July 1 Aviation Bio-Fuel Independence Day!!!

Primary energy use will grow by nearly 40% over the next twenty years, with 93% of the growth coming from non-OECD (Organization of Economic Co-operation and Development) countries. Non-OECD countries are seen to rapidly increase their share of overall energy demand from just over half currently to two-thirds.
Global liquids demand is forecast to reach 102.4 million barrels per day (mmbpd) in 2030. The net growth of 16.5 mmbpd over the next 20 years comes exclusively from the emerging economies of the non-OECD.

Biofuels production’s (high case scenario) is expected to reach 16.7 mmbpd by 2030 from 2.3 mmbpd in 2011. Continued policy support, high oil prices, political instability (oil producers) and continued technological innovations all contribute to the rapid expansion.

Beginning July 1, 2011 (subject to regulatory delays), fuel processed from organic waste or non-food materials, such as algae or wood chips, may comprise as much as 50% of the total fuel burned to power passenger flights, ATA spokesman Steve Lott and a Boeing Co. (BA) official told Bloomberg.

“The real winners of this type of regulatory breakthrough will be technology companies involved in the production of aviation biofuels,” said Harry Boyle, an analyst at Bloomberg New Energy Finance in London. “The biotech-biofuels business models of Amyris Inc. (AMRS), Codexis Inc. (CDXS), Gevo Inc. and Solazyme Inc. are all making claims to these types of new markets.”

Other biofuels companies that may benefit from opening up the $139 billion-a-year aviation fuel market are Neste Oil Oyj (NES1V) of Finland, Spain’s Abengoa SA and Honeywell International Inc. (HON)’s UOP unit, which is developing a fuel-making technology.

General Electric Co., the world’s biggest jet engine maker by sales last year, said at a 50% blend level it doesn’t expect to see any impact on engines or operability.

Airbus and Boeing, which together manufacture about 80% of the world’s passenger planes, are planning to set up biofuel production chains across the world. Airbus is working on a supply hub in India where it’s talking with government and airline officials. Its aim is to form joint ventures and partnerships with growers, transporters and refiners. Boeing is negotiating with companies across the supply chain in South America.

Fuel from inedible plants or waste doesn´t put price pressure on crops as can fuel from corn, sugar cane or soy.  Honeywell and Indian Oil Corp., the nation’s largest refiner, are planning to establish a pilot biofuel production plant in India next year, James Rekoske, vice president of renewable energy at Honeywell’s UOP, said. It would be Honeywell’s first pilot facility in Asia and the companies will examine the feasibility of using plants such as jatropha and pongamia to make renewable jet fuel.

The 30 component stocks of the Biofuels Digest Index are:
Archer-Daniels-Midland (ADM)


Algae.Tec (AEB.AX)


Amyris (AMRS)


The Andersons (ANDE)


Aventine Renewable Eenergy (AVRW.OB)


Bluefire Ethanol (BFRE.OB)


BioFuel Energy (BIOF)


British Petroleum (BP)


Biox (BX.TO)


Codexis (CDXS)


CleanTech Biofuels (CLTH.OB)


Cosan (CZZ)


Danisco (DAY.F)


DuPont (DD)


Gevo (GEVO)


Green Plains Renewable Energy (GPRE)


GreenHunter (GRH)


Gushan Environmental Energy (GU)


Lignol Energy (LEC)


Monsanto (MON)


Novozymes (NZMB.BE)


OriginOil (OOIL.OB)


Pacific Ethanol (PEIX)


PetroAlgae (PALG.OB)


Rentech (RTK)


Royal Dutch Shell (RDS-A)


SunOpta (STLK.T)


Syngenta (SYT)


Valero (VLO)


Verenium (VRNM)

The only question now is: will there be enough chips to go around?

Sources: IEA, BP 2030 Energy Outlook, Bloomberg.