Iowa State Study Finds Ethanol Lowers Fuel Prices

John Davis

card.jpgClaims that ethanol production drives up gas prices don’t hold up after a study from Iowa State University. ISU’s Center for Agricultural and Rural Development has taken a look at the impact of ethanol production on U.S. and regional gas prices and found that ethanol production actually lowers prices at the pump.

Using pooled regional time-series data and panel data estimation, we quantify the impact of monthly ethanol production on monthly retail regular gasoline prices. This analysis suggests that the growth in ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case. The analysis shows that the negative impact of ethanol on gasoline prices varies considerably across regions. The Midwest region has the biggest impact, at $0.39/gallon, while the Rocky Mountain region had the smallest impact, at $0.17/gallon. The results also indicate that ethanol production has significantly reduced the profit margin of the oil refinery industry. The results are robust with respect to alternative model specifications.

Agribusiness, Ethanol, News

POET Cancels Construction of Ethanol Plant

John Davis

poet.gifA long delay in permitting has led POET, the world’s largest producer of ethanol, to cancel plans for construction of a new facility in Glenville, MN. Larry Ward, Vice President of Project Development for POET, says permitting has delayed the project for over a year.

“When we selected Glenville for a second ethanol production facility, we believed that we would be holding its grand opening sometime around today,” said Larry Ward, Vice President of Project Development for POET. “Early discussions with the appropriate authorities indicated there wouldn’t be any unusual permitting concerns due to the plant’s close proximity to another POET plant. However, permitting has delayed the project by more than a year and has caused a significant amount of additional costs making it less attractive than other potential projects in the Eastern Corn Belt. Our existing plant in Glenville continues to perform very well and it’s still possible that we may construct a second plant in that area sometime in the future, but it likely won’t be in the next few years.”

POET has opened three new ethanol production facilities in the Eastern Corn Belt states of Indiana and Ohio over the past seven months and will open three more in those states before the end of the year. “We also have four additional sites in the eastern Corn Belt that are in some stages of due diligence and we continue to be excited about the possibilities for increased production in those areas,” said Ward.

Energy, Ethanol, Facilities

Seminole Electric Looking for Renewable Energy

John Davis

se.pngSeminole Electric Cooperative Inc. is exploring ways to incorporate renewable energy. The Tampa, Florida-based company is requesting proposals for potential renewable energy sources.

The Florida generation and transmission cooperative is seeking up to 250 megawatts of renewable energy to help meet its member systems’ growing demand and to diversify its resource portfolio. Seminole is not charging a fee for proposal submission. Proposals are due by June 13, 2008.

Seminole is the wholesale power supplier for 10 electric distribution co-ops. Its member co-ops together have nearly 900,000 retail consumers and provide electricity to an estimated 1.7 million individuals and businesses, located across 46 of Florida’s 67 counties.

Seminole is seeking any type of renewable resource located in or planned for construction in Florida, including baseload resources designed for continuous operation, and intermediate/peaking type resources. Proposed renewable resources must be at least one megawatt in maximum generating capacity.

Seminole will consider all renewable technologies including generation facilities using wind, hydrogen, waste heat, geothermal, ocean energy, solar photovoltaic, solar thermal, landfill gas, biomass, municipal solid waste, anaerobic digesters, and hydropower fuel sources.

Seminole’s renewable energy RFP is open to all providers including but not limited to independent power producers, renewable energy providers, exempt wholesale generators, qualifying facilities as defined under the Public Utility Regulatory Policies Act, and electric utilities.

Energy

EPIC Speaks Out Against Ethanol Scapegoating

John Davis

e.pngThe Ethanol Promotion and Information Council has gathered data from multiple sources that debunk claims that America’s renewable fuels are a large player in soaring food prices. Toni Nuernberg, the Executive Director of EPIC wants to spread the word that changing the nation’s renewable fuels standard is not the answer to driving down global food costs.

Recent calls to reduce the renewable fuels standard (RFS) seem like an easy and immediate fix to world food shortages. However, the factors influencing global food prices and supplies are a result of converging global production and demand issues that go far beyond corn-based ethanol. Changing U.S. energy policy will not provide short-term relief on the food supply and decrease food prices as many expect. In fact, relaxing the renewable fuels standard mandate actually may escalate food prices now and in the future by driving fuel prices even higher.

Across the country, including 10 percent ethanol in gasoline has held the price per gallon down by $.15 to $.45 depending on the region of the country, as highlighted in recent studies in Missouri. Reducing ethanol requirements by 50 percent removes 4.5 billion gallons of ethanol from the fuel supply. This will reduce the total fuel supply, causing transportation, fertilizer, fuel, packaging and other food production costs to continue to increase, further inflating the price of food.

Long-term, repealing or suspending the 2007 Energy Policy Act is unnecessary, as technologies in use today and on the horizon will enable American farmers to increase productivity per acre to meet demands for food and this mandate, potentially with the same or fewer inputs than used today.

For many, it is easy to look past the primary factor wreaking havoc with the global economy — namely exorbitant oil prices which have increased from $35 in 2005 to more than $110 today — nearly 300 percent.

Globally, today’s energy prices are a disincentive to food production, as third world countries simply can’t afford to develop agriculture systems and, therefore, their ability to feed themselves.

Corn-based ethanol, while not a silver bullet, is the foundation upon which the next generation of “advanced biofuels” is being built.

The industry is fueling research into cellulosic ethanol produced from feedstocks such as switch grass and other non-edible renewable biomass. Corn-based ethanol is a solution that is here now, available in our current infrastructure and making a difference in the price of fuel.

Agribusiness, corn, E85, Energy, EPIC, Ethanol, Food prices, Government, News

Former Ag Secretary Defends Ethanol

Cindy Zimmerman

Former Secretary of Agriculture John Block can look at the food versus fuel issue from a number of angles. He ran the U.S. Department of Agriculture under President Reagen from 1981-1986. He was executive vice president of the Food Marketing Institute, which represents food retailers and wholesalers. He serves on the board of Friends of the World Food Program, a US-based non-profit organization dedicated to building support for the World Food Program and other hunger relief efforts. And he is an Illinois family farmer who produces both corn and hogs.

RFA Press Conference John BlockOn Wednesday, Block shared his perspective on food prices and ethanol with the media at the National Press Club.

“The first point I would make is, yes, biofuels have had some impact on the price of food, we can’t deny that,” Block said. “But it’s pretty small, it’s hard to figure out exactly what it is.”

That’s because this is a very complicated issue, Block says, which includes factors such as increased demand for animal protein in developing countries, crops affected by weather, speculation in the futures markets, weakness of the dollar, and oil. “I dare say we would not even be standing up here right now if oil was $20 a barrel, but it’s not, it’s $120 and its likely to stay in that range and it puts us in a position we had not been in before,” he said.

With so many factors involved, Block says it’s unreasonable to give biofuels a majority of the blame for higher food prices, especially internationally. “Because we are not shorting the market on grain,” he said. “We are exporting more grain than we ever have in history.”

The positive side to this Block says is that higher prices equals investment and that equals more food. “Over time, with good prices for farm products, the world is going to produce more food products.”

“I believe that biofuels have an important place,” Block concluded. “All of this is home-grown, it makes jobs for us in the United States and its a clean fuel – those are good, positive things.”

Listen to Block’s comments here: [audio:http://www.zimmcomm.biz/rfa/rfa-press-block.mp3]

Audio, Ethanol, News, RFA

Ethanol Blender Pumps Gives Consumers Choices

Cindy Zimmerman

A new partnership between the Ethanol Promotion and Information Council (EPIC) and the South Dakota Corn Utilization Council (SDCUC) is helping gas station retailers in South Dakota put in more ethanol blender pumps to let consumers with flex fuel vehicles have more options.

e-podcastThe edition of “Fill up, Feel Good” features comments from EPIC Director of Operations Robert White and SDCUC Executive Director Lisa Richardson about the new program, its goals, how it will work, and how it will benefit consumers.

The podcast is available to download by subscription (see our sidebar link) or you can listen to it by clicking here (5:00 MP3 File):
[audio:http://www.podtrac.com/pts/redirect.mp3?http://www.zimmcomm.biz/epic/epic-podcast-5-2-08.mp3]

The Fill Up, Feel Good theme music is “Tribute to Joe Satriani” by Alan Renkl, thanks to the Podsafe Music Network.

“Fill up, Feel Good” is sponsored by the Ethanol Promotion and Information Council.

Audio, EPIC, Facilities, Fill Up Feel Good, Flex Fuel Vehicles, News

Ethanol Closer to Little Bo Peep

Cindy Zimmerman

Is ethanol Little Bo Peep or the Ax Murderer?

RFA Press Conference Rick TolmanThat’s the question National Corn Growers CEO Rick Tolman presented to the media during a press conference in Washington DC on Wednesday, pointing to the front page article on ethanol and corn prices in the Washington Post as being the latest example of making ethanol out to be the ax murderer. “There’s a lot of misinformation, slanted information that is just inaccurate,” Tolman said. “While we do have some role in higher food prices in the corn industry, we are certainly closer to Little Bo Peep than the ax murderer.”

Tolman pointed out the importance of the US corn industry, the dramatic increases in yields and production and the fact that prices for petroleum products have a much greater impact on food prices than corn does.

“What do corn prices have to do with food riots in China and Pakistan and India over rice?” Tolman asked. “Absolutely nothing. There is no connection to rice production around the world with biofuels production in the United States. Absolutely none.”

Tolman blamed the disinformation in the media on a very clever marketing campaign by those with deep pockets. “If you want to know who the real ax murderer is slashing our grocery food budget, look at $4 a gallon gasoline, look at $120 a barrel oil,” Tolman said.

Listen to Tolman’s comments here: [audio:http://www.zimmcomm.biz/rfa/rfa-press-tolman.mp3]

Audio, corn, Ethanol, Food prices, News

Renewable Energy Bill Passes Florida Legislature

John Davis

A comprehensive energy bill has passed the Florida legislature, and now goes to the governor for an expected signature.

This story from the Orlando (FL) Sun-Sentinel says the measure has provisions specifically addressing renewable energy in the state:

crist.jpgThe bill, which addresses Gov. Charlie Crist’s call for policies that combat global warming, is made up of 112 sections that could dramatically increase the state’s investment in renewable energy. The House passed the energy bill unanimously Tuesday and the Senate passed the House bill by a vote of 39 to1 Wednesday.

Among the changes proposed, the bill would require state buildings to meet specific “green energy” standards. That’s expected to cost more during construction but save the state money in the long run by increasing energy efficiency.

The bill would allow state regulators to set goals for individual utilities on how much renewable energy they produce and to fine utilities that don’t meet the goals and reward them if they do. Regulators would be required to consider the effect of utility customers’ rates when setting the goals.

Passage gained the praise of Crist:

“I want to thank Senate President Ken Pruitt, House Speaker Marco Rubio, Senator Burt Saunders and Representative Stan Mayfield for their leadership in securing Florida’s green energy future,” Governor Crist said. “Today’s vote signifies a commitment to protecting Florida’s natural beauty and stimulating our economy, as well as reducing our dependence on foreign sources of oil.”

The bill also assures accountability for the renewable energy with a state commission studying whether green fuels such as biodiesel, wind, and solar provide returns for the state’s investment in them.

Biodiesel, Ethanol, Government, Legislation, News, Solar, Wind

GM Announces Second Cellulosic Ethanol Partnership

Cindy Zimmerman

GMGeneral Motors and Mascoma Corporation of Massachusetts today announced a strategic relationship to develop cellulosic ethanol.

MascomaThe development is focused on Mascoma’s single-step biochemical conversion of non-grain biomass into low-carbon alternative fuels to help address increasing energy demand. It ties in with another partnership announced earlier this year with Coskata that uses a thermo-chemical process to make ethanol from non-grain sources.

“Taken together, these technologies represent what we see as the best in the cellulosic ethanol future and cover the spectrum in science and commercialization,” GM President Fritz Henderson said. “Demonstrating the viability of sustainable non-grain based ethanol is critical to developing the infrastructure to support the flex-fuel vehicle market.”

Mascoma has raised significant equity from venture capital investments and secured more than $60 million in state and federal grants, including the recent awarding of a $26 million grant from the U.S. Department of Energy.

“Cellulosic biofuels represent next-generation renewable energy, and have the potential to reduce oil dependence, reduce greenhouse gas emissions, and stimulate regional economic development,” Mascoma Chairman and CEO Bruce Jamerson said. “Our transformational technology will allow us to combine the affordable non-grain biomass with low-cost conversion techniques to make ethanol more quickly, efficiently and economically than is possible with other biochemical methods.”

GM’s multi-dimensional involvement with Mascoma will include projects to evaluate materials and other fuels for specific engine applications as well as collaborating on Mascoma’s efforts to expand its commercialization projects globally, including promotion of increased biofuels distribution.

Car Makers, Cellulosic, Ethanol, News

Biofuels Digest Diverts Blame to China

John Davis

bdlogo.jpgChina, not biofuels, are to blame for rising food costs. At least, that’s what The Biofuels Digest suggests. The online publication says their study finds that for every bushel of grain used to make U.S. ethanol, six are used to support Chinese meat demand.

A change in Chinese meat consumption habits since 1995 is diverting eight billion bushels of grain per year to livestock feed and could empty global grain stocks by September 2010, according to a new study from Biofuels Digest.

The study, “Meat vs Fuel: Grain use in the U.S. and China, 1995-2008,” concluded that a complete shutdown of the U.S. ethanol industry would extend the deadline only until 2013.

“It’s not food, it’s not fuel, it’s China,” said Jim Lane, editor of Biofuels Digest and author of the report.

The study determined that China’s meat consumption since 1995 has increased by 112 percent to 53 kilograms per person per year.

“If the Chinese people had consumed the same amount of meat, per person, in 2007 as in 1995, there would have been enough grain left over to support 927 million people with food for an entire year,” said Lane.Read More

Agribusiness, Biodiesel, Energy, Ethanol, Food prices, Research