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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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Saturday, December 23, 2006

Energy top priority as Germany takes over the Presidency of the EU

For those not familiar with European institutional affairs, a quick intro: the European Union's presidency is taken up not by a person but by a country's government (chaired by its foreign minister). This presidency is rotating and changes every 6 months. The current president is Finland, on January 1st Germany takes over. The presidency chairs the meetings of the Council of the European Union, a legislative body that contains government ministers of all EU member states.

The Council of the European Union should be distinguished from the European Council, which meets four times a year in what is informally known as the 'European Summit' (EU summit), and is a closely related but separate body, made up by the heads of state and government of the member states, whose mission is to provide guidance and high level policy to the Council.

The Presidency of the EU sets out a broad agenda of highly important topics which it wants the Council of the EU and the Parliament to focus on. This system allows the presiding member-state to give certain accents to EU issues. But it also has to address problems raised during its predecessor's time in office. During Finland's presidency, our energy relations with Russia were one of the more difficult and important topics, which Germany cannot avoid to tackle.

For Europeans, the announcement of the program of the new presidency is a bit like a 'State of the Union', seen through the looking glass of an individual member state. Both State of the Union and Program for the Future - with armies of analysts, commentators and the public debating the strengths and weaknesses of the proposed program. Germany's foreign minister Frank-Walter Steinmeier recently presented the long awaited Program of the German Presidency of the EU [*.pdf, and see the German Presidency's website].

Let us have a look at where the new Presidency stands on energy security, efficiency, transport, climate change, biofuels, Russia and energy-driven foreign relations:
:: :: :: :: :: :: :: :: :: :: :: :: ::

Germany's main task in the energy field during its six-month stint at the helm of the EU will be to draw up an 'Energy action plan' for adoption by the summit of EU leaders on 8-9 March.

In a Green Paper, endorsed by the Spring European Council in March 2006, the Commission put the completion of the internal market for electricity and gas on top of its objectives. Raising the EU's profile in relations with suppliers and transit countries, especially Russia, is also high on the agenda.

German presidency prioritiesPdfexternal on energy include energy-efficiency, expanding the use of renewables, as well as seeking closer co-operation with supplier, transit, and consumer countries.

Energy security and energy market reform
The German Presidency's Program states the following:

A secure, environmentally friendly and competitive energy supply is crucial if Europe is to experience positive economic development. Yet guaranteeing such a supply is becoming increasingly difficult due to the finite nature of fossil fuels, combined with growing international demand, persistently high oil and gas prices, mounting instability in certain regions of the world and the effects of climate change. In view of these challenges, adoption of the European action plan on energy policy will be a priority of the European Council in spring 2007.

Completion of the Internal Market for gas and electricity by 1 July 2007 is an important goal of European energy policy. The German Presidency will work to obtain the complete opening of the markets for electricity and natural gas on the basis of blanket application of European legal provisions in all EU Member States. Given the high electricity and gas prices, it is vital that competition in Europe increases. In early 2007 the European Commission’s report on implementation of the Second Internal Market Package and its final report on the sector inquiry will reveal where problems still exist, where the Member States need to do their homework, and where additional guidelines might be necessary.

The goals are clear, but the task will not be easy. After the Commission adopts of a new series of energy proposals on 10 January, the German presidency will have little time to draw up an action plan to launch a common energy policy scheduled for approval at the Spring Summit in March.

In particular, the ongoing liberalisation in the gas and electricity sector, a prerequisite in the eyes of the Commission to any real European energy policy, is creating unease in German business and political circles.

German utilities recently came under close scrutiny for alleged antitrust practices. On 12 December, the Commission raided the offices of major German power utilities RWE, E.ON, EnBW and Vattenfall. The move followed similar inspections in May over suspected price-fixing.

Although energy liberalisation is officially backed by Berlin, further moves in that direction are being resisted by Chancellor Angela Merkel. On a recent visit to Paris, she backed French President Jacques Chirac in rejecting Commission calls for so-called ownership unbundling, a move that would see former state monopolies such as E.ON and EdF broken up into companies dealing with transmission and power generation separately.

Competition Commissioner Neelie Kroes has repeatedly argued that the absence of full unbundling in power markets leads to "systemic conflicts of interests" where operators deny network access to new competitors.

In the face of German and French opposition, Commission President José Manuel Barroso is said to be considering a less radical approach where networks would remain in the hands of former state monopolies. In exchange, the role of national regulators would be strengthened to ensure fair and neutral access to pipelines and electricity transmission networks.

However, Germany's difficulties with the EU on energy do not end there. Last year, it signed a deal with Gazprom to build a new gas pipeline under the Baltic Sea, in an effort to secure its long term gas supplies. The move triggered furious reactions from Warsaw which said it had been bypassed, in contradiction with EU solidarity principles.

It also raised questions as to Germany's willingness to support a truly European instead of a national approach in dealing with powerful suppliers like Russia.

The Presidency's program is vague about the issue:
Outside its borders the EU must put the energy policy partnership with key producer, transit and consumer countries on a solid and reliable footing by conducting intensive dialogue as part of a cooperative approach and involving the Member States more closely. Extending the energy dialogue with Russia and the United States in particular will play a key role. Energy issues will also receive greater priority within the European Neighbourhood Policy.

Renewables, biofuels, energy mix, efficiency
Other problems are also likely to surface. While greater EU co-operation on energy is widely accepted, it could quickly cross national sovereignty 'red lines' as member states keep the final say on their preferred choice of energy mix.

Here too, Germany's nuclear phase out runs in opposition with choices made in other countries like France, Finland and others. The Commission will attempt to defuse the issue with the publication of a 'strategic energy review' that will map out the advantages and drawbacks of each source of energy in terms of supply security, economic viability and environmental impact.

Germany, Europe's leading renewables user, stresses that its Presidency will focus strongly on energy efficiency and biofuels (and sees a way of defusing the nuclear debate with it):

In achieving our trio of goals, namely security of supply, efficiency and environmental compatibility, we must reduce the need for energy imports by boosting energy efficiency, saving energy and making greater use of renewable energies (also in the field of heating/cooling), for example, by increasingly tapping the potential offered by biomass and biofuels.

All EU Member States are called to meet the goals set by 2010. Germany will promote the development of clear medium and long-term goals for renewable energies.

Efforts to improve energy efficiency will focus on the building sector as a major energy consumer, as well as on the product sector. The German Presidency will also be involved in the groundwork for a long-term and coherent EU fuel strategy and push ahead with proposals on innovative drives. A priority in this context is to safeguard Europe’s technological leadership in this field. The 7th Research Framework Programme is designed to promote research and innovation in the energy sector.

In addition, the German Presidency will put special emphasis on formulating a development-oriented EU energy policy and devote particular attention to the issues of renewable energies and energy efficiency in cooperation with newly industrialized and developing countries. The EU will also push these issues at the 15th session of the UN Commission on Sustainable Development in May 2007.

Transport and climate change
As Sonja Klingberg writes in her editorial on the Presidency Program for the European Federation for Transport & Environment: "Germans are always on the look-out for a bargain. And when Germany takes up the EU presidency on 1 January, it should be looking to “buy one and get three for free”. The bargain is this. If the EU invests in substantially reducing energy use in the transport sector, it will get better climate security, better oil security, and regain control over oil prices. Best of all, there are three prime opportunities to help achieve this on the EU agenda in the first half of 2007: the follow-up to the voluntary agreement to improve the fuel consumption of new cars, the strategy for reducing the contribution of aviation to climate change, and the review of the biofuels directive."

It is no exaggeration to say transport threatens the EU’s entire strategy for combating climate change. Transport’s emissions went up by 32% between 1990 and 2004, while all other sectors of the economy reduced theirs. This makes it difficult for policymakers to ask for additional cuts from other sectors. And there is a real danger that increases from transport could completely offset the progress made in other areas.

The transport sector is also largely to blame for both the higher oil prices seen recently and for Europe’s high-risk dependence on imported oil from increasingly hard-to-reach or politically unstable regions. By 2020 the EU will have to import 86% of its oil. Transport guzzles most of it (71%) and its share is rising. It is easy to blame the growth of countries like China and India for higher oil prices, but in reality, the problem is here on our doorstep. We are responsible for one fifth of global oil use and our demand increases by 2% per year. If we could just reduce our oil demand in transport, we would spend less on it in the first place and would also save on what we continue to buy because the price would go down (as would the price of gas). EU cost/benefit analyses never consider this additional benefit of lower energy use. That should change.

Another reason for doing more on transport is simple – it is not subject to competition from outside the EU in the same way that fixed polluters are. A properly functioning EU Emissions Trading System (ETS) is fine for energy-intensive factories. But transport operators on routes in Europe will not suffer the same competitive threat from outside. You can produce aluminium in China, but you can’t move the London-Brussels transport route there. Transport can, and therefore should, do more.

The German presidency should look to three areas over the next six months to help reduce energy use in the transport sector.

Firstly, cars and vans are responsible for 15% of all CO2 emissions in Europe – so the follow-up to the voluntary agreement with car makers to reduce CO2 emissions from new cars is a good place to start. T&E’s recent study showed that 75% of big brands are behind (some well behind) the current 140 g/km target, but the other 25% are on track. This success should be the inspiration for ambitious targets, legally binding this time, to ensure the industry as a whole takes its responsibility seriously. Doubling fuel efficiency of new cars in a decade is feasible and, as we have seen, necessary.

On aviation, the EU faces another trade war with America if it is serious about including aviation in the ETS. Failing to include flights that start or end their journeys outside the EU, or exempting intra-EU routes where non-EU airlines also fly, would kill the effectiveness of the system before it is even born. When America demands new security rules for all airlines arriving in the US, it expects European airlines to comply. So Europe must equally fight for its right to act on the emissions from the fastest growing transport sector.

Finally, in the biofuels debate, some push hard for increased volume-based targets for biofuels. But the name biofuels is deceptive – they are not all good. The target for biofuels, indeed all fuels, should be that those that result in the least emissions (and other environmental impacts) from “well to wheel” should be promoted.

Germany takes over the presidency at the height of the winter sales. The bargain is there for the taking. Germany must make sure Europe takes it.

This is what the Program says:
The EU will play a leading role in international efforts to combat environmental pollution and climate change. The Presidency will drive forward international climate protection under the Framework Convention on Climate Change and the Kyoto Protocol and on the basis of the agreed two-degree goal after 2012 to tackle climate change effectively as well as to create long-term planning security for investment in innovative, energy-saving technologies. The development of a negotiation package containing proposals on emission reduction targets and options for incorporating more major greenhouse gas emitters as well as the implementation and advancement of emissions trading are particularly important in this context.

The Presidency will drive forward Council discussions on the experiences made with emissions trading to date and introduce the Commission proposal envisaged for the end of 2006 on integrating air transport into the Council’s work on this topic.

Germany will give priority to the issue of sustainable and environmentally safe mobility. In this connection it plans to take forward or conclude the consultations on the Commission proposals to reduce exhaust emissions (EURO 5 and 6 for cars, EURO VI for heavy-duty vehicles). A further important priority is the development of measures to reduce CO2 emissions from cars and measures involving environmentally safer fuels.

Energy as part of development aid
For the first time, a European Presidency takes energy as a priority in its foreign aid program and its relations with developing counrties:

The agreements from the Paris Declaration concerning more effective division of labour between the Commission and the Member States must be put into practice and operational guidelines elaborated. The annual Monterrey follow-up report will examine the status of implementation of the Millennium Development Goals, particularly the plan to gradually increase official development assistance and the qualitative commitments. Regarding the implementation of the EU-Africa strategy, the Presidency will focus particularly on initiatives in the areas of energy and governance and the issue of HIV/AIDS.

When it comes to the EU's relations with the ACP, which are crucial when talking about biofuels (because these relations determine the trade regime to be applied to biofuels imported from countries of Africa, the Caribbean and the Pacific), Germany's Presidency will simply make sure that the agreements can come into force as planned:

To facilitate the integration of partner countries into the global economy, the Economic Partnership Agreements between the EU and ACP states (EU partners in Africa, the Caribbean and the Pacific) must be concluded in good time so that they can enter into force as planned at the beginning of 2008. Germany will ensure that the agreements, which are intended to guarantee the ACP states access to the EU Internal Market after 2007, are oriented towards development policy. In addition, the Presidency will oversee the implementation of the EU’s voluntary commitment to Aid for Trade.

EU actor positions
We highlight some EU actors' assessments of the Program as it concerns energy:

German Business Association
The association (BDI) said the German government should use the Presidency to create a "functioning internal market for electricity and gas" and "make every effort to bring high European energy prices to an internationally competitive level, in particular by dismantling high state taxes." BDI also said it regretted that the future development of nuclear energy was "disregarded" in EU debates. "It is not made clear that all energy sources are required and that none can be left out of the equation," BDI said.

Matthias Warning, Managing Director at Nord Stream AG, the Gazprom-led consortium set up to build the Baltic gas pipeline, tried to play down Polish fears over future gas supplies. "The gas transported by Nord Stream will be fed into existing networks and reach a whole row of Western European states. The European dialogue cannot be dominated by the interests of individual states or enterprises."

European Environmental Bureau
"The key priority for Germany over the next six months must be to deliver a sustainable energy policy", said John Hontelez, secretary general of the European Environmental Bureau, a federation of 143 environmental citizens' organisations. The EEB said it expects the Presidency to "speed up implementation of the EU Energy Efficiency Action Plan, using standards and market instruments". "There should be agreement on sector-specific targets for energy production from renewable energy sources. Strict environmental criteria must be enforced through a comprehensive and mandatory certification system for biofuels, and nuclear energy must be excluded from consideration," the EEB said.

Thomas More Institute
The Paris-based liberal think tank, is highly critical of the German Presidency programme on energy, saying it contains only "declaration of principles" on global warming and the importance of innovation and research. Therefore, it says it expects little more than "great empty words" from the presidency.

Key dates:

10 January 2007: Commission to present 'energy package' comprising:
-Strategic energy review: analysing advantages and drawbacks of national energy choices and their impact on other EU member states. Foreign relations and internal EU energy market to be considered as well.
-Communications and reports on: coal, biofuels, nuclear
-Renewables road map with possible new targets for 2020
-Final report on competition enquiryexternal into electriticy and gas markets
-Communication on the costs and benefits of global warming action post-Kyoto. Environment Commissioner Stavros Dimas told reporters in Brussels that the aim should be a 30% reduction in greenhouse gas emissions from developing countries by 2050.
-Commission consultation (Green Paper) on adaptation to climate change

8-9 March 2007: EU Spring Summit to adopt an Action Plan to launch a common European energy policy

May 2007: EU-Russia summit (Samara)

Conferences organised by the German Presidency

We pick out the meetings and events organised by the German Presidency, as they relate to energy, bioenergy, climate change and mobility:
-January 29: European Renewable Energy Conference, Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Brussels
-February 1: Workshop on promoting environment and resource conservation in the European Security Strategy, Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Berlin
-February 12: Symposium: Time to Adapt: Climate Change and the European Water Dimension, Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Berlin
-February 22: EU Policy on Offshore Windpower Deployment, Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Berlin
-March 3: Renewable Resources, New Opportunities for Rural Areas - Federal Ministry of Food, Agriculture and Consumer Protection - Munich
-April, 23: Conference: Environment and Agriculture - Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Bonn
-April (throughout): Combined EU/G8 Conference on Energy Efficiency - Federal Ministry of Economics and Technology / Federal Ministry of Transport and Urban Affairs - Berlin
-May, 7: 15th European Biomass Conference, Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - Berlin
-May, 15: 4th Conference on Forest Based Sector Technology Platform, Federal Ministry of Education and Research / Federal Ministry of Food, Agriculture and Consumer Protection / Federal Ministry of Economics and Technology - Hanover
-May 30: En route to the knowledge based Bioeconomy, Federal Ministry of Education and Research / Federal Ministry of Economics and Technology - Cologne
-June, 03: European Sustainability top, German Chancellory, Berlin

More information:
German Federal Government: Europe - Suceeding Together, Presidency Programme, 1 January to 30 June 2007.
Commission: Green paper on energy - Website
Commission (DG Relex): External Energy Policy
Commission (DG Relex): External energy relations – from principles to action
Commission (DG Competition): Sector inquiries - Energy
Commission (Press release): Competition: Commission has carried out inspections in the German electricity sector (12 Dec. 2006)

Euractiv: Germany walking tight rope on EU energy blueprint - Dec. 18, 2006

-European Environmental Bureau (EEB): EEB's Ten Green Tests for the German EU Presidency (20 Dec. 2006)
-Institut Thomas More: Working paper: What European revival? Objectives, ambitions and limits of the German EU-presidency (Dec. 2006)
-German Institute for International and Security Affairs: Working paper: Perspectives for the EU's external energy policy (17 Dec. 2006)

European Federation for Transport and Environment: Three ways for the German presidency to claim a bargain, Dec. 21, 2006


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