Perspectives on 2013: Ethanol Industry Executives Approach 2013 with Optimism and Concern.

by Holly Jessen & Susanne Retka Schill (Ethanol Producer Magazine) Looking into the future, Jeff Roskam, CEO of the Kansas Alliance for Biorefining and Bioenergy, fears any modification of the renewable fuel standard (RFS). “Period,” he says. “Not only would this be detrimental to the existing industry, it would take us back to a petroleum monopoly on liquid fuels. Monopolies generally are not market justified.”
...Overall, Roskam believes there needs to be a much greater recognition for the value of biomass. To that end, he believes higher corn prices will drive innovation, as ethanol producers realize the raw input costs for biomass are actually lower than recent high corn prices. “That hasn’t really existed too much in history of bioenergy,” he says.
Of course, more needs to be done to scale up biomass harvesting capacity and draw down the cost of harvesting and transporting biomass from field to plant gate.
...Roskam believes agricultural residues will be the first cellulosic feedstocks, partially because farmers assume less risk for greater utilization of crops they’re already planting. Feedstox’s combination combine balers, which harvest corn or wheat and bale stover or straw at the same time, have worked particularly well, he says. Depending on the agreement, Feedstox may harvest the grain and take the bales in barter or split the revenue with the producer. “They generally find that very attractive,” he says.
After spending 15 years working in the corn-ethanol industry and the past two years in biomass, Roskam feels strongly that there are opportunities to take the sucrose molecule to fuel ethanol, yes, but other chemical directions as well. “I think the opportunity is not exclusive for cellulosic ethanol,” he says. “I think it’s for organic chemicals from renewable sources, and that’s where I guess I get more optimism.”
...For Poet, the product list will soon include cellulosic ethanol, as construction continues on its first facility at Emmetsburg, Iowa, in partnership with DSM. “Cellulosic ethanol provides opportunities for more feedstock and product diversity,” he (Jeff Lautt, CEO of Poet) says. “I see biorefineries in the future with multiple feedstocks coming in and multiple products—fuel, renewable power, food, feed, biochemicals and more—coming out.”
...He (Neill McKinstray, president of The Andersons Ethanol Group) points to the coming together of several factors that will create a dynamic and challenging situation. “The outlook will be for very tight margins in the industry and forced restrictions on some production in expectation that we’re going to have to fight for what corn is available. It will be high-priced corn.” he says. “On top of that, with the continued slow pace of gasoline consumption, the need for ethanol is not as great as it once was.
...Such things as operating efficiency and systems improvements, better cost controls and well-tested new technology will be tried, he says, “as opposed to looking at some grand scheme involving huge acquisitions, new plants or untried technology.”
...He points to the contrast between a recent trip to The Anderson’s ethanol plant in Iowa and his hometown in Illinois. “There’s nothing going on,” he says of his hometown. “Main Street is boarded up, and by the way, there’s no ethanol plant there. “I drive through small towns in Iowa that have really not much else going for them except there’s an ethanol plant nearby and there’s crop production. They’re thriving, and the unemployment rate in Iowa is half of what it is in the rest of the nation.” The industry should celebrate those successes, McKinstray says.
...He’d (Bob Shults, president and founding partner of Atlas Commodity Markets) like to see other opportunities for increased ethanol demand, such as new engine technologies to take advantage of the fuels higher octane content. “If nothing else, we’ve got to see a closer alignment of the supply and demand,” he says.
...Calling the ethanol industry “extremely resilient in the face of a lot of obstacles,” Shults points out that it has continued to evolve in the ways it manages risk. That’s impressive, considering the industry's relative newcomer status in a multicommodity business world. The company is seeing an increase in industry participation in the financial markets, using tools such as swaps, options and block futures to manage commodity exposures. “They continually try to find new ways to increase their profitably through finding any kind of edge they can,” he says. READ MORE