Biodiesel Magazine

November 29, 2016

By Ron Kotrba

The U.S. Government Accountability Office issued two reports Nov. 28 suggesting that the renewable fuel standard (RFS) program is unlikely to meet its targets for reducing greenhouse gas (GHG) emissions and expanding the U.S. renewable fuels sector. The reports largely attribute this supposition to production of advanced biofuels falling short of statutory requirements. Advanced biofuels such as biodiesel, renewable diesel and cellulosic ethanol provide the largest GHG reductions and, per statutory requirements of the RFS, were to make up 21 billion gallons of the 36 billion gallon renewable fuel volume obligations under the program by 2022.

The biofuels industries, however, can attribute this shortfall of advanced biofuels production back to the federal government by way of the U.S. EPA, which has questionably used its general waiver authority to reduce overall renewable fuel obligations under the RFS for the past several years—the subject of a pending lawsuit—and its cellulosic waiver authority to significantly reduce the cellulosic biofuel targets in the agency’s implementation of the program vs. statutory requirements.

Biofuel industries can hardly achieve the statutory goals when EPA continues to reduce the targets set out in the statute. Year after year, biofuel industry organizations representing producers of conventional and advanced biofuels call on EPA to increase the targets to more closely resemble those laid out in the statute. For instance, the National Biodiesel Board urged EPA to boost the biomass-based diesel target for 2018 to 2.5 billion gallons, which the agency finalized at 2.1 billion. The statute mandates that advanced biofuels are to provide 9 billion ethanol-equivalent gallons (6 billion biodiesel-equivalent gallons) to market by 2017, but the EPA has reduced this target to 4.28 billion ethanol-equivalent gallons (2.85 billion biodiesel-equivalent gallons). NBB pushed EPA to boost the advanced biofuel target for 2017 to 4.75 billion ethanol-equivalent gallons (3.17 billion biodiesel-equivalent gallons), citing ample feedstock and domestic production capacity to meet the increase, but EPA was not persuaded.

The GAO initially incorrectly reported that “less than 5 percent of the 3 billion gallon advanced biofuel RFS target was produced in 2015, and additional investments for commercialization seem unlikely.” Biodiesel Magazine contacted Frank Rusco with the GAO to advise him of this error. Rusco admitted this was a mistake, as it should have read “less than 5 percent of the 3 billion gallon cellulosic biofuel RFS target was produced in 2015.” Rusco thanked Biodiesel Magazine for pointing out the inaccuracy and the statement was subsequently corrected on the GAO website. Several media outlets, however, took this initial error as fact and reported the incorrect figures.

“The advanced biofuel category requirements of the RFS have been met every year of the program in large part thanks to the growth of the biodiesel industry providing the numerous benefits Congress sought for the environment, economy, and energy security,” said Donnell Rehagen, CEO of the National Biodiesel Board. “While the cellulosic biofuel category has taken a smaller portion of the overall advanced biofuel category to date than what Congress originally envisioned, the program is still driving growth of these and other advanced biofuels into the marketplace. The advanced biofuel requirement finalized by EPA last week will be met by a variety of fuels in the marketplace, all which reduce emissions by greater than 50 percent compared to petroleum.”

In its summary report, the GAO admitted that experts advised the office of the federal government’s role in influencing the effectiveness of the RFS, and how the investment climate for advanced biofuels could be improved by reducing uncertainty about the future of the RFS program and tax credits.

One aspect of the report was particularly contentious for the biodiesel sector. “Experts said that several advanced biofuels are technologically well understood and some are being commercially produced, but they noted there is limited potential for increased production in the near term and cited several factors that will make significant increases challenging,” the report summary stated. “Given that current advanced biofuel production is far below RFS targets and those targets are increasing every year, it does not appear possible to meet statutory target volumes for advanced biofuels in the RFS under current market and regulatory conditions. Biofuels that are technologically well understood include biodiesel, renewable diesel, renewable natural gas, cellulosic ethanol, and some drop-in fuels. A few of these fuels, such as biodiesel and renewable diesel, are being produced in significant volumes, but it is unlikely that production of these fuels can expand much in the next few years because of feedstock limitations.”

John Kruse, the principal and director of quantitative analysis of World Agricultural Economic and Environmental Services, told Biodiesel Magazine, “Although the U.S. biodiesel industry has demonstrated the ability to diversify its feedstocks significantly over the past few years, the feedstock issue continues to emerge as the primary reason for limiting the expansion of volume obligations for biodiesel.”

In the narrow focus of biodiesel and renewable diesel feedstocks, Kruse said distillers corn oil (DCO) is a prime example of a new and growing source. “While many [ethanol] plants already have extraction capabilities in place, the growth is occurring through enhanced extraction yields,” Kruse said. “We see corn oil extraction yields growing nearly 45 percent over the next five years.”

Furthermore, Kruse said along with DCO, other fats and oils are used primarily as an energy source in livestock rations. “With the significant decline in feed grain prices, there is a large supply of less expensive sources of energy available for livestock feed. We expect to see some substitution away from the use of oils in livestock rations as an energy source.”

Soybean oil provides roughly 50 percent of U.S. biodiesel feedstock, and as Kruse pointed out, U.S. soybean yields have been at record levels the past four years, further increasing the supply of soybean meal and oil. “Sometimes it is forgotten that soybean oil is primarily a byproduct of soybean crush and that the soybean market has and will continue to be driven by the demand for soybean meal,” he said. “There continues to be no shortage of protein meal demand in the global marketplace with growing meat consumption and the historical underutilization of protein meal in livestock rations. Developing countries with the strongest income growth tend to demand poultry and aquaculture products, which are produced with protein-intensive rations. The strong demand for meals results in increased supply of soybean oil.” Overall, Kruse said an abundant and expanding supply of vegetable oils exists.

Biodiesel from virgin soybean oil reduces GHG emissions by more than 50 percent compared to petroleum diesel, according to EPA data, and when made from waste materials such as used cooking oil, biodiesel can achieve more than 80 percent GHG reductions. 

“It is ironic how quickly it has been forgotten that prior to biofuels, the agricultural industry was focused on developing new sources of demand for its products,” Kruse said. “With brief exceptions—biofuels as the most recent example—agriculture has struggled the past century with falling real commodity prices. Falling real commodity prices results from supply outpacing demand. Yet even with record global stocks for most commodities and significantly lower commodity prices, there is a lingering perception of scarcity.”

Read the original story: GAO RFS Reports Paint Incomplete Picture of Advanced Biofuels

Renewable Fuels Association

November 30, 2016

More than 80 percent of new 2017 model year (MY) vehicles are explicitly approved by the manufacturer to use 15 percent ethanol blends (E15), according to an analysis of warranty statements and owner’s manuals conducted by the Renewable Fuels Association (RFA). That is up from last year, when approximately 70 percent of MY2016 vehicles were approved by automakers for the use of E15.

For the first time, Hyundai Motor Company has approved the use of E15 in MY 2017 Hyundai and Kia vehicles, joining the majority of its auto competitors. Together, Hyundai and Kia represent slightly more than 8 percent of the U.S. light-duty automobile market.

In 2012, EPA approved the use of E15 in vehicles built in MY 2001 or later. However, auto manufacturers did not retroactively endorse the use of E15 in legacy vehicles that were already on the road.

Other key points from RFA’s analysis include:

The Detroit Three (Chrysler, General Motors and Ford), which collectively represent 45 percent of U.S. market share, all clearly allow E15 in their vehicles. GM started approving the use of E15 with its MY 2012 vehicles, while Ford joined the following year and Chrysler began E15 approval with its MY 2016 vehicles.

Other automakers explicitly offering E15 approval for MY 2017 vehicles include Honda, Toyota, Volkswagen Group, and Tata Motors (maker of Land Rover and Jaguar). Altogether, auto manufacturers with approximately 81 percent of the U.S. market share now approve the use of E15 in their MY 2017 vehicles.

With 9 percent of the U.S. market share, Nissan Motor Corporation remains the largest vehicle manufacturer that does not explicitly approve E15 in its vehicles. Despite announcing earlier this year that it is developing a vehicle powered by an ethanol fuel cell, the automaker only approves the use of E10 in its vehicles. Curiously, Nissan approves the use of gasoline containing up to 15 percent MTBE, a toxic additive that is banned in more than two dozen states.

Mazda, Subaru and The Daimler Group (maker of Mercedes-Benz) also continue to exclude E15 from fuel approvals and warranty statements. Together, these three manufacturers own about 7.5 percent of the U.S. market share.

Of note, BMW Group’s Mini vehicles again allow the use of 25 percent ethanol blends. The manufacturer states, “Fuels with a maximum ethanol content of 25 percent, i.e., E10 or E25, may be used for refueling.”

While neither automaker approves the use of E15, both Mercedes-Benz and Nissan produce some flex fuel vehicle models that are capable of operating on up to 85 percent ethanol blends (E85).

RFA estimates that approximately 25–30 percent of the 230 million vehicles on the road today are clearly approved by the automaker to use E15. Meanwhile, roughly 90 percent of vehicles on the road were built in 2001 or later, meaning they are legally approved by EPA to use E15.

“This analysis demonstrates that automaker acceptance and approval of E15 continues to expand rapidly,” said RFA President and CEO Bob Dinneen. “More than four out of every five new vehicles carries the manufacturer’s explicit endorsement of E15, putting to rest the myth propagated by the American Petroleum Institute that automakers don’t allow or warranty the use of this lower-cost, higher-octane fuel blend. We applaud Hyundai for joining the ‘E15 Club’ with its model year 2017 vehicles, and we’re thrilled to see Mini going above and beyond to offer E25-compatible vehicles. At the same time, we encourage Nissan, Mazda, Subaru and Daimler to get with the times and offer their customers greater freedom and flexibility when it comes to making a fuel choice at the pump.”

E15 is sold today at nearly 400 retail stations in 28 states, including major chains such as Sheetz, Thorntons, RaceTrac, Kum & Go and Murphy USA.

The RFA analysis can be found here.

Read the original story: RFA Analysis: Automakers Approve E15 in More than 80% of New 2017 Vehicles

Ethanol Producer Magazine

November 25, 2016

By Erin Voegele

The U.S. EPA has released renewable identification number (RIN) generation data for October, reporting that nearly 1.66 billion RINs were generated during the month, including nearly 17.79 million cellulosic RINs.

Nearly 17.56 million D3 cellulosic biofuel RINs were generated during the month, bringing the net total for the first 10 months of the year 142.82 million. Nearly 3.05 million D3 RINs have been generated for ethanol, with 85.47 million generated for renewable compressed natural gas and 56.14 million for renewable liquefied natural gas. Nearly 129.16 million D3 RINs have been generated domestically, with 15.5 million generated by importers.

According to the EPA, 229,819 D7 cellulosic diesel RINs were generated in October, bringing the net total for the first 10 months of the year to 227,424. A total of 456,975 D7 RINs have been generated so far this year, with a 229,551 error correction. All D7 RINs generated so far this year have been generated for cellulosic heating oil by importers.

Nearly 17.1 million D5 advanced biofuel RINs were generated in October, bringing the net total for the first 10 months of the year to 84.99 million. Nearly 56.89 million D5 RINs have been generated for ethanol, with 20.2 million generated for naptha, 118 million for heating oil, and 6.81 million for nonester renewable diesel. So far this year, 50.69 D5 RINs have been generated domestically, with 34.39 million generated by importers.

More than 1.29 billion D6 renewable fuel RINs were generated in October, bringing the net total for the first 10 months of the year to 12.59 billion. Most, 12.24 billion, were generated for ethanol, with 236.59 million generated for nonester renewable diesel and 126,227 generated for butanol. Nearly 12.23 billion D6 RINs have been generated domestically, with 140.87 million generated by importers and 236.59 million generated by foreign entities.

Nearly 224.27 million D4 biomass-based diesel RINs were generated in October, bringing the net total for the first 10 months of the year to 3.09 billion. The majority, 2.52 billion, were generated for biodiesel, with 571.43 million generated for nonester renewable diesel and 1.82 million for renewable jet fuel. More than 2.27 billion D4 RINs have been generated domestically, with 560.75 million generated by importers and 260.48 million generated by foreign entities.

As of the close of October, the EPA reports a total of 15.93 billion RINs have been generated so far this year, with 645.14 million retired, 882.94 million locked and available and 14.1 billion unlocked and available.

Read the original story here: EPA: Cellulosic RIN Generation Reaches 17.79 Million in October

Journal Advocate

November 28, 2016

By Jeff Rice

There aren't many bright spots in agriculture these days; most experts agree it will be at least 2018 before commodities prices turn around, and even then it will be slow and sporadic. But there is one light of hope, a beacon that glows brightly at the east edge of Sterling and helps provide a little more price stability than would otherwise exist.

Mark Sponsler, executive director of Colorado Corn Growers Association, told the Journal-Advocate a week ago he believes the price of corn would be a dollar a bushel lower if not for the demand for ethanol, and he credited ethanol producers with providing long-term stability for corn prices.

Dave Kramer is flattered by Sponsler's assessment, but says the effect is a little inflated. "I'd say it's about half that, if even that much. Maybe 40 cents a bushel," he said.

Kramer is CEO and founder of Sterling Ethanol LLC, which has plants in Sterling and Yuma, and in Bridgeport, Neb. And if Kramer seems overly modest about his industry's impact on corn prices, he's perfectly willing to accept credit when credit is due. After all, the Sterling-based plants provide more than three-fourths of the ethanol used in the gasoline sold in Colorado and surrounding areas. Anyone who has been stuck in traffic on southbound I-25 in Denver on a Monday morning can quickly figure out, that's a lot of ethanol.

Most people know ethyl alcohol most intimately as the stuff that makes us funnier, better-looking, smarter, and generally more likeable when imbibed in moderate quantities. But its value as an internal combustion fuel has been recognized since the invention of the internal combustion engine. More recently, it was recognized as an additive to help those engines burn cleaner, but large-scale production was more expensive than the other additives.

The nascent ethanol industry bloomed suddenly after the implementation of the Energy Policy Act of 2005. But while the provisions of the legislation had mostly to do with subsidizing and incentivizing energy production, including alternative energy sources, Dave Kramer saw the opportunities a little differently. After a couple of decades in the livestock feed business, Kramer's employer was bought out by a competitor, and he suddenly found his employment options to be, as they say, limitless.

"I got investors together from the corn and cattle industries and from other related areas, and we approached this as a feed mill that produces ethanol," Kramer said. "The wet distiller's grain that we produce is easier for cattle to process."

According to Kramer's figures, feed corn normally contains about 12 percent protein and 4 percent fat. But when it's ground and processed to produce ethanol, the distiller's grain contains about 33 percent protein and 10 percent fat. All that's taken out is the starch, which cattle don't use anyway. The result is cattle feeders paying less for the corn they can feed.

"We estimate that (distiller's grain) reduces the cost of cattle feeding by anywhere from five to 10 cents per pound of gain," Kramer said. When you consider that weight gain over the feedyard life of an average beef animal is about 92 cents per pound (according to the University of Arkansas) even a nickel a pound is a respectable savings.

One reason the distiller's grain from Sterling Ethanol's plants is so economical is that the plants are what Kramer calls "origin and destination" facilities. An origin plant, he explained, is one that takes in corn from local sources and then ships the ethanol and dried feed product to distant customers; a destination plant takes in corn from distant sources and sells the products locally.

"We're a combination of those," Kramer said. "We take in corn from local sources in Colorado and Nebraska, and we sell the products locally in Colorado and Wyoming."

Because the feed product is used locally, there's no need to dry it before shipping, which saves the considerable energy costs of drying the product. That means less energy used by the plant resulting in a lower cost for the feed.

And speaking of saving energy, the Sterling plants produce some of their own electricity from waste steam. Each of the three distilleries has its own steam turbine, which produces about a megawatt of electricity to be used in the plant. It saves about $60,000 a month in operating costs.

"We have the lowest carbon scores of any ethanol plants in the U.S.," Kramer said.

And then, of course, there's all that ethanol. After all, Kramer's investors saw their opportunity to build a state-of-the-art feed mill come from a piece of legislation that was meant to spur energy independence in the United States.

Part of that legislation is an incentive to goose production of a replacement for methyl tert-butyl ether (MTBE), a fuel additive that prevents engine knock and lowers harmful exhaust emissions from internal combustion engines. And while the billions of dollars in tax incentives and outright subsidies did give the industry a bit of a boost, it was not one the Sterling company took advantage of. In only seven months, Sterling Ethanol's investors had the $52 million plant up and running. And while Kramer is reluctant to divulge hard numbers on the company's finances, he does say that it is profitable and looks to stay that way for a very long time.

Sterling Ethanol turns 51 million bushels of corn into 165 million gallons of ethanol in its three plants each year. With the 48 million gallons produced by the plant owned by Front Range Energy in Windsor, that's enough to supply the gasoline blending stations in Denver, Cheyenne, and Colorado Springs. In other words, virtually all of the ethanol burned in Colorado is from Colorado, and most of it is from Sterling Ethanol plants.

While they're at it, the company employs 26 full-time people and pumps about $2 million in paychecks into the local economies.

As good as all of that is, however, there's bound to be a down side to ethanol, isn't there?

Well, yes ... or rather, there might have been.

At one time.

But not really.

Read the original story: Ethanol Provides a Bright Spot in Dismal Ag Picture