ESG & Industry Updates

Maine is Making Crude from Waste Wood (and it's Kind of a Big Deal!)

Posted by Ed Burke on Sep 5, 2019 11:40:17 AM

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University of Maine students experimenting with salt and high temperatures appear to have stumbled upon a way to create a sulfur free crude oil from wood pulp.

The discovery is exciting - Maine is looking at the potential (future) large scale production of an advanced, cellulosic biofuel from already abundant waste products in the area - sawdust, wood pulp, and logging residue from wood processing & lumber facilities. 

As we have discussed before, an ongoing difficulty with the Renewable Fuel Standard has been compliance with the cellulosic portion of the recommendations, because the technology and production just hasn't been there. This project in Maine is still very small in terms of production levels, of course, but the technology holds promise for cellulosic development and the patents are in place for companies to do the research and testing, and ultimately scale the project to private sector demand levels.

I wrote about the project in more detail in this month's issue of Oil & Energy Magazine, which you can read here: They're Making Fuel from Wood Waste in Maine

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Topics: Waste Feedstock Biodiesel, Cellulosic Ethanol, RFS, renewable energy

Year Round E15 & RFS Waivers on the Energy Agenda

Posted by Ed Burke on Aug 8, 2018 1:24:00 PM

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Low commodity prices, plummeting RIN values, and talk of potential trade wars are all factors hitting the US Agricultural Sector hard this year.

Some of the avenues being discussed to provide relief are: allowing year round E15 sales, looking into the impact that RFS waivers for small refiners may have had, and making the process for submitting and granting waivers much more streamlined with the goal of stabilizing RIN prices. 

E15 sales are currently prohibited from June 1 through September 15 because of RVP regulations (much like "summer" and "winter" conventional gas changes those of us from the Northeast are familiar with in Maine). E15, unlike E10, does not have a low enough RVP rating to meet the criteria for year round sale. 

The White House had proposed changing the E15 regulation in June, but postponed. It currently looks like the change will take place sometime before next summer. 

I wrote an article for Oil & Energy Magazine that goes into some more of the details on E15, the impacts we might expect, and how viable it will be in the market. You can read that article here:  Year-Round E15 and Small Refinery Waivers

 

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Topics: Ethanol, RINs, RFS

EPA Finalizes 2018 RFS Volume,Declines Obligated Party Change Proposal

Posted by Ed Burke on Dec 1, 2017 5:22:05 PM

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Yesterday (November 30th) the EPA finalized renewable volume obligations for the RFS for 2018 and the RVO levels for 2019.

Final 2018 levels are 19.29 billion gallons of total renewable fuel, 15 billion of which is conventional biofuel and 4.29 billion of which is advanced biofuels, including cellulosic ethanol. The final volumes are actually very close to those proposed in July.

Additionally, the EPA has finally issued a ruling regarding the obligated party petition. The petition has been pending while the agency sifted through comments from relevant parties on all sides of the issue.

You may recall that starting around June of 2016 some major refiners & other parties petitioned the EPA to redefine obligated parties under the RFS. The obligated party under the RFS as enacted is ““the entity that holds title to the gasoline or diesel fuel, immediately prior to the sale from the bulk transfer/terminal system… to a wholesaler, retailer or ultimate consumer.” 

So basically refiners, blenders, and importers are the obligated parties in handling RIN compliance. The argument is that smaller marketers and blenders are subject to compliance costs and purchasing RIN credits in an arena where large refiners have an advantage, and non-blenders (retailers) have no exposure.  

Supporters of changing the obligated party claim that the change would enable the market to more readily respond to the annual renewable volume obligation (RVO) standards, begin to address the structural constraints that EPA identified in its 2015 RFS rulemaking, and eliminate barriers that prevent RIN value from being passed through to consumers.

On the other side of things, retailers & related groups argue that non-manufacturers have no control over the composition of the petroleum products with which renewable fuels must be blended in order to be sold as motor fuels. Manufacturers and importers not only have control over the composition of the products they sell, but also the terms under which they sell them, and thus should remain the obligated parties.

The EPA ultimately denied the proposed change in obligated parties. Their reasoning stated was that the change would not result in improved effectiveness of the RFS as a whole, and would similarly not provide remedy to the major issue within the standard, which remains the issue of cellulosic ethanol and its (lack of) use. There would also be a lack of uniformity in who would be a stake holding and thus obligated party, which the agency felt would result in more confusion with compliance, rather than less.

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Topics: EPA Mandate, RINs, Biofuels, Cellulosic Ethanol, EPA, RFS

EPA's 2017 RFS Volume Proposal Draws Familiar Concerns

Posted by Ed Burke on Jul 20, 2016 8:20:00 AM

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This past May, the EPA released its 2017 RFS volume standards. The 2017 levels are a 3.8% increase over 2016 but are still well below the original levels for the year as proposed in 2007.

In both the stakeholder commentary period and the period immediately following the volumes' release, we saw the usual cast of characters come forward with their concerns about the mandated levels. That included biofuels proponents who see the EPAs levels as a "cave" over the blend wall, and industry members who are concerned about the market and practical feasibility of ever increasing levels and who carries the obligation to meet mandated levels. 

You can read more in depth about the diverse reactions the EPA ruling had in the recent article I wrote for Oil & Energy magazine here: "Proposed RFS Changes Draw Diverse Reactions" 

 

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Topics: EPA Mandate, Biofuels, RFS

RFS Volumes Finally Finalized

Posted by Ed Burke on Jan 8, 2016 11:36:12 AM

Corn kernels in a container labeled, Biofuel

As of November, the EPA finally released its final renewable volume obligations for 2014, 2015, and 2016.

The volumes set are lower than those mandated by Congress in the initial Renewable Fuel Standard, after the EPA took into account a drop in fuel & gasoline demand and usage over the past several years (as compared to the demand and usage projected in 2007). The final volume for 2016 is 18.11 billion gallons, versus the Congressional volume of 22.25 billion gallons.

There were over 600 thousand comments on the proposal before it was finalized, and the feelings on the results are mixed, to put it mildly.

Ag farmers and biofuel industry players had argued the EPA had to stick to the original mandated volumes. Livestock farmers and food producers had argued for the mandate to be scrapped in its entirety, citing the impact it has had on pushing the cost of food and food production skywards. The oil industry fell somewhere in the middle, arguing the EPA ought to use its waiver to greatly reduce volumes to reflect lower fuel usage, the essential lack of cellulosic renewables, and concerns that high mandated volumes of ethanol would force the blend wall issue.

I wrote an in depth piece on the EPA's final ruling for Oil & Energy Magazine - you can read it in full here: "EPA Finalizes RFS Obligations"

 

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Topics: Ethanol, Biofuels, RFS, renewable energy

RFS Battles Continue on Ethanol and E15

Posted by Ed Burke on Apr 21, 2015 3:59:45 PM

Container of corn kernels with a Biofuel sticker affixed

This week, Ethanol activists in Chicago used the 20th anniversary of the BP Oil Spill in the Gulf to push for approval of a pending mandate that would require self-serve stations with over 850,000 gallons in annual sales volumes to carry E15, given they had the proper infrastructure for the blend. They argued that companies will "keep on spilling" and that made it imperative that the push continue towards higher blended, "cleaner" ethanol.

On the flip side, on April 21st, major petroleum groups API and AFPM requested the EPA ban the sale of E15 as a flex fuel. E10 Ethanol has a 1 psi volatility waiver that allows it to be RVP compliant in summer months. E15 is not compliant, however. The argument then is that stations, etc, are using E15 as a flex fuel in the summer months to avoid having to comply with RVP regulations.

The EPA is expected to formally announce the RFS volume requirements any day now, but even prior to the announcement there is action on the RFS in the legislature. House Bill HR 701 would cap ethanol at 10% blends, and rescind the EPA's approval of E15 blends. 

Another part of the bill states that target numbers for cellulosic ethanol goals need to be production based, which obviously makes sense, since one of the major issues with the RFS has been the cellulosic mandate in the face of a complete lack of cellulosic production.

I wrote an article for this months Oil & Energy Magazine detailing the growing dissension between RFS involved groups, impacted industries, the EPA and the Government - you can read that article here:

"Dissension Grows over Biofuels Rules"

 

 

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Topics: Ethanol, EPA Mandate, Cellulosic Ethanol, RFS

How Will the EPA Address the RFS for 2014 & 2015?

Posted by Ed Burke on Jan 21, 2015 10:43:17 AM

Chalkboard image with the focus on Biofuel

In November the EPA announed it would not be able to finalize on the RFS volumes for biofuels until 2015. The 2014 and 2015 volumes will be set soon,, in theory. But there has been a lot of stress out there in the industry over the fact that the delay will essentially mean refiners and producers need to be retroactively compliant with the volumes the EPA sets.

The biofuels industry is pushing for an increase in biofuel requirements, to 18.15 billion gallons. This is probably not happening, but the uncertainty overall has had a serious impact on bio producers, many of whom have scaled operations way back over 2014 as compared to 2013.

On the other hand most refiners argue that the EPA should lower the standard by 16% given the drop in demand year on year since the RFS' inception in 2007. Additionally the cellulosic ethanol standard should be scrapped, its argued, since its not available for use and its therefore impossible to comply with that portion of the mandate.  

The implication the EPA gave was that it was looking at reducing volumes, and would almost certainly not be increasing the ethanol mandate over the 10% current level - ie that it wouldnt break the so called "blend wall". We will have to see how it plays out over the next month or so. 

I wrote a more in depth piece on the RFS for January's Oil & Energy Magazine, if you want to dive into the topic a little deeper, you can read that article here: "Rethinking the Renewable Fuel Standard"

 

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Topics: Biodiesel, EPA Mandate, EPA, RFS

Energy Issues Top the Political Agenda for 2014

Posted by Ed Burke on Feb 25, 2014 12:52:00 PM

Main energy topics in the headlines for 2014 include the Crude Export Ban, the Keystone Pipeline, the Climate Change Action Task Force, RFS Volumes, and an expected final ruling on the Tier III mandate from the EPA. 

State of the Union 2014
(Photo Credit: Amanda Lucidon, WhiteHouse.gov Official Photo)

There is a lot of work to be done on energy infrastructure in the US - something that became especially clear with record breaking spikes in Natural Gas pricing to the New England and New York markets on the heels of the Polar Vortex. This topic is supposed to be the highlight of the Administrations Quadrennial Energy Review. However, the most obvious energy infrastructure and transport improvement - the Keystone XL pipeline is still bogged down in its 5+ years of paperwork, with no decision in sight, even following the most recent Environmental Study which found there would be no major negative impact environmentally from the project. The State Department review was expected after the President's State of the Union Speech, with a Presidential decision to follow but so far as of late February we haven't seen any movement on the issue. 

Renewables are also on the table - The EPA's expected final RFS volume reductions should be out this month (the first time the EPA will have used waiver power to decrease, not increase, volumes). The tax credits for Biodiesel and Cellulosic Biofuels also expired at the end of 2013, but if you recall, last time these were reinstated retroactively. The EPA is also expected to release its final ruling on Tier 3 Gasoline Standards, which would affect the sulfur content of gasoline vehicle emissions.

I wrote a more comprehensive article for the February issue of Oil & Energy Magazine on the topics on the Energy Agenda for 2014, you can read that article by clicking here 

What do you think the priority items on the Energy Agenda should be?    

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Topics: Energy Independence, Biodiesel Tax Credit, EPA Mandate, US Crude Exports, Cellulosic Ethanol, Keystone XL, RFS, obama

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, EPA Mandate, RINs, Biofuels, EPA, Blend Wall, RFS

Environmentalists & Oil Exec's Unite on RFS Volume Reduction

Posted by Kelly Burke on Jan 14, 2014 9:47:00 AM

A surprisingly unusual coalition of folks have united to support the EPA's reduction of RFS Volume Requirements including food industry leaders, environmental groups, humanitarian groups and oil industry groups. Why is that? 

Everyone involved has concerns about different impacts they believe are created or exascerbated by the mandate, especially if the volumes hold or increase. Refiners, for example are concerned about their ability to breach the "blend wall", where every gallon of gasoline would contain the required 10% - once thats hit it will be extremely difficult for refiners to generate the neccessary RINs, largely because of concerns about moving past an E10 blend.

Refiners and Motorist groups like AAA argue that E15 is not approved for use in a large portion of vehicles, and 13 major car manufacturers will even void warranty coverage in vehicles running E15. That's a huge issue for folks with cars that are not model 2014. Even the Ethanol groups numbers on this issue leave approximately 250 million vehicles on the road that cannot run properly on E15 - that's not good news for Joe Six Pack.

So why are Environmental groups throwing their support behind a Volume Reduction? Isnt Ethanol supposed to be "green"? Well, maybe not. Original numbers put ethanol at 16% greener than gasoline, and then theres the more obvious environmental impacts. An estimated 5 million acres of land that had previously been set aside for conservation have been converted into farm land for corn for ethanol. Fertilizer run offs have worsened a "dead zone" in the Gulf of Mexico, and contaminated some local water supplies as well, according to an AP investigation. 

Food producers oppose the mandate on the basis that diversion of corn for use in fuel versus the food supply has driven up the cost of animal feed, as well as corn used in processing itself. 

Beyond just supporting the Volume Reductions, the groups in question support a full repeal of the RFS in many cases. 

I wrote an article for Oil & Energy Magazine that gets a little more detailed on the RFS Reduction, you can read it here if you are interested: Oil & Energy Magazine 

What are your thoughts on the RFS Mandate and potential Volume Reductions?

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Topics: Oil & Energy Magazine, Ethanol, EPA Mandate, Biofuels, EPA, RFS

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