Ripe for ethanol innovations: Midlands research is boosting value of corn distillation process

Source: By Russell Hubbard / World-Herald staff writer • Posted: Friday, August 8, 2014

BLAIR, Neb. — It starts out as freeze-dried fungus or bacteria from Denmark and ends up being one of the key ingredients in what some are calling Nebraska’s and Iowa’s shot at the big time when it comes to scientific innovation and economic development.

It is all about the production of enzymes at the Novozymes plant in Blair. The micro-organisms from Denmark wind up being mixed with water, oxygen and other additives in a broth to stimulate production of beneficial enzymes, or molecules that can accelerate biological processes.

In this case, that biological process is breaking down corn kernels into starch, then sugar, then ethanol, of which Nebraska is the second-largest U.S. producer, following Iowa. Enzymes from companies such as Novozymes — shipped to ethanol plants as a liquid in tanker trucks — allow ethanol producers to unlock more energy from each corn kernel, producing 5 percent more of the motor fuel while using 8 percent less energy.

The story of Novozymes is one that people in the Nebraska and Iowa biofuels industries say can be repeated on a regular basis. The Midwest’s climate and soil — and ensuing cascade of corn every year — amounts to far more than ethanol as a gasoline additive, they say.

And the quest to unlock every trace of energy from corn is generating unprecedented scientific inquiry and attracting prodigious capital investment, and has the potential of turning the nation’s Corn Belt into far more than the producer of sweetener and cattle feed.

“Our opportunities in the Midwest are far greater than the average American realizes,” said Delayne Johnson, chief executive of Iowa ethanol producer Quad County Corn Processors, which last month became the first of Iowa’s 42 plants to make the motor fuel out of corn kernel fiber. “We operate biorefineries, not just ethanol plants, and there is a lot more going on than people know about.”

Novozymes, publicly traded in Denmark, started full production in Blair in 2012 and now employs 114 people. The $200 million enzyme production center looks like a cross between a spotless candy kitchen and a brewery, but populated by white-coated professionals with doctorates in chemistry and biology.

“What we have here is basically a small-scale bio-based economy right here in Blair, Nebraska,” said Peter Grier, the plant’s general manager.

About 120 miles northeast of Omaha, Quad County is focused on cellulosic ethanol, or ethanol made from waste materials such as wood chips, straw grass or corn fibers left over from traditional ethanol production. There is starch in all of that stuff, and people like Johnson are obsessed with exploiting it.

The breakthrough involved tweaking the additives and processing of the corn. Johnson said the company now gets 6 percent more ethanol per corn bushel, and that the star engineer in charge is working on another development that might yield another 5 percent. The new processes involve no new net energy expenditure, Johnson said.

Johnson said Quad County, based in Galva, population 440, began working on the project in 2008. The company started in 2000 with about 420 area farmers as investors and now employs 40 people.

“We use every ounce of corn,” he said. “And it has meant the world to this town. We were one of the few small Iowa towns with a population increase from 2000; we went up 12 percent, and a lot of that has to do with us.”

Cellulosic ethanol has been talked about for decades and never has been commercially successful. Federal energy rules include requirements for billions of gallons of cellulosic fuels to be blended into the nation’s gasoline supply. But actual production to date has been near zero.

“For years, we’ve heard companies claim they will soon produce large quantities of cellulosic fuel, but these rosy forecasts haven’t ever come true,” said Carlton Carroll, a spokesman for the American Petroleum Institute. “Cellulosic biofuel still isn’t being produced on a commercial scale, and companies have never produced anything close to the amount EPA mandates that refiners use each year.”

The petroleum industry is rankled by cellulosic because refineries could have been forced into buying credits from the government to get exemptions for their non-use of the non-existent fuel. As it stands, EPA has waived the cellulosic requirements in recognition of lack of production.

That all might be about to change. Almost $1 billion worth of cellulosic plant investment is due to be coming to full production very soon in the Midwest:

» In Nevada, Iowa, DuPont is investing $200 million to make ethanol out of corn leaves and stalks. Capacity is pegged at 30 million gallons a year and operations are slated to begin late in the year.

» In Hugoton, Kansas, Spain-based Abengoa Bioenergy spent $500 million on a plant to make ethanol from corn leftovers, wheat straw, milo stubble and prairie grasses. Capacity is 25 million gallons a year, along with 21 megawatts of electricity.

» POET-DSM, a partnership between U.S. ethanol maker POET LLC and Dutch food and chemicals group DSM, has invested $250 million in a 25 million-gallon plant in Emmetsburg, Iowa. Corn cobs, leaves, husk and stalks are the ingredients.

Wallace Tyner, an agriculture economics professor at Purdue University, said there isn’t much hope of blending the new cellulosic production into fuel destined for vehicle gas tanks. The industry is already up against the saturation point at which only higher blends such as E85 will be sufficient to get the EPA-mandated ethanol into the nation’s gas tanks.

And, he said, “You couldn’t build plants fast enough.”

But what about Iowa and Nebraska cellulosic ethanol as jet fuel? There is a good chance of that, Tyner said. “It is the only green option in the air and the military and civilian aviation are keenly interested.”

Tyner said the U.S. uses 21 billion gallons of aviation fuel annually. And up in the air, nothing but liquid fuels work. There is no electricity, batteries are inadequate and compressed natural gas doesn’t work at altitude.

But Tyner said cellulosic fuels “would die tomorrow” without the EPA’s mandate that refiners blend them in.

“No one knows if it is economically viable in the long term, but if you get rid of the Renewable Fuels Standard, you foreclose on the possibility,” he said. “RFS was designed to boost U.S. energy independence, stimulate production of cleaner fuels and jump-start rural economies. It has done all three. Is it worth it? That is a value judgment.”

For some commuters, even run-of-the-mill ethanol isn’t worth it, given the lower gas mileage from lower energy concentration.

“I have tested it multiple times in my last couple of vehicles driving the same basic routes in the city for things like work and kids, using a tank of regular and a tank of regular 10 percent ethanol blend,” said Omahan Tom Umthun. “My miles-per-gallon was always 8 percent to 10 percent lower.”

Papillion commuter Jeff Sheets said he would love to support Nebraska ethanol producers but he, too, can’t justify it, saying it “is just not economical for me to do so on a miles-per-dollar basis.”

Not open to argument is that times have been good in the ethanol industry, with many producers reporting strong profits. A lot of that has to do with lower corn prices, down around $3.60 a bushel, from more than double that two years ago.

“It is the most profitable time I can remember,” said Dan Wych, plant manager at Southwest Iowa Renewable Energy in Council Bluffs. “People are beginning to pay off debt and invest in even more advanced technologies.”

SIRE does most everything that can be done at an ethanol plant. It makes the motor fuel, sells the grain left over from the process as cattle feed and squeezes out corn oil from still more byproducts for use in biodiesel. It even sells its carbon dioxide byproduct to beverage makers.

Wych said a cut in the ethanol mandate by the EPA — whose latest rules on the topic are now eight months late — wouldn’t affect him much in the short term. He said gasoline producers need ethanol to boost the octane of their current most common formulation, which is 84 octane, to get it up to the 87 octane that used to be the default industry standard.

But he does think innovation sometimes requires a push, and says the Renewable Fuel Standard has done that. “Novel ideas need incentives.”

Omaha-based Green Plains Energy, which operates plants throughout the Corn Belt capable of producing 1 billion gallons of ethanol a year, is considering the potential of algae.

As the majority owner of a joint venture, Green Plains is using five acres next to its Shenandoah, Iowa, ethanol plant to grow algae, which is rich in lipids and oils, using the water, heat and carbon dioxide that are byproducts of ethanol production. If the oils and fats can be economically extracted, you might wind up with Iowa-produced nutritional supplements on the grocery store shelf.

“There are applications in human and animal nutrition,” CEO Todd Becker said. The company’s algae effort is far from commercialization, he said, but it represents something bigger.

“The Midwest is creating a high-tech economy around feeding people and livestock and fueling vehicles,” he said. “No one else in the nation can do this. Only we have the climate and the soil.”