Ag Chief: Biodiesel Driving, Revitalizing Rural Economy

U.S. Secretary of Agriculture Tom Vilsack traveled back to Iowa today, praising biodiesel in his home state for driving and revitalizing rural America’s economy. In remarks during a meeting with Iowa biodiesel and farm industry representatives at the Soy Energy biodiesel production facility in Mason City, the USDA chief pointed to the green fuel as a demonstration of farmers bouncing back, according to this Iowa Biodiesel Board news release.

“This is the resilient face of agriculture we see here today,” Vilsack said, flanked by Soy Energy plant workers. “Biodiesel plants like this one are getting America back in the business of manufacturing. They are creating jobs and revitalizing the rural economy.”

The Iowa Biodiesel Board thanked the Secretary for his remarks and for his steadfast support of biodiesel.

“Iowa’s leadership in renewable energy production shows what we as a nation are capable of in building energy security and green jobs, and we’re equipped to do even more,” said Randy Olson, executive director of the Iowa Biodiesel Board.

Those meeting with Vilsack pressed for more gallons of biodiesel under the Renewable Fuel Standard-2 (RFS-2). The EPA wants to go from 1 billion gallons this year to 1.28 billion gallons in 2013, what the Iowa biodiesel industry sees as a modest increase from last year’s record nearly 1.1 billion gallons of production.

The Iowa Biodiesel Board points out that Soy Energy, LLC is a “multi-feedstock” plant, capable of producing biodiesel from many different fats and vegetable oils, including corn oil left over from ethanol production.

Biofuels Play Major Role in Great Green Fleet Exercise

Biofuels are playing a significant role in the biggest maritime exercise in the world. About 450,000 gallons of biofuels made from non-food stocks have been used to fuel the ships and aircraft, known as the “Great Green Fleet,” taking part in the U.S. Navy’s and allied nation’s Rim of the Pacific Exercise (RIMPAC).

“Yesterday, off the coast of Hawaii, was a great day for the Navy and a great day for America. It marked some serious steps to take us on the road toward energy security and energy independence,” says Secretary of the Navy Ray Mabus. He notes advanced biofuels were seamlessly integrated into the operations, which included typical fighter jet flying and refuelings and ship-to-ship underway refuelings. “Absolutely no modifications were required or made to any of the engines that were burning biofuels.”

Secretary of Agriculture Tom Vilsack echoes those sentiments in this demonstration of U.S. military might and leadership. “It’s not just leadership to make us more secure from a national security or energy security standpoint. It’s also leadership for economic opportunities in rural areas.” Vilsack adds this use of American-made biofuels plays right into the bio-based economy, providing 400,000 jobs in the U.S., expected to go even higher when the full Renewable Fuels Standard is met.

Deputy Assistant to the President for Energy and Climate Change Heather Zichal adds that this use of biofuels demonstrates to the world that the U.S. Navy is leading the way. “[The Navy] is sending a clear message that we cannot keep doing what we have done in the past. We cannot be timid about embracing new forms of energy, like biofuels, that have the potential to strengthen our energy security and reduce the military’s dependence on oil.”

Listen to the full press conference here: Press Conference on use of biofuels during RIMPAC

Ag Secretary Says RFS Okay with Ethanol Stocks

Agriculture Secretary Tom Vilsack held a sobering press briefing Wednesday after meeting with President Obama about the impact of the nation’s drought on agricultural production.

Vilsack says the drought is “most serious situation we’ve had in 25 years” with 61% of the land mass of the United States is currently characterized as being impacted. About one third of the counties in the United States are now designated as secretarial disaster areas and that is expected to grow higher. “This obviously will have an impact on the yields,” he said.

When asked if the drought impact on corn should prompt action by the Environmental Protection Agency to roll back the use of corn for ethanol under the Renewable Fuel Standard, Vilsack said, “There is no need to go to the EPA at this time based on the quantity of ethanol that is in storage.”

The latest Energy Information Administration data from last week showed another drop in ethanol production from the previous week bringing the average weekly rate down to 841,000 barrels per day for an annualized rate of 12.89 billion gallons. Stocks of ethanol now stand at 19.6 million barrels or about 824 million gallons.

USDA Cuts Corn Yields and Ethanol Use

As expected, the USDA World Agricultural Supply and Demand Estimate report out this morning did lower corn yields as a result of the hot and dry conditions throughout much of the growing region this summer.

The projected U.S. corn yield was lowered 20 bushels per acre to 146 bushels reflecting the rapid decline in crop conditions since early June and based on that and reduced harvested area based on the June 29 Acreage report, WASDE reduced corn production prospects by 1.8 billion bushels from last month. “Persistent and extreme June dryness across the central and eastern Corn Belt and extreme late June and early July heat from the central Plains to the Ohio River Valley have substantially lowered yield prospects across most of the major growing regions,” the report says.

Reduced supplies and higher prices are expected to sharply lower 2012/13 corn usage with the biggest reduction for feed and residual disappearance, projected down 650 million bushels. Food, seed, and industrial use is also projected lower, down 105 million bushels, mostly reflecting a 100-million-bushel reduction in corn used to produce ethanol. Exports are projected 300 million bushels lower as tight supplies, higher prices, and strong competition from South American exporters limit U.S. shipments. A 52-million-bushel increase in beginning stocks and a 15-million-bushel increase in imports offset only a small portion of the expected reduction in this year’s crop. Ending stocks for 2012/13 are projected at 1.2 billion bushels, down 698 million from last month’s projection. The season average 2012/13 farm price for corn is projected at $5.40 to $6.40 per bushel, up sharply from $4.20 to $5.00 per bushel in June.

Biofuels Defense Investments Announced

The Obama administration today announced new investments in the biofuels industry as part of the Defense Production Act (DPA).

The U.S. Department of Agriculture (USDA), Navy and Department of Energy jointly announced $30 million in federal funding to match private investments in commercial-scale advanced drop-in biofuels. The Energy Department is also announcing a total of $32 million in new investments for earlier stage research that will continue to drive technological breakthroughs and additional cost reductions in the industry.

“This is an important next step in the President’s direction to Navy, Agriculture and Energy to work together to support the commercialization of ready-to-use, drop-in, advanced biofuel substitutes for diesel fuel and jet fuel,” said U.S. Secretary of the Navy Ray Mabus. “This funding opportunity will enhance our national security and support the creation and commercial-viability of a defense-critical industry – domestic biofuels.”

Mabus explained that the DPA is an authority specifically designed to support defense-critical domestic industries, which includes energy. “Every time the price of oil goes up $1 a barrel, it costs the Navy an additional $30 million in fuel costs,” he added. “We don’t want to trade readiness for fuel. Diversity of supply is one of the keys to energy independence and energy security.”

“This is a matter of national security, energy security and also good for rural America,” said Agriculture Secretary Tom Vilsack. “It opens up great promise for the development of non-food feedstocks as a potential cash crop for farmers throughout the United States. The refineries that will be converting this biomass into fuel will likely be located in rural areas, helping to create jobs.”

The Funding Opportunity Announcement (FOA) made possible through the DPA, will be carried out in two-phases, with government and industry sharing in the cost. In Phase 1, applicants will submit a design package and comprehensive business plan for a commercial-scale biorefinery, identify and secure project sites and take additional required steps spelled out in the announcement. Awardees selected to continue into Phase 2 will submit additional information for the construction or retrofit of a biorefinery.

Listen to a portion of this morning’s press announcement with Mabus and Vilsack:
Administration Press Conference

USDA, GE Combine Efforts for Biofuels for Jets in Ohio

The USDA and General Electric are a couple of the key collaborators on a biofuels for jets program at GE Aviation’s Cincinnati-area facilities. During remarks at an event today, Secretary of Agriculture Tom Vilsack highlighted the work, along with the Ohio Aerospace Institute, air carriers and producer groups, to develop a Midwest-regional strategy to provide renewable-jet fuel in Ohio:

“We have an incredible opportunity to create thousands of new jobs and drive economic development in rural communities across America by developing innovative ways to use agricultural products to help reduce our reliance on foreign oil,” said Vilsack. “USDA’s collaboration with General Electric Aviation will bring together multiple sectors of Ohio’s economy, including agricultural producers, to foster new innovations in the field of renewable fuels while bolstering new economic opportunities in the Midwest. USDA is proud to work alongside private and public institutions to support the research, creation and distribution of next generation energy solutions.”

USDA is also working with the Ohio Soybean Council by awarding the group a Value Added Producer Grant for a pilot project through Ohio State University’s Bioproducts Innovation Center to refine bio-jet fuel from soybean oil, as well as the Farm Service Agency working with producers in northeastern Ohio and northwestern Pennsylvania through the agency’s Biomass Crop Assistance Program (BCAP). Other efforts include working with the Department of Energy (DOE), Department of the Navy and the Federal Aviation Administration for renewable fuels.

GE Aviation expects to buy up to 5 million gallons of renewable-jet fuel beginning in 2015.

USDA Funds Rural Energy Projects

Agriculture Secretary Tom Vilsack today announced that USDA has selected for funding 450 projects focused on helping agricultural producers and rural small businesses reduce energy consumption and costs; use renewable energy technologies in their operation; and/or conduct feasibility studies for renewable energy projects. Funding is made available through the Rural Energy for America Program (REAP) under the 2008 Farm Bill.

Vilsack says the REAP program has helped fund over 6,000 projects over the last three years. “Over 4300 energy efficiency projects, over 1000 solar energy projects, 325 wind projects, 52 anaerobic digesters, 24 biofuel and biodiesel projects, 162 geothermal projects and 22 hybrid projects,” said the secretary.

The REAP funding announced today includes projects that incorporate solar, wind, biomass, geothermal and hydropower, as well as biodiesel and ethanol. There are a couple of projects that will fund blender pumps that might help get sales of 15% ethanol moving now that EPA has given final approval to allow that fuel in the marketplace. Blender pump grants were awarded in Georgia and Missouri.

9,000 Acres to be Dedicated to Non-Food Energy Crops

An additional 9,000 acres in New York and North Carolina, and the expansion of an area in Arkansas, is being set aside as part of the Biomass Crop Assistance Program (BCAP) project. USDA announced $9.6 million will be spent to fund this latest effort to use more non-food crops for the production of biofuels, such as biodiesel and ethanol:

“Increasing the production of renewable, home-grown fuels is vital to reducing our country’s reliance on foreign oil, while creating good-paying jobs and diversifying the agriculture economy,” said [Agriculture Secretary Tom] Vilsack. “These projects are the foundation for an even stronger energy future in rural America. Because most energy crops are perennial and take time to mature before harvest, BCAP is designed so that sufficient quantities of feedstock will be available to meet future demand. Most importantly: these crops can grow where other crops cannot, providing farmers with new opportunities to diversify into more markets.”

In North Carolina, 4,000 acres is being put into Freedom® Giant Miscanthus and switch grass to support Chemtex International Inc.’s Project Alpha, a cellulosic biorefinery expected to produce 20 million gallons of ethanol and sustainable chemicals. Upstate New York will be seeing up to 3,500 acres in fast growing shrub willow to generate more than 100 megawatts of electricity for ReEnergy Holdings LLC. Finally, BCAP Project Area 2 in northeast Arkansas is expanding its enrollment up to nearly 8,000 acres of Giant Miscanthus, sponsored Missouri-based MFA Oil Biomass.

Under BCAP, producers get reimbursed up to 75 percent of what it costs to establish these perennial energy crops, plus five years of maintenance payments for herbaceous crops and up to 11 years for woody crops.

USDA officials point out that this program helps the Renewable Fuels Standard, which calls for 20 billion gallons more in just 10 years of non-corn based biofuels.

USDA Increases Ethanol Usage Number

The latest World Agricultural Supply and Demand Estimates (WASDE) are bumping up the use of corn for ethanol in the 2011-12 marketing year.

According to the June 12 report, the 50 million bushels adjustment upward to corn usage for 2011/12 reflects the latest ethanol production and trade data. “Weekly ethanol production has increased since mid-April after gradually declining from the record levels of late December,” the report states. “The higher corn use projection assumes slightly lower ethanol production during the June-August quarter as compared with the same period last year.” The total for 2011-2012 now stands at 5.05 billion bushels, higher than the 5.021 of the previous year and the projected 5.0 billion for 2012-13.

The most recent Energy Information Administration data for ethanol production, the week ending June 1, showed an average of 904,000 barrels, or 37.97 million gallons, per day. For the month of May, the four week average for ethanol production was 907,000 barrels per day, which could bring the total for the year very close to 14 billion gallons if that pace continues.

Vote to Cut Military Biofuels Disappoints Ag Secretary

Secretary of Agriculture Tom Vilsack is “disappointed” in recent Congressional action that would cut the use of biofuels by the military.

hawaii“We are extremely disappointed in that vote because I think it fails to recognize and appreciate the enormous potential of this industry to revitalize the rural economy,” said Vilsack during a conference call today when asked specifically about a vote last week by the Senate Armed Services Committee that would prohibit the military from spending money on alternative fuels. “I certainly hope that as this process continues folks will understand the negative impact such a vote has on rural America and will decide that the Navy, USDA and Department of Energy are on the right track to produce these new fuels.” The House Armed Services committee is considering a similar amendment to the defense spending bill.

Vilsack, pictured here during a visit to Pearl Harbor earlier this year to talk about military use of biofuels, said it is the right policy for the country. “People have got to understand we should not be so overly reliant on others for the supply of fuel,” he said, noting that commercial airlines are also very interested in the development of aviation biofuels.

The secretary indicated that he believes the oil industry is behind the movement in Congress to keep the military from using alternative fuels, just as oil interests are working to get rid of the Renewable Fuel Standard. “Because it is becoming a competitive alternative, and that is a good thing,” he said.

Listen to Vilsack’s comments here: Vilsack press conference questions

Novozymes Nebraska Enzyme Plant Opens

Advanced biofuels took a $200 million step forward on the march toward commercialization Wednesday with the official opening of Novozymes’ enzyme plant in Blair, Nebraska.

The inauguration of Novozymes’ new Blair facility was celebrated with employees, customers, community leaders and government officials, including the governor of Nebraska, Dave Heineman, U.S. Department of Energy Senior Advisor Jason Walsh and Blair Mayor James Realph. The governor and the mayor together ceremonially started the fermentation process at the plant. “The grand opening of Novozymes is important for the ethanol industry and for energy independence,” said Governor Dave Heineman. “Nebraska is one of the top producers of ethanol in America, which makes our state the perfect site for this facility.”

With the 100 new jobs created by the plant opening, Agriculture Secretary Tom Vilsack highlighted the importance of expanding tax credits for investments in clean energy manufacturing for the economy during a conference call today with Novozymes President Adam Monroe. Novozymes leveraged its $200 million private investment in the Blair facility with a 48C manufacturing tax credit from the federal government.

“This program (48C) along with several other tax credits really create the opportunity for a clean energy future with three very important results,” said Vilsack. Those results, he says, include increasing farm income, creating jobs, and reducing reliance on foreign oil.

Monroe says biofuels currently make up 16% of Novozyme’s $2 billion in revenues. “We’ve done a number of research projects funded by DOE and have reduced the cost of the key enzymes needed for advanced biofuels production by 90%,” he said. “Now it’s about getting steel in the ground and moving ahead. We wanted to be ready when this industry commercialized and now we are.”

Listen to comments from Secretary Vilsack and Adam Monroe here: Vilsack/Monroe press conference

Sustainable Aviation Biofuels Initiative Launched

Aviation and clean technology leaders have joined together to launch the Midwest Aviation Sustainable Biofuels Initiative (MASBI).

United Airlines, Boeing, Honeywell, the Chicago Department of Aviation and the Clean Energy Trust formed the initiative with the goal of advancing aviation biofuel development in a 12-state region of the central United States. MASBI will deliver “a comprehensive evaluation of the region’s biofuel potential and a plan to support regional and national needs in a responsible manner.” MASBI’s Advisory Council will include national leaders in advanced biofuels, such as the U.S. Department of Agriculture, U.S. Department of the Navy, other Federal agencies, non-governmental organizations and academic institutions.

“In just a few short years, aviation biofuels have developed from a hopeful vision of the future to an exciting reality of more than 1,500 passenger flights flown with advanced biofuels,” said Jimmy Samartzis, managing director of Global Environmental Affairs and Sustainability for United. “Our industry is committed to advancing sustainable biofuels, and United is proud to launch MASBI with our partners to define appropriate solutions to make alternative fuel available at commercial scale, unlock the Midwest’s economic potential for advanced biofuels and secure a sustainable future for aviation.”

MASBI Steering Committee members believe their efforts in promoting sustainable fuel supplies ultimately will spur economic growth, create jobs and promote energy security.

Ethanol Report Analyzes USDA Corn Numbers

Ethanol Report PodcastThe first guess of corn production for the new year in USDA’s May 10 World Agricultural Supply and Demand Estimates report is even higher than many in the industry expected.

“By all accounts, it could be a monster,” says Renewable Fuels Association (RFA) Vice President of Research and Analysis Geoff Cooper who did an analysis of the numbers that came out this morning.

rfaBesides a record projected corn crop for 2012 of 14.8 billion bushels, Cooper says there are a number of interesting points to be made about the report, like the fact that use for ethanol is expected to remain steady, while usage for exports and animal feed are increased. “This report shows the increases in demand would not be coming from ethanol,” Cooper says. “So all this rhetoric we hear about ethanol diverting corn away from the feed market, what we’re seeing in this report is that isn’t the case.”

In addition, Cooper says adding in the use of the ethanol co-product distillers grains for livestock feed, “you end up with the equivalent of almost seven billion bushels of corn and co-products going into feed use and that’s an all time record.”

Listen to Cooper’s analysis of the numbers in this edition of “The Ethanol Report.” Geoff Cooper Analyzes USDA WASDE Report

USDA Offers Optimistic Outlook for Corn Crop

The first U.S. Department of Agriculture outlook for this year’s corn crop is calling for record yields and record production, while corn use for ethanol is expected to remain the same.

The May 10 World Agricultural Supply and Demand Estimates report projects U.S. feed grain supplies for 2012/13 at a record 416.3 million tons, up 16 percent from 2011/12 at a record 416.3 million tons, with corn production called at a record 14.8 billion bushels, up 2.4 billion from 2011/12.

A projected 5.1-million acre increase in harvested area and higher expected yields, compared with 2011/12, sharply boost production prospects. The 2012/13 corn yield is projected at a record 166.0 bushels per acre, 2.0 bushels above the 1990-2010 trend reflecting the rapid pace of planting and emergence. Despite the lowest expected carry-in in 16 years, corn supplies for 2012/13 are projected at a record 15.7 billion bushels, up 2.2 billion from 2011/12. Total U.S. corn use for 2012/13 is projected up 9 percent from 2011/12 on higher feed and residual disappearance, increased use for sweeteners and starch, and larger exports.

The report kept projected corn use for ethanol unchanged at 5 billion bushels for this year on weak gasoline consumption limiting domestic blending opportunities. In an analysis of the report this morning, the Renewable Fuels Association said, “While still just an estimate, the confidence USDA is displaying in American farmers underscores their unique ability to feed the world and help renewably fuel the nation. There is a lot of growing season left, and these numbers could change by the fall. But, with normal growing conditions it is clear that farmers will continue to meet the bell and provide safe, reliable food and clean, domestic fuel and silence those ‘chicken littles’ that perpetually predict a shortage of corn and catastrophe in the grocery aisle.”

Ethanol Blend Wall Still There

The ethanol blend wall is still a reality for the industry, according to the chief economist with the U.S. Department of Agriculture.

“For the time being, I think we are at a blend wall and it’s a pretty hard wall,” said USDA’s Joe Glauber during a recent gathering of farm broadcasters in Washington DC. Glauber says the general feeling now is that the blend wall is about 13.5 billion gallons. “What gets produced in excess of that has to go out through the export market,” he said. “Last year we had a spectacular year, exporting more than a billion gallons, but most people think that won’t happen this year.” He expects Brazil in particular will not import as much ethanol this year.

While the industry is moving steadily toward the 15 billion gallon corn ethanol cap under the Renewable Fuel Standard (RFS2), Glauber says right now the market is steady at about 10 percent of ethanol blended fuel and getting E15 in the marketplace is moving slowly toward reality. “But you still have the underlying economics of whether or not a gas station is going to change over equipment to be able to sell E15,” he said. “The likely thing would be so-called blender pumps, which are expensive propositions.”

The expense of putting in blender pumps for stations can be offset by numerous federal, state and industry programs that offer grants and incentives to stations, but the oil companies are still putting up walls to discourage station owners from doing so. Last week, the American Petroleum Institute (API) proclaimed that EPA approval of E15 poses “serious safety and environmental concerns for consumers” because “an estimated half of all gasoline station equipment is not compatible with E15.”

Listen to Glauber’s comments here: USDA Chief Economist Joe Glauber

While there are some legitimate concerns with infrastructure, the industry is actively working with all stakeholders to address any safety issues regarding E15. “The nation didn’t have the infrastructure in place for a transcontinental railroad, but that didn’t stop us from moving forward because it was in the best interest of the nation. The same is true with America’s fueling infrastructure,” said Matt Hartwig with the Renewable Fuels Association (RFA). “Because some upgrades may be needed is no reason to accept the status quo as the best we can do.”

RFA has a website dedicated to E15 information (www.E15fuel.org), a misfueling mitigation plan to help retailers avoid confusion, and an E15 Retailer Handbook for gas station owners seeking to offer E15.