Today in Biofuels: US Department of Energy awards $86 million in cellulosic ethanol grants; new plant in South Dakota, Illinois, Germany and Italy

Top Story:

In Washington, the US Department of Energy awarded $86 million to three cellulosic ethanol projects in Maine, Tennessee and Kentucky. The four-year grants will produce an average of 2.5 Mgy of cellulosic ethanol. Grant recipients included:
$30 million to RSE Pulp & Chemical; $26 million to Mascoma; and $30 million to Ecofin.

Producer News:

In South Dakota, the 100 Mgy Glacial Lakes Energy corn ethanol plant near Mina will commence production this week; the plant was originally proposed for Aberdeen but moved to Mina after a lawsuit was filed by local landowners.

In Illinois, the 100 Mgy Marquis Energy corn ethanol plant will open this week in Hennepin, pending approval of the plant’s water discharge plan by the Illinois Environmental Protection Agency permit to discharge cooling water from the plant into the Illinois River. The plant has been granted a temporary permit to discharge the water while the EPA’s ruling is pending. Ethanol produced at the plant is destined for Florida and Louisiana. http://www.pjstar.com/stories/042008/REG_BGCOP51F.053.php

The CEOs of Poet, Ceres, Novozymes and Aventine Renewable Energy will be headlining separate conferences this month in Chicago and New York. Poet CEO Jeff Broin, Novozymes CEO Steen Riisgaard and Ceres CEO of Richard Hamilton will speak about the biorefinery of the future at the BIO World Congress on April 29 in Chicago. Aventine CEO Ron Miller will be the keynote speaker at the “Ethanol: The 2008 Market Dynamics” Conference, April 22 in New York City.

International News:

In Italy, Oxem Group has commenced construction on a 60 Mgy canola-based biodiesel plant near Pavia, in Lombardy. Oxem will invest $100 million in the project that will utilize feedstock from France, Germany, Romania and Hungary. Last year, only 45,000 hectares of Italian crops produce d feedstock for biodiesel, insufficient for the Oxem plant’s needs.

In Germany, the regional council of Dresden has authorized a 7 Mgy biodiesel plant in Zeissig. The $6.1 million project will commence production in May, from an undisclosed feedstock, and will provide biodiesel for Lusatia, in Saxony.

In England, Ineos Enterprises has agreed with Viridas to buy jatropha oil from Viridas projects in Brazil. Viridas is currently acquiring 250,000 hectares of idle land in Brazil for the production of up to 500,000 tonnes of jatropha oil.

In Australia, Australian Renewable Fuels has signed an agreement to sell 10 million gallons of biodiesel from its Picton plant over a 5-year period to an undisclosed Western Australian resource company. ARF will produce the biodiesel on a cost plus basis, including tank infrastructure that will be completed over the next four months. The client will retain all carbon trading rights.

World Opinion:

The president of the American Farm Bureau Federation writes in the Hartford Courant: “The popular misconception that increased usage of corn for ethanol production is the only factor driving higher food prices is just that — a misconception….Global demand for U.S. agricultural products has increased significantly over the past several years….Even though corn prices for the current marketing year are up $1 per bushel from last, corn exports are projected to increase by 200 million bushels. Rising exports in the face of rising prices is an indicator of very strong demand.

US Energy Secretary Samuel Bodman told the Wall Street Journal on Friday that corn ethanol contributed to higher food prices. “As we pursue diversity in our overall energy mix, we must also pursue diversity in our biofuels,” Mr. Bodman said at a conference in Alexandria, Va. “This means moving away gradually from ethanol produced from foodstocks like corn…The reason that cellulosic fuels like ethanol are not on the market in large volumes is not because we don’t know how to make it in commercial quantities. The production process at present is too complex and too costly, but I am confident that we can find the way forward.”

Research News:

In India, researchers at Praj Industries announced the discovery of “high-energy-content ethanol” blend that matches the energy levels of petrol. “If we consider petrol delivers 100 per cent energy, then general ethanol delivers only 63 per cent of energy efficiency. The newly discovered blend of ethanol bridges this gap its pretol and diesel blend provide almost 99 per cent energy,” Praj CEO Shashank Inamdar told businessstandard.com. The company also announced progress in cellulosic ethanol research.

Policy and Policymakers:

Agricultural experts warn that US corn farmers are exposed to a potential “crash” owing to ethanol subsidies. “U.S. energy policy has been friendly to ethanol in the last couple of decades. The question is, will it continue to be. It’s running up food prices and that’s causing pressure on Congress to limit mandates for ethanol usage,” Neil Harl, an emeritus professor of economics at Iowa State University, told the Boston Herald. The resulting rise in corn prices has increased land values, and prompted large-scale borrowing for new land acquisition by famers. A similar increase in land prices in the 1970s, prompted by food price increases and tight supplies, led to a farm crisis in the 1980s when US agricultural policies changed. More than 300 agricultural banks failed in the 19080s when land prices dropped dramatically.

Consumer and Fleet News:

In Ohio, the Toledo Area Regional Transit Authority converted 10 buses to B20 biodiesel to coincide with Earth Day festivities. 25 percent of TARTA’s fleet now runs on biodiesel blends.

Financial News:

The Biofuels Digest Indexâ„¢ (BDI), a basket of public biofuels stocks, rose 1.81 percent to close at 128.81, locking in a 7.4 percent gain for the week. On the day, Archer Daniels Midland (ADM) gained 2.04 percent to $46.47, while Pacific Ethanol (PEIX) recovered 0.55 percent to $3.63. Among small caps, Green Shift (GERS.OB) fell 9.09 percent to $0.10, while Xethanol (XNL) gained 5.71 percent to $0.37. Overall, declines led advances 3 to 2 for the day.