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“Government’s ’2022′ Biofuel Timetable Mandates +15,900% Growth”

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That’s the promise from the new Government-Driven Investing newsletter edited by Andy Obermueller … who I’ve never heard of, though I give him some credit for sporting a snazzy bowtie in his picture. He can’t quite carry it off as well as the Gumshoe, of course, but we can’t all be matinee idols.

Kidding.

This newsletter is all about profiting from the gummint, which I know makes some people squirm — benefitting from bailouts, riding government prirorities as they develop and change, etc. I don’t know if it will be enough to sustain a newsletter, but I suspect he’ll have plenty to write about for at least the next year or so.

And he’s starting with a great government boondoggle: Ethanol. This teaser is all about how the government’s biofuels mandates can bring profits for one little company that’s working on cellulosic ethanol.

“There’s only ONE publicly traded company that can capture that growth … and you can pick up over 6,000 shares of that stock today for only $10k!”

(I think a copywriter goofed on the math — you can actually buy about 15,000 shares of this stock for $10,000 … but you could buy 10,000 shares for about $6,000, so we’ll let that slide.)

So yes, I do know the secret stock — and I’ll share it with you after we get through the clues. Patience, please!

Here’s what we learn:

“The Energy Policy Act of 2005 established a national renewable fuels standard that requires the United States use 7.5 billion gallons of ethanol a year. But the current law, which went into effect on January 1st, requires the country to use 36 billion gallons of biofuel by 2022…

“Only 15 billion gallons of this 36 billion gallons can come from the corn-based ethanol we now produce. Now, that still means the industry is likely to expand in the next decade, but corn-based ethanol hits a ceiling in 2015. That’s not a projection. That’s not my best guess. That’s what Congress has written into federal law.

“The lion’s share of the 36 billion gallons the nation must consume by 2022 — some 21 billion gallons, or 58% — must be “advanced” biofuels. These are new formulas that are 50% cleaner than gasoline. Of that 21 billion gallons of advanced biofuel, most of it — 16 billion gallons — must come from cellulosic biofuel.”

And then we get into the specific company teaser …

“The U.S. is going to watch the biofuel industry go from producing basically zero gallons of cellulosic ethanol to production of 16 billion gallons, and in short order. That’s a +15,900% increase in only a dozen years.

“How do you think that’s going to translate to a company’s earnings? Let me spell it out: The investors who get in on these companies are going to be putting cellulosic ethanol fuel into their Ferraris. Their chauffeurs will gas up their Rolls-Royces.

“Currently, there is only one publicly traded company in this space. It’s the industry leader, and its stock has the potential to grow in concert with cellulosic ethanol quotas. That means upside of +15,900% during the next dozen years.

“In 1995, this company was granted an exclusive license to commercialize proprietary cellulosic ethanol technology that had been developed at the University of Florida and other academic institutions. It’s now a leader in R&D and has two demonstration plants in Louisiana, one of which was the nation’s first.

“The future is bright for this company. A couple of billion gallons of cellulosic ethanol produced using their technology will do nice things for the bottom line. In a few years we’ll be thanking Obama for making us rich. In a dozen years we’ll thank him for making us wildly rich.”

So what are we dealing with here? Let me just toss all that info into the good ‘ol Thinkolator 4000, and the answer come spitting out …

Verenium (VRNM)

This is indeed a leading startup in the cellulosic ethanol space, though I think it’s a stretch to say it’s the only one that’s publicly traded … there are a few others, like BlueFire Ethanol, SunOpta, and Cleantech Biofuels — some of those are a bit hairy, but they exist — and many chemical and energy companies have joint ventures with other startups, or divisions working on cellulosic ethanol that may well be just as interesting, though they aren’t “pure plays.” And if you include suppliers like the enzyme companies, you can also look at a firm like Novozymes, which I wrote about almost exactly two years ago following an Elliott Gue teaser (I think it’s down about 30% from that point).

Verenium does have two plants in Louisiana, a pilot plant and a demonstration plant, and their technology in this area does include a proprietary University of Florida patent license. Their first commercial plant is planned for Florida, too, though that seems to be a ways off and require some additional funding (their major partner at this point is BP) — but there is also a plant in Japan that uses their technology under license, so it seems like it actually must work. I have no idea whether it will be a cost-effective long-term solution, but they do at least have some operating plants.

And of course, the fact that they’re one of the few “pure play” public companies in cellulosic ethanol doesn’t mean that they’ll be the only ones to profit as (if?) government biomass/cellulosic ethanol mandates are enforced in future years … theirs is not the only process, technology or technique that can work to create biofuels, and there are dozens of startups and major corporations all working on this science and developing new technology everyday, this is still very early days for cellulosic ethanol.

If you’re interested in reading up on this, the Biofuels Digest provides some interesting details about many of the companies involved (they even have a “hottest 50 companies” in biofuels list — a cellulosic ethanol startup that is not public, Coskata, is number 1, Verenium is number 36). One of the many clean energy blogs also ran a summary of what they considered the major cellulosic ethanol companies last Summer, which includes useful summaries and a few updates.

So what do you think? The federal guidelines for biofuels are real, and the mandates for cellulosic ethanol were pretty widely supported by both parties. And at least when you use switchgrass or wood chips, the chances are less that you’ll be helping to force up food prices in the quixotic quest for transportation fuel independence. If you’re a fan or foe of cellulosic ethanol, or have any thoughts about Verenium please let us know with a comment below.

And I assume that this Government-Driven Investing newsletter hasn’t been around long enough for folks to form an opinion, but if you’ve subscribed to this or any of the other StreetAuthority newsletters, please click here to let us know what you think.

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32 Responses to “Government’s ’2022′ Biofuel Timetable Mandates +15,900% Growth”


  1. Very skeptical about bio-fuels after being burned by one (no pun intended) There are a couple low-priced green stocks on my radar right now one is (COIN) who has a commercial process for turning garbage into organic fertilizer. The other is (ESS.pk) has a process for reducing pollutants from diesel …currently being tested in California for possible use on all state school buses.

    Like(0)

  2. One thing that I'm thinking that may be a flaw to the expansion of this bio fuels technology; Consumers having an increase of demand for it. Ethanol is 10% of gas mixtures now and Gumamint is pushing a bill to increase that to 15%. In the event that the bill passes, then thats a big 5% increase. Interesting to mention this as a tie-in. Good Investing!

    Like(0)

  3. I think Andy is pushing VRNM also. However,if your following the Gov't grants,their were only six Bio-Fuel Corp.'s.awarded so far=$76 Mil to Abengoa Bio Energy,$33 Mil to Alicon,$40 Mil to Blue Fire Ethanol, $80 Mil to Broin Companies, $80 Mil to Iogen Bio-Refinery, and $76 Mil to Range Fuels(formerly Kergy.)

    Like(0)

  4. Also consider Algae to fuel technologies. There are several companies working in this area such as OOIL, GSPI, PSUD, and others.

    Like(0)

  5. Hi, sorry to side track. Anyone subscribe or heard of "Penny Trends" by Stansberry? They using something called "blue sheets", anyone heard of it?

    Like(0)

  6. (partly OT!)

    This Jan. 2009 article has quite a bit to say about Verenium (VRNM) (cellulosic ethanol) and Syntroleum (SYNM)(synthetic bio-diesel).

    http://www.2theadvocate.com/news/business/3736190

    Dynamic Fuels (a joint venture between SYNM and Tyson) will open its new refinery in Geismar, La., next year — stated capacity 75 MM gal synthetic diesel per year.

    Quote–

    "At an October groundbreaking for the Geismar plant, Syntroleum officials said the synthetic diesel would sell at prices similar to that of ultra-low sulfur diesel now making up 80 percent of the over-the-road market.

    Company officials said the Dynamic Fuels diesel will be even cleaner-burning than the ultra-low sulfur diesel that came about as a federal mandate for reducing pollution."

    More on SYNM's technology at http://finance.yahoo.com/news/Syntroleum-Corporat

    SYNM's pps, now around $2.50, is apparently climbing back from last year's debacle.

    Like(0)

  7. I have not received any emails from

    you for the last two months. I do

    not know why but tonight your

    article has appeared in my email

    again. I hope to read your mails

    regularly. thanks.

    tt tan

    Like(0)

  8. i think another Bio Fuel company is Valcent, but i dont think they are anywhere near commercial output as yet.

    Like(0)

  9. The Bio Fuel companies are only good stock investments IF they are bought out by one of the big boys..

    Any word that CVX, XOM or BP want to buy a biofuel company?

    Like(0)

  10. Oh yeah!! I have been burnt by these biofuels startups. They were so hot some 3 years ago with govt subsidies. They fizzled after a while and all of them were losers. I could not get excited with VRNM now. I almost bought SunOpta because of their joint project with Spain Abengoa. Good I did not because it is now around $3.50 from $9+. RTK or SYNM were hyped for having an upgraded technology from that used by Sasol but were also losers even with support from the US Air Force and coal companies.

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  11. I wish they'd eliminate all ethanol! It's expensive, cannot be pipelined, must be trucked. Have you noticed your gas mpg is down by 10%. Where's the savings?

    It fouls up outboard motors and gas tanks costing time and money to clean them up.

    More and more tankers are exploding – is it from the very flammable and explosive ethanol?

    It's taking away corn from feeding animals making meats more expensive. (Of course we should be eating grass-fed beef anyway)

    It has many unintended consequences.

    Now cap in trade is apparently going through raising all fuel prices and your electric and heating costs plus the cost of almost every item you use because of increased fuel costs.

    Like(0)

  12. And today we hear about DOE giving the go-ahead for the VRNM / BP partnership to :

    CAMBRIDGE, Mass., June 25 /PRNewswire-FirstCall/ — Verenium Corporation (Nasdaq: VRNM), a pioneer in the development of next-generation cellulosic ethanol and high-performance specialty enzymes, and international energy company BP today announced that their jointly-owned, commercial cellulosic ethanol project, located in Highlands County, Florida, has been selected by the U.S. Department of Energy (DOE) to enter the due diligence phase of its Title XVII Loan Guarantee Program. Under this program, the DOE may provide loan guarantees for project debt covering up to 80% of eligible costs. The Highlands project is scheduled to break ground in 2010.

    http://news.prnewswire.com/DisplayReleaseContent….

    I sold 2000 @ .935 and will buy back in when the excitement subsides.

    Like(0)

  13. VRNM is exibiting a "bullish falling wedge" pattern, and reversed today. If it can make it above 0.60, it will have broken out of that wedge. The 50-day MA is around 0.63. I say breaking above those levels would make this stock a "buy". The next area of resistance is between 1.10 and 1.30, though, where a whole bunch of dissapointed investors bought in at the beginning of the year only to be slammed down hard on Feb 27th, where the stock went from 1.10 all the way down to 0.25!! (hmmm – do I smell naked short selling)???

    When buying this, I would put my stop at 0.50 (just in case)!! If the stock goes up over $1, I would recommend taking 1/2 off, just in case!

    As the case in any speculative penny stock, make sure you use a SMALL position!

    –joe

    Like(0)

  14. 7/11/09

    Andy Oberuller, "Government Driven

    Investing" News letter has anew

    teaser. It's called "C-1 miricle

    fungus". Company has License,

    Pattens, Etc. and sells rights

    to use thier prosess. You have to

    buy his news letter to get info.

    Do you know this Company ??

    Al

    Like(0)

  15. "And at least when you use switchgrass or wood chips, the chances are less that you’ll be helping to force up food prices in the quixotic quest for transportation fuel independence."

    You mean to tell me you never tried Raccoon pie with Switchgrass sauce? Thems mighty fine Vittles!

    Like(0)

  16. There is absolutely NOTHING good about turning corn or other stuff into alcohol for internal combustion engines–it ruins them over time. The whole process is a disaster. Food crops should be eaten.Corn farmers love it of course. (Nazis loved killing Jews-that didn't make it a good idea.)Bio-diesel fuels, if made from scrap, are only a slightly better idea.

    Like(0)

  17. Just that I don't think they're really a biofuels company — their primary process is liquefaction, I believe they're more focused on coal to liquids and nat gas to liquids (a variant of the Fischer-Tropsch process that's probably most heavily used by Sasol right now), though they also say they can use biomass and other sources.

    Like(0)

  18. blue sheets is just another name for a madeup momentum industry indicator, right now they are hot on coffee stocks, palladium stocks, gold stocks, china stocks to name a few, gotta love those boys

    Like(0)

  19. Yeah-been burnt too! Git into Australian Ethanol (revamped as Agri-Energy with plant in USA) but they went down the tubes as they were, I think, corn based. Still, if garbage, wood chips etc can do the trick, then it seems a good possibility. Bit of a "wait and see" situation I think.??

    Like(0)

  20. Your RTK has been poppin like crazy dude. We gotta have some changes and VRNM, if u have the patience will do very well in a coupla years. pick up shares cheap on dips. Me; also bot an aussie cbm explorer turning producer and sitting on a shitload of cbm. sooer or later though, they will hit the liqued stuff besides the gas. due, just read thru their pr's and see for yourself…unbelievable and even predictable chart from the loyal stock holders. ICN.AX. wanna scream on this one.they even have mucho cash.verify for yourself.

    Like(0)

  21. Are you talking about VRNM? They are as close to a pure play in cellulosic ethanol as you can get. They have a great team and unmatched collaborations. They will win.

    Like(0)

  22. I just read a new recomm ticker DYAP. They are into fast growing jute that matures to 3 meters in less than 2 years. Has many uses from rope to paper and as omega food supplement. I put it in my watch list and was $.18 last Friday.

    Like(0)

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