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

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

Conservation Biomass

At the America's Grasslands Conference in Sioux Falls this week, I was joined by Steve Apfelbaum, head scientist of The Earth Partners, to announce the launch of Conservation Biomass. Working together, our organizations aim to develop a source biomass that comes from restored marginal lands and is used to produce power. The ultimate goal is to make that biomass cost competitive with current power sources while delivering real environmental benefits.

The conservation biomass will initially be delivered to POET Biorefining - Chancellor, a 100 million gallon per year grain ethanol production facility in Chancellor, S.D. That facility is powered by landfill gas from the Sioux Falls landfill and a solid fuel boiler, where the biomass will be burned. Eventually, we intend to use it as a feedstock for cellulosic ethanol.

We made the announcement at the America's Grasslands Conference because we wanted to seek out the expertise of those who are managing grasslands and restoring native prairies. Steve and I spoke during lunch on the first day of the conference and you can watch our speeches here or on POET TV.

For more information on Conservation Biomass, check out our press release and this news story from Ethanol Producer Magazine. Also, be sure to visit the web site of The Earth Partners.

EPA & USDA Chiefs hear about Biofuel Innovations

POET Chairman & CEO Jeff Broin participated in a discussion with EPA Administrator Lisa Jackson and USDA Secretary Tom Vilsack yesterday about the biofuels industry. The discussion was held at the Newton, Iowa office of Renewable Energy Group (REG) and included Todd Becker, CEO of Green Plains Renewable Energy (GPRE).

Prior to the discussion, each of the three biofuel companies gave a brief presentation. Becker talked about GPRE's work on algae and Broin spent a good portion of his time on corn oil and cellulosic ethanol. Here are the slides that Broin presented:

POET USDA/EPA Presentation

View more presentations from POET

According to press reports, Jackson said that biofuels is about the innovation. AgriTalk has complete audio of the Vilsack/Jackson press conference. Lots of photos from Joanna Schroeder here. A joint response from POET, REG and GPRE can be found on our web site: Biodiesel, ethanol industry leaders applaud USDA, EPA for supporting renewable fuels.

Broin to participate in USDA/EPA Roundtable today

POET Chairman and CEO Jeff Broin will participate in a roundtable discussion hosted by Renewable Energy Group (REG) at their biodiesel plant in Newton Iowa. Joining Broin in the discussion will be Agriculture Secretary Tom Vilsack and EPA Administrator Lisa Jackson as well as representatives from REG and Green Plains Renewable Energy.

Part of the discussion will be POET’s recent announcement on corn oil, some of which will be processed by REG into biodiesel. The potential is more fuel from the same raw material. To read more about the event, see KSFY.com.

What's in store for ethanol and POET in 2011?

Ethanol Producer Magazine interviewed four ethanol industry CEOs (along with one oil company CEO and one media relations director) to get their thoughts about what 2011 will hold for the industry. It's the cover story of the December, 2010 issue (pictured here).

Jeff Broin was one of those CEOs. He talks about the need to expand market access for the industry and our plans for cellulosic ethanol.

Give it a read and let me know what you think. What will 2011 hold for the ethanol industry?

Meet a POET Farmer

Tony Thompson is an investor in POET Biorefining - Bingham Lake (Min.) and his 3,000 acre farm is located about 5 miles south of the plant. A CNN.com profile of Thompson highlights his unique farming practices. But is he all that different? Thompson doesn't think so.

"There's nothing that unusual about me," Thompson said when I talked to him yesterday. "Most of my neighbors are doing the same things I am. They may not do as much research, but many or most good farmers are implementing similar nutrient management systems and watching every unit of nutrient flow through the farm with the output goal being marketable grain…not pollution." Thompson said the real heroes are his crop consultant Steve Sodeman and Fairland Management Company who help him take better care of his land.

Thompson and his two brothers invested in POET Biorefining - Bingham Lake before the plant started up in 1997. They scraped together everything they could to purchase one share in the plant because it was a local outlet for their abundant corn crop. Thompson said he was initially one of the the most reluctant investors in the plant but has since bought out his two brothers.

That plant, where Thompson sells his corn, is also implementing new technologies that take care of natural resources. It was the first POET ethanol plant to install total water recovery, which decreased its water use by 23 percent. Read the story in Vital.

Energy and agriculture can be difficult undertakings, but this plant and farmers like Thompson are doing the best they can, while constantly looking for ways to improve. Be sure to read the entire story on CNN.com and leave your thoughts below.

Storm-felled trees to power POET ethanol plant

Last weekend saw a storm with damaging wind gusts sweep through the area and down lots of trees in Harrisburg, S.D. Those trees are now being cleaned up by the county but it won’t cost them a dime.

That’s because the trees will be burned in a solid waste fuel boiler to provide power for POET Biorefining – Chancellor. As Lincoln County Emergency Manager Harold Timmerman said to KELO TV: “It's eco-friendly all around. We get rid of the branches through this grinder, and they're able to be used in an effective way.” Watch his interview and the full story here:

Did he say varmints? That’s one benefit of bioenergy production that I had previously thought of. Anyway, if you’re in the area and would like to get rid of some wood waste, simply take it to Mueller Pallets. They’ll grind it up and bring it to our facility. You can find them through their web site.

Presidential visit is a big day for POET

To say that a presidential visit is a big deal would be like saying that Michael Jordan was a good was a good basketball player. This was the week that POET found out just how big of a deal it really was as President Barack Obama visited POET Biorefining - Macon (Missouri).

The plant first got word of a potential administration visit in late March and quickly started preparing the plant. As the event date got closer, it was confirmed that President Obama was the person considering the visit. For obvious reasons, we had to keep it quiet, but the plant continued to prepare.

We got the final word on Sunday that he would be coming along with Agricultural Secretary Tom Vilsack. The day before, we found out that there were more than 100 members of the press who had requested credentials for the event, not counting the traveling press corp. The morning of the event, there were seven satellite trucks parked outside the grains building and the event was carried live on several TV stations across the country.

It was easy to tell that this was not the first walk around the block for the White House team. They were great to work with and the team at our Macon plant really went the extra mile to make the ethanol plant look its best. Next week is the plant's tenth anniversary and it probably hadn't looked that good since its first.

Although some industry-watchers thought it could have been better, I thought the speech was a ringing endorsement for the work being done by POET and the rest of the ethanol industry. Others concurred. You can read the transcript on the White House web site or watch it here:

Those members of the press generated a lot of coverage. Among the notables was CNN, with the headline: Obama tours, praises ethanol plant. The story from USA TODAY read: Obama: Energy programs can help rescue rural America. TV coverage came from KHQA, KEYC, KTVO, and many more. We'll continue to post stories on our web site news page.

For photos, visit our Flickr page and check out the online gallery from the Kansas City Star.

During the visit, President Obama made it clear that all forms of ethanol have an important role to play in our country's energy future. As POET continues to its ethanol development, we'll do our best not to let the President, or the country, down.