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Biofuels Deathwatch: Pacific Ethanol, Nova Biosource Join the Bandwagon

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The ethanol industry just can’t catch a break. We started tracking plant closures more than a year ago, when record-high corn and soy prices and an ethanol glut had squeezed ethanol’s profit margin to a slim 25 cents per gallon, down from $2.30 a gallon in 2006.

The storm hasn’t exactly cleared since then. This week, environmental arguments against corn-derived ethanol and mandates to blend more ethanol into gasoline got extra ammo with a new study showing that growing enough corn to meet renewable fuel standards will mean increasing the “dead zone” in the Gulf of Mexico, as the Wall Street Journal reports.

In California, Sacramento-based Pacific Ethanol (s peix) said it could run out of cash within a month and is considering bankruptcy, according to the Sacramento Bee. That’s the option Nova Biosource Fuels has already decided to take. The biofuels refiner and marketer filed for Chapter 11 on Tuesday, and said yesterday that the New York Stock Exchange plans to seek delisting of the company’s stock and has suspended trading of its shares.

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While corn has been battered more than most feedstocks since the food-fuel debate erupted and cellulose seized the mantle of next-next-big-thing in biofuels, Nova’s fall reflects more than the tailspin of ethanol derived from corn. It’s also part of the larger credit environment that has many cleantech startups on the ropes, not to mention the drop in oil prices, which has put the squeeze on alternative fuels. The company supplied biodiesel to commercial truck fleets, and relied on more than 25 different vegetable oils, animal fats and greases in an effort to drive down costs. As Cleantech Group reports, the company posted a net loss of $11.1 million in the quarter ending January 31.

Today we’re adding Nova’s two refineries to our map — one in Seneca, Ill., and another in Clinton, Iowa — which had a combined capacity of 70 million gallons per year. Seven other plants, which Nova had planned to build at capacities of tens of millions of gallons apiece, never saw the light of day.

8 Responses to “Biofuels Deathwatch: Pacific Ethanol, Nova Biosource Join the Bandwagon”

  1. WeMadeAmistake

    So long as President Narcissist keeps spending more money that we do not have, bio-fuel and alternative enegy costs will never come down. Even if they do, this irresponsible spending and his socialist policies are going to inflate prices way beyond what any net reduction in alternative energy moves will bring. Worse, the Cap & Trade legislation is nothing more than a tax and the revenue squezed further from 100% of Americans will result in a huge backlash for energy alternative industry. It does not look good with an arrogant Narcissist leader like we have at the helm. A White House that follows idealism instead of reality.

  2. Recall that they started going out of business when oil prices spiked this summer because their feedstock prices also spiked. If high oil prices and low oil prices both put you out of business, maybe, just maybe, this model is not economically viable.

  3. CNCMike

    It is not inefficient to make ethanol from corn. 87% of all corn grown in this country is fed to livestock and nearly all the starch in that corn is wasted because they cannot digest the starch, especially cattle. All of that 87% should be used to make ethanol as the dried distillers grains with the soluables left in the liquid are a much higher quality animal feed than the corn is. In fact every 30 lbs of dried distllers grains with soluables will produce more meat and more milk than 100lbs of corn. So in reality we would be getting a much higher quality fuel than gas or diesel from a normally wasted energy source and increasing the food supply at the same time. Plus there is no waste produced making ethanol. Every byproduct, or more acurately coproduct is a very useful, all natural source of animal feed, fertilizer, pesticide, herbicide, even the CO2 is a useful product that would prevent us from burning fuels to produce.

    What you want to watch is how fast the price of oil and gasoline go up once the oil companies have succeded with their false information and propaganda that is killing the ethanol industry. It will be just like after WWII when the oil industry said it could produce synthetic rubber for 11 cents a pound vs 22 cents a pound from ethanol, using of course tax payer subsidized plants. The oil companies got the contract to dismantle the established ethanol industry and then the price of synthetic rubber shot up to 30 then 40 and finally 65 cents a pound because there was no longer any competition.