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| Share Name | Share Symbol | Market | Stock Type |
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| Renova | RVA | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
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| 0.00 | 0.00% | 2.75 | 01:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
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Posted at 30/1/2008 12:32 by motoben Boom or bust?Will M.V. ethanol gold rush pan out? By Matt Christensen Times-News writer What was once hyped as a regional ethanol boom could be headed for bust. After much fanfare about a regional piece of the ethanol pie, the industry is struggling to get off the ground in southern Idaho. Crop experts are downplaying the significance of a corn surge on the valley's ag sector. Politicians are asking questions about the industry's effects on trade and the environment. Local contractors have walked off the job site at one of the plants near Heyburn, where construction has halted. The future seemed much brighter just a year ago, when plans for two Cassia County ethanol plants were announced by Renova Energy, a London-based company with offices in Boise, and Pacific Ethanol, a California business. The facilities would be the state's first commercial fuel-grade ethanol facilities, and company officials lauded the economic surge that would come from 70 new jobs. They touted the environmental benefits of 70 million gallons of environmentally friendly fuel that could be produced at the plants each year. Agriculture specialists were excited about diversifying the southern Idaho ag market to include more corn, which is not a traditionally popular southern Idaho crop. Kernels to cash Ethanol producers prefer corn, which is a cheaper source for ethanol than potatoes or barley. As a result, corn is being grown in record numbers in states not known for their corn production. In 2007, U.S. farmers planted the most corn in a season since 1944, up 12 percent from just the year before, according to the U.S. Department of Agriculture. In Idaho, farmers planted more corn than ever: an estimated 300,000 acres - almost 100,000 acres more than just four years ago. But much of that Idaho corn won't reach an ethanol plant: It winds up in the stomachs of cows. Ethanol production from Idaho-raised corn may simply not be economical, because livestock producers are willing to pay more for corn than ethanol plants can afford. In Iowa, a state that leads the nation in corn and ethanol production, corn sold last year for about $3.15 a bushel. In Idaho, corn cost 60 cents more, at $3.75 a bushel. Corn prices in both states have increased significantly in the past two years, but nowhere near the economic growth seen in Idaho's dairy industry. In just one year, dairy industry revenue nearly doubled, from $1.28 billion in 2006 to just over $2 billion in 2007, according to University of Idaho economists. "The guys in the livestock industry are going to pay what they're going to pay," said Steve Hines, a crop specialist with the University of Idaho, who recently finished a report on biofuels in the Magic Valley. "There are just not a lot of incentives for farmers to change what they're doing now." Traditional Magic Valley crops such as wheat and barley are selling for near record prices, which also keeps farmers from switching to corn that could support the ethanol plants, he said. Corn is also a water-intense crop, Hines said, which isn't attractive to farmers who are struggling through a drought and water crisis or have money invested in equipment for other crops. Hines predicts the Magic Valley ethanol plants will have to import most of their corn from Midwestern states, where, despite record harvests, farmers are struggling to produce enough corn to meet ethanol plants' demands. Ethanol company officials say they'll import most of their corn at first but that local farmers could sell to the plants once they're up and running. Hines isn't so sure. "As more ethanol plants come on line, I don't think we'll be able to grow enough corn to meet their needs," Hines said. The ethanol explosion There were just 50 ethanol plants in 17 states in 1999, according to the Renewable Fuels Association, a biofuels advocacy group. Eight years later, 134 plants are scattered across 26 states, with 77 more facilities under expansion or construction, including the two in southern Idaho. Much of the growth can be credited to heavy government subsidies for ethanol producers, which are expected to be extended in the farm bill currently before Congress, and to oil companies' willingness to form long-term deals with ethanol producers. In fact, most ethanol sold in the U.S. is through long-term, fixed price contracts with oil companies, according to the ethanol industry's trade association. The means the price an oil company pays for ethanol doesn't fluctuate, even when the market does. Some contracts are tied to a gasoline benchmark, so that when gas prices fluctuate, the oil company pays. The smallest amount of contracts is sold on the "spot" market. Last week, ethanol was selling for about $2.35 a gallon. Producing ethanol from corn costs between $1 and $2 per gallon, depending on who you ask. The potential for profits has increased competition in the market, which has hurt some companies, including Pacific and Renova. In the past year, stocks in both companies have plummeted. Pacific halted construction of an ethanol plant in December near Calipatria, Calif. Renova recently stopped trading its stock on the London stock exchange for three weeks, prompting local contractors to walk off the job site near Heyburn. The company resumed trading this month, but workers haven't returned. "I'm worried I won't get paid," said John Kloepfer, part-owner of a paving company that was working on the plant. Renova owes his business almost $250,000 and as much as $1 million to other contractors. Kloepfer said the hit to local contractors and the regional economy could be tremendous should the plans collapse. But even if the plans are successful, some worry the ethanol plants will harm existing local businesses, such as the Scoular Co., which sells distillers grain, a byproduct from ethanol production that producers feed to livestock. An earful for dairies Nearly every dairy in the area feeds distillers grains, much of it bought from Scoular, said Todd Strayer, a business manager in the company's Jerome office. Ranchers and dairymen are in an unusual position in the ethanol picture: They're forced to pay higher prices for corn, a staple for their livestock, but they're paying less for distillers grain, which has become more popular as a feed supplement. Both Renova and Pacific have said they'll sell distillers grain to livestock producers in the area. Globally, it's not just dairymen feeling the pinch. Speculative demand for corn has driven prices so high, countries dependent on U.S. imports can't afford to feed their poorest residents. In Mexico, for example, tortilla prices tripled and prompted President Felipe Calderon to cap tortilla prices last January at 77 cents per kilogram - about half their peak value. Tens of thousands of protestors marched in Mexico City in February when the cap was largely ignored. At the time, Mexico's Economy Minister Eduardo Sojo blamed ethanol, saying food corn supplies had dwindled. U.S. politicians are still trying to sort out the repercussions of the ethanol boom. U.S. Rep. Mike Simpson, R-Idaho, is one of them. An ethanol advocate, Simpson said he's now concerned with the effects of ethanol on trade, including the so-called Mexican tortilla riots, and the environmental consequences of ethanol. Some environmentalists have blamed the ethanol industry for a large "dead zone" at the mouth of the Mississippi River, where scientists suspect nitrogen fertilizer runoff from increased corn production is killing aquatic life. A federal report released in the fall warns that increased nitrogen application could threaten groundwater quality. The Idaho Department of Environmental Quality lists the Magic Valley as a high priority area for current groundwater pollution due to nitrogen that could be from fertilizer runoff. Ethanol supporters say more corn takes greenhouse gases out of the atmosphere, but skeptics say the fuel it takes to grow and ship more corn negates the deductions. It depends on how you do the math, Simpson said. Despite these concerns, Simpson still sees a bright future for ethanol in Idaho. "I've been a supporter of ethanol, and I think it should be used more widely," he said. "And Idaho could be a center of production for it." Neil Koehler, Pacific's president and CEO, agrees. His company's plant is scheduled to be finished before the end of summer, and workers for the plant have already been hired. He's not concerned Renova's problems are an indication of a limping industry. "We're still really excited about ethanol in Idaho," he said. "We're on the final lap of finishing the plant, and we're still going strong." That remains to be seen for the industry at large, here in the Magic Valley. Renova needs to renew investor interest in the Heyburn plant. Company officials have indicated, through the company's Web site, they would tour the plant site with investors this month. Calls to the company's Boise office were not returned for this story. In the meantime, Magic Valley contractors, businessmen and farmers will wait, hoping to find the gold at the end of the ethanol rainbow before it collapses. Matt Christensen may be reached at 735-3243 or at matt.christensen@lee |
Posted at 28/11/2007 18:06 by asp1 First the 'old' news - then the real news:The EPA raised its renewable fuels standard for 2008 today to meet a federal mandate that - at least - 5.4 billion gallons of ethanol be blended into our (U.S) gasoline. This years standard was approximately 4.7 billion gallons as the EPA hopes to reach 7.5 billion gallons by 2012. Rick Kment, a DTN biofuels analyst, believes, though, that this move is unlikely to have much effect as gasoline blenders are already using more than the 5.4 billion gallons mandated. The U.S. currently has 134 operating ethanol plants with a combined capacity of 7.2 billion gallons. December Ethanol on the CBOT increased once again to settle at $1.968 a gallon. CBOT Ethanol has jumped approximately 40 cents since hitting its all-time low back in October. Investors should keep an eye out for ethanol stocks as conditions have become moderately favorable. Morgan Stanley's analyst, Dave Wilson, recently issued a short-term buying opportunity with share prices so low. In other news, Aventine's (AVR) CEO, Ronald H. Miller, bought 10,000 shares of his own company's stock at $8.54. What to look forward to: The U.S. House of Representatives could vote on a wide-ranging energy bill next week that would triple the use of ethanol. There is speculation that legislation will require 20.5 billion gallons of ethanol by 2015, with 5.5 billion gallons of that coming from cellulosic ethanol. The bill is also speculated to set short-term targets of 9.5 billion gallons by 2008 and 11.6 billion gallons by 2009. Back in June, the Senate passed a proposal to require 36 billion gallons of ethanol use by 2022. Democrats will also attempt to hit the oil industry with $15 billion in taxes and require utilities to get 15 percent of their electricity from wind, solar and other renewable sources. |
Posted at 23/11/2007 11:11 by j5ack5k question is, is it worth a gamble a week before interims?I reckon even if they are good share price won't go anywhere because most investors just want out of ethanol altogether now - especially after GTL's great results then subsequent a*se bumming by the MM's. Only way this lot will rise is if Congress raises RFS IMHO. |
Posted at 20/11/2007 21:05 by opmoc asp1,I'm afraid you are talking mumbo-jumbo religious nonsense. You can't get more energy out of a system than you put in. Take your "2km high tubular towers to be built in outback Australia using the rising hot air to drive turbines and generate huge amounts of electric power" To try and illustrate... You can accurately estimate the maximum possible energy you could get out of the tower from the shadow it would make on the ground. Whatever you do there will be a massive loss in energy conversion costs. Having turbines in the system - might be attractive to potential investors who don't understand science - but it isn't going to create energy that isn't there in the first place. I suspect that it would be less efficient than having a conventional array of solar panels. You also have to take into account - in any such system - the energy costs of manufacture, maintenance, storage and distribution. However - with solar power there is at least a chance that you will get net energy out of the system - over its lifetime. With ethanol from food - there is no chance whatsoever - because it takes more energy to create the ethanol - than the ethanol contains. You have a net energy loss. You are wasting petroleum to create ethanol. You are also reducing food supplies for people to eat and wasting a great deal of water. Tony |
Posted at 23/9/2007 00:10 by j5ack5k Thanks Jimarilo, without legislation I think it may be a while before we see prices rise significantly (i.e. next summer), but I've always maintained from the outset (mainly on iii) this is a long term play. I think most investors discount Renova because they don't bother to research it properly. They read doom and gloom articles (see the completely factually incorrect one above) and look at ethanol and corn prices without factoring in forward purchasing and long term sales contracts, local market prices, energy and distillers grain prices, and overall debt levels. They also tend to ignore distribution infrastructure and different business models that can massively distort results when taken in the context of future earnings. It seems to me that many articles also seem to be driven by the PR machines of various interest groups and its easier for journalists to write total cr*p and grab headlines than provide a balanced perspective. And for the trolls out there post what you want (I'm sure you will)... but it'll be me and the faithful that will be counting the buckeroonies when this comes good. In the meantime, enjoy the following: |
Posted at 19/9/2007 07:29 by drjudywood crazy!Corn Ethanol & its Unintended Consequences for California Juliette Anthony, M.A., M.S., Consultant Sept 19, 2007 www.renewableenergya Growth of the corn ethanol industry in California is fraught with unintended consequences, none of which are beneficial to the economy or the environment of the state. They include impacts on our overcommitted water resources, on our air quality, on the price of food, and on the financial burden to citizens while private investors profit. Already there are 235 ethanol plants under construction or in planning stages across the county, in addition to 111 operating plants. And there just isn't enough corn to go around. If all the scores of factories under construction or planned go into operation, they will gobble up no less than half of the entire corn harvest by 2008. All of the water systems upon which the state depends, to serve both agriculture and the urban sector, are oversubscribed. Ethanol requires large amounts of water both to grow the corn and to process it, putting corn into direct competition with our agricultural industry that feeds half the nation with all of its fruits, vegetables and nuts. Corn ethanol requires 3.7 to 5 gallons of water to produce 1 gallon of ethanol just in the manufacturing process. Cellulosic ethanol from other plant materials is far in the future and will require 6 gallons of water for each gallon of ethanol to manufacture, though the energy output is 4-5 times greater than for corn ethanol. States such as water rich Minnesota and Iowa complain that the ethanol industry is mining their groundwater, causing some plants to be closed because the groundwater supply has been so depleted. In many places in California, especially in the San Joaquin Valley, the ground has already subsided many feet because of groundwater mining. Approximately 14 percent of the U.S. corn crop is irrigated and this irrigated acreage consumes almost 18 million acre-feet per year of water-much of which is overdrafted from the Ogallala aquifer in the Great Plains. To put this water requirement in perspective, the average annual flow of the Colorado River at Lee's Ferry is only about 14 million acre-feet per year. Almost all of California's agriculture is dependent on irrigation. Diverting millions of gallons of water from California farms to ethanol will disrupt the nation's food supply for growing since corn is a very water intensive crop, and it will also add to the problem of pesticide and fossil fuel fertilizer run-off polluting our waterways. Shifting our valuable farmland from vegetables to mono-cropping corn is already happening in Kern County. If all the vehicles in California operated on E85 [the policy of the Governor and Legislature], the ethanol required would consume 70 percent of the entire U.S. corn crop, but only 13.6 percent of the energy in the fuel would be renewable because of the heavy use of fossil fuel. In Iowa and Indiana, the Sierra Club has sued because ethanol plants have made neighbors ill from toxics in the air and the water. Biofuels are not as clean as they would have us believe. Ethanol molecules are microscopically small and escape from gas tanks and hoses. Its use increases NOX by 5%, and for every 18 degrees fahrenheit increase in temperature over baseline, evaporative emissions double. Ground level ozone is also increased. While the ARB is required by state law to ensure that emissions do not increase, plans for mitigation are years away from being implemented. And corn is not the best raw material for fuel. It takes 10 gallons of ethanol to produce the energy equivalent of about 7 gallons of gasoline, and greenhouse gas reductions are minuscule. Very much like the original backers of MTBE, both from industry and major environmental groups, who adamantly ignored the warnings regarding MTBE's ability to contaminate drinking water, many of these same people are avoiding the unintended consequences of diverting millions of gallons of water into ethanol plants. They fought to preserve the oxygenate mandate so that ethanol could replace MTBE, which delayed MTBE's removal from California's gasoline by several years. Only after many wells in California were contaminated, did they support its removal. Already there are 235 ethanol plants under construction or in planning stages across the county, in addition to 111 operating plants. And there just isn't enough corn to go around. If all the scores of factories under construction or planned go into operation, they will gobble up no less than half of the entire corn harvest by 2008. Even though last year's corn harvest was the third largest crop ever, food prices are rising in the supermarkets. Hog and cattle farmers are already bringing their animals to market early in an effort to save money on feed because the cost of a bushel of corn has doubled since September of 2006. As the price of grain goes up, people will go hungry. There were riots in Mexico in June because people were not able to afford corn for tortillas. State Senator Tom McClintock (R) summed it up as follows: "The CARB regulations [to enforce the low carbon fuel standard] will undoubtedly hit Californians hard-but they will hit starving third world populations even harder. Basic foodstuffs are a small portion of the family incomes in affluent nations, but they consume more than half of family earnings in third world countries." The Federal Government subsidizes major agribusinesses, such as ADM and Cargill, to grow corn. It also provides funds to build plants, and the refiners are given $0.51 cents a gallon for blending ethanol into our gasoline. Now these same agribusinesses want California's citizens to also pay more at the pump and supermarket by legislating additional subsidies in AB118. A gallon of ethanol is less expensive than gasoline because of its subsidies, but we pay exactly the same amount for it at the pump. The oil companies profit by selling us a gallon of less expensive fuel for the same amount per gallon that we are now paying for gasoline. And we get less gas mileage from that gallon of ethanol, so we have to purchase more gasoline to drive the same number of miles. Everywhere the money flows out of our pockets into theirs. Alternative energy for transportation does not have to be liquid fuels. PV panels will supply energy for 25 or more years with very little maintenance for plug-in hybrid vehicles. Any crop that is grown for ethanol requires energy inputs annually, for growing, processing and distribution. Rather than subsidizing corn ethanol, we should have programs to place solar panels on the top open air layer of parking garages for plug-ins, and devote more funds to public transportation. Let the Venture Capitalists who are seeking subsidies risk their own funds to research better non-food crop solutions and bring them to market when they are ready. Juliette Anthony, M.A., M.S., Consultant Sept 19, 2007 |
Posted at 04/6/2007 13:51 by davius Sub 70p? Heading out over 80p by the look of it. But it does seem that the buys are small and look to be mostly private investors on the back of the Working Lunch report.The share price has been at its lowest level since floatation though, so if they are predominantly private investors getting in for the longer term they are at least doing so at a low price. |
Posted at 09/5/2007 07:39 by jailbird Top News May 9, 2007, 12:01AM EST text size: TTRising Fears of an Ethanol Bust With some analysts warning of an oversupply of the corn-based fuel later this year, concern is growing among farmers and investors by Moira Herbst President George W. Bush's January, 2006, declaration that the U.S. is "addicted to oil" marked the beginning of a gold rush for corn growers: The government policies the comment helped spur have been a boon for the producers of corn-based ethanol, the all-American fuel that now displaces about 4% of U.S. gasoline supply. Over the past 18 months, farmers have rushed to plant more corn-and are set to produce a record crop this year-while small-time entrepreneurs and agricultural giants alike have built plants to expand capacity. A handful of initial public offerings have fed investors' desire to get in on the action. But while farmers and producers remain bullish on corn ethanol's prospects, a once-enthusiastic Wall Street is growing skeptical. On May 1, the largest U.S. ethanol producer, Archer Daniels Midland (ADM), reported quarterly earnings that fell short of analyst expectations, citing higher corn costs as a problem. ADM shares tumbled 5.4% that day to close at $36.60 as investor disappointment spread throughout the sector. Shares of U.S. Bioenergy (USBE), Pacific Ethanol (PEIX), Andersons (ANDE), Aventine Renewable Energy (AVR), and VeraSun Energy (VSE) dipped 1% to 2%. Lurking behind ADM's gloomy news are doubts about the future of corn ethanol. A growing number of analysts, once bullish on the product, are warning that an oversupply may be coming as soon as this year. On Apr. 27, a Lehman Brothers (LEH) report projected that production will outstrip demand in the second half of 2007, measuring the domestic thirst for corn ethanol at 420,000 barrels per day but supply at 445,000 barrels a day, mainly because the U.S. lacks the infrastructure to move the product to market. "Chicken-and-Egg Problem" "There's tremendous capacity coming online, but the infrastructure isn't there to keep up with it," says Michael Waldron, an oil markets research analyst at Lehman Brothers who co-authored the report. "We need a nationwide system to pipe it, and until that happens, we'll likely have an excess of product." Waldron says the problem isn't a lack of demand for ethanol, which remains high, especially given that the federal Renewable Fuel Standard mandates at least 4 billion gallons, or about 3% of all U.S. transportation fuels, to come from alternative sources today, and nearly double that amount, or 7.5 billion gallons, by 2012. Lawmakers are expected to give the mandate a significant boost later this year. Rather, the problem is getting ethanol to consumers in various parts of the country. Ethanol requires a separate piping system from gasoline, and since Uncle Sam hasn't appropriated funds to build such infrastructure, ethanol is now primarily transported by rail. But the rail system extends only to major metropolitan areas-not to mention the dual problems of its high cost and carbon dioxide emissions. "It's a chicken-and-egg problem," says Waldron. "If the infrastructure were there, the demand would be there. In the end the government would have to play a role to help build out a [national] dedicated pipeline." Caution to Investors A growing number of analysts agree with Lehman Brothers' conclusions. "We remain cautious on the ethanol stocks over a 12-month period," wrote Bank of America (BAC) analyst Eric Brown in an Apr. 24 research note. "Looking ahead we continue to believe that an oversupply of ethanol in the second half of 2007 will depress ethanol's premium to gasoline." A glut of ethanol stuck in the Corn Belt would be unwelcome news for corn growers and the agricultural entrepreneurs who had set their hopes on a bright future for what has since become a controversial fuel (see BusinessWeek.com, 3/19/07, "Ethanol's Growing List of Enemies"). Farmers are beginning to voice their concern. "We've got an enormous amount of product coming online in a short period of time," says Geoff Cooper, director of ethanol programs for the National Corn Growers Assn. "The market is surprised by all this volume and can't absorb it now." Evolving Infrastructure He says the problem of transporting ethanol to parts of the country like the Southeast remains a problem, as does a shortage of storage capacity in these areas. Yet Cooper calls those obstacles "bad news but not disastrous" for corn growers, as a more effective ethanol infrastructure will evolve in the next several years. "The oversupply now is more a bump in the road than a catastrophe," he says. Plus, not everyone agrees with the emerging consensus among analysts. The Renewable Fuels Assn., an industry trade group for ethanol producers, maintains that the problem is a lack of capacity rather than an excess of it. Using Energy Dept. figures, the RFA calculates that demand now stands at 416,000 barrels a day but production is only 386,000 barrels a day. Even the 80 new ethanol plants expected to be operating by 2009 won't be able to meet the growing demand, according to the association. "Right now we have ethanol making up 4% of transportation fuels, but we can get to 10% with no changes to cars' engines or retail pumps," says Matthew Hartwig, an RFA spokesman. He acknowledges that transportation is an issue but says rail cars are able to transport the product now, and there are studies under way about a national pipeline. Short-Term Pain, Long-Term Gain? In any case, Hartwig says, any oversupply domestically could be exported to other counties, as demand for fuel is growing in all parts of the world, and gasoline prices are increasing. Waldron of Lehman Brothers sees another outcome to a glut. An ethanol oversupply would make ethanol blends cheaper for consumers, potentially eliminating the need for the 51ยข-per-gallon subsidy blenders get from the government. In other words, too much ethanol means cheaper ethanol, which could ultimately extend its longevity in the marketplace. "Too much supply could hurt ethanol producers' margins, but in the end it may be a good thing for prices to come down," Waldron says. "A short-term problem for the industry could be healthier for it in the long run." |
Posted at 18/2/2007 09:51 by david77 From this week's MoneyWeek page 24:How to profit from America’s ethanol rush America’s interest in ethanol as an alternative to petrol may not be based on sensible economics or be all that green, but for investors, opportunity knocks, says Jody Clarke ... Make money from soaring softs Ethanol might be the fuel behind the boom in corn and soft commodities prices, but one sector you should definitely avoid is the firms that are producing it. As prices for corn have risen, so has the cost of making ethanol, while the actual selling price has fallen in line with oil prices, squeezing ethanol producers’ profit margins. Investors would be better off looking at ways of playing rising demand for corn, and the knock-on effect to other soft commodities. Until recently, the only way to get direct exposure to softcommodity prices was through spread-betting – not the most convenient or stable method of investing. Thankfully, there is now an easier way to play the boom: through exchange traded commodities (ETCs). These track the price of a specific commodity or commodity index, and because they are traded on stock exchanges, can be bought as easily as shares through most brokers, while management charges are less than 0.5% a year. Soft ETCs tracking corn, wheat, soybeans, sugar, soybean oil and cotton are all available to investors. Alternatively – and this might be a better bet – if you want to spread your risk across a range of softs, the ETFS Agriculture security (Ticker: AIGA: LN) follows the DJ-AIG Agriculture Sub-Index, which tracks a basket of soft commodities. The allocation is 25% soybeans, 19% corn, 16% wheat, 11% cotton, with the rest being made up of sugar, coffee and soybean oil. For more information, see www.etfsecurities.co If you would rather play softs with stocks, you might want to look at agribusiness giant Bunge (BG: US), a long-time MoneyWeek favourite. The group stores and processes soft commodities, including soybeans, and also supplies fertiliser to farmers in Brazil. It recently beat analysts’ expectations for the third quarter in a row as rising crop prices encouraged farmers to grow more, boosting demand for fertiliser, which saw fourth-quarter profits rise by 74% on last year. The group trades on a p/e of 15 for 2008. Another agriculture play is farm machinery manufacturer Deere & Co (DE: US). The group is well placed to benefit as farmers reap the gains from rising crop prices – bigger profits mean more money to invest in machinery. On top of this, the amount of land being farmed in the US may have to grow in coming years to have any hope of meeting ethanol targets. To stop corn stocks falling to zero over the next two years, Credit Suisse analyst David Nelson says the US must turn over 12 million acres of land out of the 36 million held for conservation purposes to increased corn production. More land, of course, means more machinery to work it. Investors could also look into a more successful biofuel – Brazilian ethanol. Clean Energy Brazil (CEB: LN) listed on Aim in December, and plans to invest in ethanol and sugar mills in the country. It raised £100m in funding, 30% from Invesco and 29.9% from US fund manager Stark. It has already bought a mill for $140m, which has sold forward all its sugar for the next 18 months, says Tom Frost of Numis Securities. The group is focused on Brazil’s domestic ethanol market, and aims to invest in firms with a total of 30 million tonnes of sugar under their control within two years. Executive officer Peter Thompson says, “once you have cane in your hand you have a fully integrated business… under your control”, one that is not subject to fluctuations in the sugar price, unlike most US-based ethanol producers. |
Posted at 03/1/2007 10:11 by asparks why the drop?Financial Times article > Renewable energy begins to pick up speed as an investment > By Fiona Harvey and Kate Burgess > > Worrying about the environment is not the prerogative of a fringe of > ageing hippies it once was. It has become one of the hot topics of the > capital markets. > More than $70bn (£36bn) of new money was invested globally in clean or > renewable energy or clean technology last year, says Michael Liebreich > at New Energy Finance, a specialist research firm. That was a 43 per > cent increase on the year before, he says. > He reckons there are more than 1,246 private equity funds targeting > environmental projects: "All the biggest private equity houses are > looking at this space." > The latest to launch a fund was Hg Capital, which reported last week > it had raised EUR330m (£222m) for a fund investing in renewable power > in Europe. > Conventional asset managers and hedge fund managers are joining the > fray. According to the UK Social Investment Forum more than EUR780bn > had been invested in socially responsible investments and funds and > the bulk of SRI funds use environmental criteria to pick stocks. > Standard Life Investments and Merrill Lynch Investment Managers have > both highlighted the environment as an important investment theme for > 2007 as environmental issues become more integrated into mainstream > asset management and corporate behaviour. > "Investors are seeing potential for profits, from the trading of > pollution permits to investing in new technologies and approaches > designed to cope with increasing scarcity of resources such as oil and > water," says Standard Life. > As the investment case for renewable energy strengthens, more > companies are being drawn to list on the public markets. > So far 50 companies focused on renewable energy have floated on Aim > and more are expected in the next year or so. > Wind power and ethanol turned out to be the best bets for investors > last year in the burgeoning market for renewable energy. > The highest performing renewable energy stock on Aim, by a large > margin, was Clipper Windpower, the developer of wind farms in the US. > Clipper, whose chairman is the former Conservative minister Lord > Moynihan, more than doubled in value during the year, continuing the > strong performance since the company listed in September 2005. > Shares in Clipper jumped more than 75 per cent in July when the > company announced a deal with BP to develop jointly five wind farms in > the US. > Wind is the most mature of all renewable energy technologies and > companies with good wind sites can make substantial profits as > electricity prices have remained high. > Turbine design has advanced to allow much more power to be generated > than was possible in the past, up to 3MW or even 5MW in the case of > the biggest models. In addition, most developed country governments, > including the UK and the US, offer a subsidy for wind power > generation. > The mixture of government support, high energy prices, carbon trading > and concerns about the security of energy supplies have all combined > in the past two years to make renewable energy an attractive sector. > High energy prices have changed the economics of renewable energy, as > has carbon trading, initiated by the European Union in January 2005, > which puts an extra cost on fossil-fuel power generation, making > renewable energy more economical. > More than £500m of wind turbines were commissioned in the UK in 2006, > according to the British Wind Energy Association. > But investors ought to be wary of the potential problems associated > with wind power. > Shane Woodroffe, director of renewable energy at Fortis Bank, notes > there are estimated to be more wind farms in planning in the UK, or > about 2GW to 4GW of generating capacity, than there are wind farms > already operating. > That reflects the difficulty of gaining planning permission from local > authorities. Companies must also get permission for any additional > networks of large pylons that must be set up to connect remote wind > farms to the electricity grid. > Many of the UK's windiest sites, and those where planning permission > is relatively easy to obtain, have been taken. > Potentially more damaging to investors is that the Department of Trade > and Industry is to review its subsidy regime in 2007 and may reduce > the money available for onshore wind farms. > The Carbon Trust, one of the government's chief advisers, has called > for other less mature technologies, such as offshore wind farms and > tidal and wave energy, to be favoured in future. > Complicating matters further is a global shortage of wind turbines, > caused by greatly increased global demand and high steel prices. > David Fitzsimmons, chief executive of Novera Energy, one of the UK's > biggest pure play renewable companies, says he expects consolidation > to take place this year. "We're taking this forward from being a > cottage industry," he says. "I think the interest will be in > [companies with] existing assets rather than developing new assets." > Ethanol companies such as Renova Energy and GTL Resources also fared > well in 2006. They are cashing in on the ethanol boom in the US. > However, there are potential dangers for these companies too. The crux > of their business model is to exploit the lower price of ethanol > compared with petrol. > Yet those economics are changing as a bad grain harvest in many places > has pushed up the price of their raw materials, while the oil price > has come off its recent highs. > Investors putting their faith in other biofuels will have seen mixed > results. D1 Oils, a company founded and chaired by entrepreneur Karl > Watkin, plans to make biodiesel from the jatropha plant, which it > believes it can grow in countries such as India. > The company's shares have almost halved since April. It said this > summer it was in early discussions about a buy-out but instead is > raising nearly £50m by means of a share placing. > In the meantime, a series of problems at its Teesside factory has > beset the indebted Biofuels Corporation, which warned last month it > would have to seek more funding next April in order to continue as a > going concern. > Emissions trading specialists have sprung up to take advantage of the > new markets in carbon dioxide brought into being by the Kyoto protocol > and the European Union's greenhouse gas emissions trading scheme. > These have also experienced divergent fortunes. Climate Exchange was > one of the best performers of "clean energy" companies on Aim, but > Trading Emissions lost value during the year. Yet the UK is likely to > remain the centre for emissions trading for the foreseeable future, > according to Paul Newman, London managing director at Icap Energy (see > profile below). > One of the renewable energy technologies to have received most hype in > the past few years is the fuel cell. These devices, which generate > electricity from hydrogen or ethanol, have been around for decades. > However, the technology to make them has not yet been proven and it > remains several years from widespread commercial application. > In April this year, the fuel cell specialist ITM Power was one of the > relative heavyweights among renewable energy companies because it had > found a way to make it cheaper to produce some of the important > components in hydrogen fuel cells. > However, as it became clear this technology would take years to come > to market, the company's value fell from £140m to £125m. > Renewable energy in general is poised to receive more investment in > 2007, according to Mr Woodroffe of Fortis. "I'd say this will be one > of the big growth markets, definitely." > Venture capitalists are also taking a keen interest. Mark Kerr, a > director at 3i, which last month invested EUR30m in Electrawinds of > Belgium, says: "The economics of renewable energy are more compelling > than the economics of traditional power generation opportunities from > a venture capital perspective, because traditional power is a mature > industry but renewable has huge opportunities for growing companies." > He said he also expectedto see consolidation in the renewable > industry, whichis characterised by a large number of small companies > and a few big energy companies that dabble in renewable energy. |
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