Agronomists and Admirals: Looking back at ABLC 2013

April 22, 2013 |

ABLC13-audienceTakeaways from the Advanced Biofuels Leadership Conference

By Pavel Molchanov
Senior Vice President, Raymond James & Associates

Earlier this week, we attended the Advanced Biofuels Leadership Conference, a major gathering of public and private companies in an industry that should, over time, become a mainstream component of U.S. and global fuel markets – next-generation (Gen2) biofuels. There is a torrent of activity in the space, project announcements, industry partnerships and joint ventures, policy developments, and – after a hiatus – capital markets activity.

Following the conference, as well as investor roadshows with two of our covered Gen2 companies (Ceres and KiOR), today we provide our latest comprehensive update on the industry. There is no question that there have been growing pains along the way, more than we would have hoped, but the industry continues along its trajectory towards scale. We expect 2013 to be a critical period as a wide variety of Gen2 biofuels approach commercialization and companies increasingly “graduate” from the pre-revenue stage to full commercial operations.

Slow scale-up means Gen2 RFS targets won’t be met for the rest of this decade.

If you are an investor in refining stocks who is watching in frustration as refiners have to buy large amounts of RIN credits, you probably know that the problem in the corn ethanol market is too much supply, i.e. the so-called “blend wall”.

The problem in the Gen2 biofuel space is the exact opposite: the industry is behind on meeting its federal targets, particularly when it comes to cellulosic biofuels. When Congress enacted the Renewable Fuels Standard’s Gen2 provisions in 2007, the expectation was that cellulosic production would reach commercial scale in 2010.

In actuality, the EPA has had to practically waive the statutory targets for the past three years and again for 2013. For example, the EPA is requiring 14 million cellulosic gallons in 2013, up 61% y/y but still a reduction of 99% from the official target of one billion gallons.

In the complete Molchanov report, here:

  • Why have Gen2 biofuels been so slow to scale up?
  • Washington has a role to play in moving Gen2 biofuels forward, but the RFS alone is not enough.
  • DoE, USDA, and DoD: An alphabet soup of biofuel support programs.
  • How can U.S. investors play Gen2 biofuels and renewable chemicals?
  • The road less traveled: Biofuel tidbits that you might not have thought about.

 

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