Saturday, September 28, 2013

"Conservative Groups Oppose Compromise Effort For Ethanol" Bloomberg

"The criticism shows the difficulty lawmakers may face in revamping a program that’s supported by corn growers and ethanol makers, and opposed by refiners, chicken producers, restaurant groups, anti-hunger activists and some environmentalists."

Sunday, September 15, 2013

"Wall St. Exploits Ethanol Credits, and Prices Spike" New York Times

"Every time they mix ethanol into gas, or import fuel already blended with ethanol, energy companies get a credit from the government, and that credit can be sold to other companies that don’t blend ethanol to help them meet federal requirements. If refiners fall short of their obligation, they can face fines of $32,500 a day. To monitor compliance, each gallon of ethanol is assigned a 38-digit Renewable Identification Number, or RIN. Six billion of them were generated in the first six months of this year."
"The market in ethanol credits is exactly the kind Wall Street loves: opaque, lightly regulated and potentially very lucrative."
“The last thing we wanted in implementing this program is to get price increases for the consumer,”

Tuesday, September 3, 2013

"Biofuel crops: food security must come first" The Guardian

Since 2003, the UK and other EU countries have effectively poured billions of euros into biofuels, on the premise that they reduce emissions from transport. But it has been an expensive case of the Emperor's new clothes: we now know that many biofuel crops actually increase overall emissions. At the same time, they damage biodiversity, hurt some of the world's poorest people by pushing up food prices, and cost us an estimated £460m each year.
Early in September, the European Parliament will have its first opportunity to put the brakes on. MEPs will vote on whether to amend biofuels policy to take account of the critical issue of indirect land use change (iLUC) and at what level to cap biofuels made from food crops.
Biofuel crops increase emissions through land clearance, fertiliser use, and by displacing other crops. When millions of hectares of land are switched from food to biofuel crops, food prices rise and food productionis displaced, triggering a domino-like chain of events ending in cropland expansion elsewhere, including into the tropical forests of Southeast Asia and the savannas of South America and Africa. This is iLUC.
We can't point to the precise hectare of rainforest that's felled because a particular farmer now grows fuel rather than food. But the evidence is clear that burning millions of tonnes of food as biofuel on top of what we eat leads to more land clearance and more fertiliser use (even accounting for useful biofuel co-products fed to animals). UK biofuel use in the first year of monitoring required around 1.4 million hectares of farmland, most of it overseas. That's an area the size of Northern Ireland, just to provide 3% of our transport fuel. By ignoring iLUC, the EU overlooks a large share of the emissions triggered by its biofuel targets.
ILUC is not just about carbon. Agricultural expansion and intensification are among the greatest of all threats to wild nature. Each year, millions of hectares of new cropland threaten tropical forests, wetlands and other biodiversity-rich habitats. Fertiliser run-off from the US corn belt, which supplies us with bioethanol, helps create an oxygen-depleted 'dead zone' in the Gulf of Mexico. The EU's Renewable Energy Directive has laudable 'sustainability criteria', but unsustainable biofuels can still be imported; they just don't count towards the targets. Furthermore, the criteria don't address iLUC, so biofuel demand continues to cause deforestation and biodiversity loss. If a domino falls in the forest, apparently no-one can hear it.
Some in the biofuels industry don't want iLUC factors introduced next month, because some crops would no longer be counted as 'green fuels'. But fuels that trigger deforestation, increase emissions and destroy biodiversity are not 'green'. Supporters of the industry argue that iLUC factors are too uncertain for policy. But they seem happy for policy to support an industry whose promise to deliver lower emissions is even more doubtful. The irony is that any carbon benefit of biofuels is based on their indirect effect in replacing and reducing fossil fuel use. It's nonsensical to argue that food-based biofuels should be supported for this indirect carbon benefit without also counting their indirect carbon cost.
MEPs will also vote on whether to cap use of food as biofuel at 5.5% or 6.5% of transport fuel. The lower cap would protect existing jobs while sending a clear message to investors that food-based biofuels are a poor prospect. In the longer term, we should ask whether it is rational to burn any food at all in our cars.
The right biofuels have a role to play in our energy mix, in the right quantities. Governments should continue to support the development of advanced biofuels, such as those made from waste and those grown in places unsuitable for food crops. But even these 'good biofuels' need safeguards to ensure that they don't damage biodiversity or displace other crops.
In the meantime, it's clear that the Emperor has no clothes. Will the European Parliament listen to the science, and curb the unseemly rush for food-based biofuels? I'll be writing to ask my MEPs to vote for a more modest approach, and I urge you to do the same.
• Dr. Ben Phalan is a research associate in conservation science at the Department of Zoology, University of Cambridge, and is the Zukerman junior research fellow in global food security at King's College.

"Biofuel project funded by UK ‘leaves Africans without food" The Independent

Thousands of people in one of Africa’s poorest countries are going hungry because of a biofuels “land grab” by a firm that receives funding from the Department for International Development, a charity claims.

ActionAid accuses the Swiss company Addax Bioenergy of threatening livelihoods in rural communities in Sierra Leone, where it runs an extensive sugar-cane plantation.
Addax, which will soon begin the first commercial shipping of biofuels from Africa to Europe, receives funding from a UK-based development fund that received just under $150m (£97m) from DfID in 2012-13.
The Addax project, set up in 2008, saw the company take a 50-year lease on 57,000 hectares of land in the Makeni region of northern Sierra Leone. Due to begin exporting in 2014, the project will produce 85 million litres of ethanol a year, for petrol – enough to meet 12 per cent of the UK’s ethanol consumption in 2011/12.
The scheme had been promoted as an example of an environmentally and socially responsible biofuels project. But following visits to the Addax project and 100 interviews with local people, ActionAid claims that the company is harming the livelihoods of 13,000 people, across 60 villages.
Of those surveyed, 99 per cent said that food production had declined in their communities, and 90 per cent said that loss of farmland to the Addax project had been responsible. More than three quarters of local people said that they had never seen the land lease agreements with Addax and 85 per cent said that they had not been adequately informed about the pros and cons of the company’s investment in their land, the charity claimed.
The project is funded by a number of development banks and Government-backed funds, including the Emerging Africa Infrastructure Fund (EAIF), which receives substantial funding from DfID.
Tim Rice, ActionAid’s biofuels policy adviser and author of the report, told The Independent: “It is deeply concerning that DfID, whose aim is to reduce poverty around the world, is funding a project in one of the poorest countries in Africa which is pushing people off their land and into hunger.”
Fiona Hall, Liberal Democrat MEP for North-east England, and a member of the European Parliament’s Industry, Research and Energy and Development committees, told The Independent she would call for a European Commission investigation into the project. “It is a matter of great concern,” she said.
A DfID spokesperson said ActionAid’s claims should be investigated. “EAIF makes their own commercial funding decisions,” the spokesperson said. “As one of EAIF’s funders, we would expect them and their fund managers to investigate any allegations raised and to seek reassurance from the company.”
An Addax spokesperson said the project in question “is already held up as a positive example by the authorities in Sierra Leone, and by international organisations like the Food and Agricultural Organisation of the UN and the African Development Bank.”

"Bad Ethanol Policy Is a Job Killer The price of EPA compliance rose 3,625% since the end of 2012." Wall Street Journal

  •  And 
Like most ideas in Congress, the Renewable Fuel Standard was rooted in good intention. Enacted in 2005 by President George W. Bush and with strong bipartisan support, the RFS was designed to improve energy security and the environment by requiring that the transportation fuels Americans use include a minimum amount of renewable fuels. Administered by the Environmental Protection Agency, the RFS sets a schedule for increasing the amount of renewable fuel used each year, regardless of demand.
The good news is that each gallon of gasoline now includes a 10% ethanol blend. The bad news is that despite technological limits and a lack of consumer demand for greater concentrations of ethanol, the EPA is now mandating that refiners use more than a 10% ethanol blend. That's something refiners simply cannot do.
The Renewable Fuel Standard created a market-based compliance system in which refiners must submit credits to prove that the required amount of renewable fuel is used or paid for by them each year. These credits, known as Renewable Identification Numbers, can be bought or sold like commodities. Both refiners and blenders acquire RINs by either blending the renewable fuel or buying credits in lieu of blending.
Associated Press
As a display of regulatory failure at its finest, current regulations place the compliance obligation on refiners rather than on renewable-fuel blenders—allowing blenders to sell RINs to anyone, including Wall Street speculators—and fail to require any transparency in the RIN market. One result: a shortage of RINs for purchase by refiners, and a lack of clarity about who is acquiring them.
There's somewhat less mystery about the price explosion in RIN credits. Historically, they have traded at a relatively low price—typically four cents per RIN. But higher blend quotas have become increasingly unrealistic to meet—required by law for a commodity that is not reliably available commercially. Another drawback: Ethanol blends beyond 10% can ravage older car engines. No wonder the limited number of RINs are becoming more valuable. Starting in early 2013, prices exploded from four cents per gallon to over $1.45 per RIN, a 3,625% increase since the end of 2012.
The skyrocketing price of RINs is creating a huge threat to refineries like Monroe Energy in Trainer, Pa., near Philadelphia. Monroe purchased the Trainer refinery in June 2012 for a reported $150 million. At current RIN prices, Monroe Energy's annual cost to buy RINs will be almost twice the price it paid to buy the refinery itself.
Like Monroe Energy, refineries across the country are facing unsustainable compliance costs. We need a solution for refineries struggling to comply with burdensome and mismanaged RIN credits, while balancing the intent of the Renewable Fuel Standard.
The Environmental Protection Agency's Aug. 6 announcement that it will consider reducing the renewable fuel volume mandate next year—while refusing to take action this year—is a far too tepid response to this crisis. Next year may be too late. The federal government owes it to the thousands of refinery workers across the nation not to imperil their jobs with ruinous regulations.

Rep. Meehan, a Republican, represents the Seventh District of Pennsylvania in the U.S. House of Representatives. Mr. Eiding is president of the Philadelphia Council of the AFL-CIO.