“Gas stations in Michigan now have greater incentive to provide alternative fuel to the public,” The Michigan Policy Network writes. “Though it may not be quite the incentive they were looking for. A recently passed bill will provide a tax credit to gas station owners who install or upgrade existing fuel pumps to dispense E85 or biodiesel fuel. The credit is for up to 30% of the total costs of installing or upgrading the pump, with a cap placed at $20,000 per taxpayer per year.” But Wolverine State taxpayers shouldn’t worry too much: “The tax credit will be available from January 1, 2009 until December 31, 2012 and station owners must first receive a certificate of approval from the Energy Office of Michigan. In addition, there is a $1 million cap placed on the total amount of tax credits that can be given out during any given year. The Senate Fiscal Agency analysis notes that the likelihood of reaching this $1 million cap is very low considering the diminutive demand for these kinds of pumps currently.”
Category: E85
Never let it be said that TTAC doesn’t kick a bad idea when it’s down. (It’s the best way to make sure it stays down.) Obviously, it’s no secret that myself and several members of TTAC’s crack (smoking) freelance team consider E85 the biggest boondoggle outside of the Motown meltdown boondoggle. Corn juice for fuel is a fundamentally flawed concept on environmental, energy, practical and even a geo-political basis. But even as the U.S. ethanol customers line-up none deep for their chance to prove that “no one ever died defending a corn field,” even as the ethanol industry continues to block cheap E85 imports from Brazil, even as the major players suck-up to Uncle Sugar to secure a $1b bailout (no really) to stay alive in a business where they already enjoy a .50 a gallon “blender’s credit” and a federal requirement for someone somewhere to use the stuff (a.k.a. the 36b gallon by 2020 Renewable Fuels Standard), they’re shifted gears to open a second front in their war against common sense. AG Week reports that the push for a federal mandate to raise the ethanol content in regular gas from E10 to E15 (and beyond) continues apace.
The Indianapolis Business Journal reports that Indiana’s E85 subsidiy slush fund has run out of cash just three months into that state’s fiscal year. High demand for E85 in the summer months when regular gas cost over $4/gal caused the state subsidy of 18 cents/gal to rapidly run through its earmarked funds. Now, with gas under $2/gal, E85 demand is tanking just as the subsidy ran out, leaving ethanol boosters in a tough spot. “In June or July, we could sell E85 blindfolded,” says Jim Gentry, fuel purchasing manager for Greenfield-based GasAmerica, one of the first firms to sell E85 in the Indianapolis area. “Back in the summer, we didn’t need the 18-cent [state tax] credit.” Now? “We blew through that money,” admits Kellie Walsh, executive director of the Central Indiana Clean Cities Alliance. “I am anxious to see whether gasoline prices dropping has our flex-fuel customers continuing with E85 or if they’re going back over.” One E85 retailer says his firm hasn’t given up on E85 yet. “That being said, that’s not to say it’s the smartest business decision at this point in time,” says Ed McClure, CEO of Marionbased McClure Oil Corp. Except that Indiana still offers a $20k grant to install E85 pumps even though such conversions can be done for as little as $15k.
You know the sinking price of gas has stopped the E85 industry in its tracks when the corn growers’ local government turns its back on the biofuel blend. Indiana’s jconline.com reports that “After a 60-day trial run this summer, the West Lafayette Police Department has decided to no longer fill half of its patrol fleet with E85… Chief Jason Dombkowski said last week that officers making the six-mile trip to fill up ended up cutting too much into what the department saved.” Even with the .50 a gallon federal blenders’ credit, E85 just couldn’t make the grade. “We compared it by cost per mile,” [fleet maintenance director Tim] Bullis said. “When regular unleaded and E85 were $1 apart, it was a tossup. The closer the prices became, the less effective the savings from E85.” Oh, as a quick aside, the ethanol industry’s year in review has coined a pet name to demonize retail organizations who claim that corn-based E85 drives up food prices: Big Grocery.
Well, it was only a matter of time. After all, the ethanol industry receives about $7b in annual government subsidies and still can’t turn a profit when times are good. Why, they’re going to need the most special bailout of all! The WSJ’s Washington Wire reports that the Renewable Fuels Association recently sent a bailout-begging mission to DC. The RFA lobbyists met with congressional and Obama staffers and reportedly “provided them with some ideas on how to craft the language of” an economic recovery package. Run that phrase through the DC bullshit decoder, and it turns out that the RFA team was actually lobbying for a massive bailout package. And a hauntingly familiar massive bailout package at that. The RFA is seeking $1 billion short-term credit facility so ethanol producers could finance current operations (think “bridge loans”); a $50 billion federal loan guarantee program to finance investment in new renewable fuel production capacity and supporting infrastructure (think “136 loans”); and a requirement that any auto maker receiving federal aid only produce new vehicles that can run on any blend up to 85% ethanol, beginning with the 2010 model season (give up on democracy). Meanwhile, the RFA’s Matt Hartwig insists that “we’re not asking for a specific bailout, but rather, as a trade association, we’re providing ideas to an incoming Congress and a new administration about ways to bolster the domestic renewable fuel industry.” Right. (Hat Tip: Reason Hit & Run)
A new study of alternative energy strategies by Stanford professor Mark Jacobsen [via Green Car Congress] ranks corn-based and biomass ethanol as among the worst alternatives to fossil fuels. According to the study, “the Tier 4 combinations (cellulosic- and corn-E85) were ranked lowest overall and with respect to climate, air pollution, land use, wildlife damage, and chemical waste. Cellulosic-E85 ranked lower than corn-E85 overall, primarily due to its potentially larger land footprint based on new data and its higher upstream air pollution emissions than corn-E85.” These results were calculated by comparing wind-powered battery-electric vehicles (BEVs), wind-powered hydrogen fuel cell vehicles (HFCVs), concentrated-solar-powered-BEVs, geothermal-powered-BEVs, tidal-powered-BEVs, solar-photovoltaic-powered-BEVs, wave-powered-BEVs, hydroelectric-powered-BEVs, nuclear-powered-BEVs, coal-with-carbon-capture-powered-BEVs, corn-E85 vehicles, and cellulosic-E85 vehicles (listed in order of the study’s calculated impacts).
In the last E85BOTD, Farago had the temerity to suggest that perhaps E85 and E10 are DOA. And we have surely come a long way from even nine months ago, when corn-based ethanol was still publicly accepted as an environmentally-friendly fuel for American energy independence. You know, a tortilla riot and media feeding frenzy ago. But mandates are still in place, and as the Chicago Tribune reports, the ethanol industry is awaiting the Obama inauguration with quivering anticipation. After all, Obama has long touted ethanol as a cornerstone of his energy independence plan, even pledging that all new cars would be flex-fuel by 2013. And a quick look at opensecrets.org (tsk, no ethanol breakouts) shows that a number of big names in biofuels gave heavily to Obama and the Democrats. Also, the recent announcement that Dr. Stephen Chu, Lisa Jackson, and Carol Browner will fill key energy and environmental roles in the Obama administration has the biofuel bizz cheering. Of course the all-flex-fuel-by-2013 pledge was qualified with a hearty “if elected,” and these things have a habit of changing. Just ask the UAW.
Anyone remember the good old days, when TTAC manned the barricades in the fight against federal subsidies to a corn-based ethanol industry that made little sense for anyone but the corn-based ethanol industry? Rest assured, we haven’t de-listed our “E85 BOTD” (Boondoggle of the Day) category. We’ve just been a little… preoccupied with that other call on the public purse emanating from the city whose motto is, ironically enough, Speramus Meliora. And while we’ve been away, the price of imported oil– and thus gas– has dropped precipitously. Even copious federal subsidies (.50 a gallon “blender’s credit” to start) hasn’t been able to shelter the E85 folk from that particular reality. In fact, E85 sales are pretty much shot. Kaput. It’s got so bad (good?) that E10 (10 percent corn juice) is now falling by the wayside.
The Washington Post notes a lesson in unintended consequences: a US government initiative to reduce gasoline consumption has been a miserable failure. The Energy Policy Act of 1992 (EPAct) mandated that government agencies purchase flex-fuel vehicles for 75 percent of light duty fleets, hoping to spur automakers into building more fuel efficient vehicles and decrease gasoline consumption. And they were built: the Ford Taurus FFV 3.0 and Ranger pickup, GM compact pickups, Chrysler minivans, among many others. For years, agencies ignored EPAct; enforcement came in 1999 after environmental groups Sierra Club and Bluewater Network sued to force compliance. Problem was, replacement flex-fuel vehicles had larger engines in their predecessors and often ran on gasoline, usually due to difficulty obtaining E85. For the 2008-2009 period, fully 61% of vehicles had exemptions to run on gasoline. The mandate resulted in flex-fuel vehicles purchased for Puerto Rico and Hawaii, where E85 pumps don’t exist as it’s quite expensive to ship large quantities of ethanol. In some locations, said pumps are nearby but don’t accept government credit cards. So, despite all good intentions, the result is an increase in government gasoline consumption. Not mentioned in the article was that the billions of dollars in purchases went almost, if not wholly to the Detroit 2.8, as import manufacturers (still) don’t offer many flex-fuel cars or trucks.
This one isn’t so much a new boondoggle as the failure of an existing boondoggle. Falling fuel prices have triggered a clause in Missouri’s ethanol blending mandate, which allows retailers to sell unblended gasoline instead of E10. The Springfield News-Leader reports that gasoline is now cheaper than ethanol, which means station owners have the right to ignore a state law requiring pumps to sell the ten percent ethanol blend. “The gas price has really dropped tremendously and ethanol has not quite kept up with the pace,” said Ron Hayes, director of the Missouri Department of Agriculture’s weights and measures division, which monitors gasoline sales in the state. The drop in the price of oil has “really slowed down, if not stopped, any additional expansion of capacity” at the state’s six farmer-owned ethanol plants, said Gene Millard, president of the Missouri Renewable Fuels Association. “Plants are just not going to start up producing a product that’s showing negative pricing margins,” he said without placing blame directly where it belongs: ethanol mandates which have drastically elevated the price of corn. Aint it tough when markets don’t respond to your political agenda?
We don’t write about motorsports here at TTAC. Well, except for that one time. Actually, we don’t write many E85 BOTD’s these days either. Ethanol and its lobby are in something of a retreat right now, as bailout fever crowds agriculture out of its VIP seat at the pork pump. Not to mention the fact that the MSM now seems to recognize E85 as the wasteful, pork-fueled debacle it is. Anyway, despite the fact that the US has a glut of ethanol thanks to already set (and non-demand-based) subsidy goals, the Indianapolis Racing League has just concluded a contract to import sugar cane ethanol from Brazil to power its racers from 2009 and beyond. But don’t worry, under the terms of the multi-year deal, APEX-Brasil in cooperation with UNICA (the Brazilian Sugarcane Industry Association) will seek a partnership with a US-based ethanol company to supply the IndyCar Series with corn-based ethanol as well. Why? “The move to other sources of ethanol is a natural progression as the ethanol industry continues to grow and evolve. We continue to strive to be on the leading edge of the greening of racing. The IndyCar Series was the first motorsports series to mandate use of a renewable fuel, and now we will work with the ethanol industry in both the United States and Brazil to promote the use of all types of ethanol by consumers,” says IRL President Terry Angstadt. The only greening here is greenbacks being sent from Brazil, which is spending millions aggressively marketing its ethanol around the world.
There should be no doubt in anyone’s mind that giant fuel-swilling dinosaurs are as American as fake boobs. So it stands to reason that giant, fuel-swilling dinosaurs powered by federally-subsidized, mileage-reducing, corn-based fuels must be more American still. The only thing such a vehicle needs to achieve an apotheosis of American automotive excess is a 10k pound curb weight and enough armor to make Saturday night joyrides through Fallujah as drama-free as the invasion of Grenada. This bold vision of an America with unlimited energy and enemies was made real today, when Conquest Vehicles unveiled their Knight XV luxury armored SUV. And where else would this happen, but in Las Vegas, at the annual SEMA show? The $300k Knight XV is built on a Ford Super Duty platform, powered by a 6.8-liter Ford V-10, making 400 to 500hp depending on how many oil wells you own. This beast is DOT certified (certifiable?), fully armored. It boasts night vision camera systems and a 2000w audio system (Ride of the Valkyries, anyone?). Oh right, and it’s “environmentally friendly.” As in flex-fuel capable. Because nothing says you care like a corn-juice-powered luxury armored car.
The Wall Street Journal reports the massive financial hangover of South Dakota’s VeraSun, 2006 IPO darling turned bushel basket case. VeraSun is trying to point the finger at the in vogue financial turmoil excuse, but the real problem is that they are buying high and selling low. Their Greenspan worthy doublespeak goes thus: “‘Worsening capital market conditions and a tightening of trade credit resulted in severe constraints on the Company’s liquidity position.’ It intends to work with lenders to secure ‘additional committed financing to provide adequate liquidity to fund operations in the normal course.'” But the real deal is that VeraSun “lost $63 million to $103 million due to bets on the price of corn that ended up working against it. VeraSun’s current liabilities totaled $312 million at the end of the second quarter, and it had $1.4 billion in long-term debt.” Ah, almost $2b in debt and losing commodities market bets. Now we’re getting closer to the truth. When it came time to get yet another credit card with which to pay the interest on the old credit cards, nobody would play ball. “As the global credit crunch intensified in September, VeraSun was unable to secure the funding it needed to pay interest on its debt, which is due in December.” And guess who has ridden to the rescue with debtor-in-possession financing to fund the Chapter 11 reorganization attempt? Cerberus, I kid you not. Lucky for them, plenty of moonshine is on hand for the deal signing party.
As bailout after bailout sucks the federal teat dry, the ethanol lobby is finally doing the patriotic thing by taking its insatiable greed for public money to China. Green Car Congress reports that General Motors and its cellulosic ethanol partner Coskata are making the pitch for US-style ethanol subsidies in the Happy Shiny Peoples Republic Of China. At the World Biofuel Symposium hosted by Beijing’s Tsinghua University, GM and Coskata announced that China could produce 45-49 billion gallons per year (BGPY) of cellulosic biofuels by 2030… with the proper subsidies. And though the 45-49 BGPY would be 60% derived from agricultural residue, 20% from grasses, 10% from forest residue and 10% from “other,” China’s capacity is estimated (by GM and Coskata) at only half that amount without government incentives. E10 mandates in several of China’s largest provinces have already increased grain-based ethanol production from 100 million gallons in 2004 to about 500 million in 2008, but the Chinese government is also trying to limit grain-based production for all of the obvious reasons. Hence GM and Coskata’s attempts to hype their cellulosic ethanol approach, despite not having plans to open a commercial demonstrator plant before 2011. Meanwhile, “GM will continue to advance its strategy of ‘in China, with China, for China‘ to help China develop diverse automotive energy solutions and commercialize such energy solutions, according to GM China VP David Chen. All we can say to China is, beware of Americans bearing biofuels and patriotism. Then again, better you than us. But don’t say we didn’t warn you.
For some time now, firefighters have warned of the challenge of extinguishing ethanol fires. Because ethanol cannot be piped due to its corrosive properties, large quantities are delivered by tanker truck or rail car. Pure ethanol can burn at a temperature as low as 55 degrees F (12.8 degrees C). Even when highly diluted in water ethanol remains flammable at higher temperatures. Since oceanic quantities of water would be required to extinguish a large ethanol fire, special retardant foams are generally used– but not readily available (= hours) to many fire departments. Even with that foam, a big ethanol fire can take days to extinguish; the holding tank often burns to the ground. (At least pure ethanol burns cleanly, leaving behind just water and carbon dioxide.) A NIMBY situation arose this spring in the heart of highly populated Alexandria, VA. (FYI, that’s communist country per First Brother wannabe Joe McCain.) Ethanol rail cars started offloading their cargo back in April 2008, but local fire departments didn’t get the appropriate flame-retardant foam for another month afterwards. There’s lots of finger pointing going on, with the city of Alexandria blaming rail company Norfolk Southern for slipping ethanol shipment in without notification.
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