Domestic Fuel

Agriculture Secretary Tom Vilsack visited a state-of-the-art bioindustrial facility in Pennsylvania on Friday, where he announced $25 million to fund research and development of next-generation renewable energy and high-value biobased products from a variety of biomass sources.

“USDA’s continuing investments in research and development are proving a critical piece of President Obama’s strategy to spur innovation of clean bioenergy right here at home and reduce our dependence on foreign oil,” said Vilsack. “The advances made through this research will help to boost local economies throughout rural America, creating and sustaining good-paying jobs, while moving our nation toward a clean energy economy.”

Vilsack made the announcement while visiting Pennsylvania-based Renmatix, a leading manufacturer of cellulosic sugars for biobased chemical and fuel markets, for the commissioning of the company’s BioFlex Conversion Unit, a multiple-feedstock processing facility at the company’s King of Prussia headquarters.

The four projects approved for investment are:

Kansas State University – $5,078,932 The goal of this project is to make the oilseed crop camelina a cost-effective biofuel and bioproduct feedstock.

Ohio State University – $6,510,183 This project will result in an anaerobic digestion system for the production of liquid transportation fuels and electricity from animal manure, agricultural residues, woody biomass and energy crops.

Ceramatec, Inc., Salt Lake City, Utah – $6,599,304 This project will convert lignocellulosic biomass to infrastructure-compatible renewable diesel, biolubricants, animal feed and biopower. New hybrids of energy sorghum will be developed, and other biomass resources include switchgrass and forestry residues.

USDA-Agricultural Research Service, Eastern Regional Research Center, Wyndmoor, PA – $6,865,942 ARS scientists will develop an on-the-farm distributed technology for converting forest residues, horse manure, switchgrass and other perennial grasses into biofuels and high-value specialty chemicals.

A cellulosic sugar producer in New York has signed a deal with an ethanol plant in Wisconsin to begin commercial production of cellulosic ethanol.

Sweetwater Energy signed a long-term commercial agreement with Ace Ethanol to generate cellulosic ethanol at the ACE corn ethanol facility for up to 16 years.

According to Sweetwater officials, the company’s “patented, decentralized process will convert locally available cellulosic, non-food biomass, such as crop residues, energy crops, and woody biomass into highly fermentable sugar, which Ace will ferment into ethanol. The entire contract has a total potential value in excess of $100 million, and requires a minimal capital outlay by Ace Ethanol while stabilizing Ace’s feedstock cost over the life of the agreement.”

“Ace Ethanol has been bench testing Sweetwater’s cellulosic material for some time and we’re confident that this project will be commercially profitable,” says Neal Kemmet, President of Ace Ethanol. “With Sweetwater, we’ll move from 100% corn to a combination of corn starch and 7% cellulosic sugar as our feedstocks.”

“This is a very exciting time for the industry, and we couldn’t be more pleased to have aligned Sweetwater with Ace,” says Jack Baron, President and COO of Sweetwater. “Our patented, decentralized sugar-production model is designed to let us work in tandem with a refiner’s existing infrastructure, which fosters strong collaboration on both sides. Furthermore, our refined sugars can be used for biochemical or bioplastics production, giving Ace diversification options in the future. Ace is a progressive industry leader located near affordable biomass; they are financially successful and constantly incorporating proven new technologies to maintain their leadership position.”

Sweetwater also announced today that they have been issued a patent for the “manufacture and deployment of distributed pretreatment units designed for the extraction of sugars from any cellulosic feedstock for the production of ethanol.” Officials say the process allows Sweetwater to deploy its cellulosic sugar conversion facilities in a “hub and spoke” fashion, providing broad scale diversity for cellulosic ethanol production that takes full advantage of economic and capacity constraints surrounding cellulosic biomass. “This patent is a major breakthrough for the future of cellulosic ethanol,” says Arunas Chesonis, Chairman and CEO of Sweetwater. “The patent protects the first technology to support a viable economic model for scaling the conversion of cellulosic biomass into highly fermentable sugar and subsequently, ethanol. It will mean a great deal to the US corn ethanol industry, and the profitable future of biofuel production worldwide.”

The American Taxpayer Relief Act of 2012 passed by Congress on New Year’s Day includes the extension of three key ethanol related tax credits, which starts the new year off well for the ethanol industry.

“The one year extension of the cellulosic producer tax credit and accelerated depreciation provides some measure of certainty to ensure that 2013 will be a year of growth and milestones for the advanced ethanol industry,” said Bob Dinneen, President and CEO of the Renewable Fuels Association. “In addition, and equally significant, is the extension of the alternative fuel infrastructure tax credit which will accelerate E15’s entry into the marketplace this coming year.”

Dinneen says it would be better that the alternative energy provisions were extended for 5-7 years instead of just one, but it is certainly understandable. “Folks do understand that is all that was on the table and really it’s teeing up a longer conversation about what to do with our tax code,” he said. “We want to have that conversation because we want all energy tax incentives on the table” including those benefiting the oil industry.

In this edition of the Ethanol Report, Dinneen talks about the dysfunctional 112th Congress and his optimism that the 113th Congress will be better.

Listen to or download the Ethanol Report here: Ethanol Report on Congress in 2013

Subscribe to “The Ethanol Report” with this link.

Agriculture Secretary Tom Vilsack has had a good working relationship with EPA Administrator Lisa Jackson on various issues important to farmers, ranchers and renewable energy and he is sorry to hear about her resignation from the Obama cabinet.

“Lisa Jackson has served our country well as she balanced improving the environment and the health of the American people – while ensuring our country’s economic competitiveness – because they are intrinsically linked,” said Vilsack in a statement today. “Throughout her tenure, she listened to stakeholders, including farmers and ranchers, and took their concerns into account while considering policies that impacted rural America. She was a friend to me and to those who live and work in rural America and her leadership will be missed.”

Vilsack and Jackson met with representatives of the ethanol industry and toured Renewable Energy Group (REG) biodiesel plant in Newton, Iowa last year. Jackson was instrumental in deciding in favor of a waiver allowing the use of 15% ethanol and against a waiver of the Renewable Fuel Standard requested this year.

In this Ethanol Report, Renewable Fuels Association (RFA) president and CEO Bob Dinneen provides his naughty and nice list for Santa, talks about a new progress report on cellulosic biofuels, and promises 2013 will bring one of the biggest fights for the future of energy policy.

Dinneen says those who deserve coal include industries that have continued to relentlessly attack ethanol this year, while he puts the Obama administration on the nice list for upholding the Renewable Fuel Standard and finally allowing sales of 15% ethanol.

Listen to or download the Ethanol Report here: Ethanol Report on 2012 in Review

Subscribe to “The Ethanol Report” with this link.

The Advanced Ethanol Council has just released a detailed look at the progress made towards the commercial deployment of advanced cellulosic biofuels.

The Cellulosic Biofuels Industry Progress Report profiles production facilities and projects across the country and producing nations around the world. According to the report, all countries that were profiled are working toward developing production capacity in the U.S. to meet the Renewable Fuel Standard (RFS).

The new data includes each facility’s path to commercial deployment, capacity, feedstock and more, demonstrating that notwithstanding the global recession, the cellulosic biofuel industry is coming on line.

The report points to the industry’s enormous potential. According to the Sandia National Lab, the U.S. could produce 75 billion gallons per year of cellulosic biofuels without displacing food and feed crops, or more than half of the 134 billion gallons of gasoline consumed by the U.S. in 2011.
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USDA’s World Agricultural Supply and Demand Estimate (WASDE) out this week left corn stocks unchanged but lowered the season average price estimate by 20 cents to $7.40 per bushel.

USDA maintained corn ending stocks in the U.S. for the marketing year at a tight 647 million bushels, which is about three weeks worth of supply. Globally, USDA slightly lowered the projection for corn ending stocks in the current marketing year to 117.6 million metric tons, which is down 13.4 million from last marketing year. However, global coarse grains production was actually increased 7.9 million metric tons, as China reported a corn crop four percent larger than the November estimate.

“The drought reduced production by four billion bushels from what we thought earlier this year,” said USDA Chief Economist Joe Glauber. “No question that’s rationed demand and we’ve seen a really tight stock situation.”

Glauber says margins for ethanol producers have been very tight this year. “If you look at ethanol production, it’s been below 13 billion gallons on an annualized basis, if you look at weekly production numbers, and that reflects the lower margins for sure,” he said. Corn use for ethanol is forecast at 4.5 billion bushels, 10% lower than last year.

According to the Renewable Fuels Association, the U.S. ethanol industry is projected to use 78.9 million metric tons of grain (net distillers grains) or less than three percent of the world grain supply – the lowest rate in five years. “Further, more grain will be available for non-ethanol use than any other time in history with the single exception of last year,” said RFA Vice President, Research and Analysis Geoff Cooper. “In fact, grain available for non-ethanol use in 2012/13 will be 15% higher than 10 years ago in 2003/04. Meanwhile global population grew 9.8% during this period.”

Dashing through the fields comes GROWMARK and the FS member cooperatives with a load of fuel to make your holiday season warm and bright!

The National Corn Growers Association has created a simple website that offers just the facts about ethanol.

The website EthanolFacts.com offers information about E15, food versus fuel, energy security, jobs in rural America and more. There is a lot of discussion about ethanol these days, and plenty of need for a look at the facts. That’s why the National Corn Growers Association has created the EthanolFacts.com website as a simple place to get the facts and links to a lot more information about our favorite domestic renewable fuel.

“For years, NCGA has been at the forefront of promoting ethanol as an important choice for today’s drivers, who are demanding fuels that are not only cleaner-burning, but powerful and made right here in the United States,” said Chad Willis, a Minnesota corn farmer who serves as chairman of NCGA’s Ethanol Committee. “EthanolFacts.com provides the key information to people who want to know the simple truth about a very complex subject so they can continue the conversation about how farmers are not only helping feed the world, but fuel it, too.”

EthanolFacts.com was designed for simplicity and clarity on a number of platforms, especially mobile platforms such as tablets and smartphones – and NCGA also has print versions available.

The European Commission today issued a “general disclosure document” setting forth its proposed ruling in the anti-dumping investigation involving U.S. ethanol exports to Europe.

Growth Energy and the Renewable Fuels Association (RFA) issued a joint statement on the issue:

“We continue to cooperate with the Commission’s investigation. We are troubled by news that the Commission is recommending a 9.6 percent anti-dumping duty to its Member States. We remain convinced that if all the facts are considered, the European Union will decide not to impose any anti-dumping duties on imports of ethanol produced in the United States.”

Last year, the European Union (EU) initiated anti-dumping and countervailing duty investigations regarding U.S. exports of ethanol to Europe and current U.S. policies surrounding ethanol production and use, specifically the expiring volumetric ethanol excise tax credit, or VEETC, available to blenders of ethanol and gasoline. Allegations by EU ethanol producers suggested that U.S. ethanol exports to Europe were taking advantage of the tax incentive before export, thus lowering its price and harming EU ethanol producers. However, by August of this year it appeared the issue had been resolved and the EU would not be taking any action.

Automotive service expert Bobby Likis nearly blew a gasket when he saw today that the AAA is calling for the sale of 15% ethanol blended fuel (E15) to be suspended “to protect motorists” from damaging their engines.

“To state that ethanol damages engines is a disservice to consumers…specifically to AAA members,” said Likis, who is the host of the syndicated Car Clinic Network and has been in the automotive service industry for over 40 years as technician, rear-engine dragster builder, and owner of an award-winning service shop. “The fact is there’s no proof that ethanol damages engines.”

Likis is a long time AAA member who also provides both of his out-of-state daughters with annual AAA road service cards and he speculates on what members might take away from the organization’s statements about ethanol. “Can you imagine a car owner reaching out to AAA in need of gas with the stipulation they would not accept ethanol-based fuel?” he questioned.

Likis says he is amazed when he hears people claim that ethanol ruins engines. “Technicians know that people ruin engines – neglect of ownership, lack of service, lack of following normal maintenance procedures,” said Likis, noting that car engines are perfectly capable of running on at least 15% ethanol. “Have been since 2001 and even cars prior to that, if the truth be known,” he added.

Listen to an interview with Likis about AAA statements: Car Clinic Host Bobby Likis

GROWMARK has made several changes since purchasing the Fort Dodge Fuel Terminal in Duncombe, Iowa two years ago – and the cooperative company continues to grow the facility which was originally built more than 40 years ago.

“GROWMARK has made a lot of improvements to get a good quality system where customers can depend on it to come and get fuel 24 hours a day,” said terminal manager Bill Fandel, who has been at the facility for nearly 40 years himself. “We’ve been in a constant state of construction.” Capacity has increased to over nine million gallons for fuel oil and about 3.5 million gallons for gasoline.

GROWMARK also added 76,000 gallon storage capacity for ethanol and 30,000 gallons for biodiesel. “We’re blessed with about eight ethanol plants in a 40 mile radius,” Fandel said, and at least two biodiesel plants within 40 miles. “It is all soy, no animal fat,” he added.

Listen to my interview with Bill here: Bill Fandel, Ft. Dodge Terminal

Demand for both ethanol and biodiesel are good at the Fort Dodge Terminal. “The majority of the gas going out of here has ethanol in it and a lot of our member companies are using the bio,” said Fandel. Customers select their blend at the terminal for both ethanol and diesel.

Facility operations manager Greg Eckhart says the Fort Dodge facility has been a great investment for GROWMARK. “It was a great asset sitting right in the middle of our territory already, it was a terminal we did use before and we saw potential and growth,” said Eckhart, who added that they have nearly doubled volume in two years.

Adding ethanol and biodiesel was good for them. “We’ve increased the gas loading here tremendously because of that,” Eckhart said.

Listen to my interview with Greg here: Greg Eckhart, GROWMARK

The U.S. Senate has repealed a provision in the defense department budget that would have prevented the military from developing the use of biofuel alternatives.

A coalition of organizations representing military biofuels supporters welcomed the news that will allow the Department of Defense “to continue research and testing of fuels that provide U.S. forces with enhanced military capability.”

The Senate voted 62-37 to pass an amendment by Senator Mark Udall (D-CO) repealing section 313 of the FY2013 National Defense Authorization Act (NDAA), which prohibited DOD from procuring alternative fuels if they cost more than their conventional counterparts.

“Military leaders and security experts believe these initiatives are vital to our military’s energy security,” said Mike Breen, Executive Director of the Truman Project and spokesman for its clean energy campaign, Operation Free. “Our dependence on oil as a single source of transportation fuel endangers our national and economic security.”

The House of Representatives has included similar language in its defense appropriations bill.

The National Council of Chain Restaurants today joined the fight against the Renewable Fuel Standard (RFS) with the release of a new report on its impact on the chain restaurant industry, commodity prices and the food supply chain.

The study, which was conducted by PwC, “concluded that the RFS mandate could cost chain restaurants up to $3.2 billion annually, with quick-service restaurants witnessing cost increases upward of $2.5 billion, and full-service restaurants seeing increases upward of $691 million.”

Ethanol industry representatives called the study “flawed” and “misleading” and said it failed to take many factors into account. “The true culprit behind rising food prices is the cost of energy, and in particular oil,” said Growth Energy CEO Tom Buis. “Only 14 percent of the price of food is attributable to the cost of the commodity, while the rest can be attributed to energy costs and marketing. The processing, packaging, wrapping, storage, refrigeration and transportation costs are the true drivers in price increases.”

American Coalition for Ethanol Executive Vice President Brian Jennings says the council of chain restaurants is ‘out to lunch’ on the RFS. “Contrary to their claims, a recent fact-based analysis by the U.S. Department of Agriculture and EPA showed that the Renewable Fuel Standard (RFS) has virtually no impact on food prices, so we encourage the media to take this fast-food study with as much salt as you’d find in one of their meals,” said Jennings.

“They lost in their bid for a waiver of the RFS, so now they are resorting to super-sized myths about the impact of the RFS on food prices. Every reasonable analysis of the factors influencing food prices has concluded that the cost of diesel fuel, gasoline, and other energy inputs is the major driver. This study conveniently avoids that issue,” said Bob Dinneen, President of the Renewable Fuels Association.

Listen to Dinneen’s comments here: RFA president Bob Dinneen

Congressman Bob Goodlatte (R-VA) announced at the NCCR press conference this morning says the report supports his legislation “The Renewable Fuels Elimination Act” HR3098. “This is a bipartisan effort,” Goodlatte said, noting that a letter to EPA administrator Lisa Jackson encouraging a waiver of the RFS was signed by 156 members of the House. “That group provides a basis for moving forward with legislation that would do what unfortunately she chose not to do.”

Goodlatte says he is hopeful that the RFS will either be reformed or eliminated in the next Congress.

Listen to Goodlatte’s comments here: Congressman Bob Goodlatte

The ethanol industry is categorizing the latest attack on the Renewable Fuel Standard (RFS) by the American Petroleum Institute (API) as more of the same.

In response to API’s call this morning to eliminate the RFS “because it is not working well and because it will force higher concentrations of ethanol in gasoline that could harm vehicles,” Growth Energy CEO Tom Buis said, “This is a classic example of the fox guarding the chicken coop. Really? Special interests will stop at nothing to discredit the success of renewable fuels created right here at home to ensure their lock on the fuels market goes unchecked.”

Bob Dinneen, President and CEO of the Renewable Fuels Association, referred to the API position as the classic “dog bites man” journalism example. “API wants to repeal a highly successful program that has reduced gasoline imports and stimulated investment in renewable energy resources. API doesn’t like the RFS because it has taken ten percent of their barrel and reduced consumer costs. Americans like and support the RFS for exactly those reasons.”

Iowa Renewable Fuels Association Executive Director Monte Shaw was equally blunt. “The reason API is so concerned now is that E15 is poised to become widely available. Without the RFS, Big Oil can continue to hide behind its Century of Subsidies and the federal petroleum mandate to ignore lower cost ethanol blends like E15.”

Brent Erickson, executive vice president of the Biotechnology Industry Organization’s Industrial & Environmental Section, says the oil industry continues its efforts to undermine the success of the RFS. “Since the inception of the RFS, API has used every regulatory and legal ploy available to delay and block implementation of the law. Since these efforts appear to have failed, they are now mounting a public relations effort to convince lawmakers to repeal the RFS. Congress should see right through this effort.”