New Hope for Biofuels

The ethanol boom has come and gone. But if you think the opportunity to profit from biofuels has come and gone as well, you're sorely mistaken.

You see, corn-based ethanol turned out to be a bust for many reasons. Its feedstock was in direct competition with food sources, its lifecycle carbon reduction was constantly in question and the energy return on energy invested (EROEI) turned out to be less than desirable--meaning the net energy produced was hardly more than the energy used to produce it.

Of course, with all the heavy capital expenditures that went into developing a corn-based ethanol market, we'll continue to see that product produced. Especially since federal mandates require a certain amount of ethanol to be present in the nation's gas tanks.

In fact, right now there are 139 ethanol biorefineries operating in the US with a capacity of 7.9 billion gallons per year (bgy). Also right now, there are 62 plants under construction and seven expansions underway that will bring an additional 5.57 bgy online.

That gives the US a total projected capacity of over 13.5 bgy.

But the recent energy bill signed into law on December 19, 2007 calls for the blending of 36 bgy of domestic alternative fuels to be blended into our nation's fuel supply by 2022.

Basic math tells me there is a 22.5 bgy discrepancy. Sounds like an opportunity, right?