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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, October 06, 2006

Gabon's biofuel dilemma

Gabon is one of Africa's most successful economies. As a major oil producer it succeeded in managing its petro-dollars exceptionally well, in contrast to many other African countries where the black gold is a real curse, leading to mass corruption, political instability and enormous social inequalities.

Because of this good management, other economic sectors have thrived, and more importantly, Gabon has been able to protect its precious environment. The rainforests of the country constitute one of the world's biodiversity hotspots. A fledgling eco-tourism industry has been built around it and large areas have been designated as natural parks and protected zones. Control mechanisms against illegal logging and poaching seem to be working [see Gabon's Biodiversity and Protected Areas profile at the World Resources Institute's Earthtrends website].

All these positive developments are due to Gabon's well managed oil wealth. But the country's petroleum production is facing a rapid decline: whereas today Gabon produces some 265,000 barrels per day, it is estimated that by 2010 this will have halved to approximately 140,000bpd. Obviously, the question then becomes whether the Central African country can keep both its economy growing and its environment intact when the petro-dollars stop flowing in.

Biofuels production in Gabon would be highly problematic, given its pristine ecosystems. The risk exists that a simplistic economic logic will prevail and that forests are going to be logged to make place for energy crops. However, the current government, and more in particular its Minister for Conservation, Enviroment, Science & Technology, Mme Georgette Koko, is clearly committed to protecting this resource. How to do this in a concrete manner, and given the pressure of declining oil revenues, is a very difficult matter.

Earlier we reported about a new idea that is being circulated to help developing countries like Gabon protect their ecosystems and more in particular their tropical rainforests. The concept is known as 'compensated reduction' and it comes down to putting a concrete monetary value on the resource (rainforests as carbon sinks), which can be translated into a carbon credit that can then be traded on the global carbon market. This approach is interesting, but hardly sufficient:
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The question is whether such a mechanism will ever succeed in stopping illegal deforestation and the conversion of forests into lands for energy crops. The hard economic truth tells us that 'compensated reduction' will fail if a price based on the mere market value for carbon is put on the forests. Energy crops bring in much more immediate cash profits. Moreover, when oil resources decline, prices for energy shoot up, making the case for biofuels even stronger (Gabon will experience this stress very soon within its own market). The price for carbon is not tied in such a straight manner to oil prices.

So what to think of compensated reduction? We have a reference point which shows whether this accounting system results in a compensation strong enough to counter the push towards erasing tropical forests in order to plant energy crops. Recently, scientists calculated the total value of all the eco-services of Boreal forests. These services include carbon capture and storage, water filtration and waste treatment, biodiversity maintenance, pest control, and so on. The total monetary value was estimated to be about US$160 per hectare of forest. Extrapolating this to tropical rainforests is very difficult, but even doubling this value (taking into account eco-tourism, discovery of plant pharmaceuticals, etc...) would still not be enough to compensate farmers whose alternative is to grow energy crops. An oil palm plantation brings between US$500-800 per hectare of net profits to a small farmer. Compensated reduction does not compensate enough.

So countries like Gabon face a very difficult dilemma. Unless oil consumers - that is all of us - start saving energy, or start building a global fund for the future protection of rainforests and biodiversity in the tropics, Gabon will probably not withstand the push towards producing energy crops. Compensated reduction, if merely based on carbon prices, will never tempt farmers to give up planting energy crops.

Another strategy might be found in introducing market barriers based on sustainability criteria for biofuels. The world's largest economies, the EU and the US, can decide to block market access for biofuels that were not produced in a sustainable manner. The problem is that a country like Gabon will look at its own energy needs first, and only if those are satisfied will it think of exporting bioenergy.
On the other hand, the EU/US are already losing power on the global market today, where growth in energy consumption is coming from rapidly emerging economies like China and India. It is highly unlikely to see the latter countries coupling market access for biofuels to stringent sustainability criteria. We are already seeing that China's 'no questions asked' attitude in Africa is extremely utilitarian. 'Soft' concepts like environmental conservation are not on its agenda. This means that a Gabonese farmer may decide to skip the EU/US markets, and simply sell to China or India. No questions asked.

It will be interesting to see how a country like Gabon deals with this dilemma. As its oil production declines, it will have to think very carefully on how to resist the temptation of abandoning its successful conservation policies in favor of biofuels production.

More information:

InfoPlus Gabon: A quand le biocarburant dans les stations d’essence du Gabon? - Sept. 27, 2006

InfoPlus Gabon: Le ministère de l’Environnement veut préserver les écosystèmes - Feb. 10, 2006


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