Facing The Challenge Of Change
Bruce Rastetter, CEO of Summit Agricultural Group, has deep roots in the Midwest and the ag industry. With a background in farming and ethanol production, both domestically and abroad, Rastetter has a resume like few others. He shares his story with Ethanol Producer Magazine, covering his experience in agriculture and ethanol along with his recent endeavors into carbon capture and sequestration as well as sustainable aviation fuel. The common thread running through Rastetter’s reflections on agriculture and the renewable fuels industry is the importance of change and the “transformative” potential of low-carbon products.
Raised on a 300-acre farm in Alden, Iowa, Bruce Rastetter has deep roots in the agricultural world. In the 1980s, when he went to college, farming was a tough business. “I was going to become a lawyer, always intended to, started law school after I didn’t want to do that, came back, and wanted to farm, got involved in some different ag businesses, and I started selling feed[.]”
After founding Summit Farms in 1990, Rastetter expanded his interests and entered the pork industry, founding Heartland Pork four years later. The company reached over a million hogs per year before it was sold in 2004. He entered the renewable fuels industry by forming Hawkeye Renewables, completing a 60 MMgy ethanol plant in Iowa Falls, Iowa, in 2003. The initial plant and expansion was followed by three 120 MMgy plants across Iowa, becoming the third largest ethanol producer in the nation at the time. Hawkeye Renewables made it through the 2008 financial crisis before being sold to Koch Industries in 2011.
Freed up by the sale, Rastetter visited Brazil and decided to move forward with developing a corn-based ethanol plant there. Summit Ag opened Brazil’s first corn ethanol plant in 2017. Since then, Summit has built two more plants in the country, together the three produce a total of 550 MMgy, utilizing second-crop corn as their feedstock. The company’s experience with RenovaBio, Brazil’s national biofuels policy, helped it get acquainted with carbon scoring, having gone through the process to rate its plants’ carbon sustainability scores.
“We’re understanding the challenges of the U.S. industry,” Rastetter says. “Because agriculture has been my life and everything about it is really important to me—[the] markets and how we have a viable Midwest economy[.]” In response to these challenges and primed with the company’s understanding of a carbon scores, Summit Ag launched Summit Carbon Solutions, a company aiming to build carbon capture and sequestration pipeline that would move CO2 emitted from ethanol plants to permanent storage deep underground in North Dakota.
Doing Good Business
Throughout his years as an entrepreneur, Rastetter has developed some key principles by which he makes investment decisions. One of those principles is having partners with integrity and sound business practices. “You can’t get everything in a contract, you have to have people with integrity to do business with,” Rastetter says.
Some of the good businesspeople Rastetter has worked with over the years include Dave VanderGriend, CEO of ICM Inc., and Harry Stine, founder and owner of Stine Seeds. “I’ve done business with Harry for 25 years, and a handshake is always his word. I think you first start with that; [try] to do business with the best people,” Rastetter says.
A knowledgeable and adaptive team allows Summit to stay on top of new opportunities, such as Summit’s recent SAF venture. In May 2022, Summit announced plans to build an SAF plant using Honeywell’s alcohol-to-jet technology.
“Be honest and do business … that’s kind of the guiding principle we try to have here,” he says. “And we try not to be the smartest guys in the room, but know the smartest guys in the room, and then make common sense business decisions, hopefully, and try to do what’s right.”
Throughout his time in the biofuels industry, Rastetter has seen a lot of changes. One of them being the shift from ethanol being seen as a non-toxic replacement for MTBE to an octane enhancer in fuel, while at times being pulled into the food-versus-fuel debate as ethanol started to take up a larger percentage of the nation’s gasoline pool. As he reflects on his career, he explains that he has seen both good times and hard times. “For me, one of the best experiences was having a successful company, one of the hardest was going through tough times,” Rastetter says. “Whether it was 9-cent hogs, a 50-year low in 1998—which wasn’t any fun—to ethanol prices plummeting because of both supply and demand during the financial crisis of 2008.”
The lesson he learned from going through those tough times was that the industry needs to grow and develop new markets to weather those situations, which are hard on plants, investors, community members and corn prices.
Expanding Markets
One of Summit Ag’s projects that has been garnering attention throughout the Midwest is the Summit Carbon Solutions pipeline. The CCS project would put net-zero ethanol production within reach, lowering each participating plant’s CI score by roughly 32 points. Covering nearly 2,000 miles and crossing five states, Summit’s pipeline would have the capacity to move 18 million metric tons of CO2 per year from ethanol plants to North Dakota for sequestration deep underground. Since inception in 2020, the project has partnered with 34 plants representing 22 ethanol companies across the Midwest, most of which have CI scores in the 60s. Sequestration of CO2 coming from fermentation would lower ethanol’s CI score by about 32 points. With the addition of post combustion and sequestration, which lowers the score by another eight points, a 40-point overall reduction is possible.
This pipeline would give ethanol producers “line of sight” on net-zero or ultra-low-carbon ethanol, allowing the industry to have a lower carbon footprint than electric vehicles. “They won’t be able to do that if the pipeline doesn’t go in the ground. But if we do, we have a whole new world that could get opportunities for agriculture and biofuels,” Rastetter says. “And that, in my mind, [will be] really transformative by creating generational wealth in rural America, and you know, frankly that’s what we care about.”
Rastetter explains that Summit wanted to have a variety of plants across the pipeline footprint as well as diversity in the sizes of different facilities. “I don’t think there’s anything that I’ve ever done in my life that will be more transformative to ag than this,” Rastetter says. “And I think one of the messages that we try to send when we speak publicly or talk privately—saying the same thing—is that I’m not here to debate climate change. But I think agriculture [and] biofuels have [always been about] accessing new markets and responding to consumer demand.”
This pipeline could provide a significant boost for ethanol producers and farmers alike since it would open up new market opportunities for ethanol and its feed coproducts. Agriculture and biofuels have always tried to respond to consumer demand, and the CCS pipeline is a way to respond to the worldwide demand for sustainability. It would also enable the ethanol industry to compete with electric vehicles, lifting “all boats” in the agricultural world through higher commodity prices.
Both farmers and ethanol producers would be able to produce more if there was a market for it, Rastetter says; however, they have been limited by the risk of oversupplying the market. The ethanol industry is currently competing over a 15 billion gallon market. However, with carbon reduction technology, ethanol producers could access the 50 billion gallon SAF market, which when accounting for the conversion rate, would require 75 billion gallons of ethanol. The CCS pipeline could usher in a “golden era” of agriculture, Rastetter believes. With lower carbon ethanol, there is more potential for the ethanol industry to make SAF, which would make it possible for the ethanol industry’s growth to accelerate and benefit farmers. With the recent addition of ethanol producers Absolute Energy and NuGen Energy, Summit Carbon’s pipeline will impact nearly 45 million acres of farmland with these benefits, Rastetter explains.
Reflecting On Markets
Rastetter discusses the relationship between ethanol producers and farmers, as well as the importance of efficiency and sustainability to the future of both industries. He has seen firsthand the value the ethanol industry offers to grower profits. “[Nearly two decades ago], I had a farmer in Iowa Falls, Iowa, tell me that in 30-some years of farming he only had two years that were profitable without government subsidies, prior to 2004,” Rastetter says. “And since then, the only real government subsidy we have, [maybe excluding what’s there for] some smaller crops, is federal crop insurance. And the reason for that is profitability driven by the market demand [built by domestic ethanol production].”
Every producer on Summit’s pipeline may be able to sell its ethanol for 35 cents per gallon more because of sequestration, which would allow the plants to pay farmers a dollar more per bushel and still be able to break even, Rastetter explains. Each producer has plans to expand 15 to 25 percent when Summit gets its needed permits and constructs the pipeline.
A cleaner environment is the benefit of pursuing greater efficiencies, allowing farmers to access new markets while making more with less. Embracing sustainability also empowers farmers to access markets they couldn’t before and improve the market overall. “We have to lower those carbon scores for us to attain those new markets,” Rastetter says. “And to me that’s critical, and why we feel so passionate that we have to succeed with Summit Carbon or this industry’s going to struggle.”
He is concerned that if change is not accepted, U.S. agriculture will be left behind international competitors. Since American farmers cannot double-crop like Brazilian farmers, they need to “create value” with their singular crop. “And I think, with that, you have to embrace the change that allows you to attain new markets, because if you don’t, the world will leave you behind quickly,” Rastetter says. “And … that’s the biggest thing that strikes me.”
Agriculture has an opportunity to move forward and increase the overall corn crop up to 20 or 25 billion bushel crops, Rastetter believes. He believes that it could be a similar development to what happened when corn production and prices rose in the 2000s. Farmers with more money are able to invest in newer and better technologies, and farm equipment companies will jump to make new equipment for farmers to buy. “We’ll be producing a hundred bushel soybean per acre instead of 50,” he says. “We will produce everything more productively and with less nutrients, because of improvements in the root system of the plant or the timing of nutrient application.”
Although Rastetter believes the Summit Carbon pipeline will help the environment, he sees access to new markets as equally important. “And that’s what will drive wealth creation in agriculture if we do that,” Rastetter says. “We don’t have to return to the days of setting ground aside or thinking we all have to go [to] electric vehicles, that’s crazy.”
For Rastetter, accepting change and the value of decarbonization is vital to the health of the agriculture industry. “I think if you know the world is changing and you embrace it and you find a way to work within those markets, your life is going to be better, your community is going to be better and your companies will be better,” Rastetter says. “And it’s challenging.”
Source Link: https://ethanolproducer.com/articles/facing-the-challenge-of-change
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