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    Oil prices reach record highs as the U.S. Energy Information Agency releases a report that showed crude oil inventories fell by more than seven million barrels last week. The rise comes despite a decision by the international oil cartel, OPEC, to raise its output quota by 500,000 barrels. Reuters - September 12, 2007.

    OPEC decided today to increase the volume of crude supplied to the market by Member Countries (excluding Angola and Iraq) by 500,000 b/d, effective 1 November 2007. The decision comes after oil reached near record-highs and after Saudi Aramco announced that last year's crude oil production declined by 1.7 percent, while exports declined by 3.1 percent. OPEC - September 11, 2007.

    GreenField Ethanol and Monsanto Canada launch the 'Gro-ethanol' program which invites Ontario's farmers to grow corn seed containing Monsanto traits, specifically for the ethanol market. The corn hybrids eligible for the program include Monsanto traits that produce higher yielding corn for ethanol production. MarketWire - September 11, 2007.

    Ethanol Statistics, a new industry information resource, reports that U.S. petroleum refiners Citgo and Valero are the top 2 ethanol importing companies in the United States in the first 6 months of 2007. Overall imports were up 7.64% compared to the same period in 2006, from 193,620 gallons to 208,404 gallons. Chevron imported 43% less, whereas Noble and ConocoPhilips' imports were up 255% and 372% respectively. Data are reported in 'The United States Ethanol Market 2007’, which also provides a breakdown of U.S. ethanol production costs and a detailed analysis of U.S. consumption and production. Ethanol Statistics - September 10, 2007.

    The government of British Columbia launches a $100,000 study into the production of biogas, heat, power and clean water from household waste streams. Raw sewage water can be cleaned by microbial fuel cells that deliver electricity as they clean the water; other technologies include classic anaerobic fermentation. Canada.com - September 10, 2007.

    Saudi Aramco in its Annual Review 2006 said that last year the company's crude oil production declined by 1.7 percent, while exports declined by 3.1 percent, compared with the previous year. Crude oil production in 2006 averaged 8.9 million barrels of oil a day (b/d) and exports 6.9 million b/d. Saudi Aramco - September 9, 2007.

    Chinese packaging manufacturer Livan Biodegradable Product Co. Ltd. will build plants in Alsozsolca and Edeleny in eastern Hungary at a combined cost of €18 million by 2009, the Hungarian economics ministry says. The plants, which will employ 800 people, are planned to produce initially 50, 000 metric tons a year of environmentally-friendly packaging material, and double that amount by a later date. Livan will use corn to manufacture biodegradable packaging boxes with similar properties to petroleum-based plastic boxes used in the food industry. Dow Jones Newswires - September 7, 2007.

    South Korea aims to raise biodiesel content in domestic diesel to 3 percent from the current 0.5 percent by 2012, Seoul's energy ministry said today. The government was initially set last year to impose a mandatory 5 percent blend, in line with the level targeted by the European Union by 2010, but the country's powerful refining lobby opposed the move, forcing it to push back the target, according to market sources. Reuters - September 7, 2007.

    Virent Energy Systems, Inc. announced today that it has closed a US$21 million second round of venture financing. Investor interest in Virent was driven in large part by the Company’s continued development of its innovative BioForming process beyond its traditional hydrogen and fuel gas applications and toward the production of bio-based gasoline, diesel, and jet fuels. Virent Energy Systems - September 6, 2007.

    The U.S. National Ethanol Vehicle Coalition (NEVC) announces that 31 models of motor vehicles will be offered in the U.S. with an E85 capable engine in 2008. Chrysler, Ford, General Motors, Nissan and Mercedes Benz will all offer flexible fuel vehicles (FFVs) in the coming year. The NEVC expects 750,000 such FFVs will be produced in 2008. National Ethanol Vehicle Coalition - September 5, 2007.

    GreenHunter BioFuels, Inc., has begun commercial operations with the start-up of a 1,500 barrel per day methanol distillation system. Methanol is an alcohol used to transesterify vegetable oils into biodiesel. The methanol production facility is a key element of GreenHunter's 105 million gallon per year biodiesel refinery, the largest in the U.S., slated for initial operations during the first quarter of 2008. PRNewswire - September 5, 2007.

    GreenHunter BioFuels, Inc., has begun commercial operations with the start-up of a 1,500 barrel per day methanol distillation system. Methanol is an alcohol used to transesterify vegetable oils into biodiesel. The methanol production facility is a key element of GreenHunter's 105 million gallon per year biodiesel refinery, the largest in the U.S., slated for initial operations during the first quarter of 2008. PRNewswire - September 5, 2007.

    Spanish renewables group Abengoa released its results for the first half of 2007 financial year in which its consolidated sales were €1,393.6 million, which is a 27.9 percent increase on the previous year. Earnings after tax were €54.9 million, an 18.6 percent increase on the previous year's figure of 46.3 million euro. Abengoa is active in the bioenergy, solar and environmental services sector. Abengoa - September 4, 2007.

    Canadian hydro power developer Run of River Power Inc. has reached an agreement to buy privately owned Western Biomass Power Corp. in a $2.2 million share swap deal that could help finance development of new green sources of electricity in British Columbia. The Canadian Press - September 4, 2007.

    As of Sept. 1, a biodiesel blending mandate has come into force in the Czech Republic, requiring diesel suppliers to mix 2 per cent biodiesel into the fuel. The same rule will be obligatory for gasoline starting next year. In 2009 the biofuel ratio will grow to 3.5 percent in gasoline and 4.5 percent in diesel oil. CBW - September 3, 2007.

    Budapest's first biofuel station opens on Monday near the Pesterzsébet (District XX) Tesco hypermarket. This is the third station selling the E85 fuel containing bioethanol in Hungary, as two other stations are encouraging eco-friendly driving in Bábolna and Győr. Caboodle - September 3, 2007.

    Canadian forest products company Tembec announced that it has completed the acquisition of the assets of Chapleau Cogeneration Limited located in Chapleau, Ontario. The transaction includes a biomass fired boiler and steam turbine with an installed capacity of 7.2 megawatts. Consideration for the assets consists of a series of future annual payments to 2022, with a present value of approximately $1 million. Tembec - September 1, 2007.

    Innovative internet and cable/satellite channel CurrentTV is producing a documentary on Brazil's biofuel revolution. Biopact collegues and friends Marcelo Coelho (EthanolBrasil Blog), Henrique Oliveira (Ethablog) and Marcelo Alioti (E-Machine) provided consulting on the technical, economic, environmental and social aspects of Brazil's energy transformation. ProCana - August 31, 2007.

    Oil major BP Plc and Associated British Foods Plc won competition clearance from the European Commission on to build a plant to make transport fuel from wheat in Hull, northeast England. U.S. chemical company DuPont is also involved. Reuters UK - August 31, 2007.

    The government of the Indian state of Orissa announced its policy for biofuel production which includes a slew of incentives as well as measures to promote the establishment of energy plantations. The state aims to bring 600,000 hectares of barren and fallow land under Jatropha and Karanj. At least 2 million hectares degraded land are available in the State. The new policy's other objectives are to provide a platform for investors and entrepreneurs, market linkages and quality control measures. Newindpress - August 29, 2007.

    Brazil's state-run oil company Petrobras said today it expects to reach large scale cellulosic ethanol production in 2015, with the first plant entering operations as early as 2011. Lignocellulosic biomass is the most abundant biological material on the planet, making up the bulk of the structure of wood and plants. In a first phase, Petrobras intends to use bagasse as a feedstock. Reuters / MacauHub- August 29, 2007.

    Seattle based Propel Biofuels, is announcing a $4.75 million first round of capital from @Ventures and Nth Power. The money will be used to help Propel set up and manage biodiesel fueling stations. BusinessWire - August 29, 2007.

    BioEnergy International, a science and technology company committed to developing biorefineries to produce fuels and specialty chemicals from renewable resources, announced today the closing of a major US$61.6 million investment that will provide funding for the Company’s three strategic initiatives: generating secure cash flow from its conventional ethanol platform, product diversification through the introduction of novel biocatalysts for the manufacture of green chemicals and biopolymers and the integration of its cellulose technology. BusinessWire - August 28, 2007.

    German company Verbio Vereinigte BioEnergie, the biggest biofuels producer in Europe, says it is considering plans to invest up to €100/US$136.5 million in a biofuel production facility in Bulgaria. The company wants the new facility to be located close to a port and Bulgaria's city of Varna on the Black Sea is one of the options under consideration. If Verbio goes through with the plan, it would produce both biodiesel and bioethanol, making Bulgaria a major source of biofuels in southeastern Europe. Verbi currently produces around 700,000 tonnes of biofuels per year. Sofia News Agency - August 27, 2007.

    Czech brown-coal-fired power plant Elektrárna Tisová (ETI), a unit of the energy producer ČEZ, could co-fire up to 40,000 tons of biomass this year, the biggest amount in the company’s history, said Martin Sobotka, ČEZ spokesman for West Bohemia. ETI burned more than 19,000 tons of biomass in the first half of 2007. The company’s plan reckoned with biomass consumption of up to 35,000 tons a year. Czech Business Weekly - August 27, 2007.

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Sunday, July 30, 2006

Indonesia's biofuels program seen as a way to alleviate poverty

We reported earlier that biofuels superpower Indonesia recently launched a bioenergy crash program with planned investments of up to €17.5 billion (US$ 22 billion) by 2010. In a statement made today, the Indonesian government stresses that it will pursue this development explicitly within a framework of poverty alleviation.
Major institutions like the EU, the UN's FAO, the World Bank and environmental institutes like the SEI have often pointed to bioenergy projects as a way to lift farming communities out of poverty. The potential for social and economic development of the rural poor is there. And indeed, several governments are now radically implementing large-scale biofuels programs with exactly such a perspective in mind (amongst them the governments of Argentina and Brazil).

Millions of farmers in the developing world are already involved in cultivating crops that could serve as the energy feedstocks of the future. In Indonesia, bioenergy crops like coconut, rubber and cassava are predominantly cultivated by smallholders. And even though two-thirds of the country's vast palm oil industry (a real GDP booster) is dominated nowadays by large estates, it still hosts an estimated 1 million smallholders (that is roughly an equal amount of families) [see graph].

That is why Alhilal Hamdi, the newly installed chairman of Indonesia's national biofuel promotion committee, recently said: "The promotion of biofuel could help develop what we call the social economy". The policy, he said, was part of the government's triple-track strategy of promoting biofuel, which was intended to promote growth and employment, and reduce poverty. According to figures from the Central Statistics Agency (BPS), the number of poor people in Indonesia stood at some 50 million last year. But many analysts say that the true number accounts for almost 60 percent of the total Indonesian population of 220 million. They note that the government's decision to raise fuel prices by an average of 120 percent last year had particularly impacted on the number of people living in poverty.

Various efforts, ranging from specially designed pro-poor programs to promoting foreign investment, have long been pursued by the government with a view to reducing the incidence of poverty. But their results to date leave a lot to be desired. This time around, however, the government is confident that the new biofuel-promotion policy will provide an effective tool for tackling the poverty problem. By the year 2010, the government hopes that the biofuel industry will employ a total of 3.6 million people in biofuel processing plants, and in castor oil, palm oil, cassava and sugar cane plantations covering some 6-million hectares across the archipelago:
:: :: :: :: :: :: :: :: ::

Mines and Energy Minister Purnomo Yusgiantoro has said that it is expected that Indonesia can produce 720,000 kiloliters (kl) of biofuel per year on average between 2005 and 2010, 1.5 million kl per year over the five years after that up to 2015, and 4.7 million kl per year over the following ten years up to 2025.

By the year 2010, he said, the country would be able to substitute some 10 percent of its oil-based fuels with the environmentally friendly biofuel, which emits zero carbon dioxide. Research and Technology Minister Kusmayanto Kadiman said that there were 60 different types of plants that could be used to produce biofuels. All 60 plants can be easily grown across the archipelago. Some of them are already widely cultivated. Others, like castor oil, are as yet not so common.

Biofuels consist of biodiesel, bioethanol, bio-oil and biogas. Bio-diesel serves as an alternative to oil-based diesel, bio-ethanol can replace gasoline, bio-oil can substitute for kerosene, and bio-gas can serve as an alternative to kerosene. These can all be produced from liquid waste; poultry droppings; and plants such as corn, grains, rice and sunflowers.

Analysts have long advocated the idea of developing alternative fuels as a way of promoting the social economy and thereby reducing poverty.

They argue that ordinary people in rural areas can become involved in biofuel production with only small amounts of capital.

For example, Alhilal says that an investment of only Rp 3 million is required for every hectare planted with castor oil, which starts bearing fruit after six months.

Castor oil is the easiest one to grow of all the plants, and bears fruit all year round. Having many strains and two genera -- Jatropha curcass and ricinus -- the castor oil plant can be easily grown on all kinds of land across Indonesia.

Castor-oil growers can process their castor-oil harvests into bio-diesel using their own small-scale processing machines.

Private firm PT Tracon Industri manufactures portable machines with production capacities ranging from five kilograms to 50 kilograms per hour.

If farmers were to purchase the five-kilogram-capacity machines, which cost less than ten million rupiah each, they could process their produce and then sell the oil to either state power utility PLN or state oil and gas firm Pertamina.

Alhilal said that the government would also guarantee that PLN and Pertamina would buy the biofuel from the micro-businesses. "We're also designing fiscal incentives, including tax holidays, for people who want to enter the biofuel business," he said.

Minister of Research and Technology Kusmayanto Kadiman told members of the House of Representatives on Monday that the government would tightly and equitably regulate the biofuel industry.

With this promise in mind, he said the government hoped that many people would be encouraged to set up businesses in the sector, which would help generate economic growth, create new jobs and reduce poverty.

However, such hopes could easily come to naught if the government fails to deliver on all the promises it has made to the public. As Minister Kusmayanto warns: "If this fails, then it will be very difficult to motivate the general public to continue developing the biofuel industry."


Australian Centre for International Agricultural Research: Contract farming in Indonesia: Smallholders and agribusiness working together. An interesting study analysing how the parties that are often seen as enemies can create mutually beneficial relationships. Full study, here [*.pdf].

Jakarta Post: Promoting biofuel as a way of alleviate poverty, Juli 31, 2006.

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A look at Africa's biofuels potential

Now that African states have decided to create a "Green OPEC", it is time to look at the biofuels and bioenergy potential of the continent as a whole. Assessing and projecting this biomass energy potential is extremely complex because there are so many factors at play. Some of those factors can be predicted quite precisely (demographic trends), for others this is far more difficult (e.g. climate change effects).
Several studies have been published though, and we highlight the most detailed ones as they relate to sub-Saharan Africa's long-term potential. Both studies were produced by the Copernicus Institute at the University of Utrecht, by scientists who also head the International Energy Agency's Bioenergy Task 40 study group, which deals with assessing large-scale bioenergy production, global logistics and trade. The studies in question are the following [*pdf]:
The authors use a large number of factors and assumptions to calculate the technical potential that can be produced in a sustainable way, that is, by preserving biodiversity, rainforests and water resources, and without endangering the food security of people. If a 'business as usual' approach is taken - the unsustainable agricultural strategies still seen often today - then the potential would be much larger, but in that case the environmental effects become unpredictable and the damages might be irreversible. Another crucial sustainability assumption in the study is that food production matches projected demand, and that local food demand is given priority over export and transnational trade.

The main factors used to calculate the potential are: demographic trends, the demand for food, fibre and wood products, and changes in land-use patterns. From these intertwined factors, the authors make projections about how much land becomes available for bioenergy production (that is: after food demands have been satisfied). A more detailed study of the quality of the land is then carried out and the arable land is divided into different crop suitability categories. This way, the potential can be assessed quite accurately.
The conclusion of both studies is that the global, sustainable bioenergy production potential in 2050 is between 273 Exajoules (scenario1) and 1471 EJ (scenario 4).
Now consider that the world's total current energy consumption from all sources (nuclear, coal, oil, natural gas and renewables) amounts to 440 EJ of energy per year. This means that under a high productivity scenario, the planet's potential to produce biofuels is several times larger than the total amount of energy we get from fossil fuels and nuclear today.

Of all the regions studied, sub-Saharan Africa has the largest potential (max. 410 EJ), followed by Latin-America & the Caribbean (max. 252 EJ), CIS & the Baltic States (235 Ej), North America (max. 195 EJ), East Asia including China (max. 188 EJ), Oceania including Australia (max. 115 EJ), Europe (max. 44 EJ), Near East & North Africa (max. 39 EJ), South & South-East Asia including India (max. 38EJ), and Japan which has no potential.

To many, the vast amount of potential bioenergy that the planet can yield in a sustainable way, may come as a surprise. Let's therefor have a closer look at the main assumptions underlying those scenarios, because to actually produce so much bioenergy, several drastic measures must be implemented. The authors take 4 basic assumptions to draw up the scenarios:

There is a big difference between scenario 2 and 3. In 1 and 2, animals destined for human consumption can freely roam pastures ("mixed" animal production system), whereas in 3 and 4, they are part of the industrial form of animal production that we use here in the West ("landless"), that is, by locking animals up indoors in tiny confined spaces. Other assumptions are:
:: :: :: :: :: :: :: :: ::

(1) The use of highly efficient agricultural techniques, which includes the use of modern fertilizers and pesticides. This is an optimistic assumption, because we know Africa has a long way to go on this front (as we recently reported in the context of the African Fertilizer Summit).
(2) Irrigation is used on a very large scale. This too is an optimistic assumption, especially when it comes to agriculture in Africa where irrigation is virtually non-existent. Mass investments will be required in order to arrive at the maximum potential of 410 EJ. But it is possible; the study merely looks at the technical potential, not at real world requirements to arrive at using that potential.
(3) Very efficient use of animal feed; many bioenergy projects are already integrated and contain a component for the efficient co-production of animal fodder. Again, the question will be whether such systems can be implemented on a large enough scale.

Finally, a series of subsequent assumptions are made, in order to keep the projections within the sustainability framework:

(4) the world's total population in 2050 is projected to stand at 8.8 billion (a medium scenario predicted by the U.N.)
(5) from now until 2050 there is no further deforestation
(6) the implementation of very efficient agricultural techniques is projected to lead to a decrease in the amount of land needed for food production; depending on animal land-use patterns ("mixed" or "landless system") the decrease is 14%, 22%, 64% and 70% for the different scenarios
(7) the daily intake of calories increases from a global average of 2300kcal per person today, to 3300kcal in 2050, with an assumed maximum of 3700kcal of which 1100kcal come from meat and fish (that is: all people on the planet take on American food habits - even though we hope this does not happen, it is quite probable)
(8) economic and trade barriers are explicitly not taken into account (because the study deals with the technical potential only); in reality of course, these barriers may limit or on the contrary increase the potential
(9) no limitations when it comes to the implementation of the mentioned techniques (e.g. agricultural outreach in Africa promoting the use of fertilizers and pesticides)
(10) possible climate change effects are not taken into account

These assumptions are global and abstract, and several of them are problematic in the context of Africa's potential. We just want to illustrate this with one example: it is highly unlikely that within 4 decades, the average intake of kilocalories by Africans will be as high as that of Americans today; let alone their intake of calories from meat! This implies that in Africa, less food and meat will be produced than the authors assume; this in turn means more land available for bioenergy production. This will be the reality on the ground. And it is here that a strategy has to be devised to give priority to increasing average African food consumption (in many countries, the average is below what is considered to be a minimum for human beings), over bioenergy production.

Moreover, one of the most unpredictable factors that has not been taken into account, is the effect of climate change on the African continent. The few studies that have been carried out contradict each other: for example, some project the vast Sahel to become drier, others see it becoming much wetter. Since the Sahel region is so large, the actual climate change effects on it will determine whether there will be more or less land suitable for bioenergy than predicted. The same ambiguity holds for other regions in sub-Saharan Africa.

One thing is certain though, even without the strict implementation of highly efficient agricultural techniques, without the need to lock up each animal into a cage as we do here in the West, without the need for mass irrigation,... Africa still stands to become a large biofuels producer. Even when the worst-case climate change predictions are taken into account.

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