Jeff Broin holds conference call on industry future sans tax credit

POET founder and CEO Jeff Broin held a conference call with reporters Tuesday.

In a nutshell, Jeff’s message was that the ethanol industry is ready to compete with oil without the benefit of the tax credit. Going forward, renewable fuel targets remain important, support for cellulosic ethanol will reap great rewards, and the fuel market must be opened through E15, flex fuel vehicles, and flex pumps.

I posted the transcript of Jeff’s remarks here.

About 20 reporters participated. Some of the coverage focused on the industry itself, while some took a look at the effect that losing the tax credit would have on fuel prices, like this clip from KELO-TV here in Sioux Falls.

 

Here’s a sample of other coverage:

As federal tax credit ends, Minnesota’s ethanol refiners say industry can survive without it – Pioneer Press (St. Paul, Minn.)

Corn ethanol will survive subsidy loss, CEO says – Star Tribune (Minneapolis, Minn.)

Ethanol tax credits set to expire, pump prices set to rise – KTIV (Sioux City, Iowa)

Elimination of ethanol blender subsidy doesn’t faze Poet’s Broin – Argus Leader (Sioux Falls, S.D.)

End of ethanol tax credit seen boosting gas price – Des Moines Register (Des Moines, Iowa)

Jeff Broin on the ethanol tax credit, industry focus looking ahead.

In a conference call with reporters Tuesday, POET founder and CEO Jeff Broin discussed the soon-to-be-expiring ethanol tax credit and other issues for the industry looking ahead.

Here’s a transcript of his remarks:

Thank you all for joining me today.

The end of this year will mark a significant transition for the American ethanol industry. But it’s significant for a reason that isn’t immediately obvious.

This transition started years ago, when policy-makers decided that, in order to do something about our oil addiction, American ethanol would be taxed at a lower rate than foreign oil. The ethanol tax credit directly led to the creation of the most successful renewable energy source in American history. Ethanol now makes up 10% of our nation’s gasoline supply and is in more than 9 out of 10 gallons pumped in America.

But the tax credit wasn’t designed to stay at the initial level, or to last forever. That’s why it has been reduced several times since its inception and expires at the end of this year. The goal of the credit was to launch an industry that eventually wouldn’t need it to be sustainable, and that has been successful.

Over the last 30 years the industry, to improve profitability, became increasingly more efficient as the tax credit was decreasing.  Since POET started producing ethanol more than 20 years ago, our process has cut energy use in half and water use by 80 percent, while increasing yields more than 20 percent.

Thanks to those efficiency gains and the steadily increasing price of oil, the industry has now matured to the point that it can survive without the tax credit.

Let me repeat that. Ethanol is now able to compete with gasoline without a tax break. That’s the significance of this transition. That it won’t have a significant impact on the industry.

The reality is that, with the exception of a few short periods, ethanol has been priced below gasoline for the past three years. Since the start of 2008, ethanol has been an average of 16 cents below gasoline without the tax credit, which is a bargain for such a high octane fuel. Today, American ethanol is so competitive that we’ve become a major exporter, even to Brazil.

In the short term, the most notable consequence of the tax credit expiring is that consumers will pay higher gasoline prices, around 4 cents more per gallon. However, the consumer still benefits because ethanol lowers all gasoline prices at the pump around 17 cents per gallon, saving every driver in America more than $100 per year.

We should take this time of transition to evaluate the role government plays going forward.

First, we can’t afford to go backward on our renewable fuel targets, so policy makers must maintain the Renewable Fuel Standard. The road to the pump for ethanol still goes through our competitor, the oil industry.

Second, we must continue to invest in cellulosic ethanol. Although innovators like POET have made much progress over the past few years and the potential is more than 80 billion gallons per year, no one is yet producing at commercial-scale. Policy support for cellulosic ethanol has played a significant role in industry progress. If we’re going to see it through to the finish and realize this great potential, policy-makers must continue to support the development of the cellulosic ethanol industry.

Recent news on this hasn’t all been good. There have been funding and implementation problems with the Biomass Crop Assistance Program. Some have suggested that we water down the Renewable Fuel Standard. And most importantly, the Cellulosic ethanol tax credit has not yet been extended beyond 2012.

Third, policy makers should open the market to all fuels and let us compete head-to-head with imported oil. Allowing higher blends of ethanol like E15, requiring flex fuel vehicles and incentivizing flex pumps are all efforts that allow consumers to choose cleaner burning, American made fuels with little or no cost to taxpayers.

In summary, we have b een improving the efficiency of the ethanol production process for decades and that has put us in a position to compete with gasoline head-to-head without the aid of the tax credit. POET believes that policy-makers must use this transition period to invest in infrastructure and in future innovations in renewable fuels like cellulosic ethanol.

Thank you

 

Technorati Tags: ethanol,poet,tax credit,government

POET Biorefining – Hanlontown receives “Shining Star Volunteer Award”

Mason City, Iowa honored POET Biorefining – Hanlontown at an awards luncheon last week with the mayor and city council.

Mason City Mayor Eric Bookmeyer honored the plant with the “Shining Star Volunteer Award ” for the many ways they reach out to their surrounding communities.

Over the last year, the plant donated time and equipment to paint a railroad bridge, paint and clean along the city trails, and many team members were regular volunteers at the community kitchen.

In a North Iowa Today article, General Manager Kelly Hanson said, “We did not expect this honor and it certainly is not why we volunteer, but we certainly appreciate the award.”

Congratulations to the Hanlontown crew for making the plant such an important part of the surrounding area!

 

Technorati Tags: Hanlontown,POET,ethanol,volunteering,award,Mason City

Economist Global Energy Conversation

The Economist is hosting their second Global Energy Conversation on Friday, November 18 and POET President Jeff Lautt will particiapte as an online expert on biofuels. Lautt will be joined by other experts, academics, corporates and media to discuss the technological and political solutions that can help the world achieve its long-term energy goals.

You can register to particpate in the conversation by clicking here. Let me know in the comments below if you have any points you think Jeff should make during the conversation.

POET ranked #4 of “50 Hottest Companies in Bioenergy”

Biofuels Digest today released its latest “50 Hottest Companies in Bioenergy” list, and POET came out ranked #4.

It’s a ranking determined by voters with experience in bioenergy and subscribers to the publication, so it’s a special honor to be recognized by peers as a “hot” company. POET was unique in its inclusion as the top large-scale ethanol producer working with grain and cellulose.

POET reached some notable milestones over the past year in the areas of cellulosic ethanol, new products and green technology.

1. Cellulosic ethanol advancement (Project LIBERTY):

- Approved for a $105 million loan guarantee from the Department of Energy for Project LIBERTY construction

- Completed the first commercial-scale biomass harvest of 56,000 tons for cellulosic ethanol in Emmetsburg, Iowa and commenced the second harvest

- Built a 22-acre biomass stack yard at the Project LIBERTY site with work continuing this fall

2. Developed new products:

- Branded zein product “Inviz™,” which can be used as a gum base or in films, packaging, adhesives, coatings, glazes and more

- Branded corn oil “Voilà!™,” which is being sold to biodiesel producers. Plan to install technology to more POET plants, with a potential of enough corn oil to supply feedstock for 50 million gallons of biodiesel per year.

3. Green technology:

- Installed POET’s Total Water Recovery system to more POET plants, for a total of 18 plants today. The system has reduced overall water use by more than 650 million gallons of water per year over 2009 baseline. The company-wide average water use per gallon of ethanol is now at 2.6

- Installed a waste heat recovery system that saves energy in POET Biorefining – Caro (Mich.).

 

Technorati Tags: POET,ethanol,cellulosic,green,zein,corn oil

USDA report shows that DDGS are more nutritious pound-for-pound

POET produces 10 billion pounds of animal feed per year through dried distillers’ grains with solubles (DDGS), but a new USDA study shows that DDGS replace a much larger proportion of corn and soybean meal in feed markets.

It’s an often-overlooked fact that ethanol production uses only the starch portion of the corn kernel, leaving the protein-rich portion for animal feed through DDGS.

A USDA study released this month titled “Estimating the Substitution of Distillers’ Grains for Corn and Soybean Meal in the U.S. Feed Complex,” found that pound for pound, DDGS are more nutritious than corn

“Findings demonstrate that, in aggregate (including major types of livestock/poultry), a metric ton of DDGS can replace, on average, 1.22 metric tons of feed consisting of corn and soybean meal in the United States.”

When you hear that “ethanol uses 40% of the corn crop,” it’s not accounting for that return of animal feed. About 40% of that corn used for ethanol goes right to livestock.

Another interesting point is that more DDGS are being used to replace soybean meal. Whereas the corn used for ethanol is not edible for humans, soybeans are. In a sense, DDGS are replacing edible food with inedible (to humans) feed. That actually frees up soybeans for human consumption.

Technorati Tags: DDGS,livestock,feed,ethanol,USDA

NAMA Trends in Agriculture

"Progress through Productivity" is the theme of the annual NAMA Trends in Agriculture Conference scheduled for next week in Kansas City, Mo. NAMA is the association for professionals in marketing and communications in agriculture.

On November 8, I will speak with Ohio State University Professor Matt Roberts in a session titled "Trends in Energy and Alternative Fuels." Dr. Roberts and I are going to cover the current and future biofuel markets and what the latest trends mean for growers and communicators.

Other speakers during the two-day event will address how agriculture can feed a growing population through innovation and responsible stewardship of the land. Due to the mission of NAMA, they will also look at the role that information technology will play in the future of agriculture.

As someone who spends a fair amount of time communicating in an industry tied to agriculture, I'm looking forward to the event. I always like to meet people who do related work, so if you're planning to attend, look me up when you get there.

Since I just can't get enough of KC, I'll be sticking around the next day for the National Association of Farm Broadcasters Annual Convention where POET Founder & CEO Jeff Broin will participate in Trade Talk.

POET at Plain Green

Plain Green 2011 is in Sioux Falls tomorrow and POET will be there. We are one of the event sponsors and I will speak on the Renewable Energy in South Dakota panel at 2:30.

If you're planning to attend, be sure to swing by our booth to learn about POET's sustainability efforts. You might even get a small gift.

Talking innovation in Minneapolis

As I said in a blog post last week, I was in Minneapolis for a conference on innovations in the Midwestern Biofuels industry. It proved to be two good days of conversation between ethanol producers and environmental groups.

I was joined at the conference by my colleague, Erin Heupel, the Director of Environment & Technology at POET. Here’s her presentation:

Alternative Approaches to Process Steam

View more presentations from POET

The Great Plains Institute hosted the meeting and summarized it in a recent email:

Leaders from the biofuels industry and the environmental community gathered in Minneapolis this week to discuss strategies for "greening" the existing corn ethanol industry. Organized by the Great Plains Institute and co-hosted by the Midwestern Governor's Association, the Innovation in the Midwestern Biofuels Industry meeting was planned in conjunction with several ethanol, agriculture and environmental groups.

"Convening diverse interests and facilitating the open exchange of information and ideas is a key part of  what we do at the Great Plains Institute," said GPI Bioenergy and Transportation Program Manager Brendan Jordan.  "This meeting was an important first step to engage leaders from the ethanol industry and environmental and agricultural organizations in constructive dialogue on how best to achieve mutually beneficial environmental and efficiency-related goals." 

Meeting participants - including ethanol producers, environmental community leaders, trade organizations, agribusiness, public sector, and academics - discussed the improving environmental profile of the ethanol industry. Presentations highlighted that the industry has become far more efficient and lowered its carbon intensity over the past decade.

The existing industry will remain focused on implementing cost-saving technologies.  Several additional technologies that may further reduce carbon intensity in ethanol production require extensive up-front capital investment and are unlikely to see widespread adoption until the financial environment improves.  Lower carbon intensity policies in California, Europe and other jurisdictions may provide some additional motivation for ethanol producers to adopt lower carbon intensity technologies, but meeting participants generally felt that existing policy is not sufficient. Participants discussed modifications to existing policies, and also discussed what additional policies may be helpful.

Meeting participants agreed that there are areas of common ground, and that they should be working together to figure out how to encourage investment in the existing industry, just as we work to encourage investment in second generation facilities.

Innovation in the Midwestern Biofuels Industry planning committee members included representatives from the Institute for Agriculture and Trade Policy, Minnesota Corn Growers Association, Monsanto, Natural Resources Defense Council, POET, Renewable Fuels Association and the Union of Concerned Scientists.

Freedom Film Tour coming to Sioux Falls

Documentary film-makers Josh and Rebecca Tickell have followed up their Sundance award-winning film “Fuel” with a new documentary that looks at America’s need to break its reliance on oil through the use of alternative solutions including ethanol.

Their new film, “Freedom,” outlines the clear dangers of remaining an oil-based society and steps viewers through current and coming alternatives. One of those alternatives is ethanol, and the pair spent some time in South Dakota interviewing farmers, fuel station owners and POET CEO Jeff Broin, among others.

The Tickells bring their “Freedom Film Tour” to Sioux Falls, SD this Monday for a special viewing at Augustana College. The Freedom Bus (which runs on ethanol and includes 19 solar panels and a mobile learning lab) will be at the school outside the Morrison Commons from 9 a.m. to 5 p.m. The film will air at 7 p.m. in the Kresge Recital Hall. The directors will be on hand as well.

I’ve seen parts of the film, and it’s pretty moving stuff. If you don’t know much about the potential of renewable fuel, it’s a great introduction. And if you already know, it will still inspire you.

Those who aren’t able to get to Sioux Falls should check out the tour schedule to see when it’s coming your way.

Technorati Tags: ethanol,Freedom,documentary,alternative fuel,oil