Daily Biofuels Summary for September 28

September 28, 2007

Top Story:

The El Paso Times published a profile on Valcent, which has developed the Vertigo system for growing algae on a commercial scale for biodiesel. The system uses 10-foot-long water-filled plastic bags suspended in a greenhouse-like setting, and Valcent projects it can produce 100,000 gallons of algae oil per acre per year, or 233 times the land productivity of corn ethanol production at current rates.

The company projects an initial growing cycle of 30 days, followed by a daily harvest; the bags use an initial injection of algae cells, plus water and carbon dioxide. Michael Berry, a biofuels investor, was quoted in the article saying that no one had “figured out how to do continuous harvesting. But I think these guys figured it out. If they have figured it out, it’s going to be a big deal.”

Full scale plants would require 200 to 300 acres and cost $800,000 per acre to build and operate. The plants would produce biodiesel at $1.70 per gallon, or about 30% less than soybean oil-based biodiesel.

Producer News:

Archer-Daniels-Midland announced a partnership with ConocoPhillips to produce “biocrude“, a hydrocarbon fuel made from biomass with similar properties to crude oil, which can be refined into gasoline or diesel. ConocoPhillips had previously announced a partnership with Tyson foods to develop chicken-fat based biodiesel. ADM had indicated previously its strategy to diversify beyond its base in corn ethanol.

Missouri issued an air permit to Ethanex of SEMO. The permit will allow Ethanex to build a 138.6-million-gallon-per-year ethanol plant at the Southeast Missouri Regional Port. A permit is still in process for a 65 Mgy ethanol plant to be operated in the same region by First Missouri Energy. Bootheel Agri-Energy received a construction permit for its 120 Mgy plant in Sikeston.

Reed-Three Rivers Bio-Grain has announced plans to build nine 240 MGY corn ethanol plants in Illinois, Kentucky, Indiana and Arizona. The facilities will use the new, higher productivity Chen-Xu Process of converting corn to ethanol.

A 40 Mgy corn ethanol facility in Boardman, Oregon was opened yesterday by Pacific Ethanol, and will supply fuel for the Portland market. The City of Portland’s Renewable Fuels Standard (RFS) went into effect this year and Oregon’s upcoming RFS goes into effect January 1, 2008. The plant also produces 350,000 tons of distillers grains for livestock feed.

International News:

Brazilian President Luiz Inacio Lula da Silva continued his global offensive on behalf of sugarcane ethanol and biofuels with an address at the UN summit on climate change. He strongly defended Brazil against accusations of poor environmental stewardship and the suggestion that biofuel production causes food shortages. He has pointed out that only 20 percent of arable land in Brazil is currently under cultivation and less than 4% is used for ethanol. “This is not a choice between food and energy,” he said. “The problem with world hunger is not a shortage of food but a shortage of income.”

Lula has pointed out that biofuel industry creates higher paying jobs than traditional agriculture. “When we think about ethanol, we think about helping the poor, helping countries like ours out of poverty,” Lula said. However, critics point out that sugar cane workers make $1.35 per hour, twice the wages of other agricultural workers, but that 312 sugar cane or ethanol workers died on the job between 2022 and 2005, and nearly 83,000 suffered on the job accidents.

Oil and natural gas producers Venezuela and Bolivia have criticized ethanol production for increasing food prices and world hunger. Bolivia, Venezuela and Cuba are supporting a draft report by the UN special rapporteur on the Right to Food, calling for a five-year moratorium on ethanol production produced from sugar cane that is expected to be debated in the UN General Assembly and cause Brazil considerable embarrassment.

In Africa, lack of infrastructure to move biofuels to markets is under scrutiny in an article by AllAfrica.com. “Lack of infrastructure in African countries weighs down opportunities for biofuel use. You can produce it, but if you can’t get it to the users at a reasonable price there’s no point,” a refinery manager for D1 Oils Africa told AllAfrica. A 300-mile pipeline from Maputo, Mozambique is under development, but in other areas of Africa trucks must be used over unsuitable roads.

In Malaysia, the Plantation Industries and Commodities Ministry will launch a jatropha pilot project in Sabah. The location will be in Kota Marudu. The Ministry pledged to expand cultivation, especially in poorer areas, if the crop proves to be viable. The Ministry also pledged to introduce new methods for oil palm production in Sabah that would increase productivity.

Research News:

A report by Nobel Prize winning chemist Paul J. Crutzen said that crops used in the US and Europe to make biofuels were speeding up global warming. The report sated that use of canola, or rapeseed, to produce biodiesel resulted in 70% higher emissions than diesel, taking into account the use of fertilizers. The report found that the fertilizers release nitrous oxide, which is 300 times more insulating than carbon dioxide.

Policy and Policymakers:

The UN Special Rapporteur on the Right to Food, Jean Ziegler, called “transformation of agricultural land for the production of bio-fuels in America” is a “huge problem”. This had resulted in the rise of the price of corn, especially in Mexico. This would lead to massive hunger in the world.” He added that bio-fuels had to be produced in some other way,” and added that in Europe the emerging agro-fuels were also deadly for countries where food production was declining.”

He spoke also about the situation in Brazil, stating that “the scale of sugar cane plantations was spreading to the detriment of domestic agriculture in Brazil. The landless peasants in Brazil had campaigned against bio-fuels â€“ all 6 million of them.”

Consumer and Fleet News:

Air New Zealand announced that it would trial a Boeing 747 flight using blended biofuel, in late 2008 or early 2009. The flight is projected to take-off from Auckland, but will not carry passengers, the company said.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of 21 public biofuel stocks, rose 0.89% to 100.16 as investors returned to the sector for a second straight day following a capital flight earlier in the week. Oil rose to more than $82 per barrel, prompting reconsideration of the merits of Big Ethanol. Major ethanol playes Pacific Ethanol (PEIX), Aventine (AVR), VeraSun Energy (VSE) and Archer-Daniels-Midland (ADM) were all up for the day, with Pacific Ethanol rising 8.97% to $9.48.

Earlier in the day, all major ethanol stocks were down on news of a downgrade by Goldman Sachs analyst Arjun Murti. Murti cited poor pricing and cost outlooks in cutting his share price targets and said that there might be a “dead cat bounce” proving short term gains as investors took advantage of the low stock price, but that fundamentally the stocks would continue their downward spiral.

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Written by Jim Lane · Filed Under The Daily Biofuel Summary

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