The Importance of Net-Zero Ethanol webinar transcript

In this webinar held on Nov. 11, 2021, EcoEngineers’ ethanol team of experts examined the current ethanol industry and production processes and how it must adapt to keep up with increased demand for renewable fuel with a lower carbon intensity (CI).

Lyndsey Nielsen (00:00):

I am Lyndsey Nielsen, EcoEngineers marketing coordinator. I want to welcome you to our webinar on the importance of net zero ethanol and how to achieve it today. We’ve written a few thought leadership pieces about this topic, and you can find them on our blog. I also want to put a pitch in there for our free library of informational micro learning videos that answer specific questions about the energy transition and the clean energy economy. You can find all of this under our media tab on the website at ecoengineers.us. But enough about that, let’s get onto the presentation.

Lyndsey Nielsen (00:33):

So let’s introduce our speakers. Today we’re going to have Jim Ramm, he’s our director of engineering and ethanol line of manager at Eco. And then Sarah Caswell, a senior regulatory consultant and also a policy expert. Roxby Hartley, is a senior regulatory consultant focusing on compliance management and CCS today. And Mark Heckman, is a senior regulatory consultant. And who I like to call our resident farmer in the Eco world. So now before we kick this off, I’m going to play a short video that explains how EcoEngineers can help you in the clean energy economy and a little intro from our CEO, Shashi Menon.

Narrator (01:20):

Carbon is the biggest disruptor of the 21st century and the world as we know it is changing. EcoEngineers can guide you to make the best decisions as you navigate toward your clean energy goals. A diverse team of carbon analysts, engineers, scientists, auditors, and regulatory specialists are trusted advisors of the clean energy fuel sectors worldwide. Clean energy regulations are a maze. We simplify them with an unbiased approach and fully manage your compliance. Modeling your carbon reduction is complicated. We quantify your emissions with a rigor based in science. Together we can create market that will protect and grow your investment. We create sustainable solutions for a better tomorrow. We are EcoEngineers.

Shashi Menon (02:16):

Hi, I’m Shashi Menon, a CEO of EcoEngineers. That video you just saw is EcoEngineers in the nutshell. We’re team of consultants, auditors, and engineers and scientists with deep expertise in low carbon fuels, emerging technologies and policies that are helping decarbonize the world. We are at the part of the energy transition. At EcoEngineers we are laser focused on aiding, assisting and supporting this transition to a clean energy economy. Through our education programs, our science based approach to lifecycle carbon analysis, through our asset development support, our engagement with policy makers and through our compliance management and auditing teams, we provide a 360 approach to usher in the clean energy transition, the ultimate success of low carbon fuel projects. And ultimately the future of our planet depends on the successful execution of net zero goals. And that’s exactly what our team is here to help you do. Thank you.

Lyndsey Nielsen (03:17):

All right, now I’d like to introduce Sarah Caswell, who’s going to give us a short policy update.

Sarah Caswell, Esq. (03:25):

Thanks Lyndsey. Ethanol production blending and the ability for the industry to grow is impacted significantly by various market conditions, policy and regulatory developments happening right now, designed to achieve lofty state, national and international decarbonization goals. Today’s webinar will focus on how the ethanol industry can get to a net zero CI score and remain one of the key ingredients to these efforts. Given the short time we have to discuss all of this today, I’ll just briefly discuss some of the most significant drivers and developments impacting the industry. While EPA has not yet issued its proposed RVOs for 2021 and 2022, earlier this fall potential 2020 to 2022 RVOs were leaked and reported in the media. The leaked volumes would essentially propose to reduce ethanol blending. Time will tell whether the leaked volumes match the actual proposed volumes that are issued, but the reported RVOs have already stimulated elected ethanol champions to make several recent statements touting the importance of ethanol to overall decarbonization efforts and urging EPA in the administration not to reduce RVOs traditionally met with ethanol.

Sarah Caswell, Esq. (04:43):

For instance, last week, a bipartisan group of seven midwest governors sent a joint letter to EPA administrator Reagan requesting guidance on how they might make state action to increase sales of gasoline with higher blends of ethanol, including E15. The governors of Iowa, Nebraska, North Dakota, Minnesota, Missouri, South Dakota, and Wisconsin all signed the letter. And the letter comes after a federal court, this past summer vacated the rule finalized by the last administration that allowed for year round sales of E15, all throughout the country. If not addressed, there is a possibility that sales of E15 may need to halt during next summer’s driving season, as they did before the rule went into effect.

Sarah Caswell, Esq. (05:36):

As everyone has likely heard already this week, Congress has passed and president Biden is set to sign into law the first of two major infrastructure bills. The first one focuses on funding for bridges, roads, broadband, and similar traditional forms of infrastructure. The second one expected to be considered by the house of representatives soon. Currently includes 555 billion in funding for climate related incentives and activities. Among the incentives are extensions and some expansions of important renewable energy tax incentives. For instance, the bill would extend and enhance, the carbon sequestration tax credit under section 45Q of the internal revenue incurred.

Sarah Caswell, Esq. (06:23):

It would provide 960 million for biofuel infrastructure grants that may be used for distribution facilities or fuel stations. It also includes the creation of a new sustainable aviation fuel incentive and a new technology neutral one called the clean fuel PTC for the domestic production of clean fuels. The level of this last incentive will depend on the lifecycle carbon emissions of a fuel.

Sarah Caswell, Esq. (06:54):

The potential new sustainable aviation fuel incentive would result from the passage of the second infrastructure bill aligns with recent publicly stated goals for this fuel type by president Biden, several participants of COP26, as well as a round table held in Iowa this fall, led by USDA secretary Vilsack, DOE secretary Granholm and DOT secretary Buttigieg and attended by members of the ethanol industry. Following the round table, the three leaders announced their joint goal of domestic production of 35 billion gallons of sustainable aviation fuel made from feed stocks, including corn to meet 100% of US aviation fuel demand by 2050.

Sarah Caswell, Esq. (07:44):

The California Air Resources Board has begun holding a series of informal public workshops on specific topics that will likely be included in the agency’s proposed rule expected out next year to update the state’s low carbon fuel standard regulation. All stakeholders are encouraged to sign up for CARB LCFS, email updates through the agency’s website and to fully participate during this informal part of the process. CARB staff are proactively seeking stakeholder feedback to inform the nature of the updates that will be included in the proposed rule. Their likelihood to include stakeholder proposals does increase with stakeholder participation and they accept written comments for two weeks after each workshop.

Sarah Caswell, Esq. (08:34):

Several states beyond California are continuing efforts to craft and pass state low carbon fuels bills and regulations, including, but not limited to Washington, New Mexico, Illinois, Minnesota, Iowa, and Nebraska. These efforts are important as they’re designed to promote innovation and development of renewable transportation fuels. In addition, they will likely impact any effort to craft and pass national low carbon fuel legislation just as state laws impacted the RFS first passed in 2005 and enhanced in 2007. I’m going to now handed over you Jim, to direct the webinar from here.

Jim Ramm, P.E. (09:18):

It’s really an exciting time for ethanol, and it’s really a pleasure to speak to you today about the importance of net zero ethanol. Since we wrote about this, the topic has continued to gain momentum and that momentum has helped along by the American Coalition for Ethanol and their work on sustainable agriculture led by Ron Alverson. It’s also been helped along by the Department of Energy, Argonne Laboratories, release of models and information that improve ethanol’s place in low carbon energy.

Jim Ramm, P.E. (10:00):

So today there’s more momentum than ever in these three topics, sustainable agriculture, soil carbon sequestration, and carbon capture and sequestration. As a starting point, I want to talk about the renewable fuel associations, July commitment. The 70% greenhouse gas reduction by 2030, 70% or better. And net zero or better greenhouse gas emissions by 2050 or earlier. And I want to point out the recent work by MIT and Harvard researchers who called average carbon intensity of ethanol about 51.4 grams per megajoule. This is a much better number than is recognized in some markets. And so we want to applaud Argonne and call for the adoption of the Department of Energy Argonne’s GREET model by markets.

Jim Ramm, P.E. (11:07):

So we have the technologies. Many of these technologies are currently available. Kernel fiber ethanol is available in California. Corn starch is available in California. Corn starch ethanol associated with wet distillers grains is available in California. There are sustainable agricultural practices that no till cover crops and soil carbon sequestration that are available.

Jim Ramm, P.E. (11:41):

Inside the ethanol plant, the biomass heating capabilities, renewable natural gas, wind, solar combined heat and power. And now carbon capture, enhanced oil recovery, including pipeline projects or truck and rail projects. And there are a number of emerging technologies coming. So that includes biochar, pyrolysis type projects that can provide process heat and electricity as well as provide low carbon soil amendments, and then low carbon intensity fertilizer and hydrogen. We need to understand more about greenhouse gas impacts. And this is from the international panel on climate change. And it depicts the different global warming potentials of different greenhouse gases, CO2, methane being 34 times worse than greenhouse gas, N2O being 300 times worse than greenhouse gas.

Jim Ramm, P.E. (12:50):

But again, we have the technologies to address these greenhouse gases and to make a difference. Achieving zero CI based ethanol can be done. So from the work at MIT and Harvard using the paper by scholia, starting point of 51.4 grams per megajoule. Carbon capture and sequestration is estimated to be minus 30 to minus 32. So that leaves us just 20 points to reach a zero CI ethanol. And that 20 points can be achieved within the fuel production where we have 30 points to work from or within the agriculture where we have 26 points to work from. And so those technologies are there.

Jim Ramm, P.E. (13:45):

I’m going to talk about LCFS pricing and there’s a lot of information on this slide. The orange is ethanol, and we see in this slide, the depiction of ethanol share of carbon credits in California, shrinking from 79% in 2011 to 28% in 2020. The other thing that we see here is that the lowest carbon fuel wins. So we see that fossil natural gas in purple is displaced by biomethane in green. We see the growth of electric. We see the growth of biomethane. Today ethanol has opportunity to turn low carbon from a disadvantage to an advantage. These are the non-liquid fuels and the green is electricity. The center of the bubble indicates the carbon intensity and the size of the bubble indicates the volume of the credits generated. So the average CI of electric is the red dot. It approaches zero. We can say the same thing about renewable natural gas in purple. The average is actually less than zero.

Jim Ramm, P.E. (15:20):

The light blue on the bottom of the screen is ethanol. And there’s information here too. The grouping on the right is the starch based ethanol. The grouping in the center is sugar cane based ethanol that uses biomass based heat and electricity. You can see that there. The grouping on the left is kernel fiber ethanol. The average CI depicted here for all of ethanol is about 59. There’s a lot of room for growth in kernel fiber into California. So this is where we are today, from a California standpoint, these numbers reflect California. And here’s what’s new, today we have an opportunity to reduce the carbon intensity of ethanol by 30 points using carbon capture and sequestration. We also have the ability to greatly improve ethanol plant performance inside the fence using natural gas and electricity improvements. And that could be as high as 20 points.

Jim Ramm, P.E. (16:30):

And then in the next slide, sustainable agriculture and the possibility to use site specific farm practices for agriculture could have another significant impact. So here’s another way to look at this. And this is kind of the progression of where we’ve been as an ethanol industry. Energy efficiency could bring the ethanol industry to about 70, and these are California based numbers. If we wanted to get to 60, we needed to use wet distillers grains, or onsite solar or combined heat and power. If we wanted to get to 50 on a California basis, we’d have to do something like use biomass based heat. Today, if we want to get to 40, we need to use carbon capture and sequestration. And if we wanted to get below 40, we wanted to get down to 20 saying, we would need to use kernel fiber as a feed stock or manure or agriculture biogas.

Jim Ramm, P.E. (17:34):

Now various combinations of these can achieve net zero today. So these improvements have to be paid for, and this is the LCFS market. And we can see that there are strong incentives for kernel fiber. The example here is for kernel fiber, Nebraska kernel fiber ethanol, 86 cents a gallon. And in this example is based on 4 million gallons worth of kernel fiber ethanol, call that 4% from a hundred million gallon plant. Could produce 3.4 million in incentives and that revenue would be used to purchase the enzyme, to perform the analytical protocols necessary to pay off a separate processing technology, to pay for compliance, but there is definitely revenue to be made there. And then a wet distillers grain type ethanol for a hundred million gallon plant could have a significant per starch gallon impact. These markets are open today. And I think the exciting news is that what the incentives of 45Q and the incentives of voluntary markets mean to the expansion of these technologies. So I’m going to visit about kernel fiber ethanol and why is this important.

Jim Ramm, P.E. (19:14):

So the doors for kernel fiber ethanol are still open in California. And when you go to California, there’s no indirect land use change, and there’s no corn farming. And so you’re going to be about 40 points better than your starch. Industry is moved on to non baseline methods for evaluating kernel fiber conversion. So today using methods like Edeniq and Soliton two to 5% kernel fiber conversion is seen in in-situ in the same fermenters. And then in separate processing, seven to 10% type numbers are seen in processes like quad county corn processors and D3 max at ACE ethanol. And the other reason is that the ASTM practice that industry has established as a means for reliably evaluating and sampling for starch and fiber conversion, and then doing the statistical work on the backside so that we have a better and better job by industry and sampling and in use of the data.

Jim Ramm, P.E. (20:33):

So there’s kernel fiber requirements for in-situ which are to recalculate within 10 business days of producing 500,000 kernel fiber gallons. As this is specific to California, and they also allow a pathway for wet or modified distillers grains starch ethanol. So when you make a decision to go to California, because of the market, there are compliance requirements in order to participate in a stackable credit market. And those requirements are that you report to the LRT that you have annual verification of your LCFS score, that you file a fuel pathway report every year. I apologize. There’s a lot of detail on this, but we get a lot of questions on how long does it take to establish a new kernel fiber pathway? And in this table, it takes about seven months. That includes the 90 day data collection. It includes the time to prepare the pathway. The time for CARB to deem the pathway application substantially complete. The time for validation and the time for CARB to finally approve the pathway. So about seven months.

Jim Ramm, P.E. (22:06):

So during that time, that the way that we work with producers in this case is, first of all, to establish a temporary pathway and a CI of 50, and then the producer will continue to have recertifications. They’ll use the temporary pathway at a CI of 50 for up to two quarters. And then once CARB finally approves the pathway after about seven months, they should be able to move to a CI of 25.

Jim Ramm, P.E. (22:40):

So you’re all aware that no kernel fiber pathways have been approved by the RFS since December 2017, even though the rule of RFS pathways too, which included kernel fiber, included the pathways shown here has been in place since August 2014. So I bring this up just to emphasize the need to reopen these pathways. These pathways are still available in California. And the hope is that EPA pathways will eventually open back up. If that happens, a Q-RIN is going to be required by the marketplace. So just kind of wrapping that up, if we could reopen RFS kernel fiber pathways, it could add $3 a gallon to the value of a cell elastic gallon of ethanol. And it could do that because the D3, D6 split today is about $2. And the IRS tax credit is about a dollar one. So about a $3 split.

Jim Ramm, P.E. (24:05):

I just want to really ask industry to keep up the good work that’s being done. Soliton and Edeniq continue to demonstrate the consistency of kernel fiber and starch data year to year in the corn crop and continue to bring those gallons into California. And I recommend to producers that they consider beginning in California and getting that good track record going the hope is that our industry groups and our industry is going to eventually reopen these RFS fiber pathways. With that I want to turn it over to Dr. Roxby Hartley. He’s going to talk about carbon capture and sequestration.

Roxby Hartley, Ph.D. (25:04):

Hi everyone. Thank you very much, Jim. So this is kind of a hot topic that ethanol plants are really ideally placed to use CCS. Because I’m sure everybody realizes that you get a stream of very clean CO2 of the fermenters and it relative easily is straightforward to capture. Now, when you sequester carbon dioxide, it has to be permanently taken from the atmosphere and CARB allows this to happen. Because talk about California pathways here by enhanced oil recovery, which is often set to be EOR or injection to storage, which is deep drying reservoirs of old oil fuels. Storage is a slightly more complicated proposal because it often requires the classics injection well. Plus EOR there’s lots of plaster injection wells, and EOR is extremely well understood by the oil industry.

Roxby Hartley, Ph.D. (26:16):

So let’s talk about who’s announced project so far. ADM has been doing this for a number of years with the Decatur plants. And then Red Trail really were the first people to show what could be done when the design based pathway was put out for public comments. I think it was the beginning of the last year, and that showed that of the 37 CI drop that you’d expect from the ejection of the CO2. You get about 32 left over when all the energies and any leakage, then the fugitive emissions are taken into account. You see a CI drop of 32 gram of CO2 remitted per megajoule.

Roxby Hartley, Ph.D. (27:11):

And then since then we’ve seen Catahoula announce with Chief Ethanol, some like 110 million gallons. Summit Ag Group have announced that they’re working with lots of different ethanol producers. And that could be anything from 1.7 to 3 billion gallons worth of ethanol that could be put under CCS. Navigator/Blackrock/Valero of all announced projects. An Oxy actually put out design based pathway with white energy. And they showed that with an EOR injecting to a pipeline from the ethanol plant to take it to the oil field. You can see a drop of around 26 of gallons per megajoule and that’s for about 240 million gallons. And it’s something to notice that if you add up all the gallons on the right, even though you can’t really count ADM, because I think they’re precluded by the baseline that CARB set of 2016.

Roxby Hartley, Ph.D. (28:10):

But if you add up all those gallons, you can see that it exceeds all the gallons that are currently used in California and Oregon and BC and all the LCFS programs on the west coast that currently exist. And then if you look at the benefits you can have from each of these, you can see that there’s an awful lot of additional revenue when you add in the CI drop from carbon capture. For the current hybrids about 5 million boilers, distillers grains 78 million. Now this is taken CARB credit prices at 182 50% of carbon. So yeah, you can see the value is there right now for people to think about putting CCS projects into action. Although it must be said, we haven’t seen any site certifications come out of CARB yet, but I think they’re going to be anticipated over the next two quarters. I’m happy that my slide is over and I can hand over to Mark. Who’s got interesting reports on what’s going on in sustainable agriculture.

Mark Heckman (29:27):

Thanks Roxby. And sustainable agriculture, agriculture collectively holds a very large part to climate and to climate emissions, but we also hold great promise. And to that end, I also want to … Jim talked and gave special kudos to associations and people dedicated to driving solutions with carbon into this area. So special thanks to ACE, Ron Alverson, in the work that they’re doing. Farm practices holds a key to a lot of the carbon sequestration and accounting for that takes a lot of detail and a lot of work behind the scenes. Department of Energy, Argonne, their model this year has been greatly improved for that. And it continues to show those improvements. USDA, also want to say thanks to the states that are putting time and resources to this, and really trying to find and show that Ag is a solution.

Mark Heckman (30:23):

And so we’ve been challenged and we’re certainly up for that challenge. So Jim spoke of the different classifications of greenhouse gases. And what I’m going to speak to today is the effect in CO2, methane which is 34 times, CO2, and then nitric oxide in relation to the farm practices and how we can benefit as practices are done at the farm level to improve those items. So again, 40% cradle to farm gate activities is part of an ethanol picture. And the slide on the right depicts that, where is that, the farming energy it’s in the fertilizer and the nitric oxide emissions. So how do we do this? There’s many ways and many models that are out here. And each of those models, value farm level inputs a little bit differently, depending on the market you’re entering, whether it be a food, a fuel voluntary markets, your impact is measured a little it differently.

Mark Heckman (31:23):

So we have to work on that, but I want to illustrate just a few things. And so as we move this forward, in Nebraska, we did some work a few years ago. So in this work, we use the comet farm model to do that. And if you look at the value from no-till carbon sequestration, CO2 equivalents, you pick up 57 metric tons, the use of cover crops, 0.37 metric tons, almost one metric ton per acre, per year, really adds up. And these in the voluntary markets work from the Boston Consulting Group, valued those looking at 2025, that value would come in at $35. Again, you can see the math, it amounts to substantial contributions, but probably more important is what’s happening in the ground. And the actual carbon that is being prevented and escaped from going anywhere. So farmers just in Nebraska through the comet modeling comet farm, that’s the way it looks.

Mark Heckman (32:29):

As we fast forward. I want to take a deeper dive into what happens at the ethanol plant using grape modeling. As we take a look at this deep dive, the Department of Energy, GREET 2021 gave an update. And in this GREET modeling this update, if I’m a farmer, I’m thrown in that category, which is on this chart on the right hand side is the US Midwest average. And those are all the inputs and the attributes that go into the modeling at this point. We want to break that down because we’ve got that ability to do that. The video that you’re watching is things that are happening as we harvest our crop on our farm in Eastern Iowa. And I want to drive it down to the yield and what’s actually happening as we’re harvesting this crop, there’s a lot of carbon and that we’ve got the ability to sequester in the practices that we’re doing and not all farms are alike.

Mark Heckman (33:27):

And so we’d like to very much make sure that those farm practices are driven all the way through those supply chains. So this model for the account of time of just focused on corn, but GREET has also worked the model that we’ve got the ability to capture soybeans and other crops and they’re continuing to work on improvement. So this a little bit complicated. So just a little background as we break this forward on the left and the green box, that’s going to be the inputs, on the right is the results of the CI as it relates to an ethanol plant. And if you look at on the left, today, Midwest, that’s what I’m using and that’s what I as a corn producer receive getting my crop harvested, et cetera. This is what I did. It says basically because I’m saddled with that Midwest average and I get the Midwest average of the 29 CI.

Mark Heckman (34:20):

So let’s break this down just a little bit. And just by taking and me having the benefit of being in Muscatine in Iowa, I get it an immediate improvement because I’m in a region that the climate is affecting us. And that climate affects us to the tune of roughly two points. But now enter yield. Average yield as we go through and yield continues to improve, we’re going to see even greater but yield also has a significant impact. So just by the region and yield under the GREET modeling, we pick up roughly five points. Fertilizer, if I don’t even change my fertilizer based on what the GREET modeling has it at. And if I take and apply efficiency enhanced fertilizers, meaning that I’m using fertilizer that is stabilized, less volatilization, less leaching, just that change alone captures an additional two points.

Mark Heckman (35:20):

On our farm we use manure. We come back in at planting time, as we plant the crop, we put down 40 pounds of nitrogen to give the crop a boost, two by two, and that goes in the ground. So as you look at this GREET this year, an additional change has … they give us a little bit soil carbon. So GREET recognizes that. And it’s saying that by the use of manure, you don’t have the methane, excuse me, the nitric oxide emissions. Taking a look at tillage, again, it drives us lower. And then the last is, if we look at cover crops. Cover crops, big improvements all the way around because we’re putting carbon in and we’re putting something on the ground to basically lower temperatures, make a lot of improvements to the soil. And we’re also promoting microbes that are in here, busily at work, taking care of the breakdown.

Mark Heckman (36:23):

So as you can see, we went from 29 down to zero on the right, with the GREET default model. And on the left, we’ve gone all the way down to a negative 12, those dollars add up. As a result, corn farmers are doing their part to drive CI to zero. Either by the standard GREET 2021 default values or getting down to site specific, the inclusion of soil organic carbon has large effect on these. These models are available today. The technology exists today to measure this and to verify field level data. The agreement on the adaptation for each sector needs to take place in order for us to do this.

Mark Heckman (37:11):

And as ethanol plants and as farmers, and just as industry, we need to recognize all the steps that are going to have to be in place, that need to take place in order to do this. So as these changes take place, or as pilot programs come about, we’ve got this ability to pull all this together and drive our emissions and change the aggregate emissions from agriculture. So with all of this, I’m going to turn this back to Jim and he’s going to show us how we pull all this together. Jim.

Jim Ramm, P.E. (37:46):

Mark. Thanks very much. That’s an amazing story about what you’re doing there on your family farm and doing it because it’s the right thing to do because it’s a good farming practices. And it’s just an amazing story to go from a 29 to a zero CI or even a negative CI. So in this slide here, this comes from Argonne, and Argonne Laboratories shows the CI reduction to zero or negative CI for ethanol that’s possible. And the thing I want to point out that I think is so important, there is something on this chart that ethanol can do that fossil fuel can never do. Okay. And that is, these gray boxes over here for pure gasoline. So the carbon intensity of gasoline is 93. Most of that is associated with the combustion of the gasoline, the light gray. The dark gray is the gasoline production.

Jim Ramm, P.E. (39:06):

Anytime that we take fossil fuel, 350 million year old carbon from under the ground and bring it to the surface and combust it, we’re releasing carbon that had been buried under the ground for 350 million years. There’s no way for gasoline to eliminate this light gray chunk. Gasoline can work. Gasoline production can work on the gasoline production side, but they can’t work on the gasoline combustion side. So when you look at ethanol, the scoring is different, ethanol can do what gasoline can’t, ethanol can approach net zero, ethanol can approach zero CI it can go negative. So here we have Argonne saying that ethanol is on average 54 grams per megajoule from their default. So if we go to a fuel switch, if we go to renewable natural gas, if we go to biomass-based heat, we can drop that by 20 points. We can get to 34.

Jim Ramm, P.E. (40:16):

If we go to renewable electricity, we can drop that again. When we look at renewable electricity, when we look at how low solar energy price has gotten to, we can drop it again. When we look at carbon capture and sequestration, we can drop at additional significant points. We talked about 26 to 32 points in this presentation. When we move on to low carbon farming, low carbon fertilizers, like green ammonia, sustainable farming, cover crops, carbon sequestration type numbers, ethanol can achieve a zero CI or a negative CI.

Jim Ramm, P.E. (41:01):

And just again, there’s no way gasoline can follow ethanol. The low carbon and the world’s demand for low carbon is to the advantage of ethanol. So for a wrap up, net zero ethanol is achievable today. We can get there today by kernel fiber ethanol. The market is open to California and the industry continues to try to reopen the RFS markets. Carbon capture and sequestration, the advantages of 45Q, the increase is proposed for 45Q, the use of renewable natural gas taking advantage of methane and methane avoidance credits that can be achieved. When we’re talking about co located dairies, co located swine production, significant improvements can be made in renewable natural gas or biomass-based heat.

Jim Ramm, P.E. (42:02):

Renewable electricity is a profound opportunity, not only for the electric demand of the ethanol plant, but also for the process heat. So because of the process heat demand at an ethanol plant, there’s no need for a battery. Batteries are a significant amount of the cost of solar, but because there’s always an electric demand and a process heat demand at an ethanol plant, solar can be stored it in that way, as process heat demand. The developments in sustainable agriculture in soil carbon sequestration, cover crops and no-till, and the emerging technologies, emerging low carbon fertilizers, especially, emerging technologies like pyrolysis that can address process heat at the same time that they’re impacting agricultural practices. I guess my final statement on this is that, ethanol is a powerful and reliable platform to further impact transportation markets, to really impact voluntary markets and to help to develop new technologies and sustainable agriculture. And thanks very much.

Lyndsey Nielsen (43:36):

Thanks everybody. That was really awesome. And a good look at how ethanol can move us forward. Does everybody want to come back for a little bit of a Q&A session? I have a couple questions here. The first one, Sarah, this might be a little bit up your alley. Is there an awareness of the Future Fuels Act because Minnesota led low carbon fuel standard to augment the CARB LCFS for SAF implementation. This person thinks ethanol, especially Midwest all stands to be a key player in this opportunity. Do we have any thoughts on the Future Fuels Act or SAF and its implementation?

Sarah Caswell, Esq. (44:19):

Well, I just wanted to say of course, yeah, there is an awareness of the Future Fuels Act in Minnesota. That’s definitely one of the state level policies that we are tracking closely. And I know that there is support and awareness at the federal level as well for the concepts being promoted by that state legislation. Roxby did you have something to add?

Roxby Hartley, Ph.D. (44:49):

No, I think that one of the things that will drive ethanol sales perhaps in the future is that it can be converted into SAF. And that might have been an outlet if we see extensive electrification in California, the ethanol market, then that’s an outlet for the fuel. Certainly it’s both in California and potentially in Minnesota as well.

Jim Ramm, P.E. (45:20):

I want to interject one thing there. So a couple years ago, we wrote about a world with too much ethanol, and we wrote about how ethanol producers were kind of taking a beating in the marketplace a little bit. And this renewable jet space has the ability to change that marketplace significantly. So when we move some ethanol into jet and we create a world where there not enough ethanol, then the market demand’s going to go up or that would be my hope, that the market demand would go up significantly for ethanol as the lowest cost, non carcinogenic, agriculturally based, high octane, blend stock. For it to have greater value and to be in greater demand.

Roxby Hartley, Ph.D. (46:20):

I’d just say, one thing is that the SAF market in Minnesota is pretty small. It’s around 1/10 of what the California market size is. The California is going to prepare the most important carbon market in the foreseeable future.

Sarah Caswell, Esq. (46:36):

Yeah, I know. And that’s such a great point. And also just to circle back to the Future Fuels Act, I mean, as we were talking about in the policy update at the beginning of this webinar, it is so important that states like Minnesota are engaging in introducing and working towards passage of their own low carbon fuel legislation beyond California, because there are so many different regional needs and unique resources throughout the country. As I mentioned in the policy update, the Future Fuels Act and similar pieces of legislation that are geared toward technology neutral, market driving, low carbon fuel policies will have an impact not only at the state level, but when the conversations heat up at the federal level to establish potentially a national low carbon fuel bill, these state policies and the concepts in them like in the Future Fuels Act in Minnesota will become an important part of that conversation.

Sarah Caswell, Esq. (47:53):

And some of the provisions that are unique to the state of Minnesota, for instance, and the resources there will be more likely to be considered for inclusion in national low carbon fuel policy that would really be geared towards a technology neutral market driving policy that can really help all regions of the country and all of the resources that the country has to contribute towards achievement of the decarbonization goals at the national level.

Lyndsey Nielsen (48:32):

Let’s move it over to a little bit of farm practices. I have a couple questions here for Mark. How many years of inventory do you need for soil carbon accumulation on your fields?

Mark Heckman (48:45):

That’s a good question. I don’t know that I know that answer. It might be something Roxby has a better verse on that, but I would love to get back to that. I will say this, from the emissions that are created from day one, as we enact new practices on the farm level, there’s science out there that shows that soil organic matter is in increasing, it converts to carbon over time if left undisturbed and the state of Iowa has increased through millions of samples, soil samples that go back in time and they’ve demonstrated an increase in organic matter through these aggregate soil samples. So how that converts to carbon, I’d like to answer that individually or Roxby if you want to take a shot at it.

Roxby Hartley, Ph.D. (49:38):

I can take a guess and say that it depends on conditions, temperature, moisture, compaction of the soil, all those sort of things.

Lyndsey Nielsen (49:49):

This is a good one too. Is there any negative impact on crop yields associated with the sustainable farming practices you’re using Mark?

Mark Heckman (49:58):

No, it’s all over the place. I’m going to revert back to my own experience. In 2014, my son came to us and said, “Hey, we need to try something.” And I was pessimistic. I said, I’m not going to do it. And he said, “Well, how about we try just a little bit.” We started with 40 acres and we’ve increased that to cover the whole farm. And we’ve got it on 1400 acres and we’re 100% no-till. I was very pessimistic. The soil aggregate has improved. And what I mean by that is, we’ve got the ability to hold the nutrients and it acts like a sponge. And what I mean by that is those nutrients. Yeah. When the cover crop dies or when we kill it, it leaves that organic matter there. A rain comes, the rain goes in, instead it runs off. It makes it so that it holds the things in place.

Mark Heckman (50:46):

And that organic matter through the plant, it has to have the moisture to get in and out of the plants. But even though the moisture’s there, it’s really a case that the moisture is in the soil and it’s not there taking and depleting oxygen and forcing denitrification. So I don’t know if that answered the question 100%, but my yields have increased since 2015.

Lyndsey Nielsen (51:14):

Looks like we have time for one, maybe two more questions. It says at one point there was a discussion of design-based and provisional pathways. Are you able to monetize design-based pathways and true up later?

Jim Ramm, P.E. (51:30):

No. What happens is, I think the discussion … the design based pathways are to give you an opportunity when you’re in design. So design based pathways were discussed as far as mass and energy balance around carbon capture at Red Trail and Oxy white energy. And from there we go to a temporary pathway, which can be monetized. Temporary pathway can be monetized. And then we go to a provisional pathway, which can be monetized.

Roxby Hartley, Ph.D. (52:09):

And if we want to know more about exactly the timing of the chapters and how that applies to CCS, and just please contact us, we can help you with that.

Lyndsey Nielsen (52:22):

Yep. Everybody’s emails are listed here on the screen.

Mark Heckman (52:24):

Lyndsey, I have one more thing, we talked about the impact on yield. One thing I will say is the volatility on the yield. And what we’ve seen over time is that if you go back in history and look at farm practices, tillage of land has decreased. Okay. And that volatility that we’ve experienced, we haven’t experienced the 1974 drought where the yields dropped dramatically almost 75%. Those yield impacts are not as great today. Some say it’s part of the hybrids, but mostly it’s because of, our tillage has been less. And in our case, as you employ cover crops, no-till et cetera, you stabilize your yields. And there’s some science behind that.

Jim Ramm, P.E. (53:13):

Lyndsey, I just want to say as the ethanol line of business manager, that just one more time, that there’s a tremendous opportunity for ethanol to use low carbon as an advantage, and to leverage the advantage that it has and to become more and more important as a platform for the nation to develop a new energy economy around low carbon agriculture, around carbon capture and sequestration to expand the impact that it ethanol has had on transportation markets and take it into voluntary markets as well. Thanks very much for the chance to speak-

Lyndsey Nielsen (53:56):

Thanks everybody. For those of you who follow our webinar series, we have three announced, our crystal ball webinars, the first one on R&G electric vehicle and hydrogen will be in December, followed by biomass based diesel and renewable diesel in January and then ethanol in February. So stay tuned for more information on that. If you want to register now, you can get to all of those links from our website. So thanks everybody for joining us today and take care.

Roxby Hartley, Ph.D. (54:25):

Thank you.

Jim Ramm, P.E. (54:27):

Thank you.

Sarah Caswell, Esq. (54:27):

Thanks. Bye.