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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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Friday, August 04, 2006

Stunning news: OPEC is beginning to fear biofuels

Quicknote biofuels potential
Interesting, fascinating and even stunning news for those who have heard of the simple, yet elegant First Law of Petropolitics.
According to Inside Fuels and Vehicles, a report from the Organization of Petroleum Exporting Countries (OPEC) shows that a 'most likely' long-term scenario for its future as a cartel is based on alternative fuels entirely displacing oil by 2050. Apparently, the strategy think tanks of one of the world's most powerful organisations are beginning to take the potential of biofuels extremely serious. At least, and we must stress this, if we can believe 'Inside Fuels and Vehicles', an industry magazine. The claim about the existence of this report containing such a prediction is repeated in Ethanol Producer Magazine.

According to the report, an official with the cartel's long-range planning group predicts that "the value of a barrel of oil in 2050 will be zero." This obviously contradicts all common economic sense, since the scarcer this essential commodity, with its very low demand elasticity, the higher its price should become - unless of course the prediction of biofuels displacing all oil were to be true. But as prices for oil decline, incentives to invest in biofuels decline as well, which would have a stabilizing effect on oil prices.
The official adds: "The trend to alternative fuels will begin to be felt by OPEC around 2020". And most importantly, the report says, a rapid and steep reduction in oil demand would reduce the effectiveness of a potential oil embargo.

Given the huge importance of petroleum in the history of the 20th century and the ever present threat of an Arab or Iranian oil embargo - on which the 'First Law of Petropolitics' is based - this is an absolutely strange and even bizarre statement made by the OPEC. Since, according to the 'First Law', the less oil available or the higher the demand and the scarcer the resource (with consequently more geopolitical tensions), the more likely the possibility of an embargo should be. But again, if the substitution theory holds true, then the strategist is right, and the 'First Law' becomes obsolete.

We are as confused as you may be. And we find the existence of such a report or this dubious admission hard to believe. Why would OPEC play such an open game? It has no interest in predicting or projecting its own decline, and certainly not in such radical terms. OPEC, known for its discreetness and opacity, would never publicly state what the report claims one of its strategist has said, - the organisation is simply too important and each single word or comma that comes out of it, is carefully scrutinized by an army of hyper-sensitive investors, businesses and policy makers. Even such a long-term prediction as the one supposedly made by one of the strategists, would have serious consequences for the long-term investment strategies of other energy players and investors.

Anyway, as long as we don't have any confirmation of this bizarre statement by OPEC, we remain skeptical about it - even if we are only talking about 'scenarios' and 'projections'. This story is certainly to be continued [we are in the process of ordering the report after which we can shed more light on the subject.]
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Biodiesel byproduct glycerine makes excellent chicken food

Quicknote bioenergy byproducts
Earlier we reported about how the ethanol boom implies a boost for beef production because the residues from ethanol production make a prime cattle fodder. A similar development can be seen with glycerine, the main byproduct of biodiesel production.

U.S. poultry scientists have found that glycerine can be used as a dietary supplement for broiler chickens. Glycerine - a sweet, syrupy trihydroxy molecule - is the byproduct that emerges when vegetable oils or animal fats are transesterified by methanol (or ethanol). Since the growing production of biodiesel both in Europe, the US and Asia will soon overwhelm traditional uses for the byproduct, researchers are exploring using it as an energy source in broiler diets.

In a short-term preliminary study, the scientists from the University of Arkansas found they could feed up to 10 percent glycerine to chicks up to 16 days of age without impairing performance. Diets with 5 percent glycerine supported good performance, with the feed flow rate slightly reduced at 10 percent. Neither glycerine level produced adverse effects on meat quality.

Traditionally, glycerine is used in many household and cosmetics products, most notably soap. As has often been noted, when biodiesel is produced in the developing world, local soap production from glycerine may indeed offer an interesting side-market. But it will take more novel uses for the vast excess amount of glycerine that will soon hit the market. One of those might be in the production of biodegradable plastics.

More importantly, several bio-hydrogen production processes are being developed that may use biodiesel derived glycerine as a feedstock. (Most notably the production of H2 from glycerol via a process known as Aqueous-Phase Reforming. See this *.ppt presentation.)

It is crucial to find and develop viable markets for bioenergy byproducts, in order to generate extra revenues with which to make green energy more competitive.
[Entry ends here.]
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Indonesia allots 6 million hectares for biofuels

A while ago we reported about Indonesia's massive bioenergy crash program (and its potential for poverty alleviation), which is aimed at making the vast island state with its 220 million inhabitants less dependent on fossil fuels. Even though Indonesia is still an OPEC member, its oil production has steadily declined and its population - some 50% of whom live in poverty - feels the pain of rising fuel costs, which has sparked numerous and at times violent protests.

Today, more details emerged about the land resource component of the biofuels program. According to Bernama, Energy and Natural Resources Minister Dr Purnomo Yusgiantoro said the country will offer 6 million hectares to local and foreign investors to develop plantations for biofuel which would involve a total investment of approximately €16 billion (US$20 billion). "The doors are opened not only for domestic use but also for the export as worldwide biofuel demand now is increasing because of high oil prices," he told reporters after the Kuala Lumpur Business Club Roundtable Session. He said the current increase in the oil prices had made Indonesia realise the urgent need to prepare for alternative energy and energy independence.

"Indonesia is learning. Our heavy subsidy has pushed us to use oil products intensively. We realise this is not right and we are going to substitute them with alternative energy like biofuel," he said. Despite being one of Asia's largest crude oil producers, Indonesia is a net oil importer because of decades of declining investment in exploration and extraction. A move by the administration to reduce fuel subsidies last year triggered widespread protests in the Southeast Asian nation.

"It's no more about increasing production or reducing consumption or subsidies ... it's now about a move to alternative fuels," he said.

Yusgiantoro added that Malaysia's diversified conglomerate Genting Bhd. had already approached the government for a 1 million hectare allocation for biofuel development in palm oil and sugar cane. "Indonesia is a large country and we have the land ... in Sumatra, in Kalimantan, in Papua, in other places," he said. "So, if the request is 1 million hectares, then (we can handle it)."

At present several other Malaysian companies like Petroliam Nasional Bhd and Sime Darby Bhd, were keen to invest in the biofuel sector as well.

"However, the opportunity is only for upstream activities as we have decided to give Pertamina, the state-oil company, monopoly in the downstream activities."

[Entry ends here.]
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Now or never for common EU energy policy

After the takeover squabbles and fierce debates surrounding national sovereignty issues, the EU is now facing a number of key decisions that will reveal its true resolve in shaping a common energy policy.

EU heads of state and government agreed on the basic principles of a future 'Energy Policy for Europe' at the spring summit in March. Discussions were based on suggestions presented earlier by the Commission in an Energy Green Paper. They include completing the opening of European gas and electricity markets and stepping up relations with major suppliers such as Russia and OPEC. Others relate to further boosting renewable energies, most notably biomass (see the Biomass Action Plan), energy efficiency, and research on low-carbon technologies.

But EU leaders had other problems on their minds at the summit with an ongoing wave of cross-border takeover attempts in the energy sector which they viewed as a threat to their national interest. The moves triggered protectionist reactions with France arranging a last-minute merger between Gaz de France (GdF) and Suez to counter a possible bid by Italy's Enel. In Spain, the government tried to put together a defensive merger between Gas Natural and Endesa to block a bid by Germany's E.ON and is currently still busy placing regulatory hurdles in the way of the Germany giant to discourage the move.

Competition commissioner Neelie Kroes later criticised what she described as "the outdated political rhetoric of economic patriotism in Europe". "We should be vigilant - because if a protectionist trend continues or intensifies, one thing is certain: all of us here in Europe will suffer," she said.

Let's have a closer look at the issues at stake:
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Common energy policy

Discussions on a common energy policy will continue this year, with the results of a public consultation on the Commission's Energy Green Paper due before the end of the year.

The main points of the Green Paper have already been taken up by EU leaders at their annual spring summit in March. But they insisted on protecting national sovereignty on key strategic decisions such as the choice of energy mix - including nuclear - and rejected the idea of a single European energy regulator as premature.

The consultation will give a chance to industry players and other key stakeholders to make their views heard. The results will be fed into a Strategic Energy Review that the Commission will present in on 10 January. The review will weigh different options on external and internal aspects of EU energy policy, including on the right mix of measures needed to meet the EU objectives of supply security, economic competitiveness and environmental sustainability approved at the summit.

On the external relations front, an agreement on the Energy Charter could be struck in the autumn, possibly at the EU-Russia summit on 24 November or even earlier in October. But delays in Russia's WTO accession talks could hinder the whole process.

Liberalisation of gas and electricity markets

The final conclusions of a competition enquiry into the EU energy sector will be published by the Commission in December.

The draft conclusions, published in February, confirmed fears by Brussels that former state monopolies were keeping a stronghold on their home markets, allowing them to raise prices to the detriment of consumers. Competition commissioner Neelie Kroes came out vehemently against them, criticising excessive concentration in what she said reflects the "old market structure of national or regional monopolies".

Later in May, Kroes showed she meant business when the Commission launched a series of surprise inspections at the premises of major power utilities in Germany, Italy, France, Belgium and Austria on suspicion of antitrust practices and abuse of dominant market position in the gas sector (E.ON, RWE, Gaz de France, Distrigas, OMV AG were among the companies targeted). The investigations are ongoing and do not come with a specific deadline but the sense of urgency surrounding energy policy might encourage Brussels to conclude swiftly.

The final report, due in December, will test the Commission's resolve to pursue this policy and eventually bring prices down.

Biofuels for transport and CO2 emissions from cars

Encouraging alternative energy sources was also a major point to come out of the spring summit. The heat is on particularly in the transport sector where the Commission is due to review the EU biofuels directive and authorise increased blending of biofuels with petrol and diesel before the end of the year.

The EU has set itself a target of increasing the share of biofuels in transport to 5.75% by 2010. At the spring summit, EU leaders suggested that this target could be increased to 8% by 2015, pending further impact analysis.

Biofuels also offer the prospect of further reducing CO2 emissions from cars. CO2 emissions are directly linked to fuel consumption with engine efficiency and other technological improvements regularly leading to further emissions cuts.

Before year end, the Commission will revise its current strategy with the aim to reduce average emissions of new cars to 120g CO2/km by 2010 at the latest. European and Japanese carmakers have committed to cut emissions to 140g CO2/km by 2008/9 respectively.

But progress so far has been slow, the latest Commission report in 2005 saying "major additional efforts" are needed to reach the target. "Should it become clear that the commitments made are no longer honoured, the Commission will consider measures, including legislative ones, to ensure that the necessary reductions of CO2 are delivered," said Stavros Dimas, the EU environment Commissioner.

Clean coal

As part of an 'energy package' to be tabled in December, the Commission will issue a Communication on reducing CO2 emissions from coal using carbon capture and storage technology.

Next important dates:

:: 26 September 2006: Commission to present action plan on energy-efficiency

:: 23 November 2006: Energy Council to discuss:
-Common energy policy
-Internal energy market
-Energy efficiency action plan
-Renewable energy promotion
-International relations (Russia, Balkans)

:: 24 November 2006: EU-Russia summit to focus on energy issues and WTO accession

:: 12 December 2006: Commission to table an 'energy package' which is expected to include:
-The final conclusions of the sector enquiry into the gas and electricity sector
-A proposal to revise of EU biofuels directive and fuels quality directive to allow increased blending of biofuels with petrol and diesel
-An update of the Commission's strategy to reduce CO2 emissions from cars
-A Communication on clean coal focusing on carbon capture and storage technology

:: 10 January 2007: Strategic Energy Review focusing on both external and internal aspects of EU energy policy and analysing advantages and drawbacks of different sources of energy

:: March 2007: EU heads of state and governments to adopt an Action Plan on a common European energy policy


Euractiv dossier: Biofuels for transport

Euractiv dossier: Energy Green Paper: What energy policy for Europe?

Euractiv dossier: Liberalisation of EU electricity and gas markets

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Brazil 'could double' ethanol output by 2014

Quicknote ethanol potential

Brazil could nearly double its sugar cane-based ethanol production to 31 billion litres by 2014 by planting more cane and using new technology, the President of Sao Paulo's Cane Agroindustry Union said yesterday at a conference in Rio de Janeiro. Brazil is the world's biggest ethanol exporter and its production will be an essential component of Europe’s biofuels directive targets, although only 15% of its output is currently exported.

US$10 billion in investment is planned for 92 new cane mills in Brazil, and ethanol production could be doubled if only about two-thirds of these investment plans come to fruition.

At present some 5.5 million hectares in Brazil are planted with sugar cane, compared with a total crop area of 60 million ha and 300 million ha of livestock pasture. A further 100m ha could be planted with cane, primarily on pasture land, without de-forestation. Increases in ethanol yields per ha are expected from new cane varieties and new processing technology.

Brazil’s ethanol exports to the US have risen sharply over the past three months; despite a 54 cents-per-gallon import tariff, Brazilian ethanol is said to be about half the price of the US’s domestically-produced corn-derived product.
[Entry ends here.]
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