Daily Biofuels Summary for October 10: E85 pump sales low in US as India moves to E5 and the UK lowers projected benefits of renewables mandate

Top Story: Pennsylvania fuel marketer Sheetz is recording a 50% drop in sales at pumps converted from gasoline to E85. Sheetz spent more than $150,000 this year on E85 conversion at three locations in Western Pennsylvania.

Producer News: In Pennsylvania, the 45 Mgy Lake Erie Biofuels biodiesel plant opened. The plant received a $625,000 grant last year through the Pennsylvania Alternative Fuels Incentive Grants Program….In Montana, Allied Bio-Energies selected a site for a 10 Mgy biodiesel plant near Havre. The site was picked because it is near to major crop growing areas as well as the Northern Agricultural Research Center and Montana State University-Northern….The Sierra Club and WorldWatch Institute reported that the average 50 million Mgy ethanol plant in Iowa creates 133 jobs, about 85% lower than originally projected by local communities.

International News: In India, the government yesterday approved the production of ethanol directly from sugar and made E5 mandatory from this month. E10 is mandated as of October 2008. As a result of the government’s actions yesterday, stock prices of Indian sugar companies rose by up to 12 percent yesterday….In England, the NaREC Clothier Laboratory B100-fueled combined heat and power (CHP) plant has begun operation. The 9.9 kW pilot plant uses biodiesel made from waste vegetable-oil. The UK government expects that CHPs will be a cornerstone of its effort to reduce carbon emissions by 60 percent from 1990 levels by 2050….The renewable energy industry in Germany recorded sales of $32.4 billion, exports of $8.5 billion, and accrued investments of $12.7 billion, according to Invest in Germany. Biodiesel accounted for $4.5 billion in sales and will generate $22.6 billion in investment by 2012….In Brazil, agricultural officials and biofuel industry representatives explained the proposed expansion of the ethanol industry to portions of the Amazon, saying that already cleared fields would be used for sugarcane production….Petrobras, the Brazilian state oil company will invest $112 billion in R&D between 2008 and 2012, of which $1.9 billion will be applied to biodiesel, wind energy, other alternative sources and thermoelectric generators….In Mozambique, the director of the National Agricultural Development Programme (PROAGRI) outlined a biofuels policy that will be formalized later in the year. He predicted a balance between biofuel and food production, noting that “production of cotton by peasant farmers in Nampula, or of sugar cane by peasants in Xinavane in Maputo province, did not mean that these farmers stopped growing food.”….In the UK, the Government revised its costs and carbon savings from the proposed implementation of the Renewable Transport Fuel Obligation (RTFO). The cost has risen 87% to $760 per ton of carbon emission saved based on an estimated carbon savings of 700,000-800,000 tonnes. The RTFO imposes a 2.5 percent biofuel mandate in 2008, increasing to 5 percent in 2010.

Research News: A study by the International Water Management Institute (IWMI) in Sri Lanka warned that biofuel production in India and China would severely impact the two countries’ water supplies. Charlotte de Fraiture, an IWMI scientist and lead author of the biofuels study said that India and China “account for almost 70 percent of projected worldwide growth in oil demand between now and 2030. Yet, the two countries are already struggling to find enough water to grow the food they need.” According to farmonoline, the survey concluded that biofuel production will only have a modest impact on global water and food supply.

Policy and Policymakers: An article in the Huffington Post blamed Big Oil for many ethanol woes, primarily for not offering subsidies for biofuel pump conversion or supplying a major branded E85 or biodiesel. The article noted: “So why did BP build a steel-clad and LED-lit Beverly Hills-adjacent gas station, promote it as the nation’s “greenest”, then sell nothing but three grades of gasoline? Because BP and Exxon can’t pull ethanol out of the ground for as little as $10 to $15 a barrel, sell it for $80 to their own refineries, make another $30 turning it into gasoline and control its retail sale. Their hostility is not just about corn ethanol. Oil companies are flexing their collective political muscle against it to put the brakes on any renewable fuel alternatives that undercut them.”….U.S. Representatives Baron Hill, D-Ind., John Shimkus, R-Ill., Nydia Velazquez, D-N.Y., Kenny Hulshof, R-Mo., Stephanie Herseth Sandlin, D-S.D., and Sam Graves, R-Mo., introduced the Biodiesel Promotion and Quality Assurance Act of 2007 would mandate usage of 450 Mgy of biodiesel in 2008, increasing to 1.25 Mgy by 2012.

Consumer and Fleet News: The Illinois Corn Marketing Board projects a massive increase in E85 availability after Underwriters Laboratories certifies ethanol pumps as safe, which is expected by year-end, A spokesman for the Board said that major fuel dispensers such as Wal-Mart and Kroger, are waiting on certification before expanding E85 availability….In Rhode Island, Motiva Enterprises opened a rail yard in Providence, that can receive as much as 15,000 Mgy of ethanol. In Maine, Canadian National Railway opened a 150-acre biofuels terminal in Auburn, Maine that can move up to moving 450 gallons of ethanol per minute.

Financial News: Stocks were set to open down today as major stock futures indices fell 0.2 percent overnight, as broad market investors awaited corporate earnings reports and biofuels investors looked at a variety of new data including low retail sales of E85 and increased ethanol distribution capacity. Yesterday, the Biofuels Digest Index, a basket of public biofuels stocks, rose 1.58 percent to 99.27. The increase was the biggest one day jump since September 19. The sector was led by strong recovery my pure-play ethanol companies such as VeraSun (VSE), up 2.66 percent to $11.98, and Aventine Renewables (AVR) up 2.81 percent to $10.25. Numerous small-cap stocks rose more than 3 percent yesterday, including Bluefire Ethanol (BFRE.OB), Bio Soluitions Manufacturing (BSLM.OB), Green Energy Resources (GRGR.PK), GreenShift (GSHF.OB) and Xethanol (XNL). Gainers led losers by 3 to 1.

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