Chemoil Settles RIN Dispute

Joanna Schroeder October 5, 2016

The largest mis-use of Renewable Identification Numbers (RINS) since the inception of the Renewable Fuel Standard (RFS) has been settled this week. The U.S. EPA and the U.S. Department of Justice have ordered Chemoil Corporation to retire 65 million fuel credits to resolve violations. When factoring in the current market value of the credits, combined with an additional 7.7 million RINS previously retired by Chemoil in lieu of the lawsuit, the company will pay a $27 million civil penalties as part of the settlement.

RINS are credits created when a company, such as a biofuel producer, produces or imports renewable fuel. Under the RFS, they can be traded or sold to refiners and fuel importers or exporters as a means of complying with the program. The lawsuit alleged that Chemoil exported at least 48.5 million gallons of biodiesel from 2011 to 2013 and did not retire the more than 72 million associated RINS. The RFS requires RINS to be retired when the fuel is exported because it is no longer available for blending into the U.S. fuel supply, and consequently, cannot be used to meet the Renewable Volume Obligations (RVOs) established each year under the program. When RINS are not retired, as in this case, it artificially inflates the volume of renewable fuel available for blending in the U.S. along with the number of RINS available to meet RVOs.

“This settlement delivers on the greenhouse gas emissions reduction goals that Congress envisioned for the Renewable Fuel Standard,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “It’s vital that companies retire renewable fuel credits when exporting fuel abroad. Upholding this requirement is a key way EPA is working to maintain program integrity and a level playing field for companies that follow the law.”

Assistant Attorney for the Environment and Natural Resources Division, John C. Cruden, said of the ruling, “Congress adopted the Renewable Fuel Standards program to achieve significant greenhouse gas emissions reductions, reduce the nation’s dependence on foreign oil, and grow our domestic renewable energy industry. By ensuring a level playing field within the industry through vigorous compliance monitoring and enforcement, we help ensure that these important Congressional goals are met.”

EPA said it discovered the alleged violations as a result of tips from RFS program participants.

advanced biofuels, Biodiesel, EPA, RFS, RINS

Supercomputer Paving Way for Biomass to Biofuel

Joanna Schroeder October 5, 2016

Supercomputing is being used to discover ways to make turning biomass into biofuel. The University of Tennessee and Oak Ridge National Laboratory (ORNL) project is led by Jeremy Smith, UT Governor’s Chair for Molecular Biophysics based in the Department of Biochemistry and Cellular and Molecular Biology. He also is director of the UT-ORNL Center for Molecular Biophysics.

A team at Oak Ridge National Laboratory (ORNL) performed its largest biological simulation to explain why lignin is so potent in blocking the enzymes that break down cellulose. Here, an enzyme (orange) hydrolyzes cellulose (green) despite the presence of lignin (brown). Image courtesy of ORNL/scistyle.com.

One of the biggest barriers to converting biomass, or plant matter, into biofuel lies in removing the other biomass polymers that inhibit this chemical process. To assist in finding a solution to this challenge, large-scale computational simulations are picking apart lignin, one of the problematic ploymers, and its interactions with cellulose and other plant compounds. The results should pave a path to more optimized biofuel production.

The research is also helping researchers better understand the complexity of plant cell walls.

Researchers at the UT-ORNL Center for Molecular Biophysics have been using supercomputers for many years to model and study lignin polymers and their interactions with cellulose. For this project, they’ve started to include other biomass polymers with the idea of simulating all the chemical components of plant cell walls. They’re now applying simulations again to the task: a hundred-million processor hours on Titan, ORNL’s Cray XK7 supercomputer.

To expand their simulations from cellulose polymers to lignin to ever more complicated biomolecule combinations, the team has had to optimize communication between parallel processors in supercomputers such as Titan. Smith says the machine’s capability should let them scale up to the point that the team can simulate atoms in parts of a plant’s cell wall. The team will begin by incorporating other cell wall biopolymers such as hemicelluloses and pectin and then add various enzymes and watch what happens – on the supercomputers that is.

“We can envisage simulations of the complete cell wall,” Smith says. Then they could expand to cell walls from a variety of plant species and even interactions between the plant cell walls and microbial surfaces. With exascale computing power – roughly 100 times that of Titan – Smith expects that the team might eventually simulate the workings of an entire plant cell.

advanced biofuels, biomass, Research

NCGA’s Skune: RFS Important to Drive Demand

Joanna Schroeder October 5, 2016

As North Dakota farmer Kevin Skunes takes the reigns as the new First Vice President of the Board for the National Corn Growers Association (NCGA) for fiscal year 2017, he says two of the greatest challenges he sees for corn farmers is both increasing demand and the ability to meet increasing demand. One area that can increase demand for corn is ethanol and the resulting co-products such as corn oil, which can be processed into biodiesel, and dried distillers grains (DDGs) a growing export market in particular. In an interview with Off the Cob, Skunes says one of the biggest demand drivers for corn will be the Renewable Fuel Standard (RFS).

“The first demand that I referenced is the Renewable Fuel Standard,” he explains. “This program, which the United States has in place, facilitates the mixing of ethanol into the fuel supply. We know that ethanol is a high priority for NCGA, because it generates demand for corn. I don’t want to make it too simple, but it is very important that we have this. The RFS puts forth a mandate that we have 15 billion gallons of corn in the fuel supply. The EPA has set the Renewable Volume Obligation below that for this year. We believe that EPA should follow the statute.”

In an interview AgWired did with Skunes during this year’s Farm Progress Show, he also mentioned that increasing fueling infrastructure for higher blends of ethanol such as E15, E30, E85 and anything in between will also help drive demand above and beyond the so-called blend wall. NCGA, on behalf of its growers, is participating in the Prime the Pump program – an initiative to assist retailers with the costs to update ethanol infrastructure. To date, more than $210 million has been allocated by the ethanol industry, including NCGA, individual states and the USDA to ensure consumers have access to higher blends of ethanol.

Ethanol, NCGA, RFS

2017 RFA Board of Directors’ Officers Elected

Joanna Schroeder October 5, 2016

The Renewable Fuels Association (RFA) held its annual meeting this week in Minneapolis where the 2017 Board of Directors’ Officers were elected. The RFA elected Mick Henderson, general manager at Commonwealth Agri-Energy LLC, as Chairman of the Board. Also elected:

Vice Chairman, Neil Koehler, Pacific Ethanol in Sacramento, California
Treasurer, Jim Seurer, Glacial Lakes Energy LLC in Watertown, South Dakota
President, Bob Dinneen, Renewable Fuels Association in Washington

Commonwealth Agri-Energy is located in Hopkinsville, Kentucky and began production in 2004. Per year, the biorefinery produces 35 million gallons of ethanol from 12 million bushes of corn as well as 107,000 tons of dried distillers grains, 110,000 tons per year of carbon dioxide (that is sold as a co-product) and 3,000 tons of corn oil. Henderson has been with Commonwealth Agri-Energy since 2003 and has served on the RFA Board of Directors since 2006.

“I am humbled that my peers have selected me as the Renewable Fuels Association Chairman of the Board of Directors,” said Henderson. “The RFA’s vast resources and knowledge will continue to be essential as we fight back against our well-funded critics. With the help of all RFA members , I will lead the fight to ensure that America’s most successful climate and energy policy to date, the Renewable Fuel Standard, remains unchanged, and that consumers continue to have access to the lowest cost liquid transportation fuel in the world.”

Ethanol, Ethanol News, RFA

Biobased Industry Positioned to Explode

Joanna Schroeder October 5, 2016

According to a new report released by the U.S. Department of Agriculture (USDA), the biobased products industry contributed $393 billion and 4.2 million jobs in 2014, an increase of 220,000 jobs and $24 billion over 2013. “An Impact Analysis of the U.S. Biobased Products Industry,” commissioned by USDA’s Biopreferred Program, is a follow-up to the 2015 report and sought to examine and quantify the effect of the U.S. Biobased products industry on each U.S. state.

The new study found that the biobased industry directly supported 1.53 million jobs in 2014. For every 1,000 direct jobs in the biobased industry, 1,760 indirect jobs were supported. In other words, the 1.5 million jobs directly supported by the biobased industry supported 2.7 million indirect and induced jobs. In addition, the $127 billion in value added from sales by the biobased products industry generated another $266 billion in indirect and induced sales.

“When USDA released the first-ever Economic Impact Analysis of the U.S. Biobased Products Industry last year, we were thrilled to see what a positive impact this sector was having on our economy, and this updated analysis shows that the sector is not just holding strong, but growing,” said USDA Ag Secretary Tom Vilsack. “America has an appetite for everyday products-including plastic bottles, textiles, cleanings supplies and more-made from renewable sources, and that demand is fueling millions of jobs, bringing manufacturing back to our rural communities, and reducing our nation’s carbon footprint. As this sector is strengthening,” continued Vilsack, “so is the economy in rural America, where this year the unemployment rate dropped below six percent for the first time since 2007. USDA is proud to see such strong returns on our investment into the biobased products industry.”

States leading the way in the biobased industry include California (145,080), North Carolina (90,040), Texas (88,680), Georgia (80,520) and Pennsylvania (71,360). It should be noted that the biobased industry, as defined by USDA, includes agriculture and forestry, biorefining, biobased chemicals, enzymes, bioplastic bottles and packaging, forest products and textiles. The definition does not include energy.

The report concludes that despite the current low price of oil, it is projected that the U.S. biobased products industry will exhibit steady growth over the next five years. However, several challenges will need to be overcome including, but not limited to:

Production tax credits (PTCs) must be extended beyond biofuels to include biobased products;
Further legislation is required to support the biobased products industry;
Financial incentives are needed to promote the construction and operation of more U.S.- based facilities; and
States need to provide resources to support the growth of the biobased products industry, which is very important because currently there are insufficient pilot plants to foster innovation.

Click here to read the full report.

biochemicals, biomaterials, bioplastics, bioproducts, USDA

Spurlock Takes NCGA Helm Focused on #Ethanol Trade

Joanna Schroeder October 4, 2016

Wesley Spurlock, a grower from Spurlock of Stratford, Texas, officially took the helm as the President of the Board for the National Corn Growers Association (NCGA) Saturday and he has his eye on trade as a major focus of the 2017 fiscal year. Trade will play a starring role in finding homes for the increasing corn harvests and one growing area of trade: ethanol and dried distillers grains (DDGs).

“This year is much like the one we just finished,” said Spurlock. “We are looking at a massive corn crop. It is still being harvested but, even with some rain problems in the Midwest, the yields may be there. So, growing demand remains awfully important to finding a use for the crop that we have.”

Spurlock will utilize several teams focused on various elements of increasing demand including ethanol. “Our new action teams work well with our strategic plan,” said Spurlock. “We have three new teams focused on demand: the Ethanol Action Team; the Feed, Food and Industrial Action Team; and the Market Access Action Team. These groups on the demand side will all be working hard to find out where we are and where we need to be.”

He continued, “We have to work every side of this. We need trade. We need to work for the Trans Pacific Partnership. We need to work with our partners in the livestock industry. We need to work with the ethanol industry to keep that market open. And, we need to keep government regulations from becoming more cumbersome.”

Spurlock stresses that members will play an important role in achieving success. “We need the grassroots to go straight to their Representatives and Senators. They have to be active on the political side and the regulatory side. When we ask, it is because we do really need all of our members to come out and voice their opinions so that we can all keep the freedom to farm.”

biofuels, corn, Ethanol, Exports, NCGA

U.S. Propane Exports Growing

Joanna Schroeder October 4, 2016

A recent Today in Energy looks at the correlation between the growth of propane exports and growth in exports of petroleum products. According to U.S. Energy Information Administration data (EIA), during the first half of 2016, the U.S. exported 4.7 million barrels petroleum products per day. This is an increase of 500,000 b/d over the first half of 2015 and nearly 10 times the crude oil export volume. During the same time period, propane exports increased by more than 230,000 b/d while distillate (50,000 b/d) and gasoline (140,000 b/d) exports also increased. During the first six months of this year, propane has surpassed motor gasoline exports to become the second-largest petroleum product export.

However, while export volume increased, export destinations remained largely unchanged. Top countries included Mexico (775,000 b/d), Canada (579,000 b/d) and the Netherlands (271,000 b/d). EIA reports that the majority of petroleum exports stay in the Western Hemisphere with nearly 60 percent of total petroleum product exports in 2015 going to this region, down slightly from 65 percent in 2005.

U.S. propane exports increased from 562,000 b/d in the first half of 2015 to 793,000 b/d in the same period of 2016 with exports to Asia and Oceania accounting for 94 percent of growth. Japan imported the most U.S. propane at 159,000 b/d in the first half of 2016, an increase of 111,000 b/d from 48,000 b/d in the same period of 2015. Panama, historically a stable export market, decreased from 41,000 b/d in the first half of 2015 to 7,000 b/d in the first half of 2016.

Today in Energy reports that the large increases in propane exports to Japan and decreases in propane exports to Panama could be a result of reduced ship-to-ship transfer activity. However, the analysis found that some of the propane exports from the U.S. that undergo ship-to-ship transfers will cite the location of the transfer but not the final destination of the propane. This often results in larger-than-actual export numbers for the countries where the ship-to-ship transfers take place and in less-than-actual numbers for some final destinations.

Propane

Canada Adopts Carbon Pricing Strategy

Joanna Schroeder October 4, 2016

Canada has announced a carbon pricing strategy on emissions that takes effect in 2018 with a $10 per ton rate. The fees rise to $10 per ton per year until they are capped out at $50 per ton by 2022. As part of the legislation, provinces and territorial governments can select from two carbon pricing systems: carbon tax or cap and trade, and have the ability to use the carbon revenues as they choose. Advanced Biofuels Canada commended the policy but has cautioned that a well-designed national carbon price system will address economic distortions between provinces and territories and allow Canada to use border adjustments to maintain competitiveness with our international trading partners.

Thomson said there are cleaner transportation fuel option today including low carbon advanced biofuels as well as electric, hydrogen and renewable natural gas vehicles.

“The Trudeau government’s decision to place a uniform national price on carbon is an important step to reducing transportation sector emissions,” said Ian Thomson, President of Advanced Biofuels Canada. “An effective carbon price system must put a visible price on the lifecycle carbon emissions of all fuels to support the transition to cleaner transportation fuel choices. Nascent carbon pricing systems in BC (carbon tax) and Quebec (cap & trade) have room for improvement, and all Canadian markets should adopt a common approach to maintain level economic conditions.”

The organization is also calling on governments to adopt firm regulatory measures to assure that not only real carbon reductions are achieved, but to ensure these low-carbon fuels are available to consumers.

“Advanced Biofuels Canada has recommended that Canadian governments adopt a Clean Fuels Strategy to combine firm action on carbon pricing, flexible low carbon fuels regulation, and strategic cleantech investment to leverage Canada’s natural resources and demonstrate leadership on transport emissions.” Thomson concluded, “This approach will ensure that Canada benefits from the economic growth in the low carbon economy and meets its carbon reduction commitments.”

advanced biofuels, Carbon

BIO Releases RIN White Paper

Joanna Schroeder October 4, 2016

A new white paper finds evidence to challenge the assumption that the ethanol blend wall caused the 2013 spike in Renewable Identification Number (RIN) spot market prices. “The Myth of High RIN Prices as Proof of the Blend Wall,” was released by the Biotechnology Innovation Organization (BIO) and analyses EPA data on compliance of the Renewable Fuel Standard between 2010-2013. The blend wall is the point when ethanol blending in gasoline is greater than 10 percent.

“The success of the Renewable Fuel Standard has become distorted by the myth that U.S. refiners have encountered an unbreakable blend wall,” said Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section. “Oil refiners, their champions in Congress, and even EPA have proposed changes to the RFS program based on this myth. Yet these changes to the RFS are aimed at solving a problem that never existed.”

Erickson continued, “Data recently made available by EPA demonstrates that obligated oil refiners and importers were able to meet RFS requirements through 2013 – even building excess RINs – despite having reached the blend wall as early as 2010 and definitely surpassing it by 2012. EPA’s delays in issuing 2014 and 2015 rules – which were in response to the assumed arrival of the blend wall – obscured this data until now. The delays in issuing rules and the proposed changes to the RFS have undercut investment in advanced biofuels and harmed developers of new technology. EPA should reconsider its proposed RFS rules for 2017 in light of the newly available data.”

The Myth of High RIN Prices as Proof of the Blend Wall finds:

Data recently released by EPA challenges conventional wisdom that the blend wall caused RIN prices to rise in 2013.
Refiners and importers blended ethanol into obligated gasoline volumes beyond the 10 percent limit as early as 2010.
Refiners’ and importers’ use of compliance flexibility reveals they did not experience RIN shortages at any point.
EPA’s rulemaking delays and unwarranted changes to the RFS based on blend wall assumptions harmed biofuel producers while providing obligated parties relief from a problem that didn’t exist.
EPA should reconsider its 2017 RFS proposed rule in light of this newly available data.

BIO, Ethanol, RFS, RINS

EPA Proposes #Biofuels Market Growth Rule

Cindy Zimmerman October 4, 2016

The Environmental Protection Agency on Monday released a proposed update to Renewable Fuels Standard (RFS) regulations “to better align our standards with the current state of the renewable fuels market and to promote the use of ethanol and non-ethanol biofuels.”

According to the agency, the proposed changes are the result of “recent developments in the marketplace resulting in increased production of cellulosic, advanced and other biofuels” and will help increase production and use of renewable fuels “by allowing the market to operate in the most efficient and economical way to introduce greater volumes of renewable fuels under the program.”

The proposed rule includes:

An updated regulatory structure that would allow biofuel producers to partially process renewable feedstocks at one facility and further process them into renewable fuels at another facility under existing pathways.

Updating fuel regulations to allow expanded availability of high ethanol fuel blends for use in flex fuel vehicles (FFVs).

New feedstock approvals for cellulosic biofuels produced from short rotation poplar and willow trees, cellulosic diesel produced from co-processing cellulosic feedstocks with petroleum, and renewable diesel and biodiesel produced from noncellulosic portions of separated food waste.

Ethanol producer groups are in the process of reviewing the proposal but Renewable Fuels Association (RFA) president and CEO Bob Dinneen says they have been working with the EPA for some time on these draft regulations. “Our goal is to ensure the final regulations do not unreasonably impair the ability of blenders and retailers to offer ethanol flex fuels like E85 to consumers,” said Dinneen. “Ethanol flex fuels are the lowest-cost, lowest-carbon, and highest octane liquid fuels on the market, and it is imperative that these EPA regulations help, not hinder, broader commercial introduction of these fuels.”

Growth Energy CEO Emily Skor expressed concerns about the impact of the proposal on E15 retailers. “If this proposed rule is finalized, this regulation would leave E15 as the only ethanol-blended fuel that does not have Reid Vapor Pressure (RVP) relief,” said Skor. “It is imperative that E15 be given the same volatility treatment as regular E10 gasoline.”

EPA is also seeking comment on a variety of other issues that impact renewable fuels, including Renewable Identification Number generation for renewable electricity used as transportation fuel and requirements for facilities that could use carbon capture and storage as a way to reduce carbon in the production of renewable fuels in the future. Once the proposal is published in the Federal Register, parties will have 60 days to comment.

advanced biofuels, biofuels, Cellulosic, EPA, Ethanol, Ethanol News, Growth Energy, RFA, RFS

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