The signing of the Paris Climate Agreement on Earth Day 2016 puts the focus on what countries are doing to make the world a better place, and some of the nearly 170 countries signing the accord are backing the use of renewable fuels like ethanol for cleaner air. In this Ethanol Report, Renewable Fuels Association president and CEO Bob Dinneen talks about the environmental benefits of ethanol and how the United States could have done more in the agreement to promote renewable fuels. He also shares his thoughts about what the oil industry costs American taxpayers on Tax Day.
Listen here: Ethanol Report on Earth Day
Back in January, China’s Ministry of Commerce (MOFCOM) initiated an investigation into anti-dumping and countervailing duties on imports of U.S. produced distillers dried grains with solubles (DDGS). The U.S. Grains Council has been on top of the situation from the start and provided an update for members of the American Coalition for Ethanol (ACE) meeting in Washington DC this week.
USGC Director of Industry Relations Lyndsey Erb says the issue is important because China is such a huge market for the ethanol co-product used as animal feed. “China had been the largest importer of U.S. DDGS, taking 56% of exportable supplies last year,” said Erb. USGC has been coordinating the response from the U.S. ethanol industry to provide the information needed to help address the concerns and get China back in the market.
“We’re still very much in the beginning stages,” Erb says. “Ultimately the case has to wrap up between a year and a year and a half after the initiation so we still have a long road ahead of us in this case but such a large percentage of the U.S. industry is joining the Grains Council to fight that we are optimistic we can put together a good defense.”
Erb explains more in this interview: Interview with Lyndsey Erb, USGC
ACE 2016 DC Fly-in Photo Album
There has been a resolution in the European Union’s (EU) Anti-Dumping Measures on Biodiesel from Argentina. A World Trade Organization dispute panel has ruled in favor of Argentina on several of its complaints against the EU. Back in 2013, EU sanctioned anti-dumping duties on imports from biodiesel from Argentina, which served to all but shut down biodiesel trade. The charge against Argentina was that the country was selling the biodiesel at prices below the cost of production.
Argentina countered that EU’s actions were protectionist, and EU countered back that domestic tax breaks allowed Argentina producers to sell their biodiesel at below market value putting European biodiesel producers at an unfair disadvantage. The panel sided with Argentina citing that the EU acted inconsistently with the Anti-Dumping Agreement by failing to calculate the cost of production of biodiesel on the basis of the records kept by the producers under investigation. In other words, how much it cost each individual Argentine biodiesel producer to produce the biodiesel.
The panel also upheld Argentina’s claim that the EU imposed anti‑dumping duties in excess of the margin of dumping that should have been established. However, other claims made by Argentina were dismissed and ruled in favor of the EU including the profit margin analysis used by the EU. The panel ruled, “The profit margin used by EU authorities was the result of a reasoned analysis that was rationally directed at approximating what the Argentine producers’ profit margin for the like product would have been if the like product had been sold in the ordinary course of trade in the domestic market of the exporting country.”
“NBB has for years maintained that Argentina’s distorted biodiesel market and export tax schemes lead to high volumes of below-market biodiesel imports from Argentina, including to the United States,” said Anne Steckel, VP of federal affairs for the National Biodiesel Board (NBB). The WTO has largely affirmed the EU’s determination that such market distortion resulted in dumped and injurious imports from Argentina. NBB remains concerned about the impact of Argentinian imports in the US and will continue to assess options for addressing these imports.”
The Global Renewable Fuels Alliance (GRFA) is commending the leadership of 13 countries that highlighted biofuels as part of their Intended Nationally Determined Contribution (INDC) plans at the recent Conference of the Parties to the UN Framework Convention on Climate Change (COP21) in Paris.
GRFA president Bliss Baker sent letters to leaders of the 13 nations thanking them for recognizing the significant contributions that ethanol-supportive policies have made, and continue to make, in reducing CO2 emissions in the transport sector. “If the enormous potential of biofuels as the only commercially viable technology available to significantly offset emissions in the transport sector is to be achieved, strong policies must be put in place to increase global production, innovation and consumption of ethanol,” said Baker.
In the letters, Baker offered the expertise of GRFA members to work with government leaders in the development of policies that “maximize the advantages of biofuel technologies that are demonstrated to be effective, affordable and immediately available.”
The 13 countries are Angola, Argentina, Brazil, China, Fiji, India, Malawi, Malaysia, Mozambique, Nigeria, Philippines, Uruguay, and Zimbabwe.
The Renewable Fuels Association (RFA) was part of a recent trade mission to Peru led by Agriculture Secretary Tom Vilsack which included discussions about increasing cooperation with that country when it comes to ethanol production and exports. The March 13-15 trip went to Lima and the Piura region, where cane-based ethanol is produced, and featured meetings with ministry of energy officials and a biofuels roundtable with ethanol producers and fuel distributors.
RFA General Counsel Ed Hubbard was among nearly 40 industry and government representatives on the trip. In this edition of the Ethanol Report, Hubbard talks about the mission and opportunities with Peru to expand ethanol
Listen to it here: Ethanol Report on Trade Mission to Peru
NCGA’s Paul Bertels and Nigerian Corn Growers Association’s Edwin Uche in front of the NCGA office.
The National Corn Growers Association (NCGA) staffers welcomed
the director of the Nigerian Corn Growers Association for a series of meetings this week on how farmers in the two nations can work together to increase corn demand.
Edwin Uche, director of the Nigerian Corn Growers Association, reached out for a meeting during the recent Maize Genetics Conference in Florida and expressed his excitement for NCGA’s work and enthusiasm for doing similar for farmers in Nigeria. During his visit to the NCGA office, Uche met with Vice President of Production and Stewardship Paul Bertels, Director of Communications Ken Colombini and Director of Development Joe Hodes.
Through a series of in-depth discussions, Uche explored ways in which he could increase corn demand in Nigeria while fostering acceptance of biotechnology and growing the country’s ethanol industry. A proponent of biotechnology in agriculture, Uche also hopes to move more farmers toward this productive technology and away from an ongoing reliance upon open pollinated varieties currently hampering yield in Nigeria.
Discussions yielded insights for NCGA as well. Uche shared his confusion as to how the idea of food versus fuel took hold in the United States, expressing that he sees how corn clearly provides an excellent way to meet both demands simultaneously. Additionally, his pro-biotechnology and pro-ethanol stances fostered hope for potential market growth in Nigeria which could lead to growth in American corn exports to the region.
A bipartisan group of lawmakers sent a letter to U.S. Trade Ambassador Michael Froman this week urging him to examine opportunities to reduce any tariffs on U.S. produced energy, including ethanol, during the Transatlantic Trade and Investment Partnership (T-Tip) negotiations.
“The U.S. ethanol industry has been unfairly targeted by the EU for increased duties (on ethanol) which have subsequently eliminated U.S. share in the European market,” reads the letter from nine members of Congress. “Currently Europe cannot adequately produce enough ethanol for their own market without importing ethanol from foreign sources, such as the U.S.”
“As T-TIP negotiations progress toward completion,” they continued, “we are confident you can leverage access to all domestic energy sources, such as U.S. natural gas, crude, and ethanol in order to achieve a favorable outcome for these industries and the reduction or elimination of trade obstacles to market access in Europe.”
The European Commission imposed a 9.6 percent duty on U.S. ethanol over three years ago in response to an anti-dumping complaint lodged by European ethanol trade group ePURE. In May 2013, the Renewable Fuels Association (RFA) and Growth Energy filed a complaint with the General Court in Luxembourg which is still being litigated challenging the Commission’s decision.
“The duties imposed were unjustified and blatantly protectionist,” says RFA CEO Bob Dinneen. “Sadly, the real losers in this are European consumers that have to pay more for motor fuel because the lowest-cost liquid fuel in the world — U.S. ethanol — has been targeted by their protectionist policy. Since Europe cannot produce sufficient domestic ethanol supply, and must import the fuel from foreign sources, including the U.S., it is time to see the duties removed.”
The 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.
Renewable energy technology company Gevo, Inc. has inked a deal with South American alcohol maker Porta Hnos S.A. to build several isobutanol plants in Argentina. This Gevo news release says they plan to use corn as a feedstock.
The first plant is to be wholly owned by Porta and is anticipated to begin producing isobutanol in 2017. The plant is expected to have a production capacity of up to five million gallons of isobutanol per year. Based on projected isobutanol pricing, Gevo estimates that it could generate approximately $1 million in annual revenues once the plant is operational, through royalties, sales and marketing fees, and other revenue streams such as yeast sales.
The agreements also contemplate Porta constructing at least three additional isobutanol plants for certain of their existing ethanol plant customers. For these projects, Gevo would be the direct licensor of its technology and the marketer for any isobutanol produced, and would expect to receive all royalties and sales and marketing fees generated from these projects. As one of the leading engineering, procurement and construction (“EPC”) service providers to the ethanol industry in Argentina, Porta would provide the EPC services for the projects. The production capacity of these additional plants is still to be determined.
“Porta is a unique partner for Gevo, as they are expected to be both a direct isobutanol licensee, as well as a partner in building out isobutanol plants for other plant owners. We are excited to leverage their EPC expertise and their local Argentinian presence to accelerate the adoption of our isobutanol technology throughout Argentina, and potentially elsewhere in South America. By partnering with Porta, this will dramatically decrease the investment in engineering and business development resources that Gevo would otherwise have to deploy to roll out our technology in the region. As a result, we anticipate any revenue derived from the Porta relationship to be high margin in nature,” said Dr. Patrick Gruber, Gevo’s Chief Executive Officer.
“We appreciate Porta’s desire to be the first direct licensee of Gevo’s isobutanol technology, as well as their agreement to be our EPC partner in Argentina. Consequently, we have agreed to waive an up-front license fee for the first plant that is to be wholly-owned by Porta,” added Gruber.
New Zealand will soon get its first industrial-scale biodiesel plant. This article from Radio New Zealand says the Z Energy plant will produce the green fuel from animal fat and is expected to make about 5 million gallons of biodiesel per year when it opens in June.
While the planned 20 million litre production will be just a fraction of the company’s total diesel sales of 860 million litres, Z Energy views it as a start in reducing greenhouse gas emissions from transport.
Even getting this far was a problem, according to Z Energy chief executive Mike Bennetts.
He said the globally low prices for crude oil make it harder for biofuels to compete.
The cost imposed under the Emissions Trading Scheme for burning fossil fuels was also low, which discouraged the use of clean alternatives such as biofuel and this affected the economics of the plant.
“They are marginal, and (as a listed company) we’ve always been very honest about that,” Mr Bennetts said.
But Z was pressing on, aiming to add 5 percent biofuel to its conventional diesel by June, and signing up companies such as Fonterra to commit to its product.
“We’ve been well supported by Fonterra, Fulton Hogan, Downers and New Zealand Post, to pay us a small premium to actually take the product.
“And then we are looking for the rest of New Zealand to follow through on some of the statements they make to use around ‘why don’t you guys do something about a less carbon intensive future?'”
Company officials say they made the project a reality by cutting start-up costs to a minimum.