Domestic Fuel

The U.S. Department of Agriculture has changed some of its rules that will help the bifuels industries, and, in turn, help create jobs in rural America and increase the production and use of renewable energy.

The changes will allow non-rural areas to get funding and remove prior citizenship requirements for borrowers under the Biorefinery Assistance Program, the Repowering Assistance Program and the Bioenergy Program for Advanced Biofuels:

Biorefinery Assistance Program:
This program supports the development and construction of commercial-scale biorefineries and the retrofit of existing facilities using eligible technologies. The changes increase the maximum loan guarantee percentage in certain circumstances; add “refinancing” as an eligible project purpose under certain conditions.

“These changes contribute to the Obama Administration’s effort to revitalize our rural economy and meet our energy challenges,” [Agriculture Secretary Tom] Vilsack said. “It’s part of our effort to ‘win the future.’ USDA’s renewable energy programs provide new sources of farm income, increase domestic energy production and develop a domestic renewable energy industry which will create jobs and reduce America’s dependence on imported oil.”

The rule changes for the Repowering Assistance Program and the Bioenergy Program for Advanced Biofuels are in the federal register today, and the rule for the Biorefinery Assistance Program is expected to be published on Monday.

Once again, ethanol is being attacked by the national media for causing food shortages.

In a Washington Post editorial today, long-time ethanol opponent Tim Searchinger writes about “How biofuels contribute to the food crisis.” While admitting the “2008 food crisis” resulted from a number of causes, Searchinger said, “We should recognize the ways in which biofuels are driving it.”

In response, Growth Energy released a chart showing ethanol’s small slice of total global grain supplies and CEO Tom Buis said Searchinger used the op-ed to defend his “indirect land use scheme.”

“Ethanol is both a food and a fuel business. What is ignored in this piece is that every ethanol plant in the country turns out animal feed as well as fuel – we only take the starch out of the corn kernel but put all the protein, fiber and oils right back into the food supply as ‘dried distillers grains.’ Even then, ethanol’s use of the global grain supply is a fraction,” said Buis. “The notion that ethanol is causing today’s food crisis ignores reality: the reality of the market, the reality of global trade agreements, the reality that other countries have their own domestic farm policies, and the reality that Wall Street’s rampant speculation is driving up food prices.”

Buis and Todd Becker, CEO of Green Plains Renewable Energy, held a telephone press conference this morning to address the issue.

Becker noted the reasons our country should be very supportive of ethanol. “Ethanol today, without the tax credit, is the cheapest motor fuel in the world that you can buy today,” he said. “We’re even cheaper than Brazilian ethanol today because we can make it more competitively than they can.”

Noting the importance of low cost distillers grains as livestock feed, Becker said, “When you talk about 40% of the corn kernel that goes right back into the feed supply, ethanol doesn’t just fuel, it feeds America as well. “Anybody that says that we’re not contributing that we’re not contributing to cheaper food supplies doesn’t understand the full equation.”

Listen to the press conference here – Becker’s comments start at about 22 minutes in when he joins the call. Growth Energy Press Conference

Apps for trade shows and conferences are becoming more and more popular. The next one I’ll be using is the National Ethanol Conference App in Phoenix. I hope the weather is as nice as it was for the National Biodiesel Conference this week!

* Get 24 hour access to unique, on-the-go information, maps and networking.
* Organize your schedule.
* Navigate using the conference map.
* Stay in the know with important alerts and the most up-to-date event schedule.
* Download speaker and sponsor information.

For Blackberry, Droid and all other smartphones: From your phone, point your mobile browser to http://m.core-apps.com/nec2011 (the system will determine your phone type for proper download for your device). Then bookmark this page on your phone for easy future access.

Solar Acquisition Corp. and Global Natural Energy Cyprus Ltd have signed a deal to form joint venture, GNE USA, that will produce algae-based biodiesel.

This press release says the agreement should be finalized in the next two months:

“GNE-USA will come out of the gate with a strong competitive advantage in its exclusive right to the GNE patented technology,” said Bruce Levy, SLRX director. “We expect GNE-USA to have high volumes and low costs driven by this technology.”

The GNE systems both reduce the cost of growing the algae and significantly reduce the costs of extracting the oil used for diesel fuel production.

Company officials say their system is much more advanced than their competition. The deal will also give the new company years of experience in the algae farm and alternative energy markets.

Animal nutrition company Alltech will be holding its first annual International Algae Conference, February 22-24, 2011 at the Hyatt Regency Hotel in Lexington, Kentucky:

[E]ntitled Algae: The Growth Platform, [the conference] will be dedicated to discussing the technological revolution of algae fermentation, including biodiesel, bioremediation, carbon sequestration, and application to both novel pharmaceutical products and animal nutrition.

The conference will also feature a tour of Alltech’s new world-class algae production and research facility, one of the largest in the world. The good folks at Alltech are also making sure that media not able to attend the conference will still be able to go on the plant tour on Feb. 23rd. RSVP to tspicer@alltech.com. More information and conference registration are available here.

A South Dakota wind farm will receive U.S. Department of Agriculture loan guarantees that will help build 100 wind turbines providing 151.5 megawatts of electricity.

This USDA press release says the money will help Basin Electric Power Cooperative build the PrairieWinds wind farm energy project in central South Dakota that will join the cooperative’s other electric generation projects to meet the needs of 2.8 million customers served by 135 distribution systems in nine states:

“The investment announced today will help us ‘win the future,’” said [Agriculture Secretary Tom] Vilsack. “Capturing and converting wind to electricity will create jobs, reduce our reliance on imported energy, and build a reliable source of renewable energy for generations of rural Americans.”

The South Dakota project is a model of public and private investment partnership. The Wind Partners announced in late September they had raised the $16.8 million required from South Dakota investors for their part of the project, along with 32 separate rural land owners who participated by providing lease easements. PrairieWinds will construct the turbines for the Wind Partners and operate them. Through PrairieWinds, Basin Electric will purchase the electricity produced. A $204 million loan guarantee will be funded by USDA Rural Development’s Rural Utilities Service. The Loan Guarantee is for 60 percent of the total $340 million project costs. Funding is contingent upon meeting the conditions of the guaranteed loan agreement.

American Ethanol has entered into a sponsor partnership with Richard Childress Racing and its No. 33 Chevrolet driver, Clint Bowyer, for the 2011 NASCAR Sprint Cup Series season.

American Ethanol will be the primary sponsor of the No. 33 Chevrolet car at the June 5th Kansas Speedway 400 and an associate sponsor of the car for the rest of the season. Bowyer, who is a native of Kansas, will serve as an official spokesman for American Ethanol this season.

“Born and raised in the Midwest, it’s truly an honor to support American farmers as they strive to develop energy independence for our country,” said Bowyer. “I look forward to representing American Ethanol both on and off the track beginning this weekend in Daytona.”

Growth Energy and the National Corn Growers Association are the primary organizations behind the creation of American Ethanol, the coalition that signed a partnership agreement with NASCAR to promote the use of domestically-produced ethanol from both corn and cellulosic biomass.

There were not many changes in the February World Agriculture Supply and Demand Estimate (WASDE) report out today, except in the corn department. Corn used for ethanol is projected 50 million bushels higher on a higher-than-expected November final ethanol production estimate and weekly ethanol data that indicate record output for December and January.

USDA chief economist Joe Glauber says ethanol plants are using more corn than expected, almost 8.5 percent more than last year. “The (ethanol) production levels themselves suggest that we’re producing at a level above the mandated levels under the Renewable Fuels Standard,” Glauber told USDA Radio. “For corn use this is obviously a record and it now probably accounts for at least 40 percent of the corn use at least this year.”

Ethanol interests are concerned that the report may flame the food versus fuel debate fire again, despite the fact that farmers are likely to respond to higher corn prices by planting more than enough corn this year to meet all needs.

“I have said it before and it looks like I will say it again, America’s farmers are second to none when it comes to production,” said Growth Energy CEO Tom Buis. “Our farmers are getting more corn out of every acre thanks to better science in seeds, precision farming, and technology and they will continue to meet our nation’s demands for food, feed and fuel.”

National Corn Growers Association President Bart Schott agrees in a new NCGA editorial on food versus fuel. “We are growing more corn on each acre, thanks to technology in the seed and practices on the farm. And we will do so for years to come,” writes Schott. “In 2010, U.S. growers reached an average yield of 152.8 bushels per acre. In 2000, it was 136.9 bushels per acre and in 1990 the average yield was 118.5. Some seed companies and others think we can reach 300 bushels per acre.”

Even if the report is overestimating corn for ethanol use, as the Renewable Fuels Association believes, RFA’s Matt Hartwig says it will still have an impact on the commodity market and prices. “These revisions will add fuel to the speculative fire, likely pushing prices for corn and other commodities higher. Many will use strong ethanol demand as the rationale to drive the price of corn futures as high as the market will bear. In turn, this will likely cause ill-informed industries and talking heads to pronounce U.S. ethanol production as the root cause of food inflation the world over.”

The February USDA World Agriculture Supply and Demand Estimate (WASDE) report out today includes some revisions in grain use numbers. This edition of the Ethanol Report podcast with Renewable Fuels Association Vice President of Research Geoff Cooper takes a look at those numbers and provides some perspective from the ethanol industry standpoint.

For U.S. corn supplies, USDA lowered its forecast of marketing year ending stocks to 675 million bushels, down 70 million bushels from the January estimate. The change comes from slight increases in the estimates of corn for ethanol use and sweetener/starch use. Globally, USDA is estimating a slightly smaller grain (wheat, rice, corn, etc.) supply than last year’s record amount of more than 2.7 billion metric tons. “People lose sight of the global picture of the grain markets,” Cooper says. “The fact of the matter is, the global grain supply remains very strong.”

Cooper says RFA believes USDA may be slightly overestimating corn for ethanol use, even though export demand prospects remain strong. “Even if we do assume that we export 300 or 400 million gallons of ethanol in this marketing year, that still means the domestic market is going to need to absorb the remaining 13.3 or 13.4 billion gallons, which seems unlikely given the E10 blend wall and the fact that E15 hasn’t really penetrated the market yet.”

The estimates are likely to re-ignite the food versus fuel debate, but Cooper notes that higher prices will likely mean farmers will plant more corn this year. “It’s a basic concept that farmers respond to price signals,” he said.

Listen to the Ethanol Report here: Ethanol Report on February WASDE

The 2011 National Biodiesel Conference has been a scene of optimism for the industry. To wrap things up I spoke with Donnell Rehagen, COO, National Biodiesel Board. He says that we had approximately 1,100 in attendance and it looked like business was getting done.

Yesterday NBB held its annual membership meeting and approved projects and a plan that will begin this fall. This gives the staff a “play book” to execute initiatives from market development to governmental affairs.

So let’s look forward to next year when the conference will take place in Orlando, FL!

You can listen to my interview with Donnell here: Interview with Donnell Rehagen

2011 National Biodiesel Conference Photo Album

It looks like there’s a very high expectation among our various audiences that commodity prices will go higher. You haven’t sold all of last year’s soybeans have you! We asked the question, “Will commodity prices be higher or lower a year from now?” Overwhelmingly, 70% said higher while 21% said about the same and only 9% lower.

Our next ZimmPoll is now live and asks the question, “What smartphone platform do you use” The Apple iPhone is now available from Verizon. I wonder if this will change things. Let us know and thank you for participating.

ZimmPoll is sponsored by Rhea+Kaiser, a full-service advertising/public relations agency.

A new commercial scale advance biofuels plant broke ground today in Vero Beach, Florida.

The $130 million plant is being developed by INEOS New Planet BioEnergy (INPB), a joint venture between INEOS Bio and New Planet Energy. The Indian River BioEnergy Center in Vero Beach, Florida, will convert yard, vegetative and household wastes into cellulosic ethanol and renewable power for the local community.

“We are excited to celebrate this important milestone, which moves advanced biofuels a step closer to achieving significant scale, enabling the U.S. to achieve a leading position in the bioenergy sector,” said Peter Williams, Chairman of INPB and CEO of INEOS Bio. “As part of our goal of advancing the biofuels industry, educating people about the benefits of this technology and creating demand for advanced biofuels, we will continue to license this world-changing technology to partners across the U.S. and beyond, bringing secure, renewable fuel and power to communities worldwide.”

When production starts in mid-2012, the Indian River BioEnergy Center will produce eight million gallons of bioethanol and six megawatts (gross) of renewable power, of which approximately two megawatts will be exported to the local community. This renewable electricity will be able to power approximately 1,400 homes. Located at a former citrus processing plant site in Vero Beach, Florida, the BioEnergy Center will provide 380 direct and indirect jobs (including 175 construction jobs) over the next two years and 50 full-time jobs in Indian River County where, current unemployment is at 13.6 percent, the 23rd highest metro area in the nation.

Despite being indoors, there was plenty of wind used during Sunday’s Super Bowl (no, I’m not talking about Joe Buck yammering on). The electricity used to power everything from TV cameras to the massive jumbo screen has been offset by the purchase of wind energy credits from a wind farm in Texas.

This story from Environment News Service says the deal is an agreement between between Just Energy, the National Football League and the North Texas Super Bowl XLV Host Committee:

Just Energy will purchase renewable energy certificates on behalf of the Super Bowl to offset all direct and indirect carbon emissions associated with power generation at major Super Bowl XLV venues.

“We’re thrilled to be chosen by the NFL to play a key role in the greening of the world’s most significant annual sports championship,” said Ken Hartwick, chief executive of Just Energy. “Every day we see more organizations and more people becoming greener in their habits. We see this as a powerful opportunity to join the NFL and lead by example before a global audience.”

Just Energy also provided renewable energy certificates for the recent Pro Bowl in Hawaii.

The nation’s first multi-use industrial park fueling station to supply hydrogen directly for industrial, commercial, and government use has opened in South Carolina.

Logistics provider GENCO ATC has partnered with customers Kimberly-Clark Corporation, Plug Power Inc., Air Products, and the Aiken-Edgefield Development Partnership to launch the facility:

The fueling station supplies hydrogen directly to Kimberly-Clark’s 450,000-square-foot distribution facility managed by GENCO ATC to be used with fuel cells powering Toyota forklifts. Both the fueling station and the Kimberly-Clark facility are located in Sage Mill Industrial Park, Graniteville, South Carolina.

“Kimberly-Clark is constantly looking for innovative ways to minimize the impact of our operations on the environment,” said Rick Sather, Vice President of Customer Supply Chain at Kimberly-Clark. “We are pleased to partner with GENCO ATC, Plug Power and Air Products to help expand hydrogen fuel cell technology to our entire forklift fleet. This energy technology can reduce our carbon emissions by hundreds of metric tons per year, lower costs and drive efficiencies to power our operations.”

The project got some help from $1.1 million of a $6.1 million cost-share award made to GENCO ATC by the U.S. Department of Energy.

One of the big knocks against alternative forms of energy is that they are not cost competitive to more traditional counterparts. However, the American Wind Energy Association (AWEA) now contends that wind energy generation costs about the same as natural gas.

And this article from ClimateCentral.org says despite a tough year for new wind energy installations, the group is looking forward to a much better future:

Experts have suggested that natural gas, with its apparently smaller climate impact and widespread availability within the United States, could temporarily replace coal on our way to a cleaner energy future. But recent reports have called some of gas’s benefits into question; could the economics and the science suggest a coming turn against the so-called “bridge fuel?”

AWEA’s statement of competitiveness with natural gas does include the federal incentives for wind power, primarily the renewable energy production tax credit. The credit can lower the price of wind power by 2.2 cents per kilowatt-hour, and is currently set to expire at the end of 2012. Including this straightforward subsidy, and excluding various other factors from the wind power economics equation can lead one to make the claim of cost parity, some experts say.

Wind energy proponents say they need more consistent government policies … and less federal incentives for the petroleum industry … to stay competitive.