Today in Biofuels: President Bush signs historic US Energy Bill into law; Petrobras exec says Lula’s effort on trade barriers a failure; Europe proposes stiff auto emission standards for 2012

Top Story:

In Washington, President Bush signed the US energy bill, calling it a “major step” towards energy independence and the reduction in global warming. The bill, which has become law, requires automakers to increase corporate average fuel economy to 35 miles per gallon and mandates that 36 billion gallons of fuel by 2022 be derived from renewable sources.

Producer News:

The Louisiana Public Facilities Authority has approved a $70 million bond issue in support of a sugarcane ethanol plant that will be owned by Louisiana Green Fuels. The plant is expected to be operational by October 2008. The plant will be the first sugarcane ethanol facility in the US.

International News:

In Brazil, the head of energy development for Petrobras blamed EU and US tariffs for a massive shortfall in planned ethanol exports, and said that the effort by Brazilian President Luiz Inacio Lula da Silva to lower the trade barriers has not produced results. Petrobras has stated its plans to invest $1.5 billion in biofuel projects between now and 2012.

In Taiwan, the deputy director of the Agriculture and Food Agency said that Taiwan will switch emphasis to producing ethanol after yields from biodiesel feedstock cultivation had proven to be a disappointment. The country will begin a phased transition from soy and sunflower cultivation on 7,000 acres to sweet potatoes for ethanol production.

In El Salvador, Southridge Enterprises will construct a 5 Mgy ethanol plant in El Salvador. The company said that it will import ethanol from Brazil, dehydrate it, and reexport the fuel to the United States, supplementing this activity with actual production at the plant from more than 4500 acres of sugar cane cultivation. The plan takes advantage of the Caribbean Basins Initiative trade pact which permits El Salvador to export ethanol to the United States tax-free, vs. the 54 cent per gallon tariff on direct exports from Brazil.

In India, AE Biofuels’ 50 MGY biodiesel plant in Kakinada, India has completed construction, and the company has begun construction on a glycerine plant that will be next to the biodiesel works. The refined glycerine produced by the plant has an 80% price premium over crude glycerine.

In the Philippines, Pacific Bio-Fields and Bio-Energy NL will convert 1.3 million acres of bare land into coconut plantations in a multi-year plan that will begin shortly with an initial 200,000 acre planting. The plantations will be located in Barangay Caunayan, Pagudpud, Ilocos Norte, in Northern Luzon.

Research News:

Dr. Michael Duffy, an Iowa State University farm economist, released the 2007 Iowa Land Value Survey, which showed that acre of farmland prices have jumped more than 22 percent to a record high of $3,908 per acre. Duffy said the increase was the highest one-year jump since 1976. Prices were $1,857 as recently as 2000. Duffy attributes the change to the impact of ethanol.

In Nebraska, Jon Holzfaster, chairman of the Nebraska Corn Board, lashed out at critics of the ethanol industry’s water consumption. He said that it takes three gallons of water to produce one gallon of ethanol, compared to 94 gallons of water to produce a gallon of crude oil, or 150 gallons to produce a Sunday newspaper, or 1800 gallons to irrigate a golf course for a day. He also noted that only 14 percent of corn depends on irrigation to supplement the existing rainfall.

Policy and Policymakers:

The European Commission has proposed a 120 g/km emission standard for automobiles beginning in 2012, with a sliding scale of penalties for manufacturers who do not meet the standards. The fines will range from 20 to 95 euros per gram over the 120 g/km standard, and multiplied across a carmaker’s fleet. The Commission expects to reach a 130 g/km standard through engine technology improvements alone, with the remainder coming from improvements in tires, gears and air-conditioning systems.

Consumer and Fleet News:

In New England, Green Mountain Biofuels is collecting waste vegetable oil from 200 restaurants, and powering a 150,000 gallon biodiesel works operated by its corporate parent, MBP Energy.

In California, the city of San Francisco has mandated the development of a Local Carbon Offset Program that will be the first in the United States. The program will establish a fund that will invest in carbon-offset projects in the city. A novel feature of the program is that carbon offset investment will be in the same city as the emissions are generated.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of public biofuels stocks, rose 2.97 percent yesterday to a new 52-week high of 120.91 as investors celebrated the passage of the Energy Bill. Winners led losers 4 to 1 for the day. Among diversified agribusiness, Archer-Daniels-Midland (ADM) leapt 2.99 percent to close at $41.38 while, among midcaps, Pacific Ethanol (PEIX) jumped 18.37 percent to close at $9.15. VeraSun Energy (VSE) and Aventine Renewables (AVR) were also up on the day, while US BioEnergy cropped 0.87 percent to close at $11.35. PEIX has increased its stock price more than 50 percent in the past month as it recovers from a series of 52-week lows recorded earlier in the fall. Among small caps, Green Plains Renewable Energy (GPRE) was up 3.64 percent to $10.54 while Environmental Power (EPG) fell 4.87 percent to close at $4.6699.

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