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By Timothy J. Rudnicki, Esq
September has been an especially busy and constructive month for the ethanol industry in Minnesota. The US EPA’s discriminatory RVP season ended, thus making E15 available once again to all 2001 and newer vehicles. Gov. Mark Dayton joined several other Midwestern governors in calling on the EPA to end the Reid Vapor Pressure (RVP) ban on E15 and declared Sept 16, 2016, Ethanol Day, in Minnesota.
Separately, we made some progress with state agencies with some tangible and meaningful action. There’s still more to be done to lower or remove artificial barriers to ethanol producers and the fuel marketplace.
Minnesota has a set of interrelated laws which are designed and intended to lower or remove some of those barriers. The petroleum displacement law, for example, calls for using at least 30 percent biofuels (excluding biodiesel) by 2025. But until these laws (words) are actualized, Minnesota will continue to be dependent on carbon intensive fossil fuels while shipping energy dollars out of Minnesota.
Here are some of the present challenges facing our industry in Minnesota and steps we have taken to give consumers greater fuel choices at the pump.
1. We tracked the 2016 Energy Security Bill which may as well have been drafted by Big Oil. While it never got out of the legislature, it is expected to resurface in 2017. In an attempt to bring this bill into alignment with existing biofuel laws in the state, we worked with the Deputy Commissioner of Division of Energy Resources to include ethanol in a fuel inventory survey and recognize the role ethanol can play in further displacing gasoline.
2. We have also identified some cumbersome regulatory barriers that prevent ethanol producers from rapidly changing out production and pollution control equipment in order to use even more efficient equipment. These regulations clearly run counter to laws aimed at strengthening and growing Minnesota’s ethanol industry. We are currently engaging the Minnesota Pollution Control Agency to identify a common roster of equipment that could potentially be changed in a matter of a few days, rather than months, through an administrative amendment or some comparable time-sensitive process.
3. The Minnesota Environmental Quality Board’s (EQB) “Climate Solutions and Economic Opportunities” report will purportedly be used by state agencies to set policy directions and budgets with respect to carbon reduction plans. Unfortunately, the report contains data that is flawed at best. Despite informing the EQB on these deficiencies, the EQB refuses to accept the science which demonstrates that ethanol’s CO2 reduction benefits augments the CO2 reduction from the use of more efficient vehicle engines.
This is perhaps one of the most egregious examples of policies that are out of alignment with the Dayton Administration and our state’s biofuel laws, goals and science. We will continue to work with the Governor to align department policies and actions with the biofuel laws.
4. The RVP ban on E15 during the summer months can be fixed by the EPA through administrative action as well as well by calling for the use of a better quality base gasoline (reformulated gasoline). In fact, we’ve discovered that there are particulate matter (PM2.5) concerns in a specific region in the state that could necessitate the use of RFG.
We are currently reviewing a variety of air quality measures to determine the PM2.5 levels in various counties and have engaged with local governments to explore the use of E15 blended with RFG to ensure their region is within compliance with air pollution laws.
5. For many years the state’s procurement contract has made E10 and E85 available to state fleet operators as well as counties and cities. E15, however, has not been included. That will change moving forward. After working with the Department of Administration for over a year, E15 will now be a fuel option for all units of government across Minnesota thereby paving the way for higher consumption of E15 in Minnesota.
Conclusion
The constructive actions we have undertaken are aimed at implementing Minnesota’s laws so as to facilitate the expanded use of clean, homegrown ethanol in the State. We will continue to blow the dust off those law books and turn the two dimensional words into three dimensional results and in turn, keep more energy dollars in Minnesota, boost our economy, give consumers savings at the pump and reduce the carbon emissions in the transportation sector.
It’s all about aligning and implementing those words (laws).
By Timothy J, Rudnicki, Esq
Over the last few months the Minnesota Bio-Fuels Association has been taking the political pulse.
We were keenly interested in what local candidates had to say about their support for: (A) ethanol as used in regular gasoline and E15, (B) Minnesota’s petroleum displacement law, (C) the RFS and (D) expanding the fueling infrastructure to make more E15 and higher ethanol blends available to Minnesotans across the State.
Our findings tell an interesting story.
The pilot project survey was broad but targeted. Survey questions and follow up telephone calls were made to those candidates having specific ethanol touch points in their districts. We examined, for instance, whether an ethanol plant, industry stakeholder, or fuel retailer (selling E15 or higher blends) were in the district and then tallied the total number of touch points for ethanol in each targeted district. All but one of the 67 Minnesota senate districts has at least one touch point such as a fuel retailer selling E15 or E85. Other senate districts have as many as 13, 18 and 21 touch points.
A district with numerous touch points might, for example, have an ethanol plant within its bounds as well as one or more ethanol fuel retailers and ancillary ethanol businesses such as an engineering company, accounting firm or fuel marketing enterprise. The threshold for this phase of the survey project required at least 10 touch points in a senate district. While we plan to refine and expand the survey's methodology for use in the future, the results for this round are useful and instructive.
We have identified those senate districts where House and Senate members might benefit from some additional information regarding the social, economic, consumer and environmental benefits that stem from the production and use of renewable biofuel in Minnesota. And we also have information showing us where the very strong support exists, too.
As we connect the dots for what this election means for ethanol in Minnesota, I have a couple of observations. First, the vast majority of candidates expressed strong support for ethanol indicating that ethanol is party neutral. Regardless of one’s party affiliation, the production of homegrown, renewable ethanol provides tangible benefits for Minnesotans.
The second point is about politics and the future. We all know that petroleum has dominated the transportation fuel market for more than 100 years. And that dominance has come at a steep cost to our energy security and carbon emission budget. Therefore, the Minnesota Petroleum Displacement law and the Renewable Fuels Standard remain necessary to ensure, as a state and nation, we continue to move further down the sustainable and renewable, low carbon path. Many of our lawmakers understand the importance of these two laws and the incredible social, economic and environmental benefits that have flowed from them thus far.
There is an equally important future component at issue, too. While some see electric vehicles dominating the future transportation landscape, a July 2016 publication from the Department of Energy's Oak Ridge National Laboratory suggests otherwise. In the “Summary of High-Octane, Mid-Level Ethanol Blends Study,” it states:
"[Automakers] are pursuing a broad portfolio of technologies to reduce CO2 emissions and improve fuel economy. Central to this effort is higher efficiency spark ignition (SI) engines, including technologies reliant on higher compression ratios and fuels with improved anti-knock properties, such as gasoline with significantly increased octane numbers. Ethanol has an inherently high octane number and would be an ideal octane booster for lower-octane petroleum blendstocks."
The Report then goes on to cite additional studies which point to 25-40 volume percent as the range for a new high octane fuel and how it would assist in reaching the goals set forth in the RFS and to curb greenhouse gas emissions. In short, it seems the spark ignition engine, along with ethanol, could play a major role in future automobiles.
With respect to the election results and what it means for ethanol, we look forward to working with incoming House, Senate and Congressional Members. We have a fantastic story to share with them about the thousands of jobs that are supported by the ethanol industry in Minnesota, how E15 is about 10 cents less per gallon compared to regular, the billions of dollars of economic contribution from the ethanol industry and the millions of tons of greenhouse gas that can be displaced annually with ethanol. Equally important, as the auto industry retools for the high mileage, high efficiency, lower emitting spark ignition engine, so long as we work together, Minnesota will have the ethanol producers necessary to provide the high octane low carbon fuel.
By Timothy J. Rudnicki, Esq
The November elections did shift the balance of power among Democrats and Republicans in both the Minnesota Senate as well as the US Senate and the White House. Following the elections, I’m frequently asked, what does this shift mean for ethanol and renewable chemicals?
On an academic level, the social, economic, energy security, consumer and environmental benefits that stem from biofuels are apolitical and have no party affiliation. For nearly six years the Minnesota Bio-Fuels Association has worked with Democrats and Republicans including lawmakers from the urban and suburban areas and rural communities of the state. We all found common ground and ways to grow the biofuel and renewable chemical industry to displace imported, finite petroleum-based products.
To produce what we require for mobility and products from renewable ingredients grown right here in Minnesota helps our community and improves the environment.
Doing what’s best for us is keeping billions of energy dollars in Minnesota rather than exporting those dollars to Canadian tar sands oil, Bakken crude or Middle Eastern oil producers. Doing what’s best for us is saving Minnesota drivers $240 million annually with E15. Doing what’s best for us is reducing nearly a million tons of greenhouse gas emissions from the transportation sector annually.
All of the above are being achieved with renewable chemicals and ethanol produced right here in Minnesota.
Here is a case where the old adage “if it works, don’t fix it” applies. As MBA has reported on the 2015 Minnesota ethanol industry data, Minnesota ethanol producers supported over 18,000 jobs, generated $7.37 billion in gross sales, generated $1.6 billion worth of income for Minnesota households and contributed $2.13 billion to Minnesota’s gross domestic product.
Given the very tangible benefits the ethanol industry provides for people in Minnesota, I would expect that lawmakers will do no harm or try to fix something that doesn’t need fixing. In other words, that means doing no harm to both the Minnesota Petroleum Displacement Law and the federal Renewable Fuel Standard.
We must, however, be ever vigilant and continue to advocate our positions. MBA will, once again, launch a major campaign to help Minnesota lawmakers and members of the Minnesota Congressional Delegation more fully understand the tangible, positive benefits the renewable ethanol industry and the growing renewable chemical industry provides all Minnesotans.
In addition to ensuring lawmakers do no harm to the existing biofuel laws, we will ask lawmakers to help build upon successes in the biofuel sphere. One way we can do this is by making a few minor regulatory adjustments to obtain even greater economic, social and environmental benefits. For instance, if E15 were given the same Reid Vapor Pressure treatment as E10, E15 could be sold throughout the year including the high mileage, busy summer driving season. Using more E15 would displace more carbon-intensive petroleum and also cut more greenhouse gas emissions in the transportation sector.
We will also ask lawmakers for assistance with expanding the fuel storage and dispensing infrastructure to handle more E15 and higher blends of ethanol. As of this writing, there are 62 E15 stations in Minnesota. The next phase of this infrastructure project will call for adding several hundred additional E15 dispensers, which can handle up to at least E25.
Many positive social, economic, energy security and environmental benefits have flowed from biofuel laws. And those benefits, and the success stories, are measurable and linked to real people in each US Congressional District and each Senate District in Minnesota. One would, therefore, expect lawmakers to allow society to build upon these tremendous success stories.
But, as we have seen this past election cycle, this has been a year of change. Some who question me about the implications of the election seem satisfied with the thought that change will come to Minnesota or Washington.
What does this mean? Change what? Change for whom? If this change comes, who will be benefitted and who will be burdened? Change for the sake of change seems like a rather infantile and dangerous game for people, the economy and the environment.
What if lawmakers decided the best change is to stop trying to make a political football out of biofuels and instead embrace the growing success and positive benefits of biofuels and to build upon that success to produce even more benefits? What if lawmakers demonstrate change by articulating and reinforcing a renewable energy vision which puts more Americans to work building, expanding and further modernizing ethanol plants to produce an even lower carbon biofuel?
If lawmakers want to make this election about change to serve their constituents and society as a whole, then let’s work together to find ways to make Minnesota and the nation more energy independent with homegrown biofuels. Collectively, we have tremendous potential and opportunities to match the next generation of internal combustion engines with a higher octane low-carbon fuel, expand the fueling infrastructure, put more people to work and improve the quality of our environment.
Let’s do change with a vision and a purpose. Toward that end, MBA will remain vigilant and continue to advocate for meaningful change. Happy New Year!
By Timothy J. Rudnicki, Esq
With 598 House Bills and 499 Senate Bills introduced as of January 30, a fired up legislature and four more months remaining in the 2017 Legislative Session, we have an excellent opportunity to do more advocacy on behalf of the biofuel and renewable chemical industries in Minnesota.
As usual, the Minnesota Bio-Fuels Association will work both defense and offense. Thus far, at some point in every legislative session, we have seen bills introduced which, either by accident or intent, attempt to hack away at the core of Minnesota’s biofuel and renewable chemical industries. Regardless what the attack might be, MBA is there to confront, challenge and change the offending bill.
MBA also works on the offense. For instance, this session MBA is working with key stakeholders and legislative bill champions in the Minnesota House and Senate to advance a couple of bills. One bill involves a tax credit to jump start a new technology and the other bill is aimed at giving at least 150 fuel retailers the types of resources they need so they can rapidly transition to making E15 the new unleaded regular fuel in Minnesota.
The first technology bill holds some super potential to increase efficiency of production. At issue is the need to stimulate the generation of electricity onsite with, for example, combined heat and power systems or expander generators or some combination of both. These energy technologies can enable renewable biofuel and chemical producers to use cleaner energy and further lower their carbon footprints.
With these energy efficiency technologies, carbon footprints are lowered in at least two ways. First, when a producer generates their electricity onsite, they immediately reduce the problem associated with transmitting electricity over long distances: line loss. The resistence of the transmission wires essentially “wastes” electricity, hence the term line loss, yet energy had to be used to generate that electricity. So, when renewable biofuel and chemical producers use the onsite generating technology they can cut the amount of wasted energy due to line loss.
Biofuel and renewable chemical producers can also reduce the carbon footprints of their products with the onsite generating technology because the technology uses cleaner fuel to make electricity. While the vast majority of the grid serving Minnesota is still powered with very carbon intensive fuel, the biofuel and renewable chemical producers can use much less carbon intensive fuel such as natural gas, biogas or pressure differentials.
Today’s onsite electricity generating technology is really fantastic. A combined heat and power system produces both the heat needed to process renewable biofuels and chemicals and to generate the electricity used to power, for instance, fans and pumps. The expander generators convert high pressure gases or fluids to lower pressure by taking and using the pressure (energy) to spin a generator to produce electricity. Given the tremendous environmental benefits associated with these systems, as well as the potential to jump start the use of this dormant technology, MBA is working with lawmakers to advance a bill that would provide a phased out tax credit to producers.
Another key bill is the 2017 biofuel infrastructure build out program. This bill aims to literally build upon the success of the Biofuel Infrastructure Partnership Program which was funded by the US Department of Agriculture and matched with grants from the Minnesota Department of Agriculture and the ethanol industry.
Through the course of its work with fuel retailers across Minnesota, MBA has identified another set of more than 100 fuel retailers who are interested in and prepared to offer E15 and higher blends if they can get some assistance. We have identified a range of needs for the retailers including from those requiring relatively minor adjustments to their dispensers to those who could offer two or three tankers of E15 a week to their customers but for some changes that need to be made to their tanks or pipes or dispensers. The multi-million dollar bill at issue could go a long way to making E15 the new regular, boosting the Minnesota economy with homegrown biofuels and driving down GHG emissions.
When E15 is the new regular fuel, renewable ethanol will cut an additional 358,000 metric tons annually of carbon dioxide equivalent gas from the atmosphere. That’s the equivalent of taking about 75,368 passenger vehicles off Minnesota roadways. A few million dollars can get GHG emission reductions within a matter of months. It would cost several billion dollars to displace the same number of passenger vehicles with alternative technology.
In short, both of the bills spearheaded by MBA hold tremendous potential to boost the biofuel and renewable chemical industries in Minnesota, jump start an energy efficiency technology, expand annual consumer fuel savings by about $240 million and drive down those GHG emissions now. For more news between newsletters, be sure to follow us on Facebook and Twitter. As always, I welcome you comments This email address is being protected from spambots. You need JavaScript enabled to view it..
By Timothy J. Rudnicki, Esq
The current legislative session in Minnesota has been filled with policy and finance bills. For instance, 1,824 bills have already been introduced in the Minnesota House of Representatives. In the Senate, 1,572 bills have been introduced. But among the more than 3,000 bills are two which can unlock and unleash the full energy security, economic, environmental and consumer benefits of renewable ethanol made in Minnesota.
The key to unlocking all this potential is currently in the hands of legislators and embodied in House File 1257 and Senate File 1277.
First, a bit of context.
Minnesota Statute 239.7911 calls for at least 25 percent biofuel use within the transportation fuel market by 2020. As of 2015, ethanol comprised approximately 12.47 percent of transportation fuel in Minnesota. The gap between the 2015 metrics and the 2020 target can be bridged, in part, with a robust program to help fuel retailers make some technical decisions and install the most appropriate and cost-effective fuel storage and dispensing systems so they can offer E15 and higher blends to consumers.
Although Minnesota ethanol producers can supply the transportation sector with more renewable biofuel, some fuel storage and dispensing equipment needs to be adjusted or replaced to handle E15. Both House File 1257 and Senate File 1277 provide the necessary funding for technical assistance and appropriate technology so fuel wholesalers and retailers can ween themselves from foreign oil. More importantly, more stations will be able to dispense E15, thus increasing access to a clean, locally-produced fuel that is growing in popularity.
While only 2 percent of retail fuel stations in Minnesota are equipped to offer E15 (also known as Unleaded Plus), where E15 is available, consumers choose it. E15 sales in Minnesota hit an all-time high of 5.68 million gallons in 2016, nearly double the volume in 2015. In fact, each month in the fourth quarter of 2016 broke a new monthly record with 550,270 gallons (October 2016), 742,253 gallons (November 2016) and 841,589 gallons (December 2016). Moreover, the volume in December 2016 was 60 percent higher than the total recorded in December 2015 (528,171 gallons).
Millions of Minnesotans will benefit from this biofuel bill. But for solar and wind energy and biofuels, Minnesota imports all the rest of its energy. Using more biofuels made in Minnesota keeps energy dollars in the state. According to the 2016 ABF Economic Report, the Minnesota ethanol Industry supported about 18,000 jobs, contributed $2 billion to the GDP, paid $80 million to state and local taxes and, in more human terms, generated nearly $1.5 billion in household income.
When the legislators use the biofuel key to unlock the potential of made-in-Minnesota biofuel, additional benefits could flow to consumers. If, for instance, E15 was ubiquitous, based on current market conditions and demand analysis, annual fuel cost savings to consumers are estimated to range from $168 million to $240 million. Additionally, E15 could reduce air pollution while also reducing GHG emissions by an additional 358,000 metric tons annually or the equivalent of removing approximately 76,000 vehicles from Minnesota roadways.
Thus far, Minnesota legislators are taking some action on the biofuel key. On Monday, February 27, the Minnesota Senate Agriculture, Rural Development, and Housing Finance Committee held a hearing on the bill. The House Agriculture Policy Committee is scheduled to take up the bill on March 1. For those Minnesotans who support greater access to renewable biofuel made in Minnesota, now is the time to contact the Members of the House and Senate Committees to voice your support for House File 1257 and Senate File 1277.
In the final analysis, the key to unlocking more of the benefits of biofuels in Minnesota rests with legislators. While legislators have many public policy, economic, consumer, energy security and environmental reasons to use the biofuel key, they need to hear from you.
By Timothy J. Rudnicki, Esq
The current biofuels infrastructure bill in the Minnesota legislature (House File 1257 and Senate File 1277) is really more than just increasing fuel tanks, pipes and dispensers.
It's about bolstering Minnesota's energy security, saving consumers at the pump, driving down greenhouse gas emissions and boosting Minnesota's economy. And to fully realize these economic, environmental and social benefits, there needs to be greater access to E15 in Minnesota. That's where this biofuels infrastructure bill comes in.
If the state invests $12.5 million in E15 infrastructure, some 150 additional stations would be able to dispense E15, which in turn could potentially increase E15 consumption in Minnesota to 150 million gallons annually.
More E15 equals less harmful greenhouse gas emissions. A University of Illinois analysis shows that if all gasoline in Minnesota contained 15 percent ethanol instead of just 10 percent, greenhouse gas emissions would be reduced by an additional 358,000 metric tons annually. To put that into perspective, we would need to remove 75,368 vehicles from our roads annually to achieve the same result.
Investing in E15 infrastructure will also have a positive impact on Minnesota's economy.
An independent analysis by ABF Economics shows that this one-time investment of $12.5 million would boost Minnesota's GDP by $35.9 million, support 276 full-time jobs, generate $25.5 million in household income and pay $1.4 million in state and local taxes.
This biofuels infrastructure bill will also play a critical role in meeting Minn. Stat 239.7911, which states biofuels should comprise 25 percent in transportation fuel by 2020.
As of 2015, biofuels comprised 12.47 percent of transportation fuel in Minnesota. Increasing access and usage of E15 would certainly help us meet the goals set in Minn. State 239.7911.
Last but not least, an investment of $12.5 million is just 7/10 of 1 percent of Minnesota's projected budget surplus of $1.65 billion that is available for the upcoming biennium.
The facts are plain to see. Minnesota has much to gain from this biofuels infrastructure bill and we call upon Minnesota lawmakers to pass this bill and send it to Gov. Mark Dayton.
By Timothy J. Rudnicki, Esq
Right now Minnesota legislators have the opportunity to bolster the household income of Minnesotans by $25 million while supporting 276 jobs and generating $35.9 million in gross domestic product (GDP). Prudent budget action by legislators could generate additional benefits which include cutting air pollution and greenhouse gas emissions by 358,000 metric tons annually and generating $1.4 million in state and local taxes.
What stands in the way of the Minnesota legislature’s actualization of these positive social, environmental and economic benefits? Budget targets, potentially, could be the road block.
Legislators tell us they support funding the expansion of biofuel infrastructure because they recognize the very tangible benefits to Minnesotans. Legislators tell us they understand when consumers have access to a “Made In Minnesota Biofuel,” especially one with more octane at a lower cost, they purchase it. And legislators tell us they recognize the artificial barriers that have been raised against biofuels and they understand we need to lower those barriers by providing a helping hand to fuel retailers who choose to offer E15 and higher blends to consumers.
But then legislators lament the anticipated budget targets, which are expected to be too low, because there will be little or no room for meritorious initiatives such as the expansion of biofuel infrastructure.
With a $45 billion biennial budget and an estimated $1.65 billion budget surplus, I cannot understand how legislative leaders might not even consider the significant return on a modest policy proposal calling for $12 million to fund the expansion of Minnesota’s biofuel infrastructure.
After following some of the thousands of policy bills and funding requests that have been introduced this legislative session, I understand full well that there are many competing interests for scarce taxpayer dollars. So how do legislators decide which issues are worthy of some funding from our budget surplus?
If the weight of the case or issue is a deciding factor, I respectfully suggest they give careful consideration to our case because it has substantial benefits.
Minnesota is home to 5.5 million based on July 2016 U.S. Census estimates. Does having cleaner air for Minnesotans carry any weight? Ethanol is free of toxins, such as benzene and toluene, found in petroleum gasoline. Making more ethanol available to Minnesotans is good for the environment and human health. Additionally, using just 5 percent more ethanol can have the same GHG emissions reduction effect as taking 75,368 vehicles off Minnesota roadways.
An analysis by ABF Economics shows that a $12 million investment in E15 infrastructure would result in $35.9 million to the state’s GDP, generate $25.5 million in household income and contribute $1.4 million in state and local taxes. If the legislature’s purpose is understood to include making policy and funding decisions which improve the lives of Minnesotans, then the modest $12 million biofuel infrastructure funding request, with all its benefits, should be an easy call.
With the early success of the USDA Biofuel Infrastructure Partnership Program making E15 available at 138 locations in Minnesota, ethanol plant modernization and expansion projects, including the $146 million Al-Corn Clean Fuel expansion, and at least another 150 retailers prepared to submit project proposals to offer E15, now is the time for legislators to act and build upon success.
According to the National Renewable Energy Laboratory, we can achieve market penetration with approximately 600 fuel retailers offering E15. If legislators choose to allocate $12 million from the $1.65 billion budget surplus to continue expanding biofuel infrastructure, we will be at the halfway mark in making high octane, low carbon E15 the new regular for Minnesotans. We all win with cleaner air, lower carbon emissions and a boost to the economy and household income.
Picture Caption : Rudnicki testifying on the benefits of the Biofuel Infrastructure Bill to legislators in St Paul
By Timothy J. Rudnicki, Esq
The Minnesota Bio-Fuels Association is working to facilitate the rapid adoption of E15 by consumers as the new regular fuel across Minnesota. Given MBA’s work, we often engage with the many minutiae that go into advancing the use of E15. When it comes to related advocacy issues, communication messages and fuel supply chain projects, those many details we work on and how they are handled can often make the difference between obtaining or not obtaining funding for biofuel infrastructure, converting or not converting consumers to E15 use and having or not having an availability of E15 in the marketplace.
By working on the many minutiae in these three key areas, we can often identify those artificial barriers that do indeed substantively impact and matter to producers and consumers. And from our vantage point, we can often identify barriers the industry imposes upon itself.
Those self-imposed barriers are actually ones we, as an industry, should be able to easily and effectively manage for more productive outcomes. For instance, from our vantage point in the trenches, so to speak, we sometimes wonder whether those who proclaim to speak for the renewable biofuel industry actually understand how educated and informed consumers make fuel purchase decisions at the retail level.
In the last few months MBA completed more than 40 retailer promotions, building upon the success we have had with these outreach initiatives for more than two years. Included among these promotions are field events where we literally engage with consumers onsite at a retail fuel station.We have built our outreach projects upon sound field research, the provision of training for retail staff, carefully listening to consumers and ramping up social media.
We take some preliminary steps before we directly engage with a potential E15 consumer at a retailer’s fuel station. First, we make some observations. Is the person approachable? Can the vehicle use E15? Only then do we approach the person in a respectful and professional manner. Based on these direct observations of and engagement with potential E15 consumers, we have learned a few things over the last couple of years.
One thing we know is this: the suggestion that if only E15 or E30 were available, then consumers will automatically use it as the new regular fuel is wishful thinking. In our estimation, this is an example of a self-imposed industry barrier because it prevents the industry from actually wrestling with the reality on the ground. That Lexus owner who wants to speak with the dealer before trying E15 or the VW Golf GTI owner concerned about the effect of E15 on the turbocharger have concerns that are valid to them. And these examples are just a few of the real concerns, whether technically valid or not, that many consumers still have.
Given sales of E15 in Minnesota breached the one million gallon mark in March, people are indeed buying E15. Greater availability of E15 in the marketplace and some price differential, typically 10 cents per gallon, between E15 and regular certainly have helped to increase sales. But only when E15 sales reach approximately 166 million gallons per month can we say E15 is indeed the new regular fuel in Minnesota.
To reach this target, it’s time for the industry to let go of some self-imposed barriers.
In addition to the fuel retailer events, the Minnesota Bio-Fuels Association also provides training services for fuel retailers and their staff. This training helps the fuel retailer team understand E15 so they can be comfortable and competent in answering consumer questions. We also help fuel retailers simplify required labeling at the dispenser. Our work with fuel retailers in this area has helped to give consumers some certainty, clarity and consistency so they can purchase E15 with confidence.
Interestingly, just as consumers are coming to learn and expect that E15 is 88 octane or Unleaded Plus, now some retailers are adopting "eblend88" as a new product name. While there may be some business reason for this change, it certainly creates confusion in the mind of consumers. And for those consumers who want a simple purchase experience rather than go through another learning exercise, they may simply revert back to E10.
Certainly there are artificial barriers to E15. Some are very tangible and can have profound adverse effects on consumer purchase decisions. Examples of these barriers include the summer RVP constraint and the many dispenser labels which can scare a customer away.
We can do more advocacy around some of the external barriers. But the self-imposed barriers to how we think consumers consider biofuels and make a purchase decision can only be addressed internally. Let’s open up our thinking and use more consumer research and science to tackle the difficult issues so E15 and higher blends of renewable fuel can indeed displace more carbon intensive, finite fossil fuels. We will all benefit when we cross this bridge together.
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By Timothy J. Rudnicki, Esq
As we approach the end of the 2017 RVP season for E15, we’re getting some suggestions from various quarters that RVP relief may be at hand. Well yes, September 16 is almost here. If, however, the suggestion is that the EPA and/or President Trump is prepared to make some authentic regulatory change, then let’s see the amendment or executive order.
Quite frankly, I really wonder how the EPA could square a change with the RVP standard after it released the proposed RVO numbers just a few weeks ago. The connection between the RVP and proposed RVO rule rests not with an explicit reference to RVP but rather the Agency’s tortured reasoning and clinging to the blendwall fiction so as to rationalize its perverted analysis of the market barriers to higher levels of biofuel use.
Here is what the EPA states in the Federal Register at 34231:
We continue to believe that the constraints associated with the E10 blendwall do not represent a firm barrier that cannot be crossed. Rather, the E10 blendwall marks the transition from relatively straightforward and easily achievable increases in ethanol consumption as E10 to those increases in ethanol consumption as E15 and E85 that are more challenging to achieve. However, we also recognize that the market is not unlimited in its ability to respond to the standards we set. This is true both for expanded use of ethanol and for non-ethanol renewable fuels. The fuels marketplace in the United States is large, diverse, and complex, made up of many different players with different, and often competing, interests. Substantial growth in the renewable fuel volumes beyond current levels will require action by many different parts of the fuel market, and a constraint in any one part of the market can act to limit the growth in renewable fuel supply.
Well, for sake of argument, let’s accept this faulty or incomplete premise for why E15 has yet to be the new regular fuel across Minnesota. The EPA tells us the fuels marketplace is complex, there are numerous actors with competing interests and that a barrier in one part of the market (e.g., the petroleum industry which has failed to make its own investment in infrastructure to make E15 available to consumers) can limit the growth in, for instance, E15. While the EPA analysis may have accurately identified some elements which are or could be constraints to greater use of biofuels, the EPA fails to state the most obvious reason for the 25 percent market shortfall in E15 sales at this point in time: the Reid Vapor Pressure (RVP) Standard.
In June, the first month of the RVP season, E15 sales in Minnesota fell 58 percent. Thanks to the outstanding field work being done by MBA’s fuel retail/wholesale supply chain marketing specialist, we have learned that some stations have even lost from 76 percent to 97 percent of their E15 sales. On our social media platforms, station managers have complained how their customers are confused by the RVP rule. And, based on our observations over the last few years, following the RVP season, it can take as long as 45 to 60 days for retailers to reach the same volume of E15 sales they had prior to the RVP season.
So, if the EPA really wants to know about a market constraint, look no further than the RVP. And unlike the other ambiguous problems the EPA identified above, the EPA actually has the authority to fix the RVP mess.
Meanwhile, until we see an RVP announcement (or any interest in addressing it) from the EPA, we will continue to explore new avenues for removing the RVP market constraint before the 2018 RVP season is here. Toward that end, while MBA continues to monitor and engage with stakeholders, where possible, on either a regional or nationwide basis, MBA is also taking an alternate pathway toward a possible solution.
MBA is preparing to launch a new campaign that calls for direct engagement with state regulators in other parts of the United States as well as with key state agencies in Minnesota to craft a pilot project. While the elements of the project remain fluid, we are exploring ways to leverage E15 to either halt the rise in PM2.5 or use E15 in an attainment zone where zip code zone air quality monitoring can be used to obtain real world data about the effects of E15 use during the summer. Our theory of the case is either E15 will have no adverse effect or the ozone level will drop.
Meanwhile, we hit a major milestone this month on Combined Heat & Power (CHP) issues. CHP and similar energy efficiency technology can produce the heat and some of the electricity used by an ethanol plant to produce biofuels. The enhanced energy efficiency from CHP is good for the environment and biofuel producers because the already favorable carbon index for ethanol gets even better.
MBA is working to obtain some tax credits to help stimulate the use of CHP. This effort also dovetails with various economic and environmental policies in Minnesota. Toward this end, MBA succeeded in crossing the first major threshold: bringing together a coalition of disparate interests to begin educating lawmakers about the role of CHP in stimulating economic growth, improving environmental quality and helping businesses meet corporate sustainability goals. Although much more work remains to be done, this project is indeed moving in the proper direction.
As always, I look forward to hearing from you.
By Timothy J. Rudnicki, Esq
A proposed rule to cut advanced biofuels. A proposed rule to give the automakers a free pass to backslide on mpg’s in the CAFE Standard when the high octane ethanol mid-level blend solution is staring them in the face. And now it’s been reported that there is a proposal to essentially offshore the RFS?
President Trump, have you forgotten about your commitment to rural communities and your supposed support for ethanol? If you give one iota for the wellbeing of rural communities and Americans generally as well as the rule of law, then tell your EPA Administrator to back off the RFS.
The latest attack on the RFS is the ultimate attempt to repudiate the RFS and congressional intent. If blenders were to be allowed to satisfy their obligations under the RFS through export, the RFS would be gutted. Republicans and Democrats agreed the purpose of the RFS is to address onshore energy issues in the United States. In other words, the RFS is about actual displacement of finite, carbon intensive petroleum with renewable biofuels.
In other words, the RFS is about energy issues right here in the United States.
It is about paving the way for E30 and making America even more energy independent. Offshoring the RFS might enrich a few on a short-term basis, but it undermines us as a nation and people. Please, Mr. President, show some respect for your own commitments, the RFS and the rule of law.
President George W. Bush, State of the Union Address 2006:
“Keeping America competitive requires affordable energy. And here we have a serious problem: America is addicted to oil, [Emphasis Added] which is often imported from unstable parts of the world. The best way to break this addiction is through technology. . . .
“By applying the talent and technology of America, this country can dramatically improve our environment, move beyond a petroleum-based economy, and make our dependence on Middle Eastern oil a thing of the past.”
Rep. Betty McCollum of Minnesota in the House of Representatives, Dec 6, 2007 regarding the Energy Independence and Security Act (EISA):
“Mr. Speaker, I rise today in strong support of the Energy Independence and Security Act. With this legislation, the new Democratic Congress is leading America in a new direction on energy policy. This is the most significant energy bill in a generation. The House is taking a major step toward ending our dependence on foreign oil by increasing efficiency standards for cars and trucks for the first time in over 30 years. . . .”
Rep. Barbara Lee of California in the House of Representatives, Dec 6, 2007 on EISA:
“The passage of the Energy Independence and Security Act will help these grass-roots efforts expand and grow through Federal initiatives designed to put the United States on a path to energy sustainability. "
Sen. Jeff Bingaman of New Mexico, Dec 6, 2007 on EISA:
“On balance, I believe the energy legislation we have before us deserves the support of my colleagues. It is not perfect in every respect. Legislation of this size and complexity obviously cannot be. However, it represents an opportunity to make significant steps forward in a number of key areas of energy policy. With the passage of this legislation, we can reduce our dependance on oil, we can increase our consumption of homegrown fuels, we can provide substantial savings to consumers, and we can create many new jobs. I think it is a real step forward, also, in curbing greenhouse gas emissions.”
Sen. Amy Klobuchar on EPA’s attempts to reduce RVOs In 2014:
“I believe legislative policy works best when it is stable, predictable and provides businesses the ability to make long-term investments. We need to provide the certainty farmers and biofuel producers need to make plans and investments. That is why I will continue to fight to get a long-term Farm Bill done and why we must work together to fix the proposed rule and preserve the integrity of the Renewable Fuel Standard. Position Statement regarding the RFS (commenting on the EPA proposed rule in 2014 and having relevance today in 2017).”
By Timothy J. Rudnicki, Esq
In the realm of biofuels, it seems the threats from and chaos in Washington D.C. crop up at least monthly, if not weekly. The many threats and ongoing chaos cut to the core of the biofuel industry which has made significant investments in people and production facilities so as to meet its obligations under the RFS. Unfortunately, just when some of us thought the most recent RFS disaster may have been averted, we now learn, just days after the EPA Administrator finally acknowledged the rule of law, the petroleum industry is back hammering away at the Trump Administration to further undermine the RFS.
The most recent disaster that may have been averted for a few days or weeks is the now possibly defunct proposal to “offshore” the RFS by allowing exports to satisfy the RVOs rather than to put biofuels into the market in the United States. Such an action, we noted in the column for last month, would have been an outright repudiation of the RFS and its underlying congressional intent.
Suffice to say, thanks to President Trump’s intervention following pressure from lawmakers that included Senators Amy Klobuchar, Al Franken, Chuck Grassley and Joni Ernst, the spine of the RFS has been preserved at least for now.
Rather than rehash the political maneuvering and process machinations that led to saving the RFS a few days ago, the balance of remarks here are offered as a type of road map for the EPA to consider and perhaps use. First and foremost the law, that is, the statutes, rules and court cases, must transcend short-sighted political knee-jerk reactions.
The enhanced version of the RFS (Energy Independence and Security Act) has been with us for 10 years. Republicans and Democrats and all the interested stakeholders worked their way through an open and transparent democratic process to produce what we have accepted as and indeed is the law of the land, the RFS. Nothing in the RFS is a surprise to biofuel producers nor the petroleum industry but for the manner in which the EPA has devised ways to pervert and distort the simple application of the black letter law.
And, over the last 10 years, it should be apparent to all of us that the majority of the petroleum industry in and of itself has failed to make substantive and significant investments in fueling infrastructure so as to enable more consumers to have access to cleaner, renewable biofuels. Rather than helping to fulfill the spirit and the letter of the law, the petroleum industry has continuously worked to undermine the RFS and the petroleum industry seems to now be even more invigorated and aggressive in its attacks on the RFS as ethanol consumption has cracked through their fictitious “blend wall”.
We must remember that congress - Republicans and Democrats - expected the RFS would put us, as a People and Nation, on a truly renewable energy pathway. A host of energy security, consumer, economic and environmental benefits already are derived from the RFS, but the magnitude of those benefits becomes greater as the RFS is more fully implemented.
Under past administrations, lawmakers and stakeholders have had to come to the defense of the RFS especially with respect to the RVO determinations. But the most recent attack on the RFS (i.e., using exports to meet the RVOs) is unprecedented.
Stakeholders will certainly advocate for their positions with respect to implementing or changing the law, but there are reasons we have congress and agencies in the United States. The EPA Administrator is neither a member of congress nor a judge and the rules of administrative procedure govern the work of the agency rather than powerful interests from the fossil fuels industry.
As such the Administrator is charged with enforcing, for example, the Clean Air Act, the Clean Water Act, Toxic Substances Control Act, Safe Drinking Water Act and many other laws including the RFS. The Administrator should work to restore the credibility of the agency and follow the rule of law.
The road map for the EPA does include some guideposts along the way. There are of course the laws including those embodied in the RFS and the broader Code of Federal Regulations. Another important guidepost is science. Unless the Agency embraces science, particularly with respect to the emission of greenhouse gases and their effect on climate, ecosystems and human societies, the laws such as the RFS may be seen as simply giving favor to biofuels versus petroleum. That interpretation, however, flies in the face of the purpose and intent of the RFS and the science underlying biofuels.
Biofuels are a renewable fuel with a significantly lower lifecycle GHG emission compared to finite fossil fuel petroleum. Whether used in spark ignition engine powered vehicles in amounts of 10 percent, 15 percent (2001 and newer vehicles) or higher blends (flex fuel vehicles), biofuels can immediately help to lower GHG emissions in the transportation sector. It is the RFS that creates the opening for biofuels to enter the petroleum dominated marketplace so as to reduce GHG emissions.
Along this road, particularly with respect to the RFS, are many opportunities to fulfill the intent and vision expressed by Congress: to make America more energy independent with renewable biofuels.
The EPA has, for example, a special opportunity now to connect the dots between the RFS, the CAFE standards and GHG emission targets in the transportation sector. Under the law and based on science, the EPA can unleash the full potential of biofuels to fulfill the aims of the RFS and to improve environmental quality. By keeping strong and enforcing the RFS, maintaining the CAFE Standards and GHG emission targets and accepting the science supporting the use of mid-level blends of ethanol as a high-octane, low carbon fuel, the EPA can fulfill its charge and help usher in a new era for automobile manufacturers, biofuel producers and all of us who depend upon clean air and a life sustaining environment.
The EPA should use its collective energy and resources to work within the law and build a future that puts us further down the renewable energy pathway. It’s better for the economy, energy security, consumers and the environment.
The EPA Administrator should recall his role as the Administrator of the EPA. Or it won’t be too long before President Trump has to once again personally intervene to save the RFS.
By Timothy J. Rudnicki, Esq
As we look ahead and take stock of the year past, it’s clear that by working together, we have once again surmounted many challenges. Whether it’s been the push back to attacks on the RFS or helping independent fuel retailer chains in making the transition from mid-grade fuel to E15, we did it. Through all these challenges, at the state and federal level and in the field with fuel retailers, equipment installers and consumers, we remained true to our organizational mission to once again deliver incremental, meaningful and tangible results in 2017.
More pointedly, our supporters helped to make possible our work on the ground to lead various battles to lower artificial barriers to both biofuel producers and biofuels. Practically speaking, these battles have been, for instance, over the RVOs proposed by the EPA; the role of mid-level blends in boosting engine performance while driving down GHG emissions; rallying support for ASTM International testing standards favorable to E15 and advanced biofuels; implementing sophisticated and targeted social media campaigns, promotional events and school tours of ethanol plants; and leading the efforts to build the network of E15 fuel retailers, fuel brands and sales volume in Minnesota.
With a clear organizational mission and aggressive project goals, with our competent and highly motivated team and with adequate resources, we have demonstrated that almost anything is possible. To wit, the many projects managed and actualized by the Minnesota Bio-Fuels Association. We broadly categorize these projects as advocacy, communications and education and fuel supply chain. During 2017, we threaded the project needle and stitched together the right combination of advocacy and education and facilitation of the fuel supply chain so as to further lower barriers to biofuels and substantially increase access to E15.
On the legislative and advocacy front, we joined other RFS proponents to make the case for minimal changes to the RVOs. Without getting too deep in the weeds on this, we underscored the disconnect between the congressional intent of the RFS and the damaging cuts proposed by the EPA.
As part of our effort to keep strong the RFS, we testified before the EPA in Washington, D.C. and later submitted substantive written comments. We also engaged with the EPA’s midterm review of the CAFE Standards and GHG emission targets for automakers, emphasizing on the costly reality of inaction with regard to climate change, the performance characteristics of mid-level blends of ethanol and existing engine technology.
And just a few words about ASTM International. This is another example of how we seek to have a high, positive impact for the industry at the most strategic level possible. ASTM International is the standards setting organization for virtually everything in the world of commerce including petroleum and biofuels. Within ASTM International, we work with colleagues from within the realm of biofuels as well as research labs to ensure the standards set a level playing field between petroleum and biofuels.
In terms of E15 sales, we need to be mindful that having the dispensing infrastructure in place is not enough to get consumers to use E15. Having a 10 cent (or even a 20 cent) price differential between regular fuel and E15 is not always enough to get consumers to use it. We still have to continue educating consumers and promoting E15 to increase sales volumes. In October, E15 sales breached the 3 million gallon mark in Minnesota for the first time. But considering the number of stations now offering E15, we're still some way from making it the new regular.
Lessons Learned for What’s Ahead
As we head into 2018, we have an excellent foundation to build upon. And we will need to use that foundation on day one of the new year.
Given the renewed push by Marathon Oil and other anti-biofuel interests, I expect the attacks on the RFS will continue to grow. But we plan to do our part to keep strong the laws which help strengthen the biofuel industry. Until petroleum products reflect their true external costs (e.g., military defense, environmental damage, climate change), we need a strong RFS and Minnesota Petroleum Replacement Law. This also means we will continue to monitor and serve as the guardian of 43 statutes in Minnesota.
On the regulatory front in Minnesota, the biofuel industry continues to be a dynamic industry. With constantly evolving biological processes and the availability of advanced production technology, regulators have been challenged to keep up with the industry. Over the past year we have charted a new course by working in cooperation with the Minnesota Pollution Control Agency so as to achieve a meaningful level of regulatory flexibility for biofuel producers. We aim to continue the push forward with this innovative regulatory framework to serve a variety of biofuel producers including those who will be using a variety of advanced biofuel qualified feedstock.
For 2018 we also plan to expand the capability of our social media platforms to reach even greater numbers of potential E15 consumers. And we will work to maintain the high quality of our school tours while further expanding our reach into high schools and secondary education classrooms. We also plan to expand our reach into the retail, wholesale and fleet vehicle markets. With respect to fleet operations, we aim to ensure greater access to E15 and E85 for state, county and municipal vehicle operators.
And we will explore new pathways by which to address the RVP challenge and thereby liberate an additional 25 percent in market potential for E15.
All of these new or expanded initiatives are possible, but only with the continued support from our stakeholders. As we look ahead to 2018, we need to work together and work smart. We need to build upon the foundation laid in 2017 so as to pave the way for greater volumes of biofuel, including advanced biofuels, in the marketplace. By doing so, we will move closer to fulfilling the actual intent of the RFS and the Minnesota Petroleum Replacement Law.
Happy New Year.
By Timothy J. Rudnicki, Esq
Yes, Sen. Ted Cruz and his henchpeople are doing all they can to tear down the RFS as I write this piece. And we, along with other biofuel proponents, are doing all we can to bolster lawmakers’ support for the RFS. Toward that end, the facts, the evidence are unequivocal: the RFS continues to deliver substantive consumer, economic, energy security and environmental benefits.
These assertions are based on facts. We, as the trade association for Minnesota's ethanol industry, need to know whether the RFS is working as intended by Congress. If the RFS is not working, it should be modified to make it work. On the other hand, if the RFS is working, it should be allowed to fully perform as intended by Congress.
So what does the data and the evidence show?
The RFS is working.
To recap the facts: ethanol (1) provides consumers with a better value at the pump (higher octane at 5 to 15 cents less than regular unleaded), (2) has the potential to reduce annual GHG emissions by 1.07 million metric tons if all regular gasoline sales in Minnesota contained 15 percent ethanol, (3) comprises 12.4 percent of the transportation fuel in Minnesota with room to grow and (4) supports over 18,800 jobs in Minnesota.
Nothing fake here. The metrics are real numbers from the field and include data from the U.S. Energy Information Administration, Argonne National Laboratory, University of Illinois Chicago GHG specialist and the Minnesota Departments of Commerce and Revenue.
With respect to the most current analysis about the contribution of the Minnesota ethanol industry to the Minnesota economy and well-being of residents, we rely on subject matter experts to give us the facts. Upon reviewing, evaluating and analyzing the relevant data for 2017, a reputable economist reports that in addition to supporting 18,800 jobs, the Minnesota ethanol industry contributed $2.17 billion to the gross domestic product and $1.54 billion to household incomes and paid $192 million in state and local taxes.
Yes indeed, the RFS is working and most likely working better than the petroleum industry interests anticipated. Perhaps that’s why Sen. Cruz and his ilk are using Philadelphia Energy Solutions, a refiner that is failing due to its own mismanagement, as a tool to inflict harm upon and damage to the RFS.
We encourage lawmakers to ask tough questions about petroleum’s ruse. And we ask lawmakers to have the facts when a party challenges the RFS. Please know the RFS is working as intended by Congress. Ethanol is indeed displacing finite petroleum and moving us toward a more renewable and sustainable energy pathway. While we are making progress in displacing finite, carbon intensive petroleum, we have much more work to do. Therefore, to complete the transition to renewable energy in the transportation sector, we, as a state and sation, need to keep strong the RFS so we can collectively more fully decarbonize the transportation sector.
This takes me to the last point about the RFS - where do we go from here or in 2022? For the immediate future, given the results delivered by the RFS, we should all work to keep strong the RFS. To explore the longer term issues, MBA will be convening stakeholders in the next few months. To queue up the broader issues, I will close with a few points for the biofuel industry, lawmakers and other stakeholders to consider. At the root of all our efforts should be the drive to more fully decarbonize the transportation sector.
What does this mean over a span of 10 to 15 years? In the short term, that means making E15 available to all consumers with a spark ignition powered vehicle that was built after 2000. While we celebrate the sale of approximately 20 million gallons of E15 during 2017 in Minnesota, we need to displace at least 150 million gallons of petroleum gasoline each month! Providing RVP parity for E15 will help to further accelerate this transition. Perhaps the next rung to decarbonizing the transportation sector is the use of mid-level blends of ethanol.
The infrastructure is moving into place so a growing number of fuel retailers can actually offer to consumer, for example, 25 percent ethanol blends for use in EPA-approved vehicles. This will require the proper research and testing so as to obtain approvals similar to what was done for E15. Meanwhile, in my humble opinion, we should also embrace EVs powered by a green electrical grid, a grid filled with electrons moving from wind energy conversion or solar arrays. Europe is making the transition as evidenced by various policies and the vehicle line-up for a growing number of manufacturers. My hunch is this: if we embrace a broader renewable vision and put the focus on decarbonizing the transportation sector, we will discover new and expanded opportunities for biofuels.
In closing, all of us must continue to work to keep strong the RFS. Let’s put the focus on getting E15 fully deployed across the entire fuel supply chain in the United States.
By Timothy J. Rudnicki, Esq
A tax credit being proposed in the Minnesota legislature to help ethanol producers improve energy efficiency could boost Minnesota’s economy by $189 million.
To qualify for the tax credit, ethanol producers in Minnesota would have to make significant capital investments to install and operate combined heat and power (CHP) and expander generators (EG) systems.
These systems improve energy efficiency because they can generate process steam and electricity with a lower carbon fuel, like natural gas, without losing electricity over many miles of transmission lines.
While this technology is relatively common in Europe, it is still in its infancy in Minnesota. A properly crafted tax credit would provide the necessary push for a diverse mix of ethanol producers and other eligible businesses to make the commitment to install these energy systems.
Some have asked why a tax credit is needed if such technology is so great? They argue against the proposed incentive because they believe the market provides all the necessary price signals. And if the price signal is negative, businesses can either heed that finding or disregard it and build the systems at their expense.
While there might be some merit to the traditional economic market argument with respect to some capital investments, it fails to recognize that economic signals from the marketplace can be inadequate or incomplete.
For the CHP and EG systems, the current price signals for electricity fail to fully incorporate the environmental externalities associated with generating electricity from fossil fuels such as lignite or coal. And almost half of the electricity generated and used in Minnesota is derived from these carbon-intensive finite fossil fuels.
Furthermore, the positive economic impact from the adoption of CHP and EG systems cannot be overlooked.
Minnesota’s 19 ethanol plants currently use 178.3 megawatts of electricity annually. To produce 50 percent of that electricity through CHP and EG systems, Minnesota’s ethanol plants would have to invest $260 million to install the aforementioned systems.
And according to an analysis by ABF Economics, those investments would add $189 million to Minnesota’s gross domestic product (GDP).
It would also support 1,458 full-time equivalent jobs in all sectors of the state economy, add $17 million in tax revenue and contribute $147 million in household income
In addition, ethanol producers and other eligible business would benefit directly with lower operating costs as energy would be used more efficiently.
Minnesota residents would benefit too.
Ethanol already emits 44 to 57 percent fewer greenhouse gas (GHG) emissions than gasoline. With CHP and EG systems, lower carbon fuels such as natural gas would replace electricity from coal and lignite in the ethanol production process, thereby making ethanol an even greener fuel.
Minnesota lawmakers should consider supporting the tax credit for CHP and EG systems because of its benefits to Minnesota’s environment and economy.
By Timothy J. Rudnicki, Esq
On July 24, the new acting administrator for the EPA, Andrew Wheeler said the agency is open to changes sought by the biofuel industry, but only if we make concessions with Big Oil.
“When everyone is complaining about the program, we need to look at ways to change the program,” he said.
Let’s be clear here. There are legitimate complaints from the biofuel industry because Wheeler’s predecessor turned over the agency to Big Oil. How else can you explain the 2.25 billion gallons of ethanol that were lost via the EPA’s RVO waivers to refineries in the last two years?
But more importantly, it’s not Wheeler’s job to set policies and promulgate laws. That responsibility lies with Congress. So with respect to the RFS, his sole job is to implement the law.
Simply put, that means increasing the RVOs to push biofuel producers to make more biofuels, including from greater amounts of cellulosic biomass, and for petroleum refiners and the entire fueling infrastructure to blend increasingly greater amounts of biofuels. That’s his job.
Perhaps he’s doing just what his boss wants: advance the use of more fossil fuels. While the President gives mixed signals as to whether he actually supports the use of ethanol, the White House Energy Plan is crystal clear - promote fossil fuels with no mention of renewable energy or biofuels.
But regardless of what the White House Energy plan states, the RFS is the law of the land.
Wheeler might, however, be challenged to get more biofuels into the marketplace. One of the simplest first steps to rectify that problem is to give E15 RVP parity with E10. While I recognize some thought leaders have already weighed in on this matter, here are a few general ideas about how the RFS actually supports the EPA in granting an RVP waiver to E15.
Starting with 42 USC § 7545, Regulation of Fuels, there is a pathway for the E15 RVP waiver. Subsection (h)(4) specifically addresses the RVP waiver for E10 and has three subparts the EPA uses to determine whether “a distributor, blender, marketer, reseller, carrier, retailer, or wholesale purchaser-consumer shall be deemed to be in full compliance.” One of those parts, (B), goes to the blend of ethanol not exceeding its waiver condition.
What is that singular waiver condition? In 2012, the EPA granted a partial waiver for E15 whereby it was approved for use in all cars 2001 and newer. Keep in mind, approval for E15 was issued seven years after the RFS became law.
Another pathway to obtain RVP parity for E15 is through a Congressional act - an amendment to only the Clean Air Act provision dealing with RVP. Although one party in Washington controls all three branches of government, the Consumer and Retailer Choice Act (Senate 517 and House Resolution 1311) appears to be stalled.
Lastly, the EPA could initiate a rulemaking process. An agency has at least nine factors it may consider to do so and here are a few factors:
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New technologies or new data on existing issues: E15 is new relative to E10 when the RFS was signed into law.
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Petitions from interest groups, corporations, and members of the public: Ethanol trade associations fall into this category. The rulemaking, however, should be narrowly tailored to specifically address RVP parity for E15. This could be the opportunity to also “fix” section (h)(4) so as to include anticipated higher blends going forward.
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Presidential directives: The President could direct the EPA to begin rulemaking. While efforts may have been made in this direction, perhaps this avenue should be reviewed and pushed more aggressively.
By failing to comply with and enforce the law, the EPA has weakened the RFS and created unnecessary confusion and uncertainty for the biofuels and agriculture industries. The agency must take immediate steps to get the RFS back on track. That means holding Big Oil accountable for compliance as well as fixing the RVP problem so greater volumes of ethanol can be used by consumers throughout the year.
Those were the central questions put to about 60 participants in a recent energy discussion hosted by the University of Minnesota Institute on the Environment. The answers to those questions, especially by and for lawmakers, have profound implications for biofuel producers and the future of biofuels in Minnesota.
As the event progressed and information was shared and discussions opened up, an extremely ludicrous notion came up several times – that to support renewable energy was akin to “locking-in certain technologies.”
What exactly does this notion mean? It means – believe or not – that by supporting renewable energy, we could be curtailing support for some yet to be discovered form of energy.
Perhaps calling this notion ludicrous is too kind.
What was more alarming is that this notion came from a Minnesota state senator. He was among the diverse group of participants which also included other Minnesota lawmakers, commissioners and stakeholders from the agriculture industry.
As luck would have it, the aforementioned senator was in my discussion group, which included an investor handling carbon credits, a representative of a non-profit organization promoting renewables, a professor from a renewable energy laboratory and a member of the Minnesota Public Utilities Commission.
It should be noted that all of us but the senator were having a fast moving, positive, proactive conversation about the role and future of three renewables (biofuels, solar, wind), distributed generation, microgrids and combined heat and power systems.
It was during this discussion when the senator floored the rest of us by suggesting that any support for renewables is akin to “locking in certain technologies.”
Naturally we were curious about this notion so we peppered him with questions:
“How do you think supporting renewables would ‘lock-in technology?’”
“And what do you mean by locking in certain technologies?”
“What problems do you have with supporting renewables, especially when they cut greenhouse gas emissions and bolster the economy?”
“Moreover, how could any future technology be locked out just because one supports renewables?”
As one would expect, he struggled to provide a logical explanation for his position. Was his judgement clouded because he was biased towards another form of energy? Was his connections to the nuclear industry the underlying reason for his opposition towards renewable energy? Or was he just misinformed?
Equally shocking, during their closing remarks, a few other lawmakers brought up this technology lock-in issue. Simply put, they said renewables are great, but we should not pick winners and losers – a mantra popular with politicians aligned with the fossil fuel industry.
Had the opportunity presented itself, one could have asked whether the lawmakers realize that finite, carbon-intensive fossil fuels have been picked as winners because they are heavily subsidized through, for instance, exploration, the depletion allowance and the failure to account for externalities such as climate change, polluted air and other related human health problems.
Make no mistake, these lawmakers would indeed hinder the growth of biofuels in Minnesota and they might attack or undermine Minnesota’s Petroleum Replacement Promotion law, which calls for the consumption of at least 30 percent biofuels in transportation fuel by 2025.
Their arguments and “concerns” over renewable energy lock-in and picking winners and losers are red herrings. As such, lawmakers who support renewable energy cannot be silent.
Minnesota’s biofuel industry already faces a multitude of barriers – be it access to E15 or regulatory bottlenecks in the air permitting process. It does not need another and this illogical “technology lock-in” idea is just that. Lawmakers who take seriously their support for renewables must lead and support the Renewable Fuel Standard and the Minnesota Petroleum Replacement laws. We must continually work together to address these and other challenges. That’s how we can keep Minnesota a biofuel leader.