BASIC Associates: Big Oil, Big Food, Small Biofuels

Monday, November 8, 2010

Big Oil, Big Food, Small Biofuels

By Robin J. Johnson, Ph.D.

In her excellent analysis of biofuels' prospects in the 112th Congress, biofuels blogger Joanna Schroeder quotes Renewable Fuels Association head, Bob Dinneen as saying, "The ethanol industry, and the domestic biofuel industry as a whole, ought not be asked to unilaterally disarm while extensive government support continues for petroleum companies."

More and more, the line between the biofuels and petroleum industries is becoming blurred. Companies such as Valero*, Petrobras, and Sunoco* own outright, or hold partial stakes in, a number of existing ethanol plants. (Many of these plants were acquired at bargain basement prices following the collapse of the original owners' businesses). In addition, investment in biofuels technology development has become de rigueur for oil companies such as Exxon Mobil*, Chevron*, Shell, ConocoPhillips*, and Marathon Oil*.

Not to be left behind by big oil, big food is part of the biofuels scene. Actually, big food preceded big oil into the biofuels arena. Companies such as Archer Daniels Midland*, Tyson*, and Cargill** have major presences in the biofuels industry, having developed technologies and established production facilities for biofuels. ADM was once the world's largest ethanol producer, a position now held by POET of South Dakota.

With these giants mixing it up, is it any surprise the food versus fuel debate continues to rage and oil and food execs get richer?

Government subsidies for petroleum companies dwarf those for biofuels. The famous volumetric ethanol excise tax credit (VEETC), or blenders' credit, pays oil companies to blend ethanol into gasoline and biodiesel into diesel. (The American Jobs Creation Act of 2004 created the blenders' tax credit for both ethanol and biodiesel. The credit for biodiesel expired December 31, 2009, seriously harming the US biodiesel industry. So much for jobs!)

With big oil claiming three of the top ten spots on the 2010 Fortune 500 list, it's time to revamp biofuels subsidies so they benefit producers who take the lion's share of the risk. Let's reward big oil and big food for innovation and support of biofuels instead of simply paying them for obeying mandates on using it.

* indicates member of the Fortune 100 list for 2010

** indicates member of the Forbes top 100 private companies list for 2010

No comments:

Post a Comment

About BASIC

Unlike other investor services, BASIC Associates focuses not on the financials, but on the science behind various R&D initiatives in bioproducts. Sound science, after all, is the ultimate driver of profitability in the industry. We believe that a superior understanding of the science behind the business model reduces uncertainty and risk and allows for better decision-making by investors and stakeholders.

The principals at BASIC Associates use their doctoral training, coupled with years of experience researching and writing about biofuels, biochemicals, and other bioproducts, to provide an accessible science-oriented analysis of companies and projects in this growing market.

Meet the Principals

Robin J. Johnson, Ph.D.

Dr. Johnson is a cofounder of BASIC Associates. She previously worked as a curator for Garbrook Knowledge Resources, which she joined in March of 2007. Prior to joining Garbrook, she was a Scientist at Genstruct, a systems biology company that creates computer models of biological pathways, and a curator/editor at Incyte and later Biobase, working on the Proteome BiKnowledge Library. (Proteome was a successful knowledge company that provided comprehensive annotation of the proteomes of a variety of organisms, including humans.) As an assistant Professor of Biochemistry at Boston University School of Medicine from 1985-2003, Dr. Johnson taught Medical School and did research in the field of cellular neurobiology. She has numerous publications to her credit. Dr. Johnson received her B.S. in Biology from the State University of New York at Stony Brook and her Ph.D. in Anatomy from Boston University. Her postdoctoral studies of viral infection in the nervous system were performed at Yale University School of Medicine Section of Cell Biology.

Daniela Sciaky, Ph.D.

Dr. Sciaky, a cofounder of BASIC Associates, is a scientific expert in plant biotechnology and biofuels and bioproduct processes. From 2006 to 2010, she was the senior content expert at Garbrook Knowledge Resources, where she contributed her expertise to the gathering and organization of biofuels and bioproduct information. From 1998 to 2006, she curated the scientific literature on a wide variety of topics, including plant and yeast molecular biology, helping to develop content for the Proteome databases. She has also held research positions with Children's Hospital of Cincinnati and Albany Medical College and faculty and research positions at the University of Cincinnati and Brookhaven National Laboratory. During the course of her career, Dr. Sciaky has served as a peer reviewer for the US Department of Agriculture, the National Science Foundation, and the US Department of Energy, in addition to reviewing papers for the The Plant Cell, Biochemistry, Planta, Nucleic Acids Research, Plasmid, Bio/Technology and BioScience journals.

Dr. Sciaky received her M.S. and Ph.D. in Genetics from Washington State University and her B.S. in Biology from the State University of New York at Stony Brook. She did post-doctoral research at the Cold Spring Harbor Laboratory, NY. She has presented at numerous scientific conferences and is well published in plant disease and natural systems as well as other fields.

Henrique Oliveira, MBA

Henrique, a cofounder of BASIC Associates, worked as a curator for Garbrook Knowledge Resources from 2008 to 2010. A citizen of both Brazil and the United States, he received his MBA in Finance in 2008 from the Stephen M. Ross School of Business at the University of Michigan in Ann Arbor, where he was awarded a fellowship by the University’s William Davidson Institute to conduct research on Brazil’s 35-year experience with biofuels. As a Fellow of the Institute, Henrique spent several months in 2007 touring biofuel facilities in Brazil with Tom MacDonald, a senior researcher with the California Energy Commission and the head of MacDonald Associates, a boutique consulting firm specializing in alcohol transportation fuel.

Prior to joining Garbrook, Henrique worked as a consultant for Hart Energy’s Global Biofuels Center. He has extensive business experience in Brazil and has authored a number of reports on the country's biofuels industry, which, because of its size and depth, impacts alternative energy initiatives worldwide. Henrique has also written editorials on the Brazilian ethanol and sugar industry for various publications.