Domestic Fuel

In this edition of “The Ethanol Report,” we hear from Geoff Cooper, Vice President of Research and Analysis for the Renewable Fuels Association, about what is right and what is wrong with the rule for the expanded Renewable Fuel Standard released early last month by the Environmental Protection Agency.

The good news is that the RFS2 improves upon the rule EPA proposed last year, and that it is much better than what California is using to determine lifecycle greenhouse gas emissions. The bad news is the continued reliance on the non-scientific indirect land use change. EPA’s new calculations determined that corn ethanol was better than they first thought when it comes to indirect land use change, so they cut that penalty in half, while they totally eliminated it for sugarcane ethanol – a move that has RFA mystified.

This podcast was recorded at the recent National Ethanol Conference, where RFS2 was the main topic of discussion. We reference a presentation done at the conference by EPA’s Sarah Dunham, which you can find in a previous post here on Domestic Fuel.

You can subscribe to this twice monthly podcast by following this link.

Listen to or download the podcast here:

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Kinder Morgan is getting ethanol moving through the pipeline.

Those attending the Renewable Fuels Association 15th annual National Ethanol Conference in Orlando last month had the opportunity to see the Kinder Morgan terminal in Orlando and hear about the first pipeline in the country to provide commercial ethanol deliveries. “We now have the capability of handling 100 percent of the greater Orlando demand for ethanol by pipeline,” said Jim Lelio, Director of Business Development for Kinder Morgan Energy Partners.

Florida’s E10 market penetration has increased rapidly in just two short years, moving from virtually nothing at the end of 2007 to almost 100 percent at the end of 2009. The 104 mile Central Florida pipeline, in operation since December 2008, is the only pipeline currently moving commercial ethanol batches to supply major U.S. markets. “Our number one concern is the integrity of that pipeline and maintaining safety of it. We have had no signs of corrosion during comprehensive testing,” Lelio said. “We proved it’s possible and now we are gaining in confidence and looking at different pipelines.” That includes the Plantation Pipe Line from Louisiana to Virginia.

Last year, Kinder Morgan handled nearly 30 percent of total U.S. demand for ethanol, or about 83 million barrels, and this year that is expected to increase to 95 million. The company is the largest independent transporter of petroleum products in the nation, transporting more than 2 million barrels per day.

Listen to or download Jim Lelio’s presentation from the 2010 NEC here:

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A trio of ethanol industry executives showed their creative side as the live entertainment during the Tuesday night reception at the Renewable Fuels Association National Ethanol Conference last week.

“Green Floyd” is made up of Frontline Bioenergy CEO Bill Lee, Neil Koehler with Pacific Ethanol and bioenergy consultant Paul Kamp. The group played a variety of songs from blues to folk to rock, and entertained with a couple of original parodies designed with the ethanol audience in mind. Here are the lyrics to “The Blend Wall” (to the tune of Pink Floyd’s “The Wall”) and a short video clip to enjoy.

We don’t need o-ver production
We could use some E-15
Lisa Jackson, approve our waiver
Listen to our man, Dinneen

Hey, Lisa –
Listen to Bob Dinneen!
All in all it’s just another wicked Blend Wall
All in all it’s just another wicked Blend Wall

(For those not in the industry, the references are to EPA administrator Lisa Jackson, the waiver to allow up to 15 percent ethanol in regular gasoline, RFA president and CEO Bob Dinneen and the blend wall faced by the industry if the allowable blend is not increased – trust us, it’s funny!)

Three different companies announced the introduction of new enzymes for cellulosic ethanol production at this week’s National Ethanol Conference in Orlando.

Novozymes made the biggest splash with its Cellic® CTec2 for the production of biofuel from agricultural waste, but the other two are no less significant in the race towards commercialization of advanced biofuels.

Verenium Corporation’s new introduction into the enzyme mix is called Xylathin, which is specifically designed to improve the economics of fuel ethanol production from cereal grains. According to the company, “Xylathin rapidly breaks down xylan, a compound found in cereal grains such as wheat, rye and barley and significantly reduces mash viscosity. This faster acting enzyme allows producers to shorten retention times and reduce enzyme dose. Xylathin also reduces grain water retention lowering grain drying energy requirements.”

At the same time, Danisco’s Genencor introduced Accellerase® DUET, a step up from Accellerase® 1500. “Accellerase® DUET employs a whole broth formulation, which provides nutrients for fermentative organisms and lowers the chemical load introduced into our customers’ processes. Higher performance at lower dose will lead to significant improvements in enzyme cost in use for producers, which is critical to enable the cellulosic biofuels industry.”

Representatives from all three companies, as well as others in the field, made presentations at two different sessions during the National Ethanol Conference to talk about advanced biofuels technology and the path to commercialization. If you attended the conference, those presentations are now available on-line.

The futures hold a new climate of opportunity for corn, ethanol and livestock producers.

CME Group this week announced the launch of Distillers’ Dried Grain agricultural commodity futures contracts, scheduled to begin trading April 26. Information about the new contract was released during the Renewable Fuels Association’s National Ethanol Conference in Orlando where CME Group was a sponsor.

Distillers’ Dried Grains, a byproduct of corn-produced ethanol, is used for animal feed, including livestock and dairy cows. The electronically traded and physically delivered futures contracts can be used by livestock and ethanol producers, commercial corn interests and others to lock in the price of feed or to hedge their ethanol refining margin in combination with corn, natural gas and ethanol futures.

The contracts will be listed with the Chicago Board of Trade and more information is available on the CME Group commodities website.

2010 National Ethanol Conference Photo Album

The new rule for the expanded Renewable Fuel Standard, fresh out of the box just two weeks ago, was the main topic of discussion at the Renewable Fuels Association’s 15th National Ethanol Conference in Orlando. Sarah Dunham, Transportation and Regional Programs Division Director with the U.S. Environmental Protection Agency, boiled down the guts of the new RFS2 in a 45 minute presentation that highlighted changes made in lifecycle analysis determinations from the rule as originally proposed.

“I can safely say that this is the area we got more comment than any other area in the rule,” Dunham said, calling it very constructive and helpful to get real data and science to apply to the rule. This led to “significant” decreases in estimates of international indirect land use change related to biofuels production, “more than 50-60-70 percent in some cases,” she added. Using corn ethanol as an example, she noted that the final rule factored in both increasing yields and the value of co-products, which had not been in the original model

Dunham also talked about how EPA addressed “uncertainty” in their analysis. “There is inherent uncertainty in these assessments,” she said. “And we thought it was important to try to formally recognize that uncertainty” and incorporate it into the analysis. The assessments will be updated over the next two years as more information becomes known.

The regulations for RFS2 are scheduled to go into effect on July 1 and between now and then EPA will be working with the Renewable Fuels Association and the biofuels industry in general to conduct workshops to help inform producers about the new rule and what it means to them.

If you are in the industry, it is worth listening to Sarah’s presentation, including answers to questions at the end asked by moderator Charles Knauss with Bingham McCutchen LLP. Listen to the audio in the player below and you can see screen shots of some of the slides she references in the NEC conference photo album.

Podcast: Play in new window | Download (23.1MB)

2010 National Ethanol Conference Photo Album

A major breakthrough in the development of cellulosic ethanol was announced at the National Ethanol Conference in Orlando Tuesday.

Novozymes launched the first commercially viable enzymes for production of biofuel from agricultural waste – Cellic® CTec2.

“We have been working on this for the past 10 years and promised our customers and the market to be ready by 2010,” says Novozymes’ CEO, Steen Riisgaard, who first started work on the project 30 years ago as a young researcher.

He says they are really focusing on using this new development on making ethanol from agricultural waste, such as wheat straw or corn cobs, to avoid the current controversy of indirect land use change. “Personally, I think energy crop are wonderful and should be part of our future, but I don’t want to see this beautiful development be blocked by people speculating about things,” he said.

Riisgaard gives lots of credit to the United States for moving toward renewable energy sources. “Other than Brazil, the US is certainly in the lead,” he said. “Corn based ethanol has paved the way in terms of establishing the infrastructure and it appears to us on the other side of the Atlantic to be a carefully orchestrated and well-executed plan.” But he stresses the importance of continued investment by both the public and private sectors to make cellulosic ethanol commercially viable.

Novozymes is in the process of contracting a plant in Blair, Nebraska to produce the enzymes. “It will be ready for production by the end of 2011 and will produce enzymes for both corn based and cellulosic ethanol,” he said.

Listen to or download my interview with Steen Riisgaard here:

Podcast: Play in new window | Download (2.2MB)

2010 National Ethanol Conference Photo Album

Despite the bad economy and continued attacks by detractors, ethanol provided a significant economic impact for the nation in 2009.

According to “The Economic Contribution of the Ethanol Industry to the Economy of the United States” by economist John Urbanchuk, the economic activities of the ethanol industry put an additional $16 billion into the pockets of American consumers in 2009, added $53.3 billion to the nation’s Gross Domestic Product and displaced crude oil imports amounting to a value of $21.3 billion.

“While 2009 was a really rough year for the overall economy, the ethanol industry grew and expanded,” Urbanchuk said during the 15th annual National Ethanol Conference in Orlando on Tuesday, where he presented his findings. “I think it’s one of the shining stars in the manufacturing sector.”

Listen to or download an interview with John Urbanchuk from the 2010 NEC in the player below:

Podcast: Play in new window | Download (3.0MB)

We’re broadcasting the opening general session live from National Ethanol Conference. Afterward we’ll be posting a recording of it your you to view at your leisure.

*Post update*

Below is the recorded video of the opening general session which includes comments from Renewable Fuels Association chairman Chris Standlee, President and CEO Bob Dinneen and part of the first session on the RFS2.

2010 National Ethanol Conference Photo Album

The mood is definitely a little brighter at this year’s National Ethanol Conference compared to last year. You can tell that the industry is in a better place and the climate has changed with plants reopening and the economy turning back around.

The theme of the conference is “Climate of Opportunity” and the program officially opened this evening with the welcome reception, sponsored by Fagen, Inc., which followed the annual golf tournament. The opening general session will kick off at 8:00 am Eastern time on Tuesday morning and we will be live streaming the state of the industry address by Bob Dinneen, president and CEO of the Renewable Fuels Association.

We will also be hearing from Paul Machiele with the U.S. Environmental Protection Agency about the new RFS2 rule, debate indirect land use change, view the international landscape for ethanol and get the perspective of the automotive industry from Tom Stephens of General Motors.

The Flickr photo album is started here – 2010 National Ethanol Conference photos

Join us for continuing coverage of the conference this week on Domestic Fuel.