Corn Commentary

EPA to Issue Rules on RFS

Posted By Cindy May 5, 2009

The notice of proposed rulemaking on the Renewable Fuels Standard will be issued today by the Obama administration.

The announcement will be made jointly in a 10 am Eastern time press conference by Secretary of Agriculture Tom Vilsack, Secretary of Energy Steven Chu and Environmental Protection Agency Administrator Lisa Jackson who will discuss President Obama’s commitment to advance biofuels research and commercialization under the rule.

epaEPA is required under the 2007 Energy Bill to consider ‘significant indirect emissions’ when determining greenhouse gas emissions for fuels under the so-called RFS-2 program. The new RFS requires new corn ethanol plants and new cellulosic ethanol plants to produce a fuel that emits fewer life-cycle greenhouse gasses relative to regular gasoline and that indirect land use changes should be figured into that. The problem is that the data and methods for calculating such ‘indirect land use changes’ – such as from forest or grassland to crops – are not yet adequately developed, and therefore many are arguing they should not be used in calculating the emissions. “Otherwise, we’ll exclude some good biofuels and stifle the investment that is so essential to our national renewable fuels strategy,” says Senator Tom Harkin (D-IA).

There are concerns that the recent decision by the California Air Resources Board regarding indirect land use impacts of ethanol will have a bearing on EPA’s rulemaking, but Renewable Fuels Association president Bob Dinneen believes the agency is looking at a different model for assessing greenhouse gas impacts that will be more favorable for ethanol and other biofuels. Dinneen says they believe a complete evaluation of the science “will demonstrate that ethanol’s impact on indirect land use change is minimal and the significant direct benefits of adding ethanol to gasoline is extraordinary and is a policy that needs to be expanded.”

We’ll find out this morning.

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Categories: Environmental, Ethanol, government

Valero Offers Deal on Corn Contracts

Posted By Cindy May 3, 2009

Corn farmers who had contracts to provide corn for ethanol plants owned by bankrupt VeraSun are pleased with deal offered by Valero Energy, which purchased some of the company’s assets.

ValeroValero is offering to pay corn suppliers spot price plus 40 percent of the amount above spot price specified in their previous VeraSun contract, according to company officials. Suppliers whose contracts were set below the current market prices were allowed out of their contracts.

The South Dakota Corn Growers Association calls the action “a step in the right direction for Valero to build trust with feedstock suppliers,” said Bill Chase, president of the SDCGA. “Offering an option for producers implies Valero understands the importance production agriculture will have in the success and viability of their ethanol facilities.”

Four of the seven plants Valero purchased are currently operating and the company plans to steadily ramp up production at the other facilities. “As Valero continues its efforts to bring former VeraSun plants up to operational capacity, their commitments to the industry will strengthen surrounding communities and bring faith back into these important markets for producers,” said Chase.

Last week, Valero reported a first-quarter profit increase 18 percent on higher margins for processing crude into gasoline and other petroleum products. CEO Bill Klesse says they expect business conditions to improve in biofuel under the government’s fuel blending requirements. “Acquiring these assets at a time of low ethanol margins enabled us to pay only 30% of replacement cost for some of the industry’s best ethanol plants,” Klesse said.

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Categories: Ethanol, Farming



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