Today in Biofuels: 17 NGOs demand EU drop biofuels mandate or require sustainability; hundreds of German biodiesel companies on “brink of bankruptcy”; Beer vs Fuel debated in Kansas

Top Story:

A consortium of 17 non-governmental organizations called on EU Energy Commissioner Andris Piebalgs to require sustainability standards for biofuel production or eliminate biofuels mandates. The NGOs were responding to a draft biofuels mandate for the EU which will be finalized later this month and raises the use of biofuels to 10 percent of all fuels by 2020. The NGOs said that the plan did not fully address water shortage and deforestation issues. The NGOs called for a ban on the use of sugar cane, corn, and some varieties of canola and palm oils in biofuels production. The NGOs proposed threshold, that only feedstocks producing a minimum savings of 50 percent in CO2, has won significant support in the European Parliament.

Producer News:

In Washington state, Imperium Renewables has slashed its workforce in a cost-cutting move. The biodiesel maker said that operations at its 100 Mgy plant in Grays Harbor were not affected. The CEO of Imperium, Martin Tobias, resigned abruptly and without comment shortly before Christmas.

In Kansas, a designer of ethanol plants told the state basin advisory committee that 3 to 4 gallons of water were required for each gallon of ethanol fuel produced, but ethanol supporters added that it takes 1500 gallons of water to produce a barrel of beer and 150 gallons to produce a Sunday newspaper. Ethanol plants have been attracting criticism in arid states because plant operations at a 50 Mgy facility consume enough water to supply a 4,000 resident community.

International News:

In Japan, Oenon Holdings will construct a 14 Mgy rice ethanol plant in Hokkaido. The company has awarded contracts to Tsukishima Kikai and Marubeni and will commence operations in April 2009. The plant will have an initial capacity of 1.3 Mgy. Half of the $40 million project cost will be supplied by the Ministry of Agriculture, Forestry and Fisheries.

In Germany, JP Morgan Chase said that it expects that Suedzucker, the world’s largest sugar producer, will suspend ethanol production at its Cropenergies subsidiary due to unfavorable economics. It was unclear how long a potential shutdown, slated for as soon as next week, would last.

In India, the Punjab state government will restart six cooperative sugar mills and produce ethanol. The government said that operations at nine other sugar mills in the state would not be affected by the announcement. The government indicated that it would use the ethanol to generate electricity.

In Germany, die Welt reported that hundreds of German biodiesel makers are on the brink of bankruptcy due to increased German taxes on biofuels. The report said that the largest biofuels companies, Verbio AG, Petrotec AG and Biopetrol AG, would survive by cutting back production to service the German B5 mandate, but that the market for B100 has collapsed due to price hikes. The government raised the biodiesel tax by 60 percent on January 1 to $0.80 per gallon, up $32 cents per gallon.

Research News:

A study by just-auto.com projected that biofuels will account for only 3 percent of total fuel usage in 2020, and said that the long term contribution of first-generation biofuels will be negligible. The report projects that first-generation biofuels will fall out of favor, but that second-generation fuels will pick up the shortfall. The report projects that synthetic liquid hydrocarbons will be the dominant biofuel in the long term, and that the 3 percent market share will be on the rise.

Policy and Policymakers:

An executive with the American Sugar Alliance said that increased imports of sugar into the US from Mexico under the North American Free Trade Agreement will not affect the domestic sugar supply because of a proposed rule that all excess sugar be converted into ethanol. The proposed rule is the the Department of Agriculture will buy excess sugar and auction it to ethanol producers. Under NAFTA and the Caribbean Free Trade Agreement, the US is required to import 1.65 million tons of sugar per year.

In Washington, the Ecological Society of America, representing 10,000 scientists, proposed new principles for sustainable biofuels production in the US. The Society said that the US must focus on a systems approach that minimizes undesirable side effects in production such as soil erosion and groundwater contamination of groundwater and provide incentive for sustainable farming practices,  and avoid creating biomass monocultures. The ESA is conducting a biofuels conference in March.

Consumer and Fleet News:

In South Dakota, a study released by the state government said that E10 has become the most popular fuel in the state. 37 percent of all state fuel tax revenues come from E10, 31 percent gasoline, 31 percent diesel, and the remaining 1 percent from E85 and liquid petroleum gas (LPG).

Financial News:

The Biofuels Digest Indexâ„¢ (BDI), a basket of public biofuels stocks, fell 1.37 percent to 128.00 on renewed weakness in the large cap and mid cap ethanol sectors. For the day, decliners led advances 3 to 2, led by sector giant Archer Daniels Midland (ADM), which closed at $44.58, down 1.35 percent. Among mid caps, Pacific Ethanol (PEIX) fell 4.90 percent to $7.18 amidst continuing concerns about the long term prospects for corn ethanol. Among small caps, Xethanol (XNL) rose 15.00 percent to $0.92 while Intrepid Technology & Resources (IESV.OB) fell 5.56 percent to end the day at $0.017.

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