It appears that the biodiesel tax credit will be extended by one year if the Farm Bill is passed as recently drafted.  If so one major reservation about the future of Nova Biosource Fuels (NBF) will have been temporarily resolved (until next year). 

A second question has been the ability of management to bring on line the complex 3-phase 80 mg/y Seneca, IL plant using cheap high-FFA (free fatty acids) feedstock.  The company’s recent press release indicates it is operating the first phase at capacity, has produced the first million gallons of diesel, and is using increasingly high FFA inputs. 

All that is good news, but the low stock price (around $1) now brings to the fore a new risk, namely whether the company’s financing will be sufficient to see it through its negative cash flow start up phase.   If it all works as hoped, the company could become the phoenix stock of 2008.  Good luck to them.  It would be nice to see a company that is actually doing something good for our country’s energy needs be financially successful. 

Incidentally, speaking of the public weal, it’s interesting that whenever Obama speaks about necessary energy alternatives he always says, “solar, wind, and biodiesel”.  Not ethanol.  Biodiesel.  As we all know, corn ethanol is a cruel joke and cellulosic ethanol is a ways off.  So the fact that Obama can distinguish between the unattractive or unavailable ethanol on the one hand and the promise of biodiesel on the other I find to be extremely impressive.  This is a guy who actually listens and can tell a good idea from a bad one.

Thanks to reader Rob B. for the alert on the tax credit. 

Tags: peak oil energy investments

This entry was posted on Friday, May 16th, 2008 at 1:33 pm and is filed under biodiesel. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.