Today in Biofuels: President Bush to announce revised energy strategy, expected to call for emission caps for first time; Aussie consumers reject carbon offsets, ethanol; US corn for export, livestock to increase up to 60 percent by 2022

Top Story:

US President George W. Bush is expected today to call for a change in the US climate change strategy, calling for “realistic” emission reduction targets. The administration is concerned about the Warner-Lieberman bill in the US Senate calling for stringent greenhouse gas emission caps, and a recent court ruling that would requiring the EPA to regulate carbon dioxide emissions. The administration called a spate of court rulings a “regulatory train wreck”. Speculation has increased that the president may endorse mandatory caps on emissions, a move the Administration has resisted in the past.

Producer News:

In Minnesota, Freeborn County Commissioners approved a 55 Mgy, $130 million ethanol project proposed for Glenville. The project is expected to create 40 new jobs and increase the value of locally-produed corn.

In Indiana, the 65 Mgy POET Biorefining corn ethanol plant in Alexandria will officially open tomorrow.

In Kansas, the leading designer of ethanol plants, ICM, announced a layoff of 105 employees, or 16 percent of its workforce, due to the downturn in plant construction activity. The company cites commodity market and financing issues as factors which had slowed construction activity by the company, which until this year had been rapidly expanding.

International News:

In Australia, a survey by insurance group AMMI found that more than half of Australian drivers will not use ethanol in their cars, due to concerns regarding engine damage. State Regional Development Minister Tony Kelly blend a ’scare campaign’ against ethanol, according to Australia’s ABC news service, and said that “Australians need to get on board with the rest of the world and come to accept the use of biofuels.” More than half of Aussies also said they would not buy carbon offsets for vehicle use at any price.

In Indonesia, the National Biofuel Development Committee proposed a cut in the local VAT for biofuels in order to stimulate biofuels production in the face of the rising cost of palm oil. The Committee proposed a graduated tax cut based on the price of palm oil, an approach that has been used with the palm oil export tax. Palm oil exports are taxed at a 15 percent rate if crude palm oil prices are below $1200, but rise to 30 percent if the price for CPO exceeds $1,300.

In Canada, Alberta Energy Minster Mel Knight said that the province would release its new energy strategy in the next three months, but said it would focus on biofuels as a key step in addressing the province’s fast-growing greenhouse gas emissions. He added that the plan would not significantly affect food prices, adding “When you look at all of the alternative energy possibilities and the idea that we need to upgrade and refine and get more out of our petrochemical industry, those are the kinds of opportunities that we want to be sure that we don’t miss,” in comments to the Calgary Herald.

World Opinion:

“Those who say it’s all the fault of biofuels are wrong and those that say that none of the fault belongs to biofuels are wrong,” said the co-director of the Stanford University Center for Environmental Sciences and Policy. “Biofuels are not causing the demand for meat and soybeans for feed in China.”

In Canada’s National Post: “The price of corn has doubled in two years, largely as a result of an American policy to support biofuels…life itself is at risk in poor countries where food accounts for a far larger proportion of the household budget.”

Elsewhere in the National Post: “It is Asia’s export wealth which is now being invested in cities and infrastructure and is the equivalent of a Marshall Plan every two years….India lags but is undertaking the same thing….The two will create ten New York Citys in the next ten years….This is why everything from rice to scrap metal (non-exchange traded metals have tripled in six months worldwide), gold, silver, copper, base metals, potash, coking coal and uranium have jumped and will continue to do so. So ignore dummies who don’t get it and buckle up.

Oxfam theorized that the UK’s Renewable Fuel Transport Obligation “will cost taxpayers 500 million pounds ($1 billion) a year, and may lead to 60 million people being forced from their land to make way for biofuel plantations.”

Research News:

In North Dakota, estimates from the US Geological Survey on the size of the Bakken Formation oil field fell well short of expectations. The USGS projected reserves of  3 billion to 4.3 billion barrels of oil using “current technology”. Some observers has projected recoverable reserves of up to 200 billion barrels, or 10 times the current US proven reserves.

Monsanto has projected that corn yields will increase to 245 bushels per acre by 2022, when the US will produce 15 billion gallons of ethanol from corn. Based on an increase in production to 3.0 gallons per bushel with advances in starch recovery techniques, US demand for corn acreage should be expected to rise to 23 percent of overall corn acreage (based on 2008 plantings of 86 million acres), leaving 16 billion bushels of corn for livestock and export markets.

Policy and Policymakers:

In Washington, US Secretary of State Condoleezza Rice reaffirmed that the US view is that rising energy costs are the cause of food inflation, while Secretary of Agriculture Ed Schafer said that the US would make more wheat available than President Bush’s initial $200 million pledge if needed to alleviate world hunger.

Consumer and Fleet News:

In Nebraska, an Ethanol Promotion and Information Council representative confirmed that oil companies are blending more ethanol with high grades of gasoline to offset their costs, but said that ethanol-blended regular unleaded was available, and denied that there was a conspiracy by oil marketers to prevent consumers from using ethanol by making it available only in premium fuels.

Financial News:

The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, leapt 2.66 percent to close at 122.88 as agribusiness and small cap strength offset mixed results in the ethanol sector. For the day, Archer Daniels Midland (ADM) gained 2.82 percent to $42.95, while VeraSun Energy (VSE) recovered 2.11 percent to $7.25 to lead ethanol stocks, offsetting a 6.15 percent drop by Aventine Renewable Energy (AVR).   Among small caps, Green Energy Resources (GRGR.PK) rose 23.33 percent to $0.148.    Overall, advances led declines 2 to 1 for the day.