Domestic Fuel

Rep. John Sullivan (R-OK) has submitted a proposed amendment to the House Continuing Resolution, a short-term resolution that was enacted during the lame duck session last year that would fund the government through March 2011, that would block E15 from gaining market share throughout the U.S. This past January, the EPA approved the use of E15, a blend of 15 percent ethanol, 85 percent gasoline, for conventional vehicles and light duty trucks manufactured in 2001 or later. This approval has caused a storm of opposition from politicians, to the petroluem industry, to major food manufactures, to fight to block the use of the higher blend of ethanol.

This Thursday, the House is scheduled to vote to extend funding through September 30, 2011. True to their ‘campaign promises,’ many Republicans are stepping up to cut costs, and at the ire of several Republicans is ethanol. First, Sullivan has proposed to eliminate funding for the EPA to implement the move to E15.

Bob Dinneen, President and CEO of the Renewable Fuels Association (RFA) responded by saying, “America needs to tighten its belt, but it should not come at the expense of our energy security. Preventing EPA from implementing its approval of E15 for cars, pickups and SUVs made in model year 2001 and newer only means America remains addicted to foreign oil.”

“EPA and DOE have done extensive testing and found E15 to be a safe and effective fuel for use in the vehicles approved in the waiver. No evidence to date has shown E15 to cause problems in any vehicle, regardless of its vintage. This amendment seems more about political science than physical science, and would only serve to slow the evolution of America’s domestic ethanol industry and strengthen the stranglehold oil has on the nation’s economy and energy future,” said Dinneen.

Then, Rep. Jeff Flake (R-AZ) proposed another amendment to the House Continuing Resolution that would bar USDA funds from helping to install blender pumps. Flake has made his move despite the fact that Ag Secretary Tom Vilsack has stated multiple times that the funds are already allocated in previously approved budgets.

“The ultimate outcome of both of these amendments will be to perpetuate our nation’s dependence on foreign oil. The Sullivan amendment injects politics where it doesn’t belong – in regulatory affairs that are decided by sound science rather than politics,” said Tom Buis, CEO of Growth Energy, the organization that submitted the E15 Waiver. ”

“A full and immediate move to E15 would create more than 136,000 new jobs in the U.S., reduce our dependence on foreign oil by 7 billion gallons, reduce harmful emissions equivalent to removing 1.35 million cars from the road, and revitalize our rural communities. At the same time, preventing the Administration from implementing policies that will develop our nation’s renewable fuel infrastructure will only limit consumer choice at the pump and maintain the status quo,” concluded Buis.

The mood was optimistic during Advance: 2011 Biodiesel Conference & Expo last week. Why? Because all signs are pointing to the industry growing by leaps and bounds this year. I spoke with Donald Nelson, Director, National Sales with REG (Renewable Energy Group), the largest biodiesel company in the U.S. about RINS and how, if at all, they can signal positive things in the marketplace.

To begin, I asked Nelson to explain what a RIN was. It’s a Renewable Identification Number (RIN). “To make it simple,” said Nelson, “RINS really is the currency of the RFS2. That’s how the EPA measures the compliance of an obligated party.” He continued by explaining that for each gallon of biodiesel produced, 1.5 RINs are generated that travel with that gallon to the blender and then the blender or obligated party separate that RIN from the “wet gallon” and at this point, the RIN can travel separately from the fuel.

Last year was a tough year for the biodiesel industry. The $1 per gallon tax credit had expired and several obligated parties sued the EPA over the RFS2 biodiesel mandate numbers (under the RFS2 biodiesel qualifies as biomass based diesel). Fortunately, by the end of the year, the EPA won the suit and the credit came back, but by this time there weren’t enough RINS in the marketplace to meet demand to the uncertainty caused by the aforementioned issues.

Nelson said there were 1.15 billion gallons of material that needed to be consumed when you add 2009 and 2010 together but it appears that the marketplace will be short 95 million gallons. Yet he’s not worried and is very confident that the industry can not only make up for the shortfall this year, but also meet the RFS2 numbers. Combined this will be a total of approximately 925 million gallons of biodiesel needed to be produced this year. To put it in perspective, last year the industry produced 310 million gallons. Nelson said this is a 300 percent increase in production but there are 2.2 billion gallons of biodiesel production registered with the EPA, although much of it is not online.

So what’s next for the industry? Explosive growth. Plants are coming back online although Nelson said some still need additional investment dollars to get back up and running. In addition, the obligated parties are creating plans to build out the much needed infrastructure so the fuel can get where it needs to go.

Nelson concluded that he thinks the industry is going to see tremendous growth over the next couple of years and “It’s very exciting.”

You can listen to my full interview with Don here: Interview with REG's Donald Nelson

2011 National Biodiesel Conference Photo Album

There are renewable winners and losers in the FY2012 budget proposed this week by President Obama.

Agriculture Secretary Tom Vilsack says the president has included funding in the budget “To promote the domestic production of renewable energy, we invest in renewable energy programs related to commercialization; research and development; education and outreach; and energy efficiency and conservation. We are also focusing our loans to rural electric cooperatives to support the development of clean burning low emission fossil fuel facilities and renewable energy deployment. Developing a nation-wide renewable energy industry will create hundreds of thousands of jobs in rural America, while helping us reduce our dependence on foreign oil, and reducing risks to our environment.”

More specifically, Secretary of Energy Steven Chu says the budget includes $3.2 billion for energy efficiency and renewable energy programs and $300 million in credit subsidies to support approximately $3-4 billion in renewable energy and energy efficient projects. Funding for renewable energy technology would increase over all by 70 percent, including $425 million to support the “SunShot” solar power initiative, $64 million for offshore wind farms, $59 million for geothermal power initiatives.

However, hydrogen energy and fuel cell research would be cut by about 40 percent, a move that the Fuel Cell and Hydrogen Energy Association (FCHEA) calls those cuts “misguided and harmful to American competitiveness.”

“After investing billions of American dollars and years of effort, we simply cannot walk away from our commitment to these critical technologies,” said Ruth Cox, president and executive director of the FCHEA. “Fuel cells are the microprocessors of the Energy Age and they are already transforming the energy network through distributed generation of clean, efficient and reliable power.”

In the good news category, Big Oil takes a big hit in the budget, eliminating some $3.6 billion in tax subsidies for the oil, coal and gas industries.

The new Renewable Fuels Standard (RFS2) will require at least 800 million gallons of biodiesel are used this year … and how petroleum refiners and importers and distillate distributors get to that number will be the subject of a series of free webinars offered by the National Biodiesel Board.

NBB officials say the 90-minute webinars, entitled “RFS2 Ready: Biodiesel Producers Ready to Meet 2011 RFS2 Requirements,” will offer information on how to meet the Environmental Protection Agency’s 2011 volume requirements and will be tailored for each region of the country:

Exclusive biodiesel market analysis will also include:
• Month-by-month, gallon-by-gallon outlook for 2011 biodiesel supply and demand
• Risk management and pricing strategies utilized for RINs compliance
• Federal, state and PADD-specific legislative policies driving biodiesel demand
• New end-user markets pushing biodiesel sales

PAD District 5: West Coast
Date: March 10, 2011
Time: 10:00 a.m. PT
https://www1.gotomeeting.com/register/120837872

On the heels of last month’s announcement from Raptor Fabrication and Equipment about its opening a Florida biodiesel plant, its parent company, Raptor Technology Group says it will provide equipment for Coastal Biofuel of Savannah, Georgia:

The plant has the capability to produce one million gallons of clean biodiesel per year. Raptor expects the facility to begin biodiesel production in mid March. In addition to providing both the manufacturing and technology Raptor also participates in the ongoing revenue stream of the facility. The Coastal Biofuel facility is the second plant that Raptor has launched in 2011.

“We are excited to have Coastal Biofuel as one of our customers. With fuel costs rising, Coastal will be able to produce a competitively priced biofuel that burns cleaner and has superior lubricating properties compared to petroleum diesel fuel,” said Tom Gleason, President and CEO of Raptor Technology Group. “In addition to its many advantages over petroleum diesel fuel, the recently re-instated Federal Tax Credit for biofuel levels the playing field for economical and profitable fuel production,” added Gleason.

A new line of flexible rubber hose has been designed to work better with biodiesel-burning engines.

Fleet Equipment Magazine reports that Eaton Corp.’s new GH100 ESP hose will stand up to biodiesel mixes from 2 to 100 percent:

GH100 hose features a hydrogenated nitrile rubber tube, wrapped with aramid/poly braid reinforcement with a polyester abrasion-resistant cover. It is qualified for underhood use with B2 to B20 up to 150C and B100 up to 125C and for transmission oil cooler applications using synthetic lubricants at peak temperatures up to 175C.

“Temperature is the catalyst,” she said, “and with underhood temperatures easily reaching 150 C on a hot day in the southwest, we are seeing hose damage in a short time depending on the biodioesel blend percentage and quality of the blend, on a global front. The materials used in GH100 resist ‘bake out,’ which reduces the potential for damage and early hose failure.”

The new hose is designed to fill the temperature-performance gap between conventional chlorinated polyethylene tube hose products and premium Teflon hoses.

The Mexican government is getting into the renewable fuels game – they are funding a pilot scale algae project spearheaded by OriginOil to develop renewable jet fuel. The government is using the project to demonstrate industrial algae production and then hopes to launch the project into a substantial investment in large-scale jet fuels production.

“We are excited to support Mexico’s ‘Manhattan Project’ to produce 1% of the nation’s jet fuel from algae in less than five years,” said Riggs Eckelberry, OriginOil CEO. “By the end of this decade, the project must produce nearly twenty times that amount, propelling Mexico to the front rank of bio-fuel producing nations. We pledge the full dedication of our resources to help make this happen.”

Genesis Ventures of Ensenada, Baja California will be the project operator and the company has received a first Economy Ministry grant through The National Council for Science and Technology (CONACYT) for its first site. Genesis will develop the site as a model for numerous additional projects to be co-located with large CO2 sources. Once complete, the site will be operated by Ensenada’s Center for Scientific Research and Higher Education (CICESE) who have also invited University of Baja California (UABC) algae researchers to collaborate on the project.

“We intend to rely heavily on OriginOil’s expertise in feeding and sanitizing algae cultures, and its core harvesting and extraction technology,” said Eduardo Durazo Watanabe, President of Genesis Ventures. “Through our partner Jose Sanchez, we have a uniquely close association with OriginOil which will enable us to scale up production quickly.”

Worldwide ethanol production will replace one million barrels of oil per day this year, according to the latest forecast by the Global Renewable Fuels Alliance (GRFA).

In its global annual ethanol production forecast released today, the GRFA forecasts ethanol production to hit 88.7 billion litres in 2011, up three percent from 85.8 billion litres in 2010. Global production has now surpassed 550 million barrels of ethanol per year according to data compiled by F.O. Licht.

The United States continues to be the largest ethanol producer in the world with production levels expected to reach over 51 billion litres (13.5 U.S. gallons) in 2011.

The African continent has tremendous potential for biofuels production; however, production levels remain very low despite recent efforts by some countries to kick-start biofuel programs. The African continent is forecast to produce 170 million litres of ethanol in 2011, despite sub-Saharan Africa having one billion hectares of rain fed, crop producing land that could be producing biomass for ethanol according to the United Nations Food and Agriculture Organization.

Read more here.

The challenge to American agriculture to produce more food, fuel, and fiber on decreasing acreage continues to be challenged by governmental regulation, according to Gary Baise, agricultural lawyer with Olsson, Frank, Weeda, Terman, Bode, and Matz law firm in Washington, D.C.

At a recent GROWMARK FS Green Plan Solutions “In Pursuit of Maximum Yields” conference in East Peoria, Baise talked about some of those challenges, including the impact of policy on the ethanol industry.

During an interview after his presentation, Baise said ethanol production is increasing under the Renewable Fuels Standard (RFS2) passed in the energy bill by Congress and being implemented by EPA. “At the end of the day, this is all about a policy that can change,” he said. “Right now the policy is burn fuel that we can grow and the American farmers have responded to that magnificently.”

“Government policy is driving the demand for ethanol,” he added. “It’s risky, risky, risky. But, as they say on Wall Street, don’t fight the tape.” Baise believes that until Congress or the administration changes direction, “ethanol’s going to be around for several years to come.”

Listen to my interview with Gary Baise here: Gary Baise Interview

Save the date. Nebraska Ethanol Board’s (NEB) 2011 Emerging Issues Forum is set for April 7-8, 2011 in Omaha, Nebraska. The event is being held at the Magnolia hotel. While the agenda is still coming together and registration is not yet open (but soon), confirmed speakers already include:

• • Jan Koninckx, Global Business Director-Biofuels, DuPont: Fuel production opportunities for the corn ethanol sector
  • Douglas Durante, Executive Director, Clean Fuels Development Coalition: Legislative policies impacting FFVs and the Blend Wall
  • Dave Vander Griend, president, ICM: Improving ethanol value in emerging markets
  • Steffen Mueller, University of Illinois at Chicago: Low Carbon Fuels Standards and RFS2 Compliance
  • Alvaro Cordero, Manager of International Grains Operations, U.S. Grains Council: Corn and DDDGs demand and export marketing
  • Ron Lamberty, Market Development Director, American Coalition for Ethanol: Blender pump market development strategies

Past years have shown this forum to be informational and timely. To sign-up for forum updates and to be alerted when online registration opens, click here.

Just a reminder that the online auction of some brand new equipment for biodiesel production continues through 5 PM EST this Friday, February 18th, 2011.

Maas Companies of Rochester, Minnesota, a specialist in selling ethanol and biodiesel plants and related equipment, is helping Sustainable Energy sell its 600 Tons/Day Hexane Extraction Equipment through the ONLINE ONLY auction.

The equipment, made by Crown Iron Works, was for a plant expansion but was never installed.

Tyler Maas, Sales & Marketing Director states, “The on-line timed auction offers this equipment to a new buyer at a significant savings over new construction. During tighter economic times, a savings on equipment can enhance a plant’s bottom line.”

Buyers will submit bids via Proxibid and supply the seller with a $50,000 deposit. Full and final payment is due no later February 22. The equipment will need to be loaded and removed from the site by the end of the month.

More information is available through the auction’s website.

During the National Biodiesel Board Conference (NBB) last week, I had the opportunity to hang out with some “Next Generation Scientists for Biodiesel“. There were 10 in attendance at this year’s conference and the two that I spent time with were Evan Le, a senior studying mechanical engineering at the University of Nevada and Lucas Ellis, in a graduate Biochemical Engineering program at Dartmouth and a co-chair of Next Generation Scientists for Biodiesel.

I asked Le how he became involved in biodiesel and he said that it was actually a lot of professors pushing him in that direction and a lot of minor biodiesel projects in the courses he took that got him on his way. Eventually, his senior design project was to design a biodiesel project and he chose to focus on algae. This is when he truly discovered there is a lot of potential in biodiesel and he wanted to be one of the scientists who helps unlock this potential.

Le has just begun in career as a biodiesel scientist. He is going to spend the next two years working at Sandia National Laboratory where he will continue working with algae. He wants to focus on research on how to scale up algal biofuels from pilot to commercial scale. Today, he says, it takes too much energy to produce algal biofuels so they are not commercially viable. From there, he plans on working towards in Ph.D. in biodiesel.

While Le is focusing on algal biofuels, Lucas Ellis is actually focusing on cellulosic biofuels in his graduate program at Dartmouth, but he too is very interested in algae. However, he doesn’t feel that cellulosic ethanol and biodiesel compete, but rather are two complementary technologies that both have roles in energy production. Ellis also feels that the skills he is developing researching cellulosic ethanol, are the same skills needed to research and develop advanced biodiesel.

Ellis also fell into biodiesel, per se, while in his undergraduate program and once he got the biodiesel bug, it stayed with him. So when he was given the opportunity to become involved with Next Generation Scientists for Biodiesel, he jumped at the chance. Although the organization is relatively young with 30 founding members, they have a declaration that has been signed by more than a 1,000 budding biodiesel scientists around the world dedicating their careers to researching and developing the next technologies for advanced biofuels.

While at the conference, the 10 next gen biodiesel scientists met with various biodiesel mentors during a luncheon where students and professionals alike shared their ideas and visions for the future of biodiesel.

You can listen to my full interview with Evan and Lucas here: Interview with Evan & Lucas

2011 National Biodiesel Conference Photo Album

General Electric has acquired technology that will help it build taller wind towers.

This company press release says this next generation technology from Wind Tower Systems, LLC (WTS) is necessary as wind turbine blades have been getting longer:

WTS has been working on the development of the space frame tower system technology for use at wind farm sites that require hub heights of 100 meters or more. The space frame tower technology is a highly engineered and optimized structure that will handle the unique static and dynamic loads generated by wind turbines.

“We see great potential in the addition of this technology to our portfolio not only for our customers but also for the wind industry as a whole,” said Victor Abate, vice president-renewable energy for GE Power & Water. “Taller towers are an essential complement to longer blades. Longer blades capture more energy and in turn improve return on investment for wind farm developers.”

GE officials say the taller towers will help lower wind energy costs. The company will be testing the new tower later this year with plans to make it commercially available by next year.

All diesel fuel in Canada … for heating and transportation … will be required to have at least a 2 percent blend starting July 1, 2011.

This article from Reuters says this requirement joins the country’s 5 percent renewable content in gasoline:

Industry and investors had grown impatient waiting for word on the proposed regulatory change for diesel. The government said it needed proof from demonstration projects that biodiesel could perform under Canadian conditions before it set a start date.

“It will help moderate price by adding to our fuel supply, create new jobs, and benefit farmers and drivers alike.”

The mandate could end up being a boon for the U.S. biodiesel industry. Right now, about 75 percent of biodiesel produced in Canada is sent to America. But with the new mandate, more of that will have to stay home, and possibly, the Canadians might have to get some biodiesel from their friends to the south to meet the requirement.

Syngenta Seeds announced today it has received full deregulation from USDA for corn amylase (Event 3272), the first corn output trait designed to help ethanol industry become more efficient, profitable and environmentally friendly.

According to a company release, Syngenta Seeds plans to sell corn containing Event 3272 under the “Enogen” seed brand. “Enogen corn is a breakthrough product that provides ethanol producers a proven means to create more value per gallon while offering targeted corn growers an opportunity to cultivate a premium specialty crop in a contracted, closed production system,” said David Morgan, president of Syngenta Seeds. “Also, Enogen corn can substantially reduce the energy and water consumed and the carbon emissions associated with ethanol production.”

The Enogen corn amylase trait is the first genetically modified output trait in corn for the ethanol industry. By enabling expression of an optimized alpha-amylase enzyme directly in corn, the Enogen trait improves dry grind ethanol production in a way that can be easily integrated into an ethanol production plant’s existing infrastructure. Further, Enogen corn is another innovative product that can provide the right growers more choice for their farms and help keep rural communities strong.

Enogen grain has been tested extensively at Western Plains Energy (WPE), in Oakley, KS. The most visible result for WPE has been an eight percent increase in ethanol production combined with an eight percent reduction in natural gas consumption. “What that means for us is more profits, with less expense,” said general manager and CEO Steve McNinch, “And there are no ‘gotchas’ for the plant either.”