Biofuels Deathwatch: Pacific Ethanol, Nova Biosource Join the Bandwagon

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.