Domestic Fuel

One of the great things about the Advanced Biofuels Leadership Conference is the diverse group of biofuels stakeholders with diverse points of view. Case in point, Shell Oil’s presence at the gathering, and the company’s Downstream Policy & Advocacy Manager, North America, John Reese, who makes the contention that it’s not the oil companies who are creating the E15 blend wall.

“We are really maxing out on the ability to blend ethanol into gasoline,” he says because the automakers don’t approve above E10 blends for about 95 percent of the cars and trucks on the roads now. “EPA did approve the use of E15 for 2001 and newer vehicles, but the issue is the automobile manufacturers don’t support that.”

Groups such as the Renewable Fuels Association contend differently, and even Secretary of Agriculture Tom Vilsack told me that those 2001 and newer non-flex fuel vehicles should be able to use E15 without any modifications to those vehicles. But John says we should believe those who have built and tested the vehicles. And while that’s coming from a big oil company, he says Shell supports biofuels because, frankly, the company has a stake in the success of the green energy market.

“We have a joint venture to produce ethanol, and we have interests in cellulosic biofuels going forward, so we’re really looking to find solutions to this.”

Listen to my entire interview with John here: John Reese, Shell

A big part of any business operation is being able to secure the capital to allow the company to get started and grow properly. Obviously, that’s no different for the biofuels industry, and attendees at the Advanced Biofuels Leadership Conference heard some good news from the financing side of the house.

“I think the overarching message of the panel was a sign of increasing optimism,” says Chris Groobey, a partner in the law firm Wilson Sonsini Goodrich & Rosati, who spoke during a session on debt financing. He says the last year and a half has been a tough time for the biofuels industry, but it’s not because the companies were doing anything wrong. It had more to do with the political and external environments surrounding the industry. And now he’s optimistic things are changing on the government and private financing fronts.

“Now you have folks who have made their companies and projects even better, and now that you have a solidified political environment, you have an opportunity now to do better things legislatively and you have folks in the government and private sector side of the money who are very, very motivated to get this moving. And they see 2013 as the time to do that.”

Chris adds that while there seems to be more Departments of Energy and Defense grants to use, those can be tricky to make sure the money is lined up correctly. Law firms such as his specialize in helping biofuels makers to navigate that maze.

He says while it’s pretty tough to get venture capital money in to the industry right now, there are plenty of opportunities to get debt investors involved, including some pretty big financial institutions that want to be part of this green energy market.

Listen to more of what Chris had to say here: Chris Groobey, Wilson Sonsini Goodrich & Rosati

According to a new report by @GlobalDataEnergy, #bioethanol is the car fuel of the future. The report, “#Cellulosic Ethanol – Global Production, Major Trends, Regulations, and Key Country Analysis to 2020,” finds that #ethanol is the most widely acclaimed alternative or additive for gasoline used for running vehicles. In addition, the U.S. ranked number one in biofuel production using natural waste feedstocks. According to the latest report, the U.S. is the global leader in cellulosic ethanol production, manufacturing 5.42 million gallons in 2012.

Bioethanol is produced through the fermentation of cellulosic feedstock such as forest and agricultural waste. The reports finds that the U.S. has an abundance of biomass feedstock, and dedicated energy crops such as #switchgrass and #miscanthus that are grown exclusively for conversion into cellulosic ethanol to help the nation’s ambition to meet fuel needs while reducing greenhouse gas (GHG) emissions.

The U.S. is the only country currently working to promote the cellulosic ethanol market, says the report, with the U.S. Department of Energy (US DOE) providing grants to help companies establish a commercial-scale cellulosic ethanol plant. As a result, several companies have set up pilot and demonstration plants and a few commercial plants are expected to be commissioned in late 2013. The report also finds that the U.S. have also mandated the addition of 10% ethanol in gasoline fuel, setting steady domestic demand for the industry, while certain recently released cars are able to run on a 85 percent ethanol, 15 percent gasoline mix.

The report finds corn stover and wheat straw are among the most freely available types of feedstock used in countries producing cellulosic ethanol, and growing ethanol demand may see these nations utilizing the residue of their corn crop for ethanol production, creating a sizable market for agricultural waste. GlobalData expects that the growing feedstock demand will create a structured market, in which biomass feedstock prices will be set based on their ethanol yield and the prevailing trading price of ethanol.

Some EU countries such as France and Italy have cellulosic ethanol production infrastructure, but a limited supply of biomass feedstock. Growth of commercial production in these countries may fuel the need to import feedstock from nearby countries or expand production to other countries with ample feedstock availability. A few producers with upcoming commercial scale plants in the U.S. have already started signing agreements to procure agricultural residue and other kinds of cellulosic feedstock.

Global cellulosic ethanol is expected to increase from 14.25m gallons in 2012 to 412.25m gallons in 2020, with commercial production anticipated to take off on a large scale in late 2013 and 2014, thanks to major players adding substantial production capacity and new companies joining the market. The report finds that the U.S. is expected to retain its market dominance until 2020.

Today, the International Energy Agency (IEA) released their Tracking Clean Energy Progress report in New Delhi that details the increased role that biofuels will need to play in reducing greenhouse gases (GHG) as part of their Climate Change Scenario by 2020. The Global Renewable Fuels Alliance (GRFA) applauded this finding, stating that biofuels are already significantly reducing global GHG emissions.

According to the report, globally, the world is not on track to meet the IEA’s goal of holding global climate change to a 2°C rise by 2020. According to the IEA’s Energy Sector Carbon Intensity Index (ESCII) average CO2 emissions have only improved by 0.02 tonnes of CO2 per tonne of oil equivalent in the last 20 years. In order to reach the 2020 target the IEA recommended that annual biofuels production needs to more than double and advanced biofuels capacity must increase six-fold.

“Biofuels are the only real viable option available today to reduce emissions in the transportation sector,” said Bliss Baker, spokesperson for the GRFA. “We agree with the IEA that biofuels offer real GHG emissions reductions today and that we must increase biofuel usage if we want to mitigate the impacts of climate change.”

In order to facilitate this major scale up in global biofuels production, the IEA released some specific recommendations for governments in their report:

• Lessen the risks for early investors through mechanisms such as loan guarantees, guaranteed premiums for advanced biofuels, or direct financial support for first-of-a-kind investments.
• Targeted policy support for advanced biofuels is required to ensure large-scale deployment.
• Monitor sustainability in feedstock production.

“Frankly, the GRFA is not surprised by these findings, despite the commitments from world leaders we are clearly struggling to reduce emissions in the transportation sector,” concluded Baker.

If you’ve never been to Italy, you might be inclined to believe the whole country is very much the same. But you’d be wrong. From the simmering sea shores of the southern coasts to the towering Alpine peaks of the north, where people are more likely to speak German than Italian, the whole country is a rich tapestry of diverse people, customs and foods. In that tradition, Guido Ghisolfi of the Italian company Beta Renewables told attendees of the Advanced Biofuels Leadership Conference (ABLC) that they, too, needed to be diverse in their thinking of biomass for biofuels.

“It’s quite important that the [refineries] be biomass agnostic – they can take several different types of biomass without changing the hardware,” he says, adding that no matter where you are in the world, biomass is seasonal by definition, and those who want to convert the various types into fuels need to be able to change to stay in business year-round. But he admits that currently there is not one system that converts the divergent forms of biomass, whether it’s corn stover or wheat straw or even what’s left over when you press olives, into biofuels. And the technical solution might be simpler than people think.

“So far, people have not focused on the advantage of having a multi-feedstock plant. I’m pretty sure the new technologies coming up in the next few years will be able to handle many more types of biomass,” especially when the costs drive that need.

Guido says you want to bring technology to the territory so you can use all the various biomass feedstocks that an area might have. He adds that biofuels producers need to be flexible as well … and spend less time complaining.

“Instead of complaining and wailing about the RFS, we have to deliver competitive fuel that people will but because it is cheaper and not because it is green.”

You can hear my conversation with Guido here: Guido Ghisolfi, CEO, Beta Renewables

Fuels America has released a new video highlighting the truth behind high gas prices and how renewable fuels can help. Many studies, including a report from the American Security Project, have shown that the country can’t drill its way out of high gas prices and vulnerability to global oil markets. In addition, recent International Energy Agency (IEA) data shows drilling will still leave us with oil that costs upwards of $215 per barrel.

Other studies have shown that renewable fuel lowers gas prices by an average of $1.09 per gallon in 2011, reducing the average American’s gas bill by more than $1,200 per year.

There’s some real negativity hanging over the biofuels industry these days. And while any industry has risks, it seems that the setbacks loom larger over the renewable energy sector compared to what their competitors in the conventional energy sector face. In his talk before the Advanced Biofuels Leadership Conference, “De-Risking a Risky World,” Fred Cannon, the CEO of cellulosic fuel maker KiOR, told the group that the biggest challenge facing the biofuels industry is perception, and they have to shift their thinking to a perception of success for others to see them as successful (his infectious positive attitude is probably why USDA chief Tom Vilsack singled him out to talk with him one-on-one at the conference).

I caught up with him afterwards, and he told me the way to overcome the negatives hanging over the industry is to highlight the wins out there.

“You build it one success at a time,” Fred says. “Every company that starts producing and putting fuel in American cars, you just build on that momentum. And that mitigates the risks.”

But there’s an old saying that I remember from my days in the Air Force (and we’ll clean it up here for general audiences): one “Oh, shoot!” kills a hundred “attaboys.” Fred says we can’t get overwhelmed by the setbacks and feed more into the negative attitudes sometimes around biofuels, because everything seems to get amplified when you’re talking renewable energy. And he says there’s a good way to overcome all the negativity … outside and within the biofuels industry.

“Put clean, sustainable fuel in American cars,” adding that when KiOR’s Columbus, Mississippi cellulosic fuel plant is fully operational, it will put that clean fuel in 25,000 cars a year. He also urges patience, because it takes time to create a new technology.

“We have so much opportunity: a massive market, RFS2, technologies developing. We just have to get through this perception issue of the industry. And we will … one success at a time.”

Listen to my interview with Fred here: Fred Cannon, CEO, KiOR

Two members of Pres. Obama’s cabinet today have signed their names to an agreement that will extend the administration’s commitment to the production of biofuels for use in airplanes. Secretary of Agriculture Tom Vilsack and Transportation Secretary Ray LaHood have extended by five years the “Farm to Fly” program, an initiative to partner the USDA and Federal Aviation Administration (FAA) to help develop a viable biofuel for the aviation industry.

During remarks at the ceremony at the Advanced Biofuels Leadership Conference (ABLC) near Washington, D.C., Vilsack said this is a real job producer, especially for rural parts of the country.

“By continuing to work together to produce American made ‘drop-in’ aviation fuels from renewable feedstocks, we will create jobs and economic opportunity in rural America, lessen America’s reliance on foreign oil and develop a thriving biofuels industry that will benefit commercial and military enterprises,” Vilsack said. “USDA is pleased to partner with the FAA in our quest to develop alternatives to fossil-based fuel, which is critical to reducing carbon emissions and protecting the environment.”

LaHood pointed out that it’s been the hard work of people in attendance at the ABLC that made this agreement even a possibility.

“Through the use of sustainable alternative jet fuels, we are showing the world that we can come together to solve our greatest environmental challenges,” said LaHood.

During a news conference after the signing, Vilsack said that while there are some that want to derail the renewable fuels industry through the destruction of programs such as the Renewable Fuels Standard (RFS), he remains one of biofuels’ biggest allies.

I asked Vilsack how they overcome objections from automakers who don’t approve of E15 for most cars on the road, and he bristled and remained steadfastly behind the studies that show it would work in model years 2001 and after.

“The testing would suggest that there would not be damage to the engines. And I think if consumers were given the option, consumers would choose [E15] because they want to be supportive of a domestic fuel industry.”

And while there might be some who dispute on how much renewable energy is saving consumers and creating jobs, Vilsack said there are some things that are crystal clear.

“I am positive consumers benefit from this. I am positive that hundreds of thousands of jobs are connected to this industry. And I am positive that it has stabilized farm income,” he said.

Listen to Vilsack and LaHood’s remarks here: Secs. Vilsack and LaHood at ABLC

As I mentioned earlier, I’ll be at the Advanced Biofuels Leadership Conference at the Gaylord National Resort & Convention Center near Washington, D.C. on Monday. And I just got this breaking news item in my email box from our friend, Jim Lane from Biofuels Digest:

Agriculture Secretary Tom Vilsack and Transportation Secretary Ray LaHood will announce that the U.S. Department of Agriculture and Federal Aviation Administration, along with other partners, are extending an agreement to help develop viable renewable fuels for the aviation industry.

Secretary Vilsack and Secretary LaHood will both deliver remarks at the 2013 Advanced Biofuels Leadership Conference. This extension follows the initial success of the 2010-2012 “Farm to Fly” partnership to strengthen research and capacity building for aviation biofuels.

I’ll be there to get their comments on this agreement and more! Hope to see you at the ABLC!

Yesterday Rep. Jim Sensenbrenner introduced legislation that would stall the roll-out of E15. Many in the renewable fuels industry responded to the proposed legislation including Fuels America who noted that the legislation ignores the long track record of successful, rigorous testing that E15 has undergone. “What the bill is clearly geared toward, however, is promoting the interest of oil compaines looking to retain control over America’s fuel option.”

“E15 is the most tested renewable fuel in history and to suggest otherwise ignores a wealth of facts. In multiple tests, E15 has been put through the paces in more than 6 million miles of testing. The results of these tests were so satisfactory that E15 is used in NASCAR vehicles – high-performance racecars that can top 200 miles an hour – have opted to use E15, continued the Fuels America statement.

“The reality is that E15 provides options to Americans and the choice to power their cars with clean and renewable fuel. Unfortunately, Rep. Sensenbrenner’s legislation would limit that choice by favoring the oil industry over hardworking American families and businesses.”

The American Coalition for Ethanol (ACE) who recently had a team of more than 70 ethanol supporters meeting with Congressman in DC, noted that the legislation would require another 18 months of E15 testing at taxpayers expense. Senior Vice President Ron Lamberty called the bill “A transparent attempt to protect Big Oil’s profitable monopoly by taking away a driver’s right to choose which fuel to use in his or her own car.”

“Congressman Sensenbrenner is basing his opposition of E15 primarily on two studies that clearly selected vehicles and components based on their history of performing poorly regardless of the type of fuel that was in them,” said Lamberty. “All Mr. Sensenbrenner is proving is that he either doesn’t know what the studies actually say or he does know, and is misrepresenting the findings. Neither should be acceptable to those who serve with him on the House Science and Technology Committee. In the event the bill passes out of committee, we would hope Congress would recognize this bill for what it actually is and not pass it.”

Lamberty continued, “Jim Sensenbrenner has a well-known history of refusing to accept science that doesn’t agree with his personal opinions. And after repeatedly saying two years of E15 testing by EPA and DoE testing was a “rush to judgment,” does anyone think he’ll accept a smaller, shorter test from the National Academy of Sciences when it says E15 is safe? No, this isn’t about science, it’s about delaying to protect BP and Exxon-Mobil.”

“Congressman Sensenbrenner loves to talk about “individual choice and free-market competition” when he talks about health care, and “defending the freedom and individual responsibilities” of motorcycle riders to not wear helmets, but he doesn’t trust people to make their own choice at the gas pump? Ridiculous,” added Lamberty.

We’ll see you next week at the Advanced Biofuels Leadership Conference (ABLC) in Washington, DC!

Our friends from Biofuels Digest are promising this will be a great forum running April 15-17 at the Gaylord National Resort & Convention Center with real dialogue on the real issues facing the biofuels industry. Just look at some of the folks who will be attending!

Thomas Vilsack, Secretary of Agriculture, USDA
Brooke Coleman, Executive Director, Advanced Ethanol Council
Brent Erickson, Executive VP, BIO
Joe Jobe – CEO, National Biodiesel Board
Mike McAdams, President, Advanced Biofuels Association
Mary Rosenthal, Executive Director, Algae Biomass Organization
Harry Baumes, Director, Energy Policy, USDA
Mindi Farber-DeAnda, Head, Biofuels & Emerging Technologies, Energy Information Agency
Gerald Ostheimer, FAS Science Advisor, USDA – US technical lead, Global Bioenergy Partnership (GBEP)
Congressman Joe Garcia (D-FL)
Valerie Sarisky-Reed, Acting Director, DOE Biomass Program

Plus, many, many more from industry, financing and the military.

I’ll be there Monday to catch all the action and post it right here on Domestic Fuel. See you in DC!

Through Genscape’s Quality Assurance Plan (QAP), there are now 1,058,000 QAP-B Renewable Identification Numbers (RINa) available for identification to obligated parties using Genscape’s RIN Integrity Network, a visual platform where obligated parties identify producers offering QAP RINs. Genscape’s validation process utilizes the its monitoring technology to offer a cost-effective and truly independent solution to ensure producers are meeting the EPA’s RFS2 regulations.

Genscape B-RINs are validated using the same  technology and monitoring processes as their A-RINs. “The Genscape B-RIN should be even more valuable than any other QAP provider B-RINs because of the rigor and transparency of Genscape’s processes,” said David Dunn, a broker with Progressive Fuels Limited (PFL). “Their model allows for sign-off on all B-RINs from any producer whereas other providers might not get a blanket acceptance because of their plant-by-plant auditing process.”

Through QAP pre-registration on the EPA website, Genscape is able to provide A-RIN and B-RIN assurance in the interim period between January 1, 2013 and the final QAP rulemaking.

“The interim period enables obligated parties to take advantage of the benefits of affirmative defense and the A-RIN backing before the rule is final. We are aggressively responding to market demand for QAP’d RINs in the interim period,” added Olson.

This afternoon, Reps. Bob Goodlatte (R-VA), Jim Costa (D-CA), Steve Womack (R-AR), and Peter Welch (D-VT) released the RFS Reform Act in the U.S. House of Representatives. During a press conference to “unveil:” the bill Goodlatte said, “The RFS debate is no longer just a debate about fuel or food. It is also a debate about jobs, small business, and economic growth. The federal government’s creation of an artificial market for the ethanol industry has quite frankly triggered a domino effect that is hurting American consumers, energy producers, livestock producers, food manufacturers, and retailers. The broad coalition of organizations supporting this legislation echo the same sentiment: the RFS is not working.”

The representatives say that the RFS is causing food prices to go up, and has not provided relief for consumers at the pump.  In fact, they say, citing the RFS, the EPA is setting the target for refiners to blend cellulosic biofuels into gasoline higher than the amount of cellulosic biofuels that exists. When these non-existent fuels cannot be blended refiners are financially penalized, which ultimately gets passed on to consumers at the pump.

Goodlatte added, “The RFS Reform Act will eliminate corn-based ethanol requirements, cap the amount of ethanol that can be blended into conventional gasoline at 10 percent, and require the EPA to set cellulosic biofuels levels at production levels. Renewable fuels play an important role in our energy policy but should compete fairly in the marketplace. This legislation will bring the fundamental reform this unworkable federal policy needs now.”

The RFS Reform Act is supported by a diverse group of more than 40 organizations.

The renewable fuels industry is aghast at the bill saying it would impede the progress of the renewable fuels industry and takes the choice out of the hands of consumers,  all while protecting the virtual monopoly that oil companies have over America’s transportation fuels.
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Combine small with community, and you might get a big deal! Biodiesel Magazine reports that small-scale refiner Extreme Biodiesel announced it wants to acquire fellow California renewable energy maker, Promethean Biofuels, a community-scale biodiesel producer and cooperative corporation that also provides waste oil and used motor oil collection services:

“This relationship between Extreme Biodiesel and Promethean has flourished over the past several years, with talks of an acquisition having taken root several months ago,” said Joe Spadafore, Extreme Biodiesel’s corporate secretary. “This is an outstanding opportunity to expand the company in the industry with a means to enter into a cooperative environment through an established company with over 300 existing clients. This addition to Extreme Biodiesel, we anticipate, can be another solid revenue-generating venue for the company.”

Extreme Biodiesel is known for its “Mini Refineries,” waterless systems that can make 600 gallons of biodiesel per day.

The Iowa Renewable Fuels Association (IRFA) has submitted a letter responding to the House Energy and Commerce Committee’s request for stakeholder comment on the Committee’s white paper regarding the so-called blend wall.

IRFA Policy Director Grant Menke stated, “Our stakeholder comments focused on three main points. First, there is no valid E10 blend wall. The blend wall vanished as soon as EPA approved E15—in the most extensive testing of any fuel in history—for 2001 and newer vehicles. 

Second, the oil industry has taken specific actions and inactions to attempt to build a bogus blend wall, brick by brick, to undercut the RFS and protect its virtual monopoly over the transportation fuel marketplace. We detail these deliberate Big Oil obstruction efforts in our comments and explain how these ‘bogus blend wall bricks’ could be removed immediately by the oil companies if they chose to do so. 

Third, the RFS is working and must be preserved. To gut the RFS would preserve the oil monopoly, reward the bad actors who have spent years undermining the RFS instead of preparing for it, and deprive consumers of more choices at the pump—choices that are cleaner, cheaper and homegrown. The fundamental intent of the RFS was to crack the petroleum monopoly, and it is on the verge of doing so if Congress allows it to keep working.”

Click here to read IRFA’s full comments.