Ethanol Producer Magazine

January 31, 2019

By Erin Voegele

The Renewable Fuels Association is calling on the U.S. EPA to use its upcoming Renewable Fuel Standard “reset” rule to reallocate renewable volume obligations (RVOs) impacted by recent small refinery exemptions, a 2016 lawsuit, and a recent bankruptcy settlement.

A notice released by the Trump Administration in October 2018 indicates the EPA is scheduled to release an RFS reset rule in early 2019 and finalize that rulemaking by the end of the year. The notice states that “under the statutory provisions of governing the [RFS] program, EPA is required to modify, or reset, the applicable volume targets specified in the statute for future years if waivers of those volumes in past years met certain specified thresholds. Those thresholds have been met or are expected to be met in the near future. As a result, EPA is proposing a rulemaking that will propose modifying the applicable volume targets for cellulosic biofuel, advanced biofuel, and total renewable fuel for the years 2020-2022.”

On Jan. 29, Geoff Cooper, president and CEO of the RFA, sent a letter to Acting EPA Administrator Andrew Wheeler in which he said the RFA expects the EPA will use the rest rule as an opportunity to adjust future implied blending obligations for conventional fuels upward to account for the 500 million gallons of renewable fuel improperly waived from the 2016 standards, as required by the D.C. Circuit Court of Appeals’ remand in Americans for Clean Energy v. EPA; the approximately 232 million renewable identification number (RIN) “write-off” as part of the Philadelphia Energy Solutions Refining and Marking LLC bankruptcy settlement; and the 2.25 billion RINs attributable to 48 small refinery exemptions granted for compliance years 2016 and 2017.

“As a result of these waivers or exemptions from required volumes, many ethanol plants have recently idled, shut down, or announced layoffs,” Cooper wrote. “These compliance exemptions have also hurt demand and price for American farmers. At a time when trade disputes are dampening export market opportunities, the EPA-induced disruption in domestic ethanol and corn demand is devastating.”

In his letter, Cooper notes that due to the exemptions he listed, the RFS—as implemented—has not achieved the applicable volume requirements set by the EPA in its annual rules. He also stressed that EPA has statutory mandate to ensure those volume requirements are met, noting that mandate can only be accomplished if EPA adjusts volumes upward to account for volume obligations previously exempted by EPA and not accounted for in the subsequent year’s volume requirement.

A full copy of the letter can be downloaded from the RFA’s website. 

Read the original article: RFA Asks EPA to Use RFS ‘Reset’ Rule to Reallocate Waived RVOs

Successful Farming

January 30, 2019

By Jerry Perkins

Exports of U.S. ethanol could hit a record 4 billion gallons a year in 2022, according to Mike Dwyer, chief economist for the U.S. Grains Council.

Dwyer made the prediction Tuesday during a roundtable discussion on trade at the Iowa Renewable Fuels Summit, which was held at the Prairie Meadows Conference Center in Altoona, Iowa. The annual event is sponsored by the Iowa Renewable Fuels Association.

If the U.S. ethanol industry exports a total 4 billion gallons in 2022, it would more than the double the current record of 1.62 billion gallons of ethanol exports set during the 2017-2018 marketing year that ended August 31, 2018.

During that 12-month period, U.S. ethanol was exported to 74 countries, according to the U.S. Department of Agriculture’s Foreign Agricultural Service.

U.S. ethanol exports during the current marketing year that ends August 31 are on track to hit 2 billion gallons, Dwyer noted.

The U.S. Grains Council is a Washington, D.C.-based organization that promotes the exports of U.S. corn, sorghum, and barley and value-added products made from those commodities.

Dwyer said that the Grain Council’s global strategy includes selling ethanol to the Chinese market despite trade disputes between the U.S. and China that have roiled the markets there for U.S. crops and other products.

China currently imposes a 70% duty on U.S. ethanol, Dwyer stated, but it will have to find a way to import foreign ethanol if it aims to fulfill the mandate it has imposed to use a blend of 10% ethanol and 90% gasoline (E10) by 2020.

It is possible that China could import approximately 1 billion gallons of U.S. ethanol to meet its E10 mandate, Dwyer told Successful Farming in an interview after his presentation at the Iowa Renewable Fuel Summit. That would make China the first country to import 1 billion gallons of U.S. ethanol a year, he added.

If trade issues between the U.S. and China are resolved, Dwyer stated, ethanol imports by China could hit 300 million gallons this year.

Kelly Nieuwenhuis, a farmer from Primghar, Iowa, who traveled to China last year on a U.S. Grains Council trade mission, said that he was told by Chinese gasoline retailers that they want to do business with the U.S. ethanol industry. The Chinese also expressed a desire to use more ethanol because they know it will improve their air quality, Nieuwenhuis remarked.

Dwyer said that the Grains Council believes that by 2022, 75% of U.S. ethanol exports will go to six countries: China, India, Japan, Brazil, Canada, and Mexico.

Ron Lamberty, senior vice president and market development director for the American Coalition for Ethanol in Sioux Falls, South Dakota, said during his presentation at the trade roundtable that he has made seven trips to Mexico to advise the transportation fuels industry there on how it can integrate the use of E10 into Mexico’s fuel supply.

Mexico has made the use of E10 legal in the country, Lamberty said, except for the cities of Mexico City, Guadalajara, and Monterrey. Small quantities of ethanol are currently being sold in Mexican cities on the U.S.-Mexico border, Lamberty told Successful Farming in an interview after his presentation.

Lamberty has participated in technical workshops on ethanol that have been held for Mexico’s petroleum equipment installers and retailers. The workshops were a joint effort of the U.S. Grains Council and the Mexican Association of Petroleum Equipment Suppliers (AMPES) and were intended to inform Mexican fuel marketers about sourcing, blending, distributing, and retailing ethanol-blended gasoline.

Mexico’s potential annual E10 market totals 1.2 billion gallons, Lamberty stated, which represents 200 million gallons more U.S. ethanol than is currently imported by Canada. Canada was the second-largest importer of U.S. ethanol in the marketing year ended August 31, 2018. Brazil was the largest importer of U.S. ethanol during the most recently-completed marketing year.

In opening remarks at the Summit, Iowa Renewable Fuels Association Executive Director Monte Shaw said that 2018 was his toughest year yet working for the industry.

Making the year 2018 particularly difficult were the fight for the year-round sales of E15, China trade disputes, and the plethora of small-refinery exemptions to the Renewable Fuel Standard (RFS) granted by the Environmental Protection Agency (EPA). The exemptions have been estimated to have cut the demand for ethanol domestically by 2.25 billion gallons a year.

Shaw emphasized that despite the policy challenges, the biofuels industry fought hard and won a victory when President Donald Trump announced on October 9, 2018, in Council Bluffs, Iowa, that he had ordered the EPA to begin a rulemaking process that will allow the year-round sale of E15.

As 2019 ramps up, Shaw said the state of the biofuels industry is “hurting but hopeful… Due to small-refinery exemptions and the China trade dispute, ethanol producers are facing a period of prolonged breakeven or negative margins the likes of which we haven’t seen in many years. And biodiesel producers are forced to sell their product based on Congress retroactively restoring the blenders’ tax credit.”

Despite the drawbacks, he said, Iowa biofuels producers are hopeful. “We have ample feedstocks, efficient production capacity, and the ability to once again power the rural economy to prosperity,” Shaw stated

He also noted that, during 2019, the industry will likely see the outcome of many pending lawsuits over small-refinery exemptions, the highly-anticipated E15 rule allowing its sale year-round, the announcement of 2020 blend levels, a possible RFS reset rule, and other beneficial developments.

“Quite frankly, when you look at the plethora of issues on our plate that should come to a head this year, I will not be surprised if 2019 goes down in biofuels history as the most impactful year – for better or worse – since 2005,” Shaw concluded. “We may not like every answer we get. But I’m confident that 2019 can be a great year for biofuels and biofuels policy.”

Read the original article: U.S. Ethanol Exports Could Hit Record 4 Billion Gallons by 2022, Says Expert

Ethanol Producer Magazine

January 25, 2019

By Erin Voegele

Gevo Inc. made two announcements in mid-January regarding its efforts to expand the use of sustainable aviation fuel (SAF). The company supplied its fuel to an airport in California and signed on to an existing coalition that aims to expand the use of SAF.

On Jan. 17, Gevo announced it was supplying its alcohol-to-jet (ATJ) to Avfuel Corp. for use at the “Business Jets Fuel Green: A step Toward Sustainability” event, which was held that day at the Van Nuys Airport in Southern California. According to Gevo, the event aimed to demonstrate that renewable jet fuel, including Gevo’s ATJ, can become a mainstream, drop-in alterative for today’s general aviation aircraft. During the event, Avfuel offered a blend of traditional jet fuel and Gevo’s ATJ.

“There are more than 210,000 aircraft in the general and business aviation sector in the U.S. alone.  With more than 650 Avfuel-branded locations and 3,000-plus fueling locations, our partnership with Avfuel has allowed us to begin to effectively support this market and the market goals to achieve carbon neutrality from 2020 and beyond,” said Patrick R. Gruber, CEO of Gevo. “This event demonstrates our partnership and mutual commitment with Avfuel to feed the world, sequester carbon dioxide and reduce greenhouse gas emissions.”

Less than one week later, on Jan. 22, Gevo announced it has joined with the San Francisco International Airport (SFO), certain airlines and other industry participants for the use of sustainable aviation fuels (SAF). The company said it has signed onto a memorandum of understanding (MOU) with United Airlines, Alaska Airlines, American Airlines, Cathay Pacific, Chevron Corp., Shell Oil Co., Neste and Lanzatech Inc. and others to work cooperatively on expanding the use of SAF at SFO. The consortium was originally formed in September 2018.

“With this Memorandum of Understanding, we’re moving the dial on an entire industry,” said Ivar C. Satero, director director at SFO. “A quantum leap of this kind requires partnering with like-minded organizations, and we’re pleased that Gevo has joined the airlines and fuel suppliers who are committed to expanding the use of Sustainable Aviation Fuel in air transportation.”

Read the original article: Gevo Supplies ATJ to California Airport, Joins SAF Coalition

Ethanol Producer Magazine

January 24, 2019

By Erin Voegele

Novozymes has released fourth quarter and full year 2018 financial results, reporting strong sales growth for its bioenergy segment. Overall the company’s sales grew by 4 percent organically when compared to 2017.

Sales for the bioenergy segment grew by 12 percent organically for the full year when compared to 2017. For the fourth quarter alone, sales for the segment were up 5 percent when compared to the same period of the previous year.

“2018 was a very good year for our Bioenergy business supporting decarbonization of transport,” said Tina Sejersgård Fanø, executive vice president of agriculture and bioenergy at Novozymes, during an investor call. “For the full year we delivered 12 percent organic sales growth, which came on top of a strong 11 percent growth in 2017. The fourth quarter was, as expected, a bit softer with 5 percent organic growth driven by lower ethanol volumes and a tough comparison from Q4 2017.”

Novozymes said strong growth within enzymes for conventional biofuels continued throughout 2018, driven by broad technology offerings and tailored customer solutions. “Growth was driven by a strong momentum due to our broad technology base, the launch of our yeast products—Innova Drive and Lift—for conventional biofuels, and good performance in Latin America with producers expanding into corn-based ethanol production,” Sejersgård Fanø said.

The company estimates U.S. and global ethanol production was up approximately 1 percent in 2018 when compared to the previous year. During the fourth quarter, however, production was down an estimated 3 percent. Novozymes noted ethanol producer margins were under pressure, and inventory levels were elevated.

Moving into 2019, Novozymes said organic sales growth for its bioenergy sector is expected to be driven mainly by increased penetration from innovation as well as volume growth outside the U.S. market. The company currently expects U.S. ethanol production this year to be down slightly when compared to 2018, with ethanol inventory levels expected to remain high this year. Novozymes currently expects high-single-digit growth in bioenergy for the full year.

Sejersgård Fanø also discussed the potential of increased biofuel use, including the potential of E15 in the U.S. “We´re happy to see continued discussions supporting expanded use of biofuels,” she said. “In the U.S. we are awaiting clarity on E15, which is expected sometime before summer. In Brazil, the RenovaBio framework should support the continued expansion of corn-based ethanol production. China is investing in new capacity, and the REDII directive has been adopted in the EU, with Member States now working on the implementation process.”

In addition to bioenergy, Novozymes also operates segments dedicated to household care, food and beverages, agriculture and feed, and technical and pharma. Overall, the company reported 4 percent organic sales growth for 2018, with 2 percent organic sales growth for the fourth quarter. For the current year, Novozymes expects to achieve organic sales growth of 3-6 percent.

Read the original article: Novozymes Reports Significant Growth in Bioenergy Sales for 2018

Gulf News UAE

January 16, 2019

By Binsal Abdul Kader