Friday, December 31, 2010
Western Provinces Form Energy Alliance
Government ministers from the Canadian provinces of Saskatchewan, Alberta and British Columbia have agreed to collaborate on energy issues with an emphasis on oilsands development. The agreement was formalized through the signing of a memorandum of understanding in Calgary, Alberta on Dec. 16. Read more...
Thursday, December 30, 2010
Nebraska Legislature May Act on Keystone
In view of the level of opposition to the Keystone XL pipeline in Nebraska, it's not unlikely the matter will brought up in the upcoming state legislative session that begins next week, according to an article in today's Sioux City Journal. Among the issues lawmakers could consider, according to the Journal article, are measures to protect landowners in the event of an oil spill and rules that require pipeline companies to remove pipes from the ground rather than abandoning them. The article also suggested the Legislature may also consider tightening laws governing eminent domain, which TransCanada has said they may use to obtain the land easements required for the project. Read more...
Tuesday, December 28, 2010
Minnesota Wind Farm Goes Online
Minneapolis-based Xcel Energy has announced the activation of its Nobles Wind Farm in southwestern Minnesota. The 201-megawatt wind farm in Nobles County consists of 134 turbines. Xcel Energy also owns the Grand Meadow Wind Farm in southeastern Minnesota and is working on a third facility in North Dakota that is expected to go online in late 2011. Read more...
New Iowa Wind Farm Announced
A new wind farm will be constructed in western and central Iowa by MidAmerican Energy Co., according to a new release published today. The facility will use 258 turbines made by German manufacturer Siemens to generate 593 megawatts of electricity. When completed in early 2012, the new wind farm will increase Iowa's total wind energy output by 16% to 3,760 megawatts. MidAmerican Energy serves retail customers in Iowa, Nebraska, Illinois and South Dakota. Read more...
Monday, December 27, 2010
South Dakota Wind Farm Update
Construction continues at the community-based wind farm near Wessington Springs, South Dakota. The facility will consist of 108 turbines, of which 86 have been installed. A total of 611 area investors have put up $16 million to own seven of the turbines. North Dakota's Basin Electric will own the remaining 101 units in the facility, which is scheduled to be completed in April. Developers say the wind farm is the first of its kind in the country. Read more...
Wednesday, December 22, 2010
Iowa Wind Farm Finds Buyer for Power
Iberdrola Renewables has signed 20-year contracts with two Illinois utilities for the power generated by the New Harvest Wind Power project under construction northwest of Schleswig in Crawford County, Iowa. The 100MW facility will use a total of 50 turbines supplied by Spanish manufacturer Gamesa. The turbines are expected to be delivered in the spring of 2011. Read more...
Tuesday, December 21, 2010
Biodiesel Production Resumes in Minnesota
The signing of the 2010 tax relief bill last week made the biodiesel tax credit retroactive to Jan. 1 and extended it through the end of 2011. The bill puts producers like Minnesota Soybean Processors back in business again. Biodiesel production at the plant stopped on Nov. 23 following a period of declining orders after the previous $1-per-gallon tax credit was allowed to expire on Dec. 31, 2009. The company, based in Brewster, said there was enough biodiesel in storage to fill the orders received in recent days and plans to begin production again as soon as possible. Read more...
Ethanol and Biofuel Tax Credit Extensions
By Cole Gustafson, Biofuels Economist, NDSU Extension Service
On Dec. 17, 2010, Congress passed and President Obama signed legislation extending for another year the 45-cent-per-gallon ethanol and $1-per-gallon biodiesel tax credits, as well as the 54-cent-per-gallon ethanol import tariff. The biodiesel tax credit terminated almost a year ago, and the ethanol tax credit and tariff were scheduled to cease at the end of this year.
The ethanol industry praised the extensions, saying the legislation would save jobs in rural America and lead to greater oil independence. It is true that the tax credits are a direct economic benefit to the industry. However, it isn’t always clear which part of the industry captures the benefit. When margins are high, blenders are able to extract and capture most of the benefit because enough biofuel exists in the marketplace. When profitability is at a break-even point, blenders pass greater portions of the tax credits to biofuel plants to entice production.
In the case of biodiesel production, the tax credit is large and a key economic driver. When the credit ceased to exist in 2010, most biodiesel plants curtailed production. Profitability in the ethanol industry during the past year has been somewhat mixed. Iowa State University reports that total economic returns were at a break-even point through the summer, but increased to 33 cents per gallon in November.
Extending the credit certainly will benefit established biofuel plants. However, by merely extending the credits and tariffs for only one year (Dec. 31, 2011), the legislation does little to stimulate new biofuel investment. Construction of new biofuel plants is a long-term investment, so risk-averse investors are weary of funding such ventures with such policy uncertainty. The wind energy industry was stymied for several years when its tax credit provisions were on and off again.
Creating even more angst among biofuel investors are the emerging differences within the industry. One faction seeks to continue funding tax credits at the present level, while another faction prefers to replace the credits with new investments in blender pumps, dedicated pipelines, and flex-fuel vehicles that would secure biofuel demand into the future.
In another interesting twist, the legislation extended the ethanol tax credit at 45 cents per gallon, while the ethanol tariff remained at 54 cents per gallon. Previously, they were at identical monetary values because the tariff was justified as a means of offsetting the benefit blenders get when they import ethanol from other countries (blenders get a tax credit for selling ethanol in the U.S. but have to pay a tariff for importing it). Now that a differential exists between the credit and the tariff, foreign ethanol producers have a legitimate complaint that can be advanced to the World Trade Organization.
With a new, more conservative Congress and mounting federal budget pressures, I expect continued active debate in 2011 on the value of biofuel tax credits and tariffs.
Source: NDSU Agriculture Communications
On Dec. 17, 2010, Congress passed and President Obama signed legislation extending for another year the 45-cent-per-gallon ethanol and $1-per-gallon biodiesel tax credits, as well as the 54-cent-per-gallon ethanol import tariff. The biodiesel tax credit terminated almost a year ago, and the ethanol tax credit and tariff were scheduled to cease at the end of this year.
The ethanol industry praised the extensions, saying the legislation would save jobs in rural America and lead to greater oil independence. It is true that the tax credits are a direct economic benefit to the industry. However, it isn’t always clear which part of the industry captures the benefit. When margins are high, blenders are able to extract and capture most of the benefit because enough biofuel exists in the marketplace. When profitability is at a break-even point, blenders pass greater portions of the tax credits to biofuel plants to entice production.
In the case of biodiesel production, the tax credit is large and a key economic driver. When the credit ceased to exist in 2010, most biodiesel plants curtailed production. Profitability in the ethanol industry during the past year has been somewhat mixed. Iowa State University reports that total economic returns were at a break-even point through the summer, but increased to 33 cents per gallon in November.
Extending the credit certainly will benefit established biofuel plants. However, by merely extending the credits and tariffs for only one year (Dec. 31, 2011), the legislation does little to stimulate new biofuel investment. Construction of new biofuel plants is a long-term investment, so risk-averse investors are weary of funding such ventures with such policy uncertainty. The wind energy industry was stymied for several years when its tax credit provisions were on and off again.
Creating even more angst among biofuel investors are the emerging differences within the industry. One faction seeks to continue funding tax credits at the present level, while another faction prefers to replace the credits with new investments in blender pumps, dedicated pipelines, and flex-fuel vehicles that would secure biofuel demand into the future.
In another interesting twist, the legislation extended the ethanol tax credit at 45 cents per gallon, while the ethanol tariff remained at 54 cents per gallon. Previously, they were at identical monetary values because the tariff was justified as a means of offsetting the benefit blenders get when they import ethanol from other countries (blenders get a tax credit for selling ethanol in the U.S. but have to pay a tariff for importing it). Now that a differential exists between the credit and the tariff, foreign ethanol producers have a legitimate complaint that can be advanced to the World Trade Organization.
With a new, more conservative Congress and mounting federal budget pressures, I expect continued active debate in 2011 on the value of biofuel tax credits and tariffs.
Source: NDSU Agriculture Communications
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