Northwest Renewable News

Your Daily Source for Renewable Energy News in Oregon, Washington, Idaho, Montana & Northern California

US biofuels industry expected to consolidate January 5, 2009

Filed under: Biofuels — nwrenewablenews @ 1:58 pm
Tags: ,

The US biofuels industry is expected to undergo consolidation in 2009, with many of ethanol and biodiesel plants either closing or being absorbed by a few larger players who will dominate the market.

The US has 171 biodiesel refineries with estimated capacity at more than 2.4bn gal/year, well ahead of the 6m gal/year mandated by the US government for 2009.

With domestic renewable fuel infrastructure relatively underdeveloped and Europe taking an increasingly aggressive stance against US biodiesel imports, many analysts consider the US market oversupplied.

Demand for US biodiesel in the domestic and overseas markets will be muted through the first quarter of 2009. The EU, traditionally the destination of about 70% of US biodiesel, is investigating allegations of dumping by subsidised US biodiesel sellers and has taken steps to reduce imports.

At home, the rapid decline in crude oil values – from $147/bbl in July to the $40s/bbl in December – has squeezed profit margins for biodiesel producers who compete against the petro-fuel.

In both arenas, the global recession also has contributed to a considerable softening in demand.

Some biodiesel industry representatives continue to argue that soy-based biofuels have little influence on food markets supply and pricing. However, commercial suppliers are increasingly looking toward such “second-generation” feedstocks as jatropha seeds and algae. Both of these potential fuel sources yield more oil than conventional feedstocks and exist outside the “fuel vs food” sphere.

Market analysts and producers consider algae an especially promising feedstock, as it can be grown virtually anywhere and, by some estimates, can yield 2,000 times more oil than soybean feedstocks. A commercially viable algae-based biodiesel process is still considered at least five years away, however.

On the ethanol side, consolidation and mothballing were poised to be the buzzwords for 2009, market sources said.

The vulnerability of the US ethanol industry came under the spotlight in October, when VeraSun Energy, the country’s second-largest producer, filed for bankruptcy, citing shrinking liquidity.

VeraSun was only one of at least six producers that have halted production or sought bankruptcy protection in the fourth quarter of 2008.

Read More: http://www.icis.com/Articles/2008/12/31/9181188/outlook-09-us-biofuels-industry-expected-to-consolidate.html

Advertisements
 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s