Today in Biofuels: US requires $105.5 billion in capital to meet Renewable Fuel Standard; ethanol train derails in Pennsylvania; Brazil’s ethanol production up 20 percent; Greenpeace leader says biodiesel yields are inflated

Top Story:

The Farm Credit Council said that, following the signing of the Energy Independence and Security Act, US industry will require $105.5 billion in capital to meet the new Renewable Fuel Standard. Council director Ken Auer questioned whether commercial bankers would continue to “sit back and wait for someone else to take the financing risk to get the industry up and running”. Auer referred to a banking industry study that showed that commercial banks or private institutions generated about $2 billion of new debt per year for the industry, compared to the more than $10 billion per year that will be required.”

Producer News:

In Michigan, an $150 million corn ethanol project is stalled, and the city of Corunna will have to refund a $900,000 grant from the state government that would have assisted with funding.

In South Carolina, East Coast Ethanol has proposed a 110 Mgy corn ethanol plant in Selma. Total project investment is projected at $130 million, but the firm did not outline a construction timetable. Selma officials said that the town had the excess water capacity to supply the 1.2 million gallons of water required per day by the proposed plant.

International News:

In Hong Kong, Noble Group said it will invest $450 million in its Brazilian sugar-cane ethanol processing operations by 2011. Noble will increase capacity at its Votuporanga plant, to 5 million tons of cane (from 2 million), and will construct a new plant in Sao Paulo to crush an additional 5 million tons. The company said that 80 percent of its output will be used to supply ethanol to the domestic Brazilian market. The Hong Kong-based company currently accounts for 10 percent of total Brazilian sugar cane processing.

In Canada, Toronto Hydro, which converted its entire fleet to biodiesel in 2005, said it has recorded no change in the fuel or maintenance cost for biodiesel blends compared to conventional diesel.

In Brazil, ethanol production increased 20 percent in 2007, according to figures released by the the Ministry of Agriculture, Livestock and Supply. Consumption increased, according to a Ministry official , because 90 percent of all new cars sold in Brazil are flex-fuel vehicles. The Ministry projects that 20 new ethanol plants will come online in 2008.

In the Philippines, the National Biofuels Board says that it expects to release a policy response on the “food vs fuel” debate that has slowed biofuel production development.

In Germany, the president of the Federal Association of Organic Fuels, Peter Schrum, has accused the Finance Minister of trying to “crush us”, as tension erupts between supporters of the biofuels industry among Christian Democrats are pitted against anti-biofuels CD’s and the Social Democratic Party. Under previous tax laws, German biofuels production increased from 200,000 tonnes to 3.4 million tonnes in 2007. But the imposition of excise taxes on biofuels has made biodiesel non-competitive with conventional diesel, threatening the viability of the German biodiesel industry.

Research News:

Greenpeace spokesperson Michael Hopf, said that biodiesel “produces as many fine carcinogenic particulates as do fossil fuels,” and said that biofuels advocates have falsely quadrupled the biodiesel yield of rapeseed. Hopf said that a field produces  35 gallons of biodiesel per acre, compared to industry claims of yields of 140 gallons per acre. Hopf added that “If half the available farmland in Germany were used to grow rapeseed, the total production would be less than five percent of the total annual consumption of gasoline in Germany.  On that same land it is possible to grow 6.8 million tonnes of wheat, or 41 million tonnes of potatoes. Germany has to choose between producing food or vegetable oil to run its cars.”

Policy and Policymakers:

Jerry Taylor of the Cato Institute says “If you want to be president and you’re running in the Iowa caucuses, you have to support ethanol.” Among major candidates, only John McCain has been strongly opposed to ethanol subsidies, but Taylor points out that McCain is simply opposed to all subsidies, even those which benefit his home state.

Consumer and Fleet News:

In Pennsylvania, an ethanol train derailed on the weekend. Nine cars went off the tracks in West Wheatfield in Indiana County. No casualties were reported but one of the ethanol cars caught fire and ignited its ethanol cargo. No cause for the derailment has been mentioned.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of public biofuels stocks, rose 1.70 percent on Friday to close at a 52-week high of 135.83. Archer Daniels Midland (ADM), up 2.28 percent to $47.09. led the way as investors continued to embrace biofuels in the wake of the signing of the Energy Act. Mid cap ethanol, stocks were generally down on the day, led by VeraSun Energy (VSE), down 4.07 percent to $15.09. Among small caps, BioSolutions Manufacturing (BSLM.OB) was off 17.95 percent to close at $0.032.

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