29 May 2012
Advanced biofuels that use waste feedstocks to deliver a low carbon footprint and do not compete with food crops are entering a critical stage of development as a number of new facilities prepare to enter service, according to a market analysis by Reuters.
According to the report, many of the companies are turning to wood waste, municipal solid waste, animal waste and cellulosic plant materials to deliver millions of gallons of biofuels.
Reuters said that U.S. government targets that call for fuel suppliers to blend billions of gallons of the new biofuels into U.S. transport fuel are the driving force behind the recent developments.
However, the report highlights that while the targets have helped biofuel companies develop and expand, they do not provide tax incentives or subsidies such as those that have helped the solar and wind industries.
Many of the companies have reportedly been working for years to develop technology that can economically process cellulosic sugars or waste materials into energy – with many securing investment from the world’s top oil companies.
Among the big oil companies to have made such investments are BP Plc (BP.L), Royal Dutch Shell (RDSa.L), Chevron Corp (CVX.N) and Total SA (TOTF.PA).
According to the analysis, one of the most anticipated new production plants is KiOR’s (KIOR.O) Columbus, Mississippi, facility that will process wood wastes into blendstocks that can be used in the production of both gasoline and diesel.
With a capacity of 11 million gallons per year, the analysts said that KiOR’s $222 million plant will be the largest of its kind in the U.S.
KiOR is reported to have already sold the planned output from the plant to Hunt Refining, FedEx Corp (FDX.N) and Catchlight Energy, a joint venture between Chevron and forest products company Weyerhaeuser Co (WY.N).
However, the Reuters report cautioned that even with the growth expected over the next few years, many industry executives are wary of promising an energy revolution that could lead to unrealistic expectations.
The analysis also noted that while KiOR and others such as Codexis Inc CDXS.N, Amyris Inc (AMRS.O), Solazyme Inc (SZYM.O) and Renewable Energy Group Inc (REGI.O) have all successfully tapped into the public markets, their shares have all fallen below their launch prices.
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