Domestic Fuel

Registration is now open for the 16th Annual Commodity Classic in Tampa, March 3-5.

The annual event will be “smooth sailing” for soybean, corn, wheat and sorghum farmers and biofuels will be a big part of the event, as always.

Growers who attend the 2011 Commodity Classic are sure to benefit from the value of attending a trade show with more than 800 booths representing today’s leading agricultural equipment, technology, product and service companies and organizations.

“While enjoying the warm Florida sun, one can learn of new products and methods to increase the profitability of their farm,” said Commodity Classic Co-Chair Charles Cannatella. “As a producer of all the commodities represented at Commodity Classic, I look forward to attending the policy development sessions. A grower can strengthen his industry by helping to set policy.”

Special entertainment at Classic this year is Little River Band and the jam-packed schedule includes educational sessions, technology demonstrations, association banquets, entertainment events and important networking opportunities.

“Biodiesel is a great fuel. It’s a great success story,” said Rob Joslin, the President of the American Soybean Association when I asked him during an interview (see below for audio) why biodiesel is so important to our country. While the biodiesel has had great success, it is currently facing a challenge – the $1 per gallon tax credit expired at the end of 2009 and has yet to be extended, although it is close.

Joslin explained to me that biodiesel is not just important for farmers and the industry itself, but also for consumers. A recent Department of Energy study showed that the biodiesel tax incentive saves consumers 35 cents per gallon at the pump. The biodiesel industry contributes $4 billion dollars to the country’s gross domestic product and generated over $866 million in direct tax revenue back into the tax coffers. In addition the industry provides 29,000 direct jobs and the number exceeds 50,000 when you factor in the indirect jobs associated with the production of biodiesel.

However, with the tax credit off the table, more than 23,000 workers have been idled. “The majority of the industry is idled because you can’t run a business on the hope that Congress will pass a bill in a future point in time,” said Joslin. “So the economies didn’t work the plant managers had to put those people in unemployment.”

Anther conundrum the industry is facing is the lack of synergies between current pieces of legislation. The RFS mandates biodiesel use and the Low Carbon Fuel Standard recognizes its low-carbon benefit; yet, our government hasn’t put into place the mechanisms for the industry to produce competitively priced fuel while it matures.
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Today, about 1/3 of the sorghum crop goes into ethanol production. An interesting little piece of information I picked up when I spoke with Gerald Simonsen, the Chairman of the National Sorghum Producers during Commodity Classic. Sorghum is a good feedstock for ethanol production for several reasons. First, it uses half the amount of water used in corn production and second, the sugar-based sorghums, like sweet sorghum and energy sorghums produce more ethanol per acre than other starch-based feedstocks.

Simonsen told me that his organization is very focused on the ethanol industry not only from a research, development and marketing standpoint, but also policy. The RFS2 rules were recently announced and Simonsen said that while they were happy to be included, they do have a few issues with some of the things said about sorghum. Therefore, his organization is working with the USDA and EPA to “iron out some of the rough edges and make sure sorghum has a viable future in ethanol.”

Currently, you can produce the same amount of ethanol from a bushel of corn or ethanol. However, Simonsen noted, you can also make sugar-based ethanol out of sweet sorghum and in terms of cellulosic ethanol, energy sorghum and forage sorghum are feedstocks that the US Department of Energy is excited about. These types of feedstocks produce more ethanol from a bushel of sorghum than what we’re seeing today.

“We have a three-way punch. We’ve got the whole ethanol thing surrounded. We just have to bring it together and move forward,” concluded Simonsen.

You can listen to my interview with Gerald below.

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The E15 waiver was a hot topic during Commodity Classic and for good reason: EPA administrator Lisa Jackson, in response to a question asked during a Congressional hearing, said she felt they’d be ready to make a decision late summer. Originally, the EPA was to have ruled on the E15 waiver, that would waive the Clean Air Act to allow up to 15 percent ethanol in motor vehicles, by the beginning of last December. At that time, they deferred to mid-summer – now they are saying possibly by end of summer.

“Though without giving a date, clearly that date has passed and that’s troubling I think, and we’ve got to keep the pressure on,” said Brian Jennings, the Executive Director of the American Coalition for Ethanol (ACE) during an interview with DomesticFuel during Commodity Classic.

According to Jennings, Robert White with the Renewable Fuels Association (RFA), and Secretary of Agriculture Tom Vilsack, the EPA is doing more work on small engines and the effect of ethanol blends on catalytic converters. This despite the large number of research already available.

“But it does seem frustrating to us that they keep looking for some sort of excuse to delay or not to make the decision when we feel the preponderance of evidence, so far, and as it continues to come in, is going to justify this,” continued Jennings.

Both Vilsack and White agree and feel that the E15 waiver will pass – especially since the Renewable Fuels Standard mandates 36 billion gallons of ethanol by 2022 and the E10 blend wall is approximately 14 billion gallons and White notes that there are 22 billions gallons above the blend wall that need to find a home.

“E15 is great, but it’s still a band aid for the real issue and the sticking point is going to come very soon and the problem we’ve been facing for well over a decade is you simply can’t flip a light switch for this infrastructure to be there,” explained White.

You can download (mp3 file) or listen to a Robert’s interview here: WhiteE15.CC10.mp3

You can download (mp3 file) or listen to Brian’s interview here: JenningsE15.CC10.mp3

Each day, cellulosic gets closer to becoming commercially viable in the marketplace. Two weeks ago, a major hurdle was overcome with the announcement that Novozymes’ enzyme Cellic® CTec2, used for cellulosic ethanol production with feedstocks such as corn stover and corn cobs, is now 50 cents per gallon. I had the opportunity to learn more about this breakthrough when I sat down with Thomas Videbaek, Executive President of Novozymes BioBusiness, at Commodity Classic.

Videbaek explained that Cellic is the first commercial product for cellulosic ethanol. With Cellic, you’ll be able to produce cellulosic ethanol using an enzyme cost of about 50 cents per gallon. “With this, we think that the enzyme part of producing cellulosic ethanol has been cracked,” said Videbaek. “Now we need to get out and starting producing it and we’re really, really excited about that.”

Novozymes is a partner with POET’s Project Liberty which will produce ethanol from corn cobs. I asked Videbaek for an update and he believes that with the enzyme breakthrough they will be able to produce cellulosic ethanol for around $2.35 per gallon. However, the expectation is that once Project Liberty is up and running, the cost will be reduced to around $1.90 per gallon. This will be monumental in that it will break the $2.00 per gallon barrier challenge of producing cellulosic ethanol.

This was a massive project for Novozymes who has been working on it for more than five years. “It’s the biggest project we’ve ever carried out,” said Videbaek. There were more than 150 people working on it in the past year alone.

In addition to corn stover and cobs as a feedstock, they are also working with wheat in Europe and have an operational pilot plant in Denmark. In addition, they are working with Brazilian ethanol producers to develop an enzyme to break down the bagasse.

You can learn more about Cellic by listening to my full interview with Thomas below.

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“Some people believe that corn ethanol is an old technology. We believe just the opposite,” said John Caupert, the Director for the National Corn-to-Ethanol Research Center (NCERC) during an interview with me at Commodity Classic. “We feel the corn ethanol industry is still in its infancy and through technological advancements, there’s much more to learn and prove in corn ethanol production.”

In the last two-to-three years, Caupert noted that there has been a major emphasis on technological improvements such as corn fractionation, and aneorbic digestion, things that would incorporate capital upgrades or capital investments in the ethanol plant. In terms of corn ethanol production, a lot of focus has been dedicated to advancements in fermentation ingredients such as enzymes and various strains of yeast.

The NCERC has also played a role in the debate over indirect land use. Caupert explained that they have done a lot of research that focuses on the value of how co-products improve the greenhouse gas footprint of fuel ethanol production.

“I think more often than not, we forget about the fact a corn ethanol plant in addition to producing fuel ethanol, also produces this high value livestock feed called distillers grains,” said Caupert.

They will continue to look at this data and make recommendation about how the co-products should add value to corn ethanol in the indirect land use arena.

Listen below to hear my entire interview with John.

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Ethanol issues were in the spotlight when National Corn Growers Association president Darrin Ihnen of South Dakota took the stage at the Commodity Classic general session on Friday.

Ihnen talked about the importance of using higher blends of ethanol in the fuel supply. “The EPA is studying the issue and everything they’ve indicated to this date looks very promising,” said Ihnen. “They said it will probably be late summer now and we are very hopeful it will come then.” He says that is a top priority for corn growers and “this is a game changer” that will give them an opportunity to use more corn.

Ihnen also talked about the climate change issue and other important issues during an interview with session moderator Mark Mayfield which is available in the player below.

Commodity Classic Photo Album

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During the general session of the 2010 Commodity Classic, American Soybean Association president Rob Joslin, who stressed the importance of getting the biodiesel tax credit back in place.

“We need it now,” Joslin said. “It’s costing U.S. soybean farmers 25 cents for every bushel. On my 500 acres of soybeans, that’s over $6000 a year. Couple that with all the jobs loss, that’s our goal right now.”

Joslin says the tax credit is back in the second jobs bill that is being considered by the Senate right now. “I kinda feel like a bride that goes to the altar that comes away without a ring. We’ve been to the altar 2 or 3 times and we haven’t gotten a ring on our finger yet.”

Rob was interviewed by session moderator Mark Mayfield about this issue and others important to soybean producers – listen to that exchange below.

Commodity Classic Photo Album

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“I’m not troubled by getting it right as long as we get it right. And I think we’re headed in the right direction. I’m anticipating we’ll see some increase in the blend rate,” said Secretary of Agriculture Tom Vilsack during a press conference at Commodity Classic when asked about EPA’s delaying the decision to increase the blend rate to E15.

However, prior to addressing the status of the E15 Waiver, Vilsack began by noting that biofuels are a good way to bring prosperity and economic vitality to all regions across the country. Rural America is disappearing and farmers have been one of the hardest hit groups during this financial crises. He explained that its not just growing the crops that help farmers but also the jobs it creates for residents of rural communities who work in the ethanol plants and other companies that are tied to biofuels production.

Circling back to E15, approving a higher blend is essential to reaching the country’s goal of producing 36 billion gallons of biofuels by 2022. Per the mandates as set by the EPA as part of the Renewable Fuels Standard, nearly 10 percent of all fuel will be blended with E10 in 2010. Without higher blends, including E85, there is no where for the fuel to go.

Yet earlier this week, the EPA announced that it was delaying any decision on increasing the blend level to E15 until the end of the summer. Vilsack commented that the purpose of the delay is due to ongoing testing by the Department of Energy to determine what engines can use the higher blend without ill effects. It has already been established that newer vehicles, and all flex-fuel vehicles can use the higher blend safely, “Which suggests to me that we’re going to see an increase in the blend rate,” said Vilsack. He then noted that it will be important to use rural development resources to make sure the distribution systems create the opportunities for people to use higher blends.

You can see photos from Commodity Classic here.

You can listen to Vilsack’s comments on biofuels here.

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You may not have heard about Phibro Ethanol Performance Group but what they offer is what they believe is the top performing antibiotic in the ethanol industry. According to Tom Slunecka, Phibro’s VP of Marketing, testing has shown that their base product, LACTROL, “outperforms all other products on the market.” Phibro Ethanol Performance Group is a subsidiary of PhibroChem, a third-generation family owned business that has specialized in animal health for more than 60 years and expanded into the ethanol industry a few years ago.

Antibiotics are an important element in the ethanol production process because during any type of  fermentation process an infection can incur. Infections thrive in environments of high moisture and temperatures and ethanol plants create an abundance of both. 

As margins continue to be tight in the ethanol industry, I asked Slunecka to give the industry some advice when it comes to choosing products and services for their plants. “Just like how consumers purchase automobiles, the time is right to be selective in the products they choose and the services they ask for,” answered Slunecka. “It’s vital that all inputs be maximized in order to generate the greatest return on investment.” 

According to Slunecka, you need to ask the question, “were the products chosen for their efficacy or overall performance package or were they chosen back in the boon days when these decisions didn’t hit the bottom line like they are now?” The reason is that the integrity of a company’s services and products is paramount.

Phibro Ethanol Performance Group is dedicated to the industry and is growing their team so that they can continue to provide a quality product and service package to an industry that they are confident will continue to grow. 

Listen to my full interview with Tom here: cc-09-joanna-slunecka.mp3

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Wind energy celebrated its biggest year in 2008 with 8,000 megawatts being installed–that’s a lot of wind. I wanted to learn more about the industry so I caught up with Susan Williams Sloan, the Outreach Manager for the American Wind Energy Association (AWEA) last week during Commodity Classic. . 

“2008 really was a banner year for the industry,” said Sloan. She anticipates that 2009 won’t be as big of a year due to the economic situation but does see a bright future going forward citing the provisions in the stimulus package.  

Last year, the industry was growing so rapidly that it could take months to have wind turbines delivered, but this year is different. There is a large inventory of wind turbines available. “The Good News is that there are turbines available for those with projects that are ready to move forward,” said Sloan. 

A big challenge for AWEA is building a transmission grid that can help move move wind power from the windy areas to the load centers where people need more electricity. “We must figure out the political issues surrounding moving wind,” said Sloan, and assured me that  AWEA will work diligently to ensure an effective transmission grid is developed.

Listen to my interview with Susan here get the full update on the wind industry’s efforts. cc-09-joanna-wind-energy.mp3

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As Cindy mentioned in the previous post, biofuels were a big part of the conversation at the recent Commodity Classic in Grapevine, Texas. And during that important meeting of the nation’s grain producers, it only makes sense that one of the country’s biggest commodities recognized the contribution biodiesel has made to the agricultural industry in the U.S.

The American Soybean Association honored immediate past chairman of the National Biodiesel Board Darryl Brinkmann for his lifelong work in furthering biodiesel in this country. This NBB press release says Brinkmann received the ASA Lifetime Achievement – Association Focus Award for his work with biodiesel through NBB, among his other service to ASA:

“It is a real honor to have your colleagues pay tribute to you in that way,” said Brinkmann, who was surprised with the award at ASA’s banquet Friday night at the Commodity Classic in Grapevine, Texas. “Usually getting a new product to market takes longer than it has for biodiesel. During my time serving ASA on NBB’s board, there have been lots of challenges, lots of successes, and lots of fun.” The Commodity Classic is an annual agricultural trade show and convention.

Brinkmann, from Carlyle, Ill., serves on the NBB Executive Committee and Governing Board as the ASA representative. He was NBB chairman from 2004 – 2007. Brinkmann has also served on ASA’s executive committee as vice president.

The award thanks the person for working on behalf of ASA throughout the years. NBB officials point out that while Brinkmann was chair, the first federal biodiesel tax incentive was enacted, along with other critical federal developments.

One of the most well attended learning sessions at the 2008 Commodity Classic in Nashville was “Starch and Cellulose as Ethanol Feedstocks” sponsored by John Deere.

Deere’s principal scientist for renewable energy John Hickman told the crowd that by the year 2015, most ethanol will still come from starch – or corn – but the growth to cellulosic ethanol will include some intermediary steps.

According to their calculations, Hickman says the United States could produce a 15.6 billion bushel corn crop seven years from now. “If we grow as much corn as we did in 2007 and the yield increases go from where they have in the last ten years, that would be possible in 2015,” he said. “That could then produce 19 billion gallons of ethanol and still provide exports and other uses for corn.”

Down the road, as cellulosic technology improves, Hickman says growers may have to make different planting decisions. “They have a period of time yet. The first cellulosic plants will be rolling on board in 2010, 2011. We’re going to learn a lot from those first plants. That will give growers much better signals than they have today.”

Veteran farm broadcaster Stewart Doan of Little Rock, Arkansas interviewed Hickman after his presentation. Listen to that interview here:
jd-hickman.mp3

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There were lots of babies at the 2008 Commodity Classic but this one really caught our attention.

Her name is Danica – after Indy race car driver Danica Patrick – and her little onesie featured the IRL logo on the front and on back it said the “Smell of Ethanol.” How cute is that! Her parents were letting her pose on top of the ethanol display in the Pioneer booth, prompting oohs and ahs from the passers-by.

The E85 sticker on her shoulder was supplied by the National Ethanol Vehicle Coalition.

Attendance at this year’s Commodity Classic in Music City was record-breaking, according to the final numbers:

4,534 Total Registration (record)
145 Total Media (record)
847 Trade Show Booths (record)

Domestic Fuel coverage of the 2008 Commodity Classic
is sponsored by:

John Deere Risk Protection has introduced the industry’s first-ever Ethanol Policy by providing coverage to corn producers who have delivery contracts for the purpose of ethanol production.

The policy was officially introduced at the end of January and Deere has been talking with growers at events during the last month, including the Farm Machinery Show and last week’s Commodity Classic.

Deere held a press conference at Classic where Dennis Daggett, Director of Marketing for John Deere Risk Protection, explained the policy to the ag media.

Very simply, the policy insures yield shortfalls below contracted volumes in the event the price to replace the corn rises above the federal crop insurance coverage. The policy is being offered in Iowa, Illinois, Indiana, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin. “We offered it where the majority of the active ethanol plants are in existence today,” Daggett says.

Since they introduced the policy, Daggett says there has been a lot of buzz in the industry. “We have fairly modest expectations on the product itself because we know that there is a very specific type of farmer who would be interested in this product, a farmer who actually contracts more than 50 percent.”

Daggett says the policy is beneficial for the ethanol plants because it allows them to actually work with the farmer in case there is a shortfall on their delivery contract. “We think this is a win for the ethanol plants because it stabilizes their input of grain and stabilizes their relationship with the farmer.”

Listen to an interview with Dennis about the ethanol policy here:
cc-jd-daggett.mp3

Domestic Fuel coverage of the 2008 Commodity Classic
is sponsored by:

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