Domestic Fuel

American officials say they are looking into allegations that China is providing unfair support to the country’s wind and solar products makers, as well as the advanced batttery and energy-efficient vehicle industries.

This Wall Street Journal article says U.S. Trade Representative Ron Kirk promises a vigorous pursuit of these allegations through the World Trade Organization:

The United Steelworkers union on Sept. 9 petitioned the Obama administration to examine China’s green technology practices, saying the country employs export restraints and subsidies, discriminates against foreign companies and imported goods, and engages in other practices that harm U.S. interests and run counter to global trade rules.

“As allegations contained in the petition in question are unwarranted, it’s not a right move by the U.S. side to decide to conduct investigation into it,” said embassy spokesman Wang Baodong.

The article goes on to point out that while the U.S. also supports its own clean-energy sector, the USW says China is using its subsidies specifically to help exports, a violation of trade rules.

A group of farmers from around the world gathered in Des Moines this week for the fifth annual Global Farmer-to-Farmer Roundtable organized by Truth About Trade and Technology (TATT) and held in conjunction with the World Food Prize.

As part of the event, the 16 farmers had the opportunity to visit Couser Cattle Company, owned by Bill Couser, who is a director on the board of the farmer-owned Lincolnway Energy ethanol plant in Nevada, Iowa. Bill conducted a fascinating presentation about his marriage of row crop farming (corn/soybeans), livestock production and ethanol production. He used a long table to display all the products he produces starting with an ear of corn and winding up with ethanol (2.81 gal/bushel of corn) as well as by-products like DDGS and ultimately fine quality beef.

Couser debunks the food versus fuel debate by explaining how corn going into an ethanol plant produces feed, fuel, food and fertilizer. Watch his presentation here:

TATT Global Farmer To Farmer Roundtable Photo Album

The wind industry received a boost this week with the release of the “Global Wind Energy Outlook 2010,” in Beijing ahead of the China Wind Power 2010 conference slated to begin today. China is now the world’s largest wind power market and the Global Wind Energy Council (GWEC) anticipates the country’s wind power will increase 10 fold by 2020. The report forecasts that wind power could provide a fifth, or up to 22 percent of the world’s electricity needs by 2030 while at the same time achieving major greenhouse gas emissions reductions, and details how global wind power capacity could reach 2,300 GW by 2030 and reduce CO2 emissions by 34 billion tons.

The GWEO 2010 presents three different scenarios for global wind power development through 2030, Reference, Moderate and Advanced. The Reference Scenario is based on the new 2010 IEA report, “Projected Costs of Generating Electricity” and although its wind numbers are cautiously optimistic, it believes wind power will replace oil’s role in electricity generation by 2030.

The report also calls for a global agreement to be reached regarding greenhouse gas emission reduction goals and encouraged more governments to achieve their goals through the development of green energy.

“Wind power can make a massive contribution to global electricity production and to decarbonising the power sector, but we need political commitment to make this happen.” said Steve Sawyer, GWEC’s Secretary General. “Wind power technology provides governments with a viable option for truly tackling the challenges of our time and for being part of the energy revolution our planet needs.”

In addition to environmental benefits, the report also demonstrates that wind energy is becoming a substantial factor in economic development, providing more than 600,000 ‘green collar’ jobs today both in direct and indirect employment. By 2030, the number of jobs is projected to increase to over 3 million. In 2010 a new wind turbine was in stalled every 30 minutes and GWEC’s goal is that by 2030, a wind turbine is installed every seven minutes.

Today, more than 75 countries have at least one operational wind farm and by 2030, GWEC predicts that half of the new installed wind capacity will be in developing countries.

The President/CEO of the Renewable Fuels Association addressed the Export Exchange 2010 today and highlighted the importance of U.S. ethanol policy and expansion into foreign markets which is critical for the DDGS industry. You can read his full remarks here as well as listen to them below.

In his remarks, Dinneen said, “As a nation, failure to continue the growth of our domestic ethanol industry will not only limit our ability to reduce our dependence on foreign oil, but constrain our ability to provide a high quality livestock feed to our domestic livestock industry and world trade partners. Make no mistake, the success of the distillers grains market is directly tied the fate of American ethanol production.”

Dinneen drew parallels between the markets for fuel ethanol and for distillers grains underscoring the need for expanded trading relationships. “You have heard talk of the ethanol blend wall that limits the amount of ethanol that can be used. In much of the same manner, we are rapidly approaching a feed wall in the U.S. Due to current limits in dietary rations, the livestock feed market will likely be saturated with distillers grains when the industry is producing between 35 and 45 million metric tons. As we spoke about before, we are rapidly approaching the lower end of the “feed wall” estimates.”

You can listen to Bob’s speech here: Bob Dinneen Speech

Export Exchange 2010 Photo Album

Our keynote speaker at the Export Exchange 2010 is Dr. Robert L. Thompson, Professor Emeritus from the University of Illinois at Urbana-Champaign where he held the Gardner Endowed Chair in Agricultural Policy. He is a Senior Fellow of the Chicago Council on Global Affairs and serves on the USDA-USTR Agricultural Policy Advisory Committee for Trade and the International Food and Agricultural Trade Policy Council.

Dr. Thompson started off his presentation talking about demand dynamics looking to the future. He presented some amazing numbers when it comes to population growth. Between now and 2050 there will be 2.6 billion more people. That’s twice the population of China and most of that growth will come in low income countries. There are a lot of statistics in his presentation that you will find very interesting.

You can listen to Dr. Thompson’s presentation here: Dr. Robert Thompson Presentation

Export Exchange 2010 Photo Album

This morning the Export Exchange 2010 program got started in earnest with opening remarks from Tom Dorr, USGC President/CEO. He says we have nearly 500 attendees from 33 countries. The proceedings will be translated into 7 languages.

Tom says that the opportunity to trade across borders helps to improve lives. That opportunity needs to be done in a transparent way to ensure food security. This Export Exchange is a forum to show that that food security is possible due to the use of new technologies and trade as a means to provide proper nutrition and safe food and economic opportunity for all.

You can listen to Tom’s remarks here: Tom Dorr Remarks

Export Exchange 2010 Photo Album

The Export Exchange 2010 got off to an official and social start this evening with welcoming remarks from U.S. Grains Council President/CEO Tom Dorr (left) and Renewable Fuels Association President/CEO Bob Dinneen.

The conference is focused on connecting international buyers of DDGS and coarse grains with the U.S. market. I don’t know what the attendance totals are here but we had a full room for the welcoming reception. During the next couple days I’ll have interviews and presentations posted here from the event.

You can listen to Tom’s opening remarks here: Tom Dorr Remarks

You can listen to Bob’s opening remarks here: Bob Dinneen Remarks

I’m also posting into an online photo album: Export Exchange 2010 Photo Album

Friends of the Earth International (FOE) has released a report about Africa’s move to produce biofuels to help meet the global needs of renewable energy. “Africa, up for grabs: the scale and impact of land grabbing for agrofuels” looked at 11 African countries and found that five million hectares of land, or an area the size of Denmark, is being acquired by foreign companies to produce biofuels, mainly for European markets. Dubbed “land grabbing,” the majority of entities entering the country are European and Chinese companies with Brazil making a play as well.

According to FOE, the purpose of the report was to take a closer look at these land deals and determine how many of them are for agrofuels and how they will affect local communities and the environment. In the report the authors write, “although information is limited, there is growing evidence that significant levels of farmland are being acquired for fuel crops, in some cases without the consent of local communities and often without a full
assessment of the impact on the local environment.”

The report says that many African countries are waking up to the realities of biofuels and have halted their biofuels programs. Others, they say are moving forward. FOE offers several actions that they believe should be taken including putting a stop to land grabbing; re-prioritize political priorities that include local sustainable farm programs and energy efficiency brought about through public transportation, walking and cycling;  and creating fair and appropriate land deals.

In a press release, Mariann Bassey, food and agriculture coordinator for Environmental Rights Action/Friends of the Earth Nigeria said, “The expansion of biofuels on our continent is transforming forests and natural vegetation into fuel crops, taking away food-growing farmland from communities, and creating conflicts with local people over land ownership. We want real investment in agriculture that allows us to produce food and not fuel for foreign cars.”

The report points out that jatropha, often hailed as a wonder crop for biodiesel production, is actually one of the worst enviornmental offenders and claim that those who have converted food crops to this biofuels crop, can not make a living.

In conjunction with the report, FOE is calling for the EU to scrap its biofuels policy and asking governments to invest in environmentally friendly agriculture and decrease the energy used for transportation through conservation efforts.

The sugarcane harvest in Brazil is running ahead of schedule and the U.S. corn crop is progressing well, according to the latest reports.

The cane crush in Brazil so far this year is running about 20 percent ahead of last year, which is not necessarily good news according to the Brazilian Sugarcane Industry Association’s (UNICA). Technical Director Antonio de Padua Rodrigues says the additional crushing observed so far can be attributed to the early start of the current harvest. Drier weather this year compare to last year has increased the harvesting pace, but it also may reduce the biomass potential of the cane yet to be harvested.

About half of the Brazil harvest is going to ethanol and half to sugar. UNICA reports that sugar production totaled 2.50 million tons in the first half of July, 25.75% higher than in 2009 during the same two-week period. Ethanol production also increased by 25.28% over the same period, reaching 1.86 billion liters.

Ethanol exports from Brazil are down this year, but domestic use is strong, according to Rodrigues. “The demand for ethanol fuel is rising, as flex-fuel vehicle sales remain high. Moreover, domestic ethanol consumption for other purposes will set new records during this harvest, mainly because of higher demand for the ethanol as a raw material for chemicals production.”

Meanwhile, here in the U.S., ethanol production was up 14,000 barrels per day in May, according to the Energy Information Administration (EIA), at more than 846,000 barrels. Ethanol demand, as calculated by the Renewable Fuels Association, also reached an all time high at 847,000 b/d in May, up from 713,000 b/d a year ago.

On the import/export side, EIA reports that U.S. ethanol imports were up slightly from April at 1.6 million gallons, but exports were down dramatically – from 40.8 million gallons to just over 17 million. As of May, the U.S. has exported a total of 141.4 million gallons this year, but RFA notes that export figures represent the sum of “Ethyl alcohol and other spirits, denatured, of any strength” and “Undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher.” As such, the figures likely include ethyl alcohol exports for non-fuel industrial purposes, so RFA ethanol demand calculations are for domestic use only, providing a comparison to domestic ethanol production.

The U.S. corn crop continues to look good and some farmers are expecting to start harvest earlier than normal. According to the latest USDA report, 93% of the crop is silking, compare to 86% on average, over 30 percent in the dough stage and 7% dented, both ahead of normal. Despite the heat, the condition of the crop is holding steady at more than 70 percent good to excellent.

Ethanol production probably had less impact on global commodity prices in 2008 than many were saying at the time.

A newly released working paper, entitled “Placing the 2006/08 Commodity Price Boom into Perspective,” from the Development Prospects Group at the World Bank, concludes that “…the effect of biofuels on food prices has not been as large as originally thought.”

Authors of the report, John Baffes and Tassos Haniotis, argue that energy prices, as well as speculation, played significant roles in the non-energy commodity price spikes seen in the recent past. “We conclude that a stronger link between energy and non‐energy commodity prices is likely to have been the dominant influence on developments in commodity, and especially food, markets,” says the report. “Demand by developing countries is unlikely to have put additional pressure on the prices of food commodities, although it may have created such pressure indirectly through energy prices.”

Another point they make is that biofuels only represent 1.5 percent of worldwide grain and oilseed use. “This raises serious doubts about claims that biofuels account for a big shift in global demand. Even though widespread perceptions about such a shift played a big role during the recent commodity price boom, it is striking that maize prices hardly moved during the first period of increase in US ethanol production, and oilseed prices dropped when the EU increased impressively its use of biodiesel. On the other hand, prices spiked while ethanol use was slowing down in the US and biodiesel use was stabilizing in the EU.”

In a 2008 Policy Research Working Paper, authored by Donald Mitchell, lead economist for the World Bank’s Development Prospects Group, which claimed 70-75 percent of the increase in food prices that year was due to biofuels and the related consequences of low grain stocks, large land use shifts, speculative activity and export bans.

So, this new paper is a big about-face from the 2008 view and actually says what most biofuels advocates were saying all along, according to Renewable Fuels Association president Bob Dinneen. “In reversing course, this World Bank report reaffirms the marginal role biofuels play in world commodity and food prices,” said Dinneen. “The RFA has long noted that ethanol production has continued to increase while corn prices have now returned to normal levels. Volatile oil prices, speculation, and adverse weather conditions all played far more significant roles in driving commodity prices to record and near record prices.”

Growth Energy CEO Tom Buis praised the World Bank for setting the record straight. “This study clearly shows that the notion of food-versus-fuel was simply wrong,” said Buis. “Food-versus-fuel has always been and will always be nothing more than a myth. We hope that this report will encourage others who have relentlessly perpetuated this untruth to admit their mistakes and put an end to this false debate.”

It is interesting to note that these “working papers,” although released by the World Bank, done by World Bank economists and posted on the World Bank website, come with a disclaimer that says they represent “work in progress” and that the findings “are entirely those of the authors” and do not necessarily represent the views of the World Bank.

Link to July 2008 working paper.
Link to July 2010 Working Paper.

A partnership between the Renewable Fuels Association and the U.S. Grains Council will help bring producers of the ethanol co-product distillers dried grains with solubles (DDGS) together with interested international buyers to get answers, make connections, and build business.

Export Exchange 2010 will bring together more than 150 international buyers of U.S. DDGS and coarse grains with more than 300 U.S. producers and agribusinesses. The conference will be held on Oct. 6-8, 2010, at the Hyatt Regency McCormick Place Hotel in Chicago, Ill.

“The opportunity to educate foreign buyers about high quality, U.S.-produced DDGS could not come at a better time,” said RFA President Bob Dinneen. “At current dietary inclusion levels, distillers grains consumption is nearing saturation in the United States. Increasing U.S. exports of distillers grains will be instrumental in helping the industry avoid running into a ‘feed wall.’ Fortunately, markets around the world are rapidly opening, creating demand for approximately 15 to 20 percent of all distillers grains produced today.”

“We are excited to have the Renewable Fuels Association co-sponsor the Export Exchange 2010,” said USGC President and CEO Thomas C. Dorr. “The burgeoning world population is demanding more meat, milk and eggs. U.S. DDGS and coarse grains continue to play an important role in livestock and poultry feed rations globally. We have to educate and connect our buyers and sellers to continue to grow vital markets for the United States.”

The Council is providing sponsorship for the attendance of targeted international trade teams from more than 25 countries. These participants represent nearly 80 percent of the global export market for DDGS and coarse grains. The conference will address critical issues facing U.S. exports and seek to educate and build awareness of U.S. DDGS and coarse grains among international buyers.

I know the name of this blog is Domestic Fuel, but I wanted to point out a story I found that makes the case how biodiesel might just help the U.S. win the war in Afghanistan.

A new white paper from Wayne Arden, an expert in the financial technology field, and John Fox, a former CEO of a biodiesel company, makes the case that if biodiesel was produced in the landlocked country, U.S. and allied forces fighting the Taliban and Al Qaeda would gain certain advantages:

The first insight is that it is very expensive for the military to import fuel into Afghanistan. In October 2009 DOD officials reported to Congress that the average cost of importing fuel into Afghanistan, or the Fully Burdened Cost of Fuel (FBCF), approaches $400 per gallon when all direct and indirect costs are accounted for, and even sometimes exceeds $400. A 2008 Defense Science Board study, “More Fight Less Fuel,” described the FBCF as “several hundred dollars per gallon.”

The third insight is that a high percentage of U.S. casualties in Afghanistan stem from protecting convoys of fuel, water, and other military supplies. The Army calculated in a 2009 study that one casualty occurs for every 24 fuel resupply convoys in Afghanistan.

In addition, the paper points out that growing feedstocks for biodiesel would give Afghan farmers a cash crop other than opium, which fuels the bad guys’ efforts to kill our good guys. Safflower, which already grows in Afghanistan and is highly drought-resistant, seems like a good possibility. Throw in the fact that biodiesel’s higher ignition temperature makes it safer in a war zone and it’s a better lubricant, it appears the green fuel would be a good fit for our war fighters.

The paper also goes on to point out that a 12 million-gallon-a-year plant in Kandahar would cost as little as $90 million to build and get running. Considering the potential that the military could save $3.7 billion in its first year of operation, the plant would pay for itself in just a month. Now there’s an investment in all of our futures.

You can read more about the project on this website and on the white paper’s authors’ Facebook page, Biodiesel in Afghanistan.

Brazil’s ethanol pipeline is getting closer to reality as a preliminary environmental license for the project was issued this week.

The $1.1 billion project, which is a partnership between Petroleo Brasileiro SA (Petrobras), Mitsui & Co. and Camargo Correa SA, is designed to transport ethanol in a 337 mile pipeline from the producing regions in the Mid-West, Minas Gerais and São Paulo to the large consuming centers of São Paulo and Rio de Janeiro.

The project has been under development since early 2006 and is now scheduled to begin late next year.

A new cellulosic ethanol plant in Denmark is claiming to be the largest producer of “New Ethanol” in the world, turning wheat straw into 1.4 million gallons per year.

According to Inbicon CEO Niels Henriksen, the biorefinery in Kalundborg is producing both cellulosic ethanol and a clean lignin biofuel to replace coal. “But our renewable energy process is as important as our renewable energy products,” Henricksen says. “The Inbicon Biomass Refinery can demonstrate dramatically improved efficiencies when integrated with a coal-fired power station, grain-ethanol plant, or any CHP operation. Symbiotic energy exchange helps our customers build sustainable, carbon-neutral businesses.”

The Kalundborg refinery will be integrated with the Denmark’s largest power station. Waste steam from the power station will run the biomass refinery, increasing the refinery’s total energy efficiency to 71%. Inbicon says a variety of feedstocks can be used by the plant, including straw, corn stalks and cobs, sugar bagasse, and grasses.

According to the company, three U.S. companies have cellulosic projects in development that will each include a scaled-up Inbicon Biomass Refinery.

Sandra Broekema, manager of business development for Great River Energy, a Minnesota electric cooperative, spoke about Dakota Spirit AgEnergy, a commercial-scale Inbicon Biomass Refinery processing North Dakota wheat straw to be co-located with their new 64 megawatt Spiritwood Station.

Peter Bendorf, PE, Integro Services Group, developing engineer for SWI Energy, plans a new 59MMgy corn-to-ethanol plant in Alton, Illinois integrated with a 20MMgy Inbicon Biomass Refinery. Utilizing the synergies of each will produce fossil-free ethanol.

Just yesterday, I told you how International Fuel Technology had just recently finished testing on a couple of its fuel additives that make biodiesel run better with more miles per gallon.

Now, the St. Louis-based company has announced that East Midlands Trains in the United Kingdom, which were the test trains for DiesoLiFT 10 in its light rail, diesel multiple unit (DMU) operations, will continue to use the additive and could save about 92,000 gallons of diesel fuel a year:

“The fuel economy improvement realized by East Midlands Trains in the recently completed in-service field demonstration is consistent with fuel economy improvements we have achieved in numerous other in-service and test bed rail engine demonstrations,” said Gary Kirk, IFT’s Director and Sales and Marketing. “Use of DiesoLiFT 10 will reduce fuel consumption and harmful emissions. We are excited to work with a company committed to cost effective green technologies.”

Matt Browne, East Midlands Trains’ Environmental Manager, said, “We are extremely pleased to be the first train operator taking part in this in-service field demonstration with IFT. The results are already demonstrating that by using the fuel additive, DiesoLiFT 10, we are improving our fuel efficiency and cutting our carbon emissions. Trains are already one of the most environmentally friendly forms of transport, and use of DiesoLiFT 10 is helping us make our trains even greener.”

Trains in the UK use around 317 million gallons of diesel a year. DiesoLiFT 10 could save 16 million gallons of fuel annually.