Last week, BP committed $500 million in a ten-year year research program to study "the impact of the Deepwater Horizon incident, and its associated response, on the marine and shoreline environment of the Gulf of Mexico." It recalls the $500 million BP invested in 2007 in the Energy Bioscienes Institute. Deepwater indeed for the oil industry this year - but if there are deep troubles, there are deep pockets.
Pockets are a little smaller around the biofuels industry, where this past week in Washington, four of the companies which have received investment support from oil majors or have formed investment partnerships with them - Coskata (Total), HR Biopetroleum (Shell), Solazyme (Chevron), Algenol (Valero), visited with reporters to discuss "the industry's #1 ask" this political season: the need for sustained and diverse tax credits.
Their goal, to develop "parity with solar and wind" in a tax credit design that unleashed billions in investment for other renewables from private equity.
But - private equity, schmequity. The $500 million committed by BP this week to studying the impact of Deepwater Horizon would have funded virtually any first-in-kind advanced biofuels project currently stalled for lack of finance, many of them already receiving investment from the oil industry and seeking, through "#1 asks" like HR 5412, to deploy their technologies at scale.
In the wake of the massive Gulf of Mexico oil spill, it’s clear the U.S. needs to end its crude-oil addiction as much to protect its economy as the environment.
To move the future forward, America needs one company in particular to come through on behalf of all Americans. In a cruel twist of fate, that company is ExxonMobil (XOM), which is working on arguably the most important energy-research project in the world today. Namely, a project to replace crude with genetically-modified algae that can be cost-effectively refined using existing refinery equipment.
A year ago when Exxon announced its algae project with biotech pioneer J. Craig Venter, the company said that it would take at least 5-10 years to produce commercial quantities of algae-based fuels. “My suspicion, and it’s just a suspicion, is that they still see it as five to 10 years away,” says Addison Wiggin, editorial director of The Daily Reckoning, who has been looking into the Exxon-Venter project for a forthcoming documentary on entrepreneurs in the post-crisis financial world.
Too long. As video of the black death pouring out of that ruptured pipeline gushes onto every American TV and computer screen, it's time for President Obama to declare a new Manhattan Project, a new man-to-moon space race. The goal must be to take America off its crude addiction in less than five years with a literally home-grown industry that will create tens of thousands of agricultural and other jobs without jeopardizing the existing oil industry’s trillion-dollar infrastructure.
Exxon shares would surge the moment this plan became publicly known; however, the President can’t allow the investor payoff to be too bountiful. There will have to be safeguards against Exxon controlling the applicable patents in order to prevent the company from controlling America’s energy future.
Algae oil is no panacea, the President will further need to say. Accelerated development of plug-in electric and all-electric vehicles is needed in order for the U.S. to have, by 2020 or sooner, a nationally-secure, environmentally-sound transportation infrastructure.
In a second twist of fate, not only would Exxon shares likely surge in price, so too might the shares of utilities that generate a lot of electricity from coal. Companies such as Duke Energy (DUK), Southern (SO) and FirstEnergy (FE) might lose their pariah image if part of the President’s strategy were to capture coal plants’ carbon dioxide and use it to accelerate algae growth.
For risk-inclined investors who believe that all this may be on the way, a company that might be worth a closer look right now is tiny OriginOil. (OOIL.OB). The company has started signing up customers as it begins commercializing a technology for producing biofuel from algae using CO2 emissions captured from smokestacks.
In Canada, the Canadian Renewable Fuels Association released a report on the Total Economic Impact Assessment of Biofuels Plants in Canada, which found that the construction of 28 renewable fuels plants in Canada generated $2.949 billion in economic activity. The construction activity created 14,177 direct and indirect jobs during the respective construction periods.
In Australia, Mission NewEnergy Limited (ASX: MBT) announced that the commissioning of its second 75 Mgy Axens 2nd Generation biodiesel trans-esterification refinery has been completed. Mission expects to begin producing under its Valero contract once the U.S. Environmental Protection Agency has accepted palm oil as an approved pathway, and makes palm oil biodiesel eligible for Renewable Identification Number (RINS).
In Barbados, Amelot Holdings and Barbados National Oil Company have signed an MOU for the ownership and operation of a biodiesel production facility, using waste cooking oil as a feedstock. BNOCL also plans to develop B20 pumps for biodiesle distribution. The facility will use containerized modular equipment and proprietary feedstock technology.