On Monday, biofuels industry leaders will hold briefings for Capitol Hill staff and the media to discuss the implications of the decision and where we go from here. The Fuels America briefing will feature Buis, Dinneen, Advanced Ethanol Council (AEC) Executive Director Brooke Coleman, and Brent Erickson with the Biotechnology Industry Organization (BIO).
Deciding not to decide is not a decision. Unfortunately, the announcement today perpetuates the uncertainty that has plagued the continued evolution of biofuels production and marketing for a year. Nevertheless, the Administration has taken a major step by walking away from a proposed rule that was wrong on the law, wrong on the market impacts, wrong for innovation, and wrong for consumers.
Today’s announcement is a clear acknowledgement that the EPA’s proposed rule was flawed from the beginning. There was no way the methodology in the proposed rule would ever work, as it went against the very purpose and policy goals of the RFS. The EPA wisely decided not to finalize the rule so they could fix the flawed methodology. Their initial proposal over a year ago was unacceptable and simply acquiesced to the demands of Big Oil and their refusal to blend more renewable fuels into the marketplace.
American Coalition for Ethanol (ACE) Executive Vice President Brian Jennings credits ethanol supporters for helping the EPA reconsider the 2014 RVO obligations under the Renewable Fuel Standard.
Big Oil came close to bullying the Administration to completely rewrite the RFS this year so oil companies could escape their legal responsibility to blend more ethanol in gasoline. But thanks to thousands of comments from ACE members and other biofuel supporters, EPA wisely chose to reconsider their ill-advised proposal which would have legitimized the so-called ‘blend wall’. While we will reserve full judgment until they finalize the 2014 targets next year, it certainly appears the Administration recognizes their proposed RFS changes were inconsistent with legislative history and the Clean Air Act.
Among the topics he addressed were the need for Congress to pass tax extenders for biofuels, first cellulosic ethanol plants going on line this year, how lower oil could be impacting domestic oil production, rail transportation issues, and of course, the Renewable Fuel Standard (RFS).
Regarding the lame duck session of Congress, Dinneen says it’s called lame for a reason but he does expect them to pass a tax extenders bill. “It will include the biodiesel tax credit and the cellulosic ethanol tax incentive, which will be good to have now that we finally have cellulosic ethanol production so they can take advantage of the tax incentive that has been there for them,” he said.
While the industry continues to expect a final decision from the EPA on the 2014 volume requirements any day, Dinneen says it could still be next week. “I fear for my Thanksgiving dinner because I suspect that the minute I carve into that turkey, I’m going to get an email that Gina McCarthy has just signed the rule,” he said. “I wish they’d get it out, let’s just be done with it.”
Seeing gas prices continue to drop nationwide, Dinneen agrees with some analysts that OPEC could be trying to cut U.S. oil production. “The Saudis, I think, have become annoyed that the U.S. is producing more (oil) and has decided that they want to try to break the back of these fracking operations,” said Dinneen, noting that those operations start losing money with prices below $80 a barrel. “Ethanol remains the lowest cost transportation fuel on the planet today and it’s unlikely that the Saudis will be able to break our back.”
The folks representing America’s ethanol industry are taking a shot at a campaign by livestock producers and fast food companies that takes its own shot at biofuels. The Renewable Fuels Association (RFA) says the Feed Food Fairness Campaign ran a one-sided advertisement in the popular Beltway publication “Politico” inaccurately blaming the Renewable Fuel Standard (RFS) for rising food prices.
“Never before in the history of misleading advertising has so much bull been slung in defense of chickens, hamburgers, and even potatoes. The ad is replete with misinformation. One would have to be awfully creative, for example, to draw any connection between biofuels and potatoes!” said Bob Dinneen, president and CEO of the RFA.
“Apparently, the Feed Food Fairness campaign is not big on facts or transparency. Their ad conveniently leaves out the key fact that their numbers come from a 2012 study on commodity costs during the worst drought in 50 years.”
“Simply put, the information is outdated and misleading. We are now well into 2014 and that drought has long since subsided. Farmers are harvesting the largest corn crop in history. Corn prices have plummeted with this record crop and yet as a recent RFA study demonstrates, food prices continue to rise. They should take an ad out to explain that!”
Dinneen also said that numerous independent analyses have concluded energy prices, not the RFS, drives food prices, citing the World Bank finding that “most of the food price increases are accounted for by crude oil prices.”
A new analysis of real-world land use data by Iowa State University raises serious concerns about the accuracy of models used by regulatory agencies regarding “indirect land use changes” (ILUC) attributed to biofuels production.
The study, conducted by Prof. Bruce Babcock and Zabid Iqbal at ISU’s Center for Agricultural and Rural Development (CARD), examined actual observed global land use changes in the period spanning from 2004 to 2012 and was compared to predictions from the economic models used by the California Air Resources Board (CARB) and Environmental Protection Agency (EPA) to develop ILUC penalty factors for regulated biofuels. The report concluded that farmers around the world have responded to higher crop prices in the past decade by using available land resources more efficiently rather than expanding the amount of land brought into production.
“There hasn’t been much land use change in terms of converting non-agricultural land into crop land,” said Renewable Fuels Association (RFA) Senior Vice President Geoff Cooper. “We’ve seen more double-cropping, we’ve seen triple-cropping in some parts of the world. And, very interestingly, we’ve seen an increase in the amount of planted acres that are harvested.”
Cooper says the study, which was funded in part by RFA, comes at a time when the California ARB is in the process of re-adopting its low carbon fuel standard, which includes revisiting their land use analysis. “So this paper, we hope, should inform that debate and bring some clarity and commonsense,” said Cooper. More importantly, this new analysis can provide input to states like Oregon and Washington which are currently working on developing low carbon fuel standards.
“There’s no doubt that E85 sales will double or triple over the next decade, but they also predict that the flex fuel vehicle count will continue to grow,” says RFA vice president for industry relations Robert White. “The flex fuel vehicles on the road today could use all the ethanol we produce if they used E85 more often.”
And that would be possible if there were more places for drivers to buy E85, which would happen if the Renewable Fuel Standard were allowed to work as it was intended. “If given its chance, it will create the market and this report clearly shows that more E85 would be sold,” he said.
At the National Association of Farm Broadcasting convention last week, White also talked about RFA’s “Post Your Price” contest which has been getting lots of entries showing the price of E85 around the country. The contest will award free E85 for a year to a randomly drawn entry, but they are also awarding prizes for the largest and smallest price differentials between E85 and E10. “We’ve already got one sent in that E85 was higher than E10,” White said. The lowest price for E85 so far has been $1.64, compared to $2.84 for regular.
Cooper addressed a variety of topics including the truth behind the fictional food vs. fuel argument, as well as the hot button issue of greenhouse gas – or GHG – emissions and the role ethanol plays in reducing their output into the ozone. Cooper will also share with Car Clinic audiences the benefits and the commercialization of cellulosic ethanol.
“RFA recently conducted a study that shows while corn prices have plummeted, food prices have remained steady or have risen,” said Cooper. “The petroleum industry would like to pin any increase in food prices on the ethanol industry when in fact it is oil that drives food prices.”
“The mission has been a great experience,” said [Alex Marquis, Logistics Manager of Marquis Energy, who represented Growth]. “The mission delegates met with a number of Peruvian government officials over the span of two days, and the access provided was impressive. Though more work and dialogue is needed to cultivate relationships with key Peruvian contacts, these discussions revealed that Peru’s burgeoning economy offers growth potential for American renewable energy groups,” Marquis added.
“Exploratory trade missions like these allow the industry to identify new market opportunities across the globe and raise awareness of the benefits of renewable fuels. Ethanol can play a key role in improving the global environment and reducing the world’s dangerous dependence on fossil fuels,” stated Tom Buis, CEO of Growth Energy.
Growth Energy also participated in trade missions to China, Korea and Japan earlier this year.
A group representing ethanol interests is calling on Oregon to treat ethanol the same as other clean fuels in the state. The Renewable Fuels Association (RFA) sent in comments to the Oregon Department of Environmental Quality (DEQ) detailing a number of requested changes to the proposed rule for Phase 2 of the Oregon Clean Fuels Program (CFP), including the recommendation that indirect effects be withheld from the program’s lifecycle carbon intensity analyses for various fuel pathways.
Phase 1 of the Oregon CFP, which is structured similarly to California’s Low Carbon Fuel Standard (LCFS), included carbon intensity scores for ethanol and all other fuel pathways that were based strictly on verifiable direct emissions. However, for Phase 2 of the program, Oregon DEQ is proposing to introduce subjective and uncertain penalty factors for hypothetical indirect land use changes (ILUC) for select biofuels, but no indirect effect penalty factors for any other fuel types. RFA’s comments underscore the fact that “Inclusion of highly uncertain and prescriptive ILUC factors creates an asymmetrical and discriminatory framework for the CFP.”
RFA urged that DEQ remove ILUC from the proposed rule “…until such time as there is broad scientific agreement on the best methodology for estimating the indirect effects for all fuels” and that “If DEQ includes ILUC for biofuels, it must also include indirect emissions associated with all other regulated fuels (including baseline petroleum).”
Even if DEQ’s proposal to include ILUC was justified, the letter points out that “…DEQ is proposing to use factors that have been shown to be grossly exaggerated and based on outdated information and data.” In fact, DEQ is planning to adopt ILUC penalties developed by the California Air Resources Board (CARB) in 2009 for that state’s LCFS. Even CARB has recognized that its 2009 ILUC factors are flawed and is planning to propose revisions to those values.
RFA added that it will support “performance-based low carbon fuel programs that are grounded in the principles of fairness, sound science, and consistent analytical boundaries.” The group continued that introducing into the regulatory framework concepts without scientific integrity and balance “only creates stakeholder division and controversy.”
The 20th annual National Ethanol Conference, titled “Going Global,” will offer college students a chance to hear key industry leaders and policymakers address topics such as the Renewable Fuel Standard, E15, international trade, next-generation ethanol, rail transportation, and more. In addition, they will have a unique opportunity to interact with key leaders of the U.S. ethanol industry.
“The National Ethanol Conference offers an excellent opportunity for college students to get their feet wet and gain an in-depth look into the ethanol industry,” said Mike Jerke, chairman of the RFF and CEO of Guardian Energy Management LLC. “Our goal is to educate the next generation of biofuel leaders and the conference is the perfect place for them to learn, ask questions, and network.”
Interested students are asked to submit a 500-word essay explaining how their attendance at the National Ethanol Conference will help them achieve their future goals. They are also asked to submit two letters of recommendation, a current resume, and a school transcript. The scholarship is only available to students attending a U.S. institution of higher learning or foreign students affiliated with the U.S. ethanol industry.
DuPont will now be sitting on the governing board of the Renewable Fuels Association (RFA). The company has been an associate RFA member for more than 10 years and has now upgraded its membership as its first cellulosic ethanol plant is in its final stages of construction. The biorefinery will be co-located next to Lincolnway Energy in Nevada, Iowa and when complete will produce 30 million gallons per year of ethanol using corn ag waste.
“Next generation cellulosic ethanol is emerging on the market and DuPont is at the forefront of innovation. Their knowledge and expertise in all aspects of the biofuels industry make them a valuable addition to the Renewable Fuels Association,” said Bob Dinneen, president and CEO of the RFA. “I am eager to work together to advance the renewable fuels industry, which is already directly and indirectly employing nearly 400,000 people, reducing GHG emissions, and lowering America’s foreign oil dependence.”
William Feehery, president of DuPont Industrial Biosciences said of their renewed commitment to the ethanol association, “RFA is a leading voice in Washington on issues related to our industry and we look forward to working even more closely together as we reach full cellulosic production in the coming year. We acknowledge the hard work RFA has done to promote and defend the Renewable Fuel Standard (RFS) both as an individual organization and as our partner in the Fuels America Coalition. A stable RFS is vitally important to support growth for the existing corn ethanol industry while garnering the investment needed to expand and grow cellulosic ethanol in the United States. We must keep the technology, research, and development here in the United States so consumers can continue to have choices at the pump and America can reduce its reliance on foreign oil.”
According to Secretary of Commerce Penny Pritzker, the function of the committee is to “provide consensus advice on the development and administration of programs and policies to expand U.S. renewable energy and energy efficiency exports.”
“It is truly an honor to be selected by Secretary Pritzker to serve on the Renewable Energy and Energy Efficiency Advisory Committee,” said Davis. “I look forward to having a seat at the table and helping Secretary Pritzker ensure that our global trading partners understand and appreciate the benefits of U.S. produced ethanol in reducing consumer gasoline prices, improving energy diversity and security, and addressing climate change.”
Davis recently participated in a trade mission to China, led by USDA Under Secretary Michael Scuse, to promote U.S. ethanol and co-products and strengthen the trade relationship between the two countries. Last year, she joined a similar trade mission, led by the U.S. Grains Council, to South Korea and Japan. The RFA board of directors has made opening new markets for ethanol and distillers dried grains with solubles (DDGS) abroad a top priority, and Davis’ appointment to this prestigious advisory committee reflects that commitment.
In a recent blog post authored by Geoff Cooper, senior vice president of the Renewable Fuels Association (RFA), the American Petroleum Institute (API) recently released a study that argues that the fracking boom has led to dramatically lower prices for crude oil and refined products between 2008-2013. Cooper wrote that the study suggests that increased domestic production of crude oil, natural gas liquids (NGLs) and lease condensate from fracking has already extended U.S. supplies and helped to lower gas prices.
The study finds that every 1 million barrels/day of new supply reduces consumer prices for petroleum products between $0.06-0.20 per gallon. Cooper writes that according to economics more supply generally results in lower prices, in this case there are two problems with API’s rationale.
Problem 1: Global demand for petroleum products continues to grow faster than global supply. EIA data show global production of crude oil, NGLs and condensate grew by 4.1 million barrels/day between 2008 and 2013. But global consumption of those products ramped up by 5.4 million barrels/day over the same period. Thus, demand gains outstripped supply gains by more than 30%.
Problem 2: When energy economist Phil Verleger and researchers at Louisiana State University, Iowa State University, University of Wisconsin, the Department of Energy, and others separately showed that extending the U.S. gasoline supply with ethanol leads to lower pump prices, Big Oil defiantly screamed “NOT SO!” Verleger found that consumer paid $0.50-$1.50 per gallon less for gasoline in 2013 because of ethanol’s extension of the fuel supply. His conclusion corroborated results from Iowa State/University of Wisconsin that showed consumers saved up to $1.09 in 2012 due to ethanol’s aggregate effect on gasoline supplies.
Cooper ends his article by asking the question, “So, which is it API? Does adding volume to the fuel supply reduce prices, or doesn’t it?”
Many of the international teams visiting the United States last week for the 2014 Export Exchange also participated in tours before and after the event to see ethanol plants and farms across the Midwest.
Badger State Ethanol in Wisconsin had the honor of hosting a team of buyers from the Kingdoms of Saudi Arabia and Jordan. The KSA/Jordan team included companies representing the major dairy and poultry companies and major importers of feed grains in both countries and have been buyers of DDGS in the last couple of years.
Held every other year by the U.S. Grains Council (USGC) and the Renewable Fuels Association (RFA), Export Exchange brings together more than 200 international buyers with U.S. sellers of corn, sorghum, barley, distiller’s dried grains with solubles (DDGS), corn gluten meal and corn gluten feed. Over the course of three days of events and the pre- and post-tours, these individuals not only do business directly but also make connections to facilitate future sales.
“This year’s Export Exchange was a resounding success,” said RFA president Bob Dinneen, pictured here with USGC president Tom Sleight. “In addition to new business agreements, it is my hope that attendees from all across the world will return home with a better understanding of international grain markets, domestic supply and demand of DDGS and coarse grains, and the current political landscape.”