Today in Biofuels: US, EU deadlock in Bali over emissions targets; Brazil calls for “unconditional” US surrender on ethanol tariff; John McCain’s Long March to ethanol support

Top Story:

As the UN Conference on Climate Change in Bali approached its final day, signing of the Bali Roadmap document was imperiled by a deadlock over the inclusion of emission reduction targets in the document. The Bali Roadmap, intended to be the major product of the 190-nation conference, will guide negotiations for a successor to the Kyoto Treaty which expires in 2012. UN Secretary-General Ban Ki-Moon said that the new treaty must be finalized by the Copenhagen conference in 2009 to give nations enough time to ratify before 2012.  The US, Japan, Canada and Australia are opposing a non-binding 25-40 percent emissions reduction goal backed by the European Union. In retaliation for what it sees as US foot-dragging, the EU threatened to boycott a Washington conference in January. The Bali conference has agreed on a fund to help poorer nations cope with the impacts of climate change, and to assist in the preservation of economically valuable forest lands.

Producer News:

In Michigan, E85 has postponed construction of a 116 Mgy corn ethanol plant in Corunna, among several that the company is reportedly halting.

International News:

In Brazil, Praj Industries will take a 54 percent stake in a joint venture with Jaragua Equipments to pursue increased business in selling ethanol plant equipment and systems improvement tools into the Brazilian market.

In Thailand, major oil traders may be required to establish mandatory strategic reserves of ethanol and biodiesel in addition to conventional fossil fuels. Thai biofuel demand has increased more than 100 percent this year, and sales are expected to grow next year when the country switches to B2 biodiesel from 100% conventional diesel, and E20 is introduced into the market.  Biofuel distributor Bangchak said that it had voluntarily set up a reserve of 790,000 gallons of ethanol and 378,000 gallons of biodiesel.

In Indonesia, the Brazilian Foreign Minister, Celso Amorim, said that “if we want to be serious about climate change, trade barriers must be removed promptly and unconditionally.” He added criticism of the United States for not signing the Kyoto Treaty. President Bush affirmed in March that the tariff on Brazilian ethanol would remain in place until 2009.

In the Philippines, the Coconut Industry Investment Fund Oil Mills Group said that it would partner with the UK’s International Fuel Technology to develop a process to use medium chain fatty acids from coconut oil for biodiesel. The current process, which uses long chain fatty acids, is a process developed for other oils such as soy or palm. The group intends to significantly reduce the production cost and performance characteristics of coconut oil-biodiesel.

Research News:

The U.S. Department of Agriculture, Department of Energy, and the Chinese National Development and Reform Commission signed a pact on biofuels cooperation today. Under the agreement, the two countries will cooperate on biomass production, sustainability, production, bio products, and rural development. The USDA and the Chinese Ministry of Science and Technology also inked a renewal of their 2002 protocol supporting science and technology exchanges with China.

Policy and Policymakers:

US Senator John McCain’s quotes on ethanol were featured by MSNBC in a feature on the Senator’s wavering position against ethanol. “Ethanol is a product that would not exist if Congress didn’t create an artificial market for it. Ethanol does nothing to reduce fuel consumption, nothing to increase our energy independence, nothing to improve air quality.” (November 2003).  “I support ethanol, and I think it is a vital alternative energy source not only because of our dependency on foreign oil but its greenhouse gas reduction effects.” (August 2006).

In Washington, the US Senate is expected to vote on the Energy Bill today, with last minute negotiations underway to increase support for the bill above the 60 votes needed to overcome a Republican filibuster against the bill. Several Republicans are expected to vote for the bill, but up to two Democrats are expected to oppose it. President Bush has promised to veto the bill, which would go back to the House for consideration of the Senate’s amendments before the President has to sign or veto.

In Pennsylvania, the Republican-controlled State Senate passed a $650 million energy package, more than $200 million short of Gov. Rendel’s proposed energy plan. The bill provides $380 million in incentives for research and manufacturing in biofuels and other renewable energies such as wind and solar. $170 million was earmarked for consumer rebates on purchase of energy-saving items such as energy efficient appliances, hybrid cars or solar panels. $100 million would go to emergency aid for poor families for assistance with rising utility bills.

Consumer and Fleet News:

In California, the City of Santa Cruz opened an E85 station, the second in California. The fueling station will be operated by  International Institute for Ecological Agriculture under a five-year lease from the city. The opening is a result of a Climate Action Compact signed by Santa Cruz and UC Santa Cruz to reduce greenhouse gas emissions.

In Pennsylvania, 500 school buses in Chester County are converting to B20 biodiesel commencing in January. The conversion is the result of work by Moms for the Future; a non-profit energy supplier, the Energy Cooperative; and Krapf Bus Companies. The Pennsylvania Department of Environmental Protection provided a $300,000 grant to reduce the cost impact from the conversion.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of public biofuels stocks, gained 3.67 percent yesterday to close at 112.42, as diversified agribusinesses Archer-Daniels-Midland (ADM) and The Andersons (ANDE) rose sharply. ADM rose 3.92 percent to $38.73 while ANDE gained 5.00 percent to reach $42.04 at trading’s end. Among mid cap ethanol stocks, VeraSun Energy (VSE) gained 3.27 percent to close at $13.27 as investors continue to warm to the prospect of a VSE-US BioEnergy merger.  Among small caps, Xethanol (XNL) fell 6.98 percent to finish at $0.40. Overall, winners and losers were even on the day.

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