RFA's National Ethanol Conference Draws Over 600 to San Diego

Dinneen, Cavaney display historic concord that leads to bilateral support for Renewable Fuels Standard
By | March 01, 2002
Ethanol industry leaders are calling the 2002 National Ethanol Conference: Policy & Marketing one of the most prolific and meaningful industry summits in the last two decades. The ethanol industry's 7th annual national gathering drew more than 620 producers, marketers and policy makers to San Diego, Calif., Feb. 27-March 1.

On the precipice of what both ethanol and oil industry analysts are calling an "historic agreement" to enact a renewable fuels standard (RFS), Renewable Fuels Association President Bob Dinneen and American Petroleum President Red Cavaney announced a "new era of cooperation" in San Diego with a display of mutual respect and shared interest.

"The political stars are aligned, the strategic alliances are in place," said Dinneen in his state of the industry address Feb. 28. "I give Red Cavaney and the API great credit for recognizing the value of an RFS. . . Our objectives are no longer mutually exclusive."

While presenting the RFA's outlook on legislative opportunities and challenges ahead, Dinneen described the state of the ethanol industry as "dynamic, sound, clean and secure."

"The state of the industry is growing at an unprecedented rate, shattering production records and moving into new markets with a commitment to providing consumers with high performance, high quality, and renewable motor fuels that can enhance U.S. energy security while improving air quality," Dinneen said.

Cavaney described a new relationship between the oil and ethanol industries that will ensure "fuel flexibility" in meeting consumer needs and market certainty for ethanol producers. Reiterating Dinneen's comments, Cavaney said the oil/gas and ethanol industries share the same "values and aspirations," adding that, "ethanol brings a number of valuable benefits to gasoline."

"Our industries have found a new path forward," Cavaney said. "The U.S. oil and gas industry is not anti-ethanol. We need to work together, not against each other."

Hume, Urbanchuck, Schafer address homeland security
Tim Hume, President of the Corn Board - National Corn Growers Association (NCGA) led the general session through a homeland security discussion with ethanol industry consultant John Urbanchuck and RFA legislative counsel Larry Schafer.

Hume earnestly expressed his satisfaction with the oil industry's newfound support of ethanol, as well as his frustration with California Gov. Gray Davis' threats (and eventual decision) to delay the Jan. 2003 ban on MTBE.

"It's difficult for me to understand why we have to keep proving ourselves in California," Hume said. "Gov. Davis should be working with us. We have earned the right to supply the California market. . . and we will not relent."

As for the oil and gas industry, Hume said, "We have a new partner in the API - it's been a long time coming."

Urbanchuck gave a synopsis of a recent study entitled The Ability of the U.S. Ethanol Industry to Replace MTBE, while Schafer outlined 10 key RFS-related components in the pending Senate energy bill, including the accepted 5 billion gallon market for ethanol, a credit trading program, monitored compliance by the Environmental Protection Agency (EPA), small refinery exemption, an elimination of the oxygen requirement and a nationwide MTBE ban by 2006, including a special program to help MTBE producers ease out of the market.

Graboski, Piel, Kortum discuss oxygenates market
Under the direction of panel moderator Mary Giglio, RFA Congressional & Public Affairs Director, Colorado School of Mines Director Michael Graboski, transportation fuel consultant William Piel (President, Tier Associates, Inc.) and EPA Fuel Program Support Group Manager David Kortum together presented a timely overview of the public policy benefits and challenges of oxygenates.

The discussion was of particular importance, several attendees said, because the current RFG legislation excludes an oxygenate mandate. Notably, Kortum said, "70 percent of the gasoline in California would require ethanol even without an oxygenate mandate."

Informative & lively breakout sessions
Concurrent breakout sessions - perhaps the most engaging discussions at the conference - began after lunch Thursday, Feb. 28, making one of the most arduous decisions of the day choosing which session to attend.

A diverse set of early afternoon breakout sessions included: A Primer for Prospective Producers - Part 1, What are We Going to Do With All this Distillers Grain, and Understanding Gasoline Components Markets and the Role for Ethanol. The breakout sessions continued later in the day with A Primer for Prospective Producers - Part II, How Far are We Along the Road to Cellulose Commercialization, and An Outlook for E-Diesel in the U.S. Diesel Fuel Market.

Norm Marek, Program Manager for Alternative Energy and Transportation Fuel Programs, Illinois Department of Commerce & Community Affairs, outlined some the latest testing that has been completed on e-diesel by public and private industry. Marek discussed, among other topics, the promising results of the ADM truck program, sponsored by the Illinois DCCA in cooperation with Mack Trucks, Growmark, Corn Belt FS, Williams Bio-Energy and Pure Energy Corporation.

A 'balanced' breakfast

The final day of the conference began with an early morning breakfast presentation on the persistent topic of ethanol's energy balance. Along with moderator Ralph Groschen, Senior Marketing Specialist, Minnesota Department of Agriculture, USDA Agricultural Economists Hosein Shapouri and James Duffield presented overviews of the department's latest ethanol production energy balance findings.
Shapouri and Duffield were, once again, compelled to refute the findings of Cornell University professor David Pimentel, who released his fourth revised report on the energy balance of ethanol last June. The researchers said Pimentel still erroneously claims ethanol has a net energy loss, does not contribute to the nation's energy security, and is not a secure and reliable form of energy.

"These are fighting words," Dufflield quipped. "Clearly, ethanol has a net energy gain and replaces U.S. energy imports. And Pimentel says ethanol is not a secure form of energy (because flooding and drought can affect feedstocks) . . . As if oil from the Persian Gulf is a secure form of energy."

Furthermore, the researchers explained, nine studies have been completed on ethanol's energy balance in the last 11 years - and Pimentel is the only researcher to find ethanol's energy balance negative in the last decade.

"Pimentel is alone," Duffield said. "He ignores changes in technology and I'm surprised anyone takes him seriously."

According to Shapouri, the USDA plans to release its most recent findings in April, once again showing ethanol has a net energy gain, a gain that continues to widen with advances in modern farming and production technology. (Note: for accurate figures and more detailed information on this topic go to www.ethanolrfa.org/pubs).

International Outlook
The RFA included in its agenda an International Outlook that gave attendees a taste of the developing ethanol industries in Canada, Europe and Australia.

Mike Bryan, president of BBI International, moderated a panel that included Canadian ethanol consultant Don O'Connor, Abengoa executive Joaquin Alarcon de la Lastra, and Bill Wells, a U.S. ethanol industry veteran now living and working in Australia.

Supplying California
"We're ready to go (in California). There's no reason to extend the MTBE deadline for 10 seconds," said Neil Koehler, President of Kinergy, LLC, as he opened a conversation on replacing MTBE with ethanol in California.

Pat Fitzgibbon, BP Manager of MTBE Phase Out, said refinery modifications in California are well underway, modifications to terminal and blending stations are making good progress and the state's receiving infrastructure is midway through development.

"Essentially, these modifications will be completed in the fall of 2002," he said. "Unfortunately, the business environment is still uncertain."

Jack King, California Farm Bureau Federation manager of national affairs and research, spoke of California's potential to grow ethanol feedstocks in-state and produce ethanol locally. Notably, King said, farmers are interested in using sugar cane as an ethanol feedstock and growing corn, if possible. "The time (for ethanol in California) is now," King said.

California Energy Commission representative Susan Brown presented an overview of the state's transportation energy needs, while the candid Brooke Coleman, Director of the Renewable Energy Action Project, fervently disputed the findings of the influential Stillwater Report.

Logistics & transportation
The infamous Stillwater Report took yet another beating from ST Terminals Vice President of Marketing Tony Hoff, who reminded everyone that ST Terminals has been storing ethanol in California for 15 years.

"Let's build more rail cars. Let's fill them up with ethanol, roll them out to California, and we'll fill them up for you - it's that simple," Hoff said.

Legislative roundtable
A well-rounded panel of "political prognosticators" took the stage to field questions from the inquiring and (sometimes jesting) Dinneen. The panel session, always a crowd favorite, included Greg Scott, legal counsel to the Society of Independent Gasoline Marketers of America (SIGMA), Jon Dogget, director of government relations for the American Farm Bureau Federation, John McClelland, and Trevor Guthmiller, executive director of the American Coalition for Ethanol.

When asked if the Senate energy bill would include an RFS, McClellend accurately predicted, "I don't see any way there could be a bill without an RFS. The momentum has already begun."

Scott conceded, "Yes an RFS will likely be part of the energy bill, but (SIGMA) does not support it and I personally don't think (an RFS is needed)."

As for legislative priorities, the panelists named the pending energy bill, passing an RFS, getting the farm bill through Congress, trade promotion authority and refunding the Credit Commodity Corporation's Bioenergy program.

Closing Remarks

In his closing remarks, Dinneen thanked all who contributed to the success of the National Ethanol Conference, including the event sponsors: Fagen, Inc., Bio-Renewable Group, Ethanol Producer Magazine, Broin Companies, Victory Energy, and AMETHEX - American Ethanol Exchange. Before closing, Dinneen repeated his praise for API President Red Cavaney and thanked BBI International and the RFA staff for their hard work and dedication in planning and facilitating the conference.