Ethanol

The Great Ethanol Debate: Shoddy Economics all 'Round. Like many environmentalists, I'm not a big fan of the ethanol industry, especially corn ethanol.  From a net energy standpoint, even advocates agree that you only get a little more energy out than the energy you put in (Energy Return on Energy Invested or EROEI of 0.9 to 1.5, depending on whom you ask... some say it's much lower.)  At this point, most environmentalists simply decide that ethanol isn't sustainable enough for them, and go back to talking about photovoltaics (EROEI around 8, PDF) and wind (EREOI 30-70, PDF).  The last...

by Debra Fiakas CFA The stark reality of basing their business model on a food commodity has been brought into sharp focus for ethanol producers.  The drought settling across the U.S. corn crop is helping drive up corn prices for hog producers, chicken farms and ethanol plants alike.  Investors who simply must have a position in ethanol might think the sugarcane-based ethanol producers could offer a safe haven against the supply and margin squeeze that is certain to hobble GreenPlains Renewable Energy (GPRE:  Nasdaq), Pacific Ethanol (PEIX:  Nasdaq) and Poet (private), among others relying on corn feedstock....

Jeff Coombe The Ethanol industry has only responded tepidly to the Volumetric Ethanol Excise Tax Credit in the past, so why should it be renewed? The U.S. ethanol industry is nearing a major deadline. The industry's primary subsidy mechanism, the Volumetric Ethanol Excise Tax Credit (VEETC), is set to expire on December 31, 2010. Federal ethanol subsidies were worth roughly $5 billion in 2009, a figure large enough to create vigorous debate over their renewal. Some call the credits a boondoggle, others a vitally important lifeline for an industry still in its formative years. ...

Archer-Daniels-Midland Co. (ADM) and Siouxland Ethanol LLC are pleased to announce the formation of an ethanol marketing agreement. As part of this marketing agreement, ADM will market all ethanol produced by Siouxland Ethanol at its forthcoming 50 million gallon Jackson, Nebraska facility. Construction has begun and the plant is expected to be operational in early 2007. In addition to producing ethanol, the plant will produce an estimated 165,000 tons of distiller grains on an annual basis.

by Debra Fiakas CFA Sorghum Bicolor photo by Matt Lavin    Like the Fairy Godmother in Cinderella, the Environmental Protection Agency has waved a wand and given sorghum a new dress and slippers.  Sorghum has been designated as an eligible feedstock under the Renewable Fuels Standards for production of advanced biofuel.  Only biofuels produced from non-corn starch, sugar, or lingo-cellulosic biomass, which reduces carbon intensity by 50% or more from a gasoline baseline, qualify as ‘advanced.’ Sorghum qualifies for advanced fuel status as the result of a 53%...

by Debra Fiakas CFA Recently, in compiling our lists of remarkable small-cap stock trades, I was surprised to find the shares of Ceres, Inc. (CERE:  Nasdaq) among stocks setting new 52-week lows.  Ceres has only been trading since its initial public offering in February 2012, when the company sold 5.0 million shares at $13.00 per share.  After a brief trade higher in the early spring, Ceres shares have been steadily losing ground, finally setting an all-time low of $6.02 last week. Named after the Greek Goddess of Agriculture, Ceres is a self-styled energy crop producer.  Ceres...

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...

The International Monetary Fund released its Spring 2007 World Economic Forecast today. Fuel Vs. Food There is a short sub-section in Appendix 1.1 ("Recent Developments in Commodity Markets") that I thought might be worth sharing with you. 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". In it, the IMF notes that food prices (as measured by its own food price index) rose by 10% in 2006, driven partly by a poor wheat crop in certain countries but...

Jim Lane In Nebraska, word has arrived from Green Plains (GPRE) that it will purchase the Madison, Ill., Mount Vernon, Ind. and York, Neb. ethanol facilities from Abengoa (ABGOY) Bioenergy with combined annual production capacity of 236 million gallons per year, for approximately $237 million in cash, plus certain working capital adjustments. The company said it was the successful bidder on three ethanol plants for sale conducted under the provisions of the U.S. Bankruptcy Code. Upon completion of the acquisitions, Green Plains will own and operate 17 dry mill ethanol facilities with combined production capacity of nearly 1.5...

Jim Lane Address: 200 Penobscot Drive Redwood City, CA 94063 Year founded 2002 Annual Revenues: $107 million (2010) Company description: Codexis serves major worldwide markets where clean technology can make a positive economic and environmental impact. Codexis CodeEvolver ™ directed evolution technology accelerates development of high value sustainable products. Our focus is on the cost-effective conversion of renewable resources into transportation fuels, pharmaceuticals and biobased chemicals, and on the development of new technologies for effective air and water treatment. Stock: CDXS; NasdaqGS Type of Technology(ies): Directed evolution – CodeEvolver™ directed evolution...

Jim Lane In California, Aemetis (AMTX) will acquire all of Edeniq’s outstanding shares in a stock plus cash merger transaction. In 2015, Edeniq generated approximately $20 million in revenue and $6 million in positive EBITDA. Headquartered in Visalia, California, Edeniq has 30 employees working at advanced research and development facilities, as well as pilot plants funded through grants from the DOE and the California Energy Commission. Under the terms of the agreement, Aemetis expects to issue between one and two million shares of its common stock (depending on whether Edeniq stockholders elect to receive part of their consideration...

Romm v. Kholsa In a persuasive series of articles, entitled "Pragmatists vs. Environmentalists" (Parts I, II, and III) on Gristmill, Vinod Khosla provides the reasoning behind his "dissing" of plug-in hybrids, which drew the ire of Joeseph Romm.  Neither seems to think the argument is settled, and Joeseph Romm returns fire here. As someone who knows as much about investing as Joe Romm and has written as much about Climate Change and Energy Policy as Vinod Khosla, I feel the need to jump into the debate and settle the matter.  (Will either of them will notice?)...