ETHANOL

[timhyma]

Ethanol innovator driven to replace oil
'Quiet guy' family man the force behind Poet
Thom Gabrukiewicz • [e-mail] • January 4, 2009

Numbers? Don't get him started. Jeff Broin loves the crunchiness of numerals, the facts, the figures - the absolute language of science behind turning a kernel of corn into biofuel.

Specifically ethanol, or ethyl alcohol, a straight-chain molecule with the structure of C2H5OH - six atoms of hydrogen, two atoms of carbon and one atom of oxygen. It's one of the oldest known recreational drugs known to man - Martini anyone? - which has become the single largest additive to the world's gasoline supply.

Sioux Falls-based Poet produces 1.5 billion gallons of ethanol a year at the 26 plants it manages across seven states, making it the leading ethanol producer in the world, according to the Renewable Fuels Association. Poet produces another 3.5 million tons of distillers grains, a protein-rich animal feed marketed under the Dakota Gold label.


Broin, Poet's 43-year-old chief executive, has been dubbed "Mr. Ethanol" by Forbes magazine. Soft-spoken and polite, he declines to disclose his net worth. Instead, he's eager to talk about ethanol and the promise the simple corn plant can have to slake the world's fuel thirst. Well-respected in the industry, Broin is a major player. He made $89,900 in campaign contributions, to Democrats and Republicans alike, in 2008. He is as complicated as he is quiet.

"Clearly, he has been extremely successful," said RFA president Bob Dinneen. "He has been a leader in this industry."

Broin seems to find comfort in numbers. At a home-office tour, Broin stops in a cavernous room filled with desk pods and copious computers; he raises a hand, smiles, points.

"We get 4,000 data entry points a second from each of our plants right here," he says of Poet Plant Management, one of five subsidiaries under the Poet banner. "We can even run the plants from here, for a short time. Last summer, we actually did that at one of our Iowa plants - there was a tornado warning. In fact, I think the plant manager ran it from his house."

Firing back at the critics of ethanol and subsidies
But as Broin continues to build his ethanol empire - the privately held company will post $4 billion in revenue this year, along with "a slight profit" - the industry faces numerous challenges. Once the darling of the alternative energy movement, in 2008, ethanol was blamed for rising food prices, global starvation and an increase in greenhouse gas emissions from intensive farming practices.

Contraction has hit the industry. Publicly traded VeraSun of Sioux Falls sought Chapter 11 protection in October. Smaller, independent plants have shuttered from Ohio to Colorado.

Groups such as the Clean Air Task Force, Environmental Working Group, Friends of the Earth and the Grocery Manufacturers Association have called on Congress to end subsidies and mandates for corn-based ethanol production.

"Despite the subsidies, ethanol is not competitive in the marketplace, and the industry only survives because politicians shovel our money into their pockets," said Duane Parde, president of the National Taxpayers Union. "We must end the bailouts and subsidies for industries that are unable or unwilling to stand on their own."

Broin, who in November helped launch the trade group Growth Energy to counter the claims, bristles at the slings, all while pushing ethanol as the replacement for gasoline in the U.S. during the next 20 years and the world sometime later.

"There is not a shortage on the means to produce food and fuel on the surface of Planet Earth," he says, tapping his fingers for effect on the conference table in his spacious, yet spartan, office. "There are those out there who would have you believe there's a problem out there. There is not a problem out there."

The government gave domestic ethanol producers about $1.3 billion in subsidies in 2007, according to an Iowa State University study. It also put a 54-cent-a-gallon tariff on foreign ethanol, which largely affects Brazilian producers that make ethanol from sugar cane. That tax is on top of the 51-cent federal excise tax exemption given to fuels that are mixed with ethanol. The 2008 Farm Bill lowers that credit to 45 cents a gallon.

"In 2007, the tax incentive, that tax break, was $3.3 billion, but the ethanol industry returned $4.6 billion in tax revenue to the Treasury," Broin says. "We saved $8 billion in farm payments because we eliminated farm payments for the first time in almost 40 years. We saved the consumer $40 to $60 billion in gas prices with extra supplies that kept prices down. We added $47 billion to the (Gross Domestic Product)."

Americans burn about 140 billion gallons of gasoline a year, according to the Energy Information Administration. The Renewable Fuel Standard now calls for blending 10.5 billion gallons of renewables this year. That mandate will increase to 36 billion gallons by 2022.

Of those 36 billion gallons, 22 billion must be made from sources other than corn kernels.

And President-elect Obama has floated a plan to expand the fuel standards to reach 60 billion gallons by 2022.

Just to wean the country off foreign oil. Ethanol's time is now - and it is the future, Broin says.

"That $3.3 billion investment?" Broin asks, rhetorically. "I think that's the best investment the government's ever made. I'm just giving you the facts here - best investment ever made."

An empire starting on family farm in Minnesota
Poet was born out of the collapse of the first Gold Rush ethanol promised in the 1970s and '80s when the technology was no better than that of a bootlegger's whiskey still. Broin's father, Lowell, began experimenting with ethanol production on the family's farm near Wanamingo, Minn., in 1983.

"Actually, my dad was always interested in new, unique things," Broin says. "At this point, I'm not even involved - I'm away at college."

By 1986, the farm was producing 100,000 gallons and the family went looking for a bigger investment.

They bought a bankrupt ethanol plant in Scotland, S.D.

"They were willing not only to sell the parts, but the land," Broin says. "The whole plant. The family said, 'Let's look at this thing.' They asked me to run the company, since I had the business degree."

The Scotland facility, which is the only plant Poet owns outright, holds a special place for Broin. It's where much of the research and development practices - $50 million over the past six years and $20 million alone in 2008 - are polished.

It's where in November, the company started producing ethanol from corn cobs - the next-generation biofuel called cellulosic ethanol - on a pilot-project basis, with the aid of an $80 million grant from the Department of Energy. Broin predicts Poet will be producing cellulosic ethanol in commercial amounts - about 25 million gallons a year - by 2011 at Poet Biorefining-Emmetsburg, in north-central Iowa.

Scotland also is where, to save on rent, Broin lived in three rooms upstairs from the plant's entrance during start-up.

"When he was here, ethanol was his career - well, it still is," says John Finck, plant manager at Poet Biofuels-Scotland, who Broin first hired as a maintenance man 17 years ago. "He takes great interest in it, the whole thing. Innovation, determination drives him."

By 1991, Broin and his brothers Rob and Todd increased Scotland's production to 3 million gallons. It also was the year they created Broin & Associates (now called Poet Design & Construction) and began to build plants across the Midwest.

"We have been profitable every year since our inception," he says. "I've often said it's all about the people - and I'll bet on our people every time."

In 2006, Broin bought out his brothers' shares in Broin Cos. In 2007 - his 20th year as head of the family business - Broin changed the company's name to Poet, saying, "Just as a poet takes everyday words and turns them into something valuable and beautiful, our team takes information that comes from common sense to leave things better than before."

Understanding his suppliers and having a vision
Poet succeeds because of its business model, say many of the farmers and ranchers who are investors. Poet is always the largest investor in its plants, and by designing, building and managing each, it can keep much of the control.

But remember the 4,000 data points per second? Each plant also runs independent of the others, and each has access to the numbers. Competition drives each plant to run with cool, efficient profitability.

"The Broins come from the Earth," says rancher Jerry Rubendall, an investor in Poet Biofuels-Mitchell. "That agriculture background is just so important. It's just a well-run company, best one going. Jeff understands us, but he knows the business. I'd invest all over again in a minute."

At Poet's Project Liberty field day in Emmetsburg, Broin moves through the crowd of farmers - guys in the caps and Carhartt overalls he needs to persuade to harvest the corn as well as the cobs - in jeans, button-down shirt, V-neck Poet sweater and a black jacket. He shakes hands, chats up the farmers and equipment manufacturers but eats his pork sandwich and baked beans away from the crowd. He sits alone, but for the company of his public relations director Nathan Schock.

Youthful, reserved, trim, Broin nearly stares through you with his gray-blue eyes as he talks. He chooses his words carefully, measures his sentences prudently.

Broin doesn't seek the public eye; it was thrust upon him. Success will do that.

"He's a quiet guy by nature," said Sen. John Thune, R-S.D., a strong supporter of the ethanol industry who has known and worked with Broin for years. "He loves what he does, he loves the technical nature of the business. But he also realizes that this industry needs a face, a leader in telling ethanol's story to the public, not only in America, but to the world. Jeff has assumed that role, and I give him great credit for it."

Broin admits he doesn't read much past trade journals. He does a little hunting, fishing, golfing and skiing - snow and water. But he spends most of his free time with his wife, Tammie, and children Alyssa, 16, Miranda, 13, and Austin, 11, at the family's home in Dell Rapids.

"I think Jeff is a very genuine person," said Hurley farmer Darrin Ihnen, a shareholder in Poet Biofuels-Chancellor who delivered the first corn cobs to Project Liberty. "I've had the opportunity to go on a few business trips with him and he's the kind of the guy who wants to get back at night to get to his daughter's basketball game. He's got family on the mind."

Ihnen says through family and ethanol, he's gained an important insight into Broin. "I can give him an agriculture-farmer perspective he doesn't get from an employee. He gives me his vision of the future, and that vision is cellulosic."

But whatever new technology develops in the advance of biofuels, Poet always will be an ethanol company, Broin says.

"Long-term, corn will become the oil of the future," he says. "I don't think people understand yet, that you can get everything from a corn plant that you can get from a barrel of oil - with the exception that it is renewable."

And he plans to steer the ethanol industry into its uneasy course for the foreseeable future.

"I am very driven by the opportunity to change our nation's and the world's energy supply and reduce our independence on foreign energy supplies," Broin says. "Agriculture and ethanol have the potential to fuel and feed the world, and we're very excited about that mission. And, quite frankly, that passion grew on me, that this was going to be so important for our country, our world."

Reach Thom Gabrukiewicz at 331-2320.

Can ethanol replace gasoline in this country?

"If you look at the projected increase in corn yields over the next 20 years, we can produce 50 billion gallons of corn-based ethanol, or 430 percent more than we do now, and increase the amount of food and feed by 40 percent. It you add cellulosic ethanol, we can produce 85 billion gallons on top of that, basically replacing gasoline."


How does a bailout of the auto industry sit with you?

"We think it's important to have a domestic auto industry. They have been great supporters of ethanol. We believe that they understand that the only available option to this country to significantly reduce oil imports in the next 20 years is ethanol."


What is your hope for the industry under President-elect Obama's administration?

"We see ourselves very aligned with President-elect Obama's three major platforms - energy independence, the environment and jobs. And we see our industry goals are exactly the same."


What makes Poet different from other companies?

"The culture we've created at Poet allows people to thrive, no question. Our culture revolves around three statements: 'We're all on the same team, we leave our egos at the door and we always over-communicate.' We work very hard at maintaining a small business environment even while becoming a large company."


Do you have any political aspirations?

"I've got a full-time job here. We have a lot to accomplish right here, so I don't need to speculate on the future. It's very hard to see past five years, so I don't."

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BrianJDonovan wrote:

Louisiana Enacts the Most Comprehensive Advanced Biofuel Legislation in the Nation

Governor Bobby Jindal has signed into law the Advanced Biofuel Industry Development Initiative, the most comprehensive and far-reaching state legislation in the nation enacted to develop a statewide advanced biofuel industry. Louisiana is the first state to enact alternative transportation fuel legislation that includes a variable blending pump pilot program and a hydrous ethanol pilot program.

Field-to-Pump Strategy
The legislature found that the proper development of an advanced biofuel industry in Louisiana requires implementation of the following comprehensive “field-to-pump” strategy developed by Renergie, Inc.:

(1) Feedstock other than corn
(2) Decentralized network of small advanced biofuel manufacturing facilities
(3) Use of blending pumps rather than splash blending
(4) Hydrous ethanol

Please feel free to visit Renergie’s weblog (www.renergie.wordpress.com) for more information.
http://www.argusleader.com/article/20090104/NEWS/901040311/1001/rss01