The ethanol industry has weathered a stormy 2009 and is looking forward to a little more sunshine in 2010. Analyzing leading market trends today may help producers improve their bottom line next year.
Lower Your Carbon Footprint
All ethanol production is no longer created equal. Several states have rules on the books to require a lower carbon fuel standard (LCFS) than the national renewable fuels standard. California going from E5.7 to E10 on Jan. 1, represents a market of 1.2 billion gallons of ethanol that requires a lower carbon fuel standard than other states.
California won’t be alone in setting tougher limits, and like so many trends in emissions and sustainable business practices, what starts in California inevitably washes east to the rest of us. Nor is the U.S. alone; Canada is seeing similar moves with British Columbia working on lower carbon fuel legislation with updates expected in the next few months. All this indicates the door is wide open to new markets for plants that can produce to a more carbon efficient standard.
To move with that market, in 2010 we’ll see more plants:
>Move from distillers dried grains to wet distillers grains (saving one-third of the cost)
>Replace natural gas with renewable biomass. (Biomass is carbon neutral—natural gas is not.)
Overall, this will produce greater energy per Btu consumed, and result in a reduced carbon footprint.
Farmer-owned Siouxland Energy and Livestock Cooperative in Sioux Center, Iowa, is a case in point. What started out as a 15 MMgy plant grew, and now produces at 70 MMgy. The plant never included a dryer, which from a carbon footprint position, means sustainable plant production that will see value either from qualifying for more renewable identification numbers (RINs) or selling at a premium into LCFS markets, or perhaps both.
“A lot of Midwestern farmers resorted to drying beans last harvest because it was so wet in the Midwest,” says Bernie Punt, general manager of SELC. To take grain moisture down for a dry distillery, Midwest farmers saw costs hover around 70 cents per bushel. Punt’s facility has a bunker about the size of three football fields and processes corn from local farmers at high moisture, which saves almost one-third the processing cost, he says.
Cleaner Fuel Facilities Cash In
Destilmex S.A. de C.V., a Mexican ethanol facility owned and operated by Zucarmex S.A. de C.V., in Navolato, Sinaloa, is among the trend-setting businesses positioning themselves to be clean fuel facilities.
Normal fuel facilities get one RIN per gallon of ethanol. But reducing a company’s dependence on fossil fuels, will facilitate generating more than one RIN per gallon of ethanol, thanks to its “clean fuel facility” status with the EPA. To achieve this standard, last fall Destilmex tore out its fossil fuel boiler and put in a fluid bed boiler.
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Ethanol Producer Magazine
Doug Haugh