Columbia, South Carolina is the latest municipality that is getting waste grease out of its sewer system and into its vehicles in the form of biodiesel.

The Columbia Free Times says the city has set up a system to collect residents’ used cooking oil and use it in a trash truck:
When restaurants need to get rid of used cooking oil, they can usually donate or sell it to companies that convert it into fuel.

Columbia’s backyard chefs, on the other hand, have had to throw away their oil — the Thanksgiving turkey-frying oil; the used oil from family fish frys; the gallons and gallons of oil it takes to perfect a fried chicken recipe or the world’s best raw fries.

Now, the City of Columbia wants residents to bring their used cooking oil to a new drop-off site at the city’s Public Works facility on Colonial Drive. Dubbed Southern Fried Fuels, the program is part of an arrangement with the local company Midlands Biofuels.

Brandon Spence, co-owner and CEO of Midlands Biofuels, says his company is paying for the oil collection itself; the city is only providing space for the collection tanks and then buying the biofuel.

“The containers are an investment,” Spence says.

The city will use a B20 blend of this waste grease biodiesel for the garbage truck and could use it in other equipment. Columbia’s fleet of other diesel vehicles is already running on B5.

In addition, the city says it spends $1.5 million a year dealing with grease, mostly from residents and not restaurants, in its sewer lines. Officials hope this will cut those costs down significantly.

In 2008, we reported on the price-distorting entry of speculators into the ethanol and grain markets, a rising disconnect between ethanol and gasoline prices, and the rapid expansion of energy and food demand in China.
In late 2010, we see again the predatory entry of speculators into the grain markets, and a growing disconnect between ethanol and gasoline prices.

As for China? The country has passed the US in terms of overall energy demand and now leads the G20 in green investment.
Go-go China: LanzaTech signs with Henan Coal and Chinese Academy of Sciences for advanced biofuels demo plant
One signal investment? MOUs signed this week by LanzaTech with Henan Coal and Chemicals and the Chinese Academy of Sciences to build a demo and eventually, if successful, a full scale commercial facility based on coal derived synthesis gas. Henan is the second-largest coal company in China, ranked by revenues.

The primary purpose of the collaboration is the production of ethanol fuels and chemical products through the integration of coal gasification and biological fermentation.

Also signed was a separate three way LOI regarding the establishment of a Bio Energy Research Centre for the development, pilot production and commercialization of the technology of “coal derived synthesis gas to ethanol fuels and chemicals”. The research centre, supported by multiple research institutes under CAS, will focus on developing important complimentary process technologies, like product separation, water conservation and process integration. The research centre will also focus on developing other high value added technology and products.

“This complements the Bao demo as it will show the extensibility of our technology to synthesis gas,” explains LanzaTech CEO Jennifer Holmgren, “not just steel mill waste gases. We have already shown we can convert biomass derived synthesis gas in the lab, but this will enable us to demonstrate this at a 300 TPA demo scale.”.

“Henan has expertise converting coal derived synthesis gas to other fuels and chemicals using thermochemical approaches,” Holmgren continued. “This will enable us to do a head to head comparison to understand which steps are best done biologically with our system vs which steps are best done thermochemically. I think this will allow the industry to continue to leverage multiple approaches and pathways to continue to reduce the carbon and energy intensity of making liquid fuels and chemicals.”

As you said- these biological routes could provide some of the progress that conventional approaches have not over the past few years.
Ethanol disconnecting from gasoline: trouble ahead.

In another echo from 2008, ethanol prices are disconnecting from gasoline. We know that, based on the BTUs, a price for ethanol at 70 percent of gasoline makes sense on the BTUs. Now, we need to have an oxygenate in gasoline to reduce smog, so E5 gasoline isn’t really about ethanol, green jobs or energy security, its about breathing. So a parity price for ethanol, given that we are distributing the equivalent of a 10 percent supply, should be about a 15 percent discount to gasoline. Above that – danger!

According to Bloomberg: “[Ethanol] jumped 22 percent since the U.S. driving season began in May, rising above gas, which has fallen 6.5 percent in the same period…Denatured ethanol for September delivery, the benchmark contract, rose to $1.944 a gallon on the Chicago Board of Trade. Futures climbed 14 percent in August. October gasoline settled at $1.8891 a gallon on the New York Mercantile Exchange, down 8 percent this year.”

The crazy rally in corn

Again, from Bloomberg: “Ethanol may continue to rally as corn, a main feedstock for the fuel, rose to a 14-month high of $4.4675 a bushel today on speculation U.S. grain demand will increase after Russia halted exports amid its worst drought in half a century. ”

The Digest’s take

Look out for another wild ride in grain prices over the next 6 months, and that could mean crazy times for ethanol producers and corn ethanol-dependent countries like the US. While China has adopted a “slow-down-baby” approach to biofuels development since nixing corn ethanol in 2007-08, they are onto something with steel mill carbon dioxide.

Their thought: turn a pollution source – and a cost center – and turn it into a revenue source. LanzaTech’s technology may just prove the trick. Another sign that the BRIC countries – Brazil, Russia, India and China – may have the most at stake with advanced biofuels.
And, for sure, China is getting organized, and is determined to take US technologies to scale, while the US sleeps. As a Digest reader put it, in commenting on a recent report on Asian investment, “I’d like to echo the quote “Asia is more aggressive”. Not only in biofuels, but with solar as well. Even with hoards of funding an American company like Solasta can’t make it and has to sell out their IP to a Chinese company.

The ethanol market this week will focus on:

• the corn market where the focus remains on weather, yields, and exports,
• gasoline prices, which continue to focus mainly on the stock market, and
• whether ethanol inventory levels continue to fall and indicate strong demand.

Strong ethanol demand continues — Ethanol inventories in the latest reporting week (Aug 27) fell by 1.7% to 17.562 million barrels, leaving inventories 11.8% below the peak seen in July and down to the winter levels seen this past January. The decline in inventories indicates that demand for ethanol remains very strong and that inventories are coming down by even more than they should as the summer driving season comes to a close.

At the same time, there is virtually no unused U.S. plant capacity to boost production. The daily production level of 856,000 barrels/day seen in the latest week represents 97% of U.S. ethanol capacity of 13.519 billion gallons per year reported by the Renewable Fuels Association. There is very little construction of new ethanol facilities at present, meaning that the industry cannot boost production much higher from current levels in the near future. Ethanol prices last week briefly moved slightly above gasoline prices, illustrating the continued strong demand for ethanol relative to gasoline. However, even with ethanol and gasoline prices at near-equal levels, ethanol is still 45 cents cheaper due to the ethanol excise tax subsidy. Therefore, there is no reason for ethanol demand to drop off relative to gasoline, suggesting that ethanol prices may be able to hold the bulk of the rally as long as corn prices stay high as well. The main wild card for ethanol prices at present, however, is whether the EPA later this month will approve higher ethanol blends of E12 or E15, which will have a big impact on the medium and long term demand outlook.

Ethanol Market Action – October CBOT Ethanol futures prices last week extended the 10-week rally to a total of 30%, posting a new 2-year high and closing up 6.9 cents (+3.8%) at $1.884 per gallon. Ethanol prices were again led higher by corn’s 6.5% rally during the week. Ethanol prices were also supported by the indications of continued strong demand seen in the weekly EIA report and by the slightly higher 0.2% close in gasoline prices.

Ethanol/Gasoline – October gasoline futures prices last week consolidated just below the recent 3-week high and closed the week slightly higher by 0.47 cents (+0.2%) at $1.9195 per gallon. Gasoline prices were supported during the week by the solid rally in the stock market and by last Friday’s stronger-than-expected August payroll report. The spread of Oct ethanol prices minus gasoline prices last week rose by 6.4 cents to -3.6 cents, although ethanol is still 49 cents cheaper than gasoline including the 45-cent ethanol tax subsidy.

Ethanol/Corn – December corn futures prices skyrocketed higher to post a new 2-year high and close 28.50 cents higher (+6.5%) at $4.645 per bushel. Bullish factors included (1) recent news that foreign purchases of U.S. corn in the 2 weeks ended Aug 19 were 3.987 million tons, the biggest 2-week total since at least 1990, and (2) recent hot, dry weather that will reduce corn yields a bit. Ethanol prices failed to fully keep up with last week’s corn rally and the Dec ethanol-corn crush margin fell by 4.5 cents to 15.3 cents/gallon. Including DDG, the Sep corn for ethanol crush margin fell by 4.5 cents to 51.1 cents/gallon.

Ethanol Calendar
• Sep 8: EIA Weekly Petroleum Status Report
• Sep 10: USDA WASDE Crop Supply-Demand
• September: EPA’s E15 decision due
• Sep 29: EIA July Monthly Ethanol Report

German grain has suffered from an early summer heat wave followed by heavy harvest-time rain, it said.

 The wheat crop of all types was likely to fall 5 percent on the year to 23.92 million tonnes. This includes the key winter wheat crop, used for bread-making, which is expected to drop 5.3 percent on the year to 23.58 million tonnes, it said.

 German wheat prices peaked on Monday to their highest level in 28 months on fears the harvest size and quality had been heavily damaged. Germany’s woes have added to a series of global wheat production problems.

 World wheat prices surged to two-year highs in early August as drought devastated Russia’s harvest and the country announced a sudden grain export ban. Heavy rains have also hit wheat in Canada and Pakistan.

But the farm ministry said it believed Germany would still be self-supporting in wheat despite the forecast 5.3% drop in the winter crop.

 The German flour mills association said last Wednesday Germany might import up to 1 million tonnes of milling wheat in the coming year, its first major imports for a decade, after the rain seriously damaged wheat crop quality and volume.

 ”The (wheat) quality for food use – 6 to 7 million tonnes are milled – should still be available in satisfactory volumes this year,” the ministry said.

Germany’s winter barley crop, used for animal feed, is likely to fall 14% to 8.66 million tonnes, and the spring barley crop for malt and beer brewing is expected to fall 20% to 1.76 million tonnes, the ministry said in a report.

 The maize (corn) crop is likely to fall 19.5% to 3.64 million tonnes, and the rye harvest will fall 34.3% to 2.84 million tonnes, the Ministry said.

 The rye harvest is also enough to cover German bread needs as substantial volumes were harvested before rain damaged the harvest in August, the ministry said.

 But Germany, normally the EU’s second-largest grain exporter after France, will have considerably smaller supplies available for export, it added.

 Grain harvesting has still not finished because of rain, but enough work has been done for crop estimates to be made.

The rapeseed crop is likely to fall 9.3% to 5.70 million tonnes, the report said.

 Rapeseed has also suffered from the extreme weather this summer, but last year’s 6.28 million tonne crop was a record and this year’s harvest will be above average, it said.

 About 80% of Germany’s rapeseed crop is expected to be for non-food use. Germany is Europe’s largest producer of biodiesel, which largely uses rapeseed oil as raw material.

“If we don’t sow now, we will reap nothing,” says a resigned Maxim Zhalin, head of an agricultural holding in Tambov called October in the centre of the country’s grain belt, who estimates the farm lost nearly $700,000 as the grain crop failed this summer.

The success, or failure, of Mr Zhalin and thousands of other farmers will determine when Russia returns to the global wheat market, easing – or, in a worst-case scenario, increasing – pressure on prices.

Russia’s grains export embargo has pushed wheat prices to a two-year high, triggering fears of a repeat of the 2007-08 food crisis.

On Monday, European milling wheat rose to €234.25 a tonne, within striking distance of the €236 peak hit last month on worries about dryness in Russia. Moscow has set a target to plant 18m hectares of winter wheat by the end of the month, as part of a plan to boost grain production to 80m-90m tonnes in 2010-11, up from about 60m in 2009-10. But farmers and analysts believe that the goal is optimistic.

The Commodity Weather Group, a consultancy, estimates that about a third of Russia’s grain belt remains “too dry” for planting, although recent rains mean half of the country’s grain areas “have enough moisture for establishment”.

Tambov is an example of the problems ahead for Russian farmers – and for global wheat markets. The town lies 400km south-east of Moscow in the heart of the Black Earth region, a vast fertile area that accounts for the bulk of Russia’s grain output.

As a light rain fell this week, farmers began sowing winter wheat. But they say there is no certainty the soil will be moist enough for seeds to take root. Planting must be completed before the end of the month when the first frosts usually set in.

Agro Vista, which farms 36,000 hectares of land in Tambov, says it is considering cutting winter wheat planting by 25 per cent if there is not substantial rain in the next few days. “It is a gamble,” says David Metcalfe, chief executive. “There is a good chance some of the seeds will fail because of the dryness.”

The concern is shared by experts. Dmitry Rylko, director of the Institute for Agricultural Market Studies in Moscow, a consultancy, says patchy rainfall would allow for successful sowing only in some regions.

Another wheat crop failure would ruin many Russian farmers and put global grain markets under extraordinary pressure.

The current shortfall has upset the market, but with plentiful inventories elsewhere – notably the US, the world’s largest exporter – the impact has been somewhat cushioned.

That will change if Russian farmers cannot seed their winter wheat, further draining global stocks next year.

Moscow imposed a ban on grain exports last month, saying it would lift the embargo at the end of the year.

But in a sign of nervousness about the slow pace of winter wheat planting, Vladimir Putin, prime minister, said last week the export restrictions would continue until the 2011 harvest was gathered. By late August, Russian farmers had sowed about 485,000 hectares with winter wheat, half the nearly 965,000 hectares of last season, according to official data.

The weather is not the only factor weighing on planting – access to cash to finance the purchase of seed, fertiliser and to pay for other planting expenses is just as critical.

Farmers in Tambov say they have come under pressure from the authorities to inflate the size of the grain harvest or risk losing subsidised loans essential to the planting season.

As evidence of the drought’s toll mounted over the summer, the government promised to help farmers. But Mr Zhalin says the slow disbursal of funds could prevent winter wheat sowing at some farms.

“Not a kopeck has arrived. People are not in a condition to plant.”

He said many players were not able to maintain their operations given the high cost of production and the lack of the much needed incentive and subsidies from the Government.

Of the total installed production capacity of 2.6 million tonnes, production was stagnant with very few players in operation, Unnithan told StarBiz.

The situation was also reflected in the Malaysian Palm Oil Board (MPOB)’s latest statistics which showed that biodiesel export in July was at an alarmingly low level – 137 tonnes or 95% drop from 2,518 tonnes a month earlier. It is also the lowest biodiesel export recorded so far this year.

Unithan said it was sad to see the biodiesel industry, which has been identified as one of the 12 National Key Economic Activities (NKEA) under the Tenth Malaysia Plan, was being left “unproductive”, when the Government intend to fully implement its much delayed mandatory B5 biodiesel programme by June next year.

The MBA represents 22 biodiesel producers from both local and international companies with operations in Malaysia.

“Our members in total had invested over RM21bil in terms of investment over the past three years and all have gone to waste; this put us into negative margins because of the slow action by the Government.

“It is important to quickly address this dying industry if the Government is serious about implementing the biofuel act for the country,” added Unnithan.

He also question why Malaysia cannot help to subsidise local palm-based biodiesel when countries like Thailand, Indonesia, the Philippines, Argentina and Colombia were heavily subsidising their biodiesel product.

Colombia, for example, started its biodiesel production in 2009, which is much later than Malaysia’s biodiesel production in 2007.

“However, Colombia is already progressing into B10 programme and will soon migrate to B20, where else Malaysia, still cannot even implement its B5 programme successfully,” said Unnithan.

He said given the right subsidy and incentives, biodiesel players in Malaysia could easily take up 500,000 tonnes of CPO from the domestic market thus making CPO prices to continue to be traded at stable levels.

Carotech Bhd chairman and managing director David Ho said: “To offset poor margins in biodiesel, many players including Carotech had to convert to other applications which uses the palm methyl esters.”

For Carotech, he said group was now actively involved in the extraction and sale of palm oil phytonutrients and oleochemical products.

Many biodiesel players in Malaysia were initially focusing for export. Ho said: “However, we have no advantage over the other international biodiesel players which are selling at much cheaper prices given the subsidy by their respective governments.”

He added that the situation was also not getting better at the domestic level. “Without subsidy, local biodiesel will not able to compete efficiently in terms of pricing with the existing subsidised petroleum diesel by the Government,” said Ho.

An industry observer said there was much to deliberate on the biodiesel programme, which is not viable given the current high feedstock prices.

He estimated that biodiesel would cost about 60 sen per litre more to produce than petroleum diesel when the CPO price is at RM2,500 per tonne and Tapis crude oil is at US$80 to US$90 per barrel.

“Some quarters believe that replacing petroleum diesel with biodiesel will worsen the Government’s subsidy burden rather than improve it.”

The Government’s annual consumption subsidies for petroleum fuel have been estimated at RM20bil to RM25bil. Replacing 5% of petroleum diesel with biodiesel would add about RM300mil per year to the subsidy bill, he added.

     The company disclosed $5.7 million in equity investments in a regulatory filing today that will be added to $23.7 million garnered from 11 investors, which the company reported in a May filing. Matthew Hargarten, a spokesman for the Warrenville, Illinois-based company, declined to comment beyond the document.

     Chief Executive Officer William Roe is seeking financing to develop Coskata’s first commercial-scale ethanol plant, a 50 million gallon-a-year facility that may cost more than $200 million. The company hasn’t yet chosen a site and previously said it’s evaluating locations in the U.S. Southeast with access to southern pine feedstock.

     Coskata uses a gasification technology licensed from Alter NRG Corp. subsidiary Westinghouse Plasma to convert feedstock from almost any carbon-containing material, including tires, to gas. Microorganisms then consume the carbon monoxide and hydrogen to produce ethanol.

     Coskata has conducted tests at a 40,000-gallon “semi- commercial” facility in Madison, Pennsylvania, since October 2009. Its process may yield more than 100 gallons of ethanol from every ton of raw material, Coskata said on its website.

     Total SA, Europe’s largest refiner, acquired a stake in Coskata, the Paris-based company said in April. Other backers have included General Motors Co., Blackstone Cleantech Venture Partners and Arancia Industrial SA, a Mexican holding company with businesses in biotechnology and industrial enzyme markets.

SIOUX FALLS, S.D. — Midwest farmers who sold corn to bankrupt ethanol producer VeraSun Energy Corp. have been receiving official letters asking for most of that money back.

Although the request carries legal precedent, trade association groups say growers have a defense and should consult an attorney before sending any money. They do have to respond though — and promptly, the groups advise.

Shannon Hannappel, who farms 1,400 acres near Clarks, Neb., said Thursday she thought she was done dealing with VeraSun until she received a letter requesting an $80,000 repayment.

“We thought we had gotten settled a year ago and we were done,” said Hannappel who typically sold to her local grain elevator but decided to take advantage of VeraSun’s higher offer. “For us, that’s a quite a dent.”

The Aug. 20 letters were sent to farmers paid by VeraSun in the 90 days before it filed for Chapter 11 bankruptcy protection. The settlement offer good through Sept. 30 requests an 80 percent repayment of what VeraSun paid them for their corn.

The demand has not been well-received by farmers, many of whom also had their high-price corn contracts with VeraSun negated when the company filed for bankruptcy, said Lisa Richardson, executive director of the South Dakota Corn Growers Association.

“The ghost of VeraSun has returned, and there is significant frustration,” Richardson said.

The association is trying to get a list of how many growers are affected, and Richardson estimates hundreds in South Dakota and thousands nationwide received letters.

Sioux Falls-based VeraSun, once the nation’s No. 2 ethanol producer, filed for bankruptcy in October 2008 after tightening credit markets erased its lifeline to weather the swings in corn and fuel prices. San Antonio-based traditional refiner Valero Energy Corp. has since bought nine former VeraSun facilities.

VeraSun as a company exists only in a Delaware bankruptcy court, with a trustee who is responsible to the creditors in charge of its remaining assets.

Seeing the VeraSun name in correspondence caught many Nebraska farmers off-guard, said Jay Rempe, vice president of governmental relations with the Nebraska Farm Bureau.

“I think they thought that was well behind them now,” Rempe said. “The first reaction from farmers is ‘Is this real? Is this credible, or is this somebody just out on a fishing expedition?’”

Sioux Falls law firm Meierhenry Sargent LLP is representing a couple of farmers, one of whom received a letter requesting more than $29,000.

“These are not small amounts of money,” said attorney Patrick Glover.

Bankruptcy code considers any payment made by a company in the 90 days leading up its Chapter 11 filing a preferential payment. The idea is to prevent a company that knows its days are numbered from choosing to pay certain creditors while stiffing others.

“They think that maybe they’re trying to pay off certain creditors to the detriment of others,” Glover said. “That’s why they have that law.”

He said the best defense for those who receive letters is to show the payments were part of an “ordinary course of business.”

If farmers can show that VeraSun made payments for corn to farmers in the ordinary course of its business before and up through the bankruptcy, then they could be considered exceptions to the preferential-payments rule, Glover said.

Glover said his firm is talking to the South Dakota Corn Growers to see if farmers could be grouped in a class since the letters and issues are similar.

National and state trade organizations have been getting swamped with phone calls, and they’ve been offering farmers guidance.

The Iowa State University’s Center for Agricultural Law and Taxation has posted a legal brief on its website, and the South Dakota Corn Growers has linked to the document and another prepared by the National Corn Growers Association.

Hannappel said that even though the ethanol plants’ current owners have nothing to do with VeraSun, many farmers are wary of getting burned.

“We’re all a little bit gun-shy about working with the ethanol plants, period,” she said.

In Indiana, Imperial Petroleum announced that its wholly-owned subsidiary, e-biofuels, a biodiesel producer in Middletown, cleared a milestone. After becoming part of Imperial and negotiating a series of feedstock purchase agreements and biodiesel off-take sales contracts, e-biofuels generated revenues of approximately $3.5 million in the month of July 2010 alone on fuel sales of about 1.2 million gallons and as a result the subsidiary expects to be highly profitable going forward.

Fuel sales for August 2010 are approximately 1.4 million gallons with revenues of just over $4.0 million for the month. “Expanding the plant throughput to its current capacity was one of our early goals for e-biofuels… August sales to date are on pace to exceed the July results,” commented Jeffrey T. Wilson, President of Imperial.

Wilson went on to add, “the closing of our financing for the Company, we expect to proceed quickly to expand the biodiesel production capacity to 25 MMGPY; convert the plant over to our more-efficient process technology and add bio-jet fuel capabilities. Our goal is to add slow pyrolysis equipment into the facility over the next year to produce both electricity for re-sale to the power grid and bio-oil for inclusion in our renewable boiler fuel and renewable heating oil products.”

Burger King will no longer purchase palm oil from a subsidiary of Sinar Mas after an audit “raised valid concerns about some of the sustainability practices of Sinar Mas’ palm oil production and its impact on rainforests,” Burger King announced on its Facebook page.

The fast food giant will transition to a new supplier for 176 restaurants that received palm oil from Sinar Mas subsidiary PT SMART Tbk. Over the last year, Unilever, Nestle and Abengoa Bioenergy, a Spanish energy company, have walked away from PT SMART’s palm oil. Staples, Woolworths, and U.K. retailers Tesco and Carrefour stopped buying products from Asia Pulp and Paper, another Sinar Mas subsidiary. HSBC also sold off all of its shares in Sinar Mas.

The driving force behind these developments has been Greenpeace, which launched a series of campaigns to raise awareness of what it considers to be Sinar Mas’ destructive forestry practices, while also applying public pressure on consumer-facing companies to cut ties with the Indonesian conglomerate. Underpinning these campaigns were a series of reports with titles that include “Caught Red Handed,” “Burning Up Borneo” and “Sinar Mas Continues Rainforest Destruction.”

In response to allegations in the reports of land-clearing and other wrongdoings, Sinar Mas hired a team of independent auditors to verify the Greenpeace claims. The report found Sinar Mas had indeed cleared and planted on deep peatland “but not as extensively as claimed,” and it cleared land in certain areas before required environmental impact assessments were approved. The report also noted weaknesses in PT SMART’s documentation of its engagement with landowners during compensation dialogues.

Sinar Mas touted the report as proof that the Greenpeace allegations were either wrong or exaggerated.

The auditors released a clarified statement two weeks ago because some parts of its research were “misreported as it has been published and presented,” said authors BSI Group, Control Union Certifications (CUC) and experts from the faculty of forestry at Bogor Agricultural Institute (IPB). “We therefore wish to restate the key findings of the report in the IVEX Team Report Summary and would ask all parties concerned to do the same.”

In a statement Wednesday, Sinar Mas expressed disappointment with Burger King’s decision.

“We are disappointed with this decision and will continue to engage Burger King to help them better understand our sustainability commitments,” the company said. “We hope to welcome them back as customers soon. We are confident that Burger King’s decision does not represent the view of the majority of our customers.”

Sinar Mas acknowledged mistakes, “but these are not to the extent that it has been made out to be,” it said. “This must be put into context. We have also made clear that where mistakes were made, we have taken the necessary action to ensure that this is not repeated.”

PUNE: Ethanol-blended petrol, rated as green fuel, is set to be launched in the country from the first week of October.

Vijaysinh Mohite-Patil, chairman of the Ethanol Manufacturers’ Association of India, said, “The country’s demand for ethanol is 105 crore litre and ethanol manufacturers have submitted the required letters of expression of interest which will be opened on Friday. After scrutiny by a government-appointed committee, the manufacturers will start supply of ethanol to respective oil depots of the public sector oil companies. The ethanol-blended petrol will be launched in the first week of October.”

He said, “Ethanol supply was started during 2004 to 2006, but not all the manufacturers supplied ethanol to oil companies. Hence, the Union government’s ethanol-blending programme could not be implemented completely. From the Rs 19.50 per litre of ethanol four years ago, the price has been revised to Rs 27 per litre this year. This time, the association has also decided to ensure smooth supply of ethanol to oil companies, as it is the only assured source of income.”

The 55 manufacturers, who are members of the association have submitted cumulative expression of interest to supply 23.81 crore litre of ethanol. Besides, nine individual suppliers have offered to supply 12.10 crore litre of ethanol, he said.

Speaking on the condition of anonymity, a senior official of the Indian Oil Corporation said, “Blending of ethanol will not only save expenditure on imports, but also reduce emission. This green fuel is likely to be introduced by the first week of October, as the government-appointed committee will take some time to finish its scrutiny. The Union government as well as oil companies want to avoid a repeat of the previous attempt that had to be abandoned, when manufacturers backed out from supplying ethanol to oil companies.” All the oil companies had installed the required machinery to blend ethanol in petrol in 2004 itself, he added.

N M Rao, secretary of the Indian Sugar Mills Association, told TOI, “There was opposition from the chemical and fertiliser industry who are major customers of molasses and rectified spirit. Many sugar factories from various parts of the country were getting good returns from the by-product sale. The ethanol-blending programme has given an assured market to sugar mills which can also use the bagasse for co-generation and earn additional money”.

     Five of nine traders, analysts and brokers surveyed by Bloomberg News said raw sugar traded in New York will rally. Two predicted a drop, and two said the price will be little changed.

Raw sugar rose 4.3 percent this week to 20.81 cents a pound yesterday on ICE Futures U.S.

     The market is pretty strong, especially because of the perspective of really tight supply/demand for sugar worldwide citing lower production in Brazil’s Center-South, the largest growing region.

     Output in Brazil, the world’s biggest exporter, will increase less than previously forecast this year as dry weather may hurt crops, according to the Agriculture Ministry’s crop- forecasting agency, known as Conab.

     Five of nine respondents in the Bloomberg survey said white sugar traded on London’s Liffe exchange will rally. Two said the price will decline, and two forecast little change. Refined sugar gained 2.6 percent this week to $592.20 a metric ton.

     Refined sugar’s premium over raw sweetener will probably widen, according to six of nine surveyed. Two said the spread will narrow, and one forecast little change.

     In the attached chart, red bars are derived by subtracting bearish forecasts from bullish estimates for raw sugar, with readings above zero signaling that most respondents expect higher prices. The green line shows raw-sugar prices, and the blue line shows white sugar.

Find out what is behind the recent spike in wheat prices in our interactive graphic. Plus: video analysis and country-by-country data

The announcement by Vladimir Putin came as the UN’s Food and Agriculture Organisation called an emergency meeting to discuss the wheat shortage, and riots in Mozambique left seven dead.

The unrest in Maputo, in which 280 people were also injured, followed the government’s decision to raise bread prices by 30 per cent. Police opened fire on demonstrators after thousands turned out to protest against the price hikes, burning tyres and looting food warehouses.

Although agricultural officials and traders insist that wheat and other crop supplies are more abundant than in 2007-08, officials fear the deadly Mozambique riots could be replicated.

The 2007-08 food shortages, the most severe in 30 years, set off riots in countries from Bangladesh to Mexico, and helped to trigger the collapse of governments in Haiti and Madagascar.

The Russian announcement extended an export ban first announced last month until late December 2011, sending wheat and other cereals prices to near a two-year high.

The FAO said that “the concern about a possible repeat of the 2007-08 food crisis” had resulted in “an enormous number” of inquiries from member countries. “The purpose of holding this meeting is for exporting and importing countries to engage.”

Russia is traditionally the world’s fourth-largest wheat exporter, and the export ban has already forced importers in the Middle East and North Africa, the biggest buyers, to seek supplies in Europe and the US.

Mr Putin said Moscow could “only consider lifting the export ban after next year’s crop has been harvested and we have clarity on the grain balances”. He added that the decision to extend the ban was intended to “end unnecessary anxiety and to ensure a stable and predict-able business environment for market participants”.

“This is quite serious,” said Abdolreza Abbassian, of the FAO in Rome. “Two years in a row without Russian exports creates quite a disturbance.” Dan Manternach, chief wheat economist at Doane Agricultural Services in St Louis, added: “This is a wake-up call for importing nations about the reliability of Russia.”

Jakkie Cilliers, director of South Africa’s Institute of Security Studies, said there was concern over a repeat of the protests of 2008: “That certainly strengthened a return of the military in politics in Africa.”

European wheat prices on Thursday hit €231.5 a tonne, just shy of last month’s two-year high of €236. Wheat prices have surged nearly 70 per cent since January, and analysts forecast further rises after Russia’s decision and concerns about weather damage to Australia’s crop.

TORONTO, ONTARIO, Sep 02, 2010 (MARKETWIRE via COMTEX) — Xylitol Canada Inc. is pleased to provide the following update on the recently announced sale of SunOpta BioProcess Inc., Xylitol Canada’s joint venture partner, to Mascoma Corporation of Lebanon, New Hampshire.

Background

In 2008, Xylitol Canada and SBI collaborated on a research and development program pursuant to a joint venture agreement focusing on the design, construction and optimization of biomass conversion equipment, processes and facilities for the cost effective production of xylitol from xylose-enriched raw materials. This initial agreement was later complemented by a series of agreements providing Xylitol Canada with relevant technology and sufficient xylose feedstock to validate scale-up to commercial production of xylitol in North America. SBI also became a major shareholder of Xylitol Canada pursuant to these agreements.

The Sale of SBI

By way of press release dated September 2, 2010, SunOpta Inc announced the sale of SBI to Mascoma. SunOpta noted that the combination brings together SBI’s fiber preparation and pretreatment technology with Mascoma’s consolidated bioprocessing technology, to create a company with comprehensive capabilities for converting non-food cellulose (wood chips, energy crops and organic solid waste) into ethanol and high value co-products such as xylitol. Following the transaction, the resulting company will be approximately 73% owned by existing Mascoma shareholders, approximately 18% by SunOpta, and the balance by other SBI shareholders. SBI will operate as Mascoma Canada, a wholly-owned Canadian subsidiary of Mascoma.

“We congratulate both SunOpta and Mascoma on completing this important transaction and we believe that the resulting combination represents a benefit to Xylitol Canada’s shareholders as we now execute our business plan with Mascoma Canada,” stated Andrew Reid, Xylitol Canada’s President and CEO. “We are excited to work with the expanded Mascoma/SBI team to move our project ahead and to explore opportunities to reduce the time and expense of implementing xylitol production at demonstration and commercial scales.”
Mascoma, through its affiliate Frontier Renewable Resources LLC, is currently developing a commercial scale production facility in Kinross, Michigan. The facility is based on technologies developed in Mascoma’s laboratories in Lebanon, New Hampshire and operating in its 57,000 square foot demonstration facility in Rome, New York. The facility will also incorporate technologies developed by SBI from its pilot operations in both Waterdown and Brampton, Ontario.

Propel Fuels is opening more pumps with 85 percent ethanol for California flex fuel vehicle (FFV) drivers.

The company held a grand opening event in Oakland this week to formally launch a network of renewable fuel stations for the Bay Area, which will include more than 20 stations across the Bay, with up to half opening by the end of this year. The event also announced a $10.9 million grant from the U.S. Department of Energy (DOE) and California Energy Commission (CEC) to build and operate 75 retail renewable fuel stations throughout California over the next two years.

At the grand opening, California Energy Commissioner Anthony Eggert (pictured) said the station development project, known as the Low Carbon Fuel Infrastructure Investment Initiative (LCFI3), will help the state with the development and deployment of low carbon fuels and clean vehicles. “The Energy Commission is proud to team up with Propel Fuels and the partner agencies to bring next generation low carbon biofuels, including cellulosic ethanol, to the nearly half a million flex fuel vehicle customers in California, while creating hundreds of green jobs, and continuing to lead the way in our nation’s battle against climate change,” said Eggert.

Propel will work with community partners CALSTART and East Bay Clean Cities to educate consumers and fleets on the wide spread benefits of low carbon, alternative fuels available today and those next generation fuels coming in the future.

“Presently in California more than one million diesel and Flex Fuel passenger cars are capable of running on renewable fuels, but there hasn’t been a sufficient number of renewable fuel stations,” said John Boesel, President and CEO of CALSTART. “This program takes a major step forward by creating 75 new renewable stations which will give consumers the choice to say ‘no’ to oil dependence, ‘yes’ to the American economy and ‘yes’ to the environment.”

Propel has already begun construction of the station locations in major markets across California, with the network of 75 stations funded by this project to be complete by the end of 2011. Currently there are three locations open in the Bay Area (Fremont, Oakland, South San Jose) with additional sites planned for Downtown San Jose, North San Jose, Berkeley, Palo Alto, Redwood City, Livermore, and Concord in the coming months.

Chandra said domestic demand for petrol was rising at 14 percent a year, while sugar industry was growing at 2 percent.

“Therefore, it seems that even 5 percent blending of ethanol with petrol will not be feasible on sustained basis. There are times when there is a huge shortage of ethanol,” he said.

Cane production is cyclical in India and often sees a sharp jump and drop in the output.

India’s cabinet last month asked oil firms to pay 27 rupees ($0.577) per litre for ethanol, 25.6 percent more than an earlier price of 21.50 rupees, which was considered too low by sugar mills.

But a panel of officials and representatives of oil and sugar firms are expected to suggest a new price later.

The arguments are familiar to all sections of the global agricultural sector which has to find a balance between meeting the challenge of feeding a growing human population, while striving to preserve the health and bio-diversity of life on Earth.

In palm oil, it is the big multinational consumer brands that have more to gain or lose from public opinion concerns surrounding sustainability than any other section of the commercial community.

For brands such as Ferrero or Nestle to be associated with environmental damage or species loss would be highly damaging. Commodity pricing comes second with this category of buyer – brand integrity is key. Both these companies have pledged support for the objectives of the Round Table for Sustainable Palm Oil (RSPO).

Amongst producers, New Britain Palm Oil is a role model for plantation owners looking to the benefits of RSPO certification. The company’s sustainable and fully traceable oil, coupled with modern processing facilities, has enabled it to win business directly with large consumer brands.

Controversial expansion

Since the early 1990s, the area under palm oil cultivation has increased by more than 40%, mostly in Malaysia and Indonesia, the two largest producers of the commodity.

Global vegetable oil production in 2009 was calculated by the United Nations’ Food and Agriculture Organisation at about 150m tonnes. Of this, palm oil accounted for some 40m tonnes.

As the single most important of the vegetable oils, palm oil is a raw material for both food and non-food products.

The rapid expansion of oil palms - which grow only in a narrow band around the equator and thus in environmentally sensitive areas - has not been without controversy in an era concerned with bio-diversity, climate change, and loss of habit for wildlife and indigenous peoples.

Price vs sustainability

The RSPO is a not-for-profit association that unites stakeholders from seven sectors of the palm oil industry to develop and implement global standards for sustainable palm oil.

Key to the success of its goals will be the willingness of the end consumer, and the supply chain, to pay a premium for oil produced to standards winning RSPO certification.

There appears to be a difference in sensitivity to RSPO goals between more price conscious buyers, especially those in Asia, South America and Africa, and Western brands, more sensitive to environmental and sustainability issues.

For the majority of buyers, palm oil is a commodity, and with the percentage of that commodity available to RSPO standards very small, economical pricing looks to be given higher priority than sustainability.

The amount of certified palm oil is thought to be less than 3% of world production. Unilever alone is rumoured to purchase something around that volume for its manufacturing operations. 

The RSPO plans to introduce a registration system for sustainably supplied oil in 2015, but buyers may be reluctant to commit today.

Compelling economics

Producers give mixed views about the value of RSPO accreditation, with some suggesting that the premium per tonne is not a sufficient incentive to go through the process.

But we hear consistent reports of premia in the region of $40 per tonne � and this seems a thoroughly commercial value to target.

We are told that the cost of gaining certification is around $20 per hectare � but with the premium at say $40 per tonne and a hectare able to yield a good 5 tonnes of oil � the economics are compelling.

However, the certification process is very consuming of management time and it exposes operators to detailed inspection, which may not always be comfortable. What is clear is that RSPO certification is not easy to achieve.

Pressure points

In the end it is public opinion, and in particular consumer purchasing behaviour, that will determine the extent to which the objectives of the Round Table gain widespread fulfilment.

Today it is big Western consumer brands, and their upstream suppliers, who will be the RSPO’s principal allies.

  ”Biodiesel trading in Singapore has completely been chased out by the EC investigations,” the source, who regularly exports biodiesel out of the region, said.

 Singapore was used to consolidate shipments of palm methyl ester, or palm oil-based biodiesel, from Malaysia and Indonesia, but traders are now likely to send shipments directly from producing origins, he said.

 The Singapore’s Ministry of Trade and Industry circulated a note last month to Singapore companies exporting biodiesel to the European Union to assist in the investigation.

 ”MTI has since notified and been in close touch with the affected companies,” a MTI spokesman said Wednesday, without giving further details.

In the note, MTI said if a company has exported the said product to the EU between April 1, 2009 and June 30, 2010, there may be an impact if the investigation determines that the company’s exports were in fact transhipped products from the US to the EU via Singapore.

 ”Customs in EU has already begun requiring all shipments of palm methyl ester from Singapore to post a bond equivalent to the countervailing duty, so this effectively will stop all Singapore shipments of biodiesel, will also now have no more transhipment of biodiesel because of this EU rule,” said the source.

 The European Commission has launched an investigation into imports of US-produced biodiesel to Europe as it seeks to determine if antidumping measures that were imposed on the US in March 2009 are being circumvented.

 The investigation follows a request by the European Biodiesel Board, which claims that the US biodiesel is reaching Europe without paying antidumping duty, either through triangular trading through other countries, mainly Canada and Singapore, or through the import of B19 – a mixture of 19% biodiesel and 81% gasoil – which is not covered by the EU duties.

 TRADERS WILL NOT BE ABLE TO STORE BIODIESEL IN SINGAPORE

 Palm methyl ester was being stored in Singapore during the northern winter period, but now traders will not be able to use Singapore storage, the source noted, who has already emptied out his storage tanks in Singapore.

 ”So there is very little incentive to buy PME during the winter in the region, this is a huge impact,” he said.

 Demand for PME, which is normally sold into Europe as a blendstock, typically declines towards the end of third quarter, when the markets in Europe make the switch to winter grade biodiesel. So PME is kept in storage during that period.

Biofuel producer Imperial Petroleum has said its newly-acquired biodiesel plant in Middletown, Indiana, is now on the way to becoming “highly profitable”.

The company bought the e-biofuels LLC facility back in May with the intention of converting it to its own technology.
Ahead of that process, Imperial said today that it has negotiated a series of feedstock purchase agreements and biodiesel off-take sales contracts.

The facility produced 1.2 million gallons of fuel in July 2010, generating $3.5 million in revenues.

Imperial said this looks to have increased in August to 1.4 million gallons and $4 million revenue.

Jeffrey T. Wilson, President of Imperial, said: “Expanding the plant throughput to its current capacity was one of our early goals for e-biofuels and a great deal of credit goes to the management of e-biofuels for their efforts and achievements thus far. August sales to date are on pace to exceed the July results.”

Capacity

The Middletown plant has a capacity of around 15 million gallons of biodiesel each year, but last year only produced about seven million gallons.

Oil and gas exploration firm Imperial, which has its head office in Evansville, Indiana, is aiming to expand the e-biofuels plant’s capacity to 25 million gallons a year once it has finalized the financing for its eBio subsidiary.

Mr Wilson said: “As a result of the mandates under the Renewable Fuels programs, e-biofuels has been in a unique position to take advantage of its certification as an advanced biofuels producer to rapidly increase its market presence. Our products are sold to some of the largest retail outlets and truck stop owners in the United States.”

As well as making the plant more efficient, the company intends to install a slow pyrolysis system to generate electricity for resale to the grid, and bio-oil for use in the biodiesel plant and for sale as renewable heating oil products.

Combination Creates a Leading International Biofuels Company With Extensive Capabilities in the Production of Low-Cost Cellulosic Biofuels.

TORONTO, Sep 1, 2010 (GlobeNewswire via COMTEX) — SunOpta Inc. a leading global company focused on natural, organic and specialty foods and natural health products, today announced the sale of SunOpta BioProcess Inc. (”SBI”) to Mascoma Corporation (”Mascoma”). The combination brings together SBI’s fiber preparation and pretreatment technology with Mascoma’s consolidated bioprocessing (”CBP”) technology, to create a company with comprehensive capabilities for converting non-food cellulose (wood chips, energy crops and organic solid waste) into ethanol and high value co-products.

The combination of Mascoma and SBI results in a company that is well positioned to achieve the industry’s objective of low-cost, sustainable production of transportation fuels from non-food biomass. By integrating SBI’s state-of-the-art fiber preparation and pretreatment technology (known as the upstream component of cellulosic ethanol production) with Mascoma’s consolidated bioprocessing technology (known as the downstream component of cellulosic ethanol production), the new company brings together two core technical competencies essential for the effective conversion of non-food cellulose into ethanol and high-value co-products. In addition to these technical synergies, the combined entity will have operational presence in both the United States and Canada, and an extensive intellectual property position in the cellulosic biofuels sector, with broad coverage of both pretreatment and consolidated bioprocessing technologies.

Both SBI and Mascoma have made significant progress towards commercialization and collectively have development partners in the U.S., Canada, China, Brazil and South Africa, all of which should benefit from the combination. In early 2010, SBI announced a major contract to supply its fiber preparation and pretreatment technology to one of the largest operators in the new energy sector in China.

The transaction values SBI at approximately $51 million and will be funded via a combination of preferred and common shares in Mascoma. As a result, the combined company will be approximately 73% owned by existing Mascoma shareholders, approximately 18% by SunOpta, and the balance by other SBI shareholders. Jeremy Kendall, Chairman of SunOpta and former Chairman of SBI will join Mascoma’s Board of Directors. Post the transaction, SunOpta will account for its ownership position in Mascoma on a cost basis and as a result will not include the ongoing financial results of Mascoma in operational results.

Mascoma, through its affiliate Frontier Renewable Resources LLC, is currently developing a commercial scale production facility in Kinross, Michigan. The facility is based on technologies developed in Mascoma’s laboratories in Lebanon, New Hampshire and operating in its 57,000 square foot demonstration facility in Rome, New York. The facility will also incorporate technologies developed by SBI from its pilot operations in Waterdown, Ontario and Brampton, Ontario.

“We are pleased to announce this important and strategic acquisition. We share a common vision of solving one of the most important energy problems in the world: enabling a sustainable transportation fuel sector by converting cellulosic biomass to fuel in a low-cost, sustainable way,” said Bill Brady, Chief Executive Officer of Mascoma. “The combined company has extensive commercial experience, with the application of our technologies around the world, and the technology breadth to offer a complete biofuels solution. We believe the combination of Mascoma and SBI significantly advances our capabilities in the cellulosic ethanol field and positions the combined entity for a successful future.”

Steve Bromley, President and Chief Executive Officer of SunOpta commented, “We are very pleased to have entered into this transaction with Mascoma. We believe that Mascoma is the ideal partner for SBI given its leading edge biotechnology in the conversion of non-food biomass into biofuels. This transaction allows SunOpta shareholders to continue to participate in the commercialization of low-cost biofuels and xylitol through an equity investment in Mascoma. More importantly, it allows SunOpta to realize on its stated objective to focus on its core value-added natural and organic foods business. We want to express our sincere appreciation to the SBI team for their years of hard work and dedication and wish them continued success.”

For the first time since December, ethanol prices are higher than gasoline as corn surges and refiners profit from tax breaks.

The alternative fuel jumped 21 percent since the U.S. driving season began in May, rising above gas, which has fallen 6.5 percent in the same period. Ethanol as a gasoline component rose 7.6 percent since early June to a record 810,000 barrels a day in the week ended Aug. 20, Energy Department data show.

“No one really felt the need to buy a lot and all of a sudden prices took off,” said Jim Damask, a manager at Biofuelsconnect, a Heathrow, Florida-based alternative energy broker. “People need to buy on the way up now.”

Ethanol may continue to rally as corn, a main feedstock for the fuel, rose to a 14-month high of $4.4525 a bushel on Aug. 30 on speculation U.S. grain demand will increase after Russia halted exports amid its worst drought in half a century. American companies are being encouraged to blend more under a tax credit that enables them to profit as long as the additive is no more than 45 cents a gallon more expensive than the finished fuel.

Denatured ethanol for September delivery, the benchmark contract, settled at $1.938 a gallon on the Chicago Board of Trade yesterday, up 14 percent in August. September gasoline was at at $1.8695 a gallon on the New York Mercantile Exchange at 6:46 a.m. in London today, down 11 percent in the month. Gasoline has averaged 24 cents a gallon more than ethanol in the past three years and the last time ethanol was higher was Dec. 15, according to data compiled by Bloomberg.

‘Upside Potential’

“There is more upside potential,” said Fabrizio Zichichi, an executive director at Morgan Stanley in New York. “Blending continues to increase. If you use the 45-cent tax credit, that is an incentive for people to internalize as much profit as possible.”

Slowing economic growth may damp gains, said Jeff Broin, chief executive officer of Sioux Falls, South Dakota-based Poet LLC, the largest U.S. ethanol producer.

“It’s based on gasoline demand,” Broin said. “We’ll see what happens with gasoline demand as we move forward.”
The Commerce Department cut its estimate for U.S. gross domestic product in the second quarter to an annual pace of 1.6 percent from an initially reported 2.4 percent on Aug. 27. U.S. gasoline demand slid 3.1 percent in the seven days ended Aug. 27 as motorists bought an average 9.17 million barrels of fuel a day, down from 9.46 million the prior week, MasterCard Inc. said yesterday in its SpendingPulse report.

Ban on Blends

Demand may also be stifled should the U.S. Environmental Protection Agency ban blends of as much as 15 percent of ethanol in gasoline should it determine that higher concentrations could damage engines in vehicles, lawnmowers or boats. The EPA said June 17 it may decide whether to permit so-called E-15 in vehicles made after 2007 this fall.
The U.S. House Ways and Means Committee is considering cutting the ethanol tax incentive by 20 percent while preserving a tariff that limits foreign imports. Shipments from Brazil, where ethanol is made from sugar cane, are subject to a 54-cent penalty under current rules.

Earnings at U.S. distilleries are rebounding as ethanol advances, boosting an industry battered by a glut that began two years ago. More than a dozen producers, including VeraSun Energy Corp., once the largest American distiller, filed for bankruptcy protection over an 18-month period starting in October 2008.

‘Room to Go’

The average ethanol mill in Iowa earned 18 cents a gallon on a spot basis as of Aug. 25, according to Ag Trader Talk, an online grains information service in Clive, Iowa. As recently as July, distilleries were losing money as corn rose faster than ethanol.

“We’ve got room to go, especially with the tax credit, before blending stops,” Todd Becker, chief executive officer of Green Plains Renewable Energy Inc. in Omaha, Nebraska, said in a telephone interview.

Corn settled at $4.4175 a bushel on the CBOT yesterday, up 32 percent since reaching this year’s low on June 8.
Companies are ensuring output is aligned with demand to prevent producing so much that prices fall, according to Wallace Tyner, professor of agricultural economics at Purdue University in West Lafayette, Indiana. Green Plains, the fourth-biggest U.S. ethanol producer, monitors margin opportunities in real- time, Becker said.

“We have a whole desk of traders, marketers and risk managers that move very quickly to lock margins away,” he said.

U.S. ethanol production decreased to 835,000 barrels a day in the week ending Aug. 20, down 2.9 percent from the previous week, according to the Energy Department. Stockpiles declined 7 percent to 17.9 million barrels.
“It’s refreshing to have some margins in the industry,” Broin said. “Obviously, it’s been a difficult two years for the industry, so it’s good to see the margins returning.”

The Kalimantan plant will use bio-diesel made from jatropha shrubs to produce fuel for Komatsu’s dump trucks, Senior Executive Officer Masao Fuchigami said in an interview. Komatsu aims to market the carbon-reducing fuel in Southeast Asia and Africa as soon as production stabilizes, he said.

“We’ve got inquiries from companies interested” in bio- fuel-powered trucks, Fuchigami said yesterday at Komatsu’s headquarters in Tokyo. “We see big potential.”

Companies from Boeing Co. to Daimler AG are trying to develop alternative energy sources to cut carbon-dioxide emissions amid a global push to combat climate changes. Jatropha, which is inedible and grows faster than sugar or corn, can be cultivated in less-fertile soil and its fuel derivative is suited for use in warm climates. Low temperatures can cause bio- diesel to coagulate.

Shares of Komatsu, whose customers include Rio Tinto Group, Vale SA and Codelco, fell 0.2 percent to 1,702 yen as of 9:53 a.m. on the Tokyo Stock Exchange.

Komatsu teamed up with PT Adaro Energy, Indonesia’s second- largest coal producer, and PT United Tractors to produce biodiesel for Komatsu dump trucks used at the Adaro coal mine, the Tokyo-based company said in August last year. The target is to operate about 100 dump trucks as soon as 2012, the statement said.

Komatsu estimates that 1,000 biofuel-powered dump trucks will cut 200,000 tons of CO2 emissions a year, equivalent of the carbon emission at the company’s factories in Japan, Fuchigami said. The company may seek to use emission-trading to cancel domestic carbon emissions, he said.

The Renewable Fuels Agency says it is disappointed that the vast majority of biofuels sold on UK forecourts do not conform to environmental standards.

The body said fuel suppliers were meeting legally binding volume targets but some were falling “well short” on achieving voluntary green standards.

But since biofuels have had to be mixed into forecourt fuel, there had been a reduction in emissions, it added.
The figures are based on 2009/10 data, which will be finalised in early 2011.

The Renewable Fuels Agency (RFA) is the UK’s independent regulator for biofuels, and is responsible for the Renewable Transport Fuels Obligation (RTFO), which requires a percentage of fuel sold on forecourts to be biofuels.

In the first year of the RTFO, 2008/09, the target was 2.5%, and it is set to gradually increase until 2013/14 when 5% of all fuel sales have to be from a renewable source.

Falling short
Provisional figures for the second year of the obligation showed that almost 1.6bn tonnes of biofuels had been sold, primarily as a blend with traditional transport fossil fuels (petrol and diesel). This equated to 3.33% of total sales, exceeding the government’s target of 3.25%.

However, a RFA spokesman said that, despite the volume target being achieved, the agency was “disappointed that more companies did not source more fuel that was produced according to a recognised environmental standard”.
“We believe that sustainable biofuel is available, in sufficient volume, should these companies wish to procure it,” he told BBC News.

Figures released by the RFA show that just 33% of biofuels met an environmental standard, well short of the 50% goal for 2009/10.

About 80% of the feedstock to produce the biofuels was imported, most of which was not subject to meeting an environmental standard.

But the spokesman did add that the RTFO did appear to be achieving its primary objective, namely to cut carbon emissions.

“The year two figures suggest that the RTFO is succeeding in cutting carbon. The target on this front was exceeded, with biofuels… delivering carbon savings of 51% compared with conventional diesel or petrol.”

Under the RTFO, the target to cut emissions during 2009/10 was 45%.

“This is a significant reduction, equivalent of taking half a million vehicles off the road, or making Edinburgh, Cardiff and Belfast car free.”

However, he did caution that the savings reflected the directly measurable savings biofuels offer in comparison with fossil fuels, but did not take into account the potential impact from indirect land use change.

Indirect land use change is a complex set of circumstances that makes it difficult to measure – such as when land used to grow food is switched to grow fuel crops, but as the demand for food remains it lead to primary forest being felled in order to create more arable land for food production.

The growth in demand for biofuels around the globe has been criticised by environmental groups, who said it is accelerating the rate of habitat loss and increasing food insecurity.

Currently, the majority of biofuels are produced using food crops – such as cereals, soybean, rape seed oil, sugar cane and palm oil – on arable land.

However, technological advances will see an emergence of “second generation” biofuels, which – for example – will be able to use waste from food crops (such as the leaves and stems) and woody plants that can grow on poor soil.

Proponents of biofuels say the new technologies will markedly improve the environmental performance of the renewable fuels and halt the sector’s reliance on food crops. Some developers are even working on “third generation” fuels, such as using vast ponds of algae as a feedstock for fuel.

Currently under the RTFO, only the volume target is mandatory; the carbon savings and environmental standards goals were voluntary.

However, this is set to change when the EU Renewable Fuel Directive (RED) comes into force at the end of the year, which will expect member states to ensure the biofuels meet both environmental and carbon saving criteria.
Under RED, member states will also be expected to ensure that 10% of transport fuel is from a renewable source by 2020.

American Electric Power is looking to use biodiesel in one or more of its generating stations in Ohio.
The utility issued a request for quotes last week for biodiesel blended with No.2 fuel oil for its Picway, Muskingum River and Conesville plants.

It said it will be evaluating the use of renewable fuel sources for start-up and flame stabilization in the plants.

CINCINNATI, Aug. 31 /PRNewswire/ — AdvanceBio LLC, a Cincinnati-based advanced biofuel technology company, today announced the development of its next generation, sugar-based fuel ethanol process.

The process is capable of utilizing sugars derived from sugar cane, sweet sorghum, sugar beet and other similar crops as feedstock for the production of fuel ethanol and green power while generating zero liquid waste.

When built in conjunction with the sugar milling operation, plants employing AdvanceBio’s sugar-based ethanol process will have the same, low-greenhouse gas footprint found in Brazil’s existing cane-based fuel ethanol industry. “The facilities will be extremely self-sufficient. In addition to eliminating costs associated with outside sources of fossil fuels, power and process water, our technology eliminates the need for extensive waste treatment processes and the cost of transporting large volumes of liquid vinasse back to the cane fields. These ethanol production facilities will also meet stringent U.S. pollution and occupational safety regulations,” said Dale Monceaux, Principal.

AdvanceBio envisions that producing fuel ethanol by processing cane and sweet sorghum feedstocks will serve to supplement corn as the country transitions to cellulosic ethanol and beyond. Currently, U.S. legislation establishes a Renewable Fuel Standard (RFS) requiring the production of 36 billion gpy of renewable fuels by 2022. Of this total, 15 billion gpy is designated as a cellulosic ethanol requirement. “Sugar-based ethanol process technology is capable of supplying environmentally friendly gallons to meet our country’s near term transportation fuel needs and bridge the gap to cellulosic ethanol commercial scale production. In addition, the biomass rich stalk residue called bagasse, that is produced and used to generate steam and power, will be available onsite as a biomass feedstock for cellulosic ethanol production. Furthermore, these projects decentralize ethanol production capacity, moving new volumes from the Corn Belt to southern regions of the United States, near large population centers and markets.”

Years of process design and in-plant operations experience led to the AdvanceBio development. The fermentation system is more than twice as productive as today’s starch-based processes and doesn’t require enzymes or major nutrient additions. “Our engineers and technologists employed rigorous process simulation modeling to optimize the ethanol plant design and develop overall plant efficiency, energy and water requirements and emissions criteria, integrating these closely with the sugar milling processes,” Monceaux added.

The improving global economy is expected to increase the demand and price of crude oil and spur the next wave of renewable fuel investment. We are working with groups currently developing cane and sweet sorghum-based projects in the United States. Considerable time and financial resources have been invested in developing not only the process technology but also the agricultural practices and systems that supply feedstock to these processing facilities.

One day a few years ago, in 2007, the trader, John Lee Neuman, bought $4 million near-term futures contracts in a down market on his co-worker’s account.

On June 22, 2007, [Neuman bought] “several thousand July 2007 corn futures contracts in a downward trending market.” Mr. Neuman ended that day with 4,000 contracts and $8 million in margin calls that he couldn’t cover.

We know the outcome of the events that day, but many questions still remain.

Was Neuman authorized to be trading on his co-worker’s account? Why did he buy so many corn futures in a down trending market in one day? Did he intend to harm his co-worker?

At the end of the day, Neuman’s co-worker wound up with $4 million of trading losses which, apparently, Neuman tried to hide from him. Luckily for the innocent trader, it didn’t work.

The CBOT ordered Neuman to pay $4 million in restitution to the account owner, and now his career is over. The CFTC has banned Neuman from the futures industry for life.

Mr. Neuman declined to comment so we might never find out the story here, but it sounds like a good one.

The city will donate the cooking oil to a Winnsboro company, Midlands Biofuels, which will convert it to biodiesel. The company will then sell the biodiesel back to the city to use in one of its garbage trucks.

The program, which is dubbed Southern Fried Fuel Initiative, has two purposes:

• First, to cut down on the amount of grease dumped into the city’s sewer system. Grease last year caused 460 sewer spills, which dumped 2.1 million gallons of raw sewage into the community.

• Second, to reduce the vehicle emissions of harmful pollutants that contribute to bad ozone, the kind that is formed at ground level by a mixture of chemicals in warm weather.

The program represents a baby step in both directions. It is only open to city residents, who make up less than half of the city’s sewerage customers. And the biodiesel will run only one of the city’s 60 garbage trucks.

But city and state officials praised the program as a good start during a Monday news conference.

“I think the city of Columbia is definitely further ahead than anybody else, certainly on this scale,” said Brian Barnes, environmental health manager for the state Department of Health and Environmental Control.

Midlands Biofuels was founded by Joe Renwick and Brandon Spence, two Citadel graduates who majored in business and got into biodiesel after Renwick built a bioreactor in his garage. The company makes biodiesel by breaking apart the triglycerides in cooking oil and combining it with methanol.

Biodiesel is usually mixed with petroleum diesel. All of the city’s diesel vehicles use a mixture of 5 percent biodiesel and 95 percent petroleum diesel, because the manufacturer’s warranty doesn’t cover anything above 5 percent.

The garbage truck fueled by Midlands Biofuels will run a mixture of 20 percent biodiesel. The warranty on that particular truck has expired.

The city will spend about $2.52 a gallon on the biodiesel it purchases from Midlands Biofuels.

A 2005 study by N.C. State professor Christopher Frey found that vehicles running a mixture of 20 percent biodiesel and 80 percent petroleum diesel reduced emissions and “suggests that there is a benefit to the use of biodiesel fuel.”

Hoover, Ala., officials started a cooking oil recycling program in March 2007, Hoover Mayor Tony Petelos said. The city collects cooking oil from anyone, and city workers convert it to biodiesel. During Thanksgiving and Christmas, when many people deep fry turkeys, the city runs commercials on local television stations with Petelos, asking people to recycle their cooking oil with the city.

The city collects about 1,000 gallons of cooking oil a month, Petelos said, and makes the biodiesel for less than a dollar a gallon. The city uses a mixture of 20 percent biodiesel in its vehicles with expired warranties.

“They can pick up an empty container at the fire station and drop it off at the fire station and take another clean container,” Petelos said. “Everyone lives close to a fire station.”

Petelos said most of the city’s recycled cooking oil comes from small restaurants.

But Tom Sponseller, president of the S.C. Hospitality Association, said he doubts whether any Columbia restaurants will participate in the city’s program.

“There is a huge market for used cooking oil in a lot of companies competing for that market today,” Sponseller said.

Most companies will purchase the cooking oil from restaurants. Others, like Midlands Biofuels, offer a tax deduction.

Columbia’s program, like the program in Hoover, is only voluntary.

“One step for us is just to give people a place to recycle,” said City Councilman Daniel Rickenmann, the newly appointed chairman of the city’s Climate Protection Action Campaign. “We hope to grow it with our neighbors and friends from (Richland) County to Lexington County to hopefully the smaller municipalities within.”

ITASCA, IL, Aug 30, 2010 (MARKETWIRE via COMTEX) — John Mafrige has joined DuPont Danisco Cellulosic Ethanol (DDCE) in a leadership role as Vice President of Commercial Development and a member of the company’s Senior Leadership Team. John has held leadership positions in petrochemicals, energy and renewable industries as well as in private equity investing. He has more than two decades of experience in business and corporate development and finance. John holds a B.S. from Sam Houston State University and an M.B.A. from the University of Houston — Clearlake. John and his family have relocated from Houston to DDCE’s headquarters in the Chicago, IL, area.

Reporting to the CEO, John will lead DDCE’s strategic business efforts in marketing, value chain development, licensing, business operations and regulatory affairs. “John will be a great asset to our management team,” said DDCE’s CEO, Joe Skurla. “His leadership experience in fuel products and business development will contribute to our success as we accelerate deployment of advanced biofuels and prepare to deliver investment-grade solutions to the market.”

About DDCE DuPont Danisco Cellulosic Ethanol LLC (DDCE) delivers comprehensive, integrated technology, engineering, and service solutions. Built on a legacy of innovation, business leadership and strategic collaborations, DDCE is positioned as a key player in achieving global goals for energy security, economic development, and deployment of a reliable, sustainable transportation fuel supply. The company is headquartered in Itasca, IL, and has a demonstration-scale biorefinery in Vonore, TN.

The ethanol market this week will focus on:

• the corn market where the focus remains on weather, yields, and exports,
• gasoline prices, which recovered last week on short-covering and Friday’s stock rally, and
• whether ethanol can continue to find such strong support based on rising corn prices.

Why are major oil companies MIA in biofuels? — Biofuels Digest last week ran an interesting article entitled “Why don’t oil majors invest in biofuels in scale? (see link on page 2 news digest item). The simple answer, according to Biofuels Digest, is that the upstream oil exploration and production (E&P) business is so massively profitable that the oil majors have no interest in investing their capital in the lower margin biofuels business. The corn ethanol business is a dangerous game that is completely dependent on the ethanol-corn price spread, while cellulosic and algae-based ethanol can be as much of a chemical refining business as it is a biofuels business, meaning it falls outside the oil majors’ wheelhouse to some extent. Biofuels Digest argues that the oil majors will only show up to invest at scale in biofuels if oil prices plunge to $30 per barrel and wreck their E&P returns, forcing them to look elsewhere for profits.

Ethanol Market Action – September CBOT Ethanol futures prices last week extended the 9-week rally to a total of 34%, posting a new 2-year high and closing up 6.8 cents (+3.7%) at $1.926 per gallon. Bullish factors included the 1.2% rally in gasoline prices, the upward rebound in corn prices from early-week lows, and last Friday’s sharp stock market recovery, which suggested a little better view of the economy and fuel demand. Ethanol prices were also boosted by last Wednesday’s weekly EIA report showing a 2.9% decline in weekly ethanol production to a 4-week low of 835,000 barrels/day, the third weekly decline. In addition, inventories fell sharply by 7.0% to a 7-month low of 17.858 million barrels, which suggested that strong ethanol demand continues. Ethanol inventories are now down by 10.4% from the record high of 19.921 million barrels posted in the week ended July 2.

Ethanol/Gasoline – September gasoline futures prices last Wednesday posted a new 13-month low but then rebounded higher to close the week up 2.28 cents (+1.2%) at $1.9479 per gallon. Gasoline inventories rose to a new 5-month high, but gasoline prices rallied mainly on short-covering after the sharp decline and on last Friday’s stock market recovery. The spread of Sep ethanol prices minus gasoline prices last week rose by another 4.5 cents to a meager -2.2 cents, the narrowest spread since Dec 2009, although ethanol is still 47 cents cheaper than gasoline including the 45-cent ethanol tax subsidy.

Ethanol/Corn – Sep corn futures prices last week overcame an early-week sell-off to close 0.25 cents lower (-0.1%) at $4.21 per bushel, just slightly below the recent 7½-month high of $4.2525. Bullish factors continued to center on strong demand for U.S. corn exports with China buying 193,896 metric tons of U.S. corn in July, double the June level. Corn was undercut by last Monday’s news that the good-to-excellent rating for the U.S. corn crop rose by 1 point to 70%. Strength in ethanol prices allowed the Sep ethanol-corn crush margin to rise by another 6.9 cents to a 6-month high of 42.2 cents/gallon. Including DDG, the Sep corn for ethanol crush margin rose by 6.9 cents to 76.1 cents/gallon.

Ethanol Calendar
• Aug 30: EIA June Monthly Ethanol Report
• Sep 1: EIA Weekly Petroleum Status Report
• Sep 10: USDA WASDE Crop Supply-Demand
• September: EPA’s E15 decision due

The increase comes after the Chinese government ramped up the production of ethanol from non-grain feedstocks including straws, cassava and bagasse.

The issue of food security led the government to curb the cultivation of first generation crops for use in biofuel production.

Most recently the nation has seen an ethanol plant come online in Guangxi, which processes 200,000 tonnes of cassava, and a 10,000-tonne straw-to-ethanol facility is due to begin construction next year.

Financial terms were not released. Electrabel is a subsidiary of GDF SUEZ Group.

While Enviva has exported wood fuel pellets to Europe since 2007, this is the company’s largest contract, Thomas Meth, executive vice president of Intrinergy, parent company of Enviva, tells Recharge.
“The pellets will originate in different locations in the US Southeast,” he says.

One of those will likely be the former CKS Energy wood pellet biomass fuel manufacturing plant in Emory, Mississippi, that Enviva acquired earlier this month.

That plant has a successful track record of producing and exporting wood fuel pellets to Europe. In response to growing demand from businesses, industry and utilities, Enviva intends to double the plant’s annual output to 100,000 tons.

“We are pleased that Electrabel has joined Enviva’s growing base of utility customers committed to reducing CO2 emissions over the coming years,” Enviva chief executive John Keppler says in a statement.

Enviva is based in Richmond, Virginia.

Across the continent almost 5 million hectares of land, an area bigger than the Netherlands, have been sold to cultivate crops for biofuels since 2006, Friends of the Earth’s Brussels- based European division said today in a 36-page study.

European companies including Portugal’s Galp Energia SGPS SA, the U.K.’s D1 Oils Plc and Sun Biofuels Ltd. and Agroils Srl of Italy joined firms from Canada and Israel in buying acreage to plant jatropha to make biofuels, the study said. The 27- nation European Union has set a goal of getting 10 percent of transport fuels from renewable sources by 2020.

“The EU’s mandatory target for increasing agrofuels is a clear driver to the land grabbing in Africa,” Friends of the Earth said. “There is a risk that agrofuels, and with them, Africa’s agricultural land and natural resources, will be exported abroad with minimal benefit for local communities and national economies.”

Governments including Ethiopia, Ghana and Mali have encouraged the purchases, which in some cases are made without the consent of local communities, or an environmental impact assessment, the group said. The report lists land sold in Angola, Cameroon, Congo, Ethiopia, Ghana, Kenya, Madagascar, Mozambique, Nigeria, Sierra Leone and Tanzania.

Jatropha can use up valuable water resources and require expensive pesticides, while in some cases diverting farmland away from food crops, Friends of the Earth said. Companies including D1 Oils say the non-edible plant is a promising crop for biofuels that’s tolerant to drought and adaptable to different weather conditions.

Chinese, Swiss, German, Nigerian, Ghanaian and Norwegian firms are also listed as land purchasers. Friends of the Earth recommended that African nations halt the land purchases, and that the EU scrap its biofuel target, which was intended as a measure to cut greenhouse gases and combat climate change.

Non-profit interest groups including Greenpeace and Oxfam have said biofuels can do more harm than good, increasing greenhouse gas emissions as carbon dioxide-absorbing forests are cut down to make way for plantations.

Biofuels were also blamed in 2008 by researchers including the Washington-based International Food Policy Research Institute for contributing to rises in cereal prices. A study for the World Bank last month said “the effect of biofuels on food prices has not been as large as originally thought.”

Future land deals should include enforceable obligations for the investor, the agreement of local communities, and possibly a commitment that a certain percentage of crops cultivated should be destined for local markets, the study said.

A $12-billion joint venture between Shell and Brazilian ethanol producer Cosan moved closer to reality as the two companies signed binding agreements on the a deal first proposed in February. If completed, the deal will create the third largest ethanol producer in the world with 4,500 retail stations and annual production of 440 million gallons.

The proposed joint venture between Europe’s largest oil company and Brazil’s largest sugar cane processor will produce and commercialize ethanol and power from sugar cane and distribute a variety of industrial and transportation fuels through a combined distribution and retail network in Brazil. It will also explore business opportunities to produce and sell ethanol and sugar globally.

Mark Williams, Shell’s downstream director, says the yet-to-be named joint venture aims to pool the two companies’ complementary businesses, enhance growth prospects in ethanol production globally, and support growth of its retail and commercial fuels businesses in Brazil. “Over the next 20 years, sustainable biofuels are one of the most realistic commercial solutions to reduce CO2 emissions from transport,” he says.

For Shell, the deal significantly strengthens its position in alternative fuels and provides the company access to inexpensive feedstock for ethanol. For Cosan, the deal allows the company to strengthen its balance sheet and provides added financial muscle.

The agreement calls for Cosan to contribute its 23 sugar cane mills, all of its co-generation plants, 1,730 retail outlets, and other ethanol assets. It will also fold in $2.5 billion of liabilities. Shell will contribute $1.6 billion in cash, downstream assets that include 2,740 retail sites, and its aviation fuel business. Shell will also fold its 50 percent stake in Canadian cellulosic ethanol producer Iogen Energy and its 15 percent stake in U.S. biocatalyst developer Codexis. Neither company will contribute their lubricants business to the joint venture.

The inclusion of Shell’s interests in Iogen Energy and Codexis could enable the joint venture to deploy next generation biofuels technologies in the future. The company will also generate electricity from sugar cane bagasse in cogeneration plants at all mills. Ten cogeneration plants are already operational.

The agreement also gives Shell the option to buy out Cosan’s 50 percent stake in the joint venture after ten years, and gives either company the buyout right after 15 years. It also gives Shell the option to assume full control should the need arise, according to a joint statement.

Wisconsin’s very first ethanol plant is about to get bigger, thanks to a half million dollar stimulus grant the company received from the state government on Thursday. Commerce Secretary Aaron Olver presented Ace Ethanol LLC in Stanley with $595,000 in funds to help the facility expand and upgrade its equipment needs. The move is expected to cost $850,000 and will retain about 40 jobs.

The announcement was part of Governor Jim Doyle’s Up North tour. His office says the ethanol industry is important to keep our air cleaner while reducing dependence on foreign oil.

“We greatly appreciate the confidence shown us by Governor Doyle and the State of Wisconsin,” said Ace Ethanol President Neal Kemmet. “We look forward to continuing to grow our business with state of-the-art equipment and doing our part to explore alternative energy sources.”

Josh Morby of the Wisconsin Bio Industry Alliance praised the announcement. He noted that as the ethanol industry continues to grow, reducing energy costs and improving efficiency remains a key priority for plants across the state.

“The ethanol industry has contributed over a billion dollars to our state economy, and it is vitally important that we keep this industry growing and thriving in our state,” Morby said. “Biofuel production not only creates good jobs in Wisconsin, but also creates a home-grown alternative to traditional gasoline that keeps energy dollars here in the state.”

Ace Ethanol, which was formed in June 2002, is a dry mill facility and produces over 40 million gallons of ethanol fuel annually. The company plans to install heat exchange equipment on the regenerative thermal oxidizer to recover waste heat for process heating.

But the plant, which would operate round the clock, has already given rise to worries from the local community about emissions, noise and visual impact as well as serious concerns about its viability and sustainability

The proposal has been revealed by Peel Energy whose Peel Ports company has a controlling interest in the ClydePort group and its land at Annat, near Corpach, on the shores of Loch Linnhe.

The company’s intention is to import 240,000 tonnes of clean wood, including chips, sawdust, bark and sawmill products, which would be sourced locally and delivered daily by 37 26-tonne lorries although sea and rail connections could be used in future.

The chipping and mixing of materials would be carried out in the company’s harbour compound on the site of the former pulp mill’s storage area.

The plant would operate round the clock with an expected 25-year life span. Its chimney would be 167ft with the turbine housing at 137ft, six times higher than nearby industrial buildings.

The company intends holding a public exhibition in early October at Kilmallie Hall and Treslaig Hall.

Peel Energy’s development manager Jonathan Burley said yesterday: “We are still carrying out detailed technical and environmental studies on the site. We believe this is a good location for a biomass plant which takes advantage of the site’s portside location and builds on the existing timber trade handled at the harbour.”

He added: “We have had some initial discussions with relevant local groups and we will shortly be announcing full details of our plans for consultation with the local community on our proposals.”

But more than a dozen neighbouring villagers have already made their views known at a meeting organised by Ardgour Community Council and chaired by Tony Boyd, whose company is involved in the joint venture, Clyde Boyd.

Among them was local Highland councillor Michael Foxley, who lives on the loch-side. He said: “It was clear from the meeting that there were many more questions than answers.

“Very serious concerns were expressed by the local community about the visual impact as well as noise and pollution. Great doubt was also expressed about the viability and sustainability of the plant. Thirty seven 26-tonne truck movements through Corpach will have a major impact upon that community as empty lorries leaving will double that number.”

It is the latest biomass project to be unveiled in Lochaber.

Dumfries-based Northern Energy Developments has run into strong opposition from villagers over its plans for a biomass facility at Invergarry.

Belgian-based owners of the former Arjo Wiggins were offered a £5million government grant towards creating a £23million biomass project at Corpach, but it was not taken up and the mill closed with the loss of 120 jobs.

There have also been plans in the pipeline for a £30million biomass power plant at the Rio Tinto Alcan smelter at Fort William, which would provide power for 40,000 homes.

     The CHART OF THE DAY shows the profits per metric ton for shipping U.S. No. 2 yellow corn to ports connected to China’s major consuming regions since January 2009, based on data compiled by Wanda Futures, the second-biggest brokerage by volume on the Dalian Commodity Exchange. Margins for importers plunged since July as the price in Chicago surged 13 percent on expectations a drought in Russia will boost demand for U.S.

grain. The lower panel shows China’s corn trade balance.

     “There aren’t a lot of opportunities for imports,” said Wang Chen, Beijing-based director of research at Wanda Futures.

“The market is waiting until the picture for the new crop gets clearer,” and in the meantime the government is selling more of its stockpiles to control inflation and maintain food self- sufficiency, he said in a phone interview yesterday.

     Corn on the Dalian Commodity Exchange surged 15 percent in the past year amid reports by companies such as Geneva-based SGS SA and Shanghai JC Intelligence Co. that the crop last year didn’t reach the official output of 164 million metric tons.

Those reports cited independent estimates of harvests in fertile northeast provinces, such as Jilin, which were hit by drought ahead of the gathering season that starts in the autumn.

     Wang said policy makers say there is no real shortage in the world’s second-biggest corn producer and consumer, and that the current supply tightness is amplified by speculators who hoard grain bought from state sales. The official target for this year’s harvest is 168 million tons, with the extent of any surplus difficult to predict, Wang said. Corn in the major consuming provinces including Shandong and Guangdong is trading near record prices.

     “The weather has had a varying impact on crops this year, so until the harvest comes in, the price won’t move much, and it makes no sense to risk importing,” he said.

     The U.S. has 283,000 tons in outstanding corn sales to China and accumulated exports totaled 1.04 million tons as of Aug. 19, according to a U.S. Department of Agriculture report yesterday. That is the most since 1995-1996, USDA data show.

In Mississippi, Governor Haley Barbour has called the state legislature into special session and said that a proposal to award $50 million in incentives for wood-based biofuels for an undisclosed venture will be on the agenda. By law, the governor calls special sessions and sets the legislative agenda.

Barbour told reporters that the proposed wood-based biofuels project would generate $85 million in economic impact, as well as 1,000 direct and indirect jobs.

The total package includes $45 million in bonds and tax incentives for the project; $4 million for workforce training, and a $1 million R&D grant to the Sustainable Energy Research Center at Mississippi State University.
Among projects that are active in development in Mississippi: BlueFire Ethanol’s proposed cellulosic ethanol project in Fulton. Another: Enerkem’s project in Pontotoc, which recently received a $50 million DOE integrated bioenergy grant.

However, the focus on SERC in developing a center of excellence in pyrolysis suggests that it may be another new project getting the nod.

Brazil’s oil giant Petrobras announced yesterday that it is investing $11 million in upstart cellulosic ethanol producer KL Energy. Last December I wrote a about how the Rapid City, S.D. company has devised a method to make ethanol out of wood chips. This is a smarter way to make ethanol than using heavily subsidized corn, especially in wooded parts of the country with millions of acres of trees killed by the ongoing plague of pine beetles.

The deal with Petrobras will fund expansion of KL’s demonstration plant in Upton, Wyo., and help the companies explore whether KL’s tree-digesting process will also work on sugarcane bagasse–the stalks and stuff left over after the cane is harvested. The other part of the plan is to integrate KL’s technology into a sugarcane mill being built by Petrobras in Brazil.

Petrobras has high hopes, figuring KL’s technology could increase the ethanol output from existing sugarcane fields by 40%. If it works, this could be a huge deal, not just for Petrobras, which makes 240 million gallons of ethanol a year, but for Brazil–6.75 billion gallons total. Many cars in Brazil can run on any ethanol blend, from E20 to E100. (By comparison, the U.S. uses around 11.5 billion gallons a year.)

Petrobras aims to treble its ethanol production by 2014, spending $3.5 billion on biofuels investments. U.S. ethanol makers will be watching intently to see if Petrobras can pull it off, economically. Whatever works will need to be applied in the U.S. if we have any hope of meeting the Congressional mandate of 36 billion gallons of ethanol a year by 2021.

The rise in corn and soyabean imports has raised questions over whether Beijing’s policy of grain self-sufficiency will be sustainable as demand rises and agricultural land shrinks under the advance of cities. Meanwhile, corn imports are at levels not seen in 15 years, and soyabean imports have doubled in the past five.

Wholesale corn prices in local markets in China are at record levels and industry officials forecast that Beijing will import at least 1m tonnes of the grain this year, up from just 0.05m tonnes in 2008-09 and the highest since crop failures in 1994-1995.

China’s rice imports have also been higher than usual this year, with the country surprising observers with big purchases in Vietnam and elsewhere.

The overseas purchases of corn and rice – staples that Beijing considers key for its food security – and the surge in imports of soyabeans have revived fears over Beijing’s potential to influence global agricultural commodities markets.

“We’ve seen what a significant change China’s demand for soyabeans has had on the world market,” says Luke Chandler, grain analyst at Rabobank in London. “If their demand for corn accelerates as quickly … then obviously that will have a significant recalibration on the world corn market.”

Ever since China began economic reforms 30 years ago, it has faced apocalyptic warnings that its increasing demand would lead to food shortages worldwide. By and large, these warnings have turned out to be wide of the mark.

Yet in spite of its success at achieving self-sufficiency in grains, Beijing still has to feed its population with limited fertile land, scarce water and relatively basic agricultural technologies.

Emerging markets: News and comment from emerging economies, headed by Brazil, Russia, India and China

“China’s [food] self-sufficiency rate is still 99 per cent, but China is a huge country, and global agricultural markets, in general, are very thin,” says Scott Rozelle, an expert on Chinese agricultural policy at Stanford University. “So when they move into markets, especially new markets, they can have a big impact.”

Beijing considers grain self-sufficiency a matter of national security and has responded to the challenges of boosting supplies by ploughing record amounts of money into agriculture.

According to estimates by Deere & Co, the world’s largest manufacturer of tractors and combines, the Chinese government has increased its spending on farming to Rmb140bn ($20.5bn) – up tenfold from Rmb14bn in 2004.

A key driver for the rising corn and soyabean imports this year has been a dietary shift. As Chinese people become wealthier, they are eating more meat and less rice. Absolute rice demand in China is basically at the same level this year as it was 10 years ago, according to estimates by the US Department of Agriculture, in spite of rising family incomes.

Meanwhile, consumption of key feedstocks such as corn and soyabeans used to fatten livestock have jumped — soyabean consumption has doubled in the past 10 years.

Officials have played down China’s surge in imports, but last week concerns over corn availability prompted Beijing to take the unusual step of holding two corn auctions to increase the country’s corn supply.

The market is now debating whether recent corn imports, in particular, signal a permanent move towards overseas purchases or a one-off event owing to poor weather in some parts of China. In 1994-95 a similar imports surge by China proved to be short-lived.

“We do expect that China’s corn imports will gradually increase,” says Abdolreza Abbassian, a senior grain economist at the UN’s Food and Agriculture Organisation in Rome.

“But given its overall size and consumption, the imports should be very modest, ranging from 5m-6m to maximum 10m tonnes.” China’s total corn consumption last year was 156m tonnes, according to the US Department of Agriculture.

Others believe that China will be mostly self-sufficient in the future, especially if agricultural policies succeed in increasing crop yields.

“China will not be a significant net importer of maize,” in coming years, says Shenggen Fan, director general of the Washington-based International Food Policy Research Institute and an expert on Chinese agriculture.

Agricultural policies, including biotechnology policies, will be crucial in determining China’s future crop yields and thus crop import demand, he says.

OAKLAND — The first day of a free alternative fuel giveaway started Tuesday with a trickle of motorists lured in by curiosity and the promise of a bargain: Five free gallons of biodiesel or an ethanol-based blend called Flex Fuel.

“It’s an incentive for drivers to stop,” said Emily Shellabarger, a spokeswoman for Propel, the Sacramento-based fuel company that opened a self-serve fueling dock at a Chevron station at 350 Grand Avenue.

The opening came amid the BP oil-drilling disaster and on the second Spare the Air day in the Bay Area.

“People are excited to have another choice,” Shellabarger said.

Propel’s Flex Fuel is 85 percent ethanol and 15 percent petroleum.

The biodiesel is almost all petroleum-based, with 5 percent coming from biofuels.

“Our pumps are a little bit different looking and it’s a bit confusing, but we’re an independent company,” Shellabarger told a gray-haired woman who pulled up in a Chrysler Sebring.

The Sebring was not equipped for Flex Fuel although there are about a million cars on the road that are, including the 2009 Hummer H2.

Propel provides a list of Flex Fuel-ready vehicles at the pump. Motorists can also tell by the manufacturer’s yellow gas cap.

* Shell, Cosan sign binding accord on biofuels venture

* Final agreement adds Cosan energy business, BNDES debt (Adds changes to agreement, context)

SAO PAULO Aug 25 (Reuters) – Royal Dutch Shell Plc and Brazilian sugar and ethanol giant Cosan signed on Wednesday a binding agreement to create a global ethanol business, looking to benefit from growing demand for biofuels.

The joint venture, with estimated annual sales of $21 billion, was modified since its initial announcement in February to include all of Cosan’s energy generation business and 500 million reais ($283.6 million) in debt owed to Brazilian development bank BNDES.

Cosan, the world’s largest sugar and ethanol producer, also said in a securities filing that the initial accord was changed to make the venture a global biofuels provider. As a result of that, Cosan and Shell are barred from competing with the new entity.

Another financial collapse could lead to another commodity boom, says Jim Rogers.
If the UK or US were to default, as some fear, real asset prices would be one of the main beneficiaries, according to the veteran commodity investor.

Rogers is based in Singapore, because he sees Asia as a future base of economic prosperity. Commodities are growing in importance as many raw materials become scarcer and, taking the long view, there has been underinvestment in agriculture, mining and related processing industries in recent decades.

“Rightly or wrongly people do not invest in bear markets”, and commodities is a sector that has underperformed for decades, he says. Some commentators believe the UK and US are technically bankrupt and both countries could default in the next five years, adds Rogers.

Asia now accounts for half the world’s economic growth, says Nomura International chief economist Rob Subbaraman. The Asian Development Bank forecasts 7.9% GDP growth for developing Asia in 2010, while the International Monetary Fund forecasts 7.5% growth for all of Asia, and 6.75% in 2011.

So what can go wrong for the commodities sector? 

“Well, what has gone wrong over history? There could be total financial collapse, which we have seen,” Rogers says. Then governments print money and, under inflationary pressure, people buy real assets such as commodities. If there was a war, commodities generally go up in that scenario as well.”

Meanwhile, China and India’s populations are too large to ignore, he adds, although they are very different countries with different issues. What they have in common is that they are both coming out of several hundred years of decline. Historically, prior centuries saw them to be far more powerful nations, he argues.

Indeed, the Paris-based International Energy Agency (IEA) reported last month that China has surpassed the US to become the world’s biggest energy user, a mantle the US had held for over a century. IEA data showed China consumed 2.25 billion tonnes of oil equivalent last year, about 4% more than the US. The oil-equivalent metric represents all forms of energy consumed, including crude oil, nuclear power, coal, natural gas and renewables, such as hydropower.

So does Rogers have any tips for commodity investors today? “Do your own homework,” says Rogers. But he did note that sugar prices are 70% below historic highs.

He also says the number of commodity funds will no doubt grow. “There are 70,000-odd mutual funds to invest in and fewer than 100 commodity funds for the public,” he says.

Rogers is the founder of the Rogers Commodity Index. In the 1970s he set up the Quantum hedge funds with George Soros.

Corn led declines by grains in Chicago on signs of improved crop prospects in the U.S.

About 70 percent of the U.S. corn crop was rated good or excellent as of Aug. 22, up from 69 percent a week earlier, the U.S. Department of Agriculture said yesterday. The country’s corn harvest will be a record, it says.

Conditions have improved for U.S. crops, said Tetsu Emori, a commodity fund manager at Astmax Co. in Tokyo.

Corn for December delivery slid 7.25 cents, or 1.7 percent, to $4.255 a bushel on the Chicago Board of Trade at 11:13 a.m. London time. Wheat for December delivery fell 1.5 percent to $7.1475 a bushel and soybeans for November delivery dropped 0.6 percent to $9.99 a bushel.

Milling wheat for November delivery declined 0.8 percent to 212.50 euros ($268.22) a metric ton on NYSE Liffe in Paris.

For spring wheat, 82 percent of the crop earned top ratings as of Aug. 22, unchanged from the previous week, the USDA said.

In Vermont, the Biocardel biodiesel plant near Swanton has been shuttered due to the expiration of federal biodiesel tax credits at the end of 2009. The plant was on the verge of ramping up production in December when the tax credit ended and only ever managed to produce seven truckloads of 6,000 gallons each. All of the biofuel was sold outside of Vermont.

The state’s economic development authority is now in the process of trying to recover $645,000 it provided to the facility in low-interest loans, according to officials.

In Michigan, American Process has commenced construction on its $32 million, 0.9 Mgy wood-waste based cellulosic ethanol plant in Alpena. The company’s ribbon-cutting ceremony was headlined last week by Governor Jennifer Granholm. The pilot-scale plant, which will be completed by the end of 2011, has received $17.9 million in support from the DOE and $4 million from the state of Michigan.

The purpose of the project is prove in a pilot-scale the conversion of a waste stream to cellulosic ethanol, and utilizes the Decorative Panels International hardwood plant, and will result retaining 200 jobs, and adding 10 permanent jobs. Last February, Diamond Alternative Energy and American Process Energy Recovery commenced operation at a second generation biofuels demonstration plant in Thomaston, Georgia.

RAPID CITY, SD, Aug 24, 2010 (MARKETWIRE via COMTEX) — KL Energy Corporation (PINKSHEETS: KLEG) is pleased to announce that Petrobras, through Petrobras America, has entered into a Joint Development Agreement with KL Energy Corporation (”KLE”), to jointly optimize KLE’s proprietary cellulosic ethanol process technology for sugarcane bagasse feedstock (”Bagasse”).

The latest generation of KLE’s process design provides for substantial enhancements over the first generation, implemented in 2008 at the company’s demonstration plant in Upton, Wyoming using Ponderosa Pine feedstock, including the ability to be optimized for multiple feedstocks.

As part of this agreement, Petrobras will provide US$ 11 million to adapt KLE’s demonstration facility to the use of Bagasse, validate the optimized process by producing cellulosic ethanol and bio-lignin from Bagasse in multiple campaigns and license the technology.

In parallel, Petrobras and KLE will jointly work on an industrial scale Bagasse based cellulosic ethanol plant project that shall be fully integrated into a sugarcane mill belonging to the Petrobras Group in Brazil slated to go on stream in 2013 and capable of producing 15 million liters per year.

The agreement, which has an initial term of 18 months and provides for mutual exclusivity in the area of developing cellulosic ethanol from Bagasse, provides Petrobras with the option to enter into a technology license for the use of KLE’s technology within Petrobras Group assets.

Miguel Rossetto, CEO of Petrobras Biocombustivel, said, “Petrobras views cellulosic ethanol as a very promising technology to substantially increase the ethanol output by some 40% without increasing the planted area output and further improve the carbon footprint of its sugarcane mills. This agreement with KLE will considerably accelerate this development effort and we are optimistic about the commercial potential of the optimized technology platform.”

“Brazil is the global leader in the production of affordable biofuels and biomass, and we believe that bagasse is a perfect feedstock for our process. KLE plans to be at the forefront of the emerging cellulosic ethanol market in Brazil,” said Peter Gross, President and CEO of KL Energy Corporation. “We are very excited about this opportunity and we can think of no better partner for this endeavor than Petrobras, a company globally recognized for its technological competence, social and environmental responsibility and its investments in clean energies.”

About Petrobras

Petrobras is a major integrated oil, gas, and energy company operating in the following segments of the industry: exploration and production; downstream, marketing, transportation and petrochemicals; distribution; natural gas, energy and biofuels. Established in 1953 as Brazil’s National Oil Company, Petrobras today is a publicly traded company whose principal operations are still in Brazil, but where it now competes under an open and competitive regulatory framework. Recognized by its massive resource base and its global leadership in deep and ultra-deep water exploration, Petrobras is now one of the world’s ten largest companies by market capitalization. The company operates in all five continents and in 29 countries. The company also has activities in renewable energies, especially in biofuels, for which Petrobras established a subsidiary company, Petrobras Biofuel.

About KL Energy Corporation

KL Energy Corp. (PINKSHEETS: KLEG) is a leader in the development and commercialization of second generation cellulose-based energy products, including ethanol and bio-lignin based energy products and chemical intermediaries. KLE’s commercial demonstration facility in Upton, Wyoming is to the company’s knowledge one of the first demonstration facilities of its type to produce cellulose-based ethanol and bio-lignin products from wood waste. The facility uses KLE’s proprietary thermo-mechanical pretreatment and enzymatic hydrolysis process, in what the company believes is one of the most environmentally friendly processes in the sector, which can be adapted for various non-food feedstocks. In addition, KLE provides engineering, optimization and technical services for biofuels facilities.

This Times Argus article says the Swanton, Vermont Biocardel biodiesel refinery has been shuttered because of the lack of the credit … and most likely won’t be coming back:

The state’s economic development authority is now in the process of trying to recover more than a half-million dollars it provided to the facility in low-interest loans, according to officials. State tax credits were also awarded to the company that built the plant, Biocardel, a subsidiary of a Canadian company, although the credits were never used.

The expiration of a federal tax credit for the production of biofuels at the end of 2009 has hammered the industry nationally and the Biocardel facility in Vermont is one casualty. The company does not have plans to reopen the facility.

Jo Bradley of the Vermont Economic Development Authority said that the plant has closed.

“We are trying to negotiate some kind of settlement for the balance of our loan,” she said. “When the federal credits were not renewed it was a blow to the industry as a whole. It made it much more difficult for them to survive.”

Stephen Daigle, who was the general manager of the Vermont plant, said Friday it was frustrating to see the plant just get to the verge of ramping up production last December after nearly two years of preparing and research and development, only to have the tax credits expire and Congress fail to restore them in the months since.

“People tried to help us as much as possible,” Daigle said. “It’s sad because I think Vermont as a green state would have supported it very well.”

     Prices of arabica and robusta beans may climb as much as 10 percent in the next two months as the “balance” is in favor of demand, said Ramesh Rajah, president of the Coffee Exporters Association of India.

     Commodity assets under management gained about $8 billion in July to more than $300 billion, driven mostly by new inflows, according to Barclays Capital. Arabica is the best-performer on the Reuters/Jefferies CRB Index this year, wheat has jumped 49 percent since the end of June and corn has gained 15 percent on speculation the Russian drought will spur demand for U.S. crops.

     “The terminals are in the hands of the speculators,” said Rajah in a phone interview from Bangalore. “People are saying that after cocoa, wheat, gold and petroleum, coffee is a good investment. We see more fund flows in coffee.”

     Speculators increased their net long-positions in New York coffee futures by 4 percent in the week ended Aug. 17, according to U.S. Commodity Futures Trading Commission data.

     December-delivery arabica reached $1.8865 a pound on ICE Futures U.S. yesterday, the highest intraday level since Sept.

11, 1997, and closed at $1.8325. Robusta for November delivery in London fell 0.8 percent to settle at $1,777 a metric ton, near the highest since November 2008.

     Shipments from producing nations will decline for a second year in 2010 from last year’s estimated 95.5 million bags and from 2008’s 97.7 million bags, the International Coffee Organization Executive Director Nestor Osorio said last month.

     “Even if there’s a reversal in prices with funds exiting coffee, it won’t be very swift as fundamentals are reasonably good,” Rajah said. The rally is being supported by Brazil and Vietnam, the top producers, which are financing growers to hold back beans to ensure an orderly sale, he said.

     In Brazil, the top producer, the bean quality was hurt by excess rain last year even as production increased, according to Osorio. Brazil’s harvest, now under way, may total 50 million bags from an estimated 39.5 million bags in the prior season, according to ICO figures.

     “Brazil is not shipping as aggressively as people expected it to,” Rajah said. “There will be no fresh arrivals until November, when Central America starts shipping out.”

     Production in Colombia, the second-largest producer of mild-tasting arabica beans, dropped to a 33-year low in 2009.

Output may be less than 9 million bags in the year that began Oct. 1, according to ICO.

     Exports from India, Asia’s third-biggest grower, may reach as much as 220,000 tons this year through December, Rajah said.

Re-exports of imported coffee, mostly from Vietnam, may be more than 30,000 tons, he said.

     Shipments jumped 57 percent to 195,859 tons between Jan. 1 and Aug. 19, data from the state-run Coffee Board of India show.

BLOOMBERG NEWS

The world’s appetite for meat, flour and ethanol is expanding faster than the supply of the crops needed to produce them, eroding inventories and increasing the chance of accelerating food prices.

But in central Ohio, big buyers of flour aren’t doing more than keeping an eye on the situation.

Wheat stockpiles are expected to slip to a two-year low as demand rises and a drought damages the crop in Russia, whose exports will plunge 84 percent, the U.S. Department of Agriculture said this month. Inventories of corn, used to feed livestock and make fuel, will be little changed from a year earlier, even as output rises to a record, the USDA said.

Russia’s worst dry spell in 50 years sent Chicago wheat futures to a 23-month high at one point this month. Corn prices are up 24 percent in the past year, as ethanol mills use 35 percent of the grain produced in the United States, the world’s largest exporter, and rising global incomes lead to more beef and pork consumption.
“The world doesn’t have enough exportable supplies to meet demand” for wheat and feed grains, said John Macintosh, 61, a vice president at Rand Financial Services Inc. in Chicago.

World food prices rose in July for the first time in three months on higher costs for cereals and sugar, the United Nations’ Food and Agriculture Organization said. The USDA said last month that meat prices will rise faster than expected this year at 2 to 3 percent.

Premier Foods, the St. Albans, England-based maker of the Hovis brand, said recently that higher wheat costs mean an “inevitable increase” in bread prices.

In central Ohio, food companies that rely on flour as a main ingredient say they’re not overly concerned about prices — yet.

“We buy all our commodities on a contract basis. We’ve bought all our flour and other goods through the end of the year,” said Tom Santor, spokesman for the Donatos pizza chain. “It’s something we always have to watch, but from what I’ve read in the trade press, people think at this point that any spike in prices will come down in the fall when the U.S. harvest comes in.”

Still, local businessmen remember other price spikes in the past few years that took a bite out of their bottom line, and they hope this year won’t see a repeat.

“I have heard rumblings that flour could shoot up again. I haven’t seen a whole lot of that yet, but I sure hope it doesn’t do what it did a couple of years ago, when prices more than doubled in a short period of time,” said Steve Block of the Block’s Bagels chain on the East Side.

Block said having to raise prices would be especially tough now, given the economy.

“We had to raise prices a little then (two years ago), though we tried to absorb as much as we could,” he said.
A global food crisis is possible if wheat drives the prices of other staples higher, said Franciscus Welirang, chairman of the Flour Mills Association in Indonesia, that country’s largest buyer of the grain.

“There will be a domino reaction, and we expect corn demand will rise, pushing prices higher, and feed industries will buy more corn and soybeans,” Welirang said. “It’s the end of cheap wheat.”

The wheat rally will need to last longer to boost costs for consumers, said Bill Lapp, the president of Advanced Economic Solutions in Omaha, Neb., and the former chief economist for ConAgra Foods.

“I don’t think it’s going to immediately pass through,” Lapp said. “It’s been a dramatic increase, but you have end users who have at least some inventory, and probably more coverage than they had two years ago.”

Rich Nelson, director of research at commodity broker Allendale Inc. in McHenry, Ill., said, “We’re going from an incredibly burdensome supply down to just above normal, so this is not a shortage.”

Aug. 23 (Bloomberg) — Corn and soybean prices may rise as hot, dry weather this week threatens to reduce yields in the U.S., the biggest grower and exporter of both crops.

Twelve of 19 traders and analysts surveyed from Chicago to Tokyo on Aug. 20 said corn prices will climb, and 10 of 18 respondents predicted a soybean rally. Last week, corn futures for December delivery rose 2.1 percent to $4.3625 a bushel on the Chicago Board of Trade, the fourth straight weekly gain. Soybeans for November delivery fell 3.8 percent to $10.04 a bushel, the first drop in four weeks.

The decline in soybeans was unexpected by the majority of respondents surveyed on Aug. 13, while the corn rally was expected. Since 2004, the surveys have forecast weekly moves accurately 49 percent of the time for corn and 54 percent for soybeans.

Bullish on corn: 12 Bullish on soybeans: 10 Bearish on corn: 7 Bearish on soybeans: 8

The ethanol market this week will focus on:
• the corn market where the focus remains on weather, corn yields, and exports,
• gasoline prices, which remain weak along with the U.S. economic data and the stock market, and
• whether ethanol demand can continue to absorb near-record production levels once the summer driving season winds down.

Cellulosic ethanol takes a step forward with a “biomass harvest” — Poet LLC, the largest U.S. ethanol producer, last week kicked off the collection of corn cobs, leaves and husks to store the biomass needed for its Project Liberty cellulosic ethanol plant in Emmetsburg, Iowa. The 25 million-gallon-per-year plant, slated to begin production in early 2012, will convert corn harvest waste into ethanol, providing farmers with about 10% of additional revenue per acre and producing cellulosic ethanol with an 111% reduction in greenhouse gas emissions versus gasoline. Poet has reduced the cost of cellulosic ethanol to $2.35 per gallon from $4.13 per gallon, and intends to further reduce the cost to $2.00 per gallon by the time the plant starts operation. Poet intends to eventually roll out its Project Liberty corn waste cellulosic technology to other plants across the country and to modify the technology to work with wood chips and switchgrass (see news digest links for more information).

Ethanol Market Action – September CBOT Ethanol futures prices last week extended the 8-week rally to a total of 30%, posting a new 7-month high and closing up 9 cents (+5.1%) at $1.858 per gallon. Bullish factors included the 2.3% rally in corn prices and continued strong demand for ethanol. Ethanol prices also found some support from Wednesday’s weekly EIA report showing that ethanol production in the week ended August 13 fell by 0.7% to 860,000 barrels/day, which was 1.5% below the record high of 873,000 bpd posted July 30. In addition, ethanol inventories fell by 0.7% to 19.205 million barrels where they were 3.6% below the record high of 19.921 million barrels posted in early July.

Ethanol/Gasoline – September gasoline futures prices last week posted a new 3-month low and closed slightly lower by 1.45 cents (-0.7%) at $1.9251 per gallon. Gasoline prices continued to see downward pressure from (1) the weaker US economic data and doubts about fuel demand, and (2) above-average inventories with crude oil and gasoline inventories 5-6% above their 5-year seasonal averages. The relative strength in ethanol prices caused the spread of Sep ethanol prices minus gasoline prices to rise by 10.5 cents to -6.7 cents, the narrowest spread since Dec 2009, although ethanol is still 52 cents cheaper than gasoline including the 45-cent ethanol tax subsidy.

Ethanol/Corn – Sep corn futures prices last week moved up toward the recent 7-month high and closed the week up 9.5 cents (+2.3%) at $4.2125 per bushel. Corn prices were supported by (1) talk of lower yields due to extreme heat and wet weather, (2) the 2-point decline in the good-to-excellent rating of the corn crop to 69%, and (3) continued expectations for strong exports tied to the Russian grain export ban and Chinese buying. Strength in ethanol prices allowed the Sep ethanol-corn crush margin to rise by 5.6 cents to 35.4 cents/gallon, well above the recent 13-month low of 20.1 cents per gallon. Including DDG, the Sep corn for ethanol crush margin rose by 5.6 cents to 69.2 cents/gallon.

Ethanol Calendar
• Aug 25: EIA Weekly Petroleum Status Report
• Aug 30: EIA June Monthly Ethanol Report
• Sep 10: USDA WASDE Crop Supply-Demand
• September: EPA’s E15 decision due

Lately, market technicians have been warning that risk assets, from equities to the more volatile currencies, may be at risk of another decline. As usual, they hedge these warnings with the customary conditions about breakouts and resistance levels, but they are waving the bear flag.

So I thought I would take this moment to discuss a really, really, dangerous and volatile piece of paper, or, rather, electronic entry: the Argentine Republic’s GDP warrants. These “securities”, or, really, long-dated derivatives, combine all kinds of danger. The debtor, in this case the Argentine government, defaulted on its foreign debts back in 2001. The payments on the warrants are based on an economic statistic, the previous years’ growth in gross domestic product, that is calculated by the very same administration that promises to wire the money. The current leaders of that administration have made a habit of demonising foreign creditors.

If you buy any GDP warrants today, the earliest you will be paid is December 2011. There is a national election coming between now and then. The warrants have been issued in a couple of batches since 2005, each time to sweeten the bitter pill of a unilaterally dictated exchange offer for the country’s old defaulted debt. Anything else…let me think…oh, yes, the prosperity of the country, measured by its GDP, is dependent to a significant degree on volatile commodities prices.

Having now scared off any small children, fiduciaries, and people with nervous conditions, let me add that I think they are an interesting speculation, and possibly under-priced compared with other risks. True, the price of the warrants is up by over 50 per cent so far this year, but then the Argentine GDP estimates for 2010 have been rising even faster.

So what are these things? Essentially, the owner of the warrants is paid a sort of dividend each December that is calculated by subtracting a previously-set “base case” of annual increase in the previous year’s inflation-adjusted GDP (3.29 per cent for 2010) from what the GDP growth, as calculated by the Argentines, turned out to be. Then the warrant holders receive a payment equal to 5 per cent of the “excess” GDP. This December, by the way, there will be no payment because Argentina’s growth in 2009 came in well below the 3.29 per cent base case.

There are a lot of possibilities for fiddling here for a government inclined to do so. However, the GDP warrants benefit indirectly from the Argentine government’s apparent tendency to underestimate inflation for various political and financial reasons. That means that real growth, which is what the warrant holder is paid, could be overstated by official statistics.

Argentina, even more than most countries, rides a rollercoaster from growth and optimism to recession and gloom. Over the course of this year, its speed on the upswing has accelerated, thanks in part to rapid increases in agricultural commodities prices. Along with the higher income from exports, the food boom has led to a bouncier mood and higher spending on the part of Argentine consumers and businesses. Now GDP estimates for 2010 have risen from 3 per cent at the beginning of the year to a bit under 9 per cent today.

This makes a dramatic difference to the warrants’ value. Instead of no payment to the holders, the current GDP estimates for 2010 would lead, according to the formulas, to a payout of over 40 cents on the dollar at the current market prices. There are three classes of warrants: US dollars, euros, and Argentine pesos.

The GDP warrants mature at December 2035, or when total payments equal 0.48 for each unit of currency, whichever comes earlier. So far the dollar warrants, for example, have been paid 0.0739, which means there is still a lot of potential for future payments. Those should be deeply discounted in any valuation.

When you consider high-risk paper, take into account whether the locals are buying them alongside you, or unloading their positions. Francisco Velasco, who analyses Argentine securities for Exotix, the London frontier markets bond dealer, says local institutions are buying the warrants. “In this way, your interests are aligned. We believe government institutions now hold between 20 and 40 per cent of the outstanding warrants.”

However, Mr Velasco says, there is serious mark-to-market risk. “The GDP warrants are, in the long term, highly correlated to spreads for Argentine fixed-income instruments, such as the discount bonds,” he says. “But they have a higher beta; it is not unusual for the warrants to trade up or down 10 per cent in a week.”

So if you can stand that sort of volatility, and want to add a lot of risk, look at these things. Bring your own parachute.

     Singapore-based Olam offered 55 New Zealand cents a share for the 81.55 percent of Christchurch, New Zealand-based NZ Farming that it doesn’t already own. NZ Farming shares are worth between 65 cents and 79 cents, it said in a statement today, citing a report by Grant Samuel.

     NZ Farming shares rose as high as 64 cents last week, valuing the company at NZ$156 million ($110 million), after Union Agriculture Group, a closely held Uruguayan landowner said on Aug. 16 it may offer 60 cents a share. The stock is unchanged at 63 cents at 3:15 p.m. in Wellington trading.

     NZ Farming said its losses are narrowing as milk prices rise and issues with implementing its strategy are put behind it.

There was a $11.3 million loss in the year ended June 30, from a

$54.8 million loss a year earlier, when there were writedowns in the values of land and livestock, the company today.

     “Subject to the introduction of new funds, the impediments have all either abated or been addressed,” the company said.

“The offerors clearly see value in what has been established to date and the future earnings prospects.”

     Olam’s offer included plans to change its business model, which would reduce NZ Farming’s ability to capitalize on the positive outlook, and which had insufficient detail on funding future developments, NZ Farming said.

     The company reiterated that shareholders shouldn’t sell their shares, pending further analysis of Union Agriculture’s offer. As well, the company is in talks with another investor which would be prepared to buy new shares in exchange for a “significant minority stake,” it said.

CEDAR RAPIDS, Iowa – The completion of ADM’s new $540 million dry mill ethanol plant in Cedar Rapids has created a need for more railroad track.

The CRANDIC Railway began construction this month of a hew 9,000-foot track that will go from Old Bridge Road to just east of Fairfax, CRANDIC Marketing Manager Jeff Woods said.

The new railroad track, referred to internall as the West 900 project, will parallel an existing CRANDIC line.

Woods said the new track will speed the interchange of cars with the Cedar Rapids-based Iowa Interstate Railroad, which operates and east-west line across Iowa.

Currently, CRANDIC’s interchange with the Iowa Interstate takes place in the railroad’s Smith-Dows yard near Edgewood Road in southwest Cedar Rapids, and takes place on two separate tracks.

When the construction is complete, the CRANDIC will be able to simply move the train onto the track and uncouple its engine so that the Iowa Interstate can pick them up.

ADM’s new dry mill is opening up this month at its existing manufacturing complex in southwest Cedar Rapids.

The CRANDIC, a unit of Alliant Energy, got a later than expected start on the project because of the summer’s heavy rains and permitting issues. The project is slated for completion by winter.

“It’s an expensive project, but it wil help the shipping community in terms of getting shipments in and out of town quickly,” Woods said. “It will definitely save a lot of time, with the sheer magnitude of trains moving in and out of town.”

The major categories of commodities the track will carry are coal, corn, distillers dried grains and ethanol. The track will also carry general freight, such as cardboard and paper shipments.

Wheat prices jumped Thursday as Russia’s persistent, devastating drought raised questions about whether another crop can be planted this fall.

Hot, dry weather severely damaged the region’s spring wheat, prompting Russia to ban exports for the rest of the year. Without significant rainfall, fall planting could be in danger in the region near the Black Sea.

“We’re hearing from guys there they won’t even try to plant the winter wheat unless they get an inch of rain,” said Northstar Commodity analyst Jason Ward said. “A half inch of rain isn’t a drought breaker. They’re going to need an inch plus before they going to try it.”

Traders are expected to keep a close eye on a weekend forecast that is calling for rain in the area, which also includes parts of Ukraine and Kazakhstan.

Wheat for December delivery rose 25.5 cents, or 3.8 percent, to settle at $7.1425 a bushel after hitting $7.24 a bushel earlier in the day. The September contract hit $7.8575 a bushel this month, the highest price since August 2008.

Corn and soybeans both settled lower. December corn lost 4 cents to settle at $4.2925 a bushel and November soybeans fell 18.5 cents to $10.1225 a bushel.
Most metals prices fell on disheartening news about the U.S. economy.

The Labor Department said initial claims for unemployment benefits rose by 12,000 to 500,000 last week, the third straight week of increases.

In addition, the Federal Reserve of Philadelphia said its manufacturing survey was negative 7.7 for August after a reading of positive 5.1 last month. A reading above zero indicates growth in the sector.

Both reports could indicate diminishing demand for metals such as platinum, palladium and copper, which are used in construction and manufacturing.

“Ultimately, the negative sentiment arising from these figures fed markets a grim outlook on the state of the U.S. recovery,” RBC Global Futures said in a research note.

Silver for September delivery fell 7.3 cents to settle at $18.379 an ounce; December copper lost 3.1 cents to settle at $3.3395 a pound; September palladium fell $4.75 to settle at $485.65 an ounce and October platinum lost $9 to $1,527.50 an ounce.
Gold for December delivery added $4 to settle at $1,235.40 an ounce.

The disappointing economic news also pressured energy prices.

Benchmark crude for October delivery fell $1.01 to settle at $74.77 a barrel on the New York Mercantile Exchange.

In other Nymex contracts for October, heating oil fell 2.42 cents to settle at $2.0007 a gallon; gasoline lost 3.25 cents to $1.9287 a gallon and natural gas dropped 6.8 cents to $4.171 per 1,000 cubic feet.

Global agriculture and food gorilla Cargill made $2.6 billion in profit in 2010: The over-a-century-old company, which is one of the largest private companies in the U.S, doesn’t necessarily need biofuels for its bottom line. However, Cargill is one of the larger producers of ethanol and biodiesel in the U.S. and has corn ethanol production plants in Iowa, Nebraska and Missouri, as well as biofuel assets in Europe, Brazil, Argentina, among other places.
But Cargill has a longer-term strategy to move from the low-margin business of trading and processing commodities to the higher margin businesses of conducting research and development and creating new chemical and bio-based intellectual property. Cargill had revenues of $107.9 billion in 2010 to get that $2.6 billion profit. Next-gen biofuels is just one area that Cargill is looking to develop new IP, and it’s been partnering with promising startups to help deliver innovative biofuel technology.
Cargill is a dream-come-true partner for a small biofuel startup. It has a food and ag distribution chain that would make Walmart jealous; it sells a good chunk of the grain and food in the U.S., so it has feedstocks at its fingertips; and its traditional biofuel business is ripe for remaking. At the same time, Cargill gets a lot of flack for some of the environmental and food-safety mistakes it’s made, and it’s been accused of causing deforestation in South America, selling contaminated beef, and dumping chemicals from biofuel production. Here are 10 next-gen biofuel bets that Cargill is making:
Virent Energy: Shell and Cargill announced back in June that they’d invested $46.4 million into startup Virent Energy, a company that’s created a thermochemical process which catalyzes sugars into hydrocarbons, creating molecules similar to those produced in oil refineries.
Gevo: Isobutanol producer Gevo, which recently filed for an IPO, says it’s been working with Cargill to develop a future-generation yeast biocatalyst specifically designed to produce isobutanol from cellulosic feedstocks.
Elevance Renewable Sciences: Elevance Renewable Sciences is a biochemical venture created in 2004 to commercialize the work of Cargill and catalyst maker Materia. The company has been backed with $40 million in funding from TPG Growth and TPG Biotechnology Partners, and focuses on using soy, canola and corn as feedstocks to produce a variety of chemicals and materials.
Argentinian Biodiesel: While not exactly “next-gen,” Cargill has some serious investments into biodiesel in Argentina made from soybeans. Earlier this week Cargill announced that would invest $112 million into building both an 18 MW energy co-generation facility and a soybean biodiesel plant that can produce 240,000 tons per year. The plants will be built in Villa Gobernador Gálvez, which along with Cargill’s current assets in the region, will make up “Cargill’s largest soybean processing complex in the world.”
Brazilian Ethanol: Given Brazil’s world-leading sugar ethanol industry, it’s no surprise that Cargill has investments there. Also not necessarily next-gen, Cargill has an ethanol dehydration facility in El Salvador, and an ethanol terminal and two sugar cane mills in Santos, Brazil. Cargill has been criticized by environmentalists (Greenpeace article here) for adding to the deforestation in Brazil for biofuel production.
U.S. Cellulosic Ethanol: Cargill has received DOE funding to work on cellulosic ethanol at its corn ethanol plants in the U.S.
Verenium Now BP: Back in 2005, when Verenium was still called Diversa, Cargill had an enzyme collaboration with the biofuel maker. Verenium’s cellulosic ethanol assets have since been sold to BP.
UK’s Greenergy Biofuels: In 2006 Cargill took a 25 percent stake in Greenenergy Biofuels, which turns rapeseed into oil for biodiesel production.
Cargill Ventures: Cargill’s original investment in Virent Energy was made through its VC arm Cargill Venture, but that fund has been folded into its investment firm Black River Asset Management.
Jet Fuel from Animal Waste: Last year, the U.S. Air Force ordered bio jet fuel made from rendered animals fats from Cargill, which was converted using Honeywell’s UOP processing technology.

The new law, Introductory Number 194-A, promotes use of Bioheat, a blended fuel available in Northeastern and Mid-Atlantic states.

It also places limits on sulfur content within Number 4 heating oil of 1,500 parts per million, complementing new sulfur limits on Number 2 heating oil adopted by New York State last month.

Signing the measure into law this week, New York’s Mayor, Michael Bloomberg, said it would “significantly” reduce pollution and “vastly” improve city air quality.

He added that the legislation would also support alternative fuels and help to create new “green” jobs.

Mayor Bloomberg said: “Promoting the use of cleaner burning heating fuels is one of fourteen air quality initiatives from PlaNYC 2030 and I am pleased to say that the legislation before me today will do just that. Introductory Number 194-A requires that by 2012, the sulfur content of Number 4 heating oils be limited to no more than 1,500 parts per million and all heating oils used in New York City contain at least two percent biodiesel.”

Green economy

New York City uses more than a billion gallons of heating oil each year. The new law will mean replacing 20 million gallons of this with renewable biodiesel.

METRO Fuel Oil Corporation, a fuel distributor due to open one of the nation’s largest biodiesel plants in Brooklyn in 2011, applauded city lawmakers for helping reduce reliance on fossil fuels while supporting a local green economy.

The company plans to process used cooking oil from New York restaurants into biodiesel, and is also looking to use other sustainable sources including soybean oil and algae.

Gene V. Pullo, President of METRO Terminals, said: “METRO is looking forward to playing its part in locally processing biodiesel and helping New York become a greener place to live and work.”

Local fuel distributor Sprague Energy, which helped champion the new legislation, said it was one of the original suppliers of Bioheat, with firsthand experience of the “positive impact” the biofuel blend has.

Steven J. Levy, the firm’s managing director, said: “This landmark legislation is another huge step in reducing air pollution in the city, yet just another building block in cleaning the air we breathe for healthier, longer lives.”

The Russian ban sent international wheat prices to a peak of €236 a tonne on August 6, almost double their level in April. Much can be learnt from this event, throwing light on the more extreme food price spike of 2007-08. The 2010 spike helps us separate the real source of price volatility in international grain markets from various secondary or phoney explanations.

Two years ago it was said that prices had spiked because of low grain stock levels. We can now reject that explanation because, this time, global wheat stocks are 50 per cent higher, and stock levels in the US – the largest wheat exporting country – are at a 23-year high.

Some blamed the spike in 2007-08 on rising fuel prices and high demand for biofuels from crops such as corn. That theory also fails today – crude oil futures are lower now than in April and wheat is not a biofuels crop.

Another explanation two years ago was rising import demand from China. It was clearly bogus even then, since China was a net exporter of wheat, corn and rice in 2008.

Finally, some said grain prices had been destabilised in 2007-08 because severe weather (a drought in Australia) pointed to intensifying climate change. But in 2010, despite Russia’s unprecedented heatwave, this explanation does not stand up. Large cyclical fluctuations in grain output are not unusual in Russia. And Russia’s high latitude means global warming may actually boost grain production.

The real explanation for the price spikes of today and two years ago is a new and self-fulfilling fear in grain markets that even minor supply or demand shocks will trigger export restrictions by big suppliers. We saw this in 2007-08 when fears of domestic food price inflation led China to impose export taxes on grains, and Malaysia and Indonesia to do so on palm oil. Argentina raised its export taxes on wheat, and Egypt, Cambodia, Vietnam, Indonesia and India banned exports of rice. These actions stabilised domestic prices in exporting countries but drove up the price for importers, which accelerated purchases, worsening the crisis. Irresponsible media reports about a new era of global food scarcity fuelled the bubble and speculators moved in. It was not until the international price level became absurd that the bubble burst.

On a smaller scale this pattern is being repeated in 2010. Russia is usually the source of only 13 per cent of global wheat exports, but when abnormal weather hit Russia, big importers such as Egypt remembered the export bans of 2008 and increased purchases of Russian wheat just in case. Panic buying by Egypt and other importers, plus breathless media coverage, again brought in speculative buyers and created another bubble. On August 5, Vladimir Putin, Russia’s prime minister, declared an export ban, telling his cabinet: “We cannot allow an increase in domestic prices.” The ban briefly pushed global prices still higher.

How can we stop export restriction fears from becoming self-fulfilling? The best solution is one that is quite likely to unfold anyway – a long-term loss of reputation and market share for exporters that interrupt trade. As Alexander Belyayev, deputy agriculture minister, has already lamented: “Exports are very easy to lose and very hard to win.”

The US learnt this in 1973, when the Nixon administration shocked Japan with a temporary ban on soybean exports. In response Tokyo began cultivating Brazil as an alternative. Not wishing to repeat this error, the US placed no restrictions on exports when prices spiked in 2008, despite protests from the milling and baking industries and panic buying.

Now the US is positioned to reap its reward. The Russians will watch with envy as their hard-won wheat markets in the Middle East and north Africa turn to the US. Tom Vilsack, US secretary of agriculture, could not resist gloating after Russia’s export ban announcement: “There is no question this is an opportunity for us and we’re going to take advantage of it.” It is Russia’s turn to learn the lesson. Ukraine may already have learnt.

     Inventories of oil and fuel products rose to 1.13 billion barrels last week, the highest level since the Energy Department began keeping combined weekly data in January 1990, according to a report Aug. 18. Oil has fallen 9.8 percent since reaching a three-month high on Aug. 3.

     The U.S. economic recovery is showing increasing signs of slowing growth and demand for fuel products has declined 6 percent to 19.7 million barrels a day since the recession began in December 2007, according to the Energy Department. With predictions that oil will fall below $70 a barrel, there is growing pressure for the Organization of Petroleum Exporting Countries, the 12-nation group that pumps 40 percent of the world’s crude, to stick to their production quotas.

     “Stocks are high and that is bearish,” said Mike Wittner, who heads oil research at Societe Generale SA. “If prices go significantly below $70 with some momentum and stay there, then they take action. Somewhere in the $60 to $70 range is where they would start cutting real production.”

     Crude hasn’t traded below $70 since June 7, when it fell as low as $69.51 a barrel. Oil for September delivery settled 1.3 percent down at $74.43 a barrel on the New York Mercantile Exchange yesterday and was at $74.41 at 6:11 a.m. in London.

     Oil may fall below $70 a barrel in coming months for the first time since June, according to Michael Lynch, president of Strategic and Economic Research in Winchester, Massachusetts.

The declines may prompt OPEC to clamp down on members exceeding their quotas, said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.

     U.S. crude stockpiles fell 818,000 barrels to 354.2 million barrels last week, the Energy Department report showed. Supplies were forecast to drop by 1 million barrels, according to a Bloomberg survey. Gasoline inventories slid 39,000 barrels to

223.3 million, versus the 375,000-barrel decline that was predicted. Inventories of distillate fuel, which include diesel and heating oil, jumped to their highest levels since 1983, climbing 1.07 million barrels to 174.2 million.

     “That’s what has been keeping a lid on prices,” said London-based Wittner. “We are a full year into the recovery from recession and stocks are still as high as they were a year ago.” Crude supplies were 3 percent higher last week from a year earlier.

     Supplies may rise further as U.S. refineries shut for regular maintenance and the vacation-travel season ends, sapping demand for gasoline and jet fuel.

     “Supply is rising faster than demand is recovering,” said Tim Evans, an analyst at Citi Futures Perspective in New York.

“I don’t expect the bottom to just drop out here, but I think we will be asking the question: do we need OPEC to cut back?”

     OPEC cut production by the most in its 50-year history at the end of 2008 when it lowered targets by 4.2 million barrels a day, capping output at 24.845 million. Compliance with the cut weakened in July as Nigeria and the United Arab Emirates pumped more, according to International Energy Agency data.

     The 11 members with quotas increased production by 190,000 barrels a day to 26.8 million last month, implying compliance of

53 percent, the Paris-based IEA said in an Aug. 11 monthly report, down from 72 percent a year earlier. Supplies from all 12 nations, including Iraq, grew by 220,000 barrels a day to average 29.2 million.

     “If we fall durably below $70, then you will see increased pressure within the cartel to increase compliance with its target cuts,” said Tchilinguirian at BNP Paribas.

     OPEC left production targets unchanged when ministers last met in Vienna on March 17. The next meeting is Oct. 14. OPEC comprises Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

     OPEC raised its demand outlook for 2010 and 2011 by 140,000 barrels a day each in its monthly report last week. Worldwide crude use will increase by 1.05 million barrels a day, or 1.2 percent, to average 86.56 million a day next year, the organization’s Vienna-based secretariat said.

“We’re going into a part of the season where demand will certainly begin to wane as kids go back to school and people take less holidays, and weather demand will start to ease as well,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania.

      Distillate stocks in the U.S. will continue to rise as nations in European economic growth falters, Lynch said.

     “Distillate has not been this high in years, especially seasonally, reflecting essentially the downturn and the fact that diesel-fuel use has plummeted around the world,” he said. “We usually ship it to Europe and elsewhere, but they have huge inventories now too.”

Wheat rose the most in two weeks and corn gained after a government report today showed increased U.S. export sales of the grains. Soybeans fell.

Exporters sold 1.41 million metric tons of wheat in the week ended Aug. 12, 4.4 percent more than the week before, the U.S. Department of Agriculture said. Export sales of corn more than tripled to 2.89 million tons, the USDA said. Before today, wheat gained 4.1 percent this month as Russia imposed a ban on external shipments, while corn was up 6.5 percent.

“Export sales were high,” said Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas. The effects of Russia’s ban “showed up today on the sales report. All of the grains were strong. They were above the high end of the range.”

Wheat futures for December delivery advanced 29.25 cents, or 4.2 percent, to $7.18 a bushel at 10:17 a.m. on the Chicago Board of Trade. The price has gained 57 percent since the end of May as the worst Russian drought in 50 years damaged crops.

Corn futures for December delivery rose 2.25 cents, or 0.5 percent, to $4.355 a bushel in Chicago. Prices before today climbed 14 percent in the past two months as demand increased for U.S. inventories.

Soybean futures for November delivery fell 5.25 cents, or 0.5 percent, to $10.255 a bushel in Chicago. The most-active contract has dropped 2.2 percent this week.

Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.8 billion, government figures show. Wheat is the fourth-largest, behind hay, valued at $10.6 billion.

Range Fuels, one of the more successful biofuel startups backed by Khosla Ventures, announced today that it has opened up its first commercial plant to make cellulosic methanol out of non-food feedstocks. Located in Georgia, the facility is expected to pump out 20 million gallons of ethanol and biodiesel every year.

The company’s plan is to use wood waste generated by timber plants located around the Soperton, Ga. site (pictured above). It will convert that waste into synthetic gas using heat and pressure, which is fed into a proprietary catalytic process to produce alcohol-based compounds. The end product can be used for vehicles and jets with existing gas tanks.

This has been Range’s goal for a while. It initially said that the plant would be up and running in 2008, then 2009. Now, finally, it has come to fruition two years after the fact — mostly due to the limping economy and the Environmental Protection Agency’s decision to cut back support for cellulosic fuels.

Still, Range has been able to succeed over a number of venture-backed biofuel operations with generous private funding — more than $100 million in venture capital — as well as an $80 million loan guarantee from the U.S. Department of Agriculture. This has set it on track to be one of the first companies of its kind to commercially scale.

Range’s roadmap has the company producing methanol for biodiesel first, followed up by cellulosic ethanol later in the year. Next year, it hopes to expand the plant’s capacity to 60 million gallons a year, eventually hitting a full capacity of 100 million gallons. The challenge now will be to stick to that time frame.

Based in Broomfield, Colo., Range is also backed by Pequot Capital, Pacific Corporate Group and Morgan Stanley, in addition to Khosla Ventures — which has been one of the most bullish Silicon Valley firms in biofuels, also investing in LS9 and Amyris Biotechnologies.

     The biofuel gained for a sixth day after the Agriculture Department reported that U.S. exporters sold 240,000 metric tons of corn to Egypt for delivery in the marketing year that starts on Sept.1.

          Denatured ethanol for September delivery gained 2.2 cents, or 1.2 percent, to $1.827 a gallon on the Chicago Board of Trade, the highest price since Jan. 11. Futures have gained 7.3 percent this month.

     Corn for December delivery increased 3.25 cents, or 0.8 percent, to settle at $4.3325 a bushel in Chicago, the highest price for the most-active contract since Jan. 11. One bushel distills into about 2.75 gallons of ethanol.

     The Agriculture Department yesterday said exporters sold 121,920 metric tons of corn to Japan.

     U.S. ethanol production slid 0.7 to 860,000 barrels a day for the week ending Aug. 13, the Energy Department said today in a report in Washington. Stockpiles declined 0.7 percent to 19.2 million barrels.

     An average ethanol mill in Iowa is earning 6 cents a gallon on a spot basis, and a distillery in Illinois is pocketing 8 cents, according to Ag Trader Talk, an online grains information service in Clive, Iowa.

“There’s no question that the recent run in commodity prices, driven by the events in … eastern Europe, has supported the prospect for crop-farmer income,” said Marie Ziegler, Deere’s head of investor relations. “Overall, for the farm sector it would appear to be very positive as you look into 2011.”

The manufacturer raised its crop price estimates for next year: to $3.90 a bushel for corn from its previous forecast of $3.60; $5.25 for a bushel of wheat from $4.75; and $9.25 for a bushel of soyabeans from its prior prediction of $8.75.

Ms Ziegler noted, however, that rising crop prices had increased feed costs for livestock farmers, who she said accounted for about half the European farm economy. Coupled with the uncertain economic recovery, that could act as a drag on growth in the agricultural sector next year.

She made her comments as Deere reported quarterly profits well ahead of Wall Street’s expectations, citing strengthening demand for big farm machinery in the Americas.

The company said its net profit was $617m, or $1.44 per share, in its fiscal third quarter to the end of July, up from $420m, or 99 cents per share, in the same period last year, beating analysts’ average forecasts of $1.22 per share. Net equipment sales were $6.2bn in the quarter, up from $5.3bn last year.

Deere struck a bullish note on the farm economy in the Americas, saying it expected growth of 5-10 per cent in North America for its full fiscal year and 25-30 per cent in Brazil and Argentina. The company expects equipment sales to rise 32 per cent in the current quarter compared with the same period last year.

Demand for farm equipment is partly driven by a rush by farmers to avoid what they expect to be higher prices for new tractors from next year, when the US government will raise carbon emission standards on such vehicles.

However, a main source of US agricultural equipment demand is expected to be increased farm receipts as a result of soaring prices for wheat and other crops, resulting from supply shortages around the world. Wheat has spiked because of severe drought in Russia, which Deere said would hit its sales in eastern Europe.

Overall, the company said farm equipment sales in Europe could fall in the current quarter by as much as one-fifth from last year because of weakness in livestock and dairy farming.

(Reuters) – European consumers will be forced to boost shipments of palm oil, despite a vigorous campaign by green groups against it, after a drought that shriveled oilseed crops across the Black Sea region.
Palm oil futures on the Bursa Malaysia Derivatives Exchange climbed to a 15-month top last week and the market could be set for further gains as European consumers scurry for supplies to satisfy demand from the food and fuel sectors.

A storm could be brewing in global vegetable oil markets, analysts say, although not on the scale seen in U.S. wheat futures, which surged to two-year highs this month.

“Europe’s rapeseed crop was lower than expected and Ukraine is going to have a very limited supply available for exports,” said Doug Whitehead, a commodities analyst at Rabobank in London.

“It really means that rapeseed oil supplies will be very much constrained, so it is likely we will see palm oil moving as a substitute.”

Hamburg-based analysts OilWorld forecast the European Union’s palm oil demand to rise 4.4 percent to 5.7 million tonnes in the oil marketing year to September 2010, making the region the No.3 buyer after India and China.

That coincides with expectations for the European Union’s rapeseed crop to fall 7.8 percent to 19.9 million tonnes in 2010 from a year ago while Ukraine’s sunflower crop may drop 2.7 percent to 7.1 million tonnes, OilWorld data showed.

Excessive rains are likely to cut canola production in Canada, reducing exports nearly 20 percent to 6 million tonnes.

TRADERS BRACE FOR DEALS

Data from cargo surveyors shows that demand for Malaysian palm oil from the region has outpaced India and China so far in August, and traders expect more.

“We expect to see some new orders coming in this week onwards to about September or October,” said a trader with a Singapore-listed planter who deals with European buyers.

“Inquiries are there and sentiment is positive. European customers will buy on small dips in the current palm oil rally. They don’t want to be caught off guard.”

In the Rotterdam cash market, palm oil was up 11 percent in August, while its discount to rapeseed oil has widened to more than $175 a tonne from an average of $75 in the second quarter, making palm oil a cheaper substitute.

“The law of economics will pull the cheapest oil into the European food market and palm oil’s widening discount to rapeseed makes that happen,” said Dorab Mistry, head of trading for Indian firm Godrej’s international arm.
European buyers may have to push environment issues linked to palm oil on the back burner as they struggle with lower domestic supplies, although top importers will be unwilling to take shipments from firms accused of destroying rainforests to expand palm estates.

“For major consumers like Germany sustainability is important, but we are going to see increased flows of palm oil as there are not enough edible oil sources,” said Standard Chartered analyst Abah Ofon.

“We continue to be bullish on palm oil as we feel global consumption of edible oils is going to outstrip supplies in the coming year.”

Environmentalists say palm oil’s use in biofuels has triggered a land grab at the expense of rainforests and peatlands — a campaign that largely limited its use in the sector.

Rapeseed oil is mostly channeled to biofuels, leaving palm oil for the food sector and green groups have persuaded Unilever and Nestle to scrap supply contracts with some planters.

Some traders say European firms may import more soyoil to avoid a backlash from environment-conscious consumers while a more compelling reason points to prospects of bumper soy crops from the Americas.

“Even if soyoil is taken up rather than palm oil, there will be a ripple effect as soyoil will come up short,” said Kuala Lumpur-based Citi analyst Penny Yaw.

“Countries that usually import soyoil will then have to rely on palm oil. Somehow, palm oil will benefit,” said the analyst, referring to India, which shifted some demand to soyoil in early 2010 when palm oil rallied on hot weather hurting output.

Palm oil production will also be affected by changes in global weather. Prices have also risen on the back of the brewing La Nina-driven rains that may disrupt harvesting in the world’s top producers Indonesia and Malaysia in the short term but could boost output in 2011 and staunch the European oilseed decline.

The Indonesian Palm Oil Association said crude palm oil output may grow at a slower pace of 4.5-5.0 percent this year as prolonged rains hit yields. Malaysia’s commodities ministry has revised its palm oil output forecast this year to 17.8 million tonnes from 18.1 million on prospects of wetter weather.

Scottish scientists at Edinburgh Napier University have developed a new whisky biofuel that can power cars, based on a formula that makes use of waste by-products left over from whisky production. They combined whisky production. They combined pot ale, which is the liquid from copper stills distillery equipment, with the spent grains used to make whisky, also known as draff, to produce butanol.
Researchers state that butanol can deliver 30 percent more power than traditional ethanol fuels. The research was reportedly based on technology once used to manufacture explosives during WWI and WWII, quedit.com reports.

However, while ethanol can only be blended up to 85 percent and requires engine modification, the biofuel can be introduced to unmodified engines with any gasoline blend.

As part of a two-year research project, funded by a GBP260,000 grant from the Scottish Enterprise’s ‘Proof of Concept’ program, the University now plans to create a dedicated company to take the new fuel to market and leverage the commercial opportunity, in the bid to make it available to consumers.

“The EU has declared that biofuels should account for 10 percent of total fuel sales by 2020. We’re committed to finding new, innovative renewable energy sources,” Professor Martin Tangney, Director of the Biofuel Research Centre at Edinburgh Napier University, said.

“While some energy companies are growing crops specifically to generate biofuel, we are investigating excess materials such as whisky by-products to develop them. This is a more environmentally sustainable option and potentially offers new revenue on the back of one Scotland’s biggest industries. We’ve worked with some of the country’s leading whisky producers to develop the process.”

Wheat rose for the first time in three sessions on speculation that demand for U.S. grain will rise because Russia, the world’s third-largest exporter, has banned exports after the worst drought in at least 50 years.
Shipments by the U.S., the largest exporter, have jumped to 4.29 million metric tons since the start of the marketing year on June 1, up 33 percent from a year earlier, U.S. Department of Agriculture data show. Russia’s ban is set to last through the end of the year.

“It’s a matter of how much business do we get,” said Jim Hemminger, a risk-management specialist at Top Third Ag Marketing in Chicago. “The U.S. has excess wheat, and there are places that need to come buy it.”
Wheat futures for December delivery rose 8.75 cents, or 1.3 percent, to $7.05 a bushel at 9:57 a.m. on the Chicago Board of Trade. Before today, the price was up 5.3 percent this month.

Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.

New York City Mayor Michael Bloomberg has made it official, signing a bill that will require all diesel heating oil in the city contain at least 2 percent biodiesel:

“The final bill before me today is Introductory Number 194-A … [which] will significantly reduce pollution, promote the use of alternative fuels, create new ‘green’ jobs and vastly improve air quality throughout the City.
“Promoting the use of cleaner burning heating fuels is one of fourteen air quality initiatives from PlaNYC 2030 and I am pleased to say that the legislation before me today will do just that. Introductory Number 194-A requires that by 2012, the sulfur content of Number 4 heating oils be limited to no more than 1,500 parts per million and all heating oils used in New York City contain at least two percent biodiesel.”

The move won the praise of the National Biodiesel Board and local biodiesel makers and marketers, Sprague Energy and METRO Terminals:

“New York City is already the nation’s largest municipal user of biodiesel. We applaud the Mayor and City Council for building on that legacy by adopting a universal biodiesel requirement that will further improve air quality in the city,” said Shelby Neal, NBB’s director of state governmental affairs. “I would especially like to thank Councilman Gennaro, who has been a tireless advocate for this and other important environmental issues. His vision for a cleaner burning, green, and sustainable heating fuel is being realized.”

“As one of New York’s original biodiesel and Bioheat suppliers, we know firsthand what a positive impact the fuels have on the lives of New Yorkers,” said Steven J. Levy, managing director of Sprague Energy. “This landmark legislation is another huge step in reducing air pollution in the city, yet just another building block in cleaning the air we breathe for healthier, longer lives.”

“More than 70 years ago, my grandmother started a heating oil business here because she thought coal represented the past,” said Paul Pullo, who owns METRO Terminals along with his brother, Gene. “With biodiesel, America’s only commercially available advanced biofuel, we will take our business into the next generation again.”

The stock fell as much as 18 percent, the most since October 2008, after the Randers, Denmark-based company posted a second-quarter loss of 119 million euros ($153 million), compared with a profit of 43 million euros a year earlier. That exceeded the average estimate of a 7.3 million-euro loss in a survey of 15 analysts. Sales fell 17 percent to 1 billion euros.

Vestas cut its sales forecast for this year to 6 billion euros from 7 billion euros on delays in expected orders in the U.S., Spain and Germany. The credit crisis has prompted banks to restrict loans to wind-park developers that buy turbines from Vestas and competitors including Germany’s Siemens AG, Gamesa Corp. Tecnologica SA and General Electric Co.

“The result confirms that turbine prices and pre-payment conditions are under pressure,” Patrik Setterberg, analyst with Nordea Bank AB in Copenhagen, said in a note. He has a “hold” rating on the shares. “Even a strong order intake will not compensate for the weak result.”

Vestas also lowered its forecast for its 2010 margin for earnings before interest and tax to a range of 5 percent to 6 percent from a range of 10 percent to 11 percent.

Vestas declined 55.8 kroner, or 18 percent, to 258.7 kroner at 9:27 a.m. local time. The shares have lost 19 percent this year compared with a 1.9 percent gain in the Bloomberg European 500 Index.

The company, Denmark’s fifth-largest by market value, lost 82 million euros in the first three months, its first quarterly loss in four years.

Global investment in wind power slowed during the economic slump in the U.S. and Europe, lowering prices paid for wind farms, according to Bloomberg New Energy Finance. Turbine makers are most at risk as manufacturing overcapacity narrows margins, Justin Wu, an analyst for Bloomberg New Energy Finance, said on June 21.

Still, Vestas has signed at least eight orders the past month, including its biggest ever in the U.S. and its largest in Australia

     Principle Capital Investments Ltd., a major shareholder of U.K.-based D1, did not support the proposal, a statement from D1 said today. Without Principle’s support, D1 could not accept Mission’s offer, both D1 and Mission said in statements.

     D1 remains in discussions with other companies for a possible takeover, a spokesman for D1 said today by telephone.

He declined to disclose the names of the suitors or how many were in the bidding.

     Shares of D1 fell 15 percent on London’s Alternative Investment market, closing down 0.82 of a penny at 4.68 pence.

     D1 said in May it was considering two potential takeover offers, one of which was Mission NewEnergy. The Australian company offered 16 million pounds ($25 million) to purchase the entire share capital of D1. At the time, D1 said it was hoping to proceed with the offer.

     The company could not provide any further detail regarding Principle’s objections to the takeover.

     Principle Capital said in December last year it had incurred “substantial losses” on its 18 million-pound investment in D1. Principle said it wanted D1 to start minimizing cash expenditure and began seeking buyers.

     Ben Good, chief executive officer at D1, said in May that the company had sufficient capital until the end of 2011.

 Flint Hills Resources, based in Wichita, owns and operates refineries, chemical plants and terminals across the Midwest and Texas.

 It bought the plants during an auction held by Royal Bank of Scotland, outbidding the plants’ builder and original owner, Hawkeye Energy, which lost control of them during bankruptcy. Hawkeye emerged from bankruptcy last month.

 The Menlo and Shell Rock, Iowa, plants opened in 2008. The plants each employ about 50 people and each produce about 110 million gallons of ethanol a year.

 No price was released.

 The purchase, expected to close in September, marks Koch’s entry into a new business — and a vote of confidence in the industry’s future , the company said.

 Flint Hills is forming a new subsidiary, Flint Hills Renewables, to manage the new plants, said Flint Hills spokesman Jake Reint

 ”The renewable business is an increasingly important part of the transportation fuel mix,” Reint said.

 Currently, the federal government allows blenders such as Flint Hills to blend up to 10 percent ethanol into the automobile fuel they sell. It gives them a tax credit as an incentive.

 By owning ethanol production plants, Flint Hills can make a profit off the 10 percent of fuel that is no longer made up of gasoline.

 But, Reint said, Flint Hills also has faith in the future of ethanol as well.

  The federal government has set ethanol consumption targets of 36 billion gallons by 2022. That’s more than a 200 percent increase from

2009 and almost certainly would require higher percentages of ethanol in automobile fuel, although the government hasn’t established a clear path to reach those consumption targets.

 The bottom line, Reint said, is that ethanol is competitive with gasoline from a cost standpoint.

 ”We continue to oppose mandates and subsidies,” he said. “As we see it, ethanol can be competitive without subsidies.”

 Koch’s purchase is a tremendous vote of confidence in the future of what has been a frequently criticized industry, said Robert Casper, president of Poet Ethanol Products.

 ”Koch is not a short-term thinker,” Casper said. “They have a long- range vision for everything they do.”

 Casper said there has been a trend for outside companies, including petroleum producers and refiners, to buy troubled ethanol plants. He said he doesn’t see that changing.

 The ethanol industry expanded rapidly in the middle of the past decade after the federal government established the 10 percent limit.

 But it hit a wall in 2008 when it reached that limit and plants began competing on price alone. Less efficient and more indebted ethanol plants went out of business.

 The industry has been lobbying the Environmental Protection Agency and Congress over the past year to raise or remove the limit.

Looking to bolster its biodiesel footprint in Latin America, Cargill Inc.’s Argentinean operating branch Cargill Argentina (Cargill SACI) invested $112 million towards the cost of building a 240,000 metric-ton (72 MMgy) biodiesel plant in the rich soybean-growing region of Villa Governador Galvez within the Santa Fe Province in Argentina.

In addition to the biodiesel facility, Cargill intends to build an 18 megawatt-per-year co-generation plant on site with the biodiesel facility. Both projects are slated to come online in September 2011.

“Both projects clearly ratify Cargill’s confidence in the potential of the Argentine agribusiness industry and the role of our country in the international trade, demonstrated by over $500 million of investments made by Cargill in the period ’04-’09, through the building of new processing plants and ports as well as joint ventures with highly renowned local enterprises, all of these focused on adding value to the national agribusiness production thus improving Argentina’s competitiveness in the international market ,” said Hugo Krajnc, president of Cargill Argentina.

The biodiesel plant will be located next to a Cargill-owned port terminal that will use soy oil originating from its 13,000-ton-per-day soybean processing plant in Santa Fe, Cargill’s largest soybean processing complex in the world. Cargill employs 4,000 workers in Argentina in 50 locations and its assets include export terminals, country elevators, malt plants, oilseed crushing plants, beef processing plants and four mills.

According to Cargill, it’s estimated that the investment in goods, machinery, equipment and services of local origin represent approximately 77 percent of its total investment amount towards the projects. Additionally, approximately 90 percent of the production from the future plant will be exported to China, Spain, Peru, Egypt, Brazil, the Netherlands, India, South Korea, Malaysia and Chile, according to the company.
In July, Argentina lifted the required mix of biodiesel in its diesel fuel pool to B7 from B5. The increased mandate to a B7 blend is anticipated to launch in September.

PEORIA, Ill. (AP) – Agriculture experts are expecting a record corn and soybean crop for the United States, but the crop in central Illinois might fall short of last year’s yields.

The U.S. Department of Agriculture estimates Illinois’ corn crop is expected to yield 180 bushels an acre, up 6 bushels from last year. And the state’s soybean yields are expected to average 49 bushels an acre, or about 3 bushels more than last year.

But the outlook isn’t so rosy everywhere.

Kim Craig works for Bell Enterprises, a grain elevator that’s organized a plot tour for the past 15 years. Craig says farmers who recently checked cornfields in Tazewell, Woodford and McLean counties reported conditions that look to fall short of last year’s yields.

He says the tour found problem areas in most fields due to last season’s wet fall.

Iowa-based Renewable Energy Group (REG) has held a grand re-opening of its Seneca, Illinois biodiesel plant after taking over the 60 million-gallon-a-year biodiesel and glycerin facility from Nova Biosource Fuels.
REG celebrated the occasion with a ribbon cutting ceremony and by selling the first load of REG-9000 biodiesel from the refinery to Meier Oil of Ashkum Illinois last Thursday.

The REG Seneca facility has three side-by-side 20 mgy biodiesel process units, a technical grade glycerin refining facility, raw material and finished product storage as well as rail car and truck unloading and loading with the potential for barge transportation that had been idled for more than a year. This re-opening put 38 plant workers back on the job.

REG now wholly-owns five biodiesel production businesses and markets biodiesel in 49 states.

Name Change Designed to Better Reflect Its Fuel and Energy Production Capabilities

IRVINE, Calif., Aug 17, 2010 /PRNewswire via COMTEX/ — BlueFire Ethanol Fuels, Inc., a company focused on changing the world’s transportation fuel paradigm through the production of renewable fuels from non-food cellulosic wastes, today announced that the company has changed its name to BlueFire Renewables, Inc. to more clearly illustrate the company’s vast capabilities in renewable energy. BlueFire Renewables will continue to trade as BFRE.OB.

Through its internally-designed and third-party-developed back-end technologies, BlueFire can produce a vast array of other Biofuels, including Biodiesel, BioJet Fuel, Drop-in Directs, and more. As such, the name change and rebranding as a renewable energy company more clearly represents the many applications for which BlueFire’s technology can be applied.

As an example, BlueFire has developed relationships with key industry partners, such as Solazyme, Inc., a renewable oil production company and leading algal synthetic biology company that has been testing sugars produced through BlueFire’s patented process for compatibility with its renewable oil process to produce the oil cost effectively and at scale.

“BlueFire is more than just an ethanol company. We’re happy to at last announce the expansion of our capabilities, and feel that this name captures our spirit for innovation and development of cleaner alternatives to fossil fuels,” says Arnold Klann, CEO of BlueFire Renewables, Inc. “Our goal with this name change is to demonstrate the company’s potential to vertically integrate our technology into other areas of renewable energy and help us avoid the confusion with traditional ethanol producers.”

BlueFire Renewables is also currently in the process of developing two cellulosic ethanol facilities in Lancaster, CA and Fulton, MS. The fully-permitted and shovel-ready Lancaster, CA, facility, BlueFire’s first U.S. commercial plant, will use post-sorted cellulosic wastes diverted from Southern California’s landfills to produce approximately 3.9 million gallons of fuel-grade ethanol per year. BlueFire is in the detailed engineering phase for its second commercial plant in Fulton, MS, which will produce approximately 19 million gallons of ethanol per year from woody biomass, mill residue, and other cellulosic waste. These two planned facilities will create more than 1,000 construction jobs and, once in operation, more than 100 new operations and maintenance jobs. This is in addition to the hundreds of jobs created or maintained at equipment vendors and suppliers that will be involved in the company’s other projects.

BlueFire Renewables recently announced that the Department of Energy has determined that BlueFire has met the requirements necessary for Phase I completion of the application process for its Loan Guarantee and that the company has been invited to continue on to Phase II for the financing of their Fulton, MS Project.
About BlueFire Renewables, Inc.

BlueFire Renewables, Inc. was established to deploy a commercially ready, patented and proven Concentrated Acid Hydrolysis Technology Process for the profitable conversion of cellulosic waste materials (”Green Waste”) to renewable fuel sources, including Cellulosic Ethanol, Biodiesel, BioJet Fuel, and Drop-in Directs. BlueFire is the only cellulose-to-fuel company worldwide with demonstrated production of Biofuels from urban trash (post-sorted MSW), rice and wheat straws, wood waste and other agricultural residues.

BlueFire received an increase to its Grant totaling $88 million under the American Recovery and Reinvestment Act in December of 2009. BlueFire’s biorefineries will be located near markets with high demand for ethanol and will use locally available biomass. This should dramatically reduce delivery costs and increase biofuel supplies, while providing a unique waste processing technology to help America’s cities better manage the increasing problem of overflowing landfills.

     Export quotas will be 1 million metric tons for barley and 1.5 million tons for wheat from Sept. 1 through Dec. 31, the minister said today. Corn will be exempt from the curbs, and 1 million tons of grain already at ports for export will be allowed to go before the quotas start.

     “We need to secure food safety in the country,” the minister said at a meeting with exporters and producers in Kiev.

     Russia, the world’s third-biggest wheat producer, banned grain exports as of Aug. 15 after the country’s worst drought in at least a half century ruined crops. Wheat traded in Chicago, a global benchmark, advanced as much as 90 percent since early June on concern that the drought in Russia, flooding in Canada and a lack of rain in Kazakhstan and the European Union would limit supply.

     Ukraine’s government will announce details of the export quotas tomorrow, Deputy Prime Minister Viktor Slauta told reporters today. National grain stockpiles were 16.9 million tons as of Aug. 1, down 21 percent from a year earlier, the state statistics committee said yesterday.

     The country exported 1.1 million tons of wheat and 1.2 million tons of barley from July 1 through yesterday, Prysyazhnyuk said. The harvest will allow total exports of 2.42 million tons of barley in the marketing year that ends in June 2011, 6 million tons of wheat and 6 million tons of corn, the minister said.

     National grain exports totaled 21.1 million tons in the marketing year that ended June 30, down from a record 24.7 million tons the previous year, according to Kiev-based researcher UkrAgroConsult.

     Ukraine will sell 5.4 million tons of barley overseas in the 12 months ending in September, making it the world’s biggest exporter, according to U.S. Department of Agriculture estimates.

Wheat exports in the 12 months ending in June 2011 will be 6 million tons, the USDA says, 2 million tons less than it estimated a month earlier.

     Obama used the example of ZBB Energy Corp., which is using a $1.3 million loan from the legislation to keep 12 workers on staff and eventually hire 80 more as it expands production.

     “We expect our commitment to clean energy to lead to more than 800,000 jobs by 2012,” Obama said after a tour of the ZBB factory. “And that’s not just creating work in the short term; that’s going to help lay the foundation for lasting economic growth.”

     Obama is kicking off a three-day, cross-country tour to defend his economic policies and raise money for Democratic candidates.

     At a fundraiser in Milwaukee he told supporters that Republicans would put the nation on the same path that led to the worst recession in more than 80 years.

     “What we don’t need, the worst thing we could do, is to go back to the very same policies that created this mess in the first place,” he said. “The most important thing we can do right now is to keep moving forward.” Republicans, who are working to wrest control of Congress in the November elections, are critical of the $862 billion stimulus measure as economic growth and hiring have fallen short of some administration projections.

     Since the legislation was approved in February 2009, the U.S. unemployment rate has climbed to 9.5 percent in June from

8.2 percent. The administration projects the jobless rate will average 9.7 percent for the year.

     The White House hasn’t made much progress in selling the stimulus spending to voters. Asked how their opinion of the stimulus has changed in recent months, respondents to a Bloomberg National Poll were divided almost evenly among those who say they had become more supportive, those who are less supportive and those who haven’t changed their view.

     Obama has been making regular trips outside Washington to defend the stimulus and the government’s bailout of automakers, and to say the U.S. economy is on the mend.

“These have been a couple of very hard years for America.

And we’re not completely out of the woods yet,” he said at the battery factory.  “But we are headed in the right direction.”

     Following today’s visit to Wisconsin, Obama will fly to Los Angeles to raise money for his party’s congressional candidates.

     The president will deliver remarks on the economy tomorrow in Seattle and attend a fundraiser for Democratic Senator Patty Murray. On Wednesday he’ll discuss the economy in Columbus, Ohio, and raise money for the Ohio Democratic Party before traveling to Miami for a similar fundraiser for Florida Democrats.

     So far this month Obama has raised more than $4.5 million for Democratic candidates and party organizations.

     All 435 members of the House of Representatives face elections this year, as well as more than one-third of the Senate. Democrats now have majorities in both chambers.

     “Everybody’s going to have a tough race across this country because we’re going through tough times,” Obama said at the Milwaukee event, which raised money for Mayor Tom Barrett’s campaign for governor and the state Democratic Party organization.

     The company signed an option to lease a 20-acre site in the Port of Southampton, on the U.K.’s south coast, from owner and operator Associated British Ports, Helius said in a statement yesterday.

     The exercise of the option is subject to securing a Development Consent Order, the statement said. Helius expects to apply for this permit in March 2011, Andrew Jones, a company spokesman, said yesterday in an e-mail.

     “Helius would anticipate that a planning decision would be made between March and June 2012,” Jones said. “With a construction and commissioning period of around 30 months, we would anticipate that the plant could be operational toward the end of 2014 or beginning of 2015,” he said.

     The facility will burn about 700,000 tons of solid biomass annually, Jones said, and the majority will be sourced from the U.K., continental Europe, and the Americas. It will be delivered through the Port of Southampton, he said.

     “Biomass feedstock will comprise wood fuel in the form of virgin wood, recycled wood chips, and energy crops, together with other biomass material including residues from processing cereals such as wheat and barley, and oilseeds such as rapeseed and sunflower,” Jones said.

     The project will need an investment of between 250 million pounds and 300 million pounds ($392 million to $470 million), said Jones. Helius expects to meet about 75 percent of the total project costs through debt, he said.

     The U.K. government on July 27 said it will be fully supporting the biomass industry through obligations on utilities to use clean energy for the next 20 years.

Aug. 16 (Bloomberg) — Some of Russia’s top corn consumers are planning to import the grain from countries including the United States, the U.S. Grains Council said, after the worst drought in at least half a century parched the nation’s crops.

“While the price of grain in Russia is high, it is expected to go higher, so no one is selling,” Alex Kholopov, a consultant at the council, said on its website. “This leaves many Russian animal farmers in a panic and fearful.”
Corn has jumped 24 percent in Chicago since June 29 on speculation demand will increase from China and as wheat soared because of the Russian drought. World stockpiles of coarse grains, including corn, sorghum, barley, oats and rye, will drop 8.4 percent before next year’s harvest to the lowest level since 2008, according to the U.S. Department of Agriculture.

Drought in Ukraine, the fourth-largest corn exporter in the 2009-2010 season, and Russia may help the U.S. increase its market share in countries such as Saudi Arabia and boost shipments of sorghum to the Middle East, Joe O’Brien, the council’s regional director for the area, said on its website.

Russia will probably double corn imports to 300,000 metric tons in 2010-2011 from 150,000 tons the previous year, while exports may slump to 25,000 tons from 400,000 tons, according USDA estimates.

Israeli Imports
December-delivery corn was little changed at $4.28 a bushel on the Chicago Board of Trade at 10:39 a.m. Singapore time today, while wheat declined 0.8 percent to $7.2825 a bushel. Wheat has soared 59 percent since June 29, pushing its premium to corn to 70 percent, according to Bloomberg data.

Israel’s imports of U.S. sorghum may surge 65 percent to between 100,000 to 120,000 tons this year, boosting the U.S. market share to 85 percent, because of the export ban in Russia and a shortage in the Ukraine, the council said. Imports of corn are likely to increase to 1.5 million tons, raising the market share to 30 percent from 10 percent, it said.

The council “received word” last week that Israel purchased 40,000 tons of U.S. sorghum and intended to buy 60,000 tons to 80,000 tons more, it said.

WASHINGTON – Corn-based ethanol has been America’s leading biofuel for more than 30 years, and has blossomed into a thriving business.

American farms and refineries now generate half of all ethanol produced around the globe.

Despite being a mature and profitable industry, corn ethanol producers are lobbying hard to extend perks they have enjoyed for three decades. The debate is heating up on Capitol Hill because the two main subsidies – a tax credit for blending ethanol with gasoline and an import tax on foreign ethanol, particularly Brazilian sugarcane ethanol – expire at the end of the year.

A diverse group of critics – including meat producers, anti-hunger activists, taxpayer advocates, free-market groups and environmental organizations – argue the subsidies are unnecessary and expensive.

These strange bedfellows, who rarely agree on much else, are urging Congress to reform the existing ethanol policies. Defenders of the subsidies counter that the United States would suffer catastrophic job losses without them, domestic biofuel production would plummet and America would become more dependent on foreign energy.
To learn what really would happen, Americans have only to turn to leading agricultural economists at Iowa State University, in the heart of corn country.

Researchers at Iowa State found that consumers would benefit from ending the tax credit and trade protection. Key findings from the study, which was published last month, included:

- Elimination of the subsidies practically would have no short-term effect on U.S. corn and ethanol demand. That’s because Congress already mandates the use of renewable fuels such as ethanol, and those requirements will triple from 13 billion gallons today to 36 billion gallons by 2022. As a result, corn ethanol production would continue to increase to 14.5 billion gallons by 2014 even without tax credits or tariffs.

- In a time of soaring budget deficits, $6 billion annually is real money. Ending the ethanol subsidies would save that amount. Yet some Washington politicians want to spend an additional $30 billion for five more years of subsidies to corn ethanol.

Indian sugar mills, reeling from a slump in prices, may report higher profits in the year starting Oct. 1 after the government increased the price of ethanol for blending with gasoline, according to a producers’ group.

India’s cabinet today ordered oil refiners to buy locally manufactured ethanol at 27 rupees (57 cents) a liter, according to a statement on the Press Information Bureau website, handing producers a 26 percent increase.
Bajaj Hindusthan Ltd., India’s largest sugar maker, posted a loss in the quarter ended June 30, Balrampur Chini Mills Ltd., the second-biggest, reported 83 percent plunge in net income for the same period, as wholesale prices of refined sugar collapsed by more than a third from a record in January. Bajaj, Balrampur and Shree Renuka Sugars Ltd. are among the worst performers this year on the BSE200 Index.

“The decision will definitely improve their profitability and the gains will be added directly to the bottomline of the mills,” Sageraj Bariya, an analyst with Angel Broking Ltd. in Mumbai, said by telephone. Prices of ethanol also fell in the quarter ended June 30, lifting inventory at mills, he said.

Bajaj shares jumped 4.5 percent to 122.95 rupees in Mumbai, the highest price since May 3. Balrampur rose 1 percent to 85 rupees and Shree Renuka closed little changed at 68.80 rupees after jumping as much as 3.3 percent. Dhampur Sugar Mills Ltd. advanced 4.4 percent to 61.2 rupees.

India may produce 25.5 million tons in the season starting Oct. 1, from 18.8 million tons estimated this year, according to the Indian Sugar Mills Association, or ISMA. Cane output may be 370 million tons from 313 million tons a year earlier, the group said July 26.

‘Firm Price’
“It’s extremely positive going into the next year as there will be good cane production so there will be ample availability of molasses,” which is used to produce ethanol, Vivek Saraogi, president of ISMA and the managing director of Balrampur, said in a phone interview today. “We will have a firm price going ahead for molasses conversion into ethanol.”

Mills can meet as much as 1 billion liters of ethanol demand, he said.

India in 2007 made the sale of ethanol-added fuel mandatory, joining the U.S. and the European Union in raising biofuel usage to counter rising oil costs and tighten pollution control norms. The plan failed to take off countrywide due to non-availability of ethanol and opposition from the ministry of chemicals, which said the price of molasses they use for making liquor had gone up, according to the Press Trust of India.
Potable liquor makers and chemical producers are the top consumers of molasses-based alcohol.

The government has provided loans of 3 billion rupees ($64 million) to sugar producers in the past three years to add 365 million liters of ethanol-making capacity, according to the food ministry. The current production is about 1.8 billion liters.

“The procurement would be done under supply contracts with penalties on the sugar industry for default in supply and on oil industry for not lifting ethanol,” the government said today.

The ethanol market this week will focus on:

• the corn market where the focus remains on weather and corn yields and the extent of damage to crops in Russia and eastern Europe,

• gasoline prices, which continue to track U.S. economic data and the stock market, and

• whether ethanol demand can continue to absorb record production levels once the summer driving season winds down.

Tighter USDA corn situation increases profitability risks for ethanol producers — The USDA in last Thursday’s World Agricultural Supply & Demand Estimates (WASDE) report boosted its corn yield estimate by 0.9% to 165.0 bushels/acre from July, leading to a 0.9% increase in its corn production estimate to a record 13.365 billion bushels. However, the USDA also raised its use estimate by 1.0% from July, mainly because of a 5% increase in corn exports tied to the poor crops in Russia and eastern Europe. The net result was a 4.4% cut in the U.S. ending stock estimate to a 6-year low of 1.312 billion bushels. That left the U.S. stocks/use ratio at a tight 9.7%, 3.6 percentage points below the 5-year average and the fourth tightest level in the past two decades. While ethanol prices have been able to rally with corn prices thus far, the tight U.S. corn supply situation clearly increases the profitability risks for ethanol producers.

Ethanol Market Action – September CBOT Ethanol futures prices last week extended the 7-week rally to post a new 7-month high and close up 4.5 cents (+2.6%) at $1.768 per gallon. Bullish factors included the 1.7% rally in corn prices during the week as well as strong demand for ethanol in general. Ethanol prices also found some support from Wednesday’s weekly EIA report showing that ethanol production in the week ended August 6 fell by 0.8% to 866,000 barrels/day from the previous week’s record high of 873,000 bpd. In addition, ethanol inventories fell mildly by 1.0% to 19.343 million barrels where they were 2.9% below the record high of 19.921 million bbl posted in early July. Ethanol prices last week were able to shake off the sharp sell-off in gasoline prices.

Ethanol/Gasoline – September gasoline futures prices last week fell sharply to post a new 3-month low and close 17.31 cents lower (-8.2%) at $1.9396 per gallon. The main bearish factor was the FOMC’s downgrade of US economic growth, which caused pessimism about US fuel demand. The sharp sell-off in gasoline prices caused the spread of September ethanol prices minus gasoline prices last week to rise by 21.8 cents to -17.2 cents, the narrowest spread in 6 months, although ethanol is still 62 cents cheaper than gasoline including the 45-cent ethanol tax subsidy.

Ethanol/Corn – Sep corn futures prices last week consolidated below the recent 7-month high and closed the week up 6.75 cents (+1.7%) at $4.1175 per bushel. Corn prices continued to see strong upside support from the drought and hot weather in Russia and eastern Europe, which has damaged crops. In addition, abnormally hot weather in the U.S. has the potential to curb U.S. corn yields. Ethanol prices last week rallied by more than corn prices, allowing the Sep ethanol-corn crush margin to rise by 2.1 cents to 29.7 cents/gallon, which was well above the recent 13-month low of 20.1 cents per gallon. Including DDG, the Sep corn for ethanol crush margin rose by 2.1 cents to 63.6 cents/gallon.

Ethanol Calendar
• Aug 18: EIA Weekly Petroleum Status Report
• Aug 30: EIA June Monthly Ethanol Report
• Sep 10: USDA WASDE Crop Supply-Demand
• September: EPA’s E15 decision due

596,024 tons a year earlier, the Solvent Extractors’ Association of India said today in an e-mail. Incoming cargoes of crude palm oil jumped 23 percent to 410,604 tons, the group said.

     Overseas purchases in the year ending Oct. 31 may be less than 9.1 million tons forecast by the group in March because of an increase in local supplies, B.V. Mehta, executive director at the association, said by phone. Reduced imports may cool gains in palm oil prices that touched a 16-month high in Kuala Lumpur today on concern adverse weather in Asia may lower output. “Imports will be more or less the same as last year’s”

8.66 million tons, he said. “An increase in imports forecast earlier may not materialize. Local crushing has picked up on expectations of a good crop following good rainfall.”

     The peak season for India’s edible oils demand starts with the Ramadan this month and ends with Diwali in early November.

     Palm oil for delivery in November fell 0.2 percent to 2,686 ringgit ($845) a metric ton on the Malaysia Derivatives Exchange at 5:36 p.m. local time. Earlier, the price advanced as much a 1.5 percent. The commodity rose 2.1 percent last week to a fifth straight week of gains.

     India’s vegetable oil imports in the November-July period were 6.38 million tons, little changed from 6.42 million tons a year earlier, the association said. Purchases may be 2.1 million to 2.2 million tons in the next three months, Mehta said.

     Stockpiles were at 1.21 million tons on Aug. 1 from 1.11 million on July 1, the group said. Soybean oil imports surged to 220,070 tons last month, from

66,212 tons a year earlier, as the premium of the vegetable oil over palm oil narrowed to $70 to $80 a ton, the association said. Palm oil makes up almost 80 percent of India’s purchases.

Vegetable oil imports by India, the biggest consumer after China, in July gained for the first time this year as demand climbed before religious festivals. Purchases advanced 34 percent to 800,644 metric tons from

596,024 tons a year earlier, the Solvent Extractors’ Association of India said today in an e-mail. Incoming cargoes of crude palm oil jumped 23 percent to 410,604 tons, the group said.

     Overseas purchases in the year ending Oct. 31 may be less than 9.1 million tons forecast by the group in March because of an increase in local supplies, B.V. Mehta, executive director at the association, said by phone. Reduced imports may cool gains in palm oil prices that touched a 16-month high in Kuala Lumpur today on concern adverse weather in Asia may lower output. “Imports will be more or less the same as last year’s”

8.66 million tons, he said. “An increase in imports forecast earlier may not materialize. Local crushing has picked up on expectations of a good crop following good rainfall.”

     The peak season for India’s edible oils demand starts with the Ramadan this month and ends with Diwali in early November.

     Palm oil for delivery in November fell 0.2 percent to 2,686 ringgit ($845) a metric ton on the Malaysia Derivatives Exchange at 5:36 p.m. local time. Earlier, the price advanced as much as 1.5 percent. The commodity rose 2.1 percent last week to a fifth straight week of gains.

     India’s vegetable oil imports in the November-July period were 6.38 million tons, little changed from 6.42 million tons a year earlier, the association said. Purchases may be 2.1 million to 2.2 million tons in the next three months, Mehta said.

     Stockpiles were at 1.21 million tons on Aug. 1 from 1.11 million on July 1, the group said. Soybean oil imports surged to 220,070 tons last month, from

66,212 tons a year earlier, as the premium of the vegetable oil over palm oil narrowed to $70 to $80 a ton, the association said.  Palm oil makes up almost 80 percent of India’s purchases.

     Purchases advanced 34 percent to 800,644 metric tons from 596,024 tons a year earlier, the Solvent Extractors’ Association of India said today in an e-mail. Incoming cargoes of crude palm oil jumped 23 percent to 410,604 tons, the group said.

     Overseas purchases in the year ending Oct. 31 may be less than 9.1 million tons forecast by the group in March because of an increase in local supplies, B.V. Mehta, executive director at the association, said by phone. Reduced imports may cool gains in palm oil prices that touched a 16-month high in Kuala Lumpur today on concern adverse weather in Asia may lower output.

     “Imports will be more or less the same as last year’s” 8.66 million tons, he said. “An increase in imports forecast earlier may not materialize. Local crushing has picked up on expectations of a good crop following good rainfall.” The peak season for India’s edible oils demand starts with the Ramadan this month and ends with Diwali in early November.

     Palm oil for delivery in November fell 0.2 percent to 2,686 ringgit ($845) a metric ton on the Malaysia Derivatives Exchange at 5:36 p.m. local time. Earlier, the price advanced as much as 1.5 percent. The commodity rose 2.1 percent last week to a fifth straight week of gains.

     India’s vegetable oil imports in the November-July period were 6.38 million tons, little changed from 6.42 million tons a year earlier, the association said. Purchases may be 2.1 million to 2.2 million tons in the next three months, Mehta said.

     Stockpiles were at 1.21 million tons on Aug. 1 from 1.11 million on July 1, the group said. Soybean oil imports surged to 220,070 tons last month, from

66,212 tons a year earlier, as the premium of the vegetable oil over palm oil narrowed to $70 to $80 a ton, the association said. Palm oil makes up almost 80 percent of India’s purchases.

Vegetable oil imports by India, the biggest consumer after China, in July gained for the first time this year as demand climbed before religious festivals. Purchases advanced 34 percent to 800,644 metric tons from

596,024 tons a year earlier, the Solvent Extractors’ Association of India said today in an e-mail. Incoming cargoes of crude palm oil jumped 23 percent to 410,604 tons, the group said.

     Overseas purchases in the year ending Oct. 31 may be less than 9.1 million tons forecast by the group in March because of an increase in local supplies, B.V. Mehta, executive director at the association, said by phone. Reduced imports may cool gains in palm oil prices that touched a 16-month high in Kuala Lumpur today on concern adverse weather in Asia may lower output.

     “Imports will be more or less the same as last year’s” 8.66 million tons, he said. “An increase in imports forecast earlier may not materialize. Local crushing has picked up on expectations of a good crop following good rainfall.”

     The peak season for India’s edible oils demand starts with the Ramadan this month and ends with Diwali in early November.

     Palm oil for delivery in November fell 0.2 percent to 2,686 ringgit ($845) a metric ton on the Malaysia Derivatives Exchange at 5:36 p.m. local time. Earlier, the price advanced as much as 1.5 percent. The commodity rose 2.1 percent last week to a fifth straight week of gains.

     India’s vegetable oil imports in the November-July period were 6.38 million tons, little changed from 6.42 million tons a year earlier, the association said. Purchases may be 2.1 million to 2.2 million tons in the next three months, Mehta said.

     Stockpiles were at 1.21 million tons on Aug. 1 from 1.11 million on July 1, the group said.

     Soybean oil imports surged to 220,070 tons last month, from66,212 tons a year earlier, as the premium of the vegetable oil over palm oil narrowed to $70 to $80 a ton, the association said.

     Palm oil makes up almost 80 percent of India’s purchases.

The announcement made by Cargill Argentina’s President, Hugo Krajnc, at a meeting held today at the Presidential Residence, with the presence of Government Ministers and Secretaries, refers to the construction of an 18 Mw energy co-generation plant and a biodiesel production plant to be originated from soybean oil, with a processing capacity of 240,000 tons per year.

Both plants will be ready to start operating in September 2011, and as expressed by Mr. Krajnc: “… the fact that these investments are made in our country within an international context of economic and financial uncertainty, reinforces once again Cargill’s commitment to the development of agribusiness industry in Argentina, as it has been shown since it was established in our country back in 1947…”

He also stated that: “… both projects clearly ratify Cargill’s confidence in the potential of the Argentine agribusiness industry and the role of our country in the international trade, demonstrated by over 500 million dollars investments made by Cargill in the period 2004-2009, through the building of new processing plants and ports as well as joint ventures with highly renowned local enterprises, all of these focused on adding value to the national agribusiness production, thus improving Argentina’s competitiveness in the international market…”

Both new projects announced will be developed at Cargill’s oilseeds processing plant located in Villa Gobernador Gálvez (Santa Fe), which together with the port terminals that form part of the installations, constitute Cargill’s largest soybean processing complex in the world.

During the announcement it was also emphasized that the investment in goods, machinery, equipments and services of local origin, represent 77% of the total investment amount, and that during the construction period, both projects will demand an average monthly workforce of 370 people.

The biodiesel production to be obtained from this project, equivalent to 30% of the soybean oil produced by Cargill at Villa Gobernador Gálvez’s complex, will be destined to both the domestic and international markets. In turn, the 18Mw to be generated by the energy co-generation plant will allow other users of the energy system to make use of the energy Cargill will not be consuming.

for the other user industries, a front-page advertisement by the Confederation of Indian Alcoholic Beverage Companies and the Indian Chemical Council in the Economic Times said today.

     The price of ethanol for blending with fuel currently is fixed at 21.50 rupees per liter (45 U.S. cents). The government plans to increase this to 27 rupees a liter.

     Ethanol, or ethyl alcohol, is made from molasses, a by- product of the sugar industry. “While this will be music for the sugar industry which will reap windfall profits, it will sound the death knell for other users of alcohol — the chemical industry and the potable alcohol industry,” said the advertisement, issued as an appeal to the ministries of finance, petroleum, chemicals and agriculture.

     The Indian Chemical Council is a group that comprises companies from the plastics, petrochemicals, fertilizers and paints industries.

     The two industry groups also said in the advertisement that there was a large gap in the 2.51 billion liters of demand for alcohol from the chemical and potable alcohol industries and the overall availability of 1.62 billion liters. This gap would increase with the blending program, they said.

     Agrium, North America’s third-largest fertilizer producer by market value, offered A$1.50 a share for AWB, the Calgary- based company said in a statement. That’s 38 percent more than GrainCorp’s bid, which values the Melbourne-based company’s stock at A$1.09 a share, based on Aug. 13 closing prices.

     Purchasing AWB will enable Agrium to broaden its rural product sales business, including fertilizers and herbicides, into Australia, the world’s fourth-largest wheat exporter and third-largest shipper of canola. Agricultural companies worldwide are seeking acquisitions to benefit from surging demand for food led by China and India.

     “Agrium fits well with the rural services side of AWB,” Belinda Moore, a Brisbane-based analyst with Royal Bank of Scotland Group Plc said today. “This gives them another geographic region.”

     AWB, which is trading at 18 times forecast earnings, rallied 30 percent to A$1.42 at the 4:10 p.m. Sydney time close on the Australian stock exchange, up from A$1.095 on Aug. 13. Sydney-based GrainCorp shares rose 4.2 percent to A$6.53.

     “This is a surprise for the market as AWB has been trading at parity to the GrainCorp implied bid price,” Citigroup Inc said today in a note to clients.

Agrium’s Chief Executive Officer Mike Wilson has completed nine acquisitions valued at about $3.4 billion in the past five years. The company was seeking targets, he said in May after a failed $5.4 billion bid for fertilizer maker CF Industries Holdings Inc.

     AWB’s rural services unit had sales of A$821.3 million in the six months ended March 31, accounting for 27 percent of revenue from continuing businesses. It sells merchandize to farmers through its Landmark unit in Australia and also supplies agricultural and animal health products in New Zealand.

     “The proposed transaction with AWB would continue Agrium’s strategy of growing its retail business,” Wilson said yesterday in a statement. “Agrium sees significant potential to enhance the product and service offerings to the Australian and New Zealand grower.” The two companies were in talks, Agrium said.

     Barclays Plc is advising Agrium, whose bid values AWB at about 8.6 times forecast earnings before interest, tax, depreciation and amortization, according to Bloomberg calculations.

     GrainCorp spokesman David Ginns declined to comment on the company’s response to the higher offer from Agrium.

     GrainCorp, eastern Australia’s largest grain handler, on July 30 offered one share for every 5.75 AWB shares, valuing its bid at A$891 million, based on the Aug. 13 closing prices.

     Australia two years ago ended a wheat export monopoly formerly held by AWB, spurring international grain traders to enter the market. Viterra Inc., the largest Canadian grain handler, bought barley shipper ABB Grain Ltd. in 2009.

     GrainCorp would struggle to offer a higher price than Agrium and may become a target itself, RBS’s Moore said. “If the deal with AWB falls through, they are a strong Australian agribusiness and could be a strategic fit for an international grains company at some point in the future,” she said.

     Demand for the country’s wheat shipments is rising this year as drought cuts production in Russia. Wheat prices on the Chicago Board of Trade reached a 23-month high of $8.68 a bushel on Aug. 6.

     The Agrium offer is conditional and subject to negotiation, AWB said today in a statement. The directors had not withdrawn or modified their previous recommendation that shareholders vote in favor of the GrainCorp offer, it said.

     The Australian government ended AWB’s monopoly after an inquiry found the company was among 2,200 firms that made illegal payments to win contracts from Saddam Hussein’s regime under the United Nation’s oil-for-food program.

Kansas farmers are expected to harvest the biggest corn crop in the state’s history this year.
The Kansas Agricultural Statistics Service on Thursday forecast corn production in Kansas at 629.2 million bushels. That would surpass last year’s record crop of 598.3 million bushels.

Kansas growers planted 4.7 million acres in corn this year, the highest planted acreage for corn in the state since 1936.

Kansas is expected to produce by far more bushels of corn this season than wheat. The 2010 wheat crop is pegged at 369 million bushels, down less than 1 percent from last year. The wheat crop was grown on 8.2 million acres, down 600,000 acres from a year ago.

Driving the increase in corn acres this season was an unusually wet fall in 2009, when winter wheat is planted, that kept many farmers out of the fields, said Jason Lamprecht, deputy director at the Kansas Agricultural Statistics Service.

“Not as many acres got planted, so when came spring time and they didn’t have wheat in the ground … they had to find something else to do,” Lamprecht said. “We had more acres of soybeans than corn because of that also.”

Soybean production is forecast at 153.9 million bushels. That is down 4 percent from last year, but would be the second highest production if realized. Kansas farmers planted a record 4.10 million acres with soybeans.
Sorghum production in Kansas was forecast at 184.5 million bushels, down 18 percent from the previous season.
Alfalfa hay production forecast at 3.44 million tons is down 6 percent from the 2009 crop.

The forecast released Thursday is based on crop conditions on Aug. 1.

Kansas has had a stretch of triple-digit temperatures with little, if any rain, since then. The impact of that weather on crop conditions will not be reflected until the agency releases its updated forecast in September.

BUENOS AIRES – Agribusiness giant Cargill said Thursday it was investing $113.6 million to build a biodiesel plant and an electricity generator in Argentina, where the U.S.-based company is the largest soy exporter.

Both projects will be carried out in the central province of Santa Fe and are due to come online in September 2011, the general manager of Cargill Argentina, Hugo Kranjc, told reporters after submitting the company’s plans to President Cristina Fernandez.

“This shows the company’s confidence in the country’s potential,” Kranjc said.

The power plant will have 18 MW of generating capacity, while the biodiesel facility’s annual production capacity will be 240,000 tons, the Industry Ministry said in a statement.

Both projects will be located next to a Cargill port terminal and 13,000-ton-per-day soy-processing plant in Santa Fe.

“This investment contributes to the diversification of the energy matrix, promotes the purchase of capital goods of national origin and generates value-added and real jobs,” Industry Minister Debora Giorgi said.

Cargill employs 4,000 workers in Argentina in 50 locations and its assets include export terminals, country elevators, malt plants, oilseed crushing plants, beef-processing plants and flour mills.

More than 90 percent of its production is destined for export to markets including China, Spain, Peru, Egypt, Brazil, the Netherlands, India, South Korea, Malaysia and Chile, according to the company. EFE

China Integrated Energy, a private integrated energy business, has devised a plan to double its diesel manufacturing capacity to 200,000 tons from the current volume of 100,000 tons. Its new biodiesel manufacturing facility at Tongchuan City is expected to be commissioned during the last quarter of this year.
In addition to this, the company has plans to purchase a biodiesel plant with 50,000 tons production capability before the end of September this year. The company is expected to invest around $31.5 million to achieve this goal.

During the 2nd quarter of 2010 the company has achieved a sale of 22,500 tones, thus resulting in 29.3% increase in sales volume corresponding to the same period of the year 2009 and a clear 22.5% increase in its first quarter sales. During this period the marketing price of the biodiesel went up by 21.3% concurrently with the existing price of diesel.

Gao Xincheng, China Integrated Energy’s CEO, said the company witnessed a surge in its biodiesel sales to 56.8% during the 2nd quarter of 2010 in comparison to the same period in the year 2009. He attributed bulk growth and pricing for this increase.

US’ Pacific Ethanol said Wednesday that its two production facilities at
Madera and Stockton have been accepted by the California Energy Commission to
participate in the California Ethanol Producer Incentive Program.

Pacific Ethanol’s plants in California have a combined production
capacity of 100 million gallons/year. They have been shut since the first
quarter of 2009 due to poor market conditions.

The payments would help to resume ethanol production in California,
Pacific Ethanol’s President and CEO Neil Koehler said.

CEPIP is designed to provide payments to California ethanol producers
under specific unfavorable economic conditions and requires reimbursement by
the producers any outstanding CEPIP payment balance when the economic
situation is favorable.

Current funding is subject to final adoption by the State of California
for its fiscal 2011 budget.

CEPIP uses what it calls the Ethanol Crush Spread calculation, which
includes a Los Angeles ethanol price and a Chicago Board of Trade month-ahead
futures corn price.

CEPIP limits total annual funding to $3 million for any single production
facility.

Pacific Ethanol’s subsidiaries emerged from bankruptcy at the end of June
this year.

PEKIN, Ill., Aug 12, 2010 (GlobeNewswire via COMTEX) — Aventine Renewable Energy Holdings, Inc is pleased to announce that it has completed the acquisition of an ethanol plant from New CIE Energy Opco, LLC, d/b/a Riverland Biofuels.

On August 6, 2010, the Company and Riverland entered into an Asset Purchase Agreement pursuant to which the Company acquired substantially all of the assets, and assumed specified liabilities, of Riverland for a purchase price of $16.5 million. The assets comprised an ethanol production facility located in Canton, Illinois, and included real property at the plant site as well as surrounding parcels. The acquisition closed on August 6, 2010. We intend for the Canton facility to be transferred to a newly-formed wholly-owned subsidiary of the Company.

Tom Manuel, CEO of Aventine said: “This is an exciting opportunity to acquire a 38 million gallon facility at a favorable price. When operational, we will leverage the proximity of the Canton facility to our Pekin, Illinois facilities to gain marketing and operational synergies.”

About Aventine
Aventine is a leading producer of ethanol. Through our production facilities, we market and distribute ethanol to many of the leading energy companies in the U.S. In addition to producing ethanol, our facilities also produce several co-products including: corn gluten feed and meal, corn germ, condensed corn distillers solubles, dried distillers grain with solubles, wet distiller’s grain with solubles, carbon dioxide and brewers’ yeast.

Forward Looking Statements
Certain information included in this press release may be deemed to be “forward looking statements” within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release, are forward looking statements. Any forward looking statements are not guarantees of Aventine’s future performance and are subject to risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by such forward looking statements. Aventine disclaims any duty to update any forward looking statements. Some of the factors that may cause Aventine’s actual results, developments and business decisions to differ materially from those contemplated by such forward looking statements include the following:

— The risk that any synergies from the Canton acquisition may not be
realized or may take longer to realize than expected;
— Unexpected costs or unexpected liabilities that may arise from the
Canton acquisition;
— Our ability to obtain and maintain normal terms with vendors and service
providers;
— Our estimates of allowed general unsecured claims, unliquidated and
contingent claims and estimations of future distributions of securities
and allocations of securities among various categories of claim holders;
— Our ability to maintain contracts that are critical to our operations;
— Our ability to attract and retain customers;
— Our ability to fund and execute our business plan and any ethanol plant
expansion projects;
— Our ability to receive or renew permits to construct or commence
operations of our proposed capacity additions in a timely manner, or at
all;
— Laws, tariffs, trade or other controls or enforcement practices
applicable to our operations;
— Changes in weather and general economic conditions;
— Overcapacity within the ethanol, biodiesel and petroleum refining
industries;
— Availability and costs of products and raw materials, particularly corn,
coal and natural gas and the subsequent impact on margins;
— Our ability to raise additional capital and secure additional financing,
and our ability to service our debt or comply with our debt covenants;
— Our ability to attract, motivate and retain key employees;
— Liability resulting from actual or potential future litigation; and
— Plant shutdowns or disruptions.

Net income fell 15 percent to $344.5 million, or 5.4 cents a share, for the three months ended June, from $407 million, or 6.4 cents, the Singapore-based company said today in a statement to the stock exchange. The second-quarter profit missed estimates by UBS AG and OCBC Investment Research Pte.

Chief Executive Officer Kuok Khoon Hong is seeking to diversify from Wilmar’s palm oil business, and last month agreed to spend A$1.75 billion ($1.6 billion) to buy CSR Ltd.’s Australian sugar unit. Profit estimates for Wilmar by analysts may be cut by 10 percent to 20 percent after the results, UBS said in a note today.

“Profit was 7 percent below our forecast and margins were lower across most business areas,” Carey Wong, an analyst at OCBC Investment Research Pte., said by phone in Singapore.

“Prices for raw materials inputs are rising, and there’s a time lag before Wilmar can pass those on to customers.”

Wilmar fell 1.9 percent to S$6.15 at 9:04 a.m. in Singapore trading. Sales for the period rose 18.3 percent to $6.8 billion.

The revaluation of convertible bonds cut profit by $41.7 million, it said.

Pretax profit for its merchandising and processing business, which made up 68 percent of the total, fell 4.7 percent on “poorer industry refining margins from tighter supply of crude palm oil and relatively less competitive pricing of palm oil compared to other edible oils,” the company said.

Wilmar’s plantations and palm oil mills business, the second biggest contributor, posted a 24 percent decline in pretax profit on lower palm oil prices and a drop in yields.

“Refinery margins came under pressure as expected from tighter palm oil supply and raw material cost pressure,” UBS said. “But the pressure on profitability was higher than our expectations.”

A longer-than-normal rainy season is disrupting harvesting in Indonesia, and output may drop as much as 10 percent this year, Susanto, head of marketing at the Indonesian Palm Oil Association, said Aug. 12. Output may fall to 19 million to 20 million metric tons from 21 million tons in 2009, he said.

Wilmar has 30,647 hectares under cultivation in Indonesia and 962 hectares in Malaysia. The two countries account for 90 percent of the world’s production of palm oil.

“The group is positive on the prospects of Asian economies, especially China, India and Indonesia, despite uncertainties in the global economic environment,” Wilmar, which supplies almost half of China’s cooking oil, said.

Rising food prices over the past few months of staples such as sugar and wheat have raised the risk of China imposing price controls, which may have an impact on Wilmar, OCBC’s Wong said.

China in 2008 imposed price controls on cooking oil, leaving producers unable to pass on higher input costs.

China’s inflation rate rose to 3.3 percent in July, the highest in 21 months, as floods destroyed crops, leading to increased food costs.

Kuok last month said Wilmar is willing to spend as much money as Sucrogen, CSR’s sugar unit, needs for expansion.

Sugar demand in Asian markets, including China and India, outstrips annual supply by 30 percent, Wilmar said July 6, citing the International Sugar Organization.

“Sugar consumption is definitely on the rise, especially in Asia, and China as a market is developing fast,” said OCBC’s Wong. “Wilmar has a vast network in China, and the CSR acquisition is a good path for them to go down.”

Now imagine prices of wheat, corn and other agricultural commodities, which comprise much of your input costs, jump 50 per cent in a matter of weeks because of a drought in Russia that has caused catastrophic crop failure.

Worse, Moscow slaps a ban on exports. That is exactly what has happened to companies such as Tyson Foods, Anheuser-Busch InBev, General Mills, Kellogg and Kraft. Contrary to the fears of many investors, however, these big food companies are likely to weather the turmoil in commodities markets.

The reason? They learnt from bitter experience during the food crisis of 2007-08 and have protected themselves from the latest surge in prices by using derivatives, say bankers and industry executives.

The benefits are already being felt. Companies have told investors that their commodity hedging strategies will largely insulate them from the effects of spiking wheat, corn and barley prices.

In a conference call two weeks ago, when the magnitude of the Russian grain problem had become known, Kellogg executives told investors that the cereal and snack company was 90 per cent hedged on a range of commodities.

Anheuser-Busch InBev, the world’s largest brewer, on Thursday said it had hedged its barley purchases through 2011, avoiding a big cost problem. The price of barley has doubled in the past month-and-a-half due to the drought in Russia and Ukraine. A few weeks earlier, before the Russian grain shortage suddenly worsened with the export ban, Don Mulligan, chief executive at General Mills, told investors that the food company was “about 50 per cent hedged” for the 2011 fiscal year, which began in June.

The growing use of derivatives to lock in forward prices marks a big change from the situation multinational food producers found themselves in in 2007 and 2008, when they were caught offguard by sudden jumps in prices. Their attempts to pass on cost rises then sparked a consumer backlash.

Many of the same companies that have hedged their exposures were those that suffered the last time round. Then, they were caught between rising input costs, which eroded their margins at the start of the crisis, and, later, anger at the price increases in shops, which drove customers away from their brands and into the arms of private label distributors.

Bankers estimate that up to a third of the world’s largest food companies launched fresh hedging programmes in the aftermath of the 2007-08 crisis.

“The price volatility we saw three years ago certainly raised the issue of ingredient cost to the boardroom,” says a banker who works closely with several large food companies. “It made chief financial officers more receptive to the ideas of hedging.”

The 2007-08 crisis was for the food industry what the 1990-91 Gulf War spike in oil prices was for the world’s airlines: a wake-up call.

Since then, says Will Shropshire, head of agricultural commodities at JPMorgan in London, companies “are paying more attention to price risk management and putting hedges in place”.

For years, food companies did not worry too much about being caught out by unexpectedly steep price rises. Only the biggest groups hedged and, in most cases, they only bought protection for a few volatile commodities, such as coffee, sugar or cocoa.

They sidelined other key agricultural commodities, from wheat and soyabeans to milk and corn, on the grounds the prices in those markets were relatively stable. Moreover, the convention in the industry was to pass on to consumers any rise in costs. Companies learnt in 2007-08 there was a limit to shoppers’ loyalty.

As a result, they overhauled their forward buying practices and locked in prices through buying futures and options traded on commodities exchanges in Chicago, New York, London and Paris. They dealt directly, too, with Wall Street banks on bespoke “over-the-counter” derivatives deals that are not traded on exchanges. Bankers say most of the hedges were relatively simple compared to the more exotic derivatives common to other industries, such as natural gas or copper.

The shift to hedging is work in progress. Some companies are still debating whether to use derivatives, while others have only just started. Steve Jesse, director of agricultural commodity sales at Barclays Capital in London, says the main shift in attitudes has happened over the past six to nine months.

Hedging has become a strategic choice, too, rather than an opportunistic punt when, for example, prices fall.

Even so, bankers say that the length of the hedges in the food industry is shorter than in other industries, such as energy or metals, where companies lock in prices up to 10 years ahead. As supplies of agricultural commodities vary each year depending on the weather, plant diseases and planting, companies are reluctant to lock in prices beyond 12-18 months.

Gary Stibel, chief executive of the New England Consulting Group, warns, though, that hedging could itself lead to unexpected problems. Some multinationals, he says, bought too much protection in 2009, when prices were falling, adding to their costs then.

Crises such as the one that has propelled wheat prices to their highest in nearly two years are rare. “Having some hedges is good. Having too much of a hedge is counterproductive. You’re dealing with black swan events,” he says.

     Six of 12 traders, analysts and brokers surveyed by Bloomberg News said raw sugar traded in New York will rise next week. Five predicted a decline, while one expects it to be little changed. Raw sugar has climbed 4 percent this week to

18.97 cents a pound yesterday on ICE Futures U.S.

     Russia’s Sugar Producers’ Union has cut its sugar-beet crop forecast by 20 percent because of drought. Floods destroyed 200,000 acres of sugar cane in Pakistan, a farm group said yesterday. Both countries already import sugar to meet domestic demand, according to U.S. Department of Agriculture estimates.

     “There is a possibility of additional import demand in the case of Pakistan and Russia,” said Sergey Gudoshnikov, an economist at the International Sugar Organization in London.

“Weather is probably the most important driver in the short term.”

     Five of 12 respondents said white sugar traded in London will advance. Four expect prices to drop, while three respondents said prices will be little changed. Refined sugar has increased 1.8 percent this week to $549.60 a metric ton on the NYSE Liffe exchange.

     Refined sugar’s premium over raw sweetener will probably narrow, according to five of 12 people surveyed. Two said the spread will widen, and four said it will be little changed.

Iowa-based Renewable Energy Group (REG) will hold a grand re-opening of its Seneca, Illinois biodiesel plant. The biodiesel maker and marketer became the operator of the 60 million-gallon-a-year biodiesel and glycerin facility, taking over from Nova Biosource Fuels.

REG will have Congresswoman Deborah Halvorson on hand to make remarks on the start-up of the plant and to “celebrate the start of biodiesel production at the 60 million gallon per year biodiesel facility, recognize industry partners, welcome 38 full-time employees and increase awareness of biodiesel’s benefits for Illinois’ environment, economy and energy independence.”

The REG Seneca facility has three side-by-side 20 mgy biodiesel process units, a technical grade glycerin refining facility, raw material and finished product storage as well as rail car and truck unloading and loading with the potential for barge transportation that had been idled for more than a year.

REG now wholly-owns five biodiesel production businesses and markets biodiesel in 49 states.

The European Union started an investigation into shipments of U.S. biodiesel to Europe as it seeks to find out if antidumping measures introduced last year are being circumvented.

The probe will look at whether biodiesel originating in the U.S. is being shipped to the EU through Canada and Singapore, thereby getting around tariffs on U.S. producers, the European Commission said yesterday in the Official Journal.

“This is good news, local producers may stand a better chance of competing,” said Krzysztof Osuch, who owns Associated British Bio Fuels Ltd., a U.K. biodiesel producer. “In the EU biodiesel isn’t subsidized to the level it is in the U.S.”

The EU imposed five-year tariffs on U.S. biodiesel last year to help EU producers counter American subsidies. The investigation comes after the European Biodiesel Board lodged a complaint in June.
Biodiesel is added to motor fuel in Europe to reduce carbon emissions. The EU approved a law that 10 percent of energy for land transport must come from renewable sources by 2020.

The EU probe will also look into whether U.S. biodiesel is being exported in a blend containing 20 percent or less of the renewable fuel, according to the Official Journal.

The so-called B19 blend of diesel, which contains 19 percent of biodiesel, is not covered by last year’s tariffs, according to the European Biodiesel Board, whose members produce 80 percent of the region’s fuel.

‘Unfair and Artificial’

The industry group “is strongly committed to ensure that the EU duties are not undermined by unfair and artificial trade practices,” Secretary General Raffaello Garofalo said in a statement today.

Rapeseed is Europe’s biggest crop used for biofuel production that is blended into diesel that is more suitable for use in the winter. The fuel clogs at a lower temperature compared with other sources such as palm oil. .

Biodiesel made from rapeseed has an average so-called cold filter plugging point of minus 13 degrees Celsius (8.6 Fahrenheit), according to brokerage Starsupply Renewables SA. This compares to minus 3 Celsius for fuel made from soybean oil and 12 degrees Celsius for palm oil based biodiesel. The CFPP is the lowest temperature at which a vehicle will operate using a specified fuel.

Rapeseed for November delivery has jumped 27 percent on NYSE Liffe in Paris this year to 374 euros a metric ton on concern over falling supply. German rapeseed production is expected to decline 11 percent this year, according to an industry group.

BLOOMINGTON, Ind. — The U.S. government supports domestic ethanol development to reduce America’s oil dependence. Additionally, ethanol weakens OPEC’s control over world oil prices, reduces tailpipe pollutants and supplies extra octane that improves engine operation.

America’s pro-ethanol policies include tax credits for businesses, support for research and development, tariffs on imported ethanol, rules requiring refiners to blend small amounts of ethanol with gasoline, and rules requiring automakers to produce cars that can run on gasoline or a mix of 85 percent ethanol and 15 percent gasoline (E85).
Due to large swings in oil prices, which are partly manipulated by OPEC, a domestic ethanol industry wouldn’t survive without government support. Countries with strong ethanol industries such as Brazil have pro-ethanol policies.

Now is a particularly dangerous time to eliminate federal support. OPEC’s power will rise as the global economy recovers and as a strong appetite for oil in China and India continues to be satisfied.
If pro-ethanol policies were terminated immediately, U.S. taxpayers might benefit in the near term, but, in the long run, the real beneficiaries would be the oil barons in the Middle East, Venezuela and Russia.

Critics argue that more oil is used growing corn and making ethanol than is saved by replacing gasoline. In fact, the energy sources for producing ethanol are primarily natural gas and coal. Each 10 gallons of ethanol displaces at least five gallons of gasoline – accounting for the fact that ethanol has somewhat less energy content than gasoline.
It’s valid to argue that hybrid and diesel engines reduce gasoline use at a lower cost than ethanol. But even more oil can be saved with hybrid engines running on E85 and trucks using biodiesel mixtures.

Critics claim that the sharp rise in corn prices was due to the increased use of corn-based ethanol. In reality, the big culprit was the growing demand for food worldwide.

While U.S. ethanol policies contributed to the rise temporarily, the effect could have been reduced if blending requirements had been phased in more gradually, allowing more time for corn supplies to respond.
Some fear that land clearing creates more carbon dioxide which exacerbates global warming. Modernized ethanol refineries supported by federal subsidies are now minimizing the land-use effect through more efficient farming and refining practices.

As new federal subsidies facilitate use of cellulosic ethanol made by producing ethanol from wastes such as the stalk of the corn and the cob, there will be less demand for land.

In addition, ethanol is particularly effective in reducing tailpipe emissions of carbon monoxide, nitrogen dioxide, and particulate matter. Ethanol pollutants such as formaldehyde are not harmful at the small concentrations projected for America’s cities.

Although it’s unwise to pull the plug on ethanol, America’s policies should be modernized. Refueling stations need stronger incentives to provide at least one E85 pump. Tax credits should be aimed at consumers who use E85 instead of businesses that already have a mandated market for their products. Tariffs on imported ethanol should be gradually reduced so the domestic industry has time to prepare for intensified competition.

Research and development support should be expanded to encourage innovation in the production of ethanol from agricultural waste, while rules requiring automakers to offer cars that can run on E85 should be tightened.
In order to minimize the environmental footprint of greater land use, subsidies for producers and farmers should encourage modern practices that maximize corn yield per acre and ethanol yield per bushel.

Commercial-scale demonstrations on how to make ethanol from the cob and stalk would ease concerns about food prices and land use.

Although America’s pro-ethanol policies are far from ideal, they should not be eliminated. Instead, they should be modernized to keep the competitive pressure on OPEC while improving urban air quality and reducing the environmental footprint of ethanol production.

Pacific Ethanol Inc. said Wednesday that its two California production plants, including a currently idle facility in Stockton, have been accepted by the state Energy Commission for a new price support program.

The California Ethanol Producer Incentive Program would provide payments to ethanol producers when market conditions are poor but would require the payments be reimbursed when economics improve.

Neil Koehler, Pacific Ethanol’s president and chief executive, welcomed the program. “We believe these production payments support the resumption of ethanol production in California,” he said in a news release.

The incentive program itself is stalled, however, by the ongoing state budget impasse.

“We as a state don’t have a budget, so the program can’t start until that is done,” said Rob Schlichting, a spokesman for the California Energy Commission.

Once available, the program would provide a $6 million fund ethanol producers can tap if the difference between the price of ethanol and the price of corn used as a feedstock falls too low.

Pacific Ethanol’s operating subsidiaries, including its California production plants in Stockton and Madera, emerged from Bankruptcy Court reorganization in late June. Both remain offline, waiting for market conditions to improve.

The two companies are in talks regarding the purchase of a “minority stake by Wilmar,” Kencana Agri said today in a statement to the Singapore stock exchange. Wilmar issued a similar statement.

The Kencana investment would add to Wilmar’s recent acquisition streak, as Chief Executive Officer Kuok Khoon Hong buys sugar and oleo-chemical businesses in Australia and Malaysia. Wilmar is seeking a 20 percent stake in Kencana, Reuters reported yesterday, citing unidentified people.

“An announcement on this matter will be issued as soon as an agreement is reached,” Kencana said.

Shares of Kencana, owner of palm plantations in Indonesia, jumped 6 percent to 35 Singapore cents on Aug. 6, the last day it traded before a suspension. The company has a market value of S$349 million ($255 million).

     The Environment and Energy Management Agency’s program is the first of several sustainable development-related plans set out in the country’s future investments bill passed in March. It was detailed on Aug. 8 in France’s official bulletin of new regulations, a spokeswoman for the agency said by e-mail.

     The renewables program, known as demonstrateurs energies renouvelables et chimie verte, will allocate 450 million euros in subsidies and 900 million euros in loans. Funds will go to industries including solar, marine, geothermal, carbon capture and “green chemistry” for biofuels, the spokeswoman said.

     “France is following the footsteps of other European governments in providing a combination of loans and grants for high cost, emerging renewable energy technologies,” said Charlie Hodges, an industry analyst at Bloomberg New Energy Finance in London. “While the French government has historically backed mature, low cost, emission-free technologies like nuclear and onshore wind, these funds will directly assist companies at the other end of the energy cost spectrum.”

     The support will focus on three key stages between the research phase of the project and commercial development. They include research demonstration projects, pre-commercialization experiments and technological testing platforms, according to the bulletin. A total of 190 million euros are earmarked for 2010 and 290 million for each of the next four years.

The agency will publish “road maps” with more details about its requirements before it invites expressions of interest from companies and research institutions. It’s aiming to attract 2 billion euros from private companies to complement the government funds.

     The environment agency plans to open two other programs under the bill, including a 1 billion-euro plan to develop sustainable transportation and a 250 million-euro measure to develop smart-grid technologies, the spokeswoman said.

     The measures follow the agency’s more modest four-year research demonstration fund program created in 2008 out of France’s first major environmental law, or Grenelle 1, she said.

That 325 million-euro fund focuses on transport, energy and housing, also aiming to help the country reach its future carbon reduction and renewable goals.

     The programs also follow the final approval in late June of France’s second major environmental law, or Grenelle 2, which enacted policy in a sectors ranging from transport to agriculture, waste and energy.

     The number of ships waiting to load at the country’s seven main ports fell to 133 vessels today from a record 135 yesterday, Nicolle Alves de Castro, a commercial assistant for Santos Associados Consultoria Ltda, a research firm that monitors ports, said in a telephone interview from Santos, Brazil. The logjam compares with 40 vessels a year ago.

     Rains have disrupted shipments since mid-July because humidity ruins the sweetener. The vessels waiting to load after the rains are expected to transport 3.99 million metric tons of sugar, according to Santos Associados and shipping agency Unimar Agenciamentos Maritimos Ltda.

     The Port of Paranagua, the country’s second largest, is using berths normally reserved for fertilizers to load sugar, Mario Lobo Filho, Parana state’s ports superintendent, said in a phone interview from the port.

     The Port also ordered new conveyor belts to speed up the loading of sugar bags into ships as it seeks to reduce the lineup of vessels, he said.

     Paranagua had 37 vessels waiting to load sugar, from 5 a year ago, Santos Associados said.

     Brazil accounts for 54 percent of the world’s sugar exports, according to the U.S. Department of Agriculture.

     Raw for October delivery fell 0.3 cent, or 1.6 percent, to close at 18.26 cents a pound at 2 p.m. on ICE Futures U.S. in New York.

Best BioDiesel Cashton LLC, a subsidiary of Madison, Wis.-based Best Energies Inc., shut down operations at its 8 MMgy facility in Cashton, Wis., citing the lapse of the federal blender tax credit as the determining factor behind the decision.

Best BioDiesel Cashton filed for Chapter 128 receivership in late April in Monroe County Circuit Court to Milwaukee-based law firm Beck, Chaet, Bamberger & Polsky S.C. The plant had eight employees when it closed. Production began in December 2007, but the facility hadn’t produced biodiesel since the end of March. The plant, which had 20 full-time employees at the time, subsequently laid off additional workers when it approached receivership, according to Laxson Boyd, principal for Wadsworth Whitestar Consultants, a turnaround consulting firm assigned to oversee operations and market the plant for sale that was retained by BCBP.

“Essentially, we had been operating since the receivership that was filed back in late April under the assumption and certainly with the hope that the biodiesel credit would come back and, had it come back, it was the intent of the receiver and of the bank that is providing financing to the receivership to restart the facility so that we would be selling an operating biodiesel plant as opposed to an idled plant,” Boyd told Biodiesel Magazine.

The plant initially used soy oil as feedstock but in 2009, Best Energies installed esterfication units for transitioning to using crude corn oil collected from various ethanol producers in the region. In 2008, Best Energies formed a partnership with Golden Grain Energy LLC, an 80 MMgy ethanol plant in Mason City, Iowa, to create a new entity called Corn Oil Bio-Solutions LLC that intended to extract corn oil from ethanol plants for biodiesel production. The extraction unit utilized proprietary technology owned by Best Energies.

Boyd said there are prospective suitors interested in taking over operations of the Cashton biodiesel facility, but a decision from a potential buyer to purchase the plant would ultimately rest on if/when the biodiesel tax credit will be reenacted.

“Frankly, I think that a lot of them are also sitting on the sidelines waiting to see what’s going to happen with the tax credit,” Boy said. “It’s very difficult for us to move prospective buyers to being actual buyers when they’re in the same position we were in, and that’s waiting to see what Congress is going to do with the tax credit. We’re hopeful that we’ll be able to bring the plant to sale relatively quickly in the absence of the tax credit.

Ukraine, one of the world’s top grain exporters, said on Wednesday that it was considering a cap on wheat exports, a move that would put added pressure on already surging global grain prices.

The announcement comes nearly a week after Russia, the world’s third largest exporter, introduced a ban on grain exports until the end of the year after the worst drought in a century devastated the country’s crops.
Wheat prices have paused after surging last week to a two-year high. In Paris, European milling wheat traded at €205 a tonne, after touching €236 a tonne last week. European wheat prices are still up 50 per cent since mid-June.
The announcement by Kiev comes amid days of heated discussion between Ukrainian officials and grain traders. The later have accused Ukraine’s government of already imposing an informal blockage on grain exports through customs inspections and other administrative measures.

“If quotas will be imposed, then foremost on wheat, in order to ensure the country’s food security,” Mykola Prysyazhnyuk, Ukraine’s agriculture minister, said on Wednesday. “They will be soft, targeted, and agreed upon with grain traders.”

The focus on milling wheat would relieve the livestock industry which relies heavily on Ukraine’s feeding barley. Kiev last year exported 6m tonnes of feeding barley, about 35 per cent of the global trade of the grain. The cost of feeding barley in Europe has doubled over the past six weeks as traders fear the effect of lower production in Ukraine and the export ban in Russia, also a big exporter.

Ukraine’s harvest has been less badly hit by drought than neighbouring Russia and Kazakhstan, also a big regional producer. The country expects to harvest just over 40m tonnes of grain this year, down from about 48m tonnes last season.

But the heat has damaged the quality of the crop, reducing supplies of milling wheat, used to bake bread. Ukraine’s governing coalition is struggling to build up a large enough reserve stock pile to keep bread prices stable ahead of an October 31 election to regional legislatures. Doing so is vital in preventing a backlash from cash-strapped citizens who were hit hard by last year’s recession.

Traders said Ukraine had about 1m tones of milling wheat still in storage from last season’s harvest. An additional 5m tonnes is needed to cover domestic demand. But traders said that if temperatures remained at record highs in coming weeks, the quality of the crop would continue to deteriorate, putting at risk the government plans to build a reserve of milling wheat to control bread prices.

The relationship between the government and the grain traders has deteriorated as a result of the crop losses. On Wednesday, Andriy Kluyev, Ukraine’s first deputy prime minister, openly accused traders of “manipulating prices” by spreading fears that Ukraine could ban exports internationally.

(Reuters) – U.S. wheat futures rose on Wednesday, breaking a three-session losing streak, ahead of a key U.S. Department of Agriculture (USDA) report expected to estimate lower global output after Black Sea crop damage.
“People have taken positions ahead of the USDA report but some early day gains were given up because of profit-taking,” one trader said.

U.S. wheat rose 2 percent on Wednesday in the Asian session, but gave up some of the early gains as trading remained nervous, with traders citing some adjustments ahead of Thursday’s world crop report from the U.S. Department of Agriculture.

“The funds are booking some profits before the USDA report,” one French dealer said.
On Wednesday, CBOT wheat for September delivery was up 0.2 percent to $696-1/4 per bushel by 1117 GMT (7:17 a.m. EDT) after sliding 2.5 percent in the previous session.

Chicago Board of Trade wheat futures are up 66 percent from the June low of $4.25- a bushel despite losses since the market fell from a two-year peak on Friday.

Paris wheat futures were lower on Wednesday as the French market continued to track U.S. prices as the two origins vie for knock-on demand created by Russia’s export ban.

The French market was awaiting results of tenders issued by Egypt and Algeria to see whether French wheat would secure more business after a 240,000-tonne sale to Egypt last weekend.
Paris benchmark November milling wheat on Euronext fell 0.5 euros to 206.50 euros a tonne by 1117 GMT, with the market testing support at 205 euros ahead of a major threshold at 200 euros.
Reaction to news from Ukraine, where the government is due to decide on Wednesday whether to introduce export quotas, was muted with dwindling exports from both Ukraine and Kakazhstan already anticipated.
“It’s gone from being informal news to official news,” the dealer said of potential export curbs in Ukraine.

NERVOUS MARKETS
The drought in eastern Europe — which has boosted U.S. wheat futures since the end of June — shows no sign of respite, with a senior Russian weather official predicting on Tuesday that the heat in most parts of European Russia is likely to continue over the next 10 days.

“The global grain markets remain very nervous and any further hot and dry conditions in Russia continue to unsettle the market,” said Garry Booth, a trader with MF Global Australia. “Export numbers coming out of the U.S. have been a good surprise.”

Private exporters reported the sale of 120,000 tonnes of U.S. wheat, mainly to China and Egypt, the U.S. Department of Agriculture said on Tuesday.
China’s National Bureau of Statistics warned lower global wheat output could translate into inflationary pressure for the world’s top producer and consumer of the grain.
Analysts were expecting the USDA’s forecasts for U.S. wheat, corn and soybean production to rise when it releases its monthly estimate at 1230 GMT on Thursday.
But U.S. ending stocks were seen falling as global crop woes will force end users to look to the United States to satisfy their supply needs.

U.S. corn and soybean prices were little changed.
CBOT September corn was down 0.1 percent at $3.93 a bushel and August soybeans were up a marginal 0.2 percent to $10.39-1/4 a bushel.
Soybeans and corn futures, which have been tracking gains in the wheat market, remain under pressure from expectations of large crops in the United States.

Services firm Sembcorp UK and waste management firm SITA UK are planning to build a £200 million waste-to-energy facility at the Sembcorp-owned Wilton International site near Middlesbrough.

The plant, which is set to be constructed in 2012 and become operational in 2015, would be used to treat 400,000 tonnes of non-hazardous waste sourced from businesses and local authorities in the Teesside area.

The process is intended to generate 35MW of electricity, which would be used to power around 55,000 households in the Teesside region. In addition to electricity, the facility will also produce steam and heat to be used on the Wilton International site.

Development of the plant – known as Wilton 11 – will add to both firm’s work in the region. SITA UK already operates a large-scale waste-to-energy facility at Billingham under its long-term waste treatment contract with Northumberland council.

And, Sembcorp currently operates a 300,000 tonnes-a-year capacity biomass facility on the Wilton International site, which is fed with 80,000 tonnes of material each year from a Middlesbrough facility run by UK Wood Recycling.

John Bone, vice president for business development at Sembcorp UK, said: “This move builds on our earlier move into renewable energy via our successful biomass power plant. The skills of the Teesside workforce plus the infrastructure already in place mean we are ideally placed to extend our expertise in this growing sector.”

And, Andy Stokes, head of development at SITA UK, added: “We have to shift the way we think about waste, from being something we throw away to a resource that has a second life, which can be used to generate energy again.”

The plant will be jointly owned by both companies, which, according to the firms, have complementary strengths in renewable electricity and waste management.

A spokeswoman said: “We will consult with the local council and other stakeholders including the local community to address any concerns and ensure they are kept fully updated with our proposal, although we understand that the plant is covered by Wilton’s existing planning consent.”

Discussions are currently on-going about the potential to deliver waste feedstock to the plant via existing rail links at the Wilton International site. A quantity of material gathered from authorities nearer to Teesside could also come by road and rail.

“That this project remained on track through the deepest financial crisis in living memory is a testament to ERC’s solid economic fundamentals,” Ahmed El-Houssieny, a managing director at Cairo-based Citadel, said in an e-mailed statement today.

Egypt, the Arab world’s most populous country, said the country’s oil refining capacity may double to 66 million tons over the next decade as mostly Asian companies spend $30 billion building new facilities.

The loan for the Egyptian Refining Co. has $2.35 billion of senior debt from institutions including Japan Bank for International Cooperation, Nippon Export and Investment Insurance, the Export Import Bank of Korea, the European Investment Bank and the African Development Bank, the Cairo- based firm said.

The funding also includes $225 million in subordinated debt from Mitsui & Co., which is part of the group of contractors building the refinery, and the African Development Bank, Citadel Capital said. Mitsui is providing $200 million, and the African Development Bank the balance.

“It’s one of their most economically sound investments, but it will take time to realize a profit on this project,” said Hatem Alaa, an equity analyst at HC Securities & Investment Co. in Cairo. “It’s positive for their fee business, but the real value generation is when they exit the investment and that will not be before 2014 when construction is complete.”

The refinery, to be built in the greater Cairo area, will produce 4 million tons of refined products when completed, including 2.3 million tons of EURO V diesel, Citadel Capital said. The Egyptian Refining Co. will sell its production to the state-owned Egyptian General Petroleum Corp. under a 25-year agreement at international prices, it said.

Citadel Capital shares increased 4.4 percent to 7.12 Egyptian pounds as of the 2:30 p.m. close in Cairo, valuing the company at 4.71 billion pounds ($830 million).

A cold front is moving away from the Port of Santos and the Port of Paranagua, Brazil’s two largest, Marcio Custodio, a meteorologist at Sao Paulo-based Somar Meteorologia said.

The number of vessels waiting to load sugar at Brazil’s six main ports rose to a record of 134 today from 121 a week ago, according to Santos Associados Consultoria Ltda. and shipping agency Unimar Agenciamentos Maritimos Ltda. The ships, which have been waiting to load sugar amid wet weather, are expected to transport 4.12 million metric tons of the sweetener.

“The lineup should ease as vessels will be able to load sugar 24 hours a day in the next three days,” Custodio said today in a telephone interview from Sao Paulo.

Ships were forced to stop sugar loading amid rains because humidity ruins the product. The Port of Santos received 116 millimeters (4.6 inches) of rain this month through today, compared with an average 70 millimeters for the first 10 days of August over the past 30 years, Custodio said.

Sugar loading in Santos and Paranagua has been halted for most of the time since last week because of rainfall, officials at the press offices of both ports, who can’t be named because of internal policies, said.

Brazil, the world’s largest sugar producer, ships 54 percent of the world’s sugar exports, according to the U.S. Department of Agriculture.

Raw sugar for October delivery gained 0.83 cent, or 4.7 percent, to close at 18.56 cents a pound at 2 p.m. on ICE Futures U.S. in New York. The price has tumbled 31 percent this year.

In Mozambique, state oil company, Petromoc, Portuguese oil company Galp, and Ecomoz have partnered in a $19 million investment to develop jatropha-based biodiesel on up to 124,000 acres (50,000 hectares) of land in Manica province. The project will initially cultivate 25,000 acres (10,000) hectares.

The news comes as unrest continues over the wind-down of fuel subsidies, which were halted in 2009. Fuel prices had led to riots in 2008 when oil prices spiked.

What follows are opening calls for U.S. grain and oilseed markets.

– Wheat futures may open 8 cents to 12 cents a bushel lower on the Chicago Board of Trade, the Kansas City Board of Trade and the Minneapolis Grain Exchange on speculation that demand may ebb after prices surged to a 23-month high on Aug. 6, said Chad Henderson, a market analyst at Prime Agricultural Consultants Inc. in Brookfield, Wisconsin.

– Soybean futures may open 8 cents to 12 cents a bushel lower in Chicago, ending the longest rally since September 2007, on speculation that cooler temperatures and rain will revive U.S. crops, Henderson said. Soybean-meal futures may open $3 to $4 lower per 2,000 pounds, and soybean oil is expected to open down 0.2 cent to 0.3 cent a pound, he said.

– Corn futures are called to open 4 cents to 6 cents a bushel lower after the government said U.S. crop conditions held steady last week as plant maturity accelerated, signaling higher yields, Henderson said. Harvesting begins next month in the Midwest.

In Washington, the US Senate once again took up the biodiesel tax extenders package when Senator John Kerry of Massachusetts introduced a new energy bill that would extend the tax credit retroactively for 2010 and through 2012. The limited energy bill package would also incentivize natural gas-based heavy trucks, energy efficient appliances, energy-efficient homes and business, extend R&D credits through 2012, and also add $3.5 billion for renewable energy bonds.

The scaled-back package follows the failure of a more extensive energy bill, and the climate bill that failed to pass this year. The bill does not include a Rnewable Electricity Standard. The legislation may come to the floor in September, or may be attached to an oil spill response bill that Senate Majority Leader Harry Reid has pledged to bring to a floor vote in September.

In Minnesota, Gevo announced it has agreed to acquire the 21 Mgy Agri-Energy ethanol plant in Luverne, and will commence mechanical retrofitting of the plant to produce isobutanol. The company said that during most of the retrofit process, the facility will continue to produce ethanol, and that the conversion will be complete by Q1 2012.
Gevo has developed a proprietary process designed to fit into current ethanol production facilities. The process also enables the production of isobutanol from numerous renewable feedstocks including corn, wheat, sorghum, barley, sugar cane and cellulosic feedstocks when biomass conversion becomes commercially available.

Gevo’s integrated fermentation technology (platform consists of two components: a yeast biocatalyst and a separations technology unit that bolts into existing ethanol plants. Isobutanol can be used directly as a solvent and converted to isobutylene, the raw material for plastics and fibers. Gevo believes its isobutanol will provide a route to the renewable production of rubber, polypropylene, polystyrene, and PET. Isobutanol can also be used directly as a gasoline blendstock.

Based on the Digest’s previous analysis of biobutanol conversions, the plant could be expected to produce up to 16 Mgy of biobutanol in its current configuration. Biobutanol can replace up to 16 percent of gasoline, and thereby displaces almost twice as much gasoline as ethanol, in a blending scenario.

Wheat prices in Europe hit their highest level in two years, rising almost 50% since late June as Russia due is experiencing a record drought that has destroyed millions of hectares of its land.

“That’s the straw that broke the camel’s back,” Rogers told CNBC in a phone interview Tuesday. 

“We’re going to have much, much higher prices over the next few years,” Rogers added.

Russia, currently the world’s number three wheat exporter, earlier this week slashed its grain harvest forecast to 70-75 million tonnes owing to the worst drought for decades.

Prime Minister Putin this week banned grain exports for the next four-and-a-half months due to the drought.

Last year, Russia exported 21.4 million tonnes of grain and observers had already warned that could be sharply lower this year owing to the drought. The Russian Grain Union has said that in a worst-case scenario, they could range from as low as 11 million tonnes up to 19.5 million tonnes.

Concerns about Russia — coupled with a drought that has also hit Ukraine and Kazakhstan as well as a low harvest in Canada — had already led to a spike in global wheat prices to two-year highs.

On Euronext, the November milling wheat future jumped after Russia’s announcement to 234 euros per metric tonne, up 11.96% on the day.

US wheat futures on the Chicago Board of Trade fell 5% on Friday after surging more than 20% earlier this week and nearly doubling since early July to US$8.41 a bushel.

Investors finally began to realize that prices for agricultural commodities have been too low for too long because of subsidies and other factors, which made agriculture an unattractive area for workers, Rogers explained.

“Be prepared, if you have a sugar bowl home go fill it up because it’s going to be more expensive,” he said.

“Anybody who’s got potentially good agriculture land and good weather” is likely to emerge a winner out of this situation because prices of nearly all agricultural commodities are set for steep rises, Rogers said.

“Prices aren’t high enough and most people don’t believe it,” he said. “Unless prices are high you’re not going to attract people in the business. Eventually people will go into farming again but it’s going to take a while.”

Rogers has been warning about shortages coming in the agriculture sector for a while.

The legendary investor believes that most agricultural products are depressed on a historic basis and the story is not over for a few years because no one is bringing new supply on stream.

“A catastrophe is looming,” he said in October, adding ‘the world is going to have a period when we cannot get food at any price in some parts of the world.”

“If we start having problems, weather problems, production problems, the price of rice is going to skyrocket over the next decade,” Rogers said. “When it happens I don’t know. But I know that the fundamentals are ripe,” he added.

“I’ve owned commodities since 1998,” he said.

“I still own them all. Some day, I presume, there’s going to be a wild hysteria at the end of the bull market. Hopefully, I’m smart enough to sell if and when that happens.”

“It’s all happening at a time when governments are printing more money… it’s a very dangerous situation,” Rogers told CNBC on Tuesday.

“When you print money, it’s got to go in a place where it can protect itself, and that’s real assets,” he added.

Argentine soybean and corn exports may be disrupted as workers who control the quality of grains and oilseed start a two-day strike.

The protest will interrupt operations at all bean and cereals gathering plants in the country, the union, known as Urgara, said in a statement on its website late yesterday.

The strike was announced after salary talks failed, the union said. The union demands a 40 percent increase while employers are offering 25 percent, the statement said.

Argentina is the world’s third-largest exporter and producer of soybeans and the second-largest exporter of corn, according to Bloomberg data. The largest exporters in Argentina are Cargill Inc. and Bunge Ltd.

A new clean energy bill introduced by Sen. John Kerry (D-Mass.) would extend the excise tax credit for biodiesel and renewable diesel retroactively for 2010 and through 2012. The biodiesel credit expired Dec. 31, 2009, and industry stakeholders have not been able to see legislation extending it.

The Clean Energy Technology Leadership Act of 2010 is aimed at providing tax incentives for clean energy manufacturing, renewable energy and conservation.

The legislation would also modify the cellulosic biofuel tax credit to include algae-based fuels.

“While we continue the fight to bring comprehensive energy legislation to the floor of the United States Senate, it’s essential that we take action to start moving in the right direction,” said Kerry. “Providing incentives for clean energy production will drive our economy forward and take us one step closer to reducing our carbon emissions and ending our dependence on foreign oil.”

In addition to the biodiesel tax credit provision, the bill would also provide incentives for natural gas heavy vehicles and provide additional funding for the advanced energy manufacturing credit and uncap the credit for solar energy property, fuel cell power plans, and advanced energy storage systems, including batteries for advanced vehicles, among other goals.

Last month, Sen. Blanche Lincoln (D-Ark.) submitted a proposal to amend H.R. 5297, or the Small Business Jobs and Credit Act of 2010, by retroactively extending the biodiesel tax credit.

The ethanol market this week will focus on:
• the corn market ahead of this Thursday’s key USDA Crop Production and WASDE reports,
• gasoline prices, which closed lower last week on the weaker-than-expected payroll data, and
• whether ethanol demand can continue to absorb record production levels once the summer driving season winds down.

Ethanol producer profit margins are being saved by strong ethanol-corn correlation — Ethanol prices have soared by 32.7 cents or 23% in the past 6 weeks, mainly because of the 27% rally in corn prices. Ethanol over the past year has shown a fairly high correlation of 0.63 with corn prices, thus allowing ethanol prices to rally in sympathy with corn and maintain producer profit margins. This contrasts sharply with corn rally in 2007/08 when ethanol prices failed to rally with corn and led to big losses and bankruptcies in the ethanol industry. At the peak of the corn rally in June 2008, ethanol prices showed a correlation of only 0.28 with corn prices.
What’s different now is that ethanol is using a higher 35% of the corn crop and market participants are aware that if ethanol prices don’t follow corn prices higher, there will be another round of bankruptcies and a collapse in ethanol production, thus eliminating a major source of corn demand and leading to lower corn prices.
Ethanol Market Action – September CBOT Ethanol futures prices last week rallied sharply to post a new 6-1/2 month high and close the week up 5.7 cents (+3.4%) at $1.723 per gallon. Bullish factors included the 3.1% rally in corn prices and the 1.4% sell-off in the dollar index, which boosted commodity prices in general.
Ethanol production hits record high — Ethanol prices last Wednesday were able to shake off the EIA’s weekly report showing that ethanol production in the week ended July 30 soared by 7.0% w/w to a new record high of 873,000 barrels per day. Yet inventories rose only 0.1% on the week to 19.541 mln barrels.

Ethanol/Gasoline – September gasoline futures prices last Wednesday posted a new 3-month high but then sold off on Friday on the weaker-than-expected U.S. payroll report and closed 0.97 cents lower (-0.5%) at $2.1127 per gallon. With last week’s relative strength in ethanol prices, the spread of September ethanol prices minus gasoline prices last week rose by 6.7 cents to -$39.0 cents, which was the narrowest spread in 2-1/2 months, although ethanol is still 84 cents cheaper than gasoline including the 45-cent ethanol tax subsidy.

Ethanol/Corn – Sep corn futures prices last week rallied sharply to post a new 7-month high and close the week up 12.25 cents (+3.1%) at $4.05 per bushel. Corn continued to see strong upside support from the drought and hot weather in Europe and Russia, which has damaged all crops. Wheat prices showed a particularly sharp rally last week after Russia announced an export ban on grains as it tried to conserve its reserves and keep domestic prices from rallying too far. Grain prices settled back on Friday after Russian officials softened the export ban. Ethanol prices kept up with the corn rally last week and the Sep ethanol-corn crush margin rose by 1.3 cents to 27.7 cents/gallon, which was mildly above the recent 13-month low of 20.1 cents per gallon.
Including DDG, the Sep corn for ethanol crush margin rose by 1.3 cents to 61.5 cents/gallon.

Ethanol Calendar
• Aug 11: EIA Weekly Petroleum Status Report
• Aug 12: USDA WASDE Crop Supply-Demand
• Aug 30: EIA June Monthly Ethanol Report
• September: EPA’s E15 decision due

The turf cutting ceremony took place on 4 August and brought together all the major partners, including plant designer BiogenGreenfinch, energy company E.ON and local contractor Adonis Construction.

The Shropshire campus at Harper Adams is one of just three England-based higher education institutions to have won a share of £10 million awarded by the Revolving Green Fund for ‘transformational’ projects.

When up and running in March next year the AD plant will generate heat and power from farm and food waste. As well as offsetting campus carbon emissions more than three times over, the unit will also create jobs.

Harper Adams’ principle David Llewellyn said: ‘Biogas will fuel a until producing both heat ad power meaning we will be sheltered from fluctuating energy prices for at least the next 10 years and will make a significant contribution to reducing greenhouse gas emissions for our campus.’

October-delivery futures rose as much as 65 ringgit, or 2.4 percent, to 2,726 ringgit ($867) a metric ton on the Malaysia Derivatives Exchange. The contract was at 2,715 ringgit at 9:50 a.m. in Mumbai. On the Dalian Commodity Exchange, May-delivery soybean oil rose as much as 174 yuan, or 2.1 percent, to 8,286 yuan a ton, the highest since September 2008. It finished the morning session at 8,246 yuan a ton.

Wheat prices rallied to a 23-month high on Aug. 6 as Russia halted grain exports as dry weather cut output and flooding in Canada ruined crops. Palm oil harvesting in Malaysia, the world’s second-biggest producer, may be disrupted in November and December as a La Nina weather event causes flooding in major growing areas, the country’s forecaster said last week.

“Bad global weather phenomena, such as more floods and what’s happening in Russia, are stoking concerns on global grain supply,” Cao Huimin, analyst at China Cereals and Oils Business Net, said by phone from Beijing. “Since agricultural products compete for land, it’s helping oilseeds.”

Palm oil must rise “rapidly” to cool export demand as output declines in Malaysia and weather damages canola crops in Europe and Canada, Dorab Mistry, a director at Godrej International Ltd. said last week. Godrej is one of India’s biggest cooking oil importers.

“On the global front weather has been playing hide and seek, at one part we have excess of rains whereas in other areas soil moisture has been totally soaked up,” AnandRathi Commodities Ltd. said today in a note to clients. The company forecast palm oil to rise to 2,800 ringgit a ton, then to 3,000 ringgit.

“We feel the current buoyancy in prices would continue for some time on the back of demand support and weather play,” it said.

The company will bring a new 50,000-tonne biodiesel production facility in Tongchuan City online by the end of Q3 and completing an acquisition for 50,000 tonnes of biodiesel production capacity, which is anticipated to close before September end.

The company anticipates spending approximately $31.5 million (€23.75 million) in capital expenditures to accomplish this goal. China Integrated Energy has secured adequate raw materials to accommodate this new capacity, including new feedstocks, and will continue to work towards securing more long-term sources of raw materials.

The company has experienced sales volume of biodiesel for Q2 2010 totalling 22,500 tonnes, an increase of 29.3% compared to the same period of 2009 and a sequential increase of 22.5% from Q1 2010.

The average selling price of biodiesel increased approximately 21.3% from the same period in 2009, which was in line with the price of diesel.

‘The company’s biodiesel sales increased 56.8% for the second quarter of 2010, compared to the second quarter of 2009, driven by growth in both volume and pricing,’ states Gao Xincheng, CEO of China Integrated Energy.

During the second quarter of 2010 production and production and sale of biodiesel was approximately 30.1%, and operation of retail gas stations was approximately 12.9%, versus 11.5%, 29.4%, and 10.4%, respectively, compared to the same period of 2009.

In Washington, the Renewable Fuels Association is reporting that U.S. ethanol production rose in May, to an all-time high of 846,000 barrels per day, up from 832,000 b/d in April, and up from demand of 713,000 barrels per day at this time last year.

Meanwhile, the RFA is reporting that the US exported 17.1 million gallons of ethanol, down 58 percent from April, although the RFA cautioned that export figures include ethanol exported for non-fuel purposes, such as technical-grade ethanol. Overall, the RFA is reporting ethanol stocks of 828 million gallons, or a 23.3 day reserve.

Refining, packaging, biodiesel and other results increased $ 58 million (€43.6 million) to $79 million for the quarter.

Recently expanded biodiesel production capacity at Rondonopolis, Brazil, allowed ADM to capture good margins and volumes amidst strong demand.

Profit in ADM’s oilseeds processing segment increased $132 million for the quarter and $120 million for the 12 months.

Cocoa futures fell to a two-month low in London, and declined in New York, before harvests in West Africa that may add to supplies.

Production in the Ivory Coast and Ghana, the two biggest growers, usually begins in October. World production of the beans has fallen behind demand for three of the past four years, according to the International Cocoa Organization.

“Growing conditions in West Africa were quite good and a good harvest” can be expected, Eugen Weinberg, head of commodity research at Commerzbank in Frankfurt, said in an e- mail. Crops will be “probably even earlier than usual,” he said.

Cocoa for September delivery dropped 62 pounds, or 2.7 percent, to 2,230 pounds ($3,540) a metric ton at 12:30 p.m. on NYSE Liffe in London and earlier fell to 2,222 pounds, the lowest price for that contract since May 20.

Prices for December delivery on ICE Futures U.S. in New York dropped 2.8 percent to $3,051 a ton.

The premium for the September futures in London compared to December narrowed to 84 pounds, the lowest since June 17, suggesting a supply shortage may be easing.

White, or refined, sugar for October delivery fell 0.2 percent to $544 a ton. Raw sugar for October delivery climbed 0.8 percent to 18.44 cents a pound on ICE Futures U.S. in New York.

Sugar in Russia

Drought and record heat in central Russia and along the Volga River forced the government to declare emergencies in 28 crop-producing regions. Sugar beet is among crops being damaged, the national weather center said this week. Russia, the world’s third-biggest grower of wheat, has banned grain exports from Aug. 15 to Dec. 31 as the weather cuts yields.

“The situation in Russia is worrying,” said Jonathan Kingsman, managing director of Kingsman SA, a sugar and ethanol research company in Lausanne, Switzerland.
Arabica-coffee futures for September delivery were little changed at $1.698 a pound. Prices have climbed 25 percent this year. Robusta-coffee futures for September delivery fell 0.3 percent, to $1,734 a ton.

October-delivery futures advanced as much as 1.1 percent to 2,648 ringgit ($841) a metric ton, the highest level in intra- day trading since March 12, and closed the morning session at

2,643 ringgit. Prices have gained 5 percent this week for the fourth straight weekly advance.

“This year belongs to grains and oilseeds and oils will be no exemption,” Harish Galipelli, vice president at JRG Wealth Management Ltd., which advises traders, said by telephone from Hyderabad. “Weather disruption is going to set the market on fire for some time to come.”

Corn futures surged to 13-month high and soybeans extended a rally to the highest price since January after Russia halted grain exports yesterday. Corn jumped as much as 5.8 percent, soybeans gained as much as 2.4 percent, and wheat futures soared to a 23-month high on the Chicago Board of Trade yesterday.

Palm oil has rebounded 16 percent from a seven-month low on July 7 on speculation that demand may rise in Asian nations and futures will track advances in crude oil, soybeans and equities.

China, India, Pakistan and Indonesia mark festivals in the three months ending September, typically stoking edible-oils demand.

Malaysia may have flooding in some of the main growing areas in November and December because of La Nina weather, the state forecaster said. La Nina may gain strength by the end of the year, bringing above normal rain in northern Sarawak and the state of Sabah, the Malaysian Meteorological Department said.

Prices must jump to as high as 3,200 ringgit to cool export demand as output declines in Malaysia and weather damages canola crops in Europe and Canada, Dorab Mistry, a director at Godrej International Ltd. said yesterday.

December-delivery soybean oil gained 0.5 percent to 42.21 cents a pound at 2:20 p.m. in Singapore, narrowing the vegetable oil’s premium over palm oil to $90.52 a ton from $95.88, according to Bloomberg data.

CME Group Inc.’s October-delivery palm oil contract, pegged to the Malaysian benchmark price, jumped as much as 0.2 percent to $835.5 a ton, the highest price since the exchange began trading the product in May. On the Dalian Commodity Exchange, January-delivery palm oil gained as much as 2.2 percent to 7,800 yuan ($1,035) and soybean oil for May delivery added as much as 1.7 percent to 8,020 yuan.

The new 42,000 square foot greenhouse will feature the largest collection of jatropha genetic material and a laboratory where the company’s team of biologists can work towards developing jatropha as a low-cost, sustainable source of oil.

The company already owns an ever-increasing collection of jatropha genetic resources, which includes over 6,000 unique genotypes, plus a wide array of jatropha genetic traits.

‘Our San Deigo facilities will serve as a hub for SG Biofuels’ network of global crop improvement centres, bringing together the results of our sophisticated breeding and biotechnology efforts into central, state-of-the-art development platform,’ said the president and CEO of SG Biofuels, Kirk Haney. ‘Our research centre significantly expands the scope of crop improvements and the speed to marketplace of elite, high yielding seeds of jatropha.’

 A variety of freakish weather conditions across the world has sent the price of staples including wheat, pork, rice, orange juice, coffee, cocoa and tea to fresh highs in recent weeks. Yesterday’s decision by the Russian government to ban the export of wheat to protect home consumers saw grain prices jump 8 per cent on the day, on what was already a two-year high. Meanwhile, the burgeoning demand for foodstuffs and raw material growth in the resurgent economies of China and India has also driven oil, copper and other industrial commodities higher.

 Taken together it suggests that Western nations will be hit by a sharp inflationary spike next year, as the price of bread, beer, petrol and many other everyday items climbs higher again. Given the sluggish prospects for growth in Western economies it threatens a return to “stagflation” – stagnant growth coupled with high inflation. The Governor of the Bank of England, Mervyn King, has warned that inflation will stay above the official target of 2 per cent for “much of next year”. At least for a time it could spike much higher as global commodity prices surge once again, exacerbating the VAT rise in January.

 In developing and emerging economies, however, the challenge is in some cases a matter of life and death. In these countries food represents a much higher proportion of household budgets than in the West, and they are less able to withstand such shocks. Freakish weather, as in Pakistan now, can also lead to immediate demands for extra food supplies.

 Fears that the population may simply not have enough to eat because of the drought in Russia, the Ukraine and Kazakhstan, one of the world’s great “bread baskets”, prompted the Russian Prime Minister, Vladimir Putin, to sign a decree yesterday prohibiting the export of wheat, barley, rye, corn and flour until the end of the year. “We must prevent domestic prices from rising, preserve cattle herds and build up reserves,” he said. Mr Putin added that ending shipments would be “appropriate” to restrain domestic food prices, which rose 19 per cent last week alone.

 Conversely, flood conditions in Canada, another major grower, have also reduced supply. World wheat prices are up 92 per cent since early June. Worse could follow: the Russian weather has also threatened the next sowing season, and has harmed other crops such as sugar beet, potatoes and corn.

 However, the United Nations Food and Agriculture Organisation (FAO) has tried to calm fears of a repeat of the food riots seen from Mexico to Indonesia in 2008. “Fears of a new global food crisis are not justified at this point,” it said. “This rapid increase in prices is prompting concerns about a repeat of the crisis of 2007/08. But after two consecutive years of record crops, world inventories have been replenished sufficiently to cover the current anticipated production shortfall.

 ”On the other hand, should the drought in the Russian Federation continue, it could pose problems for winter plantings in that country with potentially serious implications for world wheat supplies in 2011/12.”

 Wheat is just the latest crop to be affected by unusual weather. Coffee has been hit by excessive rain in Brazil and Colombia, just as rice production was reduced in India last year because of a late monsoon in India; pork and other meat prices have been driven higher by rising grain feedstock prices; and the Floridian orange juice harvest is down because of an unseasonal frost.

 Politics and speculators have also played a part; the unrest in Kenya in 2009 sparked a rise in tea prices, while the activities of some hedge funds have been blamed for wild fluctuations in coffee and cocoa. Earlier this month it emerged that hedge fund manager Anthony Ward had cornered a large slice of the cocoa market by buying 240,000 tonnes of beans – a £650m investment sufficient to make 5 billion chocolate bars. Mr Ward’s hedge fund Armajaro, has refused to confirm or deny these reports. Last month the price of coffee leapt when hedge funds landed in a “short squeeze”.

High and volatile food prices seem certain to lead to more calls for “financial food speculation” to be curbed, though conclusive evidence that they do much more than amplify existing trends is scanty. The EU’s internal market commissioner, Michel Barnier, declared last year: “Speculation in basic foodstuffs is a scandal when there are a billion starving people in the world. We must ensure markets contribute to sustainable growth. I am fighting for a fairer world and I want Europe to take the lead on that.”

One of the country’s most touted, and failed, ethanol concepts may be sold. Last year, Hereford Biofuels, the first commercial scale plant in the country intended to operate using methane from cattle operations, went belly-up. Construction was halted when owner, Panda Energy, an energy firm based in Dallas, Texas, sold the plant to creditors earlier this year for a reported $25 million.

The reported suitor is Murphy Oil Corporation, an international oil and gas company based in El Dorado, Arkansas. Their plans to increase their stake in the biofuels market comes on the heels of a July 22, 2010 announcement that the company will be exiting the refinery business as early as first quarter of 2011. The move was approved by the Board of Directors and now their refineries in Meraux, Louisiana; Superior, Wisconsin; and Milford Haven, Wales along with the retail system in the United Kingdom are now up for sale.

In a company statement made earlier this month by President and CEO David Wood, “Murphy’s Upstream and U.S. Retail businesses have demonstrated marked growth and financial performance over the last several years. By exiting the refining business, we can fully focus our attention and resources on continuing that growth, developing a premier international upstream business and a top quartile U.S. retail franchise.”

Corn futures surged to 13-month high and soybeans extended a rally to the highest price since January after Russia halted grain exports for the rest of the year following the worst drought in at least five decades.

A spokesman for Prime Minister Vladimir Putin said the ban applies to shipments that don’t clear customs by Aug. 15, including signed contracts. Corn jumped as much as 5.8 percent, soybeans gained as much as 2.4 percent and wheat futures soared almost 8 percent in Chicago. The U.S. is the biggest exporter of the crops.

“This unprecedented and historical export ban will provide buoyancy to prices through at least September,” said Richard Feltes, the director of commodity research at MF Global Holdings Ltd. in Chicago. “U.S. grain exporters will benefit” as makers of food, animal feed and grain-based fuel increase purchases to fill in the Russian void, he said.
Corn futures for December delivery rose 9.5 cents, or 2.3 percent, to $4.245 a bushel at 10:59 a.m. on the Chicago Board of Trade. Earlier, the price reached $4.39, the highest level for a most-active contract since June 15, 2009.

Soybean futures for November delivery gained 11.5 cents, or 1.1 percent, to $10.3575 a bushel. Earlier, the oilseed reached $10.49, the highest level since Jan. 7.

Corn rose to a record $7.9925 on June 27, 2008, and soybeans climbed to an all-time high of $16.3675 on July 3, 2008.

Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.8 billion, government figures show.

“I think it is advisable to introduce a temporary ban on the export from Russia of grain and other agriculture products made from grain,” Putin told a government meeting.

He also pledged 10 billion roubles ($334.9 million) in subsidies and another 25 billion roubles in loans to the agricultural sector, and said that grain from the government intervention fund will be distributed to regions without auctions.

Awarded by the Waste Resources Fund (WRF), managed by FourWinds Capital Management, the capital will go towards financing Monsal’s AD company within the UK’s wastewater sector, in addition to providing infrastructure funding for biogas energy from waste products.

WRF will initially invest £4 million in the company, taking an equity stake alongside Monsal’s management team and private equity investor, Matrix Private Equity Partners.

Monsal will thereafter see a further investment of £10 million for projects developed by itself and WRF.

Plentiful soybean oil supplies, low costs and a favorable export tax regime have spurred a rapid increase in production capacity in the South American country, which began exporting biodiesel in significant quantities just three years ago.

“We’re thinking that Argentine biodiesel production will be at least 2.5 million tonnes in 2011,” said Victor Castro, executive director of Carbio, which groups Argentina’s biggest biodiesel producers including Louis Dreyfus, Patagonia Bioenergia, Bunge and Molinos Rio de la Plata.

Argentina’s government, keen to reduce diesel imports, in July raised the blend requirement for a green fuels law to 7 per cent from 5 per cent — increasing annual domestic demand by up to 300,000 tonnes per year. Some industry analysts said the measure could reduce Argentine exports, but Castro said shipments would not be affected because production was growing even faster.

“The way things are at the moment, even with the 7 per cent mix requirement, Argentina has the ability to cover both markets and investments are already being made to further increase output capacity,” he told Reuters during a two-day conference on renewable energy in Buenos Aires.

Biodiesel producers in Europe have accused Argentina’s government of unfairly subsidizing its biodiesel industry with tax benefits, flooding their market with cheap imports that have brought many plants to a virtual standstill.

Wheat prices have risen almost 50 per cent in the past month, due to drought in Russia, Ukraine and Kazakhstan – which are among the world’s top 10 exporters – and heavy rains in Canada, the number two exporter.

 “We seek to cover all our incremental costs on labour and overheads through our own devices,” said Robert Schofield, Premier chief executive. “But where we’ve got commodity increases, we do pass those on.” If retailers decline to absorb the rises, the price of a Hovis loaf could increase by about 5p, according to Martin Deboo, an analyst with Investec.

Mr Schofield was speaking after Premier, which also makes Mr Kipling cakes, Branston pickle and the Loyd Grossman range of sauces, announced results for the six months to the end of June that were dented by restructuring and pension costs. Pre-tax losses were £54m on revenues of £1.18bn, against a loss of £30m and revenues of £1.25bn in the same period in 2009. Losses per share were 1.7p (2p).

However, the shares rose almost 10 per cent to 19.7p as trading profits of £110m came in slightly ahead of expectations.

The price has halved in value over the past year and, according to Mr Deboo, was “set for a bounce if there was any sort of ‘beat’ at all”.

It remains on track to generate at least £100m of cash by the end of the year, which it will use to pay down its £1.37bn net debt.

Shoppers continued their move away from own-label brands – a trend demonstrated by Hovis, where falling wheat prices until June helped reduce the price difference between branded and non-branded loaves. Promotions may help keep that gap small, even with wheat prices resurgent. Still, Mr Schofield said shoppers were cautious.

Julian Hardwick, an analyst with RBS, said: “Given a difficult marketplace with a lot of promotions and very little volume growth, Premier Foods appears resilient.”

     The biofuel gained on concern that drought in Russia will cause the country to restrict exports of wheat and use less costly corn as a substitute. Wheat for September delivery jumped

45.75 cents, or 6.7 percent, to $7.2575 a bushel in Chicago, the highest price for the front-month contract since September 2008. Ethanol in the U.S. is distilled from corn.

     “When you see wheat prices rise to a certain level, generally feed demand will start to increase for corn,” said Terry Reilly, an analyst at Citigroup Global Markets Inc. in Chicago. “It’s a pretty strong market and it has brought new life to the ethanol market.” Denatured ethanol for August delivery advanced 0.6 cent, 0.4 percent, to settle at $1.745 a gallon on the Chicago Board of Trade, the highest price since Feb. 10. Prices have fallen 11 percent this year. The contract expired today.

     Ethanol prices have jumped 14 percent since June 30, prompting distillers to increase output, Reilly said.

     U.S. ethanol production surged to 873,000 barrels a day for the week ended July 30, up 7 percent from the week before, according to the Energy Department.

     Stockpiles of the gasoline additive were little changed from last week at 19.5 million barrels, the department said today in a report in Washington.

     Corn for December delivery jumped 11 cents, or 2.7 percent, to $4.15 a bushel in Chicago. One bushel of the grain distills into about 2.75 gallons of ethanol.

Massachusetts After five years in the planning and development stage, ground was broken on the Northeast Biodiesel and Co-op Power, a 1.75 million-gallon-per-year facility located in Greenfield, Massachsetts. Biodiesel production is expected to begin in January of next year.

The facility has been caught in limbo in the last couple of years due to the financial crisis. The collapse of large financial institutions sent the economy into a deep recession, causing banks to pull back and tighten their credit underwriting. Northeast Biodiesel originally sought loan capital from banks to complete the financing package needed for a five million gallon processor. Though area banks proved unwilling to make the start-up loans, the development of smaller processors at lower cost allowed the project to move forward with the capital invested by Co-op Power members and local investors.
Five years ago, the smallest manufacturing unit built to produce biodiesel fuel was a five million gallon per year processor. Today, processors are being built at lower cost and smaller volume. Northeast Biodiesel will begin fuel production with a single 1.75 million gallon per year processing unit, and plans to add a second unit to produce 3.5 million gallons per year in 2012.

Co-op Power owns the majority of shares in Northeast Biodiesel, which is an independent limited liability corporation. Co-op Power is a member-owned cooperative founded in 2005 to create community-owned renewable energy resources across the Northeast. Co-op Power invested $135,000 of its member equity in Northeast Biodiesel, which leveraged $1 million from 24 investors.

Despite this positive news, EurObserv’ER has highlighted in its latest Barometer on biofuels that “the European Union needs to raise biofuel consumption by 6 Mtoe in 2010 if it is to reach the Directive’s goal (5.75%)”.

According to EurObserv’ER estimates, the slowdown in the growth of European biofuel consumption has oncer again deepened, making it even more difficult to achieve this target. Biofuel use in transport grew by 18.7% between 2008 and 2009, against 30.3% between 2007 and 2008 and 41.8% between 2006 and 2007.

In contrast to previous years, growth in bioethanol fuel consumption was steadier (up 31.9% between 2008 and 2009) than that of biodiesel (up 19.9% between 2008 and 2009). The collapse of vegetable oil consumption continued (down 72.3%), which contrasts with the consumption of biogas fuel that has the same properties as natural gas, and is still growing in Sweden (up 23.2%).

In Europe most biofuel used in transport is essentially sourced from biodiesel which accounts for 79.5% of the total energy content, as opposed to 19.3% for bioethanol. The vegetable oil fuel share is becoming negligible (0.9%) and for the moment the biogas fuel share is specific to one country: Sweden (0.3%).

Besides the 2009 realisations per EU Member State other subjects discussed in the new barometer include:

• Selected country reviews

• Renewable energy policies

• Industry overview

• Projection to the year 2010

The next EurObserv’ER Barometer is expected to be released in November 2010 and will focus on solid biomass, biogas and renewable municipal solid waste.

Wheat shipments from Russia, the world’s third-largest exporter last year, and the rest of the former Soviet Union are slowing, prompting buyers in Indonesia to turn to the U.S. and Australia, an executive said.

“Wheat out of Ukraine and Russia has started to drain out,” said Franciscus Welirang, chairman of the Flour Mills Association in Indonesia, Asia’s biggest buyer. The country will increase imports of wheat used in flour to 4.3 million metric tons from 4.1 million tons last year, he said in a phone interview today.

Prices surged to a 22-month high on Aug. 2 after posting the biggest monthly gain since 1973 in July on concern that the worst drought in at least 50 years in Russia, persistent dry weather in Ukraine, Kazakhstan and other parts of Europe, and excessive rains in Canada may curb supply from some of the world’s biggest exporters.
The drought in Russia shows no signs of easing and now threatens sowing of the next grain crops, according to the Hydrometeorological Center. The Russian unit of Glencore International AG, the world’s biggest commodity trader, warned of a domestic grain shortage and said the government must impose export bans, allowing companies to cancel contracts.

Russia’s wheat harvest may plunge 19 percent to 50 million tons in the year that began July 1, the USDA’s Foreign Agricultural Service forecast on Aug. 2. Exports may drop 23 percent to 14 million tons this year, from an estimated 18.2 million tons a year earlier, it said.

Monitoring Prices

The U.S. agency’s export estimate compares with a forecast of 13 million tons this year by Glencore, and 9.5 million tons by the Moscow-based Institute for Agricultural Market Studies.
“We are monitoring” prices in Chicago and are concerned speculators may push them to the record levels of 2008, Welirang said from Jakarta today. Indonesia will keep buying wheat from overseas because of strong domestic demand, said Welirang, who is also a director at PT Indofood Sukses Makmur, the nation’s biggest flour miller.
He declined to give a price forecast, saying speculation will lead to “more people suffering.”
Wheat futures soared to a record $13.495 a bushel in February 2008 on concern that there would be a global food shortage, triggering riots from Haiti to Egypt.

The number of hungry people in the world has climbed to more than 1.02 billion, the highest level since record-keeping started in 1970, and “hunger has increased not as a result of poor harvests but because of high domestic food prices, lower incomes and increasing unemployment,” according to the United Nations’ Food and Agriculture Organization website.

U.S. Department of Agriculture data show Indonesia is Asia’s largest importer of wheat, flour and products.

CHICAGO, Illinois (Agriculture.com)–The pre-opening prices for the CME Group grain commodities for Wednesday, August 4, 2010 are sharply higher. The early calls for corn are 5-7 cents higher, soybeans up 5-7 cents and wheat 18-20 cents higher.

In overnight electronic trading, the Dec. corn futures contract traded 4 1/2 cents higher at $4.08 1/2 per bushel. The Nov. soybean futures contract traded 5 3/4 cents higher at $10.23 3/4 per bushel. The Sep. wheat futures contract traded 22 1/4 cents higher at $7.02 1/4. For Dec. soymeal futures, the contract traded $2.50 per short ton higher at $292.50, and Dec. soyoil up 17 points at $41.85.
The outside markets are not supportive for Wednesday’s grain trade. The real factor driving the higher early calls is the sharply higher overnight market.

It’s August in the nation’s capitol and the climate is hazy, hot and humid with a chance of afternoon thundershowers, which Renewable Fuels Association president and CEO Bob Dinneen says kind of describes what is happening on Capitol Hill these days as well – especially the hazy and stormy part.
In this edition of “The Ethanol Report,” Dinneen discusses the situation with regard to the ethanol industry’s priority issues – tax incentives and E15.

Despite the few legislative days left on the Congressional calendar, Dinneen says he remains hopeful that the blenders tax credit for ethanol will be extended in some form for some length of time before it expires at the end of the year. However, he remains very frustrated with delays in getting E15 or at least E12 approved in the interim by EPA. “EPA continues to be one of the most dysfunctional agencies in the federal government,” Dinneen says. “One wishes that the agency had been as diligent in studying the blow out preventers that BP was using in the Gulf of Mexico.”

The Justice Department is investigating possible criminal wrongdoing and the Securities and Exchange Commission is probing potential civil violations, said the person, who wasn’t authorized to speak publicly and asked not to be identified.

BP disclosed July 27 in a filing to U.S. regulators that the SEC and Justice Department “are conducting informal enquiries into securities matters” related to the oil spill triggered by an April 20 explosion. BP declined to elaborate at the time.

“We will cooperate with any investigations,” Sheila Williams, a BP spokeswoman based in London, said in an e-mail today.

Investigators haven’t yet determined whether insider trading occurred or the company intentionally made false statements to investors, the person said.

BP shares have dropped 34 percent in U.S. trading since the accident, wiping out $64.1 billion in market value. The American depositary receipts, each equal to six ordinary shares, rose 58 cents, or 1.5 percent, to $40 at 4 p.m. in New York Stock Exchange composite trading.

The Justice Department is investigating whether criminal or civil laws were broken, Attorney General Eric Holder said at a news conference on June 1.

The government has been reviewing whether there were violations of the Clean Water Act, which carries civil and criminal penalties, and the Oil Pollution Act of 1990, which can be used to hold companies liable for cleanup costs.

Also under review is whether there were violations of the Migratory Bird Treaty Act and Endangered Species Act, which provide penalties for injuries to wildlife, and other criminal laws.

Following the success of its smaller facility in Goole, North Humberside, UK, the Yorkshire-based power station operator is now developing a pellet producing facility for the town of Gainsborough, Lincolnshire.

Made from shredding, grinding, drying and compressing straw and miscanthus or elephant grass, the pellets will be co-fired alongside coal at the company’s 4,000MW power station.

150,000 tonnes of pellets will be produced annually at the 8,000m2 site, which was developed by Andritz. Andritz worked on the plant in Goole, which has the capacity to produce 100,000 tonnes of pellets a year with a 932-bale storage capacity. The second plant, however, will be built on a much larger scale and will have the capacity to store up to 2,300 bales.

According to Drax there is around 2 million tonnes of straw available within a 50 to 70 mile radius of its power station and the company is looking to collect its straw and miscanthus from farms within this area.

Although Drax has been using biomass in its plant for seven years, the company is now ramping up consumption as an increasing amount of emphasis is being put on the use of green energy.

The $239,008 (€181,155) grant will go towards cultivating trees and grass for the production of biofuels, as well as installing and testing solar cells.

A total of six green schemes, all of which are planned for former surface mines, will benefit from the grant.

Reeds will be planted at two locations in Upshur Country and used to make biofuels and test solar cells. Elsewhere, in Mingo County, trees will be grown at a 4-H camp, while more trees are to be planted in Webster County for biofuel production and to deal with erosion.

If EPA later finalizes the 50% GHG cut determination, then canola-biodiesel would join soy-biodiesel on a growing list of fuels meeting the “biomass-based diesel” requirement.

Under RFS-2, 36 billion gallons of “renewable fuels” must be blended into US motor fuels by 2022. Corn-ethanol will take a big chunk of the total, but various future competitors including “cellulosic” biofuel (including ethanol not from corn starch) and “biomass based diesel” (including non-food-based biofuel) eventually would make up the bulk of the 36 billion gallons.

Under the EPA rules, “biomass-based diesel” and “advanced biofuel” must achieve at least 50% reduction in GHG compared to petroleum diesel, while corn-ethanol essentially gets a free pass on GHG, up to 15 billion gallons/year.

EPA hasn’t yet completed its GHG analyses on certain other types of vegetable-oil biodiesels, including palm-oil biodiesel or “renewable diesel” (the latter produced by a type of distillate hydrotreating).

For the canola-oil GHG analysis, EPA assumed that canola might provide up to 200 million gallons of US biodiesel by 2022.

“Canola oil biodiesel is produced using the same methods as soybean oil biodiesel, therefore plant designs are assumed to not significantly differ between these two feedstocks,” according to EPA’s analysis.

“Additionally, similar to soybean oil biodiesel production, we assumed that the co-product glycerin would displace residual oil as a fuel source on an energy equivalent basis. This is based on the assumption that the glycerin market would be saturated in 2022 and that glycerin produced from biodiesel would not displace any additional petroleum glycerin production.”

EPA’s analysis concludes that canola biodiesel “at the midpoint of the range of results” would deliver “a 50% reduction in GHG emissions compared to the diesel fuel baseline,” according to the EPA.

“The 95% confidence interval around that midpoint results in range of a 20% reduction to a 75% reduction compared to the diesel fuel 2005 baseline.

“These results, if finalized, would justify authorizing the generation of biomass-based diesel RINs [tradeable renewable information numbers credits] for fuel produced by the canola oil biodiesel pathway modeled, assuming that the fuel meets the other definitional criteria for renewable fuel (e.g., produced from renewable biomass, and used to reduce or replace transportation fuel),” according to the EPA.

Under the EPA “mid-point” calculation, canola-oil biodiesel is presumed to produce 48 kilograms of CO2-equivalent GHG emissions per million Btu of fuel energy, but with a calculated range of between 25 to 78 kg CO2e/Mm Btu. Petroleum diesel is assumed in the EPA calculation to have 97 kg CO2e/Mm Btu.

EPA’s canola-oil biodiesel calculation assumes that relatively low-CO2 natural gas would be used for biodiesel plant process energy. That’s not always the case with biofuels, as many Midwest US ethanol plants use cheaper (but relatively higher-CO2) coal, which explains why corn-ethanol is given a free pass on GHG in the RFS-2 rules.

The call highlights international trading houses’ concerns about fulfilling their contracts amid rising prices and scarce supplies due to a drought in Russia.

If Moscow imposes an export ban, as it did briefly during the 2007-208 food crisis, trading houses such as Glencore could declare “force majeure”, a clause that allows them to cancel the deals because of reasons outside their control.

The plea by employees at Glencore’s Russia unit, International Grain Company, came as Moscow moved to prevent panic in the markets, saying its grain exports would be stable.

The Russian agriculture ministry said the country’s grain crop would drop to 70-75m tonnes this year, down from previous estimates of more than 85m tonnes. But it insisted cereals exports would remain stable because of plentiful stocks.

Alexander Belyaev, deputy agriculture minister, said Russia held enough inventory to support exports and cover the nation’s needs. “The country has sufficient resources to ensure that everything is favourable and reliable.”

But Yury Ognev, head of Glencore’s Russian unit, said Moscow’s expectation of a grain crop of 70m-75m tonnes was too high. He offered a forecast of 65m tonnes.

“From our point of view the government has all the reasons to stop all exports from Russia and starting September 1,” he told Reuters in Moscow.

Glencore later distanced itself from the comments. “The views expressed by an employee of one of our field offices with regard to the Russian grain market were his own and do not in any way reflect the views of Glencore,” a spokesperson said.

Wheat prices fell slightly on Tuesday’s from Monday’s two-year high, but trading was frenetic. European milling wheat in Paris dropped nearly 1.7 per cent to €204.25 a tonne, after touching an intraday high of €211 a tonne on Monday.

European wheat prices have surged more than 50 per cent since late June on the back of the worst heatwave and drought in Russia and Ukraine in more than a century. The rally is the strongest in nearly 40 years and the food industry has already warned about rising prices for flour-related products, from bread to biscuits.

The full extent of the damage caused to Russia’s grain crop will not be clear until the end of the month when farmers have gathered the Siberian harvest. Siberian farms usually account for about one fifth of Russian grain production and have been less severely hit this year by drought than European regions of the country.

U.S. corn and soybean conditions slipped slightly last week as hot weather adversely affected crops in the central Plains and the Mississippi River Delta, while excessive rainfall hurt crops in other areas.

However, steady to higher ratings for major Midwestern producing states limited the decline in crop ratings and crop development remained ahead of normal due to warm weather and ample moisture across the heart of the Midwest.

USDA rated the U.S. corn crop 71% good/excellent as of Sunday, down 1 percentage point from a week earlier, but 3 percentage points above a year earlier. Soybean conditions were pegged at 66% good/excellent, down 1 point from a week earlier and a year earlier.

USDA reported that 31% of the U.S. corn crop had reached the dough stage of development as of Sunday, up from only 13% a year earlier and a five-year average of 24%. Some 7% of the crop was already denting against an average pace of 5%.

Soybean development also remained ahead of normal, with 53% of the U.S. crop reported setting pods against 33% a year earlier and a five-year average of 48%.

The most significant decline in corn conditions came in South Dakota where the good/excellent rating for the crop dipped 5 percentage points to 71% largely due to the negative impact of excessive rains in the southeast part of the state.

In Kansas, corn conditions declined to 68% good/excellent from 72% previously due to the effects of hot, dry weather.

However, corn conditions were unchanged in the top growing state of Iowa at 70% good/excellent and the rating in No. 2 Illinois improved one point to 66% good/excellent.

Minnesota continued to enjoy excellent growing weather with corn conditions there improving to 90% good/excellent from 89% last week.

Minnesota soybean conditions also improved last week to 87% good/excellent from 85% previously, while the crop rating for Illinois rose one point to 64% good/excellent and Iowa soybean conditions held steady at 71% good/excellent.

Notable declines in soybean conditions occurred in Nebraska, South Dakota and Kentucky.

The good/excellent rating for Nebraska soybeans fell 4 points to 77%, while the South Dakota good/excellent rating fell 5 points to 65% and the Kentucky crop rating fell 6 points to 57% good/excellent.

Senator Tom Harkin (D-IA) and a group of bipartisan senators met with EPA Administrator Lisa Jackson and Department of Energy (DOE) Deputy Secretary Daniel Poneman this week to discuss delays in the approval of E15 ethanol blend for vehicles, as well as other key issues related to the ethanol industry.

Harkin says they talked with the officials about the importance of moving to E15, the need to mandate the manufacturing of flexible fuel vehicles and the installation of pumps that provide for high ethanol fuels and loan guarantees for biofuel pipelines. “We all agree that we must reduce our dependence on foreign oil, and that this will require a multi-pronged strategy, including more efficient use of transportation fuels and expanded use of alternatives to petroleum-based fuels,” Harkin said in a statement. “We also recognized that biofuels have already significantly displaced petroleum based fuels in the transportation fuels markets, reducing our reliance on oil imported from overseas. And we all agreed that biofuels have the potential to make much larger contributions.”

Harkin says he was pleased to hear in today’s meeting that DOE is also evaluating E20 in its battery of vehicle tests. “This may well provide the basis for EPA approval of E20 as well as E15 for use in all gasoline-fueled vehicles early next year,” he said. However, Harkin noted that he remains frustrated that testing is not yet complete on E15 and that the deadline has been extended twice. “This process seems so much more difficult that it was when E10 was approved. While I had hoped that E15 would be available by now to consumers, Secretary Jackson and Deputy Secretary Poneman were very helpful in fully explaining the rationale for the protracted timeline, and I am looking forward to hearing EPA’s decision on E15 soon,” said Harkin.

Archer Daniels Midland, the US-based agricultural trading house, said on Tuesday its profits had risen almost 15 per cent in the fiscal year 2010 compared with the same period of 2009 on the back of rising demand for ethanol and soyabeans.

The agribusiness said it had earned $1.93bn in the year to June 30, up from $1.68bn the previous year, when profits were hit by the global economic crisis.

The jump in profits comes as agricultural commodities prices from wheat to cocoa rise strongly on the back of poor crops and a revival in demand, with consumption of food commodities emerging unscathed from the global financial crisis.

“The ADM team finished strong, capping a very good year with very good fourth-quarter performance,” said Patricia Woertz, chief executive. “As we begin our new fiscal year, our large projects are nearly finished, and we commit to use our strong balance sheet and cash flow to deliver shareholder value,” she added.

Shares of ADM were up 1.6 per cent in light pre-market trading.

The company, whose main competitors in the US are Cargill and Bunge, said its earnings had jumped in the fourth quarter to $446m – or 69 cents per share – up from just $58m – or 9 cents per share – in the same period of fiscal 2009. The fourth-quarter earnings were above Wall Street’s forecast of 53 cents per share.

The increase in ADM’s profitability contrasts with Bunge’s disappointing start to the year, which forced the trader to cut its earning forecast for 2010.

ADM said its strong performance in the year to June 30 had been helped by better ethanol margins on its biofuels division. The trading house has invested heavily on corn-based biofuels, a sector which last year struggled because of low demand for gasoline and low oil prices, which made ethanol unattractive.

ADM also benefited from “strong export demand” for commodities such as soyabeans and corn on the back of rising consumption in emerging countries, including China. ADM said it was running its corn processing plants “strong” to meet demand.

Net sales on the 2010 fiscal year fell to $61.7bn, down from $69.2bn in the same period last year. However, net sales are a poor indicator of a commodities trader’s performance as they move up and down with the price of raw materials.

ADM, based in Decatur, Illinois, is one of the world’s top-three agricultural traders and processors, employing 29,000 people in more than 60 countries.

Wheat futures jumped to a 22-month high on Monday, hitting $7.11 (£4.47) a bushel on the Chicago Board of Trade. At 1pm New York-time wheat was trading at $6.92.

A severe drought destroyed one-fifth of the wheat crop in Russia, one of the world’s largest exporters, and now wildfires are sweeping in to finish off some of the fields that remained after the hottest July for 130 years.

Heavy rains in Pakistan are said to have destroyed 15pc of the country’s wheat crop.

“Inflation expectations are high,” said Evgeny Gavrilenkov and Anton Stroutchenevski, economists at Troika Dialog in Moscow.

The Russian Grain Union said on Monday that it expects exports to decline to 15m tons, down from 21.4m tons in 2009. Although grain prices are rising on world markets, with further gains on Monday, they are growing even faster in Russia, so many farmers have littel incentive to export and are holding on to their harvested grain in the hopes of still higher profits.

“Russia has become the price-maker on the market,” said Dmitry Rylko, director general of the Institute for Agricultural Market Studies.

George Lee, agriculture fund manager at Eclectica Asset Management in London, said the United States and other exporters, principally Argentina and Australia, are set to be “big gainers”, while the European Union was not looking at its best harvests.

An average loaf of sliced bread currently costs between £1.30 and £1.40 in the UK.

The ethanol market this week will focus on:

• the corn market ahead of  Monday’s weekly Crop Progress report and next Thursday’s (Aug 12) key USDA Crop Production and WASDE reports,
• gasoline prices, which closed slightly higher last week on the weak dollar, and
• whether ethanol demand can continue to absorb near-record production levels once the summer driving season winds down.

Ethanol groups again call for E12 decision – Three ethanol groups last week again called on the EPA to raise the maximum ethanol mix to 12% (E12) from the current 10% (see news digest links).  The groups are concerned that the EPA in September may approve E15 only for newer vehicle models, which would likely cause big distribution problems since most fuel stations cannot carry multiple ethanol blends.  The groups would rather have a single limit of E12 for all engines than E15 for new engines and E10 for older engines.

Ethanol production matches record in May – Last week’s monthly EIA ethanol data indicated that production in May climbed 1.8% m/m to 847,000 barrels per day, thus matching the record high posted in March.  However, the more recent weekly data for the week ended July 23 indicated production at 816,000 bpd, which was 3.7% below the record high and was a bit more palatable for ethanol prices.  Ethanol inventories in May rose to a record high of 19.721 million barrels, although the more recent weekly data indicated inventories 1.0% lower at 19.523 million barrels.  On the bullish side, the U.S. ethanol industry in May was operating at 96.0% of capacity, meaning there is not much room to further boost U.S. ethanol production.  However, the market remains concern about a possible bulge in inventories when the summer driving season ends.

Ethanol Market Action -  September CBOT Ethanol futures prices last week extended the 5-week rally to post a new 2½-month high and close up 6.4 cents (+4.0%) at $1.666 per gallon.    Ethanol prices were boosted last week by the sharp 5.8% rally in corn prices and by continued technical buying with the new 2½- month high.  The EIA ethanol reports contained no surprises and had little net impact.

Ethanol/Gasoline – September gasoline futures prices last week consolidated below the recent 7-week high, finally closing slightly higher by 0.32 cents (+0.2%) at $2.1224 per gallon.  Gasoline prices were supported mainly by commodity strength driven by the 1.1% sell-off in the dollar index.  The spread of September ethanol prices minus gasoline prices last week rose by 6.1 cents to -$45.6 cents.

Ethanol/Corn – Sep corn futures prices last week recovered most of the losses seen in the previous week and closed +21.50 cents (+5.8%) at $3.9275 per bushel.  Bullish factors included (1) forecasts for hot weather in key U.S. growing areas in the next 2 weeks, (2) continued hot, dry weather in Russia and Europe, which is causing substantial damage to crops and should boost demand for U.S. corn exports, and (3) the 1.1% sell-off seen in the dollar index last week.  The Sep ethanol-corn crush margin last week fell by 1.3 cents to 26.3 cents/gallon, which was mildly above the recent 13-month low of 20.1 cents per gallon.  Including DDG, the Sep corn for ethanol crush margin rose by 5.1 cents to 60.2 cents/gallon thanks to a sharp 23% increase in Sep DDG prices to $106.90 from $86.90 per ton.

Ethanol Calendar

• Aug 4: EIA Weekly Petroleum Status Report
• Aug 12: USDA WASDE Crop Supply-Demand
• Aug 30: EIA June Monthly Ethanol Report
• September: EPA’s E15 decision due

HICAGO, Illinois (Agriculture.com)–The pre-opening prices for the CME Group grain commodities for Monday, August 2, 2010 are sharply higher. The early calls for corn are 5-7 cents higher, soybeans up 12-14 cents and wheat 18-20 cents higher.

In overnight electronic trading, the Dec. corn futures contract traded 5 3/4 cents higher at $4.12 1/2 per bushel. The Nov. soybean futures contract traded 15 cents higher at $10.20 per bushel. The Sep. wheat futures contract traded 22 3/4 cents higher at $7.16 1/2. For Dec. soymeal futures, the contract traded $4.90 per short ton higher at $294.90, and Dec. soyoil up 43 points at $40.98.

The outside markets are supportive for Monday’s grain trade. The real factor driving the higher early calls is the sharply higher overnight market. Plus, the grains are underpinned by world crop-weather issues, namely Russia’s drought that may halt that country’s 2010 grain exports.

Holden is expected to announce today that it will soon rely on alcohol to future-proof Australia’s best-selling car against dwindling world oil supplies.

The carmaker is expected to unveil a version of the Commodore that can run on anything from 100 per cent petrol to E85, a combination of 15 per cent petrol and 85 per cent ethanol, while Caltex will trial a chain of E85 fuelling stations in a joint venture that will help both companies develop a strategy for introducing the fuel nationally.

The fuel is also expected to cost a lot less at the pump, with ethanol production costs running at about 50¢ a litre.

Caltex said its ”Bio E-Flex” fuel would ”offer an energy option beyond the traditional fuel mix that can significantly reduce greenhouse gas emissions”.

”Caltex will be profiling the new fuel in Melbourne before it begins its national roll-out of the product,” the company said. The ethanol-blended fuels would offer ”an energy option beyond the traditional fuel mix that can significantly reduce greenhouse gas emissions”.

Holden is expected to announce that it will soon be standard for Commodore engines to have E85 compatibility.

Owners will be able to decide if they want to refuel with petrol or any other combination of the fuel-ethanol mix up to E85.

While Holden has not sold an E85-compatible car in Australia before, Saab – at the time owned by General Motors, the same US parent as Holden – has tried to attract buyers to the fuel.

Saab’s 9-5 BioPower, introduced to Australia in 1997, struggled after it was stifled by the limited availability of E85 refuelling stations. It was quietly dropped from Australian showrooms this year, shortly before the cash-strapped GM sold the Swedish carmaker to the Dutch sports car company Spyker.

The 9-5 used about 30 per cent more fuel when running on E85 than when with petrol alone, although the engine did perform better while running on the fuel and produced significantly lower exhaust emissions.

Holden is expected to announce E85 compatibility for its 3.0-litre and 3.6-litre V6 engines, while an E85-compatible version of its 6.0-litre V8 engine is tied to an export program that is developing Chevrolet-badged Commodores as police cars for the US

SUGAR LAND, TX, Aug 02, 2010 (MARKETWIRE via COMTEX) — Researched by Industrial Info Resources (Sugar Land, Texas) — Murphy Oil Corporation is said to be eyeing the purchase of the former Panda Energy’s shuttered fuel ethanol plant in Hereford, Texas. Earlier this year, The Panda Group (Dallas, Texas) sold subsidiary Hereford Biofuels (Hereford, Texas) and the unfinished plant to creditors for $25 million. Murphy Oil is following in the footsteps of other big oil companies looking to supply their own ethanol. In the first quarter of 2009, Valero Energy Corporation purchased five operational plants directly from bankrupt VeraSun for a steal of a deal at $280 million. Sunoco Incorporated bought an unfinished plant in Fulton, New York.

The multi-million pound plant would create pellets from waste straw and miscanthus or elephant grass, for firing alongside coal at Drax power station.

According to planning documents submitted to West Lindsey District Council, the plant would produce 150,000 tonnes of pellets a year, made by shredding, grinding, drying and compressing straw and miscanthus.

The pelleting plant and storage area would be more than 8,000 square metres, and developed by Austrian engineering group Andritz, which worked on the Goole pelleting plant.

It would have six grinders capable of reducing straw and miscanthus to 6mm particles. Steam and water would be added to the resulting powder which will be compressed with six presses to create 8mm pellets. Pelleting alters the density of straw from about 200kg per cubic metre to about 650kg per cubic metre.

Its storage capacity would be about 2,300 bales, far greater than the 932-bale capacity at the Goole plant, which started production in September last year, and can make about 100,000 tonnes of pellets a year.

Drax, which supplies around seven per cent of the UK’s electricity, is trying to build a supply chain to meet its ambitious aims for burning biomass – organic, plant-based material.

The straw and miscanthus for the new plant would be harvested from farms around Lincolnshire. Drax believes there are about 2m tonnes of straw available within a 50-to-70-mile radius of the power station. For some years it has been at the forefront of encouraging UK farmers and landowners to supply biomass and develop a supply chain. Last year it launched its Green Shoots plan to source energy crops from farmers.

Drax, whose chief executive Dorothy Thompson will update the City with first half results tomorrow, said the Gainsborough pelleting plant is in the final stages of planning and design but declined to comment further.

The plant has been burning biomass for seven years, but has stepped up its efforts as pressure grows to clean up Europe’s coal-fired power stations.

The 4,000mw plant recently spent £80m on 400mw of new biomass co-firing capacity, to give it 500mw co-firing capability, although is not using it at full capacity because it is not economically viable.

Its co-firing capacity alone, if used to its full capacity, would save about 2.5 million tonnes of carbon dioxide each year.

It also has plans for three 290mw standalone biomass plants through a joint venture with Siemens Project Ventures, costing an estimated £2bn.

This would bring Drax’s biomass-burning capacity to 1,400mw, enough to power two million homes and equivalent to 2,000 wind turbines.

Drax also recently revealed plans to convert one of its 650mw boilers from coal to solely biomass. If the scheme goes ahead, that would make it the biggest coal-to-biomass conversion demonstration in the world.

However, the latest pelleting plant will satisfy only a fraction of Drax’s biomass needs. Its aim is to source up to 1.5 million to two million tonnes of biomass a year for co-firing plus around 1.3 million tonnes a year for each of standalone plants.

It says that to do this, it must import the majority of its biomass, believed to be about three quarters of its requirements. Despite needing to import vast quantities of biomass, Drax insists this is still greener than many other alternatives.

Firms including AIM-listed Viridas are trying to meet the demand for biomass.

The Leeds-based company recently agreed a development and partnership deal with a “leading UK power generator” which could see it supply 240,000 tonnes of biomass annually.

It plans to develop an operation producing oil and biomass from the jatropha plant, an inedible but highly-calorific plant which grows in Brazil.

Fertilisers accounted for more than 50 per cent of the total cost, he said at the opening of the Second International Conference on Oil Palm Biomass here.

“In this context, the efforts include enhancing R&D (research and development )on biocomposting to produce biofertilisers to ensure that oil palm trees are provided optimal nutrient,” Hamzah said.

“As such, full utilisation of biomass will not only provide more income but will also contribute towards zero carbon emission and zero waste,” he said.

The text of his speech text was read by the ministry’s secretary-general Datuk Wira Ismail Saleh.

According to Hamzah, about 10 per cent of the oil palm tree is palm oil while about 90 per cent in the form of oil palm biomass has yet to be fully exploited.

“These include among others empty fruit bunches, palm fibres, palm trunks, palm fronds and palm oil mill effluents,” he said.

In 2009, the oil palm industry generated an estimated 80 million tonnes of biomass.

Hamzah said with the depleting timber resources for the wood-based and furniture industry, the utilisation of oil palm biomass in such sectors also offered potential.

The oil palm biomass could be used to manufacture plywood, particleboard, lumber, veneer and medium density fibre board, he said.

Europe is lagging the U.S., China and Brazil in developing biofuels for transportation because of a lack of political direction, Novozymes A/S Chief Executive Officer Steen Riisgaard said.

Brazil aims to displace 10 percent of global gasoline use with ethanol by 2020; China is testing corn-based ethanol in nine provinces; and the U.S. has set fuel standards requiring ethanol use, said Riisgaard, whose companies is the world’s biggest maker of enzymes used to refine biofuels.

“Brazil knows what it wants to do,” Riisgaard said in an interview at Bloomberg’s office in London. “In the United States, similarly, they have a renewable fuels standard — they know what they want to do. You go to China: the government knows what it wants to do. They have a plan. You come to Europe and there’s not this kind of political direction. We don’t know what we want to do.”

Novozymes estimates ethanol from crops, agricultural waste and grasses can cut greenhouse gas emissions by 90 percent relative to gasoline. The Bagsvaerd, Denmark-based company draws 17 percent of its revenue from selling enzymes used to speed up the reactions in producing biofuels.

Novozymes is working with more than 30 companies around the world including Poet LLC, the largest U.S. ethanol producer, Dedini S/A Indústrias de Base, a Brazilian maker of biofuels equipment, Cofco Ltd., China’s largest grain trader and China Petrochemical Corp., known as Sinopec, which is the nation’s second-largest oil producer.

Debate in Europe

The 27-nation European Union has set itself a target of deriving 10 percent of its transportation fuel from biofuels by 2020. The push for the fuels is clouded by a debate over whether biofuel production is competing with farmland used for food crops, “which is not relevant when you talk about residues from agriculture” that will be used to make the next generation of biofuels, Riisgaard said.

So-called second-generation biofuels, which come from grasses and crop waste rather than the crops themselves, can be competitive with current ethanol and gasoline within five years without government subsidy, Riisgaard said. With support, the new fuels will be competitive next year, he said.

Poet, based in Sioux Falls, South Dakota, plans to open a new plant next year using enzymes developed by Novozymes to make biofuels, he said.

“They say that in that facility they will be able to produce at less than $2 per gallon,” Riisgaard said. “The corn-based fuel ethanol today is roughly $1.80, so it’s not quite there, but under the U.S. subsidy regime, which is more favourable for cellulosic, it is certainly a competitive price.”

Now that we’ve covered the ethanol-related debate surrounding a move from E10 to E15 from almost every angle, it’s time to move on to a discussion about E12. With the Environmental Protection Agency choosing to postpone its decision regarding E15 until further testing can be conducted, an interim move to E12 is now the suggested solution by farmers, ethanol blenders and proponents of renewable fuels.

The American Coalition for Ethanol (ACE), National Corn Growers Association (NCGA) and the Renewable Fuels Association (RFA) have teamed up to convince the EPA that an immediate move to E12 is necessary. The three groups issued a joint letter to EPA administrator Lisa Jackson, a portion of which reads:

Based on the EPA’s delay in acting upon the full E15 waiver and on our concerns that the Agency will restrict the use of E15 to cars made in 2001 and thereafter, we encourage the EPA to formally approve the use of E12 for all motor vehicles as an immediate interim step pending any ongoing additional testing on E15.

While a move to E12 may seem harmless to some, we still believe that even a two percent increase in ethanol content in gasoline should trigger thorough testing prior to approval.

HARTFORD – Governor M. Jodi Rell’s signature of Senate Bill 382 on May 26 enacted several regulations, while setting the table for more sweeping reform over biodiesel and home heating fuel. Those reforms open the door for more biodiesel to be used in traditional oil heaters – seamlessly.

Bantam Fuel president Peter Aziz attested to the impact – or lack thereof – that biodiesel has had on his customers so far, who have already been using fuel containing biodiesel. Aziz was invited to testify before the Senate, in part because of his company’s experience with biofuels.

“Bantam Fuel’s one of the few companies to sell BioHeat in any significant volume,” said Aziz of Bantam Fuel’s blend.

BioHeat contains five percent biodiesel, which can be made from various renewable sources. Derived from vegetable oils or animal fats, biodiesel can be used on its own or in a blend with traditional fuels. Considering its sources, biodiesel contains almost no sulfur, in addition to other benefits. This lack of sulfur ties into the first section of Senate Bill 382, which calls for reductions in sulfur content in diesel fuel. Fuels sold in Connecticut, as of July 1, 2011, will need to contain no more than 50 parts per million of sulfur, down to one-sixtieth of the current maximum of 0.003 percent. Three years later, that ceiling drops to 15 parts per million.

Bantam Fuel’s incorporation of biodiesel in its BioHeat fuel has been a seamless process, as Aziz noted. That experience spurred the Independent Connecticut Petroleum Association to approach Aziz, asking him to testify in support of the bill.

“It’s not any more expensive than heating oil,” said Aziz, “and it’s really a very seamless process, one that’s been successful for us. The members of the environmental commission were very pleased to hear that.”

The bill’s major component, though, is the requirement of all heating oil sold in Connecticut to contain at least two percent biodiesel, eventually escalating to 20 percent in 2020. In addition, the Commissioner of Consumer Protection will investigate Connecticut’s production of biodiesel to ensure that fuel companies can comply with the requirements. The ICPA stated that the law will replace 100 million gallons of traditional fuel with biodiesel, in addition to creating jobs in the biofuel sector, with no noticable impact on end users.

“Some of our customers don’t even realize they’re being green,” said Aziz. “There’s no change in their equipment or our delivery.”

But while the sulfur restrictions can take effect as scheduled on July 1, 2011, the requirement for biodiesel blends will have to wait. The relevant section is contingent on New York, Rhode Island and Massachusetts enacting similar legislation. Massachusetts has already done so, while New York and Rhode Island are both already considering similar laws. The waiting period is meant to protect fuel companies, who would otherwise need to maintain biodiesel blends in addition to presumably-cheaper traditional fuels.

“That’s important,” said Aziz of the waiting period. “They don’t want to have two different product streams, because that makes it more expensive to store.”

Sen. Blanche Lincoln (D-Ark.) submitted a proposal Wednesday to amend H.R. 5297, or the Small Business Jobs and Credit Act of 2010, by retroactively extending the biodiesel tax credit.

Lincoln’s amendment would extend the biodiesel tax credit through Dec. 31, 2010. The credit expired Dec. 31, 2009, and industry stakeholders have not been able to see legislation extending it.

In June, Sen. Chuck Grassley (R-Iowa) submitted a similar amendment, in his second attempt to pass legislation to extend the credit. According to a statement, Grassley believes the tax credit would likely put 20,000 people back to work.

“The Democratic leadership has essentially put the biodiesel industry out of business with the tactics they are using in the Congress,” he said. “This non-controversial, non-partisan provision for clean, green energy is being held hostage.”

Lincoln’s amendment is co-sponsored by Sen. Thomas Carper (D-Del.).

     Brazil aims to displace 10 percent of global gasoline use with ethanol by 2020; China is testing corn-based ethanol in nine provinces; and the U.S. has set fuel standards requiring ethanol use, said Riisgaard, whose companies is the world’s biggest maker of enzymes used to refine biofuels.

     “Brazil knows what it wants to do,” Riisgaard said in an interview at Bloomberg’s office in London. “In the United States, similarly, they have a renewable fuels standard — they know what they want to do. You go to China: the government knows what it wants to do. They have a plan. You come to Europe and there’s not this kind of political direction. We don’t know what we want to do.”

     Novozymes estimates ethanol from crops, agricultural waste and grasses can cut greenhouse gas emissions by 90 percent relative to gasoline. The Bagsvaerd, Denmark-based company draws

17 percent of its revenue from selling enzymes used to speed up the reactions in producing biofuels.

     Novozymes is working with more than 30 companies around the world including Poet LLC, the largest U.S. ethanol producer, Dedini S/A Indústrias de Base, a Brazilian maker of biofuels equipment, Cofco Ltd., China’s largest grain trader and China Petrochemical Corp., known as Sinopec, which is the nation’s second-largest oil producer.

The 27-nation European Union has set itself a target of deriving 10 percent of its transportation fuel from biofuels by 2020. The push for the fuels is clouded by a debate over whether biofuel production is competing with farmland used for food crops, “which is not relevant when you talk about residues from agriculture” that will be used to make the next generation of biofuels, Riisgaard said.

     So-called second-generation biofuels, which come from grasses and crop waste rather than the crops themselves, can be competitive with current ethanol and gasoline within five years without government subsidy, Riisgaard said. With support, the new fuels will be competitive next year, he said.

     Poet, based in Sioux Falls, South Dakota, plans to open a new plant next year using enzymes developed by Novozymes to make biofuels, he said.

     “They say that in that facility they will be able to produce at less than $2 per gallon,” Riisgaard said. “The corn-based fuel ethanol today is roughly $1.80, so it’s not quite there, but under the U.S. subsidy regime, which is more favourable for cellulosic, it is certainly a competitive price.”

The oil giant slashed its spending by $3.5bn over the last 18 months by shedding 7,000 staff and making operational savings. It saw a 15pc increase in profits – on a cost of supply basis stripping out inventory changes – and 49pc rise in pre-tax profits to $8.7bn.

Peter Voser, the chief executive, insisted that safety budgets and asset integrity had been ring-fenced from the cuts. US politicians have blamed cost-cutting for contributing to the Deepwater Horizon explosion and oil leak – an allegation that BP denies.

 The Anglo-Dutch company intends to carry on making “efficiency savings” but said its radical restructuring programme had come to an end earlier than planned.

Mr Voser said Shell’s deepwater drilling programme should continue, despite concerns about the industry’s capability to cope with an oil spill a mile under the sea.

“The recent announcement of Shell’s participation in a new $1bn Gulf of Mexico oil spill containment system is an example of where we are working with governments and partners to improve the industry’s capabilities,” Mr Voser said. Shell has taken a $56m hit on the new US deepwater drilling ban after BP’s accident and stands to lose around $200m by November.

Last year, the company lagged behind the profitability of BP, but Shell has a production pipeline that is aiming for an increase from 3m to 4.5m barrels per day by 2014. Current output will be boosted when its huge Qatar gas projects comes on stream over the next year.

Meanwhile, BP is slimming down, reducing its daily output from 3.8m to 3.5m via a huge asset sell-off.

Shell is also intending to accelerate its programme of asset disposals to $8bn by the end of 2011, focusing on selling refineries and petrol stations. Mr Voser said this was to fund growth rather than make the company smaller.

“With the Qatari projects on track to start up by year end, we continue to believe that Shell offers the most compelling risk-reward proposition,” said Alejandro Demichelis, an analyst at Merrill Lynch.

Shell’s share price stayed largely flat yesterday, rising 6 to £17.13. An interim dividend of 42p will be paid on September 8.

The EPA further noted that “As was the case for soybean oil biodiesel, production technology for canola oil biodiesel is mature and we have not projected in our assessment of canola oil biodiesel any significant improvements in plant technology.”

The EPA further commented “These results, if finalized, would justify authorizing the generation of biomassbased diesel RINs for fuel produced by the canola oil biodiesel pathway.” The NODA was a follow up to their March 26th, RFS2 final rule announcement earlier this year.  The NODA release opens a comment period that will close on August 25th, 2010.

September could bring a “huge potential catalyst” for the ethanol business, Cramer said Wednesday, and Deere is the way to play it.

Here’s the background: Congress has directed the Environmental Protection Agency to make it possible for 21 billion gallons of renewable fuels to be sold in the US in 2015, up from 12.9 billion this year, and much of the increase is expected to come from corn-based ethanol.

In order to reach that level, the EPA said it would need to increase the blend of ethanol in gasoline to 12% from 10% while studying the effects on cars of a longer-term increase to 15%. The final decision is expected late next month, and given that the EPA said the initial tests in June looked good, Cramer expects still more good news in just over a month.

But rather than recommend a pure play on ethanol, which Cramer would most likely never do because those stocks are too risky, he thinks Deere [DE  64.93 0.75  (+1.17%)   is the one to buy. After all, without the farming necessary to grow corn, there would be no ethanol.

“And when it comes to farm equipment,” Cramer said, “there’s none better than the best-of-breed John Deere.”

Right now farmers are making more profits per acre, with variable margins per acre of corn up to 53% from 38% a year ago, and they are reinvesting those earnings into their business. That means there is incentive to plant that one extra acre of corn, and there is a good chance farmers will buy Deere’s equipment to get the job done. It’s probably little surprise then that the company, when it reported second-quarter earnings back on May 19, raised its 2010 outlook for North American agricultural sales.

So even with the stock trading less than a point off its 52-week high, Cramer thinks DE looks inexpensive given that profit potential. Plus, the price-to-earnings multiple sits a mere 13.3, while the long-term growth rate clocks in at 10%, which is another indication the stock is cheap. And keep in mind, too, that sales are expected to rise 11% to 13% in 2010, much more than Deere’s original guidance of 6% to 8%.

Cramer’s recommendation? Buy some now and then look to pick up some more the next time the market sells off because we now know that there’s a catalyst coming in the fall.

“And believe me,” the Mad Money host said, “you will hear about this Deere investment endlessly come September.”

First, calling for an end to tax credits for ethanol while ignoring the billions of dollars of tax subsidies for Big Oil is as inequitable as it is shortsighted. Lawmakers want more renewable energy technologies, but they require these industries to come hat in hand to Congress for investment. The oil industry, by comparison, lobbies only when the permanent subsidies it enjoys are threatened.

Second, American ethanol is a success story. Only lamenting the value of the tax credit for ethanol without discussing the economic benefits of ethanol production is misleading. Federal tax revenue generated by the production and use of ethanol totaled more than $8 billion in 2009, $3 billion more than the value of the tax credit. Jobs and economic opportunity in hundreds of rural communities further add to the value of the investment.

Third, the editorial suggested that there are better technologies available without providing any evidence. There is no gasoline-alternative technology that can match ethanol’s availability, production volume or oil displacement benefit. Moreover, continued investment in ethanol is required to ensure that promising next-generation biofuel technologies, such as cellulosic ethanol, are commercialized. Ending investment in ethanol will result in more oil consumption and severely curtail investments in new renewable fuel technologies.

Australia has “inadequate funding” for biofuels, with the government devoting just $15 million to the technology, Julian Segal, chief executive officer of Caltex, said in a speech in Sydney today. The U.S. Department of Energy by contrast is investing more than $1 billion to advance the field, he said.

“The determination of countries like the United States and China to find sustainable solutions to liquid energy supply should not be underestimated,” he said.

Caltex, the Australian refiner half-owned by San Ramon, California-based Chevron Corp., plans to sell a new “high ethanol-content” fuel later this year, Segal said. Australia must have policies to encourage alternative fuels, he said.

Segal, who became CEO in 2009, told reporters Caltex would consider acquiring refineries in Australia if they were up for sale and “if it made economic sense.” He declined to comment on Caltex’s outlook for refining margins.

Royal Dutch Shell Plc, which operates the Clyde and Geelong refineries in Australia, may sell its “downstream” assets in the country, Goldman Sachs JBWere said yesterday.

BP Plc runs the Kwinana refinery in Western Australia and the Bulwer Island plant in Queensland. The London-based company plans to sell as much as $30 billion of assets over the next 18 months to cover costs from the Gulf of Mexico spill.

In the groups’ first ad, ‘Say NO to untested E15’, they state that the ethanol blend should only be increased following ore tests and claim that E15 will result in automobile and recreation engines to stall.

According to Charles Drevna, president of the National Petrochemical and Refiners Association: ‘Some ethanol companies want consumers to pump first and ask questions later. They [Congress and the EPA] shouldn’t authorise E15 unless full and complete scientific testing confirms it’s safe and compatible with all gasoline-powered engines.’

The campaigners believe that the testing which is being carried out fails to include engine durability, durability of fuel pumps and fuel lever sensors and vapour leakage from parked cars.

However the CEO of Growth Energy, the US-based group which filed the original E15 waiver request in March last year, Tom Buis, dismissed the claims, explaining that the tests being conducted by the DoE are extremely thorough. This comes after Growth Energy received a letter from the DoE in December 2009 explaining that vehicles built in 2001 or later obtained no negative effects after running on the E15 ethanol blend. It is now believed that the EPA could approve a partial waiver that would see the more recently built vehicles only utilising E15.

While the EPA is thought to announce its verdict on the E15 waiver towards the end of this year, the groups campaigning against E15 are said to be conducting their own tests on E15, which are not expected for a number of years.

The mountains of food at risk of rotting – equal to a sixth of its stocks – have erupted as a hot political issue, fuelled by televised images of wheat piled carelessly at state warehouses.

The row comes as global wheat prices surge on the back of a drought in Russia, one of the world’s largest producers, and heavy rains in Canada. If India is forced to dump the wheat in the market, it could dampen the price rally. But if the stocks are lost, it could fuel the price surge as it would reduce global inventories.

European wheat prices on Wednesday hit a 22-month high of €190 a tonne in Paris, up nearly 5 per cent. In Chicago, CBOT September wheat hit a peak of $6.23¼ a bushel, a 13-month high and up more than 4 per cent on the day.

Analysts and industry executives fear prices could rise further in the coming weeks as Russia cuts further its estimate of the size of its wheat crop.

India is the world’s second-largest wheat producer. The country usually harvests enough wheat to feed itself, but periodic shortages forces New Delhi to tap the international market, impacting global prices.

With many poor Indian households reeling from the impact of spiralling food prices, India’s Supreme Court has weighed in, demanding the government explain why the surplus food cannot be given to the poor. “In a country where people are starving, wastage of even a single grain is a crime,” it said.

The Food Corporation of India, and allied state agencies, have at least 59m tonnes of food grains – including about 33m tonnes of wheat, and 24m tonnes of rice – in its custody, ostensibly to serve as a buffer to ensure affordable food for India’s population in case of crop failure or sharp swings in prices.

But just 42m tonnes of this national stock are being kept in covered warehouses, while at least 17m tonnes is piling up outdoors under tarpaulins, inadequately protected from the elements. Experts say about 10m tonnes – enough to feed 140m people for a month – risks being totally ruined.

“It’s an embarrassing mountain of food grains,” said Ashok Gulati, the New Delhi-based Asia director of the International Food Policy Research Institute.

“The big question is, what to do with it now?”

The grain mountain – nearly three times bigger than what the official buffer stock policy demands – began accumulating during the sharp 2007 surge in global food prices, when India, banned exports of wheat and most rice varieties.

JAKARTA, July 28 – Malaysian crude palm oil closed up 0.4 percent on Wednesday on concern that rains will slow output, which countered expectations of slowing demand from India.

Concern remained that a brewing La Nina weather event, which brings more rains to palm oil producing Southeast Asia and hotter weather to soybean growing U.S. and South America, will affect output.

The benchmark October contract KPOc3 on Bursa Malaysia’s Derivatives Exchange settled up 10 ringgit to 2,495 ringgit ($782) a tonne. Overall volume stood at 10,785 lots at 25 tonnes each.

“Uncertainties about palm oil supply remain the driver for CPO prices,” said a trader with a local commodities brokerage.

However, expectation that India, the world’s largest vegetable oil buyer, may slow buying because of a possible increase in its domestic oilseed crops weighed the market, the trader said.

A Reuters technical analysis showed that the contract was expected to fall towards 2,403 ringgit per tonne. For a 24-hour technical outlook on palm oil, click on [ID:nSGE66R03R].

Oil slipped towards $77 after an unexpected increase in U.S. crude stockpiles and a drop in U.S. consumer confidence deepened doubts about recovery in energy demand. [O/R]

Other vegetable oil markets were mostly higher. U.S. soyoil for August delivery BOQ0 edged up 0.34 percent and the most active January 2011 soybean oil contract DBYH1 on the Dalian Commodity exchange rose 0.05 percent.

Benign conditions for the developing U.S. crop and the prospect of large harvests, have limited gains in soybeans markets.

For analysis on soyoil’s premium over Asian palm oil, click on [ID:nSGE66J08S]

INDONESIA PALM TRADES

The Jakarta-based PT KBN Nusantara, formerly known as the state marketing centre, sold 9,000 tonnes of crude palm oil in an auction on Wednesday with the top price at 7,559 rupiah ($0.839) per kg, against 7,456 rupiah per kg on previous day.[OILS/TEND]

Producers in Medan, home to Indonesia’s main palm oil export port of Belawan in Sumatra island, did not hold any palm oil auction.  

Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm olein — used as cooking oil — unchanged at 7,900 rupiah per kg from previous day.

Lukoil agreed to buy back 7.6 percent of its stock from ConocoPhillips for $3.44 billion, according to a statement today by the Houston-based seller. ConocoPhillips said it will sell its remaining Lukoil interest, about 12.4 percent of the Russian company’s stock, by the end of next year.

Second-quarter net income jumped almost fivefold to $4.16 billion, or $2.77 a share, from $859 million, or 57 cents, a year earlier, ConocoPhillips said. Per-share profit excluding such items as gains from asset sales and a drop in the value of an idled German refinery that the company may sell was $1.67, 11 cents higher than the average of 16 analyst estimates.

“ConocoPhillips has been a notorious underperformer, and I think they’re trying to sort of streamline themselves into a more lean operation, thereby improving shareholder value,” said Robbert Van Batenburg, head of equity research at Louis Capital Markets in New York.

The company, which is in the middle of a $10 billion asset- sale program, canceled plans to upgrade its Wilhelmshaven refinery in Germany and this year pulled out of a refining project in Saudi Arabia and an Abu Dhabi natural-gas venture. The Lukoil sale isn’t included in the $10 billion divestiture target. ConocoPhillips previously said it would sell half of its stake in Lukoil, Russia’s largest non-state oil producer.

Quick Cash

The change of plans stems from “the expected business environment and our stated strategy to enhance returns and increase distributions,” ConocoPhillips Chief Executive Officer Jim Mulva said in the statement.

“It’s sort of a quick way to raise some cash, and the Lukoil interest wasn’t really core to their future strategy,” said Matti Teittinen, an analyst at IHS Herold in Boston. “It’s a surprise, but I think it’s a positive.”

ConocoPhillips rose 24 cents to $54.68 at 9:50 a.m. in New York Stock Exchange composite trading. The stock has climbed 7.1 percent this year.

Lukoil said in a separate statement that it plans to complete its share purchase from ConocoPhillips on Aug. 16. ConocoPhillips said it will sell the rest of its stake on the open market or to Lukoil.

Price Gains

ConocoPhillips and other oil companies benefited in the second quarter as a recovering global economy spurred gains in crude prices. New York oil futures traded 31 percent higher than a year earlier, averaging $78.05 a barrel. ConocoPhillips also benefited from wider profit margins on gasoline and other refined fuels, Mulva said.

The company said costs recorded to reflect a drop in the German refinery’s value reduced profit by $1.1 billion. ConocoPhillips said last week that the plant may be sold or converted to a fuel terminal.

“Although you hate to see them take these big write-offs, it’s better than throwing good money after bad to try to save face,” said Philip Weiss, an analyst at Argus Research in New York who has a “buy” rating on ConocoPhillips shares and owns none. “I think that they’re making the right moves.”

Second-quarter production fell 7.4 percent from a year earlier to the equivalent of 1.73 million barrels of oil a day, ConocoPhillips said. The company said planned maintenance at fields in Norway and Australia contributed to the decline.

Exxon, Chevron

ConocoPhillips is first among the major U.S. oil companies to report second-quarter earnings. Exxon Mobil Corp. of Irving, Texas, is scheduled to announce its results tomorrow, and San Ramon, California-based Chevron Corp. plans to report earnings July 30.

ConocoPhilips in June completed the sale of its 9 percent stake in oil-sands producer Syncrude Canada Ltd. for $4.65 billion.

The company posted its biggest loss on record in 2008 on about $34 billion in writedowns of assets that dropped in value. The company agreed to buy gas producer Burlington Resources Inc. in 2005, the day before futures prices hit an all-time high.

Net revenue totalled 3.99 billion reais ($2.26 billion) in the so-called first quarter of 2011, compared with 2.57 billion reais a year earlier, the company said in an e-mailed statement. Quarterly net sales were 4.39 billion reais in the prior quarter.

Average sugar prices rose 35 percent to 889.4 reais a tonne, slower than the 49 percent growth posted in the prior three months. The company sold 932,400 tonnes of sugar in the three months ended on June 30, compared with 988,500 tonnes in the year earlier period, the statement said.

The company, based in Sao Paulo, will unveil quarterly results on Aug. 12 after markets close.

Cosan’s fiscal year starts on April 1 and ends on March 31, following the sugar cane harvesting cycle in Brazil’s center-south region.

As populations around the world in both developed and emerging markets increase, new solutions for both feeding and providing energy for the planets new citizens will have to be fashioned. Recent struggles within the United States corn ethanol industry illustrate that finding the balance between food and fuel source can be difficult. Several producers such as Aventine filed for bankruptcy protection as feed stock costs soared and food demand strengthened. However, a different crop might be the best combination of a renewable energy source and food play.

The Oil Palm
Palm oil is quickly emerging as the cooking medium of choice for the developing world, with both China and India being the largest importers of the substance. Worldwide demand for vegetable oil is expected to rise nearly 54% by 2020, with palm oil demand nearly doubling in that time frame.

Its low cost is one of the reasons for its growth. The oil palm is regarded as one of the most cost-effective vegetable oil crops, cultivating average yields of 3.5 to 5.0 tons of oil per hectare per year. This low cost and high production values has the oil competing with soybean imports in Asia. Important festivals with their communal meals in China, India, Pakistan and Indonesia are strengthening edible oils consumption. In Europe, palm oil is quickly becoming a primary substitute for rapeseed and in the U.S., palm oil is finding its way into an ever increasing amount of processed foods.

Cooking aside, the real growth for palm oil could be had as an alternative fuel. Palm oil can be refined into bio-diesel and analysts predict that an oil price above $55 a barrel makes palm oil-based biodiesel a commercially viable option. Currently, only about 20% of palm oil production is used for bio-fuels. Increasing energy costs in developed countries combined with economic growth in Asia’s emerging markets are calling for new energy supplies. Increased ownership of cars and motorbikes within emerging Asia will help buoy palm oil prices.

Environmental Concerns
One of the chief concerns related to palm oil production is the vast amount rainforest being clear cut to make way for new plantations. A recently proposed study from the U.K.’s Environment Secretary will look into what proportion was sustainably sourced, and what changes could be made to reduce the impact on the environment. Currently, only 4% of the world’s palm oil is certified as sustainable. Investors should beware of any developed countries potential legislation in terms of imports.

Palm Oil Plays
Unfortunately, most pure palm oil plantation stocks, like Sime Darby or IJM Plantations, do not trade on U.S. exchanges. Companies such as conglomerate Jardine Matheson (OTCBB:JMHLY) or Ag-super stars Archer Daniels Midland (NYSE:ADM) and  Bunge(NYSE:BG) do have palm oil operations, but are a small part of their overall businesses. Investors wanting to play palm oil’s growth, should look to exchange traded funds of the nations chiefly responsible for its production.

Malaysia and Indonesia account for around 90% of the world’s supply of palm oil. The iShares MSCI Malaysia Index (NYSE:EWM) is probably the best way to play its continued growth. The ETF has many of its assets dedicated to the palm oil farms and processors, with both Sime Darby and IOI as top-five holdings.

The Malaysia Fund (NYSE:MAY) also gives access, but to a lesser degree. For a play on Indonesian palm oil, the iShares MSCI Indonesia and its 58 holdings includes more plantation stocks versus the more popular Market Vectors Indonesia ETF (NYSE:IDX).

Colombia has quietly become the largest palm oil producer in the Latin America with significant portion of its crop exported as bio-fuel. The Global X/InterBolsa FTSE Colombia 20 ETF (NYSE:GXG) is currently the only way to access the South American nation.

The Bottom Line
With increasing populations on the horizon, new solutions on how to feed and meet the energy requirements of this larger populace will have to found. The growth of palm oil makes for an interesting trend as both food source and fuel supply. While owning individual plantation stocks in the sector is almost impossible, retail investors can add the iShares Malaysia ETF as starting point for investment.

The company was established to create large-scale plantations and build facilities that would produce biodiesel from coconuts.

Pacific Bio-Fields has been allocated over 400,000 hectares of public idle land in Northern Luzon by the Philippine government for use in putting up a $600-million biodiesel complex.

Moriaki Hayashida, Pacific Bio-Fields president, said the company would borrow $150 million from the Japan Bank for International Cooperation to augment the proceeds of its initial public offering in London.

He said the company would also avail of official development assistance loans, and do syndicated borrowings from local and foreign commercial banks to finance the project.

Pacific Bio-Fields has already planted coconut seedlings within a 1,000-hectare property in Pagudpud, Ilocos Norte as part of its Northern Luzon venture.

The biodiesel project would require at least 100,000 hectares of coconut plantations to achieve its target production capacity of 300,000 kiloliters of fuel in the medium-term. The company would need to spend $200 million to achieve its target.

Hayashida said initial output from Pacific Bio-Fields’ plantations would be sold to local biodiesel manufacturers.

The company plans to export the fuel to Japan after reaching the target production.

October-delivery futures declined as much as 0.6 percent to 2,470 ringgit ($773) a metric ton on the Malaysia Derivatives Exchange. The most-active contract ended the morning session at

2,488 ringgit.

Oil dropped the most in more than three weeks yesterday as the Conference Board said confidence among the U.S. consumers waned. Crude oil for September delivery dropped as much as 0.8 percent to $76.88 a barrel today in New York.

“We may not see a huge decline in palm oil as festival buying remains strong,” said Amol Tilak, an analyst at Kotak Commodity Services Ltd. in Mumbai. “Indian demand is on the rise and China is certain to buy more as they no longer import soybean oil from Argentina.”

China in April banned Argentine soybean oil imports in retaliation for anti-dumping probes on products ranging from elevators to textiles. Argentina is the largest exporter of soybean oil and China is the commodity’s biggest consumer.

Palm oil has climbed 8.6 percent in the past two weeks on speculation demand may rise among Asian countries and as weather threatens to disrupt production in the biggest producers of the tropical commodity. China, India, Pakistan and Indonesia mark important festivals in the three months ending September, with communal meals stoking edible oils consumption.

December-delivery soybean oil rose as much as 0.3 percent after losing as much as 0.7 percent yesterday. The vegetable oil’s premium over palm oil widened to $90.37 a ton from $85.30 yesterday, according to Bloomberg data.

CME Group Inc.’s October-delivery palm oil contract, pegged to the Malaysian benchmark price, lost 0.5 percent to $770 a ton yesterday.

On the Dalian Commodity Exchange, January-delivery palm oil tumbled climbed 0.8 percent to 6,618 yuan ($976) a ton at 12:22 p.m. in Singapore, while soybean oil gained 0.4 percent to 7,592 yuan a ton.

EPA data that compares greenhouse gas emissions between biodiesel and conventional diesel, released on Monday, shows canola oil would meet a key eligibility requirement for the U.S. Renewable Fuel Standard program.

“These results, if finalized, would justify authorizing the generation of biomass-based diesel … produced by the canola oil biodiesel pathway modeled,” the EPA said, adding that canola oil would have to meet other criteria as well.

The EPA will receive comments on the data until Aug. 25, after which canola oil could become an eligible fuel source under the fuel mandate, giving it equal status with soyoil, said Tom Hance of lobbying firm Gordley Associates, which represents a coalition of U.S. canola and biodiesel groups.

“If you’re a (fuel provider) and you’ve got to meet this mandate and you’ve got a choice between fuel that’s eligible and fuel that’s not, you’re going to buy the fuel that’s eligible,” Hance said.

The main market for canola oil is edible oil, but biodiesel would give it fall-back demand, said Dale Thorenson, assistant director of the U.S. Canola Association.

U.S. farmers planted 1.5 million acres (607,100 hectares) of canola this year, mainly in North Dakota. That’s a relatively small area, but the U.S. Canola Association has set a goal of expanding to 4 million acres by 2015.

U.S. plants have annual capacity for 200 million gallons (909 million litres) of biodiesel from canola oil, Hance said.

Canola oil’s eligibility for the mandate may also stabilize U.S. imports of Canadian canola oil, Thorenson said. Canada, the world’s third largest producer of canola and rapeseed, shipped 892,000 tonnes of canola oil to its top export market the United States from August 2009 through May 2010, according to Statistics Canada.

The United States Congress has set a goal of blending 36 billion gallons of renewable fuel into transportation fuel by 2022.

Companies hoping to burn organic matter — from waste to wood chips — to produce energy with less carbon emissions, have long called for long-term support under the renewables obligation certificate (ROC) scheme, which has been the main driving force for green technologies in Britain to date.

“Today’s announcement will come as a great relief … This brings most bioenergy projects into line with other technologies such as wind,” said Gaynor Hartnell, chief executive of the Renewable Energy Association (REA).

“Levels of financial support for completed projects are now guaranteed for 20 years, even if the rules change in the future. This should unlock some £13bn ($20.2bn) of much-needed private investment in the sector,” she added.

The new coalition government said support for electricity generated from dedicated solid and gaseous biomass, energy from waste, anaerobic digestion and advanced conversion technologies such as gasification and pyrolysis would be fixed for 20 years, subject to the 2037 end-date of the RO.

Until now, biomass burners have been able to get up to 2 certificates (ROCs) for every megawatt hour (MWh) of electricity they produce from dedicated boilers, but the government has not guaranteed that level of support over time.  Shares in AIM-listed Viridas, which grows crops in Brazil for use in the production of biomass and bio-oil for the British market, rose sharply after the announcement and closed up 87 percent at 10.75 pence.

Drax Group, which plans to build three dedicated biomass burning boilers at an estimated cost of £2bn, rose about 2.4 percent to 383.60 pence.

But the company said the government’s announcement does not reach far enough and increases uncertainty on subsidies for biomass plants that are ready to operate before April 2013.

“We remain concerned that there will still be a period of uncertainty for dedicated biomass plants which would not be accredited, and so ready to begin generating, until after April 2013,” a spokesperson for the company said late yesterday.

“We trust that DECC (Department of Energy and Climate Change) will take the opportunity to address this issue early in the review,” she added.

Drax opened a 400 megawatt biomass power unit in June, but the operator has been running the plant at no more than two-thirds of its capacity as the lack of subsidies makes operating the plant at full capacity unprofitable, Drax said.

The government said it wanted to speed up the introduction of smart meters into most British homes to help better manage electricity supply as Britain becomes more reliant variable on wind power over the next decade. The meters allow people to monitor their consumption more closely.

The coalition also said it was committed to implementing a Renewable Heat Incentive (RHI) to reduce reliance on fossil fuel heating by encouraging low-carbon heating systems.

“We welcome the government’s full commitment to taking action on renewable heat,” said Paul Golby, chief executive of E.ON UK, in a statement.

“Delivery of the RHI is vital to encourage people to take up the challenge of a low carbon future in their own homes.”

The support for biomass and cleaner heating was widely welcomed by industry.

But some said the Conservative-led government’s plan to consult on electricity market reform until spring 2011, which continues years of mulling over Britain’s energy future under the then Labour government, could further delay investments urgently needed to modernise Britain’s energy supplies.

“In many areas where the government has announced further consultation or analysis, investors in renewable and low-carbon energy will find few crumbs of comfort,” said Jim Fitzgerald, assistant director at consultants Ernst & Young.

Congress finally is starting to recognize the high cost of filling up gas tanks with ethanol, the motor fuel made from corn. Billions of dollars in federal subsidies are on the chopping block.

It’s about time. With the national debt soaring, the government needs to wean the biofuel industry from its dependence on federal subsidies. Biofuels have always sounded better during the Iowa caucuses than they have performed in reality.

Taxpayers have bankrolled biofuel research and a boom in ethanol production. Aggressive mandates have hiked the amounts of ethanol blended into the gasoline supply, and the industry is pushing for even higher levels of the corn-based fuel in each gallon. At the same time, trade barriers have kept out cheaper ethanol produced from sugar in Brazil and other countries.

Those heavy-handed government policies were intended to develop a big new domestic industry that would reduce American dependence on oil, improve the environment and bring jobs to rural communities. The goals are worthy, but for all the expensive coddling, American taxpayers have little to show for their money.

Consider corn: When ethanol factories were popping up all over the heartland four or five years ago, livestock producers and food processors warned that using grain to make fuel would raise grocery prices. Not to worry, the biofuel industry responded, since corn would be phased out and inedible cellulose would be used instead. But the industry failed to deliver. “Cellulosic” ethanol, as it’s called, looks like it may never roll out on a commercial scale, despite Uncle Sam bending over to make it happen.

Last week, the Congressional Budget Office calculated how much taxpayers provide in biofuel subsidies to reduce gasoline consumption. The bottom line: $1.78 for every gallon when the biofuel is made from corn. (That includes tax credits for petroleum blenders, plus lost revenues from excise taxes that otherwise would be collected.) Ethanol from cellulose costs a beyond-belief $3 a gallon in subsidies.

Enough already.

When President Barack Obama took office, the biofuel industry cheered. Here, after all, was a resident of the Corn Belt who had visited ethanol plants and understood the industry’s allure for farm-state politicians.

But with the economy down and government spending up, some key Democrats are finding it impossible to make the case for the whopping subsidies. At the end of last year, a subsidy for the pint-sized biodiesel industry was allowed to expire. Now the House Ways and Means Committee is talking about slashing ethanol tax credits. Democratic Sen. Jeff Bingaman of New Mexico earlier this month urged Congress to weigh “the credit’s very high cost to taxpayers.”

Wasn’t Congress supposed to be doing that all along?

It’s time to eliminate the tax credit. And before Congress even considers mixing more biofuel into the gasoline supply beyond the current 10 percent in each gallon, it needs to lift the protectionist barriers so ethanol brewed from foreign sugar can compete. Lawmakers also need to resist the biofuel industry’s efforts to redirect funding into self-serving infrastructure projects.

Yes, the nation needs to reduce its reliance on foreign oil. There are many ways to do that through conservation, new supplies and alternative sources. When it comes to ethanol, heavy subsidies and protectionism have proved to be a bad mix.

Also on the panel, the Chief Representative in North America for the Brazilian Sugarcane Industry Association (UNICA), Joel Velasco, questioned the need to impose trade distorting barriers on sugarcane ethanol when fossil fuels are freely traded around the world: “The bottom line is that Americans cannot benefit from this clean, more affordable alternative if Congress continues to maintain trade barriers against imported ethanol.”
Global Biofuels Market
Several initiatives to promote the internationalization of biofuels were raised by panel members, including the U.S.-China Memorandum of Understanding on renewable fuels and the recently signed agreement between Brazil, the European Union and Africa. “The importance of these partnerships is clear and Brazil can have a positive influence on developing countries that could be producing sugarcane ethanol, said Runge.
Velasco recalled that, sugarcane is not only a Brazil-related story. “Over one hundred countries around the world grow sugarcane and could supply biofuels to 200 nations, instead of only 20 oil producing countries which provide fossil fuels to most of the world today.”

How we farm algae is crucial to making algal biodiesel environmentally viable, says Anna Stephenson at the University of Cambridge. She has developed a computer model that calculates the carbon footprint of producing, refining and burning algal biodiesel.

Making algal biodiesel in clear tubes has a carbon footprint nearly four times that of producing diesel

When algae are farmed in perspex tubes, she says, the energy needed to pump the algae around to ensure adequate exposure to sunlight results in a carbon footprint of 320 grams per megajoule equivalent of fuel. This compares with 86 g/MJ to extract, refine and burn regular diesel (Energy and Fuels, ref)

“If you use tubular bioreactors, frictional losses mean the energy required to pump the culture around is so high that the biodiesel would have a much greater greenhouse gas emission than fossil diesel,” she says.

Her model shows that growing algae in open ponds offers “a lot more potential to produce an environmentally sustainable fuel” – the footprint of biodiesel produced this way is only 19 g/MJ. But open ponds have one major drawback, namely that the water tends to evaporate, making them potentially more water-hungry than biofuel crops. What’s more, the yield of diesel from open ponds tends to be lower than from growing tubes, where the algae have better exposure to sunlight.

Renewed interest in algal biofuels has seen the likes of oil giant Exxon Mobil and Synthetic Genomics, based in La Jolla, California, jointly invest $600 million in researching algae cultivation. Such firms hope to pioneer technology that could see the cost of producing algal biodiesel dip below that of diesel within a few years.

The solution may lie in closed reactors designed to circulate algae for little energy outlay, says Benjamin Taylor, a chemical engineer at the University of Cambridge. He is developing a system of tubes containing baffles that restrict the flow of the water and algae in such a way as to create a swirling motion. This ensures the algal culture is constantly mixed and uses just 4 per cent of the energy consumed by conventional tubular reactors, he says.

     One ton of a crop known as jatropha, used to produce biomass to generate electricity, costs about 100 pounds ($155), Viridas Chairman Stanley Wootliff said today in an e-mail. That would value the contract at 24 million pounds ($37 million) a year. He declined to identify the buyer. Viridas said the transaction may lead to an “off-take”

agreement in which the company will supply biomass once its plantations are growing jatropha at full-scale. The agreement would run over a period of 10 years and could be worth about 250 million pounds, Wootliff said.

     “We would expect to sign the agreement for the biomass before the end of this year,” he said. Deliveries are scheduled to start in 2014. About 240,000 tons of jatropha biomass would produce approximately 50,000 megawatt-hours of electricity a year, he said.

     Viridas, based in London, signed an off-take agreement last year with chemical group Ineos Group Holdings Plc in the U.K.

Ineos agreed to purchase 450,000 barrels of jatropha bio-oil a year from Viridas, Wootliff said. The company rose to 5.75 pence today in London trading, valuing Viridas at 1.9 million pounds. The shares are down 42 percent this year.

     The price will average $4.25 a bushel on the Chicago Board of Trade in the three months ending March 31, said Luke Chandler, Rabobank’s executive director of agricultural market research. The price averaged about $3.91 this month at the close of trading yesterday.

     “We have turned bullish on prices” because of the drop in world grain production, Chandler said yesterday during an interview in Chicago. “We could see additional feed-grain demand moving back to U.S. corn” to avoid the risk of additional output losses in Europe and the Black Sea region, Chandler said.

     Demand will increase just as yields drop in the U.S., where crops got too much rain this year, Chandler said. The U.S. is the world’s largest grower and exporter.

     The average yield in U.S. may fall to 162 bushels an acre, less than the 163.5 bushels forecast earlier this month by the U.S. Department of Agriculture and a record yield of 164.7 bushels last year, he said.

     “Yield estimates will become increasingly important to determine the amount of corn that can be used to meet demand,”

Chandler said. “The U.S. supply already looks tight” with the USDA using an above-average yield forecast, he said.

     Corn also may rise because U.S. supplies are cheaper for importers in China, Chandler said. Corn futures on the Dalian Commodity Exchange have risen 4.1 percent this year compared with an 8.9 percent drop in Chicago futures. Dalian corn is trading at a $3.46 premium to Chicago futures. China’s expanding economy is boosting demand for meat, milk and eggs, as rising incomes allow people to buy more food. “China prices are relatively high compared to the U.S.,” Chandler said. “Exports are on the increase.”

The ethanol market this week will focus on:

• the corn market ahead of  Monday’s weekly Crop Progress report,
• gasoline prices, which rallied last week in sympathy with the stock market, and
• the ethanol demand and inventory situation as reflected in Thursday’s monthly EIA ethanol report for May.

CARD study paints much less dire situation if Congress does not extend ethanol tax credits – A study by the Center for Agricultural and Rural Development (CARD) at Iowa State University released last week predicted much less dire consequences if Congress fails to extend the 45-cent ethanol tax subsidy and the 54-cent tariff on imported ethanol.  Specifically, the study forecasted that only 300 jobs would be lost in 2014 and that ethanol prices would fall by only 12 cents per gallon per gallon in 2011 and by 34 cents in 2014.  The study forecasted that U.S. ethanol production would still increase to 14.5 billion gallons by 2014 and that U.S. imports of Brazilian ethanol would amount to only 740 million gallons or less than 5% of the total by 2014.  These forecasts are much less dire than forecasts by groups like the RFA and Growth Energy.  CARD’s more modest forecasts mean the failure of Congress to extend ethanol tax measures by year-end, while painful, may not be as much of a disaster as earlier thought.

Ethanol production mildly below record high – The EIA weekly ethanol data released last Wednesday indicated that U.S. ethanol production in the week ended July 16 rose by 1.8% w/w to 836,000 barrels per day (bpd), which was only 2.3% below the record high of 855,000 bpd posted in the week ended July 2.  Inventories rose by 1.0% to 835 where they were just 0.2% below the recent record high of 19.921 million barrels.

Ethanol Market Action -  August CBOT Ethanol futures prices last week extended the 4-week rally to post a new 2-month high and close slightly higher by 0.5 cents (+0.3%) at $1.616 per gallon.    Ethanol prices were supported by technical strength and the 3.6% rally in gasoline prices, but were undercut by the sharp 6.0% sell-off in corn prices and the rise in weekly ethanol production and inventories.

Ethanol/Gasoline – August gasoline futures prices posted a new 1-month high last week and closed 7.36 cents higher (+3.6%) at $2.1222 per gallon.  The main bullish factors was the strength in stock prices.  Tropical Depression Bonnie caused some worries early in the week as it developed in the Gulf of Mexico but it hit shore in Louisiana on Sunday with only 30 mph winds and did not seriously disrupt oil production.  Ethanol lagged the rally in gasoline prices and the spread of July ethanol prices minus gasoline prices last week fell by 6.9 cents to -$50.6 cents.

Ethanol/Corn – Sep corn futures prices last week fell back from the previous week’s 4-1/2 month high and closed the week down 23.5 cents (-6.0%) at $3.7125 per bushel.  Bearish factors included long-liquidation pressure, the weekly Crop Progress report that showed continued early development of the crop, and heavy rains across key corn growing areas in the Midwest that should improve yields.  The July ethanol-corn crush margin last week rose 7.5 cents to 27.6 cents/gallon, recovering from the previous week’s 13-month low of 20.1 cents per gallon.  Including DDG, the corn for ethanol crush margin rose by 7.5 cents to 55.2 cents/gallon.

Ethanol Calendar

• July 28: EIA Weekly Petroleum Status Report
• July 29: EIA May Monthly Ethanol Report
• Aug 12: USDA WASDE Crop Supply-Demand
• September: EPA’s E15 decision due

What a deal: Ethanol reduces carbon for only $754 a ton

The best refutation of the theory of the survival of the fittest is probably the corn ethanol lobby, whose annual $6 billion in federal subsidies have managed to outlive both its record of failure and all evidence and argument. So while we doubt another devastating study will result in any natural selection, recent findings from the Congressional Budget Office deserve more attention all the same.

CBO reveals that it costs taxpayers $1.78 in ethanol “incentives” to reduce U.S. gasoline consumption by one gallon—or nearly two-thirds of the current average retail gas price. CBO also estimates that cutting carbon emissions by one metric ton via ethanol runs to $754. To put that number in perspective, the budget gnomes estimate that the price for a ton of carbon under the cap-and-tax program that the House passed last summer would be about $26 in 2019.

That isn’t a one-to-one comparison, for reasons too complicated to get into here, though CBO does note that cap and trade or a straight carbon tax would “generally be cheaper than reductions resulting from a tax credit that encouraged specific actions in fewer sectors of the economy.” An even more astounding feat is that these ethanol subsidies are redundant—consumers are already required to buy ethanol at the pump under the arbitrary gasoline-blending mandate that Congress imposed in 2007.

CBO is also honest enough to mention that in reality $754 may be purchasing a net carbon emissions increase. “Because the production of ethanol draws so much energy from coal and natural gas,” the authors write, “it can be thought of as a method for converting natural gas or coal to a liquid fuel that can be used for transportation.” Meanwhile, the assumptions of their model also exclude indirect land-use changes toward energy-intensive crops that also tend to boost overall CO2.

Given these realities, the only mystery is how an industry that produces a fuel that no one would willingly buy has managed to be subsidized over four decades at costs that are higher than anyone ever imagined. But then, maybe it merely illustrates the theory of the politically fittest.

What follows are opening calls for U.S. grain and oilseed markets.

– Corn futures are called to open 1 cent to 2 cents a bushel lower on the Chicago Board of Trade as rain in the past three days improves conditions for plants, said Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago. More precipitation in the next 10 days was forecast.

– Soybean futures may open 5 cents to 7 cents a bushel lower before government reports today are expected to show improving U.S. crop conditions after rain replenished soil moisture, Grow said. Soybean-meal futures may open $2 to $3 lower per 2,000 pounds, and soybean oil is expected to open 0.1 cent to 0.2 cent a pound lower, he said.

– Wheat futures may open 4 cents to 6 cents a bushel lower on the CBOT, the Kansas City Board of Trade and Minneapolis Grain Exchange on speculation that rain boosted the yield potential of the U.S. spring crop in the northern Great Plains, Grow said.

The Gulf of Mexico oil spill is changing the driving habits of some north Alabama motorists.

Since the Deepwater Horizon oil rig exploded in April and dumped millions of gallons of oil into the Gulf, more north Alabama motorists have opted to use ethanol-based fuels in their flex-fuel vehicles.

That increase has prompted a local fuel distributor to install a pump for dispensing ethanol at one of his Lauderdale County convenience stores.

Recent increases in sales at his Muscle Shoals convenience store, which was the area’s first to offer E-85 ethanol, prompted Jonathan Edwards, president of Lawrenceburg, Tenn.-based Edwards Oil, to begin offering the fuel at the company’s Quick Mart store on Cox Creek Parkway in Florence. The store is across from Regency Square Mall.

“Our ethanol sales in Muscle Shoals have been strong, and we’re expecting the same at our Florence Quick Mart,” Edwards said. “The Shoals community has been supportive of an alternative to traditional gasoline, especially with everything going on with the oil spill in the Gulf right now.”

In addition to providing an alternative to petroleum-based fuel and helping reduce America’s dependence of foreign oil, E85 ethanol is cheaper than traditional gasoline.

On Friday, regular unleaded gasoline was selling for $2.52 per gallon at the Cox Creek Quick Mart, while the E85 sold for $2.19 per gallon.

Although E85, which is 85 percent ethanol and 15 percent gasoline, delivers fewer miles per gallon than conventional gas, Edwards said the lower cost more than makes up for the reduced mileage.

Mark Bentley, executive director of the Alabama Clean Fuels Coalition, said interest in E85 is growing throughout the state.

“In 2006, there were no public stations in Alabama pumping E85 ethanol,” he said. “There are now 13 public stations making E85 ethanol available to the general public.”

Edwards said E85 can only be used in vehicles designed to burn ethanol-based fuels.

The cars and light trucks that can use E85 are commonly called flex-fuel vehicles.

Edwards said as interest in ethanol-based fuels has increased, automakers have boosted production of flex-fuel vehicles.

While some Americans are embracing E85 ethanol, there are critics who voice concern about federal subsidies that are being used to promote its use.

The Belarus government has teamed up with Irish firm Greenfield to build one of Europe’s largest bioethanol plants which would convert crops grown on contaminated land into fuel.

According to online resource, the Environmental Data Interactive Exchange (EDIE), the crops would grow on land not yet suitable for food production following the meltdown of the Chernobyl reactor over two decades ago.

The land is still very fertile and therefore ideal for crop production. Growing the crops would have the added benefit of helping to clean-up the land as they absorb toxins in the soil. Greenfield plan to use the project to study how the crops can help return the land back to full use and will use the Chernobyl land as part of a wider study into the environmental benefits of biofuel production on contaminated land.

Greenfield chairwoman Ann McClain told the online publication: “Greenfield’s plan to produce bio-ethanol will use land which has been contaminated by radioactive isotopes to cultivate biomass crops for the ethanol distilleries.

“At the same time, we believe that growing the biomass crops will work to clean up the affected areas.

“At a later stage, when we move on to second-generation cellulose ethanol, there will be even greater advantages which will mean faster bio-cleaning of the contaminated zones.

“We hope we can build on research, field trials, and the experience we accumulate to go on to a comprehensive programme to use biological methods to clean up the areas affected by Chernobyl.

“The benefits will be economic, of course, but above all they will be social and environmental.”

On the surface it all seems good news for Europe’s biodiesel industry with capacity growth at 16.6%, but a worrying number of idled plants put its true potential at bay.

The total production figure of 9 million tonnes is overshadowed by the EU27’s two-thirds idle capacity, said to be due in part to unfair trade practices on the global biodiesel market.

The European Biodiesel Board (EBB) says the region’s biodiesel production capacity grew by 5 million tonnes to 21 million tonnes despite the closure of some smaller plants.

In 2008, Europe produced 7.75 million tonnes of biodiesel from a capacity base of 16 million tonnes, putting idle capacity levels at 51%.

The profitability of biodiesel producers continues to be hit by the circumvention of EU anti-dumping duties on subsidised US B99 biodiesel, shrinking domestic tax breaks and cheap imports from Argentina, EBB states.

The EU duties, imposed in March 2009, are being avoided by the trans-shipment of US biodiesel via non-EU destinations such as Canada, the EBB says.

It said differential export taxes in Argentina have also fuelled a boom in exports from the South American biodiesel producer, which reached 850,000 tonnes in 2009.

Biodiesel blending in regular diesel is still limited at 7%, strongly constraining the supply perspectives for EU biodiesel producers.

‘The EU will not reap the full benefits of its biodiesel industry if standardisation of higher biodiesel blends is not completed as a matter priority,’ EBB says.

European biodiesel production growth slowed last year from a 35% increase in production registered in 2008. Germany remained Europe’s biggest biodiesel producer despite output slipping from 2.82 million tonnes to 2.54 million tonnes in 2009.

The EU remains the leading biodiesel-producing region worldwide, representing about 65% of worldwide output. In 2009, biodiesel represented about 75% of biofuels produced in Europe with ethanol production last year at 3 million tonnes.

To meet the national requirement of 10% ethanol blend, Kenya’s national production will need to triple.

The two largest producers of ethanol in Kenya are Spectre International at 7.1 mgy and Agrochemical and Food Co. with 5.7 mgy production.

Chemelli, Nzoia and Sony announced in 2009 that they planned to produce up to 37 mgy of ethanol.

Biomass supplier Next Step Biofuels signed a letter of intent with Omaha Public Power District (OPPD) to test burn 2,200 tonnes of Next Step’s corn stover PowerPellets.

PowerPellets will replace up to 5% of the coal burned in one of OPPD’s North Omaha Station boilers during the one-month co-firing test. Pending the outcome of the August test, the companies said they expect to negotiate toward a multi-year PowerPellet contract by mid-October.

‘Wind and solar are important renewables, but PowerPellets contribute to the utilities’ base load, meaning they can be counted on to generate clean electricity 24 hours a day, 365 days a year. In this way, PowerPellets help to balance utilities’ renewable portfolios, and they can be implemented in existing coal-fired assets with minimal capital investment,’ Next Step president Kevin Dretzka.

‘With our PowerPellet solution, there are dozens of 500-plus megawatt coal-fired power plants in the Midwest that could be generating 5-10% renewable electricity in the very near term.’

It estimates production will increase to 1.1 billion gallons in 2010 with an economic impact of $3.1 billion, and providing 1,500 additional jobs.

In 2009 Minnesota’s ethanol industry generated more than $2.5 billion in economic activity in 2009 and supported more than 6,800 jobs.

Last year Minnesota processed about 29% of its corn crop into ethanol, expected to rise to one-third this year.

     NDRC said in a statement that the tariff for electricity generated from biomass projects will be fixed at 0.75 yuan

($0.11) per kilowatt hour, including value added tax, for straw-fired plants in the country. The straw-fired plants burn a number of agricultural and forestry residues including rice, wheat and cotton straws, to produce electricity.

     Currently, biomass power plants receive aabout 0.25 yuan/kWh subsidy increment to the benchmark price of desulfurised coal-powered plants, with an extra 0.1 yuan/kWh for straw-fired facilities, implemented in 2007.

     Feed-in tariffs for biomass projects can range from 0.5 yuan/kWh to 0.7 yuan/kWh, with central and western provinces in China have a comparatively lower power tariff than the east due to poor economic development. The western provinces are expected to enjoy a higher gain under the new fixed tariff.

     Bidders for individual biomass power projects must adopt the power purchase price as stated in the bid document, which should not be higher than the national tariff, the statement said.

     A biomass power plant with a capacity of 30 megawatts can reduce carbon emissions by 180,000 tonnes a year, NDRC said.

 The new streamlined biomass tariff should come as good news for most project developers in the space. The CNY 0.75/kWh tariff falls just above our central estimate of CNY 0.72/kWh for the levelised cost of biomass energy in China. Previously, the tariffs were based on a CNY 0.25/kWh subsidy added on to the local desulphurised coal power tariff, which varies from province to province. Given that fixed investment costs should not vary much across China, the streamlined tariff is more appropriate although variable costs (due to feedstock price and collection) do vary widely from location to location. Our central LCOE estimate assumes a feedstock price of CNY 300/tonne, so plants with prices lower than that may see IRR’s higher than 10% while plants with prices higher than that (most commonly seen in Shandong and Jiangsu) will need to apply for CDM credits in order to boost their revenue.

Hayward’s departure, to be announced tomorrow, follows months of speculation on his future amid a series of gaffes which have drawn scorn from US politicians.

The terms of his multi-million pound severance package are due to be agreed by board directors in London. BP said this morning that “no final decision has been made” on any management changes but confirmed that the board will meet tonight “ahead of the announcement of the second-quarter results” on Tuesday. BP is expected to report a massive $13bn (£8.4bn) loss as the company makes a provision for the cost of the oil spill that could top $25bn.

“Any decisions will be announced as appropriate,” BP added, but expectation that Hayward will leave the business helped the oil giant’s shares jump 10.3p to 408.9p in early trading this morning – a gain of almost £2bn.

Hayward, who riled Barack Obama by saying the amount of crude tipped into the Gulf of Mexico since the 20 April explosion was relatively “tiny” and that he “wanted his life back”, even though 11 people died in the explosion, will be replaced by Bob Dudley, a BP veteran who is currently overseeing the clean-up of the oil spill.

The move is seen by BP as the only way to rebuild the company’s shattered reputation in the US. The group, which has been the subject of takeover and liquidation speculation, was hoping to keep Hayward for as long as possible in an attempt to ensure one man took all the flak should a spate of investigations into the accident find BP seriously to blame. But it has realised in recent days that this is impossible.

BP is also aware that it is beginning to look like a group with a history of turbulence given this is its second big change of leadership in less than four years. Lord Browne, Hayward’s predecessor, left the firm after a spat with the then-chairman, Peter Sutherland, and a sinking of BP’s share price after the 2005 Texas City refinery fire which left 15 people dead.

Hayward, 52, was last night locked in meetings with the BP board about the financial details of his leaving package, but he is expected to go under basic contractual terms. That means one-year’s pay of £1m and a pension pot of more than £10m, capable of paying out more than £500,000 a year when Hayward reaches 60.

BP continued to insist “Tony Hayward remains chief executive”, and any change to this will be formally announced through the Stock Exchange. The decision to axe the boss will be rubber-stamped at a board meeting presided over by chairman Carl-Henric Svanberg in London.

Hayward has spent all his working life at BP and rose to become head of exploration under Browne. He was seen as a back-to-basics operator by the City who loved Browne’s swashbuckling style until the share price began to suffer after the Texas City fire, a pipeline spill in Alaska and a propylene trading scandal.

Svanberg was criticised for not doing enough to support his chief executive but the US media targeted Slough-born Hayward, who they described as “the most hated man in America”.

BP had privately insisted Hayward was working on a “fightback” to try to salvage his own reputation and that of a company that was once the largest on the London stock market.

The fightback was to be made on the back of the well in the Gulf finally being capped and criticism gradually extending from a sole focus on BP to the rig’s owner Transocean, which has been criticised by its own staff at recent accident hearings.

But as the week drew on and a “new BP” strategy began to take shape, both Hayward and other board members began to realise the vital US business and brand could only be salvaged under an immediate change of guard. The formal announcement is planned to be unveiled along with the first half-year financial results.

Dudley is seen as the best candidate because he is a US citizen with a very strong track record at BP and previously at Amoco. He lost out on the position to Hayward but in recent months has been called on to give credibility to the Gulf clean-up operation. Dudley was best-known as chief executive of the Russian business TNK-BP, where he performed well until being forced to flee the country in what many observers saw as a Kremlin-inspired campaign to destabilise BP there and put it under more Russian control.

Some industry commentators have predicted the demise of BP – once the most peer-respected oil company in the world after ExxonMobil. Predators have been circling since the share price fell by 40% after the Deepwater Horizon blast.

Exxon has already sounded out Washington politicians about whether they would stand in the way of a takeover of what was once its most bitter rival. Other global energy giants such as Gazprom in Russia and PetroChina have also had their names linked with either a merger or a purchase of parts in the event of a break-up.

BP has been forced by Washington to set aside $20bn into an “escrow account” that can be used to pay out the billions of dollars worth of claims expected to emanate from those who have suffered financial hardship as a result of the spill.

The company has also previously announced plans to raise $10bn through the sale of assets and last week revealed that it had already sewn up a $7bn deal to dispose of oil properties to Apache Corporation of America.

Tomorrow the company will announce plans to ramp up the sales process with a new commitment to sell up to $20bn of non-core assets. BP has been surprised by the relatively high price it was able to extract from Apache for the properties in New Mexico and Texas plus ones in western Canada and Egypt. It is keen to take advantage of this.

Work to finally halt the flow of oil into the Gulf, meanwhile, has resumed after the disruption caused by Tropical Storm Bonnie. BP said this morning that the two drilling rigs that were forced to evacuate the area on July 23 because of the approaching storm are returning in order to continue drilling the relief wells which it is hoped will eventually enable the damaged well to be plugged far below the seabed. The first rig returned on July 24 and is currently attempting to reconnect with the well and resume drilling operations, which BP said will take a number of days. The second rig is also moving back into place but work on the second relief well has been suspended so as not to interfere with the other rig.

Oregon State University, Rutgers University and the Arbor Day Foundation are the other members of the Hybrid Hazelnut Research Consortium. The grant, announced Wednesday, is awarded by the U.S. Agriculture Department.

UNL researchers have found that hazelnuts can produce nearly twice the amount of oil per acre as soybeans, and the properties of the oil make it substantially superior to soybean oil for culinary use and biodiesel fuel.

After the oil is extracted, a high-quality protein meal remains for animal feed.

The U.S. Department of Energy grant was announced Thursday afternoon for Phycal LLC of Highland Heights near Cleveland.

The project will use industrial carbon dioxide emissions to cultivate microalgae to be used in making biofuel that can be blended with other fuels.

The second-phase grant was one of six totaling $106 million in federal funding announced by DOE.

July 23 (Bloomberg) — Corn headed for the first weekly drop in four weeks in Chicago on speculation that rainfall in China will support yields, potentially reducing imports by the world’s second-largest consumer of the grain.

December-delivery corn rose 0.6 percent to $3.925 a bushel on the Chicago Board of Trade at 12:26 p.m. Paris time, reducing this week’s decline to 3.6 percent.

Corn and soybean crops in northeast China, which includes the country’s largest growing region, “will likely benefit from recent rain and thunderstorm activity and cooler temperatures,” Telvent DTN Inc. said in a forecast yesterday.

“There will be an impact” on prices as rains soak drier corn areas of northeast China, Michael Pitts, commodity sales director at National Australia Bank Ltd., said by phone. Reduced heat stress on Chinese corn and favorable U.S. crop conditions helped push prices lower this week, he said.

About 72 percent of the U.S. corn crop was in good to excellent condition as of July 18, compared with 73 percent a week earlier and 71 percent a year earlier, the U.S. Department of Agriculture said July 19. About 65 percent is silking, when plants begin to produce grain, and 8 percent is in the dough stage, when kernels are formed though yet to fill, the USDA said.

“The risk period, at least in the Northern Hemisphere, has passed,” Pitts said in reference to the pollination stage, when corn crops are most susceptible to damage from adverse weather.

Soybeans, Wheat

Soybeans for November delivery rose 0.2 percent to $9.81 a bushel, limiting the weekly loss to 0.4 percent, the first drop in three weeks.

September-delivery wheat slipped 0.2 percent to $5.9525 a bushel, trimming the fourth straight weekly gain to 1.4 percent. Milling wheat for November delivery fell 0.8 percent to 177.75 euros ($229.92) a metric ton on NYSE Liffe in Paris, cutting the weekly advance to 3 percent.

About 20 percent of Russian grain plantings, or 10 million hectares (24.7 million acres), were ruined by the worst drought in at least a decade, Ekho Moskvy reported, citing Agriculture Minister Yelena Skrynnik. The country was the world’s third- largest wheat producer in the 2009-10 season, according to the USDA.

An odd coalition of environmental and business groups is banding together to head off a move to increase the amount of ethanol in gasoline to 15%, up from 10% in most places now.

A spokeswoman, Abbey Franke, says that the government may decide whether to allow the higher blend by September, if not sooner.

Groups ranging from the Natural Resources Defense Council to the International Snowmobile Manufacturers Association issued a joint statement yesterday opposing more ethanol in gas. They say they fear that if the 15% ethanol/85% gas mix isn’t approved, ethanol backers might try for a 12% compromise, which they also oppose.

Ethanol, basically grain alcohol, usually is made from corn in the U.S. Gasoline sold in much of the nation has up to 10% ethanol mixed in to cut pollution and burn less foreign oil. It has huge support from corn growers and is usually a political football in farm states. Opponents often cite ethanol’s high cost:

Production of ethanol is heavily subsidized by the federal government, though the subsidy, too, is being debated. And some small engine makers, such as for snowmobiles, warn that higher mixes might cause internal damage.

A higher mix of 85% ethanol/15% gasoline — so-called E85 — is sold primarily in the Midwest, but vehicles have to be designed to accept that much ethanol, which is more corrosive than gasoline. Detroit automakers have been big supporters and expanded the numbers of such “flex fuel” vehicles that can use E85.

But opponents are lining up: “Rather than run a giant science experiment on the vehicles and gasoline-powered equipment owned by just about every American family, we believe Congress and the EPA have a responsibility to protect the public,” said National Petrochemical & Refiners Association President Charles Drevna.”They shouldn’t authorize E15 unless full and complete scientific testing confirms it’s safe and compatible with all gasoline-powered engines.”

Interestingly, the coalition also includes some groups connected to food processing — the American Frozen Food Institute; American Meat Institute; Grocery Manufacturers Association and Snack Food Association — who believe diverting more corn to ethanol will raise the price.

Earlier this year, EPA announced the final rule for the new Renewable Fuel Standard (RFS2), but the canola pathway was not yet looked at as biofuel feedstock able to meet required greenhouse gas reduction standards. Now, Biodiesel Magazine reports that the EPA says canola oil biodiesel could reduce GHGs by 50 percent compared to petroleum-based diesel:

“These results, if finalized, would justify authorizing the generation of biomass-based diesel RINs for fuel produced by the canola oil biodiesel pathway modeled, assuming that the fuel meets the other definitional criteria for renewable fuel (e.g., produced from renewable biomass, and used to reduce or replace transportation fuel) specified in EISA,” EPA said in the NODA memo.

EPA analyzed canola oil as a feedstock “assuming the same biodiesel production facility designs and conversion efficiencies as modeled for biodiesel produced from soybean oil.” To assess the impact of producing biodiesel from canola oil, the EPA also created a control case projection estimating 200 million gallons of canola-based biodiesel per year by 2022. “While we recognize that some canola oil has historically been used to make biodiesel for domestic use,” EPA said, “this range of production (zero to 200 million gallons) covers the range of production likely by 2022.” To create the projection, the EPA used a number of factors including historical volumes, potential feedstock availability and competitive uses, potential increases in crop acreage and potential increases in crop and conversion yields.

“As with other EPA analyses of fuel pathways with a significant land use impact, the proposed analysis for canola oil biodiesel includes a best estimate as well as a range of possible lifecycle greenhouse gas emission results based on formal uncertainty analysis conducted by the agency,” EPA also noted.

The EPA believes canola crop yields will increase in the long term.

The case was filed at the U.K. High Court yesterday, according to court records. Michael von Buelow, a spokesman for Danisco, wouldn’t say which enzymes were covered by the patent in the lawsuit.

“This is becoming the new normal for our relationship with Novozymes,” Buelow said. “We sit on 70 percent of the global enzyme market between us, so there’s bound to be some confrontation.”

Novozymes, based in Bagsvaerd, Denmark, in May filed a complaint in the U.S. that said Danisco infringed its patent on a so-called alpha amylase enzyme used in biofuels. In 2007, Danisco paid Novozymes $15.3 million to settle a patent dispute over another enzyme, also used in ethanol production.

The legal department at Novozymes hasn’t received any information on the suit, Annegrethe Jakobsen, a spokeswoman, said by phone.

Both companies produce enzymes that break down organic material, such as grain and corn, to form bioethanol, which is used as an alternative to fossil fuels.

Danisco and Novozymes are also developing so-called second- generation bioethanol, which uses organic waste such as corn- cobs, rather than grain and other food stuffs. Danisco estimates the global market for such second-generation biofuel will grow to $75 billion by 2020.

However GfL’s plans have been dashed after the application was turned down by councillors.

The plant, expected to cost in the region of £25 million (€29.7 million), would have processed cow slurry, crops and food waste, 40,000 tonnes of which ends up at Devon’s landfill sites every year.

But on 21 June Devon County Council blocked the application in the grounds that Rackenford was the wrong location and plant was just too large.

The promise is on condition that she is re-elected after the national vote on 21 August, when she faces opposition leader Tony Abbott.

“If elected, the Australian Government will contribute up to A$1 billion over ten years to the investment needed to connect our electricity grid to new sources of renewable energy,” she says in a speech on Friday.

Australian renewable energy firm Pacific Hydro says the commitment marks an important step towards ensuring the country meets its target to use 20% of electricity from renewable sources by 2020.

“Some of our highest value renewable energy zones fall outside of the existing transmission net,” says Lane Crockett, general manager of Pacific Hydro.

“The expansion and investment in this network will unlock billions of dollars of projects across Australia and create thousands of jobs,” Crockett says.

Critics, however, pointed out loopholes in Gillard’s idea of upgrading the electricity grid.

Conservation Foundation head Don Henry says: “The money for grid infrastructure is important, but we need solar power stations to connect the grid to. Today’s announcement will not see any additional solar power stations built.”

The Australian government has already invested A$5.1bn through the Clean Energy Initiative in clean energy projects such as clean coal, wind, geothermal and biofuels.

Another A$1.5bn Solar Flagships Program supports the development of very large scale solar generation plants, with eight projects out of 52 being shortlisted for development.

Gillard’s Labor Party will ensure that two applicants will be eligible for a round one funding in the first half of 2011.

“From solar power in north Queensland to geothermal in South Australia and wind and wave technologies in Western Australia. I want the whole country, from the north-east coast to the south-west, involved in creating these renewable solutions for our future,” Gillard says.

Another A$100m will be earmarked to support market-based projects developing renewable technologies through the Australian Centre for Renewable Energy, she adds.

However,. the Prime Minister’s ideas for a greener Australia have not been welcomed by some.

Gillard reaffirmed a delay in introducing a price for carbon pollution until at least 2012, provoking condemnation from environmentalists and The Greens party.

Senator Christine Milne, spokeswoman for The Greens, predicts voters would desert the Labor Party for delaying the emissions trading scheme, and criticises them for not following up with action from commitments.

“Prime Minister Gillard has shown a complete and utter lack of leadership on climate change,” Milne says.

The buy is part of BioVerde’s plan to boost its biodiesel production capacity to fourteen times its current amount by the end of next year before going public in 2013, board member and head of capital markets at Trendbank, Ailton Domingues, said in a telephone interview from Sao Paulo.

Taubate-based BioVerde will invest a further 55 million reais in a 200,000 square-meter (2.2 million square-feet) industrial plant by the end of the year. The company aims to reach an annual production capacity of 1.2 billion liters by June, 2012.

The company currently has the capacity to produce up to 83 million liters of biodiesel annually at its sole unit in Taubate, according to its Website.

“With this investment, we are completing the business plan to become the main biodiesel producer in the country after Petrobras,” Domingues said. BioVerde plans to go public in 2013, and will fund its investments until 2012 with its own resources, credit lines and selling debt, he said.

The UN’s Food and Agriculture Organisation flagged an “urgent need” to multiply the yields of the oilseed which, while it has been touted as a major potential source of biofuels, was “still essentially a wild plant sorely in need of crop improvement”.

It was “unrealistic” to expect jatropha, which many backers have championed for its ability to grow on marginal land, “to substitute significantly for oil imports” in the developing countries where it is grown.

Indeed, the level of economic returns needed to secure private sector investment “may not be attainable on degraded land”, the organisation said, noting considerably better gross margins which can be gained on sugar cane and oil palm plantations.

‘Little evidence-based information’

“Although there have been increasing investments and policy decisions concerning the use of jatropha as an oil crop, they have been based on little evidence-based information,” the FAO said in a report.

“Many of the actual investments and policy decisions… have been made without the backing of sufficient science-based knowledge.

“Identifying the true potential of jatropha requires separating the evidence from the hyped claims and half-truths.”

The report comes two weeks after two researchers at Belgium’s University of Leuven said that the crop requires more water than had been thought, and was best suited for small-scale growing in remote areas, where alternative fuel supplies are erratic and expensive.

Jatropha investors

The study also follows three days after shareholders at D1 Oils, the loss-making, London-listed jatropha specialist, foiled a coup by activist investor Brian Myerson, who last year lost an attempt to switch the group’s resources to producing cane ethanol.

D1 is in talks over a takeover by Australian peer Mission NewEnergy.

Other companies that have invested in jatropha since a surge of interest five years ago in the potential for biofuels include US car giant General Motors, which in April announced a five-year programme with the US Department of Energy and India’s Central Salt and Marine Chemicals Research Institute to demonstrate the oilseed’s commercial potential.

The FAO acknowledged that, while there was limited information available on private sector work into jatropha, “it may be assumed… that advances have been made”.

The producers association said the region’s biodiesel production capacity grew by 5 million mt to 21 million mt in 2009 despite the closure of some smaller plants.

In 2008, Europe produced 7.75 million mt of biodiesel from a 16 million mt capacity base, putting idle capacity levels at 51%.

The EBB said the profitability of biodiesel producers continues to be hit by the circumvention of EU anti-dumping duties on subsidized US “B99″ biodiesel, shrinking domestic tax breaks and cheap imports from Argentina.

The EU duties, imposed in March 2009, are being avoided by the trans-shipment of US biodiesel via non-EU destinations such as Canada, the EBB said.

It said differential export taxes in Argentina has also fueled a boom in exports from the South American biodiesel producer, which reached 850,000 mt in 2009.

Earlier this month APPA Biofuels, a division of Spain’s Association of Renewable Energy Producers, said that 75% of the Spanish biodiesel plants were idle due to “unfair” imports from Argentina.

According to APPA, 60% of all the biodiesel consumed in Spain in the first quarter of 2010 was imported, compared to a 51% figure in the previous quarter. Out of the 166,714 mt of pure biodiesel imported into Spain in the first quarter, 61% came from Argentina.

Europe’s biodiesel capacity has grown more than ninefold since 2004, driven by ambitious biofuels consumption targets given by EU authorities. Due to environmental concerns over the benefits of first-generation biofuels, however, many fiscal incentives for renewable fuels in Europe have since dried up.

BLENDING CONSTRAINTS

In addition to tax and US imports, the Spanish biofuels industry said it is also plagued by a delay in the approval of technical specifications that will allow higher biofuel blends into diesel and gasoline.

This delay could complicate the overall performance of the obligation of biofuels of 5.83% set for 2010, APPA said.

The EBB said biodiesel blending in regular diesel is still limited at 7%, strongly constraining the supply perspectives for EU biodiesel producers.

“The EU will not reap the full benefits of its biodiesel industry if standardization of higher biodiesel blends is not completed as a matter priority,” the EBB said.

European biodiesel production growth slowed last year from a 35% increase in production registered in 2008, the EBB said.

Germany remained Europe’s biggest biodiesel producer despite output slipping from 2.82 million mt to 2.54 million mt in 2009, the EBB said.

Production fell also in Greece and the UK, but expansions was seen in Austria, Belgium, Finland, Italy, Netherlands, Poland and Spain.

Spain saw its biodiesel output quadruple to 859,000 mt in 2009, taking the place of Italy as third largest EU biodiesel producer, behind Germany and France.

The EU remains the leading biodiesel-producing region worldwide, representing about 65% of worldwide output. In 2009, biodiesel represented about 75% of biofuels produced in Europe with ethanol production last year at 3 million mt.

The deal announced last week will see BP Biofuels North America taking on Verenium’s pilot plant and demonstration scale cellulosic ethanol facility in Jennings, Louisiana.

BP will also take Verenium’s research and development facilities in San Diego, California, along with the intellectual property rights to Verenium’s cellulosic biofuels technology and cellulosic enzyme technology.

The acquisition will leave Verenium with its commercial enzyme development business and personnel, allowing it to continue development work on enzymes suitable for use in the biofuels sector.

Scientists and technologists required for the biofuels development program are expected to transfer to BP.

Carlos A. Riva, President and Chief Executive Officer at Verenium said BP was the “right company” to expedite commercialization of Verenium’s technology.

Opportunities

Mr Riva said: “This agreement should give both companies the flexibility to pursue the growth opportunities in the respective businesses and achieve goals in the near-term.

“As a result of this transaction, Verenium will have the resources to grow our commercial enzyme business while maintaining strategic access to the emerging cellulosic ethanol market in a manner that better fits our resources,” added the President of Verenium, which has its head office in Cambridge, Massachusetts.

BP, which is also to provide $10.8 million in cash to Verenium when the lease for its San Diego facility is transferred to BP, will take over Vercipia Biofuels, the joint venture company formed with Verenium in February 2009, becoming sole investor.

Galaxy Biofuels, another 50-50 joint development company will also become 100% owned by BP.

The deal is expected to close in the third quarter of 2010.

BP Biofuels CEO Philip New said his company’s partnership with Verenium had been “very fruitful”.

Mr New said: “By acquiring Verenium’s cellulosic biofuels technologies, BP Biofuels should be well placed to accelerate the delivery of low cost, low carbon, sustainable biofuels, at scale.”

Terms weren’t disclosed. The acquisitions give Renewable Energy 16,000 cooking-oil collection installations nationwide, the Ames, Iowa-based company said in a July 20 statement.

Renewable Energy operates five biodiesel plants with about 182 million gallons of production capabilities. That capacity increases to almost 300 million gallons when considering biodiesel marketed on behalf of third parties, Alicia Clancy, a company spokeswoman, said in an e-mail.

American BDF is a joint venture between Tellurian, a unit of Irvine, California-based Golden State Foods, and Eagan, Minnesota-based Restaurant Technologies Inc., which owns the 16,000 installations. American BDF had been focused on developing smaller plants to convert waste cooking oil into biodiesel, Renewable Energy said.

A spokesman for Tellurian didn’t immediately respond to a request for comment regarding production capacity.

Renewable Energy Chief Executive Officer Jeff Stroburg said this year that the company’s network of plants has averaged 20 percent capacity utilization since a $1 a gallon biodiesel tax credit expired at the end of 2009, according to Clancy.

The National Biodiesel Board, an industry group, said this year that aggregate capacity utilization of facilities nationwide had decreased to less than 5 percent since the tax credit for blending biofuel into diesel fuel ended.

Biodiesel maker Renewable Energy Group of Ames has ventured into the used cooking oil business.

REG said Tuesday it is purchasing Tellurian Biodiesel Inc. of California and American BDF, a jointventure owned by Golden State Service Industries, a wholly‐owned subsidiary of Golden State Foods of Irvine, Calif.; Restaurant Technologies Inc. of Eagan, Minn.; and Tellurian.

ABDF and Tellurian specialize in disposal of used cooking oils for large commercial and industrial users.

REG said the deal “connects RTI’s national used cooking oil collection system – with more than 16,000 installations – with REG’s national network of proven, commercial-scale biodiesel manufacturing facilities in order to produce high performing, clean liquid fuel.”

Like other makers of biodiesel fuel, REG long has looked at the potential of acquiring and using cooking oils as a feedstock. Soybean oil prices can be volatile, and animal fats tend to gel in colder weather.

“Turning used cooking oil into biodiesel at REG’s network of manufacturing facilities is another good outlet for our customers’ waste products to power a simple, green, and safe solution for fueling our nation’s progress toward clean energy goals,” said Restaurant Technologies CEO Jeff Kiesel.

REG owns or manages biodiesel plants in Iowa, Illinois, Kansas, Louisiana, Minnesota and Texas.

The biodiesel industry has been hurt this year by Congress’ refusal to renew the $1-per-gallon federal tax credit on biodiesel, which has led to the shutdown or curtailment of many plants.

RTI and Tellurian Biodiesel previously tried to develop a network and system to convert used cooking oil into biodiesel. Terms of the purchases were not announced.

SIOUX FALLS, S.D. A dedicated ethanol pipeline could be profitable if the biofuel expands beyond its use as a 10-percent additive in standard cars, a new government study suggests.

A U.S. Department of Energy study released Monday said the nation would first have to boost its use of the alternative fuel either through greatly expanded use of E85, an 85-percent blend that runs in flexible fuel vehicles, or a transition to 15- and 20-percent blends in standard cars.

Assuming ethanol demand volume of 2.8 billion gallons a year and a project construction cost of $4.25 billion, a pipeline would need to charge an average tariff of 11 cents more per gallon than if the fuel was moved by rail, barge or truck.

“Even at a lower pipeline construction cost ($3.75 billion), significant financial incentives would be required to make the pipeline profitable if ethanol blends remain capped at 10 percent and E85 demand is not significantly expanded,” the study found.

The Energy Department was considering a hypothetical project, but top ethanol producer Poet is already looking at moving its product by pipe.

Sioux Falls-based Poet and Magellan Midstream Partners LP are studying the feasibility of a $3.5 billion, 1,800-mile pipeline that would send ethanol from plants in Iowa, South Dakota, Minnesota, Illinois, Indiana and Ohio to distribution terminals in the northeastern United States.

The companies’ analysis of their project concludes that it is economically viable with transportation rates about 15 percent lower than rail rates. The venture becomes more viable if flexible fuel vehicles that run on E85 become more popular and the Environmental Protection Agency allows higher concentrations of ethanol in gasoline.

The EPA recently announced that it would wait until this fall to decide whether U.S. car engines can handle the higher blends,

The ethanol industry has maintained that there is sufficient evidence to show that a 15 percent ethanol blend in motor fuel will not harm the performance of car engines. The refining industry, small engine manufacturers and some environmental groups have argued against an increase.

Poet said a renewable fuel pipeline would enhance the transportation efficiencies for the domestic renewable fuels industry.

“Pipelines are the most reliable, cost effective and safest mode of transportation capable of moving large volumes of liquid energy from where it is produced to where it is consumed,” the company said in a statement.

A viable ethanol pipeline does face several challenges, the Energy Department said.

Ethanol tends to cause more internal cracking of carbon steel pipe than gasoline or diesel, but the study found that an ethanol pipeline can operate safely and without stress corrosion cracking when appropriate measures are taken.

Such a project is unlikely to find affordable financing because of demand and supply uncertainty, and it would require government financial assistance.

The Energy Department said there are also siting and regulatory barriers.

“Environmental assessments for a dedicated ethanol pipeline could face more than average complications due to its first-of-a-kind nature and a growing public resistance to the ethanol industry,” the study noted.

October-delivery futures rose 1.4 percent to 2,459 ringgit ($764) a metric ton on the Malaysia Derivatives Exchange. The most-active contract climbed as high as 2,467 ringgit earlier.

“Crude is holding its gain today and that’s supportive for palm oil prices,” said Alimuhammad Lakdawala, an analyst with AnandRathi Commodities Ltd. in Mumbai.

Oil traded near a three-week high as equities climbed and an industry report showed a drop in U.S. crude stockpile. Crude for September delivery in New York gained as much as 0.9 percent to $78.25 a barrel, and was at $77.94 at 6:09 p.m.

Goldman Sachs Group Inc. forecast crude palm oil for immediate delivery to gain between 15 percent and 20 percent this year as a dry weather impacts Malaysian production. A 35 percent decline in palm oil inventory in Malaysia from its peak in December is “positive” for prices, analysts Patrick Tiah and Nikhil Bhandari said in a report today.

“Malaysian crude palm oil production has been relatively weak due to biological yield stress,” they said. “We see more downside risk in the second half of the year from the lagged impact of dry weather in early 2010.”

Goldman expects U.S. biodiesel demand to pick up in the second half of the year, offsetting the bearish bias from a record soybean harvest. It expects soybean output to drop next year on lower yields and acreage.

Goldman Forecast

Palm oil may average $800 a ton this year, and $900 in 2011, Goldman said. Prices in Rotterdam averaged $680.75 in 2009 and $806.68 so far this year, according to Bloomberg data.

The most-active palm oil contract advanced 9.1 percent in eight-day period ended July 19 on speculation that demand for the vegetable oil will climb on Asian consumption.

Soybeans for November delivery in Chicago rose 0.4 percent to $9.77 a bushel at 6:36 p.m. Singapore time. Soybean oil for delivery in December added 0.1 percent to 39.23 cents.

“There’s increased demand for soybean oils the world over and that may limit gains for palm oil,” AnandRathi’s Lakdawala said. “Palm oil will find incremental demand only if the premium of soybean oil price increases substantially.”

Soybean oil’s premium over palm oil narrowed to $100.08 a ton from $110.76 yesterday, according to Bloomberg data. The two oils are direct substitutes.

Exports Drop

Malaysia’s overseas sales of palm oil dropped 3 percent to 879,018 tons in the first 20 days of the month, from the same period in June, Intertek said yesterday. Sales to China slumped 61 percent to 134,700 tons, the data showed. Societe Generale de Surveillance said exports fell 4.8 percent, with shipments to China plunging 61 percent and those to India by 7.6 percent.

CME Group Inc.’s October-delivery palm oil contract, which is pegged to the Malaysian benchmark price, fell 0.4 percent to $752.5 a ton yesterday.

On the Dalian Commodity Exchange, January-delivery palm oil lost 0.2 percent at 6,516 yuan ($961) a ton while soybean oil was little changed at 7,558 yuan at the 3 p.m. close.

In a meeting between the London Assembly’s Environment Committee and the head of sustainability at the London Organising Committee of the Olympic Games, David Stubbs explained that there are not enough renewable energy projects in the city. A planned wind turbine scheme has already been blocked and this, combined with a general lack of sustainable energy facilities, means that London may not meet its target during the staging of the Olympic Games and Paralympics.

Olympic organisers are also facing another setback as waste processing facilities fail to be developed. With 40% of the waste created at the Games expected to come from food and food packaging, it was hoped that East London would see a new organic waste processing facility. Although this has not been the case Sean McCarthy, chairman of the Commission for Sustainable London 2012, hopes to see such a facility built in the near future.

However the London 2012 team is still trying to reduce overall energy consumption during the Games. It is using boilers which burn waste wood and 50,000m2 of solar panels, which it wants to install around the Olympic Park. It is also planning a small scale CHP biomass plant.

The company claims the proposed scheme, which will be located at the Reclamation Pond site -adjacent to the North Tees Chemical Complex, near Billingham – will generate renewable electricity for up to 50,000 homes in the North East.

As part of the planning and consultation process for the project, an initial scoping document, which details the project and the measures that will be taken to consider its environmental impact, has been issued to the council.

Consultation with local stakeholders and residents about our plans is an important part of the project’s development process

Ian Williamson, Air Products

The facility will use advanced gasification technology provided by Alter NRG to convert pre-processed waste to baseload, renewable power.

A full environmental assessment and programme of public and regulatory stakeholder consultation, with stakeholders such as the Environment Agency and Natural England, will take place over the coming months, claims Air Products. If successful, it is anticipated that formal planning and environmental permit regulation applications will be submitted later this year.

For the plant to go ahead, it requires planning consent from Stockton on Tees borough council and an environmental permitting consent from the Environment Agency.

Air Products claims that by diverting waste from landfill, the proposed scheme will also offer an environmentally-friendly solution for the production of renewable energy in the North East.

The company is also looking into the potential of generating renewable hydrogen for mobile and stationary energy applications from the plant, which is being considered for a demonstration of energy from waste developer Waste2Tricity’s fuel cell technology.

It is anticipated that the scheme will create up to 50 permanent jobs and 500-700 jobs during its three-year construction period.

Commenting on the project, Ian Williamson, European hydrogen and bio energy director at Air Products, said: “Consultation with local stakeholders and residents about our plans is an important part of the project’s development process and we will be hosting drop-in sessions for local people over the coming months to explain the need for the project, the environmental merits of using the latest technologies and also the economic benefits to Teesside.”

The project has received £250,000 support from regional development agency One North East to investigate the feasibility of constructing the proposed plant at the Reclamation Pond site.

One North East chief executive, Alan Clarke, said: “We are delighted with this signal of intent from Air Products and we are committed to making sure the Tees Valley is ready to grab investment opportunities like this one. This is especially true for industries like the energy and process sectors, in which the North East already has significant strength.”

The site, owned by Teesside-based waste company and landowner Impetus Reclamation, has been renamed the New Energy and Technology Business Park (NETBP) and will focus on energy efficient production facilities and the conversion of waste to energy, waste to fuels and other related products.

Working in collaboration with Impetus Waste Management, Air Products claims it will now carry out a full assessment into the availability of waste, the suitability of the site and the need for baseload renewable power in the area.

million) anaerobic digestion plant in Suffolk, England.The project will use beer waste and food remains to produce a burnable gas for vehicles and for the national grid to be delivered to homes and businesses, a statement from Adnams said.

     The facility, using three digesters to break down about 12,500 metric tons of waste each year, eventually will generate sufficient renewable biogas to power the brewery and run Adnams’ truck fleet while still leaving as much as 60 percent of the output for injection into the grid.

     Production is set to begin in a month or two and have the energy equivalent of 4.8 million kilowatt-hours a year, or an amount sufficient to heat some 235 homes.

     The European Regional Development Fund, East of England Development Agency and the Department of Energy and Climate Change have provided grants for the project.

     Adnams developed the plant in partnership with National Grid Plc and Centrica Plc’s British Gas unit. Commissioning of the plant is now under way.

In February, a jury found him guilty on 10 counts in a $2.88 million scheme to defraud a biofuels subsidy program of the U.S. Department of Agriculture.

Co-defendant, disbarred Tennessee attorney Max Speight, 67, pleaded guilty to one count shortly before they were to go on trial. The prosecution’s key witness at Tacker’s trial, he hasn’t been sentenced.

Senior U.S. District Judge Glen H. Davidson presided at the sentencing. Tacker, 57, faced up to 50 years in prison and $2.5 million in fines.

Tacker is expected to appeal his conviction.

Tupelo attorneys Chip Davis and Rhett Wise represented Tacker during his three-day trial in Aberdeen, but he has hired new attorneys for his appeal, former Mississippi Supreme Court justices Oliver Diaz and Chuck McRae.

Tacker built a plant to produce biodiesel from soybean oil in Nettleton in 2006. He and Speight were partners in the business, Biodiesel of Mississippi Inc., which went bankrupt.

Tacker contends it was Speight who handled all the business’ finances and perpetrated the fraud while Tacker was the on-site nuts-and-bolts guy with a brain injury that prevented him from “doing numbers.”

Speight of Martin, Tenn., lost his license to practice law and spent time in jail after pleading guilty to stealing $1 million from real estate clients.

October-delivery futures jumped as much as 1.3 percent to 2,455 ringgit ($764) a metric ton on the Malaysia Derivatives Exchange. The most-active contract traded at 2,435 ringgit at the mid-day break in Kuala Lumpur.

“Crude is holding its gain today and that’s supportive for palm oil prices,” said Alimuhammad Lakdawala, an analyst at AnandRathi Commodities Ltd. in Mumbai.

Oil traded near a three-week high as equities climbed and an industry report showed a drop in U.S. crude stockpile. Crude for September delivery was little changed at $77.54 a barrel on the New York Mercantile Exchange at 12:36 p.m. Singapore time.

Goldman Sachs Group Inc. expects crude palm oil prices for immediate delivery to gain 15 percent to 20 percent this year as a dry weather impacts Malaysian production. A 35 percent decline in palm oil inventory in Malaysia from its peak in December will be positive for prices, Goldman analysts Patrick Tiah and Nikhil Bhandari said in a report today.

“Malaysian crude palm oil production has been relatively weak due to biological yield stress, but we see more downside risk in the second half of the year from the lagged impact of dry weather in early 2010,” the analysts said.

Goldman expects U.S. bio-diesel demand to pick up in the second-half of the year and pressure on palm oil prices to ease from a record soybean harvest. It expects soybean output to drop next year on lower yields and acreage.

The most-active palm oil contract advanced 9.1 percent in eight-day period ended July 19 on speculation that demand for the vegetable oil will climb on Asian demand.

Soybeans in Chicago gained as much as 0.4 percent to $9.725 a bushel at 12:35 p.m. Singapore time. December-delivery soybean oil, which rose 1.2 percent yesterday for the first time in three days, traded unchanged at 39.19 cents a pound at 12:38 p.m.

“There’s increased demand for soybean oils world over and that may limit gains for palm oil,” AnandRathi’s Lakdawala said.

“Palm oil will find incremental demand only if the premium of soybean oil price increases substantially.”

Soybean oil’s premium over palm oil narrowed to $106.61 a ton from $110.76 yesterday, according to Bloomberg data. The two oils are direct substitutes.

Malaysia’s overseas sales of palm oil dropped three percent to 879,018 tons in the first 20 days of the month, from the same period in June, according to cargo surveyor Intertek. Shipments to China slumped 61 percent to 134,700 tons, the data showed.

Rival Societe Generale de Surveillance said yesterday exports fell 4.8 percent, with shipments to China down 61 percent and those to India lower by 7.6 percent.

CME Group Inc.’s October-delivery palm oil contract, which is pegged to the Malaysian benchmark price, fell 0.4 percent to $752.5 a ton yesterday.

On the Dalian Commodity Exchange, January-delivery palm oil was little changed at 6,520 yuan ($962) a ton at 11:38 a.m. in Singapore.

U.S. shippers sold 115,000 metric tons to China for delivery in the marketing year that starts on Sept. 1, the Department of Agriculture said today in a statement. Exports for the current year to all destinations will reach 39.7 million tons, up 17 percent from the previous year, the USDA said last week. The price has risen 4.6 percent in the past month.

“Beans are demand-driven,” said Jon Marcus, the president of Lakefront Futures and Options LLC in Chicago. “Beans have stayed up, and every time the price comes off a little, it’s a bargain, so you can see the demand is definitely there.”

Soybean futures for November delivery rose 1 cent, or 0.1 percent, to $9.73 a bushel on the Chicago Board of Trade, after dropping as much as 1 percent. The most-active contract has gained 5.4 percent in the past year.

Soybeans are the second-biggest U.S. crop, with a 2009 value of $31.8 billion, behind corn at $48.6 billion, government figures show. The U.S. is also the world’s largest producer of the oilseed.

The National Corn Growers Association recently began running TV ads in Washington featuring an easily recognizable villain: BP PLC and its huge, uncontained oil slick in the Gulf of Mexico.

“Ethanol: Now is the time,” the ad announces.

“Ethanol is clean-burning, environmentally friendly and can reduce greenhouse-gas emissions compared to petroleum,” said the association’s president, Darrin Ihnen, in an interview. “The spill is a good reminder of that.”

BP says it is one of the largest buyers and suppliers of corn-based ethanol in the U.S., but corn growers aren’t the only ones hoping to use BP’s woes for their own benefit. When lobbyists, politicians or public-relations specialists are looking for a symbol of evil these days, BP is a top choice, even if the subject matter has little or nothing to do with oil. BP declined to comment on how others are invoking its name

Rarely has a corporation been the subject of such frustration and anger as BP has faced from the American public since the Deepwater Horizon oil rig exploded in April, killing 11 people and triggering one of the worst environmental disasters in U.S. history.

Seemingly insensitive statements by several BP executives, including one by the chairman calling the Gulf fisherman and others affected by the spill “small people,” have only fueled the fire.

Boycotts of BP-branded gas stations have sprung up, and some advocacy groups have called for the oil giant to be banned from military contracts.

Crisis-management experts say that taking advantage of corporate turmoil can be effective. The fact that this particular incident involves an oil company, the bane of many environmental and other activists, only magnifies the effect.

“There is not, never has been and never will be any downside in attacking an oil company,” said Eric Dezenhall, chief executive of Dezenhall Resources, a Washington, D.C., crisis-management firm.

And the more BP’s name is invoked by the public at large, the more the company’s image is damaged, experts said. Exxon Mobil Corp. suffered for years from the taint of its giant 1989 oil spill in Alaska, remaining synonymous in the minds of many consumers with an environmental disaster.

“It will be years before they live down—if they live down—this event,” said Gerald C. Meyers, a University of Michigan business professor and crisis-management expert.

The spill in the Gulf has had such negative reverberations that some companies that have nothing to do with oil are fearful of the possibility of being equated with BP.

In recent litigation on genetically modified rice, Germany-based Bayer CropScience asked a federal judge in Missouri to ban attorneys for the plaintiffs from comparing it to BP. They feared plaintiffs’ attorneys would say that Bayer was tainting U.S. rice crops in same the way BP has damaged the Gulf coastline.

The judge decided to take up the issue as it arose during the trial. A Bayer spokesman said such motions were commonplace and “intended as a means of focusing the jury’s attention on the issues actually in dispute.”

President Barack Obama is getting in on the act. In a speech from the Oval Office last month, Mr. Obama cited the BP oil disaster as a reason to press for legislation that would cap emissions of greenhouse gases.

Opponents of such legislation responded by also invoking BP, pointing out that the company is one of the founding members of the U.S. Climate Action Partnership, a group of businesses and environmental groups that have endorsed the principle of capping emissions.

“BP…has been only too happy to support the policy contained [in the climate legislation] with the understanding that they would be able to profit from the costly new regulations that will force consumers to pay more for energy,” said Dick Armey, a former Republican House majority leader, in a written statement. Mr. Armey now runs FreedomWorks, a group that has helped organize some of the Tea Party protests against many of Mr. Obama’s policies in recent months.

BP eventually pulled out of the climate partnership.

While BP’s name is being used to further, or detract from, various political and economic interests, it is also becoming an insult in the culture at large.

Angry bloggers refer to AT&T Inc. as the “BP of phone carriers” for problems with its network. On Twitter, users grouse that Toyota Motor Corp. is the “BP of the car industry” after it announced world-wide recalls amid complaints that its vehicles were accelerating out of control. AT&T and Toyota declined to comment.

In the Broadway musical “Fela!” the final number of Act I was recently changed. The cast parades across the stage holding signs of international companies that the characters call corrupt. The show has now replaced a sign showing Siemens AG, the German industrial conglomerate, with one showing BP.

Philadelphia Daily News film critic Gary Thompson, in his review of the movie “Grown Ups,” called the match-up of director Dennis Dugan and actor Adam Sandler “the BP of low-brow gags,” saying their films are “an unpluggable gusher of juvenile comedy.”

And the oil spill has also provided much fodder for late-night TV comedians. One, Jimmy Fallon, joked that the Coast Guard had offered good news, saying it was catching as many as 630,000 gallons of oil a day. “The bad news is that they’re capturing it with ducks,” he added.

An energy technology that has long been viewed as a clean and climate-friendly alternative to fossil fuels is facing tough new regulatory hurdles that could ultimately hamper its ability to compete with renewable power sources like wind and solar.

Dozens of biomass power plants, which typically burn plant or tree matter to generate electricity, are already in operation in a variety of states, like California, Michigan and Maine. In most cases, those plants have qualified for some form of renewable energy tax incentives or other benefits, as states used them to diversify their power portfolios.

But a long-simmering debate in Massachusetts questioning the environmental benefits of biomass has culminated in new rules that will limit what sorts of projects will qualify for renewable energy incentives there. If other states — or even Congress, which is writing energy legislation of its own — follow suit, it could have wide implications for biomass developers, as well as for states trying to meet renewable energy production targets.

Ian A. Bowles, the Massachusetts secretary for energy and environmental affairs, instructed the Department of Energy Resources on Wednesday to draft new regulations that would impose stricter standards for biomass projects seeking to qualify for state incentives.

The new proposals would, among other things, require the projects to provide “significant near-term greenhouse gas dividends.” Mr. Bowles also called for clear definitions of “residues” and “waste wood” — that is, the branches and other debris, left behind after timber and agricultural harvests, that provide the primary feedstock for many biomass plants.

The state also plans to develop careful carbon accounting rules for biomass power, and to throw its greatest support behind plants that produce both heat and power, which are considered more efficient than ones that generate only power.

Mr. Bowles said he hoped to have a draft of the new standards by the fall, and final regulations in place by the end of the year. The proposed changes in Massachusetts come just weeks after a study commissioned by the state suggested that careful regulation was needed to prevent biomass development from having a negative effect on New England forests, and on the climate generally.

“Our policy should reflect this current science by moving to support the development and operation of facilities that have the greenhouse gas profile needed to fulfill our emission-reduction mandates,” Mr. Bowles said in his letter to state energy regulators.

Industry representatives warned that the new rules could hinder efforts to meet renewable energy goals, and to reduce greenhouse gas emissions over all. But environmentalists welcomed the move, saying it would protect forests and foster responsible development of electricity generated with biomass materials.

Biomass power — a $1 billion industry in the United States, according to the Biomass Power Association, a trade group based in Maine — has long been considered both renewable and carbon-neutral on its most basic level. Trees and plants can be replanted, its proponents point out, and while they emit carbon dioxide when burned, they absorb it while alive, resulting in no net gains in greenhouse gases.

The technology has long held substantial allure for state and federal regulators seeking to diversify energy portfolios. California, Maine, Michigan, New Hampshire, Oregon, Vermont and Washington are among the states that make heavy use of biomass.

“I am not aware of any state that has a renewable portfolio standard that doesn’t include biomass,” said Bob Cleaves, the president of the Biomass Power Association.

He added that several states in the Southeast had been preparing plans to use biomass as well, saying that without it the states would fail to meet their renewable energy requirements.

But many environmental groups say that the benefits of biomass power — and all forms of energy derived from organic sources, including biofuels — are realized only in carefully controlled circumstances. The cycle of carbon emission and absorption also unfolds over long periods of time that need to be carefully monitored.

By providing incentives without strict rules governing which materials are burned and how they are harvested, governments risk creating a rapacious industry that could gobble up whole forests, critics warn. That could ultimately increase the amount of carbon dioxide being released into the atmosphere — one of the problems that renewable energies are supposed to address.

“Whether you call it biomass or simply chopping down trees, it’s still deforestation,” said Franz A. Matzner, climate legislative director for the Natural Resources Defense Council in Washington, which supports the sensible use of biomass power. “Burning trees for energy is an age-old practice that we know can cause some pretty bad effects if we don’t get our heads around doing it the right way.”

At the national level, critics have lambasted energy reform legislation currently being considered in Congress because it excludes careful carbon accounting for biomass projects. In May, a group of 90 scientists sent a letter to Congressional leaders urging them to consider “the importance of accurately accounting for carbon dioxide emissions from bioenergy in any law or regulation designed to reduce greenhouse gas emissions from energy use.”

Mr. Cleaves said that rules like those being proposed in Massachusetts could be devastating for biomass developers.

“This business is hard enough,” he said. “The margins are so small.”

But he also said that biomass producers were committed to sustainable practices and healthy forests. He asserted that state-level regulations already in place were adequate to prevent the sort of nightmare situations that some environmentalists fear.

“The public can’t lose faith in our technology,” Mr. Cleaves said. “If we’re going to get a benefit as a renewable energy source, the ratepayer obviously has to get something that’s green.”

U.S. automakers say they’re on track to increase the number of vehicles that can run on fuel-saving ethanol, even as the ethanol industry falters and other technologies like electric vehicles capture the public’s attention.

Most gasoline in the U.S. contains a low percentage of ethanol, which is a kind of alcohol made from corn, sugar and other substances. But only some vehicles can run on either gasoline or E85, a blend of 85 percent ethanol and 15 percent fuel. There are around 8 million flex-fuel vehicles on the road right now. Regular gasoline vehicles can’t run on E85.

Although not as efficient as gasoline, E85 reduces dependence on oil because of the low percentage of gas it contains. It’s typically cheaper than gas because of federal subsidies of around $6 billion per year.

Automakers benefit, too, because they get federal fuel economy credits for making flex-fuel vehicles.

General Motors Co., Ford Motor Co. and Chrysler Group LLC say they expect to meet a 2006 pledge to double their production of flex-fuel vehicles by the end of this year. In 2006, they produced 700,000 vehicles, so that means making more than 1.4 million flex-fuel vehicles by the end of this year.

U.S. automakers also expect to meet a goal of making half their vehicle production flex-fuel by 2012, up from around 30 percent now. But they warn that they could pull back if there aren’t enough gas stations with ethanol pumps.

Availability of ethanol varies widely. There are more than 2,000 U.S. gas stations with E85 pumps or blender pumps that allow drivers to specify the percentage of ethanol they want in their fuel. But that’s less than one in five gas stations in the country, and the vast majority are in the Midwest.

“We haven’t changed the commitment because we really do believe that biofuels need to be a piece of it,” Ford spokeswoman Jennifer Moore says. “But it may turn out to be a more regional solution.”

Ethanol lobbying group Growth Energy says the number of stations with ethanol pumps grew 11 percent last year, but that was far slower than the triple-digit growth they saw earlier in the decade. Sales slumped last year in Minnesota, which has the most ethanol-equipped gas stations in the country, as low gas prices narrowed the cost advantage enjoyed by E85.

When prices are low, buyers are more likely to choose regular gasoline because it’s more efficient. GM spokesman Alan Adler says E85 needs to be 20 to 25 percent cheaper than gasoline to make up for the fact that you have to fill up more often.

E85 is now around 20 percent cheaper nationwide, at $2.17 per gallon versus $2.72 per gallon for gasoline, according to E85prices.com. But in some states, the difference is as little as 16 percent.

The ethanol industry also has been hurt by high corn prices, low wholesale ethanol prices and the overall economy. Several major producers have gone bankrupt, and the industry is uncertain as it waits for the federal government to decide whether to renew its incentives at the end of this year.

Last week, Growth Energy called for a gradual end to the government payments that oil producers get for blending ethanol. The group wants the money used to install blender pumps at gas stations. It also wants the auto industry to make all its vehicles flex-fuel capable, although it didn’t give a timeline.

“It doesn’t matter how quickly automakers move if there are no blender pumps,” says Growth Energy spokeswoman Stephanie Dreyer.

A rival ethanol group, the Renewable Fuels Association, doesn’t support that plan and wants to keep the incentives in place.

The three Detroit-area automakers make the bulk of flex-fuel vehicles, although Toyota Motor Corp., Nissan Motor Co., Mazda Motor Co. and Mercedes-Benz also make some flex-fuel models, according to Growth Energy.

Adler says GM intends to introduce more and more flex-fuel vehicles, since it’s simple to transfer the technology. But he says it would be a challenge to make 100 percent of its vehicles flex fuel. Some trucks have diesel engines, for example, that aren’t compatible with E85.

GM promoted ethanol heavily between 2006 and 2008. More recently, it has focused other fuel-saving technology, such as the Chevrolet Volt electric car.

But Adler says that doesn’t mean GM is abandoning ethanol.

“We’ve always said that as long as the infrastructure keeps up, we’ll have it,” he says. “If gas prices go up and there are not thousands of electrics or diesels on the road, there will be a rush to have E85.”

The team’s focus will be on building multiple projects that generate electrical and thermal energy for sale to nearby or co-located industries.

The first joint project will be a 29MW combined heat and power biomass facility in Berlin, New Hampshire, which is fully permitted to begin construction. The plant will directly employ 23 people.

By combining forces, Gestamp Biomass and Clean Power , based in New Hampshire, say adding biomass plants will improve the region’s carbon footprint and increase long-term employment in green energy production.

The accord covers their joint activities in five other New England states of Connecticut, Maine, Massachusetts, Rhode Island and Vermont, plus New York and Pennsylvania

Clean Power will manage a portfolio of selected new biomass energy projects to be developed throughout the region. It will also provide a suite of services during acquisition, development, construction and operation of Gestamp Biomass-owned projects and operating facilities.

Gestamp Biomass, in turn, will provide project equity and arrange the balance of plant financing for the projects undertaken. It will also bring global experience in energy marketing and facilities operation, engineering, construction, and biomass fuel-procurement experience.

“Clean Power Development’s impressive management team brings essential expertise to our plan to significantly expand our presence in biomass energy in the USA,” says Emilio L. Lopez, chief executive of Gestamp Biomass, a unit of Gestamp Renewables, based in Madrid.

Gestamp Renewables has wind power operations in Oklahoma and Nebraska, and plans to build a large solar power facility in New Mexico.

   The Ministry of Knowledge Economy said the specialized fund has been offered to a consortium led by LG International Corporation, Hana Bank and the state-run Korea Trade Insurance Corporation (K-sure).

   LG will build the 60 megawatt plant, which is expected to go online in 2012, in Shanxi Province, with Hana and K-sure providing the necessary financing and insurance coverage.

   The plan calls for using fallen branches from over 50 million apple trees as biomass fuel. The ministry claims the move can cut greenhouse gas emissions by 320,000 tons annually due to the reduction in the burning of coal. Under the clean development mechanism (CDM), South Korea can receive credits for the reduction.

   The CDM outlined by the Kyoto Protocol regime is a system that allows countries and businesses to make overseas investments in projects that can reduce overall greenhouse gas emission levels. The total saved from such projects can be used as credits by a company or country. It can also be traded on a carbon market.

   The ministry said the total cost of the project is worth 70 billion won with 57 percent of the total coming from the carbon fund created in 2007.

   It said the Shanxi project marks the first time Seoul has invested its carbon fund in a foreign endeavor. So far, it has used 15 billion won of the 100 billion won fund on a solar power installation in South Korea in 2008.

     Output of the sweetener rose to 2.61 million metric tons between June 16 and June 30, up from 1.91 million tons a year earlier, Unica said today in an e-mailed statement.

     Growers in the Center South, where about 90 percent of Brazil’s sugar and ethanol is produced, harvested 41.6 million tons of cane in the period, up from 33.8 million tons a year- earlier.

     Mills turned 46.1 percent of the cane into sugar in the second half of June, compared with 44.6 percent a year ago. The remainder was processed into ethanol.

     Ethanol output rose 29 percent to 1.87 billion liters (494 million gallons) in the period.

     This month, sugar exports from the South American country will likely surpass a September 2009 record of 2.55 million tons, Unica said, citing technical director Antonio de Padua.

     Brazil’s Center South will produce 34.1 million tons of sugar this year, up from 28.6 million tons last year, Unica said March 31.

July 19 (Bloomberg) — Corn futures slumped, snapping three days of gains, as some speculators and farmers locked in profits on speculation favorable weather in the U.S. and China may boost output. Soybeans fell and wheat rose.

December-delivery futures declined as much as 3 percent to $3.9525 a bushel, the biggest intraday drop for the most-active contract since May 28. Corn was at $4.03 on the Chicago Board of Trade at 2:15 p.m. Singapore time. Futures rose 5.2 percent in the three sessions through July 16.

“We’re seeing some selling from speculators and possibly some producers to lock in prices,” Toby Hassall, an analyst at CWA Global Markets Pty, said by phone from Sydney today.

Corn and soybean crop conditions in parts of the North China Plain may improve as rains and lower temperatures were forecast over the weekend and this week, while the eastern part of the U.S. Midwest will have “light, sporadic showers over the next few days,” Telvent DTN Inc. said in a July 16 report.

China is the second-largest corn consumer and the biggest soybean buyer, while the Midwest is the largest U.S. corn and soybean growing region.

Forecasts for rainfall in the U.S. Midwest and China “will boost the crop outlook,” pushing some speculators to close long positions or bets on price gains, Hassall said.

Hedge-fund managers and other large speculators increased their net-long position in Chicago corn futures by 77,256 contracts or 105 percent in the week ended July 13, from a week ago according to U.S. Commodity Futures Trading Commission data.

Speculative long positions outnumbered short positions by 150,573 contracts on the Chicago Board of Trade, the commission said in its Commitments of Traders report.

‘Speculative Traders’

“Some speculative traders may be looking to take those positions off the table,” Hassall said, referring to bets prices will rise. “We’re seeing the market reevaluating those influences.”

Corn and soybean crops in the U.S., the biggest grower and exporter, are in good or excellent condition and may produce above-average yields this year, according to a survey of five Midwest states by SGS SA released July 16.

Corn that was planted earlier in the U.S. is “reaching a point where wet, dry or hot conditions have decreasing effect on yield,” SGS Crop Services said in a report.

Wheat for September delivery gained as much as 1.8 percent to $5.9775 a bushel, recouping the loss posted in the previous session, on lingering concerns dry weather in Russia and growing areas in Europe may pare global supply. The contract traded at $5.95 a bushel, up 1.3 percent at 1:50 p.m. Singapore time.

Flash Floods

Turkey will harvest 15 percent less wheat than the 20 million ton forecast in 2010-2011 season because of rains and flash floods this spring, Referans said, citing Ugur Kaleli, head of the trade bourse in Turkey’s breadbasket of Konya.

Turkey is the largest wheat grower in the Middle East, according to the USDA.

“There is a fundamental basis to the rally,” CWA’s Hassall said. “The recent weather threats have certainly caused many people in the market to revise their expectations of the supply-demand balance going forward.”

Bangladesh is seeking to buy 50,000 metric tons of wheat from any exporting country except Israel, and suppliers have until July 29 to submit bids, according to a notice dated July 15 from the Directorate General of Food.

Still, the most-active contract may drop to $4.94 a bushel by Dec. 31 as prospects for the second-biggest wheat stockpiles in almost a decade overwhelm a damage caused by drought, according to a Bloomberg survey of 14 analysts.

November-delivery soybeans fell for a second day, losing as much as 1.3 percent to $9.7225 a bushel before trading little changed at $9.845 in Chicago.

Slightly more than 5 months are left in 2010, but there are only 30 legislative days scheduled for Congress before the end of the year, when the current ethanol tax credits expire. And the way things are shaping up, there could be some major changes in the way the federal government supports ethanol. Policy proposals are being prepared. Economic analyses are being compiled. And the ethanol economy could be about to change.

The federal energy policy supporting ethanol recently reduced the blenders’ credit from 51¢ down to 45¢, which reduced the amount the IRS collects from fuel blenders by $4.86 billion based on the 10.8 billion gallons of ethanol blended into US motor fuel in 2009. As subscribers of the Cornbelt Update* newsletter learned last week, there are significant proposals to lower the support and to also shift those funds from blending to an ethanol infrastructure. Currently the tax writers in the US House are looking at a 36¢ credit, but there are ethanol critics on both sides of the aisle for a complete withdrawal of support. One of the reasons given is the fact that ethanol is already cheaper than unleaded gas.

If there is not a blenders’ credit, what shape could support for ethanol take, if there is continuing support. One of the major infrastructure proposals is for an ethanol pipeline network that would pump ethanol from the Cornbelt out to metropolitan areas much like natural gas is delivered to cities. Another proposal would shift the blenders’ credit to service stations to install pumps that would deliver higher percentages of ethanol for flexible fuel vehicles.

The latest report that is in play is a report by the Congressional Budget Office (CBO), sought by the Chairman of the Subcommittee on Energy, Natural Resources, and Infrastructure of the Senate Committee on Finance. Senator Jeff Bingaman (D-NM) wanted a report that assesses the incentives provided by the bio-fuel tax credits for producing different types of biofuels and analyzes whether they favor one type of bio-fuel over others. In addition, the study estimates the cost to U.S. taxpayers of reducing the use of petroleum fuels and emissions of greenhouse gases through those tax credits; it also analyzes the interaction of the credits and the bio-fuel mandates.

The CBO indicated that national energy policies are met with the support of bio-fuels, which also contribute to national environmental policy objectives, and provide income support to agriculture. The tax credits range from the 45¢ for ethanol, to $1 per gallon for bio-diesel, and $1.01 per gallon for cellulosic ethanol. The CBO report questions if those differences raise questions about equality of fuel and whether taxpayers are achieving certain energy or environmental policy goals. However, the CBO report acknowledges that the bio-diesel tax credit expired in December and policymakers have not reinstated it.

The CBO report states that, “Although the credit is provided to blenders, most of it ultimately flows to producers of ethanol and to the farmers who grow the corn—in the form of higher prices received for their products.” It adds that cellulosic ethanol could account for a significant share of bio-fuel production, but even with the $1.01 per gallon credit, it is not commercially successful today.

While not making any recommendations to Congress, the CBO economists conclude that the tax credits are somewhat unequal in their impact, based on their energy equivalents. Compared to the energy in a gallon of gasoline, the ethanol tax credit is worth 73¢, the cellulosic tax credit is worth $1.62, and the bio-diesel tax credit is worth $1.08. However, if the three were compared by their ability to eliminate the use of one gallon of petroleum-based gasoline, the cost would be $1.78 for corn based ethanol and $3.00 for cellulosic ethanol, and $2.55 for bio-diesel.

On the subject of reducing greenhouse gases, taxpayers have to pay $750 for corn based ethanol to reduce emissions of one equivalent ton of carbon dioxide, $250 for cellulosic ethanol and $300 for biodiesel. The CBO is quick to say those costs do not include any data for carbon dioxide emissions during the production of crops used to make the biofuels, which is part of the argument surrounding “indirect land use charges.”

The CBO reiterates that federal energy policy has set goals for inclusion of ethanol into motor fuels, but the blenders’ credits have had more promotional power to do that than the annual targets. But in the future, the mandates will provide a guarantee for ethanol refiners that the market exists with such certainty that investments for expansion are warranted, whether or not the blenders’ credits continue to have impact. Additionally, the CBO says while the tax credits may not cause production to increase, the cost of biofuels would be shared by the taxpayers as well as by the motoring public.

In Argentine, the national government has increased the biodiesel blending mandate from B5 to B7. According to Carlos St. James, president of the Argentine Renewable Energies Chamber (CADER), in a report in Biodiesel Magazine,  “Argentina decided to quickly expand to a B7 [blend] for a combination of reasons. On the one hand, until last year, Argentina imported about 5 percent of its diesel needs, typically from Venezuela, which has a particularly high sulfur content. The B5 [mandate] eliminates the need to import this diesel.”

The ethanol market this week will focus on:

• the corn market ahead of  Monday’s weekly Crop Progress report,
• gasoline prices, which faded late last week due to weak U.S. economic data and the stock market sell-off, and
• ethanol demand, which is strong enough at present from the summer driving season to offset near-record production.

Congress takes up ethanol subsidy extension - House Democratic leaders have produced draft legislation to extend the current excise tax subsidy for fuel blenders.  The current 45-cent-per-gallon subsidy expires at the end of this year.  The draft bill would cut the tax subsidy by 20% to 36 cents and extend the tax credit by one 1 year.  The ethanol industry is very worried about the year-end expiration of the subsidy given the debacle in the U.S. biodiesel industry, which has been forced to virtually shut down production since Congress has yet to roll over the biodiesel subsidy that expired last year.  If Congress fails to extend the ethanol subsidy, the U.S. ethanol industry warns that the result would be mass bankruptcies and layoffs.  The U.S. ethanol industry would prefer to have a multi-year subsidy that reduces uncertainty for investors and companies.  However, Congress is under pressure to reduce subsidies due to the bulging U.S. budget deficit and the ethanol industry at this point would be relieved with at least a 1-year extension.  Growth Energy, seeing the handwriting on the wall about the difficulty of getting subsidy roll-overs, is proposing a fairly radical plan of phasing out the subsidy altogether in exchange for E85 vehicle production mandates and incentives for installing more E85 pumps across the country (see news digest links).

Ethanol production backs off from record high – The EIA weekly ethanol data released last Wednesday indicated that U.S. ethanol production in the week ended July 9 fell by 4.0% to 821,000 barrels per day (bpd) from the previous week’s record high of 855,000 bpd.  Inventories dipped by 1.2% w/w to 19.674 million barrels from the previous week’s record high of 19.921 million barrels.

Ethanol Market Action -  August CBOT Ethanol futures prices last week extended the 3-week rally to post a new 1-month high and close up 1.6 cents (+1.0%) at $1.611 per gallon.    The main bullish factor was the continued rally in corn prices.  Factors keeping a lid on prices included the 1.0% sell-off in gasoline prices and continued concern about ethanol inventories with near-record ethanol production.

Ethanol/Gasoline – August gasoline futures prices moved sideways last week and closed slightly lower by 2.14 cents $2.0486 per barrel.  Gasoline prices fell last Friday on the poor consumer confidence data and last Friday’s 2.9% sell-off in the S&P 500 index.  The spread of July ethanol prices minus gasoline prices last week rose by 3.7 cents to -$43.8 cents.

Ethanol/Corn – Sep corn futures prices last week extended the 3-week rally to post a new 3-1/2 month high and close up 11.25 cents (+2.9%) at $3.9475 per bushel.  Corn prices continued to receive a boost from technical short-covering and the recent USDA reports, which indicated strong demand, reduced corn planting acreage, and lower carry-overs for both the old and new crops.  The July ethanol-corn crush margin last week fell slightly by 1.5 cents to post a new 13-month low of 20.1 cents per gallon.  Including DDG, the corn for ethanol crush margin fell by 1.5 cents to 47.7 cents/gallon.

Ethanol Calendar

• July 21: EIA Weekly Petroleum Status Report
• July 29: EIA Monthly Ethanol Report
• Aug 12: USDA WASDE Crop Supply-Demand
• September: EPA’s E15 decision due

The £650m ($992m) investment gives Mr Ward enough cocoa to make more than 5 billion small chocolate bars, the reports say.

The investment was reportedly made by Mr Ward’s hedge fund Armajaro, which would not confirm or deny the reports.

The price of cocoa has risen sharply in recent years due to increased demand.

The deal is the single largest cocoa trade in 14 years, the reports suggest.

Unusually, they say that the firm will take delivery of the cocoa beans, and is likely to store them in warehouses in England and the Netherlands.

Mr Ward co-founded Armajaro in 1998 and is ex-chairman of the European Cocoa Association.

Reporting on the volumes and sustainability of biofuel supplied to the UK at the Low Carbon Vehicle Partnership’s annual conference today, the RFA’s chief executive, Nick Goodall, claimed that this figure exceeds the government’s target of 3.25% of transport fuels to come from biofuels.

According to the Agency, which is responsible for administering the RTFO, this has resulted in significant carbon savings of 51% compared to petrol and diesel, which it claims makes an important contribution to reducing climate change inducing emissions from the transport sector.

The RTFO is a legal mechanism introduced in April 2008 to help reduce carbon emissions from road transport through the use of renewable fuels. It tracks volumes of biofuel coming into the UK and the social and environmental impacts of their production.

The scheme works by placing an obligation on fossil fuel suppliers importing or refining over 450,000 litres of liquid motor fuel annually to procure a set percentage of their total fuel as renewable.

While the RFA said it was pleased with the success of the results for the second year of the obligation – running from April 15 2009 to April 14 2010 – it revealed its disappointment at some big oil companies, claiming they were failing to take significant steps towards sourcing biofuels sustainably.

Mr Goodall said: “The volume target has been met which is welcome news. But this is about sustainable carbon reduction.

“The leading suppliers have demonstrated that it is possible to secure sustainable biofuels in volume. Others have fallen well short.”

The RFA maps the performance of the scheme against three sustainability targets, including data collection, greenhouse gas savings and performance against sustainability standards.

Against the 70% data capture target, Chevron, Murco, Total, Esso, Petroplus and Prax failed to meet it, while 10 obligated companies met or exceeded the goal.

Of the 16 companies obligated, only Mabanaft, Greenergy, Topaz and Lissan met the 50% target for environmental standards and Chevron, Murco, Total, BP and Conoco Phillips failed to reach the 45% greenhouse gas savings target.

According to the results, there were 31 countries of origin for the biofuels in the second year, compared to 18 in year one. The most widely reported source of biodiesel was soy from Argentina (28%), while Brazil provided the most bioethanol (67%) from sugarcane.

They also show that the majority of feedstock was imported – with only 10% of the biofuel reported as coming from UK feedstocks. However, according to the figures, 98% of the fuel from the UK met environmental sustainability standards.

The RFA claims the carbon figures reflect the directly measurable savings biofuels offer but do not take into account the potential impact from indirect land use change (ILUC) – which looks at the unintended consequence of releasing more carbon emissions due to land use changes induced by the expansion of croplands for ethanol or biodiesel production.

The European Commission is due to report by the end of this year on how ILUC should be addressed for meeting renewable fuel targets, claims the RFA.

The pilot facility will convert low quality waste grease into biodiesel using groundbreaking technology developed by Piedmont Biofuels and Novozymes.

Built at Piedmont’s site in Pittsboro, the plant, which has an initial capacity of 12,600 gallons of biodiesel a year, was developed in conjunction with the Biofuels Center of North Carolina and the Chatham County Economic Development Corporation.

‘This new process of using enzymes to produce biodiesel will increase yields, decrease waste and allows the producer to use lower cost feedstocks,’ explains Greg Austic of Piedmont Biofuels. ‘This groundbreaking technology will allow existing producers to increase their biodiesel output.’

And Christian Holm, global marketing manager for Novozymes, is equally positive about the technology. ‘We believe this technology could contribute to North Carolina and the US biofuels targets within a couple of year,’ he says.

The ribbon cutting ceremony took place on 16 July with representatives from both companies in attendance, as well as Steven Burke, president of the Biofuels Center of North Carolina and Per Munk Nielson, senior science manager at Novozymes.

     The bid of 55 cents a share for the 81.55 percent of Christchurch, New Zealand-based NZ Farming that Olam doesn’t own is priced at 34 percent higher than its previous close, Olam said in a statement. NZ Farming, which owns dairy farms in Uruguay, jumped 29 percent, the most in almost 17 months, to 53 cents at the 5 p.m. local time close in Wellington.

     Olam, which said last month it has $1 billion to spend on acquisitions and investments, currently sources dairy products from Europe, India and North and South America. Uruguay’s dairy industry may benefit from global prices that are forecast to be “generally elevated” over the next five years as demand rises and cost pressures increase, according to Rabobank Groep.

     “It is a relatively low-cost place to produce milk and if you can get your business’s supply chain right it should be a place where you can make money producing for export into the regional and global market,” Tim Hunt, a global dairy analyst at Rabobank, said from Melbourne today.

     Olam has already agreed to buy 28.1 million shares from PGG Wrightson Ltd. to take its stake to 30 percent. NZ Farming Systems said shareholders should take no action before the company releases an independent appraisal of the offer.

     The acquisition follows last month’s announcement of Olam’s purchase of ConAgra Foods Inc.’s dehydrated and vegetable products business for $250 million.

     Olam first bought shares in NZ Farming in September to strengthen its position in dairying. In 2008, it paid about $69 million for a 25 percent stake in New Zealand milk processor Dairy Trust Ltd.

     NZ Farming is converting its beef farms to dairying and had a $45.9 million loss in the year to June 30, 2009, as milk prices fell and it wrote down the value of livestock and farms.

The loss narrowed to $7 million in the six months ended Dec. 31 as prices improved, it said in February.

     The company had total livestock numbers of 54,300, including 19,600 milking cows as of December 2009, according to its website. Area in dairy production totaled 11,100 hectares (27,429 acres), it said.

     Uruguay accounted for 1 percent of global exports of dairy products in 2008, according to Rabobank. Wheat Prices Peaking as Glut Subdues Best-Performing Commodity

 The five-week rally in wheat that made it the best performer of any commodity is under threat as prospects for the second-biggest stockpiles in almost a decade overwhelm damage caused by drought.

     Wheat rose 37 percent to $5.8725 a bushel in Chicago since June 9 as a lack of rain in Russia, Kazakhstan and the European Union and floods in Canada hurt crops. That prompted the U.S. Department of Agriculture on July 9 to cut harvest estimates by1.1 percent, while global inventories will be the second-highest since 2002. Prices will drop 16 percent to $4.94 by Dec. 31, based on the median in a Bloomberg survey of 14 analysts.

     “I don’t think prices will hold these higher levels,” said Pete Sorrentino, who helps manage $13.1 billion at Huntington Asset Advisors in Cincinnati and correctly predicted the 2008 crash in commodity prices. “We’re going to be getting some massive harvests, and that’s going to keep stockpiles swelling.”

     The 50 percent jump in stockpiles from a quarter-century low in 2008 shows there’s little chance of a return to the record $13.495 reached that year and the food riots that erupted from Haiti to Egypt. The world’s poorest nations will spend 37 percent less on cereal imports this year than at the peak, according to the United Nations, whose food-price index has fallen 24 percent from an all-time high in June 2008. Cheaper wheat may boost profit for Kellogg Co., the largest U.S. cereal maker, and General Mills Inc. Prices rallied from a three-year low of $4.255 on June 9 as drought and flooding damaged crops. Russia, the world’s fourth- largest exporter, declared emergencies in 17 regions by July 15, and Canada said July 9 it would pay as much as $432 million to farmers hurt by floods, the biggest aid package ever under the country’s AgriRecovery disaster-relief program.

     While output may be lower than originally estimated, stockpiles will still reach 187 million metric tons by the end of the season in May 2011, the USDA estimates. That’s 62.6 million tons more than in 2008 and equal to three years of production in the U.S., the world’s biggest exporter.

     “There are very plentiful stocks,” said Christin Tuxen, an analyst at Danske Bank A/S in Copenhagen who was the most accurate first- and second-quarter forecaster surveyed by Bloomberg. “U.S. crop progress has been good, which suggests there might be some further downside for wheat.” Tuxen expects prices to drop as low as $4.25 before the end of the year.

     Speculators including hedge funds also are still betting the rally will end. Their net-short position, or wagers on lower prices, on the Chicago Board of Trade fell 52 percent in the week ended July 13 to 16,927 contracts, U.S. Commodity Futures Trading Commission data show. Speculators have held a net-short position since June 2009.

     Wheat’s surge since June 9 is the biggest in the Standard & Poor’s GSCI Index of 24 commodities. The gain topped corn’s 20 percent advance and is more than three times the 9.9 percent jump in soybeans. The S&P GSCI Total Return Index, tracking the net amount investors received, advanced 2 percent over the same period. The gauge slumped 46 percent in 2008, the worst crash since at least 1970.

     For now, traders are focused on production rather than stockpiles. Wheat futures traded on the CBOT jumped 9.2 percent last week, the biggest gain since November, after drought worsened in Russia and lower grain output was forecast in Kazakhstan, Germany and France. All the countries are exporters.

     Futures are pricing in $6.76 by the end of 2011, exchange data show. The December 2011 contract traded at $5.80 about five weeks ago, indicating some traders expect drought and flooding to tighten supply through the end of next year.

     While rain is forecast to return this week to France, Europe’s biggest wheat producer, it may do little to bolster yields.

     “The rain has come too late,” said Sebastien Poncelet, a consultant at Paris-based farm adviser Agritel. Ripe grain soaks up moisture like a sponge, yielding less flour, he said.

     In the U.K., “the last thing we want now is solid rain in the last week of July and first two weeks of August,” said Gary Sharkey, the head of wheat procurement for St. Albans, England- based Premier Foods Plc, the U.K. maker of Hovis breads. “That would obviously delay the harvest but would also ruin the quality.”

     Production in other countries may help offset the declines in parts of Europe and Canada, said Dale Mohler, a senior meteorologist who specializes in agriculture forecasts at Accuweather.com in State College, Pennsylvania.

     “Ukraine is going to have a decent crop,” Mohler said. “It’s been too wet, and that slowed down the initial harvest.

That looks like it’s going to improve. Farmers will be able to harvest and they’ll have good yields because of the rains.”

     The U.S. crop will be bigger than originally anticipated, the USDA said July 9, raising its estimate 7.2 percent to 60.3 million tons. Domestic stockpiles will total 29.8 million tons in the year that ends in May, 12 percent more than a year earlier, the USDA estimates.

     Wheat was the fourth-biggest U.S. crop behind corn, soybeans and hay last year, valued at $10.6 billion, government data show.

     Yields are improving in Kansas, the biggest U.S. producer of winter wheat, the most common variety grown in the country. In the northwest part of the state, yields may reach 60 bushels

(1.63 tons) an acre, said Darrell Holaday, the president of Advanced Market Concepts, a commodities consulting and brokerage firm in Wamego, Kansas. In May, analysts, growers and agronomists had expected 40.7 bushels an acre after touring fields in the state.

     Silos are filling up in some areas, forcing growers to cover harvested crops with plastic tarps.

     “They’re storing wheat on the ground in northwest Kansas, and they’re not done yet,” Holaday said.

     Production in Australia may rise about 2 percent to 22.2 million tons, Commonwealth Bank of Australia forecast this month. Output is rebounding after droughts in 2007 and 2008. The USDA expects bigger harvests in Argentina, Brazil and the European Union.

     Global stockpiles are equal to about 28 percent of consumption, USDA data show. Any figure above 25 percent means a “limited” potential for a shortage, said Mike Zuzolo, the president of Global Commodity Analytics in Lafayette, Indiana.

     “The second half of the year will still be mired by surplus stocks,” said Abah Ofon, an analyst at Standard Chartered Bank Plc in Dubai who expects prices to drop to $4.30 before the end of the year. “That is going to put a cap on how far prices can actually go.” Lower prices may help to bolster profit for cereal makers.

Kellogg, based in Battle Creek, Michigan, will report earnings per share of $3.58 this year, compared with $3.16 last year, according to the mean of nine analyst estimates compiled by Bloomberg. The stock has fallen 4 percent this year in New York trading. General Mills, which produces Golden Grahams cereal, will post earnings per share of $2.49 in its fiscal year ending in May, up from $2.24 a year earlier, based on eight estimates. The stock rose 0.4 percent this year in New York.

     The price of wheat “could drop as fast as it’s gone up,”said Alexandre Marie, a grain analyst at Bourges, France-based Offre et Demande Agricole, which advises about 5,000 farmers.

“The market is looking first and foremost at production levels, but forgets that behind it are enormous stocks of wheat in the world.”

By Mara Lemos Stein

With a $98.3 million cash injection from the sale of its cellulosic ethanol business to energy giant BP PLC, Verenium Corp. is on the path to financial well-being.

The Cambridge, Mass.-based company had been accumulating losses since it started operations in 1992 as a specialty enzymes developer and producer, and BP had been a critical source of funding since 2008 through a 50-50 joint-venture to develop, produce and market cellulosic ethanol.

Verenium is going back to its roots as a specialty enzymes business, and it’s probably the better for it, analysts and traders said, because the deal takes away the major source of cash burn from the company’s balance sheet, which is the cellulosic ethanol business. Chief Financial Officer James Levine concurred.

Verenium is divesting a business “that still requires a significant amount of investment,” he told Dow Jones in an interview, and BP is the one with the pockets to make that kind of investment. “It’s very much about how much risk do we think is worth the reward.”

Making ethanol from nonfuel feedstock, such as switch grass and energy cane, has proven elusive because of the high-risk nature of the technology – it’s still too new. That risk in turn spooks investors, leaving a financing gap for the technology to reach commercial scale.

In Verenium’s case, those financial strains led the company to warn previously that it wouldn’t be able to make debt payments without further capital, while its auditors had expressed doubts about the company’s ability to continue as a going concern.

Commercial plants can cost a few hundred million dollars – the 36-million-gallons-a-year production facility that BP and Verenium were proposing to build in Florida will cost around $300 million. The government is helping ease some of that risk by offering loan guarantees for project financing, but has yet to actually sign a loan for a cellulosic ethanol developer. BP, now the sole owner of the cellulosic business, is applying for such a guarantee.

Verenium will retain its specialty enzymes business, which is its main product revenue generator, the remainder being from grants and collaborations. In the first quarter, it reported revenue of $11.6 million from specialty enzymes sales, up from $10.6 million a year ago. Animal nutrition is the main market for Verenium’s enzymes, followed by corn ethanol and soy oil processing.

Much of the cash from the deal will go to expanding the specialty enzymes business, said Levine. Yes, the company has debt to retire but it isn’t in any hurry to do that, as Verenium feels it has some time to deal with the debt, he said.

The earliest that its convertible bonds can be put to the company or become callable is April 2012. Bondholders can choose to convert before that date – and conversion in recent quarters has helped it reduce its debt load – but Levine said he cannot predict bondholders’ behavior.

One such bondholder said that he sees no need for investors to put the bonds back to the company at this point, as the value of the investment seems set to rise with the major cash-burn gone and the specialty enzymes business growing. “This [sale] is a game-changer for Verenium,” he said.

COLUMBUS, Neb. -(Dow Jones)- U.S. Sen. Ben Nelson (D., Neb.) said Friday he is confident the government will increase the amount of ethanol that can be blended in gasoline to 15% by the end of the year, but “certainly not much before.”

Nelson said at the opening of an Archer Daniels Midland Co. (ADM) ethanol plant in Nebraska that the Environmental Protection Agency is studying “to death” the potential increase from a 10% blend.

He said the agency should consider incremental increases as it awaits further data on an industry request to raise the ceiling to 15%.

“I’d love to get them to do 15% right off the bat, but if we’re unable to get them to that level, then in the interim, let’s start moving it up,” Nelson said. “What’s the difference between 10% and 11%?”

The push for a higher so-called blend rate has received opposition from some auto makers concerned about the impact of using more of the additive in gasoline. The food industry has also been ramping up its concerns that higher corn-based ethanol production could inflate animal feed costs.

The static blend rate and weak gasoline demand have pushed the industry toward the blend wall, or the point at which ethanol production is exceeding possible usage, said John Rice, executive vice president for commercial and production at ADM.

The dry-mill plant can produce 300 million gallons of ethanol a year and sits alongside an existing wet-mill ethanol production facility. The complex is the biggest such plant in Nebraska, the nation’s second-biggest ethanol producer.

Since construction of the plant was announced in early 2006, the ethanol industry has gone through a boom and a bust. It has since stabilized, but producers say the blend wall poses another problem.

As of April, according to the U.S. Energy Information Administration, ethanol accounted for 9.2% of total gasoline supplies. The EIA said it expects the industry to hit the blend wall in the first quarter of 2011.

ADM officials said synergies among the twin Columbus plants and a coal co- generation power plant next to them will help the company weather any weakening demand. “We feel we have a very efficient (complex),” Rice said.

Dry-mill plants produce ethanol and distillers dried grain, a byproduct used for cattle feed, while wet-mill plants produce a wider array of products, including paper, high-fructose corn syrup and corn-based plastics.

July 15 (Bloomberg) — BP Plc will acquire Verenium Corp.’s cellulosic biofuels business, expanding its operations in alternative fuels.

BP Biofuels North America will pay $98.3 million for the business, which includes facilities in Jennings, Louisiana, and San Diego, the two companies said in a statement today. Shares of Verenium, which will keep its commercial enzyme business, surged the most since they started trading in February 2000.

BP, fighting the worst oil spill in U.S. history in the Gulf of Mexico, has invested about $3 billion in alternative fuels since 2005 on forecasts for global energy demand to rise 50 percent in the next two decades. Cellulosic biofuel is a liquid fuel made by extracting the sugars out of grass.

“This acquisition demonstrates BP’s intent to be a leader in the cellulosic biofuels industry in the U.S.,” Philip New, chief executive officer of BP Biofuels, said in a statement. “BP Biofuels should be well placed to accelerate the delivery of low cost, low carbon, sustainable biofuels, at scale.”

The sale will enable the Cambridge, Massachusetts-based company to focus on its enzymes business, Verenium Chief Executive Officer Carlos Riva and Chief Operating Officer Janet Roemer said on a conference call today. Enzymes are used in the manufacture of biofuels.

“We continue to believe in the potential of cellulosic ethanol and its ability to be a significant and sustainable component of the world’s alternative energy mix,” Riva said. “The best and clearest way for Verenium to profit from the opportunity is to focus our resources on the enzyme component of the business.”

Roemer said the company has a “deep pipeline” of possible products and a “tremendous capacity” for growth. “This transaction provides the focus and capital needed to pursue that growth,” she said.

Verenium shares surged as much as 79 percent today and were up $1.61, or 65 percent, in Nasdaq trading at about 11 a.m. New York time today.

BP, Poet LLC and other companies are trying to find ways to produce ethanol from switchgrass, wood chips and agricultural waste, as an alternative to biofuels from food crops such as corn. Even so, the technology for affordable production of non- corn ethanol remains uncertain, Joe Glauber, the U.S. Department of Agriculture’s chief economist said in April.

The Obama administration in February slashed the nation’s 2010 cellulosic-ethanol mandate to 6.5 million gallons from the 100 million that had been required under a 2007 energy law.

WASHINGTON — The once-popular ethanol industry is scrambling to hold onto billions of dollars in government subsidies, fighting an increasing public skepticism of the corn-based fuel and wariness from lawmakers who may divert the money to other priorities.

The industry itself can’t agree on how to persuade Congress to keep the subsidies, which now come in the form of tax credits worth about $6 billion annually.

One industry group, Growth Energy, made the bold move Thursday of calling for the tax credits to be phased out completely in favor of spending the money on more flex-fuel cars and gasoline pumps that support ethanol. A rival group, the Renewable Fuels Association, said it’s too late in the year to make such proposals — the tax credits expire at the end of the year, and legislative days are numbered.

As the industry bickers over what to do, Congress is signaling it’s growing tired of paying for ethanol. The House Ways and Means Committee is considering slashing the tax credit by 9 cents a gallon, from 45 cents to 36 cents, when it looks at a wide range of energy tax credits as early as next week. That would be the second cut in the credit in as many years.

A key senator also expressed skepticism this week. Democratic Sen. Jeff Bingaman of New Mexico, chairman of the Energy and Natural Resources Committee and a longtime supporter of renewable fuels, said Congress should “weigh all factors, including the credit’s very high cost to taxpayers,” when looking to extend the credit. Bingaman noted that the ethanol industry is protected by congressional mandates for its use.

Some supporters say they see the writing on the wall.

“The longer we have this support structure in place for ethanol, the more people begin to question it,” said Roger Johnson, president of the National Farmers Union, which supports Growth Energy’s plan. He says a new approach is needed as the public becomes more skeptical.

The tax credits still have strong supporters on Capitol Hill and in the Obama administration. Agriculture Secretary Tom Vilsack said Thursday that the administration remains committed to tax incentives supporting biofuels like ethanol. Rep. Earl Pomeroy, D-N.D., a member of the Ways and Means Committee, is leading the fight in the House to keep the tax credits.

Pomeroy says that the 9-cent cut is a good starting point and that he feels optimistic after discussing the issue with fellow committee members and members of the ethanol industry this week.

He acknowledges that the legislative environment is challenging and says that a simple extension of the credit makes the most sense in the House. “Late in the legislative session, simpler is easier,” he said.

Iowa Sen. Charles Grassley, the top Republican on the Finance Committee that will consider the tax, said he is also working to get it extended. He noted that the lapse of a tax credit for makers of biodiesel has already hurt that industry.

Ethanol producers say expiration of the tax credits, which are paid to oil companies as an incentive to blend gasoline with ethanol, could mean the loss of almost 40 percent of its plants and tougher times for a domestic fuel that is good for national security.

Critics say the industry should stand on its own after receiving subsidies for 30 years and argue the tax credits are a waste of taxpayer dollars. A diverse coalition of groups has argued over the past few years that the increase in production of corn and its diversion for ethanol is making animal feed more expensive, raising prices at the grocery store and tearing up the land.

Craig Cox of the Environmental Working Group, one of the organizations opposing the fuel, says he thinks the industry “hit a wall” in Congress as concern over budget deficits have increased.

Growth Energy, a group formed in 2008 as some ethanol companies grew worried that their political clout was waning, said it is proposing the phase-out as a way to think more creatively about boosting the industry and the fuel. The group says ethanol helps reduce the nation’s dependence on foreign oil, pointing to the Gulf oil spill as a reason to turn to the corn-based alternative.

The industry was also frustrated last month by a delay by the Environmental Protection Agency in deciding whether U.S. car engines can handle higher concentrations of ethanol in gasoline. But the increase in the maximum blend is expected to be approved later this year.

ANCHORAGE, Alaska — A dozen local garbage trucks are now running on used cooking oil. Originally, only two of Alaska Waste’s trucks ran on 100 percent biodiesel.

Alaska Waste opened up the state’s first commercial-sized biodiesel plant last month. It’s designed to produce 250,000 gallons of biodiesel fuel each year after processing used cooking oil from local businesses.

According to the company’s renewable resources manager, more trucks will start using biodiesel throughout the next few weeks, and some will start operating in the Mat-Su Valley.

The Danish firm said it and Dedini, a global leader in equipment for the sugar and ethanol sector, had signed a partnership deal “aiming at continuing to develop a technological route to produce cellulosic ethanol in Brazil”.

Cellulosic ethanol, or second-generation ethanol, is made from wood, grasses or the non-edible parts of plants — which overcomes problems associated with making fuel from food crops.

“Considering the demand for ethanol in Brazil and the amount of bagasse available, there is considerable opportunity for further growth in this market,” Novozymes Chief Executive Steen Riisgaard said in an emailed statement.

“The objective of this partnership is to develop a process using the enzymatic hydrolysis route from sugarcane residues. This would result in the implementation of a demonstration plant, integrated into sugarcane mill refineries,” the firm said.

Brazil is the world’s largest producer of sugarcane, crushing more than 600 million tons per year, from which 27 billion liters of ethanol is produced, Novozymes said.

Novozymes in February commercially launched the first enzyme for the production of second-generation fuels.[ID:nDKT004853}

The EPA is requiring the domestic use of 800 million gallons of biodiesel in 2011. This is consistent with the renewable goals established in the Energy Independence and Security Act of 2007 (EISA), which expanded the Renewable Fuels Standard (RFS2) and specifically requires a renewable component in U.S. diesel fuel.

RFS2 provides specific volume requirements for Advanced Biofuels such as Cellulosic Biofuels, Biomass-based Diesel and undifferentiated Advanced Biofuels. Today, biodiesel is the only widely, accepted, commercial scale Advanced Biofuel produced in the U.S. that meets the definition of Biomass-based Diesel and undifferentiated Advanced Biofuels under the RFS2 program. According to the EPA, biodiesel produced from waste greases, animal fats and agricultural oils reduces greenhouse gas emissions (GHG) by as much as 86 percent compared to petroleum diesel. The RFS2 program, consistent with the EPA’s announcement, requires a minimum of 800 million gallons of Biomass-based diesel, which included biodiesel, to be entered into the commercial marketplace in 2011.

“We applaud EPA for this announcement and for reaffirming the common-sense notion that we should displace petroleum diesel fuel with Advanced Biofuels like biodiesel,” says Manning Feraci, vice president of Federal Affairs for the National Biodiesel Board. “This notice demonstrates to all actors in the fuels marketplace that the volume goals for Biomass-based Diesel provided for by law in the RFS2 program will be met and that 800 million gallons of biodiesel must be used in 2011.”

Under the RFS2 program, the EPA is required to determine and publish the applicable percentage standards for each compliance year prior to November 30 of the previous year. The notice published by EPA July 13 sets in motion the process for EPA to finalize this regulatory rule and implement the RFS2 2011 renewable volume requirements.

“The U.S. biodiesel industry stands ready to provide the Advanced Biofuel that will allow this nation to meet the attainable renewable energy goals established by RFS2, reduce our dependence on petroleum and cut harmful greenhouse gas emissions,” concludes Feraci.

The National Biodiesel Board is the national trade association of the biodiesel industry and is the coordinating body for biodiesel research and development in the U.S. NBB’s membership is comprised of state, national, and international feedstock and feedstock processor organizations, biodiesel producers, fuel marketers and distributors, and technology providers.

The Environmental Protection Agency proposed requiring less cellulosic ethanol to be blended into gasoline next year than sought under U.S. law because production of the alternative fuel hasn’t reached commercial scale.

The decision is part of the EPA’s proposed standard for renewable fuels of about 14 billion gallons, or 7.95 percent of transportation fuels used in the U.S., the agency said today in a news release. The goal for cellulosic biofuels, based on an analysis of market availability, is 5 million to 17.1 million gallons, or as much as 0.015 percent, according to the agency.

Cellulosic ethanol, made from switchgrass, wood chips and agricultural waste such as corn cobs, has been promoted as having a smaller carbon footprint than fuel made from corn because it provides less incentive to cut down trees or plow up prairies to create cropland.

The Obama administration said it will continue to evaluate the market as it works to make the cellulosic standard final in coming months. The EPA “remains optimistic” that the commercial availability of cellulosic biofuel will continue to rise over the next few years, the agency said.

In February, the EPA slashed the cellulosic ethanol mandate for this year by 94 percent, reducing the goal to 6.5 million gallons from the 100 million required under a 2007 energy law. The agency said corn-based ethanol produces less greenhouse-gas emissions than previously anticipated, clearing the way for more use of the fuel.

Congress passed a renewable-fuels standard in 2007 that quadrupled the requirement for blending ethanol and other biofuels into gasoline supplies, to 36 billion gallons by 2022. The law also set interim goals.

     By shutting off valves in a cap bolted to the top of the Macondo well this week, BP stopped the flow of oil for the first time in almost three months.

     “It felt very good not to see any oil going into the Gulf of Mexico,” BP Senior Vice President Kent Wells told reporters on a conference call yesterday. “We’re very encouraged.”

     National Incident Commander Thad Allen said in a statement it “remains likely” that BP will have to reopen the flow of oil from the well and collect as much as 80,000 barrels of oil a day until the well can be permanently plugged.

     “This isn’t over,” Allen said.

     The test is measuring the pressure inside the well, and may continue for as long as 48 hours, BP said in an e-mailed statement yesterday.

     The disaster, the biggest oil spill in U.S. history, followed an April 20 explosion aboard the Deepwater Horizon drilling rig. The well has been spewing 35,000 to 60,000 barrels of oil a day, according to a U.S. government-led panel of scientists.

     BP’s confirmation that it had stopped the flow from the well pushed the London-based oil company’s U.S. shares up 7.6 percent to $38.92, the highest value in more than a month.

     Success in stopping the leak, even temporarily, “has the market excited that this could lead to an earlier-than-expected containment of the well, from expectations of mid-August to within the next several days,” Brian Gibbons, an analyst at CreditSights Inc. in New York, said in an interview.

     If BP detects lower pressures, it may stop the test sooner and resume recovering as much oil as possible through pipelines leading from the well to vessels on the surface of the Gulf, Allen said in a New Orleans press conference. Lower pressures indicate a leak has erupted elsewhere and the flow will continue until the well is plugged, said BP officials.

     Higher pressure between 8,000 and 9,000 pounds per square inch will show the oil is trapped in the wellbore drilled by the Deepwater Horizon, an encouraging sign the well might be successfully sealed with the cap.

     Being able to shut in the oil would help in the event a hurricane entered the Gulf before BP permanently plugs the well, Allen said.

     If the well withstands high pressure for two days, BP will reopen the valves, let the pressure drop, and run a seismic survey to check for any leaks before shutting the valves for good, Allen said.

     “I would prefer that the pressure test goes well, that it holds pressure,” said Philip Adams, an analyst at Gimme Credit LLC in Chicago. “And that they are in fact able to say that there has not been damage to the wellbore below the seafloor.”

     The pressure test was delayed after the government raised concerns it might cause the well to burst open beneath the seabed. After getting necessary approvals, BP halted the test July 13 because a leak developed when it began shutting off the flow to allow pressure to build up.

     Sealing the leak using the new cap is an interim step before BP can permanently plug the well with cement, Allen said.

     “The number-one goal is to shut in the well and kill it and stop it at the source,” Allen said yesterday.

     The first of two relief wells being drilled to plug the well is about 100 feet (30 meters) from intercepting the leak, Allen said.

     BP had been sending captured oil from the well to the Helix Producer I platform and Q4000 rig at the surface, where the oil and gas are separated, stored and some is burned off.

The Reality Energy Centre, proposed at an old council landfill site in Stag Lane, Newport, could create 235 jobs.

Island-based Real Ventures Ltd believes the privately-funded plant, which would burn wood pellets to create steam to power generators, could open in 2013.

A planning application is expected to be submitted later this year.

A number of public exhibitions will be held before the proposal is sent to the council.

Real Ventures Ltd was formed by island residents who came together after opposing plans for wind turbines.

Their project also claims would help cut the island’s carbon emissions by 60%.

The centre will be able to provide heating and hot water for nearby public and industrial buildings through underground insulated pipes from a distribution centre.

Ray Tucker, from Real Ventures Ltd, said: “The island has been searching for suitable renewable energy projects that will make a significant and real difference for some time.

“We believe our biomass plant provides the right answer.

“Employing proven modern technology, our plant will be highly energy efficient and environmentally friendly and it’s entirely appropriate for the island.”

As part of the plan , developers also plan to create a wildlife sanctuary on part of the 8.7 hectare (87,000 sq m) site.

New Mexico State University is part of a national canola winter variety trial being conducted in 24 states.

NMSU’s Farmington Agricultural Science Center is evaluating what variety does best in New Mexico’s Four Corners region.

The research assistant working on the study for NMSU, Curtis Owen, says the agricultural center planted 40 to 50 varieties this year.

Owen says that so far, the Four Corners area appears to be a good one for winter canola compared to other areas of the country.

Winter canola is a good fit for small-grain crop systems since it requires the same equipment as winter wheat.

The group, Growth Energy, also asked that automakers be required to build flexible-fuel vehicles that can use gasoline containing up to 85 percent ethanol. The commonly sold blend is 10 percent.

“Here is a blueprint that helps the nation,” said Tom Buis, president of Growth Energy, a trade group that produces 30 percent of U.S. ethanol. Members include POET, the No. 1 maker.

The group described its plan as a complete redirection of ethanol supports.

U.S. support for ethanol, popular in the Farm Belt as a home-grown fuel, may be at a turning point. Congress has been unable to extend the less-costly biodiesel tax credit, and major ethanol incentives expire at the end of this year.

Senate Energy Committee chairman John Bingaman said on Wednesday the high cost of incentives “should prompt Congress to critically examine whether it is appropriate to extend” the 45-cent a gallon tax credit for ethanol. Backers have proposed a five-year extension at a cost of more than $30 billion.

Growth Energy outlined its plan as Democratic leaders in the Senate sought consensus on a long-term energy bill.

Under the plan, it said, ethanol supports would be phased out when blender pumps — which allow consumers to choose higher ethanol-gasoline blends when they fill their tanks — blanket the nation and more than 100 million flex-fuel vehicles are on the road.

Growth Energy did not set a target date.

It proposed that money now spent on the 45-cent tax credit be converted to a tax credit to install 200,000 blender pumps. It also called for loan guarantees for construction of ethanol pipelines and a producer tax credit that would replace the current credit which goes to blenders who mix ethanol with gasoline.

The blender-pump credit could cost $5 billion over five years, said Buis. There are now only a comparative handful of the pumps among the 170,000 U.S. service stations. The pumps can cost $15,000 each.

A 2007 law guarantees renewable fuels a share of the U.S. market of at least 36 billion gallons from 2022. The mandate for this year is 12.95 billion gallons, most of it made from corn.

The largest ethanol makers are Archer Daniels Midland Co (ADM.N), Valero Energy Corp (VLO.N) and privately owned POET.

POET chief executive Jeff Broin said the petroleum industry enjoyed many tax breaks. With a blender pump on every corner and a flex fuel vehicle in every garage, ethanol can compete against oil without the tax incentive,” he said. (Reporting by Charles Abbott; editing by Jim Marshall)

BP PLC’s (BP, BP.LN) North American biofuels business has agreed to acquire the cellulosic biofuels business of Verenium Corp. (VRNM) for $98.3 million.

Verenium’s shares surged 90% to $4.68 in recent premarket trading as the deal will sharply improve the unprofitable company’s liquidity; cash and cash equivalents were more than halved in the first quarter to $15.5 million. As such, Verenium’s stock through Wednesday’s close was down 45% this year.

Under the agreement, Verenium will retain its commercial enzyme business, including its biofuels enzymes products, as well as certain reseach-and-development capabilities and access to some biofuels technology that BP may develop using what it is acquiring from Vernium. The deal is expected to close this quarter.

President and Chief Executive Carlos A. Riva said, “We are very pleased that our strategic development partnership with BP has successfully advanced our cellulosic ethanol technology to the cusp of commercialization.”

Meanwhile, Verenium said Executive Vice President Janet Roemer was promoted to president and chief operating officer of the company’s enzyme’s business. Roemer joined the company in March 2008.

The U.S. EPA has issued the proposed production volumes for the 2011 RFS2, calculating biomass-based diesel for 2011 at 800 million gallons. To formulate the production number, EPA examined both industry capacity and recent production rates. “As of April 2010, the aggregate production capacity of biodiesel plants in the U.S. was estimated at 2.2 billion gallons per year across approximately 137 facilities,” EPA said.

“The biodiesel industry stands ready, willing and able to produce the wet gallons required to comply with the program,” said Joe Jobe, National Biodiesel Board CEO. “By 2011, much of the uncertainty that has accompanied the start up and transition of the program in 2009 and 2010 will have been eliminated.”

Advanced biofuels will total 1.35 billion gallons and cellulosic biofuels, according to the EPA, will total between 5 million and 17.1 million gallons in 2011. “Based on analysis of market availability, EPA is proposing a 2011 cellulosic volume that is lower than the EISA target,” EPA said.

The EPA believes, however, that it may be appropriate to allow excess advanced biofuels to make up for the shortfall in cellulosic biofuel, including excess biomass-based diesel. “If we were to maintain the advanced biofuel and total renewable fuel volume requirements at the levels specified in the statue, we estimate that 125 million to 144 million ethanol-equivalent gallons of additional advanced biofuels would be needed, depending on the standard we set for cellulosic biofuel.”

“Biodiesel is well-positioned to meet volumes in this category relative to other advanced biofuels, and will likely play a significant role in meeting them,” Jobe said. The markets, he added, will ultimately decide how much biodiesel is used to fulfill the generic category of advanced biofuels.

Under current market conditions, the EPA first considered whether the 800 million gallon volume can be met in 2011 if biomass-based diesel production may also qualify for the cellulosic biofuel volumes. “We believe that the 0.8 billion gallon standard can indeed be met,” EPA said. “Since biodiesel has an Equivalence Value of 1.5, 0.8 billion physical gallons of biodiesel would provide 1.20 billion ethanol-equivalent gallons that can be counted towards the advanced biofuel standard of 1.35 billion gallons,” adding, “Of the remaining 0.15 billion gallons, up to 0.026 billion gallons would be met with the proposed volume of cellulosic biofuel.”

“We believe that Congress wanted to encourage the development of advanced renewable fuels and allow in appropriate circumstances for the use of additional volumes of those fuels in the event that the projected volume of cellulosic biofuel falls below the statutory mandate,” EPA said.

Also included in the EPA’s proposal report was information on domestic cellulosic diesel producers. The EPA sited two companies capable of producing cellulosic diesel in 2011, Cello Energy and Bell Bio-Energy. Producers using canola oil, grain sorghum, pulpwood or palm oil as a feedstock may soon qualify for RFS2 compliance. The EPA is proposing changes for those feedstocks if it is determined that certain greenhouse gas reductions are met.

Because the 2011 production values set by the EPA are only in the proposal stage at this point, Jobe said the recent rulemaking is only a formality put in place to allow public feedback. “NBB’s comments on this rulemaking will be supportive of the EPA’s decision, with the possible addition of some administrative and technical comments,” Jobe said.

The ethanol subsidy is running into trouble in Congress.

Citing a congressional study of the cost of the 45-cent-per-gallon tax credit, the chairman of the Senate energy committee issued a statement Wednesday saying that the subsidy should not be “reflexively” extended when it expires at the end of the year.

Sen. Jeff Bingaman, D-N.M., “thinks Congress needs to take a careful look” at the cost of the subsidy “as it decides whether or not to renew it,” said spokesman Bill Wicker.

A lapse in the subsidy could reduce demand for ethanol. Iowa’s biofuel industry adds nearly $12 billion, or about 9 percent, to the state’s gross domestic product, according to the Iowa Renewable Fuels Association.

The study by the Congressional Budget Office evaluated biofuel subsidies by the energy content of the products and found that it costs taxpayers $1.78 to reduce gasoline consumption by one gallon using corn ethanol. The cost rises to $3 with ethanol made from crop residue and other forms of plant cellulose, for which there is a $1.01 per gallon tax credit.

The Renewable Fuels Association said the congressional study did not fully account for the benefits of biofuels and the “clear destruction wrought by fossil fuels.”

Separately Wednesday, House Agriculture Committee Chairman Collin Peterson, D-Minn., warned members of the National Corn Growers Association that Congress was unlikely to provide a long extension of the ethanol credit and that it could even lapse at year’s end.

A $1-a-gallon tax credit for biodiesel lapsed at the end of 2009 and hasn’t been renewed. The biodiesel subsidy isn’t controversial by itself. But an extension of the credit has been bogged down because it’s a part of legislation that includes an extension of jobless benefits and other measures that would add to the federal budget deficit, which has been a major issue in Washington.

The corn growers group is counting on Democratic congressional leaders to protect vulnerable Midwest lawmakers by getting the ethanol subsidy extended ahead of the November election.

A bill pending in the House would continue the tax credit for five years, but Peterson said, “I don’t think that’s very realistic.” He added, “We’ll be lucky to get a year extension … and we may not even get it on time.”

Peterson also said there would be an effort to reduce the subsidy, something he would oppose unless the money saved was used to subsidize the cost of retrofitting service station pumps to sell higher blends of ethanol.

Dave Nelson, a corn grower who is chairman of ethanol producer MGP Cooperative in Belmond, Ia., said the ethanol subsidy has strong enough support in the Senate that Congress is unlikely to let it lapse.

He said a lapse in the subsidy “could be disastrous.” But ethanol producers could weather a temporary loss of the tax credit better than the biodiesel industry could because of the relative production costs, he said.

A lapse in the subsidy could temporarily reduce demand for ethanol by the refiners and other companies that blend the product with gasoline, said Bruce Babcock, an economist at Iowa State University. However, the reduced production could raise the price of ethanol, he said. In addition, a federal mandate for use of the fuel additive “will keep almost all plants operating,” he said.

As for Peterson’s warning that the subsidy could lapse, Nelson said, “He’s trying to lower our expectations.”

Peterson disclosed that he’s been meeting with representatives of the oil and automobile industries and trade groups representing convenience stores and service stations to try to resolve issues that could prevent ethanol sales from expanding significantly. Gasoline retailers, for example, oppose higher blends of ethanol unless they are given immunity from lawsuits for damage that could be caused by the fuel.

Another problem Peterson sees: The Environmental Protection Agency is likely to require special labeling of pumps that dispense ethanol in blends of greater than 10 percent. The labels will say that the higher blends should be used only in newer vehicles.

There’s the world’s ever-growing population, all of whom need to eat. In particular, there are the expanding middle class populations of Asia, all expecting better diets. It takes a lot of grain to rear a cow, chicken or pig.

There is the threat of increasingly volatile weather, bringing drought or flood to disrupt crop growth. There’s the apparent shortage of new, good-quality arable land. Then there’s the fact that much of US corn production is used to make ethanol.

But these are hardly new sales pitches. Let’s take a look at the case for the grains today. Is now the time to buy?

After years of stability, grains shot up in price

Let’s start by looking at a chart of wheat for the last 25 years.

You can see that wheat spent the vast part of the ’80s, ’90s and ’00s trading in the $2.50 – $4.50 per bushel range. That is, apart from a large spike in 1996, known as ‘the 1996 grain price shock’, that was the result of a drought in the Midwest.

Corn followed a similar pattern, trading between $1.80 and $3.20, again with a 1996 spike. Soybeans seem to be slightly more volatile. They followed the same direction, but had bigger rallies in 1989 and 2003.

But then, in the atmosphere of all-out speculation that gripped the world in 2006 and 2007, the grains began their greatest run in history, with wheat and corn leading the way. Wheat went from $3.00 to north of $10.00, while corn rose from $2.00 to $7.20. Soybeans almost tripled as well, going from $5.50 to $16.00 per bushel.

Fortunes were made. American farmers had never had it so good.

Then the bubble burst. And fortunes were made on the short side in the bust of early 2008. But what is interesting is that, despite the huge wash out in the grains markets, the grains all seem to have found support at the top of the ranges in which they had traded during the ’80s and ’90s, if not above them.

Other commodities are following a similar pattern

We’ve seen a similar story throughout the commodities complex. Oil for example, is still about 50% off its all-time high of $147 a barrel. But trading now in the mid-$70 range, it’s still many times higher than where it began the decade.

Copper began the decade at around $70 per pound. After soaring north of $420, in the 2008 bust it properly capitulated. But it still only fell back to $140, double where it began the decade. It now sits back around the $300 mark.

This is partly a symptom of the ever-declining purchasing power of modern money – the great inflation that goes undetected by the retail price index, consumer price index, or any other government-sponsored measure.

But it’s also a symptom of great bull markets. For example, there was the bull market in stocks that went from 1982 to 2000. Many people lost their shirts in the crash of 1987, but many managed to hang on and ride the bull – particularly those who got in early. Markets took time to recover after the crash of 1987, but there were still another 13 years of bull market to go.

For commodities as a whole, 2008 may prove to be what 1987 was to stocks – a short, severe correction in a longer-term bull market. Commodities, for the most part, are up on the decade, but stocks are not. They are still mired in a bear market that began in 2000 and is probably many years from being over.

Many people lost their shirts in commodities in 2008. But anyone who got in during the early part of the decade and managed to ride the bull will be fine now and looking to further gains in the future. These gains are based on all those fundamentals we know so well by now – put simply, falling global reserves meeting increasing global demand.

Trading in soft commodities is not for the faint-hearted

But as my colleague John Stepek pointed out last week (The best way to play agricultural commodities), trading soft commodities directly is not for the faint-hearted. I would be a buyer of wheat around the $4.50 mark, of corn around the $3.40 mark, and soybeans around the $9.50 mark – on pullbacks, in other words. But I do not see huge returns in the short-term, unless there is some kind of weather-related disaster, which causes another spike (many speculators are attracted by extreme weather).

I see further consolidation still after the events of 2008. Look how many years it took the grains to recover after the 1995-6 spike. But I also see gentle year-on-year gains as likely. And in ten years or so they could well do what stocks did in 2000, making the boom of 2006-08 look like small beer.

But sustained high prices? I’d expect that if prices go too high, governments will fight tooth and nail to get them back down again. And farmers respond to the profit motive just like anyone else. Indeed, until very recently, analysts were expecting a grain glut this year, due to a couple of decent harvest years, and farmers globally bringing more land into use. (Concerns about such a glut have since been scotched by unfriendly weather in the US and higher-than-expected demand from China – but it shows that rising prices do engender a significant response from growers).

Indeed, the characteristic of both the above charts is for periods where we see several years of doing pretty little, interrupted by sudden, violent spikes. So perhaps the strategy should be to buy, wait for a spike, sell, then look to get short.

The best way to play the grains

What’s the best way to play the grains? There are exchange-traded funds (ETFs) which play the grain prices, but I do not recommend them – the cost of rolling over the future contracts against which the ETFs are levered can be a source of immense frustration and disappointment for unwary investors. Sophisticated investors might buy futures, particularly long-dated ones.

But to be honest, the easiest way to play the grains is via a spread bet. Of course this is risky, and I’ll give you the usual warnings – you have the potential to end up losing far more than your original stake. If you are tempted to chance your arm at trading, you can find a spread betting provider to suit you on our comparison table.

Sadly, the spread betting ethos does not lend itself to long-term buy-and-hold, which is a game I would look to play for the grains. If you’re more interested in an agricultural play that you can stick in your long-term portfolio, you should stick to the companies involved in the sector. James McKeigue wrote about some promising stocks in a recent issue of MoneyWeek magazine: Harvest profits from agricultural growth.

Ministers from Germany, France and the UK come together for the first time in the Financial Times to call for the EU to slash emissions by 30 per cent by 2020, instead of the current 20 per cent target.

They say moving to the higher target unilaterally would not be difficult and would prevent Europe from lagging behind in the global race for green technology.

“If we stick to a 20 per cent cut, Europe is likely to lose the race to compete in a low-carbon world to countries such as China, Japan or the US, all of which are looking to create a more attractive environment for low-carbon investment,” the ministers said.

Research from Bloomberg New Energy Finance this week showed China had leapt ahead in green technology investment, attracting $40.3bn (€31.6bn) of asset finance for clean energy in the past year, compared with $29.3bn in Europe.

But the move by the three countries has reopened a debate most businesses regarded as settled. In May, the European Commission reported a 30 per cent reduction would be €22bn a year cheaper than thought because the recession had trimmed emissions. But an outcry from businesses forced a concession that raising the target would have to wait “until the time was right”.

Thursday’s move marks a U-turn for Germany, which has long opposed a unilateral move to 30 per cent, favouring the EU’s previous pledge to raise its target only if other countries showed similar ambitions, which they did not at last year’s Copenhagen climate summit. France also had strong reservations, but the UK’s Liberal Democrat party scored a coup when the ruling coalition of which they are a part backed the change.

Influential European business groups oppose the higher target. “We believe a unilateral move by the EU could disadvantage manufacturers by subjecting them to higher costs than their international competitors,” said Neil Bentley, director, business environment, at the UK’s CBI employers’ organisation.

Gordon Moffat, director-general of Eurofer, the European steelmakers’ association, said: “It would be absurd to take the economic downturn as justification for more ambitious climate change targets.”

But some businesses, including those with interests in green technology, support the tougher target. Joan MacNaughton, senior vice-president of policy at Alstom, the engineering group, said: “A 30 per cent target could really help to incentivise the low-carbon investment that Europe needs.”

The same vessels that were docked yesterday are still waiting to be loaded, a spokesman for Copersucar, who can’t be named because of company’s policy, said today.

Today there are 107 delayed vessels at six Brazilian sugar ports, up from 103 yesterday when rainfall started, according to Santos Associados Consultoria Ltda. and shipping company Unimar Agenciamentos Maritimos Ltda. The number of vessels waiting in the Santos Port rose to 74 from 70 yesterday.

Brazilian ports are struggling to keep up with demand for the sweetener. The country, the world’s biggest producer, accounts for 54 percent of the world’s exports, according to the U.S. Department of Agriculture.

Rainfall started yesterday and is expected to continue until Saturday, the port of Santos said on its website.

Raw sugar for October delivery fell 0.2 cent, or 1.2 percent, to 16.97 cents a pound on ICE Futures U.S. in New York.

Before today, the price tumbled 36 percent this year on forecasts that rising output will end two years of supply deficits.

Copersucar, based in Sao Paulo, owns the second-largest sugar terminal at the port of Santos. It is a sugar and ethanol cooperative with 39 associate mills.

NEW YORK (MarketWatch) — U.S. stock futures scaled back gains Wednesday as investors digested a 0.5% drop in U.S. retail sales in June and a 1.3% monthly decline in U.S. import prices. “Today’s data show that the recent downdraft in gasoline prices, the continued unwind of the cash-for-appliance program, and the ongoing pull-back following the April deadline for the homebuyers’ tax credit are all taking a toll on spending,” wrote analysts at Action Economics. Futures for the Dow Jones Industrial Average were off 2 points at 10,286. Those for the S&P 500 fell 1.4 points to 1,088.3, while Nasdaq 100 futures remained 4.25 points higher at 1,846.75.

Tom Buis, CEO of Growth Energy commented, “The Energy Department’s loan guarantee program is not working properly and that is especially true for cellulosic ethanol. Since the Department of Energy began administering this program six years ago, there is yet to be a single loan guarantee issued to a producer of cellulosic ethanol…just yesterday, the Environmental Protection Agency revised the nation’s cellulosic ethanol production target for next year from 250 million gallons to less than 20 million gallons. The single biggest reason for that revision is a lack of financing available to cellulosic ethanol producers, many of which are ready to build plants if funding can be secured.”

The Brazilian company said Wednesday in a press release that the state-run Brazilian Environment Institute, known as Ibama, awarded the preliminary license for the project but that the company still needs an installation license before construction can begin.

Petrobras said in the statement that its goal is to begin construction of the pipeline this year with a view to bringing it on stream in the second half of 2011.

The company said the pipeline, which will have the capacity to transport up to 12.9 million cubic meters (455 million cubic feet) of ethanol annually, will be used to send the fuel from mills in the producing regions of Minas Gerais, Sao Paulo and the midwest to the biggest consumer markets and eventually to ports for export.

The pipeline, which will use existing pipeline sections to minimize the environmental impact, will be built by a partnership in which Petrobras, Japan’s Mitsui and Brazilian construction firm Camargo Correa are the shareholders.

Two years ago, Petrobras and Mitsui created a company to supply biofuels – mainly ethanol – to the Japanese market.

Petrobras plans to build a pipeline that will run from Uberaba, Minas Gerais to Vale do Paraiba, Sao Paulo and then connect to other existing pipelines in Sao Paulo and Rio de Janeiro states.

Brazil, the world’s leading producer and exporter of sugarcane-based ethanol, is making an international effort to promote this alternative fuel as a way to reduce emissions of greenhouse gases and help farmers in poor countries.

Petrobras announced last month that its $224 billion business plan for the 2010-2014 period includes $3.5 billion for the biofuel sector.

More than 7 million automobiles in Brazil are “flex-fuel,” meaning they can run on any mix of gasoline or ethanol; roughly 93 percent of new light vehicles made in the country have this technology.

Last year, Brazil produced 27.5 billion liters (7 billion gallons) of sugarcane-based ethanol fuel, more than five billion liters of which was exported, mainly to the United States.

Shares of Petrobras, which is a global leader in deepwater oil exploration and production, trade on the Sao Paulo, New York, Madrid and Buenos Aires stock exchanges, but the Brazilian government retains control through a golden share. EFE

“EPA remains optimistic that the commercial availability of cellulosic biofuel will continue to grow in the years ahead,” the agency said in a release about the proposal, but the ethanol industry is concerned that lowering the goal will lower investor interest in next generation biofuels.

“While this may be prudent for EPA based on market conditions, it does send a chilling effect through the investment community with respect to cellulosic ethanol technologies,” said Matt Hartwig with the Renewable Fuels Association (RFA). “EPA’s estimates underscore the need for Dept. of Energy and USDA to construct loan guarantee programs that work for cellulosic ethanol companies.”

Chris Thorne with Growth Energy says his organization has the same concerns. “Cellulosic ethanol needs much greater investment to become commercially viable. Yet, in the six years that the Department of Energy has been managing the program, it has yet to issue a single loan guarantee to a cellulosic ethanol producer,” he said.

The blend wall is also an issue for the ethanol industry to meet the RFS2 targets under EISA, according to American Coalition for Ethanol (ACE) executive director Brian Jennings. “The scaled-down targets for cellulosic biofuel clearly indicate the E10 blend wall is standing in the way of market certainty for both corn and cellulosic ethanol producers,” said Jennings. “Until the blend wall is dealt with in a meaningful way, it is going to be difficult to secure financing for and move forward with next-generation ethanol projects.”

The lowered target for cellulosic biofuels lowered the overall goal for total renewable fuels next year, from the 8.25 percent set for this year in February by EPA to 7.95 percent of total gasoline sales in
2011 or a total of 13.95 billion gallons.

Under completion, expected in 2011, the facility will produce around 50,000 tonnes of biodiesel, 50,000 tonnes of civil use clean fuel and 100,000 tonnes of ethanol for vehicles. The plant’s total capacity is 200,000 tonnes.

The chairman of American Jianye Greentech Holdings, Haipeng Wang, said: ‘When complete this clean fuel production facility will significantly expand our refining and distribution capabilities in the southern part of China and help us meet current and future market demands for clean fuels required for civil and automobile use in that province.’

Sao Paulo state, where about 60 percent of Brazil’s sugar is produced, received 14 millimeters of rain (half an inch) in June, compared with an average 40 millimeters for the month in the previous 15 years, Antonio de Padua, Unica’s technical director, said. The southeastern state got 21 millimeters of rain in May, compared with a 15-year average of 50 millimeters, he said in a telephone interview from Sao Paulo yesterday.

Brazil’s Center South, which includes Sao Paulo and five other states, produces 90 percent of Brazil’s sweetener and ethanol made from sugar cane. The region is forecast to harvest 595.9 million metric tons of cane this year, up 10 percent from 2009, Unica said March 31. Sugar output was estimated at 34.1 million tons, up from 28.6 million. Padua declined to give a new estimate.

Dryness may boost the concentration of sucrose, the substance that is processed into ethanol and sugar, partly offsetting the smaller-than-expected harvest, Padua said. Crops may yield as much as 140 kilograms (309 pounds) of sucrose per ton of cane, up from a previous forecast of 138.6 kilograms per ton, he said.

“Sucrose content is going to be higher, which will partially compensate for a smaller sugar-cane crop,” Padua said.

The Center South has harvested around 40 percent of the sugar-cane crop so far this year, he said. He didn’t say when Unica will release its next estimate on sugar and ethanol output.

The strategy is not entirely risk-free, as market volatility escalates, although recent more positive data are calming investor jitters over a possible double-dip recession. The increasingly crowded market may also pressure trading margins and sharpen the competition for the best talent.

Following rapid growth in 2007, the Asian oil sector saw its worst shake-up a year later, when the onset of the global financial crisis froze credit markets and forced many to scale back trading volumes, with a handful shutting up shop.

While Asia remains a safe haven for firms seeking shelter from the last vestiges of the 2008 financial crisis and Europe’s current credit woes, the region is also grappling with shaky demand growth and the spectre of risk aversion.

The ambitions are not limited to banks from the West, but include those within Asia, such as Japan and Singapore.

“With the engines of economic growth for the world economy shifting eastwards, and that growth being energy- and base metals-intensive, the commodity-related interest is also shifting east,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London.

“The push into the commodities space started a few years ago. It was interrupted by the past recession and financial crisis, but appears to be resuming its upward trend in 2010.”

DEMAND FROM BULK COMMODITIES

Singapore-based Commodity Appointments, an international recruitment firm, said the greatest demand for talent was coming from bulk commodities, particularly iron ore and coal, with growing interest in clean fuels, oilseeds, grains and metals.

“It’s busy, it’s been busy all year. There has been a 100 percent uptick since this time last year in the midst of the global financial crisis,” said its consultant Dominic Mound.

“Some financial institutions and trading houses continue to build out in the commodities space and this is creating pressure in the marketplace to find people with the requisite skills.”

Some institutions could have over-hired in the first half in anticipation of a faster-than-expected global recovery, but others have been adding staff at a steady pace, Mound added.

Alexander Toone, Credit Suisse’s Asian head of commodities, also said key growth opportunities lay in the region’s iron ore, coal, freight, energy and base metals markets.

The Swiss bank’s Asian expansion plans are in line with those of Singapore’s DBS , Citigroup, Japan’s Nomura Standard Chartered , Societe Generale, Australia’s Macquarieand Australia and New Zealand Banking Group.

StanChart is eyeing energy markets, mainly crude oil and coal, after boosting its products portfolio for clients in the past year to include iron ore, freight, palm oil and rubber, Arun Murthy, its global head of commodities trading, said.

Commodity Broking Services, a Sydney-based trading house dealing in metals and grains, has grown its grains desk by 20-25 percent in the past three months.

“Our policy is to get younger people in and train them properly as we anticipate a resurgence in demand for commodities, both from the consumer and investing side in the region,” said its managing director, Jonathan Barratt.

DBS Bank is focusing on base metals and the energy complex, said Roger Quek, director of Integrated Energy, Metals and FFA Services at DBS Vickers Securities.

“These sectors will be more attractive than soft commodities, with Asia pushing forward with its urbanisation plans,” he added.

The growth potential for hedging in Asia’s coal, gas and oil sector could be as high as 60 percent, including consumers in the transportation sector such as airlines and shipping, said a source familiar with the regional hedging business.

Reflecting investor enthusiasm for this asset class, inflows into the commodity sector hit their second-highest levels this year at $8.6 billion (5.6 billion pounds) in May, after crossing the $12 billion mark in February, Barclays Capital said in a client note.

It cautioned that despite heavy inflows, the sector’s price performance was disappointing, with crude oil and base metals posting steeper falls during the month than agricultural commodities, while gold was the biggest beneficiary of safe-haven buying amidst jitters about the strength of the global recovery.

On the regulatory front, with the United States and Europe pushing to tighten financial rules and boost transparency in opaque markets, Asia’s relatively lighter frameworks are a boon.

“With all the regulatory change occurring in the U.S. and Europe, we’ve seen more and more of the discretionary hedge funds business relocate to Asia,” Toone said.

The U.S. recently approved the most sweeping overhaul of Wall Street financial rules since the 1930s, while the EU is debating controversial rules for hedge funds and is deadlocked in talks to set up watchdogs for policing banks and markets.

Even as signs emerge that the worst could be over for Europe’s financial crisis and U.S. firms look set to post robust quarterly earnings, high U.S. unemployment levels and the spectre of slowing growth in China could muddy the sector’s outlook.

Volatility levels have surged as increasingly risk-averse investors pummelled nearly all commodity markets — except for precious metals — over the last few weeks.

“Investors continue to shift investments away from riskier assets into bonds,” said Ole Hansen, senior manager of CFD and Listed Products at Saxo Bank in London, pointing to the recent poor performance of the benchmark Reuters Jefferies CRB index .CRB, which covers 19 mostly U.S.-traded commodities.

The index sank to a 10-month low of 248.79 on May 25, and has fallen about 9 percent since the start of the year.

“In our Q3 forecast, we have a negative outlook for the index. We fear the Chinese slowdown could accelerate the sell-off, especially in base metals and energy,” he added.

But BNP Paribas’ Tchilinguirian was more sanguine about the longer-term outlook.

“If commodities have corrected on concerns over the near-term economic outlook in China and the U.S., it does not necessarily mean market sentiment will stay negative,” he said.

“Asian economic growth prospects are overall positive and monetary policy is expected to remain accommodative well into 2011. Should China’s economic growth slow more than expected, we anticipate the authorities will again loosen credit conditions.”

And for some, volatile markets offer an opportunity to boost hedging volumes, while the move away from central price controls and removal of subsidies in countries like India and China would enhance the need for end users to better hedge their purchases.

“High and volatile commodity prices mean companies are becoming more and more sophisticated in understanding their risks and how to manage that risk,” said Toone at Credit Suisse.

New York time, said Paulo Roberto de Souza, chief executive officer of Sao Paulo-based Copersucar, which owns the second- biggest sugar terminal at the Port of Santos.

     “The situation is worrisome, because we are already working at full capacity and the rain will slow us down,” he said today in a telephone interview from Sao Paulo.

     Brazilian ports haven’t been able to keep up with record output of the sweetener. The number of vessels waiting to load sugar at six Brazilian sugar ports dropped to 103 from 106 a week ago, according to Santos Associados Consultoria Ltda. and Unimar Agenciamentos Maritimos Ltda., a shipping company.

     Brazil, the world’s largest sugar producer, ships 54 percent of the world’s sugar exports. The Santos Port has the capacity to ship 2 million metric tons of sugar a month.

     The Santos Port probably won’t meet its target of loading 3 million tons of the sweetener in July, Souza said.

     “With or without rain, there is no way Santos is shipping 3 million tons this month,” he said.

     Rain is expected to continue through Saturday, according to the port’s website.

     Raw sugar for October delivery climbed as much as 0.16 cent, or 0.9 percent, to 17.26 cents a pound on ICE Futures U.S. in New York and was at 17.18 cents at 8:45 a.m. local time.

     Copersucar is a Brazilian sugar and ethanol cooperative with 39 associate mills that exports more of the sweetener than Thailand. It plans to export 6 million metric tons of sugar next year. Thailand, the world’s second-biggest exporter after Brazil, exported 5.2 million tons last year.

The agreement will be signed during a summit of European and Brazilian leaders in Brasilia on Wednesday, they said.

Spurred by surging EU biofuel demand and Brazil’s production expansion goals, the deal with Mozambique is seen in Brussels and Brasilia as a first step toward greater cooperation on developing renewable energy projects in Africa.

Under the agreement, the EU and Brazil will start studies on how best to develop bioethanol, biodiesel and bioelectricity projects in Mozambique, which has become a leading African biofuels producer in recent years.

“This agreement will be part of the EU and Brazil’s wider cooperation with Africa, which we hope will eventually lead to an agreement with the Africa Union,” an EU official said.

The EU needs biofuel to meet its target of sourcing 20 percent of its energy needs from renewable sources by 2020.

Teaming up with global bioethanol leader Brazil would speed up the creation of a new and cheaper supply in Africa.

Unlike Brazilian bioethanol, which is subject to high import tariffs at EU borders, African-produced biofuel would be subject to minimal tariffs.

New production bases in Africa could benefit Brazilian biofuel producers such as Cosan and ethanol and sugarcane group Copersucar, Brazilian diplomats said.

Such companies would still need the EU’s stamp of approval to ensure African-made biofuel meets strict European rules designed to protect the environment.

EU officials are unsure about how long feasibility studies on Mozambique will take to complete, or how soon they could spawn bioenergy projects. Brazil has completed similar feasibility studies with the United States for bioenergy projects in Haiti, the Dominican Republic and Central America.

Despite the EU’s commitment to increasing use of biofuels over the next decade, concerns are rising about the impact such a policy could have on the environment and food security, with some research showing biofuels may end up causing more harm than good to the environment.

BP Plc jumped the most in 20 months in London trading on speculation the company may succeed in halting the biggest oil spill in U.S. history this week as it negotiates the sale of assets in Alaska.

The length of a U.S. moratorium on deep-water oil drilling will be decided by the Interior Department, not the presidential commission investigating the BP Plc spill in the Gulf of Mexico, the panel’s co-chairman said.

Hedge funds slashed bets that oil would rise last week to the lowest level in more than a year just before crude began its biggest advance since May.

U.S. inventories of crude oil probably dropped for a third consecutive week amid refinery utilization near the highest level in more than two years and declining imports.

The economic damage from the BP Plc spill in the Gulf of Mexico will be dwarfed by the Obama administration’s moratorium on deep-water drilling, the chief executive officer of a New Orleans business group said.

Gasoline futures fell for the first time in four days as the dollar strengthened and on speculation a decline in demand will extend gains in inventories.

Brazil’s oil regulator said it concluded its first test at the Franco offshore field, which holds the oil reserves that the government may sell state- controlled Petroleo Brasileiro SA in exchange for new stock.

The Environmental Protection Agency proposed requiring less cellulosic ethanol to be blended into gasoline next year than sought under U.S. law because production of the alternative fuel hasn’t reached commercial scale.

Ethanol followed crude oil and gasoline lower as the stronger dollar decreased the allure of commodities as an investment.

Kuwait Petroleum Corp., the state- owned producer, kept its official oil exports to Asia for August unchanged from July.

Saudi Arabian Oil Co., the world’s largest state-owned oil company, will supply full contractual volumes of crude to Asia for loading in August, according to refinery officials.

Valero Energy Corp. said it had a leak in a hydrogen unit that led to emissions at its Three Rivers, Texas, refinery, according to a filing with state regulators.

BP Plc will flare gases in a planned event at its oil refinery in Carson, California, from 2:45 p.m. local time tomorrow through 11:59 p.m. July 16, the company said in a filing with the South Coast Air Quality Management District.

Gulf Coast spot gasoline traded at the smallest discount to futures since February as demand increased for the motor fuel to be shipped to the Midcontinent.

Chevron Phillips Chemical Co. began the startup of an ethylene unit at its Port Arthur, Texas, chemical plant over the weekend after a loss of steam supplies in June caused an emergency shutdown of all units, according to a filing with state regulators.

Chevron Phillips Chemical Co. began the startup of an ethylene unit at its Port Arthur, Texas, chemical plant over the weekend after a loss of steam supplies in June caused an emergency shutdown of all units, according to a filing with state regulators.

Light Louisiana Sweet crude oil weakened against benchmark West Texas Intermediate as Motiva Enterprises LLC said it would shut a boiler at its Port Arthur, Texas, refinery for work.

Delek US Holdings Inc. reported unplanned maintenance and the shutdown of an amine unit at the Tyler, Texas refinery, according to a filing with regulators.

Gulf Coast spot gasoline strengthened as demand increased for the motor fuel to be shipped to the Midcontinent market.

Delek US Holdings Inc. reported unplanned maintenance and the shutdown of an amine unit at the Tyler, Texas refinery, according to a filing with state regulators.

Total SA, Europe’s largest refiner, has filed two legal motions contesting rulings on the Dunkirk refinery in northern France that it shut in September because of falling demand for fuels such as diesel.

The cost of shipping a gallon of gasoline, jet fuel or other so-called clean petroleum products from the Middle East to Japan was unchanged at 6.45 U.S. cents yesterday, according to data compiled by Bloomberg. The cost is based on a cargo of 55,000 metric tons.

North Sea Forties crude oil may gain after BP Plc bid for a cargo without attracting sellers. Hellenic Petroleum SA, Greece’s biggest refiner, is seeking a cargo of Russia’s Urals crude blend for delivery in August.

The cost of delivering Middle East crude to Asia, the world’s busiest route for supertankers, fell for a 17th session in London as brokers and analysts speculate charter income can’t decline much further.

Middle East crude oils for sale to Asia rose on expectations of increases in demand for middle- distillate rich grades as processing profits strengthen.

Some people might think the hours you spent over the last month sitting around, drinking beer and watching the soccer World Cup being played in South Africa was a waste of valuable time.

Oil may push toward $84 a barrel based on signals from on a Japanese charting method called Ichimoku Kinko Hyo, or “one- glance cloud chart,” according to Astmax Ltd.

BP Plc worked today to install a new cap intended to capture all of the oil leaking from its Macondo well in the Gulf of Mexico.

China’s Suntech Power Holdings Co., the world’s largest maker of polysilicon solar-power modules, fell the most in two months in New York after Citigroup Inc. recommended selling the stock and said next year’s earnings may miss analysts’ estimates.

BP Plc plans to stop the flow of crude from its leaking Gulf of Mexico well tomorrow so it can measure the pressure inside the well.

BP Plc is in talks to sell assets to Apache Corp. as it seeks funds to pay for the biggest U.S. oil spill in history, two people familiar with the discussions said.

China is buying unprecedented amounts of uranium, signaling that prices are poised to rebound after three years of declines.

BP Plc, seeking to stop the biggest oil spill in U.S. history, is employing at least two of the service providers whose equipment was involved in the April 20 rig explosion in the Gulf of Mexico that triggered the disaster.

Brazil’s petroleum regulator said it first test at the offshore Franco oil field shows a well can produce about 50,000 barrels a day.

Stocks rose, with the Standard & Poor’s 500 Index climbing for a fifth day, as analyst upgrades of technology shares boosted optimism before the start of the earnings season. The dollar strengthened and oil and copper retreated.

Just a month ago, BNP Paribas SA, Royal Bank of Scotland Group Plc and UBS AG said the euro was heading toward parity with the dollar as Europe’s sovereign debt crisis threatened to tear the European Union apart.

The pound rose against the euro as European stocks advanced, boosting demand for assets correlated with economic growth, and speculation mounted about a takeover bid for BP Plc.

U.S. stocks rose, adding to gains from the biggest weekly rally in a year for the Standard & Poor’s 500 Index, as analyst upgrades of technology companies boosted optimism before the start of the earnings season.

The Standard & Poor’s 500 Index may fall 17 percent to the lowest level in a year after the measure formed a head-and- shoulders pattern, according to a technical analyst at SEB AB.

Alcoa Inc., the largest U.S. aluminum producer, reported second-quarter profit that topped analysts’ projections as higher metal prices boosted sales. The shares rose.

Gold futures fell as the dollar’s rally eroded demand for the precious metal as an alternative asset.

Japan’s Prime Minister Naoto Kan lost control of parliament’s upper house, undermining legislative efforts to cut the world’s largest public debt and creating the possibility of a third leadership change in a year.

U.S. Interior Secretary Kenneth Salazar issued a revised ban on deep-water oil drilling that he said may allow new wells if the industry shows it has raised safety standards.

The bomb attacks in Uganda that left 74 people dead represent the spread into the rest of East Africa of a conflict that has torn Somalia apart, said analysts including Gus Selassie at IHS Global Insight.

The FIFA World Cup final, in which Spain beat the Netherlands 1-0, was the most-watched men’s World Cup game ever, Walt Disney Co.’s ESPN said in an e-mail, citing data from Nielsen Co. The game was telecast on Disney’s ABC network.

Grupo Televisa SA, the world’s largest Spanish-language broadcaster, said second-quarter revenue jumped 14 percent as more customers signed up for satellite TV service to watch World Cup soccer.

South Dakota has given out about $50 million in tax breaks in the past four years to lure companies into building large projects in the state, but critics question whether the state is getting enough bang for its buck.

House Democratic Leader Bernie Hunhoff of Yankton believes the state gives away too much tax revenue that would be better spent on schools. The state should target the tax breaks to specific industries, such as wind farms and ethanol plants, after closely examining how effective the breaks are, he said.

“To just blindly pass out corporate tax breaks hither and thither as we’ve been doing makes no fiscal sense whatsoever,” Hunhoff said.

Even Gov. Mike Rounds, a supporter of the incentive program, acknowledges that it’s hard to list what additional projects have been built because of the tax breaks. “It’s difficult to quantify,” he said.

However, the Republican governor believes the tax breaks help attract large energy projects that will provide good jobs for a long time to come.

“If we can get them to actually invest their capital in this state, we’ve got a pretty good chance of having those good jobs, those stable jobs here on a permanent basis,” he said.

Hunhoff and other critics argue that some projects that got the tax breaks, particularly TransCanada Keystone’s oil pipelines, would have been built in South Dakota regardless of any tax incentive.

Businesses are generally reluctant to say a break on construction taxes is the deciding factor in a company’s decision to build in South Dakota.

Daryl Hill, a spokesman for Basin Electric Power Cooperative, said companies look at a number of factors when deciding where to locate projects. State reports show Basin Electric, based in Bismarck, N.D., has received nearly $3.3 million in tax refunds on South Dakota projects since 1996, and it plans to begin construction soon on a $400 million gas-fired power plant near Brookings.

“I think they certainly had a part in the decision-making process. When you look at saving millions of dollars, that’s certainly a factor you consider when you develop a project,” Hill said.

South Dakota has given more than $66.2 million in construction tax refunds to 37 businesses from July 1, 1996, through June 20, 2010, according to the South Dakota Department of Revenue and Regulation.

A review of tax records by The Associated Press shows the bulk of those refunds have been made in the past four years — since the state began providing incentives to encourage construction of energy projects in South Dakota. Most have gone to companies building ethanol plants and wind farms.

The state gave $5 million in construction project tax refunds in fiscal year 2007, nearly $15 million in fiscal year 2008, about $18 million in fiscal year 2009 and expects to pay about $12 million in fiscal year 2010, which ended June 30.

The Revenue Department publishes a list of companies and how much each has received in tax refunds overall, but does not specify how much is provided for each project. The law requiring that information be made public refers to the company, not the project, Revenue Secretary Paul Kinsman said.

Tax refund permits issued for projects are public information, but not the companies’ applications for refund permits for projects, Kinsman said. “That’s tax information that would give specific tax information for the taxpayer, which is protected.”

Rounds in 2005 proposed expanded breaks on the sales tax and contractor’s excise tax that apply to the cost of construction as a way to attract new power plants to South Dakota. A couple of coal-fired plants were proposed but never built.

The governor said South Dakota at that time was not competitive with other states in reducing the initial costs of building large projects. But as the recession took hold and revenue dropped, South Dakota and other states began to reconsider those tax breaks in the past year or two, he said.

Rounds this year proposed limits on the tax refunds. The Legislature passed a different version, intended to help balance the state budget, after extensive negotiations involving legislative leaders, industry lobbyists and the governor’s staff.

For the past few years, the program refunded a portion of the sales tax and contractor’s excise tax paid for many kinds of business construction projects costing more than $10 million. Refund levels varied from 25 percent to 90 percent, with larger projects getting larger percentage refunds. New or expanded agricultural processing projects costing more than $4.5 million also were eligible for some tax refunds.

The law passed by the Legislature, which took effect July 1, allows rebates of 45 percent of taxes on projects costing $10 million to $40 million, and 55 percent for those costing $40 million to $500 million. The largest projects would not get any refunds for the portion exceeding $500 million.

Lawmakers gave wind farms the same tax breaks, but with no upper cost limit. That means all wind farms costing more than $40 million will get a 55 percent tax refund for even the portion exceeding $500 million.

The budget passed by the Legislature assumes the changes will bring in an additional $14 million in tax revenue in the year beginning July 1, but Rounds doubts the revenue gain will be that large.

Hunhoff and other Democratic lawmakers argued that no tax refunds should be given to oil pipelines, such as the one TransCanada Keystone has built across eastern South Dakota and the TransCanada Keystone XL pipeline that is planned to be built in western South Dakota.

Hunhoff said the oil pipelines would have been built through South Dakota even without tax incentives, so the state gets little in return for the tax breaks given to TransCanada.

The first TransCanada pipeline qualifies for the previous version of tax refunds, but the law passed this year will cost the company about $20 million in refunds for the $920 million XL line in western South Dakota, roughly cutting in half the refund it would have received.

Jeff Rauh, a spokesman for TransCanada, said the refund cut increases the cost of the second pipeline long after the company had developed its business plan. TransCanada used its cost estimates when it sold 80 percent of the XL pipeline’s capacity to companies that want to ship oil in the pipe running from Alberta to Texas refineries on the Gulf coast, he said.

“It is a significant change late in the process. It makes it very, very difficult,” Rauh said.

Keystone is committed to running its second pipeline through South Dakota, but the change in tax refunds could cause companies to build future pipelines elsewhere, Rauh said.

“Shipping of oil is a competitive business. Competing pipelines run through Wyoming, Minnesota, Wisconsin and other states,” he said

Rounds said he supports giving oil pipelines the same refunds as other large projects. He noted that TransCanada had the option of placing two pumping stations on the XL line either in South Dakota or just over the state borders in Montana and Nebraska.

In exchange for a break on construction taxes, TransCanada would pay substantial property taxes to local school districts and counties for many years, the governor said. “You really do have a trade off on it.”

Rauh said TransCanada has completed its evaluation and will keep those two pumping stations in South Dakota, one in Tripp County and one in Harding County. Each will cost tens of millions of dollars, he said.

The XL pipeline will bring thousands of construction jobs to South Dakota, and the state will get an extra $10 million in sales tax revenue above and beyond construction taxes because workers and others will spend money on meals, motel rooms and other services, Rauh said.

The two TransCanada pipelines will pay more than $20 million a year in property taxes to local governments along the two routes, Rauh said.

In addition, oil producers in Montana, North Dakota and South Dakota are exploring whether to ship through the XL pipeline, Rauh said.

Basin Electric officials have also said the new law means it will pay substantially more taxes for its Deer Creek power plant near Brookings.

Rounds said it’s impossible to know which projects located in South Dakota just because of the tax incentives, but he believes Basin Electric’s Deer Creek plant and some wind farms would not have been placed in the state without the incentives.

The tax refunds also reduced the cost of some wind farms, freeing up money so companies could spend more on the transmission lines needed to get the electricity to customers, the governor said.

Hunhoff said the state needs to study what benefits it gets from the tax refunds and then decide which kind of projects should get the tax breaks.

“I think there’s possibly a place for them. but I think we’re wasting way too much money on them and probably getting a very poor return in most cases,” the Democratic lawmaker said.

The $0.425 per liter ($1.61 per gallon) subsidy is hoped to spark production of up to 5 Mgy in local biodiesel production (20 million liters).

The decision is part of the EPA’s proposed standard for renewable fuels of about 14 billion gallons, or 7.95 percent of transportation fuels used in the U.S., the agency said today in a news release. The goal for cellulosic biofuels, based on an analysis of market availability, is 5 million to 17.1 million gallons, or as much as 0.015 percent, according to the agency.

“While this may be prudent for EPA based on market conditions, it does send a chilling effect through the investment community with respect to cellulosic ethanol technologies,” Matt Hartwig, a spokesman for the Renewable Fuels Association, wrote on the industry group’s website.

Cellulosic ethanol, made from switchgrass, wood chips and agricultural waste such as corn cobs, has been promoted as having a smaller carbon footprint than fuel made from corn because it provides less incentive to cut down trees or plow up prairies to create cropland.

The Obama administration said it will continue to evaluate the market as it works to make the cellulosic standard final in coming months. The EPA “remains optimistic” that the commercial availability of cellulosic biofuel will continue to rise over the next few years, the agency said.

In February, the EPA slashed the cellulosic ethanol mandate for this year by 94 percent, reducing the goal to 6.5 million gallons from the 100 million required under a 2007 energy law. The agency said corn-based ethanol produces less greenhouse-gas emissions than previously anticipated, clearing the way for more use of the fuel.

Congress passed a renewable-fuels standard in 2007 that quadrupled the requirement for blending ethanol and other biofuels into gasoline supplies, to 36 billion gallons by 2022. The law also set interim goals.

Nelson said at the opening of an Archer Daniels Midland Co. (ADM) ethanol plant in Nebraska that the Environmental Protection Agency is studying “to death” the potential increase from a 10% blend.

He said the agency should consider incremental increases as it awaits further data on an industry request to raise the ceiling to 15%.

“I’d love to get them to do 15% right off the bat, but if we’re unable to get them to that level, then in the interim, let’s start moving it up,” Nelson said. “What’s the difference between 10% and 11%?”

The push for a higher so-called blend rate has received opposition from some auto makers concerned about the impact of using more of the additive in gasoline. The food industry has also been ramping up its concerns that higher corn-based ethanol production could inflate animal feed costs.

The static blend rate and weak gasoline demand have pushed the industry toward the blend wall, or the point at which ethanol production is exceeding possible usage, said John Rice, executive vice president for commercial and production at ADM.

The dry-mill plant can produce 300 million gallons of ethanol a year and sits alongside an existing wet-mill ethanol production facility. The complex is the biggest such plant in Nebraska, the nation’s second-biggest ethanol producer.

Since construction of the plant was announced in early 2006, the ethanol industry has gone through a boom and a bust. It has since stabilized, but producers say the blend wall poses another problem.

As of April, according to the U.S. Energy Information Administration, ethanol accounted for 9.2% of total gasoline supplies. The EIA said it expects the industry to hit the blend wall in the first quarter of 2011.

ADM officials said synergies among the twin Columbus plants and a coal co- generation power plant next to them will help the company weather any weakening demand. “We feel we have a very efficient (complex),” Rice said.

Dry-mill plants produce ethanol and distillers dried grain, a byproduct used for cattle feed, while wet-mill plants produce a wider array of products, including paper, high-fructose corn syrup and corn-based plastics

GDF Suez representatives met with the town mayor Alexander Kravarov and privately owned French company Bul Eco Energy.

GDF Suez will present Bansko Municipality with its investment offer by the end of July 2010.

To date the French energy company has installed biomass heating systems in 150 European towns and cities.

WVO recycling starts at restaurants or other food providers. Used cooking oil or grease from meats or other foods is transported to a plant and filtered and dewatered before undergoing the biodiesel conversion.

The process is creating a new industry of WVO collectors, from mom-and-pop style converters like Jay Martin, a Bivalve farmer, to large companies like Greenlight Biofuels, a biodiesel manufacturer in Princess Anne.

About a decade ago, business owners had to pay to get discarded cooking oil removed from their restaurants. As the nation moved more toward renewable energy and biodiesel in particular, the demand went up for used cooking oil that is typically used to manufacture the diesel alternative, said J.J. Smith, president at Winchester, Va.-based Valley Proteins.

Companies like Valley Proteins, in the “restaurant used cooking oil collection” business, began to make token payments to restaurants that gave them grease. Not too long ago, Valley Proteins began offering about 5 cents per pound for discarded used oil, or about 37.5 cents per gallon, Smith said.

“When it had more value, it was worth more to go out to collect it and pay more to get the sources,” Smith said.

The dramatic increase in crude oil helped drive up the price of fuel and spiked a demand for biodiesel, he says.

“Nobody was putting that in biofuel until about five years ago,” Smith said. “We saw a ramp up in late 2006 and early 2007. A peak was in 2008, when oil went to $145 a barrel and diesel went to $5 per gallon. Since then, the demand and volume for biodiesel have gone down as fuel prices went down.”

The demand for used grease is so high right now that collection companies are competing and “bidding to pick up (grease),” Smith said.

The contract from BRDC is funded by the U.S. Department of Agriculture in support of Arvens Technology Inc.(ATI), which plans to establish geographically dispersed, advanced biofuel production plants using pennycress seeds. Under the contract, Alion will develop a set of models that will be used to assess the feasibility of various processing technologies, simulate overall process performance and provide an economic evaluation of the costs related to the construction and operation of pennycress processing plants.

Harvested pennycress seeds contain about 36% oil and after oil extraction and conversion to biodiesel, the remaining material, called presscake, can be burned, gasified or pyrolyzed to bio-oil. Both the extracted oil and the presscake become value-added products. It is estimated that an acre of pennycress can produce 95 gallons of biodiesel and another 95 gallons of bio-oil. In addition to its high yield, it is easy to grow and helps prevent soil erosion.

“Alion’s development of these models will lead to an analytical tool that will help determine specific design features for pennycress processing plants and how to best apply development dollars,” said Damon Griggs, Alion Senior Vice President and Manager of the Business Solutions Group. “Our scientists and engineers have performed similar analyses for the chemical and pharmaceutical industries, and our process engineering and manufacturing expertise makes us ideally suited to perform this work.

“The results of Alion’s work will help establish the suitability of pennycress for production of biofuels by guiding the selection of equipment and process options,” Griggs explained. “This work is also important to the agricultural industry as pennycress can potentially generate over $200 million annually in new farm income per million acres cultivated.”

Alion’s work will be conducted at offices near Tulsa, OK, and Chicago. Similar studies are being proposed to other clients for other feedstock and process combinations to help them evaluate and optimize the economics of their alternative energy strategies, Griggs said.

BRDC is a 501(c)(5) organization that was formed to encourage the development of better agricultural products in the United States by funding and managing research projects at Agricultural Research Service Laboratories and private and public universities throughout the country. This particular project is being done in support of ATI, an Illinois company that has been established to grow and crush pennycress seeds and make available the oil and remaining de-oiled material (presscake) to fuel and energy companies.

About Alion Science and Technology

Alion Science and Technology is an employee-owned technology solutions company delivering technical expertise and operational support to the Department of Defense, civilian government agencies and commercial customers. Building on 70 years of R&D and engineering expertise, Alion brings innovation and insight to multiple business areas: naval architecture & marine engineering; defense operations; systems engineering; modeling & simulation; information management & technology; chemical, biological, nuclear & environmental sciences; wireless spectrum engineering; and industrial technology. Based in McLean, Virginia, Alion employee-owners are located at major offices, customer sites and laboratories worldwide. For more information, call 877.771.6252 or visit Alion online at www.alionscience.com.

This press release contains information about management’s view of Alion’s future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of a variety of risk factors and uncertainties discussed in documents periodically filed by Alion with the SEC. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof.

SOURCE: Alion Science and Technology

The Energy Secretariat signed a resolution recently to boost the fuel-mix requirement to 7% from the current 5%, Planning Minister Julio De Vido said, without saying how long the companies would have to put the measure in place.

The contract from BRDC is funded by the U.S. Department of Agriculture in support of Arvens Technology Inc.(ATI), which plans to establish geographically dispersed, advanced biofuel production plants using pennycress seeds. Under the contract, Alion will develop a set of models that will be used to assess the feasibility of various processing technologies, simulate overall process performance and provide an economic evaluation of the costs related to the construction and operation of pennycress processing plants.

Harvested pennycress seeds contain about 36% oil and after oil extraction and conversion to biodiesel, the remaining material, called presscake, can be burned, gasified or pyrolyzed to bio-oil. Both the extracted oil and the presscake become value-added products. It is estimated that an acre of pennycress can produce 95 gallons of biodiesel and another 95 gallons of bio-oil. In addition to its high yield, it is easy to grow and helps prevent soil erosion.

“Alion’s development of these models will lead to an analytical tool that will help determine specific design features for pennycress processing plants and how to best apply development dollars,” said Damon Griggs, Alion Senior Vice President and Manager of the Business Solutions Group. “Our scientists and engineers have performed similar analyses for the chemical and pharmaceutical industries, and our process engineering and manufacturing expertise makes us ideally suited to perform this work.

“The results of Alion’s work will help establish the suitability of pennycress for production of biofuels by guiding the selection of equipment and process options,” Griggs explained. “This work is also important to the agricultural industry as pennycress can potentially generate over $200 million annually in new farm income per million acres cultivated.”

Alion’s work will be conducted at offices near Tulsa, OK, and Chicago. Similar studies are being proposed to other clients for other feedstock and process combinations to help them evaluate and optimize the economics of their alternative energy strategies, Griggs said.

BRDC is a 501(c)(5) organization that was formed to encourage the development of better agricultural products in the United States by funding and managing research projects at Agricultural Research Service Laboratories and private and public universities throughout the country. This particular project is being done in support of ATI, an Illinois company that has been established to grow and crush pennycress seeds and make available the oil and remaining de-oiled material (presscake) to fuel and energy companies.

About Alion Science and Technology

Alion Science and Technology is an employee-owned technology solutions company delivering technical expertise and operational support to the Department of Defense, civilian government agencies and commercial customers. Building on 70 years of R&D and engineering expertise, Alion brings innovation and insight to multiple business areas: naval architecture & marine engineering; defense operations; systems engineering; modeling & simulation; information management & technology; chemical, biological, nuclear & environmental sciences; wireless spectrum engineering; and industrial technology. Based in McLean, Virginia, Alion employee-owners are located at major offices, customer sites and laboratories worldwide. For more information, call 877.771.6252 or visit Alion online at www.alionscience.com.

This press release contains information about management’s view of Alion’s future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of a variety of risk factors and uncertainties discussed in documents periodically filed by Alion with the SEC. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof.

SOURCE: Alion Science and Technology

July 9 (Bloomberg) — U.S. corn inventories may slide 7.1 percent next year, the government said, as demand grows and after excess rain prompted farmers to plant less and trimmed yield potential.

“The reduction in the corn carryover has drastically changed the supply dynamics,” Roy Huckabay, the executive vice president of Chicago-based Linn Group, said before the report. “Too much rain in the Midwest and hot, dry weather in the southern and eastern U.S. are causing crops to walk backwards.”

Corn futures for December delivery rose 7 cents, or 1.8 percent, to $3.9625 a bushel yesterday on the Chicago Board of Trade, after touching $3.975, the highest price since Jan. 12. The most-active contract has jumped 15 percent since June 29, the day before the USDA said farmers planted less than they intended this year.

Smaller inventories may raise costs for companies including hog-processor Smithfield Foods Inc. and poultry-producer Pilgrim’s Pride Corp., which say corn-based feed is their biggest expense. Ethanol makers such as Archer Daniels Midland Co. also may have to pay more for raw materials.

Planted Acreage

The USDA said in June that 87.872 million acres (35.6 million hectares) of corn were planted this year, based on a survey of farmers. That’s up 1.6 percent from a year earlier. In March, growers indicated they would plant 88.789 million.

U.S. production is projected at 13.245 billion bushels, down 0.9 percent from 13.37 billion forecast last month. Last year’s crop was estimated at a record 13.11 billion. Average yields in 2010 may fall to 163.5 bushels an acre from an estimated 164.7 bushels last year. That estimate was unchanged from last month.

The amount of corn used to make ethanol in the marketing year that begins Sept. 1 will increase 4.4 percent to 4.7 billion bushels from the current year, the USDA said. Exports will be unchanged from this year’s 1.95 billion bushels, according to the department, which cut its forecast 2.5 percent from last month.

World production in the crop year that begins Oct. 1 will reach 832.4 million metric tons, down from June’s projection of 835.8 million while up 2.9 percent from the current year, the USDA said.

Global consumption is forecast to jump 1.7 percent to 830.89 million from a record 816.83 million in the 12 months through September.

China, the world’s largest corn consumer after the U.S., will import 100,000 tons in fiscal 2011, unchanged from last month’s forecast, the USDA said. This year’s imports are estimated at 1 million. China will become a net importer this year for the first time since 1996, USDA said.

Worldwide inventories will total 141.08 million tons on Oct. 1, 2011, the lowest since 2008 and down from a revised 147.32 million forecast for the end of this marketing year. In June, the USDA projected 147.3 million.

Corn is the biggest U.S. crop, valued at a $48.6 billion in 2009, government figures show.

July 8 (Bloomberg) — Cash premiums for soybeans and corn shipped to export terminals near New Orleans rose relative to Chicago futures as U.S. farmers withheld supplies and overseas demand increased.

The spot-basis bid, or premium, for soybeans delivered this month was 80 cents to 95 cents a bushel above August futures, compared with 80 cents to 90 cents yesterday, U.S. Department of Agriculture data show. The corn premium rose to 40 cents to 45 cents a bushel above September futures, compared with 40 cents to 43 cents.

“Farmers are beginning to let loose of some corn and soybeans, but the pipeline supplies have not been replenished” to load ships, said Ron Uhe, a risk consultant for Mid-Co Commodities Inc. in Bloomington, Illinois. “We have a battle for supplies between processors and exporters.”

Soybean futures for August delivery gained 15.25 cents, or 1.6 percent, to $9.83 a bushel on the Chicago Board of Trade. Prices rose 2.9 percent yesterday, the biggest advance for the contract since Oct. 12. The oilseed has climbed 5.6 percent this month after the USDA said that inventories as of June 1 fell to the lowest level since 2004.

Corn futures for September delivery rose 7.25 cents, or 1.9 percent, to $3.855 a bushel. The contract jumped 6.6 percent last week after the USDA said farmers planted less this year than they planned.

U.S. exporters sold 116,000 metric tons of soybeans for delivery before Aug. 31 to China, the Department of Agriculture said today. Ethanol production in the U.S. rose 2.8 percent in the week ended July 2 from a week earlier, an Energy Department report showed today.

“There was talk that China was buying more U.S. soybeans today,” Uhe said. “Ethanol processors are running near full capacity.”

The facility means that Everpure can now collect waste vegetable oil from eateries around the local area before Zuraw Technologies converts it into biodiesel in the new plant.

Prior to the construction of the biofuel production facility Everpure sold biodiesel that had been acquired from outside the region.

‘Zuraw Technologies has recently started production of biodiesel using 100% recycled vegetable oil collected by the Everpure Biodiesel Coop as part of its ‘Local Communities’ Initiative’, said Phil Mount of Everpure. ‘The used oil currently comes from a dozen restaurants in the region but more are joining the co-op’s pilot project every day.

Within a year the plant has been predicted to increase its production capacity from 500 litres to 5,000 litres each week.

The US department of Energy’s State Energy Program split the finds between the counties of Lake, Tillamook and Wallowa.

The Lakeview Cogenerative project received $1.7 million to convert wood waste into bioelectricity and heat.

The second biomass project is set to receive a total of $1 million to produce electricity from manure and other waste sourced from dairy farms.

Finally, $275,000 will go towards aiding the construction of a biomass plant in the Wallowa County Wood Products Campus.

The projects must be completed by 15 February 2012.

After receiving an $88 million (€69.9 million) grant the firm, based in Irvine, California, has now met the conditions required in order to receive an additional $250 million loan guarantee from the Department of Energy (DoE).

The company will use this funding to finance the construction of a commercial-scale biofuel plant, producing 19 million gallons of ethanol per year from woody biomass, mill residues and other waste agricultural materials.

In addition to the construction of the plant in Fulton, BlueFire is also developing a facility in Lancaster, California. It will produce the ethanol using a patented Concentrated Acid Hydrolysis.

The company’s goal is to erect a number of biorefineries throughout the US near to areas which have a high demand for the biofuel. This will dramatically cut transportation costs as well as reduce the amount of waste being sent to landfills.

Commenting on the loan Arnold Klann, CEO of BlueFire Ethanol, said: ‘We are very pleased to see the financing for the Fulton facility moving forward. It’s going to take programmes like the DoE loan guarantee to enable first-of-its-kind technologies to be in a position to secure the necessary funding to move forward and help provide cleaner energy sources to the fuel market.’

Crude climbed for a third day after an Energy Department report yesterday showed stockpiles dropped 4.96 million barrels last week, the most since September. The Labor Department said the number of Americans applying for weekly unemployment benefits fell by 21,000, more than the median forecast from economists surveyed by Bloomberg News.

U.S. crude supplies fell to 358.2 million barrels in the week ended July 2, the lowest in 10 weeks, according to the Energy Department report. Imports slipped and refiners increased operating rates to 89.8 percent of capacity, the highest weekly average since January 2008.

Fuel demand rose 3.2 percent to 19.6 million barrels a day, the highest since May 28, the department said.

Initial jobless claims dropped to an eight-week low of 454,000, a level that indicated improvement in the U.S. job market may take time to develop. A Labor Department report last week showed companies in June hired fewer workers than forecast.

Germany’s industrial production climbed in May as the global recovery fueled demand for goods from Europe’s largest economy. Production rose 2.6 percent, more than double a revised

1.2 percent in April, the Economy Ministry said yesterday.

The global economy will grow 4.6 percent in 2010, the biggest expansion since 2007, the International Monetary Fund said yesterday in revisions to its World Economic Outlook.

The U.S. government’s request to reinstate a deepwater oil- drilling moratorium while it challenges a lower-court order rejecting the ban was denied by a federal appeals panel.

The Obama administration sought to delay an order by U.S.

District Judge Martin Feldman that scrapped the six-month ban, imposed May 27 after the explosion and sinking of the Deepwater Horizon oil rig in April. The three-judge panel of the U.S. Court of Appeals for the Fifth Circuit denied the stay after a hearing yesterday in New Orleans.

Oil may rise next week after the IMF upgraded its global economic outlook and as U.S. supplies dropped to a two-month low, a Bloomberg News survey showed.

Twenty of 38 analysts and traders, or 53 percent, forecast crude will increase through July 16. Ten respondents, or 26 percent, predicted futures will be little changed and eight saw a decrease. Last week 53 percent of survey respondents forecast a price drop.

Santos said it was in “detailed ongoing discussions” with a number of parties in relation to potential equity and liquefied natural gas sales, and on collaboration between projects.

“These discussions are incomplete and there is no certainty that definitive agreements will be executed by the parties,” Santos said in a statement on Friday.

Santos was responding to a report in The Australian Financial Review that it was close to inking a $2 billion deal with Shell to sell a 30-35 per cent stake in the Gladstone coal-seam gas-to-LNG project.

Citing industry sources, the paper said Santos was also close to signing long-term LNG sale agreements with China’s Sinopec Corp and state-run Korea Gas Corp (KOGAS) that are worth tens of billions of dollars.

“Shell has indicated that they are open to consolidation and it is only logical for them to talk to Santos since Shell’s acreage is land-locked and is located right next to Santos’ project, which has a deep-water port good for LNG ship loading,” said Di Brookman, an energy analyst at CLSA Asia-Pacific Markets.

The report sent Santos shares sharply higher. They closed up $1.24, or 9.7 per cent, at $14.

Analysts said the reports also boosted the broader energy sector.

Eastern Star Gas was up 5 cents, or 6.2 per cent, at 86 cents and Liquefied Natural Gas gained 1.5 cents, or 4.3 per cent, to 36.5 cents.

‘‘Other energy plays benefited on the view that we’re likely now to see more consolidation in the space,’’ CMC Markets analyst David Taylor said.

A potential deal with Shell would greatly reduce Santos’ burden in funding its Gladstone project and alleviate investor concerns that it would need to carry out another equity raising, after it tapped investors for $2.5 billion last year to cover its share of costs for another LNG project in Papua New Guinea.

It would also bring clout and certainty to the Gladstone project that major buyers need before they can commit to contracts worth tens of billions of dollars.

“If Shell joins Santos, the credit rating for the project would go up and that will also make it easier for them to sign on major customers,” Mr Brookman said.

The Gladstone project, which will have an initial production capacity of 3.4 million tonnes per annum, is slated for an investment decision later this year, with production targeted to start in 2014.

Santos owns a 60 per cent stake in the project, which it estimated in 2008 would cost A$7.7 billion to build, though most analysts are expecting the cost to have increased.

Deutsche estimates the cost for Santos to build two processing plants with an export capacity of 7.2 mtpa to be $16.4 billion.

Malaysian state-owned energy giant Petronas owns 40 per cent, which it bought 2008 for $US2.5 billion.

The AFR said Shell would become the operator of Gladstone LNG plant, which will process coal-seam gas into LNG – and incorporate its own Curtis Island LNG project into Gladstone, which is considered to have a superior site for an LNG processing facility.

A merger of projects on the plant level would yield significant economies of scale, although there could also bring risk of a delay to the project’s start-up by about six months, said Adrian Wood, an energy analyst at Macquarie Group.

Should a deal be done between Santos and Shell, the project merger would also hasten the pace for further consolidation in the industry, potentially drawing the Australia Pacific LNG project owned jointly by ConocoPhillips and Australia’s Origin Energy to the table.

There are five proposed LNG projects around Gladstone port in the northeastern Queensland state. Other projects in the pipeline include BG Group’s Curtis LNG project and a smaller plant planned by Liquefied Natural Gas Ltd.

The 542-kilometer (337-mile) pipeline, set to start up in the second half of 2011, will link mills in the states of Minas Gerais and Sao Paulo to the Atlantic coast, according to a regulatory filing today.

Petrobras, as Brazil’s state-controlled oil producer is known, has agreed to pay 2.5 billion reais for stakes in ethanol mills in the past six months as part of plans to almost triple annual output of the biofuel to 2.6 billion liters (686 million gallons) by 2014. The purchases include a 45.7 percent stake in Acucar Guarani SA, Brazil’s third-largest sugar maker by market value.

The retailer has submitted a planning application to the local council and if this is approved the new Waitrose will have permission to convert an electricity substation into a biomass plant. The facility would then provide the supermarket with, electricity, heating and cooling needs.

Although all of Waitrose’s stores utilise green energy, this will be the first to be fully powered by biomass. The biomass boiler will utilise wood chips from various managed woodlands throughout the Isle of Wight.

A spokesperson for Waitrose said: ‘This will be a trial period. The eco version is for a Waitrose store that requires no electricity or gas from the grid for its operation, powered by wood chips from managed sources…The carbon footprint of the store will be better than zero with a further net saving of around 1,900 tonnes of CO2 per annum.

According to Waitrose, the surrounding area will also benefit from the plant, as it will have the ability to provide heating to parts of nearby development areas.

“From this perspective biodiesel is complementary to the oil refinery industry in Europe whereas each ton of bioethanol would increase the surplus of gasoline,” said Klaus Henschel, chief executive of Swiss-German biodiesel maker Biopetrol.

However, biodiesel has to be made from vegetable oils, which have to be mostly imported and are far more expensive than locally grown cereals, the main raw material for bioethanol, which can be blended with petrol.

EU grain trade lobby Coceral estimates the 27-country bloc will produce 284 million tons of cereal this year, or 10 times a total oilseed harvest of 28.3 million.

Several large European biofuel manufacturers see bioethanol as a better long-term business.

Spanish multinational renewable energy firm Abengoa has built just one biodiesel plant in Europe, compared with four bioethanol plants and one more under construction.

“Biodiesel is not a strategic business for us,” said Javier Salgado, chief executive of Abengoa’s biofuels division, which had global revenues of €1 billion ($1.22 billion) in 2009.

“You have to import massive amounts of soya oil, palm oil. We think there is a significant Achilles heel in the [biodiesel] industry,” he added.

British biofuel maker Ensus has also chosen to focus on bioethanol, of which it makes 400-450 liters a year from 1.1 million tons of wheat.

“I think you’re going to see preferential use of bioethanol in Europe because of cost and sustainability,” Ensus Chief Executive Alwyn Hughes said.

“The sustainability risks are greater in biodiesel and as the sustainability rules start to bite in Europe that’s increasingly going to become an important factor.”

Narrow profit margins

Christoph Berg, head of German commodity analysts F.O. Licht, said that bioethanol producers in Europe benefitted from relatively low feedstock prices for sugar and grains while prices for rapeseed oil, a key biodiesel feedstock, had risen sharply.

“The profit margins in the biodiesel sector are currently low, for some at loss-making levels,” he said.

“For bioethanol, the scene is better overall and producers are finding it easier to achieve profitable operations than the biodiesel industry, but bioethanol profit margins are also not as high as hoped.”

In Spanish ports, a ton of wheat costs €150 and can be used to make 387 liters of ethanol, so grain costing €388 will make one cubic meter. That compares to a benchmark bioethanol price of €470/m3.

Reuters data show that a ton of biodiesel costs €803 to refine in Germany — using palm oil at €715/ton — but will sell at €721.

Producers in some countries hoped for a near-term boost to demand on moves to raise bioethanol blending targets in fossil petrol to 10% content in so-called E10 fuels.

France and Poland have already introduced E10, and Germany is likely to follow suit in late 2010 or 2011, although the government has yet to set a date.

“E10 will probably become a standard in coming years and its introduction in a large consuming country like Germany would certainly be an advantage to other countries which wish to follow,” Mr. Berg said.

Geraldine Gilmartin, an analyst at Kingsman SA, said bioethanol demand in Britain could grow for similar reasons.

“The UK is one market where we forecast stronger growth rates for bioethanol than biodiesel this year,” she said.

“East Asia has come out of the global financial crisis pretty well and there is increased demand in most of our markets,” Alan Winney, chairman of Brisbane-based Queensland Sugar Ltd., said in an interview. “The Southeast Asian part of the market, Malaysia, Indonesia, is particularly strong and we are quite optimistic about that continuing,” he said yesterday.

Sugar demand in Asia exceeds annual supply by 30 percent in key markets in Asia, Wilmar International Ltd. said in Singapore yesterday. Wilmar this week agreed to buy CSR Ltd.’s Sucrogen unit, Australia’s top miller, for A$1.75 billion ($1.5 billion) and said the purchase would help its expansion in Indonesia.

“We just see huge upside there,” Winney said of Indonesia. “They are importing about 2 million tons and there are enough refineries and demand planned that we could see that double inside the next five years.”

Indonesian raw sugar imports may be 2.3 million metric tons the 2010-2011 season, according to an April U.S. Department of Agriculture Foreign Agricultural Service report.

Raw sugar for October delivery slipped 0.1 percent to 16.69 cents a pound on ICE Futures U.S. in New York yesterday. Earlier, prices advanced to 16.98 cents, the highest level for a most- active contract since April 20.

Prices were likely to range from 15 cents to 20 cents this year unless a “real deterioration” in weather disrupts global output, Winney said. Brazil and India are the top producers.

Queensland Sugar handles more than 90 percent of Australia’s raw shipments under an export system where millers enter into agreements for the company to sell the commodity and then pass proceeds back to suppliers. Contracts were extended this month with eight millers until June 30, 2014. Sucrogen contributes more than 40 percent of the volume.

Wilmar sees “no reason” to end the arrangement after the current contract period, Chief Executive Officer Kuok Khoon Hong told reporters in Singapore yesterday.

“We are pleased to be continuing our 50-plus year relationship with Sucrogen and are looking forward to engaging with Wilmar around their plans for the Australian sugar marketing beyond the 2013 season,” Winney said today after the comments. A withdrawal by Sucrogen from the pact would undermine the benefits of the system and require the whole industry to “sit down and look at” the future structure, he said yesterday.

The Wilmar bid, which trumped a rival offer by China’s Bright Food Group Co., is subject to approval by Australia’s Foreign Investment Review Board.

Australian raw sugar output may rise about 5 percent to 10 percent next year on increased planting from output forecast at around 4.2 million tons this season, Winney said. Exports in the year ending Sept. 30 were likely to be about 3 million tons, with similar shipments next season, he said. Crushing started May 31 and will be mostly finished by early November, according to farm group Canegrowers.

Prices also fell as rising palm supplies in the next few months may push inventory levels higher as export demand remained sluggish, trade participants said.

The benchmark September contract on the Bursa Malaysia Derivatives exchange ended MYR45 or 1.9% lower at MYR2,290 a metric ton after moving in a MYR2,290-MYR2,338 range.

“Technical charts and supply fundamentals suggest that prices may extend losses in the next trading session,” said a senior trading executive at a Kuala Lumpur-based brokerage.

Palm production is rising in the July-September period and analysts said the July figure may rise as much as 10% on month. They said June output probably rose 5%-7%.

Traders said the fall in palm prices may help palm products regain market share as palm’s premium had been shifting buyers to cheaper soyoil.

More weakness in prices is likely, due to the seasonal rise in palm oil supply, and a sharp fall in prices could bring palm olein back at a discount to soyoil after trading at a premium the past two months, Oil World’s analyst and co-editor Siegfried Falk said in an interview recently.

He also said palm may develop a small price discount in the coming weeks.

In the cash market, palm olein for October/November/December was traded at $745/ton free on board Malaysian ports, said a Singapore-based trading executive.

Cash CPO for prompt shipment was offered MYR40 lower at MYR2,400/ton

CME Group Inc.’s dollar-based CPO futures contract for September wasn’t traded in Asia, while rupiah-denominated September CPO futures on the Indonesia Commodity and Derivative Exchange were trading 0.3% lower at IDR6,250 a kilogram at 1020 GMT, with 87 lots done.

Many funds have been left nursing double-digit percentage losses over the first six months of the year.

The average energy commodity fund had lost 2 per cent since the beginning of the year to the end of May, compared with gains of 1.3 per cent for the hedge fund industry as a whole, according to Hedge Fund Research.

However, the numbers disguise the severe difficulties some energy hedge funds have faced over the past two months, say investors, where performance has been particularly poor.

According to a report by JPMorgan, recent losses have led to falls of as much as 19 per cent for some global energy funds.

May saw the steepest fall in Brent crude since November 2008 while June, and an early blast of summer heat, saw many traders caught out by whipsawing natural gas prices.

Such ructions have fuelled rumours of large liquidations over the past few days, with many traders nervous about the possibility of forced unwinds amid choppy markets.

The $2.3bn Norway-based Sector Asset Management, one of Europe’s largest energy-focused hedge fund managers, was the subject of rumours last week, though brokers said it was not winding down. A spokesperson for the firm did not return a call for comment.

Sector, which has seen two of its funds lose more than 11 per cent so far this year, has suffered recently as a result of the BP oil spill in the Gulf of Mexico, an investor in the fund told the Financial Times.

The fund manager’s Maritime fund, which specialises in investing in oil production and exploration ventures, has lost millions as a result of the equity sell-off hitting the oil business as news of the BP slick has worsened.

Other big-name commodity funds that have been hit by volatile markets include Willem Kooyker’s $3bn Blenheim Global Markets fund, which was down 11.29 per cent as at the end of May, according to an investor.

Singapore-based Merchant Capital, which trades a selection of commodities including energy instruments was, meanwhile, down 17.6 per cent mid-June.

iodiesel in Argentina should hit a 10% admixture by year-end, Carlos St James, president of the country’s renewable energy chamber Cader, told BNamericas.

Argentina’s biofuels market was launched this past April with the B5 mandate, or 5% admixture, and planning minister Julio De Vido signed the B7 admixture into law this week.

“We expect B10 by year-end,” added St James.

“We are witnessing the true launching point of the renewable energy industry in Argentina,” he said in a statement.

Last week, state energy company Enarsa awarded some 900MW of renewable power contracts for wind, solar, biomass, and small hydro projects.

“In recent years the country has established itself as a major biodiesel producer on a global scale, and with this tender there should be no doubt that renewable electricity is now on its way to comparable success, bringing forth a new energy matrix that takes on the challenge of climate change and protects our environment,” according to St James.

– Company signs letter of intent to acquire Sichuan-based Company with 50,000 tons of biodiesel production facility

– Company on schedule with construction of the new 50,000 ton biodiesel production facility due to come on line in Q4 2010

XI’AN, China, July 7 /PRNewswire-Asia-FirstCall/ — China Integrated Energy, Inc. (Nasdaq: CBEH) (”China Integrated Energy” or the “Company”), a leading non-state-owned integrated energy company in China, today announced that it is progressing on its goal of doubling its biodiesel production capacity to 200,000 metric tons (MT) in 2010 through both internal expansion and an acquisition.

As previously disclosed, the Company has continued to actively evaluate acquisition opportunities to increase its biodiesel production capabilities, the most profitable segment of its business. Toward that goal, China Integrated Energy, Inc. recently signed a non-binding letter of intent (LOI) to acquire a Sichuan-based company with 50,000 MT of capacity. The feedstock for this facility is mainly waste cooking oil and vegetable oil residue and yields profit margins the Company believes are similar to the current biodiesel production of China Integrated Energy, Inc. The acquisition cost is estimated at $16.5 million and has an expected payback of less than two years. The Company is completing negotiations and due diligence, and expects to complete the transaction by the end of the third quarter. The LOI is non- binding and there are risks this transaction will not occur.

China Integrated Energy Inc. also continues on plan with the construction of its new 50,000 ton biodiesel production facility in Tongchuan City, Shaanxi Province. The new facility is adjacent to the Company’s existing 100,000 ton biodiesel production facility. Equipment installation is expected to be completed by the third quarter of 2010, with production commencing in the fourth quarter. The facility is expected to be operating at 60-70% of capacity in the first quarter of 2011, ramping to a 80-90% utilization rate in the second quarter of 2011. For the full-year 2011, the new facility is expected to contribute approximately $27 million in revenue and $9 million in net income.

“To respond to our government’s focus on environmental preservation and reduction in China’s dependency on crude oil imports, China Integrated Energy plans to continue expanding its biodiesel production capabilities both organically and through acquisitions,” stated Mr. Gao Xincheng, the Company’s chairman and CEO. “With a large distribution footprint, established customer base and growing market demand, we believe an increase in our biodiesel production capabilities will yield further improvements in profit margins and cash flow.”

The Chinese central government continues to focus the implementation of the Clean Production Promotion Act. The Act, which was adopted by the PRC’s National People’s Congress and went into effect as of January 1, 2003, requires industries to use clean energy, green raw materials, advanced technologies to reduce environmental pollution, and increase efficiency of resource utilization. The government has aggressively implemented enforcement of the Clean Production Act to improve environmental protection and effectiveness of consumption of resources. Also, under the Mid-term Renewable/Alternative Energy Development Plan promulgated August 2007, China central government established a goal that by year 2020, 15% of energy consumed will be required to come from renewable/alternative energy sources to reinforce environmental preservation and reduce dependency of crude oil import from abroad. There are approximately 600 million tons of agricultural crop wastes and forestry wastes available each year that can be used to produce bio-fuel including biodiesel and ethanol. Biodiesel consumption is expected to reach approximately more than 2 million tons by 2020.

About China Integrated Energy, Inc.

China Integrated Energy, Inc. is a leading non-state-owned integrated energy company in China engaged in three business segments: the wholesale distribution of finished oil and heavy oil products, the production and sale of biodiesel, and the operation of retail gas stations. The Company utilizes an extensive distribution network to distribute traditional petroleum produces, including finished oil and heavy oil. The Company also operates a 100,000-ton biodiesel production plant with an additional 50,000-ton biodiesel production plant under construction, and twelve retail gas stations in China. For additional information on the Company please visit http://www.chinaintegratedenergy.com .

An online investor kit including a company presentation, press releases, current price quotes, stock charts and other valuable information for investors is available at http://www.chinaintegratedenergy.com . To subscribe to future releases via e-mail alert, visit http://www.chinaintegratedenergy.com/alerts .

Safe Harbor Statement

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. For example, statements about the future use of the proceeds are forward looking and subject to risks. China Integrated Energy, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company’s filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

• the corn market ahead of Tuesday’s weekly Crop Progress report,
• gasoline prices, which have been sinking with stock prices and the global economic data, and
• ethanol demand, which will likely fade a bit with ethanol prices losing 20 cents of their price advantage against gasoline last week.

Ethanol production remains below record – The EIA monthly and weekly ethanol data released last Wednesday contained no suprises and had little net market impact.  U.S. ethanol production in April fell by 1.8% m/m to 832 million barrels/day from the record level of 847 million bpd seen in March.  The weekly EIA data indicated that ethanol production in the week ended June 25 fell by 1.7% w/w to 832 million bpd, which was also 1.7% below the record high of 847 million bpd posted in March. The ethanol industry in April continued to run nearly flat-out at 94.4% of capacity, meaning there is not much room to further increase production.

Meanwhile, ethanol inventories in April were above average but not burdensome.  April inventories were at 23.6 days of usage, which was 0.7 percentage points above the 4-year average for April of 22.9 days.   The weekly ethanol data for the week ended June 25 showed ethanol inventories at 819 million gallons, which was down by 0.9% from the April monthly level of 827 million gallons.

Ethanol Market Action -  August CBOT Ethanol futures prices fell sharply early last week on weakness in gasoline prices but then rallied sharply later in the week due to the sharp rally in corn prices prompted by last Wednesday’s USDA reports.  August ethanol prices last week closed up 1.7 cents (+1.1%) at $1.550 per gallon. The bullish impact on ethanol prices from last week’s sharp 6.6% rally in corn prices counteracted the bearish impact of the 8.4% plunge in gasoline prices during the week. 

Ethanol/Gasoline – August gasoline futures prices continued lower last week to post a new 5-week low and close sharply lower by 18.11 cents (-8.4%) at $1.9777 per gallon.  Gasoline prices fell on stock market weakness and general pessimism about world economic growth and fuel demand.  The sharp sell-off in gasoline prices made ethanol prices less competitive, with the spread of July ethanol prices minus gasoline prices last week rising by 19.8 cents to a 1-month high of -42.8 cents.

Ethanol/Corn – Sep corn futures prices last week rallied sharply to post a new 5-week high and close 23 cents higher (+6.6%) at $3.7250 per bushel.  The USDA reduced its corn planting estimate by 1% to 87.872 million acres and pegged June 1 ending stocks at 4.31 billion bushels, which was substantially below the market consensus of 4.62 billion bushels.  The smaller-than-expected ending stocks report suggested that strong demand substantially reduced corn stocks and that the 2009/10 and 2010/11 marketing year carry-overs will be smaller than earlier expected.  That bullish turn of events for corn prices indicates that corn prices have likely put in their low for the near-term and that U.S. ethanol producers face narrower profit margins this year than earlier thought.  The July ethanol-corn crush margin last week fell by 5.5 cents to 21.5 cents per gallon, which was a new 13-month low.  Including DDG, the corn for ethanol crush margin fell by 7.4 cents to 49.0 cents/gallon.

Kenya is an investment hub that Brazilian companies and entrepreneurs can use to seek business opportunities in the wider East African Community, a five-nation economic bloc of more than 125 million people, Brazil’s President Luis Inacio Lula da Silva said at a news conference with Kenyan President Mwai Kibaki.

Silva’s visit is the first by a Brazilian president to the East African nation. Silva and Kibaki did not give more details about how Brazil will help Kenya develop biodiesel or improve its agriculture. For several years, however, a growing number of Kenyan farmers have been increasing the amount of land they dedicate to plants known to be good sources of biofuel. The production of such fuel remains small scale in Kenya.

Earlier in the day, Kenyan Foreign Minister Moses Wetangula and his Brazilian counterpart, Celso Amorim, signed five agreements to act as a framework for future investments and assistance. The agreements include one that will allow Kenyan students join a university the Brazilian government will build in its northeastern state of Ceara to train 5,000 African and 5,000 Brazilian students in various fields.

Silva and a delegation of Brazilian Cabinet ministers, officials and businesspeople arrived in Kenya on Monday. They go to neighboring Tanzania later Tuesday and then to Zambia before ending their six-nation African tour in South Africa.

The Brazilian leader began his tour last week in Cape Verde, where he attended a meeting with the 15-nation Economic Community of West African States. He then visited Equatorial Guinea before arriving in Kenya.

     Shares in the Spanish solar-technology developer climbed 9 percent to close at 18.015 euros. The stock leg gainers on the 88-member benchmark WilderHill New Energy Global Innovation Index, which rose 0.1 percent.

     U.S. government backing will allow Seville-based Abengoa to get a cheaper loan, improving the profitability of the power plant, said Nathaniel Bullard, the lead North American solar- energy analyst for Bloomberg New Energy Finance.

     “At a narrow spread, less than 100 basis points over Treasury rates, a loan guarantee creates economics simply not possible given finance arranged on the Street or in the City,” Bullard said in an e-mail.

     Abengoa’s plant, to be built 70 miles (113 kilometers) southwest of Phoenix, will be the world’s largest solar-power installation, producing 250 megawatts and serving 70,000 families, the company said July 3 in a statement.

     The Solana installation, using solar-thermal technology, will prevent 475,000 tons in carbon-dioxide emissions annually, according to the company’s calculations.

     The company plans to start construction before year-end and begin generating electricity before the end of 2013, Santiago Seage, chief executive officer of Abengoa’s solar unit, said in a July 3 interview.

     The investment will be made in Cosan subsidiary Rumo Logística S.A. (2836097Z BZ Equity), the company said in a 5 July stock filing. It will go towards a 1.2 billion real scheme to ramp up rail transport infrastructure connecting the interior of Sao Paulo and the port of Santos. A large part of this has already been contracted with national development bank BNDES, Cosan said.

     Some 535 million reais ($311 million) will be used to duplicate and improve an existing railroad that links the town of Bauru to Santos, according to a Cosan stock filing issued in January. Another 434 million reais ($252 million) will be used to purchase 79 trains and 1,108 wagons that will be completely owned by Rumo Logística. The remaining 206 million reais ($120 million) will be used to build and expand sugar terminals.

     In case there is not sufficient liquidity in Rumo Logística S.A. three years following deal close, both TPG Capital and Gavea Investimentos will be able to exchange all 13.3 million shares they own in the firm at a price of 30 reais per share over the following 12 months.

     Currently, Cosan holds 92.5% of the stock in Novo Rumo Logística, which, in turn, holds 99.9% of the  stock in Rumo Logística. Following the closing, which is subject to certain undisclosed conditions that must be met by 30 September, Novo Rumo Logística will hold 75% and each of the investors will hold 12.5% of the issued and outstanding capital stock in the firm.

     TPG Capital is based in Fort Worth, Texas with $48 billion of capital under management across a family of funds, according to its website. Gavea Investimentos, founded by Armínio Frag, the ex-president of the country’s Central Bank, is based in Rio de Janeiro and was managing $5.3 billion of assets as of May 2010, it said on its website.

     The scheme was introduced in July 2009. Currently, biodiesel sold must be used in a blend with ordinary diesel of no more than 20 percent biodiesel.

     “By extending the eligibility to blends up to and including 100 per cent biodiesel , we provide an incentive for those businesses and individuals who are willing and able to use these higher level blends,” Brownlee said.

     The change in the scheme will help to increase production and sales of biodiesel domestically, Brownlee said.

     Six biodiesel producers are registered to take part in the Biodiesel Grants Scheme. Most of the biodiesel that has received the grant to date is made from used cooking oil and oilseed rape (canola) grown as a break crop. The change in eligibility will take effect from 1 July 2010.

     The scheme, which has a three-year funding of NZ 36 million available until June 2012, gives grants of up to 42.5 New Zealand cents per litre to biodiesel producers who sell 10,000 or more litres of eligible biodiesel each month.

Sucrogen is the largest producer of raw sugar in Australia and is in the top 10 globally. CSR had originally planned to spin off the unit into a separate listed entity in order to separate it from its building products businesses.

The agreed deal between Wilmar and CSR, announced on Monday, came the day after Bright Food made a cash offer of between A$1.65bn and A$1.7bn for Sucrogen, which was less than an earlier indicative bid of A$1.75bn that it pitched in April.

Wilmar, which has a market capitalisation of about $31bn, is one of Asia’s largest listed agribusinesses and the world’s largest listed palm oil producer.

Kuok Khoon Hong, Wilmar’s chairman and chief executive, said in a statement:m “The acquisition of Sucrogen will jump-start [the group’s] strategy to expand into sugar.”

He said Sucrogen was a “good strategic fit” with the company’s existing portfolio of agricultural products.

Bright Food’s failure to secure the sugar business marks the second recent occasion that a big Chinese company with an appetite for food and crop protection assets has missed out on an acquisition because of pitching a lower offer at the eleventh hour.

Late last year, Sinochem cut its A$2.8bn bid for Nufarm by 8 per cent and was consequently trumped by Japan’s Sumitomo, which went on to buy a 20 per cent stake in Nufarm – one of the world’s largest “off-patent” agricultural chemical manufacturers.

Sinochem had reservations about Nufarm’s underlying earnings following a big shift to generic crop protection products.

Analysts said valuations of Sucrogen depended on future sugar price estimates, which have slumped this year on lower demand, particularly in China.

At the time of its original approach to buy the CSR unit, Bright Food had forecast significant growth in China’s sugar demand as its population rises and becomes more wealthy. It also believed it could leverage its distribution network, which it said was the largest in China, to distribute CSR sugar products.

The deal is expected to be complete by the last quarter of this year, pending approval from the Australian and New Zealand foreign investment review panels, and approval from shareholders.

BRUSSELS — The European Commission will seek to salvage its beleaguered biofuels policy on Thursday by announcing a quality-certification process for biodiesel and ethanol and clarifying limits on fuels from sensitive areas like forests and partly drained peat lands.

Ensuring that biofuels are a credible source of low-carbon energy that deliver greenhouse gas savings compared with fossil fuels is a key component of European Union efforts to set standards worldwide for lowering emissions over the next 10 years.

Europe plans to rely on biofuels to “do most of the work” reducing emissions from cars and trucks, the commission, the executive arm of the European Union, said in a statement Monday. Reducing transportation emissions was “particularly hard to achieve and reliance on imported oil is particularly high,” it said.

Commission officials spoke on condition of anonymity about the details before the official announcement, by the E.U. energy commissioner, Günther Oettinger, scheduled for Thursday.

The 27 member countries of the European Union agreed two years ago to generate 10 percent of their transportation fuel from renewable sources by 2020. A large proportion is supposed to come from biofuels. The remainder would come from other sources, like electric vehicles.

But the green credentials of the policy were badly dented as energy experts issued a stream of reports suggesting that many of the biofuels on the market were causing more emissions than conventional fuels if the full emissions costs of producing the fuels were taken into account.

A sudden spike in food prices at about the same time served to highlight the potentially negative effects biofuels, which some experts said were displacing food crops and making corn, wheat and soy harder to obtain for human nutritional needs.

Some companies that import palm oil into Europe have already made commitments to follow sustainability guidelines under development by environmental groups and by industry groups.

Mr. Oettinger’s endorsement represents a way for the commission to certify that those guidelines meet E.U. standards, and commission officials said he planned to call on companies to apply for the quality stamp before year-end.

The announcement on Thursday will be Mr. Oettinger’s first major policy statement on renewable energy. Commission officials said the statement showed his commitment to restoring the green credentials of the fuels.

Mr. Oettinger also plans to clarify on Thursday that companies must not interpret existing E.U. rules to cut down forests or sow crops on partly drained peat lands for biofuels, commission officials said. Even partly drained peat land still contains significant amounts of stored carbon, which can escape as carbon dioxide gas once the land is cultivated and contribute to climate change.

But the tighter rules on peat lands could anger countries like Indonesia and Malaysia, which are the major suppliers palm oil used to make biodiesel for European motorists.

Officials said trade experts at the commission had established that the measures would be compatible with international trade rules, partly because they would apply equally to biofuels producers growing crops inside and outside the bloc.

Mr. Oettinger’s quality stamp, “Recognized by the European Union,” also could prove controversial.

He still must reach a decision on how to calculate the emissions created when food crops have been displaced by fuel crops, and when areas containing high stores of carbon like grasslands, peat lands or forests are chopped down to produce the food crops elsewhere.

E.U. officials said Mr. Oettinger’s stamp could include criteria on Indirect Land Use Change, in the jargon of emissions experts, once he decides on the scale of its effects at the end of this year.

But experts warned that the stamp risked ending up being criticized for legitimizing unsustainable practices.

A “labeling system which is not dealing with the indirect effects will not be regarded as a guarantee for sustainability,” said Jan Ros, project leader for bioenergy at the Netherlands Environmental Assessment Agency, a Dutch national institute for environmental research and planning.

“The real challenge is to find biofuels that do not create these indirect effects like fuels from crops grown on degraded lands or fuels generated from waste products,” Mr. Ros said.

E.U. officials said the stamp would be added to the labels used by sustainability programs managed by governments, civil society organizations or industry bodies that meet E.U. criteria.

Although the certification would last for five years, it would also rely on annual checks done by outside auditors, but those audits would be paid for by fuel producers.

Companies would also be free to decide how to display the stamp, and that could limit its use to farmers and processors.

But commission officials said they were hopeful that fuel companies would also begin voluntarily displaying the label at fuel pumps, so that motorists seeking greener options would feel assured that their purchase was making a contribution to the environment.

Commission officials also said they wanted to use a light touch in regulating how biofuels were labeled, so that companies achieving higher-than-average reductions in greenhouse gases compared with fossil fuels, or companies applying even more ambitious sustainability criteria, could devise their own certification programs.

“Normally these are wildflower beds, but we’ve taken them out of production to do this,” said Kevin Clemmer, with the North Carolina DOT Roadside Environmental Unit.

Crews are tilling several plots along the interstate, where canola had been planted in the fall.

“We just harvested a few weeks ago, and we’re now in preparation of planting sunflowers,” said Clemmer.

Sunflower seeds for the next crop are being loaded up in a planter, which also heads off down the fields. The crops are being researched in 10 acres across the state, in Duplin, Rutherford, Surry and Wake counties.

“We’ve got a mountain, Piedmont and coastal region, so we’re trying to look at how different types of biofuel seeds will grow throughout those three regions,” said Ben DeWit with the Roadside Environmental Unit.

Part of this experiment is seeing how much seed this test plots yield across the state, and in turn, how much biodiesel.

“Between the two plots we had, it was approximately one acre, and we harvested approximately a 1,000 pounds of seed, we thought that was a great yield for this first round of efforts,” said Clemmer.

Some of the canola plants still remain. The seeds are processed into biodiesel fuel — something that’s already being used in the DOT’s fleet.

“We use it in tractors, dumptrucks, our graders, anything like that,” said Dewit.

As the tractors made their passes, some of the blue-treated sunflower seeds were left behind on the ground.

N.C. State researchers, who are also working on the project, reported that the first crops harvested from the program generated about 40 gallons of biodiesel for each acre of sunflowers that were grown.

“Certainly the crops that we’re growing bring a lot of aesthetics to the roadside, too, because the canola has a beautiful, yellow bloom, as well as the sunflowers,” said Clemmer.

Officials say the cost of biodiesel production equals the cost of buying gas or diesel, but has less environmental impact.

Lilbourn, Missouri: With the new Renewable Fuels Standard (RFS2) going into effect July 1, 2010, the new owners of ME Bio Energy of Lilbourne, Missouri announced that they are ahead of schedule and now open for business. The 5MMGPY plant was built by AP Innovations of Stuttgart, Arkansas and operated for a short time in 2007. It was bought thru Lee Enterprises Biodiesel Consulting Firm for the new owner in May 2010.

With the new Renewable Fuels Standard (RFS2) going into effect July 1, 2010, ME Bio Energy announced that they are ahead of schedule and now open for business.  The 5MMGPY plant was built by AP Innovations of Stuttgart, Arkansas. 

General Manager, Jerry McDowell, said the group has “been working night and day” to get ready for the July 1^st implementation of RFS2. “We have a fully staffed crew trained and ready to meet the Bio Diesel Production needs”, said McDowell.  “Over the past sixty days we have worked diligently with Lee Enterprises of North Little Rock, the consulting group that helped us buy the plant” McDowell said, “and we brought back the plant’s original design and fabrication group, AP Innovations of Stuttgart, Arkansas.  The combination of a dedicated staff, in conjunction with both Lee Enterprises and AP Innovations assisting us, has positioned ME Bio Energy to be ready to meet the demands of RFS2 earlier than we had hoped”. McDowell noted that the plant had obtained all its federal and state certifications, successfully run all its test samples, and was now ready to take orders.  “I am certain that the refiners and producers, and other parties are beginning to fully understand the impact and obligations they now have under the Energy Independence and Security Act (EISA) of 2007 provisions that became effective July 1, 2010.” said McDowell. 

Wayne Lee, owner of biodiesel consulting firm, Lee Enterprises, agrees.  “When everyone realizes that 1.1 billion gallons of biodiesel or equivalent RINs must be purchased in 2010, and that the majority of biodiesel producers are currently not producing, I think there is going to be a ‘mad rush’ to find biodiesel”  said Lee.  “After all, 2010 is already half over and the companies that do not comply with their obligation can face daily fines of $37,000 per violation”, he said.

McDowell says that the goal of ME Bio Energy was to be ready to go as quickly after the purchase as possible.  “When the demand hit, we wanted to be here and ready to service these clients” said McDowell.  “The owners of the plant are investors who see the future of alternative fuels” McDowell said.  “They are currently working with Wayne (Lee) and APInnovations in evaluating other alternative energy opportunities”.  McDowell said he is “very excited” about the future of the industry and looks forward to the expansion of the plant at Lilbourn.

Released yesterday, the Energy Technology Perspectives 2010 report warns that if greenhouse gas emissions do not peak by around 2020 and decline steadily towards the 50 per cent cut in carbon emissions by 2050 recommended by the Intergovernmental Panel on Climate Change (IPCC), tackling climate change will become much more costly and even impossible.

Robert Bell, chief technical officer at environmental consultancy AEA, which advised the IEA report team, said the report highlights the huge differences between a business-as-usual approach and the one needed to tackle both energy security and climate change.

“Governments, investors, and consumers around the world need to take bold steps,” he said.

Under a business-as-usual scenario, global carbon dioxide emissions could double by 2050, compared with the IEA’s ‘BLUE Map’ scenario under which they could be halved.

The IEA scenario requires investment in clean technology to rise from the present $165bn a year, to $750bn in 2030 and $1.6 trillion in 2050, with the money coming from both government and the private sector.

It foresees an energy mix where renewables account for 48 per cent of power generation, nuclear provides 24 per cent and plants equipped with carbon capture and storage (CCS) provide 17 per cent.

In contrast, the business-as-usual scenario would result in fossil fuels continuing to supply more than two-thirds of the world’s energy.

As well as widespread CCS and renewables deployment, the IEA scenario envisages the widespread use of next-generation biofuels as well as a huge improvement in energy efficiency that means overall energy demand grows by just 32 per cent, compared with 84 per cent under the business-as-usual scenario.

It also encourages the widespread introduction of electric, hybrid or fuel cells cars to account for at least 80 per cent of all vehicles on the road.

The IEA report says that in order to achieve a 50 per cent cut in carbon emissions by 2050, government funding for R&D in low-carbon technologies will need to be two to five times higher than current levels.

It also recommends that stable, long-term incentives such as feed-in tariffs, loan
guarantees and tax credits must be introduced to encourage the adoption of low-carbon technologies, while market barriers such as planning obstacles, building codes and red tape must be cut.

Poland’s Ministry of Economy said in an e-mailed statement that it informed the European Commission it needs to have another meeting about the plan before filing it. Juraj Novak, an official at the renewable energy section of the Slovak Ministry of Economy, said in an interview that details about the nation’s biomass program caused the delay.

Failing to submit proposals by yesterday’s deadline is a breach of EU law requiring a National Renewable Energy Action Plan to be submitted by June 30, a spokeswoman for the commission said. She said EU officials will deal with non- compliance the same way it treats other infringements of EU law. The earliest the commission could act is in September.

“The commission lacks the teeth to back up its control over implementation of European Union law,” said Angus McCrone, an analyst at Bloomberg New Energy Finance. “Many plans will only reach the Commission this summer, or even later. It seems that most of the governments are actually taking their plans seriously. It is because of this that the delays are happening, rather than a lack of will.”

In Slovakia, parliamentary elections on June 12 contributed to the delay. The nation also is refining rules about its use of biomass, formerly living matter converted into fuel. Novak said no changes are planned to feed-in tariffs paid to electricity producers using renewable energy.

“The National Action Plan is focused on the use of biomass in electricity and heat generation,” Novak said. “The currently existing feed-in tariffs will remain unchanged and there will be a specific incentive mechanism for renewable heat.”

The German Environment Ministry said last week that its program would be delayed, though it declined to comment on the cause. The CDU-FDP coalition parties are working to resolve internal differences about extending the life of the nation’s 17 nuclear plants, which were slated for closure under the previous government.

Each of the 27 EU member nations were required to submit their plans under the European Renewables Directive, which sets out targets for clean energy use by 2020. The measures they take to fulfill their plans will be monitored by the commission on a two-yearly basis.

Earlier this month, the European parliament urged the commission to exercise stricter control over the implementation of EU law at the national level.

“A number of MEPs felt that the European Commission should take on a more active role in supervising the policies of EU members,” the parliament said in a statement.

Sweden, Spain, Malta and Greece submitted their programs on time. Britain’s plan is ready for submission, an official at the Department of Energy and Climate Change said without providing further details.

Spain, which is finishing its custody of the rotating presidency, had its draft plan in place by June 11. Its program included support for clean energy such as wind and marine technologies aimed at ensuring it gets 20% of its electricity from renewable sources by 2020. Hydro power will account for 8.3% of electric production, solar thermal 3.8% and solar thermal 3.6%.

Sweden’s Ministry of Enterprise, Energy and Communications said in an e-mail it submitted its plan to the EC yesterday, confirming its intention to exceed the EU’s mandate for the nation to generate 49% of its energy from renewable sources.

The country plans to hit 50.2% by 2020. It achieved 44% in 2008, the highest proportion of renewables in the EU, according to the Swedish Energy Agency. Biomass, hydro power and wind account for the majority of its clean energy supply.

Malta, which currently is sourcing less than 1% of its energy from renewable sources, must raise that portion to 10% by 2020. It aims to get 3% of its power from waste-to-energy programs, 4% from offshore wind and 1.2% from solar energy, a spokeswoman at Malta’s National Resources Authority said in an e-mailed statement. Biofuels will account for 2%.

Greece’s official 2020 target is 18% of energy to come from renewable sources. The country, however, is targeting a 20% share of renewable energy sources and a 40% share in electricity generation by 2020.

In order to do this it will concentrate on developing existing capacity in hydro, wind, solar thermal, biomass and solar photovoltaics, which it hopes to advance at a faster growth rate, the government’s Centre for Renewable Energy Sources said in an e-mailed statement.

The fuel-mix requirement will be raised from 5 percent now to 7 percent initially and to 10 percent by year’s end, Planning Minister Julio De Vido said.

Argentina is the main global exporter of soyoil and some analysts say that greater local demand for biodiesel could eventually reduce shipments abroad. [ID:nN30159745]

“This week we’ll publish a resolution to bring it (the fuel-mix requirement) up to 7 percent and the same resolution will include the strategic objective of reaching 10 percent by the end of 2010,” De Vido told state television.

“This gives us a chance to reduce dependence on soyoil exports and permits us to use this oil to expand Argentine fuel reserves,” he added.

Argentina’s soyoil shipments have been clouded by a two-month-old trade dispute with top buyer China, which blocked Argentine imports in retaliation for the South American country’s restrictions on Chinese manufactured goods.

Argentina is the fourth-biggest global biodiesel producer, with a production capacity of 2.5 million tonnes per year.

The current 5 percent biodiesel fuel-mix requirement, mandated by a law that came into force earlier this year, represents production of around 800,000 tonnes, according to the Carbio biofuels chamber, which groups larger producers.

The group has estimated this year’s biodiesel exports could exceed the 1.15 million tonnes shipped last year.

The groups, including the Center for Biological Diversity and the Sierra Club, said today in a statement that the government agency approved the tests at 28 undisclosed sites in seven states “with minimal environmental review.” The tests will be conducted by a joint venture that includes International Paper Co, the world’s largest maker of white paper used in offices.

The fast-growing “cold-tolerant” genetically-engineered eucalyptus trees could displace native species of plants and increase the risk of wildfires, according to the complaint filed in federal court in West Palm Beach, Florida.

ArborGen LLC, the venture that will conduct the tests, also includes MeadWestvaco Corp. and Rubicon Ltd., according to the statement. ArborGen may use the trees for pulp and biofuels, said Marc Fink, with the Center for Biological Diversity. The test sites are in Alabama, Florida, Georgia, Louisiana, Mississippi, South Carolina and Texas.

In the complaint, the environmental groups ask the court to order the agriculture department to set aside the test permits and prepare an impact study. They also seek a court order barring ArborGen from allowing any of the trees to flower.

“We don’t comment on pending litigation,” Alison von Puschendorf, a spokeswoman for Richmond, Virginia-based MeadWestvaco, said in an e-mail. “We are a partner of ArborGen and support the research to develop safe, reliable solutions to fiber needs for our products, and trials such as the one ArborGen is leading are an important part of this research.”

Patty Neuhoff, a spokeswoman for Memphis, Tennessee-based International Paper, deferred comment to ArborGen spokeswoman Nancy Hood, who wasn’t immediately available.

Caleb Weaver, a spokesman for the agriculture department, said the agency doesn’t comment on “active litigation.” He described the tests as “limited.” Efforts to reach Auckland, New Zealand-based Rubicon weren’t successful.

The plaintiffs also include the Dogwood Alliance, the Global Justice Ecology Project, the International Center for Technology Assessment and the Center for Food Safety. Also named as a defendant was the USDA’s Animal and Plant Health Inspection Service.

The plaintiffs provided a copy of the complaint. It wasn’t immediately available on the court’s electronic docket.

The case is Center for Biological Diversity v. U.S. Department of Agriculture, U.S. District Court, Southern District of Florida (West Palm Beach).

Global demand for transportation fuels leaves no choice but to drill in such deepwater fields, he said. Exploration continues in other deep-sea fields around the world, such as the North Sea, off the west coast of Africa and offshore Brazil.

Total’s chief executive called on the oil industry to pool its safety expertise. Above, CEO de Margerie at a Paris oil conference in April.

“This remains a job that not only is normal but is necessary,” he said in an interview with The Wall Street Journal at his Paris office. “If we stopped producing in the North Sea, prices would soar.”

Mr. de Margerie’s comments follow the April 20 explosion of a BP platform, which killed 11 workers and unleashed hundreds of thousands barrels of oil into the Gulf, a gusher that continues to this day. Other oil executives including Chevron Corp. CEO John Watson similarly have cautioned against imposing bans on drilling in waters over 200 meters deep.

From his office atop of a building in La Défense, a business district west of Paris, Mr. de Margerie said he expects the BP spill to usher in more stringent safety measures globally, and that could mean higher oil prices as related costs are passed along to consumers.

“Our policy is clearly towards zero risk,” he said. “All this means extra attention, potential additional costs… and this might mean a slight delay before new projects are announced,” he said. “This can only have a negative impact over oil prices” and push them higher.

An oil price rise would be a turnaround from recent trends. After a rise at the start of the year, oil prices have remained relatively stable during the first half, due to the sovereign debt crisis, falling demand from developed countries and stricter environmental standards.

The 58-year-old chief executive has spent all his professional life at Total. Starting in the company’s finance department in 1974 after studying business, he became head of the Total’s exploration and production division in 2002, and was named CEO in 2007.

He runs one of the stars of the French economy. The company reported first-quarter profit of €2.61 billion ($3.46 billion) on revenue of €37.6 billion. But Mr. de Margerie sees rough seas ahead. In addition to the prospects of higher oil-exploration costs, Total faces difficulties turning around its oil-refining operations.

First quarter refinery output dropped 11% on plant shutdowns designed to trim operating losses. Last October, a Total official said its oil-refining division was losing around €100 million a month at the time.

Total announced in February that it would cut its refining capacity by 500,000 barrels of crude a day, or 20%, by 2011, bringing it back to 2007 levels. The company is in the last stages of converting a Dunkirk refinery into a storage unit and has offered to sell its U.K.-based Lindsey plant.

Such moves are controversial in France, and Dunkirk employees initiated a nation-wide strike, hoping to prevent the restructuring. Total pledged to the French government not to close any of its five remaining refineries in the country.

“We never said we would do nothing further,” in terms of capacities restructuring, said Mr. de Margerie. “We only committed neither to sell nor to close.”

A further blow to Total’s profits could come from the euro’s current weakening against the U.S. dollar. Total and other European producers buy their oil in dollars, but sell in euro at the gas pump. The exchange rate effect could hit European gas consumption—though this hasn’t yet happened.

“But it’s clear that if the barrel [price] gets higher along with a weaker euro, there would surely be an impact,” said Mr. de Margerie.

He said the price of oil could easily bounce back to $90 a barrel by year end, as the BP well disaster was reducing investments in finding new fields. The spill in the Gulf “will probably trigger an additional delay in investment,” he said. “There will be a very clear impact on production capacity.”

Mr. de Margerie said that pooling safety knowledge among those in the energy industry could be a key to improving safety standards without the costs becoming excessive. In the case of BP, he said, Total has offered to help stop the spill.

“Many industry colleagues have offered support and we have accepted gratefully,” said a BP spokesman.

“Have we reached the limits [in safety measures]?” asked Mr. de Margerie. “No we haven’t, we will never, we’ll always look for something new. But I think that this should be done by working together. And instead of shouting at BP, we’d better sit and discuss over what to do in common.”

BP is spending billions of dollars to stop the spill and restore investors’ trust, and has already announced plans to sell $10 billion in assets this year to raise money. Mr. de Margerie said Total would move cautiously as those properties come onto the market.

“I won’t be the first to take advantage of someone else’s downfall,” said Mr. de Margerie. Still, he added: “We’ll have a look as we always look at potential opportunities all the time.”

Although Drax has burnt biomass for seven years, it has done so only by “co-firing” – mixing it with large quantities of coal. This would be the first time that any leading power station had taken an existing coal-fired turbine and converted it to be biomass-only.

Dorothy Thompson, chief executive of Drax, said the potential of biomass was being overlooked.

“Biomass has been the largest source of new renewable energy in the UK for years but it has stagnated as the policy framework does not work,” she said.

If demonstrated successfully, the conversion could provide a model for other coal-fired power generators to turn their boilers over to using biomass. Burning biomass in one of Drax’s six generating units, and continuing to co-fire in the other units, could reduce the carbon dioxide from the plant by 4.4m tonnes a year, the equivalent to taking 1.2m cars off the road.

Biomass power stations also counterbalance wind power, which is intermittent. Unlike nuclear and coal-fired power plants, they can be quickly turned on and off as needed.

But Ms Thompson warned that Drax, in North Yorkshire, would not be able to fulfill its full potential in using biomass, which includes plans to build three separate biomass-only power plants, unless the government changed the rules on subsidies. “We are being stymied because this policy issue remains open,” she said.

Biomass qualifies for much lower subsidies than other forms of renewable energy, such as onshore and offshore wind. Strict limits are also imposed on co-firing.

Several plans for biomass fuel power stations have made slow progress because of these problems, which make the economics of the fuel far less attractive to investors.

The coalition government has indicated that it could reform the Renewables Obligation subsidy system or introduce a broader framework of feed-in tariffs.

Ms Thompson said there was a plentiful supply of biomass available, and the company had been offered more supplies than it could use. “This is a market under development,” she said.

Biomass takes many forms: fast-growing crops, such as willow, grown expressly for burning; straw and other agricultural waste products; forestry residues, such as tree trimmings; and other forms of waste wood.

These waste products are green fuels because they would otherwise rot, releasing the greenhouse gas methane. The trees and crops that are cut down for energy are also carbon neutral over their life cycle if they are regrown.

NuGen Energy, a subsidiary of Central Farmers Cooperative, operates a nameplate 100 million gallon ethanol plant in Marion, South Dakota. The plant was built by Fagen, Inc. and utilizes ICM, Inc. technology. Upon completion, the investment will increase REX’s overall ownership interest of annual nameplate capacity ethanol production by approximately 33%. REX intends to fund its initial investment from cash on hand, and at April 30, 2010, REX had cash and cash equivalents of $101.4 million, including $86.1 million of cash at the parent company (exclusive of approximately $15.3 million of cash at consolidated ethanol production facilities).

The closing of the transaction, expected to occur by the end of July 2010, is subject to the satisfaction of customary conditions. Upon completing the NuGen investment, REX will have interests in seven ethanol production facilities representing REX ownership of approximately 191 million gallons per year of annual nameplate capacity. The total annual nameplate capacity of ethanol production facilities in which REX has ownership interests is approximately 632 million gallons per year. Further information about REX American Resources Corporation is available at www.rexamerican.com.

This news announcement contains or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by use of forward-looking terminology such as “may,” “expect,” “believe,” “estimate,” “anticipate” or “continue” or the negative thereof or other variations thereon or comparable terminology. Readers are cautioned that there are risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. These risks and uncertainties include the risk factors set forth from time to time in the Company’s filings with the Securities and Exchange Commission and include among other things: the impact of legislative changes, the price volatility and availability of corn, sorghum, dried distiller grains, ethanol, gasoline and natural gas, ethanol plants operating efficiently and according to forecasts and projections, changes in the national or regional economies, weather, the effects of terrorism or acts of war, changes in real estate market conditions and the impact of Internal Revenue Service audits. The Company does not intend to update publicly any forward-looking statements except as required by law.

Our trade alerts and ideas are provided free to investors. Simply use your email address to subscribe with http://www.microstockprofit.com to get the inside track on our next red-hot alert.

PEIX is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

Pacific Ethanol Inc. (PEIX) is a leading marketer and producer of low carbon renewable fuels in the western United States. It produces and sells ethanol and its co-products, including wet distillers grain (WDG) and provides transportation, storage and delivery of ethanol through third-party service providers in the western United States, primarily in California, Nevada, Arizona, Oregon, Colorado, Idaho and Washington. PEIX’s customers are integrated oil companies and gasoline marketers who blend ethanol into gasoline. It supplies ethanol to its customers either from its own ethanol production facilities located within the regions it serves, or with ethanol procured in bulk from other producers. In addition, the Company owns a 42% interest in Front Range Energy LLC, which owns a facility located in Windsor, Colorado, with annual production capacity of up to 50 million gallons.

In the report, the analyst notes:

“The Company recently announced that Pacific Ethanol Holding Co. LLC (PEH) and its four wholly owned ethanol production facility subsidiaries have emerged from bankruptcy. PEIX achieved a significant milestone in its restructuring effort early this month after confirming a plan of reorganization, which would provide new liquidity and low debt levels for the Company.

“With that plan taking into effect, the Plant Subsidiaries, which are now owned by a newly formed holding company (New PEHC), will continue to be staffed, managed and operated by PEIX under a fee and profit-sharing arrangement negotiated with the owners of New PEHC … PEIX has eliminated approximately $290 million in debt and other liabilities from its balance sheet, and has a 90-day exclusive option to buy a 25% equity interest in New PEHC for up to $30 million in cash.”

Power stations that burn plants to generate electricity and heat face potential feedstock price increases as well as storage, supply and transportation “challenges” that concern bankers, Paul Battelle, Deutsche Bank’s director of renewable energy financing, said today in Brussels.

“With some bioenergy projects you get 100 truck movements a day delivering wood,” said Battelle. “For a financier, this is a scary thought.”

Biomass may account for more than half of the increase in renewable energy use in the European Union as the region attempts to boost non-polluting sources of power to a fifth of the total by 2020, thge European Biomass Association says.

Unless landowners and forestry companies grow and use wood more efficiently, the region may face a shortage of material for biomass, the Confederation of European Paper Industries said.

“Without biomass you can’t write a de-carbonized story,”

said Paul Hodson, a policy officer at the European Commission who works on sustainable energy. “It’s just not possible.”

The biomass feedstock industry is still “immature” and lacks large companies with financial resources to help reduce risk for banks, said John Bingham, a bioenergy analyst.

There is almost no tradition of long-term contracts for wood or agricultural fuels and pricing is “opaque,” said Bingham, research director at Hawkins Wright, a London-based forestry consultancy. In addition, there are almost no opportunities to protect against price fluctuations, known as hedging.

Prices for wood, still the main fuel used in biomass heating and power production, will rise as much as 25 percent in the coming years, Heinz Kopetz, president of the European biomass association, said in an interview. In some countries including Austria, the cost of pellets used in domestic furnaces is 50 percent cheaper than oil, he said.

Easy-to-acquire sources of wood have been exhausted and as demand rises, the production costs of processing wood fuel will increase as well, resulting in higher prices, Kopetz said.

Most of the planned bioenergy plants in the U.K. are located near coasts in anticipation of the need to import feedstock from Russia and North America. Security of supply will be “quite a challenge” as local demand in markets like Canada and the U.S. rises, reducing the volume available for export to the U.K. and Europe, Bingham said.

In Spain, bioenergy has “significant” potential, but development is held back by a lack of feedstock, said Emilio Luis Lopez Carmona, chief executive officer of Gestamp Biomass, which is investing in 100 megawatts of “mainly small”

bioenergy power stations over the next four years.

“Theoretically there is a lot of biomass available, but there are not many big companies that can supply in the way financiers would like,” said Carmona.

The report, which shows total cropland has declined 6 million acres since 2008, is further evidence that growth in ethanol production is not leading to cropland expansion, according to the Renewable Fuels Association (RFA).

While 2010 corn acres increased 1.6% from 2009, the uptick was more than offset by reductions in acreage for other coarse grains and wheat. USDA estimates total 2010 crop acres at 318.9 million, down from 319.3 million in 2009 and 325 million in 2008.

For the sake of comparison, RFA noted that total planted acres averaged 327 million during the decade of the 1990s.

A record corn crop of at least 13.3 billion bushels is expected in 2010, despite the fact that farmers planted nearly 6 million less acres of corn than in 2007 when the first 13 billion bushel crop was achieved.

“The data clearly show that crop acres in the United States continue to trend downward,” said Bob Dinneen, RFA president and CEO.

“That’s because new technology and dramatically increasing yields are allowing farmers to produce more crops on less land.

“Today’s report reinforces the fact that the nation’s farmers simply don’t need to expand cropland to meet global demands for food, feed, fiber, and biofuels.”

RFA also noted that corn plantings were down from last year in many states with high levels of Conservation Reserve Program (CRP) acreage, which challenges the notion that grain ethanol expansion is leading to increased CRP conversion.

For instance, corn acres dropped 4% in Texas, the leading CRP state in the nation. Corn acres also fell 7% in South Dakota, 4% in Nebraska, 3% in Iowa, and 1.3% in Minnesota.

Associate professor with CQ University, Nanjappa Ashwath, says there are big advantages over grain crops as these plants can be grown on low productive land.

He says the biodiesel is extracted from their seeds, which can be harvested over and over.

“The traditional biofuel crops are grown in the fertile land and where the food crops are being grown,” he says.

“I’m targeting away from the fertile land. Instead, we are going for the marginal or grazing land or some sort of rangelands.”

Poet’s CEO Jeff Broin said: ‘In total, POET will have the capacity to produce 1.7 billion gallons of ethanol and more than 4.5 million tons of dried distillers grains. We will continue to look for opportunities to expand that capacity.’

The Cloverdale plant, which was formerly owned and operated by biofuels technology developer Altra Biofuels, is expected to resume operations in nine months once Poet has completed its $30 million (€24.3 million) upgrade. This will consist of the installation of a pollution control system and water recovery to recycle wastewater.

‘The vast amount of agricultural residue in the area makes this plant an excellent candidate for cellulosic ethanol production, which is a technology our company is working on today,’ explained Broin.

The plant will also have the ability to produce an annual supply of 246,500 tonnes of distillers grains from 31 million bushels of corn.

Safe Air sustainability manager Dean Greenhill last night announced the company had contracted to buy about 6000 litres of biodiesel in the next two weeks.

He was speaking at a meeting called by the Energy Efficiency and Conservation Authority at Blenheim’s Marlborough Convention Centre, where representatives from Marlborough’s major industries were asked to consider forming a regional consortium.

Safe Air would use biodiesel to fuel machinery including forklifts, tractors and trucks, then consider buying new generation light vehicles like trucks and vans which could be fuelled by a biodiesel mix, Mr Greenhill said.

“Increasingly, to export into Europe any business has to show what they are doing to be sustainable,” he said.

Marlborough consortium co-ordinator Kevin Parker of Vine Gas said advantages included sustainability certification and branding, resilience to fluctuating oil and carbon prices, reduced greenhouse gas emissions and Emissions Trading Scheme deductions.

EECA primary production manager Tomo Reed said a Queenstown consortium opened a biodiesel depot in March this year.

Thirty businesses, mostly tourism-based, were signed up.

Prices were two cents higher than at the pump, with the consortium paying a commission of 3c a litre.

Mr Parker said with industrial buy-in, a Marlborough consortium should be able to offer biofuel at or under the pump price.

“Bear in mind, it’s a competitive market,” he said.

“If we can get the volume, I don’t see why a consortium here couldn’t run on more like a cent a litre, or 1 per cent.”

Companies considering the pros and cons of the consortium could be assured that a big industrial player like Safe Air had done its homework, Mr Parker said.

“This provides a great base volume level for a tender,” he said. Companies here mostly had their own bulk diesel tanks, so building a depot would not be a priority.

Andrew Campbell of Wellington-based Fuel Technology said the large tractors he saw in Marlborough vineyards were designed for high percentage biodiesel blends.

Frost pots and wind machines should be able to use a 100 per cent product.

“This is an industrial component fuel, not for namby-pamby cars,” he said.

Mr Campbell proposed that B20 biodiesel be bought into Marlborough – a 20 per cent blend with mineral diesel that engine manufacturers could accept without concerns.

//

Manufacturers had their brand at stake and wanted to protect clients, he said. But as the assured quality of biodiesel improved, confidence grew.

Biodiesel did have disadvantages but generally these should be sorted by the producer which must provide a fuel fit for purpose,Mr Campbell said.

“If biodiesel is turned over on a regular basis and not stored for more than four to six months, there should not be problems,” he said.

The biofuel rose after the Agriculture Department said farmers sowed 87.872 million acres, below a March forecast, as wet, cold weather last month curbed planting and inventories were at 4.31 billion bushels, below the 4.624 billion forecast by analysts in a Bloomberg News survey.

“That was a huge report, huge report,” said Jason Ward, an analyst at Northstar Commodity Investments in Minneapolis.

“There wasn’t an analyst in the country that expected acres to go lower. Ethanol had to go up or some of these guys would be shutting down.”

Denatured ethanol for July delivery jumped 6 cents, or 4.1 percent, to settle at $1.529 a gallon on the Chicago Board of Trade, the biggest one-day advance since Oct. 12. Futures have fallen 1.2 percent this quarter and 22 percent this year.

Prices capped a second consecutive quarterly decline.

Ethanol futures fell 21 percent during the first quarter, the steepest decline since the fourth quarter of 2008.

Production of the fuel sank 1.7 percent to 832,000 barrels a day in the week ended June 25, the Energy Department said today in a report. Stockpiles swelled 0.7 percent to 19.5 million barrels, according to the report. They reached a record 19.7 million in March.

Ethanol output at 832,000 barrels, or 12.8 billion gallons, annually, exceeds the 12 billion gallons that refiners must mix with gasoline under a 2007 energy law.

Producers of the fuel were dealt a blow June 17 when the U.S. Environmental Protection Agency said it wouldn’t render a decision on whether to allow higher concentrations of ethanol in gasoline until the fall. Prices have fallen 5.6 percent since the EPA made the announcement.

Growth Energy, an ethanol industry trade organization, asked the EPA in March 2009 for a waiver that would raise the allowable limit of ethanol in gasoline to as much as 15 percent from 10 percent.

An average ethanol mill in Iowa is losing 1 cent for every gallon on a spot basis. A distillery in Illinois is earning 2 cents, according to Ag Trader Talk, an online grains information service in Clive, Iowa.

The US renewables unit of the Portuguese energy company applied to the California Energy Commission (CEC) in November 2008 for permission to build San Joaquin Solar 1 and 2 in Fresno County. Also that year, the developer contracted to sell the plant’s expected annual output of 774,000MWh – suggesting a capacity factor above 80% – to giant California utility Pacific Gas & Electric under a 20-year power purchase agreement.

The idea was to generate a consistent, firm supply of electricity by using solar energy during the day, supplemented by biomass as necessary and biomass alone at night.

Those plans appear to have fallen through, at least for the time being, according to a letter from Martifer posted to the CEC’s Web site Tuesday.

“We were not able at this time to resolve some of our issues regarding project economics and biomass supply amongst other things,” the company says in the letter formally withdrawing its permit application.

The plant was to employ parabolic trough concentrating solar technology paired with a fluidized bed combustion system to burn an expected 408,000 tonnes a year of urban clippings and wood waste, tree trimmings, orchard wastes and other agricultural biomass.

A September 2008 study found more than enough local biomass available to support the needs of the twin power plants “with a very high degree of confidence”, according to Martifer’s application.

Martifer had estimated the total cost of the project to be $485m.

Imports of coal and iron ore by China, the world’s biggest user of the commodities, fell for two consecutive months, customs data show. Grain shipments from South America slowed, leaving shipping lines with “the full force of vessel supply,”

Martin Sommerseth Jaer and Erik Nikolai Stavseth, Oslo-based analysts with Arctic Securities ASA, said in a report.

The index fell 41 points, or 1.7 percent, to 2,406 points, the lowest since October 2009, according to the Baltic Exchange in London. That’s the 24th consecutive drop, the longest losing streak since August 2005. Daily rates for capesize ships, typically iron ore transporters that are three times the size of the Statue of Liberty, slumped 59 percent since reaching a 2010 high on June 2.

“The capes are the weakest element of the BDI and the capes are iron ore-” driven, Andreas Vergottis, research director at Tufton Oceanic Ltd., which manages the world’s largest shipping hedge fund, said by phone from London today.

“Profitability of Chinese steel mills is zero now, we think.”

Chinese steelmakers are the biggest consumers of iron ore, more of which is transported at sea than any other dry-bulk commodity. Dry-bulk demand is also leveling off because of China’s moves to cool its property market, Vergottis said.

Measures taken by the Chinese government to restrain the Asian nation’s surging property sector have included raising mortgage rates and downpayment ratios, barring lending for third-home purchases and ordering tighter scrutiny of developers’ financing.

Fleet to Grow

Daily rates for capesizes were little changed today at $24,239. Rents for smaller panamaxes, the largest vessels able to navigate the Panama Canal, dropped 4.4 percent to $22,113 a day. They compete with capesizes for coal and iron ore cargoes and also carry grains.

The total number of ships waiting to transit the canal fell to 30 from 38 the previous week, according to a June 26 report from Truro, England-based Global Ports, which tracks congestion.

The fleet of dry-bulk carriers will grow 16 percent to 17 percent this year, Vergottis said. Ships that may have been ordered in 2008, when the Baltic Dry Index rose to a record before recording a 92 percent collapse for the year, may now be surplus to requirements without the demand to absorb them.

“At the moment you haven’t got that demand growth,”

Vergottis said. “There are too many ships just when growth in demand seems to be decelerating.”

Shares of Nippon Yusen K.K. fell 0.6 percent in Tokyo trading today, dropping for a fourth day. Mitsui O.S.K. Lines Ltd. declined 1.5 percent and shares in China Cosco Holdings Co.

retreated by the same amount in Hong Kong. The 12-member Bloomberg Dry Ships Index retreated 27 percent since reaching a 15-month closing high on Jan. 11.

The 90 million-gallon-per-year plant in Cloverdale, Ind., was opened and operated under Altra Biofuels for a short time in 2008.

Privately held Poet did not give a purchase price for the transaction, which closed Tuesday.

The Sioux Falls-based company says it should be ready to reopen the plant in about nine months.

Poet is the nation’s largest ethanol producer. With the purchase, the company will have 27 plants producing more than 1.7 billion gallons of ethanol a year.

Poet says the plant will create up to 45 jobs.

“Our government is investing in science and technology to create jobs, improve the quality of life of Canadians and strengthen the economy,” said Minister Goodyear. “These new fuels have the potential to deliver clean air, clean energy, clean water, and economic benefits for Nova Scotians and all Canadians.”

Biofuels produced from renewable resources such as algae are key to future energy sustainability and have the highest potential for carbon capture. Some species of microalgae are expected to yield as much as twenty times more oil than traditional agricultural crops. As a renewable resource, algae are a clear winner — they don’t require arable land, nor do they compete with food production.

The project received approximately $5 million through the National Bioproducts Program and NRC-IMB. Preliminary work and engineering plans have been drawn up to build a 50,000 litre cultivation pilot plant at the Ketch Harbour facility. A main component to help the algae grow will be carbon dioxide emissions from fossil fuel combustion. Carbon2Algae, an industrial partner in the effort, eventually plans to operate algae photobioreactors that will capture carbon dioxide from facilities like the Alberta oil sands or coal-fired power plants, and use these emissions to allow local strains of algae to thrive.

Using local algae strains key

Researchers at the Marine Research Station in Ketch Harbour, Nova Scotia, have been growing algae for over 50 years. In assessing how best to grow algae for biofuel, NRC has joined forces with the United States Department of Energy, the National Renewable Energy Laboratory in Colorado and Sandia National Laboratories in New Mexico.

Dr. Stephen O’Leary, an NRC researcher working on the project, forecasts that commercial production of algal biofuels is likely in another five to 10 years. The project will ultimately join forces with NRC aerospace expertise to work toward commercializing algal biofuel, among other projects. “We’re asking plants to do what they do best,” explained Dr. O’Leary. “With little more than water and carbon dioxide, algae can harvest sunlight and turn it into energy that could eventually be used to create jet fuel.”

A key component distinguishing the National Research Council algal biofuel project from other international efforts is the focus on identifying local strains of algae that are suitable for biofuel production from specific sites in North America. The local species are already acclimatized to the environment, making them easier to grow, and avoiding the risks of importing foreign species that might accidentally be released into the environment.

A Department of Environment spokesperson said in an emailed statement that Irving Oil’s biodiesel refinery plan has been withdrawn and will be immediately removed from the department’s list of projects under environmental review.

Irving Oil did not respond to requests for an interview on Tuesday to discuss the decision to scuttle the proposed project.

The biodiesel plant was intended to be built next to Irving Oil’s existing oil refinery in east Saint John.

Sam Robinson, a company spokesperson, said in April that the proposed plan would be designed to produce 2,200 barrels per day of biodiesel.

The company applied on March 31 for environmental impact assessment for a biodiesel refinery to create a renewable energy product from food waste that can be added to diesel fuel.

“And if this project proceeds it would employ up to 300 people in construction and create as many as 20 to 30 permanent jobs,” Robinson said in April.

The environmental impact assessment application was timed so the company could qualify for federal government incentives designed to encourage biodiesel manufacturing.

When talking about the proposed biodeisel refinery, Irving Oil said in April the project was in the very early stages of development and warned that a lot of work needed to be done before it would move forward.

While the biodiesel plant would produce 2,200 barrels per day, the conventional Irving Oil refinery that it would have been built beside produces about 300,000 barrels of oil and gas per day.

It was revealed this week that Irving Oil quietly backed away from its exclusive rights to test 11 stretches of Crown land for tidal power capabilities.

When Irving Oil was awarded the rights to study the tidal power potential in the Bay of Fundy it had indicated that the tidal power generated could help power its proposed second oil refinery.

However, Irving Oil and BP shelved plans to build a second conventional oil refinery, known as Eider Rock, in July 2009.

A study conducted by Irving Oil and BP, which is currently dealing with the Gulf of Mexico oil spill disaster, concluded that the project was not viable during the economic downturn and the softening demand for petroleum products.

But advocates for the crop say that soybeans continue to more than hold their own.

“There are some additional challenges, but farmers are still optimistic” about soybeans, says David Iverson, an Astoria, S.D., soybean farmer.

Lower prices are the biggest challenge, although weather is a concern, too.

Nationally, soybeans fetched an average of $9.28 per bushel in May, down from an average of $10.70 in May 2009, according to the National Agricultural Statistics Service, which is part of the U.S. Department of Agriculture.

Beans — both old and new crop — generally are bringing less than $9 per bushel at area grain elevators, even after a modest price rally in June.

The prices of other ag commodities grown in the region have dropped during the past year, too, but until recently soybeans prices had fared relatively better than prices for corn and wheat, the region’s other crops.

Give the Chinese both credit and blame, says John Sanow, an analyst with Telvent DTN in Omaha, Neb.

Strong Chinese demand for U.S. soybeans had helped to prop up prices. U.S. soybean exports to China have quadrupled in the past decade, and last year China accounted for $9.2 billion of the $21 billion in soybean and products exported by the United States, according to the U.S. Soybean Board.

Recently, though, “There’s been a deep freeze in demand activity from the Chinese,” Sanow says.

Chinese officials, citing overcrowding at some of their ports, have turned away a number of ships filled with soybeans.

Big soybeans harvests in Brazil and Argentina also are dampening bean prices, Sanow says.

Brazil is the world’s second-biggest soybean exporter behind the United States. Argentina ranks third.

Combined, Brazil and Argentina export more soybeans than the United States.

Also working against bean prices: The record 78.1 million acres of soybeans that USDA expects American farmers to plant this year.

Soybeans have been established crops in Minnesota and South Dakota for many years. Minnesota ranks third in U.S. soybean production, South Dakota eighth.

Soybeans’ popularity has grown sharply in North Dakota over the past decade, with acreage rising from 1.9 million in 2000 to a record 4 million this year, USDA says.

Between the increase in acres and 2009’s good prices, North Dakota farmers received $1.1 billion for their soybeans last year. That was up from $250 million in 2000.

Soybeans, though probably not as profitable as they’ve been, remain an attractive crop in the state, says Monte Peterson, a Valley City, N.D., farmer and president of the state Soybean Growers Association.

Heavy rains this spring and early summer also are concern, he says.

Many soybean fields in the region aren’t as advanced as farmers would like, but beans generally are doing well, according to the most recent numbers from the National Agricultural Statistics Service, an arm of USDA.

In Minnesota, 89 percent of soybeans are rated good or excellent.

In North Dakota, 86 percent are good or excellent.

South Dakota’s crop isn’t doing as well, with 72 percent rated good or excellent.

That reflects excess moisture in big areas of the state, says Iverson, the Astoria, S.D., soybean grower.

Sixty-nine percent of soybeans in the nation’s top 18 bean-producing states are in good or excellent shape, USDA says

Soybean prices often rally during the summer on reports of weather problems across the country, and that could happen again this year, Sanow says.

Farmers should keep a close eye on prices and take advantage on any rallies that develop, he says.

     One of its units signed a letter of intent with New Zealand’s Lanzatech NZ Ltd. and China Academy of Sciences on June 20 to jointly build the plant in China, Baosteel said today in a statement on its website. Carbon monoxide is produced during the making of steel.

     China, the biggest emitter of greenhouse gases, in December set environmental and power standards for steelmakers and threatened closures to curb pollution and overcapacity. Mills would be encouraged to pay more attention to environmental issues in a new industry policy that will be announced by the State Council, the China Metallurgical Industry Planning & Research Institute said in February.

     Sulphur dioxide emissions by the Chinese steel industry “seriously” exceed government requirements, the Chinese Academy of Engineering said in May.

TAEC will manufacture cleaning products in the production facility using the Company’s own scientific formulas that combine only natural ingredients and contain no ammonia, phosphates, dyes, artificial scents or toxins. The products are formulated to safely and naturally remove oil and grease. TAEC will launch the new line by offering a suite of household cleaners and has plans to extend the line by introducing new products for the commercial and industrial cleaning supplies markets.

Commenting on the announcement, David Bennett, TAEC CEO, said: “We are excited to announce plans to open TAEC’s new production facility that will manufacture our line of powerful scientifically formulated green cleaning products. San Antonio is a community that is creating a green city, which mirrors our mission to provide consumers with potent eco-friendly biodegradable home cleansers. We look forward to starting production and launching sales to take advantage of growing consumer demand for green household cleaners.”

About the Company:

TAEC operates a biodiesel division that intends to use extraction technology to convert waste cooking oil and grease into a biodiesel fuel ingredient sold to biodiesel fuel producers. TAEC’s business is designed to eliminate environmental issues associated with disposing of waste cooking oil and grease. TAEC operates a cleaning division that will manufacture and sell a new line of industrial strength environmentally friendly biodegradable cleaning products that contain natural non-toxic ingredients made more powerful by TAEC’s own scientific formulations.

Safe Harbor for Forward-Looking Statements

This document contains discussion of items that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurances that its expectations will be achieved. Factors that could cause actual results to differ from expectations include, but are not limited to, lack of operating history and experience in the cleaning products market, history of losses, lack of employees, risks in maintaining intellectual property, market acceptance of our new products, competition from established green cleaning products, risks in establishing a manufacturing facility and being able to produce products in sufficient quantities and at economical prices, lack of working capital, debt obligations, general economic conditions in markets in which the company does business, extensive environmental and workplace regulation by federal and state agencies, other general risks related to its common stock, and other uncertainties and business issues that are detailed in its filings with the Securities and Exchange Commission.

GE Energy Financial Services made the announcement today at the American Council on Renewable Energy’s Renewable Energy Finance Forum in New York City. The GE unit will own a majority equity interest in the Idaho Wind Partners project. Exergy Development Group will own a minority interest along with manager and operator Reunion Power. The wind farms will sell all of their power to Idaho Power Company under 20-year agreements. Once completed, the portfolio is expected to qualify for the Federal Treasury Grant program designed to stimulate renewable energy projects. Additional financial details of the transaction were not disclosed

“Through our investment in Idaho’s largest wind power portfolio, GE Energy Financial Services is putting millions of dollars to work to bring jobs and clean energy to Idaho and help the country meet growing demand for domestic, renewable sources of energy,” said Kevin Walsh, managing director and head of Power and Renewable Energy at GE Energy Financial Services.

Construction company Fagen, Inc. initiated project construction earlier this month and expects to complete the wind farms located on farmland clustered near Hagerman and Burley by year’s end. Using 122 of GE’s 1.5-megawatt turbines, over 13,500 of which have been installed worldwide, these wind farms will have the capacity to generate 183 megawatts, enough to power approximately 39,700 average Idaho homes and–according to US Environmental Protection Agency methodology–avoid approximately 331,000 short tons a year in greenhouse gas emissions–the equivalent of taking about 57,000 cars off the road. In addition to supplying the wind turbines, GE will provide 7 years of operational and maintenance services to the project.

The project is expected to create approximately 175 construction jobs as well as permanent employment for operations and ongoing seasonal maintenance requirements. In addition to those employed directly, a wind project of this size would typically support the equivalent of over 2,200 full-time jobs in the United States for one year–about half of which would be in-state–and create 25 permanent jobs, based on a National Renewable Energy Laboratory model.

Wind comprises nearly 80 percent of GE Energy Financial Services’ renewable energy portfolio. The portfolio includes equity investments in 58 wind farms with a total capacity to produce 6.1 Gigawatts of electricity, as well as loans to 38 wind farms totaling 1.5 Gigawatts. Many of these investments have helped states meet their renewable portfolio standards, regulations requiring increased electricity generation from renewable sources.

“We are calling on Congress to enact a national renewable energy standard which would help stimulate growth of more wind, solar and other cleaner energy projects across the United States,” said Walsh. “A renewable energy standard would help provide long-term certainty the energy industry and financial community need to ensure continued expansion of renewable energy throughout the country.”

GE Energy Financial Services’ renewable energy investments reinforce GE’s ecomagination initiative, a program to help its customers meet their environmental challenges while expanding its own portfolio of cleaner energy products.

About GE Energy Financial Services

GE Energy Financial Services’ experts invest globally across the capital spectrum in essential, long-lived and capital-intensive energy assets that meet the world’s energy needs. In addition to capital, GE Energy Financial Services offers the best of GE’s technical know-how, technology innovation, financial strength and rigorous risk management. Based in Stamford, Connecticut, the GE business unit helps its customers and GE grow through new investments, strong partnerships and optimization of its $23 billion in assets.

About GE

GE /quotes/comstock/13*!ge/quotes/nls/ge (GE 14.79, -0.21, -1.40%) is a diversified infrastructure, finance and media company taking on the world’s toughest challenges. From aircraft engines and power generation to financial services, health care solutions, and television programming, GE operates in more than 100 countries and employs about 300,000 people worldwide.

About Exergy Development Group

Exergy Development Group is one of the major independent renewable energy developers in the USA. Exergy’s focus is on deploying commercially successful, socially beneficial and environmentally responsible renewable energy projects. A vertically integrated company, Exergy moves its projects from conception through construction and commercial operation. As part of this effort, the company is also developing new and advanced renewable energy technologies. The company has assembled a renewables projects queue of over 4,000 MW across the Western and Midwestern United States. Exergy’s veteran team is set apart by its commitment to advancing renewable energy by mitigating utility concerns about renewables integration and orienting its projects towards local people and landscapes. Exergy believes that sustainable economic prosperity is inextricably tied to the well being of our communities and natural environment.

About Reunion Power

Reunion Power LLC, a privately owned company, provides project development and asset management services along with a thorough understanding of how to build and manage a successful project. Reunion began operations in 2000 and its management team combines over 100 years of development, engineering, and financial management experience in clean energy markets. Reunion’s hands-on experience in wind power commenced in 2002.

About Fagen

Fagen, Inc. is the largest, most respected merit shop green energy design-builder in the United States. Utilizing a database of over 25,000 civil, structural, mechanical, and electrical direct-hire employees, Fagen, Inc. has constructed 60% of the ethanol production capacity in the United States, multiple wind farms, and significant upgrades to power plants. Fagen, Inc. is prepared to meet industrial demand growth with a large inventory of cranes, including several Manitowoc 18000’s, and one of the largest CAT fleets in the Midwest. The unmatched standard for safety, quality, and service has led Fagen, Inc. to be listed in the top 40 largest contractors in the United States by ENR 

NEW YORK & TWIN FALLS, Idaho, Jun 29, 2010 (BUSINESS WIRE) — Maintaining momentum in its renewable energy investing, GE Energy Financial Services, a unit of GE /quotes/comstock/13*!ge/quotes/nls/ge (GE 14.79, -0.21, -1.40%) , announced today that it has made an equity investment in Idaho’s largest wind power project. The almost half billion dollar portfolio of 11 wind farms under construction was developed by Exergy Development Group.

GE Energy Financial Services made the announcement today at the American Council on Renewable Energy’s Renewable Energy Finance Forum in New York City. The GE unit will own a majority equity interest in the Idaho Wind Partners project. Exergy Development Group will own a minority interest along with manager and operator Reunion Power. The wind farms will sell all of their power to Idaho Power Company under 20-year agreements. Once completed, the portfolio is expected to qualify for the Federal Treasury Grant program designed to stimulate renewable energy projects. Additional financial details of the transaction were not disclosed

“Through our investment in Idaho’s largest wind power portfolio, GE Energy Financial Services is putting millions of dollars to work to bring jobs and clean energy to Idaho and help the country meet growing demand for domestic, renewable sources of energy,” said Kevin Walsh, managing director and head of Power and Renewable Energy at GE Energy Financial Services.

Construction company Fagen, Inc. initiated project construction earlier this month and expects to complete the wind farms located on farmland clustered near Hagerman and Burley by year’s end. Using 122 of GE’s 1.5-megawatt turbines, over 13,500 of which have been installed worldwide, these wind farms will have the capacity to generate 183 megawatts, enough to power approximately 39,700 average Idaho homes and–according to US Environmental Protection Agency methodology–avoid approximately 331,000 short tons a year in greenhouse gas emissions–the equivalent of taking about 57,000 cars off the road. In addition to supplying the wind turbines, GE will provide 7 years of operational and maintenance services to the project.

The project is expected to create approximately 175 construction jobs as well as permanent employment for operations and ongoing seasonal maintenance requirements. In addition to those employed directly, a wind project of this size would typically support the equivalent of over 2,200 full-time jobs in the United States for one year–about half of which would be in-state–and create 25 permanent jobs, based on a National Renewable Energy Laboratory model.

Wind comprises nearly 80 percent of GE Energy Financial Services’ renewable energy portfolio. The portfolio includes equity investments in 58 wind farms with a total capacity to produce 6.1 Gigawatts of electricity, as well as loans to 38 wind farms totaling 1.5 Gigawatts. Many of these investments have helped states meet their renewable portfolio standards, regulations requiring increased electricity generation from renewable sources.

“We are calling on Congress to enact a national renewable energy standard which would help stimulate growth of more wind, solar and other cleaner energy projects across the United States,” said Walsh. “A renewable energy standard would help provide long-term certainty the energy industry and financial community need to ensure continued expansion of renewable energy throughout the country.”

GE Energy Financial Services’ renewable energy investments reinforce GE’s ecomagination initiative, a program to help its customers meet their environmental challenges while expanding its own portfolio of cleaner energy products.

About GE Energy Financial Services

GE Energy Financial Services’ experts invest globally across the capital spectrum in essential, long-lived and capital-intensive energy assets that meet the world’s energy needs. In addition to capital, GE Energy Financial Services offers the best of GE’s technical know-how, technology innovation, financial strength and rigorous risk management. Based in Stamford, Connecticut, the GE business unit helps its customers and GE grow through new investments, strong partnerships and optimization of its $23 billion in assets.

About GE

GE /quotes/comstock/13*!ge/quotes/nls/ge (GE 14.79, -0.21, -1.40%) is a diversified infrastructure, finance and media company taking on the world’s toughest challenges. From aircraft engines and power generation to financial services, health care solutions, and television programming, GE operates in more than 100 countries and employs about 300,000 people worldwide.

About Exergy Development Group

Exergy Development Group is one of the major independent renewable energy developers in the USA. Exergy’s focus is on deploying commercially successful, socially beneficial and environmentally responsible renewable energy projects. A vertically integrated company, Exergy moves its projects from conception through construction and commercial operation. As part of this effort, the company is also developing new and advanced renewable energy technologies. The company has assembled a renewables projects queue of over 4,000 MW across the Western and Midwestern United States. Exergy’s veteran team is set apart by its commitment to advancing renewable energy by mitigating utility concerns about renewables integration and orienting its projects towards local people and landscapes. Exergy believes that sustainable economic prosperity is inextricably tied to the well being of our communities and natural environment.

About Reunion Power

Reunion Power LLC, a privately owned company, provides project development and asset management services along with a thorough understanding of how to build and manage a successful project. Reunion began operations in 2000 and its management team combines over 100 years of development, engineering, and financial management experience in clean energy markets. Reunion’s hands-on experience in wind power commenced in 2002.

About Fagen

Fagen, Inc. is the largest, most respected merit shop green energy design-builder in the United States. Utilizing a database of over 25,000 civil, structural, mechanical, and electrical direct-hire employees, Fagen, Inc. has constructed 60% of the ethanol production capacity in the United States, multiple wind farms, and significant upgrades to power plants. Fagen, Inc. is prepared to meet industrial demand growth with a large inventory of cranes, including several Manitowoc 18000’s, and one of the largest CAT fleets in the Midwest. The unmatched standard for safety, quality, and service has led Fagen, Inc. to be listed in the top 40 largest contractors in the United States by ENR

U.S. Rep. Stephanie Herseth Sandlin, D-S.D., says she and other members of Congress want to find out why federal officials have delayed a decision on allowing higher concentrations of ethanol in gasoline.

The Environmental Protection Agency recently announced it will wait until fall to decide whether to increase the maximum blend from 10 to 15 percent. The agency said the delay would allow more testing of the higher blend in vehicles.

Herseth Sandlin says the delay is inexcusable. She says allowing a 15 percent ethanol blend would help reduce the nation’s dependence on imported oil and boost the economy in rural areas where ethanol is made from corn and other plants.

The company’s biofuel plantations project is located in Cairns Hinterland, Queensland, and managed by its wholly owned subsidiary Green Oil Plantations Holdings (Pty) Ltd.

UK investors can now benefit from a safe biofuel producing plantation investment opportunity, with the choice of two investment programmes. The first is a short-term investment and requires a minimum investment of £10,000 (€12,400), while the second is a long-term programme, with a minimum investment of £16,000.

The biofuel crop being grown on the plantations is known as Millettia Pinnata. Co-founder and director of Green Oil Plantations, Patrica Ellis, said: ‘Initially we reached the whole market from jatropha plants through palm and other established species. By pitching all the varieties’ benefits against each other it became clear that the future for UK investors wishing to invest in green oil lies with a plant called Millettia Pinnata.’

The energy crop, which is native to Australia, is thought to have many advantages over some of its rivals due to its productive lifespan, which lasts over 70 years. The crop also thrives in arid conditions and produces oil of a very high quality.

‘The benefits of Millettia over other oil producing plants are well proven and our current investment opportunities will attract people looking for a safe investment with opportunities to grow their returns or pension,’ adds Ellis.

There is another advantage to using Millettia, as each hectare planted with the super intensive plant will absorb more than 50 tonnes of carbon dioxide every year.

RWE Innogy GmbH’s facility will be located in the Gelderland province in the central-eastern part of the Netherlands and make fuel pellets for power stations out of compressed biomass, a formerly living material, a spokesman for the unit said.

The plant is due to come online early next year. RWE’s Dutch subsidiary, Essent NV, will be the first company to use the pellets for combustion in the Amer coal-fired power station.

“Co-firing biomass in coal power stations is one of the cheapest ways to produce green electricity, but it is still about double as expensive as electricity generation from fossil fuels,” said Irmgard Herold, a waste-to-energy analyst at Bloomberg New Energy Finance. “Demand for this feedstock will be high if it is commercially produced at about the same cost as ‘normal’ wood pellets.”

Topell Nederland, a joint venture owned 49.9 percent by RWE and 50.1 percent by Topell, will operate the plant and invest 15 million euros ($18 million), the company said in a statement today.

Compared with conventional wood pellets, biocoal has a higher energy density and better incineration properties, the company said. When co-fired with conventional coal, “no additional infrastructural measures are required, such as separate storage and pulverization,” the spokesman said.

Topell has developed a process that can be applied to various organic materials including roots and switch grass, which are usually difficult to process. They’re converted into pellets through mild pyrolysis and pelletisation using a special reactor technology.

Essent will test the plant for several years, the spokesman said. More than 400,000 tons of biocoal from Topell and other suppliers will be used as a substitute for coal over the next five years at the plant.

Tropical Storm Alex, which is reported to have killed at least 10 people in Nicaragua, Guatemala and El Salvador, is forecast to reach hurricane strength on Tuesday.

It is projected to travel well west and south of the spill, which lies about 50 miles off the Louisiana coast, but BP’s plans to move a third containment vessel to the site of the leak could be pushed back by about a week by high waves, a company spokesman said on Monday.

 US government officials estimate that 35,000 to 60,000 barrels of oil are gushing from the blown-out well each day.

BP’s current containment system can handle up to 28,000 barrels daily. The planned addition would have raised that to 53,000 bpd, BP said.

BP admitted that the cost of the clean-up has now soared to $100m (£66m) a day, taking the total to $2.65bn. The daily rate has risen from $3m at the beginning of the crisis.

Tony Hayward’s future at the helm of the oil giant was called into question on Monday after Russia’s deputy prime minister claimed the beleagured oil boss is on the brink of resignation.

BP put the comment down to a “misquote” during Mr Hayward’s official trip to Russia and denied that he is making way for new blood after the Gulf of Mexico oil spill.

Igor Sechin, Russia’s deputy prime minister told reporters: “We know that Tony Hayward is leaving his position and he will introduce his successor.”

The comment triggered fevered speculation that BP has privately briefed Moscow that there will be change at the top of the oil company.

Mr Sechin later appeared to backtrack, saying the BP chief’s future had not been discussed at a meeting on the company’s TNK-BP joint venture with Russian oligarchs.

Russia’s interest will add to pressure on Mr Hayward, after US President Barack Obama said last month that he would already have fired the BP boss for his handling of the crisis.

BP has frequently had a tense relationship with Russia over TNK-BP, which produces a third of the company’s oil. Last week, the Russian ambassador to the UK stated Moscow would seek “guarantees that [the partnership] will continue to work”, and President Dmitry Medvedev said that he fears the spill could “annihilate” BP.

Meanwhile, The Daily Telegraph has learnt that a group of oil majors, thought to include Chevron, ConocoPhillips, ExxonMobil and Royal Dutch Shell, is preparing to present the US government with proposed changes to deepwater safety rules. The move is understood to be an attempt to pre-empt any move by America to insist on relief wells for all drilling.

BP says the leak will be plugged with a relief well by August, but the method takes several months after a spill occurs. US politicians have been calling for all operators to drill relief wells in case of an accident. This could double the cost of deepwater drilling, according to Geoffrey Maitland, professor of energy engineering at Imperial College.

“Partnerships such as these focus the creative powers of the public, private and academic sectors on key challenges facing the development of renewable energy for transportation,” said Assistant Secretary for Energy Efficiency and Renewable Energy Cathy Zoi. “The United States must find effective ways to hasten the development of technologies for advanced biofuels made from algae and other renewable resources to reduce our need for foreign sources of oil.” Zoi made the announcement while speaking at the Biotechnology Industry Organization 2010 World Congress on Industrial Biotechnology and Bioprocessing.

The consortia consist of partners from academia, national laboratories and private industries that are based across the country, broadening the geographic range and technical expertise of DOE partners in the area of algal biofuels. Projects are expected to continue for a period of three years. Together, they represent a diversified portfolio that will help accelerate algal biofuels development with the objective of significantly increasing production of affordable, high-quality algal biofuels that are environmentally and economically sustainable.

Following completion of the tender Offer and cancellation of the ordinary Shares, the Company will have a total of 36,614,913 shares in issue.

The Company is seeking to cancel its AIM listing and the proposal will be considered at a meeting on 6 July 2010.

This moves the bill back for more rewriting even though lawmakers had debated the overall package cost for weeks. Biodiesel brokers said this would deadlock the biodiesel market even further. Already the industry is working at 10 percent or less capacity.

“It never seems quite dead,” said a broker. “Everyone still assumes there is life to this bill, and we’ll be frozen until the next time around.”

Conservative senators balked at the estimated cost of $33 billion, even though it was down significantly from the $190 billion first attached to the bill. Leaving the credit in limbo has biodiesel prices separated by a wide number, leaving the market stalled.

However, prices for renewable fuel credits (RINs) were projected to soar, brokers said. “Biodiesel RINs will move up,” said another broker. “Not sure how many buyers are out there; now it’s the same guys buying and selling and not many obligated parties in the market.”

In May, the House approved a similar bill after slashing its costs to $112 billion from its original $174 billion.

(FT.com) – Government restrictions on the use of plants to generate electricity mean a new biomass power plant opened this month is operating at only half its capacity, according to its owner, write Chris Tighe and Andrew Bounds .

Drax, the power producer that owns the UK’s largest generator in North Yorkshire, is lobbying for changes to the rules as part of an impending review by the government.

The review will examine the levels of incentives offered via Renewable Obligation Certificates (ROCs) for individual technologies, based on their costs, and determine subsidy levels from 2013 onwards. This will affect all renewables in the UK covered by the Renewables Obligation, which include biomass, wind and waves.

Drax’s £80m plant could generate 400MW, it said. “It is not economic to use it fully under the current regime,” it said. “We have flagged it up . . . and are hopeful of a change.”

Drax mixes crushed plant matter with its coal to account for 100MW of its 4,000MW capacity. There are two key factors stopping it going further, as well as uncertainty over whether support measures will continue beyond 2013.

Electricity suppliers must produce ROCs to help the UK meet its target of generating 20 per cent of power from renewable sources. However, the fuels used by Drax, such as waste wood and straw, earn just half an ROC per megawatt hour, less than for dedicated energy crops such as elephant grass. Now prices for such commodities are rising, they are uneconomic. Suppliers can also only use ROCs from co-firing for 12.5 per cent of their total so demand for them is depressed.

The outcome of the review could affect Drax’s plans to build three dedicated biomass power plants with Siemens, the first at Immingham. The combined cost is expected to be £2bn.

Construction would create 850 jobs and each plant would employ 150 staff and contractors. MGT Power is proposing two 295MW biomass plants at Teesport and the Port of Tyne; it is focusing on raising finance.

Teesside had an early entry into biomass. Sembcorp’s £60m plant at Wilton was the UK’s first large wood-burning power station in 2007.

With various biomass proposals in the offing, Chris Pywell, head of strategic economic change at One, the regional development agency, said: “We need an informed approach so it’s not just seen as today’s bandwagon.”

New reports surface almost daily that add to ethanol’s credibility as a fully viable energy alternative. Last week at the International Fuel Ethanol Workshop, POET – the world’s largest ethanol producer – shared the results of an independent lifecycle analysis which concluded that ethanol produced by Project LIBERTY (POET’s first planned cellulosic ethanol plant) will reduce carbon emissions by 111% over gasoline.

This means that POET’s cellulosic ethanol actually results in negative emissions – offsetting more greenhouse gas emissions than it produces. And a new report released by the United States Department of Agriculture (USDA) concludes that current ethanol plants yield “a substantial net energy gain.”

Exciting breakthrough technologies continue to be announced for both starch and cellulosic ethanol – in the form of new feedstocks, improved fermentation efficiency and production processes, and new co-products that make ethanol even more economically and environmentally sustainable.

Efforts within the biofuels industry to make cellulosic ethanol more commercially viable are especially increasing.   Biomass feedstocks are in abundant supply, and the reduction in CO2 emissions is impossible to ignore, as is the potential of cellulosic ethanol to boost energy independence and create jobs.

Co-location of a cellulosic ethanol facility and a coal-fired power plant is one strategy that holds promise.  Joining these industries in the same location can result in significant economic and environmental benefits for both, in the form of feedstock sharing, cost savings, and regulatory compliance.

A power plant that is co-located with a cellulosic ethanol facility can benefit from co-firing lignin in its coal boilers to produce electricity. Lignin possesses high BTU levels and is a clean burning substrate. These properties make it an effective power source that results in much lower carbon emissions than those produced by burning coal. This environmental benefit is increasingly relevant in light of the current Renewable Portfolio Standard (RPS) state regulations that could become federal policy in the future.

An RPS requires electricity providers to produce a certain percentage of power from renewable energy sources within a set timeframe. There are currently 30 states including the District of Columbia with some form of RPS, with goals ranging from 10% – 50% of electricity produced from renewable sources within the next 20 years. Eligible sources of the renewable energy include hydro, wind, solar, geothermal and biomass.

Clear benefits of RPS policies include improved energy security, reliable energy delivery and protection against fossil fuel price and supply volatility. There are also significant environmental effects, such as improved air, soil and water quality.

Power plants moving towards ‘green electricity’ production will pay more to purchase biomass than coal, but an effective co-location setup can still result in profit for both the electricity and ethanol producers. Lignin is basically a by-product for the ethanol facility that must either be turned into landfill waste or burned into steam and electricity at a relatively high cost, but it has significant value for the power plant.

A similar tradeoff occurs when the power plant’s excess steam and electricity (which is currently wasted) is sold to the ethanol plant for heating its tanks and evaporators. This exchange allows the ethanol producer to realize a significant capital cost savings – up to one third – by avoiding the need to invest in onsite cogeneration equipment, including a lignin-fueled boiler and turbine generator system.

Besides these environmental and economic advantages, other benefits to the power plant include a more cost competitive power supply, capacity increments that meet load growth, portfolio diversity, and increased local control of supply assets.

Co-location brings considerable value to the cellulosic ethanol plant as well, through both direct cost savings and operation efficiency. In addition to lower capital and equipment costs, the expenses for labor, warehousing, site development, and energy can also be reduced. Other benefits include flow integration, value-added waste stream recovery, and the sharing of management and overhead expenses.

The ethanol plant also gains additional industrial infrastructure and a market for its lignin by-product. Furthermore, onsite generation results in a more reliable and affordable supply of both power and steam. Co-location also further reduces the carbon footprint of an ethanol plant and allows it to be more competitive via its decreased operating costs.

In addition to these synergies, co-location of ethanol and power plants contribute significant economic development to their community in the form of new jobs.

A recent Novozymes case study explored various co-firing and co-location production scenarios. Our process modeling showed that in situations where a Green Electricity premium of $30 per MWh is charged, an ethanol price of approximately $2.10 per gallon (before any ethanol subsidies) is the break-even point for a co-location producer.

Ethanol prices above this amount will allow the producer to make more money producing ethanol from just the cellulose and hemicellulose (and burning the lignin separately for power) than by burning the whole biomass feedstock. This same model showed that when no Green Electricity premium is included, the break-even price for the cellulosic ethanol is approximately $2.35 per gallon (pre-subsidy).

With plans in place for a growing number of bio-electricity plants, there is some concern about competition for biomass feedstock between power and cellulosic ethanol producers. Experts at Novozymes are not subscribing to this theory.

Cynthia Bryant, Global Business Development Manager, explains: “We don’t see this as an ‘either/or’ situation. Instead, we believe that it is feasible to optimize the feedstock to meet the needs of both the ethanol and electricity industries. When effective co-location strategies are put into place, any increase in startup costs is well worth the investment because of the higher return in the end.”
For more information, contact Cynthia Bryant (Global Business Development Manager – Novozymes)

     The clean energy exposure of the fund, which provides early to mid-stage funding, is currently limited to solar power company Azure Power.

     Its first fund of USD 140m is fully invested, while two-thirds of its second fund of USD 210m is yet to be invested, Aggarwal told Bloomberg New Energy Finance in a telephone interview.

     The list of investments in the clean energy sector may not rise very fast as the fund is yet to freeze its strategy for the sector. ‘We still do not have a comprehensive understanding of the sector. It will take us some six months to develop a good perspective,’ he said.

     He said that the delay in finalization of the strategy does not reflect lower priority but was a result of internal resource constraints. He also said that the group was sure that the opportunity was not going to go away. ‘Sometimes it is a good idea not to be an early mover. Let trends become more solid,’ he said.

     Helion typically provides funding of USD 2m to USD 10m per company.

     Aggarwal, who is on the board of Azure Power, said that the government’s policy to foster the growth of solar energy was on the right track. ‘We feel a thousand flowers will bloom. Give it two to three years. This should be on a strong adoption curve,’he said. Many new entrepreneurs are investing in the solar space.

Azure Power is also an example of that. ‘Solar sector will be driven by new entrepreneurs. They would make very good acquisition candidates in the future,’ he said, adding that 15% to 20% return on equity was a reasonable return to assume on these projects.

     Aggarwal also said that Helion had participated in the first two rounds of funding for Azure and may be part of the third round, but further scale-up capital would have to come from other investors.

     The Sao Paulo-based firm plans to start operations at its Alto Taquari terminal this month and have 11m litres fuel storage capacity available by the end of this year, a spokesperson told Bloomberg New Energy Finance. Cosan plans to double capacity by 2011 and add another nine storage tanks that can each hold 20m litres by 2013.  The company declined to say how much it has invested in the new venture.

     The facility will at first be dedicated only to storing ethanol but as capacity is ratcheted up it will cater to all fuels. “The terminal will improve transport logistics for sugar cane mills and biodiesel refineries working out of Mato Grosso and neighbouring Goais,” the Cosan spokesperson said.

     Biofuels producers could opt to use the site to store and then move their product to consumption centres in the South East by truck or via the Ferronorte railway that links Alto Taquari to Santa Fe do Sul in Sao Paulo. “Once the trucks dump their goods they will re-stock with petroleum fuel and return to the terminal,” the spokesperson said.

     A slew of firms, including US agribusinesses ADM and Bunge and local ethanol producer ETH Bioenergia , plan or have ethanol operations online in Mato Grosso and Goias. Nearly half of Brazil’s biodiesel refineries are located in the country’s Centre West region while approximately two thirds of the fuel is consumed in the South and South East.

At this week’s world congress on industrial biotechnology in Washington, DSM will announce “a breakthrough in bioconversion”.

This will improve the -efficiency with which fuels can be made from “second-generation” sources – agricultural waste such as corn stalks and wheat straw, wood chips and energy crops grown on land that is unsuited to food production.

First-generation biofuels – made from crops such as maize, cane sugar and oilseed rape – have proved controversial because they compete directly with food production and have not been effective at reducing greenhouse gas emissions.

DSM’s second-generation technology has two components. The first is an enzyme, derived from a -fungus discovered originally in a Swiss compost heap, which breaks down the cellulose in wood, plant stalks and other agricultural waste.

This produces a range of sugars which are then converted by DSM’s “advanced yeast” strain into ethanol, the standard biofuel.

A report released this month by UBS Global Equity Research concluded that second-generation bioethanol would become the main renewable fuel for transport over the next -decade, with a market -valued at an estimated $80bn a year by 2022.

Although DSM believes it will generate substantial revenues from selling the enzymes and yeast required to make second-generation biofuels, the company is also considering playing a more central role in biofuel production.

“We have not yet decided exactly how we will do it,” says Feike Sijbesma, chief executive. “We have several non-announced collaborations [in biofuels] and we will most likely do it in partnership.”

The first stage in second generation biofuels production involves mashing up biomass into a hot stew, in which the enzyme converts the cellulose fibres into a mixture of sugars.

DSM’s new enzyme comes from a fungus that evolved to do this in the steamy environment of rotting compost; it works at temperatures as high as 65°C, adding to the efficiency of the conversion process.

The second stage uses DSM’s “all you can eat” strain of yeast. It can make ethanol from sugars produced from second-generation biomass, such as xylose and arabinose, as well as the familiar glucose that is characteristic of first-generation feedstocks.

DSM aims to break the dominant position that two Danish-owned companies, Novozymes and Danisco, hold in enzymes for first-generation biofuels.

Marcel Wubbolts, director of DSM’s industrial biotechnology programme, says the market for second-generation biofuel enzymes could be worth several billion dollars a year.

Although DSM carries out most of its biofuels research and development in the Netherlands, some of the fungal enzyme work was carried out at its labs in New Jersey with a grant from the US Department of Energy.

The bio-diesel equipment has been installed at the public works facility on Sparta Highway. Fifty gallons of used cooking oil collected from area restaurants will provide 50 gallons of fuel.

“Not only will it recycle used cooking oil, and save the city substantial money on fuel costs while reducing emissions, it will help reduce blockages in our sewer lines,” Graham said.

Regular diesel fuel has recently risen to about $2.75 per gallon, while bio-diesel can be produced for roughly 80 cents per gallon, which would represent a substantial savings in fuel costs for the city, Graham said. The environmental impact would also be significant. Bio-diesel produces less carbon emissions than regular diesel, experts say.

“While less than one percent of the earth’s surface is covered by cities,” Graham said, “municipalities are responsible for 80 percent of the world’s heat-retaining greenhouse gases. This issue is about climate change, saving on energy use and dollars. The battle to tackle climate change will be won or lost in cities. That’s why Crossville wants to lead by example.”

Cooking oil put into the sewer system through dishwashing also creates blockages. Experts say even after emptying used cooking oil into a container, washing the pot or pan can still put as much as a tablespoon of oil into the sewer system. Wiping a pan clean of excess oil is recommended before washing it.

The city is taking used vegetable cooking oil from Honey’s Market and Lou Lou’s Diner in Crossville. When school is in session, the city hopes to work with the school system and collect used cooking oil from the cafeterias. Collection sites for others who would like to participate will be announced soon.

While a tablespoon per household each week may not sound like much, based on the number of households in the Crossville city limits, that would amount to about 75 fifty-five gallon drums of oil annually going into the sewer system, officials estimate.

Bio-diesel is made from cooking oil, methanol, and potassium hydroxide. The refining process creates a by-product of glycerin, an ingredient in some soaps, which can also be sold to manufacturers. The glycerin can be used for cleaning or as a natural week killer.

“The bio-diesel project will be a win-win situation on many fronts,” Graham said. “It will benefit our businesses and residents and is another step in the city’s continuing initiative to be as environmentally friendly as possible.”

Hoover, AL, a city of about 75,000, has produced over 20,000 gallons of biodiesel since March 2007, officials said.

Richard Goldstein, Partner at Nixon Peabody offered some perspective on the rules of the political game at a recent IPED solar financing event in East Palo Alto, Ca.

He said, “There’s gridlock in congress.”  Republicans are forcing “more cloture votes than ever” and cloture requires 60 votes while the Democrats have only 59.  (And the Democrats tend to have a few defectors from their own party.)  Goldstein added that there is a $13 trillion national debt with $1 trillion held by China and $800 billion held by Japan.  Foreign governments hold $5 trillion of the $13 trillion debt according to Goldstein’s figures.  Both parties see this as a huge issue in the upcoming elections and are trying to portray themselves as deficit hawks.   They are going to be less inclined to offer financial breaks to the renewable industry.

Derek Dorn, the Staff Director and Senior Counsel for Senator Bingaman (D-NM) made a few salient points on the current legislative process.  Bingaman is the Chairman of the Senate Finance Subcommittee on Energy, Natural Resources and Infrastructure although Dorn made sure to tell me that he spoke for himself.  He’s a Washington insider with a perspective that we don’t normally get from greentech CEOs and entrepreneurs.

A Brief History of Tax-Based Incenitves

Fossil fuels have received tax-based incentives since 1912.  Federal subsidies for fossil fuels in the years 2002 to 2008 were cumulatively $72 billion versus corn ethanol at $16.8 billion and all other renewables at $12.2 billion, acording to Dorn.

Expiring Energy Tax Incentives

There are significant expirations approaching. 

Section 1603 is going to expire on New Year’s Eve.  1603 is the program that issues cash grants in lieu of tax credits for renewable energy projects, a crucial incentive for financing wind and solar projects.

Sen. Maria Cantwell, D-Wash., has proposed an amendment to the pending “tax extenders bill” that would extend Section 1603 through the end of 2012.  Supporters estimate that it would generate at least 65,000 jobs in the solar sector.  The amendment would also make not-for-profit power producers eligible for the Section 1603 program.  The amendment was co-sponsored by Sens. George LeMieux, R-Fla., Dianne Feinstein, D-Calif., Debbie Stabenow, D-Mich., Jeff Merkley, D-Ore., and Ben Nelson, D-Neb.   According to Cantwell, extending the program would prevent a slow-down in the rate of project development in anticipation of its expiration.

The bigger battle, according to Dorn, is that the ethanol blender credit, ethanol tariff and the small-producer credit expires at the end of this year.  A cellulosic credit expires at the end of 2012 as well.   According to Dorn, ethanol blending costs the government $7 billion per year, more than any other renewable tax incentive.

Obviously corn states want the ethanol credit extended.  And political interests tend to want to keep farmers happy and early-voting states like Iowa placated. 

According to Dorn, small items like 1603 never come up separately, they all get on a “big train” as a vehicle.  The vehicles for 1603 could be the energy bill, the climate bill, the Spill Bill, or the “tax extenders.”  Currently there is confusion over whether the climate bill comes before or after energy bill.

California and the Energy Storage Bill

AB 2514 (the California energy storage bill) passed through the California Assembly on June 3rd and is currently making its way through the Senate. 

AB 2514 requires the development of storage procurement plans by all California utilities and was encouraged by the efforts of Ed Cazalet of MegaWatt Storage Farms.  Attorney General and Democratic gubernatorial candidate Jerry Brown and Assemblymember Nancy Skinner were involved in the passage of the bill.   AB 2514 proposes to require utilities to meet energy storage goals, just as they are now required to meet RPS requirements. 

According to Cazalet, “AB2514 has no state tax subsidy and would provide state and local sales tax and local property tax revenues in California.”

It now mandates 20 to 25 percent ethanol in all gasoline and its auto industry adapted engines to the more corrosive fuel in 1979. Ethanol now holds equal market share as gasoline and sales of cars that run on it are booming.

The U.S. Environmental Protection Agency and Energy Department are studying the potential impact of an increase of ethanol in gasoline to 15 percent.

U.S. ethanol producers say this would expand demand and improve the health of the industry, suffering from a glut of the biofuel typically made from corn in the United States.

But the U.S. Alliance of Automobile Manufacturers has lobbied against raising the blend, saying it would affect vehicle emissions, performance and durability.

Emissions are complicated as there are many gasses and particulates produced to varying degrees depending on the blend and the quality of gasoline and type of ethanol. Some are worse than others for humans and the environment.

But as for performance and durability, Brazilian engineers say local cars that run on E20-E25 gasoline are in no way inferior to their North American counterparts.

“From the technical point of view, this could be done without any difficulty (in the United States),” former Brazil Chief Executive for Ford and current Director of the Center for Automotive Studies Luiz Carlos Mello said.

He noted that U.S. automakers were instrumental in designing the 100 percent ethanol car that started rolling off Brazilian factory floors three decades ago.

“But it’s not an easy decision, for if it were just a matter of economics, they would have already made it,” he said, adding that there were broad political implications with the U.S. economy, which is heavily geared toward petroleum.

For years, some car manufacturers have been producing parts and vehicles in the United States with more corrosion-resistant metal alloys, such as stainless steel to handle higher blends of ethanol.

“I’d say that some manufacturers already can handle 15 percent ethanol, so I think they would have to do very little,” said Fernando Barata, an engineer who was instrumental in the development of Brazil’s flex-fuel car that runs on any mixture of ethanol or gasoline.

But the U.S. industry overall is likely to have to invest in the reworking their production lines, parts and testing.

“It would be impossible to speak of costs, beyond a true shot in the dark, but it could be something more or less significant,” Heymann Leite, an engineering professor at various universities in Brazil.