Ethanol Contributed $2B to Minnesota’s Economy

A new study by ABF Economics found that the ethanol industry in Minnesota contributed $2.13 billion to the state’s gross domestic product in 2015. The report also found the industry generated $7.37 billion in gross sales for the same year. This in turn generated $1.6 billion worth of income for Minnesota households, supported 18,116 full-time jobs and contributed $93 million to state and local taxes. In addition, the ethanol industry created indirect jobs including jobs in retail trade, health care, natural gas distributors, banking and finance.The report was commissioned by the Minnesota Bio-Fuels Association.

Refinery_1“The ethanol industry continues to be a significant contributor to Minnesota’s economy and is vital to continued economic growth in the state,” said Tim Rudnicki, executive director of the Minnesota Bio-Fuels Association.

For the study, ABF Economics used the Impact Analysis for Planning (IMPLAN) economic model to construct a model of the Minnesota economy including the sectors that support the ethanol industry, the links between them and the level of economic activity.

John Urbanchuk, managing partner of ABF Economics said of the report, “Ethanol plants provide jobs and income not only for people who work at the plants, but also for businesses that sell ethanol plant supplies including Minnesota farmers who produce most of the corn used by Minnesota’s biofuel industry.”

The study found Minnesota’s 21 ethanol plants spent $2.05 billion in 2015 to produce 1.2 billion gallons of ethanol, 3.6 million tons of dried distiller’s grains (DDGs) and 198 million lbs of corn oil. In addition, the study reported the volume of ethanol produced last year, the study said, was 11 percent higher than 2014.

Also of note, the study found, “If all of the corn refiner’s oil produced by Minnesota ethanol plants was used as a biodiesel feedstock, it could produce more than 26 million gallons of biodiesel, or more than 40 percent of the biodiesel produced by Minnesota’s biodiesel plants.”

RFA: Corn Ethanol Net Energy Improves

A new analysis from the Renewable Fuels Association (RFA) finds that the net energy balance of corn-based ethanol at dry mill ethanol plants averages between 2.6 to 2.8, a improvement over previous estimates. Recent estimates from the U.S. Department of Agriculture (USDA), found net energy gains between 2.1 to 2.3. However, RFA says its analysis uses more current dry mill energy use data than the USDA study; thus, explaining why its net energy balances are more favorable.

rfalogo1The net energy balance is a ratio of how much energy is required to grow the corn and produce the ethanol, and then transport the fuel to end users. For example, a ratio of 2.8, means every BTU of energy invested in the process to make and deliver ethanol results in 2.8 BTUs of available energy to the end user. (BTU is the acronym for British Thermal Energy, a measurement for energy.)

In February 2016, USDA issued its updated net energy balance report on corn-based ethanol, finding “[t]here has been a large improvement in energy balance since 1995, and a small but positive improvement since 2008.” The previous USDA report, conducted in 2010, was based on 2008-era data and found that the balance was 1.9–2.3. RFA’s analysis found that USDA used the same 2008-era dry mill energy use estimates for both its 2010 and 2016 reports.

According to RFA’s own analysis, “[t]he energy balance of the top-performing quartile of biorefineries is in the range of 3.2–3.4, which approaches the USDA estimate of 4.0 for an ideally situated dry mill producing wet distillers grains.”

RFA President and CEO Bob Dinneen commented, “As this new analysis shows, the U.S. ethanol industry has made tremendous efficiency gains in recent years. EPA should take note and update its lifecycle greenhouse gas modeling of corn-based ethanol under the renewable fuel standard to reflect these improvements. Today’s ethanol plants are achieving the levels of efficiency that EPA assumed wouldn’t occur until 2022.”

The RFA analysis used dry mill energy use data from two other widely respected findings to support its results — Mueller & Kwik (2013) and Christianson & Associates (2016).

RFA: API Understates Benefits of RFS

Is the American Petroleum Institute (API) changing its RFS tune? In a recent interview with POLITICO Pro Energy’s Morning Energy, API President and CEO Jack Gerard said his organization was pivoting its strategy toward reforming the Renewable Fuel Standard (RFS) rather than continuing to call for an outright repeal. A change of tune for sure but whether it’s on key remains to be seen.

dontmesswithRFS_logoRenewable Fuels Association President and CEO Bob Dinneen responded to Gerard’s comments. “API claims they are winning and that the RFS no longer holds the political currency it once did. So why are they then changing course? The reason for the change in approach is that API’s narrative on the RFS is a fiction and Jack Gerard knows it. API can’t continue to support repeal of the RFS because Americans want fuel choice, they want to reduce our dependence on petroleum, they want to address global climate change, they want the evolution of our transportation fuel system to continue. They want the RFS. API knows repeal of the RFS will never happen so they need to change course. That’s not winning. That’s recognizing that you have lost.

“But their ‘reform’ will be equally bankrupt. They will attempt to eviscerate a program they despise because it has robbed them of their monopoly and name it reform. Eliminating the corn ethanol part of the RFS, for example, would render the RFS a toothless tiger. More than 90 percent of the RFS is currently met by corn ethanol, so they would get their monopoly back. That would just tighten oil supplies and raise consumer gasoline costs. More importantly, without corn ethanol, the foundation for next-generation biofuels would be eliminated and the tremendous progress we have made toward cleaner, lower carbon fuels would be lost. That’s not reform. That’s capitulation to an overly entitled oil industry that simply does not share America’s desire to see cost-competitive low-carbon fuels in the marketplace.

“It galls Jack Gerard and the API that support for ethanol and the RFS remains strong among consumers and the Congress despite all the money they have thrown at creating their false narrative. Their acknowledgement today that they need to change course is a white flag. They’ve given up. But beware their next move. It too will not be in the best interests of consumers or American energy and environmental policy.”

Poll Show Iowans Support RFS

According to a new poll from the Des Moines Register, 71 percent of Iowans favor the Renewable Fuel Standard (RFS), 21 percent oppose it and eight percent are unsure. The issue was a hot button for candidates leading up to the Iowa Caucus where Sen. Ted Cruz received the state’s nomination, despite voters being unsure as to what his stance on the RFS and ethanol really was and RFS supporter groups spending millions running pro-RFS and anti-Cruz ads throughout the state.

The poll also found that 66 percent of Republicans, 76 percent of Democrats and 71 percent of independents favor the RFS. Tea party supporters also support the legislation with 64 percent in favor.

The most recent poll showed a five SnjNqf3percent growth in support among Republicans to 66 percent, while support among Democrats stayed consistent.

“Iowans know ethanol and the RFS are allowing America’s farmers and innovators to produce clean, secure, renewable fuel right here at home that reduces toxic emissions and is better for the air we all breathe. The immense benefits and potential of biofuels, like ethanol, plays a critical role in America’s energy policy and in developing a 21st century fuel for 21st century vehicles,” said Tom Buis, co-chair of Growth Energy in response to the poll.

He added, “Contrary to the oil industry spin, this poll reinforces the fact that the issue gained ground with Iowans during the 2016 caucuses and now they support it in even greater numbers than before. The relevancy of the issue is why an overwhelming 83 percent of Iowans caucused for pro-RFS candidates in 2016, higher percentage than in 2012.”

The poll was conducted by Selzer & Co., which surveyed 804 Iowa adults from Feb. 21-24. The poll has a margin of error of plus or minus 3.5 percentage points.

Federal Activities Report on Bioeconomy Released

USDA has released a new report, “Federal Activities Report on the Bioeconomy.” According to Dr. Catherine Woteki, the report was developed to create awareness of federal agency activities that are helping to develop and support the bioeconomy. The “bioeconomy” is an emerging part of the U.S. economy, says Woteki, that utilizes renewable biological resources to produce fuels, power and biobased products.

Screen Shot 2016-02-29 at 11.16.10 AMAccording to the Department of Energy (DOE), the U.S. has the potential to sustainably produce one billion tons of biomass. This could displace 25 percent of U.S. transportation fuels, 50 billion pounds of bio-based products, and generate 85 billion kWh of electricity. To reach this would mean tripling the size of current U.S. biomass usage. USDA, DOE, and other federal agencies have activities in place that provide a foundation for the existing bioeconomy.

The Federal Activities Report on the Bioeconomy introduces the Billion Ton Bioeconomy Vision—the government’s new, collaborative vision of what America could achieve by expanding efforts to develop the bioeconomy. Moving forward, the Biomass R&D Board will be hosting a series of workshops and webinars to gather input for the vision from stakeholders and the public, which will be released later this year.

Research Looks Into Gas Prices

Your eyes do not deceive. I paid $1.40 per gallon for ethanol-blended fuel on Thursday, February 18, 2106 in Fairfield Glade, TN. Photo credit: Joanna Schroeder

Your eyes do not deceive. I paid $1.40 per gallon for ethanol-blended fuel on Thursday, February 18, 2106 in Fairfield Glade, TN. Photo credit: Joanna Schroeder

As I pulled into a gas station in Fairfield Glade, Tennessee last week I couldn’t believe the price per gallon of fuel with ethanol. After nearly $5.00 per gallon of gas a few years ago in states such as California, I never thought I’d see prices drop below $2.00. But they have and continue to stay. While this is great news for drivers, Big Oil is not too happy about the billions of dollars they are losing with cheap oil. Crude Oil prices have fallen 23 percent in 2016, and 70 percent in the last 20 months – prices the world hasn’t seen in more than a decade.

According to AAA, the national average for gas this week is $1.70 per gallon – 55 cents less than this time last year. Interestingly, anti-biofuel advocates are using cheap oil as a call to end the Renewable Fuel Standard (#RFS) and stop blending corn-based ethanol into our nation’s fuel supply.

Professor Bruce Babcock of Iowa State University says oil companies are making “thoroughly outrageous claims” about what it would cost them, and you, to keep up with the plan to reduce greenhouse emissions. In his paper “Compliance Path and Impact of Ethanol Mandates on Retail Fuel Market in the Short Run,” co-authored by Sébastien Pouliot of Iowa State, Babcock found the impact on consumer prices is “close to zero.” This paper was recently selected to be published in the American Journal of Agricultural Economics.

“One of the reasons for writing this paper was to debunk the myths for justifications of getting rid of the RFS,” Babcock said. “This takes one of the justifications away.”

API Continues to Lambaste #RFS

The American Petroleum Institute (API) continues to lambaste the Renewable Fuel Standard (#RFS) as the energy policy draws criticism from all sides. Cited as the most effective energy policy ever enacted in the U.S. by supporters, API remains steadfast in its efforts to get the legislation repealed.

gas station in fairfield glade TN

Gas station in Fairfield Glade, TN promoting ethanol-free fuel. Photo credit: Joanna Schroeder

Shortly before a Senate committee oversight hearing on Wednesday, API’s Downstream Group Director Frank Macchiarola said during a press call, “Ahead of the hearing, we are reminding policy makers and the public that the oil and natural gas industry is stepping up our call for Congress to protect consumers from this harmful mandate. We continue to seek the repeal of or significant reforms to the RFS. Since the inception of the ethanol mandate a decade ago, the U.S. has undergone an energy transformation from a nation of energy dependence and scarcity to one of energy security and abundance. It is well past time to reform outdated energy policies to reflect the energy realities of today and tomorrow.”

Macchiarola added that API is hopeful support in Congress for repealing or modifying the RFS is growing. (Although if the current presidential race is any indication, this is in fact not true.)

Growth Energy responded to the remarks stating once again that the oil industry is spouting its “same old, disproven talking points about ethanol and the RFS”. The organization points to the fact that ethanol is the most tested fuel in American history; it’s a less expensive choice for consumers at the pump; and that NASCAR drivers have raced more than eight million miles on ethanol.

“Though this kind of rhetoric should be shocking, it no longer is,” said Tom Buis, co-chair of Growth Energy. “The oil industry has made a habit of repeatedly trotting out bogus studies for the single purpose of blocking competition and consumer choice to protect their profits. The fact is that rigorous testing and unbiased studies from the government and other industries have repeatedly demonstrated that ethanol and other biofuels are a less expensive, cleaner and better performing alternative to oil.” Continue reading

Senate Holds #RFS Oversight Hearing

The U.S. Senate Committee on Environment and Public Works held an oversight hearing on the Renewable Fuel Standard (#RFS). The legislation has been under fire for several years and there are currently several lawsuits surrounding the program: the biofuels industry is suing because the required volumes (RVOs) for 2014, 2015 and 2016 are below what the legislation requires, and Big Oil is suing to reduce RVOs claiming there is not enough advanced gallons in the marketplace. In response to the hearing several ethanol associations stressed the importance of the benefits of the RFS to America.

ace“While we appreciate that the Administration improved the final Renewable Fuel Standard blending targets for 2016 compared to the purposed rule, regrettably, the methodology used to waive volumes for 2016 protects the old way of doing business by obstructing consumer access to cleaner fuels, stifling competition in the marketplace, and undermining innovation,” said Brian Jennings, the Executive Vice President of the American Coalition for Ethanol (ACE). “ACE members have made significant biofuel production advancements because of the RFS and we know that further innovation is within reach if federal policy continues to reward a competitive marketplace. ACE is strongly committed to ensuring consumers have access to high octane, low carbon, affordable blends of ethanol and we will explore all options at our disposal to achieve that goal with this Administration and the next.”

growth-energy-logo1Tom Buis, co-chair of Growth Energy stated, “Homegrown ethanol and the RFS are major wins for the American people. Biofuels, such as ethanol, are a 21st century fuel for 21st century vehicles. It is our only alternative to oil, and the RFS is the most effective policy in reducing cancer-causing chemicals and the toxic emissions that come from oil’s monopoly on our motor fuel supply. The RFS supports consumer choice, creates hundreds of thousands of jobs across America, strengthens our energy security and slashes climate change causing emissions.

“Policies like the RFS improve America’s climate, national security, rural economy and consumer choice. Repealing or changing the RFS would turn back the clock and undermine the progress we’ve made toward increasing America’s energy independence and cleaning our air and environment.”

Panelists Discuss E15 Revolution, Global Markets

Panelists discussed the “E15 Revolution” during the Growth Energy Leadership Conference held in Orlando this week. The retailer discussion focused on their efforts to help grow the consumer availability of E15 across the country.

Todd GarnerPanelists included Jim Pirolli, VP Fuels for Kum-N-Go; Mike Lorenz, Executive VP of Petroleum Supply; and Todd Garner, CEO of Protec Fuels.

When discussing the changing marketplace, Lorenz commented that initial sales have exceeded expectations, even before kicking off a marketing campaign around E15. “The consumers are finding it on their own, and sales are increasing.” Pirolli seconded this statement by adding, “When it comes to consumer choice, they’re going to go with a higher performance, better value product.”

To learn more about how retailers are marketing E15, listen to Chuck Zimmerman’s interview with Protec’s Todd Garner, who he saw on a similar panel at the National Ethanol Conference the week before: Interview with Todd Garner, Protec

Another interesting panel discussion took place around “Ethanol on the World Stage”. The discussion focused on the important role that ethanol plays in the global marketplace and the need to take advantage of every opportunity to expand ethanol utilization worldwide. Panelists discussed the importance of trade missions to identify new markets and expand existing opportunities. Also discussed were increased opportunities to export dried distillers grains (DDGs).

The panel was moderated by Ray Defenbaugh, CEO & Chairman of Big River Resources, LLC. Panelists included Paul Trupo, Director of the USDA FAS Global Policy Analysis Division; Joel Williams, Manager of Ethanol Trading at ADM; Mark Marquis, CEO of Marquis Energy, LLC; Amit Sachdev, South Asia Representative (India Bangladesh and Sri Lanka) at the U.S. Grains Council; and Junyang Jiang, Deputy Director of the U.S. Grains Council China World Office.

During the discussion, Ray Defenbaugh stressed the importance of the partnership with the U.S Grains Council, as it is helping create new opportunities across the globe for exports. During the panel, it was announced by Mark Marquis, a board member of Growth Energy, that Growth Energy has set a goal to export at least 2 billion gallons of fuel ethanol by 2022, calling the program, “At Least 2 by 22.”

$3.50 May Be New ‘Corn Norm’

Central_Wisconsin_Ag_Services_LogoThe impact of corn prices varies between producers in different divisions of agriculture, with some producers benefiting from higher prices, and some benefiting from lower prices. Many factors seem to demonstrate that the new long-term “normal” for corn prices may be $3.50 per bushel, and Cody Heller, CEO of Central Wisconsin Ag Services (CWAS), has offered his insight into the cause of the record prices seen in 2012 and why it will be difficult for the markets to sustain prices that high over the next five to ten years.

It was increased demand for corn both for ethanol and exports, combined with a severe drought, that drove prices up in 2012. According to Heller’s report, past high prices and several good yields have led to global stocks of corn, soybeans, and wheat reaching record highs. The changing market for ethanol, however, may seriously impact the resulting demand for those record high supplies. According to USDA, we will not see an increased demand for US corn for ethanol higher than 0-1% from 2016 to 2025. On the global side, China is in a well-documented recession, and the country is forecast to import its lowest level of corn since 2009.

Heller says in order for corn prices to move higher, something would have to happen on the supply side. “This will come from a drought, governmental controls, or a stark increase in global growth and demand to reset global supply,” he says. “The catch-22 here is due to better genetics and better technology, corn yields (with the exception of 2012) have been growing at a pace of about 2-3 bu. per acre annually.”

Read the full report.