Biofuels at the Crossroads

March 21, 2011

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by Jim Lane (Biofuels Digest) ...Good news: Advances in processing technology In the past year, we’ve seen costs coming down across the line. Last spring, new cellulosic ethanol enzyme collections appeared from the likes of Novozymes and Genencor, with the prospect on the horizon for sub-fifty cent per gallon enzymatic hydrolysis and fermentation.
...In all, from every corner this year, costs have been coming down dramatically, and with oil prices hitting $111 per barrel for benchmark Brent crude, parity on an unsubsidized basis with fossil-based fuels is coming closer and closer to reality.

Bad news: The ever-shifting sands in policy-maker land By contrast, the steady drive towards commercial-scale and pricing was matched bot by steady end-game resolve by national governments, but rather we saw a herky-jerky inconsistency in national policy that freaked out the investment community right across the landscape. ...

Good news: High-value chemicals now, big-value fuels later....“Why make a $2 fuel? Because no one cares if you make a $5 chemical,” answers Lignol CTO Colin South. “If you want to have some small island of profit and you can make a $5 chemical, well that is excellent. But what the world is focused on is the problem of transportation fuels. It is true that policymakers are, in these cash-poor days, offering more enthusiasm than tangible support, but the world has turned its attention to this sector because of the opportunities to change the equation for liquid fuels.” ...

Bad News: Myths and myth-makers abound, and are growing so fast you’d think they were in a fermenter It is repeated so often by so many people in so many quarters that “the US uses 32 percent of its corn crop for ethanol” that you really have to remind yourself that the statement is completely false.

The true statement is that 32 percent of the US corn crop is delivered to integrated refineries that make feed and fuel, but that is a completely different thing. For every ton of ethanol, they produce two tons of animal feed, ...

Good news: The opening of the IPO markets Starting with the IPO that no one thought would get across the line – Codexis, which raised more than $80 million in its spring IPO, the gates finally re-opened for public finance of biofuels companies. ...

Bad News: Project finance markets still closed Before we break out the champagne, we want to note that project finance markets are still closed to biofuels, on the whole, with project after project reporting the difficulty in obtaining loan guarantees to assist in mitigating the risk of first-of-kind technologies, along with the known problem of obtaining sufficiently strong feedstock supply and off-take contracts. ...

So there we have it. Good news and bad news – challenges and opportunities. It has been an amazing year. Indeed we are at the crossroads, where the stakeholders in emissions, energy security and economic development face the choice on taking advantage of all the positives, or focusing on the negatives. READ MORE

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Biofuels at the Crossroads

Good news: The opening of the IPO markets Starting with the IPO that no one thought would get across the line – Codexis, which raised more than $80 million in its spring IPO, the gates finally re-opened for public finance of biofuels companies. ...

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