Poultry, Govs Make Case for RFS Waiver; RFA Refutes

Poultry producers are getting some help from several governors in their call for the EPA to waive the Renewable Fuels Standard (RFS), but officials with the Renewable Fuels Association (RFA) say the RFS is working, and no waiver is needed. Georgia Gov. Nathan Deal has joined Arkansas Gov. Mike Beebe and North Carolina Gov. Beverly Perdue in asking for the waiver (see Deal’s letter here). The EPA has posted the notice in the Federal Register and is accepting public comments for the next 30 days. A decision would come within 90 days.

The poultry industry backs the waiver request, with the National Chicken Council saying, “it is now abundantly clear that severe economic damage has occurred, and will continue, as a result of the RFS’ strain on the corn supply that has been exacerbated by the worst drought in more than 50 years.” Their colleagues at the National Turkey Federation agree. In an interview, the group’s president Joel Brandenberger says that lawmakers created the waiver just for disastrous droughts. “If this isn’t such a situation, you would have to conclude that the waiver process as written is worthless.”

But the RFA points out there are an estimated 2.5 billion RFS credits accumulated over the past two years as a result of ethanol blending above RFS requirements. Officials point out that gives oil refiners extraordinary flexibility to meet RFS targets. “Together with ample ethanol supplies and slower than expected gasoline consumption, these credits make the RFS workable through the 2012/2013 corn marketing year.”

Brandenberger asserts that it is the standard combined with the drought creating tight supplies that is pushing up prices. “The [RFS] has been distorting the corn market from the first day it was created in 2005.” But the RFA counters that this will still be the eighth-largest corn crop in U.S. history, and globally, the second-largest ever. And the group also points to the large amount of animal feed made from ethanol production. “One-third of every bushel used by an ethanol plant is returned to the feed market as high-protein feed. Ignoring this exaggerates the impact of ethanol on corn supplies,” the RFA stated.

Listen to my interview with Brandenberger here: Interview with Joel Brandenberger, President, National Turkey Federation

EPA Requests Comment Period for RFS

The Environmental Protection Agency has officially requested a comment period to start the process toward consideration of a waiver for the Renewable Fuel Standard (RFS).

EPA issued the request for comments in response to petitions from the Governors of Arkansas and North Carolina last week seeking a waiver of the volume requirements for corn ethanol under the RFS. The request was submitted for publication in the Federal Register and the EPA will decide on the waiver request “within 90 days of receiving it, in consultation with the Departments of Agriculture and Energy.”

EPA is requesting comment on any matter that might be relevant to review of the waiver request, including –

whether compliance with the RFS would severely harm the economy of Arkansas, North Carolina, other States, a region, or the United States; whether the relief requested will remedy the harm; to what extent, if any, a waiver would change demand for ethanol and affect prices of corn, other feedstocks, feed, and food; the amount of ethanol that is likely to be consumed in the U.S. during the relevant time period, based on its value to refiners for octane and other characteristics and other market conditions in the absence of the RFS volume requirements; and if a waiver were appropriate, the amount of required renewable fuel volume appropriate to waive, the date on which any waiver should commence and end, and to which compliance years it would apply.

Ethanol Safety Seminar Offered by RFA

The Renewable Fuels Association (RFA), along with Norfolk Southern Corp., CN Railway and Archer Daniels Midland Company (ADM) will co-host an Ethanol Safety Seminar on August 22nd in Decatur, IL. The free seminar will give first responders, hazmat personnel, safety teams and the general public in-depth information on proper training techniques needed to effectively respond to an ethanol-related emergency.

“Ethanol is the highest volume commodity transported by rail each year,” said David Schoendorfer, Manager of Hazardous Materials for Norfolk Southern Corp. “In the event of an incident, it is imperative that local emergency responders are prepared, and providing this training is part of our community outreach effort to ensure they are.”

“Focusing on emergency measures to take in the event of an incident involving ethanol products is an important part of preplanning,” said Scott McLeod, Sr. Dangerous Goods Officer for CN Railway.

“Safety is a primary focus for the ethanol industry as this fuel is the number one hazardous material shipped on U.S. railways,” said Matt Bruns, VP of Corn Processing for Archer Daniels Midland Company (ADM). “The Ethanol Safety Seminar focuses on numerous aspects of responding to an ethanol-related incident, helping those first on the scene to easily assess the situation and react appropriately.”

To register for one of the two seminars offered between 9:00am to 2:00pm and from 5:30-10:00pm on August 22nd, click here.

Other Ethanol Safety Seminars throughout 2012 are scheduled in Defiance, OH on August 29th; Willmar, MN on September 9th; Pittsburgh, PA on September 13th; Elgin, IL on October 2nd; Bessemer, AL on October 29th; and Fort Worth, TX on November 29th.

More information on ethanol emergency responses is available at www.EthanolResponse.com.

Refiners to Try Syngenta’s Bio-Engineered Ethanol Corn

Two ethanol makers will be trying Syngenta’s Enogen® grain… corn that is bio-engineered to allow ethanol production to be more efficient, cost effective and better for the environment. This Syngenta news release says Golden Grain Energy (GGE) of Iowa and Siouxland Ethanol of Nebraska agreed to run three-month trials.

Enogen grain is the first genetically engineered output trait in corn specifically for the ethanol industry. Enogen corn expresses the alpha amylase enzyme necessary for dry grind ethanol production directly in the endosperm of the grain. This breakthrough technology eliminates the need to add liquid amylase and can lead to dramatic increases in throughput while potentially reducing costs in energy, gas and water usage.

“We’re glad to be partnering with these plants and we’re excited about the improved efficiency Enogen technology can deliver,” said David Witherspoon, head of renewable fuels with Syngenta. “We’re looking forward to working closely with each plant during the trial to demonstrate the value Enogen technology can add to their operation and their community.”

The trials are to begin next spring. If it works out, growers will be paid a premium for each bushel of Enogen corn delivered to the plants.

Western New York Energy Buys ICM Milling Technology

A New York ethanol producer has bought a milling system purported to increase plant efficiency while maintaining throughput. This news release says Western New York Energy bought ICM’s Selective Milling Technology (SMT)™, including the license fee, equipment and installation of ICM’s platform technology.

Mike Sawyer, Executive Vice President and Chief Financial Officer of WNYE stated, “As a locally-owned company, we strive every day to fulfill our mission of developing the full potential of Western New York’s renewable energy resources, utilizing industry best practices, and achieving the highest ethical standards to work with our community and business partners.”

ICM President Chris Mitchell said, “We’re thrilled to continue our collaborative relationship with WNYE by delivering innovative products from our platform technology package.”

Western New York Energy also bought ICM’s oil recovery solution technology last year.

Appeals Court Upholds E15

The U.S. Appeals Court for the District of Columbia Circuit has sided with the Environmental Protection Agency (EPA) and upheld its partial waiver approval for E15 ethanol fuel for model year 2001 and newer light duty vehicles and all flex fuel vehicles.

“Today the U.S. Court of Appeals appropriately rejected multiple legal challenges to the introduction of E15 into the commercial marketplace,” said Tom Buis, CEO of Growth Energy. “This decision is a win-win for both the American consumer and our nation.”

“Adding an E15 option along side E10 and higher ethanol blends allows consumers to make the fuel decisions that work best for them and their vehicle,” Renewable Fuels Association President and CEO Bob Dinneen said. “Allowing for additional ethanol use will help lower prices at the pump, create domestic jobs, and accelerate the commercialization of new biofuel technologies.”

So far, one station in Lawrence, Kansas has started selling E15 under the conditions set by the partial waiver. The challenge to EPA’s waiver was filed by the Grocery Manufacturers Association.

RFA: Reports Show Waiver Won’t Lower Corn Prices

The folks from the Renewable Fuels Association are pointing to two university studies as proof any waiving of the Renewable Fuel Standard (RFS) would not significantly lower corn prices. The issue came to the forefront in the last few weeks as the drought pushed corn prices to record levels, and livestock groups look to the RFS waiver as relief from those prices. But this RFA news release points to a Purdue study (featured earlier here on Domestic Fuel in a webinar put on by Farm Foundation) and Iowa State University research that the drop in corn prices would be only about 5.6-7.4 percent. The webinar earlier today also showed the lower prices for producers and consumers at the grocery stores would not happen this year.

“The desire by livestock groups to see additional flexibility on ethanol mandates may not result in as large a drop in feed costs as they hope,” wrote Iowa State Professor Bruce Babcock. “…the flexibility built into the Renewable Fuels Standard allowing obligated parties to carry over blending credits (RINs) from previous years significantly lowers the economic impacts of a short crop, because it introduces flexibility into the mandate.”

Similar comments came from the authors of the Purdue study. “A partial waiver certainly is not a ‘stroke of the pen’ solution…” to record high corn prices, they wrote. “Corn prices pushed higher by the worst U.S. drought in half a century would not necessarily moderate if the federal government’s corn ethanol mandate were temporarily suspended,” according to a Purdue University press release announcing the release of the study.

“These economic analyses compellingly show that waiving the RFS is unnecessary and would be ineffective in meaningfully reducing corn prices,” RFA President and CEO Bob Dinneen said. “Congress and EPA built sufficient flexibilities into the RFS to ensure compliance is achievable even under the most abnormal and extreme circumstances, such as this summer’s drought. These studies recognize the impact of that built-in flexibility and show that a waiver would not significantly contribute any additional further relief from drought-induced high corn prices.”

You can hear the audio from today’s webinar here: Farm Foundation-Purdue Webinar on Drought and RFS Waiver
You can see the associated slide show here.

RFS Waiver Would Not Immediately Impact Corn Prices

While a new report shows that a waiver of the Renewable Fuels Standard could drop corn prices, the impact would not be felt this year and could vary. The Purdue University report, entiled Potential Impacts of a Partial Waiver of the Ethanol Blending Rules, was authored by the school’s Wally Tyner, Farzad Taheripour and Christopher Hurt and presented today in a Farm Foundation webinar. It says corn prices could drop anywhere from 47 cents to $1.34 per bushel, depending on what level the drought impacts the final harvest, how big the waiver is, and how many unused Renewable Fuel Identification Numbers (RINs) are cashed in. But livestock producers and consumers would not see any benefit this year.

Tyner explained that technical and financial incentives could determine the impact of the waiver. “If refiners and blenders cannot change for technical reasons what they’re doing now, then a waiver has very little impact. But if they do have flexibility, then there is potential for a waiver having an impact,” Tyner said. Hurt added that there could be some unintended consequences, including what he calls demand destruction. “If we return to normal production in the next 12 months, then we have a fairly large supply, we have the possibility of looking at a 15 billion bushel corn crop with a utilization base of 11 billion bushels,” pointing out that we could see prices swing back to extremely low prices as quickly as they rose to these current high prices.

Paragon Economics’ Steve Meyer and the University of Minnesota’s Vernon Eidman were also listening in on the call and offering their perspectives. Meyer said the projected reduction in corn prices could translate into $2.60-3.50 per head on hogs. “We’re not talking about peanuts here.” But Eidman was quick to point out any RFS waiver would not impact corn use for ethanol this year. “It will take more time than that to get the rollback to occur,” Eidman said.

All on the webinar agreed that the EPA should not rush to issue any judgment until more complete information is known about the corn harvest, most likely in the next couple of months. “It’s important to get this right,” concluded Eidman.

It’s a really good conversation, and you can hear the entirety of it here: Farm Foundation-Purdue Webinar on Drought and RFS Waiver
You can see the associated slide show here.

Corn Growers Ask for Careful Analysis of RFS Waiver

While Govs. Bev Perdue of North Carolina and Mike Beebe of Arkansas have petitioned the EPA to waive the Renewable Fuels Standard (RFS) for ethanol in light of the drought gripping much of the corn-producing region of the country, a supplier for both sides in the argument has called for careful analysis of the situation. The National Corn Growers Association… which has alliances with the livestock producers who want to see lower feed prices and are pushing for the waiver and the ethanol industry which says the waiver is unnecessary… is asking all parties to carefully examine the facts of the case. NCGA President Garry Niemeyer acknowledges that all sides in this debate are suffering, but encourages a careful analysis before any decision is reached:

“There currently is a lot of public discussion about the role and impact of the Renewable Fuel Standard. Unfortunately most of this discussion is unencumbered by facts and reality. The facts clearly show that the RFS has been of significant net value to the entire U.S. economy.

“While we believe that it is still somewhat premature to consider a temporary, partial waiver to the RFS (as there will be much more accurate information available with September’s and October’s USDA crop reports), we do respect the right of those with standing to exercise the language contained in the RFS. The waiver process language in the RFS calls for careful objective analysis of the economic impact of the RFS on the U.S. economy. We have faith in, and support, the process laid out in this language.

“If indeed the analysis shows that the RFS is not causing severe economic harm, but instead ethanol production is responding to market forces rather than the RFS, then the request for a temporary partial waiver should be rejected. If however, the analysis clearly shows that the RFS is causing severe economic harm in light of the drought, then a temporary, partial waiver should be granted.

Niemeyer says an “open and free market approach is the best and most efficient solution” to getting all stakeholders through this crisis.

Ethanol Supporters at Obama Iowa Event

‘Tis the season for political events, and a group of ethanol and biodiesel supporters are making sure they are front and center to drive home the message that the green fuel needs political support as well.

The Renewable Fuels Association’s (RFA) and Iowa Renewable Fuels Association’s grassroots effort, Americans Fueled with Pride, and in this specific case, Iowans Fueled with Pride, made sure to tell President Obama how much they appreciated his support of the green fuels when the commander-in-chief made political stops in Iowa. Several supporters from local ethanol and biodiesel companies attended Obama events in Boone and Council Bluffs wearing “fueled with pride” t-shirts and were able to shake hands with the president. Among them were representatives from Green Plains Renewable Energy, Midwest Grain Processors, Renewable Energy Group (REG) and Lincolnway Energy.