Pricey wheat forces shutdown at ethanol pioneer - (Agrimoney.com) 12/5/11

[Chris Hodrien]

http://www.agrimoney.com/news/pricey-wheat-forces-shutdown-at-ethanol-pioneer--3140.html

 

This biofuels business is not so simple - agricultural feedstocks have big price swings as well as crude oil ! Of course,the demand from this large Ensus plant may itself have been part of the problem in 'spiking' the UK price -'food vs. fuel  writ large'. I have vivid memories of people (e.g. BP) promoting making synthetic food (e.g SCP protein)  from fuel products back in the 1980s -they can't both be right!

To the farmers, these price swings may be just a nuisance, but to a capital-intensive conversion plant paying-back large capital loans, it's a disaster which could lead to bankruptcy - a fact which the theoretical economic 'marketeers' in DECC, OFGEM and The Treasury frequently overlook.

Chris Hodrien

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19:49 UK, 12th May 2011, by Agrimoney.com 'Pricey wheat' forces shutdown at ethanol pioneer Europe's largest wheat ethanol plant is to mothball its operations, in what is believed to be a response to high wheat prices, in another setback to the nascent biofuels segment, Agrimoney.com has learned. The UK's Ensus plant is, as of next month, to shut capacity temporarily, sources said, a move believed to be in response to wheat prices which hit a record £222.00 a tonne on the London futures market last month. The plant is, to facilitate the shutdown, accelerating delivery of wheat ordered into June and July, traders said. Meanwhile, buyers of distillers' grains, a byproduct of ethanol manufacture used as a livestock feed, are seeking supplies of alternative raw materials. A shutdown could enable the site to tap into newly harvested supplies being offered for lower prices. London's new-crop November lot was trading $173.50 a tonne in late deals in London, a discount of nearly 15% to the expiring May contract. Representatives of the Ensus plant have yet to confirm or deny the shutdown to Agrimoney.com. Glencore Grain, which is responsible for the site's wheat supplies, referred calls to Ensus. Sector setbacks Closure would represent a further hiccup for a UK wheat ethanol industry which has already been dented by building delays, at both the Ensus site, whose construction was held up by industrial action, and the Vivergo plant being developed by Associated British Foods, BP and DuPont. Completion of the Vivergo site is being delayed by a bitter dispute workers laid off in March, after the site terminated a contract with an engineering group. Ensus has also been ordered by UK environmental watchdogs to install equipment to tackle odours which have prompted complaints from neighbours to the site. Supplies freed up? As talk of the shutdown spread, Glasson Fertilizers, part of the listed Wynnstay Group, said on Twitter that the move would "add to UK ending stocks, taking the pressure of the market". Traders have long pondered how pressure on UK wheat supplies, following a spurt in exports in the first half of the 2010-11 marketing year, would play out towards the end of season, which ends next month. Grain merchant Gleadell said in a market report: "We hear rumours that the Ensus bioethanol plant is to be mothballed for an undefined period of time. "If true this will boost the UK's exportable [wheat] surplus for 2011-12." At Nogger's Blog, agriculture commentator Dave Norris said: "It would seem that with UK wheat prices now at well over £200 a tonne. the economics of the equation of turning food into fuel clearly don't currently stack up." 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[Nick Balmer]

Hello Chris,

This shows the market working.

I notice that you edited out the comment from Nogger's Blog

"Old crop London wheat fell on the surprise news that the Ensus wheat to bioethanol plant on Teesside was to close temporarily. The company blame cheap biofuel imports, particularly from the US, for taking advantage of "loopholes in EU import legislation to avoid established tariffs, bringing bioethanol of uncertain origin and sustainability into the European market."

The plant is expected to be closed for around 2-4 months. With a potential monthly wheat requirement of around 100,000 MT that, in theory, brings a significant volume of old crop wheat back onto the market".

It is not so much that the price of wheat is much higher than usual, which is very good news for farmers who will actually make money this year, as the fact that other cheaper forms of feedstock for making ethanol are available to Ensus competitors.

If the land that is growing the wheat for Ensus (and it is only the ears of corn they use) was turned over to growing whole crop silage they could use all of the ligna cellulose in the crop, and make methane instead.

Methane from bio-crops will give about four times as many kilometres per hectare as ethanol.

Ethanol is a good first step towards biofuels but it will soon be overtaken by even better biofuels.

We are seeing an energy revolution gathering pace.

What a good thing it is to see farmers beginning to benefit from transport fuels, rather than OPEC conferences. Farmers spend their money inside our own economy, and don't send it away.

The average Cambridgeshire village spends £750,000 a year on oil for is transport and commuting needs. (excluding tax)

How much better if that went to the farming community and was used to make carbon neutral and far cleaner fuels which can be grown for the foreseeable future.

Remember that this is only going back to the situation before the 1850's when our transport was by horse, and hay was the fuel.

A methane engine is only a far more efficient mechanical horse. 

Regards

Nick Balmer

[Chris Hodrien]

Excellent Nick ...love it!

(hadn't intended to edit- out the comment from 'Nogger's Blog'....'whoops')

Quite agree about biomethane vs. bioethanol cycle efficiency - biomethane has been a yawning gap in both DECC (gas grid) and DfT (CBM vehicles) clean energy strategy. Thank God it's riding to the rescue, now that we might not have all those shiny new nukes after all, post-Fukushima!

Regards, Chris.