Today in Biofuels: Continental Airlines to become first US carrier to test biofuels; Coskata raises $19.5 million; EU reconsidering biofuels targets as food-vs-fuel concerns bite

Top Story:

Continental Airlines will become the first US airliner to conduct a biofuels test flight. The company announced that, in partnership with GE and Boeing, it would schedule a test biofuels flight in 2008. The companies said that the test would include a different set of feedstocks than those tested in the historic Virgin Atlantic flight, which included babassu and coconut oil. The companies would test up to 50 percent biodiesel, compared to the B20 blend used in the Virgin floight. Air New Zealand will also be testing feedstocks and blends in a flight scheduled for later this year.

Producer News:

In Illinois, Coskata has raised $19.5 million in a second round of funding that will be used towards construction costs of its first 100 Mgy cellulosic ethanol plant. The company projects that its waste-to-ethanol process can produce fuel at $1 per gallon. General Motors and Khosla Ventures were among the investors in the first round of funding.  Coskata, which uses thermochemical and biological processes, says that it can produce 100 gallons of fuel per ton of waste.

In Pennsylvania, BioEnergy commenced construction on its two plant complex, a 100 Mgy corn ethanol facility and a pilot-scale cellulosic ethanol plant that will both commence production in 2010. The project received $17.4 million in assistance from the Pennsylvania state government, and Pennsylvania Governor Ed Rendell was on hand for the groundbreaking ceremony. “America’s future lies in cellulosic,” he said in commencement remarks.

In New Jersey, Raven Biofuels International and Pure Energy will merge, with Pure Energy shareholders receiving a controlling stake in Raven plus $3 million in cash. The merged company will own more than 30 patents relating to cellulosic ethanol production, and will focus on low-cost cellulosic ethanol.

International News:

In Brazil, state oil giant Petrobras and Japanese bank Mitsui will form a joint venture, to produce ethanol for export to Japan and electricity for the domestic Brazilian market. The company will be based in Brazil, but capacity was not disclosed with the announcement. Each partner will own 50 percent of the venture, which will produce fuel from sugar cane and use the bagasse to produce electricity.

In Canada, the city of Edmonton has proposed a gasification plant for the Clover Bar landfill that will convert trash into ethanol. The facility is expected to convert 100,000 tonnes of waste material into methanol, and to develop a process to convert methanol into ethanol for fuel markets. The proposed plant would open in 2010.

In New Zealand, seven NZ-based companies have formed the Biofuel Manufacturers Association to oppose entry of US biodiesel into the market. The manufacturers said that the introduction of subsidized US biodiesel into Europe caused massive shutdowns and capacity reductions among European biodiesel manufacturers.

Research News:

In Portugal, the international oil company Galp established a JV with the Portuguese Engineering, Technology and Innovation Institute. The combine will research the production of algae from combustion gases at the Galp refinery at Sines, on the Portuguese coast. The algae would be refined to produce oil for biodiesel.

Policy and Policymakers:

The European Union said that it is considering a change in its biofuels targets following protests from academics and environmental groups over the impact of biofuels on food prices. Prime Minister Janez Jansa of Slovenia, who holds the EU presidency, told reporters at an EU conference that “Quite certainly there will be more analysis,” and declined to say that revisions had been ruled out.

Consumer and Fleet News:

In Nebraska, the rise in oil prices has sparked E10 sales, which now account for 77 percent of overall state gasoline sales in December. The price differential between unleaded gas and E10, now at between 7 and 10 cents per gallon, is credited for the shift. E10 results in a loss of 1-3 percent in mileage, or an added cost of 3 to 9 cents to cover lost miles with added gas, putting E10 at above parity with unleaded gas in cost per mile.

Financial News:

The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, gained 0.30 percent yesterday to close at 122.11 as diversified agribusiness recovered.   For the day, The Andersons (ANDE) jumped 3.18 percent to close at $44.18, while among ethanol stocks Verasun Energy (VSE) dropped 4.45 percent to a 52-week low of $6.65 despite a stronger than expected earnings report. Aventine Renewable Energy gained 1.33 percent to $5.35.  Among small caps, Xethanol (XNL) gained 22.56 percent to close at $0.44.  Declines and advances were even for the day.