Today in Biofuels: China has breakthrough on low-cost ethanol; US has breakthrough on converting sunlight, CO2 into biofuels

Top Story:

In China, Dongfeng Motor has successfully demonstrated the use of hydrous ethanol in its automobiles. The company says that use of hydrous ethanol, containing 65 percent ethanol, would save 60 percent of the energy need to create pure ethanol, by eliminating the dehydration phase. The use of hydrous ethanol, requires an adaptive device for engines only. Dongfeng said that it would set up an ethanol car production plant by the end of 2008.

Producer News:

In Illinois, Archer Daniels Midland said that it will initiate an $84 million project that buries, or otherwise sequesters, carbon dioxide emissions. The technique, which is not yet proven to be a stable solution for reducing CO2 emissions, prevents CO2 emissions from entering the atmosphere., The project is being carried out in partnership with the Midwest Geological Sequestration Consortium and the Illinois State Geological Survey on the project. The U.S. Department of Energy is providing $66.7 million in support, with the remainder being provided by ADM among others.

International News:

In India, the central government is reportedly considering the imposition of a 4 percent uniform tax on ethanol, at the state level, and reducing the federal tax from its current level of 16 percent. At present, taxes differ from state to state, and stae-level taxes are as high as 20 percent. The move is intended to stimulate the use of ethanol and thereby reduce dependence on foreign oil and reduce the spread between the cost of domestic and imported ethanol. Currently, domestic ethanol costs $2.68 per gallon while imported ethanol costs $2.00 per gallon.

In Japan, the national government has abandoned its plan to establish Miyakojima as a “biofuel island” in Okinawa Prefecture. The decision resulted from the lack of support by the oil industry for the government’s proposed E3 mandate. The oil industry has proposed the use of ETBE, a fuel additive created from ethanol and isobutylene, which oil companies say has superior performance capabilities include a higher octane rating and less absorption of water. The original plan called for produce of sugarcane ethanol, which would be distributed at 19 gasoline stations on the island in an E3 blend.

In Canada, Husky Energy will commence production in February at its expanded ethanol plant in Minnedosa, Manitoba. The plant will now produce 34 Mgy of ethanol, compared to 4 million at the previous incarnation of the facility.

In Fiji, the Government has been asked to produce a report on the progress of biofuel development. The calls are prompted by the rising costs of gasoline, and the resulting pressure on transportation prices. The price of diesel has increased 43 percent since June 2005.

In Nigeria, Oloche Edache, FAO regional representative for Africa, said that the country will require a 70 to 80 per cent increase in food supplies to meet its food requirements by 2015, and that the national emphasis on biofuels development, carried out as a part of Nigeria’s commitments under the Kyoto Treaty, would put upward pressure on agricultural prices for the next decade. Nigeria has planned $876 million in agricultural development funding over the next four years. Kofi Annan, former secretary-general of the UN now serving as Chairman of Alliance for a Green Revolution in Africa, added that Sub-Saharan Africa is the only part of the world where per capita food production has declined in the past 30 years, and that improving the prospects for small-scale farmers is the key to African prosperity.

In Australia, a 3 Mgy, $5 million biodiesel plant in Goulburn is on hold while the developer, City and Industrial Group, secures permits for 200,000 gallons of storage tank infrastructure. The developer plans a total of four biodiesel plants in Australia.

In India, Mission Biofuels signed an exclusive jatropha oil acquisition deal. Under the agreement, a cooperative group in an undisclosed district will provide jatropha from 376,500 acres on an exclusive basis to Mission Biofuels. The company will provide nurseries, technical expertise and a local processing center. The district will plant additional jatropha acreage over the multi-year exclusive partnership.

Research News:

In New Mexico, a research team at Sandia National Laboratories has developed a new process for converting sunlight and carbon dioxide into biofuels. The process, which essentially reverses the combustion process, has been often proposed as a fuel production alternative but dismissed as too expensive. The rising cost of oil and the development of a new process has revived hopes for the S2P project, or Sunlight to Petrol.

Policy and Policymakers:

In South Dakota, acting Agriculture Secretary Chuck Conner said that he is recommending veto of the Farm Bill unless tax increases and budget gimmicks are removed, as well as credits for farmers making more than $200,000 in farm income.

Consumer and Fleet News:

In Detroit, the North American International Auto Show will feature more than 50 production and concept vehicles including more alternative fuel and hybrid vehicles. Hybrid sales jumped 49 percent in 2007 over 23006, and dealers say that more consumers are now opting for GM’s flex-fuel cars.

Financial News:

The Biofuels Digest Indexâ„¢ (BDI) a basket of public biofuels stocks, closed even for the day on Friday at 132.88 as slight gains among large caps were offset by declines for mid and small cap stocks. Among diversified agribusiness, The Andersons (ANDE) led the sector with a gain of 1.43 percent to $46.76. Among mid caps, Pacific Ethanol (PEIX) was the sector leader, gaining 0.34 percent to close at $8.85 while Aventine Renewables (AVR) was down 5.11 percent to $12.06. Among small caps, investor interest in Better Biodiesel (BBDS.OB) perked as its pending reverse-merger with GAT proved popular. The stock was up 35 percent to $1.89, while Xethanol (XNL) gained 18.29 percent to close at $0.97; MGP Ingredients (MSPI) lost 6.14 percent to close at $9.79.

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