Archive for December, 2008

Retail gas and diesel fuel prices in 2009 are projected to be $2.03 and $2.47 per gallon respectively, reports the Energy Information Administration. Given what fuel prices were last summer, this is good news. The bad news is that these lower prices may cause consumers to forget the pain they experienced every time they went to fuel up last summer.

Even though retail prices are now about half of what they were, they will in all likelihood rise again. Meanwhile, technological advances have continued to help reduce the cost of producing biofuels.

If we neglect energy policy and the promise of biofuels, solar, hydropower, geothermal and other renewable energy developments now, we will again pay the price of our addiction to oil.

In a recent editorial to the Fort Worth Star-Telegram, Senator John Cornyn (R-TX), wrote “basing our energy priorities on this ever-fluctuating price [gas prices] would be foolish. With so many global unknowns, we need to take ownership over our nation’s energy future and capitalize on the domestic resources that we can guarantee.”

I agree with Cornyn, although I think we need to capitalize much further on biofuels, particularly cellulosic ethanol and biodiesel, than relying too much on domestic oil reserves that are non-renewable.

Cornyn also wrote, “I hope Democratic leaders will roll up their sleeves as soon as the 111th Congress begins, and work with me and my Republican colleagues on completing a plan that will finally put America on the path to energy independence.”

That’s a point on which I think we all can agree. We have come far in making renewable energy economically viable. Further technological advances supported by sound policy will help us continue on that path.

The 25x’25 National Steering Committee has it right. Made up of nearly 30 volunteers with agricultural production, research and other diverse backgrounds, the Committee recently offered President-elect Obama and Congress a package of 12 recommendations that stress how a significant investment in renewable energy and energy efficiency will not only generate billions of dollars in economic growth, putting thousands of people back to work, but also enhance national security and improve the environment.

In these times of bailouts in the financial and auto industry, the Committee is recommending the federal government put its money where American taxpayers will actually see results. Just ask countless communities where wind power, hydropower or biofuels industries have already created new jobs, opened up new energy options, or where they have helped improve this country’s infrastructure.

The Committee is part of the 25x’25 Alliance, which is supported by a broad cross-section of agriculture and forestry, business, labor, conservation and religious organizations. The Alliance is supported financially by the Energy Future Coalition, a non-partisan public policy initiative funded by foundations. Visit www.energyfuturecoalition.org.

The 25x’25 National Steering Committee calls for additional investments of more than $4 billion in programs that accelerate markets for wind energy, solar power, biomass, geothermal energy, hydropower and biofuels. The Committee also calls for a renewed look at government support for advanced biofuel production, including commercial-scale cellulosic ethanol production plants.

You may have read this statistic from the University of Tennessee Department of Agricultural Economics before, but it deserves a second look. If America’s farms, ranches and forestlands are provided the necessary resources to meet 25 percent of the nation’s energy needs with renewable resources, the United States could enjoy an estimated $700 billion in new, annual economic activity and 4 million to 5 million new jobs. Those are some real numbers, not just an emergency stopgap.

Almost every American taxpayer could benefit by one or more of the 25x’25’s National Steering Committee’s 12 recommendations. Check them out at http://www.25×25.org/.

How many biomass to fuels projects will be launched next year and beyond and what are the success factors for getting deals done? These questions and many more will be the subject of the Biomass Finance & Investment Summit, Jan. 26-28, at the Westin Colonnade Hotel, Coral Gables, FL. The biomass fuels session will feature speakers from POET, Greenfield Ethanol and Novozymes.

The conference also will feature a panel of developers of biomass to power projects using feedstocks (e.g., poultry litter, hog and cattle manure, wood, rice hulls and sugarcane bagasse). They will discuss financing needs and the type of relationships they are seeking to establish with investors and lenders.

For details about these and other sessions, contact Infocast at 818-888-4444, www.infocastinc.com/biomass09, mail@infocastinc.com

If you heat your home with heating oil, you might want to check out a new Web site, www.Bioheatonline.com, created by the National Biodiesel Board (NBB). Bioheatonline.com walks consumers through the basics of biodiesel and biodiesel-based heating fuel. It also helps you find dealers in your area who sell biodiesel-based heating fuel. Just type in your zip code for a list.

The site also provides technical information for heating oil dealers. “With over 100 registered Bioheat fuel dealers already, the heating oil market is going green,” reports the NBB.

If your home heating oil dealer isn’t offering biodiesel, you might want to ask why.

On December 1, Growth Energy released a new advertisement highlighting comments made by USDA Secretary Ed Schafer about the Grocery Manufacturer Association’s (GMA) blaming ethanol for higher food prices. The advertisement can be viewed at www.growthenergy.org/Growth_Energy_ad3.pdf

In a recent interview, Secretary Shafer responded to a reporter’s question about GMA’s claims about ethanol in light of falling commodity prices and said that GMA had “no credibility.” He indicated that the GMA is trying to justify the increased costs and the increased profits they are making at the expense of the ethanol industry.

What is GMA’s response to the Secretary’s comments that the GMA has been using false attacks against ethanol as a primary factor behind higher food prices? Scott Openshaw, director of communications, GMA, www.gmaonline.org, responded:

USDA has said that ethanol production is responsible for about 30% of the increase in corn prices and has pointed to the fact that since 2006, 50% of the increase in global demand for all grains came from U.S. corn ethanol production.

As GMA has said from day one, there are many factors contributing to the sharp increase in U.S. and global food prices–including increasing global food demand, export and other restrictions, adverse weather in some countries, commodity speculation and higher energy prices–but a significant new factor and the only factor affecting food and feed prices that is under the control of Congress is the food-to fuel mandates and subsidies diverting food into fuel production.

We are calling on Congress to revisit and reconsider that policy. Perhaps most importantly, until Congress enacts bold policy to facilitate the rapid development and delivery of second generation biofuels that don’t pit our energy needs against our food and feed needs, the unprecedented volatility we’ve experienced in commodity prices will only continue.

GMA is not alone in these concerns, and in fact has joined a chorus of voices that includes three Nobel Prize winning economists, the World Bank, the IMF, the United Nations, academia, nearly every major editorial board in the United States, and dozens of organizations representing the livestock sector, the environment, food companies, restaurants, and taxpayers.

Now that corn has dropped to less than $3.50 per bushel, why haven’t food prices dropped?

Just as food companies absorbed the increasing prices since 2006 and were slow to raise prices, the full extent of increased costs sustained at the beginning of 2008 have not yet worked their way through the system. Furthermore, we expect prices to rise again in the next few months as supply and demand takes over and the ethanol mandates increase again.

Yes current gas prices are down, but commodity prices continue to be high and volatile. USDA and most economists are forecasting food inflation to continue up next year anywhere from 4 to 9 percent. Even after recent declines, farm-level corn and soybean prices have more than doubled since 2005/06. Retail food costs continue to reflect record commodity prices and volatility. Again, until Congress enacts bold policy to facilitate the rapid development and delivery of second generation biofuels that don’t pit our energy needs against our food and feed needs, the unprecedented volatility we’ve experienced in commodity prices will only continue.

Does GMA still support eliminating subsidies for ethanol?

GMA continues to support shifting subsidies away from corn ethanol and increasing investment in other types of biofuels from non-food sources. In fact, our proposals to reduce or eliminate the corn ethanol subsidy (which is actually paid to gasoline refiners) would actually increase the investment in cellulosic ethanol under existing law. Taxpayer money could be better spent accelerating development of alternative fuels or combating hunger.

If such subsidies are eliminated, the research development of cellulosic ethanol, a logical progression from corn ethanol, could be adversely impacted or even halted. What is GMA’s stance on this?

Corn ethanol has been receiving taxpayer subsidies for more than 30 years–presently to the tune of $5 billion per year. It’s time that money was shifted from a mature corn ethanol industry to be invested in second generation fuels that don’t pit our nation’s energy needs against America’s food and feed needs. Again, our proposals to reduce or eliminate the corn ethanol subsidy (which is actually paid to gasoline refiners) would actually increase the investment in cellulosic ethanol under existing law.

The National Biodiesel Board (NBB), which created a Sustainability Task Force last February, recently held a symposium focused on sustainable solutions to energy challenges. The meeting included discussions of greenhouse gas emission models, biodiesel’s positive energy balance and next generation feedstocks.

The NBB utilized the symposium to get feedback from a diverse audience and to get professionals from different sectors and disciplines talking to each other about sustainability issues and opportunities for collaboration, says Emily Bockian Landsburg, the Sustainability Task Force chair. Representatives from USDA, the Department of Energy’s National Renewable Energy Laboratory (NREL), the American Soybean Association, the World Initiative for Soy in Human Health and the U.S. Department of Energy Clean Cities were among those attending the meeting.

At its fall board meeting, the NBB also adopted several resolutions addressing sustainability:

1. The NBB resolves to develop internal policies and support practices which promote the use of sustainable feedstocks and biodiesel production methods.

2. NBB shall adopt the definition of sustainability as recommended by the Sustainability Task Force (STF).

3. The Regulatory Committee and the STF shall discuss and consider the guiding principles for biodiesel sustainability as recommended by the NBB STF for adoption by the membership in 2009.

4. NBB resolves to actively engage in forums addressing global biodiesel/biofuels sustainability standards.

5. Several organizations are developing sustainability metrics and certifications for biodiesel and other renewable fuels. NBB resolves to actively participate in these efforts on behalf of the industry.

6. Direct and indirect land use change are becoming important metrics for all industries. Legislative policy and best practices must be based on sound science and real, transparent data in order to accurately access biodiesel’s impact on greenhouse gas emissions. Such science and data are currently insufficient for this purpose. NBB resolves to actively monitor, participate in, and support research to develop science and data to address this issue objectively and accurately.

The NBB has launched a new Web site, www.biodieselsustainability.com. It is useful when you have questions or are faced with questions from others about the sustainability of biofuels, Landsburg says.

The National Corn Growers Association (NCGA), www.ncga.com, reported today that the U.S. Bankruptcy Court presiding over the VeraSun Energy Corporation Chapter 11 case will allow VeraSun to reject contracts that are economically disadvantageous to VeraSun, including contracts with corn growers.

Ron Litterer, NCGA chairman and a corn grower from Greene, IA, said that while it was doubtful that growers could influence the courts to require the ethanol company to pay the contracted price for their corn, he believed a NCGA-formed advisory committee did get growers’ views and expertise heard by the court. The committee is made up of corn growers from Iowa, Michigan, Nebraska, North Dakota, Ohio and South Dakota.

“As providers of corn to VeraSun, corn growers want fair payment under fair terms for their corn, as well as a positive conclusion that allows VeraSun to stay viable as a long-term customer for our corn,” Litterer said.

Litterer said financial challenges for other large corn customers, such as the bankruptcy filing recently announced by Pilgrim’s Pride Corporation, may create a ripple effect for corn growers. “NCGA will continue to monitor these situations and play a helpful role whenever possible,” Litterer said.