Biofuels Digest

March 19, 2017

By Jim Lane

The state of Louisiana has become the 29th state to offer consumers what Growth Energy termed “a better choice at the pump – gasoline blended with 15 percent ethanol known as E15.”

E15 saves consumers an average of 5 to 10 cents per gallon and burns cleaner and cooler than regular gasoline, allowing engines to perform at their peak while reducing drivers’ impact on the environment. The latest in this market expansion is a RaceTrac station in Baton Rouge – now one of 672 locations nationwide to offer Americans this more affordable, cleaner biofuel. Growth Energy applauds RaceTrac and all additional major retailers who currently sell E15 including Sheetz, Kum and Go, Thorntons, Minnoco, Murphy USA, MAPCO, Family Express, Cenex, and Protec Fuels.

“The ethanol industry stands ready to provide American drivers with this performance-boosting, homegrown fuel and with every new pump offering E15, we are doing just that. Growth Energy is committed to working with our retail partners to continue this expansion,” Growth Energy CEO Emily Skor said.

“American consumers have surpassed 750 million miles on E15. When given the option, consumers choose E15, and, thanks to dedicated retailers who care about their customers, more Americans can make this choice.”

Read the original story: Louisiana Becomes 29th State to Adopt E15 Ethanol

Ethanol Producer Magazine

March 16, 2017

By Susanne Retka Schill

Ethanol critics bash the fuel for its lower energy value than gasoline, while ethanol supporters point to its octane-boosting properties. University of Illinois ag economists Scott Irwin and Darrel Good analyze the value of ethanol in blended gasoline over the past decade based on those components in a recent FarmDoc Daily post, “On the Value of Ethanol in the Gasoline Blend.”

Much of the analysis of the cost of ethanol relative to CBOB has ignored the potential benefit of the octane-enhancing qualities, particularly in the face of the reported retooling of refineries to producer lower-octane base fuels that need to be oxygenated to meet specifications.  Many analyses focus only on ethanol’s energy deficit compared to gasoline, the economists point out.

The economists lay out their methodology underlying their economic analysis to determine the net benefit of ethanol, when looking at energy-adjustments and octane-enhancements. The analysis includes charts that compare the price of ethanol to CBOB, and then the energy-adjusted price of ethanol, which increases due to its lower Btu content. It also looks at the cost of aromatics, the petroleum-based oxygenates used instead of ethanol, and the shift in use from aromatics to ethanol in one state over the past decade.

 “As expected, the energy-adjusted price of ethanol (assuming ethanol has only two-thirds the energy value of CBOB) was consistently higher than the price of CBOB by an average of $1.02 per gallon. On the other hand, the price of ethanol was consistently below the price of aromatics, considered as alternative octane enhancers, by an average of $1.06 per gallon.”  That calculates to the net value of ethanol, which though just 4 cents per gallon, calculates to “nearly $7 billion over the nine-year period from 2008 through 2016.”

The net benefit was highest in 2012 during the decade examined, Irwin and Good report. “The reason is that gasoline prices were high enough relative to ethanol to reduce the energy penalty, while at the same time lofty aromatic prices drove the octane premium to high levels. The large negative net value in 2016 is essentially driven by the reverse of the 2012 price patterns.”

Limitations to the analysis, the authors point out, include other factors not examined that could impact value, such as the value of Reid vapor pressure and the lower energy value of aromatics. “The bottom-line is that a refinery optimization model is needed to conduct a complete analysis of value of ethanol in the gasoline blend. Nonetheless, our analysis points out the partial and misleading nature of work that only focuses on the energy penalty of ethanol and ignores the octane premium.”

To view the complete analysis click here.

Read the original story: Economists: Octane Premium Offsets Ethanol Energy Penalty

Ethanol Producer Magazine

March 16, 2017

By EPM Staff

Nearly two dozen U.S. senators have signed a letter advising President Trump not to change the federal biofuels program's longtime compliance protocol.

Sen. Chuck Grassley, R-Iowa, and Sen. Amy Klobuchar, D-Minn., today led 23 senators in a bipartisan letter urging President Trump to maintain the Renewable Fuels Standard’s point of obligation and reject proposed changes that, they say, would upend the current system.

“We believe such changes are unwarranted and indefensible,” the senators wrote to Trump. “We appreciate the commitment you have made to support the RFS. We strongly urge you to steer clear of administrative changes to the policy that would undermine the program and run contrary to your goals of promoting domestic energy independence and more choices at the pump. We look forward to working with you to ensure the RFS continues to provide the stability and predictability that is creating jobs and economic growth across the country.”

The senators outlined the detrimental effects of changing the point of obligation from refiners to blenders, marketers or retailers, as one prominent refiner is suggesting. The letter said shifting the point of obligation would give refiners little incentive to produce necessary fuel blends, making it difficult for downstream entities to comply.

Changing the point of obligation also would “result in a massive, costly, time-consuming shift in compliance” because small businesses, especially in rural areas, lack the resources needed to comply. Administration of the program would become complicated and “unnecessarily result in significant uncertainty and market disruptions,” the senators wrote.

Such a change is widely opposed—by fuel marketers, retailers, truck stop operators, petroleum producers and renewable fuel producers—because of the added complexity and the undermining of investments that businesses have made to comply, the senators wrote. “The overwhelming majority of transportation fuel market participants oppose any change to the point of obligation because it would cause massive disruptions and could lead to higher prices for consumers,” the letter states.

Responding to the letter immediately, Brooke Coleman, executive director of the Advanced Biofuels Business Council, said, “We applaud champions in the Senate for rallying against changes to the RFS that would harm consumers, threaten the growth of U.S. biofuels and jeopardize investments in clean, American energy."

Coleman continued, "The RFS has worked effectively for more than 11 years to foster market access for homegrown biofuels, and efforts to rewrite the point of obligation are categorically opposed by a broad coalition of biofuel producers, retailers, consumers, and other market participants. Restructuring the program would halt any progress under the RFS, creating regulatory chaos for retailers and dragging down economic growth in rural America.”

Growth Energy CEO Emily Skor issued the following statement in response to the letter: 

“Growth Energy thanks Sen. Grassley, Sen. Klobuchar, and the other 21 senators leading this important effort to support the Renewable Fuel Standard, the nation’s most successful energy policy. The point of obligation is a vital component of the RFS and is working as intended to make sure that consumers have a choice of fuel at the gas pump. Growth Energy has consistently opposed any change in the point of obligation.

“The fact is, shifting the point of obligation from refiners and importers to fuel marketers, convenience stores, railroads, truck stops and trucking companies, and even consumer service companies like FedEx and UPS, would throw the RFS into chaos. A change would immediately trigger long and complicated rulemaking that would take years to complete. It would create long-term uncertainty in the entire marketplace and reduce consumer choice at the gas pump by removing the economic incentive for retailers to offer higher biofuel blends, ultimately raising prices on consumers.

“The vast majority of the industry remains united in its opposition to any change to the point of obligation. An America-first energy policy means American consumers can access cleaner, more affordable biofuel options at every gas station nationwide. This is an issue where there is no room to equivocate or barter – preserving the point of obligation is essential to maintaining a strong RFS and growing ethanol demand in the U.S.

“We stand proudly with these 23 senators in opposition to this change and will continue to fight for the ethanol industry and rural America.” 

The senators’ letter is available here.

Read the original story: Senators Urge Trump to Maintain RFS Point of Obligation

Convenience Store News

March 6, 2017

By Lance Klatt

There has been a lot of news coverage recently about changing the point of obligation associated with the Renewable Fuel Standard (RFS). Some seek to shift the responsibility of adding biofuels into the fuel mix downstream to fuel marketers, rather than those who produce or import gasoline.

As operators of locally owned fueling stations, we wish to clarify that this change would harm fuel marketers, retailers and our customers. In fact, hundreds of single-store owners spearheaded the adoption of the first blender pumps, which allow individual stations to offer options like gasoline blended with 15 percent ethanol (E15) and E85. In the Twin Cities alone, there are 34 locally owned Minnoco gas stations selling E15 and other higher blends of ethanol, with more on the way. The number of Minnesota gas stations selling E15 gasoline doubled in 2016.

Chains like Kum & Go, Murphy USA and Sheetz have caught on, too. Today, retailers can blend their own ethanol or buy ethanol blends at a deep discount from distributors and pass the savings on to consumers. This business model makes single stores more competitive, while reducing costs for our customers. Not only is ethanol more affordable, but it also boosts the octane content of fuel, giving our consumers more appealing options for their vehicles.

Retail outlets owned or under contract with a few oil industry giants aren't always allowed to sell new blends like E15, which is becoming commonplace at more and more fueling sites. This corporate resistance to renewable energy actually benefits small retailers who can offer customers a cleaner, better-performing and more affordable option at the pump.

On the other hand, requiring fuel marketers to meet the Renewable Fuel Standard compliance would open hundreds of fuel retailers to potential new Environmental Protection Agency (EPA) compliance requirements. The change would threaten investments made under the current RFS and force the EPA to fundamentally restructure the fuels market, creating turmoil for retailers, producers, distributors, and consumers.

Further, as the end-user of the fuel, fuel retailers are not able to determine the composition of the fuel provided by refiners. As a result, changing the RFS would not only deprive retailers of valuable sales opportunities, but it could also impose dramatically higher costs on consumers or even result in the withdrawal of options from the marketplace.

That is why more than 35 organizations — including the National Association of Truckstop Operators (NATSO), NACS, the Association for Convenience & Fuel Retailing; and the Society of Independent Gasoline Marketers of America (SIGMA) — have all voiced opposition to changes in the RFS.

In exchange for yielding to demands from refining moguls like Carl Icahn, who would profit from a change in the point of obligation, RFS critics have reportedly even offered to endorse a long-sought waiver from the EPA's outdated Reid Vapor Pressure (RVP) limits, which complicate sales of E15 during the summer driving season. That's a commonsense change, with bipartisan support, but it would lose any value to retailers if the incentive to offer blends containing homegrown biofuels were to evaporate.

Of course, there are other reasons to support ethanol. Corn-based ethanol is an earth-friendly biofuel that reduces carbon emissions by an average of 43 percent, according to the U.S. Department of Agriculture. And with advanced biofuels, like cellulosic ethanol, carbon savings can rise to 100 percent or more, according to experts at the Department of Energy's Argonne National Laboratory.

Ethanol production also supports nearly 400,000 U.S. jobs, including many in states like Minnesota, which is home to 20 ethanol plants and one biobutanol plant, with a combined ethanol production capacity of more than 1 billion gallons.

No one benefits when a few massive entities can monopolize our fueling options. Biofuels provide a clean, homegrown alternative that protects consumers — and by extension, fuel retailers — from spikes in oil prices. We shouldn't let a few special interests stand in the way.

Rewriting the RFS now to benefit the refining sector would create a logistical nightmare for fuel retailers, raise costs, and threaten the future deployment of clean, American energy.

Read the original story: COMMENTARY: Small Retailers Against Changing RFS Point of Obligation

U.S. Grains Council

March 09, 2017

News Release

Politico

March 8, 2017

By Eric Wolff

A consumer advocacy group is filing a complaint to Congress on Wednesday accusing President Donald Trump's friend and fellow billionaire Carl Icahn of violating lobbying rules by pushing the White House to change the federal ethanol regulations.

Public Citizen contends that Icahn, his company Icahn Enterprises and the CVR oil refining company he owns failed to register as lobbyists, yet pushed the White House to change the EPA's decade-old rules on ethanol — a move that would save Icahn's company hundreds of millions of dollars.

Trump named Icahn, whose net worth is pegged by Forbes at nearly $22 billion, as the White House's special adviser for regulatory reform in December, but said he would "not be serving as a federal employee or a special government employee and will not have any specific duties."

Icahn has aggressively advocated for the change in the ethanol rules under the EPA's Renewable Fuel Standard since last year, and according to the Public Citizen complaint, he submitted a proposal to the White House on Feb. 27 to overhaul the program and shift the burden for complying with the ethanol rules to fuel wholesalers. The RFS, which was created by Congress, gives EPA authority to operate the nation's biofuels program.

The letter to the secretary of the Senate and the clerk of the House calls for an investigation into whether Icahn and CVR's activities constitute lobbying of the White House for changes to the program. The complaint also cites Icahn's work in helping select EPA Administrator Scott Pruitt, and the proposed language he and fellow oil refiner Valero Energy submitted to the White House for a memo that would direct EPA to make the change.

"All of this has occurred with no record of any [Lobbying Disclosure Act] filings by or on behalf of Mr. Icahn, Icahn Enterprises or CVR Energy," the complaint reads. "It is unlikely that all these activities occurred without some individual or entity being obligated to report lobbying activity under the LDA."

The letter is latest controversy around the ethical complications that Trump, the wealthy members of his Cabinet and his advisers have faced because of their myriad business holdings.

Read the entire filed letter here.

Read the original story: Trump Adviser Icahn Accused of Breaching Lobbying Rules

Des Moines Register

March 6, 2017

By William Petroski

Gov. Terry Branstad said Monday he is aware of reports of a backroom deal in the Washington, D.C., that would hurt Iowa's renewable fuels industry, but has been assured President Donald Trump's administration will support producers of ethanol and biodiesel fuels.

"I know the rumors and I can tell you who was involved, and I can tell you they are not true," Branstad told reporters Monday. He added that he has talked with his son, Eric Branstad, who works in the Trump administration, and that his son told him that "this is not going to happen."

The renewable fuels industry was in an uproar last week after a national advocacy group said a Trump official told the organization the president would sign an executive order shifting the burden for blending ethanol and biodiesel into the nation’s fuel supply from oil refiners to fuel retailers. The move, critics said, would hurt Iowa farmers and consumers by hindering the widespread use of ethanol and biodiesel. The White House subsequently distanced itself from the reports.

Branstad said he shared concerns about a possible shift of responsibility for blending biofuels to retailers. The agreement allegedly involved the Renewable Fuels Association and Trump adviser Carl Icahn, a billionaire investor in CVR Refining, a Texas energy company.

"It would be much more difficult to enforce the renewable fuels standard if you had to deal with all the retailers in the nation, rather than the people who are distributing the fuel," Branstad said. "That is the reason why practically it doesn’t make sense, and that is the reason why it was shot down real quick when the rumors surfaced."

Branstad said he had had a "very good meeting" with Scott Pruitt, the newly confirmed administrator of the Environmental Protection Agency. He said Pruitt indicated that the Trump administration's EPA will make timely decisions regarding the Renewable Fuel Standard, which requires transportation fuel to contain a minimum volume of renewable fuels.

"We are pleased with that," Branstad said. "I think he got a very clear message from the president at the time that he was appointed that he will support ethanol, and he is supporting ethanol."

Read the original story: Branstad Shoots Down Rumored Anti-Ethanol Backroom Deal

Star Tribune

March 4, 2017

By Mike Hughlett

The U.S. ethanol industry set a production record last year. Exports boomed. And after a tough first six months, profits picked up in the last half of 2016, including in Minnesota.

While there are positive indicators for 2017 — corn prices are forecast to be stable and the federal mandate for ethanol production has been increased — the industry faces some significant uncertainties. Players in Minnesota, the fourth-largest producer of ethanol in the U.S., said there could be some export challenges.

Perhaps the biggest is President Donald Trump, who has strong ties to the oil industry, often ethanol’s nemesis pushing against higher ethanol production.

Trump has told ethanol producers he backs biofuel, but “it’s impossible to predict what he is going to do,” said Bruce Babcock, professor of energy economics at Iowa State University. “This is a complete wild card.”

Just this past week, discord among large ethanol companies erupted after Trump adviser Carl Icahn, who controls one of the largest independent U.S. refiners, made a deal with the president of the Renewable Fuels Association to recommend a change in policy that could directly benefit his company.

The industry is tied to the federal government through the renewable fuel standard, which was created in 2005 by Congress and reinforced two years later. It requires that biofuels be blended into gasoline.

The U.S. Environmental Protection Agency (EPA) administers the renewable fuel program. In November, former President Barack Obama’s EPA mandated a record amount of ethanol production for 2017: 19.28 billion gallons. Of that, 15 billion gallons — the statutory maximum — would come from conventional biofuels, primarily ethanol.

It marked the first time the EPA had mandated the full 15 billion gallons for conventional ethanol. With a precedent set, “it will be hard to go back on that,” Babcock said.

The increased mandate came at the end of a year that was an improvement for the ethanol industry over 2015, though no match for the boom of 2014. The United States, by far the world’s largest ethanol producer, pumped out 15.3 billion gallons of the stuff in 2016, up 3.4 percent over a year ago.

Minnesota in 2016 contributed 1.18 billion gallons, a bit below the all-time high of 1.2 billion gallons the previous year, according to the Minnesota BioFuels Association. The decline stemmed from a shutdown of one ethanol plant during 2016, the association says.

Minnesota producers actually saw operating income fall in 2016 over 2015, the association said. Like elsewhere, higher corn prices and low oil prices that began in 2015 squeezed ethanol producers’ profitability in the first half of last year. But corn costs declined in 2016’s second half, and exports — needed for producers’ bottom lines — rallied.

“Margins were pretty low, but as the year progressed we finished strong,” said Randall Doyal, CEO of Al-Corn Clean Fuel, a farmer-owned ethanol producer in the southern Minnesota town of Claremont.

Underscoring its confidence in ethanol, Al-Corn just started site work on a big expansion, raising its capacity from 50 million gallons annually to 120 million, which would make it one of the largest ethanol plants in the state.

“As the industry grows, those plants that enjoy economies of scale are the most valuable for their owners,” Doyal said. He’s looking for a continuation of last year’s trends for 2017, though January was a weak month for the industry. “It will be a decent year,” he said, “though I wouldn’t predict a barn burner.”

Minnesota has 20 ethanol plants, from farmer-owned co-ops to outposts of publicly traded companies. The industry directly employs 2,264 and supports an additional 2,589 direct farm and farm-related jobs, according a recent study for the state’s biofuel association.

Plus, Minnetonka-based agribusiness giant Cargill has three large ethanol plants, one in Nebraska and two in Iowa. And Inver Grove Heights-based CHS, the nation’s largest agricultural cooperative, owns two ethanol plants in Illinois.

With motor fuel prices relatively low, Americans drove a record amount of miles in 2016 and gasoline consumption also hit a record, according to federal agencies. Ethanol demand rose with gasoline, as motor fuel usually contains 10 percent of the biofuel.

One positive factor is the growth of E-15, a blend of 15 percent ethanol and 85 percent gasoline that can be used in vehicles made from 2001 on. It’s usually about 10 cents cheaper than E-10, the common ethanol blend.

E-15 sales in Minnesota have risen from 258,000 gallons in 2014 to 5.7 million gallons last year, according to the Minnesota Department of Commerce. There are 68 gas stations now selling the blend. “E-15 is becoming more popular in the metro area,” said Brian Kletscher, CEO of Highwater Ethanol in Lamberton and chairman of the state’s biofuels association.

The widespread adoption of E-15, though, is still bogged down by disputes with automakers and restrictions from the EPA. The Renewable Fuel Association’s deal with Icahn, reported by Bloomberg, removes some of those restrictions in return for not opposing a rule change, which could come through a White House executive order, to remove some of the fuel blending regulations that added costs to Icahn’s refinery business. The rule change, however, could add cost pressures to other players in the ethanol industry.

Sioux Falls-based Poet LLC — the largest U.S. ethanol producer with four Minnesota plants and a founder of Growth Energy, a separate trade group vehemently opposed to the Icahn move — called the agreement “a backroom deal” made while “leading voices” were absent. White House officials deliberated with all the players last week to try to reach a compromise, people familiar with the talks told Bloomberg.

However the EPA regulations change, if at all, the renewable fuel standard law essentially puts a ceiling on domestic ethanol production. So the main prospect for ethanol’s growth will continue to be exports.

“Exports are the lifeblood of profits for the industry,” said Scott Irwin, an agricultural economics professor at the University of Illinois. “The real frosting on the cake for ethanol producers last year was the red-hot export market.”

At 1.05 billion gallons, 2016 ethanol exports were second only to 2011, according to the Renewable Fuels Association.

Brazil and Canada are the prime destinations for U.S. ethanol, together accounting for half of the industry’s exports. China has become U.S. ethanol’s third biggest export market over the past few years, with a 17 percent share. China is also the largest U.S. export market for distillers grains, an ethanol byproduct used for animal feed.

But China has indicated that it plans to significantly raise tariffs on ethanol and distillers grains, a potential blow to exports.

“There are definitely storm clouds on the trade side,” Irwin said, heightened by the uncertainty over Trump’s positions and last week’s controversy.

While skepticism exists, several executives emphasize that the president has reiterated his support for the federal ethanol mandate as recently as two weeks ago.

“He is very supportive of domestic renewable energy,” said Poet CEO Jeff Broin. “He will stand behind rural America and the voters who put him into office.”

Read the original story: Trump Administration a Wild Card for Ethanol Industry

Congressman Collin Peterson

March 3, 2017

Press Release