Archive for December, 2008

Analysis: Brazil Pumps Ethanol to Japan

Posted on December 31, 2008. Filed under: Hydrous Ethanol | Tags: , , , , |

Analysis: Brazil pumps ethanol to Japan

Published: Dec. 30, 2008 at 6:57 PM

By CARMEN GENTILE
UPI Energy Correspondent

MIAMI, Dec. 30 (UPI) — Brazilian state energy firm Petrobras is planning to open gas stations in Japan with the intent of distributing its sugar-based ethanol to the energy-hungry nation.

While gasoline will constitute the majority of sales at Petrobras stations in Japan for now, sugar-based ethanol produced in Brazil will also be a featured fuel.

Brazilian energy officials said they hope to establish a foothold for Petrobras stations in Japan, then expand to other part of Asia, including India.

The South American ethanol producer leads among nations exporting ethanol to Japan, followed by the United States. Nearly 80 percent of Japan’s ethanol imports — estimated at more than 100 million gallons per year — come from Brazil.

Petrobras estimates that Japan’s ethanol consumption could reach nearly 3 billion gallons annually following the passing of a projected law regulating emissions there, Brazil’s Folha de Sao Paulo newspaper reported this week.

Japan’s interest in Brazil’s ethanol was piqued in 2004 when Prime Minister Junichiro Koizumi visited an ethanol production facility in Brazil and said his country was interested in the alternative fuel as a means of meeting the demands of the global environmental agreement known as the Kyoto Protocol.

The Brazil-Japan ethanol relationship has grown significantly since then with the announcement in 2005 of the formation of the Brazil-Japan Ethanol Co., a partnership between Petrobras and Japan’s Nippon Alcohol Hanbai.

At the time, Petrobras proclaimed the union would “seek to identify technical and commercial solutions for inserting ethanol into the Japanese energy matrix in substitution for fossil fuels and in line with the objective of reducing greenhouse gases.”

While environmental objectives for reducing Japan’s greenhouse gases have yet to be met, the Brasilia-Tokyo ethanol connection has grown stronger, with Japan pledging some $8 billion last year to purchase minority stakes in 40 ethanol plants throughout Brazil.

The two nations have also discussed the creation of a new ethanol pipeline in Brazil to help facilitate the export of the alternative fuel to Japan for decades to come.

In 2006 the two countries said they would provide each other insights on how to improve ethanol production in the hopes that more of Japan’s private-sector business would adopt the use of the alternative fuel.

While ties with Japan have certainly helped Brazil’s ethanol producers increase output and profits over the last several years, the industry continues to face problems with its image, both at home and abroad, as some critics of the world’s largest ethanol exporter contend that increasing Brazil’s ethanol production will lead to greater deforestation of the Amazon.

Dilma Rousseff, the chief of staff for Brazilian President Luiz Inacio Lula da Silva, defended the Brazilian ethanol industry at an international energy conference in November, saying the industry was being unfairly maligned for causing deforestation in the world’s largest rainforest, which in recent months has experienced an increase in the rate of destruction, according to satellite photos of part of the region.

Rousseff told officials Brazil must “destroy the myth that sugarcane fields are encroaching on the Amazon,” noting that Brazil’s cane production takes up less than 1 percent of the South American country’s total land.

For years Brazilian energy experts have refuted claims that the ethanol sector was a contributor to Amazon destruction, noting that the climate of the forest region is not ideal for cane growth. Much of Brazil’s ethanol production comes from the more temperate clime of Sao Paulo state in the country’s southeast.

However, detractors contend that Brazilian cane growers are already pushing the boundaries of the Amazon and that the industry’s expansion during the last several years because of rising oil prices is responsible for farmers switching to sugarcane in already established agricultural regions and prompting those growing other crops to encroach on the Amazon.

Alternative-fuel experts contend that the ethanol industry in Brazil will continue to grow as long as oil prices remain relatively high, a condition that could mean continued criticism of the Brazilian ethanol sector for years to come.

“Given the strong ethanol market, one would expect that in the medium term, production of ethanol will also increase as sugarcane production rises to meet both sugar and ethanol demand,” noted Amani Elobeid, an ethanol analyst at the Food and Agricultural Policy Research Institute at Iowa State University.

Criticism of the ethanol sector in Brazil is nothing new, nor is its defense by the Lula administration and the Brazilian leader himself.

Earlier this year Lula said the world’s oil companies were behind the bad press regarding his country’s ethanol sector, denying claims by some that the industry uses slave labor and is responsible for deforestation in the Amazon.

 

About Renergie

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally.  On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice.  On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is more economical, cleaner, renewable, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops. 

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Vilsack: Some Hard Choices on Ethanol

Posted on December 18, 2008. Filed under: Advanced Biofuel, Rural Development | Tags: , , , , |

Vilsack: Some Hard Choices on Ethanol

TIME (Thursday, Dec. 18, 2008)

By Michael Grunwald

 

Iowa is the ethanol capital of the nation, and President-elect Barack Obama has been a reliable supporter of biofuels, so it’s no surprise that former Iowa governor Tom Vilsack, his choice for agriculture secretary, has been an even more reliable supporter of biofuels, even chairing a national coalition on ethanol (ethyl alcohol, a fuel distilled from plant matter). “As governor of one of our most abundant farm states, he led with vision,” Obama said of Vilsack today, “fostering an agricultural economy of the future that not only grows the food we eat but the energy we use.”

 

Unfortunately, the scientific evidence is increasingly clear that the agricultural economy should stick to growing food; using cropland to grow fuel instead turns out to be an environmental and economic catastrophe, accelerating the conversion of forests and wetlands into new cropland while jacking up food prices around the world. (See pictures of the global food crisis here.)

 

Vilsack has never been known as a reformer on this issue. And neither has Obama. But while many conservationists and sustainable agriculture activists are disappointed in the appointment, they could have done a lot worse than Vilsack. The Farm Bureau hailed his nomination, but it would have done institutional cartwheels if Obama had picked a toe-the-line “aggie” like House Agriculture Committee Chairman Collin Petersen or former ranking member Charlie Stenholm. Vilsack does have predictably close ties to traditional agriculture and agribusiness, and he did run the nation’s leading corn and soybean state. But he’s also been a supporter of farm conservation programs, clean water regulations, and a cap-and-trade scheme to prevent global warming. “He’s not really an aggie,” says one lobbyist involved in food and agriculture issues.

 

In any case, Obama has made fairly conventional Cabinet picks even for departments where he’s called for dramatic reform; it’s hard to imagine him picking a dramatic reformer for a department where he hasn’t. That’s especially true for the intensely politicized Agriculture Department. Any serious opponent of the farm lobby — like the six implausible candidates, including rural affairs activist Chuck Hassebrook and organic farmer Fred Kirschenmann, that a group of prominent foodies recently suggested to Obama — would get ripped to shreds by the aggies on Capitol Hill. Vilsack probably won’t launch a Nixon-goes-to-China initiative to block environmentally destructive biofuels, but he might not resist that kind of initiative coming out of the White House and EPA.

 

That’s because Vilsack — like Obama and his energy and environment team — has shown an especially deep interest in climate change. He wouldn’t be the first devoted biofuels advocate to change his mind after recognizing they’re making climate change worse, not to mention contributing to food insecurity here and food riots in the Third World. In fact, a climate change task force Vilsack co-chaired for the Council on Foreign Relations recommended “that the United States phase out domestic subsidies for mature biofuels such as conventional corn-based ethanol.” That wouldn’t go over big in Iowa.

 

In January, I chatted with Vilsack about biofuels after a Hillary Clinton campaign event at a soy biodiesel plant in Newton, Iowa. The theme of the day was that biofuels produce jobs, and Vilsack was pushing Iowa as “the clean-energy capital of America.” But he was clearly aware of the new research suggesting that biofuels in general — and corn ethanol in particular — created more carbon emissions by accelerating deforestation than they saved by replacing fossil fuels. “It’s definitely something we need to study,” he said. Vilsack suggested that second-generation biofuels like cellulosic ethanol manufactured from switchgrass could solve the problem, particularly if it was grown on non-productive hillsides so that it wouldn’t displace food crops. “You can get that stuff 25 feet high-and you don’t need as much land or fertilizer or energy to grow it,” Vilsack told me. “If we want to save the rain forest, we’re going to have to invest in these advanced biofuels.”

 

In fact, the jury is still out even on advanced biofuels; switchgrass would clearly be a big improvement on corn, but it’s not yet clear if it would be an improvement over gasoline if there isn’t enough non-productive land. Perhaps advanced biofuels from crop waste or even municipal waste would work better. In any case, it was interesting to see Obama make two references Wednesday to “advanced biofuels,” and none to ethanol. And it’s interesting that Vilsack has thought about this stuff in some detail.

 

The EPA is now devising a “life-cycle” test designed to measure whether various biofuels really reduce overall carbon emissions from the field to the tank; the farm lobby is already pushing for a weak test, because a strict one could halt the biofuel revolution. The position Vilsack’s department takes on this arcane test could signal whether it will really serve, as Obama pledged today, “not big agribusiness or Washington influence peddlers but family farmers and the American people.” But that would require real change — not only for the department, but for Vilsack, and for Obama too.

 

 

About Renergie

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally.  On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice.  On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is more economical, cleaner, renewable, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops. 

 

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Agriculture Secretary Pick Vilsack to Face Farm Bill, Ethanol

Posted on December 17, 2008. Filed under: Hydrous Ethanol, Rural Development | Tags: , , , , |

Agriculture Secretary Pick Vilsack to Face Farm Bill, Ethanol

 

 

By Alan Bjerga

Bloomberg (December 17, 2008)

 

Tom Vilsack, who President-elect Barack Obama may name as his Agriculture secretary choice, will need to act quickly on unimplemented farm subsidies and lower crop prices, commodities and agriculture analysts said.

 

As the 30th head of the U.S. Department of Agriculture, the former Iowa governor, 58, would also be tasked with re-examining the nation’s biofuels policy. He replaces Ed Schafer, who has led the USDA since Jan. 28. Obama plans to make the announcement today at a news conference in Chicago, according to a Democratic official who spoke on the condition of anonymity.

 

Vilsack’s experience as a state legislator and leader of the nation’s largest corn-producing state makes him well-qualified to lead the third-largest Cabinet department in spending, said Senate Agriculture Committee Chairman Tom Harkin, like the former governor an Iowa Democrat. The USDA has a budget of about $100 billion and 110,000 employees.

 

“He knows production agriculture and he knows the changes needed to ensure its profitability and future,” Harkin said in an e-mail. Vilsack will join Obama at the news conference scheduled to begin at 10:45 a.m. Chicago time, where the president-elect may also designate Colorado Senator Ken Salazar as Interior secretary. Both posts are subject to confirmation by the Senate.

 

Vilsack was elected as Iowa’s governor in 1998, the first Democrat to win the office in 32 years. He was re-elected in 2002. Now an attorney at the Dorsey Trial group, he endorsed New York Senator Hillary Clinton during the Democratic presidential primary campaign after ending his own presidential bid in February 2007, before the first contest took place.

 

Overcoming Adversity

In his brief campaign, Vilsack offered his life story as an example of overcoming adversity to rise to high public office. The Pittsburgh native was orphaned at birth and adopted from a Catholic orphanage. He moved to Mount Pleasant, Iowa, his wife’s hometown, to practice law and raise their two sons. He was elected the town’s mayor in 1987 after a disgruntled citizen murdered the previous mayor. Vilsac would bring to the Department of Agriculture experience as the former chief executive of a state heavily reliant on agriculture and related industries. Along with corn, Iowa is one of the nation’s top producers of soybeans, hogs and eggs and is second in crop value to California among all states, according to government statistics.

 

As secretary, Vilsack would face immediate challenges putting into practice a politically popular yet harshly criticized farm bill and determining the direction of ethanol policy. He would also have to manage controversies over trade, food safety and animal welfare, agriculture and commodities markets analysts said.

 

‘Intense Volatility’

“We are in a period now of intense volatility in the agriculture industry,” said Clayton Yeutter, who held the top agriculture job under President George H.W. Bush and is a former U.S. trade representative, at a farm conference earlier this month. “Farmers here and in other countries are really struggling to figure out how to handle this.”

 

The $289 billion, five-year farm bill Congress passed in June over President George W. Bush’s veto largely remains unimplemented, with key decisions on how to tailor crop subsidy programs yet to be made, said David Kruse, a commodity trading adviser at Commstock Investments Inc., in Royal Iowa. The shape of a new subsidy based on farm revenue rather than crop price still hasn’t been determined. Depending on what formula the government chooses, farmers may decide whether to plant corn or soybeans based on how much support they may receive, Kruse said. Under one scenario, “you could receive $200 an acre for corn, and that’s significant,” he said.

 

Renewable Energy

Pressure to make subsidies generous is rising as corn, wheat and soybean prices plunge from records set earlier this year, he said. Farmers’ hopes for higher payments may run afoul of potential trillion-dollar budget deficits anticipated as Obama fights a global economic crisis, said Mark Maslyn, head of public policy for the American Farm Bureau Federation, the largest U.S. farmer group.

 

“Any Cabinet secretary is going to have the overarching problem of the budget,” he said, which may make it more difficult to fund Obama campaign promises such as $150 billion in renewable energy investment over 10 years. Biofuels subsidies themselves may come under attack should they be seen as budget-busters, making ethanol another key issue for the new secretary, he said.

 

Beyond the farm bill, the budget and biofuels, agriculture will continue to be a key part of the Doha round of international trade talks, Maslyn said. Also set for more prominence are food safety and animal-welfare standards, called into question after a series of high profile recalls involving Cargill Inc. beef, General Mills Inc. pizzas and the largest meat scare ever, the 143.4-million-pound Westland/Hallmark Meat Co. recall of February that involved animal cruelty.

 

How the new secretary handles these issues will go a long way toward determining whether the new administration will lead to a new direction for American food policy, said Jim Harkness, president of the Institute for Agriculture and Trade Policy in Minneapolis, Minnesota.

 

“We hope we will have a serious discussion that will be about more than tinkering at the margins,” he said.

 

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally.  On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice.  On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is more economical, cleaner, renewable, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops. 

 

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Ethanol Counting on Campaign Promises

Posted on December 12, 2008. Filed under: Hydrous Ethanol, Rural Development | Tags: , , , , |

Ethanol counting on campaign promises

Obama pledged his support, but policy, interests may collide

By Joshua Boak

Tribune reporter

chicagotribune.com (December 12, 2008)

 

Record corn prices drove VeraSun Energy into bankruptcy. Shares in Aventine Renewable Energy are trading for less than 50 cents, down 99 percent from their peak. Plans for 19 ethanol refineries were recently canceled, including nine in Illinois.

And because of its lower energy content, ethanol blend E85 effectively costs drivers about 30 cents more per gallon than gasoline, hurting its acceptance as an alternative fuel.

Promises of additional government support for ethanol producers from President-elect Barack Obama might not be enough to immediately rescue a business near and dear to farmers. Ethanol is a crucial part of Obama’s pledge to limit the use of foreign oil, a policy that connects energy to national security and economic development.

Government mandates established a demand for ethanol that proved greater than what the corn harvest could provide. That drove up corn prices and slashed the profit margins of refiners. Additional government efforts to strengthen the industry could only prolong that cycle.

“If you just give them more money, it’s just going to make the price of corn higher, which is going to make the situation worse for them,” said Tom Elam, who runs the agricultural consulting firm FarmEcon. “As a result of their unbridled enthusiasm, they have built an industry bigger than the government mandate and the ability of corn growers to provide.”

E85, a blend of 85 percent ethanol and 15 percent gasoline, rings up lower at the cash register for drivers, but gasoline delivers more miles per gallon and a better value to motorists. That puts companies that spent hundreds of millions of dollars constructing ethanol refineries across the Midwest into a bind because higher prices would salvage their profit margins yet make the biofuel less competitive against gasoline.

To restore profits to stable levels, refiners must shut down to cull supplies or have legislation that expands the potential markets for ethanol. Obama ran for president as a friend to the ethanol industry, promising to keep it open for business.

“Now’s not the time to pull the rug out from under the ag policies that help you find profitability in the marketplace,” Heather Zichal, the Obama campaign’s policy director for energy, environment and agriculture, said at the ribbon-cutting of an ethanol refinery in Marion, Ohio, a week before the election.

The Obama campaign platform called for funding research for biofuels and next-generation ethanol made from switch grass and garbage, so that the country would have an annual biofuel supply of 60 billion gallons by 2030, up from roughly 10 billion gallons this year.

His platform also called for every new car in America to be “flex fuel” by 2013, which could improve the ethanol market because drivers could fill up with gasoline or an ethanol blend.

Sanjay Shrestha, an alternative-energy analyst for Lazard Capital, said Obama’s victory was an “incremental positive” for ethanol, but he cautioned, “We shouldn’t draw the conclusion that it’s going to revitalize the corn-based ethanol industry.”

The auto industry plans for half of new vehicles to be flex fuel, running on E85. Introducing flex-fuel vehicles would require installing thousands of pumps across the country to handle E85, at a cost of about $50,000 each.

And in order for motorists to have a genuine choice with flex fuel, E85 must be competitively priced, a challenge because fuel economy with the high-percentage blend is worse than gasoline. A recent study sponsored by the Energy Department and the American Coalition for Ethanol claims that fuel economy improved slightly with 30 percent blends of ethanol, which could narrow the price gap.

Most gasoline bought at filling stations contains some ethanol. The government capped the blend at 10 percent ethanol and 90 percent gasoline. Ethanol currently accounts for about 8 percent of the country’s supply of transportation gasoline, according to the Environmental Protection Agency.

Raising the cap to 15 percent or 20 percent would stimulate more demand for ethanol, restoring higher profit margins to refiners, said Jeff Broin, chief executive of Poet LLC, the South Dakota-based owner of 26 refineries that recently said it was looking for takeover targets.

That solution could give headaches to drivers though, because using an ethanol blend higher than 10 percent would void the warranties for most car engines, said Alan Adler, a spokesman for General Motors. The engines were never designed for a higher ethanol concentration.

As president, Obama will have to parse through these types of conflicting interests to arrive at a policy. That could distance him from the interests of a Corn Belt that helped the former Illinois senator win the White House.

“When you’re governing, you have to make clear choices that are unambiguous in consequences and outcomes,” said John Hofmeister, the retired president of Shell Oil Co. and founder of the non-profit Citizens for Affordable Energy. “It’s different than campaigning, when you can test ideas.”

Obama’s energy plan looks beyond ethanol. It embraces a 2015 deadline for putting a million hybrid plug-ins on the road. The cars would charge their batteries in a wall socket, making them a potential rival to flex-fuel vehicles. Cars also could be powered by hydrogen cells and compressed natural gas, fuels with well-funded advocates.

If Obama wants to truly deliver on the broader goal of reducing dependence on foreign oil, the administration will have to decide which alternative fuel to pursue, Hofmeister said.

“If we only let market forces determine the outcome, 10 years from now we’ll still be debating how many infrastructures to support,” he said.

jboak@tribune.com

 

About Renergie

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally.  On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice.  On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is more economical, cleaner, renewable, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops.

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Ethanol Fumes: After VeraSun, More Trouble for Midwest Ethanol Makers?

Posted on December 10, 2008. Filed under: Hydrous Ethanol, Rural Development | Tags: , , , , |

The Wall Street Journal Environmental Capital Blog (December 9, 2008)

 

Ethanol Fumes: After VeraSun, More Trouble for Midwest Ethanol Makers?

Posted by Keith Johnson

 

There’s one industry that’s definitely not cheering lower oil prices—old-fashioned ethanol. The sector’s latest troubles are a reminder that not even the savviest clean-tech investors have found a way to cash in on first-generation biofuels.

 

After the implosion of VeraSun last month, which sent the Sioux Falls, S.D.-based ethanol producer into bankruptcy, ethanol makers have been braced for more fallout from a collapse in ethanol prices.

 

Another big name appears to be quivering: AltraBiofuels, an Omaha, Neb-based ethanol producer backed by celebrity venture capitalists such as Vinod Khosla and Kleiner Perkins. Altra is suspending production at its plants in Indiana and Ohio in part due to the collapse of ethanol prices.

 

An Indiana paper initially reported that Altra would shutter its two plants; Altra later described the December layoffs at its Ohio plant as a “furlough” and said it aimed to re-start production in January. The Indiana plant isn’t so lucky: “Due to the poor margin environment, we have made the decision to stop producing ethanol at our Cloverdale facility,” Altra said in a statement.

 

U.S corn ethanol makers might be getting a break from lower corn prices, but ethanol prices have also collapsed. Ethanol nearly hit $3 a gallon in June; today it trades just under $1.40 a gallon. That spells zero or even negative margins for most ethanol makers. Spare capital was already spent on higher corn prices earlier in the year, construction of new facilities, or on hedges on corn prices that went south.

 

That leaves much of the industry with little wiggle room to weather a prolonged period of depressed oil and ethanol prices, says David Woodburn, an alternative fuels analyst with ThinkEquity in Chicago. Temporary shutdowns can lower operating expenses, but don’t stanch the bleeding entirely. “What’s the timeframe for resuming production?,” he asks. “The real answer depends on what market conditions look like at that future decision point.”

 

Altra says it hopes to reopen the Indiana plant if the market recovers. “We have and will continue to monitor the margin environment on a daily basis and will assess a restart of the plant as soon as margins improve,” the company said in the statement.

 

Altra is a poster child of sorts for the corn ethanol business, attracting investment from Mr. Khosla and Kleiner Perkins. Former vice president Al Gore touted Altra as an example of the alternative-energy companies that could underpin a green revolution in the U.S.

 

But with oil prices hovering in the $40s, and ethanol prices halved since the summer, biofuel investors are setting their sights now on the next generation of biofuels made from inedible things like switchgrass. The idea is that oil prices will inevitably rebound just as the second-generation biofuel makers finally come to market.

 

 

About Renergie

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally.  On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice.  On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is more economical, cleaner, renewable, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops.

 

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RENEWED ENERGY: Ethanol Poses Big Challenge For New EPA Chief

Posted on December 2, 2008. Filed under: Blender's Tax Credit, Hydrous Ethanol | Tags: , , , , |

RENEWED ENERGY: Ethanol Poses Big Challenge For New EPA Chief

 

WASHINGTON (Dow Jones)–The U.S. Environmental Protection Agency chief who takes over next month faces an immediate challenge: how to handle a flood of ethanol into the market.

 

The U.S. Congress last year increased by almost five times the amount of biofuels that must be in the fuel supply by 2022. Next year alone, companies that blend ethanol must add 11.1 billion gallons, more than double the amount mandated two years earlier. The jump has been hailed by lawmakers from Minnesota and South Dakota, where the ethanol industry is creating jobs, and promoted as part of a solution to U.S. dependence on foreign oil.

 

But as the U.S. economy weakens and Americans buy less gasoline, ethanol poses a problem. The fuel is coming close to making up 10% of ordinary gasoline, the maximum permitted by regulations. At the same time, an effort to switch to blends slightly higher than e-10 depends on cooperation from Detroit’s auto makers, which are running out of cash and having trouble meeting more pressing obligations, such as funding day-to-day operations.

 

“We’re open to start thinking very carefully what’s going to happen in distributing this huge volume of biofuels,” Margo Oge, the director of the EPA’s office of transportation and air quality, said at a conference last month. “There is a lot of discussion about allowing into the markets other blends, like an e-15, an e-20, and obviously before we do that we have to make it clear that allowing these fuels will not have unintended consequences of impacting the environment or impacting the vehicles, both on-road and off-road vehicles.”

 

Supply, Demand Problem

The basic problem was underscored last month when the EPA announced that in 2009, blenders would have to ensure that 10.21% of the volume produced consists of renewable fuels, mostly ethanol. While some will be used in a high-ethanol blend known as e-85, the majority will be used in ordinary gasoline. The result is that ethanol will come close to the 10% level deemed acceptable by regulators – and by car makers, whose warranties for regular vehicles do not extend beyond e-10 blends amid concerns that midlevel blends will damage engines.

 

Protracted economic weakness has made the issue more pressing. In October, the U.S. Energy Information Administration forecast that U.S. oil consumption would fall by 5.4% next year, the first time since 1980 that annual consumption would decline by more than one million barrels a day. The result would be to boost ethanol’s share of supplies and force the country to decide about higher blends faster than planned.

 

The challenge is complicated by the fact that the ethanol industry is depending on support from General Motors Corp. (GM), Ford Motor Co. (F) and Chrysler LLC. These auto makers, which make dozens of flex-fuel vehicles that can run on e-85, warned Congress last month they were on the verge of collapse. Toyota Motor Corp. (TM) and Nissan Motor Co. (NSANY), which are in better financial condition, each make only two flex-fuel vehicle models, according to the National Ethanol Vehicle Association. Honda Motor Co. (HMC) doesn’t offer any flex-fuel vehicles in the U.S. market.

 

GM is already trying to figure out whether it could help the industry by allowing higher ethanol blends in existing vehicles.

 

“We’re working very collaboratively with EPA and the industry on test plans,” said Mary Beth Stanek, director of environment and energy at GM. She said that the auto maker would be open to modifying existing car warranties, but cautioned that any changes would depend on regulatory test results.

 

Risk Of Backfire?

The push for more ethanol could backfire. Last year, Rep. John Shadegg, R-Ariz., changed the laws governing fuel approvals when his 1973 boat was damaged after he refueled it with an e-10 blend. Now, the EPA must grant specific approval before new fuel blends enter the market. Previously, new blends could enter the market if the EPA hadn’t taken any action within 180 days after an application.

 

Farm state lawmakers are already gearing up for action. Sen. John Thune, R-S.D., and Sen. Amy Klobuchar, D-Minn., are among those pressing the EPA to quickly allow higher blends. They argue that unless government supports the existing ethanol industry now, the country will be unable to move to cellulosic ethanol, a next-generation biofuel that is derived from switchgrass or other plants and considered to be better for the environment.

 

“One of the things we’re exploring with EPA, with Sen. Thune, and others is whether we can move to e-12, e-13, without going through a huge rulemaking,” Klobuchar said. “With the economy the way it is, you want to keep fostering the ethanol industry with the understanding that we’re going to move to a more efficient ethanol with cellulosic. We’re concerned that if we don’t keep it moving, that we could have a problem.”

 

(Siobhan Hughes covers energy policy and climate change from Washington, D.C., and can be reached at 202-862-6654 or siobhan.hughes@dowjones.com.)

 

About Renergie

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally.  On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice.  On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is more economical, cleaner, renewable, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops.

 

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National Oil Companies Gaining Predominance

Posted on December 2, 2008. Filed under: Blender's Tax Credit, Hydrous Ethanol | Tags: , , , , |

The following article appeared in the December 2, 2008 issue of Green Car Congress.

 

 

National Oil Companies Gaining Predominance

Petroleum Intelligence Weekly published its annual ranking of the world’s 50 largest oil companies, a benchmark survey now in its 20th year. The main trend in the latest survey is the greater predominance of national oil companies, and particularly the substantial gains by Chinese and Russian companies.

The PIW Top 50 rankings are based on six operational criteria that allow the comparison of private sector and state-owned oil companies. This year’s rankings are based on operational data for 2007, the most recent period data available for such a wide group of firms.

In contrast to national oil companies, the major oil companies and other private sector firms generally lost ground, especially in the top tiers. In contrast to other super majors, Exxon Mobil held on to its number three position. A comparison with results from 10 years ago shows that the top major oil companies, as a group, now account for a smaller global share of the six ranking criteria than they did prior to the mega-mergers that created them.

Other key findings from the PIW Top 50:

  • Saudi Aramco maintains its hold on the top spot, the result of significant ongoing investment in both upstream and downstream oil and gas operations.
  • China’s CNPC surpasses BP and Shell.
  • Russia’s Rosneft makes biggest jump, from 24th to 16th.
  • Three new firms moved into the PIW Top 50—Uzbekneftegas, China’s CNOOC and Kazmunaigas of Kazakhstan—all majority state-owned.
  • Majority state-owned national oil companies now make up 27 of 50.
Piw2008

 

 

About Renergie

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally.  On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice.  On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is more economical, cleaner, renewable, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops.

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    About

    Renergie created “field-to-pump," a unique strategy to locally produce and market advanced biofuel (“non-corn fuel ethanol”) via a network of small advanced biofuel manufacturing facilities. The purpose of “field-to-pump” is to maximize rural development and job creation while minimizing feedstock supply risk and the burden on local water supplies.

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