Appeals Court Upholds E15

Cindy Zimmerman

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.

Ethanol, Ethanol News, Growth Energy, RFA

RFA: Reports Show Waiver Won’t Lower Corn Prices

John Davis

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.

Audio, corn, Ethanol, Ethanol News, Government, RFA, RFS

RFS Waiver Would Not Immediately Impact Corn Prices

John Davis

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.

Audio, corn, Ethanol, Ethanol News, Farm Foundation, food and fuel, Government, RFS, Webinar

Corn Growers Ask for Careful Analysis of RFS Waiver

John Davis

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.

corn, Ethanol, Ethanol News, Government, RFA, RFS

Wind Energy Grows; Manufacturing Keeps Pace

John Davis

The Department of Energy has released a report on the expansion of wind energy in the U.S. and the U.S. manufacturing that is supporting the surge. The nation was one of the world’s largest and fastest growing wind markets in the world in 2011. Wind power represented 32-percent of all new electric capacity added in the U.S. last year. The states of Texas, Iowa, California, Illinois, Minnesota, Washington, Oregon, Oklahoma, Colorado and North Dakota were leading the way with the most installed wind capacity at the end of 2011 and account for almost 75-percent of U.S. wind capacity. Overall – the U.S. has now installed 50 gigawatts of wind energy. The turbines power the equivalent of nearly 13-million American homes. It’s estimated the wind energy industry supports 75-thousand full-time jobs at more than 400 facilities across 43 states.

The Energy Department says the percentage of wind equipment made in the United States has also expanded dramatically. In fact – nearly 70-percent of the equipment installed at U.S. wind farms last year – including wind turbines and components like towers, blades, gears and generators – was made in the U.S. That’s up from just 35-percent in 2005.

The growth in domestic wind energy deployment could dramatically slow in 2013 – according to the Department of Energy report. This is due in part to the possible expiration of federal renewable energy tax incentives. The Production Tax Credit is set to expire at the end of the year. This credit has helped drive the industry’s growth and the wind industry projects 37-thousand jobs could be lost if the credit is allowed to expire. President Obama has called on Congress to pass legislation that extends the credit.

Government, Wind

Ethanol Supporters at Obama Iowa Event

John Davis

‘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.

Biodiesel, Ethanol, Ethanol News, politics

Most Believe Ag Journalists Are Ethical

Melissa Sandfort

Our latest ZimmPoll asked the question, “Do ag journalists (broadcast/print/web) adhere to good ethical practices in reporting?” This is just in time for the ag journalists gathering in Sweden for the International Federation of Agricultural Journalists Congress. I’ll be sharing the results with them.

Our poll results: Sixteen percent said they all do; sixty-eight percent said most do; and sixteen percent said most do not.

Our new ZimmPoll is now live and asks the question, “Which team for President would be best for agriculture?” What do you think…who is the better choice for office when it comes to supporting our nation’s farmers and ranchers?

ZimmPoll is sponsored by Rhea+Kaiser, a full-service advertising/public relations agency.

ZimmPoll

Vilsack Announces 106 Renewable Energy Projects

John Davis

Agriculture Secretary Tom Vilsack today announced 106 projects in 29 states, Guam and Puerto Rico have been selected for funding to make renewable energy and energy efficiency improvements. Money for the projects comes from the USDA Rural Development’s Rural Energy for America Program (REAP), authorized by the 2008 Farm Bill.

“The Obama Administration is helping agricultural producers and rural small business owners across the country reduce their energy costs and consumption,” Vilsack said. “This is part of the President’s ‘all-of-the-above’ energy strategy, which involves expanding support for traditional as well as alternative energy sources. Stable energy costs create an environment for sustainable job growth in rural America.”

The release highlighted projects such as a Washington County, Iowa wind turbine on a farm and an anaerobic digester in Wisconsin that will produce enough power for 420 homes each year. You can see the complete list of projects here.

REAP provides grants and loan guarantees for agricultural producers and rural small businesses to reduce energy consumption and costs, use renewable energy technologies in their operations and conduct feasibility studies for renewable energy projects. USDA has an active portfolio of more than $170 billion in loans and loan guarantees.

Government, USDA

Ethanol Industry Urges EPA to Deny RFS Waiver

John Davis

Two state governors have reportedly made an official request to the EPA to waive the RFS for corn ethanol, and the ethanol industry is wasting no time saying it should be denied. According to this Reuters article, North Carolina Gov. Bev Perdue and Arkansas Gov. Mike Beebe have asked the EPA for a waiver to the Renewable Fuels Standard (RFS), but officials at the Renewable Fuels Association (RFA) and Growth Energy have called on the government to reject those requests.

In a statement, the RFA says while the drought has stressed agricultural areas, it is not severe enough for the EPA to grant such a waiver:

“The RFS already includes a number of compliance options allowing great flexibility for oil refiners to meet their obligations under the program. The market is already taking advantage of these flexibilities as ethanol production has slowed 15% since the beginning of the year in response to market signals.

“To be clear, a waiver of the RFS will not provide the relief meat and livestock producers seek nor will it make it rain on dry corn fields and pastures. What waiving the RFS would do is send chilling signals to investors in new biofuel technologies, threaten to force gas prices higher than they already are, and dramatically lower the availability of ethanol feed products on which the livestock industry is growing to rely.”

Growth Energy responded saying the marketplace will straighten out any imbalance between corn supply and demand:

“Furthermore, the governors continue to use misinformation saying that corn ethanol uses 40 percent of the corn crop – we do not. In fact, only 16 percent of the corn acres harvested goes to ethanol production. Just one-third of the kernel is used for ethanol, with all the protein, fiber and oil being returned to the food chain in the form of a high protein animal feed, which replaces corn and soybean meal and is less expensive.

“To blame the ethanol industry due to a lack of rain does not make any sense. These governors are asking American family grain farmers who are already suffering crop loss to also take a further loss by limiting their market through a domestic grain embargo, benefiting large corporate food companies by lining their pockets at the expense of the family farmer, and our nation’s pursuit of energy independence.”Read More

corn, Ethanol, Ethanol News, Government, RFA, RFS

RFA: RFS Waiver Brings No Lower Prices for Anyone

John Davis

Officials with the Renewable Fuels Association (RFA) say if the EPA grants a waiver to the Renewable Fuels Standard (RFS), it would not bring the hoped-for reduction in feed prices for livestock producers and lower prices for consumers at the grocery stores. The calls for the waiver grew louder after last Friday’s USDA crop report showed a 13 percent reduction in this year’s expected corn crop due to the drought.

During a webinar today, the RFA’s VP of Research and Analysis Geoff Cooper looked at the impact of the drought on the corn crop and what it means for ethanol production and the RFS. He pointed out that some groups, particularly the meat lobby, are trying to turn this to their advantage. “These are the same groups that have been gunning for the RFS for a number of years and attempted to strike while the iron is hot,” Cooper explained. But he says their arguments that the RFS is too inflexible and the ethanol industry won’t reduce its demand for corn in proportion to the reduction in the crop just don’t hold water. “We’ve seen corn consumption by the ethanol industry drop significantly in recent months,” adding that the record surplus supply stocks of ethanol and RINs have helped the industry still maintain its end of the RFS. “The flexibility in the RFS and the responsiveness of the market itself make a waiver completely unnecessary.”

Cooper added that consumers won’t see any significant price drops in their grocery bills if the RFS is waived. He highlighted recent research that shows the waiver would produce only a 4.6 percent reduction in corn prices at the commodity level, which translates to even less for consumers when you consider that only 14 cents of every food dollar spent goes toward the actual commodity… transportation costs, support, marketing, etc. make up the other 86 cents. And he noted that consumers would end up paying a lot more for gasoline as ethanol is credited with lowering gas prices $.84-$1.07 per gallon. “Really what’s driving higher gas prices, as you would expect, are higher crude oil prices and some of the problems in the refining sector.”

Cooper concluded saying the bottom line is the ethanol industry and the market are responding and sharing in the tighter corn stocks, there is enough flexibility in the RFS to make it through a leaner year like this one, and an RFS waiver won’t reduce prices for anyone.

You can listen to the entire webinar here (it’s a little long at just over an hour but well worth a listen):
RFA Webinar on RFS Waiver Follow along with the slide presentation here.

Audio, corn, Ethanol, Ethanol News, Government, RFA, RFS