USDA Announces Biofuels Initiatives

As part of the Obama Administration’s effort to promote production of fuel from renewable sources, create jobs and mitigate the effects of climate change, Secretary Tom Vilsack today announced a series of measures during a speech to the National Press Club in Washington.

“Domestic production of renewable energy, including biofuels, is a national imperative and that’s why USDA is working to assist in developing a biofuels industry in every corner of the nation,” said Vilsack. “By producing more biofuels in America, we will create jobs, combat global warming, replace our dependence on foreign oil and build a stronger foundation for the 21st century economy.”

The Secretary announced several measures, including the publication of a final rule to implement the Biomass Crop Assistance Program (BCAP). Under the BCAP final rule, USDA will resume making payments to eligible producers. The program had operated as a pilot, pending publication of the final rule. Authorized in the Food, Conservation, and Energy Act of 2008, BCAP is designed to ensure that a sufficiently large base of new, non-food, non-feed biomass crops is established in anticipation of future demand for renewable energy consumption.

The nation’s largest ethanol producer, POET, welcomed finalization of rules for the Biomass Crop Assistance Program (BCAP), saying it will help launch the biomass market near the site of their planned cellulosic ethanol plant. “The 85 farmers we have contracted with to deliver 56,000 tons of biomass this fall are nearly finished harvesting, so the final BCAP rule comes not a day too soon,” said Jim Sturdevant, Director of Project LIBERTY for POET. “We will now apply for our cellulosic ethanol plant to become an approved Biomass Conversion Facility (BCF) so that local farmers can become eligible for matching payments for the biomass they will soon deliver.”

POET is in the midst of the world’s largest commercial harvest of biomass for cellulosic ethanol. Farmers around Emmetsburg, Iowa are baling corn cobs and light stover for delivery to POET. In order to store the bales, POET recently completed construction of a multi-million dollar stack yard next to where the first commercial cellulosic ethanol plant will be built.

Read more about Vilsack’s announcement here.

Ugly Biodiesel Brewer Beauty to Farmers, Businesses

It’s not very pretty … but it’s a thing of beauty to farmers, school administrators and even some businesses that want to brew their own biodiesel.

A couple of weeks ago, I posted a story from the Flint (MI) Journal about Onsite Energy LLC‘s new Genesee Biodiesel Processor, a first-of-its-kind, automatic machine that can make cooking oil into biodiesel with only 20 minutes of work. Well, based on the response, you wanted to know more. So I called Onsite’s Operational Manager Jeff Woolman to find out more about these automatic biodiesel brewers, that come in 80 gallon, 150 gallon and 230 gallon sizes.

“We did a three-year research study with USDA and the Michigan Corn Growers Association, so we’ve got a lot of farmers’ inputs,” Woolman says.

So what makes this biodiesel maker any different than some of the other kits out there or someone’s homemade concoction they have in their garage? Woolman says it’s fully automatic, so a farmer … or anybody using the machine … only has to spend a few minutes with the rig and come back a few hours later to have a batch of biodiesel ready to use.

“We went into it knowing there were other ones on the market with turn valves, and we wanted to have something that was fully automatic where could walk up, push a button and walk away from it.”

While it works well and is rugged, Woolman admits it’s not the prettiest thing out there with only a face a mother … or a farmer or a school administrator or a trucking company owner … could love. He says the lowest priced unit in the line costs about $12,000, but it comes with a trailer so multiple users could share it, making it easier to recover their investment.

Woolman says they’re currently able to produce about 500 of these biodiesel makers a year, and Onsite could ramp that up with plenty of workers in the Flint, Michigan area looking for a job. He hopes they’ll be able to provide plenty of jobs for a long time to come.

You can find out more about the company at the Onsite Energy LLC website.

Listen to my interview with Jeff here: Jeff Woolman, Onsite Energy

EPA Must Move Quickly to Approve E15 in Older Cars

The ethanol industry all agrees that today’s decision by the EPA to grant an E15 Waiver for 2007 or newer model cars and light duty trucks is a step in the right direction. However, most groups feel that the decision didn’t go far enough in moving the US to its renewable fuels goals of 36 billion gallons for biofuels by 2022.

Shortly following the EPA press conference, Agricultural Secretary Tom Vilsack released a statement commending the EPA for its decision. “Today’s announcement from EPA is an important step toward making America more energy independent and creating much-needed jobs in rural America. The announcement will help get existing ethanol capacity into the market.”

Vilsack continued, “Today’s action by Administrator Jackson and the EPA provides assurance to farmers, ranchers and the renewable fuels industry that the government backs the use of home grown energy in our cars and trucks. At the same time, more work is needed and we hope EPA and the Department of Energy complete an evaluation of 2001-2006 models soon.”

However, not all groups agreed with Vilsack’s enthusiasm. POET CEO Jeff Broin, whose company spearheaded the E15 Waiver, reacted by saying, “Approval of E15 in 2007 and newer vehicles is a positive first step toward opening the market for more ethanol to compete with gasoline. However, the EPA must move quickly to take the next step: approval of E15 for use in older vehicles.”

Broin continued, “The arguments being made right now against E15 are the same as those made about E10 back in the late 1980s, when I entered the ethanol industry. Seventy billion gallons later, we have proven those arguments false, just as research on E15 is proving critics wrong today. Greater market access will help give investors the needed confidence to commit to bringing cellulosic ethanol to commercial scale. Many projects, POET’s Project LIBERTY among them, are ready for commercialization but hindered by unnecessary limits on ethanol content in fuel.”

Ethanol enzyme company Genencor, a Division of Danisco echoed others’ sentiments. “We applaud the action taken today by the EPA and hope that they will quickly move to approve E15 for all vehicles. The adoption of sound, tested policies for cleaner fuels is critical to reducing our dependence on foreign oil, supporting our agricultural sector and cutting greenhouse gas emissions,” said Glenn Nedwin, Executive Vice President of Genencor.

Corn Crop Lower But Ethanol Stays Steady

usdaCorn production for this year was cut by four percent in the latest forecast out this morning from USDA, a bigger drop than expected by the industry. Corn production is now forecast at 12.7 billion bushels, down 3 percent from last year’s record production of 13.1 billion bushels. Yields are now expected to average 155.8 bushels per acre, down 6.7 bushels from the previous month and 8.9 bushels below last year’s record of 164.7 bushels.

The latest supply-demand numbers reflecting the new forecast show a decrease in stocks, increase in feed use, decrease in exports, but use of corn for ethanol remains the same at 4.7 billion bushels.

In response to the report, the president of the National Corn Growers Association (NCGA) said U.S. corn farmers will still be able to meet all demands for food, feed, fuel and exports.

“We have had many reports of lower yields and, at the same time, are hearing stories of higher-than expected yields in some areas,” said NCGA President Bart Schott of North Dakota. “This may not be a record year, but we’re bringing in the corn and meeting all needs, even for our export markets.”

tom dorrThe report came out today as the Renewable Fuels Association (RFA) and the U.S. Grains Council (USGC) were wrapping up a seminar in Chicago promoting exports of the ethanol by-product distiller’s dried grains with solubles (DDGS). USGC President and CEO Tom Dorr was not very concerned about the new numbers. “I’ve been a farmer most of my life and the thing that I know is that farmers, more often than not, swim in surpluses, they love dealing with shortfalls and they’ll produce our way out of this very quickly,” Dorr said.

Listen to or download an interview with Dorr reacting to the report today: Tom Dorr Interview

Ag Secretary to Make “Major” Biofuels Speech

Later this month, Agriculture Secretary Tom Vilsack will give a “major speech on domestic biofuel production.”

According to USDA, Vilsack will discuss the progress USDA and other federal agencies are making toward achieving the 36 billion gallon biofuel production goal mandated by the Renewable Fuels Standard and new efforts by the Obama administration to bolster the industry and reduce U.S. dependence on foreign oil.

Other topics of the address will include ensuring that infrastructure is in place to ease the production and use of domestically produced renewable transportation fuel, as well as the administration’s strategy to foster renewable energy nationwide.

The address will be made October 21, 9:30 am Eastern, at the National Press Club.

Second Look at USDA Ethanol Energy Balance Report

A report released by USDA in June on the energy balance of ethanol plants is getting a second look this week, thanks to a post on the USDA blog.

The second look is well deserved, since the report, titled “2008 Energy Balance for the Corn Ethanol Industry,” got less coverage than it deserves when it was first released. The findings of the report are significant because they specifically tackle the much-publicized claims of David Pimental that ethanol production results in a net energy loss. The USDA report updates the energy balance numbers by taking into account current practices used by both corn producers and ethanol processors that have led to increased efficiencies and concludes that “A dry grind ethanol plant that produces and sells dry distiller’s grains and uses conventional fossil fuel power for thermal energy and electricity produces nearly two times more energy in the form of ethanol delivered to customers than it uses for corn, processing, and transportation.”

The report does concede that ethanol production was much less efficient 20-30 years ago, but that it has made tremendous gains, thanks to both increased corn yields and better production methods. “Over all, ethanol has made the transition from an energy sink, to a moderate net energy gain in the 1990s, to a substantial net energy gain in the present.”

As more plants start using biomass power instead of conventional fossil fuel for production, the energy balance could increase even more significantly, according to the report. “As processors master the logistics of handling bulky biomass, the energy balance ratio could reach 26 BTUs of ethanol per BTU of inputs used.”

Read the report here.

USDA to Fund Rural Renewable Energy Studies

The USDA is providing funding to look at the feasibility of renewable energy systems for agriculture producers and rural small businesses.

Grants of up to $50,000 each for a total of $3 million will be made available under the Rural Energy for America Program (REAP):

“Renewable energy production represents a promising revenue source for America’s producers while meeting the nation’s need for new sources of renewable energy,” [Agriculture Secretary Tom Vilsack] said. “These grants will help encourage the development of viable renewable energy projects across the nation and help small business owners, farmers, ranchers and agriculture producers conduct feasibility studies that identify renewable energy opportunities.”

Eligible feasibility studies for renewable energy systems include projects that will produce energy from wind, solar, biomass, geothermal, hydro power and hydrogen-based sources. The energy to be produced includes heat, electricity or fuel. For all projects, the system must be located in a rural area, must be technically feasible and must be owned by the applicant. More information is available by visiting http://www.rurdev.usda.gov/BCP_ReapGrants.html.

Deadline for application is October 5, 2010.

Record Corn Crop and More Ethanol Production

Some weather issues over the past month caused USDA to slightly lower the forecast for this year’s corn crop, but it is still expected to be a record at 13.16 billion bushels.

The average yield was lowered due to average 162.5 bushels per acre, down 2.5 bushels from the previous month and 2.2 bushels below last year’s record of 164.7 bushels. Forecasted yields decreased from last month throughout much of the Corn Belt, Tennessee Valley, and Delta. Yields were up from August in the lower portions of the Southeast.

USDA is also forecasting increased ethanol production and lower ending stocks with higher prices for corn. “We have seen increased demand so we boosted our ethanol production for the current year, which means our ending stocks have gone down a bit,” said USDA Chief Economist Joe Glauber. “We’re now looking at ending stocks of corn of 1.1 billion bushels and a season average price of $4.40 a bushel – that’s a big increase.”

USDA added 35 million bushels to the 2009-10 corn used for ethanol for a total of 4.535 billion bushels to reflect the actual production numbers through August. Outlook Board Chairman Gerry Bange says they also increased the estimate for 2010-11 but not as much as some might expect. “What we’re thinking is that with the current rise in corn prices we’ve seen and with the gasoline price coming off we might expect somewhat of a slow down in the rate of increase for ethanol production, so we’re carrying a number at 4.7 billion bushels for 2010-11, which is up nearly four percent,” said Bange. USDA lowered total 2010/11 corn demand by 50 million bushels.

According to Renewable Fuels Association Vice President of Research Geoff Cooper, the changes in this latest USDA report were expected and speculators have been running up the corn prices lately.

“The recent flurry of activity in the corn market is undoubtedly being driven by the resurgence of speculators. Hedge and index funds are descending on the corn market in numbers not seen since the spectacular commodities bubble of 2008,” Cooper wrote in a blog post on the E-Xchange. “The movements of the market become sufficiently more exaggerated when this many speculators are in the game. The highs are higher, the lows are lower, and everything happens faster.” He notes that the Friday prior to the crop report coming out, a record 556,034 corn futures contracts (the equivalent of 2.8 billion bushels of corn!) changed hands, marking the single busiest day in the corn markets since the Chicago Board of Trade began trading grain in 1877.

Ethanol Plant Receives Grant to Use Biomass for Power

An ethanol plant in Iowa has received a nearly $2 million federal grant to use renewable biomass to replace the fossil fuels needed to run the biorefinery.

The USDA announced that the award comes from the Repowering Assistance Program, part of the 2008 Farm Bill:

Lincolnway Energy, LLC, based in Nevada, Iowa, has been selected to receive a $1.9 million payment award. The company produces 55 to 60 million gallons per year of fuel-grade ethanol. The USDA payment will reimburse the firm for costs to modify a boiler to burn wood and other biomass.

USDA’s Repowering Assistance Program was authorized under the 2008 Farm Bill and allows USDA to make payments to eligible biorefineries to encourage the use of renewable biomass as a replacement fuel source for fossil fuels used to provide process heat or power in the operation of these eligible biorefineries. Biorefineries that were in existence when the Bill was enacted, June 18, 2008, are eligible to apply.

More information is available through this USDA website.

Federal Ag & Energy Depts. Team Up for Bioenergy

The U.S. Departments of Agriculture and Energy have teamed up to hand out some research awards to designed to improve and accelerate genetics in plants for bioenergy production.

This USDA release says the announcement from Agriculture Secretary Tom Vilsack and Energy Secretary Steven Chu will make $8.9 million available:

“Cost-effective, sustainable biofuels are crucial to building a clean energy economy,” said Secretary Chu. “By harnessing the power of science and technology, this joint effort between DOE and USDA will help accelerate research in the critical area of plant feedstocks, spurring the creation of the domestic bio-industry while creating jobs and reducing our dependence on foreign oil.”

“Developing a domestic source of renewable energy will create jobs and wealth in rural America, combat global warming, replace our dependence on foreign oil, and build a stronger foundation for the 21st century economy,” Secretary Vilsack said. “This scientific investment will lay the foundation for a source of fuel made from renewable sources.”

The research grants will be awarded under a joint DOE-USDA program focused on fundamental investigations of biomass genomics, with the aim of harnessing lignocellulosic materials–i.e., nonfood plant fiber–for biofuels production. Emphasis is on perennials, including trees and other nonfood plants that can be used as dedicated biofuel crops. Since such crops tend to require less intensive production practices and can grow on somewhat poorer quality land than food crops, they will be a critical element in a strategy of sustainable biofuels production that avoids competition with crops grown for food. Combining DOE’s leadership in genome-scale technologies with USDA’s long experience in crop improvement will help accelerate development of such specialized crops and improve their effectiveness as feedstocks for biofuels production.

The Energy Department will be handing out $6.9 million for seven projects across the country and USDA’s National Institute of Food and Agriculture will give $2 million for two projects in Illinois and Texas.

USDA Proposes Blending Solar and Wind Power

A USDA scientist believes wind and solar power generating systems could be set up to complement each other.

A study by Agricultural Research Service (ARS) agricultural engineer Brian Vick at the agency’s Renewable Energy and Manure Management Research Unit in Bushland, Texas says that by using solar power during doldrum days and wind at night could help offset the two energy sources shortcomings:

Vick discovered that in the Texas Panhandle and West Texas, as well as in northern and southern California, there is almost an exact mismatch between wind power production and peak energy demands over a 24-hour period. In these locations, at the heights of modern wind turbines, winds are lowest at mid-day, when power demands are greatest. In Texas, there is also a seasonal mismatch: The winds are weakest in the summer, when power demands are highest.

But the sun’s rays are most intense at mid-day and in summer months.

Texas is the top state for wind-generated electricity production, with Iowa ranking second and California third. California is the leader in solar-generated electricity production.

The most efficient storage system is one being used in solar thermal power plants, where the sun’s heat is used to heat water or other fluids. The fluids are kept hot long after the sun goes down, ready to be used later to produce steam to generate electricity.

The excess electricity generated by wind in the late night and early morning hours could be pumped into the grid and removed by storage facilities (like pumped-storage hydroelectricity or compressed-air energy storage facilities) to match the utility loading in the daytime.

The article goes on to say that Vick and his colleagues have also been testing wind/biodiesel hybrid systems.

Bioenergy and Ethanol Market News from USDA

USDAProducers, consumers and distributors of bioenergy products can access crucial data through the Bioenergy Market News Reports published by the USDA’s Agricultural Marketing Service.

The Ethanol reports include data for six regions – Iowa, Wisconsin, Minnesota, Nebraska, South Dakota and the Eastern Corn Belt. Each report publishes daily corn bids, daily distiller grain prices and a weekly ethanol price. The Weekly Ethanol Summary combines all ethanol reports into a summary report. Futures prices for CME corn and ethanol, as well as NYMEX natural gas and reformulated gasoline can be found on this report. Graphs depicting prices for Iowa ethanol price, Iowa distiller grain price and the price ratio in Iowa between distiller grain and corn are shown.

The National Weekly Ag Energy Roundup includes prices for commodities that can be used to make energy, such as soybean oil, corn oil, tallow and greases. The prices of ethanol and biodiesel are also reported. Additionally, CME and NYMEX futures prices are reported for ethanol, soybean oil, crude oil, reformulated gasoline and natural gas. Graphs are included to show price relationships for several commodities.

There are three reports that report Ethanol Corn and Products Processing Values (Iowa, Nebraska and Illinois). These reports compare the price that ethanol plants pay for corn in their state to the value the ethanol plant receives from the outputs of ethanol and distiller grains.

To access the reports, visit marketnews.usda.gov.

Biofuels Videos from Obama Administration

The Obama administration and USDA have released a couple of videos highlighting the importance of biofuels to the nation and what the government is doing to get us down the road to advanced renewable fuels.

In a short YouTube video, USDA highlights current production and consumption capacities as well as projections to meet the Renewable Fuels Standard (RFS2) which calls for the use of 36 billion gallons of biofuels by 2022.

The administration has also produced a DVD containing presentations from the Biofuels Interagency Working Group. It includes presentations from representatives of USDA, EPA and DOE, as well as discussion and commentary by key industry leaders from Advanced Biofuels Companies introduced and moderated by Brent Ericksson, Executive Vice President of the Industrial and Environmental Section of the Biotechnology Industry Organization and Michael McAdams, Executive Director, Advanced Biofuels Association. The 99 minute DVD includes five presentations and over 68 slides and it is not cheap. A single copy is $345.00 and a site license is $1,380.00.

Order here.

USDA Report Disputes Land Use Theory

USDAUSDA’s new planted acreage report out Wednesday morning estimates corn acreage planted is two percent higher than last year, but that is down a point from the March report with more acres are going to soybeans. Corn planted area for all purposes in 2010 is estimated at 87.9 million acres, up 2 percent from last year. Acreage is up in Illinois, Kansas, Indiana, Missouri and Ohio; but down significantly in Iowa, Nebraska and South Dakota. Soybean planted area for 2010 is estimated at a record high 78.9 million acres, up 2 percent from last year.

Actually, the total amount of land dedicated to crops in the United States has dropped for the second straight year in 2010, according to the report, which shows total cropland has declined 6 million acres since 2008. The Renewable Fuels Association (RFA) notes that this is further evidence growth in ethanol production is not leading to cropland expansion.

Renewable Fuels Association Logo“The data clearly show that crop acres in the United States continue to trend downward,” said Bob Dinneen, RFA president and CEO. “That’s because new technology and dramatically increasing yields are allowing farmers to produce more crops on less land. Today’s report reinforces the fact that the nation’s farmers simply don’t need to expand cropland to meet global demands for food, feed, fiber, and biofuels.”

While corn acres are up compared to last year, that increase is more than offset by reductions in acreage for other coarse grains and wheat. USDA estimates total 2010 crop acres at 318.9 million, down from 319.3 million in 2009 and 325 million in 2008. For the sake of comparison, RFA noted that total planted acres averaged 327 million during the decade of the 1990s. A record corn crop of at least 13.3 billion bushels is expected in 2010, despite the fact that farmers planted nearly 6 million less acres of corn than in 2007 when the first 13 billion bushel crop was achieved.

RFA also noted that corn plantings were down from last year in many states with high levels of Conservation Reserve Program (CRP) acreage, which challenges the notion that grain ethanol expansion is leading to increased CRP conversion. For instance, corn acres dropped 4% in Texas, the leading CRP state in the nation. Corn acres also fell 7% in South Dakota, 4% in Nebraska, 3% in Iowa, and 1.3% in Minnesota.

Biodiesel Has Place in USDA Biofuels Report

While the ethanol industry has been praising the USDA’s report entitled “Roadmap to Meeting the Biofuels Goals of the Renewable Fuels Standard by 2022,″ there’s plenty in there for biodiesel fans to like as well.

The feds are optimistic that biodiesel will be able to carry its share of the overall 36 billion gallons of biofuels goal:

The U.S biofuels industry is on track to produce 1 billion gallons of biodiesel by 2022. In 2009, the United States already produced 550 million gallons of biodiesel. There are presently 173 plants and nearly as many companies that have invested millions of dollars into the development of biodiesel manufacturing plants and are actively marketing biodiesel. Twenty-nine companies have reported that they have plants currently under construction and are scheduled to be completed within the next 12-18 months. Their combined capacity, if realized, would result in another 427.8 million gallons per year of biodiesel production.

Furthermore, the report recognizes the importance of the soybean industry as being the main feedstock for biodiesel production, especially in the Midwest, and the rise of more non-traditional sources, such as algae and waste cooking greases.