The Wall Street Journal front page article on ethanol this week is getting lots of attention.
Little over a year ago, ethanol was winning the hearts and wallets of both Main Street and Wall Street, with promises of greater U.S. energy independence, fewer greenhouse gases and help for the farm economy. Today, the corn-based biofuel is under siege.
As one commentator in the Daily Republic noted, “The Wall Street Journal all but announced the death of biofuels.”
“Ethanol Craze Cools As Doubts Multiply,� reads the headline of the obituary in the newspaper that, famously, failed to foresee the 1987 stock market crash, the dot com bust of 2000 and the great mortgage meltdown of 2007.
The article includes several quotes from RFA president Bob Dinneen, along with his flattering pen-and-ink likeness.
Against all the criticism and lobbying, “we’re David in this fight,” says Bob Dinneen, the ethanol industry’s top lobbyist. Mr. Dinneen says the industry has been made a scapegoat for food price increases that are due to many factors, including higher oil prices and growing overseas demand for grain. He also faults the lack of a mature U.S. distribution network that would make it easier for consumers to get ethanol. His group, called the Renewable Fuels Association, and the National Corn Growers Association have formed a coalition to “unify the voices” in the ethanol community, he says.
Bob even gets in the last word of the 2000 word article.
Mr. Dinneen, who has been lobbying on ethanol so long he’s known as the “reverend of renewable fuels,” says he’s “reasonably confident” Congress will raise the ethanol mandate. He says he’s talking with the military, labor groups, Southern black churches and others about how ethanol can help them. “We’ve got to build the biggest, baddest coalition we can.”
Ethanol Statistics, a Netherlands-based market research and business information publisher, recently did an extended interview with RFA President Bob Dinneen on the future of ethanol.
Bob Dinneen, president of the Renewable Fuels Association, is much more positive about ethanol in the United States because he knows why consumption has been lagging behind, because he knows what are and what aren’t showstoppers for the industry, and more importantly, because he probably knows more about upcoming legislation than anyone else. In an interview with Ethanol Statistics he ‘announced’: “It will be a busy 12 months with respect to legislation in Washington, I suspect.�
Read the story here.
With all the negative publicity about ethanol, it was refreshing to see a pretty straightforward documentary that featured mostly facts.
History Channel’s Modern Marvels on Monday night offered a fascinating look at Corn - the history of the crop, how it became what it is today, and where it is going.
RFA member VeraSun Energy provided the backdrop for the program’s segment on ethanol. Modern Marvels spent a full day at VeraSun’s Charles City, Iowa production facility filming and documenting the ethanol production process which was featured on the show..
The program is available on DVD from the History Channel online.
Here’s the bad news:
Americans will take a hit in their wallet as well as their waistlines this Thanksgiving holiday. The run up in oil prices over the past year is forcing fuel prices as well as food prices ever higher.
An analysis by John Urbanchuk, a director at the economic consulting firm LECG, LLC, released today estimates that Americans will fork over $520 million more this year than last year on their Thanksgiving travel. That means, based on the national gas price average of $3.11, an increase of 39 percent over 2006 just to drive over the hills and trough the woods to Grandma’s house. That is $520 million that won’t be spent on Black Friday, the traditional kick-off to the holiday shopping season. More specifically, it will cost the average family an extra $17 for roundtrip travel for Thanksgiving dinner.
Now, here’s the good news:
Where gasoline marketers are blending ethanol, drivers are realizing a savings at the pump. Today, ethanol is blended in roughly half of the nation’s gasoline. Given the current economics of ethanol and gasoline, the increasing availability of ethanol is helping keep gasoline prices up to $0.15 lower than they otherwise might be.
“Americans are literally over a barrel this holiday season as oil prices are likely to remain high and gasoline will no doubt follow suit,� said Bob Dinneen, president of the Renewable Fuels Association. “Were it not for the growing availability of ethanol, Americans would be spending a whole lot more to go over the river and through the woods this holiday season.�
Without ethanol blended at ten percent with gasoline (E10), the average pump price of gasoline would be as much as $0.15 per gallon, or 4.7 percent higher than current levels and the average American household would pay $19.68 more than last year for the Thanksgiving trip.
Have a glorious Thanksgiving!
Because of activity in the Senate, RFA President Bob Dinneen was unable to make it to the National Association of Farm Broadcasting (NAFB) annual meeting in Kansas City Thursday, but Matt Hartwig handled the interviews with dozens of farm broadcasters quite handily.
When I caught up with Matt around noon he had already done about 20 interviews on a variety of topics from legislation to the state of the industry and the future.
The lack of movement on the energy bill, and the potential for adding a Renewable Fuels Standard to the 2007 Farm Bill as an amendment, was a big topic of discussion.
“Our biggest concern is getting the RFS passed,” Matt says. “We think that’s very important not only to the industry, but also to the nation as a whole.”
“If the farm bill turns out to be the vehicle that moves the RFS, that’s okay,” he continued. “But we believe that the RFS should be part of an energy bill and it should be passed by Congress and sent to the president’s desk as soon as they can possibly get it done.”
Listen to all of Matt’s comments here in the “Ethanol Report” podcast.
Listen to the podcast here: 
Ethanol Report 2 (7:00 MP3 file)
The Wall Street Journal reporter Jessica Resnick-Ault gave RFA a chance to respond to an article she was doing on how ethanol production uses too much water. Fortunately, that gave some balance to an otherwise pretty critical article.
Ethanol producers say they are prepared for the challenges as the business expands and are ready to adapt quickly. Producers, plant designers and water engineers are all teaming up to try to reduce water consumption, says Matt Hartwig, a spokesman for the Renewable Fuels Association, a Washington, D.C.-based group that represents ethanol producers.
Producers as small as newcomer US BioEnergy of St. Paul, Minn., and as big as Archer-Daniels-Midland Co. of Decatur, Ill., have discussed measures to reduce their impact.
The article points out that advancements in engineering and new technology are being developed to reduce water usage.
Significant technical innovations are required to reduce the amounts of water that ethanol plants consume. One ethanol plant designer, Delta T Corp., based in Williamsburg, Va., says it has created a system that will reduce consumption to just one-and-a-half gallons of water per gallon of ethanol, down from four gallons of water.
To further reduce the plants’ impact on drinkable water, engineers also can route more low-quality water — even waste water — to functions where high purity is unnecessary. In the past two years, demand for engineers experienced in this kind of work has skyrocketed in the ethanol industry.
And the WSJ report notes that even without increased ethanol production, the nation still needs to get fuel somehow.
Canadian oil reserves, seen as a possible source of conventional fuel for the U.S., produce a thick grade of oil that requires just as much — if not more — water for refining than ethanol does, says Mr. Hartwig.
“The water from that [refining] process is so toxic that it has to be put into holding ponds so large they can be seen from space — and it takes 200 years to separate,” he says.
In a letter to United Nations Secretary General Ban Ki-moon, the leaders of the world’s largest ethanol trade associations expressed their concerns over the “apocalyptic� public statements as well as the interim report issued by United Nations Special Rapporteur on the Right to Food, Jean Ziegler.
The apocalyptic statements made by the Special Rapporteur, calling biofuels production a “crime against humanity� and a “recipe for disaster,� are not only unjustified but also unacceptable to those of us who contribute to this emerging industry and millions of people around the world who benefit from renewable biofuels everyday.
The letter, signed by the heads of the Renewable Fuels Association (RFA), the European Bioethanol Fuel Association (EBIO), the Canadian Renewable Fuels Association (CRFA), and the Brazilian Sugar Cane Industry Association (UNICA), detailed some specific concerns the world ethanol industry has about the assumptions and conclusions made by Mr. Ziegler. Specifically, the groups pointed to the economic and environmental benefits ethanol provides that Mr. Ziegler has marginalized or ignored completely. Moreover, the letter also details some of the more immediate factors limiting the availability of food in some regions of the world.
Mr. Secretary General, we urge the United Nations to review the Interim Report of the Special Rapporteur on the Right to Food with a focus on sound science, credible studies, and a comprehensive view of the biofuels sector
rather than unsupported assumptions and selected anecdotes. We stand ready to participate in this revision process. Specifically, each signatory to this letter plans to submit additional comments and recommendations to the Special Rapporteur to address specific inaccuracies and concerns regarding its policy recommendations.
Read the whole letter here.
In conjunction with F.O. LICHT´S World Ethanol 2007 conference being held in Amsterdam this week, leaders of the world’s largest ethanol production and trade associations issued an unprecedented joint statement on the necessity of developing a robust and vibrant renewable biofuels industry around the globe.
The following statement was issued jointly by Gordon Quaiattini, President, Canadian Renewable Fuels Association, Canada; Robert Vierhout, Secretary General, European Bioethanol Fuel Association (eBIO), European Union; Bob Dinneen, President, Renewable Fuels Association (RFA), United States; and Marcos Jank, President, Sugar Cane Industry Association (UNICA), Brazil.
“Renewable fuels must be a central component of a global strategy to lessen reliance on fossil fuels, to mitigate the impacts of global climate change, and to provide real economic opportunity for rural residents in every country on Earth.
“First, as oil prices soar to US$100 per barrel and declining petroleum reserves become ever more costly to extract, it is vital that we move quickly to expand the production and availability of biofuels such as ethanol. A renewable biofuel, ethanol contributes to global fuel diversity and security, particularly when considering that the current alternatives are fossil fuels from the war-torn Middle East and other dangerous regions of the world.�
“Second, today’s global ethanol industry is contributing to a more sustainable energy future unlike any other fuel in history. The use of renewable fuels such as ethanol significantly reduces the emissions of greenhouse gases and other pollutants that lead to global warming.
“Third, ethanol will continue to create economic opportunity for farmers in developed and developing countries and who are often most affected by low world agricultural prices. Enhanced rural development means improved income, less pressure on urban areas, and greater opportunities to the world’s poorest who often pay the greatest penalty for high energy prices.
“The success achieved by the world’s ethanol industry is in and of itself a good story. But the narrative does not stop here. The rapid evolution of the world ethanol industry is quickly yielding new technologies that are improving production efficiencies at existing biorefineries and introducing diverse new feedstocks such as grasses, bagasse, straw, wood chips and other biomass into the ethanol and bio-electricity generation production process. By continuing to work together and sharing ideas, these new technologies promise not only to increase ethanol production where it already exists but to make the benefits of ethanol production available in more countries.
“Together with the world’s farmers and entrepreneurs, we can continue to feed as well as begin renewably fueling humankind.
“Through cooperation and technology, we can responsibly and sustainably increase the production and use of renewable fuels and encourage others to take the essential first steps toward a more secure and stable energy and environmentally-sensible future.�
With the energy bill languishing in limbo, some senators this week decided to attach a new Renewable Fuels Standard (RFS) to the 2007 Farm Bill.
Senator John Thune (R-SD) along with Senators Pete Domenici (R-NM) and Ben Nelson (D-NE) introduced a 36 billion gallon RFS amendment to the farm legislation which began debate on the floor Monday.
“As oil approaches $100 a barrel, America needs to decide if we are going to send our energy dollars to rogue leaders like Hugo Chavez and Mahmoud Ahmadinejad, or use these funds to encourage family farmers across our great country to grow crops that can be converted to ethanol. Rather than funding the hostile regimes of those opposing our interests, it is time for America to invest in domestic alternative energy sources,” said Thune. “Breaking this nation’s dependence on foreign sources of energy is absolutely critical and achievable. America has the resources, the will and the need to produce more of our energy here at home.”
Senator Thune’s amendment would require that 21 billion of the 36 billion gallon RFS threshold be met by advanced biofuels such as cellulosic ethanol. This RFS requirement would complement the cellulosic ethanol provisions already in the Senate Farm Bill, including Senator Thune’s Biofuels Innovation Program provision, which expand the cellulosic ethanol industry; grants and loan guarantees for commercial scale cellulosic biorefineries; and funding for cellulosic ethanol research and development.
A new report from the Consumer Federation of America (CFA) shows just how much energy costs have skyrocketed in recent years.
According to the report, household energy expenditures (home heating and gasoline) have nearly
doubled in just the last five years, and are now 50 percent more than health care expenditures and 23 percent more than spending on food.
CFA also released a new poll revealing deep concern among consumers about the worsening energy situation and strong support for three key policies to begin addressing it, including higher passenger vehicle fuel economy standards, the purchase of renewable energy by electric utilities and increased production of biofuels.
The survey indicates that 84 percent of Americans support those three key policies contained in Congressional energy legislation, and 75 percent still support them even after hearing arguments from opponents of the legislation.
The numbers are very similar to an RFA poll released this week that found 74 percent of Americans believe we should increase our use of domestically produced renewable fuels like ethanol, 87 percent say the federal government should actively support the development of a renewable fuels industry in this country, and 77 percent think Congress should encourage oil refiners to blend more ethanol into their gasoline products.
A key concern among those surveyed is U.S. dependence on oil from the Middle East. More than three out of four respondents (76 percent) express concern over imports (56 percent express great concern). This is almost equal to the 78 percent who express concern about prices (63 percent express great concern).
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