by JIM ALGIE
Final numbers for the U.S. Environmental Protection Agency’s renewable fuel standard, announced Nov. 30, raise targets above those proposed earlier this year for renewables blended with that country’s petroleum supply.
They remain short of legislated expectations, however, and have produced widely mixed reaction in the United States. But Canadian Renewable Fuels Association chairman Jim Grey described the Environmental Protection Agency (EPA) move as “very positive” for ethanol production. Grey is CEO of the seven-year-old, Integrated Grain Processors Cooperative which processes ethanol at the rate of about 170 million litres annually from a plant in Aylmer, Ont.
Fresh from his group’s annual conference in Vancouver, Grey said the numbers were well-received there. The U.S. move provides new incentive for growth of advanced fuels and coincides in Canada with a handful of environmental policy developments, he said.
“We were knee keep in discussions about Ontario’s cap and trade plan, Alberta is going to price carbon . . . and now you’ve got (Prime Minister Justin) Trudeau who clearly has a very strong climate-change agenda,” Grey said of conference sessions this week. They’re all positive (developments) for crop-based ethanol.
“We’ve always got work to do, for sure; but I think we’re at a pretty good spot right now,” Grey said of his industry’s prospects which also reflect the benefit of a relatively large corn crop and resulting low prices. This week’s EPA announcements push blending beyond the 10 per cent “blend wall” but they “do it slowly to give the market time to adjust,” Grey said.
Grain Growers of Ontario Government Relations Manager Debra Conlon described the EPA announcement as “a good confidence thing” for corn growers.
“We’re always pleased to see that the international biofuels business is being developed,” Conlon said in an interview, Thursday, referring to “a lot of discord over the last two years” over raising the renewable content of fuel beyond existing levels.
“It’s not on track for where it should be but it’s going in the right direction and it’s not going away,” Conlon said.
Canadian governments maintain ethanol blending requirements similar to those in the United States but at levels that vary by province and remain lower than those south of the border which are to grow to about 10.5 per cent by 2017. Fuel mandates played an important role in generating initial demand for corn in ethanol production both here and in the United States.
For Ontario biomass growers such as Urs Eggimann, however, the U.S. fuel policies that were once key to establishing the renewables industry are now almost beside the point. Growing crops for fuel production has become such a close-margin business that pioneering miscanthus and switchgrass growers such as Eggimann, who is Vice-President of the Ontario Biomass Producers’ Cooperative Inc., now concentrate on the potential of their crops as feedstock for other more-profitable industrial chemicals.
Biomass production with crops other than corn remains very much a pioneering venture for Ontario growers hoping for future markets with Canada’s relatively new biomass processing industry, Eggimann said in an interview from his Grey County farm, Thursday.
In addition to corn ethanol, U.S. regulations include mandates for so-called “advanced” or “cellulosic” ethanol made from a variety of plant sources, including non-food agricultural crop refuse such as lumber industry wastes and corn stover. Slower-than-expected cellulosic ethanol production is part of the reason EPA officials first proposed mandate adjustments.
“The challenge is there are all these future opportunities but these industry sectors want to be sure they can get solid supply, and the farmers obviously they have to prove they can step up to the plate,” Eggimann said. “So it’s really a chicken and egg thing.”
“If each party waits for the other to make the first move it’s got going to happen. We have to work together, obviously,” Eggimann said.
Some analysts expect the revised U.S. standard will further boost ethanol demand as Americans react to a recovering economy and cheaper petroleum prices with increased vehicular travel. Iowa State University biofuels economist Robert Wisner in a recent article for the U.S. Department of Agriculture’s on-line, Renewable Energy Newsletter cites a three-year uptrend in gasoline use he said is “slightly positive for ethanol demand” because of U.S. blending requirements.
If the recent trend continues in 2016, Wisner predicted a domestic market for ethanol of about 14.25 billion gallons. That translates to additional market demand for about 335 million bushels of corn, the report said.
U.S. National Corn Growers Association President Chip Bowling hinted in a statement that his 40,000-member group may push for higher mandates prescribed in the 2007 Energy Independence and Security Act.
“Any reduction in the statutory amount will have a negative impact on our economy, our energy security, and the environment,” Corn Growers’ Bowling said in a statement.
“We should be strengthening our commitment to renewable fuels not backing down,” Bowling said. U.S. Agriculture Secretary Tom Vilsack welcomed the EPA final rules as part of “continued growth” in what he described as “a sophisticated and growing American biofuels industry.”
However, one leading, petroleum industry spokesman argued the 2007 mandates are out of date and push ethanol blends beyond safe levels for current engine technology. Reacting to the mandate decision, American Petroleum Institute President Jack Gerard said Congress must repeal or “significantly reform” the renewable standard in order to protect consumers from unsafe, higher ethanol levels.
The rules announced this week establish renewable fuel volumes beyond historic levels at about 9.5 per cent and “grow the amount of biofuel in the market over time,” EPA acting assistant administrator Janet McCabe said in a statement. The total standard requires growth from 2014 to 2016 of more than 1.8 billion gallons of biofuel, up 11 per cent over 2014 actual volume, McCabe said. BF
Comments
It''s too bad that big ethanol doesn't realize it isn't just hog farmers and the American Petroleum Institute who oppose ethanol - for example, a recent visit to Hawaii's "Big Island" revealed the extent to which Hawaiians dislike ethanol:
(1) The ability to refuel a so-called "E-85 ready" car (A Mustang rental) with fuel sold clearly advertised as being "ethanol-free", a choice demanded by consumers.
(B) a notice exhibited by a large Kona-brand coffee-farm/processor/retailer that they no longer use a certain ethanol-based product in their processes.
It would seem abundantly-clear that the only things "sophisticated" and "growing" about the ethanol industry is the disingenuous nature of the arguments being proffered by its advocates.
I mean, really, ethanol advocates are still using the same-old, and equally-lame energy security shibboleths now that oil is in the $50 per barrel range that they used when it appeared oil was going to $140 and don't see anything inconsistent and/or duplicitous about their arguments.
Stephen Thompson, Clinton ON
It is obvious that mr Thompson has not read the story on page B 4 of the bible . His good friend Al has gone and done a 180 and didn't tell him .
Also once the public learns more about the carcinogens added to gas the public will be crying for pure ethanol which does not contain any .
As long as ethanol use is mandated, it will be net-negative for jobs and economic activity no matter how much positive "spin" ethanol advocates put on whatever dubious environmental benefits it might provide.
The above poster must have been reading well-between the lines of the story to which he/she refers (as well as doing it a week late) because I found the thrust of the story to be that Mussell found the Ontario basis for corn has not changed since ethanol came to Ontario - and if there's been no positive change in basis, there's been, by definition, no benefit to Ontario's corn farmers. Why then are they so keen to support something which, by virtue of no basis improvement, has been of no benefit?
Furthermore, Mussell:
(A) never commented on consumer resistance - he's probably not been in Hawaii recently
(B) never noted that everyone, in their visits to Princess Auto, can easily see that engine manufacturer, Briggs and Stratton, puts notices on new engines warning users to not use so-called E-85 ethanol at the risk of poor performance and/or engine failure.
Ethanol remains, like supply management, nothing more than a protectionist scam designed to benefit the favoured few at the expense of the out-of-favour many.
Stephen Thompson, Clinton ON
So ethanol has not hurt those feeding corn right !
Ethanol is not net neg for jobs , it creates jobs . Further it is just another market for corn growers to sell their crop to .
Maybe Al , Stephen and all those opposed to countervail can now realize their mistake and corn growers should now be getting compensation cheques with interest from years past .
I did not know that ethanol was used like gas for a cheap high . Maybe you do though . I have fumes of other types skew peoples thinking !
I just can't possibly make it simpler - when, like ethanol, something depends on mandates and/or tariffs rather than economics for its existence, it is, by the first principles of economics, net-negative for both jobs and economic activity, a truism as basic to economics as water not running uphill is to physics.
In addition, the above poster posits an overly-narrow interpretation (Keynsian interventionism at its most-absurd) of job creation - while he/she simplistically touts the jobs created by ethanol in the same way supply management supporters tout the jobs created by supply management, he/she equally-simplistically avoids seeing the jobs lost in areas such as:
(1) sectors of the economy that find traditional corn users, including consumers, cutting back on purchases of other things in order to buy corn
(2) sectors of the economy that produce, refine and distribute petroleum
(3) sectors of the economy that would be exporting corn otherwise converted into ethanol.
I guess I should make it even simpler than that - net-negative means that something results in the loss of more jobs than it creates, and that definition applies, without the possibility of either debate or discussion, to both ethanol and supply management.
Stephen Thompson, Clinton ON
The very fact that corn basis was unchanged according to economist AL very clearly mutes plus evaporates your economic net negative argument.
Furthermore, AL states very clearly in the article that "other factors" not ethanol lowered livestock numbers that he originally claimed several years ago.
As well the BIG OIL industry gets approx. 450 billion in subsidies. See: G20 countries spend $450B a year on fossil fuel subsidies, study says:
http://www.cbc.ca/news/politics/g20-fossil-fuel-subsidies-450b-1.3314291
The above attempt to correlate basis with economic neutrality is a spurious correlation and validates the observation made by H. L. Mencken - "For every complex problem there is a solution that is neat, simple and wrong."
A spurious correlation is one where the correlation is appearance only - an example is claiming that cows with long tails give more milk, a supposed correlation that ignores every other factor including age, nutrition and genetics.
The above basis claim is a spurious correlation because, for example, it ignores jobs and economic activity lost in other sectors because of the mandated diversion of corn into ethanol.
In addition, the above poster muddies the substantial economic and structural differences between taxpayer-funded subsidies received by the petroleum industry and the consumer-funded subsidies received by ethanol - they're just not the same thing and, therefore, no valid comparison exists.
Stephen Thompson, Clinton ON
Too bad you can't put on your big boy pants like Al and admit to being wrong . Not asking you to say SM is not gouging consumers !
The ultimate in absurdity, chutzpah and childishness is someone wearing the dirty-diapers of anonymity telling someone prepared to sign his/her name to put on "big boy pants".
Furthermore, nowhere in the article pertaining to Al Mussell's recent corn basis studies does he say, imply or can it even be inferred that his previously-stated views about the net-negativity of ethanol have changed in the slightest.
To claim that a "no change in basis" for corn since ethanol came to Ontario means that ethanol is net-positive for jobs and economic activity, is statistical and economic nonsense as well as reading things into Mussell's study that he never concluded and which can never be attributed to him.
Sigh, the extent to which ethanol supporters are prepared to grasp at the slenderest of straws in an attempt to defend their unearned and unjustified legislated entitlements, never ceases to amaze and disappoint.
Stephen Thompson, Clinton ON
The problem is yours . Many times you spout off about things which is your choice . Funny part is as soon a some one proves your wrong , you look to deflect and blame some one else . Never admitting you were wrong even though you know you were is a bully tactic . There is nothing wrong with admitting you are wrong unless you have to keep admitting it then you have a problem .
I am not wrong when I state that an unchanged basis level for corn doesn't mean, or even imply, that ethanol is net-positive for jobs and economic activity.
More to the point, nobody, anonymous or otherwise, has, or ever could, prove anyone, including Al Mussell, wrong about the net-negativity of ethanol (and supply management) when it comes to jobs and economic activity - the net-negativity of both is too-basic a principle of economics to be debated, or even discussed.
Therefore, why admit to being wrong when I, like every other critic of ethanol and supply management, clearly am not?
Stephen Thompson, Clinton ON
Economist Al said very clearly in the Ont. Farmer article that:" In terms of our work on this we thought this direction would Crowd Out Livestock production." he said. However, he said none of the events actually materialized. And while there is no question the province has seen a dramatic reduction in cattle and hog marketing, it is largely the result of other factors. In other words, Ethanol Production and Corn Basis has had very little to do with it.
Thank you Al.
Given the current overabundance of N.A. corn yields, total supplies and low N.A. corn prices it further validates Al
The above poster is adopting the same sort of convoluted "red-herring" logic adopted by:
(A) the Grain Farmers of Ontario when defending neonicotinoids
(B) supply management supporters when defending supply management
(C) parents defending spoiled, out-of-control children.
- "Because our "spoiled child" isn't to blame for everything, he/she can't be blamed for anything". -
The truism studiously ignored by the above poster, and all ethanol advocates, is that a diversion of up to 40% of the US corn crop into ethanol is a "rising tide that lifts all boats" which, in this case, is the flat price composed of basis plus the appropriate futures month(s) and it's the flat price, not the basis, that screws hog and cattle feeders as well as rewarding grain farmers.
Therefore, the fatal flaw in the arguments proffered by the above poster and all ethanol advocates is that they can't answer the following question without simultaneously incriminating themselves and ethanol mandates:
- "What would happen to the price of corn if ethanol mandates disappeared?" -
The rather-obvious answer would result, according to basic economic principles (as well as common sense, alas, an extremely-scarce commodity among corn producers at the moment) in a dramatic increase in cattle and hog marketings in Ontario.
Stephen Thompson, Clinton ON
I can't believe what I am reading .
Further Hog and Cattle feeders can grow their own although the cattle guys love the ddg's from ethanol . Livestock farmers have said they can compete with any one so now they need to prove it . If that means competing for grain then so be it . Grain farmers were told for long enough to find a better market and ethanol is one . Competition is good .
(1) even people who fail an introductory course in managerial accounting learn the concept of transfer pricing, an extremely-basic and extremely-important management concept the above poster obviously does not understand and/or does not want to understand.
(2) livestock farmers do not "love" ethanol by-products but, instead have a love-hate relationship with what, thanks to the rising tide of the price of all corn-related products because of ethanol mandates, amounts to a "least-worst" situation. For example, livestock farmers would much-rather prefer no ethanol mandates so that they could buy corn at, let's say, $3.00 per bushel rather than pay $4 for bushel because of ethanol mandates or even a $3.50 per bushel equivalent for DDG. Therefore, to claim that livestock feeders "love" DDGs is a misrepresentation of the highest order, but then again, what claim about the benefits of ethanol isn't?
Stephen Thompson, Clinton ON
(519) 482 - 3244
Better yet ! Ethanol is environmentally friendly . Your car will run better on it . Don't think so then watch this . http://www.greencarreports.com/news/1097877_rare-e85-ethanol-fuel-good-f...
Maybe your old auto has a princess auto special motor that pollutes and is not e-tested and up to current emission standards .
It doesn't matter to what extent anonymous farmers tout the real or imagined environmental benefits of ethanol, motorists in Hawaii, easily the most environmentally-conscious jurisdiction I have ever visited, have made it abundantly-clear they don't want ethanol.
More to the point, if ethanol can't be sold on its environmental benefits in Hawaii, it can't be sold on its environmental benefits anywhere, a common-sense marketing truth instantly recognized by everyone except, alas, ethanol supporters.
Stephen Thompson, Clinton ON
Really
What did that cross border shopping cost u and bargains bought home
Apples and oranges and respectively a lot of smoke and mirrors to make a comment with your own baisis once again showing
From here its not shooting the messenger just pointing out the rather obvious
Enough said
If u have examples and can prove of the same signs in Michigan or the I states please provide that proof as last time I checked we are in Ontario are not on a border with Hawall's big island
It seems MrThompson is still using the same same old tired argurments
Larry Lynn
Mr. Lynn is still ignoring the fundamental and obvious points studiously ignored by all corn ethanol advocates:
(1) corn ethanol has nebulous environmental benefits
(2) corn ethanol is, because it is mandated, definitionally net-negative for jobs and economic activity.
The "new" in ethanol is the extent of public backlash against ethanol made higly-obvious by a visit to the big island of Hawaii. As was explained to me, Hawaiians import all their gasoline, and since they do, they aren't interested in buying ethanol-tainted gasoline that causes engines to run poorly and lowers engine performance - thus the demand for "Ethanol-free gasoline" at Hawaiian gas stations made apparent by the prominently-displayed signs advertising just exactly that.
In addition, as was quite-evident on the coffee farm, Hawaiians are so-opposed to GMOs and all sorts of "non-natural" interventions in their food supply, that this opposition has spread to also being opposed to ethanol-based pest controls, the name of this particular one I didn't recognize.
Insofar as Hawaii seems to be even slightly-ahead of California when it comes to environment, health and/or food health consciousness, for whatever reasons, Hawaiian opposition to ethanol is likely to spread to the mainland if it hasn't done so already.
My point was, and still is, that ethanol advocates are fighting a war for public opinion that they've already lost in Hawaii and will likely soon lose in the US mainland - insofar as we in Canada seem to be always the last to figure these sort of things out, it would be nice if, for once, we could be the first to get out of a bad deal like ethanol, instead of always, as is the case with supply management, being the "bitter-enders"
In addition, I'd be delighted if Mr Lynn could:
(A) explain what he meant by his several references to cross-border shopping
(B) point out where in my original posting I made any reference to cross-border shopping
(C) explain how and why cross-border shopping has anything to do with ethanol at all.
Stephen Thompson, Clinton ON
Good to see things never change with my old sparring partner Mr. Thompson, on my bucket list I have added.... seeing Stephan type the phrase "Oh I see your point...." I suspect that will remain along with fitting into my high school jeans as things that might never happen.
Always happy to sign my name, and Merry Christmas Stephan.
Tom Cox
It would appear, alas, that Mr. Cox's nose is still out-of-joint because I hoisted him on his own petard on this site years ago, and since he seems to have nothing better to do than make scurrilous ad-hominem attacks on me, I believe I am completely justified in pointing out to this site's readers exactly why I believe Mr. Cox is acting so-childishly herein.
Some years ago, Mr. Cox made a great to-do of an analysis he completed, and published on this site, wherein he claimed that since the adjusted basis for corn hadn't increased since ethanol mandates came to Ontario, then ethanol hadn't adversely affected Ontario hog and cattle feeders.
Mr. Cox immediately found his nose somewhat out-of-joint, a position where it still appears to be, when I pointed out, on this site, that if a "no-change-in-basis" meant that ethanol hadn't harmed corn users, then it hadn't helped corn farmers either, meaning that Mr. Cox's study was useless when it came to defending ethanol and/or ethanol mandates.
Mr. Cox was, unfortunately, not alone in making this fundamental logic error - the Grain Farmers of Ontario (GFO) hired a consultant who came up with the same flawed conclusions as Mr. Cox and boasted about the results of their study in one issue of the GFO monthly magazine (I believe in early 2011). When I pointed out the study's fatal error to GFO and complained that my check-off money had been squandered on a study which was fundamentally flawed by design, nothing was ever heard of this study ever again, and it promptly disappeared from the GFO website.
Stephen Thompson, Clinton ON
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