The economics of biofuels
Apr 2, 2013
Bishop Hill in Energy: biofuels

Ensus, a manufacturer of bioethanol from wheat, has decided to suspend production at its plant in the North-east due to the poor harvest last year. How long this situation will continue for is anyone's guess but, somewhat remarkably, all of the plant's 100 workers are going to continue on full pay until the situation is resolved. Given that the winter wheat crop looks as though it may be in trouble too, that may be some time.

Interestingly, the Ensus plant seems to have been through this situation before.

The plant started operations in February 2010 but shut for 15 months from May 2011 until August 2012, also due to adverse market conditions.

So if I understand correctly, the plant has only actually operated for about 60% of the time since it was commissioned. The rest of the time it has been sitting idle and, since it re-emerged at the other end of the last shutdown, its staff may well have been retained then as well.

Reading between the lines then, the actual manufacture of biofuels seems to be somewhat peripheral to profits and losses of the Ensus factory. I'm left thinking that the biofuels industry must have some pretty interesting economics. Can anyone shed any light on this?

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