Today in Biofuels: President Bush threatens to veto Energy bill, impose biofuels mandate; Brazilian ethanol exports plummet; major new investments in Malaysia and the Philippines

Top Story:

In Washington, President Bush threatened to veto the Energy Bill and impose a biofuel mandate by executive order if the final bill requires utilities to get 15 percent of their power from renewable sources or contains other language the White House doesn’t like. Final negotiations of the House Bill are continuing with a goal of completing the bill this week. The White House’s chief economic adviser, Allan Hubbard, met with House Speaker Nancy Pelosi for an hour on Monday to discuss the Bill. Former congressman Charles Stenholm, now a livestock and oil lobbyist, told the Des Moines Register that he does not expect the bill to clear the Senate before the end of the year.

Producer News:

In Michigan, Liberty Renewable Fuels is reaching out to private equity investors after a drive to fund the 110 Mgy corn ethanol plant with small investor dollars came up short of expectations. Construction will be postponed in December if new financing is not complete.

In New Mexico, a new ethanol plant planned for Clovis by ConAgra has been scheduled for an additional hearing by the state Environmental Improvement Board. The  Environment Department previously approved the plant, but local residents objected to the location of the plant on the edge of town. The EIB ordered the hearing after it was disclosed that notices to residents did not properly disclose the distance from the plant to the town limits. The additional hearing will be held before February.

International News:

In Brazil, ethanol exports fell to 60 million gallons in November, a drop of 31 percent from October and a fall off of 17 million gallons, or 22 percent, compared to November 2006. Excess US ethanol supplies were blamed for the drop. In addition to falling export levels, prices also fell to $1.47 from $1.83 last year and $1.50 last month. Total export income from ethanol fell from $141 million to $86 million, a loss of  $55 million or 39 percent.

In the Philippines, Bionor Transformacion plans to invest $200 million in a 247,000-acre jatropha plantation. AME Bioenergy will conduct feasibility studies, pick sites, install infrastructure, and organize labor on behalf of Bionor. The announcement came at the beginning of a state visit by Philippine President Arroyo to Spain. Bionor operates biodiesel plants in Spain and Italy with a combined output of 39 Mgy, and ins constructing five more plants in Brazil and Spain with a planned capacity of 254 Mgy.

In Malaysia, Earth Biofuel (Asia) and the state of Perak announced a joint venture to construct a 200-acre, $400 million integrated biofuels facility. The facility will include a wastewater treatment plant, a biomass co-generation electricity Plant, a methane biogas power plant and a biodiesel plant. The promoters project creation of 30,000 jobs. Construction will begin in 2008.

In South Africa, the national government will release a highly-anticipated biofuels industry strategy by the end of the year. A draft report released last year recommended that 75 percent of the national renewables target be met through biofuels. The report is aid to focus on using surplus agricultural capacity, to avoid conflicts with food production.

Research News:

In Washington, the Energy Information Administration released the monthly ethanol production figures for September. For the month, production grew to 556 million gallons while demand fell 54.2 million gallons to 532 million, compared to August. For the year to date, ethanol production has averaged 406,000 barrels per day, with demand at 429,000 barrels per day.

The USDA Agricultural Marketing Service reported that the average rack price of ethanol in October fell to 45 cents below the comparable price for gasoline. In August, the ethanol rack price had been 10 cents higher than conventional gasoline. However, the Service reported that, by November, ethanol prices had recovered to $1.87, up from a low of $1.49 in September. In August 2007, the average rack price of ethanol in Omaha, Nebraska was $.10 per gallon higher than the average rack price of unleaded gasoline.  The price for corn grew $0.39 per bushel during the same period (adding roughly 14 cents to the production cost per gallon), while the price of distillers grains increased $20 per ton.

The International Food Policy Research Institute released a report saying that the world is eating more food than it produces, and that biofuel production runs the risk of creating social unrest. The report projected a 66 percent increase in the price of corn and a 50 percent increase in oilseed prices by 2020, attributed to biofuel production. The report also said that global cereal stocks have fallen to their lowest levels in more than 15 years. http://uk.reuters.com/article/homepageCrisis/idUKPEK13048._CH_.242020071204 However, the International Grains Council said that it projected an increase in global wheat stocks in 2008-09 due to increased planting. Poor harvests in Australia, Ukraine and Canada resulted in significant shortfalls in production in the past year.

Policy and Policymakers:

In Washington, the Farm Bill appears headed for Senate passage after more than 260 amendments were offered to the bill, creating a month-long delay in consideration of a final bill. The bill includes more than $1 billion in research and incentive dollars for biofuels. It is not clear whether the Farm Bill will be passed in 2007, and President Bush has threatened to veto the bill over the amount and type of planned spending.

Consumer and Fleet News:

In New Hampshire, Cranmore Mountain Resort has reported that its fleet of trucks, which operate on B20, have experienced no problems relating to the effect of cold on biodiesel, at temperatures as low as minus 20 Fahrenheit.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of public biofuels stocks, fell 0.51 percent yesterday to close at 104.87. Losers led gainers 5 to 4 as prices slipped for large cap diversified agribusinesses and small caps, offsetting gains in the mid cap ethanol stocks. For the day, large cap The Andersons (ANDE) fell 1.60 percent to close at $41.74, while among small caps Green Energy Resources (GRGR.PK) gained 33.33 percent to close at $0.16 and Xethanol (XNL) gained 21.43 percent to close at $0.51. Gushan Environmental Energy filed for a $250 million IPO on the New York Stock Exchange, and Indonesian palm oil and biodiesel producer First Resources filed for a 171 million IPO on the Singapore Exchange.

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