German Ethanol Production Jumps
German ethanol production has jumped following the closure of the lucrative "splash and dash" window.
The scam, which undermined the production of biofuel in the EU, involved shipping biodiesel from Europe to the US where a "splash" of mineral-derived diesel was added, thereby rendering the entire consignment eligible for a US subsidy.
Invariably the fuel was then shipped back here and sold below European prices.
Latest figures now show that ethanol production in Germany reached 637,000 m³ in July 2009 to Jan. 2010, the first seven months of marketing year 2009/10, which is 17% more than the 544,000 m³ produced in the same period in 2008/09.
The main feedstocks used were 358,000 MT of wheat, 109,000 MT of corn, 307,000 MT of rye, and 117,000 MT of barley.
Corn Ethanol Production In The US Gets A Boost
News coming from the US Environmental Protection Agency appears to potentially open the door for large-scale increases in corn ethanol production in the US.
Only two months ago the EPA frustrated US farmers and the ethanol industry bully boys by refusing to bow to pressure and increase the maximum inclusion rate of ethanol in gasoline from 10% to 15%. The EPA said it needed more time to assess the effect of an increase on the environment.
In 2007 the Bush administration passed a law calling for annual biofuel production in the US to reach 36 billion gallons of biofuels, to be blended into the US gasoline supply, by 2022. An emissions reduction that they said would be like taking 27 million cars off the road.
The law currently allows the production of up to 15 billion gallons per year, which the industry is already close to reaching. Ethanol production from corn beyond that would have to be subject to a requirement that its "lifecycle" - from growing the corn to producing the biofuel - reduces greenhouse gas emissions at least 20 percent more than the production of gasoline.
The EPA are now saying that they've had a bit of a rethink and lo and behold it does. They will now be under strong pressure to relent on the so-called E15 blend too. If you've GOT to produce 36 billion gallons, then you've GOT to up the inclusion rate right?
That potentially leaves US ethanol producers free to ramp up production, which will require them taking an even larger share of US farmers' corn production than the one third of the 334 MMT currently being grown there that they now use.
That's good news for US corn farmers, although it potentially opens up a whole new can of worms elsewhere. Like what are the environmental implications of two thirds of all the corn grown in the US being used to produce biofuels? What are the knock on effects for the production of other crops there? And if most of the corn grown in the US goes for industrial use, driving global prices higher (they currently produce over 40% of the world's corn), then who's to say that Brazil won't be tempted to steal a few more million acres of rain forest to grow corn on?
Brazil Reduces Ethanol Mandate
In an effort to curb surging ethanol prices the Brazilian government have temporarily reduced the maximum amount of the biofuel allowed in gasoline from 25% to 20%. The reduction will run from Feb 1st until April 30th.
Ethanol is in short supply in Brazil after processors there switched to producing more sugar (and less ethanol) following the recent surge in prices of the sweetener. In addition the heavy rains that disrupted the harvest in Brazil in late 2009, also reduced the sucrose content of the cane.
US September Ethanol Production Up 13 Percent
US ethanol production reached 914 million gallons in September 2009, the first month of marketing year 2009/10 (Sept/Aug), say the US Energy Information Administration (EIA).
That's a 13% increase in the 806 million gallons produced in September 2008 and required 325 million bushels of corn (2008: 287 million bu).
Around a third of this year's entire US corn crop is expected to go into ethanol production.
US Corn Dips Out On Ethanol Mandate
The Environmental Protection Agency yesterday refused to bow to pressure from US ethanol producers and increase the maximum inclusion rate of ethanol in gasoline from 10% to 15%.
The EPA said it needed more time to assess the effect of an increase on the environment, and subsequently delayed a decision until next year.
Cynics say that it might not really be the environment that they are most concerned about in litigation-happy America. They are looking to Congress to protect them from potential lawsuits from car and boat owners against damage to their engines should a blend increase get approved.
A petition from the ethanol industry trade group Growth Energy argued that increasing ethanol levels are safe, and that the ethanol industry is being undermined and economically disadvantaged by this uncertainty fell on deaf ears. I don't know how they kept a straight face when they put that argument together, but that's another matter.
It would seem that when the EPA said to them "well if you're that confident then you won't mind signing here and absolving us for any liability against litigation" - Growth Energy suddenly remembered that they'd left the kettle on and had to dash.
German Ethanol Production Leaps
Production of ethanol in Germany leapt by 50% in the first two months of the 2009/10 marketing year (July/August), according to the trade body the Bundesmonopolverwaltung für Branntwein (BfA). Blimey, that's a mouthful isn't it missus?
The closure of the "splash and dash" loophole in the face of the US helped production increase from 105,000 cubic metres in July/August 2008 to 158,000 cubic metres this year, they say.
The main feedstock? Surprisingly not wheat but rye.
They don't mention the war, and why should they? We're all friends now.
More Ethanol Firms Filing For Bankruptcy
Brazilian ethanol producer Infinity Bio-Energy says that falling prices and lack of credit have forced it to file for bankruptcy protection.
The company operates five mills in the states of Mato Grosso do Sul, Minas Gerais and Espirito Santo.
Earlier this week US leading producer Pacific Ethanol said that four of it's subsidiaries had also filed for Chapter 11 bankruptcy protection.
Earlier this week President Barack Obama introduced a new proposal to boost US fuel economy, suggesting that all passenger vehicles must be able to average 35.5mpg by 2016. Ethanol's lower energy content means that vehicles burning fuel blends with high inclusion rates such as E85 (85% ethanol:15% gasoline) get a lot less mpg. Typically 20-30% less according to some reports, making complying with this new proposal AND burning E85 impossible for many.
It seems that the best hope for the ethanol industry from here is to push for the inclusion level in normal gasoline to be hiked from 10% to 15% as soon as possible.
US Wants More Ethanol In Gas
Agriculture Secretary Tom Vilsack says that he'd like to see the limit on the amount of ethanol that can be mixed with gasoline increased from 10 percent "fairly quickly".
The Environmental Protection Agency were asked last week to up the amount to 15 percent by US ethanol producers.
Vilsack himself goes even further saying that he sees no reason why this can't be increased to 20 percent in the not too distant future.
Unsurprisingly, the proposals met with the rapturous approval of US farmers, eager to see another ethanol-fueled price boom.
Such a move would simultaneously save the planet, provide thousands of new jobs, stimulate the economy and do everything short of promoting world peace, they say.
And it seems like Vilsack & Obama largely agree with them.
That's just what we need to get us out of a global recession, soaring world food prices. Again.
Pacific Ethanol Suspends Production At California Plant
Pacific Ethanol, the largest US West Coast-based producer of ethanol, said it is suspending production at it's 40 million gallon plant in Madera, California.
"Extended unfavourable market conditions for producing ethanol have prompted Pacific Ethanol to suspend operations beginning Jan. 12," the company said in a news release Friday. "The company, through its wholly-owned ethanol marketing arm, Kinergy Marketing, intends to continue serving its ethanol customers with production from other Pacific Ethanol plants and Kinergy suppliers," it added.
Soapy Bubble At Northern Ethanol
Two top executives with Toronto-based Northern Ethanol Inc. have reportedly resigned after the company failed to pay their wages and other expenses, according to documents filed with the U.S. Security Exchange Commission earlier this week.
"Effective Nov. 3, 2008, Mr. Steven Reader resigned his position as chief operating officer of our company," the SEC filing said, "due to the non-payment of wages and expenses owed to him. On Nov. 12, 2008, Mr. Reader left the company."
The SEC document also said that Chief Financial Officer Richard Smith resigned his position effective Nov. 17, "due to the non-payment of wages and expenses owed to him."
VeraSun Not The Last Merely The Latest
VeraSun Energy Corp, the largest publicly traded US ethanol company with 14 distilleries across eight states, said on Friday it was seeking bankruptcy protection.
It certainly isn't the first ethanol company to run into difficulties. Gateway Ethanol and Greater Ohio Ethanol both declared bankruptcy early last month.
Renova Energy LLC, a company that owns a partially built 20 million-gallons-per year ethanol plant in Idaho, declared bankruptcy in the summer, following Kansas-based Ethanex Energy Inc who declared bankruptcy in March.
So VeraSun becomes the largest and latest ethanol producer to run into trouble after corn and crude prices have halved from summer highs. It seems likely that there will be more casualties along the way, as US capacity is already higher than the government's mandate of 11.1 billion gallons for next year.
Pacific Ethanol shares are down 90 percent since their twelve month of $9.88 in December, and closed at one dollar Tuesday on Nasdaq. Shares of Aventine Renewable Holdings Inc, which closed on Tuesday at $2 on the New York Stock Exchange, have lost 85 percent of their value since hitting a 52-week high of $13.65 in December.
VeraSun Files For Chapter 11
VeraSun, one of the USA's largest ethanol producers, filed for Chapter 11 bankruptcy protection on Friday. The move, says the company, follows a series of events which have impacted on its liquidity and will give it the opportunity to reorganize under the protection of the Chapter 11 filing.
Commenting on the situation Don Endres VeraSun's CEO said; "Today's filing allows VeraSun to address its short-term liquidity constraints as we navigate historically challenging market conditions while we focus on restructuring to address the company’s long-term future. We appreciate the loyalty of our employees, customers and suppliers during this challenging time."
Explaining its downturn in fortunes the company said that it suffered significant losses in the third quarter of 2008 from a dramatic spike in its corn costs, reflecting in part costs attributable to its corn procurement and hedging arrangements, and historically unfavorable margins. Beginning in the third quarter, worsening capital market conditions and a tightening of trade credit resulted in severe constraints on the company’s liquidity position. Faced with these constraints, VeraSun and 24 of its subsidiaries filed their chapter 11 petitions to facilitate access to additional liquidity while they reorganize to take better advantage of VeraSun’s position as one of the nation's largest producers of ethanol.
Tax Changes, Red Tape, Put Soufflet's Ethanol Plans On Back Burner
Tax changes, announced last Friday in France's draft 2009 budget, have been condemned by biofuel producers as going against commitments to back biofuel investments as part of national environmental targets.
Government plans to phase out tax breaks for biofuels by 2012 raised fresh doubt over the viability of ethanol production, despite falling feedstock prices.
Construction of an ethanol production plant located in the Aube department of northeast France by the country's largest grain trading group Soufflet also continues to be held up by legal challenges from local opponents after a year-long delay, the company said on Thursday.
After obtaining the necessary planning permits earlier this year, Soufflet has decided to delay construction pending further court appeals by a local association.
Although Soufflet insist that they have not dropped the project they concede that the plant will not meet its target launch date of early 2009.
Ethanol Producer Bets On New Production Method
Paul Woods traces the origins of Algenol Biofuels to his college days in the mid-1980s, with the idea of alternative energy sustained by memories of the oil embargo of the prior decade.
At around that time, gasohol started taking root in the U.S., but then it quickly faded as oil prices fell.
But Woods stayed at work on the idea of using algae to produce ethanol. Along the way, Woods managed to build up and sell his natural-gas company, United Gas Management, and channel those resources into algae. He formed Algenol in 2006 along with Craig Smith and Ed Legere.
Now, armed with patents, several test facilities around the world, and some $70 million in private backing, Woods is targeting his first large-scale ethanol production facility with output that may rival that of some of the category's largest U.S. players.
Algenol inked a partnership with BioFields, which has committed $850 million to build an industrial-scale ethanol facility in Mexico on 102,000 acres of desert located near the Pacific coast and not far from Cabo San Lucas.
"We don't use farm land, we don't consume any food and [we use] no fresh water," reported Woods, who has said hopes to bring the plant on line by the end of next year. "It's time to focus on California, Texas and Florida. We want to have a major plant on U.S. soil. Cheap energy is a matter of national security."
Woods holds a half-full plastic bottle of Gatorade sideways to illustrate the functioning of the firm's 5-feet-by-20-feet plastic holding tanks. Using a patented algae, Alegenol fills each tank with seawater and places the water-based plant inside.
As the algae grows, Alegenol will tap into carbon dioxide from a nearby power plant and funnel it into the tanks. The algae takes the gas and converts it into oxygen and evaporated alcohol, which is then removed and concentrated for use as fuel.
Unlike other algae players that make diesel oil by processing algae itself, Algenol doesn't spend time or energy removing the algae. It uses the ethanol vapors that the plant emits.
Algenol forecasts sales from the Mexico plant by the end of 2009 at price levels comparable to other U.S. ethanol makers. It says the plant will have a capacity of 1 billion gallons per year, much of which will be transported by ship to Mexican oil refineries nearby to be blended into gasoline.
Brazil fines 24 local ethanol producers for environmental crimes
(AP) -- Brazil has slapped multimillion-dollar fines on 24 ethanol producers accused of environmental crimes in the country's dwindling Atlantic rain forest, Environment Minister Carlos Minc said Tuesday.
The companies together face 120 million reals (US$75 million) in fines for operating without licenses and planting sugarcane in illegally deforested parts of one of Brazil's most threatened ecosystems, Minc said. They will also be required to restore 143,300 acres (58,000 hectares) of degraded rain forest.
"We will not let companies that destroy the Atlantic rain forest have any peace," Minc told reporters. "If these environmental crimes continue, they will provide ammunition for those who want to slap trade barriers on the export of Brazilian ethanol."
International criticism of Brazil's massive sugarcane-based ethanol industry is mounting, with opponents saying it encourages environmental destruction and inflates world food prices. Brazilian officials deny those claims and note that ethanol producers are required to preserve much of their land.
The companies fined this week — mostly small Brazilian producers — violated rules requiring them to leave 20 percent of their forest lands untouched, Minc said.
The Atlantic rain forest once lined most of Brazil's coast, but only about 8 percent remains. In contrast, about 80 percent of the Amazon rain forest is intact, as laws there require land owners to keep 80 percent of their property as forest reserves.
Brazil is the world's largest ethanol exporter, and the second-largest producer after the United States. Its sugarcane-based fuel is significantly more efficient than the corn used to make U.S. ethanol.
Verasun Delays Opening Of Two Ethanol Plants
(FinancialWire)-- Verasun said it is delaying the opening of two midwestern ethanol distilleries until market conditions improve. The plants, each scheduled to produce 110 million gallons per year, were to be built in Welcome, Minnesota, and Hartley, Iowa.
VeraSun spokesman Michael Lockrem said record corn prices and low ethanol prices, relative to spikes in gasoline, have made making the biofuel difficult. The plants had been scheduled to come on line during the second quarter of 2008. Lockrem could not say if they would start this year.
Ethanol uproar threatens ADM chief's strategy
Skyrocketing food prices are threatening Patricia Woertz’s plan to recast grain processor Archer Daniels Midland as the eco-friendly giant of green energy.
ADM’s CEO tied her growth strategy to corn-based ethanol, the alternative fuel that’s suddenly emerged as the bogeyman of the world food crisis. Critics say ADM and other ethanol makers are driving up the price of everything from hamburgers to corn flakes.
“They’re getting blamed for higher food prices and people starving all over the world,” said Morningstar analyst Ann Gilpin. “ADM’s got a political fight on its hands and an image problem.”
Ethanol is turning into a business problem too, as an expanding array of opponents—from environmental and hunger activists to food companies and federal lawmakers—join forces to attack government supports that make it economically viable. Any meaningful reduction in those supports would cripple ADM’s ethanol business, which is already struggling under the weight of the same rising corn prices that have stoked outrage against the company.
Ms. Woertz lashed out at ethanol critics recently with a vehemence that underscores the company’s stake in the controversy. “To retreat from biofuels is wrong,” she said in an April 29 conference call with analysts. “It’s foolish. It’s dangerous. It’s an empty gesture. It won’t fill anyone’s stomach. It won’t fill anyone’s gas tank.”
Decatur, Ill.-based ADM makes an inviting target for anger over food costs. It is raking in profits in its corn and soybean-processing businesses. At the same time, its ethanol business—the third-largest in the world—gobbles up acres of corn. Ethanol is diverting more than 20% of the U.S. corn crop and pushing corn prices to their highest level in more than a decade.
Ethanol’s sudden fall from grace marks a sharp reversal for Ms. Woertz, 55. ADM hired the former oil executive two years ago to ramp up its ethanol business and repair a corporate image battered by a price-fixing scandal that sent three former executives to jail.
Back then, ethanol enjoyed widespread support from renewable energy advocates and the farm industry. A complex system of tax subsidies, consumption mandates and tariffs vouchsafed its profitability. Just five months ago, President Bush signed a law doubling the amount of ethanol that must be mixed into the nation’s gasoline supplies by 2015.
Citigroup estimates ethanol accounted for about 25% of ADM’s $3.16 billion in operating profit last year and 5.5% of its $44.02 billion in net sales.
But the same government supports that boosted ADM’s ethanol business sparked a building boom that raised overall capacity. The resulting glut is pulling down ethanol prices even as the new plants’ corn consumption drives costs higher. ADM’s operating income from ethanol plunged about 38% in the most recent quarter from a year earlier.
More ominously, the backlash against ethanol is building as higher corn prices contribute to a worldwide rise in food costs. The controversy is intensifying in the wake of food riots from Haiti to Egypt to Bangladesh.
Ms. Woertz declined to comment for this story, but she has blamed rising food costs on higher oil prices and warned gasoline prices would surge without ethanol.
But the arguments of ethanol foes are gaining force as their numbers grow. A group of 24 Republican senators called on federal officials to roll back ethanol consumption mandates. Food companies like Kraft are adding their lobbying clout as higher corn costs squeeze their profit margins.
The final version of this year’s farm bill would reduce the tax subsidy for corn-based ethanol by 6 cents, to 45 cents a gallon. Congress isn’t likely to reverse itself on the consumption mandates before the presidential election, said grains analyst Thomas Elam, formerly with the Agriculture Department. But he predicted if corn prices continue to rise then that could trigger action to reduce ethanol consumption mandates.
Significant cuts in government support for ethanol could torpedo Ms. Woertz’s growth strategy for ADM and put at risk the billions it has invested in the business.
“If the government mandates are eliminated, for ADM it would be horrible,” said Morningstar’s Ms. Gilpin. “Their profits are down in that business already.”—Crain’s Chicago Business News
Venezuela's Chavez: US Push For Ethanol Production A 'Crime'
CARACAS (AP)--Venezuelan President Hugo Chavez says a U.S. push to boost ethanol production during a world food crisis is a "crime." The socialist leader says he is concerned that so much U.S.-produced corn could be used to make biofuel, instead of feeding the world's poor. Chavez said Saturday that the corn needed to fill an average car with ethanol would be enough to feed seven people for a year.
When asked wasn't Venezuala the world's fifth largest oil exporter Chavez said "Me no undastand, me no speaka, 'ow you saya, the Queen's Eengleesh."
Brazil: stick your ethanol
Brazilian ethanol producers are concerned about a potential new market opportunity being lost as the German government has taken a decision to put on hold its mandatory ethanol-gasoline mix program, according to the Valor Economic business daily.
The German government has decided to postpone its plans to introduce a mandatory 10% ethanol mix in gasoline, starting in 2009. The government is reportedly concerned about existing automobiles that are not adaptable to ethanol and will have to instead fill up on more expensive premium gasoline, reported the Valor Economic.
In a related development, the UK government has decided to do away with the credit line for its E85 gasoline program, possibly keeping another potential market away from Brazilian exporters.
Brazilian ethanol producers reportedly exported a majority of their fuels to Europe in 2007. Increased exports have saved Brazilian sugarcane producers from going bankrupt as sugarcane prices fell below the cost of production on commodity exchanges, according to the Valor Economic.
Brazilian ethanol exporters are pro-actively lobbying with common interest groups in the US, to help create a global market for ethanol. But with the German and UK governments' decision to go slow on the implementation of mandatory ethanol-gasoline mixing, the possibility of a global ethanol market seems far-fetched, reported the news source.
Nogger - what future is there for an industry that can only survive IF "environmentally concious" governments continue to provide massive subsidies for it to exist?
Yet another US ethanol Co having financial difficulties
Pacific Ethanol Inc., a California biofuels darling that boasts political connections and an investment from Bill Gates, is short on cash and suffering from higher corn and plant construction costs, which threaten to derail the once-promising biofuels maker.
The Sacramento company on Monday posted record-high sales but a larger-than-expected $14.7-million loss in the fourth quarter, reflecting a financial squeeze that has clouded prospects for ethanol producers nationwide.
Pacific Ethanol reported the loss just days after it shored up its depleted coffers with a $40-million cash infusion from Lyles United, a company whose affiliates have provided construction services to Pacific Ethanol and had previously lent it funds.
The Lyles investment provided a bit of good news for the company and helped remedy several violations of Pacific Ethanol's credit agreement with a group of lenders. The company recently postponed construction of its Imperial Valley ethanol plant, said it suffered from large construction cost overruns and admitted to having a "material weakness" in its financial controls -- problems it says it has since fixed.
Chief Executive Neil Koehler on Monday attributed the fourth-quarter loss primarily to sharply higher corn costs combined with lower prices for ethanol caused by industry overexpansion. Pacific Ethanol, like most other U.S. ethanol producers, makes its biofuel from corn.
For the three months ended Dec. 31, Pacific Ethanol's gross margins -- the difference between the cost of production and the selling price of the ethanol -- plummeted to 1.3% from 14.6% in the final quarter of 2006. For the full year, the margin slipped to 7.1%, down from 2006's margin of 11%.
The lower margins couldn't cover the company's debt and overhead expenses, Koehler said. The quarterly loss equaled 39 cents a share, well off average analyst expectations of a 17-cent loss, according to a survey by Thomson Financial. In the fourth quarter of 2006, the company lost $3.1 million, or 11 cents a share.
The margin crunch has taken a toll industrywide. Grain giant Cargill Inc. suspended plans for an ethanol plant near Topeka, Kan.; an ethanol producer in Illinois fell into bankruptcy protection; and VeraSun Energy Corp. scrapped plans for an ethanol plant in Reynolds, Ind. -- a community that had hoped to call itself BioTown USA.
