Domestic Fuel

The U.S. Senate yesterday passed a continuing budget resolution that would keep the federal government operating through the end of the fiscal year on September 30th and keep funding for advanced biofuels testing in the military.

By a vote of 40-59, the Senate rejected an amendment from Sen. Patrick Toomey (R-PA) that would have transferred $60 million in funding for military biofuels testing to increase Defense Department operations and maintenance funding. Toomey said in a press release he was very disappointed in his colleagues who “would rather spend taxpayer dollars on more wasteful biofuel subsidies than support essential maintenance operations for our military.”

Adam Monroe, president of advanced biofuels company Novozymes, praised the Senate for continuing its support of the Navy’s advanced biofuels program. “Every day we import oil, we’re putting our troops, families and country at needless risk. We can reduce that risk with a secure energy supply, including renewable fuels,” said Monroe. Last year, Novozymes opened an advanced manufacturing plant in Blair, Nebraska which specializes in enzymes for both the conventional and advanced biofuel markets.

The Senate spending bill was approved 73-26 and now goes to the House.

Leaders of Fuels America held a press conference this morning to “preemptively answer misinformation on renewable fuel blends and gasoline prices” in a new report by the American Petroleum Institute.

Speaking in defense of the renewable fuels industry were the heads of several industry organizations and companies, including Growth Energy CEO Tom Buis, Renewable Fuels Association CEO Bob Dinneen, Advanced Ethanol Council Executive Director Brooke Coleman, Biotechnology Industry Organization CEO Jim Greenwood, Adam Monroe with Novozymes and Chris Standlee with Abengoa.

Listen to the entire press conference here: Fuels America Press Conference

The Renewable Fuels Association (RFA) is requesting a multi-agency investigation into what they are calling the “discriminatory and unlawful conduct” on the part of the oil industry.

In a letter sent today to the Environmental Protection Agency (EPA), the Federal Trade Commission (FTC), the Department of Energy (DoE) and the Department of Agriculture (USDA), RFA requested the agencies investigate the oil industry’s conduct that is “impeding the delivery of renewable fuels to the American marketplace.”

The focus of the letter is a recounting of recent events at Zarco 66, the first marketer in the United States to offer E15.

RFA says that when Zarco 66 began offering E15 last year, ConocoPhillips “threatened to terminate Zarco 66’s franchise agreement and charge Zarco 66 hundreds of thousands of dollars in penalties unless Zarco 66 started offering “premium” gasoline—gasoline that would replace the ethanol housed in one of Zarco 66’s fueling tanks, and a gasoline that is likely to result in far fewer sales than the ethanol blends that would be available if Zarco 66 maintained the current ethanol contents.”

“For franchisees like Zarco 66, the message that the oil industry is delivering is loud and clear: Stop selling renewable fuels, or face the consequences,” said RFA president and CEO Bob Dinneen in the letter, requesting that the aforementioned agencies “investigate and put an end to the oil industry’s highly discriminatory and unlawful conduct—conduct that is impeding the delivery of renewable fuels to the American marketplace. Otherwise, Zarco 66 will simply represent the first casualty in the oil industry’s war against the marketing and delivery of cheaper, more sustainable renewable fuels.”

Read more from RFA here.

RINsanity is running rampant across the country and the ethanol industry is trying its best to bring some reason to the debate over these things called RINS.

In this edition of “The Ethanol Report” podcast, Renewable Fuels Association president and CEO Bob Dinneen explains what RINS are and how the ethanol industry believes oil companies are choosing RINS instead of blending more ethanol and trading them amongst themselves, which is causing the volatility being experienced in the RIN marketplace this year.

So far this year, RIN values have been going up and down, increasing from about 7 cents to over a dollar at one point, which has increased calls from the oil industry for a repeal of the RFS, even though Dinneen says it was the refiners who wanted the credits to comply with the RFS.

Listen to or download the Ethanol Report here: Ethanol Report on RINS

Subscribe to “The Ethanol Report” with this link.

A New York-based cellulosic sugar producer has received the 2013 Sustainable Biofuels Feedstock Process Award.

Sweetwater Energy received the award at this year’s World Biofuels Markets and Bio-based Chemicals Conference currently being held in Rotterdam, The Netherlands. The award recognizes the most exciting new feedstock innovation in the development of truly sustainable and renewable fuel and chemical solutions in the global biofuels market.

“We’re very pleased to receive this recognition, especially on the global stage,” says Arunas Chesonis, Chairman and CEO of Sweetwater. “Sweetwater’s sugar platform technology is a way to help our customers take a step away from the difficulties of managing various types of feedstocks, and to have at their disposal a simple, clean source of carbon from which to produce fuels, plastics, and other useful chemicals. It’s gratifying to know we’re processing carbon captured from the atmosphere by crops and trees over the past few years, as opposed to carbon from 100 million years ago in the case of fossil fuel.”

The award is in recognition of Sweetwater’s patented cellulosic sugar technology, as well as for the patented decentralized business model that allows refineries to transition to cellulosic feedstocks gradually and without large capital outlays usually associated with cutting-edge cellulosic technologies. Sweetwater uses a unique technology to produce low-cost sugars from non-food plant materials, including waste materials such as crop residues, wood thinning, or non-food, purpose-grown crops such as energy sorghum. This highly fermentable sugar solution is sold to refineries, which use it to produce biofuels, biochemicals, and bioplastics.

The Governor’s Biofuels Coalition met in Sioux Falls Wednesday and sent a letter to members of Congress in support of the Renewable Fuels Standard.

The letter from the 30 governors represented by the Coalition, led by Iowa Governor Terry Branstad, urges Congress to stay the course on the RFS. “As governors who see firsthand the impact that the RFS has had on our states, we urge you to reject any modifications to the RFS,” the letter reads. “By intentionally using misinformation, biofuels opponents damage the nation’s economy, environment, and energy security.”

The governors’ meeting was held at the headquarters of POET and CEO Jeff Lautt says Governor Branstad is a strong defender of biofuels. “He’s seen first hand the success of what this industry’s done for America on the energy side but also what it’s done on the ag side,” said Lautt.

The Iowa Biodiesel Board and Iowa Renewable Fuels Association both praised their governor’s leadership and appreciate the strong stand taken by the coalition to support the RFS.

The Advanced Ethanol Council (AEC) is working to stamp out RIN illiteracy, offering an education to the media on just what the compliance credits are and how they work under the Renewable Fuel Standard (RFS).

AEC sent a response entitled “RIN Credits for Dummies” to a recent Wall Street Journal editorial which argues higher prices for RIN compliance credits are driving up the price of gasoline.

In the spirit of educating, AEC pointed out the very basic facts about RIN credits and how they work, such as:

A RIN is produced when a gallon of renewable fuel is produced. Oil companies can then split the RIN from the gallon when they buy the gallon of renewable fuel and sell it on the open market. Oil companies can either buy a gallon of renewable fuel to comply with the RFS or buy a RIN credit on the open market.

According to AEC, “oil companies have indeed bid up the price of RINs over the last few weeks, but they are doing so voluntarily to avoid the alternative of adding more ethanol to gasoline.”

Renewable Fuels Association (RFA) president and CEO Bob Dinneen says oil companies have essentially “gone on strike” by refusing to move to higher ethanol gasoline blends. “The RIN program was designed to meet any shortages of renewable fuels, not to allow oil companies to avoid blending ethanol with gasoline,” Dinneen wrote in a blog post today.

Also on the RFA E-xchange Blog, VP for research and analysis Geoff Cooper provides a good primer on RINS called Stop the RINsanity. Cooper walks through the math of RINS and gas prices and calculates that even in the worst case scenario for RIN pricing, ethanol-blended gasoline still saves consumers money.

“If RIN prices average $0.80 and the ethanol discount to gasoline averages $0.58 per gallon, and if both impacts are fully passed through to retail, E10 would still be $0.05 per gallon cheaper than unblended gasoline,” Cooper concludes.

The Governors’ Biofuels Coalition (GBC) is holding its annual meeting this week in Sioux Falls, South Dakota at the headquarters of ethanol production company POET.

Iowa Governor Terry Branstad, GBC chairman, and South Dakota Governor Dennis Daugaard, a GBC member, will be leading a discussion of the accomplishments of the federal Renewable Fuels Standard (RFS). Governor Branstad was one of the founders of the coalition and instrumental in the passage of the RFS. The meeting will also include presentations on innovative pubic-private partnerships to expand retail infrastructure and spur economic development, the use of biofuels to cost effectively meet clean air requirements, gasoline quality, and opening markets for cellulosic and advanced biofuels.

The Governors’ Biofuels Coalition was started in 1991 as the Governors’ Ethanol Coalition. Membership now includes representatives from 36 states and eight countries.

Cellulosic ethanol got a little closer to commercialization with an announcement today from ZeaChem, Inc.

ZeaChem officials report they have produced commercial-grade cellulosic chemicals and ethanol at their 250,000 gallons per year (GPY) biorefinery in Boardman, Ore.

“ZeaChem is developing the first truly-integrated biorefineries for the production of a broad portfolio of economical and sustainable biofuels and bio-based chemicals,” said Jim Imbler, president and chief executive officer of ZeaChem. “The demonstration plant is fully integrated and operating as we ramp up to full capacity. The start of cellulosic production is a significant milestone for ZeaChem as we demonstrate our highly efficient biorefining technology, develop the first commercial biorefinery project, and expand global development opportunities.”

Similar to a petrochemical refinery that makes multiple fuels and chemicals, ZeaChem’s demonstration facility is employing its C2 (two-carbon atom) platform to produce cellulose-based ethanol and intermediate chemicals such as acetic acid and ethyl acetate. Unlike conventional biorefineries, ZeaChem can convert nearly any non-food biomass into fuels and chemicals. This provides ZeaChem with the opportunity to source feedstock locally and inexpensively. The demonstration facility will receive its feedstock from nearby-GreenWood Resources’ tree farms and other local agricultural residue processors.

Read more here.

Corn oil recovery is helping the bottom line of ethanol producers with tight margins, according to a new report from the Energy Information Administration.

Beginning in summer 2012, the prices of ethanol and corn reached levels where production costs at relatively simple ethanol plants exceeded revenue. These simple plants, which are not able to recover corn oil, make up a diminishing portion of the ethanol industry. Reacting to the market conditions, several ethanol plants temporarily shut down. By January 2013, the number of idled ethanol plants had grown to at least 20.

Relatively simple ethanol plants produce ethanol and distillers grains from corn. More advanced plants are able to recover other products, like corn oil, from a portion of the distillers grains. Ethanol plants with corn oil recovery units are able to earn more revenue, so they usually have higher profit margins than plants without corn oil recovery, even if their production costs are slightly higher.

According to the EIA report, corn oil recovery is one of several strategies that the ethanol industry is developing to improve margins. “Others involve switching to processes that are more advantageous under the renewable fuels standard (RFS). For instance, Aemetis in Keyes, California, is changing its feedstock from corn to sorghum and replacing its natural gas consumption with biomass. Other companies plan to produce butanol rather than ethanol, or integrate cellulosic feedstock, such as wood waste or corn stover (e.g., leaves, stalks, and leftover cobs after the corn harvest). These approaches allow their products to qualify as advanced biofuels under the RFS, a category that specifically excludes ethanol produced from cornstarch, which has been the dominant feedstock for the U.S. ethanol industry.”

Read more here.

Projected 2012/13 U.S. corn ending stocks were unchanged in the World Agricultural Supply and Demand Estimate report out Friday, lowering exports but increasing feed use and keeping corn use for ethanol the same.

Projected corn use for ethanol this season remains unchanged at 4.5 billion bushels, which is down 10 percent from last year on lower gasoline use, according to USDA Deputy Chief Economist Rob Johansson. “Obviously we expect that will increase towards the end of this year when the new crop comes in,” said Johansson.

Corn exports were lowered 75 million bushels, imports were increased 25 million, and feed usage was increased by 100 million – due in part to “continued expansion in poultry production.” The projected season-average farm price for corn was lowered by 20 cents a bushel to $6.75-7.45.

Ethanol was high on the priority list for delegates to the National Corn Growers Association Corn Congress policy meeting last week during the 2013 Commodity Classic.

NCGA President Pam Johnson said they will continue to fight the attacks on both the Renewable Fuel Standard and the approval of E15 in the marketplace. “We will not let these attacks stand,” said Johnson. “We know our potential to produce is very great and we know that we need to continue to build that demand.”

NCGA notes that even with last year’s record drought, more corn growers than ever before had yields of 300 or higher on the National Corn Yield Contest, demonstrating the ability for farmers to meet the demand for corn in all markets, including both livestock feed and ethanol production.

Johnson says growers have been hit with demand destruction because of the drought but “we hope to plant a really great corn crop this year and get some of that back.”

Of course, getting a comprehensive five year farm bill passed this year after being delayed is really the top priority for corn farmers and NCGA supports fundamental changes to farm programs that include effective and affordable federal crop insurance that will provide assistance to growers only when it is most needed.

Listen to Pam Johnson summarize issues important to corn growers at the 2013 Commodity Classic: NCGA President Pam Johnson

2013 Commodity Classic Photo Album

President Obama has announced his picks for Secretary of Energy and Environmental Protection Agency administrator. The President nominated MIT professor Ernest Moniz as energy secretary and EPA official Gina McCarthy as administrator for the agency.

Renewable Fuels Association president Bob Dinneen welcomed the nomination of McCarthy as a solid choice and is interested in getting to know Moniz. “(McCarthy) is knowledgeable, willing to listen, and straight-forward. She knows the EPA inside and out and has typically approached challenges with a common-sense determination to resolve them in a timely manner,” said Dinneen. “(We) look forward to meeting with Secretary-designee Moniz to update him on the state of the U.S. ethanol industry, our track record of success in fostering greater energy independence, and the exciting results of ongoing investment in next generation biofuels.”

Growth Energy CEO Tom Buis added that “McCarty has been a strong supporter of biofuels and we look forward to working with her to bring sustainable, clean, homegrown American fuels to the consumer.” Brooke Coleman, Executive Director of the Advanced Ethanol Council (AEC), said McCarthy is “the perfect choice” because she has been “very engaged on the development of the cellulosic biofuels industry and the administration of the Renewable Fuel Standard (RFS).”

Back in 2009, McCarthy was one of two high-ranking EPA officials to visit farm operations and biofuel facilities in Iowa, including Renewable Energy Group‘s (REG) Central Iowa Energy biodiesel plant in Newton.

Camelina, energy cane and renewable gasoline are now added to the list of qualifying feedstocks and fuels approved by the Environmental Protection Agency for use under the Renewable Fuel Standard (RFS).

EPA released its final rule to identify additional fuel pathways that meet the “lifecycle greenhouse gas (GHG) reduction requirements for biomass-based diesel, advanced biofuel, and cellulosic biofuel” under the RFS.

This final rule describes EPA’s evaluation of biofuels produced from camelina oil, which qualify as biomass-based diesel or advanced biofuel, as well as biofuels from energy cane which qualify as cellulosic biofuel. This final rule also qualifies renewable gasoline and renewable gasoline blendstock made from certain qualifying feedstocks as cellulosic biofuel.

The National Biodiesel Board (NBB) is pleased with the addition of camelina oil as a feedstock. “This decision adds to the growing list of biodiesel feedstocks that meet the EPA’s standards for Advanced Biofuel and gives us yet another option for producing sustainable, domestic biodiesel that displaces imported oil,” said Anne Steckel, NBB’s vice president of federal affairs. “This is important for our energy security, for our economy and for addressing climate change, and we thank the EPA for conducting a thorough and fair review.”

Read EPA’s final rule here.

The House Committee on Science, Space and Technology Subcommittee on the Environment will hold a hearing tomorrow on mid-level ethanol blends, but without any input from the ethanol industry. Witnesses scheduled to testify include representatives from AAA, motorcyclists and a research council that works for the petroleum industry and auto makers.

Growth Energy CEO Tom Buis CEO of Growth Energy says the committee regularly holds biased hearings on ethanol. “It seems to me that if the Science Committee continues to hold these one-sided, sham hearings, they out to change their name to the Science Fiction Committee – because that is exactly how their treatment of ethanol and biofuels have been,” said Buis. “By only inviting vocal critics to discuss mid-level ethanol blends and refusing to invite a single producer or stakeholder in the ethanol industry to testify exemplifies a colossal waste of time and taxpayer money.”

“It both saddens and angers me that in this day and age such a lopsided, stacked hearing could actually happen,” said Renewable Fuels Association president and CEO Bob Dinneen, who submitted a letter to protest the one-sided nature of the witness list as well as note the extensive testing of E15 and the benefits of the blend.

Ethanol organizations have submitted written testimony for the hearing which will begin at 2:00 pm Eastern time on Tuesday.