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Senators Ask Trump to Suspend EPA's Use of Biofuel Waivers

April 9, 2018

Five Republican senators on Monday called on President Donald Trump to temporarily halt the use of biofuels policy waivers for small oil refineries, after reports the Environmental Protection Agency had issued a recent wave of such exemptions.

The group of lawmakers, which includes Senators Charles Grassley and Joni Ernst of Iowa and John Thune of South Dakota, said the EPA waivers are “undermining” the U.S. Renewable Fuel Standard, a law that requires biofuels like ethanol to be added to the nation’s fuel, which Trump has said he supports.

“We therefore urge you to call on the EPA to cease all RFS waiver action until the agency’s administration of the RFS can proceed in a more transparent and impartial manner,” the senators said in a letter dated April 9.

The request comes as Trump is scheduled to meet with EPA head Scott Pruitt and Secretary of Agriculture Sonny Perdue on the issue later on Monday.

An EPA source told Reuters last week that the agency had issued 25 small refinery exemptions, relieving the plants of their requirements to blend biofuels last year.

Reuters also reported that Andeavor, one of the country’s largest refiners, also received EPA exemptions from the biofuels law for three of its smallest refineries.

In the past, the EPA has issued between six and eight waivers from the RFS per year to small refining operations of less than 75,000 barrels per day that can demonstrate they are struggling financially to comply, according to a former official familiar with the waiver program under past administrations.

But refiners have applied for the waivers in larger numbers after a federal appeals court ruling last year that said the EPA must expand the guidelines for approving them.

They have also been encouraged to apply by the Trump administration’s recent efforts to broker a deal between the oil and corn industries to reduce the costs of the RFS, industry sources said. Those talks have not yielded a deal.

“The EPA is using its small refinery waiver in an unprecedented manner to benefit some of the largest refineries in the nation, including Andeavor, which posted profits of approximately $1.5 billion last year,” the senators wrote.

White House spokeswoman Kelly Love did not immediately respond to a request for comment.

The RFS requires refiners to blend biofuels, or purchase blending credits from other companies - a policy intended to help farmers, and cut pollution and fuel imports.

Read the full letter here.

Read the original story: Senators Ask Trump to Suspend EPA's Use of Biofuel Waivers

Highwater Ethanol Applying for Boosting Production

Marshall Independent

March 30, 2018

By Jody Issackson

Highwater Ethanol is applying to increase its ethanol production with the Environmental Protection Agency and the Minnesota Pollution Control Agency.

Highwater Ethanol CEO Brian Kletscher said his company hopes to make the best use of equipment and resources to increase shareholder profits. He said the number one reason for increasing production is to produce more renewable fuel for consumers to use in their new flex fuel vehicles. Kletscher also said that will help decrease the country’s dependency on imported crude oil and finished gasoline.

He said the company will consume another 2 million bushels of corn which will be good for the local farmers. Kletscher said that the majority of the grain Highwater uses in its processes comes from a 25-mile radius including farmers and elevators.

“It’s not going to be a huge increase, but as long as margins are profitable, it will be an increase,” Kletscher said. “Anything we can do to increase ROI (return on investment), we owe it to our shareholders to do it.”

The CEO and his staff have calculated that with their current facility and production equipment, they could increase their production form 59.5 million gallons of ethanol per year to 70.2.

“We looked at how much our plant can handle by an engineering review and calculated how much our plant can produce with the current equipment,” Kletscher said Wednesday.

One of the reasons Highwater Ethanol would not have to add equipment or storage to make this leap in production is because the company had already added a 600,000-bushel grain bin which was completed in August of 2017. This brought their storage capacity up to 1.8 million bushels.

The company had also added new computerized systems for handling grain and distillers’ grains.

The increase in production would increase the volume of pollutants, which requires the involvement of the Minnesota Pollution Control Agency and federal Environmental Protection Agency (EPA). The EPA requires Highwater Ethanol to monitor its air emissions and calculate how much more will be produced with the increase in production, he said.

“We’ve been working with them since mid-January on this permit and expect to hear back in late summer or early fall,” he said.

The application itself was started in May of 2017 and the EPA was able to start looking at it in January.

“We do a modeling of the project for them,” Kletscher said. “They may require us to measure the emissions. However, we do those already. We anticipate very minimal increase in emissions.”

At the recent annual meeting, Board Chair David Moldan announced fiscal year 2017 (ending Oct. 31) was “another successful year.”

The company took in 20.3 million bushels of corn and sold 59.4 million gallons of ethanol. Kletscher explained Wednesday the company also sells byproducts of its process. Dried distiller grains (DDGs) are sold for swine and poultry feed, while modified distillers grains (MDG) are sold to feed beef cattle.

“They serve as protein and energy sources for livestock,” he said.

Ethanol production for FY 2017 was 200,000 gallons more than the previous year while the corn used was 600,000 bushels less.

“That allows us improved efficiencies, and the potential for a more profitable year is definitely there,” the CEO said.

The net income was just over $3.5 million, an increase from the $522,668 margin in FY 2016, the company reported to its shareholders.

Total sales for last year were $100,225,143. The previous year was just under $99 million. This profit was due in part in the 10 cent per bushel decrease in the cost of corn, going from $3.30 in 2016 to $3.20 in 2017.

Distributions of $345 a unit were paid to shareholders in December for a total distribution of $1,660,657.

Going forward, Kletscher said tariffs on imports could create a problem, but he is optimistic.

“Tariffs could potentially hurt exports,” he said. “We’ve reviewed that any tariff can have an impact on ethanol exports. Currently China has a 30 percent tariff on our exports and has talked about adding an additional 15 percent on top of that. We’re hoping our other foreign markets will pick up and offset the drop to China.”

Kletscher is anticipating the permits to increase ethanol production at Highwater Ethanol to go through by fall and they will be able to meet an increasing demand for the renewable resource as the flex fuel vehicles that use it catch on in the metro areas as well as the rural areas.

Read the original article: Highwater Ethanol Applying for Boosting Production

USDA Report Shows Impact of US Biobased Economy

Ethanol Producer Magazine

March 26, 2018

By Erin Voegele

The USDA has released a new report that measures economic growth, job creation and household income from biofuel and bioenergy production, along with future growth in renewable chemicals and biobased products.

The report, titled “Indicators of the U.S. Biobased Economy,” shows that the biobased economy is playing an increasingly important role in the U.S. economy. “Through innovations in renewable energies and the emergence of a new generation of biobased products, the sectors that drive the biobased economy are providing job creation and economic growth,” the report states.

According to the USDA, the report aims to understand and analyze trends in the biobased economy by comparing 2011 and 2016 data.

The data shows significant increases in the production of liquid biofuels, with U.S. ethanol production increasing from 175 million gallons in 1980 to more than 14.7 billion gallons in 2015. The number of ethanol plants reached 199 in 2016, with three facilities under construction and the industry accounting for more than 270,000 U.S. jobs.

Biodiesel production also grew exponentially, increasing from 343 million gallons in 2010 to 1.26 billion gallons in 2015. From 2005 to 2012, soybean use for biodiesel increased from 670 million pounds to 4.1 billion pounds.

The production of solid biofuels has also increased significantly. The report states that “wood pellets manufactured primarily in the Southeastern United States have become an important component of the bioenergy sector.” The U.S has established itself as the world’s largest exporter of wood pellets, with more than 4.6 million metric tons exported in 2016.

Growth has also occurred in the production of renewable chemicals and biobased products. The report states that the number of renewable chemicals and biobased products certified under the USDA’s BioPreferred program has increased from 1,800 in 2014 to 2,900 in 2016. The number of overall biobased products in the U.S. marketplace has increased from approximately 17,000 in 2008 to 40,000 in 2014. An estimated 4.22 million jobs were attributed to the biobased products industry in 2014. In addition, the report estimates the value-added contribution to the U.S. economy from the U.S. biobased products industry was $393 billion in 2014.

The Biotechnology Innovation Organization has spoken out to welcome the report. “The biobased economy is approaching a tipping point in its growth and maturation,” said Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section. “The economic impact is evident.

“BIO calculates that the global economic value of the biobased economy—including industrial biotechnology, renewable chemicals and polymers, biofuels, enzymes and biobased materials—is $355.28 billion,” he continued. “Looking at the new USDA Indicators report and other sources, we estimate that the United States generates 58 percent of the global value of biobased manufacturing, or more than $205 billion. And that economic activity supports employment for 1.66 million U.S. workers.

“The growth of the biobased economy has been supported by good federal policy that strengthens the agricultural sector and rural America,” Erickson said. “For instance, Farm Bill energy title programs have compiled a record of success that deserves to be continued. We look forward to working with USDA and Congress to build on that success and reauthorize the programs.”

A full copy of the report can be downloaded from the USDA website.

Read the original article: USDA Report Shows Impact of US Biobased Economy

Green Biologics Partners With Kingsford Charcoal to Launch New EcoLight Natural Charcoal Lighter Fluid

LITTLE FALLS, Minn., March 27, 2018 - Green Biologics, Inc. announced that it has agreed to supply their patented GreenFlame® bio-based charcoal lighter fluid formulation exclusively to Kingsford® Charcoal, to be marketed under a new brand: EcoLight™. The licensing agreement builds on the successful 2017 introduction of GreenFlame, a natural USDA BioPreferred^® certified, clean-burning charcoal lighter fluid based on Green Biologics' proprietary advanced fermentation process.

Kingsford^® EcoLight^™Powered by GreenFlame^®charcoal lighter fluid will be available at retailers across the country starting later this month, with intentions for continued expansion throughout 2018 and beyond.

"As the leading charcoal brand and wholly owned subsidiary of The Clorox Company, a champion for sustainability, we found Kingsford to be an excellent partner for the GreenFlame charcoal lighter fluid formulation," said David Anderson, global vice president of marketing, Green Biologics. "Their strong branding, extensive retail presence, and distribution capabilities will quickly introduce a large number of consumers to a high-performance, bio-based alternative to petro-based charcoal lighter fluid. We see this as a critical first step toward an exciting future of renewable product collaborations."

"Working with Green Biologics to introduce this product was a logical addition to our existing line, showcasing Kingsford's commitment to launching products consistent with evolving consumer trends," said Lauren Kahn, director of marketing at Kingsford. "The key to EcoLight's success lies in its superior performance. Unlike other natural charcoal lighter fluids on the market, there are no trade-offs in performance here. EcoLight lights quickly, stays lit and works every time."

About Green Biologics

Green Biologics Ltd (GBL) is a renewable specialty chemicals company based in Abingdon, England with a wholly owned U.S. operating company, Green Biologics Inc., based in Little Falls, Minn. GBL's Clostridium fermentation platform converts a wide range of sustainable feedstocks into high performance green chemicals such as n-butanol, acetone, and through chemical synthesis, derivatives of n-butanol and acetone used by a growing global consumer and industrial products customer base in numerous markets including Coatings, Pharmaceuticals, Personal Care, Consumer Fuels and Cosmetics. The platform combines advanced high productivity fermentation with superior-performing proprietary Clostridium microbial biocatalysts and synthetic chemistry to produce a pipeline of high value renewable specialty chemicals with optimal performance in downstream formulations. For more information, visit www.greenbiologics.com

Minnesota Ag Has Much to Lose in U.S.-China Trade Spat

MPR News

March 23, 2018

By Mark Steil

There's been a lot of hand-wringing in farm circles about trade with China for the past two years, ever since presidential candidate Donald Trump criticized the Asian economic giant with comments like this: "China is ripping us off like nobody has ever seen," Trump said, on the campaign trail.

But fears over a possible trade war with China moved much closer to reality this week.

Words have become action as now-President Trump announced proposed tariffs on Chinese products sold in the U.S.

Minnesota sells about a billion and a half dollars' worth of agricultural products to China each year — and China's list of proposed tariffs against U.S. products includes several that are important to farmers across the state.

"We're poking the bear if you will," said University of Minnesota grain market economist Ed Usset.

China responded to the U.S. tariff proposal by announcing import taxes of its own. And if the back-and-forth snowballs into a full-scale trade war, many industries could be affected.

Agriculture is a big one.

"There's a lot at stake here for American farmers, Minnesota farmers," said Usset.

China is taking a two-step approach in its retaliatory tariffs.

The first group of U.S. products to be hit includes ethanol, which is threatened with a possible 15 percent Chinese import tax. That worries Minnesota's ethanol CEOs, including Randall Doyal of the Al-Corn Clean Fuel ethanol plant in Claremont.

"We are depending on being able to export our production to the world," Doyal said.

China is a part of that overseas market. It has enacted ethanol tariffs in the past, so U.S. sales there have been up and down.

But as recently as 2016, sales to China accounted for about 20 percent of U.S. ethanol exports.

Doyal said if China follows through on its tariff threat, it will hurt U.S. sales there. And that will hurt Minnesota farmers who sell corn to ethanol plants around the state. Doyal also worries that a sour export market will hurt his plant.

"It certainly will put a damper on us," he said. "We're coming out of an expansion, we've got a lot of debt. And I don't like the thought that we're looking at markets that are going to be returning less."

State pork producers are looking at a similar scenario.

Pork is in the second group of products facing a 25 percent tariff if the U.S.-China trade dispute escalates. China is the second-largest market for U.S. pork. Minnesota Pork Producers Association President Greg Boerboom said hog farmers in Minnesota and across the country will feel the impact of a trade war.

"If something happened that we would lose the China market, which is our No. 2 market, that'd be a devastating impact on both hog producers and the rural economy," said Boerboom.

But Boerboom, a self-described optimist, still believes the two nations can pull back from the brink, and avoid an escalating series of trade barriers and taxes that could hurt both countries.

"Nothing has been finalized yet," said Boerboom. "It's still a threat on both sides. So we're hoping that they can negotiate and actually resolve the situation before any tariffs or retaliation would take place."

That would also be very good news for Minnesota's soybean farmers — China has not yet proposed a soybean tariff. But if the trade fight expands and soybeans are pulled into the retaliatory actions, Minnesota farmers would take their biggest hit of all: Soybeans are Minnesota's top farm export — and China is the state's biggest customer.

Read the original story: Minnesota Ag Has Much to Lose in U.S.-China Trade Spat

Enerkem Makes a Major Breakthrough by Producing a New High-Octane Biofuel

PR Newswire

March 20, 2018

By Enerkem

Enerkem Inc., a world-leading waste-to-biofuels and chemicals producer, announced today during the 255^th American Chemical Society national meeting being held in New Orleans, that it had succeeded in producing a new high-performance biofuel that could improve the octane rating of fuels sold on the market and reduce their carbon footprint.

The chemical engineering expertise at Enerkem's Innovation Centre in Westbury, Quebec, allowed the company to successfully develop a process that uses its proprietary waste-to-biofuel technology to produce a new biofuel with a Research Octane Number (RON) of up to 112. This is 20 points higher than the average octane rating found in regular motor gasoline. By using bio-dimethyl ether (Bio-DME), a product derived from Enerkem's biomethanol, combined with a DME-to-high-octane-gasoline catalyst developed by the National Renewable Energy Laboratory (NREL) in the United States, the Enerkem-NREL team were the first to demonstrate at pilot scale the production of an alternative fuel rich in paraffins.

"It's a major breakthrough that could enable the development of a new non-oxygenated biofuel made from waste on a commercial scale," explained Stéphane Marie-Rose, Director of Enerkem's Innovation Centre. "Through the very selective catalytic reaction achieved using our waste-to-biofuels process, we have formed paraffinic molecules, such as triptane, whose properties already contain a high-octane rating, thereby increasing the volume of paraffins when used as an additive in a conventional fuel."

In addition to the various environmental and economic upsides, there are many possible applications for a high-octane biofuel derived from Enerkem's bio-DME. The non-oxygenated additive could serve the specialized fuels market, such as the aviation gasoline and professional motorsport sector. As with the biomethanol and advanced ethanol produced today at commercial scale by Enerkem, this new biofuel allows better combustion, replaces fossil fuels and reduces greenhouse gas emissions.

Enerkem's Innovation Centre intends to build on this technological advancement by further developing and optimizing the process as well as evaluating the potential commercial applications in the coming months.

About Enerkem

Enerkem produces advanced biofuels and renewable chemicals from waste. Its disruptive proprietary technology converts non-recyclable, non-compostable municipal solid waste into methanol, ethanol and other widely-used chemicals. Headquartered in Montreal (QC), Canada, Enerkem operates a full-scale commercial facility in Alberta as well as an innovation centre in Quebec. Enerkem's facilities are built as prefabricated systems based on the company's modular manufacturing infrastructure that can be deployed globally. Enerkem's technology is a prime example of how a true circular economy can be achieved by diversifying the energy mix and by making everyday products greener while offering a smart, sustainable alternative to landfilling and incineration.

Read the original article: Enerkem Makes a Major Breakthrough by Producing a New High-Octane Biofuel

Expanded Ethanol Plant Boosts Production

Post Bulletin

March 17, 2018

By Noah Fish

The first bushels of corn were delivered to the new system at the Al-Corn Clean Fuel ethanol plant last week, signaling that completion of its $146 million expansion and modernization project is right around the corner.

Al-Corn CEO Randall Doyal said construction is slated to wrap up the first week of April, and the system should be functional later that week. Construction on the project began in December 2016 and was originally expected to end this July. Doyal attributed the swift work to good collaboration by personnel.

“To get done the first week in April, that’s phenomenal,” said Doyal, who credited McGough Construction for instituting a system that has subcontractors and plant staff working effectively together.

The expansion will increase annual ethanol production by the Claremont-based cooperative from 50 million gallons to 120 million gallons by early this year, making it one of the state’s top producers in the industry. The plant will also increase its annual throughput of corn from 17.5 million bushels to 47 million bushels. Doyal said the move is in line with the cooperative’s proactive history of trying to stay relevant in a wavering industry.

“In any business that’s commoditized, you want low-cost producers, because that’s how you weather the storms that come with all cycles of business,” said Doyal. “You want to be in that top tier, and the folks that continue to operate when others are forced to stop production because of financial circumstances.”

The farmer-owned ethanol production cooperative was formed in 1994 as a way for local farmers to add value to their corn crop. Annually, the plant turns out 132,000 tons of livestock feed, 12 million pounds of corn oil and 70,000 tons of beverage grade carbon dioxide, according to the cooperative’s website.

The expansion consists of new additions as well as the modification of some existing equipment at the plant. Additional fermenters have been added, and the fermentation scrubber has been expanded to operate at twice the water and gas flow rate of the previous unit.

Other updates include new distillation and vaporization vessels and a Combined Heat Power unit, which will be capable of generating up to 40 percent of Al-Corn’s power. The plant also expanded its rail capacity, which Doyal said will allow Al-Corn to reach new markets. The upgraded Al-Corn facility covers 200 acres altogether.

On March 7, three of the original Al-Corn board members — Lyle Kuhlmann, Lyle Borgschatz and Orlo Toquam took part in delivering the first bushels into the new machinery. All three were joined by their sons, who now serve on the board.

“That was really kind of cool,” Doyal said of the ceremonious testing. “And in one case, the person actually driving the truck was a grandson of an original board member. Really just a neat, multigenerational impact we got to see there.”

Read the original article: Expanded Ethanol Plant Boosts Production

Toyota Reveals World-First Flexible Fuel Hybrid Prototype in Brazil

Toyota

March 19, 2018

Press Release

A prototype of the world's first hybrid flexible-fuel vehicle (Hybrid FFV), debuted in an event Toyota held today in Sao Paulo, Brazil. Stakeholders including the state government, universities, and the sugarcane association (the Sugarcane Industry Union: UNICA) attended the event. The prototype is the combination of a flexible-fuel vehicle (FFV) that can be powered by both gasoline and alternative fuels such as ethanol, and Toyota's famous hybrid system which combines a combustion engine and an electrical powertrain.

Hybrid FFV is a new powertrain system that Toyota is developing with an aim to popularize Hybrid Electric Vehicles in Brazil and contribute to the environment through reduction of CO2 emissions. Hybrid FFV has the potential to drastically reduce total CO2 emissions as it is built on Toyota's hybrid system that has high energy efficiency and low emission levels and it also leverages the CO2 reabsorption capacity of ethanol, a plant-derived 100% renewable fuel. The prototype uses the Toyota Prius as a base model, which is currently sold and becoming popular in Brazil.

Toyota's initial studies indicate that Hybrid FFV has a great advantage in environmental performance compared to a standard FFV, when we estimate CO2 emissions starting with the extraction of the raw material, through its distribution at the fuel pumps to the ignition in the combustion process of the car. If it is fueled only by sugarcane-based ethanol (E100 fuel), the results are even better.

The development of Hybrid FFV represents one of Toyota's efforts to achieve its "Environmental Challenge 2050" where it challenges itself to reduce vehicle CO2 emissions by 90% in comparison with 2010 levels, by 2050. Another objective of the Environmental Challenge is to completely eliminate CO2 emissions from the vehicle lifecycle, including materials, parts and manufacturing. In line with that goal, Toyota also targets to have more than 5.5 million electrified vehicles in its global new vehicle sales by 2030.

"I am very proud of our Toyota do Brasil engineers that worked closely with our engineers in Japan to develop the world's cleanest hybrid vehicle that uses ethanol for our Brazilian customers. The invention demonstrates our journey in providing a new mobility society," said Steve St. Angelo, Senior Managing Officer of Toyota Motor Corporation serving as CEO of Toyota Latin America Region and Caribbean, as well as Chairman of Toyota do Brasil.

Toward the commercialization of Hybrid FFV in Brazil, Toyota will collect various data through real-world road testing in Brazil going forward and evaluate the system's reliability, durability, and powertrain performance.

Read the original press release: Toyota Reveals World-First Flexible Fuel Hybrid Prototype in Brazil

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Sen. Tina Smith Stands up for Minnesota Jobs & American Energy Independence, Presses White House to Preserve Strong Renewable Fuel Standard

Senator Tina Smith

March 13, 2018

Press Release

U.S. Senator Tina Smith is calling on the White House to support Minnesota’s rural communities and American energy independence by maintaining a strong Renewable Fuel Standard (RFS), the federal program that sets the level of biofuels—like ethanol and biodiesel—that are blended into our nation’s fuel supply.

After a series of postponed meetings between the White House and U.S. biofuel producers—sparking fears that there may be an attempt to weaken the RFS—Sen. Smith is urging the Administration’s top energy officials to come together with renewable energy leaders and discuss how to preserve and protect the program.

“I fought for a spot on the Senate Agriculture Committee because I want to do my part to help Minnesota’s ag economy grow—and because I want to see our rural communities, farmers, clean energy producers, and agribusinesses thrive,” said Sen. Smith. “We can’t make that a reality without a strong Renewable Fuel Standard. The RFS supports thousands of local jobs and helps lead to billions of dollars in economic activity, it cuts our dependence on foreign oil, and it helps reduce the environmental impact of energy. I strongly urge the White House to get on board with championing the RFS—our family farmers and clean energy producers depend on this critical program.”

Read the original press release: Sen. Tina Smith Stands up for Minnesota Jobs & American Energy Independence, Presses White House to Preserve Strong Renewable Fuel Standard

Positive US Ethanol Margins are Driving Ethanol Production Growth

Ethanol Producer Magazine

March 7, 2018

By U.S. Energy Information Administration

Estimated ethanol production margins at U.S. corn ethanol plants averaged 22 cents per gallon (gal) in 2017. Last year was the fifth consecutive year that margins have averaged more than 20 cents/gal, which has helped drive consistent ethanol production growth over that period. U.S. ethanol production averaged an estimated 1,032 thousand barrels per day (b/d) in 2017, marking a fifth consecutive record level of annual production.

Increases in ethanol supply have outpaced increases in domestic demand in 2017, which have contributed to relatively low spot prices and margins that are about 20 cents/gal lower than the previous four-year average but still largely in line with levels in the previous two years.

Ethanol producer margins are estimated by EIA for a dry mill corn ethanol plant of average capacity located in the Midwest, a region that is home to more than 90 percent of domestic fuel ethanol production capacity. EIA estimates these margins by taking the sum of revenue generated from the sale of ethanol and co-products, such as distillers dried grains with solubles (DDGS) and corn oil, and subtracting variable and fixed costs. Variable costs include expenses such as the cost of corn and natural gas, along with a fixed operating cost of 35 cents/gal.

The price of corn is the largest variable cost associated with a dry mill corn ethanol plant, and profits are generally highest when corn supply is plentiful and demand for ethanol gasoline blending is high. U.S. corn production has been at record high levels in recent years, which has kept corn prices generally stable, ranging between $3.40 and $4.00 per bushel since 2015. A period of drought in 2012 and 2013 led to corn prices greater than $8.00 per bushel, resulting in one of the least profitable periods for ethanol operators.

In the United States, ethanol is primarily used as a blending component in the production of motor gasoline and mainly blended in volumes up to 10 percent ethanol, known as E10. Ethanol demand is highly dependent on motor gasoline consumption, and ethanol production has been driven higher in recent years because of the Renewable Fuel Standard, the program administered by the U.S. Environmental Protection Agency that mandates the blending of biofuels into the nation’s fuel supply. Although demand for higher ethanol blends such as E15 and E85 remains limited, low ethanol prices and increasing RFS targets have created favorable blending conditions for these higher ethanol blends.

For most of 2017 and the first two months of 2018, ethanol production, net inputs, and inventory levels have been near or above average levels in the previous five years (2012–2016). During December 2017, fuel ethanol production set a four-week record high, averaging 1.09 million b/d, while ethanol blending into gasoline, measured by net inputs, was nearly unchanged from the previous year. Despite record-high domestic gasoline demand and record-high ethanol exports in 2017, ethanol production exceeded consumption, which led to end-of-2017 inventories that were four million barrels higher than at the end of 2016.

In its latest Short-Term Energy Outlook, EIA forecasts that continued growth in ethanol production and limited export growth through 2019 will lead to increases in domestic consumption of ethanol by way of limited higher-level ethanol blend growth beyond E10. U.S. ethanol consumption, which increased by 1 percent in 2017, is expected to increase by an average of 1 percent through 2019, resulting in an estimated ethanol blend percentage of gasoline that increases from slightly more than 10.1 percent in 2017 to about 10.3 percent by 2019.

Read the original article: Positive US Ethanol Margins are Driving Ethanol Production Growth

University of Illinois Analysis: 10-Cent RIN Price Cap Would be ‘Catastrophic’ for Renewable Fuels

Renewable Fuels Association

March 1, 2018

By Emily Druckman

A new analysis issued by University of Illinois economist Scott Irwin finds that the impact of a 10-cent cap on RIN prices, as proposed by Texas Sen. Ted Cruz, would be “catastrophic” for the Renewable Fuel Standard (RFS) and “would have large impacts on biofuels in the U.S.” Specifically, such a price cap would serve as the mortar in the oil industry’s attempt to rebuild the “blend wall.” Irwin finds that “…the RINs price cap would remove all incentives for blending E15 and E85” and would be equivalent to “waiving…the conventional ethanol mandate down to the level of the E10 blend wall.”

Meanwhile, the analysis finds that if “…ethanol usage could be pushed up just a few hundred million gallons, …D6 [conventional biofuel RIN] prices would naturally fall to just a few cents. An RVP waiver for E15 might just do the trick.” Still, Irwin finds that the biofuel and agricultural industries would be the losers in any “deal” that exchanges an E15 RVP waiver for a 10-cent RIN price cap. “Agricultural and biofuels interests will find this tradeoff distinctly unappealing, while refining interests will tend to have just the opposite reaction,” he said.

Addressing the myth that RIN prices can somehow be capped without destroying the efficacy of the RFS program, Irwin writes, “…the RINs price and the mandate level are directly related–one cannot be changed without changing the other. Stated differently, reductions in the volume mandates will reduce the RINs price, or reductions in the RINs price will reduce the volume produced, effectively reducing the mandate.”

Reacting to the new analysis, Renewable Fuels Association (RFA) President and CEO Bob Dinneen said, “This study confirms that a demand-destroying 10-cent RIN price cap is absolutely the wrong policy for agriculture and consumers. We agree with Prof. Irwin that such a cap on RIN prices would be disastrous for the RFS and for jobs in the agricultural and manufacturing sectors. As we have stated repeatedly, and as this study underscores, the quickest way to lower RIN prices is to establish RVP parity for E15. That is the only ‘win-win’ solution that upholds the spirit and intent of the RFS and at the same time takes pressure off of RIN prices. We hope the administration closely examines this new analysis as it hosts ongoing discussions on this issue.”

The new analysis is available here.

Read the original release: University of Illinois Analysis: 10-Cent RIN Price Cap Would be ‘Catastrophic’ for Renewable Fuels

Third White House Biofuel Summit This Week Ends Without Deal

Bloomberg

March 1, 2018

By Jennifer A Dlouhy and Mario Parker

President Donald Trump found out how difficult it is to bridge the competing interests of ethanol producers and oil refiners as a third White House biofuel meeting in four days ended with no agreement on how to change U.S. policies.

Trump has been trying to address complaints from refiners who say the U.S. biofuel mandate -- the Renewable Fuel Standard -- is too costly, without alienating another key constituency: corn farmers and ethanol producers who helped elect him president.

Each side was represented in a one-hour discussion on Thursday, but they left with no breakthrough -- only a commitment to keep talking and the parameters of a potential solution, said three people familiar with the talks who asked not to be named to describe the meeting, which was closed to the press.

Participants discussed a possible policy change that would effectively cap the price of the compliance credits refiners use to prove they have fulfilled annual biofuel quotas, in exchange for an environmental waiver to allow year-round sales of E15 gasoline, containing 15 percent ethanol.

Waiver Credits

Compliance credits tracking 2018 ethanol targets plunged 13 percent to 55 cents each after the meeting, according to broker data compiled by Bloomberg.

Trump floated the idea of the Environmental Protection Agency selling ethanol waiver credits for two years at 10 cents in exchange for the E15 policy change that could expand the domestic market for ethanol.

Senator Chuck Grassley, a Republican from Iowa, the top U.S. corn growing and ethanol-producing state, tweeted after the meeting about what he called an “emerging solution.”

A “true win-win” is selling E15 year-round, a change that would lower refiners’ compliance costs while also helping farmers squeezed by low corn prices, Grassley said on Twitter.

Participants in Thursday’s gathering included the same Republican senators who met with Trump on the issue Tuesday: Ted Cruz of Texas, Pat Toomey of Pennsylvania, and Grassley and Joni Ernst of Iowa.

Economic Impacts Debated

But the focus was on 11 industry representatives who came to spell out the economic consequences of potential biofuel policy changes, including the chief executives of biofuel producers Poet, Green Plains Inc. and Renewable Energy Group Inc. and oil refiners Valero Energy Corp., PBF Energy Inc. and Delta Air Lines Inc.’s Monroe Energy LLC.

Bill Horan, a farmer with Western Iowa Energy LLC, and United Steelworkers President Ryan O’Callaghan also participated.

Tom Nimbley, chief executive of New Jersey-based refiner PBF Energy Inc., termed the conversation “productive.”

“We will continue to work with the president, senators and all stakeholders that can provide important reforms that are a win for farmers and a win for union refinery workers,” Nimbley said in an emailed statement.

But Jeff Broin, chief executive of ethanol producer Poet LLC, who also participated in Thursday’s gathering, said “nothing new was discussed.”

Jobs Imperiled?

“Removing accountability from oil companies would deprive millions of Americans the freedom to choose less expensive, homegrown biofuels and imperil countless jobs and family farms across America’s heartland,” Broin said in an emailed statement. “This issue will continue to play out. We will protect interests of this industry, farmers and consumers.”

Refiners’ concerns generally center around the compliance credits, known as renewable identification numbers, or RINs, that they use to prove they have satisfied annual biofuel quotas.

Administration officials have been considering a menu of possible changes the EPA could make without Congressional action to lower the cost of those RINs and expand the market for ethanol.

The conflict over the 13-year-old RFS that mandates biofuel use at a certain level began long before Trump moved into the White House, and it’s among the most intractable energy policy disputes in Washington. Federal law enshrines biofuel targets through 2022, but after that the EPA has more latitude to set annual quotas and shift its approach.

“Nothing will change until there is a sense of risk about what might happen after 2022,” said Mike McKenna, a Republican energy strategist. “For most on the Democratic side, this eventually becomes an electric vehicle mandate if they’re in charge. For most on the Republican side, the program should zero out in 2022.”

Trump asked for another meeting on the issue next week and told participants he wanted to see studies on the economic effects of potential policy changes.

Read the original story: Third White House Biofuel Summit This Week Ends Without Deal

EPA Unresponsive to Senators’ Letter on Agency Position on RIN Prices

Senator Chuck Grassley

March 1, 2018

Press Release

WASHINGTON – U.S. Sen. Chuck Grassley (R-Iowa) today issued the following statement on EPA’s official position, restated as recently as November 2017 that, “high RIN prices do not cause significant harm to refiners.” Grassley also commented on a previously unreleased letter that he, along with Sens. John Thune (R-S.D.), Roy Blunt (R-Mo.), Deb Fischer (R-Neb.) and Joni Ernst (R-Iowa), wrote in January 2018 asking EPA about its previous assessments that RIN prices do not affect the success of refiners. EPA has yet to respond to the senators’ letter, despite numerous staff follow-ups.

“We are told that action needs to be taken to lower RIN prices to help refiners. But under both Democratic and Republican administrations, EPA has found that RIN prices don’t affect whether refiners are successful or not,” Grassley said. “That was true of President Obama’s EPA and it’s true of President Trump’s EPA. Several of my colleagues and I asked EPA about this in light of calls to make changes to the RFS, but we’ve yet to receive a response. I’m always willing to engage in good faith discussions on any issue, but the facts need to be on the table. Changing the RFS based on misinformation and baseless arguments isn’t fair to the thousands of farmers and workers throughout rural America whose livelihoods would be harmed if the RFS were undermined.”

The EPA in November 2017 found (p. 198), “After reviewing the available data, EPA has concluded that refiners are generally able to recover the cost of RINs in the prices they receive for their refined products, and therefore high RIN prices do not cause significant harm to refiners.” In May 2015, EPA found (p. 22), “the obligated parties were generally able to recover this increase in the cost of meeting their RIN obligations in the price they received for their petroleum-based products in 2013.”

The full letter from the senators is available below and can also be found here.

January 11, 2018

The Honorable E. Scott Pruitt, Administrator

U.S. Environmental Protection Agency

William Jefferson Clinton Building
1200 Pennsylvania Avenue, N. W.
Washington, DC 20460

Dear Administrator Pruitt,

As you are aware, we have been asked to participate in discussions with our Senate colleagues regarding the Renewable Fuel Standard. Specifically, our colleagues are working to construct policy options that would lower RIN prices for certain fuel refiners. In an effort to fully understand the perceived problem that we are being asked to address, it would be useful to have clarification from the Environmental Protection Agency on a number of topics to better understand the issues being discussed. We would respectfully request your help in addressing the following questions.

-In November, EPA wrote “After reviewing the available data, EPA has concluded that refiners are generally able to recover the cost of RINs in the prices they receive for their refined products, and therefore high RIN prices do not cause significant harm to refiners.”[1] Has EPA’s view on this subject changed?

-EPA has also stated that “Merchant refiners, who largely purchase separated RINs to meet their RFS obligations, should not therefore be disadvantaged by higher RIN prices, as they are recovering these costs in the sale price of their products.”[2] Does EPA still maintain this view on the effect of RINs on merchant refiners? If not, what has changed?

-A November analysis by Wells Fargo concluded that “…bottom line performance appears positive for most of the Independent Refiners across our coverage universe as the vast majority of the cost of RINs is embedded in the crack spread.” The report also noted that RINs provide a “financial incentive to ‘build out’ wholesale infrastructure.” Does EPA agree with those conclusions?

-The RFS allows obligated parties to fulfill their volume obligations by either blending renewable fuel or purchasing RINs. Is it accurate that obligated parties have an alternative other than purchasing RIN credits? Could merchant refiners increase their ability to blend renewable fuels to comply with the RFS? Is EPA aware of any obstacles preventing any of the merchant refiners from blending physical gallons of biofuels to meet their obligation?

-Many obligated parties have made substantial, long-term investments in renewable fuel blending facilities to meet RFS obligations. Have the refiners who claim to be severely negatively impacted by RIN prices chosen to make similar investments? If so, in what way? If not, why not?

-Does EPA have any data that would demonstrate a relationship between RIN prices and quarterly operating income for these certain refiners?

-EPA determined that the RFS and RINs are not causing significant harm to refiners.[3] What are the market factors that primarily affect the financial performance of oil refiners?

-How do refining margins and financial performance differ geographically? What unique factors contribute to regional variations in refining margins in the Northeast, Gulf Coast, Midwest, Rocky Mountain region, and West Coast?

-EPA analysis revealed that “the discounting of renewable fuels enabled by the sale of the RINs, and the higher petroleum prices that result from the cost of purchasing RINs, are expected to offset each other, resulting in the RIN price having no net impact across the entire fuel pool.”[4] In other words, RINs have no impact on retail prices for standard E10 gasoline. Economists from Harvard University, MIT, Iowa State University, and other institutions have come to similar conclusions. Does EPA still maintain the view that RINs have no net impact on E10 gasoline retail prices? If not, what has changed?

-EPA analysis shows that “[h]igh RIN prices are expected to reduce the price of fuel blends that contain a higher percentage of renewable fuels, such as E85...” In turn, EPA found that consumption of E85 increases as RIN prices increase and E85 prices decrease relative to gasoline.[5] Would a price cap on RINs discourage increased renewable fuel consumption?

-Does EPA believe capping RIN prices would reduce or eliminate the economic incentive to expand consumption of fuel blends with higher renewable content, like E15, E85, and B20? Would a price cap on RINs make it more difficult for the marketplace to achieve the statutory renewable blending volumes?

Thank you for your assistance in clarifying these matters.

Sincerely,

Sen. Charles Grassley

Sen. John Thune

Sen. Roy Blunt

Sen. Deb Fischer

Sen. Joni Ernst

Read the original release: EPA Unresponsive to Senators’ Letter on Agency Position on RIN Prices

Grassley Statement on Northey Confirmation, RFS White House Meeting

Senator Chuck Grassley

February 27, 2018

Press Release

WASHINGTON – U.S. Sens. Chuck Grassley and Joni Ernst of Iowa today held a joint press conference call to discuss their meeting with President Trump and others at the White House, as well as the confirmation of Iowa Secretary of Agriculture Bill Northey to serve at USDA as Undersecretary for Farm Production and Conservation. Audio of the press call is available here. Grassley’s statement:

“Today Senator Ernst and I met with President Trump, Senator Cruz, Senator Toomey, EPA Administrator Pruitt, USDA Secretary Perdue and White House staff. I reminded President Trump of his commitment to maintaining 15 billion gallons a year of ethanol under the RFS, and his commitment to biofuels, agriculture and rural America.

“No deal on RFS reform was reached at the White House meeting. And no assurances or commitments were made to change the RFS ahead of the meeting. Senator Ernst and I attended the meeting because we are always willing to meet with our colleagues to engage in good faith discussions on any topic, especially when the President is involved.

“I understand the President is concerned any time an American’s job could be lost. I am too, which is why I strongly support the U.S. biofuels industry, which 50,000 Iowans depend on for their livelihoods. But ethanol isn’t just important to Iowa. It’s important to 14 other states in the Midwest, and to our national security.

“The potential loss of more than 1,000 jobs at PES would be devastating for the families affected. I’m glad we have a President who cares about these blue-collar workers. It’s important though that we are honest with ourselves when examining these issues. If we don’t look at the facts before reaching conclusions, it becomes harder to fix problems. Every independent study indicates that other factors, not RIN prices, led to the bankruptcy of PES. Notably, merchant refiners in Texas and elsewhere are recording record profits.

“Senator Ernst and I suggested specific policy changes that would be a win-win for biofuels and oil. But we’ve made it clear all along that a cap or waiver credit for RINs would not be a win-win. It would undercut demand for ethanol and undermine the integrity of the RFS. Farm jobs and blue-collar energy production jobs would be lost as a result. I appreciate that President Trump wants to look out for domestic energy production workers. That does not need to be at the expense of ethanol production. The RFS shouldn’t be gutted for interests seeking market advantage in disguise.

“I’m glad that the unrelated hold on Bill Northey was lifted, and he has been confirmed by voice vote. Bill Northey’s nomination to USDA has never had anything to do with a program administered by EPA. Secretary Northey is a highly qualified and honorable man. He and his family waited long enough. I’m looking forward to Secretary Northey’s swearing-in so he can get to work for American agriculture and farmers.”

Read the original release: Grassley Statement on Northey Confirmation, RFS White House Meeting

Biofuels and Electric Vehicles Key to EU Decarbonisation, Report Claims

Biofuels International

February 20, 2018

A new report from the International Renewable Energy Agency (IRENA) says the EU could double the renewable share in its energy mix, cost effectively, from 17% in 2015 to 34% in 2030.

In order to reach long term decarbonisation goals, the report argues that all renewable transport options – both biofuels and electric vehicles, are necessary.

The report also argues that biomass will remain a key renewable energy source through to 2030 and beyond. Earlier this year, a Eurostat report argued that although wood biomass was the biggest contributor to the EU’s renewable energy supply, the mix was shifting. The Eurostat figures suggesting the rate of increase in wood biomass sources was not keeping pace with wind, solar and other renewables.

The IRENA report argues all EU countries have ‘cost-effective’ potential to use more renewables.

“Tapping the additional renewable energy potentials identified in the study would propel the EU further on a decarbonisation pathway compatible with the ‘well-below’ 2°C objective established in the Paris Agreement,” a statement announcing the report explains.

The new report comes as part of the Remap EU study, which is aiming to identify cost-effective renewable energy options across all Member States, sectors and technologies in a bid to meet and possibly exceed the proposed 27% renewables target for 2030.

2030 cost savings

According to IRENA, current plans for renewable energy deployment would result in a renewables share of 24% by 2030. The authors identify three categories of through which additional potential could be realised.

Significantly, the study notes that the first category – renewable power generation (wind, solar, hydro and thermal) could lead to strong cost savings compared to conventional technologies. The second category – which relates to the heat and transport sector and covers both electrification and biodiesel, delivers cost-neutrality to moderate savings. The third category, which involves different forms of biomass across sectors, would come at an additional cost.

However, it’s noted that full implementation of all the identified options would result in net cost savings of $25 billion (€20 billion) a year, with the savings from the cheapest options outweighing the costs of the most expensive.

Read the original article: Biofuels and Electric Vehicles Key to EU Decarbonisation, Report Claims

Analysis: RIN Prices of ‘Just a Few Cents’ are Coming—Without Changes to RFS

Renewable Fuels Association

February 16, 2018

By Emily Druckman

A new analysis from the University of Illinois shows that the conditions that caused high conventional biofuel (D6) RIN prices are changing rapidly and that “…it is not out of the realm of possibility for D6 RINs prices to fall back their pre-2013 level of just a few cents without making any changes to the RFS.”

The authors argue that high D6 RIN prices have been driven by the “gap” that exists between domestic ethanol consumption (estimated at 14.5 billion gallons in 2017) and the 15-billion-gallon statutory requirement for conventional renewable fuels. The size of that “gap” continues to shrink rapidly as E10, E15, and E85 blending has expanded. Thus, as that expansion continues at a rapid pace, the “gap” will be fully closed and RIN prices will fall dramatically. As the Renewable Fuels Association has pointed out, this is exactly how the RFS was intended to work. Establishing RVP parity for E15 would certainly help accelerate the closing of that gap. Specific findings from the University of Illinois report include:

“What seems to have gotten lost in all the noise surrounding the political war over the RFS is how rapidly the conditions are changing that created the high ethanol RINs prices in the first place. The key is the “gap” between the ethanol blend wall and the conventional ethanol mandate.”

“With the statutory conventional ethanol mandate fixed at 15 billion gallons, the growth in ethanol use has led to a sharp decline in the magnitude of the conventional gap. In particular, the latest ethanol use estimate from the EIA for 2019 implies a conventional gap of a little less than 300 million gallons. This gap is so small that an increase in projected ethanol use for 2019 of just two percent would erase the gap completely.”

The bottom-line from this analysis is that the conventional ethanol gap is well on its way to being eliminated in the next few years, even without a large expansion in the use of higher ethanol blends such as E15 and E85. If this does occur, the impact on D6 ethanol RINs prices could be almost as profound as what we witnessed in 2013, but in exactly the opposite direction.

“It is not out of the realm of possibility for the price of D6 RINs to go back to their pre-2013 level of just a few cents. Of course, this assumes that the conditions that have been driving ethanol consumption upward do not change. Even if conditions do change, the size of the conventional gap is much more manageable than just a few years ago and opens the door for very modest increases in E15 and/or E85 to close the conventional gap. For example, a 300 million gallon conventional gap could be eliminated with an increase in E15 consumption of just 2 billion gallons, or about 1.3 percent of total gasoline consumption.”

“This means it is not out of the realm of possibility for D6 RINs prices to fall back their pre-2013 level of just a few cents without making any changes to the RFS.”

“The first supposed ‘blend wall’ was the 10% ethanol blend level. Well, we crashed through that last year and are now blending above 10.0% nationally,” said Renewable Fuels Association President and CEO Bob Dinneen. “But the next blend wall is the 15-billion-gallon allotment for conventional ethanol. With increased E15 and E85 blending, we are careening toward smashing that wall as well. It seems, however, that the closer we come to that wall, the more intent some refiners become in hitting the brakes, insisting upon RFS demand destruction as the only safe course. This analysis lays waste to that false premise, and demonstrates, as we have insisted for years, that increased ethanol use will also break the 15-billion-gallon wall and lead to lower RIN prices. And RVP parity for E15 would lower RIN prices even more quickly while leaving the RFS intact. Now that’s a win-win,” he added.

Read the original analysis: Analysis: RIN Prices of ‘Just a Few Cents’ are Coming—Without Changes to RFS

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