Domestic Fuel

A new international label for companies and products using wind energy is being proposed by a new organization.

Wind energy industry leaders gathered in New York today on Global Wind Day to unveil the proposed WindMade™ standard for public comment and to promote it worldwide. This event was co-sponsored by the new WindMade™ organization, headquartered in Brussels, Belgium, and the Wind Energy Foundation, of Washington, D.C.

“I believe that WindMade has the potential to develop into a truly global movement, with consumers around the world demanding transparency on the companies and products they choose,” said WindMade CEO Henrik Kuffner. “WindMade can make a real difference in driving consumer demand for sustainable products, and I am excited to be given the opportunity to spearhead this groundbreaking initiative.”

The proposed standard requires participating companies to source a minimum of 25 per cent of their electricity demand from wind power and it was developed by a committee made up of representatives from founding organizations, including the World Wildlife Fund (WWF), American Wind Energy Association (AWEA), LEGO, Climate Friendly, Gold Standard, and Vestas Wind Systems. “We believe that the label will build a bridge between consumers and companies committed to clean energy,” said Steve Sawyer, Chairman of the WindMade™ Board and Secretary General of GWEC.

Organizers say that WindMade™ will be “dedicated to increasing corporate investments in wind power by informing consumers about companies’ use of wind energy, and increasing demand for products that embrace this clean and renewable energy source.”

We’ve got some beef eaters in this community! In answer to our question, “What’s your favorite meat?” an overwhelming majority said Beef at 39%. Here’s how the other choices fared in order. Fish, 15%; Chicken, 12%; Pork, 10%; All of the above, 10%; Lamb, 5%; Venison, 5% and Other, 4%. I’ve spoken with some AgWired community members who voted that told me they voted for beef but definitely eat other meat choices. We just thought we’d ask the question this way to see if you had a favorite and it sure looks like you do. Thanks to everyone who participated.

Our new ZimmPoll is now live. We’re asking the question, “Will ethanol be an issue in the presidential race?” Let us know what you think. And if you have any questions you want to suggest for future ZimmPolls please let us know.

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

The ethanol industry is anxious to continue talks about the future of the Volumetric Ethanol Excise Tax Credit (VEETC) and how best to balance the budget while still ensuring the ethanol industry can move forward. Yet while many believe the Senate’s defeat of Sen. Coburn’s ethanol amendment opens the door for dialogue, others believe today’s action does little to move the debate forward.

“Today’s debate did little to move the ball forward in encouraging the development of an advanced and cellulosic biofuels industry,” said Michael McAdams, president of the Advanced Biofuels Association. “Our nation needs a comprehensive approach that focuses on the future of all biofuels, including advanced drop-in, algae, and cellulosic fuels to deliver as many gallons to back out foreign oil as quickly as possible. In order to best achieve this goal, Congress must consider policies that are technology, feedstock, and product neutral, and provide long term certainty for the markets. We remain committed to working with Congressional leaders and stakeholder groups to find a common sense approach the benefits all biofuels.”

While all groups remain committed to working with federal policymakers on a compromise, Bart Schott, a grower from Kulm, North Dakota and the current president of the National Corn Growers Association noted that should Coburn’s policy have been passed, the ethanol industry could have seen production reduced by 38 percent. “This would have significantly impacted an industry that provides and supports more than 400,000 U.S. jobs, many in rural America, during a time of economic uncertainty. The loss in ethanol production could have resulted in the shedding of approximately 112,000 of these jobs, in all sectors of the economy,” said Schott.

Schott pointed out that while the ethanol industry remains open to change the oil and gas industry has refused to proactively engage in debates about subsidy reform. He continued by reiterating his organization’s support of the Ethanol Reform and Deficit Reduction Act that was introduced yesterday by Sens. John Thune and Amy Klobuchar.

Jeff Broin, chairman and CEO, of POET, the country’s largest ethanol producer added that the country must transition away from the tax credit and make a short-term investment that will reap long-term rewards. This should be done through the expansion of flex fuel pumps and flex fuel vehicles.

“Over the years as the tax credit has declined, we have been able to improve our efficiency and stay competitive with gasoline. Now it is time for the ethanol industry to take the next step in competing with oil. That can only happen if ethanol is allowed greater access to the fuel market,” concluded Broin.

After the defeat Tuesday in the Senate of an amendment by Sen. Tom Coburn (R-OK) to immediately eliminate the Volumetric Ethanol Excise Tax Credit (VEETC), the ethanol industry is supporting another approach and the two concepts could be heading for a showdown in the Senate before the end of the month.

“That indeed has been teed up with a commitment by the majority leader for a vote on Coburn again in a couple of weeks and a vote on an alternative,” says Renewable Fuels Association CEO and President Bob Dinneen.

The alternative is the Ethanol Reform and Deficit Reduction Act introduced this week by Senators John Thune (R-SD) and Amy Klobuchar (D-MN) that would end the tax incentive this year while still helping the industry move forward. The legislation would provide tax incentives for infrastructure such as blender pumps, and for cellulosic biofuels development, as well as a variable safety-net determined by the price of oil. “It’s very fiscally responsible and makes sense as an insurance that the investment that the taxpayer has already made in this industry will be protected,” Dinneen said.

The ethanol industry and agriculture groups are supportive of the alternate approach, which would save about $1 billion toward deficit reduction and Dinneen hopes it will go head-to-head against the Coburn amendment. “I welcome that side-by-side comparison,” he says. “I think there would be a great deal of support for our vision.”

In this edition of “The Ethanol Report,” Dinneen talks about why ending the ethanol tax credit without a plan to move forward would be disastrous and how the ethanol industry is taking the initiative to work with Congress and develop a plan that cuts spending while continuing to move the country toward energy independence.

Listen to or download the interview with Dinneen here: Ethanol Report on Senate Legislation

In a vote of 40-59, Sen. Tom Coburn’s (R-OK) Amendment No. 436 to immediately eliminate the Volumetric Ethanol Excise Tax Credit (VEETC) and the tariff on imported ethanol was quashed. Coburn’s proposal needed 60 votes to move forward but fell short by 20 votes. Shortly after the news hit, the ethanol industry began calling for “real reform.”

“The fight is not over until we achieve real reform for the ethanol industry, but this vote sends a signal that there is a right way and a wrong way to go about it,” said Growth Energy CEO Tom Buis. “For more than a year, Growth Energy has advocated for our Fueling Freedom plan, which would phase out the VEETC in a fiscally responsible way, while redirecting the funds toward ethanol infrastructure build out. Opening the fuels market to ethanol, through Flex Fuel pumps and Flex Fuel vehicles, would give consumers a choice at the pump and allow us to ultimately eliminate all government assistance.”

The industry applauded the Senators who voted to stop the amendment from moving forward. Renewable Fuels Association President and CEO Bob Dinneen said, “This vote demonstrates the lack of appetite for this kind of destructive policy and political gamesmanship. The Senate and the country need to focus on a comprehensive energy strategy that seeks to expand America’s ability to renewably meet its fuel needs.”

Yesterday the ethanol industry joined together in support of another proposal introduced by Senators Thune and Klobuchar. This proposal also eliminates VEETC in its current form but replaces it with a variable tax incentive tied to the price of oil, which hit more than $120 a barrel today, a five week high. This proposal would also allocate funds to improve ethanol infrastructure and supports tax policies for emerging ethanol technologies.

“This vote is a major victory for the biofuels industry and American consumers and a setback for those clinging to our status-quo dependence on oil,” added Brian Jennings, executive vice president of the American Coalition for Ethanol. “It proves political stunts aimed at ethanol won’t be tolerated in the U.S. Senate. Now we can focus on continuing our work with the White House and both chambers of Congress to support meaningful and responsible legislation to reform ethanol policy.”

According to a new study released today by the National Biodiesel Board (NBB), the U.S. biodiesel industry will grow to support more than 74,000 jobs throughout the economy by 2015. These jobs will create nearly $4 billion in household income and generate almost $1.6 billion in local, state and federal tax revenues. The study was conducted by Cardno ENTRIX and released in timing with NBB’s annual membership meeting being held in Washington, D.C.

“This shows without question that a healthy and thriving biodiesel industry is good for America,” said Joe Jobe, CEO of NBB. “Biodiesel isn’t just improving our environment and shoring up our energy security, it’s creating good-paying jobs in virtually every state in the country.”

The study also looked at how the industry responded after losing its key tax incentive in 2010, which was retroactively brought back at the end of the year. It discovered the expiration of the tax credit and the resulting 42 percent drop in production caused the loss of nearly 8,900 jobs. Household income also decreased by $485 million and a reduction in real GDP or $879 million.

Fortunately for the industry, this year marks a major turnaround as the Renewable Fuels Standard ramps up with biodiesel considered an advanced biofuel. In January alone, production jumped 69 percent and is continuing to climb.

“Since the EPA designated us as an advanced biofuel last year and Congress reinstated our tax incentive in December, the market has responded with incredible quickness, ” said Jobe. “Plants across the country are reopening and ramping up production. This means new jobs in all sorts of sectors – manufacturing, transportation, agriculture, sales. It means plants are hiring, buying supplies and machinery, and circulating money throughout the economy.”

Jobe continued, “The numbers also show what happens when those incentives weren’t there in 2010. They demonstrate what we’ve been saying, that biodiesel is still a young industry. We’re trying to gain a foothold in a business that is and always has been dominated by fossil fuels, and breaking into that business is extraordinarily difficult.”

Proterra Inc has secured $30 million in financing led by Silicon Valley venture firm Kleiner Perkins Caufield & Byers. Also participating were GM Ventures, Mitsui & Co. Ltd., Vision Ridge Partners, and 88 Green Ventures. Golden, Colorado-based Proterra will use the money to accelerate the commercialization of its fast-charge battery electric transit buses and automated bus charging system.

“Our goal at Proterra is to fundamentally transform urban transit,” said Jeff Granato, President of Proterra. “The tremendous resources of Kleiner Perkins, leveraged with GM’s automotive expertise and the financial and technical strength of Mitsui, Vision Ridge and 88 Green Ventures gives us an enviable platform to compete and win in the electric transit bus market.”

Proterra’s main product is its 35 foot EcoRide BE35 bus. A bus is currently being tested by Foothill Transit in Pomona, California since last September. The company plans to deliver EcoRide buses to VIA Transit in San Antonio and Tallahassee Star Metro later this year. The bus is emission free, quiet and charges in less than 10 minutes with the company’s FastFill charging station. When compared to the diesel buses EcoRide is designed to replace, the bus is averaging nearly 24 miles per gallon, a 600 percent improvement over a typical diesel bus that averages only 4 miles or less per gallon.

Former Vice President Al Gore, a partner with Kleiner Perkins Caufield & Byers noted, “Electrification of public transportation has tremendous benefits to governments, municipalities and citizens by reducing the operating cost of transit, while also eliminating local air pollution and reducing C02 per passenger mile in the industry.

The funds will be used to complete federal validation testing, launch additional pilot fleets, as well as enable the company to reduce costs and increase volume of production at its production facility in Greenville, South Carolina.

Solar energy has come full circle for Bell Labs. Recently, Bell Labs Global Headquarters in Murray Hill, NJ “flipped the switch” on its 1.2 megawatt solar power system. This is the same site where in 1954, Bell Labs researchers invented the first device to convert sunlight into electricity in meaningful amounts.

A formal ceremony was held at the site on Jun 7 and participants included Robert Mennella, COO, ConEdison Development; New Providence Council President Michael Gennaro; John Conley, Project Development Director, SunPower Corporation; and Stephen Reynolds, General Counsel, Alcatel-Lucent. The solar system is comprised of 3,728 solar panels and was designed and constructed by SunPower Corp. The new solar power system will provide an estimated 10 percent of the campus’ electricity when operating at peak capacity. The system is owned and operated by ConEdison Development.

In advance of a vote in the Senate on an amendment to eliminate the Volumetric Ethanol Excise Tax Credit (VEETC) immediately, ethanol interests remain “cautiously optimistic” that the measure will fail.

Seven agriculture and ethanol organizations sent a letter to the Senate leadership urging a no vote on the amendment proposed last week by Sen. Tom Coburn (R-OK). In it the groups note that, “As evidenced by the ethanol tax reform legislation recently introduced by a bipartisan group of senators and supported by our nation’s ethanol producers, the ethanol industry understands the need for reforming the tax incentive to significantly reduce costs to a more responsible approach that protects the evolution of the industry.” Groups signing the letter include the American Coalition for Ethanol, Advanced Ethanol Council, American Farm Bureau Federation, Growth Energy, National Corn Growers Association, National Farmers Union, and the Renewable Fuels Association.

Other groups that have voiced opposition to the amendment include the Petroleum Marketers Association of America (PMAA), and the Society of Independent Gasoline Marketers of America (SIGMA) which sent a letter to Sen. Coburn in opposition stating, “…an abrupt termination of VEETC before that date will injure many marketers who have contracts to purchase ethanol at prices that were premised upon the existence of VEETC through the year 2011. SIGMA assumes that such a consequence is not your intent and therefore urges you to forego any legislation which would end VEETC before the end of this year.”

A vote on the amendment is expected this afternoon.

This month, Brazil has resumed exporting ethanol to the United States, at the same time the country is struggling to meet its own country’s demand for ethanol to fuel is flex fuel vehicles (FFVs). Ethanol producers in the country have expanded exponentially – there are more than 115 ethanol plants many of which have come online since 2005. However, despite massive investments by foreign companies into the country’s biofuels industry, nary a five new ethanol plants are expected to come online the remainder of this year.

Some may remember that last year due to a decreased sugarcane harvest caused by excessive rains, the country reduced its minimum ethanol requirements in the country’s fuel. Then this year, threat of another reduction circulated when once again the sugarcane harvest was lower than expected. In response, the government has cited ethanol shortages due to poor long-term strategic planning by the industry. The ethanol industry countered that the cause of problems lies in lack of uneven taxes, vague plans for future regulation and lack of investment incentives.

“As long as there is no clarity about the policy for fuels, there is a risk for investments,” said the president of Sao Paulo-based Datagro consultants, Plinio Nastari in a Reuters article.

Yet on the flip side of this bickering between the Brazilian government and Brazilian ethanol producers, the industry has once again begun exporting fuel to the U.S. over the past few months. According to brokers quoted in a recent Soyatech article, the ethanol industry has exported 1.9 million barrels to the U.S. as a result of fuel retailers needing to meet the requirements of the Renewable Fuels Standard.

Brazilian sugarcane ethanol has been considered an advanced biofuel as designated by the U.S. Environmental Protection Agency (EPA). Since there is a shortage of advanced biofuels being produced in the U.S., sugarcane ethanol has become a premium fuel for the obligated parties. Ironically, the exportation of ethanol was an abrupt change as earlier this year Brazil imported ethanol to meet its country’s mandates – the first time since 1994.
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Earlier today, Sens. John Thune (R-SD) and Amy Klobuchar (D-MN) created waves when they announced their new biofuels bill the Ethanol Reform and Deficit Reduction Act. This act is designed to address federal budget issues while phasing out ethanol tax incentives (VEETC) that are designed to go to the fuel blender of record. While the ethanol industry came out in full support of the bill, expected to be voted on tomorrow, some in the fuel retail industry have quite a different view – in favor they are not.

In an exclusive interview with DomesticFuel, Mike Lewis, Principal of one of the largest renewable fuel retailers in California, Pearson Fuels, said that
while ethanol subsidies have become unpalatable to many legislators, it is important to keep in mind that in the short term there are really only two fuel options for the 200 million plus gasoline and flex fuel vehicles on the the US roads. These two options are 1) gasoline or 2) gasoline and ethanol blends, period.

Lewis continued by saying, “As distributors and proponents of E85, we can tell you with certainty that when the VEETC is reduced or eliminated there will be an immediate decrease in the price advantage E85 has versus gasoline and this will immediately, significantly hurt E85 volumes, gasoline’s only real competitor. It will also put more pressure on the price of gasoline, causing it to increase.”

The Thune/Klobuchar Ethanol Reform and Deficit Reduction Act will incentivize some E85 infrastructure, says Lewis, but this will pale in comparison to the existing benefits of the VEETC enjoyed by E85.

“What we really need is a carve out for E85 from any elimination of the VEETC,” said Lewis. “Gasoline is subsidized in so many direct and indirect ways. For example, why do so many Americans know where the Straight of Hormuz is and how many tax dollars have we spent there? There is no line item for US Military on oil company expense statements, but it is absolutely an expense required to ensure access to their raw materials. The expense to carve out E85 from VEETC elimination is insignificant by comparison.”

Should the Ethanol Reform and Deficit Reduction Act be passed, it would take effect July 1, 2011.

You hear a lot about the role biofuels could take in the aviation sector. Just a few weeks ago, the U.S. Air Force successfully tested renewable jet fuel in several of their fighter planes. Biojet fuel is poised to become a big player for the U.S. military which is the largest user of fuel in the country. But what might be holding biojetfuel back on a commercial aviation scale? No ASTM International Committee on Petroleum and Lubricant approvals.

ASTM develops standards related to oil products. You hear much ado about the biodiesel industry producing ASTM standard biodiesel but we haven’t heard much on this issue in terms of aviation. This week, ASTM announced a provisional approval for a new specification for hydroprocessed renewable jet fuel.

“This is a significant step toward a new era of greener and more energy-independent air travel,” said US FAA Administrator Randy Babbit. “We anticipate publication of a standard in the next few weeks will open the door for production of commercial aviation biofuels that can be used without changing aircraft systems or airport fueling infrastructure.”

To help move along the approval process, the Commercial Aviation Alternative Fuel Initiative conducted thorough research and testing. Once the standard is officially approved, biojet fuels with up to a 50 percent blend can be used. Feedstocks currently in the running – camelina, jatropha and algae.

Senators John Thune (R-SD) and Amy Klobuchar (D-MN) along with a bipartisan group of nine other Senate colleagues have introduced the Ethanol Reform and Deficit Reduction Act. The bill is designed to modify the current Volumetric Ethanol Excise Tax Incentive (VEETC), which is a set tax, to a variable tax incentive tied to the price of oil. To help open up market access for ethanol, the bill would also allocate funds saved through the updated ethanol tax incentive, to be used to expand fueling infrastructure through the vehicle of improved tax policies.

The legislation would generate $2.5 billion by ending the blenders’ credit or VEETC on July 1, 2011, and allocate $1 billion to deficit reduction and invest $1.5 billion in a blender pump tax credit, cellulosic biofuel tax incentives, a variable VEETC safety-net, and extension of the Small Ethanol Producer Tax Credit. While the USDA currently has a 10,000 blender pump program, the Ethanol Reform and Deficit Reduction Act also calls for 53,000 blender pumps – a number the ethanol industry feels is necessary to meet the Renewable Fuels Standard requirements.

“The legislation essentially sacrifices the ethanol blenders’ credit to catalyze next-generation biofuels and level the playing field with oil with one half of the market access puzzle – blender pumps,” said Brian Jennings, executive vice president of the American Coalition for Ethanol. “The other half of the market access puzzle, Flexible Fuel Vehicles (FFVs) will need to be addressed separately. ACE has been working behind the scenes with Republicans, Democrats, and the White House to advance this reform package and we will strongly support its adoption in Congress.”

Renewable Fuels Association President and CEO Bob Dinneen added, “This is thoughtful, responsible legislation that addresses the need for sound budget policy with progressive and innovative strategies for creating jobs and ending America’s addiction to imported oil.
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Ethanol is expected to be a hot topic when Republican presidential hopefuls debate tonight in New Hampshire.

The candidates who are scheduled to participate include Minnesota Congresswoman Michele Bachmann, businessman Herman Cain, former Speaker of the House Newt Gingrich, Texas Congressman Ron Paul, former Minnesota Governor Tim Pawlenty, former Massachusetts Governor Mitt Romney and former Pennsylvania Senator Rick Santorum.

Renewable Fuels Association President Bob Dinneen expects ethanol to be on the agenda during the debate and hopes it will provide the opportunity for a more comprehensive conversation about America’s energy future. “America desperately needs a thoughtful, comprehensive and realistic energy strategy that fully appreciates and incents the use of domestically produced renewable fuels like ethanol,” Dinneen said.

The candidates’ views on ethanol have already been the subject of many media reports, which started hot and heavy when Gingrich made headlines in January at the Iowa Renewable Fuels Summit. At the same meeting, Santorum said he supports ethanol and called himself a “biofuels convert”.

Pawlenty made news when he announced his candidacy and called for a reform of ethanol policy similar to what the industry supports, while fellow Minnesotan Bachmann is also reportedly interested in re-examining ethanol supports.

Romney says he believes that ethanol is “an important part of our energy solution in this country” and Herman Cain also sees ethanol as one part of a needed comprehensive plan for energy independence.

Of the candidates scheduled to appear tonight, only Ron Paul, as a Libertarian and representative of Texas, has been consistent in his opposition to ethanol support.

U.S. Secretary of Energy Steven Chu announced today $36 million in federal grants to fund six small-scale projects in five states designed to produce drop-in advanced biofuels and other bio-based chemicals. Each project’s goal is to improve the economics and efficiency of converting non-food biomass feedstocks into biofuels, bioproducts and biochemicals.

“Projects such as these are helping us to diversify our energy portfolio and decrease our dependence on foreign oil,” said Secretary Chu. “Together with our partners, the Department is working hard to expand the clean energy economy, creating jobs in America and providing sustainable replacements for the fuels and products now provided primarily by petroleum.”

According to Chu, the new round of funding will help diversify DOE’s Biomass Program portfolio to include a breadth of fuels and chemicals beyond cellulosic ethanol. The secondary goal is to ensure that the Department’s research and development on biofuels remains integrated and strategic.

The following projects were selected:

− General Atomics: San Diego, California who was awarded up to $2 million
− Genomatica, Inc., San Diego, California, who was awarded up to $5 million
− Michigan Biotechnology Institute, Lansing, Michigan, who was awarded up to $4.3 million
− HCL CleanTech, Inc., Oxford, North Carolina, who was awarded up to $9 million
− Texas Engineering Experiment Station, College Station, Texas, who was awarded up to $2.3 million
− Virent, Madison, Wisconsin, who was awarded up to $13.4 million