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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, October 20, 2006

Not investing in biofuels may result in water scarcity for millions

Just when an anti-biofuels advocate writes that biofuel production might put stress on water resources (previous post), a new report from the Christian development agency Tearfund indicates that by 2050 millions may face water scarcity and drought because of climate change. In this context, one must now say: not investing in biofuels might result in an unprecedented water crisis affecting millions.

It is easy to make the case for biofuels with this in mind:
  • climate change must be tackled now, or we are getting beyond a 'tipping point' after which mitigating global warming becomes much more difficult and certain effects will become irreversible, and disastrous (Blair at the EU energy summit held today in Lahti repeated the doomsday message once again: "act now or the world faces climate catastrophe")
  • of all greenhouse gas emitting sectors, the transport sector by far contributes most to CO2 emissions
  • of all the renewable and carbon-reducing technologies only biofuels represent an immediate, cost-effective and infrastructurally realistic substitute to fossil transport fuels (wind, solar and nuclear do not deliver a high energy density liquid fuel suitable for transport); only biofuels produced in the South from high-yielding crops that do not destroy rainforests, have high CO2 reduction balances (such as cassava, sugar cane, jatropha, sweet potato, sorghum...)
  • if we don't fight climate change now, millions will face water scarcity and drought
  • conclusion: we must invest in biofuels in the South now, to prevent a global water crisis of unprecedented proportions
The Tearfund report, Feeling the Heat [*.pdf], urges donors to ramp up assistance to poor countries to adjust to drought quickly. Other charities are likely to make similar pleas in the run-up to next month's UN Climate Summit which begins on 6 November in Nairobi, Kenya.

Citing research by the Oxford academic Norman Myers, Tearfund suggests there will be as many as 200 million climate refugees by 2050:
:: :: :: :: :: :: :: :: :: :: ::

Areas where people are already on the move to avoid climate excesses include, the report says:

* Brazil, where one in five people born in the arid northeast region relocates to avoid drought
* China, where three provinces are seeing the spread of the Gobi desert
* Nigeria, where about 2,000 sq km is becoming desert each year

Attributing the movement of people to climate impacts is, however, a difficult issue, with many other factors including economic opportunity behind decisions to relocate.

One of Britain's leading climate scientists, Sir John Houghton, said the severity of climate change was getting through to world leaders "at a level of rhetoric", but not yet at a level of action.

"There were promises made at the G8 summit and at the last UN meeting in Montreal about money for adaptation," he told the BBC News website, "but I understand that very little of that has come through."

Sir John, who contributed a foreword to the Tearfund report, said water shortages would be the biggest climate threat to developing countries.

"It's the extremes of water which are going to provide the biggest threat to the developing world from climate change," he said.

"Without being able to be too specific about exactly where, droughts will tend to be longer, and that's very bad news. Extreme droughts currently cover about 2% of the world's land area, and that is going to spread to about 10% by 2050."

Overall, he said, climate models show a drying out of sub-Saharan Africa, while some other areas of the world will see more severe flooding.

Sir John is a former head of the UK Meteorological Office, former chairman of the Royal Commission on Environmental Pollution, and co-chaired one of the Intergovernmental Panel on Climate Change (IPCC) working groups.

He is now chairman of the John Ray Initiative, whose mission is to "connect environment, science and Christianity".

The positive side of the Tearfund report is that simple measures to "climate-proof" water problems, both drought and flood, have proven to be very effective in some areas.

In Niger, the charity says that building low, stone dykes across contours has helped prevent runoff and get more water into the soil; while in Bihar, northern India, embankments have been built to connect villages during floods, with culverts allowing drainage.

More information:

BBC: Climate water threat to millions - Oct 20, 2006

Tearfund: Climate change will create millions more refugees - Oct. 20, 2006

Tearfund full report: Feeling the Heat [*.pdf]

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Why the 'water scarcity' argument against biofuels is flawed

The massive campaign against biofuels is often based on flawed arguments (such as those driving the 'food versus fuel' debate) or on strategies that consist of fusing unrelated truths into a single argument that fits a predetermined agenda. One of the latest illustrations of this technique is the argument that biofuels will deplete scarce water resources. On closer inspection, the argument bears no relation with reality. On the contrary, we will argue that biofuels production can increase access to drinking water to those deprived of it most, that is, the poor in the developing world.

Let us first listen to Fred Pearce, one of the staunchest anti-biofuels advocates, who uses the popular New Scientist magazine as a campaign platform. Pearce presented his thesis yesterday at the Sugaronline conference in Geneva, a non-scientific meeting of the Euro-American sugar industry:
  • The politics of water will become critical as demand for water from rising populations and the needs of industry increase.
  • About one billion people lack access to clean drinking water.
  • Vast quantities of water are needed to cultivate crops, with two-thirds of the world's water used in agriculture.
  • Sugar is one of the thirstiest crops in the world. Pearce estimates that 600-800 tonnes of water were required to grow one tonne of cane.
  • Part of the answer is to boost the efficiency of irrigation infrastructure.
The problem with Pearce's line of reasoning is that (1) numbers about physical water scarcity and virtual water budgets get mixed up, (2) he doesn't recognize the fact that the planet's carrying capacity can result in the production of 1500 Exajoules worth of energy by 2050, without endangering the by then increased demand for food, (3) that he doesn't take into account the fact that biofuels are produced because oil prices are high (biofuels substitute for expensive oil; if oil becomes too cheap, farmers switch to food production), and (4) Pearce doesn't see that both food (virtual water) and energy have a very low demand elasticity, which is why price decreases of one commodity allow for more spending on the other (in this case: mass-production of biofuels will lower energy prices, which results in savings that can be spent on access to water or on trade in 'virtual water'):
:: :: :: :: :: :: :: :: :: :: ::

No water scarcity in the humid tropics

Let us begin by illustrating the obvious: Brazil is a wet and humid country that faces no water scarcity whatsoever. Strangely enough, in such a wet region, there are many people without access to clean and safe drinking water. But this is not because sugarcane catches the rain before they do. The reason is to be found elsewhere: there's no water infrastructure that brings clean water to them. More importantly, social inequalities are the main cause of people's lack of access to clean and safe water (poor people cannot afford it). Not agriculture's withdrawal of water.

The situation in Central-Africa illustrates this point even better: this vast humid region's agriculture sector only withdraws 0.05% of its entire renewable water resource [FAO Aquastat]. And still, many people there don't have access to clean drinking water. This indicates that not agriculture's or biofuels' withdrawal of water is the cause of the lack of access, but again, lack of infrastructure, problematic economics, bad governance, and a lack of social justice are.

So when it comes to solving this problem, we think the following line of reasoning does makes sense: the sugarcane farmer in the tropics should produce biofuels, to boost the local economy (as has happened in Brazil). The local poor, who do have plenty of access to water, but not to clean drinking water, would immediately benefit. A boosted economy (provided the wealth is distributed more or less fairly), will result in improved access to clean drinking water to those deprived of it. The state would spend less on oil imports, and can invest money in building infrastructures. In short, biofuels production enhances access to drinking water for the poor.

Virtual water and the demand elasticity of food and energy
But of course, the picture is more complex. Pearce takes global figures ("a billion people don't have access to drinking water") and then, in a strange turn, claims biofuels could worsen the situation. Let us first say that, theoretically, there is enough land and water available to produce 1500 Exajoules worth of bioenergy (7 times the amount of oil used today on the planet), without endangering the food security of people, and without threatening fragile ecosystems (IEA Bioenergy Task 40).

So there is no problem with the theoretical production potential. The planet has enough carrying capacity to meet the population's growing demand for food and fuel. The question is: will these resources be distributed fairly and equally?

Of the one billion people Pearce mentions, a great percentage don't have access to clean and safe water because of unfair economics, not because there is no water in their area. But another part of that "one billion" doesn't have access simply because they use more of it than their resource base allows them to (either their population is growing too big, or they live in arid regions). They face physical or virtual water scarcity. Now it is the latter group that deserves focus. They cannot grow enough food themselves, and must rely on imports. And this is how they get connected to a country like Brazil.

The question is: should Brazil refrain from using its agriculture to grow fuels, and instead produce more food so that those who face (physical) water scarcity can import enough of it without spending too much on it?

The answer is: it doesn't matter, both choices result in the same outcome.

Pearce forgets that both food and energy have an equally weak demand elasticity. They are very inelastic commodities. This means they are both crucial to an economy as a whole and to individual households. So for a State that imports food (because it faces water scarcity and cannot grow enough of it itself), it doesn't matter whether food or energy prices decline. Mass-produced biofuels will result in lower energy prices and imply that a state spends less on imported oil; individual households spend less on energy. The savings they make can now be spent on importing food, or in the case of individual households, on buying access to clean drinking water.

Food and energy have an almost equal demand inelasticity. This is why the debate about water depletion and food versus fuel makes no sense. Biofuels produced in the South (where water and land are abundant) result in lower energy prices (both at home, and on the global market), which results in more leverage to tackle the problem of water scarcity.

The reality of Peak Oil
On another note: the case in favor of biofuels gets strengthened if Peak Oil were to be knocking at the door. If the global decline in oil production starts, it will see a rapid reduction in output of some 3-4% per year. Now if this were to happen, there is only one immediate substitute that can prevent a collapse of the global economy, and that is biofuels.

Biofuels production could be upped rapidly at a pace of 3-4% per annum. The result would be rising food prices, but this is the opportunity cost we face. If we were not to invest in biofuels, and Peak Oil were to arrive, the entire global food distribution system (which is entirely dependent on abundant and cheap fuel) would collapse, resulting in far higher food prices. The collapse of this trade chain would result in far higher 'virtual water' prices too, for that matter.

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Putin's coming to dinner: European energy priorities headed the wrong way

The EU is dependent on Russia for 25% of its gas and 25% of its oil. Conversely, sales of raw materials to the EU provide most of Russia's foreign currency and contribute to over 40% of the Russian federal budget. In October 2000, the EU and Russia agreed to start an Energy Dialogue (dossier) dealing with issues such as security of supply, energy efficiency, infrastructure (e.g. pipelines), investments and trade.

This dialogue is now reaching a highpoint, with EU heads of state attending the Summit in Lahti, Finland, today. And Russian President Vladimir Putin is coming to dinner. The 'lively' dinner debate looms on the Union's energy relationship with Moscow and the murder of independent journalist Anna Politkovskaya on 7 October 2006 underlining accusations of his country’s poor human rights record. Lack of progress on actions against climate change, both on Russia and the EU's side, takes center stage as well.

EU leaders are hoping to present a united front in calling for an equal energy partnership with Russia, but Moscow remains intransigent in its refusal to sign up to the transit protocol of the energy charter treaty, which would give third parties access to the pipelines of Gazprom, the Russian energy group.

European diplomats in Brussels have expressed concerns that the summit in Lahti could become a show of European disunity in regard to its relations with Russia, which has signed bilateral gas deals with several European countries such as Germany, which has been criticised for its quick deal with Russia to build a gas pipeline under the Baltic that bypasses EU member Poland and plugs straight into Germany.

European diplomats have said that President Putin is unlikely to accept criticism of Russia and “would not take lectures from the Europeans in regard to human rights”, which is likely to lead to “very lively” discussions.
New member states from Eastern Europe favor a much tougher stand - Finland is also likely to raise the matter of tensions between Russia and Georgia, as well as the subject of the murder of journalist Anna Politkovskaya.

Meanwhile, British and Dutch Prime Ministers Tony Blair and Jan Peter Balkenende will be promoting climate change as the key issue, as they warn that the world is only 10-15 years away from “a catastrophic tipping point”. But analysts have criticized the fact that Europe marginalises the issue of climate change and solely focuses on good old hard energy politics. Sending Balkenende and Blair as butlers carrying the message of global warming on a plate to Putin and the others, is seen as a weak offer. Even though Russia signed Kyoto in 2004, Putin will again not accept European interference when it comes to pushing Russia to implement the treaty. And when he sees that the EU sends only two of its leaders to send the message, he will gladly conclude that the Union is divided on the issue.

Interdependence or dependence ?
We think the Summit will once again prove that European energy rhetoric is something different than its real actions. Supposedly, the EU leaders want to use the fact that we import so much energy from Russia, as a lever to force Putin to implement political change. The key-word is 'interdependence', negotiations based on the idea that both parties stand to gain from strengthening their relationship. But in reality, the logic is the other way around: Putin thinks in terms of European dependency and will not allow his energy policies to fall prey to 'non-zero sum' game dialogues and actions. Because after all, when it comes to energy, economics and politics really are a zero-sum affair: you either have the resource, or you don't. And if you don't, you are dependent on the other party.
Therefor Putin will not easily step into to the EU strategy which ties energy consumption to demands for political change in Russia. The events of the past years have shown that the Kremlin does not shy away from radical shifts in its energy policies to suit its political agenda (e.g. the sudden shock-decision taken recently by Gazprom to block foreign participation in the exploitation of the giant Shtokman field or the evenly dramatic move by Russia to temporarily close off gas supplies to the Ukraine).

Another logic: a bioenergy pact with the South
The EU-Russia 'dialogue' is a perfect illustration of an antagonistic energy relationship in which one party really sets the agenda. Even though our vision of a bioenergy relationship with the Global South seems idealistic, in theory, it is based on an entirely different logic:
:: :: :: :: :: :: :: :: ::

Currently, European leaders can push climate change aside as a marginal issue in the name of 'realism'; security of energy supplies from Russia is far more important, they say. Even though Russia signed Kyoto in 2004, the EU will not push for the Kremlin to actually implement the protocol, again, because Putin will not accept European interference on this front. Both parties are caught in a spiral of inaction. Both parties have to perpetuate the same relationship based on petropolitics. The result is inaction on the front of climate change.

A bioenergy pact with the global south would automatically put climate change at the center of the deal and open a positive dynamic based on the emergence of a genuine mechanism that thrives on reducing CO2. As Europe imports green energy from the developing world, it would create a global market not only for bioenergy itself, but for carbon credits as well. This comes down to the creation of an entirely new market out of which positive synergies and a dynamic towards mutual adoption of carbon-neutral fuels emerge. With the arrival of such a market, other countries in the South would be prompted to adopt competitive bioenergy production.
Unlike Russia which is a fossil fuel producer, developing countries stand to gain economically from investing in carbon-neutral bioenergy (they can sell both fuel and carbon credits). Europe's effort to convince Russia to join the fight against climate change is based on an entirely different logic: Russia would have to work against its own resources (fossil fuels) and penalise itself. Obviously, that will never work.

Moreover, a bioenergy pact with the South would gradually reduce dependence on Russian oil and gas (the potential is there: over the long term, Africa alone can produce more oil and gas equivalent bioenergy than the entire world currently consumes, without endangering its own food security - see our previous post on Africa's green energy potential). This systematic reduction of dependence would also change the EU's current catch-22 relationship with Russia. The EU can use its bioenergy pact as a political weapon against an intransigent Russia. If it were to tell Putin that there's an alternative down South, that both benefits the fight against climate change, and that enhances the diversification of our energy portfolio, then Putin would lose a lot of his grip on our energy policy.

Positions on the EU-Russia energy dialogue

Some of the following quotes reveal the issues at stake at the Lahti summit:

"If Russia is not prepared to ratify the charter in its current form, it's time to start changing wordings we cannot accept," said Sergei Yastrzhembsky, Putin's aide in charge of EU ties. "There are no other options."

Finnish Prime Minister Matti Vanhanen said: "It is important for the EU to speak with one voice, stressing our interdependence in terms of energy. Russia needs our markets, we need its energy. But this relationship must be built on openness and reciprocity. The EU market is open to Russia but we expect the same openness from them."

European Commission President José Manuel Barroso: "We must address all issues: of course human rights, and of course rule of law — especially freedom of expression. We must do so with a common voice."

Jennifer Morgan, Director of the WWF Global Climate Change Programme criticises the "old-style approach in energy relations between EU and Russia for focusing on oil, gas and pipelines, which continues to dominate at the expense of renewable energy. By joining forces towards non-carbon energy, the EU and Russia could significantly contribute to the reduction of global greenhouse gas emissions, thus combating climate change. However the overall priorities of the EU-Russian energy relations seems to have gone back to the seventies when the entire debate was geared towards oil, gas and nuclear and supply pipelines".

European Liberal Democrat (ALDE) leader Graham Watson, in an open letter to President Putin, published in Russian newspapers Novaya Gazeta and Nezavisimaya Gazeta, spoke of his party’s “deep concern” that “…the killing of the prominent and independent journalist, Anna Politkovskaya on 7th October is one of dozens of high profile assassinations of media personnel, nearly all of which go unpunished and unresolved, leading to a situation which is stifling freedom of thought and opinion in Russia.” "The next generation agreement between the EU and Russia," Watson added, "must be based on a stronger common understanding of democracy and human rights."

More information

Euractiv: Guess who's coming to dinner? - Oct. 20, 2006
Euractiv: EU-Russia Energy Dialogue - dossier
Finnish EU presidency: Lahti informal meeting of Heads of State or Government
BBC News: Papers predict a rough ride for President Vladimir Putin - Oct. 20, 2006
International Herald Tribune: Putin could make for uneasy dinner guest at summit with EU leaders - Oct. 20, 2006

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