Federal Law Mandates +15,900% Increase in Ethanol Production

The catch? New 'Advanced Biofuels' can't come from corn.

StreetAuthority.com - June 19, 2009

(PRNewsChannel) / Washington, D.C. / The federal government's timetable for cellulosic ethanol calls for a +15,900% increase in production by 2022.

 

"While environmentalists are focusing on cutbacks in greenhouse emissions, investors need to keep an eye on these federally mandated increases," said Andy Obermueller, Chief Investment Strategist for Government-Driven Investing.

 

Investors tend to dismiss ethanol because they think they've heard the story. They focus on corn-based ethanol. Obermueller says that's a mistake. He advises investors to focus instead on cellulosic ethanol, an advanced biofuel derived from an organic compound found in all plant life.

They need look no further than existing energy law.

"Most investors look for stocks in the Wall Street Journal," Obermueller said. "I look in the Federal Register."

 

As an example, Obermueller cites the fine print in the 2007 Energy Security and Independence Act. It calls for 100 million gallons of cellulosic ethanol in 2010 and 16 billion gallons by 2022, a +15,900% increase.

Obermueller thinks companies that own significant cellulosic ethanol technology will see similar gains in their stock prices. There aren't many.  

 

"Lots of companies have a stake in traditional corn-based ethanol," Obermueller acknowledged. "But there's only one pure-play in cellulose, and that's Verenium."

 

The company, which has a market cap of only $70 million, has developed the enzymes that can turn cellulose into ethanol.

In 1995, Verenium was granted a license to commercialize cellulosic ethanol technology that had been developed at the University of Florida and other academic institutions. It's been hard at work ever since, spending millions of dollars to hone the process. It also has built two demonstration-scale plants in the United States and a third in Japan.  

 

What gives the company the edge? Chemistry.

"There are two substances in plant material that can be converted into ethanol," Obermueller said. "The chemistry is a little technical, but the bottom line is that Verenium can turn both of these substances into ethanol, not just one."

That's what gives the company a significant competitive advantage.

"The country has to start cranking this stuff out. The company that comes up with the most efficient process wins, not only financially but environmentally. One kind of 'green' helps make the other kind," Obermueller said, "It's what I'd call a win-win."

You can get Obermueller's complete analysis here: http://www.streetauthority.com/p/gdi/pr.htm

ADDITIONAL RESOURCES:

Federal Ethanol Production Timetable

                                 Renewable Advanced     Cellulosic

12/31/2008                  9                     

12/31/2009                  10.5         0.6   

12/31/2010                  12            0.95             0.1

12/31/2011                  12.6         1.35             0.25

12/31/2012                  13.5         2                 0.5

12/31/2013                  13.8         2.75             1

12/31/2014                  14.1         3.75             1.75

12/31/2015                  15            5.5              3

12/31/2016                  15            7.25             4.25

12/31/2017                  15            9                 5.5

12/31/2018                  15            11               7

12/31/2019                  15            13               8.5

12/31/2020                  15            15               10.5

12/31/2021                  15            18               13.5

12/31/2022                  15            21               16

                                 66%         3400%         15900%

 

Details of the bill: http://www.ethanolrfa.org/resource/standard/

Renewable & Alternative Fuels Information: http://www.eia.doe.gov/fuelrenewable.html

Contact: 

Andy Obermueller

Email:

Phone: (512) 501-4001 x108

Web: www.StreetAuthority.com

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