Nov. 2, 2011 –Something is wrong in the world of energy subsidies. According to statistics gathered by the International Energy Agency (IEA), the worldwide subsidies to fossil fuel consumption in 2009 amounted to no less than 300 billion USD, while at the same time the global support for renewables was almost 60 billion USD. This means that global government spending on promoting fossil fuels was five times higher than on promoting carbon dioxide neutral renewable energy sources.

The reasons for promoting the use of renewables are easily understood. Renewable energy sources (bioenergy, hydro, wind, solar and geothermal energy) are not only beneficial from a carbon dioxide emissions perspective. They are usually locally produced and harvested, generating jobs and income in rural areas. Other arguments towards the use of renewable energy sources include decentralized energy production, security of supply, less dependency on imported energy and long term readiness for shortages in the supply of fossil energy.

The intentions for fossil fuel subsidies are to alleviate poverty and promote economic development by providing cheaper energy. However, not only do fossil fuel subsidies increase CO2 emissions, but they often encourage wasteful consumption, hasten the decline of exports, threaten energy security by increasing imports, distort markets and create barriers to clean energy investments. (World Energy Outlook 2011, IEA)

The global fossil fuel consumption subsidies were driven even higher in 2010 by the rebound in international energy prices, from 300 to 409 billion USD. These subsidies are set to reach 660 billion USD in 2020, or 0.7% of global GDP, without further reforms. But, phasing out fossil fuel consumption subsidies by 2020 would slash the growth in global energy demand by 4.1% and reduce the growth in oil demand by 3.7 million barrels per day, leading to 1.7 billion tonnes less CO2 emissions. Many countries have now started or planned reforms of their fossil fuel subsidy systems.

Based on: IEA - World Energy Outlook 2010 and IEA - World Energy Outlook 2011

With the United States importing 65 percent of its oil, gasoline prices hovering near record levels, and a sweltering summer raising concerns about climate change, Congress is debating public policies that encourage the use of alternative fuels for our cars and trucks.
Critics of renewable fuels keep claiming that the production of American ethanol threatens the food supply and raises food prices.

Not true.

There just isn't any statistical evidence that increased ethanol production results in rising food prices, according to a comprehensive new study by Informa Economics, a world leader in market research on domestic and international agricultural commodities. Instead, retail food prices are determined by many factors, including supply-chain costs for energy, labor, transportation, packaging and other expenses related to marketing, not farming.

As the nation's farmers have long suspected, there isn't a kernel of truth in the urban myth that ethanol production is the major driver of corn prices, and corn prices are a key determinant of food prices.

Using statistical analysis and examining government data and information, the Informa study presents the complex causes of food prices, including five conclusions that refute the simplistic theory that just blames biofuels.

First, corn prices have historically been a statistically insignificant variable in determining what drives consumer food prices.

Second, many other costs have been rising, including labor, packaging, transportation, energy, profits, advertising, depreciation, rent, interest, repairs and business taxes - and they're all contributing to rising food prices.

Third, farm products such as corn account for only 11.6 cents out of every food dollar that Americans spend on food - a decline of 20 percent 1993 according to the latest analysis by the Department of Agriculture.

Fourth, even when it comes to commodities, corn prices have historically had little relationship with the prices for other farm products, such as livestock, poultry, eggs and milk.

And fifth, ethanol isn't the only factor influencing corn prices - other determinants include weather events, the declining U.S. dollar, strong export demand and steady feed demand.

In fact, energy costs, including especially oil prices, track more closely than ethanol production with consumer food prices. By replacing imported oil, American ethanol may well do more to hold food prices down than to push them up.

The Informa study (which was funded by the Renewable Fuels Foundation) is the last report to refute the food vs. fuels mythology. The U.S. Department of Agriculture's Economic Research Service recently reported that while just 11.6 cents of every food dollar Americans spend on food going to farm products of all kinds, the remaining 88.4 cents goes to energy, transportation, packaging, labor and other costs.

Meanwhile, the World Bank, the Congressional Budget Office, and other respected authorities have all concluded that food prices track more closely with energy costs than with the prices for corn and other commodities.

As a former U.S. Secretary of Agriculture, I'm proud that American farmers are the most productive on the planet and, indeed, in all of human history. Producing more than twice as much corn on little more acreage than three decades ago, American farmers are playing a leading part in feeding the world and fueling the nation.

The nation - and the world - have a stake in the survival of rural America. We should all be proud that the U.S. ethanol industry supports almost 400,000 working Americans, many in struggling rural communities, and pays $7 billion in federal taxes and $4 billion in state and local taxes, contributing to police and fire departments and school systems.

As this latest economic study shows yet again, the issue isn't food versus fuel. It's fact versus fiction.

ABOUT THE WRITER
John Block was U.S. secretary of agriculture under President Reagan from 1981 through 1986.

The Environmental Protection Agency (EPA) yesterday issued a final rule intended to minimize misfueling from use of gasoline that contains up to 15 percent ethanol (E15). The final rule would prohibit the use of gasoline containing more than 10 percent ethanol on any vehicle, engines and equipment not approved by EPA for use of E15. Under two final rules issued by the agency late in 2010 and early in 2011, use of E15 was limited to only 2001 and later model year vehicles.

The July 25 final rule also requires that all E15 fuel dispensers have a specific label meant to prevent consumers from using an E15 dispenser with a vehicle not intended for use of the ethanol blend. The new label requirements take into account suggestions from the Federal Trade Commission for more simple and effective communications of information for consumers in order to avoid misfueling.

The rule further requires that product transfer documents (PTDs) specifying ethanol content and Reid Vapor Pressure accompany the transfer of gasoline blended with ethanol through the fuel distribution system. The agency is also requiring in the final rule a survey of retail gasoline stations to ensure compliance with E15 labeling.

For More Information: Bruce Scherr, Chairman of the Board and CEO of Informa Economics: bruce.scherr@informaecon.com

(July 11, 2011) Washington—There is no statistical evidence to support the argument that growth in ethanol production is driving consumer food prices higher, according to a comprehensive study released today by Informa Economics. Rather, the report concludes that retail food prices are determined by a complex set of inter-related factors, including supply chain costs for energy, labor, transportation, packaging and other marketing-related expenses.

The new study, entitled “Analysis of Corn, Commodity, and Consumer Food Prices”, concludes that “the statistical evidence does not support a conclusion that there is a strict ‘food-versus-fuel’ tradeoff that is automatically driving consumer food prices higher.” The analysis, which was funded by the Renewable Fuels Foundation, further found that “…there has historically been very little relationship between annual changes in corn prices and consumer food prices. The corn price would be considered a statistically insignificant variable in determining what drives the food [consumer price index].”

“Ethanol is not the only driver influencing corn prices, and corn prices have not been the only factor driving consumer food prices,” said Bruce Scherr, CEO and Chairman of Informa Economics. “Rather, there is a complex and interrelated set of factors that contribute to corn and food prices. Further, the farm share of the retail food dollar is relatively small. Increases in other marketing bill component prices are contributing to food price increases.”
Renewable Fuels Association President and CEO Bob Dinneen said the new study adds to a mounting body of economic analysis that shows ethanol plays a trivial role in retail food pricing.

“Yet again, sound analysis has demonstrated that the farcical food-versus-fuel debate is just that – a joke,” Dinneen said. “Unfortunately, the effort to scapegoat ethanol in order to continue our addiction to imported oil is not funny. The fact remains that no statistical evidence exists demonstrating a significant link between ethanol, corn prices, and rising food costs. “If we learned anything from the commodities bubble and food price run-up of 2008, it should have been that consumer food prices are influenced by a multitude of important factors, not the least of which is higher energy prices. Oil prices at or above $100 will increase everything, including food prices and oil industry profits.”
The study presents a number of key findings based on statistical analysis and examinations of government data and information. Among the report’s major conclusions are:

• There has historically been very little relationship between annual changes in corn prices and consumer food prices. The corn price would be considered a statistically insignificant variable in determining what drives the food CPI.

• The costs of other components in the marketing bill (e.g., labor, packaging, transportation, energy, profits, advertising, depreciation, rent, interest, repairs, business taxes) have also been increasing and general inflationary pressures have also impacted food prices. Increases in these other marketing bill components are contributing to food price increases, as reflected in the growing farm-to-retail price spread for many food categories.

• The “farm value” of commodity raw materials used in retail foods accounts for just 16% of total U.S. food costs, a proportion that has declined significantly from 37% in 1973. For food products where corn is only one of several farm-produced inputs, the proportion of the total product cost attributable to the cost of corn is even less than 16%. The remaining portion of total retail food costs is known as the marketing bill.

• Historical price relationships between corn prices and livestock, poultry, egg, and milk prices show relatively weak correlations. With these low correlations, it is statistically unsupported to suggest that high and/or rising corn prices are the only or even the main reason behind high and rising retail meat, egg and milk product prices.

• Ethanol has not been the only factor influencing corn prices; other supply and demand factors have also been at play. Weather events, a decline in the U.S. dollar, strong export demand, and steady feed demand are among the supply/demand factors that have pressured corn prices in recent years.

In several places, the report references the important role of energy prices in determining consumer food prices and speaks to the ability of ethanol to reduce gasoline prices. According to the authors, “Within the overall marketing bill, the costs of energy and transportation have increased considerably over the last several years, with crude oil prices surging from just under $60 per barrel in fall 2006, reaching above $100 per barrel in the first half of 2008, falling back down during the economic recession and again breaking $100 per barrel in 2011, roughly the same periods during which corn prices have increased.”

On the ability of ethanol to hold down gasoline prices, the report states “…to understand the net impact on consumers’ financial condition, changes in expenditures on not only food but also fuel would have to be considered. Specifically, if more abundant supplies of ethanol were to result in a measurable reduction in retail fuel prices, this would have to be compared to any food price increase in determining the net impact to consumers.” The Informa study makes reference to a recent analysis by the Center for Agricultural and Rural Development that concluded growth in ethanol production reduced gasoline prices by an average of $0.25, or 16%, over the entire decade of 2000-2010.

The entire Informa Economics report is available here and an executive summary is available here.

RFA also noted that the new Informa report confirms many of the key findings from a recently released USDA study on the factors contributing to higher food prices. The USDA report is available here.

PRESS RELEASE
Contact Person: Pam Ost
(406) 785-3722 or pamd@ethanolmt.org

FOR IMMEDIATE RELEASE
EPAC Represented at Biofuels Beltway March

EPAC (Ethanol Producers And Consumers), Nashua MT, Executive Director, Pam Ost, was one of 60 ethanol advocates that participated in the Biofuels Beltway March Fly-In to Washington DC, March 29-30. EPAC's participation was sponsored by the American Coalition for Ethanol and KATZEN International. The two day Fly-In is an annual event organized by the American Coalition for Ethanol (ACE). Brian Jennings, Executive Vice President of ACE stated “There has never been a more urgent time to bring grassroots ethanol voices to Capitol Hill, and Ace is pleased to organize this timely fly-in that puts a human face on why the U.S. needs to support American ethanol.

Visits were made to over 160 offices with Congress men, women and staff members representing 43 states including many of the freshman members of Congress. The group’s priorities were to promote the proven benefits of ethanol, advocate consumer fuel choice through Flexible Fuel Vehicles and Blender Pumps and address questions about reform of the Ethanol Tax Incentive.

EPAC has for it’s 20 year history addressed the myth that ethanol fuel will take food away from people. Ost took this opportunity to explain again that only the starch in grain is turned to fuel. All the nutrients, including protein, fiber, germ and vitamins remain in the distillers grains co-product and are readily available to the food chain, usually as a livestock feed. To demonstrate and reinforce this information Ost used a high grade of distiller gains from a wheat processing facility to make cookies that she delivered to each of the Montana Congressional offices of Senators Max Baucus and Jon Tester, and Representative Denny Rehberg. Ost also presented the offices with copies of the many studies that show there is a positive energy balance, meaning that more energy is gained than is used to make the fuel.

Larry Johnson of Cologne, MN, a private consultant in the biofuels industry and an EPAC Board member was also a part of the delegation that visited the Congressional offices. Fly In participants were from 16 states and represented various segments of America’s ethanol industry: farmers, investors, ethanol producers, plant managers, rural electric cooperatives, commodity groups, engineering firms, gas station operators and businesses that supply goods and services to the industry.

Ost stated “The ethanol industry currently supports more than 400,000 American jobs; cuts foreign oil dependence by displacing 445 million barrels of imported crude oil each year; cuts greenhouse gas emissions by as much as 50 percent as compared to gasoline and provides over 30 million metric tons of distillers grains to the livestock sector. Ethanol and biofuels mean we’re investing in ourselves and they allow us to grow and strengthen the economy of rural America. The Biofuels Beltway March is an important opportunity to reach out, educate and convey the importance of the Biofuel Industry in America to those decision makers that will formulate policies for its future. Education and continued conversation about the benefits of the industry is key to it’s continued growth and success.”

EPAC will host it’s next educational opportunity with an Agricultural Biofuel Summit at the Heritage Inn in Great Falls MT, June 7-8. Summit topics include: wheat and barley ethanol production; distillers grains for livestock feed; permitting, financing and construction of projects; distribution and infrastructure and more. For more information and detail call EPAC today at 406-785-3722.

March 30, 2011

FACT SHEET: America's Energy Security

Rising prices at the pump affect everybody – workers and farmers; truck drivers and restaurant owners. Businesses see it impact their bottom line. Families feel the pinch when they fill up their tank. For Americans already struggling to get by, it makes life that much harder. That’s why we need to make ourselves more secure and control our energy future by harnessing all of the resources that we have available and embracing a diverse energy portfolio. With an ultimate goal of reducing our dependence on oil, in the near term we must responsibly develop and produce oil and gas at home, while at the same time leveraging cleaner, alternative fuels and increasing efficiency. And beyond our efforts to reduce our dependence on oil, we must focus on expanding cleaner sources of electricity – keeping America on the cutting edge of clean energy technology so that we can build a 21st century clean energy economy and win the future.

Reducing oil imports
In 2008, America imported 11 million barrels of oil a day. By 2025 – a little over a decade from now – we will have cut that by one-third.
• Expanding Safe and Responsible Domestic Oil and Gas Development and

Production:
o Implementing critical safety reforms: In response to the Deepwater Horizon oil spill in the Gulf of Mexico, the Obama Administration has launched rigorous and comprehensive environmental and safety reforms to ensure the responsible development of offshore oil and gas resource

o Identifying underdeveloped resources: The President asked the Department of the Interior (DOI) to issue a report on the status of unused oil and gas leases. That report showed that 57 percent of all leased onshore acres and 70 percent of offshore leased acres are inactive – meaning that they are neither being explored or developed.

o Developing incentives for expedited development and production: DOI is developing incentives for expedited development of oil and gas production from existing and future leases. For its offshore leasing program, the DOI has already begun to employ incentives, including the shortening of some lease terms to encourage earlier development, and requiring drilling to begin before an extension can be granted on a lease. DOI is also evaluating the potential use of graduated royalty rate structures, such as those adopted by the State of Texas, to encourage more rapid production.

• Securing Access to Diverse and Reliable Sources of Energy: The U.S. is acting in the international arena to moderate global oil demand and secure additional supplies of liquid fuels and clean energy. We are working with our international partners to increase natural gas supplies, replace oil with natural gas in power generation, and increase responsible oil production in a manner that ensures safety . We are also increasing sustainable bioenergy production, building a new international framework for nuclear energy, and promoting energy efficiency.

• Developing Alternatives to Oil, Including Biofuels and Natural Gas: Some of our most effective opportunities to enhance our energy security can be found in our own backyard. We are committed to finding better and smarter ways to use these abundant energy resources. That means:

o Expanding biofuels markets and commercializing new biofuels technologies: Corn ethanol is already making a significant contribution to reducing our oil dependence, but increasing market share will require overcoming infrastructure challenges and commercializing promising cellulosic and advanced biofuels technologies. To help achieve this goal, the Administration has set a goal of breaking ground on at least four commercial-scale cellulosic or advanced bio-refineries over the next two years. And as we do all of these things, we will look for ways to reform our biofuels incentives to make sure they meet today’s biofuels challenges and save taxpayers money.

o Encouraging responsible development practices for natural gas: The Administration is committed to the use of this important domestic resource, but we must ensure it is developed safely and responsibly. To that end the Administration is focused on increasing transparency about the use of fracking chemicals, working with state regulators to offer technical assistance, and launching a new initiative to tap experts in industry, the environmental community and states to develop recommendations for shale extraction practices that will ensure the protection of public health and the environment.

• Cutting Costs at the Pump with More Efficient Cars and Trucks: The Administration is building on recent investments in advanced vehicles, fuel, technologies, high speed rail, and public transit:

o Setting historic new fuel economy standards: Standards for model years 2012-16 will raise average fuel economy to 35.5 miles per gallon by 2016, and save 1.8 billion barrels of oil over the lifetime of the vehicles covered. In July, the Administration will also finalize the first-ever national fuel economy and greenhouse gas emission standards for commercial trucks, vans and buses built in 2014 - 2018. These standards will cut oil use and promote the development and deployment of alternative fuels, including natural gas. The Administration is also developing the next generation of fuel economy and greenhouse gas emission standards for passenger vehicles 2017-2025 and expects to announce the proposal in September 2011.

o Paving the way for advanced vehicles: The President has set an ambitious goal of putting 1 million electric vehicles on the road by 2015. To help us get there, the President’s FY 2012 Budget proposes a redesigned $7500 tax credit for consumers, competitive grants for communities that encourage the adoption of electric vehicles, and funding for R&D to drive innovation in advanced battery technology. At the same time, the President is calling on Congress to move forward with policies that can help unlock the promise of natural gas vehicles.

• Leading by Example With the Federal Fleet. The Federal government operates more than 600,000 fleet vehicles. We have already doubled the number of hybrid vehicles in the federal fleet. Today, the President is calling for administrative action directing agencies to ensure that by 2015, all new vehicles they purchase will be alternative-fuel vehicles, including hybrid and electric vehicles.

WASHINGTON (DTN) -- Members of the American Coalition for Ethanol went right into the lions den for the annual ACE fly-in -- meeting with members of Congress who have voted against ethanol-related measures.
As some 160 ACE members met with Congressional delegations from 44 of 50 states, President Barack Obama mentioned corn ethanol in a speech on energy policy, and the CEO of the largest ethanol producer in the country offered testimony during a hearing Wednesday.

The face time ethanol received underscores concern in the industry about being lost in the shuffle of the budget deficit and a growing sentiment against ethanol on the part of food, agriculture and other interest groups.
The challenge of the moment comes from an amendment from Sen. Tom Coburn, R-Okla., to eliminate the 45-cent volumetric ethanol excise tax credit, or blenders credit. On the Senate floor Wednesday, pro-ethanol Sen. Charles Grassley, R-Iowa, told fellow senators that getting rid of the VEETC would increase gasoline prices 5 cents a gallon for consumers.

Brian Jennings, executive vice president for ACE, said members received a "sobering" message from Sen. John Thune, R-S.D., Tuesday that Coburn likely would get a vote on his amendment. Some ACE members met with Coburn Tuesday evening.
"He needs to know there are consequences for what he's doing," Jennings said.

MEETING WITH COBURN
In particular, ACE members made the case with Coburn that eliminating the VEETC in one fell swoop would result in a tax increase on drivers at the pump, he said. That's because there will be less ethanol blended, Jennings said. Using less-expensive ethanol reduces gasoline prices.
Today, ethanol is doing all it can to prevent the instant elimination of the blenders credit, while pushing for more federal investment in ethanol infrastructure including blender pumps.

Tomorrow, the industry may have to battle to save the Renewable Fuels Standard, as pork industry and other food industry groups want it eliminated.
"We're taking significant heat from others on the hill," Jennings said. "They want to go in and dismantle the RFS. These guys don't like that they're paying more for corn. They think it is their corn. It is the farmers' corn."

PACKAGE IN MAKING
At the end of last year, the 45-cent tax credit received a one-year extension, based largely on an ethanol industry proposal to phase out the credit and use federal dollars to improve infrastructure, including flexible-fuel vehicles and blender pumps.

In recent weeks, ACE, Growth Energy, the Renewable Fuels Association and the National Corn Growers Association have offered a proposed ethanol support tax reform package to Congress. Though Jennings would not discuss the details, he said the groups intend to make it public within the next month.
"We don't know what it costs and we don't know if they (members of Congress) agree if it's good policy," he said. "We're making it clear that we are working proactively and actively on VEETC reform. We're working in a responsible way to reform it."

Bill Couser, a cattle farmer and board director for Lincolnway Energy in Nevada, Iowa, said ethanol producers understand the budget challenges in Washington and are willing to move away from the blenders credit.

"In today's world, if that's what needs to be given up to make successful policy, can we do something in return?" he said.
Namely, expanding the number of blender pumps across the country would provide more consumer choice at the pump and expanded markets for ethanol, he said.
Couser said that when blender pumps were installed at local stations in Nevada, Iowa, ethanol sales increased by some 25 percent to 30 percent. That is why the industry is willing to trade the $6-billion-per-year VEETC for more infrastructure. VEETC costs taxpayers about $6 billion a year.

"Being a farmer and looking at VEETC, it is chump change," he said. "But it seems to be the biggest target in our industry."
As part of the visits with members of Congress, ACE members took along samples of corn and dried distillers grains, to educate those lawmakers who aren't familiar with the ethanol process.
"I just hope they will listen to this story," Couser said. "It is a timely national security issue."

WORKING TOGETHER
Dave Sovereign, chairman of the board for Golden Grain Energy in Mason City, Iowa, said recent efforts by all the major ethanol advocacy groups to work together are important when ethanol industry representatives meet with lawmakers.
"It's important to speak with one voice and to be unified," he said.
In the past year, all the ethanol groups met behind closed doors to work out their differences, emerging with a single voice.

Jennings, who worked as a staff member for former Sen. Tom Daschle, said he knows from experience that when industry groups are split on a given issue, it "is one of the easiest ways to say 'no.'"

Some of the opposition to ethanol policy, ACE members said, can be overcome when lawmakers understand what the industry has meant to local economies.
"I shudder to think what the Iowa economy would have been if not for the ethanol industry," Sovereign said. "Overall, it is very good when the Midwest economy is good. It drives the rest of the economy."

Times have been good for Golden Grain Energy and the communities housing the company's three plants, he said, including $20 million in returns to investors.
"That made a real difference to the economy," Sovereign said.

If not for ethanol, gas prices would be even higher
Monday, March 14, 2011
Sen. Ben Nelson

We're seeing a repeat of 2008 when Americans were paying close to $4 a gallon for gasoline and the price of crude oil was around $100 per barrel. One of the few bright spots then, and now, is ethanol.
Not only is ethanol less expensive at the pump, it helps reduce our reliance on foreign oil, reduces greenhouse emissions, creates jobs, and it helps hold down the cost of oil.

Ethanol Holds Down Use of Foreign Oil
The Renewable Fuels Association reports that last year ethanol sales in the U.S. amounted to just under 13 billion gallons. Nebraska, the second leading ethanol producer in the country, produced 13 percent of that total, or 1.7 billion gallons.
The 13 billion gallons of ethanol the U.S. used meant that we needed to import 445 million fewer barrels of oil. That's more oil than America imports every year from Saudi Arabia, our third leading supplier. By importing less oil we saved $34 billion. Next year, ethanol production is forecast to total almost 14 billion gallons and increase to 36 billion gallons by 2022 as provided for in the renewable fuels standard passed by Congress.

Ethanol Restrictions Misguided
This is not the time to end advances we've made to expand the use of ethanol. Washington definitely needs to cut spending but must do it wisely and HR 1, the House budget bill that was defeated was anything but wise. It contained two anti-ethanol amendments that would have dealt a blow to America's efforts to expand consumer fuel choice of domestic renewable fuels by hampering the development of blender pumps and prohibiting EPA's implementation of E-15, which is scientifically proven to be safe.

Ethanol production is also contributing to our financial well-being as well as that of American households. In 2010, ethanol production contributed $53.6 billion to the national Gross Domestic Product and added $36 billion to household incomes.
In the current economic climate where federal, state, and local governments are running large deficits, ethanol is also having an impact. The increased economic activity and income generated by America's ethanol industry added some $12 billion to federal, state and local governments through increased tax revenue.
Improves the Environment

Besides saving money ethanol also benefits the environment. The U.S. Department of Energy says studies have shown that using corn-based ethanol instead of gasoline reduces greenhouse gas emissions by 19% to 52%. Using cellulosic ethanol provides an even greater benefit--reducing greenhouse gas emissions by up to 86%.
Most people understand that ethanol is helping our economy and creating jobs while helping the U.S. in our battle for energy security and, just like in 2008, is again helping to hold down the price of fuel.

Two Midwest senators proposed legislation March 10 favoring the build-out of biofuels infrastructure and continued federal support of ethanol and biodiesel. The Securing America’s Future with Energy and Sustainable Technologies Act, introduced by Sens. Amy Klobuchar, D-Minn., and Tim Johnson, D-S.D., would establish incentives for biofuels infrastructure and deployment, develop a “more cost-effective” tax credit program for ethanol and biodiesel, establish a renewable energy standard and encourage greater production of hybrid, electric and flex-fuel vehicles (FFVs).

“At a time of rising gas prices, this bill would provide incentives that can help us utilize more homegrown biofuels, strengthen our homegrown energy economy in Minnesota and secure our energy future,” Klobuchar stated.

The bill immediately received widespread support from renewable fuels and agriculture groups. It has been endorsed by the National Farmers Union, Growth Energy, the National Association of Energy Service Companies, the American Soybean Association, the Minnesota Farmers Union, the Minnesota Corn Growers Association and the National Biodiesel Board. The Renewable Fuels Association has likewise voiced its support for the legislation, but added that other proposals such as a variable tax credit also deserve consideration.

The 117-page SAFEST Act covers a wide spectrum of renewable fuels interests and contains several important provisions related to the ethanol industry. It amends the definition of “advanced biofuel” to include corn starch-derived ethanol. It would allow renewable fuel pipeline projects to qualify for federal loan guarantees equal to 80 percent of the project cost. It also supports a mandate for automakers to ramp up the production of “fuel choice-enabling” vehicles to 100 percent by model year 2021. This includes FFVs, biodiesel-powered vehicles, hydrogen fuel cell technologies and hybrid vehicles. It attempts to eliminate liability concerns related to the use of ethanol in combustion engines. It also provides subsidies for the installation of blender pumps and requires any entity that owns or manages 10 or more retail fueling stations to install a blender pump at each station.

The blenders credit would be shifted to a credit for producers and would be reduced from 45 cents per gallon to 20 cents per gallon beginning in 2012. The credit is then phased out slowly, at a reduction rate of 5 cents per year, until it zeros out in 2016. The $1.01-per-gallon credit for cellulosic biofuels is retained as is a 10-cent-per-gallon small producer credit for ethanol facilities with capacities no greater than 60 MMgy.

The legislation also includes text that would prevent the U.S. EPA from considering international indirect land use changes when calculating biofuels’ lifecycle greenhouse gas (GHG) emissions and calls for the National Academies of Science to conduct a review of methodologies used to project indirect GHG emissions relating to transportation fuels.

The Klobuchar-Johnson bill was introduced on the heels of other proposed legislation that seeks to immediately revoke the blenders credit. Senators in favor of eliminating the subsidy have said the move would save $6 billion from the annual federal budget.

Vilsack made the request to members of a Senate appropriations subcommittee a day after Sens. Tom Coburn (R.-Okla.) and Ben Cardin (D.-Md.) introduced a bill to repeal the 45-cent-per-gallon subsidy which is paid to gasoline blenders that include ethanol into fuel.

Vilsack said a gradual dissipation of the subsidy over time would be acceptable if some of the money were to be "redirected" to other activities that supported biofuel production.

"I have a deep concern about the cliff that some folks want to create [for] the incentives that are currently in place for the biofuel industry," Vilsack said. "I think if you create a cliff, what you're going to see is a drop in production."

American corn farmers have come to rely on the ethanol industry to buy their crops. Ethanol producers are expected to consume roughly 5 billion bushels of corn this year, more than a third of total production, according to a USDA forecast.

The subsidy cost taxpayers $5.4 billion in 2010, according to the Government Accountability Office. Last year, Congress decided to extend the tax credit until the end of 2011.

Earlier this month, the GAO, acting as the investigative arm of Congress, said the tax credit is "largely unneeded" because Congress already requires ethanol in gasoline. The so-called renewable fuel standard requires the use of 36 billion gallons of renewable fuels by 2022, with or without the tax credit.

Domestic Fuel
Posted by Joanna Schroeder – February 26th, 2011

The state of Nebraska’s first ethanol plant, Chief Ethanol Fuels, shipped its one billionth gallon from its plant located in Hastings in Mid-February. One of the first biorefineries in the U.S., Chief Ethanol Fuels opened in 1984 with the capacity to produce ten million gallons per year. In 2011, they are expected to produced nearly 70 million gallons. Today, Chief is a major grain buyer in the state, providing a market for 25 million bushels of corn annually—about 80 percent of the crop grown in Adams County, where the facility is located. In addition to fuel ethanol, the plant also markets high protein distillers grains to local livestock feeders. More than one-third of the corn processed in the plant is returned to the feed sector in the form of distillers grain.

“Chief Ethanol’s long history parallels the growth of the industry across the state and nation,” said Steve Hanson, Chair to the Nebraska Ethanol Board (NEB). “They have a distinguished record of adding value to our abundant corn supplies, providing jobs in their community and helping to drive the agricultural economy of Nebraska.
Hanson continued, “Today, Nebraska is home to twenty-five ethanol plants that produce two billion gallons annually and employ thirteen hundred people. Chief’s success and leadership in the industry are major factors in Nebraska’s rank as the number two producing state in the nation. Without a doubt, renewable, home-grown ethanol is key to the nation’s energy future.”

Todd Sneller, Administrator of NEB added, “Chief Ethanol Fuels continues to invest capital, create jobs and add value to Nebraska agricultural products and the economy. Nebraska is fortunate to host a portfolio of ethanol producing plants that continue to stimulate the economy and stabilize our supply of renewable transportation fuels.”

Ethanol Tax Credit Under Fire
Todd Neeley
Tue Mar 1, 2011 03:04 PM CST

OMAHA (DTN) -- A coalition of 90 business associations, taxpayer and hunger advocates, agricultural groups, environmental groups and others asked Congress in a letter on Tuesday to let the volumetric ethanol excise tax credit, or VEETC, expire when it sunsets at the end of the year.

The groups asked Congress not to fund infrastructure improvements for conventional biofuels such as corn ethanol.

Some of those groups include the Grocery Manufacturers Association, Environmental Working Group, MoveOn.org, National Chicken Council and National Taxpayers Union.
"In particular, Congress has the opportunity to end the $6 billion a year subsidy to gasoline refiners who blend corn ethanol into gasoline," the letter said. "At a time of spiraling deficits, we do not believe Congress should continue subsidizing gasoline refiners for something that they are already required to do by the Renewable Fuels Standard.

"Experts like the Congressional Budget Office and the Government Accountability Office have concluded that the subsidy is unnecessary, and leading economists agree that ending it would have little impact on ethanol production, prices or jobs."
A Government Accountability Office report on duplicative government programs also released on Tuesday cited Renewable Fuel Standard and VEETC as an example. The GAO stated eliminating the credit could save $5.7 billion.

“The fuel standard is now at a level high enough to ensure that a market for domestic ethanol production exists in the absence of the ethanol tax credit and may soon itself be at a level beyond what can be consumed by the nation’s existing vehicle infrastructure,” the report stated.

Biofuel groups got VEETC extended as part of a larger tax package last December, but the tax credits expire at the end of this year. Biofuel groups are looking for a way to shift the tax credit to fund infrastructure expansion such as blender pumps and pipelines.

The letter from ethanol critics makes no mention of government subsidies to the oil industry. A copy of the letter can be found here: http://dld.bz/…
A DTN investigation, http://dld.bz/…, last year found that the oil industry receives government supports that total between $133.2 billion and $280.8 billion, compared to about $17.9 billion a year to ethanol.

NEW YORK (DTN) -- Agriculture Secretary Tom Vilsack announced Friday that his agency will soon seek proposals to study the feasibility of providing crop insurance to producers of biofuel feedstocks, including corn stover, straw and woody biomass.
These feasibility studies, funded by the Risk Management Agency, will join research efforts already under way for energy cane, switchgrass and camelina, he said in a news release posted on the U.S. Department of Agriculture website.
"Providing additional risk management tools for American farmers to produce advanced biofuels crops is an important step toward developing a thriving biofuels industry and reducing our dependence on foreign oil," said Vilsack.
"Renewable energy development contributes to the Obama Administration's effort to 'win the future' by supporting America's farmers as they grow and harvest materials that can be converted into renewable energy. This effort creates new jobs and opportunities for those who live in rural America."
The Energy Independence and Security Act of 2007 established a mandate that the American economy use 36 billion gallons of renewable transportation fuel per year in its transportation fuel supply by 2022. Of that, 20 billion gallons are targeted to come from sources such as switchgrass, energy cane, woody biomass and other non-food feedstocks.

Ethanol and farm industry trade groups are pressing the Senate to reject House-passed legislation that aims to thwart use of higher levels of ethanol in gasoline.

The Renewable Fuels Association, the National Corn Growers Association, Growth Energy and four other groups sent a letter Friday to Senate lawmakers that bashes fiscal year 2011 spending legislation the House approved last week.

“Despite the logic of fostering energy independence through a robust ethanol industry, the House of Representatives adopted amendments as part of H.R. 1 that would undermine significant investments in rural communities. Those investments have created American jobs, strengthened national security and helped grow our rural economy through the increased production and use of ethanol,” the letter states.
The House bill to fund the government through September would prevent EPA from proceeding with a program to allow use of higher amounts of ethanol in newer vehicles.

The bill would also block federal funding for the installation of certain ethanol-related infrastructure at gas stations.

With current federal spending only in place through March 4, House Republicans are also floating a short-term, stopgap spending measure.

Here’s the whole ethanol letter:

Dear Senator:
As the United States Senate considers a Continuing Resolution for 2011, we urge you to defeat any efforts that would damage the American ethanol industry and the integrity of the Renewable Fuels Standard (RFS).

The implementation and enforcement of the RFS is critical to advancing home-grown energy sources and developing and maintaining a robust renewable fuels industry. The importance of the RFS is underscored by recent events that have forced oil prices to more than $100 per barrel, increasing gasoline prices and further threatening the fragile economic recovery.

Despite the logic of fostering energy independence through a robust ethanol industry, the House of Representatives adopted amendments as part of H.R. 1 that would undermine significant investments in rural communities. Those investments have created American jobs, strengthened national security and helped grow our rural economy through the increased production and use of ethanol.

We urge you to oppose any efforts that would prohibit the U.S. Environmental Protection Agency (EPA) from implementing the approval of E15 for cars, pickups and SUVs made in model year 2001 and later. Such a prohibition would only contribute to our nation’s reliance on foreign sources of oil. Extensive testing has been done on E15, and it has been found to be a safe and effective fuel for use in the vehicles approved in the waiver. There has been no evidence that would indicate problems in any vehicle regardless of vintage.

In addition, we urge you to oppose any legislation which would prevent federal agencies from using federal funds for directly or indirectly supporting the installation of ethanol infrastructure such as blender pumps– fuel dispensers which give motorists a choice of the blend of ethanol and gasoline—and storage facilities. Blender pump installation will provide consumers a cost-effective fuel choice and support domestic renewable fuels that reduce dependency on foreign oil.

American ethanol is uniquely positioned to help America achieve energy independence. Domestic ethanol production has been and is currently a major force in the revitalization of rural America by helping to create green jobs and by stimulating economic activity in rural communities.

As our nation struggles to overcome economic uncertainty, we need to recognize the vital contribution that domestic ethanol production makes to achieving energy independence and creating a healthy economy. We look forward to continuing our work with you to build a stronger, safer and more prosperous America.

Thank you for your support and consideration.
Sincerely,

American Coalition for Ethanol

American Farm Bureau Federation

Growth Energy

Renewable Fuels Association

National Corn Growers Association

National Farmers Union

National Sorghum Producers

After 20 years of unsuccessful attempts to build an ethanol plant in Great Falls, Mont., Montana Ethanol Holdings LLC is one step closer to making the proposed plant a reality. The company has applied for the U.S. DOE loan guarantee program, meeting the criteria for Part I as of Dec. 31 and hoping to hear in March if it met the criteria for part II, said Gary Hebener, president.

Montana Ethanol is the parent company to Montana Advanced Biofuels LLC. If the loan guarantee is approved, the company will build a $400 million barley and wheat ethanol plant that will produce 115 MMgy of ethanol, 460,000 tons of barley meal and 25 tons of vital wheat gluten, a baking additive. “The company is optimistic that financial closing could occur this summer, with construction to commence immediately thereafter,” Hebener said, adding that it will take about 18 months to construct the plant. ICM Inc. and Fagen Inc. are the design/build team.

If the DOE loan guarantee isn’t approved, however, it’s going to throw another wrench in the works for Montana Advanced Biofuels. “That would be extremely disappointing,” he said. “Because in today’s banking climate, unfortunately, we are pretty sure conventional financing is not available for a first-of-its-kind facility like we have.”

The plant’s main feedstock will be feed-grade barley and some low-protein wheat. The barley meal produced will have more than 40 percent protein. “We’re convinced that the barley and wheat feedstocks will allow us to have a diversified revenue stream, strengthening the economic viability of our project,” he said.

Great Falls is a good location for the project for a variety of reasons, Hebener said, the most important of which is the fact that a lot of barley and wheat is produced there. Great Falls, Shelby and Havre mark the corners of what is known as the Golden Triangle in northern Montana. The seven-county area produces about 45 percent of Montana’s wheat crop every year, according to the Montana Wheat and Barley Committee.

Montana currently exports most of the grain it produces out of state and out of the country. “This would provide an opportunity for Montanans to add value to their grain,” he said. “We’ll process it right there in Great Falls and turn it into finished products.”

The barley hulls and husks plus other grain milling residue will be gasified using proprietary ICM technology, providing more than 90 percent of the plant’s process energy. A benefit of gasifying biomass is that a significant portion of carbon will be captured, he said. The Biochar produced can be applied to agricultural land to sequester carbon and improve soil characteristics. By using biomass for energy and partial carbon capture the company can reduce its greenhouse gas footprint well below the 50 percent threshold required by the U.S. EPA

Financing is the last step before the company can move forward with construction. It has already applied for its air quality permit from the Montana Department of Environmental Quality and identified all its other permitting needs. “We are confident that we will be able to meet construction and operating permit requirements,” he said.

House Sends Tax Bill Extending Biodiesel Tax Credit to President Obama
WASHINGTON, D.C. –

The U.S. House of Representatives (“House”) today voted by a 277 to 148 margin to approve H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The legislation, which reflects the framework of the tax agreement reached by President Obama and Congress, retroactively extends the biodiesel tax incentive through 2011. The bill will now be sent to the President for signature.

“Reinstatement of the biodiesel tax credit is welcome news for the U.S. biodiesel industry and good news for the nation as a whole,” said Manning Feraci, NBB Vice President of Federal Affairs. “This will undoubtedly help kick-start the domestic biodiesel industry, lessen our dependence on foreign oil, and create thousands of new jobs across the country.”

Biodiesel is a commercially viable, renewable, low carbon diesel replacement fuel that is widely accepted in the marketplace. The fuel meets an exact commercial fuel specification (ASTM D6751) and is the only domestically produced, commercial scale fuel that qualifies as an Advanced Biofuel under the Renewable Fuels Standard.
The biodiesel tax incentive is structured in a manner that makes the fuel price competitive with conventional diesel fuel in the marketplace. The lapse of the tax incentive on December 31, 2009 has had a detrimental impact on the domestic biodiesel industry. Conversely, retroactive reinstatement and extension of the tax incentive through 2011, as provided for in the tax bill approved by the U.S. Senate, is widely expected to increase U.S. biodiesel production and in the process, displace foreign petroleum with a domestic Advanced Biofuel.

“The U.S. biodiesel industry is poised for a strong 2011, and stands ready to meet the nation’s Advanced Biofuel goals,” concluded Feraci. The NBB is the national trade association of the biodiesel industry and is the coordinating body for biodiesel research and development in the U.S. NBB’s membership is comprised of state, national, and international feedstock and feedstock processor organizations, biodiesel suppliers, fuel marketers and distributors, and technology providers.

The only action remaining before the ethanol industry has the best holiday present of the season is President Obama’s signature. In what could literally be defined as the 25th hour, Congress passed the tax bill on Thursday that included a one-year tax extension for several key ethanol tax incentives. In the most heated subsidy debate in history, ethanol was the victor on the hill.

Renewable Fuels Association (RFA) President and CEO Bob Dinneen said of the victory, “House members have struck a blow to the oil status quo and extended important tax policies that will allow America’s ethanol industry to grow and evolve. Domestic ethanol production helps create jobs and economic opportunity in often overlooked rural communities. Domestic ethanol production reduces America’s tab to petro-dictators across the globe. There is no alternative to gasoline available today that can match ethanol’s energy security and economic benefits.”

The American Coalition for Ethanol (ACE) was one of several organizations that worked to ensure that the ethanol incentives remained in place. ACE’s Executive Vice President, Brian Jennings, said of the tax bill, “When it became apparent a long-term extension of VEETC was unlikely in Congress, ACE began actively working with the White House, Congress, and other groups to unite behind a plan to reform the ethanol tax incentives. This one-year extension will provide the ethanol industry the opportunity we asked for to continue identifying the best long-term roadmap for the tax credit and overall ethanol policy reforms.”

Growth Energy CEO Tom Buis added, “This vote today will provide certainty in the market and give us a chance to work with Congress and the Administration to enact longer term tax policy reforms that will level the playing field in the fuels market. The infrastructure build out proposed in our Fueling Freedom proposal will help open the market to reduce our dependence on foreign oil, improve our environment, create U.S. jobs that can’t be outsourced and strengthen our national security.”

Posted Nov. 29, 2010

On Nov. 29, the U.S. EPA finalized the volume requirements for next year’s renewable fuel standard (RFS), reducing the requirements for cellulosic biofuels while maintaining the overall volume requirement.

The EPA said in the final rule it has determined that 6.6 million gallons of cellulosic biofuel, equivalent to 6 million gallons of ethanol, is a high enough target to provide incentive for growth within the industry but low enough to balance the uncertainty surrounding actual production levels. “The task of projecting the volume of cellulosic biofuels that could be produced in 2011 is challenging,” the EPA stated in its ruling. “Announcements of new projects, changes in project plans, project delays and cancellations occur with great regularity. Biofuel producers face not only the challenge of the scale-up of innovative, first-of-a-kind technology, but also the challenge of securing funding in a difficult economy.”

The EPA’s proposed cellulosic biofuel volume, released this summer, targeted a range of between 5 and 17.1 million actual gallons of cellulosic biofuels for next year’s RFS. Six U.S. producers and one Canadian company were initially pegged to contribute cellulosic ethanol next year. In the final rule, the EPA said it now expects only four companies to produce cellulosic biofuels next year - DuPont Danisco Cellulosic Ethanol LLC, Fiberight LLC, KL Energy Corp. and Range Fuels Inc. Newly mentioned in the final rule is potential cellulosic diesel fuel producer KiOR, which the EPA believes could also contribute to next year’s cellulosic requirements.

In order to reach its final cellulosic volume requirements, the EPA combined the U.S. DOE’s Energy Information Administration actual volume projections with its own evaluations of what volumes are potentially attainable. In October, the EIA suggested that actual cellulosic biofuels production next year is likely to be 3.94 million gallons, far shy of the EPA’s final requirements. The EPA indicated in its rule that it views the EIA’s prediction as a floor for production amounts next year and the EPA’s 2011 RFS requirements are meant to provide assurance that there will be a market for additional cellulosic biofuels if they come online. “By basing the 2011 cellulosic biofuel standard on the attainable volumes rather than discounting project volumes to account for uncertainty, we aim to avoid the undesirable scenario in which cellulosic biofuel production exceeds the mandated volume,” the EPA stated. “Such a scenario would result in weak demand for cellulosic biofuels and RINs [renewable identification numbers].”

The EPA set a price of $1.13 for each 2011 cellulosic biofuel waiver credit, based upon an average gasoline price of $1.97 per gallon over 12 months. Waiver credits for 2011 will only be allowed to be used to meet 2011 cellulosic biofuel requirements and may not be used to meet advanced biofuel or total RFS requirements, unlike cellulosic biofuel RINs.

The EPA also addressed fuel pathways in its final ruling and said it is continuing to evaluate certain pathways and fuels. There is currently no pathway for methanol to generate cellulosic RINs, which is what Range Fuels is currently producing at its Soperton, Ga., facility. The EPA said it has engaged Range Fuels to discuss adding a pathway for its cellulosic methanol. "For the purposes of projecting cellulosic volumes for 2011, we believe that the methanol from Range Fuels has the potential for being approved for generation of cellulosic RINs and is therefore appropriate for being included in the volumes that we believe are potentially attainable in 2011."

Over the course of the commentary period, several commenters suggested that the EPA should lower the overall RFS to match a reduction in anticipated cellulosic biofuel volumes. The EPA did not agree with those suggestions and is maintaining an overall volume requirement of 13.95 million gallons. The agency also said it believes there is a sufficient amount of advanced biofuels available, including biodiesel, renewable diesel and sugarcane ethanol, to maintain the initial 1.35 billion gallon requirement. Therefore, the EPA also does not agree with suggestions made by the ethanol industry that seek to allow corn ethanol to make up for any potential shortfall of advanced biofuel production and will not allow corn ethanol to be used for that portion of the RFS. “As a result, the demand for corn ethanol will not be greater as a result of today’s action than it would be if all applicable volumes as specified in the statute were used in deriving the 2011 standards,” the EPA stated in its final rule.

While the final 2011 cellulosic biofuel volume is drastically less than the original statutory goal of 250 million gallons, the EPA said it “remains optimistic” that the industry will continue to grow. It said it is currently tracking more than 20 facilities representing more than 300 million gallons of production scheduled to come online in 2012.

Ethanol Tax Incentive Cost Perspective
Cindy Zimmerman – December 14th, 2010

The cost of extending the ethanol blenders tax credit for another year is well worth it, according to the Renewable Fuels Association.

Extending the Volumetric Ethanol Excise Tax Credit (VEETC) is estimated to cost about $6 billion dollars in 2011 at the current rate in the Senate bill of 45 cents per gallon. The United States spends about $750 million per day on imported oil, or $5.25 billion per week. Which means, extending the VEETC through 2011 would be the equivalent to about one week’s worth of oil imports – eight days, to be precise.

The Senate measure that includes extending the ethanol tax credit was moved along yesterday with a vote of 83 to 15 to formally end the debate and will soon be put to a final vote. RFA president and CEO Bob Dinneen hopes that will be very soon. “The Senate has taken an important step to keep America on the path toward greater energy self-reliance,” said Dinneen. “We encourage the Senate to move as swiftly as possible to pass this measure.”

Despite the cloture vote, the rules allow the Senate to debate the bill until midnight tonight, but the final vote could be held before then or delayed until tomorrow morning. Senator Dianne Feinstein (D-CA) is expected to introduce an amendment to cut the tax credit and the associated tariff to 36 cents, but Senator Chuck Grassley (R-IA) says a vote on the amendment is unlikely.

As for the future, Grassley expects some changes. “We’re all kind of committed to taking a new approach and the phasing out of the tax credits,” he said during his Tuesday morning conference call with reporters.

RFA’s Dinneen says the industry also expects changes in the incentives, but the extension gives them time to adapt. “This one-year extension will provide the industry and lawmakers breathing room to think through responsible reform of ethanol tax policy and all energy tax policy more specifically,” he said.

Today’s American ethanol is cleaner and more energy efficient than ever before. Study after study has proven that ethanol production does not drive up prices at the grocery store.
Here are facts to remember:
• Ethanol is more energy efficient to produce than conventional gasoline
• For every one Btu put into creating ethanol, there is a 2.3 Btu return. That is a better energy-return ratio than gasoline. This is according to a scientific study conducted by the U.S. Department of Agriculture’s Office of Energy Policy and New Uses. This study included all the energy needed to produce ethanol from dirt to tailpipe.
• Every day, America’s ethanol producers are developing technological improvements to increase efficiency, reduce water use, and boost the amount of energy derived from grain and from cellulosic biomass.
• The corn in ethanol isn’t suitable for humans, anyway. It’s all field corn. Ninety-nine percent of the corn grown in the U.S. is field corn, meant for livestock feed.
• When the starch is removed from the corn kernel, what’s left – the fiber, the oils and the protein – are sold as a highly-valued livestock feed. So, that grain does go right back into the food chain.
• Even if people want to believe that somehow ethanol demand drives up food prices, dismissing the first two points, a top executive of a major food company is quoted in the media saying that grain prices are too small to matter to the company’s overall bottom line.
• Countless studies, including the most recent World Bank study have proven that ethanol production has little impact on food prices.

Dear Prospective Member, 2011 Membership Dues

We need your support.

EPAC was organized in 1991 as a non-profit outreach advocacy group whose mission is to educate the public about the production and use of ethanol and biofuels. Through the years, the staff, Board and members have worked vigorously for the continued evolution of the biofuel industry through workshops, seminars, conferences, summits, newsletters and more. EPAC has always believed that we who support the industry need to work together, to maximize the message and the opportunity to make biofuels a viable reality. EPAC will continue to provide education, cooperation and support all those groups who are working to grow the industry.
We need your support.

EPAC members are individuals, companies, businesses and facilities who recognize the benefits of the biofuel industry to our nation - a thriving value added industry that brings jobs and tax base to rural economies; are good for the environment, can replace oil imported from hostile nations and provide for U.S. Energy Security. We are asking you today because we know you share our passion and would welcome you as a member of EPAC.
We need your support.

Your membership dues help to reach out to individuals with a personal message of information about biofuels; Your membership dues help provide for one of our quarterly newsletters, like the one you are reading today; Your membership dues help to develop and facilitate one of our many seminars and workshops; Your membership dollars are used as EPAC’s ability to show matching funds to acquire grants for long-term projects. Your membership is imperative to our continued existence.
We appreciate your support.

Thank you for your consideration. Please fill the membership form here today and become a valued member of EPAC
.
We need and depend on your support.

Sincerely,

Pam Ost, Executive Director Patsy Reimche, Membership Director
Shirley Ball, Chairman of the Board

Though the U.S. ethanol industry appears poised to receive a one-year extension of the 45-cent volumetric ethanol excise tax credit and the 54-cent import tariff, it likely falls short of what ethanol producers need as a market signal going forward.
A few months ago Growth Energy offered what it calls the Fueling Freedom plan to gradually phase out the blenders credit and other supports, and to increase government investment in ethanol infrastructure including flexible-fuel vehicles, blender pumps and dedicated ethanol pipelines.

Sen. Charles Grassley, R-Iowa, said Tuesday that he was impressed by how the industry was able to pull together to agree that a one-year extension of the credit and tariff was needed.

However, the Renewable Fuels Association has not endorsed the Fueling Freedom plan --although Dinneen and RFA have indicated that a broader ethanol policy discussion is necessary.

Industry of any type typically does not react well to any level of uncertainty in public policy.

In recent years advanced biofuels companies and others have consistently pushed for more longer-term government supports. That would include extensions of current tax credits out to at least five years.

A one-year extension of the VEETC does little for corn-ethanol companies to attract new investors or to plan on making improvements to their plant operations. Unlike the oil industry that has subsidies as permanent fixtures in U.S. tax code, ethanol industry officials have fought this battle many times before.

In Zanesville, Iowa, Times Recorder column, Des Moines Register columnist Phillip Brasher. http://dld.bz/…, said the industry wanted a five-year extension of the credit and likely will have to fight a similar fight this time next year.

RFA president and CEO Bob Dinneen said a one-year extension would give the industry a year to talk about the future of ethanol subsidies, according to the column.
"Industry officials say they're open to changing the way the government subsidizes producers next year, but there is disagreement within the industry about the best way to do it," the column said. "A one-year extension of the subsidy buys the industry some time."

Grassley said he would like to see a five- or 10-year extension of the tax credit to include a plan for phase-out.

LETTERS
OCTOBER 26, 2010

Ethanol Is a Step to More Biofuels

Your editorial "The Ethanol Bailout" (Oct. 18) challenging the ethanol industry and the Environmental Protection Agency sidesteps the critical role the "blend wall" decision will play in building a sustainable green economy in America.
The EPA's decision to allow the increased use of ethanol in some automobiles is scientifically sound and follows a comprehensive review of extensive testing and other available data on E15's impact on engine durability and emissions. What's more, it will help ensure that the existing corn ethanol market acts as a successful stepping stone to a national biofuels industry that is creating jobs in every corner of the country using regionally appropriate feedstocks grown by American producers.
Biofuels present an extraordinary opportunity to move away from our dangerous dependence on foreign oil and to reduce risks to our environment. Why not create it every single year from the hard work of farmers, ranchers and other rural Americans?
This week, I am outlining the Department of Agriculture's strategy to assist in developing a biofuel industry powered by feedstocks produced in every corner of the country. We are coordinating the best science, technology and infrastructure solutions to help advance profitable biofuels produced from a diverse range of feedstocks. That includes addressing some of the issues raised in your editorial.
Don't forget, the petroleum industry receives billions of dollars in tax breaks each year from the federal government.

Tom Vilsack

Agriculture Secretary

Washington

#2 - Earl Fisher Biofuels LLP, Brett Earl and Logan Fisher

#3 - Biofuels: Montana Update, Howard Haines, MT DEQ Bioenergy Program

#4 – USDA Biofuel Strategic Production Report

#5 – Optimization Techniques in Engineering and Construction of a Bioethanol Plant: Christopher Hutson, ABENER

#6 – Developing Railway Markets for Montana Biodiesel, Barbara Stiffarm, Opportunity Link

#7 - USDA Rural Development business Cooperative Programs, John Guthmiller

Summit Registration Final

Release date: 10/13/2010

Contact Information: Cathy Milbourn milbourn.cathy@epa.gov 202-564-7849 202-564-4355

WASHINGTON – The U.S. Environmental Protection Agency (EPA) today waived a limitation on selling fuel that is more than 10 percent ethanol for model year 2007 and newer cars and light trucks. The waiver applies to fuel that contains up to 15 percent ethanol – known as E15 – and only to model year 2007 and newer cars and light trucks. This represents the first of a number of actions that are needed from federal, state and industry towards commercialization of E15 gasoline blends. EPA Administrator Lisa P. Jackson made the decision after a review of the Department of Energy’s (DOE’s) extensive testing and other available data on E15’s impact on engine durability and emissions.

“Thorough testing has now shown that E15 does not harm emissions control equipment in newer cars and light trucks,” said EPA Administrator Lisa P. Jackson. “Wherever sound science and the law support steps to allow more home-grown fuels in America’s vehicles, this administration takes those steps.”

A decision on the use of E15 in model year 2001 to 2006 vehicles will be made after EPA receives the results of additional DOE testing, which is expected to be completed in November. However, no waiver is being granted this year for E15 use in model year 2000 and older cars and light trucks – or in any motorcycles, heavy-duty vehicles, or non-road engines – because currently there is not testing data to support such a waiver. Since 1979, up to 10 percent ethanol or E10 has been used for all conventional cars and light trucks, and non-road vehicles.

Additionally, several steps are being taken to help consumers easily identify the correct fuel for their vehicles and equipment. First, EPA is proposing E15 pump labeling requirements, including a requirement that the fuel industry specify the ethanol content of gasoline sold to retailers. There would also be a quarterly survey of retail stations to help ensure their gas pumps are properly labeled.

The Energy Independence and Security Act of 2007 mandated an increase in the overall volume of renewable fuels into the marketplace reaching a 36 billion gallon total in 2022. Ethanol is considered a renewable fuel because it is produced from plant products or wastes and not from fossil fuels. Ethanol is blended with gasoline for use in most areas across the country.

The E15 petition was submitted to EPA by Growth Energy and 54 ethanol manufacturers in March 2009. In April 2009, EPA sought public comment on the petition and received about 78,000 comments.

The petition was submitted under a Clean Air Act provision that allows EPA to waive the act’s prohibition against the sale of a significantly altered fuel if the petitioner shows that the new fuel will not cause or contribute to the failure of the engine parts that ensure compliance with the act’s emissions limits.

Register TODAY!!

BrighterEnergy.org

Published: September 24, 2010
By James Cartledge

The US Navy is already testing biofuel blends in its jet fuel, but is currently restricted to five-year energy supply contracts

As the Senate debated and ultimately failed to pass reforms in the military this week, two Senators from Montana introduced legislation to boost markets for biofuel.
Sens. Max Baucus and John Tester’s bill, American Security and Freedom Fuels Act of 2010, proposes to grant powers to the Department of Defense to contract for US-made renewable fuel for up to 20 years.

The military is currently allowed to contract with energy suppliers for only five years at most.

The Democrat Senators said allowing longer-term deals would boost demand for American-made renewable fuels made from home-grown crops including camelina.
It would also help cut US dependence on foreign oil, they said this week.
Sen Baucus said boosting demand for camelina would provide farmers in his home state with a reliable demand for their crop.

He said: “With demand for camelina comes good-paying jobs converting the crop into renewable fuel made right here in America. This will help to reduce our dependence on foreign oil and make our military even stronger.”

“Win-win”
Senator Tester, who attempted legislation in 2007 to set up a federal crop insurance program for camelina farmers, said his latest bill was a “win-win” for the military and Montana farmers.

He said: “Longer contracts mean more predictability for folks who raise crops like camelina, and they will help our entire country become more energy independent.”
With the military currently pushing to secure half its fuel from renewable sources by 2016, the Pentagon has requested the authority to contract for longer periods – suggesting it would mean cheaper contracts in the long-term.

The Air Transport Association has also expressed support for this policy in a letter to the Armed Services Committee in May.
Montana

Montana’s camelina industry now includes Sustainable Oils, a joint venture between bio-tech firm Targeted Growth, Inc., and Houston-based biodiesel firm Green Earth Fuels, which opened new facilities in the state this summer (see this BrighterEnergy.org story).

The company is under contract to provide 100,000 gallons of camelina-based biofuels to the US Air Force, which has invested $13 million to test and certify biomass-derived aviation fuels.

The US Navy is also sourcing aviation biofuels from Sustainable Oils – 40,000 gallons for a $3 million testing and certification program.
Sustainable Oils President Scott Johnson said the Baucus-Tester Bill would be “key” to continued investment in the state’s energy potential.

He said: “Such strategic legislation allows for energy crops, such as camelina, that are already contributing to the security of our national military fuel needs to have the surety of long-term demand necessary to create sustainability.”

Advanced biofuels
The American Security and Freedom Fuels Act has received the thumbs up from bio-tech industry group The Biotechnology Industry Organization (BIO).

The trade body said yesterday that the proposals could help develop advanced biofuel technology in a way the US Department of Energy’s loan guarantee program has not.
“Efforts to commercialize advanced biofuels have been hampered during the recent recession by lack of access to institutional funding,” said Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section.

“Expanding the military’s ability to engage in long-term contracts could provide the certainty for leading companies and potential investors needed to commit capital to large-scale biofuel production.”

Canola Oil Biodiesel Meets Fuel Mandate
EPA Puts Canola Oil Biodiesel on Same Level as Soybean Oil

WASHINGTON (Reuters) -- The U.S. Environmental Protection Agency has placed canola oil on an equal footing with soyoil, ruling that it emits low enough greenhouse gas levels to qualify for the U.S. mandate to increase renewable fuel production.
In a final decision signed on Wednesday, the EPA said canola oil biodiesel met the lifecycle greenhouse gas emission reduction level of 50 percent from petroleum diesel fuel.
The decision qualifies canola oil biodiesel as an advanced biofuel and as biomass-based diesel.
The U.S. Congress has set a goal of blending 36 billion gallons of renewable fuel into transportation fuel by 2022.
The main market for canola oil is edible oil, but biodiesel would give it fall-back demand and possibly contribute to an increase in U.S. plantings.
"Everything that you do that increases markets for a crop certainly goes into (planting) decisions," said Tom Hance, a lobbyist with Gordley & Associates for U.S. canola and biodiesel groups.
"The most direct impact will be for those existing canola biodiesel producers, who will now have a level playing field in their marketing."
U.S. farmers planted 1.5 million acres (607,100 hectares) of canola this year, mainly in North Dakota. That is a relatively small area, but the U.S. Canola Association has set a goal of expanding to 4 million acres by 2015.
U.S. plants have annual capacity for 200 million gallons of biodiesel from canola oil.

By KIM SKORNOGOSKI
Tribune Staff Writer

Every day, trains packed with Montana grains chug past Earl Fisher Biofuels.
This morning, company officials will join BNSF representatives and U.S. Sen. Jon Tester, D-Mont., at the Havre Depot to celebrate a decision that could allow the Chester-based company to someday provide at least some of the fuel for the engines pulling those trains.

Railway officials announced last month that over the next year, Montana State University-Northern's Bio-Energy Center will test biodiesel produced by Earl Fisher Biofuels in one of two BNSF Railway switch engines used at the Havre Depot.
For now, that is 24,000 gallons of fuel, but considering that between 30 million and 40 million gallons of fuel are pumped into trains at the Havre station annually, the potential is much higher.

"If Montana farmers can provide the fuel that's shipping their grain out to Portland, that would be a win-win-win," Earl Fisher Biofuels co-founder Brett Earl said. "(BNSF) uses a tremendous amount of fuel — more fuel than we even dream about making."

BNSF Havre Diesel Shop superintendent Beau Price said Havre offers a perfect opportunity to test biodiesel on trains under extreme cold and heat conditions.
"I can't say at this point that there's a plan to put (biodiesel) in our entire fleet," he said. "The real benefit will be in the long term. It's going to allow us to see what the impacts will be on the engine and that information will be useful to us and to the entire industry."

Price said the arrangement bloomed naturally.

Many of the diesel shop employees were once students at MSU-Northern. Greg Kegel, dean of MSU-Northern's College of Technical Sciences, pitched the idea that the college could test biodiesel train engines, and Price saw it as a way to help both the Bio-Energy Center and the Hi-Line work force.

The college wasn't capable of producing the quantity of fuel needed for the test, so it turned to nearby Earl Fisher Biofuels.

One switch train will continue to use diesel to act as a control and the other will run on a mix of 20 percent biodiesel, which BNSF requires be made with Montana-grown oil seeds.

Trains currently can use as much as 5 percent biodiesel mixed with regular diesel. But because biofuels are usually more expensive than diesel and haven't had extensive testing on train engines, railway companies often only mix it in when states require them to.

The Bio-Energy Center first will certify the Chester-made fuel to make sure it's up to standards. Every three months during the test, center staff will compare the fuel performance, consumption and emissions of both of Havre's switch engines to see how the biodiesel stacks up.

Kegel is confident the biodiesel will deliver.

"This will be an extensive study, and I have no doubt that biodiesel will stand up to it," Kegel said. "Right now, they are hauling in millions of gallons of diesel from across the globe. Why wouldn't they want to buy biodiesel made right down the road?"

BNSF figures that using the blend of biodiesel will reduce the greenhouse gas emissions from the single locomotive engine by 1.4 million metric tons during the one-year test period.

MSU-Northern recently received a $2.25 million federal allocation to install new testing equipment to allow the scientists there to see if biofuels can be used in aircraft. The center also was able to add four employees, which combined with AmeriCorps workers will provide the manpower needed to test the train engine.
The Bio-Energy Center also is testing various additives that could make biodiesel less likely to gel in cold weather.

"The research and development they are doing with biofuels will be part of the next generation of transportation fuels and crops that farmers grow," said Sen. Jon Tester, D-Mont., who will be at a Saturday open house to celebrate the BNSF decision. "I look forward to seeing this made-in-Montana idea put to work in a BNSF engine."

When Earl Fisher Biofuels first got started, the company didn't sell a drop of biodiesel during Montana's long winter.

Last year, the company added the Montana Department of Transportation and the Havre and Chester school districts to its list of winter clients. With BNSF now a steady client, it will have year-round demand for biodiesel and for the crops — such as camelina, canola and safflower seeds — that produce it.

The company doesn't need to expand to meet the railway's test fuel order. But if the arrangement becomes long term, it would look to add employees and equipment, according to company officials.

For now, a sign on the train will advertise that its running on Montana-made biodiesel, and the testing will help prove the fuel's year-round reliability.
"We've finally gotten to the point where we've figured out the fuel, and we're capturing the interest of the end users," Kegel said. "It's just baby steps, but each one of those steps is getting us closer to our goal of revitalizing rural Montana. This is exciting."
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Senate Majority Leader Harry Reid announced Tuesday he has drafted an energy bill including provisions on clean-up in the Gulf and prevention of further offshore drilling mishaps - along with alternative energy and conservation incentives. Reid says his focus is on pollution - not cap and trade - and that means focusing on utilities. Reid expects to get the draft on the Senate floor by the 26th of this month - even though Senate Democrats haven’t resolved how to address this pollution reduction issue. The Senate isn’t expected to pass the comprehensive cap and trade provision passed in a House bill last year.

More Energy Legislation

A measure introduced by Senators Amy Klobuchar of Minnesota and Tim Johnson of South Dakota could become part of the energy bill Democratic leaders are working on. Klobuchar believes strong biofuels provisions should be part of a revamped energy bill. The bill she has introduced with Johnson - the Securing America‘s Future with Energy and Sustainable Technologies - or SAFEST - Act would provide long-term incentives for the development of renewable fuels, renewable electricity and increased energy efficiency. It would - among other things - establish a renewable electricity standard of 25-percent renewable energy by 2025 - include a long-term extension of tax credits for ethanol and biodiesel - establish a tax credit for blender pumps - and establish requirements for auto manufacturers to produce vehicles that utilize technologies and fuels that reduce direct fossil fuel consumption.

According to Klobuchar - the strength of the nation is tied to the strength of the energy economy. She says the U.S. has the ability to be the global leader in energy due to the ingenuity of American farmers and manufacturers. This bill - she says - would provide incentives that can boost the economy and help the nation secure its energy future. Klobuchar says the measure would not only reduce the nation‘s dependence on foreign oil - but would have a positive economic impact.

The measure is endorsed by several groups including Growth Energy, National Farmers Union and the National Corn Growers Association.