2018 HALF YEAR REPORT

Transcription

1 2018 HALF YEAR REPORT

2 OUR MEMBERS ETHANOL PRODUCERS Al-Corn Clean Fuel Claremont, MN ADM Marshall, MN Central MN Renewables Little Falls, MN Chippewa Valley Ethanol Benson, MN Granite Falls Energy Granite Falls, MN Guardian Energy Janesville, MN Heartland Corn Products Winthrop, MN Highwater Ethanol LLC Lamberton, MN VENDOR MEMBERS

3 MESSAGE FROM OUR EXECUTIVE DIRECTOR Dear Valued Member, The realm of biofuels seems to be under siege on a daily basis. From NAFTA to international trade tariffs to refinery waivers to artificial market barriers, the Minnesota Bio-Fuels Association remains vigilant, focused and engaged to displace more finite and carbon intensive petroleum with biofuels. In short, with your support, we have focused on projects that deliver tangible results to help lower artificial barriers to biofuel producers while at the same time increasing access to and demand for E15. In the following pages you will learn more about our work in the first half of 2018 on reforming the regulatory process for biofuel producers, generating millions of ad impressions to drive consumers to E15 fuel dispensers and growing beyond the 14 brands and 282 fuel retailers who now offer E15 in Minnesota. While we continue to keep our focus on delivering tangible results in Minnesota, we are cognizant of the growing threats to our industry and its implications for Minnesota biofuel producers and agriculture industry as well as consumers of biofuels. Make no mistake, the current attacks on the RFS go to its very core. The seemingly illegal refinery waivers, if left to stand, can eviscerate the very foundation upon which the biofuel industry is built. Together, we need to keep pushing back on Big Oil and continue to align our industry with the renewable future. We thank you for your financial support, membership and the opportunity to exchange ideas and build a better future with biofuels. Best regards, Timothy J. Rudnicki, Esq

4 LEGISLATIVE / ADVOCACY Thus far in 2018, we have participated in numerous collective and productive efforts to advocate on behalf of Minnesota s biofuel producers and the industry in general. Our scope of legal and regulatory matters and policy initiatives are proactive as well as reactive. Our preference is to set the agenda and move it, but sometimes we find ourselves in a defensive mode, especially with respect to preserving the integrity of the RFS. Earlier this year, we commissioned an economic report on Minnesota s ethanol industry in 2017 and have used it in our advocacy work with members of the Minnesota legislature, the governor's office, various state and federal agencies and members of Minnesota s congressional delegation in Washington, D.C. Some of the key issues we brought to the attention of our lawmakers in Congress were the need for RVP parity for E15, a $25 million biofuel infrastructure initiative for Minnesota and protection of the RFS as it provides the foundational basis for current ethanol production as well as the production of advanced biofuels. At the Minnesota legislature we worked aggressively to advance a stimulus bill for combined heat and power (CHP) systems, which can help lower the carbon intensity of energy inputs and thereby lower the carbon index for ethanol. The challenge with respect to CHP systems is that they can cost as much as $3 million per megawatt. Yet once installed, the units reduce carbon emissions (eliminate

5 transmission line loss and use natural gas to displace coal-generated electricity on the grid system) and can improve the operating efficiency of ethanol plants. Our CHP bill had strong support from Democrats, Republicans, the Department of Commerce and the governor s office but was met with opposition from two tax committee chair people and was excluded from the omnibus tax bill. Given the extensive economic and environmental benefits of these energy systems for biofuel producers and the Minnesota environment, we plan to launch another initiative during the 2019 legislative session. We also monitored 3,491 bills that were introduced during the 2018 Minnesota legislative session. Some of the bills dealt with taxes, water quality regulations, regulatory fees, scientific peer review, carbon dioxide reduction for electricity generation, biodiesel, environmental assessment worksheets, electronics recycling, renewable chemicals, transmission lines and freight rail systems. We remain active in ASTM International and we have followed balloting with respect to all the fuel standards that involve E15 and higher blends of ethanol as well as the protocol for the measurement of biomass. The latter can very well involve use of the pericarp of the corn kernel with respect to EPA RIN pathways as well as to other feedstocks for advance biofuel production. Our work on a regulatory flexibility initiative with the Minnesota Pollution Control Agency (MPCA) continues to produce more tangible results. Our meetings with MPCA officials over eight months and with multiple subcommittee meetings has produced some results for permit flexibility and the permitting process for ethanol producers.

6 COMMUNICATIONS RADIO ADVERTISING In the first half of 2018, we launched E15 ad-campaigns on KDWB FM and KS95 FM, the top-two rated radio stations in the Twin Cities metro market. Broadcasted on-air and streamed online, these ads targeted young adults and encouraged them to use E15 by highlighting the various economic and environmental benefits of using it. A total of 1.31 million ad impressions were achieved each month through our radio ads. SOCIAL MEDIA CAMPAIGNS & STATION EVENTS So far in 2018, we have carried out 49 ad campaigns on Facebook targeting users within a two-mile radius from a station offering E15 in the Twin Cities metro area. Each of these ads featured a short 30-second video explaining the benefits of using E15 and were shot on location at each of the stations we promoted during the first half of the year. This is the third year we ve run these ad campaigns on Facebook and as access to E15 increases, these campaigns have played a vital role in increasing demand. In total, these ad campaigns in the first half of the year delivered nearly 400,000 ad impressions to consumers who live or work within two-miles of a station offering E15.

7 In addition, with our partners at KS95 FM, we organized engagement events at five stations that offer E15 during the first half of the year. At each event - which ranged from an hour to two-hours- a KS95 personality along with our team engaged with consumers to educate them on the benefits of using E15. At all the aforementioned events, an average of 30 drivers switched to E15. These campaigns - on radio, social media and at the stations - have been critical in increasing E15 usage in Minnesota as, despite more stations offering E15, there is still an essential need to educate consumers on the fuel, where it s made and why it s beneficial to use it from both an economic and environmental standpoint. Our Facebook page also remains the most popular Facebook page in the industry with over 41,000 followers. EDUCATION In the first half of 2018, we organized six school tours to ethanol plants in Minnesota. These visits were aimed at educating the students on how ethanol is produced and its benefits to the environment and the economy in rural Minnesota. Of the six tours we organized this year, two were for college students - Ridgewater College and the University of Minnesota. In total, we brought 155 students to ethanol plants in Minnesota in the first six months of the year.

8 FUEL RETAILERS & SUPPLY CHAIN RETAIL STATIONS Minnesota continues to lead the nation in making E15 the new regular with 282 stations offering E15 (as of mid-june). Casey s General Stores became the latest brand this year to offer E15 in Minnesota. It joins a roster of brands that includes Holiday, SuperAmerica, Kwik Trip, Minnoco, Winner, Little Dukes, Hy-Vee, Clark and Tesoro. Most of the stations are located in major markets throughout the state - Duluth, Mankato, St Cloud, the Twin Cities metro area and Rochester. WHOLESALE We continued to engage with wholesale distributors such as Waterford Oil, Diesel Dogs, Severson Oil, North Dale Oil, Rainy Lake Oil and Dooley s Petroleum to broaden the availability of pre-blended E15 to retailers as well as municipalities, industrial and commercial customers and private fleet operators. Many stations have also begun offering E15 without on-site blender pumps, indicating that some petroleum wholesalers have made pre-blended E15 available.

9 E15 SALES 2018 VS 2017 E15 sales in Minnesota as of April 30, 2018 totaled million gallons - a 22 percent increase in sales over the million gallons sold for the whole of The monthly average for E15 sales in 2018 has been 5.81 million gallons and the increase is the result of higher availability of E15 throughout the state as well as promotional activities from organizations like the Minnesota Bio-Fuels Association Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec FLEET VEHICLES We continued to engage departments of the state of Minnesota and fleet managers in Hennepin County, Ramsey County, Dakota County, the University of Minnesota and the city of Minneapolis to increase E15 and E85 usage in their fleet vehicles.

10 GOING FORWARD For the remainder of 2018, we will continue to focus on targeted legal, regulatory and public policy advocacy aimed at lowering artificial barriers for biofuel producers and E15. There are more than 150 fuel retailers who still need some financial assistance to transition from mid-grade fuel to E15. We need approximately 660 fuel retailers to hit 20 percent market penetration in order for E15 to become the new regular in Minnesota and we are working to secure grants via the Minnesota Department of Agriculture while also seeking $25 million in funding at the federal level. On permit processing for ethanol producers, more work needs to be done. This is a complicated matter because it involves the interpretation of process rules, the deployment of professional staff and a data management system called Tempo. We have advocated for permit flexibility and a reduction in the number of days it takes to issue a major modification air permit. Thus far, the MPCA has indicated its support for this initiative and backs our call for sound scoping of the problems, clear definition of the solutions and alternatives and use of solid metrics. Out of the policy and legal world, we are working to obtain two demo vehicles that have a new approach to using ethanol - the Toyota hybrid flex fuel and the Nissan solid oxide fuel cell vehicle. We are in negotiations with the engineering departments of both carmakers and are working to address a number of issues regarding fuel

11 availability and other technical details. We will know more about the viability of these projects later this year. We are also working on several other advocacy initiatives. One initiative explores the feasibility of running a fleet vehicle testing program using mid-level blends of ethanol. Another initiative is to explore how to address the RVP problem on a statewide or regional basis. The last initiative involves advocacy work with a state agency and the US Climate Initiative for the purpose of creating a pathway for E15 in the California fuel market. Once the RVP-ban on E15 is lifted in September, we will resume our activities to increase the usage of E15 in Minnesota through aggressive advertising campaigns on social media and on-the-ground promotions with KS95 FM at E15 stations in the Twin Cities metro area. We will also resume school tours to ethanol plants in the fall. Lastly, we are entering an election season in which cheap and hollow talk by candidates can be alluring but devastating for biofuels. On this front, we will work to hold candidates for office accountable for what they say during the campaign and when they enter office. Unless their energy plans explicitly include biofuels, we will remain skeptical of their commitments and will work to educate them about the energy security, consumer, economic and environmental benefits that flow from biofuels.

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