February 2007 Digest

The IPCC finally released their long-awaited summary of findings on global warming. Al Gore's movie won the Oscar for Best Documentary. Does that mean that people are finally convinced of the truth about global warming? Does it matter?

There are plenty of reasons to be concerned about the state of the atmosphere without having to declare one way or the other on the issue of global warming. Living in Los Angeles, raising a daughter with lifelong battles with allergies, bronchial congestion, and asthmatic inhalers, I am more concerned with particulate matter and reactive organic gases than I am about gradual global temperature increases due to greenhouse gas. No one has to convince me that we need to act now to clean up the air we breathe.

As ACORE attests, a welcome consequence of a switch to renewable fuels is that we will move closer to a carbon-neutral balance for our atmosphere. If we can simultaneously reduce our mountains of decaying trash and fire-prone wood waste to produce biofuels through bioconversion, so much the better for our environment.

BIOstock Blog--------------
• SunOpta goes global with steam explosion biomass pre-treatment
• Wood beats corn stover in U.S. cellulosic ethanol race
• "Green Tags" reward Renewable Energy development
• Trees-for-Fuel Biomass Plants Mitigate Fires

BIOconversion Blog--------------
• BP invests in UC Berkeley/UIUC Biosciences Institute
• Banking big on Renewable Energy
• Corn Sugar Fermentation - Educational Videos
• Wood beats corn stover in U.S. cellulosic ethanol race
• Online game is a Climate Challenge
• U.S. DOE backs funding of six cellulosic ethanol biorefinery projects

BIOoutput Blog--------------
• The IPCC Report solution? Renewable Energy.
• Green Options is the place to be
• California's Transportation Action Plan targets 2020
• INDY 500: Drivers, start your ethanol-fueled engine
• Clean and Efficient Biogas Fuel Cells

BIOwaste Blog--------------
• PyroGenesis' BIOwaste Conversion Systems
• Small Town with a BIG green vision
• Green Options for Recycled Paper

Each month we provide a similar breakdown of article titles from our favorite "companion" site - Biopact Blog. This list is kept current and is accessible in the right hand column of each of the three blogs.

Please forward a link to this digest to anyone you know who would be interested in keeping track of change that will affect us all. They can add their name to the mailing list on the BioConversion Blog.


technorati digest, biofuels, conversion, bioenergy, cellulosic, feedstock, ethanol

U.S. DOE backs funding of six cellulosic ethanol biorefinery projects

U.S. Department of Energy (DOE) Secretary Samuel W. Bodman hosted a press conference today to announce selection of six cellulosic ethanol biorefinery projects that will contribute to the President’s goal of reducing U.S. gasoline consumption by 20 percent in ten years (President’s Bush’s Twenty in Ten Initiative).

The government's matching fund program was considered by many to be a necessary step to get cellulosic ethanol off the ground. With six separate initiatives being pursued by private industry, the better technologies will "rise to the top." Each is sited in a different region of the country using a broad array of feedstock - a testament to the universality of the bioconversion approach.

The project winners are a who's who of developers that have been chronicled on this BIOconversion Blog over the past year and a half. For more information on them, use the search engine at the top of this webpage.

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DOE Selects Six Cellulosic Ethanol Plants for Up to $385 Million in Federal Funding
Funding to help bring cellulosic ethanol to market and help revolutionize the industry

WASHINGTON, DC – U.S. Department of Energy (DOE) Secretary Samuel W. Bodman today announced that DOE will invest up to $385 million for six biorefinery projects over the next four years. When fully operational, the biorefineries are expected to produce more than 130 million gallons of cellulosic ethanol per year. This production will help further President Bush’s goal of making cellulosic ethanol cost-competitive with gasoline by 2012 and, along with increased automobile fuel efficiency, reduce America’s gasoline consumption by 20 percent in ten years.

“These biorefineries will play a critical role in helping to bring cellulosic ethanol to market, and teaching us how we can produce it in a more cost effective manner,” Secretary Bodman said. “Ultimately, success in producing inexpensive cellulosic ethanol could be a key to eliminating our nation’s addiction to oil. By relying on American ingenuity and on American farmers for fuel, we will enhance our nation’s energy and economic security.”

Today’s announcement is one part of the Bush Administration’s comprehensive plan to support commercialization of scientific breakthroughs on biofuels. Specifically, these projects directly support the goals of President Bush’s Twenty in Ten Initiative, which aims to increase the use of renewable and alternative fuels in the transportation sector to the equivalent of 35 billion gallons of ethanol a year by 2017. Funding for these projects is an integral part of the President’s Biofuels Initiative that will lead to the wide-scale use of non-food based biomass, such as agricultural waste, trees, forest residues, and perennial grasses in the production of transportation fuels, electricity, and other products. The solicitation, announced a year ago, was initially for three biorefineries and $160 million. However, in an effort to expedite the goals of President Bush’s Advanced Energy Initiative and help achieve the goals of his Twenty in Ten Initiative, within authority of the Energy Policy Act of 2005 (EPAct 2005), Section 932, Secretary Bodman raised the funding ceiling.

“We had a number of very good proposals, but these six were considered ‘meritorious’ by a merit review panel made up of bioenergy experts. So I thought it would be best to front-end some more funding now, so that we could all reap the benefits of the President’s vision sooner,” Secretary Bodman said.

Combined with the industry cost share, more than $1.2 billion will be invested in these six biorefineries. Negotiations between the selected companies and DOE will begin immediately to determine final project plans and funding levels. Funding will begin this fiscal year and run through FY 2010. EPAct authorized DOE to solicit and fund proposals for the commercial demonstration of advanced biorefineries that use cellulosic feedstocks to produce ethanol and co-produce bioproducts and electricity.

The following six projects were selected:

1. Abengoa Bioenergy Biomass of Kansas, LLC of Chesterfield, Missouri, up to $76 million.
The proposed plant will be located in the state of Kansas. The plant will produce 11.4 million gallons of ethanol annually and enough energy to power the facility, with any excess energy being used to power the adjacent corn dry grind mill. The plant will use 700 tons per day of corn stover, wheat straw, milo stubble, switchgrass, and other feedstocks.
Abengoa Bioenergy Biomass investors/participants include: Abengoa Bioenergy R&D, Inc.; Abengoa Engineering and Construction, LLC; Antares Corp.; and Taylor Engineering.

2. ALICO, Inc. of LaBelle, Florida, up to $33 million.
The proposed plant will be in LaBelle (Hendry County), Florida. The plant will produce 13.9 million gallons of ethanol a year and 6,255 kilowatts of electric power, as well as 8.8 tons of hydrogen and 50 tons of ammonia per day. For feedstock, the plant will use 770 tons per day of yard, wood, and vegetative wastes and eventually energycane.
ALICO, Inc. investors/participants include: Bioengineering Resources, Inc. of Fayetteville, Arkansas; Washington Group International of Boise, Idaho; GeoSyntec Consultants of Boca Raton, Florida; BG Katz Companies/JAKS, LLC of Parkland, Florida; and Emmaus Foundation, Inc.

3. BlueFire Ethanol, Inc. of Irvine, California, up to $40 million.
The proposed plant will be in Southern California. The plant will be sited on an existing landfill and produce about 19 million gallons of ethanol a year. As feedstock, the plant would use 700 tons per day of sorted green waste and wood waste from landfills.
BlueFire Ethanol, Inc. investors/participants include: Waste Management, Inc.; JGC Corporation; MECS Inc.; NAES; and PetroDiamond.

4. Broin Companies of Sioux Falls, South Dakota, up to $80 million.
The plant is in Emmetsburg (Palo Alto County), Iowa, and after expansion, it will produce 125 million gallons of ethanol per year, of which roughly 25percent will be cellulosic ethanol. For feedstock in the production of cellulosic ethanol, the plant expects to use 842 tons per day of corn fiber, cobs, and stalks.
Broin Companies participants include: E. I. du Pont de Nemours and Company; Novozymes North America, Inc.; and DOE’s National Renewable Energy Laboratory.

5. Iogen Biorefinery Partners, LLC, of Arlington, Virginia, up to $80 million.
The proposed plant will be built in Shelley, Idaho, near Idaho Falls, and will produce 18 million gallons of ethanol annually. The plant will use 700 tons per day of agricultural residues including wheat straw, barley straw, corn stover, switchgrass, and rice straw as feedstocks.
Iogen Biorefinery Partners, LLC investors/partners include: Iogen Energy Corporation; Iogen Corporation; Goldman Sachs; and The Royal Dutch/Shell Group.

6. Range Fuels (formerly Kergy Inc.) of Broomfield, Colorado, up to $76 million.
The proposed plant will be constructed in Soperton (Treutlen County), Georgia. The plant will produce about 40 million gallons of ethanol per year and 9 million gallons per year of methanol. As feedstock, the plant will use 1,200 tons per day of wood residues and wood based energy crops.
Range Fuels investors/participants include: Merrick and Company; PRAJ Industries Ltd.; Western Research Institute; Georgia Forestry Commission; Yeomans Wood and Timber; Truetlen County Development Authority; BioConversion Technology; Khosla Ventures; CH2MHill; Gillis Ag and Timber.

Cellulosic ethanol is an alternative fuel made from a wide variety of non-food plant materials (or feedstocks), including agricultural wastes such as corn stover and cereal straws, industrial plant waste like saw dust and paper pulp, and energy crops grown specifically for fuel production like switchgrass. By using a variety of regional feedstocks for refining cellulosic ethanol, the fuel can be produced in nearly every region of the country. Though it requires a more complex refining process, cellulosic ethanol contains more net energy and results in lower greenhouse emissions than traditional corn-based ethanol. E-85, an ethanol-fuel blend that is 85-percent ethanol, is already available in more than 1,000 fueling stations nationwide and can power millions of flexible fuel vehicles already on the roads.

technorati BIOblog, BIOconversion, bioenergy, biofuels, ethanol, hydrolysis, syngas, cellulosic, gasification, decentralization

Online game is a Climate Challenge

The BBC Weather Centre has a wealth of information on their Climate Change website about global warming - evidence, impacts, adaptation, policies, and links. They recently ran a Climate Change experiment that utilized the spare computing power of a quarter of a million participants - mostly throughout Europe and the eastern U.S. Through this huge distributed processing project, thousands of climate change models could be run and the results computed. Their findings:

• The UK should expect a 4°C rise in temperature by 2080 according to the most likely results of the experiment.
• Heatwaves are on the rise and, by 2080, summer temperatures of 40°C will be common. Winters will also be warmer.
• Summer rainfall is set to decrease and the UK can expect more frequent droughts
• Winters will bring less snow and more rain, especially in the north and west. Storms will be more frequent and more severe.
• Different regions around the world can expect varying levels of warming. New Zealand faces a smaller temperature rise than the UK's 4°C change, while Alaska should prepare for a greater increase

They recently published a free, online serious game that simulates the decision-making process engaged by world leaders in counter-acting the global warming phenomenon. It is important that each stakeholder of the energy/environment dialog recognize the need for coordination of many nations efforts to forestall the effects threatened by interlinked future challenges.

Thanks to our European friends at Biopact for supplying the base information on this story. Monitoring bioenergy stories from their well-researched viewpoint should be a part of the regimen for anyone that is serious about global approaches to solving the energy/environmental challenges before us. A monthly digest of their most relevant stories are published here - see February's digest.


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Why make a game about climate change?

The BBC decided a game might be a good introductory route into climate change and some of the issues this creates for governments around the world. At times it was necessary to strike a compromise between strict scientific accuracy and playability. For this reason, Climate Challenge should not be taken as a serious climate change prediction. Wherever possible, real research has been incorporated into the game.

Apart from the primary goal of creating a fun game, Climate Challenge's producers aimed to:
• give an understanding of some of the causes of climate change, particularly those related to carbon dioxide emissions.
• give players an awareness of some of the policy options available to governments.
• give a sense of the challenges facing international climate change negotiators.

Players must respond to catastrophic events caused by climate change as well as natural and manmade events, which may or may not be linked to climate change. This aspect of the game is meant to give some idea of what could happen as the Earth's climate changes and also introduce the unpredictable nature of some natural events.


technorati BIOenergy BlogRing, BIOconversion, bioenergy, biofuels, legislation, decentralization, security

Wood beats corn stover in U.S. cellulosic ethanol race

We knew it was coming. Vinod Khosla has finally made a bold move to back up industry-wide speculation that cellulosic ethanol would soon emerge as the next phase in ethanol production. The surprise is that wood would be the feedstock of choice given the vast headstart of corn-based biorefineries in the country and the obvious synergy of basing corn stover conversion technologies near sugar fermentation plants.

However, the high energy potential of wood cellulose, the ready available of cheap waste, and the search for a renaissance of forestry-based industries makes the announcement a welcome one to the "nation's woodpile" in the southeastern states.

See the Range Fuels, Inc. press release at the BIOstock Blog.

technorati BIOblog, BIOstock, biomass, cellulosic, Khosla, forestry

Corn Sugar Fermentation - Educational Videos

There are not too many videos available online that can be used to educate the lay audience on the processes under discussion by this Blog. However, there are videos available that explain the processes involved in conventional sugar fermentation.

Pioneer Hi-Bred International, Inc., has compiled a series of brief WMV files that provide an overview of the processes involved in sugar fermentation.

Pioneer Hi-Bred International, Inc., a DuPont company, is the world's leading developer and supplier of advanced plant genetics to farmers worldwide.

With headquarters in Des Moines, Iowa, Pioneer develops, produces and markets a full line of top-quality seeds and forage and grain additives and provides services to customers in nearly 70 countries.

----------------
Tour an Ethanol Plant

Tour an Ethanol Plant
Watch:
1. Dry Milling
(WMV | 01:02 | 1.64 MB)
2. Liquefaction
(WMV | 00:20 | 1.64 MB)
3. Saccharification
(WMV | 00:15 | 1.64 MB)
4. Fermentation
(WMV | 00:43 | 1.64 MB)
5. Batch Fermentation
(WMV | 00:20 | 1.64 MB)
6. Distillation
(WMV | 01:11 | 1.64 MB)
7. Molecular Sieve
(WMV | 00:34 | 1.64 MB)
8. Distillers Grain
(WMV | 01:19 | 1.64 MB)


technorati BIOblog, BIOconversion, bioenergy, biofuels, ethanol

Banking big on Renewable Energy

It is not always easy to be a cheerleader or evangelist for a new technology paradigm. You have to be ready to accept rejection by the saviest skeptics - particularly the big banks.

People promoting expensive biomass conversion technologies and waste management reforms have felt their share of skepticism. They have come to realize that if public demand is waning, the banks will be unenthusiastic about risking their funds.

That's why 2006 was such an important year. It started in November, 2005 when one of the world's biggest and most forward looking banks, Goldman Sachs, announced that it would invest over $1 Billion in alternative energy - solar, wind, and biofuels. It turns out they exceeded that number by half.

Not wanting to be outdone, other banks appear to be re-evaluating their conservative opinions about environmental markets. This bodes well for a sustained effort to shift to renewable fuels and infrastructure. Where the banks go, the politicians are sure to follow.

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For Goldman Sachs, Long-Term Greed Means Going Green
by Christopher Wright on The Katoomba Group's Ecosystem Marketplace

In November 2005 Goldman Sachs surprised many people in the financial sector when it announced an ambitious new environmental policy framework. The slew of green measures included commitments to consider the environmental and social impacts of investments, encourage the development of environmental markets, and reduce the investment bank's overall climate footprint.

"Goldman Sachs really pushed the envelope with [its] policy framework," says Jon Sohn, a senior associate at the World Resources Institute. "They are sending a message that valuing the environment can go hand in hand with wealth creation."

Due to strong demand and opportunity, it exceeded its original pledge to invest $1 billion in alternative energy by 50 percent.

Reflecting its appetite for innovation, Goldman also purchased a minority stake in Iogen Corporation, which is attempting to pioneer the conversion of agriculture materials like straw, corn stalks, and switchgrass into ethanol.

A notable finding of Goldman Sachs' research is that the impact of pressures from NGOs and SRI funds, or single pollution incidences, impacts shareholder value much less than government regulation. Accordingly, the investment bank has strongly come out in favor of regulation that creates long-term value for greenhouse gas emissions reductions and new technologies. Voluntary action, it reasons, is insufficient.

"We are not advocating for any specific federal regulatory policy," says Shah. "Rather, we want to inform decision-makers of good market-principles that they should think about."

Chapple agrees with this approach: "The best input into policy that investment banks can provide is to conduct and present research to government and stakeholders that identifies the obstacles they face in expanding their investments into alternative energy and clean technologies," she says. In turn, government should set clear policy targets and stick to them, thereby providing regulatory certainty for investors.

Based on its financial standing and reputation, Goldman Sachs is a bellwether for investors. When it speaks, Wall Street listens. So given its endorsement of the sustainability agenda, are we seeing the contours of a green arms race in the financial industry?

Well, perhaps. Last October Morgan Stanley tripled Goldman's $1bn commitment, announcing plans to invest roughly $3bn in carbon credits and energy projects to reduce greenhouse gas emissions during the next five years. In the long run, however, only effective and stable federal regulation can put a robust price on carbon.

Market analysts have called the U.S carbon market a "hibernating giant." With Goldman Sachs leading the way, the conservative wing of Wall Street seems to have woken up. And so the question is: when will lawmakers on Capitol Hill follow suit?


technorati BIOblog, BIOconversion, bioenergy, biofuels, ethanol, hydrolysis, cellulosic, legislation, investment

BP invests in UC Berkeley/UIUC Biosciences Institute

It's only been three months since Californians voted down Prop 87 - The Clean Alternative Energy Initiative. We may never know what research and advancements would have resulted from the plan's taxation of California oil producers (mostly Chevron).

However, it now appears that we will see what BP's (aka British Petroleum or Beyond Petroleum) corporate investment in similar research will accomplish. Even though the $500 million represents about 1/8th the total sought by Prop 87, it will, in all likelihood, be more efficiently applied to solving the problems. If nothing else the major stakeholders in the bid winning collaboration - UC Berkeley, the University of Illinois/Urbana Champaign and the Lawrence Berkeley Lab had to compete for the opportunity. They also received the backing of the State government who made substantial tax concessions to make the offer more attractive.

Undoubtedly, this is good news for venture capitalists in Silicon Valley who are poised to read business implications into every innovation developed from the research. The Biosciences Institute is a great "seed" enterprise that will impact the rate of learning and deployment of important advances in bioenergy. Kudos to all parties involved.

Competition is key to stimulating advancements faster and more efficiently. Maybe Chevron, who stood to lose $3-4 Billion if Prop 87 had passed, will pick up the gauntlet and invest in a similar research collaboration elsewhere. Now that the formula has been set, there is more than one state interested in being home to biofuel development.

Here are some excerpts from BP's press release...

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BP Selects Strategic Partners For Energy Biosciences Institute
University of California Berkeley, the University of Illinois and the Lawrence Berkeley National Lab join research effort

BP today announced it has selected the University of California Berkeley and its partners the University of Illinois, Urbana-Champaign and the Lawrence Berkeley National Laboratory to join in a $500 million research program that will explore how bioscience can be used to increase energy production and reduce the impact of energy consumption on the environment.

The Energy Biosciences Institute will perform ground-breaking research aimed at the production of new and cleaner energy, initially focusing on renewable biofuels for road transport. The EBI will also pursue bioscience-based research in three other key areas; the conversion of heavy hydrocarbons to clean fuels, improved recovery from existing oil and gas reservoirs, and carbon sequestration.

“The proposal from UC Berkeley and its partners was selected in large part because these institutions have excellent track records of delivering ‘Big Science’ – large and complex developments predicated on both scientific breakthroughs and engineering applications that can be deployed in the real world,” said BP Group Chief Executive John Browne. “This program will further both basic and applied biological research relevant to energy. In short, it will create the discipline of Energy Biosciences. The Institute will be unique in both its scale and its partnership between BP, academia and others in the private sector.”

Said U.S. Secretary of Energy Samuel W. Bodman. "As we continue to promote alternative energy as a means to strengthen our nation's energy security, it is important that private industry join in support of research to advance President Bush's goal of making clean energy sources, like bioenergy and biofuels, commercially available."

"I can’t tell you how excited I am that BP has chosen UC Berkeley and California for its new $500 Million Energy Biosciences Institute," said California Governor Arnold Schwarzenegger. "I’m proud that the private sector has recognized California’s leadership and commitment to clean energy. This is a perfect complement to our new low-carbon fuel standard which will cut carbon emissions 10 percent from our cars by the year 2020, and with research facilities like the Energy Biosciences Institute, California will continue to be a leader in the Cleantech industry."

technorati BIOblog, BIOconversion, bioenergy, biofuels, ethanol, research, sequestration

Biopact: February 2007 Digest

Biopact Blog writes many stories that are relevant to the study of BIOstock, BIOconversion, BIOoutput, and BIOwaste.

Rather than summarize and reprint excerpts from this excellent source of information, a breakdown of each month's most relevant titles is provided in one updated article...

BIOstock...
• Eyes in the sky: ESA images forests in 3-D to analyse biomass
• Net energy of biofuels made from crops grown in the North comes at a high cost - study
• Green giant Russia to produce 1 billion tons of biomass for exports
• China to develop energy forests the size of England
• Valencia to make ethanol from orange peels
• Florida grants US$ 1 million to study cellulosic ethanol from sugarcane bagasse

BIOconversion...
• BP selects Berkeley and partners for US$500 million energy biosciences institute
• Can you tackle global warming? Play the Climate Challenge game to find out
• U.S. to import biofuels from Brazil, Panama
• DuPont outlines commercialisation strategies for biobutanol, cellulosic ethanol
• Quick comparison of renewable energy and fossil fuel prices

BIOoutput...
• Scientists propose cold storage of CO2
• MIT scientists look at saline aquifers for CO2 storage
• The bioeconomy at work: methane storage tanks for cars made from corn cobs
• Going negative: carbon-burial test will monitor leaks
• Capturing carbon with "synthetic trees" or with the real thing?
• Climate change heating up China faster than rest of the world - report
• Fuel Cell Energy signs 10-year manufacturing & distribution agreement for its biofuel capable fuel cells in South Korea
• EU opens public consultation on carbon capture and storage
• EU seeks to force transport CO2 rules on trade partners

January 2007 Digest

The Renewable Industrial Revolution

After more than 150 years, the Industrial Revolution is overdue for a major retooling. No longer can we heedlessly combust biomass and fossil resources without consideration for the carbon emissions and potential energy that "floats out the smokestack." But what can possibly replace the status quo paradigm that we have based so much of our energy, industry, transportation, and lifestyle liberties upon?

This BIO "BlogRing" - BIOstock Blog, BIOconversion Blog, BIOoutput Blog, and the new BIOwaste Blog - is intended to help identify the multi-faceted pieces of emerging biomass technologies. - is intended to help identify the multi-faceted pieces of emerging biomass technologies. Like a Rubik's cube, the parts are inextricably linked together, but currently in disarray. By addressing each facet independently, challenging issues will become clear. By shifting perspective, new collaborative solutions can be synthesized. Not just one solution but many, because the ultimate solution for any market will depend upon the resources, ecology, and stakeholders of that market.

Here are their most significant developments of January 2007, organized by blog...

BIOstock Blog--------------
• Utilizing Pine Beetle Wood Waste as BIOstock
• Japanese wood-to-ethanol facility uses Arkenol process
• CHINA: Choosing wood over corn for biofuels production
• Low heat gasification converts woody biostock to energy
• 25x'25 Vision of BIOstock Supply
• Food vs. Fuel: Over-reliance on Corn Raises Ag Prices
• Celunol produces Ethanol from Wood using Bacteria
• BIOethanol converted from pulping liquor
• Food vs. Fuel? U.S. Farmers Can Produce Both
• Black Liquor Gasification Technology Attracts Volvo Investment

BIOconversion Blog--------------
• Biomass: Year-in-Review
• Biomass Power Generation using Gasification
• ALT Energy Stocks: The Future of Ethanol
• FLORIDA: Cultivating a Bioconversion Industry
• Low heat gasification technique to convert biostock to energy
• Europe's "New Industrial Revolution"
• Celunol launches commercial-scale cellulosic ethanol plant in Japan
• Cellulose Ethanol Market Potential Report
• ACORE: President Bush on Renewable Energy in 2007
• Apollo Alliance pursues 'green-collar' jobs
• Ethanol and Net Energy - EROI
• The Renewable Path to Energy Security

BIOoutput Blog-----------------
• FAQ: BIOoutput Blog
• "Living with Ed" Begley, Jr. in Studio City
• CALIFORNIA: Governor Targets Fuel Emissions
• Electric cars - a boost for biofuels?
• CHINA: Pollution threatens 2008 Olympics
• BioButanol from Cellulosic Bioconversion
• From Food to Fuel to Fashion

NEW! BIOwaste Blog-----------------
• FAQ: BIOwaste Blog
• Spinning “Gold” Out of Trash
• Southern California Emerging Waste Technologies Forum
• The Benefits of Conversion Technologies
• Recycling’s “China Syndrome”
• Plasma Gasification and Incineration Compared
• CANADA: Municipal Solid Waste Disposal Options
• CHINA: Pollution threatens 2008 Olympics
• Using Algae to Recycle Flue Gas into Biofuels
• U.S. D.O.E.: Strategies for Reducing Greenhouse Gases
• CALIFORNIA: Air Resources Board tackles Global Warming
• Impact of Global Growth on Carbon Emissions
• Enforcing California's Greenhouse Gas Emissions Limits
• BIOwaste Energy as Explained on the Energy Kid's Page
• Expanded Recycling - a Key to Cutting Fossil Fuels and Global Warming
• Mayors seek $4B to fight Energy & Environmental Challenges
• MIT/PNNL Plasma Arc Waste-to-ethanol Solution

Each month we provide a similar breakdown of article titles from our favorite "companion" site - Biopact Blog. This list is kept current and is accessible in the right hand column of each of the three blogs.

Please forward a link to this digest to anyone you know who would be interested in keeping track of change that will affect us all. They can add their name to the mailing list on the BioConversion Blog.


technorati digest, biofuels, conversion, bioenergy, cellulosic, feedstock, ethanol

The Renewable Path to Energy Security

Mixing environmental concern with American "can-do" attitude, the Worldwatch Insitute and Center for American Progress have teamed up to provide a free, online 40-page that provides chapters titled:
• a vision for a more secure and prosperous America
• building a new energy economy
• a cleaner, healthier America
• resources and technology
• American energy policy agenda

As their press release announces:

The American Energy Initiative is a joint project of the Worldwatch Institute and the Center for American Progress focused on educating and inspiring the public and policymakers on the importance of renewable energy to the economic, environmental and national security of the United States. The report, American Energy: The Renewable Path to Energy Security, demonstrates the potential of renewable energy and energy efficiency and presents a practical policy agenda for achieving them.

The chapters on Biofuels and Biopower are particularly relevant to the interests of frequent visitors to this blog. There is a blind eye, however, to urban waste as a biomass feedstock. This misses a major opportunity to effect industrial and urban change in our society.

Rather than quote excerpts, here are a few harvested charts and snippets to encourage you to download and read the report:

----------------------------
American Energy: The Renewable Path to Energy Security
by the Worldwatch Institute and the Center for American Progress

The time is ripe for a strong national commitment to enacting new policies at the federal, state, and local levels that will allow the United States to become a world leader in building a 21st century energy system.Meeting that challenge will require concerted action by governments, businesses, and citizens across our nation.

“Renewable energy is one of the great stories of recent years, and it’s going to be a bigger story in the years to come.”
—George W. Bush, President of the United States

“This field of greentech could be the largest economic opportunity of the 21st century.”
—John Doerr, venture capitalist for Kleiner Perkins Caufield & Byers

“The Stone Age did not end for lack of stones, and the Oil Age will end long before the world runs out of oil.”
—Sheikh Yamani, former Oil Minister of Saudi Arabia

“The best way to predict the future is to invent it.”
—Alan Kay, pioneer of personal computing

technorati BIOblog, BIOconversion, bioenergy, biofuels, ethanol, cellulosic, legislation, security

Ethanol and Net Energy - EROI

Energy return on investment (EROI) is the ratio of the energy delivered by a process to the energy used directly and indirectly in that process.

Many of the arguments against ethanol concern the hotly debated Energy Rate of Investment (EROI) of the fuel. Does it take more (mostly fossil fuel) energy to produce ethanol than the final fermented product contains?

Most experts agree that ethanol made from corn has a lower EROI than that made from sugarcane because sugarcane has more energy in it than corn and the energy to cultivate and harvest the crop takes less energy. They also agree that cellulosic ethanol, made from agricultural and forestry waste, would have a much higher EROI because the cellulosic feedstock does not include accounting for cultivation energy expense. However, the conversion process could be higher than sugar fermentation so it is hard to come up with real numbers.

Interestingly, while determining EROI is a fairly straightforward process of accounting for inputs and outputs, there are social factors that come into play when evaluating fuels and they are highly variable. The social cost we place on carbon emissions, for example, would impact the refining and infrastructure costs of the fuel. Can we put a price on disposal of uranium wastes or other process residues like pet-coke (which may grow as time goes along)? Should we factor in the hidden costs of oil or feedstock for a process?

Increasingly, it seems, EROI is becoming more of a fuzzy math affected by assessment of non-scientific military, employment, trade, and political variables.

Changing structure of final energy sold to consumers in the United States by energy form. Solids consist of fuelwood and other biomass and coal. Liquids consist of petroleum products. Grids consist of electricity, gas, and district heat.
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The costs of energy transition may make the usefulness of one low-EROI fuel more attractive than one with a higher EROI. Is it realistic to expect to convert to a hydrogen-based energy economy when one considers that the historical trends of energy form do not even include compressed gas or fuel cells (see chart above)?

There is an excellent online reference called the encyclopedia of earth that helps define EROI in laymen's terms. Many of the topics come from the Environmental Protection Agency which is a pretty credible endorsement for the site.

The entry on EROI is fairly lengthy but I have listed the ten principles here:

----------------
Ten fundamental principles of net energy

The decline in cost for ethanol fuel produced from sugarcane in Brazil.

EROI is a tool of net energy analysis, a methodology that seeks to compare the amount of energy delivered to society by a technology to the total energy required to find, extract, process, deliver, and otherwise upgrade that energy to a socially useful form. Net energy analysis was developed in response to the emergence of energy as an important economic, technological and geopolitical force following the energy price increases of 1973-74 and 1980-81. Interest in net energy analysis was rekindled in recent years following another round of energy price increases, growing concern about energy's role in climate change, and the debate surrounding the remaining lifetime of conventional fossil fuels, especially crude oil.

The principles
1. Net energy and energy surplus are important driving forces in ecology and economic systems
2. The size and rate of delivery of surplus energy is just as important as EROI
3. The unprecedented expansion of the human population, the global economy, and per capita living standards of the last 200 years was powered by high EROI, high energy surplus fossil fuels
4. The principal economic impact of a shift to a lower EROI energy system is the increased opportunity cost of energy delivery
5. Energy quality matters
6. Market imperfections that distort prices and cost also affect EROI
7. The methodologies to perform net energy analysis are well established
8. The relation between “peak oil” and the EROI for world oil production is unknown
9. Technological change affects EROI just as it affects price and cost
10. Alternatives to the dominant energy and power systems show a wide range in EROI

On the power generation side, coal, and hydropower have the highest EROI among conventional power systems, although the latter has very limited potential for further expansion in most regions of the world. Nuclear power appears to have a lower EROI, but there are very few credible studies that are thorough and unbiased. We do not know what the EROI will be from the new generation of nuclear reactors that would be built if demand for them returns.

Wind has a very favorable EROI in the right conditions, while solar thermal and photovoltaic systems have lower EROIs compared to coal and hydropower. As outlined above, a key issue is the size of the surplus that can realistically be delivered by those renewable power technologies.

A final point for consideration: Carbon may trump EROI. The growing concern that climate change may impose swift and large costs on society may drive the next major energy transition. It is plausible that carbon intensity, as opposed to net energy, may be the principal attribute of future energy systems that determines the timing and pace of their adoption. Society may choose to forgo the benefits of a larger energy surplus to reduce its exposure to climate-related risks.

For more information, click HERE


technorati BIOblog, BIOconversion, bioenergy, biofuels, ethanol, cellulosic

Apollo Alliance pursues 'green-collar' jobs

One of the great benefits of deploying emerging renewable energy technologies are the "green-collar" jobs that they will create. A leader in advancing the cause of new employment is the Apollo Alliance led by Jerome Ringo.

I met Mr. Ringo at the ACORE Biomass Coordinating Council meeting last April. He is passionate in his pursuit of green industry jobs for the upwardly mobile middle class.

Here is a story about the environmental community and the Apollo Alliance both embracing the same goals in pursuit of a greener nation.

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Unions see greenbacks in 'green' future
Organized labor is joining forces with environmentalists to push for an eco-friendly economy.
By Moises Velasquez-Manoff | Correspondent of The Christian Science Monitor

Union leaders are betting that a green economy will not only address the issue of climate change, it will also provide a bonanza of well-paying manufacturing jobs – the kinds of jobs that have largely vanished from the United States in recent decades.

"From labor unions' point of view, these are the kinds of jobs their unions are most prepared for," says Jeff Rickert, vice president of the Apollo Alliance, a coalition of the major environmental and labor organizations.

According to studies by the Apollo Alliance, which has outlined a 10-point plan for energy independence and jumpstarting the renewables sector, dollars invested in clean energy create more jobs than those invested in traditional energy sources. Renewable energy is simply more labor intensive. An investment of $30 billion per year for 10 years would create 3.3 million jobs and boost the gross domestic product by $1.4 trillion, according to its analysis. The federal government would recoup the initial investment in increased tax revenues within the same 10-year period.

The most optimistic point out that, because decentralization is inherent to renewable energy, an equitable distribution of wealth is built into the new energy paradigm.

Environmentalists looked down their noses at organized labor as "goons" more interested in protecting polluting industries than protecting the environment. Organized labor, meanwhile, viewed the environmental movement as elitist and more preoccupied with saving trees than in saving livelihoods. The Bush administration has helped change those attitudes.

"They have run roughshod over the environmentalists, who thought they were so powerful," Professor Getman says, "and they have done everything possible to diminish the power of unions."

Mr. Rifkin envisions not only more jobs but also a more equitable distribution of wealth due to the decentralization of energy production. He foresees a land dotted with community- or individually-owned generators and hydrogen fuel cells to store energy, all connected by a "smart grid," an Internet-like network managing the ebb and flow of electricity.


technorati BIOblog, BIOconversion, bioenergy, legislation, decentralization, security

ACORE: President Bush on Renewable Energy in 2007

While this year's State of the Union address had no memorable "addicted to oil" soundbites, it did include some notable goals for the renewable energy and fuels industries. His Twenty in Ten plan (reducing U.S. gasoline usage by 20% in the next ten years) is the kind of goal setting that we need to achieve significant change in the energy paradigm.

I recommend reading David Adams' article at "The Fueling Station" where he asks How green did he go? and then places it in the context of what it means in practical terms for the development of the cellulosic ethanol industry and biofuel imports.

I am a member of the American Council on Renewable Energy (ACORE), a membership nonprofit organization headquartered in Washington, D.C. It is dedicated to bringing renewable energy into the mainstream of the US economy and lifestyle through information and communications programs.

At its annual Power-Gen Conference on Renewable Energy each year ACORE provides a common platform for the the renewable energy community - including renewable energy industries, associations, utilities, end users, professional service firms, financial institutions and government agencies. It's Biomass Coordinating Council holds a pre-conference meeting that alone is worth the price of admission.

I profited greatly from my participation last year and highly recommend attendance this year March 6-8, 2007 in Las Vegas - especially in light of the lift the industry has received from both the Executive and Legislative branches of government. I will be helping Price BIOstock Services with their presence at Booth 338 this year. Let me know if you are attending and please visit the booth.

Here is ACORE statement about the President's State of the Union Address commitments to renewable energy:

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ACORE Supports President Bush's Renewable Energy Initiatives in State of the Union 2007

Washington, D.C. - President George W. Bush laid out a set of important programs and goals for a national shift to renewable energy and fuels in last night's State of the Union address.

The President laid out a comprehensive set of actions and goals to increase the use of renewable energy in America. He called for an increase in solar energy and wind power for electricity generation, and an increase in renewable fuels such as biodiesel and ethanol for more fuels.

Specifically, the President set a goal of reducing our gasoline consumption by 20% in 10 years. He called for a mandatory target of 35 billion gallons of renewable fuels by 2017, and to reform fuel economy standards for automobiles.

The President called for Americans to live our lives less dependent on oil, and to reduce the threat of global climate change.

The American Council On Renewable Energy (ACORE) is pleased with this forward-stepping program for increased use of renewable energy.

"The President's program for renewable energy gets things going in the right direction for our country," said Michael Eckhart, ACORE President, who added, "but we can actually do much more."

ACORE, a 400-member non-profit organization, was formed five years ago to assume responsibility for the success of renewable energy in America, to bring renewable energy into the mainstream of our country, and to be for renewable energy and against nothing.

"The President took some bold steps in the right direction tonight," said John Geesman, Co-Chairman of the ACORE Board of Directors, "and we applaud him for it. We will continue working with all public leaders who see the path forward with renewable energy."

A new assessment of the potential for renewable energy, developed by 15 non-profit institutions and trade associations, indicates that renewable energy can contribute as much as 25% of US energy supplies by the year 2025, in accordance with a campaign by the Energy Future Coalition and recent legislation introduced by Senator Lugar of Indiana.


technorati BIOblog, BIOconversion, bioenergy, biofuels, ethanol, legislation, security

Cellulose Ethanol Market Potential Report

Recently published by Energy Business Reports this report may be of interest to some readers - I haven't read it yet. With all the renewable energy conferences and interest in cellulosic ethanol, we should expect to see more of these publications in the years to come.

See the linked webpage for table of content information. Here is their brief description:

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Given its environmental and economic benefits, together with the vast availability of feedstock, ethanol has taken on prominence as one of the most favored alternatives to fossil fuel.

The Market for Cellulose Ethanol report is an in-depth analysis of the prospects for the use of cellulose ethanol as a fuel. The report includes a comprehensive analysis of how cellulose ethanol is produced, its cost-effectiveness, the growth drivers promoting the use of ethanol over other fuels, the barriers to market, and much more.

The report also focuses on the steps the U.S. government is taking to promote ethanol use, including tax incentives, funding for research and development, funding for technology, and other measures. The report also covers the basics of ethanol production; how ethanol differs from other fuels, and the benefits to consumers from using ethanol.

The Market for Cellulose Ethanol report is an analysis of this promising young industry and the market potential of ethanol as an alternative fuel source.

Includes a SPECIAL SECTION: A Guide for Developing Ethanol Processing Plants


technorati BIOblog, BIOconversion, bioenergy, biofuels, ethanol, hydrolysis, syngas, cellulosic, legislation

Celunol launches commercial-scale cellulosic ethanol plant in Japan

Celunol Corporation out of Dedham, Massachusetts is making good on its commitment to help open commercial-scale cellulosic ethanol facilities this year using their proprietary wet biomass conversion technology.

The technology

The sugar in cellulosic biomass is locked up in the form of cellulose and hemicellulose. Cellulose contains glucose, the same type of sugar—a six-carbon (C6) sugar—that is found in cornstarch and that can be fermented to ethanol using conventional yeasts.  However, hemicellulose contains mainly non-glucose sugars—five-carbon (C5) sugars.  Conventional yeasts cannot ferment most non-glucose sugars to ethanol with commercially acceptable yields.

Celunol’s technology enables almost complete conversion of all the sugars found in cellulosic biomass.  This efficiency advantage, combined with the low input cost of cellulosic biomass, results in superior economics in the production of ethanol.

(Its) groundbreaking technology is based on the metabolic engineering of microorganisms. Its key element is a set of genetically engineered strains of Escherichia coli bacteria that are capable of fermenting into ethanol essentially all of the sugars released from many types of cellulosic biomass. This trait enables Celunol to achieve the required efficiency to make the process commercially feasible.

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BioEthanol Japan Begins Production of Cellulosic Ethanol from Wood Scraps; Uses Celunol Technology

BioEthanol Japan on Tuesday became the world’s first company to produce cellulosic ethanol from wood construction waste on a commercial basis.

The plant in Osaka Prefecture has an annual capacity of 1.4 million liters (about 370,000 gallons US). In 2008, it plans to boost production to 4 million liters (1 million gallons).

BioEthanol Japan was established in 2004 by five companies, including construction firm Taisei Corp., major trading house Marubeni Corp., Daiei Inter Nature System, and beermaker Sapporo Breweries Ltd.

Marubeni is supplying the process technology, which it has licensed from US-based Celunol (earlier post), to BioEthanol Japan. Marubeni is also supplying the same technology for a wood ethanol project in Asia, and is also involved in a bioethanol project using sugar cane in Thailand run by the New Energy and Industrial Technology Development Organization (NEDO).

Celunol is a privately held company headquartered in Dedham, Massachusetts moving rapidly to commercialize its proprietary technology for producing ethanol from a wide array of cellulosic biomass feedstocks, including bagasse, agricultural waste, wood products and dedicated energy crops.


technorati BIOblog, BIOstock, BIOconversion, biomass, agriculture, forestry

Europe's "New Industrial Revolution"

If we are learning anything in the new millennium it is that the Industrial Revolution of the last 150 years is overdue for a major upgrade. While we have come a long way from wood burning boilers (at least in some industries) we seem stuck on old ways of thinking about what is efficient and economical without considering the social costs related to:
1 - particulate matter and toxic emissions from combustion
2 - wasted energy related to released heat and emissions
3 - energy transport and transmission from over centralization
4 - foreign resource and energy supply dependency
5 - carbon release into the atmosphere
6 - geopolitical and market competitiveness
7 - aging infrastructure

We need to look at feedstock and energy generation with a fresh eye - an eye for opportunities to improve the status quo in significant ways. The new European Union report entitled An Energy Policy for Europe gives a glimpse of what is under consideration for that continent with significant implications for the rest of the world.

To see other related European Union documents (plus laymen's summaries), visit the EU Press Room's Energy for a Changing World. Topics include: Renewable Energy Road Map, Progress in renewable electricity, Progress in Biofuels, Gas and Electricity Infrastructures, Nuclear Energy, Sustainable Power Generation from Fossil Fuels, and European strategic energy technology plan.

Below are some excerpts from the Biopact description of the Energy Policy's contents...

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EU unveils energy policy for the 21st century: towards a 'low carbon economy' with renewables

Today, the Commission put forward a series of energy reports and policy proposals, which it hopes will be a catalyst for "a new industrial revolution" that will "transform Europe into a highly energy-efficient and low-CO2 energy economy" by the mid-century.

To address those challenges, the Commission proposes an Action Plan, to be implemented in the next three years. It calls on the European Parliament and on EU leaders to endorse the plan at the forthcoming summit in March. "The point of departure for a common energy policy must be combating climate change, promoting jobs and growth and limiting the EU's external vulnerability to imported hydrocarbons," the Commission says.

The new EU energy strategy is based on three main pillars:

1. Accelerating the shift to low carbon energy

In its report entitled the Renewables Energy Roadmap the Commission proposes to maintain the EU's position as a world leader in renewable energy, by proposing a binding target of 20% of its overall energy mix will be sourced from renewable energy by 2020. This will require a massive growth in all three renewable energy sectors: electricity, biofuels and heating and cooling. This renewables target will be supplemented by a minimum target for biofuels of 10%. In addition, a 2007 renewables legislative package will include specific measures to facilitate the market penetration of both biofuels and heating and cooling.

2. Creation of a true Internal Energy Market

The aim is to give real choice for EU energy users, whether citizens or businesses, and to trigger the huge investments needed in energy, as outlined in the policy proposal Prospects for the Internal Gas and Electricity Market. The single market is good not just for competitiveness, but also sustainability and security.

3. Energy efficiency

As outlined in the Strategic Energy Technology Plan [*.pdf], the Commission proposes that the use of fuel efficient vehicles for transport is accelerated; tougher standards and better labelling on appliances; improved energy performance of the EU's existing buildings and improved efficiency of heat and electricity generation, transmission and distribution. The Commission also proposes a new international agreement on energy efficiency.

The European Union cannot achieve its energy and climate change objectives on its own. It needs to work with both developed and developing countries and energy consumers and producers. The European Union will develop effective solidarity mechanisms to deal with any energy supply crisis and actively develop a common external energy policy to increasingly "speak with one voice" with third countries. It will endeavour to develop real energy partnerships with suppliers based on transparency, predictability and reciprocity.


technorati bioenergy, investment, Europe, biofuels, waste, environment, policy, sustainability

Low heat gasification technique to convert biostock to energy

The thermal process of gasification is one way to break down the bonds of cellulosic feedstock into syngas (primarily CO and H2). Some processes, like plasma arc, uses extremely high heat to "vaporize" the biostock.

Here is an announcement from Germany about a company that has been getting very promising results from gasifying at a lower heat level. They claim, based on experiments with woody biomass, that the lower heat level enables the process to be applicable to a greater range of biostock, including wet forestry waste.

While commercial-scalability is always an issue, such advancements bring the vision of decentralized, blended feedstock, continuous flow bioconversion ever closer.

Here is a brief of the original article I found at Biopact. Thank goodness someone there can interpret German!

----------------
German consortium tests new biomass gasification technology, obtains record hydrogen yield

The 'Zentrum für Sonnenenergie- und Wasserstoff-Forschung' (ZSW) in Baden-Württemberg, Germany, announces that it has developed a new gasification technology for the production of an energy rich gas from biomass that can be used for the generation of electricy and heat, but also for the production of biohydrogen, biomethane and a series of next-generation synthetic liquid biofuels.

The innovation at the ZSW concentrates on the water vapour gasification of biomass in the presence of a CO2 absorbent. The technology is based on an innovative step in a process called 'Absorption Enhanced Reforming' (AER), which was developed in cooperation with the University of Stuttgart and other European partners. During the gasification process, solid biomass is converted into a hydrogen-rich and carbon-oxide-poor fuel gas with a low tar content by means of integrated gas conditioning. Compared to other gasification processes, the AER technique yields gas with a much higher hydrogen content; pilot tests showed yields of up to 70% hydrogen, an unprecedented level.

The integrated gasification-cogeneration plant uses woody biomass as a feedstock. But, compared to conventional gasification methods, the AER technique considerably reduces the temperatures required for the gasification of biomass. This not only reduces the amount of energy needed to drive the process, it also allows for a much broader range of feedstocks to be used, including wet biomass. Large waste-streams from the agroforestry industry now become available: from grass and straw residues with low ash melting points, which weren't useable until now, to wet wood (leaves, shoots).


technorati bioenergy, gasification, conversion, biofuels, cellulosic, plasma-arc, sustainability

FLORIDA: Cultivating a Bioconversion Industry

As the most tropical state on the continent, Florida provides a unique combination of climate and agriculture for the cultivation of biomass feedstock. Almost more important, it has a state commissioner that recognizes the unique opportunity the state has to lead the nation in bioconversion of its crops into biofuels.

The Fueling Station website has a report on Commissioner Charles H. Bronson's appeal to Florida legislators to provide a regulatory environment (equal to the agricultural ecology) necessary to cultivate a powerhouse bioconversion industry there. Here is part of the report...

----------------------
Florida Official Touts Alternative Fuels To Lawmakers.

Florida has the capability of producing more alternative fuels than anywhere else in the country, Florida Agriculture and Consumer Services Commissioner Charles H. Bronson told state legislators on Wednesday.

Appearing before a joint meeting of the House Agribusiness and House Energy Committees, Bronson said the state's abundant sunshine, ample rainfall and year-round growing season puts Florida ahead of every state in the country in its potential to produce ethanol and bio-diesel crops.

"You today are in a position of putting Florida ahead of the pack," Bronson said. "It will be a Florida that looks much different than it does today."

What are needed are tax incentives or some form of financial assistance that the state can provide to encourage growers to produce alternative energy crops and processors to locate facilities in Florida to convert the crops to fuel, Bronson said.

Bronson is a member of the steering committee of "25x25" -- a national bipartisan organization whose goal is to see U.S. agriculture produce 25 percent of the nation's energy needs by the year 2025. He has launched the state's Farm to Fuel program, which encompasses efforts under way in Florida to see that goal realized.

The Commissioner told legislators that unlike the Midwest, where corn is the primary alternative energy crop, research done at the University of Florida has concluded that by using certain bacteria, virtually any type of bio-mass can be broken down to fuel. That would include wood, forestry debris, plant stalks and even livestock waste in addition to conventional crops.

"The opportunities in Florida are going to shock you," Bronson said.


technorati bioenergy, bioconversion, ethanol, Florida legislation, biofuels

ALT Energy Stocks: The Future of Ethanol

For any renewable fuel to make a dent in the current oil paradigm, it is going to have to make sense to investors over the long haul. According to two writers for Alt Energy Stocks website, the fast growing ethanol industry offers some food for thought as well as food for energy. Rapid growth may result in some shortterm investment profits, but fear of a dot com type bust for some developers is very real. I invite you to read the original stories, but here are my abridged versions...

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Are Ethanol Companies Risky Investments?
by Neal Dikeman

In the short run ethanol stocks are in a land grab phase ramping to meet demand, and some of these stocks may do well while demand still outstrips supply and the industry is still small, but when this dynamic changes – watch out as the margin pressure will be brutal, and could turn already aggressively valued stocks into a dot bomb style free fall as per gallon profits get crushed. So, make your profits while you can!

------------------------
The Future of Alternative Fuels: Ethanol
by Charles Morand

Whether one likes ethanol or not, it was without a doubt one of the top alt energy stories of 2006, and will remain a biggie in the years ahead.

Consider this quote from a recent Bloomberg article on biofuel demand and feedstock prices:

“The 110 factories now producing ethanol in the U.S. have boosted their annual capacity by 12 percent in the past six months, to 5.3 billion gallons, according to the Renewable Fuels Association in Washington. An additional 6 billion gallons of capacity will be added in the next two years as 79 new plants or expansions of factories are completed, the association said.”

The industry’s capacity will thus grow by 113% by the end of 2008, a significant number.

Lester Brown, a known environmental commentator, argues that the Department of Agriculture’s projections that ethanol producers will, as a result of industry growth, consume 60 million tons of corn by 2008 are wrong, and says he instead expects ethanol manufacturers to consume 139 million tons of corn by then, more than double (by the way, the Earth Policy Institute, Lester Brown’s outfit, produced this very cool table of ethanol distilleries in the US by aggregating data from multiple industry sources.

However way you look at it, if the ethanol industry is truly responsible for the current rise in corn demand and associated run in corn prices, it is doubtful US farmers will be able to scale up production enough to keep pace with the kind of refining capacity growth discussed above, and prices should thus spike. The result of this will be that the food-Vs-fuel debate, which was mostly academic only 18 months ago, will intensify, pitting farmers and the ethanol industry against environmentalists and other concerned citizens. Another impact of this will be that high feedstock costs will eat away at producers’ margins, as there will be limits to what the market will tolerate in terms of price increases, especially if oil gets cheaper.

There are early signs that the new Democratic Congress wants to forge ahead with the budding ethanol economy. This article from the Green Car Congress provides details on a proposed piece of legislation that, if adopted, would grant significantly more regulatory certainty to the ethanol industry than to just about any other alternative energy industry in America.

In my view, corn-based ethanol is one of those transition technologies that will play a key part in America's energy mix for some time, but that will slowly dwindle into irrelevance as better solutions come on-stream. The best plays on ethanol should therefore do well, for a time.

You should also keep an eye on firms that are working on cellulosic ethanol. Cellulosic ethanol holds great promises, as evidenced by the fact that Goldman Sachs took, in May 2006, a $30 million position in cellulosic ethanol firm Iogen of Canada. But cellulosic ethanol is at least 5 years away.

In short, I’m sure ethanol, as an asset class, can and will make you money. The ethanol investor will, however, have to be cautious, as the waters ahead are not free of trouble.


technorati bioenergy, investment, venture, stocks, biofuels, ethanol, cellulosic