Don’t Penalize Biofuels

Joanna Schroeder

corn-field-schuyler-nebraska-neb168The Environmental Protection Agency (EPA) has proposed a rule based on Indirect Land Use Change (ILUC) that would penalize biofuel production such as corn-ethanol. The ethanol industry has banned together to fight this potential ruling, and today Growth Energy urged Congressional support of an amendment authored by Senator Tom Harkin, D-Iowa.

Specifically, the Harkin amendment to the Interior-Environment Appropriations bill, would prohibit the use of funds by the EPA to include international ILUC theories in the implementation of the renewable fuel program. This in hopes to spur a full debate in the Congress on ILUC theory. EPA is forging ahead with the rules even though sound science on the topic is lacking, nor an agreed upon way to even measure ILUC impacts.

“If the EPA goes ahead with this lopsided rule, it will penalize domestic production of biofuels like ethanol. And U.S.-made ethanol is the only existing alternative we have to foreign oil. It creates jobs, enhances our national and economic security, and cuts greenhouses gases. Senator Harkin’s amendment deserves to be passed by the Congress. Senator Harkin’s legislation is rooted in logic and fact – two things that are lacking from the EPA’s proposed rule,” said Tom Buis, Chief Executive Officer of Growth Energy.

According to Growth Energy, ILUC theory has never been debated in the Congress, and it’s not accepted as a consensus of the scientific community. “If we’re going to theorize the indirect land use changes of fuel, the EPA should not single out biofuels – but should include the sources of all transportation fuels, including emissions from coal-fired power plants for plug-in cars, Persian Gulf oil tankers and tar-sand extraction,” said Buis.

Ethanol, Indirect Land Use, News

Biodiesel Industry Split Over End of B99 Bill

John Davis

USCapitolWhile the biodiesel industry’s biggest advocacy group is praising a bill that could make B99 a thing of the past, not all biodiesel makers are glad to see the change.

This article from Biodiesel Magazine says the Biodiesel Tax Incentive Reform and Extension Act, introduced last month by U.S. Sens. Chuck Grassley (R-IA) and Maria Cantwell (D-WA), is being hailed by the National Biodiesel Board as a “common sense” proposal that will bring stability and reliability to the marketplace by extending the tax incentive for five years and will change the excise tax for biodiesel from a blender to a producer credit. But some sources aren’t so happy or optimistic about its effects:

“I don’t understand their wanting to change that,” said one NBB member, who asked not to be named. “I don’t see the sense or the advantage in it.”

The source indicated that producers who sell B100 are able to keep their books clean because they don’t file any claims with the Internal Revenue Service. This allows them to bill the $1 per gallon credit into their sale price and let distributors, who blend the fuel, deal with the paperwork. “It usually takes about 10 days for us to get paid by our customers,” said the source. “When you’re dealing with the federal government, 45 days is good.”

The longer a producer has to wait to get paid, the more of its own capital it has to invest to maintain its inventory and procure feedstocks, which could be a problem imposed by a conversion of the credit. “I understand that it’s a cash flow issue,” said Bobby Heiser of Bulldog Biodiesel. “But most of the time we’re the blender of record anyway, so we’re already dealing with the IRS. The way that this change will make it easier for us will be by eliminating B99.”

Management at Lake Erie Biofuels, a plant with a 45 MMgy capacity in Erie, Pa., agreed. “We sell maybe a couple of truckloads of B100 while B99 makes up almost 90 percent of our total sales,” said Michael Noble, director of operations at LEB. “Changing the excise tax will be better for our customers, but it doesn’t change our position.”

Still, others say converting the credit gets rid of the paperwork for blenders and will encourage sales.

And you thought all the debate in DC was just about health care!

Biodiesel, Government, Legislation

Purdue Study Proves Biodiesel Burns Well in Furnaces

John Davis

Yesterday, I told you how oilheat industry officials have set out a plan to make more use of biodiesel blended to burn in home furnaces. For those who might be worried about the performance of the green fuel in your home heater, a new study indicates it will do just fine.

This story from Purdue University says researchers have been testing degummed soybean oil and No. 2 fuel oil as an alternative to heating fuel:

ileleji-soybeanKlein Ileleji, an assistant professor of agricultural and biological engineering, tested blends of 20 percent, 50 percent and 100 percent degummed soybean oil – an unrefined and cheaper product to produce than soy methyl esters, commonly known as biodiesel – and found that the 20 percent blend didn’t degrade a home furnace’s parts or heat output. The only issue found with the 20 percent blend was a slight early degradation of the furnace’s seals and gaskets, which manufacturers could fix by switching to a higher quality product. Ileleji’s findings were reported in the recent early online version of the journal Fuel.

“You are going to reduce the sulfur emissions with degummed soybean oil. The things you should be worried about with a biofuel, such as the pour point temperature and heating ability, were not affected,” Ileleji said. “You want to keep the properties of your No. 2 fuel oil, and at 20 percent degummed soybean oil, you would minimally affect those properties.”

Ileleji found that a 20 percent blend worked well in furnaces without any modification to the heater’s design.

The Indiana Soybean Alliance and the Indiana United Soybean Board funded the research.

Biodiesel, Research

Pacific Ethanol Facing Stock Delisting

Cindy Zimmerman

Pacific EthanolPacific Ethanol will be booted from the NASDAQ unless its stock goes up soon.

NASDAQ sent a letter last week notifying Pacific Ethanol that “it does not comply with the $1.00 minimum bid price requirement for continued listing on The NASDAQ Global Market set forth in NASDAQ Listing Rule 5450(a)(1).” The company has been given 180 calendar days, or until March 14, 2010, to regain compliance. The last time the company’s stock was above $1 was November 7, 2008. In the last year, the high for the stock was $2.08, with the low at 20 cents. Shares of Pacific Ethanol closed at 59 cents today, up two cents.

Ethanol, Ethanol News

ASA, Biodiesel Board Call for RFS2 Comments

John Davis

ASANBBThe deadline for getting in your two cents’ worth on the U.S. EPA’s proposed Renewable Fuels Standard (RFS2) is rapidly approaching, as this Friday, Sept. 25th will mark the end of the comment period.

This article in Biodiesel Magazine says the American Soybean Association and the National Biodiesel Board are making a last-minute appeal to their members and biodiesel supporters to get their comments in:

Both organizations have made it easy to access information at their Web sites, providing background information, sample comments, links to the EPA Web site and instructions on emailing comments. The ASA form is available at www.soygrowers.com/policy/RFS2.htm. The NBB’s action center is available at http://biodiesel.org/news/RFS/. The NBB provides an express comment that features a condense message and only requires a name, city, state and email address. “it takes less than 20 seconds to fill out and submit,” the NBB says. The NBB also offers long and short versions of sample comments to make, and provides information for an individual to craft a unique response.

The stakes are high for the biodiesel industry. “As EPA’s proposed rule is written, soy biodiesel would no longer qualify under the specific federal mandate for biomass-based diesel use,” ASA President Johnny Dodson explained. “With the future of the U.S. biodiesel industry at stake, farmers need to get involved right now by voicing their opposition to the proposed rule.” The ASA has reached out to U.S. soybean farmers in their campaign, as have several state soybean associations and corn grower associations as well to comment on the impact on corn ethanol.

The main sticking point the ASA and NBB (and the Renewable Fuels Association, for that matter) have with the proposal is the inclusion of international indirect land use impacts into the calculations of greenhouse gas emissions.

If you haven’t commented yet, better get your thoughts in now.

Biodiesel, NBB, Soybeans

Hurricane Recovery Money to Help Build Biodiesel Plant

John Davis

Money intended to help rebuild economic activity in parts of the Gulf Coast hit by Hurricanes Katrina and Rita will be used to build a biodiesel plant in St. Rose, Louisiana.

The New Orleans Times-Picayune reports that the State Bond Commission has unanimously approved $100 million in hurricane-recovery bonds to help finance the project:

The $100 million will come from financing by the Gulf Opportunity Zone program, which makes low-cost money available to developers to help spur economic development in the areas hit hard by Hurricanes Katrina and Rita.

REGlogo2The project will be developed by the Renewable Energy Group of Ames, Iowa, in conjunction with Bunge North America and International-Matex Tank terminals, two companies with a presence in the River Parishes. The project will be located on property on IMTT’s St. Rose terminal.

REG spokeswoman Alicia Clancy said Thursday that the 60 million-gallon-per-year plant on the IMTT St. Rose site was about 50 percent complete.

REG officials say the project must have the sale of the bonds to investors to go forward. It’s expected to create an estimated 30 direct jobs, with an average annual salary of about $48,000 and another 500 construction-related jobs.

Biodiesel

Heating Oil Industry Adopts Biodiesel Plan

John Davis

BioHeatMore homes across the country, especially along the East Coast, could soon be burning a combination of biodiesel and heating oil better known as Bioheat®.

This press release from the National Biodiesel Board says oilheat industry leaders from Maine to South Carolina met and set a plan for wider adoption of the green fuel:

At the national oilheat industry policy summit, oilheat leadership including National Oil Heat Research Alliance, the New England Fuel Institute, and Petroleum Marketers Association of America approved a statement formally embracing cleaner burning fuels, like Bioheat, as well as endorsing an ultra low sulfur standard and solar technology. The resolution calls for changes to heating oil, including that by July 2010, all heating oil will be mixed with a bio component to ensure that at least 2 percent of the fuel is renewable, with goals to increase levels over time.

“Bioheat is another way biodiesel is working to reduce our dependence on foreign oil, to seamlessly introduce cleaner fuel alternatives and to implement sustainable energy solutions,” said National Biodiesel Board CEO Joe Jobe. “We applaud the oilheat industry for formally recognizing the outstanding potential for Bioheat and biodiesel as an important part of our country’s energy future.”

Officials say that if Bioheat is mixed at a 5 percent blend, it would increase biodiesel demand by 450 million gallons a year.

Biodiesel

NREL Tests Ethanol Blends

nrel_ethanolThe National Renewable Energy Laboaratory (NREL), a laboratory for the Department of Energy, is testing higher blends of ethenol to be used in vehicles. Researchers are trying to find out, because these new ethanol blends could play a significant role as America tries to wean itself off petroleum based fuels.

The Energy Independence and Security Act of 2007 (PDF 821 KB) (EISA) is one force behind the quest for higher ethanol blends. The 2007 law requires that the U.S. use 36 billion gallons of renewable fuels by 2022. But, a leaner benchmark is just around the corner, with 15 billion gallons required by 2012.

“We’re pushed right now to find ways to get more ethanol into the fuel stream,” said Keith Knoll, senior project leader for NREL’s Fuels Performance Group.

Currently, ethanol is the most widely used and readily available renewable fuel. As a result, it is a likely candidate to make up a significant chunk of the 36 billion gallons required under EISA. Ethanol as a motor fuel is commonly found in E85, a fuel intended for use only in Flexible Fuel Vehicles (FFVs). Ethanol also is widely used as a 10 percent blend in standard gasoline (E10) to reduce carbon monoxide emissions and smog. But, increasing ethanol from the current 10 percent blend to a proposed blend of E15 or even E20, brings up a whole host of questions and issues.

For instance, E20 is currently not allowed for use in conventional automobiles under the Environmental Protection Agency’s (EPA) Clean Air Act. This is where research from NREL and Oak Ridge National Laboratory (ORNL) will play a pivotal role in understanding how blends like E15 and E20 affect vehicles currently in the market. The research is examining whether using higher ethanol blends will have an adverse impact on tailpipe emissions, exhaust temperatures, catalytic converters and engine performance and durability.

E85, Ethanol, Government, News

Book Review – Black Monday

Joanna Schroeder

“They’ll panic at first and stop all gasoline delivery. They’ll ease restrictions when they figure out which supplies are still clean. Because you can’t order Americans to stop driving. It’s like telling them to stop eating. They think God gave them cars.”

9781439109229They say that fiction is truth sprinkled with a few well placed lies. In this week’s book, “Black Monday,” by Bob Reiss, the truth has been contaminated with sludge. This fiction novel is based on the world’s near end when a foreign company doing business in the oil industry, sets off a catastrophe of monumental proportions. The crime – introducing a heat resistant bacteria, known as Delta-3, into the oil supply infecting the oil and rendering it unusable. Planes begin dropping from the sky, killing thousands. Cars stop dead in their tracks on the road. Heating oil rendered useless.

In a mix between Stephen King’s, “Cell” and William Golding’s “Lord of the Flies,” the world must learn how to live without oil. Fighting occurs, looting becomes commonplace, people begin starving, and ultimately people form “tribes” to survive. The main character, Gregory Gillette, fights to save the world and his family by discovering how the bacteria infected the oil supply and ultimately the antidote.Read More

book reviews

Brazil Proposes Sugarcane Zoning

Joanna Schroeder

In a pro-active attempt for the Brazilian ethanol industry to distance itself from ties to deforestation, the Brazilian President Luiz Inacio Lula da Silva recently announced a legislative proposal called, “The Agro-ecological Zoning of Sugarcane,” that would in essence, “zone” where sugarcane could be grown and harvested throughout the country. The amount of sugarcane grown has increased significantly due to worldwide demand of ethanol.

The Brazilian Sugarcane Industry Association (UNICA) responded positively to the proposal claiming that it, “will prove useful to enhance the sustainability of sugarcane expansion, by going beyond land use restrictions defined in some export markets.” Last week, UNICA released the estimated sugarcane harvest numbers, which are down due to heavy rains.

x6154e04Although UNICA supports the idea in some aspects, they also note that various aspects need further analysis. One such area of concern involves the challenges in defining the concept of food security, due to the crop’s dual functions as to provide both food and energy. The proposal, as currently written, could lead to restrictions in growing sugarcane that would, according to UNICA, “have the reverse effect in terms of food security, by restricting the production of additional sugar.” Brazil supplies 60 percent of the world’s sugar needs after supplying its own.

UNICA notes that no forest lands need to be cleared to grow sugarcane as there are enough suitable lands for growing the crop particularily degraded pastures.

Ethanol, News