Economist Still Opposes RFS Despite Livestock Recovery

bivi-nc-meyerDespite the fact that livestock margins have made a dramatic recovery in the past few years as availability of feed has increased and prices have decreased, a leading livestock economist still opposes the Renewable Fuel Standard (RFS).

“We’ve thrown billions of dollars at this industry already and it ought to have to stand on its own,” said Steve Meyer, Paragon Economics, during an interview last week at an event for pork producers. “It has a place in the fuel business as an oxygenate and as an octane enhancer, it’s not going away from there.”

Meyer, who has always been an outspoken critic of U.S. energy policy, says his beef with the RFS is that it caused ethanol production to increase too much too quickly. “The trend yield on corn is up about two bushels per year. If you had grown the ethanol business at a rate equivalent to that, I wouldn’t have been able to gripe too much about it,” he said. “But it was far faster than that …. and the economic impact of that was very negative for (livestock) producers.”

However, the tide has turned dramatically to the point where demand and prices for livestock and poultry are riding high and there is almost record high feed availability with manageable prices. “We’re not going back to $2 corn and $180 bean meal but we’re at the lowest levels on costs in five years,” said Meyer. “We’re not increasing corn usage for ethanol every year like we were, it’s pretty much flat. It’ll grow a little bit but not much and we can probably keep up with that with trend yield growth on corn.”

Despite that, Meyer thinks the RFS needs to go away. “I don’t hate ethanol,” he says he tells corn producers. “I just don’t like subsidized, mandated ethanol when I’m the alternative user of the input.”

Interview with Steve Meyer, Paragon Economics

New Campaign Spotlights Winners if RFS is Lost

fuels-americaA new Fuels America campaign spotlights who wins if we lose the Renewable Fuel Standard (RFS).

The top ten list includes:
1. Supertankers: Cutting production of U.S. renewables means more oil imports.
2. Big Oil Execs: Less ethanol in your tank means more in big oil’s wallets.
3. Asthma Inhaler Manufacturers: Cutting the RFS means dirtier fuel and dirtier air.
4. The Air Conditioning Industry: Cutting renewable fuel = more CO2 = climate change.
5. Persian Gulf Realtors: Less American fuel = pumping more dollars overseas.
6. China and Brazil: Killing the RFS means advanced biofuel investments go overseas instead.
7. The Dowager Countess from Downton Abbey: Afraid of change? Killing the RFS kills investment in American innovation.
8. Oil Spill Cleanup Crews: There were 6000 oil spills in 2012.
9. The Koch Brothers: Filling up on fossil fuels fills up their pockets.
10. Gondoliers: Climate change = more sunken cities.

The campaign, which also highlights the negative consequences for all Americans if the RFS is weakened, will run inside the beltway and target the Hill, Politico, the New York Times, the New Republic, and mobile ads. The ads ask, “If America loses the Renewable Fuel Standard, who wins?” and go on to suggest answers: “Less Lower-Cost Ethanol = More $$$ For Big Oil,” or “There were 6,000 oil spills in 2012—16 per day.”

RFS Update from EPA at ACE Meeting

ace14-epaEnvironmental Protection Agency official Paul Machiele visited the American Coalition for Ethanol conference this week in Minneapolis to discuss various issues, including plans for the 2014 volume obligations under the Renewable Fuel Standard (RFS).

Machiele, who is director for Fuel Programs in EPA’s Assessment and Standards Division, said they understand the rule is very important and they are working very hard to get it finalized as soon as possible. “I can’t say when it’s going to come out because that will depend in a large part on the review time when it gets into the interagency review process,” he said. “That review can take anywhere from 30-90 days,” he continued, saying he hopes it will be expedited.

“We were blessed with 300,000 comments on this rule-making and not only do we have to finalize the rule-making but we have to respond to the comments that we receive,” said Machiele, adding that his staff is working on that project right now.

As it stands, Machiele says EPA has extended the compliance deadline for obligated parties so “they know what the standards will be for 2014 before they make their final decisions on buying, selling, trading, holding RINs for 2013.” Meanwhile, he acknowledged that the 2015 standards should already be proposed by now, but they expect to get that done shortly after the 2014 rule is finalized and “hoping that we can move that to final rule a little faster.”

Machiele also discussed final rules for new pathways, cellulosic feedstocks, and RINs, as well as Tier 3 regulations, and frankly answered several questions from producers at the conference. Comments from Paul Machiele, EPA

27th Annual Ethanol Conference photo album

Collin Peterson Honored for Ethanol Support

ace14-merle-collinThe American Coalition for Ethanol meeting in Minneapolis this week honored Congressman Collin Peterson of Minnesota with its highest award for supporters of ethanol, the Merle Anderson award. Anderson himself presented Peterson with the award, as well as an ethanol lapel pin and five dollars for his campaign.

Peterson says ethanol has been great for agriculture and he continues to fight for it in Congress. “It’s just been a tremendous success story in agriculture because it’s changed the marketplace so farmers can get a decent price for their corn,” he said. “We do have our opponents and they are still working to undermine things,” he continued, noting that just last week Rep. Bob Goodlatte (R-VA) attempted to bring up a bill to get rid of the RFS. “They want to go back to $1.85 corn and I tell them if they are successful they will rue the day because nobody can grow corn for $1.85.” Peterson says the only way farmers survived when prices were $1.85 a bushel was because of the government subsidy “and that’s gone.”

Peterson remains hopeful that the EPA will eventually come out with a better final rule on the 2014 volume obligations for the RFS. “I think the fact that they delayed this for now a third time shows they are listening,” he said. “It appears to me that they realize they made a mistake here and they’re trying to figure out how to undo it.” He thinks it could be next year before the rule is final, but “a delayed decision is better than a bad decision.” Interview with Rep. Collin Peterson (D-MN) at ACE Conference

27th Annual Ethanol Conference photo album

Report Shows Oil Companies Paid 11.7% Tax Rate

According to a new report from Taxpayers for Common Sense, oil companies paid only 11.7 percent of the U.S. income in federal taxes over the last five years. This is compared to the statutory 35 percent corporate tax rate paid by other companies.

“This is a perfect example of how the oil industry is allowed to play by a different set of rules than everyone else,” commented Jeremy Funk, communications director with the ETRcover4nonprofit organization Americans United for Change who supports choice at the pump through biofuels. “They can dodge billions of dollars in taxes, and Washington lets them get away with it. This is the same industry that is now fiercely lobbying the White House for yet another special interest favor: gutting the Renewable Fuel Standard and allowing more foreign oil into the U.S. gasoline supply at the expense of cleaner, cheaper renewable fuels made in America. Isn’t the system rigged enough in Big Oil’s favor without Washington helping them become a monopoly at the pump, too?”

The country is still waiting the final rules from the Environmental Protection Agency (EPA) for the 2014 Renewable Fuel Standard (RFs) that if passed as proposed, would reduce the amount of domestically produced biofuels at the pump while increase foreign oil. Funk points out that gasoline costs more than renewable fuels such as ethanol, and the EPA proposal would cost Americans millions of dollars at the pump, ‘killing’ American jobs. Funk also said that because the EPA proposal effectively allows oil companies to block access to the marketplace by refusing to install fueling infrastructure for renewable fuels, it will be particularly devastating to America’s emerging advanced biofuel industry.

To achieve such a low current tax rate, oil companies were able to take advantage of special tax breaks and loopholes that allowed them to defer more than $17 billion in taxes they would have otherwise owed, explained Funk. One “small” oil company, Apache, earned $6 billion in profits between 2009 and 2013 but deferred its entire tax bill. Not only did the company avoid paying any taxes, but it actually reaped a tax benefit worth $220 million according to Funk.

The report concludes with a damning indictment of the oil industry’s deceitful rhetoric about its tax obligations:

“Oil and gas companies may pay a lot in income taxes, but it is not to the U.S. government. Indeed, the “current” federal income tax rate of some of the largest oil and gas companies – the amount they actually paid during the last five years – was 11.7 percent. The “smaller” companies included in the study which reported positive earnings only paid 3.7 percent. Many of the tax provisions available to the oil industry are not available to other taxpayers, giving these companies a significant tax advantage. The language the industry uses gives the impression that it pays a high federal income tax rate. The American Petroleum Institute cites an industry-wide effective tax rate of 44.3 percent. In reality, the amount oil and gas companies pay in federal income tax is considerably less than the statutory rate of 35 percent, thanks to the convoluted system of tax provisions allowing them to avoid and defer federal income taxes.”

Oily Palms

According to Americans United for Change (AUC), Iowa Republican U.S. Senate candidate Joni Ernst has attracted national attention with her stance on the Renewable Fuel Standard (RFS) – that she is not supportive of subsidies. This before the news broke last week that the billionaire oil baron Koch brothers maxed out their contributions to Ernst’s campaign on top of the over $20,000 the Koch donor network has funneled to her campaign coffers. The new breaking news is that ExxonMobil PAC is toasting Ernst at a $1,000 a plate in Washington, D.C. this Wednesday, July 30, 2014.

In response, AUC, a pro biofuels and pro-RFS organization, is hitting the radio waves this week in Des Moines, Iowa calling on Ernst to choose a side: Iowa jobs, or Big Oil profits. However, AUC said Ernst seemed to side with the latter.

The group cites that when Ernst was pressed to take a firm stand on the RFS, Ernst stressed she’s “philosophically opposed” to farm subsidies and that she “want[s] people to choose products that work for them and not have them mandated by the United States government.” Not exactly the ringing endorsement for ethanol that Iowa rural communities may be hoping to hear, said AUC.

Jeremy Funk, Comm. Dir., Americans United for Change, which recently ran full page ads in Iowa urging Ernst to clarify her muddy RFS position, said, “There’s easy choices and there’s hard choices. For someone hoping to represent a state that leads the nation in renewable fuels production, you might think that unconditional support for the Renewable Fuel Standard and 73,000 Iowa jobs would be a no-brainer. But for some reason, it’s a hard choice for Joni Ernst.”

“Big Oil has taken notice of Ernst’s begrudging support for the RFS while remaining ‘philosophically opposed’ to it. What is a telling choice is for Ernst to welcome Big Oil’s support with open arms at a decadent Washington fundraiser this week,” continued Funk. “Big Oil lobbyists would love nothing more than to be able to say, “You see, even a Senator from Iowa thinks the RFS is unnecessary.” Big Oil would love to be able to use Ernst as a poster child in their multi-million smear campaign to drive ethanol out of business. They hate that consumers have a cheaper and cleaner option at the pump thanks to Iowa renewable fuels. They hate that every gallon sold of ethanol produced domestically means one less gallon sold of gas made from dirty crude oil from unstable regions like Iraq.”

Funk noted that the more money Ernst receives from Big Oil interest, the more reluctant her support for renewable fuels.” Ernst needs to get her priorities straight: choosing between Iowa’s economy and the special interests shouldn’t be a choice at all,” Funk concluded.

RFA to DOE: Update Your E85 Data!

Today the Renewable Fuels Association (RFA) is calling on the Department of Energy (DOE) to accurately account for all stations selling E85. According to RFA, the DOE’s Alternative Fuels Data Center is missing a vast number of E85 stations – nearly 1,000- after comparing the list to the “crowd-sourced” website E85Prices.com that lists 3,449 retail locations offering E85.

RFANewlogo“The AFDC database is way off in its reporting of E85 stations, and this is negatively influencing discussions over the 2014 Renewable Fuel Standard (RFS) blending requirements. It isn’t just a handful of stations that are missing; we are talking about the exclusion of hundreds of stations nationwide. In fact, they missed 40 percent of the stations that are included in other databases! That’s simply unacceptable,” said Bob Dinneen, president and CEO of the RFA.

In a letter sent to the DOE’s Office of Energy Efficiency & Renewable Energy, the RFA illustrates the central role of the database in crucial policy decisions, stating, “EPA’s mistaken belief that existing E85 refueling infrastructure is insufficient to distribute the 2014 RFS volumes specified in the statute is based in large part on information from the AFDC. As a result, the Agency wrongly proposed to reduce required renewable fuel blending volumes in 2014.”

Dinneen stressed the urgent need for updated, accurate information as the EPA decides the final 2014 RFS blending requirements. He noted, “Accurate data is the foundation of well informed decisions. The so-called ‘blend wall’ — the level at which oil companies claim they can no longer blend ethanol into gasoline — can be scaled through increased use of E85. Therefore, an accurate accounting of E85 stations distributing low-cost, renewable fuels is vital to informing the debate over RFS implementation.”

The letter concludes, “The correctness and completeness of the database has never been more important, as crucial policy and regulatory decisions are being informed by the information. Inadequate data leads to ill-informed policy decisions, which can have significant consequences for affected industries.

ACE Announces Final Ethanol Conference Agenda

The 27th annual Ethanol Conference agenda is set and will include an update on the Renewable Fuel Standard (RFS) from the Environmental Protection Agency. The event is taking place August 4-6, 2014 in Minneapolis. In addition to the RFS update, Paul Machiele, director for fuel programs for the EPA will also be discussing other agency ethanol priorities. Registration is still available.

“As EPA and the White House close-in on a final decision about the 2014 RFS we’re pleased that Paul Machiele will be on hand to meet with our members,” said ACE Executive Vice President Brian Jennings.

ACElogo“Consistent with our conference theme of ‘Power by People’ we’re pleased that the 2014 conference will feature updates from ACE members and other speakers on the policy, marketing, and innovation initiatives that will help position the industry for future profitability,” Jennings added.

The ACE conference will also feature new findings from an economic study on “Eco-Performance Fuel,” an Innovators panel of four ACE-member ethanol producers who are adding new processes and technologies, a Retailer Roundtable involving gas station owners who are making money and attracting new customers by selling higher blends of ethanol fuel, and panel discussion focusing on international sales opportunities for ethanol and distillers grain.

Three breakout session tracks will be offered for ethanol plant board directors, mangers/CEOs, and operators focused on technology advances. Breakout session topics include risk management, the impact of proposed FDA regulations on plant operations, and technology to speed or increase yeast fermentation rates.

EPA Hears Corn Grower Concerns About RFS

Members of the National Corn Growers Association (NCGA) meeting in Washington DC were able to share their concerns about the delayed rule on 2014 volume obligations under the Renewable Fuel Standard with EPA Deputy Administrator Bob Perciasepe.

epa-ncga“The number needs to be out, it’s really ridiculous,” said NCGA president Martin Barbre, pictured here on the right with Perciasepe. “He said ‘we’re behind time frame’ and we had some delegates stand up and say ‘you’re not behind time frame, you’re way late.’” The final rule was expected by the end of June but EPA officials say it is being delayed because of the massive volume of comments that need to be studied in order to make a decision.

Barbre says while they appreciate the fact that EPA is taking the time to make sure they make the right decision, delaying it until almost the end of the year causes problems in the market. “Sort of what has created this issue with RINS and that run up in the RINS price is the lateness of the oil companies getting the numbers,” said Barbre. “They’re supposed to have these number in the spring, they get them in the fall, and by the end of the year they have got to have met their obligations. So it puts them in somewhat of a bind.”

“We’re not usually on the side of defending the oil companies, but in this case they just need to get the numbers faster so they can get themselves where they need to be,” Barbre added.

Listen to Barbre’s comments here: Interview with NCGA president Martin Barbre

Corn Growers Keep Ethanol in Focus

Ethanol and the Renewable Fuel Standard (RFS) were big topics this week as members of the National Corn Growers Association met in Washington DC.

ncga-ethanolMichigan farmer Jeff Sandborn, chair of the Ethanol Committee, said they spent the week talking with administration officials and members of Congress after being updated on the issues. “Right now, Congress faces rapidly evolving issues crucial to our members. The information and understanding coming out of these meetings will help each of our delegations make the strongest case possible for farmers.”

During the Ethanol Committee meeting, staff from the U.S. Environmental Protection Agency’s Office of Transportation and Air Quality provided an update on the regulatory issues facing the ethanol industry. On Thursday, the entire NCGA delegation heard from EPA Deputy Administrator Bob Perciasepe about the status of the pending 2014 volume obligation rule under the RFS.

“We greatly appreciate the deputy administrator’s willingness to participate in an open, well-considered conversation,” said NCGA President Martin Barbre of Illinois. While Perciasepe mainly dealt with the proposed Waters of the United States rule, he also fielded questions from growers pertaining to both the reduction in volume, and the continued delays of final RFS rule.

Report Shows Oil Companies Block Renewable Fuels

gasoline_pumpThe biggest names in the oil industry get failing grades when it comes to offering alternative transportation fuels like ethanol, according to a new report card released today by the Renewable Fuels Association (RFA).

A new “Consumer Choice Report Card” grades the nation’s largest retail gasoline chains based on whether they are providing consumers with alternatives to regular gasoline that cost less, reduce pollution and are higher octane for better engine performance.

RFANewlogoAccording to RFA, the “Big Five” oil companies all scored at the bottom of the list — with fewer than one percent of stations offering American made, renewable alternatives like E85 or E15 — while a number of major independent retail chains received “A+” grades, with more than 25 percent of their stations offering E85 or E15. Those five companies are Exxon, BP, ConocoPhillips, Chevron and Shell. At the head of the class are independent chains such as Break Time, Meijer, Thorntons, Kum & Go, and Kwik Trip – all of which earned a grade of A+ for their support of renewable fuels. Among oil company affiliated brands, only Speedway/SuperAmerica and Cenex received high marks (“A-“ and “B,” respectively.)

The Consumer Choice Report Card is part of a new report from the RFA titled “Protecting the Monopoly: How Big Oil Covertly Blocks the Sale of Renewable Fuels” which exposes how the five largest oil companies, along with a number of leading refiners, are “engaging in strong arm tactics and covert practices to prevent and discourage the sale of renewable fuels, especially at stations carrying their brand name.” The report finds that oil company distribution contracts “routinely include provisions that make it difficult, needlessly expensive, or simply impossible for a retailer to offer consumers choices like E15 or E85.”

RFA president and CEO Bob Dinneen and RFA Senior Vice President Geoff Cooper held a media call to discuss the report and scorecard. “Cynically, oil companies frequently cite a shortage of fueling infrastructure as a reason why the EPA should lower the requirements of the Renewable Fuel Standard. Yet, as demonstrated in this analysis, the oil industry itself has deliberately created this shortage by making it as difficult and burdensome as possible for retail gas stations to offer greater volumes of renewable fuels,” said Dinneen. “We have to enforce the Renewable Fuel Standard.”

Cooper explains some of the tactics used by the big oil companies to prevent or discourage sales of renewable fuels. “Most of these contracts require supplier exclusivity meaning the retailer can only sell fuels made by supplier,” said Cooper. “So if the supplier doesn’t make E15 or E85 available at the terminal, the distributor can’t distribute it to the retailer.” Cooper says many agreements actually actively discourage retailers from promoting the availability of E85 and some have been fined for doing so.

Listen to or download the call here: RFA report on how oil companies block renewable fuels

EPA Chief Hopes RFS Rule Coming “Soon”

epa-mccarthyEnvironmental Protection Agency Administrator Gina McCarthy held a conference call with media this morning in advance of her trip to Missouri this week to talk about the proposed Waters of the United States rule, or WOTUS.

I had the last question on the press conference and took the liberty of going off topic to ask about when the final rule on the volume obligations under the Renewable Fuel Standard (RFS) would be released. “I’m hoping it will come out soon,” she said. Explaining about the delay in releasing the final rule, which was expected by the end of June, McCarthy said it has become clear that there is concern “not only about what the volumes of the fuels are but the way in which we are adjusting those volumes.”

McCarthy stressed that the administration “continues to have a strong commitment to biofuels” and they want to make sure the final rule “clearly reflects that interest.”

“My goal is always to make sure we get it right,” she concluded.

Listen to McCarthy answer the question here. EPA Administrator Gina McCarthy on RFS rule release

EPA Establishes Quality Assurance for RINS

epaIn addition to the final rule approving crop residue as a cellulosic feedstock, the Environmental Protection Agency yesterday established a “voluntary quality assurance program” for renewable identification numbers, or RINs.

The program is designed to maintain liquidity in the market for RINs under the Renewable Fuel Standard (RFS) providing a means for ensuring that RINs are properly gener­ated through audits of renewable fuel production conducted by independent third-parties using quality assurance plans (QAPs). According to EPA, the QAP is intended to improve RIN market liquidity and ef­ficiency and improve the ability of smaller renewable fuel producers to sell their RINs.

Other provisions in the final rule regarding RINs include modifications to the exporter provisions of the RFS program to help ensure that an appropriate number and type of RINs are retired whenever
renewable fuel is exported.

Read the entire rule from EPA here.

Ethanol Report on Energy Independence

ethanol-report-adAs we prepare to celebrate our nation’s Independence Day, many of us will be out on the roads driving to see family, friends and fireworks. But, thanks to upheaval in a little country halfway across the world, gas prices are up again so we are going to be paying more at the pump, a stark reminder that we are not so independent when it comes to our energy sources.

dinneen-capitolIn this Independence Day Ethanol Report, Renewable Fuels Association president and CEO Bob Dinneen reminds us that ethanol saves Americans money at the pump, stretches the fuel supply and is the perfect remedy for skyrocketing gas prices.

Dinneen talks about the new milestone reached this week in cellulosic ethanol production and why the government needs to be expanding the use of biofuels rather than contemplating scaling back our nation’s renewable energy policy and striking a blow for American energy independence.

Ethanol Report on Energy Independence

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Corn Fiber Approved as Cellulosic Feedstock

epaThe Environmental Protection Agency issued final rules Wednesday to qualify additional fuel pathways for the production of cellulosic biofuel, including crop residue such as corn fiber.

EPA has now determined that crop residue does meet the lifecycle greenhouse gas (GHG) reduction requirements for cellulosic biofuel under the Renewable Fuel Standard (RFS) provided that “producers include in their registration specific information about the types of residues which will be used, and record and report to EPA the quantities and specific types of residues used.”

corn-cobsThe final rule comes just as the first gallons of cellulosic ethanol are being produced this week from corn fiber in Galva, Iowa. “As demonstrated by Quad County Corn Processors—which produced its first commercial gallon of cellulosic ethanol from corn fiber just yesterday—this feedstock holds tremendous potential to contribute meaningful volumes toward compliance with the RFS cellulosic biofuels standard,” said Renewable Fuels Association president Bob Dinneen.

Dinneen says EPA should be commended for using a straightforward approach to accounting for the cellulosic content of biofuel feedstocks. “The ‘cellulosic content threshold’ method finalized in today’s rule is a common sense approach that minimizes administrative and accounting burdens for commercial producers, but upholds the spirit and intent of the RFS,” Dinneen said.

The EPA also finalized some minor amendments related to survey requirements associated with the ultra-low sulfur diesel (ULSD) program and misfueling mitigation regulations for 15 volume percent
ethanol blends (E15) in announcements made on Wednesday.