Submitted by Biofuels Digest Blog

Top Story:

“Vinod you are still totally clueless” and “there will be pie in the sky by-and-by” were among comments hurled at billionaire investor Vinod Khosla in response to a second three-part series of articles posted at Grist. The second series focused on Biomass, including regulatory standards, “better agronomy for energy crops”, and “cellulosic ethanol yields”. Among dozens of responses, writers accused Khosla of turning “self delusion” on carbon cycles into a “mass delusion”, adding comments such as “cellulosic ethanol is such BS and that’s not just for the fertilizer.’

Producer News:

In California, Green Star Products is expected to announce today that it will license technology from Biotech Research for a new, low-cost method for extracting algae oil and cellulose sugar from microscopic algae biomass. The process replaces the mechanical dry-and-press process which has bedeviled algae oil economics, and continuously strips oil from algae as well as reducing biomass into carbon chain carbohydrates, and protetins. Green Star has been operating a 11,000 gallon demonstration-scale production facility in Montana since last April. The company recently completed a winter production demonstration in temperatures as low as -18 F, which slowed but did not stop outdoor algae production.

In Minnesota, a proposed corn ethanol plant, in Watonwan County in the south-central part of the state, is on hold pending improvements in economic conditions. Watonwan Energy has pnned its development hopes on a reduction in corn prices, which topped $5 a barrel this week for the March contract at the Chicago Board of Trade.

In Colorado, LiquidMaize is expecting to receive its air permit for the $24 million corn ethanol project slated to be built eight miles north of Pueblo. LiquidMaize has not yet applied for its water permit for the project, which received its building permits in November 2006.

International News:

In India, the Bureau of Indian Standards (BIS) has endorsed the increase of the ethanol blending mandate from 5 percent to 10 percent in October.

In Thailand, the Agriculture and Cooperatives Ministry is promoting sugarcane production for ethanol in the cadmium-contaminated Mae Sot district of Tak, where food crops have been banned for health safety reasons. The Mae Sot Clean Energy plant, a joint venture between Padaeng Industry, Thai Oil and Petrogreen, will be completed in 2008 to produce sugarcane ethanol in the district.

In Finland, UPM-Kymmene and waste management company Lassila & Tikanoja announced that, in conjunction with the Technical Research Centre of Finland (VTT), they had developed an ethanol and energy generation concept using paper, cardboard, wood and plastic, and would begin testing at VTT’s Rajamäki unit.

In Thailand, Solvay will invest $184 million in a epichlorohydrin facility to produce feedstocks for epoxy resins. The plant will use Solvay’s Epicerol process, based on the transformation of glycerine, a biodiesel by-product. The plant is expected to be operation in 2009.

Research News:

The U.S. Department of Energy will pull the plug on an $1.8 billion project to build a power plant that stores carbon emissions underground. The FutureGen project, which had aimed to build its first facility in Mattoon, Illinois, has been beset with delays and cost overruns.

Gasoline prices are expected to spike higher than $3.50 per gallon as blenders move from winter to summer gas formulations amidst a shortage of the alkylate additive which has replaced ethanol as the summer oxygenate additive of choice for many blenders. Prices in selected east coast markets could approach $4 per gallon as blenders scramble for alkylate, which replaces MTBE as a an additive to reduce tailpipe air pollution from unburned oxygen. Ethanol is also used to boost oxygen, but has a high evaporation rate.

Policy and Policymakers:

In Washington, midwestern lawmakers have vehemently opposed moves by the Bush administration to reduce or eliminate the tariff on Brazilian ethanol imports. Sen. Chuck Grassley, the ranking Republican on the Senate Finance Committee, said on he opposed the Bush administration move, while Sern. Ben Nelson of Nebraska said the protection for US ethanol would be eliminated “over my dead body”.

Consumer and Fleet News:

In Michigan, Kroger Stores debuted E85 at its Michigan locations, with an 85-cent-per-gallon E85 promotion that prompted lines of up to 20 minutes for low-cost gas at the Burton store.

Financial News:

The Biofuels Digest Index™ (BDI) remained flat yesterday, rising 0.02 percent to 121.93 as slight increases at Archer Daniels Midland (ADM) and a bullish roar on Pacific Ethanol (PEIX) offset a biofuels investor retreat. For the day, declines led advances 5 to 2, with Archer Daniels Midland (ADM) up 0.12 percent to $42.99, and Pacific Ethanol (PEIX) leaping 11.49 percent to $6.21 on news that it had received a $24 million grant from the Department of Energy for its cellulosic ethanol developments. Among small caps, Green Plains Renewable Energy GPRE) was up 5.74 percent to $12.16, but biofuels stocks and the broader market failed to rally on the half-point interest rate cut by the Federal Reserve.

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Submitted by DTN Ethanol Blog

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) — While U.S. Energy Secretary Sam Bodman said Tuesday that the U.S. ethanol industry was close to standing on its own and may no longer need import tariffs, one industry spokesman said the tariffs are still needed to keep the industry competitive with the likes of Brazil.

A Reuters story Tuesday reported that the president may propose changing the 54-cent-a-gallon tariff on U.S. ethanol imports as part of the White House’s 2009 budget.

Matt Hartwig, spokesman for the Renewable Fuels Association, the ethanol industry’s largest representative, said those people who want to remove the tariff are missing the point.

“I’m not sure what Secretary Bodman was talking about,” Hartwig said. “Anything having to do with the tariff must be addressed by Congress. The administration has absolutely no say in the matter.”

Brian Jennings, executive vice president of the American Coalition for Ethanol, said that eliminating the tariff could only make matters worse for a slumping U.S. economy.

“I don’t believe there is any real support in Congress to eliminate or reduce the tariff,” he said. “With the U.S. economy feeling the effects of a slowdown, eliminating the tariff would only serve to add to the jobless numbers here at a time when we can least afford it.”

Groups like the RFA and ACE are opposed to removing the tariff for fear that U.S. ethanol producers would not be able to compete with lower-cost producers in Brazil.

On average, Brazilian ethanol producers who use sugarcane as a feedstock pay 30 to 40 percent less to make ethanol than U.S. producers who use corn.

Hartwig said RFA is opposed to removing the tariff for two basic reasons.

First, he said the RFA doesn’t believe that “American taxpayers should be forced to subsidize” foreign ethanol industries, particularly in countries like Brazil which have provided a wide range of government supports for more than 30 years.

“Brazilian ethanol, for example, qualifies for the same (51-cent blender’s tax credit) as ethanol from Nebraska,” he said. “Congress put the tariff in place simply to reclaim that tax incentive. It is really that simple.”

Congress recently passed the 2007 Energy Act that mandates the use of 36 billion gallons of ethanol and other biofuels by 2022, including 21 billion gallons from cellulosic ethanol.

Some think that removing the import tariff would make it easier for ethanol blenders to meet the new mandate by providing ethanol volumes above and beyond what U.S. companies produce. The tariff on ethanol imports is scheduled to expire at the end of this year, while the blender’s credit is good through 2010. Some federal lawmakers have proposed cutting the 51-cent credit to 46 cents.

Hartwig said that by removing the tariff “we would be sending a signal to the investment community that we are not serious about a domestic industry that can realize its full potential. That includes large-scale production of ethanol from cellulosic feedstocks.”

Without the tariff, he said, investors might choose to spend money on projects in Brazil where “labor standards and deforestation are serious problems.”

Hartwig said it all comes down to how committed the U.S. is to developing a domestic renewable fuels industry. “And if we are not,” he said, “then this administration and members of Congress who support eliminating the tariff must explain to their constituents why they feel it’s necessary to send hundreds of millions of taxpayer dollars to the sugarcane fields of Brazil.”

Hartwig said the tariff has nothing to do with the U.S. ethanol industry being able to stand on its own.

“It’s a matter of a level playing field,” he said. “And when you are both competing with and selling into the nation’s well-heeled and established petroleum industry, it’s hardly a level playing field. The tariff issue has nothing to do with domestic ethanol production or its viability. It has to do with determining how we use U.S. taxpayer dollars.”

Hartwig said RFA — which is the industry representative in Congress for hundreds of U.S. ethanol producers — will be working with Congress and making the case as to why the tariff should remain.

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Submitted by Biofuels Digest Blog

Top Story:

In Washington, U.S. Energy Secretary Sam Bodman, commenting on the future of the ethanol tariff, said that the Bush Administration “will start to deal with that question” in the 2009 US Budget due in Congress on Monday. The 54-cent tariff, which primarily applies to Brazilian ethanol, tariff is due to expire at the end of this year. Critics say that it should not be renewed in order to reduce ethanol prices and bring more supply to East Coast markets. Bodman did not comment on the 51-cent per gallon ethanol subsidy, which will not expire until 2010.

Producer News:

In Washington, the US Energy Department awarded $114 million in grants to cellulosic ethanol projects in Missouri, Oregon, Colorado and Wisconsin. The demonstration projects were proposed by ICM, for a plant in in St. Joseph, Mo.; Lignol Innovations, for a plant in Commerce City, Colo; Pacific Ethanol, for a plant in Boardman, Ore.; and Stora Enso North America for a plant in Wisconsin Rapids. Pacific Ethanol received $24.32 million, while the others received $30 million. Pacific Ethanol’s 2.7 Mgy plant will produce cellulosic ethanol from a process developed by BioGasol, which partnered with Pacific Ethanol and the Joint BioEnergy Institute on the project. JBI will provide enzyme technologies.

In Iowa, two coal-fired electricity plants, in Marshalltown and near Waterloo, have been proposed in order to provide electricity for the growing collection of Iowa ethanol plants. Critics say that ethanol’s need for coal-powered electricity makes the case that it is not a green fuel. Alliant Energy, co-owner of the Marshalltown project, said that the needs of the ethanol plants can only be solved at this point in time by nuclear, natural gas or coal, and that natural gas is not economical while nuclear has been taken off the table due to environmental concerns. The proposed plants would cost $1 billion each.

International News:

In India, the Biodiesel Association of India (BDAI) has called on the central government to place biodiesel in the “declared goods” category so that it will receive a uniform rate of taxation throughout the country. The BDAI also called on the government to encourage the use of B20 blends and exempt biodiesel used in those blends from taxation. Meanwhile, the president of the BDAI, Sandeep Chaturvedi, said that the industry faces a feedstock shortage and is not utilizing full production capacity.

In Australia, Willmott Forests won a contract from the New South Wales government to expand a $60 million softwood processing plant at Bombala. Plant owners have indicated that they plant to produce ethanol, or supply waste timber biomass for ethanol production, as part of the vision for expansion project. Willmott Forests has a pilot ethanol project in place on the northern New South Wales coast.

In Hungary, the 150,000 tonne Rossi Biofuels biodiesel plant has commenced operations in Komárom. Austrian businessman Rudi Roth owns 75 percent of the $60 million project and joint venture partner MOL owns the remaining 25 percent. MOL will use 80 percent of the plant’s biodiesel at its refineries.

In Malaysia, the Sabah Land Development Board (SLDB) demonstrated jatropha biodiesel in a Toyota Land Cruiser trial conducted at the Sabah Development Corridor Expo. The SLDB has proposed expansion of jatropha capacity in Malaysia as a poverty-reduction program, saying that farmers could earn RM 1500 per month from farming 6-acre plots of jatropha curcus, from seedlings provided by Borneo Alam Ria Biomatrix. The SLDB general manager said that Nihon Biotech, Kelana Stabil and TKM Resources have indicated that they would invest up to RM 300 million in jatropha cultivation and would purchase the fuel for export to the US, Japan and South Korea.

In Sudan, the government expects to adopt an alternative energy bill before August. To brief legislators, a parliamentary committee on industry visited the Kenana sugar facility in Khartoum. Kenan, Giad and the ministry of Energy have proposed a Sudanese energy project with an undisclosed location and capacity.

Research News:

The US Energy Information Administration said that U.S. ethanol supplies increased 14 percent in November to 11,194,000 barrels, as the result of a 45 percent increase in ethanol production capacity over the past 12 months.

Tyson Foods blamed ethanol for a drop in profits of 10 cents a share, or $23 million, in its first fiscal quarter, and the company said that uncertainty over grain prices made it impossible for the company to issue earnings guidance to analysts. Tyson said that its costs rose 3.9 percent in the first quarter compared to the same period last year, while sales increased 3.2 percent. Ethanol was priced at $2.202 yesterday at the Chicago Board of Trade, while corn closed at $5.02 per bushel for the March contract.

Policy and Policymakers:

In France, the central government is considering a reversal of its biofuels policy because of protests from environmental and food-related groups. The government is reported to have asked the French energy agency, ADEME, to review French policy in light of protests and advances in second-generation biofuels. France had previously set a policy that 7 percent of all fuels must come from renewable sources by 2010, and 10 percent by 2015 — ahead of the requirements of new EU laws.

Consumer and Fleet News:

The Corvette Racing team will convert to E85 ethanol for the 2008 American Le Mans season, using cellulosic ethanol produced by KL Process Design Group from wood waste. The fuel will debut at the Mobil 1 Twelve Hours of Sebring in March.

Financial News:

The Biofuels Digest Index™ (BDI), a basket of publicly traded biofuel stocks, fell 0.71 percent yesterday to 121.90 in mixed trading. For the day, The Andersons (ANDE) led diversified agribusiness, up 0.61 percent to $46.02, while Archer Daniels Midland (ADM) fell 0.83 percent t $42.94. Most ethanol stocks rose, paced by VeraSun Energy (VSE), which rose 1.76 percent to close at $10.40. Among small caps, Green Energy Resources (GRGR.PK) rose 11.54 percent to $0.145 while Texcom (TEXC.PK) was off 11.11 percent to $0.08. Overall, declines led advances 5 to 4.

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Submitted by Biofuels Digest Blog

Top Story:

In Detroit, the vice chairman of General Motors said that only 1 in 12 consumers want modern diesel engines because they cost $3,000 to $4,000 per vehicle, and that the popularity of diesel engines in Germany is the result of punitive tax policies that skew the market, result in gasoline costing $8 per gallon compared to $4 for diesel fuel. Bob Lutz, speaking at the Automotive News World Congress, said that natural market share of diesel is more like the 8-10 percent seen in Switzerland. Lutz added that GM is developing a full range of diesel vehicles but that ethanol had to be a priority for the car maker because of the popularity of the internal combustion engine.

Producer News:

In Iowa, the city of Des Moines has given Vision Fuels Des Moines an extension until June 1st to provide a financing commitment for their proposed $210 million corn ethanol plant, situated on 164 acres of city-owned land. The company has provided nearly $1 million in non-refundable deposits for the natural gas-powered plant that was first proposed in 2006.

In Wyoming, the KL Process Design cellulosic ethanol plant in Upton, near the Black Hills National Forest, will double its production to 2.5 Mgy of ethanol produced from waste wood chips. The company commenced production last March with an initial capacity of 1.5 Mgy, using waste wood from the forest floor as well as pine tress killed by insect infestations.

In Maryland, Chesapeake Biodiesel has proposed a 30 Mgy soybean oil biodiesel plant near Hagerstown, which will also produce approximately 100 million pounds of soybean meal. The company is investigating three potential sites, with a goal of opening by fall 2009.

International News:

In Brazil, the president of the sugar producers industry association, UNICA, said that bagasse could supply up 11.5 terawatts, or up to 15 percent of Brazil’s electricity by 2015. Bagasse is the waste biomass left over from sugar extraction. Today, the sugar industry supplies 1.6 terawatts, or about 2 percent of the country’s electricity needs. Marcos Jank said that burning more bagasse to generate electricity would complement the country’s hydroelectric projects because sugar cane harvests occur during the dry season, when hydro plants produce less power owing to reduced water levels.

In China, the country’s largest state oil company, Sinopec, said it will invest $5 billion in biofuel plants and crop development in Indonesia. The company will invest in jatropha and palm plantations and biodiesel plants in the country’s Papua and East Kalimantan provinces. The project is slated to begin later this year.

In India, Agriculture Minister Sharad Pawar will convene a Group of Ministers meeting aimed at making a decision on India’s biodiesel policy. Observers expect that a Biodiesel Board will be established to coordinate policy and provide stability for the market. In addition, the meeting is expected to produce a target of as much as 1.3 billion gallons of biodiesel per year. The Biodiesel Association of India has proposed a B5 mandate, a price reduction from the current $2.54 level, and a 30 percent subsidy on jatropha cultivation.

In Mozambique, President Armando Guebuza said that biofuel development will not dislodge Mozambican farmers from their lands. He said that government policy would require the use of underutilized or empty lands, would avoid using lands used for food production, and that Mozambique will refine its own raw materials.

Research News:

Corn futures at the Chicago Board of Trade have increased to $5 per bushel, prompting expectations of another big spring planting of corn. Last year, farmers planted record acreages of corn and produced a record 13.074 billion bushel corn crop. Despite the record production, reserve corn stocks only increased from 1.3 billion to 1.4 billion bushels, owning to strong ethanol producer demand as well as 2.45 billion bushels in export sales.

Policy and Policymakers:

In Washington, President George Bush delivered the annual State of the Union address, but for the first time since 2004 did not mention ethanol or biodiesel fuel by name. President Bush called for an international clean energy fund, for the inclusion of China and India in a new emissions treaty, and continued investment in renewable fuels.

Consumer and Fleet News:

In Utah, “Fields of Fuel”, Josh Ticknell’s documentary about biodiesel and America’s need for fuel independence received the Audience Award for Best Documentary Film. “May we work together to create a green and sustainable future,” Ticknell said in accepting his award.

In Colorado, Blue Sun will supply its Fusion 20 biodiesel to the 45-truck Corporate Express fleet in Colorado and Kansas. The company will use B20 in trucks built after 2004, and expects to record higher mileage as well as environmental benefits.

Financial News:

The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, rose 2.90 percent yesterday to 122.77 as diversified agribusiness and ethanol stocks all performed strongly at week’s open. For the day, sector giant Archer Daniels Midland (ADM) rose 2.83 percent to $43.30, while all ethanol stocks rose, paced by US BioEnergy (USBE) which closed at $8.07, up 5.63 percent. Among small caps, Xethanol (XNL) rose 9.09 percent to $0.72, while GreenShift (GSHF.OB) tumbled 9.89 percent to $0.0082. Overall, advances led declines by 3 to 1.

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Submitted by Biofuels Digest Blog

In Minnesota, the state Environmental Quality Board will examine water usage by ethanol plants after a plant in Granite falls, which had been allocated sufficient groundwater for its proposed needs, began pumping water from the Minnesota River. With 16 new ethanol plants in the proposal or construction stage, the state is facing a doubling of water demand from ethanol producers. The industry is consuming 2 billion gallons of Minnesota groundwater per year. The Board plans to look at whether ethanol producers have understated their needs, or ground water reserves are less than projected.

A report from the National Research Council suggests that ethanol production could affect water levels in the Ogalalla aquifer, which runs from west Texas to South Dakota and Wyoming. A report in Reuters quoted Jerald Schnoor, a University of Iowa professor of environmental engineering, who chaired the committee that produced the report. Schnoor said that extensive parts of the aquifer are showing drops in the water table of more than 100 feet.

US ethanol production is centered, however, on the much deeper Prairie Du Chien-Jordan and other aquifers, which supply Iowa, Illinois, Wisconsin, Minnesota were not under threat, according to the report.

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Submitted by DTN Ethanol Blog

WARWICK, N.Y. (DTN) — Corporate Express US Inc. said in a news release that it is now fueling the majority of its 45 delivery truck fleets in Colorado and Kansas, with Blue Sun’s Fusion B20 biodiesel — a blend of 20-percent virgin oilseed-based biodiesel and 80-percent petroleum diesel.

Blue Sun’s Fusion B20 biodiesel can be used in conventional compression-ignition engines that were designed to be operated on diesel fuel, making it a direct substitute for traditional diesel fuel.

Blue Sun is a vertically integrated manufacturer and marketer of premium agricultural and renewable fuels products.

Corporate Express provides customers with a single source of business products and services, so that they can focus their resources, energy and time on their core business.

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Submitted by DTN Ethanol Blog

WARWICK, N.Y. (DTN) — Biofuels technology and equipment company Arisdyne Systems said in a news release that it recently installed a new biodiesel reactor at Middletown Biofuels, a biodiesel production facility located in Middletown, Pa.

The company said that the biodiesel reactor offers the production plant enhanced output predictability, both in quality and in quantity. The facility has now shifted to a continuous flow system, a more efficient means of production than its previous batch process. Actual production is closer to 3 million gallons of biodiesel fuel per year compared to its design capacity of 2 million gallons per year.

A second Arisdyne reactor system will be installed at the Middletown facility during the current quarter.

Arisdyne Systems specializes in the design, development, and implementation of fully integrated continuous flow cavitation systems for biofuel production.

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Submitted by DTN Ethanol Blog

CRANBURY, N.J. (DTN) — Dole Fresh Vegetables Company, a division of Dole Food Company, Inc., said in a news release that it has converted all of its harvesting equipment in Salinas, Calif., and in Yuma, Ariz., to B20 — a 20-percent biodiesel to 80-percent diesel fuel blend.

Biodiesel is a domestic renewable fuel for diesel engines derived from natural oils.

According to Environmental Protection Agency, biodiesel is the first and only alternative fuel to have a complete evaluation of emission results and potential health effects submitted to the U.S. EPA under the Clean Air Act Section 211 (b). Dole notes that the EPA has determined that B20 has 20 percent less unburned hydrocarbons than conventional diesel as well as less carbon monoxide and particulate matter.

“[B]eing good stewards of the environment is very important to Dole and this includes reducing emissions and using alternative sources of energy,” said Kevin Fiori, Dole senior vice president of Agriculture Operations.

Dole said it has been testing B20 since August 2007 in farm equipment and off-road vehicles with very positive results.

“Those of us in agriculture, who depend on the environment, land, water and air quality to grow foods, are keenly aware of the importance of applying sustainable agricultural practices,” Fiori said.

Dole Food Company, which posted revenues in 2006 of $6.2 billion, is the world’s largest producer and marketer of high-quality fresh fruit, fresh vegetables and fresh-cut flowers.

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Submitted by DTN Ethanol Blog

Energy Profits Gyrate

By Gary Wilhelmi
DTN’s Man on the Floor of the CBOT, CME

The energy profitability formula is getting more and more dramatic in its gyrations. Crude has dropped into the high $80s per barrel range from a test two weeks ago of the $100 area. The alternative fuels feedstocks corn and soybean oil have also been quite volatile and the jitters are likely here to stay.

The outside markets include gold and the global security markets and both have been exceedingly active. The profitability formula became so adverse that ConAgra pulled the plug on a planed ethanol plant in New Mexico. It is important to note that Midwestern plants close to the raw material source (corn) have been much more stable. Any facility that requires long supply lines can quickly become unprofitable in this Wild West environment. More and more we hear rumblings about ethanol as the cause of higher food prices, and it certainly does carry a share of the blame.

We who live along the southern shore of the Great Lakes are seeing some contentious environmental battles over the refining of Canadian oil sands imports to refineries along the south shore. It is a good thing, economically, that we were not so environmentally conscious 100 years ago when the steel industry developed along this same south shore. Without the Rust Belt our history would have been much less successful for anything from autos to the tanks that beat the Axis powers in WWII. The refining of oil sands crude is much cleaner than the manufacturing of steel, but the fanaticism is now slanted toward environmental care rather than the bottom line of big steel. Now that the need for alternative fuels creation is so clearly defined we need to be making some trade offs.

The fear of fat at the fast food restaurants has been overcome by transfat being flushed from the menu, but diesel engines are not concerned about clogging their arteries. Stories are popping up about individuals who contract with McDonalds etc. for their waste product cooking oil then filter it and put it right into their fuel tanks and away they go, smelling like a fresh batch of French fries. We cannot all do that, but for a few of us it is the answer and it shows how ingenuity does not only come out of university labs. A little basic chemistry, some engine modification and a simple filter and away they go for peanuts or, if available, peanut oil. How about that!

The key word in cellulosic alternative fuel development is experiment, because at this time that’s where we are — in the experimental stage. Five to ten years of trial and error are likely before we find our way. When the science is complete the profitability becomes the ultimate test and that will be an ongoing procedure in pursuit of the most economical products.

An associate of mine here in Chicago has a new oil strategy — he would push drilling in the Gulf of Mexico, step up exploration off shore and drill but cap wells in Anwar in order to put more competitive pressure on Mideast suppliers.

Gary Wilhelmi can be reached at gary.wilhelmi@dtn.com

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Submitted by Biofuels Digest Blog

Top Story:

Vinod Khosla published three articles on Gristmill under the title “Pragmatists vs. Environmentalists”, in which the noted investor stated his objections to plug-in hybrids and the rational for his continued support of cellulosic ethanol. Khosla said that the barriers to improved battery performance and electric grid infrastructure improvements necessary for plug-ins to succeed as a technology were greater than those facing cellulosic ethanol. “I consider replacing coal-based electricity plants (50-year typical life) a much longer, tougher slog than replacing oil with biofuels (15-year car life),” he said. ” The investor said that marketing campaigns aimed at “greenwashing” were making hybrids popular, although even corn ethanol reduces emissions, mile for mile, as much as hybrids.

Producer News:

In Ohio, investors in the proposed 60 Mgy GreenLion Bio-Fuels plant in Streator are moving to recover a portion of their money as insiders indicate that the delay may become a cancellation due to unfavorable ethanol economics. Investors have been offered 72 cents on the dollar; the plant’s construction efforts were halted last summer amidst market uncertainties.

In North Carolina, a Superior Court judge ruled that an Iredell County farmer may proceed with plans to produce 500,000 gallons of biodiesel per year from soybeans, canola and sunflowers. Iredell Neighbors for Rural Life had sued over environmental, traffic and safety issues but the court’s said that individuals, not the group, had no standing to sue. The venture has been approved for as much to 4 Mgy in capacity to date by Iredell county commissioners.

In Louisiana, Verenium said that it would have the first enzyme-based, commercial-scale cellulosic ethanol plant in the US operating by March 31st. The 30 Mgy commercial-scale plant will use sugar cane residue, called bagasse, that is usually burned at electric power plants. The Cajun Sugar Cooperative sugar mill in New Iberia donated the first 10 tons of bagasse, and Verenium will become a customer of local sugar mills for future shipments. Among cellulosic ethanol plants that received Department of Energy grants last year for commercial-scale plant construction, only the gasification-based plant in Georgia constructed by Range Fuels is said to be closer to an opening date.

International News:

In Brazil, the federal government announced a crackdown on illegal deforestation in the Amazonian rainforest. Biofuels producers have been accused of causing deforestation, however the authorities are targeting soy farmers, cattle ranchers and illegal timber operators in 36 pockets where increased deforestation has occurred. An emergency meeting of the Brazilian cabinet had been been called by President Luiz Inácio Lula da Silva after a 50 percent jump in deforestation rates, following a steady three-year decline.

In Japan, the central government has outlined a five-year plant to invest in technologies to convert wood waste into ethanol. The Ministry of Agriculture said that it had earmarked $11.2 million in next year’s budget for research.

In Thailand, the government has established a new, national biofuels organization, which will include members of the government, industry, and private citizens. The Energy Ministry has begin coordination talks with the Commerce and Agriculture ministries, as well as representatives of universities, farmers, car makers and oil retailers. A 21-member panel will supervise policy while a 13-member panel will supervise management of biofuels development from field to wheels. $3 million in palm oil taxes will be used to support the committees.

The Brazilian Sugarcane Industry Association (UNICA) issued a stinging response to “Deadly Brew,” a documentary on the Brazilian sugar cane industry and ethanol which debuted on Bloomberg Television last week. UNICA said that the producers did not substantiate their contention that worker conditions were deteriorating, did not report that sugar cane workers are paid more than twice the minimum wage, that cane cutters do not have minimum daily quotas, and used outdated injury and death reports without reporting falling accident rates.

Research News:

In the Philippines, researchers have discovered a rumen fluid in carabao, a domesticated species of water buffalo, that can help convert up to 30 gallons of ethanol per ton of lignocellulose. Researchers had noted that the carabao could survive on low quality rice stubble and straw, which indicated that the animal’s had microorganisms capable of converting lignocellulose into volatile fatty acids which can be fermented into sugars.

In Minnesota, the state Environmental Quality Board will investigate water usage by ethanol plants after a plant in Granite falls, which had been allocated sufficient groundwater for its proposed needs, began pumping water from the Minnesota River. With 16 new ethanol plants in the proposal or construction stage, the state is facing a doubling of water demand from ethanol producers. The industry is consuming 2 billion gallons of groundwater per year. The Board plans to look at whether ethanol producers have understated their needs, or ground water reserves are less than projected.

Policy and Policymakers:

Members of the European Parliament in Brussels approved the emissions reduction plan proposed by the European Commission. The package of proposals included proposals on emission cuts, renewable sources, carbon capture and revision of the EU Emissions Trading Scheme, with a stated goal of reducing EU greenhouse gas emissions by 20 percent and increasing the share of renewable energies in the energy consumption by 2020 to 20 percent.

Consumer and Fleet News:

In Arizona, Dole Fresh Vegetables has converted its harvesting equipment in B20 biodiesel. The company had been testing B20 since August in both farm equipment and its off-road vehicles.

Financial News:

The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, dipped 0.28 percent on Friday to 119.31 as weakness in midcap ethanol stocks offset recoveries in the small caps. Among diversified agribusiness, The Andersons (ANDE) rose 1.35 percent to close at $44.36, while in the ethanol mid caps Aventine Renewables (AVR) eked out a 0.10 percent gain to close at $9.79 but US BioEnergy (USBE), down 1.16 percent to $7.74, was more indicative of sector activity. Among small caps, Intrepid Technology and Resources (IESV.OB) rose 12.50 percent to $0.018 while Bluefire Ethanol (BFRE.OB) and Xethanol (XNL), both were up strongly for the day, closing at $3.60 and $0.66 respectively.

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Submitted by Biofuels Digest Blog

Top Story:
In Washington, the Earth Policy Institute released a report calling the US’s focus on ethanol “misguided effort to reduce its oil insecurity,” and said that the consequences will be hunger and malnutrition in the Third World as well as price increases for grains hitting US consumers. The Institute said that 400 million more people will live in hunger in 2025 than today. The report was authored by well-known policy adviser Lester Brown.

Producer News:

In Ohio, Coshocton Ethanol will commence operations today, after completion of a two-year construction period. The 55 Mgy corn ethanol plant will utilize 20 million bushel of corn and create 41 direct jobs. The company is a subsidiary of Altra.

In South Dakota, a subsidiary of VeraSun Energy has purchased 200 acres southwest of Tilton for undisclosed purposes. Tilton city officials and VeraSun execs were tight lipped about plans for VeraSun Tilton LLC, which is recorded as the owner of the land. VeraSun currently operates five plants in South Dakota, Iowa, Nebraska and Indiana, and has a capacity of 560 Mgy, with four facilities under construction in Iowa, Minnesota, Ohio and Indiana that will bring capacity to 1 billion gallons. VeraSun and US BioEnergy have announced a merger that would create a 1.5 billion gallons capacity ethanol company. The company also has 150 retail outlets that sell its VE85-branded fuel.

In New York, Xethanol said that it would discontinue development at two sites in Georgia and North Carolina, and that it was losing money at a 5.6 Mgy facility in Iowa that represented its sole operating facility. The company said that it would sell the former Pfizer site in Augusta, where it had planned to have a 35 Mgy ethanol plant online in 2007. Xethanol also announced that it would discontinue development efforts in Spring Hope,m NC. Following losses of $1.3 million in the 4th quarter, the company is facing the prospect of being delisted from the American Stock Exchange.

International News:

In Japan, New Century Fermentation Research will build a small pilot plant in Malaysia that uses sago palm as an ethanol feedstock. The company says that it can produce up to 1700 gallons per acre from sago, more than any other existing ethanol feedstock. The company said that residual biomass from ethanol processing could be used for generation of heat and power. The company uses its proprietary “Ishizaki process”, which uses the Zymomonas bacteria in fermentation.

In Nigeria, the federal government is planning to send 50 officials to the World Ag Expo in February to seek biofuel investment partners and technological expertise. Nigeria is a major oil producer, but the high price of oil has prompted the federal government to use oil for exports while focusing on the development of biofuels for domestic purposes, including three 20,000 hectare farms set up by the government for ethanol production. In related news, the central government of Malawi is seeking engineering firms to manufacture components for an ethanol-based stove, which the government hopes to use to reduce dependence on charcoal, firewood and paraffin.

In China, Gushan Environmental Energy has commenced biodiesel production at its 50,000 tonne Beijing facility. Capacity at the Beijing plant will be increased to 100,000 tonnes by the 4th quarter of 2008. Gushan is on track to open a new 50,000 tonne facility in Shanghai in the second quarter of this year, with 30,000 tonne plants opening in Chongqing and Hunan later in the year. Overall, the company has set a goal of 400,000 tonnes of biodiesel capacity by the end of 2008.

In the United Arab Emirates, the Crown Prince of Abu Dhabi announced an $15 billion investment project in solar, wind, hydrogen, carbon reduction, sustainable development, education, manufacturing and research. The investment will be managed through the emirate’s Masdar Initiative, which will leverage the initial investment through joint ventures and other partnerships that will greatly expand the portfolio size.

Research News:
In Missouri, researchers have developed a new process for butanol production. The research team at Washington University, led by Lars Angenent, assistant professor of energy, environmental and chemical engineering, uses fiber by-products of ethanol production from the USDA research facility in Peoria, Illinois as feedstock. A culture of thousands of different microbes are used to convert the biomass into butyrate, which is then fermented into butanol.

Policy and Policymakers:

In Switzerland, the CEO of Nestle said that there needed to be a true price associated with the use of water, saying that it takes 2,400 gallons of water to make one gallon of biodiesel. Peter Brabeck said at the World Economic Forum that it took less than a gallon of water to make a gallon of oil, but that it would take as many as 65 gallons of water to make a gallon of oil if heavy oil and oil sands were tapped as energy sources.

In England, Dr. Andrew Boswell, a Green Party councillor in England, said that “The biofuels route is a dead end”, and predicted massive damage to the environment and social unrest in tropical countries if biofuels were pursued. Boswell has produced a study which, according to Business Week, said that “vast swathes of forest have been felled and burned in Argentina and elsewhere for soya plantations” The study pointed to the release of CO2 from peat bogs and rainforests that have been converted to agricultural use.

Consumer and Fleet News:

In Colorado, the Winter X Games has converted to biodiesel; buses and snowcats will be powered by fuel made from kitchen grease. The organizers of the Games said that they would make compost from left overs and make plates and napkins from sugarcane byproducts, in an effort to demonstrate concern for the environment.

Financial News:

The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, leapt 3.16 percent to close at 119.64 as large cap diversified agribusiness and mid cap ethanol stocks continued to rally as recessionary fears subside. For the day, Archer Daniels Midland (ADM) rose 3.48 percent to close at $42.27, while Aventine Renewable Energy (AVR) rose 1.45 percent to $9.78 to lead the mid caps. Among small caps, Intrepid Technology jumped 23.08 percent to $0.016 on news that its biogas had successfully completed a rigorous testing program conducted by the Gas Technology Institute. Overall, advances led declines 5 to 3.

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Top Story:

Regan Suzuki of the U.N.’s Food and Agriculture Organization said that while biofuels are better for the environment and promote energy security, the effect of competition for land, and the potential for water shortages were areas for concern. She said that “Biofuels have become a flash point through which a wide range of social and environmental issues are currently being played out in the media,” and said that countries such as India have rolled out biofuels plans without considering the potential effect on deforestation and other negative environmental effects.

Producer News:
In California, Gevo announced it has acquired an exclusive license for use of UCLA’s method for modifying E.coli bacteria that will improve its ability to mass produce next-gen biofuels such as butanol. Gevo said that the technology will allow it potentially to retrofit existing ethanol plants to produce butaol, at a low capiotal ost, and will speed up the commercialization of butanol by several years. At the same time, Gevo announced that UCLA Professor James C. Liao has agreed to join its Scientific Advisory Board. Dr. Liao focuses on developing advancements that speed up the commercialization of next-generation biofuels through metabolic engineering and synthetic biology. Recently Liao’s team developed the method for modifying E.coli that Gevo licensed.

In California, LS9 executives attended the World Economic Forum in Switzerland, where the company received a Technology Pioneer award for the company’s development of hydrocarbon fuels made from cellulosic feedstock. LS9’s fuels are designed to closely resemble petroleum fuels, but are specially engineered to be clean, renewable, domestically produced and cost competitive with crude oil. The company says that its trademarked DesignerBiofuels product line are compatible with existing infrastructure, including pumps, pipelines and vehicles. LS9 is now in the process of moving its products from lab to commeercialization.

In Connecticut, CT Biodiesel responded to resident criticisms of its biodiesel project by bringing 20 architects and engineers to a public hearing, where they presented for three hours on the merits of the project. Resident opposition groups said that their supporters “became worn down and left. They came here to speak, and they’re disappointed.” Resident groups have said that the plant does not meet zoning specifications that ban chemical manufacturing, while CT Biodiesel says that it manufactures fuels, not chemicals, and that chemicals used in its production process were finished or semi-finished and not raw chemicals.

International News:

In Brazil, the Brazilian Sugar Cane Industry Association (UNICA) said in a statement said that it welcomed the new EU criteria for sustainability and looked forward to supplying more fuels to the EU market under new EU rules proposed this week.

In Japan, Japan Biofuels Supply, a biofuel cooperative owned by Japanese oil companies, will import 2 Mgy of ethyl tertiary butyl ether (ETBE) from Brazil, made by mixing ethanol and isobutylene. Wholesalers have been mixing 7 per cent of ETBE into gasoline, and Japan is prepared to expand blending of ETBE to 222 Mgy by 2010.

Swaziland and other Southern African nations are turning to the emergency development of power from biofuels to avoid being plunged into darkness, after South African energy supplier Eskom withdrew supply from Zimbabwe, Botswana and Namibia, and reduced supply to Swaziland because of shortages in South Africa. Eskom has exported 5 percent of its energy regionally. Swaziland Electricity Company has asked consumers to switch off all unused appliances from 6 a.m to 10 p.m daily. The Swaziland National Energy Policy Project (SNEPP) initiated in August 1999, has failed to address the development of sufficient alternative resources.

In Indonesia, biodiesel production is down 85 percent and blamed failed government policies for their troubles. They pointed out that the state oil company Pertamina reduced its biofuels purchasing by half when government subsidies were dropped. Biofuel Producers Association chairman Purnardi Djojosudirdjo said that 17 biofuel companies has postponed projects, while the five companies producing were doing so at 15 percent of capacity. “We invested in the business after the presidential instruction on biofuel promotion was introduced back in 2006, promising a lot of incentives for the alternative energy industry,” Djojosudirdjo told the Jakarta Post. “But apparently, no regulatory support followed the instruction.”

Research News:
The European Commission has backed a European Biofuels Technology Platform initiative to bring industry and academics together to develop a long-term R&D agenda for biofuels. Members include the Imperial College London, Defra’s Central Science Laboratory and the Low Carbon Vehicle Partnership. The group intends to launch their research agenda on January 31st, following policy directives from the EU that will be issued this week.

Policy and Policymakers:

In Washington, the Government Accountability Office said that biofuels trade would decline and energy prices would climb unless global standards for biofuels are developed. The GAO said that “the array of incompatible gasoline and diesel blending stocks, and final blended products that cannot be interchanged at the retail level” are reducing opportunities for trade. The GAO recommended that the Departments of Transportation and Energy “encourage uniform biofuel and petroleum product blending practices.”

Consumer and Fleet News:

BMW may introduce a new “green” brand, after concluding that the BMW brand is too closely identified with its “Ultimate Driving Machine” image to encompass an eco-friendly brand message. The company is concerned that it will not excite consumers with its Efficient Dynamics program, unless it has a new brand, because fundamental changes to the primary BMW brand are not under discussion. BMW makes the Hydrogen 7, which runs on hydrogen and gasoline, but the vehicle is only available on loan and has been reserved for celebrity use.

Financial News:

The Biofuels Digest Index™, a basket of public biofuels stocks, rose 1.56 percent yesterday to 115.97, after declining for five consecutive sessions. Among diversified agribusiness, Archer Daniels Midland (ADM) was up 1.64 percent to $40.85, while among mid caps Pacific Ethanol (PEIX) rose 6.20 percent to $5.31 as the ethanol sector rallied broadly with fears of a recession fading slightly on positive comments from the Congressional Budget Office. Among small caps, Xethanol (XNL) fell 16.18 percent to $0.57 while GreenShift (GSHF.OB) jumped 9.09 percent to close at $0.012. For the day, advances led declines 3 to 1.

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Top Story:

The Florida state government awarded grants totaling $25 million to 12 next-gen biofuel projects as the state moves forward with its Farm-to-Fuel goal of producing 25 percent of Florida’s energy needs by 2025 using Florida agricultural resources. Among the projects, US EnviroFuels received a $7 million grant towards its 20 Mgy sweet sorghum ethanol plant in Venus. $7 million also was awarded to Gulf Coast Energy of Walton for its $62 million ethanol and biodiesel project in Mossy Head. Biofuels Digest Index™ component stock Xethanol was one of the beneficiaries when its Southland Biofuels subsidiary received $500,000 towards its $6.4 million pilot plant in Auburndale that will produce ethanol from citrus waste. The Florida Institute of Technology received $415,000 for microalgae project in conjunction with California’s Aurora BioFuels, while Neptune Industries received $158,000 for an algae biodiesel research project. Other grants totaling $4.5 million went to Liberty Industries, Agri-Source Fuels and Sigarca for waste-based biodiesel and ethanol projects.

Producer News:

In New Mexico, ConAgra announced that it was canceling its proposed 100 Mgy corn ethanol project in Clovis due to depressed economic conditions and rising building costs. The $200 million project also ran into resident opposition because the plant site bordered the town.

In New York, Xethanol Corporation announced that it would invest $500,000 in Consus Ethanol for its cogeneration project that would provide power for its ethanol production process from waste coal, that would have a $0.48 per gallon cost advantage over comparable ethanol plants in the Midwest powered by natural gas. The Pittsburgh-based facility will distribute fuel to East Coast markets, which have higher prices for ethanol.

The Louisiana Economic Development Corporation has awarded $400,000 towards the construction of a rail spur that would serve the $126 million Dynamic Fuels biodiesel project in Ascension Parish. The Parish had already pledged $600,000 in sales tax rebates to assist in rail spur construction. The Dynamic Fuels plant is a joint venture between Syntroleum and Tyson Foods, and will convert animal fats and other agricultural waste into biofuels.

International News:
A documentary on the Brazilian sugar cane ethanol industry has been completed and will air on Bloomberg Television on January 24th. The documentary, titled “Deadly Brew: The Human Toll of Ethanol,” will investigate the 82,000 injuries and 300 deaths reported in the sugar cane industry in the past 3 years, and profile a group of migrant workers who were jailed for more than a month after striking for better conditions.

In Canada, Climate Change Central, an Alberta not-for-profit organization, will test 60 trucks in a $2.6 million cold weather biodiesel research project. The Canadian and Alberta governments, Shell Canada, the Canola Council of Canada, the Canadian Petroleum Products Institute, Canadian Bioenergy, Neste Oil and Milligan BioTech are the project sponsors.

In England, D1 Oils is among several Teeside biofuels companies up in arms over a UK parliamentary committee report calling for a ban on biofuels over food cost and environmental concerns. D1 spokesmen said that the ban would serve to undermine companies in the ULK that are investing in sustainable, alternative crops such as jatropha that would cure the problems identified in the parliamentary report. Renewable energy accounts for 2 percent of total energy use in the UK, and the EU has proposed mandating a 15 percent level by 2020 with 10 percent to come from biofuels. An 5 percent Road Transport Fuel Obligation takes effect in the UK in April which would mandate that 5 percent of all fuel consumed in the UK be made from biomass.

In Malaysia, the state of Sabah is seeking $304 million over 18 years from the Federal Government to assist in the development of its Palm Oil Industrial Cluster (POIC) in Lahad Datu. The POIC is expected to generate 8,000 jobs and attract $2.7 billion in investment by 2025, with investors having injected more than $500 million since 2006. SPC Biodiesel and Global Biodiesel have come online with more than 300,000 tonnes in biodiesel capacity to date. South Korea’s Eco Frontier plans to invest more than $100 million in a combined heat-and-power (CHP) facility which will provide power for the POIC complex.

Research News:

In Nevad