Minnesota’s biodiesel mandate, looking like it could take a hit, has risen up like a Monty Python character and shouted back, “I’m NOT dead yet!” Recently, we told you how the mandate was facing an uncertain future, as the date to finally move to B10, a 10 percent blend of the green fuel, is coming this year. But that put it dangerously close to another milestone of moving to B20 next year. But this article from Biodiesel Magazine says a compromise piece of legislation looks like it could preserve the mandate… just at a slower pace.
State Representative Clark Johnson is an ardent supporter of the biodiesel industry. Last month he introduced a bill for the agriculture department and the biodiesel industry seeking to modify future requirements regarding exceptions, what months higher blends should be required, and the date on which the state will jump from B10 to B20. His bill, House File 3203, missed a deadline to move forward, but Charlie Poster, assistant commissioner at the Minnesota Department of Agriculture, says the agency has made concessions to opponents of the increased biodiesel mandate by incorporating HF 3203’s language into an agency “unsession” bill (SF 2618) that is moving forward.
“The bill that’s signed into law probably won’t be HF 3203, but it will be that language,” Poster tells Biodiesel Magazine. “There was a movement by the Alliance of Automobile Manufacturers and the Minnesota Automobile Dealers Association (MADA),” Poster says. “They had some concerns about biodiesel, and they wanted to see the biodiesel mandate gutted—and I don’t think that’s too strong of a word. They were proposing some language that, in all but name, would remove our biodiesel standard. And the Department of Agriculture’s position is that biodiesel has worked really well in our state. It’s lowered the price of diesel fuel. It’s added to farmers’ incomes. It’s doing exactly what we want it to do. It’s been a great success.”
The article goes on to say that in order to appease opponents of biodiesel, the agency made four concessions: 1. Move the B20 date to 2018; 2. Shorten by one month the “summer” months part of the mandate, making it April-September; 3. Make permanent some exceptions for nuclear power plants, railroads, mining, logging and the Coast Guard; and 4. Extend the biodiesel blending waiver for No. 1 fuel to May 1, 2020.
The Senate Agriculture Committee held a hearing this week on advanced biofuels. Chairwoman Debbie Stabenow of Michigan says advanced biofuels are here now, and they are an important part of the energy title in the recently passed farm bill.
“The Energy Title funds critical programs that helps our farmers produce energy from non-food sources and helps companies get low-interest loans for those facilities, and of course, all that creates jobs,” Stabenow said, adding that to continue to grow the industry, there needs to be policies that support it. She said passing the Farm Bill was a strong first step toward to that goal. “Now we need to provide certainty through a strong Renewable Fuels Standard and tax credits to support long-term investments in our energy future.” Sen. Debbie Stabenow (D-MI), Senate Agriculture Committee
One of the witnesses at the hearing was NASCAR team owner Richard Childress who talked about the many benefits of corn-based biofuels, such as the higher fuel performance he has seen in more than five million miles of racing since the E15 ethanol blend was introduced in the 2011 racing season.
“When they decided to go with an ethanol-blend of fuel, in 2010, NASCAR started looking at what was the correct blend to use. After many tests, they came up with E15,” Childress said, pointing out that his own racing team tested up to E30 blends, which he believes would be even better. “Nothing but positive results came out of our tests. Engines ran cooler, ethanol makes more octane so it makes more horsepower, less carbon buildup, better emissions, and our parts when we tore the engines down looked much better.” NASCAR team owner Richard Childress at biofuels hearing
Environmental Protection Agency Administrator Gina McCarthy spoke to the North American Agricultural Journalists meeting in Washington DC on Monday and expressed confidence that the final rule for the Renewable Fuel Standard (RFS) will be different than the proposed rule that reduces volume requirements for biofuels in 2014.
According to Agri-Pulse McCarthy said EPA is in the process of reviewing more than 200,000 comments on the RFS proposal and plans to issue a final rule in late spring or early summer.
She stressed that EPA has to make sure the final rule is implementable. “And that means taking into realities of the fuel market. One of those realities is the fuel blend wall.”
Agri-Pulse reports that McCarthy expects the final rule will “almost certainly” be different than the one that was proposed. “Gasoline demand had an impact in the proposal and it will also be reflected in the final rule,” she said.
She also said that EPA expects legal challenges to any RFS standards. “We need to be able to justify it in court,” McCarthy said. With current the current infrastructure, the industry this year would not be able to “get anywhere near” the levels required in the original RFS. “But we think that the industry is stepping up to that challenge,” she said. “We’re going to try to work toward these goals the best we can, but we need to be realistic.”
A delay in Minnesota’s biodiesel mandate could have a ripple effect for more targets in the law’s future. This article in the Mankato Free Press says nearly three years ago, state regulators delayed implementing a B10 mandate scheduled for 2012. Now that officials in Minnesota believe they’re ready for the higher blend, it’s running dangerously close to another target, B20, scheduled for 2015.
That deadline would be extended by three years, to 2018, under a bill from North Mankato Rep. Clark Johnson.
The basic problem with the 2015 deadline is similar to the reasons for the earlier delays: The state just isn’t ready, he said.
The state’s soybean farmers association, Mankato-based Minnesota Soybean, supports the bill, said Mike Youngerberg, its senior director of field services. Another version of the bill, opposed by the association, would have delayed the 10 percent transition and eliminate the 20 percent move entirely. But it failed to pass a Senate committee last month.
Johnson’s bill, too, has an uncertain future — it didn’t pass through its House committees before a March 21 deadline — but he believes it can still pass this year.
Johnson’s bill would also change the summer mandate months from April – October to September. Another provision would allow companies that build generators to test them without biodiesel.
After quite a bit of back and forth, the Senate Finance Committee finally included wind energy in the renewable energy Production Tax Credit (PTC) and Investment Tax Credit (ITC) tax extenders package out of committee this week.
“We’re grateful to all the supporters of renewable energy on the Senate Finance Committee,” said Tom Kiernan, CEO of the American Wind Energy Association. “This provides a critical signal for our industry, which has created up to 85,000 jobs and has a bright future ahead, as we grow from 4 percent of the U.S. power grid to an expected 20 percent and beyond, so long as we have a predictable business climate.”
The PTC and the alternate Investment Tax Credit were added overnight to a modified “Chairman’s mark,” after an earlier draft released Monday left them and several other provisions for further negotiation.
They prevailed on a critical 18-6 vote during the committee markup late Thursday morning, on a motion by Sen. Pat Toomey (R-PA) to strip them out. Five Republicans joined the committee’s Democrats in voting down that amendment: Sens. Chuck Grassley (R-IA), John Thune (R-SD), Rob Portman (R-OH), Mike Crapo (R-ID), and John Cornyn (R-TX).
The cellulosic biofuels industry was very pleased to see the Senate Finance Committee markup of a package of tax extenders that includes the Producer Tax Credit (PTC) and the special depreciation allowance for advanced biofuels.
“The cellulosic biofuel industry is just breaking through at commercial scale. Today’s markup sends a clear signal to the marketplace that Congress is making progress on extending its support for one of the most innovative, low carbon industries in the world,” said Brooke Coleman, Executive Director of the Advanced Ethanol Council (AEC). “It will be very important to move this package along quickly, as executives in our industry are weighing the pros and cons of developing the next wave of projects here or abroad.”
“We applaud the Finance Committee and Chairman Wyden for supporting the advanced biofuels tax incentives included in the extenders legislation,” added Advanced Biofuels Association president Michael McAdams. “These extenders send a significant signal to the advanced and cellulosic industry and to the markets regarding the sustained support at the federal level, and our members appreciate the certainty of a two-year extension.”
Companies like Novozymes that are members of these organizations are very happy with the action. “When you’re on a road trip, you don’t stop every 10 minutes to put in one gallon—you fill up for the long haul. That’s what these tax credits and renewable fuel policies like the RFS need too: Fuel for the long haul to drive investment, create jobs and move our economy forward.” said Adam Monroe, Novozymes President, Americas.
The Second Generation Biofuel Producer Tax Credit, Special Depreciation Allowance for Second Generation Biofuel Plant Property, Biodiesel and Renewable Diesel Fuels Credit, and the Alternative Fuel and Alternative Fuel Mixture Excise Tax Credit all expired at the end of 2013. This package extends them through 2015 adding certainty for the advanced biofuel industry and its investors.
A measure that would renew the federal $1-per-gallon biodiesel tax incentive has cleared a congressional committee. The credit, which expired at the end of 2013, passed the Senate Finance Committee as part of a package of tax provisions. The news was welcomed by the National Biodiesel Board, which still appeared miffed it expired in the first place, as Congress let happen in 2010 and 2012.
“This is the third time in five years that the biodiesel incentive has lapsed, making it incredibly difficult for biodiesel businesses to plan for expansion or build infrastructure,” said Anne Steckel, vice president of federal affairs at the National Biodiesel Board, the industry trade association. “We applaud the Senate Finance Committee for taking the first step toward extending it and urge the House and Senate to continue the committee’s bipartisan work by acting quickly to extend this credit so the biodiesel industry can get back to work.”
“The U.S. biodiesel industry has plants in almost every state in the country, and this tax incentive is something Congress can pass today to stimulate growth and economic activity at all of them,” Steckel added. “This incentive is a job creator, and it also pays tremendous dividends in terms of reducing harmful emissions and strengthening our energy security.”
The measure calls for the incentive to be restored retroactively back to Jan. 1, 2014, and extended through the end of 2015.
A crop that has had an undeserved stigma attached to it could now become a source for biodiesel and ethanol. The recently passed and signed Farm Bill contains a provision that would allow hemp to be grown for research purposes, including making it into the green fuels.
“Hemp is a great crop for biodiesel, and we’ve already started experimenting with [cellulosic ethanol made from hemp],” explained Ben Droz with Vote Hemp, a group trying revitalize industrial hemp production in the U.S., at last week’s National Agriculture Day in Washington, D.C. He pointed out that hemp goes back a long ways in this country’s history, including being grown by the Founding Fathers and the founder of our modern automobile industry. “Henry Ford was actually doing research on hemp fuels and hemp biocomposites. And now today we are looking back to see if we can grow hemp once again.”
Ben said the Farm Bill defined industrial hemp, not to be confused with marijuana despite its similar appearance, as having 3/10 of a percent or less of THC – the active ingredient in the drug. Even if you smoked a hemp joint the size of a telephone pole, Ben said you still wouldn’t get high. But it’s only legal to do the research at universities and state ag departments in the 10 states where hemp is already legal to grow. He’s hoping that positive results in those locations will allow the effort to go nationwide.
“Those results will then encourage lawmakers to change the law so farmers can grow this profitable crop. There’s literally thousands of uses for hemp.”
Soybean growers are welcoming news of a couple of important measures moved forward in legislation for biodiesel. The American Soybean Association says a two-year extension of the dollar-per-gallon biodiesel tax incentive and a reinstatement of the pre-2014 expensing amounts for farm infrastructure and equipment under Section 179, both in the Senate Finance Committee Chairman’s Tax Extenders Package, are key issues for group’s members.
ASA First Vice President Wade Cowan, a farmer from Brownfield, Texas, issued the following statement on the committee’s proposal:
“The extension of the biodiesel tax credit is huge. Biodiesel blenders create a renewable and safe domestic energy source for our country and a valuable market for the soybean oil American farmers produce. The credit further encourages the development and sustained success of the biodiesel marketplace, and much credit goes to Chairman Wyden and Ranking Member Hatch and specifically Sens. Grassley and Cantwell for recognizing the importance of the biodiesel tax incentive and including it in their proposal…
“The proposal’s Section 179 reinstatement is also important. This enables farmers and other small business owners to expense investments made in new technology, equipment and infrastructure in their operations. Given the land-based and capital-intensive nature of farming, not to mention the ever-advancing technology we need to farm sustainably and competitively, this program helps us to stay on the cutting edge of our industry.”
Cowan also pointed out the biodiesel industry has been operating without the credit since the end of the fiscal year in September and called on the full committee to take up the measures quickly and move them on to the full Senate and House for final approval.
While Argentine biodiesel is having a hard time getting into Europe, its prospects to make it into the U.S. could be boosted. And that is worrying soybean growers in this country. This story from Agri-View says the Environmental Protection Agency (EPA) is considering whether it should allow Argentine biodiesel to be eligible under the Renewable Fuel Standard (RFS). The potential for CARBIO, the trade association representing Argentine biodiesel producers, with its 1.3 billion gallons of biodiesel production capacity and export subsidies, prompted the American Soybean Association (ASA) to send a letter to EPA to register its concerns.
ASA believes that the far reaching impacts of this issue require an exhaustive review by EPA that includes a public comment period and input from the various stakeholders as well as other government agencies, such as the U.S. Department of Agriculture, and the Office of the U.S. Trade Representative.
EPA must be made aware of the fact that Argentine biodiesel is being heavily subsidized into world markets, and the European Union already has imposed anti-dumping duties on Argentine biodiesel imports due to the significant subsidies that Argentine biodiesel receives as the result of Argentina’s differential export tax system (DET).
ASA also says the CARBIO application needs to be done far in advance so EPA can figure in the amount of Argentine biodiesel when calculating the Required Volume Obligation (RVO) for Biomass-based diesel for that year.
This year’s corn plantings are expected to be down this year, but growers say there will be plenty of stockpiles for all needs, including ethanol. The latest U.S. Department of Agriculture figures show that American farmers expect to plant 3.7 million fewer acres of corn this year, down four percent from 2013. But the National Corn Growers Association says, don’t worry, there are plenty of stocks going into the year, and it would still be the fifth-largest U.S. corn acreage planted.
“In 2013, U.S. farmers produced a record crop abundant enough to meet all needs and provide an ample carry over into 2014,” National Corn Growers Association President Martin Barbre said. “While it is still early in the season and many factors may change the reality on the ground as planting progresses, the public can rest assured that bountiful stockpiles and adequate plantings will ensure our corn security for the year to come.”
NCGA says the plantings will yield 13.37 billion bushels, and corn stocks stand at more than 7 billion bushels, up 30 percent from the same time last year.
Expected big plantings of corn and soybeans underscore the need for a strong Renewable Fuels Standard (RFS). New estimates from the U.S. Department of Agriculture (USDA) show a possible record amount of soybeans expected to be planted this year and the fifth largest corn acreage to be planted as well. The Iowa Renewable Fuels Association (IRFA) says these factors show why a strong and growing RFS is needed this year.
“The past eight years were prosperous for agriculture because the RFS was allowed to act as a sponge, soaking up additional corn and soybeans when needed,” stated IRFA Executive Director Monte Shaw. “The vast amount of corn and soybeans expected to be planted in 2014 demonstrates the importance of a strong and growing RFS. If the EPA’s proposal to essentially gut the RFS is allowed to become final, we could see huge carryovers, crop prices plummet below the cost of production, and family farms placed in jeopardy.”
Nearly 92 million acres is expected to be dedicated to corn this year and a record 81.5 million acres for soybeans, a six percent increase from last year.
How does the Environmental Protection Agency (EPA) feel about its proposal to cut the amount of ethanol and biodiesel to be blended into the Nation’s fuel supply? Well, that depends on who the folks at the agency are talking to.
Speaking before the House Appropriations Committee last week, EPA Administrator Gina McCarthy seemed to backtrack on last January’s statements before biofuels advocates when she told them that her agency “heard loud and clear that we didn’t hit that right,” indicating the EPA could be changing its stance. But when grilled by Congressman David Valadao (R-CA) who represents California agriculture and oil interests, McCarthy had a different response.
“We’re going to make sure to take a reasonable approach that recognizes the infrastructure challenges and the inability at this point to achieve the levels of ethanol that are in the law,” she said.
It’s also interesting that McCarthy did not challenge part of the premise in Valadao’s original question that stated how consumers’ vehicles could not handle higher blends than being offered right now, specifically E10. Biofuels advocates have long made the claim that most vehicles can handle at least 15 percent ethanol blends (E15), and two years ago the EPA approved E15 for use in 2001 and newer vehicles.
A team of four biofuels supporters had the chance to meet with Sen. John Thune (R-SD) last week while in Washington DC for the American Coalition for Ethanol (ACE) Biofuels Beltway March.
In an interview following that meeting, Thune talked about some of the issues facing the biofuels industry, in particular the EPA proposal to lower volume requirements under the Renewable Fuel Standard. “Trying to reverse the EPA’s decision on this is what we’ve been focused on since it came out,” said Sen. Thune.”Going down to 13.1 gallons is horrible for the industry so we hope they make some accommodation for getting beyond the blend wall.”
Thune says he expects to Congress to get a package of expired tax credit extensions passed soon, including renewable energy credits for wind, advanced biofuels, and biodiesel. “It’s very hard for people to plan to invest when they don’t know what the rules are going to be,” he said.
The senator also talked about the rail delays that have been impacting shipments of ethanol and grain. “The railroads are going to have to do a better job,” he said, noting that the problem has been caused by both the long, cold winter and increased shipping of crude oil from North Dakota. “It’s important that the railroads recognize that agricultural commodities need to be shipped too.” Interview with Senator John Thune (R-SD)
2014 ACE Biofuels Beltway March photo album
In this edition of the Domestic Fuel Cast, we talk to Rep. Rodney Davis (R-IL), Sen. Mike Johanns (R-NE), and Sen. John Thune (R-SD), who met with ACE and its supporters and all expressed their backing of efforts to keep renewable fuels, especially ethanol, in the forefront of federal policies.