ESG & Industry Updates

Is Ethanol Even Green?

Posted by Ed Burke on Jan 21, 2014 2:08:00 PM

Grassy Hillsides plowed into crop rows. Millions of acres of conservation land converted to corn fields. Fertilizer runoff polluting lakes and streams. All to produce a "green" fuel source.... Or that's the picture painted by an AP article slash expose anyway. 

The ethanol industry renounced the AP article as a "smear campaign" pointing out that fertilizer runoff and associated issues occur regardless of the end point of the corn produced. Another issue with the AP article is that the "conservation" land converted to corn fields wasn't exactly "conservation land" in the usual sense - essentially, much of it was designated conservation under an initiative that seemingly has less to do with conserving land than it does with boosting crop prices for farmers. While those points may be true, there is no doubt that corn based ethanol has environmental impacts, and there's even question on how much benefit to the environment the fuel itself produces, with the revelation that ethanol may be only about 16% "greener" than gasoline, which would technically disqualify it as a green alternative to gas.

The Senate has even introduced a bill to eliminate the ethanol portion of the RFS. This happened in December, just as the EPA announced it would reduce the ethanol blending goals in the standard. Not a good month for the Ethanol Industry, I would say. Senators Feinstein and Coburn - another unlikely alliance, cosponsored the bill. Both cited increased food costs as a result of diversion of corn into fuel supply, and the issues oil companies face with the blend wall - their inability to blend more ethanol into fuel without risking damage to consumer vehicles (that was the issue behind the EPAs reduction as well). [You can read a little more detail about the bill in my most recent Oil & Energy Article by clicking here]

So what does this all mean anyways? Its not likely ethanol will "go away" but both of these actions make it a little less burdensome on refiners and companies and protect the blend wall. It will be interesting to see how it shakes out over 2014 - the Obama administration strongly supports the corn based ethanol on the basis that it encourages biofuel adaptation in general and ethanol is a good starting point. There is no doubt that the mandate for corn based ethanol is extremely costly however, and with the undeniable impacts on food prices for both the industry and consumers, given the recent questions on the reality of its environmental impact, it seems to be time for politicians to really sit down and repair broken and costly regulations.  


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Topics: E85, Ethanol, RFS 2, EPA Mandate, RINs, Biofuels, EPA, Blend Wall

Cellulosic Ethanol Production: Benefits, Progress, and Challenges

Posted by Ed Burke on Jul 26, 2012 1:56:00 PM

 The EPA has mandated that in 2012 Cellulosic Ethanol production hits 8.65 million gallons

What is Cellulosic Ethanol anyways? Cellulosic, unlike Corn Ethanol, is a second generation Biofuel (corn ethanol is a first generation) which means it comes from cellulose contained in non food plant material, either remnant products of food crops, or entirely non food crops.

A drawback of first generation Biofuels is that since they come from food crops, they potentially stand to impact food prices due to increased demand.  Today there are headlines on the news regarding the drought in the Midwest, and other natural events driving up the cost of food – the impact of events like this could become much more pronounced when there is a competing demand for the same commodities like soybeans, corn, and so on. Second generation Biofuels, being from non-food crops or remnants, take the food price issue out of the equation.  Additionally, from an environmental standpoint, although Corn Ethanol stands to reduce emissions up to 52% over gasoline, Cellulosic Ethanol could drop greenhouse gas emissions by up to an impressive 86%.

I wrote a piece this past month for Oil & Energy Magazine discussing the positive moves the Cellulosic Industry has made towards production, the science behind production, and obstacles in the way of moving forward.  You can read the article in Oil & Energy HERE or read it as a PDF HERE

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Topics: Commodities, E85, Oil & Energy Magazine, Biofuels, Cellulosic Ethanol

Whats the likely future for E85 with the expiration of VEEP?

Posted by Ed Burke on Feb 14, 2012 8:36:00 AM

January 1 2012 saw the expiration of the Volumetric Ethanol Excise Tax Credit (VEET).

For the end gasoline user (non retail), this would have been the 4.5 cent per gallon discount on the invoice you recieved for all gas purchased product that featured the standard 10% Ethanol blend.

For the retail end user filling up at the station, this credit was a large part of what allowed you to fill your Ford or GMC Flex Fuel car or truck with E85 at a substantial savings over standard E10.

However, if you had purchased E85, the credit would have been 38.25 cents per gallon (due to the 85% Ethanol).

What happens when youre a high volume E85 retailer or dealer and you stop getting 38.25 cents back on the gallon? This credit was critical to maintaining the price spread between E85 and RBOB, or regular unleaded gasoline, especially at the retail level. The spread has been what has really fueled the growth of E85 use, as flex fuel vehicle drivers, who can fuel their vehicles on either E85 or standard E10 gasoline can literally choose which product to fill their car with at the pump, depending on the pricing.

I spoke with CSP regarding this issue in a recent article they published. My view is that the spread between E85 and RBOB needs to be in the vicinity of 25% in order to fuel growth, unless you see larger segments of municipal fleet type end users, which may make the spread less critical. To read the whole article you can go here:

Below is a shot of our biofuels center before the opening, and a shot of us trying to figure out this whole flex fuel vehicle thing way back in probably 2005/early 2006 with a loaner GMC "live green go yellow" Impala

Biofuels Center at Station 2ethanol car live green go yellow resized 600


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Topics: E85, Ethanol Tax Credit, VEEP

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