Media
Interview with Randall Doyal, CEO of Al-Corn Clean Fuel
Q. Where specifically has Al-Corn made the most significant improvements in production efficiencies since beginning production?
A. We started production in 1996. Our largest improvements are a 15% increase in ethanol yield per bushel, 30% decreases in natural gas and electricity per gallon, and a 240% decrease in water use per gallon. We continue to look for ways to improve yield, decrease energy and use less water.
Q. How long have you personally worked in the ethanol industry and what drew you to this career path?
A. I started in this industry in 1982. I was working as a carpenter, and got hired on to do construction at a small ethanol plant in my home town. When I arrived the first day I was walked through the one plant that was operating (another was under construction at that time). Then I was told that I was a “cooker”. Thankfully the “distiller” that was on duty showed me what I was supposed to do to produce batch cooks and fill a fermenter. But no one could tell me why exactly we followed the steps we followed. When I got off work that evening I went to the library at the local university and checked out just about every book I could find that talked about making alcohol, or fermentation, or even moonshining. That was my introduction to the industry that has been my home and my passion ever since.
Q. Please share the impact that you feel Al-Corn has on the local economy and surrounding communities?
A. There are some impacts that are easy to quantify. We are the largest tax payer in our community. That has immediate impact on our community. We have contributed to the success of our farmer members. I can see that in the upgrades of their equipment from small single axle trucks to multiple tractor/trailer rigs for delivering their corn. Seed and implement dealers love us. We create a multitude of jobs from the vendors that supply us to the construction firms that help build and repair our facilities to the truckers who transport our finished products like CO2, ethanol, DDGS (livestock feed), and corn oil.
Q. How do you explain to consumers the myth of “Food vs Fuel” surrounding grain-based ethanol production?
A. Ethanol production in the US does not use “food”. We use feed grain quality corn, corn that would have gone into feeding livestock. The process converts the starch portion of the kernel into ethanol and CO2. Some of the oil is recovered and is sold to make biodiesel or to feed livestock. The remaining portion of the kernel is concentrated into a high quality livestock feed that is high in protein and digestible nutrients. That product called Distillers Dried Grains with Solubles, DDGS, is sold into the livestock feeding market. So we are producing both fuel and feed, and we are not using food to do so.
Q. Lots of talk lately in the energy world about RIN credits (Renewable Identification Number and is a renewable fuel credit). What is your take on why there as been such a significant price spike for RIN credits?
A. RIN price spikes are completely due to the oil industry’s desire to limit access to market for ethanol. Ethanol producers are selling ethanol well below the rack (pretax) price of gasoline. Each gallon of ethanol sold by a producer has a RIN attached, at no additional cost. But the oil industry is rushing to buy additional RINs from nonobligated parties rather than allowing the entry of E15 to the market or correctly valuing and promoting E85. So the oil industry is effectively raising the cost of gasoline by more than a dime a gallon by their action, when we could allow more lower priced ethanol to enter the market and reduce consumer costs.
Expect this to continue, because it is clear that the oil industry does not want to lose any more market share to ethanol. They will cover their additional obligation by buying high priced RINs rather than blending lower cost ethanol. And they will definitely increase the fight to eliminate the Renewable Fuel Standard that creates the obligation. RFS sets definite targets for replacement of petroleum and is the law passed by Congress in 2007. The ethanol industry did its part to provide the product as the law required, but the oil industry has done virtually nothing to prepare for higher ethanol blends.
Q. How do you see “second generation” or “advanced biofuel” technology meshing together with Minnesota’s existing biofuel plants and infrastructure?
A. I have long been a believer that if cellulosic ethanol actually becomes viable, it will be adapted by the existing industry in relatively short order. We have always looked for ways to improve and expand on what we can do, and all of work toward increasing ethanol yield per bushel of corn we grind. Being able to use the pericarp, the fiber portion of the kernel, would increase that yield. Being able to process stover would significantly increase our total ethanol yield per acre, and that is another goal we strive for. By the way, with the sort of yield per acre many of our members achieve in a normal crop year, and with the yield efficiency we have here at the plant, we are already producing 600 gallons of fuel ethanol or more per acre.
Interview with Dana Persson, CEO/General Manager of Central MN Ethanol Co-op.
Q. What do you view as the most important things you can do as a general manager to ensure the continued success of Central MN Ethanol Co-op (CMEC) facility?
A. A challenge for the ethanol industry, like many other industries, is managing our margins. As a plant, we have little control over the price that we receive for the products we produce (ethanol, DDGS and corn oil) as the prices are dictated by the markets. The same is true for what we pay for our major inputs (corn and natural gas). As a team we work to properly manage the commodity risk that is inherent in the business and ensure that we are operating the plant at its optimal performance and peak efficiency. We have made significant improvements in operational efficiencies in the last couple of years and we will continue to do so into the future.
Q. How long have you personally worked in the ethanol industry and what was your path to your current position?
A. I started my career in the Grain and Farm Supply business managing locally owned cooperatives. In the middle 1990's I helped develop a "greenfield" fully integrated poultry operation selling egg products to companies in the food manufacturing and food service industry. We sold the company in 2009. I have been with CMEC and I have worked in the ethanol industry for the last two years.
Q. Please share the impact that you feel CMEC has on the local economy and surrounding communities?
A. We feel that employing local people is an important part of keeping a community vibrant. CMEC currently has 29 full time employees and 2 part time employees. CMEC supports many other local businesses in the area by purchasing goods and services from these companies. In addition, CMEC also provides benefits to the local agricultural industry as we provide a consistently competitive market for corn. CMEC's presence has improved our local corn basis and saves agricultural producers the expense of transporting their product greater distances.
Having been in the grain business for over 30 years, I have witnessed the effects of a weak agricultural economy firsthand and its direct impact on families, communities and the country at large. It was not that many years ago that farmers consistently sold their grain for a price that was well below what it cost the farmer to produce it. The result of this deficit was larger payments through government farm programs. More recently because of improved corn prices, government payments to farmers have decreased.
In my experience, rural areas have exported a lot of "brain power" from our local communities as our kids lost hope in careers in agriculture and sought their fortunes from non-ag industries. We hope that the impact of ethanol on the agricultural community provides the opportunity for young people to return to rural communities for jobs and possibly the opportunity to return to the family farm.
Q. What would you like consumers to know about your plant and the products produced by the plant?
A. In my opinion, one of the best kept secrets about the ethanol industry is the positive impact we have on the livestock industry. In addition to ethanol, one of the co-products from our ethanol production process is Dried Distillers Grains (DDGs) which are sold to livestock producers for feed. We sell this very high quality feed (protein content of 27-30% and fat content of 6-9%) at a discount to raw corn values. This allows livestock producers to displace higher cost ingredients and thereby reduce their overall feed costs substantially.
Q. Where are the biggest opportunities for ethanol in the next 10 years in your opinion?
A. Ethanol is extremely important since it is as an economical source of octane in fuels and an oxygenate replacement for MTBE. MTBE is fossil fuel derived and was banned because of its adverse health effects and pervasiveness in the environment. Future engines will require higher levels of octane to achieve better performance and economy required to meet new federal standards and ethanol can satisfy the requirements of those new engines.
Interview with Steve Christensen, CEO/General Manager of Granite Falls Energy, LLC
Q. Please tell us a bit about the history of Granite Falls Energy and a bit about the plant as it operates today?
A: Granite Falls is a dry mill ethanol plant comprised of over 900 investors. Granite Falls Energy LLC began production in 2005 and today produces 65 million gallons of ethanol utilizing over 20 million bushels of locally grown and sourced corn . We produce distiller grains and also extract corn oil. We are located at the intersection of highway 212 and highway 23 and are served by the TC&W railway.
Q. Where specifically has Granite Falls Energy made the most significant improvements in production efficiencies since the facility opened?
A: We have increased production while at the same time reducing water usage. When we initially started we used 4 gallons of water per gallon of ethanol produced and today we are using 2 gallons of water per gallon of ethanol produced. A percentage of the water we use comes from collecting storm water runoff. We are also a zero discharge plant.
Q. How long have you personally worked in the ethanol industry and what is your professional background that brought you to your current position?
A. Prior to coming to GFE, I was the General Manager of Western Wisconsin Ethanol which began construction in 2005 and began producing ethanol in 2006.
Q. What do you view as the three most important things you can do as a general manager to ensure the continued success of the Granite Falls Energy facility?
A. I work to ensure that we are a low cost producer of ethanol, in a volatile commodity based business. Motivating the employees and providing them with information, training, and tools to achieve their duties. Providing an adequate return to our investors is an important goal too.
Q. Please share the impact that you feel Granite Falls Energy has on the local economy and surrounding communities?
A. We are purchasing corn from local farmers and also returning dividends to the local shareholders who have invested in the plant. Our plant provides 35 plus jobs to people living in the area, with competitive salaries and benefits. To support local businesses, we also purchase local goods and services that are used to maintain the plant, locally.
Q. How do you explain to consumers the "Food vs. Fuel" myth surrounding grain-based ethanol production?
A: First of all we produce distillers grains which are fed to livestock that comprise 1/3 of each bushel of corn. Second the price of corn comprises a very small amount of what the consumer pays for in finished products at the grocery store. Marketing, processing, wholesaling, distribution, and retailing account for more than 80 cents of every food dollar.
Q. What would you like consumers to know about your plant, your employees, and the products produced by the plant?
A: We provide local jobs in a rural community in a safe, environmentally responsible manner.
Q. Where are the biggest opportunities for ethanol in the next 10 years in your opinion?
A: The commitment by the government, both national and state, to support a renewable energy policy.
Q. What do you see as the biggest threats to the ethanol industry in Minnesota in the short term (next year) and in the long term?
A: Same as above - Threats to the renewable energy policy.
Q. What are your feelings on the role of the Minnesota state government and how its policies affect the state's ethanol producers? Are there policy changes you'd like to see that would greatly impact the Minnesota ethanol industry?
A: The State of Minnesota has been very supportive of ethanol. Our biggest challenge will be with regulations that affect our business and how we collaborate with policy makers through those changes without negatively affecting our business.
Q. In your opinion, how does renewable fuels energy policy on a federal level impact what happens here in Minnesota?
A: The Renewable Fuel Standard drives what happens across the nation, not just in Minnesota
Q. How do you see "second generation" or "advanced biofuel" technology meshing together with Minnesota's existing biofuel plants and infrastructure?
A: I think that they go hand-in-hand with current producers starting to utilize cellulosic feed stocks that can be used along with corn to produce ethanol. Cellulosic feesdstocks that may work well here in Minnesota include sugar beets and corn stover.
Interview with Tom Hanson, Vice President of Operations (left), and Dean Reder, Chief Financial Officer (right).
Q. Please tell us a bit about the history of Guardian Energy since opening in 2009 and how it operates today?
Reder: The Janesville, MN, ICM/Fagen 100 million gallons per year facility was one of the final designed and constructed facilities by US BioEnergy before their merger with Verasun. It was nearly complete when Verasun’s bankruptcy liquidation occurred. The facility was purchased in September 2009 by six farmer-owned ethanol companies that had worked together to form and develop Renewable Products Marketing Group (“RPMG”) based in Shakopee Minnesota. The plant quickly filled positions and started operations in November 2009.
The Company enjoys leadership from its ownership group that have been pioneers and leaders for the ethanol industry:
KAAPA Ethanol, LLC - Minden, NE
Heartland Corn Products - Winthrop, MN
Al-Corn Clean Fuel Cooperative - Claremont, MN
Chippewa Valley Ethanol Company - Benson, MN
Golden Grain Energy, LLC - Mason City, IA
Q. Where specifically has Guardian Energy made the most significant improvements in production efficiencies since the facility opened?
Hanson: Guardian Energy has converted the process to a zero liquid (water) discharge. One of the first production facilities to do so. Occasionally, the plant will utilize excess run-off rain water in its production to further reduce well water usage. The use of strong conservation and environmentally focused processes, and the facility’s state of the art water treatment system, have enabled the plant to generate each gallon of ethanol with less than 2 gallons of water.
Q. What do you view as the three most important things you can do to ensure the continued success of Guardian Energy?
Reder: We must stay focused on:
1. Maximizing efforts on the things we can control and hire good people to manage the areas that are out of our control
2. Continuously improving yield & efficiency while not cutting corners on safety
3. Enhancing shareholder value
These focal points align and interconnect in many areas.
We don’t control or exercise significant influence over the corn or ethanol markets. We can strive to develop good relationships with local farmers and elevators to make us the preferred place for them to sell their corn. We have state of the art grain receiving equipment to minimize “waiting times” and added 1 million bushels of grain storage to reduce the days that “we’re full”.
The empowered maintenance team and diligent preventative maintenance programs have enabled us to become a reliable source of ethanol for RPMG to market our products to customers that have come to rely on us as a source for them in tightening ethanol supply markets. Beyond the normal planned shutdown days (5-10) for cleaning and inspection the facility has had relatively few unplanned shut-downs. By doing these things we believe we receive fairly priced corn and receive the best price available on our ethanol.
Emphasizing yield improvement and energy usage reductions with a strong group of laboratory and production managers will continue to separate the leaders from the followers. We may not see ethanol demand exceed production capacity in the next few years resulting in thin margins. When margins are thin the only way to make a profit is maximize yield and energy efficiencies.
Realizing that our ownership group and their group of farmer-owners took a risk to purchase and operate our facility, we understand that we need to operate in a manner that will maximize returns to those owners in the current, near term and long term. Shareholder value over the long term should be maximized by making good economic decisions and treating farmers, employees, vendors, railroads, policy makers and advocates fairly and with the respect expected in rural communities. Earning and maintaining that respect will result in continued success at Guardian Energy.
Q. Consumers have been hearing about E15. How do you feel E15 impacts Minnesota and the fuel consumers in the state?
Reder: We believe E-15 will reduce the price at the pump for fuel consumers without impacting gas mileage. Over the last few years the price of ethanol has been considerably less than gas and has provided an octane boost when blended with gasoline. By blending an additional 5% of less expensive, high quality fuel, retail competition should pass on some of that savings to the end users. Burning more ethanol and less petroleum should improve air quality especially in the Twin Cities and surrounding communities. As E-15 gains market share, the increased demand will be met by Minnesota ethanol producers. That spurred activity should maintain the value that local farmers receive for their corn which historically has been reinvested in local economies.
Q. What would you like consumers to know about your plant, your employees, and the products produced by the plant?
Hanson: Guardian Energy employees are very proud to be a positive influence for their community bringing value to rural Minnesota. We take pride in processing corn from local farmers to provide a clean renewable fuel, corn oil used as an animal feed additive and biodiesel feedstock and a value added feed for livestock and poultry called Dried Distillers Grains.
The Guardian team is very involved in the community and and the team understands the importance of the benefits they provide for their neighbors since the materials and services needed for the ethanol facility are sourced from their neighbors.
Guardian Energy is focused on continually improving and utilizing new methods and new technologies that result in more efficient and more environmental friendly ways to produce a renewable liquid fuel.
Q. Where are the biggest opportunities for ethanol in the next 10 years in your opinion?
Reder: We believe there is an opportunity for growth of higher ethanol fuel blends within the United States in the next 10 years. Once the oil industry supported 10% blend wall is penetrated (torn down), E-15 will become common place. As US fuel economy standards increase, there is additional opportunity for higher octane fuels (E-20 or E-30) to run higher compression engines that auto manufacturers are indicating will be required to meet those standards.
We believe that new markets will develop for using the recently available in bulk scale commodities that are produced in the ethanol production process (distiller grains and corn oil). Often referred to as co-products, the distiller grains are primarily sold to beef and dairy cattle, swine and poultry markets as feed and the corn oil is used in poultry diets as well as a feed stock for bio-diesel production. We believe that additional “green products” will be developed from further refining these valuable co-products.
Q. What do you see as the biggest threats to the ethanol industry in Minnesota in the short term (next year) and in the long term?
Reder: The potential reversal of federal legislation originally designed to improve energy independence, clean the air and produce domestic jobs would threaten our industry. Ethanol is a less expensive, cleaner burning, higher octane fuel than petroleum based fuel. However, without certain protections, the oil industry has the resources to halt any further market penetration by renewable fuels and or exercising influence to regain 100% of the liquid fuel market in the United States. Failure of any state to adopt or promote federal renewable programs, like the EPA’s 2011 approval of the use of E-15 blends, adds another threat level to producers in those regions.
This month we spotlight Mankato-based AgStar Financial Services, which has provided financial services to the agriculture sector for over 90 years. Read our interview with Mark Schmidt, vice president of industry specialties at AgStar, below.
Q. Please tell us a little bit about AgStar?
A. AgStar Financial Services, ACA, headquartered in Mankato, Minn., employs more than 600 full-time team members. As part of the national Farm Credit System, AgStar has a public mission to serve 69 counties in Minnesota and northwest Wisconsin. AgStar’s industry specialization, client segments and market delivery systems result in diversification nationwide. With expertise in the corn, soybean, swine, dairy and bio-energy industries, AgStar has developed successful programs in loans, leases, crop insurance, tax services, accounting, consulting and rural home mortgages. As a value-added financial services cooperative, AgStar allocates patronage dividends to its 14,000 stockholders. AgStar is also committed to giving back to rural residents, organizations and communities through AgStar’s Fund for Rural America. Visit www.AgStar.com for more information.
Q. Please tell us about your company’s role within the ethanol industry and why the company is committed to supporting the ethanol industry now and into the future.
A. AgStar became involved in the ethanol industry by providing finance to its existing producer clients who were looking for opportunities to invest in ethanol as a means to increase their returns, per acre of corn. Our future commitment to ethanol is aligned with this same strategy; our goal is to offer financing opportunities that keep our clients and rural America vital and healthy.AgStar’s diverse portfolio includes renewable fuels, grain, swine, dairy and cattle industries and we remain committed to each of these industries.
Q. From your perspective, what would you like fuel consumers to know about the ethanol industry and the fuel it produces?
A. The ethanol industry was created for multiple reasons including:
- clean the air
- reduce the U.S. demand on foreign oil imports and the need for the U.S. military to protect those interests as part of our national defense
- add value to America’s agriculture output, which will restore economic vitality to rural areas.
Moreover, locally, ethanol production does help consumers save money. Ethanol is the cheapest domestic and global source of octane for finished gasoline, cheap octane lowers the price of gas plus it adds volume to our gasoline supply. By adding volume to our nation’s transportation fuel supply; again, ethanol is helping put downward pressure on gas prices. The average American household is saving approximately $200-400 per year on gasoline because of ethanol's inclusion in the U.S. fuel supply.
Q. What do you see as the ethanol industry’s biggest challenge?
A. AgStar recognizes that agriculture is cyclical and global in nature. Each commodity sector encounters ups and downs as global economics change; ethanol economics are no different. It does not appear that ethanol producers in the U.S. will have a problem supplying the domestic needs of ethanol and octane. Rather it will be the economics of providing the supply that harbor the risk. Being able to survive economic downturns is the risk of all commodity production and building a strong balance sheet through effective cost management and profitability are the keys to surviving volatility in all commodities, including ethanol.
Q. What does your company see for the future of ethanol and advanced biofuels?
A. AgStar believes in the future of ethanol as a valuable source of octane (biofuel) and feed stuffs. In addition, AgStar believes in the ability of the ethanol business to bring economic value to all producers and rural communities. Globally, ethanol has a bright future in regards to demand for ethanol and ethanol-related products as it’s a very productive and competitive source of supply.
By Tim Rudnicki, Esq.
Every runner has a set of tactics (or survival skills) they use to propel themselves across the
finish line. For me, when I’m running a marathon, one of my tactics is to keep looking forward.
The aim is to get far away from the starting line by putting my energy and focus on moving
toward and crossing the finish line up ahead. Many of us think the U.S. EPA should do the same
with respect to the Renewable Fuel Standard - Keep Looking Forward!
We are half way into the biofuel marathon and the U.S. EPA has proposed that we slow down
and then go backwards. What do I mean by this? Just as we are making progress in moving
toward the use of more biofuels (E85 for Flex Fuel Vehicles and E15 for all 2001 and newer
vehicles) the EPA has proposed a substantial reduction in the amount of biofuel to be used by
consumers in 2014.
The Renewable Fuel Standard (RFS), however, is a law that is intended to be a paced and ramped
up implementation of biofuel usage through the year 2022. Specifically, for 2014, Congress
directed that at least 18.15 billion gallons of biofuels (14.4 billion gallons from renewable fuel
such as ethanol) be used in the United States. That is a very clear mile post that has been known
by the petroleum industry, biofuel producers and the EPA for at least seven years!
The petroleum industry likes to say they can’t comply with the law because the amount of
gasoline being consumed is going down. Basic math and, according to the Energy Information
Administration, the total actual and projected fuel consumption in the United States tells us
otherwise. Just because the petroleum industry is comfortable with the E10 status quo, this is no
time for the EPA to look backwards, retreat and accept defeat. In fact, under the law, the Agency
has a clear duty to keep looking forward and to push even harder to reach the 2014 biofuel mile
post as well as the next one.
How can one conclude the EPA has a duty to “push” for the use of more biofuels? The law
explicitly requires the EPA to “ensure that transportation fuel sold or introduced into commerce
in the United States (except in noncontiguous States or territories), on an annual average basis,
contains at least the applicable volume of renewable fuel, advanced biofuel, cellulosic biofuel,
and biomass-based diesel, determined in accordance with” the Energy Independence and Security
Act of 2007. In other words, it is not an option for the EPA to capitulate to the petroleum
industry by reducing the amount of biofuel to be used in 2014. Instead, the EPA should accept
the renewable volume requirements in law and take proactive steps to ensure consumers have
greater access to more biofuels as intended by Congress.
Minnesota biofuel producers are doing their part to comply with the RFS, so to should the
petroleum industry and the EPA. Biofuel producers in Minnesota have made, and continue to
make, significant investments in their operations to meet the RFS requirements. This translates
into more clean, renewable biofuels that can and should be made available to consumers through
the petroleum infrastructure.
Any retreat the EPA makes from the gallon volume requirements of the black letter law will have
adverse environmental and economic impacts. Biofuels have lower carbon footprints compared
to petroleum gasoline. If the EPA proposal to reduce the amount of biofuels for 2014 moves
forward, more gasoline will be used instead of biofuels. The unintended consequence will be a
boost in greenhouse gas emissions. This situation is especially troubling as more highly carbon
intensive tar sands from the boreal forest in Alberta are used for fuel in the United States.
Biofuels also save consumers money at the pump. The Center for Agricultural and Rural
Development found biofuels, in the Midwest, held down the price of gasoline by approximately
$1.69 per gallon. If the EPA fails to comply with the law and slows down the pace of biofuel
usage, environmental and consumer benefits will be lost.
Will the EPA and White House listen to your voice? Thanks to many of you, thousands of
messages in support of biofuels and the RFS were sent to the Minnesota Congressional
Delegation, U.S. EPA and the White House. If the EPA heard you, the Agency will continue to
keep looking forward and implement the RFS as signed into law. With the EPA implementation
of the RFS as written, the economic, consumer and environmental benefits will move us, as a
Nation, closer to the next renewable fuel mile post. This will put us, as a Nation, well on the
path toward winning the biofuel marathon and a better environmental quality.
As always, I look forward to your This email address is being protected from spambots. You need JavaScript enabled to view it..
This month, we spotlight Willis of Minnesota, Inc, which is a unit of Willis Group Holdings, a leading global risk advisor, insurance and reinsurance broker. Read our interview with Brad Frankenstein, senior vice president for risk management services, below.
Q. Please tell us a bit about Willis of Minnesota, Inc.
A. Willis Group Holdings is a leading global risk advisor, insurance and reinsurance broker. With roots dating to 1828, Willis operates today on every continent with more than 18,000 employees in over 400 offices. Willis offers its clients superior expertise, teamwork, innovation and market-leading products and professional services in risk management and transfer. Our experts rank among the world’s leading authorities on analytics, modelling and mitigation strategies at the intersection of global commerce and extreme events. Willis is a publically held (WSH) Global Insurance Broker; with the Willis of Minnesota office being located near Highways 394 and 100 in Minneapolis.
Q. Please tell us about your company’s role within the ethanol industry and why the company is committed to supporting the ethanol industry now and into the future.
A. Willis of Minnesota has significant expertise in the Commodity and Biofuels space. Willis of Minnesota has been working with clients in the Biofuels space for 14 years and currently writes more than a quarter of the country’s 200 bio-refineries. With a blend of Safety and Loss Control Services, Willis is able to provide its clients with an integrated Insurance Risk Management program.
Q. From your perspective, what would you like fuel consumers to know about the ethanol industry and the fuel it produces?
A. Educating consumer that ethanol is a clean-burning and a high-octane motor fuel safe for engines, and higher blends are available and coming to the marketplace.
Q. What do you see as the ethanol industry’s biggest challenge?
A. The largest challenge ethanol faces is Big Oil’s negative media campaign against Ethanol.
Q. What does your company see for the future of ethanol and advanced biofuels?
A. We see a bright but challenging future. Investment is needed by all vested partners to help support the campaign to promote and educate consumers about ethanol.
By Tim Rudnicki, Esq
The details might be complicated, but the overarching blueprint is straightforward: continue to grow the biofuels industry AND build out the biobased feedstock industry.
On the continuum of an industry's development, the biofuel industry in Minnesota is very young. Relative to other Minnesota industries, such as agriculture and mining, the biofuels industry is just getting started. Nevertheless, the latest economic analysis of the Minnesota-based biofuels industry finds it supports 48,506 jobs with wages close to $3 billion and has a total annual economic impact of approximately $11.7 billion. And today's Minnesota-based biofuels industry still has room to grow.
More than two years ago the United States Environmental Protection Agency approved the use of E15 (that's a blend of 15% ethanol and 85% petroleum gasoline) for use in vehicles from model year 2001 to the present. If we focused on the current law and if all the owners of those vehicles had access to and chose to use E15 (when it's available, they do indeed use it), Minnesota would nearly triple the amount of biofuel used within the State. That outcome would have spin off benefits for the biofuels industry, Minnesota consumers and the environment.
Who is the Minnesota biofuels industry? It's the men and women that live and work throughout Minnesota. Some of the more than 48,000 jobs supported by the industry include those who live and work in the metro area of Minneapolis and St. Paul as well as in Minnesota’s rural communities where the production plants are located. All these men and women provide a broad range of products and services. The products provided for the biofuels industry include, for example, renewable ingredients, enzymes, all the processing tanks and related production equipment. Similarly, the scope of services is broad. It covers, for instance, finance, transportation, communications and engineering to name a few.
In practical terms, Minnesota made biofuels support thousands of Minnesotans, keep energy dollars at home on Main Street and add to the vitality of rural communities.
How do consumers benefit from increased use of biofuels? The short answer is this: an ample supply of less expensive, renewable biofuels decreases the demand for more expensive finite petroleum. Biofuels helped Minnesota consumers save nearly $2 billion dollars in 2012 because biofuels, such as ethanol, held down the price of petroleum gasoline. Today, biofuels continue to hold down the price of petroleum gasoline. By keeping the bioeconomy blueprint focused on building up the existing biofuel industry, more renewable fuel will be available to continue holding down the price of gasoline. That’s good for people who live and work here in Minnesota.
What are the environmental benefits associated with expanding the use of existing biofuels in Minnesota? Briefly, studies by Argonne National Laboratory and other reputable science based organizations find ethanol made from corn starch has a lifecycle greenhouse gas emission (GHG) footprint that is up to 57% lower than petroleum. Even when counting the energy used to plant, cultivate, harvest, process and use biofuels, the GHG emissions for biofuels is significantly lower compared to petroleum. Right here, right now, nearly 85% of the vehicles on the highway today can be using a lower GHG fuel with existing vehicle technology. Regular engines in 2001 and newer vehicles can use E15, a 5% higher blend of ethanol compared to regular unleaded gasoline at most retail fuel stations. Let’s not forget that green plants are the best solar collectors, and its that renewable plant material that is used to make biofuels.
Where do biobased feedstocks, that displace petroleum, fit on the bioeconomy blueprint? Next to, not in place of, biofuels. The bioeconomy blueprint is not about picking one over the other, but instead building synergy between one and the other. A truly growth oriented and sustainable bioeconomy will focus on expanding the use of both biofuels and biobased feedstocks which can be used in paints, adhesives, inks and resins to name a few uses.
This basic blueprint is offered in the hope we can build upon the discussion now taking place in Minnesota. Let’s work together to find ways to expand the success in the biofuels industry and to build upon that success in ways that can further grow the biobased feed stock industry. If we do this the correct way, Minnesota will be a leader on this front. Most importantly, we can further improve the environment and quality of life for Minnesotans.
As always, direct any questions or comments to me This email address is being protected from spambots. You need JavaScript enabled to view it.
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This month, we spotlight Merjent, a Minneapolis-based environmental consulting firm. Read our interview with Billy VonSee, Principal at Merjent, below.
Q. Please tell us about Merjent.
A. Merjent is an environmental consulting firm committed to serving the energy industry. We maintain our focus on the energy industry because we want to provide our clients with the best service possible, and the key to that level of service is understanding as much about their business activities as possible. This focus not only makes us efficient in providing customized services, but it also allows us to proactively address potential issues before they become a hindrance to our clients' business.
Night time stack testing by Merjent
Q. Please tell us about your company's role within the ethanol industry in Minnesota and why the company is committed to supporting the ethanol induystry now and in the future?
A. Merjent staff have been serving the Minnesota ethanol industry since 1999, including active membership in supporting organizations. Merjent believes in the industry's vision of a robust, renewable supply of transportation fuel, and we also understand the value of supporting local business, both direct and indirectly.
Q. From your perspective, what would you like consumers to know about the ethanol industry and the fuel it produces?
A. Minnesota ethanol plants have been producing fuel ethanol for more thant two decades. This is not a brand new fuel, and billions of miles have been driven on ethanol blends. Consumers deserve choices, and we support the ethanol industry in its production of a viable clean-burning alternative.
Q. What do you think is needed for the availability of E15 to grow?
A. For E15 to become more available and grow, it needs to be placed into the fuel market on a large scale. Challenges limiting E15 market share include requirements under EPA's partial waiver and the current Renewable Fuel Standard regulations.
Q. What do you see as the ethanol industry's biggest challenge?
A. The biggest challenge to the ethanol industry is market development. Ethanol is economical, but the market was developed for a single source of fuel starting more than a century ago. Such a developed market is not easy to change without a serious shift in supply or demand (or both). The challenge will be to figure out what will cause that shift (e.g., changes in demand based on price, engine manufacturers approving its use, greater presence at the pump, etc.)
Q. What does your company see for the future of ethanol and advanced biofuels?
A. For the next decade, we see the industry focusing on increasing market share and improvements to existing production facilities for (1) adding value added co-products, (2) adding technologies like cellulosic biofuel, and (3) increasing efficiency.
Stack testing during winter
This month, we spotlight Solenis, a global specialty chemical supplier. Read our interview with Allen. M. Ziegler, director of global biorefining and marketing at Solenis.
Q. Please tell us about Solenis.
A. Solenis is the new company formed via the recent purchase of Ashland Water Technologies, formally a commercial business unit of Ashland Inc., by the private equity firm Clayton, Dubilier & Rice. Solenis, rooted in “solutions” and “genesis,” underscoring the company’s mission to be at the source – genesis – of solutions for customers.
This standalone company continues a 94-year reputation as a respected manufacturer of specialty chemicals for biorefining, pulp, paper, oil & gas, chemical processing, mining, power and municipal markets.
Headquartered in Wilmington, Delaware, Solenis operates 30 manufacturing facilities strategically located around the globe and employs a team of 3,500 professionals in 118 countries across five continents. For additional information about Solenis, please visit www.solenis.com.
Q. Please tell us your company’s role within the ethanol industry in Minnesota and why the company is committed to supporting the ethanol industry now and in the future?
A. Solenis has designated Biorefining as one of the six specific market areas we will concentrate both research & development and commercial resources going forward. Specific patented/patent pending process chemistries currently in commercialization such as corn oil extraction aids, regulated scale inhibitors and new technologies slated for introduction in 2015 are the result of years of development work and financial commitment.
Q. From your perspective, what would you like consumers to know about the ethanol industry and the fuel it produces?
A. I have a unique perspective in that I have experience in the industry from that of an agriculture producer, investor and supplier to the industry. I cannot stress enough the economic and environmental significance this industry had provided and will continue to provide long into the future.
Q. What do you think is needed for the availability of E15 to grow?
A. Providing the consumer choice via blender pumps and in addition, regulation to allow retailers under the auspices of oil companies a pathway to provide.
Q. What do you see as the ethanol industry’s biggest challenge?
A. Volatility of demand.
Q. What does your company see for the future of ethanol and advanced biofuels?
A. The global projected growth of biofuels to as far out as 2040 is healthy with advanced biofuels contributing a significant portion. Solenis process technologies in conjunction with the water treatment programs are designed to address - not only the current demands but anticipated regulatory, feedstock and water usage challenges.
This month we spotlight ERI Solutions, our latest vendor member. Read our interview with ERI Solutions president, Nathan Vander Griend, below.
Q. Please tell us about ERI Solutions.
A. ERI Solutions, Inc. is commonly known in the ethanol industry as the manager of the ethanol industry’s only group captive insurance program which is comprised of nearly 70 ethanol producer/shareholders spanning 20 states. In addition to providing the premier insurance program available to the industry, ERI also provides a variety of services designed to mitigate insurable and uninsurable risks of the ethanol industry by providing environmental compliance, carbon & sustainability modeling, health & safety, Process Safety Management (PSM), Non-Destructive Testing (NDT) and insurance risk management consulting services.
Image above : ERI Solutions' testing and inspection services
Q. Please tell us about your company’s role within the ethanol industry in Minnesota and why the company is committed to supporting the ethanol industry now and in the future?
A. ERI is involved with several ethanol producers in Minnesota in varying capacity. Some have qualified and are shareholder members of the captive program whereas others purchase some varying degree of our services on a standalone basis.
ERI is passionate about what we do, but we are also passionate about the ethanol industry and its success. We are part of the ethanol industry as it is the majority of what we do and who we service. Like ERI, most companies understand their businesses in and out, but do they understand your business in and out? Are they there to fight for you as a member of their industry or are they there to cut a deal and make a buck? ERI is committed not only to being financially involved in supporting various ethanol trade associations and initiatives, but also by actively participating in lobbying efforts to congress through fly-ins, letters to congress and promoting the truth about ethanol in every avenue possible.
Image above : ERI Solutions' audit and assessment services
Q. From your perspective, what would you like consumers to know about the ethanol industry and the fuel it produces?
A. I believe there are a three things that consumers should understand about ethanol that so often go overlooked – The value of ethanol from an octane standpoint, and the value of corn starch being converted to ethanol vs. being fed to livestock, and ethanol is often not the culprit of small engine issues or issues with rubber or plastic component deterioration.
Octane Value of Ethanol: Ethanol and toluene (a known toxic aromatic in gasoline) are both used to increase octane in motor fuel. It takes 1 part ethanol to replace 2 parts of toluene.
Corn Starch – Ethanol or Feed: All ethanol producers are doing is using the starch, a portion of a kernel of corn that has little to no nutritional value to ruminants such as cattle.
Small Engine & Plastic/Rubber Component Issues: When testing fuel lines and other plastic components found in small engines, aromatics found in gasoline are the culprit, NOT ethanol.
Q. What do you think is needed for the availability of E15 to grow?
A. There are several challenges for E15 to grow, but the challenge I believe to present the greatest threat to adoption of E15 is the EPA’s seemingly blatant attempts to make higher ethanol blends look worse in studies/models such as the EPAct study which is the base data for the MOVES2014 (Motor Vehicle Emissions Simulator) model. This model shows that when ethanol is added to gasoline, emissions actually go up. It’s easy to see when you review the study that in fact the only way you can make emissions go up when you add ethanol is by changing the characteristics of the gasoline in the “new blend.”
Q. What do you see as the ethanol industry’s biggest challenge?
A. From my perspective the biggest challenge without a doubt is misinformation about the industry. Like many, if not all of you being from the Midwest we have morals and values that often tells us that what is right will always prevail. I often hear the popular saying, “The truth will prevail!” We all want to believe that, but our opponents are well funded, and the truth can be vailed for an awful long time if enough money is thrown at it. We need to continue to be unique and relentless with our approach.
Q. What does your company see for the future of ethanol and advanced biofuels?
A. It is hard to say exactly what we see at this point. With the attacks on the RFS it makes for an interesting environment. No doubt the technology exists to disprove the myth that cellulosic can’t be done, but our uncertainty is if the EPA and Government will stand their ground on the decisions they made that so many are relying on to make the significant investments to move forward with advanced technologies.
This month, we spotlight Boulay, which is a renowned accounting firm with strong ties to the biofuels industry. Read our interview with Jadin Bragg, partner at Boulay, below.
Q. Please tell us about Boulay.
A. Boulay works with individuals, closely-held businesses, nonprofit organizations and public companies who are, or who aspire to be, successful. Our focus is to protect your business, build your wealth and secure your future by partnering with you and integrating our depth of experience in accounting, tax and financial consulting services designed to “help you get there.”
Founded in 1934 by Joseph A. Boulay, today our team consists of 29 partners and over 125 employees in Eden Prairie, MN. We’ve experienced a long history of consistent growth and rank 11th in the Minneapolis/St. Paul Business Journal’s Book of Lists for accounting firms. We were also named a 2014 Best of the Best CPA firm by INSIDE Public Accounting.
Our professionals adhere to rigorous quality control policies and have a proud tradition of unqualified opinions in our peer reviews since the inception of the program in 1988. Again, we received an unqualified opinion and a rating of pass, the highest of the three potential opinions designated by the American Institute of Certified Public Accountants.
Boulay is a member of PrimeGlobal, one of the Top 5 largest associations of independent accounting firms in the world. Boulay’s membership offers clients access to trusted people who can help you get your business done around the world — anytime, anywhere, any way.
Q. Please tell us about your company’s role within the ethanol industry in Minnesota and why the company is committed to supporting the ethanol industry now and in the future?
A. The renewable fuels industry is a highly complex environment that requires a strong commitment to understanding the current environment along with seeing the long-term picture. We have been long-standing advocates of the industry, from grass roots efforts as an unknown energy alternative through today’s dramatic political, environmental and economic challenges. Since we started serving the renewable fuels industry in 1997, Boulay has served 50 private and public renewable energy clients representing approximately 2 billion gallons of potential capacity nationwide. Manufacturing and distribution embodies approximately 200 clients for our firm with more than 20 professionals dedicated to servicing the renewable fuels industry.
This experience allows us to bring tried and true practices and support to you through the following financial services:
- Assurance
- Accounting Advisory
- Business Consulting
- Employee Benefits
- ESOP
- Estate and Trust
- Public Company
- Tax
- Wealth Management
Specific services that may be of interest to ethanol companies include:
- Member Tax Consulting
- Cash Flow Forecasting
- RIN Attestation
- Strategic Planning
- Retreat Facilitation
Whether understanding the construction phase, start-up of the plant or production efficiencies, we will be there for you with the collective knowledge of our renewable energy team. We also have a wide network of contacts that we use to assist you in resolving intricate operating challenges.
Through our immersion in renewable energy we developed a unique knowledge of ethanol and other alternative energy sources that you won’t find with other firms. Our professionals are passionate about the industry and work with producers to find tax incentives and other financial strategies that best serve your business. At Boulay, our clients’ goals are our goals, which is why we are committed to serving the ethanol industry and “helping you get there.”
Q. From your perspective, what would you like consumers to know about the ethanol industry and the fuel it produces?
A. Since 1997, when Boulay began serving clients in the industry, technology has come a long way. The industry and the plants used to create ethanol continue to evolve to efficiently produce a product that is a viable alternative to gasoline. The industry now uses less energy, water and other resources than ever before to create the same gallon of ethanol. It also gets more out of each bushel of corn as it converts into not just ethanol, but also oil and animal feed.
Q. What do you think is needed for the availability of E15 to grow?
A. In order for E15 to grow, consumers need to have the ability to choose a blend at the pump. This expansion of infrastructure will lead to increasing demand and to further acceptance in the marketplace. Pricing and value will drive consumer demand.
Q. What do you see as the ethanol industry’s biggest challenge?
A. Dealing with the influence of fuel prices, commodity pricing, government support, limited supply of crop-based feed stocks and a limited distribution infrastructure are a few of the biggest challenges your industry faces. With these ongoing challenges, getting bogged down in financial reporting and tax compliance details is the last thing you have time for as an entrepreneur. That's why it's important to work with an entrepreneurial-minded professional services team who knows your industry and can help you navigate these pressures. With Boulay we know you'll experience:
- Genuine, thoughtful, cooperative partners
- Honest, down-to-earth, long-term relationships
- Listen first, help next approach
- Business advisors vs. transactional compliance providers
- Better service with more partner attention than national firms
- “Go the extra mile” mentality
We go beyond meeting your financial reporting matters and provide you sound business advice. When you want help understanding options and best practices regarding specific financial matters, you can count on your client service partner to weigh in with not only their knowledge and experience, but the collective expertise at Boulay.
Q. What does your company see for the future of ethanol and advanced biofuels?
A. The future looks bright for the ethanol and advanced biofuels industry. Climate change, energy independence, and new tax incentives and subsidies are opening up new opportunities, and growing concerns about the environment and fossil fuel dependence will likely lead to an increase of ethanol and advanced biofuels production in years to come.
This month, we spotlight Tin Thanh Electricity Steam Industrial Corp- our first international vendor member -which has extensive experience in the renewable energy sector in Vietnam and recently established operations in Minnesota. We spoke to Khoa Tran, CEO of Tin Thanh, to find out more on the company's background, its plans in Minnesota and the biofuels industry in Vietnam.
Khoa Tran, CEO
Please tell us about the history of Tin Thanh Electricity Steam Industrial Corp.
With nearly 20 years of experience in the environment and energy industry, the Tin Thanh Group established Tin Thanh Industrial Electricity and Steam Limited Company in 2009 in Vietnam.
Since then, we have become a leading company in the renewable energy sector in Vietnam. We specialize in providing steam and heat from renewable materials such as corn, corn stover, agricultural waste, forestry waste and industrial waste to manufacturers in Vietnam.
We have supplied steam to companies such as Saigon Brewery, Carlsberg Brewery, Hanoi Brewery as well as Da Nang Rubber in Vietnam.
Following our experience and success in Vietnam, we established Tin Thanh Electricity Steam Industrial Corp in 2012 in Bloomington, MN.
Why did Tin Thanh choose to expand to Minnesota?
We chose to invest and expand to Minnesota because of the characteristics of its economy, agriculture industry, biofuel policies and taxation rates. We were particularly interested in Minnesota’s ethanol production capacity which averages 1 billion gallons annually. Moreover, Minnesota is also the fourth largest producer of corn in the country and we intend to use corn byproducts as fuel for steam and electricity generation.
In addition, the logging, pulpwood processing, forest product manufacturing and paper production industries are strong in Minnesota. The abundant amount of sawdust, wood shavings and wood chips from these industries are suitable to be used as fuel for steam generation.
Last but not least, the large amounts of tires left for scrap in Minnesota can be recycled into industrial oil and used to generate power.
What projects is Tin Thanh currently working on in Minnesota?
We have signed a contract to provide steam for the Greater Development Corporation of Minnesota with a total capacity of 800 tons / hour. In 2014, we signed new steam supply contracts for a total capacity of 1,000 tons / hour. We plan on constructing and installing our new boilers in 2015.
Picture above : Tin Thanh's equipment
Please tell us how Tin Thanh intends to provide renewable energy to ethanol plants?
We will use a combination of fluidized bed boilers and biomass burners to provide steam to ethanol plants.
Picture above : Diagram of Tin Thanh's biomass burner connected to a boiler
This method produces steam from biomass which in turn reduces CO, NOx and SOx emissions. This also limits heat loss while the boiler system, which is cheaper to install than a conventional fluidized bed boiler, is more compact.
A common drawback of biomass boilers is the amount of particle matter that ends up being emitted but we’ve solved this problem by using electrostatic precipitators. This in turn complies with the EPA’s standards on dust particulate matter.
Is ethanol widely used in Vietnam?
The government of Vietnam has implemented a roadmap to introduce and subsequently increase the use of biofuels in transportation fuel. Since December 2014, biofuels have been available in seven cities and provinces in Vietnam including Ho Chi Minh City and Hanoi. By December 2015, biofuels are expected to be available nationwide.
Vietnam’s Ministry of Industry and Trade estimates the country will need some 6.88 billion liters (1.81 billion gallons) of ethanol in 2015 with volumes rising to 8.31 billion liters (2.91 billion gallons) by 2020.
The rollout of ethanol blended fuels is being undertaken by state-run PetroVietnam. Under the first phase of the rollout, E5 (gasoline containing 5 percent ethanol) will be available in the select cities. E10 will be introduced in seven localities from December 2016 and nationwide a year later.
Picture above : E5 sold in Vietnam