Administration Offers New Renewable Initiatives

usda-logoAs USDA announced the investment $68 million in 540 new renewable energy and energy efficiency projects nationwide today, the White House offered new administrative actions to advance solar deployment and promote energy efficiency.

Secretary of Agriculture Tom Vilsack made the USDA announcement while in North Carolina to highlight USDA’s investments in rural renewable energy projects being funded through USDA Rural Development’s Rural Energy for America Program (REAP). Vilsack visited Progress Solar in Bunn, N.C., which received a $3.4 million REAP loan guarantee in 2012 for installation of a solar array.

At the same time, President Obama announced new executive actions to further advance the development of solar technologies across the country which includes commitments from a broad coalition of 50 public and private sector partners, including leading industry, community development organizations and housing providers in 28 states. “USDA is proud to play a key role in Obama Administration’s efforts to promote the use of solar technologies,” Vilsack said. “Of the REAP projects funded today, 240 projects are for solar investments of $5.2 million in grants and $55.3 million in loans.”

In North Carolina alone, Vilsack announced $55.3 million in new REAP program loan guarantees and grants for 22 solar energy projects. For example, USDA is awarding a $3 million loan guarantee to Broadway Solar Center, LLC to help finance a 5 megawatt solar array in Columbus County, a $4.9 million loan guarantee for a similar project in Hertford County and a $2.1 million guarantee for a project in Warren County.

Iowa RFA Ad Challenges Biden on RFS

The Iowa Renewable Fuels Association (IRFA) took out a full page ad in today’s Des Moines Register to ask Vice President Joe Biden to set the record straight on reports that he may have intervened to reverse the Obama Administration’s previous support for the Renewable Fuel Standard (RFS).

biden-iowaWith the headline “Say it ain’t so, Joe” the ad questions the vice president about the story out of Philadelphia in May that he urged EPA to lower the RFS after receiving a call from a Pennsylvania congressman on behalf of a refinery owned by the politically connected Carlyle Group. “This report, if true, is deeply troubling. We hope you’ll take the opportunity today to set the record straight. And more importantly, work with us to fix the Administration’s flawed proposal. It’s not too late – but we need your help.”

IRFA and other individuals and organizations involved in Iowa’s renewable fuels industry wrote a letter to the Vice President asking him to clarify the reports and to discuss the issue with Iowans. “Because he has thus far not responded, IRFA is now addressing the issue more publicly with Biden as he visits Iowa today,” said IRFA.

The Vice President delivered remarks in Des Moines today at a kick-off event for the Nuns on the Bus “We the People, We the Voters” bus tour. Not surprisingly, he did not mention renewable fuels during his address.

Senate Committee Considers Energy Tax Reform

The Senate Finance Committee held a hearing today on Reforming America’s Outdated Energy Tax Code, led by chairman Ron Wyden (D-OR).

“It’s past time to replace today’s crazy quilt of more than 40 energy tax incentives with a
modern, technology-neutral approach,” said Wyden at the start of the hearing, adding that the disparity in how the tax code treats energy sources needs to end. “Traditional sources benefit from tax incentives that are permanently baked into law. But clean energy sources are stuck with stop-and-go incentives that have to be renewed every few years.”

The main goal of the hearing is to focus on extending the dozen or so tax incentives for alternative energy sources such as advanced biofuels, wind, and solar.

aeclogo“The title of the hearing is right,” said Advanced Ethanol Council Executive Director Brooke Coleman. “Investors are highly sensitive to protections offered by tax law, and today’s energy tax regime drives investment away from viable petroleum alternatives like cellulosic biofuels because oil tax breaks are richer and permanent. The short term fix is extending recently expired and existing tax incentives for clean energy this year, to buttress against those offered to fossil fuels permanently. But any broader discussion about America emerging as the leading energy innovator in the world starts and ends with the federal tax code. It simply won’t happen without serious energy tax reform.”

Among those testifying at the hearing today was former Sen. Don Nickles (R-OK), now a lobbyist who has represented several energy companies, who spoke against continuing wind energy tax incentives.

EIA: Nat Gas, Biofuel to be More of World Fuel by 2040

Natural gas and biofuels will make up the biggest share of the increase in what are known as “other liquid resources” in the world liquid fuel supply. The U.S. Energy Information Administration’s (EIA) International Energy Outlook for 2014 (IEO2014) says those fuels that include natural gas plant liquids (NGPL), biofuels, coal-to-liquids (CTL), gas-to-liquids (GTL), kerogen (oil shale), and refinery gain, made up just 14 percent of the world’s liquid fuels in 2010. But that number is expected to rise to 17 percent by 2040, driven by higher petroleum prices.
worldotherfuels1
NGPL are the largest component of the other liquids, accounting for 68% of the total in 2010 (Figure 14). The increase in NGPL production is directly correlated to the increase in natural gas production. In contrast, increased production of the remaining other liquids (primarily biofuels, CTL, and GTL) is in response to policies that encourage growth in the expansion of these liquids with available domestic resources, such as coal and crops. In the IEO2014 Reference case, sustained high oil prices make the development of the non-NGPL other liquids more attractive. In addition, biofuels development also relies heavily on country-specific programs or mandates. Combined, the remaining, non-NGPL other liquid fuels grow at more than twice the rate of NGPL over the projection period.

Brazil is expected to put in 500,000 additional barrels of biofuels per day, with another 300,000 additional barrels of biofuels coming from China.

Nat Gas, Solar and Wind Lead Power Capacity Adds

During the first half of this year, natural gas, solar and wind lead all sources when it comes to new utility-scale generating capacity to come online. This report from the Energy Information Administration (EIA) says that 4,350 megawatts (MW) of new utility-scale generating capacity came online, with natural gas making up the lion’s share of those additions but solar and wind made bigger proportional gains compared to the first six months of 2013.
eiaaddsjanjune2014
Utility-scale capacity additions in the first half of 2014 were 40% less than the capacity additions in the same period last year. Natural gas additions were down by about half, while solar additions were up by nearly 70%. Wind additions in the first half of 2014 were more than double the level in the first half of 2013.

Of the states, Florida added the most capacity (1,210 MW), all of it natural gas combined-cycle capacity. California, with the second-largest level of additions, added just under 1,100 MW, of which about 77% was solar and 21% was wind, with the remaining additions from natural gas and other sources. Utah and Texas combined for another 1,000 MW, nearly all of it natural gas combined-cycle capacity with some solar and wind capacity in Texas.

In addition to the large additions by natural gas, solar saw strong year-on-year growth, adding 1,146 MW. Wind basically more than doubled the amount added in the same period last year, putting 675 MW generating capacity online.

Biodiesel Imports Set Record for Year-to-Date

census-logoThe U.S. is importing biodiesel at a record rate for the year so far. This article from Platts cites U.S. Census Bureau data that shows imports reached a 2014 year-to-date record in July of 69,474 metric tonnes, more that twice the previous record set in March. Low palm oil prices seem to be the big driver, although biodiesel imports are far below last year’s overall levels when reinstatement of the $1-a-gallon federal tax credit made it profitable for blenders.

The top origin for US biodiesel imports in July was Indonesia at 24,043 mt, up 60% from the previous month and the highest since December 2013 when 52,350 mt were imported.

Traders attributed the surge in imports from Indonesia to lower palm oil prices.

A couple of producers from Indonesia are already registered with the EPA and would be capable of generating RINs if they ran an approved feedstock. Although palm oil has not been approved as an eligible feedstock to generate RINs under RFS2, grandfathered biodiesel plants — construction of which started prior to December 19, 2007 — can assign RINs with a D6 code to palm oil-based biodiesel if they keep up with the appropriate documentation.

Also, for the first time this year, imports from Argentina were recorded at 18,217 mt. A massive 441,772 mt were imported from Argentina in 2013.

More imports are seen coming from Argentina – a sign traders are pretty confident the blender’s credit will be restored and made retroactive. Political watchers believe that restoration could happen after November’s elections.

Air Force Turning Waste into Synthetic Diesel

synthetic-diesel1It takes a lot of energy to run the world’s most powerful military, and the U.S. military is looking at more non-petroleum options for its operations. This article from my favorite scientific blog, Armed with Science, talks about a method by the Air Force Research Laboratory’s (AFRL) Advanced Power Technology Office (APTO) to turn synthetic gas (syngas), which could be collected from waste sites even at the most forward of bases, into synthetic diesel.

APTO utilized a company with extensive experience in the Fischer-Tropsch (F-T) synthesis process. In this application, syngas is passed through a sealed reactor vessel over copper condenser tubes that are coated with a cobalt catalyst. Applying proper heat in the reactor causes a chemical reaction that results in synthetic diesel fuel. The fuel can be used in ground vehicles or diesel generators to create electricity for base operations.

The initial demonstration system, contained in a steel-framed skid for portabililty, produced less than one barrel of fuel per day. Further system refinements could increase the output, with the capability to improve to 10 barrels. Test results showed that the created fuel successfully operated a 20kW diesel generator.

The team created its own syngas supply through a methanol dissociation process, but APTO has other ongoing efforts to supply syngas through Waste to Energy systems that use biomass or municipal solid waste to create syngas.

Not only does this help ensure a fuel supply, but it also helps a base reduce its waste, while helping keep us less energy dependent on some parts of the world that might not be that friendly towards us.

RFS Headed to OMB for Review

epaThe Environmental Protection Agency has sent its final rule on 2014 volume obligations under the Renewable Fuel Standard (RFS) to the White House Office of Management and Budget for review in a last step before public release. Renewable fuels groups responded to the news today.

“We’re pleased to see the process moving forward and hope the final rule will show that this Administration is standing behind our national goals for clean, domestic fuels that strengthen our economy and national security,” said National Biodiesel Board Vice President of Federal Affairs Anne Steckel. “The original EPA proposal and continued delays have severely disrupted the U.S. biodiesel industry this year. We can begin to reverse that damage with a meaningful increase in the biodiesel volume that is finalized as quickly as possible so that producers can ramp up production in a timely fashion.”

“While we have not seen the rule, we hold strong in our belief that EPA and OMB will fulfill President Obama’s commitment to biofuels as a means of greater energy independence, lower greenhouse gas emissions, and wider availability of cost-saving alternative fuels for American consumers,” said Renewable Fuels Association president and CEO Bob Dinneen. “This decision is about more than targets and gallons, it is about a rationale that places highest importance on the long term strength of this country and not the bottom line of oil companies.”

“While OMB has up to 90 days to review this rule, what is most important is the content of the final rule,” added Growth Energy CEO Tom Buis. “Ultimately, this final rule should promote the policy goals of the RFS and call for an increase in the production of renewable fuels, so we can continue to reduce our dependence on foreign oil, create jobs at home that cannot be outsourced and mitigate climate change, while we improve our environment.”

Brian Jennings, Executive Vice President of the American Coalition for Ethanol, says his members are pleased with the progress. “Anything short of that turns the keys to the RFS over to the oil companies and puts cellulosic biofuel at risk,” said Jennings. “While all stakeholders have waited a long time for the final rule, and it could take another 30 days or more for interagency review, getting the rule done right is far more important than getting it done quickly.”

Since the rule is not public yet, there is no word on whether the volume requirements were changed from the initial proposal, which reduced the amount of ethanol and kept the biodiesel requirement the same. Senator John Thune (R-SD) expects some middle ground. “I think we’ll see an upward change,” he says. “I hope it’s a significant upward change and I hope that in ’15 they look at this in a different way.”

Thune still expects it will be later in the fall before a final rule is announced. EPA received over 340,000 comments on the proposal.

Funding for Renewable Energy Programs

usda-omannThe Energy Title in the 2014 Farm Bill included re-authorization of the Renewable Energy for America Program – or REAP – with funding for renewable energy projects.

USDA Rural Development Energy Coordinator Ron Omann says an additional 50-million dollars of mandatory funding and up to 20-million dollars of discretionary funding have been dedicated to REAP for fiscal years 2014 through 2018, and funding for this year and next are being combined. “We’re going to be putting both ’14 and ’15 monies together which amounts to $100 million total for projects,” said Omann. That includes funding for both the Renewable Energy System and Energy Efficiency Improvement Guaranteed Loan and Grant Program and the Energy Audit and Renewable Energy Development Assistance Grant Program.

Omann says they are working to simplify the application process. “Generally, we want to streamline it and make it less of a barrier to get into it,” he said, adding that they are implementing specific changes in the application process for projects of less than $80,000.

For those interested in applying for REAP funding, Omann says each state has its own template to help with the application process, but it helps to keep it small and simple.

Find out more about REAP here.

MN Gubernatorial Candidates Differ on Biofuels

mn-flagAll politics is local, and how some local and regional elections this year could help determine the fate of biodiesel and ethanol for a much larger area. Case in point, this article from the St. Cloud (MN) Times looks at how the four Republicans vying for their party’s nomination to take on current Democratic Gov. Mark Dayton in November have differing views on biofuels as they go into the August 12 Republican primary in that state.

A Marshall resident and former state representative, [Marty] Siefert said the state has created thousands of jobs, and the state should not change the requirement that gasoline include 10 percent ethanol.

“I see this as the status quo for now,” he said, not jumping on a bandwagon to increase ethanol percentages.

For diesel, Seifert said, he can understand concerns about biodiesel gumming up fuel filters in cold weather. “Biodiesel mandates are not going to go up if I’m governor.”

Raised on a North Dakota farm and now a Maple Grove resident, [Kurt] Zellers said he wants to look into increasing the ethanol mandate to 15 percent but needs more information before fully supporting it.

At minimum, he said, he wants to keep existing mandates in place.

[Jeff] Johnson, who grew up in Detroit Lakes and lives in Plymouth, said he favors eliminating mandates from state law, including those affecting biofuels.

However, he added, he has been around government enough to know that the mandates cannot be eliminated right away.

“Government has created somewhat of a dependency,” Johnson said, adding that eliminating biofuel mandates is not a priority and that he would like to phase them out.

There is none of that waiting for [Orono businessman Scott] Honour.

“I would try to push away from mandates as quickly as possible,” Honour said. “My view is that the less government is trying to influence a free market, the better.”

So there you have it Minnesotans. Choose wisely when you go to the polls on August 12.

Collin Peterson Honored for Ethanol Support

ace14-merle-collinThe American Coalition for Ethanol meeting in Minneapolis this week honored Congressman Collin Peterson of Minnesota with its highest award for supporters of ethanol, the Merle Anderson award. Anderson himself presented Peterson with the award, as well as an ethanol lapel pin and five dollars for his campaign.

Peterson says ethanol has been great for agriculture and he continues to fight for it in Congress. “It’s just been a tremendous success story in agriculture because it’s changed the marketplace so farmers can get a decent price for their corn,” he said. “We do have our opponents and they are still working to undermine things,” he continued, noting that just last week Rep. Bob Goodlatte (R-VA) attempted to bring up a bill to get rid of the RFS. “They want to go back to $1.85 corn and I tell them if they are successful they will rue the day because nobody can grow corn for $1.85.” Peterson says the only way farmers survived when prices were $1.85 a bushel was because of the government subsidy “and that’s gone.”

Peterson remains hopeful that the EPA will eventually come out with a better final rule on the 2014 volume obligations for the RFS. “I think the fact that they delayed this for now a third time shows they are listening,” he said. “It appears to me that they realize they made a mistake here and they’re trying to figure out how to undo it.” He thinks it could be next year before the rule is final, but “a delayed decision is better than a bad decision.” Interview with Rep. Collin Peterson (D-MN) at ACE Conference

27th Annual Ethanol Conference photo album

Grassley Adds Biodiesel, Wind Amendments to Jobs Bill

grassley-headA U.S. senator has filed amendments to a jobs bill that would renew the expired wind energy and biodiesel tax incentives… although he admits it could be just political posturing. Sen. Chuck Grassley (R-IA) wants to add the renewals to the Bring Jobs Home Act, which he says really is just political messaging and not a serious jobs bill.

“I don’t expect to be allowed to offer my amendments because the Senate majority leader shuts out amendments from the Republican side,” Grassley said. “But I want to draw attention to the potential growth in a sector of the economy that’s right under our noses. This area could get a real boost if the majority in Congress chooses to act to restore these tax incentives.

“In fact, if the majority leader were really interested in jobs, he would devote floor time to debating and processing the pending bipartisan tax extenders legislation as it should be processed, in its entirety, to provide certainty to businesses and individuals alike. There’s no reason this tax relief legislation should be left to sit on the sidelines. Instead, it should be front and center in any effort to spur job-generating economic activity.”

Grassley had already secured renewal of the expired wind energy and biodiesel tax provisions, which expired at the beginning of this year, in a tax measure passed out of the Finance Committee back in April, but that bill is still awaiting action from the full Senate.

Navy Adds Biofuels to Fuel Shopping Cart

greenfleetbiofuels1The latest government procurement report shows the U.S. Navy has for the first time put biofuels in the mix for requests for military-specification diesel fuel and jet fuel. This story from U.S. Energy Information Agency (EIA) says the request is for the eastern and inland United States and Gulf Coast and is expected to the Rocky Mountains and West Coast later this year.

The U.S. Navy’s interest in biofuels is part of its goal to generate 50% of its energy from alternative sources by 2020: nuclear energy, electricity from renewable sources, and biofuels. The Navy currently sources about 17% of its energy supplies from renewable and nuclear sources of electricity. No biofuels are currently included in that percentage.

The Navy’s interest in biofuels is limited to those fuels that can be used as direct replacements for petroleum-based gasoline and distillate fuels, also known as drop-in biofuels. These fuels require no modification or operational changes to distribution infrastructure, aircraft, or ships. Although biodiesel blends readily with diesel fuel or jet fuel, and is compatible with most diesel engines, it is not a drop-in fuel. Certain properties limit biodiesel blends from being used in some applications: potential fuel system clogging and poor performance at low temperatures prevent its use in jet fuel for civilian or military use, and water separation problems prevent its use as a marine diesel fuel. Drop-in biofuels are available today on a limited commercial basis, and operable U.S. production capacity is about 210 million gallons per year.

Companies wanting to make a bid to offer drop-in biofuels under the current solicitation can apply to the USDA Commodity Credit Corporation for grants to offset the cost of feedstocks used to produce the biofuels. Some drop-in biofuels might also qualify for Renewable Identification Numbers (RINs).

White House Gathers Senate Dems on RFS Proposal

nbb-senatorsIn what could be seen as a sign that an unpopular decision is about to be rendered by the Obama Administration on ethanol and biodiesel, a select group of Senate Democrats have met with the White House. The Hill reports White House adviser John Podesta met with the group on Thursday to discuss the Environmental Protection Agency’s (EPA) plans regarding the Renewable Fuel Standard (RFS).

The senators said they wanted to discuss “urgent concerns” with the RFS, which requires that diesel and gasoline refiners mix a certain amount of renewable fuels such as biodiesel and ethanol into their traditional fuels each year. The Environmental Protection Agency proposed last year to keep the biodiesel volume in 2014 at least year’s level, despite an increase in biodiesel production, and reduce the ethanol volume.

The EPA has not yet finalized its 2014 volumes for renewables.

[Minnesota Senator Al] Franken and his colleagues took particular issue with the biodiesel mandate.

“Such a decision would not only harm the economic growth surrounding biodiesel production in our states, but would be a setback in our national efforts to continue boosting U.S. energy security while also reducing greenhouse gas emissions,” they wrote.

The National Biodiesel Board (NBB) seems concerned about the meeting as well and issued a statement from from Vice President of Federal Affairs Anne Steckel:

“While we are encouraged by these discussions, the biodiesel industry remains concerned that the Administration still appears to be considering a proposal that would backtrack from last year’s proven production and that threatens biodiesel plants around the country. The fact is that biodiesel is the most successful Advanced Biofuel under the RFS, yet it could see its production cut significantly. This meeting, which was originally requested by a diverse group of 14 Democratic senators from across the country, makes clear that there are serious concerns about the impact that the proposal would have on jobs and economic growth nationwide, in states from Rhode Island to Minnesota to Washington state. This is a critical decision, not just for the biodiesel industry but for the future development of clean, American-made renewable fuels that will help us reduce our dangerous dependence on petroleum.”

Many of those senators participating in this week’s meeting were also critical back in May on the Obama Administration’s proposal to cut the amount of biodiesel and ethanol to be mixed into the nation’s fuel supply, with some of the President’s staunchest backers calling it “disastrous” and a miserable failure of policy.

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.