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SBI
Global Biofuels Market

Opportunities, Emerging Technologies and Production
October 2009

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GLOBAL BIOFUELS MARKET
OPPORTUNITIES, EMERGING TECHNOLOGIES AND PRODUCTION

OCTOBER 2009
Global Biofuels Market: Opportunities, Emerging Technologies and Production has been
prepared by SBI. Our market intelligence reports are specifically designed to aid the
action-oriented executive by providing a thorough presentation of essential data and
concise analysis.

Vice President of Publishing Don Montuori
Publisher Shelley Carr
Author Darren Bosik
Research Director David Sprinkle
Communications Associate Daniel Granderson
Publication Date October 2009
Copyright 2009 SBI
SB1926676 1-59814-288-7

Global Biofuels Market Table of Contents

October 2009 SBI I
Table of Contents
Global Biofuels Market:
Opportunities, Emerging Technologies and Production

Chapter 1: Executive Summary .................................................. 1
Outlook for Biofuel Consumption ............................................................1
Figure 1-1: Global Share of Energy Consumption by Source,
2009 vs. 2014.......................................................................................2
Table 1-1: Bioenergy Supply, by Region,
2006, 2009 and 2014 (GwH) ................................................................3
External Factors Affect Growth of Biofuels.............................................4
Food Prices Fuel Biomass Debate ...........................................................4
United States Remains Hotbed of Biomass Activity...............................5
Biofuel Technology Research...................................................................5
Global Market Values.................................................................................6
Table 1-2: Global Market Values of Biofuel and Bioenergy
(Organic and Technology) Manufacturing, by Country,
2009 and 2014 (in $ millions) ...............................................................6
Table 1-3: U.S. Market Value of Biomass Manufacturing,
Organic and Technology, 2006 to 2009 ...............................................8
Shipments of Organic Biomass Feedstocks ...........................................8
Table 1-4: U.S. Export Value of Wheat, by Country,
2004 and 2009 (in $ thousands)...........................................................9
Imports of Organic Biomass .....................................................................9
U.S. Shipments of Biomass Conversion Technology Components....10
Table 1-5: U.S. Shipment Value of Biomass Conversion Technology
Components, 2004 to 2009 (in $ millions) ..........................................11
Table 1-6: U.S. Market Value of Biomass Conversion Technology
U.S. Backs Biofuel Innovations ..............................................................11
Federal Funding Fuels Innovation..........................................................12
Innovations in Biorefineries....................................................................12
Innovations in Biofuel Processing .........................................................12
Biofuel Energy Policy Fuels Debate.......................................................13
Biofuels Effect on Food Prices..............................................................13
Biofuels Lobbying Efforts.......................................................................14
Global Policies toward Biofuels .............................................................14
Table of Contents Global Biofuels Market

II SBI October 2009
Chapter 1: Executive Summary [cont.]

Market Value Forecast Through 2014.................................................... 15
Figure 1-2: Share of Global Market Value for Biofuel and
Bioenergy Manufacturing by Country, 2009 and 2014....................... 16

Chapter 2: Introduction and Overview......................................17
Report Scope........................................................................................... 17
Methodology............................................................................................ 18
Terminology............................................................................................. 19
Table 2-1: Biomass Power Technologies............................................... 21
Future Biomass Conversion Technologies .............................23
Table 2-2: Future U.S. Biomass Conversion Technology Research
Projects ............................................................................................. 23
First- and Second-Generation Liquid Biofuels..................................... 24
Ethanol Production Processes .............................................................. 24
Table 2-3: Energy use and Net Energy Value per Gallon Dry vs.
Wet Milling Processes (BTUs per gallon) .......................................... 25
Biomass Feedstocks............................................................................... 25

Chapter 3: World Bioenergy Activities & Technologies..........27
Table 3-1: World Consumption of Energy, by Energy Types and
Country Group, 2002, 2009 and 2014 (in quadrillion BTUs) ............. 28
Figure 3-1: Global Share of Energy Consumption, by Source,
2009 vs. 2014.................................................................................... 29
Table 3-2: U.S. Renewable Energy Consumption, by Source,
2008, 2009 and 2014 (trillion BTU).................................................... 29
Table 3-3: U.S. Renewable Energy Capacity and Electricity
Generation, by Source, 2009 and 2014............................................. 31
Table 3-4: Electricity Generation Capacity, by Source and Region,
2009 and 2014 (GwH) ....................................................................... 32
Table 3-5: Electricity Generation Capacity, by Source in France,
2009 and 2014 (GwH) ....................................................................... 33
Table 3-6: Electricity Generation Capacity, by Source in China,
2009 and 2014 (GwH) ....................................................................... 33
Table 3-7: Electricity Generation Capacity, by Source in India,
2009 and 2014 (GwH) ....................................................................... 34
Table 3-8: Electricity Generation Capacity, by Source in Brazil,
2009 and 2014 (GwH) ....................................................................... 34

October 2009 SBI III
Chapter 3: World Bioenergy Activities & Technologies [cont.]

Table 3-9: Bioenergy Supply, by Region,
2006, 2009 and 2014 (GwH) ..............................................................35
Table 3-10: Bioenergy Production, by Country,
2006, 2009 and 2014 (GwH) ..............................................................36
External Factors Affect Growth of Biofuels...........................................37
Table 3-11: Consumption of Bioenergy Supply, by Region,
2006, 2009 and 2014 (GwH) ..............................................................38
Table 3-12: Percent of Domestically Produced Bioenergy Consumed,
by Region, 2006, 2009 and 2014 ......................................................39
Figure 3-2: Percent of Domestically Produced Bioenergy Consumed,
2006, 2009, and 2014 ........................................................................40
Food Prices Fuel Biomass Debate .........................................................40
Figure 3-3: U.S. Producer Price Index of Biomass Conversion
Components, 2004-2014....................................................................42
United States Remains Hotbed of Biomass Activity.............................43
Table 3-13: U.S. Renewable Energy Consumption, by Sector
and Source, 2009 and 2014 (in quadrillion BTUs)..............................44
Table 3-14: U.S. Production of Electricity from Biomass and
Other Renewable Sources, by Region, 2009 (MwH)..........................45
Figure 3-4: Share of Electricity Produced from Biomass to
Other Renewable Sources, by U.S. Region, 2009 and 2014 ............46
Table 3-15: U.S. Production of Electricity from Biomass and
Other Renewable Sources, by Region, 2014 (MwH)..........................47
Table 3-16: Operational Biorefineries, by State, 2009............................48
Table 3-17: State Biorefinery Generation Capacity,
2009 and 2014 (MwH)........................................................................49
Figure 3-5: U.S. Biomass Plant Capacity, 2002 to 2014 (MwH) .............50
Biofuel Technology Research.................................................................50
Table 3-18: Average Expenditures on Energy Research and
Development, by IEA Nations, 2000 and 2005 with Projections
by SBI for 2009 and 2014 (in $ millions) ............................................51
Reduction of Greenhouse Gases ...........................................................51
Figure 3-6: U.S. Emissions of Carbon Dioxide, 2009 and 2014
(in billions of metric tons)....................................................................52
Table 3-19: World Carbon Dioxide Emissions, by Region
(in millions of metric tons of CO2) ......................................................53

Chapter 4: World Biomass Market Trends............................... 55
Table 4-1: Global Market Values of Biofuel and Bioenergy
(Organic and Technology) Manufacturing, by Country,
2009 and 2014 (in $ millions) .............................................................56

IV SBI October 2009
Chapter 4: World Biomass Market Trends [cont.]

Figure 4-1: Compound Annual Growth Rate of Biofuel and
Bioenergy Conversion (Organic and Technology Segments),
by Country, 2009 to 2014 .................................................................. 57
Table 4-2: Global Liquid Ethanol Production, by Country or Region,
2007, 2009 and 2014 (millions of gallons) ......................................... 58
Table 4-3: Global Liquid Biodiesel Capacity, by Country,
2002, 2009 and 2014 (in millions of gallons) ..................................... 59
Table 4-4: Production of Mill Residue, by State, 2009 and 2014
(thousands of dry tons)...................................................................... 60
Table 4-5: U.S. Market Value of Biomass Manufacturing,
Organic and Technology, 2006 to 2009............................................. 61
Shipments of Organic Biomass Feedstocks ........................................ 61
Table 4-6: U.S. Imports of Ethanol, by Country of Origin,
2007 to 2014 (in millions of gallons) .................................................. 62
Table 4-7: U.S. Ethanol Production Capacity, by Type of Feedstock,
2009 and 2014 (in millions of gallons) ............................................... 63
Table 4-8: U.S. Production of Corn and its Share Used for Ethanol
Conversion, 2009 to 2014 ................................................................. 63
Table 4-9: U.S. Export Value of Feedstocks Used for Bioenergy and
Liquid Biofuel Manufacturing, 2004 and 2009 (in $ thousands) ......... 64
Table 4-10: U.S. Export Value of Wheat, by Country,
2004 and 2009 (in $ thousands) ........................................................ 65
Table 4-11: U.S. Export Value of Corn, 2004 and 2009
(in $ thousands)................................................................................. 66
Biodiesel Trade Market in Flux .............................................................. 66
Table 4-12: Biodiesel Imports, by Region, 2008 to 2014
(in million gallons).............................................................................. 66
Table 4-13: Biodiesel Exports, by Region, 2008 to 2014
(in million gallons).............................................................................. 67
Table 4-14: U.S. Exports of Soybean Oil, by Country,
2004 and 2009 (in $ thousands) ........................................................ 68
Imports of Organic Biomass................................................................... 68
Table 4-15: U.S. Import Value of Organic Biomass Feedstocks for
Biofuel Conversion, 2004 and 2009 (in $ thousands) ....................... 69
Table 4-16: U.S. Import Value of Corn, by Country,
2004 and 2009 (in $ thousands) ........................................................ 70
Table 4-17: U.S. Soybean Production and its Use for Biodiesel
Production, 2009 to 2014 .................................................................. 71
Table 4-18: U.S. Import Value of Oilseeds, 2004 and 2009
(in $ thousands)................................................................................. 72
U.S. Shipments of Biomass Conversion Technology Components ... 73
Table 4-19: U.S. Shipment Value of Biomass Conversion Technology
Components, 2004 to 2009 (in $ millions) ......................................... 73

October 2009 SBI V
Chapter 4: World Biomass Market Trends [cont.]

Table 4-20: U.S. Market Value of Biomass Conversion Technology
Figure 4-2: Biomass Conversion Technology Share of Shipment
Value, 2004, 2009 and 2014 ..............................................................74
Imports of Technology Components.......................................................74
Figure 4-3: Share of Import Shipment Value, by Technology
Component, 2004 and 2009...............................................................75
Table 4-21: U.S. Imports of Industrial Furnaces, 2004 and 2009
(in $ thousands) .................................................................................76
Figure 4-4: U.S. Imports and Exports of Organic and Technology
Components of Biomass Conversion, 2006 to 2014
(expressed as a percentage of total market value) ............................77
Biomass Conversion Technology Exports..............................................77
Table 4-22: U.S. Export Value of Metal Tanks, by Country,
2004 to 2009 (e) (in $ thousands) .....................................................78
Table 4-23: U.S. Export Value of Metal Cans, by Country,
2004 to 2009 (e) (in $ thousands) .....................................................79
Table 4-24: U.S. Exports of Industrial Furnaces, 2004 and 2009
(in $ thousands) Source: U.S. Dept. of Commerce, U.S. Census
Bureau, Stat-USA, USA Trade Online. Calculated and estimated
by SBI ................................................................................................80
Market Value Forecast Through 2014 ....................................................80
Figure 4-5: Share of Global Market Value for Biofuel and Bioenergy
Manufacturing, by Country, 2009 and 2014 .......................................81
Table 4-25: U.S. Shipment Value of Organic Biomass Manufacturing,
2006, 2009 and 2014 (in $ millions) ...................................................81
Table 4-26: U.S. Market Value Forecast of Organic and Technology
Components for Biomass Conversion, 2006, 2009 and 2014
(in $ millions) ......................................................................................82
Table 4-27: U.S. Shipment and Market Value of Biomass
Conversion Technology Component Manufacturing,
2009 to 2014 (in $ millions) ................................................................82
Figure 4-6: U.S. Share of Market Value for Organic and Technology
Components Used in Biomass Conversion, 2006, 2009, 2014 ..........83

Chapter 5: Manufacturer Profiles ............................................. 85
Archer Daniels Midland (ADM) ................................................. 86
Corporate Background............................................................................86
Industry Segments...................................................................................87
Oilseeds Processing...............................................................................87
Corn Processing.....................................................................................87

VI SBI October 2009
Chapter 5: Manufacturer Profiles [cont.]

Agricultural Services .............................................................................. 87
Other...................................................................................................... 87
Table 5-1: ADM Revenue, by Industry Segment, 2007-2008................. 88
Figure 5-1: ADMs 2008 Share of Revenues, by Division ...................... 88
Company News ....................................................................................... 89
Outlook..................................................................................................... 89
Personnel Changes................................................................................. 89
Bunge .. ......................................................................90
Corporate Background ........................................................................... 90
Industry Segments.................................................................................. 91
Table 5-2: Bunge Revenue, by Industry Segment, 2007-2008 .............. 91
Company News ....................................................................................... 91
Outlook..................................................................................................... 91
CHS .93
Renewable Energy ................................................................................ 94
Figure 5-2: CHS 2008 Share of Revenues, by Business Segment
(in $ billions) ...................................................................................... 95
Company News ....................................................................................... 96
Outlook..................................................................................................... 96
Royal Dutch Shell .......................................................................97
Table 5-3: Shell Revenues, by Business Segment, 2007-2008
(in $ billions) ...................................................................................... 98
Company News ....................................................................................... 98
Outlook..................................................................................................... 99
Foster Wheeler..........................................................................100
Corporate Background ......................................................................... 100
Industry Segments................................................................................ 100
Company News ..................................................................................... 101
Outlook................................................................................................... 101


October 2009 SBI VII
Chapter 5: Manufacturer Profiles [cont.]

Wilmar . .................................................................... 103
Corporate Background..........................................................................103
Industry Segments.................................................................................103
Outlook ...................................................................................................104
Tenaska ...................................................................... 105
Corporate Background..........................................................................105
Industry Segments.................................................................................105
Outlook ...................................................................................................106

Chapter 6: Innovations in Biofuel Technology...................... 107
U.S. Backs Biofuel Innovations ............................................................107
Diversity of Cellulosic Feedstocks ........................................................108
Federal Funding Fuels Innovation........................................................109
DOE Funds Advanced Biofuels Projects ..............................................110
Innovations in Biorefineries..................................................................112
Table 6-1: Advanced Biorefinery Concepts ..........................................112
Whole Crop Biorefineries......................................................................112
Ligno Cellulosic Feedstock Biorefineries (LCFBR) ...............................113
Green Biorefineries...............................................................................113
Two Platform Concept Biorefinery (TPCBR) ........................................113
Marine Biorefinery (MBR) .....................................................................113
Thermo Chemical Biorefinery (TCBR) ..................................................114
Innovations in Biofuel Processing .......................................................114
Advances in Ethanol Separation Technologies ..................................115
Germ and Fiber Separation..................................................................115
Enzymatic Dry Milling ...........................................................................116
Dry Fractionation ..................................................................................116
Ammonia Process in the Wet Mill .........................................................116
Continuous Membrane Reactor for Starch Hydrolysis..........................117
Alkali Wet Milling ..................................................................................117
High-Gravity Fermentation ...................................................................117
Improved Yeast ......................................................................................117
Conversion of Pentose Sugars to Ethanol ............................................118
Enzymes for Liquefaction and Saccharification .................................118
Enzymes to Reduce Sulfur Dioxide......................................................118
Distillation Technology..........................................................................119

VIII SBI October 2009
Chapter 6: Innovations in Biofuel Technology [cont.]

Control Systems.................................................................................... 119
Environmental Technologies ............................................................... 120
Biodiesel Derived From Tallow............................................................ 120

Chapter 7: Consumers of Biofuels..........................................123
Biofuel Energy Policy Fuels Debate .................................................... 123
Table 7-1: Renewable Fuel Volume Requirements for RFS2,
2008-2022 (billion gallons) .............................................................. 124
Feedstock Implications ........................................................................ 125
Legislation Favors E85 Production ...................................................... 126
Figure 7-1: U.S. Consumer Opinions About Biofuels
(% who fully agree).......................................................................... 128
Biofuels Effect on Food Prices ........................................................... 129
Studies Point to Ethanols Effect on Food Prices................................. 131
Biofuels Lobbying Efforts .................................................................... 132
Table 7-2: Top 25 Expenditures on Biofuel Lobbying in 2008,
by Company or Group ..................................................................... 134
Global Policies Toward Biofuels.......................................................... 135
European Union Changes Biofuel Composition................................... 136
Japan Continues Import Strategy ........................................................ 136
India Ethanol Blends Fluctuate ............................................................ 137
China Steps Up Corn Ethanol Production............................................ 137

Appendix: Addresses of Selected Companies
and Organizations .......................................................................i

Global Biofuels Market Chapter 1: Executive Summary

October 2009 SBI 1
Chapter 1 Executive Summary
Several countries are investing in the development of technologies and processes that convert
biomass into electricity-generating resources and usable liquid biofuels, including ethanol and
biodiesel. Their governments understand that biomass can only become a sustainable
renewable form of energy by implementing enhanced refining processes that minimize
impact on local environments and reduce the threat to diminished food supply and other
natural resources. Brazil, the United States (U.S.), and China are the largest producers of
bioenergy and liquid biofuels today. Their objectives are to optimize domestic feedstocks,
mainly corn and soybeans, for biofuel development while minimizing their depletion as food
sources.
This Specialists in Business Information (SBI) report delves into the global efforts to develop
technologies that improve the biomass refining and conversion processes associated with
many different types of biofuels and bioenergy. We cover the significant opportunities in
technology manufacturing that correlate to the growing consumption of bio-based energy
among nations.
Outlook for Biofuel Consumption
Compared to other fuel sources, renewable energy, including biomass, comprises about 4% of
the total consumption within the global energy market. Petroleum is the leading energy
source, comprising an estimated 34% of the total global consumption in 2009. Consumption
of renewable energy sources is growing rapidly between 2002 and 2009, and is expected to
achieve a Compounded Annual Growth Rate (CAGR) of 31.4% for the seven-year period.
OECD nations now consume about 20 billion British Thermal Units (BTUs) of electricity
from renewable sources, compared to 2.7 billion in 2002. SBI estimates that by 2014, OECD
nations will increase their consumption of renewable energy to nearly 25.5 billion BTUs.

Chapter 1: Executive Summary Global Biofuels Market

2 SBI October 2009
Figure 1-1
Global Share of Energy Consumption by Source, 2009 vs. 2014
33.7%
32.2%
21.8%
21.1%
25.8%
25.0%
7.2%
7.8%
7.1%
8.4%
4.3%
5.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2009 2014
Petroleum Natural Gas Coal Hydroelectric Nuclear Renewable

Source: SBI
To keep pace with changing domestic energy demands, countries invested in the long-term
success of biomass will assess their capabilities to convert available resources into liquid
biofuels and electricity, including the retrofitting of established petroleum plants and paper
mills with biomass conversion technology, and the building of new biorefineries. Power plant
capacity and generation production vary by fuel type. In the U.S., for example, hydropower
comprises nearly 64% of the total renewable energy capacity nationwide, and represents 63%
of the total renewable energy generated. SBI expects that biomass will begin to take share
away from hydropower during the next five years, especially in overall energy generation.
Biomass currently comprises a 10% share of total renewable energy generation and will
likely reach 12.5% by 2014, although overall capacity share will remain flat. SBI attributes
this increase in generation to accelerated efforts among bioenergy companies to generate
electricity and liquid biofuels more efficiently and economically.
In the U.S., the DOE and the Department of Agriculture are committed to expanding the role
of biomass as an energy source. They support biomass energy as a way to reduce the need for

October 2009 SBI 3
oil and gas imports, and as a way of growing economies associated with agriculture and
forestry. The production and use of ethanol displaces crude oil needed to manufacture
gasoline. According to the Energy Information Administration, imports account for more than
65% of the U.S. crude oil supplies and oil imports are the largest component of the expanding
U.S. trade deficit. The production of nine billion gallons of ethanol means that the U.S.
needed to import 321.4 million fewer barrels of oil in 2008 to manufacture gasoline, or
roughly the equivalent of 5% of total U.S. crude oil imports. The value of the crude oil
displaced by ethanol amounted to $32 billion in 2008.
Table 1-1
Bioenergy* Supply, by Region, 2006, 2009 and 2014
(GwH)
*Bioenergy includes production of liquid biofuels and electricity from biomass
Source: International Energy Agency with Projections by SBI
Growth in bioenergy, including electricity and liquid automotive fuels, is inherently
dependent on the projected supply of converted biomass produced domestically or via
imports. Some nations rely on the import market more heavily than domestic production,
which places a greater dependence on volatile foreign currency exchange rates to keep their
bioenergy inventory competitively stocked. Non-OECD nations, most notably China, Brazil
Region 2006 2009 2014
CAGR
2009 to 2014
2006
Share
2009
Share
2014
Share
OECD Europe 1,025,354 1,192,148 1,458,461 4.1% 6.8% 6.9% 6.8%
Production 998,548 1,155,944 1,405,058 4.0 -- -- --
Imports 34,164 44,244 62,453 7.1 -- -- --
Exports (7,358) (8,040) (9,050) 2.4 -- -- --
OECD North America 855,299 1,334,820 2,416,485 12.6 5.7 7.7 11.2
Production 854,718 1,334,126 2,415,622 12.6 -- -- --
Imports 620 760 996 5.6 -- -- --
Exports (39) (66) (132) 14.9 -- -- --
OECD Pacific 114,591 118,123 123,026 0.8 0.8 0.7 0.6
Production 114,267 117,729 122,509 0.8 -- -- --
Imports 324 397 520 5.6 -- -- --
Exports -- (3) (4) 7.1 -- -- --
OECD Total 1,995,244 2,645,091 3,997,972 8.6 13.3 15.3 18.6
Production 1,967,533 2,607,800 3,943,189 8.6 -- -- --
Imports 35,108 45,400 63,969 7.1 -- -- --
Exports (7,397) (8,109) (9,186) 2.5 -- -- --
Non-OECD 10,997,879 12,014,771 13,516,849 2.4 73.4 69.4 62.8
Production 11,006,838 12,027,469 13,537,023 2.4 -- -- --
Imports 520 619 782 4.8 -- -- --
Exports (9,479) (13,318) (20,956) 9.5 -- -- --
World 14,988,367 17,304,952 21,512,794 4.4 -- -- --
Production 14,941,905 17,243,069 21,423,400 4.4 -- -- --
Imports 70,736 91,419 128,720 7.1 -- -- --
Exports (24,274) (29,536) (39,327) 5.9 -- -- --

4 SBI October 2009
and India, currently control about 69% of the total bioenergy supply, although that will likely
fall to 63% by 2014 as OECD nations look to increase their domestic production rates.
Within the OECD North America region, for instance, domestic supply production of
biofuels will grow at a CAGR rate of nearly 13% to reach more than 2,400,000 GwH.
External Factors Affect Growth of Biofuels
Many forces affect the growth of liquid biofuel and bioenergy activities throughout the
production supply chain. Petroleum prices, for example, directly determine biofuel supply
and demand. As substitutes or additives to conventional gasoline and diesel, biofuels demand
is directly enhanced by higher oil prices. Other interactions exist between energy markets and
feedstock markets. Increased biofuel production directly affects feedstock production and
raises prices by competing for resources and vying with other users. Higher oil prices help
biofuel producers accommodate these higher costs, but indirectly affect supply by raising
input and transportation costs for biofuel feedstock. Through 2014, SBI projects the U.S. to
lead the world in global production of bio-based energy activity, growing at a five-year
CAGR rate of 13%. Among non-OECD nations, India and China will likely accelerate their
bioenergy production rates faster than Brazil to comprise nearly half of the output in 2014.
Food Prices Fuel Biomass Debate
Some nations are reluctant to invest in biomass conversion technology adoption because of
the volatility in commodity prices such as corn, wheat and sugar. An ethanol plant in Spain
ceased production in late 2007 after cereal prices skyrocketed. Production resumed in 2008
when prices dropped and the Spanish government mandated a compulsory blending
requirement for ethanol used for transportation fuel. The entire European Union, in fact, has
set a 2020 target of supplying 10% of its transportation needs with renewable sources,
including biofuels.
The global economic crisis should keep feedstock commodity prices low through year-end
2010, but an economic recovery could increase prices soon after. The EU has approved a
directive that stipulates that the energy-based share of biofuels should be nearly 6% by the
end of 2010. Meanwhile, the EU and India have taken measures to ensure biofuel
requirements are met by non-food sources. The EUs Industry Committee said it will require
5% biofuel blends by 2015 and 10% by 2020, with no more than 4% of the target from
todays crop-based biofuels. India plans a 20% biofuel blend by 2017 from non-edible

October 2009 SBI 5
sources grown on non-farming land. The country also called for the elimination of tax and
duties on biodiesel. India has been finalizing its biofuel policy for about two years.
United States Remains Hotbed of Biomass Activity
In the U.S., President Obamas directive to the DOE and the Environmental Protection
Agency to accelerate biofuel development has been questioned by advocates of corn-based
and soybean-based fuels. Congress has called for 36 billion gallons of biofuels by 2022. But
the EPA claims that doing so will translate to nearly 300 million fewer barrels of imported
oil. As a result, some biofuel players are looking at other sources of nonfood material. One of
the cheapest sources now is garbage, such as the municipal waste that BlueFire Ethanol plans
to use. Weyerhaeuser is exploring growing energy crops in its forests, as well as using wood
waste. Range Fuels will tap into forests in the Southeast for its Georgia facility.
Ethanol production provides a substantial contribution to the American economy. The
industry spends in excess of $13 billion on raw materials, the largest share of which is for
corn and other grains, noted John Caupert, Director of the National Corn-to-Ethanol Research
Center. In addition to providing a reliable domestic market for American farmers, the ethanol
industry also provides the opportunity for farmers to enjoy some of the value added to their
commodity by further processing. Farmer-owned ethanol plants account for half of U.S. fuel
ethanol plants and almost 40% of industry capacity. The spending associated with ethanol
production and spending on new plant capacity circulates throughout the entire economy
several fold stimulating aggregate demand, supporting the creation of new jobs.
Biofuel Technology Research
The biofuels industry is ablaze with research and development activity to determine the most
sustainable and cost-efficient technologies for biomass conversion. The U.S. Renewable Fuel
Standard provisions of the Energy Independence and Security Act of 2007 (EISA) requires
that 36 billion gallons of renewable biofuels be used in the nations motor fuel by 2022. Since
EISA caps the amount of ethanol from corn starch at 15 billion gallons by 2015, the
remaining 21 billion gallons will come from second generation feedstocks and technologies
plus an estimated one billion gallons of biomass biodiesel. A significant expenditure of funds
for R&D supporting development of biofuels was made within the last two years.

6 SBI October 2009
Global Market Values
SBI estimates that the global market value for liquid biofuel and bioenergy manufacturing is
$102.5 billion ($U.S.) in 2009 and expects it to reach nearly $170.4 billion by 2014. The U.S.
is the leading producer and consumer of bio-based renewable energy, including automotive
fuel and electricity. The dollar value of U.S.-produced bio-energy manufacturing initiatives is
currently $48.7 billion and will grow to reach $103.3 billion in 2014, representing a five-year
CAGR rate of 16.2%. The U.S. share of the biofuel and bioenergy manufacturing industry is
nearly 48% of the worlds total and will grow to nearly 61% by 2014. Brazil will maintain
share of second place with a market value of $46.3 billion by 2014, a 4.2% CAGR growth
from $37.7 billion. The fastest growing countries for bio-based energy manufacturing include
China and India, which will grow their market values through 2014, although their overall
market share will flatten.
Table 1-2
Global Market Values of Biofuel and Bioenergy (Organic and Technology)
Manufacturing, by Country, 2009 and 2014
(in $ millions)
Country 2009 2014 CAGR
2009
Share
2014
Share
U.S. $48,749,095 $103,304,605 16.2% 47.6% 60.6%
Brazil 37,651,411 46,311,235 4.2 36.7 27.2
China 3,645,718 6,380,006 11.8 3.6 3.7
Germany 5,849,891 6,376,382 1.7 5.7 3.7
Canada 1,585,062 1,822,821 2.8 1.5 1.1
Other 1,310,000 1,506,500 2.8 1.3 0.9
Thailand 594,117 724,823 4.1 0.6 0.4
India 396,078 744,627 13.5 0.4 0.4
France 389,993 522,590 6.0 0.4 0.3
Colombia 561,861 589,954 1.0 0.5 0.3
Austria 491,878 545,985 2.1 0.5 0.3
Belgium 379,903 448,285 3.4 0.4 0.3
Australia 198,039 320,823 10.1 0.2 0.2
Italy 243,745 248,620 0.4 0.2 0.1
Turkey 118,523 129,190 1.7 0.1 0.1
Pakistan 69,014 118,703 11.5 0.1 0.1
United Kingdom 194,996 202,796 0.8 0.2 0.1
Argentina 39,008 64,753 10.7 0.0 0.0
Market Value $102,470,340 $170,364,713 10.7% -- --
Source: SBI
Brazils current energy matrix is comprised of 47% renewable and 53% non-renewable but its
long-term model depends on greater reliance on renewable energy sources such as biomass.

October 2009 SBI 7
Petroleum fuels nearly 38% of its current energy consumption needs and renewables such as
wood (14%) and sugarcane (17%) make up a smaller portion. By 2014, biomass sources will
make up a greater share of Brazils total energy consumption mix. Historically, Brazil has
been the largest producer of ethanol. However, U.S. production is growing at a faster rate
than any other country owing to recently implemented large subsidies for corn producers and
ethanol end users.
China, the European Union, India, and Russia are also large producers of ethanol, but Brazils
production is more efficient. Brazilian production of energy from sugarcane is more efficient
than from wheat used as a feedstock in the European Union, from corn in United States, from
cassava in Thailand, or even from other species of sugarcane in India. Besides ethanol,
Brazils modern sugar and ethanol mills are also producing bioelectricity for their own use
and selling the surplus of energy in the national electricity grid. The future of the biofuels
industry in Latin America will depend on whether regional governments can ensure that
production will remain sustainable in the long run.
For this report we value the biofuels market based on the manufacturing of the raw materials
that compose primary and secondary biomass feedstock sources, and technology components
that enable the conversion of biomass to bioenergy. Primary feedstock biomass includes corn,
wheat and barley, and secondary feedstock includes soybeans and other oilseeds. Industrial
technology manufacturing includes components to retrofit established paper mills or
petroleum refineries or construction of new biorefineries. These components include
furnaces, boilers and metal cans. The U.S. market value for biomass manufacturing has
nearly doubled since 2006 to reach $48.7 billion, which is comprised of $24.9 billion from
organic feedstock manufacturing and $23.8 billion from industrial technology manufacturing.
The U.S. has grown less dependent on exports of organic feedstocks for biomass
manufacturing and this trend is likely to continue through 2014.


8 SBI October 2009
Table 1-3
U.S. Market Value of Biomass Manufacturing, Organic and Technology, 2006 to 2009
2006 2007 2008 2009
Percent Change
2006 to 2009
Primary Organic Manufacturing (Feedstock)
Corn $9,628,376 $12,035,470 $15,646,111 $19,714,099 104.8%
Wheat 385,501 393,211 688,119 701,881 82.1
Barley 124,673 127,166 222,541 226,992 82.1
Sorghum 132,809 156,715 274,251 323,616 143.7
Other Feedstock
(forestry products)
523,642 638,843 1,117,975 1,308,031 149.8
Total Primary Organic $10,795,000 $13,351,404 $17,948,996 $22,274,619 106.3%
Secondary Organic Manufacturing
Soybeans 1,151,460 1,439,325 1,943,089 2,428,861 110.9
Cottonseed 50,132 51,135 62,385 63,632 26.9
Other oils 1,250,000 1,362,500 2,248,125 2,450,456 96.0
Ethyl alcohol mfg 2,288,305 2,906,147 4,882,328 6,200,556 171.0
Total Secondary Organic $4,739,897 $5,759,107 $9,135,926 $11,143,506 135.1%
Organic Shipment Value $15,534,897 $19,110,512 $27,084,922 $33,418,124 115.1%
Imports 3,523,073 3,734,457 3,958,525 3,681,739 4.5
Exports 15,009,288 15,159,381 15,310,975 12,183,089 -18.8
Organic Market Value $4,048,682 $7,685,588 $15,732,472 $24,916,775 515.4%
Technology Market Value $21,098,000 $21,986,400 $20,404,800 $23,832,320 13.0%
Total Market Value $25,146,682 $29,671,988 $36,137,272 $48,749,095 93.9%
Source: SBI
Shipments of Organic Biomass Feedstocks
Biofuels trade accounts for upwards of 15% of total global production. Ethanol trade alone
represents nearly 80% of global production and faces high tariffs in many countries. The U.S.
accounts for approximately 48% (nearly 10 billion gallons) of global biofuel production, with
the EU and Brazil accounting for the remainder. Brazil exports about 950 million gallons of
ethanol, or about half of world exports. In the U.S., biofuel imports comprise a small share of
domestic consumption since the tariff costs of importing ethanol typically exceed domestic
ethanol prices.
Since the U.S. is the worlds leading producer and exporter of corn, corn-based ethanol
manufactured outside of the U.S. will not likely become a significant competitor to U.S. corn
ethanol. SBI expects the U.S. export market for corn, as well as other feedstock components
of ethanol and biodiesel, to continue to decline through 2014. U.S. exports of biomass
manufacturing components have declined since 2004 at a CAGR rate of 3.5% to reach $12.2

October 2009 SBI 9
billion. A more substantial threat to the U.S. corn-ethanol export market will be how rapidly
other nations develop their cellulosic biofuel conversion technologies, maximize those
conversion efficiencies and create a viable and profitable export market. Biofuel legislation in
a biofuel exporting country may limit its total potential for exports, according to Brian
Jennings of the American Coalition for Ethanol
A closer look at feedstocks used for bio-based energy refining shows sharp declines in the
U.S. export value for organic resources other than corn. Japan remains the largest consumer
of U.S. produced wheat, for example, but its trade value has declined by 7% from $525.8
million in 2004 to $489.6 million in 2009. Overall U.S. exports of wheat have dipped 38.1%
since 2004 to reach $3.2 billion in 2009.
Table 1-4
U.S. Export Value of Wheat, by Country, 2004 and 2009
(in $ thousands)
Country 2004 2009
Percent
Change
2009
Share
Japan $525,789 $489,578 -6.9% 15.3%
Mexico 469,405 359,316 -23.5 11.2
Nigeria 389,355 433,142 11.2 13.5
Iraq 50,764 0 -100.0 0.0
Philippines 223,150 144,550 -35.2 4.5
Egypt 451,520 119,098 -73.6 3.7
Iran 0 30,310 100 0.9
Korea 230,998 193,330 -16.3 6.0
Venezuela 111,686 77,902 -30.2 2.4
Indonesia 18,511 86,486 367.2 2.7
Colombia 107,616 114,144 6.1 3.6
Taiwan 188,997 137,582 -27.2 4.3
Brazil 8,004 0 -100.0 0.0
Thailand 98,364 156,331 58.9 4.9
Guatemala 34,416 69,514 102.0 2.2
Subtotal $2,908,576 $2,411,282 -17.1% 75.2%
All Other $2,272,412 $797,184 -64.9% 24.8%
Total $5,180,988 $3,208,466 -38.1% 100.0%
Source: U.S. Department of Commerce with Estimates by SBI
Imports of Organic Biomass
Global production and foreign demand could soon interact with the U.S. domestic biofuels
market if price relationships make exporting biofuels economically attractive to America.

10 SBI October 2009
However, continued rapid growth in domestically produced renewable fuels demand suggests
that U.S. prices may be sufficiently strong to attract additional imports from foreign
producers, if their production costs and demand situation result in lower finished goods
prices.
To compete in the U.S. market, the price of foreign-produced liquid biofuels would have to
be low enough to more than cover the costs of transportation to the U.S. and any tariff
(currently 54 cents per gallon of ethanol for most countries) imposed on U.S. imports.
However, lower prices would stimulate an increase in the total quantity consumed. Imports
would also affect domestic feedstock markets by reducing demand and prices for U.S.
feedstocks used in the domestic production of biofuels.
U.S. Shipments of Biomass Conversion Technology
Components
The refining of biomass to liquid biofuels and electricity requires several components
throughout the conversion process, including boilers, furnaces, metal tanks and cans. Many
bioenergy manufacturers are retrofitting petroleum refineries and paper mills to accommodate
the conversion process. Others are weighing the cost of building newer biorefinery plants that
can convert organic feedstocks and adopt next-generation cellulosic refining processes. U.S.
shipment value of biomass conversion technology components is expected to reach $18.6
billion in 2009, representing a five-year CAGR of 7.1%. The greatest CAGR growth (10%)
comes from power boilers and heat exchangers, which is expected to reach $4.2 billion in
2009.

October 2009 SBI 11
Table 1-5
U.S. Shipment Value of Biomass Conversion Technology Components, 2004 to 2009
(in $ millions)
Description 2004 2005 2006 2007 2008 2009 (e) CAGR
Power Boilers and Heat Exchangers $2,761 $2,975 $3,174 $3,361 $3,537 $4,229 10.04%
Heavy Gauge Metal Tanks 2,905 3,039 3,168 3,291 3,409 3,689 5.21
Metal Cans 4,419 4,540 4,658 4,773 4,884 5,447 5.35
Other Metal Containers 1,926 2,109 2,276 2,430 2,575 2,639 5.06
Industrial Furnaces 1,188 1,900 2,300 2,460 2,599 2,615 4.37
Total Shipments $13,199 $14,563 $15,516 $18,322 $17,004 $18,619 7.12%
Source: U.S. Dept. of Commerce, U.S. Census Bureau, Stat-USA, USA Trade Online. Calculated and estimated by
SBI
Total U.S. market value for biomass conversion technologies will exceed $23.8 billion in
2009, representing a five-year CAGR rate of nearly 6%. U.S. exports have grown at a faster
rate than imports to reach an estimated $25.2 billion in 2009.
Table 1-6
U.S. Market Value of Biomass Conversion Technology Components, 2004 to 2009
(in $ millions)
SBI
U.S. Backs Biofuel Innovations
Manufacturers of bio-based energy products and biomass conversion technologies understand
that a profitable future depends on their ability to use unconventional, and non-food, sources.
In the U.S., for instance, former President George W. Bush spoke in his 2006 State of the
Union address about producing biofuels by 2012 using woodchips, stalks, and switchgrass as
the primary source of cellulosic biomass. The "woodchips and stalks" represent resources that
are currently available from forestry and agriculture. Woodchips are logging residues and
urban wood residues that typically carry relatively high costs of removal, handling, and
transportation and the expense has not compared favorably to their relatively low value as an
energy resource. From the agricultural sector, the major cellulosic resources are corn "stalks"
and wheat straw. Both are left in the field after the grain is harvested in much of the U.S.
While a portion of this cellulosic residue does have a value in maintaining soil quality and
Total Shipments $13,199 $14,563 $15,516 $18,322 $17,004 $18,619 7.12%
Imports 18,255 21,898 24,548 26,822 28,857 30,435 10.76
Exports 13,632 16,961 18,966 23,158 25,456 25,222 13.09
Total Biomass
Technology Market Value
$17,822 $19,500 $21,098 $21,986 $20,405 $23,832 5.98%

12 SBI October 2009
crop productivity, in some higher yield areas of the U.S. there is an excess of residue
produced that could be removed in a more economically sound procedure to supply the needs
of biorefineries.
Federal Funding Fuels Innovation
Innovative developments in cellulosic-based biofuels, although more environmentally sound,
carry an overall higher price and greater manufacturing risk. Capital costs for a next-
generation cellulosic ethanol plant with a capacity of 50 million gallons per year are
estimated by one leading producer to be more than $400 million, as compared with $67
million for a corn-based plant of similar size, and investment risk is high for a large-scale
cellulosic ethanol production facility. However, other studies have provided lower cost
estimates. The National Renewable Energy Laboratory tells SBI that the estimated total
capital costs for a cellulosic ethanol plant with a capacity of 69.3 million gallons per year is
$200 million. Its recent study showed that the costs (including capital and operating costs)
remained too high for a company to begin construction of a first-of-its-kind plant without
significant short-term advantages, such as low costs for feedstocks, waste treatment, or
energy. Significant reductions in the capital cost and operating costs of a cellulosic ethanol
plant will be needed for cellulosic ethanol to be economically competitive with petroleum-
based fuels.
Innovations in Biorefineries
Research efforts that lead to successful innovation of next-generation biofuels will lead to
further growth in construction projects of refineries that incorporate advanced biomass
conversion technologies. SBI expects seven different biorefinery concepts will dot the biofuel
processing landscape during the next decade.
Innovations in Biofuel Processing
Plants specifically designed for industrial processing to biofuels can be developed
concurrently with new biorefinery treatment and conversion processes. Resulting
technologies will lead to the fusion of agriculture, industrial biotechnology, and energy value
chains to enable an efficient and economically viable industry for conversion of plant
biomass to liquid fuels. Several examples of advanced biofuels are being developed that have
the potential to complement or even replace ethanol as the dominant biofuel. While still in

October 2009 SBI 13
early stage development, these fuels are being created to improve fuel properties and
circumvent production bottlenecks. Examples include technologies used to produce
alternative alcohols to be blended with gasoline. British Petroleum and DuPont have been
working together on butanol while Amyris Biotechnologies is working with synthetic biology
to produce alternative fuels. Other companies are experimenting on non-alcohols that can be
introduced into the supply chain in different ways than ethanol. For example, ADM and
ConocoPhillips are working together on the development of biocrude from cellulosic
feedstock sources that can be introduced at the oil refinery level. Another example is start-up
LS9, which is producing renewable petroleum that can be distributed through traditional
pipelines.
Biofuel Energy Policy Fuels Debate
Consumers are aware of impending changes in the composition of conventional fuels for their
vehicles, which are increasingly more fuel efficient and environmentally emissions friendly.
Biofuels for consumer vehicles will undoubtedly become more prevalent at the fuel pump as
governments pass stricter regulations on fuel composition. The U.S. Environmental
Protection Agency (EPA), for example, is proposing revisions to the National Renewable
Fuel Standard program (RFS program) that establish new specific volume standards for
cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel that must
be used in transportation fuel each year. The revised statutory requirements also include new
definitions for renewable fuels and the feedstocks used to produce them, including new
greenhouse gas emission (GHG) thresholds for renewable fuels. The regulatory requirements
for RFS will apply to domestic and foreign producers and importers of renewable fuel. The
current Renewable Fuel Standard program (RFS1) was established under the Energy Policy
Act of 2005 (EPAct). The EPA proposes to establish a revised annual renewable fuel standard
(RFS2). The volume standard under RFS2 was increased beginning in 2008 from 5.4 billion
gallons (Bgal) to 9.0 Bgal. Thereafter, the required volume continues to increase under RFS2,
eventually reaching 36 Bgal by 2022.
Biofuels Effect on Food Prices
The general price elasticity of ethanol and biodiesel is one consumer concern that biofuel
manufacturers should continue to monitor during the next five years. Another challenge is
improving consumer acceptance of biofuels based on current misconceptions about the
energys effects on local environments and food prices. The USDA has downplayed concerns

14 SBI October 2009
that the production of conventional biofuels is having serious consequences on the price of
food and overall supply of food. Agriculture Secretary Ed Schafer has stated that demand for
biofuels is having some impact on food prices, "but it is not a major factor." He said that
changing the direction of biofuels policy would not calm rampant food inflation. "The change
in the renewable fuel standard, the change in tariff or duty isn't going to affect food prices,"
said Schafer. Other factors, including high oil prices and increased global food demand have
been blamed for rising prices in the U.S.
Biofuels Lobbying Efforts
To sway public opinion in their favor, and secure additional funding and support from
government organizations, many biofuel manufacturers and industry trade groups have
increased their spending on public awareness campaigns and lobbying. Total spending on
biofuel-related lobbying in the U.S. reached nearly $44.5 million in 2008. An ethanol trade
group that represents biofuel makers spent $162,000 in 2008 to lobby the federal government
on incentives for the industry. The Renewable Fuels Association lobbied Congress on
renewable fuels legislation and waivers of fuel requirements during the first quarter of 2008,
according to an April 21, 2009 filing. Besides Congress, the Renewable Fuels Association
lobbied the Environmental Protection Agency and the departments of Agriculture and
Energy.
A group formed by Monsanto Co., Archer Daniels Midland, Deere & Co. and DuPont Co. is
using national advertisements and lobbyists on Capitol Hill to build the case that new
technologies can make it feasible to produce crop-based fuels like ethanol and biodiesel, even
as grain prices climb worldwide. Organizers of the newly formed Alliance for Abundant
Food and Energy said they want to convince consumers and politicians that both goals can be
met at once by increasing agricultural productivity.
Global Policies toward Biofuels
Although the U.S. is the largest producer of biofuels, it is keeping a close eye on the biofuel
policymaking activities of other nations to ensure it can protect its export market, and keep
tariffs on biofuel imports low. Government standards and mandates on future biofuel
production vary by nation, which poses challenges on the trade of biofueled vehicles (FFVs)
and their components. For instance, the second largest biofuel consuming nation, Brazil,
currently produces both hydrous and anhydrous ethanol. Hydrous ethanol has 96% ethanol

October 2009 SBI 15
and 4% water in its composition, whereas anhydrous ethanol is made up of 99.5% ethanol
and 0.5% water.

In 2006, total ethanol consumption made up 17.2% (9.9% hydrous and 7.3%
anhydrous) of the vehicle fuel pool with the rest being: 27.2% Gasoline A (pure gasoline
before blending with ethanol), 3.2% vehicular natural gas (VNG), 3.3% B2 (diesel blended
with 2% biodiesel), and 48.9% Diesel.
Market Value Forecast Through 2014
Given the unsettled global economy, particularly in the U.S., SBIs five-year market value
forecast of the bioenergy manufacturing industry is cautiously assertive. The U.S. will
undoubtedly maintain its global leadership position as its economy recovers through 2014
and its government continues to provide low-interest loans and grants to the private sector to
further R&D efforts in renewable energy, especially biomass. Brazil, too, will continue
expansion in biomass during the next five years although SBI expects that it will lose market
share to the U.S.
The U.S.s commitment to renewables through 2014 will be most evident in the rapid growth
of organic biomass manufacturing, especially corn and non-food sources such as forestry
products and tallow. SBI forecasts the U.S. shipment value of organic biomass manufacturing
to grow at a five-year CAGR rate of 19% through 2014 to reach more than $80 billion. The
shipment value of exports will slow through this period and grow at a 2% CAGR rate. Total
organic market value will increase from $24.9 billion in 2009 to $71.3 billion by 2014.

16 SBI October 2009
U.S., 47.60%
U.S., 60.60%
Brazil, 36.70%
Brazil, 27.20%
China, 3.60%
China, 3.70%
Germany, 5.70%
Germany, 3.70%
All Other, 6.40%
All Other, 4.80%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2014
Figure 1-2
Share of Global Market Value for Biofuel and Bioenergy Manufacturing by Country,
2009 and 2014
Source: SBI

Global Biofuels Market Chapter 2: Introduction and Overview

October 2009 SBI 17
Chapter 2 Introduction and Overview
Biomass is poised to become a significant source for renewable energy production during the
next decade. Many nations are investing in the research and development of technologies and
processes that convert biomass into electricity-generating resources and usable liquid
biofuels, including ethanol and biodiesel. Leaders realize that for biomass to compete as a
sustainable renewable form of energy, accelerated development and implementation of
enhanced refining processes that minimize impact on local environments and reduce the
threat to diminished food supply and other natural resources is required. Developing
innovative and sustainable biomass separation technologies will be a key factor for its long-
term industrial and commercial success.
Brazil, the United States (U.S.), and China are the largest producers of bioenergy and liquid
biofuels today and are leading the charge in emerging biomass conversion technology
research. Their objectives include optimizing domestic feedstocks, mainly corn and soybeans,
for biofuel development while minimizing their depletion as food sources. This Specialists in
Business Information (SBI) report delves into the global efforts to develop technologies that
improve the biomass refining and conversion processes associated with many different types
of biofuels and bioenergy. We cover the significant opportunities in technology
manufacturing that correlate to the growing consumption of bio-based energy among nations.
Report Scope
This report covers several components of the biomass technology conversion industry around
the world, including:
Overall market value of organic (feedstocks) and technology manufacturing by
nation
Production and consumption rates of ethanol, biodiesel and other biofuels compared
to alternative vehicle fuels; similar rates of electricity-generating sources, including
renewable energy
Biorefinery installations and their energy-generating capacities
Chapter 2: Introduction and Overview Global Biofuels Market

18 SBI October 2009
Innovations in biomass conversion technologies
Costs and benefits of bioenergy and biofuel adoption
Methodology
The report covers shipments, imports and exports, as well as the economic and market trends
driving the biomass technology industry. We identify key market trends and dynamics, and
profile major market players, outlining their strategies to maximize growth and profitability.
SBIs research methodology for this report involved aggregating, synthesizing, and analyzing
data from several sources, including government and several third-party market research
syndicated data suppliers. Historical data relating to the manufacturing and distribution of
products are culled from government sources. Analysis of these data provides the foundation
for our projections of overall market size and growth through 2014. Our projections also take
into account data that indirectly affects the growth of energy markets, such as information
provided by the U.S. Department of Energy and National Renewable Energy Laboratory.
Another component of our forecasts is the in-depth interviews we conducted with industry
experts on bioenergy and their associated conversion technologies, including:
Brian Wrenn, Director of the National Corn-to-Ethanol Research Center
Ned Stowe, Coordinator for the U.S. Sustainable Energy Coalition
Joan Glickman, Technology Manager for the U.S. Department of Energy (DOE),
Office of the Biomass Program
Brian Jennings, Executive VP of the American Coalition for Ethanol
George Douglas, Media Relations Manager of the U.S. National Renewable Energy
Laboratory (NREL)
Amani Elobeid, Food and Agriculture Policy Institute, Iowa State University
Jim Greenwood, President, Biotechnology Industry Organization

October 2009 SBI 19
Terminology
This report contains terminology and acronyms commonly used in the biofuel manufacturing
industry. Our interviews with experts help define these terms.
Biomass is plant matter converted into fuels or electricity. Biomass includes wood, vegetable
waste, and animal wastes. Biomass gases are derived principally from the fermentation of
biomass and solid wastes and combusted to produce heat and power. Included in this category
are landfill gas and sewage gas.
Primary biomass feedstocks are harvested or collected from the fields or forests where they
are grown. Examples of primary biomass feedstocks include grains and oilseed crops used for
transportation fuel production, and some residues from logging and forest operations that are
currently used for heat and power production.
Municipal waste comprises wastes produced by the residential, commercial and public
service sectors that are collected by local authorities for disposal in a central location for the
production of power. Hospital waste is included in this category.
Biorefineries are facilities that integrate biomass conversion processes and equipment to
produce fuels. The biorefinery is similar to a petroleum refinery, which can produce several
kinds of fuels from petroleum. The goal is for biorefineries to produce both high-volume
liquid fuels and high-value chemicals or products to address energy needs while enhancing
operation economics.
The U.S. NREL is involved with six biorefinery development projects focused on new
technologies for integrating the production of biomass fuels into a single facility. The
emphasis is on using improved technology and conversion processes to derive ethanol and
other chemicals, according to Bob Wallace, NREL Director. These projects include:
Second Generation Dry Mill Refinery project to enhance the economics of ethanol
dry mills by increasing ethanol yields.
Integrated Corn-based Biorefinery initiative to build a bio-based production facility
to convert corn into fermentable sugars for production of value-added chemicals.
Advanced Biorefining of Distiller's Grain and Corn Stover Blends project to develop
a biomass conversion technology to use distiller's grain and corn blends to achieve
significantly higher ethanol yields while maintaining the protein feed value.

20 SBI October 2009
There are four primary classes of systems used in biorefineries: direct-fired, co-fired,
gasification, and modular.
Direct-fired systems are similar to most fossil-fuel fired power plants. The biomass
fuel is burned in a power boiler or furnace to produce high-pressure steam. This
steam is introduced into a steam turbine, where it flows over a series of aerodynamic
turbine blades, causing the turbine to rotate. The turbine is connected to an electric
generator, so as the steam flow causes the turbine to rotate, the electric generator
turns and electricity is produced.
Co-firing systems involve substituting biomass for a portion of coal in an existing
power plant furnace. Much of the existing power plant equipment can be used
without major modifications, making co-firing less expensive than building a new
biorefinery plant.
Gasification systems operate by heating biomass in a furnace where the solid
biomass breaks down to form a flammable gas. The biogas can be cleaned and
filtered to remove problem chemical compounds. The gas can be used in more
efficient power generation systems called combined-cycles, which combine gas
turbines and steam turbines to produce electricity. In gasification, wood and bark are
heated in the presence of oxygen to produce a mixture of carbon monoxide and
hydrogen, which, is referred to as syngas.
Modular systems use some of the same technologies as direct- and co-firing, but on
a smaller scale that is more applicable to farms and small industry. These systems
are now under development and could be most useful in remote areas where biomass
is abundant and electricity is scarce.
Biodiesel is a clean burning alternative fuel, produced from domestic, renewable resources.
Biodiesel is derived from the vegetable oils extracted by crushing oil-seeds, although waste
from cooking oil or animal fats (tallow) may be used. The oil is strained by combining the
fatty acid molecules in the oil with methanol or ethanol. Biodiesel contains no petroleum, but
it can be blended at any level with petroleum diesel to create a biodiesel blend. It can be used
in diesel engines with little or no modifications. In the U.S., most biodiesel is made from
soybean oil or recycle cooking oils.
Ethanol (ethyl alcohol), according to Wallace of the NREL, is a clear, colorless liquid with a
characteristic, agreeable odor. Ethanol is made by fermenting and then distilling starch or

October 2009 SBI 21
sugar crops such as corn, sugar-cane, maize, sorghum, wheat and other grains, or fruit and
vegetable waste. Parts of the U.S. blend ethanol with gasoline to form an E10 blend (10%
ethanol and 90% gas). Other regions blend higher ethanol concentrations to make E85, or its
pure form E100. Flexible fuel vehicles (FFVs) in the U.S. are designed to use E85, while
E100 is used in Brazilian FFVs.
Table 2-1
Biomass Power Technologies
Technology
Category
Biomass
Conversion
Technology
Primary Energy
Form Produced
Primary Energy
Conversion and
Recovery Technology
Final Energy
Products
Direct
combustion
Stove/
Furnace
Heat Heat exchanger
Hot air,
hot water
Direct
combustion
Pile burners
Heat,
steam
Steam turbine Electricity
Direct
combustion
Stoker grate
boilers
Heat,
steam
Direct
combustion
Suspension boilers:
Air spreader
stoker or cyclonic
Heat,
steam
Direct
combustion
Fluidized-bed
combustor
FB bubbling
CFB- circulating
Heat,
steam
Direct
combustion
Co-firing in
coal-fired boilers
(several types)
Heat,
steam
Gasification
(atmospheric)
updraft, counter
current fixed bed
Low Btu
producer gas
Combustion boiler +
steam generator and
turbine
Process heat
or heat plus
electricity
Gasification
(atmospheric)
Downdraft,
moving bed
Low Btu
producer gas
Spark engine
(internal combustion)
Power,
electricity
Gasification
(atmospheric)
Circulating
Fluidized Bed
(CFB) dual vessel
medium Btu
producer gas
Burn gas in boiler
w/ Steam Turbine
Electricity
Gasification
(atmospheric)
Co-fueling in
CFB gasifiers
Low or medium
Btu producer gas
Combustion turbine or
boiler and steam turbine
Electricity
Slow pyrolysis
Kilns or
retorts
Charcoal Stoves and furnaces Heat
Fast (flash)
pyrolysis
Reactors
Pyrolysis oil
(bio-oil), charcoal
Combustion turbines,
boilers, diesel
engines, furnaces,
catalytic reactors
Heat, electricity,
synthetic liquid
fuels, (BTL)
Source: National Renewable Energy Laboratory
Cellulosic ethanol is a biofuel produced from wood, grasses, or the non-edible parts of
plants. It can be produced from lignocellulose, a structural material that comprises much of
the mass of plants. Corn stover, switchgrass, woodchips and the byproducts of lawn and tree
maintenance are some of the more popular cellulosic materials for ethanol production.

22 SBI October 2009
Production of ethanol from lignocellulose has the advantage of abundant raw material
compared to organic sources like corn and cane sugars, but requires a greater amount of
processing to make the sugar available to the microorganisms used to produce ethanol by
fermentation. According to Joan Glickman of the U.S. DOE, one of the benefits of cellulosic
ethanol is that it reduces greenhouse gas emissions (GHG) by 85% over reformulated
gasoline. By contrast, starch ethanol made from corn, which uses natural gas to provide
energy for the process, may not reduce GHG emissions at all depending on how the starch-
based feedstock is produced.
Megawatts. Watts are the yardstick for measuring electric power. A one hundred watt light
bulb, for example, is rated to consume one hundred watts of power when turned on. If such a
light bulb were on for four hours it would consume a total of 400 watt-hours (Wh) of energy.
Watts, therefore, measure instantaneous power while watt-hours measure the total amount of
energy consumed over a period of time. A megawatt (MW) is one million watts and a
kilowatt (kW) is one thousand watts. Both terms are commonly used in the power business
when describing generation or load consumption.

October 2009 SBI 23
Future Biomass Conversion Technologies
Conversion processes, which include several technologies that decompose biomass into
intermediate products, also come in many different forms and configurations. Different
feedstocks require different methods for conversion into energy-related products. Conversion
technologies may be classified at several levels. At the highest level, feedstock
decomposition processes are carried out principally through biochemical, thermochemical, or
chemical means. Emerging technologies promise to convert biomass to energy in more
efficient and cost-effective methods. These include:
Lignocellulosic biomass fermentation is a biochemical decomposition process through
which biomass containing lignin, cellulose, and hemicellulose is pretreated to break into
component sugars, and then is chemically decomposed to form ethanol and carbon dioxide.
Transesterification is a chemical reaction through which alcohol groups from an alcohol
catalyst bond to fatty acids from oils, fats, and greases. This process reduces the viscosity of
the fatty acids and converts them to a combustible form.
Anaerobic digestion is a biochemical process through which biomass or other organic matter
is consumed by bacteria and subsequently released in a gaseous state. This process occurs in
the absence of oxygen. Different types of bacteria can be used for this process.
Table 2-2
Future U.S. Biomass Conversion Technology Research Projects
Company Conversion Technology Feedstock Start Up Time
Albengoa Dilute acid hydrolysis, gasification Corn stover 2010
Alico Gasification, fermentation Citrus waste 2010
Blue Fire Concentrated acid hydrolysis Construction waste 2009
Iogen Enzymatic hydrolysis Wheat straw 2010
Poet Enzymatic hydrolysis Corn stover 2010
Range Fuels Gasification, catalysis Wood residues 2011
Source: U.S. Department of Energy
Sugar and Thermochemical (Syngas) Platforms. Two of the emerging biorefinery
platforms are the sugar platform and the thermochemical platform (also known as the syngas
platform). Sugar platform biorefineries would break biomass down into different types of
component sugars for fermentation or other biological processing into various fuels and

24 SBI October 2009
chemicals. Thermochemical biorefineries would convert biomass to synthesis gas (hydrogen
and carbon monoxide) or pyrolysis oil, the various components of which could be directly
used as fuel.
Flash Pyrolysis is a process used to convert biomass into renewable diesel fuel or bio-oil.
This process occurs by heating compact solid fuels in the absence of air at temperatures
between 400 and 500 degrees Celsius for less than two seconds and then condensing the
resulting vapors within two seconds. The bio-oils produced are suitable for use in boilers or
in turbines designed to burn heavy oils for electricity generation.
First- and Second-Generation Liquid Biofuels
First-generation liquid biofuels, either ethanol or biodiesel, are made from various crops
specific to a localized geography. Corn and other starches dominate production in temperate
regions while sugar and palm oils are used in tropical areas. Brazil focuses on sugar-based
conversion technologies and the U.S. on starch fermentation. Countries in Asia and the
Pacific Rim, meanwhile, have expanded their sugar-cane production systems.
Second-generation biofuel technologies are expected to produce competitive liquid biofuels
from cellulosic feedstocks, including wood and agricultural residues. The technology for
commercially viable conversion of cellulose to liquid biofuels is currently in the
demonstration phase with cellulosic liquid biofuel the closest to mass commercialization,
especially in the U.S. Agricultural residues will be among the least expensive liquid biofuel
feedstocks. Residues from the production of cereals, including maize, wheat, and barley, are
among the feedstocks that can be converted to bioethanol. Residues from forest products
comprise only a small proportion of todays liquid biofuels, but research is increasing into
economically viable conversion technologies for wood products. Second-generation
processes could be more profitable when integrated into established manufacturing facilities,
such as paper mills, that produce or have access to low-cost biomass. The U.S. is among the
most technologically advanced countries for cellulosic conversion processes.
Ethanol Production Processes
Corn conversion to ethanol follows one of two technologies: dry corn milling or wet corn
milling. Over 80% of U.S. ethanol production uses a dry-mill process, and the rest comes
from wet corn milling. Dry corn milling uses the starchy part of corn to produce ethanol,
distilled dried grains and carbon-dioxide gas, which can be collected or released. The primary

October 2009 SBI 25
energy sources in both dry and wet milling are coal, natural gas, and electricity (from burning
coal or from a power grid). Wet milling initially accounted for most of the ethanol fuel
production in the U.S., but new construction has shifted to dry mills, partly because dry mills
cost less to build. Thus, most new technologies are being developed for dry-mill production.
Table 2-3
Energy use and Net Energy Value per Gallon Dry vs. Wet Milling Processes
(BTUs per gallon)
Source: U.S. Dept. of Agriculture
In the wet mill the grain must be separated into its components. First, the corn is steeped in a
solution of water and sulfur dioxide (SO2) to loosen the germ and hull fiber. This 30- to 40-
hour extra soaking step requires additional tanks and metal cans that contribute to the higher
refinery construction costs. Then the germ is removed from the kernel, and corn oil is
extracted from the germ. The remaining germ meal is added to the hulls and fiber to form the
corn gluten feed (CGF) stream. Gluten, a high-protein portion of the kernel, is also separated
and becomes corn gluten meal (CGM), a high-value, high-protein (60%) animal feed. The
corn oil, CGF, CGM, and other products that result from the production of ethanol are termed
coproducts.
In dry milling, the entire corn kernel or other starchy grain is first ground into flour, which is
referred to in the industry as meal and processed without separating out the various
component parts of the grain. The meal is slurried with water to form a mash. Enzymes are
added to the mash to convert the starch to dextrose, a simple sugar. The mash is processed in
a high-temperature cooker to reduce bacteria levels ahead of fermentation. The mash is
cooled and transferred to fermenters where yeast is added and the conversion of sugar to
ethanol and carbon dioxide begins.
Biomass Feedstocks
Growth of the bioenergy industry largely depends on the quantity of available biomass
worldwide, and on the industry's ability to use biomass for energy production. Ensuring a
Production Process Dry Milling Wet Milling
Corn Production 18,875 18,551
Corn Transport 2,138 2,101
Ethanol Conversion 47,116 52,349
Ethanol Distribution 1,487 1,487
Total Energy Used 69,616 74,488
Net Energy Value 6,714 1,842

26 SBI October 2009
sustainable and functional supply of biomass feedstock requires research on all elements of
the biomass feedstock supply chain, from plant breeding to crop production and harvesting
technologies. Sustainable feedstock production includes all the steps required to produce
biomass feedstocks to the point they are ready to be collected or harvested from the field or
forest. Feedstock logistics encompass all the unit operations necessary to move biomass
feedstocks from the field to the biorefinery, while ensuring the delivered feedstock meets
biorefinery specifications.
Soybean oil is the most widely used biodiesel feedstock. According to U.S. data on plant
capacity and feedstock utilization, soybean oil accounts for at least 40% of biodiesel
feedstock. Since many plants report utilization of multiple feedstocks, the actual soybean oil
share is likely much larger. Other vegetable oils made up much smaller shares. Canola
accounted for about 5% and recycled and waste vegetable oil for less than 1% of feedstock
that was explicitly reported. While soybean oil is the predominant biodiesel feedstock now,
there are other options, including other vegetable oils and recycled cooking oil. The choice of
feedstock for biodiesel production depends largely on the available supply and its price.
A sustainable, adequate resource supply is one of the more significant barriers to increased
penetration of biomass conversion technologies and processes. Research priorities for
biofuels include improving technologies that leverage less expensive feedstocks, cellulosic-
based sources and producing large amounts of biomass globally. Ken Bossong of the U.S.
Sustainable Energy Coalition says three factors undermine further growth of biomass for
energy: improved performance, reduced production costs, and the inherent impact of
conversion technologies on the environment and society. Operating costs still differ
significantly from country to country due to wide variations in the cost of the biomass fuel
delivered to the gate of the conversion plant. Such variations are due to the cost of the raw
biomass local policies related to agriculture and forestry, including taxes and labor costs for
harvesting the resources.
A key to developing cost-competitive cellulosic biofuels is reducing the processing and
capital cost and improving the efficiency of separating and converting cellulosic biomass into
fermentable sugars. Research currently focuses on high-yield feedstocks, more efficient
enzymes, and more robust microorganisms to advance biochemical conversion processes.
The next chapter discusses bioenergy development activities worldwide in greater depth.

Global Biofuels Market Chapter 3: Activities & Technologies

October 2009 SBI 27
Chapter 3 World Bioenergy Activities
& Technologies
Many nations are increasing their dependence on renewable energy to stave off the growing
costs of traditional energy sources, such as oil and gas, for manufacturing electricity, fueling
vehicles, and generating other power. While many countries are increasing their portfolio of
wind and solar energy technological capabilities, this report will show that the U.S., China,
India and Brazil remain the countries most determined to grow their domestic use of bio-
based energy within their renewable portfolio.
Our analysis of the role of biomass in manufacturing energy, particularly electricity and
vehicle fuels, begins with its position relative to the other consumed sources of energy within
and among nations. For the purposes of a global perspective, we have broken down the
energy types by two regions -- member nations of the Organization for Economic
Cooperation and Development (OECD), and non-OECD members. OECD is the group that
unites the governments of countries committed to democracy and the market economy to
support their sustainable economic growth and raise their living standards. Members include
the U.S., United Kingdom, France, Germany, and Japan.
Compared to other fuel sources, renewable energy, including biomass, comprises about 4% of
the total consumption within the global energy market. Petroleum is the leading energy
source, comprising an estimated 34% of the total global consumption in 2009. Consumption
of renewable energy sources is growing rapidly between 2002 and 2009, and is expected to
achieve a Compounded Annual Growth Rate (CAGR) of 31.4% for the seven-year period.
OECD nations now consume about 20 billion British Thermal Units (BTUs) of electricity
from renewable sources, compared to 2.7 billion in 2002. SBI estimates that by 2014, OECD
nations will increase their consumption of renewable energy to nearly 25.5 billion BTUs.

Chapter 3: Activities & Technologies Global Biofuels Market

28 SBI October 2009
Table 3-1
World Consumption of Energy, by Energy Types and Country Group,
2002, 2009 and 2014
(in quadrillion BTUs)
Energy Type/
Country Group
2002
2009
(e)
2014
CAGR
2002 to 2009
CAGR
2009 to 2014
2009
Share
2014
Share
Petroleum
World Total 157.9 179 183.9 1.80% 0.54% 33.70% 32.16%
Organization for Economic
Cooperation & Development
Countries (OECD)
95.7 102.1 106.7 0.90 0.89 19.20 18.66
Non OECD 62.2 76.9 81.2 3.10 1.09 14.50 14.20
Dry Natural Gas
World Total 95.7 115.8 120.8 2.80% 0.85% 21.80% 21.12%
OECD 51.4 57.2 61.4 1.50 1.43 10.80 10.74
Non OECD 44.3 58.6 61.1 4.10 0.84 11.00 10.68
Coal
World Total 98.2 137.3 142.9 4.90% 0.80% 25.80% 24.99%
OECD 44.9 50.4 54.8 1.60 1.69 9.50 9.58
Non OECD 53.2 87 91.3 7.30 0.97 16.40 15.96
Net Hydroelectric Power
World Total 26.5 38.3 44.7 5.40% 3.14% 7.20% 7.82%
OECD 12.7 16.1 19.3 3.40 3.69 3.00 3.37
Non OECD 13.8 22.2 25.8 7.10 3.05 4.20 4.51
Net Nuclear Electric Power
World Total 26.7 37.8 48.2 5.10% 4.98% 7.10% 8.43%
OECD 22.7 26.8 29.3 2.40 1.80 5.00 5.12
Non OECD 4 11 18.8 15.70 11.31 2.10 3.29
Net Geothermal, Solar, Wind, and Biomass Electric Power
World Total 3.4 23.1 31.4 31.40% 6.33% 4.30% 5.49%
OECD 2.7 20 25.5 33.00 4.98 3.80 4.46
Non OECD 0.7 3.1 5.7 23.70 12.95 0.60 1.00
Total Energy
World Total 408.4 531.4 571.9 3.80% 1.48% 100.00% 100.00%
OECD 230.2 272.5 297.0 2.40% 1.74% 51.30% 51.93%
Non OECD 178.2 258.9 283.9 5.50% 1.86% 48.70% 49.64%
Source: Energy Information Administration with estimates by SBI


October 2009 SBI 29
Figure 3-1
Global Share of Energy Consumption, by Source, 2009 vs. 2014
33.7%
32.2%
21.8%
21.1%
25.8%
25.0%
7.2%
7.8%
7.1%
8.4%
4.3%
5.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2009 2014
Petroleum Natural Gas Coal Hydroelectric Nuclear Renewable

Source: SBI
Within the U.S., biomass is the largest source of renewable energy, recently surpassing
hydroelectric power on total consumption. In 2009, biomass will contribute an estimated 58%
share of the total renewable energy consumption portfolio, and grow to nearly 60% by 2014.
Table 3-2
U.S. Renewable Energy Consumption, by Source, 2008, 2009 and 2014
(trillion BTU)
Source 2008 2009 2014 CAGR
2009
Share
2014
Share
Biomass 4222 4850 5700 3.3% 57.8% 58.9%
Hydroelectric 2557 2700 3075 2.6 32.2 31.8
Solar 85 92 104 2.5 1.1 1.1
Wind 322 358 422 3.3 4.3 4.4
Other 370 390 380 -0.5 4.6 3.9
Total 7556 8390 9681 2.9% 100.0% 100.0%
Source: EIA and SBI

30 SBI October 2009
Global energy consumption changes through the next decade will be directly affected by a
nations economy and its ability to develop the technological capability to embrace emerging,
cleaner energy resources, such as biomass. Nations agree that world oil prices are likely to
remain high through 2014 and SBI expects global liquid fuel consumption growth to remain
flat through this period. Bio-based energy, therefore, can only benefit from the trend of
sustained high price of oil and a growing interest to convert to less expensive, more
environmentally friendly energy. Slower population growth in OECD nations is contributing
to lower than expected rates of increase in energy demand. In non-OECD nations, economic
growth and commerce are expected to grow, which will increase demand for energy in many
of its service industries.
To keep pace with changing domestic energy demands, countries invested in the long-term
success of biomass will assess their capabilities to convert available resources into liquid
biofuels and electricity, including the retrofitting of established petroleum plants and paper
mills with biomass conversion technology, and the building of new biorefineries. Power plant
capacity and generation production vary by fuel type. In the U.S., for example, hydropower
comprises nearly 64% of the total renewable energy capacity nationwide, and represents 63%
of the total renewable energy generated. SBI expects that biomass will begin to take share
away from hydropower during the next five years, especially in overall energy generation.
Biomass currently comprises a 10% share of total renewable energy generation and will
likely reach 12.5% by 2014, although overall capacity share will remain flat. SBI attributes
this increase in generation to accelerated efforts among bioenergy companies to generate
electricity and liquid biofuels more efficiently and economically.


October 2009 SBI 31
Table 3-3
U.S. Renewable Energy Capacity and Electricity Generation, by Source, 2009 and 2014
Source: Energy Information Administration with Projections by SBI
Share of biomass among all electricity generation sources is small in OECD and non-OECD
nations, representing about 1% of the total and will likely grow to 2% by 2014. Generating
capacity of biomass will grow at an expected CAGR rate of 7.6% within the OECD region,
representing the fastest rate of all production sources.

Capacity
(GW)
2009 2014
CAGR
2009 to 2014
2009
Share
2014
Share
Hydropower 77.43 77.59 0.0% 63.8% 62.9%
Geothermal 2.40 2.60 1.7 2.0 2.1
Municipal Solid Waste 3.77 4.38 3.0 3.1 3.6
Biomass 6.84 7.49 1.8 5.6 5.6
Solar 1.64 5.58 27.7 1.4 1.9
Wind 29.22 30.83 1.1 24.1 24.0
Total 121.31 128.48 1.2% 100.0% 100.0%
Generation
(billion KWh)
2009 2014
CAGR
2009 to 2014
2009
Share
2014
Share
Hydropower 260.10 293.44 2.4% 62.2% 60.0%
Geothermal 16.84 18.62 2.0 4.0 3.9
Municipal Solid Waste 17.26 22.05 5.0 4.1 4.9
Biomass 42.66 83.99 14.5 10.2 12.5
Solar 2.78 9.67 28.3 0.7 0.9
Wind 78.61 84.49 1.5 18.8 17.9
Total 418.25 512.26 4.1% 100.0% 100.0%

32 SBI October 2009
Table 3-4
Electricity Generation Capacity, by Source and Region, 2009 and 2014
(GwH)
Source and Region 2009 2014 CAGR 2009 Share 2014 Share
OECD
Production from:
Coal 4,638,002 5,472,842 3.4% 37.3% 36.8%
Oil 492,087 536,375 1.7 4.0 3.6
Gas 2,476,119 3,342,761 6.2 19.9 22.5
Biomass 170,095 244,936 7.6 1.4 1.6
Waste 71,522 86,542 3.9 0.6 0.6
Nuclear 2,779,575 2,974,145 1.4 22.4 20.0
Hydroelectric 1,606,590 1,943,974 3.9 12.9 13.1
Geothermal 44,940 54,827 4.1 0.4 0.4
Solar 3,700 5,328 7.6 0.0 0.0
Wind 137,095 211,126 9.0 1.1 1.4
Other 11,469 11,813 0.6 0.1 0.1
Total OECD 12,431,194 14,884,669 3.7% 100.0% 100.0%
Non-OECD
Production from:
Coal 4,512,469 5,821,085 5.2 45.1 44.2
Oil 801,248 953,486 3.5 8.0 7.2
Gas 2,016,013 2,439,376 3.9 20.2 18.5
Biomass 34,437 40,636 3.4 0.3 0.3
Waste 6,416 6,544 0.4 0.1 0.0
Nuclear 516,200 763,977 8.2 5.2 5.8
Hydroelectric 2,075,736 3,092,846 8.3 20.7 23.5
Geothermal 24,963 25,213 0.2 0.2 0.2
Solar 183 236 5.2 0.0 0.0
Wind 603 886 8.0 0.0 0.0
Other 16,391 16,719 0.4 0.2 0.1
Total Non-OECD 10,004,660 13,161,003 5.6% 100.0% 100.0%
World Total 22,435,853 28,045,672 4.6% -- --
Growth in electricity production from biomass varies by country. In the European Union,
France will pour resources into nuclear energy development at a much higher rate than
biomass. Its share of biomass generation capacity will remain less than 1%, and hover at
2,100 GwH through 2014. Compare that to nuclear, which will grow from 486,206 GwH
generating capacity in 2009 to more than 630,000 GwH in 2014, representing a CAGR rate of
5.5% and a share of nearly 79%.


October 2009 SBI 33
Table 3-5
Electricity Generation Capacity, by Source in France, 2009 and 2014
(GwH)
Production from: 2009 2014 CAGR
2009
Share
2014
Share
Nuclear 486,206 636,930 5.50% 78.40% 78.50%
Hydroelectric 66,001 93,061 7.10 10.60 11.50
Gas 23,818 32,393 6.30 3.80 4.00
Coal 28,426 28,994 0.40 4.60 3.60
Oil 7,678 9,827 5.10 1.20 1.20
Wind 2,322 4,064 11.80 0.40 0.50
Waste 3,305 3,338 0.20 0.50 0.40
Biomass 2,091 2,133 0.40 0.30 0.30
Other 561 577 0.60 0.10 0.10
Solar 24 39 10.70 0.00 0.00
Total 620,431 811,357 5.50% 100.00% 100.00%
China and India, however, will likely increase their production of electricity from biomass at
a much faster rate through 2014, although biomass will remain a relatively small share of its
total energy portfolio. Biomass capacity in China will growth at a 9.2% CAGR rate for the
five year period through 2014 to reach 4,208 GwH. India, meanwhile, will experience a
nearly 10% CAGR rate of growth in biomass electricity generation capacity to reach 3,314
GwH by 2014.
Table 3-6
Electricity Generation Capacity, by Source in China, 2009 and 2014
(GwH)
2009
Share
2014
Share
Coal 2,485,514 3,007,472 3.90% 80.40% 78.00%
Hydroelectric 470,649 649,495 6.70 15.20 16.80
Nuclear 59,230 87,069 8.00 1.90 2.30
Oil 55,587 78,933 7.30 1.80 2.00
Gas 15,354 20,882 6.30 0.50 0.50
Wind 4,177 7,311 11.80 0.10 0.20
Biomass 2,715 4,208 9.20 0.10 0.10
Total 3,093,227 3,855,370 4.50% 100.00% 100.00%


34 SBI October 2009
Table 3-7
Electricity Generation Capacity, by Source in India, 2009 and 2014
(GwH)
2009
Share
2014
Share
Coal 549,031 697,269 4.90% 68.30% 65.80%
Hydroelectric 122,687 172,989 7.10 15.30 16.30
Gas 67,059 93,213 6.80 8.30 8.80
Oil 33,993 49,290 7.70 4.20 4.70
Nuclear 20,096 29,540 8.00 2.50 2.80
Wind 8,634 14,245 10.50 1.10 1.30
Biomass 2,084 3,314 9.70 0.30 0.30
Solar 21 34 0.00 0.00 0.00
Total 803,604 1,059,894 5.70% 100.00% 100.00%
Biomass comprises only 2% of Brazils electricity generation portfolio but the nation will
assertively move to grow its use of bioenergy during the next five years. Brazil will ease its
dependence on hydroelectric production and grow its biomass capacity to 29,107 GwH in
2014, representing a CAGR rate of nearly 13% for the five-year period.
Table 3-8
Electricity Generation Capacity, by Source in Brazil, 2009 and 2014
(GwH)
2009
Share
2014
Share
Hydroelectric 376,709 459,585 4.10% 83.35% 80.92%
Biomass 15,993 29,107 12.70 3.54 5.12
Gas 19,720 24,847 4.70 4.36 4.37
Nuclear 14,854 21,836 8.00 3.29 3.84
Oil 13,401 18,761 7.00 2.96 3.30
Coal 11,044 13,584 4.20 2.44 2.39
Other 256 264 0.00 0.06 0.05
Total 451,977 567,984 4.70% 100.00% 100.00%
In the U.S., the DOE and the Department of Agriculture are committed to expanding the role
of biomass as an energy source. They support biomass energy as a way to reduce the need for
oil and gas imports, and as a way of growing economies associated with agriculture and
forestry. The production and use of ethanol displaces crude oil needed to manufacture
gasoline. According to the Energy Information Administration, imports account for more than
65% of the U.S. crude oil supplies and oil imports are the largest component of the expanding
U.S. trade deficit. The production of nine billion gallons of ethanol means that the U.S.
needed to import 321.4 million fewer barrels of oil in 2008 to manufacture gasoline, or

October 2009 SBI 35
roughly the equivalent of 5% of total U.S. crude oil imports. The value of the crude oil
displaced by ethanol amounted to $32 billion in 2008.
Table 3-9
Bioenergy* Supply, by Region, 2006, 2009 and 2014
(GwH)
The dependence of OECD countries on oil imports is also expected to increase over the next
few years. In 2000, oil imports accounted for 52% of their energy requirements, but SBI
expects this to rise to 65% by 2014. Many countries now consider that it is important for
them to reduce their overdependence on traditional energy sources, particularly oil-importing
developing countries that frequently spend a large proportion of their foreign currency
reserves on oil import.
Region 2006 2009 2014
CAGR
2009 to 2014
2006
Share
2009
Share
2014
Share
OECD Europe 1,025,354 1,192,148 1,458,461 4.1% 6.8% 6.9% 6.8%
Production 998,548 1,155,944 1,405,058 4.0 -- -- --
Imports 34,164 44,244 62,453 7.1 -- -- --
Exports (7,358) (8,040) (9,050) 2.4 -- -- --
OECD North America 855,299 1,334,820 2,416,485 12.6% 5.7% 7.7% 11.2%
Production 854,718 1,334,126 2,415,622 12.6 -- -- --
Imports 620 760 996 5.6 -- -- --
Exports (39) (66) (132) 14.9 -- -- --
OECD Pacific 114,591 118,123 123,026 0.8% 0.8% 0.7% 0.6%
Production 114,267 117,729 122,509 0.8 -- -- --
Imports 324 397 520 5.6 -- -- --
Exports -- (3) (4) 7.1 -- -- --
OECD Total 1,995,244 2,645,091 3,997,972 8.6% 13.3% 15.3% 18.6%
Production 1,967,533 2,607,800 3,943,189 8.6 -- -- --
Imports 35,108 45,400 63,969 7.1 -- -- --
Exports (7,397) (8,109) (9,186) 2.5 -- -- --
Non-OECD 10,997,879 12,014,771 13,516,849 2.4% 73.4% 69.4% 62.8%
Production 11,006,838 12,027,469 13,537,023 2.4 -- -- --
Imports 520 619 782 4.8 -- -- --
Exports (9,479) (13,318) (20,956) 9.5 -- -- --
World 14,988,367 17,304,952 21,512,794 4.4% -- -- --
Production 14,941,905 17,243,069 21,423,400 4.4 -- -- --
Imports 70,736 91,419 128,720 7.1 -- -- --
Exports (24,274) (29,536) (39,327) 5.9 -- -- --

36 SBI October 2009
Table 3-10
Bioenergy* Production, by Country, 2006, 2009 and 2014
(GwH)
Country 2006 2009 2014
CAGR
2009 to 2014
2006
Share
2009
Share
2014
Share
OECD North America 855,299 1,334,820 2,416,485 12.6% -- -- --
United States 681,440 1,077,470 1,984,764 13.0 79.7% 80.7% 82.1%
Other 173,860 257,350 431,722 10.9 20.3 19.3 17.9
OECD Europe 1,025,354 1,192,148 1,458,461 4.1% -- -- --
United Kingdom 42,443 49,839 61,742 4.4 4.1% 4.2% 4.2%
France 131,216 160,745 210,704 5.6 12.8 13.5 14.4
Germany 139,352 165,971 209,534 4.8 13.6 13.9 14.4
Other 712,343 815,593 976,481 3.7 69.5 68.4 67.0
OECD Pacific 114,591 118,123 123,026 0.8% -- -- --
Japan 43,048 44,353 46,153 0.8 37.6% 37.5% 37.5%
Other 71,542 73,771 76,872 0.8 62.4 62.4 62.4
Non-OECD 10,997,879 12,014,771 13,516,849 2.4% -- -- --
Brazil 700,164 833,906 1,052,787 4.8 6.4% 6.9% 7.8%
China 2,583,675 2,906,283 3,399,940 3.2 23.5 24.2 25.2
India 1,857,744 2,405,833 3,396,030 7.1 16.9 20.0 25.1
Europe 71,976 76,382 82,678 1.6 0.7 0.6 0.6
Thailand 199,852 218,384 245,793 2.4 1.8 1.8 1.8
Other 5,584,467 5,573,983 5,339,621 -0.9 50.8 46.4 39.5
Brazilian fuel consumption data recently released by its national regulatory agency for
petroleum, natural gas and biofuels, confirm that ethanol consumption has surpassed that of
gasoline for automotive use in the country. In 2008, Brazil consumed 281.3 million gallons of
ethanol. The fuel consumption growth in Brazil is in part attributed to the economic and
income growth in the country. Lower interest rates and improvements in credit and financing
have contributed to an increase in sales of new vehicles.
Growth in bioenergy, including electricity and liquid automotive fuels, is inherently
dependent on the projected supply of converted biomass produced domestically or via
imports. Some nations rely on the import market more heavily than domestic production,
which places a greater dependence on volatile foreign currency exchange rates to keep their
bioenergy inventory competitively stocked. Non-OECD nations, most notably China, Brazil
and India, currently control about 69% of the total bioenergy supply, although that will likely
fall to 63% by 2014 as OECD nations look to increase their domestic production rates.
Within the OECD North America region, for instance, domestic supply production of
biofuels will grow at a CAGR rate of nearly 13% to reach more than 2,400,000 GwH.

October 2009 SBI 37
External Factors Affect Growth of Biofuels
Many forces affect the growth of liquid biofuel and bioenergy activities throughout the
production supply chain. Petroleum prices, for example, directly determine biofuel supply
and demand. As substitutes or additives to conventional gasoline and diesel, biofuels demand
is directly enhanced by higher oil prices. Other interactions exist between energy markets and
feedstock markets. Increased biofuel production directly affects feedstock production and
raises prices by competing for resources and vying with other users. Higher oil prices help
biofuel producers accommodate these higher costs, but indirectly affect supply by raising
input and transportation costs for biofuel feedstock.
Meanwhile, expenses from indirect energy use, such as fertilizers, also contribute to operating
expenses for some biomass crops, such as corn. But the impacts of higher energy prices vary
by type of feedstock. The impact depends on the share of energy costs in total operating costs
of the feedstock being produced, as well as the volume and mass of the feedstock being
delivered. Heavier feedstocks are more expensive to transport. For instance, biodiesel can be
produced from soybean oil for $1.80 to $2.40 per gallon ($15.20 to $20.30 per million Btu)
and from yellow grease for $0.90 to $1.10 per gallon ($7.60 to $9.30 per million Btu).
Feedstock costs for virgin soybean oil, which are dictated by commodity markets and vary
between $0.20 and $0.30 per pound, constitute 70% to 78% of final production costs.
Although beef tallow may be available in large quantities at low cost, it has not been
produced as a feedstock for biodiesel. Animal fats such as beef tallow are less uniform than
processed vegetable oils and require more processing to produce biodiesel.

38 SBI October 2009
Table 3-11
Consumption of Bioenergy* Supply, by Region, 2006, 2009 and 2014
(GwH)
Through 2014, SBI projects the U.S. to lead the world in global production of bio-based
energy activity, growing at a five-year CAGR rate of 13%. Among non-OECD nations, India
and China will likely accelerate their bioenergy production rates faster than Brazil to
comprise nearly half of the output in 2014.
U.S. consumption of home-grown bioenergy will grow at a CAGR rate of nearly 12% for the
five-year period of 2009 to 2014 as the nation looks to reduce its dependence on imports.
If we examine the rates at which nations consume the bioenergy they produce domestically,
we see that several non-OECD nations are most efficient. China and India have nearly 100%
consumption rates of their total bioenergy produced, compared to the U.S. which consumes
roughly 82% of its produced biomass energy. This is likely to decline through 2014 as the
U.S. looks to produce and sell multiple products, besides fuel and electricity, from its
biomass conversion process. Its biorefineries will likely seek to greater production of several
high-value chemical products to enhance their overall profitability.
Region 2006 2009 2014 CAGR
OECD Europe 657,491 715,753 785,992 1.9%
United Kingdom 4,983 10,086 18,712 13.2
France 110,597 136,188 179,701 5.7
Germany 70,495 92,899 130,439 7.0
Other 471,415 476,581 457,141 -0.8
OECD North America 708,552 1,055,029 1,754,999 10.7%
United States 560,988 858,747 1,500,221 11.8
Other 147,565 196,281 254,778 5.4
OECD Pacific 93,368 92,839 91,086 -0.4%
Japan 24,647 24,825 25,016 0.2
Other 68,722 68,014 66,070 -0.6
OECD Total 1,459,411 1,863,621 2,632,077 7.1%
Non-OECD 10,066,390 10,841,363 11,920,441 1.9%
Brazil 528,892 612,105 739,696 3.9
China 2,567,738 2,884,487 3,366,853 3.1
India 1,844,877 2,383,038 3,347,166 7.0
Europe 70,777 75,109 81,301 1.6
Thailand 197,205 215,491 242,538 2.4
Other 4,856,900 4,671,133 4,142,888 -2.4

October 2009 SBI 39
Table 3-12
Percent of Domestically Produced Bioenergy Consumed, by Region,
2006, 2009 and 2014
Region 2006 2009 2014
OECD North America 82.8% 79.0% 72.6%
United States 82.3 79.7 75.6
Other 84.9 76.3 59.0
OECD Europe 64.1% 60.0% 53.9%
United Kingdom 11.7 20.2 30.3
France 84.3 84.7 85.3
Germany 50.6 56.0 62.3
Other 66.2 58.4 46.8
OECD Pacific 81.5% 78.6% 74.0%
Japan 57.3 56.0 54.2
Other 96.1 92.2 85.9
Non-OECD 91.5% 90.2% 88.2%
Brazil 75.5 73.4 70.3
China 99.4 99.3 99.0
India 99.3 99.1 98.6
Europe 98.3 98.3 98.3
Thailand 98.7 98.7 98.7
Other 87.0 83.8 77.6
Source: SBI
The efficiency among Asia-Pacific countries in bio-based energy production and
consumption makes them some of the worlds largest consumers of biomass for
transportation. Countries throughout Asia have introduced important technological and policy
initiatives to develop biofuels and to position themselves as a potential export source of their
supply of ethanol and biodiesel. A few countries are pursuing multilateral and bilateral
initiatives. To date, however, the biofuel activities of Asian countries remain in an early
development stage. The enactment of a new energy bill in 2007 requiring 130 billion gallons
of biofuels to be produced by 2022 in the U.S. and President Barack Obamas promise of a
$150 billion investment to green the countrys use of energy in the next 10 years have
encouraged the Pacific Rim countries to secure their sources of ethanol and biodiesel
internally or externally. Japan is working to enter into cooperative partnerships with Brazil
and other leading ethanol and biodiesel suppliers. Japan currently has a target of 3% ethanol
in gasoline and is considering increasing that to a 10% blend. The Brazilian petrochemical
company, Petrobras, and the Japanese conglomerate, Mitsui, are also trying to strengthen
cooperative ties to develop the ethanol and biodiesel industry. They are studying the viability
of new production in Brazil dedicated to Japan, including a focus on how biofuels would be
transported, transformed, and distributed. Petrobras formed a joint venture with Japan

40 SBI October 2009
82.8%
79.0%
72.6%
64.1%
60.0%
53.9%
81.5%
78.6%
74.0%
91.5%
90.2%
88.2%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
85.0%
90.0%
95.0%
2006 2009 2014
OECD North America OECD Europe OECD Pacific Non-OECD
Alcohol Trading, called the Brazil/Japan Ethanol Company, to import and distribute ethanol
in the Japanese market.
Figure 3-2
Percent of Domestically Produced Bioenergy Consumed, 2006, 2009, and 2014
Source: SBI
Food Prices Fuel Biomass Debate
Some nations are reluctant to invest in biomass conversion technology adoption because of
the volatility in commodity prices such as corn, wheat and sugar. An ethanol plant in Spain
ceased production in late 2007 after cereal prices skyrocketed. Production resumed in 2008
when prices dropped and the Spanish government mandated a compulsory blending
requirement for ethanol used for transportation fuel. The entire European Union, in fact, has
set a 2020 target of supplying 10% of its transportation needs with renewable sources,
including biofuels.
The global economic crisis should keep feedstock commodity prices low through year-end
2010, but an economic recovery could increase prices soon after. The EU has approved a
directive that stipulates that the energy-based share of biofuels should be nearly 6% by the
end of 2010. Meanwhile, the EU and India have taken measures to ensure biofuel

October 2009 SBI 41
requirements are met by non-food sources. The EUs Industry Committee said it will require
5% biofuel blends by 2015 and 10% by 2020, with no more than 4% of the target from
todays crop-based biofuels. India plans a 20% biofuel blend by 2017 from non-edible
sources grown on non-farming land. The country also called for the elimination of tax and
duties on biodiesel. India has been finalizing its biofuel policy for about two years. The new
rules promote biofuels by classifying biodiesel and bioethanol as declared goods to ease
commerce within and outside the countrys states. India's new rules call for the elimination of
tax and duties on biodiesel and the establishment of a minimum price for oil seeds used for
biodiesel to encourage growers. India also plans to give preference to homegrown biodiesels,
mandating they come from non-edible oil seeds and be grown on waste, degraded or marginal
lands. Biodiesel crops will not be allowed to grow on fertile, irrigated land, and the
government plans to ban the import of free fatty acids, such as palm oil. Indias biofuel plan
also pushes the government to encourage research and development, while aiding plantations,
processing and production technologies including cellulosic biofuels.
Since early 2008, world cereal and oilseed prices have risen sharply for various reasons.
Wheat prices increased by 126% from January to April 2008 compared to the same period in
2007. Corn prices increased 23% during early 2008. Prices for sugar reached a 25-year high
in 2006 but then retreated in 2008 largely due to an oversupply in the market. These recent
price spikes have occurred in the wake of increasing demand for food products, due to
population and economic growth in emerging economies, and are linked to long-standing
problems in the agricultural sector.

42 SBI October 2009
50
100
150
200
250
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Industrial Furnaces Corn Oilseeds Soybeans
Figure 3-3
U.S. Producer Price Index of Biomass Conversion Components, 2004-2014
Source: U.S. Bureau of Labor Statistics with Projections by SBI
Data from the U.S. Bureau of Labor Statistics show wide variations over time in the Producer
Price Index for various food commodities of the biomass conversion process. The PPI, which
measures the average change over time in the selling prices received by domestic producers
for their output, exceeds 200 in 2009 for corn, soybeans and oilseeds. The PPI for non-
commoditized biomass conversion components, such as furnaces, is currently below 200,
although SBI expects producer prices to continue to increase across all components through
2014.
Reduction of production prices will depend on the direction of the U.S. economy and, more
specifically, the decreased dependence on foreign supply of feedstocks and raw conversion
materials. In addition to enacting mandated amounts and blending targets, the U.S. will
impose tariffs on imported biofuels and require adherence to technical requirements. Those
result in a strong preference for domestically-produced feedstocks. Such policies may well
put pressure on prices and induce land-use changes, with reverberating effects on global
markets.

October 2009 SBI 43
United States Remains Hotbed of Biomass Activity
In the U.S., President Obamas directive to the DOE and the Environmental Protection
Agency to accelerate biofuel development has been questioned by advocates of corn-based
and soybean-based fuels. Congress has called for 36 billion gallons of biofuels by 2022. But
the EPA claims that doing so will translate to nearly 300 million fewer barrels of imported
oil. As a result, some biofuel players are looking at other sources of nonfood material. One of
the cheapest sources now is garbage, such as the municipal waste that BlueFire Ethanol plans
to use. Weyerhaeuser is exploring growing energy crops in its forests, as well as using wood
waste. Range Fuels will tap into forests in the Southeast for its Georgia facility.
China has shifted focus to sorghum to limit the use of corn for non-feed purposes. Feedstocks
such as wheat, palm oil, cassava, and jatropha are also being adopted in various countries,
including India, Malaysia, and Indonesia. More biofuel manufacturers are realizing that
nonfood organic materials, such as grass and wood, pose the greatest economic promise for
biofuels long-term economic sustainability. By 2016, in fact, U.S. bioethanol producers will
be required to switch to lignocellulosic feedstocks. Aquatic biomass (such as algae) will
provide another option, as will rapidly growing grass and tree species and organic refuse from
households and factories.
Wood resources contribute most to the biomass resources consumed in the U.S. and most of
that is used in the generation of electricity and industrial process heat and steam. The
industrial sector will likely use about 1.3 quadrillion Btu of biomass in 2009. The residential
and commercial sectors consume .59 quadrillion Btu of biomass; however, this figure may
understate consumption in these sectors due to unreported consumption, such as home
heating by wood collected on private property.


44 SBI October 2009
Table 3-13
U.S. Renewable Energy Consumption, by Sector and Source, 2009 and 2014
(in quadrillion BTUs)
Sector and Source 2009 2014
CAGR
2009 to 2014
2009
Share
2014
Share
Residential (biomass) 0.47 0.65 6.5% 6.1% 6.8%
Commercial (biomass) 0.12 0.12 0.0 1.6 1.3
Industrial 2.17 2.43 2.2 27.8 25.4
Conventional Hydroelectric 0.02 0.02 0.0 0.3 0.2
Municipal Waste 0.12 0.12 0.0 1.6 1.3
Biomass 1.34 1.39 0.8 17.1 14.6
Biofuels Heat and Coproducts 0.69 0.89 5.1 8.8 9.3
Transportation 0.98 1.60 10.4 12.5 16.7
Ethanol used in E85 0.00 0.12 209.5 0.0 1.2
Ethanol used in Gasoline Blending 0.88 1.17 5.9 11.3 12.3
Biodiesel used in Distillate Blending 0.10 0.22 18.4 1.2 2.3
Electric Power 4.06 4.97 4.1 52.0 51.9
Conventional Hydroelectric 2.54 2.87 2.5 32.6 30.0
Geothermal 0.35 0.41 3.2 4.5 4.3
Biogenic Municipal Waste 0.17 0.23 6.8 2.1 2.4
Biomass 0.21 0.59 22.6 2.7 6.2
Solar Thermal 0.01 0.02 12.9 0.1 0.2
Wind 0.78 0.84 1.5 10.0 8.7
Total Marketed Renewable Energy 7.81 9.57 4.1% 100.0% 100.0%
Ethanol production provides a substantial contribution to the American economy. The
industry spends in excess of $13 billion on raw materials, the largest share of which is for
corn and other grains, noted John Caupert, Director of the National Corn-to-Ethanol Research
Center. In addition to providing a reliable domestic market for American farmers, the ethanol
industry also provides the opportunity for farmers to enjoy some of the value added to their
commodity by further processing. Farmer-owned ethanol plants account for half of U.S. fuel
ethanol plants and almost 40% of industry capacity. The spending associated with ethanol
production and spending on new plant capacity circulates throughout the entire economy
several fold stimulating aggregate demand, supporting the creation of new jobs.
The cost to build a biomass-fired steam-turbine plant is approximately $2,500 per kilowatt of
installed capacity. This high cost of capital is attributed to the small plant size. Future capital
costs will decrease as more plants adopt advanced conversion technologies. An advanced
technology gasifier plant, for instance, will likely carry an estimated capital cost of $1,037

October 2009 SBI 45
per kilowatt. Projected total costs for electricity from biomass gasifier systems will range
from 4 cents to 5 cents per kilowatt hour in the U.S. southeast to as much as 7 cents per
kilowatt hour in the U.S. north central region.
U.S. generation of electricity from biomass exceeds 64 million MwH, and will likely grow at
a 7.4% CAGR rate through 2014 to reach 91.8 million MwH. A scan of different U.S.
geographical regions reveals differing levels of net biomass electricity generation as a share
of total renewable energy production. Biomass currently comprises more than half of the
renewable energy production in states in New England, South Atlantic and East North
Central regions. By 2014, SBI expects these regions will increase their dependence on
biomass conversion technologies to higher levels, with South Atlantic states growing its share
of biomass from 55% to 61%. South Atlantic states, in fact, comprise more than a quarter of
the 64 million megawatt hours of electricity generated from biomass in the U.S. Its share of
total biomass-produced electricity will grow to nearly 30% by 2014.
Table 3-14
U.S. Production of Electricity from Biomass and Other Renewable Sources, by Region,
2009
(MwH)
U.S. Region Biomass Share
Other
Renewables
Share Total
Share of
Biomass to Total
New England 9,850,000 15.4% 7,220,000 2.3% 17,070,000 57.7%
Middle Atlantic 5,330,000 8.3 31,225,000 9.8 36,555,000 14.6
East North
Central
5,575,000 8.7 5,490,000 1.7 11,065,000 50.4
West North
Central
1,980,000 3.1 17,300,000 5.4 19,280,000 10.3
South Atlantic 16,288,000 25.4 13,400,000 4.2 29,688,000 54.9
East South
Central
7,775,000 12.1 11,950,000 3.7 19,725,000 39.4
West South
Central
6,990,000 10.9 21,280,000 6.7 28,270,000 24.7
Mountain 880,000 1.4 37,940,000 11.9 38,820,000 2.3
Pacific
Contiguous
9,140,000 14.2 172,000,000 53.8 181,140,000 5.0
Pacific
Noncontiguous
350,000 0.5 2,145,000 0.7 2,495,000 14.0
Total 64,158,000 -- 319,950,000 -- 384,108,000 16.7%
Source: Energy Information Administration

46 SBI October 2009
Figure 3-4
Share of Electricity Produced from Biomass to Other Renewable Sources,
by U.S. Region, 2009 and 2014
54.9%
57.7%
50.4%
39.4%
24.7%
14.0%
14.6%
10.3%
5.0%
2.3%
61.3%
54.5%
52.4%
36.7%
19.3%
14.0%
10.9%
6.1%
6.0%
1.8%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
South Atlantic
New England
East North Central
East South Central
West South Central
Pacific Noncontiguous
Middle Atlantic
West North Central
Pacific Contiguous
Mountain
2009 2014

Source: SBI


October 2009 SBI 47
Table 3-15
U.S. Production of Electricity from Biomass and Other Renewable Sources, by Region,
2014
(MwH)
U.S. Region Biomass Share
Other
Renewables
Share Total
Share of
Biomass to Total
New England 14,282,500 15.6% 11,913,000 2.5% 26,195,500 54.5%
Middle Atlantic 5,489,900 6.0 44,651,750 9.4 50,141,650 10.9
East North
Central
6,578,500 7.2 5,984,100 1.3 12,562,600 52.4
West North
Central
2,039,400 2.2 31,313,000 6.6 33,352,400 6.1
South Atlantic 27,363,840 29.8 17,286,000 3.6 44,649,840 61.3
East South
Central
9,563,250 10.4 16,491,000 3.5 26,054,250 36.7
West South
Central
9,226,800 10.1 38,516,800 8.1 47,743,600 19.3
Mountain 1,135,200 1.2 62,601,000 13.2 63,736,200 1.8
Pacific
Contiguous
15,720,800 17.1 244,240,000 51.4 259,960,800 6.0
Pacific
Noncontiguous
357,000 0.4 2,187,900 0.5 2,544,900 14.0
Total 91,757,190 100.0% 475,184,550 100.0% 566,941,740 16.2%
Still, California remains the state with largest number of operational biorefineries. Its 41
biorefineries comprise nearly 27% of the share of total capacity in the U.S.

48 SBI October 2009
Table 3-16
Operational Biorefineries, by State, 2009
Number of Operation
Biorefineries
State
Name
Share of
Capacity
41 California 26.5%
15 Maine 15.7
11 Florida 8.4
8 New Hampshire 7.8
7 Michigan 6.9
6 Minnesota 5.5
5 Washington 5.0
6 Virginia 4.5
5 Wisconsin 3.4
3 Vermont 3.1
3 New York 2.0
1 North Carolina 1.9
6 Oregon 1.9
1 Alabama 1.4
3 Massachusetts 1.3
2 Pennsylvania 1.2
1 Georgia 0.9
4 Arkansas 0.6
2 Louisiana 0.5
2 Idaho 0.5
1 South Carolina 0.3
2 Ohio 0.3
1 Texas 0.2
2 Kentucky 0.1
1 Arizona 0.1
139 -- 100.0%
Source: National Electric Energy Database System
California will remain the leading state to generate biomass electricity. Its current generation
capacity exceeds 9.6 million MwH and that will grow at a 9.2% CAGR rate through 2014 to
reach nearly 15 million MwH. Florida is the second largest U.S. producer, with a 12.4% share
of the total.


October 2009 SBI 49
Table 3-17
State Biorefinery Generation Capacity, 2009 and 2014
(MwH)
State 2009 2014
CAGR
2009 to 2014
2009
Share
2014
Share
CA 9,638,488 14,939,656 9.2% 15.0% 16.3%
FL 7,942,282 9,689,584 4.1 12.4 10.6
PA 4,695,387 6,291,818 6.0 7.3 6.9
NY 4,497,057 5,126,645 2.7 7.0 5.6
IL 4,479,559 7,704,842 11.5 7.0 8.4
TX 3,727,648 5,367,814 7.6 5.8 5.9
MA 3,706,939 5,337,993 7.6 5.8 5.8
NJ 3,358,768 4,299,223 5.1 5.2 4.7
MI 3,237,038 3,593,112 2.1 5.1 3.9
OH 3,081,218 3,395,502 2.0 4.8 3.7
GA 2,356,712 2,521,682 1.4 3.7 2.7
VA 2,288,991 2,884,128 4.7 3.6 3.1
MN 1,268,118 2,149,459 11.1 2.0 2.3
CT 1,177,712 2,512,451 16.4 1.8 2.7
WI 1,151,296 2,532,852 17.1 1.8 2.8
AZ 780,985 1,496,889 13.9 1.2 1.6
MD 952,892 1,417,427 8.3 1.5 1.5
ME 695,686 1,502,681 16.7 1.1 1.6
WA 902,612 1,001,899 2.1 1.4 1.1
HI 531,277 1,073,179 15.1 0.8 1.2
NH 517,985 1,077,408 15.8 0.8 1.2
NC 498,533 1,086,801 16.9 0.8 1.2
IN 528,827 1,015,348 13.9 0.8 1.1
IA 458,530 694,673 8.7 0.7 0.8
RI 445,842 795,828 12.3 0.7 0.9
NM 295,903 563,696 13.8 0.5 0.6
LA 177,216 324,305 12.8 0.3 0.4
TN 123,135 300,450 19.5 0.2 0.3
CO 133,409 236,134 12.1 0.2 0.3
OR 95,235 232,375 19.5 0.1 0.3
AK 139,707 204,530 7.9 0.2 0.2
AL 52,527 135,519 20.9 0.1 0.1
NE 60,597 74,898 4.3 0.1 0.1
WV 23,054 56,253 19.5 0.0 0.1
SC 21,773 28,479 5.5 0.0 0.0
UT 9,894 24,141 19.5 0.0 0.0
AR 7,345 15,424 16.0 0.0 0.0
MO 5,056 11,123 17.1 0.0 0.0
ND 149 300 15.1 0.0 0.0
MS 51 111 16.9 0.0 0.0
US-Total 64,065,431 91,716,632 7.4% -- --
Source: SBI

50 SBI October 2009
Growth in biomass production results from the U.S.s ability to increase plant capacity since
2002, a trend that will likely perpetuate through 2014. Recent estimates show the U.S. has
added more than 11.8 million MwH of biomass generating capacity during 2005 to 2009.
Figure 3-5
U.S. Biomass Plant Capacity, 2002 to 2014
(MwH)
0.00
50.00
100.00
150.00
200.00
250.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
Additional Capacity Cumulative Capacity

Source: National Electric Energy Database System with Projection by SBI
Biofuel Technology Research
The biofuels industry is ablaze with research and development activity to determine the most
sustainable and cost-efficient technologies for biomass conversion. The U.S. Renewable Fuel
Standard provisions of the Energy Independence and Security Act of 2007 (EISA) requires
that 36 billion gallons of renewable biofuels be used in the nations motor fuel by 2022. Since
EISA caps the amount of ethanol from corn starch at 15 billion gallons by 2015, the
remaining 21 billion gallons will come from second generation feedstocks and technologies
plus an estimated one billion gallons of biomass biodiesel. A significant expenditure of funds
for R&D supporting development of biofuels was made within the last two years.
SBI leveraged data available from the International Energy Agency (IEA) to project future
expenditures of biofuel research compared to research on other energy sources. We estimate

October 2009 SBI 51
that total spending on R&D in biofuel among IEA participating nations will reach $1.2 billion
in 2009, compared to $1.3 billion for fossil fuels and $1.8 billion for nuclear. By 2014,
spending on renewables will rival nuclear energy R&D efforts with governments and private
sectors spending $2.8 billion for renewables and $2.6 billion on nuclear.
Table 3-18
Average Expenditures on Energy Research and Development, by IEA Nations,
2000 and 2005 with Projections by SBI for 2009 and 2014
(in $ millions)
Year 2000 2005 2009 2014
Conservation $1,497 $1,075 $1,053 $2,745
Fossil Fuels 612 1,007 1,346 1,722
Renewables 773 1,113 1,237 2,825
Nuclear Fission 3,406 3,168 1,175 1,850
Nuclear Fusion 893 715 641 859
Total Energy R&D 7,181 7,078 5,452 10,001
Source: IEA and SBI
Experts tell SBI that expenditures on renewable energy R&D significantly outweighs nuclear
in every nation except France and Japan.
Reduction of Greenhouse Gases
Much of the R&D efforts and interest in expanding U.S. production of biofuels is related to
the opportunities this form of renewable energy creates to reduce greenhouse gas (GHG)
emissions. Increasing the use of biofuels replaces fossil fuels that add carbon dioxide to the
atmosphere with fuels that recycle carbon dioxide between the atmosphere and the ground.


52 SBI October 2009
Figure 3-6
U.S. Emissions of Carbon Dioxide, 2009 and 2014
(in billions of metric tons)
Source: SBI
Proposed policy that would put a price on GHG emissions and provide tax credits and loan
guarantees for renewable energy is boosting the prospects for plant-based fuels. Although
GHG is released when biomass is burned, the process is considered nearly carbon neutral
because the plants only emit the carbon they absorbed while they were growing. The plants
would release the same amount of GHG if they died and decomposed.
Non-OECD nations in Asia lead the world in carbon dioxide emissions and SBI expects its
share of the total to grow from 29% in 2005 to 31% in 2014 as it will be slower to adopt
cleaner fuel alternatives. North American nations are accelerating efforts to reduce their
carbon footprints and the U.S. is leading that charge. By 2014, SBI projects the U.S. will
have the slowest growth of carbon dioxide emissions, moving from 6 billion metric tons in
2009 to 6.7 billion in 2014.

5 5.5 6 6.5 7
2009
2014

October 2009 SBI 53
Table 3-19
World Carbon Dioxide Emissions, by Region
(millions of metric tons of CO2)
Region 2005 2009 (e) 2014 (e)
CAGR
2005 to 2014
Share
2005
Share
2014
OECD
OECD North America 7,008 7,040 8,200 3.19% 25.00% 27.57%
United States 5,982 5,991 6,695 2.28 21.30 22.51
Canada 628 640 880 6.98 2.20 2.96
Mexico 398 409 625 9.45 1.40 2.10
OECD Europe 4,383 4,390 4,825 1.94% 15.60% 16.22%
OECD Asia 2,174 2,225 2,985 6.55% 7.80% 10.04%
Japan 1,230 1,239 1,455 3.42 4.40 4.89
South Korea 500 527 845 11.07 1.80 2.84
Australia/New Zealand 444 459 685 9.06 1.60 2.30
Total OECD 13,565 13,655 16,010 3.37% 48.40% 53.83%
Non-OECD
Non-OECD Europe and Eurasia 2,865 2,871 3,160 1.98% 10.20% 10.62%
Russia 1,696 1,699 1,825 1.48 6.00 6.14
Other 1,169 1,172 1,335 2.69 4.20 4.49
Non-OECD Asia 8,177 8,267 9,204 2.39 29.20 30.94
China 5,323 5,359 5,645 1.18 19.00 18.98
India 1,164 1,191 1,555 5.96 4.10 5.23
Other Non-OECD Asia 1,690 1,718 2,004 3.47 6.00 6.74
Middle East 1,400 1,425 1,700 3.96% 5.00% 5.72%
Africa 966 980 1,255 5.37% 3.40% 4.22%
Central and South America 1,078 1,111 1,575 7.88% 3.80% 5.30%
Brazil 356 373 380 1.31 1.30 1.28
Other Central and South America 722 738 1000 6.73 2.60 3.36
Total Non-OECD 14,486 14,500 13,734 -1.06% 51.60% 46.17%
Total World 28,051 28,155 29,744 1.18% 100.00% 100.00%
The next chapter examines the overall market value of the bioenergy manufacturing industry
worldwide.
Global Biofuels Market Chapter 4: World Biomass Market Trends

October 2009 SBI 55
Chapter 4 World Biomass Market Trends
SBI estimates that the global market value for liquid biofuel and bioenergy manufacturing is
$102.5 billion ($U.S.) in 2009 and expects it to reach nearly $170.4 billion by 2014.
This chapter will analyze the various organic and technological components that contribute to
the total, which is based on total shipments of feedstock commodities and manufactured
technology used in biomass refining and conversion processes. The U.S. is the leading
producer and consumer of bio-based renewable energy, including automotive fuel and
electricity. The dollar value of U.S.-produced bio-energy manufacturing initiatives is
currently $48.7 billion and will grow to reach $103.3 billion in 2014, representing a five-year
CAGR rate of 16.2%. The U.S. share of the biofuel and bioenergy manufacturing industry is
nearly 48% of the worlds total and will grow to nearly 61% by 2014. Brazil will maintain
share of second place with a market value of $46.3 billion by 2014, a 4.2% CAGR growth
from $37.7 billion. The fastest growing countries for bio-based energy manufacturing include
China and India, which will grow their market values through 2014, although their overall
market share will flatten. As such, much of our analysis on the market value will focus on
these opportunistic countries. Our definition of market value is based on two industry
segments:
Organic This segment includes the feedstocks required for conversion to liquid
biofuels, such as ethanol and biodiesel, and electricity.
Technology Here we analyze the value of the manufactured components required to
enable the conversion of biomass into usable forms of energy. This technology
includes metal tanks, furnaces, and boilers.

Chapter 4: World Biomass Market Trends Global Biofuels Market

56 SBI October 2009
Table 4-1
Global Market Values of Biofuel and Bioenergy (Organic and Technology)
Manufacturing, by Country, 2009 and 2014
(in $ millions)
Country 2009 2014 CAGR
2009
Share
2014
Share
U.S. $48,749,095 $103,304,605 16.2% 47.6% 60.6%
Brazil 37,651,411 46,311,235 4.2 36.7 27.2
China 3,645,718 6,380,006 11.8 3.6 3.7
Germany 5,849,891 6,376,382 1.7 5.7 3.7
Canada 1,585,062 1,822,821 2.8 1.5 1.1
Other 1,310,000 1,506,500 2.8 1.3 0.9
Thailand 594,117 724,823 4.1 0.6 0.4
India 396,078 744,627 13.5 0.4 0.4
France 389,993 522,590 6.0 0.4 0.3
Colombia 561,861 589,954 1.0 0.5 0.3
Austria 491,878 545,985 2.1 0.5 0.3
Belgium 379,903 448,285 3.4 0.4 0.3
Australia 198,039 320,823 10.1 0.2 0.2
Italy 243,745 248,620 0.4 0.2 0.1
Turkey 118,523 129,190 1.7 0.1 0.1
Pakistan 69,014 118,703 11.5 0.1 0.1
United Kingdom 194,996 202,796 0.8 0.2 0.1
Argentina 39,008 64,753 10.7 0.0 0.0
Market Value $102,470,340 $170,364,713 10.7% -- --
Source: SBI
SBIs discussions with experts on bioenergy reveal that since 2002, global interest in bio-
based energy manufacturing has grown due to several key factors:
Skyrocketing fossil fuel and oil prices for commercial and home heating that is
resulting in greater dependence on alternative energy sources
Broader government policies on bioenergy manufacturing certifications
Renewed interest in energy sources that are less harmful to the environment
The U.S. lead in market share stems from its ambitious production of ethanol, for which it has
nearly half of the worlds output. Brazil and the U.S., in fact, comprise nearly 90% of the
global share of ethanol production on a gallon output basis with the U.S. manufacturing more
than 9.2 million gallons in 2009 and Brazil producing 7.8 million gallons.

October 2009 SBI 57
Compounded Annual Growth Rate of Biofuel Market Value (Organic and Technology), 2009 to
2014
17.2%
15.6%
15.2%
14.4%
13.8%
11.8%
9.6%
7.7%
7.5%
6.8%
6.3%
5.5%
5.1%
5.1%
4.3%
4.1%
3.7%
3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 17.0%
India
China
Pakistan
Argentina
Australia
U.S.
France
Brazil
Thailand
Belgium
Canada
Austria
Germany
Turkey
Colombia
United Kingdom
Italy
Figure 4-1
Compound Annual Growth Rate of Biofuel and Bioenergy Conversion
(Organic and Technology Segments), by Country, 2009 to 2014
Source: SBI


58 SBI October 2009
Table 4-2
Global Liquid Ethanol Production, by Country or Region, 2007, 2009 and 2014
(millions of gallons)
Country
or Region
2007 2009 (e) 2014 (e)
Percent Change
2007 to 2014
2009
Share
2014
Share
U.S. 6,499 9,245 11,827 82.0% 48.50% 49.40%
Brazil 5,019 7,828 8,784 75.0 41.10 36.70
European Union 570 680 1,120 96.5 3.60 4.70
China 486 550 980 101.6 2.90 4.10
Canada 211 320 450 113.3 1.70 1.90
India 53 98 210 296.2 0.50 0.90
Colombia 75 78 140 86.7 0.40 0.60
Thailand 79 88 110 39.2 0.50 0.50
Australia 26 57 104 300.0 0.30 0.40
Pakistan 9 15 48 433.3 0.10 0.20
Central America 40 44 60 50.0 0.20 0.30
Argentina 5 17 40 700.0 0.10 0.20
Turkey 16 22 35 118.8 0.10 0.10
Peru 8 11 28 250.0 0.10 0.10
Paraguay 5 9 15 200.0 0.00 0.10
Total 13,101 19,062 23,951 82.8% 100.00% 100.00%
Source: Renewable Fuels Association with Projections by SBI
The U.S. trails Germany, France and Italy, however, in liquid biodiesel production and will
likely remain fourth through 2014. Germanys 40% share of the global biodiesel market will
slip to 35% by 2014 as other European Union nations, including Italy and Austria, grow their
production. Austria will increase its output of biodiesel from 11.3 million gallons of biodiesel
in 2009 to nearly 22 million gallons in 2014, representing a CAGR rate of 14.1% for the five-
year period.

October 2009 SBI 59
Table 4-3
Global Liquid Biodiesel Capacity, by Country, 2002, 2009 and 2014
(in millions of gallons)
Country 2002 2009 2014
CAGR
2009 to 2014
2009
Share
2014
Share
Germany 165.1 198.2 225.8 2.6% 39.8% 35.3%
France 102.0 140.8 170.9 4.0 28.3 26.7
Italy 63.1 48.2 75.8 9.5 9.7 11.8
United States 18.5 27.8 48.5 11.8 5.6 7.6
Poland 21.1 37.9 45.8 3.9 7.6 7.2
Belgium 9.5 15.4 27.5 12.3 3.1 4.3
Austria 8.5 11.3 21.9 14.1 2.3 3.4
Sweden 4.5 7.3 9.8 6.1 1.5 1.5
Spain 2.4 5.9 6.5 2.0 1.2 1.0
Denmark 0.8 2.8 4.5 10.0 0.6 0.7
UK 1.6 2.8 3.2 2.7 0.6 0.5
World 397.1 498.4 640.2 5.1% 100.0% 100.0%
Brazils current energy matrix is comprised of 47% renewable and 53% non-renewable but its
long-term model depends on greater reliance on renewable energy sources such as biomass.
Petroleum fuels nearly 38% of its current energy consumption needs and renewables such as
wood (14%) and sugarcane (17%) make up a smaller portion. By 2014, biomass sources will
make up a greater share of Brazils total energy consumption mix. Historically, Brazil has
been the largest producer of ethanol. However, U.S. production is growing at a faster rate
than any other country owing to recently implemented large subsidies for corn producers and
ethanol end users.
China, the European Union, India, and Russia are also large producers of ethanol, but Brazils
production is more efficient. Brazilian production of energy from sugarcane is more efficient
than from wheat used as a feedstock in the European Union, from corn in United States, from
cassava in Thailand, or even from other species of sugarcane in India. Besides ethanol,
Brazils modern sugar and ethanol mills are also producing bioelectricity for their own use
and selling the surplus of energy in the national electricity grid. The future of the biofuels
industry in Latin America will depend on whether regional governments can ensure that
production will remain sustainable in the long run.
The criteria for defining the sustainability of liquid biofuels production are still being
developed around the world. The U.S., for example, is looking to forestry products and
residues from wood mills as a primary source to produce cellulosic ethanol. The U.S. Forest
Service classifies primary mill residues into three categories: bark, coarse residues (chunks

60 SBI October 2009
and slabs) and fine residues (shavings and sawdust). These mill residues are excellent
sources of biomass for cellulosic ethanol because they tend to be clean, uniform,
concentrated, have low moisture content, and are located at a processing facility. U.S. mills
are expected to produce more than 102 million dry tons of residue in 2009. Through 2014,
SBI expects Oregon and Georgia to be the leading producers of dry mill residues for domestic
and international use to convert into biofuel. The two states will comprise nearly one-quarter
of the total share of mill residue production by 2014, growing from a 17% share today.
Table 4-4
Production of Mill Residue, by State, 2009 and 2014
(thousands of dry tons)
State 2009 2014 2009 Share 2014 Share
Oregon 8,941 13,488 8.7% 12.4%
Georgia 8,254 10,842 8.1 10.0
North Carolina 6,195 9,869 6.1 9.1
Washington 6,228 7,865 6.1 7.3
Mississippi 7,720 7,720 7.5 7.1
Texas 5,716 7,653 5.6 7.1
Alabama 7,989 7,244 7.8 6.7
Louisiana 5,442 6,134 5.3 5.7
Arkansas 6,339 5,587 6.2 5.2
California 4,282 4,827 4.2 4.5
South Carolina 3,314 4,719 3.2 4.4
Florida 2,966 4,222 2.9 3.9
Virginia 3,420 3,622 3.3 3.3
Idaho 2,619 2,863 2.6 2.6
Kentucky 1,830 2,651 1.8 2.4
Tennessee 2,371 2,512 2.3 2.3
Michigan 2,184 2,387 2.1 2.2
Montana 1,782 2,341 1.7 2.2
Wisconsin 2,016 1,896 2.0 1.7
Pennsylvania 1,921 1,742 1.9 1.6
All Other 10,793 11,152 10.5 10.3
Total 102,323 108,391 100.0% 100.00%
Source: U.S. Dept. of Agriculture with Projections by SBI
For this report we value the biofuels market based on the manufacturing of the raw materials
that compose primary and secondary biomass feedstock sources, and technology components
that enable the conversion of biomass to bioenergy. Primary feedstock biomass includes corn,
wheat and barley, and secondary feedstock includes soybeans and other oilseeds. Industrial
technology manufacturing includes components to retrofit established paper mills or
petroleum refineries or construction of new biorefineries. These components include

October 2009 SBI 61
furnaces, boilers and metal cans. The U.S. market value for biomass manufacturing has
nearly doubled since 2006 to reach $48.7 billion, which is comprised of $24.9 billion from
organic feedstock manufacturing and $23.8 billion from industrial technology manufacturing.
The U.S. has grown less dependent on exports of organic feedstocks for biomass
manufacturing and this trend is likely to continue through 2014. The next few sections will
focus on shipments of biomass feedstocks and industrial components of biomass conversion
technologies, including the trend of imports and exports that drive total global manufacturing
market value.
Table 4-5
U.S. Market Value of Biomass Manufacturing, Organic and Technology, 2006 to 2009
2006 2007 2008 2009
Percent Change
2006 to 2009
Primary Organic Manufacturing (Feedstock)
Corn $9,628,376 $12,035,470 $15,646,111 $19,714,099 104.8%
Wheat 385,501 393,211 688,119 701,881 82.1
Barley 124,673 127,166 222,541 226,992 82.1
Sorghum 132,809 156,715 274,251 323,616 143.7
Other Feedstock
(forestry products)
523,642 638,843 1,117,975 1,308,031 149.8
Total Primary Organic $10,795,000 $13,351,404 $17,948,996 $22,274,619 106.3%
Secondary Organic Manufacturing
Soybeans 1,151,460 1,439,325 1,943,089 2,428,861 110.9
Cottonseed 50,132 51,135 62,385 63,632 26.9
Other oils 1,250,000 1,362,500 2,248,125 2,450,456 96.0
Ethyl alcohol mfg 2,288,305 2,906,147 4,882,328 6,200,556 171.0
Total Secondary Organic $4,739,897 $5,759,107 $9,135,926 $11,143,506 135.1%
Organic Shipment Value $15,534,897 $19,110,512 $27,084,922 $33,418,124 115.1%
Imports 3,523,073 3,734,457 3,958,525 3,681,739 4.5
Exports 15,009,288 15,159,381 15,310,975 12,183,089 -18.8
Organic Market Value $4,048,682 $7,685,588 $15,732,472 $24,916,775 515.4%
Technology Market Value $21,098,000 $21,986,400 $20,404,800 $23,832,320 13.0%
Total Market Value $25,146,682 $29,671,988 $36,137,272 $48,749,095 93.9%
Source: SBI
Shipments of Organic Biomass Feedstocks
Biofuels trade accounts for upwards of 15% of total global production. Ethanol trade alone
represents nearly 80% of global production and faces high tariffs in many countries. The U.S.
accounts for approximately 48% (nearly 10 billion gallons) of global biofuel production, with
the EU and Brazil accounting for the remainder. Brazil exports about 950 million gallons of
ethanol, or about half of world exports. In the U.S., biofuel imports comprise a small share of

62 SBI October 2009
domestic consumption since the tariff costs of importing ethanol typically exceed domestic
ethanol prices. Under NAFTA, ethanol imports from Mexico and Canada enter the U.S. duty-
free. The Caribbean Basin Initiative (CBI), a separate trade agreement, allows countries to
supply as much as 7% of U.S. ethanol consumption duty-free. Much of the ethanol imported
to the U.S. comes from Brazil or is routed through CBI countries to avoid tariffs. Imports of
ethanol typically come from countries in close proximity to the U.S. Brazil, for instance, is
expected to export more than 198 million gallons of ethanol to the U.S. in 2009. But Brazil
and other U.S. neighbors face a downward trend of ethanol exports through 2014 as the U.S.
continues to produce a larger portion of ethanol for consumption domestically.
Table 4-6
U.S. Imports of Ethanol, by Country of Origin, 2007 to 2014
Source: Renewable Energy Association with Projections by SBI
In addition to tariffs, corn ethanol trade and its associated operating economics must consider
the health of the broader supply chain, including primary and secondary suppliers and sources
of innovation that may shift the landscape over time. The largest cost category by far is corn
feedstock. In recent years, corn prices rose dramatically with a significant impact on producer
margins. Given the upward pressure on corn prices as a result of increasing ethanol demand, a
key question is the break-even price for corn, beyond which corn ethanol becomes
economically viable to produce. The total revenue from one bushel of corn is approximately
$6.33 ($5.67 from the 3 gallons of ethanol), and the total cost of processing the bushel is
$2.28. The continued upward pressure on corn prices may impede further growth of the corn
ethanol industry, assuming constant ethanol prices. Ethanol use accounts for much of the
growth in food and industrial use of corn.
Although ethanol can be produced from several different types of feedstock, corn dominates
the share of total U.S. production capacity. In 2009, corn-based ethanol is expected to
comprise 86% of ethanol production, translating to 9.7 billion gallons of the 11.3 billion
gallon total production. By 2014, corn will comprise 87% of the total capacity.
Country 2007 2008 2009 2010 2011 2012 2013 2014
Brazil 189 201 198 184 172 110 99 45
Costa Rica 39 32 29 31 35 42 36 31
El Salvador 73 68 65 60 45 48 40 35
Jamaica 75 70 70 72 71 70 67 60
Trinidad & Tobago 43 28 32 0 0 0 0 0
Canada 5 0 0 0 0 0 0 0
China 5 0 0 0 0 0 0 0
Total 429 399 393.8 347 323 270 242 171

October 2009 SBI 63
Table 4-7
U.S. Ethanol Production Capacity, by Type of Feedstock, 2009 and 2014
Plant Feedstock 2009 % of Capacity 2014 % of Capacity
Corn 9730.3 86.2% 24344.45 87.10%
Grain Sorghum 428.9 3.80 894.4 3.20
Wheat 259.6 2.30 614.9 2.20
Barley 112.9 1 139.75 0.50
Milo/Wheat 112.9 1 279.5 1
Waste Beverage 361.2 3.20 782.6 2.80
Cheese Whey 225.8 2 726.7 2.60
Sugars & Starches 56.4 0.50 167.7 0.60
Total 11,288 100.0% 27,950 100.00%
Source: U.S. Department of Agriculture with Projections by SBI
In 2009, the U.S. is expected to produce more than 19.4 billion bushels of corn of which more
than 5.6 billion will be used for ethanol conversion. Although the output of corn production
will continue to rise through 2014, the U.S. will increasingly turn to alternative feedstocks for
ethanol manufacturing. Estimates of the share of U.S. corn production used for ethanol vary
but SBI places it at about 29% in 2009 and that is likely to rise to more than 30% by 2012. By
2014, the U.S. will depend less on corn and more on cellulosic sources for ethanol production
lowering corns share required for ethanol production to 28%.
Table 4-8
U.S. Production of Corn and its Share Used for Ethanol Conversion, 2009 to 2014
Since the U.S. is the worlds leading producer and exporter of corn, corn-based ethanol
manufactured outside of the U.S. will not likely become a significant competitor to U.S. corn
ethanol. SBI expects the U.S. export market for corn, as well as other feedstock components
of ethanol and biodiesel, to continue to decline through 2014. U.S. exports of biomass
manufacturing components have declined since 2004 at a CAGR rate of 3.5% to reach $12.2
billion. A more substantial threat to the U.S. corn-ethanol export market will be how rapidly
Corn 2009 2010 2011 2012 2013 2014
CAGR
2009 to 2014
Production
(millions of bushels)
19,445 20,455 22,788 23,499 23,877 24,122 4.4%
Price per Bushel $5.7 $6.5 $6.2 $6.1 $6.1 $6.0 1.0%
Value of Production
($ millions)
$110,837 $132,958 $141,286 $143,344 $145,650 $144,732 5.5%
Share used
for Ethanol
29% 30% 31% 30% 28% 28% --
Total used for Ethanol
5,639 6,137 7,064 7,050 6,686 6,754 3.7%

64 SBI October 2009
other nations develop their cellulosic biofuel conversion technologies, maximize those
conversion efficiencies and create a viable and profitable export market. Biofuel legislation in
a biofuel exporting country may limit its total potential for exports, according to Brian
Jennings of the American Coalition for Ethanol. For instance, if legislation in another country
requires that all domestically sold fuels be blended with some proportion of ethanol, then fuel
blenders in that country will likely act to maintain ethanol supply to meet their own minimum
blending requirements.
The anticipation of greater production of corn will create a new set of conditions under which
farmers make planting, input use, and management decisions. Demand for all agricultural
commodities will need to adjust to the new price signals, leading to changes in consumption.
Table 4-9
U.S. Export Value of Feedstocks Used for Bioenergy and Liquid Biofuel Manufacturing,
2004 and 2009
(in $ thousands)
Feedstock 2004 2009 CAGR
Corn $6,133,830 $5,187,336 -3.3%
Wheat 5,180,988 3,208,466 -9.1
Sugar 279 588 16.1
Other Feedstock
(forestry products)
564,498 577,790 0.5
Soybeans 1,888,296 2,520,554 5.9
Other oils 716,437 607,310 -3.3
Ethyl alcohol mfg 83,359 81,043 -0.6
Total Exports $14,567,687 $12,183,089 -3.5%
A closer look at feedstocks used for bio-based energy refining shows sharp declines in the
U.S. export value for organic resources other than corn. Japan remains the largest consumer
of U.S. produced wheat, for example, but its trade value has declined by 7% from $525.8
million in 2004 to $489.6 million in 2009. Overall U.S. exports of wheat have dipped 38.1%
since 2004 to reach $3.2 billion in 2009.

October 2009 SBI 65
Table 4-10
U.S. Export Value of Wheat, by Country, 2004 and 2009
(in $ thousands)
Country 2004 2009
Percent
Change
2009
Share
Japan $525,789 $489,578 -6.9% 15.3%
Mexico 469,405 359,316 -23.5 11.2
Nigeria 389,355 433,142 11.2 13.5
Iraq 50,764 0 -100.0 0.0
Philippines 223,150 144,550 -35.2 4.5
Egypt 451,520 119,098 -73.6 3.7
Iran 0 30,310 100 0.9
Korea 230,998 193,330 -16.3 6.0
Venezuela 111,686 77,902 -30.2 2.4
Indonesia 18,511 86,486 367.2 2.7
Colombia 107,616 114,144 6.1 3.6
Taiwan 188,997 137,582 -27.2 4.3
Brazil 8,004 0 -100.0 0.0
Thailand 98,364 156,331 58.9 4.9
Guatemala 34,416 69,514 102.0 2.2
Subtotal $2,908,576 $2,411,282 -17.1% 75.2%
All Other $2,272,412 $797,184 -64.9% 24.8%
Total $5,180,988 $3,208,466 -38.1% 100.0%
Japan also continues to be the largest importer of corn from the U.S. but its total trade value
has declined nearly 8% since 2004 to reach $1.7 billion. Japan still represents a third of the
value of U.S. corn exports. As the U.S. accelerates its propensity to manufacture liquid
biofuels using cellulosic conversion processes, it will likely export biomass organic
feedstocks for purposes other than energy conversion. But SBI expects a continued
downward trend in the export value of organic feedstock shipments, with Asian countries
bearing the brunt of the decline.

66 SBI October 2009
Table 4-11
U.S. Export Value of Corn, 2004 and 2009
(in $ thousands)
Corn Exports 2004 2009 Percent Change 2009 Share
Japan $1,891,631 $1,748,100 -7.6% 33.7%
Mexico 730,335 840,250 15.0 16.2
Korea 548,201 334,406 -39.0 6.4
Taiwan 600,518 379,682 -36.8 7.3
Canada 283,714 271,591 -4.3 5.2
Colombia 212,769 125,683 -40.9 2.4
Egypt 356,448 193,958 -45.6 3.7
Venezuela 69,981 175,771 151.2 3.4
Dominican Republic 93,642 81,612 -12.8 1.6
Syria 93,694 49,337 -47.3 1.0
Cuba 57,501 68,897 19.8 1.3
Israel 104,404 11,160 -89.3 0.2
Costa Rica 71,112 63,922 -10.1 1.2
Guatemala 64,919 83,083 28.0 1.6
Saudi Arabia 54,364 50,402 -7.3 1.0
Subtotal $5,233,233 $4,477,855 -14.4% 86.3%
All Other $900,597 $709,481 -21.2% 13.7%
Total $6,133,830 $5,187,336 -15.4% 100.0%
Biodiesel Trade Market in Flux
The trade market for biodiesel shows that Asian countries are also the largest importer of the
liquid biofuel with more than 135 million gallons in 2009. North America will grow imports
of biodiesel at the fastest CAGR rate, nearly 14% through 2014.
Table 4-12
Biodiesel Imports, by Region, 2008 to 2014
(in million gallons)
The biodiesel export market, however, is dominated by the EU, especially Germany and
France, which is expected to export more than 742 million gallons in 2009 and garner nearly
a 98% share of the world export market.
Region 2008 2009 2010 2011 2012 2013 2014
CAGR
2009 to 2014
North America 25.45 31.85 42.75 48.95 55.67 58.95 60.75 13.8%
Asia 129.43 135.75 148.72 151.7 161.95 167.88 170.35 4.6
Other 87.9 92.8 95.7 98.85 115.75 119.48 121.33 5.5
Total 242.78 260.4 287.17 299.5 333.37 346.31 352.43 6.2%

October 2009 SBI 67
Table 4-13
Biodiesel Exports, by Region, 2008 to 2014
(in million gallons)
Region 2008 2009 2010 2011 2012 2013 2014
CAGR
2009 to 2014
2009
Share
North America 6.82 7.91 8.35 9.22 10.54 11.18 11.75 8.2% 1.0%
European Union 645.96 742.21 775.88 833.88 885.45 910.5 925.35 4.5 98.1
Other 5.9 6.8 7.2 7.9 8.3 8.9 9.5 6.9 0.9
Total 658.68 756.92 791.43 851 904.29 930.58 946.6 4.6% --
Feedstocks refined into biodiesel, most notably soybeans, are undergoing a volatile trade
period. From a U.S. perspective, Mexico and Canada are the largest consumers of U.S.-
refined soybean oil and Mexico is expected to grow its import trade value from $306 million
in 2004 to $421 million in 2009, a 38% increase.
The USDA said that export controls imposed in India, Vietnam and Argentina on rice, wheat,
soy and beef are causing supply disruptions and spiking prices. India and Vietnam have
eliminated most rice export activity, while soy prices are reflective of high taxes that have
been imposed by the Argentine government on soy exports. In Argentina, the increase in the
export tax levy on biodiesel from 5% to 20% has not yet slowed biodiesel shipments, but it
has halted new project development activity.
Soy oil exports by the U.S. and Brazil are likely to be substantially cut in the coming months
due to increased domestic biofuel production in the two countries. A reduction in U.S. and
Brazilian exports would likely tighten world market supplies as Argentina would be unable to
fill the gap.

68 SBI October 2009
Table 4-14
U.S. Exports of Soybean Oil, by Country, 2004 and 2009
(in $ thousands)
Soybean Oil Exports 2004 2009
Percent
Change
2009
Share
Mexico $306,245 $421,202 37.5% 16.7%
Canada 362,846 267,965 -26.1 10.6
Venezuela 56,840 179,981 216.6 7.1
Philippines 81,895 191,717 134.1 7.6
Japan 114,645 149,491 30.4 5.9
Dominican Republic 59,323 76,042 28.2 3.0
Colombia 46,826 41,995 -10.3 1.7
Morocco 12,486 61,054 389.0 2.4
Korea 17,974 63,643 254.1 2.5
Guatemala 53,970 84,086 55.8 3.3
China 34,512 5,834 -83.1 0.2
Algeria 60,042 25,289 -57.9 1.0
Saudi Arabia 20,900 54,048 158.6 2.1
Honduras 23,855 33,770 41.6 1.3
El Salvador 27,638 28,901 4.6 1.1
Subtotal 1,279,996 1,685,016 31.6% 66.9%
All Other 608,300 835,538 37.4% 33.1%
Total $1,888,296 $2,520,554 33.5% 100.0%
Imports of Organic Biomass
Global production and foreign demand could soon interact with the U.S. domestic biofuels
market if price relationships make exporting biofuels economically attractive to America.
However, continued rapid growth in domestically produced renewable fuels demand suggests
that U.S. prices may be sufficiently strong to attract additional imports from foreign
producers, if their production costs and demand situation result in lower finished goods
prices.
To compete in the U.S. market, the price of foreign-produced liquid biofuels would have to
be low enough to more than cover the costs of transportation to the U.S. and any tariff
(currently 54 cents per gallon of ethanol for most countries) imposed on U.S. imports.
However, lower prices would stimulate an increase in the total quantity consumed. Imports
would also affect domestic feedstock markets by reducing demand and prices for U.S.
feedstocks used in the domestic production of biofuels. This would ease price pressures on
U.S. feedstocks. U.S. imports of organic feedstocks necessary for conversion to biofuels and

October 2009 SBI 69
bioenergy have grown at a CAGR rate of 4.5% for the five-year period ending 2009 to reach
more than $3.6 billion. Corn and wheat imports have grown at the fastest rates, while soybean
imports, used for biodiesel, have been cut by more than half.
Table 4-15
U.S. Import Value of Organic Biomass Feedstocks for Biofuel Conversion,
2004 and 2009
(in $ thousands)
Imports 2004 2009 CAGR
Corn $127,098 $313,241 19.8%
Wheat 162,109 645,089 31.8
Sugar 232 413 12.2
Other Feedstock
(forestry products)
108,063 128,374 3.5
Soybeans 167,930 51,374 -21.1
Other oils 2,123,217 2,362,025 2.2
Ethyl alcohol mfg 259,401 181,224 -6.9
Total Imports $2,948,050 $3,681,739 4.5%
Like any other econometric exercise, forecasting feedstock yields is an imprecise process.
Crop yields may increase because of technological change or increased consumption.
Technological change can arise from increased genetic yield potential or greater resistance to
pests or drought. Experts tell SBI that research focusing on feedstock yield growth,
development of crops that can grow on marginal lands, or the development of crop varieties
allowing greater use of existing land could mitigate price pressure by increasing the overall
supply of feedstocks and lowering costs for biofuels manufacturers.
Whatever the trend in feedstock pricing, through 2014 SBI expects the U.S. will continue to
accelerate domestic production of corn and wheat to keep pace with ethanol demand. The
U.S. import market for corn, however, will undoubtedly remain active, too. Chile, Argentina
and Canada stand to benefit the most as their market share for corn exports to the U.S. are a
combined 92% in 2009 and total more than $287.9 million.


70 SBI October 2009
Table 4-16
U.S. Import Value of Corn, by Country, 2004 and 2009
(in $ thousands)
Country 2004 2009
Percent
Change
2009
Share
Chile $57,801 $94,140 62.9% 30.1%
Canada 45,385 69,854 53.9 22.3
Argentina 11,020 123,941 1024.7 39.6
Mexico 8,257 8,798 6.6 2.8
Brazil 615 9,650 1469.2 3.1
France 2,197 5,520 151.3 1.8
Peru 813 646 -20.6 0.2
Austria 26 70 167.7 0.0
China 120 14 -88.0 0.0
New Zealand 48 -- -100.0 0.0
Ecuador 59 70 18.0 0.0
Turkey 0 454 -- 0.1
Korea 23 -- -100.0 0.0
Subtotal 126,363 313,154 147.8 100.0
All Other 735 86 -88.2 0.0
Total $127,098 $313,241 146.5% 100.0%
Today approximately 92% of the nearly 3 billion soybean bushels produced are used for
conversion into the liquid biodiesel. SBI expects, however, that although soybean production
will grow steadily through 2014, the U.S. will depend less on the soy-based oils for bioenergy
and biofuel production.


October 2009 SBI 71
Table 4-17
U.S. Soybean Production and its Use for Biodiesel Production, 2009 to 2014
Soybeans 2009 2010 2011 2012 2013 2014
CAGR
2009 to 2014
Production
2,988 3,225 3,686 3,555 3,299 3,100 0.7%
Price per Bushel $11.8 $10.5 $9.8 $10.2 $9.7 $9.5 -4.2%
Value of Production
($ millions)
$35,258 $33,863 $36,123 $36,261 $32,000 $29,450 -3.5%
Share used for Biodiesel 92% 87% 80% 80% 75% 75% -4.0%
Total used for Biodiesel
2,749 2,806 2,949 2,844 2,474 2,325 -3.3%
Value Used for Biodiesel $32,438 $29,460 $28,898 $29,009 $24,000 $22,088 -7.4%
While soybean oil is the predominant biodiesel feedstock source today, there are other
options, including alternative vegetable oils and recycled cooking oil. Of the animal fats and
greases used to produce biodiesel, yellow grease and trap grease are the most common.
Yellow grease is recovered from used cooking oil from large-scale foodservice operations.
Renderers collect yellow and trap grease and remove the solids and water to meet industry
standards. Tallow, another alternative, is a byproduct of the meat production and processing
sector. Most tallow (edible and inedible) in the U.S. is generated by the meatpacking
industries.

72 SBI October 2009
Table 4-18
U.S. Import Value of Oilseeds, 2004 and 2009
(in $ thousands)
With greater dependence on alternative biomasses for biodiesel production, the U.S. import
market for other oilseeds will likely continue to flourish. Total growth in oilseed imports has
been 11% since 2004 and is expected to reach $2.4 billion in 2009. Canada, Malaysia, and
Italy are the primary sources for U.S. oilseed imports, comprising more than 70% share of the
market.

Other Oilseed
Imports
2004 2009
Percent
Change
2009
Share
Canada $585,401 $773,208 32.1% 32.7%
Malaysia 262,833 623,662 137.3 26.4
Italy 499,990 285,103 -43.0 12.1
Philippines 208,458 119,640 -42.6 5.1
Indonesia 50,682 165,955 227.4 7.0
Spain 129,217 120,470 -6.8 5.1
Tunisia 39,290 65,287 66.2 2.8
Argentina 23,167 15,835 -31.6 0.7
India 91,493 37,939 -58.5 1.6
Mexico 29,273 30,202 3.2 1.3
Japan 17,233 15,170 -12.0 0.6
Greece 12,730 13,025 2.3 0.6
Turkey 27,892 20,890 -25.1 0.9
Colombia 2,868 2,602 -9.3 0.1
Nicaragua 5,270 -- -100.0 0.0
Subtotal 1,985,797 2,288,988 15.3 96.9
All Other 137,420 73,037 -46.9 3.1
Total $2,123,217 $2,362,025 11.2% 100.0%

October 2009 SBI 73
U.S. Shipments of Biomass Conversion Technology
Components
The refining of biomass to liquid biofuels and electricity requires several components
throughout the conversion process, including boilers, furnaces, metal tanks and cans. Many
bioenergy manufacturers are retrofitting petroleum refineries and paper mills to accommodate
the conversion process. Others are weighing the cost of building newer biorefinery plants that
can convert organic feedstocks and adopt next-generation cellulosic refining processes. U.S.
shipment value of biomass conversion technology components is expected to reach $18.6
billion in 2009, representing a five-year CAGR of 7.1%. The greatest CAGR growth (10%)
comes from power boilers and heat exchangers, which is expected to reach $4.2 billion in
2009.
Table 4-19
U.S. Shipment Value of Biomass Conversion Technology Components, 2004 to 2009
(in $ millions)
Power Boilers and
Heat Exchangers
$2,761 $2,975 $3,174 $3,361 $3,537 $4,229 10.04%
Heavy Gauge Metal Tanks 2,905 3,039 3,168 3,291 3,409 3,689 5.21
Metal Cans 4,419 4,540 4,658 4,773 4,884 5,447 5.35
Other Metal Containers 1,926 2,109 2,276 2,430 2,575 2,639 5.06
Industrial Furnaces 1,188 1,900 2,300 2,460 2,599 2,615 4.37
Total Shipments $13,199 $14,563 $15,516 $18,322 $17,004 $18,619 7.12%
SBI
Total U.S. market value for biomass conversion technologies will exceed $23.8 billion in
2009, representing a five-year CAGR rate of nearly 6%. U.S. exports have grown at a faster
rate than imports to reach an estimated $25.2 billion in 2009.
Table 4-20
U.S. Market Value of Biomass Conversion Technology Components, 2004 to 2009
(in $ millions)
SBI
Total Shipments $13,199 $14,563 $15,516 $18,322 $17,004 $18,619 7.12%
Imports 18,255 21,898 24,548 26,822 28,857 30,435 10.76
Exports 13,632 16,961 18,966 23,158 25,456 25,222 13.09
Total Biomass Technology
Market Value
$17,822 $19,500 $21,098 $21,986 $20,405 $23,832 5.98%

74 SBI October 2009
Metal cans and power boilers comprise the greatest share of shipment value, representing
29.3% and 22.7%, respectively, in 2009. By 2014, their shares of total shipment value will
decline slightly, as industrial furnaces grow share.
Figure 4-2
Biomass Conversion Technology Share of Shipment Value, 2004, 2009 and 2014
20.5%
22.7%
20.8%
20.4%
19.8%
19.3%
30.0%
29.3%
28.1%
14.7%
14.2%
15.0%
14.8% 14.0%
16.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 Share 2009 Share 2014 Share
Power Boilers and Heat Exchangers Heavy Gauge Metal Tanks Metal Cans Other Metal Containers Industrial Furnaces

SBI
Imports of Technology Components
U.S. imports of technology components used in biomass conversion are valued at an
estimated $30.4 billion in 2009, with the greatest share coming from power boilers and heat
exchangers and metal tanks. Both segments of technology manufacturing have grown their
combined share of import shipment value from 61% in 2004 to more than 70% in 2009.


October 2009 SBI 75
27.8%
48.3%
33.2%
22.1%
5.3%
4.9%
15.0%
14.6%
18.7%
10.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2004 2009
Power Boilers and Heat Exchangers Heavy Gauge Metal Tanks Metal Cans Other Metal Containers Industrial Furnaces
Figure 4-3
Share of Import Shipment Value, by Technology Component, 2004 and 2009
SBI
As the U.S. looks to retrofit petroleum and paper mill refineries to enable the burning of mill
residues and other cellulosic-based biomass, it will likely grow its imports of industrial
furnaces, currently valued at more than $350 million. Canada is the leading source for these
large furnaces and its import value has grown more than 80% since 2004 to reach
approximately $130.7 million in 2009.


76 SBI October 2009
Table 4-21
U.S. Imports of Industrial Furnaces, 2004 and 2009
(in $ thousands)
Industrial Furnaces
Imports
2004 2009
Percent
Change
2009
Share
Canada $72,032 $130,694 81.4% 37.2%
Germany 62,497 49,075 -21.5 14.0
Japan 125,364 21,749 -82.7 6.2
China 7,545 28,193 273.7 8.0
United Kingdom 19,319 23,561 22.0 6.7
Italy 24,334 25,579 5.1 7.3
Mexico 7,696 25,915 236.7 7.4
France 11,786 1,942 -83.5 0.6
Netherlands 51,829 4,118 -92.1 1.2
Austria 14,194 8,575 -39.6 2.4
Sweden 10,452 5,748 -45.0 1.6
Korea 12,522 3,283 -73.8 0.9
Denmark 1,446 1,961 35.6 0.6
Brazil 545 691 26.8 0.2
Ireland 1,460 2,676 83.3 0.8
Subtotal 423,020 333,763 -21.1 95.0
All Other 46,546 17,654 -62.1 5.0
Total Imports $469,566 $351,418 -25.2% 100.0%
Source: U.S. Dept. of Commerce, U.S. Census Bureau, Stat-USA, USA Trade Online. Calculated and
estimated by SBI
Imports have far exceeded total technology market value since 2004 but SBI expects that
trend to stabilize through 2014. When imports of technology components are expressed as a
percent of the total market value for biomass conversion technology there is a decrease from
116.4% in 2004 to an anticipated 90.2% in 2014. U.S. exports of technology components will
likely follow an upward trend as other nations increasingly look to buy American made
products that will be more innovative and adaptable for biorefining processes.
When compared to the trade market for organic biomass components, the technology trend
seems quite stable. U.S. exports of organic biomass feedstocks, expressed as a percent of the
total organic market value, continue to decline sharply. Import value is declining at a slower
pace and is expected to rise by 2014 as the U.S. will require greater dependence on foreign
sources for cellulosic materials for next-generation biomass conversion processes.


October 2009 SBI 77
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
200.0%
Organic Imports Organic Exports Technology Imports Technology Exports
Organic Imports 48.6% 25.2% 14.8% 11.8% 9.9% 8.5% 7.5% 6.6% 21.4%
Organic Exports 197.2% 97.3% 48.9% 37.9% 30.8% 25.7% 22.1% 18.9% 8.5%
Technology Imports 116.4% 122.0% 141.4% 127.7% 114.4% 101.8% 98.4% 97.6% 90.2%
Technology Exports 89.9% 105.3% 124.8% 105.8% 109.3% 110.2% 112.2% 113.2% 114.8%
2006 2007 2008 2009 2010 2011 2012 2013 2014
Figure 4-4
U.S. Imports and Exports of Organic and Technology Components of Biomass
Conversion, 2006 to 2014
(expressed as a percentage of total market value)
Source: SBI
Biomass Conversion Technology Exports
The U.S. export market for bio-energy technology products has a shipment value of $25.2
billion in 2009, largely coming from the power boilers and heat exchangers manufacturing
sector. The fastest growth sector has been in the exports of metal tanks and metal cans
required to store organic feedstocks primed for conversion to energy or fuel. Exports of metal
tanks have grown at a five-year CAGR rate of 12% to reach $908 million in 2009. U.S.
exports of metal cans will reach a shipment value of $253 million in 2009, representing a
CAGR rate of 18% since 2004. Canada is the chief consumer of U.S.-made metal tanks, with
an estimated shipment value of $242.8 million in 2009 and a five-year CAGR growth rate of

78 SBI October 2009
11.2%. Its share of the total export value hasnt changed much since 2004, accounting for
approximately 27% of the total in 2009.
Table 4-22
U.S. Export Value of Metal Tanks, by Country, 2004 to 2009 (e)
(in $ thousands)
Country 2004 2009 (e) CAGR
2004
Share
2009
Share
Canada $142,608 $242,821 11.2% 27.9% 26.8%
Mexico 51,525 76,606 8.3 10.1 8.4
Japan 56,926 50665 -2.3 11.2 5.6
United Kingdom 25,225 35448 7.0 4.9 3.9
France 3,937 16214 32.7 0.8 1.8
Brazil 4,203 17259 32.6 0.8 1.9
China 24,736 18249 -5.9 4.8 2.0
Australia 10,288 19029 13.1 2.0 2.1
Korea 6,969 16656 19.0 1.4 1.8
Singapore 3,200 20696 45.3 0.6 2.3
Germany 10,990 12622 2.8 2.2 1.4
South Africa 1,896 11285 42.9 0.4 1.2
Ukraine 1,265 23228 79.0 0.2 2.6
Denmark 5,806 11946 15.5 1.1 1.3
Turkey 1,065 9918 56.2 0.2 1.1
All Other 159,624 325,045 15.3 31.3 35.8
Total Metal Tanks $510,263 $907,687 12.2% 100.0% 100.0%
Source: U.S. Dept. of Commerce, U.S. Census Bureau, Stat-USA, USA Trade Online. Calculated and estimated
by SBI
Canada and Mexico comprise nearly 80% of the total share of the export value for metal cans
in 2009, spending a combined $201 million in 2009. Korea and the Netherlands have
dramatically increased their dependence on U.S. manufactured metal cans since 2004. The
Netherlands will import an estimated $6.1 million worth of the goods in 2009 while Korea
will spend an estimated $13.5 million.


October 2009 SBI 79
Table 4-23
U.S. Export Value of Metal Cans, by Country, 2004 to 2009 (e)
(in $ thousands)
Country 2004 2009 (e) CAGR
2004
Share
2009
Share
Canada $75,766 $184,755 19.5% 69.4% 72.9%
Mexico 9,285 16,480 12.2 8.5 6.5
Netherlands 187 6186 101.3 0.2 2.4
Korea 3 13540 438.1 0.0 5.3
Trinidad & Tobago 1,597 10399 45.5 1.5 4.1
United Kingdom 3,615 6042 10.8 3.3 2.4
France 1,770 323 -28.8 1.6 0.1
Bahamas 1,251 2268 12.6 1.1 0.9
Jamaica 68 2527 106.1 0.1 1.0
Brazil 1,529 1218 -4.4 1.4 0.5
Costa Rica 1,850 1181 -8.6 1.7 0.5
Thailand 1,786 1026 -10.5 1.6 0.4
El Salvador 673 1390 15.6 0.6 0.5
China 2,061 974 -13.9 1.9 0.4
Aruba 610 886 7.8 0.6 0.3
All Other 7,134 4,096 -10.5 6.5 1.6
Total Metal Cans $109,185 $253,292 18.3% 100.0% 100.0%
SBI
Meanwhile, China and Canada comprise nearly one-quarter of the total U.S. export shipment
value of industrial-size furnaces. The two nations 2009 contribution to the $581 million total
export value amounts to nearly $140 million.


80 SBI October 2009
Table 4-24
U.S. Exports of Industrial Furnaces, 2004 and 2009
(in $ thousands)
Source: U.S. Dept. of Commerce, U.S. Census Bureau, Stat-USA, USA Trade Online. Calculated and estimated
by SBI
Market Value Forecast Through 2014
Given the unsettled global economy, particularly in the U.S., SBIs five-year market value
forecast of the bioenergy manufacturing industry is cautiously assertive. The U.S. will
undoubtedly maintain its global leadership position as its economy recovers through 2014
and its government continues to provide low-interest loans and grants to the private sector to
further R&D efforts in renewable energy, especially biomass. Brazil, too, will continue
expansion in biomass during the next five years although SBI expects that it will lose market
share to the U.S.
The U.S.s commitment to renewables through 2014 will be most evident in the rapid growth
of organic biomass manufacturing, especially corn and non-food sources such as forestry
products and tallow. SBI forecasts the U.S. shipment value of organic biomass manufacturing
to grow at a five-year CAGR rate of 19% through 2014 to reach more than $80 billion. The
shipment value of exports will slow through this period and grow at a 2% CAGR rate. Total
organic market value will increase from $24.9 billion in 2009 to $71.3 billion by 2014.

Industrial
Furnaces Exports
2004 2009
Percent
Change
2009
Share
China $155,678 $89,650 -42.4% 15.4%
Canada 94,398 49,939 -47.1 8.6
Japan 150,547 14,446 -90.4 2.5
Mexico 62,093 51,982 -16.3 8.9
Taiwan 151,135 17,306 -88.5 3.0
Germany 36,170 25,992 -28.1 4.5
Korea 28,244 32,359 14.6 5.6
Philippines 11,425 21,931 92.0 3.8
India 10,030 21,058 109.9 3.6
Brazil 13,650 11,225 -17.8 1.9
United Kingdom 28,232 8,057 -71.5 1.4
Malaysia 31,127 6,612 -78.8 1.1
Turkey 6,239 39,595 534.6 6.8
Russia 7,135 33,269 366.3 5.7
Italy 12,692 12,703 0.1 2.2
Subtotal $798,793 $436,126 -45.4% 75.0%
All Other $298,214 $145,181 -51.3% 25.0%
Total $1,097,007 $581,306 -47.0% 100.0%

October 2009 SBI 81
U.S., 47.60%
U.S., 60.60%
Brazil, 36.70%
Brazil, 27.20%
China, 3.60%
China, 3.70%
Germany, 5.70%
Germany, 3.70%
All Other, 6.40%
All Other, 4.80%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2014
Figure 4-5
Share of Global Market Value for Biofuel and Bioenergy Manufacturing, by Country,
2009 and 2014
Source: SBI
Table 4-25
U.S. Shipment Value of Organic Biomass Manufacturing, 2006, 2009 and 2014
(in $ millions)
Description 2006 2009 2014
CAGR
2009 to 2014
Organic Shipment Value $15,534,897 $33,418,124 $80,036,404 19.1%
Imports 3,523,073 3,681,739 4,698,936 5.0
Exports 15,009,288 12,183,089 13,451,114 2.0
Organic Market Value 4,048,682 24,916,775 71,284,225 23.4
Technology Market Value 21,098,000 23,832,320 32,020,380 6.1
Total Market $25,146,682 $48,749,095 $103,304,605 16.2%
Source: SBI


82 SBI October 2009
Table 4-26
U.S. Market Value Forecast of Organic and Technology Components for Biomass
Conversion, 2006, 2009 and 2014
(in $ millions)
Source: SBI
On the technology front, it will likely take some time for the U.S. to ramp up construction of
new biorefineries as it continues to optimize existing power plants and liquid fuel conversion
facilities. This trend through 2014 will affect the growth of biomass conversion technology
manufacturing, which SBI projects to grow at a five-year CAGR rate of 6.1% to reach $32
billion. Total market value share of technology manufacturing will decline from 84% in 2006
to 57% in 2014.
Table 4-27
U.S. Shipment and Market Value of Biomass Conversion Technology Component
Manufacturing, 2009 to 2014
(in $ millions)
SBI
Primary Biomass
Manufacturing (Feedstock)
2006 2009 2014
CAGR
2009 to 2014
2009
Share
2014
Share
Corn $9,628,376 $19,714,099 $48,067,363 19.5% 59.0% 60.5%
Wheat 385,501 701,881 774,933 2.0 2.1 1.7
Barley 124,673 226,992 250,617 2.0 0.7 0.6
Sorghum 132,809 323,616 740,355 18.0 1.0 0.9
Other Feedstock
(forestry products)
523,642 1,308,031 1,880,371 7.5 3.9 3.6
Total Primary Biomass $10,795,000 $22,274,619 $51,713,640 18.3% 66.7% 67.3%
Secondary Biomass Manufacturing
Soybeans 1,151,460 2,428,861 3,996,552 10.5 7.3 7.0
Cottonseed 50,132 63,632 70,255 2.0 0.2 0.2
Other oils 1,250,000 2,450,456 3,770,331 9.0 7.3 6.5
Ethyl alcohol mfg 2,288,305 6,200,556 20,485,626 27.0 18.6 19.0
Total Secondary Biomass $4,739,897 $11,143,506 $28,322,764 20.5% 33.3% 32.7%
Shipment Value $15,534,897 $33,418,124 $80,036,404 19.1% 100.0% 100.0%
Description 2009 2010 2011 2012 2013 2014 CAGR
2009
Share
2014
Share
Power Boilers and
Heat Exchangers
$4,229 $4,317 $4,403 $4,487 $5,121 $5,288 4.57% 22.70% 20.80%
Heavy Gauge
Metal Tanks
3,689 3,789 3,887 3,983 4,288 4,900 5.84 19.80 19.30
Metal Cans 5,447 5,515 5,582 5,649 6,343 7,150 5.59 29.30 28.10
Other Metal
Containers
2,639 2,779 2,913 3,040 3,299 3,800 7.56 14.20 15.00
Industrial
Furnaces
2,615 2,955 3,155 3,600 3,755 4,275 10.33 14.00 16.80
Total Shipments $18,619 $19,355 $19,940 $20,759 $22,806 $25,413 6.42% 100.00% 100.00%
Total Market
Value
$23,832 $24,387 $25,124 $26,156 $28,736 $32,020 6.08% -- --

October 2009 SBI 83
Figure 4-6
U.S. Share of Market Value for Organic and Technology Components Used in Biomass
Conversion, 2006, 2009, 2014
SBI
In the next few chapters, we will profile global companies that manufacture bioenergy
products to understand how they contribute to market growth and develop business
opportunities.

16.1%
25.9%
43.5%
83.9%
74.1%
56.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2006 2009 2014
Organic Market Value Technology Market Value
Global Biofuels Market Chapter 5: Manufacturer Profiles

October 2009 SBI 85
Chapter 5 Manufacturer Profiles
Manufacturers of bio-based energy products, particularly those based in the U.S., face critical
near-term decisions about the long-term viability. Nations committed to growing their share
of biofuel within their energy portfolios look to these manufacturers for quality products at
affordable prices. Manufacturers, meanwhile, are closely monitoring how governments
respond to the demand for biofuel compared to other renewable energy sources. They are also
scrutinizing government legislation affecting the use of natural food products as a primary
source for biofuel conversion. New policies that limit or prohibit the use of corn, soy, and
other food for conversion to ethanol and biodiesel can adversely affect the manufacturers
strategy for growth. Governments, meanwhile, are challenged by the weak global economy
that has tightened credit needed to fund some of their long-term bio-based energy initiatives.
Suppliers to the energy construction market are also attempting to keep pace with increased
demand as the struggle to stay afloat with a reduced labor force. Although many of the
manufacturers profiled in this chapter are embracing research and development of bioenergy
products from non-food sources, their core competencies lie in their ability to produce energy
from natural resources. The companies, which include Areva and Mitsubishi, are leveraging
their economies of scale in energy markets by collaborating and aligning with competitors to
gain market share and increase their installed base of customers.
This chapter profiles the leading manufacturers of bio-based energy products worldwide.

Chapter 5: Manufacturer Profiles Global Biofuels Market

86 SBI October 2009
Archer Daniels Midland (ADM)
Company Details Descriptions
Company Type Public
Company Address
4666 Faries Parkway
Decatur, IL 62526
Phone (217) 424-5200
URL www.adm.com
Key Executive Patricia Woertz, Chairman and CEO
Revenue (2008) $69.8 billion (est)
Corporate Background
Archer Daniels Midland Company was incorporated in 1923 and is one of the worlds largest
processors of oilseeds, corn, wheat, cocoa, and other feedstuffs. ADM is a leading
manufacturer of soybean oil and protein meal, corn sweeteners, flour, biodiesel, ethanol, and
other value-added food and feed ingredients. ADM also has an extensive grain elevator and
transportation network to procure, store, clean, and transport agricultural commodities, such
as oilseeds, corn, wheat, milo, oats, and barley. Since 2004, ADM has experienced significant
growth, spending approximately $5.3 billion for construction of new plants, maintenance and
expansions of existing plants, and the acquisitions of plants and transportation equipment.
With more than 27,000 employees at over 230 processing plants worldwide, ADM turns food
crops such as corn, oilseeds, wheat and cocoa into renewable products for food, chemical and
energy uses. ADMs business spans the entire agricultural value chain, from sourcing of
crops to cleaning, storing and transporting them, and processing them into food, feed and
fuel. ADMs business has historically been producing food and feed ingredients and it has
grown into one of the largest corn processors in the world, converting more than 50,000
metric tons of corn per day, 91,000 metric tons of oilseeds each day, and 27,000 metric tons
of wheat each day. ADM partners with other agribusinesses, traditional fuel producers, and
research institutions to grow its biofuels business. ADM owns, wholly or jointly, biodiesel
production facilities in Germany, Brazil, India, Indonesia and the states of Missouri and
North Dakota. Its annual production capacity is 450 million gallons. ADM has entered into a
joint development agreement with ConocoPhillips that will develop renewable transportation
fuels from agriculture, forestry, and crops grown specifically for energy. This development

October 2009 SBI 87
effort is focused on the production of bio-crude oil that can be used by conventional
petroleum refineries to produce transportation fuels.
Industry Segments
ADM generates its revenue from four industry segments:
Oilseeds Processing
The Oilseeds Processing segment includes activities related to processing soybeans,
cottonseed, sunflower seeds, canola, peanuts and flaxseed into vegetable oils and meals
principally for the food and feed industries. In addition, oilseed products may be processed
internally or resold into the marketplace as a raw material for other processing.
Corn Processing
The Corn Processing segment includes activities related to the production of syrups, starches,
glucose, dextrose, and sweeteners for the food and beverage industry, as well as activities
related to the production, through fermentation, of bioproducts such as ethanol alcohol, amino
acids and specialty food and feed ingredients.
Agricultural Services
The Agricultural Services segment utilizes ADMs extensive grain elevator and
transportation network to buy, store, clean and transport agricultural commodities, including
oilseeds, corn, wheat, milo, oats, barley and edible beans, and resells these commodities
primarily as feed ingredients and as raw materials for the agricultural processing industry.
Agricultural Services' grain sourcing and transportation network provides reliable and
efficient services to ADMs agricultural processing operations. The Agricultural Services
segment also includes an animal feed facility in Illinois and 23 domestic edible bean
procurement facilities.
Other
This segment includes ADMs remaining operations, consisting principally of food and feed
ingredient businesses and financial activities. Food and feed ingredient businesses include
wheat processing with activities related to the production of wheat flour and cocoa processing
with activities related to the production of chocolate and cocoa products. Financial activities

88 SBI October 2009
include banking, captive insurance, private equity fund investments, and futures commission
merchant activities. Performance
Table 5-1
ADM Revenue, by Industry Segment, 2007-2008
Industry Segment 2008 2007 % Change
Oilseeds Processing $23.3 $13.9 67.6%
Corn Processing 7.1 $5.8 22.4
Agricultural Services 34.0 $20.4 66.7
Other 5.4 $3.8 42.1
Total $69.8 $43.9 59.0%
Source: ADM
Figure 5-1
ADMs 2008 Share of Revenues, by Division
Oilseeds Processing, 33.4%
Corn Processing, 10.2%
Agricultural Services, 48.7%
Other, 7.7%
Source: ADM


October 2009 SBI 89
Company News
In August 2008, ADM embarked on a research collaboration with Deere & Company and
Monsanto Company that focuses on the logistical hurdles associated with turning biomass
into biofuels. This effort seeks to identify environmentally and economically sustainable
methods of harvesting, storing and transporting corn stoverthe stalks, cobs and leaves of
corn plants. These agricultural residues can be used as cellulosic feedstocks for biofuel
production, as biomass to generate steam and electricity, and as animal feed. A successful
outcome would maximize the value and productivity of existing corn-crop acreage and could
ultimately lead to more efficient and cost-effective biomass collection and transportation
methods around the world.
Outlook
For 2009, ADM expects two new U.S. corn dry mills to come online that will initially
increase its annual U.S. ethanol production capacity to 1.65 billion gallons. In addition, the
company is currently constructing a polyhydroxy alkanoate (PHA) natural plastics production
facility, a propylene/ethylene glycol production facility, two cocoa processing facilities, and
two coal cogeneration facilities. Construction of these plants is expected to be completed
during the next two fiscal years. ADM expects to spend approximately $2.5 billion to
complete construction of these facilities and other approved capital projects over the next five
years.
In January 2009, ADM and Aliana Da Terra, a leading advocate for sustainable farming in
Brazil, launched Doing it Right, a program to encourage Brazilian soy growers to adopt
sustainable farming practices. Doing it Right enlists growers as partners to ensure that each
hectare of farmland achieves its maximum yield potential. The aim is to increase farmers
profitability while reducing the environmental impact of their operations and helping to
ensure good working conditions for farm employees.
Personnel Changes
Robert Broomham was named business director of Industrial Chemicals. He will report to Ed
Harjehausen, senior vice president, Global Corn. Broomham recently served in business and
commercial leadership positions for The Dow Chemical Company, and previously held
positions within that company in sales, marketing and government public policy.

90 SBI October 2009
Bunge
Company Type Public
Company Address
50 Main St.
White Plains, NY 10606
Phone (540) 361-2400
URL www.bunge.com
Key Executive Alberto Weisser, Chairman and CEO
Bunge is a global agribusiness and food company operating in the farm-to-consumer food
chain. The company, founded in 1818, is a leading oilseed processing company, producer and
supplier of fertilizer to farmers in South America, and a leading seller of packaged vegetable
oils worldwide.
The company conducts its operations in three divisions: agribusiness, fertilizer and food
products. These divisions include four reportable segments: agribusiness, fertilizer, edible oil
products and milling products. Its agribusiness division is an integrated business principally
involved in the purchase, storage, transport, processing and sale of agricultural commodities
and commodity products. Its agribusiness operations and assets are primarily located in North
and South America, Europe and China, and it maintains marketing and distribution offices
throughout the world. The fertilizer division is involved in every stage of the fertilizer
business, from mining of phosphate-based raw materials to the sale of retail fertilizer
products. The activities of its fertilizer division are primarily located in Brazil. Bunges food
products division consists of two business segments: edible oil products and milling products.
These segments include businesses that produce and sell food products such as edible oils,
shortenings, margarines, mayonnaise and milled products such as wheat flours and corn-
based products.
Bunge also participates in the biodiesel and corn-based ethanol industries, generally as a
minority investor in biofuels producers. Its Diester Industries International S.A.S. joint
venture is a leading biodiesel producer in Europe with operations in Germany, Austria and

October 2009 SBI 91
Italy. Bunge also has investments in biofuels companies in the United States, Argentina,
Spain and Portugal.
Industry Segments
Bunges primary role in the biodiesel and corn-based ethanol industries is to supply the raw
materials and services through its global network of agribusiness operations. Bunge
originates corn used to produce ethanol in the U.S. through its North American agribusiness
operations. The company maintains minority partners in a small number of corn ethanol
plans. In 2008, Bunge added Tate & Lyles sugar trading arm to become a larger producer
and processor of sugar-based ethanol. It also bought a majority stake in a second sugar and
ethanol mill in Brazil.
Table 5-2
Bunge Revenue, by Industry Segment, 2007-2008
Industry Segment 2008 2007 % Change
Agribusiness $36.7 $27 36%
Fertilizer 5.9 3.9 51.3
Oilseed Products 8.2 5.6 46.4
Milling Products 1.8 1.3 38.4
Total $52.6 $37.8 39.2%
Source: Bunge
Company News
In late 2008, Bunge acquired Corn Products International, Inc. in an all-stock transaction
worth approximately $4.8 billion, including assumption of approximately $414 million of
Corn Products' net debt. Under the terms of the agreement Corn Products stockholders
received common shares of Bunge with a market value of $56.00 for each share of Corn
Products common stock that they own. Combining with Corn Products enables Bunge to
establish an integrated, global presence in the corn value chain. Corn Products is a leading
pure-play franchise in corn refining and will add higher-margin starch and sweetener
products to Bunge's product portfolio, expand its operations in important growth markets.
Outlook
Demand for Bunges products is affected by global and regional demographic and
macroeconomic conditions, including population growth rates and changes in standards of
living. A significant downturn in global economic growth, or recessionary conditions in

92 SBI October 2009
major geographic regions, may lead to reduced demand for Bunges agricultural commodities
which could adversely affect its business. Bunge will continue to source and supply the raw
materials to produce ethanol and biodiesel worldwide. Bunge North America is playing an
important role in the growing North American biofuels industry. With its extensive
Midwestern elevator assets, Bunge Grain is originating corn for origin ethanol production and
destination ethanol facilities across North America.

October 2009 SBI 93
CHS
Company Type Public
Company Address
5500 Cenex Dr.
Inner Grove Hts, MN 55077
Phone 651-355-6000
URL www.chsinc.com
Key Executive John D. Johnson, President and CEO
Revenue (2008) $63 billion (est)
CHS is a diversified energy, grains and foods company owned by farmers, ranchers and
cooperatives, along with thousands of preferred stockholders, across the United States. CHS
supplies energy, crop nutrients, livestock feed, grain, food and food ingredients, along with
business solutions, including insurance, financial and risk management services. The
company operates petroleum refineries/pipelines and manufactures, markets and distributes
Cenex brand refined fuels, lubricants, propane and renewable energy products. The company
provides a full range of production agricultural inputs such as refined fuels, propane, farm
supplies, animal nutrition and agronomy products, as well as services, which include hedging,
financing and insurance. CHS purchases grains and oilseeds directly and indirectly from
agricultural producers primarily in the midwestern and western United States. These grains
and oilseeds are either sold to domestic and international customers, or further processed into
a variety of grain-based foods products.
CHS ranks as North Americas largest cooperative refiner and a significant wholesaler and
reseller of refined fuels. As an energy solutions provider, CHS also invests in the production
and distribution of renewable fuels and lubricants, demonstrating their long-standing
commitment to help protect the environment and offer customers more energy choices.
Industry Segments
CHS derives its revenues through three segments: Agribusiness, Energy, and Processing. The
Energy segment is involved in refining, wholesaling, marketing and retailing of petroleum

94 SBI October 2009
products. The company owns and operates a 55,000 barrel-per-day refinery and operates
1,200 miles of crude and product pipelines. The Energy products segment:
Sells more than 3 billion gallons of refined fuels, including gasoline and diesel.
A leading propane wholesaler/retailer, providing propane and services from origin to
the consumer.
Manufactures, packages and markets lubricants for all engines, from boats and
snowmobiles to heavy equipment and industrial machinery.
Supplies more than 1,600 branded retail petroleum outlets, including more than 1,000
Cenex-identified convenience stores.
Renewable Energy
CHS has more than three decades of experience linking grain producers with fuel consumers
through renewable energy products.
A leading marketer of renewable fuels, providing a critical link between ethanol
producers and blenders of biofuels.
One of the nation's largest suppliers of ethanol-enhanced gasoline and a leading
marketer of biodiesel products.
A manufacturer of vegetable oil-based, environmentally friendly lubricants.

October 2009 SBI 95
Energy, $11.50 , 18%
Agribusiness, $19.70 , 31%
Processing, $1.30 , 2%
Other, $31.40 , 49%
Figure 5-2
CHS 2008 Share of Revenues, by Business Segment
(in $ billions)
Source: CHS
Energy products from CHS heat homes, fuel vehicles and keep equipment running. CHS also
sells E85 and other alternative fuel blends through this network. In addition, it manufactures,
packages and markets lubricants for engines from heavy equipment and industrial machinery
to boats and snowmobiles. While also custom blending and packaging for private labels,
much of the CHS energy product line is delivered under the Cenex name.
The Ag Business segment derives its revenues through the sale of wholesale crop nutrients,
the origination and marketing of grain, including service activities conducted at export
terminals, through the retail sales of petroleum and agronomy products, processed
sunflowers, feed and farm supplies, and records equity income from investments in the
Companys agronomy joint ventures, grain export joint ventures and other investments. The
Processing segment derives its revenues from the sales of soybean meal, soybean refined oil

96 SBI October 2009
and soy-based food products, and records equity income from two wheat milling joint
ventures, a vegetable oil-based food manufacturing and distribution joint venture, and an
ethanol manufacturing company.
CHS includes other business operations in Corporate and Other because of the nature of their
products and services, as well as the relative revenue size of those businesses. These
businesses primarily include the companys insurance, hedging and other service activities
related to crop production.
Company News
Within the United States, increased demand for corn to produce ethanol in the Midwest
altered how grain shipments move to the Gulf of Mexico and to export markets. CHS grain
marketing personnel adjusted shipping routes in 2008 to feed those Gulf markets while
allowing producer-members to benefit from ethanol-driven markets in the Upper Midwest.
Strong relationships with area cooperatives and establishment of river port locations at
Havana and Beardstown, IL contributed to that enhanced distribution system. CHS sunflower
completed the fiscal year with unprecedented sales and earnings, driven by high demand for
unique confectionary sunflower seeds, introduction of valuable sunflower hybrids and
increased production. New Royal Hybrid brand hybrids were launched, delivering the large
seeds demanded by global customers, plus excellent plant quality and yields. Despite high
demand for acreage devoted to corn, soybeans and wheat, CHS added more acreage with
sunflower growers, demonstrating the value growers find in partnering with CHS.
Outlook
As an energy and grain-based foods company, CHS is in a unique position in the food-or-fuel
discussion. As a participant in renewable fuels processing and marketing of ethanol products
and byproducts, plus significant presence in grain marketing and traditional energy refining
and sales, CHS maintains a conservative, yet responsive role in energy production of all
kinds. With significant expertise and assets in transportation, plus knowledge of all aspects of
energy marketing and sales, Provista Renewable Fuels Marketing, which links ethanol
manufacturers with biofuels blenders, marketed about 525 million gallons of ethanol in fiscal
2008. Provista is now solely owned by CHS.

October 2009 SBI 97
Royal Dutch Shell
Company Type Public
Company Address
Carel van Bylandtlaan 16
2596 HR The Hague, Netherlands
Phone +31 70 377 9111
URL www.shell.com
Key Executive Jorma Ollila, Chairman
With about 102,000 employees in more than 100 countries and territories, Royal Dutch Shell
has been a leading manufacturer of petroleum and energy industry products for more than
100 years. Throughout the 1990s, Shell made great strides in biomass fuels. The basic
technology had been established for several decades but the cheap, plentiful supplies of crude
oil meant there had been little interest in developing it commercially. The opening of Shells
Bintulu plant in Malaysia in 1993 was a pioneering step, a precursor to the importance Gas to
Liquids was to play in the Group in the following decade.
Industry Segments
Shell consists of the upstream businesses of Exploration & Production and Gas & Power and
the downstream businesses of Oil Products, Chemicals and Oil Sands. Shell plays a key role
in helping to meet the worlds growing demand for energy in economically, environmentally
and socially responsible ways. The objectives of the Shell Group are to engage efficiently,
responsibly and profitably in oil, oil products, gas, chemicals and other selected businesses
and to participate in the search for and development of other sources of energy to meet
evolving customer needs and the worlds growing demand for energy.
Exploration & Production business searches for and recovers oil and natural gas around the
world. Many of these activities are carried out as joint venture partnerships, often with
national oil companies.
Gas & Power business liquefies natural gas and transports it to customers across the world.
Its gas to liquids (GTL) process turns natural gas into cleaner-burning synthetic fuel and other

98 SBI October 2009
products. It develops wind power to generate electricity and is involved in solar power
technology. It also licenses its coal gasification technology, enabling coal to be used as a
chemical feedstock and for more efficient generation of electricity.
Oil Sands business, the Athabasca Oil Sands Project, extracts bitumen an especially thick,
heavy oil from oil sands in Alberta, western Canada, and converts it to synthetic crude oils
that can be turned into a range of products. Shells Oil Products business makes, moves and
sells a range of petroleum-based products around the world for domestic, industrial and
transport use. Its Future Fuels and CO2 business unit develops biofuels and hydrogen and
markets the synthetic fuel and products made from the GTL process. It also leads company-
wide activities in CO2 management.
Chemicals business produces petrochemicals for industrial customers. They include the raw
materials for plastics, coatings and detergents used in the manufacture of textiles, medical
supplies and computers.
Table 5-3
Shell Revenues, by Business Segment, 2007-2008
(in $ billions)
Business Segment 2008 2007 Change
Exploration & Production $66.1 $53.3 24.0%
Gas & Power 25.8 17.0 51.8
Oil Sands 3.8 2.9 31.0
Oil Products 372.6 286.1 30.2
Chemicals 49.1 45.9 7.0
Total $517.4 $405.2 27.7%
Source: Royal Dutch Shell
Company News
The year 2008 saw several key developments in biofuels. In March, it announced a joint
research and development project with Virent Energy Systems Inc. in the U.S. to convert
plant sugars directly into gasoline and gasoline-blend components. In July, Shell increased its
interest in Iogen Energy Corporation in Canada from 26.3% to 50% to speed up the
development of cellulosic ethanol a biofuel from straw that can be blended with gasoline. In
September, Shell announced six new biofuels research agreements with academic institutions
across the world. They are part of a number of agreements that complement Shells own
biofuels research and development program, and are aimed at accelerating results. The
program investigates new raw materials and new biofuels production processes with a focus
on boosting efficiency and lowering costs. The academic research agreements will last

October 2009 SBI 99
between two and five years. In 2008, research and development (R&D) expenses were $1,266
million, compared with $1,201 million in 2007 and $885 million in 2006.
Outlook
Shell is investing to build a low-CO2 biofuels business based on sustainable sources. Its
German partner, CHOREN, will work on a commercial demonstration plant to produce fuel
from waste wood chips. It is doing research with companies such as Virent and Codexis on
cheaper, lower energy ways to convert plants to biofuels. Construction began on a small pilot
facility in Hawaii with HR Biopetroleum to turn marine algae into a biofuel feedstock. Shell
is also working with six academic institutions, including universities in China and Brazil, on
next generation fuels and better ways to make todays biofuels sustainable. To help meet the
worlds growing demand for energy in a responsible way, Shell will likely focus on
technologies that will help the company:
Meet energy demand at lower cost by improving our ability to find, develop, recover
and process greater volumes of oil and gas;
Improve the efficiency of converting oil, gas and, biomass, into products with cost
and performance benefits; and
Reduce the environmental impact of our operations and products with a focus on the
reduction of greenhouse gas emissions.
During 2009, Shell aims to strengthen partnerships with leading companies in the
development of biofuels, including Iogen, Virent, CHOREN and Cellana. These partnerships
complement its in-house research and focus on programs to identify sustainable feedstocks
and the processes to convert them to high quality fuels. In addition, Shell is seeking to
establish research programs with six leading universities and institutes around the world with
expertise in biofuels and bioenergy. Starting June 2009, the regular gasoline purchased at a
Shell service station in Ottawa, Canada contains 10% cellulosic ethanol. The biofuel is
produced locally from non-food raw materials at Iogen Energy Corporations demonstration
plant, using advanced conversion processes. Iogen and Shell are partners in the plant, which
now produces 40,000 liters of fuel per month. Cellulosic ethanol, as an end fuel, is identical
to ethanol but it can offer up to 90% less lifecycle CO2 emissions than gasoline. It is a key
part of Shells strategic investment and development program in sustainable biofuels.

100 SBI October 2009
Foster Wheeler
Company Type Public
Company Address
Perryville Corporate Park
Clinton, NJ 08809
Phone 908-730-4000
URL www.fosterwheeler.com
Key Executive Raymond Milchovich, Chairman
Foster Wheeler is a global engineering and construction contractor and power equipment
supplier that employs over 14,000 professionals in two primary business groups. The
companys Global Engineering and Construction (E&C) Group designs and constructs
leading edge processing facilities for the following industries: upstream oil and gas, LNG,
gas-to-liquids, coal-to-chemicals, coal-to-gas, coal-to-liquids, carbon capture and storage,
refining, chemicals and petrochemicals, power, environmental, pharmaceuticals,
biotechnology and healthcare. The companys Global Power Group (GPG) designs, supplies
and erects advanced steam generating equipment and is a leader in carbon and fuel-flexible
combustion technology and the development of solutions to address carbon reduction.
Industry Segments
Foster Wheeler operates through two business groups: Global Engineering and Construction
Group and Global Power Group.
The Global E&C Group, which operates worldwide, designs, engineers and constructs
onshore and offshore upstream oil and gas processing facilities, natural gas liquefaction
facilities and receiving terminals, gas-to-liquids facilities, oil refining, chemical and
petrochemical, pharmaceutical and biotechnology facilities and related infrastructure,
including power generation and distribution facilities, and gasification facilities. The
Global E&C Group provides engineering, project management and construction management
services, and purchases equipment, materials and services from third-party suppliers and
contractors. It is also involved in the design of facilities in new or developing market sectors,

October 2009 SBI 101
including carbon capture and storage, solid fuel-fired integrated gasification combined-cycle
power plants, coal-to-liquids, coal-to-chemicals and biofuels. The Group owns one of the
leading refinery residue upgrading technologies (referred to as delayed coking) and a
hydrogen production process used in oil refineries and petrochemical plants.
Company News
Since its fiscal year 2007, Foster Wheeler has been exploring acquisitions within the
engineering and construction industry to strategically complement or expand on its technical
capabilities or access to new market segments. During fiscal year 2008, the company
acquired a U.S.-based biopharmaceutical engineering company as part of its strategy to
enhance its positioning in the pharmaceutical marketplace, especially in the U.S., and it
acquired the majority of the assets and work force of an engineering design company, with an
engineering center in Kolkata, India, which provides engineering services to the
petrochemical, refining, upstream oil and gas and power industries. Foster Wheeler is also
exploring acquisitions within the power industry to complement its product offering. Its
Global Power Groups new order activity, in terms of dollars, was unfavorably affected by
several trends in fiscal year 2008 and early fiscal year 2009. Weakness in the global economy
reduced the near-term growth in demand for electricity. In addition, political and
environmental sensitivity regarding coal-fired boilers caused a number of the Global Power
Groups prospective projects to be postponed or cancelled in fiscal year 2008 as clients
experienced difficulty in obtaining required environmental permits or decided to wait for
additional clarity in state and federal regulations. This environmental concern has been
especially pronounced in the U.S. and Western Europe and is linked to the view that solid-
fuel-fired steam generators contribute to global warming through the discharge of greenhouse
gas emissions into the atmosphere. Finally, the recent sharp decline in natural gas prices
increased the attractiveness of that fuel, in relation to coal, for the generation of electricity.
Outlook
The current weakness in the global economy has caused many of Foster Wheelers clients to
reevaluate the size, timing and scope of their capital spending plans in relation to the kinds of
energy and petrochemical projects in which its specializes. The drop in oil and natural gas
prices and, to a lesser extent, credit concerns among certain clients, have contributed to this
uncertain market tone. As a result, the environment for prospective projects has become
somewhat less favorable than it was in fiscal year 2008. Specifically, the market in late fiscal

year 2008 and early fiscal year 2009 has been characterized by instances of postponement or
cancellation of the companys prospects; resizing of prospective projects to make them more
economically viable, and pricing pressure. However, world demand for energy will continue
to grow over the long term and Foster Wheelers clients will continue to invest in new and
upgraded capacity to meet that demand. In that regard, the company should continue to be
successful in booking contracts for front-end engineering work and contracts of varying types
and sizes in its key end markets.


Wilmar
Company Type Public
Company Address
56 Neil Rd.
Singapore 088830
Phone +65 6216-0244
URL www.wilmar-international.com
Key Executive Kuok Khoon Hong, Chairman
Wilmar International, founded in 1991 as a palm oil trading company, is today a leading
agribusiness group in Asia whose business activities include oil palm cultivation, edible oils
refining, oilseeds crushing, consumer pack edible oils processing and merchandising,
specialty fats, oleochemicals and biodiesel manufacturing, and grains processing and
merchandising. Wilmar is located in more than 20 countries across four continents, with a
primary focus on Indonesia, Malaysia, China, India and Europe. Backed by a staff force of
about 70,000 people, over 250 processing plants and an extensive distribution network, its
products are delivered to more than 50 countries globally.
Over the years, Wilmar has established a resilient integrated agribusiness model that captures
the entire value chain of the agricultural commodity processing business, from origination
and processing to the branding, merchandising and distribution of a wide range of agricultural
products. Through scale, integration and the logistical advantages of our business model, they
claim they are able to extract margins at every step of the value chain, resulting in significant
operational synergies and cost efficiencies.
Industry Segments
Wilmar owns and operates a number of strategically located and vertically integrated palm
and lauric oils processing plants to process palm and lauric oils into, among others, RBD
(refined, bleached and deodorized) palm oil, RBD palm olein, RBD palm stearin, specialty
fats, oleochemicals and biodiesel. Its palm oil, laurics and related products are widely used in
many industries including food manufacturing, cosmetics and pharmaceutical industries.

Outlook
Wilmars integrated business model, sizeable distribution network and strong balance sheet,
coupled with the relative resilience in demand for staple food commodities place it in a strong
position to weather economic uncertainties in 2009. The company is positive about palm oils
longer term prospects due to the rising global demand for its food and non-food uses (such as
biodiesel), backed by its versatility, price competitiveness and supply growth. In Indonesia
and Malaysia, production is expected to grow in 2009 due mainly to the rapid acreage
expansion in Indonesia. Wilmars long term strategy is to grow its refining capacity in line
with supply growth, to enhance its presence in key destination markets and to expand its
capacities in the downstream processing of specialty fats, oleochemicals and biodiesel.

Tenaska
Company Type Public
Company Address
1044 N. 115th Street, Suite 400
Omaha, Nebraska USA 68154-4446
Phone (402) 691-9500
URL www.tenaska.com
Key Executive Howard Hawks, Chairman and CEO
Revenue (2008) $16 billion (est)
In business since 1987, Tenaska, one of the largest independent power producers in the
United States, has established a solid reputation as a reliable provider of value to customers
in: power plant development, construction and operation; natural gas, electric power and
biofuels marketing; energy risk management; fuel procurement, and energy asset acquisition,
development and management. With expertise in site development, engineering, construction
and operating management, Tenaska has developed 9,000 megawatts (MW) of generating
facilities. It manages and operates 10 power plants totaling more than 6,800 MW that it owns
in partnership with other companies.
Industry Segments
Tenaska BioFuels, LLC (TBF) provides marketing, physical delivery and financial services to
customers in the ethanol and biodiesel industries. TBF is a multi-commodity business, with
an international reputation for expertise in transportation and storage. In 2008, 53 percent of
TBFs business was a result of services and marketing for the ethanol, diesel and biodiesel
industries. The rest was comprised of vegetable oil sales. TBF is a one-stop shop for off take
and procurement services for ethanol producers, biodiesel producers and food processors, as
well as a provider of transportation and storage services for all industry participants. TBF
provides marketing, physical delivery and financial services to customers in the ethanol and
biodiesel industries. The two products result from a merger of the agriculture and energy
industries.

The company has developed productive relationships with alternative fuels producers,
marketers, blenders and retailers.
Outlook
As of early 2008, the TBF had offtake contracts to market about 100 million gallons per year
from existing and planned production facilities. Forward contracts with planned facilities will
total over 500 million by 2010. As technology develops in the ethanol and biodiesel
production industries, TBF is poised to adapt its services to fit the needs of its customers. In
March of 2008, TBF acquired the business of Edible Oil Marketing, LLC, an Omaha-based
vegetable oil and biodiesel marketing and trading company. The acquisition responds to the
growing customer need for offtaking, transporting and marketing services for agricultural oils
in a variety of markets, including biodiesel feedstock. In 2008, 53% of TBFs business was a
result of services and marketing for the ethanol, diesel and biodiesel industries, including
related products. Diversification helped the company weather the downturn in the ethanol and
biodiesel industries in 2008, when a combination of high feedstock prices, steep drops in
crude oil prices and excess production capacity undermined the economics for production.
TBF continues to benefit from Tenaskas financial stability and reputation for delivering
excellence in customer service.

Global Biofuels Market Chapter 6: Innovations in Technology

Chapter 6 Innovations in Biofuel Technology
Conventional methods for converting biomass into renewable energy are coming under
greater scrutiny by governments with vested interest in biofuel technologies. The processes
that leverage feedstocks such as corn, wheat, and soybeans are at risk for greater regulation
because of the possible threat they pose to diminishing the food supply. Nations committed to
growing their biofuel consumption face critical decisions about whether to invest financial
and human resources to retrofit established refineries with next-generation biomass
conversion technologies. Innovations in biomass conversion processes that incorporate
cellulosic and non-food inputs are playing a greater role in the long-term strategies of bio-
based energy businesses. The ethanol and biodiesel manufacturers that accelerate their
research and development into the next-generation biomass conversion technologies will
likely benefit from the increased demand as new biorefinery construction efforts accelerate,
particularly in the U.S., during the next five years. These future-focused manufacturers are
certain that innovative approaches to converting non-food biomass to renewable energy will
play a greater role in sustaining the environment and reducing dependence on food sources.
This chapter takes a closer look at the innovations in biofuel technologies that are likely to
make the greatest impact on the renewable energy market.
U.S. Backs Biofuel Innovations
Manufacturers of bio-based energy products and biomass conversion technologies understand
that a profitable future depends on their ability to use unconventional, and non-food, sources.
In the U.S., for instance, former President George W. Bush spoke in his 2006 State of the
Union address about producing biofuels by 2012 using woodchips, stalks, and switchgrass as
the primary source of cellulosic biomass. The "woodchips and stalks" represent resources that
are currently available from forestry and agriculture. Woodchips are logging residues and
urban wood residues that typically carry relatively high costs of removal, handling, and
transportation and the expense has not compared favorably to their relatively low value as an
energy resource. From the agricultural sector, the major cellulosic resources are corn "stalks"
and wheat straw. Both are left in the field after the grain is harvested in much of the U.S.
While a portion of this cellulosic residue does have a value in maintaining soil quality and
crop productivity, in some higher yield areas of the U.S. there is an excess of residue
Chapter 6: Innovations in Technology Global Biofuels Market

produced that could be removed in a more economically sound procedure to supply the needs
of biorefineries.
Switchgrass is a thin-stemmed, warm season, perennial grass that has shown potential as a
crop for production of cost-competitive cellulosic biomass. Other perennial energy crops that
might be preferred in some situations include other thin-stemmed grasses, such as Reed
Canary grass or Big Bluestem grass, or thick-stemmed grasses with rhizomes, such as
Miscanthus. The perennial crops have better environmental performance due to lower
chemical requirements and better erosion control. Switchgrass is most suitable for cultivation
in marginal lands, low moisture lands, and lands with lower opportunity costs such as
pastures, including lands under the Conservation Reserve Program (CRP) where the Federal
government pays landowners annual rent for keeping land out of production. According to
Ned Stowe of the U.S. Sustainable Energy Coalition, some factors favoring adoption of
switchgrass include the selection of suitable lands for growth and harvesting, its inherent
environmental benefits (including improved soil nutrients and carbon balance effect), and use
of current hay production techniques to grow the crop.
Opponents of switchgrass point to its limited possibilities for crop rotation, unknown
production costs, and the lack of skills in the market to farm the product. Other issues include
disproved methods of storage and handling, long transport distances, and lower net yields. If
total costs of switchgrass bioenergy production is higher than conventional crops then
cellulosic ethanol or biopower plants would have to offer relatively higher prices for
switchgrass to induce farmers to grow it. Experts interviewed by SBI say the long-term
viability of an energy crop like switchgrass hinges on continued reductions in cellulosic
ethanol conversion costs and sustained improvements in switchgrass yields and productivity
through breeding and biotechnology research.
Diversity of Cellulosic Feedstocks
The diversity of cellulosic feedstocks also leads to geographic diversity of cellulosic ethanol
production facilities, which is significant to the development of a sustainable transportation
system to get ethanol to the end-user market. In the U.S., infrastructure will be further
developed from the traditional Midwest sources, but also from new regions such as the
Southeast where there is large potential for cellulosic development. Although the biofuel and
associated coproducts market are not fully developed, new operations that focus on single
products (such as ethanol and biodiesel) are a starting point in the development of sustainable
biorefineries. Next-generation biorefineries are developed with more sustainable biomass

feedstocks, cleaner conversion technologies and greater efficiencies for transporting finished
product to energy carriers. But high costs for developing next-generation biorefineries can
prohibit their inherent benefits.
Federal Funding Fuels Innovation
Innovative developments in cellulosic-based biofuels, although more environmentally sound,
carry an overall higher price and greater manufacturing risk. Capital costs for a next-
generation cellulosic ethanol plant with a capacity of 50 million gallons per year are
estimated by one leading producer to be more than $400 million, as compared with $67
million for a corn-based plant of similar size, and investment risk is high for a large-scale
cellulosic ethanol production facility. However, other studies have provided lower cost
estimates. The National Renewable Energy Laboratory tells SBI that the estimated total
capital costs for a cellulosic ethanol plant with a capacity of 69.3 million gallons per year is
$200 million. Its recent study showed that the costs (including capital and operating costs)
remained too high for a company to begin construction of a first-of-its-kind plant without
significant short-term advantages, such as low costs for feedstocks, waste treatment, or
energy. Significant reductions in the capital cost and operating costs of a cellulosic ethanol
plant will be needed for cellulosic ethanol to be economically competitive with petroleum-
based fuels.
Reducing costs through advances in the production process for cellulosic ethanol will be
important to the future competitiveness of cellulosic ethanol. Federal governments have
recognized the need to offset these costs through funding initiatives. To fuel the
commercialization of technologies for the production of ethanol from lignocellulosics, for
example, the U.S. DOE created a $385 million plan to fund the construction of six large-scale
biorefineries. The conversion technology employed by half of these plants will be a
biological fermentation process, essentially an extension of the grain ethanol industrys
approach.
Several other projects in biofuel innovation are garnering government investments. In late
2007, the DOE announced that four cellulosic biofuel projects will receive up to $7.7 million
in funding through 2011. The projects will demonstrate the thermochemical conversion
process of turning switchgrass, corn stover, wood, and the non-edible parts of other organic
materials into biofuel. The five projects will validate technologies for removing contaminants
from biomass-derived synthesis gas to low levels. After verifying the proposed cleanup

technology can achieve the required low contaminant level, the projects will advance to the
second phase where a fuel synthesis train will be coupled to the gas cleanup system. The fuel
synthesis train will use catalysts to convert the cleaned synthesis gas to Fischer Tropsch
hydrocarbons and/or mixed alcohols. The DOE is also providing up to $114 million, over
four years, to support the development of small-scale cellulosic biorefineries. The projects
will develop biorefineries at 10% of commercial scale that produce liquid transportation fuels
as well as biobased chemicals and bioproducts used in industrial applications. Combined with
industry cost share, more than $331 million will be invested in these four projects. The
remaining DOE-funded biorefineries will use a thermochemical process to produce cellulosic
ethanol or a hybrid of the biochemical and thermochemical approaches. The thermochemical
conversion of biomass can be carried out through different processes.
DOE Funds Advanced Biofuels Projects
The DOE selected six advanced biofuels projects in which its plans to invest up to $4.4
million. The endowment to U.S. institutions of higher education will support research and
development for cost-effective, environmentally friendly biomass conversion technologies for
turning non-food feedstocks into advanced biofuels. Combined with the minimum university
cost share of 20%, more than $5.7 million is slated for investment in these six projects.
These projects represent an investment in clean energy technologies that will help expand the
current U.S. biofuels R&D efforts and help reduce greenhouse gas emissions and dependence
on foreign oil. The initiatives will also expand the geographic diversity and breadth of
partners working on advanced biofuels development across the country and strengthen DOE
collaboration with universities, encouraging the innovation necessary to diversify U.S. energy
sources.
The DOE is working to meet the Renewable Fuel Standard mandated by the Energy
Independence and Security Act of 2007, which has a requirement of producing at least 36
billion gallons of U.S. renewable fuels by 2022.
Biofuel technology manufacturers should follow the R&D efforts and final results of the
following six projects that were competitively selected for negotiation of awards:
University of Toledo: The University of Toledo (Toledo, Ohio) will address
development of cost-effective biocatalysts capable of increasing product yield in the
biological conversion of lignocellulosic biomass. The project will use a novel

enzyme pellet scheme for efficient fermentation of both five-carbon and six-carbon
sugars. The proposed approach provides the potential of simultaneous conversion of
cellulose to sugar and fermentation to ethanol with native yeasts for the first time.
The University of Toledo will undertake research tasks to evaluate the
implementation of the technology in several modes of operation.
Steven's Institute of Technology: Steven's Institute of Technology's New Jersey
Center (Hoboken, NJ) for MicroChemical Systems with BASF Catalysts LLC is
planning to evaluate and demonstrate a novel microchannel reactor to reform
pyrolysis oil to synthesis gas (syngas). The project intends to use the novel reactor
and precisely controlled operating conditions to produce a high yield of syngas at a
reduced energy and temperature, while additionally extending the life of the chosen
catalyst.
Montana State University: Montana State University (Bozeman, MT) will partner
with Utah State University to evaluate the oil content of algae cultures available to
the universities and identify populations that naturally have higher rates of oil
production. In this project, they will test the oil producing microalgae in existing
open ponds for growth characteristics and oil production and determine the optimal
algae type and most efficient biorefinery design.
University of Georgia: University of Georgia (Athens, GA) plans to develop novel
approaches to supply nutrients to oil-producing algal systems resulting in cost-
effective algae-biofuel production systems. The project will take advantage of the
abundance of litter from the poultry industry as a source of low cost nutrients, and
develop a nutrient delivery system to grow algae sustainably. Additionally, this
project aims to develop process methods for the harvesting of algae from open ponds
and subsequent processing to biofuels and other value added products from algae.
University of Maine: The University of Maine (Orono, ME) in conjunction with
several industry and academic partners is planning to determine the optimal yield and
productivity of high potential bacteria at moderate to high temperatures. The
University of Maine intends to use regionally available feedstocks, such as seaweed
sludge, to model alternative conversion and fermentation pathways of these
feedstocks into intermediates and alcohols.

Georgia Tech Research Corporation: Georgia Tech Research Corporation (Atlanta,
GA) plans to evaluate and model the reaction kinetics in two experimental gasifiers
using forest residues under different processing conditions. This project will evaluate
the impact specific conditions, pressure and temperature, on the carbon gasification
rate and formation of contaminates. The resulting models will maximize synthesis
gas yield from an optimized gasifier.
Innovations in Biorefineries
Research efforts that lead to successful innovation of next-generation biofuels will lead to
further growth in construction projects of refineries that incorporate advanced biomass
conversion technologies. SBI expects seven different biorefinery concepts will dot the biofuel
processing landscape during the next decade. This section discusses them in greater detail.
Table 6-1
Advanced Biorefinery Concepts
Concept Feedstock Technology
Green Biorefineries
(GBR)
Wet biomass; green grasses
and green crops, such as
clover
Pretreatment, pressing,
separation and digestion
Whole Crop Biorefineries
(WCBR)
Whole crop cereals, such as
rye and wheat
Dry or wet milling,
biochemical conversion
Ligno Cellulosic Feedstock
Biorefineries (LCFBR)
Lignocellulosic-rich biomass,
such as straw, reed, and
wood
Pretreatment, chemical and
enzymatic hydroluysis,
fermentation, separation
Two Platform Concept
Biorefineries (TPCBR)
All types of biomass
Combination of sugar
platform and syngas platform
(thermochemical conversion)
Thermo Chemical
Biorefineries (TCBR)
All types of biomass
Thermochemical conversion,
pyrolysis, gasification,
product separation
Marine Biorefineries (MBR) Aquatic biomass; microalgae
Cell disruption, product
extraction and separation
Source: U.S. Department of Energy and SBI
Whole Crop Biorefineries
The Whole Crop Biorefinery is based on dry or wet milling of biomass. Raw materials are
cereals, such as rye, wheat, and maize. The first step is the mechanical separation into a grain
and straw fraction where the portion of grain is approximately 20% and the portion of straw
is 80%. Both streams are processed separately to yield starch, which can be processed further
to result in a portfolio of end products. The grain is swelled and pressed releasing value-

added products. The advantages of using a wet milling system are that natural structure
elements, such as: starch, cellulose, and proteins are saved.
Ligno Cellulosic Feedstock Biorefineries (LCFBR)
The LCFBR is based on the fractionation of lignocellulosic-rich biomass sources into the
intermediate output streams cellulose, hemicellulose and lignin, which can then be further
processed into a portfolio of bio-based products, materials, chemicals, fuels, power and heat.
Experts tell SBI that these bio-based products will have a good position on both the
traditional petrochemical and the expected future bio-based markets. Lignocellulosic-rich
biomass is expected to become the most important biomass source of the future, because it
will become widely available at moderate costs, and its cultivation and use compete less with
food and feed crops. However, when lignocellulosic biomass can be processed to ethanol, it
can also be used as feed.
Green Biorefineries
The Green Biorefinery pressurizes wet biomass, including green crops and grasses, to create a
nutrient-rich cake that can be converted to energy. This concept differs from other refineries
in that it uses fresh biomass for processing that require careful preservation and storage to
prevent their rapid degradation. The advantages of the Green Biorefinery are a high biomass
profit per hectare and a good link with the agricultural production along with lower priced
raw materials.
Two Platform Concept Biorefinery (TPCBR)
The TPCBR is based on fractionation of biomass into mainly a sugar (cellulose and
hemicellulose) and a lignin fraction. The sugar fraction is biochemically converted into a
portfolio of potential bio-products, such as materials, chemicals, and fuels. The lignin fraction
(and the residues from the biochemical process) are thermochemically converted into syngas
for the potential production of bio-based products, including power and heat, to meet the
internal process power and heat requirements.
Marine Biorefinery (MBR)
Marine crops, such as microalgae and macroalgae (brown, red and green seaweeds), and their
derived products, are the primary sources of a marine biorefinery. Depending on the type of

algae chosen and the growing conditions, marine biomass is able to accumulate significant
amounts of bio-based products.
Thermo Chemical Biorefinery (TCBR)
In a Thermo Chemical Biorefinery several biofuel technologies are applied, such as pyrolysis,
gasification and Hydro-Thermal-Upgrading (HTU). The biomass is refined thermochemically
into a portfolio of value-added products along with the co-production of value-added
chemicals, mixed alcohols and Synthetic-Natural-Gas (SNG) from biomass. A specific type
of Thermo Chemical Biorefinery is to make use of raw oil-based petrochemical
infrastructure. Raw biomass and biomass-derived intermediates are conditioned and
introduced into these infrastructures, substituting fossil fuels and raw materials for the
sustainable production of a variety of conventional petrochemical products.
Innovations in Biofuel Processing
Plants specifically designed for industrial processing to biofuels can be developed
concurrently with new biorefinery treatment and conversion processes. Resulting
technologies will lead to the fusion of agriculture, industrial biotechnology, and energy value
chains to enable an efficient and economically viable industry for conversion of plant
biomass to liquid fuels. Several examples of advanced biofuels are being developed that have
the potential to complement or even replace ethanol as the dominant biofuel. While still in
early stage development, these fuels are being created to improve fuel properties and
circumvent production bottlenecks. Examples include technologies used to produce
alternative alcohols to be blended with gasoline. British Petroleum and DuPont have been
working together on butanol while Amyris Biotechnologies is working with synthetic biology
to produce alternative fuels. Other companies are experimenting on non-alcohols that can be
introduced into the supply chain in different ways than ethanol. For example, ADM and
ConocoPhillips are working together on the development of biocrude from cellulosic
feedstock sources that can be introduced at the oil refinery level. Another example is start-up
LS9, which is producing renewable petroleum that can be distributed through traditional
pipelines.
The bio-oils currently produced are suitable for use in boilers or in turbines designed to burn
heavy oils for electricity generation. There is ongoing research to upgrade bio-oil into
transportation fuels. DynaMotive Energy Systems is commercializing a proprietary fast
pyrolysis process that converts forest and agricultural residue into liquid bio-oil and char. The

company is launching a bio-oil cogeneration facility in West Lorne, Ontario, Canada in
collaboration with Erie Flooring and Wood Products Company. The flooring company
provides the wood residue and Dynamotives 2.5-megawatt plant uses its fast pyrolysis
technology and a gas turbine to supply power to the wood product companys mills and
lumber kilns. Dynamotive is now in the process of building a second 200 ton-per-day plant in
Guelph, Ontario.
Ensyn Group Inc. has commercialized a fast pyrolysis technology under the name of Rapid
Thermal Processing (RTP). This technology is based on the biomass refining concept, where
value added chemicals are produced in addition to a consistent quality bio-oil. Ensyn has four
RTP facilities in commercial operation; a new facility and a bio-oil refining plant are
currently under construction. Three of the commercial facilities are in Wisconsin and one is
near Ottawa, Canada. The largest of these facilities processes about 75 green tons per day of
mixed hardwood wastes. Ensyn currently produces about 30 chemical products from RTP
bio-oil with lower value remnant bio-oil used for boiler fuel. Ensyn is just beginning to enter
the energy market.
Advances in Ethanol Separation Technologies
New techniques that separate corn kernel components before processing will blur the
distinction between wet and dry milling by allowing the dry mill to recover the coproducts
from the germ. Process improvements are also being made that will reduce the cost of wet
milling, generally by shortening the soaking step. Some of the separation improvements are
still experimental.
Germ and Fiber Separation
Modifications of the dry-grind facility have made the recovery of corn germ possible in dry
milling. Normally, corn germ is separated out before becoming part of the mash; all
components go through fermentation and become part of the feed coproduct. Various
modifications of the process have made it possible to recover fiber and corn germ from both
the endosperm and the outer covering of the kernel. A technique developed at the University
of Illinois called Quick Germ (QG) allows recovery of corn oil and corn germ meal from the
germ, making the dry mill a more profitable operation
Another process, Quick Fiber (QF), can be used with QG to recover fiber from the outer
covering of the kernel, which is a source of potentially valuable food coproducts. Though

these processes have not been used in commercial applications, they hold promise for
reducing the net cost of the input corn. The tanks and equipment for the additional steps
would increase the plants capital cost, but could increase its capacity by reducing the amount
of nonfermentables in the mash.
Enzymatic Dry Milling
Enzymatic dry milling, which uses newly developed enzymes, is another method with the
potential for cost savings in ethanol production. In addition to recovering the germ and fiber
from the outer kernel, it allows recovery of endosperm fiber. Savings come from the
recovered coproducts and from reduced energy consumptionthe process requires less heat
for liquefaction and saccharification. Plant capacity should be enhanced as well, since there is
less nonfermentable material in the substrate because it is removed earlier in the process. The
amount of DDGS is smaller, but of higher quality. Ethanol concentrations in the mash are
also higher. Industrial- and food-grade products can be recovered from the fiber.
Dry Fractionation
Dry fractionation technology separates the corn kernel into its components without the
soaking step. The feedstock is misted with water before being separated into bran, germ, and
the high-starch endosperm portion of the kernel. The advantages of dry fractionation over
processes that require a soak step include lower costs, since less energy is required for drying
the feed coproduct, lower emissions, and greater coproduct output because the mash is more
highly concentrated. The germ can be sold or pressed for corn oil, and the bran also has
potential for food or energy use. Dry fractionation is a process that has been tested and is in
use in the food industry. Both new and planned ethanol plant construction employ the
technology.
Unlike some other new biofuel technologies, the dry fractionation equipment can retrofitted
to an established dry mill. With all the separation techniques, there appears to be less total
ethanol recovered per bushel than with conventional dry-milling techniques, likely due to
removal of some starch with the coproducts. Each technique will change the nature of the
resulting distillers grains, potentially raising their value.
Ammonia Process in the Wet Mill
Researchers have also investigated a separation technique involving pretreatment with
ammonia. This process would facilitate removal of the outer corn kernel and reduce the soak

time in wet milling. Anhydrous ammonia would take the place of the caustic soda solution
usually used in debranning. In laboratory research, the outer corn kernel was more easily
removed through ammoniation, but though the oil was not degraded, its quantity was reduced
compared with conventional techniques.
Continuous Membrane Reactor for Starch Hydrolysis
This process, still experimental, uses enzymatic saccharification of liquefied corn in a
membrane reactor. In a continuous membrane reactor, as opposed to the traditional batch
process, starch would be broken down and glucose extracted continuously. Theoretically, the
yield would increase, and the automated continuous process would enable better control than
the batch process.
Alkali Wet Milling
In an experimental modification of the wet-milling process, corn was soaked briefly in
sodium hydroxide (NaOH) and debranned. This process cut the costly soaking time to just
under one hour. The outer corn shell removed in alkali wet milling becomes a potentially
valuable part of the coproduct stream. Additional work is needed to develop ways of
disposing of or recycling the NaOH before the technique can be commercialized.
High-Gravity Fermentation
The high-gravity fermentation technique would lower water use in ethanol production.
Potential savings would come from the reduced cost of water and wastewater cleanup, as well
as from reduced energy use. This process would involve less heating and cooling per gallon
of ethanol. Very-high-gravity fermentation accomplishes this saving in energy by using a
highly concentrated mash with more than 30% solids. Experiments have resulted in a 23%-
alcohol fermentation, which is much higher than with the conventional process. Commercial
production at that level is not likely in the near future because of difficulty in staying within
the required tolerances. However, incremental moves toward higher concentrations open the
possibility of lower production costs.
Improved Yeast
Researchers have been trying to improve yeast as a highly effective converter of sugars to
ethanol. The desired end product is a yeast that would be more heat tolerant and better able to
withstand high alcohol concentrations, which could produce fewer undesirable byproducts,

and that could convert more types of sugar to ethanol. Developers have made progress in
some of these areas. For example, the ethanol tolerance of yeast is at least one-third higher
than in the 1970s. Some researchers believe a yeast that can tolerate temperatures as high as
140 degrees F is ideal. Development of such a yeast would completely revolutionize the
ethanol conversion process.
Conversion of Pentose Sugars to Ethanol
Sucrose from starch is not the only type of sugar in the corn kernel. Some of the sugars are
pentoses, or five-carbon sugars not normally utilized by common yeast. Any organism that
could ferment pentoses to ethanol would be a valuable contribution to corn-ethanol
conversion efficiency. This conversion has been achieved in the laboratory using genetically
modified yeasts and in bacterial fermentation using E. coli. These processes are not in
commercial use, partly because the engineered organisms are less tolerant of environmental
changes than conventional organisms.
Enzymes for Liquefaction and Saccharification
Enzymes were first used in ethanol production in the 1950s, but they have recently been
improved and their cost reduced through the use of special fermentations of microorganisms.
Enzymes enable more efficient chemical reactions with less heat. Their use in ethanol
production improves liquefaction, saccharification, and fermentation. Enzyme use also results
in reduced soak time, higher starch and gluten yield, better protein quality, and reduced water
and energy use. The USDAs Agricultural Research Service (ARS) is working with enzyme
manufacturers to further reduce cost and improve effectiveness.
Enzymes to Reduce Sulfur Dioxide
Part of the additional expense in wet milling is the need to soak the corn before separation of
the germ from the kernel. The tanks increase overall capital cost, and the soak time slows the
process. Soak time can be reduced by adding sulfur dioxide to the steep water, but research
shows that the sulfur dioxide can be reduced or eliminated by using enzymes. Recently, an
experimental two-stage procedure reduced soak time by up to 83%.
In the saccharification step, the protease enzyme hydrolyzed the protein matrix around the
starch granules and made it available for further breakdown. Most enzymes carry high costs
but recent experiments seeking to optimize the process have reduced the total enzyme

requirement. Research trials show that using a low level of sulfur dioxide (more than 90%
less than conventional levels) greatly reduces the enzyme requirement. Small amounts of
sulfur dioxide are still effective in reducing bacterial contamination, a potential problem in
continuous processes. Though enzymes are an added expense, the procedure could increase
biofuel plant capacity, reduce energy costs, and allow the use of otherwise unusable broken
grains.
Distillation Technology
Ethanol distillation was modeled from the beverage alcohol industry, where there is no need
to remove all of the water during the conversion process. Fuel ethanol, however, requires
almost total dehydration. Producers began dehydrating their ethanol using a technique called
azeotropic distillation, which needs an ingredient, usually benzene or cyclohexane, to break
the azeotrope the point after which distillation becomes ineffective. The adoption of
molecular sieves allows the refinery to use less power, reduce original capital costs, and
eliminate the potential exposure of workers to dangerous chemicals.
Molecular sieves use materials with microscopic pore sizes large enough to allow a molecule
of one size to get through while blocking another. For example, in ethanol dehydration the
molecular sieves have a pore diameter that allows a water molecule to enter and be trapped
but keeps out the larger ethanol molecule. Since the late 1980s, vapor-phase molecular sieves
have been the industry standard, improving on the liquid-phase sieves by reducing the
required size.
Control Systems
Incremental changes have led to the increased control of fermentation and other processes.
Distributed control systems and advanced computing capabilities have continued to reduce
costs while optimizing the production process. Distributed control systems are used in
industrial and other engineering applications to monitor and control a process remotely.
Human operators manage equipment distributed throughout the refinery. Examples, besides
ethanol plants, include power distribution systems, traffic signals, water management
systems, and biorefineries. Instruments to measure and control, usually digital, are wired
ultimately to computers, allowing a human-to-machine interface.
Merging the distributed control system with computer programs allows timely monitoring of
processes, and even allows prediction. Reports can be compiled from stored data, and alarms

can be set to alert operators if established parameters are breached. Distributed control
systems have cut costs in ethanol plants mainly by reducing the labor required. Better process
control also reduces downtime and maintenance.
Environmental Technologies
Ethanol production uses less energy as techniques and technologies improve. Both wet and
dry millers are using less fuel and electricity per gallon produced, and farmers are producing
corn more efficiently. All of these savings are an environmental plus for ethanol. Ethanol
plant emissions are another improvement. Producers in several U.S. states have agreed to
install thermal oxidizers or other technologies that eliminate nearly all volatile organic
compounds (VOCs) and other pollutants, adding equipment that averages more than $2
million per plant.
The EPA estimates that this agreement will eliminate more than 63,000 tons of pollution
annually. Pollutants like particulate matter and VOCs can originate from fermentation and
from other parts of the plant such as grain-handling areas. Thermal oxidizers are now
standard equipment in most new ethanol facilities since they convert carbon- and hydrogen-
bearing compounds into carbon dioxide and water through high-temperature oxidization.
Besides eliminating odors and visible emissions, thermal oxidizers can eliminate nearly all
oxides of nitrogen and other hazardous air pollutants.
Biodiesel Derived From Tallow
Biodiesel production has focused on fuel derived from soybean or canola (rapeseed) oil.
These oils are available in a consistently high quality form, and are the easiest to process for
making biodiesels. Most of the biodiesel available is based on soybean oil. Beef tallow
consists of the renderings from meat packing and is available in either an edible or inedible
form. The difference between the two forms is based on what is considered acceptable for
food products. As a result, there is traditionally a larger variation in the composition of
inedible beef tallow compared to the edible tallow. Pork lard is the swine-derived counterpart
to beef tallow, also as a result of the meat packing process. The advantages of tallow and lard
are their lower cost compared to soybean and canola oil. However, a disadvantage is that they
may require additional processing to produce an acceptable biodiesel.
Investors in biodiesel production facilities will continue to search for economically feasible
sources of vegetable oil and animal fats that can be used to produce biodiesel. One of these

animal fats is poultry fat, a feedstock that is relatively inexpensive when compared to other
oil and fat sources such as soybean oil. However, the free-fatty acid (FFA) content of poultry
fat can vary greatly depending on the fat profile of the bird. Since the FFA content affects the
biodiesel yield potential it has a major impact on the economic feasibility of this feedstock
High FFA content, in combination with conventional base-catalyzed transesterification,
lowers the yield of biodiesel and produces by-products like soapstock and glycerine.
Higher FFA concentrations result in more oil that is lost in processing. The FFAs, such as
that in yellow grease, are formed from triglycerides (principal component of fats and oils).
These form naturally from enzymes in oils, oxidation, or acids/bases/moisture and heat
reactions.
Biodiesel can be made from tallow using very similar processes to plant oils. The advantage
is a higher cetane number than plant oil biodiesel, which leads to cleaner and more efficient
burning in diesel engines. One disadvantage is tallows higher cloud point. The cloud point
is the temperature at which a cloud of crystals first appears in a liquid as the liquid is cooled.
A high cloud point indicates that the fuel will melt at higher temperatures and will gel at low
temperatures. High cloud point fuels require added heating systems to liquefy the fuel at low
temperatures. Low cloud point fuels gel and remain as a liquid at lower temperatures.
Because of the high levels of saturates, biodiesel from tallow tends to crystallize out at much
higher temperatures than biodiesel from plant oils. In Northern Europe this makes tallow
biodiesel unsuitable for winter use apart from blending at low rates into conventional diesel.
Tallow diesel cannot meet the required DIN standard for 100% biodiesel, but as a 5% mix
with conventional diesel it meets the required standards.
The third class of feedstocks is waste yellow grease. It is soybean oil (or equivalent) which
has been used for cooking. Characteristic of the feedstock are the larger amounts of free fatty
acids that have been liberated during the cooking process. Because of seasonal variations, the
free fatty acid content can range from 2% to 20% or more. However, 4% to 10% is a more
typical range, and was selected for the two yellow greases.
Global Biofuels Market Chapter 7: Consumers of Biofuels

Chapter 7 Consumers of Biofuels
Biofuel manufacturers, including those who produce ethanol, biodiesel, and the technologies
to process biomass into energy, are faced with many challenges in the marketplace. Besides
competing against other forms of renewable energy sources, such as wind and solar, the bio-
based businesses face the hurdles of lobbying government legislators about the inherent
safety and environmental benefits of their products. As nations increase their investments in
biofuel initiatives and build next-generation refineries that leverage innovative biofuel
technologies, they are simultaneously deploying massive public awareness campaigns to the
commercial and consumer sectors. Many consumers view bio-based energy as a threat to the
food supply and inflation of food prices, and an economic burden on the supply chain of
natural resources. The industry is still struggling to convince consumers of the environmental
benefits of biofuels, especially in the wake of the recent increase in food prices. The biofuels
industry will also struggle to find money to finance the necessary infrastructure to store and
transport the products to the end user.
U.S. citizens are dubious about purchasing biofuel-powered vehicles because of the uncertain
future availability and price points of ethanol and biodiesel. Manufacturers of bio-based fuels
and biomass conversion technologies continue to monitor public perceptions about bio-
energy and its consumption potential during the next decade. If the end users of biofuels are
not convinced that ethanol and biodiesel will provide a long-term solution to reducing carbon
emissions in vehicles and fulfilling other energy needs, then manufacturers of biofuel
conversion technologies will face reduced demand and growing supplies of finished goods.
But as this chapter will show, biofuel industry efforts to change public attitudes toward the
energy are in full force and resulting in renewed and sustainable interest in biofuels.
Biofuel Energy Policy Fuels Debate
Consumers are aware of impending changes in the composition of conventional fuels for their
vehicles, which are increasingly more fuel efficient and environmentally emissions friendly.
Biofuels for consumer vehicles will undoubtedly become more prevalent at the fuel pump as
governments pass stricter regulations on fuel composition. The U.S. Environmental
Protection Agency (EPA), for example, is proposing revisions to the National Renewable
Fuel Standard program (RFS program) that establish new specific volume standards for
Chapter 7: Consumers of Biofuels Global Biofuels Market

cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel that must
be used in transportation fuel each year. The revised statutory requirements also include new
definitions for renewable fuels and the feedstocks used to produce them, including new
greenhouse gas emission (GHG) thresholds for renewable fuels. The regulatory requirements
for RFS will apply to domestic and foreign producers and importers of renewable fuel. The
current Renewable Fuel Standard program (RFS1) was established under the Energy Policy
Act of 2005 (EPAct). The EPA proposes to establish a revised annual renewable fuel standard
(RFS2). The volume standard under RFS2 was increased beginning in 2008 from 5.4 billion
gallons (Bgal) to 9.0 Bgal. Thereafter, the required volume continues to increase under RFS2,
eventually reaching 36 Bgal by 2022.
Table 7-1
Renewable Fuel Volume Requirements for RFS2, 2008-2022
(billion gallons)
Year
Cellulosic Biofuel
Requirement
Biomass-based
Diesel Requirement
Advanced Biofuel
Requirement
Total Renewable
Fuel Requirement
2008 -- -- -- 9
2009 -- 0.5 0.6 11.1
2010 0.12 0.65 0.95 12.95
2011 0.25 0.8 1.35 13.95
2012 0.5 1 2 15.2
2013 1 a 2.75 16.55
2014 1.75 a 3.75 18.15
2015 3 a 5.5 20.5
2016 4.25 a 7.25 22.25
2017 5.5 a 9 24
2018 7 a 11 26
2019 8.5 a 13 28
2020 10.5 a 15 30
2021 13.5 a 18 33
2022 16 -- 21 36
Note: a = To be determined by EPA through future rulemaking
Source: EPA
The RFS program requires increasing the use of renewable fuels every year through 2012. By
2012, at least 15 billion gallons of renewable fuel must be blended into motor-vehicle fuel
sold in the U.S. After 2012, renewable fuel use is required to grow in volume as gasoline
demand grows. Manufacturers expect ethanol blends of up to 10% to be fully compatible with
current and previously manufactured gasoline-powered vehicles and engines. However,
certain components of older vehicles or engines that are operated in areas where ethanol is
new might be affected.
The EPA understands that sufficient plans are underway to build refineries capable of
producing 0.1 billion gallons of cellulosic biofuel in 2010, the minimum total volume of

cellulosic biofuel required for the year. However, it recognizes that cellulosic biofuel is at the
early stages of commercialization and current domestic economic concerns could have
significant effects on these plans. It is not proposing that any portion of the cellulosic biofuel
requirement for 2010 be waived, but is seeking additional and updated information that
would be available prior to November 30, 2009, which could result in a change in this
conclusion. It is proposing that the renewable fuel volume requirements for RFS2 be used as
the basis for the applicable standards for 2010.
Currently, the main feedstocks used for renewable fuel production are corn for ethanol and
soy for biodiesel. As technologies improve, the EPA expects more emphasis on using
cellulosic feedstocks such as agricultural residues and forestry residues. However, limitations
may occur due to concerns over sustainable removal rates for initial cellulosic feedstocks.
Dedicated energy crops which are touted as requiring low fertilizer and energy inputs as well
as having the ability of being grown on marginal lands may also enter the market.
RFS2 is expected to reduce dependence on foreign sources of crude oil, increase domestic
sources of energy, and diversify the U.S. energy portfolio to help in moving beyond a
petroleum-based economy. The increased use of renewable fuels such as ethanol and
biodiesel will expand the market for agricultural products such as corn and soybeans and
open new markets for the development of cellulosic feedstock industries and conversion
technologies.
Feedstock Implications
The embracement of conventional biofuels by U.S. policymakers has led to growing
skepticism in the environmental community that next-generation biofuels will become a
viable component of a larger U.S. renewable energy portfolio. The USDA and EPA have
commenced discussions aimed at raising ethanol blending levels in the U.S. to as high as E85
(85%) from the current level of E10. A coalition of leading environmental groups in late 2008
released a comprehensive platform to address the critical and immediate energy challenges
facing America. Highlights of the platform that encourages a sensible biofuels policy include:
Federal policy should no longer seek to expand the production and use of corn
ethanol and the US government should freeze the renewable fuels mandate (RFS) for
conventional fuels at current levels.

Change the direction of US biofuels policy by phasing out the blender's tax credit
while phasing in tax credits or subsidies for renewable fuels that are scaled in
accordance to the fuel's relative environmental, health, and consumer protection
merits.
Rebalance the U.S. renewable energy and energy conservation portfolio to reflect the
relative contribution true renewable energy options make to reducing fossil fuel use,
enhancing the environment, spurring economic development, and increasing energy
security.
Proceed with caution by engaging in serious and practical research on "advanced
biofuels" to ensure we avoid the same kind of "unintended consequences" that have
resulted from the push to expand production of corn ethanol.
One concern is the higher price per gallon consumers could pay for fuels with higher ethanol
blends. According to an online fuel price survey, E85 is currently priced almost 30 cents per
gallon higher than conventional gasoline on an energy-equivalent basis. Experts says E85
needs to be priced competitively with conventional gasoline based on its reduced energy
content, increased time spent at the fuel pump, and its limited availability. E85 is 79% as
energy dense as E10. The EPA expects that E85 should be priced at least 21% lower at retail
to compensate. Its price analysis suggests that E85 would need to be priced around $1.74 per
gallon at retail, or about a third lower than $2.58/gal gasoline for consumers to refuel on it
74% of the time in 2022. As expected, higher crude oil prices could make E85 look slightly
more attractive. However, there would still need to be a strong E85 price incentive at the
pump for consumer demand to grow. Similarly, there would need to be a marked price
advantage at the terminal level for ethanol refiners to blend E85 efficiently (given their
overall transportation costs, taxes, and marketing costs at retail). The EPA is aware of the
challenges and coordinated efforts that would be required on the part of automakers, gasoline
retailers, and consumers to get beyond the E10 blend hurdle. Many retailers will have an
interest in bringing E85 to market and pricing the fuel so that it is attractive to consumers.
Legislation Favors E85 Production
U.S. Rep. Herseth Sandlin (D-SD) and Rep. John Shimkus (R-IL) recently reintroduced
bipartisan legislation that increases the availability of homegrown, renewable biofuels like
E85 and biodiesel at gas stations across the country. The 2008 E85 and Biodiesel Access Act
(H.R. 1757) streamlines the process and provides greater incentives for service station owners

to install equipment to dispense E85 and biodiesel. The Act increases consumer access to
these homegrown biofuels and would enhance the Alternative Fuel Vehicle Refueling
Property Credit. The credit typically allows gas station owners to claim a 30 percent tax
credit for the cost of installing clean-fuel vehicle refueling property up to a maximum of
$30,000. Additionally, the IRS limits the credit to the amount a dual purpose fuel dispenser
exceeds the cost of equivalent conventional refueling dispensers.
Earlier in 2009, Congress passed the American Recovery and Reinvestment Act of 2009
which temporarily boosts the standard credit from 30% to 50%, and increases the maximum
credit to $50,000 from $30,000. The E85 and Biodiesel Act legislation boosts the percentage
to 50%, and adds additional enhancements to ensure the dispensing infrastructure challenge is
fully addressed. The E85 and Biodiesel Access Act not only raises the amount of the credit,
but raises the maximum credit to $100,000. The National Ethanol Vehicle Coalition has
reported that although more than seven million E85 or Flexible Fuel Vehicles (FFV) are
currently on the road in the U.S., less than 2,000 E85 fueling stations are in place to service
these vehicles, and about 8,000 more sites are needed to meet expected FFV demand. This
legislation is supported by the American Coalition for Ethanol, the Renewable Fuels
Association, the National Association of Convenience Stores, and the National Biodiesel
Board. "The American Coalition for Ethanol is pleased to endorse this critically important
bipartisan legislation to provide petroleum marketers with a more meaningful incentive to
install blender and E85 pump equipment," Brian Jennings, Executive Vice President of the
American Coalition for Ethanol, said in a statement.
Energy industry experts are also calling for government action to boost transportation and
distribution of biofuels, warning in a new report that needed infrastructure is lagging behind
fuel production. The report from a task force assembled by the bipartisan National
Commission on Energy Policy surveys the infrastructure needs for meeting the expansion of
biofuels use mandated by a 2007 energy law. The report finds that while major infrastructure
investments will be needed to meet these mandates, the global recession is a barrier to
investment in areas such as blending terminals, pipelines, unit trains and retail sites for sale of
E85 ethanol. Ethanol is currently transported mostly by rail, which covers about 60%,
followed by trucks and to a lesser extent, barges. Other recommendations include ensuring
there is "certainty" about the federal commitment to implement the expanded renewable fuels
standard. The task force includes representatives of companies such as ConocoPhillips,
Archer Daniels Midland and General Motors Corp., as well as trade groups for gas station,

67%
66%
53%
44%
43%
28%
24%
0% 10% 20% 30% 40% 50% 60% 70% 80%
I want to know more about
renewable biofuels
Biofuels will reduce U.S. reliance on
foreign oil
Biofuels will have a positive effect on
climate change trends
Corn-based ethanol production will
create pressure on the food supply
Ethanol will create pressure on local
water supplies
Biofuels is a permanent solution to
the energy problems in the U.S.
I would use corn-based ethanol for
my transportation needs
trucking, oil pipeline and other interests. The 22-member panel also includes members of the
Energy Policy Research Foundation, pipeline company officials and others.
Figure 7-1
U.S. Consumer Opinions About Biofuels
(% who fully agree)
Source: University of Wisconsin
The ethanol industry is also pushing federal officials to allow so-called mid-level blends
above E10 in current engines and vehicles. U.S. EPA is currently seeking public comments
on a petition by the ethanol trade group Growth Energy and more than 50 ethanol companies
asking for a Clean Air Act waiver to allow 15% blends. It turns out most Americans want to
know more about biofuels, too. A new survey from the Department of Life Sciences
Communication at the University of Wisconsin-Madison showed that 67% of respondents

were interested in learning more about renewable biofuels with a majority of respondents
perceiving some clear benefits of biofuels. Another 66% agreed that using biofuels can help
the U.S. reduce reliance on foreign oil while 53% believed biofuels can have a positive
impact on climate change trends. Respondents indicated some concerns about ethanol, with
44% believing that the production of corn-based ethanol will create pressure on the food
supply, and 43% saying that ethanol will create pressure on local water supplies. The survey
is part of the Cooperative Campaign Analysis Project, a joint venture that brought together
more than 60 researchers from 25 academic institutions, to conduct a six-wave panel study of
18,250 respondents throughout the U.S.
Another survey conducted in 2008 by Hormel Foods found that 67% of Americans believe
that food prices have increased significantly in the past year, and 61% believe that corn
ethanol is partly responsible for the increase. The survey found that 58% of respondents said
that the role of ethanol should be reconsidered in light of rising food prices and 41% want to
repeal ethanol mandate.
Biofuels Effect on Food Prices
The general price elasticity of ethanol and biodiesel is one consumer concern that biofuel
manufacturers should continue to monitor during the next five years. Another challenge is
improving consumer acceptance of biofuels based on current misconceptions about the
energys effects on local environments and food prices. The USDA has downplayed concerns
that the production of conventional biofuels is having serious consequences on the price of
food and overall supply of food. Agriculture Secretary Ed Schafer has stated that demand for
biofuels is having some impact on food prices, "but it is not a major factor." He said that
changing the direction of biofuels policy would not calm rampant food inflation. "The change
in the renewable fuel standard, the change in tariff or duty isn't going to affect food prices,"
said Schafer. Other factors, including high oil prices and increased global food demand have
been blamed for rising prices in the U.S.
But the Grocery Manufacturers Association has decried the use of corn to make fuel that is
driving up the cost of virtually all commodities. With soaring feed prices, the US poultry
industry is one sector feeling the brunt of rising commodity costs. The National Chicken
Council said that while commodity prices may not have hit consumers yet, shoppers are
likely to feel the price effect soon.

Those sentiments from consumer advocacy groups are stirring greater interest in non-food
biofuel production. President Barack Obama is a strong supporter of ethanol and remains
committed to biofuels in his energy plan as a way to cut US dependence on foreign oil.
Obama was a supporter of the renewable fuel standard (RFS) in both the 2005 and 2007
energy bills. The 2007 law expanded the RFS by requiring 36 billion gallons of renewable
fuel -- overwhelmingly ethanol -- to be used annually by the year 2022. It also specified that
21 billion gallons should come from advanced biofuels including cellulosic ethanol. Obama's
energy plan includes a proposal to expand the RFS further to 60 billion gallons of biofuels by
2022. "Obviously the overarching goal here is to accelerate our path toward ending America's
dependence on foreign oil," said Heather Zichal, Obama's policy director for energy,
environment and agriculture in an interview published on the Renewable Fuels Association's
website in Fall 2008. "In order to reach this goal we'll need to support research and
development into the next generation of feedstock and processing technologies." Zichal says
advanced feedstocks like rice hulls and sugarcane have the potential to improve the carbon
footprint of biofuels across the board. Obama's pledge to invest $150 billion over 10 years in
renewable energy technology -- including biofuels , wind and solar -- will be key for moving
from corn-based ethanol -- which is blamed for high food prices -- to advanced biofuels like
cellulosic ethanol, she said.
Obama also supports the current policy of providing oil refiners and marketers with a 46 per
gallon tax credit when they blend gasoline with ethanol. Obama simultaneously backs a tariff
imposed on imported ethanol, which Zichal stated is designed to nurture an independent
domestic biofuels industry, as well as mandates for automakers to manufacture more flexible-
fuel cars that can run on more highly concentrated blends of biofuels. "The whole point of the
program is to build a domestic industry that will achieve energy independence for this
program," she said.
As for the effect on food prices, Obama has cited studies from the U.S. Department of
Agriculture and the White House Council of Economic Advisors which concluded that
ethanol-related demand for corn has had only a minimal impact on consumer food prices.
Still, the American Corn Growers Association (ACGA), is calling for support for federal
policy reforms to protect American Farmers, consumers and investors from the negative
impacts of the growing worldwide demand for food and biofuels.
Consumers might be aware that the price of oil has had the greatest impact on crop and food
prices during 2008 and that biofuels can help end U.S. dependence on petroleum while
creating new green jobs and real economic growth. Jim Greenwood, president and CEO of

the Biotechnology Industry Organization (BIO), stated "American consumers should not be
fooled by ongoing attempts to misplace blame for this year's rise in food prices on biofuels.
The evidence before consumers is clear: crop prices have fallen dramatically in the past few
months as oil and gas prices have declined. He added that the U.S.s goal of producing and
using 21 billion gallons of advanced biofuels by 2022 is a tremendous opportunity for jobs
and growth.
Studies Point to Ethanols Effect on Food Prices
In contrast, two studies released in late 2008 show that federal ethanol mandates have placed
significant pressure on food prices, while any effect on gasoline prices has been "almost too
small to measure." Dr. Thomas Elam of FarmEcon LLC, and Keith Collins, former chief
economist of the U.S. Department of Agriculture, submitted their new analyses to the EPA.
"The 2008/2009 increase in fuel production made possible by the RFS is almost too small to
measure against the global energy market, but the effects on food prices and security are
huge," Elam notes. "The U.S. government should re-examine and reduce the RFS in light of
the damage it can do to our food production capacity and the overall welfare of the country."
Elam's study concludes that ethanol actually has had little effect on gas prices -- only about 4
cents per gallon. Dr. Elam's study also describes the expected impact of crop shortages on
commodity and food prices if congressional food-to-fuel mandates remain at their current
levels. The study concludes that maintenance of the current RFS in light of recent flooding in
the Midwest would prove "devastating" to livestock and poultry farmers and would increase
the burden of food prices for American consumers. Elam's study, entitled "Biofuel Support
Costs to the U.S. Economy: The Key Role of the RFS in a Feedstock Shortage Scenario,"
investigates two distinct scenarios: one in which there is crop damage and the RFS remains in
place, and one in which there is crop damage but the RFS mandate is reduced by 50%.
"Maintenance of the current RFS schedule in the face of a smaller 2008 corn crop will be
devastating to meat, dairy and poultry producers," Elam wrote. "Consumers will suffer as
food and fuel costs rise and supplies of corn-based foods diminish. The overall economy will
be damaged from higher inflation and lost jobs in the food production sector." The Collins
study, "The Role of Biofuels and Other Factors in Increasing Farm and Food Prices,"
indicates that unless the RFS is suspended or revisited, U.S. grain stocks, which are at
dangerously low levels, will fall even further as ethanol consumes a larger share of the
dwindling corn supply. "Government support for corn-based ethanol ensures a permanent,
significant, and increasing demand for corn," Collins said. "These policies interfere with the

normal price rationing function of markets when supplies are short such as in 2008, with
production being reduced by flooding and excess moisture. In this short-crop environment,
biofuels policy, including mandated use of ethanol, causes even higher corn prices, shifts the
demand adjustment burden to non-ethanol users of corn -- particularly the livestock sector --
and puts continuing pressure on food prices."
The USDA has argued that biofuels policy has had very little effect on food prices -- as little
as two percent. The Collins study contradicts this finding and points to potentially serious
impacts on consumer prices. "The increase in retail food prices due to biofuels is estimated to
be 23-35 percent above the normal increase in food prices that would occur over 2-3 years,"
Collins wrote. "Accordingly, biofuels are now becoming a significant factor in higher food
prices."
The Elam study also warns that reduced crop yields coupled with the RFS and corn prices at
$8 per bushel would have an overwhelming effect on food producers and American
consumers: "While mid-2008 profitability indicators for meat and poultry production were
depressed well below normal levels, production was still generally higher than prior year
levels," the study noted. "Without a reduced RFS, that will all change in the coming months.
Meat, poultry and dairy producers will find it necessary to deal with not only higher feed
costs, but the sheer availability of feed ingredients at any price. "
Biofuels Lobbying Efforts
To sway public opinion in their favor, and secure additional funding and support from
government organizations, many biofuel manufacturers and industry trade groups have
increased their spending on public awareness campaigns and lobbying. Total spending on
biofuel-related lobbying in the U.S. reached nearly $44.5 million in 2008. An ethanol trade
group that represents biofuel makers spent $162,000 in 2008 to lobby the federal government
on incentives for the industry. The Renewable Fuels Association lobbied Congress on
renewable fuels legislation and waivers of fuel requirements during the first quarter of 2008,
according to an April 21, 2009 filing. Besides Congress, the Renewable Fuels Association
lobbied the Environmental Protection Agency and the departments of Agriculture and
Energy.
A group formed by Monsanto Co., Archer Daniels Midland, Deere & Co. and DuPont Co. is
using national advertisements and lobbyists on Capitol Hill to build the case that new
technologies can make it feasible to produce crop-based fuels like ethanol and biodiesel, even

as grain prices climb worldwide. Organizers of the newly formed Alliance for Abundant
Food and Energy said they want to convince consumers and politicians that both goals can be
met at once by increasing agricultural productivity.
"I think the only path forward is one that meets both food and energy security demands," said
Monsanto's Chief Technology Officer Robert Fraley. "I think we can add a component of
science and technological perspective to the discussion." Monsanto hopes to double the yield-
per-acre (yield-per-hectare) of crops like corn and soybeans by 2030, he said. The alliance
plans to lobby federal lawmakers to keep current ethanol mandates while increasing funding
for agricultural research and development that could increase crop yields. It also plans to try
to sway consumers by telling them new technologies will make it possible to grow enough
food to affordably fill gas tanks and grocery carts.
The alliance faces opposition from well-funded agricultural interests that are suffering under
rising food costs, including the American Meat Institute and the Grocery Manufacturers
Association. The GMA is already funding a campaign to highlight the negative effect of
rising grain costs for average consumers, and it wants Congress to reconsider the federal
ethanol mandates. The GMA isn't swayed by the idea of waiting for agricultural productivity
to improve, GMA Vice President for federal affairs Scott Faber said in a statement. "While
improvements in global agriculture are vital, this work must not distract us from the fact that
while we wait, millions of people will be pushed deeper into hunger and poverty because we
are diverting more and more food and feed supplies to producing ethanol," Faber said in a
statement. "Congress and the administration can take immediate action to curb hunger by
revisiting these flawed policies."

Table 7-2
Top 25 Expenditures on Biofuel Lobbying in 2008, by Company or Group
Ranking Company or Organization
2008 Lobbying
Spending
Share
1 Clean Energy Group $1,340,000 --
2 National Biodiesel Board $1,148,806 --
3 Salt River Project $1,130,000 --
4 Covanta Holding $1,040,000 --
5 Metro Water District/Southern California $923,400 --
6 Alstom Power $911,107 --
7 McDermott International $850,000 --
8 Renewable Fuels Assn $563,609 --
9 Poet LLC $520,000 --
10 M&M Energy $480,000 --
11 SUEZ SA $480,000 --
12 Metro Water Reclam Dist/Greater Chicago $460,000 --
13 National Assn of Water Companies $448,000 --
14 Assn of California Water Agencies $420,000 --
15 Greenhunter Energy $390,000 --
16 New Generation Biofuels $390,000 --
17 Clean Energy Fuels Corp $380,000 --
18 National Water Resources Assn $365,000 --
19 First Solar $360,000 --
20 Noble Environmental Power $360,000 --
21 FuelCell Energy $355,000 --
22 Futuregen Industrial Alliance $345,000 --
23 National Hydropower Assn $330,000 --
24 Monroe County Water Authority $320,000 --
25 Star Atlantic $320,000 --
-- Subtotal $14,629,922 32.9%
-- Others $29,829,551 67.1%
-- Total $44,459,473 100.0%
Source: Opensecrets.org
Retail fuel distributors are launching a coordinated lobbying push for legislation that would
absolve the distributors from liability for accidents involving mid- and high-grade ethanol
blends, arguing that they should not face legal risks if ethanol blends leak underground or
consumers mistakenly add high-ethanol mixes that are inappropriate for their vehicles. While
fuel blends commonly include 10% ethanol (E-10), they will have to be blended in higher
quantities to meet the RFS ethanol mandate. While many retail distributors in the upper
Midwest have E-20, E-30, or E-85 pumps, Underwriters Laboratory (UL) -- which certifies
products for safety -- has not certified all the components for these high-level pumps. To
meet the RFS targets, fuel distributors would need to offer ethanol blends before some of the
necessary infrastructure technology components are UL-certified, raising liability concerns.

Global Policies Toward Biofuels
Although the U.S. is the largest producer of biofuels, it is keeping a close eye on the biofuel
policymaking activities of other nations to ensure it can protect its export market, and keep
tariffs on biofuel imports low. Government standards and mandates on future biofuel
production vary by nation, which poses challenges on the trade of biofueled vehicles (FFVs)
and their components. For instance, the second largest biofuel consuming nation, Brazil,
currently produces both hydrous and anhydrous ethanol. Hydrous ethanol has 96% ethanol
and 4% water in its composition, whereas anhydrous ethanol is made up of 99.5% ethanol
and 0.5% water.

In 2006, total ethanol consumption made up 17.2% (9.9% hydrous and 7.3%
anhydrous) of the vehicle fuel pool with the rest being: 27.2% Gasoline A (pure gasoline
before blending with ethanol), 3.2% vehicular natural gas (VNG), 3.3% B2 (diesel blended
with 2% biodiesel), and 48.9% Diesel.
Production of anhydrous ethanol to be mixed with gasoline has fallen since the 2006 harvest
because of the smaller share of cars running exclusively on gasoline. This was especially due
to the success of FFVs with Brazilian consumers. Sales of FFVs in Brazil, those that can use
any mixture of gasoline and ethanol from 0 to 100%, have grown dramatically, with domestic
FFV sales representing 91% of vehicles sold in 2008. Hydrous ethanol production, however,
has grown almost constantly in recent years. However, in the 2008/2009 crop year, growth in
hydrous ethanol was much larger, with hydrous ethanol accounting for 65% of ethanol
production in Brazil.
To remain competitive and improve consumer adoption of ethanol, Brazil will need to
improve its current ethanol distribution infrastructure. Brazils transport system is
predominantly road-based. Railroad infrastructure and use of a waterway system is lacking,
as well as low availability of multi-mode terminals. Logistics currently represent 22% of the
export expenses and is one of the areas where costs need to be reduced in order for Brazilian
ethanol to become more competitive abroad. Another area that requires investment is in R&D
and education. Currently, government statistics show that Brazil produces only 0.08
engineers for every 1000 people, compared to 0.2 in the U.S., 0.33 in the European Union,
and 0.8 in Korea. There are deficiencies in basic education in Brazils north and northeast
regions. Brazil will need to continue to invest in training and professional development for
the sectors labor pool to meet the growing demand in the biofuels industry.

European Union Changes Biofuel Composition

The European Union is considering a binding target requiring 10% biofuel use for transport
by 2020, although the target has recently come under criticism due to concerns over
deforestation and food security problems. The International Energy Outlook (IEO) forecasts
OECD European countries will consume 159 billion gasoline gallons equivalent (gge) of
transport fuel in 2010, growing to 167 gge by 2030. Other sources indicate smaller gasoline
consumption volumes are possible by the 2020/2022 timeframe which when translated equals
5.2-5.4 billion gallons of ethanol assuming a 10% energy requirement. Most recently, the EU
Energy Committee has passed draft legislation that if approved is expected to forbid the 27
EU countries from importing ethanol produced with excessive use of natural resources such
as water or stimulates forest devastation.

As a result, Brazilian stakeholders are monitoring
such potential modifications in EU biofuels policy as it will affect the potential demand for
ethanol from the EU.
Due to constraints in ethanol production from available technologies and feedstocks, the EU
is continuing its development of next-generation biofuels based on cellulosic materials. The
majority of attention has been in Sweden, and to a lesser extent, the UK, Spain, and
Netherlands. If ethanol from cellulosics proves feasible and commercial-scale production is
realized in the future, additional ethanol supplies from such feedstocks may help lessen the
amount needed from imports.
Japan Continues Import Strategy
Japan did not produce much ethanol and imported the majority of its consumption in 2008. Its
government is beginning to encourage biofuels production by promoting (and not mandating)
a 3% blend of ethanol in gasoline. A non-mandatory 3% blend, experts tell SBI, will create a
demand of 106-132 million gallons of ethanol. This demand is similar to Japans Agency for
Natural Resources and Energy target to replace 132.1 million gallons of transportation fuel by
2010, using ethanol and biodiesel. With the passage of legislation calling for a 3% ethanol
mandate in gasoline blend, Brazilian ethanol companies are hopeful that trade will increase
substantially with Japan. The Japanese government has mandated that all gasoline powered
vehicles run on E10 blends by 2030 and will also enact legislation to require all new vehicles
to be E10 compatible by 2012. The Japan Ministry of Environment (MOE) expects Japan to
meet only 10% of the 132.1 million gallon target (or 13.2 million gallons) with domestic
ethanol production.

India Ethanol Blends Fluctuate
The amount of ethanol blended into gasoline in India has fluctuated in recent years. In 2004,
India halted ethanol blended in gasoline because of a lower sugar output due to a drought,
which increased prices. In 2006 the government announced the second phase of a program
that mandates 5% blending ethanol with gasoline in 20 states and eight union territories. But
the program only started with 10 states and was not implemented in other states due to high
state taxes, excise duties and levies. The government plans to extend the ethanol blend ratio
to 10% once the program is extended to all target states. Some local sources report plans to
introduce E10 mandates in several cane-producing states such as Tamil Nadu, Andhra
Pradesh, and Maharashtra. The original plan on a minimum of 10% blend of ethanol by
October 2008, however, was put on hold because of the sharp fall in crude oil prices and
because of technical concerns raised by the Society of Indian Automobile Manufacturers. The
main concern is from vehicles with older engines that may not be able to use a 10% blend
without engine modification. Regardless, the government announced as part of its new
biofuels policy to raise the blending level to 20% of total fuel usage by 2017.
Because of Indias ethanol policy, more than 110 distilleries have modified their plants to
include an ethanol production line, with a total production capacity of 343 million gallons per
year, enough to meet the estimated demand for E5.
China Steps Up Corn Ethanol Production
Approximately 80% of fuel ethanol currently made in China is from corn. China began
mandating fuel ethanol blended into gasoline in 2002 but in 2004 the Chinese government
introduced an ethanol mandate of 10% ethanol blended in gasoline (E10) in the provinces of
Helongjiang, Jilin, Liaoning, Henan, and Anhui. This mandate was further expanded to 27
cities in the provinces of Shandong, Jiangsu, Hebei, and Hubei in 2006. To keep up with fuel
demand, a National Plan calls for fuel ethanol to rise from approximately 330 million gallons
of ethanol per year to 660 million gallons by 2010 and 3.3 billion gallons by 2020.
There have been concerns in China about the security of its food supply and the inflationary
impact of biofuels, which use grains as feedstock. With a population of 1.3 billion people,
corn growers have to meet the demand for food while also providing feedstock for fuel. In
response to these food and feed demands for corn according to the National Development and
Reform Commission (NDRC), China has stopped approvals for industrial corn processing for
until 2010 and has suspended approved projects that have not yet started construction. Over

the next three years, corn consumption by the deep-processing sector will be restricted to
26% of China's total corn consumption.
Global Biofuels Market Appendix

October 2009 SBI i
Appendix
Addresses of Selected Companies and Organizations
Archer Daniels Midland
4600 Faries Parkway
Decatur, IL 62526
(217) 424-5200
www.adm.com

Bunge
50 Main St.
White Plains, NY 10606
(540) 361-2400
www.bunge.com

CHS
5500 Cenex Dr.
Inner Grove Hts, MN 55077
(631) 355-6000
www.chsinc.com

National Corn-to-Ethanol
Research Center
400 University Park Dr.
Edwardsville, IL 62025
(618) 659-6737
www.ethanolresearch.com

Sustainable Energy Coalition
6930 Carroll Ave.
Takoma Park, MD 20912
www.sustainableenergycoalition.org

National Renewable
Energy Laboratory
1617 Cole Blvd.
Golden, CO 80401
(303) 275-3000
www.nrel.gov

U.S. Department of Agriculture
1400 Independence Ave., S.W.
Washington, DC 20250
www.usda.gov

National Biodiesel Board
1331 Pennsylvania Ave., N.W.
(202) 737-8801
www.biodiesel.org

Food and Agriculture Policy
Research Institute
Iowa State University
578 Heady Hall
Ames, IA 50011
(515) 294-6336
www.fapri.org

Royal Dutch Shell
Carel van Bylandtlaan 16
2596 HR
The Hague, Netherlands
+31 70 377 9111
www.shell.com

Foster Wheeler
Perryville Corporate Park
Clinton, NJ 08809
(908) 730-4000
www.fosterwheeler.com

Wilmar
56 Neil Rd.
Singapore 088830
+65 62 16-0244
www.wilmar-international.com

Tenaska
1044 N. 115
th
St., #400
Omaha, NE 68154
(402) 691-9500
www.tenaska.com

U.S. Department of Energy
1000 Independence Ave., S.W.
(202) 586-4403
www.energy.gov

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