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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, December 07, 2006

Commodity strategists: biofuels frenzy may cause oil prices to decline

Crude oil prices in New York may tumble to US$40 a barrel next year as demand for biofuels made from crops spurs investors to switch from energy to agricultural commodities, says Tetsu Emori, chief commodities strategist at Japan's Mitsui Bussan Futures Ltd. This means biofuels are beginning to have a real macro-economic impact on the world economy.

Shifting to biodiesel and ethanol additives may slow the growth of demand for gasoline and diesel in the US, Europe, and Japan. Earlier, Emori predicted oil would rise to $96 a barrel in August this year because of the hurricanes in the US Gulf. Prices fell from a peak of $78.40 on July 14 after a calmer-than-usual storm season.

"Some people may say the 2006 oil bubble eventually was short-lived like a firework that sparks and disappears," Emori said. "People called me crazy when I projected a couple of years ago oil to surge this year. They may do that again because I said oil may touch the $40 a barrel mark next year."

Oil consumers are increasing use of fuels and additives that derive from corn, soybean, sugar cane, and oilseeds, as they try to reduce greenhouse gas emissions. The switch may cause a shift of money from oil futures on the New York Mercantile Exchange to the grain futures market in Chicago, Emori said in Tokyo:
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Biofuels may account for 7 percent of global transportation energy by 2030, provided governments implement International Energy Agency policies to promote alternatives to oil, the Paris-based adviser to oil-consuming nations said in its World Energy Outlook 2006 report. Currently, biofuels make up 3% of global transport fuels.

'Epoch of Change'
Oil prices in New York have dropped 20 percent from the record set in July and traded at $62.71 a barrel in Tokyo.

"Biofuels may be an epoch of great change for oil, possibly ending the spike in prices of crude we've seen in the past few years, and attract pension and commodity fund managers to pour more money into grains," Emori said. "A record of $78.40 a barrel set on July 14 may eventually be the peak of oil in the years through the end of 2010."

Biofuels include gasoline blended with ethanol that's made from sugar cane or grain and diesel mixed with vegetable oils. Prices for corn, used to make ethanol, have risen 47 percent in Chicago this year. Oil has gained 2.4 percent. Emori started at Mitsui Bussan, a unit of Japan's second- largest trading company, in 2000. Before that he worked at Sumitomo Corp. and German commodity trader Metallgesellschaft AG.

Crude oil will average $62 a barrel next year and $61 in 2008 in New York, according to the median forecast of 35 analysts surveyed by Bloomberg News.

Japan's Refiners
Shinzo Abe's government, an IEA member country, plans to increase consumption of biofuel for transportation to 500,000 kiloliters (3.15 million barrels) by the end of 2010 as part of efforts to cut greenhouse gas emissions and meet targets set under the Kyoto Protocol. Japan currently doesn't use biofuel.

Starting in April 2010, Nippon Oil Corp. and other Japanese refiners aim to supply about 12 million kiloliters of ethanol- blended gasoline, about 20 percent of the country's total consumption, the Petroleum Association of Japan said in a statement in April. In doing so, they need a total of 360,000 kiloliters of ethanol for blending.

"The growth of gasoline and diesel demand may slow at a faster-than-expected pace if the government subsidizes companies distributing the biofuels and further pushes promoting use of the environmental-friendly fuel," Emori said.

Big Ethanol
In the U.S., a Democratic-controlled Congress is expected to boost demand for the corn-based fuel. Collin Peterson of Minnesota, in line to take over the House Agriculture Committee, said Nov. 8 he will be more aggressive in seeking ethanol subsidies.

"Democrats' victory means a lot and big plus for the U.S. ethanol industry," Emori said. Democrats picked up at least 27 House seats in November elections, ensuring control of the House in January, after being out of power for 12 years.

Californian Nancy Pelosi has proposed a doubling of the amount of ethanol required by law to be blended into gasoline by 2012, to 15 billion gallons. In August, ethanol output rose 27 percent to an all-time high average of 329,000 barrels, or 13.8 million gallons a day, according to the Energy Department.

China, Brazil and Europe booming
Brazil's shipments of ethanol to overseas markets jumped 91 percent last month to 545 million liters (144 million gallons) from 286 million liters a year earlier, according to the Trade Ministry.

China and Europe, too, are expanding their biofuel industries. "In particular, we should closely monitor China's biofuels policy, which could affect the nation's appetite for oil in the coming years," Emori said.

A rosy biofuels demand outlook helped bolster trading of agricultural futures in Chicago, Emori said. "The global race for agri-products may be intensifying, while fierce competition for energy assets may ease," he said.

The Chicago Board of Trade, the second-biggest U.S. futures market, registered record trading in agricultural contracts in October as turnover rose 35 percent from a year earlier.


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