Domestic Fuel

An Ohio biodiesel plant is among those 19 projects that Michelle told you about yesterday that will share in $564 million in federal Recovery Act monies.

This press release from Rep. Marcy Kaptur (D-OH), whose district includes a biorefinery pilot project on the Health Science Campus at the University of Toledo, says that biorefinery will get nearly $20 million:

Federal funding for the project will total $19.9 million and will be derived from the American Recovery and Reinvestment Act, popularly known as the economic stimulus plan. “Our goal is to put our people to work in an industry that can help America break its dependence on imported petroleum,” Kaptur said.

The Toledo pilot plant will refine biodiesel—which Secretary Chu noted will be an end project that requires no additional processing in order to be used in diesel engines—out of agricultural and forest product residue.

The project is expected to create at least 100 jobs in the building of the biorefinery with the potential for more after that.

Ret. General Wesley K. Clark, who is the Co-Chairman of Growth Energy, will be speaking at the White House jobs summit today.

“Green Jobs” has been a hot topic since the new administration took office; yet not much traction has been gained in turning around unemployment rates, which are currently the highest since 1983. The summit was convened by President Barack Obama who took office during one of the country’s worst ever economic recessions. The goal of the forum is to conjugate business executives, economists and labor leaders to discuss ways to improve the economy and create jobs.

According to Growth Energy, Gen. Clark will be making remarks about the Administration’s plans to focus on stimulating the renewable energy industry, in an effort to remake the nation’s economy for more sustainable growth that is less dependent on debt and foreign sources of energy. Clark said that for too long, imported oil has held the nation’s economy “over a barrel.”

“Ethanol is the model for all successful renewable energy industries:  driven by technological innovation and with enormous potential for growth and job creation,” said Gen. Clark. “Ethanol is the only viable renewable, sustainable fuel we have in this country that is an alternative to gasoline refined from imported oil. It is being used today. And we can make it cleaner and greener every year – while creating jobs right here that can’t be outsourced.”

In other news, Tuesday Growth Energy recieved a letter from the EPA postponing the decision to act on the Green Jobs Waiver, until mid0-2010.

Agriculture Secretary Tom Vilsack has responded to the Environmental Protection Agency’s (EPA) postponement of the E15 Waiver request.

In a statement issued by the United States Department of Agriculture (USDA), Vilsack said, “We are very encouraged that the results of the tests of E15 in newer model cars have been positive. The Environmental Protection Agency’s (EPA) movement towards developing an effective labeling rule sends a strong signal about the future viability of the biofuels industry. Biofuels are a vital component of America’s energy future, helping to break our dependence on oil. This commitment reflects the Obama Administration’s support for a strong biofuels industry helping to increase income for farmers and jobs in rural America.”

In other news, the industry is still waiting to hear EPA’s announcement of the Renewable Fuel Standard (RFS) for 2010. which were to have been released by November 30. The number for 2009 was 10.21 percent of all gasoline sold or approximately 11 billion gallons. The RFS is used by obligated parties including refiners, importers and blenders to determine their renewable fuels obligation. Compliance is monitored through the Renwable Indentificaion Number, or RINs. The notice is required under section 211(0) of the Clean Air Act as amended by the Energy Independence and Security Act of 2007 which was signed into law on December 17, 2007.

The ethanol industry continues to let the EPA know its thoughts on the postponement of the decision regarding the E15 Waiver request, but like many other organization, is confident that the EPA will approve up to E15 blends by mid-2010.

Brian Jennings, the Executive Vice President of the American Coalition for Ethanol (ACE) and one of the ethanol groups to submit the original waiver request, commented today, “While we would have strongly preferred that EPA approved E15 today for all vehicles, we’re pleased that progress is being made toward this goal. We are confident that in the long run the data will demonstrate that E15 and higher ethanol blends such as E20 and E30 can effectively be used in all vehicles.”

While the EPA acknowledges that ethanol will need to be blended into gasoline at levels great than 10 percent (E10) to meet the goals of the Renewable Fuel Standard which states that the country needs to blend 36 billion gallons of alternative fuels by 2022, there is consternation among supporters of their unwillingness to acknowledge current vehicle research that supports the use of mid-level blends of ethanol. ACE has conducted research regarding the performance of mid-level ethanol blends in conventional vehicles for the past several years.

The organization believes that in preparation for the E15 waiver to be approved now is a good time for Congress to enact the Harkin-Lugar ‘Choice Act,’ S. 1627, “which promotes flexible fuel vehicles, blender pumps and ways for fuel retailers to economically add more options for their customers.”

Jennings concluded, “Ultimately we need to shift the power to decide what fuels motorists use away from government agencies and oil companies and to consumers.  We support maximum consumer choice for motorists to use E10, E15, E20, E30, E85, or ethanol-free gasoline, and we believe that when consumers are finally given these meaningful choices they will select the ethanol-blended fuels that work best in their vehicles. Senate Bill 1627 will be one of ACE’s top legislative priorities for 2010.”

Click here to read ACE’s full statement.

The EPA received more than 80,000 comments regarding the E15 waiver and with responses coming in a tidal wave, there may well be another 80,000 more. Yesterday, the EPA submitted a letter to “postpone” making a decision regarding the E15 waiver petition.

“This delay from EPA threatens to paralyze the continued growth of the American ethanol industry because of its decision to over analyze this decision,” said Renewable Fuels Association (RFA) spokesperson, Matt Hartwig.

According to Hartwig and seconded by many in the ethanol industry, the data that has been submitted to the EPA in support of this request, “demonstrates that there are no ill effects of ethanol with vehicles today.”

He continued, “In order to avoid this paralysis by analysis, we believe EPA should immediately approve an intermediate ethanol blend such as E12 or E13.” This would represent several more billion gallons of ethanol in the marketplace and, “signal a willingness by the EPA to work with the industry to expand renewable fuels.” It would also, concluded Hartwig, provide a “glimmer of hope,” for those second generation ethanol companies that there will be a market for their product.

You an listen to the full interview with Matt Hartwig here.

Podcast: Play in new window | Download (782.8KB)

The deadline was met yesterday on the Environmental Protection Agency’s (EPA) ruling on the E15 waiver, or was it? The EPA, in a letter to Growth Energy, the organization that filed the E15 Waiver, also known as the Green Jobs Waiver, has ruled to not rule. According to the letter the EPA wrote, “we want to make sure we have all the necessary science to make the right decision.” The letter also stated, “our engineering assessments indicate that the “robust fuel, engine and emissions control systems on newer vehicles (likely 2001 and newer model years) will likely be able to accommodate higher ethanol blends, such as E15.”

Today, that decision is to postpone a ruling on the petition until the DOE completes a study between May- August 2010. In addition, the EPA is looking at “addressing fuel pump labeling issues” should ethanol be blended up to 15 percent in the future. It appears that the EPA won’t make a decision on this petition until the end of 2010 but that when it does, it will be positive.

In response to the letter, Growth Energy Co-Chairman Gen. Wesley Clark said, “This announcement is a strong signal that we are preparing to move to E15, a measure that will create 136,000 new U.S. jobs, cut greenhouse gas emissions and lessen America’s dependence on imported oil.”

Tom Buis, CEO of Growth Energy, noted, “The Growth Energy Green Jobs Waiver brought to light the issue of the regulatory cap on ethanol and is responsible for moving this process forward. The importance of increasing the blend is now universally understood. This expanded market opportunity is necessary to draw capital investment for cellulosic ethanol and allows the industry to comply with the Renewable Fuel Standard.”

Buis also commended the EPA for its intent to begin the labeling and public education process in anticipation for higher ethanol blends in the marketplace.

Click here to read the EPA letter and Growth Energy’s response.

Listen to the Growth Energy press conference opening statements from this morning here:

Podcast: Play in new window | Download (3.4MB)

Ethanol industry groups are reacting to the announcement this morning from the Environmental Protection Agency that may be another six months before a final decision can be made on increasing the allowable ethanol content in fuel to 15 percent.

Growth Energy, the coalition of U.S. ethanol supporters that filed the Green Jobs Waiver seeking E15, is optimistic that the agency will approve E15 upon the completion of ongoing tests early next year.

“This announcement is a strong signal that we are preparing to move to E15, a measure that will create 136,000 new U.S. jobs, cut greenhouse gas emissions and lessen America’s dependence on imported oil,” said Gen. Wesley Clark, Co-Chairman of Growth Energy.

“While we believe the data included in the Green Jobs Waiver supports raising the blend to E15, critics have called for additional testing. We are confident the ongoing tests will further confirm the data we submitted in the Growth Energy Green Jobs Waiver and silence those critics, allowing more American-produced energy to enter the market.” said Tom Buis, CEO of Growth Energy.

The Renewable Fuels Association says the delay threatens the future growth of the ethanol industry.

“In order to avoid paralysis by analysis, EPA should immediately approve intermediate ethanol blends, such as E12,” said RFA president and CEO Bob Dinneen in a statement. “Allowing for a 20 percent increase in ethanol’s potential share of the market would provide some breathing room for the industry while EPA finishes its testing on E15. Additionally, it would represent a good faith gesture that underscores the commitment President Obama has pledged to biofuels.”

EPA’s announcement in a letter to Growth Energy today indicated that it will be the middle of 2010 before they have enough data to make a final decision on the waiver.

December 1 is the deadline for the Environmental Protection Agency to issue a decision on the waiver to allow up to 15 percent ethanol in regular gasoline and the industry is anxiously awaiting a positive outcome.

The waiver request was submitted by Growth Energy and an alliance of ethanol producer organizations and companies in early March and by law EPA must take action on it by December 1 and the word from EPA officials last week was that they are committed to making an announcement by the deadline. Growth Energy CEO Tom Buis says they are optimistic. “We think we made the case,” Buis said. “The data we submitted proves there is no impact on engine performance or durability that would prevent the EPA from deciding in favor of E15.”

Matt Hartwig with the Renewable Fuels Association says the decision could go in several directions, three of which his group suggested in comments to the agency. “Obviously one is, yes – E15 is a safe and effective fuel. That’s the one we believe should be their decision,” said Hartwig. “Another option is the E12 pathway, taking that intermediate step while they continue to work on the full E15 waiver.”

He says a third option might be a partial waiver, “Where they say you can use up to E15 blends for on-road vehicle engines, but would put off a complete decision on the waiver with small engines or marine engines until they were comfortable with the data.”

The fate of the ethanol industry hinges on the EPA’s decision, since the so-called “blend wall” has already been reached and without the waiver there will be no way to utilize the production of ethanol required under the Renewable Fuel Standard mandated by the Energy Independence and Security Act of 2007. However, if the EPA denies the waiver, the industry may consider other regulatory or legislative options to overcome the blend wall issue.

Brazilian Finance Minister Guido Mantega has confirmed that government will extend tax breaks to flexible fuel vehicles (FFVs) and others that are “environmently friendly”. According to Reuters, the Brazilian government will allow and extension on tax breaks given to E85 compatible cars with 1-liter engines until March of 1010 and trucks until June of 2010. Reversely, taxes on traditional gasoline-powered vehicles will rise in December.

“We want the automobile industry in Brazil to consolidate and to bring new environmental technologies to the country” Mantega told reporters at a news conference in Brasilia.

The government will lose an estimated 1.3 billion reais ($751 million) in revenue as a result of the measure. But taking into account potentially higher car sales, saved jobs, and unemployment benefits not paid, the government would come out even, Mantega said.

“If we look at the whole package, we may neutralize this (tax) loss,” Mantega said.

Biodiesel producers are worried the wait for the renewal … or even worse, the failure of renewal … of a crucial tax credit, set to expire in just more than a month, could be a death knell for the industry.

The Houston Chronicle reports that despite efforts already underway in the U.S. House and Senate to renew the $1 per gallon biodiesel tax credit, lawmakers don’t seem to be moving this measure to the forefront:

Losing the biodiesel tax incentive would be another blow to an industry that has closed many plants this year and slashed jobs amid rising costs of raw materials, weak domestic demand and on-again, off-again backing from the government.

Today, U.S. biodiesel plants have the capacity to produce about 2.5 billion gallons a year of the fuel. Yet more than half of that plant capacity is sitting idle amid uncertainty on several fronts…
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