Domestic Fuel

Ethanol related issues top the list of concerns for members of the National Corn Growers Association (NCGA) preparing for their annual policy meeting ti be held this week in Anaheim as part of the 2010 Commodity Classic.

NCGA president Darrin Ihnen, a corn grower from South Dakota, says among those concerns are the use of indirect land use change in making regulations for low carbon fuels and increasing the allowable blend level for ethanol in gasoline to 15 percent. “The other thing that is looming is tax policy when it comes to the ethanol industry – VEET (volumetric ethanol excise tax credit) and the import tariff,” Ihnen said on a visit last week to the Missouri Corn Growers Association annual meeting. “Those will definitely bring a lot of discussion in our resolution sessions and our policy decision making.”

Corn growers are also concerned about the threat posed to animal agriculture in individual states by activist groups, which affects them on two levels. “Number one, the livestock industry is our largest user of corn,” Ihnen says. “The second thing is that we supply a lot of corn to the ethanol industry, which produces DDGs, which comes back to the livestock industry.”

Ihnen sees the animal activist threat as a unifying issue for the agriculture industry, which is sometimes divided when it comes to ethanol. “We can’t be separated when it comes to agriculture,” he said. “We need to work together.”

Listen to or download my interview with Darrin Ihnen here.

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The U.S. Grains Council is holding its 7th Annual International Marketing Conference and 50th Annual Membership Meeting in Mexico. One of the main purposes of this meeting is for the organization to create a new working plan for the development of U.S. grain exports and a bright spot for corn growers has been the growth in the export of DDGS.

I’m attending the meeting and had a chance to visit with National Corn Growers Association CEO, Rick Tolman, seen here addressing one of the conference meetings. NCGA is a founding member of the U.S. Grains Council.

Rick, who worked for USGC for many years, says that NCGA considers the Grains Council their international trade partner. The two organizations have a very strong working relationship. He says one of the things he’s really happy to hear discussed here at this meeting is how well exports of DDGS have been due to the efforts of the Grains Council. That’s good news for corn growers for whom the production of ethanol is so important right now. He says that the Grains Council is looking at other value added products they can promote for export too.

Since Rick is here instead of attending the National Ethanol Conference which gets underway today I asked him what’s going on in the ethanol industry from a corn growers perspective. He says there is a whole list of challenges and opportunities for ethanol. He says that with the final rule making on the RFS-2 it has improved the regulations but also created some challenges. It has given more optimism for growth of the business he says but the EPA is still giving a big penalty to ethanol for indirect land use change. He says it’s “tying an anvil around the ankle of the industry and trying to move forward and compete.” NCGA will continue to work with EPA to remove the unfair part of the new rules.

By the way, Cindy is attending the National Ethanol Conference so you’ll be seeing her coverage here on Domestic Fuel once the meeting gets going. The opening general session will be tomorrow morning.

You can listen to my interview with Rick here:

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The ethanol and agriculture industry have a few things to celebrate today, one of which is EPA’s acknowledgment that ethanol, including corn-based ethanol, has greenhouse gas emission advantages over conventional gasoline. Today, the Environmental Protection Agency (EPA) announced its new released regulations for the implementation of the Renewable Fuel Standard (RFS2) which in part outlines the country’s move to 36 billion gallons of biofuels by 2022 while reducing GHG emissions in the fuel.

“We’re pleased the U.S. Environmental Protection Agency recognizes that corn ethanol provides a distinct advantage over conventional gasoline when it comes to greenhouse gas emissions, with a reduction of more than 21 percent in some cases,” said National Corn Growers Association (NCGA) President Darrin Ihnen. “This means that all corn ethanol including existing grandfathered capacity and new production will qualify to meet the conventional biofuels targets in the RFS.”

However, like others in the ethanol industry, NCGA is frustrated with EPA’s continued use of indirect land use theory, a piece of “flawed science” say industry supporters. Ihnen stressed that the EPA should reject the unproven theory of international indirect land use change, which assumes that growing more corn means planting corn on a proportionately greater amount of acreage and will impact other crops or natural resources on a global basis. Today’s yield trends show this to be false. 2009’s record corn yield was 165.2 bushels per acre, according to the U.S. Department of Agriculture, more than 11 bushels higher than 2008 and nearly 15 bushels higher than 2007.

One of the inherent problems with indirect land use is that it is only applied in the case of corn ethanol. “This is the perfect example of bad science being applied unfairly,” said Ihnen. “Removing the impacts from the international indirect land use theory means that corn ethanol actually provides a 52 percent reduction in greenhouse gas emissions, compared to gasoline. The EPA is not considering similar indirect impacts of petroleum-based fuels, so why are they so stringent when it comes to green, renewable corn ethanol?”

Motorists in Sioux Falls, SD now have more fuel choices at the pump with the installation of four new ethanol blender pumps at a Kings Mart gas station in the city.

Through a joint effort between the American Coalition for Ethanol (ACE) and the South Dakota Corn Utilization Council (SDCUC), the station now offers a variety of fuel blends including unleaded gasoline and E10, and E30 and E85 for Flexible Fuel Vehicles (FFVs).

“This is the first location in Sioux Falls to offer a blend of 30 percent ethanol for FFV owners,” said Ron Lamberty with ACE. “The important investments made by the owners of King’s Mart, and the South Dakota Corn Utilization Council with the assistance of ACE and the “Blend Your Own Ethanol” campaign, have provided consumers with another ethanol fueling option in Sioux Falls.”

The BYO Ethanol campaign was launched last year as a partnership between ACE, the Renewable Fuels Association, the National Corn Growers Association and leading corn-producing states such as South Dakota. The campaign works to show gas station owners the benefits of blending ethanol and using blender pumps to provide choices for motorists.

The Sioux Falls blender pump location joins 40 other locations across South Dakota and around 150 nationwide. ACE offers an on-line map of blender pump sites.

The National Corn Growers Association is both pleased and disappointed by the Environmental Protection Agency announcement this week to delay final action on a waiver that would allow up to 15 percent ethanol blends in regular gasoline.

“While we are disappointed the Environmental Protection Agency has chosen to postpone its decision on the higher ethanol blends, we are pleased the positive tone of their response shows an understanding of the importance of moving to higher blends in the very near future,” said NCGA President Darrin Ihnen. “We are confident that the Agency’s further research will support our position. Further, NCGA feels strongly that EPA should work quickly and expeditiously to move toward higher blends and we look forward to working with the ethanol industry to make this happen.”

The waiver request was supported by NCGA, key ethanol organizations and thousands of farmers and others from around the country who provided comments to EPA on the importance of allowing higher level blends of ethanol in gasoline to reduce our nation’s dependence on foreign oil.

The Midwest Legislative Conference of The Council of State Governments recently issued a series of policy resolutions supporting increased use of both ethanol and biodiesel, and specifically support ethanol blender pumps. The group also adopted resolutions calling for use of sound scientific methods when calculating carbon emissions.

The National Corn Growers Association (NCGA) is pleased with all the resolutions, particularly noting the call for “implementation of both federal and state legislation to provide incentives to encourage the implementation of ethanol blender pumps.” In a press release, NCGA Ethanol Committee Chairman Jon Holzfaster said, “As legislators actively push for this technology, we feel that we are on the verge of a movement toward the choice and independence that ethanol can provide.”

The conference is a bipartisan association of state legislators representing 11 Midwestern states – Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.

You can’t burn ethanol in a diesel engine. Nope. Just not done. Like mixing oil and water.

But what if you added more water to the ethanol? And came up with a way to mix the hydrated-ethanol blend with the diesel… or better yet, biodiesel… right at the point of ignition? Ahhh… then you’d have something that National Corn Growers Association chairman and Nebraska corn farmer Bob Dickey calls the CleanFlex Power System… a new venture he has formed with Ron Preston, president of CleanFlex. Together, they hope to get the 60 million diesel engines in the U.S. to burn some ethanol as well.

They don’t have a Web site, yet, but you can contact CleanFlex at 402-480-0346.

In this edition of the Domestic Fuel Cast, listen to Bob and Ron as they discuss how this process works and how it will help renewable fuels meet the next round of emission requirements set to kick in in 2011.

Listen to the podcast here:

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You can also subscribe to the DomesticFuel Cast here.

This edition of “The Ethanol Report” features comments from the National Corn Growers Association (NCGA) “Land Use and Carbon Impacts of Corn-based Ethanol Conference” held August 25-26 in St. Louis. Comments come from National Corn Growers Association Director of Biofuels & Business Development Jamey Cline, NCGA CEO Rick Tolman, North Dakota grower Bart Schott, and Geoff Cooper with the Renewable Fuels Association.

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

Listen to or download the podcast here:

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Corn growers want regulators to know that trying to measure unintended consequences of biofuels production could result in more unintended consequences.

The National Corn Growers Association held a conference this week in St. Louis to focus on the issue of land use and carbon impacts of corn ethanol and how the future can be predicted with models to determine lifecycle greenhouse gas emissions. The problem, according to NCGA CEO Rick Tolman, is the language that was put in the 2007 energy bill’s Renewable Fuels Standard. “We had some arcane language put in there that said we’ll take a look at indirect land change and its implications as an unintended consequence,” Tolman said. “What we think is there’s an unintended consequence of the unintended consequence, which may be that we may in fact start using more imported oil because of this language we have regulation that exceeds our ability to measure.”

Tolman says California’s low carbon fuel standard is an example of how using unproven models that fail to use updated information or accurate future predictions of new technology and higher yields is going to have the opposite effect of what was intended – that is, using less imported fossil fuels. “After 2010, you won’t be able to sell ethanol in California,” said Tolman. “And it is really the only viable low carbon fuel that’s available in California, so that means more oil.”

The corn growers are hoping regulators will take a closer look at what they are trying to do and consider the impact that it will have down the road.

Listen to or download an interview with Rick Tolman here:

Podcast: Play in new window | Download (4.7MB)

Yet another study has found that Searchinger et al.’s paper on Indirect Land Use was not based on ’sound science’. According to researchers Professor John Matthews and Dr. Hao Tan, from Macquarie University in Sydney, Australia, the Searchinger paper is more ideology than science and is seeking to put biofuels in the worst possible light. In addition, they say, alternative approaches are more likely to be fruitful in genuinely evaluating effects of biofuels grown around the world. This from the new report, “Biofuels and indirect land use change effects: the debate continues”.

Their efforts revealed that the framework used started with assumptions as to the diversion of grain to ethanol production in the U.S. but then extrapolated these parts of the world, such as sugarcane growing in Brazil, which are actually much more bio-efficient. Professors Mathews and Tan’s analysis concluded that Searchinger et al. failed sound scientific standards on many fronts and that government agencies relying on Searchinger et al. findings for evaluating biofuels would be better served by utilizing other controls.

“Indirect land use change effects are too diffuse and subject to too many arbitrary assumptions to be useful for rule-making,” stated Professor Mathews. “The use of direct and controllable measures such as building statements of origin or biofuels into the contracts that regulate the sale of such commodities would secure better results.”

According to Matthews and Tan, there are six ways Searchinger et al. fell short:

1. 1.    Direct plantings of biofuels crops around the world are ignored, and instead a spike in U.S. corn-based ethanol is considered a trigger.
   2.    The U.S. spike is met exclusively by growing corn, but other ways of meeting the U.S. spike, all involving fewer GHG emissions, are ignored.
   3.    The U.S. spike met entirely within the U.S. – without regard to trade (such as half of the spike being met by Brazilian sugarcane and imported into the U.S.).
   4.    The Searchinger et al. calculations of carbon release are based on trends recorded in the 1990s but are projected forward up to 2016.
   5.    Improvements in biomass yields around the world are not considered.
   6.    The U.S. spike leads to indirect effects around the world without regard to regulatory limits (even in the U.S.).

“If you wished to put U.S. ethanol production in the worst possible light, assuming the worst possible set of production conditions guaranteed to give the worst possible set of indirect land use effects, then the assumptions would not be far from those actually presented in the Searchinger et al. paper,” commented Dr. Hao Tan. “Frankly, better science upon which to base rule-making is available today.”

If you’d like to participate in the debate, then consider attending the Land Use Conference in St. Louis hosted by NCGA (Aug. 25-26). They will be discussing current models, limitations and develop recommendations for future science and policy.