Domestic Fuel

The Soybean Checkoff has helped grow the biodiesel industry to where it is today and they want to ensure continued growth by ensuring the quality of the product. To that end, the checkoff-funded National Biodiesel Board has formed the National Biodiesel Accreditation Commission (NBAC), which developed and implemented a voluntary industry quality-control program known as BQ-9000. The United Soybean Board sent a release out about it this week providing information about the program. (link to release)
Quality standards in the BQ-9000 program are based on the American Standard for Testing and Materials (ASTM) D-6751 Specification for Biodiesel Fuel (B100, 100 percent biodiesel) Blend Stock for Distillate Fuels. ASTM specifications are used to ensure the quality standards of petroleum diesel, gasoline and even ethanol. Americans rely on these specifications every day and now that same confidence can be found in biodiesel carrying the ASTM D-6751 standard.
“We strongly encourage all biodiesel manufacturers to become accredited by participating in the BQ-9000 program,” says NBB Chairman Darryl Brinkmann, a soybean farmer from Carlyle, Ill. “This will help ensure fuel quality and the great engine performance that I and the millions of other diesel users have come to expect from biodiesel.”
There is a website for the program – bq-9000.org – where marketers can get more information.
There was a pre-conference session devoted to BQ-9000 at the recent National Biodiesel Conference in San Diego. Here is a link to stories on the Biodiesel Conference Blog that include an interview with Leland Tong of Marc IV Consulting, which is helping to coordinate this program

Tuesday’s USA Today had an article on how expensive E85 is compared to full fledged gasoline or 10 percent ethanol blends that might have given some ethanol proponents heartburn. But, it is indeed a fact that E85 currently does cost more in most areas unless the retailer chooses to make it less expensive for promotional reasons. And the article rightly notes that the main reason for the higher price has been higher demand driven by refiner needs for ethanol to replace MTBE. And the article also rightly notes that E85 has about 72 percent as much energy as conventional gas. So, the conclusion is that if gas costs $2.286 per gallon, the price of E85 should be 72 percent of that or $1.646 per gallon. That makes sense and it’s possible that will someday be the actual case.
But, I had a little conversation about this yesterday with Tom Slunecka, executive director of the Ethanol Promotion and Information Council, who pointed out that the benefits of ethanol to the environment, to the economy and to the domestic security of the country are intangibles that add to the value of ethanol.
“Consumers need to be purchasing ethanol more on its value and less on its price. And now more than ever, they need to be committed to making a change in philosophy as to what fuel they are choosing to put in their vehicles,” Slunecka said.
And that is also true.

The Environmental Protection Agency has changed the rules requiring certain states to add oxegenates – like ethanol or MTBE – to gasoline to fight air pollution. Here’s the actual announcement from EPA made late yesterday:
In a move to provide greater flexibility in producing clean-burning gasoline to protect and improve air quality, EPA is revoking the two percent oxygen content requirement for reformulated gasoline (RFG) nationwide. The Energy Policy Act authorized the action, which reduces production burdens while continuing to protect the environment with clean fuel blends as the use of ethanol increases. Currently, about 30 percent of gasoline is RFG. The revocation takes effect nationwide on May 6 and in California 60 days after the regulation’s publication in the Federal Register.
In other words, the government is no longer going to tell refiners exactly how they have to make cleaner-burning gasoline. The new regulation implements a provision in last year’s comprehensive energy bill that did away with the oxygenate requirement – and that was in response to complaints by states that have banned MTBE because it pollutes groundwater, leaving them with ethanol as their only option.
Now, the smoggiest areas of the country in 14 states – California, Connecticut, New York, Delaware, Georgia, Illinois, Indiana, Louisiana, Maryland, New Jersey, Pennsylvania, Texas, Virginia, Wisconsin – and the District of Columbia are still going to have to meet clean air standards by using cleaner burning gasoline. They may still choose to use oxygenates, like ethanol, or go some other route.
What will this mean for the ethanol industry, since much of the increased demand lately has come from states replacing MTBE with ethanol? Likely not much, because while the energy bill eliminated the oxygenate requirement, at the same time it created a new renewable fuels requirement that calls for refiners to use four billion gallons of renewables this year, and 7.5 billion by 2012. So, as an article in USA Today states, the outlook is still bright for ethanol.

Another sweetheart of a story for the day after St. Valentine’s.
Heartland Biodiesel is the name of a group of Missouri farmer-investors planning to build a biodiesel plant in Rock Port, MO. According to an AP report, the northwest Missouri plant will cost $40 million to $45 million to build and will employ about 28 people, producing roughly 30 million gallons of biodiesel per year.
“Renewable energy – that’s what everybody’s talking about,” said Kent Fisher, of Fairfax, vice president of the group’s board of directors.
The group’s website is under construction at www.hartlandbiodiesel.com and they have no logo available as yet.

According to a Valentine’s Day press release, Xethanol Corporation, a biotechnology driven ethanol production company, announced today that despite downtime over the holiday season, ethanol production at its Iowa BioFuels plant during January 2006 reached a record 502,000 gallons. That’s basically the story in a nutshell, not much to add, except that the company is working with Harris Group engineering firm to accelerate deployment of our proprietary technologies for producing ethanol from low cost biomass feedstocks.

US BioEnergy Corp. is moving from South Dakota to Minnesota. The company has also named a new president, according to a press release issued Tuesday. Brian Thome, a Director on the Corporate Board since the company’s inception, has been named President of the Corporation. As President, Thome will primarily be responsible for building the infrastructure necessary to support the rapid growth of the ethanol company. US BioEnergy – which recently partnered with CHS, Inc. (see previous post) – decided to move from Brookings, SD to St. Paul, MN to be closer to its business partners and a larger labor pool.
In another release issued today, US BioEnergy also announced that it will be acquiring Platte Valley Fuel Ethanol located near Central City, NE. Currently US BioEnergy has two plants under construction: US Bio Albert City, a 110 million gallon per year (mgy) plant in Iowa scheduled to be on-line in November 2006 and US Bio Woodbury, a 45 mgy plant in Michigan, scheduled to begin production in October of 2006. US Bio Janesville, a 110 mgy plant located in Minnesota is in the permitting phase and will begin construction sometime this summer. With Platte Valley, this would bring US BioEnergy production to approximately 250 million gallons per year by the end of 2006.

Members of the Missouri Corn Growers Association were tickled pink on Valentine’s Day when the Missouri House Agriculture Policy Committee unanimously approved legislation to establish a statewide renewable fuel standard. The bill requires nearly all gasoline sold in the state contain 10 percent ethanol starting Jan. 1, 2008. The “nearly all” means that the legislation includes exemptions for motorboats, antique vehicles and aviation fuel have been included, as well as compromise language to address supply concerns of small and independent petroleum marketers. MCGA is pleased with the House Ag Committee action, but note this is just the very first step in passage of the bill. It will now be referred to the Rules Committee for review and placement on the House calendar.

Here’s a summary of three recent stories about domestic plants in the news.

Clymers, IN – The Andersons, Inc. has gotten its air permit approval for a 110-million gallon facility in north-central Indiana due to be completed in early 2007. The plant would be the largest east of the Mississippi. (full story)

Bismark, ND – According to an Associated Press article in the Grand Forks Herald, there is some question as to whether plans for an ethanol plant in northwestern North Dakota are still on or not. State and local officials say no, Vancouver, Wash.-based Makad Corp. says yes they are. (full story) By the way, I provided a link to Makad, but the website appears to not have been updated for a couple of years.

St. Joseph, MO – ICM and LifeLine Foods have announced plans to build a 40 million gallon ethanol plant with a research and development lab in northwest Missouri. (full story) The story link is to an article from the Wichita Eagle – neither of the company websites have information about this project on them.

The Renewable Fuels Association has launched its version of a blog to cover next week’s National Ethanol Conference in Las Vegas, according to a news release. With response to this year’s National Ethanol Conference so overwhelming, the Renewable Fuels Association (RFA) today launched the National Ethanol Conference blog to keep those unable to attend up-to-date with conference happenings. The blog, available at www.ethanolrfa.org/industry/conference/blog, will feature news updates from RFA staff, commentary from conference attendees, photos from the event, audio, and more.
Now, blog connoisseurs tend to be a bit snobbish when it comes to the medium they are essentially creating out of web air. I am neither a connoisseur, nor a blog snob, so I won’t be critical about RFA’s first forray into the blogosphere. Let’s just say it’s hard to know the rules when the book is still being written.
I will simply applaud this effort and you can be certain that since I am unable to attend the conference next week due to other commitments I will indeed be checking out the site and referring to it. I think RFA’s communications man Matt Hartwig has been doing a great job sending out regular news releases, as well as providing links to audio on the website. As a radio broadcaster, I think that’s great (although, as I have told Matt, he needs to work on getting Mr. Dineen to be a bit more conversational in his sound bites.)
The blog effort is very admirable and I look forward to keeping an eye on it next week.
Incidentally, if you are planning to attend this conference, you better be registered already because, according to the conference website – in bold, red letters – Due to the overwhelming response to this year’s conference, registration is now officially CLOSED. WE WILL NOT BE ABLE TO ACCOMMODATE ON-SITE REGISTRATION.

Texas Tea may one day be Texas-E. The Texas State Energy Conservation Office is holding a two-day workshop and expo in Austin this week called “The Road to Renewables.” According to the agenda, the event will introduce perspectives from ethanol and biodiesel producers, production technology providers, and government researchers. Attendees will explore the challenges and opportunities presented from various different perspectives such analytical methods, production technology, applications for use and sharing information related to barriers to increased use of biodiesel and ethanol. The event is being held Wednesday and Thursday this week at the Hilton Austin Airport and registration is $35.
One of the “Road to Renewables” sponsors is the Ethanol Promotion and Information Council – our friends at EPIC.

Here is a link to an article from The American Enterprise by Dr. Robert Zubrin, president of the aerospace engineering and research firm Pioneer Astronautics, who wrote The Case for Mars and other books. Basically, he’s a rocket scientist. “An Energy Revolution” discusses in detail the “alcohol solution” to America’s dependence on foreign oil, including a relatively balanced comparison of ethanol and methanol, detailing their pros and cons. Here is a portion of that comparison:
Methanol is cheaper than ethanol. It can also be made from a broader variety of biomass materal, as well as from coal and natural gas. And methanol is the safest motor fuel, because it is much less flammable than gasoline (a fact that has led to its adoption by car racing leagues). ***please note that major car racing leagues, like Indy, are now switching to ethanol – cz***
On the other hand, ethanol is less chemically toxic than methanol, and it carries more energy per gallon. Ethanol contains about 75 percent of the energy of gasoline per gallon, compared to 67 percent for methanol. Both thus achieve fewer miles per gallon than gasoline, but about as many miles per dollar at current prices, and probably many more miles per dollar at future prices.
Methanol is more corrosive than ethanol. This can be dealt with by using appropriate materials in the automobile fuel system. A fuel system made acceptable for methanol use will also be fine for ethanol or pure gasoline.
Both ethanol and methanol are water soluble and biodegradable in the environment. The consequences of a spill of either would be much less than that of petroleum products. If the Exxon Valdez had been carrying either of these fuels instead of oil, the environmental impact caused by its demise would have been negligible.
Now, Dr. Zubrin’s ultimate conclusion is that methanol is better in the long run – my conclusion is that there is room for everyone in this domestic fuel boat, but that’s just me. He also completely discounts hydrogen as an alternative fuel possibility -but I would say that it may have its niche as well. Again, that’s just me – and I am no rocket scientist, just an observer.
Thanks to Gary Dikkers for pointing me to this article.

Any kid between 7th and 12th grade who can complete a 450 word essay on alternative fuels from agriculture and get it sent in before the deadline on February 15 could win $1000. It’s the National Ag Day contest and I was remiss in not posting this last week when I saw it, since the theme is “Growing our energy: Alternative fuels from agriculture.” So, the deadline is now literally just around the corner – well, more like on the doorstep at this point. Besides the $1000, the winning essay writer will receive a trip to Washington DC and recognition during the National Ag Day Luncheon at the National Press Club. According to information from the Ag Day website: At the luncheon, the winning essayist will have the opportunity to join with industry representatives, members of Congress, federal agency representatives, media and other friends in a celebration of agriculture. Statewide winners of the contest will also be selected. Each will receive a $100 prize.
All entries should be sent to: Ag Day Essay Contest (MC), 1201 NW Briarcliff Pkwy., Ste. 200, Kansas City, MO 64116, or msandfort@mccormickcompany.com.

FFA members from Illinois helped Chevy unveil their newest E85-powered vehicle last week at the Chicago Auto Show. A dozen blue jackets took part as Chevrolet made public the new 2007 Avalanche at the nation’s largest auto show on February 8. According to an FFA release pairing with Chevy to introduce the new truck, shows the FFA members dedication to finding new and innovative ways to succeed into today’s global economy. The Avalanche is the latest in an explosion of flex-fuel vehicles to hit the marketplace as American auto makers rush to try and outdo each other climbing aboard the ethanol express. Chevy’s idea to have the FFA kids – who, by the way, are among the best and brightest youth in this country – introduce the new vehicle was a nice PR move to highlight ethanol’s farm connection.

Two syndicated articles out today express differing opinions about ethanol. Actually, one is a purely editorial piece, written by Kevin Hassett, director of economic policy studies at the American Enterprise Institute, and distributed by Bloomberg. With the title “Ethanol’s a Big Scam, and Bush Has Fallen for It,” it could hardly be more negative about ethanol – mainly stressing the facts that corn farmers receive government subsidies and that it does currently require a significant amount of fossil fuels to produce ethanol. The commentary also cites the controversial Pimentel/Patzek study that has been discredited by other sources, including the newest report out of Berkeley just released a few weeks ago. In my opinion, the worst thing about a commentary such as this is that it offers only criticism, with no constructive suggestions.
Contrast that with this AP article, which discusses research being done to find cheaper ways to produce ethanol. The article begins – The key to kicking what President Bush calls the nation’s oil addiction could very well lie in termite guts, canvas-eating jungle bugs and other microbes genetically engineered to spew enzymes that turn waste into fuel. It quotes Nathanael Greene with the Natural Resources Defense Council, and discusses the work in the field being done by Iogen. It talks in a positive, constructive way about research being done to address some of the issues brought up in the negative commentary. I especially like this quote from the article: Thanks to biotechnology breakthroughs, supporters of alternative energy sources say that after decades of unfulfilled promise and billions in government corn subsidies, energy companies may be able to produce ethanol easily and inexpensively. Positive and constructive thinking is what it will take to overcome obstacles in making good domestic fuel economical and viable.

I just received the following statement from Tim Haig, Chair of the Canadian Renewable Fuels Association. He issued the following statement today in regard to recent biofuel issues in the Halifax area:

The Halifax Regional Municipality recently purchased what we now understand to be partially converted fish oil for use as a biofuel blend. Despite the best of intentions, the partially converted fish oil did not meet the universally recognized American Society of Testing Material (ASTM) biodiesel standard of quality.

The ASTM standard exists to ensure the highest quality of biodiesel fuel is available for consumers and its trouble free use in transportation. The Canadian Renewable Fuels Association does not recommend or support blending any biofuel which does not meet the very specific standard of ASTM D6751. Biodiesel can be produced from fish oil but it must be manufactured to meet ASTM standards. Meeting the ASTM specification is the only guarantee of a reliable and efficient fuel.

Quality for biodiesel is going to be a big focus with the industry this coming year. That was made very clear at the just completed National Biodiesel Conference in San Diego.