The future of U.S. biofuels: Navigating policy, market, technological and cost challenges

The Future of US Biofuels: Navigating Challenges and Opportunities

Introduction to the Panel

• The panel focuses on the future of US biofuels, addressing policy, market, technological, and cost challenges.

• Reed Wagner introduces himself as the technical director of Growth Energy, emphasizing the importance of networking at this conference.

• Wagner highlights that Growth Energy is the largest biofuels association in the U.S., representing nearly 100 ethanol plants and over 130 associate members.

Panelist Introductions

Don Caldwell

• Don Caldwell introduces himself as a farmer and rancher from Nebraska and executive director at Renewable Fuels Nebraska.

• He discusses his role in supporting Nebraska's ethanol plants (24 total), focusing on state-level policy and regulations.

• Caldwell emphasizes the significance of corn, cattle, and ethanol in Nebraska’s economy, referring to it as their "golden triangle."

Jackie Fee

• Jackie Fee shares her background as a renewable fuels regulatory adviser at Cargill with 31 years of experience.

• She mentions her involvement in starting one of the largest bio-refineries in Blair, Nebraska.

• Fee describes her technical expertise in chemistry and her focus on regulatory aspects to facilitate commerce.

George Dunan

• State Senator George Dunan introduces himself as a trial attorney turned legislator advocating for sustainable aviation fuel (SAF).

• He recounts how he became interested in SAF after being prompted by his uncle who is a pilot.

• Dunan expresses his commitment to promoting SAF within legislative discussions despite feeling less knowledgeable about biofuels initially.

Sustainable Aviation Fuel and Ethanol Industry Insights

Nebraska's Role in Sustainable Aviation Fuel Production

• Senator Duncan emphasizes Nebraska's potential to lead in sustainable aviation fuel (SAF) production, highlighting its benefits for the agricultural economy, job creation, and environmental sustainability.

• The senator expresses enthusiasm for supporting innovations in the biofuels industry and acknowledges the importance of learning from experts during discussions.

Key Issues Facing the Ethanol Industry

• Discussion begins on ethanol issues with Don providing insights into top priorities for Nebraska's ethanol plants, focusing primarily on year-round E15 availability.

• Year-round E15 is identified as a critical issue; it could save $4 to $6 billion at the federal level if implemented nationwide. Current regulations create uncertainty for retailers and refiners regarding summer sales.

Challenges with Current Regulations

• The EPA’s delayed assessments cause confusion about E15 sales during summer months, leading to operational challenges for fuel retailers.

• Retailers face restrictions that require them to cover pumps or label them due to regulatory uncertainties, which complicates consumer access to E15.

Economic Impact on Agriculture

• The economic strain on corn producers is highlighted; they are losing approximately 80 cents per bushel produced, affecting rural banks and local economies significantly.

• Emphasis is placed on creating more stability for farmers through policy changes that support their economic viability.

Future Opportunities in Carbon Management

• Discussion shifts towards carbon pipelines and sequestration projects being implemented by Tallgrass Energy, which will begin operations soon. This initiative opens new opportunities for carbon utilization.

Federal Policy Considerations

• Acknowledgment of the need for policies that strengthen agricultural markets without relying heavily on federal assistance long-term.

Clarification Needed on Tax Incentives

• Questions arise regarding pending decisions from the Department of Treasury related to tax incentives under section 45Z, which are crucial for spurring innovation in carbon dioxide usage.

• Ongoing uncertainty around tax filings necessitates clarity from federal authorities so stakeholders can effectively plan their strategies moving forward.

Tax Credits and the Ethanol Industry

Overview of Tax Credits and RFS

• Discussion on the importance of calculations to determine eligibility for tax credits related to ethanol production.

• Notable increase in ethanol production, with a potential to reach the full 15 billion gallons of traditional ethanol for the first time.

• Historical challenges in meeting production goals due to small refinery exemptions and other factors.

Impact of Policy Changes

• Retention of key provisions from previous administrations, particularly Section 45Z, which supports bioeconomy incentives.

• Decrease in sustainable aviation fuel credit from $1.75 to $1.00; however, parity between biodiesel and renewable diesel was achieved.

State-Level Policy's Role in Sustainable Aviation Fuel (SAF)

Importance of State-Level Stability

• Senator Duncan emphasizes the need for state-level policies that provide certainty for investors in burgeoning industries like SAF.

• Investors express interest in Nebraska but require assurance that their investments will be beneficial long-term.

Legislative Efforts and Challenges

• Introduction of a state income tax credit bill aimed at supporting SAF production, recognizing federal volatility.

• The necessity for state policymakers to demonstrate tangible returns on investment when considering incentives.

Education and Advocacy

• Ongoing efforts by Senator Duncan to educate fellow lawmakers about the benefits of SAF and its economic impact on rural Nebraska.

• Emphasis on understanding return on investment amidst tight budget constraints faced by many states.

Recent Developments in Nebraska's SAF Legislation

Progress and Limitations

• Passage of an income tax credit bill for SAF production in 2022; however, concerns over caps limiting its effectiveness were raised.

• Continued discussions with stakeholders regarding expanding tax credits to better incentivize industry growth.

Bipartisan Support for Tax Credits in Nebraska

Importance of Stakeholder Engagement

• The speaker emphasizes the bipartisan support in Nebraska's legislature for maintaining tax credits, highlighting the potential for leadership in production through developer engagement.

• Legislators often question the necessity of tax credits and bills; thus, stakeholders must actively communicate their importance to state and local officials.

• Experts engaging with policymakers can significantly influence decisions, making it crucial for industry professionals to advocate at various governmental levels.

Regulatory Challenges and Developments

• Discussion shifts to policy implementation, noting that regulatory codes must be navigated effectively to realize policy goals.

• The conversation introduces regulatory changes affecting ethanol production, particularly regarding modeling adjustments related to 45Z tax incentives.

Updates on Standards and Regulations

Advances in Ethanol Industry Standards

• A significant change allows wet milling ethanol producers parity with dry milling counterparts, marking a major win for the industry.

• The rebranding of committees within ASM International reflects a broader acceptance of biofuels alongside traditional petroleum products.

Expanding Market Opportunities

• New standards are being developed not only for transportation fuels but also for bioproduct applications, enhancing market opportunities for ethanol.

• Efforts are underway to facilitate global trade by allowing undenatured ethanol transport without denaturant addition at production sites.

Innovations in Ethanol Applications

• Development of standards like D3417 expands coverage beyond corn feedstock to include sorghum mixtures, benefiting the ethanol sector significantly.

• New standards aim to improve indoor cooking safety by utilizing ethanol stoves in regions reliant on wood fuel, addressing health concerns from toxic emissions.

This structured summary captures key discussions from the transcript while providing timestamps linked directly to relevant sections.

Discussion on Agricultural Standards and Climate Smart Practices

Importance of Participation in Standard-Making Committees

• A call for representatives to join standard-making committees at ASM, emphasizing the low annual fee of $115 and the value of participation.

• Highlighting the significance of active involvement in discussions that shape market standards, encouraging industry professionals to engage.

Climate Smart Agriculture (CSA) Insights

• Mention of climate smart agricultural practices and their importance in recognizing farmers' innovations at the field level.

• Discussion on USDA rules regarding CSA and how farming practices will be integrated into regulations, awaiting clarity on specific guidelines.

Regional Adaptation in Farming Practices

• Emphasis on acknowledging diverse farming practices across regions, such as cover crops, which may not be feasible everywhere due to climatic differences.

• The need for tailored approaches that consider local conditions rather than a one-size-fits-all solution for agricultural practices.

Economic Considerations for Farmers

• Farmers seek return on investment (ROI) from their practices; they prefer methods that minimize chemical use while maximizing efficiency.

• Recognition of state support for agriculture and biofuels in Nebraska, highlighting successful trade initiatives with countries like Japan.

Opportunities within the Biofuels Industry

• Ethanol is recognized as a foundational molecule for various processes, presenting opportunities for innovation and product development.

• Encouragement to explore partnerships across different sectors within the biofuels industry, fostering cooperation among diverse stakeholders.

Final Thoughts on Collaboration and Support

• Acknowledgment of the collaborative spirit within Nebraska's legislative support for biofuels, promoting job creation and environmental sustainability.

• The potential for building bridges between various groups interested in sustainable aviation fuel and other innovations within agriculture.

Building Bridges in Politics

Collaboration and Partnerships

• The speaker emphasizes the importance of building bridges between communities and state legislators to foster partnerships that can benefit everyone involved.

• There is a recognition that, in the broader political landscape, opportunities for collaboration may not always be visible or prioritized.

• The discussion highlights an exciting potential for collective action aimed at achieving common goals that serve the interests of all stakeholders.

• The closing remarks suggest a positive outlook on working together across different sectors to create impactful change.

• Acknowledgment is given to esteemed panelists, indicating a respectful conclusion to the dialogue.