Ethanol. Right. Now.

Brazil's sugarcane industry rep speaks at ACE ethanol conference

Joel Velasco, Chief Representative in North America for Brazil's sugarcane industry association (UNICA), told ACE conference attendees that the U.S. and Brazil agree on 99 percent of things.  "We believe in the power of farmers and agriculture to solve many of these problems," Velasco said. 

Forty-six percent of Brazil's total energy use is considered renewable, he noted, and sugarcane makes up about 16 percent of the country's entire energy matrix.  Thanks to co-generation at the mills from burning the bagasse, sugarcane makes 3 percent of the country's electricity demand - and that may climb to 10 percent in the near future.  They don't have distillers grain to sell, but they have electricity to make, Velasco said.

Half a billion tons of cane were grown last harvest, making 7 billion gallons of ethanol.  This equals 31 billion metric tons of sugar.  Brazil's sugar output for food is up by 20 percent, responding mainly to India's shortfall in sugar production.  Velasco noted that India has shunned biofuels and now is short on sugar for food.

"There is no correlation between deforestation - it exists in Brazil, and it's a tragedy - but it has nothing to do with growing cane in Brazil or growing corn here in the U.S.," Velasco said.

In Brazil, the "gasoline" is actually E25.  Ethanol competes with gasoline and keeps gas prices in check.  "Gasoline in Brazil is now the alternative fuel," he said.

"The flex-fuel car has been very, very successful in Brazil," Velasco said, noting that General Motors does not offer a single car in Brazil that's not flex fuel today.  The Honda Civic can run on pure ethanol and meet all emissions standards in Brazil, the U.S., and in Europe.

Velasco says that Brazil supports the move to E15 in the U.S.  In UNICA's official comments to the U.S. EPA, they noted that throughout all of Brazil's many fuel changes over the years with different blends of ethanol, there were very, very few incidents with engines.  "We believe the technology is all there," he said, noting that if they could do it with 1970s automotive technology, it's probably ok today. 

Experts debate methods for calculating international land use change

At the American Coalition for Ethanol's national conference last week in Milwaukee, experts in the field of studying international land use change debated the different methods behind the calculations.  Wally Tyner, professor and energy economist in the Department of Agricultural Economics at Purdue University, and Tom Darlington, President of Air Improvement Resource (AIR) Inc. addressed the conference's general session on "Theory vs. Science: The Role of Biofuels in Low Carbon Policies and Calculating Direct and Indirect Emissions."

Tyner noted that prior to 2007, the general consensus was that corn ethanol had a 20% reduction in greenhouse gas (GHG) emissions, but then in the Energy Independence & Security Act of 2007 came the requirement that indirect land use change be considered in estimating total GHG impacts.  He stated that there are a number of issues involved in developing a lifecycle model to quantify these international changes, including how to define the boundaries, deciding what to include and not include, and working with uncertain numbers. "How uncertain are these numbers?  And they are uncertain, believe me," Tyner said.

He also mentioned the E10 blend wall, calling it "the biggest issue" facing the ethanol industry.  "It's a total block to cellulosic ethanol," Tyner said. "Cellulosic ethanol will never appear without getting over the blend wall."

Tyner believes that, based on Purdue's "GTAP" model, the range today for corn ethanol is minus 9 to minus 23 in terms of lower lifecycle emissions than gasoline.

Tom Darlington has studied the international land use change (ILUC) issue and sees what California has done with its low carbon fuels standard as potentially problematic.  Other states are looking to take up the banner on a low carbon fuels standard after California, he noted, saying "I still believe how we do a low carbon fuels standard or RFS2 is a pretty big issue."

"At this point I believe the numbers are not as high as the GTAP model and some of the other models are saying, and I'm not in one camp or the other," Darlington said.  He studied the ILUC issue about a year ago for the Renewable Fuels Association and determined that land use change could indeed be zero.

Darlington believes a higher credit should be given for the ethanol co-product distillers grain, which goes back into the livestock feed market.  He said that other models traditionally believe distillers grain replaces corn on a pound for pound basis, but a new study shows that especially in dairy cattle, swine, and poultry, distillers may replace some soy, too.  One pound of distillers grain replaces nearly 1.3 pounds of corn.  Properly accounting for that soy offset should have a land use change credit, Darlington said. 

When the models are tweaked according to Darlington's recommendations, the outcome is much more favorable for corn ethanol than under the California model, for example.

"Land use modeling is in its infancy," Darlington said.  "Regulations requiring these to be estimated are still far ahead of the models.  We believe there is great risk in making bad decisions, and they may be irreversible."

During the Q&A with the audience, Tyner said he has a couple of issues with Darlington's model, but "we have made tremendous progress in the science.  We're all working to improve all of this stuff."

The California low carbon fuels standard is another question, Tyner said, stating that "it's really tough to create a policy that puts millions of dollars on every percentage point on every different type of fuel."  Measurement becomes absolutely critical, he said, adding that "I don't think we're going to get there," to a point where we can be absolutely certain of each percentage point.

 

Administration trade reps: No plans to change ethanol import tariff

In a July 29 letter to U.S. Senator Charles Grassley (R-IA), Secretary of State Hillary Rodham Clinton and U.S. Trade Representative Ron Kirk made the following comment about the existing ethanol import tariff:

"The Obama Administration is committed to developing our domestic biofuels industry in order to reduce U.S. dependence on oil imports and increase our use of renewable energy sources.  There has been no change of policy with respect to the U.S. import surcharge of $0.54 per gallon on ethanol.  The Administration has no plans to seek changes to the import surcharge."

Read the entire letter here: http://grassley.senate.gov/upload/200907290001-2.pdf

President Obama on biofuels: "If Brazil can do it, there's no reason we can't do it"

President Obama was interviewed yesterday by Yankton, South Dakota's WNAX Farm Director Michelle Rook, speaking about the Administration's "Rural Tour" which kicks off July 1.  In the interview, the President spoke at length about biofuels and their role in the future of American agriculture.

When asked how big of a role he thought renewable fuels would play in the long-term profitability of American agriculture, President Obama replied, "I think it's going to be critical.  I think there's huge potential around biofuels... Ethanol has been a big boon to a lot of rural communities, really making the difference between profitability and not making a profit for a lot of farmers."

The President noted that next-generation biofuels will be important: "What we also are recognizing is that the key for us is going to be moving into the next generation of biofuels. How can we use wood chips, refuse, switchgrass, and the whole other set of biofuels standards, and how can we improve the efficiency of first generation biofuels.  And farmers are going to be critical to that entire process."

President Obama also cited the example of Brazil, which uses ethanol extensively to fuel its automobile fleet.  "If Brazil can do it, there's no reason we can't do it," the President said.

Listen to the radio interview in its entirety here.