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USDA releases roadmap for biofuel goals

USDA has released a regional roadmap for meeting the biofuel goals of the current Renewable Fuels Standard (RFS2) by 2022.

The report is an initial step in determining the size and scope of the investments necessary to achieve 36 billion gallons of renewable biofuels by 2022. The report concluded:

• A rapid build-up in production capabilities is needed to meet the RFS2 targets for cellulosic biofuels.

• The scope of the monetary investment for biorefineries is substantial.

• It is important to consider both sides of the market – the production/supply side and mandate/consumption side – and how they respond to the RFS2 mandate.

• There are current infrastructure needs such as blender pumps and rail and trucking infrastructure.

• The U.S. farm sector is capable of producing a diverse complement of feedstocks to make the biofuels industry a truly national effort.

• Stakeholders must identify bottlenecks and barriers related to locating biorefineries.

The ethanol industry is awaiting a decision by EPA on increasing ethanol blending allowances from 10 percent to 15 percent. Some in the industry have urged EPA to provide some immediate market relief through the approval of 12 percent blends while it finalizes work on E15.

The Renewable Fuels Association says the EPA is unnecessarily delaying the decision. RFA also disagrees with an EPA plan to approve E15 use for only in 2007 and newer vehicles.

“EPA is dropping the ball, and for no scientifically justified reason,” said RFA President and CEO Bob Dinneen. “While initial plans to approve the use of E15 for only 2001 and newer vehicles were bad, this plan borders on shameful. Confusing the market as EPA seems intent upon doing likely will lead to little if any additional ethanol being sold.”

Allowing up to E15 blends, up from current 10 percent limits, would mean a potential increase of 6.5 billion gallons of new ethanol demand, displacing more than 200 million additional barrels of imported oil.

In early June, RFA reported April ethanol exports of 40.8 million gallons, compared to 48.3 million gallons in March. Year-to-date exports are 124.3 million gallons, which means 2010 exports have already surpassed exports for all of 2009, 113.3 million gallons.

“American ethanol producers continue to be forced to look for overseas markets for their product as domestic markets for ethanol remain saturated due to the regulatory cap on blending levels,” said Geoff Cooper, RFA vice president of research.

“As a matter of national energy security, America should first seek to maximize its use of domestic renewable fuels before it turns to overseas markets.”

Exports to the EU, India, Jamaica, Australia, and Canada were up or stable. But exports to Brazil dropped to virtually zero, as Brazilian ethanol output rebounded from previous months.

RFA explored the issue of increasing U.S. ethanol exports in depth in report released in May.

According to the Energy Information Administration, ethanol production for the week ending June 18 was 846,000 barrels per day, or more than 35.5 million gallons daily. The week prior, production reached 839,000 barrels daily.

Ethanol in storage around the country ticked upward with supplies of 19.4 million barrels, or nearly 815 million gallons. That is up from 18.6 million barrels the week before.

Total gasoline demand fell slightly at just over 388 million gallons of daily demand, meaning ethanol production is equivalent to 9.15 percent of gasoline demand.

Based on RFA calculations, the ethanol industry consumed 12.7 million bushels of corn daily for the week ending June 18. The corn also converted into approximately 98,000 metric tons of livestock feed, including corn gluten feed, corn gluten meal, and distillers grains. Distillers grains production alone totaled more than 86,000 metric tons according to RFA calculations.

RFA is assuming an industry average of 2.8 gallons of ethanol per bushel of corn. For feed production, the RFA assumes 17 pounds of distillers grains are produced from each bushel of corn in the dry mill process. Plants using the wet mill process generate 13.5 pounds of corn gluten feed and 2.5 pounds of corn gluten meal per bushel processed. RFA assumes 88 percent of the current operating capacity utilizes the dry milling process.

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