Domestic Fuel

Tyson is defending the use of a biodiesel tax credit by the meat-producing giant and oil giant ConocoPhillips.

A recent IRS ruling that the two companies could take advantage of a $1-a-gallon tax credit brought criticism from the National Biodiesel Board (see my post on April 18th) and the threat of legislative action by a Congressman from Texas (see my May 24th post). Now, in an article on Cattle Network.com, Tyson says they, along with ConocoPhillips, should get to use the credit because it will help spur growth of alternative fuels, such as biodiesel:

“Our initiative is about increasing the supply of renewable fuels and contributing to U.S. energy security efforts,” Tyson spokesman Gary Mickelson told Meatingplace.com. “We believe our alliance qualifies for a federal production tax credit, which will be based on the number of gallons produced. It is not a jobs credit or an investment tax credit.

“It’s true the renewable diesel made from animal fat will be produced and distributed with existing refineries and fuel distribution systems,” Mickelson added. “However, ConocoPhillips has publicly stated it will spend $100 million in capital expenditures to enable it to produce the fuel. Tyson will also make capital improvements in order to begin pre-processing animal fat from some of its North American rendering facilities.”

Rep. Lloyd Doggett (D-Texas) has introduced a bill to repeal the IRS ruling and narrow the tax break’s scope to what Congress had originally intended.

It looks like it’s truly the end of the road, or the water in this case, for a biodiesel-powered boat trying to set a record for a ’round-the-world trip.

Previous reports of the Earthrace abandoning its bid were dismissed by the crew. The record attempt looked in serious jeopardy earlier this spring when the boat ran into mechanical and biodiesel fuel supply problems. But the crew decided it could restart the race and continued its attempt. On May 18th, David Perez with the Earthrace’s ground crew sent this note to Domestic Fuel:

Just wanted to let everyone know that the world record attempt is absolutely, positively not abandoned. We have an official restart/finish line in San Diego, CA and are currently en route to Salalah, Oman doing good time.

David Perez
Earthrace Ground Crew
Race Leg Sponsorship

But the Earthrace has run into more problems, suffering structural damage to the main hull while crossing the Mediterranean Sea. The damage occured when the boat hit a strong storm on route from Port Said, Egypt to Malaga, Spain… the third severe storm she had hit in three weeks. The crew found a two meter crack (6 feet) in Malaga. They made repairs, but shortly after leaving the port, it was apparent the repair would not hold. In this release on the Earthrace web site, the crew was crushed at the realization the record-breaking attempt would not happen this year:

Earthrace skipper Pete Bethune said “ The whole team is pretty devastated right now. We have all put so much time, money, and effort into this record attempt; it is pretty upsetting to have to abandon the race. We can all feel proud of what we have achieved with the limited resources we had, and we do take some heart from that”

Bethune went on to shot “We gave it our best shot.” “The Earthrace project was created to promote the awareness and use of alternative fuels such as biodiesel. And whilst it is disappointing to miss out on the world record, we have certainly succeeded in our overall aim of promoting biodiesel, and we will continue to build on this success during our upcoming European promotional tour”

But Bethune hints they might be trying again… as early as March of next year.

This past long weekend, I had the chance to travel back home to Iowa to one of my favorite fishing spots in the entire world: Spirit Lake. This natural lake is up in the northwest corner of the state, and it takes nearly 10 hours to get there from my home in Missouri. Full of walleyes, it is a destination I gladly load up the family car with the wife, the kids, and the dogs, and hit the road for a butt-wearing 10 hours behind the wheel.

As I was in the homestretch of my 500-plus mile trip, burning plenty of $3.25/gallon gas, I noticed an alternative fuel source turning above the farm fields just a few miles off Highway 71… windmills.

For years, I’ve seen the turbines in the distance. Now that I’m reporting on this type of energy source, I decided to get a closer look. Turning at a corner where many times my family and I have stopped for gas and snacks, we made our way to where the white turbines turn in the constant breeze of an area known as Buffalo Ridge… a high spot of land that seems to catch every breeze… and a natural for the approximately 260 turbines along its flat plateau. Locals say it is one of the largest wind farms in the world. It’s no wonder nearby Storm Lake earned its name and reputation of constantly have a significant chop on its shallow waters.

The turbines are spectacular to see… looming over the farm fields, whooshing as the wind turns their huge blades, generating power that will be available for many years to come… possibly forever.

In the meantime, I thought about the gas station back on the corner of Highway 71 where I turned. In front of the pumps is a concrete statue of a dinosaur, symbolic of the fossil fuel that flows from those pumps. I thought how fitting a symbol for that type of fuel. Dinosaurs are extinct and won’t be coming back. Much like the concrete in the statue, the oil industry in many ways is immovable – stuck in a dwindling supply that will become extinct in its own time, maybe sooner than we think. Contrast that with the constant motion of the turbines. If the wind supply is ever exhausted, we’ll have more problems than how to light our homes. Even the more stationary corn and soybean fields below the wind generators hold the promise of renewable fuel in the form of ethanol and biodiesel.

The wind did have some drawbacks. When we finally arrived at our destination of Spirit Lake, the wind was fueling some good-sized waves… too big to let me chase the much-desired walleyes and northern pike like I would like to. At least for a while. The next day the winds calmed, and we picked up plenty of walleyes… and the biggest pike my Dad has got in more than 70 years of fishing – 37″ long, weighing 10 pounds. That’s big enough to make even a concrete dinosaur smile.

One former and two current Democratic presidential candidates are sponsors or co-sponsors of a bill introduced by Senator Amy Klobuchar (D-MN) intended to expand consumer access to 85 percent ethanol fuel, or E-85. Primary sponsors of the bill with Klobuchar include Barack Obama, (D-IL), Kit Bond (R-MO), George Voinovich (R-OH), and Dick Durbin (D-IL). Senators Ben Nelson (D-NE), Debbie Stabenow (D-MI), Sherrod Brown (D-OH), Hilary Clinton (D-NY), Claire McCaskill (D-MO), and John Kerry (D-MA) are also co-sponsors of the legislation.

According to a release from Klobuchar’s office, the Ethanol Education and Expansion Act of 2007 would work to reduce prices at the pump for consumers by providing grants through the U.S. Department of Agriculture (USDA) to farmer-owned ethanol producers to install additional E-85 pumps at rural gas stations as well as the equipment needed to sell E-85 directly to gas stations.

Sen. Klobuchar will work to include the legislation in the 2007 Farm Bill, which the Senate is expected to take up in the coming months.

Apparently no new records to report, but ethanol production still remains strong, according to the latest figures.

The Renewable Fuels Association reports that production of domestically produced ethanol in March averaged 384,000 barrels per day while demand was 414,000 barrels a day, which is an increase over last year by 83,000 b/d in production and 34,000 in demand.

US BioEnergy Corporation, one of the largest producers of ethanol in the United States, just got bigger.

The company has agreed to acquire Millennium Ethanol, which is constructing a 100 million gallon ethanol plant near Marion, South Dakota, expected to begin production in the first quarter of 2008. With this acquisition, US BioEnergy will have 8 plants in 6 states with expected total production of 700 mgy by the end of 2008.

Gordon Ommen, CEO of US BioEnergy Corporation says they are excited about having Millennium’s approximately 900 shareholders, many of whom are farmers, become shareholders of US Bio. “This fits well with our existing shareholder base, including CHS and their 325,000 farmer owners.”

Most of the time, I tell you about the big biodiesel plants that are helping shed this country of its dependance on foreign oil. Those operations that crank out millions of gallons a year are great and make a BIG difference. But sometimes its nice to report on the little guys who are making a difference in their own right.

Case in point, this story from the Buffalo (NY) News. The owner of a Lewiston, NY restaurant (The Silo pictured on the right) is brewing up his own biodiesel in his own garage… using his own restaurant’s leftover cooking oil. He says he got the idea while living in France last winter:

“I met someone who was making [biodiesel fuel] in five-gallon buckets,” said Alan Hastings, who owns the restaurant on the Niagara River. “I couldn’t believe it. The guy was going around to restaurants and begging for their used cooking oil. I got excited about it.”

He said he was definitely motivated by economics — with the cost to produce the biodiesel fuel at about 50 cents per gallon. He said his Volkswagen gets about 50 miles per gallon using the biodiesel fuel.

Hastings does take some precautions, such as keeping the flammable methanol used in the process in a separate building.

Hopefully, he won’t run afoul of the law like some home brewers in Wisconsin ran into. You might remember my post from March 25th, 2007 when I told you about Steven Griesbach and Paul Simon who got in trouble for not paying road taxes on their home-brewed biodiesel. Of course, this came at the same time the state of Wisconsin was giving money away to encourage some big producers to produce biodiesel.

Many times we hear about the government incentives designed to encourage the biodiesel industry, but this story is about something the industry is giving back to one community.

According to this story in the Decatur (Georgia) Daily News, the city of Athens, GA was in need of a sponsor for a family resource center when a local biodiesel producer stepped up to the plate:

Athens City Council President Harold Wales said Melvin Kilgore of Southeast BioEnergy LLC was looking for a project to sponsor when he heard about local leaders seeking seed money to start the center. BioEnergy plans to open its research and development facility in Elm Industrial Park on July 1.

Community leaders, including District Court Judge Jeanne Anderson, asked the city and county for $26,000 each to fund a director and utilities for the first year. The council had concerns about funding that amount.

Kilgore said he would fund it all… showing how big of heart biodiesel has.

Mark your calendar for the International Congress on Biodiesel, November 5-7th in Vienna Austria. Congress General Chair Michael Haas of the USDA’s Agricultural Research Service posted a message on the American Oil Chemists’ Society’s web site (one of the conference sponsors, along with the USDA) inviting participants to open a global discussion on the science and the technologies of biodiesel:

“Most of us tend to think of biodiesel largely in the context of local or national fuel needs. However, broader considerations now dictate that we must think and communicate on this subject in a new way. Biodiesel feedstocks as well as biodiesel itself are being traded globally. Fuel quality standards vary from country to country. New feedstock oilseeds are being considered in countries where they never before have been grown. Engines built in one country are being exported to other countries and must function in the fuel and regulatory climates there. Global warming knows no national boundaries. For these and for other reasons it is the right time to open a global discussion on the science and the technologies of biodiesel.”

Organizers encourage those interested in attending to register by July 6th on the American Oil Chemists’ Society web site to get a special online discount.

North Carolina-based Duke Energy has acquired the wind power development business assets of Tierra Energy. According to this press release on Duke’s web site, it bought more than 1,000 megawatts of wind assets under development in the Western and Southwestern United States. About 240 megawatts in Texas and Wyoming will be up and running commercially by the end of next year with the rest operational possibly by 2009.

“As our nation’s appetite for electricity continues to grow, renewable energy will play a larger role in meeting that demand,” said Duke Energy Chairman, President and CEO, James E. Rogers. “This acquisition supports our strategy to increase our investment in renewable energy and national efforts to reduce carbon emissions.”

Tierra Energy President David Marks will become Duke Energy’s senior vice president, business development – wind energy. Five other senior Tierra management team members will also join Duke.

This isn’t Duke’s first venture into the clean energy market. The company also has purchase agreements for wind generation in Indiana and just put in solar panels at 10 Indiana schools.

With the stroke of a pen, Nebraska biodiesel producers gain a credit for production of the green fuel. Governor Dave Heineman signed the legislation, originally sponsored by State Senator Chris Langemeier of Schuyler, designed to encourage greater investment in biodiesel production. According to this release on the Governor’s web site, a tax credit of up to 30% would be given to those who invest in locally-owned facilities producing B100 biodiesel:

“There is tremendous potential for Nebraska to expand our presence in the renewable fuels sector by becoming a leading producer of biodiesel,” Gov. Heineman said. “This bill will encourage greater diversity in renewable fuels by providing opportunities for Nebraskans to invest in the development of a biodiesel facility.”

Sen. Langemeier said, “With the signing of LB 343, coupled with the vast resources available in Nebraska, we will be positioned to become the nation’s leader for biodiesel production.”

Nebraska has only one biodiesel plant… interesting since it is the fifth largest producer of soybeans. But two more facilities are in the works, and if the credit does its job, more will be on the way.

BioSelect Fuels LLC – a division of Standard Renewable Energy – and oil-giant Chevron cut the ribbon on a new biodiesel plant in Galveston today (May 29th). According to this press release on Chevron’s web site, the refinery will start producing 20 million gallons of biodiesel a year with the capability of 110 million gallons… making it one of the first large-scale biodiesel plants in North America:

“Chevron’s investment is a tangible manifestation of the company’s strategy to invest in renewable energy technologies,” said Donald Paul, vice president and chief technology officer, Chevron. “Biofuels are playing an increasingly important role in diversifying our nation’s energy portfolio. With growing demand, the nation needs all the sources of energy to contribute to supply. Our involvement with BioSelect Galveston will allow us to apply our world-class capabilities in transportation fuel manufacturing and distribution while expanding our knowledge and experience in large-scale biofuels production,” said Paul.

“Chevron is setting an example for the energy industry by constant innovation and proactive leadership to create new energy sources, like the added domestic fuel production capacity at BioSelect, which is critical in meeting growing demand,” said John Berger, Chairman and CEO of Standard Renewable Energy.

BioSelect has plans to expand to expand its total biodiesel-producing capacity at its multiple large-scale sites to 470 million gallons a year by 2010.

Sen. John Thune (R-SD) has introduced legislation aimed at helping farmers near biorefineries begin growing dedicated energy crops.

According to Thune, the Biofuels Innovation Program Act would offer farmers incentives to grow crops, such as switchgrass and fast-growing trees, for use as cellulosic ethanol feedstocks.

“Cellulosic ethanol, produced from homegrown sources like corn stover, wheat straw, switchgrass and wood chips, has incredible potential to supplement corn-based ethanol. But if cellulosic ethanol is to achieve its potential, it is critical that Congress help this industry overcome initial market barriers” said Thune. “My legislation would spur the construction of biorefineries across the country and provide incentives to farmers in surrounding areas to grow energy dedicated crops that can eventually supply these biorefineries in a cost-effective, environment-friendly way.”

Thune hopes the legislation, which is co-sponsored by Sen. Ben Nelson (D-NE), will be included in the 2007 Farm Bill energy title. Similar legislation has also been introduced in the House.

The bill would fund several USDA feasibility studies to determine the level of interest and likelihood of success for biorefinery constructions. The bill would authorize a cost share and per-acre rental payment for farmers during a contract’s first five years, in order to help the biorefinery get established and build a market. In addition, farmers selling byproducts and residues, such as wheat straw and corn stover, to ethanol plants would be eligible for matching payments of up to $45 per ton.

Florida Agriculture and Consumer Services Commissioner Charles Bronson has scheduled the second annual “Farm to Fuel” summit July 18-20 at the Marriott Renaissance Vinoy Resort in St. Petersburg.

Hoping to build on recent developments in Florida’s efforts to establish a renewable energy industry, Bronson said the meeting will cover current initiatives relating to ethanol and bio-diesel, as well as other opportunities for renewable energy production in Florida.

“There has been a good deal of momentum recently in our drive to get this industry off the ground,” Bronson said. “We’re eager to share that with participants and provide them with the information they need to enter this industry.”

Last August in Orlando, Bronson hosted the first ever Florida “Farm to Fuel” summit, which attracted more than 300 participants, and the Commissioner believes that this year’s conference will be bigger and better.

I received this letter yesterday from a self-proclaimed “ethanol crusader” in Florida. It was pretty long, but here is an edited version with her key points:

Hi Cindy, keep up the good work.

Best Regards,
Lynda Gagnon
Ethanol Crusader

First of all, Lynda – thanks for the grassroots work you are doing to help bring ethanol to the Sunshine State. You are doing more with your campaign than you might believe. If retailers think people will buy a new product, they are more likely to begin offering it.

Secondly, the Ethanol Promotion and Information Council was a major sponsor of the Indy 500, which featured spots that aired multiple times during the race. To view the ethanol spots, go to this page on the EPIC website. The television spots have run during all of the races so far this year, starting with Homestead in Florida.

EPIC also sponsored a major public and media event at the Indy 500 called the Ethanol Summit to educate people about ethanol’s benefits as a performance fuel. They have gotten major publicity from events held earlier this month at the National Press Club and Chicago Board of Trade.

Finally, you make a good point about the need for more information for retailers about incentives to offer ethanol-enhanced fuel and I have passed that along to EPIC. A good place for that information right now is the National Ethanol Vehicle Coalition site, which has a page devoted to retailer information.

Thanks again, Ethanol Crusader. Just curious, do you have some kind of cool super hero costume to wear when you are out crusading??