Minnesota Biodiesel Mandate Survives Delay Attempt

mnstatelegis1A bill that would have delayed implementation of a 10 percent biodiesel mandate in Minnesota diesel fuels was stopped in a state legislative committee. This story from WDAZ-TV says the bill from Sen. Melisa Franzen, D-Edina, was defeated overwhelmingly in the state Senate Commerce Committee.

She said most cars and light trucks are built to handle 5 percent biodiesel, which now is required to be sold in Minnesota, not the planned 10 percent, known as B10.

Biodiesel supporters said they have heard this argument before, reaching back years to when ethanol first was required to be blended with gasoline. Problems have been few and far between once the state mandated that gasoline and diesel contain plant-based fuel, they said.

Jerry Schoenfeld, who represents soybean farmers and the Minnesota Biodiesel Council, said those who support Franzen’s bill sit on a biodiesel task force but never brought up their complaints until the bill surfaced recently.

Both sides used Illinois as an example to support their cause. Those wanting a B10 delay pointed to fuel-blamed engine problems such as clogged filters and acceleration hesitation. Biodiesel supporters said that even in Illinois, Mercedes-Benz praised biodiesel and urged owners to monitor oil levels and strictly follow oil change intervals, but few problems have been reported.

A 2008 law in Minnesota upped the current 5 percent blend to 10 percent when state officials believe there is enough biodiesel to meet that demand, and they had decided that will come on July 1st.

New Budget Would Roll Back Oil Subsidies

2015-budgetThe recently proposed Obama administration Fiscal Year 2015 Budget includes $4 billion a year in cuts to oil industry subsidies, notes Americans United for Change (AUFC), which calls that “a big win for taxpayers and consumers.”

Under the Department of Energy section, the budget calls for elimination of “Unnecessary Fossil Fuel Subsidies” stating that as “the Nation continues to pursue clean energy technologies that will support future economic growth, it should not devote scarce resources to subsidizing the use of fossil fuels produced by some of the largest, most profitable companies in the world.” The proposed budget would repeal “over $4 billion per year in tax subsidies to oil, gas, and other fossil fuel producers.”

americans-change“We are elated that the President has renewed his commitment to doing away with billions of dollars in pointless subsidies for big oil that shortchange investment in cleaner burning, cheaper renewable fuels of the future,” says AUFC executive director Caren Benjamin, adding however that the EPA proposal to cut the Renewable Fuel Standard (RFS) at the same time is inconsistent. “It’s a proposal that runs totally counter to the President’s strategy to address climate change by supporting clean energy — because a weak RFS means less incentive for innovation in cleaner burning, next generation renewable fuels and guarantees a greater use of dirty fossil fuels.”

AUFC also points out that there seems to be some bipartisan consensus building in Congress against special tax treatment for the oil industry. The draft tax reform proposal circulated by Republican House Ways and Means Committee Chairman Dave Camp (R-MI), for example, would eliminate some of the accounting tactics that allow oil companies to report lower net profits and pay less taxes.

AUFC encourages House Budget Committee Chairman Paul Ryan to follow that lead and hold a hearing on “why an industry that made $100 billion in profits last year can’t do without billions of dollars in subsidies every year courtesy of the taxpayers.”

EPA “Add-Up” for RFS & Biodiesel Tax Credit

The government’s proposed change in how to figure biodiesel and ethanol use for purposes of the Renewable Fuel Standard (RFS) could end up being a boost for the green fuels. This analysis from the University of Illinois looks at how the EPA’s method of “adding-up” the market potential for E10 and E85 ethanol, biodiesel and other non-ethanol fuels changes how we should look at the RFS and Biodiesel Blenders Tax Credit.

In its proposed rule for the 2014 RFS, EPA announced a plan to waive a portion of the RFS from 2014 on, a notable break from previous proposals.

The EPA proposal maintains the hierarchy, but replaces the set targets of the Energy Independence and Security Act (EISA) with annual estimates of how much renewable fuel use is ‘expected’ (Figure 1). The Add-Up method sets the biomass-based diesel requirement at the higher of a base level of 1.28 billion gallons or expected use… Higher RIN prices would appear to lead to additional E85 consumption would then potentially lead to greater future mandates.
addup1
A blender’s tax credit, such as the $1.00 per gallon credit given to biodiesel blenders which expired at the end of 2013, gives an incentive to blenders to use more biofuel. Under the EPA’s previous method, the credit may simply make the mandate less costly to achieve… If the RFS was then easy to exceed or if obligated parties wanted extra RINs to carry into the next year, biodiesel use might rise but perhaps not very much. If extra biomass-based diesel was used beyond its own requirement, then it might displace ethanol used for advanced or overall requirements.

The analysis concludes that using the Add-Up method, the RFS renewable fuel requirements will respond to market conditions and other policies, not remain at set EISA targets.

Bulk of Advanced Biofuel Payments Go to Biodiesel

USDA Rural Development LogoThe biggest portion of money recently paid out for the U.S. Department of Agriculture’s Advanced Biofuel Payment Program went to biodiesel operations, indicating that green fuel is the leading advanced biofuel in the U.S. Biodiesel Magazine reports that about $40 million of the $60 million paid out went to biodiesel production. USDA officials say the entire $60 million announced last week shows the the Obama Administration’s commitment to support an “all-of-the-above” energy strategy.

“The Bioenergy Program for Advanced Biofuels is building the foundation for a clean energy economy and protecting our environment while making America less dependent on foreign and fossil fuels and increasing rural economic growth,” said Paco Valentin, USDA Rural Development State Director.

Through this program and others at USDA, the department is working to support the research, investment and infrastructure necessary to build a robust and lasting biofuels industry that creates jobs and broadens the range of feedstocks used to produce renewable fuel. More than 300 producers in 47 states have received $279 million in payments since the program’s inception. It has supported the production of more than 4 billion gallons of advanced biofuel and the equivalent of more than 40 billion kilowatt hours of electric energy.

The funding was first established with the 2008 Farm Bill and reauthorized in the recently signed 2014 Farm Bill.

Ill Winds Blow for Energy Production Tax Credit

single wind turbine Photo Joanna SchroederThings could be looking bleak for a federal tax credit that helps wind power projects. This article from Bloomberg Businessweek says the production tax credit is facing a bumpy ride as Congressional Republicans look for a bigger tax break overhaul.

“Maybe there will be some in the Senate who will try to revive it but I really do think it’s dead in the House,” said [Representative Charles] Boustany, a Louisiana Republican and member of the House Ways and Means Committee, said in an interview today in New York. While the credit might be revived as part of lame-duck legislation after the November elections, that seems unlikely, he said.

The 2.3-cent per kilowatt-hour production tax credit, which pays owners for power produced during a project’s first decade, expired at the end of last year. A broader tax reform proposal released last month by Representative Dave Camp, chairman of Ways and Means, would reduce the amount project owners can claim to 1.5 cents, boosting government revenue by an estimated $9.6 billion.

President Obama has proposed a permanent extension and expansion of the production credit at a cost of $19.3 billion over the next decade. His efforts might be boosted by Oregon Democratic Senator Ron Wyden, who is planning a vote on restoring the measures in the next few months.

Meanwhile, officials with the American Wind Energy Association promise to stay engaged in tax-reform discussions.

South Dakota to Include 15% Ethanol in State Fleets

South Dakota will soon begin incorporating 15 percent ethanol (E15) fuel into its state vehicle fleet.

sd-govGovernor Dennis Daugaard announced Thursday that E15 will be made available this year during a test period at four major fuel sites in Brookings, Pierre, Rapid City and Sioux Falls. The state will utilize E15 for flex fuel vehicles and some of its newer non-flex fuel models that are approved for E15 use. Flex fuel vehicles make up over 58 percent of the fleet or 1,950 vehicles. Currently, the state fueling sites primarily provide E10 fuel for fleet vehicles.

“South Dakota is a large ethanol producer, and our state has significantly benefited from the ethanol industry,” said Daugaard. “The goal is to use more of our homegrown fuel by using E15, the newest fuel in the marketplace.”

South Dakota is the fifth largest ethanol producing state in the nation, producing about a billion gallons per year, an industry worth about $3.8 billion. It is also home to POET, one of the world’s largest ethanol production companies, based in Sioux Falls. “We are excited to hear Governor Daugaard’s desire to incorporate E15 into South Dakota’s state vehicle fleet,” POET President and CEO Jeff Lautt. “This is a no-cost means to create new jobs, stimulate the economy, secure our nation and improve our environment.”

Also located in South Dakota is the American Coalition for Ethanol (ACE). “Gov. Daugaard is providing tremendous leadership and vision by encouraging the use of E15 in the state’s vehicle fleet, a move which will support South Dakota’s farmers and ethanol industry,” said Ron Lamberty, ACE senior vice president.

The governor’s office says the testing period for E15 will run about six months, after which the state will evaluate how the use of the E15 blend affected the fleet and determine how to efficiently utilize ethanol in the future. “We are confident state employees will find E15 a safe, reliable and affordable fuel choice,” said Lamberty.

Ethanol’s Voice Heard at Commodity Classic

white1It might not be a biofuels convention per se, but the recently completed Commodity Classic in San Antonio attracted lots of producers and advocates for the green fuels. Previously, I talked to Joe Jobe from the National Biodiesel Board about his group’s participation in the annual meeting of corn, wheat, soybean and sorghum growers. At the booth next door was another group in the biofuels game, the Renewable Fuels Association, representing the ethanol industry. RFA’s Director of Market Development Robert White said that they’re glad to come out and talk with the thousands of corn farmers attending who are a big part of the main feedstock for ethanol and invest heavily themselves in the industry.

“It’s a good place for us to be. It’s actually nice to go into a friendly environment every once in a while,” he said.

Of course, the biggest thing they heard at the event was the concerns over the Environmental Protection Agency’s (EPA) proposal to cut a billion gallons of ethanol from the Renewable Volume Obligations, the amount of ethanol required to be blended into the Nation’s fuel supply. Robert said they need to counter some of the myths that petroleum companies are trying to spread with fact-based arguments in favor of ethanol.

“And it has to be strategic, because if the opposition to the [Renewable Fuels Standard] is a fire hose, we’re a dripping faucet, and we have to make sure it’s a strategic approach and it’s fact-based because if we got caught stretching the truth, they’d never forget it,” he said.

Robert went on to say that despite the comment period for the EPA being over, it’s important to keep letting Washington know where ethanol and all biofuels proponents stand.

“Don’t become complacent. Keep reaching out to elected officials, EPA and the White House to make sure they know how important this is to individual farming operations and rural America.”

Listen to my interview with Robert here: Robert White, RFA

2014 Commodity Classic Photos

Farm Bill Boosts Biodiesel-based Bioheat

us-capitol-fiscal-cliff-voteOne of the big winners in the recent passage of the $1 trillion Farm Bill was the reauthorization of the National Oilheat Research Alliance (NORA) and the biodiesel-based heating fuel, Bioheat. This article from Biodiesel Magazine says the five-year extension of the program will boost Bioheat in this country.

The new bill encourages greater research on Bioheat with the goal of moving up the percentages of biodiesel in heating oil.

“When NORA was founded in 2000, the product was almost nonexistent,” said John Huber, NORA CEO. “But through a partnership between NORA and the National Biodiesel Board, we have moved this into a product used by nearly every heating oil retailer at concentrations between 5 and 20 percent. We expect those percentages to continue to grow as the biodiesel industry continues to provide a compelling product to our industry.”

The organization’s executive committee and board of directors will work diligently to integrate those changes into the program. Most importantly, there will be an increased emphasis on research and development. This additional research will pave the way for a better product for the heating oil consumer—a product that will be more efficient and more dependable.

The article goes on to say that NORA and the biodiesel industry have worked closely to expand the use of Bioheat in home heating oil markets.

Changes in the Law Drive U.S. Biodiesel Trends

rabobankbiodiesel1While the proposal to cut the amount of biodiesel and ethanol to be blended into the Nation’s fuel supply has green fuel makers nervous, a new report shows that turmoil at the end of 2013 actually helped biodiesel spike. Financial services provider for agricultural producers and agribusinesses Rabobank Food & Agribusiness Research (FAR) says the Environmental Protection Agency’s (EPA) proposal to adjust the Renewable Fuel Standard (RFS) at the end of last year could actually end up providing an environment for a stable long-term outlook for biodiesel demand

“We saw a record level of biodiesel production in 2013 due to the expiration of the one dollar per gallon tax credit on biodiesel production and an anticipated soybean shortage in 2014,” notes report author and Rabobank analyst Al Griffin.

According the Rabobank U.S. Biodiesel Outlook, the U.S. biodiesel industry is expected to remain commoditized with tightening margins and periods of negative returns. The industry players best positioned for success are those focused on becoming the low cost producer, gaining access to multiple feedstock sources, and accessing adequate working capital to withstand volatile margins.

“Increases in biodiesel production will bolster demand for soy oil, corn oil, canola oil, yellow grease, and palm oil, along with other, less common inputs,” says Griffin. “With biodiesel feedstock being split roughly evenly between soy oil and all other sources, the fats and oils sector will benefit from intensified production.”

The report goes on to point out that while ethanol runs into issues with the blend wall, biodiesel doesn’t really face the same issues. In addition, recent signals from the EPA that it will go back to original RFS mandate levels during 2014 have helped provide the biodiesel optimism in the report.

EPA Director Addresses Ethanol Conference

nec14-grundlerThe Director of the Office of Transportation and Air Quality for the U.S. Environmental Protection Agency addressed the National Ethanol Conference on Wednesday morning on issues related to the Renewable Fuel Standard and EPA’s proposal for the 2014 Renewable Volume Obligations (RVO).

Chris Grundler was scheduled to be on a panel at the NEC Tuesday but had a conflict and instead had the stage to himself to talk about how the EPA came up with the proposal that shocked the ethanol industry when it was released last fall. “You deserve to really understand what went into our thinking on that,” he said. “The most disappointing thing I heard in the reporting is that EPA no longer supports the development of biofuels, and I’m hear to tell you that’s wrong.”

“Our overriding goal with this 2014 RVO proposal is to put the RFS in what we call a manageable trajectory while continuing to support the growth of renewable fuels in our transportation supply,” he said. “We have to address some of the practical realities that we see today in the marketplace.”

Grundler stressed that the proposal is just that and it could be changed. He also noted that EPA received over 100,000 written comments during the comment period with 6,000 “unique” comments, and that the hearing held in early December was a record. He added that they do intend to try and meet the goal of finalizing the rule by the end of spring.

A disarmingly un-bureaucratic bureaucrat, Grundler was forthcoming and even funny in his short presentation and afterword even met with reporters to answer questions. Comments by Chris Grundler, EPA

Raw informal press availability audio – Press Avail Chris Grundler, EPA

2014 National Ethanol Conference Photo Album

NEC Coverage sponsored by Patriot Renewable Fuels LLC

Biofuels’ Feedstock Growers to Host Ag Secretary

vilsackccThe growers of the two biggest biofuels feedstocks, corn for ethanol and soybeans for biodiesel, will once again host the U.S. Secretary of Agriculture for their biggest meeting of the year. For the fifth time in a row, Tom Vilsack will deliver the keynote address to Commodity Classic, the annual convention and trade show for corn, soybean, wheat and sorghum growers. This news releases says Vilsack speaks to an expected crowd of more than 6,000 during the event’s General Session on Friday, Feb. 28, in San Antonio, Texas.

“We are honored to welcome Secretary Vilsack-someone who has been a strong advocate and voice for agriculture-to a conference that is both focused on and led by farmers,” said American Soybean Association President Ray Gaesser. “As we face many challenges in this industry throughout this next year- trade agreements and access, conservation and water quality, moving the RFS forward and access to innovative technology-we are excited to hear the secretary speak on these issues and other important topics that impact farmers who grow the nation’s food.”

“Secretary Vilsack has done a lot to support our growers, and to encourage all farmers to speak out and represent their industry at a time when the general public is more removed than ever from the farms that feed them,” said National Corn Growers Association President Martin Barbre. “We’re looking forward to his visit to Commodity Classic so he can speak with our growers and learn more about our great efforts to rebuild consumer trust in what we do.”

The 19th annual Commodity Classic is Feb. 27-March 1, 2014, along the banks of the famous River Walk at the Henry B. Gonzalez Convention Center in San Antonio, Tex. Your ZimmComm New Media team will be there, including myself, bringing you the latest from this annual meeting of the National Corn Growers Association, American Soybean Association, National Association of Wheat Growers and National Sorghum Producers, America’s largest farmer-led, farmer-focused convention and trade show.

Check out the 2014 Commodity Classic website www.commodityclassic.com for additional information.

DF Cast: Hearing in the Heartland Talks EPA & RFS

Unable to get the Environmental Protection Agency (EPA) to come to the heart of where biodiesel and ethanol are produced, leaders in the Midwest decided to hold their own “field hearing” to let the Obama Administration know they are unhappy with what proposed cuts to the Renewable Fuel Standard (RFS). The comment period for this proposal has recently ended, but now comes the possible months-long decision process by the EPA.

In this edition of the Domestic Fuel Cast, we listen in on some of what was said at Iowa Gov. Terry Branstad’s “Hearing in the Heartland,” a gathering of politicians, biodiesel and ethanol advocates, energy experts, and those who will be affected if this proposal to cut the amount of ethanol and biodiesel to be blended into the Nation’s fuel supply comes to fruition.

You can hear more of what was said during the hearing in the Heartland it in the latest Domestic Fuel Cast: Domestic Fuel Cast - Hearing in the Heartland

You can also subscribe to the DomesticFuel Cast here.

President Signs Farm Bill

President Barack Obama traveled to Michigan State University to sign the Agricultural Act of 2014 at the alma mater of Senate Agriculture Committee chair Debbie Stabenow (D-MI).

fb-signing“Despite its name, the farm bill is not just about helping farmers,” President Obama told the small crowd invited for the signing. “Secretary Vilsack calls it a jobs bill, an innovation bill, an infrastructure bill, a research bill, a conservation bill. It’s like a Swiss Army knife.”

The president also gave a shout out to biofuels production in Michigan in his address prior to the bill signing. “I just got a tour of a facility where you’re working with local businesses to produce renewable fuels,” said Obama. “This bill supports businesses working to develop cutting edge biofuels, like some of the work being done here at Michigan State.”

Listen to the president’s speech here: President Obama farm bill signing

What do you think of the new farm bill? Which part is most important to you? Tell us in this week’s ZimmPoll.

Biofuel Groups React to SOTU

Corn farmers and biofuels producers are questioning President Obama’s commitment to an “all of the above” energy strategy mentioned in the State of the Union address, considering the administration’s proposal to cut the Renewable Fuel Standard (RFS) this year. The address Tuesday evening came just hours before the comment period on the EPA proposal ended.

sotu-2014“It was great to hear President Obama talk about the importance of an ‘all-of-the-above’ energy policy,” commented National Corn Growers President Martin Barbre. “And you can’t have such a policy without biofuels. So, we call on his Administration to back away from its irresponsible proposal to reduce the Renewable Fuel Standard.”

Fuels America released a statement echoing a similar sentiment, adding that they hope EPA will listen to those who will be impacted by changes in the RFS. “We hope the agency considers the thousands of comments from farm families, small business owners, labor groups and environmental advocates. These are the real people who will lose their livelihoods and their faith in this Administration’s commitment to a clean energy future if the EPA proceeds down its current path.”

The president mentioned agriculture in the opening minute of his speech, with an image of a farmer in a corn field as an example of the “citizens, who make the state of our union strong.”

President Obama did make note of progress made in solar energy during his address and called for an end to tax breaks for the oil industry. “Every four minutes, another American home or business goes solar,” said the president. “Let’s continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don’t need it, so that we can invest more in fuels of the future that do.”

Farm Bill Compromise Includes $881 Mil for Energy

us-capitol-fiscal-cliff-voteA compromise Farm Bill agreed upon by U.S. Senate and House negotiators will set aside about $881 million in its Energy Title portion. The deal on the $500 billion Agricultural Act of 2014 gained praise from the Agriculture Energy Coalition (AgEC), a consortium of organizations and companies representing a broad spectrum of renewable energy, energy efficiency and bioproducts stakeholders.

Lloyd Ritter, co-director of the AgEC, said, “Today’s conference report will continue the Farm Bill’s support for economic growth and development in rural America. Renewable energy and energy efficiency programs support new manufacturing and stable, well-paying jobs. Expansion of the programs will enable renewable chemical technologies to create new manufacturing opportunities and jobs. These very modest investments make major energy security, economic, and environmental benefits happen across the entire United States.

“The programs help grow the rural economy by opening access to critical project capital, ensuring that investments continue to be made in agriculture energy development.”

Some of the benefactors from this legislation include the Biomass Crop Assistance Program, partnering with hundreds of farmers across the country to develop sustainable new biofuels; the Biorefinery Assistance Program, supporting advanced biofuels by assisting U.S. companies secure more than $450 million in private capital for innovative advanced biofuel projects; and the Renewable Energy for America Program (REAP) that helps support renewable energy jobs in rural parts of the country.

The bill must still pass the full House and Senate, but the bipartisan compromise is seen as very positive step toward full passage.