Ethanol Producers and Consumers

The ACE Conference, as always, was excellent and the highlight of the event was the Awards Banquet where Merlin Ball was awarded the ACE Grassroots Award which is given to the "unsung heroes" of the Ethanol industry. (see related story)

Many contacts were made and the associating with so many of the Ethanol producers, marketers and supporters was very much worth the time and the trip.

EPAC board members in attendance were Shirley Ball, Linda Nielson, Mike Allen, Jim Redding and Harold Newman.

Minnesota Goes 2% Biodiesel

Minnesota is one step closer towards implementing the state's requirement that all diesel contain two percent biodiesel. A groundbreaking at the Minnesota Soybean Processors biodiesel plant took place in March, edging the state closer to fulfilling the biodiesel production capacity requirement of the legislation.

The Minnesota two percent biodiesel mandate became law on March 15, 2002. The law will go into effect on June 30, 2005 on the condition that the state has eight million gallons of biodiesel production capacity.

"This groundbreaking is the beginning of a brighter future for rural Minnesota," said Minnesota Soybean Growers Association (MSGA) President Ron Jacobsen. "Minnesota uses 831 million gallons of diesel fuel each year. At two percent, that means a brand new market demand of over 16 million gallons of biodiesel will be created on June 30, 2005."

A Minnesota Department of Agriculture study found that on-road demand alone will generate a direct economic impact of over $212 million dollars annually and create over 1,120 jobs.

Group working to pump up E-85 - Objectives are promotion and accessibility
. . by Pam Eggemeier, The Journal-Standard
As gas prices increase, so do the opportunities to promote alternative fuels, and an Illinois group is trying to take advantage.

Blackhawk Hills Resource Conservation and Development Council has teamed up with Stephenson County Farm Bureau, area farmers, Adkins Energy, Illinois Corn Growers Association, oil company representatives and State Rep. Jim Sacia to assemble a broad coalition calling itself the Northwest Illinois E-85 Initiative.

Its primary function is twofold - to bring more retail outlets of the 85 percent Ethanol fuel blend to the region, and to promote its use, since E-85 has not become nearly as popular in Illinois as other states, especially Minnesota, where there are now more than 100 outlets.

One of the reasons is that there are only about 15 pumps in Illinois. The only one in this area is the Phillips 66 station at 4545 Sandy Hollow Road in Rockford. After that, the nearest state E-85 pumps are scattered throughout the Chicago area, Bloomington and Champaign.

Dave Dornbusch, Blackhawk Hills coordinator, said they will kick off their E-85 information campaign this fall and hope to have at least two area stations up and running by next spring.

"From there we hope to see stations all over northwest Illinois," Dornbusch said. "We have some educating to do, but we think that E-85 will come to be accepted like E-10 is now."

It is a bit of a Catch-22 situation because until the retail outlets are established it's difficult to gauge how popular they will be.

The Rockford Phillips 66 has had its E-85 pump for about six years now and they are still in danger of losing it.

"We sell about 100 gallons a week and we really need to sell at least five times that for it to be feasible to keep it," said Dawn Rolander, station manager. "We had a five-year contract with the government when it was first installed, but that was up more than a year ago."

Because Rolander is personally a big proponent of E-85, she has lobbied the owners to keep the pump, but she isn't sure how much longer she can pull it off.

"Business has improved lately with the gas prices up but there have been weeks where we didn't sell any at all," Rolander said. "They've talked for the last year about changing it to diesel."

On Thursday, E-85 was selling at $1.75 per gallon, while regular unleaded was up to $1.83 at the Rockford station.

So why is E-85 business so spotty in Illinois, while vehicles wait in line to use the pumps in Minnesota?

"This region particularly has lagged way behind in putting in retail outlets," said Bruce Johnson, Stephenson County Farm Bureau manager, and co-chairman of the E-85 Initiative. "There's also a big educational component to this - many people are driving E-85 compatible vehicles and don't even know it."

Johnson said help is needed from vehicle dealers in getting the word out about alternative fuels. "We've been working with the Vehicle Dealers Association," Johnson said. "The first step in this is an all-out education campaign."

Johnson said the group has done some brainstorming about possible grant opportunities. "There is DCEO and some other grant sources out there," Johnson said. "We're basically a grass-roots farm group and that may help us to get a jump on businesses and grab some funds early on."

Sacia has been involved in alternative fuels education at the state level. He and State Rep. Todd Sieben pushed House Bill 5129, that would require the secretary of state's office to compile a flexible-fuels database to help determine where it's most feasible to promote and sell blends like E-85. The governor recently signed that bill into law.

Rolander believes there are several reasons that E-85 usage is lagging in Illinois. She agrees that we haven't done a very good job of marketing alternative fuels but it is also a matter of convenience. "People are used to going to a gas station near their homes or work," Rolander said. "But if they have more choices that won't be as much of an issue." She also believes that many consumers, herself included, want to use E-85 but have older vehicles that can't run on the alternative fuels. The group will meet again in early September to work on grant issues and the logistics of setting up new pumps.

Ethanol's Net Energy Value
"an Excerpt from the recent Ethanol Across America issue Brief On Net Energy Balance, published by CFDC"

Ethanol critics such as Cornell University's Dr. David Pimentel, who argue tht Ethanol production uses more energy than it yields, sypically select data and use assumptions that are outdated. While virtually all analyses refute Pimentel's conclusions, a 2002 Michigan State University study notes several discrepancies in Pimentel's methodology and conclusions:

· 1992 corn yields and energy inputs were used. Today's yields have greatly increased and the use of pesticides and fertilizers has gone down.

· Figures for the energy used to manufacture Ethanol data were from 1979.

· Irrigation energy costs are included for all corn used in Ethanol manufacturing, though only 15% of U.S. corn is irrigated.

· Distillers dried grains are not used as an energy credit.

Dan Walters provides a similar perspective. According to Walters, a University of Nebraska-Lincoln soil scientist, these reports continue to rely on outdated data. "The problem is that it's all old date," says Walters. His claim is that the negative energy numbers are derived from the data collected in the last 1980's and early 1990's.

In addition to simply over-counting the energy used in producing Ethanol, detractors fail to recognize the significant gains of recent years in yields and energy used in processing. Modern Ethanol plants are producing 15% more Ethanol from a bushel of corn, and using 20% less energy to do so than just five years ago.

Merlin Ball Receives Prestigious Ethanol Grassroots Award

The American Coalition for Ethanol (ACE) awarded Merlin Ball their Grassroots Award at their annual conference August 11th in Duluth, Minnesota.

Merlin, who lost his battle to cancer on April 29, 2004, was a long time Ethanol advocate and agriculture supporter. ACE spokesperson, Ron Lamberty, said that the award is presented to "...devoted individuals who performed behind the scenes to advance the cause of Ethanol." These "unsung heroes" of the U.S. Ethanol industry are recognized with the Grassroots ward.

"Since 1991, Merlin has been a crucial part of EPAC (Ethanol Producers And Consumers), helping his wife Shirley in her job as Executive Director. He drove the E-85 cars to promotional events, helped set up the EPAC booth at trade shows, took photos for the EPAC newsletter and performed behind the scenes. He worked at EPAC and other Ethanol conferences, discussing the benefits of Ethanol. At trade shows that were staffed with the most knowledgeable people in the Ethanol industry, people often gravitated to this quiet Montana farmer and trusted his lifetime of experience and firm support for Ethanol", said Lamberty.

Lamberty finished by saying that Merlin devoted countless hours to Ethanol and made thousands of friends along the way. He will not be forgotten. Accordingly, his dedication and hard work will live on in the ACE Grassroots Award.

Accepting the award on behalf of Merlin was his wife Shirley. Mrs. Ball thanked ACE for this wonderful award and reminisced that Merlin had driven her to the first ACE conference in 1998 at Moorhead, Minnesota, where less than 100 people had attended. Now, over one thousand people attended this conference and Mrs. Ball told them that Merlin would be proud that he played a vital role in that growth.

The American Coalition for Ethanol (ACE) is the grassroots voice of the U.S. ethanol industry. ACE is a national, non-profit organization of nearly 600 members in 41 states, including farmers, commodity organizations, ethanol producers, businesses that supply goods and services to the ethanol industry, rural electric cooperatives, public power districts, and individuals supportive of increased production and use of ethanol. For more information about the organization or about ethanol, visit ACE on the Web at www.ethanol.org or call (605) 334-3381.

Thank You From Bob Dinneen

Dear Shirley,
Thank you again for the invitation and hospitality at the EPAC Conference in Helena. It was another great success and you deserve tremendous credit for what you have been able to accomplish with and through EPAC.

I have to tell you, the riverboat cruise and the Lewis & Clark adventure were just a thrill for me. Thank you so much for putting it all together. I am sure it took a lot of work. I really will have to return to Montana soon, before my children get so big they don't want to be seen with me, to share some of the state's beauty and history with them. As it is, I can't wait to tell them about the 1,400 year-old Indian artwork, the mountain goats, the eagles, the magnificent rock formations, the Gates of the West and everything else we saw. It could be a long discussion!

Shirley, I also want to tell you again that you and Merlin are in my thoughts and prayers. You were very strong at the Conference. I know it was hard for you. Merlin was a good man; he is missed by many. But as long as you continue doing the work that you do for ethanol, value-added agriculture and farmers in Montana and across the country, Merlin will be by your side and in our hearts.

Thanks, again, Shirley. You are a good friend.

With warm personal regards, I am

Sincerely,
Bob Dinneen
President, RFA

Hulless Barley Makes Waves In Ethanol Research
. . . from the Prairie Star, Friday, July 16, 2004

Barley comes in second to corn when it comes to Ethanol production, but shouldn't be eliminated from the formula, according to an agricultural scientist.

"Farmers in the east are like those in Montana, they produce enough corn to feed their livestock," said John Cherry, an agricultural scientist with the U.S. Agricultural Research Service's Eastern Regional Research Center. "We say, why not bring barley into the (Ethanol) picture?"

Hulless barley is the new "thrust" in Ethanol production, Cherry told nearly 100 producers and consumers at the 14th Annual Ethanol Producers And Consumers Conference held in June in Helena, Montana.

Barley has generally been overlooked in Ethanol production because it has less starch than corn, produces a high viscosity of mash with glucan and has abrasive hulls. However, Cherry said hulless barley has proven barley can be an Ethanol source crop, yielding high proteins, low fiber, low glucan and no abrasive hulls.

"The hull is lost during harvest and stays in the field which avoids the need for pearling," he said. "With no hull, there is a higher amount of material; it averages 11 percent protein dry weight. And the Beta Glucan is higher in barley, but we selected it down with the hulless varieties.

Cherry said there are currently 116 strains in cultivation for testing in Ethanol production. Researchers tested 77 lines in six locations with four reps in the year 2002-2003. Gallao, Doyce, Throughbred and Price are four varieties being researched for Ethanol potential.

In 2002, Doyce averaged 62.2 percent starch, 11.39 percent protein and 3.85 percent Beta Glucan. With 59 percent starch, Ethanol producers can make 2.27 gallons of Ethanol per bushel of barley. Hulled barley produces 1.64 gallons of Ethanol per bushel with 50 percent starch yields.

"We can make it work," said Cherry.

Like the Mid-Atlantic farmers, a group of Idaho producers have discovered a way to utilize barley in Ethanol production, according to John Hamilton of Treasure Valley Renewable Resources, LLC.

However, instead of using barley solely for Ethanol production, this group has found and developed markets for the Ethanol barley by-products.

"There are 22 people in the Treasure Valley group," said Hamilton, "and 80 percent are farmers."

They found the protein can be sold to area fish hatcheries and dairies, while the Beta Glucan can be marketed to pharmaceutical companies and the CO2 gas produced during Ethanol production can be sold to welding and soda pop companies, said Hamilton.

Pharmaceuticals like Beta Glucan because it has been known to reduce colon cancer risks, reduce cholesterol levels, is used as an antioxidant and increases the immune system, he added.

In addition, Hamilton said Treasure Valley researchers found they could divide the fiber into three layers and separate the protein from the starch to produce Ethanol without wasting the barley by-products.

"With corn, you debran it and cook it, get the water out and recycle that back into Ethanol," explained Hamilton. "But in barley, you can take the fiber and glucan out, cook it and mill it into feed. In the end you get feed, fiber, beta glucan and Ethanol. If you look at the difference in economics, the fiber from the barley is worth $2.50 per acre."

Using barley to produce Ethanol and all of its by-products makes more cents than corn, Hamilton said. "If you take the value of the grain in as a co-product, barley is more profitable than corn," he said.

Cherry said researchers are developing ways to utilize more barley-like properties in Ethanol production and found the Beta Glucan-assisted fermentation increased Ethanol yields. They are also developing new fraction mills for hulled barley varieties.

"We know we can do it in the Mid-Atlantic," said Cherry. "The question is can you do it in Montana?"

Montana producers are currently working with legislation and Ethanol consumers to develop Ethanol plants in several locations throughout the state. Currently, both the National Yellowstone Park and Glacier National Park are using Ethanol gas and bio-diesel in their park vehicles. Other government agencies are utilizing renewable fuel resources, as well.

How Is Ethanol Made?
. . . from ACE

The production of Ethanol, or ethyl alcohol, from starch-based feedstocks is an excellent example of value-added processing. Using corn as the feedstock is one of the most common ways to produce Ethanol. Dry mill Ethanol production is a premier manufacturing production system to extract starch contained in the corn.

Ethanol plants are fermentation facilities in which corn is ground and mixed with water to form a mash. Mash is then heated, and enzymes are added to convert starch into fermentable sugars. Fermentation then occurs when yeast is added to convert the sugars into Ethanol and carbon dioxide.

Fermentation produces a mixture called "beer" containing about 15% Ethanol and 85% water. "Beer" is boiled in a distillation column to remove the water, which results in ethyl alcohol that is 90% to 95% pure. This mixture is then dehydrated, which increases the alcohol content to 99% or more. At this point the product is mixed with a denaturant for commercial sale, which renders the product unfit for human beverage consumption.

Solids removed during the distillation process are centrifuged and/or evaporated and then sent to a dryer system to reduce the moisture content to approximately 10%. This value-added co-product is DDGS (distiller's dried grain with solubles). DDGS is the corn kernel minus the starch.

Major Petroleum Marketer Now Supplying 85% Ethanol - E-85
. . . from NEVC

The National Ethanol Vehicle Coalition (NEVC) is pleased to announce that Marathon Ashland Petroleum LLC (MAP), the fifth largest refiner of fuel in the U.S., has recently added clean-burning 85% Ethanol to its product offerings at fourteen terminals. MAP is the first major marketer of motor gasoline to make E-85 part of their regular terminal product lines.

"This action by Marathon Ashland Petroleum is a major step in our continuing efforts to promote E-85 as a 'mainstream' form of fuel and remove it from the so-called 'niche fuel' marketplace. Many small independent wholesalers have formed the basis for the initial growth in the use of E-85 and we are thankful for their leadership and entrepreneur skills. As is the case in any new production introduction, when the so called 'big guys' take notice and begin to offer this new product, as a marketer, one can clearly measure such action as a positive step. This decision by Marathon Ashland provides a significant boost for E-85 use and for agriculture in general," stated Todd Sneller, Executive Director of the Nebraska Ethanol Board and NEVC Chairman.

MAP, based in Findlay, Ohio, refines about 945,000 barrels-per-day. Their retail marketing system includes many Marathon brand locations among others in sixteen states. MAP is owned by Marathon Oil Company, a wholly-owned subsidiary of Marathon Oil Corporation, and by Ashland Inc. The organization plans to distribute E-85 flyers announcing availability of the fuel at each of their terminals.

Ethanol will be offered at the following MAP terminals throughout the Midwest:

· Brecksville, Ohio

· Canton, Ohio

· Cincinnati, Ohio

· Columbus, Ohio

· Heath, Ohio

· Lexington, Kentucky

· Louisville, Kentucky

· Indianapolis, Indiana

· Mt. Prospect, Illinois

· Rockford, Illinois

· Detroit, Michigan

· Niles, Michigan

· North Muskegon, Michigan

· St. Paul Park, Minnesota

E-85, a blend of 85 percent Ethanol and 15 percent gasoline, can easily be splash blended at the terminals. "E-85 can now be more efficiently blended and distributed in a large geographic area. Consumers in this marketing area should find E-85 more readily available and this clean burning fuel should be attractively priced for operators of flexible fuel vehicles," said Sneller.

The National Ethanol Vehicle Coalition is the nation's primary advocate dedicated to the use of 85 percent Ethanol as a form of alternative transportation fuel. Financial assistance for the NEVC comes from advocates of clean, renewable, domestic energy.

Ethanol Proposal Draws Support
. . by Sean Hao at The Honolulu Advertiser

A proposal that would require Ethanol to be added to gasoline in Hawaii was supported by most of the 13 people who testified yesterday at a public hearing on the initiative.

About 60 people attended the one-hour public hearing, which was the last opportunity for the public and businesses to weigh in on the requirement that could take effect in about 18 months.

Those testifying included Ethanol and oil industry representatives and members of the general public. About two dozen written testimonies were submitted, but were not immediately available.

Now it's up to the Department of Business, Economic Development and Tourism to decide whether a set of rules that has been 10 years in the making are ready for Gov. Linda Lingle's signature. Lingle has said she supports implementing the law, which would require that most gasoline sold in Hawaii include 10 percent Ethanol content.

A mandate that Ethanol be blended with gasoline to cut down on oil dependency and support the local sugar-cane industry was first passed in 1994, then amended in 1997. Ethanol, an alternative fuel that can be made from grain or sugar-cane byproducts, is used in most states.

Producing Ethanol to blend with gasoline would also help restore the viability of sugar production in Hawaii, supporters of the proposal said.

"Growing sugar cane is a tough business, as evidenced that there are only two plantations left in Hawaii," said Charles Okamoto, director of finance and property management for one of those plantations, Gay & Robinson Inc., on Kauai.

"Gay & Robinson is committed to agriculture, but its economic viability is currently being challenged with low sugar prices and higher costs," he said. "We must find an alternative to our core sugar business and we've identified production of Ethanol to be one target that would be viable."

William Maloney, managing director for Maui Ethanol LLC -- one of at least three companies planning to produce Ethanol locally -- testified that the regulations in their current form are a product of two years of work that included input from the oil industry. He also tried to allay concerns that Ethanol factories would produce foul smells.

Ethanol proponents including Ethanol and renewable energy trade groups contend Ethanol is a cleaner burning renewable fuel. They also cite a state study that estimates local Ethanol production will result in $104 million of new investment in manufacturing plants, 84 direct jobs and 601 indirect jobs.

Those against the use of Ethanol, including local oil companies, contend that it would result in less fuel efficiency, potentially higher gasoline prices, cut into state and county tax collections and won't guarantee a cleaner environment.

State officials have said the use of Ethanol is not likely to reduce or increase gasoline prices, though it could result in less fuel efficiency.

Melissa Pavlicek, a spokeswoman for the Western States Petroleum Association, which represents ChevronTexaco and Shell Oil, testified that the hearing served as an opportunity to make the public aware of concerns that Ethanol could cost consumers more money without necessarily resulting in less pollution. In addition, Pavlicek questioned whether 18 months is enough time to allow for adequate supplies of locally produced Ethanol to become available.

If the proposed rules don't require significant changes a final version could be ready for Lingle's signature within weeks, said Maurice Kaya, energy branch administrator for DBEDT. Kaya said it was too early to tell whether such changes were warranted.

Reach Sean Hao at or 525-8093.

DDG's Lower Feed Costs

Ethanol's leftovers may help cattle producers cut their feed costs while maintaining the quality of their animals when it comes time for slaughter, according to preliminary findings of a study. Relatively small amounts of distillers' grain have been fed to animals for years as a protein supplement. The University of Illinois study shows that raising the percentage of distillers' grain in a cow's diet can make the feed an effective source of calories, too, says Larry Berger, a professor of nutrition in the Department of Animal Sciences.

Ethanol Byproduct A Cheap Animal Feed Option
. . . by Eric Noe and Chris Stebbins

Many U.S. beef and dairy producers struggling with this year's soaring costs for traditional animal feeds have turned to distiller's dried grain (DDG) as a cheaper feed alternative, industry sources said.

DDG, a by-product of corn-based Ethanol production, has grown in recent years as the Ethanol market has exploded in response to demand for cleaner-burning fuel additives.

U.S. Ethanol production is expected to rise to 3.3 billion gallons in 2004, up from 2.13 billion in 2002. DDG has grown in lock-step, with production expected to rise to 6.2 million tons in 2004 from 4.5 million two years ago.

The boost in production has pressured DDG prices this year at a time when costs for more traditional protein feed supplements like soymeal have surged to multiyear highs.

Cash soymeal prices climbed above $320 per ton earlier this year, more than double year-ago levels, as a U.S. soybean shortage after last year's drought set futures soaring.

Cash 48 percent protein soymeal in central Illinois was being offered at $300 to $306 per ton.

In contrast, DDG was selling at around $112 per ton in central Illinois. The wide spread has led many livestock producers - both at home and overseas - to turn to DDG for their feed needs.

"The high price for all the commodities around the world and the world demand is driving the additional use of DDG," said Gary McKinney of the U.S. Grains Council. "DDG is relatively cheap because of the availability, and you also have a situation where you don't have to move it as far."

The bulk of U.S. Ethanol production is scattered through the U.S. Corn Belt, making it simple and cheap to deliver to dairy, beef and swine producers in Midwestern states.

"It's been discovered to be a good viable feed substitute," said Tracy Snider, spokeswoman for the National Corn Growers Association. "Part of it is due to the Ethanol industry's commitment to not just producing Ethanol, but also producing animal feed. They're really seeing it as a co-product.

DDG's protein content is similar to that of soymeal, Snider said, with the only big difference being DDG's absence of lysine.

About 80 percent of DDG production is used by dairy and beef producers, with an additional 15 percent used for swine feed and the rest going to poultry, according to the NCGA.

About 22 to 25 percent of DDG is sold into export markets, with Southeast Asia and South America the prime destinations.

"The European export market has not grown. The export material going to Central and South America, the Caribbean and Southeast Asia has grown a lot," said Sean Broderick, a grain merchant at Commodity Specialists in Minneapolis, Minnesota.

Traders said this week that Vietnam, Malaysia and Indonesia bought DDG from the United States for the first time this year. But domestic sources said the continued strong domestic demand would prevent foreign markets from draining U.S. stocks.

"I don't know that a larger percentage is going toward exports because domestic consumption has been so strong," said McKinney of the U.S. Grains Council, which promotes exports.

Ethanol Would Reduce Gas Prices By 7¢ A Litre

(1.1 gallon = 4 litres)

A new study released by the Canadian Renewable Fuels Association shows that Premier McGuinty's promise of mandating a 5% blend of Ethanol in fuel would reduce the price of gasoline by at least 7¢ per litre.

"If you have had your fill of high gas prices, you should know there is relief - renewable energy such as Ethanol and biodiesel," stated Canadian Renewable Fuels Association President Kory Teneycke. "That is why today we are launching a campaign to get the word out - Ride Renewable, Save Money and the Environment."

In his election platform, Choose Change, Premier McGuinty called for a 5% Ethanol blend in gasoline by 2007 and 10% by 2010.

The new study, "Relief: Impact of an Ethanol Mandate on Retail Level Gas Prices in Ontario," by John Urbanchuk, Director at LECG Consultants and a world renowned industry economist and expert in economic modeling, found that Ethanol would add critical supply to the Canadian gasoline market. Specifically, the report found:

In the near term (2005-2007) an Ethanol mandate in Ontario would lower prices at the pump 8.3 percent. At current prices this amounts to a savings of 7.1¢ per litre.

The implementation of an Ethanol mandate requiring Ontario gasoline to contain 5% Ethanol will more than triple the market for renewable fuels in Ontario to 793 million litres by 2007 and 1,658 million litres by 2010.

Implementing an Ethanol mandate in Ontario would increase the supply of motor fuel and reduce the retail price of gasoline. Blending renewable fuels with gasoline and diesel literally makes the same amount of gasoline and diesel go farther. In addition to reducing the amount of crude oil required to make gasoline, increased use of renewable fuels reduces pressure on already stressed refineries that are operating very near full capacity.

When it comes to producing and consuming Ethanol, Canada lags behind the rest of the world. This gap is due in large part to resistance from the oil industry to blend renewable fuels and the lack of government mandates that force them to do so.

"A McGuinty mandate for Ethanol will break big oil's monopoly on what you use to fill your gas tank and that is good for consumers, good for the environment and good for the economy," added Teneycke.

For more information please call: Kory Teneycke CRFA at (416) 578-6170

Ethanol Legislation Put On Hold On Capitol Hill
. . . from the Prairie Star, Friday, July 16, 2004

Political silliness is to blame for Ethanol legislation being delayed on its journey to the President's desk, according to a national renewable fuels lobbyist.

Ethanol legislation was included in the Renewable Energy Fuels bill to be discussed in June, a discussion that was long overdue, according to Bob Dinneen, Executive Director for the Renewable Fuels Association in Washington, D.C.

"I find it unconscionable and absolutely deplorable Congress cannot get the energy bill to the President," he said at the Annual Ethanol Conference on June 15 in Helena, MT.

Dinneen blamed the "squeaky politicians in California" and the obnoxious ones in New York" for the Ethanol legislation holdup. HR6, a bill similar to the energy legislation that failed to pass the House last year, was discussed in June.

"I'm not at all optimistic the energy legislation will move this year," said Dinneen. "It's the silly season in Washington with elections in November and all of us are going to pay the price."

Though he has virtually no faith in the Energy Bill making its final destination, Dinneen said he was a "bit more optimistic for the tax provision reform for the Ethanol tax incentives", where the incentives will be replaced with a tax credit instead of reducing the highway trust funds.

"That way the Ethanol producers will realize a net savings balance," he said.

The tax incentive will also benefit the oil industry as they will be required to use any blend ratio of renewable oils by 2007, which makes the E-85 legislation more attractive, according to Dinneen.

"I'm excited about E-85," he said." I also believe the country can support an $8 billion Ethanol market without having a negative impact on agricultural commodity prices."

On the local Montana level, several forms of Ethanol legislation are to be introduced in the 2005 legislative session, according to Sen. John Tester of Big Sandy, MT and Sen. Jerry Black of Sidney, MT.

"We had an Ethanol bill that almost made it through the house and senate last year," said Black. "It required a 10 percent blend of Ethanol in Montana, was not tax exempt and it had no consequences to the highway money. It had strong support and would have passed, but it got deadlocked on an even vote in committee in the House. We lost by five votes."

Black said opposing politicians didn't like the bill because it mandated Ethanol use in gasoline in the state.

"But what it boils down to is that anything they do and pass in the legislature is a mandate to someone," said Black. "This was a mandate to refineries to put Ethanol in our gas."

Since the 2003 legislative session, Black and Tester have been traveling across the state educating the public on Ethanol and its benefits.

"Ethanol supports agriculture and economic development," said Black. "If the bill passes, then an Ethanol plant in Montana will be planned and considered. I doubt any plants will get built unless a bill is passed."

The state of Montana has a tax incentive for any Ethanol plants built within the state boundaries, however, past legislation has prevented any plants from being successfully constructed and operated. Black said he and Tester have been talking to legislators as well as agriculture producers to gain support for the use of Ethanol in Montana. "Sometimes the people who need to be educated are the decision-makers," said Black. "The voters need to get on the phone and talk to their senators and representatives about Ethanol - tell them they want Ethanol in Montana."

Black and Tester plan to reintroduce a similar Ethanol bill this next legislative session, which begins in January 2005.

"There is a bright future ahead for Ethanol in Montana," said Black. "I think support for Ethanol use will grow as the world interest increases with either future administration."

Both gubernatorial candidates, Brian Schweitzer and Bob Brown, have pledged to support future Ethanol legislation if elected in November as the new governor in Montana.

DDG Exports Increase!
( from U.S. Grains Council Golbar Update)

U.S. exports of distillers dried grains with solubles (DDGS) to Southeast Asia are already exceeding expectations six months into fiscal 2004, the Council's Kuala Lumpur staff reports.

The Council's goal is to increase U.S. DDGS exports to the region to 600 metric tons this fiscal year. So far, the United States has exported 581 tons of U.S. DDGS to Southeast Asia this fiscal year compared to 16 tons exported to the region in fiscal 2003 and more contracts are in the pipeline.

"All of the imports have been a result of our enhanced technical and trade servicing approach," said Kimberly Rameker, the Council's director in Kuala Lumpur.

The Council recently confirmed more contracts, including a Malaysian importer who has contracted for 6,000 tons of DDGS, scheduled for shipment over six months beginning in April or May. Also in March, a large feed miller in Malaysia imported 51 tons of U.S. DDGS for poultry feed trials. "The feed miller has told us that the DDGS they have received is of satisfactory quality and that if the trials go well, they intend to expand utilization of DDGS in all Malaysian rations since the cost of all other raw materials is high," Rameker said. Also, a medium-sized feedmill, a layer farm and a swine operation in Malaysia plan to utilize 150 tons of U.S. DDGS that arrived in Malaysia Mar. 5.

One company in Malaysia estimates that at current raw material prices, using DDGS will result in a net savings of 50 cents per ton of finished feed, improving their bottom line, Rameker added.

The Council's Kuala Lumpur staff reports interest in U.S. DDGS exports has also surfaced in Vietnam and the Philippines.

To read a more in-depth story about the growing DDGS market in Southeast Asia, visit the "Latest News" section at www.grains.org.

Calendar for Upcoming Events

SEPTEMBER 21-23, 2004

Pacific Oil Conference in Reno, Nevada

OCTOBER 25-27, 2004

BBI Workshop and Trade Show in Sacramento, California

FEBRUARY 7-9, 2005

Renewable Fuels Association Annual Ethanol Conference in Scottsdale, Arizona

FEBRUARY 22-24, 2005

Western Petroleum Marketers Association Annual Trade Show and Convention in Las Vegas, Nevada

APRIL 19-21, 2005

Atlantic Regional Energy Expo in Atlantic City, New Jersey

MAY 1-4, 2005

11th National Clean Cities Conference in Palm Springs, California

June 12-14, 2005

Ethanol Producers And Consumers 15th Annual Ethanol Conference in Cody, Wyoming

JUNE 28 - JULY 1, 2005

21st Annual Fuel Ethanol Workshop in Kansas City, Missouri

AUGUST 16-18, 2005

American Coalition for Ethanol Annual Conference and Trade Show in Omaha, Nebraska

EPAC 15th Annual Conference Set For June 12-14

The EPAC 15th Annual Ethanol Conference will be June 12-14, 2005, in Cody, Wyoming. There will be a trade show, nationally known and respected speakers, excellent informational panels, lots of extracurricular fun activities, tremendous networking opportunities all set in a beautiful area, close to Yellowstone National Park.

For more information, call 406-785-3722 or Mike at 406-594-5119. You may also e-mail us at

EPAC (Ethanol Producers And Consumers) organized as a non-profit organization in 1991, with a thirteen person Board of Directors to oversee and guide activities. Membership includes individuals, businesses and organizations in over 26 states and 3 foreign countries.

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