Ethanol Report on 2014 Export Exchange

ethanol-report-adComing up October 20-22 is the 2014 Export Exchange sponsored by the Renewable Fuels Association (RFA) and the U.S. Grains Council (USGC) to bring international coarse grain buyers and U.S. suppliers together, with a particular focus on the ethanol co-product distillers dried grains with solubles – better known as DDGS or distillers feed.

2014-export-exchangeThis edition of the Ethanol Report features comments from RFA president and CEO Bob Dinneen, USGC president and CEO Tom Sleight, and industry relations director Lyndsey Erb-Sharkey.

Ethanol Report on 2014 Export Exchange

Badger State Ethanol Hosts Foreign Ag Guests

wisconsin-tourBadger State Ethanol in Monroe, Wisconsin had the honor of hosting the 2014 Foreign Agricultural Attaché Tour this week.

The group is part of the USDA’s Foreign Agriculture Service and is made up of 26 representatives from more than a dozen countries including Japan, Korea, Malaysia, Spain, Switzerland, Finland, France, Angola, Canada, Germany, Mexico, Philippines, New Zealand, Nigeria, Ghana, United Kingdom of Great Britain and Northern Ireland.

The Wisconsin Department of Agriculture, Trade and Consumer Protection are playing host to the group for the week to educate them about the quality and diversity of Wisconsin agriculture. The group visited Badger State Ethanol on Monday to take a tour of the facility and learn about the importance of biofuels to the world economy.

Impact of Ethanol Mandates on Fuel Prices Nill

Professors Sebastien Pouliot and Bruce A. Babcock with Iowa State University’s Center for Agricultural and Rural Development (CARD) have released a new paper, “Impact of Ethanol Mandates on Fuel Prices When Ethanol and Gasoline are Imperfect Substitutes“. The authors note papers that consider the two transportation fuels “equal” have been of limited use in informing current policy debates because the short-to-medium-run reality is one of sets restrictions on how ethanol can be consumed in the U.S.

Mandate Impacts on GasThe authors’ objective of the paper was to improve understanding of how these restrictions change the findings of existing studies. The paper estimated the impacts of higher ethanol mandates using a open-economy, partial equilibrium model of gasoline, ethanol and blending whereby motorists buy one of two fuels: E10, which is a blend of 10 percent ethanol and 90 percent gasoline, or E85 which is a high ethanol blend. The model is calibrated to recent data to provide current estimates.

Mandate Impacts on EthanolThe authors find that the effects of increasing ethanol mandates that are physically feasible to meet on the price of E10 are close to zero. In other words, White House fears of higher RIN prices due to higher gas prices are unfounded. The report also shows the impact of the size of the corn harvest on E10 prices is much larger than the effects of mandates. However, increased mandates can have a large effect on the price of E85 if the mandates are increased to levels that approach consumption capacity. These findings show that concerns about the consumer price of fuel do not justify a reduction ethanol mandates under the Renewable Fuel Standard (RFS).

The 2014 RFS rule is currently under review with the Office of Management and Budget (OMB).

Cellulosic Making Progress Despite Uncertainty

Advanced and cellulosic biofuels producers continue to press the administration for certainty in the Renewable Fuel Standard (RFS) to continue making investments for future expansion.

“Today we’re at the start, like oil was 160 years ago, or corn ethanol was four years ago, said Steve Hartig with POET-DSM Advanced Biofuels during a teleconference organized by the Biotechnology Industry Organization (BIO) highlighting progress in the industry. His company just celebrated the grand opening of a cellulosic ethanol plant in Iowa. “We have invested hundreds of millions of dollars in this and are convinced cellulosic ethanol will be a key part of our future energy mix.”

Abengoa Bioenergy plant in Hugoton, KS

Abengoa Bioenergy plant in Hugoton, KS

Chris Standlee with Abengoa Bioenergy said his company is also invested substantially in commercializing cellulosic ethanol technology. “Abengoa’s been working on perfecting this technology for over 10 years,” said Standlee, adding that their plant will be holding a grand opening in Hugoton, Kansas next month.

Also participating in the teleconference was Vonnie Estes with GranBio, a plant being built in Brazil using sugarcane straw and bagasse as feedstocks. She noted that the uncertainty of the RFS is impacting their plans because they intend to export at least half of their plant’s production to the U.S. “The company has spent over $200 million in capital on this plant,” she said. “The plant (will be) really good for the U.S. in that it’s a source of low carbon fuels into the market.”

All three company representatives noted that they are postponing decisions to increase production of cellulosic biofuels due to the uncertainty created by EPA.

BIO teleconference on cellulosic ethanol advancements

Bobby Likis Car Clinic Globalcast Features Ethanol

likis-logoBobby Likis Car Clinic recent globalcast featured topic was ethanol with guest Bob Dinneen, president and CEO of the Renewable Fuels Association (RFA). More specifically the two discussed issues around the Renewable Fuel Standard (RFS).

During the program, Dinneen explained that the RFS and ethanol production saves consumers money at the pump, decreases America’s foreign oil dependence, and helps rural America. He discussed the Environmental Protection Agency’s (EPA) proposed cuts to the RFS and the negative impact those cuts would have on consumers and investment in next-generation ethanol.

Dinneen said, “In today’s environment of misinformation and spin, it is absolutely vital that consumers know the truth about ethanol and understand the role the Renewable Fuel Standard plays in furthering America’s energy independence, reducing greenhouse gas emissions, and lowering the price of gasoline for drivers.” He adds, “I was proud to join Car Clinic’s Bobby Likis to give an overview of the political, regional, and agricultural factors that play into the future of ethanol production and explain the benefits of ethanol to drivers all across the country. Their votes of confidence in the RFS will count in the upcoming election.”

Likis, who is an automotive and ethanol expert, reflects, “When presented with facts – which Bob Dinneen delivers in easy-to-understand terms – American consumers and voters are smart enough to make the right decision at the polls in November. That’s how the RFS was passed in the first place. Clearly, the RFS has delivered to voters: lowering prices at the gas pump; reducing dependence on foreign oil; stimulating regional economies; giving the environment a fighting chance; and incenting investors to keep their money in the US as they research and develop new seed and other technologies to increase efficiencies and crop yields.”

FAPRI: Biodiesel, Ethanol Feedstocks Bigger than Expected

FAPRI logoA new report shows that the main feedstocks for biodiesel and ethanol, soybeans and corn, are going to have bigger harvests than previously expected. The Food and Agricultural Policy Research Institute at the University of Missouri says while the big crops will push prices for those feedstocks down – even further down than what was projected just a couple of weeks ago – soybean and corn prices will recover a bit as markets adjust.

- Larger corn and soybean crops translate into lower projected 2014/15 prices for many grains and oilseeds. Corn prices drop to $3.50 per bushel, soybeans to $9.92 per bushel… In all … cases, these projected prices are close to the midpoint of the price ranges reported in the September USDA World Agricultural Supply and Demand Estimates.

– Larger crops in 2014/15 also result in larger beginning stocks and total crop supplies in 2015/16. As a result, corn and soybean prices for next year’s crop are lower than projected in August. Corn prices average $3.80 per bushel in 2015/16, and soybean prices drop to $9.04 per bushel.

– Prices recover as markets adjust. Corn prices average $4.10 per bushel, soybeans average $10.21 per bushel … over the 2016‐18 period.

Previously, FAPRI said that corn prices would stay at about $4 per bushel for corn, but the new, bigger numbers for yield estimates push those prices down even more.

Iowa RFA Ad Challenges Biden on RFS

The Iowa Renewable Fuels Association (IRFA) took out a full page ad in today’s Des Moines Register to ask Vice President Joe Biden to set the record straight on reports that he may have intervened to reverse the Obama Administration’s previous support for the Renewable Fuel Standard (RFS).

biden-iowaWith the headline “Say it ain’t so, Joe” the ad questions the vice president about the story out of Philadelphia in May that he urged EPA to lower the RFS after receiving a call from a Pennsylvania congressman on behalf of a refinery owned by the politically connected Carlyle Group. “This report, if true, is deeply troubling. We hope you’ll take the opportunity today to set the record straight. And more importantly, work with us to fix the Administration’s flawed proposal. It’s not too late – but we need your help.”

IRFA and other individuals and organizations involved in Iowa’s renewable fuels industry wrote a letter to the Vice President asking him to clarify the reports and to discuss the issue with Iowans. “Because he has thus far not responded, IRFA is now addressing the issue more publicly with Biden as he visits Iowa today,” said IRFA.

The Vice President delivered remarks in Des Moines today at a kick-off event for the Nuns on the Bus “We the People, We the Voters” bus tour. Not surprisingly, he did not mention renewable fuels during his address.

DuPont Chooses Murex to Market Cellulosic Ethanol

DuPont LogoDuPont Industrial Biosciences (DuPont) has selected Murex LLC to market the cellulosic ethanol produced from its 30-million-gallon-per-year plant in Nevada, Iowa. Upon completion, the facility will be the largest cellulosic ethanol plant in the world.

murex“Murex is a leading marketer in today’s ethanol market. Its team understands domestic and international ethanol dynamics and can hit the ground running to drive growth in the emerging cellulosic ethanol industry,” said DuPont Cellulosic Ethanol Commercial Leader Steven Ogle. “With this collaboration, DuPont is well-positioned to lead the deployment of cellulosic ethanol at a commercial scale.”

Murex has a strong presence in the domestic ethanol market and has been the largest exporter of domestically produced ethanol since 2010. Murex was one of the first marketers of advanced Renewable Identification Numbers (RINs) and developed an in-house due diligence program prior to the Quality Assurance Program that allows smaller producers of advanced RINs to deliver their products and RINs to market.

Senate Committee Considers Energy Tax Reform

The Senate Finance Committee held a hearing today on Reforming America’s Outdated Energy Tax Code, led by chairman Ron Wyden (D-OR).

“It’s past time to replace today’s crazy quilt of more than 40 energy tax incentives with a
modern, technology-neutral approach,” said Wyden at the start of the hearing, adding that the disparity in how the tax code treats energy sources needs to end. “Traditional sources benefit from tax incentives that are permanently baked into law. But clean energy sources are stuck with stop-and-go incentives that have to be renewed every few years.”

The main goal of the hearing is to focus on extending the dozen or so tax incentives for alternative energy sources such as advanced biofuels, wind, and solar.

aeclogo“The title of the hearing is right,” said Advanced Ethanol Council Executive Director Brooke Coleman. “Investors are highly sensitive to protections offered by tax law, and today’s energy tax regime drives investment away from viable petroleum alternatives like cellulosic biofuels because oil tax breaks are richer and permanent. The short term fix is extending recently expired and existing tax incentives for clean energy this year, to buttress against those offered to fossil fuels permanently. But any broader discussion about America emerging as the leading energy innovator in the world starts and ends with the federal tax code. It simply won’t happen without serious energy tax reform.”

Among those testifying at the hearing today was former Sen. Don Nickles (R-OK), now a lobbyist who has represented several energy companies, who spoke against continuing wind energy tax incentives.

RFA Calls on EPA to Undo Unfair Fuel Regulations

The Renewable Fuels Association (RFA) is calling on Environmental Protection Agency (EPA) Administrator Gina McCarthy to address the unfair fuel volatility regulations that keep the sale and expansion of E15 from occurring. Because E15 does not have the same 1 psi Reid Vapor Pressure (RVP) as E10, the ethanol fuel blend can not be sold during summer months. In a letter to McCarthy, Bob Dinneen, CEO and president of RFA writes that EPA’s failure to put E15 on the same footing as E10 has been a substantial roadblock to the rollout of E15.

According to the letter, “…faced with a hopeless decision every spring: stop selling E15 during the summer volatility control season, or secure the appropriate low-RVP gasoline blendstock. For most retailers, neither of these options are acceptable business decisions.”

RFANewlogoDinneen says the EPA continues to handicap market opportunities for E15 by effectively making it a seasonal fuel. This causes retailers and marketers to be hesitant to invest in a fuel that can only be offered part of the year. “Our biggest frustration is that there is simply no legal or environmental justification for EPA’s unequal volatility treatment of E10 and E15. If the Administration is serious about addressing greenhouse gas emissions and keeping gas prices in check, it should immediately correct this gross inequality,” said Dinneen.

RFA points to the larger implications of the RVP restriction in the letter writing, “Slow market adoption of E15 has unnecessarily complicated compliance with the Renewable Fuel Standard (RFS) and led the Agency to embrace the oil industry’s ‘blend wall’ concept in the proposed rule for 2014 Renewable Volume Obligations. The bottom line is that E10 and E15 should be treated consistently in the marketplace with regard to RVP….There is simply no sound technical justification, no air quality benefit, and no economic rationale for denying equal RVP treatment for E15 and E10.”

Big Corn Crop Getting Bigger

usda-logoUSDA has increased its estimate of the corn crop again this month, building on already forecast record highs. Corn production is forecast at 14.4 billion bushels, up 3 percent from both the August forecast and from 2013 and yields are expected to average 171.7 bushels per acre, almost 13 bushels an acre higher than last year.

NCGA-Logo“It will be the fifth record crop that we’ve had in the last 12 years,” says National Corn Growers Association Vice President of Public Policy Jon Doggett, who commented on the crop during a during a Fuels America press call Thursday discussing the importance of EPA keeping the ethanol requirements under the Renewable Fuel Standard (RFS) going forward. “When the energy bill was passed in 2008, there was a challenge to the corn industry to produce the corn, and we have produced the corn,” he said, adding that farmers have done it so well that prices have fallen back below cost of production.

“The American farmer has done it again!” said Bob Dinneen, president and CEO of the Renewable Fuels Association (RFA). “The innovation and rapid technology adoption we’ve seen in the corn sector over the past decade has been nothing short of astounding. The American farmer has again risen to the challenge to meet all demands for feed, food and fuel.”

RFANewlogoAs harvest ramps up in fields across the country, corn demand from the ethanol sector is ramping up as well. Dinneen notes that DOE projects 2014 ethanol production will be 14.3 billion gallons. “A decade ago, who would have dreamed that 14 billion bushels of corn and 14 billion gallons of clean-burning, domestically-produced ethanol would be the reality in 2014?,” he said.

Dinneen added that EPA’s proposal to reduce the 2014 RFS requirement for “renewable fuel” from 14.4 billion gallons to 13.01 billion gallons would effectively reduce demand for corn by some 500 million bushels, at a time when corn stocks are rising and prices are slumping to levels below the cost of production. “Now is not the time to artificially constrain demand for corn and tie the hands of the American farmer,” Dinneen said, urging EPA to “finalize a rule that returns the RFS to its intended trajectory.”

Dueling RFS Ads Have Same Tune

President Obama needs to overrule this misguided proposal from the EPA before it is too late and these new technologies move overseas. The fate of America’s advanced biofuel industry, along with the President’s clean energy legacy, are resting on his decision. Fuels America USA Today print ad

“Tell President Obama, stop playing politics – fix the RFS.”
American Petroleum Institute TV ad

fuels-americaBoth the American Petroleum Institute and Fuels America unveiled new media campaigns this week targeted at telling the White House what to do when it comes to volume obligations under the Renewable Fuel Standard (RFS). Both organizations held conference calls with reporters to announce the new campaigns.

The single, full page, USA Today ad that will run during Climate Week September 19-21 is a sharp contrast to the oil industry’s multi-million dollar television, radio, and online advertising campaign. “This has been a David and Goliath struggle all along,” said Brent Erickson with the Biotechnology Industry Organization on behalf of Fuels America. “The biofuels industry has been struggling against this Goliath oil industry that has spent millions and millions of dollars on ads.”

The biofuels industry ad stresses the opening of the first large, commercial-scale cellulosic ethanol plants this year and warns that “the companies and investors looking to deploy the next wave of cellulosic ethanol facilities have put U.S. investment on hold” until a decision on the future of the RFS is made. The API ad calls the RFS “Washington red tape” and blames ethanol for raising food prices and contributing to hunger, even though corn prices are lower than breakeven for farmers this year, according to National Corn Growers Association Vice President of Public Policy Jon Doggett. “We are selling corn today at about 35% of what we did just a couple of years ago, certainly below the cost of production for many of our growers,” he said.

API’s Bob Greco says they launched their campaign in part because of recent statements from EPA Administrator Gina McCarthy that the agency will raise ethanol requirements based on the latest gasoline demand figures for 2014. “Unfortunately, the administration seems to be playing politics with the RFS rule instead of doing what’s best for consumers,” Greco said. “You don’t have to be a political insider to see how the Iowa Senate race—and the White House fear of losing control of the Senate—plays into this decision.”

“Politics are being played on this issue by both sides,” said Doggett. “I don’t think anyone should be surprised.”

Fuels America is a “coalition of organizations committed to protecting America’s Renewable Fuel Standard and promoting the benefits of all types of renewable fuel already growing in America.” API is the “only national trade association that represents all aspects of America’s oil and natural gas industry.”

Listen to the Fuels America call, which also includes comments from POET-DSM’s Steve Hartig: Fuels America RFS Campaign call

RFA: Rail Congestion Must Get Resolved

Bob Dinneen, president and CEO of the Renewable Fuels Association (RFA) is speaking out again on the problems of rail congestion that is slowing down the delivery of ethanol and ethanol byproducts across the country. He submitted written testimony to the U.S. Senate Committee on Commerce, Science and Transportation that held a hearing yesterday to examine rail congestion and the harmful impact it has had on agriculture and other commodities.

Dinneen stressed the role that Bakken Crude rail shipments have played in increasing dwell times and decreasing train speeds and pointed toward the negative impact these delays are having on ethanol producers. “The rail system didn’t collapse last winter because of a snow drift in North Dakota,” he said. “It was because of a 400% increase in oil shipments from the Bakkens.”

RailcarsIn the written testimony Dinneen said, “The recent crisis of congestion that has seemingly overtaken the rail industry has become a huge and costly problem … This crisis is one that is causing significant harm to the economic health and well-being of our nation’s economy, as well as driving up costs for a wide array of commodities that rely on the rail for transportation…it is becoming more and more apparent that surging crude oil shipments are coming at the expense of other goods and commodities.”

Listen to Dinneen’s comments here: RFA CEO Bob Dinneen comments on rail situation

Iowa E85 Sales Strong

IowaRFAlogoIowa motorists purchased over 2.9 million gallons of E85 in the second quarter of 2014, the second most sales in any second quarter on record, and a more than 200,000 gallon increase over the first quarter of 2014, according to the Iowa Renewable Fuels Association (IRFA).

“Two strong quarters of E85 sales are now in the books, and Iowa is poised for another big year in E85 sales,” said IRFA Executive Director Monte Shaw. “As White House officials review the final RFS volume levels, they should take note that when given the choice, motorists firmly support lower-cost, higher-level ethanol blends.”

E85, a fuel blend containing between 70 and 85 percent ethanol, is currently sold at more than 200 fueling sites in Iowa, and can be used in all flex-fuel vehicles (FFV).

Ethanol Report on Corn and Food Prices

ethanol-report-adIn this edition of the Ethanol Report, Renewable Fuels Association (RFA) Senior Vice President Geoff Cooper talks about how corn prices have fallen but food prices continue to rise, and how that shows the “food versus fuel” argument is false.

A new report from RFA compares corn prices to the price of dairy products, pork products, beef products, and poultry and egg products from January 2007 – July 2014.

Ethanol Report on Corn and Food Prices