BioCycle August 2007, Vol. 48, No. 8, p. 50
Mark Jenner

BIOENERGY projects have served either as an energy profit center or a waste remediation function with an energy enterprise. Now these separate economic roles are merging into a new business model.
Corn-based ethanol and virgin vegetable oil for biodiesel both function as bioenergy profit centers. Even the wood waste used in most of the fuel pellet processes is unused wood from mills. Because of their financial success at producing clean, renewable energy, these young industry sectors all pass the litmus test of commercial maturity. They can get financing.
On the other hand, biomass methane energy projects (landfills, wastewater treatment digesters and manure digesters) have evolved as energy enterprises in a waste treatment facility. The facility’s function is to first treat the waste and stabilize the carbon, and second, attempt to recover some costs by developing methane gas utilization. The primary goal is waste remediation and the cost recovery benefit from energy is an afterthought.
Cost recovery is not the same as a profit center. Waste treatment functions minimize liabilities and costs. The best outcome (or least cost) for a cost-minimizing project is zero cost. Investors and bankers are not excited about zero costs. They are excited about profits (revenues – costs). So even if costs are zero, profit only occurs if there is also revenue.
The economic success of waste to energy projects is very impressive. There are hundreds of successful landfill gas projects (over 1,500 MW generating capacity), municipal wastewater treatment digesters (over 100 MW) and the 60 or so farm digesters (over 10 MW). Even so, these projects are waste treatment projects first, with an add-on energy enterprise.
Waste treatment industries have a legal, health and environmental mandate that imposes enormous costs. They are finding ways to offset some of those expenses through bioenergy production. Bioenergy profit centers and waste treatment facilities have two completely different philosophies.
WASTE TREATMENT MODELS WITH PROFIT CENTER STRATEGIES
An amazing shift has occurred in both the energy projects and the waste treatment facilities. Energy projects are looking at benefits of waste remediation and cost recovery. Waste treatment facilities are beginning to adopt profit center strategies. The old parallel industry models of profitable energy and least-cost waste remediation are being fused into one new model of profit, energy and environment benefit. It is a new era.
In June, Fibrominn began turning turkey manure (700,000 tons annually) into electricity at its 55 MW plant in Benson, Minnesota. This project was borne out of the Concentrated Animal Feeding Operation (CAFO) manure regulations, but the bigger driver was the opportunity to generate revenue. Making 700,000 tons of turkey litter go away was a secondary benefit.
In July, the E3 Biofuels project in Mead, Nebraska became fully operational. E3 Biofuels’ system produces a net output of 25 million gallons of ethanol and furnishes distillers grain feed to a 28,000 cow feedlot. Manure and ethanol residuals are processed in a digester that powers the ethanol plant. In terms of the ethanol efficiency debate of the last few years, E3 Biofuels has calculated that for each unit of fossil fuel required, 46 units of bioenergy are produced.
The feedlot and the ethanol plant are both profit centers that take advantage of cost-recovery waste treatment to essentially eliminate waste production. Panda Energy in Hereford, Texas will burn (gasify) one billion pounds of dry manure to fire their 115 million gallon ethanol plant using the same kind of hybrid business plan.
Digester projects are shifting into a higher gear. Farm and industrial anaerobic digesters are looking to increase methane production by increasing the carbon value of the waste stream and finding higher valued markets for the methane.
Microgy in Stephenville, Texas is loading a large anaerobic digester with food waste and manure from 10,000 cows to produce a natural gas equivalent from the methane. It takes very large amounts of methane to justify the costs of cleaning the gas up to natural gas standards. In California, gas will be aggregated from multiple dairy farms within a community. Bison Renewable Energy (Iowa) has just broken ground on an enormous 11 million gallon community digester.
With the BioTown, USA model, sewage and manure will produce electricity to power the community. This begins to shift the public cost of wastewater treatment to the private sector. Los Angeles announced a proposed biosolids to energy project in April.
The list of full-scale projects as well as incremental innovations like using gray water from wastewater treatment plants for cooling water in ethanol plants goes on and on. Composting operations play a vital role in adding value to organic residuals of these energy projects.
This is only the beginning. None of these projects show up as waste remediation receipts from methane or compost sales in the 2002 Economic Census. This Census reports that in 2002 as a nation, the U.S. spent $51 billion on waste remediation. Nearly all of this was spent as a sunk cost of managing waste. As we adopt this new model of profitable energy and waste remediation, that $51 billion cost will generate an equivalent amount of economic growth – which is very exciting!
Mark Jenner, PhD, is the owner of Biomass Rules, LLC and has over 25 years of biomass utilization expertise. Burning Bio News is Jenner’s monthly scorecard of bioenergy project adoption, available at www.biomassrules.com. Mark Jenner developed the locally grown biomass power plant concept for the Indiana Department of Agriculture’s BioTown, USA.