Pros & Cons on Ethanol Plant Industry Technologies

There are currently over 100 ethanol plants operating in the United States, producing over 5.8 billion gallons of ethanol each year. The heaviest concentration of ethanol occurs in the western corn belt states: Minnesota, South Dakota, Nebraska, Iowa, Kansas, Illinois and Missouri.

There are at least fourteen ethanol production plants that are scheduled to begin production in the next twelve months, adding approximately 600 million gallons of annual ethanol production capacity. As more corn dry-grind ethanol plants are constructed, the concern about the long term viability of this production model is heightened. Some of the vulnerabilities of the corn dry-grind ethanol production model include:

• Limited Co-Product Value
80% to 85% of the total product value comes from the primary product, ethanol. There is very little co- product value.

• Limited Price/Value Correlation between Corn Feedstock and Product/Co-Product Value
The price of ethanol has very limited correlation with corn feedstock costs. In other words, if corn prices rise because of production shortfalls, it is unlikely that ethanol price increases will result.

• Viability Requires Federal and State Credits and Tax Incentives
The profitability of dry-grind ethanol production is very dependent on Federal and State programs designed to increase ethanol prices above petroleum-based liquid fuels and provide incentives for ethanol production.

• Energy Intensive Conversion Process
The conversion of corn to ethanol and distillers dried grains with solubles (DDGS) is a very energy intensive process compared to other agricultural processing industries. This makes the profitability of corn dry-grind ethanol plants very sensitive to changes in thermal and electrical energy costs.

• High Volatile Organic Compound (VOC) Emissions
Most ethanol plants require thermal oxidizers to meet EPA VOC emission standards.

One approach to overcoming these vulnerabilities is to utilize CPT's Patented Corn Fractionation Technology.

The CPT Corn Fractionation Technology produces three higher value corn fractions: corn germ, bran and endosperm. The endosperm fraction, also called Degermed, Debranned Corn (DDC), is utilized in the existing dry-grind ethanol plant instead of whole corn. The germ and bran co-products are then further processed into corn oil, deoiled corn germ and processed bran products. The ethanol plant could realize some or all of the following benefits with the addition of the CPT Corn Fractionation Process:

• A Substantial Increase in the Number and Value of the Co-Products Produced
  - Corn Oil
  - Deoiled Corn Germ
  - Corn Bran Products
  - Hi-Protein DDGS
  - Ultra-High Protein DDG

• Reduced Primary Product Margin Contribution
The ethanol product will represent a lower percentage of the total product value (70% to 75%).

• Improvement in Plant Profitability
The overall profitability of the ethanol plant will improve by 10 cents to 20 cents per gallon, directly resulting in a higher return on investment.

• Reduction in Plant Energy Requirements
The thermal energy requirements for the ethanol plant will be reduced by 15% to 20%. Most of this reduction comes from the reduction in the volume of DDGS that requires drying. The volume of low value DDGS will be reduced by nearly 50% since fewer unfermentables are processed through the ethanol plant. Although there will be a substantial reduction in electrical consumption, this reduction will be partially offset by additional electrical requirements for the corn fractionation process.

• Lower VOC Emissions
Reduced volume of DDGS drying significantly reduces the level of VOC emissions.

The CPT Process can be illustrated with a simple process flow diagram for the utilization of the DDC in an Ethanol plant: