Researchers Find More Pollution from Sugarcane Ethanol

University researchers from California, Iowa and Chile have found that sugarcane ethanol production creates up to seven times more air pollutants than previously estimated, according to news from the University of Iowa.

The research team used agricultural survey data from Brazil to calculate emissions of air pollutants and greenhouse gases from the entire production, distribution, and lifecycle of sugarcane ethanol from 2000 to 2008.

The estimated pollutants were 1.5 to 7.3 times higher than those from satellite-based methods, according to lead author Elliott Campbell of the University of California, Merced.

Greg Carmichael, Karl Kammermeyer Professor of Chemical and Biochemical Engineering in the UI College of Engineering and co-director of the Center for Global and Regional Environmental Research (CGRER), and UI assistant professor Scott Spak note that the findings reflect continued practices and trends that are a part of the production of sugarcane ethanol. These include the practice of burning sugarcane fields before harvest, as well as the fact that sugarcane production in Brazil continues to grow.

“We found that the vast majority of emissions come from burning the sugarcane fields prior to harvesting, a practice the Brazilian government has been moving to end,” says Spak. “However, the sugarcane industry has been expanding rapidly and moving into more remote areas, which makes it much more difficult to enforce new regulations over this growing source of air pollution and greenhouse gases.

“As people try to determine how to integrate biofuels into the global economy, Brazilian sugarcane ethanol has often been considered a more environmentally friendly fuel source than U.S. corn ethanol. In fact, the U.S. Environmental Protection Agency considers sugarcane ethanol an ‘advanced biofuel’ with fewer greenhouse gas emissions than conventional biofuels like corn ethanol. These new findings help us refine those estimates and move closer to making more informed comparisons between different fuel sources, and ultimately make better decisions about how to grow and use biofuels,” Spak says.

The study, titled “Increased estimates of air-pollution emissions from Brazilian sugarcane ethanol,” is featured in the Nature Highlights section and published in the Dec. 11 Advance Online Publication of the journal Nature Climate Change.

Ethanol and the Corn Supply-Demand Picture

According to USDA, global corn production for 2011/12 is projected at a new record high of 867.5 million tons, despite a smaller crop here in the U.S.

global cornThe latest World Agricultural Supply Demand report estimates the U.S. crop was down 3.5 million tons this year compared to last year, but foreign corn production is expected to be 43.4 million tons higher, with China alone up 7.3 million tons this month based on the recently released government estimates. USDA is now predicting the 2011/12 season-average farm price for corn will be about 30 cents lower than previous estimates at $5.90 to $6.90 per bushel.

On the demand side, corn for food, seed, and industrial use was lowered 5 million bushels and projected corn ending stocks were increased by 5 million bushels to 848 million. Corn for ethanol use remains unchanged at 5 billion bushels, which is slightly lower than last year, despite the fact that ethanol production this year is on pace to possibly be as much as a billion gallons more than 2010.

As we head into 2012, ethanol is like to be the wild card in the corn demand situation with the expiration of the Volumetric Ethanol Excise Tax Credit (VEETC) at the end of this year. “That could potentially change how much ethanol is blended into gasoline,” said USDA chief economist Joe Glauber. “There are mandates in terms of overall production that has to be blended into gasoline, the issue is how much gets produced above and beyond the mandates.” However, industry analysts expect ethanol prices are expected to drop 30-40 cents per gallon at the wholesale level after the blenders tax credit expires, which should serve as an incentive to blend as much if not more.

“Domestically, it will depend on the profitability of ethanol price versus gasoline and whether or not it pays to blend above the mandates,” said Glauber.

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

Ethanol Industry Wants Cellulosic Incentives Continued

Advanced biofuel producers are calling on Congress to take action now to ensure that tax incentives for cellulosic ethanol continue past 2012.

RFA AECIn a letter to Congressional leaders, the Advanced Ethanol Council (AEC) asked for a multi-year extension of the Cellulosic Biofuels Producer Tax Credit (PTC) and the Special Depreciation Allowance for Cellulosic Biofuel Plant Property, both of which are set to expire December 31, 2012.

AEC Executive Director Brooke Coleman noted in the letter that the incentives “are vital to the ongoing development of the domestic advanced ethanol industry. To ensure stability in the marketplace, and prevent unnecessary job losses, Congress should provide long‐term extensions of these provisions (5+ years).”

As new ethanol biorefineries are beginning construction, the AEC emphasized the importance of consistent federal policy to this kind of multi-billion dollar investment.

“The advanced and cellulosic biofuels industry is now in the process of building new plants, innovating existing production facilities with emerging technologies, and introducing new product streams that will allow the renewable fuels sector to become more profitable, diversified and efficient,” wrote Coleman. “Several billion dollars have been invested in advanced biofuels development with the expectation that Congress will stay the course with regard to its commitment to the industry. A tax increase on advanced biofuels at this time would curtail investment and undercut an industry just starting to close deals and break ground on first commercial plants.”

The AEC is asking Congress to extend these important tax incentives this year as part of a final tax extenders package as they are set to expire next year. “As Congress considers the extension of a number of tax provisions for the clean energy sector, we would also like to highlight the importance of timing. The mere prospect of the expiration of the PTC and Special Depreciation Allowance for cellulosic biofuels in 2012 will start to affect projects that take 18 months to build, and could drive our industry into a series of ‘fits and starts’ that has dampened investment in other domestic clean energy sectors for decades.”

Ethanol Groups Oppose Legislative Proposal

A number of ethanol supporting organizations recently sent a letter to the chairman and ranking members of the U.S. Senate and House Appropriations Committees urguing them to oppose a proposal by Reps. John Sullivan (R-Okla.) and Gary Peters (D-Mich.) that would delay commercialization of next generation ethanol.

Growth EnergyThe groups, which includ Growth Energy, the Renewable Fuels Association, the American Coalition for Ethanol and the National Corn Growers Association, oppose a proposal by Sullivan and Peters to include language in the FY12 omnibus appropriations package that would prohibit the U.S. Environmental Protection Agency (EPA) from using any appropriated funds to implement the E15 waiver.

The Sullivan-Peters proposed language — which did not receive a vote during this year’s appropriations process or a hearing in the Energy and Commerce Committee — is aimed at derailing and altering the long-standing process by which new fuel blends are brought into the marketplace. The EPA approved E15 after a more exhaustive study and data collection than any other of the 11 previously-approved fuel waiver petitions.

RFAThe letter from the organizations noted that “preventing the EPA from implementing the use of E15 for cars, pickups and SUVs made in model year 2001 and newer, further contributes to our nation’s reliance on foreign oil. Extensive testing has been done on E15 and it has been found to be a safe and effective fuel for use in the vehicles approved in the waiver. There has been no evidence to the contrary that would indicate problems in any vehicle regardless of vintage.”

Further, the EPA’s decision does not make E15 mandatory. Consumers are not required to use E15. Gas stations will not be required to sell E15. And the EPA will require a fuel label that clearly delineates that using E15 in model year 2000 vehicles, small engines and marine engines is illegal.

Lastly, the Sullivan-Peters language would inhibit new and innovative alternatives to fossil fuels. We are looking toward cutting-edge innovation to move to new ethanol feedstocks, like plant wastes, wood chips and switchgrass. The Sullivan-Peters language would solidify the status quo-a 90 percent mandate of our fuel supply from oil and would prevent American-made ethanol from being made available to consumers.

Pacific Ethanol Raises $8 Million in Stock Sale

Pacific EthanolPacific Ethanol reports that they have entered
into a “definitive purchase agreement with a group of institutional investors to raise $8.0 million in a private placement transaction.” In addition, the company has signed purchase agreements to acquire an additional 7% interest in the Pacific Ethanol production facilities, according to a company news release.

Of the net proceeds from the financing, $4.6 million will be used for the purchase of the additional 7% ownership interest in New PE Holdco LLC, the owner of the four Pacific Ethanol production facilities with a combined annual production capacity of 200 million gallons. Upon closing, the company’s total ownership interest will increase to 34%. On October 6, 2010, the company paid $23.3 million in cash for its initial 20% ownership interest, and on November 29, 2011, the company purchased an additional 7% ownership interest for $4.5 million.

The company lost those four plants in a bankruptcy case last year.

Ethanol Exports Remain Strong

The latest government data on exports for October shows continued strong demand overseas for U.S. ethanol.

Renewable Fuels AssociationAccording to the data, exports of denatured and undenatured ethanol which are not eligible for VEETC totaled 121.4 million gallons. That is just short of the record 127.4 million gallons of exports set in July 2011.

On the Renewable Fuels Association E-xchange Blog, RFA’s Vice President for Research and Analysis Geoff Cooper notes that Brazil continues to be the leading destination for U.S. exports, receiving a total of 50 million gallons in October. Canada and the EU continued to be other top export markets. Through the first 10 months of 2011, U.S. exports stood at 867.9 mg, more than double the 2010 export total. The U.S. is on pace to export more than 1 billion gallons in the calendar year.

Meanwhile, the U.S. imported 13.1 mg of ethanol for fuel use from Brazil in October, presumably for compliance with the Renewable Fuel Standard’s (RFS) advanced biofuel requirement and California’s Low Carbon Fuel Standard (LCFS). Imports of sugarcane ethanol from Brazil have picked up significantly in recent months at the same time U.S. exports of corn ethanol to Brazil have grown.

Cooper says that this “shuffling effect” will be the subject of an extensive analysis and blog post he is preparing for this week.

Read more from the E-xchange Blog here.

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

Iowa Already Sets E85 All-Time Sales Record

Iowa RFAThird quarter sales reports of E85 in Iowa indicate that 2011 sales have already exceeded total sales during 2010, according to the Iowa Renewable Fuels Association.

As of September, Iowa retailers sold 9.8 million gallons of E85 during the first nine months of 2011, exceeding the 9.3 million total gallons sold last year. The Iowa Department of Revenue says sales increased 20 percent during the third quarter of 2011 (July to September) compared to the same period last year.

Currently, Iowa has 158 retail outlets offering E85.

Retailers wishing to offer E85 may be eligible for a state grant to offset some of the equipment and installation costs. The Renewable Fuels Infrastructure Board is now accepting applications or retailers can contact the Iowa Department of Agriculture.

US and Brazil Spar Over Ethanol Trade Policy

Brazilian and U.S. ethanol interests are challenging each other over ethanol trade policy.

The U.S./Brazil Council and the U.S. Chamber of Commerce wrote a joint letter to Congress last week asking that the U.S. secondary tariff on imported ethanol be allowed to expire as scheduled at the end of the year, together with the Volumetric Ethanol Excise Tax Credit (VEETC).

UNICAMeanwhile, Congressman Charles Rangel (D-NY) introduced legislation last Friday that would extend the 54-cent per gallon ethanol import tariff until the end of 2014. “My legislation would preserve duty-free ethanol for the U.S. as well as ensuring that the gains achieved for the Caribbean remain intact,” stated Rangel.

The legislation, which is not backed by the U.S. ethanol industry, was immediately condemned by the Brazilian Sugarcane Industry Association (UNICA), saying that “certain parties who benefit from the current, anti-competitive arrangement and their allies in Congress are trying to change the rules by making the tariff a true trade barrier rather than a subsidy offset.”

“As the world’s top producers, the United States and Brazil need to lead by example in creating a free market for clean, renewable fuel,” said Leticia Phillips, UNICA’s Representative in North America. “That means putting an end to trade distorting tariffs on ethanol.”

RFAToday, the Renewable Fuels Association (RFA) in turn challenged Brazil’s commitment to free trade.

RFA president and CEO Bob Dinneen wrote his own letter to the U.S./Brazil Council and the U.S. Chamber of Commerce. “Please know that while we share your desire for the removal of trade distorting practices between the U.S. and Brazil, we are very concerned about the Council’s singular and biased focus on U.S. ethanol policy, and its failure to address more timely recent trade distorting practices engaged in by Brazil,” wrote Dinneen, pointing out specific actions taken by Brazil that limit U.S. access to that market.

“Recently, the Brazil government reduced the volume of ethanol that can be blended in fuel from 25% to 20%. As a result of this mandated reduction in blend volumes, U.S. exports of ethanol to Brazil are being dramatically reduced from levels that would have otherwise occurred had Brazil left the mandate at 25%,” said Dinneen.

“Second, while your letter to Congress is correct to state that Brazil’s 20% import tariff has been suspended, you fail to further explain that this suspension was only on a temporary basis. While Brazil’s Chamber of Foreign Trade (CAMEX) did indeed reduce its tariff in April of 2010, the temporary suspension is scheduled to expire one day after the U.S. tariff is set to expire,” Dinneen added, noting that the tariff reduction instituted in April 2010 is scheduled to end the day after the U.S. tariff is set to expire at the end of this month.

Read the RFA letter here.