[news] Fiber Diet Tough on Biofuel Producers

– by Robert Rapier, April 28, 2016, Investing Daily

160428TELbiofuels

Graphic: Ren21

Last week the U.S. Environmental Protection Agency (EPA) announced that just over 1 million gallons of cellulosic ethanol was produced during the first quarter of 2016. In fact, production for the month of March jumped 64% from February to 446,000 gallons, a record. Production is well ahead of the pace in 2015, when 2.2 million gallons of cellulosic ethanol were produced during the entire year.

This sort of rapid production growth is sure to catch the attention of investors, who will wonder whether there is an opportunity to make money. I am often asked about investment opportunities in the renewable fuel industry, and in particular the advanced biofuel area. So let’s do a quick primer, and put everything into proper perspective.

First, let’s define a couple of terms. For the purpose of this discussion a renewable fuel is considered to be one that is derived from recently living plants, commonly referred to as biomass. First generation renewable fuels (aka “biofuels”) are those made in large volume today, which includes ethanol produced from corn and sugarcane and biodiesel made from vegetable oils. Of the 127.7 billion liters (34 billion gallons) of biofuel produced in 2014, 97% was from conventional ethanol (74%) or biodiesel (23%) processes.

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