Hedging Risks with Asian Biodiesel

John Davis

The makers of biodiesel in Asia are taking steps to make sure they aren’t burned by the drop in oil prices. Biodiesel production has been pretty profitable for them when oil has pushed above $70 a barrel, but this Reuters story in the Hong Kong-based The Standard gives some advice on how the operations can stay profitable now that oil has dropped… sometimes below $50 a barrel.

“They should hedge the feedstock components on one side, then as crude prices go up, the margin and cost effectiveness of biodiesel tends to look more attractive,” said Tom James, chair professor at the University of Petroleum and Energy Studies in India.

“They then want to hedge against a sudden and sustained drop in crude prices, probably through some derivatives options on crude oil or gas oil or gasoline prices.”

It looks like biodiesel makers in Asia are facing some of the same issues farmers and biodiesel producers in the U.S. are facing… feedstocks prices rising with rising demand. The Asians have had to get away from some of the palm oil usually used for biodiesel. In this earlier post, we talked about how China had developed a rapeseed (canola) that produced a record 54.7% oil output… producing a feedstock hedge for that country.

Biodiesel, International

Biodiesel Conference Overview

Chuck Zimmerman

Once again this year I’ll be the biodiesel blogger at the National Biodiesel Conference which kicks off this weekend in San Antonio. I’ll be posting pictures, interviews and video clips during the conference. To get us started I interviewed National Biodiesel Board CEO, Joe Jobe. Joe gives us an overview of what we can expect.

You can listen to my interview with Joe here: Listen To MP3 Joe Jobe Conference Overview Interview (7 min MP3)

Remember that all my interviews will be podcast so you can subscribe to them in your favorite podcatching software (I recommend iTunes). You can find out more about how to subscribe here. This will be episode 22 since all the original 21 interviews from last year are still available to you.

We also have a conference blog sponsor this year and want to welcome and thank John Deere. This means you’ll be seeing the following tagline in all my posts:

Domestic Fuel coverage of the National Biodiesel Conference
sponsored by John Deere.

Audio, Biodiesel, Biodiesel Conference

All Boys Love Big Toys

Cindy Zimmerman

Big Boy ToysEthanol power was on display at the recent Big Boy Toy Show in Sioux Fall, SD. From planes to big trucks to race cars, it was all there for both big and little boys (and girls!) to enjoy.

A special attraction for all was Team Ethanol IndyCar® Series driver Jeff Simmons and the show car simulator.
Big Boy Toys and JeffKids of all shapes and sizes enjoyed playing in the car, as well as getting to meet Jeff who posed for pictures and signed autographs.

Broin Companies and the Ethanol Promotion and Information Council sponsored the Sioux Falls show which was held January 19-21 at the Sioux Falls Convention Center.

EPIC, Ethanol, News

Global Warming Expedition Kickoff

Cindy Zimmerman

GW 101Legendary explorer Will Steger kicked off his Global Warming 101 Expedition this past weekend at the St. Paul Winter Carnival.

Jeff and DogTeam Ethanol IndyCar® Series driver Jeff Simmons was among those on hand to see the expedition off, since the Ethanol Promotion and Information Council is a major Global Warming 101 sponsor. He got a chance to make friends with one of the huskies who will be leading the four month, 1200 mile dogsled expedition across the Canadian Arctic’s Baffin Island.

Dogsled TeamSteger also introduced his team members, Abby Fenton, Elizabeth Andre, and John Stetson, as well as documentary filmmaker Jerry Stenger and photographer and webmaster Jim Paulson who will accompany him on the expedition. The team is pictured here with two of the expedition dogs, and the banner is being hoisted by EPIC Communications Director Joanna Schroeder and Simmons. Steger is the one in the middle.

This weekend, the expedition will be in Steger’s hometown of Ely, Minnesota for another send-off event at the Mukluk Ball.

EPIC, Ethanol, global warming, News

Consumers Can Help Reduce Dependence on Foreign Oil

Cindy Zimmerman

e-podcastDuring the 2007 State of the Union address, President Bush made it very clear that ethanol has a vital role to play in our nation’s long term energy independence goals and public education will play a key role in the continued adoption of renewable fuels. This edition of “Fill Up, Feel Good” discusses what consumers can do to help the country be more energy independent. Audio is with President George W. Bush and Aventine Renewable Energy CEO Ron Miller.

The “Fill up, Feel Good” podcast is available to download by subscription (see our sidebar link) or you can listen to it by clicking here. (5:30 MP3 File)

The Fill Up, Feel Good theme music is “Tribute to Joe Satriani” by Alan Renkl, thanks to the Podsafe Music Network.

“Fill up, Feel Good” is sponsored by the Ethanol Promotion and Information Council.

Audio, EPIC, Ethanol, Fill Up Feel Good, Government

Groups Urge Congress to Fund Cellulosic Development

Cindy Zimmerman

AFBFThe American Farm Bureau Federation and several other ag and industry organization are urging Congress to include adequate funding for two programs that will move cellulosic ethanol closer to reality – the biorefinery grant program and the cellulosic loan guarantee.

According to a release,The two programs were created under the Energy Policy Act of 2005. The biorefinery grant program has been announced at $150 million and applications for new cellulosic facilities have already been received by DOE. The cellulosic ethanol loan guarantee program is administered by the DOE, but funds to run the loan guarantee office have yet to be appropriated. The department estimates $7 million is required to support this program.

Other groups lobbying Congress for appropriate funding or the two programs are the American Coalition for Ethanol, Environmental and Energy Study Institute, National Association of Wheat Growers, National Corn Growers Association, National Farmers Union and the Renewable Fuels Association.

Cellulosic, Ethanol, Government, News

Carnegie Mellon Research Could Improve Ethanol Efficiency

Cindy Zimmerman

CMU Grossman Carnegie Mellon University chemical engineers say they have found a new way to improve the efficiency of ethanol production.

According to a university release, Carnegie Mellon researchers have used advanced process-design methods combined with mathematical-optimization techniques to reduce the operating costs of corn-based bio-ethanol plants by more than 60 percent.

The key to the Carnegie Mellon strategy involves redesigning the distillation process by using a multicolumn system together with a network for energy recovery that ultimately reduces the consumption of steam, a major energy component in the production of corn-based ethanol.

“This new design reduces the manufacturing cost for producing ethanol by 11 percent, from $1.61 a gallon to $1.43 a gallon,” said Chemical Engineering Professor Ignacio E. Grossmann, who completed the research with graduate students Ramkumar Karuppiah, Andreas Peschel and Mariano Martin. “This research is also an important step in making the production of ethanol more energy efficient and economical.”

Ethanol, News

Purdue Scientist Honored by President

Cindy Zimmerman

Purdue Scientist A senior research scientist from Purdue University was among those honored to attend the President’s State of the Union address last week, thanks to her groundbreaking work in cellulosic ethanol.

According to BoilerStation.com, Nancy Ho was asked to attend the event by the White House and sat near First Lady Laura Bush.

“I will treasure this all my life,” Ho said Thursday. “And it is important for the biofuels and cellulosic ethanol industry. I think that was the message, too.”

Ho used genetic engineering to make a yeast that will change the sugars found in the plant residue into ethanol, something that normal yeast won’t do.

Sen. Richard Lugar, R-Ind., has also recently honored Ho by naming her an energy patriot for September 2006.

Cellulosic, Ethanol, Government, News, Research

Hungary’s Largest Biodiesel Plant to Start in May

John Davis

Europeans seem to be as keen on alternative fuels as their American counterparts… maybe even more so. This article from the Budapest-based on-line financial journal, Portfolio.hu, says the country is about to open it’s biggest biodiesel operation to date.

Öko-Line Hungary Kft. will start production at the country’s largest biodiesel plant near Bábolna (northwest Hungary) in May, with an initial output of 25,000 tonnes, Gergely Novák, the company’s business development manager said.

The company plans to double annual capacity to 50,000 tonnes from 2008, Novák added.

If my math is right (and please correct me if I’m wrong), I believe that means the plant will be producing about 7.5 million gallons of biodiesel a year and is expected to reach more than 15 million gallons a year next year.

The story goes on to say that Hungary has a couple of other biodiesel plants, but the output is only about one-tenth that the new one will be. The Hungarians seem to be also having some of the same questions we’re having in this country: Will it make money? The new operation was originally built about 10 years ago, but investors went bankrupt. Of course, oil was much cheaper then.

Biodiesel, International

State Legislatures Across Country Taking Up Biodiesel

John Davis

Interesting little thing I noticed over the weekend… a BUNCH of articles about a BUNCH of state legislatures taking up biodiesel measures. Last week, we told you about Missouri’s legislature taking up a biodiesel requirement. My news alerts have clued me in to similar measures in California, Arkansas, Washington state, and Wisconsin (just to cite a few). Of course, this follows on the heels of President Bush’s call for more renewable fuels and reduction of foreign oil dependance in his 20 percent reduction of gasoline usage in the next 10 years.

Gov Jim DoyleThe state lawmakers seem to following suit with goals also to be more environmentally conscience. In Wisconsin, for example, Governor Jim Doyle released a press release (reported on WisPolitics.com) saying “With new technology, and a commitment to renewable fuels, Wisconsin can lead the way – reducing global warming and helping this nation kick its addiction to foreign oil.”

Sen. Dean FlorezThe Fresno (California) Bee reports State Sen. Dean Florez, D-Shafter, introduced seven bills this month in hopes of making (biodiesel) common. His new bills would promote the production, sales and use of biodiesel with tax breaks and mandates. Florez’s Senate Bill 70, which would establish California standards for biodiesel as a fuel, mentions a 20% mix, known as B20. The fuel can be 100% biodiesel, or it can be a mixture of petroleum diesel and biodiesel. Florez’s bills would require school buses and state vehicles powered by diesel engines to use biodiesel fuel.

This AP story in the Seattle Times says that lawmakers in Washington state will consider a bill that would provide incentives to increase the production and use of biofuels in Washington. The incentives would go to farmers to grow crops like canola, and to various government entities to replace or retrofit big polluters like school buses. A key provision calls for spending $5 million to help local governments replace 700 aging diesel school buses with newer models. It also provides money to retrofit other old buses so they run more cleanly.

Of course, they say watching laws being made is like watching sausage being made. We’ll stay on top of it so you can avert your eyes.

Biodiesel, Government, Legislation