Domestic Fuel

In the State of the Union Address and other appearances this week, President Obama is endorsing a proposal that would extend the advanced energy manufacturing tax credit.

The Security in Energy and Manufacturing (SEAM) Act, authored by U.S. Sen. Sherrod Brown (D-OH), is a job-creating clean energy tax cut, which has delivered nearly $125 million to seven Ohio manufacturers to help create clean energy jobs, provides investment tax credits of 30 percent for facilities that manufacture energy equipment. Currently, 70 percent of clean energy components are manufactured outside of the United States.

“We can’t trade a dependence on foreign oil for a dependence on foreign-made sources of energy,” Brown said. “It’s unacceptable that 70 percent of clean energy components are made outside of the U.S. Extending the Advanced Energy Manufacturing Tax Credit will help more American manufacturers create jobs through the production of cutting-edge energy technologies.”

The initial tax credit, which was included in the Recovery Act, supported seven Ohio projects and dozens more eligible projects applied for funding but were denied due to a lack of funds. The Department of Energy (DOE) states that the program was more than three times oversubscribed. Nationwide, DOE deemed 418 projects eligible, which amounts to $5.8 billion in unfunded eligible applications. These manufacturers are waiting in the pipeline, and would be ready to break ground soon after they receive funding.

To be eligible for the tax credit, manufacturers must produce solar, wind, and geothermal energy equipment; fuel cells, microturbines, and batteries; electric cars; electric grids; energy conservation technologies; and equipment that captures and sequesters carbon dioxide or reduces greenhouse gas emissions. The SEAM Act is also cosponsored by Senators Debbie Stabenow (D-MI), Maria Cantwell (D-WA), and Bob Casey (D-PA).

As mentioned in an earlier article, last night’s Iowa Caucus results trumpeted a big victory for renewable fuels such as ethanol and biodiesel. Both former Governor Mitt Romney and former Senator Rick Santorum expressed their support for the federal renewable fuels standard while campaigning in Iowa. The Iowa Renewable Fuels Association is happy with the results. Both candidates were 4-for-4 on ethanol issues according to the Iowans Fueled With Pride Iowa Caucus Voter Guide.

“Despite scant attention on agriculture issues by the national media, both Governor Romney and Senator Santorum prioritized rural and ag issues,” said IRFA Past President Walt Wendland, who is the CEO of Golden Grain Energy near Mason City, Iowa and Homeland Energy Solutions near Lawler, Iowa. “It came as no surprise to us that friends of ethanol fared well in the Iowa Caucus. The nation needs an energy policy that recognizes the importance of domestic renewable fuels like ethanol and biodiesel.”

Former Speaker of the House Newt Gingrich, the fourth place finisher, is also a strong supporter of ethanol and biodiesel while the bottom two vote getters, Representative Michele Bachmann and Governor Rick Perry, refused to support the renewable fuels standard.

Iowans Fueled with Pride is a coalition of Iowa renewable fuels producers committed to providing accurate and current information to the public, elected officials and candidates for office. Further, they work to foster an open and comprehensive debate about the future of U.S. energy policy. The coalition does not endorse candidates for office.

As presidential candidate Rick Perry returned to Iowa today, the Iowa Renewable Fuels Association (IRFA) took the opportunity to question the Texas governor’s plan for energy tax incentives.

After the IRFA pointed out that Perry’s energy plan would end ethanol tax credits in less than two months, but allow oil tax subsidies to continue indefinitely, a Perry spokeswoman told Bloomberg News that Perry would “work with Congress to phase” out oil subsidies “over the next 20 years.”

“How in the world does Governor Perry justify 20 more years of tax subsidies for oil companies?” asked IRFA President Walt Wendland. “The renewable tax credits cease at the end of this year. But despite that some of the oil subsidies go back 100 years, now we’re told that Perry wants to give oil companies another 20 years of subsidies. Given this extreme position, Perry’s talk about not picking winners and losers and having a level playing field is simply hollow rhetoric.”

IRFA notes that, in addition to favoring tax benefits for oil, Gov. Perry opposes the federal renewable fuels standard (RFS) but his energy plan would leave intact the “federal petroleum mandate” – mandating that over 95 percent of vehicles on the road be filled with a fuel that is a minimum of 85 percent petroleum. Perry has proposed 18 specific policy recommendations in his energy plan to promote the production and use of oil and natural gas, “but not a single policy recommendation to promote the production and use of renewable fuels.”

“The Perry energy plan is not good for Iowa’s economy or America’s security,” says Wendland.

Governor Perry is in eastern Iowa tonight and then plans a major policy roll-out on government reform Tuesday morning.

Texas Governor and Republican presidential hopeful Rick Perry donned a hard hat at a Pennsylvania steel plant on Friday to announce his “Energizing American Jobs and Security” plan that he says will create over a million jobs and “reduce dependence on hostile foreign oil.”

“We are standing atop the next American economic boom – energy – and the quickest way to give our economy a shot in the arm is to deploy American ingenuity to tap American energy. But we can only do that if environmental bureaucrats are told to stand down,” said Perry.

“I believe in an “all of the above” energy plan that encourages the development of all our conventional and renewable sources,” he said, calling for the elimination of all “subsidies and mandates that punish consumers and skew the energy marketplace, leveling the playing field for all energy industries.”

The Perry plan would expand energy exploration offshore and on federal and private lands across the country by executive order and basically eliminate the EPA. However, while it touts an “all of the above” approach, some ethanol leaders believe it would promote oil above alternatives.

“The Perry plan would leave America dependent on that single fuel – petroleum – with OPEC in charge of its price,” said Iowa Renewable Fuels Association President and CEO of Golden Grain Energy Walt Wendland. “The Perry plan would leave intact the federal petroleum mandate. The Perry plan would leave in place the fuel distribution monopoly of oil companies.”

Wendland continued. “But the most indefensible part of the Perry plan is that it would lock in tax subsidies for petroleum while eliminating them for all other competing fuels. That might make sense in Texas, but it’s a stupid policy for America. Governor Perry has said he doesn’t want the government to pick winner and losers. But the Perry energy plan does just that – and foreign oil is the winner.”

The Perry plan would “phase out direct subsidies and tax credits that distort the energy marketplace” but “preserve tax incentives for research and development.” IRFA notes that the tax credits for ethanol and biodiesel are set to expire at the end of the year while petroleum tax subsidies are in the tax code permanently with no scheduled expiration dates and some have existed since 1913.

New Jersey has been heavily promoting its addition of solar energy across the state but today the Solar Alliance criticized New Jersey Governor Chris Christie for his administration’s conclusions about the merits of the state’s Solar Renewable Energy Credit (SREC) program as part of the Energy Master Plan (EMP).

“While the Draft EMP successfully lays out New Jersey’s energy needs, it excludes solar as an energy source and investment opportunity. Further it contains factual inaccuracies. The type of rigorous analysis encouraged by the EMP must be based on the best and most current information available and not on lingering stereotypes,” said Carrie Cullen Hitt, President of the Solar Alliance.

The SREC’s have been a big factor in the investment in and installment of dozens of solar projects in the state. The loss of the program could dramatically slow the growth of solar energy in the state. The Solar Alliance says they agree with EMP’s focus on rigorous “net economic benefit” analysis but claims that the plan does not apply the benefit equally. They continued by saying many of the costs cited are outdated or misconstrued while the benefits of solar have been overlooked or de-emphasized.

The national solar association cited a few specific examples: the BPU should quantify all value streams associated with solar when applying a ‘net economic benefit test’; the EMP should use updated, universally recognized cost estimates of solar technology; and the EMP should reassess its interpretation of the rate impact of the SREC Program, which is less than 1/2 percent.

Hitt added, “We may debate the methodology for measuring benefits of solar, but their existence is undeniable and their omission from the Draft EMP extremely disappointing. This unfortunately leads to an incomplete picture of the role that solar can play in creating jobs, new investment and clean, reliable electricity for New Jersey.”

“As currently drafted, the EMP will restrict New Jersey solar businesses from creating jobs and deploying clean, reliable solar electricity,” he concluded.

As the media heads to Iowa next week for the August 13 Straw Poll in Ames, they will have the opportunity to learn more about the importance of ethanol to the state and the nation.

Iowans Fueled with Pride is hosting a series of events during the week to provide the media with opportunities for first-hand interaction with leaders in Iowa’s agriculture and renewable fuels industries. As two of the most innovative sectors of the economy, renewable fuels and crop production have experienced great advances during the last four years. The “hands on” events will provide media with up-to-the-minute information on the efficiency, productivity and energy security benefits of renewable fuels.

The Renewable Fuels Association (RFA) and the Iowa Renewable Fuels Association (IRFA) are sponsoring the events, which will begin on Tuesday, August 9, with an Iowa farm family tour. On Wednesday, Dahl’s Foods in Des Moines will host a ride and drive event to allow the media to test drive the latest flexible fuel vehicles (FFVs) and biodiesel vehicles. On Thursday, the Iowans Fueled with Pride Straw Poll site will be set up near the media parking lot at Hilton Coliseum in Ames, offering the chance to meet with Iowa’s ethanol and biodiesel industry leaders and a mobile education trailer.

The premier event of the week will be on Friday, starting with an ethanol plant and livestock farm tour, followed by a visit to Iowa State University’s BioCentury Research Farm, and culminating with a media availability by Iowa Governor Terry Branstad at the Iowans Fueled with Pride Straw Poll site. All day Saturday, visitors and media are invited to stop by the site to tour the mobile education trailer and learn the latest facts on the production and use of renewable fuels.

Find out more on the Iowans Fueled with Pride website.

The Renewable Fuels Association is spreading the news that ethanol is helping to keep gas prices lower than they could be.

The new advertising campaign quotes a recent study that found ethanol reduced gas prices by 89 cents in 2010 and if ethanol were to disappear, gas prices could rise by as much as 92%.

In the past month, the ad appeared on 100 buses, in 49 bus shelters, and on 91 signs in 31 Metro stations in Washington, DC with locations highly targeted for Capitol Hill, EPA, Department of Energy, and the White House. In addition, the print ads are also running in Capitol Hill newspapers such as Politico, Roll Call and The Hill.

The RFA’s television image ad focuses on the success of the ethanol industry and jobs created. It is running on political shows on FOX, MSNBC, and CNN in the DC media market only. This campaign continues through September 1st. During the Congressional August recess, however, the campaign will move to a strictly internet-based run focused on RealClearPolitcs.com which has proven quite effective for reaching policymakers and their staffs when they are scattered across the country in their home states and districts.

Today U.S. Senators Jeff Merkley (D-OR), Tom Carper (D-DE), Tom Udall (D-NM) and Michael Bennet (D-CO) introduced the Oil Independence for a Stronger America Act today in an effort to eliminate dependence on foreign oil by 2030 and create a National Council on Energy Security that would be charged with providing recommendations to the President and Congress to ensure America’s energy goals are met. More specifically the act calls for more production and use of electric vehicles, increase in travel options (more public transportation including high-speed trains), infrastructure improvements, development of alternative transportation fuels and reduce the use of oil to heat buildings.

“America’s dependence on oil from the Middle East, Nigeria, and Venezuela makes us increasingly vulnerable to economic and national security risks,” said Merkley. “American entrepreneurs and workers have the ingenuity and grit necessary to break this addiction to foreign oil – the challenge is whether politicians in Washington are willing to choose American strength over vulnerability.”

With all of the proposed pieces of alternative energy legislation that have been introduced and voted on over the past few weeks, as an aside, I thought I would provide a bit of education on how a bill becomes a law. Remember, School House Rock?

Now that you know how the process works, let’s see what the industry is saying.

Michael McAdams, President of the Advanced Biofuels Association said, “This legislation authored by Senators Carper, Merkley and Bennet is precisely the way our nation must rethink, and how Washington must confront, our energy challenges. By resisting the past temptations of picking a winner, the bill instead offers a comprehensive approach that focuses on the future of all biofuels, including advanced drop-in, algae, and cellulosic fuels to deliver as many gallons to back out foreign oil as quickly as possible.”

He concluded, “Developing renewable energy alternatives is an inevitable part of our shared global future and America should help lead the way. This bill puts us on the road to doing just that by encouraging the development of a robust and thriving domestic advanced biofuels market.”

The Oil Independence for a Stronger America Act would reduce oil consumption in the U.S. by over 8 million barrels per day by 2030, enough to end the need for oil imports from beyond North America.

The American Coalition for Ethanol (ACE) is inviting the candidates for the 2012 Presidential Election to participate in an energy policy forum in Des Moines, Iowa on Wednesday, August 24, 2011. As part of the open invitation, ACE sent an open letter detailing the ethanol industry’s position on the ethanol tax incentive (VEETC).

Last month, former Minnesota Governor Pawlenty called for the phase out of ethanol subsides. He made this announcement during his first official campaign stop, Des Moines, Iowa. Then earlier this week, former Utah Governor Jon Huntsman announced he would bypass the Iowa caucuses due to his stance on biofuels and agricultural subsidies – he wants them to disappear.

Brian Jennings, executive vice president of ACE, said this forum is a way for supporters of ethanol to learn more about candidates’ positions on ethanol. The forum will also serve as a means for the presidential candidates to learn more about ethanol.

“With ethanol already becoming a hot topic on the campaign trail, we want the candidates to recognize how ethanol will help make the U.S. more energy secure and that we’ve been proactively working in Congress to reform the ethanol tax incentive,” said Jennings. “We are willing to responsibly reform and reduce the cost of the ethanol tax incentive. However, ACE does not believe budget cuts should just discriminate against American ethanol, while the taxpayer is still footing the bill for hundreds of billions of subsidies for the oil industry.”

ACE’s energy policy forum will take place during their 24th annual ethanol conference taking place in Des Moines, Iowa starting on Tuesday, August 23rd.

The “Biofuels Beltway March” is underway in Washington, D.C. and more than 60 grassroots members of the American Coalition for Ethanol (ACE) have their boots on the ground and are meeting with policy makers to set the record straight about ethanol. By the end of today, the ethanol advocates from 16 different states, will have engaged in 160 meetings with Members of Congress or their staff bringing ethanol information to Congressmen and Congresswomen representing 43 states.

I had a brief chance to speak with Executive Vice President Brian Jennings via Skype between meetings and he said the group’s priorities during the meetings are to show the proven benefits of ethanol, promote fuel choice through Flexible Fuel Vehicles and blender pumps, and to reform the ethanol tax credit (VEETC) while preventing moves for its repeal.

Listen to Brian’s Skype interview from D.C. here: Biofuels Beltway March Update From DC

Jennings stressed the importance of the timing of the fly-in and said that the ACE group will meet with nearly half of the freshman Members of Congress. More than half of this freshman group voted against E15 or blender pumps in the Continuing Resolution.

“We are not preaching to the choir. We’re putting boots on the ground to meet one-on-one with people who need to learn the facts about ethanol, and we plan to make a real impact in these two days,” Jennings added.

The group has been addressed by special guests USDA Under Secretary for Rural Development Dallas Tonsager, U.S. Senator Amy Klobuchar (D-MN), U.S. Senator John Thune (R-SD), part of the GOP leadership and member of the Senator Finance Committee which has jurisdiction over ethanol tax issues.

For those not able to attend but would like to get involved in ACE’s grassroots efforts, can check out their “Virtual Fly-In” campaign and send messages to Members of Congress coinciding with their face-to-face meetings. The messages urge Congress to vote against Senator Coburn’s (R-OK) amendment to repeal the Volumetric Ethanol Excise Tax Credit (VEETC). Messages may be sent this week through ACE’s Legislative Action Center.

You can also view photos from the meetings in their “Biofuels Beltway March” photo album.

Sen. Chuck Grassley (R-IA) is hoping to avoid a vote in the Senate on the amendment introduced last week by Sen. Tom Coburn (R-OK) that would repeal the Volumetric Ethanol Excise Tax Credit (VEETC).

Grassley said today during his weekly agricultural media conference call that there are two ways the vote can be avoided. “Either talking him out of it, or denying unanimous consent to bring it up, and I think we can do the latter,” he said. Grassley say he is trying to “reason with” Coburn and urge him to take up the issue within the context of energy legislation so to “have ethanol be viewed as part of an overall energy program” instead of having it be part of the spending bill debate.

According to Grassley, Coburn says he has 55 votes. “He probably needs 60 votes. I think we can probably keep him from getting 60 votes. But, quite frankly, I don’t want anybody on record, if we can avoid it, on the ethanol issue until we get down to discussing it as part of the energy debate.”

Listen to Grassley’s comments in answer to a question by Dan Looker of Successful Farming. Sen. Grassley

Meanwhile, as the future of the VEETC remains unsure in Congress, ethanol interests are reportedly in negotiations on a proposal for moving beyond the VEETC. According to DTN/The Progressive Farmer, representatives from the American Coalition for Ethanol, Growth Energy, National Corn Growers Association and Renewable Fuels Association have been working on a compromise proposal this week, getting input from lawmakers in Washington.

In a Senate floor speech earlier this week, Senator Chuck Grassley (R-IA), a long-time supporter of biofuels, said, “Over the next few weeks, I’m going to do everything I can to educate my colleagues and the public on the benefits of domestic biofuels.”

Grassley is concerned about the movement in DC to end ethanol subsidies and incentives as well as the amendments that passed the Congress that would keep the EPA from the ability to do its job bring American consumers E15 and block federal funds from being allocated to build out biofuel infrastructure. He is also concerned that people, nor his colleagues, are taking America’s energy security and the country’s dependence on foreign oil as serious enough threats.

He began his speech with a few statistics about the rising cost of gas and the diminishing cash in American’s wallets.

“According to the Energy Information Administration, gas prices jumped 19 cents during a one week period at the end of February. This is the second largest one-week jump in more than 20 years. American’s are now paying an average of $3.38 a gallon for gasoline. This is 68 cents higher than this time last year. The average cost to fill up a tank of gas is likely around $50. For a family struggling to make ends meet, these are valuable dollars spent at that pump, going overseas.

Our country is at risk. Our economy is at risk. Our nation’s security is at risk.”

Grassley then went out to say that he believes for our country to thrive and grow, we need access to reliable affordable energy and this includes nuclear, clean coal, domestically drilled oil, and renewable energy like wind, solar, geothermal, and biofuels. However, he focused his speech on ethanol. At one point he said:

U.S. ethanol production is larger than what we import from Saudi Arabia or from Hugo Chavez’s Venezuela. Without domestic biofuels, we’d be on bended knee even more than we are today begging others for oil. Ethanol is the only reliable, legitimate alternative to crude oil. Domestic ethanol currently accounts for nearly 10 percent of our transportation fuel. There is no other renewable fuel that comes close to achieving the economic, environmental and national security benefits currently delivered by ethanol.

Ultimately, the purpose of Senator Grassley speech was to announce plans for an educational campaign amongst his colleagues. He concluded by saying, “The American public deserves an honest, fact-based discussion about the benefits of reducing our dependence on people like Hugo Chavez and Moammar Kadafi.”

Click here to read Senator Grassley’s entire speech.

This week I read the book “The Frugal Superpower,” by Michael Mandelbaum. For much of the beginning, I couldn’t quite figure out what this book had to do with energy. But I kept on going and was rewarded by some true insights as to other good reasons why reducing our dependence on Middle Eastern oil can help our country out of some if its current mess.

In the book, Mandelbaum takes on the challenge of laying out why America’s expansive foreign policy is coming to an end and the consequences of such an action. Let’s face it, America needs to tighten it’s purse strings – the country has phenomenal deficits, is still trying to recover from a financial crash and its entitlement programs such as Social Security, are running out of money. So what should go by the wayside? America’s underwriting of global security that dates back to the 1940s.

Mandelbaum is not naive to what could happen when the U.S. stops fighting the wars of others, but he is also very aware of what will happen if the U.S. continues to fight all the wars of others. It will put our “Superpower” status in more jeopardy. Whereas realigning our foreign policy could actually strengthen our position.

The war in Iraq is over oil – a commodity that our country cannot live without.

Mandelbaum writes, “Because the United States accounts for so much of the world’s oil usage, a major reduction in American consumption could lower overall consumption enough to reduce the global price of the commodity. This would decrease the money accruing to the governments that depend heavily, in some cases almost exclusively, on the sale of oil to finance their operations. Iran is one such country. The sale of oil account for 80 percent of its annual revenue. Reducing the income of the Islamic Republic would give its rulers less money to spend on the policies that threaten the rest of the region and the world….Restricting the stream of Iranian oil revenue would have an even more powerful effect on the regime: It would undermine its internal stability.”
Read the rest of this post…

The lame duck session has kicked off in Washington and the ethanol industry continues to point out to legislators who are reviewing the ethanol and biodiesel tax credits, that the failure to renew these credits will cause thousands of biofuels workers to lose their jobs. The ethanol industry is scheduled to visit the White House on Thursday along with several other national ethanol and ag organizations, and today, in anticipation, the group submitted a letter to Congressional leaders.

In the letter, sent to Speaker Nancy Pelosi, House Minority Leader John Boehner, Senate Majority Leader Harry Reid, and Senate Minority Leader Mitch McConnell, the groups encouraged the extension of two ethanol related tax polices: the Volumetric Ethanol Excise Tax Credit (VEETC), and Alternative Fuel Infrastructure Credit. In addition, they asked that the definition of the cellulosic ethanol producer tax credit be expanded to include emerging feedstocks such as algae.

“The ethanol industry has been an essential component of our nation’s effort to achieve energy security and improve our environment,” the groups wrote in the letter. “The volumes of ethanol produced domestically have been uniquely successful in reducing our dependence on foreign, imported oil, and have helped to reduce our nation’s emissions of greenhouse gases and other pollutants. In addition, the ethanol industry has helped to revitalize our nation’s rural and farm economies by providing a value added market for agriculture, and supported the creation of hundreds of thousands of non-exportable, high-paying green jobs.”

On VEETC:
“Without VEETC, ethanol blending will become less economically attractive to refiners, resulting in a substantial decline in discretionary blending, and upward pressure on consumer gasoline prices. As a consequence of reduced demand, ethanol plants will close. One analysis concluded that as many as 118,000 jobs could be lost if Congress fails to extend this important incentive.”

On the Alternative Fuel Infrastructure Credit:
“Today, there are approximately 160,000 retail fuel outlets around the nation; however, only 2,300 are fitted with equipment able to dispense E85, and just a few hundred that can offer mid-level blends. It is essential that there continue to be incentives to develop the infrastructure needed to make the ethanol blended fuels available to consumers.”

On Cellulosic Ethanol and Other Advanced Biofuels:
“We believe that as we look to extend incentives for ethanol and incentives to support infrastructure, we must continue to support efforts that help the next generation of ethanol overcome commercialization hurdles. To this end, we call on Congress to pass legislation expanding the cellulosic biofuels producer tax credit which includes a broader range of eligible advanced biofuels including algae, and the ability to allow developers to elect a refundable 30 percent investment tax credit.”

The groups concluded, “Not only are these incentives necessary to provide certainty in the marketplace as we work collaboratively to reform the Federal tax structure for renewable energy, but they are also essential if we, as a nation, are intent on continuing our goals of achieving energy security, creating green jobs, and revitalizing rural communities across the country.”

Renewable Fuels Association President and CEO Bob Dinneen held a conference call with reporters this morning to discuss what yesterday’s historic election results may mean for ethanol policy, both for the rest of this year and in the next Congress.

“Washington will be a more Republican town in January,” Dinneen said. “Will that have a meaningful impact on the U.S. ethanol industry? I believe the answer to that is no.”

Dinneen stresses that ethanol is a bi-partisan issue and while a few strong ethanol supporters, including Rep. Earl Pomeroy of North Dakota and Rep. Stephanie Herseth-Sandlin of South Dakota, were defeated yesterday, there were many more that won. “And more importantly, for the most part, those that were defeated were replaced with equally strong advocates for value-added agriculture and ethanol,” he said.

The biggest issue facing the ethanol industry right now remains the expiration of the Volumetric Ethanol Excise Tax Credit (VEETC) at the end of the year. “Anyone would be foolish to predict what will happen with the incentive, it remains an uphill battle, but last night’s overwhelming message is that voters want Congress to do something about the economy and about jobs. Allowing the tax incentive to expire would risk jobs in a very important domestic energy center and across rural America,” said Dinneen.

Listen to Dinneen’s opening statement here. RFA's Bob Dinneen Comments on Election Results