A look at 2007 and 2008
2007 has been a rough one for the biofuels industry. In hindsight, it will be noted as a turning point for the industry. There are three big developments that propagated during this year:
- Corn ethanol development stalled due to high corn prices and low ethanol prices. The fallout has been a receding of enthusiasm for ethanol from the financial industry and a second look from the agricultural community (not to mention consumers who don’t like high beef prices).
- Several start-up companies emerged focusing on advanced biofuels like biobutanol or cheap, non-corn ethanol. The kick-off of this initiative was the $387 Million given by the DOE earlier this year to fund several cellulosic ethanol initiatives.
- Real industry movement on electric vehicle systems (Tesla, GM, Ford, Toyota)
2007, however, should be known as a disappointment. We were supposed to have cellulosic ethanol this year. And even now, it’s still a question mark.
What is certain is that something different must be done about the cost of producing fuel ethanol in the U.S. before the U.S. manufacturers flounder. These companies aren’t yet profitable and financially sustainable. They won’t last until the economics of ethanol are fundamentally changed.
Some positive elements of 2007, however, were some great technical breakthroughs, including some new companies, that are focused on taking on different parts of the value chain of biofuels and other chemicals (hydrogen).
2008, I predict, will be a bit more of the same. Big corn ethanol producers will continue to have consolidation and bankruptcies. But new start-ups will begin to gain ground. We’ve already seen RangeFuels break ground on a new facility and others are developing pilot facilities. This will be the most significant legacy of 2008 weather they are ultimately successful or not.
My hopes for 2008:
- A breakthrough (or more testing) on hydrogen production. While there are many detractors, I have a lot of hope for hydrogen - and at the moment, it’s only hope and not promise.
- Real evidence of ethanol demand growth. The softening of pricing and a leveling of fuel demand in December make me wonder weather or not the demand of ethanol has any more legs. The recent energy bill is a help, but not a guarantee.
- A commercial biobutanol effort. It’s still not clear that this product can be made in volume. So I’d like to see, say, a 30 Million gallon /yr facility built to really try and prove it out.
- A really successful test of a carbon sequestration facility (these are in process, but I haven’t heard a big success story).
Posts from this year:
- Amaizing Ethanol IPO
- What’s ADM’s Plan?
- The Biobutanol Pathway
- Hydrogen from Algae (hydrogen pricing analysis)
- Biofuels Essay: Intro / Part 1 / Part 2 / Part 3
Thanks for reading. Have a Happy 2008!
Doug
While I agree with all your comments, I would like and expect to see a major increase in the coverage and investment of “wave power”. This still very small industry, with enormous potential, is poised for large breakthroughs in 2008.