Biofuel's Year in Review

By Jeff St. John

If it's made from corn, it's worthy of scorn. If it's made from weeds or trash, it could be worth cash.

That, in a nutshell, sums up the course that biofuel companies' fortunes took in 2008. While makers of corn-based ethanol saw their business falter and valuations plummet, companies promising to make ethanol, biodiesel and a host of other liquid fuels from non-food sources like switchgrass, trash and algae raked in the cash.

Whether those "next-generation" biofuel companies will do as well next year is an open question, however. None have so far produced fuel in commercial volumes at prices the market can bear. And whether venture capitalists will continue to have an appetite for investing in getting them there is an open question, given the faltering global economy.

Here, then, is a quick overview of the stories that tracked the trends of the biofuel industry through 2008 – as well as a few that lay out potential future avenues of development in the quest to move past petroleum.

VeraSun Files for Bankruptcy (Oct. 31)
The woes of companies that make ethanol from corn were highlighted by the fall of the once high-flying VeraSun Energy Corp. (NYSE: VSE), which declared bankruptcy in October. VeraSun billed itself as the world's largest ethanol company, with 14 ethanol plants with a capacity to produce 1.4 billion gallons of ethanol per year -- about 14 percent of the U.S. ethanol production capacity. But, like other makers of corn-based ethanol, the company had contended with high corn prices and subsequent razor-thin margins through much of the year, and had amassed about $1.5 billion in debt.

EPA Denies Texas Ethanol Waiver (Aug. 7)
While issues of supply and demand were the main drivers in the fall of corn-based ethanol companies in 2008, politics and environmental concerns also played their part. Those complaints found their voice in Texas Gov. Rick Perry, who in April asked the EPA to cut in half a 2007 federal mandate that the nation use nine billion gallons of biofuel, arguing that the mandate had pushed up corn prices, which in turn raised the feed cost for livestock companies and affected food prices for consumers. But the U.S. Environmental Protection Agency denied Texas' request in August, contending that the requirement hasn't caused food prices to rise or harmed the economy.

BP Invests $90M in Verenium for Ethanol (Aug. 6)
While corn-based ethanol waned in investors' eyes, so-called "second-generation" biofuels rose with their promise of converting non-food crops, waste and other feedstocks to biofuel. While none had produced commercial quantities of fuel at a price the market could bear, their potential drew plenty of interest from venture capitalists, as well as their erstwhile competitors – oil companies.

The $90 million investment from British oil company BP (NYSE: BP) in Cambridge, Mass.-based Verenium (NSDQ: VRNM) exemplified that trend. The two companies agreed to jointly develop technologies and refineries to produce and sell ethanol. BP was no stranger to biofuel investment. In 2007 it gave $500 million to a consortium of research institutions led by UC Berkeley last year to develop second-generation biofuels.

Codexis Says No to IPO (Sept. 4)
Despite the allure of companies that offer biofuels made from non-food sources, the public markets proved a bad place to look for funding them. That's what led biofuel-catalyst developer Codexis to cancel its planned $100 million initial public offering in September, citing poor market conditions. Codexis was the third biofuel-related company to withdraw its IPO. While decisions like these weren't unique to biofuel companies, they reflected an overall stumbling block for venture capital-backed green technology companies – with the economy entering a freefall, the IPO exit door was all but closed by year's end.

U.S. Won't Meet its own Biofuel Mandate (Dec. 17)
The 2008 Energy Independence and Security Act set a goal of producing 36 billion gallons of biofuels by 2022 – a mandate that was meant to give a big boost to biofuel makers. But a December report from the U.S. Energy Information Administration cast doubt on that goal, saying the nation will probably only be able to produce 30 billion gallons by that deadline. The bad news didn't apply only to makers of corn-based ethanol. A recent survey by investment firm ThinkEquity indicates that cellulosic ethanol companies will be able to supply only 28.5 million gallons in 2010, short of the government's100 million gallon goal (see Consumers to Pick Up Tab for Off-Target Cellulosic Ethanol Industry).

Algae Biofuel Investments Explode (Sept. 18)
While cellulosic ethanol makers eye switchgrass, corncobs, municipal waste and a host of other non-food feedstocks, it was algae that caught the fancy of the venture capital community in 2008. Companies promising to make biofuel from algae had raised a record-breaking $179.5 million as of September, according to the Cleantech Group.

GreenFuel Farms 100 Square Meters of Algae (Oct. 21)
The aspirations of algae-to-biofuel companies – and the challenges facing them – can be seen in the ups and downs of GreenFuel Technologies Corp., one of the oldest algae-to-biofuel companies out there. In October, GreenFuel announced its first commercial project, a $92 million, 100-hectare algae farm in Spain which is expected to be complete by 2011. GreenFuel has seen some tough times, however, including layoffs and executive change.

Fueling With Diesel-Producing Fungi (Nov. 4)
Amid the confusing welter of pathways being promised for future biofuel production, new research kept up its pace, and yielded some interesting new potential candidates for the future. One of them is Gliocladium roseum, a fungus that dwells inside the branches of trees in the Patagonian rain forest. Six years after first collecting samples of the fungus, Gary Strobel, a plant-sciences professor at Montana State University, announced that he had discovered the fungus made hydrocarbons and hydrocarbon derivatives that are found in diesel fuel when placed in a low-oxygen environment.

Ethanol, Farm Industry Split on Candidates (Nov. 3)
It would be remiss of us to overlook the importance of politics on the biofuels industry's development – particularly in an election year. Luckily for the biofuel advocates Greentech Media spoke to before the 2008 presidential election, their favorite candidate won. President-elect Barack Obama promised during his campaign to push for the country by 2030 to use 60 billion gallons of "advanced" biofuels. He pledged to require that all new vehicles sold in the country be "flex-fuel" vehicles, able to use fuel containing mostly biofuel, by the end of his first term. And he called for a national low-carbon fuel standard that could be a boon to the industry.

Comments

[Moon Kil Woong:]

Well if things get really bad i guess you can convert your waste vegetable oil into gas. You can google it. Many people write their own way of doing the conversion. Just make sure to clean your engine regularly afterwards because such fuel tends to gunk up the engine, etc.

The point being, it is just chemistry, not brain science. The issue is really cost. Changing all food into liquid to run an engine isn't necessarily a great idea, esp. when grocery prices rise because of it. Japan has been doing well just figuring out how to make engines run more effectively. If GM and Chrysler did the same they wouldn't be in as much of a mess as they are now.

So I guess what matters more is what you don't invest in than what you do. Investing in companies that don't research efficiency is a bad investment. Investment in companies that do may be a good one or may be a dud like VeraSun that was trying more to get the government to force States to force people to use it's over-priced product than develop a truly financially viable bio-fuel model.

Switchgrass and algae production are attractive because they can make use of land that is not arable, that is land that isn't already in use producing things we eat. Eco friendly doesn't always mean great or sensible solutions. It will be interesting to see which ones win out.

2008 Dec 25 02:19 AM

[William Taylor:]

Jhatropa! Why no mention of Jhatropa. Jeff? The company D1oils in England, although a spectacular failure for any investor, is a leading researcher and soon to be producer of this miracle product that grows in the worst non food stock soil and produces the highest fuel content from its seeds of any biofuel. With a 30 year plant lifespan I would think money would be flowing to it. I know BP took a stake in it as did the the government of Saudi Arabia.

No thoughts on this topic, Jeff?

2008 Dec 25 10:14 AM

[Vegasjoe:]

Corn based ethanol works fine, especially with new seed generation from Monsanto, et al....But, sugar producers are laying off workers, and it is 3-5X more efficient. Obama should eliminate the tariff on sugar based ethanol, and the current subsidy of 45 cents per gallon should NEVER go to the blenders, if the blenders are directly or indirectly big oil, becasue they re conflicted. Consumers should get the credit! If you run a car of flex fuel with corn based ethanol, the credit should go to consumers, creating an incentive to go green, and indirectly bail out Detroit!

2008 Dec 25 10:40 AM

[je:]

Isn't NBF a good and useful concept.

2008 Dec 25 01:20 PM

[Erich J Knight:]

I thought these updates and endorsements may interest you,

Senator / Secretary of Interior Ken Salazar has done the most to nurse this biofuels system in his Biochar provisions in the 07 & 08 farm bill,
www.biochar-internatio...

Below are my current news & Links to major developments;


Cheers,
Erich J. Knight
540 289 9750



Biochar, the modern version of an ancient Amazonian agricultural practice called Terra Preta (black earth), is gaining widespread credibility as a way to address world hunger, climate change, rural poverty, deforestation, and energy shortages… SIMULTANEOUSLY!

The IBI Announces Success in Having Biochar Considered as a Climate Change Mitigation and Adaptation Tool;

POZNAN, Poland, December 10, 2008 - The International Biochar Initiative (IBI) announces that the United Nations Convention to Combat Desertification (UNCCD) has submitted a proposal to include biochar as a mitigation and adaptation technology to be considered in the post-2012-Copenhagen agenda of the UN Framework Convention on Climate Change (UNFCCC). A copy of the proposal is posted on the IBI website at
The International Biochar Initiative (IBI).

Modern Pyrolysis of biomass is a process for Carbon Negative Bio fuels, massive Carbon sequestration,10X Lower Methane & N2O soil emissions, and 3X Fertility Too.
Every 1 ton of Biomass yields 1/3 ton Charcoal for soil Sequestration, Bio-Gas & Bio-oil fuels, so is a totally virtuous, carbon negative energy cycle.

Charles Mann ("1491") in the Sept. National Geographic has a wonderful soils article which places Terra Preta / Biochar soils center stage.

Please put this (soil) bug in your colleague's ears. These issues need to gain traction among all the various disciplines who have an iron in this fire.
ngm.nationalgeographic...


I also have been corresponding with Michael Pollan ( NYT Food Columnist, Author ) to do a follow up story.

Since the NGM cover reads "WHERE FOOD BEGINS" , I thought this would be right down his alley and focus more attention on Mann's work.
It's what Mann hasn't covered that I thought should interest any writer as a follow up article;

Biochar data base;
terrapreta.bioenergyli...

NASA's Dr. James Hansen Global warming solutions paper and letter to the G-8 conference, placing Biochar / Land management the central technology for carbon negative energy systems.
arxiv.org/ftp/arxiv/pa...

The many new university programs & field studies, in temperate soils; Cornell, ISU, U of H, U of GA, Virginia Tech, JMU, New Zealand and Australia.

Glomalin's role in soil tilth, fertility & basis for the soil food web in Terra Preta soils.

Given the current "Crisis" atmosphere concerning energy, soil sustainability, food vs. Biofuels, and Climate Change what other subject addresses them all?

This is a Nano technology for the soil that represents the most comprehensive, low cost, and productive approach to long term stewardship and sustainability.

Carbon to the Soil, the only ubiquitous and economic place to put it.

In a recent National Public Radio interview, Michael Pollan talks about how he was approached by a Democratic party staffer about his New York Times article, The"Farmer & an open letter to the next president concerning U.S. agriculture/energy policy. The staffer wanted Pollan to summarize the article into a page or two to get it into the hands of Barack Obama. Pollan declined, saying that if he could have said everything that needed to be said in two pages, he wouldn't have written 8000 words.

Michael Pollan is well briefed about Biochar technology, but did not include it in his "Farmer & Chief" article to President Obama, (Which he did read & cited in a speech) but I'm sure Biochar will be his 8001th word to him.

Erich
540 289 9750




Total CO2 Equivalence:
Once a commercial bagged soil amendment product, every suburban household can do it,
The label can tell them of their contribution, a 40# bag = 150# CO2 = 160 bags / year to cover my personal CO2 emissions. ( 20,000 #/yr , 1/2 Average )
www.epa.gov/climatecha...

But that is just the Carbon!
I have yet to find a total CO2 equivalent number taking consideration against some average field N2O & CH4 emissions. The New Zealand work shows 10X reductions.If biochar proves to be effective at reducing nutrient run-off from agricultural soils, then there will accordingly be a reduction in downstream N2O emissions.

This ACS study implicates soil structure as main connection to N2O soil emissions;
a-c-s.confex.com/crops...


Biochar Studies at ACS Huston meeting;

578-I: a-c-s.confex.com/crops...

579-II a-c-s.confex.com/crops...

665 - III. a-c-s.confex.com/crops...

666-IV a-c-s.confex.com/crops...

Most all this work corroborates char soil dynamics we have seen so far . The soil GHG emissions work showing increased CO2 , also speculates that this CO2 has to get through the hungry plants above before becoming a GHG.
The SOM, MYC& Microbes, N2O (soil structure), CH4 , nutrient holding , Nitrogen shock, humic compound conditioning, absorbing of herbicides all pretty much what we expected to hear.



Company News & EU Certification

Below is an important hurtle that 3R AGROCARBON has overcome in certification in the EU. Given that their standards are set much higher than even organic certification in the US, this work should smooth any bureaucratic hurtles we may face.

EU Permit Authority - 4 years tests
Subject: Fwd: [biochar] Re: GOOD NEWS: EU Permit Authority - 4 years tests successfully completed


Doses: 400 kg / ha – 1000 kg / ha at different horticultural cultivars

Plant height Increase 141 % versus control
Picking yield Increase 630 % versus control
Picking fruit Increase 650 % versus control
Total yield Increase 202 % versus control
Total piece of fruit Increase 171 % versus control
Fruit weight Increase 118 % versus control

There is list of the additional beneficial effects of the 3R FORMULATED BIOCHAREU DOSSIER for permit administration and summary of the results from 4 different Authorities who executed different test programme is under construction
I suggest these independent and accredited EU relevant Authority permit field tests results will support the further development of the biochar application systems on international level, and providing case evidence, that properly made and formulated (plant and/or animal biomass based) biochars can meet the modern environmental - agricultural - human health inspection standards and norm, while supporting the knowledge based economical development.

We work further on to expand not only in the EU but in the USA as well. My Cincinnati large scale carbonization project is progressing, hopefully the first industrial scale 3R clean coal - carbon plant will be ready in 2009.

Sincerely yours: Edward Someus (environmental engineer)
HOMEPAGE 3R AGROCARBON: www.3ragrocarbon.com

www.terrenum.net
EMAIL 1: [e-mail]
EMAIL 2: [e-mail]...


Also:

October 28, 2008

U.S. Department of Agriculture to Evaluate CQuest™ Biochar

Non-Funded Cooperative Agreement Signed

The objective of the biochar research is to quantify the effects of amending soils with CQuest™ Biochar on crop productivity, soil quality, carbon sequestration and water quality. Field trials will involve incorporation of biochar in replicated field plots and on-farm strip trials with monitoring of crop yields, soil quality, water quality, emissions of greenhouse gasses, and soil carbon sequestration. Laboratory studies will involve amending soils with biochar and quantifying changes in soil quality and microbial activity during incubations.

Biochar will be shipped from Dynamotive's West Lorne facility to Agricultural Research Service (ARS) locations in Iowa, South Carolina, Idaho, Washington, and other ARS locations. Initial results are expected during the 2009 growing season.



www.dynamotive.com/en/...

2008 Dec 25 02:24 PM