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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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Tuesday, November 14, 2006

Brazilian government works to re-classify ethanol as a global fuel commodity

The development of an export-oriented biofuels and bioenergy industry in the Global South offers a chance to lift millions of people out of poverty and to achieve social and economic development in the poorest countries. A precondition for this to succeed, is that importing countries (US/EU/Japan) lower their unfair trade barriers and subsidies.

Earlier we reported that competitive ethanol made in the developing world is facing all kinds of trade barriers and has to compete with biofuels made in the North that can only surive because of massive subsidies and protectionist measures. Corn-based ethanol or soy-based biodiesel made in the US -- uncompetitive biofuels with a very low energy balance and with virtually no potential to reduce GHG emissions -- would never survive without the hundreds of subsidies they receive today. A recent report by the Global Subsidies Initiative showed that these subsidies for uncompetitive biofuels ('lobby-fuels') cost US taxpayers billions each year (earlier post).

When it comes to unfair trade barriers, the US imposes a lofty 54-cent-per-gallon duty on direct ethanol imports, as well as a 2.5% ad valorum tariff. The EU, expected to be Brazil's top purchaser of ethanol next year, imposes a tariff of €10.2 per every 100 liters for denatured alcohol, and a tariff of €19.2 per 100 liters for undenatured alcohol.

Nobel-prize winning economist Joseph Stiglitz uses precisely this example to show how the West is failing to make a credible case when it comes to building a more fair and balanced world trade regime; the West is blocking a commodity that can bring economic prosperity to millions in the South, Stiglitz argues (earlier post). So biofuels are a crux when it comes to the creation of a new global trade arena. Some people have even gone so far as to suggest that negotiations on the role of biofuels in international trade might be the key to revive the deadlocked WTO Doha Development Round (earlier post). Finally, the chief of the International Energy Agency, Claude Mandil, likewise thinks that the EU and the US must get serious and import biofuels from the South, where their production actually makes sense (earlier post).

Currently, there is a lot of debate on how biofuels should be classified in the future and on what kind of products they really are under the current global trade rules. Are the green fuels and their feedstocks agricultural, industrial or environmental goods? Or a combination of both that warrants a new form of classification? And what kind of mechanisms and negotiation strategies are there to limit importers to impose protectionist measures? A report by the International Food & Agricultural Trade Policy Council (IPC) on international biofuels trade issues -- WTO Disciplines and Biofuels: Opportunities and Constraints in the Creation of a Global Marketplace [*pdf] -- addresses precisely these questions and offers some pointers as to the effects of different forms of classification (earlier post).

Now the Brazilian government itself is getting involved in the debate. Hoping to lower global trade barriers on ethanol, it has set its sights on re-classifying the renewable fuel in the international trade arena as a fuel commodity rather than an agricultural commodity, a spokesman at Brazil's Foreign Ministry confirms:
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"There have been a series of consultations and discussions in the government about this, and it's in our internal plan," said the spokesman in a phone interview with Dow Jones Newswires. "But it's premature to talk about a schedule for when this might happen." The country's Agricultural, Mines & Energy, Chief of Staff, and Trade ministries are also involved in this discussion, he added.

Brazil - the world's top ethanol exporter as well as its lowest-cost producer - would benefit immensely from lowered trade tariffs on the biofuel. However, the country's ethanol is subject to high import duties in several key trading partners, due in part to a formidable system of tariffs already imposed on agricultural products.

If ethanol were considered an energy commodity, then it could receive the same treatment as petroleum, said Celso Amorim, the country's Foreign Trade Minister last month.

"No one, if it's not for fiscal reasons, and this occurs in few cases, places a tariff on petroleum imports, because that would penalize the whole productive process of the country," he added.

The office of Brazil's Chief of Staff is also a supporter of re-classifying ethanol under the fuel category, according to a report in local business daily Gazeta Mercantil published Monday.

The U.S., the top buyer of Brazilian ethanol this year, imposes a lofty 54-cent-per-gallon duty on direct ethanol imports, as well as a 2.5% ad valorum tariff.

The E.U., expected to be Brazil's top purchaser of ethanol next year, imposes a tariff of 10.2 euros per every 100 liters for denatured alcohol, and a tariff of EUR19.2 per 100 liters for undenatured alcohol. Both types of alcohol can be used for biofuel production.

In the first half of this year, a new bureau of energy was created within the Foreign Ministry to direct Brazil's energy strategies in both the bilateral and multilateral arenas, added the Foreign Ministry spokesman.

Brazil is the world's leading sugar producer and exporter. It is also the world's No. 2 ethanol producer after the U.S.


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