Daily Biofuels Summary for October 22: Aventium opts for IPO, UK parliament debates biofuels mandate

Top Story:

In the Netherlands, Avantium, a spin-off from Shell, announced that it would pursue an IPO after the completion of a successful proof-on-concept engine test for a new proprietary biofuel, and the extension of a strategic research partnership with BP. Avantium provides R&D services and tools to more than 70 companies in the energy, chemicals and pharmaceutical industries, including BP, Royal Dutch Shell, Sasol, Pfizer, Boehringer Ingelheim and GlaxoSmithKline.

Producer News:

Aflatoxin has been appeared in tests on Iowa and South Dakota corn harvests. The FDA permits aflatoxin levels of up to 300 parts per billion for livestock feed. This affects ethanol plants because of the trade in distillers grains which are a by-product of ethanol production.

International News:

In Brazil, questions have emerged about the scalability of the Brazilian ethanol “miracle” owing to the low wages, long hours, health problems and squalid conditions associated with sugar cane field workers. Brazil, the world’s leading exporter of ethanol (900 million gallons per year), depends on sugar cane cutters who earn $430 per month at the top end, for cutting 10-12 tons of cane per day.

In Australia, the Queensland University of Technology (QUT), its technology transfer company qutbluebox, Australian agbiotech firm Farmacule BioIndustries, and Swiss agribusiness Syngenta have agreed on a research partnership for sugar ethanol production. The Syngenta Centre for Sugarcane Biofuel Development in Brisbane will will open this month. The Queensland government pledged $4 million towards the Centre and the Center centre and a biofuels pilot plant.

In the Philippines, the Department of Agriculture said that Western Visayas, Ilocos region, Cagayan Valley, Zamboanga Peninsula, Northern and Central Mindanao and the Davao Region would be the focus for biofuels production expansion. Agriculture Minister Yap said that biofuel development deals would be shortly announced based on outright land purchases, lease arrangements or production contracts.

In the UK, Parliament will debate the Renewable Transport Fuels Obligation (RTFO) this week, which calls for 5 percent of UK fuel consumption to come from renewable fuels by 2010. The Green Party voted at its Autumn conference for an immediate moratorium on large scale monocultures for biofuels, citing the impact on food production.

In Uganda, Liquifier Uganda announced that it will construct the first ethanol plant in Uganda, setting up operations in both east and western Uganda, by June 2008. The ethanol plant, which will has an undisclosed capacity, will utilize corn, sugar and cassava as feedstocks. In 2006, Sugar Corporation of Uganda Ltd (Scoul) requested 7,100 hectares of land from within Mabira Central Forest Reserve to expand sugar production to 100,000 tones per annum and produce ethanol from the 50,000 tonne increase. Also, Oil Palm Uganda is seeking land on Bugala Island, Kalangala District, to expand oil palm cultivation for biodiesel production.

In Sri Lanka, Eco-friends, founded by MBA students of the University of Colombo distributed a plan for a jatropha based-biodiesel plant, the first in Sri Lanka. The group is seeking financing and did not disclose the target completion date or capacity of the venture.

Brazil doubled a $1.3 billion credit line for Angola as a step in the expansion of Angolan-Brazilian trade. The increase was announced by Brazilian President Luiz Inacio Lula da Silva in Luanda, on the last leg of a four-country African visit this past week. Angola, which concluded a 27-year civil war in 2002, has been helped by an oil boom, but is seeking to expand its biofuels infrastructure to take advantage of good land for biofuel feedstock cultivation. But transport infrastructure will need to be repaired following the devastation of the civil war period.

Research News:

In California, the LiveFuels Alliance, funded by Menlo Park-based LiveFuels and Sandia National Laboratories, has launched. The alliance will sponsor nationwide research into commercial biodiesel production from algae over the the next three years. The research effort will take advantage of the ‘Aquatic Species Program’ which researched high-oil algae cultivation for biodiesel production between 1978 and 1996 at the National Renewable Energy Laboratory. Projects will focus on developing higher-fat strains of micro-algae, improving the extraction process, and harvesting techniques. The goal is to produce algae-based biodiesel for $60 a barrel.

Crude palm oil surged as the markets followed the rise in oil prices. After crude oil prices topped $90 per barrel, the CPO futures contract for January delivery reached $823 per metric ton. However, soybean oil futures were down as the rise in oil prices was offset by announcement of an increase in supply as shipments from Madhya Pradesh and western Maharashtra in India more than doubled average Indian weekly production figures. The November futures contract fell 0.05 percent to $12.25.

Policy and Policymakers:

A provision in the 2007 Farm Bill requires the Department of Agriculture to buy surplus domestic sugar resulting from the influx of Mexican sugar next year when the sugar tariff is lifted next year. The government would sell the sugar, at a discount, to ethanol producers. The expected market price for sugar has not been determined, but will compete with a per gallon raw feedstock cost of approximately $1.17 per gallon for corn ethanol.
Last week, the U.S. House of Representatives passed a “25 x ‘25″ Energy Resolution, was introduced by House Agriculture Committee Chairman Collin Peterson (D-Minn.) and Ranking Member Bob Goodlatte (R-Va.) in January. The bill calls for 25 percent of US energy consumption energy will come from domestic renewable resources by 2025.

Consumer and Fleet News:

In Florida, the Palm Beach County bus system will convert its 115-bus fleet to an undisclosed biodiesel blend in January 2008. The County originally had looked at purchasing electric hybrids, but the project was cost-prohibitive.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of public biofuel stocks, fell 1.79% to 102.66 as both diversified companies like Archer-Daniels-Midland (ADM) and The Andersons (ANDE) slipped, closing down 1.69% and 0.59% respectively. Mid-cap Big Ethanol pure-plays such as VeraSun (VSE), Pacific Ethanol (PEIX) and Aventine Renewables (AVR) were hard hit despite a continuing rise in oil prices, closing down 1.77%, 6.57% and 3.71% respectively. The Dow fell nearly 400 points on the 20th anniversary of the 1987 Wall Street crash.

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