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July 2014

Biofuels Part Three - Biomass and Future Fuels

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How biomass is fueling renewable energy integration in the U.S.

As we discussed in our earlier series, innovative companies and supportive policies are essential components of the Midwest’s success in the biofuels market.

Yet these components wouldn't exist if it weren’t for this third essential ingredient: biomass.

While it may not be well recognized by consumers, the cleantech industry sees tremendous growth potential for biomass-to-bioenergy processes already taking root in the United States.

So, What is Biomass?

In short, biomass is naturally occurring material, such as grass clippings, that can be converted into bioenergy (think fuel or heat).

To spell it out further, the United Nations Foundation looks at three key methods for converting to biomass, including:

1) Combustion or gasification: The breakdown of biomass through heat for the purpose of cooking, heating, electric, mechanical, or chemical processes. An example of this is using a wood-burning stove for cooking and heating.

2) Biochemical conversion: The natural anaerobic digestion of organic matter by microorganisms, such as using composted leaves and food in gardens.

3) Chemical conversion: The use of chemical reactions to convert oils and plant products into a fuel or chemical. An example of this is – you guessed it – using a vegetable base to produce biofuels.

What about Biofuels?

According to Renewable Energy World, biofuels include various types of liquid fuels made from biomass, with the two most common being: biodiesel and ethanol.

1) Biodiesel is made by combining a triglyceride – usually vegetable oil, animal fat, or used cooking greases – with methanol. It can then be blended with petroleum diesel to reduce emissions in approved diesel engines.

According to a recent the Agricultural Marketing Resource Center report, biodiesel is the one major domestically produced biofuel currently available in large commercial volumes.

2) Ethanol, on the other hand, is made from high-carb biomasses, like starches or sugars found in corn, and can be blended with vehicle fuel at various ratios (such as “E85”).

In the Midwest, corn and corn byproducts are major feedstocks for the ethanol process. For instance, roughly 29.6 percent of all corn grown in the U.S. is used for fuel and ethanol production, according to the 2014 World of Corn report.

The Complete Winning Recipe

As traditional agricultural products (meat and crops) become less lucrative and the demand for cheap energy rises, biofuel advancement is uniquely situated to benefit from farmers, policymakers, and researchers.

With these three unique ingredients – innovative biofuel companies, state-wide government policies and abundant biomass resources – the Midwest can help steer the future of renewable energy’s integration into the U.S. energy market.

Produced by: Cassandra Oliveira

Biofuels Part Two - Fertile Energy Policies

Biofuels Part Two - Fertile Energy Policies

Biofuels Producers Find Fertile Policies Across the Great Plaines.

In terms of production capacity (MMgy), a whopping eight of the 12 largest biodiesel plants call the Midwest home, according to Biodiesel Magazine.

While impressive, this is nothing new thanks to decades of painstaking innovation in the region. As attorney Todd Taylor explains, the Midwest was the original hub for biofuel developments, not a new powerhouse, and has been absorbing the industry’s many peaks and valleys since the ‘80’s.

For part two of our biofuels series, we looked at factors effecting the mainstream success of biodiesel and how government policies are driving further adoption.

Step One: Implement Renewable Fuel Standards
Technology is a drive, but still relies heavily on national and local policy in the U.S.

The best example is the Renewable Fuel Standard (RFS) program, established and enforced by the EPA, which has enacted a coast-to-coast demand for biofuels.

Initiated in 2005, and extended in 2007, this measure set legal minimums of renewable fuels to be blended into gasoline, increasing the biofuel volume from nine billion gallons in 2008 to 36 billion gallons in 2022.

To explore this further, Dr. Darrel Good, Professor Emeritus of agricultural economics at the University of Illinois Urbana-Champaign, recently remarked:

“For the most part biodiesel production has been driven by the RFS mandate... As we move forward certainly the mandate will be an important component of whether or not biodiesel production expands.”

In response to the RFS program, many state-level governments offered – and continue to extend – incentives to draw production within their boarders, reaping the economic and environmental benefits of these renewable fuels.

Step Two: Add State-Wide Incentives
Many prairie states have recently extended legislation and, in some cases, incentive funds to promote enhanced biodiesel production.

The measure passed by Iowa legislators, for example, provides a refundable credit for the first 25 million gallons of biodiesel produced in any single plant now through 2017.

Missouri, meanwhile, has a Biodiesel Producer Incentive Fund that grants up to $6 million annually to biodiesel production facilities that are at least 51 percent Missouri owned or use roughly 80 percent of feedstocks originating in the state.

Additionally, Illinois recently extended its pro-biofuels measure, providing 100 percent tax credits for biodiesel blends greater than B10. A measure enacted in 2003, it has popularized the unique B11 blend and, as REG President and CEO Daniel J. Oh explains:"

“Since Illinois’s inception of the B11 blending credits…more biodiesel has been blended in Illinois annually than in any other state…by extending the [measure], the Illinois legislature showcases its commitment to more than 1,500 green collar jobs in the state.”

Step Three: Mix with Abundant Resources
The region’s competitive policy-making, coupled with rich resources, is an essential component of Midwest biofuel production. How? By giving companies more stable and predictable regulations, and incentives to keep green jobs rooted back home.

What goes without saying, however, is none of these innovations or policies would exist if it weren’t for the abundant biomass throughout the Midwest.

Come back in July for our final look at the future of biofuels and the potential energy packed into these fertile plaines.

Produced by: Cassandra Oliveira

Biofuels Part One - Companies to Watch

Biofuel Companies to Watch

Bioenergy Companies Worth Watching.

The combination of viable biomass developments, innovative technology and supportive policy may finally be sewing the seeds for successful bioenergy to take root in the Midwest.

Biofuel production, the process of making biodiesel or ethanol from plant products, is a particular form of bioenergy that is steadily advancing across the plains.

In the first of our three-part series, we’ll explore three “Companies to Watch” who may have winning recipes for producing cost-effective, scalable renewable fuels.

Green Plains Renewable Energy (GPRE)
Headquartered in Omaha, Nebraska, the aptly named Green Plains Renewable Energy (Nasdaq:GPRE) is becoming an ethanol powerhouse. According to the company’s website, GPRE produces a billion gallons of ethanol per year across its 12 plants and boasted a record first quarter in 2014.

Aside from its leadership in the ethanol industry, GPRE also seems to be adopting more more vertical integration and processing of viable co-products.

The company’s subsidiary, Green Plains Grain, for instance, offers bulk grain storage, while their recent acquisition of BlendStar gives Green Plains specialized terminal blending and storage capabilities for renewable fuels.

Renewable Energy Group (REG)
While Renewable Energy Group (NASDAQ: REGI) calls Ames, Iowa home, its offices and biorefinaries are scattered across the country.

According to the corporate website, REG focuses on two key areas:
1) converting natural fats, oils and greases into biofuels and
2) converting diverse feedstocks into chemicals

Although REG’s products range from fuel oil to glycerin, its flagship product is the REG-9000 biodiesel. Amid its diverse product line, REG reported a recent corporate milestone: producing the company's billionth gallon of biodiesel.

If there wasn't more incentive to take note, MSN Money recently cited REG as an attractive investment due to its “bullish 306% year-over-year growth projection.”

From polymers to jet fuel, Madison, Wisconsin-based Virent has become an expert in converting various bio-based feedstocks into products for numerous applications.

Virent’s ability to produce sustainable, cost-competitive alternatives to petroleum-based products has, in turn, lured influential partnerships across corporate and government agencies. Recently adding impressive names like Coca-Cola, Cargill and the U.S. Navy (to name a few) to their corporate roster.

Along with its high-power partnerships, the company prides itself on being one of the few producing “drop-in” replacements, meaning bio-based Virent products can be used in the existing processing, storage and transportation infrastructure.

Want to hear more?

Stay tuned next month for Part Two of our series, where we'll explore how policy, leadership and innovation shape next generation biofuels in America’s bread basket.

Produced by: Cassandra Oliveira