In the News
Apr 22, 2020
By Doug Durante, Executive Director, Clean Fuels Development Coalition
A recent article by Growth Energy CEO Emily Skor caught my eye due to a simple but important headline, which was Ethanol Industry Needs Support Now More than Ever.
The economic importance of the ethanol industry to agriculture and rural America cannot be overstated, and the article did a good job making that point. But I want build on the theme that now, when we’ve been knocked down and are on the mat is when we need support, but from an additional angle—to preserve some sense of energy security and to be ready to continue to reduce aromatics in gasoline once we rebound from our current shut down.
At CFDC, and with our industry partners, we have made no secret that we are going to stay on EPA to reduce toxics in gasoline. The family of benzene octane additives producing carcinogens in the air we breathe do not get a pass, no matter how much gasoline we have or how cheap it is. The clean octane alternative of ethanol can only deliver its highest value if it is positioned and ready to go. As assistance packages are crafted for essential industries, ethanol is as legitimate a candidate for assistance as any U.S. industry, for the reasons Ms. Skor notes in her article.
And when I say assistance, I do not mean bailout. Just as the oil industry is calling for the federal government to purchase oil for the Strategic Petroleum Reserve, the Clean Fuels Development Coalition, the National Farmers Union, and others have called for the establishment of a biofuel reserve, with ethanol being purchased but then sold into the fuel market at some future date, with the government getting back the money it bought the ethanol with.
While the emphasis on jobs is of course key, there is an equally important consideration, and that is Energy Security, which has often been a term without definition or true understanding. The double hit the domestic oil and gas sector is experiencing with the COVID-19 virus and the price war between the Saudis and the Russians threatens to return the US to the 1970’s, when we were paralyzed by supply disruptions and global events. And make no mistake, ethanol is a gasoline additive, so like it or not, the two are inextricably linked.
The obvious intent of this price war—coming at a time when demand has been reduced by half—is to put U.S. oil companies out of business, or at least as many as they can. Under that scenario, when the economy rebounds and our hefty appetite for oil resumes, we will once again need to depend on other countries, who can set the price and control supply, putting the U.S. in a position we fought so hard to avoid.
“Having a lot of domestic oil doesn’t seem like energy security to me when a couple of countries can get together and drive our guys out of business.”
This has serious implications for our national security, economy, and well-being — if we fail to defend ourselves. Part of that defense is making sure we have alternatives. We fought energy security battles via legislation in 1980, again with an Energy Security Act in 1992, and again with the EISA legislation in 2007 but would still be hit hard by world oil prices if they returned to $100 per barrel or more. That doesn’t strike me as much in the way of security.
Many in the petroleum industry gloat that we are net exporters of oil now and completely independent. Well, just how energy independent and secure are we if two countries can put our guys out of business simply by lowering the price? I have articles in my files from decades ago when we began to fight back against our oil dependence and OPEC officials were quoted as saying they should keep prices low to discourage the development of alternatives. Then, as we regularly failed to develop such alternatives, they would periodically raise the price to find the point where we would squeal, and then lower it again. Crippling gasoline and home heating oil prices just a decade ago should serve as a reminder.
Anyone in the energy business, be it stationary source power or transportation fuels, has lived through these cycles of both high and low prices. Before our last oil boom, the U.S. depended on more than 60% of its oil from OPEC and other foreign sources. Sure, the domestic oil boom has turned things around but not all of our domestic production is going to make it back from where we are now. The 10% of the fuel pool ethanol represents is going to be more important than ever, and we can do so much more with higher blends. And when we reduce gasoline demand we reduce oil demand, and that reduction is reflected in lower oil prices around the globe.
Putting our guard down now with respect to protecting our alternatives like ethanol while continuing to develop new bio technologies could put us right back to the dark ages of oil dependence. No one ever wants to see the gas lines we saw from the Iranian oil embargos of the 1970s when gas was rationed through odd and even days. And that is not that farfetched—just as foreign suppliers can flood the market with oil, they can turn the spigot the other way. These oil countries remain among the most unstable regions on the planet; disruptions in the oil business 5,000 miles away affects price everywhere.
Imagine the struggles our economy is facing as we get back on our feet over the next two years. Now imagine $4.00 or higher gasoline and the burden that puts on our citizens. And if measures are not taken to protect the hedge we have with domestic ethanol, that gasoline will be loaded with toxic aromatics, possibly making us even more susceptible to COVID 19 and other new viruses. We must keep corn ethanol and all biofuels afloat. It is the only true success story in terms of liquid fuels of all the failed energy security efforts of the past 40 years.
Read the original story here.
Apr 18, 2020
Dwindling supplies of carbon dioxide from ethanol plants are sparking concern about shortages of beer, soda and seltzer water - essentials for many quarantined Americans.
Brewers and soft-drink makers use carbon dioxide, or CO2, for carbonation, which gives beer and soda fizz. Ethanol producers are a key provider of CO2 to the food industry, as they capture that gas as a byproduct of ethanol production and sell it in large quantities.
But ethanol, which is blended into the nation’s gasoline supply, has seen production fall sharply due to the drop in gasoline demand as a result of the COVID-19 pandemic. Gasoline demand is down by more than 30% in the United States.
The lack of ethanol output is disrupting this highly specialized corner of the food industry, as 34 of the 45 U.S. ethanol plants that sell CO2 have idled or cut production, said Renewable Fuels Association Chief Executive Geoff Cooper.
CO2 suppliers to beer brewers have increased prices by about 25% due to reduced supply, said Bob Pease, chief executive officer of the Brewers Association. The trade group represents small and independent U.S. craft brewers, who get about 45% of their CO2 from ethanol producers.
“The problem is accelerating. Every day we’re hearing from more of our members about this,” said Pease, who expects some brewers to start cutting production in two to three weeks.
In an April 7 letter to Vice President Mike Pence, the Compressed Gas Association (CGA) said production of CO2 had fallen about 20% and could be down by 50% by mid-April without relief, CGA CEO Rich Gottwald said in the letter. Meat producers are also feeling the pinch, as they use CO2 in processing, packaging, preservation and shipment.
Orion Melehan, CEO of Santa Cruz, California-based LifeAID, a specialty beverage company, said two of his production partners are looking for alternative CO2 sources.
“It does have us up at night figuring out what our options are,” Melehan said. “It highlights the laws of unintended consequences.”
A spokeswoman for National Beverage Corp, whose products include LaCroix, said the company sources from a number of national CO2 suppliers and does not anticipate a supply issue.
Coca-Cola Co, SodaStream owner PepsiCo Inc , wine and beer seller Constellation Brands Inc and several bottling companies did not respond to requests for comment
Walker Modic, environmental and social sustainability manager for Bell’s Brewery, said the Comstock, Michigan-based brewing company had “not experienced any curtailments or changes in the source of our CO2.”
Denmark-based Carlsberg Group said that the company is “almost self-sufficient.”
“We, in line with our sustainability program, create our own CO2 and capture it during the brewing process,” spokesman Kasper Elbjorn.
Read the original story here.
Apr 16, 2020
The governors of five oil states—Texas, Oklahoma, Wyoming, Utah and Louisiana—sent a letter to the U.S. Environmental Protection Agency late Wednesday asking the agency to waive renewable volume obligations under the Renewable Fuel Standard due to the impact of the COVID-19 pandemic on the oil industry. Geoff Cooper, president and CEO of the Renewable Fuels Association, offers the following response:
“Apparently toilet paper isn’t the only thing in short supply in oil states these days—clearly, these governors are experiencing an acute shortage of facts and reality too. It’s clear they know absolutely nothing about how the Renewable Fuel Standard actually works. They outrageously claim that a waiver is needed because of ‘depressed demand for transportation fuel.’ But because EPA translates the RFS into a percentage each year, the renewable fuel blending requirements already adjust in tandem with changes in gasoline and diesel consumption. So, if COVID-19 causes 2020 gasoline and diesel demand to drop 15 percent, for example, the renewable fuel blending requirements drops by the exact same amount.
“In any event, the EPA has no authority to grant relief when the RFS itself is not the cause of the ‘severe economic harm,’ a fact that has been reconfirmed by EPA multiple times in the past when it denied similar nonsensical waiver requests. The governors themselves acknowledge the problems facing refiners today are driven by COVID-19 and cratering oil prices, not the RFS. These same factors are impacting the ethanol industry as well, and to an even greater extent: Nearly half of the nation’s ethanol production capacity has been idled as a result of falling gasoline demand. A general waiver at this point would only serve to close more ethanol plants and kill more jobs across rural America.
“The governors also apparently have forgotten about the record supply of low-cost banked compliance credits (RINs) available to refiners. Today, refiners can purchase two or three RIN credits—each representing a gallon of renewable fuel—for the same price as one physical gallon of ethanol. COVID-19 is exactly the sort of market disruption that EPA had in mind when it developed the RIN credit trading market mechanism.
“The bottom line is, this letter comes nowhere close to satisfying the well-defined statutory criteria and requirements established for requesting a waiver. It can’t even be called a petition. EPA should reject it out of hand and return to focusing on efforts that will actually help Americans get through this challenging period. These governors may still be practicing social distancing, but they should not be distancing themselves from the facts as well.”
Read the original story here.
Apr 9, 2020
The U.S. Grains Council is soliciting applications for seven advisory teams (A-Teams), including the Ethanol A-Team.
According to the USGC, A-Team members gain expertise on trade policy and market development topics. In addition, their input helps form the backbone of the USGC’s operations and long-term planning.
The Ethanol A-Team is dedicated to expanding the global use and trade of U.S. ethanol and the needs of feedstock producers. According to the USGC, the A-Team recognizes the division of ethanol into priority markets, second-tier markets and frontier markets. Priority markets include Brazil, Canada, India, China, Indonesia, Canada and Mexico. The Ethanol A-Team supports the USGC’s market development efforts to create and maintain market access in those priority markets. The A-Team also focuses on frontier markets and making inroads for new uses of ethanol, industrial applications and multilateral and academic efforts that support messaging about the benefits of expanded ethanol use.
Several other A-Teams also support market expansion efforts for ethanol and its distillers dried grains with solubles (DDGS) coproduct. The Trade Policy A-Team provides input and guidance on major trade policy issues affecting the value chains of ethanol, DDGS, corn, co-products, grain sorghum and barely, while the Value-Added A-Team focuses largely on co-products market development globally, including for DDGS and distillers corn oil.
Other A-Teams include the Asia A-Team; the Innovation and Sustainability A-Team; the Middle East, Africa and South Asia A-Team; and the Western Hemisphere A-Team.
“Being an A-Team member is a great way to become more knowledgeable about specific aspects of the Council’s export market development work and bring your organization’s perspective and ideas to the Council’s program planning process,” said Darren Armstrong, USGC chairman and farmer from North Carolina. “Sharing your expertise provides valuable insight and guidance to the Council staff and Board of Directors.”
The application period is open through April 30. A-Team appointments for 2020-2022 will be announced prior to the USGC board of delegates meeting in July. Terms will begin on Aug. 6.
Additional information is available on the USGC website.
Read the original story here.
Apr 10, 2020
Washington, D.C - Representative Collin Peterson, Chairman of the House Agriculture Committee, led fellow members of the Biofuels Caucus in urging Agriculture Secretary Sonny Perdue to direct funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act to support the biofuels industry. Biofuels plants across the nation have idled production as stay at home orders reduce demand for fuel and the profitability of biofuels production.
“Biofuels production is an important piece of the agriculture economy and I urge the Secretary to use the resources Congress appropriated to support this sector through the financial stress caused by COVID-19,” said Peterson. “The biofuels industry entered this crisis behind the curve following the last few years of disastrous management of the RFS program by the EPA. The biofuels industry is going to need significant support to weather this disaster.”
Dozens of biofuels plants across the country have idled some or all of their production since March 1st. Of the roughly 200 ethanol plants in the U.S., roughly 30 have shut down, and another 80 have reduced production by 50% or more. Biofuels plants consume millions of bushels of grain each year. They also produce low-cost livestock feed products (dried distillers grains) and are a major producer of CO2 gas used by hospitals and food processors.
Chairman Peterson is co-chair of the Congressional Biofuels Caucus, a bipartisan group of Members of Congress who advocate for homegrown renewable fuel policies that boost farmer incomes and reduce dependence on foreign oil. He is also the sponsor of the Renewable Fuel Standard Integrity Act of 2019, a bill which provides certainty to the biofuels industry by setting an annual deadline for small refinery exemption applications and bringing transparency to the process.
Full text of the letter can be found here.
Apr 7, 2020
A group of 15 senators sent a letter to Agriculture Secretary Sonny Perdue on April 6 urging the USDA to use funds allocated to the agency’s Commodity Credit Corp. by the CARES Act to provide financial assistance to the biofuel industry.
“We are concerned about our nation’s biofuel sector during the unprecedented economic circumstances brought on by the national pandemic of COVID-19,” the senators wrote.
The letter explains that that the pandemic has caused motor fuel use to rapidly decrease. “This dynamic comes on top of EPA’s failure to implement the RFS in accordance with the law, including the issuance of illegal small refinery waivers and the recent failure to enforce ethanol blending requirements,” the senators continued. “As the consumption of motor fuel continues to decrease in response to COVID-19, it is important to note that most U.S. gasoline contains at least 10 percent ethanol.”
“We are concerned for the many farmers and producers who will bear the impact of this decrease in consumption, further damaging an already hurting rural economy and resulting in the closing of production facilities that employ many people in rural communities in our home states,” the senators wrote.
Decreased fuel consumption has caused many biofuel plants to idle. The letter cites industry data that indicates more than 4 billion gallons of ethanol production has ceased production. “The CCC was created to stabilize, support and protect farm income and prices while also maintaining balanced and adequate supplies of agricultural commodities and aids in their orderly distribution,” the senators wrote.
“Farm income and prices for corn and other crop commodities are directly linked to the health of the renewable fuel industry,” they continued. “Ethanol plants use 40 percent of all corn grown in the United States. Among other feedstocks, biodiesel and renewable diesel producers currently use over 8 billion pounds of soybean oil a year, creating demand that adds 13 percent to the cash price of a bushel of soybeans. We have seen a significant drop in the price of corn and soybeans because of the decline in demand. Keeping plants open is vital for our states and we ask that you use the authority given by Congress to assist the biofuel industry during extremely difficult times. We are supportive of the proposals the biofuel industry has put forward to reimburse feedstocks and also believe that adding additional CCC funds to the Higher-Blends Infrastructure Incentive Program will drive future biofuel demand.”
The letter is signed by Sens. Chuck Grassley, R-Iowa; Tammy Duckworth, D-Ill,; Joni Ernst, R-Iowa; Tammy Baldwin, D-Wisc.; Deb Fischer, R-Neb.; Amy Klobuchar, D-Minn.; Roy Blunt, R-Mo.; Richard J. Durbin, D-Ill.; M. Michael Rounds, R-S.D.; Tina Smith, D-Minn.; Josh Hawley, R-Mo.; Sherrod Brown, D-Ohio; Ben Sasse, R-Neb.; Jerry Moran, R-Kan.; and John Thune, R-S.D.
Representatives of the biofuels industry have spoken out to applaud the senators for sending the letter.
“Once again, renewable fuel champions in the Senate are working tirelessly to stand up for an industry that is vitally important to rural America,” said Geoff Cooper, president and CEO of the Renewable Fuels Association. “We thank them for recognizing the unprecedented challenges facing ethanol producers today and seeking solutions to help our industry weather this storm. Ethanol prices have plunged to record lows, stocks are at all-time highs, and plants throughout the Heartland are shutting down. As ethanol serves as the largest market for U.S. corn growers, the well-being of the ethanol industry is directly linked to farm income and the livelihood of farm families across the nation. We agree with the senators that providing assistance to the renewable fuels industry would be an appropriate and timely use of emergency relief funding appropriated to USDA.”
Cooper noted that, as of April 6, 41 ethanol plants with an annual production capacity of 3.2 billion gallons have been fully idled, while 66 plants have reduced their output rates by a collective 1.8 billion gallons. Another 13 plants with 800 million gallons of capacity were closed or idled due to other factors prior to the onset of the COVID-19 pandemic. Overall, he said, a total of about 5.8 billion gallons of capacity is idle today, representing more than a third of the industry’s total production capacity. On an annualized basis, this would represent a potential lost demand for 1.7 billion bushels of corn.
“We applaud our Senate champions for their ongoing efforts to protect rural communities, where farmers and biofuel producers have been stretched beyond the breaking point,” said Emily Skor, CEO of Growth Energy. “The plunge in biofuel demand sparked by COVID-19 has generated a perfect storm, adding to the burdens created by a foreign price war over oil, continued trade barriers, and regulatory uncertainty here at home. Nearly half the industry may be offline within weeks, and without swift and decisive action in Washington, many more may soon halt grain purchases or close their doors completely. The USDA should act quickly to implement the urgent call from lawmakers and safeguard farm and biofuel jobs.”
A full copy of the letter can be downloaded from Grassley’s website.
Read the original story here.
Apr 2, 2020
The U.S. exported 194.16 million gallons of ethanol and 852,904 tons of distillers grains in February, according to data released by the USDA Foreign Agricultural Service on April 2. Exports of both products were up when compared to February 2019.
The 194.16 million gallons of U.S. ethanol exported in February was up significantly from both the 151.23 million gallon exported the previous month and the 113.82 million gallons exported during the same month of the previous year.
The U.S. exported ethanol to approximately three dozen countries in February. Brazil remained the top importer of U.S. ethanol with 56.1 million gallons, followed by India with 47.6 million gallons and Canada with 29.44 million gallons.
The value of U.S. ethanol exports reached $323 million in February, up from $256.53 million in January and $186.78 million in January 2019.
Total ethanol exports for the first two months of the year reached 345.4 million gallons at a value of $579.53 million, compared to 241.73 million gallons at a value of $377.82 million for the same period of last year.
The 852,904 tons of distillers grains exported in February was down from the 976,688 tons exported in January, but up from the 686,005 tons exported in February of the previous year.
The U.S. exported distillers grains to nearly three dozen countries in February. Mexico was the top destination for U.S. distillers grains exports with 165,609 tons, followed by South Korea with 127,776 tons and Indonesia with 102,117 tons.
The value of U.S. distillers grains was at $178.24 million in February, down from $199.48 million the previous month, but up from $143.11 million in February 2019.
The U.S. exported a total of 1.83 million tons of distillers grains during the first two months of this year at a value of $377.72 million, compared to 1.49 million tons at a value of $315.48 during the same period of 2019.
Additional data is available on the USDA FAS website.
Read the original story here.
April 1, 2020
The Food and Drug Administration (FDA) is allowing previously unapproved ethanol producers to make industrial-use product for hand sanitizer, which is in high demand amid the spread of coronavirus.
The agency released guidance and standards to produce ethanol that is to be used as an "active pharmaceutical ingredient" (API) because of inquiries from ethanol producers that are not approved to produce API grade alcohol despite possessing the capability to do so.
The FDA will not prevent or punish previously unapproved ethanol plants from producing API grade alcohol so long as it is no less than 94.9pc ethanol by volume. The ethanol must also be denatured by the producer or by the time it is an ingredient of a finished hand sanitizer product.
Production reallocated to making sanitizer products is not expected to provide notable increases to overall ethanol demand, according to the Renewable Fuels Association (RFA).
"The volume of ethanol that is being supplied for hand sanitizer and similar products is small overall, especially relative to fuel use of ethanol, so we do not expect it to be a major driver of ethanol demand in the months ahead," said RFA chief executive Geoff Cooper.
Some plants have already pivoted to producing hand sanitizer. In his 27 March earnings call, Pacific Ethanol chief executive Neil Khoeler reported that the company's sale of industrial-use ethanol had doubled (http://direct.argusmedia.com/newsandanalysis/article/2091456) to fight the spread of coronavirus.
Parties looking to produce API grade alcohol must register their facility online with the FDA but will be automatically approved to begin production.
Read the original story here: FDA Allowing More Ethanol Plants To Make Sanitizer
More...
Mar 31, 2020
The USDA expects U.S. farmers to plant 97 million acres of corn in 2020, up 8 percent or 7.29 million acres from 2019. Compared with 2019, planted acreage for corn is expected to be up or unchanged in 38 of the 48 estimating states, according to data released in the agency’s Prospective Plantings report, released March 31.
Farmers in Iowa, Illinois, Nebraska, Minnesota and Kansas are expected to lead the nation when it comes to planted corn acres. Approximately 14.1 million acres of corn are expected to be planted in Iowa, up from 13.5 million in 2019. Corn acres in Illinois are expected to reach 11.3 million, up from 10.5 million last year. In Nebraska, farmers are expected to plant 10.5 million acres of corn, up from 10.1 million in 2019, while corn acres in Kansas are expected to fall to 6.3 million, down from 6.4 million last year.
The report projects that corn acreage will grow most significantly in South Dakota, where farmers are expected to plant 6 million acres of corn this year, up from 4.35 million acres in 2019. If realized, 2020 corn acreage in the state will be at 138 percent of 2019 levels.
A full copy of the report can be downloaded from the USDA website.
Read the original story here.
Mar 25, 2020
Chippewa Valley Ethanol at least has some consolation during grim times for the biofuel industry. The west-central Minnesota company also churns out industrial alcohol, a key ingredient in hand sanitizer.
“It’s nice to have a little product diversity,” said Chad Friese, Chippewa Valley’s CEO. “In a market like this, it makes a difference.
Much of the ethanol industry has been floundering in red ink for the last year, hurt by a glut of supply and declining demand due to trade restrictions and a flood of federal exemptions on ethanol use by smaller oil refineries.
Now, with much of the country’s economy shut down, demand for transportation fuel has nose-dived and so have ethanol prices. However, during the COVID-19 outbreak, the need for sanitizers — and the industrial alcohol that goes in it — has spiked, helping some U.S. ethanol producers, including one in Minnesota.
“I haven’t seen ethanol prices this low since the mid-1990s,” said Brian Kletscher, CEO of Highwater Ethanol and current board president of the Minnesota Bio-Fuels Association, a trade group.
None of Minnesota’s 17 operating ethanol plants have temporarily shut down due to the current crisis. But like their peers across the Midwest’s ethanol belt, they are contemplating cutting biofuel production if they haven’t already.
Highwater Ethanol in the southwestern Minnesota town of Lamberton cut output by 20% on March 19, Kletscher said.
He said he has heard “rumblings” of other Minnesota ethanol plants doing the same. Throughout the country, the ethanol industry is trimming production by 20%, he said. Indeed, output will have to be curtailed if the ethanol storage system — tanks, even rail cars — fills up.
Minnesota is the nation’s fourth-largest ethanol producer and hosts 17 operating biofuels plants. The ethanol sector is an important part of the state’s agricultural economy.
Under the U.S. Renewable Fuel Standard, most fuel sold as gasoline is required to include 10% ethanol. President Donald Trump’s administration has increased the number of ethanol hardship waivers for smaller refineries, incensing biofuel makers that say it cuts demand for their product.
Now, with COVID-19 paralyzing much of the economy, demand for transportation fuel has been whacked.
“I think we will see demand destruction of 25 to 30 percent, or even up to 40 percent over the next month due to COVID-19,” Kletscher said. New York and California, two states that have been virtually shut down by their governors, are two of the nation’s biggest fuel markets, he added.
The duration of the public safety lockdowns, of course, will likely determine the depth of the ethanol industry’s troubles.
“When we get through this, people will be antsy to get out,” Kletscher said. “We are getting close to the driving season, too, and that will also increase demand.”
Chippewa Valley Ethanol in Benson is getting pummeled by declining fuel demand, too, but unlike other biofuel plants in Minnesota it produces industrial alcohol. Normally a staid, niche market, industrial alcohol demand is hot.
“We have been in this market for many years, and have just seen some large growth,” said Chippewa CEO Chad Friese. “We have a strong customer base in the sanitizer market.”
Normally, industrial alcohol accounts for about 15% of Chippewa Valley’s production, with ethanol making up the rest, Friese said. But with the COVID-19 crisis, that percentage has risen to 20% and even as high as 22%.
Making industrial alcohol from ethanol requires a further step in distillation. It also requires permits from the U.S. Food and Drug Administration and the federal Alcohol and Tobacco Tax and Trade Bureau. Chippewa Valley, a longtime producer, has both.
If the ethanol demand slump is prolonged, other ethanol makers may also seek such licenses and rejigger their production setup to produce industrial alcohol, Kletscher said.
Read the original story here.
Mar 25, 2020
Time has run out for the U.S. Environmental Protection Agency to challenge a federal court ruling that would limit the agency’s use of waivers exempting small oil refineries from the country’s biofuels regulations.
The EPA had until the end of March 24 to file a challenge, but by early March 25, no such filing had been entered, according to a Reuters review of the case docket though the U.S. government’s electronic public access service for court records.
A decision by the administration of President Donald Trump not to appeal the ruling would mark a big win for the U.S. corn lobby and a blow to the oil industry.
Oil refiners say the waivers have been crucial to keeping small refineries in business, but the agriculture industry believes they have been over used and have cut into demand for corn-based ethanol.
Under the U.S. Renewable Fuel Standard, refiners are required to blend billions of gallons of ethanol into their gasoline every year, a boon for corn farmers. But the EPA can give out waivers to small facilities that prove that compliance would put them in financial straits.
The waiver program was cast into question in January after the 10th Circuit Court of Appeals ruled that the Trump administration had been too free with the waivers and set a standard for the exemptions that would greatly reduce the numbers of waivers the EPA can give out in the future.
The EPA has been considering its response since.
EPA and White House officials did not comment on the issue on Wednesday.
Sources told Reuters earlier this month that the Trump administration was likely to adhere to the ruling and apply it nationally.
The agency, meanwhile, was discussing the possibility of other measures to ease the financial burden on refiners, including instituting a cap or other restrictions on the price of biofuel blending credits that they must acquire to show compliance with the RFS, the sources said.
Read the original story here.
Klobuchar, Smith Help Make Bipartisan Push Urging President Trump to Support Renewable Fuel Standard
Mar 20, 2020
United States Senator Amy Klobuchar
WASHINGTON - U.S. Senators Amy Klobuchar (D-MN) and Tina Smith (D-MN) joined a bipartisan effort with 14 of their Senate colleagues urging President Trump to support the Renewable Fuel Standard (RFS) as coronavirus pushes ethanol prices to record lows. Their request comes following news that the U.S. Environmental Protection Agency (EPA) may appeal a recent unanimous decision by the U.S. Court of Appeals concerning small refinery exemptions.
With the drop in oil prices related to coronavirus and the pandemic’s projected decrease in gasoline consumption, some experts are projecting a reduction in corn used for ethanol production of 120 to 170 million bushels.
The Tenth Circuit ruling found that the EPA had abused the use of small refinery hardship waivers under the RFS, eliminating demand for billions of gallons of demand for renewable fuels and hurting rural communities, farmers, clean energy producers, and agribusinesses.
“The RFS has been a critical economic driver for rural America and the agricultural industry in each of our states. Farm country has taken successive blows from low commodity prices, trade disruptions, inclement weather, and continued uncertainty over the RFS,” the Senators wrote. “Now, with the global economy bracing for the full consequences of the coronavirus, upholding this court decision is a small step that will have a resounding benefit for farmers and ethanol stakeholders who are on the ropes.”
For years, Klobuchar has been a leader in the fight to strengthen the RFS to support American jobs and decrease dependence on foreign oil. Klobuchar has led several letters urging the Administration to cease issuing small refinery waivers and reject changes to the RFS that would upend stability and predictability for small businesses and rural communities. In December 2019, Klobuchar In November 2019, Klobuchar led a public comment letter to Environmental Protection Agency (EPA) Administrator Andrew Wheeler expressing concern over the proposed supplemental rule establishing the Renewable Fuel Standard’s (RFS) 2020 Renewable Volume Obligations and 2021 Biomass-Based Diesel Volumes. In October 2019, Klobuchar sent a letter to U.S. Department of Agriculture Secretary Sonny Perdue asking the agency to document the impact of small refinery waivers on farm income, commodity prices, and renewable fuel usage. Klobuchar has also led a bipartisan push for the EPA to allow for the year-round sale of E15, including letters to the Administration urging them to expand waivers for the sale of E15 in the summer months. Klobuchar is an original cosponsor of the bipartisan Consumer and Fuel Retailer Choice Act, which would amend the Clean Air Act to allow for the year-round sale of E15.
Smith has long fought for a strong RFS. In October 2019, Smith pressed U.S. Deputy Secretary of Agriculture Stephen Censky about the Administration’s policy on the amount of corn-based ethanol and other renewable fuels blended into the nation’s gasoline supply at a Senate Agriculture Committee hearing. Smith has also pressed EPA Administrator Andrew Wheeler to take action, pointing out that the granting of waivers had increased by 370 percent since 2016, with “small refinery” waivers going to large oil companies under the Trump Administration.
Read the letter here.
Mar 19, 2020
The U.S. ethanol industry is struggling with demand destruction resulting from COVID-19, an oil price war, ongoing trade disputes, and small refinery exemptions (SREs). “Folks, this is not going to be good, and our biggest concern by far is our people,” said Randy Doyal, CEO of Al-Corn Clean Fuel, during a media call hosted by the Renewable Fuels Association on March 19.
Geoff Cooper, president and CEO of the RFA, opened the call by stressing the ethanol indsutry is facing unprecedented economic hardship. “We were already experiencing demand destruction and challenging economics before the coronavirus began to roil energy markets,” he said.
Cooper explained that demand for motor fuel is plummeting and most analysts today are expecting about a 20-25 percent drop in consumption over the near-term. “We’ve seen ethanol prices fall to record lows,” Cooper said, adding that April ethanol futures closed at 95 cents per gallon on March 18. Ethanol producer margins have also fallen and are have been in deep negative territory for the past several days. “These are some of the worst margins that we’ve seen in the industry’s history,” Cooper said.
COVID-19, the oil price war between OPEC and Russia, trade disputes with China and other markets and SREs are factors that have conspired to create not just the perfect storm for ethanol, but the perfect tsunami, Cooper added. Over the past week many ethanol plants have significantly reduced output and some have idled, he said. “We expect to see substantial reductions in ethanol production in the weeks ahead as producers contend with lower demand, record low prices and negative margins,” Cooper added.
Scott Richman, chief economist at the RFA, said average spot margins are at roughly negative 25 cents per gallon at yesterday’s prices. “That’s very far in the red,” he said, noting that some plants are slowing production, others are idling and some have stopped buying corn.
“Our absolute first concern in this is our people,” said Jeanne McCaherty, CEO of Guardian Energy Management, a company that manages operations at three ethanol plants. She said her company is working hard to follow Center for Disease Control recommendations, including social distancing, enabling employees to work remotely where possible and ensuring proper cleaning and hygiene.
“The second concern is job security,” McCaherty said. “Our people are sacred to us…We are concerned about them,” she added, noting that ethanol plants and their workers are integral parts of local rural economies.
Demand destruction the industry is facing is devastating, she said. Ethanol plants are also worried about physical logistics problems. Ethanol plants and their customers have limited amounts of storage space, she said. Some plants may need to shut down simply because of physical restrictions related to storage.
Doyal noted the ethanol indsutry was negatively impacted during the financial collapse of 2008, but said the impact from that event was relatively short. “This one, I think, we will feel for much longer,” he said. “Folks, this is not going to be good, and our biggest concern by far is our people. This is going to directly impact our folks, and we’re doing everything we can to mitigate that,” he said, whether that impact comes from risk of exposure to the virus or trying to keep plants open and operating so that workers can stay employed.
Chad Friese, general manager of Chippewa Valley Ethanol Co., discussed the unique position his company is in as a producer of not just fuel ethanol, but also pharmaceutical grade ethanol that can be used to produce hand sanitizer and other cleaning products. Currently, the company is trying to shift its focus to producing as much alcohol as possible for the hand sanitizer market. While the vast majority of fuel ethanol plants aren’t designed to produce pharmaceutical-grade ethanol, Freise said Chippewa Valley Ethanol has had the capability to serve that market for nearly 20 years, since 2001. It’s a big shift at the plant level to make that change, he said. Fuel ethanol production, however, is the first step in the plant’s process to produce pharmaceutical-grade alcohol.
Friese said his company is concerned over logistical problems impacting their ability to produce the alcohol needed for hand sanitizers, specifically whether the plant will have access to the rail cars and trucks it needs to move products. “We need those logistical channels to stay open,” he said. Friese also expressed concern over how plant operations could be impacted if a member of his staff becomes infected with COVID-19. “These are highly specialized jobs,” he said.
Cooper described several actions needed to keep ethanol plants operational. To help the ethanol indsutry survive the current disastrous market conditions, Cooper said the RFA is calling on Congress and the Trump administration to take immediate action to prevent a potential collapse of the industry. The top priority, he said, is to retain the industry’s highly-skilled workforce and save jobs. “The ethanol industry’s most valuable asset is its workforce,” Cooper said. Every effort should be taken to retain these jobs, especially given the likelihood that many plants will be forced to temporarily idle production and suspend sales of ethanol and coproducts.”
Beyond that, Cooper said the RFA is asking the administration to immediately announce that it will not appeal the Tenth Circuit Court decision that struck down three SREs approved by the U.S. EPA and announce it will apply the court’s decision nationwide. “This would send positive market signals that RFS demand will not be undermined by further small refinery exemptions,” he said. “That’s a signal our industry desperately needs today.” In addition, Cooper said the EPA should also announce it will immediately add 500 million gallons to the 2020 Renewable Fuel Standard requirements as ordered by the D.C. Circuit Court in 2017, and should announce it will not approve any pending SREs that do not meet the criteria of the Tenth Circuit Court.
“We are also joining many other businesses and industry groups in calling for more general forms of relief for our industry,” Cooper added, noting that the RFA joined with 96 other groups on a letter to President Trump and Congressional leaders this week calling for action to ensure continued access to credit for member companies and small businesses. The letter also advocated for some tax relief measures.
Cooper said the RFA expects fairness and equity in how assistance is being provided to various energy industries. Trump has already directed the U.S. Department of Energy to purchase millions of barrels of crude oil for the strategic petroleum reserve, he said, and noted other relief measures are also in the works for U.S. oil producers. “We’re simply calling on the government to ensure that all fuel producers receive equitable support during this period of marketplace uncertainty and unrest,” he said.
“I am incredibly proud of the men and women of the ethanol indsutry for their tenacity, resolve and compassion during this very difficult time,” Cooper added. “Not only are we continuing to deliver cleaner fuels to the market during this national emergency, but our indsutry is also part of the solution for mitigating the spread of the virus and protecting American families.”
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Mar 17, 2020
Chicken and eggs are a diet staple in Indonesia—the world’s fourth most populous country spread over more than 17,000 islands. Covering the largest island country is no small feat, but the U.S. Grains Council has expanded tried-and-true promotion programs for U.S. dried distillers grains with solubles (DDGS) and corn gluten meal (CGM) to capture more of the growing feed demand throughout Indonesia.
“Our job is to go find new demand, so that is what we did,” said Caleb Wurth, USGC assistant director for Southeast Asia. “In this case, we discovered significant pockets of layer production that had not considered DDGS before.”
The Council has a long history operating in West Java—servicing and developing the region since the 1990s. After years of engagement, this region is dominated by regional integrators—housing 876 million broilers and 32 million layers—who consistently use DDGS and CGM in their feed rations. This concentrated programming effort helped lead to Indonesia’s importation of nearly 974,000 metric tons of U.S. DDGS in the 2018/2019 marketing year—up substantially from nearly 517,000 tons in 2016/2017.
To expand on this success, the Council began to focus efforts outside of West Java, setting sights on the 47 million layers nestled around the locals of Blitar, Kediri, Surabaya, Maland and Jember in East Sumatra as well as the outlying islands of Sumatra and Sulawesi. In these remote markets, the practice of on-farm mixing is still quite prevalent. Within these self-mixing systems, owners formulate their own ration, supplementing concentrates from a local feed mill—often utilizing a simple mixture of local corn and rice bran. While the nutrition delivery mechanisms can be quite crude, the farm sizes in these locations can still range from 10,000 to 1 million birds.
Mimicking programs executed in other parts of Southeast Asia, Budi Tangendjaja, a long-time USGC consultant, conducted multiple feed formulation trainings across Indonesia. One such training brought together a USGC-member commercial team and a group of layer farm owners representing a local farmers’ association (PPN) in Padang, Indonesia, for a two-day feed formulation training seminar. The group learned how to maximize use of DDGS and CGM using least-cost feed formulation software. The Council made efforts to integrate the younger generation into the programming as well, recognizing the need to exhibit the benefits of DDGS usage to the emerging leaders of the community.
The feed formulation seminars demonstrated DDGS could reduce overall feed costs, and CGM could be beneficial for the early laying period of production. Immediate results of this seminar series included participants reporting increasing DDGS inclusion levels from 15 percent to 20 percent and others beginning first-time DDGS feeding trials at 4 percent and 5 percent inclusion, respectively.
The Council is continually evaluating new areas of market demand within new and existing customers to further promote the use of U.S. coarse grains and co-products like DDGS and CGM. Doing so is especially important as larger trade discussions continue between markets like Indonesia and the United States.
“Discernible headwinds face global trade in the first part of 2020,” Wurth said. “It is important we continue to look for demand outside of the box.”
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Mar 12, 2020
The U.S. Energy Information Administration slightly increased its forecast for 2020 ethanol production in its latest Short-Term Energy Outlook, released March 11. The 2021 forecast, however, was unchanged.
The EIA currently predicts ethanol production will average 1.04 million barrels per day this year, up from its forecast of 1.03 million barrels per year made in the February STEO. The forecast for 2021 ethanol production was maintained at 1.03 million barrels per day.
On a quarterly basis, the EIA predicts ethanol production will average 1.03 million barrels per day during the first quarter of this year, increase to 1.04 million barrels per day in the second quarter, fall to 1.02 million barrels per day in the third quarter, and return to 1.03 million barrels per day in the fourth quarter. For 2021, ethanol production is expected to average 1.02 million barrels per day in the first quarter, increasing to 1.03 million barrels per day in the second and third quarters, and increasing again to 1.04 million barrels per day in the final quarter of the year.
Ethanol consumption is currently expected to average 950,000 barrels per day this year, flat with 2019. In 2021, ethanol consumption is expected to fall to an average of 940,000 barrels per day.
The EIA’s most recent weekly data shows ethanol production averaged 1.044 million barrels per day the week ending March 6, down from 1.079 million barrels per day the previous week. Weekly ethanol ending stocks fell to 24.334 million barrels the week ending March 6, down from a record high of 24.964 million barrels the previous week.
The agency’s most recent monthly data shows the U.S. imported 269,000 barrels of ethanol in December, all from Brazil. During the same month, the U.S. exported 3.49 million barrels of ethanol, primarily to Canada, Brazil, and India.
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Mar 10, 2020
The U.S. exported 151.23 million gallons of ethanol and 976,688 metric tons of distillers grains in January, according to data released by the USDA Foreign Agricultural Service on March 6. Exports of both products were up from the previous month and January 2019.
The 151.23 million gallons of ethanol exported in January was up from both the 127.91 million gallons exported in January 2019 and 146.53 million gallons exported in December 2019.
The U.S. exported ethanol to approximately three dozen countries in January. Brazil was the top destination with 58.19 million gallons, followed by Canada at 24.79 million gallons, and India at 13.31 million gallons.
The value of U.S. ethanol exports was $256.53 million in January, up from $190.04 million in January 2019, but down from $263.23 million in December 2019.
The 976,688 tons of distillers grains exported in January was up from both the 806,615 million tons exported during the same month of 2019 and the 767,682 million tons exported in December 2019.
The U.S. exported distillers grains to approximately 36 countries in January. Mexico was the top destination with 169,854 tons, followed by South Korea at 129,058 tons and Indonesia at 115,632 tons.
The value of U.S. distillers grains exports reached $199.48 million in January, up from $155.07 million in December 2019 and $172.38 million in January 2019.
Additional data is available on the USDA FAS website.
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