Recently in Regulation Category

So many things going on in the US ethanol market especially current  drought conditions for corn crops (and even soybeans for biodiesel).

Corn prices are going up and that means ethanol prices have been going up too especially when some ethanol plants have been idled because of the lack in demand, which could mean lower ethanol inventories going forward. According to an ICIS news* article, the US Department of Agriculture trimmed its projected yield for 2012 corn by 12% as of its July estimate.

Ethanol producers Archer Daniels Midland (ADM), Grain Processing Corp., and MGP Ingredients have all announced price increases for their ethanol citing higher corn prices, according to ICIS.

Because of the higher corn-derived products prices resulting from the drought, industry food groups such as the National Chicken Council, the National Cattlemen's Beef Association, the National Pork Producers Council and other meat and poultry trade groups (dairy, milk, turkey, sheep, etc...) are requesting several US Congress representatives to petition for a change in the 2012 Renewable Fuel Standard (RFS) mandated by the Environmental Protection Agency (EPA).

The RFS requires 13.2bn gallons of corn-based ethanol to be produced in 2012 and 13.8bn gallons in 2013. The trade groups argue that the RFS requirement is aggravating the drought impact on food prices.

According to an August 2* article from ICIS News, more than 150 Republican and Democrat members of Congress have signed a letter to the EPA requesting the RFS amendment.

The coalition opposed to the current RFS mandate noted some agricultural forecasters estimate' of 11.8bn bushels of corn will be harvested this year, compared with about 13bn that were harvested last year. Under those conditions, corn-ethanol production will use about four of every 10 bushels, the coalition said.

Meanwhile, several biofuel groups have also been arming themselves as they urged the EPA to maintain the RFS mandate.

Today, eight biofuel industry organizations namely -- the Advanced Biofuels Association, Advanced Ethanol Council, Algae Biomass Organization (ABO), American Coalition for Ethanol, Biotechnology Industry Organization (BIO), Growth Energy, National Biodiesel Board (NBB) and the Renewable Fuels Association (RFA) -- have formed a new council called Biofuels Producers Coordinating Council.

The new council will jointly advocate for the EPA to maintain the RFS mandate. According to the council, US production of biofuels has tripled since the adoption of the RFS standard.

"Undermining the RFS will have a chilling effect on the development of cellulosic feedstocks that are not used for food or feed. The RFS is important for all biofuels, but it is critically important for cellulosic feedstock process development. To undermine the RFS now would wound this feedstock development effort that in the long run is going to help both farmers and ranchers. This aspect is often neglected by the media and is not well understood by cattle ranchers, pork and chicken producers." - BIO

*requires subscription

This action is in response to the American Chemistry Council's (ACC) petition to amend the food additive regulation given that BPA use for these products has already been abandoned.

For a chemical explanation on the use of BPA in polycarbonate resin - the resins are formed
by the condensation of 4,4′- isopropylenediphenol (such as BPA), and carbonyl chloride or
diphenyl carbonate.

According to the ACC petition, companies that produce PC resins claim that baby bottles and sippy cups manufactured from PC resins are no longer being introduced into the U.S. market and that manufacturers of baby bottles and sippy cups have abandoned the use of PC resins in making these products.

An industry poll by the ACC also noted that PC resin manufacturers, which represent over 97% of worldwide PC resin production capacity, are no longer selling PC resins to be used in the manufacture of baby bottles and sippy cups intended for import into the United States or sale in the U.S. market.

"Although governments around the world continue to support the safety of BPA in food contact materials, confusion about whether BPA is used in baby bottles and sippy cups had become an unnecessary distraction to consumers, legislators and state regulators," said Steven G. Hentges, Ph.D., of the Polycarbonate/BPA Global Group of ACC.

"FDA action on this request now provides certainty that BPA is not used to make the baby bottles and sippy cups on store shelves, either today or in the future."

Also today, the FDA's Department of Health and Human Services (HHS) received yet another petition this time from the US representative Edward J. Markey (D-Massachusetts) to ban BPA from infant formula packaging.

The FDA is now calling for comments until September 17, 2012 on the lawmaker's petition.

In March 2012, Representative Markey sent three separate petitions to the FDA requesting the agency permanently remove regulatory approval for the use of BPA in baby and toddler food packaging, small reusable household food and beverage containers, and canned food packaging on the grounds that manufacturers have abandoned use of BPA in these products.

"With the FDA moving forward with my petition, and coupled with the American Chemistry Council petition to end the use of BPA in baby bottles and sippy cups, industry practice can follow consumer demand, and we will be able to end the use of BPA in infant formula forever. 

There are viable alternatives for BPA in food packaging, and I urge companies to stop poisoning our food supply with this dangerous chemical. FDA now must complete and make public their long overdue assessment of BPA's health impacts and make clear its next steps for ensuring our entire food supply is free from this damaging chemical." - Rep. Markey

It has been a while since the blog covered the BPA issue. For more background, here are some of our past posts on BPA.

ADM offers bio-isosorbide as BPA alternative

Eastman's 50-yr old BPA-free Tritan

BPA Q&A with metal packaging group

Corn-based BPA alternative

A chemical consultant's view on BPA

EPA moves in on BPA

BPA-free baby bowl 

FDA supports reduced BPA use

US producers of bio-based products will be happy to know that President Obama signed a presidential memo yesterday that requires the federal government via the US Department of Agriculture's (USDA) BioPreferred Program to track and increase its purchases of products made from plants and other renewable agricultural materials.

The memorandum directs federal agencies to take decisive steps (such as small business assistance, increase biobased product categories, education and outreach) to dramatically increase the purchase of biobased products over the next two years. This Memorandum is expected to result in a 50% increase in the number of new products that are designated as biobased within a year.

According to the USDA, this memorandum will expedite job creation in rural part of the US. The USDA's BioPreferred program, which started in 1998, has two major initiatives: certify and award labels to qualifying biobased products, and designate categories of biobased products that are afforded preference by Federal agencies when making purchase decisions.

Here is a short video from USA Today on the news about President Obama's biobased products memo.

At Jim Lunt's bioplastic seminar held on Monday, BioPreferred Program's deputy manager Kate Lewis actually talked about the factors driving growth for biobased products including bioplastics. The BioPreferred program currently has about 9,000 individual products listed on its database under 64 categories that the USDA designated for preferred Federal procurement.

"Consumer preference are clamoring for these types of innovative, more sustainable products although they don't really know what they're asking for and what they're getting. Another reason this market is poised for explosive growth is corporate commitment in reducing greenhouses gases as well as reducing their carbon footprint. They're looking and starting to implement opportunities. Finally, international and national policies, mandates and regulations are supporting and contributing in the forward movement of biobased products." - Lewis

With regards to jobs, Lewis said that in the US, about 100,000 direct new jobs a year were created as a result of biobased product activities (development, science, technology, trade) throughout the value chain.

Another interesting point she noted in her presentation is that only about 1% of corn grown in the US are directly consumed by us and most go to animal feed. Also, 1/3 of every bushel of corn used for ethanol is returned back as animal feed called DDGs (dry distilled grain), which is a byproduct from ethanol production that are high in protein.

"Factors that really drive prices up for commodity products such as food staples is really the increase in demand for fuel and high oil prices. As long as oil stays at $90-100/bbl, that has ripple effects throughout different products and industries. The high costs of fertilizer, energy use for harvesting and delivery is impacting prices - it's not about the use of agriculture for biofuel." - Lewis.

Meanwhile in Europe, the European Commission has actually launched early this month its own bioeconomy roadmap "Innovating for Sustainable Growth: a Bioeconomy for Europe." THe goal focuses on developing new technologies and processes for the bioeconomy; develop market and competitiveness in bioeconomy sectors; and push policymakers and stakeholders to work more closely together.

The Commission defined bioeconomy as an economy using biological resources from the land and sea, as well as waste, as inputs to food and feed, industrial and energy production. It also covers the use of bio-based processes for sustainable industries.

The EU bioeconomy reportedly already has sales of nearly €2 trillion and employs more than 22 million people, 9% of total employment in the EU. It includes agriculture, forestry, fisheries, food and pulp and paper production, as well as parts of chemical, biotechnological and energy industries. Each euro invested in EU-funded bioeconomy research and innovation is estimated to trigger €10 of value added in bioeconomy sectors by 2025, according to the Commission's report.

Still, some industry organizations note that the new strategy lacks specific actions to support biobased industries in Europe. While welcoming the EU bioeconomy strategy, the European Bioplastics said it hoped for more specific measures for bioplastics to be integrated into the strategy.

"The bioplastics industry is technologically well developed and can demonstrate a wide range of mature applications already today. What we need are strong measures to support the market development of bioplastics products."

I might have mentioned before that my day job is actually writing a weekly column for ICIS Chemical Business magazine, and one of my market coverages involves chlor-alkali (the production of chlorine and caustic soda).

US chlor-alkali producer Olin announced in early December that it is exiting the use of mercury cell technology by the end of 2012 by closing its 100,000 ton/year Augusta, Georgia chlor-alkali production facility as well as converting its 260,000 ton/year Charleston, Tennessee, production from mercury cell to using membrane cell technology.

Olin said the Charleston plant will employ the most modern membrane technology which would result in lower operating costs and higher quality products produced.

"Over the past eighteen months we have experienced a steady increase in the number of our customers unwilling to accept our products manufactured using mercury cell technology. The conversion of the Charleston facility, which in addition to hlorine and caustic soda also produces potassium hydroxide, hydrochloric acid, and bleach, will prevent the potential loss of these valuable customers."

The blog posted in 2008 about OxyChem's decision to be the first mercury-free caustic potash producer in North America by ceasing all of its mercury cell based production in the region and converting its chlor-alkali plant at Taft, Louisiana into using membrane cell technology.

Early this year, we posted Bayer MaterialScience's press release about a new chlorine production developed in collaboration with engineering company Uhde that is said to be more eco-friendly than the traditional membrane cell technology. Somebody from DuPont (or is it Dow? I forgot...) questioned how eco-friendly this new process can be. Unfortunately the only answer I can say based on the press release is that it is said to result in a 30% lower electricity consumption compared to traditional membrane cell technology.

ICB published a very interesting article in September about the move of Western chlor-alkali companies to membrane cell from mercury cell technology because of 1) regulatory pressures, 2) rising maintenance costs for outdated mercury cell plants, 3) membrane conversion will reportedly help producers save 20-30% in electricity costs, and boost output by more than 30% compared to mercury cell plants.

According to industry analysts, electricity is the largest cost factor in chlor-alkali production typically accounting for 40-50% of costs. 

While the ICB article mostly reported about European legislation pressures, in North America there is also pending potential mercury legislation in Congress, which would require chlor-alkali producers to either shut down their mercury cell plants by mid 2013 or convert to other technologies by mid-2015.

This decision has to be made by mid-2012 under the bill H.R. 2190, which is still waiting to be approved by both the House and the Senate. Mercury cell chlor-alkali capacity including those of Olin's, are estimated at 474,000 short tons or 3% of total US chlor-alkali capacity.

[Photo of Olin's Augusta, GA facility]

As I've mentioned in the previous post, the US House of Representatives' Committee on Energy and Commerce introduced a bill last week which could overhaul the 1976 Toxic Chemicals Safety Act (TSCA).

U.S. Rep. Bobby L. Rush, Chairman of the Subcommittee on Commerce, Trade, and Consumer Protection, and Rep. Henry A. Waxman, Chairman of the Committee on Energy and Commerce, introduced H.R. 5820, the Toxic Chemicals Safety Act of 2010.

Waxman said the TSCA reform is long-overdue. The bill intends all chemicals will be reviewed for safety; dangerous chemicals will be restricted or eliminated; and new, safer chemicals will be developed using the green chemistry principles.

The American Chemistry Council noted in a statement that the bill needs more work.

Here are the summary of the bill. If you're bored and don't have anything to read, here's the long version. ;-)

• Establishes a framework to ensure that all chemical substances to which the American people are exposed will be reviewed for safety and restricted where necessary to protect public health and the environment.

• Requires the chemical industry to develop and provide to the Environmental Protection Agency (EPA) essential data, and improves EPA's authority to compel testing where necessary.

• Ensures that non-confidential information submitted to EPA is shared with the public and that critical confidential information is shared among regulators, with states, and with workers in the chemical industry.

• Establishes an expedited process for EPA to reduce exposure to chemical substances that are known to be persistent, bioaccumulative, and toxic.

• Creates incentives and a review process for safer alternatives to existing chemicals, promoting innovation and investment in green chemistry.

• Creates a workforce education and training program in green chemistry, promoting and ensuring long-term viability of American jobs.

• Encourages the reduction of the use of animals in chemical testing.

• Allows EPA to exempt chemicals already known to be safe from requirements of the Act.

• Promotes research to advance understanding of children's vulnerability to the harms of chemicals.

• Directs EPA to address community exposures to toxic chemicals in certain "hot spot" locations.

• Requires EPA to engage in international efforts to control dangerous chemicals.

• Ensures that EPA actions are transparent, open to public comment, and subject to judicial review, without unreasonable procedural burdens.

• Gives EPA the resources needed to carry out this Act.

So many things going on in the US ethanol market day after day, it's driving me nuts! (I'm writing an ethanol article this week...)

First of all, the ethanol industry is in a tizzy over the ticking 45c./gal subsidy which is set to expire at the end of the year. Second, the Environmental Protection Agency (EPA) has been delaying its decision whether to lift the cap on the 10% ethanol blend (E10) in gasoline to 15% (E15).

The agency was originally expected to rule on the issue in December 2009, but postponed the decision, pressured by car manufacturers and the oil industry, which claim that more ethanol in gasoline could interfere with vehicle performance and void warranties.

The group FollowTheScience.org released a statement yesterday calling on Congress to require thorough and objective scientific testing of ethanol in automobiles before allowing an increase in the amount of ethanol in gasoline.

The group includes the Environmental Working Group; Natural Resources Defense Council; The Hispanic Institute; Engine Manufacturers Association; International Snowmobile Manufacturers Association; Motorcycle Industry Council; National Marine Manufacturers Association; Outdoor Power Equipment Institute; American Frozen Food Institute; American Meat Institute; Grocery Manufacturers Association; Snack Food Association; American Petroleum Institute; National Association of Truck Stop Operators; and National Petrochemical & Refiners Association.

Here's the ad they've been putting out recently with a tagline "Say NO to untested E15".

Fueling the debate (pun intended!) is a recent report from the Congressional Budget Office (CBO) stating that it will costs taxpayers $1.78 for each gallon of gasoline replaced by corn-based ethanol; $3.00 for cellulosic ethanol and $2.55 in using biodiesel to reduce equivalent amount of diesel fuel based on the 2009 tax policy.

The Renewable Fuel Association (RFA) refutes the CBO report's accuracy stating that CBO did not include ethanol's value as an additive to gasoline and that the report failed to include any comparison with other energy tax incentives, especially petroleum oil.

Ethanol producer Imperium Renewables put out a statement blasting the CBO report's failure in reporting the overall benefits of ethanol.

"The CBO ignored data showing that every dollar of subsidy invested in biofuels returns more than two dollars in increased Gross Domestic Product and state and federal tax revenue. Most distressing is the admission by the authors that the report ignores several positive taxpayer benefits, including that 'increased production of ethanol has probably resulted in some reduction in the price of gasoline, an increase in farm incomes and some impact on the quality of the nation's air and water resources."

Here are key highlights of the CARD report:

• U.S. ethanol production would increase to some 14.5 billion gallons by 2014 without the tax credit and import tariff; U.S. imports of Brazilian ethanol would rise modestly to about 740 million gallons--less than 5 percent of the total U.S. ethanol market.
  

• If the mandates are kept in place but the tax credits and trade protection are allowed to expire, no more than 300 jobs would be lost in the ethanol industry in 2014.

• Ending the tax credit and tariff would reduce ethanol prices by 12 cents per gallon in 2011 and by 34 cents per gallon in 2014. Because most gas sold in the United States contains 10 percent ethanol--a limit the Environmental Protection Agency may increase to 15 percent this fall--lower ethanol prices lead to modest savings at the pump: a penny or two per gallon next year and 3 to 5 cents per gallon in 2014.

• Opening the U.S. market to all producers would reduce price volatility by acting as a price shock absorber, meaning that in years when domestic ethanol production is low, imports would lower the consumer cost of meeting blending mandates.

• The Renewable Fuel Standard (RFS) is the primary driver of ethanol demand. The tax credit prompts blenders to use about 900 million gallons of ethanol each year above mandated levels. This costs taxpayers some $6 billion annually (or almost $7 per gallon). Ending the subsidy would save that amount.

California's Department of Toxic Substances Control (DTSC) finally put out online its draft for the new safer Consumer Products regulation. Comments are due by July 15, 2010 and may be sent to GCRegs@dtsc.ca.gov.

According to DTSC, the draft regulation creates a systematic, science-based process to evaluate chemicals of concern in products, as well as stimulate innovation in California's product development sector.

Released following 16 months of intense dialogue with stakeholders, the draft regulation would prioritize toxic chemicals and products, require manufacturers to seek safer alternatives to toxic chemicals in their products, and create tough governmental responses for lack of compliance.

The draft regulation will be implemented in three phases:

1) Prioritization process in which DTSC will identify and prioritize chemicals of concern and products that contain them.

2) Alternatives assessment of priority products conducted by manufacturers of these products, to identify safer alternatives.

3) DTSC will impose various regulatory response actions to address any remaining concerns raised by the alternatives selected by manufacturers for implementation, and to move manufacturers toward designing safer products.

More FAQs on the draft here.

I've been monitoring the news on chemical dispersants being used on the Gulf oil spill and my colleague in ICIS, Judith Taylor, wrote an excellent article about surfactants* as one of the active chemicals in dispersants.

Many surfactants these days use natural fats/oils-based raw materials and ICIS Pricing recently reported* a slight tightness in the fatty acid market:

US tall oil fatty acid supply tightens on BP oil spill demand

Oleic fatty acids, used in dispersants, tighten on BP oil spill

However, the dispersants themselves are causing environmental advocates to cry foul claiming it could do more harm than good because of unknown long-term effects. Nalco's Corexit 9500 and Corexit 9527 are particularly the two major dispersants that have been used on the spill.

According to a recent analyst report from Jefferies & Company, Nalco was able to make around $40m in dispersant sales related to the cleanup of the US Gulf oil spill reflecting sales of roughly 840,000 gal of Corexit.

Thus far Corexit is the only dispersant used at the spill although the Federal government has mandated a significant ramped down of its use because of the toxicity concerns. The Environmental Protection Agency (EPA) recently listed on their website the chemical components of the Corexit dispersants which include: 2-Propanol, 1,2-Propandiol, at least one ethanol derivative (which is in only COREXIT 9500), at least one butane derivative, several sorbitol derivatives called sorbitans and several petroleum distillates.

The group Safer Chemicals, Healthy Families coalition noted that very few data are available on the Corexit dispersants and that the EPA only require two short-term tests of acute toxicity to fish and shrimp for a dispersant to gain approval for use in any quantity.

"Only limited short-term data are available on individual ingredients as well, with virtually no data on toxicity to surface- or bottom-dwelling organisms, land animals and plants, or birds."

"Corexit 9500 and Corexit 9527, have been banned by the United Kingdom due to their adverse effects on the marine environment," the group said in a statement.

"BP has applied dispersants that are known to be toxic to the marine environment in a wholly unprecedented, unanalyzed, and arguably unauthorized manner yet the EPA has continued to allow the use of enormous amounts of Corexit and other dispersants on the surface and deep waters of the Gulf of Mexico without ensuring that this massive ecological experiment will not jeopardize protected species or adversely affect their critical habitat."

The EPA said it has been working closely with the U.S. Coast Guard and NOAA to ensure an aggressive dispersant monitoring plan is implemented by BP and that data are regularly and rigorously reviewed.

As of June 13, the EPA claimed that their toxicity data for the dispersants used does not indicate any significant effects on aquatic life and that, so far, the dispersant is effective.

The EPA also listed on its website all dispersants that have been authorized for use on their National Contingency Plan (NCP) Product Schedule, the authorized list of dispersants. The agency said it requires toxicology tests and reports for all dispersants that are approved on this list.

Other dispersant producers to name a few include BP, Croda, Dasic International, INEOS Chemical, Shell, Taiho, Total, and U.S. Polychemical, according to Jefferies.

Several press release about more environment-friendly dispersants have came out because of this issue. Here are some of them:

Tampa-Based Thermablok, Inc. May Have the Answer to Oil Spill Clean-up Using Aerogel

Low-tox dispersant shows promise in oil-spill remediation

Green Earth Technologies Has a New Ultimate Biodegradable Solution for the Gulf Oil

[*ICIS stories are subscription only]

Ok, this is a very crazy day as our company is moving to another floor in our building for the 5th time in 5 years. I have not yet gone through all my emails for the past 4 days so for those who are inquiring about the incoming BIO World Congress on Industrial Biotechnology conference in late June, please bear with me and I will be able to get back to you guys this weekend.

And before I end my blogging hours today, here is an update about Europe's plan to certify imported biofuels.

The European Commission (EC) announced yesterday that it will set up sustainability certification schemes for all types of biofuels that will come into Europe to make sure that these biofuels must deliver substantial reductions in greenhouse gas emissions and should not come from forests, wetlands and nature protection areas.

This is driven of course from recent NGO reports claiming that increase use of biofuel feedstock such as palm oil and soybean oil are destroying forests and wetlands particularly in Indonesia and the Amazon rainforest.

The commission said the certification schemes would require independent auditors to check the whole production chain, from the farmer and the mill, via the trader, to the fuel supplier who delivers petrol (gasoline) or diesel to the filling station.

The rules for certification schemes were part of a set of guidelines explaining how the EU"s "Renewable Energy Directive," coming into effect in December 2010, should be implemented. Germany's biofuels industry broadly welcomed the EU's ruling, according to ICIS News*.

European enzyme companies Novozymes and Genencor also welcomed the plan. Novozymes said this will be an opportunity to kick start the deployment of advanced biofuels in Europe. Genencor stated that the guidelines will provide clear direction on how to build a more sustainable transport sector in the EU.

According to ICIS News, Greenpeace's German affiliate, was not satisfied, stating that the Commission's criteria did not go far enough to save rain forests in developing countries, and that the 35% greenhouse gas savings target through 2017 was too low.

In the guidelines, European Member States have to meet binding, national targets for renewable energy and that only those biofuels with high greenhouse gas savings count for the national targets, explaining also how this is calculated. Biofuels must deliver greenhouse gas savings of at least 35% compared to fossil fuels, rising to 50% in 2017 and to 60%, for biofuels from new plants, in 2018.

The Brazilian Sugarcane Industry Association (UNICA) also noted that the criteria for the guidelines are still not clear especially in defining highly biodiverse grasslands as well as a methodology for identifying degraded lands.

Non-profit group World Growth blasted the EU plan calling it a breach in global trade rules. World Growth is championing the industrial use of palm oil from developing countries.

"No matter how the Commission tries to dress up its policy on biofuels, Brussels is denying to European consumers effective, low cost, and -- in the case of palm-based biofuel -- environmentally sustainable products. The root cause is reversion by the European Union to its timeworn practice of using protectionist measures to block agricultural imports and hinder production in developing countries." --World Growth.

Okay, now that I've got the excitement of the new IPhone 4 out of my system, back to blogging and this one is about California planning to become the first US state to ban single-use plastic bag.

Last week, the California Assembly approved the bill AB1998 that would ban single use carryout bags and even paper bags on or after January 1, 2012 from groceries, supermarkets and pharmacies. The bill also requires the store to provide to consumers at the point of sale a recycled paper bag at a reasonable cost, but not less than five cents.

By 2013 and every two-years thereafter, producers of reusable bags must submit a certification to California's Department of Resources Recycling and Recovery (DRRR) that each bag meets the requirements of a bag being "reusable" -- meaning it is designed and manufactured for at least 100 uses and is made of a washable material that "does not contain lead or any toxic metal in a toxic amount, as determined by the DRRR.

Producers have to pay a fee for each certification not exceeding $10,000 per producer for the initial certification and between $2,000 and $3,000 every 2-years after. The bill authorizes DRRR to conduct inspections to enforce the ban.

For those who will not comply, penalties will be up to $500 for the first violation, and an additional $500 for subsequent violations, up to a total of $5,000. Not getting the certificate will receive fines of up to $50,000 per violation, with a max of $150,000/year.

Will this impact the plastic industry? Definitely yes, as everybody in the chemical industry knows too well that what regulation implemented in California, will not stay in California alone.

The American Chemistry Council stated that the bill would devastate statewide recycling programs for dozens of recyclable products, such as plastic dry-cleaning bags, newspaper delivery bags, consumer product wraps and retail bags.

The bill now heads to the Senate for consideration and California's governor Arnold Schwarzenegger is reportedly supportive of the bill.