Bluefire Ethanol Fuels, Inc. (OTC: BFRE) produces cellulosic ethanol, an emerging but expensive alternative to gasoline. Cellulosic ethanol gained support from the U.S. government with the passage of the Energy Independence and Security Act of 2007. The company uses Arkenol Technology, a process licensed from the Arkenol Group, to break down cellulose from feedstocks like agricultural waste, green waste, and trash. The waste products are turned into sugar, which then ferments and distills into ethanol. Bluefire's favorite input is municipal waste, because it can build its refineries on landfills, cutting feedstock transportation costs and using methane emitted from decomposing waste to help the plant generate 70% of its own electricity. Since there are thousands of landfills around the world, there are literally thousands of opportunities for Bluefire to expand its reach.
Recent growth in the ethanol market has greatly increased demand for corn. Farmers cannot produce enough to meet this demand, which has led to higher corn prices and higher food and ethanol prices. Cellulosic ethanol (also known as "ceetol") made by Bluefire has a major advantage over corn-based ethanol in that it does not depend on food prices or on the capacity to produce a single agricultural product. Bluefire is receiving Department of Energy funding to build its refinery, which helps to offset the hefty installation cost of $5.00 per gallon for a 55 million gallon per year facility. Without such funding, it would be difficult for Bluefire to make ethanol cost-competitive with other fuels, much less turn a profit.
The U.S. government is also supporting the national development of commercially viable cellulosic ethanol through research grants and subsidies to the tune of $1.18 per gallon. These subsidies are meant to help ease the transition to ethanol by paying for research into higher efficiencies and cheaper methods of production. Bluefire faces infrastructure challenges, however, as the world's current dependence on oil makes a transition to ethanol very difficult. The company competes with other ethanol producers, including Verenium, Verasun Energy, and Pacific Ethanol.
Bluefire Ethanol is a development-stage company. The company focuses on developing, owning and operating high-value carbohydrate-based transportation fuel plants, or biorefineries, to produce ethanol, a viable alternative to fossil fuels, and to provide professional services to biorefineries worldwide. Its biorefineries convert widely available, inexpensive, organic materials such as agricultural residues, high-content biomass crops, wood residues and cellulose from municipal solid wastes into ethanol. BlueFire was established to deploy the commercially ready and process for the conversion of cellulosic waste materials to ethanol (Arkenol Technology) under a technology license agreement with Arkenol, Inc. BlueFire’s use of the Arkenol Technology positions it as a cellulose-to-ethanol company with demonstrated production of ethanol from urban trash (post-sorted MSW), rice and wheat straws, wood waste and other agricultural residues.
Currently, BlueFire Ethanol is focused on the development of two cellulosic ethanol facilities in Lancaster, CA and Fulton, MS. The fully-permitted and shovel-ready Lancaster, CA facility, BlueFire's first U.S. commercial plant, will use post-sorted cellulosic wastes diverted from Southern California's landfills to produce approximately 3.9 million gallons of fuel-grade ethanol per year. BlueFire is in the detailed engineering phase for its second commercial plant in Fulton, MS, which will produce approximately 19 million gallons of ethanol per year from woody biomass, mill residue, and other cellulosic waste. The company expects to have all necessary permits for this second plant by summer 2010, putting the company on a path to commence construction by the end of 2010.
A Chinese investment firm has also agreed to fund a portion of these plants at an unknown cost.
it well in 2 Timothy 3:1-5: "But realize this, that in the last days dcfliiuft times will come.For men will be lovers of self, lovers of money, boastful, arrogant, revilers, disobedient to parents, ungrateful, unholy, unloving, irreconcilable, malicious gossips, without self-control, brutal, haters of good, treacherous, reckless, conceited, lovers of pleasure rather than lovers of God, holding to a form of godliness, although they have denied its power;..."Whatever your beliefs are concerning a personal God, there are spiritual and moral laws that govern the universe as predictable as those formulated by Newton, that if broken bring consequences...simple cause and effect.I happen to believe in a personal God and expect that there will be judgment on our nation for our flouting His laws. Paul's letter to Timothy has a "modern" ring to it, because it describes so well our modern culture in detail.My prayer is that judgment is tempered with mercy and redemption, knowing that judgment is not always a bad thing. No one would wish another Depression and World War on us, but both of them produced the "Greatest Generation" of the last century, whom we honor now as they pass from the scene.Perhaps the hard times ahead will produce another last-days generation that will repudiate the softness and self-absorption that has brought such moral rot to our society. Perhaps the "sleeping giant" will once again shake off his slumber, and rise once more.That is my hope and my prayer.
In October 2007, Bluefire announced that it would receive $40 million from the U.S. Department of Energy to build its second cellulosic ethanol refinery with a capacity of about 17 million gallons per year in California. The "Arkenol Technology" that Bluefire uses costs $5.00 per gallon installed, a hefty price considering that the average price of ethanol hovers around $2.00 per gallon. Since continuing operations for the "Arkenol Process" only cost around $0.50 per gallon, it's the installation costs that hurt profitability, so the $40 million grant allowed Bluefire to stabilize its balance sheet during the company's start-up phase. Without the grant, however, Bluefire's facility would have no hope of being profitable, illustrating the company's dependence on government aid to be feasible. Fortunately, the DOE grant is not the only support Bluefire has to rely on:
Since the Energy Policy Act of 2005, ethanol has been pushed as the next big biofuel. With oil prices rising, consumer and government demand for alternative fuels has been increasing. As oil prices have risen, however, so too have corn prices; as an example, ethanol company VeraSun Energy's average payment for a bushel of corn rose from around $3.32 in the second quarter of 2007 to $4.60 in 2008. Rising corn prices, aside from making ethanol less cost-efficient, cause prices for many other foods to rise. Corn is a major animal feedstock, forcing meat prices up, and high-fructose corn syrup is found in many mass-produced food products. Corn prices have not just shot up on their own, however; petroleum is used as a corn fertilizer, making corn's price directly related to oil's price. Furthermore, demand for corn has increased substantially because of the emerging ethanol market.
Currently, American cars can run on a mix of 90% gasoline and 10% ethanol, though there is not nearly enough corn-based ethanol being produced at the moment to meet this capacity. Part of the goal of the government's support of ethanol is to increase ethanol production and use to a scope well beyond that of the standard 10% blend. E85, a blend of 85% ethanol and 15% gasoline, is the big hope for the biofuels industry, as its use would greatly reduce greenhouse gas emissions and help to meet the new energy standards that have been placed on the U.S. through the Energy Independence and Security Act - all while greatly increasing demand for sustainable, non-food biofuels. There are, however, a number of blockades to the widespread adoption of E85 in the U.S.:
Bluefire positions its production facilities right on landfills, in order to take exploit certain cost advantages.
There are 1,600 landfills around the United States, and Bluefire can adapt its refinery set-up to work with most of them. Furthermore, Bluefire has stated that it wants to expand its reach globally, and with countries like India and China throwing away more and more trash every day, there are a huge and growing number of landfills that Bluefire could use. With so many possible refinery sites, Bluefire's potential to expand is much greater in scope than many competitors.