Daily Biofuels Summary for September 20

Top Story: India will double its current ethanol mandate from E5 to E10, national Agriculture Minister Sharad Pawar announced yesterday. The measure is intended to address the rising sugar stocks in the country amidst depressed global sugar prices, as well as address India’s rising demand for fuel at a time of historically high oil prices. The Agriculture Minister also said that India will lift its ban on direct production of ethanol from sugar cane juice. India had been facing a glut of sugar, with more than 12.1 million tonnes in store as of the end of September, or a full six months of national consumption. Fears of dumping of sugar onto global markets have depressed sugar prices around the world and caused the near-collapse of production in marginal sugar-producing areas such as Western Australia.

Producer News: In Iowa, Vision Fuels Des Moines has asked for an extension to complete $210 million in project financing for their 100 Mgy facility. The owners cited difficult financing conditions which have led projects such as Akron Riverview Corn Processors to suspend their financing efforts for the 100 Mgy Akron, IA project….In North Dakota, the Spiritwood Ethanol plant has reduced its freshwater needs from the Spiritwood aquifer to 140,000 gallons per day. The remainder would come primarily from wastewater recovered from the Cargill malt plant, which uses 4 million gallons per day from the aquifer….In Minnesota, a 50 Mgy corn ethanol plant in Eyota received a $300,000 incentive from the USDA as the project takes off, which will assist with start-up expenses.

International News: In Australia, Agri Energy is planning a $100 million ethanol plant in western Victoria for completion by the end of 2009….In Nigeria, Alconi Nigeria announced a new ethanol plant for Calabar in Cross River State. The company recently opened its first facility, in Lagos State which is producing 14 Mgy, and with the new facility the company expects to increase total production to 47 Mgy. Alconi, a Spanish-Nigerian venture, is producing ethanol for domestic Nigerian consumption, and export to Ghana and Angola….AfricaNews published a roundup of African biofuels development, stating that South Africa has the capability to produce 280 million gallons of ethanol, create 55,000 jobs, add 0.12% to national GDP, save 3.7 billion rand on oil imports and achieve substantial greenhouse gas emission reductions. The article also highlighted the Siyanda biodiesel project, and a 700 million Rand ethanol project in the Free State that will produce 45 million gallons of ethanol and 6 million gallons of biodiesel….In Malaysia, skyrocketing palm oil prices are expected to delay the opening of four new Malaysian biodiesel facilities scheduled to open in 2007. Government officials say that unless world oil prices increase higher than the current $82 a barrel, or the four plants consolidate to achieve economies of scale, they do not see plants opening this year unless palm oil prices receded. Palm oil futures are up 28 percent this year and 80 percent over 2005….China has banned new corn ethanol projects, leaving only currently operating or under-construction projects in place. This is response to the increase of China corn consumption to 150 million metric tons, up from 136 million last year, raising the prospect of China becoming a corn importer. China has experienced floods in the south, drought in the north, and an outbreak of locusts in central part of the country….In Belgium, the CEO of Volvo said the major problem with converting European drivers to biofuels is not the shortage of cars, but the shortage of fuels. The CEO was demonstrating seven Volvo trucks modified for biodiesel, but noted that the company had been able to secure only 3 liters of biodiesel even to conduct the demonstration, which highlighted the tight biodiesel supplies on the continent.

Research News: A report on the German car industry published in the Globe and Mail highlighted their struggle to reconcile German engine performance standards with tough new EU emissions mandates. The EU has mandated that car makers reduce emissions to an average of 130 grams/km per vehicle by 2012. Porsche’s vehicles currently average 285 g/km while makers such as Audi are pushing hard to get flex-fuel vehicles, while also introducing a hybrid version of its Q7 SUV….In Washington, DuPont profiled its butanol prospects, in advance of the Washington Major Economies Meeting on Energy Security and Climate Change, called by President Bush for September 27-28. DuPont’s biobutanol is expected to have 85% of the energy output of gasoline, versus 65% for ethanol, and can be used in existing vehicles without modification, can be transmitted via existing fuel pipelines. DuPont’s biobutanol will debut in the UK this fall, but it is not certain when it will be introduced in other countries. DuPont expects a Bu16 mix to be optimal at the time of the launch.

Policy and Policymakers: The New York Times published an editorial yesterday on what it called the “discouraging” economics of American ethanol industry. It cited the strong government biofuel mandates, with the E10 mandate proposed for the EU and a goal of E15 for China, but linked the “distortions in agricultural production” to biofuels and called them “startling”.

Consumer and Fleet News: In South Dakota, drivers are noting a 20 cent price drop for E10 vs regular unleaded gasoline. The price of E10 is $2.73 and regular unleaded is $2.93 in Sioux Falls, according to a report on keloland.com. The price of regular unleaded has increased more than 50 cents a gallon over last year….In Colorado, the campus buses at the University of Colorado have converted to biodiesel in a changeover funded by student contributions. An article in UC’s Campus Press highlighted the contrast to the Denver RTD pilot program, which tested four hybrid vehicles but did not see strong enough gains in fuel economy to justify the $200,000 higher price per vehicle….In North Carolina, the city of Burlington has converted its fleet to B10 biodiesel after concluding a successful test of B5 which began in July. The city hopes to convert eventually to B20, but cited the need for a slow transition due to the cleaning effect of biodiesel which can clog fuel filters. The city saw fuel cost increases of 20 cents per gallon when the pilot program commenced , but prices have subsequently dropped and now provide a one-cent savings….The CEO of EasyJet, Andrew Harrison, told the World Low Cost Airlines Congress in London that the value of biofuels was open to question, and that “The energy output versus the weight is still a problem. Maybe the second generation will be different.” The airline also points to its lower carbon output per passenger mile, which is a consequence of flying younger planes, shorter routes and point-to-point travel rather than focusing on hub-and-spoke connections. Biofuels do not play a current role in EasyJets environmental program. Biodiesel is reported to have a current energy density of 42.20 MJ/kg vs jet fuel at 42.6-42.8 MJ/kg.

Financial News: The Biofuels Digest Indexâ„¢ (BDI), a basket of 21 major public biofuel stocks, rose 1.75% on Tuesday to 100.16 as enthusiasm over the Fed rate cut, and strong inflation date in the form of a 0.1% decline in consumer prices, brought investors back to stocks. Among biofuel stocks, losers led gainers by a slight margin, but Big Ethanol dragged the sector upwards with Aventine (AVR), VeraSun (VSE), Pacific Ethanol (PEIX) and Archer-Daniels-Midland (ADM) rose between 1.8% and 4.9%. Microcaps continued to fall, including NewGen (NWGN), Texcom (TEXC.PK), and Alternative Energy Sources (AENS.OB) as concerns spread that smaller players may find tougher sledding in the days ahead. In India, an announcement that the country would impose an E10 mandate as of October 2008 spurred technical analysts to revise their demand projections sharply upwards.In the broader markets, the Dow Jones industrials rose 76.17 points to 13,815.56, the S&P 500 rose 9.25 to close at 1529.03, and the Nasdaq rose 14.82 points to 2666.48.

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