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Energy and Environment News - ClimateWire
May 5, 2020
An oil bailout remains unpopular with U.S. voters despite weeks of nonstop pain for the industry, according to a new poll.
Morning Consult's latest tracking poll found that 38% of the roughly 2,000 voters it contacted were in support of an oil and gas bailout.
Those results, collected in surveys last week, showed that public sentiment hadn't budged from late March and early April, when the same pollster also found 38% support for a bailout.
Opposition to an oil bailout also remained static at 43% of registered voters, and 19% had no opinion, according to the nationwide tracking polls. The polls had a margin of error of 2 percentage points.
Clean energy fared better. A majority of voters backed bailouts for renewable energy, with 56% of voters in support and 24% opposed.
Trump voters were more likely to support an oil bailout (50%), though a plurality also supported a renewable bailout (45%).
Oil allies responded to the poll by urging flexibility. Industry aid doesn't have to look like a bailout, they said.
"This is further evidence that tax cuts for energy extracted on federal lands might be more favorably viewed than direct spending/bailouts," Paul Blair, director of strategic initiatives at Americans for Tax Reform, wrote on Twitter.
"Cut the royalty rate!" he said.
The oil industry suffered historic blows in the time between the two polls. Amid a price war between Russia and Saudi Arabia, President Trump helped negotiate an agreement for oil-producing nations to cut output. But it wasn't enough to counteract a sharp decline made worse by the coronavirus pandemic.
Storage tanks are filled near capacity, and one benchmark showed negative prices for the first time ever.
The Federal Reserve last week expanded a loan program to include struggling oil and gas firms. Environmentalists blasted that move as a quiet bailout, but industry officials said it wasn't that simple.
Steve Everley, a managing director at FTI Consulting who works with the oil and gas sector, responded to the Morning Consult poll by pointing to one of its other findings: More Americans say low oil prices hurt the economy (52%) than say it's helped their personal finances (42%).
Everley added that he would be curious what voters consider to be a bailout.
Extending tax credits and offering Treasury loans with interest aren't the same as direct cash payments, he said.
"Many of these are not bailouts, or at least should not be considered bailouts. But do voters see the nuance?" he wrote on Twitter.
Read the original story here.
May 4, 2020
(Washington, D.C.) - U.S. Secretary of Agriculture Sonny Perdue announced the U.S. Department of Agriculture intends to make available up to $100 million in competitive grants for activities designed to expand the availability and sale of renewable fuels.
“America’s energy independence is critical to our economic security, and President Trump fully recognizes the importance of our ethanol and biofuels industries and the positive impacts they deliver to consumers and farmers with an affordable, abundant, and clean burning fuel,” Secretary Perdue said. “American ethanol and biofuel producers have been affected by decreased energy demands due to the coronavirus, and these grants to expand their availability will help increase their use during our economic resurgence.”
The Higher Blends Infrastructure Incentive Program (HBIIP) consist of up to $100 million in funding for competitive grants or sales incentives to eligible entities for activities designed to expand the sales and use of ethanol and biodiesel fuels. Funds will be made directly available to assist transportation fueling and biodiesel distribution facilities with converting to higher ethanol and biodiesel blends by sharing the costs related to and/or offering sales incentives for the installation of fuel pumps, related equipment, and infrastructure.
Additional Information:
USDA is making the grants available under the Higher Blends Infrastructure Incentive Program (HBIIP). The program is intended to increase significantly the sale and use of higher blends of ethanol and biodiesel by expanding the infrastructure for renewable fuels derived from U.S. agricultural products.
Grants for up to 50 percent of total eligible project costs, but not more than $5 million, are available to vehicle fueling facilities, including, but not limited to, local fueling stations/locations, convenience stores, hypermarket fueling stations, fleet facilities, fuel terminal operations, midstream partners and/or distribution facilities.
USDA plans to make available approximately $86 million for implementation activities related to higher blends of fuel ethanol, and approximately $14 million for implementation activities related to higher blends of biodiesel. Higher biofuel blends are fuels containing ethanol greater than 10 percent by volume and/or fuels containing biodiesel blends greater than five percent by volume.
For application information and other program details, see the public inspection notice in the Federal Register (PDF, 369 KB), or visit the Higher Blends Infrastructure Incentive Program web page.
Read the original press release here.
May 1, 2020
A coalition of ethanol and farm groups today sent a letter to the Environmental Protection Agency opposing the American Petroleum Institute’s recent petition requesting reconsideration of the 2020 Renewable Fuel Standard (RFS) final rule.
API claims reconsideration of the 2020 RFS rule is necessary in light of the coalition’s recent Tenth Circuit court victory that overturned small refinery exemptions illegally granted by EPA. The successful Tenth Circuit court challenge was brought against EPA by the Renewable Fuels Association, National Corn Growers Association, National Farmers Union, and American Coalition for Ethanol.
Specifically, API argues that the 2020 RFS rule should be revised to eliminate measures that prospectively “reallocate” RFS blending obligations expected to be lost to refinery waivers. API claims reallocation of expected waivers is no longer needed because the Tenth Circuit decision should significantly curtail the number of waivers granted. However, EPA has not yet confirmed that it will implement the tenets of the Tenth Circuit court decision nationwide, meaning reconsideration of the 2020 RFS rule would be woefully premature.
“There is no basis for revisiting or modifying EPA’s current approach until EPA acknowledges that the central tenets of the Tenth Circuit’s decision are appropriately applied throughout the country,” the groups wrote.
In fact, the 2020 RFS volumes should not be adjusted downward to remove reallocated volumes even after EPA applies the Tenth Circuit court decision nationally, according to the coalition’s letter.
“As noted by the Court, EPA’s recent abuse of its small refinery exemption authority has significantly harmed the U.S. ethanol industry. Indeed, nationally, more than four billion gallons of 2016-2018 renewable fuel volume requirements were lost due to EPA’s illegally issued small refinery waivers. Applying the Tenth Circuit decision nationally while leaving the 2020 RFS rule intact would begin to restore a small amount of the renewable fuel volume requirements lost to past small refinery exemptions; still, doing so would come nowhere near fully redressing the demand destruction wrought by the exemptions.”
The letter is available here.
Read the original story here.
Apr 28, 2020
Today, Congresswoman Angie Craig (MN-02) announced the introduction of the Clean Fuels Deployment Act of 2020. The bipartisan legislation she introduced with U.S. Reps. Abby Finkenauer (D-IA), Don Bacon (R-NE), and Roger Marshall (R-KS), would provide funding for installing and converting fuel pump infrastructure to deliver higher blends of ethanol and biodiesel.
The bill authorizes $500 million over five years to help retailers offer higher ethanol blends, expand the geographic area selling ethanol blends, support biodiesel, bioheat, and sustainable aviation fuel markets, and accelerate the deployment of fueling infrastructure. Given recent uncertainties in the renewable fuels industry, it is more important than ever to fund infrastructure improvements and remove market barriers to accessing clean and renewable fuels.
“The Clean Fuels Deployment Act is a critical step toward supporting biofuels at a particularly difficult time. As a member of the Congressional Biofuels Caucus, I’ve long supported the year-round sale of E15 and increasing options for consumers at the pump,” said Rep. Angie Craig. “This commonsense solution would provide additional certainty to Minnesota family farmers. I look forward to following through on much needed relief to our producers across the country.”
"The time is now to further diversify our fuel supply and move more biofuels into the market,"Finkenauer said. "Biofuels offer a proven path to reducing greenhouse gas emissions, decarbonizing the transportation sector, driving economic growth and creating jobs. I'm grateful to have bipartisan support from Representatives Bacon, Craig and Marshall. Cleaner fuels are good for our economy and our environment, and we’re going to keep fighting for them.”
In addition to supporting the distribution of higher ethanol and biodiesel blends at fueling stations, the program could also be used to enhance pipelines and terminals to blend and carry ethanol and biodiesel. Funding from the clean fuels grant program could be used to incentivize the deployment of ethanol and biodiesel fueling infrastructure and convert existing infrastructure to deliver ethanol blends greater than 10 percent and biodiesel blends greater than 20 percent.
Read the original story here.
Apr 27, 2020
Ethanol blends save lives through reduced vehicle emissions. That is the conclusion of a new peer reviewed technical paper published in the Journal of Air & Waste Management, validating previous research efforts by the Urban Air Initiative that find when ethanol is added to gasoline, it significantly reduces toxic emissions tied to air pollution.
The research team leading this effort included notable refinery and fuel emission experts who looked at hundreds of earlier studies on emissions and ethanol. A glaring error, according to the authors, is that these studies assume a standard fuel is created for testing emissions. However, the research found that test fuels rarely resemble real-world fuels, similar to what consumers purchase.
The paper found that when simply adding ethanol to fuel, it reduces the most carbon intensive and carcinogenic fuel additives called aromatics. Replacing these benzene-based additives with ethanol directly reduces particulate matter (PM) and NOx emissions, both of which are ozone precursors and represent significant health risks to the public. The discrepancy the authors found in the previous studies centered on the fact that test fuels add ethanol and aromatics together to raise octane, while oil refiners actually reduce aromatics to utilize ethanol as an octane enhancer. Comparing a baseline E0 fuel to E10 and E15 shows the ethanol blends are significantly better when real world fuel blending conditions are used.
“What this new paper makes clear is the aromatic reduction resulting from increased ethanol volumes provides significant health benefits from lower particulate emissions,” said Urban Air President Dave VanderGriend. “The Urban Air Initiative and its supporters in the ethanol industry call on the EPA to look at this research and consider the facts uncovered in this paper as it prepares to make regulatory decisions about ethanol blended fuels.”
And, in light of the current health crisis, the fact that regions suffering from air pollution are experiencing higher cases of the COVID-19 virus suggests reducing emissions needs to be a national priority for the EPA, according to VanderGriend.
Read the original story here.
Apr 26, 2020
The leadership at Highwater Ethanol, which is located near Lamberton in Redwood County, is always looking for new ways to add value to its product.
In a time when fuel consumption is down due to the reduction in travel, the demand for ethanol has also decreased.
For many of the facilities producing ethanol in the region that could mean, and has meant, reducing hours and even some temporary shutdowns.
“People are driving less and that is having an impact on the industry,” said Brian Kletscher, Highwater Ethanol general manager and CEO.
A new venture is helping Highwater Ethanol keep the doors open.
According to Kletscher a couple of the ethanol facility’s vendors began talking with Highwater’s leadership about an idea.
Would it be interested in providing denatured 190 proof that would be used in hand sanitizer?
The Highwater leadership did the research and determined that moving forward with this plan was in the best interest of the facility and the people it employs.
So, as of the end of March the company began the process of supplying the product to the industry.
Kletscher said development of the denatured 190 proof at the plant did not mean making any changes to the operation.
“The plant was already producing it,” explained Kletscher, adding it just meant taking it off of the production line before the ethanol process is complete.
The facility had to work through some FDA requirements in order to move ahead with the new product.
Highwater recognized the Renewable Fuels Association for bringing clarity with the FDA, adding those efforts have been appreciated.
A guidance document from the FDA has allowed the ethanol industry and plants like the one in Lamberton to help slow the spread of COVID-19. Now it is shipping that denatured 190 proof to its vendors that are then able to ship that product as hand sanitizer across the United States.
Kletscher said as of the beginning of April, the product coming from the Highwater Ethanol plant has been shipped by those vendors to eight different states.
In this way, Highwater Ethanol has been able to help in the global battle against COVID-19.
Is this part of the long-term future at Highwater?
Kletscher said that is an answer that continues to be up in the air, adding that will all depend on demand.
Kletscher said the Highwater facility was set up in a way that it could easily make the move, adding not all of the ethanol plants have been able to do that.
“We are fortunate to have great vendors who do a good job using our products,” Kletscher said. “The board is excited, the employees are excited and I am excited about this opportunity.”
Highwater continues to purchase corn, sell dried distillers grains, modified distillers grain, corn oil and denatured ethanol for the transportation fuel market.
Highwater encourages everyone to be safe during these unprecedented times.
Learn more at highwaterethanol.com.
Read the original story here.
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.
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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
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.