Domestic Fuel

Two key programs that will encourage the use of renewable biomass and production of advanced biofuels is available through the FY 2012 USDA budget, according to the Agriculture Secretary Tom Vilsack. About $25 million will be made available through each program.

First, the Repowering Assistance Program provides approximately $25 million in funding to biorefineries that have been in existence on or before June 18, 2008. The purpose of the program is to provide a financial incentive to biorefineries to use renewable biomass in place of fossil fuels used to produce heat or power. By providing this assistance, USDA is helping these facilities install new systems that use renewable biomass.

Eligible costs must be related to construction or repowering improvements, such as engineering design, equipment installation and professional fees. The application deadline for this program to receive funds for Fiscal Year 2012 is June 1, 2012. For additional details, please see pages 5232 through 5234 of the February 2, 2012, Federal Register.

Second, USDA also announced the availability of up to $25 million to make payments to advanced biofuels producers who expect to produce eligible advanced biofuels at any time during Fiscal Year 2012. To be eligible for these funds, an advanced biofuels producers must have enrolled in the program by October 31, 2011, even if the producer has an existing contract with the Agency.

Payments will be made to producers of advanced biofuels derived from renewable biomass, other than corn kernel starch. These include cellulose, sugar and starch, crop residue, vegetative waste material, animal waste, food and yard waste, vegetable oil, animal fat, and biogas.

Contract payments will be made quarterly. For additional details, please see pages 5229 through 5232 of the February 2, 2012, Federal Register.

“President Obama has laid out a new era for American energy—an economy fueled by homegrown and alternative energy sources that will be designed and produced by American workers,” said Vilsack. “These programs support that vision by helping biorefineries use renewable biomass as a replacement fuel source for fossil fuels and supporting advanced biofuel producers as they expand production.”

The USDA is seeking applications to provide assistance for ag producers and rural small businesses to complete a variety of energy efficiency and renewable energy projects.

“Renewable energy development presents an enormous economic opportunity for rural America,” said Agriculture Secretary Tom Vilsack. “This funding will assist rural farmers, ranchers and business owners to build renewable energy projects, providing opportunities for new technologies, create green jobs and help America become more energy self-sufficient.”

The Rural Energy for America Program (REAP) is designed to help agricultural producers and rural small businesses reduce energy costs and consumption and help meet the Nation’s critical energy needs. For 2012, USDA has approximately $25.4 million budget authority available to fund REAP activities, which will support at least $12.5 million in grant and approximately $48.5 million in guaranteed loan program level awards.

USDA is accepting the following applications:

• • renewable energy system and energy efficiency improvement grant applications and combination grant and guaranteed loan applications until March 30, 2012;
• • renewable energy system and energy efficiency improvement guaranteed loan only applications on a continuous basis up to June 29, 2012;
• • renewable energy system feasibility study applications through March 30, 2012; and
• • energy audits and renewable energy development assistance applications through February 21, 2012.

More information on how to apply for funding is available in the Jan. 20 Federal Register, pages 2,948 through 2,954.

Blender pumps give consumers flexibility and choice of ethanol blends when they are fueling up. Now, the USDA is accepting applications for REAP funds that can be used by retailers who want to install more blender pumps.

This is the second year that blender pumps have been authorized as part of the REAP program. Agriculture Secretary Tom Vilsack announced in 2011 that USDA had plans to install 10,000 blender pumps over the next five years.

That announcement and this year’s opening of the application process is welcome news to the Blend Your Own (BYO) Ethanol campaign, a joint educational effort by the American Coalition for Ethanol (ACE) and the Renewable Fuels Association (RFA). The campaign will again offer free grant writing services to those interested in applying.

“This program provided funding for more than 250 blender pumps last year, providing many consumers with the choice and flexibility they deserve to pick the ethanol blends that work for them based on their vehicle, their beliefs, and their budget,” said RFA Director of Market Development Robert White. “Through the BYO Ethanol Campaign, we have the ability to assist retailers in applying for these funds and help USDA and the Obama Administration achieve the renewable fuel goals they have put forward. With E15 fuel registration due any day, these blender pumps will help spread this new blend across the country.”

“We can break the stranglehold oil has over our nation’s economy and energy future by giving consumers the option to choose clean American fuels that are not petroleum,” said ACE Senior Vice President Ron Lamberty. “In just five years, growing ethanol use has helped us reduce our reliance on foreign oil by more than 10% – to a point where imports are less than half of total demand. We can continue that move toward greater energy independence by getting more ethanol in front of more consumers.”

This program is designed to help spur rural development. This program offers funding for grants, and loan guarantees, but certain restrictions will apply on the size of the local communities and the businesses applying for the funds. Applications for this program are due on March 30, 2012.

The U.S. Department of Agriculture has approved a conditional commitment of $232.5 million to build a cellulosic ethanol plant in Boardman, Oregon.

The commitment was made to ZeaChem Boardman Biorefinery, LLC (ZBB) through the Biorefinery Assistance Program. ZBB plans to operate a 25 million gallon per year biorefinery to be constructed on an industrial site in northeast Oregon, along the Columbia River.

“In his State of the Union address, President Obama outlined his vision for a new era for American energy—an economy fueled by homegrown and alternative energy sources that will be designed and produced by American workers,” said Agriculture Secretary Tom Vilsack. “This project and others like it will help to establish a domestic advanced biofuels industry that will create jobs here at home and open new markets in the Pacific Northwest and across America.”

The biorefinery will use high-yield cellulosic fermentation technology to produce advanced biofuels. The feedstock will consist of approximately 30 percent agricultural residue, such as wheat straw and corn stover, and 70 percent woody biomass from a local hybrid poplar farm. An existing 250,000-gallon per year cellulosic integrated demonstration plant at the site is currently generating operational data that will provide information needed for the commercial scale project, which will be located on an adjacent site. An estimated 51 percent or more of the biorefinery’s output will be advanced biofuel, and the remainder will be high-value biobased chemicals, such as acetic acid and ethyl acetate.

“This is a very exciting and innovative project and we are very pleased to see ZeaChem moving into the commercial stages of cellulosic ethanol production,” said Brooke Coleman, Executive Director of the Advanced Ethanol Council (AEC). “The advanced and cellulosic ethanol industry is breaking through in a challenging financial climate, which speaks to the evolution of the technology and the value proposition offered by the most innovative liquid fuel and chemical producers in the world.”

Agriculture Secretary Tom Vilsack will be a headline speaker on Friday, February 24th, at the 17th annual National Ethanol Conference, which is being held February 22-24 at the Gaylord Palms Resort and Convention Center in Orlando.

During his tenure, Secretary Vilsack has been a champion for all domestic renewable fuels, including ethanol. Secretary Vilsack has led the charge to modernize America’s fueling infrastructure through the installation of blender pumps. Under his leadership, USDA is investing in new ethanol technologies that will turn abundant materials like grasses, wood wastes, ag residues, and municipal solid waste into ethanol. And, Secretary Vilsack has been a steady voice is combating falsehoods about ethanol, including soundly refuting claims ethanol is the driving factor behind rising food prices.

Those interested in registering for the conference should do so by Thursday, January 25 to save $100 on the registration fee and ensure a room at the convention hotel. After Thursday, the room block will be released and the registration rate goes up. Registration information is available at nationalethanolconference.com.

An advanced biofuels project in Iowa is being offered support from the federal government for a plant to make fuel from waste material.

The U.S. Department of Agriculture has approved a conditional commitment for a $25 million guaranteed loan under the Biorefinery Assistance Program for Fiberight to build a biorefinery in Blairstown, Iowa.

The loan will be used to construct a 55,000 square foot facility that will produce cellulosic ethanol by converting municipal solid waste and other industrial pulps into advanced biofuels, as well as using conventional renewable biofuel derived from seed corn waste. When operational, the facility is expected to produce approximately 3.6 million gallons of cellulosic ethanol per year. The process will use a cellulosic microbe to produce up to 15 percent more ethanol than traditional fermentation technology, and reduce energy inputs in the fermentation and distillation process. Fiberight estimates the project will create 38 jobs and save 16 jobs.

”Advanced Biofuels are going commercial – and the innovation behind turning trash into biofuels demonstrates how our industry can create jobs and solve our nation’s energy needs,” says Adam Monroe, President of Novozymes North America. ”Novozymes is proud to be a partner to this project, supplying the enzymes to turn household and office waste into advanced biofuels. We applaud the federal government for its leadership in helping bring biofuels to market.”

Biotech company Novozymes is one of Fiberight’s partners in the project. ”Advanced Biofuels are going commercial – and the innovation behind turning trash into biofuels demonstrates how our industry can create jobs and solve our nation’s energy needs,” says Adam Monroe, President of Novozymes North America.

Under the conditional commitment, Fiberight must meet specified conditions before the loan guarantee can be completed. Other funding comes from the State of Iowa. Fiberight also received a $2.5 million grant from the Iowa Power Fund in 2010. The company will work with the Benton County landfill to supply a portion of the feedstock for the project. The total project cost is estimated at $59.5 million. Fiberight, LLC was incorporated in 2007 for the purpose of converting an existing ethanol facility into a cellulosic ethanol facility in Blairstown.

The U.S. Department of Agriculture this week launched a new energy website to provide quick access to the agency’s energy efficiency and renewable energy data.

The website, usda.gov/energy, provides access to all USDA energy resources, including: agricultural, forestry, economic, and social data. This is done in part through a set of new complementary web-based tools: the USDA Renewable Energy Investment Map, the Renewable Energy Tool and Energy Matrix. These tools focus on USDA’s energy, energy efficiency and renewable energy investments and projects; provide information and data to a broad spectrum of stakeholders; and empower the user with the ability to easily navigate USDA’s energy web resources. In addition, the site provides a link to all USDA state and local offices and energy resource coordinators.

The new website was welcomed by the Ag Energy Coalition (AEC). “USDA’s Energy portal demonstrates the positive impact the Farm Bill energy title and related programs are having on job creation, national security, and the environment,” said Coalition co-director Lloyd Ritter. “The Ag Energy Coalition believes Rural America will be a continuing force for change in the advancement of sustainable energy and renewable chemicals production in the years ahead. With the right policies in place, and requisite funding, the promise of a rural renaissance focused on clean energy solutions will become a reality.”

The Ag Energy Coalition includes a membership of organizations and companies representing a variety of clean, renewable energy and bioproducts stakeholders.

Agriculture Secretary Tom Vilsack is hosting a media roundtable with aviation business leaders today to discuss the important role of American-produced biofuels in the civilian aircraft and airline industry, and in the military.

Participants in the discussion with Vilsack will include John Tracy with The Boeing Company and Billy Glover of Boeing Commercial Airplanes; Alex Marren with United Continental Holdings and Jim Rekoske, Vice President and General Manager of Renewable Energy & Chemicals for Honeywell.

In January, 2010, Vilsack and Navy Secretary Ray Mabus signed a Memorandum of Understanding (MOU) to encourage development of advanced biofuels to be used in the Great Green Fleet that will demo in 2012. USDA has also signed a Memorandum of Understanding with the Federal Aviation Administration (FAA) to help the commercial airline industry utilize biofuels as jet fuel. USDA has also invested significantly in research projects to advance the aviation biofuels industry.

The roundtable discussion is being held this afternoon at 12:45 central at Boeing Corporate Offices in Chicago.

Agriculture Secretary Tom Vilsack supports the Renewable Fuels Standard (RFS2), but thinks strategies to build demand are more important to biofuels than tax credits.

Vilsack made multiple appearances in Hawaii this week, including at the American Farm Bureau Federation (AFBF) annual meeting where he addressed the membership and met with the media and had the opportunity to comment on biofuels policy.

During a press conference at AFBF on Monday, Vilsack said he believes it is important to keep the RFS2 in place for multiple reasons. “One, it provides consumer choice. We know that because we have a healthy biofuels industry that consumers are paying 90 cents to a dollar less for gas,” he said. “It’s a job creator in rural America and an opportunity to increase the bottom line for farmers, ranchers and producers. And it has helped us reduce our reliance on foreign oil, going from 60% imports to 52% in the last couple of years.” Audio from Vilsack on RFS2

A day later at the Pearl Harbor memorial to tout the increasing use of biodiesel by the military, Vilsack was asked about the expiration of the biodiesel tax credit at the end of 2011 and whether it will hurt the industry again as it did in 2010 if Congress fails to renew it. “First and foremost, our approach is to figure out ways to build demand for the product,” Vilsack responded, noting that they can use loan programs to produce more biodiesel while the commitment by the Navy to increase use of biofuel will help increase demand. “So, I don’t think that we need to rely solely on tax credits.” Audio from Vilsack on Biodiesel Tax Credit

During a visit to highlight renewable energy use by the U.S. Navy at Pearl Harbor, Agriculture Secretary Tom Vilsack also spotlighted the Hawaii-based biodiesel producer that supplies much of the fuel used there.

Pacific Biodiesel “is the oldest biodiesel producer and refinery in the country, started in 1996,” said Vilsack during his remarks on Tuesday at the memorial, noting that USDA has provided assistance to help that company grow. “We provided recently a $5 million business and industry loan to Pacific Biodiesel to allow it to continue to expand its capacity.”

That loan, announced in February 2010, is being used to construct a $10 million, 5.5 million gallon per year biodiesel production plant in Kea’au on the Big Island. Pacific Biodiesel vice president and co-founder Kelly King says Big Island Biodiesel will be the companies 13th biodiesel plant. “We’ll be owning and operating five of them, the other ones we built for clients throughout the mainland, from the east coast to the west coast,” she says, with capacity ranging from a half million to six million gallons.

“We started in Maui, where we actually had the first available biodiesel pump for the public,” said King. “Back then, most of our customers were environmental hippies who would come and pay 70 cents a gallon more for fuel and thank us and tell us to keep the change!”

King says Pacific Biodiesel operates on a community-based sustainable model set up locally to benefit local communities. While all the plants can use any type of oil feedstocks, much of them operate on used cooking oil. “It can use the most degraded oils up to the purest oils,” she said. “The degraded oils make the best feedstock because it’s the cheapest!”

King and two of her Pacific Biodiesel team members were excited to be part of the secretary’s appearance at Pearl Harbor and to have him recognize the importance of renewable fuels in the Aloha State.

Listen to an interview with Kelly King here: Pacific Biodiesel VP Kelly King

Photos from Secretary’s visit to Pearl Harbor memorial to promote biofuels

With the Pearl Harbor memorial as a backdrop and a Pacific Biodiesel hat on the podium, Agriculture Secretary Tom Vilsack Tuesday highlighted the use of biodiesel by the U.S. Navy.

Pearl Harbor naval base was the first Hawaii military marine fleet to use biodiesel, replacing the Department of Navy-operated tour boats that shuttled visitors to and from the USS Arizona Memorial with five new boats capable of running on 100% biodiesel.

“The military in the way they are approaching the future as it relates to energy is reminding us that this country has the capacity not just to think big but also to act big,” said Vilsack. “They understand and appreciate that energy security is important for the future of this country and are dedicated to making sure that the Navy provide a good example to the country on how to go about doing this.”

The secretary noted that the Pearl Harbor navel base is also “utilizing and will continue to expand E85 and B20 opportunities for their vehicle fleet” which consists of roughly 2000 vehicles, 75% of which are capable of using either E85 or B20.

Vilsack noted that much of the biodiesel used at Pearl Harbor purchased by the Navy is produced in Hawaii by Pacific Biodiesel, “which is the oldest biodiesel producer and refinery in the country, started in 1996.”

Listen to Secretary Vilsack’s comments about biofuels at Pearl Harbor: Tom Vilsack at Pearl Harbor memorial

Photos from Secretary’s visit to Pearl Harbor memorial to promote biofuels

Agriculture Secretary Tom Vilsack is in Hawaii this week to address the annual meeting of the American Farm Bureau Federation and highlight the Obama Administration’s commitment to renewable energy at the Pearl Harbor memorial center.

Vilsack will be at the World War II Valor in the Pacific National Monument’s Pearl Harbor Visitor Center on Tuesday to talk about how USDA is working with the U.S. Navy to promote the use of renewable fuels in its operations. In April 2009, the Pearl Harbor naval base was the first Hawaii military marine fleet to use biodiesel, replacing U.S. Navy-operated tour boats that shuttled visitors to and from the USS Arizona Memorial with five new boats capable of running on 100% biodiesel. Secretary Vilsack will highlight these efforts as well as other Administration efforts to advance renewable energy as part of the Navy fleet.

Cellulosic ethanol continues to be out of reach for commercial use, according to the latest Renewable Fuels Standard (RFS2) requirements set by the Environmental Protection Agency for 2012.

“EPA has essentially reduced the mandate for cellulosic, recognizing the fact that there aren’t supplies out there to meet it,” said USDA chief economist Joe Glauber.

Back in 2007, Congress set a goal of 500 million gallons of cellulosic ethanol to be produced in 2012, but only a very small fraction of that is now expected to come to fruition with a target of just 8.65 million gallons. “The big question that’s been out there for years is ‘when will cellulosic ethanol become profitable?’ said Glauber. “I don’t think anyone sees that coming anytime soon, although a few of these plants are expected to come on line in the coming year, so we’ll see.”

In order to project cellulosic biofuel production for 2012, EPA tracked the progress of over 100 biofuel production facilities, the methodology of which is clearly outlined in the official 97-page final rule document. Companies that EPA determined were likely to produce significant quantities of cellulosic biofuel in 2012 include (with projected ethanol-equivalent gallons):

KiOR – a Mississippi-based renewable crude oil project (4.8 million)
INEOS Bio of Vero Beach – waste to biofuel (3 million)
Fiberight – a waste-to-biofuel project in Blairstown, IA (2 million)
American Process, KL Energy and ZeaChem for a total of less than a million gallons combined.

EPA noted the importance of setting a cellulosic standard that was realistic, yet still encouraged investment in the technology. “Thus while any standard we set for cellulosic biofuel standard for 2012 will have some uncertainty in terms of actual attainment, our intention is to balance such uncertainty with the objective of promoting growth in the industry.”

EPA has set the “advanced biofuels” target for 2012 at 2 billion gallons, much of that being comprised of imported sugarcane ethanol from Brazil.

Read EPA’s full explanation of the RFS2 requirements justification.

The amount of land in the United States devoted to growing crops declined between 2002 and 2007, which indicates that increased ethanol production is not using up more land.

According to the report, “Major Uses of Land in the United States 2007,” total cropland was down by 34 million acres in 2007 to its lowest level since 1945. Cropland accounted for 18 percent of the total land area in the country – the third largest land use behind forest (30%) and grassland (27%).

Renewable Fuels Association (RFA) president Bob Dinneen said the new report shows increased ethanol production has not resulted in expansion of total U.S. cropland or a decline in grassland and forest.

“Using real data from the real world, this report from USDA shows yet again that U.S. cropland is not expanding in response to increased ethanol demand,” said RFA President Bob Dinneen. “The report also shows that forest and grassland increased dramatically during a period when ethanol production more than tripled.”

The smallest total use of land in the U.S. is urban at 61 million or three percent. However, while urban land use accounts for the smallest percentage, the USDA report shows that it accounts for the biggest increase in land use, quadrupling between 1945 and 2007, increasing at about twice the rate of population growth over
this period. Urban land use increased almost 2 percent from 2002 to 2007.

“It is ironic that the land use debate has fixated on biofuels, when the actual culprit of land conversion has clearly been urban and suburban sprawl,” Dinneen said. “Subdivisions full of mini-mansions, big box stores, shopping malls, and parking lots are encroaching on productive farmland across the country.”

Read the USDA report here.

According to USDA, global corn production for 2011/12 is projected at a new record high of 867.5 million tons, despite a smaller crop here in the U.S.

The latest World Agricultural Supply Demand report estimates the U.S. crop was down 3.5 million tons this year compared to last year, but foreign corn production is expected to be 43.4 million tons higher, with China alone up 7.3 million tons this month based on the recently released government estimates. USDA is now predicting the 2011/12 season-average farm price for corn will be about 30 cents lower than previous estimates at $5.90 to $6.90 per bushel.

On the demand side, corn for food, seed, and industrial use was lowered 5 million bushels and projected corn ending stocks were increased by 5 million bushels to 848 million. Corn for ethanol use remains unchanged at 5 billion bushels, which is slightly lower than last year, despite the fact that ethanol production this year is on pace to possibly be as much as a billion gallons more than 2010.

As we head into 2012, ethanol is like to be the wild card in the corn demand situation with the expiration of the Volumetric Ethanol Excise Tax Credit (VEETC) at the end of this year. “That could potentially change how much ethanol is blended into gasoline,” said USDA chief economist Joe Glauber. “There are mandates in terms of overall production that has to be blended into gasoline, the issue is how much gets produced above and beyond the mandates.” However, industry analysts expect ethanol prices are expected to drop 30-40 cents per gallon at the wholesale level after the blenders tax credit expires, which should serve as an incentive to blend as much if not more.

“Domestically, it will depend on the profitability of ethanol price versus gasoline and whether or not it pays to blend above the mandates,” said Glauber.