Ethanol Tax Incentive Cost Perspective

Cindy Zimmerman

The cost of extending the ethanol blenders tax credit for another year is well worth it, according to the Renewable Fuels Association.

Renewable Fuels Association LogoExtending the Volumetric Ethanol Excise Tax Credit (VEETC) is estimated to cost about $6 billion dollars in 2011 at the current rate in the Senate bill of 45 cents per gallon. The United States spends about $750 million per day on imported oil, or $5.25 billion per week. Which means, extending the VEETC through 2011 would be the equivalent to about one week’s worth of oil imports – eight days, to be precise.

The Senate measure that includes extending the ethanol tax credit was moved along yesterday with a vote of 83 to 15 to formally end the debate and will soon be put to a final vote. RFA president and CEO Bob Dinneen hopes that will be very soon. “The Senate has taken an important step to keep America on the path toward greater energy self-reliance,” said Dinneen. “We encourage the Senate to move as swiftly as possible to pass this measure.”

Despite the cloture vote, the rules allow the Senate to debate the bill until midnight tonight, but the final vote could be held before then or delayed until tomorrow morning. Senator Dianne Feinstein (D-CA) is expected to introduce an amendment to cut the tax credit and the associated tariff to 36 cents, but Senator Chuck Grassley (R-IA) says a vote on the amendment is unlikely.

As for the future, Grassley expects some changes. “We’re all kind of committed to taking a new approach and the phasing out of the tax credits,” he said during his Tuesday morning conference call with reporters.

RFA’s Dinneen says the industry also expects changes in the incentives, but the extension gives them time to adapt. “This one-year extension will provide the industry and lawmakers breathing room to think through responsible reform of ethanol tax policy and all energy tax policy more specifically,” he said.

Ethanol, Ethanol News, Government, RFA

First 350 Chevy Volts Headed to New Homes

Joanna Schroeder

Some lucky residents of California, Texas, Washington D.C. and New York could have a special surprise under their tree this holiday, a new Chevy Volt (Okay, maybe in their driveway with a bow on top). The first truckload of Volts left the Detroit-Hamtramck Assembly Plant yesterday destined for these markets and will receive the world’s first extended range electric vehicles. There are a total of 350 to be sent to new homes this week.

“Today is a historic milestone for Chevrolet,” said Tony DiSalle, Volt marketing director. “We have redefined automotive transportation with the Volt, and soon the first customers will be able to experience gas-free commuting with the freedom to take an extended trip whenever or wherever they want.”

The feature that sets the Volt apart is its Voltec electric propulsion system, which combines battery-only electric driving with an efficient, gas-powered engine giving the Volt up to 379 total miles of driving before having to recharge the battery or fill up the small gas tank. The Volt is the only mass produced U.S.-built electric vehicle and the only electric vehicle that has a flex-fuel component.

Earlier this year, Chevrolet shipped 15 pre-production Volts to technology enthusiasts and electric vehicle advocates whom were the first consumers to experience the Volt every day under real-world conditions during a 90-day vehicle and charging evaluation program. Unfortunately, I was not one of them.

However, I have friends in launch states…Hint. Hint.

E85, Electric Vehicles

Biodiesel Tax Incentive Clears Cloture; NBB Optimistic

John Davis

The federal $1-a-gallon biodiesel blenders credit has cleared an important legislative hurdle, and the National Biodiesel Board is optimistic it will become law. Earlier today, the U.S. Senate voted to end debate (invoking cloture) on the package of tax credits, including the biodiesel incentive, by a bipartisan 83-15 margin.

As the vote was going on, I talked to the NBB’s Vice President of Federal Affairs, Manning Feraci, who believes, this time, the measure is headed for actual passage.

“What this does, essentially, is put us on a glide path to have Senate passage in the next day or two of the tax package that is carrying everything from the two-year extension of the Bush tax cuts, and, as it applies to the biodiesel industry, a retroactive extension through 2011 of the biodiesel tax incentive,” Feraci said.

He believes that large bipartisan support in this cloture vote is a positive indicator for final passage. But Feraci admits some Democrats, especially in the House, where the bill would have to return once the Senate passes it, have some real angst over the package President Obama negotiated with the Republicans. “The Democrats, who still control the House at this point, are trying to figure out how they’re going to play this.” He says while no one wants Americans’ taxes to go up on January 1st, there’s a high-stakes game of chicken being played right now.

Feraci admits it has been a frustrating year for the biodiesel industry with the loss of the tax break and the lack of push until the 11th hour from the Obama Administration to get this passed. And he says there are worries that some fiscal hawks, especially from the Republican side, have some real heartburn with the tax break … although Feraci is quick to point out the economic “bang for the buck” the incentive provides. In addition, if the current Congress is not able to get this passed before the new session in January, when the Republicans take control of the House, the bipartisan support biodiesel enjoys could ensure it eventually passing, no matter who controls Congress. Feraci adds that passage could make 2011 a banner year for biodiesel, because it will bring stability to the industry. In the meantime, he’s watching carefully what is happening.

“We’re just going to have to stay tuned to see how this is going to play out over the next couple of days.”

Listen to more of my conversation with Feraci here: Manning Feraci, NBB

Audio, Biodiesel, Government, Legislation, NBB

Iowa City Woman Wins $7,500 In Free Fuel & Food

Joanna Schroeder

An Iowa City woman received a very welcome early holiday gift – free food and fuel for a year from the  Iowa Corn Growers Association. Katie Ortmann was the winner of the Iowa Corn Fed GameDay GiveAway campaign when her name was called during halftime of the Iowa State versus Iowa men’s basketball game held this past Friday, December 10, 2010 in Iowa City.

The year-long promotion, designed to highlight the many uses of corn and its importance to Iowa, traversed a year of Iowa State versus Iowa sporting events that included football, basketball and wrestling matches. Iowans were able to register to win from August 20th through November 20th and the grand prize was free food and fuel for one year valued at $5,000 in groceries and $2,500 in ethanol from Kum & Go.

Runner-up prizes were also awarded. Marc Foster, also of Iowa City, was randomly selected to win free food and fuel during the Iowa versus Iowa State wrestling meet on Friday, December 3. In addition, Chris Dodel’s name was drawn to win the same prize during the Iowa versus Iowa State women’s basketball game on Thursday, December 9th. He resides in Urbana, Iowa.

“We’ve reached thousands of people with the Iowa Corn Fed GameDay GiveAway promotion,” said Mindy Williamson, director of communications and public relations for the Iowa Corn Promotion Board (ICPB) and the Iowa Corn Growers Association (ICGA). “Ethanol use was just one benefit featured in the program, which included food and feed uses for corn and messages about corn’s importance to Iowa’s economy, environment and energy independence.”

On behalf of ICGA and ICPB, Williamson thanked Kum & Go, Cyclone Sports Properties and Hawkeye Sports Properties for helping to sponsor the Iowa Corn Fed GameDay GiveAway sweepstakes that is part of a four-year contract with both Hawkeye Sports Properties and Cyclone Sports Properties. The promotion includes radio, television, internet, and on-site marketing and highlights the many uses for corn and its importance to Iowa- as everyday is GameDay for Iowa’s farmers.

Agribusiness, corn, Ethanol, food and fuel, Promotion

It’s Time to Go Back to School

Joanna Schroeder

It’s never too late to go back to school. The Center for Advanced BioEnergy Research (CABER) in the College of Agricultural, Consumer and Environmental Sciences (ACES) at the University of Illinois is now offering an online class in bioenergy systems (ACES 409) for the Spring 2011 semester. The class meets on Tuesday evenings from 6:30 p.m. – 9:00 p.m. CST beginning on January 18 and ending on May 10, 2011.

The class is designed as in introductory survey course covering a wide range of bioenergy issues including agronomy of bioenergy crops; harvest, storage and transportation issues; biobutanol and biodiesel production, lifecycle analysis and environmental implications, and more. Lectures will be presented by the course instructors as well as by selected experts from industry and academic research.

The classes will be delivered online at Elluminate.com, a site optimized for online learning that allows students to interact, real-time, with presenters and other participants.

“We’re excited to offer this class in bioenergy online. We’ve been teaching it on campus for three years and have had several requests to offer the information in an online format,” said Hans Blaschek, Director of CABER. “Technology is changing so quickly in the bioenergy arena. This class should be beneficial to people throughout the world who are interested in learning more about bioenergy technology and research initiatives at the U of I.”

In addition to gaining an understanding of each topic presented and progress made in that area, students will learn how each issue fits into the broader bioenergy context and the challenges that remain.

Course tuition and fees are $1,167 for 3 credit hours. Registration is currently open and available until January 18 or until the class is full. You are not required to be a current student of U of I to enroll in the class. To register, go to www.outreach.uiuc.edu, select “NON-DEGREE Registration.”

bioenergy, Education

Update On Biofuels Tax Credit Extensions

Joanna Schroeder

The biofuels industry has been watching closely as the various biofuels tax incentives make their way through the Senate. Today the U.S. Senate voted to invoke cloture on the motion to proceed to major tax legislation containing one-year tax extensions of key biofuels tax incentives including VEETC, the Small Ethanol Producer Tax Credit, Secondary Tariff, the Alternative Vehicle Refueling Property credit and the $1 per gallons biodiesel tax credit for both 2010 and 2011.

“This procedural vote is the first step in the legislative process, and it signals that the U.S. Senate will adopt the tax package containing critical ethanol extensions later this week. We are hopeful that very soon after the Senate enacts this legislation the U.S. House of Representatives will as well,” said Brian Jennings, Executive Vice President of the American Coalition for Ethanol (ACE).

Jennings continued, “ACE has mobilized grassroots support for the tax legislation and ethanol provisions in the U.S. House so that the bill is sent to President Obama’s desk for his signature. Members of Congress voting for this important legislation will help prevent Americans from paying higher gas taxes, help save existing jobs and create new jobs in rural American and reduce our dangerous dependence on foreign oil.”

Growth Energy also weighed in on the vote and CEO Tom Buis said, “With today’s vote, the Senate took a critical step toward reducing our dependence on foreign oil, creating jobs in the U.S., improving our environment, and strengthening our national security. Extending the current ethanol incentives today will give Congress the opportunity to implement longer term solutions, like our Fueling Freedom Plan, next year.”

ACE, Ethanol, RFA

An Unusual Competitor To Biofuels?

Joanna Schroeder

According to an interesting article published in Zootaxaca, a taxonomy journal, scientists have unveiled an unusual competitor with humans for switchgrass, an energy crop with great potential for biofuels, the Blastobasis repartella moth. South Dakota State University entomologist Paul Johnson and agronomist Arvid Boe, along with other researchers, are studing the moth whose larvae are born into the stems of switchgrass stalks.

Johnson, who was interviewed by the ArgusLeader, said that if switchgrass, and other similar native grasses are to be farmed commercially, it is important that both science and industry know more about their natural ecologies. This includes how the moth would be affected by growing and harvesting switchgrass for biofuels.

Johnson said that while he and his team knew “the common stuff” they were surprised to learn that the moths in the Blastobasis genus fed on plant matter – they were thought to be scavengers. This could make farming switchgrass tricky, he says because growing one crop limits biodiversity and allows parasites or predators to take hold more easily. He also noted that since the moth is a “burrowing insect” it makes it more difficult and expensive for farmers to rid the plant of the insect.

According to the article, issues such as those posed by the moth are accounted for in a provision included in the 208 Farm Bill which subsidizes much of the cost of establishing a perennial biomass crop such as switchgrass.

In the meantime, there is a long way to go before energy crops, or biomass crops become commercially viable for biofuels. During this time, Johnson cautions that more research is needed among all biomass crops to learn more about the moth as well as other potential pests and his team will continue to “look more closely at how the moth fits into the plant’s ecology, studying its varieties, its predators and its infestation rates.”

“Now we can take that (basic) information and start generating data to answer some of these questions,” he said.

Ethanol, Research

GM Reaches Zero-Landfill Plants Goal

Joanna Schroeder

General Motors has announced that it has reached its global operations commitment set in 2008 to convert 50 percent of its 145 plants to landfill-free status by the end of 2010. Currently, 52 percent, or 76 of its worldwide facilities, now take all its waste generated from normal operations and reuse, recycle or convert it to energy. GM’s first facility to achieve landfill-free status was an engine plant in Flint, Mich., in 2005.

On average, more than 97 percent of waste materials from GM’s zero-landfill plants are recycled or reused and less than 3 percent is converted to energy at waste-to-energy facilities, replacing fossil fuel use.

“We’re committed to reducing our environmental impact,” said Mike Robinson, vice president of Environment, Energy and Safety Policy at GM. “Whether it’s a facility that’s already achieved landfill-free status or one of the many that are nearly there, every site is serious about finding ways to reduce and reuse waste.”

The first step in the process for each plant was for employees to focus on reducing the amount of waste generated. From there, as much as possible, the waste was recycled. Each month, the plants monitor, measure and report on their performance against waste-reduction goals. The collected data, that originally set the stage for the landfill-free initiative, demonstrates what materials are being generated, reused and recycled, and reveals areas for improvement. Ultimately, The results helped form a process that enables all facilities to replicate best practices.

According to a GM news release, this year the company has recycled or reused 2.5 million tons of waste materials at its plants worldwide that would fill 6.8 million extended-cab pickup trucks. If parked end-to-end they would stretch around the world.

“It’s all about being creative, lean and rethinking traditional manufacturing processes,” said John Bradburn, manager of GM’s waste-reduction efforts. “When you think of what it would take for a family of four to not produce any trash for a year, that’s quite a task. This is 76 sites around the world and about 70,000 employees committed to the cause.”

Bradburn continued, “I believe our employees were willing to engage because they could relate to what it means. People don’t want to be wasteful; they want to help the environment. It’s become a sense of pride for those that work at those facilities, and it reflects in quality and throughput.”

bioenergy, Company Announcement, Environment, Waste-to-Energy

New Land Use Change Report Released

Joanna Schroeder

According to CABI and Hart Energy Consulting, while there has been much attention given to the idea that biofuel development will change land use around the world, there are still many gaps in knowledge about how much and in what ways those changes will manifest. To determine where more information about land use change is needed, the two organizations worked together to author a new paper, “Biofuels and Land Use Change: A Science and Policy Review.”

The report sets forth the premise that while two goals of biofuel production are to reduce greenhouse gases and to protect natural resources, they may in fact exacerbate the problems rather than help them. Therefore the report recommends that before decisions are made, future monitoring, experimenting and modeling in different locations must take place in an effort to assess the true impact of changing land use caused by biofuel production.

“There is a need to establish standard methodologies to evaluate the wide range of effects, direct and indirect, that ensue from the growing global biofuels market. This would enable much greater confidence when comparing future studies and enable decision-makers to make more informed judgments,” said Tammy Klein, Assistant Vice President of Hart Energy Consulting.

According to the report, “marginal, abandoned, degraded and unused lands” are really the only possible sources of significant land for biofuel expansion. Yet the report continues, it is these very lands that are rarely quantified and so the report asks how much of this type of land is available and what problems would need to be overcome to bring these lands into production.

In conclusion, the report calls for the establishment of effective land-use management and best agriculture practice policies for biofuels feedstock crops.

“The switch away from fossil fuels to renewable alternatives will have unforeseen consequences, especially for highly populated resource-poor countries,” said Janny Vos, Business Development Manager of CABI. “At present the role of biofuels in this process is unclear. We hope that this review goes some way towards identifying the questions that need to be asked about land use change, and the areas in which we need further research.”

Biodiesel, biofuels, Ethanol, Indirect Land Use

Ethanol By the Numbers

Cindy Zimmerman

U.S. exports of ethanol remained strong in October at 34.9 million gallons, according to the latest government information, with the total of January-October at a record high 286 million gallons. The current forecast is for the U.S. to export more than 325 million gallons of ethanol this year, more than double the previous record of 158 million gallons in 2008.

Renewable Fuels AssociationIn a post on the Renewable Fuels Association’s E-xchange blog, RFA’s Geoff Cooper explains that the totals include both denatured and undenatured (non-beverage) ethanol.

Shipments of denatured ethanol totaled 21.9 million gallons, down from the 2010 high of 27.5 million gallons in September. Canada continued to serve as the top destination, with shipments of 13.2 million gallons of denatured product. The United Kingdom, Jamaica, the Netherlands, and Australia (in that order) rounded out the top five. These five destinations accounted for 98% of U.S. denatured ethanol export shipments in October.

As for undenatured (non-beverage) ethanol, U.S. producers exported 13 million gallons in October, up 15% from September. The United Kingdom was the top destination for undenatured product, followed (in order) by Mexico, Nigeria, the Netherlands and Australia.

Meanwhile, exports of the ethanol co-product distillers dried grains (DDGS) were down in October from September, but are still ahead of last year’s record level at 7.57 million metric tons. Last year the U.S. ethanol industry exported 5.64 million metric tons of distillers grains worth nearly $1 billion – this year the forecast is for about nine million.

Ethanol production is expected to reach 13.8 billion gallons this year, which would also be a record. As a percentage of average daily gasoline demand, average daily ethanol production for the week ending December 3 was 10.24% – the highest since weekly data became available, according to RFA. In the previous four weeks, RFA says ethanol producers averaged record outputs per day, using about 14 million bushels of corn each day to produce 902,000 barrels of ethanol and 105,973 metric tons of livestock feed, including 93,570 metric tons of distillers grains, and more than 4 million pounds of corn oil a day.

Despite all these records, USDA kept the forecast for corn used in ethanol production at 4.8 billion bushels, which caused American Farm Bureau Federation economist John Anderson to question why. “Ethanol production has continued to trend upward in recent weeks, and we would have expected USDA to show a small drop in the corn carryover level, or at least some adjustments within the various corn-use categories, but they didn’t. They basically stayed put with the demand side of the corn balance sheet,” said Anderson.

USDA’s chief economist Joe Glauber explained why they held the corn use for ethanol the same this month. “We’ve been looking at the weekly production numbers and we are certainly producing at a very strong rate. But what we’ve seen is a weakening in the returns to ethanol producers over the last few weeks,” Glauber said, causing them to decide not to change the number at this point. USDA had lowered corn production figures for this year in the November forecast, but will not update that figure until January, so it stands at 12.54 billion bushels.

Ethanol, Ethanol News, RFA, USDA