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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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Thursday, November 16, 2006

Wade tells oil firms in Africa to share wealth, or face expulsion

Senegalese President Abdoulaye Wade has warned oil firms operating in Africa that they have to share some of the huge profits they make in order to fight poverty on the continent, or else they might face expulsion. Wade's words come a day after oil giant Shell said Africa holds the key to meeting the world's energy needs. Wade also called for strategic infrastructure works on the continent to be developed and lauded China's approach to building economic ties with African states.

Oil companies operating in Africa must plough part of their oil profits into fighting poverty there or risk being expelled from the continent by unrest and turmoil fuelled by inequality, Senegal's president said. Violent situations like the one in the Niger Delta, where oil is pumped up in huge quantities, but where local people live in dire poverty, might spread to other regions in Africa if oil companies don't change their approach to exploiting the resource.

Furthermore, Wade insisted that it was "indecent, immoral" that oil majors should be raking in multi-billion dollar profits from higher oil prices while poor, oil-importing African states saw their own energy bills increase by tens of millions of dollars. Developing country economies are energy intensive and very sensitive to rising fossil fuel prices.

The 'Wade Formula'
The Senegalese leader told a recent news conference he was proposing a formula -- the "Wade Formula" -- to distribute oil profits more equitably between oil companies, African oil-producing countries and non-oil producing states on the world's poorest continent. Earlier, Wade surprised many by announcing the creation of a 'Green OPEC', aimed at promoting biofuels and bioenergy in non-oil producing African countries. One of the ideas behind the project is to create a mechanism through which African oil producing countries invest in biofuels in non-oil producing states on the continent (earlier post).

Talking about the social sustainability of oil production as being the key to energy security, Wade thinks "we can create a system where everyone wins". Facing an energy crunch in oil-importing Senegal where summer power cuts have badly hit economic activity and home consumers, the President presented his plan last month in the United States to executives of Chevron and Exxon Mobil, which have extensive operations in sub-Saharan Africa.

He said he warned them about the dangers of ignoring poverty in Africa, while reaping huge profits from its oil. "I said to the oilmen, you're free to carry on like that if you want. But in the long term, you'll be expelled from Africa," Wade said.

The Senegalese president said the societies of some African oil producers were already showing signs of violent rejection of energy companies which failed to sufficiently share the profits of oil. "It's started, bit by bit it will spread," he added:
:: :: :: :: :: :: :: :: ::

He gave no examples, but communities in Nigeria's oil-rich Niger delta have stepped up attacks and kidnappings targeting foreign oil firms and their staff, as part of a campaign to try to gain more benefits from oil production.

Wade said the U.S. oil executives had accepted his argument and were willing to see how more could be done to fight poverty in Africa, using its oil.

Strategic infrastructures
He said the continent also needed massive investments in big strategic infrastructure projects, such as a plan for a trans-continental railway linking Johannesburg in South Africa to Dakar in Senegal on Africa's northwest coast.

Other similar projects contemplated included a road and rail link stretching from Dakar in the west to Djibouti in the eastern Horn or Africa.

"The world has the means to do it, our partners have the means to do it," Wade said, saying the United States had completed such trans-continental rail projects across its own huge territory in the 19th century.

Recently, the European Union, the largest donor to Africa, launched a €5 billion fund for infrastructure development in Africa, recognizing that rail, road, waterways, ports, harbors and energy infrastructures are key to help the continent lifting itself out of poverty (earlier post).

Lauding China's approach to mutual development
Wade also urged governments in Africa not to view the growing political and economic competition for the continent's trade and resources between China and the West as a threat, but as an opportunity to reap material benefits for their countries.

He rejected comparisons with the Cold War battle over Africa in past decades between United States and the former Soviet Union, which spawned several proxy wars on the continent.

"Nobody's playing that game anymore," he said, adding that commercial competition in Africa between the West and China was positive. "It's up to Africa to manage that," Wade said.

He praised what he called China's global, multi-faceted approach to trade and cooperation which he said was based on non-interference in domestic affairs and mutual benefit.

Asked about criticism that China turned a blind eye to bad government, corruption and human rights in its growing relations with Africa, Wade said he opposed human rights violations.

But he added: "That polemic is one thing, and our economic relation with China is another".

More information:
Daily Nation (subscription), (Kenya): Oil firms told to fight poverty - Nov 15, 2006
Reuters: Senegal's Wade wants fairer oil share-out in Africa - Nov 14, 2006
Business Report: Fund Africa's poor or face expulsion, oil firms told - South Africa - Nov 14, 2006

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From coal to biomass: Electrabel's world premiere

Biomass, the oldest form of renewable energy, has been used for thousands of years. However, its relative share of use has declined with the emergence of fossil fuels. In 2002, the Belgian utility Electrabel decided to convert a 50-year old coal-fired power plant into one firing only biomass, thereby becoming a pioneer in large-scale bioenergy production. The World Business Council for Sustainable Development has an interesting overview [*.pdf] of this project. The case-study is of interest to the Biopact because Electrabel's Les Awirs plant imports biomass from all over the world, developing countries included. The development of this industry promises to open a world market for large-scale biomass trade, in which the global South stands to play a key role.

Currently some 13% of the world’s primary energy supply is covered by biomass. With environmental effects such as climate change coming to the forefront, people everywhere are rediscovering the advantages of biomass. Potential benefits include:
  • Reducing fossil carbon emissions if managed (produced, transported, used) in a sustainable manner;
  • Enhancing energy security by diversifying energy sources and utilizing local resources;
  • Providing additional revenues for the agricultural and forestry sectors;
  • Reducing waste (see the World Business Council for Sustainable Development. Biomass Issue Brief 2006)
Aims of a utility trying to go green
Based in Belgium, Electrabel, 98.62% owned by French giant SUEZ, Electrabel had 15,794 employees and revenues of € 12.2 billion (US$ 15.5 billion) in 2005. All of Electrabel’s strategic decisions take full account of environmental protection and sustainable development. In converting the coal-fired plant in Les Awirs into one firing only biomass, Electrabel aims to:
  • Manage its carbon dioxide emissions;
  • Encourage the production of electricity from renewable energy sources;
  • Obtain 300,000 green certificates that allow Electrabel to fulfill the obligation established by the Walloon Region and avoid paying penalties of some € 100 per lacking green MWh;
  • Create the possibility of offering customers green electricity;
  • Recycle the residual raw materials from forestry (the cultivation of forest trees for timber or other purposes);
  • Diversify the fuels used to supply energy;
  • Save fossil fuel reserves;
  • Increase the share of green electricity from 15% to 18% within Electrabel Group.
Les Awirs, a world premiere
In Les Awirs, near Liège in Belgium, Electrabel has retrofitted a pulverised coal power plant for using biomass as its sole fuel. This biomass is made up of pelletized wood dust that is again pulverised at the power plant. This method of producing electricity is a world premiere.

The production process comprises: production and supply of wood pellets, grinding these into wood dust on site and burning the wood dust using dedicated burners in the former pulverised coal boiler:
:: :: :: :: :: :: :: :: :: ::

The biomass used is recycled forestry/wood conversion waste which otherwise would be lost and create useless greenhouse gas (GHG) emissions.

The biomass used in the plant comes from producers worldwide, but with a particular focus on local Belgian production in order to avoid transportation costs and environmental burden.

The modification of this site has had a substantial impact on the surrounding communities and those involved in supplying the plant with wood pellets. It has:

-Created direct (local) employment on site for at least 10 years (duration for the grant of green certificates);
-Created indirect employment and economic development (forestry, wood pellets producer, shipping companies);
-Improved the quality of the local environment by reducing emissions in the air and road traffic required for waste product disposal;
-Recycled an industrial site, thereby maintaining local electricity production and creating the option to supply green electricity;
-Recycled the residual products from forestry, up to 350,000 metric tons per year;
-Avoided CO2 emissions of around 500,000 metric tons per year;
-Saved some 280,000 metric tons of coal annually;
-Added additional products to the company’s portfolio available to about 200,000 household customers (green electricity) while enhancing the company’s image (creating “goodwill”).

The plant has a net electric efficiency of 34% and is not a cogeneration plant that would have required getting access to a potential customer for the residual heat.

The market price of wood pellets today is about € 130/ton which makes it comparable to natural gas, but twice as expensive as coal.

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First generation biofuels dominated by agribusiness, 'second generation' by oil majors?

Major oil companies have been conspicuously absent from biofuels production so far, but they are set to play a bigger role with the advent of new technology that better fits oil industry skills. Global biofuels output has soared in recent years amid Western governments’ concerns about security of energy supply and global warming.

The industry so far has been led by small independent producers such as Switzerland’s Biopetrol Industries AG and by large agribusinesses such as US trader Cargill and Illinois-based Archer Daniels Midland.

The oil companies’ lack of involvement is partly due to the relatively small size of the market – around 1% of global road-transport fuel consumption in 2005, according to the International Energy Agency. Critics also point to the industry’s long history of conservatism.

But oil executives say technology is a key problem, because the current first generation of biofuels technology gives a competitive edge to agribusinesses rather than oil companies.

The simple manufacturing processes employed today mean that the key to profitability in biofuels production is feedstock costs. Access to cheap seeds and grain provides an edge, not expertise in operating complex facilities, the oil companies’ speciality.

Oil companies are developing new technologies that will allow them to create a biofuels business model that looks a lot more like the one they are used to.

First versus second generation
Biofuels come in two main forms – biodiesel and ethanol. Under simple 'first-generation' technology, biodiesel is made by mixing vegetable oils and animal fats with alcohol. Gasoline substitute ethanol is made by distilling corn, sugar cane or sugar beet.
:: :: :: :: :: :: :: :: :: :: ::

To increase use, governments in Europe and the US are bringing in rules that force oil retailers to include a percentage of biofuels in the motor fuels they sell.
This has prompted some refiners such Hungary’s MOL and Spain’s Cepsa to announce first-generation schemes.

However, a more wholehearted move by oil companies into the sector hinges on the use of technology that shifts the economic power away from the feedstock onto infrastructure.

So-called 'second-generation' processes involve thermochemical biomass-to-liquids technologies such as producing syngas from cellulose-rich material, including straw and waste lumber, which is then converted into synthetic liquid fuels by, for example, the Fischer-Tropsch reaction. Biochemical conversion technologies consist of fermenting cellulosic feedstocks by specially designed enzymes (picture: Iogen's experimental fermentor).

Oil majors used to capital-intensive projects
The feedstock costs much less than vegetable oils, and less land is needed to produce a given quantity of fuel. The capital costs are higher, but this is no deterrent to a cash-rich sector used to investing billions in single projects.

“We believe oil majors will play a significant direct investment role only in second-generation technologies,” investment bank Morgan Stanley recently said in a research note. Oil major Royal Dutch Shell Plc plans to build a biomass-to-liquids plant with German company Choren Industries, which Goldman Sachs estimates will cost around $2,000 per tonne of capacity to construct, compared with $190 per tonne for a first-generation plant Biopetrol plans to build in Rotterdam.

Second-generation techniques have the potential to produce fuel more efficiently and cheaply, which could dislodge first-generation producers, but it won’t happen in this decade.

The Shell/Choren plant and another plant Shell plans with US biotech firm Iogen Corp to produce cellulose ethanol are not expected to be up and running before 2009. At Chevron Corp and BP Plc, second-generation activities are mainly at the research stage.

Eager to become involved sooner but unhappy with the economics of first-generation technology, some European oil companies are backing a new technology developed by Finnish refiner Neste Oil. Neste’s NExBTL system can use cheaper feedstock and produces a biodiesel that can be used in current engines without being blended with mineral diesel. Neste is building a NExBTL plant near Helsinki and plans two more units with OMV and French oil major Total.

“If you want to be a leader there, you need to be a leader in technology,” said Neste Chief Executive Risto Rinne.

The NExBTL plants and traditional first-generation projects will give oil companies around 17% of the European biofuels market by 2010, said Mariano Alarco, a biofuels analyst at Goldman Sachs.

That’s a big jump from almost zero now, but Alarco expects agribusinesses to remain the market leaders with a 30% share, followed by independent producers with 20%.

From the middle of the next decade, when second-generation technology is expected to be widely adopted, the situation could change.

Western governments’ desire to reduce their reliance on imported energy should also help boost oil majors’ involvement.

The EU currently has a voluntary target that biofuels make up 5.75% of road fuel consumption by 2010. Industry players expect the target to become obligatory and to rise. France wants a 10% target by 2015, and Morgan Stanley thinks this will more than likely be adopted.

While this would create a multi-billion euro market for biofuels, oil majors are expected to keep their primary focus firmly on hydrocarbons, which analysts expect to underpin the energy mix for many decades to come.

“BP and Shell are a lot more interested in spending their money in the upstream (oil production). That’s where they make their money. That’s where they have the advantages,” Alarco said.

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First edition of the European Development Days kicks off: focus on Africa

The European Union is the world's largest donor of development aid and assistance. But being the biggest is not enough. Efficient aid and appropriate assistance, driven by a genuine commitment of citizens that goes beyond mere 'charity' is far more important. The first edition of the European Development Days (EUDEVDAYS) is exactly aimed at getting the dialogue going on how to achieve a deeper form of cooperation with the global South.

In order to make European citizens feel more committed to engage in a stronger partnership with developing countries and in particular Africa, the EUDEVDAYS organises a series of events aimed at a large public: a youth development prize, an African arts and film festival, and a series of lectures on crucial development topics. Development cooperation is a perfect lever to make young generations of Europeans outward-looking, global citizens aware of the many problems facing people in the South. It also broadens their perspective and allows them to think about global problems in a structural, historical and contextual way.

It is also pivotal for Europe to deliver more, better and faster aid in view of the implementation of the UN's Millennium Development Goals. Bringing all European professionals involved in development together will help to further improve ideas, working methods and delivery. The focus of the EUDEVDAYS is on Africa, the continent that remains trapped in poverty and distress. But the EU is stressing more and more that Africa is also the continent of genuine creativity and potential - perhaps more than any other continent.

Governance key
Poverty reduction requires more than aid money: Africa needs to pursue the strengthening of its governance systems. The Governance Forum (starting today) builds on the European Consensus on Development, through which the Commission, the EU Member States and the European Parliament reaffirmed good governance, democracy and respect for human rights as key pillars of EU development cooperation and a cornerstone of the EU Strategy for Africa.
With this in mind, a series of expert roundtables on governance will be held on topics as diverse as 'State Rehabilitation', 'Improving Governance in the Management of Natural Ressources', 'Environment rights as human rights: A long-term basis to alleviate poverty', 'Consolidation of Social Rights Turning declarations of intent into effective rights', 'Shifting Donor Paradigms' and the 'Role of the Media in Promoting Governance'. Strengthening the 'Voice of Civil Society' and 'Migration and Governance, Moving beyond the security approach' are important roundtable topics as well.

EU-Africa Business Forum
The taboo of the 1990s which held that businesses should stay out of formal development approaches is no longer valid, on the contrary. This is why the EUDEVDAYS organises an important EU-Africa Business Forum, aimed at strengthening private sector development and at encouraging European investors to consider opportunities in Africa (amongst them the bioenergy opportunity):
:: :: :: :: :: :: :: :: :: ::

The added value of an EU-Africa Business Forum is to give businesses the opportunity to help to shape policies.This forum should be attractive and unique because:

* Of the strong commitment of the EU at the highest level to listen to the private sector and to take into account private sector views and agenda while devising and implementing its own strategies in Africa. It will give the opportunity to influence both European and African public policies in order to improve the business opportunities and the business climate in Africa.

It has the potential to lead to concrete actions on the ground and be instrumental in the increase of much needed investment and private sector growth in Africa.

Objectives of the Forum:

*Influence improvements in the business and investment climate through enhanced governance, capacity building an4d policy coherence in order to render business and investment in Africa easier and more attractive.

*Giving the private sector a voice – the opportunity for dialogue between the private sector, the European Commission and the Commission of the African Union regarding Africa, including on matters concerning EU cooperation policies with the continent and thus indirectly with the African governments and regional organizations with which the Commission maintains a permanent dialogue. Furthermore, our plan is to link the Forum to the EU-Africa Troika meetings as from 2007 (see below in “Linking the Forum to a political event”). It will then be able to make its voice directly heard by other key decision makers from both the EU and Africa.

*Making Africa more attractive for the European private sector to provide a more accurate and positive image of the continent as a place for business and investment.

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