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    Spanish company Ferry Group is to invest €42/US$55.2 million in a project for the production of biomass fuel pellets in Bulgaria. The 3-year project consists of establishing plantations of paulownia trees near the city of Tran. Paulownia is a fast-growing tree used for the commercial production of fuel pellets. Dnevnik - Feb. 20, 2007.

    Hungary's BHD Hõerõmû Zrt. is to build a 35 billion Forint (€138/US$182 million) commercial biomass-fired power plant with a maximum output of 49.9 MW in Szerencs (northeast Hungary). Portfolio.hu - Feb. 20, 2007.

    Tonight at 9pm, BBC Two will be showing a program on geo-engineering techniques to 'save' the planet from global warming. Five of the world's top scientists propose five radical scientific inventions which could stop climate change dead in its tracks. The ideas include: a giant sunshade in space to filter out the sun's rays and help cool us down; forests of artificial trees that would breath in carbon dioxide and stop the green house effect and a fleet futuristic yachts that will shoot salt water into the clouds thickening them and cooling the planet. BBC News - Feb. 19, 2007.

    Archer Daniels Midland, the largest U.S. ethanol producer, is planning to open a biodiesel plant in Indonesia with Wilmar International Ltd. this year and a wholly owned biodiesel plant in Brazil before July, the Wall Street Journal reported on Thursday. The Brazil plant is expected to be the nation's largest, the paper said. Worldwide, the company projects a fourfold rise in biodiesel production over the next five years. ADM was not immediately available to comment. Reuters - Feb. 16, 2007.

    Finnish engineering firm Pöyry Oyj has been awarded contracts by San Carlos Bioenergy Inc. to provide services for the first bioethanol plant in the Philippines. The aggregate contract value is EUR 10 million. The plant is to be build in the Province of San Carlos on the north-eastern tip of Negros Island. The plant is expected to deliver 120,000 liters/day of bioethanol and 4 MW of excess power to the grid. Kauppalehti Online - Feb. 15, 2007.

    In order to reduce fuel costs, a Mukono-based flower farm which exports to Europe, is building its own biodiesel plant, based on using Jatropha curcas seeds. It estimates the fuel will cut production costs by up to 20%. New Vision (Kampala, Uganda) - Feb. 12, 2007.

    The Tokyo Metropolitan Government has decided to use 10% biodiesel in its fleet of public buses. The world's largest city is served by the Toei Bus System, which is used by some 570,000 people daily. Digital World Tokyo - Feb. 12, 2007.

    Fearing lack of electricity supply in South Africa and a price tag on CO2, WSP Group SA is investing in a biomass power plant that will replace coal in the Letaba Citrus juicing plant which is located in Tzaneen. Mining Weekly - Feb. 8, 2007.

    In what it calls an important addition to its global R&D capabilities, Archer Daniels Midland (ADM) is to build a new bioenergy research center in Hamburg, Germany. World Grain - Feb. 5, 2007.

    EthaBlog's Henrique Oliveira interviews leading Brazilian biofuels consultant Marcelo Coelho who offers insights into the (foreign) investment dynamics in the sector, the history of Brazilian ethanol and the relationship between oil price trends and biofuels. EthaBlog - Feb. 2, 2007.

    The government of Taiwan has announced its renewable energy target: 12% of all energy should come from renewables by 2020. The plan is expected to revitalise Taiwan's agricultural sector and to boost its nascent biomass industry. China Post - Feb. 2, 2007.

    Production at Cantarell, the world's second biggest oil field, declined by 500,000 barrels or 25% last year. This virtual collapse is unfolding much faster than projections from Mexico's state-run oil giant Petroleos Mexicanos. Wall Street Journal - Jan. 30, 2007.

    Dubai-based and AIM listed Teejori Ltd. has entered into an agreement to invest €6 million to acquire a 16.7% interest in Bekon, which developed two proprietary technologies enabling dry-fermentation of biomass. Both technologies allow it to design, establish and operate biogas plants in a highly efficient way. Dry-Fermentation offers significant advantages to the existing widely used wet fermentation process of converting biomass to biogas. Ame Info - Jan. 22, 2007.

    Hindustan Petroleum Corporation Limited is to build a biofuel production plant in the tribal belt of Banswara, Rajasthan, India. The petroleum company has acquired 20,000 hectares of low value land in the district, which it plans to commit to growing jatropha and other biofuel crops. The company's chairman said HPCL was also looking for similar wasteland in the state of Chhattisgarh. Zee News - Jan. 15, 2007.

    The Zimbabwean national police begins planting jatropha for a pilot project that must result in a daily production of 1000 liters of biodiesel. The Herald (Harare), Via AllAfrica - Jan. 12, 2007.

    In order to meet its Kyoto obligations and to cut dependence on oil, Japan has started importing biofuels from Brazil and elsewhere. And even though the country has limited local bioenergy potential, its Agriculture Ministry will begin a search for natural resources, including farm products and their residues, that can be used to make biofuels in Japan. To this end, studies will be conducted at 900 locations nationwide over a three-year period. The Japan Times - Jan. 12, 2007.

    Chrysler's chief economist Van Jolissaint has launched an arrogant attack on "quasi-hysterical Europeans" and their attitudes to global warming, calling the Stern Review 'dubious'. The remarks illustrate the yawning gap between opinions on climate change among Europeans and Americans, but they also strengthen the view that announcements by US car makers and legislators about the development of green vehicles are nothing more than window dressing. Today, the EU announced its comprehensive energy policy for the 21st century, with climate change at the center of it. BBC News - Jan. 10, 2007.

    The new Canadian government is investing $840,000 into BioMatera Inc. a biotech company that develops industrial biopolymers (such as PHA) that have wide-scale applications in the plastics, farmaceutical and cosmetics industries. Plant-based biopolymers such as PHA are biodegradable and renewable. Government of Canada - Jan. 9, 2007.

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Friday, July 07, 2006

OPEC member Indonesia announces biofuels crash program - 11 biodiesel plants

Recently, Indonesia's President Susilo Bambang Yudhoyono vaguely announced that he wishes to put the country on the road to a green energy future. On Monday, one part of that aim became concrete: Indonesia's Energy and Mineral Resources Minister Purnomo Yusgiantoro announced [*Indonesian] a crash program to build 11 biodiesel plants, with biodiesel production targets of 187 million liters next year and 1.3 billion liters by 2010.

Indonesia, an OPEC member with a population of 245 million, currently consumes around 41 billion liters of diesel and gasoline per year.

These targets are ambitious, to say the least. Even the U.S., which began developing biofuel much earlier than Indonesia, produced only about 280 million liters of biodiesel blends last year. American biofuel consumption, including ethanol, so far accounts for a mere 3 percent of the country's total fuel demand.

Purnomo himself admitted that the blueprint for biofuel development, which was discussed by President Susilo Bambang Yudhoyono and several Cabinet ministers in Magelang, Central Java, over the weekend, has yet to be finalized.

All agree that biofuel is the best alternative fuel source to help Indonesia reduce its fossil fuel consumption. Biofuels are renewable and based on such crops as castor-oil plants, oil palms, cassava and sugarcane, which can all be grown in the country. And, most importantly, biofuel production is highly labor intensive and this renewable fuel is cleaner burning.

However, the experiences of other countries such as Brazil, the U.S., Germany and China, which have developed biofuel industries much earlier than Indonesia, demonstrate that biofuel development should be part of a comprehensive energy diversification and conservation program. And as a nascent industry, biofuel production should be supported with tax breaks, subsidies and, at least initially, regulatory infrastructure to make the use of biofuel compulsory.

Hence, the blueprint on the development of the biofuel industry should contain clear directives on how the industry should be developed, what fiscal incentives and funding facilities will be granted, and what regulatory infrastructure will be established to push biofuel production and use.

Such clear directives are needed by investors considering taking the plunge into this young industry. Manufacturers of vehicles and farm equipment that will use biodiesel blends or ethanol also need to know the future direction of biofuel development, because they will have to make additional investments to modify their engines to make them biofuel compatible. Automobiles, for example, need to be fitted with flex-fuel engines so they can run on biodiesel or any ethanol-petrol blend.

Biofuel development also needs the support of an adequate pricing mechanism. It is not yet clear at what oil price biofuel is still competitive with fossil fuels, or how the different kinds of biofuels -- biodiesel, bioethanol, biogas -- will compete with each other.

Judging from the government's announcement earlier this week, biofuel development in the country will emphasize the production of biodiesel blends based on castor oil, apparently because there are large tracts of land suitable for castor-oil plantations.

An adequate market pricing mechanism is necessary to protect investors from the impact of highly volatile oil prices. Brazil, the world leader in biofuel development, started the production of ethanol based on sugarcane and the manufacture of cars fully adapted to run on pure ethanol in the mid-1970s, after global oil prices quadrupled. However, the industry virtually collapsed in the late 1980s when oil prices fell sharply and sugar prices rose markedly, making ethanol production much less commercially attractive. Brazil's ethanol industry only recovered after strong government intervention in the form of monetary measures and regulatory infrastructure.

Encouraging energy diversification through integrated energy planning and the increased use of renewable energy sources is clearly urgent for Indonesia. But this effort must be integrated into the country's overall energy conservation efforts.

The government has at its disposal a variety of instruments such as tax credits or subsidized or low-interest loans through which biofuel development and fuel conservation can be promoted. It also can take such fiscal measures as slapping higher luxury sales taxes on gasoline-guzzling cars or a progressive car registration tax on people who own more than one car to force fuel efficiency.

More information:

The Jakarta Post: "The Biofuel Era Has Arrived".

Indonesia's Ministry of Energy and Mining: "Tahun Ini Pemerintah Rencanakan Bangun 11 pabrik Biodiesel".

Indonesian Government Portal: "Cabinet discussed about bioenergy in Grabag".


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