June 30, 2007

Fuel Ethanol Workshop promotes vision and collaboration

The 2007 Fuel Ethanol Workshop was informative, thought provoking, and inspirational. Its scope was very broad. While enumerating the many benefits of a robust renewable energy paradigm, it also sought to promote greater collaboration between capitalism and environmentalism. It sought to stretch the range of feedstock beyond corn to cellulosic raw materials. And it provided many opportunities for attendees, embarked on a globally important quest, to meet and learn from each other how to achieve their goals.

Gateway to the Future

Symbolically, the choice of venue couldn't have more appropriate. It was held at the America's Center just west of St. Louis' inspirational Gateway Arch. Millions marvel at the futuristic elegance of its gleaming structure.

Between the vaulting legs of the arch is the underground Jefferson National Expansion Memorial - a contemporary reminder of the pioneering American spirit and its tireless urge to explore. In 1803 Thomas Jefferson oversaw the Louisiana Purchase that doubled the size of the country. He predicted it would take "a thousand years to settle." It took less than a hundred. This demonstrates that even a visionary as prodigious as Jefferson can dramatically underestimate the character and energy of his countrymen and the draw such vision represents to people around the world - many of whom immigrated to settle in the new territory. We are clearly at the gateway to a new era for emerging technologies that will transform the world energy paradigm and impact the exercise of freedom everywhere.

Building a globally important industry

The sense that biofuels companies are not just on the threshold of forming a globally important industry but also of insuring the humanitarian sustainability of future generations was highlighted during the opening session. BBI International hosts the conference and its CEO, Mike Bryan spoke eloquently to the attendees about the importance of the renewable fuels quest in global terms:

You are here to build an industry.

You represent a stronger economy - not just a stronger rural economy, but also a stronger urban economy because a rising tide raises all ships.

You also represent energy independence and energy security. Renewable energy promotes world peace. A new age in energy. When the oil wells and the oil refineries of today are nothing more than rusted relics of a past generation, renewable energy will continue to supply clean domestically produced energy not only to this country but also to countries all around the world.

We hope that soon, someday soon, we no longer will go to war over oil and that it is just simply a faded memory.

The need for both capitalism and environmentalism

Bryan was equally passionate when he spoke about the need for capitalists and environmentalists to work together:
You represent a cleaner environment. There’s been a lot of discussion over the years about capitalism and the environmentalism. They never seem to have gotten together, have they? That needs to change. We need to work with environmentalists.

You know what? Wealth creates pollution. Wealth needs to solve the pollution problem in this world. Capitalism alone is haughty, environmentalism alone is weak. But when we combine the two together we have something that can actually change the world.

It's okay to make money, it's okay to be profitable, that's a good thing. But as capitalists, as people who are in business to generate revenue and generate profit, we need to think about how we can create a better environment. We always need to be thinking about how we can collaborate with the environmental movement around the world.

To emphasize the importance of the environmental message, the keynote address was presented by Karen Coshof from Stonehaven Productions, Executive Producer of The Great Warming, a documentary about the threat of global warming and the need for "enlightened corporations, religious institutions, environmental and political leaders to recognize our moral responsibility to be stewards of the Earth today and for future generations."
Our time to stabilize global climate is shrinking fast. You are all working to move the world to a new and, I hope, a more sustainable energy paradigm. When you make your decisions and talk to each other over the next few days, factor in your children's future because failure is not an option.

Expanding the role of renewable biofuels

Bob Dinneen, President and CEO of the Renewable Fuels Association reflected on the immense change that has taken place over the last few years when he said:
50% of the nation's fuel is blended with ethanol. Every single gallon of gasoline sold in New York and California is blended with ethanol. Every single gallon of gasoline sold in Houston, Texas - where big oil executives have to drive to work each day on your fuel - is testament to how far we have come. But we surely have a long way to go.

We have to remind people that technology is not stagnant – that we are going to get greater and greater yields from an acre of corn. That technology is going to allow us to satisfy demand for grain used in feed, fuel, and fiber throughout this country.

We need to get the message out that... the price of gasoline has a far greater impact on consumer food prices than does a bushel of corn.

A recent poll that was done revealed that more than three out of every four Americans believe we need to be doing much more. We need to be maximizing production and use of renewable fuels like ethanol.

Congress has got that message. Congress saw what the Renewable Fuel Standard has done for our industry.

Diversifying ethanol feedstock

One way to maximize production of renewable fuels is to incorporate the use of a greater range of biomass feedstock. Poet President Jeff Broin announced a new project that will use corn cobs and corn fiber as the feedstock for their commercial cellulosic ethanol production facility that will be jointly funded with the U.S. Department of Energy (DOE).

Numerous workshops shed light on advancements in cellulosic biomass conversion into ethanol. Of the six D.O.E. "Section 932" award winners, four made presentations about their processes including Abengoa, Poet, Alico (and their technology partner, BRI), and BlueFire. However, other workshops dealt with issues that were important to all ethanol production processes.

Workshop 3 dealt with logistics and the transportation grid that currently exists to service the growing industry. Sandra Dearden, President of Highroad Consulting, Ltd. made a strong point during her presentation on "Integrating Transportation: Planning for Future Growth" that rail service is not on a trajectory that will adequately service the anticipated needs of the ethanol industry. When asked about future volume capacity, Sandra responded:
The thing that scares me the most is that the freight volume is likely to double within the next 14 years. It takes two years for a railroad to receive an ordered locomotive. It takes about ten months to get someone trained to be on a crew to be on a locomotive. And, at the same time, we don't have the infrastructure capacity. The railroads have gone to the House (of Representatives) and asked for assistance for funding additional railroad infrastructure.

The current status of Carbon Credits

Workshop 7 was titled "Greenhouse Gases: Capitalizing on Carbon Credits." Should a cap and trade mechanism be fully implemented nationwide, the value of GHG emissions is estimated to represent $50-$300 billion dollars by 2020 (US Congressional Budget Office). Keeping abreast of the carbon credit systems that are developed may spell the difference between survival and bankrupcy for many developers.

How can we use carbon credits to provide incentives for responsible industry behavior without undermining the financial stability of existing leveraged corporations? If a carbon credit system is used, what input will be taken into account? The answers will tend to be regionalized state-by-state. In the meantime, experts are developing tools to calculate the value of carbon credits based on a complex set of data input. Once of these is the BEACCON model, implemented in Excel®. which is free to download from http://lifecycleassociates.com/beaccon.php.
The BEACCON (Biofuels Emissions and Cost Connection) model allows ethanol producers to evaluate the potential impacts on production costs of the global warming intensity (GWI) of different biofuel production pathways. Version 1.0 of the model focuses on ethanol plants with a capacity range between 50 and 100 million gallons per year.

Another computational model is being developed by the University of Nebraska called the Biofuel Energy Systems Simulator (BESS). It will be released July 20th for free download.
The Biofuel Energy Systems Simulator (BESS) model provides a holistic “cradle-to-grave” analysis of energy use and net greenhouse gas (GHG) emissions during the entire biofuel production cycle—including crop production, ethanol conversion, and by-product use and waste disposal via associated cattle feedlots and anaerobic biodigestion systems. The model estimates the net energy efficiency and net GHG emissions for each component of the biofuel production life cycle and also for the integrated system as a whole.

James Murphy of Carbon Green, LLC was on hand to provide an introduction to the Chicago Climate Exchange (CCX) - which trades Carbon Financial Instrument™ (CFI) contracts.
CCX members make a voluntary but legally binding commitment to meet annual greenhouse gas (GHG) emission reduction targets. Those who reduce below the targets have surplus allowances to sell or bank; those who emit above the targets comply by purchasing CCX CFI contracts.

Notably, the U.S. Congress recently passed an appropriations bill amendment instructing the House to join the CCX - which requests that the House Chief Administrative Officer (CAO) purchase Carbon Financial Instruments from American projects through the Chicago Climate Exchange (CCX) to offset carbon produced by all House operations after renewable energy and efficiency improvements are made.

New Technologies

The new technologies addressed by FEW workshops this year included four of the six D.O.E. "Section 932" award winners mentioned earlier.

Bob Wooley, Principal Engineer from NREL/DOE gave an illuminating presentation on how his organization is helping the U.S. Department of Energy (DOE) plant and cultivate emerging technology development in the private sector. He talked about the dynamics and economics for expanding the fuel supply chain with a focus on two complex areas of the problem - feedstock supply and capital investment. They have developed a model called STELLA™ to understand how DOE activities might influence the ultimate ethanol deployment and explore what else (outside of DOE) might be needed to reach the desired deployment levels.

Other technologies included a DOE look at the emissions and performance characteristics of the SAAB 9-5 BioPower automobile and how the Chippewa Valley Ethanol Company is developing plans to displace over 90% of its fossil fuel usage with renewable biomass.

Hurdles to Deployment of E85

The Ethanol Promotion and Information Council (EPIC) held a special workshop on E85 during which their Director of Operations, Robert White, updated information about Underwriters Laboratories (UL) who rescinded E85 pump and pump component certification in September and October of 2006. This sent a chill through the distribution service industry for ethanol. There is now a process that is being developed to create standards for submitting equipment for certification and UL approval.

Back in February 2007 UL did complete a survey of dispensers across the country that concluded that E85 equipment has not resulted in any significant safety problems. A separate Brazil survey concluded in May 2007 rendered similar results. UL is now working inhouse to develop new standards which it hopes will be completed and published by December of 2007. It is anticipated that it will take a while to pass certification and it will not be until the fourth quarter of 2008 that there will be UL certified dispensers on the street.

The consequences have not completely curtailed deployment of pumps because some manufacturers are providing special warrants on safety and security in the absence of UL certification. However, this is an issue for the big box retailers (WalMart and others) and in Hawaii a program to install 25 E85 pumps was halted by the Fire Marshal because of the lack of UL approval.

Carl Donges from Clean Fuels USA talked about some equipment that his company represents that will have a big impact on how ethanol is dispensed now and will in the future. Texas based CleanFUEL USA has established itself as the leading global manufacturer of certified and approved alternative fuel dispensing equipment for both propane (LPG) and E85 and has expanded its role as an industry leader by providing comprehensive alternative motor fuel programs for fleet managers throughout the world.

Not only do they currently market dedicated pumps for dispensing ethanol but they also sell retrofitting kits and even pumps that blend different percentages of pure ethanol with standard gasoline at the dispensing station.

During Workshop 14 Jim Stewart of BRI made a presentation promoting the conversion of waste-to-ethanol using a thermochemical process. He used the occasion to launch a scathing attack accusing Big Oil companies of attempting to control renewable energy development so as to mitigate the possible negative impacts on their established businesses:
The public face of Big Oil appears to be committed to a transition between petroleum to alternative energy. But its private face is providing funds to educational institutions and think tanks that are generating unfavorable studies or otherwise opposing ethanol as a substitute for gasoline - and in subtle ways Big Oil is taking other steps to slow its expansion.

He then listed several high profile instances that he felt demonstrated the conflict of interest between the funding of educational institutions by Big Oil and subsequent research announcements detrimental to ethanol's image in the press. It is a touchy subject to be addressed at FEW because the oil companies, with their refineries that blend ethanol into their gasoline to meet state standards, are the primary customers of ethanol producers.

The promise of renewable fuel development will depend upon the collaboration of competing stakeholder interests (academia, business, social, environmental, and political) while correcting public misperceptions as reported in the press. The call is being raised for insightful leaders who can see and develop the common ground shared by these many sectors. Clearly, not all sectors were equally represented at FEW 2007, but the workshops stimulated multi-interest discourse and provided a forum for industry leaders to learn from each other.

For more information, see BBI's own publication for a Ethanol Producer recap

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