February 2013 Ethanol Producer Magazine

INSIDE: USHERING E15 FROM CONCEPT TO REALITY

ALSOHow Marketers

View Headwinds, Opportunities Ahead

Page 44

Selling E85 Direct to Retailers

Page 52

www.ethanolproducer.com

Fuel Choice, One Station at a TimePage 32

E15 Marketplace

FEBRUARY 2013

4 | Ethanol Producer Magazine | FEBRUARY 2013

FEBRUARY ISSUE 2013 VOL. 19 ISSUE 2

CONTENTS

FEATURESDEPARTMENTS

6 Editor’s Note Tearing Down Barriers, Building up Trust BY TOM BRYAN

7 Ad Index

10 The Way I See It It’s About Time Biofuels Became Cool BY MIKE BRYAN

11 Events Calendar Upcoming Conferences & Trade Shows

12 View From the Hill End All Trade Barriers BY BOB DINNEEN

14 Drive Powering the Future BY TOM BUIS

16 Grassroots Voice You Don’t Say? BY RON LAMBERTY

18 Europe Calling Working on Infrastructure,

Common Standards BY ROB VIERHOUT

20 Business Matters Distribution Infrastructure—

a Hurdle to Overcome BY DONNA FUNK

22 Business Briefs

24 Commodities Report

28 Distilled

64 Marketplace

58 BRAZILAre US, Brazil Ethanol Industries Ready to Dance?How the two countries can profit through collaborationBY DANIEL COELHO BARBOSA

CONTRIBUTIONS

ON THE COVEROwner Scott Zaremba stands at one of his seven Kansas gas stations that offer E15. PHOTO: CATHRYN FARLEY COMMERCIAL PHOTOGRAPHY

Ethanol Producer Magazine: (USPS No. 023-974) February 2013, Vol. 19, Issue 2. Ethanol Producer Magazine is published monthly by BBI International. Principal Offi ce: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offi ces. POSTMASTER: Send address changes to Ethanol Producer Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

32 E15 Choice at the PumpProgress on E15 is slow but sureBY HOLLY JESSEN

40 Q&A The First Lady of E15Fighting for higher blends BY TIM PORTZ

44 MARKETS Optimistic Bearing Opportunities for success amid challengesBY SUSANNE RETKA SCHILL

52 BLENDING Direct Connection Ethanol producers develop relationships with retailers BY HOLLY JESSEN

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EDITOR’S NOTE

TOM BRYAN, PRESIDENT & EDITOR IN [email protected]

TEARING DOWN BARRIERS, BUILDING

UP TRUST

FOR INDUSTRY NEWS: WWW.ETHANOLPRODUCER.COM OR FOLLOW US: TWITTER.COM/ETHANOLMAGAZINE

Until it approved E15 for use in contemporary ve-hicles in late 2011, the U.S. EPA hadn’t demonstra-bly changed its regulatory position on ethanol since the arrival of E10 in 1978. As we learn this month, it’s not easy to change a fuel regulation that’s been on the books for 35 years, but our industry made it happen in 2012.

Today, thanks to the diligent efforts of our industry associations, there are no signifi cant federal regulatory barriers standing in the way of E15, but as Holly Jes-sen reports in our page-30 cover story, “Choice at the Pump,” the monumental task of bringing E15 to market has shifted to other critical fronts. The industry is now working feverishly to remove state-level regulatory barriers to E15 while, at the same time, convincing retailers to sell the product when they can. Since E15 is now approved for use in all 2001 and newer vehicles, 62 percent of all the cars and trucks on America’s roads (using more than 80 percent of all fuel) can now use this higher blend of ethanol, if and when it’s available.

In this month’s page-40 Q&A, Kristy Moore of the Renewable Fuels Associa-tion tells us the industry is now focused on removing state-level obstacles to E15 implementation and moving this industry toward a future where E15 enjoys coast-to-coast market penetration. That would open up the U.S. market to more than 7 billion new gallons of ethanol made from a wide variety of feedstocks. And for that to happen—for the industry to grow by 50 percent—America would need to build the equivalent of 140 new 50 MMgy ethanol plants, spurring years of new construc-tion and job creation.

The industry is taking things in stride, though, building trust with one retailer at a time. Our industry needs more relationships like the one it has with Scott Za-remba, owner of several Zarco 66 convenience stores in Kansas that were the fi rst in the nation to offer E15. Jessen reports that the cost advantage, higher octane and locality of E15 are big selling points with station owners. Coincidentally, Zaremba usually purchases ethanol direct from ethanol plants within 100 miles of his gas stations, blending his own E15 at optimal cost. We learn in Jessen’s page-52 feature, “Direct Connection,” that selling higher ethanol blends direct from ethanol facilities is paying off for some plants. Producers like Michigan’s Carbon Green BioEnergy have invested in onsite blending equipment to capitalize on retailer demand for dis-counted E85 in close proximity to the plant. The returns have been good.

Finally, be sure to check out the ethanol and gasoline data presented through-out our page-45 feature on the domestic and global ethanol market. In “Optimistic Bearing,” Sue Retka Schill reports that ethanol marketers anticipate that the favor-able blend economics of ethanol and the growing mandated volume for conven-tional renewable fuels will drive the adoption of E15. But as Jason Searl of Poet Ethanol Products says, “The full saturation of E15 will be in the course of years.”

FEBRUARY 2013 | Ethanol Producer Magazine | 7

TM

EDITORIALPRESIDENT & EDITOR IN CHIEF

Tom Bryan [email protected]

VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR Tim Portz [email protected]

CONTRIBUTIONS EDITOR Susanne Retka Schill [email protected]

FEATURES EDITOR Holly Jessen [email protected]

NEWS EDITOR Erin Voegele [email protected]

COPY EDITOR Jan Tellmann [email protected]

ARTART DIRECTOR

Jaci Satterlund [email protected]

PUBLISHINGCHAIRMAN

Mike Bryan [email protected]

CEO Joe Bryan [email protected]

SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor [email protected]

EXECUTIVE ACCOUNT MANAGER Howard Brockhouse [email protected]

ACCOUNT MANAGERSMarty Steen [email protected] Brown [email protected]

Andrea Anderson [email protected]

CIRCULATION MANAGER Jessica Beaudry [email protected]

ADVERTISING COORDINATOR Marla DeFoe [email protected]

SENIOR MARKETING MANAGER John Nelson [email protected]

EDITORIAL BOARDMike Jerke, Chippewa Valley Ethanol Co. LLLP

Jeremy Wilhelm, Cilion Inc.Mick Henderson, Commonwealth Agri-Energy LLC

Keith Kor, Pinal Energy LLCWalter Wendland, Golden Grain Energy LLC

Neal Jakel Illinois River Energy LLCBert Farrish Lifeline Foods LLC

Eric Mosebey Lincolnland Agri-Energy LLCSteve Roe Little Sioux Corn Processors LP

Customer Service Please call 1-866-746-8385 or email us at [email protected]. Subscriptions to Ethanol Producer Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www.EthanolProducer.com or you can send your mailing address and payment (checks made out to BBI International) to: Ethanol Producer Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or [email protected]. Advertising Ethanol Producer Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Ethanol Producer Magazine advertising opportunities, please contact us at 866-746-8385 or [email protected]. Letters to the Editor We welcome letters to the editor. Send to Ethanol Producer Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to [email protected]. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

COPYRIGHT © 2013 by BBI International

Please recycle this magazine and remove inserts or samples before recycling

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57 RC Fuels Inc.

63 RPMG Inc.

47 SGS North America Inc.

43 Syngenta: Enogen

23 Tower Performance Inc.

60 Vecoplan LLC

62 Vogelbusch USA Inc.

48 Wabash Power Equipment Co.

61 WINBCO

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THE WAY I SEE IT

It’s About Time Biofuels Became CoolBy Mike Bryan

In the recent RFA Daily Clips, I read an article about a new ad campaign that was put out by UNICA in Brazil, touting biofuels (particularly ethanol) as “Cool.” While I know we have had our issues with Brazil, it’s important to give credit where credit is due, and I believe kudos should go to UNICA on this one.

Frankly, ethanol has never been viewed as cool by anyone but those who produce it and those who provide the feedstock. But despite its not-that-cool status, ethanol has done very well and has garnered a signifi cant place in the world’s petroleum pool.

Frankly, fossil fuels were never viewed as very cool either, once the novelty wore off a 100 or so years ago. They remain not very cool today, in fact have slipped into the shameful-but-necessary category and no amount of bling will ever make fossil fuels look cool again. Ethanol, on the other hand, has gone from not very cool to an easy mark for anyone with an inclination to use it as target practice.

Biodiesel was cool, solar, wind, geothermal, even MTBE, were all viewed as cool. Ethanol was like the nerdy chemistry major, compared to the star quarterback role garnered by other alternative energies. Trouble is, the star quarterback often ends up wishing he would have been the nerdy chemistry major as life unfolds.

In fact, ethanol always has been cool! What could be cooler than to annually grow a new supply of feedstock for a major energy source? What could be cooler than to go from a few million gallons to providing 10 percent of the America’s petroleum demand? And what could be cooler than to help keep agriculture strong, America safer and improve our environment?

While I fi rmly believe we chose the correct path by promoting the environmental, economic and security benefi ts over its coolness, perhaps it is time for ethanol to take off the glasses with the tape holding them together and to don some cool shades.

It’s been said that perception is 90 percent of reality. If that’s the case, then let’s begin to redefi ne ethanol’s reality. We’ll always be the nerd and proud of it, just with some cool shades.

That’s the way I see it.

Author: Mike BryanChairman, BBI International

[email protected]


EVENTS CALENDAR

National Ethanol ConferenceFebruary 5 -7, 2013Wynn Las VegasLas Vegas, NevadaSince 1996, the Renewable Fuel Association’s National Ethanol Conference has been recognized as the preeminent conference for delivering accurate, timely information on marketing, legislative and regulatory issues facing the ethanol industry. With numerous networking opportunities, more business meetings are conducted and contacts made at this conference than any other ethanol conference.866-497-1232 | www..nationalethanolconference.com

International Biomass Conference & ExpoApril 8 -10, 2013Minneapolis Convention CenterMinneapolis, MinnesotaBuilding on InnovationOrganized by BBI International and coproduced by Biomass Magazine, the International Biomass Conference & Expo program will include 30-plus panels and more than 100 speakers, including 90 technical presentations on topics ranging from anaerobic digestion and gasifi cation to pyrolysis and combined heat and power. This dynamic event unites industry professionals from all sectors of the world’s interconnected biomass utilization industries—biobased power, thermal energy, fuels and chemicals. 866-746-8385 | www.biomassconference.com

International Fuel Ethanol Workshop & ExpoJune 10 -13, 2013America’s CenterSt. Louis, MissouriWhere Producers MeetNow in its 29th year, the FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. The FEW is the largest, longest-running ethanol conference in the world—and the only event powered by Ethanol Producer Magazine. Visit our website to reserve premium booth space now.866-746-8385 | www.fuelethanolworkshop.com

Algae Biomass SummitSeptember 30 - October 3, 2013Hilton OrlandoOrlando, FloridaThis dynamic event unites professionals from all sectors of the world’s algae utilization industry including, but not limited to, fi nancing, algal ecology, genetic systems, carbon partitioning, engineering and analysis, biofuels, animal feeds, fertilizers, bioplastics, supplements and foods. Organized by the Algae Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. The event is the world’s premier educational and networking junction for the algae industry.866-746-8385 | www.algaebiomasssummit.org


VIEW FROM THE HILL

End All Trade BarriersBy Bob Dinneen

As America’s ethanol industry continues to fi ght to expand the domestic market for ethanol through the increased use of E15, more fl ex-fuel vehicles (FFVs) on the road, and more consumer fuel choice at the pump, the global market for ethanol has been critical to maintaining the health and profi tability of our nation’s ethanol industry. Despite the arrival of the E10 “blend wall” for ethanol in the U.S, the ever-increasing demand for ethanol globally has helped the U.S. industry continue to grow and thrive at the same time it fi ghts to combat an artifi cially constrained U.S fuel market.

While the U.S. ethanol industry historically only exported a small amount of its product every year, that all changed in 2009 when improving industry economics led to the U.S. ethanol industry becoming the lowest-cost producer on the planet. This ultimately led to a dramatic and sustained surge in U.S. ethanol exports around the globe. Amazingly, annual ethanol exports from the U.S. expanded from a meager 113 million gallons in 2009 to 397 million gallons in 2010 to a record 1.2 billion gallons in

2011. Although exports of U.S. ethanol in 2012 are not expected to be much higher than around 750 million gallons, this amount still represents the second-largest export total in U.S. history

It is widely accepted that the reduction in U.S. ethanol exports in 2012 is in large part due to the sustained drought conditions suffered in the Midwest that have, in turn, signifi cantly increased ethanol feedstock costs, and thereby hurt global price competitiveness. There is strong evidence, however, to suggest that the reduction of exports in 2012 is not solely the result of recent shifts in industry economics, but has been exacerbated by a recent effort by Brazil to erect new barriers to U.S. ethanol imports. While exports of ethanol to Brazil made up more than one-third of all U.S. ethanol exports in 2011, exports to Brazil have fallen signifi cantly in 2012 due to new protectionist measures put in place over the past 18 months.

Despite repeated pronouncements from Brazil regarding the need for free and fair trade in ethanol with the U.S., American ethanol producers are now being denied fair and equal access to Brazil’s fuel market as a result of several new measures put in place in the South American nation. These measures include a discriminatory tax in Sao Paulo, the primary entrance port for ethanol from the U.S., and the ordered reduction of ethanol blend rates from 25

to 20 percent. As a result of the Sao Paulo tax, an unfair “tariff” is now being placed on ethanol from the U.S. that is deferred or waived for domestic product. And, as a result of the reduction of ethanol blend volumes, the nation of Brazil is artifi cially controlling U.S. ethanol import demand and instead forcing fuel providers to import more expensive petroleum-based fuel. It is estimated that this measure alone is reducing exports by almost 30 million gallons a month. Additionally, Brazil’s state-owned oil company is fi xing gasoline prices at levels below cost, a practice that erodes demand for hydrous ethanol (used in FFVs) by making it less price competitive at the pump.

While the U.S. government has made every effort to remove all of the perceived barriers to imports of Brazilian ethanol, and is, in fact, now encouraging imports of Brazilian ethanol into the U.S. through the renewable fuels standard, the government of Brazil is repaying this effort by restricting the ability of U.S. ethanol producers to access Brazil’s fuel market. It is time for these barriers to end, and for Brazil to join the U.S. in promoting ethanol as a global commodity.

Author: Bob DinneenPresident and CEO,

Renewable Fuels Association202-289-3835

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DRIVE

Powering the FutureBy Tom Buis

The renewable fuels industry continues to contribute in so many ways. Our industry has created more than 400,000 well-paying jobs here at home that cannot be outsourced, it has revitalized rural economies across the heartland and it is helping reduce our dangerous addiction to foreign oil, all while improving our environment and providing consumers a choice and savings at the pump.

The ethanol industry is also at the forefront of addressing the diffi cult challenges of tomorrow. As automakers look forward to meet the increasing fuel effi ciency standards, one thing is for sure—cars will be very different from the ones that I grew up with. We have already seen many manufacturers cut engine size to increase fuel effi ciency and turbocharge them to maintain horsepower, while cutting the weight that decreases fuel effi ciency.

As the automotive industry moves toward smaller, turbocharged engines, they will need increased levels of octane in the fuel to produce the power necessary to continue high performance. This is where our industry helps meet tomorrow’s challenges.

Ethanol provides the most affordable octane source available today. While there are alternatives, one, MTBE, is illegal in 38

states, and others, like aromatics, are toxic and cost roughly twice as much as ethanol. Our industry produces a fuel that is essential to the future development of automobiles.

Growth Energy believes that the vehicle engines of tomorrow can be optimized for better performance, improved mileage and increased environmental benefi ts and cleaner air. The engines of tomorrow must be designed to run on the renewable fuels of the future, such as ethanol. We must always be on the cutting edge of innovation, thinking how best our industry can contribute. That is why it is so critical we work with in partnership with auto manufacturers. By highlighting all of the benefi ts of ethanol and providing concrete examples of how our industry’s fuel can help manufacturers retain performance increasing effi ciency, our industry has the opportunity to be a major driver in the future of engines.

Our industry has already demonstrated a willingness to push innovation further and faster. More than three years ago, we pushed to get E15 as an approved fuel in the marketplace and put it to the test on the racetrack. Just this past year, NASCAR cleared over 3 million miles racing on E15 and what they have seen is better performance under some of the most demanding driving conditions. The verdict: E15 delivered increased horsepower and performance without any negative side effects, mileage loss or engine damage.

The bottom line is that E15 delivers. As we continue our work to bring higher blends into the marketplace in the new year, we must remain focused on clearing the

regulatory hurdles on both the state and federal level to ensure that E15 can enter the marketplace without further delay. We must aggressively educate and advocate for retailers and consumers, to ensure a cleaner-burning, higher-performing and less expensive fuel is available, so that everyday drivers can choose to put it in their car and benefi t from the increased octane and lower price.

Furthermore, we must continue to build upon our relationship with auto manufacturers. If we are to successfully secure a place for our product in the liquid transportation fuel of the future, we must continue our collective collaboration and stay engaged.

There is no doubt that ethanol and higher blends with increased octane are a major component for the challenges of tomorrow and increased vehicle effi ciency. We know that we produce a product that is better and cleaner burning, not only for the engines, but for our environment. And in the process, we are creating jobs at home that cannot be outsourced and helping secure our nation’s energy independence by decreasing our addiction to foreign oil.

We are part of the solution, an answer to tomorrow’s challenges, and so, in this new year, we must renew our vigor and continue to advocate for higher blends of ethanol, as they are the transportation fuel of the future.

Author: Tom BuisCEO, Growth Energy

[email protected]

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GRASSROOTS VOICE

You Don’t Say?By Ron Lamberty

Several years ago, a reporter who described himself as “concerned with the environment” asked me, “Why should I use ethanol, if it’s only 16 percent cleaner than gasoline?”

I answered, “Well, because the 16 percent calculation is bogus, but, even if it were correct, you should use it because it’s 16 percent cleaner than gasoline! Hell, you should use it if it’s one percent cleaner.”

It was an odd opportunity for both of us. We both realized that the question, “compared to what?” was not being asked. Anywhere.

One of the most frequently used arguments against ethanol has been it can’t replace all the gasoline we use in the U.S. Have you ever heard similar concerns that all of the new oil they’re fi nding can’t replace ethanol? The fact that oil and other energy prices have three to four times the impact on food prices than corn does doesn’t seem to make the news.

So, maybe it shouldn’t be surprising that recent energy outlook reports from the International Energy Agency and the Energy Information Administration have been incredibly selectively reported by big oil sycophants in the media and those who do Big Oil’s bidding in Congress.

The Wall Street Journal took a look at the IEA report and wrote a gushing editorial

entitled “Saudi America,” which actually included this sentence: "Historians will one day marvel that so much political and fi nancial capital was invested in a green-energy revolution at the very moment a fossil fuel revolution was aborning."

Revolutionary fossils? Really? Finding more of the stuff you’ve always had hardly seems like some sort of moonshot to me. And “aborning?” Did some out-of-work romance novelist get hired to write editorials for WSJ? I was waiting for a description of gas-fi red heat melting “limpid pools” of sandy black Canadian sludge. The subhead of the article was “The U.S. will be the world's leading energy producer, if we allow it.” That was a remarkably incomplete description. A more accurate subhead would have been, “The U.S. will be the world's leading energy producer for 10 or 11 years, if we and OPEC allow it (and by 'it' we mean drilling and fracking wherever Big Oil wants us to, and if we’re OK with the earth’s temperature increasing by about 5.5 degrees).” They probably didn’t have room.

The report also predicts that as North America aggressively depletes its oil, OPEC’s control over the world’s oil supplies would increase to nearly 50 percent. Conservation is the major factor behind the prediction of energy self-suffi ciency for the U.S., and IEA projects a four-fold increase in renewables across all energy sectors. Somehow those parts of the report received scant mention.

When the EIA’s “Annual Energy Outlook” came out, the reaction was

similar. Many of the news stories were again about increased oil production, but another portion of the report—the part that predicted cellulosic ethanol would not meet the schedule in the renewable fuel standard (RFS)—received far more media attention. Again, no mention that the report predicts ethanol will reach 30 billion gallons, and no explanation that EIA makes its projections based on market conditions (including Big Oil resistance) and existing technology.

Ten years ago, the EIA outlook said we could only make 3.4 billion gallons of ethanol in the U.S. by 2020. Big Oil used those projections to demand the RFS be limited to 5 billion gallons. Congress deemed that unacceptable, passed the RFS, and we produced almost four times that much ethanol two years ago—10 years ahead of schedule.

The facts are still on the side of ethanol, but Big Oil and their toadies in the media and Congress aren’t going to share those facts with anyone. Unfortunately, the media doesn’t appear inclined to tell the entire story, so if we don’t say it—often—it won’t be said.

Author: Ron LambertySenior Vice President,

American Coalition for Ethanol605-334-3381

[email protected]


EUROPE CALLING

Working on Infrastructure, Common StandardsBy Robert Vierhout

Without the proper logistical infrastructure and standards, getting alternative fuels into the market is a hard sell—something the European Commission has well understood. After almost three years of public and nonpublic discussions the Commission is about to issue a draft law on the deployment of alternative fuels infrastructure and standards.

The main alternative fuel options are electricity, hydrogen, biofuels, natural gas (in the forms of compressed natural gas, liquefi ed natural gas or gas-to-liquid) and liquefi ed petroleum gas. Fueling points and standards are often poorly developed or nonexistent for most of these alternative fuels and thus the need for regulatory attention.

Biofuels are, of course, a special breed among alternative fuels because most are blended with fossil fuels, and do not require an entirely new distribution infrastructure, contrary to other alternatives. The exception is E85, and unfortunately, the draft bill is rather disappointing for its promotion. Where there is full recognition of the need to roll out recharging points for electric vehicles and refueling points for hydrogen, there is no mention of an E85 network. For some bizarre reason, the Commission believes that E85 use will be limited to captive fl eets—as though the relatively

large noncaptive fl eets of E85 cars already found in Sweden, France and Germany are nonexistent.

We still need to do some work to correct this view, but at least the ethanol industry was successful in getting recognition of the need for clear labels and consumer information. Originally, the Commission wanted market forces to sort out labels and consumer information, but that exercise became a total failure. The oil and auto industries, especially the latter, had no intention of designing a simple sticker for both car and pump that would tell every fuel customer immediately what fuel would go into the car and if the fuel would be compatible with the engine or not. One possible scheme, for example, would be black for diesel, yellow for regular (with up to 5 percent ethanol), green for E10 and blue for E85—very simple, colored stickers, perhaps in different shapes. Not truly rocket science, one would dare say.

One would also expect that the oil industry would support such a measure, knowing that they already use something similar for branding their premium fuels. In many cases, it’s far more than just a simple sticker, but rather, big and colorful, hard-to-miss ads at fuel stations. “Diffi cult, diffi cult,” said oil. “Not cost-effective,” said the auto industry. “And what about liability: who is going to pay for engine damage if the wrong sticker were put on a car?” In short: like a failed souffl é, the whole voluntary approach collapsed almost overnight, leaving the Commission no other option but to regulate. Oil and auto lost the poker game.

If the bill is adopted in its present form, member states will be required to ensure that clear and simple information on the compatibility between fuels and vehicles is available at all refueling points, car dealerships and technical control facilities. The identical information needs to be glued on the fuel dispenser and cars. Older cars will get stickers during a technical check. Such regulations would prevent a repeat of the saga that happened in Germany, where oil and auto deliberately misinformed consumers on E10.

But we are not there yet. For sure, oil and auto will use all their lobbying tools to say that such measures are too costly and unnecessary, as already enough information for the consumer is available.

The challenge for the European ethanol industry is to create a strong alliance with consumer organizations to convince both Parliament and member states that such a standard is absolutely needed. If we fail to get this legislation adopted, we will miss a crucial instrument in moving beyond E10.

Author: Robert VierhoutSecretary-general, ePURE

[email protected]


BUSINESS MATTERS

Distribution Infrastructure—a Hurdle to OvercomeBy Donna Funk

There’s no mistaking the heightened volatility in the ethanol marketplace. Whether it regards the renewable fuels standard (RFS) or consumer confi dence, the questions that surround distribution infrastructure do not have easy answers.

The current market for E15 is growing, which is an exciting statement. The industry is still facing issues associated with federal regulations restricting the sale of E15 and liability concerns from retailers associated with possible misfueling. Due to these hurdles, E15 is not widely available and the public is not well-informed about this fuel choice. In the future, these hurdles can be overcome with more consumer education, enhanced communication and education of auto mechanics.

More effi cient distribution solutions are being developed as the ethanol industry matures. Just a few years ago, the industry was growing so rapidly that low-volume transload terminals, or direct railcar-to-truck facilities, were a common distribution alternative to markets outside the ethanol production areas in the Midwest. Unit train terminals were capable of receiving 80- to

100-car trains and as ethanol volumes increased, these terminals were built in many major demand areas. Recent examples include unit train facilities in Tampa, Fla., and San Antonio, Texas.

Ethanol delivery by pipeline has emerged as a viable option in some markets. Kinder Morgan’s Central Florida Pipeline currently moves ethanol from Tampa to Orlando. Dedicated ethanol pipelines that move large volumes from production regions to demand regions have been proposed as well. And at the retail level, blender pumps are available now that are compatible with ethanol blends from E10 to E85.

Mark DeVries, director of business development at Poet Ethanol Products LLC, says the biofuels industry is working with federal agencies including the U.S. EPA and state agencies to resolve several regulatory hurdles, including vapor pressure restrictions, equipment compatibility and potential misfueling concerns.

One example is in the distribution of E15. The EPA currently requires a minimum purchase of 4 gallons of gasoline from any dispenser hose that is used for both E10 and E15. Though the intent was to prevent misfueling of small engines with E15, this solution is impractical for most retailers and has actually hampered retail distribution of E15. The industry is also working to educate fuel retailers on the advantages of blender pumps, which can offer a range of ethanol

blends including E10 to E85 from a single dispenser. This allows customers to choose the ethanol blend that best meets their needs.

Consumer confi dence in the ethanol marketplace is key. There are still gas pump debates on whether higher blends of ethanol fuel are safe for a car engine and about the mileage from using ethanol-blended fuel versus regular gasoline. At the retail level, pump infrastructure and regulatory acceptance are what need to be accomplished.

As we write this column in December, there are many unknowns regarding tax law and the growth of the economy. Accounting experts are hoping for clarifi cation, but it remains to be seen. We can hope, though, for the allowance of more ethanol to be blended into gasoline—the industry’s biggest hurdle, and one we believe we can overcome with fewer federal restrictions and debugging misconceptions about misfueling. Working together is our best chance for a strong, positive future.

Author: Donna Funk, CPAKennedy and Coe LLC

[email protected] 800-303-3241

People, Partnerships & Deals

BUSINESS BRIEFS

Victory Energy Operations LLC has completed a majority recapitalization with Saw Mill Capital Partners LP in partnership with John Viskup, Victory’s founder, presi-dent and CEO. Viskup remains a signifi cant owner of Victory and will continue to serve as the company’s president and CEO. In con-junction with the partnership, Larry Edwards, the former president, CEO and chairman of Global Power Equipment Group will join the Victory team and serve on its board. Saw Mill Capital Partners is the former owner of Glob-al Power Equipment Group. Victory designs, engineers and services boilers, fi red package boilers, waste heat boilers, heat recovery steam generators and related equipment.

Infi nite Enzymes LLC has announced IE-CBHI, a single activity, plant-based cellu-lase enzyme, is now available for research and demonstration projects. Infi nite Enzyme’s technology produces enzymes in a lower-value part of the corn kernel, thereby creating a new sustainable market for corn processing by-products. The technology lowers the cost of sugar production. The company advanced its technology through a $450,000 Small Business Innovation Research Phase II grant awarded by the USDA. The IE-CBHI product is avail-able through the Sigma-Aldrich Corp.’s prod-uct and services portfolio.

Green Plains Renewable Energy Inc. has announced that Blendstar LLC, its whol-ly owned subsidiary, has begun operations at its 96-car unit train terminal in Birmingham, Ala. The new terminal is served by the Burl-ington Northern Santa Fe Railway and has a throughput capacity of 300 MMgy of ethanol. The terminal current has 160,000 barrels of storage and a covered truck rack, each with expansion capabilities. The location will pro-vide more effi cient distribution of ethanol to underserved markets in the Southeast while expanding Green Plains Renewable Energy’s geographic footprint.

Two new employ-ee owners have joined Apache Stainless Equipment Corp. They are Dennis Buehring, vice president of sales and marketing, and Mark Nelson, director of en-gineering. Buehring has a well-established career with experience in profes-sional sales management, and engineering systems and methodologies in a manufacturing environ-ment. He is responsible for both the Apache and Mepaco equipment brands, and for develop-ing and achieving long-term strategic and co-hesive goals for the company. Nelson has a history of forging strong relationships with production workforces and has experience in engineering practices and systems.

DuPont Industrial Biosciences has purchased Verdezyne Inc.’s proprietary isomerase technology, which enables the metabolism of fi ve-carbon sugars. Under the terms of the sale, DuPont has purchased rights to the technology, covered by U.S. Pat-ent Nos. 8,114,974 and 8,093,037, for use in the biofuels and biochemical fi elds.

Illinois Gov. Pat Quinn has appointed Fred Iutzi of the Illinois Institute for Ru-ral Affairs at Western Illinois University to the Illinois Ethanol Research Advisory Board. The board provides oversight for the National Corn to Ethanol Research Center at Southern Illinois University Ed-wardsville, including guidance on the opera-tions, budget and strategic direction of the NCERC. The center provides pilot-scale research infrastructure and services to in-dustry, academia and government agencies. Iutzi serves as the agricultural and energy

Mark Nelson’s experience and technical knowledge will allow him to achieve Apache’s strategic goals.

Dennis Buehring’s has a history of achieving outstanding results.

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BUSINESS BRIEFSSHARE YOUR INDUSTRY BRIEFS To be included in Business Briefs, send information (including photos and logos if available) to: Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks ND 58203. You may also fax information to 701-746-8385, or email it to [email protected]. Please include your name and telephone number in all correspondence.

program manager for the IIRA and holds leadership roles in several other public and public-private collaborations to advance re-newable energy in Illinois, including the Il-linois Biomass Working Group.

The Indiana State Department of Ag-riculture has announced fuel retail company Thorntons Inc. as the winner of the 2012 Paul Dana Excellence in Bioenergy Leadership Award. Indiana Agriculture Director Joseph Kelsay presented the award during the Greater Indiana Clean Cities Co-alition Holiday Reception in Indianapolis. The award recognizes those who have ex-emplifi ed leadership and innovative vision in the bioenergy industry. It recognizes Indy Racing League driver Paul Dana, who sup-ported the state’s biofuels industry and was killed in a 2006 racing accident. Thorntons began selling gasoline in 1952. The compa-ny was also named the 2012 Greater Indiana Clean Cities Award recipient for the Etha-nol Blends Award.

Germany-based Direvo Industrial Biotechnology GmbH is commercializing its BluCon platform for complete, one-step conversion of nonfood biomass into carbo-hydrates for use as feedstock in the biofuel and biochemical industry. The platform is fl exible in both the type of biomass it can process, and the fuels and chemicals that can be produced.

Proterro Inc. has closed on a $3.5 mil-lion fi nancing round led by current investor Braemer Energy Ventures. Cultivan Ven-tures and Middleland Capital joined existing investors, Battelle Ventures and its affi liate, Innovation Valley Partners, in participating in the round. The funding will help in opti-mizing the genetic engineering of Proterro’s sucrose-producing microorganism and sup-port the expansion of the company’s patent portfolio. The capital will support the pilot-

ing of a full-scale bioreactor, as well as de-sign completion for a demonstration-scale facility.

The National Corn Growers As-sociation has launched a new Web-based resource designed to provide information to people who want to know the single truth about ethanol so they can continue the conversion about how farmers are not only helping to feed the world, but fuel it too. The website offers links to articles on fl ex-fuel vehicles, food and fuel, jobs and the economy, lower toxic emissions, energy security, and E15. The information can be accessed at www.EthanolFacts.com

BP Biofuels has announced its plans to invest $350 million to expand its ethanol processing capacity at Tropical, one of its sugarcane processing ventures in Brazil. The expansion is scheduled to start next year and includes the building of a new mill. Tropical’s processing capacity will double to 5 million tons of sugarcane producing 450 MMly. The mill is expected to be operating at full capacity by the end of 2014 or early 2015.

Propel Fuels has closed on the ini-tial phase of its Series D round of funding with $11 million in equity capital from ex-isting investors Nth Power, Craton Equity Partners and @Ventures as well as a new investor, Gentry Venture Partners. In addi-tion, the company has secured $10 million in debt fi nancing from CapX Partners. The new funding will allow Propel to accelerate the build-out of its network of stations. As part of the investment by Gentry, Thomas B. Raterman, a partner, has joined Propel’s board of directors. Raterman has more than 30 years of corporate fi nance, investment banking and executive management experi-ence with rapidly growing entrepreneurial companies.


Dec. 27—The Energy Information Ad-ministration recently released its Annual En-ergy Outlook 2013, providing a long-range view of energy markets with price and pro-duction forecasts through 2040.

Natural gas production is expected to continue growing from current historic high levels of roughly 24 trillion cubic feet (Tcf) per year to 33 Tcf per year in 2040. By 2020, the U.S. will be fully supplied with domestic gas and, in fact, will be a net exporter. There will be a meaningful increase in natural gas demand (CNG/LNG) from the transporta-tion sector and industrial sector, as energy consumers fi nd it economic to switch to natural gas for transportation or locate ener-gy-intensive processes , such as fertilizer pro-duction, in the U.S. The relative abundance and low price of natural gas will likely make

it the fuel of choice well into the future. Real natural gas prices, in 2011 dollars, are expect-ed to remain under $4 per MMBtu through 2018, steadily rise to $5.40 per MMBtu in 2030 and $7.83 per MMBtu in 2040.

Crude oil production will rise and peak at 7.5 million barrels per day (bpd) in 2020, then decline through 2040. Production in 2020 will be 11 percent less than peak do-mestic production levels in 1984 (8.9 million bpd). The U.S. will continue to be a signifi -cant net importer of crude, although im-ports will drop from 45 percent in 2011 to 37 percent in 2040. Real crude oil prices, in 2011 dollars, are forecast to rise from $100 per barrel in 2011 to over $150 per barrel in 2040.

Liquid fuel (light duty) usage is ex-pected to decline as fuel effi ciency improves

and more vehicles use electricity and natu-ral gas. Usage is expected to drop from the current 8.5 million to 7 million bpd by 2040. Real prices for gasoline and diesel are fore-cast to increase at a somewhat lower rate than crude oil and the spread between gasoline and diesel to increase to 14 percent as dis-tillate demand increases more than gasoline. Heavy-duty vehicle fuel demand is expected to increase by over 45 percent as industrial production increases. About 20 percent of heavy-duty vehicle fuel demand will come from natural gas as CNG and LNG.

Renewable generation will grow from 13 percent of the total today to 16 percent in 2040. Solar will grow the fastest as it starts from such a low base.

In a year, I will compare how this fore-cast compares to the 2014 EIA forecast.

Natural Gas Report

Corn Report

EIA looks ahead at energy use, sources BY CASEY WHELAN

Corn futures fall on weak demand, year-end liquidation BY JASON SAGEBIEL

COMMODITIES

Dec. 31—The corn market lost over 70 cents per bushel in December on weak de-mand and year-end liquidation. Corn futures fell below the $7 per bushel mark for the fi rst time in December, which it had not done since mid-July. The USDA did not make any changes in the December monthly supply/demand report. However, at the time of this writing, the all-important January report had not been released. Overall demand this fall has been lackluster. U.S. corn exports sales have been disappointing. The USDA is still projecting 1.150 billion bushels. Through mid-December, export sales were 496 mil-lion bushel versus 947 million bushels during the same period a year ago. U.S. corn values have been higher than competitor exporting countries such as Argentina, Brazil and even the Ukraine, making U.S. product much less competitive, as illustrated in the accompany-ing chart. In addition, ethanol margins have

been under more pressure, which, as a result, is expected to reduce demand for corn. With do-mestic cash mar-kets remaining fi rm, however, one could expect to see a bump in domestic feed de-mand.

The story in the new year will be spring crop plans. Private analysts are expecting to see a 2 million to 3 million acre increase in corn plantings, and multiple potential yield fi gures will be assessed to de-termine possible production outcomes for next year. Weather in the Southern Hemi-

Jan-

10Fe

b-10

Mar

-10

Apr

-10

May

-10

Jun-

10Ju

l-10

Aug

-10

Sept

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11Fe

b-11

Mar

-11

Apr

-11

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-11

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11Ju

l-11

Aug

-11

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-11

Oct

-11

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-11

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-11

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12Fe

b-12

Mar

-12

Apr

-12

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-12

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12Ju

l-12

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-12

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-12

Oct

-12

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-12

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-12

360

340

320

300

280

260

240

220

200

180

160

140

World FOT Corn Prices (USD/MMT)

sphere was pretty quiet at year end. Exces-sive wetness in Argentina could yet alter plans for plantings of corn and soybeans.


DDGS Report

Ethanol Report

Logistics begin to drive DDGS markets BY SEAN BRODERICK

Ethanol losing ground on RBOB gasoline price BY RICK KMENT

REPORT

DDGS Prices ($/ton)

LOCATION FEB 2013 JAN 2012 FEB 2012

Minnesota 245 240 180

Chicago 270 180 195

Buffalo, N.Y. 252 250 186

Central Calif. 308 312 248

Central Fla. 292 280 216SOURCE: CHS Inc.

Natural Gas Prices ($/MMBtu)

LOCATION DEC 21, 2012 DEC 1, 2012 JAN 1, 2013

NYMEX 3.44 3.70 3.08

NNG Ventura 3.49 3.26 2.87

CA Citygate 3.73 4.09 3.42SOURCE: U.S. Energy Services Inc.

Regional Ethanol Prices ($/gallon) Front Month Futures (AC) $2.20

REGION SPOT RACK

West Coast $2.35 $2.75

Midwest $2.20 $2.68

East Coast $2.28 $2.89SOURCE: DTN

Regional Gasoline Prices ($/gallon) Front Month Futures Price (RBOB) $2.816

REGION SPOT RACK

West Coast $2.83 $2.84

Midwest $2.54 $2.79

East Coast $2.81 $3.22SOURCE: DTN

Corn Futures Prices (Mar. Futures, $/bushel)

DATE HIGH LOW CLOSE

DEC 28, 2012 6.96 1/4 6.88 3/4 6.94

NOV 28, 2012 7.67 1/2 7.58 3/4 7.64

DEC 28, 2011 6.46 1/4 6.30 1/4 6.42 1/2SOURCE: FCStone

Cash Sorghum Prices ($/bushel)

LOCATION DEC 28, 2012

NOV 21, 2012

DEC 20, 2011

Superior, Neb. 6.64 7.14 5.85

Beatrice, Neb. 6.54 7.04 5.75

Sublette, Kan. 6.73 7.22 5.77

Salina, Kan. 6.74 7.21 5.98

Triangle, Texas 6.97 7.48 5.97

Gulf, Texas 6.98 7.36 6.76

SOURCE: Sorghum Synergies

U.S. Ethanol Production (1,000 barrels)

PER DAY MONTH END STOCKS

OCT 2012 818 25,352 18,762

SEP 2012 817 24,511 20,044

OCT 2011 904 28,013 18,038SOURCE: U.S. Energy Information Administration

Dec. 27—The ethanol and RBOB gasoline markets were moving in two starkly different directions at the end of the year—sharp losses in corn futures and a steady rise in RBOB gasoline fu-tures. The corn losses were causing a widespread downward movement in the ethanol market. March corn futures moved to the lowest price since July, holding just under $7 per bushel follow-ing the Christmas holiday. The combina-tion of lower production costs and lower corn futures prices, as well as ballooning inventory levels caused front-month ethanol futures to fall over 20 cents per gallon through the month of Decem-ber. On the other hand, RBOB gasoline futures reached what may be a seasonal low in the fi rst week of December, and

rallied steady over 20 cents higher after the Christmas holiday.

These widespread shifts in both the ethanol and gasoline markets have caused ethanol futures to widen the discount to the RBOB gasoline market from 26 cents per gallon in early Decem-ber, to over 60 cents per gallon in the last week of December. The wide discount to the gasoline market is not expected to help move additional product due to the concern that overall driving demand may fall signifi cantly following the holi-day season. Ethanol is expected to con-tinue to hold a signifi cant discount to the gasoline market through the early part of the year, with growing concerns about the ability to disperse additional product through early 2013.

Dec. 31—After Christmas, the mar-ket began to be dictated by logistics, and for ethanol plants, that means whether they had railcars. When cars are not re-turning in time, the local truck markets feel the pressure. Together with the issues that inclement weather brings, and three-day holidays, it makes inventory management a day-to-day exercise.

Thankfully, an East Coast dockwork-ers strike that was to have begun Jan. 1 was stayed by 30 days. The Chicago container market, which supplies the bulk of the Asian container trade, was beginning to feel the effects of a potentially dwindling container supply, and this should allevi-ate that. There has been a lot of buying that is being attributed to getting product

shipped before the Chinese New Year, which begins Feb. 10.

Low water levels on the Mississippi are causing havoc with barge shippers, in-creasing shipping costs due to shallower drafts. The way things are today, the river would potentially be almost nonnavigable by mid-January from St. Louis south to Cairo, Ill. This will affect the DDGS bulk market in the Gulf, and most defi nitely hamper exports.

Plant margins will be affected by all of the above, and DDGS supply will rely on the run times. With distillers trading in the high 90s percentile relative to corn price, and a decent corn oil market, plants that are running today should continue to do so.


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DISTILLED Ethanol News & Trends

In its Corn Harvest Quality Report 2012/13, the U.S. Grains council reported that the overall quality of the 2012 U.S. corn crop is high, and improved over the prior year across a range of test factors. While total U.S. corn production last year fell due to the drought, the crop showed year-over-year improvement in average test weight, protein levels and density, as well as lower moisture and broken corn and foreign material.

For the harvest quality report, samples of U.S. corn were gathered from the 12 states that produce a combined 99 percent of the U.S. corn exports. Tests conducted on the sam-ples cover grading factors, such as test weight, physical factors such as stress cracks, and other items, including moisture, protein starch, oil and mycotoxins.

“The samples tested demonstrate that this year’s U.S. corn crop, while smaller due to the drought, is of outstanding quality overall,” said Erick Erickson, USGC director of global strategies.

USGC reports high quality for 2012 crop Oregon implements phase one of Clean Fuels Program

The Oregon Environmental Quality Commission has voted four-to-one to imple-ment the proposed rules for phase one of the state’s Clean Fuels Program. Phase one of the program requires entities that produced fuel in Oregon, or import it into the state, to register and report to the DEQ the volumes of fuel they provide within Oregon. According to the DEQ, the mandatory reporting will allow it to gather data on the Oregon transportation fuel market, which will help assess the feasibility of implementing phase two at a later date.

The Clean Fuels Program program is similar—but not identical—to California’s Low Carbon Fuel Standard.

During the second phase of the program, regulated parties would have to reduce the greenhouse gas emissions associated with the fuels they provide by 10 percent when com-pared to 2010 levels.

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Corn use statistics Million metric tons 0 | 25 | 50 | 75 | 100 | 125 | 150

Marketing year 08/09




Marketing year 12/13 (projected)

3335363634






94117

128127

114

Ethanol and coproducts

Food, Seed, other non-ethanol industrial use






132130

122115

105

Feed and residual use

0 | 25 | 50 | 75 | 100 | 125 | 150

0 | 25 | 50 | 75 | 100 | 125 | 150

Million metric tons

Million metric tons

SOURCE: U.S. GRAINS COUNCIL, 2012/13 CORN HARVEST QUALITY REPORT

DISTILLED

Patriot Bioenergy looks to hemp

Patriot Bioenergy Corp. sees value in in-dustrial hemp as a possible feedstock for cel-lulosic biofuel production and for cofi ring with coal in power plants. The company has joined the Kentucky Hemp Growers Association and is exploring the possibility of growing the crop on post-mining reclamation and marginal lands in Kentucky. The goal is to complete laboratory testing and issue a report by February.

Hemp can yield a large amount of biomass on a per-acre basis, making it an attractive bio-mass crop. Although a few states have registered farmers to grow industrial hemp, its cultivation is currently banned on the federal level. Efforts are underway to change that. Patriot Bioenergy is interested in growing the crop, in part, because it fi ts into its energy park concept.

Patriot Bioenergy is also planning to estab-lish a nonprofi t energy/sugar beet growers coop-erative in the Cumberland Valley Area Develop-ment District region of Kentucky.

Grain sorghum ethanol now qualifi es as a renewable fuel and, in some cases, an advanced biofuel, under the renewable fuel standard (RFS). The U.S. EPA published the fi nal rule in mid-December.

According to the EPA, its analysis de-termined that when grain sorghum ethanol is produced at dry mill facilities fi red with natu-ral gas, the 20 percent greenhouse gas (GHG) emission threshold for renewable fuel is met, qualifying it for RFS compliance use. Where grain sorghum ethanol is produced at dry mill facilities, that use specifi ed forms of biogas for process energy and most electrical pro-duction, the resulting fuel achieves GHG re-ductions of more than 50 percent, qualifying the ethanol as an advanced biofuels for RFS compliance purposes.

Final rule published for sorghum pathways


The Advanced Ethanol Council has published a report profi ling cellulosic biofuel projects un-der development in the U.S. and Canada. It also highlights ef-forts in China, Den-mark, Germany, Italy and Spain. The paper clearly shows how much progress the industry has made since the renewable fuels standard was amended to include cellu-losic biofuels 5 years ago.

The report points out that despite the global recession, the cellulosic biofuels in-dustry has facilities and projects under de-velopment in more than 20 U.S. states. These projects represent billions of dollars in in-vestment. As more facilities near commercial

production, the cost of production continues to come down. Over the past decade, the AEC estimates that enzyme costs have been reduced by 80 percent. “Cellulosic biofuels are being produced for $2 per gallon or less today,” the organization said.

DISTILLED

Report shows progress in cellulosic industry

Construction is now underway at DuPont’s 30 MMgy cellulosic ethanol facility in Nevada, Iowa. The facility, which will cost more than $200 million to construct, is expected to be complete by mid-2014. Once complete, the plant will be among the fi rst and largest commercial-scale eth-anol biorefi neries in the world. Original plans for the facility called for a nameplate capacity of 28.5 MMgy. Optimization work, however, allowed DuPont to increase the plant’s capacity.

The facility will take in corn stover as feed-stock. To supply feedstock to the plant, DuPont will contract with more than 500 local farmers to gather, store and deliver more than 375,000 dry tons of stover per year. The company has spent three years working with local farmers to design and test a supply chain to bring stover to the plant gate.

DuPont breaks ground on cellulosic plant

6. Abengoa Bioenergy Hugoton, KS Agricultural residues, dedicated energy crops, prairie grassesCellulosic ethanol, renewable powerCapacity: 25 MMgy

6

11. EnerkemEdmonton, AB, Canada MSW Syngas, biomethanol, acetates, cellulosic ethanolCapacity: 10 MMgy

4. EnerkemPontotoc, MS MSW, wood residues Syngas, biomethanol, acetates, cellulosic ethanolCapacity: NA

4

3. FiberightBlairstown, IA MSW, non-food wasteCellulosic ethanol, biobased chemicalsCapacity: 6 MMgy

9. FiberightLawrenceville, VAMSW, commerical waste, energy cropsCellulosic ethanol/biofuels, cellulosic sugars, biochemcialsCapacity: 1 MMgy

7. Ineos BioVero Beach, FLVegetative/yard waste, MSWCellulosic ethanol, renewable powerCapacity: 8 MMgy

3

9

5. Kior Columbus, MSForestry residueCellulosic gasolineCapacity: 13 MMgy

8. LanzaTechSoperton, GAWaste forestry biomassEthanol, chemicals, aviation fuelCapacity: 4 MMgy

2. Poet-DSM Advanced Biofuels Emmetsburg. IAWaste forestry biomassEthanol, biogasCapacity: 20 MMgy (expanding to 25 MMgy)

2

5

7

8

Commercial-scale facilities (Under construction/commissioning)

SOURCE: ADVANCED ETHANOL COUNCIL, CELLULOSIC BIOFUELS: INDUSTRY PROGRESS REPORT 2012-2013


Last year marks the fi rst time since the U.S. EPA began using renewable identifi ca-tion numbers (RINs) to track compliance under the renewable fuel stan-dard (RFS), there was no year-over-year RIN carryover. University of Illinois economist Nick Paulson suggests, however, that the RIN stock won’t be depleted, offering additional fl ex-ibility for 2013, if needed.

Analysis published in the university’s FarmDocDaily newsletter, says statistics sug-gest a 2012 domestic production level of just under 13.2 billion gallons, with exports of 742 million gallons. Earlier analyses showed that 2011 wrapped up with approximately 2.64 bil-lion RINs, that could be used for compliance in 2012.

According to Paulson, the result is 2012 RIN generation of just under 12.5 billion. “Given the 13.2 billion gallon renewable ethanol mandate in 2012, this will require RIN stocks to be drawn down somewhere below the 2 billion gallon level,” he said in the analysis. “The im-plication for 2013 is continued fl exibility in the demand for corn-for-ethanol of approximately 700 million bushels relative to total demand implied by the 2013 non-advanced mandate of 13.8 billion gallons.”

DISTILLED

Delta BioRenewables LLC has announced its collaboration partner Commonwealth Agri-Energy LLC has produced sweet sorghum etha-nol at its Hopkinsville, Ky.-based corn-ethanol plant. The project utilized sugars sourced from sweet sorghum hybrids developed by Ceres Inc.

“The sugars in sweet sorghum were fer-mented in the same way as corn, without any signifi cant changes to our process. I believe that our co-op could produce 5 percent or more of our overall annual ethanol production using sweet sorghum grown on nearby marginal land and under-utilized pasture,” said Mick Hender-son, general manager of Commonwealth Agri-Energy. “Everything came off without a hitch. We wanted to see the sweet sorghum juice in a full truckload lot, run our own analytical profi le, and then introduce the juice in our fermentation system at full scale.”

In the coming year, Ceres will work with Delta BioRenewables and Commonwealth, which has 2,300 farmer members, to expand plantings of its trademarked Durasweet hybrids.

Sweet sorghum ethanol produced in Kentucky

RIN stocks down, but no shortage expected

2012 U.S. Ethanol RINs and Dec. Corn Prices

SOURCE: UNIVERSITY OF ILLINOIS, FARMDOC DAILY

$0.060

$0.050

$0.040

$0.030

$0.020

$0.010

$0.000

$9.00

$8.00

$7.00

$6.00

$5.00

$4.00

$3.00

$2.00

$1.00

$0.0012/31/11 1/30/12 2/29/12 3/30/12 4/29/12 5/29/12 6/28/12 7/28/12 8/27/12 9/26/12 10/26/12

1/15/12 2/14/12 3/15/12 4/14/12 5/14/12 6/13/12 7/13/12 8/12/12 9/11/12 10/11/12

U.S. E

than

ol RIN

s Pric

es ($/

gal)

Dec 2012 Corn Futures Settlement ($/bu)

Dec Corn Futures

Ethanol RINs

It All Adds Up

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E15


E15

E15 is currently cleared for sale in a handful of states, with work ongoing to bring it to the rest of the U.S. BY HOLLY JESSEN

Choice at the

E15 TRAILBLAZER Zaremba owns seven convenience stores in Kansas that sell E15 to light duty vehicles model year 2001 and newer.

PHOTO: CATHRYN FARLEY COMMERCIAL PHOTOGRAPHY

Pump

Scott Zaremba, owner of Zarco 66 con-venience stores, didn’t just open the fi rst E15 retail pump in the nation. Not long after of-fering 15 percent ethanol at the fi rst station in Lawrence, Kan., he expanded to six more locations—the only seven E15 pumps in Kansas to date and the highest number of E15 pumps owned by one company.

Zaremba is the second generation in his family to work in the transportation energy business, he tells Ethanol Producer Magazine. In his lifetime he’s witnessed the 1973 oil embargo, the 1991 Gulf War and crude oil price increases. Although it didn’t ultimately work out, his family considered purchasing an ethanol plant in the 1980s. He recognizes that ethanol is cleaner, renewable and can be produced locally, reducing the need for foreign oil. He fi rst started blending ethanol and biodiesel back in 2007. “It just makes sense to me,” he says, adding that he doesn’t think it’s right to utilize U.S. mili-tary forces to protect U.S. oil interests overseas. “Whatever it takes for us to be energy independent is what we need to do,” he says.

The fact that ethanol is a renewable fuel is one of its


June 2011Final approval of pump label

E15History of

October 2010 E15 approved for model year 2007 and newer

E15

key selling points for Zarem-ba. This year’s drought and the resulting higher corn prices represent a temporary situa-tion that will eventually resolve itself with adequate moisture, if not with the next crop, the crop after that, he says. Still, cur-rent economic conditions have had an impact on his business. On Oct. 1, the Garnet, Kan., ethanol plant Zaremba was sourcing ethanol from idled temporarily, meaning he’s had to travel further to get ethanol. “From a retailer perspective, it’s a little more diffi cult for me now, because there’s not the cost advantage that there was for me before,” he says, adding that the situation has simply required fl exibility. “We’re still within a 100 or so miles within our locations.”

When Zarco 66 stations fi rst started offering E15, it was priced less than E10, a factor that helped the fuel quickly account for 20 percent of total sales. In early December, when EPM talked to Zaremba, the two fuels were priced virtually the same. Value can instead be seen in the fact that E10 is an 87 octane product while E15 is 90 octane. “You’re getting almost a premium product, for the same as unleaded,” he says. “As we move forward, the customers are seeing that.”

E-Hurdles Although the fuel has cleared the necessary federal hurdles for

commercial sale for use in 2001 and newer vehicles, it’s a different story in each individual state, says Robert White, director of market development for the Renewable Fuels Association. Kansas, Iowa and Nebraska were the fi rst states to offi cially announce E15 was available to consumers. The fuel is also available at one station in South Dakota and although Illinois doesn’t yet have any E15 pumps, everything is in place and there are several retailers going through the process to offer it. “What we’ve done is try to get the low-hang-ing fruit, which we could consider these fi ve,” he tells EPM. “Now we are going out and looking at the other states.”

Depending on the rules and regulation of each state, it can be a diffi cult task. In some cases, it will require legislative action at the state level. One example is Mis-souri, a state with an E10 mandate

and an agriculture department that is generally friendly to ethanol, White said. But, because the law specifi cally mentions E10, it will re-quire a change to allow the sale of E15. “It was probably something we did to ourselves, not thinking that level would ultimately be

raised,” he says.There’s a lot of variability in the rules and regulations from

state-to-state, agrees Mike O’Brien, vice president of market devel-opment for Growth Energy. The organization is actively working to recruit retailers to introduce E15 in high-volume markets in 2013. The plan of attack is to fi rst fi nd interested retailers and then assist them with the needed federal registration to sell E15, followed by lobbying the state to allow the sale of E15. The approach should help the states understand the commercial need for E15 as well as the practical needs of retailers who will sell the fuel. “Like all new products, most traction is gained with innovative people willing to introduce new ideas and technology,” he says. “The challenge is with fi nding those people then helping them with getting the new prod-uct launched.”

A two-headed approach is defi nitely needed, White says. Get-ting state-level approvals is important, yes, but those efforts will be wasted if retailers aren’t convinced E15 is a good product to offer consumers. Unfortunately, E15’s critics have been very successful in spreading misinformation about the fuel, so that’s a constant battle. One way the group is reaching out to retailers is through the Blend Your Own program, a joint effort of RFA and the American Coali-tion for Ethanol.

Reid Vapor Pressure is another challenging matter facing the fuel blend. “Most believe that’s going to be an issue that’s not go-ing to go away anytime soon,” White says. The U.S. EPA allows E10 to exceed the 9.0 pounds per-square-inch RVP requirement by


E15

1 pound from June 1 to Sept. 15 but did not give E15 the same waiver. In order to offer E15 in the summer months, low-volatility blendstock can be pulled from markets that require reformulated gasoline. The catch, White says, is the cost of transporting refor-mulated gas into new markets, which adds to the price of the fuel.

RFA’s position on RVP is that E10 and E15 should be treated the same. Both fuels should have the RVP waiver or neither fuel should, White says. If the E10 waiver is removed, refi ners will con-tinue to blend ethanol due to the renewable fuel standard, possibly even making E15 more attractive as a fuel. Extending the waiver to both fuels would work too. “We just need you to go one way or an-other,” he says about EPA’s decision on the matter. In the meantime, retailers really only have three options, the fi rst of which is to blend with reformulated gasoline in the summer months. They could also stop offering E15 during the summer months or simply sell it only to fl ex-fuel vehicle owners. “The options for summer months are limited and that’s really too bad,” he says.

It’s true RVP is a challenge, O’Brien says. However, not all mar-

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Premium Fuel In early December, E15 was only slightly cheaper than regular gasoline. The benefi t to drivers is that it’s a higher octane product, Zaremba says.

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kets are subject to RVP seasonality. In fact, Growth Energy sees areas requiring refor-mulated gas as ideal starting points for E15. Reformulated gasoline is required in cities with high smog levels, such as in St. Lou-is, and Fort Worth—in other words, large population centers. About 30 percent of the gas sold in the U.S. is reformulated and is currently required in parts of 17 states, according to the EPA.

Minimum Purchase RuleOne of the hiccups in fi nal federal ap-

proval for commercial sale of E15 was over pumps with a single hose dispensing mul-tiple fuels. The EPA was concerned, White

says, that a consumer purchasing E10 would get a higher percentage of ethanol due to the residual fuel left over in the hose. A lot of noise was made by the American Mo-torcycle Association as well as other small engine groups representing lawnmowers, chainsaws and more. RFA argued that in order for a consumer to get a higher than desired blend, a driver seeking E10 would have to fi ll at a single hose pump immedi-ately after a customer that purchased E15. In addition, the E10 consumer would have to purchase only one gallon of fuel. “The odds of this happing are similar to some-one winning the massive Powerball,” White said, adding that not all gas pumps have

single hose confi gurations. “But EPA was not going to budge.”

So, the 4-gallon minimum purchase rule was added to the RFA’s E15 retailer handbook. Basically any retailer selling E10 and E15 from a single hose was required to add an additional sticker telling consum-ers that if a minimum transaction wasn’t adhered to it may violate federal law. On the one hand, the agreement allowed the EPA to move forward with the fi rst misfu-eling mitigation plans in June—opening the way for the commercial sale of E15. But it wasn’t a perfect fi x. Next the AMA started complaining that it would soon become dif-fi cult for consumers with small engines to purchase E10. “Which is again, nearly ludi-crous, because every station would have to sell E15,” he says. Another question White has is, why would consumers with small en-gines have to have access to E10 at every station? Diesel is an example of a fuel that consumers aren’t able to purchase at every fueling station.

In the meantime, retailers who have been ready and willing to sell E15 haven’t able to because the EPA doesn’t feel this is-sue has been fully resolved, White says. That explains why there were several announce-ments of new E15 stations in the beginning, followed by silence in late fall and early win-

LOOKING GOOD This Zarco 66 gas station in Lawrence, Kan., offers 90 octane E15 right next to 87 octane regular gasoline.

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ter. As of early January a compromise was being worked out. If approved, retailers that sell E15 from the same hose as E10 and/or straight gas, must do two things. First, each station must offer consumers at least one fueling position for which E15 is not an option. “This would allow anyone to purchase whatever volume they would like without fear the blend would be above 10 percent ethanol and squelch the concerns from the anti-E15 community,” White says. In addition, the dispensers must be labeled, alerting consumers to the non-E15 fueling option.

Slowly But Surely E15 will be successful for the same

reason E10 was successful, White says. He’s confi dent that consumers, when given a choice, will purchase the fuel for its lower price and higher octane. But it’s going to take time to get the fuel in pumps across the U.S. so drivers can take advantage of it. “It took essentially 30 years to get E10 in 95 percent of the fuel sold in our coun-try,” he says. “To think E15 is going to have overnight success is a little short sighted. It will be successful, but it will take some time. Progress is happening but it is going to be slow.”

Todd Sneller, administrator of the Nebraska Ethanol Board, agrees. The state has the second highest ethanol production capacity in the U.S. and was the third in line to offi cially offer E15 to consumers. There’s still more work to do to bring ad-ditional retail locations on board, however. “At this point, it’s a novelty item,” he says. “There’s literally one location [in Nebraska] at which to purchase the fuel.”

Sneller was involved in the process of bringing E10 to the marketplace, which began in the 1970s, so he’s been feeling a sense of déjà vu lately. Opposition from the petroleum industry and the constant battle against misinformation were issues back then too. “We’ve been down this path before and it’s a challenging process,” he says. “But nonetheless we saw success with E10 and we hope that we will see some more success with E15 and higher blends.”

Automakers were key to E10’s ac-

ceptance. Sneller recalled in the late 1970s, when General Motors fi rst announced its 1979 model and newer vehicles were com-patible with E10. Over time, as more auto-makers got on board and as the fl eet started turning over, E10 gained ground. “We saw, in about a decade, going from a novelty fuel in the Midwest, to a fuel that was used across the country,” he says.

The process has begun to repeat itself already. In October, General Motors an-

nounced that E15 can be used in model year 2012 and newer vehicles, while Ford Motor Co. approved E15 for use in 2013 models and newer. Automakers’ acceptance of E15 is critically important to consumer and retailer confi dence moving forward, he says.

Author: Holly JessenFeatures Editor, Ethanol Producer Magazine

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Q & A

The First Lady of E15Kristy Moore recalls her beginnings in the ethanol industry, her fondness for American agriculture and the long road to bringing E15 to market. INTERVIEW BY TIM PORTZ

The story of the approval of E15 for use in model year 2001 and newer vehicles can-not be told without highlighting and recog-nizing the efforts, expertise and dogged de-termination of Kristy Moore, vice president of technical services for the Renewable Fu-els Association. With gasoline forecasts in the United States predicting lower and lower usage, the approval and widespread adoption of higher percentage ethanol blends become vitally impor-tant to an established industry poised for another round of growth. Moore has piloted the indus-try’s effort to the approval of E15 and now sets her sights—and the industry’s—on making the fuel available to consumers, one station at a time.

You’re from Illinois. Did you grow up around agriculture?

Yes, I consider myself a farm kid, as my ex-tended family farms. My father worked the farm during the summer break from teaching and my mother worked for a large company that was in the crop protection business. When I graduated from Illinois State University with a degree in chemistry, I knew agriculture would be a part of my work career and I wanted to remain in cen-tral Illinois. Staying involved in farming, crops, essentially all things representing rural America, is all good with me. Agriculture is in my blood.

You’ve spent time on the production side of this industry. How does this inform what you do in your work at the Renewable Fuels Association?

I went to work for ADM [Archer Daniels Midland Co.] right out of college at their distill-ery in 1994. We were making dozens of differ-ent alcohols that would be used in hairsprays, lotions, hand sanitizers and a wide range of fuels and industrial products. Of course, we also pro-

duced some of the premier beverage alcohols in the world. ADM let me gain experience in corn wet milling, product research and develop-ment and I ultimately worked for them in ethanol technical support. It was quite a training ground. The work we did to expand ethanol transport and storage throughout the United States was groundbreaking. This type of hands-on experi-ence really prepared me to assist the broad etha-nol industry during the most expansive growth period. In most cases, I’m able to say that I’ve been there and done that.

The road to E15 approval reaches back to the first quarter of 2009. How difficult was it to maintainmomentum as you drove this effort?

Throughout 2008, Bob Dinneen (RFA president and CEO) and I worked diligently to understand all of the regulatory requirements for introducing new ethanol blended fuels into the marketplace. We understood what the Energy Independence and Security Act was going to require and higher blends of ethanol in gasoline would be mandatory. Keep in mind that the last time an ethanol waiver was approved by EPA was 1978. We knew we had a lot of research to do. Ultimately, we developed the regulatory pathway for higher level blends then started put-ting the plan into action. For nearly two years, we worked with the U.S. EPA, toxicologists and other scientists developing the required health impact information. This project culminated in a multimillion-dollar, nearly 700-page report of E15 emissions, a report full of very heavy techni-cal information. Our next effort was to study the EPA’s conditional decision of E15, which lead RFA to receive the only approval of a model Misfueling Mitigation Plan. We capped off our

regulatory effort by developing the E15 Re-tailer Handbook. This RFA document is more than a regulatory reference manual for E15, it’s a must have for all segments of the fuel distri-bution system. We really knocked it out of the park with this industry guide. Follow-up efforts for us were the creation of the E15 Education Outreach Coalition, which is a group of broad industry stakeholders joined together to support consumer education of E15.

E15 is already being sold commercially in a small but growing number of gas stations. What would you say motivated these early adopters to add this fuel to their product mix?

There are marketing and fi nancial benefi ts with offering E15, which creates a win-win for both consumers and retailers themselves. Most retailers want to offer a new ethanol fuel blend. The benefi ts of E15 being acceptable for sale to over 62 percent of all vehicles on the road today is attractive.

The best part of the E15 introduction for me has been the opportunity to work with retail-ers and touting the benefi ts of broadening their product profi le, which brings opportunities for additional profi ts. With more than 60 percent of retailers now being single- or two-store owners, these small businesses need every opportunity to stay in business. E15 offers retailers a chance to set themselves apart by offering a new, exciting fuel to their station that not only confi rms their commitment to domestic renewable fuels but also offers them a competitive advantage. I love our E15 marketing materials that state “50 per-cent more homegrown.” That says it all for me.


Q & A

Now that E15 has achieved federal approval, can you explain how that

process carries forward on a state by state basis?

There are federal level requirements for gasoline due to the environmental harm that decades of gasoline-only use has done. Agencies like the EPA control certain char-acteristics of gasoline to curb ozone and other toxic gasoline component impacts to air quality. However, each state has the authority to regulate all of the other gaso-line properties. It’s quite amazing the level of detail in gasoline specifi cations that has

been incorporated into state level regulations. I spearhead an effort at the RFA to investigate

any state-level impediments to higher-level etha-nol content in gasoline. It’s a great opportunity

to work with state-level experts across the nation.

The RFA produced the E15 Retailer Handbook, a 48-page handbook to help retailers understand the process for offering E15 at their location. How vital are convenience store owners in the effort to grow the E15 marketplace?

New ethanol fuel blends are vitally dependent on both vehicles and infrastructure. We work diligently with auto manufacturers who need to make vehicles to not only be compatible with ethanol but take ad-vantage of the benefi ts ethanol brings to transporta-tion fuels like increasing octane. We also work closely with petroleum marketers and store owners to evalu-ate their equipment to ensure a successful offering of E15 and other any other ethanol fuel blends.

What is the single biggest advantage for a retailer to come aboard and offer E15 for sale at their location?

Preparing for the future while fi nding new profi t opportunities. The Renewable Fuels Standard has been the single most effective legislation weaning the U.S. off foreign oil and it’s not going away. Retail store owners who complete the process to ensure their fu-eling equipment, like tanks, dispensers, and hoses, are suitable for higher ethanol fuel blends, position them-selves to be a step ahead for the future. As ethanol prices have become more attractive, marketers are doing the math and recognizing the bottom-line ad-vantages that can be gained by adding ethanol to their product mix.

How critical is it to grow consumer interest and demand for E15 and how does our industry engage in that effort?

Consumer interest is critical. E15 was approved for more than 62 percent of all vehicles on the roads today, which constitutes more than 85 percent of all fuel consumed. That said, every gas station in the country already sells a fuel these vehicles can use and it works just fi ne. Convincing consumers to break their norm and try something new is no easy task. The “if it ain't broke, why fi x it” mentality is strong with most consumers, and we have to reach back to the core benefi ts of ethanol to make consumers give it a shot. There are many benefi ts to using ethanol and different ones resonate with different consumers—its renewable, domestic and cleaner-burning. The RFA has prepared promotional materials that are already being used in the fi eld to promote E15 at retail loca-tions to educate consumers. You can text in for in-formation, visit the websites or simply call. As more stations offer E15, this effort will ramp up.

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MARKETS


MARKETS

Staying bullish on ethanol even in the trough of negative margins.BY SUSANNE RETKA SCHILL

Ethanol might experience strong headwinds in 2013 but four marketers still see good things ahead. Yes, ethanol stocks have climbed, indicating the blend wall is here. Corn prices have been at record heights and supplies are tight, pushing the basis up for many corn buyers. On the other hand, etha-nol prices have remained at a discount to gasoline, the renewable fuel standard (RFS) was not waived and the adoption of E15 is under way.

“Ethanol’s value proposition, as a very cost-effective molecule in the motor gaso-line pool, has proven itself over time, and we’re very confi dent of that in the future,” says Jason Searl, vice president of etha-nol marketing and trading at Poet Ethanol Products. “From January to November of last year, ethanol traded between 55 and 65 cents a gallon on average underneath gaso-line,” he says. Looking back even further, ethanol has competed with gasoline very effectively. “Its high octane benefi ts are re-ally necessary to end users who have largely converted their gasoline refi neries to sub-grades.”

For Doug Punke, CEO of the Renew-able Products Marketing Group LLC, the drop in gasoline prices before Christmas was a positive sign. “Ethanol demand is de-pendent on gasoline demand,” he says. “I’m

encouraged with the recent drop in gasoline prices. It will certainly slow down the de-mand destruction we’ve had due to higher gas prices.” He also believes that the etha-nol margins have bottomed out, although he can’t project how long the trough could last.

John Litterio, head of CHS ethanol marketing group, fi nds declining inventory levels an encouraging sign. “Since Decem-ber of last year, we’ve had 34 to 36 days-of-demand in inventory,” he points out. “Since that time, we’ve gone to 23 days-of-demand in supply. Once you’re in the low 20s, that’s when you may see some shortages in some areas of the country.” That, in turn, gives some negotiating room for ethanol market-ers, he explains. In December, the U.S. eth-anol industry was operating at 12.4 billion gallons on an annualized basis, compared to a fundamental demand of 13.2 billion gal-lons, he says. “That is why the inventory is coming down pretty quickly.”

Commodity markets are notoriously cyclical and the frequent tight, negative margins have ethanol marketers looking to shave pennies off costs. “In our market-place, one-half of one cent per gallon is a big deal to us,” says Josh Bailey, vice presi-dent of marketing and trading for Eco-En-ergy Inc., a Tennessee-based company that couples distribution services with ethanol

OPTIMISTICBEARING


marketing. “We are making investments and working with blenders and railroads to re-ally reduce the supply chain costs and cre-ate something that is long term and effi cient, that ultimately will result in a better price for the blender and for the producer.”

Global MarketsBailey is also bullish on the future for

the global ethanol market. As the industry is maturing, ethanol is joining the many com-modities that have transitioned to a global market. “We’ve opened our trade opportu-nities with the globe. And, even with reduc-ing tax subsidies and trade barriers, we are the lowest priced and most effi cient octane enhancer when you compare ethanol with other octanes. We are a very competitive product in the motor fuel supply chain, and I think that is a tremendous statement, es-pecially considering we did have a bad corn crop this, and corn prices are relatively high.”

Bailey sees some real opportunities in international trade, which Eco-Energy has acted upon in a new partnership with Coper-sucar, the largest sugar and ethanol trader in Brazil, fi nalized just before Christmas. Bra-zilian ethanol is being imported into the U.S., Bailey points out, to fulfi ll the advanced bio-fuels requirement in the renewable fuels stan-dard, which “creates a trade fl ow between us and them, and that creates opportunity.”

University of Illinois economists, Scott Irwin and Darrel Good, wrote in their Dec. 7 FarmDocDaily newsletter that ethanol im-ports from Brazil have been driven more by the imported ethanol’s price relative to bio-diesel than to U.S. ethanol. They noted that Brazilian ethanol delivered to the U.S. Gulf was $2.85 on Nov. 29, when U.S.-produced ethanol at Gulf terminals was $2.60 per gal-lon. That same day, conventional blendstock for oxygenate blending (CBOB) was $2.52 per gallon—a 33-cent spread. That is far more favorable than ultra-low sulfur diesel at the Gulf at $3.03 per gallon and B100 at $4.08, a spread of $1.05. “One fi nal conver-sion must be done to make a fair compari-son,” the analysis continues. “Since biodiesel is worth 1.5 gallons of ethanol in the RFS math, we need to divide the net profi t for

diesel blending by 1.5 to arrive at a net profi t of -$1.05/1.5 = -70 cents per gallon. This makes biodiesel almost twice as expensive as imported Brazilian ethanol when it comes to meeting the advanced RFS mandate. And that is the reason why Brazilian ethanol im-ports are surging into the U.S. during recent months.”

There are other factors suggesting the global ethanol industry can cooperate more. The two countries’ seasons mirror each oth-er, says Bailey. “They’re producing at a time when our demand is typically the highest—June, July and August—and that’s typically at the same time when we are at the end of our corn crop. As we start to get new corn in October, November, December, they stop

producing ethanol. It is summer for them, so their driving season is at a peak.” The two biggest ethanol-producing companies in the world can also cooperate to stimulate greater ethanol use in global markets, Bailey adds.

Brazil has additional market fl exibility—another positive for ethanol marketers—Searl points out. “That’s a luxury that we don’t have in the U.S. Brazil has announced that in June they’ll move from 20 to 25 per-cent blends.” The blend rate was restored to 20 percent this past year, after being dropped due to a poor sugar crop and resulting re-duced ethanol production the year before. Brazil’s increasing ethanol blend mandate is a good sign that there will be room for U.S. exports to Brazil.

MARKETS

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U.S. Ending Stocks of Fuel Ethanol Jan. 2007 to Sept. 2012

Steady Climb Ethanol ending stocks hit a peak in the spring of 2012, as shown in this chart from January 2007 to September 2012.SOURCE: EIA

Annual U.S. Ethanol Production and RFS Mandates

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SOURCE: RFA, EPA, NATHAN KAUFFMAN


E15 Expansion In the U.S., the move from E10 to E15,

a long, still hotly contested battle, is seen as essential for the ethanol industry. The U.S. EPA’s published volume for conventional renewable fuel (predominantly corn ethanol) to meet the renewable fuel standard amount-ed to 13.2 billion gallons for 2012. It goes up for each of the next two years until corn-to-ethanol volume fulfi lling the RFS is capped at 15 billion gallons in 2015. Total U.S. corn-ethanol capacity is currently estimated at be-ing very close to that already, depending on

how one categorizes certain plants. In late December, however, production had slowed signifi cantly. “There’s a good amount of eth-anol capacity that is curtailed and plants that are not running full out, but running 10 to 15 percent slower,” Litterio says. He estimates that 500 million to 600 million gallons of ca-pacity won’t likely be returned to production.

Gasoline demand is looking to remain steady at around 133 billion gallons, and E10 provides room for just 13.3 billion gallons of ethanol. Consumers choosing higher blends for their fl ex-fuel vehicles create some de-mand above that, but ethanol marketers are

looking for E15 to take the pressure off the blend wall and to make room for the expand-ing renewable fuel volumes called for by the RFS. “I am very encouraged by what I see as we look beyond 2013 from a demand stand-point,” says Punke. “That will lift the supply and demand ratio to the point where we will have positive margins. Specifi cally, I look at E15 and the demand for the RINs (renew-able identifi cation numbers used to show compliance with the RFS).”

The combination of favorable blend economics due to ethanol’s discount to gasoline along with the growing mandated

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U.S. Gasoline Consumption (Left Scale)* Ethanol Production (Right Scale)**

2012 Mandate (Right Scale) 2013 Mandate (Right Scale)

2014 Mandate (Right Scale) 2015 Mandate (Right Scale)

EIA Forecast

* When read from the right axis, this number represents the 10 percent ethanol blend wall. ** Ethanol production is net of tradeSource: Energy Information Administration The EIA Short-term Energy Outlook, September 2012, is used for the projection to 2013. The EIA Annual Energy Outlook, June 2012, is used for the projection to 2015.

U.S. Gasoline Consumption and RFS Ethanol Mandates

SOURCE: NATHAN KAUFFMAN

Markets Drive Ethanol Production, Not RFSA seven-page report, prepared by Nathan Kauffman, economist with the Federal Reserve Bank of Kansas City, concludes that ethanol production wouldn’t decline signifi cantly even if the renewable fuel standard were waived. Charts included in that report show ethanol’s relationship to gasoline, the renewable fuels standard, renewable identifi cation numbers and corn and oil prices. In 2007, when gasoline consumption was at its peak, Kauffman points out the Energy Information Administration forecast U.S. gasoline consumption to reach 150 billion gallons by 2015 and the RFS target would have equaled E10 blending. Kauffman argues that blending economics have driven ethanol production more than the mandate. These charts underlie his analysis; for the narrative see Issue 5, 2012, of The Main Street Economist, at the website. For another ethanol-related chart, see the online version of this story at www.ethanolproducer.com.

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volume for conventional renewable fuel is going to help drive the adoption of E15. Searl points out that it really wasn’t until mid-summer that the EPA fi nalized its E15 rules. “The stakeholders have had time to digest it the last half of 2012. 2013 will be when they initiate their plans by company and by region, trying to solve how they can utilize

E15 most appropriately in their systems.” Logistics and compliance issues have to be worked out state-by-state, he points out, but he expects a steady increase in E15 through-out 2013 and 2014. “The full saturation of E15 will be in the course of years,” he adds. For one, the state of California—the na-tion’s single largest market—limits blending

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Intens ity:D0 Abnormally DryD1 Drought - ModerateD2 Drought - SevereD3 Drought - ExtremeD4 Drought - Exceptional

Drought Impact Types:

S = Short-T erm, typically <6 months(e.g. agriculture, gras s lands )L = Long-T erm, typically >6 months(e.g. hydrology, ecology)

D elineates dominant impacts

U.S. Drought Monitor

January 1, 2013Valid 7 a.m. EST

Released Thursday, January 3, 2013Author: Brian Fuchs, National Drought Mitigation Center

The Drought Monitor focuses on broad-scale conditions. Local conditions may vary. See accompanying text summary for forecast statements.

Still Dry Drought conditions are ongoing this winter, although the extreme and exceptional drought conditions have been moving westward. SOURCE: U.S. DROUGHT MONITOR

Ethanol RIN Prices and Corn Prices

Note: The gap in successive RIN year prices is due to the storage provision of the RFS which implies that current year RINs are always valued at least as high as previous year RINs.

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SOURCE: OIL PRICE INFORMATION SERVICE, COMMODITY RESEARCH BUREAU, NATHAN KAUFFMAN


to 10 percent, in addition to its low carbon fuel standard that favors sugarcane ethanol over corn ethanol.

Litterio agrees that E15 inclusion will slowly build in 2013. “We’ve got to have a billion gallons to fi nd its way into E15 by 2014,” he adds, predicting that the smaller retailers will bring it on fi rst. “If ethanol prices stay lower than gasoline, E15 will be competitively priced. Retailers will have to step up, or be left behind.” Litterio’s etha-nol marketing group at CHS works with eight ethanol producers, but on the retail side, the nation’s largest farmer-owned cooperative has 1,300 retail gas stations. “We’re the largest single retailer with blender pumps and E85,” he says, adding that CHS is committed to higher blends and will move into E15 as various issues are overcome.

New Crop OutlookBased as it is on corn, ethanol’s fortunes for late 2013 and into

2014 lie with the new crop prospects: Will the drought become his-tory and production rebound and perhaps even set new records? By mid-December, eastern Corn Belt moisture conditions had greatly improved, says Rich Tinker, a meteorologist who works on the U.S. Drought Monitor. “The drought seems to have moved westward.” Winter is usually a dry season for much of the western Corn Belt, he adds, generally receiving just 5 to 10 percent of its annual precipita-tion in December, January and February, while the eastern Corn Belt will get 15 to 20 percent in that time period. In mid-December, Tinker says his team was expecting higher-than-normal temperatures for the Corn Belt, “but as far as wet or dry, we’re just not sure.” The months of March, April and May are the critical time of year for making up a soil moisture defi cit, Tinker says, when climate data shows the Corn Belt receiving one-quarter of its annual rainfall. Heading into those months, he says, “it’s not too late to set us up for a decent spring sea-son.” Summer is actually the wettest time period, he adds, when Corn Belt states receive a greater proportion of rainfall during the growing season itself. What no one can predict is whether a hot summer will exacerbate lingering dry conditions.

Like the weather and the corn market, it’s well known that the ethanol industry is cyclical. “This industry has seen diffi cult times numerous times in the past fi ve years,” Bailey says, “but I am opti-mistic. We have a great product. We have the capacity to produce it. We’ve shown that our industry can be somewhat disciplined and we will reduce production. And we also have a mandated structure that has today worked very well in allowing obligated parties to meet their mandate with RIN credits. I think that those speak to very positive things. There are the obvious headwinds that we have to overcome in the short term with the 10 percent blend wall and the state-level issues with E15, but as those get solved it’s a good opportunity for the industry.”

Author: Susanne Retka SchillContributions Editor, Ethanol Producer Magazine

[email protected]

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BLENDING


BLENDING

Developing a retail relationship with area fuel stations is a potential perk for ethanol plants, retailers and consumers.BY HOLLY JESSEN

Direct

In some areas of the U.S., drivers fi lling up with ethanol blends have one more reason to proudly choose the fuel. It's locally sourced, providing consumers with the unique opportunity to purchase ethanol produced by their neighbors—area corn farmers and the employees of a local ethanol plant. “It’s just all around a win,” says Mitch Miller, CEO of Carbon Green BioEnergy LLC, a 50 MMgy plant that sells E85 directly to retailers in Michigan.

Although the details vary from plant to plant, it generally involves in-stallation of on-site blending infrastructure, allowing an ethanol plant to sell E85 directly to area retailers. E15 and other ethanol blends represent another area of opportunity. For example, Zarco 66, the fi rst retailer to offer E15 in the nation, purchases ethanol directly from ethanol plants lo-cated within 100 miles of his seven gas stations that sell E15. In this case, the retailer does his own blending. (For more information about E15, see the Choice at the Pump story in this issue.)

The advantage to ethanol plants is a higher netback for its product, Miller says. “It’s a piece of our production that can have a little higher level of pricing control,” he says, adding that the cost of transporting the fuel is reduced and blending markups are eliminated. “The value is kept between the retail station owner and the ethanol plant,” he says.

Carbon Green started supplying retailers with E85 in July 2011. The company spent about $75,000 to install the equipment needed to do on-site blending at any ratio. With marketing assistance from Noble Mans-fi eld Renewable Energy, Carbon Green sells about 1 million gallons of E85 a year, directly to fuel stations in close proximity to the plant. “There are currently 135 (E85) pumps in the state of Michigan and we supply about 50 of them,” he says.

CConnection


BLENDING

Retailers like it because they can typi-cally purchase the fuel at a discount com-pared to other sources, although the price depends on the spread between ethanol and gas. “During high spread times we sell more than in low times, so we are looking at strategies to lock that spread when it widens out,” he says.

At Carbon Green, the E85 is blended with natural gasoline, or gas that’s recov-ered from natural gas, which is also used as

a denaturant. The bonus is that the blended E85 isn’t a petroleum fuel, meaning it con-tains fewer highly hazardous pollutants, or HAPs, and, it’s a 100 percent domestically produced product.

Although there are ethanol producers who sell directly to retailers, Miller believes more should. “Companies are reluctant to put in the capital expenditure for a seem-ingly small market,” he says, countering that it’s a growing market and the cost is worth

it. “We have been able to get a return on investment that’s pretty short, we’re talking about a 2 to 3 year return on investment at our Michigan plant,” he says. In fact, Car-bon Green has a goal to double its E85 sales in 2013.

But this isn’t just about revenue—he sees it as simply the right thing to do. “It helps build out higher ethanol blends lo-cally and gets the consumer the lowest price fuel,” he says. “If every plant was do-ing this at the same time we would make strides as a nation.”

Miller, who has worked in the ethanol industry for 18 years, has been a player in bringing the direct retail marketing system to fi ve separate ethanol plants. It started in the late 1990s, when he was part of launching the program at Chippewa Valley Ethanol Co. in Benson, Minn. His next job took him to Central Indiana Ethanol LLC in Marion, Ind., where he helped replicate CVEC’s successful program. His work at Carbon Green came after that, followed by introducing direct marketing at two more plants through Energetix LLC, an ethanol plant consulting, acquisition and manage-ment company, of which Miller is a man-aging partner. Energetix manages two ethanol plants that also sell E85 to area retailers, DENCO II LLC, a 24 MMgy plant in Morris, Minn., and Iroquois Bio-Energy LLC, a 40 MMgy facility in Rens-selaer, Ind.

The number of retail stations that pur-chase E85 from CVEC varies, says general manager Mike Jerke. At peak times, such as during Hurricane Katrina, CVEC has supplied more than 100 area gas stations with E85 it blended on site. Currently, the number is below 100. Jerke confi rmed that selling E85 locally is a benefi t to the ethanol plant and retailers. “We like it be-cause it is a value-added proposition to our bottom line and we think it has the same impact to the retailer who doesn’t have to go through a third party or the rack,” he says. Drivers also benefi t. “We know that having that direct connection, retailers are able to provide a more competitively priced product to the consumer.”

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BLENDING

Educating retailers about the benefi ts of higher percentage ethanol blends is also part of it, Jerke adds. CEVC is using its relationship with area retailers to pro-mote E15 and the installation of fl ex-fuel or blender pumps. That means connecting them with the appropriate resources to an-swer their questions about new products and opportunities.

Although CVEC has had good luck with selling E85 directly to retailers, not ev-ery ethanol plant is prepared to take on the challenge. “I think it really depends on the philosophy at the plant,” he says. “There is extra work involved.” Beyond the cost to install the needed equipment, it does require additional paperwork for tax pur-poses as well as the effort required to build up a network of customers.

In his years working on direct mar-keting ethanol to retail stations, Miller has learned that there are three keys to selling higher ethanol blends. The fi rst is that the price needs to be predominantly displayed on the marquee sign, next to E10 or regu-lar gas. “The customers driving by the sta-tions, see that price difference, recognize it and that drives sales,” he says. “We’ve found that drives sales up, by up to fi ve times.”

His next two points are the impor-tance of reaching consumers and station owners. The company is continuing efforts to sit down to talk with station owners about higher percentage ethanol blends. Carbon Green has also hosted plant tours, to allow area retailers to see where the fuel is produced. Using a database of FFV owners, Growth Energy assisted in sending out postcards advertising directly to the drivers who can use the fuel. The postcard lets them know they can use E85, an American-made fuel that can save them money, and that the fuel is available in their area. Carbon Green also produced a map it plans to send out to the owners of all E85 and fl ex-fuel pumps in Michigan. Printed in early December, the map contains a list of all existing FFVs and a map of the loca-tions in Michigan with E85 and fl ex-fuel pumps. There’s also information about the

Employees of Carbon Green BioEnergy LLC pose with the fi rst load of E85 blended on site.

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Renewable Fuels Association’s smart phone app, which helps consumers locate fl ex-fuel stations. “People need to know about that,” Miller says. The fi rst printing of 5,000 maps will be paid for by the Michigan Corn Grow-ers and will be sent to every fl ex-fuel pump station in the state, as a way of contacting

the station owner and asking them to pass out the maps to FFV owners. “It gets us in the door,” he says.

Author: Holly JessenFeatures Editor, Ethanol Producer Magazine

701-738-4946 [email protected]


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CONTRIBUTION

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily refl ect the views of Ethanol Producer Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

Are US, Brazil Ethanol Industries Ready to Dance?Making the case for the world’s ethanol powerhouses to work cooperativelyBY DANIEL COELHO BARBOSA

BRAZIL

For many years, the U.S. ethanol industry saw Brazil primarily as a competitor. In 2012, as ethanol trade barriers disappeared and weather forced market adjust-ments in both countries, corporations are noticing that together, the U.S. and Brazil can reach better results faster.

I would like to pose a question for the U.S. biofuels industry, especially those with a penchant for ethanol-based chemicals with higher added value: Have you ever dared to think your business could improve if Brazil were on your agenda?

The aviation sector demonstrates faith in a new strategy that has reviewed old concepts and identifi ed new trends: protectionism is out; coop-eration is the new driver to leadership. Today Boe-ing, Embraer and the FAPESP, a research agency in Brazil’s state of São Paulo, are working together on jet fuel research. As the aviation industry is in-creasingly under pressure to fi nd environmentally

SWEET HARVEST Truckloads of sugarcane are brought into harvest in this 2008 photo taken at the Mirriri ethanol mill, a traditional mill in Paraíba.

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BRAZIL

friendlier substitutes for kerosene for planes, there isn't an alternative to liquid fuel in sight. There's no time to lose—the International Air Transport Association plans to be car-bon neutral by 2020. Consequently, whether a major aircraft manufacturer or a small tech-nology company, all are feverishly seeking al-ternatives to reduce air traffi c emissions. In the race for the jet fuel of the future, many sources, from waste to algae, may become raw material to power the turbines. Realizing that the solution to this puzzle can be so rewarding, stakeholders have wisely chosen to join forces.

There are further examples of the growing interest in collaboration.

In September, former U.S. Treasury Sec-retary Lawrence Summers made a memorable speech in São Paulo, drawing many parallels be-tween North America and South America. The director of the Center for Agricultural and Ru-ral Development at Iowa State University, Bruce Babcock, was also a speaker at the conference. If anyone still thought Brazil has little to offer, the visions these gentlemen presented should have overhauled those opinions.

Generally speaking, companies that take the time to analyze potential partners in Bra-zil usually fi nd promising counterparts. For instance, if the goal is research and develop-ment in sweet sorghum, the IAC, the institute for sugar and ethanol that is part of São Paulo’s Agency for Agribusiness Technology (APTA), is certainly one of the best partners. The IAC coaches many projects that are regularly show-cased at its annual agro-energy workshop. In 2012, the IAC's workshop focused on energy cane varieties with higher yields and low-water needs that are designed to meet future demands, delivering more fi ber and less sugars.

If you prefer to have your own X-ray of the ethanol sector, consider attending FENA-SUCRO, the biggest event in South America for agribusiness equipment and technology. What-ever your goals are, you will certainly fi nd valu-able information there.

Removing BarriersWith the removal of ethanol import barri-

ers by both the U.S. and Brazil, traders and the industry in both countries have experienced a

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new freedom. This clear win-win is surely the better policy and in the long term, the impetus for bigger accomplishments. Consider a state-ment made by Iowa Gov. Terry Branstad in a Reuters interview: "I think there's a clear sense now that we should be collaborating instead of fi ghting each other." The declaration was received with great satisfaction, a clear indi-cation that a growing number of people are

envisioning the magnitude of strategic team-work possible, and the benefi ts for their own economies.

One might think that the U.S. EPA rank-ing of cane ethanol as an advanced biofuel would be a cause of resentment between the two countries, but I would argue not at all. Corn ethanol is selling fi ne and a lot more must be blended to meet the U.S. renewable


BRAZIL

fuels standard. Looking at it pragmatically, now that import hurdles are gone, a company in Iowa could own corn farms or a cane mill in South America and profi t from it as well. In Brazil, drivers don't mind if their ethanol is imported. In the U.S., nobody worries where the oil for their gasoline comes from. The simple truth is that Brazilian ethanol paves the way for biofuels in the American market and corn ethanol eases the supply bottleneck in Brazil.

The time has come to consolidate biofu-els as a viable global solution. Whether from cane or corn, ethanol has been just the fi rst step in the energy transition process. Togeth-er, Brazil and the U.S. defi nitely play a signifi -cant role to evangelize the rest of the world.

Free trade was a fi rst step towards eco-nomic prosperity and there's still a lot more to come if the governments keep that approach. No matter if it's manufacturing fl ex-fuel/

electric hybrids, producing fuels from mu-nicipal solid waste or developing jet fuel, the potential for companies of all sizes is simply huge.

Second-gen Opportunities This year, we should see the promise of

cellulosic ethanol production come true and, as ethanol starts to unlink from food and feed crops, its acceptance should improve. Markets for biofuels will heat up as further nations, such as China, become more receptive.

Years ago, when I told my friends in Los Angeles that the true jackpot lies beyond domi-nance, they were amused. Now that the fi rst load of American-made cellulosic ethanol has shipped to Brazil, please allow another predic-tion: When the North American and South American giants succeed in strengthening their ties, it will positively impact businesses on both ends of the hemisphere.

It's not only biofuels. According to ABIQUIM, the Brazilian chemical industry as-sociation, the federal government is preparing a bundle of incentives for renewable chemicals. That should stimulate new investments up to $20 billion by 2020 and, although green chemi-cals are still niche products, margins could double.

Thanks to the fi rst American-Brazilian joint ventures, cane-based diesel has become a reality and new specialty chemicals from al-gae grown on cane sugars are being intensely researched. Further cellulosic ethanol projects will be concluded this year, and there's still plenty of room for synergies of many kinds—from biotech to polymers or other technologies combined. Undoubtedly, the U.S. and Brazil are set to play a central role in the profi table transi-tion from the oil-based economy to bioenergy.

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BRAZIL

Embracing New PartnersBrazil's ethanol industry suffered in 2012

from numerous quarters: the world crisis, drought followed by heavy rains, blend re-ductions and artifi cially low gasoline prices. 2012 is called “a year to forget” by many in the business. Marcos Françoia, the director of MBF Agribusiness, saw many traditional mills collapse. The longtime consultant to Brazil sugar companies and foreign companies in the ethanol sector, explained, "The [cane] mills were forced to adapt or succumb—there was nothing to sweeten that pill. The management philosophy had to be reset, targets reviewed, if someone wanted to survive. It was tough, but the mills that managed to navigate the crisis re-emerged much stronger."

Cane ethanol faced corn ethanol imports at a very delicate moment for the Brazilian industry. What is curious about it is that, al-though we heard complaints of all kinds, even

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Investment type Description Million tons/year Billion $

Chemical PlantsSaccharose extraction

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DownstreamBiobased chemicals production

7.2$6.50

Total $20.30


BRAZIL

While UNICA is best known in the United States, the Forum Nacional Sucroenergético, with its 15 affi liated associations, is the national organization offi cially representing the sugar and ethanol industry in Brazil. FNS members in the national sugar and energy forum are sugarcane mill associations representing the country’s cane-producing states. For example, UNICA and UDOP in the state of São Paulo, Biosul in Mato Grosso do Sul, Sismig in Minas Gerais, Sifaeg in Goiás, Sindacucar-AL in Alagoas, Sindacool-PB in the state of Paraíba.

UNICA is surely the best known among the FNS affi liates, and many people abroad tend to think it is the only institution in Brazil. With 131 mills represented out of 430-plus, UNICA plays an important role, but its members aren't exclusively national ethanol producers anymore. Oil companies that are increasingly advancing

into biofuels markets, as well as multinational companies trading agriculture commodities, have also joined the association.

The smaller, regional ethanol associations have their virtues: they normally act closely with their mills, know their local political arenas very well, enjoy good support in the nation’s capital, Brasilia, and are frequently pioneers in innovation. Here is a taste of what's been going on in Brazil's second-largest cane-producing region, the Northeast:

In Paraíba, the state in Brazil's easternmost corner, Sindacool-PB addressed biodiversity long before nongovernmental organizations began campaigning. Association members created the fi rst ecological corridor to preserve animal life in cultivated areas. Sindacool-PB was also among the fi rst to support a biogas project using cane vinasse in the country.

In the state of

Pernambuco, two hours away from Paraíba by car, a small Austrian company started the fi rst project in Brazil to grow algae using CO2 from fermentation in a cane mill in 2012. In addition to sugar and/or ethanol, modern mills also produce bioelectricity, CO2 for the food industry and biogas, and now, algae, compliments of Austria.

In Alagoas, the next northeastern state, the Brazilian company Graalbio announced the fi rst second-generation ethanol plant in Brazil, being built with Italian technology from Mossi & Ghisolfi .

The Northeast offers some advantages for ethanol producers. Port facilities are not as crowded as Rio, Santos or Paranaguá, plus, the whole region has an affi nity for biobased chemicals.

FNS Members • ALCOPAR, Associação dos Produtores de Bioenergia do Estado do Paraná; Miguel Rubens Tranin, president.• SIAMIG, Sindicato da Indústria da Fabricação do Álcool no Estado de Minas Gerais; Mario Campos, president.• SIFAEG, Sindicato da Indústria de Fabricação de Etanol do Estado de Goiás; André Luiz Baptista Lins Rocha, executive president.• SINDAAF, Sindicato Fluminense dos Produtores de Açúcar e de Álcool; Geraldo Benedicto Hayem Coutinho Filho, president.• SINDAÇÚCAR-PE, Sindicato da Indústria do Açúcar e do Álcool no Estado de Pernambuco; Renato Augusto Pontes Cunha, president.• SINDAÇÚCAR-AL, Sindicato da Indústria do Açúcar e do Álcool no Estado de Alagoas; Pedro Robério de Melo Nogueira, president.• SINDAÇÚCAR-PI, Sindicato dos Produtores de Açúcar, de Álcool e de Cana de Açúcar de União e Região; Luiz Fernando Pereira de Melo, president.• BIOSUL, Sindicato da Indústria da Fabricação do Álcool do Estado de Mato Grosso do Sul; Roberto Hollanda Filho, president.• SINDÁLCOOL-MT, Sindicato das Indústrias Sucroalcooleiras do Estado de Mato Grosso; Piero Vincenzo Parini, president.• SINDÁLCOOL-PB, Sindicato da Indústria de Fabricação de Álcool no Estado da Paraíba; Edmundo Coelho Barbosa, executive president.• Sindicato da Indústria do Açúcar e do Álcool no Estado da Bahia; Carlos Gilberto C. Farias, president.• UDOP, União dos Produtores de Bioenergia; Celso Torquato Junqueira Franco, president.• UNICA, União da Indústria de Cana-de-Açúcar, Elizabeth Farina, president.• SONAL, Sindicato da Indústria de Álcool dos Estados do Rio Grande do Norte, Ceará e Piauí; Arlindo Farias, president.• SINDIQUÍMICOS, Sindicato da Indústria de Produtos Químicos Para Fins Industriais, Produtos Farmacêuticos, Preparação de óleos vegetais e Animais, Sabão e Velas, Fabricação do Álcool, Tintas e Vernizes e de Adubos e Corretivos Agrícolas do Estado do Espírito Santo; Ernesto Mosaner Jr., president.• SINDICANALCOOL, Sindicato de Produtores de Cana, Açúcar e Álcool do Maranhão e do Pará; Cintia Cristina Ticianelli, president.

Ethanol Associations in Brazil

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BRAZIL

when ethanol imports were at a record high, there wasn't a single protest against the U.S. Françoia, who knows the "cane soul" inside and out, explains "the agreement between the U.S. and Brazil was a big step forward—this way we could guarantee supply. And we have to deal with that, if we want to stay competi-tive internationally. If we have problems now, it's our fault." Embracing U.S. imports that strongly may sound surprising, but this opin-ion is widely shared.

Françoia closed our conversation with the statement: "There are fantastic knowledge re-sources about cane in Brazil. Our experience is huge, our researchers have international qualifi cations. That, allied with U.S. American know-how is a powerful combination. To-gether, it would be much easier to build stable markets, not only for biofuels, but there are other products to be explored. Take Coca-Cola for instance, its PET bottles use plastic from cane. Actually, the potential for partnerships is much broader. The U.S. uses corn to produce ethanol and Brazil is also a big corn producer.

If one had corn stocked in both countries, he could supply his own market in case of harvest losses. But more than that, think of the profi t margins with your own share of cane ethanol in the domestic markets!"

So, could business in Brazil improve prof-its in the U.S.? The answer is a clear yes. Could cooperation make those profi ts even bigger? No doubt. It's remarkable how fast a growing

number of American partners are discovering the lucrative details. Let the music play!

Author: Daniel Coelho BarbosaGermany-based Agribusiness Analyst

+49 163 81 69 [email protected]

ON THE WEBIAC: http://www.iac.sp.gov.br/Agroenergy Workshop organizer: Dr. José Roberto Scarpellini, [email protected] FENASUCRO: http://www.fenasucroagrocana.com.br/

DESTILARIA ETANOL Distillation columns at the Cortesia Sindalcool ethanol plant.


EnvironmentalAir Resource Specialists, Inc.970-484-7941 www.air-resource.com

Feasibility StudiesBBI Consulting Services866-746-8385 www.bbiinternational.com

Plant Optimization

ICM, Inc.877-456-8588 www.icminc.com

Quality AssuranceSGS Group41-0-22-739-91-11 www.sgs.com

SafetyRail Safe Training, Inc.712-212-4145 www.railsafetraining.com

EngineeringProcess DesignBBI Consulting Services866-746-8385 www.bbiinternational.com

Equipment & ServicesAgitation EquipmentEKATO Corporation201-825-4684, x217 www.ekato.com

Air Pollution/Odor ControlBionomic Industries201-529-1094 www.bionomicind.com

MEGTEC Systems Inc.920-339-2787 www.megtec.com

Anaerobic DigestersHimark bioGAS780-700-5110 www.himarkbiogas.com

Cellulosic PretreatmentVecoplan, LLC336-861-6070 www.VecoplanLLC.com

Control SystemsMitsubishi Electric Automation, Inc.763-381-9384 www.meau.com

Cooling TowersTower Performance, Inc.800-314-1695 www.coolingtowercomponents.com

EPM MARKETPLACEAg Products & ServicesEquipmentMole Master Services Corporation740-374-6726 www.molemaster.com

Hybrid CornDuPont Pioneer515-535-6411 www.pioneer.com/biofuels

Associations/OrganizationsMinnesota Bio-Fuels [email protected] www.mnbiofuels.org

ChemicalsAdditivesBuckman800-937-5548 www.buckman.com

U.S. Water Services866-663-7633 www.uswaterservices.com

CIPBuckman800-937-5548 www.buckman.com

DenaturantViachem, LLC631-752-8700 www.viacheminc.com

EnzymesCTE Global, Inc.847-564-5770 www.cte-global.com

Water TreatmentBuckman800-937-5548 www.buckman.com

YeastFermentis-Division of SI Lesaffre800-558-7279 www.fermentis.com

Lallemand Biofuels & Distilled Spirits800-583-6484 www.lallemandbds.com

CleaningDryer SystemsPremium Plant Services, Inc.888-549-1869 www.premiumplantservices.com

EvaporatorsPremium Plant Services, Inc.888-549-1869 www.premiumplantservices.com

FansPremium Plant Services, Inc.888-549-1869 www.premiumplantservices.com

Hydro-Blasting

Railcar Spill ResponseHydro-Klean, Inc.515-283-0500 www.hydro-klean.com

Tank Cleaning EquipmentGamajet Cleaning Systems Inc.877-GAMAJET www.gamajet.com

Scanjet, Inc.281-480-4041 www.scanjetinc.com

Tank Cleaning ServicesPremium Plant Services, Inc.888-549-1869 www.premiumplantservices.com

ConstructionFabricationAgra Industries Inc.715-536-9584 www.agraind.com

Grain StorageHoffmann, Inc.563-263-4733 www.hoffmanninc.com

Plant Construction Agra Industries Inc.715-536-9584 www.agraind.com

Fagen, Inc.320-564-3324 www.fageninc.com

ConsultingBusiness PlansBBI Consulting Services866-746-8385 www.bbiinternational.com

Central Energy PlantBuckman800-937-5548 www.buckman.com


Corn Oil RecoveryBuckman800-937-5548 www.buckman.com

Dryers-OtherCellencor, Inc.515-259-1122 www.cellencor.com

Fractionation-CornLAI Eth. Bio Tech Div, Langhauser Assoc, Inc.217-412-1150 www.LanghauserAssociates.com

Heat ExchangersPick Heaters, Inc.800-233-9030 www.pickheaters.com

Laboratory-SuppliesMidland Scientifi c Inc.800-642-5263 www.midlandsci.com

Loading Equipment

DYNATEK Articulated Loading Systems888-853-5444 www.dynatekloadingsystems.com

Membrane Dehydration SystemsHitachi Zosen U.S.A. Ltd.212-883-9060 www.hitachizosen.co.jp/english

Molecular SievesInterra Global847-292-8600 www.interraglobal.com

Paint & Protective CoatingsElevation Coating, LLC763-742-2067 www.elevationcoating.com

EPM MARKETPLACESize Reduction-ShreddersVecoplan, LLC336-861-6070 www.VecoplanLLC.com

Storage-DDGSHoffmann, Inc.563-263-4733 www.hoffmanninc.com

TanksAgra Industries, Inc.715-536-9584 www.agraind.com

Thermal Oxidizers

Koch Knight LLC330-488-1651 www.kochknight.com

Truck Receiving/DumpersAirofl ex Equipment563-264-8066 www.airofl exequipment.com

Used Equipment

BORCHART STEEL INC

ValvesCashco, Inc.785-472-4461 www.cashco.com

Wastewater Treatment ServicesBuckman800-937-5548 www.buckman.com

Yield EnhancementHimark bioGAS780-700-5110 www.himarkbiogas.com


EPM MARKETPLACEFinanceAppraisals

1-800-279-4757

Call us for a free, no-obligationconsulation today.

Natwick Associates Appraisal Services1205 4th Ave. S., Fargo, ND 58103

[email protected]

The Specialistin Biofuels Plant

Appraisals• Valuation for financing• Establishing an asking price• Partial interest valuation

Few certified appraisers in the United States specialize in ethanol plant and relatedbiofuels properties. The firm of Natwick Associates offers more than 50 years of worldwide experience.

Grant WritingSustainable Energy Strategies, Inc.703-543-6838 www.sesi-online.com

Lender RepresentativesBBI Consulting Services866-746-8385 www.bbiinternational.com

Legal ServicesAttorneysBrownWinick Law Firm515-242-2414 [email protected]

MediaPublicationsPlatts1-800-PLATTS-8 www.platts.com/biofuels

eco-energyinc.com

615.786.0400

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February 2013 Ethanol Producer Magazine

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Transcript of February 2013 Ethanol Producer Magazine