Today in Biofuels: Virgin makes historic biodiesel test flight; Aventine faces cash crunch in financing boo-boo; NY Times says Energy Act safeguards “look very smart”
Top Story:
In England, Virgin Atlantic Airways completed a successful test flight of a biodiesel-powered 747 aircraft, traveling from London to Amsterdam. One of the four engines ran on B20, supplied by Imperium Renewables, and made from babassu and coconut oil. Virgin had previously announced that it would use only sustainably produced biofuels in its aircraft. Boeing, which partnered with General Electric and Virgin in the test, will make another biofuels test in partnership with Air New Zealand later this year.
Producer News:
Aventine Renewable Energy said that it may delay construction on two plants because it cannot find buyers for $211 million in auction-rate securities that it had held as a near-cash investment, and had attempted to sell in December to fund completion of construction. With the news, and the rise of the March corn contract to $5.245, the company’s stock fell 18 percent in Friday trading.
In Ohio, Rex Stores has purchased a $36.5 million convertible promissory note in Levelland/Hockley County Ethanol. The note can be converted to equity according to SEC documents filed last week.
In Iowa, Absolute Energy commenced production at its $150 million, 110 Mgy corn ethanol plant near St. Asgar. The company will produce up to 350,000 tons of distillers grains annually. The plant, designed by ICM and constructed by Fagen, was ready five weeks ahead of the construction schedule.
International News:
In India, Bharat Petroleum, Hindustan Petroleum and Indian Oil have agreed to acquire up to 35 per cent of Brazilian ethanol producers Louis Dreyfus Commodities Bioenergia and Infinity, and 50 percent of Rezek. The companies will invest $600 million in new land acquisition and plant expansion funds. Initially, the companies had hoped to export ethanol to India, but scrapped plans after concerns were raised by Indian sugar producers.
In Cuba, analysts say that Cuban ethanol production will be limited to production from sugar by-product that does not affect the food sugar output. The Reuters report, quoting local sources, said it would be unthinkable for Raul Castro to increase ethanol production from food sugar, given Fidel Castro’s characterization of the practice as a “crime against humanity”. But it was not clear how Cuba would finance the conversion of its ethanol capacity to making cellulosic ethanol from bagasse.
In Australia, biofuels supporters have called on the Federal Government to set national biofuel mandates in light of a pessimistic report on greenhouse gas emissions submitted by economist Ross Garnaut. The report said that Australia’s emission targets needed to be substantially increased to as much as 90 percent below 2000 levels by 2050.
Research News:
In New York, insect professor David Pimentel released a new call for a rejection of biofuels. The co-author of a controversial report on energy efficiency with oil industry consultant Ted Patzek, Pimentel wrote a column distributed by Blue Ridge Press, saying that “Some investigators conveniently omit several of these energy inputs required in corn production and processing” in refuting Pimentel’s analysis of corn ethanol’s energy efficiency, and said that subsidies for corn ethanol, pegged at $6 billion in 2006 by the International Institute for Sustainable Development, by are 60 times higher than for a gallon of gasoline. Pimentel said that “The use of corn and other biofuels to solve our energy problem is an ethically, economically, and environmentally unworkable sham.”
Policy and Policymakers:
The New York Times ran an editorial reviewing the 2007 Energy Independence and Security Act in light of recent articles in Science magazine regarding greenhouse gas emissions and biofuels. The Times said “The final bill correctly included environmental safeguards. The most important is a requirement that ethanol, regardless of its source, achieve at least a 20 percent reduction in greenhouse gases compared with conventional gasoline….The calculations would have to account for both direct emissions — those associated with growing, harvesting and refining corn or other feedstocks — and indirect emissions, including those caused by changes in land use as acres devoted to producing food were converted to producing fuel. These safeguards now look very smart.”
Consumer and Fleet News:
In California, the Oscars are among several high-profile broadcasts and productions converting to biodiesel. Line 204 Rentals, which supplies 75 percent of all generators for commercial shoots, has established a subsidiary, Green Power Generators, to supply biodiesel-powered generators to the industry. The EMA (Environmental Media Association) awards, E! Entertainment & EMA’s Golden Globes Party, the Home Depot stop of the Warped Tour, and Clear Channel’s Christmas Party have been among the events selecting biodiesel generators. The Oscars, which did not partner with GPG, used biodiesel blends for production, press support and the red carpet arrival area.
In Missouri, consumer reaction to the introduction of mandated E10 suggests that flex-fuel GM cars are not sufficiently optimized for ethanol to attract consumer support. Consumers told the Columbia Tribune that they experienced worse mileage with E10. Ethanol has less energy density than conventional gasoline, but adds oxygen and improves combustion. Studies by the American Coalition for Ethanol have show that cars can achieve comparable fuel mileage using E30, indicating that added combustion will offset loss of energy density in optimized vehicles. The complains by consumers suggest that GM’s engines are not making full use of the added combustion potential of E10 to offset the loss of energy.
Financial News:
The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, fell 2.05 percent Friday to close at 124.51 as diversified agribusiness slipped and ethanol stocks dropped on concerns over Aventine Renewable Energy (AVR). For the day, Archer Daniels Midland (ADM) fell 1.85 percent to close at $44.48. Among ethanol stocks, Aventine Renewable Energy (AVR) plunged 18.35 percent to $6.94 on reaction to a weak cash position and poor ethanol outlook. Among small caps, MGP Ingredients (MGPI), fell 5.57 percent to close at $7.29.  For the day, declines led advances 3 to 1.
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