Daily Biofuels Summary for September 11

Top Story: The Organization for Economic Co-operation and Development (OECD) will release a report today calling for an end to biofuels subsidies. The report says that biofuels are an untried technology that can have only limited effect on the climate and will cause a rapid rise in food prices. The OECD concluded that US ethanol supports cost $500 for every ton of carbon dioxide removed from the atmosphere, and suggest the imposition of “technology-neutral” carbon taxes. The study found that only Brazilian sugar, paper-making byproducts and used vegetable oil are suitable feedstocks for biofuel production.

Producer News: In California, Cilion closed on a $105 million first round of debt financing for the construction of two new ethanol plants in California….In Minnesota, Lac qui Parle Ethanol signed a letter of intent with Fagen to construct a 45 Mgy ethanol plant….California Ethanol & Power announced plans for five sugar ethanol plants in Imperial County. Each plant will produce 50 million gallons ethanol, commercial grade carbon dioxide, and 50 megawatts of power. The project is expected to cost $750 million and employ 750 people. The first plant will commence production in 2010….In Texas, Endicott Biofuels (EBF) announced that it closed a $40 million private equity financing for the construction of a “second generation technology” biodiesel plant….Imperial County in California has become the new center of the developing California ethanol industry, with five plants in planning or operation with a total capacity of 213 million gallons of ethanol and 3 million gallons of biodiesel. Cilion, Imperial Bioresources, Imperial Valley Biodiesel, Pacific Ethanol (PEIX), and USFarms are the project owners.

International News: The Wall Street Journal profiled the struggles of international investors to find acquisitions in the Brazilian ethanol industry. Ethanol producers such as Archer-Daniels-Midland, Australia’s CSR, Germany’s Südzucker, and India’s Bajaj Hindusthan have announced acquisition programs of up to $700 million but have come up empty….In Malaysia, Kumpulan Fima Bhd (KFima) said it expected its first palm biodiesel plant to start production in October. The plant has a annual capacity of 60,000 tons of biodiesel and 30,000 tons of winter fuel.

Research News: In a new article published in ACS Biotechnology Progress, researchers boosted sugarcane ethanol output by 17 percent by introducing extremely low frequency magnetic waves. The study also showed a material improvement in ethanol production time, reducing cycle time by two hours….In Washington state, a Washington State University researcher received a federal grant for his studies on converting poplar trees to ethanol. Preliminary research showed yields of up to 1000 gallons per acre at a production cost of less than $1 per gallon….The Clean Fuels Development Coalition released the 5th edition of the Ethanol Fact Book detailing improvements in farm income, job creation, tax receipts and environmental benefits….US ethanol import figures were released showing US ethanol imports up 74% over 2006 to 208 million gallons. The two leading importers were U.S. refiners Citgo and Valero (VLO). Noble and ConocoPhilips were up 255% and 372% respectively, while Chevron was down 43% and BP did not import any ethanol in the first half of 2007.

Consumer and Fleet News: In Missouri, the first regional E85 flex-fuel station opened under the Murphy USA brand.

Financial News: The Biofuels Digest Indexâ„¢ (BDI), a basket of 21 major public biofuel stocks, fell 0.57% today to 99.13 within a mixed market. Monday continued where Friday left off with a whack taken out of Big Ethanol, with Aventine Renewable Energy (AVR) down 1.75% to $12.90, VeraSun Energy (VSE) down 2.17% to $12.65, and Archer-Daniels-Midland (ADM) down 0.52% to $32.54. Some small caps found higher ground, led by Environmental Power (EPG), up 3.28% to $5.04 and Green Plains Renewable Energy up 1.43% to $16.27. In the broader markets, the Dow Jones industrials rose 14.47 points to 13,127.85, the S&P 500 fell 1.85 to 1451.70 and the Nasdaq slipped 6.59 to 2559.11. A rise in tech stocks sparked a brief rally which was squelched by news that oil prices neared another record.

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