Domestic Fuel

One of the big issues that continues to dog the biofuels business, especially ethanol production, is the use of food crops as fuel sources. While many have made the case that the crops can provide both food AND fuel (consider the dried distillers grains from ethanol production, for example), a New Jersey-based company thinks it has a way to remove the food part from the debate altogether.

In this edition of the Domestic Fuel Cast, we talk to Kef Kasdin, CEO of Proterro, as she tells us about her company’s method of actually creating, not extracting, sugars. You’ll be able to hear how this process makes sugar for as low as 5 cents/pound… a pretty good bargain compared to 10-20 cents/pound of more conventional methods.

You can listen to the Domestic Fuel Cast here: Domestic Fuel Cast - Proterro Creating Sugars for Biofuels

You can also subscribe to the DomesticFuel Cast here.

And you can check out the video below to get a better explanation of how the process Kasdin describes works.

Apparently tired of false claims that biodiesel takes from the food supply, biodiesel maker Renewable Energy Group has put out a whitepaper that actually shows how the green fuel is helping the food supply. Biodiesel Magazine has this good summary of “Food THEN Fuel: How the American Biodiesel Industry Is Strengthening Food Security.”

“[C]ritics of biofuels have [tried] to convince the public that biodiesel is merely part of an amorphous group of energy sources that share the same alleged disadvantages,” the paper states. “Indeed, they would have the public believe that biodiesel not only depletes the food supply by creating a competing use in fuel, but that it also contributes to higher prices at the grocery store. In reality, biodiesel is playing a vital role in strengthening America’s food security and reducing rising pressures on food prices. Rather than competing with food, biodiesel production applies a “food THEN fuel” approach by adding economic value for food industry byproducts and sending economic signals to the market to produce more. Biodiesel production helps make the food and agricultural sectors more profitable, incentivizes the production of protein and generally helps keeps grocery items, like meat, from increasing in price more than they already would due to inflation and petroleum energy costs.”

Some of the facts REG cites are that soybean oil is the historic primary feedstock for U.S. biodiesel and still makes up the largest single feedstock used. With the soy oil used for biodiesel, that still leaves more than 80 percent of the bean to be made into meal for livestock, keeping feed costs down for livestock producers.

In addition, other feedstocks for biodiesel, such as animal fats and used cooking oils, have created value-added markets in those food industries to help farmers and restaurant owners make more money and allow them to them to produce even more food at cheaper prices.

As always, the Global Perspectives and Washington Insiders panels at the National Ethanol Conference were as entertaining as ever. The panels routinely feature representatives from other organizations that may not share the same viewpoint of the Renewable Fuels Association (RFA), allowing the opportunity for some interesting dialogue.

Global Renewable Fuels Alliance spokesperson Bliss Baker served as the moderator/referee for the global panel which featured RFA CEO Bob Dinneen; Canadian Renewable Fuels Association president Scott Thurlow; Rob Vierhout, Secretary General of ePURE; UNICA CEO Elizabeth Farina; and Poul Ruben Andersen with Novozymes A/S.

Noting the panel placement of Canadian Thurlow between Dinneen and Vierhout, Baker commented, “Some of you may be familiar with Canada’s tradition of peacekeeping,” he said. “Scott may have to assume that role of peacekeeper when we talk about our first issue” which was Europe’s trade challenge to U.S. ethanol imports. “I find it a little bizarre that we are in this spat that we are in today, attacking one another,” Baker said, throwing the floor open to Veirhout to explain “what were you thinking?”

Listen to the panel here: NEC 13 Global Panel

This year’s Washington Insiders panel included (L to R) – Marty Durbin, Executive Vice President, American Petroleum Institute; Shane Karr, Vice President, Federal Government Affairs, Alliance of Automobile Manufacturers; Louis Finkel, Executive Vice President, Government Affairs, Grocery Manufacturers Association; and James Massie, Principal, The Alpine Group (the “insider’s insider”).

Interesting exchange on the panel came between Dinneen and GMA’s Finkel regarding the impact of the Renewable Fuel Standard. Challenging Finkel’s claim that the production of corn ethanol under the RFS has had a “significant” impact on food costs, Dinneen asked if he would say that oil prices also have a significant impact on the price of food. “I don’t think it has a significant impact,” Finkel replied. “I think it has an impact on the cost of transporting our food.”

“You’re a good advocate for your industry,” Dinneen responded.

Listen to the whole panel here: NEC 13 Insiders Panel

2013 National Ethanol Conference Photo Album

2013 NEC Golf Tournament Photo Album

Earlier this month, the U.N. Committee on World Food Security (CFS) has released a draft study on biofuels and food security with a public comment period until January 30, 2013. Yesterday, the Renewable Fuels Association (RFA) submitted comments about the report and its several policy recommendations.

The authors write, “Our report has confirmed the central role of biofuels in provoking high and volatile food prices, and therefore, we point to the fact that there is enough evidence to call in question the use of mandates/targets together with subsidies and tariffs where these artificially stimulate biofuels production. Our Report concludes, however that in the context of persistent high oil prices, biofuels from maize in the US and from sugar-cane in Brazil can be, for different reasons, market competitive. In this situation, we must advance beyond the discussion of mandates and subsidies to include mechanisms for controlling the growth of biofuels markets. The recent EU Directive has moved in this direction, and while the EPA in the US has rejected the suspension of targets, maize/ethanol has almost reached its current allocated share of the biofuels market. Policies should now be directed at ensuring that domestic ceilings are not made innocuous by the emergence of a global biofuels market.”

Geoff Cooper, RFA’s Vice President for Research and Analysis, explained that the draft report “needs substantial revision before it can be submitted for official peer review. Not only does the report fail to discuss potentially positive impacts of biofuels expansion on food security, but it also inappropriately expands the intended scope of the study, blatantly disregards input from the May 2012 consultation, fails to include a comprehensive literature review, and adopts highly questionable assumptions regarding animal feed co-products, crop yields and other factors.”

The RFA comments reflect the association’s belief that “biofuels are providing tangible benefits and positive outcomes for both the world’s farmers and consumers. Biofuels have already proven themselves as agents of economic development, environmental improvement, and social progress in many developed nations. We believe biofuels can bring the same benefits to developing nations without jeopardizing food security. In fact, biofuels have the potential to serve as an important tool in reducing food insecurity. Indeed, we agree with the U.N. Food & Agriculture Organization (FAO) that: ‘…investment in bioenergy could spark much-needed investment in agricultural and transport infrastructure in rural areas and, by creating jobs and boosting household incomes, could alleviate poverty and food [in]security.’”

You can read RFA comments in full here.

This week I read, “Demystifying Food from Farm to Fork,” by Maurice J. Hladik. Many of you may be familiar with Hladik, an agricultural expert who has spoken at events all around the world including Commodity Classic. The goal of the book is to take a look at food production from “farm to fork”.

As with many concepts, farm to fork can be defined in many ways. Hladik defines it as, “Pertaining to the human food chain from agricultural production to consumption. In other words, from our readers farm to my table.”

As Hladik takes the reader through the varying stages in between the planting, growing and harvesting of food through manufacturing and eventually to the table, he explained the pros and cons, addressed any surrounding controversies and presented both sides of each argument. For this I was very impressed, as many writers take the view of “it’s my way or no way”.

Hladik also points out certain areas that he says are portrayed in the media as myths. One area he addressed was that of ethanol production and food prices. He writes, “There is a widespread conviction that the use of massive quantities of corn for the production of ethanol, and to a lesser extent soy beans for biodiesel, substantially contributes to hunger throughout the world….In reality, there is enough food in the world to go around, but getting it to all those who need it is a challenge.”

He continues by writing that the world does not need all the corn and other grains that are dedicated to biofuel production, and thus corn might as well be used for this purpose (he also rightly points out that a diet solely of corn does not constitute a balanced diet). In addition, he explains during his examination of “food versus fuel” that because of the increased need for corn for ethanol, along with the fact that growers are harvesting more bushels per acre than ever before, that should the unforeseen happen, the corn can be diverted to other areas – in essence, ethanol production is “money in the bank”.

This book is very well suited to those of us who are not very familiar with agriculture, and gives the reader a good, brief introduction into all the steps it takes to deliver our food to the table.

How do you keep an expected world population of 9 billion people by the year 2050 fed AND meet the world’s energy needs? Our friends at Farm Foundation are taking on those challenging questions, hopefully with some good answers through their new blog, AgChallenge2050.org.

“It’s an opportunity for more people to be involved in the conversation,” said Mary Thompson, Farm Foundation’s Vice President, Communications, adding there are four key areas of consideration: role of science and technology in agriculture, farm and food policy, adaptability resistance, and human capital needs in agriculture and the food system. “We have contributors who will be twice a week posting new ideas and new perspectives in those four areas, and we will encourage all types of stakeholders to come in and be part of the conversation.”

And don’t forget, Farm Foundation has another one of their forums coming up this Wednesday, November 14th looking at what the recently completed election means to agriculture, food and rural policies. It will be held at the National Press Club in Washington, DC and webcast. Click here for more information.

Listen to Cindy’s interview with Mary here: Mary Thompson, Farm Foundation

2012 NAFB Convention Photo Album

A new coalition forms to fight back against the push against the Renewable Fuels Standard… a fight prompted by the drought and the pressure the drought is causing on the most common feedstock for ethanol, corn. During a recent news conference, former congressman and now CEO of the Biotechnology Industry Organization… or BIO… Jim Greenwood was one of the leaders of the new coalition dubbed Fuels America, a diverse group of interests, including renewable fuels, national security, renewable energy and other stakeholders. Growth Energy, the Renewable Fuels Association, the American Coalition for Ethanol, the National Corn Growers Association, BIO and the Advanced Ethanol Council are part of Fuels America, as well as several biofuel companies, such as DuPont, POET and Novozymes.

In this edition of the Domestic Fuel Cast, listen in as Greenwood is joined by Novozymes president Adam Monroe, Marion (Ohio) Chamber of Commerce president Pam Hall, and ZeaChem president and CEO Jim Imbler who make the case for preserving the RFS.

You can listen to the Domestic Fuel Cast here: Domestic Fuel Cast

You can also subscribe to the DomesticFuel Cast here.

According to an analysis by the Biotechnology Industry Organization (BIO), “food before fuel” is a fight between states. After reviewing eight waiver requests from governors submitted to the U.S. Environmental Protection Agency (EPA), a common argument was farmers in other states have to provide their states’ livestock industries corn. The waivers request a halt, or lowering, of the amount of ethanol that should be blended into fuel as mandated by the Renewable Fuel Standard (RFS). The current drought that has impacted the majority of the U.S. is causing heated discussions about who should get the corn.

It wasn’t until recent years that farmers in the U.S. could grow corn at a profit. Instead, most had to rely on federal payments or subsidies. Interestingly, while corn farmers in the Midwest created a new and growing market with ethanol and its by-products, those in Southern states where the waivers were primarily filed, lagged behind the U.S. average in achieving profitability. The core reason: growers were focused on only one market, the livestock industry.

It should be stressed that the corn used for livestock feed and ethanol is NOT the corn used in your corn tortilla. That said, yes, humans are indirectly eating the corn when eating meat (unless the animal was grass fed). But what many don’t understand or choose not to acknowledge, is that one by-product of ethanol production is a high protein based distillers grain, or high-protein animal feed. So you are not losing the entirety of the corn bushel to produce ethanol – that same bushel is also producing feed. In otherwords, a bushel of corn produces food AND feed AND fiber.

The analysis points out, rightly so, that what the growers in the Southeastern states should be looking for ways to increase their profitability. “Additional markets for corn – such as conventional biofuel production – could add value to corn grown in Southern Seaboard states.”

The wonderful thing about market dynamics, and the way the RFS was written, is that they are working. The marketplace is sorting out the difference between supply and demand and to intervene would only create a more negative impact than the drought has already.

Click here to read BIO’s RFA Waiver Analysis.

While a new report shows that a waiver of the Renewable Fuels Standard could drop corn prices, the impact would not be felt this year and could vary. The Purdue University report, entiled Potential Impacts of a Partial Waiver of the Ethanol Blending Rules, was authored by the school’s Wally Tyner, Farzad Taheripour and Christopher Hurt and presented today in a Farm Foundation webinar. It says corn prices could drop anywhere from 47 cents to $1.34 per bushel, depending on what level the drought impacts the final harvest, how big the waiver is, and how many unused Renewable Fuel Identification Numbers (RINs) are cashed in. But livestock producers and consumers would not see any benefit this year.

Tyner explained that technical and financial incentives could determine the impact of the waiver. “If refiners and blenders cannot change for technical reasons what they’re doing now, then a waiver has very little impact. But if they do have flexibility, then there is potential for a waiver having an impact,” Tyner said. Hurt added that there could be some unintended consequences, including what he calls demand destruction. “If we return to normal production in the next 12 months, then we have a fairly large supply, we have the possibility of looking at a 15 billion bushel corn crop with a utilization base of 11 billion bushels,” pointing out that we could see prices swing back to extremely low prices as quickly as they rose to these current high prices.

Paragon Economics’ Steve Meyer and the University of Minnesota’s Vernon Eidman were also listening in on the call and offering their perspectives. Meyer said the projected reduction in corn prices could translate into $2.60-3.50 per head on hogs. “We’re not talking about peanuts here.” But Eidman was quick to point out any RFS waiver would not impact corn use for ethanol this year. “It will take more time than that to get the rollback to occur,” Eidman said.

All on the webinar agreed that the EPA should not rush to issue any judgment until more complete information is known about the corn harvest, most likely in the next couple of months. “It’s important to get this right,” concluded Eidman.

It’s a really good conversation, and you can hear the entirety of it here: Farm Foundation-Purdue Webinar on Drought and RFS Waiver
You can see the associated slide show here.

Ethanol has been scapegoated for just about every blip in food markets in recent years, but the question of whether that is fact or fabrication was taken on during the recent 17th annual National Ethanol Conference.

In keeping with the NEC’s tradition of generating constructive debate by exposing members to opposition viewpoints, the Food Versus Fuel panel included Dr. Steve Meyer of Paragon Economics, who has been an outspoken opponent of ethanol from the viewpoint of livestock producers in particular. The panel was set up in a “point-counterpoint” format, with USDA International Affairs Specialist Dr. Gerard Ostheimer taking the “point” position and leading off the discussion.

Following on the heels of a rousing speech of Agriculture Secretary Tom Vilsack, Dr. Ostheimer thanked ethanol producers for their contributions to America’s energy portfolio and noted that the energy policy for development of biofuels was deliberately set up to grow slowly. “We understood that increasing this demand would have an effect on global markets and price and so we chose to do so, not in a shocking way, but in a steady, clear and transparent way and the result has been phenomenal.”

Ostheimer, who represents the United States to the Global Bioenergy Partnership, noted that there are several factors that contribute to commodity prices over the next decade, most importantly being demand from countries like China. “Because they’re growing and they want to eat more meat,” he said, adding that input costs are also a huge driver of prices. “We feel that in the developing world we can create synergy between improved energy access from bioenergy, which will improve agricultural yields, which will lift all boats for all people.”

Dr. Meyer opened his remarks by stressing that he is “not opposed to ethanol…expensive oil and gasoline clearly provide an opportunity for ethanol and are a reason that we should continue to make biofuels.”

However, he says his problem with ethanol stems from U.S. energy policy. “The supply of total feed grains and high energy feed ingredients for U.S. livestock, poultry and dairy sectors has gone down,” Meyer claimed, showing data that contradicted Ostheimer’s.

Meyer showed a picture of a starving Ethiopian child being watched by a vulture – a Pulitzer Prize winning photo taken in 1993 that he noted had “nothing to do with ethanol.” While contending that global food prices have increased dramatically since 2006, Meyer also admitted that more food is not the entire answer. “The real thing is that we have to have economic development,” he said. “These people have to have a way to grow food and earn a living and have a way to have a voice in a stable government.”

The use of the shocking photo that had nothing to do with ethanol’s impact on food prices offended many in the audience and helped to justify the claims of the ethanol industry that their opponents use emotionalism, misinformation and fabrication to work against the development of biofuels. “I didn’t think that was at all constructive,” said Renewable Fuels Association president Bob Dinneen. “That has no place in a reasonable dialogue.”

Listen to or download the NEC Food vs. Fuel debate here: NEC Food vs. Fuel Panel

2012 National Ethanol Conference Photo Album

As the Global Forum for Food and Agriculture draws to a close in Berlin, the Global Renewable Fuels Alliance (GRFA) has challenged new United Nation’s Food and Agricultural Organization (FAO) Director General Jose Graziano Da Silva on his critique of biofuels and their alleged impact on commodity prices.

“Mr. Da Silva has failed to recognize that the rising price of energy is the primary driver in the rising cost of all commodities including corn and sugar,” said GRFA spokesperson, Bliss Baker.

Many international organizations have back tracked on their criticism of biofuels based on research which has found biofuels to have played a very minor role in the escalation of food prices globally. In fact, David Hallam, the FAO’s own Deputy Director has said that “unexpected oil price spikes could further exacerbate an already precarious situation in food markets.”

“Mr. Da Silva would do well to listen to the International Energy Agency’s dire warnings about our energy security future when commenting on biofuels,” said Baker. “The IEA concluded that biofuels could provide 27 percent of total transport fuel by 2050 and avoid around 2.1 gigatonnes of CO2 emissions per year when produced sustainably without jeopardizing food security,” said Baker.

The GRFA has repeatedly called for an increase in the use of biofuels to help reduce the world’s crippling reliance on crude oil.

“I would urge the new FAO Director General to focus on the real cause of high food prices – the rising cost of energy,” added Baker.

A Texas corn grower says the “feed versus fuel” debate is based in fallacy.

Texas Corn Producers Board member Wesley Spurlock of Stratford has been speaking to groups across the Midwest explaining how U.S. corn farmers continue to grow a crop abundant enough to meet all growing demands and he has gained attention from industry publications looking to find the truth behind the headlines.

“To put it simply, growth in demand from the ethanol industry has mirrored an increase in productivity that yields larger corn crops,” Spurlock said. “We are still supplying the livestock industry with the corn that they need for feed, but we now have a market that utilizes an increasingly abundant resource to help solve our energy problems also.”

Listen to an interview with Sprulock in the National Corn Growers Association’s podcast series “Off the Cob” discussing how corn farmers are growing a larger crop on the land already in production while decreasing inputs used. During this interview, he also discusses the innovations facilitating increased yield trends, how the Texas drought plays a major role in recent cattle industry shifts, and the amazing story of modern American agriculture.

According to the American Farm Bureau Federation (AFBF), the retail cost of menu items for a classic Thanksgiving dinner including turkey, stuffing, cranberries, pumpkin pie and all the basic trimmings increased about 13 percent this year. That’s still less than $50 to feed ten people – not even $5 per person.

The turkey itself is what gobbled up most of the price increase this year. According to AFBF, a 16-pound turkey will cost about $21.57 this year at $1.35 per pound, an increase of about 25 cents per pound over last year. That triggered some misinformed columnists to start crying fowl and place the blame for the higher price on ethanol, as pointed out in a blog post from Growth Energy.

“Our biofuels policies are a big cause of the rising cost of food in recent years, and it just feels wrong to use food for fuel with so many families struggling to feed their families,” wrote Marie Brill of ActionAid in the Huffington Post, adding that “federal ethanol subsidies … are driving up the price of everything from eggs to milk to — yes, turkeys — and undoubtedly, some families will just have to go without.”

However, AFBF economist John Anderson says it’s more a case of basic economics – supply and demand. “Turkey prices are higher this year primarily due to strong consumer demand both here in the U.S. and globally,” said Anderson.

A more well-rounded and less emotional look at the cost of turkey comes from New York Times’ Wealth Matters columnist Paul Sullivan. “It turns out that turkey pricing is not much tied to commodities prices. Instead, other factors, like tight margins for farmers and perceptions of value, play a much bigger role,” he explains. “For most of us, the price we pay for our turkey bears little relation to what it costs to raise it.”

Read “Let’s Talk Turkey” from Growth Energy.

The Global Renewable Fuels Alliance (GRFA) is calling comments made this week by a Qatari government advisor about biofuels contributing to world hunger “self-serving.”

At a global grains summit in Turkey on Monday, Quatari food security program advisor Mahendra Shah was quoted as saying, “Biofuels will trigger an increase in agricultural prices. Biofuels will result in another 120 million people hungry, just because we’re growing biofuels.” He cited a study by the Organization of the Petroleum Exporting Countries Fund for International Development (OFID) which claims the use of crops for biofuels is forecast to raise food prices by 30 percent to 50 percent by 2050.

Noting that the report cited was funded by OPEC’s International Development arm, GRFA spokesperson, Bliss Baker said, “This so-called report from 2009 cannot withstand any level of academic scrutiny and is a self serving attempt to distract people from the real impact that energy prices are having on global commodities.”

“Qatar, a key OPEC member and promoter of this report, derives 85% of its export earnings and over 70% of its government revenues from crude oil. Qatar’s agenda is to promote crude oil and discredit alternatives like biofuels,” Baker added.

According to GRFA, there is evidence that demonstrates that the OFID report is wrong, including a 2011 study by the International Energy Agency that says “by 2050, biofuels could provide 27% of total transport fuel” and will “not compromise food security”. The GRFA recently published data showing a clear and direct link between crude oil prices and the UN FAO’s Food Price Index.

A new study has looked at the “real” impacts of U.S. biofuels production both domestically and internationally and has concluded it is “negligible or nonexistent.” The research was coauthored by Dr. Seungdo Kim and Dr. Bruce E. Dale and was published in the July issue of Biomass and Bioenergy Journal under the title, “Indirect land use change for biofuels: Testing predictions and improving analytical methodologies.”

“It is the first evidence-based evaluation of ILUC utilizing actual historic data, employing a ‘bottom-up’, data-driven, statistical approach based on individual world regions’ land use patterns and commodity grain imports,” stated Dr. Roger Conway, senior partner at Rosslyn Advisors LLC and former director of the United States Department of Agriculture’s Office of Energy Policy and New Uses.

The authors say that very few previous studies have attempted to find empirical evidence for or against indirect land use change from historical data, rather most studies rely on global economic simulations.

Dale said, “Unlike most other ILUC work this study relied on very few assumptions and did not attempt to quantify nor to predict ILUC effects. We searched for direct historical evidence for ILUC in relevant world areas rather than attempting to project or predict what course ILUC might take. Projecting forward can force scientists to make untestable assumptions.”

This study was unique in that is used data from 1990, when the U.S. biofuels industry was very small, as its baseline. It then measured crop changes against that as U.S. ethanol production has significantly grown during the past decade.
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