Minnesota Adopts Biggest Biodiesel Standard

Minnesota Gov. Tim Pawlenty has signed into law a measure that will increase his state’s biodiesel mandate from 2 percent currently to a whopping 20 percent by 2015.

As you might remember from my post last Friday (May 9th), the standard will be phased in over the next several years and will only be in effect when there’s adequate supplies of biodiesel available. In addition, due to Minnesota’s cold winters, the standard will apply only during the months of April, May, June, July, August, September, and October.

The news was welcomed, obviously, by the National Biodiesel Board:

Ed Hegland, Chairman of the National Biodiesel Board and a Minnesota farmer, praised the legislation’s commitment to fuel quality. “The legislation includes quality assurance and national ASTM fuel specifications,” he said. “We will continue to work with state leaders and stakeholders impacted by this legislation to ensure only quality fuel continues to enter the marketplace.”

The measure also calls for additional feedstocks of algae, waste oils, and tallow, as well as other future feedstocks being researched in the state make up 5 percent of the biodiesel’s content.

Iowa to Increase Ethanol and Biodiesel Infrastructure

A new state law will help expand ethanol and biodiesel availability in the state.

Iowa Governor CulverAmid several bills signed by Iowa Governor Chet Culver on Monday was one that makes changes to the Iowa Renewable Fuels Infrastructure Program created in 2006 to expand renewable fuel infrastructure and access to renewable fuels all across Iowa.

Among the changes are enhanced grants for E85 and biodiesel infrastructure, bonus grants for adding pumps at multiple retail outlets, allowing retailers to receive grants for both E85 and biodiesel pumps, and allowing blender pumps to qualify for the grant program.

Governor Culver says the law “modernizes the very successful state renewable fuels infrastructure program and makes biofuels more accessible and available for individuals traveling throughout Iowa.”

Iowa Renewable Fuels Association executive director Monte Shaw says the bill will boost Iowa’s efforts to bring more E85 and biodiesel to Iowa consumers. “Roughly 80 percent of Iowa flexible fuel vehicle owners do not have access to E85 within their ZIP code,” said Shaw. “This proactive legislation should cause petroleum wholesalers and retailers to rethink the profit potential for adding renewable fuels to their product mix.”

The bill also calls for the creation of a state-wide renewable fuels marketing plan and marketing campaign for owners of flex fuel vehicles.

USDA Expects Enough Corn for Ethanol

The latest U.S. Department of Agriculture forecast calls for enough corn and soybeans to meet both food and fuel needs.

The May supply and demand report released on Friday based predictions for the 2008-09 marketing year on an expected corn crop of 12.1 billion bushels, down 7 percent from last year’s record crop.

USDAUSDA is expecting total U.S. corn use in 2008-09 to be 2 percent lower than the current marketing year, which ends in August. The report calls for reductions in feed and residual use and exports to more than offset a continued expansion in ethanol production.

Feed and residual use is projected down 14 percent as corn feeding declines with increased production of distillers grains, higher corn prices, and reduced red meat production. Corn exports are projected down 16 percent as U.S. supplies face increased world competition with increased foreign production and a sharp drop in EU-27 imports. Ethanol use is projected at 4 billion bushels, up 33 percent from 2007/08. The slowing pace of plant construction and expansion, and lower capacity utilization are expected to modestly dampen growth in ethanol corn use. With total corn use expected to exceed production by 635 million bushels, ending stocks are projected down 45 percent. At 763 million bushels, ending stocks would be the lowest since 1995/96.

Meanwhile, on the soybean side, production is expected to be up by 520 million bushels this year, but biodiesel production is expected to be only slightly higher in the coming marketing year. USDA is projecting biodiesel will use 15 percent of total soybean oil production in 2008-09, compared with 14 percent this year.

Ethanol Provisions in Farm Bill

Congressional negotiators Thursday announced a compromise 2007 Farm Bill that has new incentives for biofuels production.

“The new Farm Bill will dramatically ramp up the agricultural sector’s capacity to produce clean, renewable energy,” said conference committee chairman Senator Tom Harkin (D-IA). “Significantly, it provides more than a billion dollars to expand the supply of fuels made from biomass and crop by-products, other than grain.”

According to Senator Saxby Chambliss of Georgia, the ranking Republican on the Senate Agriculture Committee, the bill invests $320 million for new loan guarantee program for the development and construction of commercial-scale biorefineries; provides $300 million in the Bioenergy Program to provide assistance to biofuel production plants for the purchase of feedstocks; provides $118 million for biomass research and development efforts; reauthorizes and provides $250 million for grants and loan guarantees for renewable energy and energy efficiency projects; and authorizes a new program, the Biomass Crop Assistance Program to help producers transition to new energy crops for biofuel production.

To help pay for the Farm Bill, negotiators cut the blenders tax credit for corn-based ethanol from 51 cents to 45 cents and initiated a tax credit for cellulosic ethanol. The bill also includes language which calls on the federal government to buy surplus sugar and sell it to ethanol producers, where it would be used in a mixture with corn.

As soon as the compromise Farm Bill was announced, the administration issued a statement promising a presidential veto because it lacks “significant reform and increases spending by nearly $20 billion.” However, House and Senate ag leadership are working on a strategy to override a veto.

Defending the Renewable Fuels Standard

Domestic Fuel CastHigher food prices have led to increasing calls for changes in the Renewable Fuels Standard (RFS) that was implemented as part the Energy bill just signed into law last December, which calls for 36 billion gallons of annual renewable fuel use by 2022.

In this DomesticFuel Cast, we hear from several of the witnesses who testified in support of the RFS at a recent hearing of the House Subcommittee on Energy and Air Quality. Included are comments from Environmental Protection Agency Deputy Assistant Administrator Robert Meyers, Bob Dinneen with the Renewable Fuels Association, Nathaneal Greene with the Natural Resources Defense Council, Randy Kremer of KL Process Design Group, and Dr. Mark Stowers with POET.

Here is the Domestic Fuel Cast #3:

You can also subscribe to the Domestic Fuel Cast using the following url/feed link: http://www.zimmcomm.biz/domesticfuel/domestic-fuel-cast.xml.

Cellulosic Ethanol Focus at Hearing

A South Dakota lawmaker is urging Congress to allow cellulosic ethanol derived from woody biomass on federal lands to count towards the Renewable Fuels Standard. Current law prevents biofuels made from biomass that originates on public lands or any biomass from private land that is not ‘planted’ and ‘actively managed’ from being counted toward the RFS.

Herseth SandlinDuring a hearing this week on the RFS, Rep. Stephanie Herseth Sandlin (D-SD) talked about the issue and how it is impacting KL Process Design Group of Rapid City, which is using waste wood product from the Black Hills forest to produce cellulosic ethanol.

“They would like to participate in the renewable energy movement the energy bill fosters and they have no interest in turning the Black Hills into a so-called ‘fuel farm’,” Herseth Sandlin told the committee.

She noted that KL’s plant in Upton, Wyoming uses Ponderosa pine waste from the forest floor which is part of forest management thinning to prevent forest fires. “Leaving slash piles to rot or burning them leads to negative environmental effects that far outweigh any benefit gained when waste returns to soil,” she said.

KL Process DesignRandy Kramer, president and co-founder of KL Process Design, also testified before the committee.

“With a Black Hills National Forest supervisor, our research is dedicated to forest stewardship that includes finding better uses for gathered forest and mill waste that otherwise provides added fuel for forest fires,” said Kramer. “Existing timber harvest and thinning programs already allow for the removal of material from national forests.”

He spoke strongly in support of corn ethanol as the only large volume biofuels bridge to the 2022 cellulose ethanol goal. “We must protect this bridge as a strategic component to allow companies like ours to improve cellulose technology,” Kramer said.

Renewable Fuels Association president Bob Dinneen echoed that sentiment under questioning by committee members. “If you are going to have a second generation ethanol industry, you have to make sure that you have not eviscerated the first generation ethanol industry that is providing the foundation from which those new technologies will be able to flourish.”

Ethanol Standard Debated as Oil Prices Rise

House EnergyAs the House Subcommittee on Energy and Air Quality heard testimony regarding the Renewable Fuels Standard (RFS) on Tuesday, oil hit yet another record high of $122 a barrel.

RFA
Renewable Fuels Association
president Bob Dinneen reminded the committee of that several times during the hearing, having to correct his own pre-prepared remarks. “Mr. Chairman, the RFS made sense when you passed it in December and prices were $90 a barrel,” Dinneen said. “It makes more sense today with crude oil prices at $120 a barrel. I’m sorry, just while this hearing has been going on, the market has increased and we’re now looking at $122 a barrel oil.”

“Ethanol is the only tool we have today that can address the nation’s most serious economic issue – our dependence on imported oil and the rising price of gasoline and crude oil,” he said.

EPAEnvironmental Protection Agency Deputy Assistant Administrator Robert Meyers told the hearing that the request by Texas for a waiver of the RFS will go through the administrative process required by law.

“It’s our intent to shortly issue a federal register notice on this matter and establish a docket to receive public comments,” Meyers said. “EPA is required under the Clean Air Act to approve or disapprove a state petition within 90 days of receiving it.”

Besides Dinneen and Meyers, other witnesses on the issue included Nathaneal Greene with the Natural Resources Defense Council, Charles Drevna with the National Petrochemical and Refiners, Randy Kremer of cellulosic ethanol producer KL Process Design Group, Scott Faber with the Grocery Manufacturers Association, Rick Tolman with the National Corn Growers Association, Dr. Mark Stowers with POET, and Gawain Kripke of the food aid group Oxfam America.

Opposition to Ethanol Waiver Demand

Two dozen Republican Senators, including presidential candidate John McCain, are urging the Environmental Protection Agency to waive the Renewable Fuels Standard they just passed as part of the energy bill in December in an effort to cut food prices. Other senators disagree.

HarkinSenate Agriculture Committee Chairman Tom Harkin of Iowa says the request would cut short the promise of biofuels for our nation’s energy security and is without merit. He says that “singling out increased biofuels production and use in the United States, European Union and other countries as the chief cause of higher world food prices is an over-simplification of the problem.”

ThuneSouth Dakota Senator John Thune says the call for a waiver from the national ethanol mandate due to higher food prices is simply “misguided.”

“We have an opportunity here to become more energy independent and ethanol has played a big role in that process,” Thune says. “I think if the EPA were to go back on our commitment to renewable energy it would be a misguided policy for the country.”

“It’s convenient right now to make ethanol the whipping boy for food prices when in fact oil prices have a lot more to do with the high price of food than the price of corn does,” Thune said. “It’s very fashionable right now to attack ethanol and everybody seems to be piling on.”

Renewable Fuels Association president Bob Dinneen says cutting ethanol production would have the opposite effect intended by the Senators – it would actually increase food prices by driving the price of gasoline even higher.

“If you take 4.5 billion gallons of ethanol off the market today, the impact on gasoline prices would be significant,” Dinneen said.

Economist John Urbanchuk of LECG estimates that an ethanol waiver “would add about $1.10 to the price of a gallon of gasoline in the short term because you’ve got to go out and replace that 4.5 billion gallons of ethanol.”

Florida Requires Ethanol Use

Despite all the outcry about ethanol in the media, Florida is bucking the trend and establishing a renewable fuel standard, requiring ethanol to make up 10 percent of Florida’s total fuel supply by 2010.

FL Farm to FuelFlorida’s comprehensive “Green Energy” bill passed by the 2008 Florida Legislature last week includes a variety of other initiatives, prompted by Governor Charlie Crist, who praised the legislature for their work on the bill. “I’m very, very proud of the House and Senate in these difficult times they continue to move Florida forward and keep Florida green and make it even better,” Crist said.

There is a strong push in Florida to move toward producing more alternative crops for biofuels. The driving force behind that push has been Agriculture Commissioner Charles Bronson who says they are looking at a wide variety of alternative energy crops, especially those that can be grown using less water. “We have the capability of being on the ground first with real fuel,” he said. “Agriculture needs to be at the table when that process is put together.”

Bronson estimates that within ten years, Florida can produce three billion gallons of ethanol and biodiesel, and he believes that can happen without impacting food production in the state. “What we need to do is keep our food production up and grow as a second or third crop these fuel crops,” he said.

Bronson’s department is busy planning the third annual Florida Farm to Fuel summit, which will be held July 30th – August 1st in Orlando. Among the topics that will be addressed is renewable fuels initiatives in the new state energy bill, the federal energy bill, and the farm bill and how Florida can play a role in meeting the demand.

EPIC Speaks Out Against Ethanol Scapegoating

e.pngThe Ethanol Promotion and Information Council has gathered data from multiple sources that debunk claims that America’s renewable fuels are a large player in soaring food prices. Toni Nuernberg, the Executive Director of EPIC wants to spread the word that changing the nation’s renewable fuels standard is not the answer to driving down global food costs.

Recent calls to reduce the renewable fuels standard (RFS) seem like an easy and immediate fix to world food shortages. However, the factors influencing global food prices and supplies are a result of converging global production and demand issues that go far beyond corn-based ethanol. Changing U.S. energy policy will not provide short-term relief on the food supply and decrease food prices as many expect. In fact, relaxing the renewable fuels standard mandate actually may escalate food prices now and in the future by driving fuel prices even higher.

Across the country, including 10 percent ethanol in gasoline has held the price per gallon down by $.15 to $.45 depending on the region of the country, as highlighted in recent studies in Missouri. Reducing ethanol requirements by 50 percent removes 4.5 billion gallons of ethanol from the fuel supply. This will reduce the total fuel supply, causing transportation, fertilizer, fuel, packaging and other food production costs to continue to increase, further inflating the price of food.

Long-term, repealing or suspending the 2007 Energy Policy Act is unnecessary, as technologies in use today and on the horizon will enable American farmers to increase productivity per acre to meet demands for food and this mandate, potentially with the same or fewer inputs than used today.

For many, it is easy to look past the primary factor wreaking havoc with the global economy — namely exorbitant oil prices which have increased from $35 in 2005 to more than $110 today — nearly 300 percent.

Globally, today’s energy prices are a disincentive to food production, as third world countries simply can’t afford to develop agriculture systems and, therefore, their ability to feed themselves.

Corn-based ethanol, while not a silver bullet, is the foundation upon which the next generation of “advanced biofuels” is being built.

The industry is fueling research into cellulosic ethanol produced from feedstocks such as switch grass and other non-edible renewable biomass. Corn-based ethanol is a solution that is here now, available in our current infrastructure and making a difference in the price of fuel.

Renewable Energy Bill Passes Florida Legislature

A comprehensive energy bill has passed the Florida legislature, and now goes to the governor for an expected signature.

This story from the Orlando (FL) Sun-Sentinel says the measure has provisions specifically addressing renewable energy in the state:

crist.jpgThe bill, which addresses Gov. Charlie Crist’s call for policies that combat global warming, is made up of 112 sections that could dramatically increase the state’s investment in renewable energy. The House passed the energy bill unanimously Tuesday and the Senate passed the House bill by a vote of 39 to1 Wednesday.

Among the changes proposed, the bill would require state buildings to meet specific “green energy” standards. That’s expected to cost more during construction but save the state money in the long run by increasing energy efficiency.

The bill would allow state regulators to set goals for individual utilities on how much renewable energy they produce and to fine utilities that don’t meet the goals and reward them if they do. Regulators would be required to consider the effect of utility customers’ rates when setting the goals.

Passage gained the praise of Crist:

“I want to thank Senate President Ken Pruitt, House Speaker Marco Rubio, Senator Burt Saunders and Representative Stan Mayfield for their leadership in securing Florida’s green energy future,” Governor Crist said. “Today’s vote signifies a commitment to protecting Florida’s natural beauty and stimulating our economy, as well as reducing our dependence on foreign sources of oil.”

The bill also assures accountability for the renewable energy with a state commission studying whether green fuels such as biodiesel, wind, and solar provide returns for the state’s investment in them.

President Talks Ethanol in Press Briefing

President Bush talked about the farm bill, higher food and energy costs, expanding domestic oil production, ethanol and other alternative energy sources during a press briefing on Tuesday morning.

The president was critical of Congress blocking efforts to explore in ANWR and to expand capacity and build more refineries, as well as a “massive, bloated farm bill that would do little to solve the problem” of higher food prices. He indicated they were considering a summer moratorium on the federal gas tax to help alleviate pain at the pump and he defended the use of ethanol for economic and energy security.

Bush press conference“The high price of gasoline is going to spur more investment in ethanol as an alternative to gasoline,” Bush said. “And the truth of the matter is it’s in our national interests that our farmers grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us.”

In reaction to the question, why haven’t you put more resources into renewable energy research, Bush responded.

“We’ve put a lot into ethanol. As a matter of fact, the solution to the issue of corn-fed ethanol is cellulosic ethanol, which is a fancy word for saying we’re going to make ethanol out of switchgrasses, or wood chips. And we’re spending a lot of money along those lines.

But energy policy needs to be comprehensive. And we got to understand we’re in a transition period. The problem is there’s been a lot of focus by the Congress in the intermediate steps and in the long-term steps — the long-term steps being hydrogen; the intermediate steps being biofuels, for example, and researching the biofuels, and battery technology — but not enough emphasis on the here and now.”

Regarding food price inflation, Bush said that “85 percent of the world’s food prices are caused by weather, increased demand and energy prices — just the cost of growing product.” The president said the United States is concerned about the scarcity of food in poorer countries and will continue to be generous in food donations abroad.

Read the transcript of the president’s remarks here.

Importance of Ethanol

The development of agriculture-based biofuels is critical to revitalizing rural communities, according to U.S. Secretary of Agriculture Ed Schafer.

Schafer NAFBSpeaking to farm broadcasters meeting in Washington, Schafer said managing the blending of energy and agriculture is one of the top priorities for USDA. “If we over the next ten years could convert one-fourth of the four billion barrels of foreign oil that we import into this country into biofuels, not only would it increase the security of our country, it would double farm income,” said Schafer. “You can imagine if we doubled farm income in this country, what a revitalization would take place in rural areas.”

Regarding the concern about food and feed price increases relating to biofuels, “We need to remember that only about 25 percent of the corn crop goes into ethanol today and we have been able to stay ahead of that by yield increases,” Schafer said. “We have heard of this ‘perfect storm’ coming together – increased consumption, energy prices, biofuel generation, weather patterns – all those have come together to form this huge pressure on food and feed costs. I don’t think its a perfect storm.”

He explained, “When you have a storm, and you’re out on the calm sea, the storm comes in and jumbles everything up for awhile and then the storm goes away and the sea becomes flat again. The reality here is consumption and as consumption is increased we are not going to fall back.”

Schafer says corn ethanol will continue to be important in meeting the Renewable Fuels Standard and as a stepping stone towards cellulosic ethanol.

Listen to Schafer’s comments on biofuels here.

Ethanol Industry Supports Farm Bill Changes

Farm BillA tentative agreement reached by conference committee members on funding for a new farm bill would reduce the tax incentive for blenders to use ethanol from 51 cents a gallon to 45 cents. The president of the Renewable Fuels Association says they can support that.

RFA“We do understand that they are looking at that in order to pay for cellulosic tax credits and some other important programs,” said Bob Dinneen in an interview Monday. “While we wish they could find other means of paying for those important priorities, we understand the budget constraints that Congress is under.”

The ethanol blenders credit reduction would go into effect once the Environmental Protection Agency administrator certifies that the 7.5 billion gallon mandate has been reached. The ethanol import tariff would also be extended until Dec. 31, 2010, which would be in line with the ethanol tax credit.

Meanwhile, a new subsidy of up to $1.01 per gallon would be created for ethanol made from biomass sources other than corn.

The reduction in the existing blenders tax credit would reportedly save over $1 billion, while the blenders credit for celllulosic ethanol would cost approximately $400 million.

Tax credits for biodiesel were also stripped from the bill.

Congress is currently working to complete a new farm bill under the fifth extension of current law. Congress passed and President Bush signed the latest extension until May 2 but it will likely be May 8 before they can actually get a bill finished and on the president’s desk. The current law expired in September.

Gen. Colin Powell to Speak at Biotechnology Summer Conference

The state of sustainable agriculture in developing countries will be one of the main issues addressed at the BIO International Convention this summer. The Biotechnology Industry Organization is hosting the convention in San Diego from Tuesday, June 17 through Friday, June 20.

Biotechnology leaders from around the globe will be descending upon San Diego, one of the leading biotech hubs in the world, to discuss the most pressing issues and share their unique perspectives. In addition, there will be a total of 36 regional and country pavilions within the BIO Exhibition with several new pavilions, including Argentina, Brazil, Chile, Dubai, and South Africa.

This year’s convention will focus on the promise of biotech innovation to heal, fuel and feed the world. International case studies on biofuels, biomanufacturing, research funding, and international collaborations will focus on examples from Brazil, China, France, Germany, India, Japan, Korea, North America, Singapore, and Sweden. Two additional breakout session tracks will focus on doing business globally and global health. A session entitled, “The Dynamics of a Globalized World and the Future of the Biotechnology Industry,” will feature international public officials sharing insights on the evolving business landscape.

This year’s keynote speakers include Gen. Colin Powell, J. Craig Venter, Ph.D., and Gov. Arnold Schwarzenegger. Continue reading