DF Cast: Senators, Industry Push EPA on Biofuels

Time is ticking down for the Environmental Protection Agency to make a decision on how much renewable fuel will be mixed into the nation’s fuel supply, and ethanol and biodiesel groups are pressing for a change to what’s being proposed.

On the biodiesel side, nearly 120 companies have just sent the White House a letter trying to reverse the proposed 1.28 billion gallons of biodiesel to be blended… a move in the wrong direction from the 1.8 billion gallons produced just last year. The letter adds to a chorus of dissent on the agency’s proposal coming from areas such as the Midwest where renewable fuels are made and from usually staunch Obama Administration backers on Capitol Hill.

In this edition of the Domestic Fuel Cast, we hear from U.S. Senators Heidi Heitkamp (D-ND), Dick Durbin (D-IL), Amy Klobuchar (D-MN), Al Franken (D-MN), Joe Donnelly (D-IN), and Maria Cantwell (D-WA), as they express their frustration with the EPA proposal… and what can be done to fix this.

Domestic Fuel Cast - Sens., Industry Push EPA on Biofuels

You can also subscribe to the DomesticFuel Cast here.

House Members Claim Majority Want RFS Changed

A coalition of U.S. House of Representatives member opposed to the Renewable Fuel Standard (RFS) claim that a bipartisan majority of members “have expressed concerns regarding the current ethanol mandate.”

USCapitol22In a press release, Reps. Bob Goodlatte (R-Va.), Jim Costa (D-Calif.), Steve Womack (R-Ark.), and Peter Welch (D-Vt.) announced that 218 Members of the House agree “there is a serious problem with the RFS.”

“It is telling that 218 members from both sides of the aisle, representing communities across the nation, have spoken out against the current RFS and called for reform. The flawed ethanol mandate has a real impact on the American economy, and legislation in the House to reform the RFS has drawn the support of more the 50 organizations representing a diverse range of issues. There is clearly a growing appetite to reform the ethanol mandate, and it is time for the EPA to address lawmakers’ concerns. Any day now, the EPA is expected to announce the final rule governing 2014 RFS levels. As the final rule is written, we urge Administrator McCarthy to carefully consider the concerns of a majority of House lawmakers in any decision and take action to reduce the burden of the RFS for 2014.”

A spokesperson for Goodlatte’s office says the 218 members of Congress referenced in the release is “a culmination of Members who have either cosponsored H.R. 1462 or H.R. 1461 or signed onto one of the many letters sent on the topic.” The office did not provide a list of members they say have “recognized there is a problem with the current RFS.”

State Incentives, Grants Help Open VA Ethanol Plant

virginiaflagSome seed money and a few years of production incentives offered by the state are finally helping open an ethanol plant sitting dormant since its building completion in 2010. This article from Petersburg, Va.’s Progress-Index says the Vireol Bio Energy LLC plant is up and running, and most importantly, selling ethanol.

The company will receive subsidies to operate from the commonwealth, because the Biofuels Production Incentive Grant was approved by the General Assembly this session. The bill was supported by Delegate Riley Ingram, R-Hopewell, and Delegate Rosalyn Dance, D-Petersburg.

Gov. Terry McAuliffe made the announcement that he signed the bill in early April, a couple of weeks after Hopewell City Council agreed to match a $250,000 grant from the state. The money will be disbursed in equal portions over two years.

Because of the grant, Vireol can receive $0.04 cents for every gallon of ethanol they produce and sell this year. The amount decreases by one cent in 2015, then to $0.025 in 2016. The subsidies will end in June 2017 and are capped at $1.5 million each fiscal year. Subsidies will not apply to fuel made from corn in 2016 or 2017.

The plant is expected to produce 170 million gallons of ethanol over the next three years, as well as buying more than $100 million worth of grain from local farmers.

RFA Calls EWG Report Flawed

RFANewlogoThe Renewable Fuels Association is disputing findings of an Environmental Working Group report released today entitled, “Ethanol’s Broken Promise: Using Less Corn Ethanol Reduces Greenhouse Gas Emissions.”

RFA president and CEO Bob Dinneen says the report relies on “overblown and disputed assumptions of land use change, making ethanol from corn appear to be worse than gasoline,” which he calls “simply preposterous particularly when contrasted with the ever-rising greenhouse gas (GHG) emissions from tar sands and fracking.”

“The Department of Energy’s GREET model clearly shows that corn ethanol reduces GHG emissions by 34 percent compared to gasoline, including hypothetical land use change emissions,” says Dinneen in a statement. “Additionally, a Life Cycle Associates study found that corn ethanol reduces GHG emissions by 37–40 percent when compared to tight oil from fracking and tar sands.”

The EWG report claims “that the federal corn ethanol mandate has driven up food prices, strained agricultural markets, increased competition for arable land and promoted conversion of uncultivated land to grow crops.” Stay tuned for more reaction from the ethanol industry on this report.

How to Counter “Evils-of-Corn-Ethanol” Argument

corn-harvestWith the unofficial start of summer, there’s no doubt you’ll be at picnics, reunions, get-togethers, etc., and there’s a pretty good chance that if you’re involved in ethanol, there’ll be somebody wanting to debate its merits… or more specifically, its evils. This article from Ethanol Producer Magazine relates a conversation the managing editor had on how corn ethanol is not the villain it is portrayed to be.

One of my main points to her was that advanced biofuels wouldn’t be an option if it wasn’t for the first generation industry. I’ve said it before and I’ll say it again, many of the same companies that now produce corn ethanol are also working to produce cellulosic ethanol. One example is a small plant in Galva, Ill., that is working to start up a bolt on technology that will produce ethanol from the cellulosic material in a corn kernel. Other current corn ethanol producing companies are targeting corn stover for cellulosic ethanol production. My friend was surprised to hear how close some of these companies are to completing construction and producing commercial-scale volumes of advanced biofuels.

I then addressed the “corn-ethanol is bad” impression she had, with analogy I’ve used before. We’re both mothers of young daughters so it’s one that makes sense to both of us. Children don’t come out of the womb walking. They must first master some basic skills like sitting up and rolling over. And then, once they do walk, it’s not like they abandon sitting up and rolling over because they are “bad” skills or things only babies do. The U.S. corn ethanol industry has already done a lot of good for this country, by reducing oil imports and providing jobs, for example, and it will continue to contribute positively in the future.

She was able to continue her case by pointing out how the corn ethanol industry has improved its efficiency, knocking holes in arguments that it costs more energy to produce it than it produces.

You might not convince everyone on the facts you know are true about ethanol and its relationship to corn, but at least you should be well-armed in the fight.

Ethanol Blending Margins Positive Despite Price Rise

Despite a 60 percent increase in ethanol prices, a new record hit last winter, ethanol blending margins stayed positive for most of the period. This analysis from the University of Illinois credits the surprising outcome to highly positive blending margins at the start of the spike, which provided a healthy margin cushion as ethanol prices rose, as well as a 20 percent increase in wholesale gasoline prices.

[A]n analysis by the U.S. Department of Energy in November 2012 calculated a “break-even price of ethanol, above which it is more economic for the refiner to reduce ethanol volumes and alternatively produce more octane within the refinery.” That analysis indicates that the breakeven ethanol price is about 10 percent higher than the price of CBOB gasoline. That is, if the price of ethanol is less than 110 percent of the price of CBOB gasoline, there are positive economic returns to blending E10 for octane enhancement rather than producing more octane from other petroleum processes in the refinery… The ratio was much less than 110 percent for most of the period, and during the recent ethanol price spike rose above this breakeven level only during the last two weeks of March 2014. So, despite the huge spike in ethanol prices (about 60 percent) this analysis shows that ethanol blending margins remained positive for all but a brief period. The key to explaining this surprising outcome is two-fold. First, wholesale gasoline prices were substantially above ethanol prices when the spike in ethanol prices began. This reflected crude oil prices that remain at relatively high levels and a drop in corn prices. Second, not only did wholesale gasoline prices start at relatively high levels, they increased substantially at the same time as ethanol prices. At the end of December 2013 the Chicago CBOB price was $2.49 per gallon, but had risen to $2.95 per gallon by mid-May 2014. This is an increase of almost 20 percent.

The analysis concludes that ethanol blending margins becoming negative for such a short period of time with record high ethanol prices shows how firmly entrenched ethanol has become as the cheapest source of octane currently available for E10 gasoline blends.

FL Researchers Look to Sweet Sorghum for Ethanol

sweet_sorghumA partnership between a university and a private company is researching using sweet sorghum for ethanol. This story from Ethanol Producer Magazine says U.S. EnviroFuels LLC and the University of Florida could use the technology in the company’s 30 MMgy advanced ethanol plant under construction in Florida.

A research team from the University of Florida was awarded a four-year, $5.4 million USDA grant to study the crop’s potential as an energy source earlier in May. Multiple varieties will be developed and assessed, looking at water consumption needs, growth in Florida soil, heat tolerance and the tolerance to disease and pests. Cellulosic ethanol will also be produced using a genetically engineered bacteria developed at the University of Florida.

The research project is good news for the proposed ethanol plant, which is behind schedule for construction and startup, said Bradley Krohn, president and chief technical officer of U.S. EnviroFuels, founder and project manager of Highlands EnviroFuels LLC. “Any R&D program that develops commercial sweet sorghum hybrids and improves the performance of sweet sorghum from a tonnage and sugar production standpoint will help the ethanol plant project going forward,” he said.

Sugarcane is the usual feedstock for the plant, but the company wants to use the sweet sorghum during sugarcane’s off season.

Patriot Hires Leifmark for Cellulosic Ethanol Plant

patriot1Patriot Renewable Fuels has hired Leifmark to plan the first stage of its cellulosic ethanol plant in Illinois. This news release from Patriot says the Inbicon Biomass Refinery technology will be the centerpiece of the platform on the site of Patriot’s 130 million gallon per year grain ethanol plant.

“Leifmark’s analysis will give us a clear picture of the overall technical and economic factors,” says [Gene Griffith, Co-Founder & President of Patriot]. “Their study will provide a sound basis for deciding whether Patriot should go ahead with the engineering phase of the project.”

Paul Kamp, Leifmark co-founding partner in Chicago, says, “Patriot has a history of innovation since its Annawan plant opened in 2008. Adding cellulosic ethanol production is a natural next step.”

At the centerpiece of the technology platform is the Inbicon biomass conversion technology, which Denmark’s DONG Energy began developing in the late 1990s and has demonstrated for over 15,000 hours at its Inbicon Biomass Refinery in Kalundborg, where it typically processes 4.4 tons an hour of wheat straw.

About 1320 tons per day of corn stover will be turned into cellulosic ethanol using the Inbicon’s technology.

ACE Reminds Drivers that E15 is Fine for Most Cars

ACElogoSummer driving season kicked off this past weekend, and the American Coalition for Ethanol (ACE) took the opportunity to remind drivers that most vehicles can be filling up with the higher 15 percent blend of ethanol, E15. ACE Senior Vice President Ron Lamberty says it could save them some money at the pump.

“Once the federal government gave the approval for E15 blends to be sold in retail stations, automakers started building cars designed and warrantied for E15 fuel. For the last two years nearly every new vehicle sold in the US is ‘‘E15 compatible,’’ under even the strictest definition of that term. Along with flex-fuel vehicles and Ford’s earlier switch to E15 according to sales data, about 50 million vehicles on the road today have warranties that include E15. And that number will grow by almost 15 million every year. While ACE continues to encourage drivers of cars and light trucks built in model year 2001 and newer – the vehicles EPA tested safe for E15 use – to try E15, no one can argue about the safety of E15 in this group of newer vehicles.”

ACE also pointed out that more states are passing laws that should lead to more stations offering E15 blends. The group also criticized AAA for being “a very effective pawn in Big Oil’s campaign to smear E15 and maintain the fuel monopoly that has doubled American drivers’ fuel expenditures over the past five years.” Lamberty called on AAA to step up and advocate on behalf of drivers and call for the higher blend.

Former Ethanol Car Driver Wins Indy 500

ryan-indyIt was mid-season in 2007 when Ryan Hunter-Reay burst on the IndyCar Series scene wearing the green and blue ethanol logo for Rahal-Letterman Racing. He finished 6th in his first Indy 500 in 2008 and won Rookie of the Year. This year he came in first.

“I’m a proud American boy, that’s for sure,” said Hunter-Reay, who is the first American since 2006 to win the race. He now races for Andretti Autosport driving the DHL car.

ryan-2014Ryan was not the first ethanol IndyCar driver. He replaced Jeff Simmons, after Simmons replaced the first driver Paul Dana, who was killed during practice in Homestead at the first Indy race to run on 10% ethanol. Ryan was the third and last driver of the car sponsored by the Ethanol Promotion and Information Council (EPIC), which dissolved in 2008 to become part of Growth Energy.

In his first interview with Domestic Fuel after being named the new driver, Ryan talked about how pleased he was to promote ethanol as the IndyCar Series moved to 100 percent ethanol. “It’s a really neat story that they can make these 700 horsepower, 230 mile an hour cars run on 100 percent ethanol, and the fact that we can use less fuel doing it – with methanol we had to use more,” he said. 2007 Ryan Hunter-Reay Interview

Starting in the 2009 season, Brazil become the new sponsor of the 100 percent ethanol IndyCar Series, but Ryan still raced a few more times under the Team Ethanol banner at the Iowa Corn Indy 250 and has always been a strong advocate for ethanol. Congratulations on winning the big one this year, Ryan!

Corn Growers Fight AAA Stance on Ethanol

aaa-cancelThe Missouri Corn Growers Association (MCGA) is fighting back at AAA for disparaging the state’s recent action allowing the retail sale of 15% ethanol blended gasoline (E15).

MCGA CEO Gary Marshall took AAA to task in a letter to the organization’s president and canceled his longtime membership following public statements misrepresenting the benefits of E15. A St. Louis Post Dispatch article following approval of E15 sales in Missouri quoted AAA as saying that “90 percent of the cars on the road are not approved by automakers to use the fuel. That could void warranties and cause engine damage.” That quote is from a November 2013 statement by AAA president Roger Darbelnet.

In his letter to Darbelnet, Marshall corrected that statement with the facts.

Approximately 80 percent of the vehicles on the road today are 2001 or newer and approved by the EPA to use the ethanol blend. Add to that, more than 60 percent of 2014 vehicles sold this year will be explicitly warranted and approved by the manufacturer to operate on E15. In terms of possible engine damage, E15 is sold in 12 other states with no issues reported. We are unaware of AAA’s Roadside Assistance program picking up a single driver stranded alongside the road due to an engine issue caused by E15.

Marshall informed Darbelnet that he is canceling his 33-year AAA membership because he refuses “to support an organization so clearly aligned with the oil industry.”

Using Ethanol from Glycerol for Biodiesel

allison-speers1A new process that eliminates fossil fuels completely from the biodiesel equation could make the green fuel even more sustainable. Michigan State University reports Gemma Reguera, MSU microbiologist, has found a way that uses microbes to glean ethanol from glycerol and then use that green fuel to replace methanol to help brew the biodiesel.

“With a saturated glycerol market, traditional approaches see producers pay hefty fees to have toxic wastewater hauled off to treatment plants,” she said. “By cleaning the water with microbes on-site, we’ve come up with a way to allow producers to generate bioethanol, which replaces petrochemical methanol. At the same time, they are taking care of their hazardous waste problem.”

The results, which appear in the journal Environmental Science and Technology, show that the key to Reguera’s platform is her patented adaptive-engineered bacteria – Geobacter sulfurreducens.

Geobacter are naturally occurring microbes that have proved promising in cleaning up nuclear waste as well in improving other biofuel processes. Much of Reguera’s research with these bacteria focuses on engineering their conductive pili or nanowires. These hair-like appendages are the managers of electrical activity during a cleanup and biofuel production.

This promising process is already catching the attention of economic developers, who are working with a Michigan Translational Research and Commercialization grant to scale up the effort.

Ethanol Stocks Down Despite Production Uptick

eiaStocks of ethanol in the U.S. are down, despite increased production of the green fuel. This story in Platts says ethanol stocks on May 16 were down 312,000 barrels to a four-week low of 16.99 million barrels. This unexpected drop comes as production actually rose by 3,000 b/d to 925,000 b/d, according to U.S. Energy Information Administration information.

In immediate reaction to the data, US ethanol prices turned sharply bullish, with values adding 5-10 cents/gal in prompt markets, sources said.

The four-week rolling average of gasoline demand rose 186,000 b/d to a seven-month high of 8.944 million b/d, and the four-week rolling average of the refiner and blender net ethanol input rose 9,000 b/d to 872,000 b/d. The weekly refiner and blender net ethanol input, however, nudged down 4,000 b/d to 886,000 b/d.

US ethanol stocks fell in all but one region. East Coast ethanol stocks moved down 23,000 barrels to 6.354 million barrels, ending an eight-week rise after hitting a 10-month high the previous week.

Gulf Coast stocks fell 181,000 barrels to 2.789 million barrels, and West Coast stocks declined 140,000 barrels to 1.81 million barrels. Rocky Mountain stocks were 14,000 barrels lower at 288,000 barrels.

Midwest stocks, on the other hand, rose 46,000 barrels to 5.749 million barrels, rebounding from a five-month low.

Net ethanol input is just shy of the so-called 10 percent “blend wall” making up 9.75 percent of total gasoline and ethanol supplies.

Fuels America Campaign Reminds Drivers of Savings

fuels-americaJust as a good-sized portion of the country is hitting the road for Memorial Day weekend, Fuels America launches an ad campaign to remind drivers just how much they are saving at the pump, thanks to ethanol and biodiesel. The coalition of groups committed to protecting the Renewable Fuel Standard (RFS) and promoting alternative fuels is airing the campaign on Washington, D.C.’s WTOP Radio and on gas pump monitors in the D.C. area.

The advertisement playing on gas station monitors, conveniently positioned to highlight the gas prices consumers are paying just as the advertisement is playing, points out that “supporting clean energy production here in America is better for the environment, is better for your wallet, and because biofuel is higher octane, it’s actually even better for your engine.” The ad also celebrates the benefits that the RFS is already delivering to American consumers: “Thanks to America’s Renewable Fuel Standard, homegrown biofuels are cheaper than gasoline, saving you money every time you fill up… Tell President Obama: Support America’s Renewable Fuel Standard.”

“If you’re like a lot of folks, you’re probably getting ready to hit the road. And that means the oil companies are getting ready to hit you – because when you pay more, they make more,” says the WTOP spot. “So it’s no surprise Big Oil is fighting to eliminate something called the Renewable Fuel Standard, so they can lower the amount of renewable fuels in the gas supply.” The WTOP ad closes by observing that “Memorial Day is a great American Tradition,” while “getting hosed by Big Oil isn’t.”

Fuels America launched the robust inside-the-beltway advertising campaign this week and is encouraging Americans to ask the Obama Administration to protect the RFS.

Ethanol Conference Themed Power by People

ace-14-themeRegistration is now open for the American Coalition for Ethanol (ACE) 27th annual Ethanol Conference scheduled for August 4-6 in Minneapolis, Minnesota.

The theme of the event is “Power by People” and the agenda includes sessions on new innovations in the ethanol industry, the octane and high performance potential of ethanol, overseas opportunities for ethanol producers, rail regulations and possible long-term improvements of the domestic rail system, and much more. A Retailer Roundtable entitled “Power to the People” focusing on the sale and marketing of higher ethanol blends will also be featured.

Domestic Fuel will be covering the conference, thanks to the generous support of ACE and Patriot Renewable Fuels, so please be sure to join us. This conference is more important than ever before to the ethanol industry. Find out more and register today.