ADM Opens Nebraska Ethanol Plant

Cindy Zimmerman July 13, 2010

Archer Daniels Midland Company (ADM) opened a new 300 million gallon per year ethanol plant in Columbus, Nebraska on Friday. The grand opening ceremony featured ADM President Patricia Woertz, U.S. Sen. Ben Nelson of Nebraska, Nebraska Lieutenant Gov. Rick Sheehy and other honored guests.

“We at ADM are proud to harness the power and ingenuity of American agriculture to help address our nation’s energy challenges. We’re honored and privileged to have the city of Columbus, its municipal leaders and its citizens as partners in this effort,” Woertz said in her remarks.

ADM’s total ethanol production capacity will reach 1.8 billion gallons per year once a second corn dry mill in Cedar Rapids, Iowa, opens later in 2010.

In his remarks, Senator Nelson was critical of EPA’s delay in increasing the ethanol blend rate in gasoline from the current 10 percent. In a column this week, Nelson said EPA’s inaction threatens economic growth and energy independence. “It’s unfortunate that delays by the federal Department of Energy and the Environmental Protection Agency are needlessly jeopardizing our made-in-America ethanol industry,” writes Nelson. “It’s very disappointing and will also slow down development of next generation American renewable energy at a time we are striving to be more energy independent.” Nelson noted that EPA should look to Brazil to determine that ethanol blends up to 15 percent are safe, since that country uses blends as high as 25 percent with no damage to vehicle engines.

Read Nelson’s column here.

Ethanol, Ethanol News, Government

GAO Urges Changes to Energy Department Loan Program

Cindy Zimmerman July 13, 2010

The Government Accountability Office (GAO) has issued a report urging the Department of Energy (DOE) to make changes to its current loan guarantee program to make it more effective. This program is intended to support “early commercial production and use of new or significantly improved technologies in energy projects that abate emissions of air pollutants or of greenhouse gases” including next generation biofuels like cellulosic ethanol.

The GAO report recommends four steps to be taken by the DOE to improve the program: develop relevant performance goals; revise the process for issuing loan guarantees to treat applicants consistently; develop an administrative appeal process for applicants who believe their applications were rejected in error; and develop a mechanism to systematically obtain and address feedback from program applicants.

The Renewable Fuels Association (RFA), which has been highly critical of the program, supports the GAO’s assessment and recommendations. “Access to capital is a chief hindrance to the commercial deployment of cellulosic ethanol technology,” said RFA President and CEO Bob Dinneen. “DOE has created a loan guarantee program that in theory is helpful, but in practice has proven difficult if not impossible for cellulosic ethanol companies to access. If the goals of the RFS are to be met, the Obama Administration must make sure loan guarantee programs are workable and accessible for qualified companies, regardless of their technology.”

RFA wrote a letter to Secretary of Energy Steven Chu last October raising a number of issues that created unfair and unnecessary challenges for cellulosic ethanol companies. Specifically, the ethanol organization requests that DOE eliminate the requirement that applicants have year-long off-take agreements in place; recognize that applicants, by definition, may not have commercial scale financial data and to consider applications that “employ new or significantly improved technologies compared to commercial technologies in service in the U.S.” as outlined in the law; and review applications that have been declined to determine what fixes can be made to correct perceived deficiencies.

Growth Energy CEO Tom Buis notes that the problems with the DOE loan program contributed to EPA drastically reducing the goals for cellulosic ethanol under the Renewable Fuel Standard from 250 million gallons to less than 20 million gallons. “The single biggest reason for that revision is a lack of financing available to cellulosic ethanol producers, many of which are ready to build plants if funding can be secured. The Energy Department needs to address these issues identified in the GAO report and fix the loan guarantee program,” said Buis.

Cellulosic, Ethanol, Ethanol News, Government, Growth Energy, RFA

New Texas E85 Station

Cindy Zimmerman July 13, 2010

MidTex Oil has opened the first E85 station in New Braunfels, Texas, which is located between Austin and San Antonio.

“We are focused on providing our customers with what they want. Whether it is our one-stop shop Pit Stop Food Marts and Fischer’s Market concept stores to make their lives more convenient or giving them an alternative to gasoline derived from imported oil, Midtex is there for our customers,” said Rodney Fischer of Midtex Oil.

The Midtex New Braunfels fueling station is branded Shell and is Midtex Oil’s second E85 station – the first is located in Spring Branch, Texas. Midtex utilized Protec Fuel’s turnkey E85 fuel program for both stations, in partnership with the Renewable Fuels Association (RFA), which included the conversion process to an E85 fueling pump, E85 supply and promotional marketing.

E85, Ethanol, Ethanol News, RFA

NBB Pleased to See EPA’s Biodiesel Requirement

John Davis July 12, 2010

Today’s Environmental Protection Agency (EPA) announcement to require the domestic use of 800 million gallons of biodiesel in 2011 is being welcomed by the National Biodiesel Board.

The group says the number, established under the new Renewable Fuels Standard (RFS2), shows that biodiesel is the only widely accepted, commercial scale Advanced Biofuel produced in the U.S. that meets the definition of Biomass-based Diesel and undifferentiated Advanced Biofuels under the RFS2 program:

“We applaud EPA for this announcement and for reaffirming the common-sense notion that we should displace petroleum diesel fuel with Advanced Biofuels like biodiesel. This notice demonstrates to all actors in the fuels marketplace that the volume goals for Biomass-based Diesel provided for by law in the RFS2 program will be met and that 800 million gallons of biodiesel must be used in 2011,” said Manning Feraci, Vice President of Federal Affairs for the National Biodiesel Board.

Under the RFS2 program, the EPA is required to determine and publish the applicable percentage standards for each compliance year prior to November 30 of the previous year. The notice published by EPA today sets in motion the process for EPA to finalize this regulatory rule and implement the RFS2 2011 renewable volume requirements.

“The U.S. biodiesel industry stands ready to provide the Advanced Biofuel that will allow this nation to meet the attainable renewable energy goals established by RFS2, reduce our dependence on petroleum and cut harmful greenhouse gas emissions,” concluded Feraci.

Of course, there’s the issue with the lack of the federal $1-a-gallon biodiesel tax incentive that expired at the end of 2009 and has resulted in massive biodiesel refinery layoffs and endangers the industry as a whole. As my colleague Joanna Schroeder (@jmschroeder) tweeted earlier this evening: “Not enough biodiesel today w/out tax credit – no way to meet #’s.”

Biodiesel, Government

William & Mary Turns Fish Killer Into Biodiesel

John Davis July 12, 2010

Virginia’s College of William and Mary is turning algae, which is killing fish in a local lake, into biodiesel.

This article from the Daily Press says the school, working with industry and other universities, is using a flume to remove the algae from Lake Matoaka:

A rectangle-shaped floating dock with its midsection removed, the flume acts as a channel that will trap nitrogen, phosphorous and other nutrients that form oxygen-deprived dead zones in the lake and Chesapeake Bay watershed.

“Think of it as a rain-gutter-type device,” said Karl Kuschner, the university’s research scientist leading the effort. “We’ll be creating a 40-foot long hole in the water.”

Blobs of what looks like green cottage cheese — algae — cover the shore. As the algae dies, it descends to the lake floor consuming oxygen, said Dennis Manos, university vice provost. The dead zones send bass, gar, turtles and other marine life scrambling for safer waters.

“This,” Manos said gesturing toward to the lake, “is occassionally only a day or two away from a fish kill.”

In addition to the oil extracted from the algae, which will be used to research the potential of algae-biodiesel, the process is also able to get about 12 to 16 gallons of dry algae from the lake each month.

algae, Biodiesel

Industry Concerned About Lowering Cellulosic Ethanol Goals

Cindy Zimmerman July 12, 2010

A big change in the 2011 proposed targets for the Renewable Fuel Standard (RFS2) set forth by the Environmental Protection Agency (EPA) today lowers the volume for cellulosic ethanol, compared to what is in the Energy Independence and Security Act of 2007 (EISA). The proposed goal for cellulosic biofuels next year under the proposal is now a range of 5 million to 17.1 million. The mandate for this year was already cut from 100 million gallons to 6.5 million in February.

“EPA remains optimistic that the commercial availability of cellulosic biofuel will continue to grow in the years ahead,” the agency said in a release about the proposal, but the ethanol industry is concerned that lowering the goal will lower investor interest in next generation biofuels.

“While this may be prudent for EPA based on market conditions, it does send a chilling effect through the investment community with respect to cellulosic ethanol technologies,” said Matt Hartwig with the Renewable Fuels Association (RFA). “EPA’s estimates underscore the need for Dept. of Energy and USDA to construct loan guarantee programs that work for cellulosic ethanol companies.”

Chris Thorne with Growth Energy says his organization has the same concerns. “Cellulosic ethanol needs much greater investment to become commercially viable. Yet, in the six years that the Department of Energy has been managing the program, it has yet to issue a single loan guarantee to a cellulosic ethanol producer,” he said.

The blend wall is also an issue for the ethanol industry to meet the RFS2 targets under EISA, according to American Coalition for Ethanol (ACE) executive director Brian Jennings. “The scaled-down targets for cellulosic biofuel clearly indicate the E10 blend wall is standing in the way of market certainty for both corn and cellulosic ethanol producers,” said Jennings. “Until the blend wall is dealt with in a meaningful way, it is going to be difficult to secure financing for and move forward with next-generation ethanol projects.”

The lowered target for cellulosic biofuels lowered the overall goal for total renewable fuels next year, from the 8.25 percent set for this year in February by EPA to 7.95 percent of total gasoline sales in
2011 or a total of 13.95 billion gallons.

ACE, Ethanol, Ethanol News, Growth Energy, RFA

EIA Looks at Ethanol Blend Wall

Cindy Zimmerman July 12, 2010

The July 8 Energy Information Administration (EIA) “This Week in Petroleum” report takes a look at the fast approaching ethanol blend wall, predicting ethanol’s share of the gasoline market will reach the 10% saturation point by the beginning of 2011.

During April 2010 an estimated 834,000 bbl/d (12.8 billion gallons per year [BGY]) of fuel ethanol was blended into gasoline, representing an average 9.2 percent of total gasoline product supplied by volume. The July EIA Short-Term Energy Outlook projects that the ethanol share of the gasoline pool could reach 10 percent in the first quarter next year when total gasoline consumption is expected to average about 8.8 million bbl/d (135 BGY).

The EIA report concludes, in an understatement, that “the blend wall is an important event moving forward for the ethanol industry.” However, some in the ethanol industry say the blend wall is already here. According to the EIA’s Short-Term Energy Outlook report, ethanol production will average 850,000 barrels per day this year and grow to 880,000 next year. The Renewable Fuels Association (RFA) notes that would amount to an annual total of 13.5 billion gallons in 2011. “That is nearly 1 billion gallons more than called for by the Renewable Fuels Standard’s requirement for “renewable fuel,” and unless EIA knows something more about EPA’s decision-making process on E15, we believe it is unlikely that the industry will produce that volume of ethanol next year,” said RFA’s Matt Hartwig. “Current markets are limited by the arbitrary E10 blending limit enforced by EPA. And while higher level use in the form of E85 and mid-level blends is expanding, it’s not happening fast enough to justify EIA’s 2011 predictions. Further, while the ethanol export market is growing rapidly, it still remains too small to absorb that much excess supply.”

EIA’s report says, “absent a relaxation of the 10 percent limit on ethanol blending in the general gasoline pool, and with still increasing ethanol production capacity, there will likely be downward pressure on ethanol prices as the blend wall is approached.” How low ethanol prices could go, the report adds, will also be determined by the cost of production (i.e., corn prices) and whether the ethanol blender’s tax credit is extended by Congress.

Read EIA’s July 8 This Week in Petroleum report here.

Ethanol, Ethanol News, Government, RFA

EPA Proposes 2011 Renewable Fuel Standard

Cindy Zimmerman July 12, 2010

The U.S. Environmental Protection Agency (EPA) today released a proposal for comment that sets the 2011 percentage standards under the agency’s Renewable Fuel Standard program, known as RFS2.

The Energy Independence and Security Act of 2007 (EISA) established the annual renewable fuel volume targets, reaching an overall level of 36 billion gallons in 2022. To achieve these volumes, EPA calculates a percentage-based standard for the following year. Based on the standard, each refiner, importer and non-oxygenate blender of gasoline determines the minimum volume of renewable fuel that it must ensure is used in its transportation fuel.

The proposed 2011 overall volumes and standards are:

Biomass-based diesel (0.80 billion gallons; 0.68 percent)
Advanced biofuels (1.35 billion gallons; 0.77 percent)
Cellulosic biofuels (5 – 17.1 million gallons; 0.004 – 0.015 percent)
Total renewable fuels (13.95 billion gallons; 7.95 percent)

Based on analysis of market availability, EPA is proposing a 2011 cellulosic volume that is lower than the EISA target. EPA will continue to evaluate the market as it works to finalize the cellulosic standard in the coming months. Overall, EPA remains optimistic that the commercial availability of cellulosic biofuel will continue to grow in the years ahead.

EPA is also proposing changes to the RFS2 regulations that would potentially apply to renewable fuel producers who use canola oil, grain sorghum, pulpwood, or palm oil as a feedstock. This program rule would allow the fuel produced by those feedstocks dating back to July 1, 2010 be used for compliance should EPA determine in a future rulemaking that such fuels meet certain greenhouse gas reduction thresholds.

The second change would set criteria for foreign feedstocks to be treated like domestic feedstocks in terms of the documentation needed to prove that they can be used to make qualifying renewable fuel under the RFS2 program.

Public comment on the proposal will be accepted for 30 days following publication in the Federal Register.

Biodiesel, biofuels, Ethanol, Ethanol News, Government

New Jersey Passes Offshore Wind Development Act

Joanna Schroeder July 12, 2010

At the end of June, the Cape Wind project received federal approval much to the dismay of vocal opponents. This will be the first off-shore wind project in the U.S. and will consist of 130 wind turbines and the project is expected to be complete in 2012. While the debate was raging on around Cape Wind, several other states were moving forward with developing off-shore wind projects of their own including New Jersey, Road Island and Maine.

Two months after Cape Wind was federally approved, New Jersey passed the Offshore Wind Economic Development Act. This act was designed to create financial incentives for offshore wind development and sets a target of 1,100 megawatts of wind generation. This goal ties into the state’s Renewable Portfolio Standard which sets targets for renewable energy including solar and wind. The act authorizes the New Jersey Board of Public Utilities (BPU) to set financial regulations and oversee applications for new projects and also requires suppliers of electricity to retail customers to hold an Offshore Wind Renewable Energy Certificate (OREC).

In addition to the creation of the ORECs, the act created a 100 percent tax credit for capital investments of $50 million-$100 million in new offshore wind facilities. In addition, the act will work in tandem with the Economic Development Authority to allocate money from the Global Warming Solutions Fund to support these projects and provide assistance to the manufacturers of offshore wind equipment.

While the act may seem somewhat cumbersome, here is what it boils down to. BPU has already provided $4 million to a developer who is looking to build a 346-megawatt project 16 miles off the southern coast of New Jersey. In addition, BPU has approved a 20-25 megawatt project three miles of the coast of Atlantic City. Should either of these projects see fruition before Cape Cod, New Jersey will take the title of the first completed offshore wind project.

However, what may be more important than who is first, is the support that offshore wind is receiving on the East Coast. The Atlantic Offshore Wind Energy Consortium was recently established by 10 states to promote the development of offshore wind projects. When you combine all of this activity it appears that offshore wind development has great momentum. Let’s hope that this momentum is not stymied by difficult and drawn out permitting processes.

News, Wind

MO Ethanol Plant Helps Feed Hungry

Cindy Zimmerman July 12, 2010

With the help of corn growers and FFA members, a northwest Missouri ethanol plant helped provide 2,600 meals for hungry families in the Kansas City area last week.

Mid-Missouri Energy, a farmer-owned ethanol plant near Malta Bend, Mo., donated a plot of land to grow sweet corn for the hungry. Members of the Missouri Corn Growers Association (MCGA) and Malta Bend FFA did the harvesting and the result was 3,366 pounds of sweet corn for Missouri families in need, which was distributed through Harvesters Community Food Network in Kansas City, Mo.

“While sweet corn isn’t something we normally plant in these fields, we realize there are people in our community and in the city facing tough times,” said Billy Thiel, MCGA board member and corn grower from Marshall, Mo. “This sweet corn is one way Missouri corn growers can show that we care about our neighbors and that we are committed to feeding and fueling a growing population.”

During a presentation at the ethanol plant, Mid-Missouri Energy President Ryland Utlaut thanked the Malta Bend FFA Chapter for their help in harvesting the crop. The event helped to educate the media and the general public about the importance of corn and ethanol to the Missouri economy, and the difference between sweet corn and field corn grown in the state.

The donated fresh produce will be distributed through Harvesters vast network, resulting in nearly 2,600 meals for hungry families. Serving a 26-county area of northwestern Missouri and northeastern Kansas, Harvesters provides food and related household products to more than 620 not-for-profit agencies including emergency food pantries, soup kitchens and homeless shelters.