Yesterday a record 1,800 people packed the second day of the ACE annual conference, "Driving Change for 20 Years." And for good reason: the "change" ACE's members want to drive seems to be experiencing a real turbo-charge, not simply in funding or even interest in ethanol and renewable fuels, but in the sophistication of the industry at all levels.
It was a day packed with presentations that were informative for both their content and what they represent: the maturation of the industry. Although a lot of good folks in green business still debate the efficacy or enviornmental benefit of biofuels, the people here are miles ahead and barrelling forward at break-neck speed to develop the technologies and improve practices that make ethanol the dominate force in renewable energy in America.
Five big issues dominated the day's formal presentations:
The industry is Maturing. Fast.
Several presentations focused explicitly on what ethanol producers need to do to mange their risk exposure -- which is just another way of minimizing costs, increasing efficiencies and maximizing profits. From insurance "architecture" to managing rail logistics, the conversation here is about managing the volatility of the business. The question of whether ethanol is here to stay or not is moot. The question of which producers will be here to stay for the long haul is very much alive. Thus industry players are scrutinizing everything they can do operationally and financially to accomplish two key objectives: adapt to breathtaking operational advancements and run a tight business — two things that aren’t always compatible.
Cellulosic ethanol: Get ready.
For those in the industry, the conversation is not "hey, we should do this," but "here's how we're going to do it." As I drafted this post, Poet Energy's Larry Ward was demonstrating his company's model for collecting, handling and fermenting corn stalks and stover to make ethanol. His rationale for that feedstock as opposed to, say, prairie grasses or wood chips, is that there's already an installed base of technology and infrastructure for harvesting corn, and, considering that most existing biorefineries are in the cornbelt, it makes sense to plan to capture cellulose accessible through corn producers. Earlier in the day, a panel gave a fascinating presentation on "Overcoming Obstacles for Cellulosic Ethanol." The room was packed for both of the groups morning presentations. What's clear to me is that the scientists, most notably South Dakota State University's Kevin Kephart and Chris Zygarlicke of the Energy and Environmental Research Center have already divined the path to cellulosic ethanol — at both the molecular level and the regional, operation level. It’s not that they or anyone else needs convincing that cellulosic biorefining is coming — it’s which path we’ll take. Numerous players are stepping in to answer that question, including Poet, BlueFire, Verenium and Mascoma.
Food V. Fuel: The Myth, The Madness
Attendees took delight crushing the idea that ethanol made from corn is either driving up food costs or threatens overall food supply. But the message — however false — seems attractive for its simplicity. After all, people eat corn. Cows and chickens eat corn. People eat cows and chicken. Therefore corn grown to make fuel must mean more scarce or more expensive food. Not. As John Ubranchuck demonstrated to the audience, the price of corn accounts for a very small percentage of the cost of food. A box of corn flakes, for example, contains 4 pennies worth of corn. Of greater impact to food prices is energy. A barrell of oil, for instance, today fetches $78.00, a new record.
The Bite of the Opposition
The fiction of food versus fuel, in addition to other complaints raised by those who oppose ethanol, are a thorn in the side of those in the industry: a small but painful distraction. The industry is marching forward despite the hue and cry of the armchair quarterbacks who haven’t got the message about ethanol’s positive energy balance or its true impact on food prices. But the antagonism still stings. People at the conference are frustrated with that blind spot for the fuel’s massive environmental and economic benefits. That’s a problem for the industry; groups like ACE and EPIC still struggle to manage that message.
The Big Guns
Some of the more impressive presentations actually came from politicians: Minnesota Governor Tim Pawlenty and South Dakota Senator John Thune aren’t just the farm-interest shills some would claim. Both gave rousing, articulate support of ethanol and described what each is doing in government to compel biofuels #1 patron and antagonist — gasoline companies — to distribute higher blends of ethanol.
More to come.
(PS: So my plan to fully live-blog the event turned out to be a little tape-delayed. Sorry!)