Brazil is considering a pipeline for ethanol, according to an Associated Press report out today. The $226 million pipeline “would run from the central state of Goias to a refinery in Paulinia, near Sao Paulo, through Brazil’s main producing centers of sugar cane and ethanol,” and would be built by the government’s Petroleo Brasileiro SA, or Petrobras. Brazil is the world’s largest producer of ethanol and the country is getting heavily into the export market. The article quotes Petrobras Chief Executive Sergio Gabrielli saying Petrobras would be pioneering a new area of alternative fuel transportation. “We are the only country in the world that has the technology to build an ethanol pipeline,” Gabrielli said. “To make the ethanol market grow is strategic for the world, not only for Brazil.” While exports have been limited as the country has been concentrating on its domestic market, they are exporting to or in talks with exporting to Venezuela, Nigeria, China, South Korea, India and the United States. There is currently a 54-cent-a-gallon duty on imports of ethanol to the United States, which is intended to offset the federal tax subsidy for the U.S. industry. There are concerns that Brazil might challenge that tariff under the World Trade Organization. There was a good article on that subject recently in the Des Moines Register.
Somebody Got the Point
Finally I found an article that picked up on the president’s reference to a “new kind of ethanol” and provided some good information on the potential for cellulosic ethanol. Kudos to reporter Craig Rose for his story in the San Diego Union-Tribune. Here’s just an excerpt from that article:
…Bush raised the prospect of producing ethanol from waste material, which holds the potential for making it cost effective and reduce its environmental impact. Supporters say the president’s goal is within reach.
“He said that in six years we want to have competitively priced ethanol from cellulose (waste plant material),” said Reid Detchon, executive director of the Energy Future Coalition, a bipartisan public policy group.
“What that involves is moving from small scale pilot projects to full scale commercial facilities. I might be a little more aggressive. Ethanol can make a large difference in the shorter term.”
Environmentalists see big benefits to producing ethanol from waste material compared with grains such as corn.
“With this new technology, resources to produce ethanol would be much more widely available,” said Daniel Lashof, a senior scientist at the Natural Resources Defense Council.
Lashof noted that producing cellulosic ethanol – the industry term for the fuel made from waste material – does not require fertilizer and other petroleum products.
Here’s a little bit more:
Neil Koehler, chief executive of Fresno-based Pacific Ethanol, said that the U.S. energy act passed last year sets a production target of 7.5 billion gallons of ethanol by 2012, which would be about 5 percent of the nation’s fuel supply.
He said gas-powered vehicles are capable of running on a blend of up to 10 percent ethanol without modification.
“That would be a very meaningful contribution to our energy future,” said Koehler, whose company expects to begin operating its first California plant in Madera later this year.
Koehler said that the United states is capable of producing up to 12 billion gallons of conventional ethanol a year before it would begin to strain grain supplies.
By that time, he expects cellulosic ethanol production to be commercially viable.
But the technology involved requires advances in engineering enzymes, which are used to break down cellulose.
“We’ve already reduced costs from about $5 per gallon to about 50 cents per gallon for that process,” Koehler said. “We need to get it down to about 10 cents a gallon. And the five-to six-year time frame the president mentioned, that is generally considered the time it will take.”
This is a great article and worth reading the whole thing.
Ethanol Feature in USA Today
There is a big feature story on ethanol in USA Today that, unfortunately, highlights more of the drawbacks to ethanol than the advantages. It focuses heavily on the fact that production and distibution of E85 are limited and that most fueling stations are located in the midwest – which is true. What it does not discuss at all is the potential for cellulosic ethanol to increase production in other regions of the country – which is what President Bush was talking about when he called it “this new kind of ethanol.” I have seen almost no coverage about this aspect of Bush’s comments.
USA Today also focuses on the current lack of flex-fuel vehicles available – that the five million we have now is only about two percent of the vehicles on the road. True. But it does note the strong commitment on the part of U.S. auto makers to making more available in the future.
It also notes that ethanol is less fuel efficient than gasoline, but points out that engines could be designed that would improve that.
It’s important to realize that the ethanol industry needs to grow tremendously on all levels before it can get to a point where it is replacing a significant amount of foreign oil. It will not happen overnight. Which is why the president’s goal for 2025 is actually pretty realistic. We are talking about CHANGE here and that always comes slowly. The best line in the article is “the potential of alcohol-based fuel is tantalizing.” The POTENTIAL is there – we need to overcome the challenges and make it happen.
More from Mean Green: One Kernel, Two Fuels
Through a joint venture announced today, Veridium Corporation of New Jersey was granted the exclusive worldwide rights to Mean Green’s patent-pending Corn Oil Extraction System(TM). Both companies are owned in part by GreenShift, with Veridium having a primary focus on waste management services. According to a GreenShift release, the proprietary new technology extracts high grade corn oil from ethanol by-products. Veridium intends to provide ethanol producers with turn-key Corn Oil Extraction Systems(TM) for no up-front cost in return for long-term corn oil purchase agreements based on a fixed discount to prevailing market prices. Pictures and video of the new Veridium technology are available online at www.meangreenbiofuels.com.
Leaner, Meaner, Greener
GreenShift Corporation has announced the consolidation of its various biofuels companies into a restructured Mean Green BioFuels Corporation. According to a company release, GreenShift’s investments in BioEnergy Engineering, LLC and Ethanol Oil Recovery Systems, LLC, were transferred into Mean Green along with Mean Green Biodiesel of Tennessee, Inc.
Mean Green’s business model is based on the production of biodiesel out of soy bean oil; animal fats procured from rendering operations; corn oil extracted from ethanol facilities and animal fats derived from dissolved air flotation wastewater sludges.
Mean Green plans to aggressively invest in its brand as it promotes the use of biofuels in America with the objective of offsetting the demand for fossil fuels while reducing harmful greenhouse gas emissions directly in the trenches — in as many diesel burning trucks, tractors, other heavy equipment and industrial facilities as possible.
Market Reacts to Ethanol Talk
All this ethanol talk was good for business on Wednesday. Shares for farm equipment companies like John Deere and Agco posted gains in trading today on ideas that increased ethanol production will mean more tractors and combines will be needed. According to MarketWatch, Morgan Stanley reiterated its overweight rating on Deere Wednesday and called ethanol the “key energy theme in 2006.” Pent-up demand for equipment replacement on farms and higher corn production should drive machine purchases, according to the analysts. “Ethanol is a rare win-win for nearly all involved,” wrote analyst Stephen Volkmann. “Farmers get higher crop prices, consumers get away from imported energy, environmentalists get renewable and cleaner burning fuel and government gets to send less direct aid to farmers.”
Big News Day for Ethanol
Every single news story that I read or heard about the president’s speech last night focused on his remarks about ethanol and it seemed to be overwhelmingly positive. Even the Democratic response to the address from brand new Virginia Governor Tim Kaine seemed to agree with Bush on this point, sort of. “When it comes to energy, Americans are using more than ever, paying more for it, and are more dependent on the Middle East than ever before. There’s a better way. Last summer, I joined Democrats in Washington and in other states in calling on oil companies to share in our sacrifice and return some of their record-breaking excess profits. Democrats at both the state and national levels are leading the way on energy reforms, calling for greater public investments for alternative, advanced energy technologies. These investments will promote energy independence, boost our nation’s economy, create jobs, and strengthen national security.”Automotive News noted some reaction that the plan was “too little and too long term.” Global reaction was mixed according to an Associated Press story which includes negative comments from France and OPEC – no surprises there.
Read more about the Advanced Energy Initiative that the president announced last night.
Might As Well Face It, We’re Addicted To Oil
Guess what? President Bush talked about ethanol in his State of the Union address tonight! No kidding!
As expected, energy was part of the president’s speech and his most memorable line was “America is addicted to oil” – a headline that was splashed all over the internet news services as soon as they received their advanced copies of the address, hours before it was actually made. The president devoted less than three minutes of his address to energy, but it was the most highly anticipated by the media and – naturally – those in the domestic fuel industry. The Renewable Fuels Association even sent out a press release with reaction to the yet-to-be-made address at 5:30 pm EST (although they did note it was embargoed until 9:30 EST).
What the president had to say was certainly good news for the ethanol industry, announcing the Advanced Energy Initiative – a 22 percent increase in clean energy research at the Department of Energy. “We must also change how we power our automobiles,” Bush said. “We will also fund additional research in cutting edge methods of producing ethanol, not just from corn, but from wood chips and stalks or switch grass. Our goal is to make this new kind of ethanol practical and competitive within six years.” After sustained applause the president added, “Breakthroughs on this and other new technologies will help us reach another great goal to replace more than 75 percent of our oil imports from the Middle East by 2025.” Listen to President Bush’s full domestic energy remarks here.
Audio From ADM
Here is some audio from ADM’s press conference this morning with Chairman and Chief Executive G. Allen Andreas and Vice President for Corporate Affairs Brian Peterson. All the cuts are a minute or so, but I left them basically unedited for context.
First off, here are Peterson’s prepared remarks about ADM’s biodiesel interests and ethanol business.
The other three cuts are all from Allen Andreas.
First, Andreas talks about his thoughts on prospects for ethanol prices.
Andreas talks about ADM’s biodiesel business in Europe and the potential in the United States.
Finally, Andreas addresses a question about ethanol imports from Brazil and the prospects for the fuel on a global scale.
Ethanol and Biodiesel Help Drive ADM Profits
Agribusiness giant and biofuels leader Archer Daniels Midland today reported an impressive 17 percent increase in profits for the quarter ending December 31, 2005 – mainly due to lower corn prices and higher ethanol prices. The entire corn processing sector of ADM’s business increased $104 million over the same period in 2004 to well over $236 million in 2005 – up close to 80 percent. The bioproducts portion, which includes ethanol, was up 40 percent to $122 million. Officials said that while the low corn prices from last year’s record crop were the major reason for the higher profits, they are very optimistic about continued strong demand for ethanol as cities convert from MTBE and auto makers promote increased use of E85. ADM officials are also very optimistic about biodiesel, especially in Europe where ADM is a leader in production. “More than 50 percent of the automobiles there are diesel engines, so it’s really a different model from the United States,” said Chairman Allen Andreas. However, he says biodiesel holds great promise for the U.S. as well as the sulfur is removed from the fuel requiring more lubricity. Here is a link to the report presentations and audio from this morning’s press conference on the ADM site. I am in the process of cutting up some of that audio to put up some short sound bites later that refer specifically to the ethanol and biodiesel aspects of ADM’s business.