Some of the strong remaining ethanol producers came to Washington this week to press their two-pronged cause. They registered their offense with Big Food’s argument that ethanol production drives up grocery prices. And they said they would ask EPA to issue a waiver to blend more gasoline in the nation’s fuel pool.
At a press conference announcing the kickoff of Growth Energy, the media kept hounding guys like POET’s Jeff Broin and ICM’s Dave Vander Griend about what distressed assets they may buy.
Ethanol & Biodiesel News spent some time with Wayne Hoovestol, CEO of Green Plains Renewable Energy, after the event. He shed some light on future trends in the industry.
“It’s going to be wild,” said Hoovestol, referring to what’s believed to be a pending consolidation among ethanol producers.
We asked if banks will lend specifically for that purpose. One thing Hoovestol told us that we hadn’t heard yet is that that many plants have a $1/gal of debt built into their current economics.
Still, he said bankers might favor an acquisition strategy by a company that manages its margin and has a hedging strategy that “does not go out too far.”
It also might be possible to buy someone else’s ethanol plant using your own working capital, he suggested.
Green Plains has an algae-based
ethanol experiment going on in Shenandoah, Iowa
“We think algae will be big,” he added, but algae and cellulosic ethanol will be fed through existing plants in bolt-on applications.
“They will be percentage contributions [to ethanol output],” he said. “Not the next big thing.” – David Givens