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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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Thursday, November 23, 2006

From oil addicts to alcohol addicts: U.S. distorts the global biofuels market

Important news: the Environmental Law Institute in Washington warns against biofuels produced in the US, and fully supports the arguments brought forth by the Biopact. It seems like our message (see A Biofuels Manifesto) is being taken up by more and more organisations.

In its report entitled, Should the Clean Air Act Be Used to Turn Petroleum Addicts Into Alcoholics? [*.pdf], lead author Professor Arnold W. Reitze makes an important contribution to the hotly contested debate over the disadvantages of biofuels produced in the Northern hemisphere.

It says that subsidies under the US Clean Air Act have made ethanol production immensely profitable in the US even though it is more costly and performs worse than gasoline. Moreover, it says subsidisation in the US has "distorted the market for renewable fuels".

Biofuels produced in the US (so-called "lobby fuels") are based on feedstocks such as corn (for ethanol) or soya (for biodiesel). The resulting fuels have a very weak energy balance (some have found them to have a negative balance, which means you put more energy into making the fuel, than you get out of it). They are also very expensive to produce and do not contribute in any significant way to the reduction of greenhouse gases.

In contrast, biofuels produced in the global South, based on high yielding feedstocks such as sugarcane, cassava or sorghum, have a very positive energy balance. They can be produced at a cost competitive with petroleum fuels and their use contributes significantly to the reduction in greenhouse gases. Biofuels made in the US must be heavily subsidized in order to survive. Tax payers in the US literally pay billions for uncompetitive fuels, while farmers in the South are kept outside of the market and in poverty because of US subsidies.

Earlier the Global Subsidies Initiative made a sum of all the tax breaks, direct subsidies and other benefits American "lobby fuels" receive, and the results are staggering (earlier post). Prof. Reitze confirms the numbers and, in his paragraph on the US ethanol lobby, he concludes:
"These provisions represent a successful lobbying effort because the renewable fuels program is primarily designed to put money in the pockets of corn-based ethanol producers at high cost to consumers. To obtain this money, the ethanol lobby relies on political pressure and its contributions to lawmakers. To justify the program, various reasons have been advanced by ethanol’s proponents, and when they are discredited new arguments are found to convince the public to support corporate subsidies."
This distorted situation is untenable and totally irresponsible. As Claude Mandil, Chief of the International Energy Agency recently said (earlier post), the only way out is for the North to give up making biofuels themselves, and start importing them from the South, where their production makes sense from an environmental and economic perspective. Moreover, millions of poor farmers in the South can benefit from growing energy crops.

Reitze says that import barriers against countries with economically favourable conditions for producing ethanol, such as Brazil and other tropical countries, should be lowered. This would help to reduce agricultural surpluses adversely effecting the developing world, whilst also contributing to US energy security by diversifying supply:
:: :: :: :: :: :: :: :: :: :: :: :: :: ::

From a political perspective, Reitze argues that the US ethanol programme has provided the illusion that the government is responding to increased petroleum prices.

But he says that, since ethanol production requires about as much fossil-fuel energy as is found in ethanol, its use does not reduce the nation’s demand for fossil fuels. “Until the technology is available to produce a significant net energy gain from using renewable fuels, their use will not be a viable way to deal with climate change.”

The only justification the author sees for the program was “the need to generate political contributions or to placate Midwest members of Congress seeking welfare for their constituents.”

Reitze concludes that “a renewable fuels program should be an important part of a national energy policy, but it must be sustainable, and it should not be based on long-term government subsidies.”


C. Scott Miller, EDP said...

There are many factors that enter into the "US ethanol programme" - which is much less scripted by the government than Professor Reitze would have you believe:
• The political value of the midwestern states is certainly one factor - the pivotally important first presidential primary is held in the cornbelt state of Iowa.
• The business centralization of American agriculture is certainly leading to more aggressive lobbying by the conglomerates.
• The war in the Mideast which requires massive infusion of blood and treasure thereby accentuating our oil dependence is a psychological factor of immense proportions.
• Greenhouse gas emissions awareness, albeit belated, is affecting legislative policy-making at every level of government throughout the country.
• We are slowly realizing that waste conversion and emissions control through gasification retrofits can mitigate environmental blights while producing biofuels, electricity, and jobs.

In short, there are many social costs and opportunities associated with the paradigm shift to biofuels that makes development here imperative - regardless of the "very weak energy balance" of "lobby ethanol."

I live in a state (California) that imports almost one billion gallons of ethanol per year from our neighboring states. We don't care as much about energy balance as Brazil would because we don't run vehicles on E85 or E100. We blend ethanol at 5.67% with gasoline. Once proudly "self-reliant" America has outsourced just about everything else we buy - cars, clothes, merchandise, jobs, computer services, oil, etc. - so of course we want to develop our inhouse capability for creating biofuels.

I believe in the decentralized development of biofuels. I think it is AS important to develop decentralized sources of feedstocks - as Biopact so effectively advocates each day - as it is for each society to reduce dependence on externally produced fuels and electricity.

I don't think it is realistic to expect America to be a prime customer of Southern Hemisphere biofuels. Europe, on the other hand, might be for the very reasons that your Biofuels Manifesto spells out.

The role America seems destined to play is as a developer of new biomass feedstock operations management, conversion technologies, and output product design (not coincidentally the same triumvirate as my blogs on BIOstock, BIOconversion, and BIOoutput).

That is, unless the incredibly motivated Indians and Chinese get there first - or get there biggest. Competition is good - and inescapably necessary for developed and developing nations alike.

8:12 PM  
henriqueoliveira said...


I'm not sure I agree with you when you say that America will never become a prime customer of biofuels made in the global South. All it would take is one unfavorable climate event (drought comes to mind) to wipe out the production of corn in the Midwest. Then American companies that currently source their ethanol from the Midwest would have to turn elsewhere - Brazil would be a safe bet. If other countries quickly step up their production of ethanol, they would become suppliers, too, filling in the vacuum caused by the sudden demise of the subsidy-intensive, tariff-supported ethanol corn program.

1:15 AM  
henriqueoliveira said...

While we're on the subject, let's name some names. Or just A name, namely, that of Senator Chuck Grassley (R - Iowa). Mr. Grassely has been the person that has caused, individually, the most harm to American consumers and the environment by backing legislation that props up the corn fantasies of his home state. As Chairman of the U.S. Senate's Finance Committee, Mr. Grassley "bears considerable influence over the shape and scope of key 'quality of life' issues affecting virtually every American from cradle to grave. From taxes to Social Security, Medicare, Medicaid, welfare policy, pensions, worker's compensation and job-generating international trade, Iowa's senior senator controls the legislative gears in the Senate on giant public entitlement programs and other key tax and spending issues".

Mr. Grassley abused his position when, instead of fighting for the deeply American value that dictates that a product ought to stand on its own two legs, he sent a letter in May 06 to "President George Bush to challenge his recent rhetoric on lifting the tariff on imported ethanol. Grassley, sent the letter along with Sens. Jim Talent of Missouri, John Thune of South Dakota, Sam Brownback of Kansas, Kit Bond of Missouri, George Voinovich of Ohio, Norm Coleman of Minnesota, Mike DeWine of Ohio, and Pat Roberts of Kansas".

By arguing in favor of the 54-cent-per-gallon tariff on imported ethanol, these fine Republican gentlemen lent a huge hand to the status quo, which relies heavily on fossil fuels and ultimately subsidizes the likes of the Royal families of Saudi Arabia and Kuwait, both of which are pillars of democracy in the Middle East.

1:29 AM  

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