California’s Other Ethanol Producers

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...

An Insider’s Take on the Ethanol Industry

Biofuels: Panacea or Pandora's Box? Last night, I attended a talk in the Rocky Mountain Institute's "Quest for Solutions" lecture series titled "Biofuels: Panacea or Pandora's Box?"  We were told that a video of the event will soon be up on RMI's website.  Most of us were probably there to hear Amory Lovins speak, and no doubt most of the news coverage of the event will focus on him.  Amory is a visionary as well as an engaging speaker, and Tom Foust of the National Renewable Energy Lab helped shed light on the science of biofuels, but for stock...

EPA Administrator Scott Pruitt Resigns

by Jim Lane In Washington, EPA Administrator Scott Pruitt has resigned. US President Donald Trump announced the exit on Twitter, commenting, “President Donald Trump announced Pruitt’s exit, saying on Twitter “I have accepted the resignation of Scott Pruitt as the Administrator of the Environmental Protection Agency. Within the Agency Scott has done an outstanding job, and I will always be thankful to him for this.” Deputy Administrator Andrew Wheeler becomes acting administrator. The Digest’s Take Elsewhere in the media, it is widely reported that Pruitt was undone by a growing number of controversies and investigations relating to his conduct as EPA Administrator, particularly relating...

The API Bushwhacks Ethanol

Jim Lane Who’s right, in the fight of their lives over E15 ethanol blending? Whose data’s a Looney Tune, whose is from the real-world? Yesterday the American Petroleum Institute, in an apparent impression of Yosemite Sam, held a press conference in DC to highlight a new report from the Coordinating Research Council on E15 ethanol blends. The report is here. The API: Blast your scuppers, now I gotcha, ya’ flea-ridden riff-raff! Use of the ethanol gasoline blend E15 may endanger fuel systems in millions of 2001 and newer vehicles,...

Ethanol Producers Climb to New Highs

Shares of ethanol producers extended their recent rally Monday, as oil refiners continued their rush to substitute ethanol for a toxic gasoline additive before the summer driving season shifts into gear. The enthusiasm for ethanol is tied to the fate of methyl tertiary butyl ether (MTBE), an additive mixed into gasoline to reduce pollution. However, studies have found that MTBE to be carcinogenic if it seeps into a water source. States are increasingly banning MBTE due to contamination concerns. Companies wishing to comply with new laws and worried about the potential for legal liability are...

Baron’s Thinks Archer Daniels Stock to Rise on Ethanol Harvest

Barons profiles Archer-Daniels-Midland Co. (ADM) in the April 3rd edition. They feel that ADM shares are poised to climb further, literally fueled by its dominance of the ethanol market as investors seek alternative energy investments. Archer Daniels was believed to have secured a 50-cent per gallon increase in ethanol contract pricing to $1.85 per gallon in recent negotiations. Given ethanol price rises seen in the commodities market, Archer Daniels could reap significant further increases in its next round of talks for October contracts.

3 Alternative Energy Stocks You Need to Know

In the face of a declining overall energy market today, three of our favorite alternative energy stocks posted strong gains on high volume. The Oil Services HOLDRs ETF (OIH) was down 2% and the PowerShares WilderHill Clean Energy ETF (PBW) was down 1.7%. 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...

The Future of Alternative Fuels: Ethanol

Besides a slew of clean car announcements connected to the North American International Auto Show, the alt energy topic that has made media and blog headlines most often over the past week has been alternative fuels. We are thus going to run a 2-part series on alternative fuels this week as follows: ethanol today and coal-to-liquids tomorrow. ETHANOL: INVESTOR FRIEND OR FOE? I’m going to start this post with a statement of opinion: I don’t really like corn-based ethanol (as an investment), I never have, and, as a result, I haven’t followed this space as closely as...

Ethanol and Biodiesel: 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. 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...

Green Plains Nabs 3 Ethanol Plants On The Cheap

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...

EPA increases US Renewable Fuel Standard Volumes, But Only Slightly

Jim Lane In Washington, the U.S. Environmental Protection Agency announced final volume requirements under the Renewable Fuel Standard program today for the years 2014, 2015 and 2016, and final volume requirements for biomass-based diesel for 2014 to 2017. 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. “The biofuel industry is an incredible American success story, and the RFS program has been an important driver of that successcutting carbon pollution, reducing our dependence on foreign oil, and sparking...

Enerkem’s $125M IPO: The 10-Minute Version

Jim Lane The second technology focused on unlocking value in municipal solid waste comes to the public markets. Here’s our 10-minute version of the filing, with a translation of the risks into English. In Canada, Enerkem has filed an F-1 registration statement for a proposed $125 million initial public offering. The number of shares to be offered in the proposed offering and the price range for the offering have not yet been determined. The lead book-running managers for the offering are Goldman Sachs, Credit Suisse and BMO Capital Markets. The company is currently ranked #7...

What I Sold: Pacific Ethanol (NASD:PEIX)

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 describe what I plan to do with the cash, and the second was about Carmanah Technologies.   UQM Technologies was one I didn't sell. In May of last year, I took a look at competitive forces in the corn ethanol industry.  While I was rather negative on the industry at the time, when ethanol stocks fell in the summer and fall of 2007, I called the bottom much too soon, and...

Clearfish Research Profiles Pacific Ethanol (PEIX)

Pacific Ethanol (PEIX) is building a refinery in California for corn based ethanol production in the heart of the California agricultural and dairy land (the biggest agricultural and dairy producer in the country). The refinery is supposed to come on line in Q4 2006, and there are plans for 4 more subsequent refineries. As there is unlikely to be any increased ethanol demand in California (see background above), the supply capacity they are bringing online must be able to disrupt the current out-of-state supply and/or undercut the current prices. They are one of the biggest distributors of that alternate...

Cosan: No Haven for Ethanol Investors

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....

DowDuPont To Exit Cellulosic Biofuels

by Jim Lane In Delaware, DowDuPont (DWDP) announced that it intends to sell its cellulosic biofuels business and its first commercial project, a 30 million gallon per year cellulosic ethanol plant in Nevada, Iowa. The Nevada project is still going through start-up. In an official statement, the company said: As part of DowDuPont’s intent to create a leading Specialty Products Company, we are making a strategic shift in how we participate in the cellulosic biofuels market. While we still believe in the future of cellulosic biofuels we have concluded it is in our long-term interest to find a strategic buyer for our...