According to Valero's (NYSE:VLO) 2013 10K filing, the company has two reportable segments (refining and ethanol). It's ethanol that I wanted to highlight because according to an April 9 article in the science journal Nature, researchers at Stanford University may have created an innovative way to capture CO2 from the air and convert it into ethanol from a copper oxide electrode powered by the sun, wind, or waves. If this is true, Valero's focus on creating ethanol from corn could be severely challenged since this process impacts our food supply, raises corn prices, requires a lot of water to nourish corn crops and creates the need for fertilizer to maximize crop growth. If that can all be eliminated by what is being studied at Stanford University, Valero should be worried. 

For those not familiar with Valero's bet on ethanol, through its subsidiary Valero Renewables, the company only trails Archer Daniels Midland (NYSE:ADM) as the largest U.S. producer of ethanol. Valero owns 11 ethanol plants that can produce roughly 1.3 billion gallons per year from over 425 millions bushels of corn. 

Considering the company slated in its 2013 10K that it will spend $90 million in 2014 and a whopping $204 million in 2015 to comply with environmental regulations, Valero should seriously explore what is happening inside the lab of Stanford University. If the idea shows promise and actually works, it should do whatever possible to acquire the IP. It has too much invested in ethanol derived from corn not to. 

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