Today in Biofuels: BioTown USA falters, Ethanex files for bankruptcy; 20 percent increase in global ethanol demand through 2011
Top Story:
In Indiana, the future of the “BioTown USA” of Reynolds is troubled, according to an Associated Press profile. The town’s nickname is drawn from a 2005 plan to become the first US town to draw all of its power, gas and fuel needs from 100% renewable energy, . The cancellation of a nearby VeraSun Energy corn ethanol project is just one “lowlight” in a series of missteps that exemplify a national problem with delivering the benefits of “new energy” to American homes.
Producer News:
In Kansas, Ethanex Energy filed for bankruptcy after failing to raise $1.5 million in interim financing for a planned $220 million, three-plant acquisition in Nebraska.
In Massachusetts, auditors for Verenium expressed doubt “uncertainty in our ability to continue as a going concern” in a 10-K filing with the SEC. The company has accumulated a deficit of $437 million to date, and a cash shortage looms despite $174 million in private placements completed in 2006 and 2007. The company said that “if we are unsuccessful in raising additional capital from any of these sources, we may need to defer, reduce or eliminate certain planned expenditures, restructure or significantly curtail our operations, file for bankruptcy or cease operations.”
In South Dakota, the POET Biorefining ethanol plant in Chancellor has reached its production capacity of 100 Mgy only 24 hours after completing a capacity expansion. The plant produced 51 Mgy in 2007, and was expanded in a project that commenced in early 2007. A waste wood burner is still under construction that will provide up to half of the plant’s required power.
In New York, Innovation Fuels and Arpadis Group have launched a joint venture, Innovation Fuels Europe, to market and distribute biodiesel to Europe. Innovation has a 40 Mgy biodiesel facility in New York that it undergoing expansion, as well as a project underway in Wisconsin.
International News:
In the Dominican Republic, a $500 million sugar, ethanol and power project in San Pedro has been delayed by its owners, Grupo Vicini and Central Romana Corporation, after negotiations with the government collapsed over incentives.
In Germany, the Reichstag will become the first parliamentary building worldwide to use 100 percent renewable energy. The building generates 40 percent of its energy from biofuel generators, and will expand its portfolio of energy sources to include wind and solar by summer 2008.
Research News:
Morgan Stanley is projecting that corn and soybean prices will increase 20 percent in 2008, to $6 per bushel for corn and $18 per bushel for soybeans. The Morgan Stanley research team said “U.S. production of corn and soybeans in the near term is inadequate to meet growing ethanol and export demand. Prices will need to move considerably higher.” Corn prices rose 35 percent in the past 12 months to a record $5.795, but has dropped to $5.2475 in recent weeks.
In New York, Cornell University will commence construction on a $10 million biofuels research laboratory. Prof. Beth Ahner told the Cornell Sun that “The overall goal is renewable energy, and sustainable ways to use agricultural products to generate energy for human use.†The project takes on added significance because of the extensive publicity generated by Cornell entomologist David Pimentel for a series of negative outlooks on the viability of ethanol as a fuel.
Bharatbook.com said that global ethanol demand will increase 20 percent per year through 2011, in releasing its four-year ethanol demand forecast. The forecast covers 17 countries with projections for 2011 and 2016.
Policy and Policymakers:
In England, Professor Robert Watson, the government’s top-ranking environment scientist, said that the recent Renewable Fuel Transport Obligation needed a “sustainability” clause to ensure that biofuels do not compete for land with staple food crops and or speed up deforestation.Watson told Radio 4 “It would obviously be insane if we had a policy to try and reduce greenhouse gas emissions through the use of biofuels that’s actually leading to an increase in the greenhouse gases from biofuels.”
Consumer and Fleet News:
The American Coalition for Ethanol said that cost of gasoline is between 6 and 9 cents per gallon lower because of the impact of ethanol. In related news, Blue Ridge Biofuels said that biodiesel prices have climbed to as high as $4.25 per gallon because of feedstock prices.
Financial News:
The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, jumped 4.21 percent to close at 115.78 as diversified agribusiness and ethanol recovered across the board. For the day, Archer Daniels Midland (ADM) gained 4.01 percent to close at $41.79, while among ethanol stocks Verasun Energy (VSE) soared 10.41 percent to close at $7.32. US BioEnergy (USBE) jumped 12.76 percent to $5.92. Among small caps, MGP Ingredients gained 7.58 percent to $7.10. Overall, advances led declines 6 to 1.
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