Biofuels

Tom Konrad CFA There are many proposed solutions to the liquid fuels scarcity caused be stagnating (and eventually falling) oil supplies combined with growing demand in emerging economies.  Some will be good investments, others won't.  Here is where I'm putting my money, and why.  This fourth part takes a look at the possibility of converting coal,  natural gas or Biomass into gasoline or diesel we can use in unmodified vehicles. In the first three parts of this series, I looked at various substitutes for oil based transportation fuels: Biofuels and Biochemicals Vehicle Electrification...

Tom Konrad CFA There are many proposed solutions to the liquid fuels scarcity caused by stagnating (and eventually falling) oil supplies combined with growing demand in emerging economies.  Some will be good investments, others won't.  Here is where I'm putting my money, and why.  This first part looks at biofuel strategies for replacing oil. World oil supplies are stagnant, and in the not-so-distant future will begin to decline.  If economic growth continues, demand for oil will increase as well.  This will lead to a long term rise in oil prices, which will only stop if 1) high...

How Solar PV is like Ethanol Tom Konrad, CFA High levels of competition in the the solar photovoltaic (PV) industry mean that buy-and-hold investors should look elsewhere. In May 2007, I published a competitive analysis of the corn Ethanol industry based on Michael Porter's classic Five Competitive Forces model.  At the time, Ethanol stocks were flying high, but my conclusion was that "the prospective ethanol investor should be very careful about investing in corn ethanol producers at random."  If anything, I understated the case. This chart shows three ethanol stocks that have survived since 2007.  As...

Tom Konrad, CFA Representatives of Dyadic International (DYAI.OB) were quite upset when I called the company "A Stock to Avoid."  The company has now released audited financial statements for 2007 and 2008.  The lack of such statements was one of the several reasons I said to avoid the company.  Should I retract my article? Mark Emalfarb, Dyadic International's CEO sent me an email this morning with attached audited financial statements for 2007 and 2008, saying, I hope that you will act responsibly as journalists and publish a retraction to your article "A Stock To Avoid" which Tom...

Portfolio theory can lend insights into which carbon abatement strategies policymakers should pursue.  If policymakers listen, what will it mean for green investors? Tom Konrad, Ph.D., CFA Good Info, Not Enough Analysis I've now read most of my review copy of Investment Opportunities for a Low Carbon World.  The quality of the information is generally excellent, as Charles has described in his reviews of the Wind and Solar and Efficiency and Geothermal chapters.  As a resource on the state of Cleantech industries, it's generally excellent.  As an investing resource, however, it leaves something to be desired.  Each chapter is written...

Tom Konrad, Ph.D., CFA Dyadic International hopes to use proprietary gene discovery to revolutionize cellulosic biofuel and pharmaceuticals.  Investors should stay away. Dyadic International (DYAI.PK) says they are applying their "proprietary enabling biotechnologies for multi-billion dollar markets in industrial enzymes, biofuels and biotherapeutics."  A very exciting prospect, and just the sort of thing I've long warned investors to avoid.  In short, they are a company with gigantic claims and not a lot of track record to back them up. Why I Care (I don't, really) In our survey of readers, one respondent asked that I write more about stocks...

Biochar is still mostly a research and cottage industry, yet it has the potential to impact returns for a broad range of investors. Tom Konrad, Ph.D., CFA Biochar, or amending soil with biomass-derived carbon, shows great potential to improve the productivity of soils, as well as to increase the utilization of fertilizers by plants, while sequestering carbon to reduce the drivers of climate change.  On August 10, I went to the 2009 North American Biochar Conference to look at the potential for investors.  Before I went, I took a look at the publicly traded companies...

There's much excitement about second generation biofuels made from cellulosic feedstocks and algae, be they cellulosic ethanol, biodiesel, biocrude, or electricity from biomass.  There will be winners, but they may not be the technology companies. Tom Konrad, Ph.D., CFA At the 2009 Advanced Biofuels Workshop, there were two major themes: developing new feedstocks, especially algae, and the development of new pathways to take biomass into products such as biocrude, which can be used in exiting oil refineries.   Big Market, Many Competitors The current federal Renewable Fuel Standard requires the use of 36 million gallons of biofuels, including at...

If the Ethanol industry is going to rehabilitate its image, it needs to understand the issues. Tom Konrad, Ph.D., CFA In his opening remarks at the 25th annual, 2009 Fuel Ethanol Workshop, Mike Bryan, the CEO of BBI International called on the attendees to "Take back control of the industry's image."   It's no secret that the ethanol industry is having problems, mostly, in my mind, due to a classic commodity squeeze: the industry has no pricing power either for its inputs (corn and natural gas,) or its products (ethanol, with a price which closely tracks gasoline.) ...

Preparing for a world in which financing will be much more difficult to come by, I have been selling companies which are likely to need financing in the next couple of years.  A listing of the companies I've discussed so far is at the end of this entry. My sale of Nova Biosource Fuels (AMEX:NBF) continues my general moves out of biofuels, also discussed in my entries on Pacific Ethanol and Dynamotive Energy Systems.  I have long argued that electric propulsion is a superior way to power ground transport than even "Second Generation" biofuels such as cellulosic ethanol.  My...

This entry continues a series on companies I sold as part of a portfolio cleanup prompted by the mess on Wall Street.  In the first entry I described what I plan to do with the cash, followed by the reasons why I sold Carmanah Technologies and Pacific Ethanol.  UQM Technologies was one I didn't sell.   I have not  mentioned Dynamotive Energy Systems (DYMTF) before.  I have mixed feelings about the company.  They use fast pyrolysis to make cellulosic biofuels, which I believe will prove to be one of the more economic pathways to cellulosic biofuels.  However, I believe that...

This entry continues a series on companies I sold as part of a portfolio cleanup prompted by the mess on Wall Street.  In the first entry I describe what I plan to do with the cash, and the second was about Carmanah Technologies.   UQM Technologies was one I didn't sell. In May of last year, I took a look at competitive forces in the corn ethanol industry.  While I was rather negative on the industry at the time, when ethanol stocks fell in the summer and fall of 2007, I called the bottom much too soon, and...

by Tom Konrad Celluslosic Ethanol is all the rage.  A less noticed, but significant "Biofuel 2.0" is biofuel based on algae. Follow the Biomass As I have consistently argued (see these recent articles on John Deere, Biogas, Cellulosic Ethanol vs Biomass Electricity, and Renewable or Green Diesel)  the people most likely to make money from biofuel are not the processors and distributors (who compete directly with petroleum or other fossil fuel-based products, and so have little pricing power), but the producers of feedstock, which, like oil, is in very limited supply, and so they will have pricing power....

The first and last word in any discussion of biofuels should always be "Feedstock."  Feedstock is the "Bio" out of which biofuels will eventually be made, whether it be corn, sugar, jatropha, algae, palm oil, switchgrass, forestry waste, or municipal solid waste.   Before the era of peak oil, we lived in a world of plenty, which meant that we could squander energy, not only by driving Hummers, but by feeding energy intensive products such as corn crops to livestock, and by dumping "free" sources of energy such as garden waste and used cooking oil into landfills. The era of...

Romm v. Kholsa In a persuasive series of articles, entitled "Pragmatists vs. Environmentalists" (Parts I, II, and III) on Gristmill, Vinod Khosla provides the reasoning behind his "dissing" of plug-in hybrids, which drew the ire of Joeseph Romm.  Neither seems to think the argument is settled, and Joeseph Romm returns fire here. As someone who knows as much about investing as Joe Romm and has written as much about Climate Change and Energy Policy as Vinod Khosla, I feel the need to jump into the debate and settle the matter.  (Will either of them will notice?)...

Biopact reports that Salzburg AG has opened its first biomethane gas station, allowing owners of Compressed Natural Gas vehicles to use their blend of 20%.  This is the first retail station I have heard of selling a cellulosic-derived fuel to retail customers (are there others?) Prospective Cellulosic Ethanol investors should take note... while cellulosic feedstocks are likely to supply much of our liquid fuels in the future (although not as much as we currently use), cellulosic ethanol is unlikely to have the field (so to speak) to itself.  Ethanol's low energy density and difficulty of transport will...