Formidable Challenges In Front of Us

February 14, 2013

BY Tom Bryan

I return from the 2013 National Ethanol Conference hopeful but unconvinced that 2013 will be a huge bounce-back, breakthrough year for U.S. ethanol production. Too many unknowns remain—the lingering drought, the blend wall, cellulosic ethanol’s unhurried arrival—to pretend rosy times are at hand. What I am sure of, however, is that 2013 will be a year of recovery, trial and modification for our industry.


Renewable Fuels Association President and CEO Bob Dinneen had the most difficult job in bioenergy on Feb. 6 when he opened his association’s annual conference in Las Vegas with a stirring but pragmatic “State of the Industry Address.” Dinneen reminded us that a historic drought and heat wave caused the industry’s current woes. He lambasted the American Petroleum Institute for trying to impede the development of advanced biofuels. He censured Big Food for swinging at us while we were down. And then he did his thing: He fired us up and reminded us that better times are ahead.

Advertisement


Dinneen believes it. I believe it. But do the owners and managers of America’s 36 idled ethanol plants believe it? In a city built on bets, some producers sat before Dinneen in Sin City, arms folded, without much to wager. It was a tall order to ask them to look beyond their current challenges, beyond crazy expensive corn, flagging gasoline demand and negative margins.


Yes, producers should be encouraged by the fact that ethanol production is expected to rebound to predrought levels later this year, but America’s heartland remains locked in drought. If dry weather persists into the planting season, analysts say, so will high corn prices.

Advertisement


The U.S. Energy Information Agency expects ethanol’s share of the gasoline market to reach 11 percent next year (from 9.7 percent today) as E15 implementation takes hold, but even that conservative level of penetration may be wishful thinking. With U.S. gasoline demand slumping and fuel economy improving, the fight for E15 is a battle for the barrel. Implementation will happen slowly and without market pull.  


Yes, the renewable fuel standard is more durable than ever having survived the 2012 waiver requests and, more recently, gaining strength from a district court ruling that fundamentally validates the U.S. EPA’s management of the program. However, for every time Dinneen thunders “Don’t mess with the RFS,” five delegates of Big Oil say the opposite—and louder.     

  
And finally, yes, millions of cellulosic gallons are on the way. That is a fact. Significant volumes of cellulosic ethanol will come online in the next 18 to 24 months. Ineos, ZeaChem, Abengoa Bioenergy, Poet-DSM Advanced Biofuels, DuPont and others have the potential to be collectively producing upwards of 75 to 100 MMgy by the end of 2014. But will the industry actually produce 14 MMgy this year, as the EPA’s proposed RFS volumes would require? I’d like to think so. But like the rest of challenges in front of us, it would be a formidable task.

Related Stories

Saipem has been awarded an EPC contract by Enilive for the expansion of the company’s biorefinery in Porto Marghera, near Venice. The project will boost total nameplate capacity and enable the production of SAF.

Read More

Global digital shipbuilder Incat Crowther announced on June 11 the company has been commissioned by Los Angeles operator Catalina Express to design a new low-emission, renewable diesel-powered passenger ferry.

Read More

International Air Transport Association has announced the release of the Sustainable Aviation Fuel (SAF) Matchmaker platform, to facilitate SAF procurement between airlines and SAF producers by matching requests for SAF supply with offers.

Read More

Alfanar on June 20 officially opened its new office in London, further reaffirming its continued investment in the U.K. The company is developing Lighthouse Green Fuels, a U.K.-based SAF project that is expected to be complete in 2029.

Read More

ATR and French SAF aggregator ATOBA Energy on June 19 signed a memorandum of understanding (MOU) to explore ways to facilitate and accelerate sustainable aviation fuel (SAF) adoption for ATR operators.

Read More

Upcoming Events

Sign up for our e-newsletter!

Advertisement

Advertisement