Bloomberg

June 30, 2017

By Jennifer A Dlouhy and Mario Parker

Concerns that refiners will import ethanol from Brazil and biodiesel from Argentina to fulfill renewable fuel requirements prompted U.S. environmental chief Scott Pruitt to reconsider quotas for those fuels, according to people familiar with the program.

The issue has delayed the Environmental Protection Agency’s publication of proposed mandates for 2018, as Pruitt seeks revisions, according to four people tracking the deliberations. That may include lowering the targets so refiners can rely mostly on U.S.-made biodiesel and corn ethanol, they said.

EPA had previously sent the White House proposed quotas that would require the use of 15 billion gallons of renewable fuel, but the new concerns are causing the agency to rethink that approach, according to the people, who asked for anonymity to discuss internal deliberations.

The EPA debate comes as President Donald Trump pushes an America-first approach to trade. The administration is considering slapping tariffs on foreign-made products such as steel and aluminum in a bid to help domestic producers and support national security. After a meeting with South Korean President Moon Jae-in Thursday, Trump said that nation must stop exporting “dumped steel” into the U.S. market.

As part of his American energy focus, Trump told an Iowa audience this month: "By the way, we’re saving your ethanol industries." He also just spent this week touting "American energy dominance," and the ability of U.S. exports to supply the world’s energy needs.

These trade issues have already seeped into the biofuel markets. U.S. biodiesel producers filed a trade complaint against imports from Argentina and Indonesia, asking the government to impose tariffs to counter what they say are unfair subsidies and dumping.

Unlike those trade investigations, the EPA has a limited ability to discourage the use of imported biofuels under the congressionally mandated program. That program aimed to spur production of American-made fuel, but its quotas apply to all renewable fuels -- no matter their origin.  

If the EPA does take measures to restrict imports, the net result would be a spike in the price of credits tracking compliance with renewable fuel mandates and that would "drive up consumer cost significantly," said Mike McAdams, president of the Advanced Biofuels Association.

"If you want to stick it to the consumer, Mr. Administrator, just roll back the number for imported fuels with your misguided America-first policy," McAdams, whose members include Brazilian-based producers, said in an interview. "You need imports to satisfy targets."

The delays could also make it harder for the EPA to hit a Nov. 30 deadline in federal law to finalize biofuel quotas for the following year. The Obama administration missed that deadline repeatedly, until last year when they came out on time. Pruitt has promised to keep the program’s timing on track and "honor the intent" of Congress in creating the mandates.

Representatives from the EPA did not respond to requests for comment.

Under the Renewable Fuel Standard, first created by Congress in 2005, refiners can use imports to help satisfy multiple mandates in the program and make up for domestic shortfalls. For example, while refiners use U.S. corn-based ethanol to fulfill the bulk of a 2017 requirement to blend in 15 billion gallons of conventional renewable fuels, they are turning to some foreign supplies to help them hit the target.

The U.S. imported 36 million gallons of ethanol from Brazil last year, down from more than 400 million gallons in 2012, according to the Energy Information Administration. U.S. distillers produced a record 15.3 billion gallons of ethanol in 2016, it said.

The EPA is tasked with dictating specific annual quotas, but the agency has limited authority to waive the statutory goals and set lower targets. And the breadth of the EPA’s leeway is in doubt, as a federal court weighs a biofuel industry lawsuit challenging the agency’s waivers issued under former President Barack Obama.

In addition to the overall biofuel target, the agency sets standards for biodiesel, typically derived from soybean oil; advanced biofuel, which has lower carbon emissions; and cellulosic ethanol, which comes from sources such as crop waste or algae.

Sugarcane-derived ethanol made in Brazil qualifies as an "advanced biofuel," which means it can satisfy quotas for two different types of fuel in the program -- both for advanced biofuel and total renewable fuel. Corn-based ethanol doesn’t qualify as advanced.

Imported biodiesel is particularly useful because it can help satisfy quotas for three different required fuels -- advanced, total and biodiesel. Under the program, refiners receive 1.5 compliance credits for each gallon of biodiesel they blend into petroleum.

Read the original story: Brazilian Ethanol Concerns Said to Drive Delay in EPA's Quotas

Morning Consult

June 27, 2017

By Robert Walther

The arrival of summer in Washington is typically marked by growing legions of tourists zipping along on Segways and a seemingly constant need to take shelter from sudden rainstorms better suited to the tropics. In the fuel business, because of one antiquated rule, the transition to summer is much more abrupt — and much less welcome. If not resolved, it could mean one thing evading the rest of the country is a cleaner, less expensive fuel option.

Every June 1, gas station owners must re-engineer their product offerings to accommodate a decades-old Environmental Protection Agency regulation that limits sales of E15, a fuel blend containing 15 percent homegrown, low-emission ethanol. The prohibition lasts until Sept. 15, and represents one of the greatest barriers to growth in America’s renewable energy industry. It also costs retailers millions of dollars to navigate the switch, and it forces E15 customers to buy less-appealing fuels for 5 to 10 cents more per gallon. Those costs can add up quickly during the summer driving season when prices are already above the norm.

In practice, the rule — a limit on Reid vapor pressure — was designed to hold down the evaporation of toxic petroleum-based chemicals during the warm summer months. But, because RVP limits were set years before higher ethanol blends were part of the calculation, the obsolete rule now forces retailers to offer less earth-friendly options at the pump for more than three months each year.

Fixing this technical glitch would be fairly simple, and even EPA Administrator Scott Pruitt has expressed his hope for a solution, but only an act of Congress can keep E15 beyond the reach of oil industry lawyers looking hold back any competition at the gas pump.

To overcome the opposition, Sens. Deb Fischer (R-Neb.), Joe Donnelly (D-Ind.), and Chuck Grassley (R-Iowa) brought together a broad, bipartisan coalition of lawmakers to introduce the Consumer and Fuel Retailer Choice Act, S. 517.

During a recent hearing of the Senate Committee on Environment and Public Works, Brooke Colman with the Advanced Biofuels Business Council testified that new markets for homegrown fuel are vital to attracting investment dollars and “critical to first-movers in commercial cellulosic ethanol production.” His point was reinforced in a letter from POET and dozens of other leaders in second-generation biofuels who noted that, “during the summer months alone E15 can reduce GHGs equivalent to taking 2.1 million vehicles off the road.”

A top executive from the nation’s largest E15 retailer, Sheetz, also explained to committee members that the fix would simply allow “greater consumer access for a fuel that is lower cost, higher performing, and better for the environment.”

And Janet Yanowitz at Ecoengineering Inc. summed up the science for committee members, reporting that “the available emissions test data indicates that replacing E10 with an E15 of the same vapor pressure will cause a slight decrease in emissions of ozone forming organic compounds and carbon monoxide, and no change in NOx.” Meanwhile, the U.S. Department of Agriculture, reported this year that homegrown ethanol reduces carbon emissions by 43 percent compared to gasoline, a number that continues to grow as petroleum production relies on increasingly destructive extraction methods. And if those carbon savings aren’t enough, the cellulosic ethanol produced at plants like POET’s Project Liberty can slash emissions by 85 to 95 percent or more. To be clear, cellulosic biofuels are the future of our industry and our company, but we need market headroom to scale up advanced energy sources.

The only real opposition comes from a few oil company executives who think that holding consumer choice hostage is a good way to force pro-biofuel lawmakers to negotiate with refinery owners such as Carl Icahn. They are even dusting off an old oil-funded study by the Coordinating Research Council, which claimed that E15 damaged engines, but was immediately rejected by the Department of Energy, which pointed out that the report was “significantly flawed” and relied on “unreliable and incomplete data.” No surprise then that legitimate testing by the DOE of 86 vehicles operated up to 120,000 miles each found “no statistically significant loss of vehicle performance.” In fact, the EPA approves E15 for all passenger vehicles built since 2001. And because E15 offers higher-octane, a lower cost, and cleaner air, it’s quickly gaining popularity among consumers in 29 states and counting.

That progress could be accelerated, and all it will take is a simple, bipartisan fix to one outdated summer fuel regulation. It’s time to act. Cleaner, less costly fuel is a goal that everyone can agree on, and we urge the Senate Committee on Environment and Public Works to act quickly to fulfill the promise of America’s growing biofuel industry and open a market that will continue to drive investment in the next generation of low-carbon fuels.

Read the original story: More Energy, More Choice

Just Auto

June 16, 2017

By Fernando Calmon

Nissan was the auto industry's first company to develop a vehicle prototype powered by a solid oxide fuel cell (SOFC) that works with bio-ethanol. By combining this and two other technologies (electric motor and a 24 kW/h battery) range is in excess of 600km (375 miles).

Brazil was chosen by the Japanese automaker for the global reveal of the technology and initial testing due to its huge, nationwide ethanol supply network and being the world's second largest ethanol producer.

Testing was done with two SOFC-equipped e-NV200 electric vans made in Spain and fitted with an ethanol fuel tank of just 30 litres (6.6 imperial gallons).

The first testing cycle in daily use was accomplished in the last few months by the Nissan Brazil research and development team. The technology fitted perfectly with day to day use and with Brazil's 5% water, hydrous ethanol fuel.

The Fuel Cell e-bio's research and development programme was announced by Nissan in Yokohama, Japan, in June 2016. It was first unveiled on the eve of the Rio 2016 Olympic Games opening in Rio de Janeiro City in August last year at an event for smart mobility organised by Nissan.

The motor is clean, highly efficient and it works 100% on straight ethanol or on a mix of ethanol with up to 50% water, which would make it easier to use in countries with no ethanol production dependent on imports. Its emission are classified as carbon-neutral well to wheel.

The Fuel Cell e-Bio provides the usual strong acceleration and silent drive of any electric vehicle, together with low maintenance costs, but with the range of a fossil fuel-powered vehicle.

Bio-ethanol comes mainly from sugar cane and corn available in North and South American countries.

Read the original article: Nissan Brazil Ends Initial Tests of Ethanol Fuel Cell

AgriPulse

June 14, 2017

By Spencer Chase

A hearing of the Senate Environment and Public Works Committee left backers of a bill that would expand sale of higher ethanol blends encouraged, but the legislation has an uncertain future.

The hearing examined the Consumer and Fuel Retailer Choice Act (S.517), which would alter the Clean Air Act to allow for the sale of blends of ethanol like E15 to be sold in the summer. Currently, Reid vapor pressure restrictions are only waived for E10, a 10 percent blend that accounts for most of the fuel sold in the U.S.

While the hearing did examine the legislation, it wasn’t a formal markup of the bill. Sen. Chuck Grassley, an Iowa Republican who is one of the bill’s 17 co-sponsors, told reporters yesterday that he hoped to see a markup next week, but Committee Chairman John Barrasso told Agri-Pulse that isn’t going to happen.

“It’s not going to be next week,” the Wyoming Republican said. Asked whether the committee would pursue a markup, he said that a markup of the bill “has been promised” to Sen. Deb Fischer, R-Neb, the bill’s sponsor, but did not mention a timeline.

Speaking to reporters after the hearing, Delaware Democrat Tom Carper, the committee’s ranking member, said he sensed a “willingness to hold a hearing, not an eagerness to move toward a markup.”

Biofuel industry sources tell Agri-Pulse  the current estimate is for a markup sometime before the August recess. But when the bill eventually does move, it may have to overcome opposition from committee leadership.

Barrasso said at the beginning of today’s hearing that he doesn’t support the bill, but said it deserved “a full and fair hearing before this committee.” Additionally, Carper told reporters after the hearing that if his concerns about how the legislation would impact the volatility of the Renewable Identification Number (RIN) market aren’t addressed, then he “could not support the bill as it is.”

A bipartisan contingent of senators, however, threw their weight behind the bill. Besides Fisher, Republicans Mike Rounds of South Dakota, Joni Ernst of Iowa and Democrat Tammy Duckworth of Illinois all spoke favorably of the legislation.

Mike Lorenz is an executive vice president with Sheetz, a retailer that sells E15. He said that after millions of transactions from thousands of customers, “we have not had a single customer complaint or any cases of misfueling.” Todd Teske, the chairman, president, and CEO of Briggs & Stratton, reiterated his concern over misfueling, however, by pointing to damaging impacts that could come about if small engines used fuel blended with more than 10 percent ethanol.

Ethanol skeptics on the committee like Oklahoma Republican Jim Inhofe also spoke against the bill, saying it would be another victory for corn ethanol and the Renewable Fuel Standard. But Brooke Coleman, the executive director of the Advanced Biofuels Business Council, said advanced biofuels like cellulosic ethanol could also benefit from the legislation. He pointed to difficulties some cellulosic projects face in securing funding because of an uncertain demand picture, and he said the bill could shore up confidence among investors.

“This will fundamentally change that conversation,” Coleman said at the hearing. “Basically, you’ll have an ethanol industry that gets to the next level from an innovation standpoint.”

After the hearing, Coleman pointed out that opponents of  the legislation will seek to pit cellulosic and other advanced biofuels against conventional corn ethanol, but he said the industry can’t let that happen. He said the same groups of lawmakers that helped pass the RFS in the first place can also play a role in backing S.517 and companion legislation in the House.

“The coalition that built the RFS was a broad, bipartisan, middle of the country, coastal America coalition, and there’s no reason to break that down.”

Read the original story: Senate Hearing Reviews E15 Bill; Path Forward Unclear