Renewable Fuels Association

November 20, 2018

Press Release

There has been a media blitz lately by the oil industry saying that ethanol demand has been unaffected by the Environmental Protection Agency’s (EPA) rampant grants of Renewable Fuel Standard (RFS) exemptions to small refineries.  Recently, even some in the agriculture community have bought into these claims.  Don’t be fooled.

Under former EPA Administrator Scott Pruitt, 19 small refinery exemptions were granted retroactively for the 2016 compliance year, and 29 were doled out for 2017, compared to seven or eight in each of the three previous years.  The EPA reinstated RFS credits known as renewable identification numbers (RINs) to these refiners, which they can use for compliance rather than blending physical biofuels.

As shown in a new analysis by the RFA, these large-scale exemptions have impacted both components of ethanol demand: quantity and price.

The impact on quantity is reflected in the ethanol “blend rate,” the average inclusion level of ethanol in the nation’s gasoline supply.  The blend rate exceeded 10% in all but three months in 2017, and it hit a record 10.8% in January 2018.  However, it slumped starting in February 2018, as exempted refiners were flush with reinstated RINs, and as rumors and press reports regarding the exemptions made their way into the market.  The blend rate fell to 9.8% in February, ticked down to 9.7% in March and receded further 9.5% in April.  Between February and June, the blend rate exceeded 10% in only one month.

Additionally, as alluded to above, small refinery exemptions have impacted ethanol prices along with ethanol consumption.  The RFA conducted a basic regression analysis to determine the effect on prices.  The results showed that ethanol prices were 8 cents/gallon lower than they otherwise would have been in February, and that the impact grew to 34 cents/gallon by June and stayed at that level throughout the summer.

Every gallon produced and sold by the U.S. ethanol industry has been priced lower than would have been the case in the absence of the exemptions.  There were 9.4 billion gallons of ethanol produced between February and August (the latest month for which comprehensive supply/demand data are available).  By multiplying production by the price impact in each month, it can be determined that the industry’s revenues were reduced by $2.3 billion during that time period.

Moreover, the impact on the ethanol industry continues.  Largely as a result of the exemptions, the EPA has estimated that RIN inventories at the end of 2018, which will be available to meet 2019 RFS obligations, will swell to 3.06 billion.  This is an increase of 840 million RINs (nearly 40%) from the agency’s estimate of inventories carried over into 2018.  To the extent that refineries have “kept their powder dry” by using ethanol and other biofuels in recent months, they will be able to use their RIN inventories for compliance when expedient in the future.

In summary, small refinery exemptions have had a marked effect on ethanol consumption and a massive impact on industry revenues.  Don’t be fooled by commentary and social-media posts that fail to show the full picture.

Read the original release: Demand Destruction from Small Refinery Exemptions is Clear and Continuing

HybridCars

November 14, 2018

By Evan Williams

Toyota is sending an ethanol hybrid to market and the executive responsible for it says that the project is exceeding all expectations.

Brazil is the biggest producer of ethanol in the world. The country has a largely sustainable biofuel market thanks to sourcing from sugar cane instead of grain. Every car in the country built after 1976 can run on at least some mix of gas and biofuel. Most are flex-fuel cars that can work on anything from E20 to pure ethanol. So it makes sense to build a flex-fuel hybrid for the market.

“The soonest I can put it in production, I’m going to do it,” Toyota’s Latin America CEO Steve St. Angelo told Automotive News at an auto show in Brazil last week.

“We need to be competitive,” St. Angelo said. “Our home countries are not going to give the money just because we are nice guys in Brazil. You have to have a good business case.”

Toyota’s current hybrids, like the Prius, can run on the usual E10 mixture found in North America but aren’t capable of handling a higher mix of the alternative fuel. In addition to different engine fueling and ignition calibration issues, more ethanol can cause problems with seals and rubber and plastic fuel system components. St. Angelo has his team working on a flex-fuel version that will fix that issue. Combining an electric motor and an engine that can run on ethanol. That has the potential to further reduce tailpipe emissions.

The automaker revealed the hybrid flex-fuel prototype in Brazil last March. The prototype was a Prius with a combustion engine and system modified for the biofuel. Toyota says that the system significantly lowers CO2 emissions from the vehicle. The sugarcane-based ethanol made in Brazil helps further improve the emissions reduction.

So how soon is soonest? It shouldn’t take more than three years to bring the car to market, St. Angelo said. He added that the company isn’t spending big money on a new model, but is making tweaks and calibration changes. Presumedly to an existing model.

Read the original article: Toyota Bringing an Ethanol Hybrid Car to Market

Euractiv

November 8, 2018

By Gerardo Fortuna

The Intergovernmental Panel on Climate Change (IPCC) recently pointed out that the pace of transition in the transport sector deemed necessary for a 1.5C-consistent pathway must include more biofuels and electricity in transport’s energy mix.

The UN’s climate science body highlighted some benchmark indicators for sectoral changes in the supplementary materials attached to the major report that shocked the world one month ago (8 October).

As regards the transport sector, IPCC scientists indicated for 2020, 2030 and 2050 respectively a biofuels share of 2%, 5.1%, and 26.3% as good policy targets in order to follow the appropriate path in curbing emissions.

The report also said that electricity’s involvement in the transport mix should increase to 1.2% in 2020, 5% in 2030 and 33% in 2050, meaning that by 2030 biofuel-powered vehicles would still be as important as e-cars.

“What the IPCC projects on 1.5°C-consistent transport pathways can be derived from their figures on a low overshoot pathway,” Zoltán Szabó, a sustainability consultant specialised in bioenergy told EURACTIV.

Szabó said the IPCC singled out electromobility and biofuels as the two major drivers of transport sector decarbonisation in 2020, 2030 and 2050, and it concludes that biofuels will displace more oil in 2020 and 2030 than renewable electricity will, and has these two solutions roughly equal in scale by 2050.

“Electromobility is on the rise but much of it will be powered by fossil fuels. A derived chart shows that biofuels, with ethanol being the most prominent biofuel, will have a larger role in the critical next 12 years than renewable energy powered electromobility. IPCC represents science, so this is a powerful vision,” he stated.

In the latest International Energy Agency (IEA) market forecast published on the same day as the IPCC report, modern bioenergy is expected to become the fastest-growing renewable sources between 2018 and 2023.

Bioenergy will remain the largest source of renewable energy also because of its widespread use in heat and transports, sectors in which other renewables currently play a much smaller role, the IEA’s report said.

Wastes and residues will offer low lifecycle greenhouse gas (GHG) emissions and mitigate concerns over land-use change, representing huge potential for the entire bioenergy sector and improving waste management and air quality as well, according to the IEA.

The European renewable ethanol association ePure shares the view of IEA and particularly on the significant “untapped potential” of biofuels in fighting climate change.

“The current Clean Mobility proposal on reducing CO2 emissions from cars ignores the important contribution that low-carbon liquid fuels can make to decarbonisation now and in the future,” Secretary-General of ePURE Emmanuel Desplechin told EURACTIV.com

He added that politicians tend to focus on the latest miracle cure, represented in the case of transport decarbonisation by the e-cars, which are important but not the only answer to the question of emissions reduction.

Nor are e-cars a major factor at the moment. “People are still buying cars that run on liquid fuel, and those cars will be on the road for a long time,” he said, adding that the best way to decarbonise these car fleets is to use low-carbon liquid fuel, like renewable ethanol.

“We need to get ready and all options need to be mobilised,” Desplechin concluded.

“Policymakers in Brussels think about bicycles and e-cars in Norway and the Netherlands, but they ignore the real world of Poland, Italy, Ireland etc… where cycling and e-cars are purely theoretical,” said James Cogan, a policy analyst at the operator of Ethanol Europe Renewables Ltd (EERL), Europe’s largest biorefinery.

Thinking that electric vehicles powered by wind and sun have already solved the problem in transport is a dangerous solution, according to him.

He said the world’s huge fleet of conventional vehicles is growing 3%-6% each year, adding hundreds of millions of additional carbon emitting engines to the problem.

“There is a big risk that COP24 delegates in Katowice in December will not realise this,” he said.

Bioenergy can be used effectively on a scale that makes a real contribution to curbing emissions, but it has a material cost and impact because it requires substantial volumes of biomass to be converted to energy.

First generation biofuels made from food crops are currently not taken into account by the EU biofuels policy due to their significant land use impacts.

They are not considered a solution anymore, whereas “sustainable advanced biofuels from waste and residues can help decarbonise transport, provided they deliver significant GHG savings and comply with strict sustainability criteria,” said Laura Buffet from the NGO Transport and Environment (T&E).

“However, the quantities of advanced biofuels available at sustainable level will remain very limited,” she added.

The NGO is well known for underpinning e-mobility and it recently accused fossil gas of being as bad for the climate as diesel, petrol and marine fuel in a report.

“Renewable electricity from solar and wind is the cleanest source of fuel and should be the preferred pathway to decarbonise transport,” Buffet said.

According to T&E, renewable electricity is also much more efficient in terms of land use than conventional biofuels, since one football pitch of ethanol crops can power 2.6 cars for a year.

According to EERL’s Cogan electricity and biofuel can coexist and complement each other.

“The most flexible vehicle on the planet is the Toyota hybrid flex-fuel. It runs on four types of power (renewable electricity, fossil electricity, fossil petrol, and renewable ethanol) with seamless flexibility, in any combination in any moment,” he said.

For ePure as well, the two sources must coexist because people will still be driving cars with combustion or hybrid engines for a long time.

“The public wants results now to lower emissions. They shouldn’t have to wait decades for electric vehicles to become more commonplace,” said ePure’s Desplechin.

According to T&E’s Laura Buffet, renewable electrofuels produced with additional renewable electricity and complying with strict sustainability safeguards could help reduce emissions in sectors like aviation which are harder to electrify.

Read the original article: Electricity and Biofuels Needed in Tandem to Meet Climate Goals, UN Report Says

U.S. Grains Council

November 1, 2018

News Release

Global markets vary greatly in their experiences with ethanol, from fully realizing the advantages of increased ethanol use to continued reliance on expensive and environmentally harmful fossil fuel additives. The U.S. Grains Council (USGC) wants countries around the world to look to ethanol when their government and industries think about octane.

Depending on the octane of the base gasoline in the fuel, refiners use additives to boost octane levels to enhance engine performance. Many international markets rely on methyl tertiary butyl ether (MTBE) as an additive despite water quality problems and associated clean-up costs exhibited in the United States and other countries. Additionally, refiners often use aromatics such as benzene, toluene and xylene, collectively known as BTX. Aromatics have high levels of particulate matter emissions that negatively impact human health and are expensive.

With one of the highest octane ratings of any fuel additive at 113 AKI (anti-knock index, which measures the fuel’s ability to resist knocking during combustion), ethanol provides economic benefits by boosting octane ratings of subgrade gasoline. Markets that do not allow ethanol blending within their national fuel specifications do not capture this octane advantage, cost-savings and other benefits of ethanol for their fuel oxygenation requirements, typically due to the lack of policies effectively governing national fuel standards. Many of these governments simply do not know a reliable alternative to MTBE or aromatics exists and is readily available.

From a straight price perspective, U.S. ethanol is cheaper than other components of gasoline – including MTBE and aromatics – and in some cases, gasoline itself. Using ethanol also reduces refining costs, allowing use of a sub-grade of gasoline, adding more savings. Octane value and cost savings are especially important in price-sensitive markets where fuel demand is more elastic.

Countries with excess refining capacity stand to further benefit from using ethanol in the finished gasoline product to other countries. South Korea and India both have significant refining sectors to service their own markets and export finished product to other markets. Singapore is also a major transshipment point for other countries in the Asian region, including Indonesia, which has annual gasoline demand of nearly 12 billion gallons.

The Persian Gulf, the United Arab Emirates, Oman and other European countries with excess oil refining capacity are exporting finished gasoline products to the West Africa region. These countries are taking advantage of the octane benefits of ethanol and passing them on to customer countries.

In its work to promote ethanol use globally, the Council encourages countries without the ability to produce their own feedstock to develop biofuels policies that include a role for ethanol imports. Countries that produce ethanol domestically can also benefit from trade that helps reliably fulfill the total ethanol demand needed to meet national fuel mandates.

More than 65 countries already have biofuels policies in place, with 11 markets announcing significant policy expansions in the last year. The Council continues to educate ministry and industry officials on the benefits of using ethanol and developing policies with a role for trade.

Read the original release: Sharing The Octane Advantage Of Ethanol With World Markets