In Celebration of Clean Water

Energy Matters

 Last week, there was global recognition of the need for clean water when World Water Day was celebrated. Today, more than half a billion people don’t have access to clean water, and pressures on limited water supplies are increasing. Tackling the water crisis can feel like an uphill battle in the United States, after Flint and with other local crises that have been brought to light. But there is some good news in the private sector, and there is hope that the new administration will provide the crucial public support that is necessary to invest in and improve our water supply.

The good news is that a number of companies and investors are moving forward, taking steps to value water for its true worth, and working with suppliers, farmers, and local communities to preserve water supplies. Innovation is also happening at the municipal level.

Probably the best news is that agriculture, the world’s most water intensive business, is becoming increasingly focused on developing plans and technology to conserve and clean up water resources. More than 70% of the world’s fresh water is in fact used to irrigate crops and raise livestock. The companies that buy, process, and sell the food we eat have the power to raise the bar for sustainable water use in farming. Many of the largest food companies, like PepsiCo and The Campbell Soup Company, are doing that by evaluating their growing regions most at risk for water scarcity, and developing plans and targets for working with farmers to conserve water resources. Hormel Foods is developing the first comprehensive water stewardship policy for a meat company, setting water management expectations that go beyond regulatory compliance for its major suppliers, contract animal growers, and feed suppliers.

The dairy industry is another good example of leadership in this area. The leading U.S. dairy cooperatives (which represent nearly 20,000 dairy farmers who produce one-half of the nation’s milk supply), who are working in partnership with two associations to advance the entire dairy industry, have founded Newtrient – a company dedicated to clean water. They did so because they recognized the need to bring together manure management technology providers with dairy farmers, researchers, and other stakeholders in order to seize the opportunities from manure, while supporting environmental sustainability. Newtrient is a driver of positive change in the emerging industry of dairy manure use and management. By serving as a catalyst advancing new technologies, practices, products, and markets, they also help generate profits for farmers, while at the same time preserving and enhancing the environment — a win-win.

These companies and industries recognize that to ensure long-term water supplies for their businesses, they must partner with the local communities to give clean water back to the communities where they operate.

In order to scale these public-private partnerships, government and industry must work together and prioritize market solutions that advance technology to make this happen. In a recent speech, EPA Administrator Scott Pruitt predicted, “I really believe that at the end of eight years [of the Trump administration], we’re going to have better air quality, we’re going to have better water quality because we’ve invested in a partnership.” This is good news, that a new spirit of partnership may now exist as the EPA focuses again on its very important role in ensuring clean water for Americans.


 

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FROM THE CHART ROOM

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U.S. imports of biomass-based diesel, which include biodiesel and renewable diesel, increased by 65% in 2016 to reach a record level of 916 million gallons. Increasing Renewable Fuel Standard (RFS) targets and the recently expired biodiesel blender’s tax credit were strong drivers of biomass-based diesel demand in 2016, incentivizing increased levels of imports of both biodiesel and renewable diesel. The biodiesel blender’s tax credit has expired several times in the past, most recently expiring at the end of 2014, only to be retroactively reinstated.

Biodiesel and renewable diesel are valuable because they qualify for the two major renewable fuel programs in the U.S.: the nationwide RFS and California’s Low Carbon Fuel Standard (LCFS). Biomass-based diesel fuels have additional advantages over other renewable fuels, such as fuel ethanol, because of their relatively high energy content and low carbon intensity, which allow them to qualify for higher credit values in both renewable fuel programs.

Both biodiesel and renewable diesel fuels are produced from refining vegetable oils or animal fats. Biodiesel is blended with petroleum diesel up to 5% or 20% by volume (referred to as B5 and B20, respectively). Renewable diesel is a drop-in fuel, meaning that it meets specifications for use in existing infrastructure and diesel engines, and is not subject to any blending limitations.

More than half of U.S. imports of biodiesel in 2016 originated from Argentina (64%), with much of the rest coming from Indonesia (15%) and Canada (14%). Roughly half (53%) of biodiesel imports arrived along the Atlantic Coast because of the favorable economics of importing seaborne cargoes to that region, relative to the movement of domestically produced product by rail from the Midwest. Similar to 2015, Singapore was the only source of imported renewable diesel, which was primarily destined for the West Coast, most likely for compliance with California’s LCFS program.

EIA’s most recent Short-Term Energy Outlook projects biomass-based diesel imports to remain largely flat in 2017 because of the expiration of the blender’s tax credit, before increasing in 2018 as a result of increasing RFS targets.


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