In the News

Ethanol Producer Magazine

February 12, 2016

By Susanne Retka Schill

The renewable fuel standard (RFS) does not expire in 2022, but an analysis of the statute reveals major changes could occur. University of Illinois economist Jonathan Coppess examined recent RFS discussions regarding the RFS in campaign coverage in a FarmDoc Daily post, “Following-up on RFS Questions.”

The statute does not contain a sunset or end date provision, writes Coppess, but setting the annual mandates becomes more discretionary for the U.S. EPA. “After 2022, the applicable volumetric mandates for renewable fuels are to be determined by the EPA administrator,” he writes, “and based on analysis of the impact of the production and use of renewable fuels on various matters such as environment factors, U.S. energy security, infrastructure, cost to consumers of using renewable fuels and other factors including job creation and food and commodity prices.” Estimates of expected commercial renewable fuel production are to be included as well.

Two features of the post-2022 provisions speak to the current discussions around the agency’s interpretation of its waiver authority—specifically consumer and infrastructure considerations. “On one hand, Congress included issues related to the ultimate consumer and fueling infrastructure (the blend wall) in EPA's volumetric determinations. On the other hand, however, those matters are included only for determinations made after 2022 when the statutory levels (and arguably the waiver authority) no longer apply. Additionally, these are among a large set of factors within six categories for EPA to consider and all of the analysis is to be based upon a review of implementation of the RFS during the calendar years leading up to 2022.”

Another feature in the statute affects the impact of waiver decisions already made by the EPA. “If any of the statutory mandated levels are reduced by at least 20 percent for two consecutive years or at least 50 percent in any single year, the EPA administrator is given the authority to write a rule modifying the applicable volumes for all years that follow the final year of the waiver, except that this modification cannot take place prior to 2016,” Coppess writes, citing the statute language.  That already has happened regarding advanced and cellulosic biofuels, but did not occur for other fuels in the modified mandates for 2014-’16, though it came close, he points out.

Crossing that 20 percent threshold in future years could become easier, if EPA’s interpretation of its waiver authority prevails. The ethanol industry has brought suit to challenge that, however. “The fact that EPA's use of the waiver authority could also set it up to completely modify the statute might well impact a judge's review of the reasonableness of EPA's arguments,” Coppess writes, adding the outcome of the litigation is “very much unknown.”

To read his full analysis, including citations to specific statute language, click here.

To read the original story: Economist: No Sunset for RFS, Waivers Impact Future Authority

Ethanol Producer Magazine

February 11, 2016

By Kassidi Andres

New research by American Coalition for Ethanol President Ron Alverson indicates life cycle modeling has demonstrated significant improvement in emissions performance of the corn-based ethanol life cycle, with continued improvements expected during the next few years.

ACEGREET2020

Alverson conducted research based on the Greenhouse gases Regulated Emissions and Energy use in Transportation model. The model was developed by Argonne National Laboratory to evaluate the life cycle emissions of various fuel combinations, including ethanol and gasoline and ethanol-gasoline blends.

According to the national lab, "The peer-reviewed model has laid to rest some long-held misunderstandings about ethanol (EtOH) and its important role in reducing petroleum use and greenhouse gas emissions. In terms of key energy and environmental benefits, Argonne’s GREET shows that cornstarch ethanol clearly outpaces petroleum-based fuels, and that tomorrow’s cellulose-based ethanol would do even better."

According to Alverson’s research, life cycle greenhouse gas (GHG) emissions associated with ethanol have dropped by approximately 60 percent over the last 25 years and will continue to decrease with improvements in production efficiencies and negative land-use change.

GREET’s calculations show that the fossil energy input per unit of ethanol is lower, with 0.78 million British thermal units (Btu) of fossil energy consumed for each 1 million Btu of ethanol delivered. In comparison, 1.23 million Btu of fossil energy consumed for each 1 million Btu of gasoline delivered.

Read the original story: ACE: GREET Shows Improvement in Life Cycle Ethanol Emissions

Ethanol Producer Magazine

February 9, 2016

By Susanne Retka Schill

A 25 million bushel increase in projected corn use for ethanol in USDA’s February supply-demand report is partially offsetting a 50 million bushel lower export forecast. Corn imports are projected 10 million bushels higher based on recent imports of corn into southeastern U.S. feed markets and corn exports are projected 50 million bushels lower as larger supplies of South American corn further increase competition for U.S. exports. The result is USDA is projecting feed grain ending stocks for the 2015-’16 crop year higher by 35 million bushels. USDA narrowed its projected range for season-average farm prices by 5 cents on both ends to $3.35 to $3.85 per bushel.

The increase in ethanol use projections are based on the strong pace of ethanol production during January, as indicated by weekly Energy Information Administration data and higher forecast gasoline consumption. Corn use for ethanol is now projected to reach 5.225 billion bushels, up from 5.2 billion in the January report. That compares with 5.124 billion used in the 2013-’14 marketing year (beginning Sept. 1) and the estimated 5.209 billion bushels in 2014-’15.

Global coarse grain supplies for 2015-’16 are projected 1.3 million tons higher.  Higher Brazil and Argentina corn production more than offset lower corn beginning stocks in these same countries and lower production elsewhere.  Brazil and Argentina 2015-’16 beginning stocks are lowered with higher 2014-’15 exports.  Brazil corn production for 2015-’16 is raised 2.5 million tons based on higher first-crop yields and indications that strong domestic corn prices, reflecting the devalued local currency, will increase second-crop plantings.  Argentina corn production is increased 1.4 million tons on higher area.  Argentina corn production is revised higher for 2014-’15, also on higher area.  South Africa corn production for 2015-’16 is lowered 1.0 million tons, as continued historic drought conditions further reduce crop prospects despite some stabilizing rain during the month of January.  Indonesia corn production is reduced 500,000 tons. 

Global coarse grain consumption for 2015-’16 is raised 900,000 tons with foreign consumption up 200,000 tons. The largest change this month is a 2.0-million-ton increase in China corn feed use as relative internal market prices are expected to support greater corn feeding at the expense of wheat.  Corn use is also increased for Mexico, India and Turkey.  Partially offsetting are corn feeding reductions for Brazil and Argentina. Sorghum feed use is lowered for Mexico. 

Global coarse grain imports for 2015-’16 are raised 4.3 million tons with corn imports higher for South Africa, Iran, India, Indonesia, Mexico, and Turkey.  Corn exports are raised for Brazil, Argentina, and South Africa, but lowered for the United States.  Barley exports are raised for Argentina and Kazakhstan, with higher imports for Saudi Arabia.  Global coarse grain ending stocks for 2015-’16 are slightly higher, as larger barley and rye stocks more than offset a small reduction for corn.

Read the original story: Corn Use for Ethanol Offsets Lower USDA Export Forecast

KTIC Radio

February 8, 2016

By DTN/Progressive Farmer

DuPont filed a motion Friday to intervene in a lawsuit seeking review of the Environmental Protection Agency’s latest Renewable Fuel Standard volumes, arguing the final volume requirements put the company’s cellulosic ethanol investments at risk.

DuPont filed a motion to intervene on behalf of a petition for review filed with the D.C. Circuit Court of Appeals by American Coalition for Ethanol, Americans for Clean Energy, Biotechnology Innovation Organization, Growth Energy, National Corn Growers Association, National Sorghum Producers and the Renewable Fuels Association.

DuPont has completed construction and is in the process of launching commercial cellulosic ethanol production at its plant in Nevada, Iowa.

In the court filing, the company said the final RFS numbers released in November 2015 hurt DuPont’s efforts.

“DuPont has invested substantial resources in cellulosic ethanol, including hundreds of millions of dollars to construct a state-of-the-art facility in central Iowa to produce commercial quantities of cellulosic ethanol,” DuPont stated in its motion to intervene. “Having made this substantial investment, DuPont is keenly interested in ensuring that the RFS program remains true to its intended purpose — incentivizing investment to grow the renewable fuel market in the United States.

“…Quite simply, EPA’s action puts DuPont’s investment at risk.”

EPA announced a three-year program for 2014, 2015 and 2016 that includes biofuel volumes below those set in the original 2007 law.

The agency also announced biomass-based diesel volumes through 2017. The overall RFS cuts came about as a result of overall decreased demand for gasoline, reflected in about a 20% reduction in overall biofuels volumes in the RFS.

“DuPont shares the petitioners’ concerns with EPA’s decision to reduce the statutory renewable fuel volumes,” DuPont said in the court motion. “Additionally, DuPont brings a different and complimentary perspective to this litigation — namely, the impact of the RFS rule on the nascent cellulosic renewable fuel industry and on a company that has invested hundreds of millions of dollars in cellulosic biofuel technology.”

The DuPont motion comes about one month after the American Fuel and Petrochemical Manufacturers filed a motion to intervene on EPA’s behalf.

DuPont’s 30-million-gallon, $228 million plant is expected to employ about 80 people, including about 50 on a seasonal basis for stover harvest, which is conducted by DuPont on a contract basis for farmers within 30 to 35 miles of the plant. The plant is co-located with corn-based ethanol producer Lincolnway Energy.

Read the original story: DuPont Says RFS Volumes Put Company’s Cellulosic Ethanol Investments at Risk

Renewable Fuels Association

February 5, 2016

The U.S. ethanol industry exported 836 million gallons of ethanol worth $1.8 billion in 2015, according to a new summary of ethanol trade statistics released today by the Renewable Fuels Association (RFA). The final tally for 2015 was identical to the 2014 export total. The RFA publication, which draws data from several U.S. government entities, offers a succinct overview of U.S. ethanol export and import trends in 2015 and prior years. RFA’s new statistical summary will be distributed to attendees of the upcoming National Ethanol Conference (NEC), including prospective ethanol importers attending the International Buyer Program (IBP).

The RFA report finds that U.S. ethanol made its way to all six inhabited continents in 2015, reaching more than 75 countries. The top five countries receiving U.S. ethanol last year included Canada, Brazil, the Philippines, China, and South Korea. Notably, China emerged in 2015 as a leading destination for U.S. ethanol, and total exports to Asia are up 1,515 percent over 2012. While U.S. ethanol exports had a strong showing in 2015, imports of ethanol continued to sag. The United States imported just 93 million gallons of ethanol last year, with more than one-third entering through California ports.

Bob Dinneen, RFA president and CEO, noted, “Ethanol’s value as an octane booster was in the global spotlight in 2015. Even with falling crude oil prices, ethanol remained the lowest-cost—and cleanest—source of octane in the world. Clearly, refiners in foreign markets are optimizing their operations to take advantage of ethanol’s unique octane properties, just as U.S. refiners have done in recent years.”

Dinneen said the RFA and its partners will continue to seek opportunities to expand foreign markets in 2016. “Growth in the export market is critically important to the future of our industry,” Dinneen stated. “With EPA failing to enforce the Renewable Fuel Standard volumes established by Congress, we must continue to aggressively seek new market opportunities around the world. We will continue to work collaboratively with the U.S. Department of Commerce, the Foreign Agriculture Service, U.S. Grains Council, Growth Energy, and others to expand international markets for American-made ethanol.”

One such opportunity to build new markets is just around the corner. RFA’s upcoming National Ethanol Conference, held Feb. 15–17 in New Orleans, will serve as host to the U.S. Department of Commerce’s International Buyer Program (IBP). Through the department’s network of offices in U.S. embassies and consulates worldwide, the IBP recruits pre-screened foreign buyer delegations and brings them to selected trade shows and conferences in the United States, connecting U.S. companies with international buyers. Prospective ethanol buyers from Brazil, India, Mexico, Peru, and the Philippines are expected to attend.

“The RFA is excited about participating in the IBP, and for the opportunity the program provides to create a pathway that connects domestic ethanol producers with international markets,” said Randall J. Doyal, RFA Board of Directors Chairman. “By providing a forum to establish these important business-to-business relationships, the NEC will serve as the premier destination for U.S. ethanol producers who are looking for opportunities to promote their products on the world stage.”

View the summary here.

Read the original news release: As RFA Prepares to Host International Buyers, New Report Shows U.S. Ethanol Exports Reached 836 Million Gallons in 2015

Ethanol Producer Magazine

February 4, 2016

By Susanne Retka Schill

Ethanol continues to maintain its status as the low-cost octane enhancer, in spite of low oil prices reducing the cost of competing petroleum-based aromatics.  The biggest threat, say University of Illinois economists Scott Irwin and Darrel Good, would be a shortfall in U.S. corn production that would cause both corn and ethanol prices to spike. The economists analyzed octane enhancers in the refinery business in a recent FarmDocDaily post, “The Competitive Position of Ethanol as an Octane Enhancer.”

Benzene, toluene, and xylene are petroleum-based aromatic compounds with long histories as octane enhancers in gasoline blends, all with similar octane ratings as ethanol. “Despite the recent increase in ethanol prices relative to gasoline, ethanol prices still remain below that of the aromatics,” Irwin and Good found.

In examining weekly prices of the aromatics and the price of ethanol at the Gulf for two years, January 2013 through January 2015, ethanol was priced under each of the aromatics, with the exception of one brief period in spring 2014. Benzene was the highest priced, but this premium disappeared in early 2015, and now all three aromatics prices are moving together, they write. “CBOB prices were always substantially lower than the price of the aromatics, which is not surprising given the higher production costs of the aromatics compared to other petroleum blendstocks. In general, the aromatics have been priced about 140 to 170 percent above CBOB. It is interesting to note that the aromatic price premium has actually increased in recent months.”

The spread between ethanol and competing aromatics has shrunk, they continue. “The average price of aromatics increased sharply during the first half of 2015, causing the spread between aromatics and ethanol to exceed $1 per gallon. The price of aromatics has since declined below $2 per gallon, but still sits today at 35 cents above the price of ethanol, which has been relatively constant over the past year.”

The economists point out that blending economics for gasoline are rather complicated “due to the differing array of characteristics of alternative blending components and regulatory requirements to produce spec gasoline. For example, ethanol has chemical characteristics that may be beneficial, e.g., as an octane enhancer, or detrimental, e.g., high vapor pressure. Energy companies have developed sophisticated mathematical refinery models to determine optimal blends of the various gasoline components given prices and technical specifications.” Thus, while the direct comparison of the price of ethanol and alternative octane enhancers sheds some light on their relative value, it doesn’t represent all of the factors involved in blending economics.

Read the original story: Economists: Ethanol Retains Low-cost Octane Enhancer Status

Ethanol Producer Magazine

February 4, 2016

By Holly Jessen

Which needs to come first, a new high-octane midlevel ethanol blend or new vehicles optimized to more efficiently take advantage of the higher octane content?

“It is that classic chicken and egg thing,” says Timothy Theiss, bioenergy technologies program manager at Oak Ridge National Laboratory. “The analysts say it's the simultaneous introduction of a new fuel and a new vehicle, which is very difficult.”

Brian West, deputy director of the Fuels, Engines and Emissions Research Center at ORNL, offered a slight tweak to that perspective. “All we are talking about doing, and I don't mean to make it sound easy, is just changing that ratio a little bit,” he says, adding that the nation already has a gasoline and ethanol infrastructure. “It would certainly seem to me to be a much simpler thing than putting in a whole new infrastructure of, say, hydrogen.”

West believes a new E25 or E40 blend, perhaps marketed as a “renewable super premium,” could be sold in a way that is a win for consumers, retailers and everybody involved. In fact, vehicles optimized for the new fuel could be manufactured today. “I often say, there's not a good technical reason we couldn't see this in the marketplace in five or 10 years,” West adds. “That doesn't mean I think it will happen in that time frame. There's just too many parties that need to be in agreement.”

Thiess and West are two of many researchers at ORNL, Argonne National Laboratory and the National Renewable Energy Laboratory who have been engaged in a study since 2013. The goal of the U.S. DOE-sponsored scoping study was to assess the potential of an E25 to E40 mid-level blend.

In mid-January researchers were wrapping things up, preparing to provide a short, high-level summary to the DOE. The last of the data will be released in publications within the next year, West says. Up next is the Optima initiative, which will focus on developing new, co-optimized fuels and engines to maximize performance and carbon efficiency. While the high-octane fuel study focused specifically on ethanol, Optima will look at fuels like ethanol as well as other high-octane fuels, Thiess says.

Significant Findings
The high-octane fuel study found that E25 and E40—when used to fuel a vehicle optimized for the blend—could achieve volumetric fuel-economy parity with E10. In other words, each additional gallon of ethanol added would displace a full gallon of gasoline and fuel economy would be the same as one of today's vehicles using E10. Vehicle efficiency would also increase, at 5 percent for E25 and 10 percent for E40.

Of course, fuel economy varies according to multiple factors, such as how fast the vehicle is driven and engine design. “Not everybody is going to see all of this across the board every time,” Theiss says. “Your mileage may vary.”

An ANL report concluded that, compared to E10, when 40 percent corn ethanol was used for blending, total greenhouse gas emissions were reduced by 18 percent. If corn stover were the feedstock, E40 achieved a 32 percent GHG emission reduction.

NREL was involved in the high-octane fuel study in several capacities, says Robert McCormick, principal engineer and platform lead in fuels performance R&D. For example, a market analysis concluded that high-octane vehicles could make up 43 to 79 percent of light-duty vehicle stock by 2035. Another thing NREL completed was an infrastructure assessment. “There are no technical issues in deploying equipment for higher ethanol blends, only cost considerations and station knowledge of their equipment,” he says.

That's what's exciting to Thiess about the high-octane fuel study. “In this, we're finding we have a lot of ands,” he says. “We can get better fuel economy. And. When ethanol is traditionally priced a little less than gasoline, we can get a fuel that is a little bit less because we are using less petroleum and more ethanol. And. We're showing that we'd get pretty nice greenhouse gas emission reductions. And. We're showing that the vehicle manufacturers would be favorably inclined to build those vehicles. And. We're showing that the biofuel infrastructure could pretty much be adapted to handle it. And. We're showing that there's a lot of feedstock out there that could be used to make it. So, there's a lot of ands, and not the major ors, where we have to make very big trade-off decisions right up front. Now, that's not to say that it's not a difficult thing. It is very difficult to introduce any new fuel. And this would be no exception. But there are a lot of benefits that stack on top of each other.”

Making It Happen
In order to make high-octane fuels and vehicles a reality, quite a few players, including the U.S. EPA and the auto industry, have to get on board. “For manufacturers to build cars that are dedicated for this fuel, I think a number of things have to happen,” West says. “It has to be widely available. They have to believe the consumer is going to buy it all the time, or they aren't going to get the fuel economy benefit that they are getting in the certification test. In order for the consumer to buy it all the time, it has to be on a cost-parity basis with E10.”

But that doesn't mean that the fuel can't be sold until that happens. In fact, E30 is already being sold at some blender pumps across the nation and work to increase the infrastructure for higher ethanol blends is ongoing. And, most flex-fuel vehicles on the road today can already use midlevel ethanol blends and actually see a performance benefit doing so. Thiess sees the FFV fleet as a bridge across the chicken and egg dilemma in establishing a new midlevel ethanol blend and new vehicles optimized for that fuel.

Read the original story: E25, E40 for the Masses

Ethanol Producer Magazine

Jan 28, 2016

By Tom Bryan

U.S. presidential candidate Sen. Ted Cruz (R-Tex.) was given an opportunity to clarify his position on ethanol and the U.S. Renewable Fuel Standard during a high-profile Fox News GOP debate in Des Moines, Iowa, Thursday night. Here’s what Cruz said when Fox News' Chris Wallace asked him why Iowa voters should support him.

“I’m glad to discuss my views on ethanol and energy," Cruz said. "I think God has blessed this country with enormous natural resources, and we should be developing all of the above. We should be developing coal, oil, natural gas and nuclear, wind and solar, and ethanol and biofuels. But I don’t believe that Washington should be picking winners and losers. And I think there should be no mandates and no subsidies whatsoever.”

Cruz went on to say that he has introduced a comprehensive tax plan that eliminates all federal subsidies.

“So there are no subsidies for oil and gas, no subsidies for anyone," he said. "Now, it is true that there are a bunch of lobbyists, and a bunch of Democrats in this state, spending millions of dollars trying to convince the people of Iowa that I somehow oppose ethanol. That’s not true. I have introduced legislation that would phase out the ethanol mandate over five years, but that is in the context of having no mandates whatsoever for anyone. But there is a much more important regulation for ethanol, and that’s the EPA’s blend wall, which makes it illegal to sell mid-level blends of ethanol in gasoline. I will tear down the EPA’s blend wall, which will enable ethanol to expand its market share by up to 60 percent … all without any government mandates whatsoever, through the marketplace.” 

Read the original story here : Cruz Reiterates Firm Opposition To RFS, Other Mandates