Oil Prices Drop, Gas Prices Rise

It’s Friday and that means its time to fill the gas tank. Just in time for weekend fun, it always seems like gas prices go up. Here in California, prices are hovering near the $4.40 per gallon mark. But this week, oil prices dropped 15 percent from a two-year high of $114.83 on Monday and today prices closed at $97.18. Economists are predicting gas prices at the pump will fall and we’ll see a summer national average of $3.50, although last month the EIA predicted they would be closer to $3.79. But don’t hold your breath – prices won’t drop this weekend.

I’ve held this interview with Growth Energy CEO Tom Buis because I was waiting for prices to rise even higher (which they have). When we had this discussion, we were attending the event where BioProcess Algae commissioned its Grower Harvester bioreactors, the second phase in their commercialization strategy. The site is co-located with a first generation corn ethanol plant in Shenandoah, Iowa owned and operated by Green Plains Renewable Energy. This was the perfect backdrop to have the discussion about the role of biofuels in helping to lower prices at the pump.

Buis explained that for the past 40 years, our country has been addicted to foreign oil and the costs to our country have been astronomical. Every recession since World World II has been proceeded by high gas prices. As oil prices rise, it takes time for the increased price to be reflected at the pump. Yet we have a domestic solution available now – ethanol. “I don’t know how many times we have to have these wake-up calls, let’s move forward. We know we can do it. We’re sitting here at a plant today that’s living proof that we can create our own energy here in this country.”

Listen to my interview with Tom Buis here: Ethanol, Right Here, Right Now

Today, Buis said ethanol today is saving consumers at the low end 17 cents per gallon up to 50 cents per gallon on the high end. “If we shut off ethanol today, it would have a far greater impact than the turmoil in the Middle East or North Africa because we’re a bigger source,” said Buis. “Most people don’t understand that if the American ethanol industry were a country, we would be the second largest provider to the United States of transportation fuel. Second only to Canada. That would have a huge impact.”

One last fact. We spend $1 billion dollars a day to import foreign oil. This is more than $1,000 per year for every man, woman and child in this country. That means you.

Mull this over the next time you fill up.

BIO World Congress Preview

The World Congress on Industrial Biotechnology and Bioprocessing, hosted by BIO, is set to begin on Sunday, May 8, 2011 in Toronto. A record crowd is expected and the exhibitor hall is sold out. I’ll be on site to bring you breaking news and information about the latest biotechnology trends as they relate to biofuels and biochemicals. To get a preview of the conference, I spoke with Brent Erickson, executive vice president with BIO.

Erickson said that this conference is really dynamic on multiple levels. There are a series of plenary sessions as well as breakout sessions and workshops covering the gamut from advanced biofuels technology to algae and feedstock crops, as well as aviation fuels, renewable chemical platforms, and bi-based materials. Several events of special interest include the announcement of the George Washington Carver award and Greenfield Ethanol will be making an announcement about its cellulosic technology.

Listen to or download my interview with BIO’s Brent Erickson: BIO World Congress Preview

Two weeks ago, BIO released a white paper on policy and investments needed for the biotech industry. Erickson said these issues would be key during the World Congress. Government policy in the U.S. as well as Canada and globally will be entwined through many sessions. In addition, there will be a focus on the flow of venture capital and investment money into this space as Erickson said for many companies this is an important issue. He also said it is very heartening in this investment climate to see IPOs take place. The next IPO to take place is Solazyme.

I asked Erickson what companies or technologies he think will breakthrough over the next 6-18 months and he said what we’ll see are platforms breakthrough. He believes the biobutanol platform will take off as well as the succinic acid platform.

Be sure to follow conference conference right here beginning on Monday.

Biomass Grants Awarded By USDA and DOE

U.S. Agriculture Secretary Tom Vilsack and U.S. Energy Secretary Steven Chu today announced a total of $47 million to fund eight research and development projects that will support the production of biofuels, bioenergy and high-value biobased products from a variety of biomass sources.

“The projects that we are announcing today will spur innovation in bioenergy by developing renewable resources that produce energy more efficiently and do so in a sustainable way,” said Vilsack. “Advances made through this research will help boost rural economies by developing and testing new processing facilities and profitable, energy-rich crops that U.S. farmers and foresters will grow.”

The biomass research and development grants have been awarded for projects in Florida, Hawaii, Kansas, Kentucky, Massachusetts, Montana, New Jersey, and South Carolina with feedstocks ranging from algae to sweet sorghum, paper mill waste products and energy crops like switchgrass.

In addition, USDA announced today the establishment of the first Biomass Crop Assistance Program (BCAP) Project Area designating areas in Missouri and Kansas for the production of dedicated feedstocks for bioenergy.

Comprising 39 contiguous counties in Missouri and Kansas, the first BCAP Project Area proposes the enrollment of up to 50,000 acres for establishing a dedicated energy crop of native grasses and herbaceous plants (forbs) for energy purposes. Producers in the area will plant mixes of perennial native plants, such as switchgrass, for the manufacture of biomass pellet fuels and other biomass products to be used for power and heat generation. The proposed crops also will provide long term resource conserving vegetative cover. The project is a joint effort between the agriculture producers of Show Me Energy Cooperative of Centerview, Mo., and USDA to spur the expansion of domestically produced biomass feedstocks in rural America for renewable energy.

Vilsack and Chu held a press conference this afternoon announcing the biomass grants and addressing questions about the real potential for cellulosic ethanol, Congressional proposals regarding the ethanol blender’s tax, most promising fuels for the military, and more.

Listen to or download the press conference here: USDA DOE Biomass Grants

Ethanol Report on Domestic Energy Bill

Ethanol Report PodcastA bill was introduced today in the Senate that would modify the current ethanol blender’s tax credit set to expire at the end of this year.

Renewable Fuels Association
president and CEO Bob Dinneen says the bipartisan Domestic Energy Promotion Act of 2011 introduced by Sen. Chuck Grassley (R-IA) already has a number of co-sponsors. “Senators Conrad, Johanns, Klobuchar, Franken, Tim Johnson, Senator Harkin and Ben Nelson of Nebraska, so it is a bipartisan bill,” said Dinneen.

The bill modifies the current Volumetric Ethanol Excise Tax Credit (VEETC) by tying the tax incentive to the price of oil. “This proposal would continue to provide a demand driver for ethanol when oil prices are low, while not requiring the taxpayer to subsidize gasoline marketers when the marketplace is already providing an incentive to blend,” Dinneen said.

The bill includes two other provisions that would help increase ethanol infrastructure and investment in next generation technology. “The reform of the existing tax incentive to be a variable incentive, infrastructure tax incentives that will encourage marketers to invest in blender pumps, and cellulosic tax incentives to allow the industry to continue to evolve sets up a policy that we think is fiscally responsible and makes great sense for this nation’s energy and economic future.”

Listen to or download an interview with Dinneen about the bill here: Ethanol Report on Domestic Energy Promotion Act

Ethanol Leader Challenges EIA Reporting

The Energy Information Administration predicts only very modest production of cellulosic ethanol by the year 2022, but the industry is more optimistic.

rfa bob dinneenRenewable Fuels Association president Bob Dinneen challenged some of the reporting and assumptions the EIA made in the latest energy outlook, which administrator Richard Newell presented at the 4th International Biomass Conference in St. Louis this week. EIA is predicting that in 2022, cellulosic ethanol will contribute only 3.5 billion gallons to the nation’s liquid fuel supply. “We see far greater potential for cellulosic ethanol much sooner than does EIA,” Dinneen said during an industry roundtable when asked to comment on the agency’s forecast.

Dinneen also notes that the way EIA reports data marginalizes the important role that grain ethanol is already playing in the marketplace. “At the end of all the number crunching that EIA does, you’re left with a pretty pessimistic view of what grain ethanol can do for our nation’s fuel supply and energy security,” Dinneen said, pointing out that EIA reports ethanol as being just four percent of the U.S. fuel market, instead of being nearly ten percent of the gasoline market.

EIA predicts ethanol blending in gasoline will increase from 13.1 billion gallons in 2010 (about 9 percent of the gasoline pool) to 17.8 billion gallons in 2020 (about 12 percent of the gasoline pool).

Listen to an interview with Bob at the Biomass Conference here: Bob Dinneen Interview

EIA Administrator Keynotes Biomass Conference

The head of the U.S. Energy Information Administration is anticipating a significant expansion of biomass in the nation’s energy system within the next 25 years.

energy richard newellDr. Richard Newell told attendees at the 4th annual International Biomass Conference in St. Louis on Tuesday that includes liquid biofuels and electric power working in combination. “You have advanced biofuels made from cellulose and other feedstocks and in the process of producing these advanced biofuels, you also produce electricity,” he said.

Newell was impressed with the attendance at the conference and the great variety of potential energy feedstocks represented. “While corn ethanol has already seen significant expansion, we’re seeing expansion in biodiesel, there’s a lot of other potential pathways that we could be seeing in the future and I think over the next 5-10 years we’ll know a lot more than we do now about exactly where biomass is going to go in the U.S. energy future.”

Listen to a brief interview with Newell here: Richard Newell at Biomass Conference

Heliae – Measuring Algae by the Barrel

Sun and algae go together like peanut butter and jelly. Just ask Karl Seitz, Co-Founder of Heliae. I sat down with Seitz during the Advanced Biofuels Leadership Conference in DC to learn a little more about his company and their technology. The first unique attribute of the company is their name. Heli is Greek for the sun and the ae was added for algae so their name is the combination of the sun and algae.

Heliae was formed about four years ago when the team met two professors at Arizona State University (ASU) who told them about a new process by which they could take algae and turn it into jet fuel. The more they heard and understood about the technology, the more hooked they became.

“We looked in to it more and what was of particular interest to us was that their particular strains of algae grew very rapidly, doubled its weight every day, it was high in oil content, greater than 30 percent, and it had the right oil components,” said Seitz. That means it has a component of carbon that goes from C8 to C16 and that happens to be roughly the same carbon string that kerosene has. Kerosene is the main component of aviation fuel.”

Another pro of algae, said Seitz, is that not only can you produce fuel, but also food.

Listen to my full interview with Karl Seitz: Heliae - Measuring Algae by the Barrel

I asked Seitz about their technology and how they were going to go from pilot to commercial scale. “We’re going to start off with our proprietary strains of algae and improve upon them. We do not use a GMO strain. We use a strain that has been chemically altered and provides us with higher oil content and a faster growth rate,” said Seitz. “We also combine that with our closed photobioreactor and then we use our proprietary and patented extraction formulas and techniques to get the fuel out as well as the protein and carbohydrates.”

Seitz said the other issue they are focusing on is developing algae strains that are suited for different parts of the country or different regions around the world.

There are still questions about whether or not algal fuels and products can be competitive with petroleum based fuels and products. Seitz said their initial goal was to produce one barrel per day per acre and at that rate they think they can be competitive. And while many other companies are measuring success by the liter or the gallon, Heliae is measuring success by the barrel. The reason is that the world needs billions of barrels of renewable fuels to replace just aviation fuels. So in the future, Heliae hopes to play a major role in helping the world achieve that goal.

Click here to view the Advanced Biofuels Leadership Conference flickr photo album.

The Changing Face of Biodiesel

There are few people who know the biodiesel industry like Brad Albin, vice president of manufacturing for REG. Albin has been in the industry for more than 20 years – before many of us even knew what biodiesel was. Albin was on hand for the briefing and tour of REG’s Newton, Iowa biodiesel plant by USDA Ag Secretary Tom Vilsack and EPA Administrator Lisa Jackson. Vilsack is the former governor of Iowa and in this role, played an important part in growing Iowa’s renewable fuel industry. However, Jackson is much newer to the industry and she was very animated and engaged throughout the events.

Since Albin has such a colorful history with biodiesel, I first asked him how the industry has evolved over the past 20 plus years.

“Over the last ten years I have seen the industry go from a few different feedstocks such as soybean oil to using 30 to 40 different feedstocks all the way from the used cooking oil that comes from McDonalds or Burger King all the way to inedible corn oil that is now being produced on the back-end of an ethanol plant,” said Albin. “So the amount of feedstocks we use are reducing the price, the quality is outstanding and the industry is going forward at a great pace.”

Listen to my full interview with Brad Albin: The Changing Face of Biodiesel

Albin said that the future of the biodiesel industry is taking lower cost feedstocks that are inedible and changing those into biodiesel versus using higher cost refined oils. REG believes they have conducted the largest feedstock study ever. The study looked at emerging feedstocks such as camelina oil, to future feedstocks such as jatropha and algae. He is excited for the potential of algae, which REG was able to convert into biodiesel in their feedstock study. He explained where you get a certain amount of oil per acre from soybean or canola, there is the potential to get 10,000 times that much oil per acre with algae.

Albin said that you could see EPA Administrator Lisa Jackson’s eyes opening up quite a bit she saw the possibilities for feedstocks to be converted to biodiesel. This is key because confidence in the biodiesel industry is essential as the EPA continues to raise the fuel goals each year to meet the Renewable Fuels Standard (RFS2).

I asked Albin what the next step is for REG and he said it is to continue the path. “To push the envelop. Use new feedstocks. We’re building plants and upgrading plants all across the United States. It’s just continuing that effort. We need the support from everyone because its all about energy security. We’ve got these great renewable products that are a huge competitive benefit for the United States of America and I think if everyone gets on the same bandwagon it’s just a great thing.”

Click here to see photos from the USDA/EPA REG biodiesel plant briefing and tour.

REG Insights on Biodiesel State of the Industry

All eyes are on the biodiesel industry including those of the USDA and EPA. Last week, USDA Ag Secretary Tom Vilsack along with EPA Administrator Lisa Jackson, stopped by REG’s Newton, Iowa biodiesel plant for a little learning and a hands-on biodiesel tour. During the event, the big question: will the biodiesel industry be able to meet RFS2 goals this year? The resounding answer is yes.

To learn more about the state of the biodiesel industry, I spoke with REG’s Gary Haer, the company’s VP of sales and marketing. “Right now all the biodiesel producers in the U.S. are getting back on their feet,” said Haer. “Two thousand and ten was a very disruptive year for us because we had the lapse in the blenders tax credit. There was some question about the RFS2 being enforced and implemented and there was a legal challenge from the petroleum industry but that’s been resolved.”

“And so for 2011, we have the blender’s tax credit back in place. We have the renewable fuels standard in force and we’re starting to see the petroleum industry respond to that,” continued Haer. “We’re seeing an increase in demand and that’s very good for our industry. It took a little while for us to see the demand in the Renewable Fuels Standard for biodiesel, but now we’re starting to see that demand and the industry is responding by ramping up and production is going well.”

Listen to my full interview with Gary Haer: REG Insights on Biodiesel State of the Industry

Exactly how much biodiesel does the industry need to produce and the obligated parties (Renewable Volume Obligation or RVO) need to blend for 2011? According to the EPA, 800 million gallons. Haer noted that the industry is not currently adding pace at a monthly production level where the industry can achieve the RFs goal, but he assured the USDA and EPA that the industry will respond. In fact, back in 2008 the industry nearly produced 800 million gallons so the capabilities are there.

Since fuel prices are on everyone’s minds, I asked Haer about the economic benefits of biodiesel. He answered, “Biodiesel does provide some economic benefits to blenders. So because of the energy increase in fuel prices, gasoline and diesel prices, we’re seeing some economic advantages to biodiesel blends. That enables the blending of biodiesel to take place widespread across the country. We’re also seeing people and fleets that are searching for alternatives to recognize the value of biodiesel and what the opportunities are there as well. It’s really been nice to see our industry respond in a way we can produce more gallons, as well at times, provide an economic benefit through cheaper fuel to customers across the country.”

Click here to see photos from the USDA/EPA REG biodiesel plant briefing and tour.

Developing Partnerships for Biodiesel Feedstocks

The Advanced Biofuels Leadership Conference held in Washington, D.C. last week was a meeting of the minds. During one of the sessions on hot technologies, Jeffrey Stroburg, Chairman and CEO of REG, gave a presentation on advanced partnership strategies for development and commercialization. REG has been the driver in helping to commercialize corn oil extracted from the back end of a corn ethanol plant. I was able to sit down with him for a few minutes after his presentation to get more information about the process to commercialize emerging feedstocks.

Stroburg said that the biodiesel industry in the United States started off with the idea to use soybean oil. At the time, the industry felt like soybean prices were stable enough and that it would create a good feedstock.

“Little did we know that we’d go into such volatility not just in soybean oil, but in all commodities,” said Stroburg. “Which led us to believe that we needed to have a wider suite of products that we could go to so that if one was not economic, we would have another we could go to. And the cheaper the feedstock, it seems like, the harder it is to convert. We then had to increase our capabilities and improve our technology so that we could convert some pretty junky stuff. That has given us the opportunity to go into a number of different markets to try to source feedstocks.”

Listen to my full interview with Jeffrey Stroburg: Developing Partnerships for Biodiesel Feedstocks

One of the emerging feedstocks is inedible corn oil but Stroburg said it is difficult to convert. Continue reading