Biofuels September 2012

Standing up for the RFS:Far from providing relief from this year’s water shortages, an RFS waiver may actually lead to an extended investment drought

September 2012 Issue 7 • volume 6

Regional focus: biofuels in Canada

Special sustainability

issue:10 articles covering certification, social

impacts, mass balance traceability, double

counting and more!

international

»You can’t eat straw. That’s why we’re making fuel out of it.«What is Preciousto you?

this is clariant: sPecialty chemicals creating value

Energy from renewable resources is only valuable if no foodstuffs are used to make it. That’s why Clariant developed a process that turns agricultural waste into carbon-neutral ethanol biofuel. That is precious to us. what is precious to you?

www.clariant.com

105_12FC_2344_EthanolBiofuel_210x297_e.indd 1 27.08.12 08:34

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internationalIssue 7 volume 6

September 2012

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ASSocIAte publISher & edItor

Margaret DunnTel: +44 (0)208 687 4126

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No part of this publication june be reproduced or stored

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or other means without the prior written consent of the publisher.

Whilst the information and articles in Biofuels International are published

in good faith and every effort is made to check accuracy, readers should verify facts and statements direct with official sources before acting on them as the publisher

can accept no responsibility in this respect. Any opinions expressed in this magazine should not be

construed as those of the publisher. ISSN 1754-2170

c ntents

Front cover courtesy of DS Engineers – a rapeseed (canola) extraction plant

3 comment4 bioethanol news13 biodiesel news20 people on the move21 Incident report22 technology news24 uK government consultation sparks cause for concern25 Standing up for the under-fire rFS27 two thirds of German motorists still shun e1028 Wasted opportunity? ePURE has given up hope on a full review of the Energy Taxation Directive. Now it is hoping for small

changes, which may just help petrol and ethanol become more competitive across the EU

29 uS biodiesel’s summer of discontent? TheyeargotofftoaflyingstartforUSbiodieselproducerswitha78.5%increaseoverQ12011.Since

then however, feedstock costs, droughts, the ongoing RIN scandal and regulatory uncertainty have started taking their toll

32 on the rIN rebound? Thesmallplayersarealwayshithardestindifficulttimes.ThereflexreactiontotheRINfraudhasbeento

shun everyone but the most well-known producers.

34 three out of three Despite abandoning its IPO offering earlier this year, Canadian waste-to-biofuels producer Enerkem is

making notable progress with its three local facilities

36 canadian biofuels takes flight AlthoughasmallermarketthantheUS,Canadianproducersaresufferingfromthesamechallenges:

feedstock prices, competition from its neighbours and a need for more regulatory support

39 plant update – canada40 the choice widens The number of approved schemes available to certify sustainable biofuels for the Renewable Energy

Directivehasnowreached11,butdoesthelatestofferanyadvantagesandwillthelistjustkeepgettinglonger?

42 Implementing red certification44 Social impacts of biofuel cultivation Whatisthebestwaytoensuresocialimpactsareincludedwithincertificationschemes?

47 one of a kind Althoughthefirstbiorefineryproducingwood-basedadvancedbiodieselisunderconstruction,plansfor

additional plants hang in the balance, largely dependent on the outcomes of investment grants

49 certification bodies at work Onecertificationbodytakesacloserlookatbiofuels’supplychainsfeaturinganimalfatsandusedcooking

oils, and the complications that can arise

52 Making the most of sustainability Certificationisseenbysomeasanaddedcostwithlittlebenefit.Butiftraceabilityandprocessefficiencyis

builtintothebusinessmodeltheycanactuallyresultinsignificantgainstothebottomline

54 double counting spreads throughout europe Afterayearofdiscussionsno.36oftheFederalImmisionControlAct(36.BImSchV)wasintroducedin

Germany.But,asonesupplierexplains,thereisstillmoretobedone

56 how to complete an IScc audit OilpalmplantationgroupFirstResourcesexplainstheauditprocessstep-by-step,showinghowdifficult

issues, such as pesticides and soil conservation, are tackled

58 Getting closer Dupont talks about how it uses biotechnology to ensure sustainability, increase feedstock yields and bring

the second generation market one step closer to large-scale commercialisation

59 Faster commercialisation via technology licensing60 Managing the age of confluence The market is entering a new era where complex interconnections are emerging

betweenkeyresources:land,biomass,freshwater,metalsandminerals,andmanpower – all of which need to be understood and mastered

62 From harbour to hub Preliminaryfindingsfromareportintoportintegrationinthebiofuelsupplychain

65 talking biofuels turkey Turkishbiofuelproducersprepareexpansionplansasthe2013startdate

forethanolblendingapproaches,followedayearlaterbythegovernment’srequirementforbiodieselin2014

68 events page Ad index

biofuels international september 2012 1

»You can’t eat straw. That’s why we’re making fuel out of it.«What is Preciousto you?

this is clariant: sPecialty chemicals creating value

Energy from renewable resources is only valuable if no foodstuffs are used to make it. That’s why Clariant developed a process that turns agricultural waste into carbon-neutral ethanol biofuel. That is precious to us. what is precious to you?

www.clariant.com

105_12FC_2344_EthanolBiofuel_210x297_e.indd 1 27.08.12 08:34

Standing up for the rFS:Far from providing relief from this year’s water shortages, an rFS waiver may actually lead to an extended investment drought

September 2012

Issue 7 • volume 6

regional focus: biofuels in canada

Special sustainability

issue:10 articles covering certification, social

impacts, mass balance traceability, double

counting and more!

international



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Want to know who’s really reading your advert?

Now you can..

Biofuels International is the industry’s oNly audited magazine.

Our BPA audit assures you that our media figures are correct.This information proves you’re saying the right thing to the right

people in the right place.

www.biofuels-news.com

September 2011 Issue 7 • volume 5

A long time comingIt is a year and a half late, but the EU has now approved seven certifi cation schemes for biofuels that meet the RED criteria

Biobutanol warBiobutanol companies are competing against each other, but not yet against bioethanol

Regional focus: biofuels in Canada

Includes biomass

supplement

internationalinternational

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FC_Biofuels_Sept_2011.indd 1 08/09/2011 12:44



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biofuels international september2012 3

can the rFS weather the drought?A

syou’llseewhenyou start delving into this issue, the sector hasbeenaflurryof

activity – not all of it good.Perhaps the biggest issue

battering biofuels at the moment is the drought in the US–saidtobetheworstinover a century. As the extreme weather conditions continue, corn supplies are shrinking, causing their prices to climb.

Prices today are up to more than$8(€6.4)abushel,fromjustover$2in2006.Andproduction levels are forecast todecreaseby13%fromlastyear,tothelowestthey’vebeeninnearly20years.

As supplies tighten, the argument arises again as towhetherthere’senoughcorn to satisfy the needs of the food producers as well as the Renewable FuelStandard(RFS).

Drought-striken farmers arecallingforanRFSwaiver,something which the biofuels industry is clearly opposed to.

Those in favour of the waiver arguethat40%ofUScorngoes to the ethanol industry. SobywaivingtheRFSforupto one year this would lower cornpricesby5%,savingtheindustry$1billion.

In retaliation the biofuels industry has come out in force. For starters ethanol producers state that ethanol productiondoesnotuse40%ofthecorn,butonly16%ofthe total net corn acreage.

In the production of ethanol

only the starch is removed, so the co-product is a high protein animal feed, known as distillers grains, which not only replaces corn for livestock feed, but also displaces soyabean meal. Biofuelproponents

alsoarguethattheRFShasaninbuiltflexibilitydesigned to cope with such weather conditions.

Ethanol production has already been curtailed by 14%thisyearandrefinersaresittingon2.6billionofbackloggedRFScreditsfromprevious over-production that can be used to meet their compliance obligations.

Producers say that this waiver is not only unnecessary, it would also lead to long- term damage for the sector.Ifthere’sthepossibility

that targets will be halted every time the industry hits a rocky patch people are never going to commit to funding new plants and projects.

Today, nearly all of the ethanolproducedintheUScomesfromcorn.Butcornethanol is the linchpin for theindustry’smaingoal:developing advanced biofuels. Commercial advanced biofuels plants are starting to come online this year, but much more private investment is needed tomeettheRFSrequirementofblending21billiongallons of it into traditional transportationfuelby2022.

Getting rid of the federal mandate would not only halt new investments, it may

also send existing ethanol refineriesintobankruptcy.

As for resolving the issue the EPA has now opened a 30daycommentperiod.Itthenhas90daystoissueafinalruling,puttingthedeadline after the drought is scheduled to end, and notably throwing the politically-charged issue past the November Presidential election.

All this somewhat overshadows the main focus of this issue, which is that of sustainability. The addition ofNTA8080intothelistofapprovedcertificationschemesin August brought the debate back into the limelight. Within this edition we have included a selection of in-depth case studies showing exactly howthesecertificationsarecarried out as well as how you should go about deciding which scheme to choose.

Not only that, we also show that by building traceabilityefficiencyintoyourexisting model sustainability certificationcanbecomemoreof a help than a hindrance.

Whether it be regarding sustainability,theRFS,fraudulent RINs or taxation, the biofuels industry is constantly changing. It is more important than ever to keep up to date, so we hope you enjoy and benefitfromthispackedissue.

As always we welcome your feedback.

Bestwishes,Margaret

The summer is often viewed as a quiet period. Most businesses experience a noticeable lull, but that certainly can’t be said for the biofuels market this year

Margaret DunnAssociate publisher



Helvetica Black and Helvetica Ultra light biofuels bioethanol news

4 september 2012 biofuels international

E15 waiver set to increase use at US petrol pumpsThe US Appeals Court for the District of Columbia Circuit has sided with the Environmental Protection Agency (EPA) and its partial waiver approval for E15 ethanol fuel for model year 2001 and newer light duty vehicles and all flex-fuel vehicles.

Those vehicles represent nearly two-thirds of all vehicles on the road and almost 75% of vehicle miles driven.

Since the initial waiver filing in March 2009, vehicles were tested using E15 for a combined six million miles, health effects data on E15 was collected and approved and a first of its kind misfuelling mitigation plan was required and approved in order for retailer to offer E15.

‘Today’s decision is an important step forward in the nation’s quest to diversify our nation’s fuel supply,’ says Renewable Fuels Association

CEO Bob Dinneen. ‘Adding an E15 option, alongside E10 and higher ethanol blends, allows consumers to make the fuel decisions that work best

for them and their vehicle.’Currently there is at

least one petrol station in Lawrence, Kansas, selling E15 under the conditions set by the partial waiver.

‘Ethanol has a 30-year track record of safe and effective use in the marketplace and that record will continue,’ Dinneen adds. ‘Allowing for additional ethanol use will help lower prices at the pump, create domestic jobs and accelerate the commercialisation of new biofuel technologies.

‘The market for ethanol confined to E10 blends has been saturated. Allowing ethanol blends of up to E15 for 2001 and new vehicles, as well as increasing the availability of higher level ethanol blends up to E85, will provide much-needed market access to help ensure the growth and evolution of the domestic renewable fuels industry continues.’ l

Multi-million grant given to explore alternative biofuelsA research team at the University of Missouri has been awarded a multi-million grant to study ways of obtaining alternative biofuels without further impacting food supply.

The $5.4 million (€4.4 million) grant was awarded by the US Department of Energy and will be used to further study non-food biofuel crops, like switchgrass.

‘In the 10 states along the Missouri and Mississippi rivers, around 100 million acres of marginalised agricultural land is unused or underutilised often due to frequent flooding,’ says professor in the School of Natural Resources and director of the MU Centre for Agroforestry, Shibu Jose.

‘If farmers can plant just 10% of marginal floodplain land with crops designated for use in biofuels, we can produce 6 to 8 billion gallons of liquid fuel annually. Planting this land with crops designated for biofuels would have little to no effect on the food supply.’

The announcement comes after one of the worst droughts experienced in the US this summer, which has reignited the fuel-vs-food debate as corn crop bushels fell by 13% to 10.8 billion in July. l

Vehicles under 11 years old can use E10

UoM: turning ‘green’ into green fuel



Helvetica Black and Helvetica Ultra lightbioethanol news biofuels


Cobalt and Rhodia to build demo plant in Latin America Bio-based chemicals developer Cobalt Technologies and Rhodia, a specialty chemicals company, will together build and operate a biobutanol demonstration plant in Brazil.

The two companies are working together to eventually construct a commercial-scale biorefinery. This facility will be fitted with Cobalt’s technology, producing bio n-butanol from Brazilian bagasse and other local, non-food feedstocks in Latin America.

‘This agreement puts us on a clear path towards commercialisation, which will result in the development of the first commercial-scale biorefinery using bagasse as a feedstock for the production of biobutanol,’ says Bob Mayer, CEO of Cobalt Technologies.

The JV plans to break ground on the demo facility

later this month, moving to a mill site in early 2013 for integration testing. Operational testing at the plant is expected

to be completed by mid-2013.Vincent Kamel, president of

Rhodia Coatis Business Unit, says the continued partnership

will ‘capitalise on the massive market opportunity for bio n-butanol in Latin America and beyond’. l

The plant will use bagasse for the production of biobutanol

Europe’s largest biorefinery set to restart in UKBioethanol producer Ensus has announced the reopening of its £300 million bioethanol plant in Teeside, UK by the end of August after a 15-month enforced shutdown.

The move follows the closure of a loophole in the tariff system by the European Union’s Customs Code Committee which allowed imports of subsidised US product to distort the market. This, coupled with the

ending of the US taxpayer subsidies for ethanol, means Ensus is confident improved market conditions makes the restart a good idea.

Over 100 employees had been kept on full pay throughout the shutdown.

‘Everyone is absolutely delighted that we are in a position to restart. It has been a very difficult time for all connected with the business and I would like to thank everyone for their patience and understanding, paying particular tribute to our workforce who have shown resilience and a

magnificent attitude,’ says Ensus CEO Peter Sopp.

The Teesside biorefinery is designed to convert more than 1 million tonnes of animal grade wheat into fuel grade alcohol, high protein animal feed and carbon dioxide using a process of distillation and fermentation.

The ethanol will be blended with petrol to create greener road fuel while UK and European farmers can use the high protein wheat residue from the process as animal feed, preventing the need for imports of high protein

feeds from other countries.The carbon dioxide from

the process will be used in the UK and European food and drinks industry.

‘We have received considerable support from our local MP and MEP in helping to resolve the political and regulatory issues in the UK and EU,’ Sopp adds. ‘It remains critical that the UK continues to support the use of high quality sustainable biofuels. The country urgently needs greener road fuels as part of its move towards a low carbon economy.’ l





New bioethanol plant to break ground in IndonesiaPlantation company PT Perkebunan Nusantara (PTPN) is to construct a bioethanol plant in Mojokerto, Indonesia.

The company claims the plant will be the first ever bioethanol plant to be operated by a state-owned company and aims to produce up to 30 million litres of fuel a year.

PTPN finance director Dolly Bulungan says the project will abosrb around $48 million (€39 million) split between a $28 million loan from Bank Mandiri, a $16 million grant from Japan’s New Energy and Industrial Technology Development Organisation and $4 million of available internal cash.

The plant will be located on an eight hectare area and surrounded by the PTPN’s sugar plantation, which produces up to 250,000 tonnes of molasses annually.

It is predicted the project will commence commercial production by March 2013. l

EPA awards INPB registrations for production and sale of cellulosic ethanol The US Environmental Protection Agency (EPA) has granted Parts 79 and 80 registration to Ineos New Planet BioEnergy (INPB), a joint venture between Ineos Bio and New Planet BioEnergy, for the production and sale of bioethanol from non-food waste materials.

This notice of registration comes as building of the Indian River BioEnergy Centre has finished and is going

through the commissioning phase. The facility is scheduled to begin producing bioethanol in the third quarter of this year, with full production reaching 8 million gallons a year, in addition to 6MW of renewable power generated from biomass such as local yard, vegetative and agricultural wastes.

‘We have completed this new facility on schedule, on budget and look forward to further advancing this bioenergy technology and making it commercially available around the world,’ says Peter Williams, CEO of

Ineos Bio and chairman of INPB.‘Building more facilities and licensing

this technology globally provides a new platform for waste disposal while providing energy security, local jobs and local bioenergy. New technologies like this will also move us further away from and eventually change the food versus fuel debate.’

The centre is the first large-scale project in the US to receive registrations for a facility producing cellulosic ethanol from non-food vegetative waste materials. l

Five biodiesel products pass ‘no harm’ testsThe successful completion of its sixth test period of ‘no harm’ tests for oxidation stabilisers and additional products has been announced by the Association Quality Management Biodiesel (AGQM).

The tests make sure that the chemical and physical properties in biodiesel are not affected by the use of oxidation stabilisers,

there are no inadmissible reciprocal effects occurring with diesel fuel stabilisers and the additive has security datasheets.

These results mean biodiesel manufacturers can chose a total of 36 products from a total of 22 manufacturers as the following oxygen stabilisers passed the tests: Ensolant TB 1, Biostable 501, Baynox Solution 50%, INSA B30 NH and Agidol-12B.

The AGQM have said the next round of ‘no harm’ testing will begin in November. l

Hats off: PTPN move into Indonesia





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NuStar and biofuel supply chain company Eco-Energy Holdings are to build an ethanol storage facility complete with unit train infrastructure after forming a partnership.

To be located at NuStar’s Dumfries site in Virginia, US, the facility will benefit the northern Virginia and Washington DC markets. It will comprise ethanol unloading, storage and truck loading solutions.

The terminal will be able to store around 150,000 barrels of ethanol, with a 400,000 barrel-a-month distribution capacity. The unit train facility will be built to receive up to 96 rail car unit trains via CSX Transportation.

Operations at the new facility are slated to begin in the third quarter of

2013, with each company covering its own development, construction and refurbishment investments.

Gwaine Ton, Eco-Energy’s CFO and COO, was reported as saying: ‘This is a large and growing market and this project reflects how multiple partners

(Eco-Energy, NuStar and CSX) can work together to develop a long-term supply chain solution that benefits biofuel producers and end users. The site will be open for utilisation by both producers and end users seeking to effectively distribute biofuels in the region.’ l

biofuels bioethanol news


New grant issued for further Hawaiian biofuels researchThe US Department of Agriculture’s National Institute of Food and Agriculture has awarded a $6 million (€4.9 million) grant to the University of Hawaii to increase locally produced renewable energy.

To be spread over four years, the university and its partners want to develop high-yielding biofuel

feedstocks, establish advanced local biofuel production processes and guide the local supply chain.

The University is based at the College of Tropical Agriculture and Human Resources (CTAHR) in Manoa.

‘This is a timely and essential issue and I expect this project to provide Hawaii and other tropical regions with information vital to developing sustainable renewable energy,’ says CTAHR professor Andrew Hashimoto.

The project will examine the use

of fast-growing tropical grasses such as banagrass, sweet sorghum, energycane (a relative of sugarcane) and Napiergrass-pearl millet crosses for biofuel production, including testing and modifying harvesting and storage techniques for the feedstock grasses and optimising energy yields.

Hawaii currently meets more than 90% of its energy requirements through the use of imported fossil fuels and, despite almost non-existent heating needs, has the highest energy costs in the US. l

NuStar to build ethanol storage facility and unit train

A storage facility, similar to that above, will be the fruit of this new partnership

Fulcrum Bioenergy project awarded USDA loan guarantee Second generation ethanol producer Fulcrum BioEnergy has been awarded a $105 million (€85 million) loan guarantee from the US Department of Agriculture.

The finalisation of the loan guarantee, which was awarded to the company’s Sierra BioFuels Plant to be built in Storey County in Nevada, US means Fulcrum will secure bank financing. This, combined with Fulcrum’s private equity capital, will fully fund construction

of the MSW-to-biofuel plant.When the plant is built it will produce

10 million gallons a year of ethanol from household waste, in addition to renewable energy that will be consumed during the process. It will employ around 430 engineers during the construction phase, and create 53 full-time jobs when the plant becomes operational.

‘The USDA loan guarantee provides a key piece of financing to move our Sierra BioFuels project forward,’ says E. James Macias, president and CEO of Fulcrum BioEnergy.

‘It allows us to secure private bank financing at reasonable prices and with favourable terms. This is a real example of how USDA’s Rural Development Program helps bring new and innovative technologies and jobs to some of the areas hardest hit by the economic downturn,’ Macias adds.

Fulcrum has secured long-term MSW feedstock contracts and an ethanol off-take contract for the Sierra plant. It is now in the final stages of completing engineering work on the project and will break ground when the loan guarantee is finalised and the financing is secured. l





Grain sorghum supporters pleased with EPA progressThe US Environmental Protection Agency (EPA) has closed public comment on the approval of grain sorghum as an advanced biofuel under the renewable Fuels Standard.

The period for comments has been open for over a month and been championed by sorghum producers country-wide, with National Farmer’s Union president Roger Johnson supportive from the beginning.

Johnson was quoted as saying: ‘US farmers can have a tremendous positive impact on the environment by producing advanced

biofuel from grain sorghum. EPA’s analysis indicates that utilising different process energy technology options reduces lifecycle greenhouse gas impacts of ethanol produced from grain sorghum by 53% compared to the petroleum baseline.’

The National Grain Sorghum Producers, which said that the original EPA notice of data availability was significant in allowing the domestic production of advanced biofuels from sorghum as envisioned in the 2007 Energy Bill, was also reported to be in good cheer.

The 2007 Bill requires the production of 36 billion gallons of renewable fuels by 2022 from both conventional and advanced sources of biofuel. l

news in briefNew Thailand bioethanol plant gets completion dateA new 400,000 litres a day ethanol plant in Ubon Ratchani, Thailand is set to be completed by November this year.

The Thai Ubon Bioethanol project is still under construction, but the plant will have the capacity to produce both hydrous and anhydrous material and could use cassava and molasses as feedstock.

‘We will be able to produce both ethanol grades and can switch raw material feedstock providing a good alternate for our customers,’ a Thai Ubon statement said.

Thailand currently produces 3 million litres of ethanol a day, with up to 1.3 million litres consumed in the domestic market a day. l

Maple Energy seals first ethanol export salePeru-based energy company Maple Energy has completed its first ethanol transaction with global investment and trading business Mitsui Group.

Maple’s first export sale of fuel-grade ethanol was for approximately 1.56 million gallons, which Mitsui will then pass on to one of its European customers.

‘We are delighted with our first export sale of ethanol to the international market,’ says Maple CEO Rex Canon. ‘This event marks another key milestone for us as part of an initiative to develop the largest ethanol business in Peru, with the goal of also being a globally competitive ethanol producer.’

Maple’s 37MW power plant, which fully opened earlier this year, currently generates both electricity and ethanol. l

University of Georgia to use federal money for biofuel improvement The University of Georgia (UGA) has been awarded $2 million (€1.6 million) in federal money for projects aiming to drive more efficient biofuels production and feedstock improvements.

UGA has been awarded $500,000 to use a genetic analysis of biomass to identify the plant architecture that is important for optimised biomass production in a range of environments.

A second award of $1.5 million will be used for a project to determine how protein levels affect biomass development and water use in woody plants.

This is part of the US departments of Agriculture and Energy announcement of an available $10 million for eight research projects. l

A storage facility, similar to that above, will be the fruit of this new partnership

New USDA payments to boost advanced biofuels productionUp to 125 advanced biofuel producers will be receiving payments from the US Department of Agriculture’s (USDA) Bioenergy Programme for Advanced Biofuels.

Producers become eligible for payments from the programme based upon the amount of biofuels that are produced from renewable biomass other than corn starch.

Some biofuels eligible for the programme include those produced from cellulose, lignin feedstocks and hemicellulose, plus those produced from non-corn based sugar or starch.

‘Advanced biofuels are a key component of President Obama’s ‘all-of-the-above’ energy strategy to reduce our reliance on foreign oil and take control of America’s energy future,’ says agriculture secretary Tom Vilsack. ‘These payments represent help to spur an alternative fuels industry using renewable feedstocks grown in America, broadening the range of feedstock options available to biofuels producers, helping to create an economy built to last.’

The majority of the 125 recipients represent the biodiesel industry, but several qualifying ethanol plants can also receive payment under this new announcement, including Reeve Agri Energy, Bonanza Bioenergy and Abengoa Bioenergy. l





Gavilon signs ethanol marketing agreement with three Advanced BioEnergy locations Commodity management firm Gavilon has become the exclusive ethanol marketer for Advanced BioEnergy’s three facilities located in Fairmont, Nebraska and both Aberdeen and Huron in South Dakota.

The announcement was made after subsidiaries of the Gavilon Group entered

into multi-service commercial agreements with subsidiaries of Advanced BioEnergy.

Under the terms of the agreement, Gavilon is also the exclusive marketer for distillers dried grains with solubles (DDGS) for the Aberdeen facility, effective from August 2013.

Describing Gavilon as a ‘strategic partner’, Advanced BioEnergy CEO Richard Peterson says: ‘Gavilon offers a comprehensive solution that will help us achieve our risk management

objectives in a competitive market’.‘This agreement leverages our core

capabilities and will enable Advanced BioEnergy to tap into Gavilon’s extensive agricultural and energy networks. By utilising Gavilon’s expertise in the commodity markets that drive ethanol production, Advanced BioEnergy will be able to more effectively manage its processing margins in both the spot and forward markets,’ comments Randy Ives, director of ethanol services at Gavilon. l

New German pilot plant for cellulose ethanol advance initiatedA new pilot plant for the production of climate-friendly cellulose ethanol in Germany has been inaugurated.

Developed by Swiss chemicals company Clariant, the €28 million project will produce up to 1,000 tonnes of cellulose ethanol from around 4,500 tonnes of wheat straw. It is believed that Germany has around 22 million tonnes of available straw for use that would not compromise soil regeneration.

The plant will be located in Straubing and has been supported by the Bavarian government and the Federal Ministry for Education and Research.

‘The inauguration of the new plant marks an important milestone in the production of a climate-friendly

biofuel that can also be used as a raw material for the chemical industry,’ says Clariant CEO Hariolf Kottmann.

And Bavarian economics minister Martin Zeil believes the right choice has been made in terms of the plant’s location: ‘We don’t just have the raw material available but also the necessary scientific backup in the form of both university and non-university research facilities. If we can make the breakthrough here, it will create a raft of new options in terms of jobs and earnings potential in what is essentially a rural area. And, from a global perspective, there’s no “food or fuel” issue when plant waste is recycled.’

It has been claimed that the proposed amount of produced cellulose ethanol from the plant would cover around 25% of Germany’s current petrol requirements. l

UK biofuels farmers receive Red Tractor scheme boostA biofuels scheme has gained European approval so that UK feedstocks can now have Red Tractor status.

The proposal, named The Red Tractor Crops and Sugar Beet Scheme, will ensure traceability on feedstocks back to individual UK farms and has been backed by the European Commission.

The scheme hopes to give crop and sugar beet producers a boost in the biofuels market while keeping the burden of new EU regulations to a minimum by offering a route for farmers to demonstrate they meet sustainability requirements for biofuels crops under the Renewable Energy Directive (RED).

‘Our standards are known and trusted in supply chains,’ says chairman of the scheme Matthew Read. ‘Farmers can, through their membership, retain access to the European market place for their crops, without the need for additional audits and form-filling for every company they trade with.’ l

German motorists still wary about E10 pump presenceA recent survey of German motorists by ethanol association BDBE shows that most are still hesitant when it comes to using petrol-ethanol blend E10.

Seven out of 10 motorists interviewed still fear E10 will damage their engines and only 33% have ever filled their cars with it compared with using

the older Super E5 fuel option.‘If at least 90% of German gasoline

engines are suitable for E10, but two-thirds of car users still doubt this, then it is up to the car makers to inform their customers at the filling stations and the car repair shops and not simply put out general information,’ says BDBE MD Dietrich Klein.

The south of the country has embraced E10 more than its northern

neighbours however, with 38% of petrol cars using the higher blend compared to the north’s 26%.

‘Uptake of E10 is still better than the uptake of unleaded petrol when it was introduced in the 1980s however,’ adds Klein. ‘E10 has a market share of around 13% after one year of availability, compared to a 10% market share of unleaded gasoline two years after its introduction.’ l





BIO responds to ‘false claims’ by American Fuel and Petrochemical ManufacturersThe executive VP of the Biotechnology Industry Organisation’s (BIO) Industrial and Environmental Section, Brent Erickson, has issued a statement in response to what he called ‘false claims’ made by the American Fuel and Petrochemical Manufacturers (AFPM) president Charles Drevna in regard to cellulosic biofuels.

Erickson’s statement was sent to the House Energy and Commerce Subcommittee on Energy and Power chairman Ed Whitfield and ranking member Bobby Rush. Below is the sum of his thoughts:

‘In a letter to House Energy

and Commerce Subcommittee leaders, AFPM president Charles Drevna falsely states that “cellulosic [biofuel] still does not exist”. The facts contradict this statement.

‘Blue Sugars, a company focused on commercialising cellulosic technology, has recently reported registering the first Renewable Identification Numbers (RINs) for cellulosic biofuel with the EPA. More companies are now working with EPA to register their cellulosic biofuel production on a commercial basis and generate these RINs.

‘Numerous other companies have invested hundreds of millions of dollars to produce cellulosic biofuels and scale up projects from pilot to demonstration and finally commercial production levels. For instance, INEOS Bio is

commissioning a cellulosic biorefinery in Florida and ready to start production of cellulosic ethanol from vegetative waste.

‘BIO has mapped the biorefineries constructed by these companies during their path toward commercial production and assembled photographic evidence of the progress that US advanced biofuel companies are making. We welcome Members of Congress and the American public to see for themselves.

‘While the advanced and cellulosic biofuel portions of the Renewable Fuel Standard (RFS) were signed into law in 2007, the rules to implement the law came into effect only in July 2010. But, in that relatively short period, advanced biofuel producers have made rapid progress in bringing home-grown technology and energy to

the marketplace. Advanced biofuel producers must follow the same regulatory rules as other US fuel producers – and many additional ones. They are committed to achieving the nation’s energy security goals, while the refinery industry appears singularly committed to protecting its market share.

‘The RFS has levelled the playing field for new companies to enter a very tightly integrated fuel market, which has allowed the domestic biofuels industry to create more than half a million jobs and $50 billion (€40.9 billion) in new activity to the nation’s economy. The RFS has ensured that these new biofuels contribute to a cleaner, healthier environment and directly reduce the nation’s reliance on foreign oil.’ l

New Peruvian ethanol and power project operationalIntegrated energy company Maple Energy has claimed its joint ethanol and power project in Peru is now fully operational.

The 37MW power side of the plant was recently completed and Maple is confident it will be now able to increase the amount of electricity before the end of the year, which will eventually supply enough to satisfy the needs of its ethanol plant and provide power to the national grid.

The plant has used over 165,000 tonnes of harvested and processed sugarcane since the end of March, with Maple predicting it will be using close to 900,000 tonnes by the start of 2013.

The installation and commissioning of ethanol storage, loading and shipping facilities at the port of Paita have also

been completed and are expected to go online later this year, where Maple has been storing recently created ethanol due for shipping

once everything is ready.Maple Energy claims the

total cost of this project was approximately $280 million (€231.2 million). l

Maple’s plant will be processing nearly 1m tonnes of feedstock by 2013





US biofuels company pulls back on multi-million IPO

Liquid bulk throughput increases at Port of Rotterdam

Chemtex and USDA go ahead with new biofuels plant

TMO increases renewable energy presence in China

US-based biofuels company Coskata has decided not to go forward with a proposed $100 million (€82.5 million) initial public offering (IPO) as it looks instead towards natural gas options.

Plans to build a commercial-scale plant in Alabama, which would convert wood waste to ethanol, will be put onto the back burner as it looks into feeding the plant with natural

gas, which is currently available very cheaply.‘A move to natural gas would mean

we are likely to find that capital needed for commercialisation from private investors, who have expressed great interest in the technology,’ says Coskata CEO Bill Roe. ‘With natural gas prices at historic lows, we’ve decided to redirect our commercialisation strategy as investors showed real interest.’

Coskata filed IPO papers with the Securities and Exchange Commission

in December, buoyed by other biofuels companies doing the same with some success. However, more recently, many biofuels producers which have gone public have seen their stock prices drop below that of initial offerings.

Heather Youngs, a senior analysis at the Energy Biosciences Institute in Berkeley, was quoted as saying that that pattern was ‘pretty consistent and people get disillusioned with the long time period it takes to get to commercial scale’. l

The total volume of liquid bulk handled in the Port of Rotterdam rose by 10.6% to 107.5 million tonnes in the first half of 2012.

Crude oil incoming trade was close to reaching record levels for the first six months of 2012 after it reached 50.6 million tonnes, a 9.6% increase. The

handling of mineral oil was also up – by 13.8% - to 39.9 million tonnes, while fuel oil throughput was stimulated by imports from Russia and exports to Singapore.

Other liquid bulk, including basic chemical products and vegetable oils and fats, reached 16.8 million tonnes in the first half of 2012, a 5.6% growth. The Port of Rotterdam

attributes this to the rising throughput figures for palm oil, as a result of such factors as the opening of the plant of Neste Oil. There was also an increase in imports of MTBE and biodiesel, mainly from Asia. However, ethanol imports fell.

The port says that no maintenance shutdowns have taken place in the last six months, unlike the same

period in 2011 when there were two major shutdowns. Additionally, production capacity elsewhere in Europe fell due to the (temporary) closure of refineries, causing a partial shift of demand for refining capacity to Rotterdam.

The increase in throughput was facilitated by an increase in the tank capacity at ETT, STR and BTT. l

Global engineering and technology company Chemtex has won a partnership with the US Department of Agriculture (USDA) to build a new advanced biofuels plant.

Backed by a federal-private partnership and earmarked to open in 2014, the biorefinery will create 315 jobs and produce cellulosic ethanol from energy crops. The location of the site is believed

to be Sampson County, North Carolina.The partnership with the USDA

will see $99 million (€78.7 million) support the plant’s construction.

‘Realising a commercial scale cellulosic ethanol plant in the US and proving that it can produce cost competitive sustainable ethanol is an important milestone in the commercialisation process of advanced biofuels,’ says Chemtex Group president Guido Ghisolfi.

‘We believe that the plant can become a model for future cellulosic ethanol production

in America, providing jobs and benefitting local economies and US energy security.’

Chemtex will work with biosolutions company Novozymes to produce the cellulosic ethanol.

‘Advanced biofuels are commercialising because the Renewable Fuel Standard is working. With public and private investment, we are helping to add to America’s mix of domestic energy, reduce prices for consumers and free us from our dependence on oil,’ says president of Novozymes North America, Adam Monroe. l

Developer of second generation biofuels technology TMO Renewables has signed a Memorandum of Understanding with the authorities of Heilongjiang, China.

The MoU will see TMO provide long-term large volume biomass feedstock supply for future biofuel production facilities from Heilongjiang State Farm, the largest state

owned farming corporation in China.The MoU is also the first step towards

building the first of a future series of second generation biofuel production facilities in China. TMO will assess the full potential of local feedstock using its process demonstration unit, which it claims is the UK’s first cellulosic demonstration facility.

‘The scale of this opportunity is exciting and we are delighted to be developing our presence in China further,’ says TMO CEO David Weaver. ‘This is the first step towards

building one of the first second generation biofuel facilities in China. We look forward to announcing an offtake agreement for the ethanol produced, another key element that needs to be in place for the delivery of an operational plant in the province.’

‘Second generation ethanol production has been part of our strategy at the Heilongjiang State farm for some time and we are excited to see the first step in the realisation of this strategy,’ adds director-general of HSF 93 farm Zhang Guichun. l



Helvetica Black and Helvetica Ultra lightbiodiesel news biofuels


REG signs supply agreement with Maxum Petroleum Biodiesel producer and marketer REG has signed an agreement with independent energy logistics company Maxum Petroleum to supply biodiesel at its Rancho Dominguez terminal near Long Beach, California.

Under the supply agreement, Maxum began offering REG-9000 biodiesel in mid-August, which is available to petroleum jobbers or large fleets.

‘This new terminal will help consumers in the Los

Angeles region become more energy independent, meet carbon reduction goals and improve air quality,’ says REG’s VP of sales and marketing Gary Haer.

And speaking about the new deal with Maxum, Haer notes: ‘We have confidence in the team at Maxum to quickly and efficiently process orders and load trucks to make biodiesel blending an easy step for any diesel distributor in the area.’

REG also recently announced biodiesel availability at a terminal near Lebanon, Ohio and at its own terminal in Clovis, New Mexico. l

Sustainable biojet fuel first target of new Chinese research centreExploring sustainable aviation biofuels will be the first project by a newly opened airline technology centre in China.

The Boeing-Comac Aviation Energy Conservation and Emissions Reductions Technology Centre is a collaborative effort to

support commercial freight and passenger aviation growth by passenger aircraft manufacturers Commercial Aircraft Corporation of China and multinational aerospace company Boeing.

Both companies announced that the centre will first explore opportunities to refine waste cooking oil into sustainable aviation biofuel by identifying contaminants in the oil to

create processes that may treat and clean it for use as jet fuel.

‘Energy conservation and emission reduction is currently a focus of the global aviation sector and our collaboration with Boeing in this regard will have profound impacts in China as well as the world,’ Comac VP Shi Jianzhong was quoted as saying.

‘We wish to construct the new centre as a demonstrative

advanced technology centre and to make contributions to the development of the aviation industry in China and world with the concerted efforts of both sides.’

The centre is based at the Beijing Aeronautical Science and Technology Research Institute and will also work with other China-based institutes and universities to help expand on research projects. l

New biodiesel plans in Philippines Securas supportPhilippines-based bioenergy company Secura International (SIC) has signed a joint venture agreement with two cooperatives for the future production of biodiesel.

SIC will be working with the Higaonon Indi Tribes Cooperative and the

Tumanod Indi Napier Marketing Cooperative to create biodiesel from napier grass and other feedstocks.

Each company has to gather landowners with a minimum of 2,000 hectares to be able to produce enough materials for SIC to build a processing plant that converts biomass into biodiesel.

SIC president Danilo Manayaga says foreign investors will put up $35

million (€28.3 million) to build a plant in each 2,000-hectare area. SIC will allegedly pay landowners PP3,000 (€57) a month to grow feedstocks.

SIC will be exploring land possibilities in Mindanao provinces including Agusan del Sur, Compostela Valley, the Davao provinces, South and North Cotabato, Maguindanao, Sarangani, and Sultan Kudarat. l

REG-9000 biodiesel will soon be available at Maxum Petroleum’s Rancho Dominguez terminal



Helvetica Black and Helvetica Ultra light biofuels biodiesel news


Positive figures emerge from REG second quarter resultsThe Renewable Energy Group (REG) has posted several positive figures following its financial results for second quarter 2012.

REG posted $271.9 million (€220.4 million) revenue for the second quarter, an increase of 39% compared to revenues of $196.3 million for the same period in 2011. Second quarter 2012 adjusted EBITDA was $26.5 million, an increase of 3% compared to the same period in 2011. The overall balance sheet

rose from $75.2 million in March 2012 to $87.1 million at the close of the quarter.

Biodiesel production also rose by 10 million to 43 million gallons compared to this time last year, with REG also claiming to have sold 54 million gallons of biodiesel in the second quarter, which is an increase of 63% excluding tolled gallons.

REG put these biodiesel increases down to an increase in demand as petroleum-fuel refiners and importers raced to meet their renewable volume obligations to purchase biomass-based

diesel under the RFS2 programme (which specifies the consumption of 1 billion gallons of biodiesel in 2012, compared to 800 million in 2011).

‘As expected, our growth continued in our second quarter of 2012. We expanded our distribution capabilities and progressed in planned upgrades to our fleet of biorefineries,’ says REG president Daniel Oh. ‘We are optimistic about our strategic position, as we continue to execute our strategy of feedstock diversity and expand our domestic distribution footprint.’ l

BioJet and CERT form strategic business relationshipThe Council of Energy Resource Tribes (CERT) and BioJet International have formed a strategic alliance to further the development of biojet fuel.

BioJet International is a supply chain integrator in renewable jet fuel and related co-products which include green diesel for the aviation and related commercial transportation sectors.

In 2011 BioJet received a $1.2 billion (€970 million) funding facility commitment to capitalise its supply chain projects programme, which includes feedstock and refining projects, in addition

to investments and related strategic acquisitions.

Its biofuel operations include feedstock generation, technology, refining, logistics, sustainability certification, distribution and eventual end use by the aviation sector.

CERT is made up of 57 sovereign Indian tribes. Its members manage millions of acres of agricultural lands from which feedstock for biofuels may be grown.

Its members also collectively own and manage over 30% of the coal west of Mississippi, 40% of domestic uranium and 10% of known national oil and gas reserves in the US.

Speaking about the new business relationship, BioJet

CEO Mitch Hawkins says: ‘We envision the scope of our business relationship broadly with CERT to include at least $1 billion worth of joint projects over a 10-year period locating feedstock generation and refining operations to provide biofuels for commercial airlines and ground transportation at key locations throughout the western United States.’

David Lester, CERT executive director, says: ‘We believe our sovereign tribal members, together with BioJet, are well suited to lead one of the largest economic transitions in history: the transition from a fossil-based to a biofuel-based transportation sector, and on

a larger scale the transition to building a foundation for sustainable tribal communities and an infrastructure for United States energy independence.

‘This effort will be led for CERT by Robert Martin, former National Ombudsman of the US Environmental Protection Agency in Washington DC, as leader of the RES Alliance with which BioJet is a strategic partner. We are poised for a long transition period wherein biofuels gain large market share not only from fossil fuels but also from ethanol.’

CERT and BioJet expect to conclude a Memorandum of Agreement in the next 60 days to define the terms of their participation. l

Canadian plant opens on International Biodiesel Day Biodiesel producer Methes Energies Canada’s newly retrofitted biodiesel plant was officially opened on 10 August – International Biodiesel Day.

The Sombra, Ontario-based plant is able to produce 13 million gallons a year of biodiesel from mostly cooking oil and animal fat, although it is able to handle a variety of different feedstocks.

Methes Energies began retrofitting the plant after it acquired it a few years ago. It broke ground on the plant’s process facility in December after the Canadian government approved the application.

The plant also features technology for the recovery of methanol and continuous flow production.

Eighteen people already work at the plant, but this is expected to increase once the facility begins operating at fully capacity. l Methes Energies’ plant uses mostly cooking oil and animal fat as feedstocks





Positive figures emerge from REG second quarter results

Algae.Tec commissions algae-to-biofuels plant Algae company Algae.Tec officially opened its algae-to-biofuels facility Shoalhaven One on 2 August in New South Wales, Australia.

The facility showcases the company’s algae growth and harvesting system, which can then be used to produce jet fuel or diesel.

Algae.Tec has recently recruited biofuels and aviation fuels specialist engineer Colin McGregor as GM of project operations.

Algae.Tec executive chairman Roger Stroud said the company offers Australia energy security at a time when conventional fossil fuel companies are leaving

the local market: ‘We offer the promise of homegrown transport fuels (aviation and diesel), which is the number one energy security priority for countries like the US

and increasingly Australia.’Inspection, verification,

testing and certification services company SGS will now undertake the third party yield

validation process.The company will use

waste carbon dioxide from Manildra Group’s ethanol production process to help grow the algae. l

Sinopec company prepares to produce green jet fuel Sinopec Zhenhai Refining and Chemical Co., a unit of petroleum and petrochemical enterprise group China Petrochemical Corp. (Sinopec Group), is looking to convert waste cooking oil into jet fuel.

It has been investigating the potential of green jet fuel since 2009 and recently it successfully produced renewable aviation kerosene from used cooking oil (UCO).

Sinopec Zhenhai Refining and Chemical

says it is able to produce 20,000 tonnes of renewable aviation fuel from UCO, and hopes the government will certify its biojet fuel in January next year so it can begin supplying commercial airlines.

However, refining costs could significantly delay the development of this market, as it is between 1.5 to 2 times more expensive to refine UCO than the price of regular jet fuel today.

‘The cost of extracting biofuel from waste cooking oil and whether the fuel can be produced at a massive scale are two key factors that could hinder the market penetration of such fuel,’ Zou Jianjun, a

professor at the Civil Aviation Management Institute of China, was quoted as saying.

In addition, he said: ‘If the use of biofuel derived from gutter oil involved higher costs than the carbon tax, airlines will be reluctant to use the biofuel to power their flights.’

By 2020 it has been predicted that China will be consuming 12 million tonnes of renewable aviation fuel a year, around 30% of its projected total use.

Sinopec plans to be producing 60,000 tonnes a year of jatropha-based biojet by 2014, once it has built its new refinery in which to do so. l

Algae.Tec hopes to provide energy security in Australia

New research predicts nearby algae biofuels boomA new report conducted by energy research publisher SBI claims algae biofuels technologies should grow by double digits in the short-term.

The report states algae biofuels will post a compound annual growth rate of 43.1% and lead the market to $1.6 billion (€1.29 billion).

Investment by strategic partnerships and internal company revenue growth, which are slowly replacing government

grants, is a main reason for this predicted growth.‘Strategic partnerships from ExxonMobil, Chevron, BP,

Dow Chemical, Desmet Ballestra and many others will drive the investment needed to successfully commercialise algae biofuels,’ says SBI publisher Shelley Carr. ‘Private investment and venture capital will also provide funding through 2015.’

Algae biofuels is an attractive proposition to many as it provides a high yield per acre and also has a very low environmental impact. l





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The Conference will attract terminal and pipeline operators, as well as traders, analysts, regulators, renewable energy producers and technical expert. They will come together to discuss the key issues impacting the sector.

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AliphaJet moves biofuels project to next stage

Scottish farmers receive biofuels boost

After successful demonstration of its catalytic process for making jet fuel, diesel and high octane petrol from renewable energy sources, AliphaJet is taking the project to the next level.

AliphaJet used plant oil and animal fat to produce its biofuels and is now launching a programme to build a demonstration-scale facility with an annual capacity of 500,000 gallons a year, due for completion within a year. The company is seeking to

raise $4.5 million (€3.6 million) to instigate the facility’s construction and operation.

The company has also joined the Advanced Biofuels Association (ABFA).

‘We feel the ABFA is the premier industry advocacy organisation for companies ready to commercialise the next generation of advanced biofuels,’ says AliphaJet CEO Jack Oswald. ‘As we begin the commercial scale-up phase we chose to join an organisation representing our industry’s interests and working to make sure we have a sound national energy policy that includes advanced biofuels.’ l

The European Commission has given a boost to the Scottish rapeseed industry by accepting Scottish Quality Crops (SQC) into its sustainability certification scheme for biofuels.

This means SQC’s quality assurance schemes, which cover both oilseed and cereal crops throughout the country, have met sustainability criteria set by the EU renewable energy and fuel quality directives.

‘For us to gain official approval from the European Commission is both a relief and a boost with the oilseed

rape harvest only a few weeks away,’ says SQC chairman Douglas Morrision. ‘The decision will mean that crops with SQC accreditation will be able to access biofuels markets without any additional paperwork or third party audits.’

Rapeseed now produced on SQC-approved farms will now have better access into biofuels markets both at home and abroad.

‘Around 80% of the Scottish oilseed crop is exported and much of that is destined for processing into biodiesel in Germany and other member states,’ Morrison adds. ‘With harvest looming, this EU approval will help to sustain the ex-farm price for rapeseed in Scotland.’ l

news in briefUS produced 112 million gallons of biodiesel in June In June this year, 112 million gallons of biodiesel were produced throughout the US, the Environmental Protection Agency (EPA) reports, with a year-to-date production of 557 million gallons through the first six months of the year.

Biodiesel is classified under the EPA’s biomass-based diesel category in the Renewable Fuel Standard (RFS). The 117.5 million gallons of biomass-based diesel that was produced throughout June also includes renewable diesel.

Last year, the biodiesel industry set a new production record of nearly 1.1 billion gallons of biodiesel. l

New study shows increased belief in clean energy by US Defence DepartmentAccording to the study, the increased investment has risen from $400 million (€329.4 million) to $1.2 billion and is further projected to reach $10 billion by 2030. The department is set to focus on improving energy efficiency of its vehicles and at its bases while developing and testing advanced biofuels that can be used in existing aircraft and ships.

The state of Ohio may benefit from these results as it is home to blended aviation fuel research by the Air Force Research Laboratory and the University of Dayton Research, plus military and commercial jet engine testing facilities owned by General Electric which has pledged to buy five million gallons of biofuels annually from 2015 to use.

Pentagon officials have said that its priorities include reducing reliance on foreign countries for petroleum and reducing the defense budget’s exposure to oil price increases on the market. l

Seaweed biofuels set to come out of Brazil The Brazilian state of Pernambuco will be home to a proposed new biofuels plant that will use seaweed as its feedstock.

The $9.8 million (€7.9 million) plant will be constructed by Austrian-based company SAT at the site of a sugar cane plantation. It will produce up to 1.2 million litres of algae-based biofuels a year by using carbon dioxide created during ethanol production to help speed up the photosynthesis process in the seaweed.

‘For each litre of ethanol produced, one kilogram of CO2 is released in the atmosphere. We are going to take this to feed our plants,’ says head of SAT Brazilian projects Rafael Bianchini. ‘We’ll initially use 5% of the emissions created from the sugar cane ethanol process, but this will rise in the future.’

The project is still awaiting overall approval from Brazil’s National Petroleum Agency. l





ASB Biodiesel may expand biodiesel project in China

New analysis shows European biodiesel quandary

Hong Kong-based ASB Biodiesel, which is building a 100,000 tonne per year plant to produce biodiesel through processing city waste materials, claims it will aim to roll out the business to the mainland if the model proves successful.

The new factory, based at the Tseung Kwan O Industrial Estate, is slated for completion by the end of 2012 with commercial production due to start in the second quarter of 2013.

The private company will generate biodiesel from waste materials including animal fats, used cooking oil and grease trap oil, as well as palm fatty acid distillate

which a by-product of crude palm oil refining.

ASB CEO Anthony Dixon was quoted as saying that the

company currently uses nearly 15% of the total used cooking oil in the city which it buys from 1,800 local restaurants.

ASB Biodiesel is backed by the Middle East lender Al Salam Bank-Bahrain, as well as some regional investors. l

Two German researchers have re-ignited the debate that European-produced biodiesel does not meet the required sustainability targets claimed by Brussels.

Gernot Pehnet and Christoph Vietze of the Friedruch Schiller University claim eight of the ten tests on locally-produced rapeseed biodiesel failed to meet the promised 35% of greenhouse gas savings promised. In many cases the results recorded less than 30% in savings.

Europe’s Renewable Energy Directive (RED) requires greenhouse gas emissions from the production and use of biofuels for transport must be at least 35% lower than those from fossil fuels. The ambition is to get that figure up to 50% by 2017.

‘Our results indicate that the ‘sustainability’ of rapeseed biodiesel in the interpretation of RED is at best questionable and, in most scenarios, simply unjustifiable,’ says Pehnelt. ‘What we need is transparency. The European Commission hesitates to publish all the background data and promises

to come up with new calculations for individual biofuels but they have not come up with any values yet.’

The use of biodiesel in Europe is expected to double by 2020 to around 20 million tonnes of oil compared to the 10 million tonnes used in 2010.

This news will further provide Brussels with challenges as it looks to come up with the investment and technology needed to potentially move to other biodiesel feedstocks, such as weeds and waste stems, which would in turn relieve the pressure on grain supplies for food. l

Cooking oil from local restaurants is purchased by ASB

Argentina approach WTO about EU biodiesel banThe Argentinean government has begun to formally accuse the European Union of violating rules set by the World Trade Organisation in regard to biodiesel import restrictions from the South American nation.The move comes following a decision made by Spain this spring that required all imported biodiesel to come only from European producers. The decision effectively ended Argentina’s supply to the nation, of which it was number one in terms of volume delivered.

The Argentinean Foreign Ministry believes such moves by EU and other rich nations will relegate developing countries to the status of mere raw material providers instead of allowing them to be producers.

However Spain’s restriction only came into place after the Argentinean Foreign Ministry helped expropriate a 51% stake in oil and gas company YPF SA from Spanish oil producer Repsol SA. Repsol was seeking $10.5 billion (€8.4 billion) in compensation for the takeover. l





Five more biodiesel products pass ‘no harm’ tests

Aemetis to explore biojet fuel with Chevron technology

The successful completion of its sixth test period of ‘no harm’ tests for oxidation stabilisers and additional products has been announced by the Association Quality Management Biodiesel (AGQM).

The tests make sure that the chemical and physical properties in biodiesel are not affected by the use of oxidation stabilisers, there are no inadmissible reciprocal effects occurring with diesel fuel stabilisers and the additive has security datasheets.

These results mean biodiesel manufacturers can chose a total of 36 products from a total of 22 manufacturers as the following oxygen stabilisers passed the tests: Ensolant TB 1, Biostable 501, Baynox Solution 50%, INSA B30 NH and Agidol-12B.

The AGQM have said the next round of ‘no harm’ testing will begin in November. l

Biofuels and renewable chemicals company Aemetis plans to use technology developed by energy provider Chevron and construction company Chicago Bridge and Iron (CBI) to explore jet fuel and diesel production.

The technology, provided by Chevron and CBI joint venture Chevron Lummus Global, uses water to convert plant oils into products that are similar to petroleum crude and can be refined into fuel.

‘By licensing our technology Aemetis hopes to accelerate its efforts to commercialise drop-in renewable jet fuel and diesel. These differ from competing biofuels because they may be used without blending standard, petroleum-based products,’ says Chevron Lummus MD Leon de Bruyn.

Aemetis will pay a $0.10 (€0.07) a gallon royalty fee with certain decreases based on the volume of fuel produced. l

Potential loss of license for biofuels producer

New biodiesel plans gather speed in Philippines

Matrix algae research boost

Biofuels producer Aviam is running the risk of losing its license to plant jatropha shrubs over 10,000 hectares in the north of Nampula, Mozambique.

Aviam, a joint venture formed by Mozambican and Italian interests, was due to invest $20 million (€16.4 million) in the jatropha plantation. But, according to district notices, the company is not adhering to agreed time schedules.

District administrator Daniel Chapo was quoted as saying: ‘When a project is submitted to the government’s Investment Promotion Centre and to the Office of Special Development Economic Zones, it must be accompanied by a plan which should be complied with scrupulously. This isn’t happening with Aviam. There are a series of things that are not happening within the established deadlines.’

To date only 150 hectares of jatropha have been planted and there is no sign of the proposed factory to manufacture the biodiesel.

‘What we have to do now is inform the government that the situation on the ground is not meeting our expectations,’ adds Chapo. l

Philippines-based bioenergy company Secura International Corporation (SIC) has signed a joint venture agreement with two cooperatives for the future production of biodiesel.

SIC will be working with the Higaonon Indi Tribes Cooperative and the Tumanod Indi Napier Marketing Cooperative to create biodiesel from napier grass and other feedstocks.

Each company has to gather landowners with a minimum of 2,000

hectares to be able to produce enough materials for SIC to build a processing plant that converts biomass into biodiesel.

SIC president Danilo Manayaga says foreign investors will put up $35 million (€28.3 million) to put up a plant in each 2,000-hectare area. SIC will allegedly pay landowners PP3,000 (€57) a month to grow feedstocks.

SIC will be exploring land possibilities in Mindanao provinces including Agusan del Sur, Compostela Valley, the Davao provinces, South and North Cotabato, Maguindanao, Sarangani, and Sultan Kudarat. l

Biotechnology business Matrix Genetics (MG) will pursue developing biofuels-from-algae after receiving investment from Avista Corp.

The value of the investment has not been disclosed but MG CEO Margaret McCormick says it will allow the Seattle-based biotech company to spin out from agricultural biotech firm Targeted Growth, which owns the majority of MG,

and continue research far into 2013.‘It gives us plenty of time to develop our

story and collaborations in place to raise a large amount of financing in probably the next 12 to 18 months,’ she adds.

Chief strategy officer at Avista, Roger Woodworth, believes the venture-capital arm of his energy company financed MG because it had ‘an established list of patents and a reputable research team developing new strains of blue-green algae for use as a substitute to fossil fuels and petrochemicals’. l





LS9 announces CFO and appoints new chairman LS9, a technology company involved in the development of renewable and sustainable fuels and chemicals, has hired Jon Foster as the company’s chief financial officer (CFO).

Foster will be responsible for managing the company’s financial and related functions. During the past 14 years Foster has held a number of leadership roles, including CFO and executive VP of corporate development at software company Atempo, CFO of Keymage and VP of corporate development at 8x8.

He is currently on the Board of Directors of the California Clean Energy Fund and on the National Advisory Council for Environmental Entrepreneurs.

Foster holds a JD from Harvard Law School and received his BS degree in mechanical engineering from Yale University.

In similar news, LS9’s board of directors has appointed Tjerk de Ruiter to its board and also elected him as its chairman. Noubar Afeyan has stepped down as chairman, but will remain a member of the board.

de Ruiter spent 12 years at Danisco, where he served his last five years as CEO of the company’s Genencor division and a member of the Danisco executive committee. Prior to becoming CEO of

Genencor, de Ruiter worked as chief operating officer of cultures, specialities and flavours at Danisco.

He received his BS degree in business administration from the University Nijenrode in Breukelen, the Netherlands and his Masters of international management from the American Graduate School of International Management, Thunderbird.

Hawkins elected chair of the board of RSB The chairman of BioJet International, Mitch Hawkins, has been elected chair of the board of the Roundtable on Sustainable Biofuels (RSB) Services Foundation.

The RSB Services Foundation is the implementing entity of the RSB and has officially started operations as an independent entity. The US-based RSB Services Foundation was formed to manage a broad range of operational activities on behalf of the RSB Standards Body, including the certification process and oversight of licensing and use of the trademark.

BioJet International is involved across the entire renewable jet fuel supply chain, including feedstock generation, refining, logistics, sustainability certification, distribution and end-use by the aviation sector. l

People on the move

New COO for Woodland Biofuels

US-based cellulosic ethanol company Woodland

Biofuels has appointed William White as the

company’s chief operating officer (COO).

White was formerly the president of DuPont Canada;

he has spent over 30 years with the company,

working in operations, marketing, engineering and

leadership roles. Woodland Biofuels is presently building a

large-scale biomass-to-ethanol demo plant in

Sarnia, Ontario, which is on schedule for

completion later this year.



Helvetica Black and Helvetica Ultra lightincident report biofuels


A summary of the recent major explosions, fires and leaks in the biofuels industry

Date Location Company Incident information

24/08/12 Harvey, Los Angeles, US Gold Leaf Energy

05/08/12 Montana, US

30/07/12 San Francisco, US Sirona Fuels

One man died and another was injured after an explosion occurred after mixing together chemicals at the Gold Leaf Energy plant.

The two colleagues were reportedly mixing sulphuric acid and methanol.

The explosion also left two nearby vehicles ablaze and damaged a warehouse.

Authorities have not released the identity of the man who died, but say that he is from Gonzalez.

A train filled with ethanol exploded after it derailed in eastern Montana. The explosion occurred after at least eight railcars caught fire.

A total 14 tankers were carrying ethanol from Aberdeen when the incident happened. The train was 106 railcars long in total.

A collection truck belonging to biodiesel producer Sirona Fuels spilled 100 gallons of cooking oil on to the road.

Fire crews and Sirona’s own clean-up team responded to the spill, closing sewer grates and covering the oil with cat litter.

Sirona said the oil managed to spill after the container fell off the back of a truck around 3pm.



Helvetica Black and Helvetica Ultra light biofuels technology news


Solix BioSystems to ramp up algae technology with £20m funding Algae cultivation technology provider Solix BioSystems has finalised a £20 million (€25 million) round of funding and can now begin building its inaugural commercial plant.

The new large-scale plant, the location for which has not yet been decided, will grow algae biomass that can then be used for the production of biofuels and animal feed.

Solix already operates a demonstration-scale plant that develops around 2,000 gallons a year of algae. The completion of this funding round means Solix can now scale up its technology – a photo bioreactor fitted with Solix Lumian panels that encourages algae growth by maximising its exposure to light and CO2.

Solix says it completed the new round of funding with help from Southern Ute Altnerative Energy, Bohemian Ventures, and existing investor I2BF. l

New patent granted for biofuels creation in WisconsinThe Wisconsin Institute for Sustainability Technology (WIST) has been issued a patent to create biofuels from plant fibre.

It is WIST’s first patent and will allow for a process that can create biofuels and other products from cellulosic plant

material including agricultural residues like corn stover or plants grown specifically for fuel production, such as hardwood and softwood trees.

‘This gives us an economically viable way to use grass, trees or wood waste to make renewable fuels and chemicals,’ says Eric Singsaas, associate professor of biology at University of

Wisconsin-Stevens Point and co-inventor of the process. ‘It also gives us a method to commercialise some of the work we’ve done at the university.’

The patent allegedly protects a method that uses an aqueous solvent to separate biomass into pure cellulose and lignin, the substance that gives

woody biomass its rigidity. The lignin-solvent mixture can then be separated from the water to form a high-energy-density fuel that can be used independently or combined with biodiesel.

Singsaas adds that the process is also a key step in making other high-value bioproducts, not just for creating biofuels. l

Codexis signs new biofuels enzyme agreement with ShellProduction developer of biofuels and bio-based chemicals Codexis has signed an Exclusive Negotiation Agreement with Shell.

Shell has agreed to negotiate exclusively with Codexis and grant the company certain rights and licenses in the biofuels field to develop and sell cellulase enzymes to third parties on a worldwide basis, except in Brazil. Codexis has exclusive rights to commercialise its cellulase enzyme technology in all other fields.

‘Currently, our cellulase enzyme technology can only be

commercialised in the advanced biofuels field through Shell and its affiliates. If we finalise a new agreement with Shell as we currently anticipate, the rest of the world’s second generation biofuels producers will now also be available as target customers for our technology,’ says Codexis CEO John Nicols.

Codexis and Shell also agreed under the ENA that, beginning at the end of August, Shell can elect to reduce between 13 and 48 full-time employee equivalents under their Collaborative Research Agreement on one day notice. Previously, the required notice period for this type of reduction was 90 days. l

Evonik and BioAmber spark catalyst for partnershipEvonik Industries’ catalysts business line has formed a long-term agreement with US-based bio-succinic acid manufacturer BioAmber for the development and manufacturing of catalysts for making BDO (1,4- butanediol), THF (tetrahydrofuran) and GBL (gamma-butyrolactone) from bio-based succinic acid.

BDO, THF and GBL are large volume industrial chemicals used in a range of applications including polymers,

paints, adhesives and solvents. Together Evonik and BioAmber have

started to develop a new generation of BDO catalysts. ‘Through our collaboration with Evonik, we have secured the expertise and capabilities we need to rapidly bring competitive BDO and THF technology to market,’ says BioAmber CEO Jean-Francois Huc.

BioAmber operates a bio-succinic acid production plant in Pomacle, France with a 350,000-litre commercial-scale fermenter. And in Sarnia, Canada, in a joint venture with Mitsui and Co., the company has broken ground on a 17,000-tonne bio-succinic acid plant that

will be operational in late 2013. It plans to expand capacity to 34,000 tonnes and add 23,000 tonnes of BDO in late 2014.

Senior VP and head of Evonik’s catalysts business line Wilfried Eul says: ‘Chemicals from renewable feedstock for our daily life products become increasingly important as replacements for crude oil-based products. The manufacturing of renewable chemicals very often entails biotechnological steps and catalytic conversion steps. Catalysts are not off-the-rack products; they need to be specially tailored to every individual synthesis reaction and process condition.’ l



Helvetica Black and Helvetica Ultra lighttechnology news biofuels


Amyris hit stage one goals during biofene creationRenewable products company Amyris, in collaboration with its partners as part of the National Advanced Biofuels Consortium (NABC), has produced renewable farnesene (biofene) via fermenting lingocellulosic sugars.

Amyris is leading the NABC’s Fermentation of Lignocellulosic Sugars (FLS) strategy and has aimed to merge its isoprenoid-yeast platform with the ability to use cellulosic sugars derived from non-food biomass.

Farnesene is a hydrocarbon that can be hydrogenated to a diesel or jet fuel component or used as a

chemical precursor in a wide variety of applications.

Amyris met FLS Stage One goals within the one-year time frame by using Microbiogen’s non-GMO S. cerevisiae strains that were previously evolved for efficient xylose consumption and tolerance to traditional hydrolysate inhibitors as base strains for further engineering.

Based on the success of producing farnesene from a mixed glucose and xylose sugar stream, Amyris was selected to continue onto Stage Two, which will continue through to September 2013.

The other partners in the NABC are Catchlight Energy, Iowa State University, Washington State University and NREL. l

Yeast technology deal struck for bioethanol useBioethanol yeast developing company Lesaffre, and its business unit Fermentis, has acquired Xylose Isomerase technology from yeast technology provider Butalco.

‘This acquisition, combined with our own intellectual property, allows us to finalise the construction of an industrial

yeast strain suitable for second generation ethanol,’ says Fermentis general manager Didier Masy.

According to Butalco, the Xylose Isomerase technology enables an improved production of lignocellulosic biofuels as the enzyme is highly active in yeast cells and, in contrast to other xylose technologies, is not inhibited by fermentation side products like xylitol.

‘This sale of our technology is an important milestone as it enables us to invest more resources in our other internal research and development programmes,’ adds Butalco CEO Gunter Festel.

The deal included the granting of a license to Butalco, with the right to sublicense to third parties, for the use of the Xylose Isomerase technology for the production of biobutanol. l

New MoU signed for butadiene production from renewable feedstocksA Memorandum of Understanding has been signed by three companies to establish a partnership to enable production of butadiene from renewable feedstocks.

The joint venture is between elastomer producer Versalis, renewable chemical technology provider Genomatica and third generation integrated biorefineries pioneer Novamont.

Versalis will hold a majority interest in the joint venture holding company, with the ultimate aim being to develop an ‘end-to-end’ process and build the first commercial plants using the process technology upon project success.

Butadiene is a raw material used in footwear, plastics, asphalt modifiers, additives for lubricating oil, pipes, building components and latex.

‘This is a great opportunity to apply our concept of third generation integrated biorefineries to a well-known chemical like butadiene, applying new biotechnological and chemical processes to local biomass for an innovative industry at local level, thereby improving environmental, economical and social sustainability,’ says Novamont CEO Catia Bastioli. ‘And the ability for on-purpose production will make it easier to adjust supply to meet local market demand while staying close to a low volatility feedstock and reducing environmental footprint.’ l

New KMX plant to demonstrate energy efficient biofuels productionA new pilot plant in Ontario, Canada is due to demonstrate how spent solvent and wastewater converter KMX’s technology can reduce operational costs for biofuels and green chemical manufacturers.

KMX believes pathways to cellulosic ethanol and biobutanol can be aided by its hydrophobic and hydrophilic membrane technology. The pilot plant will show how it can capture and dehydrate small volumes of post-fermented alcohol molecules in the fermentation brew.

Financial implications of the project were not divulged at the time of writing.

‘We want to enable companies in the biofuels, chemicals and plastics space to significantly reduce costs and complexity,’ says KMX CEO Isaac Gaon. ‘Past objections to pervaporation technology that offered energy savings of 50% or more, but which came at a higher capital cost compared to conventional thermal technologies, is no longer the case. The capital cost of pervaporation solutions today can be either similar or often less than thermal systems on a fully installed basis.’

The pilot is also set to demonstrate KMX’s hydrolysis process and how hydrolysed sugar can be taken to a pre-crystalline state by using a sugar enrichment process. l



Helvetica Black and Helvetica Ultra light biofuels regulations


UK government consultation sparks cause for concernI

n the rush towards the Olympic Park and London’s green areas to catch some summer sun, precious few

people caught a glimpse of a Cabinet Office announcement which will have important ramifications for all companies in the renewables and biofuels industry looking to engage and influence the government on energy policy.

What this announcement said was that the government would be changing the way in which it conducted public consultations on policy – most importantly removing the long standing commitment to consultations lasting 12 weeks. Instead the Cabinet Office said it would shorten and streamline the process, limiting – or even removing entirely – the length of consultations where ‘engagement has already taken place’; all the while as departments like the Department of Energy and Climate Change are being encouraged to be more selective and limit the number of organisations able to engage with consultations.

There are important ramifications for this as it means the UK government will have the ability to make considerable alterations to policy with minimal consultation. This could have serious consequences for the commercial viability of the renewables sector.

For example, under the new regime, reductions in the Renewables Obligation branding, changes to Feed-in Tariffs and removing some technologies from eligibility for schemes such as the

Renewable Heat Incentive could be on the table and subject to change not only at short notice, but without listening to the views of the companies that are most likely to be affected.

The Renewable Transport Fuels Obligation, which is due for a further round of reform in 2014 following EU concerns over stability, could be similarly affected.

Set in this context, it was

regrettable that officials made this announcement on the final day before the House of Commons rose for its recess, thereby effectively preventing scrutiny on a decision that would fundamentally change the process by which public policy is developed.

That there has been a muted reaction from the renewables and biofuels industries on this issue highlights the low-key nature of the government’s announcement, but this is a change that should be of enormous concern to businesses within these sectors, which are exposed to changes in government regulation, and in which investment and project finance are difficult to come by as uncertainty

over future policy reigns. This, despite the pledge

made by deputy prime minister Nick Clegg in early August, when he acknowledged that inconsistency from the government had hindered the renewables sector and promised that policy would henceforth be more predictable.

Sadly, if the changes to how consultations are carried out are allowed to stand,

Clegg’s pledge is likely to be more difficult to achieve. Commitments to deregulation and a low carbon economy are not reflected in what is seen to be short-term and unpredictable policymaking. Instead, there is the very real possibility that we will be left with a more arbitrary system, in which the length of consultations is based on the subjective views of politicians and civil servants. This in turn, creates the danger that the drawbridge of industry engagement on policy could be pulled up, with businesses having little time to react to consultations or make substantive contributions.

The irony is that this decision is as much to the government’s detriment as it is to industry,

as the engagement of industry professionals in policy development is a good thing. It is industry professionals, rather than career civil servants who are likely to have a better understanding of the ramifications of policy change – and by effectively preventing industries from commenting on the decisions that affect them, the government will miss out on advice and even better solutions than those posed by officials.

So, what should the UK government do? Quite simply, the old system was not broken and did not require fixing – and what ministers should do is to return to the tried and tested commitment to a minimum of 12 weeks for public consultations – ensuring engagement from as diverse a range of stakeholders as possible.

Anything else means that the government will not, and cannot, receive and draw upon the best possible advice from those who have been on the frontline of their industries and understand the practical consequences of government policy. The motivation of the Cabinet Office to push policy development forward is laudable, but rushing development and implementation serves no-one’s best interests, and is instead a recipe for continued last minute policy changes and reversals that have bedevilled the renewables sector in recent months. l

For more information: This article was written by Carl Thomson, a senior consultant at The Whitehouse Consultancy, www.whitehouseconsulting.co.uk

‘The Renewable Transport Fuels Obligation, which is due for a further round of reform in 2014 following

EU concerns over stability, could be similarly affected’



Helvetica Black and Helvetica Ultra lightregulations biofuels


Standing up for the under-fire RFST

he US Renewable Fuels Standard (RFS) has created multiple headlines

in recent weeks as summer droughts and ambitious targets have ruffled the feathers of many different industries and even Congress.

The Advanced Ethanol Council (AEC) and the Renewable Fuels Association (RFA) firstly slammed calls by the API to re-work the current RFS programme as ‘backwards’.

API downstream group director Robert Greco stated in August that the programme, which ensures transportation fuel sold in the US has a minimum volume of renewable fuel, seemed to be failing and needs to be re-addressed.

‘The RFS programme has been the most important mechanism for bringing biofuels into our nation’s energy mix, but it is being undermined by impractical requirements and bad agency decisions,’ Greco said in a statement.

Bizarre requirements

API, along with some fuel retailers and auto manufacturers, was strongly opposed to the rise of ethanol-blended fuel from 10% to 15% by the EPA this summer, although only certain motor vehicles made from 2001 onwards are eligible to inject it.

‘The EPA approved E15 blends even though it knew, or should have known, of the existence of compatibility problems and that engine testing was ongoing,’ Greco added, before mentioning that fully implementing the RFS would raise the per gallon

ethanol concentration in petrol over an average of 20%.

The original RFS mandate required 7.5 billion gallons of renewable fuel to be blended into petrol by this year but, as the EPA correctly points out, the Energy Independence and Security Act expanded that volume to be 36 billion gallons across a range of fuels each with their own unique volume requirements, including diesel, by 2022.

The API is also concerned about what it called a ‘bizarre EPA requirement’ that refiners blend cellulosic ethanol into petrol despite the fact that the renewable fuel is not commercially produced.

‘The EPA has ruled that refiners must purchase credits for this non-existent fuel which seems regulatory absurd. It drives up costs and does nothing to increase use of biofuels, it may even undermine public confidence in the RFS programme itself,’ Greco added.

However executive director of the AEC, Brooke Coleman, hit back and claimed: ‘It is the API that has it backwards.’

‘The problem is our dependence on foreign oil which, in turn, costs US consumers billions of dollars

and comes at great cost to the economy and the environment. The RFS, which drives American-made fuel into the marketplace, is part of the solution,’ he said.

Coleman believes nobody should be shocked that the oil industry prefers to maintain its stranglehold on US consumers and judge the RFS as a threat to that dynamic.

‘This so-called report is just a basic regurgitation of

the well-worn talking points API has used for years to try to weaken a landmark piece of legislation that threatens to bring consumer choice to the gas pump.

‘The bottom line is API is concerned about the upward trajectory of the US renewable fuels industry and is trying to spin successes as failures. Nothing has changed.’

Dry summer

Another person disappointed with the attacks on the RFS is Geoff Cooper, VP for research and analysis at the RFA. He believes the above debate, coupled with a drought that gripped the US Midwest this summer, is another tactic in a campaign being mounted and funded by the petroleum

industry to seek congressional repeal of the RFS.

Prompted by a smaller corn crop harvest caused by the hottest July on record since 1936 (the US Agricultural Department estimated a 13% drop to 10.8 billion bushels – a six-year low), many livestock producers, members of Congress from both political parties in both chambers, and the UN called for a temporary suspension of RFS ethanol mandate.

‘While the drought has allowed the livestock community to take a prominent role in denouncing domestic ethanol production, many petroleum interests are still committed to seeking an end to America’s use of renewable fuels,’ said Cooper.

And the RFA believes refiners could still meet biofuel targets by using current stockpiles or excess Renewable Identification Numbers, which Greco earlier bemoaned, that can be submitted in lieu of actual blended gallons of ethanol to meet the RFS government’s mandate.

‘The RFS has been the most successful energy initiative ever undertaken to directly replace fossil fuels in American petrol tanks. It is creating domestic jobs, cleaning the environment, and reducing America’s dependence on oil – a fact not lost on API,’ added Cooper.

Waiving goodbye to investment?

At the time of writing, many members of US Congress, along with many livestock and food crop associations, were calling for the EPA to

‘The bottom line is API is concerned about the upward trajectory of the US renewable fuels industry and is trying to spin successes as failures’

Brooke Coleman, executive director, Advanced Ethanol Council





waive the RFS mandates in view of the lower number of corn bushels available.

Pressure is also on corn ethanol producers too however, who are only producing around 800,000 barrels a day – a two-year low. Executive VP of BIO’s Industrial and Environmental Section, Brent Erickson, believes that any such waiver would damage the progress made by companies adhering to the RFS.

‘Companies across the US have made substantial long-term investments in bringing advanced biofuel research and development to the point where it is beginning to make real contributions to US energy security,’ he said. ‘These advanced biofuel and biotechnology companies

rely on the federal RFS to guarantee that our fuel market will be open to domestic alternatives to foreign oil.’

Erickson feels any interruption to biofuels

production at this high level would leave potentially long-term damaging effects that would ripple far into the future.

‘The US is at a critical juncture in the development

of advanced biofuels and a waiver of the RFS is unlikely to provide relief from this year’s drought, but it could extend by several years the drought in investment capital for new technologies such as advanced biofuels if passed,’ he continued.

‘The RFS is a complex policy, but it provides multiple options to the fuel distributors obligated to make alternatives to foreign oil available to US consumers. A change to the policy in any given year will impact the production and use of renewable fuels for multiple years, which can disrupt the progress that has been made. A closing of the market for alternative fuels will chill investments in advanced biofuels.’ l

‘A waiver of the RFS is unlikely to provide relief from this

year’s drought, but it could extend by several years the

drought in investment capital for new technologies such

as advanced biofuels’Brent Erickson, executive VP, BIO’s

Industrial and Environmental Section

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It took unleaded petrol 10 years to become the standard in Germany, so the country’s uptake may not be as slow as it first seems. However, with only 33% of consumers trying E10, something still needs to be done to accelerate market penetration

Two thirds of German motorists still shun E10A

survey of German motorists conducted over the summer by ethanol association

BDBE shows that most are still hesitant when it comes to using petrol-ethanol blend Super E10.

Seven out of 10 motorists interviewed still fear Super E10 will damage their engines and only 33% have ever filled their cars with it compared with using the older Super E5 fuel option.

‘If at least 90% of German petrol engines are suitable for Super E10, but two-thirds of car users still doubt this, then it is up to the car makers to inform their customers at the filling stations and the car repair shops and not simply put out general information,’ says BDBE MD Dietrich Klein.

Despite all petrol stations stocking a form of Super E10 since October 2011 (approximately 14,700 stations in total) it is the south of the country has embraced the new blend more than their northern neighbours, with 38% of petrol cars using the higher blend compared to the north’s 26%.

‘Uptake of Super E10 is still better than the uptake of unleaded petrol when it was introduced in the 1980s however,’ adds Klein. ‘E10 has a market share of around 13% after one year of availability, compared to a

10% market share of unleaded petrol two years after its introduction. It took unleaded petrol 10 years to become the standard in Germany.’

Getting the message across

However the European Renewable Ethanol Association (ePure) thinks that if E10 has been introduced to the German consumers the same way the E5 version was then it might be more popular than it currently is.

‘There was no public discussion on E5, no questions were asked and people were using ethanol in petrol without even knowing,’ says ePure’s secretary general Rob Vierhout, who agrees with Klein that fuel providers and car manufacturers need to do more to promote E10 benefits.

Most marketing people would agree that consumers will stick with what they know if they are happy with a product, even if something new on the market can boast better attributes or cheaper prices.

‘It all boils down to properly informing the car driver,’ Vierhout continues. ‘It is understandable that any driver doesn’t want to damage their car engine by using the wrong fuel, so both fuel and car companies need to thoroughly inform the fuel

consumer through labelling and media campaigns.’

However Vierhout and his colleagues do believe that the results of BDBE’s survey did actually carry a positive message.

‘E10 suffered a difficult start in Germany a few years ago and the negative media coverage it got could have made us believe it would never take off. What we see now is that the opposite is happening ,’ he explains. ‘The results of the survey are promising as the percentage of people using Super E10 has risen from 24% to 33%. This is an upward trend which will certainly continue.’

As consumers begin to learn for themselves that no harm comes to their engines, plus no negative social impacts can be proven and the price at the pump stays competitive alongside comparable fuels, ePURE says there would be ‘no reasons to believe that E10 will not have a bright future in Germany’.

Vierhout hopes other European countries can take heart from the progression France has made as it introduced E10 fuel in back in 2009: ‘The arrival of E10 into France was smooth and now, three years after its introduction, the market share is at 23.5%. That translated into a 14% increase after the first one and half years.’

The BDBE believes it will perhaps take three years until Super E10 will be regarded as the standard petrol blend in Germany and ePure thinks that the EU-wide introduction of E10 is one of the most important parts of helping the continent achieve its ambitious biofuel targets.

Raising the standard

‘It is obvious the EU cannot achieve an overall 10% renewable energy target with only a 5% blend in petrol,’ says Vierhout. ‘The EU law on fuel quality foresees the use of up to 10% of ethanol in petrol. The European Standardisation body agreed on an E10 standard and this will be adopted in November 2012.’

That standard will be published in every EU member state within six months of that release date, so ePURE says there will no longer be an argument that the use of E10 is not possible because of a lacking standard.

‘The use of E10 in the two biggest EU fuel markets, Germany and France, will undoubtedly pave the way for its use on a wider scale’ Vierhout concludes. ‘The experience in those two countries alone will be extremely useful for other EU member states to learn from when they have to introduce it.’ l





The European Renewable Ethanol Association has given up hope on a full review of the Energy Taxation Directive. Now it is hoping for small changes, which may just help petrol and ethanol become more competitive across the EU

Wasted opportunity?Anyone thinking the

adoption of the Energy Taxation review would be

an easy ride was being extremely optimistic.

And those still believing a step change in energy taxation is still possible are just naïve. All that is achievable at this stage of negotiations is a ‘review-light’.

It all began with a Commission proposal that aimed at bringing Energy Taxation in line with the EU’s climate and energy goals, especially with regards to the emissions trading system.

For the ethanol industry this proposal contained some good elements that would have brightened the prospects for the market development in a structural manner.1

A little over a year later the original proposal is dead, shot to pieces by the member states. Their main motive was the fear of having to increase taxes, especially on diesel for cars.

The idea to keep the ratio between the different energy products at the same level above the minimum level has been heavily criticised right from the start. This so-called proportionality principle would have led to comparatively higher taxes on diesel than on petrol on a volume basis.

This is obviously not to the liking of the car industry, particularly the German manufacturers that rely heavily on modern diesel technology to achieve their CO2 reduction targets. Germany was therefore one of the first member states that opened fire on the Commission proposal, quickly

seconded by the UK (that opposes EU interference in taxation matters altogether) and Luxemburg (that makes a fortune through low fuel taxes).

But relying on diesel is pretty short-sighted. The EU is already a net importer of diesel from outside the EU while it is a net exporter of petrol.

In 2010 the EU imported 33 million tonnes of diesel, over 50% coming from Russia. About the same amount of petrol has been exported with over 60% being shipped to the US.2 This steadily growing petrol surplus is aggravated by the continuing dieselisation of the European car fleet.

The costs of meeting higher diesel demand are increasing in tandem with the associated levels of greenhouse gas (GHG) emissions. Diesel is becoming more expensive and polluting to produce, which in theory should make the fuel less attractive. But as long as the fuel taxation straightens out these effects, the driving public is still attracted by the cheaper price at the pump. And while saving money the drivers also soothe their environmental conscience by wrongly believing that, thanks to the greater fuel efficiency of their cars, they save GHG emissions. Clearly more and better education is needed in this respect.

But how long will Europe be able to afford its diesel dependency, which is highly unsustainable both economically and environmentally? Especially in times of financial crisis one would believe that

member states were looking for ways of raising taxes in a fair and targeted manner.

Time for a rethink

Member states have to work out how to raise funds in a clever way and also fulfil CO2 emission reduction target set at 95g for 2020. Fossil diesel is bound to become more costly and biodiesel will not be able to fill the structural diesel deficit in the long run. Feedstock options are as limited as its blending options. Everything above B7 is again not to the liking of the car industry. So what do the car manufacturers have up their sleeves to achieve their target? The politically correct answer is electro mobility. However many question marks accompany this statement. The price of the vehicles is prohibitively high and also the feel and practicality of electric vehicles is far removed from the vehicles consumers are used to.

It would not come as a big surprise if consumer acceptance stayed low and the car industry cannot expect any support from their usual ally the oil industry for obvious reasons.

So would it not be a better strategy to face the constraints of diesel availability and prepare for a shift in the fuel market? High octane-rated ethanol fuel with improved combustion characteristics could bring the car industry a long way to achieving the targets. But favourable framework conditions must be set in place rather soon than later.

One opportunity knocked in the form of the review of the Energy Taxation Directive, but it has not been seized.

A true level-playing field between diesel and petrol on the one hand and between biofuels and fossil fuels on the other hand is now out of reach. A light version, however, entailing only a review of the minimum rates, is still possible.

What the ethanol industry hopes for is an increased minimum rate on diesel which would take some pressure off member states to engage in a race to the bottom. Eventually petrol could become a bit more competitive again across Europe’s filling stations. Also a structural tax support for the introduction of ethanol in low, mid and high blends should be included in the review. Experience shows that leaving this up to the member states does not always translate into a fair treatment. More importantly cellulosic ethanol should receive a special boost in order to be deployed across Europe.

Raising taxes is never popular and having the EU meddling in taxation issues is even less so. But driving full speed into a dead end cannot be in the interest of the public at large either. The political U-turn is not in sight just yet. l

For more information: This article was written by Gloria Gaupmann, energy policy and environmental affairs director at ePURE, www.epure.org

Reference1 For more detailed information see ePURE contribution on this matter in BFI June 2011.2 Europia 2011 annual report, page 80; http://www.europia.com/content/default.asp?PageID=398





The year got off to a flying start for US biodiesel producers with a 78.5% increase over the first quarter of 2011. Since then however, feedstock costs, droughts, the ongoing RIN scandal and regulatory uncertainty have started taking their toll

US biodiesel’s summer of discontent?Farmers in the US

endured the worst drought in a generation this past summer,

and all-time record high temperatures during July that withered crops and pushed up feedstock costs for the US biodiesel industry, which primarily uses soyabean oil.

The higher costs for the industry’s primary raw material came alongside sluggish demand amid weak economic growth in the US to pressure producer margins after good returns during the second quarter.

Add to this deteriorating fundamentals cases of fraud involving the compliance credits used in the Renewable Fuels Standard (RFS) programme. Not to mention the RFS itself was challenged due to concern of the effects of drought on feedstock for the livestock industry. The combination produced uncertainty for industry participants, while small producers struggled desperately.

The jury has yet to return the verdict on whether the rough and tumble summer will evolve into happier times, as with Shakespeare’s Richard II’s ‘winter of our discontent’. However, there were positive developments for the industry, including ongoing expansion, a potential return of a tax credit for blending biodiesel, a change in a Texas rule, and upcoming mandate for demand in New York City.

Biodiesel producers cut back production during

the summer according to industry sources, with reliable data showing this change lagging. That did follow a productive first half of the year, when output at US biodiesel plants totalled 557 million gallons according to the EPA, compared with a 1 billion gallon mandate for biomass-based diesel in 2012.

Under the RFS, biomass-based diesel counts for 1.5 renewable

identification numbers (RINs), the credits used by obligated parties—refiners, blenders and importers—to show compliance with the mandate. This means there were 836 million RINs generated from January to June to satisfy the 1 billion gallon mandate, although an obligated party can carry over into a new year 20% of a previous year’s RINs.

The most recent data available from the Energy

Information Administration shows biodiesel sales during the first five months of 2012 outpacing the previous year by 179 million gallons or 65%. Straight B100 sales totalled 317 million gallons from January through May while biodiesel sold in blended form was 137 million gallons for overall sales of 454 million gallons.

The period proved profitable for the Renewable Energy Group (REG), the largest biodiesel producer in the US, with the Ames, Iowa-based company reporting a 63% year-on-year increase in its biodiesel sales for the second quarter of 54 million gallons. Revenue was up 39% at $272 million (€221 million).

In announcing those results in August, Daniel Oh, REG president and CEO, was less sanguine about profit for the upcoming months, pointing to a host of uncertainties facing the industry including the consequences of the drought on this year’s crops. Oh said the drought would mean livestock herds are culled with higher feed costs to meat producers.

‘The increased slaughter rate may cause upward pressure on prices with margin compression potential’ for biodiesel, he comments.

Nearest delivered soyabean futures rallied to an all-time high of $17.776 bushel in late July in trading on the Chicago Board of Trade, with the commodity remaining in backwardation – a bullish market condition in which the

Chicago spot biodiesel and spot ULSD

Houston spot biodiesel, Gulf Coast spot ULSD





nearest delivered contract trades at a premium to deferred deliveries. Soyabean meal is also in backwardation.

Soyabean oil futures gained this summer, but broke loose from the traditional pattern

of mimicking the price move in soyabean futures, trading at a discount to soyabeans since early May. Soyabean oil futures are in contango, a market structure that suggests ample near-term supply.

The reason for the market disconnect has to do with tight supply for beans and bean meal and strong demand, including export demand from China that needs a lot of those two products. In this climate, ‘bean oil is an afterthought,’ explains an ag analyst.

Nonetheless, feedstock costs are high while demand for distillate fuels continues to trail year-ago and historical averages. The EIA shows distillate demand in 2012 through early August down 2.6% versus the corresponding year-ago timeline, while holding below the five-year average for roughly 85% of the year.

Demand for diesel in the US correlates closely with the country’s economic performance, which has been weak. After a 4.1% annualised growth rate in Q4 2011, US gross domestic product weakened to a 2% year-on-year growth rate in the first quarter followed by 1.5% growth in the second quarter, according to the Bureau of Economic Analysis. That is not a good trend, but does explain the weak demand for diesel and, through extension, the pressure on biodiesel sales as we moved into summer.

Small biodiesel producers have had a tough time in 2012. Multiple cases of biodiesel RIN fraud has prompted the oil industry, which is held liable by the EPA for purchasing fraudulent RINs even if they thought they were genuine, have shunned the smaller operator. To move their RINs, small producers are forced to accept discounts of $0.10-0.15 or more per RIN compared with larger producers.

Since November 2011, the EPA has uncovered four cases of biodiesel RIN fraud, identifying 140 million fraudulent RINs in the marketplace sold in 2010 and 2011. So far, one case has ended with a criminal conviction while a second criminal trial was pending

at the time of this writing.The EPA said in August it

is working on a new rule to allow an affirmative defense against fraudulent RINs that it expects to have ready by year end. In a letter dated 14 August sent to Gene Green, D-Texas, Gina McCarthy, assistant administrator for the EPA, said the EPA recognises that it is crucial to address the market uncertainty created by the fraud.

‘The EPA has already developed a general framework for a proposed regulation,’ McCarthy wrote. ‘We have identified a number of elements that we would expect to contain. For example, it would create an affirmative defense for parties who find they are holding invalid or fraudulent RINs, despite their best efforts to ensure the RINs were valid.’

The market also awaits the EPA’s announcement on the renewable volume obligation for obligated parties under the RFS for 2013, with the EPA previously hinting at hiking the requirement for biomass-based diesel from 1 billion gallons to 1.28 billion gallons. The letter of the law creating RFS2, the Energy Independence and Security Act passed in late 2007, provides a minimum of 1 billion gallons of biomass-based biodiesel to be used in lieu of petroleum-based product from this year going forward, but does allow the EPA to increase that amount.

The EPA is not required to make this announcement until the end of November, but it does mean less forward visibility for producers and end-users.

‘There’s tremendous uncertainty, with everything from harvest to the RVO,’ Oh says.

On the positive side for the industry, a Senate Finance Committee passed a tax package on 2 August that includes a resurrected $1 tax credit for blending biodiesel into petroleum-based fuels.

CBOT soyabean and soyabean oil futures

Biodiesel RINs

Distillate fuels supplied to market





If passed in its current form, the tax credit would run through the end of 2013, and be retroactive for all of 2012, with the loss of the tax credit especially punishing for small producers this year.

‘Reinstating it will get biodiesel producers across the country back to expanding their businesses and hiring new employees, as they were doing last year with the tax incentive in place,’ says Anne Steckel, VP of federal affairs for the National Biodiesel Board.

Another bit of good news for the industry was a potential change by the Texas Commission on Environmental Quality to allow biodiesel blends to be sold under its Texas Low Emission Diesel or TxLED programme. A late August vote was set to approve a

5% biodiesel blend in diesel fuel sold in parts of Texas, with TCEQ in November 2005 adopting TxLED standards in an effort to reduce pollutants in the state’s smoggiest 110 counties.

‘The previous rules and blend requirements were making biodiesel cost-prohibitive for a great number of producers,’ Jeremy Sanders, an attorney for Houston-based BoyarMiller who represents the biodiesel industry in Texas, said ahead of the vote.

The original TxLED rules meant biodiesel could not meet stricter nitrous oxide standards.

“Texas” biodiesel industry – the largest in the country – suddenly found itself essentially outlawed after the standards went into effect,’ Sanders says.

The TCEQ has since concluded that the volumes of biodiesel blended into the TxLED market will have ‘no measurable negative impact’ on Texas air quality, Saunders added.

‘The new rules will allow producers and the market in general to be more efficient. They have the potential to be the immediate catalysis to drive revenue of Texas biodiesel producers.’

On 1 October, New York City begins a B2 biodiesel mandate in heating oil, which is heating oil with 2% biodiesel known as bioheat. For all of New York, heating oil consumption has peaked in recent winters between 130,000 and 170,000 bpd according to the EIA.

In preparation for this mandate, Ultra Green Energy Services opened a biodiesel rail transload

facility at the Brookhaven Rail Terminal (BRT) in Yaphank, New York in July.

‘The new BRT will help us ensure the economic, as well as environmental successes of the NYC bioheat mandate and provide lower cost bioheat for all of Long Island,’ says Michael Cooper, Ultra Green’s VP. l

For more information:This article was written by Brian Milne, refined fuels editor for Telvent DTN and editor of OilSpot, a weekly TDTN newsletter for fuel marketers, buyersand sellers. Milne has been a journalist and editor for 16 years, focusing on the energy markets for 14 of those, www.telventdtn.com, +1 952 851-7216

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The small players are always hit hardest in difficult times. The reflex reaction to the RIN fraud has been to shun everyone but the most well-known producers. This, mixed with ongoing regulatory uncertainty, has made the year so far a difficult one – but is this about to change?

On the RIN rebound?

Businessmen can adapt to almost anything except uncertainty and

the ‘on again, off again’ nature of the $1 (€0.80) tax credit has caused pricing difficulties each year.

The lack of the tax credit in 2012 appears to be another example of how partisan politics are destroying even good ideas.

The problems seem to result in an atmosphere where powerful lobbyists outnumber the legislators they lobby, and a non-negotiable atmosphere in Congress. This has resulted in an inability to agree on even on the most basic issues like alternative fuels. This Congressional attitude appears to have ignited an anti-incumbent sentiment among voters – but that is a story for another day.

In addition to these partisan politics surrounding the tax credit, the US market also faced instances of ‘RIN fraud’, where Renewable Identification Numbers were created without creating the actual biodiesel. These criminal activities were limited to a few isolated occurrences, but they were highly publicised and they caused the invalidation of millions of RINs – many of which had been sold to large oil companies.

This caused these obligated parties1 great hesitancy in determining how to fulfill their RFS2 obligations in the future.

Yet, with this backdrop, the US EIA reports show a significant US biodiesel production increase.

The agency’s January- May 2012 reports show production of 432 million gallons – up over 50% from the same period in 2011. These increases came mainly from large producers. Obligated parties seemed to operate under the theory that these larger producers had better financial backing to cover losses if any of the RINs were later declared invalid. This theory is quite flawed, according to Wayne Lee, CEO of Lee Enterprises Consulting Group. ‘Most large biodiesel producers sell the RINs with the biodiesel, with the actual separation event occurring downstream. Thus, it is unlikely that the generator of the RIN is going to guarantee the RINs or accept responsibility after the RINs leave their control. Financial capability appears irrelevant without liability.’

Another result of the convergence of these factors in the US market was the more attractive economics for foreign producers supplying biodiesel to the US market. RIN consultant and CEO of Gulf Hydrocarbon Jess Hewitt is actively involved in the buying and selling of biodiesel and RINs. He says it is important to remember that foreign companies have another attractive option when coming to US market. They can register their facilities

with the appropriate US agencies or they can register with a US-based importer.

Turning things around

This may be about to pick up, in part due to the fact that there is a mandated obligation in effect in the US. Secondly, new programmes have been implemented to help obligated parties verify that the biodiesel they purchase meets ASTM quality standards and that the RINs they purchase are valid.

The programme that has garnered the most support is Genscape’s RIN Integrity Network. This programme is expected to bring stability to the RIN market, and will help the smaller producers be competitive again in the marketplace.

Obligated parties that subscribe to the service will view a health score of each participating facility and view details including photos and the status of key integrity documents. In a single view, all facilities promoting their integrity will be visible on an equal stage.

Another item gathering some inquiry now involves upcoming RFS2 Engineering Review Updates which will be due for many biodiesel plants very soon2. Facilities that initially registered in 2010 must update their registrations and submit updated independent engineering reviews by 31 January 2013. (Those that

registered in any calendar year after 2010 must submit these updates by 31 January of every third calendar year after the year they originally registered.)

It is important to note that facilities that make changes will need to update more often3. Several items are important to remember. First, these updates are similar to the originally submitted reviews, with one addition4. Second involves the selection of engineers to do these reviews. The engineers must be professional engineers who are ‘independent’ and have no financial interest in the plant. The engineers who do these reviews should not be ones who designed the plant or worked on it.

While not an EPA rule, these reviewing engineers should also be licensed in the state where the plant is located because, notwithstanding EPA regulations, each state has laws governing the licensed (and unlicensed) practice of engineering within their borders.

Lee Enterprises Consulting Group has come across situations where the engineer who performed the original RFS2 Engineering Review was later hired by the plant to do some work. The consultants’ position is that those engineers should no longer do the reviews as they no longer qualify as ‘independent’. The goal of the EPA seems pretty clear.





They do not want engineers reviewing their own work or reviewing plants where they have a stake in the outcome of the review. That is certainly understandable.

A final area impacting US biodiesel plants involves process safety management (PSM). There have been a few serious accidents in US renewable fuels facilities. These accidents continue to draw government attention to alternative fuels plants and safety issues. Nathan Vander Griend, VP of ERI Solutions, stresses that PSM is a requirement – not an option – for biofuels producers.

A PSM programme is critical in managing the integrity of equipment that handles and processes any Highly Hazardous

Chemicals (HHCs). These programmes result in greatly reducing risks of insurable and uninsurable loss at such facilities. Griend also says that as the biofuels industry grows, so does its scrutiny by the US Occupation and Safety and Health Administration (OHSA).

The OSHA has increased its enforcement staff and issued a National Emphasis Program (NEP) to focus on PSM in facilities. Those without PSM programmes in place will ultimately be forced by OSHA to build and implement a programme, and will probably face some hefty fines for not having one.

Far too many companies are waiting to implement these programmes until an accident has occurred

and OSHA is at the door. PSM is a requirement. It prevents costly downtime and safety risks to employees while helping the company plan pertinent maintenance activities.

All things considered, the biodiesel market is likely to continue on an aggressive growth path. More than 30 billion gallons of new capacity will be required to satisfy worldwide mandates over the next decade. That translates in over a thousand new refineries worldwide, about 500 of which should be in the US. Even with worldwide economics seemingly causing major concerns, renewable and alternative energy, including biodiesel, is likely to enjoy a very bright future. l

About the author: This article was written by Wayne Lee, CEO of Lee Enterprises Consulting Group, +1 (501) 833-8511. www.lee-enterprises.com

References:1 Those mandated under the Renewable Fuels Standards, 40 CFR Part 80, et seq. 2 Updates required pursuant to Title 40 CFR Part 80 Subpart M § 80.1450. 3 If changes affect the registration information a facility has on file, it must update registration information seven days prior to these change(s). If changes allow the facility to produce a renewable fuel not listed in its current registration, then facility must update registration information and submit a new engineering review at least 60 days prior to producing the new type of fuel. 4 Updates must also include a detailed review of producer’s calculations used to determine

October 10-12, 2012 Vancouver, Canada The Westin Bayshore

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Helvetica Black and Helvetica Ultra light biofuels profile


Waste-to-ethanol producer Enerkem reached a major milestone in June.

After 11 years of development and testing the company has successfully upscaled and is now producing cellulosic ethanol at its demonstration facility in Westbury, Québec.

The company had already produced cellulosic ethanol at its smaller scale laboratory pilot facility at Sherbrooke since 2003, but this is the next step towards deploying its technology at full-scale commercial facilities.

With its proprietary thermochemical technology, Enerkem converts abundantly available municipal solid waste into chemical-grade syngas, and then methanol, ethanol and other chemical intermediates that form everyday products.

The Westbury facility was built in three phases and the company is now testing the final stage – converting the methanol to ethanol.

The newly installed equipment for the conversion of Enerkem’s methanol into cellulosic ethanol is now used in combination with the larger methanol equipment already in operation at Westbury.

‘We are producing batches of fuel to check the yields and test the quality,’ Marie-Hélène Labrie, VP of government affairs and communications at Enerkem, explains. ‘We are very pleased with the results we’re getting and will continue testing for another few weeks.’

The facility is located in front of a sawmill and is using feedstock from here, as well as woodwaste from utilities.

The purpose of this facility is to prepare for full-scale production. Enerkem is in

the process of building a commercial-scale plant in Edmonton, Alberta, which is expected to start operation in the second quarter of next year.

This will be built in two stages, producing methanol at first, and later adding the module to convert this methanol into ethanol as a final step.

‘We have an off-take agreement in place with methanol producer Methanex,’ Labrie explains. ‘The plant is built in modules so it makes sense to start generating revenues from the methanol while we are building the final module, which will convert the methanol into ethanol.’

This conversion will take place in early 2014 and the plant will then be able to

produce 38 million litres of cellulosic ethanol a year.

Once complete the facility is expected to divert 90% of the city of Edmonton’s landfill-bound waste to create renewable fuels and chemicals.

Although the Edmonton facility is still in progress, Enerkem is already thinking about its next venture. In 2008 the company formed a partnership with one of Canada’s largest first

Progress at Enerkem’s commercial-scale plant in Edmonton, Alberta continues

Despite abandoning its IPO offering earlier this year, Canadian waste-to-biofuels producer Enerkem is making notable progress with its three local facilities

Three out of three

As well as its local market Enerkem is also looking at opportunities further afield. It has already established a partnership with US-based Three Rivers Solid Waste Authority to build another commercial-scale cellulosic ethanol production plant.

The company is due to start construction on the facility in Pontotoc, Mississippi next year, and will take 18 months to complete it. Using residential waste from seven counties the plant will produce 10 million gallons of biofuels per year and is expected to cost around $100 million (€65 million) to build.

The local community will make use of the opportunity to build a neighbouring recycling facility.

‘Mississippi is a great location for us,’ explains Labrie. ‘There is plenty of biomass available at an affordable price, the region has a strong petrochemical sector and good access to customers on the Gulf Coast.’



Helvetica Black and Helvetica Ultra lightprofile biofuels


Quebec’s first full-scale ethanol plant is slated for 2015

generation ethanol producer Greenfield Ethanol.

The partnership, called Varennes Cellulosic Ethanol, will start construction on Quebec’s first full-scale cellulosic ethanol production facility on Greenfield Ethanol’s existing production site in early 2014.

The plant’s capacity will also be 38 million litres a year from 100,000 dry tonnes of industrial and demolition waste and production should begin in 2015. The plant is expected to produce ethanol straightaway, missing out the intermediate methanol production stage seen in Alberta.

‘There are many advantages to partnering with a first generation ethanol facility,’

explains Labrie. ‘Greenfield Ethanol already has an established customer base, the infrastructure links are already in place and the company has ongoing agreements with refiners and blenders. We think the trend of co-locating first and second generation plants is one we’ll see more and more frequently as the industry develops.’

Funding the projects

Earlier this year Enerkem filed a C$125 million (€102 million) initial public offering (IPO), which was later withdrawn, with the company blaming ‘current market conditions’.

‘We believe there are better options for us to finance

our growth plan as a private company,’ Labrie says.

‘We have the support of our current investors and partners, and together with our employees, we are

focusing our efforts on the development of our waste-to-biofuels commercial projects. We will also continue to keep all options on the table in the future.’ l

More government support neededBoth the US and Canada have mandates in place, creating a strong demand for cellulosic ethanol. However, whereas the US has specific targets for cellulosic ethanol production, Canada does not yet differentiate the fuels.

‘Canada has the potential to become a global leader,’ Labrie explains. ‘The country has a strong first generation industry and the next step is to build an equally strong second generation sector.

‘Canada is already meeting its 5% blend mandate, and maybe even blending more than this, so there’s certainly potential to increase this further.’

However, Labrie believes that in order for the industry to grow, more support is needed. In 2008 the Government of Canada introduced a scheme called ecoENERGY for Biofuels.

Initiated in April 2008, the ecoENERGY programme runs until 31 March, 2017 and recipients are entitled to receive incentives for up to seven consecutive years. Rates start at C$0.10 (€0.08) per litre for ethanol, decreasing to C$0.03 by 2016.

‘The problem is this scheme only had a certain amount of funding available, which has all been allocated by now. ‘The government needs to consider a similar scheme for advanced biofuel producers,’ Labrie says.

The Next Generation Biofuels Fund, in partnership with Sustainable Development Technology Canada (SDTC), is another scheme designed to facilitate large-scale demonstration facilities of next generation biofuels. ‘This works really well, so in our eyes the ideal solution would be a producer incentive programme, combined with the capital support from SDTC,’ adds Labrie.

March 2012 • TA N K S TO R A G E FiRe SAFeTy

biofuels international october 2009 41

plant update biofuels

Location Indonesia, MedanAlternative fuel BiodieselFeedstock Palm oilConstruction or expansion ConstructionCompletion date Q4 2009

PT Perkebunan Nusantara

Location ThailandAlternative fuel BiodieselCapacity 300,000 litres a dayFeedstock Crude palm oilConstruction or expansion ConstructionCompletion date June 2009

Pure Biodiesel

Location Australia, Wagga WaggaAlternative fuel BiodieselCapacity 170,000 tonnes a yearFeedstock OilseedConstruction or expansion ConstructionProject start date September 2009Completion date October 2010Comment Edible oils to be produced in the rst phase, biodiesel in the second

Riverina Oils and BioEnergy

Location Philippines, La Carlota CityAlternative fuel EthanolCapacity 100,000 litres a dayFeedstock Sugarcane and molassesConstruction or expansion ConstructionDesigner/builder KBK Chem-EngineeringProject start date 2008Completion date Q1 2010Comment One of the key features of the plant is a wastewater treatment system that converts pollutants into biogas which can be used as fuel

Roxol Bioenergy

Location ThailandAlternative fuel BiomassFeedstock Palm oilConstruction or expansion ConstructionInvestment THB 1 billion (€20 million)ompletion date By 2011

Vichitbhan Group

Location ThailandAlternative fuel BiogasFeedstock Palm oilConstruction or expansion ConstructionInvestment THB 300 million ompletion date By 2011

Vichitbhan Group

Location ThailandAlternative fuel BiogasFeedstock Palm oilConstruction or expansion ConstructionInvestment THB 160 millionompletion date By 2011

Vichitbhan Group

This list is based on information made available to Biofuels International magazine at the time of printing. If you would like to update the list with any additional plant information for future issues, please email [email protected]

TANK STORAGEmagazine

If you would like your company’s news to feature in this please contact:[email protected] (+44 20 8687 4126)

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plant update biofuels

Location Indonesia, MedanAlternative fuel BiodieselFeedstock Palm oilConstruction or expansion ConstructionCompletion date Q4 2009

PT Perkebunan Nusantara

Location ThailandAlternative fuel BiodieselCapacity 300,000 litres a dayFeedstock Crude palm oilConstruction or expansion ConstructionCompletion date June 2009

Pure Biodiesel

Location Australia, Wagga WaggaAlternative fuel BiodieselCapacity 170,000 tonnes a yearFeedstock OilseedConstruction or expansion ConstructionProject start date September 2009Completion date October 2010Comment Edible oils to be produced in the rst phase, biodiesel in the second

Riverina Oils and BioEnergy

Location Philippines, La Carlota CityAlternative fuel EthanolCapacity 100,000 litres a dayFeedstock Sugarcane and molassesConstruction or expansion ConstructionDesigner/builder KBK Chem-EngineeringProject start date 2008Completion date Q1 2010Comment One of the key features of the plant is a wastewater treatment system that converts pollutants into biogas which can be used as fuel

Roxol Bioenergy

Location ThailandAlternative fuel BiomassFeedstock Palm oilConstruction or expansion ConstructionInvestment THB 1 billion (€20 million)ompletion date By 2011

Vichitbhan Group

Location ThailandAlternative fuel BiogasFeedstock Palm oilConstruction or expansion ConstructionInvestment THB 300 million ompletion date By 2011

Vichitbhan Group

Location ThailandAlternative fuel BiogasFeedstock Palm oilConstruction or expansion ConstructionInvestment THB 160 millionompletion date By 2011

Vichitbhan Group

This list is based on information made available to Biofuels International magazine at the time of printing. If you would like to update the list with any additional plant information for future issues, please email [email protected]

TANK STORAGEmagazine

If you would like your company’s news to feature in this please contact:[email protected] (+44 20 8687 4126)

Sign up now to receive your FREE fortnightly newsletter providing up-to-date information on acquisitions, mergers, new terminals and the latest regulations:

www.tankstoragemag.com/tsm_newsletter.html

Sign up now to receive your FREE weekly newsletter providing up-to-dateinformation on acquisitions, mergers, new terminals and the latest regulations:

www.tankstoragemag.com/tsm_newsletter.htmlIf you would like your company’s name to feature in this please [email protected] (+44 (0)20 8687 4126)


biofuels biofuels in CanadaGreen CMYK c76 m0 y100 k0Pantone 362 crgb r61 h164 b42



Although a smaller market than the US, Canadian producers are suffering from the same challenges: feedstock prices, competition from its neighbours and a need for more regulatory support

Canadian biofuels takes flightO

n 17 April, Canadian regional carrier Porter Airlines conducted the first

biofuel-powered revenue flight in Canada, flying one of its Bombardier Q400 turboprops from its base at Toronto City Airport to Ottawa, using a 50/50 blend of biofuel and Jet A1 fuel in one of its engines. The fuel used was derived from the oilseed crops, Camelina sativa (49%) and Brassica carinata (1%) from biotechnology company Targeted Growth.

Two months later, Air Canada operated its first biofuel flight from Toronto to Mexico City on an Airbus A319, using a 50/50 mix of regular kerosene and biofuel derived from recycled cooking oil produced by SkyNRG.

Although these flights marked a milestone in Canadian aviation history, biofuel production in Canada, while still growing, remains relatively low compared to the more advanced European and US markets.

However, current production

is expected to be close to meeting Ottawa’s Renewable Fuel Standards (RFS).

Ethanol developments

Ethanol production in Canada this year is expected to reach 1.8 billion litres a year (bly) from 15 plants, up 40% from 2011 and to reach 1.9 bly in 2013, according to the Canadian Renewable Fuels Association (CRFA). Both figures are just below estimated federal content requirements of 2.05 bly for 2012 and 2.07 bly for 2013 under its RFS programme.

This year, it is estimated 79.6% of the production of domestic bioethanol will be derived from corn, 20.1% from wheat and 0.3% from ‘other’ feedstock such as wood waste, wheat straw and landfill waste, according to a report on the Canadian biodiesel market by the USDA. Next year, the ‘other’ feedstock will increase to 1.2% due to the completion of Enerkem’s Edmonton waste-to-biofuels plant in the second half of this year which

is expected to produce 19 mly of ethanol from landfill waste.

Compared to 2011’s 75% ethanol capacity, Canada’s ethanol plants are estimated to be running above capacity at 102% this year and even higher for 2013, due to the completion of two new ethanol plants, namely Growing Power Hairy Hill in Hairy Hill, Alberta, and Enerkem’s facility. Primary feedstocks for most ethanol plants still remain corn and wheat.

But the price of corn has hit record highs recently due to the severe drought in the US Midwest which has some ethanol producers worried. ‘The price of corn has gone up significantly and is now in the C$8 (€6.58) a bushel range,’ says Jim Grey, president of IGPC Ethanol in Aylmer, Ontario, which produces 160 mly of ethanol. At the same time, the price of ethanol has been kept low due to over production in the US.

‘Virtually all ethanol produced in Canada stays here due to the government’s 5% mandate’ which requires all

car fuel to contain a minimum 5% ethanol, Grey notes.

Greenfield Ethanol, Canada’s largest ethanol producer, has cancelled its G2 Biochem patented process technology and is replacing it with a new process. The technology was backed by a consortium that included enzyme developer Novozymes and industrial process solutions leader Andritz.

‘We did not proceed with the demo project because of the concern that the pretreatment equipment package was too expensive to commercialise,’ says Barry Wortzman, VP of business development. ‘Instead, we are pursuing the validation of our own pretreatment equipment to execute our process technology in a much more cost efficient and technically efficient manner.’

The company has developed a pretreatment equipment technology, a uniquely modified twin screw extruder (TSE).

‘We expect commercial scale-up by year-end, when it is fully combined and



Helvetica Black and Helvetica Ultra lightbiofuels in Canada biofuels


integrated with our pretreatment process technology and is operated on a continuous basis,’ explains Wortzman.

The benefits include fewer pieces of equipment to wash and separate the solid/liquid fractions. The pretreatment equipment package is expected to cost 45% less than any off-the-shelf package and a significant reduction in the consumption of both water to wash and separate the fractions and energy to operate the modified TSE.

‘We expect to achieve best-in-class yields from both C6 and C5 sugars at an all-in production cost of about $2 per gallon,’ adds Wortzman. ‘Additionally, our clean and green sugar streams are an ideal feedstock of other platform biofuels such as biobutanol and chemicals like lactic acids.’

Greenfield’s current total throughput from four plants is about 650 mly split 500 mly as fuel grade ethanol and another 150 mly of industrial/beverage grade alcohol. The company continues to add capacity via debottlenecking and other capital projects, but there are no new first generation plant projects in the works.

Another project is a proposed $200 million, 210 mly dry mill corn ethanol plant in Oshawa, Ontario by FarmTech Energy and FarmTech Growers Co-Op. Construction of the plant, one of the largest proposed ethanol plants in Canada, is expected to begin this fall and be operational by 2014. The plant was approved by the Oshawa Port Authority, but is

being opposed by Oshawa City Council which wants to create more green space along the waterfront of Lake Ontario east of Toronto (Canada’s largest ethanol market) where the plant will be built.

Ottawa’s RFS and 2% renewable content in the distillate pool and home heating oil (biodiesel) will result in a demand for over 2 bly of ethanol and more than 600 mly of biodiesel.

While federal law requires oil companies to sell petrol in Canada with an ethanol content of 5%, the industry is selling petrol with substantially more of the additive, because the price of ethanol is less than half the price of petrol.

The industry is probably adding ’25-30% more than is required,’ according to Doug Nixon, publisher of the trade publication Canadian Report on Fuel Ethanol. He says the industry is buying ethanol in the US at the wholesale price and selling it in Canada at retail petrol prices for a profit.

While the industry disputes claims that ethanol is a big factor in profitability, in part because of import taxes, there has been a dramatic increase in ethanol imports from the US, which rose 150% last year to 1.1 bly. Canada does export some ethanol, but it is a small amount.

While many biofuel projects are proceeding, others have been cancelled. In April, Ottawa-based Iogen and partner Shell shelved plans to build a commercial-scale cellulosic ethanol plant in

Manitoba, raising doubts about a technology that governments have promoted to make a major contribution to North America’s fuel consumption.

No explanation was given, but in a release Iogen says it plans to ‘refocus its strategy and energies’. The decision will lead to a smaller development programme and the loss of 150 jobs. Iogen has been producing cellulosic ethanol from wheat straw at its demonstration plant in Ottawa since 2004. It says in the release it ‘plans to expand its line of offerings with new technology for the production of advanced and cellulosic biofuels’.

Biodiesel boom

For 2012, domestic production of biodiesel is forecast to reach 284mly, up almost 80% from the estimated 2011 production level of 158 mly, according to the Agriculture Department’s report. Ottawa’s RFS and the completion of four new biodiesel refineries is forecast to help increase production levels of biodiesel to 538 mly in 2013 and surpass the federal requirement by 2014.

Three of the largest projects that will increase biodiesel production in Canada include a 265 mly canola-based biodiesel facility at Archer Daniels Midland’s canola crushing plant in Lloydminster, Alberta, the completion of Enerkem’s Edmonton plant and Great Lakes Biodiesel’s 170 mly plant in Welland, Ontario, which is expected to be operational in the fourth

quarter, using soyabean and canola oils as feedstock.

Alberta has also committed $444 million over the next three years to encourage Albertans to develop bioenergy alternatives using waste such as manure and woodchips, under its Bioenergy Producer Credit Programme in support of the province’s renewable fuel standards.

In the programme’s first six years, the total taxpayer investment was $150 million and the government saw $2 billion in private investment as a result of the incentive. The programme essentially provides grants to entrepreneurs who want to start bioenergy businesses and then ‘tops up’ the rate that energy producers get on the market.

The focus has turned away from energy being produced from cereal grains and toward projects that focus on producing heat or electricity from the 20 million tonnes of waste Albertans produce each year.

Rothsay Biodiesel is the protein recovery division of Maple Leaf Foods and is also Canada’s largest rendering company, operating six processing facilities across the country. It provides essential services for the efficient and environmentally responsible management of collecting, processing and recycling edible and inedible animal by-products.

The Guelph, Ontario, company entered into the biodiesel industry due to Mad Cow Disease (BSE) in the late 1990s. In 2003, when

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the first case of BSE was detected in Canada, European markets were closed to Canadian exporters of beef materials, including animal by-products. Rothsay needed to find another channel to sell animal fats and so began the production of biodiesel.

It began operations of its commercial biodiesel plant in 2005 in Montreal. Since then, numerous upgrades and process improvements have been made and it now produces 1 million litres per week, or well over 50 mly.

One of the reasons Rothsay claims it has been so successful is because it has integrated with its rendering operations. While most of the North American biodiesel industry relies on soyabean oil, which is easier to process, Rothsay developed its own process to develop a high-grade biodiesel from low-grade feedstock. And it is considered to be one of the highest quality biodiesels in North America, if not the world, according to the company.

Rothsay’s biggest customers are American wholesale fuel markets and blenders. That is changing due to Canada’s biofuels mandate for biodiesel blending that began on 1 July, 2011. Blending already occurs in the Western provinces, but Quebec and the Maritimes are exempt until January 2013 in order to get facilities built.

Rothsay will see a greater demand for biodiesel in Ontario and Quebec as the overall volume needed increases as regional refiners in those areas need to meet their obligations.

The US will still remain an important market for Rothsay fuel, as the US has an aggressive and ever-increasing mandate for biodiesel use as a part of its renewable fuel policy.

Mississauga-based Methes Energies is another company which plans to sell its biodiesel to the US market. The producer has just opened its 50 million litre plant in Sombra in August. The company also used cooking oil and waste

animal fats as feedstocks.Another Guelph company,

W2 Energy, has just installed its biodiesel plant and expects full production to begin in quarter three.

The facility the company bought from Agri-Green Biodiesel was re-located to Guelph from British Columbia. Current expectations are for the production of approximately 650,000 gallons of biodiesel per year at the plant which at today’s current market value should be worth close to $3 million in revenues. Future plans for the plant will include a retrofit modification in order

to increase its production by up to 1.2mgy. By increasing the production capabilities, the company expects to be able to double its revenue.

Milligan Bio-Tech is undergoing an $8 million expansion at its biodiesel facility in Foam Lake, Saskatchewan, that will bring total annual production up to 20 mly. The facility is currently producing 4 mly, but the expansion should be online in November, making it Western Canada’s largest biodiesel producer. The facility uses non-food grade canola as feedstock.

Government support

Many federal programmes that were announced as part of the renewable fuel strategy expired on 31 March, 2011. The federal government has

not, as of yet, announced any future measures to replace the programmes.

The government’s $1.5 billion ecoENERGY seed money programme established in 2008 and set to expire in 2017, is small compared to other government subsidisations of the energy industry in Canada. This has included more than $3 billion for the Hibernia oil project off the coast of Newfoundland, $14 billion for the Darlington nuclear plant in Ontario and in excess of $44 billion invested in Alberta’s oil sands.

The cost of government support programmes has largely been offset through value-added agricultural crops and job creation programmes, notes a report by business lobby group Conference Board of Canada. Next generation technologies, high-blend infrastructure, flex-fuel vehicles and supporting policies could extend the role ethanol plays in Canada’s transportation markets.

‘From a climate prospective, it’s an incredibly sound programme,’ suggests Scott Thurlow, president of the CRFA. ‘The federal government is often criticised (both domestically and internationally) for not moving quickly enough on green initiatives. This programme proves quite the opposite.’

However, not many biodiesel companies can

make money at current biodiesel prices, due to the expiry of the US $1 (€0.80) gallon tax credit in December according to John McIlveen, research director, Jacob Securities, Toronto. ‘Last year, the same thing happened and it was renewed retroactively in December, 2011. The US should either give some visibility/permanence to the tax credit or allow it to expire definitely. If expired, the market will find equilibrium as the volume mandates will drive demand higher, prices will rise as some plants shut down production due to these low prices.

‘Although Canada has a mandated volume much higher than its capacity, prices are still determined by the US. The border is open and despite a supply imbalance, Canada can source from the US. Projects will not get financed at these biodiesel prices.’

Canada’s 28 renewable fuel facilities generate $1.4 billion in net economic benefits each year across the country, according to the CRFA. But long-term viability of producing biofuels in Canada will depend on a multitude of factors including federal/provincial regulations and implementation, plant size, production types, co-products, feedstock costs, energy prices and production/consumption incentives. The required increase in biofuel production set out by the federal mandate will necessitate a build-up of infrastructure to support the industry.

One of the major challenges facing the industry is the availability of capital for new projects, says CRFA’s Thurlow. ‘The market today is very different from 2008 with much more stability. For growth to exist, we need more government funding. The government hasn’t made any promises, but there’s been no opposition to our request for it.’ l

IGPC’s ethanol plant in Aylmer, Ontario produces 160mly


Plant update – Canada

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Location Lloydminster, AlbertaAlternative fuel Biodiesel Feedstock Canola Construction / expansion / Construction acquisitionProject start date Mid-2011Completion date Q3 2013

Archer Daniels Midland

Location Prince Edward IslandAlternative fuel Ethanol Feedstock Sugar beets Construction / expansion / Construction of an R&D demonstration acquisition plantProject start date 2011Completion date 2012Investment The government is supporting the latest development on the island with a $340,500 (€270,000) grant to help the project get off the ground

Atlantec BioEnergy

Location AlbertaAlternative fuel Ethanol and renewable power Capacity 40mly of ethanol and 1MW of renewable power from manure and other waste Feedstock 110,000 tonnes of grain feed Construction / expansion / Construction acquisition Completion date Q3 2012Investment $50 million (€40 million)

Growing Power - Hairy Hill

Location British ColumbiaAlternative fuel Biodiesel Feedstock Yellowhorn tree Construction / expansion / Construction acquisition Project start date October 2011 (announced)Investment C$3 million (€2.4 million)

Maple Leaf Reforestation

Location Sombra, OntarioAlternative fuel Biodiesel Capacity 13mgy Feedstock Cooking oil and animal fat Construction / expansion / Retrofit and construction acquisition Project start date December 2011Completion date August 2012 (officially opened) Comment The plant also features technology for the recovery of methanol and continuous flow production

Methes Energies

Location Foam Lake, SaskatchewanAlternative fuel Biodiesel Capacity 20mly Feedstock Canola Construction / expansion / Expansion from 4mly to 20mly acquisition Project start date September 2011 (announced)Investment $8 million (€6.4 million)

Milligan Bio-Tech

Location Guelph, OntarioAlternative fuel Biodiesel Capacity 650,000 gallons per yearConstruction / expansion / W2 Energy acquired the plant from acquisition Agri-Green Biodiesel Completion date August 2012Comment Future plans for the plant will include a retrofit modification of the plant in order to increase its production by up to 1.2 million gallons per year

W2 Energy

Location Sarnia, OntarioAlternative fuel Bio-succinic acidCapacity 17,000 tonnes, with plans to expand this to 34,000 tonnes by the end of 2014Construction / expansion / Construction acquisitionProject start date November 2011 (partnership announced)Completion date Late 2013

BioAmber and Mitsui & Co.

Location Canada Alternative fuel Renewable petrolCapacity 67mlyFeedstock Wood waste Construction / expansion / Construction acquisitionDesigner / builder TechnipProject start date 2012

Core BioFuel

Location Westbury, Quebec Alternative fuel Cellulosic ethanol Feedstock Waste materials Construction / expansion / Construction acquisitionCompletion date June 2012 (initial production began)

Enerkem

*This list is based on information made available to Biofuels International at the time of printing. If you would like to update the list with any additional plant information for future issues, please email [email protected]



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The number of approved schemes available to certify sustainable biofuels for the Renewable Energy Directive has now reached 11, but does the latest offer any advantages and will the list just keep getting longer?

The choice widens

In August the NTA 8080 certification system was officially recognised by the European Commission.

It is now an approved voluntary scheme that complies with the European mandatory sustainability criteria for biofuels as laid down in the Renewable Energy Directive (RED).

The system has already been recognised in the Netherlands since the end of 2008 but now all European member states will endorse this certification system as well. This enables companies that are certified against NTA 8080 to trade their sustainable biomass throughout the entire EU.

The NTA 8080 certification system is one of the few EU-recognised schemes, along with the ISCC, that is not only applicable to biofuels, but also to solid and gaseous biomass. Consequently, the system anticipates future mandatory or voluntary European sustainability criteria for solid and gaseous biomass.

The scheme is based on the European standard EN45011. Therefore it will only take a small step to convert the NTA to an international ISO-based scheme, which is in development right now. ‘This is of interest for our customers as it won’t be necessary for them to change their quality system completely once the ISO standard is launched’, Eric Evers, sales manager at Dekra Certification, explains. ’It is the only scheme that has an independent accreditation body watching over it, which gives it added

credibility.’ Because of this, the NTA is expected to be a widely used standard.

The Netherlands-based RvA (Raad voor Accreditatie – Dutch Accreditation Council) visits certification bodies like Dekra every year. The company also goes on site with Dekra to monitor how the company carries out its sustainability assessments to ensure every certification is consistent.

‘We are heading to a situation where over 20 EU-recognised certification schemes on sustainable biomass exist. This causes confusion and additional costs for all parties involved. The development of one truly international scheme (ISO) should be accelerated.

We have contributed to the NTA 8080 development and made sure that it shares all starting points with such ISO standard, thus enabling an easy transition in future,’ Evers states.

Around 30 (mostly Dutch) companies have been NTA 8080 certified over the last year and a half, more than half of these related to solid biomass.

Evers expects that the interest in the scheme will start to increase now that it has been approved by the EU.

To cope with the growth in demand Dekra is on the lookout for more highly qualified inspectors. ‘It’s not easy to find people with industry knowledge on a wide range of topics such

as understanding social accountability, greenhouse gas calculations and economics,’ Evers explains.

Although Dekra’s inspectors are very knowledgeable, the company does not have a consultancy role. ‘As a truly independent assessor, we are not in the position to provide consultation on how a company can become more sustainable,’ he explains. ‘For our customers we do offer training on the scheme itself, though, and what it entails to enable proper preparation for the assessment.’

Before carrying out a certification Dekra will always perform a pre-investigation. ‘It is relatively easy to say whether a company is ready for an audit or not. However, some companies do still fail in the final assessment. In most cases however, shortcomings can be repaired and the certificate still can be granted.’

The NTA is based on the six Cramer principals:

• Greenhouse gas emissions• Competition with food

and local applications of biomass

• Biodiversity• Environment • Prosperity• Social well-being

The company must comply with all of these requirements and make this compliancy demonstrable.

Next to the NTA 8080 service, Dekra offers auditing and verification against ISCC, REDCert and Dutch Double Counting standards to those involved in the market for sustainable biomass. l

Definition of sustainability

People

Profit

Planet



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Bio-heating oil production in three Scandinavian harbour based factories

Your oils and fats by-product collection service partner

Your local contact in 10 countries on four continents

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Tel: +41 32 720 05 20 • www.mbpgroup.eu

NEW: ISCC certification – certified sustainable bio oils now available


technology news biofuels

Xebec Adsorption branches out to the UKCanada-based purifi cation, separation, dehydration, and fi ltration equipment manufacturer Xebec Adsorption has opened a new sales offi ce to provide enhanced service to the UK biogas market.

This new initiative is in response to the growing market in the UK for biogas upgrading to renewable natural gas, a carbon neutral fuel source. The of ce will handle all sales, marketing, technical and after-sales support for the UK.

‘The UK and Europe are poised to fully develop the use of green gas. Biomethane injected into the National Gas Grid is a huge step forward for both the industry and the

environment,’ Tony Hales, Xebec project director, says.

Xebec offers ve standard sizes of biogas upgrading systems from 200 m3/h up to 2,000 m3/h, and combines best in class recovery, purity and energy consumption. These systems are either skid-mounted or containerised with an extremely small footprint, offer high up-time and low maintenance and operations cost.

The solutions Xebec provides include natural gas and biogas puri cation, natural gas dehydration, hydrogen puri cation for fuel cell and industrial applications, and specialised solutions for other gases. Xebec also offers compressed air treatment solutions. To date, Xebec has supplied more than 8,000 adsorption systems to more than 1,300 customers worldwide. ●

Dow Water & Process expands biodiesel solutionsAfter acquiring Rohm and Haas in July this year Dow Water & Process Solutions has expanded its portfolio of solutions, including biodiesel capabilities.

It now offers the Dow Amberlyst BD20 solid catalyst FFA esteri cation technology that offers biodiesel producers the exibility to produce biodiesel from inexpensive low-quality feed stocks without sacri cing the purity needed in the end product.

The Ambersep BD19 is a feedstock puri cation technology, a pre-treatment step specially designed to be used together with Amberlyst BD20 catalyst technology that extends life time and improves the operability of the downstream process.

It also provides Amberlite BD10DRY technology, a simple and cost-effective solution for biodiesel puri cation designed to maximise process yield.

For 50 years Dow Water & Process Solutions has been providing innovative water and process solutions to both communities and industries alike. A differentiated business unit of The Dow Chemical Company, Dow Water & Process Solutions offers a broad portfolio of ion exchange resins, reverse osmosis membranes, ultra ltration membranes and electrodeionization products, with strong positions in a number of major application areas, including industrial and municipal water, industrial processes, pharmaceuticals, power, residential water and waste and water reuse. ●

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With 11 voluntary schemes now available to biofuels suppliers wanting to certify sustainability, one breaks down how it came to decide on the ISCC

Implementing RED certificationIn June 2012, Switzerland-

based biofuels supplier MBP Group finally got the Renewable Energy Directive

(RED) certificate from the ISCC standard from certification body Control Union after a year and a half of waiting.

MBP Group is active in production and sale of biodiesel for transportation bio heating oil, as well as collection and supply of used cooking oils (UCO) and other alternative raw materials for biodiesel production.

Furthermore, MBP provides substrates for the production of biogas, which is also subject to regulation by RED if the biogas produced is subsequently cleaned and processed to be used for road transportation.

MBP markets these products in several different European countries, where the national implementation of the RED has been done in different ways. MBP handles almost exclusively industrial by-product oils and almost no normal crude or refined oils.

The Renewable energy Directive (RED)

The RED (2009/28/EC) was published back in April 2009 and while it was clear from the beginning that the purpose was to provide certainty that biofuels and bio liquids used in the EU were sustainable as well as promote the use of renewable energy, a lot of things remained unclear for a long time as far as operational elements were concerned.

As an EU directive the RED needed to be implemented nationally with regards to many specific elements, so

for a long time it felt like many pieces were missing in the puzzle. The RED was to be implemented nationally by December 2010, but in many cases national implementations were not in place by then.

Biofuels suppliers have the choice to follow either the national standard for how to provide documentation on sustainability or one of the so-called voluntary schemes.

If only supplying to one national market, sticking to the national standard of the chosen country is the optimal solution.

But for MBP, which supplies several national markets, the most rational thing would be to opt for a voluntary scheme. The first seven of such schemes were announced and approved by the EU in July 2011, and then the process of choosing a scheme and a certification body could begin.

Choice of scheme

Today 11 different voluntary schemes exist, some are dedicated purely to ethanol crops and others have mainly been adopted by the biodiesel industry. MBP had three criteria for choice of scheme.

‘Firstly we wanted a scheme

that was prepared to handle the various by-products that are core to our activities, but which are in many cases a mere afterthought in the RED complex,’ Jens Søgaard Jacobsen, partner and sales director at MBP Trading, explains.

‘Secondly we wanted a scheme, which would satisfy the RED, no more no less. Thirdly we wanted a scheme, which

could and would be recognised by as many potential suppliers and customers as possible.’

MBP Trading found the first criteria difficult to fulfill. ‘In fact none of the schemes had paid much attention to other than the typical case of providing crude or refined oil via the supply chain to a biodiesel plant and on to the distribution and end consumer,’ Jacobsen says.

‘We had many discussions with different certification bodies and it was our impression that in this area, which is critical for MBP, lack of detailed knowledge is widespread. In the end we chose Peterson Control Union Germany, a division of Control Union World Group, as our certification body because the account manager had a close dialogue with the governing committee

for the ISCC standard, so she was able to provide clear answers to difficult questions.’

The second and third criteria turned out to be relatively easy to satisfy. As time went by it became increasingly obvious that especially two schemes were taking the lead in terms of number of followers in the biodiesel industry: ISCC (International Sustainability and Carbon Certification) and 2BSvs (Biomass Biofuels voluntary scheme). In the end MBP chose the ISCC based on its ability to satisfy its first criteria.

Due to national deadlines, MBP did in fact end up also with a certification according to the Swedish national implementation of RED.

How long does it take?

The whole process took over a year and a half.

‘We had the first discussions with different certification bodies in March 2011, at which time we found out that nothing was clear yet. In fact a lot of the time that we spent on this has been time waiting for the standards to take form and for the general understanding of the standards with respect to by-products. Today we would be able to do a full implementation in three to four months, and we have seen examples of colleagues with a slightly less complicated business do a full ISCC implementation in less than two months.’

MBP has developed a system to ensure it has documentation from its suppliers regarding the origin and nature of its raw material. ‘We have amended our ERP system to allow us to

‘We have seen examples of colleagues with a slightly less

complicated business do a full ISCC implementation

in less than two months’ Jens Søgaard Jacobsen, sales director at MBP Group



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Tanks at MBP’s Norwegian bio-oil facility, which has its own mass balance, a critical part of the ISCC certification

report on mass balances for each of our plants and storage facilities,’ Jacobsen explains. ‘This allows us to provide our customers with documentation for the sustainability of the products we sell. Our systems are audited by the third party certification body Control Union on a regular basis.’

What are the benefits?

The advantages in today’s market of having a RED/ISCC certification are quite obvious. In many countries the supplier’s ability to provide a certificate of sustainability is critical for the customer. If the supplier cannot produce this certificate of sustainability, then the products do not qualify for any national blending mandates/quotas or tax exemptions, which in all cases translate directly into a higher value for the customer. Today the RED certification is a must or you have excluded yourself from a very significant

part of the European market.‘Having chosen the ISCC

standard we also get the advantage of being able to communicate more easily with other ISCC certified customers,’ Jacobsen adds.

ISCC has become the de facto standard among European biodiesel manufacturers and obtaining recognition as an ISCC certified supplier poses absolutely no problems in terms of documentation. As for recognition between the

other voluntary schemes, this is an area that seems to still require some development.

‘We welcome the RED despite the teething problems when it comes to technicalities and despite the almost overwhelming amount of bureaucracy involved especially when it comes to the grower certification,’ Jacobsen says.

‘At the end of the day we see no alternative when it comes to providing documentation that biofuels are actually sustainable.

And biofuels that are not sustainable don’t make much sense. In our industry we have seen many flawed initiatives to ensure that only the ‘good’ oils are used for biofuel, all of which make little sense when this is not combined with a rigid control that only a third party certification and a recognised standard can ensure.’

MBP has always been focused on transforming by-products into biofuels. These oils cannot be used for human consumption nor for animal feed. ‘The RED offers our oils recognition as sustainable fuels as well as rewards them with particularly high carbon dioxide savings rates. As we move forward we believe that there will be more focus on the carbon dioxide savings that the different biofuels can offer,’ concludes Jacobsen.l

For more information: Contact Jens Søgaard Jacobsen, sales director at MBP Group via www.mbpgroup.eu

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There is a real risk that mandating a mass of social criteria and indicators upon biofuels developers overnight could stymie the industry altogether. So what is the best way to ensure social impacts are included within certification schemes?

Social impacts of biofuel cultivation

The interest in biofuels and bioenergy production and investment has been

driven largely by the policies of national governments, both in developed and developing countries. The EU, US, Canada, Australia, New Zealand, Korea, Japan and a number of developing countries including Brazil, India, China, Thailand, Argentina, Philippines, and South Africa, have put in place targets and mandates in support of biofuels for transport.

There are legitimate sustainability-related concerns cited by a large number of stakeholders concerning biofuels and bioenergy, ranging from environmental issues, loss of biodiversity, carbon emissions, land use issues and detrimental social impact.

Under the right conditions, and with effective systems in place, biofuels can be produced sustainably. However at present there is significant risk of production that is far from sustainable. The environmental risks and benefits have attracted significant attention and dominated sustainability discussion on biofuels to date. Increasingly, project developers are conducting environmental impact assessments as part of an attempt to demonstrate the sustainability of biofuels

to potential purchasers, importing nations and certification schemes.

The social aspects that remain are not being treated with equal weight. This is due in part to the lack of baseline social impact data as well as the complexities of social impacts which cannot always be dealt with at a local level, and require action from multiple stakeholders.

Within the EU and other developed countries the demand for biofuels and associated targets is greater than the potential domestic supply. Thus it will be necessary to source biofuels feedstock from countries where there is sufficient arable land and favourable agricultural conditions. These are likely to be developing countries, which is where the social impacts will come into play.

There is a concern that many of the developing countries from which biofuel feedstock will be exported to the EU either have poor regulations and/or suffer from poor governance, fraud or corruption. Such countries either lack the robust regulatory systems and monitoring capacities required to protect vulnerable communities and marginalised groups that are likely to suffer the social impacts of biofuel cultivation, or, they simply lack the will or interest to put the needs of

potentially vulnerable and marginalised people ahead of economic gains that biofuel cultivation may provide.

Significant social impacts

One of the most significant social impacts related to biofuel stems from land use change. Where arable land is converted from the production of food to biofuel cultivation, significant direct and indirect impacts may occur. Impacts to food security is one of the primary concerns, in terms of scarcity of food supply, food production levels and impacts to price. At a national level, the displacement of food production means that the country may become reliant upon food imports to make up the deficit in domestic food production. Thus, the country becomes vulnerable to commodity market and food price fluctuations and potential food supply shortages.

At a local level, the higher price of biofuel feedstocks may attract smallholders or smaller-scale farmers (generally poorer populations located in rural areas that are dependent upon subsistence farming). Where these farmers switch from food production to the cultivation of crops for biofuels, they become dependent upon cash crops that are vulnerable to fluctuations in the international commodities

prices. As long as the price commanded by the feedstock in question is greater than food prices, this is not an issue. However, if food prices rise or biofuel prices fall, the smallholder becomes vulnerable to food shortages.

The farming community that once was able to grow its own food may now no longer be able to feed itself. Thus, if smallholders are able to grow biofuel stock plants on their land along with food and other cash crops, this impact can be mitigated. However, due to the nature of biofuel cultivation monopsony is typical (cultivation of a single biofuel crop). This also results in increased vulnerabilities to pests, seasonal weather and climatic conditions, all of which can threaten the livelihood of the smallholders.

One solution that biofuel advocates have put forward is to use so-called ‘abandoned’ or ‘marginal land’ for the production of biofuel. However, this is still likely to entail a range of social impacts as today there is almost no such thing as empty land which is still able to support crop cultivation.

In reality, the labels of ‘abandoned’ or ‘marginal land’ are applied by governments and regulators who are in favour of biofuels development for economic reasons. This type of land is often occupied by poor, minority or indigenous groups who depend upon





the land for their livelihoods. They tend to lack political power or representation and often have no formal title to the land which makes them vulnerable and thus are more easily displaced. Even where consultations with the local community are held prior to appropriation of the land for cultivation, often the voice of these marginalised populations is not heard.

At other times, it is a question of gender discrimination, whereby male representatives alone are consulted or are the ones to voice their opinions. The voices of women, who may have a more nuanced understanding of the social impacts due to their role in agricultural cultivation or domestic food and water harvesting, are not typically heard.

Displacement of peoples from land upon which they depend or have ties to can result in significant conflict related to land rights and related disputes, including scenarios in which displaced people encroach upon the land of others, often more marginalised than themselves. It may also result in the collapse of traditional livelihoods. Where local people have formal title to the land they may be encouraged or forced to sell the land, or it may simply be confiscated resulting in forced displacement, to make way for large-scale industrial biofuel feedstock cultivation. When displacement occurs that disrupts the social structure of the area, there is a real potential for negative consequences related to food security, as discussed above, as well as women’s and child rights, water access and violence resulting from land conflicts and disputes.

Typically, it is argued by producer governments that biofuels production will lead to an increase in jobs and alternative livelihoods for the rural poor who are often dependent on subsistence

farming, as well as positively stimulate economic development. This might hold valid in some cases. However, it remains to be seen how likely these benefits are to arise and whether the social costs involved resulting from biofuels production would outweigh these beneficial claims made by proponents.

Furthermore, the quality of these income generating activities is questionable. By simply advocating the positives about biofuel production in terms of generating employment and income, it does not automatically translate into the notion that only positive social impacts will result. The opportunities must be assessed against alternative livelihood options that would realistically be available to the local people and the population most directly affected. For instance, the agricultural sector is well-known for the high risk of poor working conditions. The landless poor often work for powerful estate owners who do not respect their rights, and examples of slavery and forced labour on Brazilian sugarcane estates (one of the world’s major bioethanol producers) are often cited in the media.

Whilst there are certainly positive examples of smallholders organised into cooperatives that have benefited from the production of second generation biofuels, this sort of result does not come about on its own and must be cultivated through specially designed projects and policies. As of yet EU

policies and sustainability criteria do not sufficiently take into account the complexities of land use change and the social impacts outlined above, to enable carefully designed mitigation strategies that would result in a win-win approach for those in biofuel producing countries as well as consumer countries.

Potential solutions

The concerns discussed above have driven the development of EU regulations and international certification schemes. The EU regulations are a good start, but there should be a push to ensure that biofuel production in developing countries contributes to sustainable development. This will require that not only environmental and economic issues are taken into account, but also social issues need to be included to

a greater extent in the future. The EU regulations address

carbon emissions and direct land use change issues. As complex as these issues are, it has been demonstrated that they can be addressed at a local level by biofuels developers. Impacts from indirect land use change (ILUC) require attention and focus also at an international level. The current system for approval of biofuels in the EU does not include formal requirements to ensure that biofuels have been produced in a way that takes into account social impacts and mitigates these where possible.

Another way to ensure the sustainability of biofuels is through the application of voluntary certification mechanisms. Existing certification schemes tend to only include limited environmental and social aspects. However, the Roundtable for Sustainable Biofuels (RSB) is one of the few that has included social impact indicators in the certification system. These are related to human rights, working conditions, health and safety, child labour, freedom of association and collective bargaining rights, plus social benefits to local community and rural development.

Social impact indicators play a key role in enhancing the credibility and acceptance of sustainability certification. However, the development of appropriate indicators that take into account locally significant issues, and the ability to verify these indicators in order to ensure a positive social outcome is challenging. This is due in part to the difficulty of monitoring social criteria and enforcing adherence to social policies in developing countries, which is in turn dependent upon national regulatory and enforcement systems that are often under capacitated and ineffective. Furthermore, social issues vary from

‘When displacement occurs

there is a real potential for

negative consequences

related to food security as

well as women’s and child

rights, water access and

violence resulting from land

conflicts and disputes’



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country to country, and may not be the same in Indonesia as in Africa, for example. There is an increasing demand for standards to be able to take into account nuanced social impacts that are locally diverse. In order to be effective, this would require international governance and support.

Social impacts at a local level can be accounted for within management systems including traceability systems. For example, if we think back to the potential negative impacts upon smallholders, discussed above, traceability requirements could be defined to take into account and demonstrate local conditions that make the cultivation of biofuel feedstock sustainable for smallholders.

Increasingly, environmental impact assessments are being conducted at a local level by biofuels project developers. Currently, social impact assessments are not mandatory. Regions where biofuels are currently being developed or likely to be developed in future are often areas where the social issues will be the most complex. These are also often the areas where project developers have little available data to use as baselines. However, developers ignore social impacts at their peril as they pose serious risk to biofuels cultivation and development in many of the geographies where biofuels will be produced.

It is acknowledged that social impact assessment in relation to biofuels cultivation is challenging. Certainly from the perspective of biofuels developers and project owners, the challenge is greatest where there is little information at a national level and thus project owners are required to determine a large number of social impacts that may or may not be directly affected by the cultivation of biofuels in a given location. This puts an enormous cost

on project developers in developing countries where the baseline data required to conduct social impact assessment, including information on land use, water use, food security and health are lacking. Financial investment and assistance is required to enable countries to develop and implement frameworks for the collection and production of robust social and environmental baseline data. Greater availability of baseline data could enhance certification and regulatory systems that would ensure biofuel projects contribute positively to local communities through sustainable social development.

The social impacts outlined above will take time to address and adequately account for. What is required is a progressive approach towards inclusion of social impacts within certification and regulation schemes.

At present there is significant financial pressure upon biofuels production. Therefore care needs to be taken to ensure that the challenges in determining the impact of biofuels cultivation upon local communities does not hinder sound projects from going ahead. It is for this reason that social impact assessment and certification requirements must be progressive.

Similarly, projects that do not meet social standards need to be supported by international factors to develop mitigating strategies resulting in positive social impacts over time. What is important is that the social issues are acknowledged and that biofuel cultivation fosters positive social impacts over time, with a view to continuous improvement, rather than brushing these issues under the carpet or pretending that current regulatory or certification schemes are sufficient. l

For more information: This article was written by Bettina Reinboth, a consultant for DNV. www.dnv.com



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Construction has started at the world’s first biorefinery producing

wood-based biodiesel.Finland-based UPM’s focus

is to integrate the forestry and bio industries, and this project is the company’s first big step.

The facility is located in Lappeenranta, south-eastern Finland, and will produce biodiesel from crude tall oil at UPM’s Kaukas mill site. This integration will offer synergies, such as a wastewater treatment plant and utilities like energy, electricity, steam and instrument air. This is also the location of UPM’s R&D centre.

The building work started on schedule in June and the piling work followed in July. Construction is due for completion in two years’ time.

When it is ready, the biorefinery will produce annually approximately 100,000 tonnes of advanced second generation biodiesel for the transportation industry, equating to 120 million litres of biodiesel.

Where the idea was born

UPM launched its transformation strategy in 2008, and one of the

routes it wanted to explore was whether it produced any suitable residues in its existing operations that could be processed further.

‘We found out that a significant amount of crude tall oil was generated as a residue in our chemical

pulp production, mainly in the production of sulphate cellulose from softwood,’ Sari Mannonen, director of business relations and marketing at UPM Biofuels, explains.

‘That started an R&D project in-house and resulted as a new innovation and technology to convert crude tall oil into advanced biodiesel.’

A significant portion of

crude tall oil will come from the company’s own pulp mills in Finland but it will also source it outside.

UPM will convert the crude tall oil using hydrogenation technology. The whole process from crude tall oil to the final product, pure second generation biodiesel, is performed and controlled at the same UPM biorefinery site.

The main steps of the process are pretreatment of crude tall oil, hydrotreatment,

The project started as in-house R&D research before expanding

Although the first biorefinery producing wood-based advanced biodiesel is under construction, plans for additional plants hang in the balance, largely dependent on the outcomes of investment grants

One of a kind

‘Future investments plans in

BtL biorefineries will depend

on NER300 grants’Sari Mannonen, director of business relations

and marketing, UPM Biofuels

UPM R&D centre is located next to Lappeenranta biorefinery



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recycle gas purification, and fractionation. ‘We use our own development work and sustainable wood-based raw materials. As a result we will have a cost-competitive, high quality transport fuel that truly decreases emissions by up to 80% and is suitable for modern cars,’ Mannonen adds.

The sustainability factor

UPM is complying with best practices and legislation that is supported by the implementation of certified management systems. The tools it uses cover the whole lifecycle of the product including the supply chain. It means, for example, knowing the origin of its raw materials and regular checks of the environmental performance of the suppliers. Complying with the sustainability requirements set in the EU Renewable Energy Directive (RED) with third party verification is one key element in ensuring the sustainability of our product.

Also, UPM’s wood sourcing is based on the principles of sustainable forest management, chain of custody and forest certification. By further processing crude tall oil UPM is able to use the wood for its pulp production in a more efficient way without increasing wood harvesting.

Meeting the goals

As is well known, the EU’s target is to increase the share of biofuels in transport fuels to 10% by 2020. In Finland, however, the goals are even harder to reach, with an expected increase of 20%.

The annual production of UPM’s Lappeenranta biorefinery will contribute approximately a quarter of this biofuel target if sold entirely on the domestic market. However UPM will also supply biodiesel elsewhere, primarily to countries in the Baltic region.

Step two

Once the Lappeenranta Biorefinery is complete UPM will start to look further afield. ‘We are considering building a BtL plant in either Rauma, Finland or Strasbourg, France, but no investment decisions have been made yet,’ Mannonen reveals.

This biorefinery would use energy wood (logging residues, woodchips, stumps and bark) as raw material and a different technology to that of the UPM Lappeenranta Biorefinery.

‘We have naturally studied several things such as availability of feedstock, integration benefits or closeness of markets in our feasibility study when choosing these possible locations among all UPM sites,’ she adds.

Securing the necessary finance UPM is proud to say that its total investment of around €150 million in the Lappeenranta project was completed without any public investment grants.

However, its future biorefinery plans will depend on the EU’s decision on investment grants, particularly the NER300.

NER300 is one of the world’s largest funding programmes for innovative low-carbon energy demonstration projects. The amount of funding available is expected to be around €1.3-1.5 billion.

‘Our BTL investment decision will also be significantly impacted by the long-term outlook for wood price and availability in the market,’ Mannonen explains.

‘The EU is expected to decide on the NER300 grants by the end of 2012. UPM has been shortlisted in their evaluation and we will not invest in the BtL biorefinery without these grants.’ l

UPM´s wood sourcing is based on the principles of sustainable forest management

The transportation industry will benefit from the new wood-based biodiesel

UPM hopes for positive EU reaction to the project to secure future investment





One certification body takes a closer look at biofuels’ supply chains featuring animal fats and used cooking oils, and the complications that can arise

Certification bodies at workCertification is the

only recognised instrument to demonstrate

compliance with sustainability criteria set out in the Renewable Energy Directive (RED) directive 2009/28/EC.

Economic operators (EOs) belonging to the supply chain from feedstock to biofuels/bioliquids production can be certified through national or voluntary schemes.

Voluntary schemes are submitted to and approved by the European Commission (EC); if a product meets the scope for which EC has recognised a certain scheme for, then certifying a product against that scheme should guarantee the acceptance of such certification in the 27 member states.

This means that if a certain voluntary scheme is partly compliant, e.g. assessment of one sustainability criteria, only the certificate for that single criteria would be accepted in EU, while the other missing

requirements have to be covered by other schemes.

Biofuels/bioliquids certified through voluntary schemes covering all sustainability criteria and thus qualified for incentives do not automatically gain the right to access national support schemes.

Member states are able to set up their own list of financially supported supply chains and the rules for getting such incentives. Double counting is an example of national legislation deciding which feedstock would be entitled to such recognition.

If an EO is being certified against national and voluntary schemes, the certification body shall optimise the need of assessing the compliance with mandatory requirements set out in both schemes and the intent to avoid any unnecessary burden to the EO.

Only after completing the certification procedure with a positive result can the EO claim to be compliant with a

scheme. This is as long as any non-compliances found during the audit shall be implemented within a definite date.

In all cases, the certification body operates according to the following articles:- Sustainability criteria (GHG

and biomass production): Article 17 (2) and Annex V for greenhouse gas emissions savings; Article 17 (3), (4) e (5) for land use (conservation of biodiversity, carbon stocks and peatlands)

- Chain of custody (traceability): Article 18 (1) for the use of a mass balance system

- Audit quality: Article 18 (3) for the use of an adequate standard of independent audit to verify that the systems used by economic operators are accurate, reliable and protected against fraud.

The Italian certification body ICIM has carried out an analysis of the difficulties encountered during the

certification process arising from non-conformities.

The company has grouped such failures into three categories related to: a) Bookkeeping segregation

versus financial transportation documents

b) Sustainable versus trade batch

c) GHG emissions

Working with challenging feedstocks

For used cooking oils (UCO) and waste animal fats the supply chain starts from the point of production of the waste/residue. That is the point from where traceability and emissions are taken into account.

Incoming batches of UCO and animal fats are fully traceable and sustainable; UCO has its own code according to the European Waste Catalogue while waste animal fats can be identified according to Sanitary and Veterinary Authorities forms.

However, the final use of the recovered UCO or animal fats make a big difference in the way the EO approaches the RED certification. While EO’s involved in the food/feed supply chain already have in place a strict system for traceability, others selling their products for industrial uses are not used to linking incoming to outgoing batches.

ICIM notes a case (not necessarily from its own certification process) where a non-conformity was given because the correspondence between incoming delivery notes, bookkeeping file (mass The entire supply chain from raw material cultivation/plantation to biodiesel/bioliquid production





balance) and outgoing delivery notes was not univocally defined. This is defined as a Category A failure as above.

In fact, each batch should be identified with the purchasing date and code, or with the date in which new batches have been created from existing batches in stock or supplied to the next EO.

When a traceability system is already in force to comply with other certifications, the certification body has to check that the requirements of the chain of custody are met according to the RED.

Such requirements imply that different sustainable incoming batches (even if belonging to the same trade batch) should be maintained as such along the conversion unit. Batches acquire new codes related to processes but maintain different associated emissions.

The identification of the outgoing sustainable batches in the mixture depends on the declared yield of each of them. It is quite complicated to precisely identify each single batch in the mixture with the correspondent yield. To reduce the risk of a declaration that could lead the EO to breach the chain of custody criteria, the most conservative yield has to be used, among literature data

or real data of the process statistically managed.

Moreover, the process yield has to be clearly identified in order to guarantee the correct update of the batches in stock (it is suggested to always adopt a conservative approach to avoid high risk declarations). At the end of the declared timeframe for demonstrating compliance to the mass balance criteria, all amounts shall be higher or equal to zero, since negative credits are not allowed. The certification body has to assess the proposed yield and check how the stock is managed depending on the incoming/outgoing batches. A common mistake is the wrong definition of the yield, not associated with incoming/outgoing batches.

The only sustainable criteria associated to the waste/residue feedstocks is related to the GHG emissions; in this case non-conformities were related to calculation of real values and use of default values.

The certification body has to verify that default values have been correctly used and that the EO has calculated real values whenever the default values are not applicable. In this case the non-conformity was assigned to the biodiesel producer considering the wrong use of GHG saving index (83%) for all processed residues. In fact UCO oil, soapstock from vegetable oils refineries or waste animal fats (category I and II) are allowed for the use of 83%, while the other feedstocks are not included in the statement ‘waste vegetable or animal oil biodiesel’.

The category III animal fats renderers have to calculate real values for emissions. Since there was no justification for distributing consumption of inputs between the two feedstock, the proposal of the EO was rejected. The certification body could accept that the worst case is applied (that was

Example of management of the mass balance for a process where an amount YSB1 of batch SB1 (sustainable batch) is mixed with an amount YTB3 of batch TB3 (trade batch)

Source: ICIM

-RED

IT Scheme-M

ass Balance

For the cultivation step, Biograce database (version1) considers a value of 3,113kg rapeseed with 10% moisture as output of the cultivation step. In this example the output is considered 1,000kg. With the aim of improving the confidence of the EO with the Biograce database, the same amount of inputs have been proportionally used, so that the EO could exactly find the ‘same numbers’ by multiplying the listed values per 3.113. The sum of each contribution gives a value of emissions of 664.58g CO2,eq/Kg rapeseed, moisture content

10%. This rapeseed contains 10% moisture and thus the real emissions of this step would be 738.07g CO2,eq/Kg rapeseed,

dry. This methodology has to be used for having coherent unit on the emissions value along the supply chain allowing the sum of emissions step by step. Emissions are accepted as g CO2,eq/kg rapeseed or g CO2,eq/MJrapeseed or g CO2,eq/MJF

AME to enter in the next step, specifying if moisture has been already taken into account. In this example and in the followings, ‘rapeseed’ refers to dried rapeseed. Then, the emission expressed in energy content of rapeseed would be: 27.96g CO2,eq/MJ rapeseed. It is required to the EO to explicitly declare the standard value used for the calculations.

Example of GHG emission calculation by using Biograce values

Source: ICIM

-RED

IT Scheme-G

HG

emissions





the case), unless a technical justification is provided or real measurements through dedicated pipelines/power equipments are in operation.

Another non-conformity had arisen from the assignment of emission factors. Many EOs use the common knowledge as justification of assigned values and so are asked to provide referenced values. Sometimes, the proposed value, even if referenced, has to be rejected since it is not related to the case where the plant is located (e.g. medium voltage with a plant in the EU has to use the electricity mix for the EU).

The Netherlands-based BioGrace project aims to harmonise calculations of biofuel greenhouse gas (GHG). Its database should be used when EOs are not familiar with such calculations and structure of the file.

Common mistakes were due to the use of non-uniform units of measurement and calculation mistakes, solved during the audit. The certification body has to verify that the worst value for emissions has been attributed in case sustainable batches are mixed; taking the average emissions is not allowed in the RED

To conclude, the duration of the certification process depends on: - Size and capacity of the EO- Presence of structured

management- Level of knowledge of

chemical/physical processes- Other certification system

imposing traceability The approach used during the first interactions with EOs aims to provide guidelines to correctly organise the documentation for the audit and to manage the certification. The certification body must build up the proper

mass balance and the right GHG emissions information, with mandatory information to be passed between EOs through a clear and complete declaration of conformity or proof of sustainability.

The risk analysis made on the available documentation provided by the EO before the on-field audit provides a clear indication on the confidence reached by the EO with concept such as mass balance, GHG emissions and sustainable batch.

Further information: This article was written by Marinka Vignali and Vincenzo Delacqua, ICIM S.p.A. Certification Body

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biofuels sustainabilityCertification is seen by some as an added cost with little benefit. But if traceability and process efficiency is built into the business model they can actually result in significant gains to the bottom line

Making the most of sustainability With evolving

market drivers such as the Renewable Energy

Directive (RED) mandating certification compliance for sustainable biofuels, producers are required to have increased control and visibility of certified biofuel within their organisations. At the heart of certification is the traceability methodology known as mass-balance, which underpins the carbon and sustainability claims sold with certified biofuel.

The biofuels sector is also under increasing scrutiny due to concerns about its sustainability, transparency of supply and delivery of measurable greenhouse gas (GHG) savings. In the EU these concerns have resulted in legislation which mandates demonstrable sustainability for biofuel and feedstock.

The RED mandates that 10% of road fuels consumed in the EU are derived from sustainably managed biological sources by 2020. If biofuels are not demonstrably sustainable they are not counted towards the target and the operators supplying the fuel may face financial penalties.

The wider implication of this regional regulation is that biofuel producers have to include Carbon and Sustainability (C&S) information with the fuel that they sell, wherever they are in the world, if there is a chance that the fuel will be used or traded in the EU market.

‘Voluntary’ sustainability

certification now has the force of law backing it and as a result is emerging as the most cost-efficient and widely accepted way to demonstrate that biofuels have been produced sustainably and are therefore compliant with the RED.

Since certification allows open market access and free trading between major biofuel markets, certified biofuel is rapidly becoming an industry standard. In addition, it is also seen as an independent stamp of approval of a well-run business, something which a wide variety of stakeholders, including customers, regulators and investors, are increasingly looking for.

Virtual sustainability characteristics

Biofuel sustainability policy and certification is still in its infancy, with most operators scrambling to meet the minimum requirements of customers and regulators. Certification is therefore often seen as a cost with little upside. However, if sustainability, certification and process efficiency are built into the core of a business, with the right supporting business management systems and software, this transition can yield significant gains which are reflected in the bottom line. These systems need to give visibility to the flow of ‘virtual sustainability characteristics’ alongside mass balance traceability so that the two are seamlessly

fed into critical business management processes.

Until recently organisations have tried to manage the traceability of assets from farm to customer with internal systems including paper-based spreadsheets and bespoke software applications. These makeshift systems can be difficult to operate, inflexible and expensive to maintain and support. Often there is only partial – or no – integration between systems preventing users from having a clear and accurate view of product volumes and corresponding C&S data; something that is integral to making informed business decisions.

Even today, many biofuel producers are still ‘getting by’ with manual data inputting on certified volumes from source to destination, often in a spreadsheet. Similarly, this is often the case for contract information related to sales orders, with the spreadsheet being updated after every sale of certified product. As the demand for certified product increases the time this takes will no longer be feasible and the system will become increasingly prone to error as this manual process is stretched beyond its limits. Spreadsheet-based mass balance accounting also does not provide adequate controls to mitigate the risk associated with a negative balance.

It is illustrative to highlight two examples of the shortcomings of using spreadsheets compared to a specialised, centralised

software solution to manage mass balance traceability. Firstly, it is likely that multiple systems will be required to calculate the mass balance and transfer the results to various parts of the business, whereas a centralised system, accessed by multiple users from different departments, eliminates time lag, reduces the risk of error associated with several independent systems as well as decreases the cost to modify non-flexible processes.

Secondly, significant time and resources are required to collate the necessary data and documentation from numerous sources for certification audits, whereas a unified system decreases the time and resources necessary for auditing to different schemes by producing the data required in reports designed to meet each of the leading standards, thus reducing costs of certifying to multiple schemes.

Managing the reconciliation period to increase sales

Sustainability claims sold with biofuels rest on the integrity of the systems which manage the data associated with mass balance, as defined by the European Commission, and in the leading EU-approved certification schemes such as Bonsucro, International Sustainability and Carbon Certification (ISCC), 2BSvs, and the Roundtables on Sustainable Biofuels (RSB) and Responsible Soy (RTRS). All of these schemes provide





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Automate the Mass Balance management of your certified biofuel to:• Trackandtracecertifiedproduct• Integratecross-organizationaloperations

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Increase flexibility in the sales process whilst satisfying the traceability requirements of mass balance

scope for flexibility through a ‘reconciliation period’. This allows producers to sell volumes of fuel as certified in advance of production provided that, at regular intervals, the volume sold is reconciled with the volume claimed.

Operating a mass balance traceability system efficiently, alongside a producer or trader’s sales process, requires the acquisition, processing and management of a large amount of dynamic data, including:

• projected certified stock flow

• current certified stock levels • projected demand

for certified stock• disparity between actual

certified throughput and claimed volumes

In the future, having a live view of your stock position, relative to the reconciliation period, could offer a distinct advantage by giving operational flexibility to fulfilling sales orders.

Simultaneously, a producer must input, process and assign carbon data to outgoing consignments, which adds another level of complexity where multiple GHG values are assigned to incoming feedstock. The integrated nature of specialist software systems means that this live data is constantly pushed to relevant business functions within the company.

For example, a system might be configured to send an automated request to an administrator to approve a temporary overriding of the threshold for selling certified volumes. The system would have already confirmed with the production management software that sufficient certified volume throughput is anticipated within the reconciliation period. This in turn would be instantly processed and fed into the sales department where a temporary suspension might

be lifted in the sales system, e.g. SAP, allowing increased sales volume without risking a negative mass balance.

Reducing redundant stock

To date, some producers have been chosen to hold a large reserve of sustainability ‘credits’ as insurance against a negative mass balance because they do not have visibility of their current position. Ideally a producer would have a real time view of stock levels that factored in sales commitments as and when these were made, as well as taking account of projected production rates and the time remaining in the mass balance reconciliation period. Ultimately, the automated management of the virtual stock of certification credits would ensure that the sales department does not inadvertently leave a company exposed by selling more certified product than has been produced. At the same time the ‘live view’ would mean that a large reserve of sustainability credits would not have to be held back as insurance.

There is significant potential to free up additional certified stock for sale using this kind of automated virtual stock management. As an illustration a medium-sized biofuel producer has an output of 50 million litres per year with a notional value of $32.5 million (€26 million).

The producer commonly sells product in individual volumes of 1 million litres with a value of $650,000. To insure against the risk of an inadvertent negative mass balance the producer has taken a decision to hold back virtual stock equal to 20% of annual certified biofuel production, with a potential value of around $6.5 million. Reducing the buffer to 10% of annual output would therefore free up around $3.25 million of available certified stock, which

could in turn be released to the sales and trading department to take advantage of customer demands for large certified volumes as and when these arise. This could be particularly advantageous early on in the reconciliation period when sufficient certified feedstock may not have been processed to satisfy large sales orders. For the biggest producers these figures might be 10 or 20 times greater.

If demand for sustainable, certified product grows as expected in the future, holding a large effective reserve of certification credits will become increasingly expensive and commercially damaging to a business. Installing an automated system to calculate and generate an appropriate insurance buffer on a regular basis allows producers to sell increased volumes of certified stock without increasing the

risk of an infringement of the mass balance rules.

Certification and mass balance traceability for biofuels is now a market reality. Having access to live data on an organisation’s biofuel production and sales is key to effectively managing this requirement. Specialist software solutions enable the monitoring of sales orders as well as the actual outgoing stock, and maintain accurate and up-to-date mass balance accounts based on both the volumes committed by the sales department and on the physical product leaving the mill, which satisfies the traceability requirement. As customer and regulator information needs become increasingly more demanding and specific, those companies which can provide this data, with its corresponding electronic audit trail, will gain increased market share. l



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After a year of discussions no. 36 of the Federal Immision Control Act (36. BImSchV ) wasintroduced in Germany. But, as one supplier explains, there is still more to be done before the market can reap the benefits of consistent policy

Double counting spreads throughout Europe

The failure of various climate summits to reach a follow-on agreement

to the Kyoto Protocol is evidence of how difficult it is to achieve a global consensus for the reduction of greenhouse gases.

Within the EU the subject of greenhouse gases has been on the agenda for many years. Even the US, with not even 5% of the world’s population and still an energy requirement of around 25% of the available global energy, recognises that ambitious climate goals can only be achieved with the promotion of renewable energies, such as the RFS2.

The EU Commission implemented a legal framework to promote renewable energy in April 2009 with the Directive 2009/28/EG. This stipulates legally binding goals, namely that 20% of energy must come from renewable sources and 10% biofuels must be used in the transportation sector by 2020.

Furthermore, the EU Commission specifies the implementation of this directive according to national law in the different EU countries from 1 January 2011. This represents an important contribution to predictable energy politics

for regenerative energies. The EU Commission

also intends to impose more stringent conditions on the vehicle industry. By 2020 the emissions of new cars in Europe may not exceed 95g of CO2/km. According to Greenpeace this corresponds to a fuel consumption of around 3.9l of petrol or 3.4l of diesel fuel/100km. This would lead to a savings of up to €3,800 over the lifetime of a car.

Germany’s state of play

Germany is set to be the first EU member state

to introduce a carbon dioxide reduction quota, which will be introduced by 2015 at the latest.

From then the oil industry will be obligated to reduce the greenhouse emissions by a certain percentage, regardless of the biofuel used.

This gives clear advantage to biodiesel produced from waste or residual materials, such as a used cooking oil methyl ester (UCOME), which has a greenhouse saving potential of more than 90% compared with a comparable fossil-based fuel.

Because of the high CO2 reduction potential the

UCOME counts double for the blending quota oil companies have to buy. Such double counting schemes are already used in countries such as Germany, the Netherlands, France and the UK, with Italy due to come on board in November this year.

Throughout 2011 Germany discussed if the UCO that was used for frying animal products is automatically a tallow-based raw material. After nearly a year of discussions the conclusion was that UCO can be used as a residue for the production of double counting based methyl esters.

Oil companies can therefore decide whether to physically mix only 50% of the quota in order to fulfil the obligation, 100% or physically mix 100% UCOME in order to sell with 50% over fulfilment of the quota. If oil producers over fulfil their quota they are able to sell on these for profit.

Various biodiesel producers have recognised the potential of UCOME for many years. However, they have been waiting for a political signal, which has now been implemented in the above mentioned EU member countries.

Currently producers of UCOME can earn a

‘Germany is set to be the

first EU member state

to introduce a carbon

dioxide reduction quota,

which will be introduced

by 2015 at the latest’



Helvetica Black and Helvetica Ultra lightfeedstock biofuels


premium for their end product. There are between five and seven UCOME producers in Germany and the average price advantage is around $150-$250 (€122-€203) per tonne.

Using biofuels derived from waste or residues solves many of the frequently occurring critical remarks about biofuels, such as food versus fuel, indirect land use change (ILUC) and other such discussions.

Availability

Germany-based feedstock supplier Gelsenchem conducted some research, finding that around 2.5 million tonnes of used cooking oil are available within the EU.

However, at present only around 750,000 tonnes are collected. This means an intelligent collection infrastructure is required, such as the one that exists in Austria. Here, even private households are asked to deliver their old cooking oils to collection points.

Updating the regulations

In November 2003, the European norm EN 14214 was published in Germany as DIN EN 14214 and replaced the previous German standard of biodiesel.

Biodiesel must fulfil the requirements of DIN EN 14214 in accordance with the 10th German Immission Control Ordinance (BImSchV)

to allow it to be used in vehicles as a blend with diesel or as a pure fuel.

In 2011 article 7 of the regulations on details of the biofuels quota (no. 36 of the Federal Immission Control Act- BImSchV) was amended to include double counting.

Article 7 of regulation no. 36 of the Federal Immission Control Act (BimSchv) allows biofuels produced from waste and residual materials to count twice towards fulfilling the requirements set forth in Article 37a (1) (1) and (2) in relation to paragraph 3 of the Federal Immission Control.

‘36.BimSchV relates specifically to double counting, whereas the Renewable Energy Directive (RED) is more concerned

with sustainability as a whole,’ Thorsten Cammann, director as Gelsenchem, explains. ‘The RED doesn’t mention double counting.’

At the moment many producers do not really understand the difference. In the future 36.BimSchV, as well as double counting, will become part of the RED. A draft has already been produced for this, so it may happen as early as January 2013. This will make double counting a lot more relevant and UCOME will become an even more important biofuel. l

For more information: This article was written by Thorsten Cammann, managing director, Gelsenchem http://www.gcm.gelsenchem.de/en

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Oil palm plantation group First Resources explains the audit process step-by-step, showing how difficult issues, such as pesticides and soil conservation, are tackled

How to complete an ISCC auditT

hrough its wide range of possible applications, palm oil represents the most

important vegetable oil traded as commodity worldwide. About 90% of palm oil production is consumed within the food industry, while only 5% serves as an input to biofuel production. As a result, global palm oil production of 48.99 million tonnes has nearly doubled from 2001 to 2011. This is driven mainly by the food demand resulting from global population growth.

However, this increase in palm oil production has generated tremendous attention from NGOs and the public due to concerns regarding the associated local environmental and social impacts. With these concerns aside, the fact remains that palm oil production has the highest output of vegetable oil produced per hectare compared to annual crops like rapeseed, sunflower or soya.

In reaction to growing concerns, the palm oil industry, in association with other stakeholders, has developed the Roundtable Sustainable Palm Oil Standard (RSPO). In addition to RSPO guidelines, the International Sustainability & Carbon Certification (ISCC) standard is used increasingly to verify sustainable palm oil chains designated for biofuel and energy markets.

The ISCC and RSPO follow similar social and environmental requirements. The major differentiator between the two is that the

ISCC applies a later cutoff date for land use changes than the RSPO. As palm oil mills produce crude palm oil (CPO), not only for biofuel but for the food industry as well, implementing the

RSPO standard prepares these companies to meet and implement the ISCC standard as well.

Case study

First Resources is a group of agro-industrial enterprises, which is committed to running its operational activities in a sustainable manner with respect to the environment aspects and impacts, production, and social, including occupational safety and health.

First Resources acknowledges that the main and supporting activities could potentially cause beneficial and adverse environment impact. Therefore, First Resources efforts in embracing social and environmental responsibility are

only the beginning of a journey. The company says it

is attempting to address this and is committed to continually improve its practices and initiatives to meet evolving international

acceptable sustainability standards like ISCC. The company has obtained the ISCC for its processing plants, demonstrating the plants’ compliance with EU’s Renewable Energy Directive (RED).

Its decision to choose the ISCC standard is based on the fact that its clear structure with respect to company requirements is very detailed. This means implementation and meeting the requirements is mainly adjusting the company’s established quality management systems to additional requirements like sustainability, mass balance and greenhouse gas (GHG) calculations.

The main challenge was to re-arrange all data and activities in a way that they are traceable and provable.

Some processes or activities are well known by employees however to a certain extent they have to be documented so an external auditor can verify them. The continuous implementation of other basic management system standards, such as EMS ISO 14001, QMS ISO 9001, OHSAS 18001 and PROPER (Companies Environmental Rating Programs) contributed significant framework to accelerate the ISCC implementation on site.

While having GHG calculations, individual or actual values were more applicable for PME chains due to it not being possible to use default values.

The audit process

It is important for companies to understand that implementing either standard (RSPO or ISCC) provides the benefits of complying with client or market requirements as well as supporting companies to better understand its internal processes. Any Quality Management System (QMS) can be used to collect information for continuous process improvement and to drive increasing cost-effectiveness, while documenting a company’s social and environmental responsibility. This is clearly the case when the palm oil mill and palm plantation of PT Pancasurya Agrindo from the First Resources Group was audited according its conversion of Fresh Fruit

‘Germany is set to be thefirst EU member stateto introduce a carbon

dioxide reduction quota,which will be introduced

by 2015 at the latest’





Bunches (FFB) to CPO.The audit process is usually

a stressful time for company representatives and the challenge for external auditors is to reduce this tension and create an atmosphere that provides a constructive working environment for all parties. Relating to the audit of PT Pancasurya Agrindo, effective communication, established guidelines and relationship management were keys to completing a successful project.

The next challenge facing external auditors was not only to verify that ISCC requirements were implemented but to further understand how the respective QMS was constructed and how it met standard requirements. This can be a challenge for auditors as QMS differs between companies. As a result of this variance in QMS, verification of internal process documents must be combined with personnel interviews in order to ascertain whether ISCC requirements are being followed on a daily basis in the work environment.

PT Pancasurya Agrindo presented the auditors with a clear overview of how ISCC requirements had been implemented. It was clear that through an investigation of all relevant processes, the client’s system complied with ISCC guidelines. Outside of risk assessments, the following areas have to be taken into account by companies involved in sustainable biofuel chains:• QMS, internal audits,

document control and storage of records

• Staff training• Supplier evaluation• Traceability information/

records• Mass balance sustainable

biomass/biofuels• Greenhouse gas

calculations (if default values cannot be used).

In order to ensure supplier reliability, each company within the biofuel chain is

advised to implement an internal supplier verification process. This is especially important as certificates are valid for one year and can potentially be withdrawn in case a company violates the standard rules.

Companies that purchase biomass from farmers tend to rely on self-declarations provided by farmers/plantations, stating compliance with ISCC requirements. Further evidence that farmers comply with ISCC requirements is gathered through internal and external verification of compliance claims via an on-site inspection of a sample of farms.

In the case of PT Pancasurya Agrindo, supplier evaluation was not a crucial issue as the plantation supplying FFB was owned by the oil mill and therefore maintained direct control over ISCC requirements. While inspecting the plantation, it was possible to verify that ISCC requirements for FFB production were met.

The critical first hurdle for each agricultural producer of biomass is to show that the complete area owned by the company complies with the land use change criteria. Via provision of satellite maps and land purchase contracts, PT Pancasurya Agrindo was able to provide strong evidence that the land was under agricultural production

prior to January 2008. Intertek were impressed by the plantation management’s clear organisational structure, which provided additional documentation related to pest management, fertiliser use, soil conversion measures and social responsibility.

On the key topic of pesticide use, it was discovered that the use of special plant species was able to minimise the need for insecticides. Another important activity that was documented was the soil conservation practices like cover crops, construction of terraces and silt pits to minimise soil erosion, leaching of nutrients and pollution of waterways. Buffer zones at both sides of river banks were also maintained in order to preserve water quality.

All plantation management activities were well documented in order to comply with the obligatory GHG emission requirements for FFB production. However, the main challenge for each company with respect to GHG calculations is the availability of emission information related to inputs used. Hence for all types of pesticides only one emission factor is approved by ISCC so that potential lower emissions for specific pesticides are hardly ever taken into account.

Besides calculating emissions, all companies converting or storing biomass/biofuels are responsible for

requirements linked to mass balance and traceability. Usually, implementing this requires minimal additional effort as most companies have systems to track quantities related to production, incoming and outgoing products. The only challenge is to decide where to include additional information such as Country of Origin, GHG values, ISCC Certificate Number.

Mass balance requires that a company has to prove that it has sold no more sustainable bioliquids than it has produced from purchased sustainable biomass. In the case of PT Pancasurya Agrindo, it was evident that only sustainable FFB from its own plantation were converted to sustainable CPO. However, if a conversion unit has more than one biomass supplier, or even converts sustainable and conventional biomass into bioliquids, the administrative efforts become much more burdensome. In cases where each production line produces quantities going into conversion, the related conversion factors (e.g. extraction rates) and quantities of produced main or by-products have to be recorded separately. l

For more information: This article was written by Martin Grass, project manager for sustainability at Intertek and Bambang Dwi Laksono, head of sustainability at First Resources Group, [email protected]



Helvetica Black and Helvetica Ultra light biofuels biotechnology


Getting closer

Dupont talks about how it uses biotechnology to ensure sustainability, increase feedstock yields and bring the second generation market one step closer to large-scale commercialisation

DuPont is on the cusp of commercialising advanced biofuels. Last year the

company bought Danish bio-based company Danisco and its biotechnology Genencor unit to create the new unit DuPont Industrial Biosciences.

The company uses Genencor’s enzyme technology to convert a range of renewable nonfood feedstocks such as corn stover, switchgrass and wheat straw to cellulosic ethanol.

With the major technical challenges of enzyme optimisation and cellulosic conversion in the rear view mirror, the company’s attention has focused on developing a sustainable feedstock supply chain.

As it is plentiful, does not displace food crops and is not widely used for other commercial purposes, DuPont and other companies have selected corn stover as the logical feedstock of choice for the first cellulosic biorefineries.

DuPont is operating a demonstration facility in Tennessee that is generating data on corn stover feedstock for use in its planned biorefinery in central Iowa. This will require 350,000 tonnes of biomass feedstock annually.

The biorefinery will be located adjacent to the existing Lincolnway Energy ethanol plant, which will enable potential synergies in energy and logistical management. DuPont plans to break ground on that facility in 2012 with a 12 to 18

month construction period. To build the plant, DuPont

has contracted Fagen, an EPC contractor that has built 85 ethanol plants, more than any other construction company in the US.

Once completed, this will be one of the first commercial-scale cellulosic biorefineries in the world and it will generate 28 million gallons of cellulosic ethanol annually from corn stover residues, including corn stalks and leaves. DuPont Cellulosic Ethanol (DCE) is currently working with Iowa-based farmers to build and scale up the supply chain for this biorefinery.

DuPont’s stover harvest collection project involves collaboration with farmers, DuPont Pioneer biomass supply chain experts and Iowa State University, as well as custom harvesters and equipment manufacturers. It is focused on standardising equipment and techniques for collection, transport, storage

and pre-processing of stover, while ensuring stewardship of farms and achieving economics of the biorefinery.

In addition to plans for the biorefinery in central Iowa, DuPont also has a 50/50 joint venture with BP Biofuels, one of the world’s largest energy companies with operations in more than 100 countries. This joint venture, called Butamax Advanced Biofuels, is working to develop and commercialise biobutanol.

Isobutanol is a molecule that is similar to petrol and can be readily dropped into the current liquid transportation infrastructure, without changes to the refiner or distribution. Biobutanol is deployed through retrofit of current ethanol facilities, so it does not require building entirely new facilities. It also can be blended into petrol at a higher rate than ethanol under current US EPA regulations. Butamax has also signed up seven existing ethanol producers

with a total of 11 plants for its early adopters programme to convert their facilities to biobutanol production. Butamax will begin retrofit of the first facility in 2013.

A look to the future

Today, the biofuels industry is on the precipice of commercialising advanced biofuels.

While the US and Brazil are the leading countries producing ethanol, the potential for advanced biofuels in other parts of the world is significant. Currently, the advanced biofuels industry is on track to become a $20 billion (€16 billion) global business by 2017. l

For more information: This article was written by Jan Koninckx, global business director of biorefineries at DuPont Industrial Biosciences, biofuels.dupont.com

Advantages from plant genetics

Another of DuPont’s businesses is DuPont Pioneer, one that delivers high-yielding products to meet growing demand from the biofuels industry.

Pioneer offers more than 230 High Total Fermentable (HTF) ethanol hybrids that increase the fermentable starch content of corn plants for greater outputs. Many of these ethanol hybrids are designed to reduce insect damage to grain and help prevent moulds and mycotoxins. This helps ensure a consistent supply of high-yielding, high-quality grain.

DuPont also develops bioprocessing

aids to improve efficiency and yield, and improve the quality of Dried Distillers Grains, a co-product used in the animal feed industry. DuPont’s grain processing technologies enable the production of more of more than 6 billion gallons of ethanol each year. To realise cost and process efficiencies throughout ethanol operations, DuPont’s bioprocessing technology has also brought to market a fermentation additive that helps today’s ethanol producers achieve greater production efficiencies and lower costs without the use of antibiotics.





Faster commercialisation via technology licensing

Cellulosic ethanol is undoubtedly popular – the real question comes

down to economics. In order for it to take off producers need to reduce the cash cost of the final product, minimise capex, construct an agronomic value chain and speed up the time to production.

To date, however, many firms have approached this challenge by assuming they need to solve all the pieces themselves. This requires substantial R&D, process development, agricultural, engineering and operations experience – as well as a lot of time and money.

A different approach

Italy-based Beta Renewables has chosen a different approach, which has been rapidly gaining technical, economic and

commercial validation. The company, created

in 2011, is a $350 million (€250 million) joint venture of the Chemtex engineering division of Gruppo Mossi and Ghisolfi (M&G) and the investment firm TPG.

Since 2008, M&G has invested over $200 million of its own money in the development of the Proesa process for the cost-effective conversion of cellulosic biomass to sugars. The R&D work was ‘seasoned by’ the company’s broad experience in process scale-up, commercial plant engineering, construction and operations, and in agronomics. The results were ‘spun off’ into Beta Renewables, which licenses Proesa worldwide.

This focus on the development of technology for biomass conversion has resulted in a viable, cost-effective process, with plans

to validate it shortly at the world’s first commercial-scale cellulosic ethanol plant. The plant will start operations by the end of 2012 in Crescentino, Italy, with a planned capacity of 20 million gallons per year. Beta projects that the Proesa

technology has the potential to deliver cash costs of production as low as $0.10 per pound of fermentable sugars and $1.50 per gallon of ethanol.

But Beta’s objective is not to build, own and operate a series of plants. Instead, the company is licensing the Proesa process and its associated Basic Engineering Package – and providing access to Chemtex’s engineering services and feedstock experience – to companies around the world. Companies that license Proesa will not need to invest large sums to develop their own biomass technologies or research optimal feedstocks, but can instead focus on their strengths in building and operating plants and getting product to market through their channels of distribution – faster and with better financial returns. And licensors will continue to benefit over time from further advances in the Proesa technology.

Partnerships worldwide

The advantages of Beta’s licensing approach have resulted in a series of agreements around the world. As of August 2012, agreements and projects based on Proesa include:

The company believes that this model – of licensing key enabling technology to industry leaders – has the potential to substantially accelerate the commercialisation of biofuels and biochemicals that are greener and have better economics than current alternatives.

Companies with a similar vision

One of Beta’s partners, Genomatica, develops processes for the production of major industrial chemicals – like BDO and butadiene – from renewable feedstocks including conventional sugars and biomass. Beta’s agreement with Genomatica provides them with the exclusive rights to use Proesa as part of an integrated process for biomass-to-BDO through any route, which they can then license to their customers and partners worldwide. l

The Proesa process delivers cost-competitive sugars from non-food biomass for use in bio-products

Biomass

Feed handling

Biomass cooking & viscosity reduction

Hydrolysis & fermentation

Recovery

Enzymes CO2

Steam Water

Power

Ethanol

SteamBoiler &

generator

Company Initiative

Beta Cellulosic ethanol, Crescentino, Italy,Renewables/Chemtex 20 million gallons per year, 2012

GraalBio Cellulosic ethanol, Brazil, at least five plants

Project Alpha Cellulosic ethanol, North Carolina, 20 million gallons per year, won $99 million USDA loan guarantee

Colbiocel Cellulosic ethanol, Colombia

Gevo Integrated process for biomass to isobutanol

Genomatica Integrated process for biomass to BDO

Amyris Renewable fuels and chemicals

Codexis Detergent alcohols





The market is entering a new era where complex interconnections are emerging between key resources: land, biomass, freshwater, metals and minerals, and manpower – all of which need to be understood and mastered

Managing the age of confluenceIn June 2012, world

leaders approved the outcome document for Rio+20, entitled ‘The

Future We Want’. The foundations for social, economic and environmental well-being are set out and calls are made for a wide range of actions wherein sustainability continues to play a fundamental role in how nations live and do business. Albeit criticised for lacking commitment, detail and measurable targets, these global initiatives together with national mandates and obligations, generate a renewed call for industry to pioneer the next generation of technologies to tackle climate change.

The Rio+20 agreement also recognises that people are at the centre of sustainable development and reaffirms the importance of the Universal Declaration of Human Rights as well as other related international instruments.

It is implemented in the policy frameworks, ethical guidelines, and business codes of conduct that govern the daily actions and activities. The ethical aspects are becoming more and more important, for example as part of sustainable approach for biofuels development and production, which should not be practiced at the expense of people’s essential rights. Instead biofuels should develop in accordance with trade principles that are fair and recognise the rights of people to just reward.

The basic human rights are breached when the production endangers local food security or displaces local population from the land they depend on for their daily subsistence for example1. Indeed the food versus fuel debate is one of the controversial topics related to increasing need of biomass.

This discussion is mostly

linked to agriculture through the adoption of new land into production, changes in crops grown and changing the intensity of variable inputs for individual crops. The topic of food versus fuel still remains in the spotlight despite many efforts showing that the role of biofuels is small in the increasing prices of food compared to other factors such as increasing the price of oil, variations in the crops and speculative trade.

Re-calculating costs based on bigger pictures

The economic sustainability affects the livelihood, the economy and equitable wealth distribution. The costs and benefits of bio-based production should be

distributed in a fair way and the economical evaluation should consider absolute costs and compare the costs also to other options; when the costs of biofuels are evaluated, other alternative energy sources should be considered1. In addition to the actual absolute costs, opportunity costs merit

attention to ensure a full assessment of the total costs in comparison to the benefits and alternative uses of the feedstock. For example, biomass may be needed and used in cooking or heating, which both answer to the fundamental needs of local population instead of making use of it as a source of biofuels or other bio-based products. Therefore, the economic sustainability requires a broader approach than the evaluation of the costs and return of investment of the production plant only.

Re-planning sustainable strategies outside silos

Efforts to achieve environmental sustainability in turn affect the biosphere,

nature and biodiversity. Scientific, political and public concerns have been raised on the direct and indirect impact of biomass harvesting on land use. The environmental impact and true greenhouse gas reduction potential of biofuels are in doubt. The rapid growth of energy crops could divert too much cropland to energy crop production and/or to lead to the cultivation of previously uncultivated land.

The changes in land use could bring about significant CO2 emissions and thereby reduce carbon sinks via deforestation and threaten biodiversity by increasing monocultures. Moreover, increasing the amount of plantations can increase the use of fertilisers and need of freshwater. Therefore, the new cultivations could very well jeopardise the expected environmental benefits of bio-based production if not planned and implemented in full compliance with sustainable practices.

The global dimensions of biomass sourcing add up to the complexity of the value chain. Moving to biofuel crops in one region could mean import of food from another and/or increase prices of common commodities, thereby making them less affordable for daily subsistence. What this demonstrates is that the interconnected effects of land use are hard to trace and extremely difficult to manage. It has recently even been argued that large-

Measuring economic sustainability requires a broader approach than just evaluating

the costs and return of investment of a production plant





scale bioenergy up to 20% of current primary energy consumption from additional harvest of forest biomass is neither sustainable nor greenhouse gas neutral2.

Achieving real end-to-end sustainability

Sustainable land use and sustainable feedstock sourcing are without doubt key factors for success for all industry sectors. The forest industry has for a long time recognised the importance of sound forestry and plantation practices and the importance of certification. The quest for alternative fibre sources has already started; for example, international personal care company Kimberly-Clark has committed to cut the amount of wood fibre it uses from natural forests by 50% by 20253. This implies that sustainability is increasingly important, while the global certification of biomass for fibre, energy and fuels still poses a challenge as no broadly accepted common criteria exist.4

Large plants as a rule need a huge amount of feedstock, which is not necessarily locally available and may require a multi-sourcing approach. The

long-term security of supply with guaranteed access to sustainable and certified feedstock poses a major challenge to all new entrants.

Furthermore, it is not only the feedstock sourcing but the entire biofuels production and supply chain that has to be sustainable. The abidance to this sustainability requirement in the EU can be achieved either via checking by member states or through voluntary schemes, which are approved by the European Commission (EC).5

Recognised schemes include the REDcert Certification System, the UK fuel ethanol producer Ensus, the International Sustainability and Carbon Certification (ISCC) scheme, Bonsucro EU, the Roundtable on Responsible Soy (RTRS) EU RED scheme, the Roundtable of Sustainable Biofuels (RSB) EU RED scheme, 2BSvs, the Abengoa RED Bioenergy Sustainable Assurance and the Greenergy Brazilian Bioethanol Verification Program.

EU member states Austria, Denmark, Finland, France, Germany, Ireland, Italy and the Netherlands have introduced double counting provisions in their national biofuel legislation.

This means that biofuels made from waste or cellulosic feedstock are counted twice against the national biofuel quotas. It is thus possible to improve the competitive edge of new production by making use of wastes and residues from agriculture, forestry operations or urban living. This approach benefits from the complementary use of feedstocks and allows extracting at least a part of the residue materials for valuable products. New agroforestry practices may also contribute to feedstock sourcing as might algae once it becomes economically attractive and available in large enough amounts.

The ‘age of confluence’

When considering the concomitant growth of population and increasing need of food, energy and fuels, while also increasing the share of biomass, balancing the competing demands for nutrients, water and raw materials are essential for success.

It is increasingly important to address and understand the complexity, and the critical interconnections with the environment and

society, along the value chain from fields to markets.

Achieving this complex balance and overcoming tensions calls for global expertise across the value chain. Governments, investors and industry players alike need to become conscious of the bigger picture interrelationships and re-think traditional approaches which no longer serve strategies within the bioeconomy.

Finland-based consulting and engineering company Pöyry has introduced an ‘Engineering balanced sustainability’ approach to achieve the optimal balance between economic, environmental and social dimensions for every project.

However, this is only the beginning. The old Chinese curse ‘May you be born in interesting times’ definitely applies now. It seems obvious that the market is headed for a discontinuity, where global roles and actions in trade, politics, industry, technology and social interaction are in the melting pot, being stirred heavily; and what the outcome is will change daily life for a globalised world.

There are more questions than answers. Hence, it is vital to understand the emerging key drivers and find the way through the ongoing transition. It is actually not even necessary to talk about a sustainable future: it is the only real option there is.l

For more information: This article was written by Marita Niemelä and Petri Vasara, Pöyry Management Consulting Oy, www.poyry.com

1 Biofuels: ethical issues, Nuffield Council on Bioethics, April 2011

2 E-D. Schulze, C. Körner, B.E. Law, H. Haberl and S. Luyssaert, GCB Bioenergy, 2012, 1-4

3 Press Release, Kimberly Clark, June 19 2012

4 J. van Dam, Initiatives in the field of biomass and bioenergy certification, IEA Bioenergy Task40, April 2010

5 http://ec.europa.eu/energy/renewables/biofuels/sustainability_schemes_en.htm

A properly planned and implemented agroforestry system contributes to all key dimensions of sustainability: economic, environmental and social



Helvetica Black and Helvetica Ultra light biofuels logistics


Preliminary findings from a report into port integration in the biofuel supply chain

From harbour to hubBiofuels represent a

small but growing part of the energy mix in Europe. However,

the biofuel industry is highly volatile, largely regulation-driven and dependent on many variables, which makes its future difficult to predict.

Nevertheless, it seems clear that growing demand will have a significant impact on the refiners and distributors who have to buy, blend and integrate biofuels into their products and hydrocarbon supply chains.

At the same time, biofuel supply is often located far from demand; large amounts of biofuels and biofuel feedstock are shipped from locations that have a surplus to areas where these products are consumed. With the expected doubling global biofuel consumption between 2010-2020 (from ca 100 to 200 billion litres), the result is a growing international market and international product flows.

In this evolving world, efficient seaports can be critical to the development of cost-effective biofuel supply chains. With that in mind, Accenture and the University of Groningen in the Netherlands have conducted joint research into the role that European ports can play in this emerging world. This research provides an overview of the biofuel supply chain, together with an analysis of how it can be further developed and the strategic opportunities for ports and storage providers. The study involved interviews with more than 50 participants from business, government and research institutes in Europe.

Evolving the biofuel supply chain

The biofuel supply chain consists of several nodes,

including feedstock production and processing, feedstock trading and transportation, biofuel production, biofuel trading, blending and distribution, and biofuel retail and consumption. Taken together, these nodes combine the agricultural value chain (the upstream supply of feedstock) with the fossil fuel value chain (the downstream blending and distribution of biofuels). Overall, the biofuel supply chain is immature, with a large number of changing

players and types of product at different locations—all of which makes it highly complex.

The Accenture/University of Groningen research looked at how this supply chain will evolve through 2020 and identified several trends. One is the increasing importance of sustainable-certified feedstock. Many biofuel producers (e.g. farmer cooperatives, independents and oil companies that produce biofuel) are expected to move further upstream in the supply chain to capture some of the upstream economic value and guarantee the supply and sustainability of their feedstock. Meanwhile, growing demand is likely to lead to the emergence of new feedstock cultivating locations, such as Latin America, Asia and sub-Saharan Africa.

The research also indicates that the types of biofuels being produced will not change dramatically in the near-term. Today, conventional biofuels account for the largest volumes being produced and consumed, and that is expected to be true through 2020 (with an increased emphasis on being sustainably certified). Advanced biofuel plants - facilities that use newer technologies involving butanol, biomass-to-liquid and cellulosic ethanol for example

- are expected to operate at commercial-scale within the next decade, but the full replacement of conventional biofuels by advanced biofuels is not expected before 2050. The research also indicates that such advanced biofuels feedstock will typically be sustainable-certified.

The biofuel market is driven primarily by geopolitical forces, rather than supply and demand. Biofuels are not yet price-competitive with fossil fuels; in general, their production and use is based on government mandates. Governments have varying reasons for backing biofuels, such as energy security, environmental concerns, a desire to boost agricultural industries, as a driver of regional development, and so forth. The result, often,

is conflicting agendas and non-harmonised legislation. Such regulation may not be aligned with industry realities. For example, an important factor in the biofuel market is the blend level to which car manufacturers guarantee their warrantees. If these covered blends do not exceed the European standardised B7 or E10 – meaning conventional diesel with 7% biodiesel and petrol with 10% ethanol – achieving European mandates (obtaining fuel with 10% bioenergy content and a 6% reduction of GHGs) will prove to be difficult.

There is a level of uncertainty with regulation and legislation, and how it will affect mandated blending levels, import tariffs, subsidies and sustainability certifications. There are unknowns in terms of technology as well. Indeed, further development of the industry will require technologies that enable new sustainable feedstocks and advanced biofuels to be produced at the higher volumes needed for them to become commodities.

These trends make it clear that the biofuel supply chain will require greater flexibility, resilience and focus on both effectiveness and efficiency – that is, increased agility and leanness. This in turn will require greater supply chain integration that enables close cooperation between supply chain participants and a holistic approach to supply chain management.

Currently, several integration activities are underway, such as the upstream involvement of several international oil companies in feedstock and biofuel production (for example the Shell/Cosan JV Raizen that

The full replacement of

conventional biofuels by

advanced biofuels is not

expected before 2050



Helvetica Black and Helvetica Ultra lightlogistics biofuels


produces sugarcane and ethanol in Brazil) and the downstream integration of the agricultural industry and commodity houses into biofuel production (Glencore taking a 50% stake in biodiesel producer BioPetrol).

Nevertheless, the research found that the logistics in the biofuel supply chain are far from optimal and there is significant room for improvement. For example, biofuels producers and feedstock suppliers typically have relationships with their direct suppliers and customers, but contact between nodes that are ‘further apart’ – that is, customers’ customers and suppliers’ suppliers – is limited. With constant change among suppliers, customers, locations and routes, information is often outdated and hard to find, and supply chain visibility is limited.

The opportunity for ports

The changing biofuels supply chain – and the need for greater integration – is creating opportunity for ports in a number of locations. In part, this is because of the global imbalance in biofuel feedstock supply and demand, and the resulting international biofuel market. Europe especially is expected to become dependent on imports to fulfill its demand. Interviewees of the Accenture/University of Groningen study expect that 30% of the biofuel or intermediate products will be shipped into Europe, corresponding to an incoming volume of 70 million litres of biofuel in 2020. The shipping of biofuels and feedstocks from and

to overseas locations gives ports a potentially vital role in the biofuel supply chain.

In addition, several nodes of the biofuel supply chain can be (and in several instances, already are) located in the typical port area.

Feedstock processors and biofuel producers alike have good reasons for being physically present in a port area. For example, ports often encompass, or are near to, an industrial cluster that includes agricultural and oil businesses, which essentially puts customers and suppliers in close proximity, providing significant logistical advantages.

Furthermore, if this local industrial cluster does not provide sufficient supply or demand, the port’s access to shipping provides the flexibility to sell or source from international markets.

Finding the way forward

A port can be viewed as a

network of connectors that delivers value by integrating the biofuel supply chain. Ports are in position to increase their involvement in this supply chain in ways that will help them evolve from transshipment points to logistical hubs and/or bio-based ‘industrial clusters’.

A hub represents a port as a (global) junction of multiple biofuel and feedstock flows. On the other hand, a port industrial cluster is the conglomeration of industrial activities that adds value to the product by executing process steps of the supply chain.

The Accenture/University of Groningen research led to the development of an Integration Matrix model, which includes a recommended set of activities that ports can undertake to increase supply chain participation and drive the transition to the new hub/cluster role. The resources, characteristics and investments needed

to enable these activities are also identified in the Integration Matrix model.

Ports can begin this change by creating a clear vision of their value proposition and by extending their role from ‘facilitator’ to ‘initiator and coordinator’. The model points to five key areas where ports can provide value: (1) facilitating existing flows (2) creating new flows (3) performing value-added supply chain activities, such as biofuel production or blending (4) developing a bio-industry cluster that brings agricultural, chemical, energy and oil businesses together (5) acting as a knowledge centre for the biofuels supply chain. The research also underscored the fact that the resources and characteristics involved in building a hub differ from those involved in an industrial cluster. For example, a hub will need the infrastructure and multimodal connections that provide access to inland suppliers and customers in order to provide operating flexibility. An industrial cluster, on the other hand, will need to focus on making land available, building relationships with businesses Source: Accenture

Feedstock production and processing

Biofuel blending and distribution

Feedstock transport

Biofuelproduction

Retail

Node outside port area

Node in port area

Illustration of nodes in the biofuel supply chain

Facilitating role

Transshipment point ...involvement... Hub and/or industrial cluster

Initiating role

Coordinating role

Orchestrating role

Facilitating flows Creating new flow Value added activities

Develop bio industry cluster

Acting as knowledge centre

Port’s value proposition, Integration Matrix model

Source: Accenture



Helvetica Black and Helvetica Ultra light biofuels logistics


and governments and creating an attractive business climate.

Another important finding of the research: as a port evolves from a transshipment point into a hub and/or industrial cluster, the ‘traditional roles’ of facilitating flows remain important and should be retained.

The research found that beyond having the right resources and characteristics, a bio-port’s success will also depend on three important criteria: a level playing field for the biofuel industry, stable government policies and the harmonisation of relevant regulations in Europe.

Many study participants pointed to ports’ significant political strength and the potential to use that strength to lobby for these criteria.

The applicability of the Integration Matrix model is illustrated in the case of the Port of Rotterdam. Several biofuel nodes of the biofuel supply chain are present in the Port of Rotterdam: (among others) ADM, Cargill, IOI Loders Crocklaan and Wilmar, are involved in importing and handling biofuel feedstock; Abengoa, BioPetrol, LyondellBasell and Neste Oil produce different kinds of biofuel and Argos-NSG, Odfjell, Vopak, Shell and BP store, blend and distribute the biofuel into Europe.

An analysis of that port’s resources, characteristics and activities shows that its current services and infrastructure allow it to fulfil the facilitating and initiating role. This makes it a good candidate for taking

on more of a coordinating and orchestrating role in the biofuel supply chain. In addition, the ports’ position today as a logistical hub, the presence of large petrochemical and energy clusters, and a well-articulated ‘bio-vision’ strengthen the case for Rotterdam becoming a premier bio-port. Nevertheless, the port must take further steps to integrate itself into the biofuel supply chain by investing in the resources and characteristics needed.

Overall, the research points to a fundamental reality: ports can and should be important players in the biofuel supply chain, and they can do so by transforming themselves into logistics hubs, industrial clusters for biofuels, or both. But they need to begin taking action soon. Ports

can optimise the logistics of the biofuel supply chain and therewith reduce the cost price of biofuels. The largest value probably lies in transforming the biofuel supply chain into an interconnected network. The biofuel supply chain is evolving quickly and becoming more formalised, and with this formalisation come the solidification of logistics routes. By taking the right steps sooner rather than later, ports can put themselves at the centre of this evolution.

For more information: This article was written by Edwin Knoop, senior director with Accenture’s Energy industry group, [email protected] and Leonie Stevens, a graduate student at the University of Groningen [email protected]

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Helvetica Black and Helvetica Ultra lightbiofuels in Turkey biofuels


Turkish biofuel producers prepare expansion plans as the 2013 start date for ethanol blending approaches, followed a year later by the government’s requirement for biodiesel in 2014

Talking biofuels turkeyTurkey’s biofuels

industry is expected to see rapid expansion in production over

the next few years as the start date approaches for the introduction of new regulations that specify at least 2% domestically-produced ethanol must be added to all petrol types from 1 January, 2013, with the minimum percentage set to increase to 3% in 2014.

Production and consumption of biofuel will further grow once a new minimum biodiesel blending mandate is introduced in 2014 following last year’s announcement by Turkey’s Energy Market Regulatory Authority (EPDK) that at least 1% fatty acid methyl ester must be added to all diesel types from 2014, rising to 2% in 2015 and then 3% in 2016.

Legislation promoting biofuels has been anticipated for several years owing to growing government concern over the sharp increase in the nation’s oil import bill.

Sustained economic growth has increased family incomes over the past decade, leading to rising ownership of private vehicles.

According to EPDK data, current consumption of petrol is 2.7 billion litres a year and diesel fuel 16.3 billion litres. However, the government’s previous decision in 2006 not to support biofuel production, which now has been reversed, means that output of biofuel in Turkey currently is less than 5% of the country’s total biofuel manufacturing capacity

which is estimated at around 1.7 million tonnes a year.

This situation is about to change as biofuel producers and oil distribution companies prepare to meet market demands for bioethanol, which the government has chosen as the first fuel to promote under its new biofuel blending policy.

‘We think because of the new regulation that 2013 will be a good year for us,’ comments a source at Konya Seker, Turkey’s largest bioethanol producer. ‘This year about 2% of the bioethanol we produce is for fuel use. Next year it could be 50%, but that is only a prediction.’

Four companies produce bioethanol in Turkey. Konya Seker’s bioethanol plant at Cumra in southern Turkey is designed to produce 84,000m3 of bioethanol a year using sugar beet syrup and molasses as feedstock.

The company’s production capacity accounts for 58% of Turkey’s total 144,000m3 annual bioethanol manufacturing capacity.

Tezkim, the country’s second largest producer, has facilities capable of making 30,000m3 a year while third-placed Tarkim’s plant can produce 18,000m3 a year. Both companies use maize and wheat as feedstock.

Turk Seker, the country’s other bioethanol producer uses sugar beet molasses as feedstock for its 12,000m3 per year plant.

Based on the 2% required blend when bioethanol begins to be mixed with petrol, Turkey is expected to use 54 million

litres of bioethanol in 2013. According to USDA estimates, around 34 million litres of the 54 million litres needed will be produced from sugar beet while around 10 million litres will be produced from maize and another 10 million litres from wheat feedstock.

The forecasted 54 million litres of bioethanol will replace 330,000m3 of fuel oil resulting in an estimated $203 million (€163 million) reduction in oil imports.

As all biofuel feedstock used must be grown in Turkey to comply with government biofuels policy, Turkish farmers will need to produce an additional 540,000 tonnes of sugar beet next year which will require about 13,350 hectares of land.

Starting from 2014 when the 3% blending ratio will be applicable, Turkey’s bioethanol manufacturers will need to produce around 80 million litres of bioethanol a year which will require additional production of 800,000 tonnes of sugar beet by the nation’s farmers.

Although the government does not yet appear to have formulated plans to meet this need, individual farmers are believed to be planning their sugar beet planting to supply the forecasted additional demand.

Turkey’s bioethanol producers expect a sharp increase in demand for fuel bioethanol after supplying most of their output for non-fuel use in recent years.

‘We have produced bioethanol since 2007

but not for fuel purposes, mostly bioethanol for the solvents industry, printing ink manufacture and other uses,’ says the Konya Seker source. ‘Now we just produce fuel ethanol for one customer. After 2013 we may use our full capacity for biofuel.

‘In addition to the new biofuel regulation the government is testing and checking biofuel. They are increasing biofuel use gradually, not suddenly, which is better for the biofuel industry.’

Currently about 5% of Konya Seker’s bioethanol production is thought to be for fuel use. The client distributes vehicle fuel across Turkey, blending the bioethanol with high octane unleaded petrol.

Konya Seker supplies bioethanol by road tanker to cities that include Istanbul, which is about 700km from the company’s plant, and Samsung which is about 600km away.

With bioethanol consumption about to experience rapid growth over the next two years, Konya Seker and other producers already are preparing production expansion plans.

‘We are planning new production capacity but we have not decided whether it should be first or second generation technology,’ the source says. ‘We will probably build a new plant close to Cumra to use the same facilities. We use sugar beet molasses. There are many sugar beet farmers in the area and production is high.’



Helvetica Black and Helvetica Ultra light biofuels biofuels in Turkey


Konya Seker buys in sugar beet from about 20,000 farmers through farmer cooperatives. The source pointed out that sugar beet is grown as a rotational crop and most farmers supplying the company are small-scale growers.

Konya Seker’s options also include building a new plant or expanding the company’s existing facility. Should the second generation option be chosen then a plant capable of producing 40,000 to 50,000m3 a year may be built.

However, if the first generation technology option is chosen then Konya Seker is expected to build a second plant capable of producing 84,000m3 a year. The choice of materials still has to be decided but will be either sugar beet syrup or molasses.

Biodiesel

Turkey’s biodiesel industry is less clear due to the large number of mothballed plants and uncertainty over how many will be able to restart production when the mandatory 1% biodiesel blending requirement takes effect on 1 January, 2014.

Turkey first witnessed a biofuel investment boom in 2005 and 2006 when many biodiesel plants were built around the country. Standards for Turkish biodiesel were set by the Turkish Standards Institute in 2006 in accordance with EU standards allowing biodiesel to be marketed as ‘automobile biodiesel’ or ‘other fuel biodiesel’. Blending up to 5% currently is permitted but is not mandatory.

Some 48 biodiesel production licenses were issued by Turkey’s Energy Market Regulatory Authority after more than 100 companies applied. According to the USDA, 15 biodiesel plants closed down after 2006 due to the impact on biodiesel prices of special consumption taxes for biodiesel made

using imported materials.For petroleum-based diesel

there is no import tariff, only a special consumption tax, whereas for biodiesel there is an import tariff for the raw materials as well as a special consumption tax.

Now around 33 biodiesel plants are located around Turkey totalling 1.5 million tonnes in annual capacity, according to energy regulator EPDK. However, most of these are not in production today due to the continuing impact of the special consumption taxes targeting biodiesel production using

imported feedstock. ‘Biodiesel feedstock

supplies are picking up. The government is giving more time to biodiesel producers so that raw materials are available,’ comments Selcuk Borovali, general manager of DB Tarimsal Enerji which operates a 20,000-tonne biodiesel plant in Izmir.

‘Biodiesel starts with 1% mandatory blending in 2014, then increases to 2% in 2015 and 3% in 2016. The government chose bioethanol to go first as there are producers ready and in the market. Bioethanol is better to start with because there is available feedstock,’ Borovali explains.

Given current consumption of 16.3 billion litres a year of diesel fuel in Turkey, at the mandated 1% mixture rate some 163 million litres of biodiesel will be used in 2014. Just what share existing mothballed biodiesel plants

supply remains to be seen. ‘Turkey’s unused biodiesel

capacity is critical. Some factories will need renewal and modernisation,’ Borovali says. ‘We are not sure how much capacity will be in operation after plants have been repaired and updated.

Anticipating a sharp increase in demand and a lack of domestic capacity to supply Turkey’s growing biodiesel needs, DB Tarimsal Enerji already is planning a major expansion in production capacity.

The company is planning to build a 60,000-tonne biodiesel

plant alongside its existing plant. The commissioning date is targeted for the third quarter of 2013, in time to meet the 1% biodiesel mandate when it takes effect in 2014.

According to industry estimates, various biodiesel expansion schemes totalling 160,000 tonnes are planned by other companies which together with DB Tarimsal Enerji’s own planned 60,000-tonne expansion scheme will create 220,000 tonnes additional production capacity.

The government’s 1% biodiesel blending mandate is expected to create demand for 150,000 tonnes of biodiesel in 2014, doubling to 300,000 tonnes in 2015 and reaching 450,000 tonnes in 2016 when the 3% blending mandate takes effect.

‘Most likely we will expand in the second or third year. We are looking at options but it is too soon. Also we

have to consider where the competition’s capacity is located before we make a decision,’ Borovali says.

‘The biodiesel market will be large enough to welcome new investors. Feedstock will be critical for newcomers as there is limited local supply. Newcomers will play a role in agriculture.’

Biodiesel feedstock availability could be an issue, however, as Turkey is already an oilseeds importer.

‘I see feedstock as a possible problem area. What we do is our own contract farming. We see that as the only way for reliable feedstock,’ Borovali remarks.

Safflower is expected to become a major biodiesel feedstock as the climate is suitable for growing the crop on second and third grade farmland. Prices for safflower are expected to depend on global oilseed prices even though biodiesel producers will only be able to source safflower seeds grown in Turkey.

‘Farmers will enjoy higher incomes as the competing agriculture is cereals and these lands are not irrigated and grow using natural rainfall so safflower will give them higher income and sales are guaranteed at the end,’ Borovali says.

Meanwhile, biofuel producers will soon begin to conclude supply contracts with Turkey’s petrol and diesel distribution companies as distributors seek biofuel suppliers to meet their blending requirements.

Turkey is served by 46 distribution companies of which the five largest distributors supply over 80% of the national market. The others are regional companies or small national suppliers that focus on supplying cities across the country.

‘I think there will be good competition as this is a free market. There is room to grow so I am optimistic for the future,’ Borovali adds. l

‘The biodiesel market will

be large enough to welcome

new investors’Selcuk Borovali, general manager,

DB Tarimsal Enerji





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Powering Sustainable Innovation in Asia22 - 24 October 2012 Sands Expo & Convention Centre, Marina Bay Sands, Singapore



Helvetica Black and Helvetica Ultra light biofuels events & advert index


advert indexBiofuels International magazine (ISSN 1754-2170) is published ten times

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KLM: The airline that conducted the first commercial biofuel flight

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Renewable Energy Group: The US’ largest biodiesel producer

CropEnergies: largest bioethanol producer in Germany

Agri Energy: The largest facility in UK to produce biodiesel from waste cooking oil

UPM: The world’s first biorefinery producing advanced biofuels from wood-based feedstock

The European Commission: Providing an update on the latest developments to the Renewable Energy Directive

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Biofuels September 2012

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