Domestic Fuel

Legislation to reauthorize the Farm Bill energy title was introduced in the Senate Monday.

Senators Tom Harkin (D-IA) and Al Franken (D-MN) introduced the Rural Energy Investment Act to “help farmers, ranchers, and rural communities by encouraging the growth of agricultural energy technologies, including advanced biofuels, biogas, biomass, and renewable energies.”

“These energy programs are essential for expanding clean energy supplies, which also spur rural economic development and job creation,” said Harkin. “The tradition of providing strong support for an energy title in a farm bill must continue today, so for that reason I am hopeful that this measure will serve as a marker as the 2013 bill moves through the U.S. Senate.”

“Advancing our agricultural energy technologies is good for our farmers and economy, and it improves our overall energy independence and security,” added Franken. “This legislation will create jobs and play a critical role in cutting costs for our farmers and producers and will help them with the adoption of energy efficiency and renewable energy technologies.”

The Agriculture Energy Coalition supports the legislation and thanked the senators for introducing it. Last week, the coalition joined more than 100 national, state and regional organizations in a letter to the leaders of the House and Senate Agriculture Committees, urging them to adopt a new Farm Bill with robust mandatory funding for renewable energy and energy efficiency programs.

Since ethanol production has grown under the Renewable Fuel Standard over the past six years, government farm program payments for corn growers have declined to their lowest levels in recent history, which is saving taxpayer dollars.

In a new E-xchange Blog post, Renewable Fuels Association VP for Research and Analysis Geoff Cooper shows how the RFS has helped boost corn prices above cost of production since 2007, which decreases program payments. Prior to 2007, going back to 1990, the market price for corn exceeded the cost of production only once (1996) between 1990 and 2006. In some years (e.g., 1993, 1998-2000, 2005), the cost of production was nearly $1 per bushel higher than the harvest price paid to the farmer.

Between 1990 and 2006, producing corn was a losing business proposition. In all but one of those 17 years, the average farmer’s cost of producing corn was higher than the returns earned from selling the corn. In other words, corn cost more to produce than it was worth. As a result, U.S. grain farmers became increasingly reliant on government payments as a source of income—and as a means of survival. Due in part to the emergence of the ethanol industry and the certainty provided by the RFS, this dynamic has changed.

Cooper notes that since passage of the Energy Independence and Security Act (EISA) and expansion of the RFS in 2007 corn prices have been above the cost of production, and government payments have fallen. “Though not reflected in the above figures (due to lack of 2012 cost of production data), government payments to corn farmers in 2012 are forecast to be their lowest in 18 years and less than one-quarter of 2006’s outlays,” Cooper writes. “As a consequence of the grain sector’s economic resurgence, Congress is now considering sweeping changes to the Farm Bill that would further reduce the program’s impact on taxpayers and the federal budget.”

A new study indicates that ethanol production is continuing to reduce its energy and environmental footprint.

The study, entitled “2012 Corn Ethanol: Emerging Plant Energy and Environmental Technologies”, found that recent innovations in corn ethanol production have resulted in increased yield per bushel even as less energy is required for production.

In this edition of “The Ethanol Report”, study co-author Steffen Mueller, PhD with the University of Illinois at Chicago Energy Resources Center, talks about the findings and Renewable Fuels Association President and CEO Bob Dinneen comments on the significance.

Listen to or download the Ethanol Report here: Ethanol Report on Efficiency Study 3:39

Subscribe to “The Ethanol Report” with this link.

A bipartisan group of senators are asking for an investigation into a recent anti-dumping decision made by European Union regarding ethanol imports from the United States.

Fourteen Democratic and Republican Senators have joined together to sign a letter sent to the Acting United States Trade Representative (USTR), Demetrios Manatos and Acting Secretary of Commerce, Rebecca Blank, calling on them to review and consider a World Trade Organization (WTO) challenge to the European Union’s controversial and unprecedented anti-dumping duty recently imposed on U.S. ethanol producers.

The letter was co-authored by Senators John Thune (R-SD) and Amy Klobuchar (D-MN), and cosponsored by Senators Tom Harkin (D-IA), Chuck Grassley (R-IA), Al Franken (D-MN), Mike Johanns (R-NE), Heidi Heitkamp (D-ND), Deb Fischer (R-NE), Tim Johnson (D-SD), John Hoeven (R-ND), Claire McCaskill (D-MO), Pat Roberts (R-KS), Richard Durbin (D-IL) and Roy Blunt (R-MO).

In a joint statement, Renewable Fuels Association CEO Bob Dinneen and Growth Energy CEO Tom Buis said they are pleased to see the senators take action in the matter.

“The EU Commission failed to make any particular finding of dumping by any producer or marketer investigated in connection with the case,” said Dinneen and Buis. “The EU’s recent actions are unprecedented and we believe that the World Trade Organization (WTO) will nullify this blatantly protectionist country-wide anti-dumping duty on exports of ethanol from the United States.”

Read more here.

A new study indicates that ethanol production is continuing to reduce its energy and environmental footprint.

The study, entitled “2012 Corn Ethanol: Emerging Plant Energy and Environmental Technologies”, found that recent innovations in corn ethanol production have resulted in increased yield per bushel even as less energy is required for production. Thermal energy use at a typical dry mill ethanol plant has fallen 9% since 2008, the study found, meaning the carbon footprint of corn ethanol continues to shrink.

The authors, Steffen Mueller, PhD, of the University of Illinois at Chicago Energy Resources Center and John Kwik, PE, of Dominion Energy Services, LLC wrote in summary, “Our work includes an assessment of over 50% of operating dry grind corn ethanol plants. On average, 2012 dry grind plants produce ethanol at higher yields with lower energy inputs than 2008 corn ethanol.”

“Furthermore, significantly more corn oil is separated at the plants now, which combined with the higher ethanol yields results in a slight reduction in DDG production and a negligible increase in electricity consumption,” the authors concluded.

Listen to an interview with Steffen Mueller here: Steffen Mueller, study author

Read the study here.

Agriculture Secretary Vilsack today renewed a historic agreement with U.S. dairy producers to accelerate the adoption of innovative waste-to-energy projects and energy efficiency improvements on U.S. dairy farms, both of which help producers diversify revenues and reduce utility expenses on their operations. The pact extends a Memorandum of Understanding signed in Copenhagen, Denmark, in 2009.

USDA support for agricultural and waste-to-energy research has played a key role in the agreement’s success to date. Since signing the MOU, USDA has made nearly 180 awards that helped finance the development, construction, and biogas production of anaerobic digester systems with Rural Development programs, such as the Rural Energy for America Program (REAP), Bioenergy Program for Advanced Biofuels, Business and Industry Guaranteed Loan Program, Value Added Producer Grants, amongst others. These systems capture methane and produce renewable energy for on-farm use and sale onto the electric grid. Additionally, during this period, USDA awarded approximately 140 REAP loans and grants to help dairy farmers develop other types of renewable energy and energy efficiency systems at their operations.

Anaerobic digester technology is a proven method of capturing methane from waste products, such as manure, and converting into heat and electricity. The technology utilizes generators that are fueled by the captured methane. Dairy operations with anaerobic digesters routinely generate enough electricity to power hundreds of homes per year.

The Secretary was joined on a conference call to make the announcement by The Innovation Center for U.S. Dairy CEO Tom Gallagher and Doug Young, a farmer from NY who has benefited from this MOU.

Listen to that call here: USDA/Dairy MOU press call

In honor of Earth Day, racing is shifting gears this month to focus attention on environmental awareness with the NASCAR RACE TO GREEN™ campaign and American Ethanol is part of the effort.

The campaign is hosting a National Tree Planting initiative this month encouraging racing teams, tracks, drivers, partners and fans to pledge to plant some trees today – Earth Day – to help offset carbon emissions produced over the three national series over the season. Through the course of one mature tree’s lifetime, it absorbs about one metric ton of carbon dioxide – the same amount of carbon dioxide emitted by a NASCAR Sprint Cup™ car driving 500 miles.

American Ethanol has pledged to plant a tree for every mile raced in April. With almost 4,000 miles fuels by Sunoco Green E15 over the month, the 4,000 trees planted will be enough to offset the carbon emissions of all the miles driven on American-made ethanol in practices and qualifying laps.

“American Ethanol shares the commitment of NASCAR to operate sustainably and do our part to protect and preserve the environment,” said National Corn Growers Association board member Jon Holzfaster of Nebraska. “Farmers manage their farms every day with the tandem goals of making a profit but doing it in a way that is better for the environment. So we are proud to expand our commitment to NASCAR Green.”

NASCAR has also released a 30-second TV ad featuring Roush Fenway driver Greg Biffle and spotlighting the use of ethanol. “So, wanna be eco-friendly?” the announcer asks Biffle, who answers “Of course.”

ANNCR: “Ok, got corn?”
BIFFLE: “We got that.”
ANNCR: “Got some of it blended into fuel?”
BIFFLE: “Got it.”
ANNCR: “Got a car to use that fuel?”
BIFFLE: “Sure do.”

Watch it here:

The latest World Agricultural Supply and Demand Estimate released this week increased 2012-13 year-ending corn stocks and corn use for ethanol.

Domestic corn use for 2012/13 is projected 100 million bushels lower as a 50-million-bushel increase in corn used to produce ethanol partly offsets the lower projection for feed and residual disappearance. Larger-than-expected March
1 corn supplies, lower corn prices, and favorable margins for producing and blending ethanol limit the expected year-to-year decline in ethanol production during the second half of the marketing year (March-August).

The report also projects higher world corn production, increasing 1.5 million tons for Brazil, 1.4 million tons for Europe with upward revisions to production in Spain, Hungary, and Poland and a bit more for Russia on the final government estimate.

Ethanol producers could get a sweet deal on sugar for ethanol if the administration approves the sale of up to 400,000 tons of surplus sugar under the 2008 Farm Bill Farm Bill Feedstock Flexibility Program.

The program allows USDA to buy the surplus sugar and then sell it to ethanol producers at a loss in order to keep prices from going below mandated levels, but it has never been used. With large crops in the United States and Mexico causing sugar futures prices to fall below 21 cents a pound, USDA last week a proposal to the White House budget office to implement the program. “We’re doing it because it’s the law,” said Agriculture Secretary Tom Vilsack on Monday during a meeting of agricultural journalists.

However, Vilsack said it is not yet decided how much, if any of it will be used. “We’ll make that decision following a review of all the circumstances,” he said. “This is an issue where we have a significant oversupply and we have some issues that need to be resolved fairly quickly.” Those issues include storage challenges and minimizing the cost to taxpayers.

Listen to Vilsack comments here: Secretary Vilsack on sugar-to-ethanol

In the past month, residents of Baxter, Iowa have driven the equivalent of more than two trips around the world on 15% ethanol fuel (E15).

The Iowa Renewable Fuels Association (IRFA) today reported that statistic since Baxter fuel retailer Kountry Korner began offering E15 as a registered fuel for 2001 and newer vehicles on March 8, 2013.

“Since offering E15 as a registered fuel, I’ve seen more and more use of the fuel every day,” stated Kountry Korner Owner Bryan DeJong. “E15 has brought in many new customers to my store who are in search of lower-cost, more homegrown fueling options. The consumer response to the fuel has been very positive and I anticipate our E15 sales to continue to grow in the coming weeks.”

“E15 has been priced at an average of almost 20 cents cheaper than regular gasoline and the response in Baxter has been quite positive,” said IRFA Managing Director Lucy Norton. “Retailers around the state should take notice that there is a real demand for cleaner, more homegrown E15, and consumers wishing to have access to this less expensive option should ask their local fuel retailers to offer E15.”

IRFA notes that retailers interested in installing a blender pump to offer E15, E85, and other ethanol blends can apply for a grant from the Iowa Department of Agriculture.

In case you are wondering – assuming 20 miles per gallon fuel economy and about 49,800 miles around the world twice – that’s approximately 2500 gallons of E15 for the little town of Baxter (pop. 1,093) in 30 days.

A coalition of biofuel producer organizations the reconsideration of the 2011 cellulosic obligation under the Renewable Fuel Standard (RFS).

In January 2013, the U.S. Court of Appeals for the D.C. Circuit ordered the Environmental Protection Agency (EPA) to reconsider the 2012 Renewable Fuel Standard obligation for cellulosic biofuels. EPA has implemented the Court’s order and is now voluntarily reconsidering the 2011 obligation for cellulosic biofuels, which is the subject of a separate lawsuit before the Court.

In a joint statement, organizations that make up the Biofuel Producers Coordinating Council, noted that the “RFS was established to open the U.S. transportation fuel market to renewable fuels, and it ensures that the market remains open as cellulosic biofuel production starts up. The program has worked. Advanced biofuel companies across the United States have invested in technology development and construction of first-of-a-kind commercial scale refineries for cellulosic and other advanced biofuels. EPA’s implementation of the Court order does not impact the industry’s progress in developing technologies that reduce dependence on foreign oil and contribute to a cleaner environment.

The industry remains focused on starting up production this year and increasing it in years to come. We look forward to working with EPA to establish 2013 targets that are consistent with expected production volumes this year from the facilities that have already been built.”

Intervenors in the case included the Advanced Biofuels Association (ABFA), Advanced Ethanol Council (AEC), American Coalition for Ethanol (ACE), Biotechnology Industry Organization (BIO), Growth Energy, and Renewable Fuels Association (RFA).

USDA has announced a new collaboration with DuPont to promote sustainable harvesting of bio-based feedstocks for cellulosic ethanol.

The joint agreement between USDA’s Natural Resource Conservation Service (NRCS) and DuPont aims to set voluntary standards for the sustainable harvesting of agricultural residues for renewable fuel, and supports rural job creation, additional income for farmers, bio-based energy development, and the safeguarding of natural resources and land productivity.

“USDA and DuPont share a common interest in the wise use and management of soil, water and energy resources,” said Agriculture Secretary Tom Vilsack. “Both organizations also share an interest in helping individual farmers adapt to new market opportunities in ways that are consistent with the wise use of these natural resources.”

“Working with farmers is critical to maximizing the land’s productivity and protecting natural resources,” said Jim C. Borel, executive vice president of DuPont. “With this new collaboration, we have a partner in the Natural Resources Conservation Service to ensure that the collection of corn stover for the production of cellulosic renewable fuel makes sense for an individual grower’s operation and the land they farm.”

Under the agreement, NRCS will provide conservation planning assistance for farmers who supply bio-based feedstocks to biorefineries as the industry begins to commercialize. Conservation plan, written for individual operations, will ensure sustainable harvest of corn crop residues while promoting natural resource conservation and land productivity. A conservation plan is a voluntary document, written in cooperation with farmers, which helps them protect natural resources while promoting a farm’s economic sustainability.

According to the USDA 2013 Prospective Plantings report, farmers intend to plant a little more corn and a little less soybeans this year, for a total of 174.4 million acres.

“This will be the highest total amount of acres for those two crops that we have on record,” said USDA chief economist Joe Glauber.

Corn growers intend to plant 97.3 million acres of corn for all purposes in 2013, up slightly from last year and 6 percent higher than in 2011. If realized, this will represent the highest planted acreage in the United States since 1936 when an estimated 102 million acres were planted. “While farmers struggled with drought last year, they remain resilient and dedicated to producing an abundant corn crop in 2013,” National Corn Growers Association First Vice President Martin Barbre said. “This report shows that the innovative American farmer understands the increasing global demands of corn for food, feed, fuel and fiber and that they see the importance of meetings those needs.”

The majority of acres gained lie outside of the traditional Corn Belt, with only Minnesota, North Dakota and Ohio projecting increased acreage planted to corn within that area. Acres planted to corn outside of the Corn Belt made gains in Arkansas, Georgia, Texas and Mississippi. Final planting projections remained close to last year’s acreage as Colorado, Illinois, Indiana, Kansas, Missouri, Nebraska and South Dakota all project planting at least 100,000 fewer acres than in 2012, with Illinois projecting acres planted to corn will drop by 600,000 acres from 2012. The actual number of planted acres will be released in USDA’s June 28 report.

Soybean acres are estimated at 77.1 million acres, down slightly from last year but the fourth highest on record.

A bill has been introduced in the Florida legislature that would repeal the state’s Renewable Fuel Standard Act.

Currently, the Florida law requires that all gasoline sold or offered for sale by a terminal supplier, importer, blender or wholesaler in Florida contain 9-10 percent ethanol, or other alternative fuel, by volume. Legislation to repeal that requirement was considered by the Florida House Regulatory Affairs Committee on Friday and Pensacola automotive technician and radio host Bobby Likis was there.

However, Likis was only was able to say that he opposed the bill before the hearing had to be ended for lawmakers to go to the floor. “I’ve answered over 100,000 questions live on air, many of which have addressed the ethanol issue with regard to engine damage,” said Likis, host of the syndicated Car Clinic Network. “I strongly oppose the bill.”

Likis, who is a strong advocate for ethanol, says he is prepared to do what he can to prevent the legislation from passing in Florida.

Also testifying against the bill was Patrick Ahlm with Alginol Biofuels, an industrial biotechnology company working towards the production of fuel from algae headquartered in southwest Florida. “We’ve raised $190 million since we were founded in 2006 by Florida residents,” said Ahlm. “Our focus right now is on operating our pilot scale facility in Ft. Myers.”

Alhm said they are looking toward a commercial facility. “Our technology does not require farm land, food crops or fresh water,” he said. “We respect the issues around mandates and traditional ethanol but when we go into the investment community, this sends a very bad signal about continuing to grow in Florida.”

Because the committee ran out of time, the bill sponsored in the Florida House by Rep. Matt Gaetz of Fort Walton Beach will be carried over to the next meeting.

Listen to the ethanol bill portion of Friday’s hearing: Florida hearing

A highly respected oil economist believes the solution to the current Renewable Identification Numbers (RINs) price issue is more sales of E85 (85% ethanol).

Economist Phil Verleger has weighed in on the RINS situation in the latest edition of Notes at the Margin, his weekly email report about news impacting the petroleum industry. “The obvious solution to the RIN price problem involves no EPA intervention and no regulatory action,” Verleger wrote. “It simply calls for boosting E85 sales.”

Verleger explains that because refiners will be required by EPA this year to have 9/10s of a RIN for every 10 gallons of gasoline, and each gallon of E85 generates 0.85 RINs, a sale of 10 gallons of E85 produces a surplus of nearly 7.6 RINS which they can sell. “My point is that when the price of RINS gets high enough, that the price of E85 on a per BTU basis will be less than the price of gasoline,” said Verleger in a phone interview with Domestic Fuel. “At some point companies will almost be willing to give away E85 to get the RINS.”

According to Verleger, the RINS issue has been created by the resistance of some refiners to the RFS. “The oil industry doesn’t like to sell less oil,” he said. They want to get the program changed so that “they can sell more gasoline and not have to use as much ethanol.”

Listen to interview with Verleger here: Economist Phil Verleger