By Timothy Charles Holmseth
Ethanol Producer Magazine
July 2008 Issue
One hundred and fifty years ago sweet sorghum plants could be found swaying in the winds across southeastern United States. A U.S. patent officer brought the plant to the United States in 1853, according to the National Sweet Sorghum Producers and Processors Association. The plant was of interest as a substitute for sugarcane, but extracting dry sugar from the syrup proved to be too difficult. Sorghum production peaked in the 1880s and declined as it faced competition from sugarcane and sugar beets.
Today, sweet sorghum is making its second debut as a versatile feedstock that can be used for food, fuel and animal feed. “It is the only crop that can save the United States,” says Ismail Dweikat, an associate professor at the University of Nebraska-Lincoln. An agronomy and horticulture expert, Dweikat says the speed bumps, headaches, economical and political challenges the nation presently faces as it attempts to wean itself from foreign oil could be avoided if we would focus on using the sugar from this 18-foot-tall energy crop to produce ethanol. “Despite controversy, support for nonpetroleum fuels remains strong,” he says.
Dweikat spoke to attendees at the 13th annual National Ethanol Conference in February in Orlando using this quote from George Washington Carver to kick off his presentation: “I believe that the great Creator has put ores and oils on this earth to give us a breathing spell. As we exhaust them, we must be prepared to fall back on our farms, which is God’s true storehouse and can never be exhausted. We can learn to synthesize material for every human need from things that grow.”
Dweikat believes that sweet sorghum can do the job of producing ethanol for the nation, and he’s giving it his personal letter of recommendation. Sweet sorghum is appealing on several fronts, he explains. “It doesn’t need additional irrigation so you can save money on irrigation,” he says. “It doesn’t need as much nitrogen as corn—50 to 60 pounds of nitrogen will give you a full crop of sweet sorghum,” he says, noting that one pound of nitrogen is required for each bushel of corn produced.
Dweikat explains that the total biomass stover from corn is 4 to 5 tons per acre plus 150 to 180 bushels of grain per acre. Sweet sorghum trumps corn when produced and sold to cellulosic ethanol plants. Sweet sorghum typically yields 14 tons of biomass per acre. “If you are selling it for $40 a ton, that’s about $560 per acre. That would out-produce corn, with less output,” he says, noting they both go for about $40 per ton.
“Sweet sorghum requires half the amount of water that sugarcane needs,” Dweikat says. “It has more sugar on a plant than sugarcane. “On a one crop basis, sweet sorghum out-produces sugarcane because sweet sorghum matures within 100 to 120 days, while it takes the first sugarcane crop one year to mature. Also on a volume basis, sweet sorghum has a higher sugar content than sugarcane. As sweet sorghum requires less water (one-third less than sugarcane) and has a higher fermentable sugar content than sugarcane (which contains more crystallizable sugars), it is better suited for ethanol production. Also, sweet sorghum-based ethanol is sulfur-free and cleaner than molasses-based ethanol, when mixed with gasoline,” he explains.
Sizing it all up, Dweikat says quite plainly, “The more sugar, the more ethanol.” The net energy ratios of sugarcane and sweet sorghum are similar, with 1 input rendering 8 outputs, he says. “In corn … [the ratio] is 1:1.25,” he adds.
David Cukierman, president and chief executive officer of Ethano Peru LLC in Houston, also finds that sweet sorghum is a better ethanol feedstock compared with corn. “The average corn yield in the U.S. is about 150 bushels per acre. The average ethanol yield per bushel is 2.8 gallons per bushel,” he explains. “That equates to an average production rate of 420 gallons per acre.” And it looks even better in certain areas of the country that have optimal growing conditions. The average sweet sorghum yield in the United States corresponds with two cuttings per year, in comparison to the four cuttings it renders in Peru, Cukierman explains. They are planning to test their hybrids in the South Texas Valley near the Rio Grande, he says, adding that cuttings are determined by global longitude and latitude and three annual cuttings are expected in that region. “[Ethano Peru] strongly believes that sweet sorghum is the future and the answer to the food-versus-fuel controversy based on tests with our own hybrids in Peru,” Cukierman says.
Sweet sorghum also wouldn’t interfere with food production because it can be grown on marginal land, Dweikat explains. “You don’t have to use your best land,” he says. It’s also drought tolerant, he says describing that the plant behaves much like a camel. “It is more drought-tolerant than corn,” Dweikat says.
Testing and Investing
Most commonly grown in Texas, Louisiana, Oklahoma, Nebraska, Florida, Kansas and Iowa, sweet sorghum has garnered some attention, and significant money has been invested to advance its growth. “In Florida, they have just approved a $54 million ethanol plant based on sweet sorghum ethanol,” Dweikat says. “In Louisiana, they are going to plant 750 acres this year to replace sugarcane because it requires less irrigation.” Testing is also underway in Nebraska and Texas, he notes.
The crop has proven to be durable under the relentless heat of the Texas plains, where corn doesn’t thrive as well. “The Southeast grows pretty crappy corn,” says Juerg Blumenthal, associate professor and state sorghum cropping specialist at Texas A&M University. “One-hundred-bushel corn is common.” Biomass sorghum can endure periods of stress much better than grain sorghum or corn, he says.
Although sweet sorghum can be grown a little further north, it has some issues with the cold winters, Dweikat explains. “The problem in the Midwest is that it gets killed by the freeze so you have to re-plant it every year, like corn” he says. “That’s one of the limitations here in the United States.” However, continuous testing and hybrids are being pursued to address the plants’ tolerance for cold. “We are trying to make sweet sorghum a cold-tolerant plant by introducing a rhizome to it,” Dweikat notes.
He says indicators of sweet sorghum’s viability can be found across the globe where much testing is taking place. “In terms of acreage, the premier country that is using [sweet sorghum] now for ethanol is India,” Dweikat says.
Belum Reddy, the principal sorghum breeder for the International Crops Research Institute for the Semi-Arid Tropics in Andhra Pradesh, India, says a future exists for this plant. “In the past 35 years, the ICRISAT has been doing continuous research to develop improved sorghum hybrid parents, varieties and hybrids,” he says. The crop is especially of interest because it can be used for food, animal feed and ethanol. “Farmers can harvest the grain for their food and then sell the surplus in the market,” he says. “The stalks of the sweet sorghum plants have sugar-rich juice in them. They can be crushed and used by a distillery to produce ethanol. The crushed stalk, after the juice is extracted [and the stripped leaves], can also be used as animal feed.”
At a distillery not far from ICRISAT, sweet sorghum juice is being converted into ethanol at a rate of 10,000 gallons per day, Reddy says. “Ethanol can also be produced from grain sorghum,” he says, although ICRISAT encourages farmers to sell sorghum grain for ethanol only after all their food needs are met.
With testing underway on several continents, sweet sorghum production is being observed in a variety of climactic conditions. With 750 acres of testing grounds on the coast of Peru, Cukierman says his company is rapidly discovering methods that will lead to sweet sorghum’s production as an ethanol feedstock on a worldwide basis.
One issue producers face is finding seed, but research into corn hybrids is being used to remedy that situation. “In their native countries, seed is saved from sorghum plants by farmers to plant the next generation crop,” Cukierman says. Over time plant breeders discovered and applied hybrid vigor to corn that rendered a higher yield than either parent, and the concept eventually reached sorghum. “It involves producing and maintaining a male and a female line,” he says.
Ethano Peru’s experimentation with hybrid seeds for sweet sorghum has shown promising results. “Hybrids of sweet sorghum for Peru are very fast growers,” Cukierman explains. The cycle for one crop is 90 days to harvest. With that short of a growing cycle, four crops per year could be produced.
Although the cost involved in breeding, producing, storing and marketing hybrid seed makes the cost of production relatively high, that cost is not prohibitive because the performance of the seeds is so high and more gallons of ethanol are produced with sweet sorghum, Cukierman says.
Dweikat points to Brazil and its research advances over the past 30 years using sugarcane to prove that energy independence can be obtained. “[Brazil] announced last year that they soon expect to be oil free,” he says.
A Viable Biomass Alternative
How does sweet sorghum fare in the viability arena? Dweikat says the plant meets or exceeds expectations. The criteria for determining the viability of biomass use for biofuels centers on four general areas: energy balance, materiality, sustainability and economics, he observes. “Does it yield more energy than is required to produce it?” he asks rhetorically, pointing out that sweet sorghum does. “Can it be produced at a large enough scale to be meaningful in terms of fuel supply?” he continues, stating that sweet sorghum certainly can. “The U.S. is capable of producing 1 billion dry tons of biomass annually—enough for 60 billion gallons of ethanol per year, [which is] 30 percent of today’s transportation fuel usage,” Dweikat explains, noting the numbers include agricultural and forestry wastes, grains and perennial bioenergy crops. He says the country can produce at that level “and continue to meet food, feed and export demands.”
Is sweet sorghum a solution to the food-versus-fuel issue? Dweikat, Cukierman, Reddy and Blumenthal believe it because it’s not raised for human consumption. Sweet sorghum experiences a short vegetative period at a very high photosynthesis rate, which is why it can produce more sugar than any other crop. It has low water requirements, grows on marginal land, experiences little disease or pest attacks, and produces good cash flow at a low investment per acre. “[It has a] high conversion to alcohol, and therefore to ethanol,” Cukierman says.
Showing posts with label advanced biofuel. Show all posts
Showing posts with label advanced biofuel. Show all posts
Wednesday, July 15, 2009
Friday, July 10, 2009
One Year After Oil’s Price Peak: Volatility
By Jad Mouawad
The New York Times
July 10, 2009
A year ago this weekend, oil prices reached a trading record of $147.29 a barrel. That peak followed months of speculation that oil prices would zoom past $200 or $250 a barrel — predictions often made by people with a major stake in seeing that happen, even as experts said they were puzzled that prices could rise so high, so fast.
Within weeks of the July highs, prices collapsed as the mortgage crisis in the United States morphed into a full-fledged economic and financial meltdown around the world.
Oil demand has dropped by nearly 1.5 million barrels a day since last year, and OPEC producers are now sitting on five or six millions of barrels of daily idle capacity. As the world confronted its worst economic crisis in over 50 years, oil fell to around $33 a barrel by December.
But prices remain as volatile as ever.
With oil rising above $70 a barrel, I wrote on Monday about big swings in the oil markets over the past 18 months (which also included this neat graphic).
The story ran a day before the Commodities Futures Trading Commission, the Federal government agency in charge of commodity markets, said it was considering regulating “speculation” in commodity markets.
Oil is now headed below $60 a barrel, and some major banks like J.P. Morgan Chase see prices headed to the low $50-range in coming weeks. The reason? While investors pushed up oil prices earlier this year in anticipation of a global economic rebound, reality seems to have set back in, and most people now expect a slow recovery.
But the volatility in the energy markets is unlikely to end soon. While one trader told me this week he was bearish for oil in the short term, he said that long term he was “extremely” bullish for oil. Most of the reasons that have pushed up prices in the past years — tight supplies, geopolitical risk in major producing countries, declining production in major oil basins like the North Sea and Mexico, as well as strong demand growth — have not disappeared.
____________
A note of clarification for statistical sticklers: The July 11 record of $147.29 a barrel was the highest trading level ever reached by oil. But in print, we typically refer to the highest settlement price at the closing of a trading session on the New York Mercantile Exchange. That was set on July 3, 2008, at $145.29 a barrel.
The New York Times
July 10, 2009
A year ago this weekend, oil prices reached a trading record of $147.29 a barrel. That peak followed months of speculation that oil prices would zoom past $200 or $250 a barrel — predictions often made by people with a major stake in seeing that happen, even as experts said they were puzzled that prices could rise so high, so fast.
Within weeks of the July highs, prices collapsed as the mortgage crisis in the United States morphed into a full-fledged economic and financial meltdown around the world.
Oil demand has dropped by nearly 1.5 million barrels a day since last year, and OPEC producers are now sitting on five or six millions of barrels of daily idle capacity. As the world confronted its worst economic crisis in over 50 years, oil fell to around $33 a barrel by December.
But prices remain as volatile as ever.
With oil rising above $70 a barrel, I wrote on Monday about big swings in the oil markets over the past 18 months (which also included this neat graphic).
The story ran a day before the Commodities Futures Trading Commission, the Federal government agency in charge of commodity markets, said it was considering regulating “speculation” in commodity markets.
Oil is now headed below $60 a barrel, and some major banks like J.P. Morgan Chase see prices headed to the low $50-range in coming weeks. The reason? While investors pushed up oil prices earlier this year in anticipation of a global economic rebound, reality seems to have set back in, and most people now expect a slow recovery.
But the volatility in the energy markets is unlikely to end soon. While one trader told me this week he was bearish for oil in the short term, he said that long term he was “extremely” bullish for oil. Most of the reasons that have pushed up prices in the past years — tight supplies, geopolitical risk in major producing countries, declining production in major oil basins like the North Sea and Mexico, as well as strong demand growth — have not disappeared.
____________
A note of clarification for statistical sticklers: The July 11 record of $147.29 a barrel was the highest trading level ever reached by oil. But in print, we typically refer to the highest settlement price at the closing of a trading session on the New York Mercantile Exchange. That was set on July 3, 2008, at $145.29 a barrel.
A Rough Year for High Ethanol Blends
By Kate Galbraith
The New York Times
July 10, 2009
Far fewer people have been refueling with high ethanol blends this year in parts of the Midwest.
In North Dakota, sales of E85 — gasoline blended with 85 percent ethanol — were down by more than 60 percent this year from January to May, compared with a year earlier, according to the state’s Department of Commerce.
Minnesota has also seen a severe dip in E85 sales, according to the Minneapolis Star Tribune. Around 1.5 million gallons were sold in May — which is almost 1 million less than a year earlier, the paper reports.
National figures are not tallied by the Energy Department.
“It’s all about price, price and price,” said Phil Lambert, the vice-president for market development at Growth Energy, an ethanol lobby group. He noted that consumption of regular gasoline has also fallen across the country.
E85 can be used in “flex-fuel” vehicles, which can also take regular gasoline. Mr. Lambert said that there were slightly more than 8 million such vehicles in the United States today, or less than 3 percent of all vehicles.
Because ethanol has a lower energy content than gasoline, ideally it should be priced 15 to 20 percent lower than regular unleaded to make it worthwhile on a cost-for-energy basis, according to Mr. Lambert. Consumers, he said, should “never, ever, ever buy E85 when it is priced higher than gasoline.”
But the price was higher, at least briefly, in Iowa, according to Monte Shaw, the executive director of the Iowa Renewble Fuels Association, in the wake of plunging gasoline prices last year.
In Fargo, N.D., E85 was retailing for up to 20 cents above regular gasoline prices this spring, according to Julie Fedorchak, the communications manager for the state’s Department of Commerce — and the town of Harvey, N.D. even put bags over its E85 pumps for a time.
Recent months have brought better news for the industry. Harvey has taken the bags off its pumps, and several states report a pick-up in demand as prices return to a more viable level.
Growth Energy has a calculator on its E85 Web site suggesting that the fuel is currently priced 15 percent below regular gasoline, although there is substantial local variation.
Mr. Shaw of Iowa said that he had recently filled up at a pump where E85 was at least 70 cents cheaper than gasoline. “That’s very attractive,” he said.
The New York Times
July 10, 2009
Far fewer people have been refueling with high ethanol blends this year in parts of the Midwest.
In North Dakota, sales of E85 — gasoline blended with 85 percent ethanol — were down by more than 60 percent this year from January to May, compared with a year earlier, according to the state’s Department of Commerce.
Minnesota has also seen a severe dip in E85 sales, according to the Minneapolis Star Tribune. Around 1.5 million gallons were sold in May — which is almost 1 million less than a year earlier, the paper reports.
National figures are not tallied by the Energy Department.
“It’s all about price, price and price,” said Phil Lambert, the vice-president for market development at Growth Energy, an ethanol lobby group. He noted that consumption of regular gasoline has also fallen across the country.
E85 can be used in “flex-fuel” vehicles, which can also take regular gasoline. Mr. Lambert said that there were slightly more than 8 million such vehicles in the United States today, or less than 3 percent of all vehicles.
Because ethanol has a lower energy content than gasoline, ideally it should be priced 15 to 20 percent lower than regular unleaded to make it worthwhile on a cost-for-energy basis, according to Mr. Lambert. Consumers, he said, should “never, ever, ever buy E85 when it is priced higher than gasoline.”
But the price was higher, at least briefly, in Iowa, according to Monte Shaw, the executive director of the Iowa Renewble Fuels Association, in the wake of plunging gasoline prices last year.
In Fargo, N.D., E85 was retailing for up to 20 cents above regular gasoline prices this spring, according to Julie Fedorchak, the communications manager for the state’s Department of Commerce — and the town of Harvey, N.D. even put bags over its E85 pumps for a time.
Recent months have brought better news for the industry. Harvey has taken the bags off its pumps, and several states report a pick-up in demand as prices return to a more viable level.
Growth Energy has a calculator on its E85 Web site suggesting that the fuel is currently priced 15 percent below regular gasoline, although there is substantial local variation.
Mr. Shaw of Iowa said that he had recently filled up at a pump where E85 was at least 70 cents cheaper than gasoline. “That’s very attractive,” he said.
Thursday, July 9, 2009
Senate Ag Panel's Members Look to Stake Major Claim in Climate Bill
By ALLISON WINTER of ClimateWire
The New York Times
July 9, 2009
Powerful members of the Senate Agriculture Committee are angling to include even more farm and ethanol-friendly provisions to their chamber's energy and climate legislation than the House added to its bill last month.
Chairman Tom Harkin (D-Iowa) and other members of his panel say they want to ensure any effort at wide-ranging climate legislation in the Senate will include all of the provisions that House Agriculture Chairman Collin Peterson (D-Minn.) brokered for the House cap-and-trade bill, H.R. 2454 (pdf). With the hard-fought Peterson deal as their starting point, the farm state lawmakers could have leverage to capture additional benefits for farmers and ranchers.
As Senate leadership aims to advance the bill this fall, agricultural interests could form a formidable coalition. Several key fence-sitters on the bill sit on the Agriculture Committee, and farm interests have wide appeal in the Senate. Each senator has some farm interests in his or her state -- unlike the House, which has more representatives from urban and suburban areas.
"You're going to see more interest in agriculture on the Senate side, I think," Sen. Saxby Chambliss (R-Ga.), the ranking member of the Agriculture Committee, said this week of the climate bill.
House leaders compromised with Peterson and included a raft of changes he suggested for the cap-and-trade bill in order to win his and other key votes for the bill. The changes were a major victory for farm groups, but a disappointment to many environmentalists who are concerned it could weaken efforts to cut down on emissions.
Harkin said yesterday that he would like to repeat all of Peterson's language in the Senate bill and potentially build on it further. He had his first meeting last night with Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.), leadership and other Senate committee leaders and the top White House energy adviser, Carol Browner.
The much-publicized deal that Peterson brokered on the House side put the Agriculture Department, rather than U.S. EPA, as overseer of programs that would offset emissions with conservation efforts on farms, ranches and forests. Peterson's language also allowed "early actors," farmers who have been doing such conservation practices for years, to participate in the program.
Peterson also included a raft of provisions friendly to corn-based ethanol, another important issue for farm states. His language would temporarily block EPA from calculating a fuel's total worldwide carbon footprint before determining whether it qualifies as a biofuel eligible for incentives. The language in the bill that passed the House bars EPA for five years from including emissions from indirect land-use changes abroad.
"If it's like the House bill, I'll be reasonably happy," Harkin told E&E. "We want no indirect land use, things like that in there -- there is no scientific basis for that."
But the provisions from Peterson were not welcome additions for many environmental groups. In testimony this week to the Environment and Public Works Committee, Dave Hawkins of the Natural Resources Defense Council said he hopes the Senate will weed out some of the language. "These amendments run the risk of creating a subprime market in both offsets and biofuels," said Hawkins. "They seriously damage the environmental integrity of the bill, and they will undermine public confidence in the markets for both products."
Harkin wants to build on the Peterson language with "a little bit of other stuff," including more expansive offsets for sequestration and the ability for farmers to "stack" benefits -- using land enrolled in farm bill conservation programs to also gain carbon offsets. He admitted that he has been more concerned with work on health care legislation but said his committee would hold a hearing on the issue July 22, and he would expect to work on more legislative language in the fall.
"I don't think it will bother Senator Boxer or anybody at all," Harkin said.
The Iowa Democrat, a major advocate for ethanol, also wants to expand opportunities for the corn-based version of the fuel. He said he would like to include language that would raise the amount of ethanol that can be blended into gasoline from 10 percent to 15 percent -- a change the ethanol industry has been lobbying for but auto manufacturers have been hesitant to embrace and environmental groups have balked at.
"EPA's got to get over their absolute rejection of ethanol. They've just got to get over it," Harkin said. "And we're going to force them to get over it."
The Peterson amendment also has the support of Sen. Amy Klobuchar (D-Minn.), who sits on both the Agriculture and EPW committees. "I'm very hopeful that those changes will be included," Klobuchar said yesterday. "I'm not concerned we're going to see any backtracking."
Fence-sitters remain on fence
Attempts to broaden opportunities for farmers and corn-based ethanol could lose some support for the bill from environmental groups, which have been critical of the fuel for the land, pesticides and water pollution involved in its use.
But at least some concessions for agriculture may be necessary to secure the bill's passage. The Senate Agriculture Committee includes some key members that Boxer will need to win over if she is to get the crucial 60 votes needed to pass the bill, including fence-sitters on the bill like Sens. Kent Conrad (D-N.D.), Blanche Lincoln (D-Ark.) and Debbie Stabenow (D-Mich.).
Lincoln said this week that she has "a lot of concerns" with how the bill would affect Arkansas -- noting that her commitment is to represent the people of her state, not necessarily to help the caucus get to 60 votes. "I have great concerns with what the House has done, but I haven't seen it on this side," Lincoln said.
Meanwhile, Conrad said he has started to meet with key members of the EPW Committee in an attempt to make sure agricultural concerns are addressed early on -- not late in the negotiation stages as they were in the House. The Budget Committee chairman is a key voice for agricultural interests -- he showed himself a tough negotiator on the farm bill and frequently got his way on provisions large and small. Conrad said this week he wants the Senate climate bill to include something "very much on the same lines" as Peterson's amendments in the House.
But even with those farm-friendly provisions, Conrad said he is still on the fence about the bill -- since he must also think about his state as the nation's fifth-largest oil producer and a major consumer of coal for electricity. He said more allocations or offsets might help encourage him to vote for the measure.
"In North Dakota we have more than agriculture concerns, we're a major energy state as well," Conrad said. "So we've got a lot of concerns ... they've certainly improved substantially from where it was last year by what they did in the House, but it has a ways to go before I can vote for it."
And Sen. Ben Nelson (D-Neb.) said that to win his support, the bill will have to ensure it does not raise utilities rates or include "anything that would adversely impact agriculture." He said he has discussed the bill with Sen. John Kerry (D-Mass.) and passed on some of his concerns to Boxer.
Ag groups weigh in
Farm groups, which were divided on the House climate bill, have not started heavy lobbying in the Senate. Influential groups like the American Farm Bureau Federation and the National Pork Producers Council did not support the House-passed measure.
But farmland conservation groups and the National Farmers Union, a left-leaning group active in organizing farmers to sequester carbon, eventually endorsed the bill. Those groups came out against the version of the bill that cleared the House Energy and Commerce Committee but rallied behind the cap-and-trade effort after Peterson included his changes.
The farmers union, considered very influential among Democrats, is planning to circulate letters on the climate bill in the Senate within the next week. NFU spokeswoman Liz Friedlander said they want to be sure any Senate bill puts USDA at the helm for offsets and allows for the inclusion of "early actors," but she said her group is not seeking anything beyond the House provisions "at this time."
The American Farm Bureau Federation, on the other hand, opposes the House bill but is not making direct requests to senators for things they could do to improve it. The group is concerned that higher costs for fertilizer and fuels would outweigh any benefits from the legislation, especially as U.S. farmers have to compete with producers in China and India.
Richard Krause, the farm bureau's director of congressional relations, said his group would be talking to members about their concerns about the bill, but said they do not have a list of particular changes that could be made to gain their support.
"Right now our opposition still remains and it probably will unless something changes our mind, and I'm not sure how that will be," said Krause. "It would take a lot to change our minds, I won't say it can't be done but at this point, I don't see it."
The New York Times
July 9, 2009
Powerful members of the Senate Agriculture Committee are angling to include even more farm and ethanol-friendly provisions to their chamber's energy and climate legislation than the House added to its bill last month.
Chairman Tom Harkin (D-Iowa) and other members of his panel say they want to ensure any effort at wide-ranging climate legislation in the Senate will include all of the provisions that House Agriculture Chairman Collin Peterson (D-Minn.) brokered for the House cap-and-trade bill, H.R. 2454 (pdf). With the hard-fought Peterson deal as their starting point, the farm state lawmakers could have leverage to capture additional benefits for farmers and ranchers.
As Senate leadership aims to advance the bill this fall, agricultural interests could form a formidable coalition. Several key fence-sitters on the bill sit on the Agriculture Committee, and farm interests have wide appeal in the Senate. Each senator has some farm interests in his or her state -- unlike the House, which has more representatives from urban and suburban areas.
"You're going to see more interest in agriculture on the Senate side, I think," Sen. Saxby Chambliss (R-Ga.), the ranking member of the Agriculture Committee, said this week of the climate bill.
House leaders compromised with Peterson and included a raft of changes he suggested for the cap-and-trade bill in order to win his and other key votes for the bill. The changes were a major victory for farm groups, but a disappointment to many environmentalists who are concerned it could weaken efforts to cut down on emissions.
Harkin said yesterday that he would like to repeat all of Peterson's language in the Senate bill and potentially build on it further. He had his first meeting last night with Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.), leadership and other Senate committee leaders and the top White House energy adviser, Carol Browner.
The much-publicized deal that Peterson brokered on the House side put the Agriculture Department, rather than U.S. EPA, as overseer of programs that would offset emissions with conservation efforts on farms, ranches and forests. Peterson's language also allowed "early actors," farmers who have been doing such conservation practices for years, to participate in the program.
Peterson also included a raft of provisions friendly to corn-based ethanol, another important issue for farm states. His language would temporarily block EPA from calculating a fuel's total worldwide carbon footprint before determining whether it qualifies as a biofuel eligible for incentives. The language in the bill that passed the House bars EPA for five years from including emissions from indirect land-use changes abroad.
"If it's like the House bill, I'll be reasonably happy," Harkin told E&E. "We want no indirect land use, things like that in there -- there is no scientific basis for that."
But the provisions from Peterson were not welcome additions for many environmental groups. In testimony this week to the Environment and Public Works Committee, Dave Hawkins of the Natural Resources Defense Council said he hopes the Senate will weed out some of the language. "These amendments run the risk of creating a subprime market in both offsets and biofuels," said Hawkins. "They seriously damage the environmental integrity of the bill, and they will undermine public confidence in the markets for both products."
Harkin wants to build on the Peterson language with "a little bit of other stuff," including more expansive offsets for sequestration and the ability for farmers to "stack" benefits -- using land enrolled in farm bill conservation programs to also gain carbon offsets. He admitted that he has been more concerned with work on health care legislation but said his committee would hold a hearing on the issue July 22, and he would expect to work on more legislative language in the fall.
"I don't think it will bother Senator Boxer or anybody at all," Harkin said.
The Iowa Democrat, a major advocate for ethanol, also wants to expand opportunities for the corn-based version of the fuel. He said he would like to include language that would raise the amount of ethanol that can be blended into gasoline from 10 percent to 15 percent -- a change the ethanol industry has been lobbying for but auto manufacturers have been hesitant to embrace and environmental groups have balked at.
"EPA's got to get over their absolute rejection of ethanol. They've just got to get over it," Harkin said. "And we're going to force them to get over it."
The Peterson amendment also has the support of Sen. Amy Klobuchar (D-Minn.), who sits on both the Agriculture and EPW committees. "I'm very hopeful that those changes will be included," Klobuchar said yesterday. "I'm not concerned we're going to see any backtracking."
Fence-sitters remain on fence
Attempts to broaden opportunities for farmers and corn-based ethanol could lose some support for the bill from environmental groups, which have been critical of the fuel for the land, pesticides and water pollution involved in its use.
But at least some concessions for agriculture may be necessary to secure the bill's passage. The Senate Agriculture Committee includes some key members that Boxer will need to win over if she is to get the crucial 60 votes needed to pass the bill, including fence-sitters on the bill like Sens. Kent Conrad (D-N.D.), Blanche Lincoln (D-Ark.) and Debbie Stabenow (D-Mich.).
Lincoln said this week that she has "a lot of concerns" with how the bill would affect Arkansas -- noting that her commitment is to represent the people of her state, not necessarily to help the caucus get to 60 votes. "I have great concerns with what the House has done, but I haven't seen it on this side," Lincoln said.
Meanwhile, Conrad said he has started to meet with key members of the EPW Committee in an attempt to make sure agricultural concerns are addressed early on -- not late in the negotiation stages as they were in the House. The Budget Committee chairman is a key voice for agricultural interests -- he showed himself a tough negotiator on the farm bill and frequently got his way on provisions large and small. Conrad said this week he wants the Senate climate bill to include something "very much on the same lines" as Peterson's amendments in the House.
But even with those farm-friendly provisions, Conrad said he is still on the fence about the bill -- since he must also think about his state as the nation's fifth-largest oil producer and a major consumer of coal for electricity. He said more allocations or offsets might help encourage him to vote for the measure.
"In North Dakota we have more than agriculture concerns, we're a major energy state as well," Conrad said. "So we've got a lot of concerns ... they've certainly improved substantially from where it was last year by what they did in the House, but it has a ways to go before I can vote for it."
And Sen. Ben Nelson (D-Neb.) said that to win his support, the bill will have to ensure it does not raise utilities rates or include "anything that would adversely impact agriculture." He said he has discussed the bill with Sen. John Kerry (D-Mass.) and passed on some of his concerns to Boxer.
Ag groups weigh in
Farm groups, which were divided on the House climate bill, have not started heavy lobbying in the Senate. Influential groups like the American Farm Bureau Federation and the National Pork Producers Council did not support the House-passed measure.
But farmland conservation groups and the National Farmers Union, a left-leaning group active in organizing farmers to sequester carbon, eventually endorsed the bill. Those groups came out against the version of the bill that cleared the House Energy and Commerce Committee but rallied behind the cap-and-trade effort after Peterson included his changes.
The farmers union, considered very influential among Democrats, is planning to circulate letters on the climate bill in the Senate within the next week. NFU spokeswoman Liz Friedlander said they want to be sure any Senate bill puts USDA at the helm for offsets and allows for the inclusion of "early actors," but she said her group is not seeking anything beyond the House provisions "at this time."
The American Farm Bureau Federation, on the other hand, opposes the House bill but is not making direct requests to senators for things they could do to improve it. The group is concerned that higher costs for fertilizer and fuels would outweigh any benefits from the legislation, especially as U.S. farmers have to compete with producers in China and India.
Richard Krause, the farm bureau's director of congressional relations, said his group would be talking to members about their concerns about the bill, but said they do not have a list of particular changes that could be made to gain their support.
"Right now our opposition still remains and it probably will unless something changes our mind, and I'm not sure how that will be," said Krause. "It would take a lot to change our minds, I won't say it can't be done but at this point, I don't see it."
Monday, July 6, 2009
GM Thrives in Latin America
Fuel-efficient Vehicles from its Brazil Unit and Strong Sales in Latin America Look Promising for the Battered Carmaker's Future
By Chris Kraul and Ken Bensinger
The Los Angeles Times
July 4, 2009
Reporting from Bogota, Colombia, and Los Angeles — For all its miscues at home, General Motors Corp. has built a powerhouse operation in Latin America, where its fuel-efficient vehicles could play a crucial role in returning the battered company to health.
Since it filed for bankruptcy a month ago, the automaker has been striking deals to shed much of its operations, including its Hummer, Saturn and Saab brands and its Opel division in Europe. GM is closing more North American factories, laying off workers and slashing its U.S. dealership ranks.
But despite rumors this spring, GM's thriving Latin America operations are likely to escape the ax, analysts said.
The region is an important, low-cost manufacturing platform for the U.S. market. And to Latin American consumers, GM remains a respected brand with the highest market share -- 21% -- of any carmaker, said Guido Vildozo, an auto analyst with IHS Global Insight in Waltham, Mass. While GM's sales declined 23% last year in the U.S., they rose 3% in Latin America, and thanks to some timely government support, this year's sales are on track to match 2008's.
The automaker has been in the region for decades, opening its first factory in Argentina in 1925. It has kept ahead by continuing to invest billions of dollars, including on a new assembly plant in San Luis Potosi, Mexico, and a design center in Sao Jose dos Campos, Brazil, that the automaker hopes will become a source of cutting-edge know-how for gas-sipping cars it may someday sell in the United States.
"Latin America will keep its strategic role in the new GM," said Michel Pardal, chief Latin America market forecaster for J.D. Power and Associates in Troy, Mich. "GM has a good image, has been there for many years, and their engineers' capabilities are impressive."
In May, Italian automaker Fiat was said to be in negotiations to acquire GM's operations in the region as part of its bid to buy Opel. Fiat ended up gaining control of Chrysler -- and has plans to expand that automaker's undersized reach in South America -- but did not haul in Opel or GM's Latin America unit.
Perhaps because of those rumors, however, GM Brazil chief Jaime Ardila took the trouble last month to assure employees that not only would the unit remain part of GM, but slated investments totaling $1.5 billion would also go forward. Much of that money is going into a flex-fuel motor plant under construction in the southern state of Santa Catarina.
GM's Brazil operation, second only to its China outfit in foreign unit sales, has helped keep Detroit afloat. The company has "repatriated" annual profits of up to $800 million in some years this decade, at a time when GM's U.S. operations were bleeding cash, informed sources said.
Brazil has become a crucial stop on the career paths of company brass. GM Chief Executive Fritz Henderson and his predecessor Rick Wagoner both headed operations there earlier in their careers, and both have said that because of the region's size, complexity and importance, it's an invaluable training ground.
"The Brazilian operation of GM is one of the most successful in the world," said Alexandre Andrade, an economist at Tendencias, a Sao Paulo think tank.
Analysts expect GM to make Brazil, a world leader in vehicles that use ethanol and other biofuels, a key element of its survival plan, particularly in light of new fuel efficiency requirements being laid down by the U.S. government.
The first flex-fuel car model developed at the Sao Jose dos Campos research center is called the Prisma and will soon be in showrooms in Brazil. It is also slated for export, although GM has not said where. GM's Brazilian cars, including the Chevrolet Astra and Corsa models, are exported to Mexico and other Latin countries, though not to the United States. But with low labor costs compared with North America's despite a unionized workforce, that could change before long, analysts said.
"The Brazilian government wants its car industry to become a global exporter of 1 million cars a year and is working toward that goal," IHS Global Insight's Vildozo said. Overall exports from Brazil peaked at nearly 900,000 cars in 2005.
One element of uncertainty is that GM's Brazil operation has licensed the right to produce several small car models from the company's Opel unit, which was recently sold to a consortium of bidders led by Canadian auto parts maker Magna International Inc.
But because GM will retain 35% of Opel and is likely to retain control over much of the intellectual property developed at the European division, the Brazilian operation will probably still have the right to those designs, said Jeff Schuster, J.D. Power's global forecasting director.
GM has also invested big in Mexico, where it has 13,000 employees and four assembly plants. The newest is the $1-billion facility that opened in San Luis Potosi last year, which makes the Chevy Aveo subcompact for the Latin American market.
GM's Mexican division is a major supplier of cars and trucks to the U.S. market The unit exported just over 387,000 vehicles last year, most of which ended up in U.S. showrooms. Most of the automaker's Mexican exports are SUVs and trucks, including the Saturn Vue, Chevy Suburban, Cadillac Escalade, Chevy Yukon, Chevy Silverado and GMC Sierra.
Those vehicles aren't selling well at present, and exports this year have plunged. But analysts said they don't believe that GM's Mexican operations are vulnerable to sale or closure.
On the contrary, analysts said that with their low wages, high productivity and proximity to the U.S. market, those facilities stand to gain production lost in the United States.
By Chris Kraul and Ken Bensinger
The Los Angeles Times
July 4, 2009
Reporting from Bogota, Colombia, and Los Angeles — For all its miscues at home, General Motors Corp. has built a powerhouse operation in Latin America, where its fuel-efficient vehicles could play a crucial role in returning the battered company to health.
Since it filed for bankruptcy a month ago, the automaker has been striking deals to shed much of its operations, including its Hummer, Saturn and Saab brands and its Opel division in Europe. GM is closing more North American factories, laying off workers and slashing its U.S. dealership ranks.
But despite rumors this spring, GM's thriving Latin America operations are likely to escape the ax, analysts said.
The region is an important, low-cost manufacturing platform for the U.S. market. And to Latin American consumers, GM remains a respected brand with the highest market share -- 21% -- of any carmaker, said Guido Vildozo, an auto analyst with IHS Global Insight in Waltham, Mass. While GM's sales declined 23% last year in the U.S., they rose 3% in Latin America, and thanks to some timely government support, this year's sales are on track to match 2008's.
The automaker has been in the region for decades, opening its first factory in Argentina in 1925. It has kept ahead by continuing to invest billions of dollars, including on a new assembly plant in San Luis Potosi, Mexico, and a design center in Sao Jose dos Campos, Brazil, that the automaker hopes will become a source of cutting-edge know-how for gas-sipping cars it may someday sell in the United States.
"Latin America will keep its strategic role in the new GM," said Michel Pardal, chief Latin America market forecaster for J.D. Power and Associates in Troy, Mich. "GM has a good image, has been there for many years, and their engineers' capabilities are impressive."
In May, Italian automaker Fiat was said to be in negotiations to acquire GM's operations in the region as part of its bid to buy Opel. Fiat ended up gaining control of Chrysler -- and has plans to expand that automaker's undersized reach in South America -- but did not haul in Opel or GM's Latin America unit.
Perhaps because of those rumors, however, GM Brazil chief Jaime Ardila took the trouble last month to assure employees that not only would the unit remain part of GM, but slated investments totaling $1.5 billion would also go forward. Much of that money is going into a flex-fuel motor plant under construction in the southern state of Santa Catarina.
GM's Brazil operation, second only to its China outfit in foreign unit sales, has helped keep Detroit afloat. The company has "repatriated" annual profits of up to $800 million in some years this decade, at a time when GM's U.S. operations were bleeding cash, informed sources said.
Brazil has become a crucial stop on the career paths of company brass. GM Chief Executive Fritz Henderson and his predecessor Rick Wagoner both headed operations there earlier in their careers, and both have said that because of the region's size, complexity and importance, it's an invaluable training ground.
"The Brazilian operation of GM is one of the most successful in the world," said Alexandre Andrade, an economist at Tendencias, a Sao Paulo think tank.
Analysts expect GM to make Brazil, a world leader in vehicles that use ethanol and other biofuels, a key element of its survival plan, particularly in light of new fuel efficiency requirements being laid down by the U.S. government.
The first flex-fuel car model developed at the Sao Jose dos Campos research center is called the Prisma and will soon be in showrooms in Brazil. It is also slated for export, although GM has not said where. GM's Brazilian cars, including the Chevrolet Astra and Corsa models, are exported to Mexico and other Latin countries, though not to the United States. But with low labor costs compared with North America's despite a unionized workforce, that could change before long, analysts said.
"The Brazilian government wants its car industry to become a global exporter of 1 million cars a year and is working toward that goal," IHS Global Insight's Vildozo said. Overall exports from Brazil peaked at nearly 900,000 cars in 2005.
One element of uncertainty is that GM's Brazil operation has licensed the right to produce several small car models from the company's Opel unit, which was recently sold to a consortium of bidders led by Canadian auto parts maker Magna International Inc.
But because GM will retain 35% of Opel and is likely to retain control over much of the intellectual property developed at the European division, the Brazilian operation will probably still have the right to those designs, said Jeff Schuster, J.D. Power's global forecasting director.
GM has also invested big in Mexico, where it has 13,000 employees and four assembly plants. The newest is the $1-billion facility that opened in San Luis Potosi last year, which makes the Chevy Aveo subcompact for the Latin American market.
GM's Mexican division is a major supplier of cars and trucks to the U.S. market The unit exported just over 387,000 vehicles last year, most of which ended up in U.S. showrooms. Most of the automaker's Mexican exports are SUVs and trucks, including the Saturn Vue, Chevy Suburban, Cadillac Escalade, Chevy Yukon, Chevy Silverado and GMC Sierra.
Those vehicles aren't selling well at present, and exports this year have plunged. But analysts said they don't believe that GM's Mexican operations are vulnerable to sale or closure.
On the contrary, analysts said that with their low wages, high productivity and proximity to the U.S. market, those facilities stand to gain production lost in the United States.
Saturday, July 4, 2009
We’ll Never Pump Enough Oil
BY GAL LUFT
Miami Herald
June 13, 2009
This week America transitioned from analog to digital television broadcasts, ushering what could be described as an open standard for television. This means that consumers will have a choice between buying a digital set or signing up to cable or satellite service and keeping their old antenna by installing a signal-dumbing converter box which allows them to get analog signal.
Without the converter, an analog TV began showing snow on the screen starting as of Friday morning. Regardless of whether the shift is a good idea or not — it probably is as it allows better spectrum usage — it is sad commentary of our priorities as a society. Strategic as Congress may imagine television is in our lives, it is not nearly as important as transportation.
Yet, the same Congress that mandated consumer choice in television reception modes denies us choice in transportation fuels: our cars, trucks, ships and planes can run on nothing but petroleum.
Such choice at the pump is neither more difficult nor more costly to achieve than choice at the screen. In Brazil, more than 80 percent of the new cars are flex fuel vehicles capable of running on any combination of gasoline and alcohols like ethanol and methanol. To make a new car flex fuel costs an automaker an extra $100 or less.
All that is needed is a chip and corrosion resistant fuel line. To convert our television, Congress has already allocated nearly $2 billion in taxpayer money to provide $80 worth of coupons per household to subsidize conversion boxes. Brazilians may not have as sophisticated television system but they can choose among fuels.
Last year, when oil prices were at their three-digit level more alcohol was sold in Brazil than gasoline, and the Brazilian economy was hardly touched by the oil crisis. At the same time, with no such fuel choice Americans shelled out hundreds of billions of dollars for foreign oil, a monumental loss of national wealth that popped the mortgage bubble and brought the United States to the brink of economic collapse.
Brazil’s success story hasn’t escaped the eyes of our leaders. President Obama pledged numerous times to pass a law that would mandate flex-fuel engines in all automobiles in order to break oil’s virtual monopoly over transporation fuel. Secretary of Interior Ken Salazar, while still in the Senate, was the lead sponsor of legislation that would have ensured new cars sold in the United States offer fuel flexibility. Energy Secretary Steven Chu has also spoken on the merits of this policy. But judging from its recent actions Congress is not on board. What seems to be the signature energy legislation of the 111th Congress, the American Clean Energy and Security Act, (also known as the Waxman-Markey cap-and-trade bill) does almost nothing to break oil’s monopoly in transportation fuels and provide Americans the kind of choice they have in choosing a television set, a cup of coffee or any other consumer product.
A provision that could have made a difference, an Open Fuel Standard to ensure 50 percent of new cars are flexible-fuel capable of running on any blend of alcohol and gasoline was watered down to meaninglessness by the House Energy and Commerce Committee. Such a standard which could enable consumers to choose a fuel alternative at the pump next time gasoline prices rise to $5 a gallon was rejected by Chairman Henry Waxman due to pressure by the automakers.
The same distressed GM and Ford that, time after time, appeared before Congress asking for taxpayer money and promising that they would make 50 percent of their cars flex-fuel vehicles by 2012, ordered their lobbyists to scuttle any legislation that would require them to do just that.
Oil prices are rising, and pain will again be felt at the pump. Saudi Arabia’s oil minister Ali Naimi has recently predicted $150-a-barrel oil within three years.
Yet, as if nothing was learned from the previous oil shock of last summer, we continue to roll onto our roads 10 million new cars annually that can run on nothing but petroleum each with an average street life of 16 years. We are in for a shock, and when it comes we’ll again be able to view Americans’ vulnerability contrasted with Brazilians’ resiliency.
Only this time, we’ll be watching on our digital sets.
Gal Luft is executive director of the Institute for the Analysis of Global Security (IAGS). He is co-author of Energy Security Challenges for the 21st Century (2009).
Miami Herald
June 13, 2009
This week America transitioned from analog to digital television broadcasts, ushering what could be described as an open standard for television. This means that consumers will have a choice between buying a digital set or signing up to cable or satellite service and keeping their old antenna by installing a signal-dumbing converter box which allows them to get analog signal.
Without the converter, an analog TV began showing snow on the screen starting as of Friday morning. Regardless of whether the shift is a good idea or not — it probably is as it allows better spectrum usage — it is sad commentary of our priorities as a society. Strategic as Congress may imagine television is in our lives, it is not nearly as important as transportation.
Yet, the same Congress that mandated consumer choice in television reception modes denies us choice in transportation fuels: our cars, trucks, ships and planes can run on nothing but petroleum.
Such choice at the pump is neither more difficult nor more costly to achieve than choice at the screen. In Brazil, more than 80 percent of the new cars are flex fuel vehicles capable of running on any combination of gasoline and alcohols like ethanol and methanol. To make a new car flex fuel costs an automaker an extra $100 or less.
All that is needed is a chip and corrosion resistant fuel line. To convert our television, Congress has already allocated nearly $2 billion in taxpayer money to provide $80 worth of coupons per household to subsidize conversion boxes. Brazilians may not have as sophisticated television system but they can choose among fuels.
Last year, when oil prices were at their three-digit level more alcohol was sold in Brazil than gasoline, and the Brazilian economy was hardly touched by the oil crisis. At the same time, with no such fuel choice Americans shelled out hundreds of billions of dollars for foreign oil, a monumental loss of national wealth that popped the mortgage bubble and brought the United States to the brink of economic collapse.
Brazil’s success story hasn’t escaped the eyes of our leaders. President Obama pledged numerous times to pass a law that would mandate flex-fuel engines in all automobiles in order to break oil’s virtual monopoly over transporation fuel. Secretary of Interior Ken Salazar, while still in the Senate, was the lead sponsor of legislation that would have ensured new cars sold in the United States offer fuel flexibility. Energy Secretary Steven Chu has also spoken on the merits of this policy. But judging from its recent actions Congress is not on board. What seems to be the signature energy legislation of the 111th Congress, the American Clean Energy and Security Act, (also known as the Waxman-Markey cap-and-trade bill) does almost nothing to break oil’s monopoly in transportation fuels and provide Americans the kind of choice they have in choosing a television set, a cup of coffee or any other consumer product.
A provision that could have made a difference, an Open Fuel Standard to ensure 50 percent of new cars are flexible-fuel capable of running on any blend of alcohol and gasoline was watered down to meaninglessness by the House Energy and Commerce Committee. Such a standard which could enable consumers to choose a fuel alternative at the pump next time gasoline prices rise to $5 a gallon was rejected by Chairman Henry Waxman due to pressure by the automakers.
The same distressed GM and Ford that, time after time, appeared before Congress asking for taxpayer money and promising that they would make 50 percent of their cars flex-fuel vehicles by 2012, ordered their lobbyists to scuttle any legislation that would require them to do just that.
Oil prices are rising, and pain will again be felt at the pump. Saudi Arabia’s oil minister Ali Naimi has recently predicted $150-a-barrel oil within three years.
Yet, as if nothing was learned from the previous oil shock of last summer, we continue to roll onto our roads 10 million new cars annually that can run on nothing but petroleum each with an average street life of 16 years. We are in for a shock, and when it comes we’ll again be able to view Americans’ vulnerability contrasted with Brazilians’ resiliency.
Only this time, we’ll be watching on our digital sets.
Gal Luft is executive director of the Institute for the Analysis of Global Security (IAGS). He is co-author of Energy Security Challenges for the 21st Century (2009).
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