How Do Farmers Choose Bioenergy Crops?

Joanna Schroeder

Carolyn Hoagland was recently awarded the Volkswagen Distinguished Scholar for her work in learning about how farmers choose to grow bioenergy crops. Hoagland, an adult student, is an environmental science major at the University of Tennessee at Chattanooga (UTC). She conducted her research while working as an intern at the Oak Ridge National Laboratory. Hoagland found that many aspects of farmers’ choices as well as U.S. farm policy are complex. However, she determined that high quality farm ground is unlikely to be converted to cellulosic energy crops if farmers are concerned about making a profit.

“Most ethanol produced in the U.S. is currently made from corn grain, and the government would like to limit that process and encourage ethanol to be produced instead from non-food crops like switchgrass or hybrid poplar,” said Hoagland. “These poor quality acres can sometimes be profitably converted to switchgrass or other energy crops, but only if a biorefinery is nearby to buy the biomass energy crop.”

The USDA has programs in place to encourage farmers to grow bioenergy crops including the Biomass Crop Assistance Program (BCAP). However, this program is in jeopardy when at the beginning of June, the Senate voted to discontinue any funding for the program in 2012. The bill still needs to go to the House for vote but the industry is confident that it will look much different than the Senate version.

Hoagland presented her research during the Annual Meeting and International Research Conference of Sigma Xi, the Scientific Research Society in Raleigh, North Carolina. She has been studying energy for more than a decade.

“Getting the internship changed my life. In class, it helped me see the big picture. When you’re taking a 300 or 400-level class, it’s hard to put the information into context, but if you’ve completed an internship, when the information is presented, you can understand it UTC had been very welcoming place for adult students,” Hoagland concluded.

biofuels, biomass, Cellulosic, Research

Iowa 15% Ethanol Incentive Takes Effect

Cindy Zimmerman

Iowa could become the first state in the nation with fuel pumps sporting the new 15% ethanol (E15) labels approved this week by the Environmental Protection Agency along with final rules allowing E15 to be used in all 2001 and newer passenger vehicles later this summer.

Effective July 1, Iowa retailers are eligible for a three cent per gallon tax credit for every gallon of E15 sold. “With the EPA in the process of clearing the final hurdles, now is the time for all retailers to evaluate how E15 could fit into their business model,” said Monte Shaw, Iowa Renewable Fuels Association (IRFA) Executive Director. He notes that retailers with blender pumps will be able to take advantage of the new state incentive immediately since E15 can be already be sold to flex-fuel vehicle owners.

Shaw says that IRFA members are happy to see the EPA issue a final ruling for E15 use but still dissatisfied with the label design, even though it is an improvement over the initial proposal. “The Halloween pumpkin orange ‘draft’ label was apparently left to fade in the sun for a couple of months. That is a ‘peachy’ improvement,” said Shaw. “However, IRFA is very disappointed the EPA left in the ‘may cause damage’ warning for vehicles 2000 and older. The EPA admitted that they have ‘insufficient’ data to conclude that damage would occur, so I guess ethanol is guilty until proven innocent. Under the EPA’s rationale, E0 (gasoline only) pumps should have a similar warning, because running a car on gasoline certainly degrades the emissions control system over time.”

The new E15 incentive was part of a package of renewable fuels initiatives passed by the Iowa legislature this year and signed into law by Governor Terry Branstad which also includes a tax credit for E85 of 10 cents per gallon; a biodiesel tax credit of 3 cents per gallon for blends of B2 and higher; and infrastructure grants of up to $50,000 to install biodiesel, E85 and blender pumps.

Biodiesel, biofuels, blends, Ethanol, Ethanol News

USDA Finds More Corn Acres Than Expected

Cindy Zimmerman

The new planted acreage report from USDA shows more corn than most anyone expected, given the wet spring weather that delayed planting in many areas. According to USDA, corn planted area for this year is now estimated at 92.3 million acres, up 5 percent from last year. That’s more than growers expected to plant back in March and the second highest planted acreage in the United States since 1944.

“In light of the weather, many people seemed to be thinking that less corn would be planted,” said Lance Honig with USDA’s National Agricultural Statistics Service. “In reality, what we saw was especially in some of those areas not impacted by weather, they really planted a lot more corn than they thought they might.”

Renewable Fuels Association VP of Research and Analysis Geoff Cooper said that, based on USDA’s latest projections of average corn yield (158.7 bushels/acre) and harvested acres (84.9 million), it would mean a 2011 harvest of 13.47 billion bushels – nearly 300 million more bushels of corn than USDA was projecting in its most recent supply/demand estimates. “The takeaway from this report is that U.S. farmers continue to apply the most efficient and effective technologies to produce record or near-record crops year in and year out,” he said.

Of course, it is still early in the season, and American Farm Bureau Federation crops economist Todd Davis says a lot can happen to the corn crop from now until harvest. “We have a lot of hurdles to jump to reach a harvest of 13.47 billion bushels of corn this year,” Davis said. “The weather throughout the Corn Belt will have to cooperate in July and August for farmers to get strong yields and we would have to harvest the 84.8 million acres projected in the June 30 acreage survey.”

USDA also released the June 1 corn stocks estimate today, which was also higher than expectations but still down 15% from last year at 3.67 billion bushels.

corn, Ethanol, Ethanol News, RFA, USDA

Butte College First In Nation To Go ‘Grid Positive’

Joanna Schroeder

Butte College in California is the first in the nation to go ‘grid positive’. The school will generate more electricity from its solar arrays than it consumers and will deliver the excess renewable energy back to the electric grid. The college sits on a 928-acre wildlife refuge located 75 miles from Sacramento. The solar array is comprised of 25,000 solar panels that will generate an estimated 6.5 million kilowatt hours of electricity per year. This is enough to power the entire college or 941 average sized homes.

“Butte College has had a longstanding commitment to sustainability. Achieving grid-positive status marks the culmination of years of effort to build Butte College’s supply of solar power and to improve energy efficiency on campus,” said Dr. Diana Van Der Ploeg , Butte College president. “Having the support of the board of trustees, faculty, staff, and students was essential to making this achievement possible.”

The solar system should save the college an estimated $50-$75 million over 15 years, even when factoring in the costs for the project. The savings will come from eliminating its electricity bill, profits made from selling the excess power and avoiding future electricity rate hikes. The college is planning on using the increased monies to improve student programs and increase enrollment.

“I’ve asked community colleges to become more entrepreneurial and seek out new and innovative ways to generate revenue and to cut operating costs,” said California Community Colleges Chancellor Jack Scott. “Butte College dramatically accomplishes both of these goals by becoming grid positive. Furthermore, this college’s solar arrays will train workers for jobs in the green energy field – an outcome that will help California’s economy and recovery.”

Electricity, Energy, Solar

Wildlife & Renewable Energy Program Announced

Joanna Schroeder

To learn more about the effects of energy facilities on wildlife, the Biodiversity Research Institute (BRI) has created a wildlife and renewable energy program. The study aims to understand the movements of birds and bats and how they interact with various forms of energy such as wind turbines. BRI is currently involved in several areas of wind power research and marine spatial planning in the Eastern United States.

“Careful siting of renewable energy development may play a key role in minimizing impacts to wildlife,” said David Evers, Ph.D., BRI’s executive director and chief scientist. “However, this requires detailed knowledge of where animals breed, winter, and migrate.”

For the past two and a half years, the BRI team has studied migration and movement patterns of birds and bats over the Gulf of Maine and along the Atlantic coast. They discovered that migratory owls will fly hundreds of miles out over the Atlantic on their way south to South America and the Caribbean. BRI believes this could be important in understanding how these owls, and other birds, could be affected by offshore wind turbines.

“Wind developers and wildlife managers in both the U.S. and Europe have called for the collection of preconstruction monitoring data to minimize the potential impacts of facilities on wildlife,” says Kate Williams, director of BRI’s wildlife and renewable energy program. “This can be a hot-button issue, but BRI’s main goal is to provide sound scientific data to decision makers and the public to inform debate on siting and other issues. We don’t have a pro- or anti-wind agenda.”

One of BRI’s goals is to make the information available to policy makers as well as the general public. They will be hosting a two-day workshop about the ecological effects of offshore wind power on November 8-9, 2011 at the University of Southern Main in Portland.

Energy, Environment, Wind

Fuel Ethanol Workshop In Review

Chuck Zimmerman

The mood was very upbeat at the 27th International Fuel Ethanol Workshop. I spoke with Tom Bryan, BBI International, about how he would characterize this year’s event which concluded yesterday.

Tom says the technical sessions were extremely well attended. In fact, chairs had to be added to some of them due to the attendance in them. He says there were over 2,000 in attendance this year. That may not be as high as several years ago but shows that the industry is resilient and upbeat for the future. Tom Bryan Interview

I have several more interviews from this year’s event that I will be posting over the coming days. Thanks a lot to BBI International for allowing me to attend and for all the support they provide us. Their crew is top notch and a joy to work with.

2011 FEW Photo Album

Our coverage of the 2011 Fuel Ethanol Workshop is being made possible by the Renewable Fuels Association.

Audio, Ethanol, Ethanol News, FEW

What Would Happen If Ethanol Tax Credit Extended?

Joanna Schroeder

There are several proposed amendments to current ethanol tax policy including the VEETC and tariff. Many believe that these incentives will disappear at the end of the year, but what would happen if they were extended? Today, the blender’s credit (VEETC) is 45 cents and the ethanol tariff is 54 cents. According to research conducted by University of Missouri economists, this action would boost corn-based ethanol production as well as corn prices.

Seth Meyer, economist with the MU Food and Agricultural Food and and Policy Research Institute (FAPRI) ran a “what-if” scenario on FAPRI computers. With incentives in place, the results showed fuel production from corn would increase by 1.2 gallons over current production levels and corn prices would increase by 18 cents per bushel. In addition, the model predicts that corn acreage would increase by 1.7 million acres.

Earlier this year, the team ran the scenario without tax credits and tariffs. However, this time the scenario was run on the assumption that they would continue but did not factor in any changes to current biofuel mandates.

“This analysis looks at an alternative scenario that keeps ethanol tax credit and tariff at current levels,” said Pat Westhoff, director of MU FAPRI. “There is debate about federal support of the ethanol industry. At a Paris meeting last week, G-20-nation trading partners raised concerns about U.S. support of biofuels. The revised baseline gives FAPRI a tool to study proposed policy changes.”

Westhoff notes that U.S. ethanol policy is complex with a broad set of assumptions. It is assumed that the blender of record who receives the tax credit would keep part of the benefit and then share part of the benefit with station owners. From there, it is assumed station owners would pass along the savings to consumers at the pump. In addition, the tax credit is also designed to allow blenders the ability to pay more for ethanol and ethanol producers the ability to pay farmers more for corn. However, this is not always the case.

Westhoff concluded, “Our work suggests that how benefits of the blender’s tax credit are shared among fuel consumers, ethanol plants and corn farmers is very sensitive to market conditions.”

biofuels, food and fuel, Research

Oil Independence for a Stronger America Act Introduced

Joanna Schroeder

Today U.S. Senators Jeff Merkley (D-OR), Tom Carper (D-DE), Tom Udall (D-NM) and Michael Bennet (D-CO) introduced the Oil Independence for a Stronger America Act today in an effort to eliminate dependence on foreign oil by 2030 and create a National Council on Energy Security that would be charged with providing recommendations to the President and Congress to ensure America’s energy goals are met. More specifically the act calls for more production and use of electric vehicles, increase in travel options (more public transportation including high-speed trains), infrastructure improvements, development of alternative transportation fuels and reduce the use of oil to heat buildings.

“America’s dependence on oil from the Middle East, Nigeria, and Venezuela makes us increasingly vulnerable to economic and national security risks,” said Merkley. “American entrepreneurs and workers have the ingenuity and grit necessary to break this addiction to foreign oil – the challenge is whether politicians in Washington are willing to choose American strength over vulnerability.”

With all of the proposed pieces of alternative energy legislation that have been introduced and voted on over the past few weeks, as an aside, I thought I would provide a bit of education on how a bill becomes a law. Remember, School House Rock?

Now that you know how the process works, let’s see what the industry is saying.

Michael McAdams, President of the Advanced Biofuels Association said, “This legislation authored by Senators Carper, Merkley and Bennet is precisely the way our nation must rethink, and how Washington must confront, our energy challenges. By resisting the past temptations of picking a winner, the bill instead offers a comprehensive approach that focuses on the future of all biofuels, including advanced drop-in, algae, and cellulosic fuels to deliver as many gallons to back out foreign oil as quickly as possible.”

He concluded, “Developing renewable energy alternatives is an inevitable part of our shared global future and America should help lead the way. This bill puts us on the road to doing just that by encouraging the development of a robust and thriving domestic advanced biofuels market.”

The Oil Independence for a Stronger America Act would reduce oil consumption in the U.S. by over 8 million barrels per day by 2030, enough to end the need for oil imports from beyond North America.

biofuels, Electric Vehicles, Energy, Legislation, Oil, politics

Biofuel IPOs On The Rise

Joanna Schroeder

The biofuels industry is making a come-back with several successful IPOs (initial public offering) over the past few months. Today, KiOR announced its initial public offering of 10,000,000 shares of Class A common stock at $15 per share. The company raised nearly $138 million of proceeds from the IPO which occurred on June 24.

Other successful IPO’s include the much-awaited IPO of Gevo back in February. The company raised an estimated $123.3 million after setting the share price at $15. In total, the company sold 8.223 million shares. There were concerns as to what level of interest the IPO would generate after Amyris went public last September with less than stellar results. In total, Amyris raised $84.8 million after setting in shares at $16. The company had originally hoped to go out with an offer between $18-$20 a share.

But despite set-backs for the biofuels industry, the real IPO winner so far this year has been Solazyme who raised nearly $227 million – nearly double the money raised by others in the biofuels sector. The per share price was $18, ironically 10 percent higher than company execs predicted several weeks prior to the official IPO.

So why did Solazyme rake in the big bucks while the others merely fared well? While I am by no means a financial guru, I believe part of their success lay in the fact that Solazyme is already making profits by selling bioproducts and biochemicals. Earlier this year, the company launched a cosmetic product that is being sold in Sephora stores nationwide. The other companies, while they have contracts and are producing fuels at smaller scales, are not making profits yet. Therefore, investing in these companies is a bigger gamble.

Another reason why Solazyme’s strategy may be effective is that they are able to use their profits from their bioproducts and biochemicals to help fund it algal-biofuels research while companies like Gevo have no products yet. Therefore, Gevo needs to raise funds just to deploy its technology at commercial scale, which it is now doing. They have broken ground on the retrofit of an ethanol plant in Luverne, Minnesota.

With a solid showing on Nasdaq, at least for now, hopefully these second generation biofuels companies are paving the way for more IPOs and more private investment dollars – a much needed element if the industry is to move to commercialization.

algae, biofuels, biomaterials, Opinion

Stabilizing Food Prices

Chuck Zimmerman

Our latest ZimmPoll asked, “What can G20 ag ministers do to stabilize food prices?” The answer is Nothing, 31%; Increase productivity, 23%; End biofuels production, 18%; Regulate markets, 17%; Improve crop reporting, 8% and Stockpile food, 3%. Can they actually do any of these things? Well, I guess they can do nothing. They met recently and did come up with “a plan.” Interestingly, stockpiling food is part of their plan. Hmm . . .

Our new ZimmPoll is now live. We’re asking the question, “What do you think of USDA’s proposed GIPSA rule?” Let us know what you think. Don’t know much about GIPSA? Check out this link to find a series of posts on the subject.

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

ZimmPoll