Domestic Fuel

The renewable fuels industry is taking the opportunity to let the country know the value of domestically produced fuels. Last week, oil prices spiked to $100 per barrel amid fears that there may be oil flow disruptions due to political unrest in Egypt and surrounding regions. There is now speculation that Egyptian President Hosni Mubarak could relinquish power over the weekend and with that speculation are slightly lower crude oil prices. Experts believe that despite what transpires this weekend, prices will hold steady.

As higher oil prices translate to higher prices at the pump, T. Boone Pickens, along with others in the renewable energy field, have once again taken the opportunity to urge Congress and President Obama’s administration to pass comprehensive energy policy that will reduce the countries reliance on Middle Eastern oil. Pickens was out of the gate first with a statement last week.

“The question isn’t whether there will be more uncertainty in the Middle East. That’s a question of when not if. The greater question is whether our leadership is ready to solve this problem once and for all,” said Pickens. “I urge Congress and the Obama Administration to enact energy legislation now that gets America on our own resources. We have a tremendous supply of natural gas that can be used as a transportation fuel and is an immediate alternative to OPEC oil.”

Then earlier this week, Growth Energy’s Director of Public Affairs came out with a statement in response to some rumblings that ethanol was to blame for the rioting and upheaval in Cairo, Egypt and elsewhere. The link, ethanol opponents claim, is between wheat prices in the Middle East with demand for corn starch for ethanol in the U.S.

“These are people who want to play parlor games instead of looking at the facts and really finding out how markets work, or what’s motivating protesters in the Middle East. Seeing some of the distortions and pretzel logic these folks are going through, I’d encourage them to pick up Twister, instead,” said Thorne.

And today, Gen. Wesley K. Clark, former NATO Supreme Commander, and Co-Chairman of Growth Energy, responded to the threat of “contagion” in the Middle East.

Gen. Wesley Clark (Ret.) Talks about Egypt from Growth Energy on Vimeo.

Read the rest of this post…

SG Biofuels, a bioenergy crop company focusing on Jatropha for biofuels, has officially opened operations in Brazil and has named Brazilian entrepreneur and genomics innovator Fernando Reinach as its senior advisor for the market. Reinach will provide strategic planning, business development and executive management support for SG Biofuels Brasil, LTD, the subsidiary that will be based in Sao Paulo.

“We are privileged to add Fernando and his unique combination of entrepreneurial success and industry-leading expertise in breeding and genomics to our effort in Brazil,” said Kirk Haney, president and chief executive officer. “His guidance will be invaluable as we expand our R&D platform and agricultural development efforts in one of the most promising growth markets for Jatropha.”

Prior to accepting this position, Reinach was general partner of Votorantim Ventures, a venture capital fund of the Votorantim Group, one of Brazil’s largest private conglomerates with revenues of U.S. $8 billion. He also serves as a board member of Amyris. He as also worked for two companies now acquired by Monsanto – CanaVialis and Alellyx, both companies in the sugarcane space.

“SG Biofuels’ breeding and biotechnology platform is the right approach to develop Jatropha as a viable feedstock for biofuels in Brazil,” said Reinach. “By improving yields through genomics and regional adaptation, I believe there is a large opportunity to complement Brazil’s global leadership in sugarcane and ethanol with a successful Jatropha industry.”

SG Biofuels is collaborating with a number of partners to develop Jatropha, including Bunge, Flint Hills Resources and Life Technologies Corporation.

As Chinese President Hu Jintao wraps up his visit to the United States, a new report details how America can use biofuels to compete in the alternative energy field for vehicles.

This article on CNET.com says the Accenture report, entitled “The US and China: The Race to Disruptive Transport Technologies,” says the Chinese have a decided edge in government commitment to electric vehicles ($10 billion over the next 10 years to the EV industry alone) and rich deposits of lithium, a key ingredient in EV batteries. But American biofuels could be the great equalizer:

So what does the U.S. have to compete against China’s lithium, money, and government control? To put it succinctly: brainpower, strong intellectual property laws, and agricultural expertise.

The U.S. also happens to be the largest producer of corn in the world with an estimated 30 percent of its yield going into ethanol production. Yield improvements and domestic surpluses are even expected to rise in coming years due to recent agricultural innovations.

The article goes on to say that the U.S. is more diverse in its biofuels package, including biodiesel made from diverse feedstocks, such as algae. China seems to be focusing on cellulosic ethanol to replace gasoline.

A Canadian company has plans to open a biodiesel plant in Toronto.

This article from TheProvince.com says Energy Innovation Corp. will make the fuel, as well as animal feed and human food from flax seed without creating any waste:

“The demand is actually 10 times more than we think we’ll be able to supply over the next 16 to 18 months,” said 27-year-old CEO Jon Dwyer.

A federal mandate will require two-per-cent renewable content in all diesel fuel in 2011. Dwyer’scompany plans to make up to 10 million litres of biodiesel annually at its Toronto plant.

Dwyer plans to open at least eight more plants in Ontario over the next three years.

The Renewable Fuels Association is confident that U.S. ethanol trade policy conforms with World Trade Organization (WTO) regulations.

In response to recent comments by senators about the legality of the ethanol tariff, RFA Legislative Counsel Ed Hubbard authored an explanation on the E-xchange blog. According to Hubbard, the market-based structure of the Volumetric Ethanol Excise Tax Credit (VEETC) and the secondary tariff designed to offset tax benefits received by foreign imports of the fuel, precludes any claim or challenge to the U.S. ethanol program under the WTO.

In any WTO dispute settlement proceeding, the central point is who receives the financial contribution or subsidy. Because the recipient of the VEETC is the downstream blender, it would be very difficult for a complaining country to establish that their domestic industry is being adversely impacted by the U.S. tax incentive. Moreover, it would be nearly impossible to show that the complaining country’s industry was being sufficiently prejudiced by policy. Such a showing is required under WTO regulations.

Hubbard further explains that the secondary tariff is not a subsidy since it goes to the U.S. treasury, not ethanol producers. He notes that the secondary tariff is necessary to ensure that U.S. taxpayers are not subsidizing foreign ethanol producers and has been properly notified and scheduled according to WTO procedures.

Read the full post here.

*POST UPDATE*
Formally responding to comments made by Senator John McCain (R-AZ) and Senator John Barrasso (R-WY) that current ethanol tax and trade policies were illegal under World Trade Organization (WTO) agreements, the Renewable Fuels Association (RFA) today (1/18) sent a letter to each senator explaining why the tax incentive (VEETC) and the offsetting secondary tariff are WTO compliant.

“While agreeing to disagree about the efficacy of the ethanol tax incentives, I respectfully submit that your assessment of the policies’ compliance with WTO strictures is simply incorrect and not supported by any reasoned analysis or WTO precedent. We strongly disagree that this or any other part of the U.S. ethanol program is contrary to the WTO Agreement on Subsidies and Countervailing Measures (“SCM Agreement”) or any other WTO regulation,” wrote RFA President Bob Dinneen.

Read more here.

Before the ink was dry extending the 54 cent ethanol tariff for one more year, the Brazilian Sugarcane Industry Association (UNICA) threatened to take the legality of the ethanol tariff to the World Trade Organization (WTO). Now several U.S. senators are embroiled in the debate including John McCain (R-AZ) and John Barrasso (R-WY) who said earlier this week that the extension on ethanol imports in likely illegal under international trade rules. While the senators didn’t out and out lend support to UNICA, indirectly some believe that their support is there.

“I believe the WTO would rule against the United States because it’s clearly a subsidy that is neither warranted nor in keeping with WTO regulations,” Senator McCain of Arizona told reporters after a meeting with Brazilian President Dilma Rousseff in Brasilia.

Today, Senator Chuck Grassley (R-IA) responded to the two senators.“This isn’t a question for debate. The highest authority on U.S. trade policy said more than two years ago that the U.S. ethanol tariff is clearly permitted under World Trade Organization rules. Besides, the United States already provides generous duty-free access to ethanol from Brazil and other countries imported under the Caribbean Basin Initiative, but the CBI cap has never once been filled. In fact, as of December 20, Brazil and other countries filled the cap for 2010 less than 1 percent.”

Should Brazil move forward with their case and win, it won’t be the first time. They have won their last two WTO cases against U.S. cotton and EU sugar subsidies.

McCain has never hidden the fact that is he opposed to all ethanol subsidies. Barrasso’s opposition to the tariff stems in his belief that all clean energy should be made available to all citizens as quickly as possible and one way this can be done is to remove the ethanol tariff.

High oil prices threaten to topple a tipsy global economy that is still fragile and has yet to find stable ground according to the International Energy Agency (IEA) who issued a wakeup call to the world. The IEA recommends that high oil-consuming countries, such as the U.S., boost efforts to cut back on oil use.

In response to these warnings, Bliss Baker, the spokesperson for the Global Renewable Fuels Alliance (GRFA) stated, “These sky-rocketing crude oil prices are already having an impact on other commodity prices and food inflation. The IEA’s warnings should be a wakeup call to all countries to reduce our crippling reliance on crude oil. The European Union’s oil imports alone grew by $70 billion last year.”

Also announced last week by the UN Food and Agricultural Organization (FAO) was that the Food Price Index has surpassed 2008 levels. The cause of these spikes, in part, is the increase in world energy prices, although many today are still blaming the increase in food costs on countries’ biofuel policies.

A 2008 report by the United Kingdom’s Department of Environment, Food and Rural Affairs and cited by the GRFA concluded that crude oil prices were a major factor behind the food price spikes. The report concluded, “the rapid increase in global energy prices increased the cost of agricultural inputs, especially fertilizers, so increasing the cost-base of agricultural producers, particularly in the cereals and oilseeds sector.”

Said Baker, “The GRFA issued its own warning with regards to rising oil prices and its effect on food in September 2010. This latest IEA warning and FAO report should encourage us all to reduce our reliance on oil. These food price spikes will continue unless we make concerted efforts to develop alternatives to crude oil like ethanol and biodiesel.”

Baker concluded, “The GRFA has long advocated that biofuels are the best way to reduce our reliance on conventional oil. Even OPEC said in a recent forecast that ‘energy efficiency policies along with the use of biofuel will put downward pressure on oil consumption worldwide’. As we have seen today from the IEA warnings and the UN FAO report, we are increasingly vulnerable to soaring crude oil prices,” said Baker.

Three years ago there were virtually no dried distillers grains (DDGS) going to China. Last year there were more than 1.5 million metric tons of DDGS exported to the country and some estimate that the number could be as high as 3 million metric tons at the close of this year.

So, although the U.S. Grains Council (USGC) felt that this was the normal progression in trade in a market that is growing exponentially, it didn’t completely come as a surprise when the China’s Ministry of Commerce has launched an anti-dumping probe into the ethanol co-product DDGS. This according to Rebecca Bratter, the USGC director of trade development during a press call to give an update on the status of the situation, which was brought to you on DomesticFuel when the story first broke.

The case was initiated on December 28, 2010 and will take at least a year before a decision is made. In the meantime, the interested parties were only given 20 days to register their interest in the case.

“We understand the consequences. We know what’s at stake for registering or not registering,” said Bratter during the call. “We know this is just the first step in what will be a long process which will include both an injury investigation and on a separate track, a dumping investigation.”

Bratter continued to say that they would be communicating an industry response back to the Chinese government that could be as soon as today.

“We consider China a very important market, a very strategic market and we place a very high level of importance on our trade relationship with China,” Bratter stressed.

During the investigation, the Chinese government has the authority to impose higher duties on the exports. Today, there is a 5 percent duty on DDGS but this could climb as high as 50 percent or higher, which would have a major negative impact on trade.

During the course of the investigation, Bratter said, “The Grains Council intends to operate as normal in China.”

A $900,000 BIRD Energy grant has been awarded to Madison, Wisconsin-based Virent Energy Systems, Inc. and Isreal-based HCL CleanTech from the BIRD Foundation along with the U.S. Department of Energy and the Isreali Ministry of National Infrastructures. BIRD Energy is a program for the U.S. and Isreal to jointly develop renewable energy.

Virent and HCL have partnered on a $2.1 million project that combines HCL’s proprietary lignocellulosic conversion technologies that produce cost competitive non-food sugars with Virent’s BioForming technology that converts plant sugars into hydrocarbon molecules similar to those now refined from petroleum. These sugars can then be used as chemicals or as “drop-in” fuels for cars, trucks, trains, and aviation that can be transported using existing pipelines.

“Economically converting plentiful cellulosic biomass into renewable, fungible hydrocarbon fuels and products will enable broad market acceptance and is the most realistic alternative to displace petroleum and create a clean energy transportation sector in the coming years,” said Lee Edwards, Virent CEO. “Virent has proven it can transform cellulosic, non-food sugars into environmentally superior hydrocarbon fuels with the same energy content and performance as petroleum fuels. “Utilizing HCL CleanTech’s cost-effective biomass hydrolysis technology to provide inexpensive cellulosic sugar feedstocks may be a key component of a complete and sustainable biofuels solution.”

The sugars will be processed at HCL CleanTech’s demonstration plant operating at Southern Research Institute in Durham, North Carolina and will then be sent to Virent’s facility in Madison, Wisconsin for conversion into biofuels and biochemicals.

“We expect to have the sugars ready for Virent before the New Year [2012] and are confident the integration with Virent and the leading biopolymer producer will create new opportunities in the bio-fuels and bio-products space,” said Eran Baniel CEO of HCL CleanTech.

As part of the BIRD project, HCL CleanTech will also provide pine sugars to a leading biopolymer producer for evaluating fermentation into hydrocolloids that historically are produced from cane or corn sugars for use in a broad range of personal care, food and beverage applications.

Bob Jansen, head of HCL CleanTech Engineering noted that the company built the demo unit at a size that will allow them to scale up directly to a small commercial facility. If all goes as planned, it will be integrated into a paper mill by the end of 2012.

The announcement this week out of Beijing that China’s Ministry of Commerce has launched an anti-dumping probe into the ethanol co-product distillers dried grains (DDGS) from the US came as a surprise to the U.S. Grains Council (USGC).

“The U.S. Grains Council has a 25 year history of market development and capacity building programs in China and values the U.S./China market and trade relationship,” said USGC President and CEO Tom Dorr in a statement today. “China’s investigation of U.S. DDGS imports is surprising and could be disruptive to trade. China’s unusual market and supply volatility over the last two years has resulted in new global trade flows. As trade flows change, it should perhaps not be surprising there would be an adjustment period in response to unprecedented demand.”

It was only a few weeks ago that U.S. corn growers were in China on a USGC-sponsored trade mission to promote both corn and DDGS for livestock feed in that country. According to a post about the mission on the USGC blog The Grain Board, “Many of the feed companies that the delegation met with are increasing their DDGS use in their livestock feed rations. They stated they would continue to import, dependent on price. DDGS is easily imported into China, yet it is a feed ingredient that requires a “per plant registration” which is difficult to deal with at the port.”

China is the number one market for DDGS and is expected to import nearly three million metric tons this year, up more than 500 percent compared to a year ago. It is estimated that China produces about 3.5 million tons of DDGS domestically each year.

According to a statement from the Chinese Ministry, they initially plan to look for any evidence of dumping of DDGS, both with and without solubles, between July 2009 and June 2010, but may go back as far as 2007. The investigation is expected to take 12 to 18 months to complete.

In a new study released by The Conference Board of Canada and financed by the wind company Vestas Offshore, the development of offshore wind farms could boost Ontario’s economy by $4.8 billion to $5.5 billion a year between 2013-2026. During the same time frame, development could lead to a total of $10 billion in capital investment and operations spending and support around 4,000 jobs during the construction phase.

“Employment and Economic Impacts of Ontario’s Future Offshore Wind Power Industry,” was based on the economics if seven new offshore wind energy projects were developed totaling 2,000 megawatts (MW) by 2026. The Conference Board felt that this number was “conservative compared with market potential.” While there are no offshore wind farms currently operational in North America, there are two in development near Kingston, Ontario.

“An offshore wind industry in Ontario – one that develops enough projects to be sustainable in the longer term – would create both short-term construction employment and permanent green jobs in the operations phase,” said Len Coad, Director, Environment, Energy and Technology Policy, The Conference Board of Canada. “Should development progress as anticipated, it is likely that new industries will develop in the province to service the needs of the growing sector.”

According to IESO, there is 2,600 MW of wind energy capacity expected to be online in Ontario by the end of 2011 with the number growing significantly over the next five years. The organization said that wind energy is well positioned for growth with the implementation of the Green Energy and Green Economy Act of 2009 as well as the Ontario Power Authority’s Feed-in-Tarriff (FIT) program that promotes renewable energy.

Today marks a big day for supporters of renewable fuel in Canada. The country’s Renewable Fuels Standard has officially gone into effect. This adds nearly two billion litres of renewable fuels including ethanol and biodiesel, into the country’s gasoline pool each year and according to the Canadian Renewable Fuels Association (CRFA) will “change the way Canadians drive going forward.” In addition, a second Renewable Fuels Standard specifically for biodiesel is expected to be enacted in the new year.

“Starting on December 15th, Canadians will be fueling change every time they drive. Five per cent of the gasoline that Canadians pump into their vehicles will come from renewable green sources harvested and produced across Canada,” said Gordon Quaiattini, president of CRFA. “Ethanol and biodiesel help diversify our fuel supply, add new income for farmers, and reduce harmful greenhouse gases.”

In a CRFA press release, they cited a third party Canadian study that showed ethanol reduced GHGs by 62 percent when compared to conventional gasoline and biodiesel shows a 99 percent reduction. When using the above calculations, the new RFS will eliminate 4.2 megatonnes of emissions each year or the equivalent of removing 1 million cars from Canada’s highways.

CRFA also cites the economic benefits of renewable fuels – construction of plants has generated nearly $3 billion in economic activity and ongoing activities represent a $2 billion annually. Farmers also receive higher incomes without the need for government programs and the country’s forestry sector is also seeing economic gains.

“With the renewable fuel standard coming into effect Canada is now positioned to become a world leader in advanced biofuels,” added Quaiattini. “The production and the commercialization of next generation advanced biofuels using state-of-the-art technologies and a wide variety of feedstocks is underway.”

Canadian canola could miss out on demand from Canada’s soon-to-be-implemented biodiesel mandate.

This analysis from Reuters says the country’s second most-popular crop might be a much lower choice as a biodiesel feedstock because of some ambiguity in Canada’s requirement that could be started this coming April:

Canada has finished selecting biodiesel plant proposals to receive funding from a C$1.5-billion ($1.5 billion) program, aiming to cut greenhouse gas emissions by 17 percent by 2020 from 2005 levels through mandates of 5 percent ethanol and 2 percent biodiesel in conventional fuel pools.

In the meantime, Canada has slim prospects of turning much of the yellow-flowering crop into biodiesel, even though the canola industry is counting on biodiesel production worldwide to account for 2.5 million tonnes, or 17 percent of its targeted 15-million-tonne harvest by 2015.

But if look at what some are doing in the private sector, you might feel a little more confident about north-of-the-border canola making it into biodiesel. Last week, I told you how Monsanto was upping its investment in Canadian canola in advance of the biodiesel mandate. However, canola oil still remains very popular in food applications, which would also drive Monsanto’s investment.

The Vatican has unveiled a new book detailing the Holy See’s solar power initiatives.

“The Energy of the Sun in the Vatican” was presented last week during a press conference by Cardinal Giovanni Lajolo, president of the commission governing Vatican City State. It details two solar projects undertaken by the Vatican in the last two years – the installation of 2,400 solar panels on the roof of the Vatican audience hall in 2008 and a solar cooling unit for the main cafeteria in 2009. Both projects were the work of German-based SolarWorld, one of the world’s largest solar energy businesses. The Vatican reports that the solar projects have resulted in saving about 305 tons of carbon dioxide emissions.

Vatican City, which is a sovereign city-state consisting of about 110 acres with a population of around 800 people, has a goal of meeting 20 percent of its energy needs with renewable sources by 2020, the target date set by the European Union for its members. That is likely to include a fleet of electric vehicles and possibly a solar-powered electric Popemobile. That idea was discussed during last week’s press conference by Cardinal Lajolo and Milan Nitzscke, communications director for SolarWorld.

The cardinal said if a sponsor offered the pope an electric-powered vehicle that “was in working order, efficient and suitable, why not? It would be a sign of his environmental concern.” Nitzscke said the Pope’s customized vehicle could be powered with electricity from solar panels. “This is something we have to discuss with the people who are in charge of the security aspect, but of course this is possible,” he said. Because the popemobile is bulletproof, the car would be heavier than most electric vehicles so it would be a challenge to design one that could accelerate quickly.

The current traveling Popemobile is a modified white Mercedes-Benz with bullet-proof windows.

In what’s being described as a bit of a stunning announcement, the tiny Middle Eastern country of Qatar has been picked as the site for the 2022 World Cup, soccer’s biggest event. So how did a small country that will be subject to temperatures of above 120 degrees Farhenheit during World Cup play get the games? This inhabitat.com article I first told you about last June says solar power will play a major role in keeping the players and fans cool when the temperatures soar:

Three new eco stadiums and sports complexes will be built close within the city limits allowing fans as well as teams to easily access the arenas. The Al-Wakrah stadium will be able to host over 45,000 spectators and be located in a mixed-use complex along with an aquatic center, spa, sports facilities and a mall, which will continue to be utilized all year long even after the competition ends. Then the Al-Khor and Al-Shamal Stadiums will also be constructed with seating capacity greater than 45,000. Qatar plans on using solar technology to power carbon-neutral technology in order to cool the stadiums and keep the temperature inside less than 27 degrees celsius.

Ironically, Qatar is an petroleum-rich nation that has decided to go with green technology for this project.