Kansas Congressman Blasts Higher Ethanol Blends

A freshman Republican representative from Kansas today blasted higher ethanol blends during a House subcommittee hearing that focused on the Renewable Fuel Standard (RFS).

“Why don’t I hear my constituents screaming for E15 and E85 if it’s such a good thing to lower consumer prices?” Congressman Mike Pompeo asked Renewable Fuels Association president and CEO Bob Dinneen during the hearing. “I’ve only been here 18 months, I’ll concede that, but I don’t hear it.”

Rep. Pompeo’s district of Wichita and surrounding areas encompasses Colwich, where ethanol plant engineering company ICM was founded in 1995 by industry pioneer Dave Vander Griend, who has been an active proponent of higher ethanol blends. It is also home to one of Abengoa Bioenergy’s ethanol plants, which is currently idled due to the market conditions. Abengoa has a total of six ethanol plants in the United States with two cellulosic ethanol facilities being developed, including one in Kansas.

Pompeo also ridiculed the cellulosic ethanol requirement in the RFS. Listen to his five minutes of questioning during the hearing here: Rep. Mike Pompeo

House Hearing on Future of Renewable Fuels Now

Just a quick note to let you all know we are listening in on the House Energy and Power Subcommittee Hearing on Renewable Fuels. I’ll have more details later, but I can tell you that there is some differences in opinion between those testifying today.

Jack Gerard, President and Chief Executive Officer of the American Petroleum Institute is making the argument that the Renewable Fuels Standard (RFS) is unrealistic and a threat to consumers. He calls for an overhaul of the RFS.

Meanwhile, Bob Dinneen, President and Chief Executive Officer of the Renewable Fuels Association, strongly argues that the RFS does not need such overhauling. He points out that ethanol is lowering the price of gas to the tune of about $1.09 a gallon, and the the next generation of biofuels is happening today.

I’ll have more details and some audio later on, but we just wanted to update as the hearing is going on. You can listen and watch it here.

*POST UPDATE*
Hearing opening statements from Gerard and Dinneen: Jack Gerard and Bob Dinneen

Farm Group Opposes Bill that Would Weaken RFS

afbfThe American Farm Bureau Federation (AFBF) is opposed to a bill introduced by Congressman Jeff Flake (R-AZ) that they claim would weaken the Renewable Fuel Standard (RFS) by requiring fuel companies to blend only the amount of cellulosic ethanol currently being produced into gasoline.

“Basically any weakening of the RFS is not a good thing for the country going forward. When you look at the ambitious goals that have been set to wean ourselves off foreign sources of oil and create a domestic biofuels industry, that’s a threat when you’re trying to undermine that,” said AFBF energy specialist Andrew Walmsley, noting that pulling back on the requirement will reduce the incentive for investment in advanced biofuels.

Walmsley says investment and increased production of cellulosic biofuels could open up new markets for farmers. “Those producers that may not grow corn and have had the opportunity to benefit from the growth of corn ethanol – the advanced biofuels and cellulosic ethanol is where they can break in. There’s crops that fit into southern rotation for southern growers between peanuts and cotton or you could look at perennials. There’s crops that grow year after year that you plant and have a dedicated source of income.”

RFA Refutes RFS Rumors

In an effort to shut down the rumor mill, the Renewable Fuels Association is setting the record straight on the Renewable Fuel Standard (RFS).

RFAThere have been rumors that EPA might attempt to scale back the RFS by 20% due to the deteriorating condition of the U.S. corn crop, but RFA officials say the statutory process relating to RFS waiver provisions make that unlikely to happen.

“In order for EPA to waive RFS requirements, the agency must find that the program is causing economic “harm.” The agency can reach such a finding on its own, or it can be asked to examine the question of “harm” via petition from the public. EPA must provide a public comment period and consult with other relevant agencies before making any final decisions regarding a waiver request,” according to RFA. “In short, EPA cannot waive the overall RFS targets on a whim – there is a well-defined process for waivers.”

The organization notes that ethanol stocks currently stand at about a billion gallons of ethanol in the market, at least enough for the rest of the summer. Despite the fact that production dropped to the lowest of the year last week, the industry remains on pace to easily satisfy this year’s RFS target of 13.2 billion gallons. Year-to-date monthly EIA production data shows annualized ethanol production of 13.9 billion gallons.

RFA President and CEO Bob Dinneen will testify before a House subcommittee hearing this morning to underscore the importance of the RFS and ethanol. The House Energy and Commerce Committee Subcommittee on Energy and Power is holding a hearing on “The American Energy Initiative: A Focus on Alternative Fuels and Vehicles, Both the Challenges and the Opportunities” beginning at 10 am Eastern.

KBR to Engineer DuPont’s Iowa Cellulosic Ethanol Plant

Oil and construction giant KBR will provide engineering and procurement services for DuPont’s first cellulosic ethanol plant in Nevada, Iowa.

KBR will provide front-end engineering, detailed engineering and procurement services to DuPont’s Industrial Biosciences Group for this first-of-a-kind plant to be constructed in the Midwest United States. The ethanol facility is designed to process 1,300 tons per day of corn stover and produce 27.5 million gallons of ethanol per year. The cellulosic ethanol product will be used as a blending component in gasoline by fuel manufacturers and will enable them to meet U.S. EPA-mandated requirements for ethanol derived from cellulosic sources.

Company officials went on to say this contract solidifies KBR’s more than 20 year partnership with DuPont.

Growth Energy Applauds Governors’ Calls for E15

Three governors call for their colleagues in the Midwestern Governors Association to support an E15 action plan on the state level. Gov. Terry Brandstad (R-Iowa), Gov. Pat Quinn (D-Ill.) and Gov. Sam Brownback (R-Kan.) sent the letter, coming on the heels of federal approval of E15, to 11 of their fellow Midwestern governors, and that has won the praise of Growth Energy:

“I would like to commend Governors Brandstad, Quinn and Brownback for their unyielding support of the ethanol industry,” stated Tom Buis CEO of Growth Energy. “They understand that the ethanol industry is integral to their state’s economic growth, now and in the future. The ethanol industry already supports more than 500,000 good paying jobs, promoting economic growth and opportunities in rural America. State regulations are the final hurdle for E15, and these governors understand the proactive measures they must take to bring E15 to retailers in their state.”

The governors recognize the importance of diversifying our nation’s transportation fuel and providing consumers a choice at the pump. The governors stress that use of E15 is optional, but note the financial benefits of a home-grown, lower-cost fuel, particularly for consumers who are working to make each dollar count during troubling economic times and high gas prices.

“This letter exemplifies the kind of leadership necessary to bring E15 to the commercial marketplace,” Buis continued. “By calling on their fellow governors to bring all of the stakeholders to the table and establish an E15 action plan, they will be ahead of the curve, ready for the seamless integration of E15.”

The three governors have called for streamlining state regulations and providing short-term infrastructure support to ensure the future of the green fuel.

Study: High Corn Lowers Indirect Land Use for Biofuels

A new study seems to add credibility to the arguments that high corn prices, often driven by demand for biofuels, are not increasing the actual indirect land use effects.

This press release from the Iowa Corn Promotion Board says researchers at North Carolina State University and the University of Illinois at Chicago found that as prices for corn go up or down, farmers adjust their per acre yields and that some commonly used models for indirect land use use factors at the low end of the actual range which underestimates real yield performance:

The study assessed two dimensions of this correlation known as yield-price elasticity: first, the extent to which realized yields tend to be influenced by planting-time futures prices; and second, the potential for in-season changes responding to significant price swings. The study found that not only do farmers respond to price from season to season, they also respond to price during the season in order to optimize productivity. “Based on these findings there is no question that price has an effect on yields,” stated Jay Lynch, a farmer from Humboldt, Iowa and board director for the Iowa Corn Growers Association. “And given the factors involved in achieving higher yields, such as investment in new equipment, it is likely that new, higher yields resulting from high prices are sustained even after prices drop.”

The study adds to the growing body of evidence that actual indirect land use effects are lower than current models indicate and assumptions that high corn prices do not positively affect yields and productivity are not supported by research.

“It is a logical conclusion that when economic opportunity through greater efficiency is identified, investment occurs and results in the efficiencies that are targeted,” stated Dr. Barry K. Goodwin, study co-lead and distinguished professor, Departments of Agricultural and Resource Economics and Economics “In row crop production higher prices trigger positive changes to operations such as investments in better equipment and technology, better navigation and information systems, and so forth. The investment and changes triggered by the higher prices accelerate yield growth so that farms produce more per acre to fully capitalize on the market opportunity of higher prices. It’s a logic stream that holds up on the farm as well as other industries.”

Researchers went on to say that the new information should give people a better understanding between the real relationship between biofuels and indirect land usage.

Iowa Fuel Retailers Hit Roadblock to E15 Sales

The independent Linn Co-op Oil Company in Marion, Iowa is all set to be the first in the nation to sell 15% ethanol blended gasoline to customers, except for one little detail. They can’t get the fuel to sell it.

The problem is that petroleum refiners servicing the Cedar Rapids area refuse to make the proper gasoline for blending with 15 percent ethanol available. “We just on June 15 got the approval from EPA that we could sell E15 to 2001 and newer vehicles,” said said Jim Becthold, service manager of Linn Co-op Oil Company. “We can’t get the blend stocks to blend with the alcohol to be able to sell E15 in the summer months, from June 1 to September 15. We can sell it through the winter but we can’t sell it in the summer.”

Iowa RFAAccording to federal fuel regulations, the gasoline blendstock needed to blend E15 during the summer is different from the gasoline blendstock for E10. The refiners who control what products go into pipelines that feed the fuel terminal for the Cedar Rapids area have refused to provide E15 blendstock anywhere in Iowa.

“What we should be celebrating on the Independence Day holiday is the nation’s first E15 retailer,” said Iowa Renewable Fuels Association Executive Director Monte Shaw. “Instead, what we’re expressing frustration that the oil companies can use their monopoly over the pipelines to limit fuel choices.”

Shaw says they looked into having the correct fuel trucked in from Kansas City, but that would cost 17.5 cents per gallon in transportation costs. “E15 is going to sell 5-10 cents a gallon cheaper, but if you’re adding 17.5 cents in transportation costs, all of the sudden you’re upside down and it doesn’t make any sense.”

The same problem applies to any retailer in Iowa or anywhere not near a source for low Reid Vapor Pressure, or RVP, gasoline. “We have asked the EPA to consider granting a one pound waiver to E15 similar to what E10 gets or take the waiver away,” said Shaw. “So far, EPA has said it will take Congressional action to this.”

However, Shaw says refiners can actually make the decision themselves to serve the market. “Iowa has retailers that want to sell E15, it’s got consumers that want to buy E15, so the demand is there,” he said.

Listen to interviews with Shaw and Bechtold here: IRFA's Monte Shaw and Jim Bechtold with Linn Co-op Oil

Ethanol Report Visits Bobby Likis

Ethanol Report PodcastThis edition of “The Ethanol Report” features comments from Bobby Likis of the Bobby Likis Car Clinic Network, a radio, television and internet distributed automotive talk show that recently partnered with the Renewable Fuels Association to help educate both consumers and automotive technicians about ethanol.

Likis recently visited Argonne National Labs and the Detroit Technical Campus of Ricardo Engines to find out more about new research to produce engines that use ethanol more efficiently. So, we visited with him to find out what he learned and what he is doing to share that information with others.

Likis is the only car-talk host on commercial radio named to the “Talkers 250,” the list of the top 250 talk-show hosts in America – five times no less. He’s on everywhere answering consumer car questions so this sounds like a great way to educate people who care about cars about ethanol. Find out more at CarClinicNetwork.com and check out his 20 Facts About Ethanol page.

Listen to or download the Ethanol Report here: Ethanol Report on Bobby Likis

Subscribe to the Ethanol Report here.

Biofuels Defense Investments Announced

The Obama administration today announced new investments in the biofuels industry as part of the Defense Production Act (DPA).

The U.S. Department of Agriculture (USDA), Navy and Department of Energy jointly announced $30 million in federal funding to match private investments in commercial-scale advanced drop-in biofuels. The Energy Department is also announcing a total of $32 million in new investments for earlier stage research that will continue to drive technological breakthroughs and additional cost reductions in the industry.

“This is an important next step in the President’s direction to Navy, Agriculture and Energy to work together to support the commercialization of ready-to-use, drop-in, advanced biofuel substitutes for diesel fuel and jet fuel,” said U.S. Secretary of the Navy Ray Mabus. “This funding opportunity will enhance our national security and support the creation and commercial-viability of a defense-critical industry – domestic biofuels.”

Mabus explained that the DPA is an authority specifically designed to support defense-critical domestic industries, which includes energy. “Every time the price of oil goes up $1 a barrel, it costs the Navy an additional $30 million in fuel costs,” he added. “We don’t want to trade readiness for fuel. Diversity of supply is one of the keys to energy independence and energy security.”

“This is a matter of national security, energy security and also good for rural America,” said Agriculture Secretary Tom Vilsack. “It opens up great promise for the development of non-food feedstocks as a potential cash crop for farmers throughout the United States. The refineries that will be converting this biomass into fuel will likely be located in rural areas, helping to create jobs.”

The Funding Opportunity Announcement (FOA) made possible through the DPA, will be carried out in two-phases, with government and industry sharing in the cost. In Phase 1, applicants will submit a design package and comprehensive business plan for a commercial-scale biorefinery, identify and secure project sites and take additional required steps spelled out in the announcement. Awardees selected to continue into Phase 2 will submit additional information for the construction or retrofit of a biorefinery.

Listen to a portion of this morning’s press announcement with Mabus and Vilsack:
Administration Press Conference