Friday,  May  2,  2014

RFA to McCarthy: Oil Industry Letter on 2014 RVO is Rife with “Hypocrisy and Misdirection”  The oil industry’s recent suggestion that outdated fuel consumption projections should be used to establish 2014 Renewable Fuel Standard (RFS) requirements amounts to “the highest form of hypocrisy and misdirection,” according to a letter sent Thursday to the Environmental Protection Agency (EPA) from the Renewable Fuels Association (RFA).  In a letter sent to EPA earlier this week, the American Petroleum Institute (API) requested that EPA use October 2013 fuel consumption projections—instead of the most current projections—when setting the final 2014 RFS renewable volume obligations (RVOs). Not surprisingly, the Energy Information Administration’s (EIA) October 2013 projections forecasted lower fuel consumption than current EIA projections, meaning less renewable fuel blending would be required if EPA adopted the outdated projections.  “Common sense and the principles of good rulemaking dictate that the final RVOs should be based on the latest available fuel consumption projections from EIA,” wrote Bob Dinneen, RFA President & CEO, in the letter to EPA Administrator Gina McCarthy. “Since the inception of the RFS2, EPA has always relied on the most recent EIA projections to set annual RVOs. API has never objected to this—until now.”  The RFA letter raises the duplicity of API’s request, highlighting the oil industry’s contradictory position on EPA’s establishment of the cellulosic biofuel standard, while also focusing on the fact that refiners are attempting to turn the statutory RVO-setting process on its ear by misconstruing the fact that the RFS is fundamentally a volumetric standard, not a percentage-based requirement.  Visit the RFA News Center for more details.

Owner Neglect the Real Enemy of Engines  Renowned auto expert Bobby Likis sounds off on a misleading piece from The Morning Call.  My goodness, what misconceptions, half-truths and pure, unfounded myths have made their way onto the information highway. I’m glad to share my experience in the automotive industry as a technician, shop owner, engine builder and national car-talk host. I have had zero engines fail due to ethanol in 43 years. Zero. I also challenge a boat owner or mechanic to show me evidence that a boat motor has failed because it was fueled by 10% ethanol-enhanced fuel. And I challenge a lawn mower mechanic to show me evidence that a lawn mower engine has failed because it was fueled by 10% ethanol-enhanced fuel. That’s because E10 has been in the American fuel supply since the early ‘80s. Yes, if a lawn

mower, or generator, or whatever gasoline-powered equipment, sits without use, the old gasoline – not the ethanol in the gasoline – will cause problems.  Good ol’ gasoline – made in large part from good ol’ foreign oil – burns to make carbon debris…unlike oxygen-bearing (35% oxygen, to be exact), American-produced, ethanol-blended fuels which burn cleaner without debris. And ethanol’s high-octane rating (113 rating) enables oil companies to reach 87 RON pump standards while using less expensive base fuel stocks. In other words, the very oil companies that are denigrating ethanol use it to improve lower grades of gasoline.  In the automotive service business, we had fuel related problems long before ethanol was added, in pre-’80s days. Stale gas builds gunk, turns brown and causes rust and corrosion in any fuel system if not treated with a fuel stabilizer and stored for very long periods of time. It’s easy to blame ethanol…but in reality, ethanol is not the enemy. Neglect (belonging to owners) causes more problems than any single mechanical component.  Americans aren’t dumb. They’ve been pumping multiple fuels for longer than I can remember. I’m reminded of a motorcyclist who said, “Riders may do some crazy things, but they know what fuel to pump in their bikes…they’re not stupid.”  Read this in its entirety.

Winner of “Chill Out & Gas Up” Sweepstakes Announced  Bobby Likis Car Clinic announced the winner of its “Chill Out & Gas Up” sweepstakes this week. Shane Andersen of Omaha, Neb., was awarded a $250 VISA card from the Renewable Fuels Association.  Entrants of the contest answered a number of ethanol-related questions, including:  • E15 can be used by _____% of the light duty vehicles on the road today. (Answer: 75%)  • In 2013, ethanol use helped reduce imported oil needs by ____ barrels. (Answer: 462 million)  • In 2013, American ethanol production helped create ________ direct jobs. (Answer: 86,503)  Visit CarClinicNetwork.com for more.  

New Ad Exposes API’s Connection to Saudi Sponsorship of Anti-RFS Campaign  A new television commercial set to air this weekend exposes the American Petroleum Institute’s Saudi Arabian ties behind its media push to repeal the Renewable Fuel Standard. The ad explains that the oil-rich kingdom is “bankrolling these political ads attacking American-made fuels like ethanol to keep you addicted to their oil.” The ad, paid for by Americans United for Change and VoteVets.org, will run in the Washington metro area during the Sunday talk shows “Meet the Press”, “Face the

Nation”, “This Week”, and “Fox News Sunday”.  View the ad.

Advanced Biofuel Advocates Announce Arrival of Cellulosic, Press EPA to Raise RVOs  Representatives of advanced biofuels addressed the necessity for the Environmental Protection Agency to adjust the 2014 blending requirement for cellulosic ethanol at a Fuels America-hosted press conference held this week at the National Press Club in Washington. With four cellulosic ethanol plants ready to come online this year, EPA’s decision on blending levels comes on the cusp of the eagerly-awaited breakthrough into the commercialization of next-gen biofuels. Advocates of the industry warned that the agency’s failure to make a change would put a halt to additional expansion and investment in the market.  “Cellulosic ethanol is no longer the fuel of the future. It’s a fuel that will be produced at commercial scale this year,” said DuPont’s Aaron J. Whitesel.  Delayne Johnson, CEO of Quad County Corn Processors (QCCP), emphasized the need for adjusted blending levels, saying, “Gutting the Renewable Fuel Standard … could derail the momentum we have achieved and create uncertainty that will dramatically slow the adoption of this important technology.”  Construction of QCCP’s cellulosic facility is expected to be completed this month and open for production in June.  

Wall Street Journal’s Reporting—The Real Guilty Party of Fraud  Bob Dinneen submitted the following letter to the editor of the Wall Street Journal.  Just when we thought the Wall Street Journal couldn’t be any more confused or misinformed about biofuels, now we see that the editorial board doesn’t even know the difference between biodiesel and ethanol (Partners in Ethanol Crime, April 25). As their names imply, biodiesel and ethanol are two different molecules produced through different processes by different industries. Ethanol and biodiesel RIN credit markets are structurally dissimilar as well, with important differences in who typically separates the credits from the gallons and who holds credits.  The editorial uses two isolated cases of RIN credit fraud in the biodiesel industry to suggest the ethanol industry is somehow complicit and that the Renewable Fuel Standard (RFS) is “an invitation for mass fraud.” But here are the facts: more than 50.1 billion ethanol RIN credits have been generated since the expanded RFS began without a single case of known or alleged fraud. For ethanol RINs, EPA’s existing approach has worked quite effectively.  

And even with the two biodiesel fraud cases, the overall RIN market maintains an impressive track record. Of the 58.6 billion RINs generated from all biofuels (including biodiesel), 140 million RINs (all biodiesel) have been found to be fraudulent. That’s 0.2% of total RINs generated. In fact, the incidence of fraud in biodiesel RINs is lower than credit card and identity fraud rates.  Furthermore, the ethanol industry has always supported increased transparency in the RIN market and we have strongly backed EPA efforts to root out fraud in the generation of biodiesel RIN credits. We understand that the continued success of the RFS depends upon transparent markets and assurance that RIN credits were validly generated.  In the end, the only “fraud” being perpetrated here is the Journal’s continued distortion of the truth with regard to ethanol and the RFS.  

The RFS—No Need to Repeal a Policy That is Tried and True  Bob Dinneen submitted the following letter to the editor of the News-Gazette.  The Renewable Fuel Standard (RFS) is reducing greenhouse gas emissions and moving our country toward a better, more secure future (Outdated ethanol policy isn’t working as intended, April 27). It is a success and there is no reason to reduce or reform it in any way.  Grain ethanol is reducing greenhouse gas (GHG) emissions by 34% compared to gasoline, including hypothetical land use change emissions. Last year, ethanol displaced 462 million barrels of imported oil. It is increasing America’s energy independence, as the RFS intended, while currently receiving no tax breaks or subsidies from the government.  As for the land, farmers just harvested the largest corn crop in our history through crop switching and the use of new technology to increase yields. No new grassland has been converted to land for crop production since 2005, the year the program was initially established. Additionally, nitrogen fertilizer used to create a bushel of corn has dropped 29% since 1985, while the “dead zone” in the Gulf of Mexico has been getting smaller since 2001.  The ethanol industry is moving forward and next generation ethanol is here today. INEOS Bio is producing cellulosic ethanol with four other companies expected to come online this year. But, investors need certainty and without the solid base of corn ethanol, the next generation could be at risk. Reducing or changing the RFS isn’t the answer. The RFS is an American success story.  RFA on Liska Study: Credibility Cannot be Lent to Unfounded Hypotheticals  Bob Dinneen submitted the following letter to the editor of the Star Herald.  The recent study published by Liska et al in Nature Climate Change is deeply flawed (Opinion: Science, April 26) and nothing more than a hypothetical “what if” scenario that serves no purpose. The Liska study assumes that making cellulosic ethanol from corn stover would use 60-70% of the stover in the field. That would never happen. Removing that much stover would harm the soil. To give you a point of reference, typical stover removal would average 10-25%. Additionally, the study’s conclusions contradict many other well-known and respected studies relating to residue removal. One of the many examples comes from the University of Illinois and Argonne

National Laboratory. They found no additional direct or indirect carbon emissions resulting from a 30% removal of residue. They went on to find that certain amounts of residue removal can take place without lowering the levels of soil organic carbon! Another study from South Dakota State University found that during a time of relatively high residue removal rates (2008-1012), the levels of soil organic carbon remained stable. The truth is that according to Wang et al, using the Department of Energy’s GREET model, grain ethanol reduces greenhouse (GHG) emissions by 34% compared to petroleum, including hypothetical land use change. Additionally, cellulosic ethanol reduces GHG emissions by more than 100% compared to gasoline. The results of the Liska study should carry no weight in any decisions on how to move forward with biofuels policy or biofuels research.  Weekly Ethanol Production for 4/25/2014  According to EIA data for the week ending 4/25/2014, ethanol production averaged 898,000 barrels per day (b/d)—or 37.72 million gallons daily. That is down 12,000 b/d from the week before. The four-week average for ethanol production stood at 911,000 b/d for an annualized rate of 13.97 billion gallons.  Stocks of ethanol stood at 17.2 million barrels. That is a 4.2% increase from last week and tied for the highest level of the year.  Imports of ethanol were non-existent for the week, down from 11,000 b/d the previous week.  Gasoline demand averaged 365.1 million gallons daily. At 865,000 b/d, refiner/blender input of ethanol hit its highest level of the year.  Expressed as a percentage of daily gasoline demand, daily ethanol production was 10.33%.  On the co-products side, ethanol producers were using 13.616 million bushels of corn to produce ethanol and 100,219 metric tons of livestock feed, 89,347 metric tons of which were distillers grains. The rest is comprised of corn gluten feed and corn gluten meal. Additionally, ethanol producers were providing 4.68 million pounds of corn distillers oil daily.  If you have any questions, please let us know.

 Enlarge this chart.  

 Enlarge this chart.  Renewable  Fuels  Association  |  425  Third  Street  SW,  Suite  1150  |  Washington,  DC  20024  

©  2014  Renewable  Fuels  Association.  All  rights  reserved.