2016 August Ethanol Producer Magazine

INSIDE: CVEC CELEBRATES 20 YEARS OF OPERATION

www.ethanolproducer.com

DEVELOPING LEADERSHIP

Succession Planning Challenge Page 26

ALSOIndustry Prepares for

Tier 3 CompliancePage 44

Emily Skor’s Goals as Growth Energy CEO Page 38

Recruiting, Retaining Top Talent Page 32

AUGUST 2016

FEW ReviewPage 40

FASCINATING FACTS A B O U T E T H A N O L

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2014Blended scale inhibitors for evaporators

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Process AidsWater Treatment ChemistriesMonitoring and Control Systems

4 | Ethanol Producer Magazine | AUGUST 2016

AUGUST 2016 VOLUME 22 ISSUE 8CONTENTS

DEPARTMENTS6 EDITOR'S NOTE

The Short List By Tom Bryan

7 AD INDEX

8 THE WAY I SEE IT With Pride Comes

Responsibility By Mike Bryan

9 EVENTS CALENDAR

10 VIEW FROM THE HILLAll Smoke, No Fire on RFS

Reform, Repeal Eff orts By Bob Dinneen

12 DRIVEGetting Ready for

FSMA Compliance By Chris Bliley

14 GRASSROOTS VOICEBlend Wall Crumbles

in Retailers’ Eyes By Ron Lamberty

16 GLOBAL SCENEUS, Brazil Demonstrate

What’s Possible By Leticia Phillips

18 BUSINESS BRIEFS

20 COMMODITIES

22 DISTILLED

50 CLEARING THE AIR Repeat After Me:

High Octane, Low Carbon By Dave VanderGriend

52 BUSINESS MATTERS Globalization of Ethanol

Impacts US Industry By Ryan Strickland

54 MARKETPLACE

Ethanol Producer Magazine: (USPS No. 023-974) August 2016, Vol. 22, Issue 8. 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.

LEADERSHIP Filling a Hole in LeadershipSuccession planning is needed for smooth transitions in key positions By Holly Jessen

26HUMAN RESOURCES Recruiting, Retaining Top TalentStrategies include using recruitment fi rms, internships and engaging employeesBy Ann Bailey

32

FEATURES

Emily Skor, CEO, Growth Energy ON THE COVER

PROFILE Skoring with Personal ConnectionsIntroducing Growth Energy’s new CEO, Emily SkorBy Ann Bailey

38EVENT All Things BiofuelPhotos from the 2016 International Fuel Ethanol Workshop & Expo By Susanne Retka Schill

40

PHOTO: JAMES HARRIS

REGULATION Sulfur CompoundedIndustry prepares for EPA complianceBy Susanne Retka Schill

44ANNIVERSARY CVEC Marks 20 YearsInnovators from the startBy Susanne Retka Schill

46


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

EDITOR'S NOTE

The Short List

Tom BryanPresident & Editor in [email protected]

This issue of EPM is largely dedicated to the acquisition and retention of terrifi c people. All together, this industry’s most valuable assets are not facilities that produce ethanol, but the men and women who run them. In “Recruiting and Retaining Top Talent,” on page 32, EPM Associate Editor Ann Bailey reports on the methods, resources and tools producers use to fi nd and keep good employees. It’s no secret that ethanol plants use recruitment fi rms to secure top executives, but you’ll be intrigued by the process they use to identify, screen and select recruits at every level. Of course, the contest of fi nding great people is second only to the challenge of retaining them. We learn how ethanol plants keep people happy and engaged through workplace culture: team events, community engagement, open communication, goal setting and recognition. The result is lower turnover and higher organizational loyalty.

Growth Energy’s recent appointment of Emily Skor, the association’s new CEO, is a timely example of talent recruitment at its best, and a fortuitously good fi t for this issue’s page-38 cover story. Skor represents a change for our industry. Not only is she the fi rst woman to lead one of our national associations, but she’s also skippering a new strategy to win over consumers. In her keynote speech at the 2016 International Fuel Ethanol Workshop & Expo in Milwaukee, Skor was clear about her directive. She believes consumers will ultimately embrace higher ethanol blends if they make a personal connection with their fuel purchase. She thinks promoting higher blends through social media—the world’s pervasive personalization lever—is critical to our industry’s growth. “We have to connect with consumers as individuals—on their terms, in their language, based on their concerns and priorities and experiences,” she said at the 32nd annual FEW (see “Skoring with Personal Connections” on page 38).

EPM Managing Editor Susanne Retka Schill turns our attention to ethanol’s regulatory realm in “Sulfur Compounded,” on page 44. She reports on how an approaching set of EPA Tier 3 rules related to sulfur content in fuel will affect producers. Starting in January, plants must prove that their ethanol has 10 parts per million (ppm) or less sulfur content. That’s a big change from the current 30 ppm standard, but it shouldn’t be a problem. Retka Schill reports that ethanol rarely has more than 10 ppm sulfur, and the ethanol industry already has been meeting the new standard for years. Now, however, additional verifi cation and paperwork requirements threaten to trip up unprepared but otherwise compliant plants.

Finally, we’re honored to chronicle Chippewa Valley Ethanol Co.’s recent celebration of two decades of production in “CVEC Marks 20 Years,” on page 46. In mid-June, the Benson, Minnesota ethanol plant held an event to mark the moment. In many ways, CVEC’s incredible success is also the result of visionary leadership and remarkable employee loyalty. The plant has been a virtual incubator of progressive ideas, technical aptitude and managerial excellence. Ultimately, the things CVEC has achieved, including what it’s done through RPMG, Glacial Grains and Guardian Energy, is mostly the result of its founders recruiting and hiring the right people, starting two decades ago.

AUGUST 2016 | Ethanol Producer Magazine | 7

VOLUME 22 ISSUE 8

TM

EDITORIALPresident & Editor in Chief Tom Bryan [email protected]

Vice President of Content & Executive Editor Tim Portz [email protected] Editor Susanne Retka Schill [email protected]

Associate Editor Ann Bailey [email protected] Editor Erin Voegele [email protected] Editor Jan Tellmann [email protected]

ARTArt Director Jaci Satterlund [email protected]

Graphic Designer Raquel Boushee [email protected]

PUBLISHINGChairman Mike Bryan [email protected]

CEO Joe Bryan [email protected]

SALES

Vice President of Operations Matthew Spoor [email protected] & Marketing Director John Nelson [email protected]

Business Development Director Howard Brockhouse [email protected] Account Manager/Bioenergy Team Leader Chip Shereck [email protected]

Account Manager Jeff Hogan [email protected] Circulation Manager Jessica Tiller [email protected]

Marketing & Advertising Manager Marla DeFoe [email protected]

EDITORIAL BOARD

Ringneck Energy Walter WendlandLittle Sioux Corn Processors Steve Roe

Commonwealth Agri-Energy Mick HendersonPinal Energy Keith Kor

Aemetis Advanced Fuels Eric McAfeePoet Scott Teigen

Western Plains Energy Derek Paine

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 han-dling charge of $49.95 for anyone outside the United States. 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 op-portunities, 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 © 2016 by BBI InternationalPlease recycle this magazine and remove inserts or samples before recycling

ADVERTISER INDEX

2017 Fuel Ethanol Workshop & Expo 13AgCountry Farm Credit Services 9BetaTec Hop Products 25Buckman 24Christianson & Associates' Biofuels Financial Conference 51 D3MAX LLC 55 Direct Automation 48DuPont Industrial Biosciences 56Fagen Inc. 11Fluid Quip Process Technologies, LLC 49Growth Energy 2Hydrite Chemical Co. 37Hydro-Klean LLC 35ICM, Inc. 43J.C. Ramsdell Enviro Services, Inc. 22MonitorTech Corporation 18Nalco Water 36Phibro Ethanol Performance Group 15PITSolutions 45POET LLC 53Solenis LLC 3Sukup Manufacturing Co. 17Thermal Refractory 23Toptech Systems 28Tower Performance, Inc. 19U.S. Water Services 5Victory Energy Operations, LLC 30-31WestAgro Executive Brands 34Westmor Industries, LLC 29WINBCO 47


People can say what they want about the ethanol industry in America, but one fact is abundantly clear, it has spawned an entire global movement toward renewable fuels. The roots of that movement are here in America’s heartland.

That’s not to say that other countries have not thought about renewable fuels or even dabbled in them from time to time, but the real driving motivator for most places in the world are predicated on the success demonstrated by American agriculture. From Australia to Canada and Asia to Africa and across Europe, had it not been for the leadership of the American farmer, much of the world would not have pursued a renewable fuels strategy.

I write this as a point of pride and responsibility, not as a boastful brag about America. The successes and failures demonstrated in America’s renewable fuels industry have been and continue to be watched around the world. While every country has its own set of economic, environmental and agricultural circumstances, we have shown that it can and does work, and for that we should not only be proud, but also recognize that what we do here impacts the direction other governments consider when dealing with energy and the environment.

Having traveled to many countries over the years on ethanol-related missions, it has become most obvious to me that the world is watching. Watching how we continue to build the industry, watching the political haggling around renewables, and watching the strength and determination of the American farmer.

I have long since lost count of the number of times I have been asked if this latest crisis (pick a year, any year) would be the death knell for ethanol. It is with some pride that I have always been able to say with confidence, no, it’s just another bump in the road on the way to establishing an even-stronger program. To date, the American farmer has never made me eat those words.

The impact, for example, of E15 blends on the thinking of those developing renewable fuel programs in other countries is enormous. The obvious question is why should we settle for 5 percent when America is already successfully pushing the envelope to 15 percent and possibly higher? So while the goal in many countries was to eventually get to 10 percent blends, now their goal is 20 percent and higher with the only limiting factor being existing production capacity.

So, what we say and what we do is important and how we treat things like the renewable fuels standard has global implication. The battles we fight and win with Big Oil and others are being watched and they inspire others to do the same. The things that happen here in America provide a blueprint for success and failures for the world to follow and avoid. So, with the pride of success comes the burden of responsibility to never give in. The world is watching.

That’s the way I see it.

With Pride Comes Responsibility By Mike Bryan

Author: Mike BryanChairman, BBI International

[email protected]

THE WAY I SEE IT

ACE Annual ConferenceAugust 8-10, 2016Loews HotelMinneapolis, MinnesotaACE’s annual conference is unique in the world of renewable fuels because it is specifically tailored to the interests and needs of the people of ethanol—the folks in the trenches. It’s a gathering of ACE’s commitment to connect ethanol producers with farmers, researchers, retailers, and support businesses to continue what all of them started a long time ago. It’s also an excellent place to learn and share ideas. And it has all the fun of a family reunion. Join us Aug. 8-10 at the Loews Hotel in downtown Minneapolis, Minnesota.

605-334-3381 | www.ethanol.org/conference

2016 Christianson & Associates' Biofuels Financial ConferenceOctober 17-18, 2016Hyatt Regency MinneapolisMinneapolis, MinnesotaProduced by Christianson & Associates Organized by BBI International, this year’s Biofuels Financial Conference is focused on the best ways to explore new options in today’s changing ethanol and biodiesel industries. By understanding risks associated with various technology and marketing initiatives, and by exploring various options for making the best use of capital and resources, we’ll learn how to create a well-managed plan for growth and change—a plan which maximizes profitability while ensuring future stability and meeting the expectations of all stakeholders.

866-746-8385 | www.biofuelsfinancialconference.com

2017 International Biomass Conference & ExpoApril 10-12, 2017Minneapolis Convention CenterMinneapolis, MinnesotaOrganized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all biomass industries.

866-746-8385 | www.biomassconference.com

2017 International Fuel Ethanol Workshop & ExpoJune 19-21, 2017Minneapolis Convention CenterMinneapolis, MinnesotaFrom its inception, the mission of the event has remained constant: The FEW delivers timely presentations with a strong focus on commercial-scale ethanol production—from quality control and yield maximization to regulatory compliance and fiscal management. The FEW is also the ethanol industry’s premier forum for unveiling new technologies and research findings. The program extensively covers cellulosic ethanol while remaining committed to optimizing existing grain ethanol operations.

866-746-8385 | www.fuelethanolworkshop.com

EVENTS CALENDAR

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Congress is steamrolling through its second session of the 114th Congress. With it being an election year, aside from must-pass appropriation bills to fund the government, most observers don’t expect much to be enacted into law. That also means that legislative efforts to reduce or repeal the renewable fuel standard (RFS) likely won’t see any movement this year.

A handful of bills to alter or completely dismantle the RFS has been introduced this Congress, including those by Reps. Bob Goodlatte, R-Va., and Bill Flores, R-Texas, and Sens. Bill Cassidy, R-La., Dianne Feinstein, D-Calif., and Pat Toomey, R-Pa. Each time a legislative effort has been mounted to alter the RFS, the Renewable Fuels Association and others have hit back against the blatant misinformation propagated by biofuels opponents. We also offer our RFA Advocacy mobile app, which gives smartphone users free-of-charge access to key ethanol-related information. The RFA Advocacy app empowers any ethanol advocate to challenge efforts to undermine the RFS.

In May, Flores introduced legislation that would cap ethanol blends in the U.S. transportation pool to no more than 9.7 percent by volume. Passage of this bill would represent a complete capitulation to the oil industry that steadfastly refuses to provide consumers higher octane, lower cost alternative fuels at the pump. The oil industry whines about a so-called blend wall even as it continues to build it by denying consumer access to E15 and E85. The RFS was made necessary by oil company intransigence. It was intended to break the stranglehold oil companies have on the motor fuel market by forcing access. This bill would gut the RFS and send America’s energy and climate change policy back decades.

The RFA also pushed back on RFS repeal or reform efforts while testifying at a late June hearing by the House Energy and Commerce Subcommittee on Energy and Power. The oil industry would like to dramatically reduce or repeal the RFS because the program’s continued implementation would mean a further loss of market share. However, doing so would devastate investment in next generation biofuel technologies and halt progress already made, the RFA testified to the subcommittee.

The incumbent industry already has lost 10 percent of the market. If the RFS is implemented consistently with the statute, the market will make the final push to see cellulosic ethanol and other advanced biofuels to fruition, resulting in the loss of 30 percent of the market, RFA noted.

During the hearing, Chet Thompson, president of the American Fuel and Petrochemical Manufacturers, said consumers don’t want biofuels. RFA responded to that claim by saying there is no consumer that wants benzene or any other toxic aromatics in their fuel, either. The discussion about what consumers want is interesting, but I assure you if you ask consumers, they would want a domestic, clean-burning fuel.

My message to the committee was Congress did an excellent job of crafting the RFS, building in a great deal of administrative and market flexibility to deal with issues as they arise. Don’t be bullied by the hyperbole and scare mongering by the incumbent industry that fundamentally disagrees with the need for alternative, low-carbon options for consumers. There is nothing wrong with the RFS that cannot be fixed with what is right with the RFS, and there is no need to legislate changes to a program that is working well today.

While Congress will be preoccupied with other legislative issues as it winds down this session, the RFA will continue to be on guard, hitting back at misinformation and making sure the RFS and all its benefits stay put.

In the meantime, the next time Big Oil and its supporters in Congress trot out misinformation on the RFS, remember its motivation is to maintain a near monopoly in fueling the transportation sector. Energy diversification is the ultimate goal and ethanol, with all of its benefits, can help the U.S. wean off our addiction to oil and move toward cleaner and domestic fuels. The RFA Advocacy app will help consumers join the effort and fight back against inaccurate statements made against biofuel opponents.

All Smoke, No Fire on RFS Reform, Repeal Efforts By Bob Dinneen

VIEW FROM THE HILL

Author: Bob DinneenPresident and CEO,

Renewable Fuels Association202-289-3835


While our major regulatory focus within the industry has been the renewable fuel standard and the U.S. EPA’s latest proposal for 2017, it is essential that plants keep an eye on another major federal regulation that will have a significant impact on our industry—the Food Safety Modernization Act. FSMA, enacted in 2011 as a response to a number of high-profile cases of foodborne illness, is the first major update to our nation’s food regulation since the inception of the Federal Food, Drug and Cosmetic act in 1938.

FSMA has four major components: risk-based preventive controls, inspection and compliance, imported food safety and recall authority. Since enactment, the Food and Drug Administration has been busy writing specific regulations for both human and animal food facilities. While Growth Energy made a valiant attempt to keep coproducts from further regulation, similar to the exemption that brewers received for spent grains, the FDA did not agree and has included ethanol production facilities and coproducts in its comprehensive regulations for animal food in the final rule released last year.

Under the FSMA regulation, larger facilities have to meet the first compliance date Sept. 19 with current good manufacturing practices (cGMPs) in place. The deadline for preventive controls comes one year later. For smaller facilities with fewer than 500 employees the deadlines are extended for another year (cGMP by September 2017 and preventive controls by 2018). There are even longer deadlines for very small facilities with average sales of $2.5 million or less in the three preceding years.

Although the near-term compliance deadline only impacts larger producers, everyone in the industry needs to think about how the marketplace will react. In fact, many are already seeing notices from customers about having to be in compliance with FSMA.

To that end, plants need a compliance plan that includes a hazard analysis, preventive controls, supplier verification, monitoring

procedures, recall policy, corrective action and record keeping. A compliance plan requires standard operating procedures that address such things as personnel, pest control, water supply and plumbing, equipment and utensils and plant operations, among others.

Growth Energy, working with a producer member advisory board and program registrar Compli Associates, has developed the Animal Food Quality Assurance program. The AFQA is designed to be a comprehensive and practical quality assurance program that is available at cost to lead any biofuel production facility on the path to FSMA compliance. The AFQA is a complete quality assurance package. It includes an annual on-site audit to verify compliance and a summary report of the audit findings and related corrective actions. There will be public documentation of AFQA compliance upon meeting the requirements, along with free program updates as the program continues to develop in response to the changing regulatory landscape and customer needs. We have met with the FDA and presented the AFQA program to them, and have incorporated key feedback into the AFQA development and will continue to do so. For more information on the AFQA program or to get specific pricing for your plant, visit www.afqaprogram.com.

Whether you have to meet compliance in September or next year or even 2018, you need to make yourself FSMA-aware now. Equally important, you need to make yourself aware of what your customers may soon demand from the marketplace. Don’t wait until the last minute. The FDA has provided a great deal of material on the new regulation and you can subscribe for email updates at www.fda.gov/Food/GuidanceRegulation/FSMA.

While we have provided a comprehensive program with the AFQA that we think will best help you achieve compliance, no matter which plan or vendor you choose, the most important thing for any facility and for our industry is to ensure that your plant is compliant with the new food safety law.

Author: Chris BlileyDirector of Regulatory Affairs, Growth Energy

[email protected]

DRIVE

Getting Ready for FSMA Compliance By Chris Bliley

#


Blend Wall Crumbles in Retailers’ EyesBy Ron Lamberty

When the U.S. EPA held hearings in November 2013, after its fi rst attempt to (illegally) use Big Oil's blend wall argument to reduce the conventional biofuel portion of the renewable fuel standard (RFS), Bruce Vollan, a Baltic, South Dakota, fuel marketer, said, “There is no such thing as a 10 percent blend wall unless petroleum marketers don’t give their customers choices above 10 percent.”

Oil companies have done exactly that, using restrictions in supply agreements to prevent station owners from offering blends above 10 percent. Meanwhile, more than half of Bruce’s customers buy blends above E10, and ethanol is 25 percent of his overall sales, with months as high as 32 percent.

In the fi rst six months Petroserve USA offered E15 and fl ex fuels in six of their North Dakota C-stores, overall ethanol volume increased to 13.4 percent—and the E15 price wasn’t even on the street sign yet. Bosselman Enterprises offers higher ethanol blends in 13 of its Nebraska locations, and ethanol makes up almost 15 percent of the overall fuel mix at those stations.

Protec Fuel is an E85 wholesaler, supplying 289 stations from Maryland to Texas, with plans to add 300 more locations in the next 12 months utilizing funds from USDA’s Biofuels Infrastructure Partnership. About half of the current customers are newer locations with fl ex fuels offered on multiple islands. E85 makes up 18 to 28 percent of the fuel business at those locations, using as much as 32 percent renewable fuel in E10 and E85.

The other stations Protec supplies are older locations with E85 offered on only one island. E85 makes up 9 to 13 percent of fuel sales at those stores. Now, 9 percent E85 sales may not sound like much, but assuming the other gasoline sold is E10, those stations’ overall ethanol sales are 17 percent—well beyond any so-called E10 blend wall. In fact, a station at the higher end of that group, selling 13 percent of its volume as E85, would hit 11 percent overall ethanol volume, even if every other gallon they sold was E0.

Retailers are proving the RFS is achievable, yet Big Oil persists in its “blend wall” rhetoric and the quest to get rid of the RFS. Having worked in the C-store and petroleum marketing business for over 35 years, that’s no surprise.

When lead was being phased out of gasoline 40-plus years ago, the oil industry said it was impossible—and unnecessary. API said “the mass of evidence proves unquestionably that lead isn’t a signifi cant factor in air pollution and represents no public health problem in any way.” It told EPA, if lead was removed from gas, cars would “erode and explode.” It said it would cost tens of billions of dollars to replace infrastructure, put refi ners and retailers out of business, waste huge amounts of crude oil, prevent future oil exploration, and, of course, cause huge price increases at the pump.

If that sounds familiar, it’s because the oil industry has used that playbook to attack every regulation put in place over the years to make fuels cleaner.

In the ’90s, the oil industry said EPA’s new underground storage tank regulations would lead to the disappearance of gas stations from small towns across the country. In the early part of this century, it said reducing sulfur in gas would (again) destroy engines and reducing sulfur in diesel fuel essentially would outlaw diesel vehicles.

Each time, EPA stood its ground and the oil industry made the required changes. Air and water quality improved and none of API’s disaster predictions materialized.

Today, the oil industry rants about RFS infrastructure cost, engine damage and liability—nothing specifi c, just scary, scary, “liability.” And, as it did with laws removing lead, API now says the RFS is not necessary.

It’s disappointing, but predictable. When you’re Big Oil, it’s what you do.

In his 2013 testimony, Bruce Vollan also told EPA, “The secret to getting over the blend wall… is to TRY to get over the blend wall.” Other retailers have proven Bruce right. Now EPA must TRY to get over the blend wall. Stand fi rm and enforce the RFS. Obligated parties will comply, retailers will offer more ethanol without incident and air and water quality will improve. Just as Congress intended.

Author: Ron Lamberty

Senior Vice PresidentAmerican Coalition for Ethanol

[email protected]

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The goal of your plant is to maximize yield day-in and day-out. In order to achieve this goal you need to have a solid foundation, starting with the cleanest plant possible, which is what the suite of products from the Phibro Ethanol Performance Group can help provide. Backed by decades of industry experience and the state-of-the-art Ethanol Performance Diagnostic Center, the Phibro Ethanol Performance Group delivers high-quality products that are safe, e�ective and all suitable for use under FSMA.

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US, Brazil Demonstrate What’s Possible By Leticia Phillips

As we comment on the “Renewable Fuel Standard Program: Standards for 2017 and Biomass-Based Diesel Volume for 2018; Proposed Rule,” the Brazilian Sugarcane Industry Association—also known as UNICA— wants to make sure to focus this discussion on the importance of advanced biofuels, like sugarcane ethanol. The renewable fuel standard (RFS) is one of the world’s most ambitious programs promoting biofuels and a key policy for the future of sustainable transportation.

During the past 30 years, renewable fuels have become a cornerstone of Brazil’s economic and environmental policy. They have helped to reduce oil dependency, increase domestic energy security, create sustainable economic growth and improve the environment. We are very proud of Brazil’s experience with biofuels. That’s why UNICA regularly engages with the U.S. EPA, California Air Resources Board, European Union regulators, and many others to help shape supportive policies.

It may come as a surprise that nearly half of Brazil’s energy comes from renewable resources, and sugarcane supplies almost 20 percent of our nation’s total energy consumption. We call this the “Brazilian experience” with biomass and biofuels.

Sugarcane ethanol is a big part of that equation. This clean and affordable biofuel is produced by fermenting sugarcane juice and molasses into a high-octane, alcohol-based fuel. Our cars are a little different in Brazil. Flex-fuel vehicles capable of running on either gasoline (which in Brazil is E27) or ethanol comprise about 90 percent of new domestic vehicle sales. Brazilian consumers have a choice at the pump, and they’ve chosen to replace almost 40 percent of our gasoline needs with sugarcane ethanol.

Our country is also a pioneer developer of cellulosic ethanol and second-generation biofuels. Brazilian companies Raízen and GranBio are among the handful of firms around the world, joining a few others in the U.S., that are producing cellulosic ethanol on a commercial scale. This technology is still in its infancy, but it holds tremendous potential and it deserves the chance to grow.

The United States and Brazil have shown what’s possible when the policies are right, when markets are open and when trade and innovation are encouraged. Our two countries are the world’s largest ethanol producers and exporters, and have an obligation to work together to build a global biofuels market providing clean, affordable and sustainable solutions to the planet’s growing energy needs.

That goal brings us back to the RFS. Congress clearly intended this program to foster development of advanced and cellulosic biofuels that cut carbon emissions significantly. EPA manages the RFS and identifies Brazilian sugarcane ethanol as an advanced biofuel because it reduces greenhouse gases by 61 percent compared to gasoline—a reduction similar to cellulosic biofuels. California also considers sugarcane ethanol as an important component for meeting that state’s low-carbon fuel standard.

As a result, Brazilian sugarcane ethanol plays a modest but important role supplying the United States with clean renewable fuel. For the past four years, nearly 1.2 billion gallons of sugarcane ethanol flowed into American cars. During this time, Brazilian sugarcane ethanol comprised only 2 percent of all renewable fuels consumed by Americans, but provided one-tenth of the U.S. advanced biofuel supply.

Our members are making investments to expand production, and Americans can depend on more advanced biofuel from sugarcane. Brazil is expected to produce 8 billion gallons of sugarcane ethanol during the current harvest and we hope the RFS creates the market conditions to receive part of this volume in the United States.

Congress designed the renewable fuel standard to stimulate advanced biofuels that generate fewer greenhouse emissions compared to gasoline and other fossil fuels. Sugarcane ethanol and cellulosic biofuels from Brazil are reliable options for diversifying energy supplies so Americans are not dependent on any one source or country.

Americans deserve access to these cleaner fuels, UNICA will continue to support preserving a strong role for advanced and cellulosic biofuels under the RFS.

Author: Leticia PhillipsNorth American Representative,

Brazilian Sugarcane Industry Association, UNICA202-506-5299

[email protected]

GLOBAL SCENE


Solenis LLC and Buckman Labora-tories Inc. have announced the resolution of a pending lawsuit �led by Buckman in the U.S. District Court for the Western District of Tennessee against Solenis re-garding its patent for using polysorbate as an additive for corn oil extraction aids. As a result of the settlement, Solenis has licensed the use of its corn oil extraction technology to Buckman. Under the roy-alty-bearing license agreement, Buckman will become an authorized licensee of So-lenis technology in the U.S. and Canada.

U.S. Water’s Cambridge, Minnesota, facility was awarded a Meritorious Achieve-ment in Occupational Safety 2015 Gover-nor’s Safety Award during the 2016 Min-nesota Safety & Health Conference in Minneapolis. �e event was organized by the Minnesota Safety Council.

�e board of the Advanced Biofuels

Association has welcomed BIOX, Louis Dreyfus and the Brazilian Sugarcane Industry Association as members. With these three new members, the ABFA rep-resents 9.6 billion gallons of domestic and international biofuels production. �e board also elected Neville Fernandes, head of sales and marketing and a board member at Neste U.S. Inc., as chairman. In addi-tion, Michael Whitney, general manager of renewable fuels at Musket Corp.; Len Federico, manager of biofuels and oils at Louis Dreyfus; Je�rey Jacobs, president and CEO of Ensyn; Paolo Carollo, ex-ecutive vice president of Beta Renewables/BioChemtex; and John Cummings, vice president of Wilmar North America were added to the ABFA executive commit-tee. Former chairman Wayne Simmons, CEO of Sundrop Fuels, will remain as the ex-o�cio member of the committee.

Toptech Systems has released Multi-

Load Slate hardware. Slate opens the bene-fits MultiLoad II has provided to terminals to other markets involved in the movement of fluids. Slate is designed to help compa-

nies with fluid loading and offloading appli-cations. The new device stores information a company needs before a transaction be-gins, tracks every transaction, and sends it to the user’s software system for a fraction of the cost of PLC/PC based solutions.

�e Andersons

Inc. has announced that Ethanol Group President Neill C. McKinstray re-tired July 1. Michael S. Irmen, vice president and general manager of the Ethanol Group, as-sumed the group’s lead-ership as president. McKinstray began his career with �e Andersons in 1976 as a grain buyer in Champaign, Illinois. He worked in a variety of management, mer-chandising, sales and marketing positions before being named manager of grain transportation and market development in 1997. Instrumental in leading �e Ander-sons into the ethanol business, McKinstray was named vice president of the Ethanol Division in 2005 and president of the Eth-anol Group in 2012. Between July 2015 and February 2016 he assumed additional duties as president of the Grain Group. He served as chairman of the Renewable Fu-els Association from 2012 to 2014. Irmen has served as a member of senior leader-ship for the ethanol team since its incep-tion in 2005. He brings to his new role 40 years of experience in grain merchandising, commodities risk management and etha-nol administration. He has served as a vice president in the Ethanol Group since 2012 and was also named as general manager in 2015. Irmen serves as a special advisor to the market risk committee at GreenField Specialty Alcohols Inc. He is �e Ander-sons’ representative to the board of direc-tors for the RFA and has served on the technical committee. A member of the Na-tional Grain and Feed Association, Irmen has served on the country elevator commit-tee and chaired the arbitration committee.

BUSINESS BRIEFSPeople, Partnerships & Deals

McKinstray


�e Canadian Renewable Fuels As-sociation has relaunched as Renewable Industries Canada. �e change rein-forces the nonpro�t association’s mis-sion to promote the use of value-added products made from renewable resources.

The National Corn Growers As-sociation has added Mary Hagan as vice president of communications. She has more than 20 years of experience develop-ing and implementing complex communi-cation strategies with high-profile agricul-ture and consumer product companies. She most recently served as managing director of Osborn Barr, an agriculture-focused ad agency. Hagan also previously served as senior vice president with the Leo Burnett ad agency in Chicago, where she had vari-ous roles in media and account services.

Premium Plant Services, an indus-trial cleaning services provider based in Hibbing, Minnesota, has formed a sister company, Innovative Plant Solutions, to meet the needs of ethanol, biodiesel and food processing plants throughout the Midwest. IPS attributed the decision to the continuous demand for unique, industrial plant cleaning solutions. �e company also recently announced that Steve Farris has joined the company as vice president. In this role, Farris is responsible for all com-pany operations, including supervising 12 employees and overseeing process develop-ment, safety and sales. He brings nearly a decade of industrial cleaning experience to his role at IPS. Before joining IPS, Far-ris was employed at New Age Cryo, where he served as the hydro division manager.

He also previously worked for IPS sister company Premium Plant Services, where he served in various roles, including crew supervisor. In addition, Nathan Anacker has been added to the IPS team as environ-mental health and safety manager. In this newly created position, Anacker is respon-sible for the development and implementa-tion of all health and safety programs for IPS and PPS. He also is responsible for en-suring compliance with all applicable fed-eral, state and local requirements, includ-ing meeting or exceeding Occupational Safety and Health Administration and other standards, and ensuring the safety of IPS and PPS equipment and processes. His duties also include supervising safety coor-dinators throughout four locations oper-ated by IPS and PPS. Before joining IPS, Anacker served as a dangerous goods spe-cialist and hazardous material spill cleanup specialist at FedEx Express in Hibbing.

Western Plains Energy LLC has joined the Renewable Fuels Association. �e company operates a 50 MMgy ethanol plant in Oakley, Kansas. �e plant began operations in 2004 and takes in corn and grain sorghum as feedstock. In addition to ethanol, the facility produces more than 400,000 tons of wet distillers grains per year.

�e Indiana Corn Marketing Coun-cil recently recognized two Hoosier renew-able energy leaders for their commitment to providing ethanol-blended fuel options to consumers across Indiana and beyond. Mike and Ann Ackerman of Circle A Food Mart and John DiMartini of �e Andersons Inc. were presented awards by ICMC President David Gottbrath at the 2016 Indiana Ethanol Forum in Indianap-olis to commend their support of ethanol and Indiana corn farmers.

SHARE YOUR INDUSTRY NEWS: To be included in the Business Briefs, send information (including photos and logos, if avail-able) to Business Briefs, Ethanol Producer Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also email information to [email protected]. Please include your name and telephone number.

BUSINESS BRIEFS¦

AnackerFarris


June 28—Beginning in late May, the natural gas market came under intense upside pressure. After becoming the prompt-month NYMEX contract, July 2016 rallied sharply, dragging deliveries for the balance of summer upward with it. The day after the June contract expired at $1.96 per MMBtu—the fourth consecutive NYMEX contract expiring south of $2—July rolled to the front of the curve at $2.15 per MMBtu. From there, forecasts for widespread heat and indications of tightening domestic supply brought buyers into the marketplace. Upward momen-tum pushed the prompt-month contract as high as $2.79 per MMBtu on June 21, completing a rally of nearly 30 percent in just more than three weeks. This was the highest trade for any prompt-month contract since last September. Contracts deliverable for the remainder of the summer were impacted proportionately throughout this stretch. The winter 2016-’17 strip also increased, but by a lesser magnitude.

It seems as though the market is beginning to reconcile the impacts of last winter’s price collapse on the fundamental balance. A primary consideration remains reversal in domestic production volumes. More than a decade’s worth of consistent and reliable annual growth in U.S.

production is in jeopardy in 2016. Most estimates show year-to-date volumes marginally behind the same stretch last year, and barring a dra-matic and unexpected reversal in trend, 2016 is setting up to show the first year-over-year production decline since 2005.

On the demand side of the ledger, the most significant increases compared to last year are coming from the electric generation sector. The ongoing shift in the U.S. generation mix away from coal and to-ward natural gas and a pricing structure that favors maximum usage of gas-fired generation means that conditions are rife for a record year in demand from this sector. These factors have been exacerbated so far this summer due to widespread warmer-than-normal weather leading to heavy cooling load.

On the surface, the storage situation is bearish. Inventories began this summer at unprecedented levels, and as of late June, remained at a record for that time of year. However, the rate of injection has been historically slow, leading to a quickly shrinking surplus to last year and the five-year average. Storage levels are in danger of falling below both of these benchmarks between now and the end of the year.

Natural Gas Report

Corn Report

June 28—The corn market experienced abrupt swings the past month. Growing concerns for the arrival of La Nina and a South American harvest coming in well below expectations increased man-aged money flow into commodity markets that evaporated in three days in late June. Adding to volatility was a rally of the dollar due to investor concern about Britain’s exit from the EU. The June 10 supply-demand report increased old-crop export values by nearly 100 million bushels and increased imports by 5 million bushels, resulting in old-crop car-ryout decreasing by 95 million bushels. Ending stocks declined from 1.8 billion bushels in May to 1.7 billion in June. The lower carry-in and projected increased exports of 50 million bushels resulted in a 145 mil-lion bushel decrease in new crop carryout to 2.008 billion. Brazil exports declined—old crop by 3.5 mmt and new crop by 1 mmt due to unfa-vorable weather impacts on the second corn crop. Argentina weather woes had a major impact on its soybean production that spilled over into global corn values.

Seasonal volatility will attract investment dollars to agricultural commodities, with positive and negative affects. Any weather concerns may reel in this market in seemingly unjustified price swings that can present opportunities. Keep in mind the ethanol processor should be

focused on margins, not the price direction of one commodity. The ac-companying chart illustrates corn’s volatility, comparing this year’s new crop to last year’s.

Natural gas prices rally on falling production, heavy cooling load

by Andy Huenefeld

Corn volatility reflects shifting market dynamics by Jason Sagebiel and Geoffrey Utecht

COMMODITIES Prices & Market Analyses

Comments in this column are market commentary and are not to be construed as market advice.


DDGS Report

Ethanol Report

June 28—Ethanol market prices have broken away from the energy and gasoline markets and refocused on the aggressive up-and-down movements in the corn market. Front-month July corn futures peaked in mid-June, moving to $4.37 per bushel, which pushed buyer support into ethanol markets. Concern about tight corn supplies and weather impacting short- and long-term availability of corn to produce ethanol caused ethanol futures to rally. Prices continued to erode through the end of June with corn futures falling more than 50 cents per bushel and ethanol fu-tures trimming 10 cents per gallon off the front-month contract.

Production costs may continue to drive ethanol traders through most of the summer. RBOB gasoline futures quickly moved past seasonal demand support and fell more than 15 cents per gallon from recent highs. Ethanol prices moved from a narrow discount to the RBOB gasoline futures price to a 13-cents-per-gallon pre-mium in the last week of June. That was expected to spark additional uncertainty for both ethanol and gasoline buyers through and after the Fourth of July holi-day weekend.

June 28—Demand still is very acute in the near term, but the drop in prices has convinced DDGS buyers that waiting to buy still is the best thing to do. Ethanol margins have been satisfactory, incenting aggressive run times. In late June, there were plants that had not had much of a for-ward book that still needed to sell, so the patient buyers were being rewarded.

Overseas demand still is strong, as delivered soymeal remains expensive. The intense Chinese buying of DDGS seen in years past has been tempered by the loom-ing antidumping decision that folks expect to be announced soon. Meanwhile, demand from places like Indonesia, Thailand and Vietnam has increased substantially. Con-tainer rates still are inexpensive, as is bulk vessel freight. The amount of grain mov-ing toward the river is limiting what DDGS

could be put onto the river since an elevator can load eight grain barges in a day versus one DDGS barge. Thus, there has not been as much movement of bulk DDGS. All of the newer non-Chinese business has moved via containers.

Domestically, the prices that feed-ers are paying for DDGS are economical compared to soymeal. As a percentage of corn, DDGS is nearer to the higher end of the range, but with river access being lim-ited, local availability still is plentiful. There has not been as much talk lately about the Chinese antidumping decision, but with the current exports to China of about 200,000 tons per month, the decision still will have a signifi cant impact. And so will corn crop conditions.

Regional Ethanol Prices ($/gallon)Front Month Futures (AC) $1.620Region Spot RackWest Coast 1.790 1.800 Midwest 1.610 1.778 East Coast 1.676 1.751

SOURCE: DTN

Regional Gasoline Prices ($/gallon)Front Month Futures Price (RBOB) $1.483Region Spot RackWest Coast 1.659 1.985Midwest 1.578 1.560East Coast 1.378 1.557

SOURCE: DTN

DDGS Prices ($/ton)LOCATION Aug 2016 Jul 2016 Aug2015Minnesota 135 135 120Chicago 165 168 157Buffalo, N.Y. 165 160 160Central Calif. 190 200 195Central Fla. 168 170 178

SOURCE: CHS INC.

Corn Futures Prices (Sept. Futures)Date close, bu. close, tonJune 20, 2016 4.2675 152.411May 20, 2016 3.9675 141.696June 19, 2015 3.5875 128.125

SOURCE: FCSTONE

Cash Sorghum ($/bushel)Location June 24,

2016May 20,

2016Jun 26,

2015Superior, Neb. 3.15 3.29 4.13Beatrice, Neb. 3.15 3.21 4.18Sublette, Kan. 3.01 3.11 3.89Salina, Kan. 3.10 3.20 4.28Triangle, Texas 3.21 3.30 4.04Gulf, Texas 3.94 3.82 5.85

SOURCE: SORGHUM SYNERGIES

Natural Gas Prices ($/MMBtu)LOCATION Jun 27,

2016May 20,

2016Jun 29,

2015NYMEX 2.716 2.062 2.805NNG Ventura 2.520 1.815 2.640Calif. Citygate 2.850 1.870 3.160

SOURCE: U.S. ENERGY SERVICES INC.

U.S. Ethanol Production (1,000 barrels)Per Day Month End Stocks

Apr 2016 935 28,059 20,992Mar 2016 994 30,812 20,787Apr 2015 930 27,910 22,301

SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION

DDGS prices continue roller coaster ride following grain

by Sean Broderick

Ethanol prices fi rm despite gasoline price pull-back

by Rick Kment


DISTILLEDEthanol News & Trends

Ontario Biomass Producers Cooperative Inc., a group of Ontario farmers producing and marketing biomass, recently launched an effort to make it easier for its members to sell the mis-canthus and switchgrass they produce to various markets.

The cooperative adopted a central-desk sell-ing system and checkoff collection mechanism to help connect biomass producers and buyers. The central-desk selling system will be used to develop an advertising strategy to give the cooperative’s members the opportunity to sell into multiple markets and for the markets to go to one place to source material, said Larry Davis, vice president of business with the Ontario Biomass Producers Cooperative.

“It’s an information gathering source,” Davis said. “Producers can learn who the buyers are and what they are using it for, and the grower them-selves can put their information on a website. It’s just a way for everybody to know what material is out there and how much is available at any one time.”

Biomass checkoff established by Ontario farmers

A new analysis conducted by Informa Economics and commissioned by the U.S. Grain Council and National Corn Growers Association has determined ex-ports of U.S. corn and corn products generated $74.7 billion in annual economic output in 2014, with sales of all U.S. feed grain products contributing $82 billion.

The study specifically addresses the impact of ethanol and ethanol coprod-ucts distillers dried grains with solubles (DDGS) and corn gluten feed (CGF). According to the analysis, the direct economic contributions of ethanol exports include 938 jobs, $115 million in labor income, $238 million in GDP and $2.07 billion in output. The direct contributions of DDGS and CGF coproducts include 1,448 jobs, $177 million in labor income, $367 million in gross domestic product (GDP), and $3.19 billion in output.

The total economic contribution of ethanol exports was 25,250 jobs, $1.57 billion in labor income, $2.97 billion in GDP and $8.87 billion in output. For DDGS and CGF, the total economic contribution was 38,978 jobs, $2.42 billion in labor income, $4.58 billion in GDP and $13.69 billion in output.

Report quantifies value of ethanol-related exports

Total economic contribution of grain and grain products exports

Jobs Labor income (millions)

GDP (millions) Output (millions)

Ethanol 25,250 $1,570 $2,968 $8,870

DDGS CGF 38,978 $2,424 $4,581 $13,692

SOURCE: U.S. GRAINS COUNCIL


Valero Energy Corp. issued a petition to U.S. EPA Administrator Gina McCarthy in June asking the agency to redefine obligated party under the renewable fuel standard (RFS).

Valero is asking EPA to redefine obligated party as “the entity that holds title to the gaso-line or diesel fuel, immediately prior to the sale from the bulk transfer/terminal system…to a wholesaler, retailer or ultimate consumer.” Re-finers and importers are currently considered obligated parties under the RFS.

According to Valero, “currently the obli-gation for RFS is placed on refiners and im-porters—the point of obligation is the refinery gate and the entity that imports—regardless whether the refiner or importer have the abil-ity to affect the amount of renewable fuels blended and sold to consumers.” Valero claims this placement has created problems that im-pair the RFS program’s proper functioning and prevent it from ensuring that renewables enter the transportation fuel market.

Valero petitions EPA to redefine obligated party under the RFS

IRENA releases renewable energy jobs report

The International Renewable Energy Agency has released a report, “Renewable Energy and Jobs—Annual Review 2016,” that has determined more than 8.1 million people worldwide are currently employed by the renewable energy industry, up 5 percent from last year.

According to the report, global em-ployment in liquid biofuels declined 6 percent in 2015, reaching 1.68 million. The decline is attributed to mechanization in countries such as the U.S. and Brazil, along with falling production in others, such as Indonesia. Liquid biofuels jobs in-creased in the European Union, Malaysia and Thailand.

Brazil has the largest liquid biofuels workforce, with 821,000 jobs. Reduc-tions of approximately 45,000 jobs in the country’s ethanol industry due to ongo-ing mechanization of sugarcane harvest-

ing were partially offset by job growth in biodiesel. Even with reduced ethanol em-ployment in Brazil, production increased in 2015. Employment also declined 2 percent in the U.S. despite an increase in both ethanol and biodiesel production. Biofuel employment in the EU increased 8 percent in 2014, and the report indicates continued growth in production last year likely resulted in additional job creation.

Renewable energy jobs (in thousands) Solar photovoltaic 2,772

Liquid biofuels 1,678

Wind energy 1,081

Solar heating/cooling 939

Solid biomass 822

Biogas 382

Hydropower (small) 204

Geothermal energy 160

CSP 14SOURCE: INTERNATIONAL RENEWABLE ENERGY AGENCY

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DISTILLED


DISTILLED

USDA announces payments to advanced ethanol producers

On May 27, the USDA announced more than $8.8 million in awards through its Advanced Biofuel Payment Program, which makes payments to biofuels pro-ducers based on the amount of advanced biofuels produced from renewable bio-mass, other than corn kernel starch. Examples of eligible feedstocks include crop residue, food and yard waste, veg-etable oil and animal fat. Eligible fuels include wood pellets, biodiesel, advanced and cellulosic ethanol, and biogas.

The program was established by the 2008 Farm Bill. To date, the USDA has made $308 million in payments to 382 producers in 47 states and territories.

“Advanced biofuels expand Amer-ica’s energy options and increase our sources of homegrown, renewable ener-gy,” said Agriculture Secretary Tom Vil-sack. “These payments not only help to spur biofuel production, but also protect the environment and help create jobs by building a renewable energy economy in rural areas.”

The U.S. ethanol industry set a new weekly ethanol production record the week ending June 10. Data published by the U.S. Energy Informa-tion Administration shows production reached an average of 1.013 million barrels per day. The previous record was set the week ending Nov. 20, 2015, when production averaged 1.008 million barrels per day.

As of the close of June, the U.S. ethanol industry had surpassed the 1 million barrel per day mark only six times, all within the past year. The first was the previous record-setting week of Nov. 20, 2015. Less than a month later, dur-ing the week ending Dec. 11, 2015, production reached an average of 1 million gallons per day. During the week ending Jan 8, 2016, production again topped the 1 million barrels per day mark, reaching 1.003 million barrels per day. The week ending June 3, production reached near-record levels of 1.006 million barrels per day.

US weekly ethanol production sets new record

Advanced biofuel payments for ethanol Usl Parallel Products of California $845

Quad County Corn Processors Co-Op

$2,011

Central Indiana Ethanol LLC $4,320

Arkalon Ethanol LLC $1,061

Bonanza Bioenergy LLC $601

Diamond Ethanol LLC $1,013

Parallel Products of Kentucky Inc. $976 SOURCE: USDA

Some chemical companies focus only on process. Some focus solely on water treatment. Buckman takes a comprehensive approach and looks at the bigger picture — return on investment and environment. We look at every aspect of your plant’s operation,

tailoring chemistries to boost production and increase profitability — from evaporator efficiency to corn oil recovery to water treatment issues. To find out more or to schedule a system audit, contact your Buckman representative or email [email protected].

© 2014 Buckman Laboratories International, Inc. All rights reserved.

Some chemical companies focus on this or that .

Buckman takes a wider view.


DISTILLED

REN21 recently published its annual overview on the state of renewable energy, reporting 2015 was a record year for renewable energy installations. Renewable power and renewable heat both in-creased, along with renewables used in transportation.

According to the report, global biofuels production increased 3 percent last year, reaching 133 billion liters (35.13 billion gallons). Although ethanol production was up, biodiesel production was down slightly.

Fuel ethanol production was up 4 percent last year, reaching 98.3 billion liters. The U.S. and Brazil accounted for 86 percent of global ethanol production in 2015. China, Canada and Thailand were the next largest producers.

In the U.S., ethanol production increased an estimated 3.8 per-cent, reaching 56.1 billion liters. Ethanol production in Brazil was up 10 percent, reaching a record 28.2 billion liters. Production in Canada was down 1 percent, at 1.7 billion liters.

REN21: Global ethanol production up

Trestle Energy, Larksen partner to develop fuel pathway management platform

Trestle Energy LLC and Larksen LLC announced a col-laboration to commercialize a new fuel pathway management platform. The platform is de-signed to enable ethanol pro-ducers to substantially reduce their fuel carbon intensity and to facilitate cost-effective use of biomass fuel pellets at existing power plants.

Trestle and Larksen’s inte-grated approach furthers ethanol producers’ ability to scale up pro-duction of low-carbon biofuels and allows existing power plants to generate electricity with the

cost and reliability of coal and with carbon emissions similar to wind. This will expand sup-plies of dispatchable, renewable energy and substantially reduce greenhouse gas emissions from domestic energy supplies.

According to Trestle, the partnership charts a cost-ef-fective path for American en-ergy companies to comply with ambitious climate and energy programs, such as low-carbon fuel standards, thereby enabling greater access to premium regu-lated markets.

Global biofuel production Ethanol 74%

Biodiesel 22%

Hydrotreated vegetable oil 4%SOURCE: REN21


Succession planning involves candid discussions that pave the way for smooth transitions when facing retirements, or worse, unplanned vacancies in key positions. By Holly Jessen

in LeadershipFILLING A HOLE


in Leadership

LEADERSHIP

While the majority of etha-nol production companies have discussed succession planning, fewer have documented, action-able succession plans in place. Putting it in writing is key, says Jason John-son, vice president and team instruction specialist with AgStar Financial Services.

“We all know it’s a lot better to react if there’s a plan in place ahead of time, ver-sus trying to react and make decisions in a time of crisis. It’s a lot easier to follow a blueprint,” he says, adding that AgStar asks companies about succession planning as one part of assessing a risk management plan.

Scott McDermott, partner and chief operating officer for Ascendant Partners Inc., concurs. “If somebody gets hit by a bus, you have a day-to-day operation that needs to run. You have to have some com-bination of backups, procedures and docu-mentation.”

John Christianson, principal of Chris-tianson and Associates PLLP, tells Ethanol

Producer Magazine succes-sion planning is critical for the continuation of a com-pany’s strategic direction and vision. Without it, a company is left scrambling to fill an open position, when it should be moving forward. “You become a plant that is just treading water,” he says, “Status quo, trying to get things done, but not really working at propelling yourself forward with your vi-sion.”

Five years ago, McDermott says many ethanol production companies hadn’t put much thought into succession planning. “I think today, it’s far improved,” he says, estimating that about a third of the indus-try is lagging in this area, continuing to do things the way it’s always been done. One reason for the increased interest in succes-sion planning is that seasoned veterans are starting to retire. McDermott expects that, in the next five years, the ethanol industry

will see more changeover in senior manage-ment.

Christianson has noticed increased in-terest in succession planning as well. In the past year and a half, Christianson and As-sociates has facilitated about a dozen strate-gic planning sessions with ethanol company boards of directors where succession plan-ning is on the agenda. He sees it as a natu-ral progression, as the industry moves out of tough times when companies focused on surviving and paying off debt. With low long-term debt, thanks to good profits

McDermott

If, all of a sudden, there’s an empty spot, can you continue to operate normally?

LEADERSHIP


in 2014 and 2015, many boards are setting very specific goals for the future.

When most people think about succes-sion planning, replacing a retiring CEO is what comes to mind. But experts say there’s a lot more to it than that. Succession plans should be in place for multiple positions in top management from plant managers to commodity managers, and even board members.

David Holm, executive director of the Iowa Institute for Cooperatives, which in-cludes two Iowa ethanol plant members, says there are three scenarios to consider. The first, and easiest to deal with, is when a top manager comes to the board with plans to retire in 18 months. The second scenario is unplanned and happens when someone leaves the company abruptly.

Long-term disability is the most diffi-cult scenario to handle, in Holm’s opinion. An example would be a CEO facing a cancer diagnosis. Although the prognosis is good and the CEO will return to work, there will be an extended period of time when that person will be distracted, undergoing medi-

cal treatment and unable to work full time. “In the in-terim, you still have to run a multimillion dollar com-pany,” Holm says.

Practical Tips A good first step in

succession planning, John-son says, is to take stock of the company’s human capi-tal. List the key managers and personnel who would leave a big hole if they were no longer with the company—individuals with a long his-tory and in-depth knowledge about the fa-cility.

It’s helpful to make a chart of those individuals and include known informa-tion, such as when they may retire, Johnson says. Then, look below them in the ranks and identify talented employees with poten-tial. The next question to answer is, what would be needed to get those people ready to move up into senior management posi-tions? Of course, sometimes succession

planning means looking outside to hire new senior managers.

Another vital step is to document what key personnel do and how they do it, for continuity in times of change. “If, all of a sudden, there’s an empty spot,” McDermott asks, “can you continue to operate normal-ly?” That’s true, he says, across senior man-agement roles, from the general manager to the lab manager. “Succession planning, in our mind, is broader than the next person you want in that position or the type of per-son you want in that position,” he says. “It’s

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Johnson

It’s a lot better to react if there’s a plan in place ahead of time, versus trying to react and make decisions in a time of crisis.

LEADERSHIP

all the things around that person’s role at the management level that allows the company to be effective, not only in the transition in leadership, but also in the gap in leadership.”

For successful succession planning, the board of directors needs to talk candidly to the CEO. “If you think it’s hard to have the conversation hypothetically, wait until it’s real,” Holm says. Get the CEO’s input on possible retirement plans, as well as what the company should do if he or she is killed to-morrow or somehow unable to work, such as with the cancer scenario, Holm suggests

In the past five years, Holm has worked with three companies that have gone through a situation like the ex-ample of a CEO with cancer, where the individuals even-tually returned to work full time. In two cases, the plan in place was to spread job duties among senior leadership. Al-though that did work, it still was difficult, he says, because the company lacked the focus

of having a single person at the helm. The CEO, as someone who knows the

capabilities of the staff, should also be asked for input on succession plans for other key personnel. The board may not take all of the CEO’s suggestions, Holm says, but that’s a good place to start.

Something else to decide is exactly how to communicate succession planning deci-sions, Holm says. An employee who is told he or she will be the interim CEO, should the need arise, may think he or she is in line to be the next CEO, when that may not be the

case. And, if other staff members are told, they may come to the same incorrect con-clusion. The board and CEO need to think very carefully about how, and to whom, they should reveal these plans, Holm cautions.

Getting the Best BoardSuccession planning isn’t just for top

management. It’s for board members too, even when those board members are elected, not appointed. “The practical reality is, even when they have a vote of the membership, often times it’s the board members that basi-cally ask those candidates to run,” McDer-mott says. “Frankly, we don’t think it matters whether it’s a vote or appointed or recom-mended by the existing board.”

He sums it up like this: “Plan for the board you want, otherwise you’ll get the board you get.”

Board members fulfill a critical function for ethanol production companies and hav-ing highly active and engaged board mem-bers is vital to the future of the company, Christianson says. “You can see the differ-ence in boards of directors that are engaged.

Holm

If you think it’s hard to have the conversation hypothetically, wait until it’s real.

LEADERSHIP

These are the companies that are moving forward, have a strategy, a vision, a plan and are moving forward and executing on that plan, versus plants that are just moving along—just an observer of what’s going on, instead of determining the path.”

Christianson believes the first step is compensating board members well for what they do. Secondly, companies should raise the bar and hold board members ac-countable. That includes things such as reading the board packet, attending industry events and learning about issues affecting

the industry. “You want people who want to be on the board, with high expectations, who want to be part of driving the business forward,” he says, adding that hold-ing board members ac-countable may result in some no longer wanting to be on the board.

McDermott points to some progressive

boards that have appointed one or two nonvoting associate board members, to work with the board in an advisory capacity as one way companies can identify future board members. “It allows them to almost test run board members,” McDermott says. “And it also allows potential board mem-bers to see how it works, so when they actu-ally become a board member they hit the ground running.” A new board member, with no experience, can take two or three years to get up to speed on how to be a good board member, he adds, while an as-

sociate board member would have a much faster learning curve.

Another good strategy, Christianson says, is for boards to form membership committees to seek out the best talent for open board seats. For this to work, how-ever, the committee must be active and ef-fective, he adds.

Another important element, he says, is communication from the board to share-holders through newsletters, the website and shareholder meetings. Effective com-munication helps the membership under-stand the board’s function, actions and strat-egy for the future. This can help encourage more people to pursue getting a seat on the board. Because, although strategic board nominations are important, ultimately, elec-tions with healthy competition for board seats are a good thing, Christianson says.

Author: Holly Jessen Freelance writer

[email protected]

LEADERSHIP

Christianson

You want people who want to be on the board, with high expectations, who want to be part of driving the business forward.


WORKING CLEAN: Innovative Plant Solutions has developed unique tools and processes with the goal of reducing time requirements at ethanol plants by up to 20 percent. PHOTO: INNOVATIVE PLANT SOLUTIONS

Finding and keeping good employees is a challenge. Throw in considerations such as a need for em-ployees with specific professional and technical skills, and the typical rural loca-tion, and it can be a daunting task for eth-anol producers. Finding talent through recruitment firms, utilizing internships and engaging employees in the work and industry culture are all strategies used.

“There’s pressure on profitability to-day because of the blend wall and low oil prices. What we see ethanol companies looking for, in many cases, is a higher lev-el of executive talent,” says Gary Weihs, managing director and renewables sec-tor leader at Kincannon and Reed, an agricultural-focused recruitment firm. In the early days of the industry, managers who simply could run the plant efficient-ly were sought for the lead position, but now general managers of ethanol plants

also must manage the bottom line, Weihs says.

The 36-year-old firm starts the recruiting process utilizing keyword searches in its own data base as well as digital data bases such as LinkedIn to find the people with qualifications that match what its clients are seeking. The search team screens 400 to 500 potential candidates and from that pool typically contacts 100 to 200 people for each po-sition. After Kincannon and Reed has narrowed the search to 20 to 30 inter-ested people with the right background, it selects about a dozen to show clients who then decide which three or four to interview. “It’s not like running an ad and hoping that people respond. A lot of the people who are looking at want ads are not the people we’re looking for,” Weihs says. “Ninety percent of the people we’re researching aren’t looking for a job.”

HUMAN RESOURCES

Recruiting, Retaining TOP TALENTEthanol plants use a variety of strategies to find and keep engaged employees. By Ann Bailey



Kincannon and Reed searches for top talent, a person who has a superior, focused work ethic, he says. Those are the leaders who get things done. They also need to be able to work both strategically and tactically, Weihs says. “They might be dealing with a scheduling problem or an operational fail-ure in the morning, and in the afternoon, doing a five-year plan for the board meet-ing. They’ve got to be really good thinkers.”

Another quality critical to the success of a manager is the ability to embrace the gray and drive it to black and white, Weihs says. That is, managers who have top talent will collect, in a timely manner, all the infor-mation that is available to them and make a decision based on the input they receive.

“The other topic we talk about for tal-ent is self-awareness,” Weihs says. “People have to be confident because confident people are followed.” He looks for a one-to-one, ego-to-capability ratio. “It’s very important that their ego isn’t bigger than their capability. They have to be confident, but they can’t have a huge ego because that turns people off, which limits teamwork.”

Another important leadership qual-ity of top talent managers is a willingness to “get their hands dirty,” Weihs says. “It’s not that they do peoples’ jobs for them, but they can effectively relate to the front line. A strategic doer is someone who can relate to the front line and also relate to the board, and they have an action orientation. They

can lead people at all levels of the organiza-tion and implement the strategies after they design them. There are lots of people who are good at creating strategies, but there are lots of strategy booklets sitting on the shelf that never got implemented.” Managers who are strategic doers have the support of their employees and the leadership capabil-ity to move the team forward to accomplish their goals, Weihs says.

Conducting behavior-based interviews is one of the key ways that Kincannon and Reed identifies top talent, he says. “What we’re looking for is evidence of behavior where they’ve accomplished things in the types of areas the client is interested in. For instance, if [a client] is looking for someone

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who wants to increase market share for a fuel or chemical and if [the prospects] have two or three good examples of increasing market share in the past, you’ve got strong evidence that their behavior from the past is going to continue in the future.”

Demonstrated BehaviorPoet hiring teams also find that the an-

swers to behavior-based questions are help-

ful in making good hiring decisions, says Mike Dishman, Poet regional vice president in Sioux Falls, South Dakota. “We make sure we cover all of our bases on asking those behavior-based questions.” Hiring employees who have the same mindset and culture as the company also is important, so job interviews also include culturally based questions, Dishman says. “Do you have the same vision as we do? Are you passion-

ate about what we’re doing, changing the world?”

Poet’s strong, vibrant internship pro-gram also is a good recruiting tool for the ethanol company, he says. “We hire a lot of interns.” The interns, especially in the areas of science and engineering, come to Poet from across the United States, Dish-man says. Poet gives the interns meaningful work during their time with the company

People have to be con�dent because con�dent people are followed … �ey have to be con�dent, but they can’t have a huge ego because that

turns people o�, which limits teamwork. —Weihs


and when their internship concludes, asks them to do a report on their experiences. “We feel proud about our internship pro-grams and the results we get out of it. It’s

great for Poet and the person doing our in-ternship.”

Poet’s hiring teams talk to its job candi-dates about internal promotion opportuni-

ties and programs such as wellness or men-torship, Dishman says, adding that those are the kinds of programs that world-class companies offer to attract and retain em-ployees.

Retaining employees involves other strategies as well. “We try and provide the very best atmosphere for our team mem-bers to work in. We promote as many team-oriented activities as possible. We have a lot of competitiveness that may or may not be in line with working on ethanol. We encour-age team-oriented events that help out in the community, volunteering. We encour-age people to be leaders in the community,” Dishman says.

Taking OwnershipUnderstanding community impact is

an important way to help employees feel a part of something bigger and build loyalty and staying power, says Justin Mentele, se-nior associate, manufacturing and biofuels group, K-Coe Isom LLP. Plant employees need to know biofuels not only add value to corn and sorghum and to the ag economy, but that ethanol companies also boost the rural economy as a whole through job cre-ation. It isn’t easily seen and doesn’t show up directly in a paycheck, he says, but the true impact of the industry goes beyond distillers grains and ethanol sales.

Talking to employees about the ways in which their jobs are part of the big picture also improves their staying power. “I think there has to be a much more focused ef-fort now than what there used to be,” Men-tele says. “What we see has worked best is that employees have to not only understand their piece of the pie in the whole process and project, but also how what they do af-fects others in the company itself. If purely the production of ethanol and profit is the goal, then you’re not going to have employ-ees who are really engrossed in what they do and what happens in that company.”

Communicating with employees about what is expected of them and how they can better themselves in the company also is important when it comes to retaining them, Mentele says. Without that, “it makes it a whole lot harder to have that buy-in.” Knowing what is expected of the company is important as well. “That’s a piece that

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sometimes gets overlooked,” Mentele says. “What do we expect you to do in your per-formance and what do we expect the com-pany to do in its performance?’

Once the company and employee know what the expectations are, they need to set goals, he says. “With that, there has to be some motivation, and the motivation at some point, is monetary, but there’s also nonmonetary motivation that drives that.” That could be something as simple as a “thank you” in a monthly safety meeting or an employee-of-the-month honor in a local newspaper, Mentele says. Whether they are recognized and appreciated for their work may be the difference between employees leaving or staying with a company. “It’s a se-ries of little things that build up that either drive that loyalty or cause a reason to leave,” Mentele says.

Creating OpportunityEngaging employees from the get-go

also is important at Green Plains Inc. “We have an engaged culture with an experi-enced management team who is willing and open to hear input from employees who are just starting out with us,” says Mark Hudak, executive vice president of human resourc-es. “Everyone’s opinion really matters here. We also provide regular incentives and pre-fer to promote people within the company, when possible.”

The company also works to keep its long-time employees involved in Green Plains. The ethanol producer focuses on the company’s growth and creates advancement opportunities, Hudak says. “We provide on-going training and development programs at every location in order to create internal promotions. At Green Plains, if individuals have a passion for a specific project, they are encouraged to own it and they have ac-cess to top management for guidance and support. This creates personal development opportunities for employees and possibly new business strategies to be implemented by the company,” Hudak says.

Green Plains seeks to attract employ-ees with high-level descriptions of job re-sponsibilities and specific qualifications, he says. “During the interview process, we look for candidates with strong communi-cation skills and a positive attitude. We want

candidates who can work well in teams, set goals for themselves and can remain flex-ible. Dependable applicants with integrity, creativity, organization and intelligence can make for top-notch employees at Green Plains.”

The company wants its workers to feel like they are part of a family, while recog-nizing each plant is different. “Every Green Plains location has its own unique culture,” Hudak says. “To support this, we give

holiday gifts, sponsor community events, host potluck meals, have multiple softball leagues, share a quarterly newsletter and more. No one knows our communities like the people who live and work there do so every location is its own work family.”

Author: Ann Bailey

Associate Editor, Ethanol Producer [email protected]

701-738-4976

HUMAN RESOURCES


Emily Skor, Growth Energy’s new CEO, speaks about connecting with consumers, building relationships and tapping the power of social media. By Ann Bailey

Skoring with Personal Connections

For new Growth Energy CEO Emily Skor, it’s personal.

Rather than solely using intellectual arguments to promote and defend the ethanol industry, Skor wants industry producers and members to share their stories about how the renewable fuel makes Americans’ lives better. Growth Energy has done a good job of promoting ethanol in the past and now it’s time for industry members to begin telling their stories in a different way and empower neighbors to talk to neighbors about the benefits of the renew-able fuel, Skor says. She believes neighbors talking one-on-one to neighbors is one of the best ways to spread the word about the advantages ethanol has over fossil fuels.

PHOTO: JAMES HARRIS


PROFILE

“We have the facts on our side. But you don’t win politically charged discussions on facts alone. So often it is emotion that trumps fact,” Skor said at the International Fuel Ethanol Workshop. Skor was the key-note speaker at the 32nd annual FEW held in Milwaukee in June, a few weeks after taking over the reins of Growth Energy. A graduate of Wellesley (Massachusetts) Col-lege, Skor most recently worked as Con-sumer Healthcare Products Association vice president and was the CHPA Educa-tional Foundation executive director. She led public affairs campaigns, integrating strategic communications into legislative campaigns and coordinated ally develop-ment at CHPA, a member-based trade or-ganization advocating for consumer health care products.

Skor brings to Growth Energy her experience in building campaigns in ways that mobilize policy and leaders, an ability to engage the organization’s members and knowledge of how to work with regulatory agencies such as the U.S. EPA, Food and Drug Administration and USDA, she says. Though a natural tension exists between those agencies and the industries which they regulate, such as ethanol, there are common areas where they share objectives, Skor says. “If you find the area of commonality, you can establish trust.”

Personal TouchForging personal relationships with

consumers also is one of her goals, Skor says. “We have to connect with consum-ers as individuals—on their terms, in their language, based on their concerns and pri-orities and experiences,” she says. Ethanol producers and members are motivated by their knowledge of and experience with the biofuel, but they must figure out what influ-ences the rest of Americans who are mak-ing choices at the pump, she believes.

“What motivates the New York City cab driver, the Arizona college student who commutes to her classes from home to save on rent, the Boston mother of young kids who is starting to feel like a long-haul truck-

er just to make soccer practice? If that last one sounds personal, it is.

“I know these stories because I am part of the target audience. My son Dominic is six years old. My daughter India is eight. And anyone who tells you that life gets simple after they start kindergarten, well, they know something I don’t. As a mom, I am ready to listen when someone tells me I can save money and help my kids breathe cleaner air.”

Consumers, including Skor herself, crave personalization of the information, images, food, medicines, products and ex-periences they take in, she says. “I am not just a demographic. I am an individual. I have my own values and goals and aspira-tions. And when I buy something, it needs to speak to my values and goals and aspira-tions.”

But, it’s not just enough to have an ex-perience, it also should be documented and shared, Skor says, and that’s where technol-ogy comes into play. In today’s world, in which people live online, simple transac-tions become public statements of what they support and why they support it, it, she says. That means a transaction at the pump can become a public statement.

Social media is the ultimate grassroots way to spread the good news about etha-nol and to engage the public, Skor says. “It is absolutely a tool we should be using. It reaches all around the country and around the world.”

Spreading the Word“Let’s encourage an earnest conver-

sation with consumers about how etha-nol makes life a little better and why they can feel good about their decisions at the pump,” Skor suggests. “When my fam-ily drives to the lake for the weekend, of course, I should be able to tap an app for directions to the closest gas station selling E15. But I should be able to find retailers with blender pumps, whether I’m using Waze, Apple maps or any other GPS navi-gation.

“After I fill the tank, I want to post a photo of my happy family on Instagram. I want to tweet a shout out to my gas station for saving me a few bucks. I want to alert all my friends on Facebook to the great savings with ethanol. And then I’ll text an emoji of the American flag to my girlfriend.”

The ethanol industry can harness the digital arena to initiate one-on-one conver-sations with consumers, reminding them about the benefits of ethanol to their pock-etbooks, country and environment, Skor says. Research conducted by Growth En-ergy shows that Americans need to be re-introduced to ethanol, she says, noting that too many people still question ethanol’s reputation and others don’t understand its benefits.

“We’ve got to turn this thing around.” The research showed that consumers re-spond favorably when the ethanol indus-try explains that the renewable fuel burns cleaner and increases octane, benefitting the environment and engines, she says. En-vironmental facts speak the loudest and the ethanol industry needs to communicate them to the public. “Parents will change their purchasing habits when they hear that ethanol reduces the need for toxic gasoline additives that have been linked to cancer, smog and groundwater contamination. Mil-lennials will consider buying higher blends when they understand ethanol has cut 589 million metric tons of greenhouse gas emis-sions, and even greener options are on the way.

“That’s why we need to start evangeliz-ing this message, so that consumers from coast to coast know ethanol is moving for-ward,” Skor says. The ethanol industry’s membership motivates her to be a strong advocate for the industry, she says. “This an industry with heart and soul. I’m so excited to be working in this industry that is making a difference.”

Author: Ann BaileyAssociate Editor, Ethanol Producer Magazine

[email protected]


Tom Buis, outgoing CEO of Growth Energy, above and in the center, received the High Octane award from BBI International’s Mike and Tom Bryan. Lower left, Tom Bryan presents the Award of Excellence to Charles Abbas, director of yeast and renewables research at Archer Daniels Midland Co.

Tom Bryan, left, moderated a general session panel on marketplace access with Dave VanderGriend, Urban Air Initiative, Bob White, Renewable Fuels Association, and Mike O’Brien, Growth Energy.


EVENT

Biofuel producers of all stripes converged on Mil-waukee for the 32nd annual International Fuel Etha-nol Conference & Expo on Monday evening, June 20. Colocated with the National Advanced Biofuels Conference this year, the event drew nearly 2,000 producers and industry representatives from the ethanol, biodiesel and advanced biofuels sectors.

Nearly a third of the attendees represented biofuel production plants, coming to learn about the latest advancements in the industry. The attend-ees represented 83 percent of installed ethanol capacity and 75 percent of all U.S. plants, along with cellulosic ethanol and biodiesel producers. Ca-nadian ethanol producers were represented together with attendees from production facilities in Uruguay, Argentina, Brazil, Ireland, Sweden, Aus-tralia, India, China and Hungary, and attendees from a total of 25 coun-tries.

The FEW is the largest gathering of the biofuels industry each year, bringing together producers and representatives from 270 companies ex-hibiting in the expo hall. In addition to opening-day general sessions, the event featured four tracks of educational sessions covering production and operations, leadership and financial management, coproducts and product diversification and infrastructure and market development. The colocated advanced biofuel event had two tracks, one covering advanced and cellu-losic ethanol and the other, biodiesel and other advanced biofuels.

Monday events included a golf tournament and a preconference semi-nar, Ethanol 101, designed to give an overview of the industry and the pro-cess for professionals new to working in the sector. For those interested in getting a ground view, the FEW closed with an industry tour, this year hosted by United Ethanol, Milton, Wisconsin.

Producers meet in Milwaukee. By Susanne Retka Schill PHOTOS BY JAMES HARRIS

BIOFUEL All �ings

Emily Skor, left, gave her first keynote address as CEO of Growth Energy. Geoff Cooper, Renewable Fuels Association, above, and Anne Steckel, National Biodiesel Board, below, spoke on a general session panel addressing issues in the broader biofuels industry.


Four FEW and two advanced biofuels tracks presented a wide range of topics. Dennis Glass, D. Glass Associates, standing, spoke in a panel on regulations and the Food Safety Modernization Act along with Gary DeLong, Degart Global, left, Chris Bliley, Growth Energy, and Sue Retka Schill, moderator.

BBI International’s Tim Portz and John Nelson, above left, drew names for the producer cash give-aways. Above right, Ray Runde, United Wisconsin Grain Producers, center, checks out the Tracerco exhibit. Below, Mick Henderson, Commonwealth Agri-Energy, and Kris Plamann, SEH Design Build, chat at the Wednesday evening social held at the Harley-Davidson Museum.

icminc.com/epm

Thomas Jeffries, Xylome Corp., above, asks a question during the general session. BBI International’s Tom Portz and Syngenta’s Enogen business head Jack Bernens, below, cut the ribbon to officially open the show.


The U.S. EPA’s Tier 3 rules are not new—they were final-ized two years ago—but a com-pliance deadline is approaching that may catch a few ethanol producers unprepared. Come Jan. 1, ethanol must prove it meets the lower 10 parts per million (ppm) standard for sulfur content.

Sulfur levels are important for air quality measures, primarily because sulfur compounds kill the catalyst used to clean up automobile ex-haust. Tier 2 rules finalized in 2000 required 30 ppm limits on sulfur, Tier 3 has tightened it further. Regulators expect an immediate ben-efit from the cleaner fuel, and future benefits as the tighter emissions enable more fuel-effi-

cient engine designs that are incompatible with current emissions control systems.

It’s a more difficult rule for the oil refiners to meet, Kelly Davis, Renewable Fuels Asso-ciation director of regulatory affairs, explains. “They have to remove the sulfur during pro-cessing.” Pure ethanol is not a known source of sulfur, she adds. “We typically do not see sulfur above 10 ppm in our ethanol, but as part of the fuel supply chain, we have to prove that we comply, so it’s more of bureaucratic issue—paperwork.”

The industry actually has been meeting the standard for years. It first was adopted in California in 2003 and, due to the fungibility of the ethanol supply, the RFA has encour-aged all ethanol be under 10 ppm ever since. What’s different, Davis says, is that it is now an EPA rule with reporting requirements. “One of my concerns is if producers don’t have to

do anything except paperwork, it’s put off un-til the end,” she says.

While ethanol itself has little sulfur, plants can have low levels, Davis says. “Every ethanol plant will have a different base sulfur content, because we’re all using different sulfur chemis-tries in our process.” Most of the sulfur comes from the denaturant used to make sure the fuel ethanol won’t end up in a glass, in which case it should be taxed. Natural gasoline is the most economical denaturant, and thus the most commonly used. Also called wellhead gas, drip gas or casing head gas, it is a coproduct of natural gas production. Petroleum-based gasoline can also be used, but generally isn’t due to price.

There should not be a problem for the ethanol industry to meet the new 10 ppm stan-dard, Davis says. The industry has demonstrat-ed it can for more than a decade of compli-

PHOTO: SUSANNE RETKA SCHILL, BBI INTERNATIONAL

As the Tier 3 deadline approaches, it's important to understand the difference between EPA and ASTM treatments of the element. By Susanne Retka Schill

Sulfur Compounded


REGULATION

ance with the California regulation. Moreover, with sulfur levels in natural gasoline typically ranging between 50 to 120 ppm, using it in a 2 percent blend brings those levels down to well below the allowable maximum, assuming the ethanol is near zero.

Ethanol producers have two ways to demonstrate compliance, Davis says. “They can buy a sulfur analyzer and take on the regu-latory responsibility, certifying all their batch loads and making sure their sulfur analyses are valid. There’s also details like product transfer documents and annual EPA reporting.” Sulfur analyzers cost around $70,000, she says, and will require trained operators.

The second option is a calculation meth-od. “EPA is allowing us to certify that we are 10 ppm on a batch level basis, if we know our denatured amount and take a certification of analysis from the supplier and do the calcula-tion.” She expects most ethanol producers will use the calculation method, although the new requirement that the natural gasoline supplier be EPA certified may be an issue in some cases.

While the new rule takes effect Jan. 1, the system for reporting compliance to the EPA has not been revealed yet.

Beyond Tier 3 Meeting sulfur tolerances goes beyond

the new EPA Tier 3 rules, explains Monty McCoy, director of technology in the ethanol process group at U.S. Water Services. The Tier 3 rules are looking at reducing total sulfur in fuels with the goal of improving air emissions from gasoline engines. The new standards cover organic sulfur that is in the gasoline, he explains. “That is determined with a separate method and behaves in completely differ-ent ways than the sulfate that’s in the ethanol, which is inorganic. There are separate meth-ods and separate limits for that.”

The sulfate requirement to meet ASTM specifications has been around since the mid-2000s, and with producers occasionally run-ning into issues meeting those specifications, U.S. Water has been working to reduce the use of sulfur compounds in the process, McCoy says. “Sulfuric acid is used for pH control. There normally is some pH control to make the enzymes work well and to suppress bacte-rial growth.” The majority of sulfuric acid is used after fermentation. Controlling pH in the beer minimizes mineral deposits that drop out when the beer hits hot heat exchanger plates or in the beer column or in the evaporators. “Plants use sulfuric acid in that case to keep equipment operational by keeping those min-

eral deposits from forming.” U.S. Water intro-duced a unique technology several years ago to break up the anionic portion of the minerals before they form deposits, reducing sulfuric acid needs by 60 to 80 percent.

Sulfites are another issue. “Sulfites are really nasty from the stand-

point of final product sulfur,” McCoy says. Bisulfites are used for air emission compliance. “There’s a small amount of some aldehydes in fermentation gas that are classified as hazard-ous air pollutants by the EPA and tightly regu-lated,” he explains. Bisulfite compounds react with those aldehydes, enabling their removal in the scrubber system.

“The reason the chemistry is important is that sulfates, like those you get from sulfuric acid, are nonvolatile, so most of the sulfuric acid that gets used drops out in the coprod-uct,” McCoy says. Early on, the ethanol indus-try learned those levels need to be controlled closely to avoid problems when distillers are fed. “Sulfites are different because those are weak acids,” he continues, “essentially sulfur dioxide in water.” Sulfur dioxide is volatile

and will come off the beer and work its way through the distillation and dehydration sys-tem to end up in the ethanol. “That’s your real enemy,” McCoy says. A separation unit is avail-able that can remove sulfates, ideally from the 200 proof. U.S. Water has used it to treat dena-tured fuel in tanks and railcars.

There may be some changes coming with ASTM standards, McCoy says, and it’s important the ethanol industry gets involved, as some suggestions would make the sulfate specifications even tighter in higher blends. “I would like to see more people join,” he says. “It’s $75 a year and you can get in the queue to become an official voting member. Then these plants can start having some impact on the way these standards are written.” Right now, he adds, the members from the auto and oil industries heavily influence the process.

Author: Susanne Retka SchillManaging Editor, Ethanol Producer Magazine

[email protected]


Stories reveal a can-do spirit. By Susanne Retka Schill

CVEC Marks 20 Years Chippewa Valley Ethanol

Co. started up 20 years ago in April 1996, and, in June, the company marked the milestone with a noon meal, industry speakers and public tours. Anni-versaries are a time for celebrating and sto-rytelling.

Board member Dale Tolifson recalls the effort that went into raising the money to build the plant in the early 1990s. After the farm crisis of the 1980s, there wasn’t a whole lot of extra cash around, but more than 600 farmers invested, agreeing to de-liver corn as part of their membership in Chippewa Valley Agrafuels Cooperative. Area businessmen wanted to invest as well, but couldn’t because of the cooperative structure and requirement to deliver corn. So, a corn pool was created to accommo-date nonfarmers who could invest in that organization to technically qualify and de-liver their quota of corn. Employees have become owners as well through the corn pool.

That still wasn’t enough, recalls Jan Lundebrek, an ag lender at the time and an original board member. They got 10 or 11 area banks to participate in letters of cred-it, she says, “and as security, our farmers agreed to put up a nickel per bushel of corn delivered.” No small feat when that re-quired more than 600 farmers to agree, but that and the builder’s ownership stake put the project financing over the final hurdle and construction began on the 15 MMgy plant. The farmers’ nickel a bushel paid off that part of the debt within nine months, Lundebrek says.

Bill Lee recalls arriving at the construc-tion site a few days after he started working with Delta-T. “It was the first plant Delta-T built,” he says. “Bibb Swain had it about 90 percent perfect.” He went on to man-age CVEC for its first 15 years, describing his first job as being to figure out the other 10 percent. Mike Jerke succeeded Lee as manager, leaving two years ago to manage Guardian Energy Management. Chad Fri-ese, who was hired by Lee as commodity manager, is the current general manager.

Tolifson and Lundrebrek remember sit-ting in the offices of what is now CoBank, not long after starting up. The bankers told them, “You guys have to start working to-gether. You’re never going to make it, if you’re competing with each other.” CVEC got together with four other Minnesota farmer-owned ethanol producers—Corn Plus, DENCO, Heartland Corn Products and Al-Corn—and launched the Renew-able Products Marketing Group. It made it possible for single, farmer-owned plants to compete with the large commodity corpo-rations, Lee pointed out in his remarks at the anniversary celebration.

In 1998, CVEC took advantage of the flexibility in the Delta-T design to be-gin producing industrial alcohol under its Glacial Spirits subsidiary. Industrial alcohol is a narrow, niche market, David Thomp-son, longtime board member and current chairman, says. It wasn’t easy to get into, but it has brought good returns when fuel ethanol margins were tight. Potable alcohol was added to the product line, and CVEC became the producer of Shakers Vodka.

ANNIVERSARY


ANNIVERSARY

Shakers no longer exists, but today the company is producing organic vodka for Phillip’s Prairie Organic Spirits, which re-quires meeting organic certification require-ments for ingredients and handling. Friese describes the diversity as like having three separate processes: fuel ethanol, industrial and organic.

In 2002, the plant was expanded to 45 MMgy and when the boom years began in 2006, the board seriously considered dou-bling production by adding a second, ICM-

design plant alongside the existing facility. “We pulled the plug on that when we real-ized the industry had more capacity under construction that was online,” Thompson says, recalling that at the time, national pro-duction was about 6 billion gallons with an equal amount under construction. The board and management rightly figured once those new gallons came online, some facili-ties would get in trouble, although no one anticipated the economic downturn that multiplied the impact. CVEC joined other

partners in RPMG to form Guardian Ener-gy and buy the never-run Janesville, Minne-sota, plant out of the VeraSun bankruptcy proceedings. Later, they would participate in two other Guardian Energy investments in ethanol plants in Hankinson, North Da-kota, and Lima, Ohio. Some years, the in-vestments in RPMG, Guardian Energy and product diversification have contributed more to the bottom line for the company than CVEC’s fuel ethanol production, the board members will tell you. All told, the

CELEBRATION TALES: CVEC board chairman David Thompson receives a plaque from American Coalition for Ethanol executive vice president Brian Jennings. General Manager Chad Friese visits with association leaders. Former general managers Bill Lee and Mike Jerke catch up. Original board member Dale Tolifson and Chairman Thompson share stories of the early years. Jan Lundebrek, another original board member, visits with Renewable Fuels Association president and CEO Bob Dinneen. PHOTOS: TIMOTHY BAKKEN, CVEC

TEAM PURPLE: CVEC employees were easy to spot at the anniversary celebration in their purple shirts. Together, they keep the 20-year-old plant, seen in back, operating smoothly. PHOTO: TIMOTHY BAKKEN

company has seen 19 profitable years out of 20.

Over the years, the company has been among the leaders in the industry, lobbying in the Minnesota legislature to get one of the first state mandates, lobbying in Wash-ington for the renewable fuel standards, being among the first plants to offer direct E85 sales from the plant and among the first adopters of corn oil extraction. Not all innovations were successful in the long run, however. The company invested in Front-line BioEnergy LLC and built a gasification unit to power the plant from biomass. It

made sense when natural gas prices were high, but sits idle since natural gas prices plummeted.

Capital investments continue. A year ago more distillation capacity was added. This past winter a new boiler was installed and this summer a new water cooling sys-tem is under construction. “We want to keep this plant as new and up-to-date as possible,” Tolifson says.

“We’re a very active board,” Thomp-son says. “We’ve had other industry people tell us we’re among the most active, but we try not to micromanage.” The board’s goal

has been to think long term and look for ways to grow the company, while paying out as much as possible in dividends. “Never be complacent,” he says. “No matter how good things are going, we’re always looking for the next thing.” Another important fac-tor is the right attitude. “What makes the company successful is that we have a lot of people saying we’ll make it work, instead of people who say it won’t work.”

Author: Susanne Retka Schill Managing Editor, Ethanol Producer Magazine

[email protected]

ROIFor every

$1 invested,original investors

received$11.70

Efficiency Improvements

Gal/bu 2.57 2.85Btu/gal 35,000 27,000

1996 2016

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ANNIVERSARY


The signs are everywhere highlighting our product and how it can find its true value as an octane enhancer while lowering carbon emissions.

Using our research at the Urban Air Initiative and in conjunction with our industry trade groups, we have been banging on the U.S. EPA's door for years for recognition that octane matters. It matters in terms of emissions, performance, fuel economy and cost. And now, with a global emphasis on lowering CO2 and greenhouse gases, octane matters even more when it comes to reducing carbon. This is not an incidental value, or a throw-in to ethanol's portfolio. It needs to be a core component of our value proposition going forward.

The auto industry is facing a double-edged sword in meeting tough new mileage and carbon standards. But, the good news is that help could be on the way in the form of higher ethanol blends.

Higher octane fuels allow automakers to make small-bore, high-compression engines that can achieve impressive efficiency gains. The challenge is to do so while also reducing carbon tailpipe emissions. If that octane comes from the oil barrel, there will be problems.

On the other hand, ethanol blends in the 25 to 30 percent range can provide a premium fuel with a significantly lower carbon footprint and reduced emissions. A 92 to 94 octane at the pump opens a world of possibilities; achieving that level should be among our industry’s top priorities. A recent U.S. DOE report indicated more than 80 percent of new cars by 2020 will be turbocharged to allow for downsizing while maintaining performance and emissions. Again, that only works with a high-octane, low-carbon fuel.

OK, so let’s go make high-octane fuel, right? Well, it’s not quite that simple, although it should be. As usual, the shadow falling over us is cast by our friends at the EPA. The EPA’s regulatory roadblocks such as the RVP restriction, MOVES model and certification fuels, to name just a few, are making it difficult for higher ethanol blends to enter the market. Plus, what makes no sense is the failure of the EPA to consider octane and ethanol in order to meet mileage and carbon reduction rules.

Before signing onto the mileage and carbon changes, the auto industry insisted that the EPA conduct a midcourse evaluation (MTE)

for the 2022-’25 period to reassess the viability of the targets. That process has begun, and what is frustrating to us is that EPA is insisting that the evaluation be limited to vehicle technologies and not include the fuel that powers these engines. The EPA assumes a world of continued 85 and 87 octane, when the auto industry has been pleading for higher octane fuels for years. Our work at Urban Air, in regular consultation with the auto industry, confirms we can achieve huge gains in mileage while reducing carbon through higher ethanol blends. The EPA needs to make that part of the discussion. What purpose is served by putting blinders on to a practical solution that is readily available?

Studies by Ford and others have determined that E30 high-octane fuel would allow increased fuel efficiency and reduced tailpipe carbon emissions by 7 percent each. This is an immediately available and easily adopted technology requiring little, if any, change in consumer driving and fueling habits with no cost to taxpayers.

In addition, numerous USDA studies confirm that high-yield corn acres sequester substantially more carbon than previously believed. New data suggests that corn ethanol’s carbon footprint is 50 to 80 percent smaller than gasoline and shrinking, while gasoline's carbon footprint is growing.

For that reason, I am very supportive of a new initiative called the High Octane Low Carbon Alliance, which is an effort initiated by UAI and includes organizations such as ICM, RFA, National Corn, CFDC, Fuel Freedom Foundation and others to work with Tom Daschle to ensure we are part of those discussions.

The icing on the cake would be, after years of requesting, the EPA updates its lifecycle analysis of corn ethanol, accurately showing our ability to significantly reduce our fuel’s carbon intensity.

Author: David VanderGriendCEO, ICM Inc., President, Urban Air Initiative

[email protected]

Repeat After Me: High Octane, Low Carbon

CLEARING THE AIR

By Dave VanderGriend


It’s a big world out there and ethanol is primed to explore it—finding new markets through competitive pricing, high octane and low-carbon advantages that no other fuel on the planet today can match. The proliferation of international ethanol trade during the past decade has been impressive to watch. The current global market for ethanol stands at 30 billion gallons, with 1.2 billion gallons trading hands overseas. There is no denying the globalization of ethanol that is taking place and the impact it has on U.S. production margins. The U.S. has been a net exporter of ethanol since 2010. With 15 billion gallons of annualized production and 14.2 billion gallons of domestic demand, it’s clear that growing export markets should be a primary focus for our industry.

Mandated foreign markets short on domestic production are allowing for a ratable flow. However, growth opportunities for our industry lie where economics, environment and relationships are the deciding factors. In nonmandated markets, price and octane are the primary selling points for U.S. ethanol. Ethanol is an octane booster for gasoline as well an attractive option in programs to reduce greenhouse gas emissions.

Although the U.S. continues to be the world’s low-cost ethanol producer, the massive sell off in crude oil prices has reduced year-over-year flows. Even in the midst of oil’s deepest downturn in decades, ethanol cargoes continue to be booked, highlighting the value placed on ethanol’s octane. Roughly 40 million gallons per month are ratably exported to mandated markets, primarily Canada and the Philippines. Nonratable, mandated countries that offer the greatest potential for U.S. exports include Brazil, India and China.

Brazil has one of the most progressive ethanol mandates of any nation and is the second-largest ethanol producer in the world and, thus, is uniquely positioned to influence global ethanol trade. Brazil is also the largest sugar producer in the world. Expectations for a global deficit have spiked sugar prices to a four-year high, resulting in sugarcane mills shifting production to sugar in an attempt to capture higher earnings. This shift in the supply mix is expected to limit or reduce ethanol production for the current crushing season. This impending

vacuum offers an opportunity for the U.S. ethanol industry to fill Brazil’s shortfall, as well as displace a portion of Brazil’s market share abroad—either of which would dynamically support U.S. ethanol fundamentals and margin.

One of the world’s fastest growing economies, India is set to overtake Japan as the world’s third-biggest consumer of oil this year with an annual economic growth of 7 to 8 percent. The government is investing $14 billion in 2016-’17 to expand and improve the country’s road network and infrastructure. Sales of passenger cars and utility vehicles are expected to grow by as much as 12 percent in the next fiscal year. Recent indications from India’s government point to increasing the blend rate from 5 to 10 percent in coming years and actually enforcing it, which historically has not been done. India’s domestic production currently is enough to meet beverage demand and a portion of the fuel and chemical markets as well. While India does not allow imports of fuel ethanol, U.S. ethanol fills the deficit in chemical usage. If India moves to a 10 percent fuel mandate, the U.S. stands ready to help fill any resulting ethanol shortfall.

In late 2015, China rapidly emerged as one of the largest ethanol U.S. export markets. Although volumes were substantial through April, it appears China will not be a ratable buyer, primarily driven by corn policy. Instead of buying corn at a high fixed price for its state reserves, the government announced it will allow markets to set prices for the grain and subsidize farmers directly. This move is set to close the import arbitrage from the U.S. in the short term. However, if the government intends to enforce its current E10 mandate, or expand it nationwide, China will likely need to import as it is opposed to the depletion of corn stockpiles. Domestic employment and social stability are the primary policy drivers for China’s government, which frames the party’s negative view of imports. Nonetheless, air pollution mitigation is increasingly becoming a strong driver to expanding ethanol blending.

Author: Ryan Strickland Commercial Manager, Alliance Marketing, Eco-Energy

[email protected] 615-786-0783

Globalization of Ethanol Impacts US Industry

BUSINESS MATTERS

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2016 August Ethanol Producer Magazine