By Lisa Shumaker
CHICAGO (Reuters) - Panda Ethanol, which will open its first ethanol plant later this year, is researching selling carbon credits for its use of cow manure to power its ethanol plant, said Chief Executive Darol Lindloff at the Reuters Global Agriculture and Biofuels Summit on Monday.
Panda's plant in Hereford, Texas, will fuel its ethanol production of 115 million gallons a year by gasifying cow manure -- making it the largest biomass-fueled ethanol facility in the United States.
Most ethanol facilities use natural gas to produce ethanol from corn and some studies have said these plants do little to reduce greenhouse gases.
Panda located its plant in Hereford, which promotes itself as the beef capital of the world. There are more than 3.5 million head of cattle within 100 miles of the plant, a ready market for distiller's grains, a byproduct of ethanol production which is fed to livestock.
"Just the backing out of the natural gas fossil fuel gives us a carbon credit potential," said Lindloff. "We think it's sizable enough to go after and see where these registration and certification processes might lead us."
Panda might also qualify for credits for the 1 billion pounds of manure that it consumes each year, which prevents methane escaping into the atmosphere.
One carbon credit equals one tonne of carbon dioxide emissions, which can be sold on exchanges such as the Chicago Climate Exchange, European Climate Exchange, the Nordic exchange Nord Pool and PowerNext.
The European exchange is the world's largest, trading 1 billion tonnes of carbon emissions valued at $25.6 billion last year.
Credits on the U.S. exchange sell for much less, often $1.50 to $5 per tonne. European carbon credit prices are higher because developed countries are required to cut emissions under the Kyoto Protocol.
ETHANOL MARGINS RECOVERING
An additional income stream could help ethanol plants weather the tough times which hit the industry late last year when ethanol prices fell to a low of $1.53 per gallon. Ethanol prices have risen recently to $2.20 to $2.30 as crude oil prices rose near $100 a barrel, Lindloff said.
"We think the fundamentals are there to hold the price up," he said.
In 2007, the market was hit by a glut of ethanol as new plants came online and many states were not yet blending up to 10 percent ethanol with their gasoline.
U.S. ethanol capacity rose to 7.6 billion gallons in 2007, up 41 percent from the year before. More plants are expected to come on line, representing an additional capacity of up to 5.7 billion gallons, according to the Renewable Fuels Association, an industry trade group.
Companies scrambled to build new plants to meet government mandates to wean Americans from foreign oil and the demand from the petroleum industry for a clean-burning fuel additive. Continued...
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