A change in law or regulation could adversely impact the biofuel industry
The renewable energy industry often benefits from government subsidies and favourable tax regimes. Without government support, most renewable energy projects may not be able to compete with conventional means of electricity generation, such as gas and coal fuelled generation, due to higher cost of production. In the enevt that government support is reduced, this may have an adverse effect on the commercial viablity of renewable energy production.
In particular, in Australia from 2011, current government subsidies for ethanol will be reduced. The ongoing competitiveness of biofuels production in Australia thereafter will depend upon the then price of petroleum products, environmental issues, the price of feedstocks and whether the government provides new incentives for production and use. Similarly, the US ehanol and biodiesel industry is dependent upon a large number of US Federal and state legislation and regulation and changes could materially and adversely affect the results of operations and the financial position of such entities.
US Federal tax incentives have resulted in the cost of production of ethanol being more competitive with regular petroleum - specifically, the"blenders credit" which provides a current subsidy to blenders or resellers of US$0.51 per gallon. The blenders credit expires and is eligible for renewal in 2010 but there is no assurance that it will be so renewed or if so on what terms it would be renewed. The limitation or reduction in the blenders credit could have a material adverse effect on the operations and financial positions of parties who have an economic exposure in the ethanol industry.
The ethanol and biodiesel industry may be adversely affected by environmental health and safety laws regulations and liabilities.
The production of ethanol and biodiesel is subject to various applicable laws in the jurisdictions in which they are produced. These laws related to , amogst other thingsm the discharge of materials in to the air, water and ground, the use of water resources, the production, storage and handling and transportation of hazardous materials and the health and safety of the employees of the producers. The application of these laws can often require expensive pollution control equipment or operational changes to limit actual or potential impacts to the environment. A violation of law can result in substantial fines, criminals sanctions and facility shutdowns. A plant site may suffer environmental problems that could be expensive and time consuming to correct, which may delay or halt plant operation or construction and delay its ability to generate revenuw.
The ethanol and biodiesel industry could be adversly affected by technological advances. The development and alternative renewable fuels becoming more attractive for production and use. Any advances in technilogy and changes in public acceptance of renewable fuels could reduce demand for biofuel or the prices for biofuel and this could have a material adverse effect upon the operations of financial performance of parties in which there is vested interest.
Non-availability of, or increases in the prices of key commodity inputs could adversely affect the profitability and cash flow of a biofuels facility
The results of operations, financial position and business outlook of a biofuel plant are highly dependent on commodity prices, which are subject to significant volitity and uncertainty, and the availability of suppliers, and cash flow available to service debt could fluctuate substantially.
Increases in market prices for commodities such as corn, plam oil or sugar and changes in port prices for ethanol, biodiesel and substitiutes such as oil may materially and adversly affect returns on biofuel projects.
Biofuel plants may be subject to supply or infrastructure constraints
Biofuel plants are large are large consumers of agricultural production which may be subject to periodic supply constraints. Growth in the sale and distribution of ethanol and other biofuels is dependent on the changes to and expansion of related infrastructure which may not occur on a timely basis, if at all, and our operations could be adversly affected by infrastructure disruptions. The ability to successfully operate a biofuels plant is dependent on the availability of water at anticipated prices, the availability of electricity and natural gas at anticpated prices, and the availability of corn or other vegetable oils at anticipated prices.
Overcapacity in the renewable energy or biofuels market could adversly affect the returns of the biofuel plants
Increasing supply of renewable energy may occur as major projects reach production. Mew plants under construction may result in excess production capcity in the ethanol or biodiesel industry. Currently in the US, plans for as much as 3.5 billion per year of additional ethanol capcity and 1.4 billion gallons per year of additional biodiesel capacity have been announced. An oversupply could adversely impact returns
In particular, in Australia from 2011, current government subsidies for ethanol will be reduced. The ongoing competitiveness of biofuels production in Australia thereafter will depend upon the then price of petroleum products, environmental issues, the price of feedstocks and whether the government provides new incentives for production and use. Similarly, the US ehanol and biodiesel industry is dependent upon a large number of US Federal and state legislation and regulation and changes could materially and adversely affect the results of operations and the financial position of such entities.
US Federal tax incentives have resulted in the cost of production of ethanol being more competitive with regular petroleum - specifically, the"blenders credit" which provides a current subsidy to blenders or resellers of US$0.51 per gallon. The blenders credit expires and is eligible for renewal in 2010 but there is no assurance that it will be so renewed or if so on what terms it would be renewed. The limitation or reduction in the blenders credit could have a material adverse effect on the operations and financial positions of parties who have an economic exposure in the ethanol industry.
The ethanol and biodiesel industry may be adversely affected by environmental health and safety laws regulations and liabilities.
The production of ethanol and biodiesel is subject to various applicable laws in the jurisdictions in which they are produced. These laws related to , amogst other thingsm the discharge of materials in to the air, water and ground, the use of water resources, the production, storage and handling and transportation of hazardous materials and the health and safety of the employees of the producers. The application of these laws can often require expensive pollution control equipment or operational changes to limit actual or potential impacts to the environment. A violation of law can result in substantial fines, criminals sanctions and facility shutdowns. A plant site may suffer environmental problems that could be expensive and time consuming to correct, which may delay or halt plant operation or construction and delay its ability to generate revenuw.
The ethanol and biodiesel industry could be adversly affected by technological advances. The development and alternative renewable fuels becoming more attractive for production and use. Any advances in technilogy and changes in public acceptance of renewable fuels could reduce demand for biofuel or the prices for biofuel and this could have a material adverse effect upon the operations of financial performance of parties in which there is vested interest.
Non-availability of, or increases in the prices of key commodity inputs could adversely affect the profitability and cash flow of a biofuels facility
The results of operations, financial position and business outlook of a biofuel plant are highly dependent on commodity prices, which are subject to significant volitity and uncertainty, and the availability of suppliers, and cash flow available to service debt could fluctuate substantially.
Increases in market prices for commodities such as corn, plam oil or sugar and changes in port prices for ethanol, biodiesel and substitiutes such as oil may materially and adversly affect returns on biofuel projects.
Biofuel plants may be subject to supply or infrastructure constraints
Biofuel plants are large are large consumers of agricultural production which may be subject to periodic supply constraints. Growth in the sale and distribution of ethanol and other biofuels is dependent on the changes to and expansion of related infrastructure which may not occur on a timely basis, if at all, and our operations could be adversly affected by infrastructure disruptions. The ability to successfully operate a biofuels plant is dependent on the availability of water at anticipated prices, the availability of electricity and natural gas at anticpated prices, and the availability of corn or other vegetable oils at anticipated prices.
Overcapacity in the renewable energy or biofuels market could adversly affect the returns of the biofuel plants
Increasing supply of renewable energy may occur as major projects reach production. Mew plants under construction may result in excess production capcity in the ethanol or biodiesel industry. Currently in the US, plans for as much as 3.5 billion per year of additional ethanol capcity and 1.4 billion gallons per year of additional biodiesel capacity have been announced. An oversupply could adversely impact returns
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