The First Ever Second-Generation Biofuel Plant established in Saxony, Germany opened April. As we reported previously, a German/Dutch joint venture named Choren claims they'll soon be converting wood scraps into 13k tons per year of "SunDiesel." The list of claims for this venture is long: 90 percent fewer CO2 emissions than conventional diesel, less dependence on oil imports and less disturbance to world food markets than conventional biodiesel. Meanwhile… Autobild (print edition) says complex production processes means it will cost about one Euro to produce a liter of SunDiesel. Choren responded to the news by pointing-out that their first plant is not "optimized for low production costs." What else, then? never mind. Choren is busy talking-up its large-scale plant, set to begin production in 2013 in Brandenburg, Germany. That new factory would/should/could produce around 200k tons/year of SunDiesel, at a cheaper price. That's enough fuel to satisfy 0.6 percent of Germany's demand for diesel.

AutoblogGreen reports that Brazil is launching a "diplomatic offensive" to promote its sugarcane ethanol exports to the EU, culminating at this November's World Biofuel Summit in São Paulo. Underlying the push: a Brazilian ethanol glut that American corn farmers have sworn their lives to keep on the other side of the border (and yes, we do have a border). Speaking to the Europeans, Brazil's Director of Energy tried to contrast Brazilian sugar-based ethanol and American corn-based ethanol. André Caranha Correa arguies that his countries product does not impact foodstocks. Of course, Brazilian ethanol does present a number of less-than-feel-good challenges, from widespread ecological impacts to the near-slave labor conditions of workers in the sugar industry. But hey, what else are charm offensives for? 

Energy Business Review reports that French hypermarketeers System U are pulling the plug on their bio-ethanol pumps for one simple reason: no one's buying E85. Needless to say, critics of the critics who criticize E85– including the publication's "staff writer"– view the move as insupportable. "Plans to stop selling the fuel are being driven by a lack of consumer demand, perhaps because the French government has not yet developed a taxation system that offers sufficient incentives for motorists to purchase E85 vehicles." Zut alors! Meanwhile, System U has betrayed the farmer-friendly French government's best laid plans. "This marks a further setback for the French government, which had set an objective to open 500 E85 stations by the end of 2007, but has seen only approximately 200 installed to date." In Total? "French fuel retailer Total made an agreement with the French government through which it was to open 400 of the 500 planned E85 sites by the end of 2007. However, Total has only installed E85 pumps at 35 of its service stations." So who's the scélérat here? "By focusing tax benefits purely on tailpipe emissions, to the detriment of the fuel's carbon-positive effects, the government has been unable to provide an environment in which demand for E85 can flourish. 'End Intelliext." C'est la vérité, n'est-ce pas? 

A while ago, James Fallows at the Atlantic Monthly asked readers to submit suggestions for "the stupidest policy ever." He rigged the deck by taking The Gulf of Tonkin resolution off the table, but the winner, by a landslide, is the blind support our "independent" politicians gave to the bio-ethanol scam. (And you're the victim.) The mag gave two of the winner's proponents, Justin Cohen and his father Reuben, special mention for their comprehensive summation of all that's wrong with bio-ethanol. "I think bi-partisan support for ethanol is more stupid [than the McCain-Clinton 'gas tax holiday' plan], because it's actually harmful and because it not only panders to the public… worse it panders to a special interest group (Midwest farmers and their regional politicians). It's harmful because: 1) it helped to catalyze higher levels of food inflation, 2) it consumes as much energy to make and distribute as it provides, 3) it deflects attention from developing/trying sound policies to enhance our energy security, 4) it didn't allow for removal of taxes on the import of truly energy efficient ethanol produced in Brazil from sugar, and 5) it's a such an extreme example of government dysfunctionality it causes people like me to become truly disillusioned with the political process."

Last year, the Canadian government initiated an "aggressive push" to produce fuel from crops. The 2007 federal budget included a C$2.2b support package for biofuels. According to a report in the Globe and Mail, "political consensus in favor of biofuels is suddenly breaking down." Member of Parliament (MP) Keith Martin thinks it's time to step back and "put a moratorium on it now so people can actually wrap their heads around the facts; the current biofuel strategy is deeply misguided." The president of the Canadian Renewable Fuels Association claims "the issues that come up have nothing to do with food supply."  Gord Quaiattin says concerned Canadian should blame rising oil prices for food costs. "Everybody's screaming about 'food for fuel'; it's too bad we can't have a rational debate in this country," sighs MP David McGuinty. Still, it may be too late to shut the door: the government has poured billions into a biofuel facilities fund. Fourteen plants are running already and six more being built- so this horse may have already left the barn.

I know what you're thinking: he grabbed the New York Times' columnist's most ridiculous assertion and repeated it out of context. If so, you need to read "Bring on the Right Biofuels," 'cause this Roger Cohen guy is the MR. Context Manipulation. After listing the charges against bio-fuels, Cohen says "hogwash and bilge"– and then admits he was somewhat wrong about ethanol's critics being somewhat wrong. "I’ll grant that the fashion for bio-fuels led to excess, and that some farm-to-fuel-plant conversion, particularly in subsidized U.S. and European markets, makes no economic or environmental sense. But bio-fuels remain very much part of the solution. It just depends which bio-fuels." So, on to [theoretical] production of ethanol from switchgrass, wood chips and garbage, right? Wrong. Cohen is too busy pinning the blame for rising food prices on oil prices and rising standards of living in third world developing nations. "They’re eating twice a day, instead of once, and propelling rapid urbanization. Their demand for food staples and once unthinkable luxuries like meat is pushing up prices." Perhaps. Anyway, what's to be done about ethanol? Remove the tariff against Brazilian ethanol! And? And that's it.

Speaking at the Beijing auto show, GM CEO Rick Wagoner went on the E85 offensive. The automaker's Beancounter-in-Chief ripped into a recent United Nations (UN) report claiming that ethanol production is warming the globe and reducing vital food supplies (a.k.a. a "crime against humanity"). Wagoner described the UN report as "shockingly misinformed." Yep, an army of scientists from all over the world has nothing on Rick Wagoner. Yes yes; the UN has a bureaucracy to rival GM's and its own political axe to grind. But more importantly, this kind of commentary from Wagoner [via the Financial Times] highlights GM's breathtaking arrogance and a failure to realize the development money they've spent on ethanol so far is a sunk cost. Wagoner tried to deflect attention the morality of raising cane in former rainforests and making corn juice out of food crops. "Oil prices are a far bigger driver of higher food prices than ethanol." Ain't moral relativism grand?

Find something bad to say about biofuels, and its defenders will likely simply point to second-generation biofuels as the way forward. The problem has been that nobody has actually been commercially producing a second-generation biofuel based on biomass instead of food-grade grains and oils. Until now, that is. Auto Motor und Sport reports that Choren, a joint venture of Shell, Daimler and Volkswagen, has opened the worlds first biomass-to-liquid (BTL) fuel plant in Freiberg, Germany. It will be a few months before the first drops of BTL diesel hit the market, but once production ramps up the plant will pump out 4.75m gallons of the fuel every year. Choren's BTL process involves relatively dry (10-15 percent moisture) biomass which is gasified under high heat and then liquified (biofuel wonks can check out more details at Green Car Congress), extracting a diesel fuel. The Institute for Energy and Environmental Research in Heidelberg reckons that although the BTL fuel is net beneficial when compared to Soy or Rapeseed-based biodiesel, there are emerging technologies which could better utilize the biomass used in the BTL process. The German Minister of Industry likewise warns that while production costs are low when making small batches using straw and forest waste, further research is needed to better understand the impacts of broad proliferation of the biofuel. At least it won't raise the price of beer!

Speaking to The New York Times, Republican Senator Charles E Grassley made no secret of his contempt for "foreign officials" at a Washington conference on food prices. Grassley says biofuels are not to blame for recent food price spikes and the resulting political instability (e.g. Haiti's riots). "He questioned why they were not also blaming a drought in Australia that reduced the wheat crop and the growing demand for meat in China and India. 'You make ethanol out of corn,' he said. 'I bet if I set a bushel of corn in front of any of those delegates, not one of them would eat it.' Equally unsurprising (if slightly more conciliatory), the president of The National Corn Grower's Association says ethanol production has a minor impact on food prices and supply. "There’s no question that they are a factor," admits Ron Litterr. "But they are really a smaller factor than other things that are driving up prices." Yes, well, the Old Gray Lady reports that "a fifth of the nation’s corn crop is now used to brew ethanol for motor fuel, and as farmers have planted more corn, they have cut acreage of other crops, particularly soybeans. That, in turn, has contributed to a global shortfall of cooking oil." So ethanol might not be "the" problem, but it's "a" problem. And that's going to get… better?

In the growing war of words between bio-fuel producers and savvy environmentalists, pro-ethanol supporters often point to Brazil, claiming that the South American country's energy independence offers a template for America's future. Detractors already know that Brazil's booming ethanol production is based on geography (sugar cane rather than corn), takes a heavy toll on the [ideologically sacrosanct] rain forest and has little to do with the country's net energy consumption. And here's a new wrinkle. Energy Business Review says "Brazilian ethanol producers reportedly exported a majority of their fuels to Europe in 2007. Increased exports have saved Brazilian sugarcane producers from going bankrupt as sugarcane prices fell below the cost of production on commodity exchanges." This is a bitch because both the U.K. and Germany have recently "de-incentivized" bio-fuel consumption. And that means… "Brazilian ethanol exporters are pro-actively lobbying with common interest groups in the US, to help create a global market for ethanol." Energy independence be damned; what's the bet America's corn-fed politicians raise the barriers? 

The President of the World Bank [via NPR] says demand for ethanol and other biofuels is a "significant contributor" to soaring food prices around the world. Robert Zoellick says droughts, financial speculators and increased demand for food have created "a perfect storm" of climbing food prices. In the U.S., the price of corn has more than doubled due, in part, to the demand for alt fuels such as ethanol. The World Bank figures food prices will stay high, or go higher, over the next couple of years. "Biofuels is no doubt a significant contributor," says Zoellick. "It is clearly the case that programs in Europe and the U.S. that have increased biofuel production have contributed to the added demand for food." As we reported last week, some 20 percent of last year's U.S. corn crop went to ethanol production; it's likely to reach 30 percent next year. Boondoggles can be lethal.

Last month, Jonny Lieberman asked if anyone had been hit with a fuel surcharge. And no wonder. News10 says high fuel prices "are being felt particularly hard by small business owners." San Diego's delivery business has been particularly hard hit. With gas at an average of $3.73/gal., "some small delivery businesses [are] wondering what to do." (Deliver packages?) CMF Incorporated's fuel bill has gone up by $4k in the past year– that's not including the cost of diesel fuel for their larger delivery trucks. Even Jonny's dreaded fuel surcharge doesn't guarantee the main man a profit. What's a small business to do? Raise rates too high, and they risk losing customers. Keep them static and they lose money. It's a bummer– for all concerned. "I'm walking into companies where the phone is not ringing and everyone's in this type of slump or depression emotionally," owner/driver Ed Bidwell reports with a distinctly California-esque metaphorical shrug. "And that's what gets to me."

Environmental issues have topped cost reduction as the major concern for the auto industry for the first time according to a survey by DuPont and the Society of the Automotive Industry (SAE) [via CNN Money]. The survey of automotive designers and engineers picked a basket of challenges– from CAFE standards to emissions controls– as the industry's top concern, unseating cost reduction after 14 years. Fifty-three percent of those polled selected environmental concerns vs. 32 percent who went with cost reduction, Some 54 percent also say consumers are most concerned with improvements in fuel efficiency; only 37 percent think improved comfort and convenience float purchasers' semi-metaphorical boat. In less surprising news, alternative fuel-powered vehicles were named as the technology with the greatest impact on the car industry for the fifth year running. Biofuels and weight reductions also climbed in importance in this year's poll, completing the snapshot of an industry in transition.

Audi may be right on target with their plans to import diesels . A study by J.D Power (via the Detroit News ) shows diesels and gas-electric hybrids will have 17 percent of the U.S. market by 2015. Surprisingly, Power thinks diesels will outsell hybrids because of the higher cost of admission to the hybrid club; they predict by 2015 hybrids will increase to seven percent of the market (from the current 2.2 percent) while diesel vehicles will make up ten percent. Sales of four-cylinder gas engines are also expected to rise sharply as the automakers scramble to meet the new 35mpg CAFE standard. They don't think hydrogen fuel cells and pure electric cars will have much impact as they won't be available in any significant numbers during the years covered by the study. But what about E85? The proportion of vehicles available that can run on corn squeezin's will nearly double but few of them will be using it because it still won't be available in most places. That won't matter to the manufacturers, though, if the new CAFE standards have the ethanol loophole the current one does.

Corn prices hit an all-time high price of $6.025 per bushel yesterday, then settled to a not-much-better $6. Ethanol producers are feeling the hurt, as the corn they use now costs more than they're currently getting for the ethanol they make from it. Earlier this week, Michael Jackson (no, not that one– the president of Syntec Biofuel) explained: "For years, corn was cheap and fermentation processes for ethanol production came to completely dominate the biofuel industry in North America. Now, with corn prices well over $5 a bushel, corn ethanol economics have gone out the window." That isn't slowing the ethanol producers though. The American Farm Bureau Federation estimates that about 20 percent of last year's corn crop went to ethanol production and predicts that'll go up to 30 percent for the next crop year. With 147 plants in production and another 61 planned, the situation will only get worse. In the meantime, corn growers are reaping record profits while consumers can expect higher prices for anything that's corn-based. Sounds vaguely familiar, doesn't it?