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No. 14; Jan. 10, 2018

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ON THE HILL 

WHAT YOU NEED TO KNOW ABOUT TAX REFORM

 
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An issue in the recently passed tax reform bill has come to the forefront of our attention this week. Before the new year, farmer cooperatives were able to pass along the value of their business deductions to co-op members—this is known as Sec. 199. Because the tax reform bill did away with this provision, farmers and co-op members were looking at potential tax increases because they would no longer be able to receive this deduction. During the tax debate, we supported retaining the Sec. 199 deduction, along with dozens of other agriculture entities. The House bill repealed Sec. 199 with no solution for co-ops. The Senate bill included a fix called Sec. 199a.

 

Unfortunately, Sec. 199a appears to provide a non-market incentive for farmers to sell grain to co-op entities over non-co-op entities. Essentially, under the new tax bill, farmers can take a 20 percent income tax deduction off the gross value of their grain sales to co-op grain buyers. In contrast, grain sales to non-co-op buyers are only allowed a 20 percent deduction off the net proceeds of that sale.


Senators John Hoeven (R-N.D.), John Thune (R-S.D.), and Pat Roberts (R-Kans.) appear to be interested in limiting this provision to the original intent, which was to replace the lost value of the Sec. 199 deduction cooperatives passed along to co-op members before the new year. We are actively participating in these discussions because we want to make sure the interests of the ethanol industry are represented. This means we are looking at legislative fixes to narrow the Sec. 199 changes to better mirror the original provision, as well as looking to help our members who shift to becoming co-ops if the provision stays intact.


As this progresses, we will be sure to keep you abreast of what is happening on this issue.

For more details contact Vice President of Government Affairs John Fuher.


WORKING FOR YOU

ON THE HILL

Tax Incentives Update

IN REGULATIONS

EIA 2017-18 Outlook

 

International Markets Update

AT THE PUMP

Getting to Know... Casey's General Stores

AT THE PLANTS
Member of the Week: Kansas Ethanol

IN THE FAST LANE
Custom-Built V12 Turbocharged Engine That Runs on Ethanol 

UPCOMING EVENTS

2018 Iowa Renewable Fuels Summit

Jan. 30, 2018

Altoona, Ia.

Executive Leadership Conference

Feb. 7-10, 2018

Boca Raton, Fla.


ON THE HILL

Tax Incentives Update

The tax bill that passed last month was the most significant rewrite of the tax code in more than 30 years. In general, the bill lowered rates for individuals, corporations, and business partnerships. Business pass-throughs, which represent most of the ethanol plants in the country, now receive a 20 percent deduction for business income with a maximum top rate of 37 percent. The corporate rate is now 21 percent, down from 35. There are a host of other business changes as well, which will impact each Growth Energy member company differently. Unfortunately, the bill did not secure tax incentives for cellulosic biofuel (including from corn stover) or biodiesel. It is our hope that this gets included when Congress makes a longer term deal on federal funding, which expires on Jan. 19. 

For more details contact Vice President of Government Affairs John Fuher.

IN REGULATIONS

EIA 2017-18 Short Term Energy Outlook

Yesterday, the Energy Information Administration (EIA) released their first short-term energy outlook for 2018, which includes forecasts for gasoline consumption, ethanol production, and ethanol consumption through 2019. The agency also released projections for the final 2017 numbers. EIA estimates production rates to remain the same through 2019 while ethanol consumption continues to rise, and notably, we continue to surge past the supposed blend wall.


2017:

  • Gasoline consumption: 9.30 million barrels per day, or 142.57 billion gallons
  • Ethanol production: 1.03 million barrels per day, or 15.79 billion gallons
  • Ethanol consumption: 0.945 million barrels per day, or 14.48 billion gallons
  • Effective ethanol blend rate: 10.2 percent

2018:

  • Gasoline consumption: 9.34 million barrels per day, or 143.18 billion gallons
  • Ethanol production: 1.03 million barrels per day, or 15.79 billion gallons
  • Ethanol consumption: 0.958 million barrels per day, or 14.69 billion gallons
  • Effective ethanol blend rate: 10.3 percent

 

2019:

  • Gasoline consumption: 9.39 million barrels per day, or 143.95 billion gallons
  • Ethanol production: 1.03 million barrels per day, or 15.79 billion gallons
  • Ethanol consumption: 0.967 million barrels per day, or 14.82 billion gallons
  • Effective ethanol blend rate: 10.3 percent

International Markets Update

Bolivia: In late December, Bolivia announced that it was moving to implement a 10 percent blend rate in the country as soon as in 2018. While it is a small market, estimated to be roughly 26 million gallons, it does represent another Western country moving toward higher ethanol blending.


Japan: Japan’s Ministry of Economy, Trade, and Industry (METI) has proposed changes to its fuel ethanol policy in order to allow ethanol imports for the production of ETBE to be used in Japanese gasoline. The proposal is based on the greenhouse gas emission profile of ethanol, and as proposed, favors Brazilian cane ethanol. However, under the proposal, nearly 54 percent of the market could be met with U.S. ethanol for the first time. METI is accepting comments through Jan. 18, and we are working with the U.S. Grains Council, the Renewable Fuels Association, and Dr. Steffen Mueller from the University of Illinois-Chicago to provide technical comments.

For more details contact Vice President of Regulatory Affairs Chris Bliley.

AT THE PUMP

Getting to Know... Casey's General Stores

In 1959, Casey's founder Don Lamberti leased a store from his father on East 14th Street and Broadway in Des Moines, Ia. After nine years of operating this country store he decided it was time for a remodel. Lamberti's gas supplier and personal friend, Kurvin C. Fish, suggested that Don buy the Square Deal Oil company. Lamberti followed his friend’s advice and purchased the location in Boone, Iowa,, which came with a three-bay garage. The gas station was converted into a convenience store and was named “Casey’s” by using Fish’s initials.


The third store was built in Waukee, Iowa, a rural community of 1,500. This was the first Casey’s built from scratch, and it proved to be a success. Lamberti realized he was on to something and started establishing stores in communities with populations of 5,000 or less.

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Casey’s currently has 2,000 locations and began adding E15 to their fuel options in 2017. Today, there are over 13 sites selling E15 in Iowa, Illinois, Indiana, and Kansas. There are another 16 stores under construction that will offer E15 by the end of 2018. With a growth strategy of an additional 100 sites per year, Casey’s opportunities to add higher blends of ethanol will continue to grow. They believe that in order to remain competitive, selling E15 is in their long-term best interest.


Nathaniel Doddridge, director of fuels for Casey’s General Stores, says that Growth Energy provides education on what is changing in the industry and how Casey's General Stores can change along with it. “We rely pretty heavily on our partners like Growth Energy to keep us abreast of the changing fuel environment in almost real time," Doddridge said. "Additionally, Growth connects us with industry experts and other partners who help us enhance our fuel offer.” 

For more details contact Vice President of Market Development Mike O'Brien.

AT THE PLANTS

Member of the Week: Kansas Ethanol

 
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Growth Energy is excited to continue our new regular Weekly Rundown feature: Member of the Week! Each week, we'll introduce you to one of our association's members and get to know them on a more personal level. Kansas Ethanol is up next!

    • Location: Lyons, Kansas
    • Management Team:
      • Michael Chisam, President & CEO

      • Megan Vincent, Controller

      • Bruce Bentley, Plant Process Engineer

      • Thane Combs, Operations Manager

      • Scott Ludwig, Distillers Grain Marketer

      • Kyle Adams, Grain Merchandiser & Risk Management

    • How long has the company been in operation?
      • Operations began on May 1, 2008.
    • Do you make any ethanol co-products?
      • We produce and market WDGS, DDGS, grain oil, CO2, pelletized DDGS (Cow Cube), and a DDGS supplemental tub.
    • What do you consider some of your company’s main accomplishments?
      • We were the first plant to extract grain sorghum oil and the first ethanol plant to produce a high quality, 100 percent DDGS cow cube (7/8 diameter) and nugget (7/16” diameter).
    • How long have you been a GE member?
      • Since Growth Energy’s inception!
    • What's your website address?
    • What do you like about being a member of Growth Energy?
      • We appreciate the concerted effort to secure the industry’s future and the proactive approach to creating demand for our product. The constant communication is also very helpful.

For more details contact Vice President of Development Kelly Manning.

IN THE FAST LANE

Nth Moto Creates Custom V12 Turbocharged Engine That Runs on Ethanol

 
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Here's a cool story from American Ethanol Performance Team partner Nth Moto in Minneapolis. Don Groff, a local Minnesotan auto enthusiast, came to them recently with a custom V12 turbocharged engine that he has been building over the last four years using a pair of inline 6-cylinder Toyota engines that were engineered together through a very tedious and exacting process of design, machining, welding, and align-boring. After the engine and driveline were laid out, he fabricated the one-off chassis using tubular and machined parts that were all made from scratch. Even the formed aluminum components including body, tanks, and ductwork were entirely handmade and fabricated by Groff!


However, the really exciting part is that the engine will run primarily on E15 fuel from local Minnesota pumps but can run any mix of ethanol from E15 to E98 using an automated flex-fuel system and electronics designed by Nth Moto. The car was built to be a street rod and will be driven to events and shows. News of this iconic build has gone viral around the world (see articles on Road&Track, Jalopnik, and EngineLabs), and Nth Moto will be highlighting the vehicle's performance on ethanol through a video series on social media and YouTube throughout this year. Check out a video of the first time Don started the engine here! And make sure to become a Facebook fan of Nth Moto if you'd like to stay up to date on the project. 

 
 
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The Weekly Rundown is the weekly newsletter for Growth Energy's members, published by the communications staff at Growth Energy. For more information, email team@growthenergy.org

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