Archive for November, 2010

Guardian Energy Holdings invests in Ohio plant

(By Holly Jessen, published in Ethanol Producers Magazine)

Guardian Energy Holdings LLC has acquired a majority state in a 54 MMgy ethanol plant in Lima, Ohio. ICM Inc. will retrofit and upgrade the plant, which has been standing idle since November 2008. Construction has already begun and the facility is expected to be operating again by the second quarter of 2011. “Everyone is excited about it,” said Don Gales, CEO of Guardian Energy. “We like the geography and when ICM gets done rebuilding the plant we will have a very durable and cost-effective plant.”

…The plant will operate under the name Guardian Lima LLC. It will be managed by Guardian Energy Holdings and have Renewable Products Marketing Group as its ethanol and distillers grain marketing partner. Guardian Energy Holdings founded RPMG in 1996.

In all, 31 full-time employees will be hired to operate the plant. An additional 60 construction jobs will be created during the retrofit. “

See full article at:
http://www.ethanolproducer.com/article.jsp?article_id=7163

Our Take:
Guardian Energy reflects the creativity and agility that’s possible for the farm-based energy industry. While profitability is definitely at the top of the agenda, this group of farmer-owned ethanol companies achieves a longer-term vision and plays to strengths that publicly-owned ethanol companies can’t match.

And at this moment when we appear to be looking down a long road of tough economic challenges in America, and a long term of fighting uphill to make gains in employment, here is a company bringing valuable construction work, followed by full-time highly paid jobs to a region that has suffered from the overseas evacuation of American manufacturing jobs. We already send our money overseas for so many of our daily consumer needs–why not keep more of our energy dollars here in America, and put Americans to work like Guardian Energy is doing.

California regulator’s move helps corn-based ethanol demand

(Article by Beth Evans at Platts Business News service)

A decision this week by California regulators to lower corn-based ethanol’s so-called indirect land use penalty is good for that product’s demand, but timing of the change is not, the Renewable Fuels Association said last Friday.

California is in the midst of refining its Low Carbon Fuel Standard regulations, which go into effect January 1, 2011. The LCFS takes into account indirect land use changes (ILUC) caused by fuels, something that penalized US corn-based ethanol when compared to Brazil’s sugar-based production.

But in a resolution last Thursday, the California Air Resources Board said it would take new Purdue University research into account for its ILUC values, something that will lower the penalty for corn-based ethanol “by at least half,” according to RFA.

The new ILUC changes will not be effective when the LCFS begins January 1. Instead they will be incorporated into the regulations ” in the spring of 2011 or as expeditiously as practical afterward,” said CARB in its resolution. That will “confuse and disrupt the market,” said RFA CEO Bob Dinneen in a statement Friday.

CARB could not be reached for comment.

Brazil’s sugar-based ethanol markers backed CARB’s decision, which will also alter their fuel’s ILUC value. “The Board’s decision… ensures that as the science evolves, so will the regulations,” said Joel Velasco, spokesman for the Brazilian Sugarcane Industry Association.

CARB, in its resolution, said it continues to work with refiners and other stakeholders to “develop a screening process to assist regulated parties and other stakeholders in identifying high carbon-intensity crude oils.” It is also working with refiners and biofuels producers to complete an “evaluation for biodiesel and renewable diesel.”

Our Take:
It’s good to see that actual science can win, eventually.

Purdue put solid research into the question put forward by Tim Searchinger, an environmental attorney who used his position as a scholar at Princeton University to publish what is now recognized as a half-baked hypothesis. The Purdue research refutes Searchinger’s well-publicized assertion that a direct connection can be drawn between US land use and land use in other nations. Based on carbon emissions increases elsewhere, due to changes in land use beyond our borders, US industry should be penalized, Searchinger and his allies asserted. A thorough examination of the forces at work reveals that other countries alter their land use for many reasons, most of them a lot closer to home than whether US farmers decide to plant 85 million acres of corn or 90 million acres in a given year. 

But we’d like public officials to take this as a case in point that real harm can come from setting policy based on novel scientific hypotheses. The enterprise known as science doesn’t accept initial findings as fact, and neither should government. A new hypothesis should see vigorous debate and lots of attempts by other scientists to reproduce results before public policy is based upon such findings.

In California we are seeing the result of such hasty action. Regulations unfairly penalizing grain-based ethanol, based on Searchinger’s incomplete information, will go into effect January 1. This will potentially disrupt the use of ethanol in the state–just when California’s own ethanol production is getting back on its feet after the worst of the Great Recession. If the wheels of California government move too slowly to reverse their policy before it takes affect, despite CARB’s admission that it’s based on faulty information, then we hope they learn to take greater care and more deliberation in the future, before basing policy on unproved hypotheses.

Of course, a far more cynical reading of the situation is possible–that California’s reversal of its policy is only occurring because they realize that they played right into the hands of Big Oil, led up the garden path by the very folks that are supposed to prevent that from happening. California Air Resources Board (CARB) has created an artificial fuel shortage in their state. Brazil’s sugar and ethanol production is down. Absent Brazilian ethanol, and with a disincentive to using American grain-based ethanol, the net result of California’s policy is that more petroleum will be used, and the price at the pump will be higher. We can’t help thinking that CARB board members’ connections to California’s oil production industry plays some role in the delay in undoing the ethanol penalty.

Search underway for Extension drainage specialist

Written by Jonathan Eisenthal

A search is currently underway to identify the perfect candidate to be a drainage specialist at the University of Minnesota Extension Service. The position will be supported partly by the University of Minnesota and Minnesota Corn Growers Association (MCGA).

The University hopes to fill the position before long, according to Greg Cuomo, Associate Dean for the College of Food, Agricultural and Natural Sciences at the University of Minnesota. Cuomo takes part in the work of a search team led by Professor John Moncrief. Among those actively involved include Riley Maanum, MCGA research and project manager and the MCGA production stewardship team.

The idea to create this drainage specialist position supported by public-private partnership arose in discussions of the Corn Growers’ production stewardship team. The team is overseeing a number of research projects that determine how nutrients flow through drainage tile systems.

According to Cuomo, this new specialist would join a team of University professors who are working together to maximize knowledge about farm drainage systems and develop best management practices. Prof. Jeff Gonsolus heads the team, which also includes Prof. Dan Kaiser and Prof. Gary Sands.

This new Extension Educator would provide technical assistance regarding drainage to producers, but another aspect of the job will be communicating with the general public about the value of agricultural drainage.

Not only is drainage an important part of our farm economy and our success, but there’s also a need to let the general public know why drainage is necessary,” said Steve Sodeman, an MCGA director, a member of the production stewardship team and a crop consultant by trade. “The need for drainage is something this Extension Educator will be able to talk about with our city cousins. The score is 98-2–with only about two percent of Minnesotans involved in agriculture. The two percent is the people who need access to the latest information about drainage systems. But it’s so important to also explain it to the 98 percent, because there is so much misinformation, and drainage is so often talked about in negative terms by people who don’t know.”

Farmers have worked for decades to enhance soil conservation, and appropriate drainage actually enhances the ability of farm acres to retain their rich soils. “Tile systems keep more soil in place,” said Sodeman. “Well-designed drainage creates a sponge effect that allows a farm acre to hold more water. If you have a natural waterway in the valley of field, put tile in that –that is a strategy that has proven very effective for reducing erosion.”

Maintaining adequate drainage on existing farm lands keeps them more productive. The higher yield allowed through drainage is part of the equation that helps farmers meet growing demand for their crops, while keeping marginal lands in conservation programs and not bringing new acreage into production unnecessarily.

Coalition of farm, ethanol groups sends letter to congress: Extend biofuels tax credit

(excerpts from letter drafted by RFA, NCGA and others)

“The ethanol industry has been an essential component of our nation’s effort to achieve energy security and improve our environment. The volumes of ethanol produced domestically have been uniquely successful in reducing our dependence on foreign, imported oil, and have helped to reduce our nation’s emissions of greenhouse gases and other pollutants. In addition, the ethanol industry has helped to revitalize our nation’s rural and farm economies by providing a value added market for agriculture, and supported the creation of hundreds of thousands of non-exportable, high-paying green jobs.”

On VEETC, the groups wrote: “Without VEETC, ethanol blending will become less economically attractive to refiners, resulting in a substantial decline in discretionary blending, and upward pressure on consumer gasoline prices. As a consequence of reduced demand, ethanol plants will close. One analysis concluded that as many as 118,000 jobs could be lost if Congress fails to extend this important incentive.”

On the Alternative Fuel Infrastructure Credit, which allows fuel station owners to write off 50%, or up to $50,000, of the cost of alternative fuel infrastructure upgrades, the groups wrote: “Today, there are approximately 160,000 retail fuel outlets around the nation; however, only 2,300 are fitted with equipment able to dispense E85, and just a few hundred that can offer mid-level blends. It is essential that there continue to be incentives to develop the infrastructure needed to make the ethanol blended fuels available to consumers.”

Our Take:
Why pay for someone else to make what we can make ourselves? Our approach to energy should recognize the disaster of lost jobs we’ve seen in electronics, textiles, and automobiles. We already import nearly two thirds of our transportation energy needs–all those dollars going overseas mean energy jobs we don’t have in the US. What’s next? Will we end up importing all our food? Will we import everything we need except for services–and how many of those can be done remotely? Diversification is the key to a vibrant economy. Growing the renewable farm-based fuels industry is a proven way to create jobs.

Greentech Vote Victory in California: Prop 23 Defeated, Brown in as Governor

By Katie Fehrenbacher at Earth2Tech

Woot woot! California voters on election day handed victories to a crucial greentech-related measure, and also voted in a handful of candidates with strong backgrounds of support for the greentech industry. As expected, voters rejected Proposition 23, which would have basically suspended AB 32 — California’s climate change law — and also voted in Jerry Brown for Governor, a candidate with a much more greentech-friendly record than his opponent former eBay CEO Meg Whitman.

Silicon Valley’s greentech entrepreneurs and investors had been seriously worried that Prop 23 would pass. Backed by Texas oil companies, Prop 23 was hiding behind rhetoric about job losses due to the ongoing implementation of AB 32. However, according to the greentech industry and various economists and researchers, AB 32 has been creating jobs and revenue in the state over the past several years.

Over the past few weeks and months, the “No on Prop 23″ campaign, which included high-profile names like Al Gore, President Obama, and Bill Gates, ended up rallying (we published a variety of No on Prop 23 opinion pieces) and eventually outspent the proponents of the ballot measure. According to Maplight.org, supporters of Prop 23 spent $10.7 million, while opponents of Prop 23 spent $31.3 million.

Full article: http://www.reuters.com/article/idUS159480653020101103

Our Take:
We challenge California to truly make the defeat of Prop 23 a green tech victory by taking off their blinders about farm-based energy. It’s time for California to end its grudging allowance of ethanol and see ethanol for what it is–the most readily available green fuel on the market. Further, as the ethanol industry develops, California must acknowledge (and US EPA also, for that matter) that today’s ethanol is not grampa’s moonshine. California’s green tech people should consider that, just as Texas companies poured money into support for Prop 23, Texas was the first state to request waivers from federal ethanol requirements.

We don’t encourage an us-and-them mentality–that’s not the way to get things done. But California could wake up to the reality that the farm-based ethanol industry could be a strong ally in its fight to break away from petroleum.

The land-use change question is drifting away like so much swamp-gas–any fair comparison of ethanol to petroleum shows which energy production takes the heavier toll on the environment.

Grain-based ethanol is an advanced biofuel in everything but name. The production from most of today’s ethanol plants fits the definition of advanced biofuel under EISA 2007 (reduction of greenhouse gases, etc). With the right kind of support, ethanol can continue to innovate technologies that decrease carbon footprint.

We challenge California to embrace farm-based energy, even as it applauds the launch of biobutanol and other next generation fuels that are being pioneered by Silicon Valley visionaries like Vinod Khosla. Rather than picking one winner, California could mold its implementation of its Low Carbon Fuel Standard to encourage all fuels to minimize their carbon footprints. It’s a laudable goal, and one the ethanol industry has had in sight for some time.

Little change to ag policy, even as Peterson loses chair

by Mark Steil, Minnesota Public Radio

…Farm subsidy programs have grown steadily since beginning more than 70 years ago during the Great Depression.

Last year, federal farm programs paid over $850 million to Minnesota farmers. Nationwide the subsidy bill was over $15 billion.

William Yeatman of the Competitive Enterprise Institute, a Washington-based think-tank, said he would love to see those payments reduced.

As a free-trade advocate, he wants the open market to decide who makes money, but even though Yeatman really dislikes the farm program, he doesn’t see much change coming. What’s more likely to happen is that last Tuesday’s Republican wave will break and dissolve against the rock solid shore of the congressional farm lobby, he said.

“They are the undisputed champions of all lobbies. The amount of influence they can exert, it is incredible and it never ceases to amaze me,” he said.

Much of that strength derives from the almost iconic stature the farmer holds in American culture, Yeatman said. Like the soldier, the police officer or the firefighter, farmers are often viewed as heroes, so any proposal to cut funding is seen as hurting an American institution.

In fact, far from producing major change, Yeatman said there might be even less likelihood of a new agricultural direction with Republicans in charge of the House.

He uses the direct farmer subsidy as an example. Those payments are among the most controversial parts of the agricultural program because they’re paid even when a farmer makes substantial profits in the open market.

Right now, for example, corn prices are high. Farmers will make big money on their grain, but despite that financial windfall, they’ll still get a federal payment for their corn acres.

Peterson favored looking at ways to reduce direct payments but, Yeatman said, the incoming chair, Oklahoma Republican Rep. Frank Lucas, seems resistant to any reduction.

“He’s on the record as preferring direct subsidy programs,” says Yeatman.

Lucas sent a letter to U.S. Agriculture Secretary Tom Vilsack in early 2009 saying it would be “irresponsible” to even think of eliminating direct payments.

One early test of how the new Congress feels about farm payments could come on the issue of funding renewable energy programs like corn-based ethanol. Several subsidy programs for ethanol and other fuels have expired or are about to expire.

Farmers generally like the fuel subsidies because they boost the price of corn and other grains. If Congress votes in favor of continuing the ethanol subsidies, it could be a signal of how they will handle farm spending overall.

Our Take:
We think anyone who wants to overhaul the current farm program ought to take all their money out of savings, sink it in a farm operation for a year or five, and then get back to us after that.

With all due respect to Mr. Yeatman’s opinions, farming is a business unlike any other, where the price of both the inputs and the product is beyond the control of the producer. We tried free trade in agriculture. It was called the Dust Bowl.

Every developed economy in the world has an ongoing social contract with its farmers, regardless of these various societies’ approaches to other segments of the economy. While experts may be right in stating that the US farm program has grown, what they conveniently leave out is how much farm productivity has grown, thanks in large part to a smoothly functioning safety net. Direct payments keep independent farmers on the farm. Despite talk of factory farming, 98 percent of American farms are owned by individuals, families, or family-owned corporations (usually just two or three family members).

Minnesota farm leaders had an opportunity to visit with Rep. Frank Lucas, an Oklahoma Republican, this summer at the Minnesota Agricultural Leadership Conference. Lucas is presumed to be the next chairman of the House Agriculture Committee. It is clear that Lucas has good will towards farmers and is ready to listen to our concerns. That’s a good thing, and reassuring. For the past several years, Minnesota Democrat Collin Peterson has been a steady hand at the helm of House Ag, in some of the most fast-changing times American farmers have ever seen. We hope Peterson can continue to be a major influence as ranking minority member of the ag committee.

A final thought about the farm program and ideas of ending or reducing government support of farmers. American crop producers today harvest five times more crop per acre than they did before the farm program. What makes this possible is a vibrant public-private partnership. Independent farmers, the agribusinesses and ag science businesses that serve them and the US Farm Program all fit together. The machine is working well, judging by such results. For instance, average corn yield in the 1930s was about 30 bushels per acre, whereas today, the yield exceeds 150 bushels per acre.

Call changing that foundation provided by the US Farm Program whatever you want. We call it foolish. We hope the MPR correspondent’s pundits are correct in their analysis and conclusion that the US Farm Program will not change much under the Republicans.

When it comes to subsidies Big Oil takes the cake and eats it too

Written by Jonathan Eisenthal

Two weeks ago Exxon announced third quarter earnings of $7.35 billion dollars–up 55 percent from its third quarter profits in 2009. Chevron disappointed investors with its $3.77 billion in profits, down from $3.83 billion dollars third quarter last year. ConocoPhillips earned $3.1 billion dollars profit for the quarter–double the profits for 3rd quarter 2009.

If the top three keep up this rate, that’s an annual take of more than $50 billion dollars.

So one wants to know why they need government hand outs, why they can’t ‘stand on their own feet’ as the Wall Street Journal demands of the still developing renewable energy sector.

A raft of permanent ‘gimmes’ not only boost the profits of these titan oil corporations, but the manner of support actually encourages inefficiency and higher carbon emissions according to an analysis by Boston-based New Fuels Alliance.

“The renewable energy industry just wants to be competitive,” said Jerry Ploehn, chairman of Minnesota Corn Research & Promotion Council. “Either Big Oil can give up its tax breaks and credits, or they stop throwing their money around agitating to end the ethanol blenders credit. They can stop fighting E15 too. All we’re asking for is a level playing field.”

A tax credit of 45 cents per gallon is paid to gasoline wholesalers for every gallon of ethanol they blend into their gasoline. The credit is due to end on Dec. 31, though a number of members of Congress are working on extensions.

Big Oil doesn’t have to worry about extensions. It’s tax breaks are a permanent feature of the US tax code. Thanks to these favors, the oil industry achieves an average corporate tax rate of 11 percent, which compares to 18 percent paid by the rest of America’s energy industries (New Fuels Alliance analysis).

“Oil companies deduct a flat 15 percent of their gross income in order to account for the decline in value of their wells as reserves are pumped out,” New Fuels Alliance reports. “In most cases, the 15 percent deduction exceeds the actual decline in value. Companies that invest in technology to extend the lives of older wells also receive an ‘enhanced oil recovery credit,’ often resulting in damage to the environment as extreme measures are used to mine unproductive wells for the last drop of oil. Federal tax policies also allow oil companies to defer foreign incomes, write off capital investments, and take immediate deductions on exploration and development expenses.”

New Fuels Alliance projected the oil industry’s share of energy tax credits to amount to 86 percent of the total amount–$16.1 billion in tax breaks–offered to the energy industry between 2005 and 2009. 
 
The advantage doesn’t play out only in transportation fuels–current tax law overwhelmingly favors fossil fuels over renewables when it comes to electric power generation.

Paul Woodin, an advocate for biofuels in Oregon recently reported, “The Government Accountability Office (GAO) examined federal incentives for electricity between Fiscal Year (FY) 2002 and FY 2007 and concluded that ‘tax expenditures largely go to fossil fuels.’ To be exact, ‘about $13.7 billion was provided to fossil fuels and only $2.8 billion to renewables.’ The GAO also determined that ‘U.S. subsidies for oil, natural gas, coal, nuclear and hydropower totaled approximately $500 billion from 1950 to 1977, or approximately $18 billion per year (2004 dollars).'”

Biofuels advocates urge elected officials, policy makers and the general public to consider the value of supporting the shift to renewable energy–energy that is cleaner than oil–both to capture and to use, and even more importantly, energy that is made here–which will help us keep dollars, jobs, and even soldiers here at home instead of sending them overseas.