VANTAGE EXCLUSIVE: Lack of BioFuel Lands Lufthansa, Boosts Supplier Prospects

According to Reuters, a trial operated by Lufthansa Airlines involving the use of a biofuel mix for its planes will officially end tomorrow through a flight from Frankfurt to Washington. Utilizing a 50:50 blend of biofuel and regular fuel, the German airline

Lufthansa's Buse said the six-month trial between Frankfurt and Hamburg, which saw one engine of an Airbus A321 powered by a 50:50 blend of regular fuel and biofuel, had been a reported success over the 6-month trial that spanned 1,187 biofuel powered flights (mostly between Frankfurt and Hamburg) and appears to have shaved CO2 emissions by 1,461 tonnes. The last flight tomorrow alone from Frankfurt to Washington is estimated to cut emissions by 38 tonnes or the equivalence of the CO2 emissions from six regular flights between Frankfurt and Berlin.

The trial ends with successes, but shows that even though the technology to reduce carbon footprints from the air exist, while adequate supplies still need to be produced. The lack of proper biofuel supplies apparently cut this trial down early.

Where these biofuels are going to come from is still a question in need of an answer. While ethanol, and the utilization of corn and other primary sources is a debatable topic. Critics of palm oil based fuels, for instance, seem to have a problem with the land use diverting away from food production.

One source that seems to be gaining traction as a potential saviour is jatropha, a drought-resistant and durable plant that allegedly delivers high energy yields within smaller land areas. Seen more like a weed, the jatropha’s small footprint is appeasing to those afraid of nudging out farmland.

So far a few large-scale jatropha projects have begun sprouting up in different parts of the world, but attention from an investment standpoint is in its seedling phase. General Motors is in the midst of a five-year partnership with the U.S. Department of Energy and India’s Central Salt and Marine Chemicals Research Institute to prove the plant’s commercial viability as a biofuel provider.

As for small caps in the jatropha space, one that should be due to update its plans is AMG Bioenergy Resources [ABG – TSX.V]. Originally the company had planned to acquire 400 hectares within the People’s Republic of China for jatropha production. That plan was later amended in September to be an allocation of 133 hectares of jatropha and 201 hectares of eucalyptus. Further, in November, a delay of the process was announced due to new regulatory requirements put in place by the PRC, that put a date of December 15, 2011 as an expected time for the official transfer of the lands to ABG. No new press releases have come since that November announcement, but an update should be around the corner.

While ABG represents one opportunity for investors to get in at the ground level with a jatropha-based company, others may soon arrive on the scene as stories of drastic biofuel supply shortages as witnessed by Lufthansa appear more frequently.

G. Joel Chury
Editor in Chief
VantageWire.com

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Disclaimer: The author does not currently hold shares in any of the companies mentioned within the article.