Domestic Fuel

New numbers from the EPA show that biodiesel production in the U.S. hit 110 million gallons in April … staying on pace to hit more than a billion gallons for this year. The National Biodiesel Board hopes the green fuel can exceed targets set under the Renewable Fuel Standard (RFS) for a third consecutive year:

The numbers show a total of more than 118 million gallons of Biomass-based Diesel for April, but that total also includes production of renewable diesel. The biodiesel portion of the total was 110 million gallons – roughly the same production as in March and putting year-to-date biodiesel production through the end of April at almost 369 million gallons.

NBB also points out that the biodiesel industry supports about 50,000 jobs across the country.

The Environmental Protection Agency has announced proposed Renewable Fuel Standard (RFS2) amendments and clarifications, which include new pathway determinations for advanced biofuels such as isobutanol and ethanol from crop residues.

The EPA proposal also includes “various changes to the E15 misfueling mitigation regulations (E15 MMR) which are minor technical corrections and amendments to sections dealing with labeling, E15 surveys, product transfer documents, and prohibited acts” as well as changes to the survey requirements associated with the ultra-low sulfur diesel (ULSD) program.

EPA is proposing to allow renewable diesel, renewable naphtha, and renewable electricity (used in electric vehicles) produced from landll biogas to generate cellulosic or advanced biofuel RINs. Renewable compressed natural gas (CNG)/liquified natural gas (LNG) produced from landfill biogas are also proposed to generate cellulosic RINs. EPA is also proposing to allow butanol that meets the 50% GHG emission reduction threshold to qualify as advanced biofuel. The rulemaking also proposes a clarication regarding the definition of crop residue to include corn kernel ber and proposes an approach to determining the volume of cellulosic renewable identication numbers (RINs) produced from various cellulosic feedstocks. Further, this proposal discusses and seeks comment on the potential to allow for commingling of compliant products at the retail facility level as long as the environmental perfor­mance of the commingled fuels would not be detrimental. The action also addresses “nameplate capacity” issues for certain production facilities that do not claim ex­emption from the 20% GHG reduction threshold. Several other amendments to the RFS program are included.

“This proposed rulemaking package is essentially a collection of ‘housekeeping amendments’ that will address several odds and ends that needed to be addressed in the regulatory text,” commented Renewable Fuels Association president and CEO Bob Dinneen. “We are pleased that among these proposed amendments is a provision clarifying that ethanol produced from the cellulosic portions of the corn kernel can qualify as cellulosic biofuel under the RFS2.”

“Companies continue to make investments, put steel in the ground, create jobs and develop technologies that reduce dependence on foreign oil and contribute to a cleaner environment,” said Brent Erickson, executive vice president of the Biotechnology Industry Organization’s (BIO) Industrial & Environmental Section. “They are preparing to make additional investments with assurance that U.S. policy is committed to energy security and production of biofuels.”

The proposal has been submitted to the Federal Register for public comment.

Biofuels producers in 38 states recently received payments from the U.S. Department of Agriculture. Acting Under Secretary for Rural Development Doug O’Brien made the announcement, pointing out these payments of nearly $14 million to 162 producers are still going out, even with the current budget cuts:

“These payments represent the Obama administration’s commitment to support an ‘all of the above’ energy strategy,” O’Brien said. “Producing advanced biofuels is a major component of the drive to take control of America’s energy future by developing domestic, renewable energy sources.”

The funding is being provided through USDA’s Bioenergy Program for Advanced Biofuels, which was established in the 2008 Farm Bill. Under this program, payments are made to eligible producers based on the amount of advanced biofuels produced from renewable biomass, other than corn kernel starch. Examples of eligible feedstocks include but are not limited to: crop residue; animal, food and yard waste material; vegetable oil; and animal fat. Biofuel can be from a variety of non-food sources, including waste products.

Biodiesel Magazine reports most of the current payments are to biodiesel producers.

In the five years the program has been in effect, the USDA says more than 280 producers in 45 states and territories have received $192.5 million, supporting the production of more than 3 billion gallons of advanced biofuels. A full list of payees is available here.

The U.S. Senate today confirmed Ernest Moniz to replace Steven Chu as the Nation’s Secretary of Energy. The 96-0 vote was welcomed by biodiesel and ethanol groups:

“Throughout his career, Ernest Moniz has supported efforts to move beyond fossil fuels to a cleaner, more secure energy future in which renewable sources play a prominent role,” said Anne Steckel, vice president of federal affairs for the National Biodiesel Board. “He knows that advanced biofuels like biodiesel are critical to our long-term energy and environmental security, and he has supported practical policies aimed at developing renewables in order to reduce our dependence on petroleum, create jobs and reduce harmful emissions.”

Michael McAdams, president of the Advanced Biofuels Association, issued a statement in support of the confirmation. “We are pleased that President Obama tapped such a strong advocate for policy that supports solid energy growth and is a friend of the advanced biofuels community.”

“I would like to congratulate Ernest Moniz on his confirmation as the Secretary of Energy. President Obama has chosen an excellent and well-qualified individual to lead the Department of Energy and I look forward to working with Secretary Moniz to continue to advance the growth and development of sustainable biofuels,” said Tom Buis, CEO of Growth Energy.

The Renewable Fuels Association also congratulated Moniz. “Given his background and expertise in energy, we look forward to the secretary’s first visit to an ethanol plant. We are eager for him to see firsthand the positive economic impact the renewable fuel standard has had in creating new jobs and revitalizing rural economies,” said Bob Dinneen, president and CEO of the RFA.

Brooke Coleman, executive director of the Advanced Ethanol Council, added his praise of the pick. “Secretary Moniz has just the right combination of technical expertise and political experience to be very effective as the new Secretary of Energy. He clearly understands what it takes to commercialize new energy technologies, and we look forward to working with the Secretary and his colleagues going forward as the advanced ethanol industry deploys commercially in the United States and abroad.”

The House Agriculture Committee passed the Federal Agriculture Reform and Risk Management Act (FARRM) of 2013 by a vote of 36 to 10 late Wednesday night. While the bill does contain an energy title, an amendment to make funding of energy programs mandatory was defeated.

“We thank the entire committee for reauthorizing the programs, but mandatory funding is vital to their continued success. We look forward to working with all Congressmembers and Senators to ensure that a Farm Bill gets enacted this year that includes mandatory funding for these important programs,” said Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section.

The Senate version does contain mandatory funding for renewable energy and energy efficiency programs. “We thank the members of the Senate Agriculture Committee, especially Senator Amy Klobuchar for increasing the funding for the Renewable Energy for America Program, and Senators Joe Donnelly and Pat Roberts for a bipartisan proposal to improve risk management options for biomass crops,” said Lloyd Ritter, co-director of the Agriculture Energy Coalition. “We look forward to working with them to ensure the continued success of Farm Bill energy programs.”

“Funded farm and energy policy is better: it puts those benefits into action. On that score, we’re concerned the House bill missed the mark,” Adam Monroe, Americas Regional President of Novozymes, said of the committee bills. “While we appreciate the House Agriculture Committee reauthorizing the biomass programs, we urge them to follow the Senate committee’s lead and support a strong, fully-funded energy title.”

The Senate bill is expected to go to the floor next week while the House bill is slated for next month.

By a 15-5 vote, the Senate Agriculture Committee sent the Agriculture Reform, Food and Jobs Act of 2013 and its commitment to renewable energy to the full Senate, which could take it up next week. The National Biodiesel Board (NBB) welcomed the move, especially the part that funds the Biodiesel Fuel Education Program to the tune of $1 million a year through 2018, with another $1 million a year in discretionary funding for that same time.

During an interview with Chuck at the National Association of Farm Broadcasters (NAFB) Washington Watch, Anne Steckel vice president of federal affairs for the NBB said she is also hopeful Congress preserves the Renewable Fuels Standard (RFS).

“The RFS is really the backbone of the biodiesel industry,” she said. “It’s been incredibly successful for our industry, and it’s been very beneficial for consumers in general. We’re supporting over 50,000 jobs. We’re diversifying off foreign oil, and we’re helping better the environment.”

Steckel went to say that biodiesel enjoys a broad base of bipartisan support in Washington, and she is optimistic that support will continue and help that green fuel sector grow.

“The biodiesel industry is going to continue in its steady growth pattern, [producing] 1.3 billion gallons this year,” and the support of the RFS and biodiesel federal tax credit will help the industry and consumers as well.

Listen to Chuck’s interview with Anne here: Anne Steckel, NBB

2013 NAFB Washington Watch Photo Album

The Senate Agriculture Committee voted 15-5 today to approve the Agriculture Reform, Food and Jobs Act of 2013, which includes cuts to reduce the deficit by $23 billion dollars but still offers a commitment to renewable energy.

The bill includes an energy title that helps to advance “bio-energy production, supporting advanced biomass energy production such as cellulosic ethanol and pellets from woody biomass for power.”

The bill also provides support for blender pumps and higher ethanol blends, which was welcomed by the ethanol industry. “The American Coalition for Ethanol (ACE) thanks Chairwoman Stabenow and members of the Senate Agriculture Committee for adopting a Farm Bill which provides $800 million in mandatory funding for critical Energy Title initiatives, particularly $241 million in mandatory funding for the Rural Energy for America Program (REAP),” said ACE Executive Vice President Brian Jennings. “REAP provides vital cost-share assistance to help petroleum marketers make upgrades or install new equipment at retail stations, ensuring consumers have access to renewable and affordable fuels such as ethanol. Today’s action highlights strong bipartisan support for market access to E15 and midlevel blends, such as E30 or E85. We encourage the U.S. Senate to take action soon to enact the Farm Bill.”

The bill is expected to move to the Senate floor next week.

Legislation has been re-introduced in Congress that would give investors in renewable energy projects access to a corporate structure currently only available for fossil fuel-based energy projects.

The Master Limited Partnerships (MLP) Parity Act modifies the federal tax code by helping additional energy-generation and renewable fuels companies form master limited partnerships, which combine the funding advantages of corporations and the tax advantages of partnerships.

“The bipartisan Master Limited Partnerships Parity Act levels the playing field to help clean and renewable energy projects compete fairly with traditional energy projects,” said bill co-sponsor Senator Chris Coons (D-Del.), a member of the Senate Energy and Natural Resources Committee. “This market-driven solution supports the all-of-the-above energy strategy we need to power our country for generations to come.”

In addition to Coons, the Senate bill is co-sponsored by Senators Jerry Moran (R-Kan.), Debbie Stabenow (D-Mich.) and Lisa Murkowski (R-Alaska). The MLP Parity Act was also introduced in the House on Wednesday by Reps. Ted Poe (R-TX-02), Mike Thompson (D-CA-05), Peter Welch (D-VT-AL) and Chris Gibson (R-NY-19).

According to FaegreBD Consulting, an MLP is a publicly traded partnership that is largely measured by the predictability and sustainability of its cash flow. As a partnership, the MLP is not subject to taxation at the MLP or corporate level, but instead is taxed as a pass-through entity. As such, MLP cash flows are enhanced, and tax savings from this single level of taxation contribute to a cost of capital advantage over competitors organized or taxed as a corporation. In the late 1980’s, legislation was passed restricting the use of MLPs to the energy and natural resource industry, excluding renewable sources of energy. As a result, MLPs have been largely limited to the ownership and operation of midstream oil and gas assets such as pipelines and storage terminals, and more recently the exploration and production of oil, gas and coal.

Legislation to reauthorize the Farm Bill energy title was introduced in the Senate Monday.

Senators Tom Harkin (D-IA) and Al Franken (D-MN) introduced the Rural Energy Investment Act to “help farmers, ranchers, and rural communities by encouraging the growth of agricultural energy technologies, including advanced biofuels, biogas, biomass, and renewable energies.”

“These energy programs are essential for expanding clean energy supplies, which also spur rural economic development and job creation,” said Harkin. “The tradition of providing strong support for an energy title in a farm bill must continue today, so for that reason I am hopeful that this measure will serve as a marker as the 2013 bill moves through the U.S. Senate.”

“Advancing our agricultural energy technologies is good for our farmers and economy, and it improves our overall energy independence and security,” added Franken. “This legislation will create jobs and play a critical role in cutting costs for our farmers and producers and will help them with the adoption of energy efficiency and renewable energy technologies.”

The Agriculture Energy Coalition supports the legislation and thanked the senators for introducing it. Last week, the coalition joined more than 100 national, state and regional organizations in a letter to the leaders of the House and Senate Agriculture Committees, urging them to adopt a new Farm Bill with robust mandatory funding for renewable energy and energy efficiency programs.

Since ethanol production has grown under the Renewable Fuel Standard over the past six years, government farm program payments for corn growers have declined to their lowest levels in recent history, which is saving taxpayer dollars.

In a new E-xchange Blog post, Renewable Fuels Association VP for Research and Analysis Geoff Cooper shows how the RFS has helped boost corn prices above cost of production since 2007, which decreases program payments. Prior to 2007, going back to 1990, the market price for corn exceeded the cost of production only once (1996) between 1990 and 2006. In some years (e.g., 1993, 1998-2000, 2005), the cost of production was nearly $1 per bushel higher than the harvest price paid to the farmer.

Between 1990 and 2006, producing corn was a losing business proposition. In all but one of those 17 years, the average farmer’s cost of producing corn was higher than the returns earned from selling the corn. In other words, corn cost more to produce than it was worth. As a result, U.S. grain farmers became increasingly reliant on government payments as a source of income—and as a means of survival. Due in part to the emergence of the ethanol industry and the certainty provided by the RFS, this dynamic has changed.

Cooper notes that since passage of the Energy Independence and Security Act (EISA) and expansion of the RFS in 2007 corn prices have been above the cost of production, and government payments have fallen. “Though not reflected in the above figures (due to lack of 2012 cost of production data), government payments to corn farmers in 2012 are forecast to be their lowest in 18 years and less than one-quarter of 2006’s outlays,” Cooper writes. “As a consequence of the grain sector’s economic resurgence, Congress is now considering sweeping changes to the Farm Bill that would further reduce the program’s impact on taxpayers and the federal budget.”

Wisconsin-based Virent has delivered the first 100 gallons of its bio-based jet fuel to the U.S. Air Force Research Laboratory (AFRL) for testing. This company news release says it will be validated against the standards required for qualification and approval of new aviation turbine fuels established by the American Society for Testing and Materials (ASTM):

Dr. Tim Edwards of the AFRL’s Fuels and Energy Branch said, “AFRL is looking forward to working with Virent and the FAA to evaluate the performance of this fuel. This larger sample will help generate the performance data needed to advance the technology toward engine and flight testing.”

Lourdes Maurice, Executive Director of the FAA’s Office of Environment and Energy said, “We are excited that Virent is able to effectively utilize FAA funding to deliver these gallons for testing. The fuel will be used with our partners in the industry and government to progress testing of novel alternative jet fuels that can help meet FAA’s environment and energy goals under the Next Generation Air Transportation System.”

Virent officials say if the testing is successful, they next step will be to get the refinery up to commercial capacity.

U.S. Energy Information Agency numbers show that U.S. production of biodiesel was 68 million gallons in February 2013, up from January’s figures of 66 million gallons. The report goes on to say nearly three-fourths of that production came from the Midwest. All 110 biodiesel refineries throughout the country have an operating capacity of 2.1 billion gallons per year:

Sales – Producer sales of biodiesel during February 2013 included 44 million gallons sold as B100 (100% biodiesel) and an additional 23 million gallons of B100 sold in biodiesel blends with diesel fuel derived from petroleum.

Feedstocks – There were a total of 524 million pounds of feedstocks used to produce biodiesel in February 2013. Soybean oil was the largest biodiesel feedstock during February 2013 with 275 million pounds consumed. The next three largest biodiesel feedstocks during the period were corn oil (61 million pounds), yellow grease (51 million pounds), and canola oil (38 million pounds).

The following chart tracks biodiesel production over the past two years:

A bipartisan group of senators are asking for an investigation into a recent anti-dumping decision made by European Union regarding ethanol imports from the United States.

Fourteen Democratic and Republican Senators have joined together to sign a letter sent to the Acting United States Trade Representative (USTR), Demetrios Manatos and Acting Secretary of Commerce, Rebecca Blank, calling on them to review and consider a World Trade Organization (WTO) challenge to the European Union’s controversial and unprecedented anti-dumping duty recently imposed on U.S. ethanol producers.

The letter was co-authored by Senators John Thune (R-SD) and Amy Klobuchar (D-MN), and cosponsored by Senators Tom Harkin (D-IA), Chuck Grassley (R-IA), Al Franken (D-MN), Mike Johanns (R-NE), Heidi Heitkamp (D-ND), Deb Fischer (R-NE), Tim Johnson (D-SD), John Hoeven (R-ND), Claire McCaskill (D-MO), Pat Roberts (R-KS), Richard Durbin (D-IL) and Roy Blunt (R-MO).

In a joint statement, Renewable Fuels Association CEO Bob Dinneen and Growth Energy CEO Tom Buis said they are pleased to see the senators take action in the matter.

“The EU Commission failed to make any particular finding of dumping by any producer or marketer investigated in connection with the case,” said Dinneen and Buis. “The EU’s recent actions are unprecedented and we believe that the World Trade Organization (WTO) will nullify this blatantly protectionist country-wide anti-dumping duty on exports of ethanol from the United States.”

Read more here.

It wasn’t that long ago that Europe was a champion of biofuels, in particular, biodiesel, as just a few years ago the continent adopted a policy of having 10 percent of transportation fuels come from renewable sources, including biofuels. This boosted biodiesel demand, coupled with favorable tax laws and the popularity of diesel vehicles. This piece in Public Service Europe says that when cheaper imported vegetable oils replaced European biofuels crops, there was pushback that was unfounded and really amounted to trade protections for Europeans, and now the continent is moving to a 5 percent usage level … basically where it stands today. But the article says it’s not too late for Europe to re-reconsider its biofuels policy:

Therefore, with this cap, the EU endangers – or reinterprets – its own 10 per cent target leaving the status quo, conventional oil, as the biggest winner. And it strikes a blow to equity and development. Shall we continue to import oil from rich countries so they can become richer rather than taking the opportunity to import biofuels from poor countries? Wild, rapid policy shifts like this have costs. They disrupt markets, stifle innovation and undermine the EU’s credibility.
Read the rest of this post…

In honor of Earth Week, the Washington State Department of Transportation has outlined some key points in how to have a clean, sustainable supply of energy. And a couple of items from the top of the list of things the department is doing itself include biodiesel:

Some recent WSDOT initiatives to reduce carbon emissions and conserve natural resources include:

“WSDOT is already considered a national leader in transportation technology and sustainability,” said Secretary of Transportation Lynn Peterson. “I hope to build on this strong reputation by partnering with communities to help us maintain our previous investments and continue building a smart multimodal system for the future.”

WSDOT also says people can do their parts by driving alternative fuel and electric vehicles, among other energy-saving initiatives.