Today in Biofuels: US and German blocs at odds over emissions targets in Bali Roadmap; Japan to waive biofuel taxes in 2008; ethanol margins improve; Alanis Morisette, Sheryl Crow among musicians converting to biodiesel

Top Story:

At the UN Conference on Climate Change at Bali, U.N. Secretary-General Ban Ki-moon said that the major goal of the conference was to agree to negotiations for a treaty that would be agreed at Copenhagen in 2009, and replace the Kyoto Treaty, not specific targets. The US, supported by Japan, and Canada, oppose setting a 25-40 percent emissions reduction target in the Bali Roadmap which would set a framework for negotiations. However, other countries, led by Germany, have said that emerging from Bali with nothing more than an agreement to talk more would  be a failure. Secretary Ban’s comments were seen as tacit acknowledgment of the US position that specific reduction targets would have to be negotiated at a later time. Assessing the commercial implications of a new treaty, Lord Nicholas Stern, chairman of IDEACarbon, said Bali is setting in motion a process that would create a “global carbon market worth EUR 240 – 450 billion by 2020. Up to 13 billion tons of CO2 could be traded each year.”

Producer News:

In Wyoming, Big Horn Basin Ethanol has closed $45 million dollars in construction financing for an ethanol plant in Greybull. The plant has attracted criticism owing to an in-town location, amidst support for creating 33 jobs in the town of 1800 and diversifying the agricultural economy.

In Virginia, Synergy Biofuels will invest $1 million in a waste vegetable oil biodiesel plant in Pennington Gap, and will commence operation in March 2008.

In Texas, Global Alternative Fuels has commenced construction on a multi-feedstock biodiesel facility in El Paso. The plant will reach a planned capacity of 100 Mgy in 2012, and will use a combination of soybean, palm, cottonseed and canola oils as well as waste vegetable oil.

International News:

In Canada, Atlantic BioEnergy is planning a sugar beet ethanol plant on Prince Edward Island and is recruiting farmers to add feedstock capacity. 11 PEI farmers produced sugar beet on 2100 acres in a trial production period, and the plant wants to increase cultivation to 4300 acres prior to launch and 15,800 acres for the plant to reach full production capacity. Atlantic has also called for a 10 percent ethanol mandate in PEI and a tax break on ethanol for consumers to ensure demand for the product.

In England, Goes on Green has entered the first permitting stage for a 51 Mgy biodiesel plant in North Shields. The $61.4 million project have an initial capacity of 8 Mgy and increase to full capacity in 36 months.

In Japan, fuel excise taxes are expected to be waived on biofuels as of April 2008 in a new scheme to reduce Japanese dependence on oil. For blended fuels, taxes would be reduced in proportion to the amount of biofuels blended. Japan has set a goal of 132 million gallons of biodiesel by 2010, with a domestic production goal of 800 Mgy by 2030. To reach this goal, the government has formed a council of government units, universities and companies including Nippon Oil and Toyota to develop for reducing the cost of ethanol production.

Research News:

Citigroup reported that US ethanol margins rose 2 cents in December to 30 cents, up 26 cents since September. Citi analyst David Driscoll said that ethanol supply in September was 26 days, below the industry average of 32 days, and that the minor shortage was helping to increase prices.

Policy and Policymakers:

In Washington, the US Senate will consider passage tomorrow of a revised Energy Bill which drops the controversial provision requiring utilities to use renewable sources to make 15 percent of their energy, and changes some of the provisions in the $21 billion tax package. With these moves, Senate leaders believe they have more than 60 votes, enough to break a filibuster by Senate Republicans. President Bush has promised to veto the Bill, which would have to be passed by the House because of the changes in the tax and utility provisions. Meanwhile, Senate Agricultural Committee Chairman Tom Harkin plans to attach the 336 billion gallon ethanol mandate to the Farm Bill, which will move to the floor for a vote next week.

Consumer and Fleet News:

Non-profit music organization Reverb said that fans of the Barenaked Ladies reduced their driving by 8.5 million miles through carpooling, in response to Reverb promotions in association with the band’s performances. Reverb operates an eco-village at each concert of musicians such as Alanis Morissette, Barenaked Ladies, Dave Matthews Band, John Mayer, and Sheryl Crow, among others. Each band that works with Reverb also uses biodiesel for its tour buses and generators. Reverb says that 85 percent of a concert’s carbon footprint comes from fans driving to and from the shows.

In Delaware, state Rep. Joe Booth (R-Georgetown) said that his state task force recommended a $1 million fund to assist the conversion of 10 service stations to E85, and added that Delaware’s coastal zoning laws and limited agricultural resources, were causing the state to miss out on the benefits of biofuels development.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of public biofuels stocks, fell 3.87 percent yesterday to 108.42, amidst a broad market pullback initiated when the Federal Reserve cut interest rates by one-quarter point, less than market expectations. Archer-Daniels-Midland (ADM) was down 3.47 percent to $37.27 on the news. Among mid cap ethanol stocks, Pacific Ethanol (PEIX) rose 6.78 percent to $6.3962. Among small caps, Texcom (TEXC.PK) rose 27.27 percent to $0.14. Environmental Power (EPG) rose 2.81 percent to $5.1099 on news of a new agreement with JBS Swift to develop biogas facilities.

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