Study: High Corn Lowers Indirect Land Use for Biofuels

John Davis

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.

corn, Ethanol, Ethanol News, Indirect Land Use

Solazyme’s First Algae Oil Refinery in Illinois Online

John Davis

More good news for renewable oil maker Solazyme. On the heels of last week’s announcement that the California-based company had partnered with Bunge in Brazil to produce renewable oil from sugarcane, Solazyme has now announced the commissioning of its first fully integrated biorefinery (IBR) in Peoria, Illinois, to produce oil from algae:

Solazyme has been running routine fermentations at commercial scale since 2007 and began running fermentation operations at the Peoria facility in Q4 2011. With the successful production of algal oil from the integrated facility this month, Solazyme has met its start-up goals for the facility on schedule. The IBR was partially funded with a federal grant that Solazyme received from the U.S. Department of Energy (DOE) in December 2009 to demonstrate integrated commercial-scale production of renewable algal-based fuels. The demonstration/ commercial-scale plant will have a nameplate capacity of two million liters of oil annually and will provide an important platform for continued work on feedstock flexibility and scaling of new tailored oils into the marketplace.

Solazyme bought the facility in Peoria in May of last year. Company officials say the plant coming online is a major milestone for Solazyme.

algae

Iowa Fuel Retailers Hit Roadblock to E15 Sales

Cindy Zimmerman

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

Audio, Ethanol, Ethanol News, Iowa RFA

Ethanol Report Visits Bobby Likis

Cindy Zimmerman

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.

Audio, automotive, Ethanol, Ethanol News, Ethanol Report, RFA

Biofuels Defense Investments Announced

Cindy Zimmerman

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

advanced biofuels, Audio, aviation biofuels, Ethanol, Ethanol News, Government, USDA

Dealer Uses Truck to Wave Bioheat Flag

John Davis

A Massachusetts Bioheat dealer believes there’s no better way to show patriotism this 4th of July than parading his newly wrapped truck proclaiming the goodness of the green heating fuel. Cleghorn Oil, a Bioheat dealer based in Fitchburg will have his truck, complete with the Bioheat wrap courtesy of the National Biodiesel Board’s Bioheat outreach program, in his town’s Independence Day parade:

“I’ve never seen a more beautiful truck,” said Ryan Roy, the company’s director of operations. “This is the crown jewel, the showpiece of our fleet. I almost want to put it on a pedestal and keep it as a trophy. People see it and say ‘wow, I’ve never seen anything like that.’”

Cleghorn, which changed its oilheat line exclusively to Bioheat this year, won the wrap at the New England Bioheat Symposium in Boston in March. The application of the wrap was paid for thanks to funding from the Nebraska Soybean Board and the United Soybean Board through the soybean checkoff, but the artwork is available to all registered Bioheat dealers.

Roy’s company first learned of Bioheat from Paul Nazzaro, NBB’s petroleum industry liaison.

“We jumped on board because it seemed like the right thing to do,” Roy said. “Bioheat is better for the country, better for the burner, and cleaner. It’s working for us.”

Cleghorn gets post cards, door hangers, and other literature from the NBB’s Bioheat program to educate its customers on the cleaner heating fuel.

Biodiesel, NBB

Pacific Ethanol Looks to Raise $12 Mil in Stock Sale

John Davis

Pacific Ethanol, Inc. makes an underwritten public offering to sell 28 million units at $.43 a share expected to raise $12 million. This company press release has details:

Each unit consists of (i) one share of common stock; (ii) one warrant to purchase one share of common stock (“Series I Warrant”); and (iii) one warrant to purchase 1/2 of a share of common stock (“Series II Warrant”). The shares of common stock and warrants are immediately separable and will be issued separately. The warrants are exercisable immediately upon issuance. The Series I Warrants are to have a 5-year term and an exercise price of $0.63 per share. The Series II Warrants are to have an 18-month term and an exercise price of $0.53 per share.

The offering is expected to close on or about July 2, 2012. The company bills itself as “the leading marketer and producer of low-carbon renewable fuels in the Western United States.”

Ethanol, Ethanol News

Nebraska Corn Board Funding More Blender Pumps

John Davis

Retailers in Nebraska will get some help putting in pumps that give more choices when it comes to ethanol. The Nebraska Corn Board will give grants of $30,000 for acquisition and installation of the first blender pump at a location and $10,000 for a second pump to qualifying retailers:

Blender pumps allow retailers to more easily offer additional ethanol blended fuels, expand their fuel offerings and provide a point of distinction in the marketplace while serving the growing number of motorists driving flex fuel vehicles.

Such pumps also provide opportunities for stations to more easily offer E15, which is approved for use in all model year 2001 and newer cars, light-duty trucks and SUVs.

Grants are available on a first come, first served basis. Once funding is exhausted, retailers will be placed on a waiting list and awarded grant money in the order applications were received, if additional funding becomes available.

“We recognize the cost to install blender pumps can be a hurdle, and this grant program is designed to help station owners move forward and upgrade their system,” said Curt Friesen, a farmer from Henderson and secretary-treasurer of the Nebraska Corn Board. “We especially would like to see new pumps installed in larger cities where there are more drivers, which means more flex fuel vehicles capable of using ethanol blends beyond E10 and E15.”

Officials point out that while there are more than 120,000 (and growing) flex fuel vehicles in Nebraska, there are only about 20 blender pumps and an additional 40 pumps offering E85 across the state. They point out that stations that put in the new blender pumps will be in better positions for the higher demand for the higher blends.

More information is available through the Nebraska Corn Board’s website, www.nebraskacorn.org.

corn, Ethanol, Ethanol News

Corn Prices Shutter Another Valero Ethanol Plant

John Davis

It looks like there’s more trouble for Valero’s corn-based ethanol plants. In just more than a week, the company has shuttered a second ethanol plant. This Reuters article says this one is in Linden, Indiana, but the reasons are the same as last week’s closing of Valero’s Nebraska facility: high corn prices:

The 110-million-gallon-a-year (500-million-liter) Linden plant is the second plant Valero has idled this summer due to poor plant economics, but the company expects to return both to production before the fall corn harvest when corn supplies increase, said Valero spokesman Bill Day.

“We’ll watch market conditions at all of our plants,” Day said.

Valero idled production on Jun 19 at its 100-million-gallon-per-year in Albion, Nebraska, as high corn prices and lower gasoline demand destroyed profits.

Another Valero ethanol plant in Ft. Dodge, Iowa is closed for a planned overhaul.

corn, Ethanol, Ethanol News

Survey Finds Need for More Renewable Fueling Options

Iowa RFA In a recent online survey of shareholders, the Iowa Renewable Fuels Association (IRFA) sought input on the renewable fuels industry’s impact on individuals and communities. Nearly 500 renewable fuels supporters took part in the survey and provided some intriguing responses.

“There is a growing appreciation for fueling freedom – not just E85, but E15 and E30 as well,” said IRFA Executive Director Monte Shaw. “While progress has been made, the lack of flexible fueling stations is holding us back.”

The survey found that:
• Despite the common use of the term “farmer-owned ethanol plant” only 37 percent of the respondents identified themselves as farmers.
• 39 percent of respondents have a friend or family member employed directly by an ethanol or biodiesel plant.
• 57 percent of those surveyed owned a flex-fuel vehicle (FFV), with an equal 57 percent of those stating they routinely purchase E85.
• Of the FFV owners, 68 percent said flexible fueling influenced the purchase of their vehicle.
• Of FFV owners, 67 percent stated they do not find E85 refueling stations adequate.
• 29 percent of those surveyed said they own a diesel pickup or passenger car, with 51 percent of those stating they routinely purchase biodiesel blends.
• 18 percent stated B20 compatibility influenced their decision to purchase the diesel vehicle.
• Of diesel vehicle owners, 71 percent stated they do not find biodiesel refueling sites adequate.

“Biodiesel blends are attractive to consumers today,” added Shaw. “But the lack of distribution infrastructure prevents many Iowans from having the choice of biodiesel at the pump. One of our top goals is to reverse this and some major improvements are on the way.”

IRFA will release additional survey results throughout the summer in conjunction with future 10th anniversary events.

Biodiesel, Ethanol, Flex Fuel Vehicles, Iowa RFA