The Ninth U.S. Circuit Court of Appeals has denied rehearing en banc a ruling last year which upheld California’s Low Carbon Fuel Standard (LCFS), leaving the ethanol industry and others challenging the law to consider the next move.
In a joint statement, ethanol producer groups Growth Energy and the Renewable Fuels Association (RFA) called the decision “a blow to California consumers” and said they will continue to evaluate all options moving forward “to assure that sound science and fair play ultimately prevail in this case.”
The two groups were pleased to note that seven judges strongly dissented from the Court’s decision believing it merited further review, stating that the majority opinion “upholds a regulatory scheme that, on its face, promotes California industry at the expense of out-of-state interests.”
Challenging the law with the ethanol industry is the American Fuel & Petrochemical Manufacturers (AFPM) and General Counsel Richard Moskowitz says the decision will “have adverse consequences throughout the nation’s fuel supply chain far beyond California’s borders, and ultimately a negative impact on consumers.”
The ruling could be appealed to the US Supreme Court.
Cellulosic and advanced biofuels producers are very concerned that the EPA proposal to lower 2014 Renewable Fuel Standard (RFS) targets will have a chilling effect on investment in the next generation of renewable fuels.
“Frankly, we have decided that we are placing a hold on our evaluations of future investment in bioenergy in the United States until we see what the final rule is and what impact it does have on the market,” said Chris Standlee with Abengoa Bioenergy during a media call today organized by the Renewable Fuels Association (RFA). Standlee added that the proposal has forced them to reconsider their business plan to license technology to other producers and look for “potential investments in other countries.”
Iogen Corporation president and CEO Brian Foody said RFS is the single most important driver of investment in advanced biofuels. “Cellulosic biofuel has the promise to deliver tens of billions of gallons of ethanol to the United States, but there needs to be a market for that,” he said. Iogen is building a cellulosic plant in Brazil using sugarcane bagasse and they are “actively seeking to develop projects in America” but that will depend on the future of the RFS.
Delayne Johnson, General Manager of the farmer-owned Quad County Corn Processors ethanol plant which broke ground in July on a bolt-on cellulosic ethanol technology, said that changing the RFS at this point is “going to create uncertainty” for other plants looking at adopting that technology. “We’re hopeful the EPA will consider getting back on course,” he said.
Listen to comments from Standlee, Foody, and Johnson, as well as RFA president and CEO Bob Dinneen and Advanced Ethanol Council Executive Director Brooke Coleman. RFS impact on Advanced Biofuels media call
Media questions and answers
The newest supply and demand estimate from the U.S. Department of Agriculture confirms a record corn harvest in 2013 of just under 14 billion bushels and an increased in usage of corn for ethanol.
USDA’s World Agricultural Supply Demand Estimate for January 10 projects corn use for 2013/14 higher with feed and residual use projected up 100 million bushels based on September-November disappearance as indicated by the December 1 stocks estimate. “Corn used to produce ethanol is raised 50 million bushels reflecting continued strong weekly ethanol production, a reduction in expected sorghum use for ethanol, and higher forecast 2014 gasoline consumption in the latest projections from the Energy Information Administration.”
Renewable Fuels Association (RFA) president and CEO Bob Dinneen says the report’s numbers indicate that now is a bad time to reduce volume requirements under the Renewable Fuel Standard (RFS). “Due to the expected corn surplus, corn prices have already dropped to nearly $4.00/bushel – half the price of corn in late summer 2012, below the price of corn when EISA was signed into law in 2007, and below the farmer’s cost of production,” Dinneen said in a statement, adding that farmers, small businesses and innovation in next generation biofuels would be adversely impacted by lowering the RFS in 2014. “It doesn’t have to be this way, there is still time for the Obama White House and EPA to do the right thing and restore the numbers for ethanol to their statutory levels.”
Sen. John Thune (R-SD) is hopeful the Environmental Protection Agency will make some changes in the proposed volume requirements for biofuels under the Renewable Fuel Standard this year.
“I just hope that the EPA will work with us, work with the industry, in a way that is realistic and grounded in the view that this is an industry that’s here to stay and we ought to be looking at ways we can continue to grow it,” said Thune during a press call with reporters this week.
Thune was one of several lawmakers who met with EPA officials last month about the proposal to lower volume obligations for renewable fuels in 2014. “I think we’ll get some relief from the meeting we had, perhaps, with regard to the direction they were heading for this year,” he said. “I’m hoping that they will make a decision that … moves us back to what we think is a more realistic volume level for this year.”
Listen to Thune’s remarks in this audio provided courtesy of Agri-Pulse. Sen. Thune RFS comments
Despite all the “RINsanity” caused in early 2013 when gas prices spiked and the oil industry pointed fingers at volatile Renewable Identification Numbers, a report out today exonerates RINS from blame.
The detailed statistical analysis conducted by Informa Economics and released today by the Renewable Fuels Association (RFA) finds that retail gasoline prices were “unaffected by the erratic surge in prices for Renewable Identification Number (RIN) credits in 2013.”
“Changes in prices of renewable identification numbers (RINs) did not cause changes in retail gasoline prices in 2013,” according to Informa’s report. “Retail gasoline prices were driven primarily by movements in crude oil prices and secondarily by changes in the spread between domestic and international crude oil prices and the level of vehicle miles driven in the U.S., which varies seasonally.”
Overall, gas prices in 2013 average less than the previous year, at $3.49 per gallon according to AAA. That is the lowest price since 2010. The highest one-day national average was $3.79 per gallon on February 27.
RFA president and CEO Bob Dinneen, Informa Senior VP Scott Richman and analyst Crystal Carpenter, and Geoff Cooper, RFA’s Vice President of Research and Analysis, held a press conference today to discuss the analysis. RINS report media call
The Missouri Corn Growers Association has produced a video that tells “the greatest story never told” – Quiet Revolution: The Ethanol Story.
Like the National Corn Growers Association (NCGA) and all state corn grower groups, the Missouri Corn Growers are urging their members and others to submit comments on the Environmental Protection Agency proposal made November 15 to cap corn-based ethanol in the nation’s fuel supply this year at 13 billion gallons. “This may be the most significant challenge to corn farmers in many years. Your community and your industry are counting on you to stand up and be heard today.”
The comment period on the proposal is open until January 28.
It’s out with the old and in with the new year and on that occasion Renewable Fuels Association (RFA) president and CEO Bob Dinneen takes a look back at 2013 for the ethanol industry and a look ahead to what 2014 may have in store.
Despite the continued assaults on the Renewable Fuel Standard (RFS) in 2013, Dinneen remains as upbeat and optimistic as ever about the future of the industry. “I can’t look at 2013 and see it as a complete failure,” he said. “There’s certainly challenges but the business is doing just fine and I’m looking forward to 2014.”
Among the topics Dinneen discusses in this end of the year Ethanol Report is the EPA proposal to roll back the RFS and the importance of industry voices during the comment period which ends on January 28. “If we get enough people to shake up EPA and remind them why this program is so important, we will get that changed.” said Dinneen.
Listen to Bob Dinneen reminisce about 2013 and anticipate 2014 in this interview: Happy New Year 2014 Ethanol Report with RFA's Bob Dinneen
Subscribe to “The Ethanol Report” with this link.
Six years ago today, President George W. Bush signed into law the Energy Independence and Security Act of 2007 (EISA), which greatly expanded Renewable Fuel Standard (RFS) to become the RFS2. The goals of the new standard were to reduce our dependence on oil, confront global climate change, and expand production of renewable fuels for the security of future generations.
“Just six years later, tremendous progress has been made toward achieving the original objectives of the expanded RFS,” said Renewable Fuels Association (RFA) president and CEO Bob Dinneen today in a conference call marking the anniversary. “Renewable fuel production and consumption has grown dramatically. Dependence on petroleum—particularly imports of refined products—is down significantly. Greenhouse gas emissions from the transportation sector have fallen. The value of agricultural products is up appreciably. And communities across the country have benefited from the job creation, increased tax revenue, and heightened household income that stems from the construction and operation of a biorefinery.”
RFA has released a report that compares today to six years ago in several areas, including renewable fuels production, economic activity, agricultural impacts, environmental issues, fuel prices, import dependence, and food prices. RFA Vice President of Research and Analysis Geoff Cooper outlined the findings during the conference call, concluding that “The RFS has indeed lived up to its promise in building out a renewable fuels industry, in reducing dependence on imported petroleum, in stimulating the agricultural economy – and at the same time the RFS has simply not had the impacts on the environment and food markets that detractors of the program have claimed.”
Among the more interesting points is the price of corn, a mere 20 cent difference from $4.20 season average in 2006 compared to $4.40 this year. Meanwhile, the price for a barrel of oil is up nearly 50% – up to over $108 compared to $72 in 2007.
Listen to or download opening comments and reporter questions below: RFA Celebrates Six Years of RFS
RFA RFS anniversary call QandA
Senate Finance Committee Chairman Max Baucus (D-MT) today unveiled a proposal to streamline energy tax incentives.
“It is time to bring our energy tax policy into the 21st century,” Senator Baucus said. “Our current set of energy tax incentives is overly complex and picks winners and losers with no clear policy rationale. We need a system of energy incentives that is more predictable, rational, and technology-neutral to increase our energy security and ensure a clean and healthy environment for future generations.”
The discussion draft released today focuses on reforming the current set of energy related tax preferences. Under current law, there are 42 different energy tax incentives, including more than a dozen preferences for fossil fuels, ten different incentives for renewable fuels and alternative vehicles, and six different credits for clean electricity. Of the 42 different energy incentives, 25 are temporary and expire every year or two, and the credits for clean electricity alone have been adjusted 14 times since 1978 – an average of every two and a half years. If Congress continues to extend current incentives, they will cost nearly $150 billion over 10 years.
Advanced Ethanol Council (AEC) Executive Director Brooke Coleman commended the proposal. “Senator Baucus has rightly put all existing policies on the table while proposing a new path that will achieve these goals and ensure that the United States leads instead of follows when it comes to developing new technologies and producing less carbon intensive energy,” said Coleman in a statement.
Coleman said they look forward to working with Chairman Baucus and the Senate Finance Committee to ensure that any new piece of legislation covers the critical bases when it comes to maximizing investment. He also called for immediate energy tax extenders in the context of the proposal’s 3-year extension of existing law. “The proposal admirably calls for a 3-year extension of existing law for cellulosic biofuels to provide a reasonable ramp to a new tax regime. We commend the Chairman for recognizing the hazards of frequent expirations and change of law. That said, tax provisions for cellulosic biofuels still come off the books in two weeks while those offered to the fossil fuel industry persist. We recommend that Congress invoke the ‘do no harm’ principle going forward and pass extenders in 2013.”
Renewable energy technology company ICM of Colwich, Kansas has signed a Letter of Intent with IGPC Ethanol of Ontario, Canada to be the first Canadian adopter of ICM’s Generation 1.5™ technology.
Adoption of the technology will enable IGPC Ethanol to produce corn fiber cellulosic ethanol. “Through our previous collaboration with ICM, we believed it was important to continue down the path of obtaining their critical platform technologies that are necessary for making a sustained impact on agriculture and economic development within our region,” said IGPC Ethanol CEO Jim Grey.
ICM’s Generation 1.5™ Technology introduces a cellulosic ethanol production capability by adding ICM’s Fiber Separation Technology™ (FST™) building block onto IGPC Ethanol’s current ICM Selective Milling Technology ™ (SMT™) platform. Once the FST™ and SMT™ platforms are in place, the Generation 1.5™ technology can be added. Development of ICM’s Generation 1.5™ technology was funded, in part, by a U.S. Department of Energy BioEnergy Technology Office contract that ICM was awarded through the American Recovery and Reinvestment Act of 2009.
Legislation introduced last week in the House would extend expiring tax incentives important to the development of next generation biofuels.
Rep. Scott Peters (D-CA) introduced the “Second Generation Biofuels Extension Act of 2013” (H.R. 3758) which would extend for one year the Second Generation Biofuel Producer Credit and the Special Allowance for Second Generation Biofuel Plant Property. Four fellow Democrats are co-sponsors of the bill, which is strongly supported by the biofuels industry.
Renewable Fuels Association (RFA) president and CEO Bob Dinneen commended Peters for taking a stand and fighting for the future of next generation biofuels. “Rep. Peters clearly understands the need to continue this successful program,” said Dinneen. “Investors need certainty and extending the tax credits for second generation biofuels will boost investment and innovation in cellulosic and advanced biofuels.”
This week RFA sent a letter to the leadership of the House Ways and Means committee and the Senate Finance Committee to request that key expiring biofuel tax incentives be extended. In addition to the two credits in the Peters bill, that would also include the Alternative Fuel Vehicle Refueling Property Credit.
AgResource Company president Dan Basse looked at the year in review for grain markets and gave his outlook for the future at the American Seed Trade Association (ASTA) CSS 2013 and Seed Expo last week in Chicago. That included a pretty sobering outlook for corn and ethanol.
First off, Basse said he expects North America to be “energy self-sufficient by 2020″ but that is largely due to fracking to reach new deposits of crude oil and natural gas rather than biofuels. “Ethanol, which was deemed to be the savior from Mideast oil, is no longer going to have that spot at the table,” he said, adding that the industry has “reached its zenith.”
Thanks to flat-lining ethanol demand, Basse believes the good times may have come to an end for corn. “A year ago we had corn prices above $7 with flirtations to eight,” he said. “We’re now looking at Chicago markets with corn prices near four. We think the best we can do at least for the next 6-9 months is maybe getting back to something like four and a half.” Basse points out that the United States only needs to produce a corn crop of 13 billion bushels to meet demand. “That’s the big concern for the US farmer down the road,” he said.
Asked about the EPA proposal to lower the 2014 volume obligations for ethanol under the RFS, Basse said he believes the plan has a 70% chance of being approved. “If we don’t raise blend rates and get Big Oil and get Detroit behind us, there’s really no growth in biofuels,” he said. “I want everybody in agriculture to understand that the political wills are not there as they were a few years ago and unfortunately now with shale gas and the new blessings of a different kind of energy, we’re just talking to ourselves in terms of the marketing for biofuels going forward.”
Listen to my interview for the condensed version and his 30 minute presentation for more details:
Interview with Dan Basse, AgResource
ASTA CSS presentation by Dan Basse, AgResource
2013 ASTA CSS & Seed Expo Photo Album
Despite the Environmental Protection Agency proposal to lower corn ethanol volume obligations for 2014 under the Renewable Fuel Standard (RFS), USDA’s December supply/demand report is predicting a 50 million bushel increase in corn use for ethanol next year. Ending stocks are now expected to total 1.792 billion bushels, down 5 percent from last month’s estimate.
The new report also calls for increases in exports, food and seed use but ending stocks will still be more than double a year earlier with this year’s record crop of just under 14 billion bushels. Prices are expected to average $4.40 a bushel in the current year, down significantly from $6.89 last marketing year.
A huge turnout is expected Thursday at a public hearing on the Environmental Protection Agency’s proposed Renewable Fuel Standard volume obligations for 2014. Literally busloads of stakeholders, both opposed to and in favor of cutting the requirements, are attending the hearing at the Hyatt in Crystal City, Virginia.
Iowa Governor Terry Branstad will be attending with several Iowa livestock producers, farmers and renewable fuels leaders. Branstad fears the EPA proposal could lead to another farm crisis. “I was governor during the farm crisis of the ‘80s when land values dropped 63 percent,” he said during a conference call on Wednesday. “I know what can happen when you have an agriculture depression, and we don’t want to go back and revisit that.”
Also attending the hearing will be corn farmers from a dozen other states in addition to Iowa. “It’s great to see so many people willing to leave their farms at this time of year for an important opportunity to give the EPA a piece of their mind,” said National Corn Growers Association First Vice President Chip Bowling of Maryland.
Advanced biofuels producers will be making the case that they would bear a disproportionate share of the proposed cuts. “They have proposed to cut volume requirements for advanced biofuels by more than 40 percent compared to requirements written into the statute,” said Advanced Biofuels Association President Michael McAdams. “In contrast, EPA has proposed to reduce volume requirements for conventional biofuels by less than 10 percent. We’re left scratching our head wondering why the EPA would deliver such a disproportionate large blow to the category of renewable fuels that reduces greenhouse gases the most.”
Nearly two dozen representatives of the U.S. biodiesel industry are slated to testify at the hearing, including Wayne Presby with White Mountain Biodiesel in New Hampshire, who says the proposal threatens the survival of his company. “We currently employ 20 people and have grown at an annual rate of 300 percent per year for the last two years,” he says. “We were intending to further increase our production this coming year and hire additional workers for a third shift, however, the current proposal by the EPA will halt our growth completely and may result in the closing of our business.”
The hearing is scheduled to begin at 9:00 am Eastern time and “end when all parties present who wish to speak have had the opportunity to do so.” Domestic Fuel reporter John Davis will be there to provide coverage here.
Representatives from state government, the agriculture community, and the ethanol industry all say the Environmental Protection Agency’s proposed 2014 Renewable Fuel Standard (RFS) biofuels requirements would have a negative impact on agriculture and rural economies.
During a telephone press discussion today about the proposal, Iowa Governor Terry Branstad said he was proud of his state’s leadership in biofuels production and he believes lowering the volume obligations would be detrimental for jobs and land values in rural America. “I’m concerned that this would be devastating to what has been a robust economic recovery” in the agricultural heartland of America, said Branstad. “I think the president’s made a terrible mistake caving in to Big Oil on this issue.”
The proposal has already led to lower futures prices for corn, which American Farm Bureau economist Matt Erickson says could mean 2014 will see prices below the cost of production for the first time since 2005. “Looking at USDA’s cost of production forecast, the breakeven for corn for 2014 is forecasted to be over $4 a bushel,” Erickson said, adding that if the price is lower, farmers would lose money.
Reducing America’s dependence on foreign oil was the primary objective of the RFS, but “revitalizing rural communities, boosting farm income and reducing farm program costs were also important policy objectives,” but noted Renewable Fuels Association president and CEO Bob Dinneen. “The RFS has certainly helped to do that and this proposal will reverse that policy as well.”
Listen to comments from Branstad, Erickson and Dinneen with questions from the media here: Comments on RFS Proposal Negative Impacts