Today in Biofuels: Shouting grows for release of 7 million acres from US Conservation program to ease grain price, shortage concerns; Russia to develop 30 ethanol plants

Top Story:

The American Bakers Association joined a chorus of organizations calling for release of seven million acres of land from the US Conservation Reserve Program, which it said could be accomplished “without sacrificing environmental goals.” House Agriculture Chairman Colin Peterson floated the proposal, favored by ethanol producers as well as livestock interests.

However, Secretary of Agriculture Ed Schafer has ruled out early release for 2008 and cautioned against an expectation of release for 2009. “A lot of people say, let’s farm that land [and] put some downward pressure on prices. We’re not so sure about that.” 37 million acres of marginally productive land have been enrolled in the CRP, of which 7 million have been identified as suitable for corn production.

Kansas State University professor Barry Flinchbaugh, told told Agriculture Online “Now is exactly the wrong time, politically, to open up the CRP,” referring to delicate negotiations over the much-delayed Farm Bill. Of 94 million acres of corn planted in 2007, 23 million were used for ethanol, 39 million for feed, and 14 million for export. An additional 12 million acres will be needed for ethanol by 2010 to match mandated increases in corn ethanol blending.

Overall in the US there are 458 million acres of crop production, 66 percent of them planted with corn and soybeans. Cropland accounts for 20 percent of US acreage, while grassland and range accounts for 26 percent and 32 percent is forestland.

Producer News:

In Texas, ConocoPhillips CEO James Mulva said “We want to get into the business development of ethanol. We have a big refining system and we want to integrate more ethanol into that.” He indicated that the company would prefer to make acquisitions in second-generation biofuels, but did not rule out existing technologies or companies.

In Minnesota, LA Anderson and Interstate Realty said they have canceled plans for a 100 Mgy corn ethanol plant planned for Chenoa. The $180 million project proposed for a 550 acre industrial park was derailed by financing difficulties and high feedstock prices.

In Missouri, the state Department of Natural Resources is cracking down on glycerine dumping, which is fouling state waterways. Biodiesel producers have been dumping glycerine in recent months due to low prices for the alcohol, which is costly to purify for sale in the commodity markets. A biodiesel producer was indicted in January for dumping glycerine into Belle Fountain Ditch in the state’s Bootheel region, leading to a wipeout of 25,000 fish and a colony of protected fat pocketbook mussels.

International News:

In Russia, Prime Minister Viktor Zubkov said that the country will develop 30 ethanol plants, and making the remarks at a timber conference he touched off speculation that wood waste would be used as the feedstock. The Prime Minister said they expected to produce 606 Mgy of ethanol.

In England, the national government eliminated more than $1.1 billion in ethanol subsidies, which observers agree will kill E85 in Britain. The subsidy cut was contained in the Treasury’s Red Book, which accompanies the Budget speech, but was not mentioned in the speech itself. British Chancellor of the Exchequer Alistair Darling had said that the government had delivered a “budget for the environment”. The subsidy would be replaced by steep fines for companies that fail to meet their blending obligations under the Renewable Transport Fuel Obligation.

In Vietnam, the state oil company Petrovietnam announced two 56 Mgy cassava ethanol plants. England’s Bronzeoak Group is expected to invest $138 million in one plant, located at an undisclosed location in the center of the country. The second plant, also at an undisclosed location, is expected to be back by Japan’s Itochu.

In the Philippines, Abundant Biofuels reached an agreement with the national government to acquire 1.2 million acres for jatropha cultivation on Mindanao.

Research News:

The Clean Edge report on the market size of the renewables industry was released, and said that biofuels achieved $25.4 billion in revenues in 2007 from sales of 15 billion gallons of fuel. The market is projected to grow to $81.1 billion by 2017. Overall, renewables generated 77.3 billion in 2007 revenues and are projected to grow to $173 billion by 2017.

In the UK, The Carbon Trust has launched The Pyrolysis Challenge, under which the Trust will contribute $10 million in matching funds towards research in producing a pyrolysis-based oil that can be directly integrated into the existing oil supply.

Policy and Policymakers:

In California, the CEO of the largest US oil refiner, Valero, said that “Corn and ethanol production and the resulting high prices will impact the world in a much more acute negative way than greenhouse gas emissions and climate change ever will.” Valero CEOs remarks at the National Petrochemical and Refiners Association meeting seemed to be at odds with ConocoPhilipps declaration that the oil company plans to invest in biofuels.  Klesse criticized US government, the press and environmentalists for making a “serious attack” on the oil industry while excusing issues associated with ethanol.

Consumer and Fleet News:

The Alliance for a Safe Alternative Fuels Environment, an alliance of off-road gasoline-consuming product manufacturers, said that more study needed to be done on off-road products before E20 could be deemed acceptable. The group was responding to a University of Minnesota and Minnesota State study that concluded that E20 usage did not harm late-model vehicles. The Alliance said that tests needed to be performed on products such as ATVs and weed wackers before E20 could be mandated.

Financial News:

The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, fell 0.65 percent Wednesday to close at 121.74, as diversified agribusiness weakened but ethanol stocks recovered slightly.   For the day, Archer Daniels Midland (ADM) fell 0.88 percent to $44.13, while The Andersons (ANDE) dropped 1.95 percent to close at $42.82.  Among ethanol stocks, VeraSun Energy (VSE) gained 4.19 percent to close at $6.96 after announcing better than expected fourth quarter results, and a 25 percent increase in sales in Q1 2008, while Pacific Ethanol jumped 13.70 percent to $5.23. Among small caps, Bio Solutions Manufacturing (BLSM.OB) was up 42.86 percent to $0.02. Declines led advances 4 to 3.