Biofuels Industry on the Move

Published November 1, 2006

There is plenty of evidence of activity in the biofuels industry.

Archer Daniels Midland Company (ADM) is the world’s biggest ethanol producer, with production accounting for 17 percent of current worldwide ethanol industry profits. ADM has begun building its first biodiesel plant in Velva, North Dakota.

Petro-Canada, Canada’s second-largest petroleum refining and marketing company, is working with Iogen, another Canadian firm, to co-fund cellulosic biomass-to-ethanol technology. Goldman Sachs and Royal Dutch Shell are major investors in Iogen.

Genencor has joined a French consortium looking to produce ethanol from pulp mill waste. Novozymes is also involved in improving processes to convert cellulose to ethanol.

BP and DuPont have teamed up to develop and market nine million gallons annually of biobutanol produced from sugar beets. Unlike ethanol, biobutanol can be transported in existing pipeline infrastructure.

Cargill, Genencor, West Central Cooperative, John Deere, and Alliant Energy participate in the biofuels market in various ways. Wal-Mart is considering selling corn-based ethanol at gas stations it operates. Microsoft has acquired a 25.5 percent stake in Pacific Ethanol. Earth Biofuels is supplying a petroleum diesel terminal to Willie Nelson Biodiesel Co.

Chevron has acquired a 22 percent stake in Galveston Bay Biodiesel LB to build a 20+ million gallon per year biodiesel facility in Galveston, Texas. Similarly, Shell Oil is also involved in biodiesel, having formed in July 2006 Motiva Enterprises, a joint venture between Shell Oil and Saudi Refining. Motiva has begun blending biodiesel with petroleum diesel at its terminal in Dallas.

Recently, BP announced plans to invest $500 million over the next 10 years to create the Energy Bioscience Institute, which it describes as “the world’s first integrated research center dedicated to applying biotechnology to the energy industry.”

U.S. automakers are also engaged. DaimlerChrysler, Ford, and General Motors recently pledged to double production of vehicles capable of running on renewable fuels, to two million cars and trucks produced by 2010.

The automakers said they would develop more flex-fuel vehicles, some that can use biodiesel, and others that can run on E85 (an 85 percent ethanol/15 percent gasoline blend).

There are already more than five million flex-fuel vehicles on the road in the United States. The auto industry initiative could add another million such cars and trucks shortly.

William L. Kovacs