torbj&oslash;rn Jensen, BioGasol research scientist, his company looked into other competing solutions, but found CLC bio&rsquo;s to be the best package for its needs. &ldquo;When we do this bioinformatic work, we use a lot of different functions and all of these functions are integrated into the same program,&rdquo; he says. &ldquo;That was one of our main focuses.&rdquo; Jensen says his company began using the product last year and is very satisfied with its performance because it&rsquo;s an affordable, robust solution. &ldquo;The team behind it has been really open and eager to help.&rdquo;
 G&ouml;rlitz says his company is continually working to update and improve its bioinformatics solution, and there are always new protocols and new technologies being introduced in genome sequencing. CLC bio spends a great deal of time and energy ensuring that its platform can integrate with new improvements in the sequencing space. &ldquo;One of the really new, promising things that scientists are excited about is our new feature, coming out later this year, that allows you to compare and visualize differences between different genomes and different genome databases,&rdquo; he explains. &ldquo;It may sound trivial, but it is extremely complicated when you take into account the quantity of data you have to crunch to do this. It&rsquo;s nothing anyone else has demonstrated they can do, so this is something that is unique to our software.&rdquo; Author: Erin Voegele Associate Editor, Biorefining Magazine (701) 540-6986 <a href="mailto:evoegele@bbiinternational.com">evoegele@bbiinternational.com</a>

Bioinformatics can offer efficient, automated, accelerated analysis of genetic data

Spring 2012 Pellet Mill Magazine

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Business Briefs

Business Briefs

Business Briefs

Columns

Building on Success

Fracking Changes Everything

Proceed, But be Informed and Have a Solid Plan

Government Assistance: Double-Edged Sword?

Industrial Wood Pellet Industry is Sustainable and Carbon Neutral

Project Integration

Keeping Our Eye on the Ball

The Chemical Process Consultant's Role

Are Your Communications Privileged?

Featured

Energy-Charged Epidemic

Pellets and Power for All

Obvious Originality

Navigating the Nuances of Integration

Expediting Results

Contributions

Forest Certification: Opportunity and Challenge for the Wood Pellet Industry

Spring 2012 Pellet Mill Magazine