Explaining Dropping Biodiesel RIN Prices

John Davis

The price for D4 biodiesel renewable identification numbers (RINs) has dropped by more than 50 cents since the middle of June, leaving many scratching their heads and asking, “Why?” Analysts from the University of Illinois have an explanation.
biodieselrinssep2015a
The first factor contributing to the decline in D4 biodiesel RINs prices is the price of soybean oil, which is the main feedstock used to make biodiesel in the U.S. The price of soybean oil has fallen about 7 cents per gallon since mid-June due to improving soybean production prospects in the U.S. and concerns about economic growth in China. With a binding volume mandate, soybean oil prices are the main determinate of biodiesel prices, so the decline in soybean oil prices has led to a decline of more than 60 cents in the price of biodiesel. In turn, the decline in biodiesel prices has been the main factor in narrowing the biodiesel blending margin by about 25 cents. Since the biodiesel blending margin, at least in theory, is equal to the RINs value (ignoring time value), we are left with the puzzling result that the decline in D4 RINs prices is slightly more than twice the size of the decline in biodiesel blending margins. The most likely explanation for this puzzling result is that traders have been revising upward their estimate of the chance that the biodiesel tax credit will be reinstated for 2015. Since a tax credit reduces the RINs price when there is a binding volume mandate, it is rational to reduce D4 prices sharply if traders perceive a high chance of the credit being reinstated. Recent activity in the U.S. Senate is consistent with such an expectation.

You can read the full explanation here.

Biodiesel, RINS

GE Provides Biomass Gasification for Project

John Davis

GEPowerWaterGE is providing an integrated biomass gasification solution to power a bioenergy plant in California. This news release from the company says it struck the deal with Western Energy Systems and San Francisco-based Phoenix Energy to provide this for the North Fork project, the next in a series of bioenergy plants that Phoenix Energy is building in the state.

GE’s integrated biomass gasification solution includes an Ecomagination qualified, 1-megawatt engine and biomass gasification system. Phoenix Energy and GE have collaborated to design and implement this solution statewide.

For the North Fork project, Phoenix Energy will use the GE gasification solution to convert excess forest biomass to electricity, heat and biochar, supporting the state and federal efforts to reduce wildfire risk, eliminate wasteful pile and burn management practices and improve carbon sequestration. The renewable biomass is procured locally from U.S. Forest Service and CalFire managed lands. With GE’s process, the carbon in the biomass is left mostly in solid form as biochar. This biochar is then put back into California agriculture to improve soil health and water retention and can also be used as carbon filter media. GE will provide an integrated biomass solution including the gasifier, gas conditioning system and engine.

“GE is the first company to offer us a single end-to-end solution on the complete biomass system, rather than piecing it all together from multiple vendors. This is game changing for the forested communities,” said Phoenix Energy CEO Greg Stangl. “By working together, GE has given us the confidence that this is the right solution to use throughout California to produce sustainable local energy from local biomass, creating local jobs.”

The North Fork project received a $4.9 million California Energy Commission grant as part of a larger plan to support further deployment of bioenergy in the state.

biomass

Ethanol Report on Growing Biofuels Infrastructure

Cindy Zimmerman

ethanol-report-adUSDA has announced new funding for biofuels infrastructure at fueling stations and Renewable Fuels Association (RFA) president and CEO Bob Dinneen thinks EPA should pay attention to that message. In this Ethanol Report, Dinneen also comments on what Congress may or may not do the rest of this session, and how another big corn crop makes keeping the RFS on track more important than ever.

Listen to this edition of the Ethanol Report here: Ethanol Report on Growing Biofuels Infrastructure

Audio, corn, Ethanol, Ethanol News, Ethanol Report, RFA, RFS

American Ethanol “Top Gun” at Lake Ozark Shootout

Cindy Zimmerman

Photo credit - george denny, Lake of the Ozarks Shootout

Photo credit – george denny, Lake of the Ozarks Shootout

American Ethanol made a big splash at the Lake of the Ozarks Shootout held in central Missouri recently.

More than 100,000 spectators gathered to watch nearly 100 boats race along the one-mile course, and the boat crowned as the “Top Gun” was the American Ethanol 51-foot Mystic Powerboats catamaran. The boat, named after its fuel, logged a top speed of 208 mph.

“The American Ethanol catamaran definitively proved that ethanol and marine engines are more than compatible,” said Tom Buis, CEO of Growth Energy. “The team chose to run on ethanol because the fuel performs better and burns cooler than regular gasoline. Unsurprisingly, the second place boat was also powered by homegrown American ethanol,” Buis said.

The driver of the boat, Myrick Coil, said, “This boat accelerated harder than any boat I have ever been in. It was also the biggest boat I have ever driven. Those two things usually don’t go together!”

John Cosker, owner of Mystic Powerboats, added, “All of our hard work leading up to the event paid off when the boat came alive off of the start line and rocketed to a clocked speed of 208 mph. It showed America the power behind American Ethanol.”

The owner of the boat, Don Onken, echoed these sentiments and noted that, “We showcased the potential of American Ethanol at this event, and I’m proud of what we were able to accomplish together. There’s only one thing left to do—figure out how to go faster next year.”

American Ethanol, Ethanol, Ethanol News, Racing

California City Switches to Renewable Diesel

John Davis

walnutcreekA California city has switched to using renewable diesel in its municipal fleet. This story from Patch.com says Walnut Creek in the Bay area is one of the first cities in the area to make the switch.

So far, the conversion has been seamless, Walnut Creek Public Works Manager Rich Payne said.

“We haven’t noticed anything in terms of performance and it didn’t require any retrofitting of our equipment,” Payne said.

The city had been using low-percentage biodiesel, which is blended with petroleum diesel, for its fleet of street sweepers, dump trucks, backhoes, lawn mowers and other equipment, Payne said. Representatives from NeXgen Fuel LLC, which is distributed by Golden Gate Petroleum, approached the city about switching fuels, Payne said.

Renewable diesel is similar to biodiesel in that it is made from the same stock, which include fats, oils and greases, but that’s where the similarities end, said Pat O’Keefe, NeXgen CEO and Vice President of Golden Gate Petroleum. “The process to manufacture it is completely different,” O’Keefe said. “Renewable diesel acts and behaves in the engine just like regular diesel.”

The price for the renewable diesel is on par with regular diesel and about 10 cents per gallon cheaper than biodiesel.

Biodiesel, renewable diesel

German Biodiesel Quality Group Starts Glycerol Test

John Davis

AGQMA German group that maintains quality standards for biodiesel will carry out round-robin tests for pharmaceutical glycerol. This news release from AGQM (Arbeitsgemeinschaft Qualitaetsmanagement Biodiesel) says this will be the first time for the tests, and registrations will still be accepted until Sept. 20, 2015.

Round Robin Tests to check test methods and the proper handling of professional laboratories have a long and successful history. That is why AGQM has also carried out round robin tests for Biodiesel analytics as part of its quality management system since being founded in 1999.

Apart from Fatty Acid Methyl Ester (FAME) which is mainly used as fuel (Biodiesel) and which must comply with high quality standards, glycerol – a by-product of the Biodiesel production – is also gaining continuously in importance. In the past it was used primarily in the fields of cosmetics and technology but nowadays it is used more and more as high-quality pharmaceutical glycerol which is gained by refining raw glycerol.

With this Round Robin Test we wish to enable both company laboratories as well as commercial service laboratories to carry out external quality assurance for selected parameters of the analytics of pharmaceutical glycerol.

Biodiesel, International

USDA Applauded for Biofuel Infrastructure Support

Joanna Schroeder

Photo Credit Joanna Schroeder

Photo Credit Joanna Schroeder

This morning, the U.S. Department of Agriculture’s Secretary Tom Vilsack made the announcement that 21 states will receive grants through the Biofuel Infrastructure Partnership (BIP) to help provide access to more renewable fuels such as ethanol and biodiesel. In response, the American Coalition for Ethanol (ACE) applauded USDA for expanding its efforts to provide consumers with fuel choice at the pump through expanded ethanol blends. The program will help retail station owners pay for equipment they may need to offer higher ethanol blends such as E85.

“Secretary Vilsack has worked tirelessly to see that his vision of 10,000 blender pumps across the nation becomes reality, and the Biofuels Infrastructure Partnership is another great example of his commitment to expanding markets for farmers’ products,” said ACE Senior Vice President Ron Lamberty whose organization works with retailers and provide assistance through their FlexFuelForward website.

“BIP is a matching grant program, which means USDA also challenged states and ethanol supporters to step up and make equal or greater amounts of infrastructure funding available to station owners. The intended result is nearly a quarter of a billion dollars petroleum marketers can use to buy equipment and offer more ethanol blends to consumers. In many cases, station owners will pay little or nothing to add state-of-the-art blender dispensers and other equipment they may need to sell flex fuels and E15. We encourage retailers to apply for funding assistance through the appropriate state agencies,” Lamberty added.

Growth Energy also praised the USDA with CEO Tom Buis noting that the announcement is a “tremendous win” for American consumers. “It is unfortunate that the obligated parties refuse to follow the law and blend increasing amounts of renewable fuel,” said Buis, “but the steps by the administration and Secretary Vilsack will ensure higher ethanol blends, such as E15, penetrate the marketplace, and provide consumers with a choice and savings they deserve.”Read More

ACE, biofuels, E15, E85, Ethanol, Growth Energy, RFA

Enerkem Raises C$152M in Funding

Joanna Schroeder

Waste-to-biofuels and biochemical company Enerkem has raised C$152.6 million and initiated the production of biomethanol from non-recyclable household garbage at the Enerkem Alberta Biofuels full-scale facility in Edmonton, Canada.

Enerkem is the first company in the world to have successfully produced biomethanol from municipal solid waste at the commercial scale. (PRNewsFoto/Enerkem Inc.)

Enerkem is the first company in the world to have successfully produced biomethanol from municipal solid waste at the commercial scale. (PRNewsFoto/Enerkem Inc.)

The financings are comprised of a recently accessed C$29 million debt facility from Integrated Asset Management Corp.’s (IAM) Private Debt Group as well as C$50 million in private placements from current investors and C$73.6 million of debt from two other lenders, closed over the past year. This funding will be used for the product expansion of the Edmonton facility and the company’s global growth.

“I must say a huge thank you to our financial partners, employees, as well as the City of Edmonton and Alberta Innovates – Energy and Environment Solutions who believed in us and have accompanied us while we were reaching this pivotal operational milestone,” said Vincent Chornet, president and chief executive officer of Enerkem. “We are about to fundamentally transform the waste industry over the coming years and allow energy and chemical groups access to a new and competitive source of renewable carbon.”

advanced biofuels, biochemicals, Waste-to-Energy

USDA Announces Funding for Biofuel Infrastructure

Cindy Zimmerman

USDA logoAgriculture Secretary Tom Vilsack today announced that 21 states will receive grants through the Biofuel Infrastructure Partnership (BIP) to help provide access to more renewable fuels for America’s drivers.

“The Biofuel Infrastructure Partnership is one approach USDA is using to aggressively pursue investments in American-grown renewable energy to create new markets for U.S. farmers and ranchers, help Americans save money on their energy bills, support America’s clean energy economy, cut carbon pollution and reduce dependence on foreign oil and costly fossil fuels,” said Vilsack.

USDA estimates that the BIP grants will support nearly 5,000 pumps at over 1,400 fueling stations across the country. “Our investment will nearly double the number of pumping systems available across the U.S.,” Vilsack said. According to the list of estimated numbers of pumps that could be installed per state, Florida and Texas will be the biggest beneficiaries with 892 in Florida and 763 in Texas. Minnesota at 620 and Illinois at 428 are the largest recipients in the Midwest.

Secretary Vilsack also challenged conclusions in the American Petroleum Institute report out yesterday that he called “preposterous.”

Listen to Vilsack’s announcement here: USDA Secretary Vilsack biofuels investment

Q and A with reporters: Vilsack answers BIP questions

Audio, Ethanol, Ethanol News, Retailers, USDA

BioEnergy Bytes

Joanna Schroeder

  • BioEnergyBytesDF1Flottweg SE is founding a subsidiary in Peru to reinforce its presence in the South American market. The centrifuge manager finds this the next step in building out their global sales network. The new company, Flottweg Peru SAC, was founded in April, 2015, and will now start operational activities under the leadership of Luis Pacheco. The subsidiary consists of its own office as well as a workshop and workshop warehouse. Flottweg has a strong presence in the biofuels industry.
  • The Energy Conference, taking place in Des Moines, IA September 21-23rd, is the exclusive venue where biofuel producers and petroleum distributors meet and discuss how to increase the level of biofuels in the nation’s transportation fuel mix. The goal of this conference is to unite, across industry lines, for the purpose of growing strong business relationships that focus on higher blends of alternative fuels.
  • The Edison Electric Institute (EEI) announced that Lawrence E. Jones, an executive with two decades of international experience, has joined EEI as Vice President, International Programs.
  • Join Clean Energy Connections for Advanced Energy Consumers: Customer Models Driving Utility Industry Change from the Edge. The event is taking place Wednesday September 16, 6:30 – 9:00 pm ET. The opening speaker is Marsha L. Walton, Senior Project Manager, Market Inisghts at NYSERDA. The event will be moderated by Andrew Mulherkar, Analyst, Grid Edge division of GTM Research at Greentech Media. Panelists include: Chris Neidl, Director, Here Comes Solar at Solar One; Jennifer Metzger, Co-Director, Citizens for Local Power (CLP); Juan Camilo Osorio – Director of Research, New York City Environmental Justice Alliance; Laney Brown – Director of Smart Grid, Iberdrola USA. For those not able to attend in person, the event will be streamed live.
Bioenergy Bytes