Alabama Clean Fuels Coalition Executive Director Mark Bentley and President Phillip Wiedmeyer have been honored for their work in making Alabama cities cleaner places to live, work and play by the U.S. Department of Energy (DOE). National Clean Cities Co-Director Linda Bluestein recently inducted the pair into the Clean Cities Hall of Fame where representatives from nearly 100 Clean Cities coalitions from across the country gathered for the 2014 Clean Cities Coordinator Workshop.

In 2013 alone, the Alabama coalition saved more than 3 million gallons of petroleum and averted more than 12,000 tons of greenhouse gases through the deployment of alternative and renewable fuels, advanced vehicles, idle reduction and fuel economy improvements. The coalition has developed effective programs to support fuels such as ethanol, biodiesel, natural gas, propane, electricity and hydrogen. These accomplishments contributed to Clean Cities’ major milestone in 2013 of reducing U.S. petroleum consumption by one billion gallons in a single year for the first time ever.

“For many years, Mark and Phillip have proved themselves to be true pioneers and have made a significant impact in the deployment of alternative fuels and advanced vehicles, both in their coalition area as well as nationally,” said Bluestein.

Bentley has been the executive director of the Alabama Clean Fuels Coalition since 2006. Wiedmeyer has served as president for the coalition since 2002.

“It’s been our privilege over the years to promote the use of alternative fuels that are better for our environment, easier on our wallets, good for our local economy and a step toward energy independence for our country,” Bentley said. “We are delighted to be recognized for this important work.”

Biodiesel, ethanol, wind and energy efficiency are the leaders in a survey on job growth in advanced energy in Iowa. This news release from the Advanced Energy Economy Institute says those industries employ more than 22,000 people.

Prepared by BW Research Partnership, a leading workforce and economic development research firm, the Iowa Advanced Energy Employment Survey report is available at http://info.aee.net/ia-jobs-report-14. The AEE Institute published a similar report on California’s advanced energy industry, California Advanced Energy Employment Survey, last week, which is available at http://info.aee.net/ca-jobs-report-14.

Advanced energy comprises a significant part of Iowa’s economy, employing 1.3 percent of Iowa’s total workforce. Employment in advanced energy-related businesses is greater than employment reported for crop production, general freight trucking, and animal production in Iowa.

“In states from coast to coast and in between, the advanced energy industry is substantial and growing,” said Graham Richard, CEO of AEE and the AEE Institute. “This first-ever survey of advanced energy firms in Iowa shows that energy efficiency, biofuels, wind power, and other advanced businesses are creating jobs and contributing to the Iowa economy.”

While advanced energy jobs in Iowa dropped by 4 percent from 2013, the survey shows advanced energy employment is expected to rise 6 percent in the coming year.

Iowa-based Renewable Energy Group, Inc. (REG) is expanding into Europe with its majority ownership buy of Germany’s Petrotec AG Biodiesel. This REG news release says deal is expected to be closed by the end of this month.

ICG, Israel Corporation’s vehicle for investing in the alternative energy market, today formally accepted an offer from REG European Holdings B.V. to purchase ICG’s 69 percent equity ownership in Petrotec AG for US $20.9 million, or US $1.235 per share, to be paid in newly issued REG shares valued at the 30 trading day volume-weighted average for the day prior to signing. The REG subsidiary will also purchase ICG’s loan to Petrotec AG in the amount of approximately US $15.4 million. In the next several weeks, REG European Holdings B.V. intends to make a cash tender offer for all other Petrotec shares at a price no less than the value per share to be received by ICG.

“REG’s investment in Petrotec is a natural extension of our business strategy which should enable us to better capture value from international trade flows and to participate in European biofuel markets,” said Daniel J. Oh, REG President and CEO. “Petrotec’s people, culture, business model and technology are similar to ours at REG. We look forward to working with the Petrotec team as REG expands its business into Europe and further delivers the key benefits of our international industry: energy security and diversity, environmental stewardship and food security.”

Petrotec collects used cooking oil and other waste feedstocks from more than 15,000 points to produce biodiesel at its two biorefineries in Emden and Oeding, Germany, with a total nameplate production capacity of 55.5 million gallons per year.

A group of U.S. Senators have come out in support of EPA’s Clean Power Plan. The group submitted a letter to Environmental Protection Agency (EPA) Administrator Gina McCarthy stating that while the emission reduction goals are admiral, they believe that with modest changes to reflect real-world market and technological conditions, the plan can be more effective as well as better aligned with state power plans.

Citing Best System of Emission Reduction that requires that an emissions limitation technology be “adequately demonstrated” and also taking into consideration costs and non-air quality health and environmental impact, the Senators offer several tangible suggestions for improvement with the recommendation of using the Alternative Renewable Energy Approach methodology as outlined in the EPA proposal with the following changes:

• Recognizing the regional nature of the electricity system. State targets should reflect regional renewable energy generation and use alternative methodology to estimate regional technical potentials constrained by costs and grid integration limitations and then equitably set state targets that align with its Renewable Portfolio Standards.
• Remove the benchmark deployment rate as a constraint on the target. The EPA should set targets based on the Integrated Planning Model (they do not do this now). The model can calculate renewable energy development potential by evaluating the technical potential, costs and grid conditions in each state.
• Use current data to evaluate resource potential. The Senators cite the use of outdated data in the proposal and stress the need to use current renewable energy data that reflects today’s market conditions and recent technological developments.
• Include distributed generation technologies in calculating state targets. Distributed generation was not included in EPA’s proposal and the Senators stress the need for this energy category to be included.

In addition, the senators also recommend considering all efficiency measures that have been adequately demonstrated in the marketplace; adopt a consistent approach in which any state that implements energy efficiency measures will receive full credit for such measures; and emissions reduction from displaced fossil fuels through the deployment of renewable energy and efficiency should be accurately captured in emissions reduction targets for states.

Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA) commented on the Senator’s suggested changed to the Clean Power Plan.

“As an organization – and as an industry – we are very encouraged that so many Senators have signaled their enthusiastic support for the EPA’s Clean Power Plan. As the fastest-growing source of renewable energy in America, solar contributes in a significant way to a balanced energy portfolio. In fact, in the third quarter of this year alone, the United States installed 1,354 megawatts (MW) of solar photovoltaics (PV), up 41 percent over the same period last year. Moving forward, we believe solar can be a real game changer for states trying to meet their requirements under the Clean Power Plan, and we stand ready to help.”

I recently read the novel Flight Behavior by Barbara Kingsolver, a book about climate change. When I first began reading the book I had no intentions of doing a review, but as I got deeper into the book, and the characters voiced their opinions, about media in general, my intentions changed.

The premise of the book is that millions of monarch butterflies migrate to a rural area in Tennessee for the winter instead of going to their usual location in Mexico. After they are discovered by Dellarobia on her family’s land, and the media gets involved with a news story, people from around the world begin showing up including a scientist. The next several months the scientist, Dr. Ovid Byron, and his team attempt to ascertain why the monarch butterflies wintered in Tennessee.

There have been discussions in the media and scientific journals about how monarchs are decreasing in population. While some believe the cause is climate change, others believe it is the use of pesticides and some believe it is a combination of both. For example, Andre Leu, IFOAM President and author of The Myths of Safe Pesticides, quotes in his book, “Herbicide-resistant plants….have increased the use of glyphosate, which kills all other plants including milkweed, the only type of plant that monarch butterflies use for laying their eggs.” The author cites that milkweed has declined by 60 percent and monarchs in the U.S. that winter in the forests of Mexico has dropped from 1 billion in 1997 to 33.5 million. The milkweed fact above was mentioned in Flight Behavior.

I”m not going to use this space to debate climate change; rather, I’m going to use this space to discuss the role of media in the conversation. Today, media is quoting “experts” about climate change (and other issues) that are in fact not experts at all. Where are the credible scientists and researchers who are doing the work around climate change in this conversation?

Many scientists do not like how they are portrayed in and by the media. Reporters often spend more time being skeptical about the facts being delivered by a respected scientist then they do when speaking to a person who uses social media to get his/her word out effectively but has no basis in training or education to be discussing the scientific merits of an issue. (In other words, scientists don’t speak sexy talk).

Dellarobia and her husband Cub, give us an example: “Here’s the thing,” she said. “Why would we believe Johnny Midgeon about something scientific, and not the scientists?”

“Johnny Midgeon gives the weather report,” Cub maintained, and Dellarobia saw her life pass before her eyes, contained in the small enclosure of this logic.

In another example, Dellarobia doesn’t understand why Dr. Byran’s job is not to save the monarchs. “That is a concern of conscience,” he said. “Not of biology. Science doesn’t tell us what we should do. It only tells us what is.”

“That must be why people don’t like it,” she said, surprised at her tartness.

“Ovid, too, seemed startled. “They don’t like science?”

“…You’ve explained to me how big this is. The climate thing….But other people say just forget it. My husband, guys on the radio. They say it’s not proven.”

“What we’re discussing is clear and present, Dellarobia. Scientists agree on that. These men on the radio, I assume, are nonscientists. Why would people buy snake oil when they want medicine?

“That’s what I’m trying to tell you. You guys aren’t popular. Maybe your medicine’s too bitter. Or you’re not selling to us. Maybe you’re writing us off, thinking we won’t get it….”

[Ovid] “We were not always unpopular. Scientists.”

I truly feel through the words of these characters that Kingslover is hitting this “expert issue” on the head.

Their conversation continues with Dr. Byran saying he believes academics are the referees and can talk to either side. But Dellarobia counters and says academics are not doing this.

“It’s a point,” he said. “If we tangle too much in the public debate, our peers will criticize our language as imprecise, or too certain. Too theatrical. Even simple words like ‘theory’ and ‘proof’ have different meanings outside of science. Having a popular audience can get us pegged as second-rank scholars.”

“Is that why you don’t talk to reporters? Because, honestly, you’re good.”

“It’s a hazardous road…”

While Dellarobia becomes the poster woman of the plight of the butterflies she encourages a persistent TV reporter who wants a follow-up interview to speak with Dr. Byran. Needless to say, the reporter has no interest in interviewing him and he has no interest in speaking with her, even though Dellarobia stresses the importance of his need to speak out. So she in essence tricks him into the TV interview. Needless to say, it doesn’t go well and at one point Dr. Byran is literally yelling at her.

On camera, to the reporter: “You are letting a public relations firm write your scripts for you. The same outfit that spent a decade manufacturing doubts for you about the smoking-and-cancer contention. Do you people never learn? It’s the same damned company, Tina, the Advancement of Sound Science. Look it up, why don’t you. They went off the Philip Morris payroll and into the Exxon pocket.”

And herein lies the second reason I’m writing this editorial. We the media have done a lousy job of doing our jobs. We are not unbiased. We don’t do our homework. We report what others write without fact checking. We have helped to condition our audience to respond to sensationalism rather than facts. Facts can be boring. Drama is intriguing. Facts are bland. Drama is sexy.

Last year I lamented that people don’t understand this country’s energy challenges. They see gas prices dropping (at historic lows today in comparison to the last several years) and forget about the need to diversify our energy portfolio. So I suggested if I put the factual information in an article about aliens, would it get read? People did -thousands. And this is what Barbara Kingsolver has done so beautifully. She has taken climate change and all the issues surrounding it and put them into a wonderfully written, moving and engaging novel that hopefully will trigger readers’ thinking about a the issue of climate change.

Our latest ZimmPoll asked the question, “How should Congress handle tax breaks?”

Congress is once again considering a package of tax breaks for businesses and individuals that include everything from section 179 deductions to renewable energy tax credits. An overwhelming majority believe a flat tax is the answer. Will Congress think the same? Making tax breaks permanent and not allowing them at all tied for second place in our poll. Still looks like many are all over the board on what they think should be done.

Here are the poll results:

• Make them permanent – 18%
• One year at a time – 10%
• Keep letting them expire renew – 3%
• Don’t allow any – 18%
• Two words – FLAT TAX – 43%
• Don’t know – 5%
• Don’t care – 3%

Our new ZimmPoll is now live and asks the question, What’s the biggest challenge for the seed industry?

The seed industry gathered in Chicago for the annual seed expo and research symposium for corn, soybeans and sorghum and many issues were discussed. Since all of agriculture depends in some way on seed, the long term survival of that industry impacts everything from food and feed, to fuel and fiber, to flowers. What do you see as the biggest issues for the future of the seed industry?

New Hampshire, USA —

The global aviation industry has committed to aggressive goals to reduce its GHG emissions, including achieving carbon neutral growth by 2020 and reducing emissions by 50 percent by 2050 compared to 2005 levels. Global renewable products company Amyris and major French energy company Total, have partnered to produce and deliver a new renewable biofuel for the aviation industry that will help it meet these aggressive goals.

Amyris partnered with Brazilian airline GOL to fly the industry’s first commercial flight with farnesane, the recently approved renewable jet fuel. Credit: Amyris

In addition to helping the commercial aviation reduce emissions, this renewable biofuel represents an opportunity for improving the efficiency of airplanes and flight operations. The renewable jet fuel can be blended directly with petroleum jet fuel without any changes to airplanes, engines or fueling infrastructure. Amyris will now begin to quantitatively measure the positive impact to GHG emissions and air quality with every flight using the renewable jet fuel.

The renewable jet fuel can be blended directly with petroleum jet fuel. Credit: Amyris

Play the video to hear more about the historic first flight that took place this summer involving these two forward-looking companies.

Boom times for two-product strategies?

Can feed markets offer relief for the challenges on the fuel side? The Digest investigates.

The energy industry continues to feel the impact of falling energy prices. In Wednesday’s Top Story, we noted that the industry conversation has shifted from long-term fundamentals to a form of “oil price watching” — not even the short-term fundamentals, but the kind of paralyzed ticker watching, waiting for the bottom, that comes during stock market crashes.

“Barron’s says oil is going to $35bbl,” writes a trusted Digesterati. “The same guy who predicted the 2004 and 2009 lows.”

Well, we haven’t seen the argument made for that low-point — perhaps there’s evidence in the options market — but it’s evidence that we’re seeing ticker-watching.

Besides behavioral change, we’ve seen three types of fallout in the hard data:

a. Layoffs and assets sales announced by major energy companies, including BP, Shell and Chevron.

b. ConocoPhillips just issued its 2015 capital budget of $13.5 billion, “a decrease of approximately 20 percent compared to 2014″. ConocoPhillips notes that the cuts strongly reflect ” the deferral of spending on North American unconventional plays…In 2015, the Lower 48 development program capital will continue to target the Eagle Ford and Bakken, and will defer significant investment in the emerging North American unconventional plays, including the Permian, Niobrara, Montney and Duvernay.”

CEO Ryan Lance said “We are setting our 2015 capital budget at a level that we believe is prudent given the current environment.”

c. Rising gasoline sales. Low prices have stimulated a modest but trackable rise in consumption, despite increases in vehicle fuel economy. EIA said in September that the “short-term forecast of gasoline consumption” has risen to “8.82 million barrels per day (135.2 billion gallons), 0.13 million barrels per day (2 billion gallons) higher than last November’s forecast.”

In the December short term forecast released this week, the 2014 forecast was revised to 8.88 million barrels per day, while actual November consumption rose to 9.04 MBD, up from 8.94 MBD in 2013 and 8.48 MBD in 2012. Overall, gasoline consumption grew 1.9 percent in 2013 and 0.5% in 2014.

The uncertainty in prices going forward.

In Wednesday’s Top Story, we discussed at length the fundamentals driving uncertainty in forward oil prices, but we’ll add here that the EIA, in the December Short-Term Energy Outlook released Tuesday, forecast “$68-per-barrel average Brent crude price in 2015 (and $63 for West Texas Intermediate) while recognizing high price uncertainty,” which you can contrast with:

EIA Forecast from December 2014

a) The $35 Barron’s forecast for the new low; or b) The EIA’s previous forecast of $102 for Brent and $95 for WTI just 3 short months ago, which as of this morning was still proudly displayed on the agency’s website front page.

EIA Forecast from September 2014

We continue to point attention to what we described as a “competition between storylines,” for those who wish to divine the oil price for 2015 at this time.

The opportunities in $60 oil

In looking at the fundamentals driving oil prices (amidst other factors), one of the Digesterati writes this week with a good reminder to focus in on the opportunities that comes with low-priced oil. Namely, in a world where unconventional plays become unprofitable, the opportunities for technologies that make a feed and a fuel product. A friend writes:

I’ve attached an index graphs [comparing the crude oil, soymeal and fish meal price] which makes crude look better than it would be if the data were through November/December 2014 (the data from indexmundi.com stopped at October 2014 at $83/bbl crude oil).

What this helps me see is that, as the price of crude oil / energy further uncouples from the price of fishmeal and soymeal, the opportunity for those companies whose primary products are feed/food/protein is great and getting even better with every dollar reduction in the price for crude oil.  

Soymeal seems to trade in more sympathy with crude oil, even now, but fishmeal hasn’t for some time, as the data indicate to me.

So this obviously plays into the strategies that focus on making Omega-3s and, later, protein/feed the primary product, but with strains that make meaningful volumes of crude oil that can be refined into biofuels.

This strategy, in particular, plays into the algae market — where proteins are aiming to compete with fishmeal. In the case of algae, the opportunity to use algae oil for the biofuels market gives the volume by which an algae operation can reach meaningful economies of scale — omega-3s and other products just can’t make the enterprise big enough to capture the potential rewards seen in the fishmeal market.

Over in the ethanol markets

The same logic applies. Although fuel ethanol prices have dropped fast, in keeping with the overall drop in petroleum prices, we are seeing RIN prices on the rise — as rising gasoline consumption obviously doesn’t square with the kind of production slow-down that low ethanol prices generally result in. At the same time, ethanol producers (and biodiesel producers) have a secondary product (dried distillers grains and glycerine, respectively) to take some of the sting out of low energy prices.

The hard data?

Here’s a chart of commodity prices, contrasting September 10, 2014 with December 10, 2014:

As you can see, a massive drop in gasoline futures, nearly 35 percent. But we don’t see the same fall in ethanol future, which are off, but by a comparatively minor 6 percent. Interestingly, ethanol spot prices are up nearly 7 percent in the same period. Though, in bad news for ethanol producers, corn prices have spiked 14 percent since the fall — though still below $4.

At the same time, some other ethanol fundamentals have modestly improved over the past few months. For one, natural gas prices have dropped 5 percent, making it less expensive to run ethanol plants and in particular to dry out distillers grains. Meanwhile, corn oil and distillers grains spot prices have risen, by 10 and 7 percent, respectively.

A two-product strategy looks pretty good — in fact, overall prices for ethanol producers would be up something around 7 percent in this period — compared to a catastrophic fall in gasoline futures. Challenges in fuel prices can be partly mitigated by prices for co-products.

Note on methodology — state data is averaged but not weighted for DDGs— so, for example, Iowa’s prices are given the same importance that Michigan’s are, which could lift DDG prices a percent or two above a true weighted average. Ethanol, corn oil, corn prices, ethanol futures, natgas futures and RBOB gasoline futures are not affected in this way.

The Bottom Line

Our friend writes:

“It would obviously be good to see crude oil prices higher, but, to the extent that fishmeal soymeal and other protein sources continue their march upward asymmetrically to crude oil, it’s not necessarily a bad thing for the price of crude oil to stay persistently under $100/bbl.  One could still get to energy scale and be competitive with the going price of crude oil (no premium to the market price), and make profits, all without a subsidy.”

A two-product strategy is no guarantee of good times during period of rapidly falling energy prices. But it is a hedge, and a solid one based on the data we’re seeing. And unexpected good news, perhaps, for those watching the falling ticker and the tumble in oil prices.