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Growth Strong in Biofuels Projects, Corn-Based Ethanol May Be Leveling Off: New Results from HighQuest's Quarterly Biofuels Index (8.22.2007)

Growth Strong in Biofuels Projects, Corn-Based Ethanol May Be Leveling Off: New Results from HighQuest's Quarterly Biofuels Index

Topsfield, MA--Aug. 22, 2007--Growth in planned projects and those currently under construction remains strong for both ethanol and biodiesel plants, according to HighQuest’s Biofuels Index, newly updated for Q2 2007. However, the data also shows signs that the corn-based ethanol build out may be leveling off.

HighQuest’s Biofuels Index, which tracks planned and actual build-out of biofuels production capacity, reports dramatic growth in planned capacity for ethanol plants over the past year, from 6.761 billion gallons per year (BGY) as of July 1, 2006, to 13.03 BGY as of July 1, 2007 - an increase of 93%. During this same period, growth in ethanol capacity under construction increased 199%, from 2.417 BGY to 7.226 BGY.

During Q2 2007, total online capacity for ethanol increased by 564 million gallons per year (MGY), or 10.7%, from 5.289 BGY to 5.853 BGY. Capacity in planning rose by approximately 6% during the quarter.

However, the Index also points to a slight leveling off in construction of ethanol plants during Q2 2007 - the first time since the Index began tracking these numbers. According to the Index, capacity under construction decreased slightly by 1.7%.

"While the percent change is too small and the time frame too short to identify this as a definitive trend, we understand from industry sources that it is more difficult to secure debt financing for new refineries due largely to increased equity requirements on the part of banks providing this funding. We suspect that an additional cause may be constraints on the amount of corn available as a feedstock to produce ethanol," said Jacob Golbitz, director of research for Soyatech and its parent company, HighQuest Partners.

Total online capacity for biodiesel production increased sharply - 41% from Q1 to Q2 2007, from 890 MGY to 1.255 BGY. "While it is easier to produce impressive growth when starting from a smaller base, a 41% growth rate nevertheless means that industry capacity for biodiesel nearly doubled over the last three months. That is certainly a significant development," said Golbitz.

Biodiesel capacity under construction for the same period grew by 19%, from 1.613 BGY to 1.927 BGY, and planned capacity rose even further by 24%, from 2.331 BGY to 2.898 BGY.

Golbitz noted that one factor contributing to the strong showing for biodiesel is optimism that the $1 per gallon federal subsidy for biodiesel will be extended with the passage of the 2007 Farm Bill later this year.

The Index summary also discusses issues surrounding feedstock availability, noting a movement away from reliance only on soybean oil and towards the use of alternative feedstocks in the capacity build-out of biodiesel plants.

According to the Index, only 39% of capacity currently under construction, and just 16% of planned capacity, indicates soybean oil as the sole feedstock. "Given the development of trends that we have observed over the last six months, we expect convergence in the price of all commodity fats and oils over the next 6 to 12 months that will leave little to no additional margin for biodiesel producers that use alternative sources," Golbitz noted.

Updated each quarter, Soyatech's Biofuels Index includes detailed data on the biofuels industry, including:

-- tracking of production in all three phases of development: planned, under construction and operating;

-- searchable plant-level lists of ethanol and biodiesel production facilities; and

-- analysis of financing sponsors for plants and projects.

HighQuest (
www.highquestpartners.com) will also explore developments in biofuels and the food vs. fuel debate at Soyatech’s upcoming Soya and Oilseed Summit 2007: Nourishing Innovations in Food and Energy, which takes place November 11-13, 2007 at the InterContinental Hotel in Chicago. This conference will bring together leaders from the food and energy industries to continue exploration of key issues and opportunities emerging in the rapidly changing global marketplace for food and energy. Registration and information is available at www.soyatechevents.com or by calling 800.424.SOYA (7692).

About HighQuest

HighQuest Partners (www.highquestpartners.com) is a management consulting and strategic advisory firm that helps executive teams around the world to make better informed decisions about their strategies, investments/m&a, and governance. Since 1992, HighQuest and its subsidiary SJH & Company have completed over 500 strategic assignments for strategic players and financial investors & their portfolio companies in the global grain, oilseed, food, agribusiness, biofuels, industrial, & financial services sectors.

About Soyatech LLC

Soyatech (www.soyatech.com) assists companies in the food and agri-business sector assess and develop market opportunities through reports, conferences, publications and consulting services. Founded in 1985, the company publishes the annual Soya & Oilseed Bluebook, the industry’s leading source of information on companies and products, an industry-focused email newsletter (in daily and weekly editions), and Soyatech.com, the award-winning business-to-business online resource for the industry. Soyatech’s information services are referred to by thousands of the world’s leading commodity, food and biofuels companies in over 100 countries every business day. Soyatech LLC is headquartered in Southeast Harbor, Maine.

To subscribe to the Soyatech Biofuels Index, visit
www.soyatech.com or call 800-424-SOYA.

CONTACT: For HighQuest Partners: Hadley Coonley (9
78)887-8800 or email: hcoonley@highquestpartners.com

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