The California Air Resources Board (CARB) is far from over on discrediting biofuels as part of their mandated policy known as the Low Carbon Fuels Standard (LCFS). For the past year, the ethanol industry has been embroiled in a fight for proper reflections of biofuel’s indirect greenhouse gas emissions, aka indirect land use. Now, CARB has created a working group to study soil sustainability provisions of biofuels. The specific crops under review at this time include corn ethanol, sugarcane ethanol, wood based fuels, palm oil, and soy biodiesel.

Today, CARB held a meeting to discuss this topic. In the proposed agenda, CARB offered several “loose” categories to be considered including carbon content, erosion, crop rotation, nutrition/chemical use, productivity, and crop expansion. I’ll kick myself for saying this, but I’m surprised they didn’t include water.

While I’m not sure what exactly has driven this new LCFS dimension of discussion, I can speculate that several recent events have in part led to this recent course of action. One is the Dead Zone/hypoxia issue which resurfaced when several scientists began calling the Dead Zone a bigger environmental catastrophe than the BP Oil spill. Corn and corn ethanol are being charged for creating the Dead Zone through its use of pesticides and fertilizers used in production.

Second, Friends of the Earth has been vocally opposed to how corn is produced and to corn ethanol (actually, to all current and future biofuels) and is currently engaged in a national campaign to end production of corn ethanol and reassess corn production methods.

While I do believe that soil sustainability is an area to be reviewed in general, I do not agree that you can regulate biofuels policy on this issue. Not only that, but like indirect land use, a theory not based in sound science, petroleum is not being held to the same standards. No where on the agenda is a discussion of the soil, or land implications of global petroleum production.

Last week, the University of Nebraska finally acknowledged that there are in fact, “indirect land use” effects of petroleum. Mainly transportation and war and released a study that examined these possible effects. More studies need to be conducted on this topic and I think they will.

As California moves to create more LCFS provisions on biofuels, consumers must call for CARB to consider the environmental implications of petroleum production. For the past three months, we have seen, first hand, some of the implications of oil with the Gulf of Mexico oil spill compliments of BP.

But we don’t need a spill to have land impacts of petroleum. Drilling, chemicals and water are all elements of production. What about the emissions spewing from our refineries? CARB has created a list of hazardous chemicals that can’t be used in biofuels production, but where is the list of chemicals that can’t be used in petroleum production as part of these provisions?

I realize that I sound like a broken record when I say this, but you cannot hold biofuels up to a standard that can’t be achieved, and not hold petroleum up to the same standard. If our goal is to produce more environmentally and sustainable fuels, then let’s do just that.

Read more….

*with humble apologies to Charles Darwin
John Petersen

The Oxford Dictionary
defines the adjective ‘specious’ as:

• Superficially plausible, but actually wrong;
• Misleading in appearance, especially misleadingly attractive.

The Wiktionary
offers a broader definition as:

• Seemingly well-reasoned or factual, but actually fallacious or
  insincere; strongly held but false;
• Having an attractive appearance intended to generate a favorable
  response; deceptively attractive.

Over the last two years I’ve patiently analyzed the evolving price and
performance forecasts of electric vehicle advocates and lithium-ion
battery developers. In the process I’ve shown them to be possible, but
unlikely, and interdependent to the point where a single flawed
assumption can level the entire house of cards.

I’ve also puzzled over the broader question of why supposedly
reasonable businessmen would encourage market expectations that are so
aggressive that the probability of delays, cost overruns, performance
shortfalls and other predictable failures approaches certainty.
Everyone knows that the stock market reacts badly to disappointment, so
I’ve never been able to figure out why companies would voluntarily set
themselves up for that kind of pain.

I found my explanation last week. The lights went on when I downloaded
a new DOE Report titled “Economic
Impact of Recovery Act Advanced Vehicle Investments,” which just
happened to coincide with groundbreaking ceremonies for Compact Power’s
new plant in Holland, Michigan that will create one new job for every
million dollars of capital investment. When I compared the conclusions
of this seven-page DOE report with the exhaustive technical discussions in
the 380-page Annual
Progress Report on Energy Storage Research and Development the DOE
released in January, the differences were breathtaking.

Who’d have dreamed an industry could make that much progress in only
six months.

The answer fell into place when I noticed that (a) the DOE press release
uses a hyperlink to the White
House for people who want to read the full text of the Report, and
(b) the Report is not even hosted on the DOE’s server. Since I’ve never
encountered a situation where the government agency that generated a
report left it out of their official record, the clear inference is
that the Report is political theatre wrapped in a DOE cover.

Once you understand that The Origin of
Specious is political rather than technical, everything else
makes sense. Armed with barrels of taxpayer money, the political class
has sought out battery developers who will adopt the party line and add
technical credence to questionable ideological goals. Faced with a
Hobson’s choice between needed funding and technical integrity, the
developers make the rational business decision and take the money,
confident that future apologies will be easier to spin than current
failure. Sprinkle in a healthy dose of optimism from journalists who
don’t bother checking facts and you have the perfect political story
for the next five years.

American presidents are supposed to inspire with challenges like
putting
a man on the moon or tearing down the Berlin Wall. The great ones
sometimes succeed. For lesser men, the grand visions of their day
target the highest
fruit on the lemon tree and bring us wars on poverty, drugs, terror,
foreign countries and CO2 that inevitably fall short of
the mark while leaving us no wiser, but a little poorer and a little
less free.

We all know how well pre-election promises work out. While it gives me
no end of comfort to hear presidential assurances that battery
prices, healthcare costs and budget deficits will collapse over the
next five
years, I’m not quite ready to pay a premium price to invest in those
outcomes.

At the close of business on Thursday, the electric vehicle complex
including Tesla Motors (TSLA),
A123 Systems (AONE),
Ener1 (HEV)
and Valence Technology (VLNC)
had combined 12-month revenues of $258 million and sported a combined
market capitalization of $3.4 billion, including $900 million in
stockholders’ equity and $2.5 billion in blue sky premium.

In comparison, the lead-acid battery complex including Enersys (ENS),
Exide Technologies (XIDE),
C&D Technologies (CHP) and
Axion Power International (AXPW.OB)
had combined 12-month revenues of $4.6 billion and a combined market
capitalization of $1.6 billion, including $1.2 billion in stockholders’
equity and $460 million in blue sky premium.

Something is out of kilter when the electric vehicle complex has 6% of
the sales and 77% of the stockholders equity of the lead-acid battery
complex, but trades at twice the price.

Within a couple weeks, all of these companies will report second
quarter results. The electric vehicle complex is likely to report
bigger than expected losses – again, and at least for Ener1 and
Valence, weak financial condition. In comparison the lead-acid complex
is likely to once again report better than expected revenues, margins
and financial condition. At some point the market will accept the cruel
reality that political promises cannot repeal the laws of economic
gravity, we can’t waste scarce resources in an effort to conserve
plentiful resources, and investments in vehicle electrification are
bound to follow the tragic value trajectory blazed by fuel cells and
corn ethanol, which have been favorites of the political class since I
was a baby lawyer.

It’s your money, but at least you understand The Origin of
Specious.

Disclosure: Author is a former
director of Axion Power International (AXPW.OB)
and holds a substantial long position in its common stock.

Read more….

John Petersen

The Oxford Dictionary
defines the adjective ‘specious’ as:

• Superficially plausible, but actually wrong;
• Misleading in appearance, especially misleadingly attractive.

The Wiktionary
offers a broader definition as:

• Seemingly well-reasoned or factual, but actually fallacious or
  insincere; strongly held but false;
• Having an attractive appearance intended to generate a favorable
  response; deceptively attractive.

Over the last two years I’ve patiently analyzed the evolving price and
performance forecasts of electric vehicle advocates and lithium-ion
battery developers. In the process I’ve shown them to be possible, but
unlikely, and interdependent to the point where a single flawed
assumption can level the entire house of cards.

I’ve also puzzled over the broader question of why supposedly
reasonable businessmen would encourage market expectations that are so
aggressive that the probability of delays, cost overruns, performance
shortfalls and other predictable failures approaches certainty.
Everyone knows that the stock market reacts badly to disappointment, so
I’ve never been able to figure out why companies would voluntarily set
themselves up for that kind of pain.

I found my explanation last week. The lights went on when I downloaded
a new DOE Report titled “Economic
Impact of Recovery Act Advanced Vehicle Investments,” which just
happened to coincide with groundbreaking ceremonies for Compact Power’s
new plant in Holland, Michigan that will create one new job for every
million dollars of capital investment. When I compared the conclusions
of this seven-page DOE report with the exhaustive technical discussions in
the 380-page Annual
Progress Report on Energy Storage Research and Development the DOE
released in January, the differences were breathtaking.

Who’d have dreamed an industry could make that much progress in only
six months.

The answer fell into place when I noticed that (a) the DOE press release
uses a hyperlink to the White
House for people who want to read the full text of the Report, and
(b) the Report is not even hosted on the DOE’s server. Since I’ve never
encountered a situation where the government agency that generated a
report left it out of their official record, the clear inference is
that the Report is political theatre wrapped in a DOE cover.

Once you understand that The Origin of
Specious is political rather than technical, everything else
makes sense. Armed with barrels of taxpayer money, the political class
has sought out battery developers who will adopt the party line and add
technical credence to questionable ideological goals. Faced with a
Hobson’s choice between needed funding and technical integrity, the
developers make the rational business decision and take the money,
confident that future apologies will be easier to spin than current
failure. Sprinkle in a healthy dose of optimism from journalists who
don’t bother checking facts and you have the perfect political story
for the next five years.

American presidents are supposed to inspire with challenges like
putting
a man on the moon or tearing down the Berlin Wall. The great ones
sometimes succeed. For lesser men, the grand visions of their day
target the highest
fruit on the lemon tree and bring us wars on poverty, drugs, terror,
foreign countries and CO2 that inevitably fall short of
the mark while leaving us no wiser, but a little poorer and a little
less free.

We all know how well pre-election promises work out. While it gives me
no end of comfort to hear presidential assurances that battery
prices, healthcare costs and budget deficits will collapse over the
next five
years, I’m not quite ready to pay a premium price to invest in those
outcomes.

At the close of business on Thursday, the electric vehicle complex
including Tesla Motors (TSLA),
A123 Systems (AONE),
Ener1 (HEV)
and Valence Technology (VLNC)
had combined 12-month revenues of $258 million and sported a combined
market capitalization of $3.4 billion, including $900 million in
stockholders’ equity and $2.5 billion in blue sky premium.

In comparison, the lead-acid battery complex including Enersys (ENS),
Exide Technologies (XIDE),
C&D Technologies (CHP) and
Axion Power International (AXPW.OB)
had combined 12-month revenues of $4.6 billion and a combined market
capitalization of $1.6 billion, including $1.2 billion in stockholders’
equity and $460 million in blue sky premium.

Something is out of kilter when the electric vehicle complex has 6% of
the sales and 77% of the stockholders equity of the lead-acid battery
complex, but trades at twice the price.

Within a couple weeks, all of these companies will report second
quarter results. The electric vehicle complex is likely to report
bigger than expected losses – again, and at least for Ener1 and
Valence, weak financial condition. In comparison the lead-acid complex
is likely to once again report better than expected revenues, margins
and financial condition. At some point the market will accept the cruel
reality that political promises cannot repeal the laws of economic
gravity, we can’t waste scarce resources in an effort to conserve
plentiful resources, and investments in vehicle electrification are
bound to follow the tragic value trajectory blazed by fuel cells and
corn ethanol, which have been favorites of the political class since I
was a baby lawyer.

It’s your money, but at least you understand The Origin of
Specious.

Disclosure: Author is a former
director of Axion Power International (AXPW.OB)
and holds a substantial long position in its common stock.

Read more….

photo: Kevin Dooley

Two new pieces in NRDC‘s Switchboard blog remind us that the debate over corn ethanol subsidies is alive and well; and illustrate, through two new reports, the benefits of ditching Federal support altogether. The first, from the Congressional Budget Office, details how much money eliminating the Volumetric Ethanol Excise Tax Credit; the second, from Read the full story on TreeHugger

Read more….

I have my eye on California. They are leading the way in “green” policies; yet they make it difficult for companies with “green” products to get permits. They are also in the middle of a new Governors campaign and I can’t help but wonder if a new Governor will undo or improve any of the state’s current policies. One in particular that I’m watching is the Low Carbon Fuel Standard (CARB) which is currently under fire by the petroleum industry, trucking industry and corn ethanol industry. Each of these groups has filed a lawsuit against the California Air Resources Board (ARB) over various pieces of the policy.

One organization not filing suit is the Brazilian Sugarcane Industry Association (UNICA). To date, sugarcane ethanol has received the lowest carbon life-cycle rating of all forms of ethanol and seems to have become the ethanol darling among politicians. Recently, President Obama, who is afraid to utter the word “corn” in conjunction with ethanol, touted the benefits of sugarcane ethanol.

UNICA has repeatedly called for these organizations to drop their lawsuits against ARB. In this light, I spoke with Joel Velsco, the Chief Representative of North America for UNICA, and asked him to weigh in on what is happening in California. In terms of the LCFS, he said that they were hoping for a different decision from Judge O’Neil but it wasn’t a surprise – meaning after a review, the lawsuits have not been thrown out.

“California’s LCFS can help break our dependence on fossil fuels, protect us from market price volatility and provide consumers with cleaner and more abundant fuel choices,” said Velsco. “As UNICA outlined in our May Amicus brief, the LCFS is valid and consistent with the Constitution’s Commerce Clause, and is not preempted under the Supremacy Clause since it is entirely consistent with Congress’s own program mandating the use of renewable fuels. We will be closely observing this issue as it moves through the courts, and remain hopeful that the Judge will ultimately agree with the arguments we brought forth in our Amicus.”

As the suits make their way through California courts, I asked Velsco if he felt a new Governor at the helm could have any bearing on the future of the LCFS.

He responded, “I’ll leave the political analysis and predictions to the experts. What I can tell you is that after exhaustive study, California state officials have identified sugarcane ethanol as an important part of the solution to achieving the state’s low-carbon goals. The state has a right to lower the carbon footprint of transportation fuels used by Californians, and the biofuels industry is prepared to help the state meet this challenge.”

He continued, “Of course this would be easier to achieve if the LCFS wasn’t challenged in the courts, and the U.S. Congress lets the 54-cents-per-gallon tariff on imported ethanol expire at the end of this year. Regardless of who Californians elect as their next governor, they should seriously consider these issues and their overall energy security when casting their ballots in November.”

The ethanol tariff is currently under fire and set to expire at the end of the year. The corn ethanol industry is fighting to keep the tariff in place claiming that if the tariff is removed, America will be subsidizing foreign ethanol. However, UNICA maintains that removing the tariff will encourage competition and benefit consumers.

“At first, change and competition can be daunting,” explained Velsco. “It can be easier sometimes to accept the status-quo. But the status-quo is costing taxpayers $6 billion each year and hurting consumers at the pump with volatile gas prices. It’s time for Congress to remove a 30 year-old band-aid on a healthy and thriving industry.”

“Expanding the market for clean, renewable fuels in a way that benefits consumers is the smart and responsible thing to do. Earlier this year, Brazil took an important step by eliminating its own tariff on imported ethanol through the end of 2011. UNICA is urging the Brazilian government to make the tariff elimination permanent if Congress will do the same and drop the U.S. tax on imported ethanol,” concluded Velsco.

While the fate of the LCFS and the ethanol are uncertain, it is assured that the debate on what is in the best interest of the ethanol industry, the country and consumers will continue.

Read more….

Read more……..

A colleague of mine, Will Thurmond, who is the CEO of markets research firm Emerging Markets Online, sent me this great article about why companies are spending billions of dollars investing in advanced biofuels in Brazil while companies are hesitant to invest in any biofuels projects here in the states. I thought that it was so insightful that I wanted to share it with you here.

“US Biofuels Investors, Technologies Migrate to Brazil”

As we enter a new decade in 2010, why are Shell, Bunge, LS9, Dow, BP, Amyris and Cobalt collectively investing more than $20 billion dollars into advanced, sustainable biofuels in Brazil? The big dance between Brazil, US and EU public and industries kicks off a new era in international biofuels investment.

Bossa Nova – The New Wave
Bossa Nova (translation: the new wave, mixing old traditions with new trends) is an evolutionary art form. In the case of the agri-fuels business, Brazil’s new wave of advanced, sustainable biofuels investments represents a heady mixture of sugars and cellulosic carbohydrates into ethanol and hydrocarbon fuels, renewable diesel, biochemicals, biobutanol, biopolymers, and advanced, low-carbon drop-in replacement fuels.

Enter Brazil. For more than 30 years, Brazil has lead the world in sustainable biofuels production. At the dawn of a new decade, Brazil is  emerging as a world leader in advanced, sustainable biofuels investments, along with new technologies from private sector partners in the US and EU. In 2010, Brazil’s progress in private sector biofuels investment is charging ahead, while EU and US government policies are effectively reducing ethanol biofuels targets due to political uncertainty and slower growth related to cellulosic biofuel feedstock production economics.

Sustainable Policies Matter
Based on US , EU and UN sustainability government policy standards, Brazil’s sugar cane ethanol is environmentally, economically, and politically achievable today. Paradoxically, using the same sustainability criteria, cellulosic biofuels in the US and the EU are not yet economically achievable in substantial volumes. As the US and EU governments continue to debate sustainability criteria, the Obama’s US EPA administration has already scaled back 2010 cellulosic biofuels targets during an election year, as ethanol subsidies and tax credit benefits are challenged by the imminent arrival of the E10 blend wall in the US. This uncertain policy environment in the US and EU has private investors looking to greener pastures, and entering into a new dance mixing emerging technologies and sustainable feedstocks with Brazil.

Investment Trends
US/EU/UN sustainability criteria have ironically lead to positive investment outcomes in Brazil during a challenging economic recession world-wide. During this time, Brazil’s sugar cane production facilities and conglomerates have lead to favorable terms for 1st generation sugar cane ethanol acquisitions, and attractive conditions for next-generation, integrated cellulosic biorefineries. These reasons explain the new wave of investments in Brazil, where Shell and BP have entered into to multi-billion dollar ventures (Shell-Cosan JV at $12 billion, BP’s $8 billion through 2015) heralding this new trend of US-Brazilian emerging markets technology-feedstock ventures.

US, EU Dance With Brazil
During this time, another wave of next-generation renewable drop-in fuel companies Amyris, LS9, Cobalt, Dupont are investing in and partnering with Brazil’s sugar cane fermentation biorefineries. Why? Because their emerging technologies from cellulosic microbes (yeast, algae, fungus and bacteria) can utilize the same ethanol fermentation facilities in the US corn belt and in Brazil’s sugar cane belt to produce bio-crude, green diesel, petrol and biojet.

Here’s the big idea. Take an existing ethanol factory or conglomerate. Drop-in a new Amyris, LS9, Gevo, Cobalt microbe/bug in the same fermentation vat and what do you get? An Integrated Biorefinery that can utilize sustainable sugars to produce renewable diesel, aviation fuel, and biobutanol – fuels that are compatible with existing petroleum pipelines, storage, gas stations, and automotive engines today.

In the near future, these fermentation-based biorefineries will be able to convert multiple inputs from cellulosic sugars- bagasse, switchgrass, wood chips, municipal solid waste, and glycerin – into a diverse set of outputs, including renewable diesel, aviation fuel, bio-crude oil, biochemicals and biopolymers with significant GHG reductions and carbon emissions compared to petrochemical hydrocarbons. By 2012 the US is expected to see a similar wave of investments.

2nd Gen Economic Advantages
In Brazil and the US, the key advantage to future integrated biorefineries is in the simplicity – and diversity – of operations. By utilizing multiple inputs (cellulosic sugars from various feedstocks) in low-cost fermentation vats with new microbes, and by producing multiple outputs (green diesel, petrol, biojet) these biorefineries will not repeat the same mistakes 1st generation corn ethanol and biodiesel plants made by utilizing one commodity as an input to produce one commodity as an output.

Integrated Biorefineries In Sight
Shell, BP, Chevron and their cellulosic sugar babies Amyris, LS9, and Virent are using diversified refinery concept with (a) multiple feedstocks and (b) diversified hydrocarbon outputs– ethanol, biodiesel, renewable diesel, green petrol, aviation fuel, biocrude from algae, biobutanol, biochemicals, and biopolymers. The future benefits of these integrated biorefineries will demonstrate leadership and much-needed economic certainty that is challenged by US and EU cellulosic biofuels economics, mandates and markets today. This will benefit the other big emerging markets of China and India as the dance progresses, and eventually US markets when conditions are more favorable.

Long before the Olympics arrive in Rio in 2016, Brazil’s leadership in sustainable biofuels, coupled with advanced technologies from US and EU industry partners, will illuminate evolutionary pathways in achieving successfully integrated, diversified, biorefineries.  In particular, India, the world’s 2nd largest sugar producer, and the world’s most populated nation, is most likely to benefit from this progress along with China and other key emerging market nations.

It is no secret US biofuels policy in the spring/summer of 2010 remains asleep at the wheel at the EPA and Congress.  Before the elections in the Fall of 2010, the EPA and Congress have a prime opportunity to wake up and deliver a more stable regulatory and investment environment for US biofuels for 2010 and beyond. Until then, US investors will continue to dance the Bossa Nova and ride the new wave into Brazil.

Read more….

Filed under: Ethanol

The BP oil spill has reminded us that whether we love ethanol or hate it, it’s still loads better than crude oil. Or at least that’s what the corn ethanol lobbies would have us believe, according to Slate.

With ethanol plants closing left and right, about 1.4 billion gallons of additional distilling capacity under construction, and with the EPA still not giving the green light to E15, the ethanol-is-better-than-oil-spills message is being pushed hard. Matt Hartwig, communications director for the Renewable Fuels Association, sums up the ethanol lobby’s main talking point: “The Gulf of Mexico disaster serves as a stark and unfortunate reminder of the need for domestically-produced renewable biofuels.”

An upsurge in oil-spill, ethanol-focused advertising slogans may also be a sign of rising lobbying efforts in the nation’s capital by the industry. One example seen in a Washington D.C. Metro station that reads, “No beaches have been closed due to ETHANOL spills. … America’s CLEAN fuel,” was paid for by Growth Energy, and ethanol industry lobby group.

In a crisis like the oil spill, politics and panic can rule the day. Let’s just hope policy makers remember the false promise of corn ethanol before dumping a few billion dollars into resuscitating it. Any of our readers feel like starting an ABG lobbying group on K Street?

[Souce: Slate | Image: r-z - C.C. 2.0]

Slate: Worst part of oil spill could be return of Big Ethanol originally appeared on Autoblog Green on Wed, 07 Jul 2010 07:58:00 EST. Please see our terms for use of feeds.

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The Vice President of Iowa Speedway is Craig Armstrong. He’s the always smiling face that we in the media get to see when we cover the Iowa Corn Indy 250. This is a photo of him introducing the drivers at their press conference.

I don’t think you’ll find a bigger supporter and fan of American made corn ethanol and for good reason. The race track has had a very close partnership with the race sponsor, Iowa Corn Promotion Board and Pioneer Hi-Bred. He says they all win in this deal. The race track is really glad to have this race because although there are more race fans per capita in Iowa than any other state in the country, they are under-served in terms of feature races.

You can listen to my interview with Craig below.

Iowa Corn Indy 250 Photo Album.

Read more….