Minnesota Ag Has Much to Lose in U.S.-China Trade Spat
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
March 20, 2018
By Enerkem
Enerkem Inc., a world-leading waste-to-biofuels and chemicals producer, announced today during the 255th 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
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
Medford High School Students Tour Guardian Energy
Minneapolis, March 21- Thirty-seven students from Medford High School visited Guardian Energy in Janesville yesterday to gain a better understanding of clean Minnesota-produced renewable energy.
The students were briefed on the various processes of ethanol production at the plant, which produces 130 million gallons of ethanol a year.
“We appreciate the students and teachers taking time out of their schedule to learn more about biofuels and the advantages they provide as a source of fuel. It is important for the students to learn the facts about producing fuel from renewable feedstocks like corn. As a country, this helps to expand our energy independence while contributing to the rural economy and improving our environment,” said Jeanne McCaherty, CEO of Guardian Energy.
The students, from grades eight to 12, are from Medford High’s small engines and Ag 8 classes.
During the tour, they learned about several different components of ethanol production including incoming grain grading, grain handling, liquefaction, fermentation, distillation, distiller grain drying, corn oil separation, product storage and product shipment.
The tour was organized by the Minnesota Bio-Fuels Association. Guardian Energy is a member of Minnesota Bio-Fuels Association.
“The ethanol industry plays a vital role for Minnesota’s agricultural industry and through these tours, students are given a chance to see and understand the process of converting a homegrown renewable ingredient into clean energy,” said Tim Rudnicki, executive director of the Minnesota Bio-Fuels Association.
Medford High School Agriculture Education instructor, Tim Larson, who accompanied his students on the tour, said it was important for his students to learn about renewable fuels and the latest technologies used in ethanol production.
“Anytime we can show the students a view from the world of employment and new technologies is a positive for their future career explorations,” he added.
Toyota Reveals World-First Flexible Fuel Hybrid Prototype in Brazil
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
The Ethanol Industry's Economic Footprint in Minnesota's Sixth Congressional District
Continuing our series on the ethanol industry’s economic footprint in specific congressional districts in Minnesota, we head today to the sixth congressional district.
Sen. Tina Smith Stands up for Minnesota Jobs & American Energy Independence, Presses White House to Preserve Strong Renewable Fuel Standard
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
The Ethanol Industry's Economic Footprint in Minnesota's Fifth Congressional District
Continuing our series on the economic impact of the ethanol industry in specific congressional districts in Minnesota, we head to the fifth congressional district today.
Positive US Ethanol Margins are Driving Ethanol Production Growth
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
Kwik Trip #575
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