Scaling Back Ethanol Use Not a Solution to World Hunger for Indiana Corn

Joanna Schroeder There’s no question for the Indiana Corn Marketing Council‘s Mark Walters that the three May pump promotions have all been a huge success. Mark (pictured fourth from left) is the Director of the Biofuels Program for Indiana Corn. He says pump promotions help consumers learn about both sides of the ethanol debate. Some of the ethanol positives he points out are things like the creation of new, permanent jobs, a fuel that circulates cash within the U.S., improved air quality and more. One thing he says it does NOT impact in any significant way is global food shortages. “Doing away with the ethanol industry it not going to solve world hunger,” Mark said.

You can listen to more of what Mark has to say in my interview with him here:

2008 Indy 500 Photo Album

Crystal Flash Rep Says Ethanol a Fuel for the Future

Joanna Schroeder The Crystal Flash at Rangeline in Carmel, IN was the first gas station in the Indianapolis metro area to offer E85 fuel, and that was several years ago. Andy Batt, the Vice President of Merchandising for Crystal Flash fuel retailer, says E85 sales make up about four to five percent of all gallons of fuel sold at the Rangeline location. He says ethanol pump promotions like the one the Ethanol Promotion and Information Council and the Indiana Corn Marketing Council sponsored at his station offer great opportunities to pass savings along to consumers. He says it also helps educate them on what he says has become a very confusing topic. Andy (pictured third from left) says most consumers don’t realize the cost savings that E10 fuel brings to consumers at the pump. Couple that with the fact that the fuel also decreases foreign dependence on oil and, he says, consumers have a sound reason to opt for ethanol fuel blends.

I caught up with Andy at today’s pump promotion. You can listen to why Andy thinks ethanol is a big part of fueling the future here:

2008 Indy 500 Photo Album

USDA Chief Says “Underground” Tactics Have Targeted Ethanol

The U.S. Secretary of Agriculture has a difference of opinion with the Grocery Manufacturers Association.

USDA press briefingDuring a Monday press conference, Secretary Ed Schafer said he had talked to the people who have “initiated these underground things that have been going on” to influence public opinion about ethanol incentives and found that while they understand that higher energy and transportation costs are the driving factor for increased food prices, they think “it’s easier” to target corn and ethanol.

“The change in the Renewable Fuels Standard, the change in the (ethanol) tariff or duty, isn’t going to effect food prices,” Schafer said. “We need to focus on things that will actually have an effect, instead of a short-term political solution we need to look long-term, because we have a long-term problem here.”

When asked directly if he was referring to the Grocery Manufacturers Association campaign against ethanol that was revealed last week by the Capitol Hill publication Roll Call and publicized by Senator Charles Grassley (R-IA) and others, Schafer said yes.

“Clearly, we have a difference of opinion with GMA,” said Schafer. “They are a trade organization driven by their membership and evidently that is the course they chose to take, not one that I would take.”

Schafer did say that they were now talking about “sharing information” with GMA. “I would just as soon we share information ahead of the fact,” he said.

USDA Makes Case for Food and Fuel

Armed with power points and statistics, officials with the U.S. Department of Agriculture held a press conference in Washington DC Monday to discuss the case for producing both food and fuel in the United States.

USDA power point slide“We think the time has come for USDA to join in the public conversation about the relationship between food prices and biofuels,” said Agriculture Secretary Ed Schafer. “We want to offer our perspective and what has happened in the marketplace, to share our data and the analysis of what has happened.”

Presenting the data was USDA chief economist Dr. Joe Glauber, who pointed out that all commodity prices have risen in the past year, not just food prices. “We certainly don’t want to minimize what’s going on with ethanol, because it is a very important factor in today’s market, but it’s important to discuss it in its proper context,” Glauber said. He noted that all commodities are up 47 percent, food is up 46 percent, and oil is up 68 percent.

The factors Glauber says have contributed to higher food prices are economic growth, weather, export restrictions, higher food marketing and transportation costs, and finally, increases in biofuels.

An economic analysis of the pass-through for an increase in corn prices on the Consumer Price Index (CPI) shows that a 50 percent increase in corn prices raises the CPI less than one percent, but Glauber says, “It’s a difficult thing to sort out how much of the increase in corn prices was necessarily due to ethanol.”

However, he says the Council of Economic Advisers estimates the total global increase in corn-based ethanol production accounts for only about three percent of the recent increase in global food prices.

Link to USDA power point presentation slides.

EPA Seeks Input on RFS Waiver Request

The Environmental Protection Agency is following through on Texas Governor Rick Perry’s request to reduce the volume of renewable fuel required to be used in motor vehicles and other engines. EPA is publishing a Federal Register notice opening a 30-day comment period on the request. The RFS mandate for 2008 is the equivalent of 9 billion gallons.

EPAThe Energy Policy Act of 2005 includes provisions enabling the EPA Administrator to grant a full or partial waiver if implementation of the RFS would severely harm the economy or environment of a state, region, or the entire country, or if EPA determines there is inadequate domestic supply of renewable fuel. In consultation with the Departments of Agriculture and Energy, EPA must decide on a waiver request within 90 days of receiving it.

SunEthanol Awarded Third DOE Grant

The U.S. Department of Energy recently awarded SunEthanol a $100,000 research grant to help America develop clean transportation fuels from a variety of non-food feedstocks, including corn stover, bagasse, switchgrass, sorghum, softwoods like pine, and high lignin poplar. This is the third DOE grant that SunEthanol has been awarded in the past year.

Sun Ethanol
According to the company, this latest grant will support SunEthanol as it pioneers a new process to simplify the production of clean ethanol fuel from two complex steps – hydrolysis and fermentation – into one simple step.

The company’s patented process, known as Complete Cellulose Conversion or “C3,” will be cheaper than the current process that uses enzymes to convert corn starch to fuel. Relying on a unique microbe discovered in Massachusetts, the Q MicrobeTM, SunEthanol’s C3 process has the potential to be the ultimate low-cost configuration for cellulosic ethanol technology.

Farm Bill Promotes Cellulosic Ethanol

The Farm, Nutrition and Bioenergy Act of 2008 passed by Congress last week has some significant incentives to promote second generation ethanol.

Among them are a cellulosic biofuels production tax credit for up to $1.01 per gallon; funding for loan guarantees to commercial scale bio-refineries for advanced biofuels; a program to encourage farmers to establish and grow biomass crops in areas around biomass facilities; and continuation of research and development through the biomass energy research program administered jointly by the Departments of Agriculture and Energy. The bill more than doubles current funding, providing $118 million for research.

VereniumCarlos Riva, president of cellulosic ethanol firm Verenium, says the provisions in the bill will speed the development of cellulosic ethanol toward commercialization.

“America is preparing for the next important wave of alternative fuels, and this bill is a watershed moment in our national effort to develop energy that reduces greenhouse gas emissions and lessens America’s dependence on foreign oil,” said Riva.

Verenium operates one of the nation’s first cellulosic ethanol pilot plants in Jennings, Louisiana and is preparing to cut the ribbon at its 1.4 million gallon-per-year demonstration-scale facility in the same location on May 29.

House Committee Extends Biodiesel Incentive

The U.S. House Ways and Means Committee has approved the Energy and Tax Extenders Act of 2008, a measure that will extend the biodiesel tax incentive through the end of next year and provides a dollar-per-gallon incentive for all biodiesel regardless of feedstock.

Passage in the committee gained the praise of the National Biodiesel Board:

“I would like to thank Chairman Rangel and the members of the Ways and Means Committee for extending and improving the biodiesel tax incentive,” said Joe Jobe, CEO of the National Biodiesel Board (NBB). “The biodiesel tax incentive is working, and the committee’s decision to support biodiesel will help our industry improve America’s energy independence by displacing foreign petroleum with clean-burning, domestically produced fuel.”

If finally passed by Congress and signed by the president, HR 6049 will also stop what’s known as the “splash and dash” loophole that has been letting fuel produced outside of the U.S. to come into this country and then sent to another country for actual use. That issue has been a bone of contention for many American biodiesel producers and groups for some time.

Senators Pleased With Energy Title of Farm Bill

Tom HarkinTwo of the main architects of the new Farm Bill are more than thrilled with overwhelming passage of the legislation this week by both the House and Senate.

“Senate passage of the farm bill conference report on a strong, bipartisan basis demonstrates support for core farm bill initiatives – conservation, energy, nutrition and rural development – while continuing and strengthening farm income protection,” said Senate Agriculture Committee chairman Tom Harkin (D-IA).

Harkin says the bill increases biofuels production by accelerating commercialization of advanced biofuels, like cellulosic ethanol, by helping farmers produce biomass crops, by providing grants and loan guarantees for new biorefineries, and by increasing bioenergy research.

Saxby ChamblissSenate Ag Ranking Republican Saxby Chambliss of Georgia said of the bill, “We’re going to make sure that we provide future generations with alternative energy projects and that we do it in the right way.”

The Farm, Nutrition and Bioenergy Act of 2008 passed the House by a 75 percent margin and the Senate vote was 81 to 15. However, President Bush intends to veto the bill because he says it is too costly and contains too little reform. The margin of votes in Congress indicate that they will be able to override the veto.

DOE: Wind Could Provide 20% of US Power

A new report from the U.S. Department of Energy says that America could get 20 percent of its power from wind energy in about the next 20 years.

This agency press release says it will mean increasing the amount of wind power by nearly 20 times current production levels… a doable number according to the DOE:

Entitled “20 Percent Wind Energy by 2030”, the report identifies requirements to achieve this goal including reducing the cost of wind technologies, citing new transmission infrastructure, and enhancing domestic manufacturing capability. Most notably, the report identifies opportunities for 7.6 cumulative gigatons of CO2 to be avoided by 2030, saving 825 million metric tons in 2030 and every year thereafter if wind energy achieves 20 percent of the nation’s electricity mix.

DOE Assistant Secretary of Energy Efficiency and Renewable Energy for the U.S. Department of Energy Andy Karsner said, “To dramatically reduce greenhouse gas emissions and enhance our energy security, clean power generation at the gigawatt-scale will be necessary, and will require us to take a comprehensive approach to scaling renewable wind power, streamlining siting and permitting processes, and expanding the domestic wind manufacturing base.”

Prepared by the U.S. Department of Energy and a broad cross section of stakeholders across industry, government, and three of DOE’s national laboratories – the National Renewable Energy Laboratory in Golden, CO; Lawrence Berkeley National Laboratory in Berkeley, CA; and Sandia National Laboratory in Albuquerque, NM, the report presents an in-depth analysis of the potential for wind in the U.S. and outlines a potential scenario to boost wind electric generation from its current production of 16.8 gigawatts (GW) to 304 GW by 2030.

The report goes on to say that infrastructure will need to be improved, as well as streamlining the siting and permitting processes to meet that goal.

Canada Ag Minister Defends Biodiesel, Ethanol

Canadian Agriculture Minister Gerry Ritz is blasting those opposing a proposed mandate for biofuels in the country.

This story from the Lloydminster (Alberta, Canada) Meridian Booster has more details:

Ritz defended the plan in the House of Commons against criticism from the New Democratic Party, which once supported the use of biofuels but has switched its position. The bill would mandate a five per cent ethanol mixture in gasoline by 2010 and a two per cent mixture of biodiesel by 2012.
“It’s an excellent situation for the environment, it’s a great thing for farmers, and a great thing for rural communities,” said Ritz.

The NDP’s about-face comes after a number of studies have been released indicating that using wheat and corn-based ethanol could drive up food prices in light of what some experts are calling a global food shortage. The United Nations recently called biofuels a “crime against humanity” for diverting food away from hungry mouths.

Ritz says this situation doesn’t apply to Canada where the price of basic food commodities actually dropped slightly in February. The government estimates it would take five per cent of total production capacity to produce the three billion litres of ethanol which the plan would require. He says the weather has more impact on Canada’s agricultural output than five per cent.

The article goes on to say that Ritz points out that the United Nations has said there’s enough food. The issue is getting it to where it needs to be at the right time.

Steelman Calls Out Lawmakers for Biofuels Action

Missouri State Treasurer Sarah Steelman, who is also running for the Republican nomination in the state’s gubernatorial race, has labeled Missouri lawmakers “cowards” for changing a law that kept those same lawmakers and their family members from investing their own money in ethanol and biodiesel plants in the state.

This AP story posted on the KY3 (Springfield, MO) web site says Steelman oversees a program that provides state money to assist in investing in biofuel plants and has been barring companies from getting the money if there was even just one investor who is an elected state official, department director or a relative of those people:

The policy outrages some lawmakers who are investors in ethanol and biodiesel plants. Senators voted 21-10 about 2:30 a.m. Wednesday to overturn Steelman’s policy by allowing the incentives so long as state officials own less than 2 percent of the business. The provision is an amendment to a larger tax credit bill and was approved on a head-count vote, avoiding a written record of who voted “yes” or “no” that would have been kept had they taken a roll call.

Rural lawmakers, many of whom invest in the plants, say Steelman’s policy is not fair. They argue it punishes Missouri residents simply because they have invested in the same facility as a lawmaker.

The policy has prevented incentives from going to the $82 million Show Me Ethanol plant because its investors include Rep. John Quinn, R-Chillicothe; his wife, Mary; and Andy Blunt, a brother of Republican Gov. Matt Blunt.

“They were cowards, and didn’t want to do what they did in the light of the day, because they didn’t want the people of the state to realize they were protecting their personal interests,” Steelman, a former senator, said later Wednesday.

Some senators say Steelman was out of line by insisting on an unreasonable conflict of interest policy.

Steelman’s actions have ruffled the feathers of many of her fellow Republicans, who invest in the plants. It will be interesting to see how this plays out as she tries to woo those same Republicans to vote for her in her primary race to see who faces presumptive Democratic nominee Jay Nixon for the governor’s seat as incumbent Republican Blunt is not running for re-election.

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.