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Friday, June 02, 2006

High Level Group proposes urgent actions to promote a competitive and sustainable European energy system

The BioPact closely monitors the EU's energy policy developments, to see where it is taking our bioenergy and biofuels future. Today, the High Level Group (HLG) on Competitiveness, Energy and the Environment has adopted its first report, including a number of concrete recommendations to address pressing issues, such as: the improvement and implementation of EU regulatory energy framework, cost-effective inputs for energy intensive industries, energy efficiency, the functioning and the review of the EU Emissions Trading Scheme (ETS).

Composed of high level stakeholders, the HLG looks at ways to foster consistency between policy and legislative initiatives and to contribute to creating a more stable, predictable and competitive regulatory framework (see IP/06/244 and IP/06/226). The Commission considers that only a comprehensive approach to all parts of the energy chain and to the three objectives of security of energy supply, environment and competitiveness can lead to lasting success as put forward in its recent energy Green Paper. The recommendations of the HLG will help to achieve this goal.

The main conclusions of the first HLG report are:

1. Functioning of EU electricity and gas markets

The HLG calls for making full use of competition instrument to ensure a more competitive environment for electricity and gas supply. Member States are called upon to improve in a timely fashion the implementation of the current regulatory framework with a specific focus on unbundling provisions and the removal of regulated tariffs distorting competition. Member States should also enhance the role and independence of national regulatory authorities. Co-ordination among national transmission system operators (TSOs) should be improved, the interoperability of gas systems harmonised and the time needed to authorise investments be shortened.

2. Cost-effective and predictable prices for energy intensive industries

Public authorities should evaluate current initiatives relative to pooled generation, long term contracts and partnerships. The Commission should provide guidance on the compatibility of long term downstream supply contracts and competition law.

3. Energy efficiency and conservation

Since there still is a significant potential for improving energy efficiency, the HLG recommends that a list of priorities for energy efficiency measures be established. The High Level Group considers that a new sense of urgency is needed to fully tap the cost-effective energy efficiency potential. There is a need to have a better assessment of the payback time of investments. Take-up of Energy services should be promoted and energy using products should be subject to dynamically improving efficiency standards. The HLG recommends also making full use of the Eco-design Directive (e.g. minimum energy efficiency requirements for all energy using products, as well as further development of combined Heat and Power, and district heating.

4. EU emissions trading scheme (ETS)

The group confirmed its preference for a well-functioning ETS as a central instrument for reducing greenhouse gases. To ensure that the EU has a cost-effective instrument at its disposal for contributing to the fight against climate change, the HLG proposes to improve the current system by taking action in three stages. This instrument should, therefore, give efficient incentives for investment in low carbon technologies, have limited impact on the competitiveness of energy intensive industries competing on global markets and should be an attractive “docking station” for schemes in other big emitting countries after 2012.

To further improve the functioning of the ETS, the HLG recommends the full and urgent implementation of current EU legislation regarding the liberalisation of electricity and gas markets.

In the coming weeks the national allocation plans of Member States for the 2008-12 period should be assessed to make maximum use of the experience gained from the first trading period.

In the short term before the end of 2006 the EU ETS should give a stronger signal towards encouraging low carbon investment, and providing a level playing field. Ways to reduce the administrative burden for small installations to monitor and report emissions should be explored. Cost-effective solutions to providing information on actual emissions to ensure market transparency should be explored, as well.

The HLG recommends the general review of the ETS should take place in the broader context of international action against climate change. It calls to bring forward the international climate change policy framework post-2012, so as to ensure more long term certainty and transparency in future emission reduction efforts. The HLG recommends also intensifying discussions with big emitters and identifying how the EU ETS can be linked with compatible system emerging in other countries.


At its today’s meeting the HLG has also set up two ad hoc groups to analyse barriers and drivers for investment in innovative energy technologies and long term energy future for the EU.

The future work of the High Level Group will focus on a more strategic reflection on future energy policies for Europe. The objective will be to draw up recommendations on how policy options can be developed to enable a sustainable, low carbon, and competitive energy system which also contributes to strengthening the competitiveness of the European economy and which promotes energy security of supply post-2010.

The full HLG report and more information can be found here.

Europa Rapid Press Release.

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France tests first flex-fuel cars in biofuel push

Brazil's flex-fuel fever needs no introduction. Its successful use of the cars that allow drivers to choose between different fuels has opened the eyes of many other countries. Amongst them, France. On Thursday it launched its first tests of so-called flex-fuel cars that can run on ethanol or conventional fuel in its latest push to promote wider use of renewable energy.

The Marne regional government in eastern France has a special permit to test the ethanol-based E85 fuel, and use it to run a fleet of seven Ford flex-fuel cars for a year.

E85 is currently not authorized in France, but government approval is expected by early next year and the fuel should be widely available by 2010.

"Our goal is simple: we want cars on the market by the end of the decade that can be driven equally on petrol or biofuels," Industry Minister Francois Loos said.

"Biofuels are one way of improving our energy independence, ensuring the protection of the environment and providing new markets for French agriculture," he said at the launch of the tests in Marne.

E85 is 85 percent ethanol, a biofuel derived from sugar beet or cereals. France's biofuel production is mainly biodiesel, largely made from rapeseed and then blended with conventional diesel. Some 75 percent of French cars run on diesel and this share is expected to grow in the coming years.

Brazil, the world's top sugar and ethanol producer, and Sweden have taken the lead in the flex-fuel car sector and only Ford and Saab offer such models for the French market.

But Loos said he hoped French car makers would offer similar models on the market. Renault has said it would make half of its cars flex-fuel models from mid-2009, the industry ministry noted in a press release.


Loos has encouraged French oil companies to supply the low volatility petrol needed to incorporate pure ethanol directly into fuels before the end of 2006. However, the oil industry has been slow in producing such fuels.

"This experiment shows to those who still have doubts that it's possible to have cars running on ethanol, and not just in Brazil and Sweden," Loos said.

Instead of low volatility petrol, oil companies in France produce a type of ethanol-derived ether known as ETBE (ethyl tertiary butyl ether) which is then mixed with conventional fuel.

Siplec, a top French petrol distributor, has by-passed the oil majors by importing low volatility fuel from other European countries to become the first in the country to sell petrol mixed with a five percent pure ethanol content.

Siplec will supply the Marne authorities with the E85 fuel needed to run the flex-fuel cars.

"This experimental project...marks the beginning of a post-oil France and a France of tomorrow," Loos said.


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Total says Europe must do more to back biodiesel - endorsement of the Biopact

Energy giant Total says Europe will have to import biodiesel feedstocks in the future. This is a silent endorsement of our Biopact. Just in from Reuters:

Europe needs to take additional steps to bolster biodiesel production rather than focus on ethanol in a bid to support its farmers, says oil major Total.

This would run parallel with efforts by oil refiners to raise European diesel production capacity to meet ever increasing demand for the motor fuel.

Ethanol by contrast is a blending component for gasoline, which is already oversupplied in Europe and is exported in large volumes to the U.S. and other overseas markets.

"We don't need ethanol," Jacques Blondy, head of agricultural development at Total told Reuters on the sidelines of a Brussels refining conference organized by Hart Energy. "Even the production in Europe we don't need; the major question for the European Union is biodiesel."

"The European market definitely is, and for a long time will be, a diesel market," he said.

Biofuels are split between biodiesel, largely made from oil seeds such as rapeseed and blended with diesel, and ethanol, made from sugar beet or cereals such as wheat and then blended with gasoline.

Europe is structurally short of diesel and meets its shortfall with imports mainly from Russia and the Middle East.

At the same time, the region produces a surplus of gasoline that it exports mainly to the U.S., but also to other major consuming nations like Nigeria and Iran.

"The European Commission is paying a lot of time on ethanol questions," Blondy said. "So far, the policies have been agricultural driven. It has to recognise that if you want to make business with biofuel, the objective of the Commission is not only to be a way to replace the CAP."

The EU's Common Agricultural Policy provides farmers with subsidies that have led to overproduction of cereals such as wheat.


In the UK, one of the few countries in the EU where gasoline is cheaper than diesel, supermarket group Morrisons began selling motor fuel with 85-percent ethanol content in March.

The move coincided with the first customer deliveries of a General Motors Corp. car able to run on either petrol or 85 percent ethanol.

But outside the UK, opportunities in Europe for ethanol-based motor fuels are less clear.

Diesel-powered car sales accounted for almost half Europe's car market at the end of last year, while diesel was forecast to overtake petrol this year as the primary fuel for new passenger vehicles.

Rising diesel demand is forecast to increase Europe's deficit of the product over at least the coming 10 years, boosting the region's need to import.

"Today, it would be a very big change (to switch to gasoline), because more than half of the private customers are running diesel," Blondy said.

Rather, the EU should unify its regulatory system - instead of the current 25 different systems in 25 countries - and guarantee sufficient feedstock supplies for biodiesel production.

"We'd much prefer to have local production, but if there is not enough, we cannot afford to have disruptions," Blondy said. "If we commit to something, we need to do it fully. We need to have security of supply."

The EU wants biofuels to make up 5.75 percent of transport fuels by 2010, though the target is non-binding.

It plans to introduce further stricter targets in a renewable energy roadmap it expects to complete by the end of this year, said Luc Werring, head of the new energies unit at the EC's Directorate-General for Energy and Transport.

"We want to make enforcement of the directive a little more binding," Werring said. "Not obligatory, but more obligatory."

Europe lacks sufficient rapeseed capacity to meet even the 5.75-percent biofuel target, Blondy said.

"If you cover France with rapeseed, which is not achievable for economic reasons, you can only produce two-thirds of the diesel you need," he said. "Probably, we need to import."

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Wednesday, May 31, 2006

Biodiversity key to sustainable biofuels

Ecosystems containing many different plant species are not only more productive, they are also better able to withstand and recover from climate extremes, pests and disease over long periods of time.

These findings, published in the June 1 issue of Nature, are the culmination of 12 years of experiments conducted by David Tilman, Regents Professor of Ecology at the University of Minnesota, to explore the value of biodiversity. The research was carried out at Cedar Creek Natural History Area, near Cambridge, a field station operated by the university's College of Biological Sciences.

"This is exciting because it shows that biodiversity can be used to produce a sustainable supply of biomass for biofuels," Tilman says.

For more than 50 years, scientists have debated the hypothesis that biodiversity stabilizes ecosystems. The University of Minnesota study is the first to provide enough data -- gathered over a sufficient time period in an experiment that controlled biodiversity � to confirm the theory. The time period of the study allowed researchers to evaluate the average net effects of diversity on resistance to and recovery from drought, pests, disease and other disturbances. Tilman and his collaborators began the work in the early 1990s and began publishing a series of landmark papers in 1994.

Biodiversity of global ecosystems has decreased as global population has increased because diverse ecosystems such as forests and prairies have been cleared to make way for agricultural fields planted with monocultures, buildings and roads.

Tilman's research has shown that ecosystems containing many different plant species are more productive than those containing only one of those species. A return to biodiversity may prove to be the key to meeting energy needs for the growing number of people on the planet and for restoring global ecosystems.

"Diverse prairie grasslands are 240 percent more productive than grasslands with a single prairie species," Tilman says. "That's a huge advantage. Biomass from diverse prairies can be used to make biofuels without the need for annual tilling, fertilizers and pesticides, which require energy and pollute the environment. High diversity allows us to produce biofuels with low inputs, and this means that we can get more energy from an acre of land, year after year, with high certainty. Because they are perennials, you can plant prairie grass once and mow it for biomass every fall essentially forever."

The research was carried out in 168 plots, each of which was randomly planted with 1-16 perennial grasses and other prairie plants. Over 12 years, rainfall during the growing season varied more than twofold and average daily high temperatures ranged from 21.5 C to 24.4 C. Stability was dependent on diversity and root mass. Roots store nutrients and buffer against climate variations. Prairie plants, which are perennials, have far more root mass than crops such as corn, which must be replanted annually.


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Tuesday, May 30, 2006

Africa battles its 'oil curse'

PARIS: Experts call it the ‘oil curse’. In Africa’s oil exporting countries, only a tiny fraction of revenues is used to fight poverty, and in many cases black gold has actually become a hurdle to development.

Oil in Africa: from the Gulf of Guinea to northwestern Sudan lies at the heart of questions of good governance and development, as oil prices and revenues soar but fail to bring better living standards for millions of poor.

Across the continent, ‘oil money evaporates into the savannah’, Jean-Marie Chevalier, a professor at Paris-Dauphine University and director of Cambridge Energy Research Associates (CERA), told a conference in Paris last week.

Not only does oil wealth fail to translate into economic development, but in many cases it distorts the country’s economy and holds back the development of other export industries, he said.

Almost everywhere in Africa, oil has fostered corruption and bureaucracy without benefiting the poor, according to speakers at the conference, organised by the French Agency for Development.

Africa accounts for 11.4 per cent of global oil production, holding 9.4 per cent of the world’s reserves.

The continent’s output has surged by 40 per cent since 1990 to 10 million barrels per day (bpd), fuelled by demand from importers such as the United States and China looking to diversify their supply outside the Middle East.

Established exporters such as Nigeria, Gabon, the Republic of Congo and Cameroon have been joined by newcomers Chad, Equatorial Guinea, Sudan, Sao Tome and most recently Mauritania.

Yet despite the flow of oil revenues, African producers fare no better than importers in terms of development, according to Chevalier.

Nigeria, Africa’s most populous nation and its largest exporter with 2.5 million bpd is a prime example of the ‘oil curse’, according to Philippe Sebille-Lopez, of the French Institute of Geopolitics.

‘The evolution is catastrophic and the country is regressing in terms of human development,’ he said.

Between 2004 and 2005, Nigeria lost seven places on the UN scale of human development, sliding from 151st to 158th out of 177 countries monitored.

More than 70 per cent of Nigeria’s 130 million inhabitants survive on less than a dollar a day, and social unrest has gripped the oil-rich south as local communities rise up to claim a share of revenues.

Another case in point is Chad, which has been exporting crude oil since 2003, reaching a current rate of 200,000 barrels per day.

‘Chadians don’t understand why oil prices are rising but not their living standards,’ said Geraud Magrin, a leading researcher in the field.

Under a World Bank scheme, imposed in part because of endemic corruption, Chad agreed in 1999 for its oil to be extracted by a US-Malaysian consortium and for the revenues to be funnelled into development programmes.

‘The idea was to use oil for sustainable development,’ said Magrin. Ten per cent of oil revenues were to be set aside for future generations, and 85 per cent used for poverty reduction and development projects.

But the benefits have failed so far to reach the poor, with almost 80 per cent of the population still without access to drinking water and one in four children dying before the age of 10.

Since oil revenues started to flow in 2004, Chad has slid down 15 places on the Transparency International corruption index, and is now rated the world’s most corrupt country.

Meanwhile, the regime of President Idriss Deby Itno, facing cash shortages and threatened by armed rebellions, has already questioned the system, provoking a stand-off with the World Bank.

Experts from Mauritania, which recently joined the club of oil exporting nations, ‘came to ask us what can be done to avoid the oil curse’, said Jean-Marie Chevalier.

According to Oxford University economist Paul Collier the only way to ensure African oil wealth transforms into growth is for ‘rich countries to apply pressure to ensure that checks and balance are put in place’.

Currently, this job is largely being carried out by non-governmental organisations and international donors, as in the case of Chad.

But in the long term, argued economic consultant Christine Rosellini, African producers will only be able to fight corruption, improve governance and create sustainable development by reducing their dependency on oil.

By Alain Bommenel, AFP

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Monday, May 29, 2006

Nigeria: cassava growers go ahead with production of ethanol

As we have written before, cassava (better known as "manioc" in the lusophone and francophone world) is a very interesting energy crop, which thrives in undemanding, poor soils, and which grows explicitly outside of rainforest areas (some biofuel critics use the rainforest argument ad nauseam, without looking at the many alternatives.
In Nigeria, cassava is the cheapest, most abundant staple food. It's the poor man's food so to speak. Millions of farmers grow it, and a major growers association has now announced a partnership to produce cassava ethanol.
It seems like President Obasanjo's personal cassava biofuel initiative (earlier post) is finally being taken to heart.

The Cassava Growers Association of Nigeria, has entered into collaboration with the Nigeria National Petroleum Corporation [NNPC], towards the production of 1 billion litres of Ethanol annually from cassava tubers for processing of crude oil.

Already, the NNPC said it needed about 3million litres of Ethanol per day, which would constitute 10percent of the petroleum products to be consumed locally.

Addressing newsmen in Osogbo yesterday, the National President of the Association, Chief Moses Ayinmodu stated that the association is currently discussing with some foreign firms for the manufacture of mini-machines for the production of ethanol in the country.

According to him, an American company, had already established an ethanol plant in Akwa-Ibom State adding that others are still coming as soon as all the necessary discussions on the supply of the machines are completed with the association.

He stated that with the successful execution of the project, the production of ethanol in commercial quantity would not only save the country from huge foreign exchange it would also earn the country a remarkable foreign exchange.

While commending President Olusegun Obasanjo for setting up a Presidential Initiative on cassava production, processing and export a few years ago, Chief Ayinmodu stated that the directives that all flour mills in the country from June this year should include 10 percent cassava flour in their products was yielding favourable results.

"Presently, the association is targeting an increase in cassava production by its members by about 10 million tons within the next two years primarily for industrial use and export so that the present production level of about 42 million tons can be released mainly for food to maintain food security," Chief Ayinmodu stressed.

Earlier, the Osun State Chairman of the Association, Dr. David Ogunsade commended Governor Olagunsoye Oyinlola for the release of loans to cassava growers in the state.

His words, "Prince Olagunsoye Oyinlola has given support and encouragement to our association in form of soft loans made available to us in addition to the supply of tractors to members of the association at cheaper rates."

Gbenga Olarinoye Osogbo, Vanguard.

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