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ETHANOL INDUSTRY EYES INDIA AND CHINA: U.S. ethanol industry leaders see immense promise in the fuel’s growth potential among the world’s most populous countries, where energy demand is ever increasing with economic expansion.
India and China are massive liquid transportation fuel markets. They’re also top global greenhouse gas emitters, rely on imports for most of their petroleum, and frequently record dreadful air quality indices, issues proponents such as the American Coalition for Ethanol insist more C₂H₆O can solve (We don’t have the space to explore the ethanol-air pollution debate here, but frequent any D.C. bar and you have a non-zero chance of finding someone to engage on it).
India has been particularly aggressive on ethanol in pursuit of its national E10 target in 2022. The country was estimated to achieve an average annual national ethanol blend rate of 9.3% last year, according to USDA, a 15% increase over the prior year and a new record that’s close to being on par with the United States’s blend rate.
The government also set a national E20 target for 2025.
Ron Lamberty, chief marketing officer for the American Coalition for Ethanol, said he sees in the uptake a recognition that ethanol is a pollution solution.
“It not only replaces directly a lot of the things that increase greenhouse gases, but it helps that stuff burn more completely,” Lamberty told Jeremy. “It seems like in places where the air quality is the most desperate, they look at ethanol a lot quicker.”
Ethanol imports into India for blending remain prohibited. That means U.S. producers can’t send it there for transportation fuel. But the U.S. does provide nearly all of India’s industrial grade ethanol.
In China: Ethanol blending fell in China last year compared to 2021, according to USDA, something attributed at least in part to the economic slowdown from its COVID-19 containment policies. Department analysts also observed in their China annual biofuels report that biofuels “continue to wane” as a priority for the People’s Republic of China and investment is in decline.
But the country intends to see its greenhouse gas emissions peak in 2030. Its 2021-2025 five-year plan provides targets for reducing the carbon dioxide intensity, and ethanol is “the only biofuel that has received any attention from policy makers with ambitious emissions targets,” USDA’s report said.
If China, the largest car market in the world, were to open the floodgates to more ethanol blending and imports, the industry would jump.
“It’s an opportunity we always keep an eye on, because it’s a game changing marketplace,” ACE chief Brian Jennings said.
The domestic agenda: There’s more to do at home besides. Ethanol and its backers in Congress feel the fuel has hit an artificial ceiling with existing limits on E15 gasoline. The average U.S. blend rate has held at marginally above 10% since 2015.
Midwestern lawmakers are reviving bills that would expand ethanol in the fuel supply, including by changing regulations to allow for permanent nationwide sale of E15. The ultimate aspiration is to make fuel in the E25 to E30 range widely available, Jennings said.
“There’s about 2 million plug-in vehicles right now, but like 288 million vehicles that could be helping reduce pollution more than they already are,” Lamberty said. “We can do a lot more than they’re basically allowing us to do.”
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TREASURY ISSUES GUIDANCE ON ‘ENERGY COMMUNITY’ BONUS CREDIT: The Treasury Department rolled out another key tax guidance this morning, this one detailing how clean energy project developers can acquire a 10% bonus tax credit for setting up shop in “energy communities.”
Coal workers in particular are being displaced by the continued closures of plants and mines, something the Inflation Reduction Act and other federal laws seek to rectify with programs and funding meant to put them to work in other sectors.
In this case, the Biden administration hopes to guide those workers toward work in clean energy by luring project developers.
“The workers who powered the last century of industry and innovation can power the next,” Energy Secretary Jennifer Granholm told reporters.
The energy community bonus credit stacks on top of the IRA’s new clean electricity investment tax credit, new clean electricity production tax credit, and the renewable electricity production tax credit, so long as project developers meet prevailing wage and apprenticeship requirements.
The mix of credits means that a developer could go into a town with a closed coal mine and build a new wind farm with the help of a 30% investment tax credit with the 10% bonus on top, Deputy Treasury Secretary Wally Adeyemo explained.
Other announcements: DOE and Treasury also created a new searchable mapping tool showing regions with eligible energy communities, defined as those where local employment and local tax revenues were historically driven by the extraction, processing, transport, or storage of coal, oil, or natural gas.
Brownfield sites, areas in which a coal mine has closed after 1999, and areas in which a coal-fired power plant has been retired after 2009 are also defined as energy communities.
Many of the communities on the map are concentrated in West Virginia, Kentucky, and western states such as Wyoming.
The Department of Energy also announced this morning that it will make $16 million available to the University of North Dakota and West Virginia University to complete design studies to support the first-ever full-scale domestic demonstration refinery to glean rare earth elements and other critical minerals from coal waste.
The White House said the project will help reduce reliance on China for minerals.
COURT VACATES MVP’S WEST VIRGINIA WATER PERMIT: The 4th Circuit vacated a key state water permit for the Mountain Valley Pipeline yesterday in a decision expected to set the project further off course from its planned year-end service date.
A three-judge panel unanimously vacated and remanded the West Virginia Department of Environmental Protection water quality certification for the pipeline, without which the Army Corps of Engineers cannot continue with its permitting work for the project.
The court outlined a number of deficiencies with the WVDEP’s certification, one of which was that it failed to give an adequate explanation for declining to perform a location-specific antidegradation review in the permitting process. The Clean Water Act requires states’ water quality standards to adopt an antidegradation policy to weigh the pros and cons of a proposed activity that could degrade water quality.
The judges also ruled that West Virginia failed to adequately consider the pipeline developer’s past water quality violations in its certification process.
“Although the Department acknowledged MVP’s violation history, it failed to dispel the tension between MVP’s checkered past and its confidence in MVP’s future compliance,” the court said.
The ruling is expected to delay completion further and to delay the operation of the pipeline, which is nearly 94% complete, according to its developer.
Sen. Joe Manchin, who sought with his permitting legislation last Congress to unilaterally approve MVP and to remove litigation against the project from the 4th Circuit to the D.C. Circuit, complained about the setback in a statement circulated this morning that said the court sided with activists “who seem hell-bent on killing any fossil energy that will make our country energy independent and secure.”
GREEN PLAINTIFFS LOSE BID FOR INJUNCTION AGAINST WILLOW: A federal judge denied environmental plaintiffs’ request for a restraining order and preliminary injunction to block commencement of construction on the Willow project
Judge Sharon Gleason of the U.S. District Court in Alaska, who before had blocked Willow from proceeding in 2021 after finding deficiencies in the Trump administration’s approval, said yesterday that after weighing economic damages, effects to subsistence users, and state and federal legislative pronouncements of the public interest, she concluded the balance of interests is tilted “sharply” against a preliminary injunction.
Gleason noted hunters in the North Slope who maintain that the planned construction of a gravel road and boat ramp as part of the project would benefit them by providing easier access to subsistence resources.
The lawsuit filed by Alaska Wilderness League and other groups is one of at least two filed in the days after the Bureau of Land Management approved Willow last month.
Plaintiffs appealed Gleason’s ruling yesterday to the 9th Circuit and pledged to continue to do everything possible to halt the project.
REPUBLICANS USE OPEC+ CUTS TO TOUT HR 1: Republicans are using the news of the OPEC+ production cuts to boost the Lower Energy Costs Act, the marquee GOP-led legislation cleared in the House last week.
In particular, Republicans have played up provisions included in H.R. 1 that would boost domestic oil and gas production and streamline the permitting process to approve and build energy projects in the U.S.
“It is entirely unacceptable that the actions of a foreign energy cartel, OPEC, would have a direct effect on how much we as Americans pay for gas,” Rep. Bob Latta, an Ohio Republican and senior member of the House Energy and Commerce Committee, said in a statement.
“OPEC’s announcement to significantly cut oil production will send energy prices soaring … I am urging the Biden Administration to come to the table to support this bipartisan energy bill because it will keep U.S. energy secure, affordable, and reliable,” he added.
Senate Majority Leader Chuck Schumer has described H.R. 1 as “dead on arrival” in the narrow Democrat-led chamber, and Biden has vowed to veto the legislation on the off chance it does reach his desk.
But the OPEC+ cuts – which will hit energy prices in the next two months, around the start of summer driving season in the U.S. – could also give Republicans more ammo to go after Biden ahead of the 2024 elections or force Democrats to come to the negotiating table on certain provisions included in H.R. 1.
UPWARD PRESSURE ON GAS PRICES IS EXPECTED: And while gas prices aren’t expected to rise to the record-high levels seen last summer, analysts said the OPEC+ cuts could cause prices to increase by as much as 30 cents per gallon.
Peter McNally, the head of industrial materials and energy at Third Bridge, told ABC News he expects gas prices to see an increase of 20 to 30 cents as a direct result of the OPEC+ cuts, while GasBuddy’s Patrick de Haan said he expects an uptick of between 5 to 15 cents. “I certainly think there’s going to be upward pressure on prices as a result of these production cuts,” he told the outlet.
GERMAN VICE CHANCELLOR VISITS UKRAINE IN ENERGY-FOCUSED TRIP: German Vice Chancellor Robert Habeck traveled to Ukraine yesterday with a small business delegation for the first time since Russia’s invasion, where he sought to reaffirm Berlin’s commitment to Kyiv and to helping rebuild Ukraine’s energy infrastructure, which has come under heavy fire during the war.
Speaking after a visit to a power substation yesterday, Habeck called for Germany and Ukraine to deepen their energy partnership, which was formalized in 2020. He also announced that the German pharmaceutical group, Bayer, will invest some $5.44 million into new projects in Ukraine.
“The wish and the strategic plans — and these are security plans of the Ukrainians — are actually to make the energy system broader and more decentralized,” Habeck said. “In this respect, two things fit together quite well: the need for security and a sustainable energy system.”
…Meanwhile, French President Emmanuel Macron and European Commission President Ursula von der Leyen will travel to China together today to discuss the future of EU-China relations, including issues of trade, economic cooperation, and China’s neutral stance on Russia’s war in Ukraine. Von der Leyen spoke by phone with Ukrainian President Volodymyr Zelensky hours earlier, and vowed the war would be an important topic during her trip.
While in Beijing, Macron could bring up the Comprehensive Agreement on Investment, or CAI––a controversial, still-unratified agreement that would boost trade and investment relations between Europe and China, said Nicola Casarini, an associate fellow at the Istituto Affari Internazionali and the Wilson Center who focuses on Asian-European relations.
Some diplomats see potential to help improve Europe’s trade relations with Beijing and prevent it from aligning too closely with Moscow. U.S. officials, meanwhile, will be watching closely for signs of how it might posture itself with China on issues of trade, economic cooperation, and more.
The Rundown
Bloomberg Companies can vie to mine the deep sea starting in July
E&E News Feds warn of major climate risks to U.S. hydropower
Financial Times China’s battery king faces scrutiny over EV market dominance
Calendar
MONDAY | APRIL 17
3:30 p.m. The Institute of World Politics will host a panel on the current energy supply crisis and Canada’s role in helping supply alternative energy sources. Panelists will include James Rajotte, Alberta’s senior representative to the U.S., SVB Energy founder and president Dr. Sara Vakhshouri, and others. Learn more and register to attend here.
