Yesterday, Former Florida Governor Jeb Bush told Brazilian sugar and ethanol business leaders that the U.S. should eliminate its tax on ethanol imports from Brazil.

“The U.S. should remove the tax on Brazil ethanol imports to really get the ethanol market moving,” Bush said of 54 cents per gallon tax.

The president of the powerful Sao Paulo Sugarcane Industry Association, Eduardo Carvalho, told Dow Jones Newswires, “It’s very important that someone like Mr. Bush has this opinion on ethanol. But there is no one person capable of removing tariffs by himself. This is a big political game.”

Bush also said the U.S. should treat ethanol as part of its energy policy, not agricultural policy. Brazil, the world’s ethanol export leader, and the U.S. account for three quarters of the world’s ethanol production.

Last Thursday, Missouri’s Senate, seeking to boost alternative fuels production and consumption, endorsed a biofuel mandate and new tax breaks for motorists who pump ethanol or biodiesel fuels into their gas tanks.

The bill endorsed last week would apply a 5% biodiesel mandate to diesel fuel sold in Missouri beginning in April, 2009 - unless the price of ethanol exceeds the price of traditional diesel.  Sen. Bill Stouffer is sponsoring the legislation, which received first-round Senate approval.

Also receiving preliminary approval was a bill by Sen. Luann Ridgeway granting a variety of tax breaks, including income tax credits up to $20,000 or 20% of the cost - whichever is less - for gas stations that install tanks and pumps for alternative fuels.  In addition, beginning in 2008, Missouri residents who buy a hybrid vehicle could claim an income tax credit of up to $1,500 or 10% of the purchase price - whichever is less - and in 2008 only, Missouri would waive the sales tax for purchases of E-85-equipped vehicles. 

Already in place in Missouri is a law mandating that most Missouri-sold gasoline contain a 10% ethanol blend beginning next January - as long as its price is cheaper than regular gasoline.

The bill, according to the Associated Press, is generally supported by Missouri’s agriculture community, which is supplying more corn and soybeans to new ethanol and biodiesel production plants proliferating throughout the state.
 

Malaysia-based Pioneer Bio Industries Corp Sdn Bhd claims it will be able to produce a startling 1.7 billion gallons - roughly equal to 780,000 barrels of oil equivalent per day - of nipah (a.k.a. nypa fruticans or mangrove palm) palm ethanol per year when its planned refineries in Malaysia’s North-Western Perak State begin operations in 2009.

Ethanol can be obtained from fermenting the sugar-rich nipah sap that can be tapped continuously from the trees’ inflorescence, and nipah has a very high sugar-rich sap yield.  Some studies estimate potential ethanol yields to be as high as 20,000 liters once plantation management is optimised.  The tapping technique, however, is labor-intensive and it remains a question whether production can be scaled up that easily.

At a media briefing, the “National Biofuel Project based on Ethanol from Nypa Palm - Industrial Project Investment and Solution for Solving Global Warming,” Pioneer Bio Indistries chairman Md Badrul Shah Mohd Noor put the venture into a larger perspective, indicating that U.S. ethanol demand alone stood at 22 billion liters last year, and that the biofuel is forecast to provide 30% of global energy by 2020, up significantly from only 2% last year.

Giving details about the nipah project, Badrul Shah said the Perak state government has awarded the company the rights to harvest nipah sap on 10,000 hectares of land, for which it has to pay 324 million ringgits (€70/US$94 million) per year.  PBIC, a subsidiary of Pioneer Vaccination Biotech Corp Sdn Bhd, holds the patent to produce ethanol from nipah palm sap.  Badrul Shah said the company will sign a multi-billion dollar contract with a major international company in July to supply nipah-based ethanol over a five-year period.

Try not to laugh, but, according to UK publication the Guardian, Cuban and Venezuelan heads of state have recently slandered the biofuels industry, warning that the U.S.-backed rush towards ethanol will worsen global hunger and poverty. 

 
Cuban President Fidel Castro wrote two newspaper articles, voicing alarm at the prospect of countries boosting sugar and corn crops to make ethanol, the Guardian reports.  For the Cuban Communist party’s official newspaper, Granma, Castro wrote that by diverting crops to feed cars (as opposed to feeding people), the price of food would rise, and the world’s poor would go hungry.

 
Venezuelan president Hugo Chavez was quoted by the Guardian: “When you fill a vehicle’s tank with ethanol, you are filling it with energy for which land and water enough to feed seven people have been used.”  It remains unclear, the paper reported whether Venezuela would go ahead with sugar mills and ethanol plant investments.  Last month, Dow Jones Newswires reported that Cuba has plans to build eight new ethanol distilleries and export roughly 200 million liters of biofuel by 2011.

The American Coalition for Ethanol (ACE) offered  testimony for yesterday’s field hearing of the U.S. Senate Agriculture Committee’s Subcommittee on Energy, Science, and Technology.

 
The event was held on the campus of South Dakota State University in Brookings and was hosted by Senator John Thune (R-SD), the subcommittee’s ranking member.  The event, “The Next Generation of Biofuels: Cellulosic Ethanol and the 2007 Farm Bill,” was a forum for discussing how the 2007 Farm Bill can play a role in directing the development of the biofuels industry, especially the commercialization of cellulosic ethanol.

“Given the likelihood that the next Farm Bill will contain a meaningful energy title designed to promote biofuels and renewable energy, ACE is grateful for the opportunity to submit testimony at this field hearing on behalf of the U.S. ethanol industry,” said Brian Jennings, ACE executive VP.  “We are also pleased that the hearing featured the expertise of two ACE member ethanol companies helping develop the technology breakthroughs necessary to commercialize cellulosic ethanol - Poet Energy and VeraSun Energy.”

In its testimony, ACE outlined cellulosic ethanol’s greta potential, as well as the four overriding challenges to making cellulosic ethanol a commercial-scale reality: 1)the cost and complexity of converting biomass feedstocks into ethanol, 2) the capital costs of financing and constructing cellulosic biorefineries, 3) feedstock challenges (how and where to grow the feedstocks; how to harvest, collect, transport, and store biomass), and 4) sustainability challenges (respecting soil quality, wildlife habitat, land conservation practices).

ACE pointed to the limitations of the “blend market” and the limitations of how much corn can be used for ethanol as reinforcements of the need for cellulosic ethanol to become a reality in the near future. “There is an intersection between what we refer to as the ‘blend market,’ where E10 comprises virtually every gallon of motor fuel in the U.S., and the upward limitations of how much corn we can distill into fuel ethanol, reinforcing the need to make cellulosic ethanol a reality if we are to achieve a more meaningful reduction in fossil fuel use,” Jennings testified.

In the testimony, ACE encouraged Congress to consider a public policy framework to help create certainty for cellulosic and corn-based ethanol.  The framework contains the following:
- expanding the RFS to reach 10 billion gallons of biofuels per year by 2010, 30 billion gallons by 2020, 60 billion gallons by 2030
- promoting the use of higher blends of ethanol is the existing fleet of automobiles
- increasing funding for and consolidating federal cellulosic biofuels loan guarantee programs into a single program at USDA
- establishing a pilot cellulosic biofuels feedstock program
- requiring automakers to ensure that all vehicles in the U.S. are FFV and require installation of E85 and/or blender pump at all gas stations affiliated with major oil companies
- establishing a cost-share program under Title IX of the Farm Bill to provide assistance to ethanol plants for the installation of low-carbon processing and conversion technologies
- extending the Blender’s Credit for ethanol beyond 2010 and retain the existing secondary import tariff offset on imported ethanol

An article in today’s Chicago Tribune reports that, according to analysts from UBS AG and Friedman, Billings, Ramsey & Co., U.S. ethanol output could rise as much as 60 % by the end of the year.

As a result of more ethanol plants opening and beginnning operations, both prices and profits could be hurt, analysts explain. As supplies increase, ethanol producers will have to cut prices to compete with gasoline and profits will be trimmed, analysts said Monday in separate reports.

In January, ethanol production jumped about 5% to a record 5.9 billion gallons a year, from 5.6 billion gallons a year at the end of 2006, according to U.S. government statistics, the report from UBS said. If growth were to continue each month at that rate, ethanol production would be at about 9 billion gallons a year by the end of 2007, according to the analysts. “It is difficult to tell at this point if there is a strong link between ethanol stocks and pricing; however, we think this data may become more important as more supply enters the market,” wrote one analyst in a UBS report.

In a separate report, Friedman, Billings, Ramsey & Co. estimates that ethanol supplies may rise as much as 33% to 7.6 billion gallons by the end of the year, exceeding demand.  Friedman lowered its ethanol price forecast for 2007 to $2.05 a gallon from $2.10 a gallon and cut its forecast for the years 2008-2010 to $1.95 a gallon from $2.00 a gallon. “We are adjusting our commodity price forecasts and reducing our earnings estimates and price targets accordingly,” wrote Eitan Bernstein, an analyst at Friedman. More operating plants, higher prices for corn - the primary ethanol feedstock - and continued competition from gasoline will lead to reduced margins, the Friedman report said.

President Bush and Brazilian president Luiz Inacio Lula da Silva met at the Camp David presidential retreat this weekend(for the second time in three weeks) to discuss trade and ethanol.

Pres. da Silva hopes to advance a biofuels alliance and help break a deadlock in world trade talks known as the Doha Round, which were launched in 2001 and stalled last year.  Developing countries were upset because rich nations wouldn’t make significant cuts in farm subsidies and demanded greater access to markets in the developing world.  No major breakthrough on those talks was expected at Camp David.

“What the two presidents want to review is where we are and what needs to be done and what President Bush and President Lula can do to move forward,” said Dan Fisk, the National Security Council’s senior director of Western Hemisphere affairs. 
The two leaders’ talks on ethanol was expected follow up a memorandum of understanding to promote international ethanol that the two nations signed when Bush visited Brazil on March 9.  Fisk said the two hoped to announce a handful of Caribbean and Central American nations that will be the beneficiaries of pilot programs for biofuels development.
Last Friday, Silva reiterated Brazil’s position that the alternative fuel will not gain traction worldwide unless the U.S. drops a 53-cent-per-gallon tariff on Brazilian ethanol: “The subsidies provided under America’s corn-based ethanol program have spurred an increase in U.S. cereal prices of about 80%,” Silva wrote in The Washington Post. “This hurts meat and soy processors worldwide and threatens global food security.”
The promotion of ethanol could eventually help wean the U.S. off its need for foreign oil, officials say, lessening the energy dependence on volatile Middle Eastern nations and Venezuela, whose President Hugo Chavez has long been a political thorn in the Bush administration’s side.
Teaming up with Brazil on the promotion of ethanol, however, hasn’t pleased everyone.  U.S. Corn farmers don’t like the idea of the government helping Brazil’s industry, which they see as a competitor.  Lawmakers from corn-growing states have registered their complaints with Bush.

Growers intend to plant 90.5 million acres of corn for all purposes in 2007, up 15% from 2006 and 11% higher than 2005.  If these figures are realized, this would be the highest acreage since 1944, when 95.5 million acres were planted for all purposes.

 
Expected acreage is up in nearly all States as favorable corn prices, caused by increased demand from ethanol producers and strong exports sales, are encouraging farmers to plant more acres to corn.  The increase in intended corn acres is partially offset by lower expected acres of soybeans in the Corn Belt and Great Plains, and fewer expected acres of cotton and rice in the Delta and Southeast.

 
Illinois farmers intend to plant a record high 12.9 million acres of corn this spring, up 1.60 million acres from last year.  North Dakota and Minnesota growers also expect to plant record high corn acres, up 910,000 and 600,000 acres.

 
Corn farmers in the 10 major corn producing States (Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin) intend to plant 69.5 million acres, up 12% from the 62.2 million acres planted last year.  Iowa continues to show the largest corn acreage at 13.9 million acres, up 1.30 million acres from last year.
 

The Alexandria Daily Town Talk reports that the next big alternative fuel crop and boon for Louisiana farmers may very well be sweet sorghum, a cane-like plant with a high sugar content grown primarily for forage, silage, and sugar production.

 
Lee McClune, president of the Iowa-based Sorganol Production Co., has presented research to the AgCenter from Iowa State University that shows sweet sorghum can produce more than six times the ethanol, about 3,037 gallons per acre, than the 450 gallons per acre produced from corn.  Sweet sorghum also can be grown and turned into ethanol a lot cheaper than corn, McClune said, returning about $1,000 more per acre than corn.

 
McLune explained that Louisiana’s sub-tropical climate is ideal for growing sweet sorghum, which, he said, can be grown in Louisiana 9-10 months during the year, compared with 4-5 months in midwestern states such as Iowa. 

 
AgCenter engineers, however, are waiting to see if the technology McClune is touting lives up to expectations: “I have to take a much closer look at the technology. If it can do what he claims, it’s a very promising thing,” said Dorin Boldor, an agriculture engineer with the LSU AgCenter in Baton Rouge.

 
Sugar cane is better for ethanol production than both sweet sorghum and corn, with varieties producing as much as 3,299 gallons of ethanol per acre. It cannot, however, be effectively grown in the state much farther north than Alexandria.

 
Sweet sorghum, on the other hand, can be grown all over the state, and research is needed to determine which variety of sweet sorghum grows the best in central Louisiana.  A smaller variety of sorghum, used in animal feed, is already being grown by Louisiana farmers.

Farias, a major northeast Brazil sugarcane group, has signed a protocol of intentions with Chinese investors to build ethanol mills that could process up to 10 million metric tons of sugarcane per harvest, according to a report in local Valor Economico newspaper on Monday.

The Chinese companies interested in investing in Brazilian ethanol mills could be Jilin Fuel Ethanol, Henan Tianguan, Anhui Fengyuan Bio-Chemical and Heilongjiang China Resources Jinyu, which together produce 1 billion liters of ethanol per year, said the report. Possible investments could hit 1.2 billion Brazilian reals, with two greenfield projects currently being analyzed in the northeast state of Maranhao, said the report.

The Farias group currently has five operational mills and a new Goias mill expected to enter operation for the 2007-08 harvest. The group crushed roughly six million metric tons of cane last season, and by 2010, the Farias group plans to hit a crush capacity of just under 15 million metric tons; by 2015, the group plans to process 32 million ton of cane.