While we’ve heard a lot about the federal $1-a-gallon biodiesel tax incentive, there’s some state credits that could help producers stay competitive. The Iowa Biodiesel Board has asked lawmakers in Des Moines to extend the .02 per gallon refundable credit for the first 25 million gallons of biodiesel produced in any single plant.
The incentive is set to expire at the end of calendar year 2014, but Senate File 2333 would extend the credit through 2019.
During the Iowa Biodiesel Board’s annual Biodiesel Day on the Hill event today, IBB said the state legislation is necessary to mitigate impact from potential changes to the federal Renewable Fuel Standard, provide some market certainty and keep Iowa competitive with surrounding states.
“Unless changes are made to current federal biodiesel policy, we will likely see significant nationwide consolidation of production capacity,” said Grant Kimberley, executive director of IBB. “The extension of the biodiesel producer incentive will encourage production to remain in Iowa, substantially benefiting Iowa’s economy and biofuels leadership position.”
The Iowans point out that their neighboring states have become more aggressive in their promotion of biodiesel, such as Missouri’s production incentive of $.30 per gallon on the first 15 million gallons produced and Illinois’ exemption from state sales tax on blends of biodiesel higher than 10 percent, and producers in the Hawkeye State need this incentive to stay competitive.
The bill to extend the credit passed out of the state Senate Ways and Means Committee earlier this week.
There were over 25 battalions of ethanol troops on Capitol Hill this week to fight for the honor of biofuels, bringing the message to both friends and foes in Congress.
American Coalition for Ethanol president Ron Alverson, a South Dakota farmer and board member for Dakota Ethanol, says the teams had appointments with the offices of more than 130 senators and representatives, and he thought they were well received, even in enemy territory. “We went into what we thought were going to be some pretty hard places – representatives from Alabama, Pennsylvania, Rhode Island,” he said. “They were very cordial and they listened well … we were really pleased.”
When meeting with friends like Senator Mike Johanns (R-NE), the ethanol supporters delivered messages of gratitude and asked advice for approaching less friendly lawmakers. They also provided “ammunition” for allies in the form of the packets of the latest information to defend against some of the more popular arguments against ethanol, such as food versus fuel and engine issues with higher blends. “We’ve got some really good arguments and good data…all we can do is go out and tell our story,” said Alverson.
There are lots of activities for National Agriculture Day going on today in Washington DC, including a big celebration unveiling a statue of Dr. Norman Borlaug in the Capitol, but Agriculture Secretary Tom Vilsack still took time to meet with members of the American Coalition for Ethanol in town this week to visit Congressional offices
“The country needs a robust renewable fuel industry,” said Vilsack. “It provides choice for consumers and less cost gas at the pump. It helps to create hundreds of thousands of jobs which is important for the economy. It stabilizes farm income, it’s better for the environment, and it makes us a safer nation because we’re less reliant on others for our energy and fuel sources. So we need to continue to have a robust commitment to this industry, we need to expand it and grow it.” Brief interview with Secretary Vilsack after ACE visit
The secretary spoke to the more than 80 ethanol industry about what USDA is doing to achieve that goal, including finding creative ways to increase higher ethanol blend pumps, promoting exports of ethanol to Japan, India and China, and continuing to work towards encouraging use of higher blends in this country.
2014 ACE Biofuels Beltway March photo album
“We’ve got people from all walks of life here,” said ACE Executive Vice President Brian Jennings. That includes not just ethanol producers and corn farmers, but bankers, truckers, cattle ranchers and students. “It shows the diversity of this industry, the breadth and depth of support we have out there in the grassroots for ethanol.”
Jennings says 40 percent of the group gathered for this sixth annual DC event have never visited the office of a Congressional representative before. “We try to give them some advice,” he said. “Most importantly, tell your story.”
The ACE group is hearing this morning from the Assistant Administrator of the Environmental Protection Agency, the Secretary of Agriculture, and the Special Assistant to the president for Energy and Climate Change before heading to the Hill to meet with congressional representatives.
The letter reads, in part, “The advanced biofuels industry is at a critical stage of development. Despite a difficult financial market, we are now operating commercial plants across the country and continue to make progress on dozens of additional projects in the final stages of development. Advanced biofuel tax credits have allowed the biofuels industry to make great strides in reducing the cost of production and developing first-of-kind technologies to deploy the most innovative fuel in the world.
“As leaders in a critical innovation sector in the United States, we are well aware of the financial constraints facing this country. However, the United States’ global competitors are offering tax incentives for advanced biofuels and in fact are attracting construction of new facilities – and associated high skilled jobs. If Congress wants American companies to continue developing these homegrown technologies in the United States, it must extend these credits. Biofuel producers are also competing with incumbent fossil energy industries who continue to enjoy tax incentives on a permanent basis.”
The letter marks the latest effort by biodiesel and ethanol producers and their backers to get better federal government support for their green fuels. Late last year, the Environmental Protection Agency undercut the industries when it proposed drastic reductions in the amount of biodiesel and ethanol to be mixed into the Nation’s fuel supply. In addition, Washington also let these vital federal tax credits expire at the end of the year.
Ethanol advocates from around the country are marching on Capitol Hill this week with the message that the Renewable Fuel Standard (RFS) is working.
It’s the 6th annual Biofuels Beltway March organized by the American Coalition for Ethanol (ACE). “We have more than 80 people registered to attend, which is our highest attendance yet,” said Director of Strategic Projects Shannon Gustafson. “Those attending the event are fuel retailers, farmers, ethanol producers, bankers, and business owners representing 15 different states.”
The event officially kicks off on Tuesday when attendees will hear from representatives of the Environmental Protection Agency, USDA, and the White House. After that, the marchers will be split into groups to attend meetings on Capitol Hill Tuesday afternoon and Wednesday. “So far we have meetings scheduled with more than 130 offices on Capitol Hill,” said Gustafson, who anticipates they will have even more before they begin.
In addition to carrying the message that the RFS is working, supporters will also be telling lawmakers how ethanol benefits consumers, decreases our dependence on foreign oil, and plays a critical role in the future of our nation’s energy independence.
Domestic Fuel will be there to bring it home to those of you who are unable to attend. Thanks to ACE and Patriot Renewable Fuels for making that possible.
Shaw has just announced the formation of his Iowa Agriculture Team, which includes key ag leaders from across the district. “It takes more than just great land and good weather to make Iowa the leading agricultural state – it takes great leaders,” Shaw said. “As a farm boy, I’ve still got the dirt under my fingernails and with the help of these experts I will be up to speed on the challenges facing Iowa’s farmers. I also appreciate their willingness to take our message out to the countryside and the city. Folks connected to and interested in agriculture will play key roles on our path to victory in June and November.”
Shaw officially launched his campaign for Iowa’s 3rd Congressional District last month. He intends to remain in his position with Iowa RFA during the campaign with the full support of the organization’s board of ethanol producers.
March Madness is upon us. For those not living in the United States, it’s the two weeks where college men and women’s basketball teams battle it out on the court until the last team is standing and crowned champion. Now that the NCAA teams have been announced and the brackets determined, people are filling out their official tournament forms with hopes of also being the last one standing (this assures bragging rights for one year).
This year, the Americans United for Change has released its own version of March Madness: the 1st Annual Environment Protection Agency (EPA) Renewable Fuel Standard Elimination Tournament. Jeremy Funk, communications director, notes that there is only one possible upset in this tournament and its a long shot and that is the renewable energy industry coming out the victor. He says “everyone knows the fix is in at this tournament if the EPA ejects the RFS and guarantees victory for 1st seed team Big Oil over the 16th seed team, The American Consumers”.
The EPA is currently reviewing more than 100,000 comments submitted in response to its 2014 proposed Renewable Fuel Standard (RFS) – an energy policy designed to reduce the use of imported oil while also reducing greenhouse gas emissions.
“Big Oil has been working the refs in Washington for decades, complaining they need billions of dollars in taxpayer subsidies, even when they’ve got $100 billion in profits on the scoreboard,” added Funk. “Now the oil industry has a full court press on Washington to once again rewrite the rules in their favor by ejecting the cleaner, cheaper renewable fuels competition from the game. Without a strong Renewable Fuel Standard promoting healthy competition, Big Oil would be free to give consumers the Bobby Knight treatment at the pump.”
He says he is confident that when the EPA’s referees review this call, they’ll see the RFS has been an incredible Cinderella Story for rural communities when it comes to creating jobs, income and opportunity.
Funk concluded, “They’ll see the RFS has meant our troops have has been playing stronger D by reducing our dependence on oil from unstable regions overseas. They’d see the RFS has been a slam dunk for innovations in cleaner burning, next generation renewable fuels to combat climate change. We’re confident in the end, the EPA will reverse this terrible call and make Big Oil play fair for a change.”
A 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.
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.”
“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.”
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.
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.
The 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.
Things 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 will soon begin incorporating 15 percent ethanol (E15) fuel into its state vehicle fleet.
Governor 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.
It 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.”