Today in Biofuels: Bush says rising corn prices should prompt more R&D, not retreat from biofuels; DARPA says ahead of schedule on biomas jet fuel
Top Story:
Speaking at the Washington International Renewable Energy Conference (WIREC), President George W. Bush said that the United States needed to “get off oil” and backed cellulosic ethanol as the best path to reducing energy dependence in the face of rising oil prices. The President acknowledged the effect of rising corn prices on the cattle and hog industries, but said “The best thing to do is not to retreat from our commitment to alternative fuels, but to spend research and development money on alternatives to ethanol made from other materials…What the government doesn’t need to do is send mixed signals. I understand private capital, understand how it flows. And so when people look at the United States to determine whether we’re committed to new technologies that will change how we live, they not only need to look at the federal investment, but they’ve got to understand there’s a lot of smart money heading into the private sector to help develop these new technologies. Complete text of President Bush’s remarks.
Producer News:
In Ohio, the 55 Mgy Greater Ohio Ethanol plant is scheduled to commence operations in Lima this month, using corn as a feedstock. The Ohio Corn Growers Association said that a total of seven ethanol plants are expected to start up this year in the state. However, the state Department of Development said that the number of ethanol development projects in the pipeline had dropped more than 80 percent since 2006. The 50 Mgy Mercer Energy plant is still expected to commence construction near Celina this summer, but no other new projects are still in the active construction pipeline.
In Pennsylvania, Keystone Ethanol Energy Producers is not releasing results of a feasibility study, completed by a company consultant on the prospects for the proposed 25 to 40 Mgy corn ethanol plant. A 2006 Crawford County Farm Bureau study had concluded that the project was not commercially viable, prompting Keystone to retain a consultancy to review the County’s findings. The company has indicated that it believes that the 2006 study is out of date because of changes in feedstock and fuel prices, and added that may reduce the plant’s capacity to acquire more feedstock from a smaller radius around the plant to ensure supply.
International News:
In Brazil, analyst F.O. Licht projected that Brazilian ethanol exports will increase 15 percent in 2008 to 1.06 billion gallons. The company said that sugarcane production costs have decreased 4 percent while competing feedstock costs, such as corn or wheat, have risen more than 40 percent, creating favorable competitive conditions. The 16 percent rise in gasoline prices would prompt increased exports to Europe.
In Nigeria, the Department of Petroleum Resources has started an investigation into how a load of unlabeled E20 reached the fuel supply. After the E20 was loaded into untreated tanks containing groundwater, the ethanol absorbed the water and every vehicle that used the blend was disabled or suffered engine damage. The government ordered all petrol to be taken off the market that showed possible signs of contamination. The scandal is a setback to the plans of the Nigerian National Petroleum Corporation (NNPC) to ramp up ethanol production and distribution.
In China, state agribusiness Cofco said that all ethanol projects and corn and wheat exports would be halted, except small exports to Hong Kong and Taiwan, due to grain shortages. In addition, executives confirmed that the high cost of imports made the Chinese government reluctant to increase imports. The company said that the government’s moves would solve the grain shortage, but that soybean imports will soar on rapidly increasing demand and a domestic production and land shortage. However, Gushan Environmental Energy Ltd, China’s largest biodiesel producer, said it planned to increase biodiesel capacity from 72 Mgy to more than 120 Mgy by the end of 2008.
In the Philippines, the central government signed a $30-million agreement to expand at the FE Clean Energy/Bronzeoak Clean Energy sugarcane ethanol plant. Capacity at the San Carlos, Negros Occidental plant will increase to 19 Mgy, from 14 Mgy.
In Hungary, Duna Development announced that it will build a 26 Mgy corn ethanol plant near Orosháza, in southeast Hungary. Duna said that Hungarian, Swiss, Austrian and German investors are backing the $126 million project that will open in fall 2009. The plant will also produce 18 Mw of electricity and 60 million cubic meters of natural gas.
Research News:
In Washington, the Defense Advanced Research Projects Agency said that the BioFuels project has passed through the first stage of laboratory testing ahead of schedule, and project managers say that they expect to produce JP-8 jet fuel with a production cost of less than $3 per gallon, primarily from soy and camelina. The project will ultimately use a multi-feedstock approach with a non-food focus. Project management said that cellulosic feedstocks such as algae and waste biomass were two to three years away, and that the primary challenge to using algae was the feedstock cost. The United States Air Force has set a goal of producing 50 percent of its fuels by alternative means by 2016.
In the Netherlands, AlgaeLink announced a new process for extracting algae oil without using chemicals, drying or an oil press. The company said that its patent-pending technique uses 26 kilowatts of power to produce 12,000 gallons of algae oil per hour, with a yield of 50 percent from the initial algae paste.
Policy and Policymakers:
In Washington, USDA Secretary Ed Schafer and Department of Energy Secretary Samuel Bodman today announced at the Washington International Renewable Energy Conference 2008 (WIREC) that the two departments will award$18.4 million, over three years, for 21 biomass research and development (R&D), and demonstration projects. The projects will support the removal of barriers to cost efficient production of biomass. The Biomass Research and Development Initiative, a joint USDA-DOE effort established in 200, will provide up to 80 percent funding for R&D projects, and 50 percent funding for demonstration projects. The USDA will provide up to $13.2 million, and DOE will provide up to $5.2 million in the next three fiscal years.
Consumer and Fleet News:
In Michigan, automakers have responded to news of Minnesota’s testing of E20. They stated flatly that the fuel does not have EPA approval and is illegal. A General Motors spokesman told USA Today that in a GM test of E20 in Australia, “40% of the vehicles sustained (catalytic converter) damage, which allowed essentially unchecked tailpipe emissions.” Chrysler added that use of E20 would void the manufacturers’ warranty.
Financial News:
The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, gained 1.28 percent to 128.65 as ethanol stocks recovered from a string of recent losses. Pacific Ethanol (PEIX) rose 3.92 percent to $4.77 while VeraSun Energy (VSE) gained 2.84 percent to close at $7.97. Among diversified agribusiness, Archer Daniels Midland (ADM) rose 1.26 percent to $46.58. Advances led declines 3 to 2.
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