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US ethanol supplies rise 14 percent as capacity increases; falling prices may result

The US Energy Information Administration said that U.S. ethanol supplies increased 14 percent in November to 11,194,000 barrels, as the result of a 45 percent increase in ethanol production capacity over the past 12 months.

According to the report, U.S. ethanol stockpiles have increased from 9.067 million barrels  in June, an increase of 18 percent.

The EIA stirred controversy last month when they released long-term fuel demand projections that the US will derive 83 percent of its energy needs from fossil fuels, down only 3 points from the 86 percent figure for 2006.

The EIA, which projected in its study that biofuel consumption would increase to 17 billion gallons by 2030, may have to revise its figures in the light of the passage of the Energy Bill. The Bill mandates that 36 billion gallons of biofuel fuel consumption by 2022, or more than 25 percent of total fuel use based on 2006 consumption.

Tyson Foods blames biofuels for profit slide

Tyson Foods blamed ethanol for a drop in profits of 10 cents a share, or $23 million, in its first fiscal quarter, and the company said that uncertainty over grain prices made it impossible for the company to issue earnings guidance to analysts. Tyson said that its costs rose 3.9 percent in the first quarter compared to the same period last year, while sales increased 3.2 percent.

Ethanol was priced at $2.202 yesterday at the Chicago Board of Trade, while corn closed at $5.02 per bushel for the March contract.

Meanwhile, Tyson has stepped up its efforts to become a biofuels producer, with construction of the Dynamic Fuels biodiesel project scheduled to begin this year. The $150 million project, a joint venture between Tyson Foods and Syntroleum, is expected to be completed by 2010. The state of Louisiana recently pledged $400,000 towards construction of a rail spur serving the plant.

Also, ConocoPhillips has a partnership with Tyson to develop chicken-fat based biodiesel.

Corvette Racing Team converts to E85 for American LeMans series

The Corvette Racing team will convert to E85 ethanol for the 2008 American Le Mans season, using cellulosic ethanol produced by KL Process Design Group from wood waste. The fuel will debut at the Mobil 1 Twelve Hours of Sebring in March.

In New Zealand, the Toyota Racing Series recently adopted E85 ethanol as its racing fuel. The series will be the first to feature production cars running biofuels under extreme conditions. Other auto racing series that use ethanol feature cars built specifically for the race series. Auto racing officials noted that under racing conditions, the E85 blends are showing reduced emissions, increased power and torque over conventional fuels.

The ruling body of Formula One racing recently banned further investment in F1 engines, and required teams to invest in developing hybrid engines or other more environmentally-friendly engine technologies. Formula One had previously mandated that 5.75 percent of fuel used in F1 racing come from renewable sources.

The Indy Racing League runs on 100 percent ethanol, while General Motors has been in the news this past month encouraging NASCAR to switch to biofuels.

Iowa needs $2 billion in coal-fired electricity production to supply power for ethanol; critics say coal use “ungreens” ethanol

Two coal-fired electricity plants, in Marshalltown and near Waterloo, have been proposed in Iowa to provide electricity for the growing collection of Iowa ethanol plants. Critics say that ethanol’s need for coal-powered electricity makes the case that it is not a green fuel.

Alliant Energy, co-owner of the Marshalltown project, said that the needs of the ethanol plants can only be solved at this point in time by nuclear, natural gas or coal, and that natural gas is not economical while nuclear has been taken off the table due to environmental concerns. The proposed plants would cost $1 billion each.

Last week, Xethanol Corporation announced that it would invest $500,000 in Consus Ethanol for its cogeneration project that would provide power for its ethanol production process from waste coal, that would have a $0.48 per gallon cost advantage over comparable ethanol plants in the Midwest powered by natural gas. The Pittsburgh-based facility will distribute fuel to East Coast markets, which have higher prices for ethanol.

In another approach to solving emissions problems at coal-fired power plants,  Linc Energy and Bio Clean Coal said they would joint venture on an algae-based biodiesel plant in Australia using CO2 emissions from coal-fired electricity generation.

150,000 tonne Rossi Biofuels biodiesel plant opens in Hungary

In Hungary, the 150,000 tonne Rossi Biofuels biodiesel plant has commenced operations in Komárom. Austrian businessman Rudi Roth owns 75 percent of the $60 million project and joint venture partner MOL owns the remaining 25 percent. MOL will use 80 percent of the plant’s biodiesel at its refineries.

Biodiesel is relatively new to Eastern Europe. The first biodiesel plant in the region opened last August in Romania.

Late last year, the Slovak Oil-producers Association said that the country was the first of the Visegard countries - Slovakia, the Czech Republic, Poland and Hungary - to meet the Visegard goal of increasing biofuels share to 2 percent of the total fuel market.

Biofuels Digest Indexâ„¢ slips 0.71 percent to 121.90 despite new cellulosic ethanol grants

The Biofuels Digest Indexâ„¢ (BDI), a basket of publicly traded biofuel stocks, fell 0.71 percent yesterday to 121.90 in mixed trading.

For the day, The Andersons (ANDE) led diversified agribusiness, up 0.61 percent to $46.02, while Archer Daniels Midland (ADM) fell 0.83 percent t $42.94. Most ethanol stocks rose, paced by VeraSun Energy (VSE), which rose 1.76 percent to close at $10.40.

Among small caps, Green Energy Resources (GRGR.PK) rose 11.54 percent to $0.145 while Texcom (TEXC.PK) was off 11.11 percent to $0.08. Overall, declines led advances 5 to 4.

Australian $60 million timber processing project to supply wood waste for ethanol

In Australia, Willmott Forests won a contract from the New South Wales government to expand a $60 million softwood processing plant at Bombala. Plant owners have indicated that they plant to produce ethanol, or supply waste timber biomass for ethanol production, as part of the vision for expansion project.

One of the first projects in Australia to produce cellulosic ethanol is Willmott Forests’ Ethtec, which commenced production on December 17 at its pilot plant near Maclean in northern New South Wales. The company’s process uses hydrolysis to convert cellulose to sugars, which can then be fermented into ethanol.

Prime Minister Kevin Rudd pledged $15 million toward second-generation biofuel plants in the recent Australian election campaign, with a goal of making next-generation ethanol commercially viable by 2017.
Yahoo conducted an online poll late last year regarding Australian policy on climate change. 31 percent said that the country should put the climate first and the economy second; 53 percent the country should balance climate change action with the needs of the economy, and 10 percent said the country should put the economy first and climate second. 6 percent said the country should take no action.

Sudan government expected to pass biofuels bill, fund Khartoum sugar ethanol plant in 2008

In Sudan, the government expects to adopt an alternative energy bill before August. To brief legislators, a parliamentary committee on industry visited the Kenana sugar facility in Khartoum. Kenan, Giad and the ministry of Energy have proposed a Sudanese energy project with an undisclosed location and capacity.

Across Africa, ethanol production has been on the rise, spurred in part by an extensive visit to several African nations by Brazilian President Luiz Inácio Lula da Silva last year.  Brazil and Mozambique signed a cooperation agreement for sharing resources in biofuels production and training. Subsequent development efforts in Uganda and Nigeria have prompted assurances that government policy would require the use of underutilized or empty lands, would avoid using lands used for food production.

Today in Biofuels: GM says consumers don’t want diesel despite fuel economy; India biodiesel policy imminent; China to invest $5 billion in Indonesian crops, biodiesel

Top Story:

In Detroit, the vice chairman of General Motors said that only 1 in 12 consumers want modern diesel engines because they cost $3,000 to $4,000 per vehicle, and that the popularity of diesel engines in Germany is the result of punitive tax policies that skew the market, result in gasoline costing $8  per gallon compared to $4 for diesel fuel. Bob Lutz, speaking at the Automotive News World Congress, said that natural market share of diesel is more like the 8-10 percent seen in Switzerland. Lutz added that GM is developing a full range of diesel vehicles but that ethanol had to be a priority for the car maker because of the popularity of the internal combustion engine.

Producer News:

In Iowa, the city of Des Moines has given Vision Fuels Des Moines an extension until June 1st to provide a financing commitment for their proposed $210 million corn ethanol plant, situated on 164 acres of city-owned land. The company has provided nearly $1 million in non-refundable deposits for the natural gas-powered plant that was first proposed in 2006.

In Wyoming, the KL Process Design cellulosic ethanol plant in Upton, near the Black Hills National Forest, will double its production to 2.5 Mgy of ethanol produced from waste wood chips. The company commenced production last March with an initial capacity of 1.5 Mgy, using waste wood from the forest floor as well as pine tress killed by insect infestations.

In Maryland, Chesapeake Biodiesel has proposed a 30 Mgy soybean oil biodiesel plant near Hagerstown, which will also produce approximately 100 million pounds of soybean meal. The company is investigating three potential sites, with a goal of opening by fall 2009.

International News:

In Brazil, the president of the sugar producers industry association, UNICA, said that bagasse could supply up 11.5 terawatts, or up to 15 percent of Brazil’s electricity by 2015. Bagasse is the waste biomass left over from sugar extraction. Today, the sugar industry supplies 1.6 terawatts, or about 2 percent of the country’s electricity needs.  Marcos Jank said that burning more bagasse to generate electricity would complement the country’s hydroelectric projects because sugar cane harvests occur during the dry season, when hydro plants produce less power owing to reduced water levels.

In China, the country’s largest state oil company, Sinopec, said it will invest $5 billion in biofuel plants and crop development in Indonesia. The company will invest in jatropha and palm plantations and biodiesel plants in the country’s Papua and East Kalimantan provinces. The project is slated to begin later this year.

In India, Agriculture Minister Sharad Pawar will convene a Group of Ministers meeting aimed at making a decision on India’s biodiesel policy. Observers expect that a Biodiesel Board will be established to coordinate policy and provide stability for the market. In addition, the meeting is expected to produce a target of as much as 1.3 billion gallons of biodiesel per year. The Biodiesel Association of India has proposed a B5 mandate, a price reduction from the current $2.54 level, and a 30 percent subsidy on jatropha cultivation.

In Mozambique, President Armando Guebuza said that biofuel development will not dislodge Mozambican farmers from their lands. He said that government policy would require the use of underutilized or empty lands, would avoid using lands used for food production, and that Mozambique will refine its own raw materials.

Research News:

Corn futures at the Chicago Board of Trade have increased to $5 per bushel, prompting expectations of another big spring planting of corn. Last year, farmers planted record acreages of corn and produced a record 13.074 billion bushel corn crop. Despite the record production, reserve corn stocks only increased from 1.3 billion to 1.4 billion bushels, owning to strong ethanol producer demand as well as 2.45 billion bushels in export sales.

Policy and Policymakers:

In Washington, President George Bush delivered the annual State of the Union address, but for the first time since 2004 did not mention ethanol or biodiesel fuel by name. President Bush called for an international clean energy fund, for the inclusion of China and India in a new emissions treaty, and continued investment in renewable fuels.

Consumer and Fleet News:

In Utah, “Fields of Fuel”, Josh Ticknell’s documentary about biodiesel and America’s need for fuel independence received the Audience Award for Best Documentary Film. “May we work together to create a green and sustainable future,” Ticknell said in accepting his award.

In Colorado, Blue Sun will supply its Fusion 20 biodiesel to the 45-truck Corporate Express fleet in Colorado and Kansas. The company will use B20 in trucks built after 2004, and expects to record higher mileage as well as environmental benefits.

Financial News:

The Biofuels Digest Indexâ„¢ (BDI), a basket of public biofuels stocks, rose 2.90 percent yesterday to 122.77 as diversified agribusiness and ethanol stocks all performed strongly at week’s open. For the day, sector giant Archer Daniels Midland (ADM) rose 2.83 percent to $43.30, while all ethanol stocks rose, paced by US BioEnergy (USBE) which closed at $8.07, up 5.63 percent. Among small caps, Xethanol (XNL) rose 9.09 percent to $0.72, while GreenShift (GSHF.OB) tumbled 9.89 percent to $0.0082. Overall, advances led declines by 3 to 1.

GM vice-chairman says only 10 percent of consumers want diesel; car makers must prioritize gas-hybrids and ethanol despite superior diesel fuel economy

In Detroit, the vice chairman of General Motors said that only 1 in 12 consumers want modern diesel engines because they cost $3,000 to $4,000 per vehicle, and that the popularity of diesel engines in Germany is the result of punitive tax policies that skew the market, result in gasoline costing $8 per gallon compared to $4 for diesel fuel.

Bob Lutz, speaking at the Automotive News World Congress, said that natural market share of diesel is more like the 8-10 percent seen in Switzerland. Lutz added that GM is developing a full range of diesel vehicles but that ethanol had to be a priority for the car maker because of the popularity of the internal combustion engine.

GM continues to push hard on promotion of E85 and flex-fuel vehicles as an offset to the imposition of stricter CAFE (corporate average fuel economy) standards. Every flex-fuel car sold contributes an offset to each car maker’s CAFE (corporate average fuel economy) standard, under the new Energy Independence and Security Act (EISA) signed last month.
Earlier this month, the energy and environment director for General Motors told the Reuters Global Agriculture and Biofuel Summit that it aims to help 10,000 US gas stations to add E85 pumps by 2011. General Motors assists stations add E85 by locating grant money for conversion and supporting conversions with direct marketing to GM’s base of flex-fuel vehicle buyers.

Recently, the CEO of General Motors, Rick Wagoner, said that the US needs to increase the number of ethanol stations by a factor of 10-15, from 1400 today to as many as 20,000. He added that the company has been working with companies such as Wal-Mart and Target to add ethanol to their fuel distribution services.

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