Domestic Fuel

New York City is trying to clean up the emissions from the city’s burning of heating oil, and biodiesel is part of the plan for the Big Apple to go greener.

New York Mayor Michael Bloomberg and City Council Speaker Quinn that they have agreed on legislation to cut allowable sulfur levels for No. 4 heating oil in half. This press release from the Environmental Defense Fund says this bill will also work with current state law that tries to cut the pollution levels from the 9,500 buildings in New York City, which burn the dirtiest of diesel fuel grades and put out more pollution than all cars and trucks on the city’s streets combined:

“This landmark legislation shows that the mayor, the speaker and city council members care deeply about New Yorkers breathing cleaner air and living a healthier life,” said Andy Darrell, New York regional director and deputy director of Environmental Defense Fund’s national energy program, and a member of New York Mayor Bloomberg’s Sustainability Advisory Board…

This new law also require that all heating oil contains 2% biodiesel, resulting in about 20 million gallons of biodiesel replacing petroleum heating oil. EDF hopes that this law will help stimulate the local waste vegetable oil market and that more restaurants will have their cooking grease turned into biodiesel. From an environmental perspective, it’s best to use the local restaurant grease right here in New York City, rather than shipping it to landfills or even worse, pouring it down the drain illegally, which does tremendous damage to sewage treatment plants.

With the climate bill in flux in the Senate, there are new concerns surfacing that climate legislation is dead in the water, stalling political efforts to revive the economy though the development of clean tech jobs. In response, Senate Majority Leader Harry Reid (D-NV) responded last week by proposing a new piece of limited energy legislation that would limit offshore drilling, raise the liability caps for oil companies and support the growth of green jobs. The green jobs would come as a result of energy efficiency measures but the bill does not appear to support a Renewable Electricity Standard (RES).

Reid has been attempting to get some sort of jobs bill passed for months. Earlier this year, he presented an Unemployment Jobs Extension Bill that included a one-year extension of the biodiesel tax credit. Reid stripped the biodiesel tax credit from the bill and ultimately, the bill did not pass.

The apparent tie-in of the oil spill and energy bill is that many gulf oil workers are out of work. Reid believes that an energy bill will help put people around the country back to work. The Department of Energy estimates that if a 20 percent renewable electricity standard were put into place, 3,000-4,000 new jobs would be created in most states. Yet supporters of clean jobs are arguing that these clean jobs are not being created fast enough and an energy bill with an RES could be the ticket, although it doesn’t appear Reid’s bill be the ticket needed for admission.

But on the flip side, the oil and gas industry is fighting this bill tooth and nail saying that green jobs will not make up for the large number of displaced oil and gas workers. Offshore drilling needs to continue.
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The nation’s major fuel marketing associations are advocating legislation that will help them sell higher blends of renewable fuels, including ethanol and biodiesel greater than E10 or B5.

NACS – the Association for Convenience and Petroleum Retailing, along with NATSO (representing America’s Travel Plazas and Truckstops), Petroleum Marketers Association of America (PMAA), and Society of Independent Gasoline Marketers of America (SIGMA) have joined the Renewable Fuels Association (RFA) in supporting the Renewable Fuels Marketing Act of 2010 (HR 5778), which was introduced yesterday by U.S. Representatives Mike Ross (D-AR) and John Shimkus (R-IL).

According to NACS, “the bill will enable retailers to have existing equipment evaluated and legally approved to sell new renewable fuels and will expedite the approval of new equipment. It also will protect retailers from Clean Air Act violations and liability associated with self-service consumers fueling unapproved engines with higher blends of renewable fuels.”

On the RFA blog, communications director Matt Hartwig said the legislation will help provide for a “seamless transition” to E15, whenever it is approved by EPA, “accelerating the adoption of E15 and the needed expansion of the ethanol market.”

The groups collectively sent a letter to Reps. Ross and Shimkus thanking them for their leadership in introducing the bill.

Ethanol took the spotlight in a Senate Agriculture Committee hearing Wednesday on the Farm Bill’s energy and rural development programs.

Testimony at the hearing came from USDA Undersecretary for Rural Development Dallas Tonsager, Growth Energy Co-chairman General Wesley Clark, National Alliance of Forest Owners president Dave Tenny, and New York dairy producer Eric Zuber. The discussion ranged from increasing the blend rate for ethanol, meeting targets for advanced biofuels, ethanol tax incentives and tariffs, the use of forest biomass for energy production, and methane production from livestock waste.

Tonsager was questioned about the Biorefinery Loan Guarantee Program of the Farm Bill and why only two loan guarantees have been granted in two years. “We’ve had 17 applications for the program, of those 10 had to be rejected because they didn’t have lenders,” said Tonsager, which is a requirement of the project and he blames that on a holding back in the private sector. As to the rest, two have been approved and they are working on others.

When questioned by Senator John Thune (R-SD) about increasing ethanol blend rate to 15 percent and delays by the EPA to made a decision on the matter, Tonsager reiterated USDA’s support of the increase and Secretary Tom Vilsack’s advocacy for it. Tonsager also said that he believes federal forest lands have potential to provide biomass for energy production, supporting the definition of renewable biomass in the Farm Bill, something that Thune advocates. “We thought the Farm Bill struck the balance and would like to see that applied to the RFS,” said Thune.

Gen. Clark’s testimony before the committee on behalf of corn ethanol was passionate and emphatic, with his opening statement running more than twice as long as the five minutes allotted for each witness. “Today we do have a liquid fuel alternative to imported oil, and that alternative is ethanol,” said Clark, stressing that those imports cost $300 billion a year. “It’s $1000 per man, woman and child in America, every year, just so we can fill up our tanks with foreign oil.” Clark called corn-based ethanol an “incredible jewel of innovation” and expressed pride in the fact that it was developed here in the United States.

Listen to or download Clark’s opening testimony here: Wesley Clark Senate Testimony

Clark was questioned about the Growth Energy “Fueling Freedom” proposal announced last week that would phase out the blenders tax credit for ethanol and redirect those dollars toward increasing infrastructure like blender pumps. “It’s a concept, not a rigid proposal, with respect to timing,” Clark said, with regard to whether the idea should be implemented by the end of this year when the tax credit expires. He also said that the proposal should be tied to an energy bill. “If we can’t pass comprehensive energy legislation, we fully support the extension of current tax policies and the extension of the secondary tariff on foreign ethanol,” said Clark, “for five years, at the current rate.”

Environment Magazine has published new research today that finds that the greenhouse gas emissions derived from military use of oil is worse than previously thought. University of Nebraska professors, Adam Liska and Richard Perrin write in the article, Securing Foreign Oil: A Case for Including Military Operations in the Climate Change Impact of Fuels, “we assert that military activity to protect international oil trade is a direct production component for importing foreign oil—as necessary for imports as are pipelines and supertankers—and therefore the greenhouse gas (GHG) emissions from that military activity are relevant to U.S. fuel policies related to climate change.”

Other areas that may be considered tied to military production of GHG emissions are the global protection of oil reserves and Middle Eastern wars.

The authors note that as part of the Energy Independence and Security Act of 2007, specific GHG emission reductions must be met by biofuels including direct life cycle emissions as well as indirect emissions; however, in current legislation, only the direct GHG emissions are accounted for when calculating life cycle emissions of gasoline production. Therefore, the authors wanted to understand how military emissions affect the total amount of GHG emissions of gasoline. What they discovered is that direct spending on military activity and military acquisition of oil results in the release of nearly 289,000 tons of carbon dioxide per billion dollars spent.

To get a handle on the billions of dollars spent just on the Iraq War, the U.S. Congressional Research Service report estimated that the average annual cost of the Iraq War has been $93.5 billion.

Ultimately, the authors conclude, “In order to have a balanced assessment of the climate change impacts of substituting biofuels for gasoline, a comparison of all direct and indirect emissions from both types of fuel is required.”

Several ethanol organizations came out in support of the report today including Growth Energy who reiterated the environmental costs associated with our dependence on foreign oil and the Renewable Fuels Association who heralded the study as “groundbreaking”.

Senators Amy Klobuchar (D-MN) and Tim Johnson (D-SD) introduced legislation yesterday that “focuses on developing and deploying safe, reliable domestically grown and produced energy.”

According to the senators, the Securing America’s Future with Energy and Sustainable Technologies Act (SAFEST) establishes strong renewable energy and energy efficiency standards, incentives for developing biofuels and biofuel infrastructure, and targets for the availability of advanced vehicle technologies.

Specifically, the legislation would:

* Establish a strong renewable electricity standard of 25% renewable energy by 2025
* A strong energy efficiency resource standard (1 percent per year)
* A long-term extension of tax credits for ethanol and biodiesel
* New incentives for biofuels infrastructure and deployment
* Targets for the availability of advanced vehicle technologies

Ethanol organization Growth Energy praised the bill, which would provide incentives for blender pumps and pipelines, as well as flex fuel vehicles (FFVs). “Legislation that requires automakers to produce flex fuel vehicles and retailers to install blender pumps would provide more drivers with a choice of mid- and high-level ethanol blends and create thousands of good-paying green collar jobs that can’t be outsourced,” said Growth Energy CEO Tom Buis. He says the legislation also addresses the controversial concept of Indirect Land Use Change and provides equity by allowing all feedstocks that meet the 50 percent Green House Gas reduction requirements to qualify as an advanced biofuel.

Last year, after President Obama gave his speech about increasing the CAFE requirements – in an effort to save 1.8 billion barrels of oil over a 15-year period– a few ethanol advocates took their frustration to the streets and formed the E100 Ethanol Group.

Why? Because as Don Siefkes, Executive Director of the organization points out, “Twenty gallons of gasoline per barrel means 36 billion gallons of gas saved over 15 years or 2.4 billion gallons of gasoline per year. We use 140 billion gallons of gasoline per year so we would save only 1.7 percent of our gasoline usage and it is going to cost $25-$50 billion to achieve this meager savings. We felt it ridiculous to spend so much for so little and decided to form our group and see what we could do.”

Siefkes explained that to make the U.S. independent of imported oil, as well as avoid having to deep water drill, we need to cut our usage of gasoline by 50 percent down to 70 billion gallons per year. The organization has invested time in reaching out and discussing the issues with various ethanol organizations, everyday drivers and retail gasoline stations to encourage them to help make change. So while the ethanol industry focuses on getting the E15 Waiver approved, a short-term fix for a long-term problem, E100 Ethanol Group has decided to focus on E100.

“After 100′s of millions of dollars invested and 17 years of trying to convince consumers to buy E85, only 0.13 percent of the 10 billion gallons of fuel grade ethanol sold in the U.S. in 2009 went into E85,” said Siefkes. The other 99.87 percent went into 10 percent gasoline blends. This is in spite of the fact that we have 8 million E85 capable vehicles on the road and over 2,000 E85 stations. Why is this?”

According to Siefkes, it’s because E85 offers negative value to the consumer who has to fill up more often and sees a fuel economy loss. “There is no evidence that simply putting more E85 vehicles and stations out there is going to correct this problem,” he said.
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Yesterday, Indianapolis Colt tight-end Dallas Clark joined Tom Buis, CEO of Growth Energy and Gen. Wesley Clark, Co-Chairman of Growth Energy to tout the local economic benefits of Indiana’s ethanol industry. The presentation was given during the Indiana Ethanol Forum, an event that focused on the economic impact and importance of ethanol to the state as well as to the U.S. As part of their remarks, the group stressed the need for federal lawmakers to include support for domestic ethanol in any Congressional debate over clean energy and job creation.

“During this Independence Day recess, we are urging Congress to bring an energy bill to the floor that promotes America’s fuel,” said Tom Buis. “In these tight economic times when we are sending billions of dollars overseas to fund the economies of foreign countries, we need legislation that will keep that money right here in America. Domestic ethanol is the only commercially viable, renewable fuel that creates American jobs while cleaning our air and strengthening our economy and national security. Now, more than ever, ethanol must be at the heart of this debate in Congress.”

Clark continued by stating, “What we’re seeing in places like Indiana and elsewhere around the country is that people want to have a choice at the pump – and they want domestic ethanol to be one of those choices. The more domestic ethanol we produce, the less foreign oil we need. And every gallon of domestic ethanol creates U.S. jobs, cleans the air and strengthens our national security. Today we’re asking Congress to hear the people of Indiana and include provisions to level the playing field for domestic ethanol in the July energy debate.”

Prior to breaking for the July 4th holiday, Congressional leaders indicated they would take up legislation for energy and green jobs upon their return. Growth Energy believes there are several specific measures that should be included in the legislation that will build out infrastructure for biofuels including a flex-fuel vehicle mandate and federal support for the installation of blender pumps. Both of these initiatives would empower consumers with choices at the pump.

As the July 4th weekend kicks off, the American Coalition for Ethanol (ACE) is reminding everyone that energy independence can be achieved through choice at the pump.

To reinforce this message, ACE has confirmed that Anne Korin, author of “Turning Oil Into Salt: Independence Through Fuel Choice,” chair of the Set America Free Coalition and nationally sought after expert, will provide a keynote address on consumer choice at the pump, August 4th, during their national conference August 3-5 in Kansas City.

“We are so pleased that Anne Korin will be joining us for our national ethanol conference next month to share her expertise on how America can achieve energy independence,” said Brian Jennings, Executive Vice President of ACE.  “A key tactic outlined in her book is to break oil’s monopoly at the pump, thus breaking its status as a strategic commodity. Fuel choice is the answer, which is why we are fighting hard for the consumer’s right to access flexible fuel vehicles and blender pumps.”

According to ACE, the type of choice at the pump that would benefit consumers are blender pumps. These pumps offer consumers the choice to fill up with E10 or E85 or various mid-level blends such as E30 or E40. However, to use mid-level or higher blends of ethanol today, a consumer must own a flexible fuel vehicle (FFV) and there is currently pending legislation that would require all vehicles sold in the U.S. to be FFVs.

“Our nation’s fuel system is built around petroleum, and if there’s any hope of achieving energy independence, we must start building some flexibility into the fuel system,” Jennings said. “Flexible fuel vehicles and blender pumps will open up the fuel system to competition and allow the consumer to choose, instead of living under the decades-old mandate for 90 percent petroleum in every gallon of gasoline.”

Discounted registration is available for attendees through July 23. Click here for online registration. To learn more about other topics and speakers at this year’s event, click here.

Increasing consumer fuel choice and solving the “chicken and the egg” challenge to energy independence are the goals of two bills introduced this week in the U.S. House of Representatives.

On Wednesday, Rep. Stephanie Herseth Sandlin (D-SD) introduced the Consumer Vehicle Choice Act of 2010 (H.R. 5633) and the Consumer Fuels Choice Act of 2010 (H.R.5632). The first would mandate that auto manufacturers provide consumers with greater choice of flex fueled vehicles (FFVs). Under this legislation, 50 percent of cars and light duty trucks in model years 2011 and 2012 must be FFVs, and that percentage rises to 90 percent in model year 2013 and years after. The second bill would promote ethanol use through grants for the installation of blender pumps. The bills are co-sponsored by Rep. Adrian Smith (R-NE).

“Americans need more choices at the pump, and those choices can begin with the cars and trucks they drive. By requiring that auto manufacturers produce vehicles that give Americans greater choice of fuels, we will help reduce costs for consumers and bring the nation closer to energy independence,” said Herseth Sandlin.

Ethanol groups applauded the introduced of the bills as the right formula for lessening our dependence on fossil fuels.

“To finally break the hold that petroleum has at the pump, we must start introducing flexibility into the nation’s fuel system,” said Brian Jennings, Executive Vice President of the American Coalition for Ethanol (ACE). “The smartest action we can take to move toward energy independence is to introduce flexibility into the fuel
system, and this can be done best through a combination of blender pumps and flexible fuel vehicles.”

“Expanding America’s use of ethanol requires pumps to dispense the fuel and vehicles to use it,” said Renewable Fuels Association (RFA) President and CEO Bob Dinneen. “Congresswoman Herseth Sandlin has introduced common sense legislation that addresses both needs. America’s ethanol producers can supply the fuel. What is needed is Congressional and Obama Administration support to bring it to consumers. This legislation goes a long way toward achieving that goal.”

Growth Energy CEO Tom Buis added, “Each additional Flex Fuel Vehicle model gives consumers the option of filling up with domestic, homegrown renewable fuel and enhances our national security, all while creating U.S. jobs that can’t be outsourced.”

The bill that would renew the $1-a-gallon federal biodiesel tax incentive could pass right… if Democrats would just fund the entire bill. That’s according to a key Republican senator trying to renew the tax break.

This article from the Minnesota Independent says U.S. Sen. Charles Grassley (R-Iowa) believes the jobs bill, which has an extension of unemployment benefits that is weighing down the entire measure, could pass with the right funding:

“Ninety percent of the bill isn’t controversial,” Grassley said, concluding that the big problem is that he and many other lawmakers don’t want to add to the federal deficit. He chided Democrats for refusing to fully pay for the legislation with offsetting savings, revenue increases or using the money left in the federal stimulus.

“It wasn’t just Republicans who voted against the bill in the U.S. House,” he said. “There were plenty of Blue Dog Democrats who don’t agree with this type of spending either.”

Grassley pointed out that he Sen. Max Baucus (D-Mont.) put together a fully funded unemployment and biodiesel package back in February that would have easily passed… until Senate Majority Leader Harry Reid killed the measure.

It’s hard to believe that the 23rd Ethanol Conference and Trade Show is just around the corner. This year’s event will be held in Kansas City on August 3-5th and there is a lot of excitement surrounding the conference. To get an update on what attendees will be able to learn during the event, I sat down with Brian Jennings, the Executive Vice President for the American Coalition for Ethanol (ACE).

Jennings told me that they are really going to focus on a lot of the key issues that are so critical to the industry today. He also mentioned that they would also be talking about some of the things they’re doing on blender pumps.

However, on the policy side, Jennings explained that the ethanol tax credit, VETC, is set to expire at the end of this year as is the ethanol tariff if Congress fails to act. There will be sessions dedicated to discussing the benefits of both pieces of policy and they hope to have several current or aspiring legislators on hand to give an update on where they are at.

“There is bi-partisan legislation today in both houses of Congress that would extend both for five years,” said Jennings. “And that’s what we’re working to support and we’re doing that in conjunction with both groups.” Jennings continued to explain that Congress is going to have an opportunity to tackle that in a couple of different ways. In the Senate, Jennings believes, we’ll see this as an energy bill, likely to work its way through in July.

The conference will also feature break-out sessions dedicated to answering some key questions for ethanol producers such as the tailoring rule coming out from the EPA on greenhouse gases as well as learn about some new programs for ethanol producers that were passed as part of the Farm Bill.

They will also spend some time discussing the implications of the gulf spill. “We’re not going to attack the oil companies by doing so, but I think it’s critically important for people to get a good grasp of what the costs associated with our addiction to oil are,” said Jennings. He continued by saying these costs go beyond what consumers pay at the pump and stressed that we do have alternatives to oil today.

Registration is currently open and you can register online here. In addition, you can get more in-depth information about the conference by listening to my full interview with Brian. Brian Jennings Interview

There are many key priorities for the ethanol industry right now and so I spent some time with Growth Energy’s CEO, Tom Buis to learn more about the political priorities the association is currently working on. Buis began by explaining that a lot depends on what actions Congress will take on the energy front. He mentioned that our country has recently come off the highest gas prices in 2008 the country has ever witnessed and that Congress has taken no steps to address this problem. “We feel they need to address the fuel issues,” said Buis.

There are many elements involved in addressing fuel issues and here are some of Growth Energy’s top priorities.

1. 1) Our country needs to mandate flex-fuel vehicles and blender pumps at every gas station across the country.
2. 2) On the market access side, they want to see an ethanol pipeline built. This will lower transportation costs, lower the industry’s carbon footprint and ultimately help consumers save more money at the pump.
3. 3) The association would like to see some previous legislation re-visited specifically as part of the 2007 Energy Bill. First, they want to see indirect land use change removed. Second, they would like to see the corn discrimination clause reviewed. This clause states that under no circumstance can corn (or starch-based) ethanol, ever be considered an advanced fuel.
4. 4) VETC, or the blender’s credit, is set to expire soon and Buis noted that they would like to see this extended for multiple years.
5. 5) The ethanol tariff is under review. The sets a “fee” on ethanol imported from other countries that offsets the blender’s tax credit. It is designed, explained, Buis, to keep American’s from subsidizing foreign ethanol.

There are several more issues that the association is working on and you can learn about them by listening to the full interview with Tom, who is joined by Steve McNich, the CEO of Western Plains Energy in Oakley, Kansas.

Podcast: Play in new window | Download (3.3MB)

CleanFUEL USA has recently announced that it has added a new propane fuel dispensing product to its infrastructure equipment line. The CFT PRO 2100 is less costly than bottle filling dispensing units and offers several unique features including a stainless steel cabinet, improved hydraulics and an electronic dispensing computer. The new dispenser is currently available and will be integrated into the U.S. propane network that CleanFUEL recently received a grant to spearhead.

The project’s goal is to build the nation’s largest propane network that will include 184 liquid propane refueling stations across the country. The network will be completed in two to four years with the first new stations opening this summer in Phoenix, Arizona and Anaheim, California.

“Developing a better infrastructure for the distribution of alternative fuels is an essential part of the country’s ability to reduce its dependence on gasoline,” said U.S. Congressman John Carter (R-TX). “It helps us both offset the demand for foreign oil and meet rigorous environmental legislation by utilizing cleaner burning transportation fuels that are in surplus, such as propane.”

According to proponents of propane, the fuel is best suited for fleet vehicles and globally powers roughly 13 million cars and trucks. Ford and GM have developed propane engine platforms and CleanFUEL USA has developed a liquid propane injection technology (LPI).

“CleanFUEL is in the process of building the nation’s largest Autogas [propane] refueling network,” said Tucker Perkins, COO of CleanFUEL. “Watching the infrastructure for this pipeline unfold is an amazing achievement for this country, as it will drive down the costs and emissions associated with transporting goods and services among our cities. This new network not only reduces the impact the commercial transportation market has on our environment, but it also helps companies reduce their transportation costs, which ultimately improves their bottom line.”

USDA’s “Roadmap to Meeting the Biofuels Goals of the Renewable Fuels Standard by 2022″ released on Wednesday gives all the right directions as far as the ethanol industry is concerned, now they want to see it actually hit the road and make it to the destination.

Releasing the report, Agriculture Secretary Tom Vilsack said, “The current ethanol industry provides a solid foundation to build upon and reach the 36 billion gallon goal. As we prepare to celebrate Independence Day, we must reaffirm our commitment to bring our country closer to complete energy independence and this report provides a roadmap to achieve that goal.”

The report acknowledges the significant role of corn ethanol in meeting future goals, outlines a regional analysis of feedstocks that can be utilized for biofuels production, and stresses the need for more blender pumps and flex fuel vehicles (FFVs). All of the nation’s ethanol industry organizations issued responses that they were pleased with USDA’s report.

Renewable Fuels Association President Bob Dinneen calls the goals of the RFS ambitious, but achievable. “Secretary Vilsack and USDA have rightfully identified the crucial areas in which the department can help accelerate the growth of the industry and ensure the RFS delivers on the goals provided when Congress passed the legislation,” said Dinneen.

The USDA report says the agency “can immediately offer assistance on infrastructure” such as blender pumps to add to what the ethanol industry is already doing. RFA has joined with the American Coalition for Ethanol (ACE) on the Blend Your Own campaign aimed at installing 5,000 blender pumps in the next three years, and Growth Energy recently began a grant program for retailers to install the pumps.

However, the organizations all note that increasing the blend rate for ethanol in gasoline to 15 percent is still a critical step that is needed. “Until the regulations are modernized to allow more than 10 percent biofuels in a gallon of gasoline, petroleum still has a 90 percent mandate at the pump,” said ACE executive vice president Brian Jennings. USDA’s report acknowledges the “blend wall” as one of the challenges in expanding the use of biofuels, but beyond that says only that “EPA is in the process of evaluating whether a decision to blend up to 15 percent ethanol into gasoline is justifiable based on the latest science, its effect on engines, and its effect on air quality.”

Growth Energy CEO Tom Buis commended Secretary Vilsack for “looking down the road to help America achieve its energy independence” with a long term plan, but noted that interim measures are needed, such as approval of Growth Energy’s petition with the U.S. Environmental Protection Agency to increase the allowable blend of ethanol in gasoline from 10 percent to 15 percent.