Daily Biofuels Summary for October 19: Compromise energy bill introduced in US Senate as India struggles with its renewable fuels mandate
Top Story:
In Washington, Sen. Barack Obama (D-Ill) and Sen. Tom Harkin (D-Iowa) introduced a new energy bill that would increase the renewable fuel standard to 18 billion gallons by 2016, compared to the 36 billion target for 2022 set in the Energy Bill passed by the Senate in July. The Senate and House have not been able to agree on an Energy Bill; the House version did not include a renewable fuel mandate.
Producer News:
In Texas, TexCom announced the completed acquisition of Biodiesel International (BIC), and will move forward on the development of BIC’s proposed biodiesel plant in Paraguay. The proposed plant will take advantage of the 6 million ton annual Paraguayan soybean harvest, and increased planting of sunflower and rapeseed in the country. The plant is proposed for a site on the Paraná River. Paraguay has a 3% biodiesel mandate in place for 2008, increasing to 5% in 2009.
In South Dakota, Heartland Grain Fuels closed on a $118 million financing deal. The company secured $98.7 million in senior debt and $19 million in junior debt. The package will refinance the company’s existing debt, provide working capital, and provide funds to complete Heartland Grain Fuels 40 MMgy expansion in Aberdeen, SD. Heartland is a subsidiary of Advanced BioEnergy (ABE).
International News:
In India, the South Indian Sugar Mills Association said that of 180 sugar mills who belonged to the association, only 18-20 have the capability at this time to produce ethanol. The association’s chief told the Hindu Business Line that “The cooperative sector is beset with financial crunch to upgrade their facilities in order to produce ethanol.” The industry is struggling to establish an ethanol capacity to reduce India’s massive 12 million ton sugar excess capacity of sugar, and meet the proposed national E10 mandate which goes into effect in October 2008.
In the Philippines, South Bukidnon Bioenergy will invest P4.08-billion in sugarcane ethanol and a10-megawatt co-generation plant from bagasse. The plant will be based in Bukidnon. The power plant will be given pioneer status, which provides six years of tax-free status because the plant will use a renewable energy source. The ethanol plant received a four-year tax exemption. The plant is scheduled to commence production in December 2010, and will produce 12 Mgy of ethanol.
In India, the petroleum and natural gas ministry has expressed skepticism on the 10 percent ethanol mandate schedule for October 2008. The officials say that sugar cane production is too cyclical in nature to sustain the mandate. The E10 mandate has been championed by the Agricultural ministry as a means of handling the nation’s severe sugar overproduction. India, the world leading producer of sugar, is expected to have more than 12 million tons in overcapacity , and hopes to divert as much of that as possible to ethanol production, as a means of stabilizing sugar prices.
The Wall Street Journal published a round-up of Asian biofuel development. The report said that there were 45 approved ethanol projects in Thailand, with a total capacity of more than 1000 Mgy. More than half of the projects utilize cassava as a feedstock and those account for at least 700 Mgy in capacity. The report also pointed out that China, which established an E10 mandate in 2002 for nine provinces, has not extended the mandate, in part because of shortages of feedstocks. Malaysia has announced a 5 percent blending mandate, but delayed implementation until palm oil prices fall below $590, which is unlikely in the next few years. The report quoted an FAO study which showed that cassava ethanol could be produced for $45 per barrel, compared to $43 for jatropha biodiesel, $45 for sugar cane ethanol, from corn, $83 for corn ethanol; and $122 for soybean diesel. The last four figures came from a recent report from Morgan.
In Angola, president Jose Eduardo dos Santos opened discussions with Brazil by focusing on the potential of biofuels. “The production of these biofuels will enable to contribute for the economic development of several regions in the country, since it is possible to explore the best alternatives in the raw materials existing in each region”. Angola’s reserves of undeveloped land, and low cost structure, have made it an attractive target for foreign biofuels investment.
Research News:
The Institute for Energy Research has joined the jihad against biofuels. According to IER Adjunct Scholar Jerry Taylor, “virtually all studies show that greenhouse gases associated with ethanol are about the same as those associated with conventional gasoline once the entire life cycle of the two fuels are compared. Further, as more land is harnessed for corn production, less fertile soils will be brought into production, requiring more energy intensive inputs into the corn production process, primarily in the form of increased use of fertilizers and irrigation.” The institute for Energy Research receives substantial financial support from the oil industry and works on projects for the American Petroleum Institute. ExxonMobil alone has provided more than $200,000 in funding to IER since 2003.
In the Netherlands, entrepreneur Carlo Bakker has launched a global database of biofuel plants, called worldbioplants.com. The website includes information on 906 biofuel plants, including 549 ethanol plants and 357 biodiesel plants in 51 countries.
Policy and Policymakers:
In Washington, Sen. Tom Harkin, D-Iowa, said that the 2007 Farm Bill would appear in two weeks. He said that it would earmark $1.3 billion for biofuels over the next five years.
The head of Monsanto said there there should not be a food versus fuel debate, but a food and fuel effort focused on increased yields. He said that yields in some parts of the world are only 10 percent of US yields, and that an improved regulatory environment in, for example, Africa, would pave the way to improved crop productivity. He said that developing drought-resistant strains of corn and providing conventional corn hybrids to developing nations should be a priority. He warned that, without a biotechnology approval process in place, Africa would never catch up to the developed world in crop yields.
Consumer and Fleet News:
In Florida, Gate Petroleum announced plans to build a biofuel terminal in Jacksonville. The 55-million-gallon terminal will operate on a 139-acre site on the St. Johns River. The lack of terminal and blending facilities was raised in House hearings yesterday by Agricultural Committee Chairman Collin Peterson as the potential root cause of the ethanol glut. http://www.jacksonville.com/tu-online/stories/101907/bus_209747366.shtml
Financial News:
Stocks are expected to open down this morning as major stock indices took a minor hit in overnight futures trading, with all indices down between 0.1 and 0.4 percent.
Oil crossed the $90 per barrel threshold after hitting $80 for the first time a month ago, while the US dollar fell against major currencies as concerns about increasing trade deficits loomed.Yesterday, the Biofuels Digest Indexâ„¢, a basket of public biofuel stocks, rose 0.58 points today to close at 104.75, the highest close for 2007. The Index has jumped more than 7 percent since October 3rd. Large cap stocks led the advance, as Archer-Daniels-Midland (ADM) was up 0.42 percent to $35.50 and The Andersons rose 4.64 percent to close at $49.21. Biodiesel stocks did well, with Nova Biosource Fuels up 2.19 percent to $2.80 and Better Biodiesel up 41.43% to $1.98. Big Ethanol stocks were mixed on the day, with VeraSun (VSE) up 0.24% to $12.43, while Aventine Renewable fell 1.96 percent to $9.98, and Pacific Ethanol (PEIX) closed at $8.83, down 0.56 percent on the day. Advancers led losers 9 to 8 in the day’s trading.
