In the News

Ethanol Producer Magazine

April 10, 2015

By David VanderGriend

In baseball, they often refer to the leadoff man as the igniter, whose job is to get the offense going: get on base, start a rally and set the stage for a lot of runs. In many respects, that’s the role of the renewable fuel standard (RFS), to set the stage for a bigger score for biofuels. But rather than focusing on a big inning, the ethanol industry may be playing small ball as we await the final rulemaking renewable volume obligations (RVO). The U.S. EPA stated it intends to package 2014 with the 2015 and 2016 volumes in what could be one heck of an announcement by the end of June.

I am encouraged by numerous recent statements out of EPA that it remains committed to making the RFS all it can be. But at the same time, let’s not kid ourselves. Do we really think there are going to be any surprises? We know that the 2014 RVO will be exactly what was consumed and 2015 is not likely to be any different. EPA will be hard-pressed to do anything more than take what was used the first half of 2015 and multiply by two, so we probably know that number as well. Sure, there might be a little more due to an increase in E15, midlevel blends and E85. For 2016, there might be a slight increase, if total gasoline use goes up. But for now, it is clear we will wind up somewhere in the 14 to 15 billion-gallons-per-year range for corn ethanol. There may be another billion or two gallons in the export market, but would the corn ethanol industry be satisfied with a 17 billion-gallon cap, when the motor fuel market is 125 billion gallons plus? I certainly am not.

I have always viewed the RFS as an important building block, assuring a base market. Whether wearing my hat as CEO of ICM or as president of the Urban Air Initiative, or as a member of most ethanol trade organizations, I support the RFS. However, it should not be viewed as what defines the value of biofuels, a value which can only be realized if we get the fuel into the market.

How do we get access to the market? How do we maintain the RFS and build on it? The answer lies with carbon controls and protecting public health—the new value proposition.

One element Congress got right with the RFS was to reward fuels that reduce carbon emissions. While the corn cap is law and, to some extent, EPA's hands are tied, the carbon footprint of corn ethanol is demonstrably better than the credit given by EPA. Our work at ICM and other new, and constantly evolving, research clearly shows that corn ethanol can attain advanced biofuel carbon-reduction levels, one of the primary objectives of the RFS.

If refocusing on achieving carbon reduction is one way to create new demand, another is the critical issue of improving fuel quality and emissions of gasoline. Ethanol's greatest strength is its high octane. This is an issue of public health in that ethanol used in midlevel blends like E15 or E30 can replace some of the most harmful components of gasoline—if we have access to the market. At ICM and Urban Air Initiative, we have concluded that EPA is blocking access to the market for midlevel blends and we are challenging them.

In legal action along with the Energy Future Coalition, ICM has asked the courts to agree that the certification procedures adopted by EPA are keeping E30 out of the market. In another challenge, UAI is calling EPA out on its antiquated modeling used to guide states on how to control pollution that includes an unwarranted penalty for ethanol. Our research, supported by auto industry experts, clearly shows many of the negative emissions attributed to ethanol are, in fact, changes made to base gasoline. Splash blending ethanol always improves gasoline quality and EPA’s outdated models simply need to be updated. Why is this so important? Gasoline is the source of some of the most dangerous and harmful pollutants linked to a range of health and respiratory ailments, including lung disease and even neurological disorders. Infants, the elderly and expectant mothers are particularly at risk.

The RFS is the platform to launch and engage the environmental and health communities in this discussion. Let’s get past the RFS numbers game—as important as it is—and look at additional ways to reduce carbon and protect public health.

Read the original story here : Setting The Table For The Big Score

 

Farm Futures

April 7, 2015

As world food prices hit a near five-year low, dropping 1.5% last month according to the United Nations' Food and Agriculture Organization's most recent price report, Growth Energy said this is proof that " claims of ethanol increasing food prices do not hold any merit."

According to the FAO, the global food price has been on a downward path since April 2014. It tracks five major food commodity groups internationally: cereals, meat, dairy products, vegetable oils and sugar.

In the latest report comparing February 2015 to March 2015, sugar was down significantly, charting a 9.2% drop; vegetable oil a 3.1% drop; cereal and meat about a 1% drop; and dairy was the only gain, with a 1.7% increase.

Tom Buis, CEO of Growth Energy, said the report shows the U.S. and other nations are "capable of producing increased quantities of food, feed, fiber and fuel."

He noted that global grain stocks increased between 2006-07 marketing year and the 2013-14 marketing year by 160 million metric tons, or 47%. Those dates correspond with the enactment of the Renewable Fuel Standard, he said.

The RFS is a policy that sets the amount of renewable fuels to be blended in the domestic fuel supplies.

Buis said global crop prices have strengthened also, helping farmers invest in new production practices that improve sustainability and productivity.

Read the original story here : FAO's Latest Food Price Report Good News For Ethanol

 

Des Moines Register

April 5, 2015

By Ryan Koopman

Chicken Little ran nervously through the barnyard, warning that "the sky is falling, the sky is falling."

For the last decade, Big Oil has been running nervously through the halls of the U.S. Capitol and the EPA, screaming — to anyone who will listen — that the Renewable Fuel Standard is an "unworkable," "infeasible," "unsustainable," rule that will create a "death spiral" in the fuels market.

The stories are similar, with one difference: Chicken Little believed his tale.

A new study published this week by University of Calgary professor (and one-time Iowan) James Coleman shows that for years, Big Oil hasn't been completely honest about the RFS. They've been telling the EPA one thing (that the RFS is a horrible, economy-killing law) and telling their shareholders another thing (that it's no big deal). That general concept — that Big Oil has been misrepresenting the effects of the RFS — is something Iowans have been saying for years. But until now, no one has realized that Big Oil has effectively admitted as much.

Each year, the EPA proposes a new RFS — a rule that governs how much biofuel must be sold — and solicits comments on that proposed rule. These comments aren't supposed to be a joke. The EPA is required to consider them, and it's important that it does. When a regulatory body makes law, it needs input from stakeholders; they're the ones on the ground, after all. So it's important that those stakeholders be honest in their assessments.

As you might expect, oil companies — Chevron, ExxonMobil, Marathon, Shell, and others — take the opportunity to tell the EPA what they think of the proposed RFS standard. And as you might expect, they don't have good things to say. Shell told the EPA in 2013 that the proposed RFS would "limit the supply of gasoline," which would hurt its business and cause "severe economic harm." Even more forceful, the American Petroleum Institute — which boasts that it is the only "association that represents all aspects of America's oil and natural gas industry" — recently told the EPA that its 2013 RFS proposal could cause "large increases in transportation fuel costs" that "would ripple through the economy imposing significant costs on society" that would eventually push the fuel markets into a "death spiral."

That seems pretty bad. And it would be, if it were true. But it's not, and we know because Big Oil has told us.

Each year, publicly traded companies must file what's called a Form 10-K. The purpose (and the legal requirement) is to tell shareholders how the company is doing and to warn them about significant bumps in the road ahead. So if the proposed RFS is really such a problem — if there really is a risk that it will create a death spiral in the fuel markets — then Shell, ExxonMobil, Chevron, and other oil companies should be telling their investors in the 10-K.

They're not. Professor Coleman collected the comments that publicly trade oil companies made to the EPA on the RFS from 2009 to 2013 and compared those comments to those company's 10-K filings. He found that oil companies tell the EPA that the RFS could create significant financial hardship for them and the country, and at the same time they assure their shareholders that everything is OK. Indeed, Shell — the company that said that the RFS could limit the gasoline supply and cause "severe economic harm" — suggested in its securities filing that the RFS was a boon for its bottom line.

The EPA should take note, and it should review the oil companies' comments with the appropriate skepticism.

Of course, maybe the oil companies think that their sky-is-falling assessments of the RFS are accurate; maybe it's the shareholder disclosures that are the fib.

Probably not. The failure to make full disclosure to shareholders is against the law and can lead to costly lawsuits. Oil companies and their lawyers know that. Exaggerating to the EPA, on the other hand, doesn't come with legal consequences.

Professor Coleman has a simple solution for this problem: If a publicly traded oil company (or any public company, for that matter), comments on the EPA's proposed rules, it should attach its 10-K. That way, it can't tell the EPA one thing and its shareholders another. We'll get the truth — at least as Big Oil sees it.

Read the original story here : Study Shows : Big Oil Is Chicken Little Over Ethanol

Morris Sun Tribune

April 3, 2015

By Kim Ukura

MORRIS — Local business leaders helped share the story of ethanol and its importance to the rural economy during a meeting with members of the Minnesota House of Representatives last week.

On Friday, March 27, House Majority Leader Joyce Peppin and Rep. Jeff Backer visited the Morris area to tour Denco II and, later, meet with constituents at the annual Wulf Cattle Opportunity Sale.

Backer said he invited Peppin to tour the district to better understand how ethanol works and its impact on different aspects of the agricultural economy.

"Ethanol is extremely important to the U.S. economy and our local area," said Backer. "Ag, even though it's a very small percentage of the budget, brings a lot of money into the economy and so forth."

General Manager Mick Miller said the ethanol industry's current challenge is the Renewable Fuel Standard, a federal program that requires transportation fuel to contain a certain percentage of renewable fuels like ethanol.

Without a requirement to include renewable fuels, the oil industry would force ethanol producers out of the fuel market.

"That takes consumer choice away, that's going to raise pump prices — all that we're asking for is stabilization in Congress to make sure that we have a renewable fuel standard that allows us access to the market so we can grow and continue to show the impacts ethanol is having on America," Miller said.

Miller added that the food versus fuel debate over the use of corn is also misleading. Ethanol production uses about 30 to 35 percent of corn produced in the United States, while the rest is either fed to cattle or exported.

"We're not tilling up more ground to make more corn for ethanol demand — our farmers are becoming more and more efficient," said Miller.

Board member Lowell Nelson told Peppin that without ethanol, "agriculture would go in the tank."

"Agriculture is so unbelievably dependent on ethanol at this point, it's scary to think about it without it," he said.

Miller also highlighted the ways that Denco II's production process works throughout economy. Denco II was formed in 1998 and is owned by local shareholders. The plant works directly with about 275 producers to procure corn for the facility.

During the ethanol production process, about 33 percent is turned into ethanol, while another 33 percent is converted into distillers grain. This is a high protein feed that can, in turn, be fed to cattle. Approximately 65,000 tons of distillers grain is eaten by cattle in the region, Miller said.

City Manager Blaine Hill also noted the impact that Denco II has on the local community. Hill said the plant helps create jobs in the community and offers other benefits and support for local producers.

"Our county, this area, is doing very, very well in the overall scope of the economy," said Hill. "The future looks really bright, but this is a very important thing to the community.

Denco II has also partnered with local gas retailers to build the local market for E85, a fuel mixture that is 85 percent ethanol and 15 percent gasoline. Miller said that despite misinformation distributed by big oil companies, E85 is safe for and effective for vehicles.

The plant devotes about 10 percent of their production to direct sales of E85 to about 45 gas stations in the region. Thirteen of those stations close to the plant are part of a price promotion program that started in 2013. Those stations receive the ethanol at a discount from Denco II, then sell it to customers for $1 less than regular E10 fuel.

Miller said vehicles using E85 do show about 30 percent reduction in miles per gallon, but if E85 is priced competitively consumers will see a savings.

"Traditionally, they say if you're saving 30 percent at the pump, you're better off using E85," said Miller.

Read the original story here : Local Business Leaders Share Story Of Ethanol With Legislators

 

Renewable Fuels Association

March 27, 2015

WASHINGTON — Science Magazine has published yet another study from environmental activist and attorney Timothy Searchinger today that re-packages his already disproven theory of food vs. fuel. His assertions about the impact of biofuels on food markets run counter to the facts on the ground and have been debunked time and time again. The Renewable Fuels Association (RFA) once again exposes the holes in Searchinger’s theory as Bob Dinneen, president and CEO of the RFA, released the following statement:

“Economic models are one thing — reality is another. Data from the last decade clearly show that feed grains (like corn) used to produce meat have not been ‘diverted’ away from animal feed markets to make biofuels. In fact, even after accounting for the grain used for ethanol, more grain is available for feed and food use today than at any time in history. If biofuels were truly diverting grain away from food and feed production and causing scarcity, we would expect to see food prices rising abnormally — but this clearly isn’t happening. The United Nations food price index is at its lowest point since the global recession in 2009, and in real terms today’s food prices are lower than in the 1960s and 1970s.

“What’s more, the UN says per capita food supply and protein supply are both at record levels globally — in other words, there is more food available per person today than ever before. Global hunger has fallen 21 percent since 1992 and undernourishment is also at all-time lows, according to the UN. Indeed, ‘scarcity’ isn’t the problem facing the world’s undernourished and hungry — rather, the incredulous amount of food wasted is the largest nutrition-related challenge facing our world. The UN shows that ‘roughly one-third of food produced for human consumption is lost or wasted globally, which amounts to about 1.3 billion tons per year.’ For context, that amount of wasted food is almost equivalent to the global supply of coarse grains (corn, oats, barley, sorghum, rye, and millet). Or, in other words, the amount of food wasted is 15 times larger than the net amount of feed grains used by the U.S. ethanol industry.

“Let’s not forget that ethanol producers make both fuel and feed. Only the starch in the grain feedstock is converted to ethanol, while 100 percent of protein, fat, and fiber remain available to the feed market in the form of distillers grains or other co-products. The world wants more protein — not more carbohydrates — and using grain for ethanol has absolutely no impact on global protein supplies.”

Read the original story here : Economic Models Are One Thing - Reality Is Another

 

The Washington Post With Bloomberg

March 24, 2015

By Mario Parker

The Environmental Protection Agency moved Tuesday to gather output data from cellulosic ethanol producers to help it determine the consumption targets. That form of the biofuel is produced from non-edible sources, compared with first-generation grain-based ethanol.

EPA’s request for the data comes as it’s more than 15 months behind a statutory deadline to issue requirements under the Renewable Fuels Standard for how much biofuels refiners should have used in 2014, and four months late in releasing targets for this year.

“At a minimum, that could portend delays to the finalization of cellulosic targets,” Timothy Cheung, vice president and research analyst a ClearView Energy Partners LLC, a Washington-based policy analytical firm, wrote in a note Tuesday.

Biofuel and petroleum interests have battled on whether the 2007 energy law is tenable.

Last November, EPA decided to put off setting 2014 quotas, saying it would issue rules for last year, 2015 and 2016, this year.

In February, EPA Administrator Gina McCarthy said the rules would be issued “very soon.”

Public Comments

Today’s notice asks for public comments on the possible request to collect information from the cellulosic producers. The responses are due by May 26, leaving a scarce amount of time for the agency to meet its “self-imposed June 20 deadline to propose the multiyear RFS package,” Cheung wrote.

“This does not impact the volume rule in terms of timing, numbers or policy,” EPA said in an e-mailed statement. “It is simply a step to stay in compliance with the paperwork reduction act.”

Compliance with the standard is tracked by Renewable Identification Numbers, or RINs, certificates attached to each gallon of biofuel. Once a refiner blends biofuel into petroleum, they can keep the RINs or trade them to another party.

Advanced biofuel RINs for 2015 jumped 2 percent to 75.5 cents, while 2015 corn-based ethanol RINs increased 1.1 percent to 67.25 cents, according to data compiled by Bloomberg.

In deciding the consumption mandates, EPA is likely to align 2014’s requirement with how much biofuel refiners used and base 2015 and 2016 on gasoline consumption and biofuel production, Aakash Doshi, an analyst at Citigroup Inc. in New York, said in a report earlier this month.

Read the original story here : EPA Request For Biofuel Data Signals Renewable Fuel Delays

Renewable Fuels Association

March 24, 2015

By Robert White

RFA talks with thousands of fuel retailers at petroleum marketer meetings, conferences, webinars, and one-on-one meetings. Over the course of these meetings it quickly becomes clear that every decision made by fuel retailers is based on return on investment (ROI) and the outcome of every decision is compounded exponentially for the 60% that are single station owners. Today, nearly all of these stations offer premium fuel, but should they?

Until this year, the business case for E15 hinged on what vehicles the EPA had approved: 2001 & newer light duty cars, trucks and SUVs. These vehicles tally over 203 million, or 83% of the U.S. fleet. That is more than enough to justify the infrastructure to support them. But that has not happened and we must ask why not. The reason most often given is that while the Environmental Protection Agency (EPA) has approved the use of E15 in these vehicles, the auto manufacturers have not.

So what do the facts say? RFA recently found that 70% of MY15 vehicles are explicitly warranted for E15 — a trend that has been moving upward since MY12. So, just how many vehicles are now explicitly warranted for E15? More than 41 million! Add to that the 18 million FFVs that are also approved for E15, and there are 59 million E15 warranted cars on the road today. For comparison, there are just 15 million cars requiring premium gas today. But, no high performance automobile owner has trouble finding premium fuel!

Here is the breakdown:

  • ~ 244,000,000 light duty vehicles on the road today
  • ~ 15,000,000 require premium fuel
  • ~ 203,000,000 are 2001 & newer and approved by EPA to use E15
  • ~ 41,000,000 are explicitly warranted for E15
  • ~18,000,000 are FFVs (also warranted for E15)
  • ~ 41,000,000vehicles are 2000 & older

The fact that there are four times as many vehicles fully warranted for the use of E15 than those requiring premium gas today should be a compelling consideration for retailers considering the switch to E15 and E85. Many retailers are shocked to find that they are dedicating an entire fuel tank to premium fuel, which allows them to service fewer vehicles than if they sold E15 and E85. If retailers would consider converting their premium tank to E85 and installing a blender pump to allow for E15, they would gain both segments from one existing underground storage tank. The potential consumer fleet would jump from just 15 million vehicles to 59 million vehicles. Moreover, premium sales have been dropping. Most retailers will concede that premium sales are between 1–4% of their total volume, while stations making the conversion to E85 — and adding E15 — have demonstrated that they can turn that 1–4% into 20–30%.

The business case for higher blends of ethanol is actually quite simple. If retailers want to differentiate themselves, lower their consumer price at the pump, increase their overall fuel volumes, boost their in store sales, and ultimately increase their profits … premium might not be the wisest fuel choice. Success will come in the form of higher-level ethanol blends.

Read the original story here : Should Premium Fuel Still Warrant A Tank?

RFA talks with thousands of fuel retailers at petroleum marketer meetings, conferences, webinars, and one-on-one meetings. Over the course of these meetings it quickly becomes clear that every decision made by fuel retailers is based on return on investment (ROI) and the outcome of every decision is compounded exponentially for the 60% that are single station owners. Today, nearly all of these stations offer premium fuel, but should they?

Until this year, the business case for E15 hinged on what vehicles the EPA had approved: 2001 & newer light duty cars, trucks and SUVs. These vehicles tally over 203 million, or 83% of the U.S. fleet. That is more than enough to justify the infrastructure to support them. But that has not happened and we must ask why not. The reason most often given is that while the Environmental Protection Agency (EPA) has approved the use of E15 in these vehicles, the auto manufacturers have not.

So what do the facts say? RFA recently found that 70% of MY15 vehicles are explicitly warranted for E15 — a trend that has been moving upward since MY12. So, just how many vehicles are now explicitly warranted for E15? More than 41 million! Add to that the 18 million FFVs that are also approved for E15, and there are 59 million E15 warranted cars on the road today. For comparison, there are just 15 million cars requiring premium gas today. But, no high performance automobile owner has trouble finding premium fuel!

- See more at: http://www.ethanolrfa.org/exchange/entry/should-premium-fuel-still-warrant-a-tank/#sthash.Va5dzaeo.dpuf

SmallCAlogo

This month, we spotlight Christianson & Associates, PLLP. We spoke to John Christianson, the founding partner at Christianson & Associates, about the firm’s history and its involvement with the ethanol industry.

John Christianson 1

John Christianson, founding partner

mbaLogo4aPlease tell us about Christianson & Associates.

John Christianson  croppedChristianson & Associates, PLLP (C&A) is a full service Certified Public Accounting firm established over 28 years ago, with offices in Willmar and Litchfield, MN. C&A has deep roots in the agricultural industry; the partners and many of the staff have farming backgrounds. Our clients include ag producers, cooperatives, ag elevators, ag supply companies, feed mills, ag processing, and renewable energy.

With a strong tradition of client service for the ag industry, C&A has grown by developing services and products based upon the needs of these clients. With over 50 staff members, C&A is ready to meet ag industry needs such as forecasting, development-stage accounting services, unique tax planning strategies, auditing, RIN consulting and attestation services, and other consulting services including performance analysis and government grant writing and consulting.

The firm has developed deep expertise in the EPA and regulator reporting for producers. C&A has had the opportunity to develop the Biofuels Benchmarking service, which is a confidential analytical tool and provides over 65 ethanol production facilities a means by which to compare themselves to their peers in the industry and query unique groups or time periods to run additional reports and graphs. The firm has also funded the development of a commodity processing software, “Intellego,” which is integrated with Microsoft Dynamic GP. Over 75 plants operate on the C&A platform which gives them maximum flexibility to monitor their operational and financial activity through a multitude or reports.

mbaLogo4aPlease tell us about Christianson & Associates’ role within the ethanol industry in Minnesota and why the company is committed to supporting the ethanol industry now and in the future?

John Christianson  croppedC&A has been fortunate to be involved from the early stages of the development and growth of the ethanol industry. Working with the early industry leaders and trade organizations for over 20 years, the firm had the opportunity to work on changing federal legislation related to tax credits in the ethanol industry. C&A has been committed to providing unique solutions for our clients to solve their needs. The deep roots of our ag backgrounds are demonstrated by our commitment to the ethanol industry. We support the industry through the trade organizations and support and participate in the industry events. Our goals is to be the financial resource to the industry with our products, services, and expertise.

mbaLogo4aFrom your perspective, what would you like consumers to know about the ethanol industry and the fuel it produces?

John Christianson  cropped

Consumers need to understand a number of things about ethanol:

1. Ethanol is not subsidized by the government like petroleum.

2. Ethanol will not cause our young men and women to be sent to war in the Middle East.

3. Ethanol is the cheapest octane in the market.

4. Ethanol reduces the price of gasoline for the consumer.

5. Ethanol is clean and reduces GHG emissions.

6. Ethanol improves our energy security by reducing oil imports required.

7. Ethanol creates jobs in rural areas where jobs are scarce.

8. The ethanol industry produces fuel and food.

mbaLogo4aWhat do you think is needed for the availability of E15 to grow?

John Christianson  croppedFor E15 to grow, consumers need to be educated and understand the impact ethanol has on the economy and environment. The work the industry is doing by developing the blender pump build-out will need to continue and expand. Ultimately the ethanol industry will need access to the market to allow the consumer to choose.  Members of the industry are confident that consumers will choose ethanol if they are educated and have access to the consumer choice of fuel blends.

mbaLogo4aWhat do you see as the ethanol industry’s biggest challenge?

John Christianson  croppedThe biggest challenge the industry faces is market demand.  We must have demand for ethanol in order for the industry to grow.  Demand will be created by consumer education and access to the market.  The blender pump build-out within the retail petroleum market is critical for access to the motor fuel market to be obtained.  Maintaining the status of the Renewable Fuels Standard II is important for short-term demand.  Long-term, ethanol will need to be sold as a less expensive high-quality octane source.

mbaLogo4aWhat does your company see for the future of ethanol and advanced biofuels?

John Christianson  croppedC&A hopes to assist the industry to grow beyond the E10 market.  We see the ethanol market evolving to higher blends beginning with E15 and eventually beyond.  In addition to higher blends in the market, the ethanol plants will continue to evolve into biorefineries that produce a wide range of renewable fuel and food products.  Many producers will have components of advanced biofuels as part of their product mix in the future.  I sincerely hope the ethanol industry will grow beyond the E10 levels we are producing now for the benefit of our country, economy, and future generations.