Today in Biofuels: Morgan Stanley says short-term ethanol outlook turns positive; 2012 Olympic torch may convert to biofuel

Top Story:

A Morgan Stanley analyst issued an improved short-term outlook for ethanol prices, promoting recovery in the share price of pure-play ethanol stocks such as Pacific Ethanol.

Producer News:

In Oregon, the massive Inland Pacific Energy project has received a $504 debt commitment from an undisclosed European lender. The first phase of the project includes a 96 Mgy biodiesel plant, a 120 Mgy ethanol plant and a feed mill. Following completion of phase three, the project is expected to encompass up to 18 business and provide up to 600 jobs.

In Texas, Tetra Point Fuels will manufacture up to 5 Mgy of ethanol in 2008 from orange juice waste and other sugary waste products.

In Maryland, Atlantic Biomass Conversions is producing methanol from biomass and hopes to supply it to the military as JP-8 jet fuel. The company extracts methanol from sugar beet waste after the completion of sugar extraction.

International News:

In Thailand, consumption of B5 grew 1900 percent over the previous year to 17 million gallons for the month, while E10 consumption grew 63 percent to 47 million gallons. Overall diesel fuel consumption grew 2.2 percent during the corresponding period while the gasoline market fell 11.4 percent. E10 now represents 41 percent of all gasoline consumed in Thailand, compared to 22 percent a year ago.

In Brazil, Sao Martinho said Monday that it would export 23 million gallons of ethanol in 2008, the same as 2007. Overall, Brazilian ethanol exports for 2007 will be 800 million gallons, down 20 percent from 2006 owing to oversupply in the US market.

In Australia, Dalriada Meat has received $100,000 from the South Australian government for its proposed $5.8 million animal waste-based biodiesel plant in Keith.

In Mozambique, UK-based Principle Energy said it would invest $250 million in sugar cane ethanol at a facility along the Lucite and Buzi rivers in Mozambique.

In Australia, Linc Energy and Bio Clean Coal said they would joint venture on an algae-based biodiesel plant using CO2 emissions from coal-fired electricity generation.

Research News:

In Australia, a CSIRO report confirms that the use of B2 biodiesel made from tallow reduces greenhouse gas emissions by 1.5 percent, while the use of B20 results in a 15 percent reduction in greenhouse gases.

Policy and Policymakers:

The president of the Renewable Fuels Association, Bob Dineen, said that the RFA and the state of Minnesota have engaged in a test program for higher blends of ethanol than E10. The study looks at materials compatibility, drivability and emissions. An unrelated Department of Energy study is looking at durability and the impact of E20 or higher on small conventional engines. Dineen said he is hopeful that an application could be made next year to the EPA for permission to use higher level ethanol blends.

Consumer and Fleet News:

Organizers of the 2012 Olympic Games are considering the use of biofuels to power the Olympic torch. In 2000, the torch at the Sydney Olympic Games consumed as much natural gas as needed to power 600 households for a year.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of public biofuel stocks, fell 0.31 percent yesterday to close at 101.84, as diversified agribusiness fell but pure-play ethanol midcaps recovered on positive comments by a Morgan Stanley analyst. AMong larger caps, The Andersons (ANDE) fell 3.40 percent to $40.57, while Aventine (AVR) was up 9.50 percent to close at $8.76 and Pacific Ethanol rose 10.43 percent to reach $4.66. Among small caps, Better Biodiesel fell 27.14 percent to $0.51.

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