Ethanol

by Debra Fiakas CFA Last week Cosan Limited (CZZ:  NYSE) revealed a decision to delay the spin-off and recapitalization of its natural gas distribution network, COMGAS.  Management cited unfavorable capital market decisions.  Cosan has a mix of businesses, of which we have been most interested in its Raisen Energia sugar cane agriculture and ethanol production.  Raisen is a joint venture with Royal Dutch Shell that was initiated in 2011.  The operation squeezes over four million tons of sugar from cane grown in its fields and two billion liters of ethanol each year. The ethanol is sold through Shell’s...

Jim Lane Green Plains In Nebraska, Green Plains (GPRE) announced net income for the quarter was $42.2 million compared to net income of $25.5 million for the same period in 2013. Revenues were $829.9 million for the fourth quarter of 2014 compared to $712.9 million for the same period in 2013. Net income for the full year was $159.5 million compared to $43.4 million for the same period in 2013. Revenues were $3.2 billion for the full year of 2014 compared to $3.0 billion for the same period in 2013. Fourth quarter 2014 EBITDA was $90.7 million compared to...

Jim Lane  Part I of II Cellulosic ethanol arrives at scale “The five years away forever” put to rest but are there troubling waters still ahead? For whom, and why? There’s a gigantic disconnect between two sections in the country as to whether the United States should be celebrating the success or the failure of cellulosic biofuels biofuels made from crop residues, energy crops, and other feedstocks including municipal solid waste, and which feature a 60 percent or greater full-lifecycle reduction of greenhouse gas emissions compared to conventional gasoline. The supporters On the one...

Jim Lane  Part II of II Cellulosic ethanol arrives at scale “The five years away forever” put to rest but are there troubling waters still ahead? For whom, and why? There’s a gigantic disconnect between two sections in the country as to whether the United States should be celebrating the success or the failure of cellulosic biofuels. Supporters and detractors alike saying that the wave of commercial-scale cellulosic ethanol refineries is a new wave in technology or the latest round in a wave of unimportant hype. We looked at the supporters, the detractors, the...

Jim Lane  It towers above the surrounding Iowa countryside like the Launch Assembly Building lords it over Cape Canaveral it’s the new DuPont (DD) cellulosic ethanol project, on the outskirts of the town of Nevada. Functional yet inspiring, imposing yet accessible when it opens before year end 2014 it is sure to be a monumental addition to the cellulosic biofuels landscape. Last week we wrote: “There are strategic reasons to develop this new industrial bioscience business in central Iowa not just the “we’d love to have you, wages are low, cost of...

by Debra Fiakas CFA The first thing we think about Brazil in the context of alternative energy is sugar cane and ethanol. In the last growing season Brazil producer 596 million tons of sugar cane, a feat that secured Brazil’s position as the largest sugar cane grower in the world.  About 55% of the crop was used to producer ethanol and the balance ended up as sugar.  Brazil’s sugar cane industry association has predicted that despite a severe drought, the 2014-2015 growing season will be even more productive with expected sugar cane production in the range 632...

Jim Lane  E85 ethanol? Been stuck with low sales for years – with producers pointing to “no market access”.  Yet, Tesla was faced with “no market access” and built its own market. What lessons can be learned? Last week, Tesla Motors (NASD:TSLA) announced the completion of its transcontinental US Supercharger Corridor, a network of stations that enable Model S owners to (somewhat) rapidly recharge their Teslas on a cross-country drove. And intrepid Tesla blgger Hamish McKenzie relayed the news last week that two Tesla Model S sedans completed a 76-hour coast-to-coast all-electric crossing. The news follows...

by Debra Fiakas CFA Judging by stock prices, investors have decided Ceres, Inc. (CERE:  Nasdaq) is the favorite horse in the cellulosic ethanol race  -  at least among those that have publicly traded stocks.  Ceres develops and sells sorghum, switch grass and miscanthus seeds to feedstock growers that supply cellulosic ethanol mills. The stock is selling for a buck and change, which is far more impressive that the stocks of most companies that could be included in the “cellulosic biofuel” sector. Ceres announced fiscal second quarter 2014 results at the beginning of this month.  The company...

by Debra Fiakas CFA Legislation introduced in the U.S. Senate has put corn-based ethanol fuel on the chopping block.  The bill’s title says it all – Corn Ethanol Mandate Elimination Act of 2013.  Put into place in 2005, the Renewable Fuel Standard required refiners and blenders to use 16.6 billion gallons of renewable fuel in 2013, of which approximately 13 billion gallons will be met through ethanol made from corn.  Support for the legislation is coming from all quarters.  It is not surprising that poultry, dairy and beef people would think this is a good idea,...

by Debra Fiakas CFA In an article posted in November I incorrectly named the product of Kior, Inc. (KIOR:  Nasdaq) as cellulosic ‘ethanol’.  Kior does indeed use cellulosic biomass -  wood chips to be exact  -  but the company’s catalytic pyrolysis technology turns out crude oil that can be further refined into gasoline or diesel.  Ethanol, on the other hand, is the product of a fermentation process.  There is nothing new about catalytic pyrolysis  -  superheating in a container with no oxygen.  Oil refiners have been fracturing large, complex hydrocarbons using heat and catalysts for...

Jim Lane In New York, Sweetwater Energy and Pacific Ethanol (PEIX) announced a project to supply customized industrial sugars for the production of cellulosic ethanol. The agreement supports the construction of a cellulosic biorefinery, contingent upon Sweetwater Energy obtaining the necessary financing and permits, at the Pacific Ethanol Stockton facility capable of producing up to 3.6 million gallons of cellulosic ethanol annually. Pacific Ethanol operates and manages four ethanol production facilities, which have a combined annual production capacity of 200 million gallons in Boardman, Oregon, Burley, Idaho and Stockton, California, and one idled facility is located in Madera, California....

Jim Lane Sorghum Bicolor photo by Matt Lavin As Ceres points towards minimal plantings of its sweet sorghum hybrids in its key market of Brazil for next year, investors ask two questions. Will sweet sorghum realize its vast potential, and when? Just when many observers hoped that Ceres, Inc. (CERE) would dramatically expand hectares planted with its Blade hybrid sweet sorghum, the 2014 planting outlook was released last week and the total hectares crashed from 3000 in 2013 to 1000 in 2014. It’s a far cry...

by Debra Fiakas CFA Green Plains Renewable Energy, Inc. (GPRE:  Nasdaq) is one of the few U.S. ethanol producers to turn a consistent profit.  The company is half way through its fifth consecutive profitable year.  Sales in the most recently reported twelve months totaled $3.4 billion, on which the company earned $40.5 million in net income.  During this period Green Plains generated $100.0 million in operating cash flow. Tracing Green Plains profits requires a bit of effort by investors.  The company channels its products through a marketing and distribution division.  Thus while, ethanol production...

by Debra Fiakas CFA The Andersons (ANDE: Nasdaq) is not one of the first companies that comes to mind as an alternative energy company.  However, ANDE has been in the Ethanol Group in our Beach Boys Index for some time.  Ethanol is one of six revenue sources for The Andersons, contributing $743 million to the top line in the year 2012.  That represents about 14% of The Anderson’s total revenue base.  The company produces ethanol in four plants located in the Midwest with a production capacity of 330 million gallons per year. ...

by Debra Fiakas CFA In the last two posts Pacific Ethanol (PEIX:  Nasdaq) and Aemetis, Inc. (AMTX:  OTC/BB) got all the attention.  Both companies have crafted their facilities to accept lower-cost sorghum as an alternative feedstock, opening up the door to lower carbon intensity measures for their ethanol output.  There are other ethanol producers in the state, which we believe are still relying on corn as feedstock.  Which companies will remain in operation in California is not yet clear.  Standards sets by California Air Resources Board (CARB) for the carbon intensity of alternative fuels favors local producers and...

by Debra Fiakas CFA For all the fuss, investors might think California’s ethanol market is another Gold Rush.  The Midwest-based ethanol producers are up in arms over California’s attempt to set standards for renewable fuels sold in the state.  My recent post, describes legal maneuverings by South Dakota-based ethanol producer Poet, LLC and others to block a ‘carbon intensity’ standard imposed by the California Air Resources Board (CARB).    Under the CARB standard the carbon intensity of alternative fuels includes elements for power and other inputs as well as transportation and distribution.  The formula CARB is...