French energy strategy report calls for "territorial intelligence"

A report on sustainable development prepared by two French Senators for the French Office Parlementaire D’Evaluation des Choix Scientifiques et Technologiques (OPECST) launches a new concept for strategic thinking about energy: "territorial intelligence". In our age of globalization, multinational corporations, mundial geopolitics and transnational energy flows, "territorial intelligence" comes down to an opposite movement, based on a local logic embedded in a "politique de proximité" (local jobs, local energy flows, local resource control, decentralisation - a paradigm similar to the one we graphically sketched in a previous post.)

The report by Senators Pierre Laffitte and Claude Saunier focuses primarily on the potential of biomass and calls for financing the transition to a new energy future by taxes that would be dedicated to promoting buildings insulation, liquid biofuels, biogas, hybrids and electric cars and other low fossil-carbon technologies, particularly in the domestic heating and transport sector. The senators also call for the EU to lead a global energy transition to avoid the worst impact of climate change and an oil shock they predict occurring by 2020 at the latest.
There is a real risk of a level of climate change for which the physical and financial consequences are very underestimated. The economic cost of climate change could increase to 2.5 to 3% of world GDP, they conclude.

The combination of an insufficient supply of oil and ongoing demand from the US, China and India will create by 2020 an oil shock of great reach that will push the price of oil to more than $150/barrel. That shock will take another 2% out of global GDP.

The senators argue that while the transition away from fossil fuels is an urgent requirement, it also offers opportunities for developing new industries. They also assert that the technologies required either exist or are close to being market-ready. They estimate that their financing schemes could raise about €4-5 billion (US$5.1-6.4 billion) to be applied to the development and deployment of such solutions.

Resources:
Terre-net: Un rapport du Sénat appelle à l’ "intelligence territoriale".
Original report: Rapport de l'OPECST n° 426 (2005-2006): Changement climatique et transition énergétique : dépasser la crise [*.pdf].
Discussion: Greencarcongress.

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Good news: oil hits record above $75

Quicknews oil prices
Great news: oil hit a new record of US$75.40 per barrel today. Analysts, brokers, experts, dealers, gurus, politicians and journalists all have their opinion on what the reasons could be: the postponed EU-Iran talks, the prospect of another round of hurricanes in the US, strong American demand, North Korea's missile test... frankly we don't care.
The higher oil goes, the sooner our green future gets implemented. We have been in US$70 per barrel territory for months now, and it doesn't seem the trend is downwards.
Let's keep this short (we normally don't report about oil directly): whatever the reasons for the rising prices, the time has come for developing nations to start implementing a radical biofuels agenda. They can only win.

• Bloomberg: Oil Rises to Record $75.40/Bbl After North Korea Tests Missiles.
• Reuters: Oil hits record above $75 on US demand.
• RTE: Oil rises toward $75 as Iran talks called off.
• Sydney Morning Herald: Hurricane season to whip up oil price.

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Non-tropical countries need biofuels subsidies - major FAO/OECD study

Very few countries have enough raw material available at present to produce biofuels that could compete on price with fossil fuels without government subsidies, according to a major agricultural study authored jointly by the Organisation for Economic Cooperation and Development (OECD) and the United Nations' Food and Agriculture Organisation (FAO).

As we have stressed many times, and as the study confirms "in only very few countries is the required feedstock available at prices that would presently allow ethanol and biodiesel production to be competitive with transport fuels from crude oil without government support," it said. "But such support can also create market distortions, the nature and level of which need to be well understood before policies are put in place." And although it forecast an acceleration in world biofuel usage over the next 10 years that would raise demand for maize, wheat, oilseeds and sugar, the trade-offs between food/feed and non-food uses for specific crop sectors were still unclear.

This is why we urgently need a green energy pact with those countries where biomass can be produced competitively and where land resources are abundant (notably in Central-Africa).


This included changes in the preferred farm-based feedstock used to make biofuels to non-agricultural products such as celluiosic fibres and waste materials, the OECD/FAO study said.

The study, relating to world agricultural markets from 2006 to 2015, assumed "very strong growth" in ethanol production in Brazil, Canada and the United States, but does not make any comment on likely developments in the European Union since the bloc's biofuels directive was not yet into force. "With a sustained increase in oh prices since 2004, demand for biofuels is increasing strongly and is likely to accelerate in coming years," lt said.

In the United States, expanding maize-based ethanol production would limit increases in maize exports, it said.

But in Brazil, the world's leading producer of sugar and cane-based ethanol, there was unlikely to be any constraint on the sugar sector due to more cane being diverted into biofuel. "Despite strong growth in Brazil's sugarcane-based ethanol sector, it is not expected to prevent it from increasing its world sugar market share," it said. "Developments are not expected to unduly constrain sugar production and exports to 2015," the study said.

Source: Checkbiotech.com.

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Palm oil, a GDP booster

Palm oil is considered by some to be one of the most environmentally destructive crops. This is so because it also happens to be one of the most profitable ones.
And with the advent of biofuels such as ethanol and biodiesel, palm oil is in the spotlight more than ever. This for the obvious reason that of all commonly cultivated energy crops, Elaeis guineensis gives the highest possible and usable biomass yield (oil for biodiesel, cellulosic biomass for ethanol and solid residues for co-firing).
The palm presents a fascinating history of the clash between economic development and environmental conservation. And now that the crop promises to become a leading green fuel feedstock, this history is far from over. Let's have a quick look at some palm oil economics.

The single crop can literally lift a developing country out of poverty - all by itself. The most famous example of this is of course Malaysia, the world's largest palm oil producer. In the early years after independence from Britain, the country was still very much an underdeveloped, poor nation, with per capita incomes of less than US$ 400 per year (in 2005 dollar terms). In four short decades, Malaysia has become one of the strongest Asian economies, with continuous "Asian Tiger" growth, and a current per capita GDP of over US$ 11,000. GDP incomes grew 31% in the sixties, and and amazing 358% in the seventies led primarily by export-oriented industries. Palm oil contributed in a major way to this success.

The crop became the center-piece of agricultural reforms included in the so-called Second Malaysia Plan (1971-1975), which turned the country into an export driven economy. Palm oil production was increased massively as the result of the vast program (graph 2).

Amazingly, by 1984, the African oil palm had become Malaysia's second biggest export earner, after petroleum. And it continues to hold that place. Whereas in most countries, agriculture gradually takes on a less important role as an economy develops, for Malaysia this is not the case. On the contrary, the plantation crop's share of Malaysia's GDP continues to grow (graph 1). Today, it brings export earnings worth US$ 6.2 billion, only trailing crude oil exports. But compared to crude oil, palm plantations create considerably more jobs, currently employing around 14% of Malaysia's entire workforce. Around half of all palm oil is still produced by smallholders, that is by individual farming families. In short, the Malaysian economy and society as a whole benefits immensely from the African palm.

Given these numbers, it is not difficult to understand that many developing countries are looking into replicating Malaysia's success story. With Peak Oil around the corner, and continuously rising energy prices, the temptation to massively use one's land to cultivate the energy crop is strong. Obviously, environmental and social problems associated with the crop cannot be swept from the table. And understandably, Europe and the US are preparing to "label" and put tariffs on palm oil, trying to block it from entering their markets as a major energy crop. They use environmentalist and labor-related arguments to do so, but there are more basal reasons underneath (the US and EU's agro-lobbies know they cannot compete against tropical energy crops). We feel that the economic logic will prevail, and that new and rapidly expanding economies (India, China) may become the main importers - and they will not ask the sensitive questions raised by the West. After all, these new economies absolutely want to get their hands on as many energy resources as they can, because their appetite for energy is insatiable, and crucial for their own growth.
For producers, the dilemma remains, though: palm oil can boost the GDP of a country and lift millions out of poverty, but at the same time such a monoculture may cause an ecological disaster that in the long-run may be equally costly. This story is surely to be continued.

Sources:

• Food and Agriculture Organisation: FAO Key Statistics of Food and Agricultural External Trade.
• International Monetary Fund: International Financial Statistics (free subscription req'd).
• Malaysian Palm Oil Board, Economics and Industry Division.

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