Ethanol Report on Cost Analysis

ethanol-report-adA new analysis by the Renewable Fuels Association (RFA) shows that over the past four years, ethanol has been the most economically competitive motor fuel and octane source in the world.

rfa-cooper-headIn this Ethanol Report, RFA Senior Vice President Geoff Cooper gives some of the major findings of the report, talks about why it has particular relevance in the California market, and how the study suggests that the cost of producing ethanol in the US will continue to fall.

Ethanol Report on Cost Analysis

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What is the Difference Between Crude Oil & Ethanol?

RFANewlogoThe U.S. Department of Transportation (DOT) has released a new tank car proposal that is designed to enhance the safe transportation of hazardous materials, including ethanol and crude oil. Bob Dinneen, CEO and president of the Renewable Fuels Association (RFA) expressed concern over the rule’s same treatment of crude oil and ethanol when ethanol has a strong safety record while the high volatility of crude oil from the Bakken is not adequately addressed.

However, Dinneen did applaud the Administration for adopting a comprehensive approach to increasing concerns about rising shipments of highly volatile crude oil on the nation’s railways. He noted that the approach outlined today appears to address prevention, mitigation and response related to crude oil derailments.

“Ethanol is a low volatility, consistent commercial product with a 99.997 percent rail safety record,” said Dinneen. “Unlike oil from fracking, ethanol is not a highly volatile feedstock of unknown and differing quality and characteristics being shipped to a refinery for commercial use. Before this proposed rule is finalized, the RFA looks forward to engaging the Department of Transportation in a constructive dialogue about these differences, and the need to have a practical and effective phase-in of these new standards,” added Dinneen. “In the meanwhile, the U.S. ethanol industry will continue to work with all parties to assure the safe and effective transport of this low-cost, domestic renewable fuel to markets all across the country.”

Mudsummer Classic Features American Ethanol

dillon-ethanolAmerican Ethanol will be in the spotlight today as driver Austin Dillon will be defending his crown at Eldora Speedway for NASCAR’s Mudsummer Classic World Truck series race in Ohio.

Last year, Dillon won the historic race driving his American Ethanol branded truck, his first truck race since winning NASCAR’s Camping World Truck Series championship in 2011.

“Eldora is always an exciting race for NASCAR fans, but it is an exciting opportunity for corn farmers too,” said National Corn Growers Association (NCGA) NASCAR Advisory Committee Chair Jon Holzfaster. “With American Ethanol spokesman Austin Dillon firmly in the spotlight, Eldora provides a great platform to get our message about the environmental and economic benefits ethanol offers all Americans to a broader audience. The buzz continues to grow. Ethanol helps clean our air, improve our economic independence and benefits American consumers and farmers alike.”

American Ethanol is a partnership of Growth Energy and the National Corn Growers Association.

Ethanol Revving up for Sturgis Rally

sturgis-rfaFor the sixth year in a row, motorcycle enthusiasts from around the world will be able to learn more about ethanol, courtesy of the Renewable Fuels Association, at the famous Sturgis Motorcycle Rally.

About a half million motorcyclists will be converging on Sturgis, S.D., August 4-7 for the 74th annual Sturgis Motorcycle Rally, presenting an ideal opportunity for RFA to dispel misinformation concerning ethanol use in motorcycles. Among the ways RFA does that is “Free Fuel Happy Hours,” offering a free tank of E10 93-octane fuel to riders at the Sturgis Buffalo Chip campground. RFA is a major sponsor at the popular campground where the message “Ride Safe, Fuel Right” will be seen everywhere, including the main stage where this year’s concert line up includes Lynyrd Skynyrd, Collective Soul, Zac Brown Band, John Mayall, Alice Cooper, ZZ Top and Cheap Trick.

RFA also proudly sponsors the annual “Legends Ride” where proceeds are donated to local charities, including the Black Hills Special Olympics. All “Legends Ride” participants receive free “Fueled with Pride” giveaways and informational materials on ethanol before they embark on the ride that originates in Deadwood, S.D.

DomesticFuel will once again be there to bring all the sights and sounds to you. Check out last year’s photo album here.

Analysis: Ethanol Most Competitive Motor Fuel

According to a new analysis released today, “The Economic Competitiveness of U.S. Ethanol,” U.S. produced ethanol has been the most economically competitive motor fuel in the world over the past four years. In addition, ethanol has played an important role in E-85 fill-up photo Joanna Schroederreducing consumer fuel costs. The analysis was conducted by ABF Economics and released by the Renewable Fuels Association (RFA).

The analysis reviewed actual wholesale prices paid for ethanol, gasoline and alternative octane source in several U.S. and world markets between 2010-2013. Based on the data, the report concluded, “…U.S.-produced ethanol is an exceptionally competitive additive and fuel source…” and that “…U.S. ethanol has emerged as the lowest cost transportation fuel and octane source in the world over the past several years.”

Commenting on the analysis, RFA President and CEO Bob Dinneen said, “As proven by the recent boom in exports, American-made ethanol has evolved into the most cost competitive transportation fuel and octane source in the world. Through rapid technology adoption and innovation, U.S. producers have proudly earned the distinction of being the global leader and low-cost producer of clean-burning, renewable ethanol.”

Dinneen continued, “Despite the fact that ethanol offers greater consumer choice at a lower cost, entrenched petroleum companies continue to erect barriers that deny access to larger volumes of renewable fuels,” Dinneen continued. “In a truly free market, consumers would always choose a fuel that is produced domestically, is better for the environment and climate, and costs much less than gasoline. Unfortunately, free markets only exist in text books, underscoring the need for monopoly-breaking policies like the Renewable Fuel Standard.”

The ABF Economics study found that even after accounting for transportation costs to the reference markets of Los Angeles, Chicago, and New York, “The ‘spread’ between ethanol and RBOB [gasoline] has averaged 30 to 40 cents per gallon over the past four years in these three key markets and the difference averaged more than 60 cents per gallon in 2012.

As a result of this cost differential, the analysis found “…ethanol blended with RBOB to produce reformulated gasoline at a 10 percent (E10) blend has reduced the cost of motor fuel to consumers.” The analysis found that ethanol’s impact on gas prices goes far beyond the wholesale price spread: “This does not include the additional downward impact ethanol has on gasoline prices as a result of extending supplies and reducing demand for crude oil.”

Economic Competitiveness of Ethanol reportAccording to the report, “…even with depreciation of the real, U.S. ethanol has been more cost competitive than Brazilian ethanol in key U.S. and world markets over the past several years.” This has particular relevance in the California market, according to the study, because that state’s fuel policies strongly compel fuel suppliers to import Brazilian ethanol in lieu of U.S. ethanol. “Use of Brazilian ethanol in place of U.S. ethanol theoretically raised the price of E10 for California consumers by 8 cents per gallon over the past four years,” the study found.

In closing, the study indicates that the competitiveness of U.S. ethanol will only improve in the future: “This competitive advantage is expected to increase further, as U.S. ethanol and feedstock producers adopt new technologies and crude oil prices continue to trend higher.”

Crop Residues, Manure Hold Great Potential for Bioenergy

Crop residues and manure hold great potential as bioenergy sources, especially in areas such as the Midwest where row crops and livestock provide all the ingredients. This report from the Union of Concerned Scientists (UCS) says those resources will need some help, though, from the right policies, practices, and investments.
UCSreport
UCS analysis finds that by 2030, U.S. farmers could sustainably produce up to 155 million tons of crop residues, many times the current level of production. U.S. livestock could produce another 60 million tons of manure, to be turned into clean-burning biogas.

The right policies, practices, and investments will help these clean energy sources realize their potential—with huge benefits for farmers, communities, and the environment…

Fuel and electricity made from agricultural biomass is potentially clean too. With the right practices, ethanol made from crop residues can produce 90 percent fewer lifecycle emissions, compared to gasoline.

Many states could significantly scale up their use of crop residues and manure. The largest include Iowa, a leading producer of corn ethanol, and Arkansas, the nation’s top rice producer.

Texas and California offer a lot of potential as well because of those states’ large agricultural outputs.

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.

Nebraska Corn Farmers, Aventine In Sugar Fight

According to a Reuters article, the corn-based ethanol industry in Nebraska is fighting an ethanol sugar-based ethanol plant over its feedstock. The Aventine Renewable Energy Holdings plant re-opened its Aurora, Nebraska ethanol plant back in May 2014. However, the plant, located in corn country, is reportedly using sugar from sugar beets to produce ethanol.

The United States Agricultural Department (USDA) has as program where ethanol plants can purchase cheap beet sugar for use in producing biofuels or biochemicals and Aventine is producing ethanol from this sugar source. Aventine’ use of sugar is the first large-scale production of sugar alcohol in Nebraska since the Prohibition.

sugar beetHowever, local corn farmers have sued Aventine claiming their use of sugar violates an agreement to use their grain exclusively as a feedstock for ethanol production. Aventine denies any wrongdoing, saying it has abided by its contract.

George Hohwieler, president and chief executive of the Aurora Cooperative Elevator Co., was quoted in the article as saying, “Hamilton County, Nebraska, by any measure is one of the most productive corn-producing counties in the world,” he said. “The message being sent to the marketplace is that they’re making ethanol out of sugar.”

Aventine chief executive Mark Beemer was quoted as saying the farmers’ coop was being short sighted in suing the company. “We’ve been very blunt. This is just a very short-term pathway to get the plant open and then convert back to corn ethanol,” he said.

There has been a long-running dispute between Aventine and the Nebraska farmers’ coop. In February, when Aventine received delivery via rail of the sugar, the coop filed suit claiming they were not allowed to use the rail line to receive any feedstock other than corn. The coop also filed suit in 2012 when the plant did not produce its nameplate capacity of 110 million gallons of ethanol per year, costing them $1.7 million.

As the lawsuits and harsh words continue to fly, Aventine argues that using sugar allowed them to re-open the plant, that had been idled for nearly 5 years and bringing jobs back to the area. At this point, Aventine says they have begun bidding to buy corn as an ethanol feedstock but because of the lawsuits, they are not negotiating to buy corn from the Aurora Cooperating Elevator.

As the lawsuits continue, it can only be said in a fight between corn and sugar, no one wins.

Twin Cedars FFA Raises Money for Ethanol Infrastructure

Josh Lopez is a sophomore at Twin Cedars high school (Bussey, Iowa) and he is already an ethanol advocate. During the American Ethanol 200 presented by Enogen, Josh who is a member of FFA, along with several other FFA members from his high school, walked around Iowa Speedway talking to NASCAR fans about the benefits of ethanol. But they didn’t stop there.

Josh LopezJosh and his team also raised money for ethanol infrastructure and Syngenta matched the funds raised – dollar-for-dollar- and donated the money plus the $1 per acre funds to Growth Energy. The $1 per acre program is one that donates $1 dollar per acre of Engoen corn grown to the renewable fuels industry. In total, more than $108K was donated this year.

I asked Josh why he came out to the races to talk about ethanol. “I love racing and our school has a strong agricultural program,” so he said it was a good fit. I also asked him what he thought about ethanol and he said his dad works for Syngenta so he grew up knowing that ethanol is better for the environment, a lot cheaper and reduces America’s need for foreign oil.

Josh said the most common question he is asked is what is ethanol? He noted that after talking with most consumers, and mentioning the NASCAR drivers are racing on the same E15 fuel that consumers can use, most of them become excited about ethanol.

Listen to my interview with Josh Lopez here: Josh Lopez interview

Visit the 2014 American Ethanol 200 presented by Enogen photo album.


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.

Cellulosic Ethanol Poll

New Holland ZimmPollOur latest ZimmPoll asked the question, “How would the EPA water rule impact you?”

This is one of the hottest topics in the ag sector these days with a lot of uncertainty about what the future holds, especially when you see states starting to fine people for “wasteful use of water.” On the federal level the EPA says that under the proposed rules defining Waters of the United States (WOTUS) under the Clean Water Act (CWA) “all normal farming practices are exempt – period” but those in the agriculture community are questioning if that will hold true. Hopefully you’ve looked at how this will impact your farm or customers?

here are the poll results:

  • Just more govt. regulation – 38.9%
  • Permits for routine activities – 16.67%
  • Will regulate more of my property – 18.67%
  • Not sure but worried about it – 11.1%
  • Not worried about it – 11.1%
  • Don’t know or don’t care – 5.56%

Our new ZimmPoll is now live and asks the question, What are your thoughts on cellulosic ethanol? We just saw the first commercial production of cellulosic ethanol in Iowa from team work between Syngenta’s Enogen and the Quad County Corn Processors. Let us know what you think.

Don’t Miss the Biofuels Financial Conference

Screen Shot 2014-07-18 at 12.23.20 PMDon’t miss the annual Biofuels Financial Conference: Climate of Opportunity hosted by Christianson & Associates. This year’s event takes place August 27-28, 2014 in Bloomington, Minnesota. The conference is aimed at plant managers, board members, plant CFO’s and more.

This year’s featured session is Expanding Beyond the Baseline. Industry experts will provide critical information about financial opportunities and options available for ensuring that your organization explores all avenues for maximizing the value of your plant’s production capabilities. Topics will cover:

  • Jonathan Olmscheid of Christianson & Associates will provide background on grandfathered volume and on the valid pathways to maximize RIN value beyond your plant’s grandfathered production volume. Since the export market provides another avenue for ethanol sales and thus increased production, Olmscheid will also touch on some key points about the export market and Canadian RINs.
  • Experts from plants and from Merjent will describe in detail the process of petitioning for pathways using two advanced technologies, from an engineering perspective as well as a general plant management perspective.
  • Paula Emberland of Christianson & Associates will review best practices and formulas for evaluating such improvement projects including diversifying co-products and improving processes, to calculate ROI, and an expert from Hydrodynamics will discuss, as an example, their bolt-on biodiesel production technology.

Early bird registration ends July 21. Click here to learn more about the Biofuels Financial Conference and to register online.

Congressman Seeks Country Labeling for Fuel

braley-headshotCongressman Bruce Braley (D-IA) has introduced a bill that would give consumers the ability to know where their fuel is produced.

“America has a decision to make about its energy future. We can gut the RFS and move toward further reliance on Saudi Arabia, Venezula, and Nigeria for our energy needs—or we can continue our path toward energy independence by making investments in ethanol and other domestic energy sources,” Braley said.

Braley’s Country of Origin Labeling for Fuels Act would require gas stations to post the country of origin of the fuel right on the pump, letting consumers “know whether their fuel is coming from Saudi Arabia or from ethanol produced right down the road.”

The U.S. consumes more than 15 million barrels of oil each day, with nearly half of that total coming from other countries, including Canada, Saudi Arabia, Iraq, Kuwait, Venezuela, Mexico, and Nigeria. Since the creation of the RFS in 2005, nearly 10 billion gallons of foreign oil per year have been replaced by renewable ethanol.

Ethanol Safety Seminars Head to Oklahoma & Missouri

The Ethanol Safety seminars are heading to Oklahoma and Missouri this month with all seminars hosted by the Renewable Fuels Association (RFA). The first seminar will be held on July 21, 2014 at the Western Technology Center in Weatherford and is co-hosted by Oklahoma Emergency Management/LEPC. The second seminar will be held on July 22, 2014 at the Oklahoma City Fire Training Academy and is co-hosted by Stillwater Central Railroad. The third seminar will be held on July 24, 2014 at the Case Community Center in Tulsa and is Ethanol Safety Seminarco-hosted by South Kansas & Ohio Railroad. The final seminar will be held on July 25, 2014 at the Mid America Industrial Park Expo Center in Port of Catoosa and is also co-hosted by Oklahoma Emergency Management/LEPC. The seminars in Weatherford and Port of Catoosa are funded by an Oklahoma Hazardous Materials Emergency Preparedness grant while the Oklahoma City and Tulsa seminars are funded by a Federal Railroad Administration grant through TRANSCAER.

The other two seminars will occur in Missouri, with the first to be held on July 22, 2014 at the Public Safety Training Center in Joplin and is co-hosted by Missouri & Northern Arkansas Railroad. The second will take place on July 24, 2014 at the St. Louis Fire Academy and is co-hosted by Alton Southern Railroad. Both seminars are funded by a Federal Railroad Administration grant through TRANSCAER.

All seminars will have morning sessions from 9 a.m. to 2 p.m. and evening sessions from 5:30 to 10 p.m. While registration is free it is limited. Lunch and dinner will be provided. Certificates will be awarded to attendees at the completion of the course. While primarily targeting first responders, hazmat teams, safety managers, and local emergency planning committees, it is also open to the general public.

“With the heightened awareness of hazmat traveling throughout the United States on our railway systems, these types of training seminars are a very useful tool,” said Pat Foster, general manager at Stillwater Central Railroad. “This gives the railroads the opportunity to work with first responders in a positive atmosphere and to open a line of communication that sometimes may not have been there in the event of an incident.”

The goal of these seminars is for attendees to gain full ethanol emergency response training experience that they can put to use immediately in the field and pass along to other first response teams. A majority of this training is based on the “Training Guide to Ethanol Emergency Response,” a training package created by the Ethanol Emergency Response Coalition (EERC) that has been distributed throughout the United States and to several countries worldwide.

“The use of ethanol and ethanol-blended products continues to increase each year. With this growth comes the heightened risk of encountering ethanol emergencies on the highways, rail systems, and at transfer and storage facilities,” said Jon Hall, member of the Oklahoma County Local Emergency Planning Committee. “Our first responders must be aware of the unique challenges inherent in such emergencies. The Ethanol Safety Seminar is designed to provide an avenue for educating our responder community on the most current and effective tactics and techniques to safely react to ethanol emergencies and mitigate the hazards associated with such events.”

Click here to register.

QCCP-Syngenta Collaboration Produces Cellulosic Ethanol

Syngenta and Quad County Corn Processors (QCCP) are collaborating to produce cellulosic ethanol from corn kernels as well as to license the technology to other ethanol plants. The first-of-its-kind technology is known as Adding Cellulosic Ethanol and was developed by QCCP, who expects to produce one million gallons of cellulosic ethanol in 2014 and two million gallons in 2015.

This breakthrough was made possible through the integration of Adding Cellulosic Ethanol technology at QCCP, a 35 million gallon per year capacity ethanol production facility. The introduction of the technology Delayne Johnson Quad County Corn Processors will enable QCCP to increase ethanol yield per bushel by six percent, produce an additional two million gallons of cellulosic ethanol per year and realize a number of other important benefits including increased production of corn oil and distillers grains (DDGs).

Delayne Johnson, CEO of QCCP discussed the technology during a press conference held at the Iowa Speedway last Friday. The event was part of the American Ethanol 200 presented by Enogen sponsorship. The NASCAR Camping Truck World Series races on E15.

“Adding Cellulosic Ethanol technology will help us to increase the protein content of dried distillers grains (DDGs) by 40 percent, improve corn oil extraction by 200 percent and realize more ethanol out of the same kernel of corn,” said Johnson. “The commercialization of this technology represents a major advance in the production of cellulosic ethanol. For example, Adding Cellulosic Ethanol technology could produce one billion gallons of cellulosic ethanol by converting the corn kernel cellulose from corn currently being processed in existing dry grind ethanol plants. And, once hemicellulosic yeast is FDA-approved, Adding Cellulosic Ethanol will be capable of producing an additional one billion gallons – all from corn already being processed.”

Johnson said tests have also shown that Adding Cellulosic Ethanol technology, in conjunction with Enogen® trait technology, will deliver significant benefits to ethanol plants beyond what can be achieved through either technology alone.

“The combination of Adding Cellulosic Ethanol and Enogen corn is expected to generate significant synergies when used together in dry grind ethanol plants,” Johnson added. “It will produce advanced and cellulosic ethanol while decreasing natural gas usage, increasing ethanol throughput and reducing an ethanol plant’s carbon footprint. These advantages, combined with higher protein DDGs and increased corn oil production, make the technology package appealing for ethanol plants looking to improve their bottom line.”

Jack Bernens SyngentaCellulosic Ethanol Technologies is a wholly-owned subsidiary of Quad County Corn Processors. Earlier this year, Syngenta announced an agreement with Cellulosic Ethanol Technologies to license Adding Cellulosic Ethanol technology to ethanol production facilities.

“Ethanol is helping America reduce its dependence on foreign oil, lowering prices at the pump, improving the environment with lower emissions, and growing the economy with jobs that can’t be outsourced,” said Jack Bernens, head of marketing and stakeholder relations for Enogen Trait Technology at Syngenta. “The combination of Adding Cellulosic Ethanol technology and Enogen could represent the next leap forward for ethanol production.”

Listen to my interview with Delayne Johnson here: Delayne Johnson interview

Visit the 2014 American Ethanol 200 presented by Enogen photo album.