Another indicator of the viability of ethanol and biodiesel might be the increasing numbers of investors in the alternative fuels. In Missouri, for example, the Secretary of State’s office reports the number of the number of biofuels investments filed with the state increased from just five in 2005 to 15 last year. In this Associated Press story, government requirements are seen as the driving reason for the increase.
Federal clean air requirements have people seeking cleaner-burning additives for fuel such as ethanol and biodiesel. At the same time, ethanol’s main competitor – MTBE – has been phased out because it contaminates water supplies faster than other fuels as it dissolves in water rather than separating like oil.
Plus, states and the federal government have set benchmarks for using more alternative fuels. A federal 2005 energy law, championed by former Sen. Jim Talent, R-Mo., required the United States to use 7.5 billion gallons of renewable fuels such as ethanol and biodiesel by 2012. A Missouri law will require a 10 percent ethanol blend in most gasoline, effective next January, as long as its price doesn’t exceed traditional fuel.
On top of all that, there is a mix of state and federal subsidies for ethanol and biodiesel refineries and state tax credits for farmers who supply the agricultural products that are turned into fuel. This year’s state budget has almost $14 million of biofuels incentives – more than double the amount from two years ago.
While Missouri does have its own burgeoning ethanol and biodiesel industries, most of the companies that sought permission with the Secretary of State’s office to solicit Missouri investors were from out of state.
Mark your calendars for Biomass and Biorefinery Deals 2007 March 26th-28th in Washington, D.C. Industry leaders along with government officials, and equity and venture financiers will get together at D.C.’s AED Conference Center to discuss the financial end of biomass operations.
They will address federal incentives and programs for the development of new biomass energy projects, as well as the potential for extension of current tax incentives and implementation of more federal legislation under the incoming Congress. They will examine the prospects for obtaining financing from private equity and other “new” sources, offering helpful hints on how to take advantage on the diverse revenue streams possible in these deals and optimally structure deals to fully capture the value of bio-energy projects and assure financing. Finally, they will review some of the practical issues involved in developing and financing projects using diverse feedstocks, technologies and revenue sources.
Gotta make at least SOME money to make an industry viable, and it looks like this conference will give some insight on how to best use government money and private finvestment and how to attract in those sources of investment.
A couple of days ago, I told you about how Cincinnati, Ohio had changed its bus fleet to biodiesel and saved the city nearly half-a-million dollars last year. Now, officials in Pocatello, Idaho are making the change to the cleaner form of fuel. They expect to change the city’s entire fleet… cars, buses, snowplows… over to a 20% blend of biodiesel.
That bandwagon seems to be just getting bigger everyday.
The Cincinnati Enquirer reports that buses in the city and the surrounding county ran on biodiesel, saving the city $450,000 last year.
(The metro area’s) 390 buses used about 3.6 million gallons of fuel last year – half of which was biodiesel.
But, there is one adjustment that has to be made for the city’s cold winters…
During warm months, Metro fueled all buses with a blend made of up to 75 percent of biodiesel. It switched back to 20 percent biodiesel blend in colder months because the biodiesel can jell in cold weather.
Either way, it’s another city in the heart of soybean country making use of a plentiful, renewable, close-to-home source of energy.
The Secretary of the Arkansas Agriculture Department wants his state to focus on biodiesel, not ethanol. The Arkansas News Bureau reports Richard Bell told state lawmakers other states that produce more corn are already dominating the ethanol field.
Bell told the House Agriculture, Forestry and Economic Development Committee that Arkansas will have a chance to break into the ethanol market later, when technology is developed to allow the gasoline substitute to be made from wood products.
Of course, Arkansas is known for its forests, which could later supply cellulose-based ethanol production. In the meantime, biodiesel could be made from the abundance of soybeans grown in the state.
The Governors’ Ethanol Coalition has released a new report called Ethanol from Biomass: How to Get to a Biofuels Future.
The report asks the President and members of Congress to adopt four recommendations:
1. Expand the Renewable Fuels Standard (RFS) to include a short-term target of 12 billion gallons a year of ethanol and biodiesel utilization by 2010, and longer-term British thermal unit-based targets of 15 percent of total motor fuels consumption by 2015 and 25 percent by 2025, with equal incremental steps provided for each year in between;
2. Assign a financial value to the RFS cellulosic ethanol 2.5:1 trading credit into a more practical credit.
3. Establish a timetable for delivering 85% ethanol/15% gasoline infrastructure on a regional basis within five years.
4. Provide adequate funding for the Energy Policy Act of 2005 authorized biofuel research, demonstration and incentive programs.
Read the full report here.
California Governor Arnold Schwarzenegger wants to terminate greenhouse gas emissions in his state.
In his State of the State address Tuesday, Governor Schwarzenegger called for the establishment of a Low Carbon Fuel Standard in California, a “first-of-its kind standard” that will reduce the carbon intensity of California’s passenger vehicle fuels by at least 10 percent by the year 2020.
According to the Governor’s press office, the proposal would create “the world’s first global warming standard for transportation fuels.”
During his address, the governor said, “Our cars have been running on dirty fuel for too long. Our country has been dependent on foreign oil for too long. So, I ask you to set to motion the means to free ourselves from oil and from OPEC.”
Earlier on Tuesday, administration officials, industry and academic experts and stakeholders discussed the proposal at the state capitol. Among them was former California Secretary of State Bill Jones, who is now co-founder and chairman of Pacific Ethanol Inc. Jones called Schwartzenegger’s plan “historic, and it is one of the most comprehensive, well-thought out policies I’ve ever seen.”
According to a report from Truth About Trade & Technology, soon-to-be Agriculture Committee chairmen Sen. Tom Harkin and Rep. Collin Peterson are in disagreement over the lifting of tariffs on imported ethanol.
After earlier reports indicated Harkin, an Iowa Democrat, would support a lifting of tariffs on ethanol imported to the U.S. from abroad, the Minnesota Democrat Peterson took a hard line against such a move Friday.
“Are you serious?” Peterson said Friday after learning of Harkin’s stance on the tariff. “I’m not in favor of that. I think we’ve got plenty of ethanol production in this country coming online to meet the demand of this industry, and I for one am not interested in making any changes in the foreseeable future in that.”
In addition to diluting a now vibrant corn-based ethanol marketplace in the U.S., Peterson said allowing tariff-free ethanol imports would hamper efforts underway to develop cellulosic ethanol production, support for which Peterson says he hopes to include in the 2007 farm bill.
The latest global supply/demand report from the U.S. Department of Agriculture increases the forecast for corn and soybean prices this year due in part to stronger demand for ethanol and biodiesel.
Average corn prices are now expected to range between $2.90 to $3.30 a bushel, up ten cents from last month’s forecast. USDA Chief Economist Keith Collins said, “We think about 50 percent of the corn crop has been marketed so far this year at an average price of about $2.70 a bushel. As we look for the other 50% to be marketed, we think that could probably average about $3.50 a bushel.”
According to market analyst Brian Hoops of Midwest Market Solutions, this is only the fourth time in history that corn prices have topped the $3.00 mark. “The record year was 1995-96, so we are in some pretty uncharted waters for corn as far as cash price,” Hoops commented during a Minneapolis Grain Exchange conference call with reporters after the report was released Monday morning.
The average price for soybeans was also increased by a dime in the December report, to between $5.70 and $6.50 a bushel.
Listen to report from USDA Radio: USDA Report (1 min MP3)
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Senator Byron Dorgan of North Dakota hosted a meeting Monday with government and ethanol industry leaders to discuss new ways to market ethanol in the state.
According to an AP report from Fargo, some are suggesting the approval of blender pumps.
Many drivers have been scared away by lower fuel efficiency and reports that cars with E-85 start poorly in the winter, said Owen Jones, a Britton, S.D., ethanol producer. He said a blender pump would allow consumers to use a more economical 20 or 30 percent blend and work their way up to E-85.
“If you’re looking at E-85 sales, you really need to look hard a blender pump,” Jones said.
Federal law prohibits the promotion and production of blends other than E-10 or E-85, said Jocie Iszler, executive director of the North Dakota Corn Growers.
“We think the blender pump concept is a common sense approach,” Iszler said. “It’s up to the federal government to test and validate what we already know is true.”
Read full AP report
President Bush gave special recognition to domestic fuels in his annual Farm-City Week proclamation this year.
“Farmers are playing an increasingly important role in reducing our dependence on foreign oil by growing crops such as soybeans and corn that can be used as alternative sources of energy,” the president said in his proclamation.
National Farm-City Week is an annual event celebrating the vital partnership between America’s rural and urban industries. Held traditionally the week before Thanksgiving, it will be November 17-23 this year.
During National Farm-City Week, and throughout the year, we honor the farmers, ranchers, and all those working to build strong relationships between our rural and urban communities. Our economy is strong and growing, and behind the numbers are the stories of hard-working Americans who help spur our economic prosperity and feed our country and the world.
A Georgia Farm Bureau committee adopted a proposal to cut the sales tax on the sale and production of ethanol and biodiesel (see previous post) to present to the membership in its December meeting.
Seventeen states have reduction or elimination of sales and use motor fuel taxes for ethanol and/or biodiesel, according to information from the U.S. Department of Energy’s Alternative Fuels Data Center. Many states offer packages of tax credits, grants, loans, and rebates to producers and users.
See Georgia Ag Department press release for more.
The U.S. Department of Energy is providing $8.6 million for 16 projects to expand the use of alternative transportation fuels.
According to a DOE release, combined with funding from the participants, more than $25 million will be invested in the nation’s alternative fuel infrastructure. The grants are part of the Clean Cities program and were selected under three topic areas including Refueling Infrastructure for E85 and Alternative Fuels; Incremental Cost for Alternative Fuel Vehicles; and Idle Reduction Training and Awareness for School Districts.
The funding includes projects all over the country, and includes both ethanol and biodiesel. Under the Refueling Infrastructure topic area alone, the 13 projects selected include the installation of alternative fuel blending and refueling infrastructure at over 180 locations in 25 states and the District of Columbia.
Read full press release.
The US Secretaries of Energy and Agriculture each talked about the need for cellulosic ethanol in two different venues this week.
Energy Secretary Sam Bodman speaking at the Chicagoland Innovation Summit on Tuesday said ethanol is America’s best alternative energy source for the future, but researchers must develop a material other than corn to make it from. According to a Dow Jones report, “Eventually, we’re going to run out of the ability to make ethanol from corn,” Bodman told Dow Jones Newswires after the speech.
Meanwhile, Agriculture Secretary Mike Johanns was in Minnesota meeting “with state and local leaders Tuesday to talk up the emerging technology of cellulosic ethanol production – making ethanol from wood chips, corn stalks, alfalfa and other biomass types,” according to this Associated Press report. Johanns also said corn-based ethanol can’t meet the nation’s demand.
Ethanol has become a campaign issue in many areas, with political candidates often trying to outdo each other in proving how supportive they are of domestic fuels.
Take Missouri, for example. This story from the Columbia Missourian reports: There’s consensus on ethanol among the candidates for state representative seats in two rural Missouri districts: It’s good for farmers, good for the country and good for the economy, they say, but there’s not much more the state can do — at least for now — to encourage its use.
In the Missouri Senate race, Republican incumbent Jim Talent and Democrat Claire McCaskill both say they support alternative fuels such as ethanol, but McCaskill has raised objections to last year’s federal energy legislation that includes a renewable fuels standard. Talent is a strong supporter of the RFS and was instrumental in getting it included in the final energy bill passed by Congress. Both have traded barbs in campaign ads over who has done more or less for the ethanol industry, with the McCaskill camp claiming Talent voted against ethanol for 18 years.