Advanced BioFuels USA

by Jim Lane (Biofuels Digest) This week news came out of a partnership between Novozymes and Green Plains to use biological technology to extract more value from corn protein, at what used to be known as corn ethanol plants, but with this news we might finally and forever begin to think of them as something else.

This provided us an opportunity to spend some time with Todd Becker, the long-time Green Plains CEO, who remains the visionary he always has been, but of the “two millimeters above the ground” type and not the flying through the blue skies of this weeks’ edition of the Opportunity of the Month Club.

Though you’ve never met anyone who’s found more ways to grind a penny out of a process, and I suspect he picks up nickels in the parking lot, he’s not short on vision. It’s just of an unusually practical kind, the kind that John Madden used to have as a coach in his days with the Oakland Raiders, there was never innovation for innovations sake, there was a lot of it and always with a purpose.

Our topic today — the transformation of the ethanol industry towards something else, which meant getting out of the management of commodity fractions and into the development of true added-value in the corn kernel using the concepts of refining itself.

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Back then, you could find an equities analyst with an informed take on ethanol as the prize at the bottom of any box of Cracker Jack, I think — these days, you can hardly find one using water diviners, GPS and surveillance technology stolen from the NSA.

“Our story got hijacked,” Green Plains CEO Todd Becker told The Digest in an in-depth, exclusive interview. “We had the most successful low carbon fuel ever built, we reduced GHGs and all that. We reduced BTUs [used in the ethanol making process]. We reduced water, we reduced our carbon footprint. Then, we got highjacked with a story that we we raising food prices, we were raising corn prices. We weren’t focused, we got highjacked, and we lost.

“Now, a major oil company runs ads on TV about algae fuels and we know there’s not as much there as suggested by the advertising. They highjacked our whole story [about the beneficial impact of renewable fuels], and we can’t fight back with the resources we have, and they know it.”

I was with some of the biggest investors in Boston last week, and for more and more investors sustainability is a strong driver in their investing, and price and performance will always matter. But one of them said to me, “you guys got to get back to your story.”

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Plants were scrutinized across the Green Plains network. “We sold some off’, closed one, but we have 13 left, and the question is, what’s out there [for improvement], and I always come back to the corn kernel. There’s more in there.”

“DDGs are going out as 30 percent protein,” Becker reflected, “and we watched the soybean industry, and the demand for high protein, and how they separate and isolate. And we thought, let’s see how we can transform ours. We evaluated lots of partners, each one had something a little different. We wanted to get to the highest level, unless you make 48% like soy, we thought, you’re suck in the mids and we didn’t want to be there. Fluid Quip we thought would get us to that level the quickest with their solution, and we chose Fluid Quip for the first unit. We chose our 1G Shenandoah plant, it’s big and efficient, and we have a world class lab there to test feed with any kind of fish. And we’ve attached protein production to that.

So, off they started. Aquaculture to start. Couple of reasons for that.

First, its deep,. As Becker noted, : there are 325 million tons of demand for good protein, and at 150,000 tons we’re not going to saturate that, it’s not like cellulosic or butanol.

Second, no policy dependencies. No waiting around in an attitude of prayer while the Environmental Protection Agency, which you might just as well regard as the Emitters Protection Agency, decides how much of the notional ethanol market will be destroyed — in the name of making the world safer for Texas light sweet crude and a sustainability story right out of the Seven Bowls of the Book of Revelation.

Third, acute need. Demand for fish is rising fast, population is rising fast, we’re short on feed for the demand that will be upon us. And sustainable aquaculture based on farming fish and not overfishing the oceans, is already the mantra of the times, and more to come.

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“… If you think you’re going to produce high-value isolates at a single ethanol plant and just dial up some aquafarming operation in Asia and they’ll buy your product without knowing you or your operation, think again. For this, we need redundancy, new staffing, new training, we need consistency, reliability, a reputation, a history in high value protein, You need quality assurance, quality control. You can’t just degrade the product, or make more and make it cheaper, in another race to the bottom.

You can’t have poor products, bottom line, and customers don’t swap in this feed today, that feed tomorrow, and no feed at all the next day if the price isn’t right. They demand long term relationships before they will become your customer. That’s the bottom line in the high-value game.

“You need research, you need trails, customers will run their own trials. And they are going to grow a salmon for 28 months, and this is a global industry, there will be 45-55 projects built out in the US, but there is a lot — a lot — in this that does not have to do just with the feed.”

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“Now, we think that there’s more to be done, through biological solutions for functional proteins that improve the product even more. We found that Novozymes shared that vision, and we’re tapping into their mastery of biology, that depth in yeast. This partnership is very powerful and important to both.”

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“$500 million it will take us to do this across our network of plants. That’s not an easy check after the years we have for a lot of people to write, or to finance. And they may well have priorities in cutting costs, or improving their CI score, or whatever is critical to them, and that makes this even less likely to be pursued by many. It would take $10 billion to deploy technology like this across the industry, and the industry doesn’t have it, so we feel we’re in a good position, because we have developed our vision, we we have the access to capital and we have a proven ability to execute.”

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Becker pauses, as if in reflection.

“If we get this right, we’ll get our story back, too. That leadership in sustainable industries that provide high value products with an ability to execute at world scale, that is.

“We’ll hijack it back.”  READ MORE

Marginal Improvement (Ethanol Producer Magazine)

U.S. ethanol woes spur new animal food focus for Green Plains -CEO (Reuters)