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THE NEXT GENERATION IN BIOFUELS -
  A New Approach to the Production of Biofuels




        S. Mayfield Pierce, Chairman/CEO
          EnerGenetics International, Inc




                 June 10, 2007




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                                      SUMMARY


As the world now awakens to the dire consequences of its continued reliance upon
petroleum-based fuels, and in its mad rush to develop alternatives to such fuels, powerful
consequences are being encountered in the development new biofuels to replace
petroleum. With the development of the ―first generation‖ biofuels, corn ethanol and
biodiesel, powerful consequences are being encountered, from escalation in food prices
throughout the world, to mass depletion of water supplies used in the production of such
biofuels.

The next generation of biofuels now being sought after is ―cellulosic ethanol‖ which is
believe to be a solution to many of these problems caused by the first generation of corn
ethanol biofuels. However, the realization of an economic pathway to ―cellulosic
ethanol‖ still eludes the scientific community and is said by many experts to still be five
to ten years away from realization, a period of time which may ultimately be too late.

This Article explores an ―interim generation‖ of biofuels which may have been
overlooked, and that is a generation which hopefully learns from the mistakes of the first
generation of biofuels and purports to solve many of the problems now faced by the
current generation of biofuels, before it is too late!

What is this new, ―interim generation‖ in biofuels development? Instead of constructing
massive giant refineries which resemble the petroleum refineries which are costly to
finance and are so dependent upon petroleum, alternatively, it is the ―miniaturization‖
and downsizing of biofuels production plants which can solve many of the problems now
being faced by these first generation of biofuels. Through the construction of smaller,
distributed bio-fuels refineries which can draw upon many varied ―free-sugar-based‖
feedstocks, these mini-refineries can be constructed globally and allow local communities
to control their own energy destiny. Purpose grown crops such as sweet cane sorghum,
food wastes and new corn hybrids can be grown throughout the U.S. and the world as
feedstocks for these mini-refineries. In addition, these novel small-scale biorefineries can
bring economic development to global regions as well as produce valuable food and
nutraceutical products for a starving world. They will also protect valuable water
supplies and produce environmental friendly materials to keep our planet clean.

Yet these mini-biorefineries are but a step in the right direction, a step which must be
taken before time runs out. This Article will describe the benefits and advantages of
taking this most important next step in the development of biofuels.




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            THE NEXT GENERATION IN BIOFUELS -
                A New Approach to the Production of Biofuels

S.Mayfield Pierce, Chairman/CEO, EnerGenetics International, Inc

Keywords
Content:
1.    Introduction
2.    The First Generation of Biofuels
      2.1    Corn and Sugarcane Ethanol and Biodiesel Processes
      2.2    The Ethanol Boom
      2.3    Impact of Ethanol on Food Prices
      2.4    Impact of Large Petroleum Refineries in the US on Biofuel
      2.5    Impact of Petroleum on Food Production and Supplies
3.    The Second Generation of Biofuels: Cellulosic Ethanol
      3.1    The Biomass Generation of Biofuel
      3.2    What is the Real Next Generation of Biofuels
4.    Renewable Esters – The next generation of hybrid biofuels
5.    The Mini-Biofuels Refinery Technologies
      5.1    Bio-Fuels Production from Grains
      5.2    Higher valued Products by MBR’s and their economic impact
      5.3    Foods and Neutraceuticals produced by MBR’s
      5.4    New Corn Hybrids
      5.5    New heart healthy corn or nutraceuticals corn hybrids
      5.6    Impact of heart healthy corn hybrids on ethanol and biofuel production
      5.7    Advantages of MBR Technologies
      5.8    Benefits of MBR Technologies
      5.9    Projected Sizes and costs of MBR units
      5.10 Impact of MBR Technologies on developing nations
6.    N-Butanol as a renewable fuel
      6.1    History of butanol us as a biofuel
      6.2    Superior Fuel Qualities of N-Butanol
      6.3    The economical production of N-Butanol
7.    Status/Business Strategy/competitive Advantages/Market Opportunity
8.    Superior Fuel Traits of Bio-Butanol
9.    The old World War II ABE Fermentation
10.   The production of Bio-Butanol in Mini-Biorefineries
11.   Current Status of Mini-Bio-Butanol Refineries
12.   References




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1.     Introduction

The ―first generation of biofuels‖ has been the development of ethanol and biodiesel and
the ―next generation‖ is usually considered to be ―cellulosic ethanol‖. The production of
ethanol from corn and sugarcane are well-known processes dating back thousands of
years based upon the simple process of sugar and starch fermentations [see also
6.58.6.13. – Technology and Economics of Fuel Ethanol from sugarcane] The
production of biodiesel [see also 6.58.6.5 – Biodiesel] dates back to 1940 to a process
invented and patented by Colgate Palmolive which involves blending vegetable oils such
as soy oil or rapeseed with an alcohol or acid converting them into biodiesel, a process
known as transesterification. The substrates for these biofuels processes (starches,
sugars and oils) are readily extracted from the grains used but the left-over ligno-
cellulosic plant residues, such as corn stover, are not used in biofuels production today.
Today, in the U.S. over 95% of ethanol is produced from corn.

The ―second generation‖ of biofuels development, however, plans to convert these ligno-
cellulosic crop residues or biomass into biofuels. This ―generation‖ of biofuels is
commonly referred to as ―cellulosic ethanol‖, or a more accurate description might be
―Biomass Ethanol‖ and this generation will rely upon the use of all sorts of biomass,
including ligno-cellulosics from left-over plant residues (corn stover, rice/wheat straw,
etc.) to other more challenging feedstocks such as wood, yard wastes, municipal solid and
even food wastes such as citrus peel.

These ―second generation‖ or ―cellulosic ethanol‖ biofuels are focusing on two general
technological approaches. The first approach will employ a biochemical approach
utilizing enzymes to break the ligno-cellulose down into sugars and lignin. Some of
these exotic enzymes include fungi known by G.I.’s who served in the jungles of the
Pacific during WW II as ―jungle rot‖. Other enzymes include those found in termite guts
which digest wood into sugars.

A second technological approach relies upon the thermo-chemical gasification of ligno-
cellulosics [see also 6.58.6.10 – Thermochemical conversions] using high temperatures
and pressures and catalytic methods to produce syngas, a gaseous stream composed of
carbon monoxide and hydrogen which when pressurized at higher temperatures results in
the production of synthetic biofuels.

Each of these ―generation approaches‖ has major downfalls and technological challenges
which must be overcome. Following are just a few of the problems associated with each
of these ―generation‖ approaches to biofuels production.

2.     The First Generation of Biofuels
2.1    Corn and Sugarcane Ethanol and Biodiesel Processes




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Nations are already experiencing the negative impact of diverting grains away from food
production to fuel production. Service stations are now competing with super markets for
the same grain. It is estimated that if the food value could be extracted from one tank full
of ethanol, it would be enough to feed one person for one year. And, our world is seeing
sharp escalations in the cost of almost every food product which relies on grain, from
dairy, to poultry, to pork and beef, almost on a worldwide basis. Corn prices in the U.S.
have doubled in one year from an average of $2 per bushel to $4 per bushel causing an
increase in U.S. food prices by $14 billion per year. These prices could climb to $20
billion annually if oil prices go to $60-70 per barrel. If petroleum prices hit those levels,
the demand for ethanol could increase to 30 billion annual gallons by 2012 and this
would utilize over half of the U.S. annual corn crop. U.S. President Bush has set a goal
of 35 billion gallons of annual production by 2012 which would result in a replacement
of about 15% of total U.S. annual gasoline consumption. Until the recent ethanol boom,
over 60% of U.S. corn production went to animal feed. This has now been reduced by
almost one-third.

2.2    The Ethanol Boom

It appears that corn farmers are really enjoying the demand for ethanol and the higher
prices that corn is bringing. This ―ethanol boom‖ is creating an almost ―ethanol gold
rush‖. But more and more farmers are becoming worried and ethanol is becoming more
of a curse as farmers plant more corn than any time in the past 50 years. It would appear
that ethanol would benefit the communities which grow the corn, but the problem is that
the ethanol boom is really benefiting those at the top of the grain chain, the large agri-
business giants that provide special genetically modified seeds at premiums, the
fertilizers and pesticides, and the landlords. As usual farmers always finish last, and they
don’t keep the profits because their revenues go to paying their rising expenses. For
example, within two months, fertilizer has doubled, and within the past four months, land
values have increased by 40%. Though this seems like a great benefit to farmers, it really
is not since most farmers rent their land and rental prices have risen by 20%. This makes
it almost impossible for younger start-up farmers to get into business or to make an early
go of farming once they are in business. Initially, coops benefit from the ethanol boom
by constructing smaller ethanol plants, but now corporate investors from around the
world are constructing ethanol plants that dwarf farmer owned plants. And, most of the
incentives are going to these larger corporate owned plants. This is causing many farm
co-ops to sell out to outside investors. According to the Coalition for Ethanol, of the 75
plants to be constructed within the next two years, only 25% will be farmer-owned. This
will reduce farmers to mere work status. While corn prices may be at $4 per bushel,
when these bushel prices decline, farmers could be left holding the bag by still having to
pay the higher prices required to produce the bushel. In addition, the development of
cellulosic ethanol could cause a crash in the demand for corn within the next few years,
which could cause a farm crash and crisis and to lead to widespread foreclosures. And, it
is predicted that the farm subsidies and fuel tax credits may not be renewed in the
upcoming farm bill. So, the current ethanol boom shows just how vulnerable the current
subsidy systems are.




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2.3    Impact of Ethanol on Food Prices

Because of the increased use of corn for biofuels there has now been a $47 per capita
increase in groceries in the U.S. since last July 2006, the study stated. This study goes on
to predict that corn prices could peak at $4.42 per bushel and this would cause an
increase in pork prices by 8.4%; poultry by 5%; beef by 4% with corn production
increasing by 44% but exports decreasing by 63%. Some studies have stated that if this
trend continued over the next decade, food prices could increase by 400—500%, and this
could have a major impact on other corn importing nations. In the U.S. no more corn is
available for ethanol production and growers are frantically switching every acre to corn
production, including southern cotton farmers. Many U.S. growers are contemplating
converting federal set aside acreage to corn production to meet the demand for corn
ethanol markets.

And the impact of using grains for biofuels production on starving worlds is even more
alarming as the U.S. currently produces 40% of all world corn production and supplies
70% of all corn to foreign countries. This is especially daunting in areas where over two
billion of the world’s poorer inhabitants spend more than half their annual income on
such grains. Where will they get this grain now and what impact will this have upon
starvation and on global peace and political stability (or instability)?

And, this ―first generation of biofuels‖ is tied so closely to the use of petroleum and
natural gas, all the way from the planting, to cultivating, harvesting, hauling, drying, and
fertilizing with even insecticides and pesticides produced from petroleum. This results in
over 30-40% of the production cost to produce one gallon of ethanol being attributed to
the cost of the bushel of corn ($0.36/gallon). For every $1.00 in increased corn costs, the
ethanol industry loses $15 billion dollars annually in profits. In 2005 less than 10% of
the corn crop was used for ethanol production in the U.S. In 2007 almost 20%, and the
USDA predicts 30% will be used within the next two years for ethanol production.
Along with this increased demand for corn will be a 30% increase in farm land prices,
according to the USDA. And now Congress is considering raising the demand for
ethanol to 35% within the next ten years, which would require the use of 125% of all
current corn crops in the U.S. And, thus, the cost of farmland will go up accordingly, and
this will then have a major impact on building and construction costs as most new
construction comes from farmlands.

2.4    Impact of Large Petroleum Refineries in the U.S. on Biofuels

And that is only the beginning of the strangleholds that oil has on this ―first generation of
biofuels‖. Petroleum and natural gas are used to grind, cook, steep, distill and dry the
final product, and, it is used to ship the product across the country by truck, rail or barge,
to isolated petroleum refineries which have diminished in number by almost 50% in the
past 30 years—down from 315 in 1976 to only 149 in 2004 with no new ones constructed
since 1981 when all subsidies were eliminated to construct new refineries. Enough oil is
available, at least for the time being, but there are simply not enough refineries. The U.S.
currently uses 22 million barrels of oil per day but only has a refining capacity of 17



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million barrels. In addition, environmental laws have made it very difficult, costly and
time consuming to obtain permits to construct new ones. And, today, all smaller to
medium size refineries have went out of business with most new refineries costing more
than $1 billion each to construct. John D. Hofmeister, the president of Shell Oil
Company in an interview with Times cited an investment firm report that said the
biofuels push may ―rule out many refinery investments completely.‖ One consumer
advocacy group says oil companies are spending more on stock buybacks and dividends
than oil exploration or refining, with ExxonMobil, for example, spending $37.2 billion on
buying back its stock and paying dividends to shareholders last year while putting only
$3.3 billion toward exploration and refining. And profits for big oil have been record
breaking. ExxonMobil led the pack with $39.5 billion in profits in 2006 and their first
quarter profits this year were a tidy $9.3 billion. For comparison’s sake, that was more
than triple the profits of Microsoft last year. ConocoPhillips checked in at $15.6 billion
last year, which was not too shabby either.

At these large-scale refineries, these ―first generation biofuels‖ are then blended into the
petroleum, with the refineries getting most or all of the blending subsidies or credits as
incentives to use such biofuels in their formulas. Yet the value of these ―first generation
biofuels‖ is tied to the value of petroleum (gasoline and diesel fuel), as it goes up or
down, so goes the profits of ethanol and biodiesel. Centralized refineries cause a great
disparity in fuel prices across the U.S. where the farther away the fuel is shipped the
higher the prices, e.g. on May 18, 2007 prices for gasoline in Oakland, California were
$3.61 per gallon versus $2.91 in Baton Rouge, Louisiana where larger refineries are
located.

2.5    The Impact of Petroleum on Food Production and Supplies

And, too there are no value-added products produced in these ―first generation biofuels‖
plants, only ethanol and low-grade animal feed, or soy diesel and animal feed, and this
has created an oversupply and major glut of animal feed on global world markets.

And there is the mounting concern that even our very food supplies are dependent upon
the supply of petroleum to power the world’s diesel truck markets to deliver our foods
and goods, where it is estimated that every bite of food consumed in America travels an
average 1300 ―food miles‖ by truck to get to our supper table. In Canada this number
exceeds 5000 ―food miles‖. As the famous comedian George Carlin quipped in his
address on “On Losers”: [paraphrased]: “If we run out of fuel, we run out of electricity,
if we run out of electricity, we run out of heat and water, if we run out of water, we run
out of food ,if we run out of food, we all die!” The question is: Are we not running out of
food and water due to our quest for biofuels development?

Consider the use of water in the production of our ―first generation biofuels‖. There is no
doubt that the current generation of biofuels is having an astounding and alarming
demand on our nation’s and world’s water supplies. These ―first generation biofuels‖
utilize enormous amounts of water. For example, it is estimated that approximately 2600
gallons of water is required to produce just one single gallon of ethanol, including water



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required to grow the corn stalk, and a 50 million gallon ethanol plant will utilize almost
200 million gallons of water per year just in the ethanol production cycle. If indeed 2600
total gallons are utilized, this means over 130 billion annual gallons are used to support
just one single 50 million gallon ethanol plant. But the world has plenty of water? Think
again. It is predicted in the U.S. alone that over one-half of the U.S. will be without
water within 20 years! Predictions are confirmed that the West will see dust bowl
drought conditions over the next decades similar to the dust bowl of the 1930’s, but, it
may not end. Even now the Ogallala Aquifer which underlies some ¼ of the area of the
U.S. is down by almost 50% in the past 20 years. The largest water reservoirs in the U.S.
which are on the Colorado River, Lake Mead and Lake Powell are now down by 50%.

So what has caused all of these problems with ―the first generation of biofuels‖
development? How about simply ―over engineering‖ and the premise that ―bigger is
always better‖. Now there are 200 and 300 million gallon ethanol and biodiesel plants in
the planning stages which will cost $300-$500 million dollars each, and, companies such
as BP and DuPont are now contemplating a bio-butanol plant in the U.K. that will cost
$500 million. In essence, the biofuels plants of today are being modeled after the large-
scale petroleum refineries; only the masters will change or become layered, because these
huge biofuel plants are so closely tied to petroleum. And there is so much talk that we
will all wake up one day to discover one of two things at the pump, 1) the price of
gasoline has dipped to $0.50 per gallon, or 2) it has sky rocketed to $10.00 per gallon. If
the former occurs, every ethanol plant in the U.S. will become a heap of scraps, or if the
latter occurs, the ethanol industry will be controlled by just a few giants, or even by
foreign investors.

3.     The ―Second Generation‖ of Biofuels: ―Cellulosic Ethanol‖
3.1    The Biomass Generation of Biofuels

This generation in biofuels development is usually divided into two main categories, the
enzymatic treatment of biomass, or the gasification of biomass.

Energy Secretary Samuel Bodman has estimated that current gasification costs are about
double that of the average $1.10 per gallon cost of a corn-based ethanol plants. Recently
the U.S. DOE awarded approximately $300 million to just six companies to construct
commercial demonstration models of these ―second generation‖ biomass to biofuels
processes. Two of these demonstration plants will utilize gasification, three will use
fermentation technology and one will use a hybrid of gasification and fermentation. One
of the companies will get $33 million to turn yard waste, wood waste and citrus peel into
syngas, which would then be converted into ethanol, electricity and hydrogen. Another
will get $76 million to convert timber scraps into syngas to make ethanol and methanol
and another will get $76 million for an 11.4 million gallons-per-year plant that will use a
combined biochemical and thermochemical process to convert corn stalks, wheat straw
and switchgrass.

The problem with all of these is the very high capital costs associated with each ―second
generation‖ approach, and, it is estimated by the DOE that each process will require


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years, perhaps 5-10 more years before any of these processes can become commercially
viable on their own merit without governmental funding.


3.2    What is the Real ―Next Generation‖ of Biofuels?

So where does this put us in this world against big oil? The forecast certainly looks very
bleak. Sometimes, however, the answers are right in front of us but we cannot see the
forest for the trees. Sometimes we overcomplicate the answers and something very
simple is overlooked. Perhaps the answer lies in not a single solution but a series of
simple solutions strung together where one simple solution solves the next downstream
problem, just as the success of the light bulb was not solely tied to the invention of the
tungsten filament but was dependent upon many other discoveries, including electrical
power generation in series and the discovery of alternating current. So we must start with
one single premise, and build upon it. This author suggests that that premise should be
tied to the ―miniaturization‖ of biofuels production much like the premise of the
miniaturization of computing which led to the development of the PC. And it is that
word ―miniature‖ which, in the eyes of this author, holds the true promise for the
economic sustainability of biofuels production as will be explained hereinafter.

In today’s ―first generation biofuels‖ the buzzword is ―bigger is better‖ and ostensibly
this is believed to be necessary in order to achieve the economies of scale necessary to
compete with the giant grain industries. Smaller farm coops and organizations are going
up against the giant multi-faceted farm-based conglomerates such as the ADM’s,
Cargill’s, and the pipeline giants such as the Williams’ Bros. And so, the concern is
competing with such giants at the larger-scale in order to achieve such economies.
However, we must be careful as this could be an ―engineering trap‖ in a world of over
engineering, which has now led to a whole host of other problems. There are now a
simple few who believe the true pathway to an economically sustainable renewable fuels
industry is through smaller scale biorefinery plants based upon the premise that ―smaller
is beautiful‖ and more controllable, and, where a series of value added processes and
technologies can be perfected in short order (within a year or so) which will overcome
the massive problems now associated with the ―first generation biofuels‖.

Therefore, perhaps a whole new generation in biofuels may have been overlooked, and,
perhaps this new generation rests somewhere between the ―first‖ and ―second‖ generation
of biofuels development. This ―next generation‖ of biofuels capitalizes on the mistakes
now faced by the ―first generation of ethanol and biodiesel‖, and, the challenges faced in
the development of the ―second biomass or cellulosic generation‖ of biofuels. Perhaps
this new generation of biofuels could be defined as the ―Generation of Miniaturized
Biofuel Refineries‖ or the ―Mini-Biofuels Refinery‖ or ―MBR’s‖ for short [see also
6.58.06.01 – Biorefineries – concept for sustainability and human development].

And so, what could this ―generation of miniaturization‖ offer to the fledgling biofuels
industry? Consider the following:




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3.2.1 Biofuels Downsizing.
MBR’s will offer the miniaturization or the downsizing of biofuels production—where
the buzz words are ―modular‖, ―skid-mounted‖, ―processor controlled units‖. Consider
the fall of the great monolithic steel industry to the smaller scale, decentralized ―mini-
steel mills‖ which have practically taken over the entire steel making industry. Consider
also the fall of the mammoth main frame computers to the PC, or the advent of the micro-
brewery over the huge brewery operations which once completely dominated the entire
beer making industry. Consider this: What monolithic industries of any major purport are
still standing? How about the petroleum industry itself, or the massive grain processing
industry whose multi-billion dollar refineries resemble the gigantic petroleum refineries
in almost every aspect, or the giant plastics industries (off-shoots of the petroleum
industry)? But, in each of these areas, there are enormous challenges to the replacement
and miniaturization of these industries.

3.2.2 Flexibility of Feedstocks.
MBR’s will offer the flexibility of mixing and matching feedstocks since smaller scale
operations can be located next to and adjacent to feedstock supplies. Again, the use of
petroleum can be minimized under this approach alone and distributed MBR’s will be
able to access all of the grains, biomass and organic wastes available in the local area. In
the U.S. alone, it would take about 15,000 MBR’s nationwide each producing 10 million
gallons per year of biofuels to completely replace the use of petroleum. If corn alone
were to be relied upon, this would require increasing the total U.S. corn production by
200—300%, or require an increase in corn used for ethanol production by at least 10-20
times current production. This would be an almost impossible feat to accomplish, but if
biomass could be relied upon in every county of the 3077 counties in the U.S., or if set
aside acreages could be used, the placement of 4-5 MBR’s in each county in the U.S.
would completely replace the use of petroleum in the U.S.

3.2.3 The Production of Value Added Foods and Nutraceuticals.
MBR’s will allow for the production of value-added products such as higher valued foods
and nutraceuticals, even pharmaceuticals, instead of just producing low valued animal
feeds. This has the potential of entirely changing biofuels economic equation by taking
food out of the economic equation of producing biofuels. Such food and nutraceuticals
will be worth hundreds, perhaps even thousands of times that of animal feed values. This
would then eliminate our service stations from competing with our supermarkets for the
same grain? And, if feedstock costs are 30-40% of the production cost of producing
ethanol (80% of that of producing biodiesel), this could have a significant positive impact
on the bottom line of producing ―first generation biofuels‖.

3.2.4 Eliminate Shipping Costs of Food Products.
The advantages of producing such value-added foods and nutraceuticals do not stop here.
Such foods and nutraceuticals can be far more nutritious and health beneficial than
traditional grain processed products. And, just importantly, they can be marketed and
consumed within the communities where they are produced, thus eliminating the 1300
food miles and the petroleum energy required to deliver food to our supper tables.




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3.2.5 The Use of Novel, Value-Added Feedstocks.
MBR’s will also allow for the development and use of novel value-added feedstocks.
Consider that in the U.S. alone there is enough municipal solid wastes that if converted
into biofuels could completely replace the use of petroleum diesel fuel. Consider the
impact that the use of sweet cane sorghum could have upon the production of biofuels.
Many experts, including the California Energy Commission, have dubbed sweet sorghum
as the ―real energy crop of tomorrow‖ where the production of biofuels per acre can
exceed 300—1,000% that of corn ethanol yields per acre. In addition, what if there were
a corn hybrid which could be grown equally well on less productive farm lands with only
a fraction of the water and only a fraction of the fertilizer required by regular corn? And,
what if this new hybrid was comprised of much higher valued food and nutraceutical
products which if only could be unlocked could have a major impact on the health of
mankind, from controlling blood pressure, to diabetes and obesity to reducing coronary
and stroke. And, these new hybrids are all natural and non-genetically modified. Could
this novel new corn crop allow practically all regions of the world to become ―corn
ethanol kings‖ as Iowa has become through the production of corn ethanol? Iowa is the
largest corn producing state in the U.S. and now it is the largest ethanol producing state.
Currently 95% of all ethanol is produced from corn, with approximately 30% of that
produced in one state, Iowa. Finally, what if the only fertilizers needed for such hybrids,
were all natural animal manures, thus taking natural gas out of the equation of producing
such feedstocks for the production of the ―first generation biofuels‖? After the cost of the
bushel, fertilizer is the next largest single cost of producing ethanol, and now, there may
be technology to utilize manure wastes in the U.S. There is enough manure waste in the
U.S. to completely replace the use of natural gas based fertilizers.

3.2.6 Downscaling of Fermentation Processes.
MBR’s will also allow for the downscaling of alcohol and biochemical fermentations to
produce alcohols and biochemicals. This will be accomplished through the exponential
increase of surface areas within the bioreactor itself by factors of 1000% or more over
traditional batch reactors. These ―mini-bioreactors‖ can produce alcohols, organic acids
and esters that some consider as the basic building blocks which can be used to replace
all petroleum based fuels, from gasoline, to diesel fuels, aviation and jet fuels, even
plastics. This feat will be accomplished through the production of esters which have
superior fuel quality traits over just ethanol methanol, or bio-butanol, e.g. extremely high
octane, very low RVP, high cetane. This is very important as most fuel experts believe
that ethanol is only an interim step and that higher forms of alcohols (or larger molecules)
are necessary which are more related to the petroleum molecule. Such a molecule could
be bio-butanol, a higher form of alcohol having 4 carbon atoms and 10 hydrogens
(ethanol has 2 carbons and 6 hydrogens) whereas butanol more closely resembles the
petroleum molecule but can be produced by bacterial fermentation. Even so butanol is
not the total answer but could be the key ingredient in new types of biofuels based on
ethyl and butyl esters (the combination of alcohols, acids and triglycerides, for example).
Many believe that such esters can be used as the ―carbohydrate-based‖ building blocks
for the complete replacement of petroleum-based fuels. In essence short-chained fatty
acid esters produced from combinations of ethanol, butanol and organic acids plus
triglycerides can yield new biofuels having octane as high as 113 (octane of ethanol is



                                            11
106), RVP as low as 7.2 (the RVP of MTBE is 7.3—the only gasoline additive to meet
California air standards of 7.3), and cetane numbers as high as 80 (NOX is reduced or
eliminate at 60; soy diesel cetane is 48.2 and thus contributes to NOX). All of these
products can be produced via fermentation of carbohydrates from renewable feedstocks.
In the U.S. it has been estimated if all vegetable oils (corn, soy, canola, sunflowers, etc.)
along with all waste greases and fats, could be converted into biodiesel, it would yield
enough biodiesel to power the U.S. diesel fleet for 11 days. The use of carbohydrate-
based biofuels, however, could help meet this demand.

3.2.7 Eliminate Petroleum and Natural Gas.
MBR’s will also allow the recovery of such biochemicals and alcohols without the use of
petroleum or natural gas-based distillation.

3.2.8 Distributed Production of Biofuels.
The deployment of mini-biofuel refineries will lead to decentralization of biofuels
production and to a more distributed and controllable biofuels industry, rather than
having to rely on the giant ―petroleum-like‖ ethanol and biodiesel refineries which are
heavily dependent upon the use of even more petroleum. Not only do they require
shipping biofuels across continents to huge isolated petroleum refineries for blending,
now some ethanol plants are now transporting the corn across the continent for ethanol
production. And then there is the delivery of the corn from hundreds of miles around to
such ethanol refineries, again requiring the use of petroleum. What if ester-based
biofuels could be used entirely in the local area as complete replacements for all
petroleum-based fuels, thereby allowing for the production and use of such fuels locally?
The real problem or ―mountain to climb‖ faced today by the current ―first generation of
biofuels producers‖ is how to get ethanol and biodiesel to the refineries. Ethanol
producers are now straining rail, truck and barge lines which are already burdened by
huge shipments of coal, containers and grains.

3.2.9 Water Recycle.
And what about the massive amounts of water consumed during our ―first generation
biofuels‖ production? Mini-biofuels refineries by definition can downsize this usage,
and, in fact, recycle and control this ―out of control‖ variable that will most certainly
have a major adverse impact on our children and children’s children if such water usage
is not brought under control. Mini-biofuels refineries will allow for the complete
recycling of all water, simultaneously cleaning up such water streams, as well as MBR’s
will allow for the downsizing of the water requirements of such biofuel plants. And,
what if MBR’s simultaneously produced a value-added product with global market
demands from such organic wastes, with such products having a net value equal to or
higher than the value of the biofuels produced themselves? All of this can be achieved
through this ―Generation of Miniaturized‖ biofuels plants.

3.2.10 Preservation and Use of Free Sugar Feedstocks.
And, MBR’s can allow for the preservation and use of ―free sugar-based‖ feedstocks,
including purpose grown non-ligno-cellulosic crops. This will include preserving and
utilizing sugar ladened food waste and waste streams, and, these technologies are here



                                             12
now. We do not have to wait on cracking the ―ligno-cellulosic code‖. By constructing
these Mini-Biofuel Refineries now, possibly by the thousands, this will give us time then
to develop the more prevalent cellulosic ethanol, or the second ―Biomass Generation‖ of
biofuels.

3.2.11 The Hydrogen Highways.
And then there is the question of ―The Hydrogen Economy‖. There are two looming
issues related to developing this new economy: one, how will it be supplied, and two,
how do you economically store it on vehicles? Mini-biofuel refineries could possibly
provide the answer to the first question, since hydrogen can be a by-product when certain
biofuels, such as bio-butanol is produced by fermentation. But how can it be feasibly
stored onboard a vehicle in order to achieve the driving distance required for the vehicle.
The solution to this latter question is a major challenge and many technological
approaches are being studied. Again, the solution may be just a simple one.

3.2.12 Economic Development.
And finally, MBR’s can bring economic development to the world. They will produce
not only food, electrical power, biofuels, but more importantly they will create economic
development in many ag-regions throughout the world. Consider the economic
development created within the State of Iowa from corn ethanol plants over the past ten
years, or over 12,500 new jobs. If this same formula could be propagated throughout the
entire U.S., based upon population, this would result in the creation of some 1.25 million
new jobs nationwide, or more than is usually created in all business sectors in one year in
the total U.S. business sector. And, here is a startling figure, if every county in the U.S.
(3077 total) had 3-4 of these mini-biofuel refineries, the collective amount of biofuels
which could be produced annually could completely replace all petroleum used in the
U.S. annually and the new jobs created based upon the Iowa model, would exceed 2
million new jobs. It is also estimated that for every dollar spent on biofuels in the U.S. an
additional five dollars in spin-off economic development within the communities occurs
in the ag-supporting industries, e.g., more tractors, seeds, fertilizers, jobs, etc. So what
could these MBR technologies do for the poorer nations of the world? One must think of
food first, then biofuels, energy and power, then jobs, then biomaterials….

3.2.13 Organic Farms and Foods.
One of the benefits of MBR’s will be an increase in organic farming and food products
resulting there from. Since the MBR technologies are all ―organic‖ by definition, and do
not rely on petroleum fuels, natural gas, or toxic chemicals (such as hexane) during the
production processes, and, they will utilize manure-based fertilizers, MBR’s will lead to
the benefits of organic farming. Even the pesticides and insecticides can be produced as
all natural bio-chemicals in the MBR’s. Therefore, each farm supplying feedstocks for
MBR processing, will ultimately become ―organic farms‖, and the products produced,
will become ―organically certified products‖.

So how can these objectives be achieved? Again, through a series of discoveries, starting
with the single premise that smaller, even nano-technologies can be better and more
readily controlled and diversified. These developments are but a few. MBR’s can lead to



                                             13
the development of the ―carbohydrate tree or economy‖ leading to products which can
completely replace all petroleum products.        There will be more add-ons and
developments to the MBR technologies as the technologies totally mature. It is
noteworthy to remember that the petroleum industry first started by producing its value-
added products first. The gasolines were initially thrown away, and, the biochemicals
industry in the U.S. is some 300% greater in value than the entire petroleum fuels
industry today!

In summary, the following are the problems with ethanol and biodiesel fuels:

    Cost of Bushel = 40-50% of Production Costs = feedstock costs, including by-
product costs usually accounts for 40%+ of total production costs for ethanol and
biodiesel;
      Natural Gas Costs = 25% of Production Costs = cooking, steeping, distilling,
drying down DDGS usually account for almost 25% of total production costs. Natural
gas costs have tripled within the past five years and is expected to continue to go up;
      Diesel Fuel Costs = 15% of Production Costs = growing, harvesting, hauling,
delivering finished product by rail, barge or truck usually accounts for over 15% of the
final costs of ethanol and biodiesel;
      Ethanol Soy Diesel Production Costs Severely Tied to Petroleum Costs—as
petroleum and natural gas costs go up so does the cost to produce ethanol and soy diesel.
In addition fertilizer is produced from natural gas;
      Animal Feed Production = 40% of Capital Costs: animal feed is usually valued
at $150--$200/Ton and the cost invested in equipment to dry-down this animal feed
usually accounts for 40% of the capital cost of a plant;
      Only Two Products Are Produced: Both ethanol and soy diesel plants offer no
value-added processes or technologies. They simply produce ethanol or soy diesel and
animal feed;
     
        Ethanol has 100% affinity for Water: It can not be transported via pipeline to
the refineries; therefore it is expensive to deliver. In addition, there are fewer refineries
today with not a single new refinery having been constructed within the past 30 years.
What is needed is smaller, decentralized refineries;
     
        Ethanol plants have extremely high water requirements: In a world where
water supplies and usage is and will become of major import. In addition, ethanol plants
have no water recycle capabilities. For example, a 100 million gallon ethanol plant will
utilize about the same amount of water on a daily basis as a city with a population of
10,000, or over 400 million gallons of water per year. In Iowa, the largest ethanol
producing state in the U.S., ethanol plants currently utilize 7% of the state’s water
capacities, and this is expected to increase to 14% within the next five years. These
ethanol plants also produce as much as 13 times the amount of salts which are permitted
by EPA laws. In Iowa 11 of the state’s 34 ethanol plants have been fined by the EPA and
there were 276 violations of sewage spills into waterways. In an article entitled:
―Biofuels Crops Could Drain Developing World Dry‖ by Charlotte Defraiture, she argues
that “biofuels will increase the demand for agricultural land at the expense of natural
eco-systems, and, put pressure on already stretched water resources, where over 1.2


                                             14
billion people live in water scarce areas. Unless other, less water-intensive, alternatives
for feedstock are considered, biofuels are not environmentally sustainable. It is high time
discussions of biofuel production put green energy into a blue context, and took water
issues into account.
      Organic Farms. Farms participating in MBR processing will become organic
farms. This could be of major import to starving underdeveloped nations where a switch
to organic farming could help such nations reduce their dependence upon importing food
for survival. The market for organic foods now exceeds $40 billion worldwide in 120
countries. It is shown to minimize pollution and optimize the health of plants, animals
and people.



4.     Renewable Esters: The Next Generation of Hybrid Biofuels

So is it possible to produce biofuels which are total replacements for all petroleum-based
fuels, e.g. diesel fuel, gasolines, aviation fuels, jet fuels, or home heating fuel oil? Unlike
current biofuels which are based on ethanol, soy diesel, canola or jatropha diesel, the next
generation in biofuels will be based on the economical production of higher forms of
alcohols and esters produced wholly from renewable resources such as grains, biomass
and algae. For example, n-butanol (bio-butanol), and ethanol can be esterified to form an
ester as the reaction product. (Esterification is the general name for the chemical reaction
in which two chemicals—typically an alcohol and an acid.) Esters are common in
organic chemistry and biological materials, and often have a characteristic pleasant, fruity
odor. This has led to the extensive use of such esters in the fragrance and flavor industry.
Esterifications are among the simplest and most often performed organic transformations
where organic biochemicals called carboxylic acids such as butyric, propionic, lactic,
acetic, succinic, and stearic acids which may also be fermented from grains and biomass
are mixed with alcohols such as ethanol or butanol to form esters.

Transesterifications also often involve mixing vegetable oils with acids and bases to form
trans-esters such as biodiesel. One of the first uses of transesterified vegetable oil was to
power heavy-duty vehicles in South Africa before World War II. The name ―biodiesel‖
has been given to transesterified vegetable oil to describe its use as a diesel fuel and was
trademarked in the U.S. by this author in 1985. The current author also received a U.S.
patent on the fuel entitled: ―Diesel Fuel by Fermentation of Wastes‖ in 1983 which was
based upon the mixture of bacterially produced oil and bio-butanol. In the 1940’s
Colgate researchers were seeking a better method of producing glycerin from vegetable
oils for use in explosives in World War II, and biodiesel was produced as a by-product.
Colgate received a patent on this process though the process had been used for many
years to produce a substitute for diesel fuel. Many of the method used today by modern
biodiesel and home brewers have their origins in this 1940’s research.

In addition there is scientific evidence that such trans-esters may be produced through
novel catalytic reactions which do not require the use of temperatures or pressures, thus
lowering the energy requirement during their production. There is also new evidence that
these new trans-esters have superior fuel traits over conventional ethanol or butanol fuels,


                                              15
thus such trans-esters can be used to produce superior new ―hybrid biofuels‖ which have
superior fuel qualities over conventional ethanol, biodiesel or petroleum-based fuels. For
example, these new biofuels will produce no SOX; eliminate NOX and carbon monoxide
emissions when burned as fuels. In addition, these new biofuels will have ―0‖ affinity for
water so that it can be transported via pipeline, and they will have RVP’s of 7.2 versus
7.3 for MTBE, making these new ―hybrid biofuels‖ qualified for year-round use in hotter
climates, such as California and Arizona. These new ester-based hybrid biofuels will
have octane numbers as high as 113, or they can be engineered to have high cetane
numbers of 60 or higher (60 or higher eliminates NOX in fuel emissions) and, they are
produced wholly from renewable resources.


5.     The Mini-Biofuels Refinery Technologies

These new mini-biofuels refinery technologies are here now. They are not dependent
upon the next breakthrough in ligno-cellulosics, now considered by experts to be 6 years
away. They utilize crops containing high levels of ―free sugar‖ which require little or no
hydrolysis. Sugars in these crops merely need to be ―squeezed out‖ and can be readily
fermented into alcohols and biochemicals. These feedstocks do not require ligno-
cellulosic breakdown and subsequent hydrolysis (conversion to sugar) via enzymes,
acids, cooking, and pressures.

According to the California Energy Commission sweet cane sorghum (not to be confused
with grain sorghum or Milo—a distant relative) could become the nation’s leading energy
crop if its seasonality problem could be overcome. This seasonality issue is caused
because of the free sugar content of sweet cane sorghum. Once the crop is cut, it starts to
degrade within hours, and up to 50% of the sugar content is lost within a few days
through ―wilting‖. MBR technologies have solved this seasonality problem which will
allow the use of sweet sorghum year-round in almost any climate. This will lead to the
advent of an entirely ―non-corn‖ new energy crop which can be used in the production of
biofuels and energy throughout the agriculture sector nationwide, and worldwide. Sweet
sorghum is a member of the switch grass family and grows in almost every region of the
U.S. and world due to its drought resistance, low water and fertilizer requirements.
Because of its high ―free sugar‖ content, approximately 850 gallons of ethanol or bio-
butanol can be produced per acre versus 350-400 gallons per acre per year from corn.

Other biomass feedstocks can also be processed in mini-biofuels refineries including
jatropha, soybeans, canola and rapeseed as well as food wastes such as grape, tomato,
potato, olive and vegetable wastes. These are high sugar and oil containing feedstocks.
There is enough food and agricultural waste generated annually in the U.S. which if
converted into these new hybrid ester-based biofuels, enough biofuels could be produced
to completely replace petroleum-based diesel, jet and aviation fuels. Diesel fuel usage in
the U.S. exceeds 33 billion annual gallons per year.

5.1 Bio-Fuels Production From Grains: Corn, Soy, Rice, Canola, Jatropha



                                            16
From grains (corn, soy, rice) value added products can be produced which serve to lower
the feedstock cost of the grain when used in the production of biofuels. According to the
USDA these feedstock costs can range as high as 50-75% of the total cost of producing
ethanol or bio-butanol. As an example, a new product called corn protein isolate (CPI) is
projected to be worth between $6,000--$10,000 per ton versus the protein from ethanol
(distillers grains of DDGS) or soy diesel plants is worth only about $100 per ton.

The single largest cost in producing renewable fuels, ethanol or bio-diesel, from corn or
soybeans, is the cost of the feedstock, which, according to the USDA accounts for as
much as 40--50% of the total production cost, including any by-product credits for
distiller’s grains. Average corn ethanol production costs are now projected at $0.60 per
gallon with feedstock costs estimated at 60% of that cost, or $0.36 per gallon. Experts
have recognized that if grains and biomass are ground much finer, at the micron level, the
cooking and steeping of the grain in sulfite acids can be eliminated and this can result in
the downstream recovery of much higher valued foods and nutraceuticals rather than
animal feed from such grains. Essentially the surface area of the grain or biomass is
increased by as much as 3,000—5,000 times that over traditional grinding techniques.
This then also allows for the recovery of grain feedstock costs via the production of
value-added products, leaving the waste carbohydrates to be converted to bio- fuels and
hydrogen at a greatly reduced cost over traditional ethanol refineries. The production of
these value added products can substantially lower the capital and production costs of
producing renewable fuels and energy by as much as 50%. For example, the protein
produced as animal feed from ethanol and soy diesel plants is valued at about $100--150
per ton. The protein isolates produced by this ―micron-grinding‖ technique can be valued
at $6,000--$10,000 per ton. This ―micron-grinding‖ technology is the key technology
which allows for the downscaling of grain and biomass processing to biofuels via the
Mini-Biofuels Refinery or MBR concept.

5.2    Higher Valued Products Produced By MBR‘s and Their Economic Impact

MBR technologies allow for the production of much higher valued products in
conjunction with the production of ethanol and biodiesel. For example, using patented
USDA technologies in conjunction with micron-milling technologies allows for the
recovery of the protein from corn into a 90% pure protein isolate extract will have a value
of $6,000--$10,000 per ton versus $100 per ton for distillers’ grains. Through the use of
other proprietary technologies, such as the value-added products of PLA, PHA, resistant
starches, higher quality oils, fluffy fiber cellulose, n-butanol and biochemicals, and more,
can be more readily adapted to the MBR refinery. Combined these technologies can
bring a net value to the bushel ranging as high as $44--$250 per bushel. These
technologies therefore can serve to significantly reduce the costs of producing such
biofuels by as much as 50% simply by removing the cost of the feedstock within the
economic equation of biofuels production. In addition, these technologies are produced
using modular, smaller-scale equipment in biofuel plants estimated to cost from 5-10% of
the cost of traditional ethanol or soy diesel plants and which are capable of producing
volumes of biofuels ranging from 500,000 gallons to 10 million gallons per year.



                                            17
This unique concept of bio-refineries is referred to as Mini-Biofuels Refineries (or
MBR’s). These MBR’s can be added to new or existing ethanol or biodiesel plants or
employed in stand alone biorefineries which can dot the agricultural sector serving as
biotechnology clusters to attract jobs and economic growth throughout agricultural
sectors worldwide. When these technologies are employed to conventional ethanol or
biodiesel plants, it is estimated that a net value of almost $4.00 per bushel of corn can be
recovered through the production of such value-added products, which is well over the
current cost of corn (now at about $4.00 per bushel). In addition, such technologies will
recover the food value from the kernel in advance of ethanol production, thus helping
solve the moral issues surrounding the use of food (corn) for fuel purposes.

In addition, these novel MBR technologies have been successfully adapted to the
processing of sweet (cane) sorghum, soybeans, brown rice, and to grape and citrus
pomace and new technologies have been developed to preserve such crops, including
sweet cane sorghum so that it can be used year-round as a feedstock for the production of
ethanol and bio-butanol. Such technologies could be used in conjunction with sugarcane
ethanol plants thus allowing them to operate year round (currently such plants in South
America operate during the harvesting seasons, or for 4-6 months). These novel MBR
technologies utilizing new corn hybrids, food wastes and sweet cane sorghum
technologies, will allow for the expansion of the production of biofuels throughout the
world.

5.3    Foods and Nutraceuticals Produced by MBR‘s

Such patented processes can then be applied to the processing of novel feedstocks such as
new hybrids of corn, rice and soy into protein isolates, essential oils, resistant starches
and fluffy cellulose. When these technologies are employed in Mini-Biofuels Refineries,
they produce much higher valued added products from the bushel which may be used for
foods and nutraceutical applications in conjunction with the production of biofuels. In
essence, the production of biofuels becomes a waste treatment process. These new food
and nutraceutical products have superior nutrition and functionality and they contain
higher levels of natural phytochemicals or antioxidants. Other co-products include
special essential oils which can lower cholesterol, blood sugar levels as well as Statin
drugs such as Lipitor, yet these oils are all natural. In addition, resistant starches can be
produced which are non-digestible and will help lower the caloric content of many food
products. In addition, special fibers can be converted into fluffy cellulose.

Leading USDA scientists believe that these products could revolutionize the food
industry and they have never before been available to the food industry because they have
been heretofore ―cooked‖ and ―steeped away‖ due to the use of archaic technologies now
practiced by the grain milling industries, which technologies have not been substantially
improved upon for hundreds of years. Now with newer approaches to grain processing,
the inherent nutraceutical benefits which have heretofore been locked away in such grains
are now available to mankind for the first time.




                                             18
Today consumers are becoming increasingly aware of the dietary diseases related to
obesity, diabetes, coronary, and strokes and our foods and their nutritional content are
becoming suspect as the primary contributors to these problems. In the 70’s and 80’s
supplementing diets with protein meant bodybuilding, but today, consumers are giving
credence to having higher quality protein in diets with the increasing demand for milk,
soy, rice and casein proteins. This has caused the demand for functional foods to
increase to $25 billion per year (2006) with this market expected to top $39 billion within
the next five years. There are also new food proteins and nutraceuticals which can be
produced during the MBR process which could have a significant positive economic
impact on the production of biofuels. These include the following:

     Corn Protein Isolates. These are new proteins isolate form corn which can be
used in foods for protein fortifications. They will allow for higher quality proteins to be
incorporated into food systems without adversely affecting the taste, mouth feel or odors
of such products because these protein isolates are tasteless and odorless, and, they will
reduce caloric content and boost the nutrition and digestibility of foods into which they
are added.

    Nutraceutical Proteins. Corn Protein Isolates are shown to behave, as
"nutraceuticals" (foods that act like medicines) where preliminary tests show that they
can lower blood pressure, lower blood sugar, and cholesterol levels, thus helping to
combat dietary related diseases of obesity, diabetes, coronary, stroke and cancer.

     Protein Functionality. These new corn protein isolates are highly functional,
exhibiting exceptional functional properties equal to or superior to high costing animal-
based proteins such as egg-whites, milk proteins and milk caseinates or soy proteins. In
functionality tests, such as emulsion properties, fat binding, whipping and foaming tests,
it was equal to or superior to such animal proteins. Food formulators seek such traits in
food additives and supplements.

     Phytosterols. These are plant compounds which have been shown to lower bad
or LDL cholesterol and are found in unrefined vegetable oils, whole grains, nuts and
legumes. They have also been linked to a decrease in cancer incidents. They are now
used extensively in salad dressings and magarines.

    Resistant Starches. Resistant starches are resistant to digestion in the human
body and can be added to cereals, pastas, soups, breads, donuts, cookies to reduce caloric
content without sacrificing the taste, mouth feel or texture of such products.

     Fluffy Cellulose. A novel product called fluffy cellulose can be produced from
corn, soy or rice fibers which are 100% fiber but contain little or no lignin, the substance
which causes high fiber content products to become heavier and brown and even gritty.
Fluffy cellulose can impart the opposite effect in foods thus allowing for higher levels to
be incorporated into many food products, ranging from meats, hamburgers, sausages,
pastas, pizzas, ice-cream mixes, and drinks. Higher fiber content has been shown to



                                            19
lower cancer in the digestive tracts and its incorporation into foods has been shown to
lower the caloric and fat content of foods without affecting mouth feel.

      Natural Organic or Bio-chemicals. The entire petro-chemical industry is a $1.5
trillion annual industry, which is about three times larger than the petroleum fuels
industry in the U.S. In our world today, there are some 75,000 petroleum derived
chemicals. Only about 5,000 of these have actually been studied for their potential
adverse effects on the environment. Many of these chemicals are used in food processing
or as food additives themselves. For example, hexane, a highly toxic and dangerous
solvent produced from petroleum, is used to extract vegetable oils from corn, soy,
sunflower seeds for use in margarines and spreads, salad dressings and condiments.
These products contain parts per million of this toxin usually left-over. This toxin is
highly carcinogenic and has been shown to cause cancer. It is also of concern that such
toxins may build up in human body tissues and fats over periods of time. Other
petroleum derived chemicals such as butyric, propionic and acetic acids are used as food
flavorings, preservatives and in pharmaceuticals. Propionic acid is used worldwide as a
preservative in bread dough. All of these additives can be produced from natural,
renewable resources, from fermentation of carbohydrates, and, as a result do not contain
left-over petroleum dregs or toxins. Another chemical, n-butanol, is used in the
manufacture of butyl-rubber compounds for the production of plastics, paints for auto
lacquer finishes, neoprene, styrofoam plastics and is produced from petroleum. This
product contains parts per million of petroleum toxins which escape into the atmosphere
when this produce is used. Some 400 million gallons of n-butanol is used in the U.S.
annually and perhaps ten times that amount globally each year. This product can also be
produced as an all-natural organic product by fermentation of carbohydrates which does
not contain left-over petroleum toxins to pollute the environment. All of these products
and many other similar bio-chemicals can be produced as higher valued by-products from
MBR’s.

5.4    New Corn Hybrids

One of the interesting aspects about MBR’s is the ability of adapting MBR’s to a wide
variety of novel feedstocks, e.g. food wastes, sweet cane sorghum, canola, jatropha,
algae. One of these feedstocks is a new novel corn hybrid which is all natural and is
comprised of many ancient and lost traits reintroduced into the corn genome base by the
U.S. Department of Agriculture. The use of corn dates back to the ancient Mayans, Incas
and Aztecs in South America where corn was grown in higher mountain terrace regions
by the Mayans. Aquaculture and vegetable growth occurred in the lower terraces which
lived off the grain wash downs, and the fish muck was hauled back to the higher terraces
using elaborate pumping systems and applied as fertilizer to the corn crop growing in the
higher terraces. Corn was worshipped by the Mayans as their most important god, the
―Corn God‖ and their entire economies and very subsistence were based upon corn. Left-
over traits from some of these ancient maizes are found in the blue and red kernel Indian
corns of today. These ancient maizes, however, contained all sorts of natural traits, some
were perennials; some grew 18 feet tall; some had extremely high levels of protein (28%
vs. 8% in modern day corn). Through modern science, it is now known that some of


                                           20
these ancient civilizations were indeed vegetarian and corn was their main staple because
its protein quality and nutrition was comparable to milk or meat proteins. Unfortunately,
modern day agronomic giants have sacrificed these traits in exchange for mass yields for
sugar, starch, oils and animal feed and now ethanol purposes. The proteins have largely
been ignored and are basically ruined during the cooking and steeping processes
rendering them no longer fit for human consumption. It is estimated that if this protein
could be salvaged for human consumption rather than denatured for animal feed uses, it
would be enough protein to feed over 100 million starving people annually.

Now through modern-day visionary scientists such as Dr. Norman Borlaug, the 1970
Nobel Laureate and head of the World Food Prize, who worked in Mexico gathering
thousands of samples of these lost grains and maizes from ancient Indian ruins, many of
these traits are available to us today. And, other visionary scientists of the U.S.
Department of Agriculture have been working over the past 18 years on a special all-
natural non-genetically engineered (non-GMO) program to re-introduce many of these
lost traits back into modern day corn hybrids. The basic premise of this special program
was based upon the hybridization (non-GMO) of such ancient maizes with tripsacum
grass (from the prairie grass family), which is from the same family of sweet cane
sorghum and switch grass. The traits of tripsacum include drought resistance, abilities to
grow on arid or semi-arid, less fertile lands with little water and fertilizer requirements,
resistance to corn borer to name a few. And, when hybridized (non-GMO) with ancient
maizes and regular corn, revolutionary new and all natural corn hybrids have become
available.

In 2006, 20% of the total U.S. corn crop grown on 8.6 million acres went into ethanol
production. If the 40 million acres set aside for conservation acres and an additional 30
million for reserves were diverted to ethanol production, this would increase ethanol
production by almost 800% or to about 40 billion annual gallons, or up to about 45% of
total imported petroleum fuels.

5.5    New ―Heart Healthy Corn‖ or ―Neutraceutical Corn Hybrids‖

Following are some of the traits, including the most important nutraceutical traits of these
new hybrids. Nutraceuticals are defined as ―foods that act like medicines‖ which help in
the fight against dietary related diseases such as coronary, stroke, cancer, diabetes,
obesity.

5.5.1 All Natural—Non-GMO Hybrids. These new corn hybrids are all natural and
have not been genetically altered through GMO processing.

5.5.2 Greater Nutritious Protein Levels. They contain 500% higher protein levels
with greater nutritious over regular corn. The nutrition of this protein is comparable to
milk or meal proteins having protein efficiency ratios of 2.5 or higher. In values, this
protein could be worth from $8,000--$100,000 per ton (e.g. value of milk protein
caseinates are at about $4.00 per pound) versus animal feed at $100 per ton.




                                            21
5.5.3 Nutraceutical Proteins. Corn protein isolate has been shown to act like ACE
Inhibitors by neutralizing enzymes in the kidneys which raise blood pressure. They have
been shown to offset the onset of Alzheimer’s and act as a natural anti-inflammatory
agent in the brain. In mice studies, corn protein isolate has been shown to substantially
lower blood sugar levels, triglycerides and exhibit anti-carcinogenic traits in the
bloodstream due to high levels of anti-oxidants.

5.5.4 Higher Essential Oil Content. These new corn hybrids contain 50% higher corn
oil content over regular corn.

5.5.5 Higher Phytosterols. These new oils have been shown to contain higher
phytosterol content. Phytosterols can help in combating diet related diseases.

5.5.6 No Transfats. This new essential corn oils have no transfats usually created
during processing.

5.5.7 High Oleic Corn Oil Content. The corn oil has over 300% higher oleic acid
content, 70.1% vs. 22.9% in regular corn. This high oleic corn oil is comparable to olive
oil in quality and nutraceutical traits. In comparative studies against Statin drugs, these
new high oleic oils were more effective at reducing LDL (bad) cholesterol without
reducing HDL cholesterol over Statin drugs, yet these new oils are all-natural and exhibit
no adverse side effects as do the Statin drugs. Statin drugs usually sell for $50,000 per
pound. In addition, this new oil has been shown to lower blood sugar level for diabetic
applications. This new oil also has a much higher smoke point than olive oil. When
olive oil smokes during frying or cooking due to its lower smoke point, its nutraceutical
traits are compromised. In addition, when these special ―heart healthy oils‖ are used in
salad dressings, mayonnaises, spreads, even ice creams, they can substantially increase
the shelf-life of these products for years. The value of these new high oleic could
approach $100’s--$1,000’s per pound and each bushel of these new hybrids contain about
three pounds of these heart friendly oils.

5.5.8 Natural Resistant Starches. These new corn hybrids contain naturally resistant
corn starch, meaning its starches are resistant to digestion and therefore will not
contribute to caloric content of foods such as soups, whippings, toppings, desserts, ice-
creams, pastas, breads, donuts, candies, etc.


5.6    Impact of Heart Healthy Corn Hybrids on Ethanol and Biofuels Production

What have these new ―nutraceutical hybrids‖ got to do with biofuels production? Plenty!
By utilizing such new ―heart healthy‖ corn hybrids many higher valued food and
nutraceutical co-products can be produced upstream of the biofuels processes. This
allows for the recapture of the feedstock costs, usually many times over with feedstock
costs usually 40-50% of the total cost to produce ethanol. Perhaps even more
importantly, the use of such ―nutraceutical hybrids‖ will take the food value out of the




                                            22
biofuels production equation. Thus, the cost of ethanol will no longer be tied to the cost
of the bushel.

Then, if the agronomic conditions related to growth and propagation of these new hybrids
is considered, a whole new global opportunity could unfold that could lead to every state,
region and country expanding into the production of corn for biofuels purposes, and do
so, without expanding the use of petroleum, and without sacrificing food for fuel, and
probably more important provide a means for underdeveloped regions to produce their
own high quality foods.

It is estimated that a bushel of these special hybrids of corn can become worth from $40--
$250 per bushel in net value before the production of biofuels.


5.7    Advantages of MBR Technologies

Similar to the way "mini" steel mills have come to dominate the giant steel industry or
micro-breweries the brewing industry, or the personal computer has miniaturized the
computer processing, the next monolithic industries remaining to be miniaturized are the
grain and fuel industries. These industries (including ethanol and biodiesel) are poised
for revolution. A patented technology that adapts advanced pharmaceutical ―precision‖
micron-milling technology to grind grains and biomass up to 5000 times smaller than is
currently practiced can be the key. This technology eliminates the need to cook and steep
grains (and biomass) in acids for days to refine them. As a result refining costs of
cooking, steeping, distilling can be significantly reduced and proteins, sugars, starches,
and other components are not degraded during the process resulting in the production of
much higher quality products. By applying this smaller-scale MBR technology,
economies of scale can be achieved in relatively small-scale plants, resulting in the
commercial viability of "Mini-Industrial Bio-Refineries" (MBRs) which can be located
near to where the crops or biomass is grown or is available.

5.8    Benefits of MBR Technologies

The main benefit of this new technology is its ability to produce higher quality, value-
added products, such as revolutionary new food and nutraceutical proteins, and,
revolutionary new biofuels and additives from renewable resources. There are seven
major benefits offered by unique MBR technologies. They are as follows:

    1.     Corn, soybeans, rice (and biomass such as sweet cane sorghum) and food
wastes can be separated into protein, oil, starch and fiber under conditions so mild that
the values and integrity of these products are protected during processing with little
degradation.

    2.    The MBR Process will be economical and competitive at relatively small
scale. Economies of scale will be achieved in much smaller units, compared with
conventional technology that requires large-scale operations to be economic. This feature



                                           23
avoids the need for the very large centralized corn-processing facilities that have
characterized the corn-processing industry for hundreds of years or for larger biomass
processing facilities. Small units will facilitate quick entry into regional markets at
relatively low capital cost. Small units can be widely distributed, minimizing
transportation costs of feedstocks to the MBR. This will allow for the response to
emerging trends in the industry that will favor smaller-scale operation.

    3.     The identity of food quality products can be preserved and guaranteed, from
field to mouth, through such small-scale technology. MBR’s can respond to the
emerging need in the food industry to identity preserve quality food products.
Conventional large-scale processors of corn cannot control and audit the origin of the
many shipments of grain that enter their plants from innumerable sources, hundreds of
miles away. The small-scale competitiveness of the MBR process will allow the flow of
raw material and product to be governed over the entire quality chain. For example, on
demand, the MBR Process could guarantee the delivery of non-genetically-modified
(non-GMO) or organic protein, oil, starch and fiber characteristics to the food industry,
and supply these qualities at premium prices.

    4.      The MBR technology will also positively impact the economics of producing
other by-products including alternative alcohol fuels, biodiesel and biodegradable
plastics, potentially making these technologies competitive with petroleum products.

    5.      The MBR Technology will allow for the construction of stand-alone "Mini-
Biofuels Refineries" throughout the agricultural sector to produce higher valued food and
renewable fuels and energy such as hydrogen. This will serve to decentralize the supply
of electrical power as well and help usher in the ―hydrogen highways‖ of tomorrow.

     6.     The MBR technology will allow for the production and local consumption of
not only the biofuel and energy products produced from the MBR’s, but also the food
products produced from each MBR. Therefore, MBR’s will not depend upon far away
commodity markets but on localized ―farmer markets‖ for the sales of its high quality and
all natural products.

   7.      The MBR technology will allow for the preservation and recycle of precious
water supplies during the production of food and biofuels.


In summary, the benefits of MBR units are as follows:

    MBR‗s Are Small Scale. Five to ten percent of conventional ethanol, grain
operations--easier to finance--less capital investment--constructed in shorter period of
time;

    MBR‘s Produce Higher Valued Products. For example, corn protein isolate
can be worth $6,000--$10,000 per ton vs. animal feed at $150/ton—net value/bushel =
$45 per bushel—can be continuously expanded to produce additional valued products;


                                           24
     MBR‘s Can Process Multiple Grains. simultaneously, corn, soy, rice, canola,
jatropha and energy crops such as sweet sorghum, grape pumice, vegetable wastes, citrus
and biomass can be processed to produce multitude of products based on market
conditions;

     MBR‘s Are Vertically Integrated. from the field to supper table, from grain, to
fertilizer, to biofuel, to the products and by-products produced: nutraceuticals, foods,
ethanol, bio-diesel, hydrogen, electrical power, biofuels, aquaculture, hydroponics all
become vertically integrated processes;

    MBR‘s Use No Petroleum or Natural Gas. Hydrogen is a waste by-product and
can be used to produce electrical power through hydrogen fuel cells, making MBR’s
energy self-sufficient;

    MBR‘s Can Identity Preserve Products. GMO, Non-GMO, organic grains and
products and the identity there from are preserved through MBR processing;

     MBR‘s Can Create Economic Development. MBR’s can bring higher paying
technical jobs back to communities through ag-manufacturing. This will bring new
economic development opportunities that will restore the agricultural economic base that
will simultaneously assist our country (and all other countries) in becoming energy self-
sufficient;

     MBR‘s Can Be Added to the Front-End of Existing Ethanol or Soy diesel
Plants. MBR’s can bring value added to existing ethanol and soy diesel plants that
normally will produce only ethanol or soy diesel and animal feed. Through MBR
processing a host of value-added products, including corn, soy protein isolates, specialty
food oils and fiber, resistant starches, bioplastics, hydrogen, electrical power, aquaculture
and hydroponics can be produced, e.g. corn protein isolate is valued at $6,000--$10,000
per ton versus $75 per ton for DDGS. It is estimated that MBR processing can net as
much as $40 per bushel of corn processed before production of ethanol begins and this
can substantially escalate depending upon the final value of the nutraceutical co-products
produced during the MBR process.

     MBR‘s can reduce and preserve water supplies. MBR’s will allow for total
recycle of water during biofuels production.


5.9    Projected Sizes and Costs of MBR Units

Depending upon the feedstocks processed, some MBR units that will process food
processing wastes can cost as low as several million dollars and produce several hundred
thousand gallons of ―green biodiesel‖. MBR units that process grains can cost as low as
$10-15 million, and sweet sorghum $10=15 million. The return on investment for these
facilities can range from 50—150%, even 200% per year. In addition to n-butanol, each


                                             25
MBR unit can produce approximately 400,000 therms of hydrogen energy per year (per
one million gallons of butanol produced), or enough energy to supply the plant with
internal electrical power with excess power supplied to the grid. In addition, other locally
available feedstocks can be used which sometimes are free for the collection, such as
food wastes such as grape pomace, citrus peel, tomato, potato, onion wastes, as well as
other oil seeds, such as soybeans, canola, sunflower, jatropha and algae, all of which can
be converted into ethanol, biodiesel, biochemicals and hydrogen in co-located MBR’s.
The ideal and preferred MBR size is estimated at $15-20 million and each can be
upscaled from there to handle a host of different feedstocks.


5.10   Impact of MBR Technologies on Developing Nations

In a recent article, World Bank President Paul Wolfowitz stated that the World Bank
intended to pursue investments in agriculture in rural developing nations by going back to
the bank’s roots in agriculture which it had gotten away from. He further stated that
three-fourths of the world’s poor reside in rural developing countries where investments
in agriculture are effective at alleviating poverty and stimulating economic growth where
every $1 in rural income has 3-4 times the effect of alleviating poverty as each $1 of
urban income.

What is needed in rural developing nations are the technologies which rely upon
localization of the production of food and energy through vertical integration of the
production of the crops for the MBR, all the way from the field to the supper table and to
the production of energy and fuels. Developing nations need food and fuel (energy) for
survival, just as all mankind requires these essentials. MBR’s can offer these
opportunities at a smaller scale. With over 18,000 children dying daily due to starvation
and malnutrition and 850 million total people going to bed each night with hunger and
malnutrition, ―This is a terrible indictment of the world in 2007,‖ according to the UN’s
World Food Program based in Rome. And, along with such opportunities, many jobs can
be created, both skilled and unskilled, and this will lead to healthier environments and
true ―localized‖ economic development. Every product produced from the MBR’s will
have local markets, from the high quality food protein nutraceuticals, to the biofuels, to
electrical power and energy, to aquaculture and hydroponics, even bioplastics and
biochemicals.

The issue, however, is that there must be water sources, and these water sources must be
protected as ―fountains of life‖, and they must be utilized for farming purposes, and then
recycled. MBR’s can do that. In addition, though currently the preferred sizes of
MBR’s will be at about $10-15 million each, it is foreseeable in the future through
continued research that this price can come down even lower, making MBR’s more
adaptable to even more remote regions of the globe. The goal would be to establish one
initial economic phase of the MBR (for example the food and nutraceutical technologies)
and then continue to add-on thereafter.




                                            26
6.     N-Butanol as a Renewable Fuel

6.1      History of Butanol Use as a Biofuel.
N-butanol is a higher form of industrial alcohol usually produced as a by-product of the
petro-chemical cracking process. It can also be produced by soil bacteria that ferment
wastes. During the Battle of Britain when petroleum supplies were cut-off by German
blockades, England relied on the fermentation of n-butanol for survival. Because of its
near petroleum-like qualities and versatility, it was used to power England’s planes,
jeeps, tanks and even as heating oil during the perils of the war, thus saving England from
defeat. A young Jewish scientist, Dr. Charles (Chaim) Weizman, a former student of
Louis Pasteur, discovered many of these uses while a student at Manchester University
and Oxford, and obtained over 40 patents for its industrial and fuel uses. (As a note:
because of his contributions to the war effort, Churchill selected Dr. Weizmann as the
first President of the modern state of Israel.)

6.2    Superior Fuel Qualities of N-Butanol

     N-butanol contains four carbons versus two carbons for ethanol. N-butanol also
has 4 additional hydrogen atoms over ethanol, resulting in a higher hydrogen energy
output in hydrogen fuel cells. Butanol is safer to handle and has an RVP of 0.33 pounds
per square inch versus gasoline at 4.5 and ethanol at 2.0 psi. This also results in the safer
storage of hydrogen, a problem associated with the infrastructure of hydrogen supply.
With hydrogen as a waste by-product of the butanol fermentation processes, MBR
networks will be able to supply hydrogen to localized fueling stations anywhere in the
U.S. where biomass or grains may be grown;

    N-butanol also contains almost 90% of the BTU value of gasoline versus only
60% for ethanol;

    Unlike ethanol, butanol has little affinity for water (7.8%) versus ethanol at 100%
and butanol can be blended 100% with petroleum. It is also less corrosive and less
volatile than ethanol so it can be pumped through pipelines to petroleum blenders and
pumping stations at tremendous savings;

     N-butanol also burns cleaner in internal combustion engines. Esters of n-butanol
generate no SOX, NOX or carbon monoxide which are compounds toxic to the
environment as a result of internal combustion. Butanol can be blended directly with
petroleum-based fuels in diesel fuel up to 40% and in gasoline up to 20% without engine
modifications. N-butanol is also one of the best surfactants known so that it can be
blended with ethanol, water and other organic acids to form new micro-emulsion, ester-
based biofuels. It is these ester-based fuels that are believed to have the potential to be
total replacements (or additives) for all petroleum-based fuels (diesel, jet, aviation,
gasoline, home heating, and boiler fuels). In fuel tests some of these butyl-esters were
added to regular unleaded gasoline at a 10% blend. The RVP of the gasoline fell to 7.2
(lower than the RVP of MTBE at 7.3—which meets California standards). This ester
could allow ethanol to be used in hotter climates year round. The USDA has conducted


                                             27
detailed research projects regarding the use of butanol and its esters in diesel fuel
applications.

     Hydrogen is also generated as a by-product during the fermentation of butanol
and it can easily be removed and recovered for use as heat and power. Its recovery
increases the energy yield per ton of biomass or bushel of corn by 17% over that of
ethanol. Approximately 0.6 pounds of hydrogen is generated per gallon of butanol
produced by fermentation. The hydrogen can then be converted to electrical power
through hydrogen fuel cells or burned as a heat source.

6.3       The Economical Production of N-Butanol

Though n-butanol has all of these superior fuel traits, the fermentation is very difficult to
control. Normally only about 15-20% of the sugars are fermented to butanol because of
the off-products produced during fermentation, such as ethanol and acetone. The yield of
butanol in the fermentation broth rarely exceeds 1% due to the toxicity of the butanol.
This means that almost ten times more energy is usually required to distill butanol versus
that required to distill ethanol. As a result, the recovery cost of n-butanol is very energy
intensive. The highest yield reported to date is only about 2%. With that in mind, new
butanol fermentation technologies have been sponsored that uses a patented continuous
immobilized bioreactor that produces between 4.5-5 g/l/h at yields of 40—50% or almost
400-500% greater yields than that of the traditional butanol process (the A/B/E-Acetone,
Butanol, Ethanol process). This means that almost twice the amount of n-butanol can be
produced over normal yields from a bushel of corn (1.3 to 2.5 gallons per bushel) which
is equivalent to the yield of ethanol from a bushel of corn. However, also 17% in
additional energy from the production of hydrogen can be produced per bushel of corn
which is not produced from the ethanol process.

The commercialization of this new technology through MBR technologies can reduce our
nation's dependence on foreign oil, provide decentralization of our fuel and power
supplies and help usher in the Age of Hydrogen where our MBR networks we will be
able to supply hydrogen to localized fueling stations and decentralized power to the grids
wherever grains and biomass is available.


                 Conventional-Weizman                   Advances
                                                        1 Plant produces 95% Butanol
Plants:          3 Plants: A/B/E= Acetone               1 Plant only which produces 95%
                 Butanol/Ethanol = 3/6/1 ratio = 3      n-butanol
                 plants = 60% into butanol
Yields:          28% butanol/# sugar                    45% butanol yield per lb sugar

Toxicity         1.2% and requires total sterility      4-5%--uses non-sterile solids




                                              28
Hrs/complete 48—50 hours                                6 hours, an almost 90% reduction
                                                        in time
Batch           Turn around time = 1 week               Continuous fermentation—non-
                Sterilization required                  stop—2500% great efficiency—
                                                        years of operation—4 turn overs
                                                        per 24 hours
Recovery        Distillation 99% water removed = /      Membranes 5% in 95%
                $1.50 gal                               concentration—single pass
Plant Costs     Minimum $100 Million                    $5 -- $10 million

Production      $2.50/Gallon                            < $1.00 per gallon
Costs


The advantages of such process are as follows:

   1. Cell retention. This novel technology retains the cells within the immobilized
matrix or bed;

    2. Separation of Product from Cells. The toxic end product, butanol can be
physically separated from the fermenting cells. This toxicity usually occurs at between 1-
2% concentrations of n-butanol within the fermentation broth. Yields have been
observed as high as 4% without toxicity occurring to the bacteria within this new
bioreactor. This is accomplished because the process is a continuous-flow process;

    3. High cell densities. The time period to complete the process has now been
reduce to a fraction of the conventional time of 96 hours, or down to as low as 6 hours
due to the extremely high cell densities achieved, with as much as 5% of the weight of
the bioreactor attributed to cell mass and cell counts exceeding 109. This is much higher
than any previously reported culture density studies in the literature;

    4. High cell viability. The key to high product yield is to maintain the highest cell
viability during fermentation. Cell viability measures cell mortality—the lower the
mortality, the higher the cell viability, and in this case cell viabilities range well over
1000% greater than that of free-cell viabilities. Such high cell viabilities have resulted in
smaller reactor sizes but much higher productivity. When high cell viability is achieved
along with extremely high cell densities, it is estimated that a single 10,000 gallon
bioreactor (possibly made from plastic) will have the same output as a 250,000 gallon
stainless steel batch fermenter. This will offer tremendous savings (or as much as a 95%
reduction in capital costs). As an example, the surface area within such a densely packed
bed reaches approximately 10,000 square feet per liter of volume area within the reactor,
or a 100 X 100 foot diameter space condensed into a single liter of space;

   5. Use of non-sterile substrates. This special bioreactor technology allows for the
use of non-sterile substrates, thus minimizing the cost of feedstock preparation (no



                                             29
autoclaving is necessary). The packed bed bioreactor becomes totally saturated with cells
so that no competing cells can adhere to the surface area within the bioreactor;

    6. Maximum reaction times. Use of this bioreactor packed bed reactors results in
maximum reaction times and have thus reduced the time to produce ethanol, for example,
by 85—90% or down to 5-6 hours versus 48 hours normally required. In butanol
fermentations, this time has been reduced from the normal 96 hours to 6 hours with
evidence that such fermentations can be reduced to less than 2.5 hours. Again, DNA
genetic manipulations have yet been applied to the process.

    7. Metabolic engineering and better control of fermentation reactions. The new
process easily controls temperatures, pH, flow rates, substrate limitations or excess or
extreme conditions can be induced upon the reactor allowing for exciting new metabolic
engineering to occur to achieve greater sought after results within the reactor. This
allows metabolic engineering to be conducted to ―push‖ the bacteria to accomplish better
end results, e.g. higher solvent yields, as well as minimize cell metabolism wastes. In
normal cell fermentation systems, cell metabolism and mitosis (cell division and
propagation) can account for as much as 50% of the substrate being consumed thus
minimizing the amount of end products desired. In this reactor cell metabolism falls
sharply to as low as 10% (vs. 50%), this allowing more of the carbohydrate substrate to
go towards the production of the end products, e.g. butanol.

   8. No gas bubble fouling or solids plugging. This packed bed bioreactor
overcomes solids plugging and fouling of gaseous bubbles (hydrogen and CO2), both of
which can foul and plug the bioreactor. Unlike other fermentation, this special bioreactor
can accept high solids concentrations. This overcomes decreased productivity due to the
matrix not being in contact with the carbohydrate substrate, or in other words, there is no
worry about cell undernourishment;

     9. Higher product yields. Normal butanol yields have historically been at the 1.2—
1.5% concentration in the final spent fermentation broth. In this reactor solvent yields are
increased by as much as 300—400%. The distillation point of butanol is at 243F, water
is 212F, ethanol is at 173F. Therefore, with butanol concentrations only at 1%, this
means that all the water must be boiled off before the butanol, and its boiling point is
much higher than that of ethanol. In the past 65% of the cost to produce butanol was
attributed to distillation alone; 35% was attributed to cooking and steeping (not including
DDGS processing). By increasing the amount of butanol in the spent broth to 4%, this
reduces this cost by a factor of 3-400%, or to 10-20%;

    10. Novel butanol recovery processes. The inherent attributes of n-butanol allow
for its recovery using methods that do not employ distillation. It is estimated that these
costs can be reduced by as much as 90% using new recovery techniques never before
available. These recovery techniques are currently being tested;

   11. C-5 sugar uptake. Ethanol yeast fermentations cannot currently process C-5 or
pentose sugars. Thus when corn stover or fiber is processed, from 20-30% of the sugar



                                            30
substrate goes unused or is wasted. N-butyl processes are able to process these sugars
efficiently into n-butanol. This, along with reasons previously cited, means that almost
twice the amount of n-butanol can be produced over that normally produced from a
bushel of corn (1.3 to 2.5 gallons per bushel) which is equivalent to the yield of ethanol
from a bushel of corn, but butanol is valued at over twice that of ethanol (or over $4.00
per gallon as a fine chemical).

The commercialization of this new fermentation technology is one example of novel
technologies which can be applied to MBR’s to reduce the world’s dependence upon
foreign oil thus providing a decentralization of biofuel and power supplies and help usher
in the Age of Hydrogen where MBR networks will be able to supply new, novel
―designer biofuels‖ and hydrogen to localized fueling stations and decentralized power to
the grids wherever grains and biomass are available.

7.     Status/Business Strategy/Competitive Advantages/Market Opportunity

These technologies have been successfully operated and proven at the pilot plant level.
In order to commercialize these technologies, a scale-up of the technologies in pre-
commercial beta-site operations is required, which is expected to take from 6-9 months at
a cost approximating $5 million. During these beta-site phases, samples will be provided
to the marketplace and process design and instrumentation engineering studies will be
completed. After which commercial stand alone MBR units can be constructed, or add-
ons made to planned or existing ethanol or biodiesel plants. These will be turn-key
commercial MBR plants that will demonstrate the efficacy of these technologies using
the following feedstocks: corn, soy, rice, sweet sorghum and jatropha to produce
biodiesel, hydrogen, nutraceuticals, biochemicals, and aquaculture products there from.
In addition, turn-key operations can be co-located adjacent to food processing operations,
e.g. vegetable, grain, citrus, grape, olive, tomato, etc.

     Potential partners for the novel food and nutraceutical proteins and oils include
food cooperatives, food companies, e.g. baking, sports and health, nutraceutical,
nutritional beverage, snack-foods and confectionery segments;

    Potential partners in the fuels and industrial sectors include: grain cooperatives
and growers, fuel ethanol, soy diesel, electrical power generators, refineries, plastics and
chemical companies, hydrogen fuel cell companies, vegetable and citrus processors,
wineries and breweries, are all likely joint venture candidates;

     Strategic regional or country-wide joint venture investors or strong corporate
partners are needed as exclusive partners to bring the MBR technologies into such
regions in joint ventures. In connection with these arrangements, and because of USDA
involvement in the development of such technologies, such technologies require a joint
venture investment in the U.S. prior to exportation of its technologies to foreign regions.


8.     A General Discussion of the Superior Fuel Traits of Bio-butanol


                                            31
Bio-butanol has four carbons and ten hydrogen atoms, whereas ethanol as two carbons
and six hydrogens; methanol one carbon and four hydrogens. Therefore, bio-butanol has
twice the carbon and 40% more hydrogen than ethanol. This then equates to over 25%
greater energy per bushel of grain or per ton of biomass over ethanol.

Bio-butanol is produced by bacterial fermentation of carbohydrates from corn, grains,
biomass, food wastes, agricultural wastes and other biomass, including ligno-cellulosics.

Bio-butanol has a lower Reid Vapor Pressure (RVP) at 0.33 psi and therefore is safer to
handle than ethanol or gasoline, which have a psi of 2.0 and 4.5 respectively.

The RVP of bio-butanol esters are lower than MTBE (methyl tertiary butyl ether), which
is the most effective petroleum derived gasoline additive used to lower RVP to 7.3, which
meets California standards, the strictest in the nation. RVP’s (Reid Vapor Pressure) of
some ethyl and butyl esters are shown to be as low as 7.2. RVP measures the rate of
evaporation of a fuel, the higher the RVP the more volatile and more likely the fuel is to
contribute to air pollution.

TABLE 1
Ethyl Esters as Gasoline Octane Providers
                                    RON1     MON2 (R+M)/2 Reid Vapor Pressure
Base Gasoline (BG)                  91.0     83.0 87.0        8.6
90% BG/10% Ester A                  93.8     84.7 89.2        8.0
90% BG/10% Ester P                  93.6     84.5 89.0        N/A
90% BG/10% Ester B                  93.6     84.8 89.2        7.2
1   Research octane number.
2   Motor octane number.

Bio-butanol is an alcohol that can be blended in much higher ratios with fossil fuels (20%
in gasolines and up to 40% in diesel fuel without engine modifications) butyl esters
(mixtures of butanol with organic acids, ethanol/water and smaller amount of vegetable
oils) can be used as total replacements for gasoline, diesel, aviation and jet fuels. CO2
and water vapor are the combustion by-products of Bio-butanol and its esters.

Bio-butanol and its esters is far less corrosive than ethanol and can be shipped and
distributed through existing pipelines and filling stations because it has limited affinity
for water.

Bio-butanol solves the safety problems associated with the infrastructure of the hydrogen
supply. Reformed Bio-butanol has four more hydrogen atoms than ethanol, resulting in a
higher energy output when used as a fuel in hydrogen fuel cells.

Bio-butanol is an industrial commodity in paints, lacquer finishes, butyl rubber
compounds for tires and neoprene and in plastics manufacturing with a market in the U.S.
for almost 400 million annual gallons and a market outside the U.S. for almost twice that
amount at selling prices of approximately $4.00 per gallon.



                                            32
Hydrogen generated during the Bio-butanol fermentation process is easily recovered,
increasing the energy yield of a bushel of corn by an additional 17 percent over the
energy yield of ethanol produced from the same quantity of corn.

Bio-butanol can be produced from many types of biomass and can be readily fermented
from C-5 sugars. Most biomass has high levels of such pentose or C-5 sugars, for
example, corn has up to 17% C-5 sugars. Ethanol normally does not make use of such
pentose sugars. This means 15-30% more biofuel can be produced from biomass in the
form of Bio-butanol versus ethanol. There is abundant biomass present in low value
agricultural by-products such as distillers’ grains or soybean meals or even food
processing wastes which require substantial capital and energy costs to dry-down or
dispose of which usually results in pollution penalties. In addition there are some 240
million metric tons of municipal solid wastes which if converted to biofuels could
completely replace the use of petroleum diesel fuel in the U.S. annually. There is also
some ten million tons of low valued distillers’ grains generated by the gigantic corn
refining industry annually, enough to produce about 4 billion gallons of bio-butanol
annually, almost equaling the amount of current ethanol produced annually in the U.S.
from corn.

9.     THE OLD WORLD WAR II ABE FERMENTATION

Acetone Bio-butanol ethanol (ABE) fermentation by Clostridium acetobutylicum is one
of the oldest known industrial fermentations. Production of industrial Bio-butanol and
acetone via fermentation, using Clostridia acetobutylicum, started in 1916, during World
War I. Chaim Weizman, a student of Louis Pasture, isolated the microbe that made
acetone. England approached the young microbiologist and asked for the rights to make
acetone for cordite. Up until the 1920s acetone was the product sought, but for every
pound of acetone fermented, two pounds of Bio-butanol were formed. A growing
automotive paint industry turned the market around, and by 1927 Bio-butanol was
primary and acetone became the byproduct.

The production of Bio-butanol by fermentation declined from the 1940s through the
1950s, mainly because the price of petrochemicals dropped below that of starch and sugar
substrates such as corn and molasses. The labor intensive batch fermentation system's
overhead combined with the low yields contributed to the situation. Fermentation-derived
acetone and Bio-butanol production ceased in the late 1950s.

In the 1970s the primary focus for alternative fuels was on ethanol -- people were
familiar with its production and did not realize that dehydration (a very energy-
consuming step) was necessary in order to blend it with fossil fuels. Nor did we realize
the difficulty of distribution, since ethanol cannot be transferred through the existing
pipeline infrastructure. The selection of ethanol, a lower-grade, and corrosive, hard-to-
purify, dangerously explosive, and very evaporative alcohol is the result. Ethanol is still
subsidized by the government, since it is not profitable enough to compete with gasoline.
Over the past 30 years, this very energy-intensive and petroleum dependent ethanol
process has increasingly gained the attention of the world, though it is only a ―stop-gap‖



                                            33
solution to our energy starving world. And, today, there is grave concern over the use of
grains for fuel versus food. In Iowa, for example, with the 55 ethanol plants now online
or shortly to go online, 100% of the corn crop will be used in the production of ethanol.
This leaves little for livestock and poultry production. This comes at a time when grain
reserves are the lowest in almost 35 years, yet the US. has 76 million additional people
dependent upon grains for food, and the U.S. currently supplies over 70% of the world’s
corn supply to overseas countries.

The butanol fermentation process is one of the largest biotechnological processes ever
known. The actual fermentation, however, is very complicated and difficult to control
and the ABE fermentation declined continuously since the 1950’s with all Bio-butanol
now produced via petrochemical routes. Bio-butanol is an important industrial solvent
and potentially a better fuel extender than ethanol. Current Bio-butanol prices as a
chemical are at $4.00 per gallon with an annual increased demand worldwide of about
5% per year. This market demand is expected to increase dramatically if green Bio-
butanol can be produced economically from low cost biomass.

In a typical ABE fermentation, butyric, propionic, lactic and acetic acids are first
produced by C. acetobutylicum, the culture pH drops and undergoes a metabolic
―butterfly‖ shift, and Bio-butanol, acetone, isopropanol and ethanol are formed. Later
fermentations were usually carried out in total aseptic and sterile conditions in million
gallon stainless steel spherical fermenters. These capital costs usually escalated the
capital costs for producing Bio-butanol over ethanol by 3-500%.

In conventional ABE fermentations, the Bio-butanol yield from glucose is low, typically
around 15 percent and rarely exceeding 25 percent. The production of Bio-butanol was
limited by severe product inhibition. Bio-butanol at a concentration of 1 percent can
significantly inhibit cell growth and the fermentation process. Consequently, Bio-butanol
concentration in conventional ABE fermentations was usually lower than 1.2 percent.

In the past 20+ years, there have been numerous engineering attempts to improve Bio-
butanol production in ABE fermentation, including cell recycling and cell immobilization
to increase cell density and reactor productivity and using extractive fermentation to
minimize product inhibition. Despite many efforts, the best results ever obtained for ABE
fermentations to date are still less than 2 percent in Bio-butanol concentration, 4.46 g/L/h
productivity, and a yield of less than 25 percent from glucose. Optimizing the ABE
fermentation process has long been a goal of the industry.

Now, new processes are available which utilize continuous immobilized cultures of
Clostridium to produce an optimal Bio-butanol solvent productivity of over 4 g/L/h and
yields of 40 percent plus or almost 150% greater yields over the old ABE process.
Compared to conventional ABE fermentation, this new process minimizes by-products
such as acetic, lactic, propionic acids, acetone, isopropanol and ethanol production. The
fermentation produces hydrogen, butyric acid, Bio-butanol, acetone and carbon dioxide,
and doubles the yield of Bio-butanol solvents from a bushel of corn from 1.3 to 2.5




                                            34
gallons per bushel. That equals or exceeds the yield of ethanol from one bushel; however,
ethanol fermentations do not yield hydrogen.

10.    THE      PRODUCTION            OF     BIO-BUTANOL           IN     MINI-BIOFUEL
REFINERIES

Bio-butanol is a pure alcohol with an energy content similar to that of gasoline (110,000
btu’s per gallons vs. 125,000), or over 90% of that of petroleum versus ethanol which has
about 60-70% of the energy of petroleum. Yet bio-Bio-butanol can be produced by
bacterial fermentation from renewable resources. Bio-butanol does not have to be stored
in high pressure vessels like natural gas, and can be blended with any fossil fuel (in
gasoline up to 20% and diesel fuel up to 40%). Esters which are mixtures of Bio-butanol,
ethanol and organic acids (also produced by fermentation), can be used to totally replace
almost all forms of petroleum-based fuels, e.g. gasolines, diesel fuels, aviation and jet
fuels. Bio-butanol can also be transported through existing pipelines for distribution due
to its low affinity for water (7.8%). Bio-butanol can also help solve the hydrogen
distribution infrastructure problems faced with fuel cell development. The employment of
fuel-cell technology is restricted by the safety issues associated with hydrogen storage
and distribution, but Bio-butanol can be very easily reformed for its hydrogen content and
can be distributed through existing gas stations in the purity required for either fuel cells
or vehicles.

Growing consumer acceptance and name recognition for Bio-butanol, incentives to
agriculture and industry, falling production costs, increasing prices and taxes for fossil
fuels, and the desire for cleaner-burning sources of energy should drive an increase in
Bio-butanol production.

Building new, smaller, turnkey mini-biorefineries (MBR’s) of 1—10 million gallons per
year located in small municipalities and surrounding farming communities would allow
newer, state of the art technologies to be adapted much quicker than traditional large
scale ethanol and biodiesel operations for the dissemination of biofuels throughout the
U.S. These local MBR’s would also allow for the clean up of local landfills. They would
also reduce the threats of any prospective disruption by terrorism, thus improving
―Homeland Security.‖ Cooperatively owned facilities would allow the agricultural sector
to employ more people and retain profits within the local economy, bringing a resulting
five fold multiplication in economic development in local areas.

In addition, our MBR Bio-butanol plants may be added to the front-end of existing or
planned conventional ethanol or biodiesel plants to bring valued-added processes and
products to such operations. In the case of corn to ethanol plant operations, the use of the
germ only would be processed through MBR units, with the endosperm allowed to go
forward through the traditional ethanol operation. This would result in about a 10-20%
greater fermentation efficiency in ethanol yields in traditional ethanol fermentation
processes.




                                             35
The production of Bio-butanol (15,500 BTU/lb. or 104,800 BTU/gallon) and hydrogen
(61,000 BTU/lb.) from biomass is not constrained by technological difficulties as is the
manufacturing of ethanol (12,800 BTU/lb or 84,250 BTU/gal). New higher-value uses for
co products (corn protein isolates, specialty oils and fibers and starches, the production of
bioplastics) are likely sources of new revenues that could reduce the cost of the
production of Bio-butanol and hydrogen. The production of higher valued nutraceuticals
and other value-added technologies, such as bioplastics, aquaculture, hydroponics can
generate from $40—100 in added value from a single bushel of corn not including the
production of Bio-butanol (or ethanol).

Recent advances in the fields of biotechnology and bioprocessing have resulted in a
renewed interest in the fermentation production of chemicals and fuels, including n Bio-
butanol. With continuous fermentation technology, Bio-butanol can be produced in much
smaller bioreactors at higher yields, concentrations and production rates.
Commercialization of this new technology has the potential to reduce the world’s
dependence on foreign oil, provide and protect electrical power generation grids and once
more bring the world back to an agricultural base to create economic development, and
finally, reduce pollution and subsequent global warming.


11       CURRENT STATUS OF MINI-BIO-BUTANOL REFINERIES

This new technology has been successfully demonstrated at the pilot plant level using
cheese whey and corn byproducts. Novel technologies to recover butanol from dilute
fermentation streams, from grape and citrus pomace and from sweet (cane) sorghum have
also been demonstrated and these technologies are currently being scaled-up in pre-
commercial beta-site operations. This beta-site operation is expected to be completed by
the end of this year (2007) with full-scale commercial operation underway by December
2008 in the U.S.

The development of a viable and economically competitive renewable energy industry
both domestically and globally could have immeasurable, long term effects upon global
economies. The standards of living could be raised throughout the world as never
before, and the impact on improving and preserving the environment of our mother will
reap countless rewards for mankind in the future.

                                        End Notes
1
    ―Transesterification‖, Wikipedia, The Free Encyclopedia, June 2007.
2
  Colin A. Carter and Henry I. Miller, ―Don’t Use Corn for Ethanol‖, The Cincinnati
Post.com, 24 May 2007,
http://news.cincypost.com/apps/pbcs.dll/article?AID=/20070524/EDIT/705240311/1003
3
  Lisa M. Hamilton, ―Ethanol Booms, Farmers Bust‖, Alternet, 25 May 2007,
http://www.alternet.org/environment/52073/


                                             36
4
 Center for Agricultural and Rural Development at Iowa State University, ―Study: U.S.
Near Tipping Point in Corn-based Ethanol‖, PR-Newswire—US Newswire, 17 May 2007.
5
  Jerry Perkins—Farm Editor, ―Ethanol Industry Growth to Slow—ISU Expert Says‖,
The Des Moines Register, 14 Nov 2006,
6
  Lisa M. Hamilton, ―Ethanol Booms, Farmers Bust‖, Alternet, May 26, 2007,
http://www.alternet.org/environment/52073/.
7
  Jad Mouawad, ―US: No New Refineries in 29 Years‖, New York Times, May 9, 2005,
http://www.corpwatch.org/article.php?id=12227.
8
  Editors, ―Big Oil, the Government, and Little Old Us‖, The Journal Times, May 25,
2007, http://www.journaltimes.com/nucleus/index.php?itemid=13217.
9
    CNN News broadcast, 18 May 2007
10
   DOE Announcement, 28 Feb 2007, ―DOE Selects Six Cellulosic Ethanol Plants for Up
to $385 Million in Federal Funding‖, http://www.energy.gov/news/4827.htm.
11
  Gerhard, Knothe, et.al. Reprint No. 7742: "Cetane Numbers of Fatty Compounds…
[Vegetable Oils]", 1997.
12
   Ilan Brat and Daniel Macalaba, ―Can Ethanol Get a Free Ride—As its Popularity
Increases, Railroads, Producers Strain to Get the Biofuel to Market?‖, Wallstreet Journal,
01 Feb.2007, Page B1.
13
   Perry Beeman, ―Water Use: Biofuel Plants’ Thirsts Creates Water Worries‖, Des
Moines Register, 03 June 2007,
http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20070603/BUSINESS01/70603
0323/1029/BUSINESS.
14
   Perry Beeman, ―Water Quality: Wastewater Often Pollutes Rivers‖, Des Moines
Register, 03 June 2007,
http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20070603/BUSINESS01/70603
0322/1029/BUSINESS.
15
   Charlotte DeFraiture, ―Biofuel Crops Could Drain Developing World Dry‖,
SciDev.Net, 10 May 2007,
http://www.scidev.net/gateways/index.cfm?fuseaction=readitem&rgwid=2&item=Opinio
ns&itemid=607&language=1.
16
  Nicole Winfield, ―Switch to Organic Foods Could Help Poor‖, UN Conference On
Organic Agriculture and Food Security--Rome, ATT Dailynews.net, 05, May 2007.




                                           37
17
  Sammy Mayfield Pierce, ―Bio DieselTM Fuel‖, Reg. No. 1,311,911, Registered 01 Jan
1985, First Use: May 1981; in commerce: May 1982.
18
  Sammy Pierce and Morris Wayman, Inventors, ―Diesel Fuel By Fermentation of
Wastes‖, U.S. Pat. No. 4,368,056, 11 Jan 1983.
19
     ―Bio-Diesel‖, Wikipedia, The Free Encyclopedia, June 2007.
20
  Edwin S. Olsen, Ted R. Aulich, ―Chemicals and Fuels Processing in a Fast Conversion
Biorefinery‖—Grant Proposal to the U.S. DOE, University of North Dakota Energy and
Environmental Research Center, 22 May, 2000.
21
 Bill Blackburn and Pat Perez, ―Evaluation of Biomass to Ethanol Fuel Potential in
California‖, California Energy Commission, Dec 1999, pages IV-4-5.
22
   I.C. Anderson, ―Ethanol from Sweet Sorghum‖, Iowa State University, Aug 2000,
http://www.energy.iastate.edu/renewable/biomass/cs-anerobic2.html.
23
  Neil Hohmann and C. Matthew Rendleman, ―Emerging Technologies in Ethanol
Production‖, USDA, Jan 1993, page 2.
24
  Missy Ryan, ―Biofuels Lure U.S. but Agreement on Cost Elusive‖, Reuters, 08 Nov
2006.
25
   Kyle Bradley, ―The Protein Boom‖, Natural Product Insider, May 07, 2007,
http://www.naturalproductsinsider.com/articles/07may07feat2.html
26
  Editors, ―The New Protein On The Block‖, Food Product Design Magazine‖, Sept
2004.
27
     Ibid.
28
  Li, Li-Hsin, ―Physical, Chemical, and Functional Properties of Novel Corn Protein
Isolate—Masters’ Thesis‖, Dept. Food Sciences, Louisiana State University, Fall
Commencement, Dec. 1997.
29
  Kerry A. Dolan, ―Revving up Nature’s Engines—Never mind drug breakthroughs,
suddenly biotech is thriving down on the farms‖, Innovation, July 24, 2006.
30
     ―Mayan Maize‖, Wikipedia, The Free Encyclopedia, June 2007.
31
 Todd Seavey, ―Penn Jillette Interviews Dr. Norman Borlaug: Man Who Fed The
World‖, 14 Aug 2006, http://www.manwhofedtheworld.com/home.htm.




                                            38
32
   Luis Pons, ―Heart-Friendly Corn Oil? New High-Oleic Corn Varieties Make It
Possible‖, USDA/ARS Agricultural Magazine, Aug 2003,
http://www.ars.usda.gov/is/AR/archive/aug03/corn0803.htm.
33
  David Plumenthal, Cornell University and Mario Giampietro of the Istituto Nazionale
della Nutrizione, Rome, ―Food, Land, Population and the U.S. Economy‖, November 21,
1994, http://dieoff.org/page40.htm.
34
  USDA’s National Agricultural Statistical Service, ARS-2004, Report, Dairy and Eggs
Report (see www.usda.gov/nass/pubs/ agr0404_ch8.pdf..
35
   Luis Pons, ―Heart-Friendly Corn Oil? New High-Oleic Corn Varieties Make It
Possible‖, USDA/ARS Agricultural Magazine, Aug 2003,
http://www.ars.usda.gov/is/AR/archive/aug03/corn0803.htm.
36
  Robert L. Thompson, Michel Petit, Csaba Csaki, ―World Bank Returning to Its
Agricultural Roots‖, World Bank Release, International Food and Agricultural Trade
Policy Council, 20 Oct 2005; Page A15
37
     Ibid.
38
  Ezeji, T.C., Qureshi, N., Blaschek, H.P., “Production of Acetone-
Butanol-Ethanol (ABE) in a Continuous Flow Bioreactor Using Degermed
Corn and Clostridium Beijerinckii”, Process Biochemistry, 03 Jan 2007,
42:34-39.

39
  Edwin S. Olsen, Ted R. Aulich, ―Chemicals and Fuels Processing in a Fast Conversion
Biorefinery‖—Grant Proposal to the U.S. DOE, University of North Dakota Energy and
Environmental Research Center, 22 May, 2000.
40
 Perry, et.al., ―Comparison of Ethanol, Methanol, Butanol, Gasoline, Diesel Fuels‖,
Chemical Engineering Handbook—5th Edition.
41
  Edwin S. Olsen, Ted R. Aulich, ―Chemicals and Fuels Processing in a Fast Conversion
Biorefinery‖—Grant Proposal to the U.S. DOE, University of North Dakota Energy and
Environmental Research Center, 22 May, 2000.
42
 Sammy Mayfield Pierce, ―The Coming Age of Renewable Fuels and Energy‖, THE
THIRD INDUSTRIAL REVOLUTION, www.energeneticsusa.com.
43
  John Mooallem, ―Unintended Consequences of Hyperhydration‖, NY Times, 27 May
2005.




                                          39
Glossary
p.1

        ―Transesterification‖—the chemical addition of an acid, usually a mineral acid
such as hydrochloric or sulfuric acid, or a base, such as sodium hydroxide (NaOH) to a
vegetable oil or triglyceride oil such as soy, corn, canola, jatropha, algae oils which
precipitates glycerin as a by-product and yields a longer chain fatty mixture which can be
used as an additive in bio-diesel or as a total substitute for diesel fuel.

       ―Ligno-cellulosics‖—woody or fibrous material composed of lignin, the most
abundant organic compound on earth and is a complex polymer which confers
mechanical strength (―hardness‖) to cell walls of plants, and, cellulose, wood fibers.
Lignin usually comprises from one-fourth to one-third of the weight of wood or fiber.

        ―Corn stover‖—usually consists of the stalk, leaves and shucks of the corn plant
left over after harvest. It is the single largest known source of low-cost cellulose in the
U.S. due to the vast U.S. corn crop of some 100 million acres planted each year in the
U.S.

p.3

        ―Bushel‖—a mass measurement (rather than volume) usually of grains or
agricultural products. A bushel of regular no.2 corn usually weighs 56 pounds.

1 kg = 2.205 pounds
1 bushel = 56 pounds, 56/2.2 kg/lb = 25.45 kg
1 pound = 453.59 grams/1000 grams/kg = 0.4535 kg
1 ton = 2000 pounds/2.2 kg/lb = 909.1 kg
909.1 kg/25.45 kg/bu = 35.7 bushels

        ―Subsidies and fuel tax credits‖—in the U.S. and many foreign countries,
governments are granting subsidies and fuel tax credits to producers and blenders of
biofuels. In the U.S. ethanol now carries a $0.51 per gallon federal tax credit which is
granted to the blender. The producer also receives $0.10 per gallon producers’ credit.
This is usually realized through a reduction in taxes paid by the blender or producer at the
end of the year. Biodiesel fuel producers receive a $1.00 per gallon federal credit.
Subsidies are considered necessary in order to allow biofuels to be competitive to petro-
based fuels.

p. 6

       ―Bio-butanol‖—a name given to n-butanol, a higher form of alcohol which can be
produced naturally by bacterial fermentation of carbohydrates rather than from the petro-
chemical cracking process. All butanol is currently produced from petroleum.


                                            40
p.8

        ―Nutraceuticals‖—refers to foods which claim to have a medicinal benefit on
human health. ―Nutra‖ usually refers to nutrition and ―ceuticals‖ is derived form
pharmaceuticals or drugs. Some of these health claims include lowering of blood
pressure, blood sugar levels, blood-serum cholesterol, triglycerides, all of which could
help in the war against dietary related diseases such as coronary, stroke, arteriosclerosis,
etc. Nutraceuticals sometimes are called functional foods.

p.9

        ―Octane‖ number—measures the likelihood of engine knock. The higher the
octane, the less engine knock. Engine knocking usually results in less fuel burning and
efficiencies.

       ―Reid Vapor Pressure‖ or ―RVP‖—measures the volatility and tendency of a fuel
to evaporate. Evaporation is usually higher in hotter, higher temperature climates.
Higher RVP numbers usually contribute to air pollution.

       ―Cetane‖ number—measures the tendency of a diesel fuel or additive to combust.
Usually the higher the cetane number the higher the quality of the diesel fuel.

        ―MTBE‖—made of methanol, tert-butanol and ether, is an oxygenate used to
increase the octane number of motor fuel gasoline’s. It has since been banned in many
states because it has been found to contribute to ground water contamination. It is a
carcinogen.

       ―NOX‖—a highly reactive toxic gas made up of nitrogen and oxygen usually
emitted by automobiles and utilities and seen as the reddish brown layer of air over urban
areas. NOX contributes to ground level ozone, a major contributor to SMOG.

p.10

       ―Free Sugar Feedstocks‖—feedstocks which contain ―free‖ or liberated or
unbound sugars which may be readily fermented or recovered. Ligno-cellulosic sugars
are usually chemically bound up and not readily available for fermentation without costly
recovery methods.

p.11

       ―Carbohydrate Tree or Economy‖—a term used which compares the many and
varied products which may be produced from natural renewable sources, such as grains,
biomass, food wastes, ligno-cellulosics which can lead to the total replacement of the




                                            41
―petroleum tree‖ of products and petroleum-based economy, thus lead to the advent of
the ―Carbohydrate Economy‖.

        ―Organic farming‖—a form of agriculture which avoids or largely excludes the
use of synthetic fertilizers and pesticides, plant growth regulators, and livestock feed
additives. As far as possible organic farmers rely on crop rotation, crop residues, animal
manures and mechanical cultivation to maintain soil productivity and tilth, to supply
plant nutrients, and to control weeds, insects and other pests. According to the
international organic farming organisation IFOAM : "The role of organic agriculture,
whether in farming, processing, distribution, or consumption, is to sustain and enhance
the health of ecosystems and organisms from the smallest in the soil to human beings."
Approximately 31 million hectares (75 million acres) worldwide are now grown
organically.

        ―Nano-technologies‖—a field of applied science and technology covering the
control of matter on a sub micron level. A nano-meter is 1/billionth of a meter, whereas a
micron is 1/millionth of a meter. This field cuts across many disciplines including
chemistry, physics, material sciences, mechanical and electrical engineering where major
advances are occurring in these fields.

p.14

        ―Esters‖— a class of chemical compounds formed in a condensation reaction
between an alcohol and an acid in a reaction known as esterification. Volatile esters often
are used in perfumes, essential oils, and pheromones and sometimes have fruity smells.
Esters are used as solvents, fats and lipids and polyesters.

p.15

       ―Distillers’ Grains‖ or DDGS —the fiber product left over after ethanol
production from corn which is normally used for animal feed. It usually contains about
30% protein which has been rendered unfit for human consumption.

       ―By-product credits‖—a term used to give value to left-over products, e.g. DDGS
are usually assigned a credit towards the economic value of the ethanol process.

       ―Protein isolates‖—The USDA applies this term to purified proteins extracted
from grains, milk, egg-whites, etc. An isolate is usually defined as a protein having a
minimum of 90% or above protein purity.

       ―Micron-grinding‖—a term usually applied to the fine grinding of materials at the
micron level. A micron is 1/millionth of a meter, or about 1/00th size of the human hair.
Normal grinding of grains usually occurs at the 25,000 microns. In this instance, micron-
grinding usually refers to grinding at the 1-200 micron level or some 100-1000 times
smaller.




                                            42
P.16
        ―Biotechnology clusters‖—clusters of proximate geographically located and
interconnected companies and industries offering cellular and biomolecular products,
services, supplies and information from universities and trade associations to solve
problems in the fields of agricultural, biofuels, bioenergy, bioplastics and materials,
foods, nutraceuticals and pharmaceuticals industries.

       ―Phytochemicals‖—sometimes are referred to as phytonutrients, are chemicals
and nutrients derived from plants that have a beneficial effect on health or combating
diseases in man. Many believe that many of the diseases afflicting man are the result of
the lack of phytonutrients in the diet, sometimes due to the over processing of foods.
They have been shown to promote the function of the immune system, act directly
against bacteria and viruses, reduce inflammation, and help in combating cancer,
cardiovascular disease and any other maladies affecting the health or well-being of an
individual.

       ―Antioxidants‖—substances that may protect cells from the damage caused by
unstable molecules known as free radicals. Free radical damage may lead to cancer.
Antioxidants interact with and stabilize free radicals and may prevent some of the
damage free radicals otherwise might cause. Examples of antioxidants include beta-
carotene, lycopene, vitamins C, E, and A, and other substances.

       ―Statin drugs—Lipitor‖-- The statins are pharmaceutical drugs used to lower LDL
(bad) cholesterol levels in people with or at risk for cardiovascular disease. They lower
cholesterol by inhibiting enzymes in the liver that form cholesterol. Lipitor is one of the
leading statin drugs used for this purpose.

        ―Fluffy cellulose‖—a 100% fiber (cellulosic) product which has had lignin
removed either through mechanical or chemical means. The less lignin, the more pure
the cellulosic fiber becomes. In USDA trials, cakes actually N


P. 17
         ―Caseinates‖ or ―milk caseinates‖-- are milk proteins produced from skim milk by
usually adding acids to precipitate the casein protein from the whey. The precipitated
casein is then washed with water and resolubilized with alkali or alkaline salt to form
products like sodium and calcium caseinates. These products are then used to protein
fortify many foods and offer food designers high solubility, low viscosity, clean flavor,
excellent emulsification capacity, high fat and water-binding capacity and freeze-thaw
stability. They are then used in coffee whiteners, cream liqueurs, baked goods, dry mix
beverages, soup mixes and comminuted meats.

       ―Phytosterols‖—are plant-derived compounds or esters similar to cholesterol
which have been shown to inhibit the absorption of bad LDL cholesterol in humans.




                                            43
       ―Natural organic or Biochemicals‖—natural chemicals produced by living
organisms, such as yeasts, bacteria, etc.

        ―Neoprene or Styrofoam plastics‖—plastics produced through the use of butanol
based solvents which act as a plasticizer in the production of many petroleum-based
plastics.

P. 19
     ―Tripsacum grass‖—a grass which grows in clumps in wetlands, is a relative of
gamma grass and the wildflower.

      ―Anti-inflammatory‖—medications used to treat inflammations, and mild to
moderate pain and fever.

P.20

         ―Transfats‖—is made when manufacturers add hydrogen to vegetable oil--a
process called hydrogenation--to increase shelf life and flavor stability of foods.
Transfats are found in vegetable shortenings, some margarines, crackers, cookies, snack
foods, and other foods made with or fried in partially hydrogenated oils. Unlike other
fats, the majority of transfat is formed when food manufacturers turn liquid oils into solid
fats like shortening and hard margarine. A small amount of transfat is found naturally,
primarily in some animal-based foods. Transfat, like saturated fat and dietary
cholesterol, raises LDL cholesterol that increases your risk for coronary heart disease.
Americans consume on average 4 to 5 times as much saturated fat as transfat in their
diets.

       ―High oleic corn oils‖—has a fatty oleic acid content averaging above 50 percent
compared to about 28 - 37 percent for normal corn. Corn oil with elevated levels of oleic
acid provides desirable properties related to both health benefits and stability
characteristics. Because it is a monounsaturated fatty acid, high concentrations of oleic
can lower blood levels of cholesterol.


        ―LDL (bad) cholesterol‖— Low-density lipoprotein is the major cholesterol
carrier in the blood. If too much LDL cholesterol circulates in the blood, it can slowly
build up in the walls of the arteries feeding the heart and brain, forming plaque, a thick,
hard deposit that can clog those arteries leading to atherosclerosis and heart attacks. High
levels of LDL reflect hear disease, and that is why it is called ―bad‖ cholesterol.

       ―HDL (good) cholesterol‖--One-third to one-fourth of blood cholesterol is carried
by HDL. Medical experts believe HDL removes excess cholesterol from plaques and thus
slows their growth, and thus is known as ―good‖ cholesterol.

       ―Resistant corn starch‖—starch which is not digested in the human intestinal
track. Many nutritionists think it should be classified as fiber. It is believed to prevent


                                            44
bowel cancer and in playing a role in lowering blood cholesterol. It may also help in
weight loss. It appears that the RS changes the order in which the body burns food.
Usually carbohydrates are used first, but when RS is present, dietary fat is oxidized first
into energy before it has a chance to be stored as body fat. Studies suggest that including
foods high in RS in your daily diet may help with weight management.

P. 23
        ―Therms‖—a term used to measure 100,000 BTU’s of electrical power.

P. 27
       ―Immobilized matrix or bed‖—a container or reactor which is usually packed
with a matrix or support substance to increase the surface area within such container or
bed, and thus increase the density of micro-organisms adhering to such surface area and
within such bed or reactor.


P. 28

        ―Metabolic engineering‖— the practice of optimizing genetic and regulatory
processes within cells to increase the cells' production of a certain substance. Metabolic
engineers commonly work to reduce cellular energy use (i.e., the energetic cost of cell
reproduction or proliferation) and to reduce waste production. Producing beer, wine,
cheese, pharmaceuticals, and other biotechnology products often involves metabolic
engineering. Metabolic engineering can be useful in industry to reproduce or proliferate
cell growth and division more rapidly given the same amount of carbon compound
substrate, thus resulting in a greater industrial efficiency, e.g. more gallons per bushel or
ton.

P.29
       ―Designer biofuels‖—a term used to refer to new types of biofuels made up of
various natural organic mixtures which give such biofuels unique new traits, such as
higher octane, higher cetane, lower NOX and PPM emissions.


P.30
        ―PSI‖—pounds per square inch.

        ―Ethyl esters‖—a mixture of ethanol and organic acids such as ethanol + acetic
acid = ethyl acetate, an ethyl ester.




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