Daily Biofuels Summary for October 23: Co-generation planning goes to the next level, CIBS World Markets chief economist blasts Bush ethanol policy

Top Story:

In New York, GS CleanTech Corporation inked an agreement with Northeast Biofuels to extract 10 Mgy of crude corn oil from distillers grains produced at NEB’s 114 Mgy ethanol plant in Volney.  under the agreement,  GS CleanTech will provide an extraction system to NEB and in turn receives a right to purchase the extracted corn oil at a contract price. Meanwhile, GS CleanTech’s sister company,  GS AgriFuels Corporation will construct a 10 Mgy corn oil-based biodiesel facility adjacent to the NEB facility. The New York State Energy Research and Development Authority has given the venture a $250,000 grant in support of the construction of this biodiesel production facility.

Producer News:

In Oregon, Summit Biofuels received a $1.5 million loan from the Oregon Department of Energy’s Small Scale Energy Loan Program to establish an ethanol plant in Cornelius. The plant will help Oregon meet its renewable fuel consumption mandate and domestic production goals. The facility will use the old Sabroso fruit plant which closed several years ago. The project needs approval for its above-ground storage tanks, with a hearing scheduled for November 27.

In Missouri, a new $15 million soy-based biodiesel plant will be constructed in Moberly. The 14 acre facility will crush 250 tons of soybeans each day.

International News:

In Australia, New South Wales state premier Morris Iemma has ordered all state employees to use ethanol-blended fuel for government cars. The state has mandated that ethanol make up 2 percent of all motor fuel sales in New South Wales, and the government hopes to increase this mandate to 10 percent by 2011.

In India, Praj Industries and Tata Chemicals have established a joint venture that will construct a 40 crore sweet sorghum based ethanol plant in Maharashta. The plant will have a capacity of 30000 liters per day and will commence operation in September 2008. Te plant would generate its own power with the help of bagasse from the milling process.

In South Africa, draft national biofuels policy documents have been circulated with a goal for South Africa of producing 75 percent of its renewable energy needs from biofuels by 2013.  The Southern African Biofuels Association says it needs between $293 million and $734 million in capital funding from the government  to jump-start the industry, but  Mosibudi Mangena, Minister of Science and Technology  said in July the government was unlikely to be able to meet such demands.

In Germany, Petrotec announced it was halting biodiesel production temporarily because market prices do not allow the company to cover production costs. The company produces about 30 Mgy of biodiesel at Borken using waste oils. The company also announced that its new 40 Mgy plant at Emden, on the North Sea, would not go into production at the end of the year unless market conditions improved. The German government announced that it would begin taxing the biodiesel business sin August 2006, and the decision has thrown the industry into a tailspin. The German government has also indicated it will raise taxes in 2008. The German renewable fuels association, BBK, estimates that biodiesel production plants are operating at 40 to 50 percent capacity following the governments decision to tax the industry.

In India, the Solvent Extractors’ Association of India (SEA) called on the government to discourage the use of edible oils for biodiesel production. It said that converting all of the world’s edible oil production of 152 million tons to fuel would replace only 3 percent of fossil fuels. Meanwhile, removing even 10 percent of edible oils for renewable fuels causes mayhem in oil pricing.  The association called for an end to using rapeseed oil, palm oil and soybean oil, for biofuel. This year, soybean oil is up 60 per cent to $863 per tonne, while sunflower oil is up 132 per cent, rape oil is up 50 per cent to $1177 per tonne and crude palm oil is up 82 per cent to $795 per tonne.

In England, Harlequin debuted a new range of storage tanks designed specifically for biofuels.  The BioFuel Station range is manufactured from fully recyclable, biodiesel-resistant polymer, and is available in capacities from 369 gallons to 2668 gallons.

Research News:

In Washington, two research grants have been announced by the US Department of Agriculture and the US Department of Energy. The first, for Plant Feedstock Genomics Research, aims to improve biomass characteristics, biomass yield, or sustainability. The second, for Biomass Research aims to support research and development of biomass based products, bioenergy, biofuels, and related processes.

Policy and Policymakers:

In Canada, the chief economist of CIBC World Markets, criticizing the US drive to increase ethanol production, said that “the only thing Bush’s renewable energy policy will fuel is inflation” Jeff Rubin linked expansion of ethanol to a 60 percent increase in corn prices, and said food inflation would top 5 percent in 2008 and approach 7 percent in 2009. He said that soaring corn prices passed directly into animal feed costs and tortillas, but are also causing increases in the costs of other grains as corn production replaces other types of production. He said that corn production for ethanol uses up 13.5 percent of all corn production in the United States, and produces 6.2 billion gallons of ethanol which is equivalent to a one percent reduction in US gasoline consumption. He said that reaching President Bush’s 35 million ethanol target by 2017 would reduce gasoline consumption by only 6.5 percent.

Consumer and Fleet News:

In California, AC Transit will test two alternative fuels in a pilot renewable fuel conversion program. The six-month program will test biodiesel and natural gas-to-liquid fuels in 22 buses and compare the results to the performance of ultra low-sulfur diesel. The test is a joint effort by AC Transit, Chevron Products Co., and Cummins to study renewable fuels and bus performance under actual conditions.

Financial News:

Broadpoint Capital initiated coverage of Pacific Ethanol with a “Sell” rating on the stock. Meanwhile the Biofuels Digest Indexâ„¢, a basket of public biofuel stocks, gained 0.13% yesterday to close at 103.01.

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