Doing the Ethanol Shuffle

Ethanol Report PodcastThere’s a hot new craze called the “Ethanol Shuffle” that’s sweeping seaports from Sao Paulo to Los Angeles. No, it’s not a new dance, this shuffle is all about the “confounded realignment of the global ethanol trade.”

rfaRenewable Fuels Association (RFA) Vice President of Research and Analysis Geoff Cooper wrote about the “Ethanol Shuffle” this week on the RFA E-xchange Blog. Basically, it’s about the shuffling of sugarcane ethanol from Brazil to California to meet that state’s Low Carbon Fuels Standard (LCFS) – at the same time, Brazil is importing lower priced corn ethanol from the United States to make up for not only the ethanol it is exporting to California, but the shortfall that country has experienced in ethanol production recently.

So, that’s how the “Ethanol Shuffle” works. California imports sugarcane ethanol from Brazil rather than corn ethanol from Nebraska or Kansas; and in turn, corn ethanol from the Midwest travels to Houston or Galveston via rail, then is shipped to Brazil via tanker to “backfill” the volumes they sent to the U.S. Picture the irony of a tanker full of U.S. corn ethanol bound for Brazil passing a tanker full of cane ethanol bound for Los Angeles or Miami along a Caribbean shipping route.

Cooper explains the sweet irony of it all in this edition of “The Ethanol Report.” Geoff Cooper on the Ethanol Shuffle

GROWMARK Perspective on Energy Policy

2011 has been a challenging year for getting anything done in Washington DC, including as it relates to both agriculture and energy policy.

“In agriculture, when it comes to energy, we want reliable, economically competitive sources,” says GROWMARK government affairs director Chuck Spencer. “As a country, what we are looking for is energy security and that’s going to come from a mix of both domestic production and allies like Canada.”

growmarkWhen it comes to domestically-produced ethanol, Spencer says the expiration of the Volumetric Ethanol Excise Tax Credit (VEETC) at the end of this year provides new opportunities for the industry. “The domestic ethanol industry has been preparing for this moment for some time,” he said. “The energy table is rather large and there’s plenty of chairs at the table, particularly biofuels of all types. We’re going to see our fuel sources continue to diversify and in that diversity is going to come strength.”

Since the GROWMARK system is a cooperative that represents farmers throughout the Midwest and Ontario, Spencer says they are looking forward to the challenge of agriculture being able to supply more of our energy needs. “We’re all looking forward to more corn and soybean acres being planted. Farmers are responding to market signals to meet the demand for food products, renewable products, fiber and proteins for the livestock industry,” he said.

Spencer notes that the Renewable Fuels Standard is the corner stone of domestic renewable fuel policy and it should continue. “Considering that biodiesel is an advanced biofuel and ethanol can certainly become one as well, we have continued promise as far as our ability to produce renewable fuels and what that means to local economies,” he added.

Spencer also discusses what lies ahead in 2012 with the need to come up with a new Farm Bill during an election year with a huge federal deficit.
Listen to my conversation with Chuck Spencer here: Chuck Spencer Interview

Life Cycle Analysis Favorable for Biodiesel

Comparing the life cycle analysis of soy products to petroleum products shows clear environmental advantages on the soybean side.

Early last year, the United Soybean Board released the findings of a life cycle analysis report that compared several different soy-based products with the same products made from petroleum sources, including soy biodiesel. The peer-reviewed study was done by Omni Tech International, a consulting firm specializing in renewable and biobased products. The study included a review of soy-based biofuels, plastics, lubricants and coatings.

Omni Tech consultant Jim Pollack says they found out that soybean yields increase 12% in the last ten years, energy to grow soybeans was down 20%, soybean crushing plants were using 45% less energy to make soybean oil. “When the oil was sent over to the biodiesel plants, they were using 35% less energy,” Pollack said. “So, collectively, all of these improvements have resulted in a very favorable life cycle profile for soy biodiesel.”

Pollack was telling that story at the recent National Association of Farm Broadcasting annual meeting. Listen to my interview with him here: Jim Pollack with Omni Tech International

Iowa Corn Caucus Grades Candidates on Energy

ICGAThe Iowa Corn Caucus released its report card for presidential candidates today, giving grades for different policy areas related to agriculture, including energy and biofuels, and an overall grade for each candidate.

The highest overall grade went to Newt Gingrich, who scored straight As on every single policy issue. Second in the class was Rick Santorum, who received straight As on energy policies, but faltered under farm programs in the areas of crop insurance and conservation. President Obama received a grade of B, as did Mitt Romney, but the rest of the four major Republican candidates got no more than a C minus. Rick Perry received that grade, while Michelle Bachmann was close behind with a D+ and both Herman Cain and Ron Paul got Ds. Cain in particular failed miserably in the energy policy category and farm programs – getting straight Fs in all those areas. The energy category included three specific areas – Ethanol and Energy Policy Generally; Renewable Fuels Standard; and Ethanol Infrastructure.

“Our purpose wasn’t to endorse any candidate, but instead to give farmers a tool that they could take with them to the caucuses in January,” said Iowa Corn Growers senior policy advisor Amanda Taylor. The survey for candidates was developed in conjunction with the National Corn Growers Association (NCGA) to include ten questions directly related to agricultural issues.

ICGA president Kevin Ross noted that only half of candidates responded to the survey, so the Corn Caucus used other methods to determine the grades. “We tracked interviews, speeches, media quotes and all things related to agriculture, including voting records of candidates who held office,” he said. The candidates who did return the survey were Obama, Cain, Gingrich and Santorum.

Find out more about the Corn Caucus project results from the ICGA website, and listen to a press conference this morning about it here: Iowa Corn Caucus Results

Challenges Continue for 15% Ethanol Blend

Another challenge to the waiver allowing 15% ethanol blends in regular gasoline was made last week by Congressman Jim Sensenbrenner (R-WI) who introduced legislation to “require that the EPA certify, not only that a new fuel will not lead to emissions increases, but also that the fuel will not reduce fuel efficiency or damage engines.”

The Renewable Fuels Association says Sensenbrenner is “missing the point” when it comes to allowing American consumers the choice of using E15 ethanol blends and that EPA has already thoroughly tested E15 for safety – enough to make approximately 4,700 round trips from Washington to Milwaukee.

In an interview at the National Association of Farm Broadcasting annual meeting, RFA Director of Market Development Robert White talked about the status of the E15 waiver and when we can expect the fuel to become commercially available. “We’re close,” White says. “The EPA is going through some final information that we’ve submitted from an implementation plan to the health effects testing. We actually expect a green light at any moment.”

However, once it is approved at the federal level, White says the attention turns to the states, which have different statutory regulations for fuel sales. If the states require their own labeling, White says it will be in addition to the label already approved by the EPA, that clearly states how consumers should use E15. “We’re trying to make sure that consumers have all the information they need to make the right choice and we think they’re smart enough to figure that out,” he said, noting that RFA is complementing the efforts of EPA with a consumer education campaign.

Listen to my interview with Robert White here: RFA's Robert White

POET CEO Update on Cellulosic Ethanol

Ethanol industry leader POET is making “tremendous strides” in the development of ethanol from biomass for commercial use, according to company CEO Jeff Broin.

Broin talked with farm broadcasters at last week’s National Association of Farm Broadcasting meeting last week in Kansas City to provide an update on Project LIBERTY, a cellulosic ethanol plant project in Emmetsburg, Iowa. “When we got into this research ten years ago, it was a long shot,” Broin said in an interview with Jody Heemstra of KWAT Radio in Watertown, SD. “Today, we’re actually less than $3 on production costs so we’re competitive with gasoline and we’re very excited about that.”

Broin says they have cut enzyme costs by about a third and are planning to use the lignin from a grain ethanol plant next door to power both plants. “We’ll have a 25 million gallon cellulosic plant next to a 50 million gallon grain plant and there will be virtually no fossil fuel used to power those facilities,” Broin says.

Listen to all of Heemstra’s interview with Broin here: Jeff Broin, POET CEO

Looking At Trends In Alternative Energy

During the National Agri-Marketing Association’s Trends in Agriculture Conference, held last week in Kansas City, we had a session that focused on “Trends In Energy/Alternative Fuels” which featured Nathan Schock, POET & Matt Roberts, PhD. Pictured is Matt who is an Associate Professor of Ag Economics at Ohio State University.

Matt does a lot of work in biofuels. One of his take aways from the session is that even though we’re going to see a lot of ethanol policy changes in the market soon with the end of the VEETC/Tariff, “There’s not going to actually be that large of an impact right now when that goes away.” He says long term there may be some impact. The RFS is a different animal though. He believes it needs to be re-opened on the cellulosic side but seems to be working on the corn ethanol side. Changes, however, could have a real impact on the corn side.

He says that when you look at the big picture of ethanol and the biofuels industry there aren’t simple answers. He encourages the industry to take a step back and “think about the fundamental reasons that are out there and what’s driving it and start with the questions.” He says everyone seems to start with an answer looking for a problem to solve with it instead of asking a question first and then seeking the answer to that question.

You can find Matt online at MatthewCRoberts.com.

You can listen to my interview with Matt here: Interview with Roberts

2011 NAMA Trends in Agriculture Photo Album

SIGMA Joins Coaltion for E85

The Society of Independent Gasoline Marketers of America (SIGMA) has officially joined the Coalition for E85 in the effort to have 85 percent ethanol designated as an alternative fuel under the tax code.

The recently-launched coalition is made up primarily of fuel retailers who are concerned about the future of E85 once the Volumetric Ethanol Excise Tax Credit (VEETC) expires without renewal at the end of the year. “E85 as an alternative fuel is defined everywhere in the U.S. code, except for the Internal Revenue code,” explains tax code specialist Jeff Trinca, who is working with the coalition. That was because of the VEETC, to avoid “double dipping” in tax credits. “Now VEETC’s going away and what we’re basically saying is we would like E85 to be included in the definition of alternative fuels with propane, natural gas and others so there’s a level playing field,” Trinca says, noting that the coalition is only looking for a five year bridge to get the infrastructure in to be competitive with gasoline.

Trinca says they are working on getting a bill introduced in Congress to address the issue before the end of the year.

Trinca and coalition representative Phil Lampert, both pictured here, were at the National Association of Farm Broadcasting annual meeting last week explaining the issue to the nation’s farm broadcasters. Listen to my interview with Trinca here: Jeff Trinca, Coalition for E85

Propane Supplies Good for Winter

Propane supplies are in good shape going into the winter, according to Randy Miller, GROWMARK director of propane operations.

Regarding total inventories, Randy says 60 million barrels is the total to shoot for to feel comfortable going into the winter. “And we just did get to 60 million,” he said recently. “We’ve had some pretty good inventory increases the last few weeks.”

He says that Midwest stocks are pretty good, but stocks overall are behind last year and the five year average. “Nothing to feel short about but we are behind some nine percent compared to a year ago,” he said. “Most of that is on the Gulf Coast where we’ve seen a lot of propane exports.”

Propane exports from the U.S. are up this year, although they have dropped off a bit in the last month or so. “But still we are seeing tremendous exports compared to what we’ve ever seen before in history,” Miller said.

GROWMARK is a leading provider of a full range of energy products and services, including a complete line of quality lubricants, fuel and fuel additives, and dependable heating and drying with GROWMARK propane.

Listen to an interview with Randy Miller about propane supplies: Randy Miller Interview

Ethanol Report from NAFB

Once again this year, the Renewable Fuels Association (RFA) took part in the National Association of Farm Broadcasting’s annual Trade Talk. This unique event allows over 100 agricultural companies and organizations to have access to the nation’s farm broadcast professionals all at the same time. It is what you can truly call a “win-win” situation as the exhibitors can get their message out to farmers and ranchers nationwide and the farm broadcasters can collect lots of content for the upcoming holiday season!

RFA president and CEO Bob Dinneen spoke with a number of broadcasters about important topics facing the ethanol industry, including the expiration of the VEETC at the end of this year and the ability of U.S. farmers to produce enough corn for food, feed and fuel. In our Domestic Fuel Ethanol Report from NAFB, we also talked with Dinneen about European ethanol producers charging the U.S. with unfair imports and Brazil’s increasing imports of ethanol from the U.S.

Listen to the Ethanol Report from NAFB with Bob Dinneen here: RFA CEO Bob Dinneen