Iowa Gov Blames EPA for Deere Layoffs

fps14-govIowa Governor Terry Branstad paid a visit to the 2014 Farm Progress Show Tuesday and had some harsh words for the Environmental Protection Agency, which just last week sent a final version of the 2014 volume requirements under the Renewable Fuel Standard to the White House for review. He blames uncertainty created by the proposed rule for the recent layoffs at Deere and Company. “The result is the price of corn has dropped so much that farmers are not buying equipment,” he said. “What the EPA has done is not only damaging farm income, but it’s costing us jobs in farm machinery and manufacturing.” Deere announced more than 100 people will be laid off indefinitely from its plant in Ankeny and 460 people will be laid off at its tractor factory in Waterloo.

Branstad also notes that cellulosic and other advanced biofuels production is moving forward with the first gallons produced this summer by Quad county corn processors and two more plants opening soon. “I’m going to the POET grand opening of their new cellulosic ethanol plant and then we have DuPont Pioneer that’s also opening one in Nevada,” he said. “The problem is the oil companies control the distribution and they’ve done everything they can to discourage retailers from offering blender pumps and E15 because ethanol is a lot cheaper than gasoline.”

Listen to my interview with the Governor here: Interview with Iowa Governor Terry Branstad

2014 Farm Progress photo album.

RFS Headed to OMB for Review

epaThe Environmental Protection Agency has sent its final rule on 2014 volume obligations under the Renewable Fuel Standard (RFS) to the White House Office of Management and Budget for review in a last step before public release. Renewable fuels groups responded to the news today.

“We’re pleased to see the process moving forward and hope the final rule will show that this Administration is standing behind our national goals for clean, domestic fuels that strengthen our economy and national security,” said National Biodiesel Board Vice President of Federal Affairs Anne Steckel. “The original EPA proposal and continued delays have severely disrupted the U.S. biodiesel industry this year. We can begin to reverse that damage with a meaningful increase in the biodiesel volume that is finalized as quickly as possible so that producers can ramp up production in a timely fashion.”

“While we have not seen the rule, we hold strong in our belief that EPA and OMB will fulfill President Obama’s commitment to biofuels as a means of greater energy independence, lower greenhouse gas emissions, and wider availability of cost-saving alternative fuels for American consumers,” said Renewable Fuels Association president and CEO Bob Dinneen. “This decision is about more than targets and gallons, it is about a rationale that places highest importance on the long term strength of this country and not the bottom line of oil companies.”

“While OMB has up to 90 days to review this rule, what is most important is the content of the final rule,” added Growth Energy CEO Tom Buis. “Ultimately, this final rule should promote the policy goals of the RFS and call for an increase in the production of renewable fuels, so we can continue to reduce our dependence on foreign oil, create jobs at home that cannot be outsourced and mitigate climate change, while we improve our environment.”

Brian Jennings, Executive Vice President of the American Coalition for Ethanol, says his members are pleased with the progress. “Anything short of that turns the keys to the RFS over to the oil companies and puts cellulosic biofuel at risk,” said Jennings. “While all stakeholders have waited a long time for the final rule, and it could take another 30 days or more for interagency review, getting the rule done right is far more important than getting it done quickly.”

Since the rule is not public yet, there is no word on whether the volume requirements were changed from the initial proposal, which reduced the amount of ethanol and kept the biodiesel requirement the same. Senator John Thune (R-SD) expects some middle ground. “I think we’ll see an upward change,” he says. “I hope it’s a significant upward change and I hope that in ’15 they look at this in a different way.”

Thune still expects it will be later in the fall before a final rule is announced. EPA received over 340,000 comments on the proposal.

Virent Receives EPA Approval for BioForm

virentThe U.S. Environmental Protection Agency (EPA) has awarded Virent fuel registration for its BioForm Gasoline in blends of up to 45 percent. As a registered fuel, Virent’s biogasoline can now be used in on-highway motor vehicles. According to Virent, BioForm Gasoline is a high octane, direct replacement fuel made from plants that offers the benefits of high performance and blend rates, complete compatibility with existing refining and distribution infrastructure networks and reduced carbon footprint.

“Securing EPA registration of our BioForm Gasoline is further confirmation of Virent’s high quality drop-in fuel and is another step towards commercializing our technology to produce renewable fuels and chemicals from biobased feedstocks,” said Lee Edwards, CEO and President of Virent. “We would also like to recognize our longtime collaborator Royal Dutch Shell for supporting the registration and testing process.”

The BioForm Gasoline blended with conventional gasoline underwent testing at Southwest Research Institute (SWRI) with the results demonstrating that the emissions from the blended fuel were well below the maximum permitted by current regulations, according to Virent. The BioForm Gasoline was manufactured by Virent at its demonstration plant in Madison, Wisconsin, which is capable of producing up to 10,000 gallons of biofuels and biochemicals per year. The EPA testing work was funded by Virent partner Royal Dutch Shell.

Matthew Tipper, Shell Vice President Alternative Energies, added, “Shell is pleased to see continued progress of biofuels as a road transport fuel in the United States as evidenced by this most recent EPA registration of a plant-based alternative fuel. This success demonstrates the progress being made by the biofuels industry. Also, it supports a continuation of a framework for expanding commercialization and use of biofuels, including advanced biofuels produced from non-food based plant alternatives, in the United States.”

RFS Update from EPA at ACE Meeting

ace14-epaEnvironmental Protection Agency official Paul Machiele visited the American Coalition for Ethanol conference this week in Minneapolis to discuss various issues, including plans for the 2014 volume obligations under the Renewable Fuel Standard (RFS).

Machiele, who is director for Fuel Programs in EPA’s Assessment and Standards Division, said they understand the rule is very important and they are working very hard to get it finalized as soon as possible. “I can’t say when it’s going to come out because that will depend in a large part on the review time when it gets into the interagency review process,” he said. “That review can take anywhere from 30-90 days,” he continued, saying he hopes it will be expedited.

“We were blessed with 300,000 comments on this rule-making and not only do we have to finalize the rule-making but we have to respond to the comments that we receive,” said Machiele, adding that his staff is working on that project right now.

As it stands, Machiele says EPA has extended the compliance deadline for obligated parties so “they know what the standards will be for 2014 before they make their final decisions on buying, selling, trading, holding RINs for 2013.” Meanwhile, he acknowledged that the 2015 standards should already be proposed by now, but they expect to get that done shortly after the 2014 rule is finalized and “hoping that we can move that to final rule a little faster.”

Machiele also discussed final rules for new pathways, cellulosic feedstocks, and RINs, as well as Tier 3 regulations, and frankly answered several questions from producers at the conference. Comments from Paul Machiele, EPA

27th Annual Ethanol Conference photo album

Report Shows Oil Companies Paid 11.7% Tax Rate

According to a new report from Taxpayers for Common Sense, oil companies paid only 11.7 percent of the U.S. income in federal taxes over the last five years. This is compared to the statutory 35 percent corporate tax rate paid by other companies.

“This is a perfect example of how the oil industry is allowed to play by a different set of rules than everyone else,” commented Jeremy Funk, communications director with the ETRcover4nonprofit organization Americans United for Change who supports choice at the pump through biofuels. “They can dodge billions of dollars in taxes, and Washington lets them get away with it. This is the same industry that is now fiercely lobbying the White House for yet another special interest favor: gutting the Renewable Fuel Standard and allowing more foreign oil into the U.S. gasoline supply at the expense of cleaner, cheaper renewable fuels made in America. Isn’t the system rigged enough in Big Oil’s favor without Washington helping them become a monopoly at the pump, too?”

The country is still waiting the final rules from the Environmental Protection Agency (EPA) for the 2014 Renewable Fuel Standard (RFs) that if passed as proposed, would reduce the amount of domestically produced biofuels at the pump while increase foreign oil. Funk points out that gasoline costs more than renewable fuels such as ethanol, and the EPA proposal would cost Americans millions of dollars at the pump, ‘killing’ American jobs. Funk also said that because the EPA proposal effectively allows oil companies to block access to the marketplace by refusing to install fueling infrastructure for renewable fuels, it will be particularly devastating to America’s emerging advanced biofuel industry.

To achieve such a low current tax rate, oil companies were able to take advantage of special tax breaks and loopholes that allowed them to defer more than $17 billion in taxes they would have otherwise owed, explained Funk. One “small” oil company, Apache, earned $6 billion in profits between 2009 and 2013 but deferred its entire tax bill. Not only did the company avoid paying any taxes, but it actually reaped a tax benefit worth $220 million according to Funk.

The report concludes with a damning indictment of the oil industry’s deceitful rhetoric about its tax obligations:

“Oil and gas companies may pay a lot in income taxes, but it is not to the U.S. government. Indeed, the “current” federal income tax rate of some of the largest oil and gas companies – the amount they actually paid during the last five years – was 11.7 percent. The “smaller” companies included in the study which reported positive earnings only paid 3.7 percent. Many of the tax provisions available to the oil industry are not available to other taxpayers, giving these companies a significant tax advantage. The language the industry uses gives the impression that it pays a high federal income tax rate. The American Petroleum Institute cites an industry-wide effective tax rate of 44.3 percent. In reality, the amount oil and gas companies pay in federal income tax is considerably less than the statutory rate of 35 percent, thanks to the convoluted system of tax provisions allowing them to avoid and defer federal income taxes.”

White House Gathers Senate Dems on RFS Proposal

nbb-senatorsIn what could be seen as a sign that an unpopular decision is about to be rendered by the Obama Administration on ethanol and biodiesel, a select group of Senate Democrats have met with the White House. The Hill reports White House adviser John Podesta met with the group on Thursday to discuss the Environmental Protection Agency’s (EPA) plans regarding the Renewable Fuel Standard (RFS).

The senators said they wanted to discuss “urgent concerns” with the RFS, which requires that diesel and gasoline refiners mix a certain amount of renewable fuels such as biodiesel and ethanol into their traditional fuels each year. The Environmental Protection Agency proposed last year to keep the biodiesel volume in 2014 at least year’s level, despite an increase in biodiesel production, and reduce the ethanol volume.

The EPA has not yet finalized its 2014 volumes for renewables.

[Minnesota Senator Al] Franken and his colleagues took particular issue with the biodiesel mandate.

“Such a decision would not only harm the economic growth surrounding biodiesel production in our states, but would be a setback in our national efforts to continue boosting U.S. energy security while also reducing greenhouse gas emissions,” they wrote.

The National Biodiesel Board (NBB) seems concerned about the meeting as well and issued a statement from from Vice President of Federal Affairs Anne Steckel:

“While we are encouraged by these discussions, the biodiesel industry remains concerned that the Administration still appears to be considering a proposal that would backtrack from last year’s proven production and that threatens biodiesel plants around the country. The fact is that biodiesel is the most successful Advanced Biofuel under the RFS, yet it could see its production cut significantly. This meeting, which was originally requested by a diverse group of 14 Democratic senators from across the country, makes clear that there are serious concerns about the impact that the proposal would have on jobs and economic growth nationwide, in states from Rhode Island to Minnesota to Washington state. This is a critical decision, not just for the biodiesel industry but for the future development of clean, American-made renewable fuels that will help us reduce our dangerous dependence on petroleum.”

Many of those senators participating in this week’s meeting were also critical back in May on the Obama Administration’s proposal to cut the amount of biodiesel and ethanol to be mixed into the nation’s fuel supply, with some of the President’s staunchest backers calling it “disastrous” and a miserable failure of policy.

EPA Hears Corn Grower Concerns About RFS

Members of the National Corn Growers Association (NCGA) meeting in Washington DC were able to share their concerns about the delayed rule on 2014 volume obligations under the Renewable Fuel Standard with EPA Deputy Administrator Bob Perciasepe.

epa-ncga“The number needs to be out, it’s really ridiculous,” said NCGA president Martin Barbre, pictured here on the right with Perciasepe. “He said ‘we’re behind time frame’ and we had some delegates stand up and say ‘you’re not behind time frame, you’re way late.’” The final rule was expected by the end of June but EPA officials say it is being delayed because of the massive volume of comments that need to be studied in order to make a decision.

Barbre says while they appreciate the fact that EPA is taking the time to make sure they make the right decision, delaying it until almost the end of the year causes problems in the market. “Sort of what has created this issue with RINS and that run up in the RINS price is the lateness of the oil companies getting the numbers,” said Barbre. “They’re supposed to have these number in the spring, they get them in the fall, and by the end of the year they have got to have met their obligations. So it puts them in somewhat of a bind.”

“We’re not usually on the side of defending the oil companies, but in this case they just need to get the numbers faster so they can get themselves where they need to be,” Barbre added.

Listen to Barbre’s comments here: Interview with NCGA president Martin Barbre

EPA Issues New Rule for RINs Quality Assurance Program

epa-logoIn an effort to assure all parties of better control over possible fraud, the U.S. Environmental Protection Agency (EPA) has formally issued its new rule on a voluntary quality assurance program on Renewable Identification Numbers (RINs) used to track compliance with their renewable fuel volume obligations. The EPA proposed the rule earlier this month and issued it late last week that will elements designed to make it possible to verify the validity of RINs from the beginning of 2013 and going forward.

Today’s final action includes a voluntary third-party quality assurance program option for RINs that regulated parties may exercise as a supplement to the “buyer beware” liability as prescribed under existing regulations. The program provides a means for ensuring that RINs are properly generated through audits of renewable fuel production conducted by independent third-parties using quality assurance plans (QAPs), provides an affirmative defense for the transfer or use of invalid RINs that had been verified under an approved QAP, defines the conditions when RINs must be replaced, and a process for determining who will replace the RINs…

- Minimum requirements for a QAP, including such things as verification of feedstocks, verification that volumes produced are consistent with amount of feedstocks processed, and verification that RINs generated are appropriately categorized and match the volumes produced
- Qualifications for independent third-party auditors
- Requirements for audits of renewable fuel production facilities, including minimum frequency, site visits, review of records, and reporting
- Conditions under which a regulated party could assert an affirmative defense to civil liability for transferring or using an invalid RIN
- Identification of the party or parties who are responsible for replacing invalid RINs with valid RINs and the timing of such replacement
- A two percent limited exemption for calendar years 2014, 2015, and 2016 that exempts a small fraction of a party’s Renewable Volume Obligation (RVO) from the requirement of replacement of invalid RINs used for compliance if they were RINs verified through a QAP
- Changes to the EPA Moderated Transaction System (EMTS) that would accommodate the quality assurance program

There’s an interim period that covers back to February 21, 2013 through the end of this year which will finalize two proposed QAP programs, QAP A and QAP B.

Beginning January 1, 2015, there will be a single QAP, and the associated verified RINs will be referred to as Q-RINs.

Corn Growers Keep Ethanol in Focus

Ethanol and the Renewable Fuel Standard (RFS) were big topics this week as members of the National Corn Growers Association met in Washington DC.

ncga-ethanolMichigan farmer Jeff Sandborn, chair of the Ethanol Committee, said they spent the week talking with administration officials and members of Congress after being updated on the issues. “Right now, Congress faces rapidly evolving issues crucial to our members. The information and understanding coming out of these meetings will help each of our delegations make the strongest case possible for farmers.”

During the Ethanol Committee meeting, staff from the U.S. Environmental Protection Agency’s Office of Transportation and Air Quality provided an update on the regulatory issues facing the ethanol industry. On Thursday, the entire NCGA delegation heard from EPA Deputy Administrator Bob Perciasepe about the status of the pending 2014 volume obligation rule under the RFS.

“We greatly appreciate the deputy administrator’s willingness to participate in an open, well-considered conversation,” said NCGA President Martin Barbre of Illinois. While Perciasepe mainly dealt with the proposed Waters of the United States rule, he also fielded questions from growers pertaining to both the reduction in volume, and the continued delays of final RFS rule.

Optimus’ Bolt-On Biodiesel Solution Gets EPA Approval

optimusHardware and software that bolt onto diesel truck engines and allow pure biodiesel to run through the system has gained some key approvals from the U.S. government. Optimus Technologies is the first to receive the Environmental Protection Agency’s (EPA) approval for an advanced biofuel conversion solution for existing medium‐ and heavy‐duty trucks. This company news release says that while the system can be used with a wide variety of fuels, this also marks the first time anyone has been able to be compliant with 100 percent biofuels, creating opportunities for ethanol refiners as well.

The solution is based on a combination of Optimus’ Vector bi‐fuel (diesel or biofuel) conversion system ‐‐ hardware and software that bolts‐on to existing diesel engines ‐‐ and certified, pure biofuel. Fuels tested were derived from a variety of bio‐sources including non‐food grade corn oil, recycled cooking oil, and pure biodiesel (B100). While Optimus may be first to the U.S. market, such solutions have been available in Europe for more than a decade.

“We’re very excited that the EPA has approved our technology,” said CEO Colin Huwyler, “Our solution represents a tangible opportunity for fleets to shrink their operating costs while improving the environment. And, our solution does not require multi‐million dollar start‐up costs like CNG does.” Fleet operators have been surprised to find that CNG solutions require capital‐intensive modifications to fueling stations and maintenance facilities, extending payback periods well beyond 5 years. Optimus’ solution can leverage current facilities with only minor modifications, offering paybacks as little as one year.

The news release goes on to point out that a network of biofuel suppliers are supplying the fuel at the standard Optimus needs.

“We are very glad that Optimus has secured EPA approval,” stated Rory Gaunt, CEO of Lifecycle Renewables, a leading renewable fuel provider based outside of Boston, MA. “We have been a strong supporter of Optimus’ efforts. Now, we will be able to expand our market reach and grow into servicing commercial and government fleets with our high quality, renewable fuels.”

Emissions testing shows that Optimus has a significant overall reduction in tailpipe emissions in comparison to diesel, with particulate matter reduced by about 40 percent.

Aemetis’ Biodiesel Gains EPA, EU Approvals

aemetislogo1A California-based company making biodiesel in India has gained important approvals from the U.S. government and the European Union. This news release from Aemetis, Inc. says the U.S. Environmental Protection Agency (EPA) approved issuance of D4 Renewable Identification Numbers (RINs) for Aemetis’ imported biodiesel produced from waste fats and oils (WFO) at Aemetis’ 50 million gallon per year plant on the East Coast of India, as well as the EU certification.

The superior quality and low carbon intensity biodiesel produced at the Aemetis India plant has recently earned [the EU's] International Sustainability and Carbon Certification (ISCC) Category 2 certification. With the recent construction and commissioning of a biodiesel distillation column at the India plant, the company is producing a colorless biodiesel with 99.5% esters and nearly no monoglycerides, water or other contaminants. Aemetis biodiesel has met and exceeds all D6751 biodiesel specifications, allowing for use in all diesel engines.

“Receiving ISCC Category 2 and EPA certifications are great steps in ramping up India to full capacity with the capability to grow and implement new technologies,” said Eric McAfee, Chairman and CEO of Aemetis. “After the successful installation of the India plant distillation unit, in June Aemetis made its first shipment of Category 2 biodiesel to customers in the E.U.” added McAfee.

Aemetis’ India plant is able to make biodiesel from a wide variety of feedstocks.

EPA Establishes Quality Assurance for RINS

epaIn addition to the final rule approving crop residue as a cellulosic feedstock, the Environmental Protection Agency yesterday established a “voluntary quality assurance program” for renewable identification numbers, or RINs.

The program is designed to maintain liquidity in the market for RINs under the Renewable Fuel Standard (RFS) providing a means for ensuring that RINs are properly gener­ated through audits of renewable fuel production conducted by independent third-parties using quality assurance plans (QAPs). According to EPA, the QAP is intended to improve RIN market liquidity and ef­ficiency and improve the ability of smaller renewable fuel producers to sell their RINs.

Other provisions in the final rule regarding RINs include modifications to the exporter provisions of the RFS program to help ensure that an appropriate number and type of RINs are retired whenever
renewable fuel is exported.

Read the entire rule from EPA here.

Corn Fiber Approved as Cellulosic Feedstock

epaThe Environmental Protection Agency issued final rules Wednesday to qualify additional fuel pathways for the production of cellulosic biofuel, including crop residue such as corn fiber.

EPA has now determined that crop residue does meet the lifecycle greenhouse gas (GHG) reduction requirements for cellulosic biofuel under the Renewable Fuel Standard (RFS) provided that “producers include in their registration specific information about the types of residues which will be used, and record and report to EPA the quantities and specific types of residues used.”

corn-cobsThe final rule comes just as the first gallons of cellulosic ethanol are being produced this week from corn fiber in Galva, Iowa. “As demonstrated by Quad County Corn Processors—which produced its first commercial gallon of cellulosic ethanol from corn fiber just yesterday—this feedstock holds tremendous potential to contribute meaningful volumes toward compliance with the RFS cellulosic biofuels standard,” said Renewable Fuels Association president Bob Dinneen.

Dinneen says EPA should be commended for using a straightforward approach to accounting for the cellulosic content of biofuel feedstocks. “The ‘cellulosic content threshold’ method finalized in today’s rule is a common sense approach that minimizes administrative and accounting burdens for commercial producers, but upholds the spirit and intent of the RFS,” Dinneen said.

The EPA also finalized some minor amendments related to survey requirements associated with the ultra-low sulfur diesel (ULSD) program and misfueling mitigation regulations for 15 volume percent
ethanol blends (E15) in announcements made on Wednesday.

DF Cast: Finding Ways to Increase Ethanol Blends

While the ethanol industry awaits the Environmental Protection Agency’s decision on the amount of ethanol to be blended into the nation’s fuel supply, ethanol producers are looking at other ways to make sure the green fuel increases its blend amounts.

In this edition of the Domestic Fuel Cast, we hear from Growth Energy CEO Tom Buis, Dean Drake with the consulting company the Defour Group, Scott Zaremba, president of Zarco Incorporated, and Ken Parrent, the ethanol director for the Indiana Corn Marketing Council, as they give their thoughts on how consumer demand will be a bigger driver for higher ethanol blends after attending an Indiana Corn Growers Association ethanol forum that focused on marketing mid-level ethanol blends and ran following the recent 2014 Fuel Ethanol Workshop in Indianapolis.

Domestic Fuel Cast - Increasing Ethanol Blends

You can also subscribe to the DomesticFuel Cast here.

Lawmakers Ask Obama to Boost Biodiesel

epa-logoAs the Environmental Protection Agency (EPA) is poised to release its decision on the amount of biodiesel and ethanol to be mixed into the nation’s fuel supply (and we’re hearing word now that decision might be delayed until the Fall), a bi-partisan group of lawmakers is making its appeal to the White House to allow biodiesel to keep growing. This news release from the National Biodiesel Board cites the letter from 52 lawmakers who are concerned about the EPA’s current proposal to reduce the amount of biodiesel to be required for obligated parties under the Renewable Fuel Standard (RFS)

“During your time in office you have supported the development and growth of the biodiesel industry. Now, biodiesel producers around the nation have the ability to generate nearly two billion gallons a year of the only EPA-approved advanced biofuel, which is commercially available across the United States,” the lawmakers wrote in a letter to President Obama. “Therefore, we believe now is not the time for a critical shift in biodiesel policy. We urgently ask that you raise biodiesel’s RVO for 2014 above 1.28 billion gallons.”

The letter, which was led by Reps. Collin Peterson, D-Minn., and Adam Kinzinger, R-Ill., can be found here. The lawmakers signing the letter represent 22 states.

In a draft RFS rule released in November, the EPA proposed holding biodiesel volumes at 1.28 billion gallons – a sharp drop from last year’s actual production of nearly 1.8 billion gallons. Biodiesel producers around the country have warned that such a proposal will cause severe contraction in the industry. A nationwide survey of producers conducted by the National Biodiesel Board (NBB) in April found that more than half have already idled a plant this year and 78 percent have reduced production from last year. Nearly two-thirds – 66 percent – have already laid off employees or anticipate doing so.

NBB officials have previously expressed their shock and disappointment on the proposal because of the success biodiesel has already shown in exceeding the targeted amounts of renewable fuels. They call on the Obama Administration “to finalize a strong RFS volume as quickly as possible.”