Domestic Fuel

The Advanced Ethanol Council (AEC) is asking the U.S. Environmental Protection Agency (EPA) not to grant a retroactive waiver to the oil industry for the cellulosic requirements under the Renewable Fuel Standard (RFS) in 2011.

Under the 2011 RFS, the EPA required petroleum refiners and importers to blend 6.6 million gallons of cellulosic biofuels in 2011 or buy waiver credits by the end of February 2012 to make up for the difference.

In January, trade groups for refiners and oil producers asked EPA for a waiver from that requirement, because of the absence of cellulosic biofuel production last year.

In a letter to the EPA, Brooke Coleman, Advanced Ethanol Council Executive Director, made very clear that Congress anticipated potential shortfalls in cellulosic ethanol production in the early years and created a mechanism, with the blessing of petroleum interests, to address such a situation.

“We are well‐aware that the commercialization of cellulosic biofuels is behind the schedule set forth by the federal RFS. However, Congress anticipated the inevitable uncertainties and variability inherent with the commercialization of new technologies and set up a credit waiver system to account for variances from the established schedule for advanced biofuels,” wrote Coleman.

Coleman says the purpose of the RFS was to be forward-looking and drive the commercialization of new renewable fuel technology. Moreover, Coleman notes, oil interests and other obligated parties have multiple options available to them to comply with RFS mandated volumes.

Read the entire letter here.

The Advanced Ethanol Council (AEC) this week urged Senate Ag Committee Chair Debbie Stabenow (D-MI) and Ranking Member Pat Roberts (R-KS) to include two key tax extensions for advanced and cellulosic ethanol producers in the next farm bill.

In a letter to the committee leaders, AEC Executive Director Brooke Coleman wrote, “The Cellulosic Biofuels Producer Tax Credit (PTC) — created in the 2008 Farm Bill — and the Special Depreciation Allowance for Cellulosic Biofuel Plant Property are vital to the ongoing development of the domestic advanced ethanol industry. … Several billion dollars have been invested in advanced biofuels development with the expectation that Congress will stay the course with regard to its commitment to the industry. A tax increase on advanced biofuels at this time would curtail investment and undercut an industry just starting to close deals and break ground on first commercial plants.”

Beyond the tax extension, Coleman also highlighted four areas in which the Farm Bill could help accelerate the commercialization of advanced and cellulosic ethanol technologies. These areas include extending the USDA Loan Guarantee program for biorefinery projects with changes to facilitate participation by lending institutions.

Also, Coleman asked for support of USDA’s efforts to build out ethanol refueling infrastructure via the Rural Energy for America Program to allow ethanol to compete in the market based on price, reform the Biomass Crop Assistance Program, and modify the Repowering Assistance program to help existing bio-refining operations deploy advanced ethanol technologies and feedstock utilization.

Read the entire letter here.

The U.S. Department of Agriculture has approved a conditional commitment of $232.5 million to build a cellulosic ethanol plant in Boardman, Oregon.

The commitment was made to ZeaChem Boardman Biorefinery, LLC (ZBB) through the Biorefinery Assistance Program. ZBB plans to operate a 25 million gallon per year biorefinery to be constructed on an industrial site in northeast Oregon, along the Columbia River.

“In his State of the Union address, President Obama outlined his vision for a new era for American energy—an economy fueled by homegrown and alternative energy sources that will be designed and produced by American workers,” said Agriculture Secretary Tom Vilsack. “This project and others like it will help to establish a domestic advanced biofuels industry that will create jobs here at home and open new markets in the Pacific Northwest and across America.”

The biorefinery will use high-yield cellulosic fermentation technology to produce advanced biofuels. The feedstock will consist of approximately 30 percent agricultural residue, such as wheat straw and corn stover, and 70 percent woody biomass from a local hybrid poplar farm. An existing 250,000-gallon per year cellulosic integrated demonstration plant at the site is currently generating operational data that will provide information needed for the commercial scale project, which will be located on an adjacent site. An estimated 51 percent or more of the biorefinery’s output will be advanced biofuel, and the remainder will be high-value biobased chemicals, such as acetic acid and ethyl acetate.

“This is a very exciting and innovative project and we are very pleased to see ZeaChem moving into the commercial stages of cellulosic ethanol production,” said Brooke Coleman, Executive Director of the Advanced Ethanol Council (AEC). “The advanced and cellulosic ethanol industry is breaking through in a challenging financial climate, which speaks to the evolution of the technology and the value proposition offered by the most innovative liquid fuel and chemical producers in the world.”

In response to recent media reports about cellulosic ethanol shortfalls, including a story in the New York Times, the advanced ethanol industry is stressing that progress is being made.

“In a very difficult financial and policy environment, the first wave of commercial advanced ethanol production facilities are under construction in a number of states across the country,” said Advanced Ethanol Council Executive Director Brooke Coleman. “Diversifying America’s fuel supply with increasing amounts of clean, domestically produced renewable fuel requires us to keep our eyes on the prize and not be distracted by the noise and misdirection coming from naysayers protecting the status quo.”

Coleman acknowledges that targets for cellulosic ethanol under the Renewable Fuel Standard (RFS) have had to be revised downward from initial expectations, but says the RFS is working to help diversify the nation’s fuel supply.

The U.S. Environmental Protection Agency (EPA) is required by Congress to adjust the RFS cellulosic biofuel blending volumes based on forecasted future available supplies. For both 2011 and 2012, EPA reduced those volumes by over 90 percent to provide relief for regulated parties and simultaneously implement the very type of credit system the oil industry requested to address the inherent market uncertainties of deploying new fuel technologies in the marketplace.

Advanced biofuel producers are calling on Congress to take action now to ensure that tax incentives for cellulosic ethanol continue past 2012.

In a letter to Congressional leaders, the Advanced Ethanol Council (AEC) asked for a multi-year extension of the Cellulosic Biofuels Producer Tax Credit (PTC) and the Special Depreciation Allowance for Cellulosic Biofuel Plant Property, both of which are set to expire December 31, 2012.

AEC Executive Director Brooke Coleman noted in the letter that the incentives “are vital to the ongoing development of the domestic advanced ethanol industry. To ensure stability in the marketplace, and prevent unnecessary job losses, Congress should provide long‐term extensions of these provisions (5+ years).”

As new ethanol biorefineries are beginning construction, the AEC emphasized the importance of consistent federal policy to this kind of multi-billion dollar investment.

The AEC is asking Congress to extend these important tax incentives this year as part of a final tax extenders package as they are set to expire next year. “As Congress considers the extension of a number of tax provisions for the clean energy sector, we would also like to highlight the importance of timing. The mere prospect of the expiration of the PTC and Special Depreciation Allowance for cellulosic biofuels in 2012 will start to affect projects that take 18 months to build, and could drive our industry into a series of ‘fits and starts’ that has dampened investment in other domestic clean energy sectors for decades.”

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.

All officers of the Renewable Fuels Association were re-elected to serve another term at the ethanol organization’s annual membership meeting held this week in Washington DC.

Chuck Woodside of KAAPA Ethanol in Minden, Nebraska was re-elected as Chairman of the Board. Also re-elected were Vice Chairman Neill McKinstray, Ethanol Division Vice President and General Manager, The Andersons, Inc.; Treasurer Randall J. Doyal, CEO of Al-Corn Clean Fuel in Claremont, Minnesota; Secretary Walter Wendland, CEO of Golden Grain Energy in Mason City, Iowa; and President Bob Dinneen.

Additionally, the RFA welcomed Bill Brady, CEO of next generation ethanol technology company Mascoma and Chairman of the Advanced Ethanol Council (AEC), to the Board of Directors and Executive Committee of the RFA. The AEC represents a wide range of advanced ethanol technologies utilizing feedstock from grasses and corn stalks to wood waste, municipal solid waste and algae to produce clean, renewable ethanol and works in partnership with RFA.

The ethanol industry is challenging a new report from the National Academies of Science that questions the ability of the biofuels industry to meet current goals under the Renewable Fuels Standard (RFS2) and the ability of biofuels to reduce greenhouse gas emissions.

According to the report, production of conventional biofuels and biomass-based diesel fuel will be adequate to meet the requirements of the RFS2, but whether the mandate for cellulosic ethanol can be met is “uncertain.”

“The capacity to meet the renewable fuel mandate for cellulosic biofuels will not be available unless the production process is unexpectedly improved and technologies are scaled up and undergo several commercial-scale demonstrations in the next few years. Additionally, policy uncertainties and high costs of production may deter investors from aggressive deployment, even though the government guarantees a market for cellulosic biofuels up to the level of the consumption mandate, regardless of price.”

Brooke Coleman, executive director of the Advanced Ethanol Council (AEC) agrees that technological innovation and policy uncertainty are major hurdles for meeting the RFS2 goals for advanced biofuels. “The RFS is an aggressive, technology-forcing standard that needs complementary policy to be achieved, in much the same way that oil companies rely on a bevy of tax breaks and subsidies to protect the investments necessary to bring new sources of petroleum fuels online as known oil reserves become increasingly scarce,” said Coleman. “If we enact policies reflective of the goals set forth in the RFS, the advanced biofuels industry will emerge and the RFS targets will be met.”

“You can read this report in a number of ways because the conclusions are based on variables that will undoubtedly change with technological advancements and innovation within the industry,” said Growth Energy CEO Tom Buis. “A continued commitment to the RFS will create the market certainty that is crucial for both first generation and second generation ethanol. But any effort to doubt or dismantle the RFS would block the growth of the industry and ultimately threaten American jobs, our environment and our energy security.”

Also “uncertain” according to the report is the “extent to which using biofuels rather than petroleum will reduce greenhouse gas emissions.” “The idea that the RFS may not be an effective strategy to mitigate greenhouse gas emissions is regrettable given the published science on the subject,” said Coleman. “Even with land use change considerations, advanced biofuels are the lowest carbon fuels being developed in the marketplace; far and away less carbon intensive than electricity, natural gas and even hydrogen fuel cells.”

Ethanol, biodiesel, propane, natural gas, electricity – even regular gasoline – consumers should have choices at the pump and a new campaign is urging lawmakers in Washington to make that happen.

More than 20 worldwide leaders in the effort to commercialize next-generation transportation fuels today announced the new campaign, called FuelChoiceNow. Among the companies that have joined the effort are Abengoa Bioenergy, Battery Ventures, Propel Fuels, and Qteros.

“The purpose behind FuelChoiceNow is to promote consumer choice at the pump,” said Susan Hager, vice president of corporate communications and government affairs for Qteros. “The advocacy group does not promote one alternative fuel over another, we’re here to advocate for consumer choice.”

The group intends to educate and urge lawmakers to enact policies that promote open fuel markets in the United States. “Today in the United States, the transportation fuel market is not an open market, it’s not competitive,” Hager said. “What we’re advocating is room for innovation and new technologies for consumers to choose from.”

FuelChoiceNow has launched a website, along with a Facebook fan page and Twitter account, to encourage a grassroots effort toward expanding fuel choices.

Listen to or download interview with Susan Hager here. Susan Hager of Qteros

Cellulosic ethanol targets were reduced while biodiesel was increased under the latest standards proposed by the federal government for the Renewable Fuel Standard program (RFS2).

The U.S. Environmental Protection Agency (EPA) today proposed the 2012 percentage standards for four fuel categories under the RFS2 based on the annual renewable fuel volume targets. EPA once again lowered the target for cellulosic ethanol, which was set at 500 million gallons in 2012, to somewhere between 3.45 and 12.9 million gallons. The agency “remains optimistic that the commercial availability of cellulosic biofuel will continue to grow in the years ahead” and so does the Advanced Ethanol Council, provided there is stable policy to allow the industry to invest in technology to make it possible.

“The most immediate term solution to this problem is to enact meaningful and long-term tax incentives to spur construction of the first-commercial advanced biofuel plants, in much the same way that Congress has stood behind oil and gas production for nearly 100 years,” said AEC Executive Director Brooke Coleman. “The cellulosic and advanced ethanol industry will hit the mark and achieve the goals of the RFS if Congress aligns our tax code with the RFS and sends a clear message to the marketplace that advanced biofuels will be a cornerstone of a broader strategy to create jobs and reduce oil dependence.”

EPA is also proposing to increase the volume requirement for biomass-based diesel from 800 million gallons this year to 1 billion gallons in 2012 and almost 1.3 billion gallons in 2013. The National Biodiesel Board (NBB) notes that since biodiesel qualifies as an advanced biofuel it is also eligible to exceed the biomass-based diesel targets and help meet general advanced biofuels requirements under the program. “As America’s first advanced biofuel being produced on a commercial scale nationwide, we have done extensive research to assess the various feedstocks that are used to make biodiesel, including agricultural oils, recycled cooking oil, animal fats, algae and camelina,” said NBB CEO Joe Jobe said. “We are confident we can meet these targets and we anticipate that we will likely exceed them.”

The EPA proposes to maintain the 2012 advanced biofuel requirements under the RFS at 2 billion gallons as federal law requires. The mandate for convention renewable biofuel also remained consistent with the statute at 13.2 billion gallons.

In advance of a vote in the Senate on an amendment to eliminate the Volumetric Ethanol Excise Tax Credit (VEETC) immediately, ethanol interests remain “cautiously optimistic” that the measure will fail.

Seven agriculture and ethanol organizations sent a letter to the Senate leadership urging a no vote on the amendment proposed last week by Sen. Tom Coburn (R-OK). In it the groups note that, “As evidenced by the ethanol tax reform legislation recently introduced by a bipartisan group of senators and supported by our nation’s ethanol producers, the ethanol industry understands the need for reforming the tax incentive to significantly reduce costs to a more responsible approach that protects the evolution of the industry.” Groups signing the letter include the American Coalition for Ethanol, Advanced Ethanol Council, American Farm Bureau Federation, Growth Energy, National Corn Growers Association, National Farmers Union, and the Renewable Fuels Association.

Other groups that have voiced opposition to the amendment include the Petroleum Marketers Association of America (PMAA), and the Society of Independent Gasoline Marketers of America (SIGMA) which sent a letter to Sen. Coburn in opposition stating, “…an abrupt termination of VEETC before that date will injure many marketers who have contracts to purchase ethanol at prices that were premised upon the existence of VEETC through the year 2011. SIGMA assumes that such a consequence is not your intent and therefore urges you to forego any legislation which would end VEETC before the end of this year.”

A vote on the amendment is expected this afternoon.

Iowa Senator Chuck Grassley along with a bipartisan group of senators, announced a proposed piece of legislation to promote the development of biofuel infrastructure. The Domestic Energy Promotion Act of 2011 would transition the current blender’s credit to a variable tax credit based on the price of oil, improve tax incentives for blender pumps and ethanol refueling infrastructure, and extend crucial tax incentives for advanced and cellulosic ethanol production that are set to expire at the end of the 2012.

In response to the proposed ethanol legislation, Brooke Coleman, Executive Director of the Advanced Ethanol Council (AEC) said, “We applaud Senator Grassley’s continued leadership on this issue. The proposal strikes the right balance between providing savings to the taxpayer, developing the infrastructure necessary to incorporate growing volumes of ethanol from all feedstocks, and extending the incentives that are critical to the development of next generation ethanol fuels.”

“The tax incentives for advanced and cellulosic ethanol contained in Senator Grassley’s proposal will help our industry put steel in the ground and create jobs and economic activity that cannot be exported,” continued Coleman. “They are the type of tax incentives already provided for the fossil fuels industry, and extending these incentives helps begin the process of leveling an uneven playing field with gasoline and other petroleum fuels. Most importantly, this proposal establishes a durable and consistent tax framework for our industry, which in turn will facilitate substantial investment in domestically-produced advanced ethanol fuels and allow our sector to reach its full potential.”

To learn more about the Domestic Energy Promotion Act of 2011 and how it may impact the ethanol industry, listen to this week’s Ethanol Report.

Advanced biofuels from new feedstocks are facing a “chicken and egg” situation on the way to commercialization and that is why government funding remains vital to the industry.

That was the message delivered by Chris Standlee, Executive Vice President of Abengoa Bioenergy, during a teleconference with other advanced biofuels company officials on Thursday. “It’s a critical ‘chicken and egg’ scenario since few people are willing to grow the feedstocks before the facilities are built and few people are willing to build the facilities until the biomass feedstocks are available, so government incentives are critical,” said Standlee.

The Biotechnology Industry Organization (BIO) hosted the roundtable call – which also included officials from Ineos Bio, Coskata and POET – to discuss how USDA programs such as the Biorefinery Assistance Program and the Bioenergy Program for Advanced Biofuels are needed to coordinate market efforts to create a sustainable value chain for bioenergy and biofuel production. USDA recently announced progress in implementing those two programs and previously implemented the Biomass Crop Assistance Program (BCAP), including designation of Qualified Biomass Conversion Facilities. “The BCAP program is a critical program to develop this infrastructure,” Standlee said. “It provides payments direct to farmers and people who deliver the feedstock to the qualified facilities.”

However, funding for some of these programs may be in jeopardy due to opposition in Congress. “We certainly want to point out our belief that this opposition is short sighted and impedes our significant efforts to provide this increasing alternative to imported foreign petroleum,” Standlee said.

He also noted the importance of advanced biofuels commercialization in creating jobs and revitalizing rural economies, using the Abengoa plant to be built in Hugoton, Kansas as an example. “We anticipate roughly a two year construction period, during which there will be 300 minimum direct construction jobs created in this rural area of southwestern Kansas,” he said. Once construction is complete, which they hope to start this year, the plant will provide 65 permanent local jobs and will purchase feedstock from farmers in the surrounding area.

Abengoa is one of the founding members of the new Advanced Ethanol Council (AEC) announced this week and Standlee is serving as vice chairman of the new group. “Our primary goal is to make sure that biofuels are allowed to grow and given the support necessary, particularly the advanced biofuels which are just now coming into their own, and given the opportunity to assume a significant role in reducing our dependence on foreign oil,” he said.

Listen to Standlee’s comments from the teleconference here: Chris Standlee, Abengoa

In this edition of “The Ethanol Report” podcast, we hear from the executive director of the newly formed Advanced Ethanol Council (AEC), Brooke Coleman.

Coleman has been involved with the ethanol industry for over a decade, most recently as Executive Director of the New Fuels Alliance. He says that the new organization came together around a common theme. “The common theme is that both existing corn ethanol producers and tomorrow’s cellulose and advanced ethanol producers have a common interest – opening up U.S. fuel markets to the use of ethanol.”

“Advanced ethanol is truly on the cusp of commercialization,” he continued. “It’s a fuel that is not 15 years down the road, it’s a realistic option and there are plants in the ground already today producing advanced ethanol at demonstration and commercial scale.”

Coleman points out that the organization encompasses all types of advanced ethanol, not just cellulosic, which is a process that specifically uses cellulose to create ethanol. “At the end of the day, we want to make sure we develop market places for advanced ethanol – not just one type,” he said.

The AEC represents a wide range of advanced ethanol technologies utilizing feedstock from grasses and corn stalks to wood waste, municipal solid waste and algae to produce ethanol. The industry leaders founding the AEC include Abengoa Bioenergy , BlueFire Renewables, Coskata, Enerkem , Fulcrum BioEnergy, Inbicon, Iogen, Mascoma, Osage Bio Energy and Qteros, together with the Renewable Fuels Association.

Listen to or download the Ethanol Report on the new AEC here: Ethanol Report on Advanced Ethanol Council

Leaders in the world’s advanced ethanol industry announced today that they are joining with the Renewable Fuels Association (RFA) to form the Advanced Ethanol Council (AEC). The new council will be focused on accelerating the commercialization of advanced ethanol “through visionary public policies that unleash the full potential of these advanced technologies and launch new market opportunities for ethanol.”

The AEC represents a wide range of advanced ethanol technologies utilizing feedstock from grasses and corn stalks to wood waste, municipal solid waste and algae to produce ethanol. The industry leaders founding the AEC include Abengoa Bioenergy , BlueFire Renewables, Coskata, Enerkem , Fulcrum BioEnergy, Inbicon, Iogen, Mascoma, Osage Bio Energy and Qteros.

“Advanced ethanol production and use is a critical component of America’s strategy to become more energy self‐reliant,” said Mascoma Chief Executive Officer Bill Brady, who will serve as Chair of the AEC. “New ethanol technologies will dramatically increase transportation fuel security, create new jobs, and diversify the feedstocks that can be processed into transportation fuels. Together with existing biofuel production, advanced ethanol will dramatically reduce America’s dependence on imported oil and provide Americans with more control over their energy future. As world events have demonstrated, the need for secure alternatives to imported oil is immediate. Members of the AEC are excited to join with the RFA and begin writing the next chapter in American ethanol.”

Joining Bill Brady as Vice Chairs of the AEC are Chris Standlee, Executive Vice President of Abengoa Bioenergy and John McCarthy, Chief Executive Officer of Qteros.

Read more here from RFA.