CFDC Calls For Ethanol to Stand Up As Alternative Fuel

In a presentation at the annual Emerging Issues Forum, Clean Fuels Development Coalition Executive Director Doug Durante called on ethanol supporters to not only defend the federal Renewable Fuel Standard but to move beyond it by capitalizing on the economic, energy supply, environmental and health benefits of ethanol in mid and high level blends including E85.

Durante told attendees at the ninth annual forum that the obsession with RFS volumes has distracted the industry from pursuing other, often higher values that are not bound by the RFS. The key to capturing that value he said is using ethanol in flex fuel vehicles.

“Ethanol is treated like a second class citizen in the alternative fuels community, and we have had enough,” said Durante. “E85 is defined in law as an alternative fuel and is no different from electricity, propane, natural gas, methanol and other non-petroleum fuels. Ethanol is denied access to programs, funding and incentives these other alternatives receive. Yet ethanol is clearly the most readily available and efficient of any of them.”

He cited the phase out of incentives for the manufacture of flex fuel vehicles as a prime example of this disparity. Electric and natural gas vehicles receive an “artificial value” in the credit they get for reducing carbon and future mileage calculations. “High levels of ethanol can do more, immediately, to reduce carbon, lower petroleum consumption and improve emissions than any other fuel, period. If we are serious about reducing petroleum use with low carbon fuels how is this possible? 20 million flex fuel vehicles are on the road today. These vehicles were produced without a penny of taxpayer cost nor at any additional cost to consumers. All automakers asked was the ability to capture appropriate credits in the new regulatory structure for the carbon and petroleum savings these vehicles provide.”

Durante also cited numerous federal programs such as the $16 billion loan fund for advanced vehicles at the Department of Energy. “The sole mission of this program is to produce vehicles that can reduce petroleum use and carbon emissions. Why not redirect just $1-2 billion of that to a loan fund for flex fuel pumps to fuel the FFVs that are on the road today? That, along with reinstating FFV credits, will make more of an impact in the next year than any other program currently in place. And, we will meet and blow right past the RFS biofuel requirements”, said Durante.

Finally, Durante noted the significant potential for mid-and-high-level ethanol blends to provide reductions in particulates and the potential for substituting clean octane for toxic aromatics. Through CFDC’s partnership in the Urban Air Initiative they are raising awareness of the increasing pollution coming from consumer gasoline.

“Just give us a chance to get into the market and compete,” said Durante, “and just watch what happens.”

CO2 pipeline revenue dangled at ethanol forum

Original article by Russell Hubbard, Omaha World-Herald

A Wyoming oil company told Nebraska ethanol producers Friday that a $1 billion carbon dioxide pipeline across the state would mean up to $50 million a year in new revenue for them.

Scott Hornafius, president of Elk Petroleum, said such a pipeline would buy some or all of the CO2 produced by the state’s 24 ethanol plants and ship it to Wyoming, where it is needed for injection into oil wells. The CO2 helps drillers extract almost as much oil as the initial strike, about 17 percent of the well’s total.

For now, the CO2 pipeline is just a dream, without financial backers or cooperating ethanol plants. But Hornafius said the state’s ethanol plants produce about 5 million metric tons of CO2 a year as a natural byproduct of the process. Iowa, with 42 ethanol plants, should also be part of the pipeline, Hornafius said.

“It is an enormously underutilized resource,” said Hornafius, speaking to people gathered for the Nebraska Ethanol Board’s 2014 conference in the Magnolia Hotel in Omaha.

The proposal envisions an underground pipeline stretching more than 1,000 miles through the Iowa/Nebraska ethanol trail. It would start in about the middle of Iowa, near the border with Illinois, moving across central Iowa. It would enter Nebraska at Omaha, then jog south for most of its Cornhusker journey before heading north into Wyoming.

Hornafius said it is not unreasonable for the project to get underway in three years. He said major financing would have to emerge, probably from the large oil producers operating in Wyoming.

Then there is the gaining of rights of way from landowners and the other legal concerns, followed by a one-year construction phase at a cost of $1 million per mile.

The pipeline would be willing to pay about $10 a metric ton for the CO2, Hornafius said.

“It is a phenomenal idea, very creative, just the sort of thing we need,” said conference attendee Brett Frevert, chief financial officer of Council Bluffs ethanol producer Southeast Iowa Renewable Energy. “But it is a long way from feasibility.”

More than a dozen such pipelines are already operating, bypassing Nebraska, but running in a crooked line from Texas to North Dakota, many of them sourcing CO2 from natural deposits. There is also one originating in Mississippi. Some have been around for decades. There has never been a leak, Hornafius said, other than from construction equipment digging where it wasn’t supposed to.

Even if there was, it wouldn’t mean much, he said. While CO2 is considered a harmful greenhouse gas, it is naturally occurring, exhaled by every living organism.

Hornafius said the injection of CO2 into oil wells is an old idea. He said the gas stimulates oil to move around and give itself up for extraction after all other methods have failed. “It is almost as good as a new well,” he said.

Oil producers, he said, will look warmly upon the idea for another reason: California has a low-carbon fuel standard that requires energy companies to reduce the carbon profile of the fuels they sell in the state. Oil produced via CO2 injection counts toward the goal, because more CO2 remains trapped underground than is given off by the fuel produced with it. There are significant financial incentives for oil producers.

“Basically, it is sold in California for a premium price,” Hornafius said. “That premium price in turn pays for the pipeline.”

Todd Sneller, Nebraska Ethanol Board adminstrator, said the CO2 idea is just one of many circulating on how to use corn and its byproducts in novel ways. “The CO2 pipeline is an interesting component,” he said. “The whole idea is to capture additional value.”

‘Create Value and Demand’ For Ethanol, Booster Says

Original article by Russell Hubbard, Omaha World-Herald

U.S. ethanol producers need to excite consumers with the prospect of lower motor-fuel prices and appeal to carmakers who are required to improve their output of fuel-efficient vehicles if they plan to hold on to the gains they have made in the past decade, one of the industry’s top experts said in Omaha.

“Ethanol production and use is at an all-time high,” said Douglas Durante, executive director of the Clean Fuels Development Coalition. “Yet we are under relentless attack all the time from animal feeders, the petroleum guys, the marine industry.”

Durante was the keynote speaker Thursday at the Nebraska Ethanol Board’s Emerging Issues Forum — running through noon today at the Magnolia Hotel — which has attracted people from throughout the industry, including producers, farmers and executives from ag cooperatives.

The key to ethanol prosperity, Durante said, is to not rely on the federal mandates for how much ethanol must be blended with the nation’s motor-fuel supply. That mandate, known as the Renewable Fuel Standard, is adjusted every year by the Environmental Protection Agency; last year the EPA proposed cutting the ethanol part of the standard by 9 percent, to 13.1 billion gallons. A final decision is expected in June.

Durante said automakers are a natural ally. Chrysler, Ford and General Motors in the past two years have said manufacturing more ethanol-fueled vehicles is key to helping them comply with tighter emissions regulations.

“Here is our value,” Durante said. “We need to create value and demand, not rely on some number the EPA comes up with.”

Even then, a major problem would remain, Durante acknowledged, referring to the “blend wall.” That is the point at which blends of gasoline and ethanol with more than 10 percent ethanol, such as E15 and E85, are required to fit all of the government-mandated ethanol into U.S. vehicles. With no more space in gas tanks, the EPA proposed cutting the ethanol mandate.

“The realities of the blend wall are serious,” Durante said.

The industry, he said, has to champion higher blends of ethanol. Eight years ago, Durante himself was advocating E15, which is not now readily available, he said, much less the E30 and E85 blends that will eventually be required to sustain the industry’s growth.

Steve Bleyl, marketing manager for Omaha-based ethanol producer Green Plains Renewable Energy, acknowledged during his presentation that ethanolized gasolines haven’t caught on everywhere.

Some people think ethanol is an indirect subsidy for corn farmers, he said, while others view it as damaging to engines and the reason food prices are higher, as corn in the main ingredient.

Such views are a major bone of contention. Ethanol critics — the petroleum industry, some animal husbandry industries, small-engine users and corn customers such as food processors and restaurants — frequently mention such drawbacks.

The ethanol industry has counter-arguments to all of them.

But in some cases the preference for clear gasoline is cultural. In Oklahoma — oil country — people will pay about 27 cents more per gallon for clear gasoline, Bleyl said. Convenience store fuel buyers, he said, get phone calls from customers asking for more clear gas, not more ethanol.

People in Nebraska and Iowa, Bleyl said, should be as loyal to their native fuel, ethanol, as people in oil-producing states are to theirs. That motorists in the largest ethanol-producing states don’t show the same preference for their homegrown fuel as those in oil states is mind-boggling, Bleyl said.

“Come on,” he said. “This is the home team.”

Fat, Happy on Brewer’s Grain

Original article by the Journal Star editorial board.

The Food and Drug Administration wisely has backed off on its plans to issue new regulations on the handling of spent grain from craft brewers.

The federal agency has issued multiple statements to quiet the national backlash that erupted over its reported plans to crack down on the longtime practice of brewers to give or sell the spent grains to farmers to feed to livestock.

Humans have been drinking beer for thousands of years, based on a stone tablet found in Mesopotamia.

It surely can be assumed that cattle and other livestock have been noshing on the spent grain left over after brewing for just as long a time.

Jim Engelbart of the Empyrean Brewing Co., the state’s oldest craft brewer, told the Journal Star that his company has given away its spent grains to local farmers for at least 17 years.

“They’re doing us a favor and we’re doing them a favor,” Englebart said.

Early reports were that the new rules would be so stringent that it would require the craft brewers to dry and package the spent grain.

The owners of Zipline Brewing and Blue Blood Brewing, both based in Lincoln, say a requirement that the grains be dried and packaged would be cost-prohibitive. The Beer Institute, a trade industry group, estimated it would cost a brewery $13 million in one-time and recurring costs to meet such a standard.

Empyrean produces around 10,000 pounds of spent grain every week. What does the EPA want them to do? Truck it to the landfill? That would be ridiculous. Where’s the problem that needs to be solved?

The FDA, however, told the Beer Institute last week that the new regulations would not require drying and packaging. “We are continuing the talks we began a year ago with FDA and other industry groups to make sure the amended rule we expect this summer allows us to continue this practice of marketing spent grains in the safe, sanitary and swift manner that the industry has exhibited,” the institute said in a statement.

The FDA has more serious issues to which it should devote its resources, like the quality of imported generic drugs, which too often have been mislabeled or contaminated.

Meanwhile, the cows, steers and other grain-eating animals of all species that have been tucking into spent brewer’s grain are only getting fat and happy. They don’t need intervention by the federal government

Ethanol Industry’s Looming Challenges are Focus of Two-day Gathering

Original article by Russell Hubbard, Omaha World-Herald

Nebraska’s ethanol industry officials are gathered in Omaha today and Friday as a spate of contentious new issues bears hard on the nation’s Corn Belt.

Those issues include the proposed Environmental Protection Agency reduction in the amount of ethanol that must be blended with the nation’s gas supply; rail-transport snarls; food-grade hygiene requirements for the animal feed that is a byproduct of ethanol production; and the prospect of a carbon dioxide pipeline stretching from Iowa through Nebraska to Wyoming.

The 2014 Ethanol Emerging Issues Forum hosted by the Nebraska Ethanol Board starts today and runs through Friday afternoon at the Magnolia Hotel in downtown Omaha. The ninth annual conference, limited to about 125 participants, is expected to draw people involved in the production, technology, policy and marketing of ethanol and related products.

Confirmed speakers include Doug Durante, executive director of the Clean Fuels Development Coalition; Steve Bleyl, ethanol marketing chief for Omaha’s Green Plains Renewable Energy, now one of the state’s largest publicly traded companies; and Alvaro Cordero, manager of global trade for the U.S. Grains Council, an ag-supported nonprofit advocacy group.

There is scarcely a better spot for such a gathering. Nebraska’s 24 ethanol plants make it the nation’s second-largest producer of the motor-fuel additive, and the state is the third-largest producer of corn, its main ingredient. Iowa ranks first in both and has 42 ethanol plants.

“The ethanol sector is integrated with agriculture in many ways that are essential to our economy,” said Todd Sneller, director of the Nebraska Ethanol Board. “Corn and other grain processed in ethanol plants creates extensive economic impacts in manufacturing, livestock, engineering, transportation and other sectors. We are expecting a good turnout and really interesting speakers.”

Certain to get a lot of attention during discussions, presentations and tonight’s cocktail reception and dinner is the federal Renewable Fuel Standard. Last year, the EPA proposed cutting biofuel requirements by 8 percent, to 15.2 billion gallons; ethanol accounts for the vast majority of the requirement, with fuels from other organic material such as wood, waste and grass making up the remainder.

In its annual revision to biofuel mandates, the EPA, charged with overseeing the Renewable Fuel Standard created by Congress in 2007, said more fuel-efficient cars and modified driving habits created a saturation point called the blend wall.

That is the point at which gasoline-ethanol blends higher than 10 percent ethanol, such as E15 and E85, are required to fit all of the mandated ethanol into all of the nation’s gas tanks. Hence, the proposed cut in the mandate for the number of ethanol gallons to be blended with gasoline.

“It is a little scary to spend all these millions and then have them say, nope, sorry,” said Paul Kenney, chairman of KAAPA Ethanol in Minden, Neb.

The history of KAAPA, short for Kearney Area Ag Producers Alliance, illustrates the growth of the state’s ethanol industry. The ethanol part of the farmer-owned cooperative was started in 2003 with a capacity of 40 million gallons a year. Construction financing was not easy to find, Kenney said.

“No one had any money for ag then,” Kenney said.

Fast-forward and KAAPA now produces about 60 million gallons a year, employing about 45 people. It has been consistently profitable, owned by about 500 area farmers who receive handsome dividends. In 2012, sales were $277 million; assets were $82 million, liabilities $16 million.

KAAPA Ethanol also now owns stakes in plants in Ohio, Minnesota and North Dakota, and a share of the third-largest ethanol marketing company in the nation.

Along the way, it has contributed to Nebraska passing Texas as the nation’s largest cattle-feeding state, said board member Andy Tomsen, referring to the leftover grains from ethanol production known as “wet cake.”

“Part of the reason is wet cake,” Tomsen said. “We can now feed cattle cheaper than Texas.”

Regardless of the EPA final decision of the Renewable Fuel Standard, litigation will probably follow. In past years, the petroleum industry has sued in federal court when the mandate was raised, and the ethanol industry has done the same when it was cut.

“Raising the mandate would be of concern to us,” said Bob Greco, a group director at the Washington-based American Petroleum Institute, a trade and lobbying organization.

Greco said his group has no quarrel with ethanol; he said the quarrel is with the legal requirement under federal law for a minimum amount that must be blended with gasoline. Consumer demand, he said, should establish how much is blended, not legislation.

Greco also said there are not enough cars on the road, only about 5 percent, that can safely use E15 and E85 without voiding manufacturer warranties — a contention disputed by the ethanol industry.

“But the biggest myth is that we want to do away with ethanol,” Greco said. “It is a product people want, it is economical to blend with gasoline and it helps octane and the environment.”

Another looming challenge for the ethanol industry is increased regulation via the Food and Drug Administration. The issue is distiller’s grains, or the corn remnants left over from ethanol production. They are high in protein and sold as cattle feed.

Now, the FDA wants the plants that sell their distiller’s grains to follow food-grade safety procedures because the byproducts go to feed animals that later enter the human food supply.

“Whatever gets fed to the animal, they want to know what’s in it,” said Dan Wych, plant manager at Southeastern Iowa Renewable Energy in Council Bluffs. “There will be a lot more documentation and a lot more tracking.”

Wych said ethanol plants will be required to keep track of all additives and chemicals used to ferment grain, and to comply with rules on food-grade hygiene.

Shipments of distiller’s grains will have to be carefully labeled and documented at every stage of production and shipment. The point, Wych said, is for government regulators to be able to trace every lot of distiller’s grains that reaches a feedlot in case something goes wrong, much in the same way they can track grocery store comestibles during a recall.

Enforcement of the already-enacted regulations is slated for next year, Wych said. He doesn’t know what it all will cost, saying that no new equipment is really needed, but that a lot of new procedures and documentation will be required.

Some novel ideas will be bandied about at the conference. One scheduled for discussion during a Friday forum is the construction of a pipeline from Iowa and Nebraska to Wyoming carrying another leftover from ethanol production, carbon dioxide, or CO2. It is produced in copious amounts when corn is fermented and distilled.

The idea is the brainchild of Elk Petroleum, a Wyoming oil driller. Chief Executive Scott Hornafius said injecting CO2 into oil wells stimulates them to give up their last bits of crude. And oil produced in this fashion qualifies for low-carbon incentives from California, because the use of waste CO2 for oil production generates a net reduction in greenhouse gases.

Hornafius said he is attempting to generate interest and investment in a pipeline to carry Iowa and Nebraska’s CO2 to Wyoming, where he said oil wells are desperate for it. He described it as a $1 billion project that will probably require the participation of major energy companies.

Getting Corn Belt ethanol plants on board is a first step, he said. They would earn revenue from selling their CO2, as “there is enormous demand” from the oil industry. Hornafius doesn’t expect major environmental opposition, as with the contentious Keystone XL pipeline proposed to carry crude oil across Nebraska. CO2 is everywhere, exhaled by every living organism.

“There is no potential for pollution,” Hornafius said. “If there is a leak, it just vents into the air.”

The Advancement of Ethanol in Nebraska