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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 21, 2006

Indonesian banks to lend $2.8 billion for plantation, biofuels projects

Fighting rural poverty by creating 2.5 million jobs, dedicating 6.5 million hectares of land, replacing 10% of 245 million Indonesians' fossil fuel consumption by biofuels and exporting the rest. These are the key targets of OPEC member Indonesia's ambitious bioenergy plan. Earlier this month, the country indicated its intention to form a 'biofuel cartel' of sorts with neighboring Malaysia (earlier post).

A consortium of five state-owned and regional banks has now committed itself to providing the money to get the plan going. They will free up a total of 25.56 trillion rupiahs (€2.1/US$2.8 billion) in loans for the development of plantations across the country, including those producing biofuel feedstock. (Earlier, one individual bank had already taken the initiative to grant US$440 million to smallholders).

The banks signed the memorandum of understanding for the loan scheme with Finance Minister Sri Mulyani Indrawati, Coordinating Minister for the Economy Boediono, and Bank Indonesia governor Burhanuddin Abdullah. The loan commitment is in line with the government's program to revitalize the agricultural sector by developing the biofuel sector.

Subsidies for smallholders
Almost half of Inodesia's population works in the agricultural sector. Some 40% of all plantation outputs are carried by smallholders, that is farmers who own less than 2 hectares of land. Under the scheme, the banks will provide loans carrying an effective 10 percent fixed interest rate to these small plantation owners cultivating crops of oil palm, cocoa and rubber. The government will then provide them with a subsidy to cover any differences between the market lending rate and the fixed loan rate.

The subsidies will be provided over a period of five years for oil palm and cocoa plantations, and seven years for rubber plantations. The average lending rate is currently some 15 percent, but this is expected to fall in line with the central bank's recent rate cuts. Bank Indonesia's key rate presently stands at 9.75 percent.

In the 2007 budget, the government has set aside 1 trillion rupiah (€83.1/US$110 million) to cover the cost of subsidizing interest payments on agriculture-related loans and the cost of procuring seedlings, with another 12 trillion rupiah (€1/US$1.3 billion) being earmarked for improving agricultural infrastructure (earlier post).

Indonesia's peak oil
Even though Indonesia is still official Asia's only OPEC member, it's oil production has gone into decline steadily. The 245 million strong nation now consumes more oil than it produces. This is why the government has launched the vast biofuels program, for which it plans to designate up to 6.5 million hectares of idle land for the development of biofuel-feedstock plantations. The effort is aimed at producing enough biofuel by 2010 to replace 10 percent of the country's total oil consumption -- which reached 70 million tonnes last year (roughly 1.3 million barrels per day):
:: :: :: :: :: :: :: :: :: :: :: :: :: ::

Indonesia has had a long tradition of subsidizing fuel for its people, but the policy has cost the state a lot of money, and with increased oil prices, the scheme is becoming untenable. Hence the shift towards subsidizing farmers; they can deliver a fuel that is less costly than fossil fuels.

Choosing the right crops
The Finance Ministry further said in a statement issued to mark the occasion that it planned to extend the interest subsidy to loans for the development of sugarcane and cassava plantations. A similar loan scheme would also be worked out for jatropha plantations. Jatropha was recently identified as the plant with the most biofuel potential in Indonesia. After a chemical conversion (transesterification), palm oil and oil extracted from the jatropha plant can be mixed with ordinary diesel as biodiesel, while ethanol made from sugarcane and cassava can be mixed with gasoline.

The follow-up credit schemes are expected to be finalized by January, with other banks outside of the present consortium likely to be invited to participate. Of the total money, Bank Rakyat Indonesia (BRI) will stump up Rp 12 trillion, Bank Mandiri Rp 11.08 trillion, Bank Bukopin Rp 1 trillion, the West Sumatra regional development bank Rp 980 billion, and the North Sumatra regional development bank Rp 500 billion.


Anonymous said...

Oh oh, here we go... not such good news for the Indonesian forests!

11:05 AM  
Anonymous said...

They say "idle land". I hope that doesn't mean "forests". We know how the Indonesians look at their forests. They seem that as stuff that stands in the way of profits.

1:23 PM  

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