1. Industry Overview and Developments Ralph GroschenRalph Groschen Senior Marketing SpecialistSenior Marketing Specialist Minnesota Department of AgricultureMinnesota Department of Agriculture ralph.groschen@state.mn.usralph.groschen@state.mn.usralph.groschen@state.mn.us www.mda.state.mn.uswww.mda.state.mn.us Riverland Community College December 6, 2006 Kasson, MN

3. Includes plants under construction as of September 2003

8. New Projects HAWAII

9. Minnesota Ethanol: Production, Producer Payments, and Economic Impacts (Fiscal Year: July 1-June 30)

10. Minnesota’s Ethanol Plants Plant (Start date) Original capacity (millions) 2004 Marshall (1987)1040 Morris (1991) 3.522 Corn Plus (1994)1540 Heartland (1995)1037 Al-Corn (1996)1034 CVEC (1996)1542 MN Energy (1997)1218 Ethanol 2000 (1997)1230 Pro-Corn (1998)1240 Cornerstone (1998)1221 CMEC (1999)2022 Exol (1999)1340 North Star 20055050 Total 210 454

11. Yields 1.67 Btu of fuel ethanol (USDA) 0.805 Btu of gasoline 100% more energy w/ Ethanol 1 Btu of fossil energy Coal, oil, or gas

12. DDGs for 40 million gal. plant energy? Total Process Energy Total Electrical Energy Total Energy Required Total Energy from DDGs 1,440,000,000,000 508,000,000,000 1,948,000,000,000 1,954,000,000,000

13. Market Development 5 billion gallons used today, mostly in E10. E85 is future possibility for market expansion. (MN is way ahead nationally) May also develop other markets: –1. Aviation Fuel? –2. Diesel Fuel (Sweden) –3. E20 (Gov’s initiative) –4. RFG area O 2 caps may be lifted

14. Where do we go from here? Maintain existing industry through transition “Cellulose” (biomass) to ethanol and other fuels. Minnesota plants are taking the initiative. Pathways –1. Use biomass fuels for process energy. (MN) –2. Enzyme/Fermentation DOE focus. –2. Thermochemical A. Various thermochemical reactions (Pyrolysis- Synthetics) B. Gasification “Syngas” and “biorefinery process” (MN)

15. What’s Possible? Year Biomass Yield Tons/acre Acres Planted (millions) Cellulosic Ethanol (billion gals) Corn Ethanol (billion gals) Total Ethanol (billion gals) 20128.954.412.016.5 201712.51924.814.639.4 202723.149124.414.6139.0 Source - Vinod Khosla70% of today’s gasoline usage?

16. Fossil Energy Ratio (FER) = energy in fuel / fossil energy input 10.31 Michael Wang, Center for Transportation Research, Energy Systems Division, Argonne National Laboratory

17. Yields 3.2 Btu of Biodiesel (USDA & DOE) 0.843 Btu of Diesel Fuel 280% more energy w/ Biodiesel 1 Btu of fossil energy Coal, oil, or gas

18. Minnesota Biodiesel 2% required in Minnesota since 9/29/05 3 plants, 63 million gallons production capacity High blends & B100 used in summer by some Filter problems in Winter ‘05 & ’06 blamed on biodiesel Some “off-spec” biodiesel was shipped Everybody used B2, most had no problem Other potential causes of filter problems were not discussed

19. Diesel Filter Problems Jan. 2006 Cummins Diesel Bulletin Diesel filter life has shortened steadily since Winter of 2004. Major causes of plugging are: –“Asphaltine” polymers duel to high fuel temp –“Biological organism” growing in fuel –“Engine lubricating oil” mixed in fuel Engine design, pipeline additives & used oil. –Biodiesel fuel mixed at “high levels” (B20) –“Solid Particle contaminants, (Dirt)”

20. Questions?