For a number of years, this now old and outdated, but very useful chart has been in circulation in energy circles, mapping the supply of energy to the world by looking not at prices, but at production costs. For one thing, it goes a long way to explaining why the price of oil can tumble so quickly when there is a fall off in demand, and explains why OPEC is troubled by unconventional oil in a way it is not so bothered by other energy sources such as renewable fuels.

Renewables not only have been traditionally at the expensive end of the curve, the supply has been generally quite limited when we look at total global demand. Conversely, shale oils uncovered through US fracking operations — to use another example — are able to supply lots of oil to meet world demand at prices well below the OPEC target, and they can also be competitive with some of the more expensive conventional oils. So, they bite into market share and also price.

But today, the cost of production has changed, dramatically. You can see it in this wonderful data set that Bruce Babcock and the Center for Agricultural and Rural Development at Iowa State have maintained for many years. To make a fair comparison, we have to take into account the refining cost of making gasoline — we need to compare finished ethanol and finished gasoline, not compare corn to gasoline or ethanol to crude oil.

The EIA has this data from , here. That perception is not accurate for the net cost of production of ethanol in the US after considering the value of animal feed byproducts DGrain and corn oil and CO2 production for the human food market. Thanks to the pricing data from our friends at PFL, we see that the D6 RIN is trading at 41 cents per gallon. All the same math applies in the world of biodiesel, but there are different data points.

But biodiesel RIN s are more valuable, and close the gap a little. When we look at the California market and its Low Carbon Fuel Standard and Oregon, too, which also has an LCFS we are looking at a different animal, since the carbon value is added on top of RIN credit values. For biodiesel, the credit bites harder because biodiesel really, really reduces carbon.

Which tells you two things:. The renewable fuel credit markets work with remarkable efficiency, after just a few years in operation. The credits reach almost exactly where they should, because a credit should in some ways make a mandate obsolete, it should incentivize a market player exactly to the point where they have a financial gain from deploying a renewable fuel.

In California at least, a remarkable threshold has in fact been reached. In the actual markets that exist — carbon and fuel markets — ethanol and biodiesel have achieved market parity.

Now, you can argue all night that carbon markets are not free markets — they are created by government fiat. And, you can argue all night that fuel markets are not free markets — they are created by cartel fiat.

But they are markets, and they are the markets we have. But they are the markets we have, and in the markets we really have, we can say that markets in California are telling us this:. You can make more money producing ethanol than producing gasoline from petroleum, according to our math. And investors might take note — because making money is generally what investors are trying to accomplish in the petroleum markets.

So, why exclude those? Posted by Guest Contributor at Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. Posted by Debra Fiakas at Darling Ingredients is included in the Biofuel Group of the Beach Boys Index of alternative energy developers and producers.

Crystal Equity Research has a buy rating on Darling Ingredients and a Hold rating on FutureFuel. The USDA late on Thursday released its annual spring plantings report and it was a shocker. Corn acres up 5 million, wheat down 5 million. Despite high corn ending stocks from last year. Prices are sure to go low. But how much good news, that will only become clearer through the day.

Meanwhile, the dozens of Bloomberg TV screens and the overhead pricing screens on B biodiesel, fossil prices and key REG inputs such as virgin vegetable oils — they are spitting out the numbers, updating nearly every second.

Someone is moving inventory aggressively. The team pauses, takes it in, then the rat-a-tat-tat resumes. Minnesota, California, a terminal here, a customer there. The company has become a little ADM, rather than a big Amyris or TerraVia. You see the trading desks at the bigger ethanol operations like Green Plains — relatively massive and certainly lively trading ops.

It used to be a company you could safely describe as a biodiesel company, just as you could safely think about biodiesel as a market for the soybean oil byproduct of a soymeal crush. The problem with biodiesel companies, for a long time, has been the volatility of raw material prices and energy prices. You can get crushed. Favorable economic winds can turn on you lickety-split, leaving you with upside down economics high input, low output prices and working capital that burns faster than firecrackers on the 4th of July.

More than a decade ago, biodiesel was an answer to a problem for soybean growers. Their soymeal had been approved and successfully trialed as livestock feed, and orders were up, up, up. But throw in some methanol and a sodium-based catalyst under heat and pressure, and you break the oil molecule into pure B biodiesel and a glycerine by-product. The technology is complex enough, but costs less than a dollar a gallon for the capex.

Then, soybean oil was trading at something like cents a pound, or around dollar a gallon for the raw materials in a gallon of biodiesel, and energy prices were far higher.

And an industry was born. Back then, there were a lot of companies that wanted to become what REG has become today. A multi-plant, multi-feedstock, multi-product producer with operations across the US and now reaching into Europe. Plenty of producers went idle.

This takes free fatty acids, which are difficult to process, out of alternative feedstocks like fish oil, choice white grease, yellow grease, brown grease, and inedible corn oil. The technology allowed REG to manage its input costs through supply diversification — and with a superior price structure, came a series of mergers and acquisitions that brough the company to 11 plants today, worldwide. The company is diversifying everywhere you look. The afore-mentioned raw materials.

Through the recent acquisition of LS9 now REG Life Sciences and Dynamic Fuels now REG Geismar , the company has diversified on the product side. Meanwhile, Dynamic Fuels is a going concern, although two fires since acquisition have set back the commercial schedule. With employees, the expectation is the kind of hierarchy that begins to stifle innovation. But REG keeps it flat — person teams at individual plants, divided into 4 shifts of people.

Around at HQ, most of whom are in trading or financial operations. There are just a handful at the VP level, and decision-making is quick. Good outlook for biobased. Biofuels companies are not Wall Street darlings on the equity side. From our POV, we wonder at that. And is making money in a down market, and building market share. Could be something in the Q1 earnings call. Expansion in life sciences.

The lab expansion will include the installation of fermentation equipment and significant analytical capabilities. Upon completion, full-time positions will be added to focus on commercialization and integration of products to be developed by REG in South San Francisco into production and delivery platforms. Building the capital stack.

We are very grateful to Bankers Trust Company for seeing the strength of this part of our business and committing these funds to allow us to further grow. Over in the world of materials and products, we see a rush to divest. Consider, for example, DowDupont, which will emerge as three companies in distinct segments, out of two diversified companies.

So, companies like REG are going the other way, diversifying. Back then, one product, heading for many. One input, oils — now oils and sugars, plus a diversified set of waste oils.

Back then, one technology, transesterification. Now, a suite of them ranging from hydrotreating to fermentation. So, we see it as a little ADM , with bigger margins and growth prospects for some time to come, well positioned. Inherently more diversified than a TerraVia SZYM or Amyris AMRS on the technology and raw materials side.

Meanwhile, we note that ADM is trading at almost exactly the same price-to-EBITDA ratio as REG, and on a price-to-revenues basis.

So, how big is big enough where REG will get a bump based on a superior growth outlook? In Iowa, ExxonMobil XOM and Renewable Energy Group REGI have agreed to jointly study the production of biodiesel by fermenting renewable cellulosic sugars from sources such as agricultural waste. REG has developed a patented technology that uses microbes to convert sugars to biodiesel in a one-step fermentation process similar to ethanol manufacturing.

The ExxonMobil and REG Life Sciences research will focus on using sugars from non-food sources. Terms were not disclosed. Readers will remember the technology unit, branded as LS9 before the REG acquisition in LS9 focused on biodiesel from its earliest days in — in fact, that was the sole product in development until a detergent alcohol was put into development in Through the research, the two companies said they will address the challenge of how to ferment real-world renewable cellulosic sugars, which contain multiple types of sugars, including glucose and xylose, but also impurities that can inhibit fermentation.

The work now is to port that technology to cellulosic sugars, something which there has been DOE-sponsored work on in the past, some of which was announced publicly. In our work, we do very concentrated fermentations and we like a very concentrated sugar source.

So, optimizing those sugar streams, and understanding the impurities is an important part f the work going on now. The impurities depend on the source. They could include acids from the hydrolysis, or ash content. Exxon has been quiet of late in renewables, though they ran some algae TV ads around the time of COP Back in the days before REG acquired LS9 and before the cellulosic sugar path was discovered, Chevron became an investor in The basic science, said LS9 at the time, was completed — it was a matter of yield and scale.

The technology has been significantly de-risked. Given that there are seven pounds of oil to a gallon, the cost of US sugar makes fuel production completely out of the question for now, and will push bioprocessors towards the higher-end chemical and bio-based products for the near term. In early , working with REG Life Sciences, they came up with a way to utilize cellulosic sugars.

This breakthrough enables the production of advanced hydrocarbon fuels and chemicals in a single fermentation process that does not require additional chemical transformations. Or, possibly in its new operating sphere of Eastern Europe. Specifically, biodiesel qualifies under the Renewable Fuel Standard as a biomass-based diesel fuel; it qualifies for the biodiesel tax credit, if that is extended beyond ; it conceivably qualifies under RFS relating to the sale of cellulosic waiver credits, as a cellulosic fuel.

If produced in California, it would qualify under the California Low Carbon Fuel Standard. California would welcome this fuel, I would expect, and we expect it to fit the Low Carbon Fuel Standard very well, though again, the lifecycle analysis has yet to be completed.

Well, REG Life Sciences has IP in that area too. So, we are left with the chase for yield. No more so than with cellulosics, where the sugars are only a fraction of the biomass and the transportation and logistics penalties for low yields add up quickly. If the results are positive, we can then take the next step and explore the potential to expand our efforts and explore scalability. But the VIP-filled sedans, kicking up dust as they head northwest from the lake, are greeted primarily by dumbfounded cows and bulls that are still wondering, to the extent that they wonder, how yellow dragon disease took the citrus trees away, and where all the workers went in Okeechobee County, why so many Family Dollar thrift shops have popped up, and why so many people are using boards in place of window glass.

After all, the cows see all the Mercedes sweeping from the rich coastal enclaves like Jupiter and Palm Beach, en route to one of the several appealing hunting clubs that dot the region, or the golf courses of the west side. Do they wonder how the rich got so rich, and the poor so poor, in such a hurry, down in Florida? To the extent that bulls consider macroeconomics, in between meals in the pasture as the cars go by.

A wonder of science it is — a technology that takes in sugars, and through microbial fermentation directly converts the material into a programmable array of products, including biodiesel, jet fuel, diesel, or surfactant alcohols, just for starters. Biodiesel and its established market, and legion of fans. In Washington, the U. Environmental Protection Agency announced final volume requirements under the Renewable Fuel Standard program today for the years , and , and final volume requirements for biomass-based diesel for to This rule finalizes higher volumes of renewable fuel than the levels EPA proposed in June, boosting renewable production and providing support for robust, achievable growth of the biofuels industry.

Our standards provide for ambitious, achievable growth. The final standard for cellulosic biofuel — the fuel with the lowest carbon emissions — is nearly million gallons, or 7 times more, than the market produced in The final standard for advanced biofuel is nearly 1 billion gallons, or 35 percent, higher than the actual volumes; the total renewable standard requires growth from to of more than 1.

Biodiesel standards grow steadily over the next several years, increasing every year to reach 2 billion gallons by The RFS, established by Congress, requires EPA to set annual volume requirements for four categories of biofuels.

The final rule considered more than , public comments, and relied on the latest, most accurate data available. EPA finalized and standards at levels that reflect the actual amount of domestic biofuel used in those years, and standards for and for biodiesel that represent significant growth over historical levels. Well, you might think to yourself, why is the EPA finalizing a mandate for and n November Well, they were two years late on the mandate and a year late for But they are on time for Likely, someone is going to sue the EPA.

First of all, the EPA increased the volumes from the spring proposal, after receivging , comments. However, much of that stems from correcting an accounting error in the original proposal, and because rising gasoline consumptino increases the available pool for E10 ethanol blends. Critics say the EPA and Obama Administration have caved in to Big Oil on this one. In July, we asked the Environmental Protection Agency to restore the corn ethanol renewable volume obligation to comply with the Renewable Fuel Standard as passed by Congress and signed into law.

Because of it, our economy is stronger, we are more energy independent, and our air is cleaner. We should be strengthening our commitment to renewable fuels, not backing down. We will fight to protect the rights of farmers and consumers and hold the EPA accountable.

It may not be all we had hoped for but it will go a long way toward getting the U. We certainly think the biodiesel and overall Advanced Biofuel standards could and should have been higher. The production capacity is there, and we have surplus fats and oils that can be put to good use. To date, BIO member companies have invested billions of dollars to develop first-of-a-kind advanced and cellulosic biofuel production facilities. Unfortunately, this final rule exacerbates the problem.

The delay increased U. As the United States enters negotiations with the rest of the world to limit greenhouse gas emissions, EPA is putting in place an RFS rule that will sacrifice achievable reductions of emissions in the transportation sector. This backsliding on transportation emissions — which account for 30 percent of all U. This final rule makes it possible to drive the growth of higher ethanol blends through the so-called blend wall, giving consumers choices at the pump, such as low-cost E Of particular concern is that by using such a waiver, the oil industry is being rewarded for its unwillingness to follow the law and invest in infrastructure to move toward cleaner, renewable fuel, which sets a dangerous precedent for the future of the program.

The uncertainty this waiver will create risks sending investment in the next generation of renewable fuel overseas just as this new, homegrown industry is taking off. When EPA released its proposed RFS rule in May, the agency claimed it was attempting to get the program back on track.

It will deepen uncertainty in the marketplace and thus chill investment in second-generation biofuels. Unlike Big Oil, the ethanol industry does not receive billions in tax subsidies and the RFS is our only means of accessing a marketplace that is overwhelmingly and unfairly dominated by the petroleum industry.

Data shows that EPA, in its initial RFS proposal, understated the likely market for E85 and non-ethanol conventional biofuels in by at least million gallons. The data suggests there will be at least The Department of Energy, too, works hard to complete biofuel research on higher ethanol blends and infrastructure that is moving this industry forward.

Why is EPA so out of step? RFA recently commissioned a study which concluded that biofuels consumed under the RFS have reduced U. For context, that is the equivalent of avoiding carbon dioxide emissions from 74 million passenger cars. How can the president speak credibly about the need to address climate change on a global stage when his EPA is failing to fully implement the most potent and proven weapon to combat climate change in his own backyard?

In the future, we need to see a stronger and more consistent commitment to renewable fuel from Washington if we are ever going to realize the true potential of renewable fuels, including the development of cellulosic ethanol.

That counts for something, predominantly in markets already inclined to offer consumers more renewable fuels. But it is frustrating that the Administration missed this opportunity to fix two waiver issues that are undercutting U.

Waivers are absolutely critical to U. We do not expect this reinterpretation to stand up in court; but regardless, it is the exact type of policy bait and switch that chills investor confidence in the United States. And while initial discussions with EPA have been productive, we must also move quickly to address waiver issues in the cellulosic pool, which currently allow the oil industry to buy year-end waivers to avoid buying cellulosic gallons.

The Obama Administration has supported advanced biofuel development, and certainly the programs administered by the U. The Council will continue to work with the Administration and stakeholders to get the RFS back on track. We are not there yet with this rule, but we are confident that we can continue to improve the program in Congress needs to strengthen the RFS to help focus and expedite the production of advanced biofuels.

Outdated definitions, cellulosic waivers, as well as overall program uncertainty have created significant barriers to entry for the advanced and cellulosic industry. Given all the President hopes to accomplish at the international climate talks which begin in Paris today, it is inconsistent for the Administration to unravel the most effective policy at their disposal to support low carbon fuels.

Congress did not authorize EPA to adjust volumes based on the E10 blend wall. ACE is strongly committed to ensuring consumers have access to higher blends of ethanol and we will explore all options at our disposal to achieve that goal with this Administration and the next. The agency consistently misses deadlines and sets unrealistic levels for cellulosic ethanol, which is expensive and not commercially viable. This gross mismanagement is just one more reason to scrap the entire mandate, and why anything short of full repeal would just make the RFS worse.

The mandate distorts markets, raises gasoline prices, and benefits a limited few at the expense of all Americans. Partial repeal would only make the mandate worse by moving it closer to a California-style Low Carbon Fuel Standard, causing Americans to pay more at the pump.

Full repeal is the only option for those concerned about the interests of all Americans, and not just the self-interests of the biofuel industry and its lobbyists.

We have been challenging EPA for years to take actions that would protect public health, lessen our dependence on petroleum, and reduce CO2 and other harmful emissions. The EPA has rejected us at every turn. We can move well beyond that and we will not let EPA and its faulty, inaccurate models define our value and limit our growth.

UAI has identified a number of steps to provide access to the market, all of which will improve fuel quality and protect public health. Specifically, UAI has called for EPA to:. According to the latest estimates, Brazil is on track to produce nearly six percent more sugarcane ethanol this year compared to — an additional , gallons. Under the right market conditions, Brazil has the capacity to produce up to two billion additional gallons of this advanced biofuel for export according to installed capacity figures.

Propel debuted Diesel HPR at 18 locations in Northern California in March. Diesel HPR is a low-carbon, renewable diesel fuel that meets petroleum diesel specifications and can be used in any diesel engine. F ] NEXBTL renewable diesel, Diesel HPR is designated as ASTM D, the standard for all ultra-low sulfur diesel fuel in the U. For one, everyday low prices. Interested to learn more about that fuel, and the technology behind it? Our 8-Slide Guide to Neste is here.

According to the U. In addition to new retail locations, Propel has launched Diesel HPR commercial and bulk availability for business and government fleets statewide.

A complete list of locations is also available here. Customer testimonials are available here. Nichols, Chair of the California Air Resources Board. The fully-operational million gallon nameplate capacity biorefinery will be renamed REG Grays Harbor.

The facility includes 18 million gallons of storage capacity and a terminal that can accommodate feedstock intake and fuel delivery on deep-water PANAMAX class vessels as well as possessing significant rail and truck transport capability. Closing is subject to satisfaction of customary closing conditions. Our 5-Minute Guide to REG is here. We already sell into these markets as they have responded to the call for more clean, advanced biofuels through low carbon fuel standards.

This will enable REG to be more efficient and timely in our delivery and improve our supply assurance. Umpqua Bank officials welcomed the deal. In Washington, the EPA released its proposed standards for , , and and volumes for renewable fuels. The EPA also released a proposed standard for biomass-based diesel.

Yet, while attracting significant industry criticism on volumes, the EPA won some cautious praise for cautiously advancing renewable fuels targets for EPA has also considered the ability of the market to respond to the applicable standards by producing changes in production, infrastructure, and relative pricing to boost the use of renewable fuels. In particular, the proposed volumes would ensure continued growth in advanced biofuels, which have a lower greenhouse gas emissions profile than conventional biofuels.

EPA is also proposing to increase the required volume of biomass-based diesel in , , and while maintaining the opportunity for growth in other advanced biofuels that is needed over the long term. However, EPA recognizes that the statutory volume targets were intended to be ambitious; Congress set targets that envisioned growth at a pace that far exceeded historical growth rates.

Congress clearly intended the RFS program to incentivize changes that would be unlikely to occur absent the RFS program. The proposed volumes would require significant growth in renewable fuel production and use over historical levels.

EPA believes the proposed standards to be ambitious but within reach of a responsive marketplace. The practical goal for the EPA is not to use the RFS2 renewable fuels schedules as a driver to produce investment in capacity-building or infrastructure for distribution. Rather, the EPA opts for a more passive role of providing a market for those capacities that are built based on incremental, if any, changes in infrastructure.

EPA wrote in In its own way, the EPA is signaling that it believes that the original mandates were set, as volumetric rather than percentage standards, at a time when it was believed that the overall gasoline market would be much larger. The authority of EPA to waive down cellulosic mandates in unquestioned, in the absence of production capacity — but their authority to waive down renewable fuel standard obligations in the absence of infrastructure being deployed is bound to suggest to incumbents that the best way to prevent renewable fuels is to ensure that there is no investment in distribution.

The fear — rightly or wrongly — is that the advanced pool will be drowned in low-cost, imported ethanol that qualifies for the advanced biofuels pool — and exacerbates the blendwall issue that it sees in the marketplace.

So, they have increased the advanced pool, but kept it quite close to the biobased diesel volumes. RFS2 is based in production targeting, but it is ultimately about requiring distribution. The renewable fuels industry is taking the view that the E10 blendwall issue was well understood, at a technical level, by Congress when they passed the EISA Act — and that the law places the onus on the conventional fuel industry to develop distribution solutions, so long as the production is there.

Well, the production is there. The conventional fuels industry did not develop the distribution solutions, and the EPA is waiving the obligation.

To the renewable fuels industry, it looks like rewarding the oil industry for doing nothing. And stranding renewable fuels capacity that was built in reliance on Congress and RFS2 to provide a market. Congress gave every indication that they would expect rising RIN prices would compel obligated parties to find distribution solutions. The RFS was designed by Congress to tear down the so-called blendwall by providing a market floor for biofuels that would enable us to attract capital for construction of new biorefineries and commercialization of advanced technologies.

Instead, EPA is helping the oil industry build the blendwall to keep advanced biofuels out of the market. Just as advanced biofuel companies began to successfully commercialize new technologies, EPA proposed to turn the RFS methodology upside down. EPA continues to assert authority under the general waiver provision to reduce biofuel volumes based on available infrastructure. This is a point that will have to be litigated. It goes against Congressional intent.

EPA has proposed higher volumes for advanced biofuels, still below the statutory volumes, but maintained a methodology that discourages investment in the industry. That will likely undercut future production, requiring additional cuts to volumes in future. However, we continue to believe that the cellulosic waiver credit and other areas require legislative reform.

The Coming $200 Billion Stock Market Wealth Transfer

We look forward to continuing to work with Congress and the Administration to reform and strengthen the RFS so it can deliver on the promise of next-generation renewable fuels.

But the frustrating fact is the Agency continues to misunderstand the clear intent of the statute — to drive innovation in both ethanol production and ethanol marketing. By adopting the oil company narrative regarding the ability of the market to effectively distribute increasing volumes of renewable fuels, rather than putting the RFS back on track, the Agency has created its own slower, more costly, and ultimately diminished track for renewable fuels in this country.

EPA successfully enforced a The industry produced There is no reason to promulgate an RVO rule that takes us backward. All it will do is result in an ever-increasing supply of renewable fuel credits RINs that will further discourage private sector investment in infrastructure and technology. That is not what the statute intended. I want to thank Administrator McCarthy and Secretary Vilsack for restoring growth to the program and for their commitment to renewable fuels.

That is an incredible achievement, and we will build on that success under the proposal the EPA released today. As expected, proposed volumes for the RFS largely reflect actual use. The Agency intends for renewable fuel use to increase from to Earlier this week the U. The majority of cars on the road can use E We have sincere concerns that these proposed numbers are not moving forward to the degree that Congress had intended for the RFS.

Everyone in Congress, as well as all parties in the renewables and oil industry, knew when this legislation was debated and passed into law that the only way the RFS goals could be met was by introducing higher blends into the market moving forward. We will continue to analyze and review these proposals for , and Furthermore, Growth Energy will file exhaustive comments with EPA.

Just as we successfully commented on the original RVO proposal by EPA, which ultimately forced EPA to reconsider their initial flawed rule, we are confident that our forthcoming comments will highlight the changes that are necessary to meet the goals of the RFS. EPA significantly reduces target volumes for advanced biofuels below Congressionally mandated levels, we are pleased to see growing requirements for advanced biofuels in and This leaves the door open for continued American access to sugarcane ethanol, one of the cleanest and most commercially ready advanced biofuels available today.

This advanced biofuel from an American ally plays a modest but important role supplying the United States with clean renewable fuel. For the past three years, more than one billion gallons of sugarcane biofuel imported from Brazil flowed into American vehicles.

During this time, sugarcane ethanol has comprised only 2 percent of all renewable fuel consumed by Americans, but has provided nearly 15 percent of the U. Likewise, Brazil will continue to be a strong, dependable partner helping America meet its clean energy goals.

Agriculture has taken incredible strides in recent years, growing yields through efficient farming practices and technology improvements, and we have all reaped the benefits of that labor through greater availability of high-performance, domesticly produced ethanol. The announcement by Sec. Vilsack today that UDSA would provide funds for flex pump infrastructure aims to increase consumer access to clean, high-performance fuel produced here at home.

It is an effort obligated parties should have been driving since the RFS became law. The Obama Administration has no legal authority to reduce the ethanol numbers. For conventional biofuels, this is a path to nowhere. The proposed ethanol level for is less than what we already produced in This proposal will not crack the petroleum monopoly and will not allow consumers to benefit from the choice of lower-cost E15 and E As this could actually lead to lower U.

We need Iowans to once again step up and tell the EPA to follow the law and to let the RFS crack the oil monopoly as Congress intended. While President Obama is pushing to reduce greenhouse gas emissions in other sectors, he is letting the oil industry attack climate-smart alternative energy. That all starts with aggressive goals for the RFS. Together, we can get this right.

If America does not capitalize on the benefits of home-grown fuel, other countries will. In fact, they already are. What makes matters worse is that the EPA is about to mandate that more corn ethanol must go into American gas tanks.

Today the EPA proposed new minimum volumes of corn ethanol that refiners would be required to blend into gasoline this year and the next.

Congress set this policy, called the Renewable Fuel Standard, in the Energy Independence and Security Act of At the time, lawmakers hoped that using ethanol and other renewable fuels would reduce carbon emissions and American dependence on foreign oil. Last year, corn ethanol producers churned out 14 billion gallons, about Extracting tar sands and turning them into oil is more energy-intensive than traditional drilling for petroleum. According to the Natural Resources Defense Council, dirty oil transmitted from Alberta, Canada, to the Gulf Coast by the Keystone Pipeline would emit 24 million tons of carbon per year.

So far the federal corn ethanol mandate has resulted in a massive influx of dirty corn ethanol, which is bad for the climate and bad for consumers.

The only interest it benefits is the ethanol industry. Once the proposal is published in the Federal Register, it will be open to a 60 day public comment period through July Demonstrate a stronger market for higher ethanol blends such as E15 or E This would contribute to restoring gallons lost in the overall renewable fuels pool — and, essentially, benefit corn ethanol producers. Demonstrate a stronger biomass-based diesel production capacity , which should be a no-brainer, but also convince EPA that production capacity can and would translate into actual production.

The RFS2 targets should incentivize all parties in renewable fuels to shift strategies more towards driving consumer demand over compliance-driven demand. Build the higher-blend ethanol market based on price and positive community attributes as perceived by the consumer.

Building markets in diesel and jet fuel based on overall price parity. That is, building a case that fuel price should include a the cost of volatility and risk with fossil commodity fuels; b the social costs, such as disappointing end-use customers who prefer renewable fuels, and c differential in maintenance costs and engine replacement cycles. Rely on the EPA to support long-term capacity building in cellulosic biofuels with appropriate market mandates.

Clearly the industry is apoplectic over the the strategic shift at EPA. For corn ethanol, there is going to be a strong push back based on hopes that persuading EPA to stick with a tough mandated number will prompt the conventional fuels industry to push through wider adoption of E15, which would be good not only for corn ethanol, but ultimately for advanced ethanol fuels when they are available in higher numbers.

Crystal Equity Research has a Buy rating on DAR and Darling Ingredients is included in the Biofuel Group of the Beach Boys Index of alternative energy developers and producers. Closing of the transaction is expected before year end.

In the next several weeks, REG European Holdings B. Petrotec is a fully-integrated company utilizing more than 15, collection points to gather used cooking oil UCO and other waste feedstocks to produce biodiesel at its two biorefineries in Emden and Oeding, Germany.

Its biodiesel is compliant with EU standard EN and is one of the most sustainable biofuels marketed in Europe. Back in , we reported that Petrotec had moved into the Spanish market via a local office in Barcelona, after concluding there was existing market for the production of biodiesel from used cooking oil, especially now with the market gap left by policy prohibiting Argentine biodiesel.

The company had started collecting used cooking oil and producing biodiesel on a tolling basis. The company found itself mixed up in a bizarre dioxin scare back in when Petrotec sold dioxin contaminated fatty acids to an unnamed Dutch company for use as an industrial lubricant. Then, the Dutch intermediary sold the product to Harles and Jentzsh for use in animal feed. ICG is best known in the sector as the lead investor in Primus Green Energy, which last year commissioned its , gallon-per-year natural gas-to-gasoline pre-commercial demonstration plant at its Hillsborough facility.

The process produces drop-in fuels that are ready for immediate distribution, sale and consumption using the existing fuel distribution infrastructure.

Oh, REG President and CEO. We look forward to working with the Petrotec team as REG expands its business into Europe and further delivers the key benefits of our international industry: One of the most alluring targets in advanced biofuels — although cruelly mis-named — is in the world of free fatty acids.

Most of the oils currently used for biodiesel are sourced from soybeans, palm or rapeseed, and precisely because they contain less than 0.

Traditional biodiesel process designs have difficulty handling oils containing more than 0. At one time a few years back, restaurants would pay to have it picked up. These days, used cooking oil is sold, but at a considerable discount to virgin oils like soy or rapeseed — and that spells opportunity for those who have the technology to address conversion of high free fatty acid feedstocks.

For some time, Renewable Energy Group REGI has been translating its technical abilities with FFAs into an advantaged position in feedstock costs, and that had fueled in many ways its acquisition and expansion program. The race for FFAs heated up this week with news from Denmark of the launch of Novozymes NVZMY Eversa, the first commercially available enzymatic solution to make biodiesel from waste oils.

The enzymatic process converts used cooking oil or other lower grade oils into biodiesel. The resulting biodiesel is sold to the same trade specification as biodiesel created through traditional chemical processing. The enzymatic process eliminates the need for sodium methoxide, one of the most hazardous chemicals in traditional biodiesel plants.

The radical reduction of harsh chemicals and by-products ensures safety for both personnel and the environment. Making the change from a chemical catalyst to the enzymatic process requires retrofitting in existing plants. Biodiesel producers looking to utilize Eversa will therefore have to invest time and resources to make the switch to the enzymatic process.

Novozymes pointed to Desmet Ballestra for the plant conversion tech. So the more you are able to convert a cheaper feedstock into biodiesel, the more profitable the business is.

The enzymatic process makes it possible to convert waste oils into biodiesel with relatively low capital expenditure by retrofitting a plant. The Campbell Industrial Park plant now uses biodiesel processed from waste fats and oils by Iowa-based Renewable Energy Group, Inc. Principal investigator for the two-year effort will be Dr. Isam Janajreh, Associate Professor of Mechanical Engineering and Head of the Waste to Energy W2E Laboratory at Masdar Institute.

Fred Moavenzadeh, President, Masdar Institute commented: We are confident that the outcome of this collaboration will encourage the community to support such green technologies. In China, Boeing and Commercial Aircraft Corp. The two companies estimate that million gallons 1. Boeing and COMAC are sponsoring the facility, which is called the China-U.

Aviation Biofuel Pilot Project. HEET to clean contaminants from waste oils and convert it into jet fuel at a rate of gallons liters per day. Biofuel produced by the China-U. Aviation Biofuel Pilot Project will meet international specifications approved in for jet fuel made from plant oils and animal fats. This type of biofuel has already been used for more than 1, commercial flights. Norwegian flew from Trondheim to Oslo while SAS flew from Bergen to Oslo. Back in September, Finnair flew a A from Helsinki to New York partially on used cooking fuel-based jet fuel to highlight the opening of the UN Climate Summit.

The fuel was supplied by SkyNRG Nordic, a JV between SkyNRG and Statoil Aviation. The airline says it is hoping to set up a biofuel fueling hub along with partners to help reduce the cost of aviation biofuels and strengthen the supply chain. Earlier this year, the Chinese Civil Aviation Administration of China granted Sinopec Chinese Technical Standard Order Authorization CTSOA for aviation biofuels, certifying that the fuel has met all required industry standards.

An April test flight using hydrotreated palm oil and recycled cooking oil feedstock on an Airbus owned by China Eastern Airlines was the test case for the certification. Sinopec said it will now work on expanding the feedstocks it uses to produce aviation biofuel. The Honeywell Green Jet Fuel was made from inedible corn oil and used cooking oil.

Each flight will use a blend of Honeywell Green Jet Fuel with petroleum-based jet fuel. UOP supplied nearly 92, liters of Honeywell Green Jet Fuel for the flights. Compared with petroleum-based jet fuel, this renewable fuel will reduce greenhouse gas emissions by metric tons of CO2 over the course of the event based on life cycle analysis.

In October, Lootah Biofuels has signed an agreement with Emirates Transguard, a leading security provider, to provide biodiesel for a B5 blend for the fleet. Lootah uses old cooking oil as their feedstock. The agreement aims at taking up the initiative for greener fuel option as well as reduction of UCO waste, thereby creating value for the green economy and environment. The UAE is making strides in incorporating biodiesel into their public transit system, as well.

The Roads and Transport Authority plans to expand to 60 biodiesel-based buses in the fleet in the next three years. Last month, Greasecycle added the University of British Columbia to its list of used cooking oil suppliers for its biodiesel supply chain, but the university will also get to send its students—already working on biodiesel—to work with the company first hand on research projects.

The company already collaborates with three other universities in the province as well as hotels, restaurants and 30 Burger Kings. In September, Recoleo said that it will begin collecting used cooking oil from more than McDonalds around the country for processing into biodiesel.

Before this new contract, the company was already collecting , liters of used oil per month from 1, households and 3, businesses while selling biodiesel to 5, clients. It may be second-hand, cooking oil that is, but recycling is hot — allowing biofuels to serve as a backstop to the food industry and extending its sustainability and translating its waste into energy, rather than competing on the front end for virgin oil feedstocks. In many ways, REG is the entire industrial biotech business in a nutshelll.

They use both sugars and lipids as feedstocks. They make both biodiesel and drop-in renewable diesel. They make fuels and an array of chemicals.

Algae Market, DHA Production, Bioplastics; Cultivation Technology - Global Industry Analysis, Size, Share, Growth, Trends, And Forecast - - Pg.2 - TheStreet

They have multiple plants and labs in the West, Midwest and Eastern sections of the country. In other ways, they achieve what others aspire to. Publicly traded after a successful IPO — a reality. Generating substantial cash flow — a reality. Lipids are a worldwide business as are sugars, and we are looking for base platforms that wecan grow and adapt, with a focus on the distillate area and the intermediate speciality chemicals. After a successful IPO, you now find yourself in a leading position when it comes to dialogue with Wall Street about industrial biotech.

How do you talk about these advanced technologies there? Wall Street want to see profitable companies, they want to see the downside protected and lots of upside. In the past year you acquired LS9, now known as REG Life Sciences, one of the hottest technology sets available. How it is going? We think the company will do better without, as a venture-backed company, worrying about about where the next round of finance is coming from, and not having to swing for the fences with a home-run product right away.

The LS9 technology has the ability to iterate a lot of products, and on our side we have put together a platform of people — and there are a lot of PhDs here, master degrees, these are not not minimum wage jobs here, this is a high talent business — when you combine out platform of people and logistics and distribution with a platform that can iterate a lot of products, you can see how to get that technology and those products into the market.

In many ways, these were two companies born of the same idea, both were originally designed to make biodiesel, we started with lipids, they started with sugars. The cool thing for us is that, from their earliest days until today, they continue to improve the tools, they are always innovating the science.

Now, the midterm elections have swept Republicans to power int he Senate. How do you see that dialogue changing after the elections? Our job is simple: But every gallon of biodiesel makes it easier to achieve the broader energy policy goals of diversifying the energy mix — and the benefit of biofuels on the agricultural sector are not difficult to see and there are more sectors that are benefitting from it, such as advanced manufacturing and high tech.

And if you target international expansion, will you be looking for advantaged feedstock, or a solid market, or what other factors might be on your mind? We tend to be product and logistics focused when looking at a new market — right now we are long biomass based diesel, and the two biggest markets are the US and EU, and our strength in lipids might feed into a number of products there. Past performance is not a guarantee or a reliable indicator of future results.

This article contains the current opinions of the author and such opinions are subject to change without notice. This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.

Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Posted by Tom Konrad at The company recorded adjusted EBITDA of 6M. In addition, the company gave updates on three acquisitions in Mason City, New Boston and Geismar.

All upgrades are complete at REG Albert Lea, while previously announced upgrades to increase feedstock flexibility are progressing at REG Newton and REG Mason City. The Company also prepared for future improvements at its Danville, Illinois facility with the acquisition and rezoning of adjacent land. Finally, REG maintains a toll manufacturing arrangement that offers additional production capacity flexibility.

Dynamic Fuels, LLC was renamed REG Geismar following the acquisition. During second quarter, REG demonstrated its ability to operate an expanding business while also investing for future growth. Integration of both are underway and we are excited about the new employees, technology and products added to REG.

In Louisiana, Darling International DAR announced that Diamond Green Diesel, the joint venture between Valero VLO subsidiary Diamond Alternative Energy LLC and Darling International , has reached mechanical completion and the startup process will lead to full production of renewable diesel.

Once in full operations, the 9, barrel-per-day The renewable diesel can be shipped by pipeline and meets low-carbon fuel standards. According to company estimates, the facility will reduce greenhouse gases by more than 80 percent over conventional petroleum-based diesel; fulfill almost 14 percent of a national mandate to boost production for biomass-based diesel; and create more than jobs at peak construction in Louisiana.

The project will sell diesel into the market on an unsubsidized basis, at the rack price — supplementing its bottom line with the value of renewable energy RINs that are used by obligated parties to satisfy their obligations under the Renewable Fuel Standard. This joint venture will be a producer of high quality renewable diesel capable of fulfilling the RFS2 biomass-based diesel mandate.

Our partnership with Valero will benefit Diamond Green Diesel through multiple operational synergies. No need to wait for the promise of algal biofuels, or other hot technologies still in the process of commercializing at scale.

More than million gallons of capacity already exists — Dynamic Fuels plant in Louisiana, and three from Neste Oil NEF. F in Rotterdam, Singapore and Finland. In the case of Dynamic Fuels, Diamond Green and Emerald Biofuels, all three projects can utilize animal waste residues — a classic case of turning low-value, noxious feedstocks into high-value molecules. To work as a financial project, Diamond Green Diesel will be the largest consumer of recycled restaurant grease and animal fats in North America 1.

Three companies are expected to build 1. Even the advanced fermentation technologies expect to use existing supplies of sugars and CO2. In December, Dynamic Fuels filed this with the SEC: RIN prices at these levels have not been seen since the implementation of the RFS2 program by EPA in July of The biomass based diesel mandate for is 1. We expect markets to adjust positively in due to the higher mandate. Note that this is based on operating costs only.

However, the good news is that, on a dollars per gallon of capacity basis, the project is not all that expensive by advanced biofuels standards. Items to watch in those profit projections — diesel prices and RIN prices. One more item — feedstock costs.

Man, is that price getting high for waste fats. A signature mechanical completion. We hope the commissioning period is short enough that the plant may start making a material contribution to US biobased diesel production figures in the 4th quarter. But this much is sure.

In California, two monster announcements came out of Solazyme headquarters last week. One related to project finance and one related to raising cash. Preparing for a world in which financing will be much more difficult to come by, I have been selling companies which are likely to need financing in the next couple of years. A listing of the companies I've discussed so far is at the end of this entry. My sale of Nova Biosource Fuels AMEX: NBF continues my general moves out of biofuels, also discussed in my entries on Pacific Ethanol and Dynamotive Energy Systems.

I have long argued that electric propulsion is a superior way to power ground transport than even "Second Generation" biofuels such as cellulosic ethanol. My forays into biofuels have therefore been attempts to find companies better positioned in the industry, rather than an attempt to get exposure to the whole industry, as I have tried to do with geothermal power.

Even those picks have fared poorly, however, and my review of the cash flows and balance sheets of my holdings has led me to dispose of the majority of my biofuel investments. Nova Biosource was brought to my attention by James Kingsdale at Energy Investment Strategies. Nova's ability to handle a wider range of biodiesel feedstocks, should protect them somewhat from a commodity squeeze arising from expensive high grade oils and low prices for diesel fuel.

However, protection from a commodity squeeze is not protection from lack of new sources of financing. The company has been meeting its cash flow needs with short term borrowing. Any hiccough in terms of availability of funding could put Nova between a rock and a hard place.

The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here. This entry continues a series on companies I sold as part of a portfolio cleanup prompted by the mess on Wall Street.

In the first entry I described what I plan to do with the cash , followed by the reasons why I sold Carmanah Technologies and Pacific Ethanol. UQM Technologies was one I didn't sell. I have mixed feelings about the company. They use fast pyrolysis to make cellulosic biofuels, which I believe will prove to be one of the more economic pathways to cellulosic biofuels. However, I believe that cellulosic biofuels are not usually the best use of limited biomass.

Rather, I have argued that cellulosic biomass can be more profitably used to displace coal in electricity generation , or to displace corn in feed for livestock. Nevertheless, there is a strong regulatory and popular push towards cellulosic biofuels, which led to my speculation on Dynamotive last year. They've been funding their deficit with short term loans and new share issues, a process which I expect will become much more difficult in the current financial environment, with negative implications for the share price.

Celluslosic Ethanol is all the rage. A less noticed, but significant "Biofuel 2. When it comes to converting sunlight into biomass, algae is the most productive type of plant.

According to this chart from Five Star Consultants , Biodiesel from algae has the potential to produce enough fuel to drive a Prius-type car , miles per acre per year MAY , compared to 2, to 31, MAY for conventional biodiesel crops, while ethanol from switchgrass could produce 32, MAY.

With an order-of magnitude advantage, it would seem that algae is the green wave of the future, and actually so productive that it could produce enough biomass feedstock for us to continue to drive our SUVs with our current reckless abandon. Theoretically , biodiesel produced from algae appears to be the only feasible solution today for replacing petro-diesel completely In practice however, biodiesel has not yet been produced on a wide scale from algae, though large scale algae cultivation and biodiesel production appear likely in the near future years.

There are two basic approaches to growing algae: The open pond method, which is what Petrosun Drilling OTC: PSUD recently announced they are pursuing , involves growing the algae in open ponds of water, much like it grows in nature. Open ponds are clearly quite cheap, but they require a reliable supply of water to replenish that lost from evaporation making them impractical in all but the wettest parts of the country Petrosun's first farm will be on the Texas coast, and use saltwater, which helps with this problem.

The lack of temperature and weather control can further decrease yields from the theoretical potential. The other problem with open ponds is that it is impossible to keep other types of algae a. This means that biofuel produced from pond algae will require much more extensive processing to be turned into fuel.

It's easy to grow pond scum, but turning it into something useful is harder. The other option is the algae bioreactor, one type of which from Solix biofuels was referenced in the chart above.

The Solix technology uses closed plastic bags agitated by rollers, has climate control with the use of controlled radiative cooling, and uses concentrated carbon dioxide emissions to enhance algal growth.

The best description of the technology is at Algae Work , a company which was started by Solix's former CTO seeking to apply the technology to carbon capture. To me the bioreactor approach Solix's technology is only one version seems most likely to achieve the promise of extremely high yields, and even that is not without problems.

Large scale bioreactors are complex systems. As such, they will be expensive and take great efforts to move from the lab to commercial scale. Ken Regelson , the author of the chart above, and he believes that Solix does not have "a prayer of achieving their expected yields per acre" but that he used the number from Solix because he has yet to get authoritative numbers from anyone else. I wrote this article because readers wanted to know about Petrosun Drilling OTC: PSUD , an oil exploration company that has been promoting their algae biodiesel efforts since September.

Other than Petrosun, the only public companies I know of which are seriously looking into algae based biodiesel are large conglomerates: Boeing BA , Chevron CVX , Royal Dutch Shell RDS-A and Honeywell HON , which can take the long view and have large research budgets to finance their efforts for as long as it takes.

If you click through the company names to the news stories, you will note the common theme: These are all research stage projects. Petrosun has not filed even an unaudited quarterly report since March Given that it is also promoting exciting technology, I detect the whiff of snake oil salesmen.

Although readers are clearly interested in this company, until they begin to file current information, I don't consider it worth my time to investigate further. Petrosun's main product is much more likely to be snake oil than algae oil. Even if Petrosun does execute on its algae farms, will there be any first mover advantage? It seems unlikely to me; growing algae in open saltwater ponds will depend on access to suitable land near coastlines After all, the company is simply an unsuccessful oil exploration company with a algae farm division.

The first and last word in any discussion of biofuels should always be "Feedstock. Before the era of peak oil, we lived in a world of plenty, which meant that we could squander energy, not only by driving Hummers, but by feeding energy intensive products such as corn crops to livestock, and by dumping "free" sources of energy such as garden waste and used cooking oil into landfills.

The era of cheap energy is over. The signs are all around, and even peak oil deniers point to expensive-to-extract reserves such as deep water drilling, Canadian tar sands, and even Colorado's Oil Shale. These sources of oil are not only more expensive to extract, they are are also more carbon-intensive, meaning that regulation of greenhouse gas emissions will raise their price further. In terms of biofuels, I've long argued that there is simply not enough feedstock available , and that even if there were enough feedstock to replace all the oil products we use today, there are many other potential uses which will compete for the output of scarce land and water, such as a replacement for coal in electrical generation , and fodder for livestock.

Biodiesel producers may find that the best quality oil is bought up by refineries to make green diesel instead. In fact, it seems that almost any form of biomass can be converted to Bio-crude and processed in a conventional refinery. We'll even have to decide if municipal waste should be recycled, burned for electricity, or turned into cellulosic ethanol. I'm unconvinced that anyone knows exactly how the limited feedstocks we have available will be used, or what process will be most efficient in converting them into their final form.

This makes it difficult to find a biofuel investment that I can be confident will succeed. One biofuel technology after another has been caught by a commodity squeeze, first corn ethanol and now biodiesel makers. Polyannaish investors expecting limitless supplies of feedstock for cellulosic ethanol should take note.

Higher commodity prices do not always lead to more supply. Sometimes higher prices lead to lower demand, and the next boom could easily become the next bust.

The only sure winners from limited and increasingly valuable biomass will be the people who produce it: What do farmers do when they have spare cash? The beauty of Deere as a biofuel investment is that there is no need to know what the biomass will be used for, or what form it will come in. In nearly every scenario I can envision, Deere is likely to be a major supplier to the industry which grows it. From algae to Jatropha, if Deere does not yet sell equipment to plant, tend, and harvest it, it seems a good bet that they will design one.

This technology agnosticism, combined with their wide dealer network in agricultural areas, makes the company seem to me the safest way to bet on biofuels as a trend. Deere's close relationship with farmers also gives them an opportunity to profit from another up-and-coming crop: Since I expect the housing situation to only get worse over the coming months, a sharp decline in construction income or a continued broad market decline may be just what prospective investors need to pick up this solid biofuel play on the cheap.

Click here for other articles in this series. In August, I argued that Biodiesel stocks could be in trouble from more efficient ways to turn the oils and fats they use as feedstock into fuel, and concluded the article by saying that the likely winners are suppliers of oils and fats, not the processors. James Kingsdale, of Energy Investment Strategies has been thinking along the same lines.

Last week he wrote an excellent overview of the major biofuels industries , including some stock picks. One of those stock picks was the diamond in the rough I wish I had known about when I wrote Biodiesel's Nightmare: Renewable Diesel back in August. Renderers collect waste fat and bones from meat producers and turn them into products. Both waste greases and animal fats are potential high FFA biodiesel feedstocks, although Darling presently is not using them for that purpose Biodiesel from waste vegetable oil is the greenest biofuel available.

As a member of the Denver Biodiesel Coop , I use it in my car In the most recent two installments of Energy Tech Stocks' interview with me cover my views on transmission stocks , and biofuel stocks. Readers of AltEnergyStocks know that I am a big fan of electricity transmission , a theme I keep coming back to. You also know that I have a very ambivalent relationship with both ethanol and biodiesel.

Company

So I liked Bill's transmission article, but I just wasn't able to convey to him the subtleties of how I feel about biofuels. But he got one thing right: An Insider's View of the Ethanol Industry. Let Them Eat Grass. While you're on the Energy Tech Stocks site, read a little about trading of wind power futures here and here. I also predict hedge funds which will use strategies based on emerging inverse correlations between wind power futures and natural gas futures, probably sooner than anyone might guess.

Until algae farms move from the research and demonstration stage , biodiesel usage is going to be tightly constrained by available feedstock. The feedstocks for biodiesel are oils and fats, which naturally occur in quantity only in animals or the seeds of plants. As such, the quantity of oil available is much smaller than the sugars, starches, and cellulose which occur not only in the seeds and fruits of plants, but also in the stems and leaves , and can be used to make ethanol.

Because sugarcane contains the best ethanol feedstock, sugar in the stem not just the fruit of the plant, Brazilian ethanol can compete effectively with gasoline without subsidies. Biodiesel can also compete with diesel on the basis of price, in large part because it is much simpler to convert oils and fats into biodiesel than it is to convert sugar into ethanol, and the oils commonly used for biodiesel today were essentially treated as low-value byproducts e.

How big could the biodiesel business get? With US production of soybeans at about 3 billion bushels , if the entire soybean crop were converted into biodiesel at 1. In fact, potential biodiesel supply is falling, since farmers are changing their crop rotation to include less soy and more corn for ethanol.

All told, the potential demand for biodiesel far exceeds the potential supply, which will be limited by the supply of potential feedstocks, instead.

Currently biodiesel supply is limited by production capacity, but in the long term, as more production facilities are built, supply will be limited by available feedstock. At this point, commodity arbitrage will set the price of biodiesel close to its main substitute, petro-diesel, and the price of commodity oils will follow along for the ride, but low enough to allow biodiesel producers to earn a return on investment.

The above analysis assumes that biodiesel production is the best way to take vegetable oils and fats, and make them into transport fuel. This may not, in fact, be the case. Last spring, ConocoPhillips NYSE: COP announced a deal with Tyson Foods NYSE: TSN to use fat from Tyson's rendering plants to make "renewable diesel " fuel in COP's refineries.

The key point here is that COP is making what they call "renewable diesel" not conventional biodiesel. They developed their renewable diesel process using soy oil in Ireland, using their existing oil refinery there. I first heard of this process last October at an NREL presentation they called it "Green diesel" and could not identify COP as the oil company they were dealing with, but details remain sketchy.

The fact that they refer to the process as a "proprietary thermal depolymerization production technology" and the fact that they are using existing refinery infrastructure should cause alarm to biodiesel firms and investors. Why should this cause alarm? Because COP claims its "renewable diesel" is chemically equivalent to conventional diesel.

If this is true, it's quite possible that it has a lower cloud point than biodiesel, and so could be used at a broader range of temperatures. In addition, since COP is using conventional refining equipment, they may also be achieving higher energy yields. According to NREL's Overview of Petroleum and Biodiesel Lifecycles , Biodiesel conversion requires 80 kJ of energy for every kJ of energy in the biodiesel, while petro-diesel requires only 64 kJ to produce an equivalent amount of fuel.

While the difference in energy costs is fairly minor, transportation fuel is a commodity business, and COP's ability to use the existing pipeline infrastructure into which their refinery is already integrated, as well as its ability to avoid the large capital expenditures required to build a biodiesel refinery from scratch are likely to give them a large cost advantage over biodiesel producers in this thin margin business.

With the exception of small biodiesel producers using local and distributed biodiesel feedstocks such as waste vegetable oil from restaurants, I expect that petroleum refineries will end up having an economic advantage making renewable diesel in comparison to conventional biodiesel producers. This means that commodity oils and fats available in large enough quantities to interest refineries will be bid up in price to a point where less efficient biodiesel producers will be unable to operate profitably.

All of this may happen remarkably quickly as well. How soon will refineries be competing directly with biodiesel producers for soy and other vegetable oils?

While we can only speculate about the relative economics of renewable diesel and biodiesel, having a new competitor cannot be good for the biodiesel industry. Biodiesel producers might be sustained by federal biodiesel tax credits , but depending on government subsidies is not a sustainable business model, especially when you are competing with an industry with a long track record of successful lobbying.

The likely winners I see are the suppliers of feedstock. It's no secret that money is flooding into the alternative energy sector , but not all of this money comes from sophisticated, investors. Unsophisticated investment is a lighting rod for the scam artists. Because there is both an urgent need to deal with the the problems posed by global warming, energy security, and resource depletion, and the new money is rapidly accelerating the advance of technology in renewable energy, new innovations are very plausible.

There are many ways to lose money in alternative energy, even without being taken by a scam. The current emotional climate in the industry makes even the most solid companies' shares gyrate wildly. A speculative technology startup such as Beacon Power Corp. With all the risk already inherent in investing in a booming or is it bubbling? Below are a few basic precautions. I plan to illustrate them and how they apply to U. USSE , a company that recently announced a " revolutionary new process " for creating biofuel from soybeans, which was brought to my attention by a comment on an article I had written on Green Diesel.

Stick to the exchanges. With a stock market listing comes regulation and oversight. A stock market listing is not a guarantee that a company is for real, but the extra oversight of the exchange means that if you stick to companies listed on the NYSE, the NASDAQ, and the AMEX, you're very unlikely to be buying into a scam.

Even stocks which don't trade on an exchange in the United States often trade on exchanges abroad, but not all exchanges are equal.

You're much safer with stocks on the London Stock Exchange than on London's Alternative Investment Market. Another quick screen is to check to see if any legitimate mutual funds or ETFs own the company you are interested in in fact, for new investors looking to create their own alternative energy portfolios , a good starting point is the holdings of the industry mutual funds and ETFs.

If you use one of these strategies, essentially trusting the regulator or the investment company mutual fund to weed out the scams for you, you don't need to worry much more about scams unless you've ventured onto some of the wilder and woollier exchanges.

But the cautious approach may preclude investing in a technology that you just have to have in your portfolio. In that case, all is not lost, there are several other ways to sniff out scams. You may end up rejecting a few legitimate companies, but given the risks, why take a chance? Traded on the bulletin board, with little or no oversight. Even worse, they got their stock market listing as the result of a reverse merger with a shell company, Laforza Automobiles , which means they also avoided the scrutiny that comes as part of an IPO.

Recently, legitimate companies have chosen to use reverse mergers simply to avoid the headache of going public under Sarbanes -Oxley, but it is not a good sign, especially with a Bulletin Board stock. This same trap lurks in assessing technology, and scammers know that the typical American has a dismal understanding of basic science. Countless startups with sound technology have failed because of bad management, soif there is any doubt about the plausibility of a company's technology, it's just not worth the risk.

Since their technology sounds somewhat akin to Pyrolysis followed by Fischer-Tropsch conversion , I asked Tom McKinnon , professor at the Colorado School of Mines, because I know he does research on pyrolysis chemistry. The three products char, pyrolysis oil, and gas are more consistent with a pyrolysis processso why did they mention corn and soy.

It would be a waste to use oil crops for pyrolysis when you can use low grade biomass as a pyrolysis feed.

The high energy content of the fuel indicates that it contains very little, if any, oxygen. Typical pyrolysis oils contain phenols and a whole witches' brew of nasty reactive oxygenates. Pyrolysis oils are generally quite unstable and degrade fairly quickly time scale of weeks.

I don't think anyone in their right mind would put pyrolysis oil into an expensive diesel engine, so maybe these guys have some other process. It's also interesting to note that their " letter of validation " is from a Ph. I guess that all the engineers and chemists had something else to do that day, rather than tour the facilities of a company with a revolutionary new process that will help solve both peak oil and global warming.

It's worth looking at management's background. Often shysters wrap up one scam, only to start another. Make sure you get biographical data from sources other than the company's website.

You will want to make sure that the board of directors includes outside members with both the ability and motivation to oversee management and make sure that they do not make off with the firm's money.

Checking the company's management and board of directors , we note that the two lists are almost identical, with the exception of an extra member of the board, David Crow, a former according to the site senior vice president of " Pratt and Whitney. He does seem to be an expert on gas turbine engineering, which would be useful for the power plant that USSE is planning, but he seems to have no experience which would help him in his duties of overseeing management.

Scammers have the incentive to boast about their company's future, solutions to big problems draw more suckers than fixing mundane, everyday problems. They will also gravitate towards business plans that are easy for everyone to understand and that people can see in their everyday lives. Not constrained by actually needing a real product to sell, they will almost invariably come up with a product that will make most people think "Wow, that'd be great.

It's also a superior fuel: I'm hardly the first person to point out that something smells in the state of Mississippi , but I hope this example will help give my readers the tools to avoid the next revolutionary new technology to teleport in.

He is neither long nor short USSE his broker does not let him short penny stocks. In the face of a declining overall energy market today, three of our favorite alternative energy stocks posted strong gains on high volume.

Indeed, the vast majority of the energy stocks that we track were in the red. But bucking the trend were two energy stocks that we have profiled in the recent past and a third company that we will begin covering today. First on the list is our favorite wind energy play, Welwind Energy International WWEI. Next on the list of breakout stocks today is Nova Biosource Fuels NVBF. Nova just announced a move from over-the counter to the AMEX, which will be effective on Monday, May Nova recently held its official groundbreaking ceremony at the site of its planned biodiesel refinery in Seneca, Illinois.

The plant is expected to have a million-gallon per year biodiesel production capacity from locally generated, low-cost feedstocks, including rendered animal fats and oils and recycled vegetable and animal- based greases. Our final stock is getting its first mention on Gold Stock Bull today. Despite being the darling of the ethanol investment community and attracting funding from none other than Bill Gates, we have been hesitant to recommend Pacific Ethanol PEIX.

So what is driving our optimism with Pacific Ethanol? A shift from hype to substance. Pacific Ethanol sold Despite fears by some investors of an oversupply in ethanol during the back half of , we believe PEIX will continue pushing higher.

Pacific Ethanol currently has one plant operational, one plant about to open and three other plants under construction. The operational plant is located in Madera, California and has a capacity of 35 million gallons per year. It is the largest ethanol plant on the west coast. Their second plant is being constructed in Boardman, Oregon and will also have a capacity of 35 million gallons per day.

Construction is scheduled to be completed in the next few months. Pacific Ethanol also has begun construction on three 50 MGY name plate capacity production plants that will open mid The energy bill passed by Congress in requires an increase in ethanol use by refiners to 7. With Democrats now controlling both houses and looking likely to take over the presidency, we can only expect additional government incentive for alternative energies such as ethanol. A significant portion of Ethanol demand is coming from the fact that states across the country have banned MTBE Methyl Tertiary Butyl Ether , a fuel additive formerly required to increase octane levels of gasoline.

MTBE has found its way into drinking water and many believe is cancer-causing. Ethanol is the only other commercially viable additive that will bring gasoline into compliance with state and federal clean air regulations. Consumption and production of ethanol has continued rising at a record pace and should be considered as part of any investment portfolio. Jason Hamlin is Founder of Gold Stock Bull , a site that has been tracking the secular bull market in gold and silver since its inception, back in early , as well as the emerging bull market in energy since it took off in early The International Monetary Fund released its Spring World Economic Forecast today.

There is a short sub-section in Appendix 1. If you download the PDF version of the report and scroll down to page 44, you will find the said sub-section under the heading "Food and Biofuels".

The report notes that, looking ahead, the prices of crops like corn and soybeans, which are the main feedstocks for ethanol US and biodiesel Europe , respectively, should: About the recent news that US farmers are planning to plant more corn acreage next year, the IMF has this to say:. Still, demand fueled by the increase in domestic ethanol production capacity is expected to outpace the production rise. IMF economists also point out that the price of "partial substitutes" such as wheat and rice, as well as the price of meat and poultry, should trend upwards as a result of higher corn and soybean prices.

Finally, high crude prices could place further upwards pressure on the price of corn because corn farming in the US is highly energy intensive. It is the sub-section's final paragraph, in my view, that best captures IMF's view of current US and European biofuels policy. It reads as follows:. Many energy market analysts also question the rationality of large subsidies that benefit farmers more than the environment.

While new technology is being developed, a more efficient solution from a global perspective would be to reduce tariffs on imports from developing countries for example, Brazil where biofuels production is cheaper and more energy efficient.

This reaffirms some of the contentions that were made on this site in the past:. I guess no one's settled that thorny energy balance question yet, have they? To be sure, it's not like the IMF dedicated a large amount of space to this issue, and I'm quite certain that most of the economists who participated in producing this report don't loose sleep over it at night.

But the strong terms used in that little sub-section further reinforce what the corn ethanol bears have been saying: The author does not hold a position in any company involved in biofuels. Posted by Charles Morand at Managerial control will also pass to "certain directors and the officers of SunFuels.

If this merger goes through as planned in the second quarter of , US investors will have their first opportunity to invest in a stock focused on a biofuel which is much less controversial among environmentalists than corn-based ethanol.

Estimates of the well-to-wheels Energy Return on Energy Invested EREoI for biodiesel range from about 1. The most commonly quoted EREoI for biodiesel is 3 or 3. Speaking of feedstock, Blue Sun is a vertically integrated company with several farmer cooperatives raising oil exclusively for Blue Sun, often using varieties of mustard and canola being developed in-house by Blue Sun, although they have also used soy bought on the open market.

They have their proprietary blend of additives, which allows their Blue Sun Fusion biodiesel to offer superior cold weather performance. I've had several conversations with one of their distributors who uses their B in a dual tank diesel pickup, and he has been able to drive on B when the temperature is as low as 15 degrees F -9C Unless you, like him are a mechanic who happens to carry around a spare fuel filter in your trunk and a spare tank on your vehicle, I would not recommend trying this Their additives, according to a study by the National Renewble Energy Laboratory, allow the usual lower maintenance requirements due to the increase lubricity of biodiesel, and reduction of carbon monoxide, hydrocarbons and particulates also seen with most biodiesels, but Blue Sun's blend shows reductions in NOx as well, something that can be a serious issue for biodiesel producers, as we saw when Texas considered banning biodiesel because of increased NOx emissions last fall.

They had previously relied on contract biodiesel production at first tier facilities. Bringing production in house, combined with their own additives, they will have control of the entire biodiesel production and distribution chain their distributors sign detailed agreements with them on how the biodiesel will be handled all the way to the pump will likely help them cement their chosen market niche as the high quality biodiesel leader, which will give them a chance to compete with agricultural giants such as ADM and Cargill in the rapidly growing biodiesel marketplace.

Another publicly traded competitor is Earth Biofuels [OTCBB: EBOF ], but their main competitive advantage is celebrity endorsement BioWillie , rather than quality. Of course, investors considering buying MWAV as an early in to this quality biodiesel play should keep in mind that it ain't over til the fat lady sings when it comes to mergers and acquisitions.

Tom Konrad and clients hold positions in MWAV, as well as a private equity position in Blue Sun. Green Star Products Inc GSPI announced that they have developed and successfully commercially tested their advanced biodiesel reactor.

GSPI reactors require an amazing two minutes to complete the biodiesel conversion reaction versus over one hour for the rest of the industry. This means that GSPI's processing rate through the reactor is at least 30 times faster than the rest of the biodiesel industry. Posted by Mark Anderson at Green Star Products Inc GSPI announced its plans to construct total Bio-Refinery Complexes for production of both biodiesel and biomass ethanol at each facility.

The first Bio-Refinery is planned to be in North Carolina see GSPI press release dated April 20, and the location of the second facility is to be announced soon in the northwestern sector of the United States. Each GSPI-designed Bio-Refinery will have a start-up production of between 10 or 20 million gallons per year with quick expansion capabilities. The facility infrastructure will be capable of expanding to 60 million gallons per year and further expansion capabilities could reach million gallons per year , ranking them among the largest fuel production facilities in the world.

Production Cost and Profitability For a number of years, this now old and outdated, but very useful chart has been in circulation in energy circles, mapping the supply of energy to the world by looking not at prices, but at production costs. The shale oil revolution and its impact Conversely, shale oils uncovered through US fracking operations — to use another example — are able to supply lots of oil to meet world demand at prices well below the OPEC target, and they can also be competitive with some of the more expensive conventional oils.

Where does ethanol fit now in the cost curve? As Aemetis CEO Eric McAfee notes: Over to the biodiesel side All the same math applies in the world of biodiesel, but there are different data points. Considering California When we look at the California market and its Low Carbon Fuel Standard and Oregon, too, which also has an LCFS we are looking at a different animal, since the carbon value is added on top of RIN credit values.

Which tells you two things: But they are the markets we have, and in the markets we really have, we can say that markets in California are telling us this: So, a step change worth noting. Insider View on REGI by Debra Fiakas CFA Insider buying is not one of my regular screening criteria in selecting long plays in the small cap sector. In November , the CEO of biofuel producer Renewable Energy Group REGI: Nasdaq reported an increase in his stake in the company in recent months.

With REGI shares just above the prices paid by the CEO just three months ago, it is timely to look more closely from the outside. Using its typically low-cost feedstock such as inedible corn oil and used cooking oil, the company lays claim to being a low cost biofuel producer. Nonetheless, the company has come through a particularly tough period in , when thin margins failed to deliver enough profit to cover fixed costs.

Yet even during this difficult period, operating cash flows remained positive. Free cash flow, that is operating cash flows net of investment requirements, may be a more helpful metric to evaluate a renewable energy producer. REG operates a dozen biorefineries in North America with total nameplate capacity just over million gallons per year.

The company is moving aggressively to expand its footprint. The group turned over first shovels on a project to expand its Ralston biorefinery capacity from 12 million to 30 million gallons. REG management has had no difficulty in finding places to use that extra cash. The most recent deal in March , was the acquisition of a biodiesel refinery in Wisconsin owned by Sanimax Energy.

A growing, profitable operation should be of interest for most investors. The one reservation that investors should have regarding REGI, is the possible fall out of favor for renewable energy producers.

REG management has come out in support of a recent proposal for the standard set by the Environmental Protection Agency for Advanced Biofuel Renewable Volume Obligation from 4. Biomass-based diesel is a direct beneficiary of the standard. Given the antipathy expressed by the incoming occupant of the Oval Office toward the environment and climate, renewable energy may not be a particular priority.

Indeed, petroleum-based energy is most often the lips of Trump and his surrogates. Hopefully, REG management made a good impression on Branstad while they were in Iowa to put a good word in for renewable diesel.

Debra Fiakas is the Managing Director of Crystal Equity Research , an alternative research resource on small capitalization companies in selected industries. DAR the Rins Blow! NYSE staged a webinar on its opportunities in biofuels. Darling produces biodiesel in Kentucky and Canada and is in a renewable diesel joint venture with Valero Energy VLO: These are a creation of the U.

Environmental Protection Agency EPA to track renewable transportation fuels. They come in handy for the EPA to monitor how well oil refiners and blenders are doing in meeting the Renewable Fuel Standard RFS. Those standards were set up by Congress through the Energy Policy Act of , to promote the use of renewable transportation fuels. On the simplest level, the standards require the use of a minimum amount of renewable fuel usage based on the amount of petroleum product sales.

Here is where the RINs really become important. They can also buy RINs from other parties who have exceeded the requirements.

There is a market for RINs. Generally, RINs prices for cellulosic biofuel produced in both and have traded down from prices in late Corn ethanol D6 , biomass-based diesel D4 , cellulosic diesel D7 and advanced biofuels D5 each have their own RIN code. Indeed, the D6 RIN for corn ethanol increased in value during times of higher RFS target announcements or near the compliance deadlines.

However, more recently the D6 RIN price has been influenced by the decline in gasoline prices. What might be as important for renewable fuel producers like Darling is the amount of gasoline demand in the country. With prices at the pump at record lows at least since , gasoline consumption is expected to rise.

Energy Information Administration EIA estimates that gasoline consumption could reach 9, million barrels per day in However, ethanol blended into gasoline is expected to reach million barrels per day, an increase of 1. Darling is looking at RINs also, but in terms of market opportunity. With a capacity to produce 18 million gallons of biodiesel and million of renewable diesel per year, that is an attractive prospect. Solazyme is not the only renewable fuel company to make an about face.

Granted FutureFuel Corporation FF: NYSE has not changed its name or stock symbol like Solazyme. However, its ability to produce specialty chemicals has given FutureFuel an alternative to biofuels and its early plans to build a plant that could eventually produce million gallons of biodiesel each year.

Management

Even as the company was getting started in the and time frame, margins on biodiesel began to shrink. The plant finally ended up with a capacity to produce 58 million gallons of biofuels per year. FutureFuel was already keeping the lights on by selling performance chemicals.

As much as two-thirds of revenue in the early years was generated by the sale of specialty chemicals, including a bleach activator that was sold to a detergent manufacturer and a proprietary herbicide for a life sciences company. Biofuels accounted for only about a quarter of revenue.

Fast forward to the year , biofuels are providing the majority of sales and specialty chemicals have taken a back seat. Fact of the matter is sales of BOTH specialty chemicals and biofuels have declined. Biofuel sales peaked in the year , but have since declined on lower selling prices and volumes. Specialty chemicals sales peaked that year as well. The herbicide producer has stopped buying the herbicide additive and FutureFuel has had to accept a lower selling price for its bleach activator in order to keep its detergent manufacturer customer through the year Rebuilding the specialty chemicals segment is a largely a matter of finding new customers.

It is a situation over which the company has some control. It is a matter of marketing, branding and messaging. Then again it could be just a matter of salesmanship and good old fashion shoe leather.

Protecting profit margins from costly feedstock is just one of them. FutureFuel appears to have little latitude on feedstock even as other biodiesel and renewable diesel products have found success. There are numerous biodiesel producers, some also using the transesterification process that FutureFuel uses. An increasing number are using less expensive feedstock, such as waste oils. For example, Diamond Green Diesel , the joint venture of Darling Ingredients DAR: NYSE and Valero Energy VLO: NYSE uses the waste oils that Darling collects from meat processing plants and restaurants around the country.

Diamond Green just announced plans to expand production capacity. Another million gallon capacity will be added by the end of , bringing to total capacity to million gallons per year. Renewable Energy Group REGI: Nasdaq is also expanding storage capacity for both its waste oil feedstocks as well as finished biodiesel at its Danville, Illinois facility.

The storage capacity is pivotal in allowing REG the flexibility of timing its sales at peak or at least better pricing. The ability to delay sales to wait for better prices is one of the keys to building profits in the fuel production industry. REG now has 45 million in annual biodiesel production and 12 million gallons in biodiesel storage capacity in Danville.

This facility is only one of a dozen active biorefineries REG has in operation around the country. The company remains profitable, but comparisons to the previous twelve months are not favorable. Earnings we well above expectations, but only because the company benefited from reinstatement of the blenders tax credit.

FutureFuel has tried to break free from its biofuel origins, finding new products and new customers. It seems investors might be doing the same. After a brief recovery, the stock has sold off, leaving FF priced at ten times expected earnings for the year We note that the stock was nearly at the same value about two years ago.

A Little ADM With Better Growth Prospects Jim Lane At 8: REGI aka REG headquarters in Ames, Iowa.

The rat-a-tat-tat continues as the team talks about dealmaking in the market. The old biodiesel paradigm gone by The problem with biodiesel companies, for a long time, has been the volatility of raw material prices and energy prices. Three legs to the REG stool 1. FutureFuel Profits Preview by Debra Fiakas CFA Biodiesel and biochemical producer FutureFuel Corporation FF: NYSE will report fourth quarter financial results after the market close today.

No conference call will be held due to low attendance on recent calls. Despite an increase in this estimate in the last week, the number still represents a significant decrease in earnings compared to the prior-year period. Many of the FutureFuel products are intermediate goods used in finishing consumer and industrial end goods. FutureFuel chemicals end up in coatings, solvents, herbicides and nutrition products.

The Company is known for its bleach activator, nonanoyloxybenzene-sulfate, which is used in household detergents. The company has had to scramble to keep investors content that the near-term quarters can still deliver growth and profits. Historically, the Company has experienced erratic sales growth in part due to volatile commodity prices. While sales and net income have varied year-to-year, FutureFuel is consistently profitable.

Operations generate cash every year, providing financial resources for future investments. It is an attractive achievement for a participant in the renewable energy industry where most companies remain at developmental stage or have not yet reach sufficient scale to generate profits. Crystal Equity Research has a Technical Buy rating on FutureFuel. The shares have been on a steady climb over the past three weeks, much as we expected in our initiation argument issued in late January The stock stopped short of this level in trading last week.

The stock could drive up through this price if the quarter report shows strength. A laundry list of technical indicators was used to select FF as a good stock for a long or bull case position. Many of the same indicators are monitored daily or weekly to decide when to close out the position. The stock appears overbought according to two of the favorites, the Relative Strength Index and the Commodity Channel Index.

However, we do not believe that all demand for FF has been satisfied. The Moving Average Convergence Divergence MACD Line is still headed higher. More importantly, the MACD histogram is continuing to increase. Will Renewable Energy Group's Buying Spree Ever Stop? Renewable Energy Group Teams Up With ExxonMobil For Cellulosic Biodiesel Jim Lane Two giants hook up to bring cellulosic biodiesel to scale.

A new source of biodiesel feedstock, and a new source of renewable fuels. What about cellulosic drop-in fuels? Yield, and scale-up Scale?