Today in Biofuels: House passes historic Energy Bill, President Bush to sign today; WTO launches investigation into US farm subsidies at behest of Brazil and Canada; Nepal blends ethanol to ease gas shortage; Colombia to build three new ethanol plants

Top Story:

In Washington, the US House of Representatives passed the Energy Bill by a vote of 314-100. President Bush is expected to sign the bill this morning. The Bill establishes a Renewable Fuel Standard that 36 billion gallons of ethanol must be blended with conventional gasoline by 2022. 15 billion gallons must come from corn ethanol and 22 billion gallons from second-generation biofuels. In addition to the revising the Renewable Fuel Standard, the Bill raises the average fuel economy of carmakers’ fleets to 35 miles per gallon. The Bill also mandates more energy-efficient lighting and appliances, which will lead to the phasing out of conventional incandescent light bulbs beginning with the 100-watt bulb in 2012.

Producer News:

In Virginia, Osage Bio Energy received the go-ahead from municipal officials for its 55 Mgy barley ethanol plant.

International News:

In Nepal, lawmakers are addressing a gasoline and cash shortage by directing the Nepal Oil Corporation to blend ethanol into conventional gasoline. The national government will issue $76 million in bonds to settle outstanding bills with the Indian Oil Company, which is Nepal’s sole gasoline supplier.

In Brazil, government officials say that ethanol stocks are sufficient to keep prices in check during the intercrop season, and rumored shortages will not occur. Brazilian drivers are expected to pump 370 million gallons of ethanol in December, and stocks as low as 66 million gallons by April have been projected by some experts.

In Columbia, Controlsud International will provide $342 million in loans to develop 150,000 acres of sugar cane production and three ethanol plants with a production capacity of 96 Mgy. Colombia has an E10 mandate that this production deal will assure compliance with. The plants will be located in Bolivar, Cordoba and Sucre ad will be operational by the end of 2010.

In Belarus, Greenfield Project Management of Ireland has signed an agreement with the national government to build and operate an ethanol plant. Production capacity was not disclosed, but has been estimated at up to 280 Mgy. Project cost is projected at $288 million and construction is slated to begin next month at an undisclosed location.

In Brazil, Petrobras has commenced marketing biodiesel, and said that the company has made sales to date of 41 Mgy, primarily in Rio Grande do Sul. Petrobras will market a total of 100 Mgy which is estimated to cover Brazil’s consumption of biodiesel for the first half of 2008.

Research News:

Alliant Energy announced a partnership with IPL and Harris Companies to cut energy consumption at ethanol plants in half, through improved biomass steam technology. The process recycles ethanol residue and other byproducts as fuel for steam production. Alliant said that the process could save up to 16 cents per gallon in ethanol production costs.

Policy and Policymakers:

The WTO has commenced an investigation into US farm subsidies following protests from Canada and Brazil. The Canadians and Brazilians allege that the US has exceeded its $19.1 billion cap on farm subsidies in six of the past eight years, including subsidies for biofuel feedstocks such as corn and soya. The issue is a key point of contention imperiling the Doha round of global trade talks.

The US Senate passed the $256 billion Farm Bill by a vote of 79-14. The bill includes tax credits for farmers involved in cellulosic ethanol or other biofuels production. The bill moves to a conference with the House to resolve differences between the Bill passed in the Senate, and the version passed by the House in July. The final bill is expected to move to the White House in January.

Consumer and Fleet News:

Flex Fuel US has released a $1200 Flex-Box Smart Kit that converts older cars to E85. The EPA-certified kit, according to the company, results in a 15 percent reduction in overall fuel costs and an 85 percent drop in greenhouse gas emissions, but the company did not release details on its calculations of fuel savings. The kit currently works on key fleet vehicles such as the Ford Crown Victoria, Mercury Grand Marquis and Lincoln Town Car, but will be modified to cover more vehicles by late 2008, including the Dodge Charger, Chrysler 300, Ford Mustang and Ford F-150 pickup.

In New York, the Capital District Transportation Authority will convert its 326 vehicle fleet to B5 biodiesel. The fleet will use B5 from Mirabito Energy Products, and will reduce CO2 emissions by 1000 tons per year.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of public biofuel stocks, rose 1.43 percent yesterday to a 52-week high of 117.42 as passage of the Energy Bill by the US House of Representatives led to strong increases for ethanol stocks. Winners led losers 3 to 1 as gains were seen in diversified agribusiness and small cap stocks as enthusiasm spread over the sector. For the day, Pacific Ethanol (PEIX) rose 9.03 percent to close at $7.73, while Xethanol (XNL) rose 14.63 percent to $0.47. Among small caps, GreenShift (GSHF.OB) doubled to close at $0.028, while Archer-Daniels-Midland (ADM) rose 1.08 percent to lead the large caps.

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