Domestic Fuel

The Renewable Fuels Association (RFA) recently debuted a new blog on their website that offers commentary from RFA staffers on various topics.

The E-Xchange Blog debuted earlier this summer and the staff have proven to be quite prolific in their posting. We are going to start featuring posts from the blog as a regular feature here on Domestic Fuel.

Speculators returning to the grain market is the topic of the most recent post by RFA Vice President for Research Geoff Cooper, who notes that “hedge and index fund investors have quietly returned to the agricultural commodities market in droves over the past few weeks.”

With the stock market continuing to flounder, these speculators are positioning themselves for another bull run on agricultural commodities and crossing their fingers that corn prices go higher. They’ve laid down their bets that the drought in Russia and flood-induced crop failures in Pakistan will leave the world short of grain and spur demand and prices for U.S. grains. As clearly demonstrated by the 2008 commodities bubble, supply-demand fundamentals take a back seat to frenzied speculation when this many trigger-happy gamblers are in the market. Don’t be surprised if even the slightest hints of higher demand for U.S. crops or lower-than-expected U.S. supply touches off speculative hysterics not seen since the spring and summer 2008. If a speculative rally on corn does come to pass this fall, let’s at least hope that the pundits recognize the role of speculators and avoid immediately jumping to the conclusion—as they did in 2008—that biofuels had anything to do with it.

Cooper gives a nice analysis of what happened in 2008 when oil, gas, and corn prices skyrocketed and then the bubble burst and what is happening right now in the market.

Speculators are returning to the agricultural commodities markets in numbers not seen since the weeks leading up to the spectacular bursting of the 2008 bubble. In fact, the Commodity Futures Trading Commission’s (CFTC) latest Commitments of Traders report shows speculative investors hold as many corn futures contracts today as they did at the height of the 2008 bubble. Not since May 2008 have “non-commercial” investors (CFTC’s parlance for “speculators”) held as many net long positions as they do today (long, or “bullish,” positions are contracts that are purchased and held in the hope of profiting from an increase in prices). Speculators held 358,000 net long positions on corn last week, which is the equivalent of 1.8 billion bushels. That compares to a previous high of 360,000 net longs in mid-May 2008, at the height of the bubble.

Read Cooper’s entire commentary here.

“The 50th Anniversary of OPEC made our nation and others dependent on a few countries for oil – many that don’t have our best interest at heart,” said Tom Buis, CEO of Growth Energy during a press conference at the Farm Progress Show currently being held in Boone, Iowa.

OPEC was formed on September 14, 1960 and today, America’s dependence on oil from OPEC countries has put our country’s security at risk. One answer to this is ethanol; yet ethanol’s future in uncertain with several policies in jeopardy including the E15 waiver, ethanol tax credit and ethanol tariff.

The industry is currently being held hostage by a fickle federal policy and today, Washington is pretty much in a stalemate. “It’s not because there aren’t great ideas, or not great needs to move forward, but it’s a very politically competitive town,” explained Buis. “And both political parties want to win this next election. It’s like Iowa State playing Iowa in football. Neither side wants to see the other team score any points. The opportunity for bipartisan working relationships is not the most conducive at this time. Hopefully that changes after the elections.”

There is still some hope for this year, as Senator Reid (D-NV) has called for a lame duck sessions to help on November 15, 2010.

Buis has stressed that the ethanol industry doesn’t have a production problem, but a market access problem and passing these varied policies, especially the E15 waiver, will help to open up new markets. The simple act of doing this, says Buis, is that ethanol will help reduce an additional 7 billion gallons of ethanol per year. “It’s like saying to Hugo Chavez and Venezuelan oil, we’re not buying your oil any more.”

Iowa Ag Secretary Bill Northey, noted that just this week, an ethanol plant sold a gallon of ethanol for $1.62. “We actually have ethanol plants right now that are producing ethanol, selling ethanol, for less than the cost of gasoline and that’s without the tax credit.”

He continued, “Certainly we need some of those incentives to continue. We need some predictability, we need more than three months predictability with those incentives going off this December. We need a longer-term vision of what can happen out there.”

A longer term vision is definitely needed if America truly wants to meet is goal of achieving energy independence, and a major step to achieving this is passing more comprehensive policies including the ethanol tax credit, E15 waiver and flex-fuel vehicle policy.

Farm Progress Photo Album

You can listen to the Growth Energy press conference here. Growth Energy Press Conference During Farm Progress Show

Green living guide Mother Earth News wants to give average consumers some of the tools they need to get the most out renewable energy. That’s why publication is offering the Mother Earth News Fair, Sept. 25-26 at Seven Springs Mountain Resort near Pittsburgh.

Organizers promise more than 15 hands-on demonstrations ranging from beginner’s information for passive solar systems to building your own electric car!

Scheduled renewable energy-related speakers and topics include:

* Dan Chiras – introduction to solar electricity; passive solar electricity; passive solar heating; experts’ panel
* James Dunn – personal experience with a geodesic dome solar greenhouse
* Richard Freudenberger – small-scale alcohol fuel; basic passive solar design; experts’ panel
* John Ivanko – powering your home with renewable energy
* Angus Macdonald – DIY construction of solar and energy-efficient homes and garden structures
* Ben Nelson – building your own electric car, cheap
* Greg Pahl – community-supported energy; experts’ panel
* Darree Sicher – alternative fuel uses for sewage sludge
* Michael R. Wurzbacher – masonry heaters, stoves and ovens
* Brad Yocum – why now is the time to go solar

There will be more than 200 sessions in all. For more information and tickets, check out the Mother Earth News Fair website.

It was the “Bill and Tom Show” at the 2010 Farm Progress Show on Wednesday as Growth Energy hosted a discussion about ethanol between CEO Tom Buis and Iowa Agriculture Secretary Bill Northey held a panel discussion to talk about Growth Energy’s Fueling Freedom Plan, the upcoming energy bill and EPA’s pending decision on the E15 waiver.

Both Buis and Northey said there is a critical need for the EPA to approve E15 and open the market for ethanol in order to revitalize our rural economies, clean our skies and support the continued innovation in the ethanol industry.

“We don’t have a production problem, we have an access to the market problem,” Buis said. “By moving to E15 and eliminating the artificial barriers to the fuel market we can create a market for all ethanol to reduce our dependence on oil, strengthen our economy and improve our environment.”

“It is vital that Congress and the EPA move forward and approve these needed long-term policy proposals,” Northey said. “It is important that we send a signal to the industry and investors that support structures that will remain in place and allow the industry to continue to advance and adopt new technologies including eventually cellulosic ethanol.”

We’ll have audio from the panel to be posted along with commentary from Joanna Schroeder who was at the event.

Propel Fuels is opening more pumps with 85 percent ethanol for California flex fuel vehicle (FFV) drivers.

The company held a grand opening event in Oakland this week to formally launch a network of renewable fuel stations for the Bay Area, which will include more than 20 stations across the Bay, with up to half opening by the end of this year. The event also announced a $10.9 million grant from the U.S. Department of Energy (DOE) and California Energy Commission (CEC) to build and operate 75 retail renewable fuel stations throughout California over the next two years.

At the grand opening, California Energy Commissioner Anthony Eggert (pictured) said the station development project, known as the Low Carbon Fuel Infrastructure Investment Initiative (LCFI3), will help the state with the development and deployment of low carbon fuels and clean vehicles. “The Energy Commission is proud to team up with Propel Fuels and the partner agencies to bring next generation low carbon biofuels, including cellulosic ethanol, to the nearly half a million flex fuel vehicle customers in California, while creating hundreds of green jobs, and continuing to lead the way in our nation’s battle against climate change,” said Eggert.

Propel will work with community partners CALSTART and East Bay Clean Cities to educate consumers and fleets on the wide spread benefits of low carbon, alternative fuels available today and those next generation fuels coming in the future.

“Presently in California more than one million diesel and Flex Fuel passenger cars are capable of running on renewable fuels, but there hasn’t been a sufficient number of renewable fuel stations,” said John Boesel, President and CEO of CALSTART. “This program takes a major step forward by creating 75 new renewable stations which will give consumers the choice to say ‘no’ to oil dependence, ‘yes’ to the American economy and ‘yes’ to the environment.”

Propel has already begun construction of the station locations in major markets across California, with the network of 75 stations funded by this project to be complete by the end of 2011. Currently there are three locations open in the Bay Area (Fremont, Oakland, South San Jose) with additional sites planned for Downtown San Jose, North San Jose, Berkeley, Palo Alto, Redwood City, Livermore, and Concord in the coming months.

Thanks to Jamie Quick with Propel and Paul Wikoff for the photos from the event.

Retail outfitter L.L.Bean is turning to the power of the sun for its flagship store.

The company says it has used stimulus bucks to install a 180-tube solar hot water collector array that provides 100 percent of the hot water to the Freeport, Maine outlet:

The Efficiency Maine Commercial Grants ­ funded by the American Recovery and Reinvestment Act (ARRA) ­ pay up to 50 percent of eligible project costs.
The stimulus funding reduced payback projections for L.L.Bean’s new hot water solar system to less than 5 years, with immediate cost savings. L.L.Bean worked with Revision Energy of Portland on design and installation of the solar hot water system.

“We want visitors to see these solar panels and make the positive connection that L.L.Bean is investing in and promoting renewable energy,” says Brooks.
“The more businesses that make these types of changes, the better. It’s our hope that eventually green technology will become mainstream, and prices for
solar technology will become more affordable.”

The company was also able to use some state and federal tax credits and rebates to fund the project.

Michigan Governor Jennifer Granholm recently helped launch the new American Process Inc. (API) waste-to-cellulosic ethanol clean energy project in Alpena.

API, in partnership with San Antonio’s Valero Energy Corporation, received $4 million from the Michigan bioenergy Centers of Energy Excellence (COEE) program to establish a pilot scale biorefinery at the Decorative Panels International hardwood plant in Alpena. The $4 million in COEE funding to API helped secure a U.S. Department of Energy grant for $17.9 million. The biorefinery will convert the process waste effluent from the plant into cellulosic ethanol, sodium acetate and clean, warm water. The project has potential to be replicated across the state in other biorefineries, pulp and paper mills, and food and agricultural processing plants.

API has invested $10 million in the project and estimates that replication across Michigan in existing industries alone could create annual economic value of $200 million within 10 years.

The U.S. agricultural exports picture continues to be a bright one thanks in part to more exports of the ethanol by-product dried distillers grains (DDGs).

In the latest USDA report on exports, the forecast for 2010 exports was increased to $107.5 billion, up $3 billion compared to the May estimate. Almost half of that gain was in the revised estimate for grain and feed exports – up $1.2 billion to $27.2 billion from the May forecast. Corn shipments are increased 1 million tons and $100 million, reflecting stronger shipments in recent months as demand for feed grains and feed products (especially DDGS) has been stronger than expected. “Agriculture is one of the few major sectors of the economy today that has a trade surplus, which we are now forecasting to be a little over $30 billion,” said Agriculture Secretary Tom Vilsack..

The forecast is even better for next year, up to $113 billion, very close to the record $115 in 2008, thanks to sharply higher unit values and volumes for wheat and corn, as well as increases in products like DDGs. “I think it’s an indication of the quality of what we’re producing, which I think has allowed us to aggressively market this product as sort of an offshoot of what’s taking place in the biofuels industry,” Vilsack said. “This is an untold and I think often under-appreciated aspect of our economy in terms of how productive American farmers are and how innovative we’ve become with what we grow and what we raise and how much more opportunity there is as we expand biofuel production, beginning to use other feedstocks. I think we’re just going to continue to see more and more of these kinds of opportunities, byproducts and co-products of the process being developed.”

Another reason for ethanol producers to attend the upcoming Export Exchange, sponsored by the US Grains Council and the Renewable Fuels Association, with the express purpose of getting buyers and sellers of DDGs in particular together. More than 170 international buyers of U.S. DDGS and coarse grains are scheduled to attend the event, including representatives from China, Japan, Taiwan, Korea and Vietnam – countries which have a major interest in DDGS. South Korea, Hong Kong, and Southeast Asia account for two thirds of the forecast increase in agricultural exports this year compared to May.

Ethanol production reached an all-time high in June 2010, according to data released by the Energy Information Administration (EIA). Additionally, ethanol demand for June also hit a record level.

According to the latest numbers, ethanol production in June was just over 854,000 barrels per day (b/d), or 1.08 billion gallons for the month, nearly 19 percent higher than June 2009. Based on the totals of the first six months for this year, US ethanol production is on target to reach 12.87 billion gallons this year.

According to the Renewable Fuels Association (RFA), ethanol demand also reached an all-time high in June of 857,000 b/d, up almost 16 percent from a year ago.

Interestingly, the monthly figures from EIA for June are higher than the weekly production averages EIA recently began reporting. According to the weekly data from EIA highlighted by RFA, June production averaged just 839,000 b/d or a difference of 15,000 b/d compared to the monthly figure released today. At 18.9 million gallons for the month, this is a rather large discrepancy. Subsequent weekly and monthly reports will be needed to determine if the discrepancy between the monthly and weekly data is a trend or just a result of the kinks being worked out of the new weekly reporting requirement.

Meanwhile, the latest weekly report from the Energy Information Administration shows that ethanol was keeping up the pace in August with a 4-week average the same as June at 854,000 b/d.

Prices are going up right along with production and demand. According to Bloomberg, the price for ethanol surpassed gasoline this week for the first time since December, up 22 percent since May, while gas is down 6.5 percent.

Mascoma Corporation and SunOpta Inc. today announced the sale of SunOpta BioProcess Inc. (SBI) to Mascoma.

The acquisiting brings together SBI’s fiber preparation and pretreatment technology with Mascoma’s consolidated bioprocessing technology to create a company with comprehensive capabilities for converting non-food cellulose (wood chips, energy crops and organic solid waste) into ethanol and high value co-products.

Mascoma CEO Bill Brady says the two companies share a common vision of converting cellulosic biomass to fuel in a low-cost, sustainable way. “The combined company has extensive commercial experience, with the application of our technologies around the world, and the technology breadth to offer a complete biofuels solution. We believe the combination of Mascoma and SBI significantly advances our capabilities in the cellulosic ethanol field and positions us for a successful future.”

Mascoma, through its affiliate Frontier Renewable Resources LLC, is currently developing a commercial scale production facility in Kinross, Michigan. The facility is based on technologies developed in Mascoma’s laboratories in Lebanon, New Hampshire and operating in its 57,000 square foot demonstration facility in Rome, New York. The facility will also incorporate technologies developed by SBI from its pilot operations in Waterdown, Ontario and Brampton, Ontario.

Read more here.

A prototype micro ethanol plant in South Dakota is being auctioned this month by Maas Companies of Rochester, Minn.

Maas Companies is accepting sealed bids on the Genesis Ethanol I, a 2-4 million gallon-per-year micro ethanol plant located outside of Sioux Falls in Parker, South Dakota until Friday, Sept. 24. A winning bid may be awarded at that time or the top five bidders may continue a limited live auction Friday, Oct. 8 at 11 a.m. central daylight time.

Genesis Ethanol I was a prototype micro ethanol plant started in 2008 with several innovative concepts. Genesis purchased corn locally and sold its distiller grain by products locally, thereby greatly reducing transportation costs and delivering a consistent product. In addition, the facility was designed with energy saving components unique to its design in an effort to reduce energy costs. Initially the plant was to be the first in a series of similar plants throughout the region.

More information is available here.

The Florida Biofuels Association, together with several other organizations and state universities, are holding a meeting this month focused on growing energy feedstocks in the Sunshine State.

“Feedstocks for Florida Biofuels – A Florida Biofuels Association Town Hall Meeting” is scheduled for Friday September 17 at Florida Farm Bureau headquarters in Gainesville. The event will include an open forum to hear from Florida farmers regarding concerns and questions pertaining to energy crops, the ABCs of profitable feedstock farming, and incentives available for the feedstock farmers. Speakers include representatives from the Florida and U.S. Departments of Agriculture and the University of Florida.

The potential for energy crops in the state was one of the topics at the recent Florida Farm to Fuel Summit. One of the presenters was Bill Vasden Jr., Chairman of the Florida Feedstock Growers Association. Vasden was interviewed by Gary Cooper with Southeast Agnet at the summit about the production and distribution of renewable energy from Florida-grown crops. “We’ve been growing feedstock crops like camelina and kenaf here in Florida for four years,” he says. As a cattle and citrus farmer, he started growing energy crops to help cut his on-farm diesel costs. “Later it became apparent that a lot of these crops can be grown here in Florida, with additional revenue streams.” They now have 2500 acres in kenaf, which is a spring biomass crop, then in the fall they rotate into camelina, which is an oilseed crop. “Camelina grown in Florida produces the highest yields in the country and can be grown in fall and winter and is very drought tolerant and cold tolerant,” said Vasden. As a bonus, it is also approved for as a by-product for animal feed.

Vasden says the market demand for these energy crops exceeds demand, so it has been very profitable for his operation. “We look to 2500 acres, without any government subsidy, to gross $2.8 million when farmed with two crops of camelina and one crop of kenaf, and those are pretty impressive figures,” he explained.

Here is a link to Vasden’s powerpoint presentation at Florida Farm to Fuel.

A Colorado-based wind turbine company believes it has the solution when winds are not enough to generate electricty: team the turbine up with clean-burning biodiesel.

Smartplanet.com says Hybrid Turbines Inc.’s SmartGen system will use biogas, biodiesel and natural gas to run a back-up power generation system fuel the back-up power system that will operate during the 70 percent of time when the winds don’t get the job done:

This would of course depend on the patent-pending design working and being installed throughout the country’s wind farms. According to Hybrid Turbines, the SmartGen system can be retrofitted for existing turbines, scaled between 3 and 100 kilowatts (possibly higher), and integrated into new turbine designs.

Estimates are that wind power generation capacity would increase by 25 GW, the equivalent of 25 1,000 MW nuclear power plants

Propel Fuels, a west coast retailer of ethanol and biodiesel, has received $11 million in grants from the U.S. Department of Energy and the California Energy Commission to build and operate 75 self-serve alternative fuel stations across the state over the next two years.

This article in the Silicon Valley/San Jose Business Journal says the effort will reduce the amount of non-renewable oil used and greenhouse gases given off, while putting more people to work:

The statewide station project, or the Low Carbon Fuel Infrastructure Investment Initiative, has the potential to create more than 450 jobs, while displacing 39 million gallons of petroleum and 187,500 tons of carbon dioxide emissions each year, according to Propel.

“This grant brings a new choice to Californians looking to do their part to reduce our nation’s dependency on imported oil and help meet the state’s emission reduction goals,” Propels chief executive officer Matt Horton added in the release. “As advanced biofuel production facilities prepare to break ground in the state, this fueling infrastructure is a critical link between California’s citizens and the next generation of low carbon fuels.”

California Energy Commission officials say this will help bring the needed next generation of biofuels to nearly half a million flex fuel vehicle owners in the Golden State.

The Sportsman Stop at 1818 State Street North in Waseca, MN will be offering E85 Frenquent Fuel Cards beginning tomorrow, Sept. 1. The first 50 flexible fuel vehicle (FFV) owners will receive the card where, if they purchase E85 four times, they will receive $10 off their 5th E85 purchase.

Recently, Kelly Marczak, director for the American Lung Association in Minnesota’s clean fuel and vehicle technologies stated, “The State of Minnesota is serious about its stated goal to reduce its petroleum consumption. In [the first six months of the year], the state’s use of E85 in 2010 prevented more than 1,745 tons of lifecycle carbon dioxide emissions and harmful pollutants from entering our air.”

This promotion is supported by: the Waseca County Corn & Soybean Growers, Minnesota Corn Growers Association, American Lung Association in Minnesota, and members of the Minnesota Clean Air Choice team.

Minnesota is the home of 358 E85 fueling sites — this is more than any other state in the nation.