Domestic Fuel

Just a few seats left for the Nebraska Ethanol Board’s Ethanol 2013: Emerging Issues Forum! The April 18-19 event in Omaha, Nebraska at the Magnolia Hotel will include several key speakers, including Ron Lamberty with the American Coalition for Ethanol, Greg Krissek from ICM and Sandra Dunphy with Weaver, LLP. Weaver specializes in EPA compliance and fuels consulting for the petroleum industry and will talk about Renewable Identification Numbers (RIN) management and compliance strategies:

This annual forum has become the “must-attend” event of the year for ethanol industry leaders and advocates. The forum is designed to promote interaction between speakers and attendees- and to provide insight and leadership on emerging issues in the ethanol industry and every level.

The lineup of speakers will talk about innovative ethanol marketing and promotion programs, distillers grains marketing, a financial outlook for the ethanol industry and environmental issues.

Register here.

A group that lends its support to ethanol producers is also backing the men and women and their families who have served and continue to serve this country through the military. Growth Energy and the Armed Forces Foundation have joined in the “Fueling our Forces” campaign, a charity contest between Growth Energy members to raise the most money possible by September 1, 2013.

“We are excited to be partnering with Growth Energy this year to raise funds for the Armed Forces Foundation,” said Patricia Driscoll, Armed Forces Foundation President. “With 95 percent of every dollar raised going directly to support service members and their families, the Armed Forces Foundation is proud to have a strong ally in Growth Energy. We continue to work to raise awareness of Post-Traumatic Stress Disorder and the tragic suicide epidemic in the military through the Help Save Our Troops campaign and these funds will help in this uphill battle our nation faces.”

“Partnering with the Armed Forces Foundation is a great opportunity for Growth Energy and our members,” said Tom Buis, CEO of Growth Energy. “The spirit of the Fueling our Forces campaign—supporting our troops, veterans and their families—is a pillar of what we stand for as an organization and as an industry. Our members are honored to support the brave men and women, and their families, who sacrifice so much for our country and our safety.

The program is already off to a good start as Growth Energy members raised more than $71,000 for the Armed Forces Foundation during last month’s Growth Energy Executive Leadership Conference in Las Vegas.

The National Corn Growers Association (NCGA) has developed a comparison of the environmental impacts of ethanol and petroleum as transportation fuels. Using scientific data, the side-by-side comparison examines a wide array of environmental factors. Most know today that petroleum, made from oil, is not “renewable”. Created over millions of years, it will takes thousands of years for more oil to be developed. However, ethanol made from corn is renewable, with each new crop, a new crop of ethanol can be produced.

Here are some other key highlights of NCGA’s comparison:

• Ethanol is a tiny single substance that is non-toxic. Petroleum is a mixture of hundreds of different molecules and is toxic to biological organisms.
• Corn used for ethanol in the United States is grown on approximately five percent of our nation’s cropland. For perspective, ethanol production uses less than three percent of all grain crops grown over the entire world. Petroleum is mined across the entire globe and must be extracted from deep underground. In order to collect petroleum, landscape fragmentation and the generation of toxic, hazardous and potentially radioactive waste streams often occurs.
• Most corn-to-ethanol production facilities are located within 15 miles of the farms where the crop was produced. Since petroleum extraction happens across the globe wherever deposits can be found, it must be shipped to a facility where it can be refined.
• Based on the results of scientific testing, the EPA considers corn starch ethanol as producing 23 percent less greenhouse gas emissions compared to making and burning gasoline from petroleum. Recent evidence shows multiple ways of producing ethanol with 50 percent or less GHG compared to gasoline production.
• The U.S. oil and gas industry generates more solid and liquid waste than municipal, agricultural, mining and other sources combined.

NCGA says that looking at how the production of these fuels compares side-by-side, it becomes evident that ethanol is truly renewable and produced in a greener manner than its fossil fuel counterparts. Where petroleum creates reliance upon a fuel pulled from the ground and imported from abroad, ethanol improves our environment while increasing our national and energy security. Click here for the full comparison.

Popke’s, Inc. in Rock Rapids, Iowa has joined the E15 “club” now joining four other stations in Iowa to sell the 15 percent ethanol, 85 percent gasoline fuel blend.

“My business believes in supporting Iowa’s farmers and growing our local economy,” said Popke’s, Inc. owner Greg Popke. “American-made E15 is the next step in securing our independence from foreign oil. The citizens of Rock Rapids have been asking for E15 and are excited to have ready access to this cleaner, less-expensive fuel.”

Popke’s, Inc. is located in Northwest Iowa at the corner of Highway 9 and Highway 75 in Rock Rapids. E15 can be used by all 2001 and newer passenger vehicles and all flexible fuel vehicles (FFVs). Those vehicles account for 85 percent of fuel use in the United States. In order to offer E15 to the non-FFVs, a retailer must register with the EPA. The Iowa Renewable Fuels Association (IRFA) works with retailers to ensure they comply with all federal and state E15 regulations.

“We hope more retailers will continue to incorporate E15 into their business models,” added IRFA Managing Director Lucy Norton. “Offering E15 is a win-win as it provides economic value to both retailers and consumers.”

Retailers interested in installing a blender pump to offer E15, E85, and other ethanol blends can apply for a grant from the Iowa Department of Agriculture. The IRFA provides assistance in the application process. Click here for more information.

USDA has announced a new collaboration with DuPont to promote sustainable harvesting of bio-based feedstocks for cellulosic ethanol.

The joint agreement between USDA’s Natural Resource Conservation Service (NRCS) and DuPont aims to set voluntary standards for the sustainable harvesting of agricultural residues for renewable fuel, and supports rural job creation, additional income for farmers, bio-based energy development, and the safeguarding of natural resources and land productivity.

“USDA and DuPont share a common interest in the wise use and management of soil, water and energy resources,” said Agriculture Secretary Tom Vilsack. “Both organizations also share an interest in helping individual farmers adapt to new market opportunities in ways that are consistent with the wise use of these natural resources.”

“Working with farmers is critical to maximizing the land’s productivity and protecting natural resources,” said Jim C. Borel, executive vice president of DuPont. “With this new collaboration, we have a partner in the Natural Resources Conservation Service to ensure that the collection of corn stover for the production of cellulosic renewable fuel makes sense for an individual grower’s operation and the land they farm.”

Under the agreement, NRCS will provide conservation planning assistance for farmers who supply bio-based feedstocks to biorefineries as the industry begins to commercialize. Conservation plan, written for individual operations, will ensure sustainable harvest of corn crop residues while promoting natural resource conservation and land productivity. A conservation plan is a voluntary document, written in cooperation with farmers, which helps them protect natural resources while promoting a farm’s economic sustainability.

There’s been a lot of talk about the prices for Renewable Identification Numbers … better known as RINs … especially from Big Oil trying to blame RINs for the rise in gasoline prices.

But in this edition of the Domestic Fuel Cast, Ron Lamberty, Senior Vice President with the American Coalition for Ethanol (ACE) and Brian Jennings, Executive Vice President for ACE, explain what RINs are and what they do … as well as dispelling some of the myths that have created what they call RIN-sanity.

You can listen to the Domestic Fuel Cast here: Domestic Fuel Cast - Countering RIN-sanity

You can also subscribe to the DomesticFuel Cast here.

View the ACE Biofuels Beltway March 2013 Photo Album.

The American Coalition for Ethanol (ACE) has created an ‘infographic’ promoting the benefits of the Renewable Fuel Standard (RFS). Entitled “An American Success Story,” the new infographic pinpoints how the RFS is accomplishing the goals set by Congress.

“ACE’s infographic is a vivid and effective ‘show and tell’ tool for ethanol advocates to use in proactively promoting the benefits of the RFS,” said Brian Jennings, ACE Executive Vice President. “The RFS costs taxpayers nothing and has spurred technology innovations, efficient feedstock and biofuel production, increased feed availability, and jobs that can’t be outsourced. I encourage all ethanol supporters to use this infographic, share it with their politicians and media members, and help us show how the RFS delivers benefits for everyone.”

The infographic cites data from the U.S. Energy Information Administration and other reliable third parties and shows key ethanol accomplishments since the RFS was enacted, including consumer savings at the pump, helping to reduce oil imports and replacing the need for 462 million barrels of imported oil, how U.S. ethanol production compares to the amount of gasoline that could be produced from the Bakken Oil Shale development or from the proposed Keystone XL Pipeline project, how much pollution is reduced by ethanol, and how E15 fuel is the most tested motor fuel on the market today.

The infographic was also part of the tools used during ACE’s Biofuels Beltway March, which received a good reception.

Learn more about why the RFs is so important and more about the Biofuels Beltway March in my interview with Brian Jennings: An American Success Story

View the ACE Biofuels Beltway March 2013 Photo Album.

According to new analysis conducted by Informa Economics, Inc., ethanol costs significantly less than gasoline at the wholesale level and is reducing pump prices for consumers across the country. The report demonstrates that the Renewable Fuel Standard (RFS) and its associated “RIN” credits, have not been a factor in this spring’s higher retail gasoline prices. A RIN is a Renewable Identification Number that is used to track the use of biofuels by obligated parties.

“A fact-based review of developments in the gasoline, ethanol and RIN markets indicates that the Renewable Fuel Standard in general and RINs in particular have not been a demonstrable factor in the rise in retail gasoline prices that has occurred in early 2013,” the report concluded.

Responding to the independent study’s findings, Renewable Fuels Association (RFA) President and CEO Bob Dinneen said, “Not surprisingly, opponents of the RFS have absurdly suggested RINs are a reason for this spring’s higher gas prices. This report puts that silly notion to rest and clearly confirms that RINs are not having any noticeable impact on gasoline prices. In fact, as the Informa analysis plainly shows, increased ethanol use leads to lower—not higher—prices at the pump for American consumers. The facts and data speak for themselves. Drivers could realize even greater savings at the pump if refiners and blenders would break down their self-inflected blend wall and give up their stubborn resistance to offering E15 and E85.”

The analysis, commissioned by RFA, found RINs are likely contributing no more than $0.004 (four-tenths of one cent) to the retail price of a gallon of gasoline. Meanwhile, ethanol’s wholesale discount to gasoline in 2013 has reduced the pump price for blended gasoline by an average of $0.044 per gallon. Thus, when the net impact of both RIN costs and ethanol’s discount to gasoline are considered, ethanol-blended gasoline is saving consumers an average of $0.04 per gallon based on straight blending economics.

“Considering both the ethanol price advantage and the direct cost of RIN prices, the net benefit to consumers from the usage of ethanol is $0.04 per gallon of gasoline…” the report found. According to the authors, this savings doesn’t take into account either the indirect benefit that ethanol has on gasoline prices by effectively lowering demand for crude oil and clear gasoline or the enhanced octane value of ethanol over gasoline.

High gasoline prices in early 2013 can be explained by several factors unrelated to the RFS, RINs, or ethanol use, the report found. “There is a distinct seasonal pattern to gasoline prices and crack spreads,” the analysis notes, adding that “[t]he increase in gasoline prices and crack spreads during the first quarter of 2013 has been generally consistent with increases experienced in 2011 and 2012, despite the fact that conventional ethanol RIN prices averaged $0.03 during the first quarter of 2011 and $0.02 during the first quarter of 2012.” Citing a Department of Energy analysis, the Informa report also notes that higher gasoline prices have stemmed from planned and unplanned refinery maintenance; the low starting level for gasoline crack spreads going into 2013; preparation for seasonal fuel specification changes; and developments in global product demand.

The report was discussed during a media teleconference call that you can listen to here: rfa-rinteleconference-13.mp3

Yesterday I traveled to Tallahassee, Florida to testify at a hearing of the Florida House of Representatives Regulatory Affairs Committee on HB 4001 which is a bill to repeal the Florida Renewable Fuel Standard. This hearing was actually an extension of one held previously that ran out of time to conclude. You can watch the session here. The portion on HB 4001 starts about 39 minutes in and you can easily fast forward to it.

When you see the bill sponsor, Representative Matt Gaetz, introduce the session you’ll understand my compulsion to attend to try to help clear up the numerous things he said about ethanol that are just plain wrong. These include the now completely dis-credited food vs. fuel debate, that it harms automobile engines, that it is bad for the environment, etc. It’s all out of the play book of large oil companies and large food company interests. I was not alone in opposition to this bill. Some of the others testifying in opposition included Bradley Krohn, President, United States EnviroFuels, LLC and Bobby Likis, Bobby Likis Car Clinic. There were a number of others that you’ll see in the video recording.

Unfortunately, the bill passed by a narrow margin. A companion bill is in the Florida Senate, SB 320. After the session I spoke with both Bradley and Bobby to get their thoughts on the action taken by this committee.

Bradley says his company has been developing a 30 million gallon advanced ethanol plant project which will use sugar cane and sweet sorghum as primary feedstocks. They are very close to construction. He says the House committee got it wrong, buying into a lot of myths about ethanol. This sends a chilling effect to the financial community for investing in advanced biofuel projects in the state of Florida. His company is in the process still of funding their project. He says it sends a message that Florida doesn’t care about economic stimulus and job creation. There was an attempt to pass this bill last year that stalled on the Senate side and he hopes that will happen again this year.

Listen to my interview with Bradley Krohn here: Interview with Bradley Krohn

Bobby Likis also testified and corrected a number of factual errors that were presented to the committee, especially on how ethanol performs in an engine. He was very disappointed by the committee vote in the face of overwhelming evidence that the Florida RFS is working and reducing the cost of gas to Floridians. He says it will make him fight harder to make sure the bill doesn’t pass at the Senate. He says that if it does pass and the price of gas goes up in Florida we should call it a Gaetz Tax!

Listen to my interview with Bobby Likis here: Interview with Bobby Likis

According to several sources, Mascoma Corporation has withdrawn its registration for its planned initial public offering (IPO). The company had hoped to raise as much as $100 million through the offering. The biofuel company has been focused on developing enzymes for breakdown of sugars in the cellulosic ethanol production process.

In a filing, the company said it had determined not to proceed at this time with the offering due to market conditions. Mascoma is the fourth biofuel company to cancel or delay IPO’s since last year. Enerkem Inc. canceled its planned IPO in April, followed by Fulcrum BioEnergy Inc. in November, and Coskata Inc. shelved its deal in July.

The Engine Products Group (EPG) is challenging the Environmental Protection Agency’s (EPA) decision to grant partial waivers approving the sale of gasoline containing E15 (fifteen percent ethanol, eighty-five percent gasoline) for 2001 model year and new passenger cars and light trucks. The Court of Appeals dismissed the case in August 2012 for lack of jurisdiction.

Today, EPG has filed a petition for certiorari today asking the U.S. Supreme Court to review the DC Circuit Court of Appeals’ August 2012 decision that none of the trade associations or parties had standing in the case. Members of the organization include the Alliance of Automobile Manufacturers (Alliance), The Association of Global Automakers, the Outdoor Power Equipment Institute (OPEI) and the National Marine Manufacturers Association.

“OPEI, as part of the Engine Products Group, has filed an appeal to the U.S. Supreme Court to review the DC Circuit Court of Appeals’ claim that we did not have standing to challenge the EPA on a partial waiver for E-15,” said Kris Kiser, President and CEO of Outdoor Power Equipment Institute. “This appeal to the U.S. Supreme Court reflects the seriousness of this issue for the outdoor power equipment and small engine industry.  We feel strongly that this challenge to the E-15 partial waiver needs to be considered on its merits, and not held back on a procedural issue.  We will push on to protect our consumers from the engine failure and product harm that comes from mis-fueling with E-15.”

The petition asks the Supreme Court to accept the case for review. If the Supreme Court accepts the case, the parties will then ask that court to reverse the Court of Appeal’s ruling and find the parties have the right to challenge EPA’s partial waiver decisions that allow sale of E15 for some passenger cars and light trucks but not older vehicles and not for use in motorcycles, boats and off road engines.

According to EPG, their concern is their customers. They say it is critical that consumers have a positive experience with renewable fuels, which are an important component of our national energy security. EPG concludes, that it is not in the longer term interest of consumers, the government, and all parties involved to discover, after the fact, that equipment or performance problems are occurring because a new fuel was rushed into the national marketplace.

The American Fuel and Petrochemical Manufacturers (AFPM) held teleconferences last week in an effort to discredit the Renewable Fuel Standard (RFS). During the call, AFPM blamed increased gas prices on renewable fuels, which, says, Tom Buis, CEO of Growth Energy, is false.

“Manipulating data and spreading misinformation is not the way to educate lawmakers and drive policy decisions. Our energy security is a matter of domestic and national security, and the fact is the fossil-fuel-only approach of oil companies and refiners will do nothing for our growing energy needs except continue to feed our addiction to foreign oil and line the pockets of oil executives,” said Buis, who released the following statement.

“It seems unconscionable that AFPM would state that the presence of E15, the most tested fuel ever, would limit consumer choice if offered in the marketplace. However, when it comes to oil companies and refiners, they will say and do anything to protect their interests and bottom line. While they pretend to advocate for the consumer, they are actually intentionally blocking a choice and savings at the pump, while taking in excessive profits at the consumer’s expense.

“With regards to RINs, what we have here is a classic example of unregulated market manipulated by oil companies running wild. The biofuels industry creates RINs, but they have no place in the trading market – that is between oil companies and refiners. They are the ones driving this entire process, intentionally driving up prices as a way to blame other industries for their increasing profits and unending costs at the pump. I welcome Congressional oversight and an investigation to shed some daylight on these questionable practices.

“It is time for oil companies and refiners to get out of the way and let consumers and retailers make the voluntary decision to use higher fuel blends, such as E15. I am confident that once E15 becomes widely available, consumers will chose the homegrown fuel that helps support our economy and is better for our environment. And that is exactly what oil companies and refiners are afraid of – losing market share through fair market competition. So, they will stop at nothing to distort the facts and bend the truth to maintain the near monopoly they have on the liquid fuels market.

“Enough is enough – it is time to identify this ongoing blame game for what it actually is – an orchestrated sham by the oil companies and refiners to manipulate markets, cause panic and attempt to use false data to blame an industry that has grown to be a threat to their record profits and bottom lines.

“Bottom line – ethanol saves consumers at the pump and any information stating otherwise is simply false.”

A bill has been introduced in the Florida legislature that would repeal the state’s Renewable Fuel Standard Act.

Currently, the Florida law requires that all gasoline sold or offered for sale by a terminal supplier, importer, blender or wholesaler in Florida contain 9-10 percent ethanol, or other alternative fuel, by volume. Legislation to repeal that requirement was considered by the Florida House Regulatory Affairs Committee on Friday and Pensacola automotive technician and radio host Bobby Likis was there.

However, Likis was only was able to say that he opposed the bill before the hearing had to be ended for lawmakers to go to the floor. “I’ve answered over 100,000 questions live on air, many of which have addressed the ethanol issue with regard to engine damage,” said Likis, host of the syndicated Car Clinic Network. “I strongly oppose the bill.”

Likis, who is a strong advocate for ethanol, says he is prepared to do what he can to prevent the legislation from passing in Florida.

Also testifying against the bill was Patrick Ahlm with Alginol Biofuels, an industrial biotechnology company working towards the production of fuel from algae headquartered in southwest Florida. “We’ve raised $190 million since we were founded in 2006 by Florida residents,” said Ahlm. “Our focus right now is on operating our pilot scale facility in Ft. Myers.”

Alhm said they are looking toward a commercial facility. “Our technology does not require farm land, food crops or fresh water,” he said. “We respect the issues around mandates and traditional ethanol but when we go into the investment community, this sends a very bad signal about continuing to grow in Florida.”

Because the committee ran out of time, the bill sponsored in the Florida House by Rep. Matt Gaetz of Fort Walton Beach will be carried over to the next meeting.

Listen to the ethanol bill portion of Friday’s hearing: Florida hearing

The U.S. House Energy and Commerce Committee has released a “white paper” analyzing the federal renewable fuels standard (RFS) and the so-called E10 blend wall. On page two, the white paper highlighted that new fuels are banned from competing with petroleum products unless first approved for use by the federal government. According to the Iowa Renewable Fuels Association (IRFA), this federal petroleum mandate hampers consumers from purchasing the ethanol blend of their choice.

“It has been more than five years since the RFS was last revised, and we now have a wealth of actual implementation experience with it,” the white paper explains. “In some respects, the RFS has unfolded as expected, but in others it has not. Several implementation challenges have emerged that received little if any consideration prior to passage of the Energy Independence and Security Act of 2007. Furthermore, the overall energy landscape has changed since 2007. It is time to undertake an assessment of the RFS.”

In addition, the white paper examines issues for producers, refiners, auto manufacturers, and fuel retailers. and poses a number of questions for discussion. The committee is requesting interested stakeholders to send responses to these questions by April 5, 2013.

“IRFA welcomes a full, fair, and factual review of the RFS by the House Energy and Commerce Committee.  However, the initial white paper focused on the so-called “blend wall” is very one-sided,” responded IRFA Executive Director, Monte Shaw. “In fact, it seems to approach every issue from the Big Oil point of view.  For example, despite the contention, there simply is no such thing as a real ‘E10 blend wall.’  The reality is that refiners are going to great lengths to construct an artificial blend wall through their own direct actions as an excuse to tear apart the RFS.  Such a conclusion by elected officials would be highly ironic given that the RFS was enacted with the expressed purpose of cracking the petroleum monopoly and forcing the oil companies to allow alternative options to compete – options like cheaper, cleaner, higher performing E15.

“In what was perhaps an unintended moment of balance, the white paper does highlight that federal law establishes a federal petroleum mandate – a federally enforced prohibition of any fuel that contains less than 85 percent petroleum.  The federal petroleum mandate is one of the biggest problems today preventing fuel competition, consumer choice, and lower cost fuel options for Americans,” concluded Shaw.

A highly respected oil economist believes the solution to the current Renewable Identification Numbers (RINs) price issue is more sales of E85 (85% ethanol).

Economist Phil Verleger has weighed in on the RINS situation in the latest edition of Notes at the Margin, his weekly email report about news impacting the petroleum industry. “The obvious solution to the RIN price problem involves no EPA intervention and no regulatory action,” Verleger wrote. “It simply calls for boosting E85 sales.”

Verleger explains that because refiners will be required by EPA this year to have 9/10s of a RIN for every 10 gallons of gasoline, and each gallon of E85 generates 0.85 RINs, a sale of 10 gallons of E85 produces a surplus of nearly 7.6 RINS which they can sell. “My point is that when the price of RINS gets high enough, that the price of E85 on a per BTU basis will be less than the price of gasoline,” said Verleger in a phone interview with Domestic Fuel. “At some point companies will almost be willing to give away E85 to get the RINS.”

According to Verleger, the RINS issue has been created by the resistance of some refiners to the RFS. “The oil industry doesn’t like to sell less oil,” he said. They want to get the program changed so that “they can sell more gasoline and not have to use as much ethanol.”

Listen to interview with Verleger here: Economist Phil Verleger