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General Motors to ethanol: Focus on 95 octane fuel standard, or “miss the window altogether”

Biofuels Digest - Tue, 02/12/2019 - 6:28pm

In Florida, General Motors VP Dan Nicholson told delegates at the National Ethanol Conference that “High octane is essential to realize better efficiency and greenhouse gas emissions,” but warned the US ethanol industry to get behind the 95 octane fuel standard, warning that 98 RON is a bridge too far,” referring to the cost hurdles, and urged delegates to “focus on what can be done now and prepare for the future. Do 95 and get the infrastructure deployed. An advocacy effort with little reality based on waiting  and hoping around RFS resets and RFS reform will remove real opportunity.”

Nicolson’s passionate address on the future of octane, ethanol and liquid fuels prompted significant pushback from the delegates, who said that the Renewable Fuels Association was highly active in high octane fuel talks, but there were severe challenges for the US ethanol industry. RFA’s new CEO Geoff Cooper said that it didn’t look like there was an opportunity from growth with the 95 octane standard and that RFA members were looking for growth.

GM’s Nicolson, said that customers “more than ever” are demanding performance, affordability, safety and more, and pointed to surge in electrification R&D at General Motors in response to the shifts in sentiment.

“5 years ago, we had 8000 people and our unit was called GM Powertrain and it was 100 percent ICE (internal combustion engine) focused. A few years later we renamed at Global Propulsion Systems and our team was 70% ICE and 30% electrification. Today, we are 30% ICE, and 70% electrification. I am a proponent of higher octane in the US market, and a real ethanol fan, but developed nations will see a double digit drop in ICE engines by the 2040s. Looks like less in the US, and we have to think through a reasonable approach. The good news, there will be peaceful coexistence between ICE and electrification for some time, and high octane is essential to realize better efficiency and greenhouse gas emissions.

But we need to work now, and work together. We can’t wait for more debate. All elected officials want and expect us to work this out. Recognize it is time to revise legislation including the consumer. Let’s not wait or be distracted by other factors. The timing and opportunity exists to bring positive outcomes possible for all stakeholders. The oil industry is involved in biofuels and see the market value of biobased products. Our collective future is about oil and ethanol sectors working together to resolve outstanding issues.

“The standard should be 95 RON for all new vehicles. All retailers support it, and we get 3 percent better fuel efficiency. A national 95 RON standard will require another 7 billion gallons of high octane fuel. Europe has had it for decades. Meanwhile, we are still using more or less the same unleaded fuel from the 1970s, even though everyone else is innovating quickly [across the value chain].”

GM”s pathway? Legislative reform. “We believe in a legislative approach,” Nicolson said. “We are advocating for a new high octane base fuels and a new octane performance standards, with a 95 octane base standard and a high efficiency performance grade of 98 octane.

Audience questions and comments focused on the potential for the global oil industry to utilize petroleum to raise octane levels, cutting off the market for low carbon fuels. Questioners noted that any greenhouse gas emissions reductions from engine efficiency gains could be lost by a switch-back to higher carbon petroleum as a base fuel. Not to mention the catastrophic potential impact on US ethanol producers and the impact on ethanol investor and partner confidence.

Nicholson contended that “the oil industry could invest to make more octane, but you are the low cost provider of octane, and ethanol is the low cost solution for high octane.”

Nicolson said, “business as usual will not lead to positive results. We had to shift from not engaging, to being leaders, to keep the best of the current and define the future. It is time to jump into the effort to bring forward this new fuel and will add 3 percent efficiency. Please focus on a more achievable RON level, we need you at the table now or we will miss the window altogether.”

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Consumption, U.S. recession in 2020, oil-led, says prominent US economist

Biofuels Digest - Tue, 02/12/2019 - 6:27pm

In Florida at the 24th National Ethanol Conference, US energy economist Phil Verleger said “I don’t see how we get through this in 2020 without a major recession,” referring to predictions of disruption in US and global energy markets created by belated response by the shipping and oil refining industries to changes in ultra-low sulphur requirements that will apply to marine fuels globally in 2020. The US has required ultra-low sulphur fuels for many years, but Verleger noted that the combination of spiked demand for USD diesel, and disruptions caused by US sanctions against Venezuela and Iran, can be expected to lead to ultra-low gasoline prices and ultra-high diesel prices. Verleger said that his model shows US gasoline retail prices dropping as low as $1 per gallon in 2020, while diesel could spike to $6.

“Bad management has transformed this once untouchable sector,” Verleger said, “in terms of investor support. Today, only institutionals buy stocks, and with the rise in 301ks instead of pensions they are less and less important. Investor disdain will limit the ability of companies to invest in new drilling. It has to come from internal cash flow, — they can’t issue more equity and are generally borrowed up to the hilt. This will limit the production of oil because there’s a shortage of capital except in the US, [and falling gasoline prices will limit the opportunities for funding from cash flows]. Wood McKenzie said there’s a need to spend $600 billion over the near term in new investment, but the industry will only have $400 billion or so.”

Verleger painted a grim prospect even for the US fracking industry, which has seen strong growth in recent years. Most of that independent production is by smaller independent producers, because they are small, they hedge. And with companies like Goldman Sachs essentially closing down their commodities desks, they are all looking for hedges and can’t get them. And, the rapid increase in US crude mostly produces a lot of gasoline and not much diesel. So, we’re looking at big gasoline surpluses, but supplies of ULS diesel could be tight.”

The impact could be substantive, says Verleger. “We don’t have enough immigration, and with diesel prices it is going to be very difficult to move things around the country in an affordable way, and farm income will be wiped out for the year.”

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So hot it’s on fire!: The Digest’s 2019 Multi-Slide Guide to Biochar-based Activated Carbon

Biofuels Digest - Tue, 02/12/2019 - 6:18pm

Lee Enterprises Consulting is the world’s largest bioeconomy consulting group with over 100 subject matter experts (SME’s) in all areas of the bioeconomy.

William Naylor, activated carbon expert of Naylor Consulting and member of Lee Enterprises Consulting offers this illuminating overview of biochar-based activated carbons, their advantages, and more

Categories: Today's News

EPA not likely to reallocate RIN obligations during E15 rulemaking

Biofuels Digest - Tue, 02/12/2019 - 6:07pm

In Washington, Reuters reports that sources say the Environmental Protection Agency doesn’t plan to reallocate RIN obligations waived under the hardship waiver policy or other recent actions granted by the EPA as part of the agency’s roll out of year-round E15. The biofuels industry has repeatedly asked the EPA to include RIN reallocation during its rulemaking process for E15. There is concern that oil companies would suffer if RIN prices soared speculatively on the back of reallocated RINs.

Categories: Today's News

ePure slams European Commission for palm oil sustainability loopholes

Biofuels Digest - Tue, 02/12/2019 - 6:06pm

In Belgium, ePure says the European Commission has gone most of the way toward banning the use of unsustainable palm oil in EU transport, but it hasn’t quite closed the deal. Instead of acting on the RED II agreement and removing so-called high-ILUC-risk biofuels from the EU’s transport mix, it has left a door open.

“Making an exception for feedstock produced by smallholders isn’t just allowing high-ILUC-risk biofuels such as palm oil into Europe through the back door, it’s allowing it through the front door,” said Emmanuel Desplechin, Secretary General of ePURE, the European renewable ethanol association. “The hard-won compromise reached on RED II couldn’t have been clearer in its message that Europe should phase out biofuels associated with the significant deforestation and peatland drainage that has defined most palm oil expansion.”

“Low-ILUC-risk biofuels certified as such could escape from the phase-out, but these were clearly defined as either produced through improved agricultural practices or from unused land. By inventing a third, alternative criterion for smallholders, the Commission is making a mockery of the agreed RED II compromise.”

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Avril shuts down two biodiesel plants following wage protests

Biofuels Digest - Tue, 02/12/2019 - 6:05pm

In France, Reuters reports that Avril has decided to stop production at its two Saipol biofuel plants following wage protests by workers. Production halted on February 1 at its largest facility near the Port of Rouen as well as another as protests kept the company from being able to purchase rapeseed for feedstock. Short-lived protests were held at another two facilities but didn’t force a shutdown. The company typically crushes 3.5 million metric tons of rapeseed annually to produce 1.3 million tons of biodiesel.

Categories: Today's News

Malaysia exploring price stabilization fund for biodiesel

Biofuels Digest - Tue, 02/12/2019 - 6:04pm

In Malaysia, local press reports that the primary industries minister is contemplating the development of a fund to help stabilize biodiesel prices in an effort to keep the fuel attractive for the domestic market. She said that similar programs in Thailand and Indonesia can serve as models as her ministry as well as those for finance, international trade and the office of the Prime Minister flesh out potential ways forward. This year’s palm oil demand for biofuels is seen at 761,000 metric tons thanks to the B7 blending mandate that kicks off for the industrial sector in June. She said that blending could also be seen going as high as 20% next year for transportation.

Categories: Today's News

Green New Deal could be a boon for biodiesel demand

Biofuels Digest - Tue, 02/12/2019 - 6:04pm

In Washington, the National Biodiesel Board says the proposed Green New Deal currently being floated in the capital that would see agriculture go GHG emissions-free over the next decade could be a major opportunity for biodiesel. Though it’s not likely going 100% biodiesel would be feasible, the fuel could contribute to helping to reduce emissions and achieve the goals of the green plan. Statistics show that diesel currently powers about two-thirds of agricultural equipment in the US.

Categories: Today's News

Amyris part of major NIH project to bioengineer vaccine adjuvants alternative

Biofuels Digest - Tue, 02/12/2019 - 6:02pm

In California, Amyris, Inc. and IDRI (Infectious Disease Research Institute announced IDRI’s receipt of a $4.4 million, five-year grant from the National Institute of Allergy and Infectious Diseases (part of the U.S. National Institutes of Health) to discover sustainable alternatives to shark squalene to use as vaccine adjuvants (grant number: R01AI135673). Funding is provided by a special bioengineering research grant aimed at bringing engineering expertise to focus on a biomedical problem and ultimately develop a new solution.

Adjuvants are added to vaccines to enhance their effectiveness; the aim of the new project is to discover and evaluate novel, sustainable squalene-like compounds produced by bio- or chemical engineering for vaccine adjuvant applications.

IDRI has selected Amyris and the University of Nottingham, (UK) as partners because of their record of success in engineering pure molecules from sustainable sources at low cost. Instead of sourcing squalene from sharks, Amyris uses patented biotechnology to create squalene-like compounds using sugarcane syrup as the fermentation feedstock. Amyris has developed specific expertise as a clean manufacturer of sustainably sourced squalane.

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Canada awards C$7 million to the Biomass Cluster to drive innovation

Biofuels Digest - Tue, 02/12/2019 - 6:01pm

In Canada, the Minister of Agriculture and Agri-Food, Parliamentary Secretary Jean-Claude Poissant and Member of Parliament, Francis Scarpaleggia, were at the Macdonald Campus at McGill University to announce a federal investment of up to C$7 million to the Biomass Cluster under the Canadian Agricultural Partnership. The Cluster, led by the BioFuelNet Canada Network, will include an additional C$3.1 million in contributions from industry, for a total investment of C$10.1 million.

This new research cluster will drive innovation and help improve technologies for processing agricultural biomass, including waste material, which can then be used as a renewable and sustainable starting material for production of cleaner bioenergy, and other bio-based products. The cluster will focus on three key areas of research including:

  • • Advanced technologies to boost biomass production;
  • • Using biomass heat and energy to extend the greenhouse growing season in Northern Canada; and
  • • Reducing production costs and expanding export markets for biomass.
  • • As part of the research cluster, McGill University will receive up to C$888,061 in funding for a project that will focus on the development of biological inputs that will enhance the growth of biomass crops including switchgrass.
Categories: Today's News

LanzaTech, Amyris, Novozymes, Neste, POET/DSM, POET, Impossible Foods, Anellotech, Beyond Meat and BASF among early Hot 50 voting leaders

Biofuels Digest - Tue, 02/12/2019 - 10:21am

In Florida, LanzaTech, Amyris, Novozymes, Neste, POET/DSM, POET, Impossible Foods, Anellotech, Beyond Meat and BASF have taken the lead in early voting in the 50 Hottest Companies in the Advanced Bioeconomy ballot. The Digest released the early-voting totals from Subscriber Voting — which do not yet include Invited International Selector votes.

Alternative meats, chemicals, organism development, aviation, strategics, and nutrition on the Rise

Notable among the leaders is the rise of a truly international set of leaders — from Europe: Novozymes, Neste, BASF, DSM, AkzoNobel, Evonik, IKEA, Stora Enso, Clariant, avantium, Haldor Topsoe, Borregaard, Syngenta, Evolva, and Corbion are among the early leaders; from Canada, Enerkem and Ensyn’ From Brazil, Braskem; LanzaTech, though now a US company, was founded in New Zealand.

Also notable are the strong presence of major strategics such as Coca Cola, DSM, Neste, ADM, BASF, Braskem, Clariant, IKEA, Shell, and AkzoNobel among others. 

And, the number of (primarily) chemicals players such as BASF, Braskem, Anellotech, Genomatica, AkzoNobel, and Avantium. In aviatino, United Airlines, SkyNRG, and Fulcrum BioEnergy.

Also, fresh faces such as Impossible Foods, Ginkgo BioWorks, Evolva, Beyond Meat, Pivot Bio and  Zymergen were scoring well with voters.

About the Hot 50

Each year, Digest subscribers and a panel of invited international selectors choose the 50 Hottest Companies in the Advanced Bioeconomy. Complete rules, dates and background is here.

Photo Voting Options

Photo Votes can be submitted to hot50@biofuelsdigest.com.

Early vote leaders

Below are the leaders in early voting through February 11th.

Categories: Today's News

Renewable Fuels Association: 2019 State of the Industry Address 

Biofuels Digest - Tue, 02/12/2019 - 7:51am

By Geoff Cooper
President and CEO, Renewable Fuels Association

Good Morning! Welcome to the 2019 National Ethanol Conference. Thank you for being here. As you just heard from Neil, I’m the new President and CEO of the Renewable Fuels Association. I was honored and humbled to assume that role in October and I am extremely grateful to the RFA board of directors for giving me that opportunity. And while I am new to this position, I’m not new to the RFA or the ethanol industry. In fact, I’ve known many of you for years. 

But for those of you who don’t me, I thought I’d tell you a little more about my background and how I got here. 

I grew up in central Wyoming, where my family raised sheep, cattle, alfalfa hay, oats, and yes, even a little corn. I knew at a fairly young age that I wanted work in agriculture when I grew up. Later, I moved to Iowa to attend college at Drake University on an Army ROTC scholarship. I was commissioned as a second lieutenant the day after I graduated and immediately headed for Fort Knox, Kentucky, and later Fort Lee, Virginia. In the Army, I specialized in petroleum product logistics, and it was during a visit to Egypt in the fall of 2001 that I gained a new appreciation for the vital importance of reducing our dependence on foreign oil and enhancing our national energy security. 

In late 2003, I found my way back to agriculture, taking a job at the National Corn Growers Association in St. Louis. This was right at the beginning of the modern ethanol boom; the industry at that time consisted of about 60 plants with about 2.7 billion gallons of capacity. But states were beginning to ban MTBE, oil imports were surging, and discussions about a national renewable fuel standard were gaining momentum. And farmers across the Corn Belt saw a tremendous opportunity on the horizon. They gathered together and pooled their resources and talents—not only to invest in the construction of new ethanol plants in their communities, but also to provide the grassroots muscle needed to push the first Renewable Fuel Standard across the finish line in the summer of 2005. 

A few months later I met a guy named Bob Dinneen at the 2006 National Ethanol Conference in Las Vegas. Maybe you’ve heard of him. I’ll never forget the sold-out crowd coming to its feet and cheering as Bob touted the RFS victory and declared, “My friends, ethanol has arrived!” I knew then that I wanted to be part of ethanol’s arrival. I wanted to work with this guy and the RFA. 

And indeed, I got that chance. I worked closely with the RFA over the next few years as we advocated for expanding ad extending the RFS. Together, we battled adversaries on everything from the food vs. fuel myth to the energy balance canard to the indirect land use change fable. And we persevered, celebrating the successful passage of the RFS2 in December 2007. 

Just two months later in February of 2008, at this very conference and at this very same hotel— in fact it was on a bench out by the lake—Bob asked me to come to work at the RFA as the Director of Research and Analysis. I eagerly accepted, and I’ve been proud to be part of the RFA team—working on your behalf—for the past 11 years. 

So, that’s a little bit about me and my professional path. But there’s probably one other important thing you need to know about me: I’m a baseball junkie. I’m fanatical about baseball. When I’m not thinking about ethanol, I’m probably thinking about baseball–watching my kids play the game, reading baseball books, or taking in a Cardinals game at Busch Stadium. So, I suppose it’s only appropriate that today, about two hours east of here, Cardinal pitchers and catchers are reporting for their first day of spring training. 

And when I’m looking for inspiration or wisdom, I turn to America’s pastime. There are so many parallels between the game of baseball and the game of life and the situations we encounter every day in our business. I often find that baseball helps me put things in perspective and provides endless metaphors to help explain the triumphs and travails we experience in the ethanol world. 

In baseball, there are games where it seems like your team is doing everything right. Your hitting the ball, getting on base, and making plays. But you just can’t pull ahead. You just can’t seem to catch that break. In baseball lingo, you’re “snakebit.” That’s how 2018 felt for the ethanol industry, isn’t it? 

You did everything you could in 2018. You left it all on the field. And you put up incredible numbers—record numbers, in fact. 

The U.S. ethanol industry produced a record 16.1 billion gallons of high-octane, clean-burning renewable fuel in 2018, up about 200 million gallons from 2017 and the sixth straight annual increase in production. Meanwhile, you churned out 41.3 million metric tons of co-product animal feed, and a record 4 billion pounds of distillers oil. While other industries have struggled to simply maintain output levels in recent years, incremental growth continued in the ethanol industry. U.S. producers have quietly added nearly three billion gallons in production capacity over the past five years, positioning the industry well to serve future global demands for our two most valuable players—octane and protein. 

As a result, the ethanol industry continued to play a vital role in our economy, supporting more than 71,000 direct jobs in manufacturing and agriculture, and nearly 295,000 indirect and induced jobs across all the sectors of the economy. The industry generated $25 billion in household income and contributed $46 billion in gross domestic product. 

While 2018 saw the completion of several expansion projects and the opening of a few new ethanol biorefineries, much of our growth in recent years has come through increases in efficiency. 

You continue to squeeze more ethanol out of every bushel of grain, doing it with less energy and water. And now ethanol biorefineries across the country are adopting technologies to convert the fiber fraction of the corn kernel into high-value cellulosic biofuel, adding another revenue stream and pushing ethanol yields over three gallons per bushel. That’s incredible! 

Our industry made significant strides in 2018 to expand the market for E15 and flex fuels like E85. Thanks to the persistent and vocal advocacy efforts of our industry, our partners in agriculture, and our champions in Congress and the Administration, we got a firm commitment from President Trump in October to eliminate what he called an “unnecessary and ridiculous” regulatory barrier to year-round E15 sales before this summer driving season begins. 

While resolving the RVP barrier will not unleash an immediate tidal wave of new ethanol demand, it will absolutely send a crucially important signal to gasoline retailers and marketers, providing them with the investment certainty they need bring E15 to the pump. The number of stations selling E15 grew more than 30 percent in 2018—even with the RVP barrier in place. And within weeks of President Trump’s announcement, two major retail chains—Casey’s and Cumberland Farms—announced plans to offer E15 at hundreds more retail locations. Other major retailers will undoubtedly follow once the EPA finalizes the regulations removing this red- tape obstruction. Flex fuels like E85 made progress as well, and by year’s end a record 4,500 stations in 46 states were selling cleaner, lower-cost flex fuels to millions of FFV owners. 

One of the greatest successes for our industry in 2018 was growth in the export market, driven in large part by the sustained international market development efforts of RFA and its partners. Ethanol exports surged to a record of more than 1.6 billion gallons, meaning one out of every 10 gallons we produced went into the international market—providing savings at the pump and cleaner air for drivers around the globe. This accomplishment is even more impressive when you consider that U.S. ethanol faced punitive trade barriers in several key markets. 

The ethanol industry continued to deliver huge wins for consumers last year. Your efforts helped empower American families and improve their lives, providing them with cleaner air, a more secure domestic energy supply, and lower gas prices. 

The use of U.S.-produced ethanol in 2018 reduced greenhouse gas emissions by 55 million metric tons—that’s like taking almost 12 million cars off the road for an entire year, or eliminating the annual emissions from 13 coal-fired power plants. You’ll hear more about the role of renewable fuels in reducing GHG emissions during an excellent panel discussion this afternoon, featuring Richard Corey, the executive officer of the California Air Resources Board, and several other experts. 

And ethanol continued to displace billions of gallons of toxic aromatic hydrocarbons like benzene from our gasoline, reducing the emissions that contribute to asthma, lung disease, cancer, and heart disease. According to a recent EPA report, aromatics and olefins comprised 37 percent of our gasoline in 2000, while ethanol accounted for just 1 percent. In 2016, however, aromatics and olefins made up 28 percent of our gasoline and ethanol comprised 10 percent. 

Meanwhile, the ethanol industry continued to play an important role in America’s energy renaissance, displacing the need for an amount of gasoline refined from 594 million barrels of crude oil and helping reduce our net dependence on imported petroleum to just 14%–the lowest rate in nearly 60 years. 

Finally, as the lowest-cost octane booster on the planet, ethanol continues to save consumers money at the pump. A recent study published in the American Journal of Agricultural Economics found that ethanol consumption under the RFS saves the U.S. economy almost $18 billion per year in gasoline expenses. Time and time again, consumer polling reveals that affordability is by far the most important consideration for American consumers when they pull up to the pump. That was confirmed by recent consumer focus groups conducted for RFA, which you’ll learn more about this afternoon. 

Yes, the ethanol industry had some big home runs in 2018. 

But we just couldn’t seem to score that go-ahead run. We were always playing catch-up and it felt like we couldn’t gain any ground in the standings. Why? Because the other team on the field has the payroll of the New York Yankees and seemingly limitless resources. They play to win at any cost. They play dirty. They steal signs, throw spitballs, and use too much pine tar. They might even be using those PEDs. 

Take for example the small refiner exemptions that plagued our markets in 2018. While we were focused on fighting efforts by Texas Senator Ted Cruz and others to cap RIN prices, allow exported renewable fuels to count toward the RFS, water down the RFS with RIN multipliers, and any number of other really bad ideas, former EPA Administrator Scott Pruitt was busy cutting the legs out from underneath our industry. As we all know now, he was secretly letting dozens of so-called “small refineries” out of their legal obligations to blend renewable fuels under the RFS. 

Pruitt’s abuse of the small refiner waiver provision was unprecedented. The waiver program was created by Congress to allow small refining companies to seek an exemption IF they could prove that their RFS compliance obligation was somehow causing them “disproportionate economic hardship.” Appropriately, EPA has always applied a very rigid standard when considering exemption requests, and the Agency itself has acknowledged that RIN costs are passed downstream to the blender and there is no evidence that RINs somehow cause disproportionate economic harm. 

Under the previous administration, for example, just seven small refineries were exempted from RFS compliance obligations in 2015, while seven petitions—or half of those received– were denied or declared ineligible. Contrast that to Pruitt’s approval of 19 exemptions from the 2016 RFS standards and 29 exemptions from 2017 RFS obligations. And not a single petition reviewed by EPA during Pruitt’s tenure was denied. Mr. Pruitt unilaterally weakened the criteria for granting exemptions and threw EPA’s high standard out the window. He clung to the argument that his hands were tied by the 2017 Sinclair versus EPA court decision, and also that he had to follow Department of Energy recommendations on waiver petitions. Knowing what we know now, neither of those excuses pass the straight-face test. In the end, more than 21 billion gallons of gasoline and diesel sold in 2016 and 2017 escaped a renewable fuel blending obligation. 

Adding insult to injury was the revelation that these supposed “hardship” waivers weren’t just being issued to small, independent merchant refineries. As reported by Reuters, they were also being handed out to oil behemoths like Chevron and ExxonMobil. ExxonMobil was the 17th most profitable company in the world in 2017 with net income of $19.7 billion—if that’s “economic hardship,” sign me up! 

The effect of these refinery bailouts was devastating to the domestic ethanol market. Billions of RINs that refiners previously thought would be needed for RFS compliance were no longer needed, resulting in a flood of surplus RINs back onto the market, a collapse in RIN prices, and demand destruction in the physical markets. 

The deluge of RINs back onto the market meant obligated parties could comply with RFS blending requirements by purchasing and turning in cheap RINs rather than taking steps to expand ethanol blending. When ethanol RIN prices fell to just 8 cents each in November, a refiner could buy 15 RINs—each representing a gallon of ethanol–for the same price as one actual, physical gallon of ethanol. Think about that. 

So, naturally, ethanol prices were forced to compensate as much as possible for the collapse in RIN prices. To maintain attractive blending economics in the absence of meaningful RIN values, ethanol prices plummeted. Ethanol futures fell to their lowest price in the 14-year history of the contract, while rack prices collapsed to their lowest levels since 1999. 

And even as ethanol fought to maintain its place in America’s gas tank, domestic blending activity softened. A year ago, the U.S. Energy Information Administration forecasted that 2018 domestic ethanol blending would top 14.7 billion gallons and that ethanol would comprise 10.3 percent of total gasoline consumption. 

And, indeed, 2018 got off to an excellent start, with an all-time record blend rate of 10.7 percent in January. But as news of the small refiner exemptions trickled through the market last spring, RIN prices cratered and the pressure to expand blending was off. The ethanol blend rate fell to a five-year low in April and struggled to find any uplift through the remainder of the year. Actual 2018 domestic ethanol consumption is estimated at 14.3 billion gallons, some 400 million gallons less than EIA initially projected. That’s the first annual decrease in domestic ethanol consumption since the drought-ravaged year of 2012. 

The RFS is all about moving the renewable fuels industry forward and growing the market. Unfortunately, that isn’t what happened in 2018. And I’ll be blunt: anyone arguing that small refiner waivers didn’t cause demand destruction needs to have their head examined! 

We didn’t take this lying down, however, and RFA and its partners continue to fight the small refiner exemptions in court, demanding that the lost volumes be reallocated. Tomorrow, you’ll hear an update on that from Matt Morrison, one of the attorneys leading this fight on our behalf. 

And despite tallying record exports last year, our industry was bedeviled by a wave of protectionism that spread across the global market. An exorbitant tariff on U.S. ethanol continued to hamper exports to the European Union. A new countervailing duty in Peru began to reverse progress in that emerging market. And even though Brazil remained our top export customer, the country’s tariff rate quota on U.S. ethanol crimped our exports to that market. 

But it was the loss of the Chinese market that hurt the most. 

In 2016, China was our third-leading export market, receiving 200 million gallons of U.S. product. But the imposition of 30 and 35 percent tariffs in January 2017 effectively shut down exports to China for most of the year. However, due to the incredible cost competitiveness of U.S. ethanol, large shipments to China resumed in late 2017 and early 2018. Even with the tariff, it looked for a moment like China may return as a top-three export market. But those hopes were dashed in April when China raised its tariff on U.S. ethanol to 70 percent in retaliation to new U.S. tariffs on Chinese goods. The higher tariff immediately closed down the Chinese market, and it remains shut off today. 

In addition, the ethanol industry remained hamstrung by a number of inscrutable regulatory barriers in 2018. Whether it was the summertime ban on E15, the fatally flawed MOVES model, woefully outdated lifecycle analyses, or obscure technical issues like the R-factor used in CAFE calculations, Team Ethanol continued to play on an unlevel playing field. All we want is a chance to compete fairly, and we continue to explore every possible avenue for clearing away the thicket of red tape that keeps tripping us up. 

When you add it all up, 2018 was a tough year. And when you’re doing everything right, but can’t catch that break, it’s easy to become frustrated. 

But let’s get back to baseball for a minute. Because here’s the thing: with one bad pitch, one lazy throw, or one sloppy play by the opponent, we are right back in this thing. The game can change quickly—if we are ready. 

I can’t help but think about Game 6 of the 2011 World Series between the Cardinals and Texas Rangers. It was the bottom of the ninth inning with the Cardinals trailing by two runs. There were two outs and two on and the Cardinals, down three games to two, were one strike away from losing the series. St. Louis hometown boy David Freese was the batter and on a 1-2 count, he hammered a two-run triple to tie the game and send it to extra innings. 

When Freese came up again in the bottom of the 11th inning, he worked the pitcher to a full count then crushed a walk-off home run to dead center field. His Game 6 heroics recharged and renewed the entire lineup. And the Cardinals made short work of the Rangers in Game 7 to claim their 11th World Series title. 

You see, Freese was prepared; he was ready to capitalize on any opportunity that presented itself, he was locked in on his target. He wasn’t sitting back looking for a walk. He was looking to attack the ball. He was playing to win. And today, nobody remembers that just a few innings before his walk-off homer, Freese made an uncharacteristic error on a routine pop fly—one that looked like it might cost the Cardinals the game…and the series. “This is why you keep battling,” Freese said after the game. 

This is why you keep battling. 

It was another great hitter—perhaps the best hitter of the 1980s—Tony Gwynn, who said “Life will always throw you curveballs. Just keep fouling them off. The right pitch will come, and when it does, be prepared to run the bases.” 

We fouled off a lot of curveballs last year. But as we look ahead to 2019 and beyond, I have no doubt that the right pitch is coming. And when it does, we’ll be ready for it. We’ve been waiting—and preparing—for that moment. 

When EPA finally puts out its proposed rule to allow year-round sales of E15, we’ll be ready. RFA will throw everything we’ve got into ensuring a defensible rule is finalized as quickly as possible, expanding the domestic ethanol market, enabling competition, and eliminating—once and for all—a needless bureaucratic barrier that offers no economic or environmental benefit whatsoever. 

When EPA releases its proposal to reset the 2020 through 2022 RFS volumes, we’ll be primed to make the case that the reset should be used to increase the required volumes of all renewable fuels over current levels. In fact, as we wrote to EPA Administrator Andrew Wheeler just two weeks ago, the reset rule presents a perfect opportunity for the Agency to restore the conventional renewable volumes that were inappropriately erased by Scott Pruitt’s small refinery waivers and the Obama administration’s illegal use of a “general waiver” to reduce the 2016 standards. 

We’ll keep the heat on the Administration to resolve lingering trade disputes, and when China finally reopens its doors to U.S. ethanol imports, we’ll be prepared to deliver. We stand ready to help that nation meet its goal of reaching a 10 percent ethanol blend nationwide, offering cleaner air and lower gas prices to Chinese consumers. 

We’ll keep working to strike out the regulatory barriers that put ethanol at an unfair disadvantage in the marketplace. We’ll fight the outdated and obscure technical hurdles that prevent the expanded use of ethanol, and we’ll strive to ensure all fuel types and vehicle technologies—including electric vehicles—have to play by the same rules. 

And when an opportunity presents itself to double down on our “Don’t Mess with the RFS” message, we’ll be ready to strike. While opponents will continue to falsely claim that the RFS ends or sunsets after 2022, we’ll be reminding policymakers that the RFS does not end. And we’ll be looking for opportunities to provide more clarity to post-2022 RFS volumes. 

The RFA’s vision for the future includes not only strengthening the RFS, but also pursuing a high-octane fuel standard. The RFS and a high-octane, low carbon fuel program are not mutually exclusive. Rather, they can work in concert, not in conflict, to assure air quality improvements, carbon emissions reduction, and consumer savings for decades to come. But to make this vision a reality, we’ve got a lot of work to do. 

Specifically, the plan we’ll be pursuing for a post-2022 fuel program includes: 

• Ensuring that all new light-duty vehicles are designed to require 98 to 100 RON high-
octane fuel by a date certain;

• Requiring that those vehicles are designed and warranted for up to 30 percent ethanol;

• Establishing limits on the aromatics content of gasoline;

• Removing the Tax and Trade Bureau’s denaturant requirement, which currently results in the contamination of our clean fuel with dirtier hydrocarbons;

• Compelling EPA to approve a fuel waiver for blends up to 30 percent ethanol for use in new vehicles, or define those fuels as “substantially similar” to certification fuel;

• Extending the 1 psi RVP tolerance to all approved gasoline-ethanol blends containing more than 9 percent ethanol;

• Revising the R-factor used in CAFE compliance calculations to better represent modern \fuels and engines;

• Suspending the use of EPA’s MOVES model and replacing it with a new predictive emissions model based on appropriate test fuels;

• Requiring that EPA adopt the latest Argonne National Laboratory GREET model as the basis for analyzing the lifecycle GHG impacts of fuels regulated under any EPA programs;

• Restoring equitable CAFE credit generation mechanisms for all alternative fuel vehicles, including FFVs using flex fuels and future vehicles operating on high-octane mid-level ethanol blends;

• Ensuring that all new fuel dispensers, hoses, underground storage tanks, and other  equipment are designed, warranted, and UL-listed for at least 30 percent ethanol blends by a date certain; and finally,

• Building on the success of the RFS by ensuring EPA continues to require 15 billion gallons of conventional biofuels per year well beyond 2022. The RFS has worked—let’s fortify it for the future! We also need a clearer methodology for ensuring reasonable growth in annual requirements for advanced and cellulosic biofuels beyond 2022. And, of course, we should put a stop to small refinery exemptions.

Obviously, that is a long and complicated to-do list, but achieving these objectives would amount to nothing short of a grand slam—both for our industry and for American consumers. 

The immortal baseball commissioner Ford Frick, said “good things happen when you keep your eye on the ball.” So, let’s keep our eye on the ball in 2019 and beyond, and when that perfect pitch comes in, let’s hammer it into the bleachers! 

I look forward to working with you all this year to help the ethanol industry score that go-ahead run; and I am proud to be on your team. 

Thank you. 

Categories: Today's News

US ethanol exports through up 31% on the year at 1.56 billion gallons

Biofuels Digest - Mon, 02/11/2019 - 6:22pm

In Washington, U.S. ethanol exports through November 2018 reached 1.56 billion gallons, up 31% from the same period a year earlier and already a calendar-year record. Exports remained robust in November although volumes for the month decreased 16% to 147.9 million gallons (mg), according to government data released this morning and analyzed by the Renewable Fuels Association (RFA). In a departure from recent trends, sales were heavily concentrated in just three countries accounting for nearly three-fourths of all U.S. ethanol shipments in November. Brazil imported 51.2 mg, representing 35% of total U.S. export sales. While this was 3.2 mg lower (-6%) than October volumes, it was enough to secure Brazil’s position as the top U.S. ethanol customer for a second straight month. Canada decreased its imports of American ethanol by 8% to 28.4 mg, the lowest volume in seven months but still 19% of total ethanol shipments in November. Volumes exported to India were a solid 28.1 mg (19% of U.S. ethanol exports), slipping just 3% from a record offtake in October. Mexico imported a record 4.8 mg, up 144% for the month.

The Netherlands (8.2 mg, down 21%), South Korea (6.2 mg, down 20%), and Spain (4.3 mg, up 156% to a 13-month high) were other top markets. Notably, after purchasing 6.2 mg in U.S. imports in October, the Peruvian market essentially disappeared with the implementation of countervailing duties on U.S. ethanol by their government in November.

November exports of undenatured fuel ethanol were 90.5 mg, an increase of 10.9 mg (14%). Brazil purchased 51.2 mg (up 10 mg or 23%), representing 57% of our undenatured export market while exports to India at 14.6 mg were down 10 mg (41%). Expanded volumes were shipped to the Netherlands (8.2 mg, up 7 mg), Mexico (4.8 mg), Spain (4.3 mg), and South Korea (2.8 mg) in November while the Philippines (2.4 mg) cut imports in half.

Categories: Today's News

Biofuelwatch report says sustainable aviation fuel can never be scaled up

Biofuels Digest - Mon, 02/11/2019 - 6:20pm

In the UK, a new report about aviation biofuels, published by the environmental NGO Biofuelwatch, outlines the strict limits to the amount of such fuels which could be sourced from wastes and residues as well as their adverse indirect impacts. The report coincides with a meeting of the UN organization ICAO in Montreal which campaigners fear could ultimately result in the green light being given for large-scale use of aviation biofuels made from virgin vegetable oil, especially palm oil, one of the main drivers of deforestation especially in Indonesia and Malaysia.

Biofuelwatch’s report concludes that the limits to the amount of suitable wastes and residues would make it impossible for airlines to avoid virgin vegetable oils – especially palm oil – if they were to start using biofuels on a large scale.

The report focusses on WorldEnergy’s refinery in Paramount, California, until now the only one to regularly produce biofuels for aircraft. Amongst WorldEnergy’s customers have been KLM, United Airlines, Singapore Airlines, Gulfstream, and Oslo Airport.

Categories: Today's News

Minnesota E15 consumption reached 59 million gallons in 2018

Biofuels Digest - Mon, 02/11/2019 - 6:19pm

In Minnesota, the Minnesota Department of Commerce released its year-end station report detailing a record-breaking year for 88 Octane fuel sales, also known as E15, and building momentum for E85 in 2018.

More than 59 million gallons of 88 Octane fuel were sold to Minnesota consumers last year, nearly tripling sales from 2017. Sales of E85 reached 16.4 million gallons last year, surpassing 14.8 million gallons sold in 2017.

The remarkable growth of 88 Octane fuel coincides with a rise in ethanol infrastructure. Stations selling 88 Octane went from 14 retailers in 2014 to more than 300 last year. The investment also led to a growth in retailers offering E85, which surpassed 400 in 2018.

The increase in retailers offering the lower-priced, high-octane fuel was spurred by a $14 million investment in biofuel infrastructure in 2015.

Through the Biofuel Infrastructure Partnership (BIP), the U.S. Department of Agriculture awarded Minnesota $8 million for ethanol infrastructure development to make cleaner-burning ethanol fuels more accessible. A coalition including the Minnesota Department of Agriculture, American Lung Association in Minnesota, Minnesota Biofuels Association, Ethanol Producers, Prime the Pump, and Minnesota Corn Growers Association (MCGA) brought the total investment to $14 million.

Categories: Today's News

Fuel Bio One slapped with fine and five-year’s probation for wastewater spill

Biofuels Digest - Mon, 02/11/2019 - 6:18pm

In New Jersey, an Elizabeth, New Jersey, biodiesel fuel company was sentenced for discharging more than 45,000 gallons of wastewater from its commercial biodiesel fuel production facility into the Arthur Kill, a waterway separating New Jersey from Staten Island, New York, announced the Department of Justice and the U.S. Environmental Protection Agency (EPA). The company had pleaded guilty in June 2018 to one count of violating the Clean Water Act.

Fuel Bio One LLC was sentenced by U.S. District Judge William J. Martini to pay a criminal fine of $100,000. The company was also sentenced to probation for a period of five years, during which the company must (1) provide biannual reports to the court and the government documenting its waste generation, handling, and disposal practices; (2) develop, implement, and fund an employee training program to ensure that all employees are aware of proper waste handling and disposal practices and to ensure that all storage, treatment, and disposal of wastewater complies with the Clean Water Act; and (3) allow the EPA full access to all offices, warehouses, and facilities owned or operated by the company.

Categories: Today's News

RFA releases annual ethanol industry outlook

Biofuels Digest - Mon, 02/11/2019 - 6:17pm

In Florida, at the 24th annual National Ethanol Conference, the Renewable Fuels Association (RFA) released its 2019 Ethanol Industry Outlook and Pocket Guide, known around the world as the go-to sources for reliable information and data on America’s ethanol industry.

The annual Outlook publication provides policymakers, regulators, consumers, the media, and renewable fuel advocates with key statistics, trends, insight, and analysis on the latest developments in the U.S. renewable fuels industry, as well as commentary on what to expect in 2019. The publication also features a detailed listing of every fuel ethanol plant in the country, along with production capacity.

The Pocket Guide to Ethanol contains much of the same information as the Outlook, but in an abbreviated format and smaller size.

Categories: Today's News

Honeywell technology to be used for Punjab 2G ethanol plant

Biofuels Digest - Mon, 02/11/2019 - 6:16pm

In India, the Hindu newspaper reports that Honeywell technology has been chosen to process paddy straw feedstock into cellulosic ethanol at the planned $ million facility in Punjab. A memorandum of understanding was recently signed in the presence of chief minister of Punjab and the US Ambassador to India for the project under development by local company Virgo Corporation. With more than 20 million metric tons of paddy straw burned in the state every year, the hope is that the facility will drive demand for the straw so it can be turned into ethanol instead of pollution the air with smoke.

Categories: Today's News

Global Bioenergies produced cellulosic isobutene from Clariant’s wheat straw hydrolysate

Biofuels Digest - Mon, 02/11/2019 - 6:15pm

In France, Global Bioenergies announced that runs using wheat straw hydrolysate provided by its partner Clariant were successfully performed in its Leuna demo plant, leading to the production of cellulosic isobutene for the first time at this scale. These runs were part of OPTISOCHEM, a project which started in June 2017 and was granted €9.8 million by the Bio Based Industry- Joint Undertaking (BBI-JU) as part of the H2020 program. The aim of the project is to demonstrate a new value chain combining Global Bioenergies bio-Isobutene process with technologies developed by Clariant and INEOS, two of Europe’s leading chemical companies: currently underutilized residual wheat straw has been converted at demo scale into second generation renewable bio-isobutene, and will eventually be transformed into oligomers and polymers usable in lubricants, rubbers, cosmetics, solvents, plastics, or fuels applications. The intense R&D cooperation will continue until May 2021.

Categories: Today's News

Transport and Environment says EU allowed for loopholes in sustainability criteria for palm oil

Biofuels Digest - Mon, 02/11/2019 - 6:14pm

In Belgium, Transport and Environment says the European Commission last week acknowledged in a delegated act that oil palm cultivation causes significant deforestation, and thus biodiesel produced from palm oil cannot be counted towards meeting EU green fuel targets. However, under mounting pressure, including trade war threats, from the governments of Malaysia and Indonesia, the Commission has introduced several loopholes, including an exemption for additional palm oil produced in independent small plantations (less than five hectares) or produced on ‘unused’ land.

Categories: Today's News

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