#corn ethanol

Agri View: A Look at Current Farm Politics

There have been several things going on lately in the political world dealing with agriculture. Everett Griner talks about farm politics in today’s Agri View.

A Look at Current Farm Politics

The farm block vote was one of Donald Trump’s strongest groups in the last Presidential election. Farmers stood solidly behind his election. Recent issues that have direct impact on all of agriculture may…

Ethanol Organizations Applaud Japan Policy Shift To Allow Use Of U.S. Ethanol

Ethanol and trade groups are applauding the news that Japan will allow imports of a gasoline additive made from U.S. corn-based ethanol. The change comes as part of Japan’s update of its existing sustainability policy, approved in 2010, in which only sugarcane-based ethanol was eligible for import and which only allowed sugarcane-based ethanol for the production of ETBE, an oxygenate for…

New Post has been published on http://www.earthandwatergroup.com/uncategorized/trump-epa-favors-corn-farmers-in-proposed-biofuels-quotas/

Trump EPA Favors Corn Farmers in Proposed Biofuels Quotas

This latest decision from the EPA on renewable fuel targets may have been designed to “split the difference” but is sure to leave many elements in the business unhappy.  At the same time, the agency is still  weighing a change in the point of obligation (i.e. who is ultimately responsible for purchasing the 15 billion plus gallons of renewable  fuel annually).  To date this financial and compliance burden has fallen on refiners and importers – the groups generally furthest away from the renewable  fuel blending process – while blenders have established a valuable new stream of revenue by selling the fuel and credits to those mandated, under the current regulations to buy them.  Here’s hoping the environment and taxpayer gets some relief by shifting the point of obligation away from refiners and importers when the EPA makes its next big RFS decision.   

For more information contact Doug Parker, President E&W Strategies, [email protected].

U.S. Favors Midwest Corn Farmers in Proposed Biofuels Quotas

By Jennifer A Dlouhy, Mario Parker, and Ari Natter

July 5, 2017, 12:02 PM EDT July 6, 2017, 12:01 AM EDT

The Trump administration proposed a requirement that U.S. refiners use 15 billion gallons of conventional renewable fuels in 2018, while lowering targets for advanced alternatives that oil refiners have described as unattainable.

The proposal strikes a delicate balance on federal renewable fuel mandates by delivering a modest win to Midwest corn farmers supplying the bulk of traditional ethanol at the expense of companies producing next-generation alternatives.

Environmental Protection Agency Administrator Scott Pruitt said Wednesday the proposed volumes are “consistent with market realities.” They’re “focused on actual production and consumer demand while being cognizant of the challenges that exist in bringing advanced biofuels into the marketplace,” he said in a statement.

The EPA proposal represents the Trump administration’s first foray into the politically treacherous territory of the Renewable Fuel Standard, a program mandating biofuels in gasoline and diesel fuels that Congress established in 2005.

The program is loathed by oil producers and refiners but embraced by farmers, public officials and biofuel producers in Corn Belt states, such as Iowa, which play an outsized role in U.S. presidential contests. That unavoidable tension between oil producers and Corn Belt interests makes the program a “nightmare” for Republicans, said Kevin Book, managing director of Washington-based ClearView Energy Partners LLC.

‘Under Siege’

Donald Trump promised to support ethanol while campaigning for president, and he reiterated that position in a speech in Iowa last month. The ethanol industry is “under siege,” but the Trump administration is saving it, the president told a crowd in Cedar Rapids.

The EPA’s new plan will require 4.24 billion gallons of advanced biofuel in 2018, down from 4.28 billion this year and far lower than the 5.25 billion sought by the industry’s leading trade group.

That quota includes 238 million gallons of cellulosic biofuel, a drop from 311 million currently. Cellulosic ethanol, typically made from corn stalks, switchgrass and other materials, has been commercialized at a slower pace than supporters had hoped. The EPA is also proposing a requirement for 2.1 billion gallons of biomass-based diesel in 2019.

Highest Allowed

The 15 billion-gallon quota for conventional renewable fuel, the highest allowed under federal law for that category, is mostly fulfilled by corn starch-based ethanol. It also mirrors the current 2017 requirement.

Shares of independent refiners without upstream oil production and substantial downstream fuel-blending infrastructure declined Wednesday on the news. Billionaire Carl Icahn’s CVR Energy Inc. fell 3.3 percent. The price of soybean oil, an alternative to ethanol, slumped in Chicago trading, while prices for biofuel credits known as renewable identification numbers jumped.

The administration’s decision to keep conventional biofuel targets intact sets up a clash with oil refiners. They had argued 15 billion gallons would exceed a 10 percent “blend wall,” or the amount that can be easily blended into the fuel supply.

According to a May forecast from the U.S. Energy Information Administration, motor fuel demand is set to climb to about 143.5 billion gallons in 2018 from about 143 billion in 2017. Given that forecast, if the conventional renewable fuel quota were fulfilled entirely by ethanol, the fuel would represent 10.5 percent of total projected gasoline consumption. Most gasoline sold in the U.S. is E10, or 10 percent ethanol. Refiners can turn to other fuels, including renewable biodiesel, to help meet the target.

Declining Demand

The American Petroleum Institute, which represents oil producers and refiners, had asked the EPA to set lower quotas that would reflect about 9.7 percent of projected gasoline demand.

The ethanol industry counters that the government explicitly allowed vehicles built after 2001 to use 15 percent ethanol, and many vehicles can run on an 85 percent blend. Gasoline containing 15 percent ethanol is available in about 800 filling stations nationwide, according to Growth Energy, a coalition of biofuel producers.

By maintaining a 15 billion-gallon target for corn ethanol, the proposal will “help to drive more investment in infrastructure to accommodate higher ethanol blends,” said Bob Dinneen, president of the Renewable Fuels Association.

The proposed decline in advanced biodiesel targets reflects top EPA officials’ concernsabout encouraging refiners to import ethanol from Brazil and biodiesel from Argentina and Indonesia. The EPA said Wednesday it will take public comment on the issue.

At the behest of the National Biodiesel Board, the government is investigating separately whether imports from Argentina and Indonesia are benefiting from unfair subsidies and being sold below cost. The trade group said the EPA proposal underestimates the industry’s potential production.

Under federal law, the EPA has until Nov. 30 to issue final biofuel quotas for 2018, opening a window for intense lobbying.

‘Bad’ Proposal

Gene Gebolys, chief executive officer of World Energy Alternatives LLC, stressed that the EPA’s proposal is just an opening bid. “We need to keep in mind that EPA’s proposal is just a proposal — a bad one to be sure, but nothing more than that,” he said.

The government is right to try to match quotas for cellulosic biofuel to actual production, said Mike McAdams, president of the Advanced Biofuels Association. But strong targets should be maintained for advanced biofuels regardless of their source.

“Whether supplied domestically or internationally, the increased blending of these advanced biofuels remains critical for U.S. emissions reduction,” he said in a statement. “Only advanced biofuels reduce greenhouse gas emissions by at least 50 percent compared to today’s gasoline and diesel fuels.”

Congress asked the EPA to dictate specific annual quotas, but the agency has limited authority to waive the statutory goals and set lower targets. And the breadth of the EPA’s leeway is in doubt, as a federal court weighs a biofuel industry lawsuit challenging the agency’s waivers issued under former President Barack Obama.

Ethanol Exports Reached Record-High 1.01 Billion Gallons in 2016

Net exports of ethanol from the United States set a new record of 1.01 billion gallons in 2016, according to a new eight-page summary of 2016 ethanol trade data published today by the Renewable Fuels Association (RFA). Gross U.S. ethanol exports totaled 1.05 billion gallons in 2016, second only to 2011’s record of 1.19 billion gallons. Meanwhile, ethanol imports registered at just 34 million…

Analysis Reaffirms Ethanol’s GHG Emissions Reduction Benefits

The U.S. Department of Agriculture issued new analysis today on the lifecycle greenhouse gas emissions of corn-based ethanol. The analysis, conducted by ICF, found that typical corn-based ethanol achieves a 43 percent greenhouse gas reduction when compared to 2005-era gasoline, and by 2022, corn-based ethanol is projected to increase to a 50 percent greenhouse gas reduction over the life of the…

New Post has been published on http://www.earthandwatergroup.com/air-quality/epa-extends-comment-deadline-on-key-renewable-fuel-standard-provision/

EPA Extends Comment Deadline on Key Renewable Fuel Standard Provision

In November, the EPA announced that it would deny a petition sought by refiners and importers of fuel to change the regulatory “point of obligation” within the RFS program.   In light of strong public interest, however, the agency announced that it will extend public comment through January 23, 2017.  The announcement can be found here.

The RFS was established during the George W. Bush administration to advance domestic renewable fuel production and diminish dependence on foreign oil imports.  It sought to accomplish this by establishing a tradeable credit program whereby those that blend and generate renewable fuel can derive a credit (known as a “RIN”) that they can then sell to those that are obligated to purchase such credits (unless those obligated parties generate their own renewable fuel).

The RFS program was designed to ensure that renewable fuel targets would be met in an economically feasible manner, but it hasn’t worked out that way.  The EPA has the discretion to determine where in the process of fuel production the obligation for compliance would be placed (known as “the point of obligation”), and the agency previously decided that the obligation would be with refiners and importers rather than blenders.

This regulatory decision has led to an upending of equities in this petroleum sector where Wall Street speculators have opened trading desks for RINs, blenders (who essentially mix the fuel) have reaped billions of dollars in RIN profits with no incentive to police the market, and refiners are forced to pay-up every year with little ability to influence the blending or legitimacy of renewable fuel.

The RFS has also been subject to massive amounts of fraud by those who have illegally exploited the current regulatory structure and lack of accountability.

Moving the point of obligation to blenders would help incentivize compliance, reduce fraud, save consumers money, and ultimately would help the small businesses in the renewable fuel sector that have been unfairly stung by the fraud in the system.  Here’s hoping that the agency moves toward common sense change in the RFS by moving the point of obligation to tilt the balance back toward fairness and market efficiency.

New Post has been published on http://www.earthandwatergroup.com/climate-change/murky-biofuel-market-vulnerable-to-fraud-former-epa-cop-warns/

Murky Biofuel Market Vulnerable to Fraud, Former EPA Cop Warns

  September 19, 2016 12:37PM ET | Bloomberg Government

(Bloomberg) — A program to boost the use of biofuels in the U.S. has become vulnerable to scams that have bilked victims out of nearly $1 billion so far, warns a former Environmental Protection Agency official in a white paper funded by an opponent of the initiative.

The assessment by Doug Parker, the previous director of the EPA’s criminal investigation division, comes amid climbing scrutiny of the Renewable Fuel Standard that mandates biofuel use and the $15 billion market in biofuel credits that can be traded to prove compliance. Without changes, Parker warns, the RFS is “persistently open to large-scale, continuing misconduct” that undermines its green goals.

Valero Energy Corp., the largest independent U.S. oil refiner, commissioned the 13-page report being released Monday as part of a lobbying campaign to convince lawmakers and the EPA to shift the burden for complying with the annual biofuel quotas away from refiners and importers to blenders who mix biodiesel and ethanol. Carl Icahn, the majority owner of CVR Energy Inc., also has complained about the status quo, casting the trading of biofuel compliance credits as so potentially lucrative it would lure Colombian drug lords away from dealing cocaine.

Annual Quotas

Under the program, refiners and importers can blend in biofuel themselves to satisfy annual quotas. Those that fall short — or lack the blending infrastructure to do it themselves — can buy credits known as renewable identification numbers to meet the mandates. Those RINs are produced with each physical gallon of biofuel but are separated from the physical commodity once it is blended into fossil-based motor vehicle fuel.

The U.S. government has prosecuted at least eight fraud cases concentrated on biodiesel, in which artists lured by sometimes high RIN prices have borrowed tactics from wildlife smugglers and health care fraudsters to sell fake credits and pretend to produce phantom fuel.

The biofuels industry pushed back against Parker’s conclusions.

Brooke Coleman, executive director of the Advanced Biofuels Business Council, said it’s wrong to suggest it’s hard to enforce or comply with the RFS. “It’s really quite simple. Blend renewable fuels or buy credits,” he said by e-mail. “This is all oil industry smoke and mirrors designed to make the federal government nervous about enforcing a program that is working.”

Click here to read more about biofuel fraud.

There have been “a few isolated cases of RIN fraud in the biodiesel sector,” but that “has not been an issue at all with ethanol RINs,” said Geoff Cooper, senior vice president of the Renewable Fuels Association.

Parker, now president of the consultancy Earth and Water Strategies LLC, argues that the structure of the RINs market, designed for efficiency, “ultimately opened the door for misconduct” by creating a long, indirect chain of custody for each of those credits, which can change hands many times before being retired. And the blenders who can profit from selling RINs — but may not own refineries and thus don’t have to meet annual quotas — bear no responsibility to ensure the credits are valid.

After an initial wave of fraud, the EPA made changes, including creating an optional third-party verification system for biofuel credits and joining forces with the Commodity Futures Trading Commission to root out bad actors. Parker argues the agency needs to go further; by shifting the compliance burden “to those making the decisions on who to purchase and blend fuel from,” the EPA would “much better align risk and incentivize due diligence” across the sector.

Parker’s entry into the biofuel debate marks a second Obama official to weigh in heavily on the issue. Ron Minsk, a former special assistant to President Barack Obama on energy and the environment who now advises refiners on the program, told a Senate panel that Renewable Fuel Standard is due for an overhaul.

The cost of RINs for ethanol compliance have almost tripled in the past year to 87.5 cents, according to the Jupiter, Florida-based brokerage StarFuels Inc., and data compiled by Bloomberg. Prices could rise more if refiners stockpile those credits or if third-party speculators buy them, Bloomberg Intelligence analysts Brandon Barnes and Gurpal Dosanj wrote in a report Monday.

–With assistance from Mario Parker.