On Monday, biofuels industry leaders will hold briefings for Capitol Hill staff and the media to discuss the implications of the decision and where we go from here. The Fuels America briefing will feature Buis, Dinneen, Advanced Ethanol Council (AEC) Executive Director Brooke Coleman, and Brent Erickson with the Biotechnology Industry Organization (BIO).
The Environmental Protection Agency’s decision to hold off on issuing a final rule for 2014 volume obligations under the Renewable Fuel Standard (RFS) continues the atmosphere of uncertainty for the advanced biofuel industry, according to the Biotechnology Industry Organization (BIO).
“We appreciate that EPA will not be finalizing a proposed 2014 RFS rule containing a flawed methodology for setting the renewable fuel volumes,” said BIO President & CEO Jim Greenwood. “Unfortunately, the delay in this year’s rule already has chilled investment and financing of future projects, even as first-of-a-kind cellulosic biofuel plants are right now starting up operations. The industry needs a final rule that is legally appropriate and continues to support our efforts.”
Advanced Ethanol Council (AEC) Executive Director Brooke Coleman says that pulling back on the 2014 RFS rule is “the right thing to do at this stage in the game when it comes to preserving the integrity of the program.”
“While the cellulosic biofuel industry will not get the policy certainty it needs from this decision, it does suggest that the Administration is listening when it comes to our concerns about giving oil companies too much power to avoid its obligations under the RFS going forward,” Coleman added. “This battle was never about the 2014 volumes for the oil industry, and we appreciate the Administration’s willingness to pivot in the right direction this late in the game. The key now for advanced biofuel investment is to move quickly to fix what needs to be fixed administratively so we can reestablish the RFS as the global gold standard for advanced biofuel policy.”
EPA hit the big reset button. Given the fact that we are already at the end of 2014, we appreciate EPA’s recognition that the real importance is to set the program on a clear glide path for 2015 and 2016. The numbers do matter, and utilizing the actual production will be a positive step from what was a proposed. We appreciate how EPA recognized that cutting requirements for advanced biofuels would be a mistake. This emerging industry deserves better considering it has already demonstrated the capacity to generate 3.2 billion gallons of advanced biofuel annually. But, at least EPA’s decision leaves the glass more than half full and allow us to get back on track next year.
Deciding not to decide is not a decision. Unfortunately, the announcement today perpetuates the uncertainty that has plagued the continued evolution of biofuels production and marketing for a year. Nevertheless, the Administration has taken a major step by walking away from a proposed rule that was wrong on the law, wrong on the market impacts, wrong for innovation, and wrong for consumers.
Today’s announcement is a clear acknowledgement that the EPA’s proposed rule was flawed from the beginning. There was no way the methodology in the proposed rule would ever work, as it went against the very purpose and policy goals of the RFS. The EPA wisely decided not to finalize the rule so they could fix the flawed methodology. Their initial proposal over a year ago was unacceptable and simply acquiesced to the demands of Big Oil and their refusal to blend more renewable fuels into the marketplace.
American Coalition for Ethanol (ACE) Executive Vice President Brian Jennings credits ethanol supporters for helping the EPA reconsider the 2014 RVO obligations under the Renewable Fuel Standard.
Big Oil came close to bullying the Administration to completely rewrite the RFS this year so oil companies could escape their legal responsibility to blend more ethanol in gasoline. But thanks to thousands of comments from ACE members and other biofuel supporters, EPA wisely chose to reconsider their ill-advised proposal which would have legitimized the so-called ‘blend wall’. While we will reserve full judgment until they finalize the 2014 targets next year, it certainly appears the Administration recognizes their proposed RFS changes were inconsistent with legislative history and the Clean Air Act.
Ethanol and biodiesel producers in Iowa are joining in the growing chorus calling on Congress to extend some important tax credits. This news release from the Iowa Renewable Fuels Association (IRFA) says nine of the state’s advanced biofuel producers sent a letter to the entire Iowa Congressional Delegation encouraging the swift passage of a tax extenders package which includes provisions for biodiesel blending, cellulosic production, and accelerated depreciation, prior to final adjournment of the 113th Congress.
“Iowa’s entire congressional delegation has shown steadfast support for these important policies, and today we’re calling on them to take concrete steps to advance legislation extending these vital provisions that support energy security, American jobs, and a cleaner environment,” stated Western Iowa Energy Board Member Denny Mauser. “In the face of more than 100 years of preferential tax treatment for petroleum—a literal Century of Subsidies—these incentives keep advanced biofuel projects moving forward to the benefit of all Americans.”
The letter states, “It is absolutely critical to our industry that this Congress pass a tax extenders package, which includes provisions for biodiesel blending, cellulosic production and accelerated depreciation, prior to final adjournment.”
The letter goes on to point out the advantages the petroleum industry continues to enjoy in tax subsidies and says if Congress does nothing on the extenders package, the “U.S. will be left with a defacto petroleum mandate.”
New National Corn Growers Association (NCGA) CEO Chris Novak talked about challenges facing the corn industry as he visited with members of the agricultural media during the National Association of Farm Broadcasting convention last week in Kansas City.
“Lots of big challenges ahead for us,” said Novak, who just took over the CEO job for Rick Tolman who retired last month. “Looking at a record crop and lower prices than we’d like to see but that’s an opportunity as well.”
Novak sees increasing demand as the most important challenge and opportunity for the industry. “How do we ensure that with a second record crop in a row that we’ve got the demand that can keep our farmers profitable?” he said. The primary demand sectors – livestock, ethanol and exports – all offer new growth potential.
“Certainly EPA’s support and implementation of the renewable fuels law as passed by Congress is going to be important to us in the short term,” he added. “Longer term we’re looking to build consumer demand for a renewable fuel that increases our energy independence and helps reduce greenhouse gases.”
Chris Novak previously served many years as chief executive officer of the National Pork Board and prior to that, he was executive director of the Indiana Corn Marketing Council, the Indiana Corn Growers Association and the Indiana Soybean Alliance.
A new report from South American sugarcane growers shows ethanol benefits the environment and drivers. According to the Brazil-based Union of the Sugarcane Industry, UNICA, which represents those producing sugar, ethanol and bioelectricity, says that ethanol uses 90 percent less greenhouse gases than gasoline (translation courtesy of Google translator). The group points to data after a long dry period this year that impacted sugarcane production, and thus, ethanol production, when carbon dioxide levels hit the worst rates since 2007.
Since CIDE (Contributions Intervention in the Economic Domain) was zeroed in gasoline prices in 2011, there was an increase in the consumption of fossil fuel and ethanol, a cleaner and renewable source of energy, lost competitiveness and consumer preference at the pump.
Produced from clean, renewable source, cane sugar, the environmental benefits of ethanol over gasoline with gains including public health are widely recognized as the improvement in air quality, particularly in metropolitan areas. Several studies show that sugarcane ethanol reduces emissions causing climate change gases by up to 90% when compared to gasoline.
Thanks to this index, the Brazilian ethanol is the only biofuel produced on a large scale in the world considered ‘advanced’ by the Environmental Protection Agency (EPA), the Environmental Protection Agency of the United States.
More data shows that in the last 10 years since flex-fuel vehicles were introduced in Brazil, the country has avoided the emission of approximately 240 million tons of CO2, equivalent to three years of issuance of this gas for a country the size of Chile.
UNICA also goes on to point out that drivers can save up to 66 percent on their costs to fill up their fuel tanks using ethanol.
Among the topics he addressed were the need for Congress to pass tax extenders for biofuels, first cellulosic ethanol plants going on line this year, how lower oil could be impacting domestic oil production, rail transportation issues, and of course, the Renewable Fuel Standard (RFS).
Regarding the lame duck session of Congress, Dinneen says it’s called lame for a reason but he does expect them to pass a tax extenders bill. “It will include the biodiesel tax credit and the cellulosic ethanol tax incentive, which will be good to have now that we finally have cellulosic ethanol production so they can take advantage of the tax incentive that has been there for them,” he said.
While the industry continues to expect a final decision from the EPA on the 2014 volume requirements any day, Dinneen says it could still be next week. “I fear for my Thanksgiving dinner because I suspect that the minute I carve into that turkey, I’m going to get an email that Gina McCarthy has just signed the rule,” he said. “I wish they’d get it out, let’s just be done with it.”
Seeing gas prices continue to drop nationwide, Dinneen agrees with some analysts that OPEC could be trying to cut U.S. oil production. “The Saudis, I think, have become annoyed that the U.S. is producing more (oil) and has decided that they want to try to break the back of these fracking operations,” said Dinneen, noting that those operations start losing money with prices below $80 a barrel. “Ethanol remains the lowest cost transportation fuel on the planet today and it’s unlikely that the Saudis will be able to break our back.”
The folks representing America’s ethanol industry are taking a shot at a campaign by livestock producers and fast food companies that takes its own shot at biofuels. The Renewable Fuels Association (RFA) says the Feed Food Fairness Campaign ran a one-sided advertisement in the popular Beltway publication “Politico” inaccurately blaming the Renewable Fuel Standard (RFS) for rising food prices.
“Never before in the history of misleading advertising has so much bull been slung in defense of chickens, hamburgers, and even potatoes. The ad is replete with misinformation. One would have to be awfully creative, for example, to draw any connection between biofuels and potatoes!” said Bob Dinneen, president and CEO of the RFA.
“Apparently, the Feed Food Fairness campaign is not big on facts or transparency. Their ad conveniently leaves out the key fact that their numbers come from a 2012 study on commodity costs during the worst drought in 50 years.”
“Simply put, the information is outdated and misleading. We are now well into 2014 and that drought has long since subsided. Farmers are harvesting the largest corn crop in history. Corn prices have plummeted with this record crop and yet as a recent RFA study demonstrates, food prices continue to rise. They should take an ad out to explain that!”
Dinneen also said that numerous independent analyses have concluded energy prices, not the RFS, drives food prices, citing the World Bank finding that “most of the food price increases are accounted for by crude oil prices.”
A new analysis of real-world land use data by Iowa State University raises serious concerns about the accuracy of models used by regulatory agencies regarding “indirect land use changes” (ILUC) attributed to biofuels production.
The study, conducted by Prof. Bruce Babcock and Zabid Iqbal at ISU’s Center for Agricultural and Rural Development (CARD), examined actual observed global land use changes in the period spanning from 2004 to 2012 and was compared to predictions from the economic models used by the California Air Resources Board (CARB) and Environmental Protection Agency (EPA) to develop ILUC penalty factors for regulated biofuels. The report concluded that farmers around the world have responded to higher crop prices in the past decade by using available land resources more efficiently rather than expanding the amount of land brought into production.
“There hasn’t been much land use change in terms of converting non-agricultural land into crop land,” said Renewable Fuels Association (RFA) Senior Vice President Geoff Cooper. “We’ve seen more double-cropping, we’ve seen triple-cropping in some parts of the world. And, very interestingly, we’ve seen an increase in the amount of planted acres that are harvested.”
Cooper says the study, which was funded in part by RFA, comes at a time when the California ARB is in the process of re-adopting its low carbon fuel standard, which includes revisiting their land use analysis. “So this paper, we hope, should inform that debate and bring some clarity and commonsense,” said Cooper. More importantly, this new analysis can provide input to states like Oregon and Washington which are currently working on developing low carbon fuel standards.
My Air Force brethren are known for being able to fly, fight and win, and now, they’ll be doing it using electric vehicles, biodiesel and ethanol. This news release from the U.S Air Force says the Department of Defense’s first non-tactical vehicle fleet composed entirely of plug-in electric vehicles was unveiled at Los Angeles Air Force Base, California.
The rollout of the 42-vehicle fleet marks a milestone in the DOD’s demonstration of emerging technology and the vehicles will serve as a resource to the electrical grid when they’re not being driven.
“Everything we do to fly, fight and win requires energy, whether it’s aviation fuel for our aircraft or power to run the bases that support them,” said Secretary of the Air Force Deborah Lee James. “This vehicle-to-grid pilot is a great example of how Airmen are driving the Air Force forward and finding new and innovative ways to make every dollar count.”
The PEV fleet includes both electric and hybrid vehicles ranging from sedans to trucks and a 12-passenger van. The vehicles have the capability to direct power both to and from the electrical grid when they’re not being driven, known as vehicle-to-grid technology. Unique charging stations have been installed on Los Angeles AFB to support the vehicles’ V2G capability…
In addition to the PEV fleet in L.A., the Air Force is also investigating the benefits of other alternative fuel vehicles. More than 9,000 ethanol flex fuel vehicles are in the service’s inventory worldwide, along with 50 biodiesel fuel stations on its installations.
The Air Force plans to expand this demonstration project to Joint Base Andrews, Maryland, and Joint Base McGuire-Dix-Lakehurst, New Jersey.
It might be the scourge of the south, but kudzu could become the next feedstock for biofuels.
“When life gives you lemons, you make lemonade,” says Lewis Ziska with the U.S. Department of Agriculture’s (USDA) Agricultural Research Service (ARS). “One of the possible potential benefits of kudzu is the roots are high in starch, and it may be a potential biofuel.”
Ziska says the USDA is working with the University of Toronto and Auburn University to look at the potential of kudzu roots. Since the USDA certainly doesn’t want to promote the growing of the weed that has overrun so many places in the south, he believes harvesting kudzu from abandoned farmland and other areas where it’s growing unchecked and easily harvested could end up producing as much, or even more, ethanol from an acre of the weed they want to eliminate as would be produced from an acre of corn.
“What we think we could do is to take the existing kudzu and convert into a biofuel for a win-win,” Ziska says.
“There’s no doubt that E85 sales will double or triple over the next decade, but they also predict that the flex fuel vehicle count will continue to grow,” says RFA vice president for industry relations Robert White. “The flex fuel vehicles on the road today could use all the ethanol we produce if they used E85 more often.”
And that would be possible if there were more places for drivers to buy E85, which would happen if the Renewable Fuel Standard were allowed to work as it was intended. “If given its chance, it will create the market and this report clearly shows that more E85 would be sold,” he said.
At the National Association of Farm Broadcasting convention last week, White also talked about RFA’s “Post Your Price” contest which has been getting lots of entries showing the price of E85 around the country. The contest will award free E85 for a year to a randomly drawn entry, but they are also awarding prizes for the largest and smallest price differentials between E85 and E10. “We’ve already got one sent in that E85 was higher than E10,” White said. The lowest price for E85 so far has been $1.64, compared to $2.84 for regular.
Two Midwest governors might be from other sides of the political aisle, but they are on the same page when it comes to ethanol and biodiesel. Republican Iowa Governor Terry Branstad and Democrat Missouri Governor Jay Nixon will lead the Governors’ Biofuels Coalition beginning in January 2015 as chairman and vice chairman, respectively.
“I look forward to working with Governor Nixon to advance the bipartisan work of the Governors’ Biofuels Coalition, as the production and use of biofuels increases family incomes in rural America, diversifies our nation’s energy portfolio, and enables consumer choice at the fuel pump, ” Governor Branstad said.
“Thanks to our corn and soybean farmers, Missouri has long played a leadership role in the development and production of biofuels,” Governor Nixon said. “Missouri was one of the founding members of the Governors’ Biofuels Coalition, and the Coalition has played a major role in our nation’s energy policies, including the drafting and passage of the renewable fuel standards. I’m honored to serve as the next vice chairman of this organization, and will continue working to strengthen the energy independence of Missouri and our country.”
Outgoing chairman Gov. Pat Quinn, a Democrat from Illinois, says everyone has a stake in the game, from farmers to energy consumers.
A group that looks at market issues related to vehicles and fuels says there are opportunities to grow the E85 market — but only if E85 prices remain way below regular grade gasoline prices. This news release from the Fuels Institute says also if automakers continue to produce flex-fuel vehicles at historic rates, E85 sales will, at a minimum, double by 2023 and could even see a 20-fold increase in sales over the same time period.
“This report is essential reading for federal regulators who are considering strategies to meet the goals of the Renewable Fuel Standard and for fuel marketers seeking options to diversify their product offer,” said Fuels Institute Executive Director John Eichberger. “It presents an objective analysis of the overall market for E85, including actual retail sales data, and represents a collective effort to identify opportunities and challenges facing this alternative fuel — without taking a position of advocacy.”
Biofuels have experienced remarkable growth over the past 12 years, from 1.75 billion gallons sold in 2001 to 14.54 billion gallons sold in 2013. The vast majority of this growth is from ethanol, particularly E10 fuel that is ubiquitous in most of the country. However, additional E10 sales are constrained by the size of the gasoline market, which has declined since 2007. Therefore, future biofuels sales growth will be highly dependent upon increasing the sale of higher grades of ethanol like E85, a blend of gasoline with 51 to 83% ethanol.
The report says E85 growth will be dependent on more gas stations offering the higher blend of ethanol and making sure there are plenty of flex-fuel vehicles on the road.
“Increasing the E85 station count would improve the potential for additional E85 sales and introduce additional competition to the market. But several other factors — including the relative price of E85 compared to unleaded gasoline and the number of vehicles on the road that can operate on E85 — must also be evaluated to determine the potential E85 market, especially because flex-fuel vehicles can operate on either E85 or gasoline,” said Eichberger.