Domestic Fuel

A big change in the 2011 proposed targets for the Renewable Fuel Standard (RFS2) set forth by the Environmental Protection Agency (EPA) today lowers the volume for cellulosic ethanol, compared to what is in the Energy Independence and Security Act of 2007 (EISA). The proposed goal for cellulosic biofuels next year under the proposal is now a range of 5 million to 17.1 million. The mandate for this year was already cut from 100 million gallons to 6.5 million in February.

“EPA remains optimistic that the commercial availability of cellulosic biofuel will continue to grow in the years ahead,” the agency said in a release about the proposal, but the ethanol industry is concerned that lowering the goal will lower investor interest in next generation biofuels.

“While this may be prudent for EPA based on market conditions, it does send a chilling effect through the investment community with respect to cellulosic ethanol technologies,” said Matt Hartwig with the Renewable Fuels Association (RFA). “EPA’s estimates underscore the need for Dept. of Energy and USDA to construct loan guarantee programs that work for cellulosic ethanol companies.”

Chris Thorne with Growth Energy says his organization has the same concerns. “Cellulosic ethanol needs much greater investment to become commercially viable. Yet, in the six years that the Department of Energy has been managing the program, it has yet to issue a single loan guarantee to a cellulosic ethanol producer,” he said.

The blend wall is also an issue for the ethanol industry to meet the RFS2 targets under EISA, according to American Coalition for Ethanol (ACE) executive director Brian Jennings. “The scaled-down targets for cellulosic biofuel clearly indicate the E10 blend wall is standing in the way of market certainty for both corn and cellulosic ethanol producers,” said Jennings. “Until the blend wall is dealt with in a meaningful way, it is going to be difficult to secure financing for and move forward with next-generation ethanol projects.”

The lowered target for cellulosic biofuels lowered the overall goal for total renewable fuels next year, from the 8.25 percent set for this year in February by EPA to 7.95 percent of total gasoline sales in
2011 or a total of 13.95 billion gallons.

The July 8 Energy Information Administration (EIA) “This Week in Petroleum” report takes a look at the fast approaching ethanol blend wall, predicting ethanol’s share of the gasoline market will reach the 10% saturation point by the beginning of 2011.

During April 2010 an estimated 834,000 bbl/d (12.8 billion gallons per year [BGY]) of fuel ethanol was blended into gasoline, representing an average 9.2 percent of total gasoline product supplied by volume. The July EIA Short-Term Energy Outlook projects that the ethanol share of the gasoline pool could reach 10 percent in the first quarter next year when total gasoline consumption is expected to average about 8.8 million bbl/d (135 BGY).

The EIA report concludes, in an understatement, that “the blend wall is an important event moving forward for the ethanol industry.” However, some in the ethanol industry say the blend wall is already here. According to the EIA’s Short-Term Energy Outlook report, ethanol production will average 850,000 barrels per day this year and grow to 880,000 next year. The Renewable Fuels Association (RFA) notes that would amount to an annual total of 13.5 billion gallons in 2011. “That is nearly 1 billion gallons more than called for by the Renewable Fuels Standard’s requirement for “renewable fuel,” and unless EIA knows something more about EPA’s decision-making process on E15, we believe it is unlikely that the industry will produce that volume of ethanol next year,” said RFA’s Matt Hartwig. “Current markets are limited by the arbitrary E10 blending limit enforced by EPA. And while higher level use in the form of E85 and mid-level blends is expanding, it’s not happening fast enough to justify EIA’s 2011 predictions. Further, while the ethanol export market is growing rapidly, it still remains too small to absorb that much excess supply.”

EIA’s report says, “absent a relaxation of the 10 percent limit on ethanol blending in the general gasoline pool, and with still increasing ethanol production capacity, there will likely be downward pressure on ethanol prices as the blend wall is approached.” How low ethanol prices could go, the report adds, will also be determined by the cost of production (i.e., corn prices) and whether the ethanol blender’s tax credit is extended by Congress.

Read EIA’s July 8 This Week in Petroleum report here.

The U.S. Environmental Protection Agency (EPA) today released a proposal for comment that sets the 2011 percentage standards under the agency’s Renewable Fuel Standard program, known as RFS2.

The Energy Independence and Security Act of 2007 (EISA) established the annual renewable fuel volume targets, reaching an overall level of 36 billion gallons in 2022. To achieve these volumes, EPA calculates a percentage-based standard for the following year. Based on the standard, each refiner, importer and non-oxygenate blender of gasoline determines the minimum volume of renewable fuel that it must ensure is used in its transportation fuel.

The second change would set criteria for foreign feedstocks to be treated like domestic feedstocks in terms of the documentation needed to prove that they can be used to make qualifying renewable fuel under the RFS2 program.

Public comment on the proposal will be accepted for 30 days following publication in the Federal Register.

At the end of June, the Cape Wind project received federal approval much to the dismay of vocal opponents. This will be the first off-shore wind project in the U.S. and will consist of 130 wind turbines and the project is expected to be complete in 2012. While the debate was raging on around Cape Wind, several other states were moving forward with developing off-shore wind projects of their own including New Jersey, Road Island and Maine.

Two months after Cape Wind was federally approved, New Jersey passed the Offshore Wind Economic Development Act. This act was designed to create financial incentives for offshore wind development and sets a target of 1,100 megawatts of wind generation. This goal ties into the state’s Renewable Portfolio Standard which sets targets for renewable energy including solar and wind. The act authorizes the New Jersey Board of Public Utilities (BPU) to set financial regulations and oversee applications for new projects and also requires suppliers of electricity to retail customers to hold an Offshore Wind Renewable Energy Certificate (OREC).

In addition to the creation of the ORECs, the act created a 100 percent tax credit for capital investments of $50 million-$100 million in new offshore wind facilities. In addition, the act will work in tandem with the Economic Development Authority to allocate money from the Global Warming Solutions Fund to support these projects and provide assistance to the manufacturers of offshore wind equipment.

While the act may seem somewhat cumbersome, here is what it boils down to. BPU has already provided $4 million to a developer who is looking to build a 346-megawatt project 16 miles off the southern coast of New Jersey. In addition, BPU has approved a 20-25 megawatt project three miles of the coast of Atlantic City. Should either of these projects see fruition before Cape Cod, New Jersey will take the title of the first completed offshore wind project.

However, what may be more important than who is first, is the support that offshore wind is receiving on the East Coast. The Atlantic Offshore Wind Energy Consortium was recently established by 10 states to promote the development of offshore wind projects. When you combine all of this activity it appears that offshore wind development has great momentum. Let’s hope that this momentum is not stymied by difficult and drawn out permitting processes.

With the help of corn growers and FFA members, a northwest Missouri ethanol plant helped provide 2,600 meals for hungry families in the Kansas City area last week.

Mid-Missouri Energy, a farmer-owned ethanol plant near Malta Bend, Mo., donated a plot of land to grow sweet corn for the hungry. Members of the Missouri Corn Growers Association (MCGA) and Malta Bend FFA did the harvesting and the result was 3,366 pounds of sweet corn for Missouri families in need, which was distributed through Harvesters Community Food Network in Kansas City, Mo.

“While sweet corn isn’t something we normally plant in these fields, we realize there are people in our community and in the city facing tough times,” said Billy Thiel, MCGA board member and corn grower from Marshall, Mo. “This sweet corn is one way Missouri corn growers can show that we care about our neighbors and that we are committed to feeding and fueling a growing population.”

During a presentation at the ethanol plant, Mid-Missouri Energy President Ryland Utlaut thanked the Malta Bend FFA Chapter for their help in harvesting the crop. The event helped to educate the media and the general public about the importance of corn and ethanol to the Missouri economy, and the difference between sweet corn and field corn grown in the state.

The donated fresh produce will be distributed through Harvesters vast network, resulting in nearly 2,600 meals for hungry families. Serving a 26-county area of northwestern Missouri and northeastern Kansas, Harvesters provides food and related household products to more than 620 not-for-profit agencies including emergency food pantries, soup kitchens and homeless shelters.

Read more about the project here.

The Kansas City Regional Clean Cites held a workshop today focusing on ethanol fuel. The speakers focused on where ethanol fits in the world today, fleet and retail success stories, and funding available for retail facilities.

“There are 4,560 flexible fuel vehicles in region 6 of GSA. . . We purchased 3.2 million gallons of gasoline in fiscal year 2009 and we’re on our way on purchasing more in fiscal year 2010,” said U.S. General Services Administration’s (GSA) Region VI Represenative Don Gard. “As a success, we’ve worked with the Army installing the E85 tank in Ft. Leonard Wood, MO. But we are still having the challenges of driver’s reluctance to use E85, educating consumers and there is a lack of E85 stations.”

“Three years ago, I began putting together green gas stations. . . We were the first in Kansas to put in a blender dispenser,” noted Zarco 66, Inc. owner (shown right). “Being able to get out and explain what I do is the key to moving this forward.”

Others speakers included Rich Cregar of Wake Technical Community College, Robert White of RFA, Kelly Gilbert of the Metropolitan Energy Center, Michelle Kautz of Growth Energy, Byan Fox of KCP&L, and Mike MacComiskey of Syn-Tech Systems.

Brazil’s ethanol pipeline is getting closer to reality as a preliminary environmental license for the project was issued this week.

The $1.1 billion project, which is a partnership between Petroleo Brasileiro SA (Petrobras), Mitsui & Co. and Camargo Correa SA, is designed to transport ethanol in a 337 mile pipeline from the producing regions in the Mid-West, Minas Gerais and São Paulo to the large consuming centers of São Paulo and Rio de Janeiro.

The project has been under development since early 2006 and is now scheduled to begin late next year.

REX American Resources Corporation has agreed acquire 48% equity ownership interest in NuGen Energy of South Dakota. REX has agreed to acquire its ownership interest for $9.2 million with a commitment of up to an additional $6.5 million based upon the future profitability of NuGen.

NuGen Energy, a subsidiary of Central Farmers Cooperative, operates a nameplate 100 million gallon ethanol plant in Marion, South Dakota. The plant was built by Fagen, Inc. and utilizes ICM, Inc. technology. Upon completion, the investment will increase REX’s overall ownership interest of annual nameplate capacity ethanol production by approximately 33%. REX intends to fund its initial investment from cash on hand, and at April 30, 2010, REX had cash and cash equivalents of $101.4 million, including $86.1 million of cash at the parent company.

This represents the seventh ethanol plant investment for the electronics retailer, which first got into the ethanol business in December of 2006 by investing $14 million in Millennium Ethanol for a plant also located in Marion, South Dakota.

A new cellulosic ethanol plant in Denmark is claiming to be the largest producer of “New Ethanol” in the world, turning wheat straw into 1.4 million gallons per year.

According to Inbicon CEO Niels Henriksen, the biorefinery in Kalundborg is producing both cellulosic ethanol and a clean lignin biofuel to replace coal. “But our renewable energy process is as important as our renewable energy products,” Henricksen says. “The Inbicon Biomass Refinery can demonstrate dramatically improved efficiencies when integrated with a coal-fired power station, grain-ethanol plant, or any CHP operation. Symbiotic energy exchange helps our customers build sustainable, carbon-neutral businesses.”

The Kalundborg refinery will be integrated with the Denmark’s largest power station. Waste steam from the power station will run the biomass refinery, increasing the refinery’s total energy efficiency to 71%. Inbicon says a variety of feedstocks can be used by the plant, including straw, corn stalks and cobs, sugar bagasse, and grasses.

According to the company, three U.S. companies have cellulosic projects in development that will each include a scaled-up Inbicon Biomass Refinery.

Sandra Broekema, manager of business development for Great River Energy, a Minnesota electric cooperative, spoke about Dakota Spirit AgEnergy, a commercial-scale Inbicon Biomass Refinery processing North Dakota wheat straw to be co-located with their new 64 megawatt Spiritwood Station.

Peter Bendorf, PE, Integro Services Group, developing engineer for SWI Energy, plans a new 59MMgy corn-to-ethanol plant in Alton, Illinois integrated with a 20MMgy Inbicon Biomass Refinery. Utilizing the synergies of each will produce fossil-free ethanol.

Pres. Barack Obama made a stop at a factory that makes all-electric trucks in Kansas City, Missouri today to tout those type of vehicles and the Stimulus Bill money that is helping build up the plant’s capacity.

The White House says the $32 million grant for Smith Electric’s new factory, coupled with $36 million in private funds, has help the company expand to being able to build 500 all-electric trucks:

While he was there, the President also had the pleasure of announcing the company was hiring its 50th worker at the plant. By September, that number is expected to grow to 70, and at the project’s peak, Smith tells us the project will create more than 220 direct and indirect jobs. As the President said:

The story of Smith’s factory shows the direct and measurable impact of the Recovery Act. Smith’s factory is re-purposing an 80,000 sq. ft. jet engine overhaul facility at the Kansas City International Airport, a space that was not being utilized or creating jobs is now a fully operational plant.

Officials say the factory helps show that electric-drive cars and trucks are legitimate, and fleet customers such as Coca-Cola and AT&T will soon put them to the test. The federal money helps cut the number of years it might have taken to develop the technology relying solely on the private sector.

OriginOil, Inc., a company that has developed technology to extract oil from algae to be a competitor with petroleum, has invented a process that will be able to get hydrogen from the living algae.

This company press release says the new Hydrogen Harvester will use little or no external energy inputs, requires no sulfur deprivation or other “stressing” of the algae, and no genetic modification:

“One of the primary challenges for algae production is to achieve the best-possible energy balance,” said Riggs Eckelberry, OriginOil CEO. “By harvesting hydrogen from algae we are able to increase the energy output of virtually any algae production system. The result is a photosynthetic technology platform that yields energy in the form of oil, biomass, and hydrogen.”

Dr. Brian Goodall, OriginOil’s new CTO, commented: “The co-generation of hydrogen at the algae production site is a critical development for the realization of a completely integrated algal biorefinery. All routes from algae to ‘drop-in’ fuels such as renewable diesel and jet fuel require hydrogen and hydrotreating. The Hydrogen Harvester technology would eliminate the need for hydrogen pipelines and dependence on existing refineries which are typically far removed from ideal sites for algae growth.”

The press release goes on to say that the Hydrogen Harvester is becoming part of OriginOil’s stable of algae growth technologies.

Our country is quickly sliding down a slippery slope. Not too long ago, we were the leaders in renewable energy – wind, solar, biofuels. Today, not only have the major technological advancements come from overseas, our manufacturing facilities, entrepreneurs and investors are going, or have gone overseas as well.

Where are they going? Brazil. India. China. Why? Because these countries have the winning recipes for success: cohesive energy policy, long-term incentives and private investors. These are the exact three things we do not have in America.

We have other problems. We have states like California, that purport leadership in green policies and renewable energy, who make it nearly impossible to get permits for projects to meet its “green” initiatives.

Yesterday, Martifer Renewables Electricity dropped its plans to build a 107MW hybrid solar-powered biomass plant in California. The reason? After nearly 2 1/ 2 years, they have yet to obtain permits. Another company run out of California due to difficulty in obtaining permits, Blue Fire Ethanol – a next generation bioenergy company.

It may not be too late to head back up the hill but there are some things that must be done.
Read the rest of this post…

The world’s longest solar flight landed safely today. The solar plane, HB-SIA, dubbed Solar Impulse, completed a 26-hour test flight above Switzerland this morning and now holds the record for the longest solar-powered flight ever. However, what might be the coolest thing about the journey – the plane took off at night.

Solar Impulse took off from the Payerne airbase at 06:51 with André Borscherg, CEO and co-founder of the Solar Impulse project, at the controls. During the flight, the plane reached an altitude of more than 28,000 feet above sea level and reached speeds of 68 knots.

The plane features 12,000 solar panels built into its enormous 63.4 meter wing. It also holds 400-kilogram battery pack, which were fully charged during the plane’s decent.

“During the whole of the flight, I just sat there and watched the battery charge level rise and rise! Sitting in a plane producing more energy than it consumes is a fantastic feeling,” said André Borschberg, CEO and co-founder of the Solar Impulse project from the cockpit.

Bertrand Piccard, Initiator and President of Solar Impulse added, “This is a highly symbolic moment: flying by night using solely solar power is a stunning manifestation of the potential that clean technologies offer today to reduce the dependency of our society on fossil fuels!”

This test flight is a precursor to the real goal of flying around the globe using only solar power and not a drop of fuel. You can follow the journey at www.solarimpulse.com.

Yesterday, Indianapolis Colt tight-end Dallas Clark joined Tom Buis, CEO of Growth Energy and Gen. Wesley Clark, Co-Chairman of Growth Energy to tout the local economic benefits of Indiana’s ethanol industry. The presentation was given during the Indiana Ethanol Forum, an event that focused on the economic impact and importance of ethanol to the state as well as to the U.S. As part of their remarks, the group stressed the need for federal lawmakers to include support for domestic ethanol in any Congressional debate over clean energy and job creation.

“During this Independence Day recess, we are urging Congress to bring an energy bill to the floor that promotes America’s fuel,” said Tom Buis. “In these tight economic times when we are sending billions of dollars overseas to fund the economies of foreign countries, we need legislation that will keep that money right here in America. Domestic ethanol is the only commercially viable, renewable fuel that creates American jobs while cleaning our air and strengthening our economy and national security. Now, more than ever, ethanol must be at the heart of this debate in Congress.”

Clark continued by stating, “What we’re seeing in places like Indiana and elsewhere around the country is that people want to have a choice at the pump – and they want domestic ethanol to be one of those choices. The more domestic ethanol we produce, the less foreign oil we need. And every gallon of domestic ethanol creates U.S. jobs, cleans the air and strengthens our national security. Today we’re asking Congress to hear the people of Indiana and include provisions to level the playing field for domestic ethanol in the July energy debate.”

Prior to breaking for the July 4th holiday, Congressional leaders indicated they would take up legislation for energy and green jobs upon their return. Growth Energy believes there are several specific measures that should be included in the legislation that will build out infrastructure for biofuels including a flex-fuel vehicle mandate and federal support for the installation of blender pumps. Both of these initiatives would empower consumers with choices at the pump.

This edition of the “Ethanol Report” with Renewable Fuels Association Director of Market Development Robert White talks about their sponsorship at the 70th annual Sturgis Motorcycle Rally, August 6-14 in Sturgis, SD.

Robert, who is an avid motorcyclist himself, says this is the second year they have elected to have a presence at this event, partnering with the Legendary Buffalo Chip campgrounds which is the main venue for the rally. “More than 100,000 people a day trek through this campground,” he said. “Across the campground, we’ll have banners, educational material and promotional giveaways like koozies at all the local watering holes.”

This may seem like an unusual place to promote ethanol, but Robert says it’s really a great American event for them to reach out to a large number of people in a wide demographic range. “We like the opportunity of having that many people in one small area to educate consumers about ethanol,” said Robert. They will be able to talk with them about the safety of low level ethanol blends up to 15 percent for motorcycle engines, as well as the availability of E85 and mid-level blends for the flex fuel vehicles (FFVs) they may have at home.

Listen to more from Robert in this Ethanol Report podcast. Sturgis Ethanol Report

You can subscribe to this twice monthly podcast by following this link.