Domestic Fuel

The world is heading for an insecure and inefficient energy future unless there is a “bold change of policy direction” soon, warns a new report from the International Energy Agency (IEA).

The 2011 edition of the World Energy Outlook (WEO), released by IEA last week in London, said there is still time to act, but the window of opportunity is closing. “Growth, prosperity and rising population will inevitably push up energy needs over the coming decades. But we cannot continue to rely on insecure and environmentally unsustainable uses of energy,” said IEA Executive Director Maria van der Hoeven. “Governments need to introduce stronger measures to drive investment in efficient and low-carbon technologies.”

According the report, oil demand will rise 14% between 2010 and 2035, from 87 million barrels per day in 2010 to 99 million in 2035. All net increases in oil demand will come entirely from the transportation sector in emerging economies as economic growth pushes up demand for personal mobility and freight goods.

“This is a deeply disturbing picture that the IEA has painted for the world,” said Bliss Baker, spokesperson for the Global Renewable Fuels Alliance. “Such increases are unsustainable making it imperative that all countries quickly bring real crude oil alternatives to market.”

Baker says that according to the report, an amount equivalent to twice the current total oil production of all OPEC countries in the Middle East must be discovered and brought to market by 2035.
“This is a wakeup call to the world that we need to further promote biofuels to meet this ever growing energy demand,” he said.

The IEA also highlighted the potential for supply disruptions in the Middle East and North African countries as a potential threat to world oil supplies saying that “If, between 2011 and 2015, investment in the MENA region runs one-third lower than the $100 billion per year required…consumers could face a substantial near-term rise in the oil price to $150/barrel.”

As presidential candidate Rick Perry returned to Iowa today, the Iowa Renewable Fuels Association (IRFA) took the opportunity to question the Texas governor’s plan for energy tax incentives.

After the IRFA pointed out that Perry’s energy plan would end ethanol tax credits in less than two months, but allow oil tax subsidies to continue indefinitely, a Perry spokeswoman told Bloomberg News that Perry would “work with Congress to phase” out oil subsidies “over the next 20 years.”

“How in the world does Governor Perry justify 20 more years of tax subsidies for oil companies?” asked IRFA President Walt Wendland. “The renewable tax credits cease at the end of this year. But despite that some of the oil subsidies go back 100 years, now we’re told that Perry wants to give oil companies another 20 years of subsidies. Given this extreme position, Perry’s talk about not picking winners and losers and having a level playing field is simply hollow rhetoric.”

IRFA notes that, in addition to favoring tax benefits for oil, Gov. Perry opposes the federal renewable fuels standard (RFS) but his energy plan would leave intact the “federal petroleum mandate” – mandating that over 95 percent of vehicles on the road be filled with a fuel that is a minimum of 85 percent petroleum. Perry has proposed 18 specific policy recommendations in his energy plan to promote the production and use of oil and natural gas, “but not a single policy recommendation to promote the production and use of renewable fuels.”

“The Perry energy plan is not good for Iowa’s economy or America’s security,” says Wendland.

Governor Perry is in eastern Iowa tonight and then plans a major policy roll-out on government reform Tuesday morning.

Once again this year, the Renewable Fuels Association (RFA) took part in the National Association of Farm Broadcasting’s annual Trade Talk. This unique event allows over 100 agricultural companies and organizations to have access to the nation’s farm broadcast professionals all at the same time. It is what you can truly call a “win-win” situation as the exhibitors can get their message out to farmers and ranchers nationwide and the farm broadcasters can collect lots of content for the upcoming holiday season!

RFA president and CEO Bob Dinneen spoke with a number of broadcasters about important topics facing the ethanol industry, including the expiration of the VEETC at the end of this year and the ability of U.S. farmers to produce enough corn for food, feed and fuel. In our Domestic Fuel Ethanol Report from NAFB, we also talked with Dinneen about European ethanol producers charging the U.S. with unfair imports and Brazil’s increasing imports of ethanol from the U.S.

Listen to the Ethanol Report from NAFB with Bob Dinneen here: RFA CEO Bob Dinneen

Alaska Airlines has gone green with commercial flights on biofuels.

Starting this week, Alaska Airlines began 75 commercial passenger flights in the United States powered by biofuel made from used cooking oil.

Two maiden biofuel-powered flights left Seattle November 9 bound for Washington, D.C., and Portland, Ore. Alaska Airlines and its sister carrier, Horizon Air, will continue to operate select flights between Seattle and the two cities over the next few weeks using a 20 percent blend of sustainable biofuel.

“This is a historic week for U.S. aviation. The 75 flights that Alaska Airlines and Horizon Air will fly over the next few weeks reflect our longstanding commitment to environmental responsibility and our belief that sustainable biofuels are key to aviation’s future,” Alaska Air Group Chairman and CEO Bill Ayer said. “Commercial airplanes are equipped and ready for biofuels. They will enable us to fly cleaner, foster job growth in a new industry, and can insulate airlines from the volatile price swings of conventional fuel to help make air travel more economical. What we need is an adequate, affordable and sustainable supply. To the biofuels industry, we say: If you build it, we will buy it.”

Alaska Air Group estimates the 20 percent certified biofuel blend it is using for the 75 flights will reduce greenhouse gas emissions by an estimated 10 percent, or 134 metric tons, the equivalent of taking 26 cars off the road for a year. If the company powered all of its flights with a 20 percent biofuel blend for one year, the annual emissions savings would represent the equivalent of taking nearly 64,000 cars off the road or providing electricity to 28,000 homes.

Farmers in north central Iowa have harvested 61,000 tons of corn crop residue to produce cellulosic ethanol, but delivery to POET’s Project LIBERTY plant in Emmetsburg is contingent on funding of a federal program that provides incentives for biomass production.

Some 100 farmers are waiting for word on the status of the Biomass Crop Assistance Program (BCAP) in the 2012 federal budget before delivering the bales to POET’s 22-acre biomass storage site in Emmetsburg, where the commercial cellulosic ethanol biorefinery is being constructed.

The biomass harvest is 5,000 tons more than last year and represents an additional 15 contracts with area farmers. POET has a target of 285,000 tons of biomass per year for Project LIBERTY to produce 25 million gallons of cellulosic ethanol per year starting in 2013.

“Biomass harvesting is moving along as planned, and I’m confident we’ll have a large and consistent supply of corn cobs and light stover once Project LIBERTY is running,” POET founder and CEO Jeff Broin said. “Both the farmers and POET Biomass personnel have learned a lot in the last few years about best practices in biomass harvesting, and that experience will pay dividends.”

The goal of these early harvests is to streamline the process for harvest, storage and delivery of biomass to Project LIBERTY. Approximately 300-400 bales will be part of ongoing biomass storage research, and up to 1,500 bales could be used for additional research.

A new grant awarded by the U.S. Department of Agriculture will be used to promote flex fuel vehicles, flex fuel pumps, and driver education in Nebraska, one of six states that will be working with the FlexFuel Vehicle Awareness Campaign.

The Nebraska Ethanol Industry Coalition (NEIC) will be heading up the statewide project with partners including the Nebraska Ethanol Board, the Nebraska Corn Board, the Clean Fuels Foundation, ICM, Poet Ethanol Products, Monsanto, Green Plains Renewable Energy, and Phibro Ethanol Performance Group.

While the FFV Awareness Campaign is an ongoing national effort, this project will concentrate on six states: Nebraska, Iowa, Kansas, Maryland, Georgia and Florida. Key elements of the project include working with state motor vehicle departments to inform drivers that they may already have a flex fuel vehicle and how FFV drivers can easily find fueling sites offering high-level ethanol blends. The campaign will also provide an opportunity to educate all drivers on ethanol with respect to performance, emissions, and advantages it provides over gasoline and imported oil.

Todd Sneller, Chairman of the Clean Fuels Development Coalition and Administrator of the Nebraska Ethanol Board, said the project reflects a unique “virtual pipeline” that targets production states like Nebraska, Iowa and Kansas and links them with key markets like Maryland, Georgia, and Florida. “Clearly we are near the saturation point in terms of ethanol blends in conventional vehicles,” said Sneller. “To maintain the renewable fuel standard and move to the next level we need to take advantage of the 9 million FFVs on the road today that can use high level ethanol blends, ranging up to E85. For that to happen drivers need to know their vehicles have this capability and where to find the fuel,” he said.

Our latest ZimmPoll seems to have hit a nerve judging by the number of responses. We asked, “What is the cause of obesity?” Eighty six percent said Bad eating/exercise habits! Only 8% said Over processed food, 4% said Genetics, 2% said Fast food restaurants and no one chose Lack of food regulation. Eating really is a personal choice as well as a necessity. Seems like personal responsibility trumps all else here. What do you think?

Our new ZimmPoll is now live. We’re asking the question, “Which Republican Candidate for President is best for Ag?” There are a lot of them and we’ve listed the main contenders of the moment. Which one would be best for renewable energy? What do you think? Feel free to add a comment here.

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

For the fourth year, the United Soybean Board (USB) through the soybean checkoff is joining with U.S. Department of Energy-affiliated Clean Cities to build demand for soy biodiesel and Bioheat® in major urban areas by providing some reimbursement incentive.

The Clean Cities program is a government-industry partnership sponsored by DOE that has more than 90 local chapters across the United States working to reduce petroleum consumption. The checkoff has opened the biodiesel reimbursement application process and encourages Clean Cities chapters to partner with Qualified State Soybean Boards for this project. “Hopefully we’ll see more applications for programs that reach out to potential biofuel users in the commercial area, such as heavy trucks and contractor fleets,” says Mike Beard, USB director and soybean farmer from Frankfort, Ind. “We also want to continue to reach those who make decisions in municipal governments.”

The application period will close November 14. Participating chapters will be selected by USB farmer-leaders. USB has provided up to $150,000 to use toward the funding of these soy biodiesel and Bioheat® communications programs. Selected participants in this reimbursement program will be announced in mid-December.

In addition, USB has a second reimbursement program opened for Clean Cities. This will focus on creating demand for soy-based products, many developed with the help of the soybean checkoff. This program will award three reimbursements for up to $10,000 and four reimbursements for up to $5,000.

A cost comparison study between corn based and cellulosic ethanol has found that corn is still the cheapest way to make the alternative fuel.

The study, published in the international journal Biofuels, Bioproducts & Biorefining, concludes that “the production of ethanol from lignocellulose-rich materials such as wood residues, waste paper, used cardboard and straw cannot yet be achieved at the same efficiency and cost as from corn starch” and that it will be 2020 at the earliest before it can become competitive. The study did identify many opportunities for reducing costs and improving income within the lignocellulose-to-ethanol process, and provides insight into the priority areas that must be addressed in coming years.

Reasons for the higher cost of cellulosic ethanol include that the cost of building large scale ethanol-producing facilities will likely be higher for second generation ethanol compared to first generation technologies due to the need for significant and costly pre-treatment, according to the study’s lead author Jamie Stephen, who works in the Department of Wood Science at the University of British Columbia in Vancouver, Canada.

“Researchers and companies are going to have to concentrate on reducing the cost of pretreatment and increasing the output of the digester in order to reduce the costs of the lignocellulose-to-ethanol process,” says Stephen. Another reason costs are higher is that lignocellulose is made of multiple kinds of sugar, while corn starch consists of pure glucose. Corn starch can be reduced to glucose with low-cost amylase enzymes, while pre-treated lignocellulose requires a cocktail of cellulase enzymes. Providing these enzymes is one of the major costs of the whole process, but you currently need 12 times more cellulase than amylase protein to generate the same amount of ethanol from woody biomass.

Finally, while the input to sugarcane- and corn starch-based systems is fairly constant, the feedstocks that go into lignocellulose systems are much more variable. Different species of tree produce wood that has different properties, and waste paper and agricultural wastes will have many different types of material in them. To get maximum efficiency, each type of biomass needs to be processed under different conditions, which introduces another challenge for anyone wanting to make ethanol from these materials.

Read the study here.

The friendly skies of United Airlines are now friendlier for the environment as subsidiary Continental flew the first commercial flight on advanced biofuel yesterday.

“United is taking a significant step forward to advance the use of environmentally responsible and cost-efficient alternative fuels,” said Pete McDonald, United’s executive vice president and chief operations officer. “Sustainable biofuels, produced on a large scale at an economically viable price, can one day play a meaningful role in powering everyone’s trip on an airline.”

A Boeing 737-800 made the historic flight from Houston to Chicago Monday on an algae-derived renewable jet fuel made by Solazyme. The plane was fueled with 40 percent Solajet™ and 60 percent petroleum-derived jet fuel. United also signed a letter of intent with Solazyme to purchase up to 20 million gallons per year of renewable jet fuel starting in 2014.

“Looking at United, a company that understands the sustainability of tomorrow means environmental responsibility today, we see a true pioneer in the future of flight,” said Jonathan Wolfson, Solazyme’s CEO. “Solazyme is deeply committed to commercializing our renewable oil production technology, and we’re excited to be partnering with United on the first U.S. commercial biofuel flight.”

Solajet is made using microbial algae that grow in fermenters by feeding on sugars from plants. According to United, the biofuel meets the ASTM International specification for bio-derived aviation fuels, approved in July 2011 and referred to as “Hydroprocessed Esters and Fatty Acids” (HEFA) fuel. “HEFA fuels underwent rigorous testing and review by engine and airframe manufacturers, the U.S. military, the FAA and airlines. Solajet(TM), powering this United flight, met the certification requirements established by the ASTM and approved by the FAA.”

Read more from United.

The U.S. Supreme Court will not hear a case brought by petroleum interests against the Environmental Protection Agency over the expanded Renewable Fuels Standard (RFS2).

The petition made by the National Petrochemical Refiners Association (NPRA) and the American Petroleum Institute (API) was rejected by the District Court of Appeals in December 2010. The petition filed in March 2010 claims that the RFS2 “violated the statutory requirements setting separate biomass-based diesel volume requirements for 2009 and 2010, that it was inappropriately retroactive without proper lead time and compliance provisions.”

National Biodiesel Board vice president of federal affairs Anne Steckel says they are happy with the court decision.

“The RFS program is working just as Congress intended. It’s creating jobs across the country. It’s breaking our addiction to oil. It’s helping clean our air, and it’s reducing greenhouse gases,” said Steckel. “This year alone, the biodiesel industry is on pace to produce at least 800 million gallons of advanced biofuel while supporting more than 31,000 jobs. We’re pleased to see the Supreme Court put an end to this litigation as we continue building a strong U.S. biodiesel industry.”

Ethanol industry group Growth Energy was also pleased with the decision which mainly impacts biodiesel producers as they had intervened in the court case to defend the mandated volumes and make sure that the volumetric levels were retroactive as of Jan 2010. “The intent of Congress was clear when it passed the Energy Independence and Security Act – domestically-produced biofuels do strengthen our national defense and help support our economy. We welcome the Supreme Court’s decision as the right decision,” said Tom Buis, CEO of Growth Energy.

The association which represents European ethanol producers is requesting that the European Commission take action “against unfair imports of fuel ethanol from the United States.”

ePure claims that U.S. ethanol policy has encouraged production to the point that it can be sold at much lower prices on the world market. “Massive and sudden imports of US ethanol, combined with unfairly low prices over the last few years, have seriously damaged the economic situation of European producers” said ePure Secretary-General Rob Vierhout. “The unfair competition of US imports is simply depriving the EU industry from the benefit of this positive evolution on its own domestic market.”

According to the Renewable Fuels Association, ePure is specifically alleging that international ethanol traders were exporting E90 (90 percent ethanol blends) to Europe to take advantage of the European Union’s (EU) lower tariff on such blends as well as the $0.45 per gallon tax credit (VEETC) for ethanol blending in the U.S.

The RFA disputes the allegations. “Moreover, the U.S. ethanol tax incentive that lies at the root of the European allegations will expire at the end of 2011, rendering the tax incentive portion of the alleged trading impossible in the future. Importantly, domestic ethanol producers are not eligible for the tax incentive referenced by the Europeans. That tax incentive is specifically made available to gasoline blenders, marketers, and other end users. Therefore, U.S ethanol producers cannot nor should not be the focus of any potential European action.” The bigger issue, notes RFA, is the EU tariff schedule that encourages the import of E90 blends by classifying them at a lower tariff rate than other ethanol imports.

RFA says U.S. ethanol “remains the lowest cost, most cost effective ethanol in the market today. This fact has led to a surge in U.S. ethanol exports to Brazil, Europe, Asia, and the Middle East.”

The U.S. has become a net exporter of ethanol since the beginning of 2009 and exports continue to increase at a rapid pace. The latest reported figures for August from the Energy Information Administration showed 456,000 gallons of imports versus export demand of 52.3 million gallons. Through August, net exports are running at about 15.2 million barrels and are on pace to be double last year.

One of the benefits of membership in the GROWMARK cooperative system is daily information about the energy markets and recommendations on contracting fuel at different times of the year.

Harry Cooney is manager of customer risk management for GROWMARK Energy and he is constantly keeping an eye on the energy complex, especially gasoline, propane and diesel fuel. He says the primary influences on the energy market lately have been the situation in Europe, the value of the dollar and the stock market.

“In the past six months to a year, there’s been a strong connection between the stock markets and the energy markets,” Cooney said. “When things look bad in Europe, then our stock market tends to fall off and when the stock market falls off the energy markets tend to fall off.” He says world events in the currency and stock markets and whether the economy is strengthening or weakening have more impact on energy markets than public policy decisions, like the blenders tax credit for ethanol and the Renewable Fuels Standard.

In the diesel market, Cooney says we are seeing strong demand and falling stocks. “Diesel stocks have fallen under the five year average for the first time in many months,” he said. “The economy is starting to come around so stocks are coming down and diesel demand is back well over the five year average after just bottoming in July.”

As propane users look ahead to contracting for 2012, Cooney says they are currently making recommendations for summer through winter of next year. “Given the somewhat tight stocks situation and the fact that crude oil tends to want to go up, it makes us want to be a buyer of propane,” he said.

Listen to my interview with Harry Cooney here: Harry Cooney Interview

A three-year initiative by Nebraska corn growers to fund research into feeding the ethanol co-product distillers grains to cattle has resulted in some new breakthroughs.

The initiative created a beef cattle advisory committee to work with University of Nebraska researchers to identify research projects that would benefit cattle producers and the Nebraska Corn Board then provided funding for the projects.

“We were very pleased with how everything came together, as it allowed the corn checkoff to fund key research and more quickly advance the understanding of feeding distillers grains to cattle,” said Kelly Brunkhorst, director of research for the Nebraska Corn Board. “While this initiative has ended, the Nebraska Corn Board continues to fund research and further expand our knowledge and understanding of feeding distillers grains to cattle. We believe distillers grains, which are produced by ethanol plants, give Nebraska cattle producers a tremendous advantage in the marketplace, so the more we know the better.”

Studies involved both feedlot cattle and forage cattle. Among the findings for feedlot cattle is the drying distillers grains increases production costs and greenhouse gas emissions and has a less positive an impact on cattle performance compared to using wet distillers grains. Modified distillers grains, meanwhile, is intermediate to wet and dry distillers grains. Understanding this has huge implications for Nebraska as Nebraska cattle producers can utilize wet distillers grains due to the proximity of corn, cattle and ethanol plants. “The research provided excellent results on comparing these types of distillers grains,” said Galen Erickson, a beef feedlot specialist with the University of Nebraska.

For cattle on forage, the study found that the energy value of distillers grains in forage based-diets was a major need by the industry. “Thanks to research conducted through the initiative, this is now known and is well established,” said Aaron Stalker, a beef range specialist with the university. The comparison was also made to other major energy supplements in forage diets, such as corn.

Brunkhorst said continued research is necessary as ethanol production technology continues to advance and new techniques like extracting corn oil for other uses results in changes to the make-up of the distillers grains.

The House Committee on Science, Space and Technology’s Subcommittee on Energy and Environment is holding a hearing today on “Conflicts and Unintended Consequences of Motor Fuel Standards” with a witness list that the ethanol industry claims is biased against biofuels.

“This is the second time this year that this subcommittee has held a hearing on ethanol without bothering to include a witness from the ethanol industry. A hearing whose witness list is comprised overwhelmingly of anti-ethanol critics can hardly be considered fair and balanced,” said Growth Energy CEO Tom Buis.

Since ethanol advocates were excluded from presenting testimony, the Advanced Ethanol Council (AEC) wrote a letter to subcommittee Chair Andy Harris(R-MD) and Ranking Member Brad Miller (D-NC) to re-emphasize the advanced ethanol industry’s commitment to the Renewable Fuel Standard (RFS) and efforts to grow the market for ethanol blended fuels.

AEC Executive Director Brooke Coleman wrote that the industry is concerned that the testifying witnessesmay not be “interested in discussing the true value of the federal RFS.”

“First and foremost, the federal RFS is the single-most effective policy ever enacted to reduce our dependence on foreign oil. It is the cornerstone of a bioenergy economy that emerged in rural America in stark contrast to economic trends in which our country lost incredible wealth to China and OPEC,” Coleman said, noting that advanced ethanol industry is currently engaged in developing commercial advanced ethanol biorefineries in several states from California to Kansas to Mississippi.

“Weakening or walking away from the RFS would greatly impede efforts to develop the next generation of biofuel technologies and further embed America’s dependence on foreign oil,” wrote Coleman.

Read the letter here.