The Hill

May 4, 2017

By Brian Jennings

Enactment of the Renewable Fuel Standard in Congress did more than save money at the pump and clean up the air for consumers, it also helped boost demand for U.S. corn and soybeans which, in turn, increased prices received by American farmers.  By every measure, increasing the production and use of homegrown renewable fuels has spurred economic growth for U.S. farmers and supported high-skill, high-wage jobs in rural communities.

When the use of renewable fuels is curbed, the opposite is true.  Starting in 2013, economic insecurity spread across rural America because the Environmental Protection Agency took implementation of the RFS off-track, reducing annual renewable volume obligations (RVOs) below levels established by Congress.  During this period, EPA sided with oil companies that claimed infrastructure constraints and the mythical E10 “blend wall” prevented higher ethanol blends, such as E15 and E30, from being used in the marketplace.  As a result, leading biofuel groups were forced to sue the Obama administration’s EPA.  This litigation is ongoing and oral arguments were held last week by the U.S. Court of Appeals for the District of Columbia. A court decision is expected later this year.

The timing of EPA’s mismanagement of the RFS was awful and the consequences have been worse.  While EPA was riding the brakes on the RFS, the productivity of American farmers led to record-high corn crops in 2015 and 2016.  Supplies grew while demand and farm income fell.  According to the United States Department of Agriculture, surplus stocks of corn will swell to a 30-year high of 2.4 billion bushels and corn prices will fall to a 10-year low in 2017. Liquidity ratios and working capital have deteriorated to their weakest levels since 2002 and the value of farm sector assets is expected to decline by $32 billion in 2017.  Farm debt is mounting and will represent about 20 percent of farm income this year.  The share of farm loans that are delinquent is creeping up and reports of farm auctions have been on the rise.

Net farm income has dropped from $124 billion in 2013 to an expected $62 billion in 2017, a decrease of nearly 50 percent since EPA took the RFS off-track.  As some will remember, similar conditions forced Congress to authorize yearly ad hoc economic emergency disaster payments to farmers between 1999 and 2002 and required additional spending of $73.5 billion in the 2002 Farm Bill to avert economic collapse in rural America.  It was enactment of the RFS in 2005 that restarted the rural economy and allowed farmers to profit from the free market versus relying so heavily on government payments.  The lesson learned is that increasing the demand for renewable fuels leads to higher market prices for farmers and reduced taxpayer spending on farm program payments. 

Growing the renewable fuels market in 2017 is even more critical given the uncertainty created by efforts to renegotiate existing trade pacts. While we are hopeful that these new negotiations will lead to better trade opportunities, the uncertainty in the near term will impact the U.S. farm economy which makes a strong and growing market for ethanol-blended fuel even more important.

To restore badly needed economic security to rural America, EPA and Congress should take a number of steps.   First, Congress must reject any attempt to reduce or repeal the RFS.  To get the RFS back on track, the Trump administration needs to make good on its campaign promise to set and keep RFS volumes at statutory levels.  Likewise, EPA Administrator Scott Pruitt needs to follow through on the statement made during his confirmation hearing “to honor the intent of the RFS statute…, use RFS waivers judiciously, and honor RVO timelines.”

Second, legislative or regulatory action must be taken so E15 and higher blends of ethanol have access to the market.   Retailers want to sell E15 in the summer months because the fuel is less emitting and lower cost than E10 and straight gasoline, but EPA’s current interpretation of its Reid vapor pressure (RVP) rule handcuffs them.  This RVP regulation is the most burdensome hurdle preventing more immediate growth of E15 use nationwide.  Bipartisan legislation is pending in Congress to fix this problem and EPA has options at its disposal to make a commonsense regulatory change that would allow consumers to have access to E15 and other lower cost fuels that improve air quality.  Action needs to be taken soon.

A third hurdle impeding the use of higher ethanol blends is the mountain of EPA red tape over the approval process for new certification fuels and the registration of those fuels.  EPA needs to streamline its fuel petition process and eliminate unreasonable criteria for approval of high-octane fuels, such as E25-E40, that currently discourages innovation and obstructs the ability for new efficient high-octane fuels to compete in the marketplace.

Read the original story: Renewable Fuels Are Part of an ‘America First’ Energy Plan

On April 18, we brought 21 students from Minneota High School to the ADM Corn Processing plant in Marshall. Like the many other school tours we’ve organized, this visit gave the students a deeper understanding of the ethanol industry and potential career opportunities in the industry.

Ethanol Producer Magazine

April 26, 2017

By Bob Dinneen

In 2016, the U.S. ethanol industry produced a record 15.25 billion gallons of clean, high-octane fuel and exported more than a billion gallons of the fuel to Brazil, China, Canada and other countries. I anticipate 2017 will be another record year for production and use, but I remain focused on growing demand for our fuel. Growing demand means expanded market opportunities for higher ethanol blends and to that end, the Renewable Fuels Association’s top priority this year is securing RVP parity for all ethanol blends.

How did we get here? In 1989, the U.S. EPA provided a Reid vapor pressure (RVP) waiver to 10 percent ethanol blends, concluding there would be no air quality consequence and retailers would otherwise be unable to secure blendstocks for ethanol blending year-round. In 2011, EPA approved the use of E15 in 2001 and newer vehicles, but the agency did not extend the same RVP waiver as it did to E10. As a result of this disparity, retailers in conventional gasoline areas (most of the country) have to secure specialty—and costly—gasoline blendstocks in order to continue selling E15 in the summer (June 1-Sept. 15).

The RFA has repeatedly urged EPA to take immediate administrative actions to eliminate this nonsensical regulatory barrier that is impeding growth in the use of E15 and other higher ethanol blends. We have provided the agency with reams of data from the U.S. DOE and independent laboratories proving that extending the RVP tolerance currently provided only to E10 would have no detrimental impact on ozone or other air quality standards. In fact, because of the increased oxygen content of higher ethanol blends, there would actually be improved air quality.

Inexplicably, the Obama administration’s EPA did not seem to understand the damage inflicted on retailers and consumers by denying RVP parity, however we have hope under this new administration. One of President Trump’s priorities is an overhaul of the regulatory code that has needlessly burdened American businesses, stymied growth and increased cost with little or no environmental or consumer benefit; EPA’s treatment of volatility for ethanol-blended gasoline is a perfect example. The failure to grant the RVP waiver has needlessly discouraged retailers from offering the fuel blend year-round and punished consumers who cannot take advantage of the lowest cost, highest octane source of fuel in the world.

There are several ways for RVP parity to be achieved. RFA has worked for years on an administrative fix. To date, EPA has been reluctant to use its statutory authority to grant an RVP tolerance for E15. EPA could also lower the volatility of conventional fuels; but, while supportive, the agency has not shown much enthusiasm for getting that done either. RFA remains optimistic that, with a new sheriff in town and a fresh look at the existing statutory authority, we might soon be able to offer the lower-priced, higher-octane E15 to consumers year-round. 

Of course, a legislative fix is also possible and the RFA supports bills that have been introduced, as long as they don’t jeopardize the Renewable Fuels Standard. For example, our champions on Capitol Hill have introduced two bills that would address the issue. In early March, Sens. Deb. Fischer, R-Neb., Joe Donnelly, D-Ind., and Chuck Grassley, R-Iowa, introduced the Consumer and Fuel Retailer Choice Act (S. 517) that would extend RVP parity for ethanol blends above 10 percent. A companion bill, H.R. 1311, was also introduced in the House by Reps. Dave Loebsack, D-Iowa, and Adrian Smith, R-Neb.

We will continue to pursue all avenues to make sure parity is addressed. I want consumers to have a choice at the pump, whether that’s in February or July or November. Let’s work on making sure that happens this year.

Read the original article: RVP Parity a Win, Win for Consumers

Argus Media

April 26, 2017

Danish biotechnology firm Novozymes said it expects a slight rise in US ethanol output in 2017, after an increase in production in the first quarter of the year. But the company says US demand is down and inventories in the country are rising.

The firm said it had boosted sales of its enzymes to US bioethanol producers in the first three months of this year, helping grow sales of its bioenergy segment to 681mn kroner ($100mn) up by 9pc compared with January to March 2016. Novozymes said this was the result of estimated US ethanol output rising by 4pc in the first three months of this year, set against the first quarter a year ago. The company said it expects US ethanol output this year to be "on a par or slightly up on 2016." It also expects second generation ethanol output to increase by an unspecified amount.

The increase in its bioenergy enzymes sales reverses a decline in 2016 when Novozymes said US ethanol producers were looking to cut costs, as profits remained thin. The company has been aided in the last year by the launch of new products and in part by the decline in the oil price, which supported gasoline demand in the US, into which ethanol is blended.

But the firm said today US ethanol consumption had declined slightly in the first quarter and inventories were building. "Margins came down in the first quarter," said head of bioenergy Tina Sejersgard Fano.

The EIA said inventories are around 23mn bl, up by 1mn bl on the year, with its most recent production data giving output of 993,000 b/d, up by around 6pc on the year. That inventory build "could lead to a reduction in production," in the rest of the year said Holk Nielsen.

In Europe Novozymes owns a 10pc stake in the 40,000 tonnes/yr Crescentino cellulosic ethanol plant in northern Italy, operated by Beta Renewables. The unit was first started up in December 2012 but it ran into familiar problems associated with plants aiming to create ethanol from straw and other biomass. Novozymes said the plant is still not at capacity.

The company also supplies enzymes to cellulosic ethanol plants in the US, Brazil and China, all of which have faced similar issues. But Sejersgard Fano said US cellulosic plants were having "more and more stable production," despite being only a small part of overall US ethanol output.

But the company has successfully launched a new corn innoculant Acceleron B-300 SAT, partnering biotechnology firm Monsanto, aiming to boost US crop yields. The microbe coats seeds of corn hybrids sold by Monsanto, with Novozymes estimating the innoculant's use will reach 4.5mn to 9mn acres of planted US corn in 2017. Monsanto's sells its seeds to around 45mn acres in the US, around half of all US corn acreage.

The firm increased its first quarter net profit to 772mn kroner, up from 745mn on the year.

Read the original story: Novozymes Eyes Increase in US Ethanol Output