Eco Crystal Ball: Ethanol webinar transcript

The second installment in our “crystal ball” series is all about ethanol! Now that last year is behind us, join EcoEngineers as we look back at 2020 and look forward to 2021. Our in-house experts will discuss the trends with low-carbon fuel projects, various carbon credit markets, and predictions for the future of low-carbon fuel standards.

Lyndsey Nielsen (00:00:00):

I just wanted to introduce myself. My name is Lyndsey Nielsen. I’m the marketing coordinator at EcoEngineers. This is the second installment of our Eco Crystal Ball series. And this one is all on ethanol. Our first installment focused on RNG and you can find that one if you go to our website and YouTube channel, it’ll be available later this afternoon. And our next segment will be on biomass-based diesel and renewable diesel, which is scheduled for mid-February, so stay tuned for information regarding our Eco Crystal Ball and biodiesel products. And then I just wanted to do a couple of little housekeeping things if we could move to slide one. Awesome. And I want to go over, some of this, this is pretty standard for all of our Webinars. We will have a Q and A session in the last 20 to 30 minutes of the presentation.

Lyndsey Nielsen (00:00:52):

So feel free to type your questions into the chat box throughout the presentation, we’ll try to get to as many as we can. And as usual, this Webinar will be recorded. Everybody will be receiving a link to the video in the coming weeks after the Webinar. I wanted to just welcome everybody. And we’d really like to receive your feedback. There’s going to be a feedback survey that will pop up when you close out of the Webinar and in a follow-up email. So feel free, it’ll take just a couple minutes of your time. We really want to know what kind of Webinars you want to see and how we can serve you in the future. So I’m going to hand it over to Jim Ramm. He’s our director of engineering at Eco and our ethanol line of business manager.

Jim Ramm, P.E. (00:01:34):

Thanks very much, Lyndsey. And I want to welcome everybody to the Webinar today. We’re focused on ethanol and we’ll be talking about a look back at ethanol and a look forward. And I’m really excited today to introduce Mark Heckman and also to have Sarah on our second Webinar series here. Mark’s going to talk about farm practices, and Sarah’s going to talk about CARB rulemaking and impacts to the RFS under the Biden administration. EcoEngineer’s history. We began business in 2009, the starting point for RFS2 and the California LCFS. We’re located in Des Moines. We’re growing to 40 employees this year. Our vision is to be a global leader in developing solutions for sustainable world. Our mission. To build out a clean energy economy, to help build that out.

Jim Ramm, P.E. (00:02:33):

Our values. People, service, quality. The future. We’re really excited about the future in fuel certainly, that’s why we’ve built our business in fuel, but we’re really excited about the future in terms of farm practices and low carbon energy and food production. And we’re really excited about the switch and the discussion that goes towards carbon neutrality and draw-down. I’d like to ask you to watch a short one-minute video explaining where we’re seeing this right now.

Narrator (00:03:16):

Carbon is the biggest disruptor of the 21st century, and the world as we know it is changing. EcoEngineers can guide you to make the best decisions as you navigate toward your clean energy goals. A diverse team of carbon analysts, engineers, scientists, auditors and regulatory specialists are trusted advisors of the clean energy fuel sectors worldwide. Clean energy regulations are a maze. We simplify them with an unbiased approach and fully manage your compliance. Modeling your carbon reduction is complicated, we quantify your emissions with a rigor based in science. Together, we can create markets that will protect and grow your investment. We create sustainable solutions for a better tomorrow. We are EcoEngineers.

Jim Ramm, P.E. (00:04:12):

We provide a 360 approach to a clean energy economy through six teams that we organize as training and education, regulatory engagement, life cycle analysis, asset optimization, compliance management, and audit. And we’ve found that the ultimate success of low carbon projects depends on these areas of expertise. And we focus in all types of low carbon fuels, all types of regulations and all types of technologies. So today we’re going to take a look back at 2020, a look ahead at 2021, and then a look at farm practices and carbon capture and sequestration, the new Biden administration, and then have the Q and A session.

Jim Ramm, P.E. (00:05:04):

So let’s start with a look back. These are the RIN price histories. And what we have here on the bottom are D6 prices. And you can see these moving up. D6 is trending up quite a bit in the recent months and today reaching a dollar. That’s good news for ethanol blenders. It’s not great news for obligated parties and maybe an indirect benefit to ethanol producers. Usually, ethanol producers don’t see much of that D6 price. So D4 and D5, the orange and the blue are also trending up and the split between D4 and D5 is not much right now. And then D3s which is also important to ethanol or could be, or should be important to ethanol, is trending up quite strongly as well. When we look at the top line, that’s the historic cap of a D3, the price ceiling for a D3. It’s equivalent to a D5 plus a cellulosic waiver credit, and we can see back here at a time before small refinery exemptions and strong obligations where the actual D3 and the D3 cap ran together.

Jim Ramm, P.E. (00:06:29):

But in recent years and even months, SREs and instability and whether or not we’re going to have aggressive RPOs have really changed the D3 market quite a bit. So today, cornstarch ethanol is D6 and it has been kind of confined to a D6 by the congressional regulations or the law. And we have D4s and D5s which could be sugarcane ethanol, and then we had the D3s, which could be cellulosic ethanol. Today cornstarch ethanol producers have good arguments that they meet much, much better than a 20% greenhouse gas reduction. Many of them can meet a 50% greenhouse gas reduction, when you start talking about biomass-based heat, when you start talking about carbon capture and sequestration, the use of biogas and what Mark’s going to talk about, the low carbon farm practices. There is a tremendous ability today for D6 ethanol and its 15 billion gallons to produce tremendous greenhouse gas reductions across the industry.

Jim Ramm, P.E. (00:07:58):

However, the RFS is ill- equipped to respond to the availability of low carbon starch ethanol. The LCFS is much better equipped, and we’ll talk about that. These are the LCFS average monthly credit prices. And today they’re running at $198 for a ton of carbon. During COVID, and when the gasoline demand dropped down significantly in the short term, the LCFS hit price lows of $175 a ton, but it returned back near $200. The cap is really $200 per ton, plus inflation, which brings the current cap to about $217. This chart shows how low carbon fuel standard markets work. Higher carbon fuels contribute less and less to the overall program goals over time, and higher carbon fuels get replaced by lower carbon fuels. There’s a lot of info here. The orange is ethanol, and we can see where in the beginning it was generating 79% of the credits. But by 2019, it was only 29% of the credits.

Jim Ramm, P.E. (00:09:25):

We can see that the green biomethane has really displaced and taken the place of the purple natural gas, the purple fossil-based natural gas. We can see tremendous growth in electricity, which has been somewhat advantaged. We see the biodiesel really kind of flat or decreasing, and we see huge growth in renewable diesel. So this drop in diesel substitute is making big waves in the market. Renewable diesel has become the number one credit generator, second is ethanol, third is electricity. And there’s additional renewable diesel projects on the market which can be significant, will have significant impacts in the coming four years.

Jim Ramm, P.E. (00:10:24):

So let’s talk about a look forward. The 2020 RFS and RIN outlook. The 2021 proposed RVO, it has not been put out yet. A deadline was missed in the fourth quarter of last year. When will it be released, June, along with 2022 proposed RVO? There’s some discussion of that. There’s a rumored 600 million rinse for D3. The hope would be, a lot of that is renewable natural gas right now. Only a very small percentage of that, probably less than 1% is kernel fiber gallons right now. If kernel fiber gallons get going again at the RFS, it could have a big impact on that number. That 600 million, which is mostly renewable natural gas should be much, much higher if kernel fiber registrations began again in ethanol. The cellulosic waiver credit is moving up to two, we project it to be between $2 and 30 cents and $2 and 35 cents.

Jim Ramm, P.E. (00:11:38):

That’s up 50 to 55 cents from last year. We would expect lower small refinery exemptions going forward and overall, a bullish outlook on 2021. When we turn our attention to California, the LCFS is working. It’s accomplishing its goals of decarbonizing transportation in California and launching new low carbon fuel supplies and driving a lot of projects and investments. And we’re putting out a full report looking at the growth in California and there’ll be news put out. Lyndsey, I’ll let you know how to get a copy of that report. And so let me just give you some highlights from that. So the LCFS has propelled new carbon fuels into the marketplace, and the growth has been in the renewable diesel, that diesel drop-in has really had a big impact and looks to have even bigger impact going forward. In terms of the RNG, the renewable natural gas, that is also having a big impact in terms of very low CI, renewable natural gas or biomethane coming into the space.

Jim Ramm, P.E. (00:13:08):

So many manure based dairy and swine manure based projects are really increasing and increasing the amount of biomethane credits being produced. And then electricity. Electricity is now the third highest credit generator and then kernel fiber ethanol, so cellulosic ethanol, the light blue, and I think that this group today has a tremendous opportunity and should take it to build out that light blue kernel fiber ethanol, that cellulosic ethanol, because the market is very open and receptive to it. When we look at starch ethanol and we look at the CI of starch ethanol, it has reduced significantly. From up above 80 to down around 60 today as far as the average ethanol entering California in 2019. When we look at the percentage of credits that was being produced by starch ethanol, back when the program started, starch ethanol provided an 80% of the credits and now we’re talking about less than 30% of the credits been provided by starch ethanol. So what does this look like? The ethanol is the green line. So what was always number one has become number two to renewable diesel. And number three is electricity and number four biodiesel. And the renewable diesel, it has the ability to enter the market, because it’s a drop-in replacement for diesel. And so there’s more capacity coming and it could increase in terms of capacity, and our report shows significant increases in terms of capacity of renewable diesel over the next four years. So we modeled that, we modeled a high, medium and low development of renewable diesel and biodiesel markets. And we looked at what might be the net credits in these different cases. And we saw that renewable diesel and the projects that are in the books for the next four years, if they all get built at the schedule that they’re talking about, we could actually have a credit surplus. If they’re a little slower to develop over the next four years, we would still be running a credit deficit. And a middle case might be that the credits and the deficits are going to begin to balance in the middle case. So with that said, we really do believe that the LCFS is a very important market. The LCFS is viewed as a more stable market through 2030 and beyond, versus uncertainties in the RFS markets. One of the things that makes LCFS credits so valuable is they never lose their value. They don’t have a lifetime on them for retirement. And so those tons are good for a long time. This green line is the cumulative bank of credits, and this credit bank is going down right now. And as long as the credit bank is going down, prices are high up near $200 a ton.

Jim Ramm, P.E. (00:17:12):

And the credit bank right now, it stands at about two quarters worth of credits. The LCFS prices are strong, greater than $200 a ton, kernel fiber gallons can be 40 CI points reduction versus starch gallons. Now at 1.60 cents per gallon of ethanol per CI point, this could be a total market value adder of 50 cents to 64 cents on a gallon of kernel fiber ethanol. And our belief is that kernel fiber ethanol producers, because they have a differentiated product, they should be able to hold on to the lion’s share of that value. They’re going to have to trade some or give some to the blender, but I think they ought to have a strong argument to hold on to at 50 cents. And producers are looking for ways to differentiate themselves in the market and be in the bottom 20% of CI values. When we look at the key contributors to ethanol carbon intensity, we have indirect land use change and corn farming and transportation.

Jim Ramm, P.E. (00:18:28):

Mark’s going to talk about this in some detail later, but this is kind of the same thing in kernel fiber. US producers today have an opportunity to get away from ILAC and corn farming penalties by going to kernel fiber. And they can, Mark’s going to talk about other ways that that can happen. So there’s two ways to get away from corn farming and ILAC. One of them is through kernel fiber and the other one is through low carbon farming practices in the future. When you look at ethanol, it’s the blue squares or blue circles here. And in this grouping of ethanol, there’s really three different groups stand out. This first group, the group to the right is the starch ethanol. The red dot is the center of mass of all the ethanol. And it’s at about 60 CI in 2019. So this top grouping, the grouping to the right is all the cornstarch ethanol.

Jim Ramm, P.E. (00:19:41):

And the middle grouping is all of the Brazilian ethanol. The center of each dot is the CI of that fuel and the size of each dot represents the volume. On the lower left, down in the 20, 25, 30 CI range, these are all the volumes of Kernel fiber ethanol. There’s huge room for the growth of kernel fiber ethanol in the California market. If we produce all the kernel fiber ethanol we can, in the US, we’ll be displacing higher CI forms of ethanol. We could be displacing Brazilian ethanol from sugarcane, we could be displacing the highest CI starch-based ethanol, and there’s huge place for growth there. When we look at the starch and fiber ethanol pathways, and what can be accomplished in terms of CI, energy efficiency might get us to a 70 CI.

Jim Ramm, P.E. (00:20:56):

If we go to distillers grains or onsite solar or wind or combined heat and power, we might get to the 60 range, maybe even high 50s. If we move into biomass-based heat, we might get to the 50 or the low 50s. If we move into carbon capture and sequestration, we’ve seeing pathways out there that are 40, 45, get to 40. But the thing about kernel fiber and biogas type pathways, these are the only ones that can get it below 30, get down in the 20s and 30s. So that market’s going to be good for a long time. So what is it about kernel fiber? There’s no indirect land use change that saves 20 points. There’s no corn farming and transportation that saves 28 to 29 points depending on yield. And the CI is usually in the range of 20 to 40 grams per megajoules.

Jim Ramm, P.E. (00:22:04):

So in terms of in-situ kernel fiber methods, the ones that are often used that are the majority of pathways, the ones that are offered by laboratories like Edeniq and Edeniq 2.0 and cellulose and Soliton, these are non-baseline methods, and they’ve really increased their converted fraction of cellulose versus early-baseline methods which were used. So today it’s not uncommon to have two to 5% kernel fiber gallons in-situ co-processing, and 7-10% through separate processing, 7-10% separate processing pathways like Quad Counties process of separate processing, or like D3MAX at Ace Ethanol in Stanley, Wisconsin.

Jim Ramm, P.E. (00:23:03):

Another thing, I would point out is that the ASTM E3181 is now an adopted and standard practice for the determination of the converted fraction of starch and cellulose. And Soliton is using this methodology, and really this presentation is got quite a bit of focus right now on the LCFS. If the RFS reopened kernel fiber in 2021 or beyond. And if ethanol producers could pick up a D3-D6 split of about a dollar 20 today, or even have the potential to participate in IRS producer tax credit of a dollar one, it would be a huge shift. It would be a huge shift in kernel fiber production.

Jim Ramm, P.E. (00:24:07):

I want to talk a little bit about where we’re at today in terms of separate hydrolysis pathways. There surely two RFS pathways that exists quad county since 2014, so seven years of holding that pathway, and now today ACE D3Max, as their registered pathway into the RFS. These are separate processing-type pathways. And so the separate processing pathways are still open at RFS.

Jim Ramm, P.E. (00:24:42):

There were some initial Edeniq 1.0, a baseline derived in situ pathways approved with RFS, but none have been approved. None have been approved since December 2017, so this is the In-situ Coprocessing methods like Edeniq and Soliton. So there were five RFS pathways approved, but nothing happened after December 2017. At that time, Pruitt was the administrator at the US EPA. And these type of pathways were kind of tabled, or it’s been a long time now. So over three years, however, LCFS in California today there’s 40 or 50 pathways approved through California. And those include Edeniq 1.0, but also non-baseline pathways like Edeniq 2.0 and cellulose and the Soliton pathways.

Jim Ramm, P.E. (00:25:50):

So California has opened that been very supportive of kernel fiber technology, supporting them in their Tier 1 and Tier 2 pathways. And in terms of California, in terms of the In-situ Coprocessing, California has a similar requirement where you need to re certify every 500,000 gallons of kernel fiber that you produce. And you have to have the testing methods approved. Physical inventory limits apply. Also gives you the opportunity to look at different co-products. So we say kernel fiber now. For us, we see a tremendous potential to move from on the order of a hundred million kernel fiber gallons to 300 million kernel fiber gallons or above in California. And the LCFS is open. The ASTM is available. The incentive is there at 50 cents. And a lot of things work at $200 a ton. And based on our evaluation, you want to make sure that things work at $125 ton for you too, because these are market driven prices. And we see quite a bit of development of other low carbon fuels in California. But I think it’s really important for ethanol to take a spot in the LCFS market and grow the cellulosic fuel types there. The other things that are going on the NIST standards seem to have kind of stalled out in rail standard method with announced in a journal cellulose in the past few weeks and just the potential if D3 would open up. And I think Sarah will probably talk about that a little bit. So I want to visit briefly on LCFS Compliance and just keep talking about awareness ethanol producers. So if you’re an ethanol producer, you have an Annual Fuel Path Report due March 31st. And anybody else who has a LRT registered companies has anybody with a LRT presence, has a verification due on August 31st of this year. So let’s start in all producers and anybody who’s registered on the LRT.

Jim Ramm, P.E. (00:28:43):

So producers really need to have a monitoring plan in place for their fuel and there’s verification and validation requirements going on. And there’s some reporting that needs to be happening to make sure you’re having these discussions. We’ve got California really the low carbon fuel program is really expanding into other States, obviously Oregon, obviously British Columbia, but quite a lot of discussion on expansion into other States. And in terms of this kernel fiber. Now, I guess I want to just say that we offer a full suite of services in order to help you with your LCFS and kernel fiber compliance. So you can participate in these markets. And we understand that you’re busy run an ethanol plant. You’re busy developing your different markets for ethanol, and we’ve got a full service compliance umbrella that we can offer here.

Jim Ramm, P.E. (00:29:52):

So with that, I want to turn it over to Mark Heckman. And Mark comes to us, Iowa son and a farmer and Marcus really leading us in terms of a low carbon farm practices. So Mark, take it away.

Mark Heckman (00:30:15):

Thanks Jim. And as just a reminder, I want to point out that, this is your time. This is your meeting. The chat room is open. So if you’ve got some questions, the Jim’s thrown at us or thrown at you, get those questions, enter them in there. We’ll, we’re going to take a look at it. We’re going to have time for Q and A after this. So same for me, certainly welcome to any of that. So as we continually look for more markets and ethanol and other ways to improve our bottom line in the corn processing world, farmers are also searching for their next step and all.

Mark Heckman (00:30:50):

We can’t pick up a farm magazine today. And that headline that doesn’t have a headline in it that has climate and the climate possibilities. And you can see this change as well in Wall Street, 10 Qs, many pledges to net zero, many fortune 500 companies and food companies becoming gung-ho on the CI score of their products. So based on this, as Jim said, I believe that there’s a new market emerging and that new market is going to come in the area of the farm practices for ethanol and corn farmers. In tying into the corn farmers, carbon and sustainability practices are all part of that technology. Collaboration is going to drive that change in an unprecedented pace. And I further believe that this will transcend beyond the ethanol industry, but I believe the ethanol industry is in the best position to be the catalyst for this new market. And I asked, for some of your time today to present these possibilities and time to consider, to place you in the front of the line.

Mark Heckman (00:31:53):

So let’s begin by at the ethanol industry. And as our current status, as Jim said, this is that current slide, everything inside of the box, that red box is where most of our focus has been, but we are seeing some changes and the focus to really improve your CI is coming from the corn farming and the transport. Let’s go to the next slide, Jim, and let’s look at some numbers. These are the numbers and highlighted in red is a corn farming and transport portion of this. These represent California numbers. And if you remove the Iluc, the land use 19.8, you’ve got Oregon. And today, if you look at this, actually illustrates CARB 2.0, CA-GREET 2.0. If you look at the 3.0, you can factor in yield, that gets you down to 28, 29. And then there’s some indication that CARBs willing to look at some other factors in this from a corn farming and practices.

Mark Heckman (00:33:01):

And as I said up to this point, we’ve been focused on carbon and verification inside the plant. We’re very encouraged by what we’re seeing in these other areas. And I think it’s going to take a special blend of plants to look at their supply chain, to really figure out ways that they can quantify or capitalize on these farm practices that your producers are using in your supply chain and somehow advance that through your plant and all of this.

Mark Heckman (00:33:27):

So on the next slide, we’ll show how these corn farming practices are and to illustrate this, we’ve got the commodity of corn. We’ve also got going into that. The farm practices, there’s greenhouse gases, there’s water quality, there’s carbon capture, carbon sequestration. And just all of these things contributed into that product. Thus, far, the ethanol plant has been the person processing it. It goes to the blender, the blender then takes a physical product to the end user. It’s not anything new. The RIN goes to the obligated party RFS on the verification side of it looks after the RIN and the LCFS monitors that process, that documentation goes to the blender. And in some cases, it passes back to the ethanol plant.

Mark Heckman (00:34:27):

So, this is where we are and with the following, I’d like to paint the picture of the possibility that lies ahead. But with this slide, we’re looking ahead and up to this point, most in the US have been focused on LCFS and RFS. As we continue on our journey, we’ll see many more opportunities being revealed to us. And as we get there, this market was, there is always present. We just weren’t able to address it at that time. They illustrated a little bit.

Mark Heckman (00:35:01):

I want to relate to you a story. In 1985, I had a friend tell me that he was working on a project that I just wouldn’t believe was it Iowa State University. And this friend had a summer internship with, I believe it was Hewlett-Packard at the time that was a computer company, today it’s a printer company and he was working on a storage device that was the size of the palm of your hand. And it can store many books calculations, and even a complete VHS movie. The issue they had, was the people using it had to be educated. So they couldn’t fully adapt the technology. They weren’t quite ready for it. So what did they do? They developed a floppy disk, then a 720 compressed disc. Then a CD drive, then the hard drive. And then now we are finally to that state where is got a solid state drive and those devices are more powerful than they’ve ever been. But the point is the technology had to catch up to it.

Mark Heckman (00:36:04):

Another story Brazil 2008, I visited a farm in Brazil. It was in the center of nowhere that farm was complete on its technology. It knew all about the outside world and what was going on, but it was self-sufficient. It had its own ability that farm two years prior didn’t exist. And what it did was it was able to leapfrog the technology with leapfrog, to its point, with all the technology steps that everyone else had to go through because of the cellular technology, the satellite technology that’s now available.

Mark Heckman (00:36:39):

So the key is these technologies that are coming at us, drones, infrared, and other capabilities to validate the models that we have are finally to the point that I think it will push us to the stumbling stones of the past. And I believe this shift in verification and the pain experience in the years past are going to be easily addressed. The obstacle before was verification. The technologies removing those hurdles inside the plants and in the fields and models are being verified by those actual results. And our ability to gather verifiable usable data is providing assurance into the marketplace. And that’s really what we’ve needed, the collaboration, the technology, and those advancements to make it so that the information we had is reliable. Let’s take a look at the picture of the drivers of the past. Those mandates and calls from government or outside economics is what drove most of the markets in the past. Those were to create the change in business and production practices or to call out bad spots. And the participants are few and niche markets grew slow, but there’s a change happening. And that change that’s happening is creating voluntary markets, the large consolidation that’s taking place and making all this possible. And the collaboration is taking place in the primary drivers been there. That’s needed debt, make all this happen. As technology derive at a tipping point where contributors and consumers agree that there may be a reason for this. And people are actually willing to pay for the stewardship demands that are taking place. It’s no longer just a regulation driving the change. It’s people seeing that some practices make sense to improve the environment.

Mark Heckman (00:38:32):

There’s also ways for entrepreneurs to make money in this. And while standards are put in place to arrive at a common thread, we are able to do this in a way that is very transparent. I know there’s some people that say we’ve been here before. And then a few years ago, there was a quick trading platform that was dedicated to that. But I believe we’ve learned some lessons and the standardization is more definable and verifiable. Granted they’ll need to be some assumptions, but those assumptions will be agreed to, I said, we’ve been here before. It’s not so long ago that the Chicago Board of Trade in Chicago Mercantile Exchange, they once had large stockyards and elevators where everyday people would move their actual wares for delivery. The animals would be driven in. Then the discounts would be put in place as they’re traded.

Mark Heckman (00:39:23):

Once you back then you walked your animals to town, or you hold the grain into the Chicago warehouses. You stood in the pit and found a buyer on the other side, you agreed to the price. And then the process was reversed. The buyers took the products home. There was a few people got pretty smart. And they said this is ridiculous. Why are we standing in line to do this? When we can create standards and processes to do this? Well, you get the picture. The standards were created and people use documents and verifiers to accomplish what was once thought undoable. So how are we going to do this? It’s up to us. Farm practices and farm data from the practices are more verifiable than ever before satellites. And the ability to look back to confirm the practices are moving at breakneck speed with accuracy of model, being proven in real time, sophistication at the farm, and in all steps of the process allow for more instantaneous accountability.

Mark Heckman (00:40:26):

And I just have to ask the question, are you in a position today to include this as part of your supply chain? What steps are you taking today to confirm how your suppliers are producing their wares? So I also want to introduce the opportunity for layering and collaboration listing of these opportunities seem to continue to grow. There’s many more people from an international, federal, and state programs are available for the producers. There’s places in the voluntary markets for sustainability and carbon sequestration commitments for major food companies who want to promote their good things that are happening to their supply chain, to their customer, to include that in their supply chain. And there are simple steps that can be put in place to gain transparency. And the question you have to ask, and I continue to throw out is, can your supplier partner with you and how will you manage the data. Increased collaboration possibilities by combining these layering products are going to continue to accelerate all of these benefits.

Mark Heckman (00:41:41):

So how does this look? I wanted to throw this out. I know it’s a busy slide, but let me step you through it just a little bit. Compared to the very first flow chart that I showed, this slide in itself breaks the farm practices away from the actual crop. The crop is still there. It gets produced RFS and the RINs continue the same way. LCFS and products as well are accounted for the same way, but up to the right hand side. And down below you see the farmer, gets involved and he becomes the actual person responsible and accountable for the practices that he’s been putting in place to address the markets that are out there. The farmer seeks out the carbon agreements with other parties, sustainability agreements, with a food company or water quality agreement with NRCS or the USDA. Those programs are all verified.

Mark Heckman (00:42:45):

And the verification process and responsibility shifts back to the farmer in those cases that could also transcend through the ethanol plant to drive those. There’s a lot happening in this area, but I just want to suggest an opportunity in paint this view that I think some are seeing, and we’re seeing it more relevant in many programs that are coming. So let’s step this through this just a little bit to see how this works. So in the beginning, we’ve got a corn producer who grows a crop controls, a farm practices to achieve a lower CI, how’s he going to do that? He implements no- till cover crops, nitrogen and enhanced, but he’s focused on how can he make his operation better? And he sat on all the programs that are out there, but let’s note as we step through this, some other ways that the layering can take place and how these actually paint it forward.

Mark Heckman (00:43:49):

So in this example, just like with the LCFS, the carbon gets shifted to the ethanol plant. And in some cases, if the LCFS or that carbon participating location is limited, the carbon that’s left over can go to another party or an aggregator. We don’t want the double-dipping to take place, but if there’s excess that isn’t accounting for that carbon, then the producer has the ability to shift that other places. Then what happens to the nutrients? And next, let’s take a look at the water quality attributes go to another entity. USDA claims a portion of the water quality and the excess water quality is also accounted for in some type of registry program. And the last then is the nutrients. The nutrients could go to the food industry because the producer lines up or has a program with the food industry for a portion of his greenhouse gas, nutrient reductions, et cetera.

Mark Heckman (00:44:56):

Well, you kind of get the picture of how this works. In the end, the corn producer has the obligation and the ability to shift all of this. So the goals of the LCFS transportation fuels program and the sustainability goals of the industry require low carbon and farming practices. The challenges are going to be a collaboration. We need to approach other industries and commodity groups for the unified approach. We need to make it so that these practices compliment each other and know what layering works and which ones don’t work. We need to know where the potential for double-dipping, so to say is, but more so important is the complimenting and the complimentary practices that can actually allow these practices to be implemented. In the eyes of a farmer, green is money. And that was told to me by an auditor going out and talking with farmers.

Mark Heckman (00:46:03):

And he said, so in that case, we’ve got a little bit of an education process in all parts of the spectrum. And so it’s our job to educate people. If any of this has stimulated some thoughts, I guess I’d like to certainly challenge you and we stand ready to accept any of those challenges or questions as they come at us. Before we shift over to the policy segment, I want to talk a little bit about, and share some thoughts on carbon sequestration. And in this portion, I’ll be touching on the physical storage of carbon, and some of the early practices of pumping carbon into the ground.

Mark Heckman (00:46:40):

We’re seeing this come back and around the credits that will drive participation. This is a current structure of CARB, and CARB in their mind, storage is permanent. So are there permanent farm practices that will store carbon? Or do you have the opportunity and the ability to participate in this practice? Who knows what this will look like on a longer-term basis, but there’s a lot of legitimacy in the models and there’s a lot of money in these models and we’ll have to wait to see what the administration will allow as they promote new policy around this.

Mark Heckman (00:47:16):

CARB does have regulation on this. And as we’ve said previously, the focus is on mechanical structures to pump the carbon into permanent change. And using a structured approach for this mechanical storage, or if there are other ideas centered around sequestrations in a different manner, give us a try. Chances are we can help you get to the table or provide a structured plan with our 360 approach to a successful project. This listing of services addresses just a few of the ways we can help you make your dream into a realistic goal.

Mark Heckman (00:47:53):

And now I’d like to introduce to you Sarah Ca swell. Sarah spent 14 years in DC working on and off of Capitol Hill on policy issues before moving to Omaha with her family in 2013. She’s former administrator of the Nebraska Ethanol Board. She’s been working on RFS and LCFS policy regulatory matters since 2007. She has a deep understanding of the federal and state legislative space, and is well connected. She’s going to share her ideas and insight on the opportunities and challenges that may face the ethanol sector in DC, and in the key States this year. Sarah.

Sarah Caswell, Esq. (00:48:37):

I appreciate the introduction, Mark, and I enjoyed what you described. And Jim, there’s really exciting developments in the ethanol industry, and it just illustrates that the ethanol industry has innovated and met the challenges that is, and opportunities that has come its way in terms of markets and policies. It’s exciting to hear about all of the advancements and learn about all the advancements on corn kernel fiber cellulosic and soil health. So with those technical developments and industry developments, there’s a third piece that is really crucial to the continued investment drivers for further innovation in the ethanol industry and that’s public policy. And just as Jim was bullish on the technology side and described that, I’m bullish on the policy side. I think that 2021 in the next few years presents a unique and important opportunity for the ethanol industry to secure well-crafted public policies at the state and federal levels and even international, that will help to provide that fundamental market driver for investment in new and even more advanced technology in this space.

Sarah Caswell, Esq. (00:50:23):

One theme, I think, that the ethanol industry needs to keep in mind, as these policies move forward and are considered at the state and federal level and as the efforts ramp up cue on climate change and potential national low carbon fuel legislation, which I’ll get to in a little bit. As for the industry to really keep in mind the need to educate and constantly reinforce the message that policymakers should be focused on decarbonization and not electrification. And why is that? The low carbon fuel standard in California, which many of you are aware of the model for a market-based approach to low carbon fuel.

Sarah Caswell, Esq. (00:51:29):

Originally the agency that regulates the low carbon fuel standard in California CARB, the California Air Resources Board was really focused on electric vehicles as the ideal answer to achieving California’s ambitious carbon intensity reduction goals. And they discovered, and I think it’s fair to say industry discovered that there will be a transition period between now and zero emission vehicles and that low carbon fuels will be an important part of the equation for the foreseeable future. And I think that that message needs to be reiterated and constantly talked about with policymakers, industry and all other stakeholders in the ethanol industry, because there’s a momentum toward national low carbon fuel standard legislation and regulations. And there’s an underlying current of statements and policymaker direction geared toward electric vehicles only, or at least that’s what it seems like.

Sarah Caswell, Esq. (00:53:01):

So we need to make sure that the ethanol industry remains a part of the discussion and that the message is driven home to legislators and policy makers that ethanol and other biofuels will be a necessary component to achieving President Biden and national carbon emissions reductions efforts. So with that, I’m going to touch on the low carbon fuel standard to begin with. We have a real opportunity as an industry right now because CARB began undertaking its overhaul or update of the low carbon fuel standard regulation that provides all of these market opportunities that Jim and Mark talked about into California for the ethanol industry. They’re updating it right now and the timing of the final update or the final rule is undetermined, but we’ve heard rumors that it could be finalized by CARB as early as January of 2023, excuse me, all the way through January of 2025. It will largely depend on the approach that CARB staff ultimately decides to take in terms of making this substantial update to the low carbon fuel standard regulation.

Sarah Caswell, Esq. (00:54:48):

As I understand it, there’ll be technical updates and substantive updates. The substantive updates will likely require additional time and thought and to go through it, lengthy administrative consideration processes, but the way that they’re approaching it in general seems to be consistent with the way that CARB implemented the low carbon fuel standard to begin with back in 2011, 2012. There’s an informal process and then a formal process. It’s a little bit different from the federal level. Right now, we’re in the informal process time period where CARB staff will likely host a series of workshops on specific topic areas and there’s opportunities for certain stakeholders to present during those workshops where CARB staff will present their thoughts and proposals on how to update the regulation on a certain topic area, for instance, from practices or credits for ethanol.

Sarah Caswell, Esq. (00:56:16):

And then there’s a two week period where industry and other stakeholders will have a chance to submit written comments to CARB staff for their consideration as they work to finalize the proposed rule that will come out probably end of next year, maybe into 2022. And at that time there is another opportunity to weigh in and to advocate for any updates that the industry will want to see in the final low carbon fuel standard regulation update, because at that time that will start a formal public comment period. And before the rule is then finalized. So that’s exciting on the California front. And as I mentioned, this market-based approach is very different from the renewable fuel standard at the federal level, which we all know is a volume metric approach to providing market signals for new investment in ethanol and other biofuels.

Sarah Caswell, Esq. (00:57:32):

It seems that the market-based approach is winning out because several States around the country are considering introducing and passing their own clean fuel standard type of legislation. And California’s low carbon fuel standard is by and large the general model that the States seem to be going off of. That’s consistent with what’s going on at the federal level. So it’s hard to believe that it’s only been a week since President Biden was inaugurated. In that time, on day one, he did start acting on climate change. He signed a series of executive orders to rejoin the US in the Paris Climate Accord. And he generally wants to reestablish US global leadership on climate change. He’s put together a strong team at the White House and at EPA on the staff level. And he’s also nominated Michael Regan to head EPA and Tom Vilsack to ahead USDA, both of whom are thought to be friends to the biofuel industry.

Sarah Caswell, Esq. (00:58:57):

This provides Biden’s choices on staff, in the White House on climate, and at the EPA present huge opportunities for the ethanol industry, but also maybe some challenges, we’ll have to see, for instance, Gina McCarthy, who was the administrator of the EPA under, by under Obama, the top climate staffer to Biden in the White House. And she was administrator during annual RFS rule-makings including when there is an issue on whether or not to consider the infrastructure and the ability to consume the biofuels that were being, or the required levels of volumes for the obligated parties being proposed. Ultimately, the courts sided with the bio-fuels industry on that issue, but because of her history on the RFS and implementing the RFS, we as an industry will have to look out for potential areas where we’ll need to really educate her and other staff members on the ethanol industry, the advancements in the ethanol industry, how far we’ve come as an industry.

Sarah Caswell, Esq. (01:00:29):

And the fact that we’ll need to be a part of the low carbon fuel equation going forward in terms of public policy. Just today at the White House… Today is climate day at the White House. You may have seen that president Biden signed another series of executive orders designed elevate the climate change issue to the highest levels of the federal government, the White House, and at all of the federal agencies. Climate change will now have to be considered when agencies put out new your rules, he also formalized his new, the new position that he created within the White House. That’s a cabinet level position for Climate Envoy, which he named former secretary of state John Kerry to fill that position. According to the news reports, one of the executive orders today will put that position on and create a seat for the Climate Envoy on the National Security Council.

Sarah Caswell, Esq. (01:01:42):

So he’s elevating the issue to deal with the environmental impacts of climate change, but also to view it there’s a national security issue. And that’s consistent with what President Bush had done back in 2004, during consideration of the original RFS at the federal level. You may recall he talked about and all of the above energy, the solution necessary to transition the US off of fuels from countries that are not our allies and that present national security challenges. So, this is good news for us as an industry. And so we’ll just have to… As he and his staff and all of the other leaders and policymakers move forward, we just have to drive in the message that ethanol has made advancements, ethanol is a necessary, very part of the low carbon fuels that will fuel our cars going forward for the foreseeable future.

Sarah Caswell, Esq. (01:02:52):

And that the administration should focus on decarbonization with a fuel agnostic approach and not pick and choose winners in this space. Simultaneously there’s there’s opportunities for the ethanol industry before this current Congress, which just began. As of just a couple of days ago, we now have majority leader Schumer in the Senate from New York and Mitch McConnell is now the minority leader. What that means is that majority leader Schumer will determine the legislative priorities and the legislation that ultimately is considered on the Senate floor. It also means that the Democrats will play will be the chairs of all of the committees through which energy legislation will go through. And the Republicans will be ranking members. That’s important because committee chairs also determine what legislation is considered in committee. And usually legislation is not able to be considered by the full Senate for passage, unless there’s been a hearing or consideration of it at the committee level.

Sarah Caswell, Esq. (01:04:14):

So that’s very important. Debbie Stabenow is now the chair of the Senate Ag Committee. She’s a huge supporter and champion of biofuels and ethanol, in particular. So that will be important for any USDA programs, farm bill programs, et cetera, that are considered through her committee. And majority leader Schumer gave a news interview the other night, talking about how climate is one of his top priorities, if not the top priority, because he views it as an emergency. We need to address it so that we can stop the wildfires and all of the economic displacement that’s happening because of the weather related to climate change, in his view. He also believes that addressing climate change will also present an opportunity to address his other legislative priorities, which involve economic recovery, job creation, and racial equality. His legislative priorities are in line with president Biden’s priority to put climate change front and center on his agenda as well.

Sarah Caswell, Esq. (01:05:33):

That combination, and the thoughts that Schumer is the majority leader of the Senate and speaker Pelosi will likely lead the house of representatives. And she’s another long time champion of the ethanol industry and the biofuels industry in general. She was vital in last-minute negotiations that happened, which led to the passage of RFS2 in December 2007. So we have in place legislators, palsy, makers, and senior staff with deep knowledge and experience of the renewable fuel standard and the program. Again, that presents opportunities and challenges but I think that this industry has done a great job advocating for itself, and I have no doubt that we’ll continue to do so during the news interview that majority leader Schumer gave the other night, he did mention that he has a bill before the Senate that would focus on electric vehicles and phasing out internal combustion engines by 2040.

Sarah Caswell, Esq. (01:06:51):

So that illustrates the concept and the need for the industry to really get policymakers, to focus on decarbonization and a fuel agnostic approach to it. On the EPA level, Jim had mentioned SREs and the RVOs and the SRAs, the Trump administration, granted three SREs in its last couple of days in office RFA sued and was able to get the court to stay those three SREs until the new administration took over. So they’ll have an opportunity to, I think, reevaluate there also remain about, I think, 20 or 30 outstanding SRE applications for compliance years, 2019 and 2020, that presents it a near term opportunity. Once the new administrator is confirmed by the Senate, it will show us how they will handle SREs. The key questions will be will they grant the SREs to the extent that the Trump administration has for the last four years where they seem to approve most, if not all SRE applications before it. And also importantly it will be interesting to see whether this Biden in EPA grants, SRE, and then redistributes the waived gallon requirements among the remaining obligated parties. The Trump administration did not, and because they would grant SRE waivers and then those gallon requirements would just go away from the annual RVOs instead of being redistributed among the obligated parties.

Sarah Caswell, Esq. (01:09:03):

That was one of the main factors that we saw once those SRE were granted, we saw downward pressure on the RINs and the price of corn and just a negative economic impact for our industry in general. So hopefully the Biden administration will re-distribute any waved gallons. On the RVOs, as Jim mentioned, it’s likely that the EPA will propose a combined 2021/2022 RVO proposed rule, likely to come out May or June of this year. I’ve heard rumors that if that goes forward like that EPA may finalize the 2021 RVO gallons earlier than the 2022 RVO gallons. So the first action to finalize the 2021 RVOs could happen as early as September or October according to industry sources. And, of course, the statutory deadline for EPA to get out the 2022 RVOs is November 30th of this year. And from everything that I’ve read and heard, it seems that they’ll be on track to do that.

Sarah Caswell, Esq. (01:10:26):

Interestingly, as some of you may have seen news reports yesterday, the Trump administration EPA had submitted its proposed rule for the 2021/2022 RVO compliance years to the Office of Management and Budget to review before they would have published it in the federal register. And it was still sitting there at OMB for review when President Biden was inaugurated. What that means is that President Biden as expected has decided that all sort of pending proposed rules or regulatory actions will go through a review process. The proposal submitted by the Trump administration apparently they based their projections based on pre- COVID biofuel production levels and not the levels that we saw in the last year during the COVID crisis.

Sarah Caswell, Esq. (01:11:40):

The final thing on the federal front before we take questions. At the end of 2020, right before the holidays in December of 2020, President Trump signed into law a comprehensive omnibus bill including FY 2021 appropriations and COVID relief. And it was a huge package that included some provisions that do pertain to the ethanol industry. I just wanted to highlight a couple of those, and then of course, we’ll take questions here at the end. Included in that package where some key renewable energy tax extenders including the alternative fuels mixture credit, the second generation biofuels credit and the alternative fuel vehicle refueling property credit.

Sarah Caswell, Esq. (01:12:38):

There’s also a provision in the FY 2021 appropriations part of the package on COVID relief, making biofuel producers eligible for direct payments from USDA to recoup losses due to COVID, and that will be up to USDA discretion to distribute those funds to biofuel producers who apply for them. In addition, last year, the house select committee on climate crisis issued a comprehensive report, including the sort of recommendation that any national low carbon fuel legislation recognized that there will be a transition period to a zero-emission vehicle fleet and that low carbon fuels will be a part of the equation and should be for the foreseeable future. So that’s really positive for the messaging that I’ve been talking about during my presentation in terms of uniting our industry behind that messaging to stakeholders, policy makers, and legislatures. I could probably go on, but I think with that, I’m going to end my presentation. And I think we’re up for question and answers. So happy to answer anybody’s question.

Lyndsey Nielsen (01:14:20):

Thanks Sarah, Mark and Jim. Great presentation. We have a couple of questions here. Let’s go to this one. It says, this is probably for Mark. Do you see a CI reduction in farming practices if using biosolids for fertilizer?

Mark Heckman (01:14:40):

Using biosolids for fertilizer? I think anytime that you can eliminate the nitrogen side of this, definitely. And I think that’s one of the things, I’m going to give a typical economist answer, it’s going to depend on everybody’s situation. And it’s certainly something that could be probably easily tested and something that could be run by us pretty quickly.

Lyndsey Nielsen (01:15:02):

Similarly, how much of an impact on the CI score would RNG have an ethanol production as replacement for natural gas or for electrical production? I know we have a report here coming out with Iowa Economic Development Authority that kind of lay some of that information out, Jim, do you have any other information about that?

Jim Ramm, P.E. (01:15:21):

Yeah, I think that’s a great question. So natural gas has fossil-based natural gas out of the pipeline, it has an impact on your CI score. So the carbon intensity of fossil-based natural gas, it’s like 79.9. And so when you use that gas out of the pipeline it can be for your drying and for your boilers. It can be like 20 points of your total CI, up to 20 points, depending on how much of the animal feed that you dry. So when you displace that with renewable natural gas, it depends on the carbon intensity of your renewable natural gas.

Jim Ramm, P.E. (01:16:07):

So it could be that you have a landfill where the CI of that natural gas is 40, it could be that you have a digester, a wastewater-treatment plant type digest where the CI is in the 20s or 30s, or it could be that you have a manure-based digester where the CIO of that gas could actually be negative. So it could be minus 100, minus 200 potentially for dairy and for swine. And so depending on the CI of your gas and depending on the volume of your gas, you can lower the CI of your ethanol significantly. You can lower it 5 points, you could lower it, 40 points, depending on how much gas you have and what the CI is.

Lyndsey Nielsen (01:17:05):

All right. Do you know that we are working on projects that are involving RNG in ethanol plants too and they’re seeing some good numbers there. This one it says, how do you see that we will evolve in measuring the sequestration of carbon via improved soil health? Increasing soil microbiology will be measured how?

Mark Heckman (01:17:28):

I can take some of that. I mean, for instance, I’ll even take some on our farm. We have soil tests today that are using the Haney method for testing how we’ve done and how we’ve used cover crops and the actual controls in those situations. So, I mean, there’s got to be a baseline that you establish or there’s got to be an agreed upon soil lab that’s actually doing this. In this case, it’s the Haney methodology is what they’re using for soil health partnership on our farm. They conducted it over the last five years and they’ve continually monitored the progress of each one of those practices. It goes down to soil profiles in different soil types. So it’s pretty intense, but there’s a lot of data and there’s a lot of databases that are being created by separate companies, private companies, by universities. And there’s more data today than we had 10 years ago, and that’s going to grow just simply because of the test methodology and the availability of it.

Jim Ramm, P.E. (01:18:43):

I was going to say I’m no farmer and I’m no soil carbon expert, but I’ve learned enough [inaudible 01:18:51] with Mark and Caswell. I really do believe that agriculture is a huge part of the solution that we’re talking about here to. When we look at the carbon goals of private industry and government and the world, agriculture is going to be really, really important, it’s going to have to be a key contributor to helping with climate.

Mark Heckman (01:19:26):

To add to that also, those that are unknown, we have to agree to those assumptions and make it a charge and a challenge to everybody in the industry to accept those assumptions and try to prove going forward.

Sarah Caswell, Esq. (01:19:43):

And on the policy side, I don’t think I mentioned as a part of the low carbon fuel standard update, CARB held its first workshop in October of 2020, and it was focused on potential credit for innovative farm practices that would lower the CI scores. So that’s being considered on the policy level and there’s a real term potential opportunity for credit for innovative farm practices that would reduce emissions. And also I expect that will be a part of the debate on the federal level in this upcoming Congress. And other states and coalitions thinking about additional state legislation are also focused on trying to get credit for farm practices, including the Midwest LCFS Coalition, many of you are aware of, run by Green Plains Institute. They’re having a real conversation about model legislation that would include credits for farm practices.

Lyndsey Nielsen (01:21:01):

That was my question. With all of these potential statewide low carbon fuel standards, how does that [inaudible 01:21:09] in the markets? A little bit of feedback. The ethanol plants and other and farmers that are mainly located in the Midwest, I mean, they’re going to be geographically closer, right?

Sarah Caswell, Esq. (01:21:23):

I mean, that’s why a lot of states are considering their own legislation because Midwestern ethanol plants, the ethanol industry, the ethanol goes to California it doesn’t stay here in the Midwest, and so a lot of Midwest states are concerned. And the Midwest LCFS Coalition, one of the primary drivers of that kind of work is to get our resources to stay more in the Midwest and to gear the incentives toward the industries that are unique to the Midwest like agriculture farming, corn farming, ethanol plants, etc.

Jim Ramm, P.E. (01:22:07):

I just to piggyback on that, I think the Midwest offers the lowest carbon, corn and beans in the world. And when we put a program in place to incentivize low-carbon farm practices, there is huge potential for a net change in carbon sequestration in soil and in low carbon farming that as Mark indicates would affect fuel, would affect feed which would affect food production.

Lyndsey Nielsen (01:22:42):

That’s kind of a good segue here. I have a question about if you were to get farm practice included in your supply chain models, how do you even start doing that?

Mark Heckman (01:22:52):

Much of this is undefined in the U.S. but there’s clear standards that are international. I think it’s a case where we have to be innovative and we have to skate to where the puck is going. It’s education, so develop an understanding for yourself and for others, to help others understand what is involved, it’s engagement. I mean, it’s getting people that are in your group or in your circle, or that’s not in your circle engaged, policy, politics, those types of things. There’s got to be some collaboration. And then the last is implementation. If there’s not a program today, let’s try to discover what that is? Let’s engage the people that can do that, but we’ve got to begin someplace. The Argonne 2020 has the specifics, its good models, its GREET models. We need to join together as an industry to really pull those in from a farm practices standpoint to include those. So that’s my comments.

Sarah Caswell, Esq. (01:23:55):

I’m sorry, Mark. Just to piggyback on that, you’re right. So CARB uses the GREET model from Argonne, but they’re a little bit behind the most updated version of the GREET model that Argonne releases the most updated version of the GREET model that Argonne released last fall would include measurements for things like nitrogen and other components that go to soil health and calculating that, which then if CARB would adopt that most updated model that could provide the basis for… It would tell industry what it needs to do in terms of measurement. And it could also provide the basis for using the agriculture farming part of the life cycle to reduce that CI score for ethanol and other biofuels. I think there’s going to say something, but I don’t remember that.

Lyndsey Nielsen (01:24:56):

We’re covering a little bit up on time, but if you guys want any extra webinar, we have one more question here that I think is pretty relevant. With more states coming online like New Mexico, how likely is it that a single producer would look to access these multiple programs? Will they be interchangeable? Easy to navigate? What are your thoughts on that?

Sarah Caswell, Esq. (01:25:19):

I mean, it’s a great question, right? I mean, I think that the idea is that as states beyond California come online with their own legislative programs and implemented regulations that they would be coordinated so that you wouldn’t have different rules for different states, right? And so that right there makes the argument that eventually there should be a national low carbon fuel standard law to drive this industry whether it look like the RFS now, or the LCFS that’s to be determined. But that’s the reason to have federal legislation so that producers have the opportunity and that there’s stability in the market. And so there’s no question in terms of different rules in different states, there’s no patchwork of rules on a federal scale. Until and unless that happens at the federal level, states are trying to craft these legislative proposals to coordinate with one another.

Lyndsey Nielsen (01:26:30):

One more question, I think, and then we’ll let y’all go. It says the USEPA at the prior administration stood in the way of permits and innovations related to carbon reduction or CO2 reduction. This also prevented lenders from supporting projects, what can we do EcoEngineers to get this EPA on board for carbon dioxide reduction?

Sarah Caswell, Esq. (01:26:58):

I interpreted that question to mean we as the ethanol industry not we as EcoEngineers [crosstalk 01:27:06]. So I’m going to base my answer off of that assumption, at least. Again, I think that it sort of goes to my presentation. There’s a real opportunity right now at the federal level for this industry to come together with a strong unified voice to help the new EPA administrator and the new top staff in the office of ERA to understand the challenges that were placed on the industry like the one in this question during the Trump administration which led to avoided biofuel production. And that comes with it a whole host of other arguments to be made in terms of the real opportunity for emissions reductions, that the ethanol industry and the biofuels industry presents to achieving the carbon emission’s reduction goals that have already been articulated by the Biden administration.

Sarah Caswell, Esq. (01:28:22):

And so I think working with each other, working with the national trade groups that have advocates in DC as to the extent possible have a unified strong message. If we all break off and have different messaging to EPA, we’re unlikely to be successful or as successful as we would be if we could find consensus as to what we want EPA to do differently than the Trump administration to provide additional opportunities for the ethanol industry. Sorry, Mark. You had something that you wanted to explain?

Mark Heckman (01:29:07):

No, no, no, in fact, you touched on it. But to emphasize, it’s not just the ethanol industry and it’s not just the fuel’s industry, this is that time that unity comes or that unified front comes, I’m going to put my corn hat on or my farmer hat on. I mean, it’s the corn, the soybeans, all these associations and trade associations coming with a common thread that says, “Hey, if we’re going to do this, let’s do something that makes sense for all industries.” And what’s so important as we approach because we’ve got that ability. There’s international standards out there today, and we just need to make sure that we adopt that make sense, and we can all agree on it. Otherwise, we’re going to be segmented, we’re not going to get what we want and it’s not going to be for the good of the U.S. or good for the climate.

Sarah Caswell, Esq. (01:29:58):

And to the extent that we can avoid patchwork regulations here and abroad so that the market has that consistent message and everybody knows their role and how to get the credits here and abroad and the state level that would provide the most opportunities for the ethanol industry in terms of legislation and regulations.

Jim Ramm, P.E. (01:30:25):

I just want to say there’s a tremendous opportunity here, and that opportunity is for agricultural communities and agricultural sector to come together with urban communities and everyone in the transportation sector and provide a new energy economy that is lower carbon and more sustainable. And I’d like to have a policy that can reflect that, and I think it is possible.

Lyndsey Nielsen (01:31:06):

All right. Well, thank you everybody for your time that attended and thank you guys for speaking and sharing your knowledge. Again, we’re going to host another biomass-based renewable diesel Crystal Ball webinar coming up here in mid February. So stay tuned.

Sarah Caswell, Esq. (01:31:22):

Thank you for joining us today.

Jim Ramm, P.E. (01:31:23):

Thank you.