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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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Wednesday, August 09, 2006

Turning brownfields into greenfields with the help of biofuels

The feverish industria- lisation of the world during the 20th century has left its dirty hallmark in the form of endless "brownfiels" - polluted industrial sites the soils of which are contaminated by hazardous waste and pollution. The cost of cleaning up and re-using these countless sites is enormous. Not only the West faces high bills, but the rapidly developing global south does so even more, because of a lack of environmental standards and clean technologies. In China for example, it is estimated that up to 10% of the entire country's GDP might have to be spent on cleaning up these dramatically polluted terrains on which old industries once thrived. As we showed in a piece about mining in Africa, 'rogue industrialisation' is even more common elsewhere in the developing world, and questions abound about the capacity of future generations to invest in protecting their immediate environments. It seems like much of the developing world is copying the West's mistakes.

But there are interesting ways to clean up our past in an efficient way: brownfields could be turned into 'greenfields' with the help of biofuels. Environmental News Bits reports about a research project at the Michigan State University (MSU) that seeks to turn industrial brownfields green with a project that would grow crops for biofuels which could bioremediate the polluted sites.

Kurt Thelen, MSU professor of crop and soil sciences, is leading the investigation to examine the possibility that some oilseed crops like soybeans, sunflower and canola, and other crops such as corn and switchgrass, can be grown on abandoned industrial sites for use in ethanol or biodiesel fuel production. One of the project's partners is NextEnergy, a nonprofit organization that supports energy technology development.

Thelen: "Right now, brownfields don't grow anything. This may seem like a drop in the bucket, but we're looking at the possibilities of taking land that isn't productive and using it to both learn and produce."

The project now is a two-acre parcel that is part of a former industrial dump site in Oakland County's (Mich.) Rose Township. Thelen's group is looking to determine if crops grown on brownfield sites can produce adequate yields to make them viable for use in biofuel production. The crops also need to produce adequate quantities of seed oil.

A secondary objective is to examine whether the growing plants actually contribute to bioremediation, meaning they take up contaminants from the soils, without affecting their quality for use in biofuels. This might make them especially useful to grow on contaminated brownfields:

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"As the chemical engineers work on developing a national spec for B20, we'll grow the crops in the marginal areas and see if they can meet it," Thelen said. "We're replicating our study on campus on good agricultural land to compare yields and the quality of biofuel produced from an agricultural land base versus a marginal brownfield land base and see if there's a difference in yield and quality of biofuel."

The three-year study is supported by DaimlerChrysler, NextEnergy and Project GREEEN (Generating Research and Extension to meet Economic and Environmental Needs), the state's plant industry initiative at MSU. The study also is supported by the MSU Michigan Agricultural Experiment Station.

"Biofuel production is going to require a significant land base to meet future production expectations," Thelen said. "Use of marginal lands or sites not preferable for food crops is a good idea. We'll be looking at whether it is something that might offer multiple benefits."

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Argentina's air force tests and develops "bio-jetfuel"

Not long ago, we reported about progress made in the development of biofuels for airplanes, the last great green fuel challenge, and today, Argentina's Air Force not only announced its plan to develop "biokerosene", but actually demonstrated its use.

The plan foresees a "bio-jetfuel" containing 80% "Jet A1", a special kind of kerosene, and 20% biodiesel obtained from soy or rapeseed. A first actual demonstration of a military aircraft - a C-130 Hercules - using the new fuel was given today at a military base near Buenos Aires.

The test showed that the turbines of the Hercules operated equally well with the new "bio-jetfuel" as with "JP1", the fuel it normally uses and which also powers civilian airplanes.

Eduardo Selles, chief engineer of the Departamento de Innovación Tecnológica de la Fuerza Aérea Argentina: "Argentina is pioneering the development of this biofuel and so far we are the only air force to have ever used this mix of biodiesel and JetA1." Selles adds that the biofuel delivers the same power to the turbines as the traditional fuel and that it requires no modifications of the aircraft engines.

Today's test was a ground test but the Argentinian airforce, together with its technical partners of the Universidad Tecnológica Nacional and the Universidad Nacional de Formosa, plans a full flight with the new fuel early next year.

As we reported earlier, in april of this year, Argentina implemented its 'Ley de Biocombustibles' which aims at a production of 800,000 tons of biofuels per year by the year 2010.

More information:
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"I feel an oil lobby rising against biofuels"

We often refer to the energy situation in small island states in the tropics (such as Tuvalu, the Dominican Republic, Ile Maurice or Hawaii) and how they attempt to deal with rising oil prices. Being island states, they're extremely vulnerable to increased energy prices, but they also offer a microcosmos showing how the transition to bioenergy may unfold and what 'energy independence' is really worth.

Today we present excerpts from an interesting interview with professor Swalay Kasenally who analyses the energy market as it relates to the Indian Ocean island of Mauritius. The original appeared in French in L'Express.
Prof Swalay has fathered Mauritius' transition to locally produced bio-ethanol but now sees more and more resistance from the oil lobby. He also talks about 'peak oil' and dismisses the doom and gloom ideas some people have about the end of the oil age. Obviously, the crisis in the Middle East features in the interview as well.

How do you see the initiatives taken here in Mauritius aimed at reducing our oil consumption?

We must continue to encourage the production of ethanol and we must keep the mixing process of gasoline and ethanol here on the island. We must urgently move towards a 20:80 formula (20% ethanol/80% gasoline). There is no need for further testing before we can commercialize the product.

The current 10:90 formula is not interesting and I feel that an anti-ethanol lobby is trying to slow things down. That is why I call on all private sector players to stop their internal conflicts and to join their forces to build an ethanol industry, which we should have had a long time ago.

Locally produced ethanol based on sugar cane molasse is competitive with oil. Molasse costs 1500 rupiah (US$ 45) per ton at the factory. We can make a barrel of oil equivalent of ethanol out of this that is cheaper than petroleum at US$ 50 per barrel. And today, oil stands at more than US$ 70.

Some people have very shallow arguments to slow down our transition to ethanol. They spread the rumor that the gasoline we import is different than that of overseas and that it can not be used for mixing with ethanol. In reality of course it's the same product coming from the same refinery. Zimbabwe has been mixing ethanol into its gasoline for over a decade and it comes from the refinery that supplies Mauritius.

What are the risks of a permanent oil supply disruption?

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Well experts and oil pessimists have been predicting the end of the oil age for over a hundred years now. Recently others have been joining these 'peak oil' circles but they don't have any new arguments.

The truth is that nobody knows exactly how much oil is really out there. Has oil production peaked? Some think so, but people who master the subject equally well are not convinced at all.

Whatever the real situation might be, the high prices we are currently facing offer reason enough to encourage the development of new technologies with which to enhance the oil extraction process when dealing with existing wells and fields.

We should also re-activate wells that were deemed to be uneconomic a few years ago. Because with oil at US$ 70, these resources become economically viable. In the region known as the 'neutral zone' in Saudi Arabia and Kuwait there are fields that have only been exploited marginally - some 40% of the oil they contain has been extracted. So there remains an interesting potential.

There are very few new reserves that are being discovered, though. For every 3 barrels of oil we consume, only 1 comes from new sources.

Currently, only the oil producing countries do the exploration efforts. New suppliers like Chad or Sudan cooperate with multinationals. However, these new production streams remain relatively small, say 15,000 to 20,000 barrels per day.
Given this situation, it is indeed time to put effort into producing fossil fuel alternatives such as ethanol and biodiesel.
The market for oil products is going to remain extremely nervous because of the political and military situation in the Middle East.

How will the crisis in the Middle East influence current oil prices?

The price is now fluctuating between US$ 72 and 76. This may well escalate to US$ 80 and beyond in the coming days, if Israel's aggression towards Lebanon draws more countries into the conflict.

Besides the Israeli-Lebanese conflict, there is still the Iranian nuclear crisis which threatens the stability in the region more than ever before. The deadlock and the conflict between Iran and the Security Council over the nuclear issue is very frightening.

Iran is the world's fourth largest oil producer. An embargo or sanctions by the UN will provoque very serious reprisals and ruin global energy security. Iran's reaction to possible sanctions may push the price of a barrel well over US$ 100. Iran has already said that it will let "Europeans die in the cold" if ever it came to sanctions. This proves that with Iran, you never know what you get. They are capable of the worst.

On the other hand, the war in Lebanon may continue for a long while. Hezbollah resists fiercely. This conflict holds the potential to drag the entire region into it, if the diplomatic efforts do not succeed quickly in bringing solutions to the problem. Permanent tensions keep the oil price at a high level. Small economies like ours are most vulnerable and bear the burden most.

Moreover, the threats by guerillas against the oil infrastructure in Saudi Arabia should not be taken lightly. It is another factor of instability.

The market for oil products is going to remain very nervous given the circumstances in the Middle East. And then we haven't spoken yet about the political and social tensions in Nigeria, which have a serious impact on global production too.

What would happen in case the situation happened to calm down?

The fundamental price of a barrel floats around US$ 40 to 50. To this, one has to add a risk premious which has to do with the geopolitical situation. But other factors pump up the fundamental price as well.

First of all, the season of tropical storms in the Gulf of Mexico is arriving. These storms present a great menace to the oil installations supplying the United States.

Currently, Europe is in the process of building energy reserves for the winter. This increase in demand can felt in the prices already today.

Thirdly, Asian refineries have done their maintenance work and are now ready to accept crude oil supplies.

Finally, the market is influenced by relatively minor incidents that may yield unexpected consequences. For example, the corrosion problem of the pipeline in Alaska has reduced output by 400,000 bpd. The effect of this single drop in supply has pushed up the price of a barrel by US$ 2. I'm just saying that the equilibrium is very fragile.

One shouldn't forget the growing consumption of India and China either. These countries keep up the price to a certain level, all by themselves. But no single economy will be able to withstand a price of US$ 90 or 100 - not even these large emerging economies. World economic growth will slow down and correct the distortions on the market.

Last but not least, there are the actions of pure speculators who influence the markets.

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Asian plantation sector booms on Indonesia-Malaysia biofuel plan

We keep tracking Indonesia and Malaysia's joint plan to each set aside 6 million tons of Crude Palm Oil (CPO) per year for biofuels and to expand Indonesia's biofuel plantation acreage by 6 million hectares (roughly two times the size of Belgium or two times the state of Massachussets).
Obviously setting aside 12 million tons of CPO from a total world annual production of 32.3 million tons (this is 40%), will have a huge impact on this market. The question is, will the expansion of the plantation area keep pace with the switch to biofuels?

Asia's largest investment bank, CIMB Securities says in a report that only half of the six million hectares allocated will be used for oil palm, whereas the remainder will be used to produce cassava, castor (or jatropha) and coconut.

The research unit adds though that Indonesia could well be on its way to meeting the six million-tonne inventory target for CPO should the three million hectares yield two tonnes per hectare - which is very likely. This should prevent a potential shortage of CPO that would arise from higher biofuel demand over time. However, CIMB Securities also said the same yield rate could also lead to an over-supply should the Indonesian government’s biofuel projects fail to take off. It said the Indonesian commitment to provide the land was seen as "favourable" for Malaysian planters since Malaysian land was becoming increasingly limited. There were also incentives that could be potentially attractive to Malaysian investors.

CIMB Securities, upbeat and "overweight" on the plantation sector over the next two years due to favourable structural changes for CPO demand, continued to favour Kuala Lumpur Kepong Bhd (KLK), Asiatic Development Bhd, Golden Hope Plantations Bhd and Kumpulan Guthrie Bhd as its top picks.

Meanwhile, another research unit said the plantation sector, despite its positive attributes, should not be trading at a premium to the rest of the market, and that biofuel was viable at the CPO price of RM1,700 per tonne only if current crude oil stayed at around US$70 to 75 per barrel. If oil prices trend downwards, so will CPO prices. Both are now thoroughly linked [see table].

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