USDA Loan Guarantee Funds Hawaiian Biodiesel Turbine

The U.S. Department of Agriculture has guaranteed a $110 million loan for a Hawaiian utility cooperative that has biodiesel as part of its power generation efforts.

BusinessWeek reports the Kauai Island Utility Cooperative received the federal guarantee:

[T]he guarantee includes nearly $73 million for hydroelectric plant improvements and a 10-megawatt naphtha/biodiesel fueled combustion turbine.

[Hawaii’s Sen. Daniel] Inouye says the funds will help Kauai further harness the power of water and biofuel as part of the effort to lessen Kauai County’s dependence on imported fossil fuels.

[Sen. Daniel] Akaka says the homegrown energy sources keep dollars in Hawaii while reducing air, land and water pollution.

New USDA Reports Find Less Corn, More Ethanol

usdaThe latest reports from the U.S. Department of Agriculture are lowering the forecast for this year’s corn crop, but raising the expected use of corn for ethanol.

Corn production is now forecast at 12.5 billion bushels, down 1 percent from the October forecast and down 4 percent from last year’s record production of 13.1 billion bushels. The reason for the decrease is lower than expected yields, especially in key producing states like Missouri and Nebraska. Record high yields are still forecast for several states including Minnesota and Wisconsin.

On the supply-demand side, USDA increased corn use for ethanol in the coming year by 100 million bushels, citing record October ethanol production and favorable ethanol producer margins. “Ethanol prices continue to track higher with corn prices, supporting returns for ethanol producers. Although small relative to domestic usage, higher ethanol exports and lower imports are also expected to add to corn use for ethanol with high sugar prices limiting the availability of ethanol from Brazil.” Corn ending stocks were lowered by 75 million bushels and exports were lowered by 50 million.

USDA Looks Into Pennycress for Biodiesel

The USDA is looking into turning a common weed into biodiesel.

Researchers with the Agricultural Research Service (ARS) have found that field pennycress, better known in some circles as stinkweed, puts out a large amount of oilseeds good for making the green fuel:

Field pennycress belongs to the Brassicaceae family, along with canola, camelina and mustard-other prolific producers of oil-rich seeds. The ARS studies help support USDA’s efforts to develop new sources of bioenergy.

At the ARS National Center for Agricultural Utilization Research in Peoria, Ill., chemists Bryan Moser, Gerhard Knothe and Terry Isbell and plant physiologist Steven Vaughn formed a team to study field pennycress’ potential.

The scientists obtained oil from wild field pennycress, pretreated it with acid, and used a type of alcohol called methanol to react with the field pennycress oil to produce both biodiesel and glycerol. After some additional refining, the finished biodiesel was tested to see if it met the biodiesel fuel standard established by the American Society for Testing and Materials. The results suggested that, with some work, the previously problematic pennycress could become a commercial commodity.

The ARS goes on to say that pennycress oil is attractive for biodiesel because of its low cloud and pour points, 14 degrees Fahrenheit for clouding and for pour, well below the cloud and pour points of soybean oil-based biodiesel. In addition, pennycress can be grown in the winter and harvested in the late spring, allowing farmers to still have a summer soybean rotation.

Vilsack Tours Georgia Ethanol Plant

vilsackFollowing up on the biofuels initiatives that he announced last week, Agriculture Secretary Tom Vilsack visited First United Ethanol, LLC (FUEL) located in Mitchell County, Georgia on Monday to highlight the importance of ethanol production in all parts of the nation.

“The southeast is poised to really assist us in creating new biorefineries with a wide variety of feedstocks that can be grown in this part of the country,” said Vilsack.

“It’s a very timely visit,” said FUEL CEO Murray Campbell of Vilsack coming so soon after he announced important biofuels initiatives at the National Press Club. “Our business model and the jobs that have been created in southwest Georgia follow along in the outlines of that speech. It’s very important that these biofuel refineries be scattered around the country.”

vilsackFUEL is a 100 million gallon per year corn-based ethanol plant with 860 mostly rural investors from the local Georgia-Florida area. “Most of the ethanol plants in the Midwest are ‘rubber in and rail out’ and we’re sort of ‘rail in and rubber out,'” Campbell says. While most of their corn comes in by rail from the Midwest, they are starting to buy more local corn as farmers in the agricultural area surrounding the plant are starting to put more corn back in their crop rotation with peanuts and cotton.

Vilsack was joined during his visit by Congressman Sanford Bishop (D-GA), who is the representative for the district where FUEL is located. “He and all of our whole delegation from Georgia have supported us all through our creation here,” said Campbell.

Pictured here are Campbell, with Congressman Bishop, Secretary Vilsack and FUEL Chairman Tommy Dollar.

Listen to or download an interview here with Murray Campbell. Murray Campbell Interview

Vilsack Defends Ethanol in WSJ Letter

vilsackIn a letter to the editor of the Wall Street Journal published Monday, Agriculture Secretary Tom Vilsack responded to an editorial last week criticizing EPA’s decision to allow higher blends of ethanol in our fuel as politically motivated.

Defending and clarifying the EPA ruling, Vilsack wrote, “The EPA’s decision to allow the increased use of ethanol in some automobiles is scientifically sound and follows a comprehensive review of extensive testing and other available data on E15’s impact on engine durability and emissions. What’s more, it will help ensure that the existing corn ethanol market acts as a successful stepping stone to a national biofuels industry that is creating jobs in every corner of the country using regionally appropriate feedstocks grown by American producers.”

The Secretary also addressed the criticism of subsidies for biofuels, noting that “the petroleum industry receives billions of dollars in tax breaks each year from the federal government.”

Vilsack to Visit Georgia Ethanol Plant

First United Ethanol of Georgia, better known as FUEL, will host U.S. Secretary of Agriculture Tom Vilsack on Monday, October 25th. Secretary Vilsack will be accompanied by U.S. Representative Sanford Bishop and U.S. Representative Jim Marshall.

“We are very excited about this opportunity to speak face to face with one of the most important policy makers in America. We look forward to discussing key issues that we as a company and the entire industry are facing, “ said Murray Campbell, CEO of FUEL.

Secretary Vilsack’s visit to the 100 million gallon per year ethanol plant located in Southwest Georgia coincides with his announcement on biofuels initiatives yesterday at the National Press Club in Washington, D.C. He discussed the need for a strong, vibrant rural economy, and biofuels role in making that a reality. “We can do better. We have to do better. Rural America is where we will do better,” said Vilsack.

“Secretary Vilsack’s visit to First United Ethanol in Georgia signifies that the administration understands that ethanol production is about more than just square states in the corn belt,” said Matt Hartwig with the Renewable Fuels Association. “It’s about economic opportunity and environmental stewardship in all parts of the country, including the southeast.”

First United Ethanol, LLC began production in October 2008. It is owned by over 860 investors with the majority living in rural Georgia and Florida.

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.