Friday, August 28, 2009

What Happened to Biofuels?

Earlier this week Ann Davis and Russell Gold reported in the Wall Street Journal about the state of the biofuel industry. It was an eye-opening...

The entire industy is under siege, fighting a multi-front war that includes too much capacity, depressed fossile fuel prices, a delay in favorable federal regulations that would promote the use of biofuels, and a dearth of investment capital.

According to the Journal's report, two-thirds of the nation's biofuel capacity sits idle.

Earlier this year, two earth-shattering events potentially scared investors away for a long time. GreenHunter Energy, the largest biofuel refinery in the country, shut down. Cello Energy in Alabama, which had some big time names in the Venture Capital community behind it, was found to have defrauded investors. This does not bode well for buoyed investor confidence in the biofuel sector.

The result of this perfect storm of problems is that there will not be enough biofuel produced to meet the legislated blending targets that were passed in 2007.

Amidst this carnage, however, sits ethanol, which the reporters credibly point out, is politically untouchable.