Building the Next Generation

With the advent of cellulosic ethanol, design/build teams are gearing up for the commercialization of the next generation of biofuels, and at the same time are continuing to be involved in corn-based ethanol, where they built their reputations. EPM talked with some of the big names in the industry to get their view on this challenging transitional period.
By Bryan Sims | July 08, 2008
The ethanol industry seems to have reached a plateau after the heady days of breakneck growth in 2006 and 2007. According to data compiled by EPM, the last corn-based ethanol plant to break ground was Bridgeport Ethanol, a 50 MMgy plant located in Bridgeport, Neb. Since then, not one corn-based ethanol plant has broken ground for construction.

That doesn't mean the industry is at a standstill. Plants that were under construction are coming on line and others, mostly featuring cellulosic feedstocks, are in the planning and development stages. Some have broken ground on pilot facilities. However, until cellulosic ethanol can sucessfully be produced commercially, the United States will rely on corn to produce ethanol. According to the USDA, corn-based ethanol is expected to be the primary biofuel in the United States for the next several years, noting that corn use for ethanol was 2.1 billion bushels in 2006-'07, the equivalent of 5.7 billion gallons of ethanol. This marketing year, an estimated 3.2 billion bushels of corn will be used to produce approximately 8.6 billion gallons of ethanol. In 2008-'09, expected plant capacities suggest that 4.1 billion bushels of corn will be used for ethanol production. The USDA says U.S. farmers planted about 90 million acres of corn this spring, down less than 4 percent from 2007.

Volatile market conditions continue to squeeze operating margins for corn-based ethanol plants. Two of the predominant issues that producers and would-be producers face are high corn prices and commercial banks are not as eager to lend to traditional corn-based plants as they were before. As a result, the nation's process technology providers and builders are approaching the industry with a sundry of business strategies to expedite the leap to cellulosic ethanol production.

Those strategies got a boost from the Energy Independence & Security Act of 2007, which was enacted into law in December. The new RFS requires that 36 billion gallons of ethanol be consumed by 2022, and that 21 billion gallons of the overall mandate be advanced biofuels. Of those 21 billion gallons of advanced biofuels, 16 billion gallons must be cellulosic biofuels. Additionally, 6 billion gallons of cellulosic biofuels must enter the market for consumption by next year. To meet the mandate, 12 cellulosic ethanol facilities each producing 50 MMgy would have to be under construction now and be operational next year. One can only ponder whether this is feasible.

With that in mind, the presumption that some of the industry's prominent process technology providers and ethanol constructors could be wrapping up corn-based ethanol projects in preparation for the transition to cellulosic ethanol production is understandable. However, Granite Falls, Minn.-based Fagen Inc., one of the country's leading ethanol plant engineering, design and construction firms, doesn't see the corn-based ethanol market fading away. Instead, Fagen is shifting its focus by being more selective of the projects it engages in while still servicing its corn-based clients.

"We're not necessarily wrapping up the corn grain-based ethanol projects," says Larry Murdoch, regional manager for Fagen's southeast operations in Greenville, S.C. Murdoch is charged with finding new technologies that provide engineering and construction opportunities for the company. "We're continuing design and construction at a greatly reduced pace, obviously, and we plan to continue at a certain level whether it's new plants or improvements to existing plants. We plan to keep a strong base of knowledge and resources to serve the current industry, but at the same time have some people to develop the know-how and expertise in the cellulosic area," he says.

Process technology firms such as ICM Inc. are also not prepared to turn their backs on the corn-based ethanol market. The Colwich, Kan.-based company remains adamant that the corn-based ethanol industry will continue to serve as a viable base for achieving a successful transition into cellulosic ethanol. For example, ICM is engaged in the development of novel production methods such as fractionation technologies. Through combined enzymatic and fermentation processes, the company is refining and tailoring the technology to meet the needs of existing corn-to-ethanol producers looking to curb operating costs, enhance overall production and to produce value-added commodities, according to Doug Rivers, director of research and development for ICM. "We believe there is more value in a kernel of corn from an ethanol perspective [as well as] the energy and cellulosic side of the equation," Rivers tells EPM. Founded in 1995, ICM has designed and engineered more than 75 dry-mill ethanol plants in the United States and Canada. There are 25 plants currently under construction which are using ICM's ethanol process technology. "We see ourselves as a technology and services provider," Rivers says. "One of the things that is incumbent upon us is to be out there beating the bushes looking for new technologies that have the potential to convert natural resources, whatever they might be, into value-added products," Rivers says, adding that ICM's involvement in technologies like this in no way makes their current corn-based ethanol customers obsolete.

Fagen takes a similar stance. Together, the two have assisted in the development and construction of more than 150 ethanol plants across the country. Like ICM, Fagen is mindful of grain-based ethanol's importance in the transition to cellulosic ethanol. "We are positive in terms of not only the grain-to-ethanol industry continuing to be a viable and critical industry for our country, but also of the cellulosic industry that's emerging," Murdoch says. As grain-to-ethanol in engineering and construction projects decrease, Fagen is redeploying personnel and efforts into other industries it has served in the past as well as developing relationships with some of the cellulosic technology companies to be prepared to serve that industry in a major way when the commercial-scale plants come on line, he says.

Forward-Thinking Technology in Action
Because cellulosic ethanol is essentially in the embryonic state, companies such as ICM are refining their technologies to better utilize nonfood-based cellulosic feedstocks for conversion to cellulosic ethanol. Such optimization efforts would fit existing corn-based ethanol producers looking to explore add-on on-site technologies to convert what would otherwise be disposed of into a valued revenue stream. "There are great opportunities for these cellulosic plants to be colocated and integrated with existing corn plants, which we believe are going to provide some nice synergies and efficiencies of operations between the two," Rivers says.

In January, ICM was one of four companies to receive funding from the U.S. DOE to develop a small-scale cellulosic ethanol plant. Preliminary plans call for the pilot-scale cellulosic facility to be built adjacent to LifeLine Foods LLC, a 50 MMgy corn-based ethanol facility in St. Joseph, Mo. The $30 million project calls for the utilization of various feedstocks including corn fiber, switchgrass, corn stover and sorghum. The intent is to integrate biochemical processing pathways and to demonstrate viable energy recycling methods within a

ICM is working with a team of companies and research institutions to develop cellulosic ethanol projects, including Ceres Inc., Edenspace Systems Corp., South Dakota State University, AGCO Corp., the National Renewable Energy Laboratory, the National Center for Agricultural Utilization Research, Novosymes, VeraSun Energy Corp. and SunEthanol Inc. In February, Junction City, Kan.-based Edenspace announced it had joined the team as a provider of feedstocks. Edenspace's primary role will be to provide corn, sorghum and switchgrass bioengineered to reduce the post-harvest costs of producing cellulosic ethanol. In May, ICM tapped Thousand Oaks, Calif.-based Ceres to sow thousands of acres of switchgrass, high-biomass sorghum and other energy crops over the next three years in the St. Joseph area.

In addition to building its own pilot-scale cellulosic facility, ICM has formed an alliance to design and build Coskata Inc.'s first commercial-scale ethanol plant, which will use various biomass and waste produces as feedstocks. The Coskata plant, which has not been sited yet, will produce between 50 MMgy and 100 MMgy, using Coskata's biological fermentation technology, which can convert most organic matter into fuel at a cost of about $1 per gallon (see "Anaerobic Organisms Key to Coskata's Rapid Rise" in the July 2008 EPM).

"We believe it's important to stay on top of all these areas so that we're able to contribute to the success whichever way things go," Rivers says. "There are a number of chemicals out there that the DOE has identified that are important in the scheme of being produced by renewable resources that are today produced from petroleum chemicals."

Rivers adds that ICM is collaborating with companies looking to develop unique microbial strains that are capable of enhancing the fermentation process. One strategy is to look at organisms that can ferment both C5 (hemicellulose) and C6 (glucose) sugars simultaneously in the fermentation process. Organisms used today can only break down glucose sugars, Rivers says. "We're working to develop strains that will do both forms of sugar, thus we'll be able to get more alcohol out of a given weight unit than we otherwise would be able to," he says.

Taking that a step further, ICM is partnering with companies to develop a consolidated bioprocessing organism where microbes would be able to degrade both hemicellulose and glucose sugars and simultaneously ferment alcohol. "It would be a complete processing package in and of itself," Rivers says. "That's sort of the Holy Grail in terms of being able to convert cellulosic materials to ethanol and/or other value-added fuels and chemicals."

Scaling Up to Commercial
Although design/build teams such as ICM and Fagen have their footprints forever stamped into the corn-based ethanol industry, others have contributed and are moving on to make a significant impact in the cellulosic space.

One of those companies actively involved in cellulosic and other nonfood-based related ethanol production is Merrick & Co. The Aurora, Colo.-based engineering, design and construction company has been tapped to build Range Fuels' 100 MMgy cellulosic ethanol facility near Soperton, Ga. Once operational, the facility would be the first commercial-scale cellulosic ethanol plant of its kind in the nation. The plant will use Georgia pine collected from various forest products recycling centers in the region. Range Fuels and several other companies are in the process of constructing commercial cellulosic ethanol plants across the country.

Merrick also owns and operates a waste beer collection, recycling and processing plant colocated with a Coors brewery in Golden, Colo. The 3 MMgy facility processes off-spec beer from the brewery and converts it into fuel-grade ethanol.

These are just a smattering of projects the company is involved in, in the renewable energy and fuels space, according to Steve Wagner, vice president of energy process systems for Merrick. Wagner agrees that the corn-based ethanol industry has hit a construction plateau. He believes that minor optimization efforts to the operating equipment of corn ethanol plants are short-term solutions until the gap between corn and cellulosic ethanol is fully bridged. "There will continue to be some capacity expansions and that kind of thing," Wagner says. "It all depends on the debt structure of a particular project. There are some synergies to processing the ethanol that come off the cellulosic process. You've got the back end of your plant for making fuel-grade ethanol from the beer well backwards through distillation and dehydration. That would mean that you'd really unload the evaporators and of course you wouldn't have the dryers at all."

According to Murdoch, this is a feasible step toward cellulosic ethanol production since many of the corn-based ethanol processing methods in use today are compatible for cellulosic. "The cellulosic process has some distinct differences and it has some unit operations that are similar to the grain-to-ethanol projects," he says. "Certainly, a lot of the know-how, design and equipment used are adaptable from the corn-based to the cellulosic, although there are a lot of new equipment and changes too. As far as being able to utilize certain materials and equipment that will be possible."

Considering Cost
While cellulosic ethanol is in its demonstration state and scientists, universities and other research entities continue to assess its commercial viability; the cost at which these technologies can be deployed presents a challenge.

The ability to attract funding to develop innovative cellulosic technologies and scale that up to commercial size won't be easy. "It's not that there aren't projects out there; it's not that there aren't feedstocks available to go into these plants," Rivers says. "It's that the financial institutions got themselves in a bind to the point where they're ultra conservative."

Financiers and others involved in the industry believe that there is also limited funding available because of the gold rush mentality that permeated the ethanol industry in the past few years. And, it's always been difficult to obtain loans for technologies that are complex and unproven. Unless an ethanol project can differentiate itself from the traditional "greenfield" corn ethanol plants, lenders aren't apt to consider looking at it. Even then, differentiation doesn't come without a cost. "What we've found is that lenders are
no longer looking for good deals, they're looking for great deals," says Alan Goodnight, director of marketing for ICM.

Lenders are more selective to whom they provide funding for in the cellulosic ethanol industry and in other applicable technologies intended to optimize existing corn-based technology, according to Mark Baratta, vice president and manager of First National Bank of Omaha's renewable fuels group.

"As ethanol plants get more complex in their design and technology more capital is required and it's hard to come by today," he says. "The build-out of the corn-ethanol business is nearing its maturity. The move toward cellulosic won't necessarily make corn-based ethanol plants obsolete, and they will potentially have the opportunity to re-engineer themselves or retrofit to be cellulosic compatible."

The journey to transition from corn-based to cellulosic ethanol won't come easy, or cheap. However, design/build teams assert that progress would not be possible without the establishment of the corn-based ethanol industry as a solid foundation to build from. "It's hard to see past any of these additional products without corn-based ethanol as the starting point," Goodnight says.

Bryan Sims is an Ethanol Producer Magazine staff writer. Reach him at or (701) 738-4962.