Today in Biofuels: US House Ag Chairman says cellulosic may never get off the ground; food riots in Indonesia over soy prices; DuPont says new biofuels will proliferate

Top Story:

In Washington, the chairman of the House Agriculture Committee said that the US is 10 years away from producing commercially viable cellulosic ethanol. Collin Peterson (D-Minn), told Reuters, said “I’m not sure cellulosic ethanol will ever get off the ground,” adding that his chief concern is suitable feedstocks in sufficient quantities.

Producer News:

In Illinois, the CEO of the National Biodiesel Board told Reuters that there would be a “cooling off peiod” in biodiesel capacity development following a period of “irrational exhuberance”. Joe Jobe said in an interview that fast-rising feedstock prices are the problem, which have reduced biodiesel margins to an average of minus 30 cents a gallon. Soybean oil has risen to 54 cents a pound this week, more than double the price in 2005. Meanwhile, Jobe said that 100 new plants have been built in the past two years, bringing the total industry production to 450 million gallons in 2007, up from 25 million in 2004.

In California, the Pacifica City Council voted 4-1 to approve the addition of a biodiesel plant to the city’s wastewater treatment facility. The proposed plant, which would be built and operated by Whole Energy Fuels would produce 3 Mgy of biodiesel, primarily from waste vegetable oil. City officials have estimated that the Bay Area produces more than 11 Mgy of waste vegetable oil across the region. Whole Energy Fuels operates a biodiesel production plant in Washington state.

International News:

In Indonesia, government officials and police have been forced to clear the streets in an emergency action after food riots broke out Indonesia over rising soybean prices. Increasing demand in China, reduced US capacity as more farmers plant corn for ethanol, and poor harvests in Brazil and Argentina fueled the protests, the largest since Mexican protests and riots over rising tortilla prices last year.

In Germany, the executive director of BBK, the German renewable fuels association, said that the German biodiesel industry is producing at only 10 percent of capacity, down from 20 percent in November, and that the industry is in a state of collapse. Peter Scrum, in an interview with Reuters, said that production is being continued only by larger firms. The limited German production is primarily for export, following a 60 percent tax hike on biodiesel that has halted sales of biodiesel at German petrol stations.

In Malaysia, Carotech Berhad continue to produce palm oil biodiesel at full capacity owing to its focus on co-generating Vitamin E. Carotech executives told Reuters that the company’s 50 percent blend of palm-based Vitamin E is selling for $600 per kilogram and is extracted from the same batch of palm oil from which they create a tonne of biodiesel worth $1100 at current prices. With crude palm oil reaching $1100 per tonne, biodiesel-only producers are struggling to keep their plants open, and those who have been relying on extra income from the glycerine byproduct from biodiesel production have seen a collapse in the cost of that commodity as well.

In the Philippines, Sen. Juan Miguel Zubiri Tuesday said that oil companies are financing a campaign suggesting that biofuel production will affect Philippine food production. Zubiri said that oil companies such as Petron have launched a fund to lobby against biofuels because it represents competition. The chairman of Philippine National Oil Co.-Alternative Fuels Corp. (PNOC-AFC) confirmed that the Philippine focus on jatropha, which is grown in areas that cannot support many food crops and has a higher yield per acre than food, will assure that the Philippines can produce both food and fuel.

Research News:

In Minnesota, Xcel Energy has pledged $150,000 to assist in funding an algae-to-biodiesel research project sponsored by the University and the Metropolitan Council. Researchers at the Metropolitan Council and the University of Minnesota’s Initiative for Renewable Energy and the Environment (IREE) are conducting the research. The grant is a follow-on to more than $4.5 million given to five other University of Minnesota projects from the Xcel Energy Renewable Development Fund.

In New York, the chief innovation officer of DuPont said that second-generation biofuels would proliferate in coming years and give consumers a wide range of choices with improved fuel properties. Thomas Connelly, told Reuters that DuPont has focused on biobutanol, but has not yet proven that the fuel can be economically feasible. DuPont owns a 10 percent stake in a planned ethanol facility in the UK, in partnership with BP, that will be converted to butanol production over the next few years. Butanol has a comparable mileage to gasoline and can be shipped using existing gasoline infrastructure. DuPont subsidiary Pioneer Hi-Bred is also providing genetically modified seed corn for the conventional ethanol market.

Policy and Policymakers:

In California, a partner of legendary Silicon Valley venture capital firm Kleiner Perkins said that the establishment of a carbon tax is the catalyst that would transform the renewable energy industry “overnight”. John Denniston told Reuters that carbon taxes and cap-and-trade systems for emissions have led to a rapid pace of growth for the renewables industry in other countries, including the rapid development of wind and solar industries. Kleiner Perkins counts Al Gore. the leading carbon tax proponent in the US, among its directors. The company has invested in 30 renewable energy projects including the cellulosic ethanol venture Mascoma, and hybrid auto technology company Fisker Automotive.

Consumer and Fleet News:

In Illinois, the principal of Transportation Consultants said that the construction of rail terminals that can handle large-scale ethanol shipments is critical to the growth of the ethanol industry. Thomas Williamson, speaking to Reuters, said that with ethanol primarily shipped by rail in the US, most ethanol facilities are able to load “unit trains” that carry 1.5-3.25 million gallons at a time, but only seven destination terminals can receive and unload them. Unit trains terminals can load and unload 50 to 100 car-long trains in less than 24 hours.

In Michigan, Chrysler unveiled a hybrid diesel-electric Jeep Renegade dune buggy, one of three alternative-fuel concept cars it presented at the International Auto Show. The Jeep can travel 40 miles on its lithium battery before switching to a cleantech diesel engine that can extend range to 400 miles and achieve 110 mpg. Chrysler also debuted a Dodge Zeo electric sports car with a range of 250 miles, and a Chrysler ecoVoyager powered by a plug-in battery and hydrogen fuel cells that has a total range of 300 miles with water vapor as the only emission.

Financial News:

The Biofuels Digest Indexâ„¢ (BDI), a basket of public biofuels stocks, fell 0.62 percent to close at 127.53 as continued weakness was experienced in large cap agribusiness and mid cap ethanol stocks. For the day, declines led advances 5 to 1, with diversified agribusiness The Andersons (ANDE) falling 1.04 percent to $45.68. Among ethanol stocks, Pacific Ethanol (PEIX) tumbled 6.48 percent to close at $6.64. Among small caps, GreenShift gained 8.33 percent to end at $0.013 while Green Energy Resources (GRGR.PK) fell 17.65 percent to close at $0.14. In a note to investors, Raymond James analyst Pavel Molchanov downgraded US BioEnergy Corp. (USBE) and Verasun Energy (VSE). to “Market Perform” from “Outperform”, calling the ethanol outlook “truly bleak, at least for the next 18-24 months.”

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