The credit crunch and biofuel woes in Florida

Despite the government push to promote biofuels as part of its effort to create 'green jobs' through renewable energy economy, the current economic crisis is making it hard to find investors.
That's especially true in Florida, writes the South Florida Sun-Sentinel.
Reporters Doreen Hemlock and Jaideep Hardikar write that "scores of promising projects remain in early stages and face uncertain futures, experts say, unless the government, venture capitalists and others loosen purse strings soon."

Despite more than $700 million in stimulus funds for biofuels, the distribution of funds has been slow, partly due to a lack of qualified staffers to handle the requests, experts tell the paper. Investors are also skittish on biofuels nowadays because of oversupply in the U.S. market to meet the slowly rising biofuels mandate (currently 10.5 billion gallons).

The paper cites these revealing investment figures:

    * Worldwide, investments in new assets for biofuels projects fell from $17 billion in 2007 to $14.4 billion last year and $3.3 billion in the first half of this year (according to New Energy Finance.)
    * Venture capital for biofuels, directed mainly to new-generation feedstocks such as woody waste, dropped from $643 million last year to $111 million in the first half this year.

It also mentions several stalled projects in Florida, including Biomix Energy, a Miami company hoping to build biodiesel plants, and Citrus Energy, a Boca Raton-based firm with plans to convert citrus peels to ethanol.

(Photo of Governor Charlie Crist addressing the 2007 Farm to Fuel conference in St. Petersburg.)

David Adams, Times Staff Writer

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Sugar price hits 28-year high

The price of raw sugar has increased to its highest level since 1981. The main reasons: demand in Brazil for sugar to be turned into ethanol, coupled with a sharp fall in Indian production due to drought, analysts say.
Sugar production in India for 2008-09 has fallen 45 per cent since last year, and could fall even more in the coming year.
That could prompt Brazilian refiners to switch back to sugar from ethanol, as well as more cane planting in traditional sugar producing countries. Cuba, where sugar production has been slashed in recent years, might also consider replanting idle cane fields.

- David Adams, Times staff writer

Farm to Fuel to air on The Florida Channel

I was sorry to miss Florida's 2009 Farm to Fuel Summit last month as I was on assignment in Cuba. So I am happy to learn that it will be aired on The Florida Channel on the following dates:

Thursday, August 13, 8am - Day 1
Friday, August 14, 8am - Day 2

Viewers can check The Florida Channel website for the channels in their area. Go to www.wfsu.org and click on "The Florida Channel" in the upper right corner.  Then, in the left margin, click "Where to Watch" and click on the "Display All" button for a list of cable systems around the state and when they carry The Florida Channel.  In addition, viewers can also watch on the web by clicking on Webcast 1 on the website.

Presentations from the 2009 Farm to Fuel Summit, as well as a list of participants, are now available.
I also found this link a story from Ethanol Producer magazine about Governor Charlie Crist's speech on the state's commitment to biofuels.

- David Adams, Times staff writer

U.S. subsidizes renewable energy for $36B -- but spurns nuke project

The U.S. Department of Energy is making available $36 billion in loan guarantees for renewable energy projects and for modernizing the electricity grid, the Associated Press reports.

"The government-supported loans are expected to help companies involved in solar, wind, biofuels and other renewable energy projects get private financing," says AP. "It also aims to spur investments in power grid improvements."

"These investments will be used to create jobs, spur the development of innovative clean energy technologies and help ensure a smart, strong and secure grid that will deliver renewable power more effectively and reliably," Energy Secretary Steven Chu said in a statement.

But the DOE hasn't been so giving when it comes to a $3.5-billion nuclear-enrichment plant in Ohio, notes the Washington Post.

"The Energy Department said that the proposed plant, which would use a series of giant centrifuges to enrich uranium for nuclear power plants, was not ready for commercial production and therefore ineligible for the loan guarantees," the Post reported.

So the owner, Maryland-based USEC, plans to suspend the project. Company CEO John K. Welch said he was "shocked" by the Energy Department decision, especially since President Obama had endorsed the project while campaigning in Ohio last year.

"It is unclear how DOE expects to find innovative technologies that assume zero risk," Welch said.

--Craig Pittman

Feel-good biofuel not all it's cracked up to be? Questions arising about jatropha tree

Earlier this year, Time magazine ran a story on Florida entrepreneur Paul Dalton's new business growing jatropha trees, and the headline said, "The Next Big Biofuel?"

What made jatropha's biofuel seem promising, the story noted is that "unlike corn and other biofuel sources, the jatropha doesn't have to compete with food crops for arable land. Even in the worst of soils, it grows like weeds."

Well...not exactly, according to the latest issue of the Yale School of Forestry's newsletter "Yale Environment 360," which reports that Robert Bailis, an assistant professor at the Yale School of Forestry & Environmental Studies, along with Yale Ph.D. candidate Jennifer Baka, recently launched the first detailed “life cycle” environment assessment of jatropha as a biofuel.

"Although their study is in its early stages, Bailis notes that it’s already clear that, while jatropha can indeed grow on lands with minimal water and poor nutrition, 'if you plant trees in a marginal area, and all they do is just not die, it doesn’t mean you’re going to get a lot of oil from them,' " the story reports.

If you grow it in good farmland, though, it does just fine. But that's not good news. “If you grow it in better agricultural conditions, all the alarm bells go off as you get into the same food-versus-fuel debate we’ve seen with [biofuel from] corn," Bailis told the newsletter.

It's no idle concern, either. "According to the Indian environmental group, Navdanya, government foresters have drained rice paddies in order to plant jatropha in the poor and mostly tribal state of Chhattisgarh," the Yale newsletter reports. "As early as mid-2007, protests broke out in the mostly desert state of Rajasthan over a government scheme to reclassify village commons lands — widely used for grazing livestock — as 'wastelands' targeted for biofuel production, primarily jatropha."

Meanwhile, on the Philippine island of Mindanao, "protests erupted in late 2008, with indigenous leaders insisting that jatropha plantations had begun to displace needed crops of rice, corn, bananas, and root vegetables."

This all hits home for the Tampa Bay area, incidentally, because last year a Dallas company called GreenHunter Energy announced it would invest up to $100-million in a biodiesel plant and terminal at Tampa's Port Sutton terminal to produce 50-million gallons a year from biofuel -- including from jatropha plantations in Central and South America.

[Associated Press photo of jatropha tree]

--Craig Pittman

Good news: Obama backs biofuels; bad news: EPA says corn ethanol makes warming worse

The Obama Administration unveiled a new plan Tuesday "to shield corn ethanol producers from the credit crisis, work with them to cut their use of natural gas and coal in ethanol production, and nudge the auto industry toward production of vehicles that can use ethanol at concentrations of up to 85 percent," the New York Times is reporting.

"There is over $1.1 billion of opportunity here, created by the Congress, to assist in building biorefineries, in helping existing refineries convert from fossil-fuel power to renewable power," Agriculture Secretary Tom Vilsack said.

(read White House press release here)

That's the good news for biofuels producers. The bad news: "The Environmental Protection Agency says that corn ethanol — as made today — has a worse impact on climate than gasoline when land use changes are considered," the Associated Press says.

So the EPA has "proposed a new alternative-fuel standard that will likely prohibit some corn-ethanol production processes based on their greenhouse-gas emissions and encourage other advanced biofuels," according to CNN.

Restricting some ethanol-production processes "provides a greater market incentive for advanced biofuel technologies such as sugarcane," CNN noted -- and that's good news for Florida, where companies are experimenting with turning cane into biofuels.

More on emissions rules for ethanol from Matthew Wald of The New York Times.

Craig Pittman, Times Staff Writer

[Associated Press photo]

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BP and Verenium announce joint venture for Florida biofuel plant

BP and Verenium Corporation have announced the formation of a 50-50 joint venture to produce cellulosic ethanol from non-food feedstocks in Florida. (read press release here)

The creation of the joint venture company comes on top of a partnership between the oil giant and the Massachusetts start-up, announced last August. Together the companies have agreed to commit $45 million towards building one of the nation's first commercial-scale cellulosic ethanol facilities, located in Highlands County, Florida. (see our Jan 15 report)

"This collaboration represents a critical next step in positioning Verenium and BP at the forefront of commercializing cellulosic biofuels in the United States," said Carlos A. Riva, President and Chief Executive Officer of Verenium.

- David Adams

Chu speaks on role of science in alternative energy revolution

The new Energy Secretary Steven Chu has given his first major interview (to the New York Times) in which he lays out his thinking about the role of science in alternative energy production.

He highlights three major areas of needed scientific advances: production of commercial scale cellulosic biofuels, the size and cost of electric car batteries, and reduction in cost of solar power. He also mentions the need for improved clean-coal technology to reduce emissions.

Interestingly, he doesn't say much about wind, suggesting that he believes this technology is already on a strong commercial footing. He also warns that progress on carbon trading may be held back by the economic recession.

David Adams, Times Staff Writer

Weak demand hits ethanol industry leader, ADM.

Agribusiness giant, Archer Daniels Midland, saw profits weakened by a fall in global demand for ethanol, Forbes magazine reported today.
Profits in its corn processing division have tumbled, and ADM shares have fallen 39.4% from a year ago.
Overall, the U.S. ethanol sector has been hurt by a sharp fall in oil prices, as well as biofuel demand.
When oil peaked at $147 a barrel in July that made alternatives like ethanol extremely attractive. But with oil down to $40 a barrel the picture has changed.
ADM is a major ethanol producer, investing in a number of new biofuels refineries across the country.

Verenium announces Florida's first cellulosic ethanol plant

A Massachusetts firm today announced plans to build Florida’s first ethanol plant, and one of the first cellulosic ethanol plants in the nation.

Verenium plans to build a 36-million-gallon-a-year plant in Highlands County using plant similar to sugar cane for fuel. The $250-million project relies on a pioneering technology developed by University of Florida scientists that unlocks the energy potential of plants other than ethanol’s traditional sugar and corn.

“We’re thrilled,” said Lonnie Ingram, the UF professor who led the research. “The university is just delighted with the achievements of Verenium, even more so because it’s going to be in Florida, our home state.”