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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, November 22, 2006

Analysts see Africa as a potential global leader in biofuel production

World Politics Watch, a UK-based foreign policy and national security publication, recently interviewed a number of energy analysts, agricultural economists and biofuel industry players, and most of them agreed that sub-Saharan Africa might become a dominant producer of renewable bioenergy, to the benefit of millions of the continent's rural poor. Readers of Biopact will notice that these analysts rehearse many of the points we have been making on the biofuels potential of the South. Interestingly, and contrary to conventional wisdom, a well-known agricultural economist with decades long experience in Africa says that biofuel production will increase the food security of poor farmers.

For a number of reasons, including an agricultural sector that enjoys relatively low land and labor costs and that has tremendous potential for productivity increases, many see sub-Saharan Africa as well suited to pioneer the development of biofuels as an alternative energy source for the continent and the world as a whole. Scientists have calculated that under optimal conditions, the continent could produce some 410 Exajoules of renewable bioenergy, sustainably, without threatening the food security of growing populations, and without damaging the environment, including rainforests and other fragile ecosystems. 410 Exajoules is more energy than the entire planet consumes today from all energy sources combined (coal, natural gas, oil, nuclear). The technical potential is clearly there (earlier post).

Significant biofuel production could mean a boost for sub-Saharan economies by both providing new income to the state, to millions of the rural poor and by reducing the continent's reliance on imported fossil fuels.

Oil dependence, a heavy economic burden
For many countries in Africa, oil makes up a significant portion of gross imports, a drain on their economies. In Kenya, for example, the cost of oil imports are equal to the value of its annual trade deficit. Countries like Namibia, Ghana, and Zambia are in a similar situation. Biofuel could change this equation, say its advocates. "In the long run, this money will stay in the country and will end up in the hands of the growers and manufacturers," said Gregor von Drabich-Waechter of Green Power East Africa Ltd., a biodiesel producer in Kenya.

"Energy is Africa's and the world biggest debt burden. Once we are out of this cycle we are in a better position," said Edward Okello of Biodiesel Technologies, another Kenyan company specializing in automotive biodiesel. Biofuel could not completely replace petroleum fuels, says von Drabich-Waechter, but could offer the continent an alternative that, in addition to being environmentally friendly, would improve farmers' lives.

Proponents agree Africa is well suited for biofuel production because of its vast uncultivated land base, its low-cost agriculture and because the majority of Africans makes a living off the land and would gladly see their incomes increase by cultivating energy crops:
:: :: :: :: :: :: :: :: :: :: ::

Fifty-five percent of the African population ekes out a living from agriculture. Agriculture contributes 40 percent of the continent's gross product and 60 percent of its export income. However, the agriculture sector so far has not succeeded in transforming the lives of African farmers.

Investing in agriculture
For one reason, African produce is usually in unprocessed form, which commands lower world market prices. In addition, African agricultural productivity is low, averaging one ton of produce per hectare per year, in comparison to three and five tons in Asia and Western Europe, respectively.

According to the African Union's New Partnership for Africa's Development, Africa's agriculture sector would require an investment of $251 billion to begin transforming living standards on the continent.

Actis, a British investment fund operating in emerging markets, is keen to be part of the solution. The company recently announced a $1 million African agriculture fund, most of which will be invested in the production of biofuel.

Actis Partner Michael Turner confirmed that the project is targeting a trend toward increased global biofuel consumption, driven by initiatives such as the European Union's goal to switch 20 percent of its fuel consumption to biofuel by 2020.

"This is a great opportunity," said Turner. "The EU has no vast lands to grow the required crops from which this fuel will be extracted. We believe Africa has the potential to be a major producer."

Brazil's success with biofuel production could be a model for Africa. According to a United Nations Development Programme study, ethanol production in Brazil has helped reverse migration to large urban areas and increased the quality of life for rural Brazilians.

While many factors work in favor of biofuel production in Africa, some emphasize that there is a need to ensure the continent's rural population benefits from the nascent industry.

Multinational corporations are already investing in Africa's land and, with their ability to influence policy, individual farmers risk being left out of the production process, Okello says.

African oil: blessing or curse?
Meanwhile, the development of the oil industry in Africa continues apace. Nigeria, Algeria, Libya, Angola and Egypt are Africa's top oil producers, accounting for 80 percent of the continent's production, according to the Africa Development Bank. Joining them are Sudan, Uganda, Equatorial Guinea, Gabon, Chad, and Cameroon, among others, who have commercially viable deposits.

But while some African countries, like Libya, will enjoy an oil boom for the next 70 years, others, like Angola, have less than 20 years worth of reserves.

Catholic Relief Services (CRS), a humanitarian relief organization, estimates that sub-Saharan African governments will receive more than $200 billion in oil revenues over the next decade. But historically, petrodollars have not helped developing countries reduce poverty and oil revenues have actually exacerbated the problem in many cases, the group warns.

Most of Africa's oil producing nations have failed to diversify their economies or prepare for a post-oil future, and they are characteristically authoritarian regimes.

Boost to the rural poor
The big question is whether biofuel could help change this. Agricultural economist Peter Kegode, an authority on sub-Saharan Africa's agricultural development strategies, believes so. Because African farmers will be key raw material suppliers in a biofuel industry, and because most of the continent's farmers are small scale, the industry's benefits will be widespread, he said. "Farmers will also have an option of using their harvest to boost food security or sell to energy producers, whichever pays better," he said.

What's more, because the sector will have wide participation, corrupt governments won't be able to misappropriate revenues, as they have historical done with oil proceeds. "Because the politicians will not directly access this money to carry on their authoritarian adventures, you can expect [demands] for better governance from economically empowered citizens," said Rachael Achieng, a Nairobi-based political scientist.

More information:
-World Politics Watch: Africa seen as potential leader in biofuel production - November 21, 2006
-Biopact: A look at Africa's biofuel potential - July 30, 2006
-The New Partnership for Africa’s Development (NEPAD), website.

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Brazil opens first hybrid ethanol-biodiesel plant

Brazil's recently reelected president Luiz Inacio Lula da Silva showcased his country's prowess in the biofuels industry today when he opened Barralcool, the world's first integrated biofuels plant that will produce cane-based ethanol and biodiesel from oilseeds in a highly efficient and streamlied process.

Brazil, with its huge agricultural potential, has for decades had the world's most advanced biofuels market. After the oil crisis in the early 1970s, it launched the ProAlcool ethanol programme to lighten dependence on crude imports. Now that this program has become a major success, the country is embarking on the development of an innovative biodiesel program (ProBiodiesel) in which poverty alleviation and rural development take center stage.

The Barralcool plant is located in the city of Barra do Bugres, in the interior of Mato Grosso state, one of Brazil's poorest regions. Mato Grosso has been producing ethanol from surrounding cane fields for over 20 years, bringing employment to thousands. The 27 million reais (€9.6/$12.5 million) integrated biodiesel plant, built by Dedini, will prodive many more jobs, and has the following capacities [*.Portuguese]:
  • an ethanol to biodiesel production ratio of roughly 3 to 1, with the production of 150 million liters of sugarcane based ethanol, 57 million liters of sunflower and soybean based biodiesel and 40,000 tonnes of raw sugar per annum
  • the amount of energy contained in the liquid fuels that will leave the factory each year is around 900,000 barrels of oil equivalent
  • the plant will co-generate electricity and steam to power its own operations, and feed excesses into the national grid
  • besides producing separate biofuels, the plant will also mix ethanol and biodiesel in new formulations; recently, 1700 buses in São Paulo have started utilizing such blends and several trials are underway to find suitable blends for different engine technologies
  • in a first phase, the project will involve the cooperation of 14 municipalities and will bring new jobs to 600 rural families
Commenting on the benefits of the integrated plant, Ronaldo Knack, president of consultants BrasilAgro, which will host the International Agroenergy and Biofuel Fair in Brasilia on November 27-29, says: "Having the two plants together will provide major infrastructure and energy savings." Brazil's sugarcane ethanol already has a very positive energy balance (of around 8 to 1, with some producers achieving a balance of 11 to 1) and analysts expect this balance to become even stronger in the near future due to technological advances, equalling or even surpassing the energy balance of conventional petroleum production (earlier post). The highly efficient integrated plant is a first demonstration of the fact that these projections are not too far-fetched:
:: :: :: :: :: :: :: :: :: :: ::

According to Paulo Gaiad, operations manager at Dedini, Brazil's leading provider of sugar-ethanol, biodiesel and cogeneration plants in Brazil, there are currently some 300 sugar-ethanol mills in operation in Brazil and another 60 under construction.

But despite the ethanol success story - based on rising demand for biofuels, as consumers worry about global warming and instability in oil exporting countries - Brazil's oilseed sector is in its worst crisis in decades due to the strong real against the dollar and high production costs. Multinationals such as Archer Daniels Midland and Bunge have closed several soy crushing plants in the past year or so.

Towards full oil independence
With the advent of the ProBiodiesel program "the worst of this crisis is now over," President Lula told hundreds of onlookers at the inauguration of the Barralcool plant. Analysts like BrasilAgro estimate that Brazil will invest over US$15 billion in bioenergy in the next five to six years:

The Lula government recently passed legislation that will mandate a 2 per cent blend of biodiesel from oilseed crops like soybean, sunflower or castor bean in all commercial sales of petroleum diesel by 2008 and 5 per cent by 2013. A few hundred filling stations already blend it. Brazil has about 14 biodiesel plants in operation and another 40 or so in construction, according to consultants Enerbio.

Now, about half of Brazil's massive cane crop has gone to ethanol production with the rest being refined into sugar. The more recent spike in world oil prices has turned an already thriving industry into a gold mine. Today, motorists can choose to fill up with 100 per cent ethanol at half the price of petrol at over 30,000 filling stations nationwide or opt for petrol which is blended with 20-25 per cent ethanol. Ethanol accounts for 40 per cent of all non-diesel fuel consumption and its market share is growing.

President Lula stresses that both the ethanol and biodiesel strategies of Brazil are not only directed at local consumption, but that the growing international market for biofuels must be an equally important target. Because Brazilian plants can switch between producing liquid fuels or sugar/crushed oilseeds, the country can now play on four markets at the same time, allowing great strategic flexibility and planning: (1) the (inter)national sugar market, (2) the (inter)national oilseeds and oilseed meal market, (3) the international ethanol market, (4) the international biodiesel market. This flexibility is now available at the very level of the integrated biofuel factories of the future, of which the Barralcool plant is a first example.

Lula insisted also that "with the advent of the production of biodiesel, we [with Petrobras] are now genuinely en route towards full oil independence".

More information:
Primeira Hora: Biodiesel será um dos pilares da economia mato-grossense, diz Maggi - 22 Nov. 2006
Noticias da Hora: Primeira usina integrada de biodiesel e álcool é inaugurada no Mato Grosso - 22 Nov. 2006
Diario News: Biodiesel é uma das revoluções de um Brasil maduro e soberano, diz presidente - 22 Nov. 2006

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MBA students develop plan for biofuels in the developing world

In an interesting effort, based partly on research carried out by the Biopact, MBA students from Washington University's Olin School of Business held a practicum with the Center for Experiential Learning on the feasibility of biofuels in developing countries. The south has a tremendous technical bioenergy potential (earlier post), but utilizing it in an efficient and economic way proves to be quite challenging. Jake Schnarre, Kevin Lehnbeuter, Stephen Gabster, Keith McLamb and Tom Stehl joined forces in the spring to work precisely on these challenges. The MBA's never imagined that their efforts would make such a big impact on their lives - and possibly the lives of many others.

The practicum was sponsored by the World Agricultural Forum (WAF), a non-profit organization that examines domestic and global agricultural policy, and helps to implement solutions through policy and practice. Working on an ethanol-related project appealed to some of the students because of their backgrounds in agriculture and science.

"My undergraduate degree is from the University of Missouri-Columbia in agriculture systems management," said Schnarre. "Plus, I grew up on a fairly large farm in northern Boone County. In my professional life, I work at Emerson Electric and don't get a lot of chances to utilize the skills from my original degree. I thought the practicum would give me a chance to do something in that field."

Each participant brought unique skills to the project that helped it succeed. In addition to Schnarre's agricultural background, Lehnbeuter has an undergraduate degree in plant genomics; Stehl, had already spent a good deal of time working in developing countries; McLamb is scheduled to graduate in 2007 with a dual degree in law and business; and Gabster earned a B.A. in 2006, majoring in political science and finance.

The first meeting about the project that the students had with World Agriculture Forum board members was overwhelming, said Lehnbeuter.

"They wanted to use biofuels as a catalyst for economic growth. But they piled up their expectations from there. They talked about water, about health care — they covered the gamut about the current situation in the developing world and how they wanted to use biofuels to save the world," Lehnbeuter said:
:: :: :: :: :: :: :: :: ::

The WAF had visions of building 50-million-gallon ethanol-processing facilities like those in the United States. The students understood the goal, but also realized that it might be a little unrealistic.

"There are a lot of underdeveloped nations and countries that don't have the infrastructure and ability to implement large scale projects like that," Schnarre said.

The task seemed daunting, but the practicum team dove into the project and began to research the feasibility of building ethanol plants in developing countries. In almost no time, they realized that ethanol is only one possibility for providing fuels in remote locations — and it wasn't the most cost-effective one. The other option comes from a plant indigenous to sub-Saharan Africa called jatropha.

Jatropha, again
The plant is primarily used as a hedge because it is very hardy and inedible. Oil can be extracted from the plant's seeds and used for generating engines, cook stoves or lamps. Compared to the yield soybeans must generate to make ethanol, jatropha is a bargain. One hectare of jatropha can produce 1,800 liters of oil (or 190 gallons per acre). One hectare of soybean oil has a yield of only 446 liters.

The oil could be used to run a multi-function power unit, a very rudimentary generator that could run eight hours a day for a year on just nine hectares of jatropha (see: Biopact members' introductory text "The Jatropha Energy System: an Integrated Approach to Decentralised and Sustainable Energy Production at the Village Level" [*.pdf]).

"Once they have the power to run the engine, there are three or four other tools that they can power," Schnarre said. "And with those tools there is a series of benefits that result. The grain mill will be labor-saving. The generator can power lights or a water pump to clean water. The generator would also power the oil expeller for extracting more oil from the plant."

If each village has its own crop of jatropha it could run its own generator, which would relieve dependence on outside sources of fuel. The team suggested that if organized correctly, villages could set up regional cooperatives to run and utilize the multi-function power unit. The benefits of such a system would improve the quality of life for people in village. Work hours for cottage industries could be expanded and the village could sell excess oil to other cooperatives. The generator could improve health care by pumping fresh water or powering refrigeration to store medicine.

"The individual communities would need to purchase the power unit," Lehnbeuter said. "They need to have a stake in the success of the unit, and the use of the generator has to be operated like a business or a small co-op. It would be owned by the community and people would put their own money and effort into it so they could enjoy the benefits of it."

In late April, the practicum traveled to Washington, D.C., to present their findings to the World Agricultural Forum. Their audience included dignitaries from the United Nations, current and former executives from American companies such as Anheuser-Busch, Monsanto, Novus International and Bunge North America, as well as firms based in Morocco, Costa Rica and Argentina.

Don Kloth, retired vice president and group executive at Anheuser-Busch, is a board member on the World Agricultural forum who worked closely with the business school team. He said the students did a remarkable job on a challenging project.

"They took an enormous amount of data and boiled it down to something that we could continue to work on," Kloth said. "I had never heard of jatropha before, but now a lot of people are talking about it. We are eager to do our part to make people more aware of it, and stimulate others to view the plan as an opportunity to become a catalyst for rural development."

Because the organization's function is to provide a neutral venue to discuss improving agriculture in developing countries, the WAF won't be making an investment in the process of turning jatropha nuts into oil. However, based on the business school students' work, the forum is building a model to demonstrate how the oil is extracted and then used to power a generator. Once people see what the oil from jatropha can do, Kloth said, he expects that philanthropic groups and investors will be interested.

The forum has kept Schnarre on board to continue working on the project, but all of the students said that the experience will help them in their future endeavors. Tom Stehl, who is working on his joint degree with social work, said the project gave him perspective on what kinds of jobs he wants to do in the future.

"The fact that I can say that this project is actually happening and improving people's lives leaves me with a sense of great satisfaction and happiness, Gabster said. "The fact that we were able to present to and meet with the type of world leaders who can actually effect real change still amazes me."

We wish to congratulate the students on their work. It has opened the eyes of some high profile people who have the means to influence policy makers, entrepreneurs and non-governmental organisations alike. It must be said though that, since the 1990s there already has been a lot of work on jatropha in West-Africa, carried out by both major institutions like the UNIDO and UNCTAD and by small organisations (like Biopact). Getting the news of this work heard in Washington remains a good thing to do, though.

It is now a matter of taking concrete steps towards coupling developed nations' energy and development aid policies to those of the developing world, so that a 'Biopact' of sorts can emerge.

More information
Rademakers, L. and Venturini del Greco, G. "The Jatropha Energy System: an Integrated Approach to Decentralised and Sustainable Energy Production at the Village Level" [*.pdf]), august 2005, presented at the XIVth European Biomass Conference, Paris.

Henning, R. Combating Desertification: The Jatropha Project of Mali, West Africa, Arid Land Newsletter, 40, Fall/Winter, 1996.

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Indonesian delegation visits Austria to learn about modern bioenergy

The Austrian Federal Economic Chamber (Aussen- wirtschaft Österreich) invited a delegation of Indonesian media people to Austria last month to gain an insight into that country's experiences in developing its bioenergy sector -- an area that the Indonesian government is giving priority to in an effort to reduce the country's reliance on fossil fuels. Amongst them was The Jakarta Post's Urip Hudiono who report on his trip. The tour included visits to a number of bioenergy-related projects in the Austrian capital, Vienna, and in the provinces. In an accompanying piece, Hudiono looks at which technologies Indonesia could borrow from Europe in order to leapfrog towards a modern bioenergy future.

In the late 1980s, the town of Gssing was literally a forsaken outpost at the edge of Western Europe. Bordering the Cold War's "Iron Curtain" with Hungary, the wooded area in the southern part of Austria's easternmost Burgenland state was a cul-de-sac, making it difficult for the local economy to develop. Many residents chose to move to Vienna and other cities to seek better lives.

Fortunately, all this changed when - apart from the end of the Cold War - the local community came up with the idea of building a thermal energy plant for processing waste wood from the local timber industry into heat and electricity for the district, which has a population of 27,000. The idea struck a chord with the Austrian federal government, which - having learned its lesson from the 1970s oil crisis - has consistently encouraged the use of alternative energy.

So, in 1991 the plant was built, with the federal government providing 40 percent of the €11 million (US$13.2 million) cost. Together with the European Union, it also set up the European Center for Renewable Energy (Europäisches Zentrum für Erneuerbare Energie) to manage the project and develop other sustainable energy resources. In 2001, another plant was built - this time a biogas one - of which 60 percent of the €20.3 million construction cost was subsidized by the federal government.

The two plants can produce a total 4.5 megawatts (MW) of electricity for the heating of homes in the district, and supply 2MW to Austria's national grid at a competitive price of 16 eurocents per kilowatt-hour (kWh). Pilot projects in state-of-the-art photovoltaic and fuel-cell power generation technology, as well as biomass-to-liquid (BTL) fuel, have also commenced recently.

"The community's cooperation in the bioenergy project has brought tremendous added-value to the region. Apart from now being self-sufficient in energy, the local economy has also developed agroindustry and ecotourism sectors," project coordinator Alexandra Kopitar said. In concrete terms, Gssing has seen 50 new companies established, 1,000 jobs created, and 13 million euros in annual turnover produced by the project.

Just some 50 kilometers to the southwest, at Mureck on the Austrian-Slovenian border in the state of Styria, a similar bioenergy success story has unfolded:
:: :: :: :: :: :: :: :: ::

Pinched by rising fuel prices, local farmers there resorted to using their rapeseed crops -- the oil from which was formerly used primarily for animal feed and vegetable oil production -- to produce biodiesel to fuel their tractors and to serve as heating oil. An 8.4-million-euro biodiesel plant was built in 1989, with half of the cost being paid for by the federal government.

The Steierisch Energie und Eiweiáerzegung Genossenschaft (SEEG) plant now produces up to seven million liters of biodiesel per year, after an upgrade in 1993 enabled it to process used cooking oil collected from households in the district. This is more than enough to supply the needs of the local public transportation bus fleet. Its sister 6MW Nahw„rme biogas plant and the 1MW ™kostrom power plant -- built in 1998 and 2003, respectively -- further expanded the SEEG into a bioenergy industrial complex of its accord, providing most of the district's heating and electricity needs.

Putting it in figures, Mureck saves nearly 1 million euros in fuel costs each year, and prevents the addition of another 13 million kilograms of carbon dioxide to the global warming problem, thanks to its bioenergy plants.

Gssing and Mureck are only two examples of Austria's thriving bioenergy sector, with many other rural areas in the nine-state country running either biogas or biodiesel plants of their own. The result? Austria's 83,000 biomass installations and 13 biodiesel plants come just behind its hydro and wind-power sectors in contributing to the country's energy mix.

So what tips can Indonesia -- which recently unveiled an ambitious plan to develop its bioenergy sector -- learn from Austria, which, like many other European countries, has resorted to biomass and biofuels to diversify its energy sources, while simultaneously helping clean up the environment?

The Indonesian government wants to see 17 percent of the nation's energy mix come from renewable resources -- including bioenergy -- by 2025, thus reducing the country's costly dependence on oil. It is hoped that this will be achieved through the use of 6 million hectares of land across the archipelago for cultivating biofuel crops -- particularly oil palm, jatropha and sugar cane -- and the construction of 11 biodiesel and a number of biomass plants by 2010.

As additional benefits, the government sees increased investment, export revenues and some 3.5 million additional jobs being produced by the bioenergy projects.

Energy and Mineral Resources Minister Purnomo Yusgiantoro discussed Indonesia's plans with Austrian bioenergy industry players during a recent visit to Europe, seeking to drum up investment in the sector.

Indeed, investment and financial support are crucial if one looks at the examples of Gssing and Mureck. Austrian industry players pointed out, however, that the cost of such investments in Austria was much higher due to Europe's higher raw material, labor and construction costs, adding that such costs would be significantly lower in Indonesia.

The Indonesian government is planning to offer a number of bioenergy development projects as public-private partnership schemes. These are expected to require some Rp 100 trillion (US$10.8 billion) in investment. The government will also set aside some Rp 13 trillion to subsidize the repayment of interest on loans for biofuel-related ventures.

The government could also combine Indonesia's program for the building of biomass and biodiesel plants with its recently launched National Empowerment Program, which provides funding for locally initiated infrastructure development projects in rural areas.

A firm commitment to all this, and an integrated strategy mapping out how the bioenergy sector will be developed are essential to the success of the government's program, along with clear pricing mechanisms and fiscal incentives for investors.

In Austria, a combination of technology and econometrics is applied to every bioenergy project to ensure its efficiency and feasibility, with the federal government providing supporting policies to ensure sustainability.

Excess power produced from biogas plants, for example, is fed into Austria's national grid at prices that are competitive yet realistic in allowing projects to break even within a maximum of 10 years.

Austria's federal government leaves biofuel prices to the market, but encourages the existence of a sustainable market for rapeseed oil to serve as a buffer against instances when crude prices decline, thus making biodiesel less competitive. The federal government also provides tax incentives of up to 35 percent for firms conducting research and development work into more efficient bioenergy technologies.

Meanwhile, regarding strategies for the development of biodiesel plants, Werner K”rbitz from the Austrian Biofuels Institute pointed out how important it was for Indonesia to build flexible multifeed plants that produced high-quality biodiesel so as to achieve cost efficiencies over the long run.

"It's always better to invest a bit more for such plants. A 10 percent additional investment for plant construction only affects less than 5 percent of profit, as compared to price swings of the feedstock or biodiesel product," he said, thus highlighting the importance of Indonesia adopting appropriate supply and pricing strategies.

The need for secure feedstock supply was also stressed by Nurhan Ergn from biofuel research firm Energea.

"Biofuel has become an industry now, and the challenges ahead will lie in ensuring feedstock supply, rather than the processing technology," he said.

Ergn added that should Indonesia wish to export its oil-palm and jatropha-based biodiesel, the most prospective markets would be Japan and the Asian region, rather than Europe, which had already almost achieved self-sufficiency with its rapeseed-based biodiesel.

Oil palm-based biodiesel also presented problems when used in cold climates, although Ergn acknowledged the potential of jatropha, which is a non-edible crop that can be grown on non-arable land, therefore avoiding a conflict of interest with the basic human need for food.

There is growing concern in Europe, however, that Indonesia's biofuel ambitions could lead to the destruction of its remaining rain forests in order to provide land for plantations. Should this happen, then Indonesia's development of its bioenergy sector could miss its intended goals, and produce more problems than it solves.

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Austria builds world's first biogas-based biorefinery; energy and bioproducts from grass

In a world's first, the government of Upper-Austria (Oberösterreich) and a conglomerate of academic and industrial partners have launched [*.German] the construction of a unique biorefinery in which grass will be converted into biogas and high-value bioproducts. The pilot plant, which is being built in the city of Utzenaich, uses spear-point technologies which are expected to boost Austria's position in the rapidly growing global bioenergy sector and which will cut the country's reliance on petroleum products.

At the Biopact, we follow biogas developments closely, because they can be easily transferred to the South where biomass feedstocks are abundant (the use of grass makes it especially interesting in this context). Coupling biogas production to green chemistry strengthens the economics of biogas production.

The biorefining processes at the pilot plant involve three steps. Each phase results in a set of product-streams that are direct alternatives for petrochemical products:
  1. in an initial process, grass is pretreated and chemical compounds are first extracted. Freshly cut grass is dehydrated, a process during which amino-acids and lactic-acid are separated and purified. Both products have industrial uses: amino-acids are used in the pharma-industry, in cosmetics, in the production of protein-rich foods and fodder, and in so-called 'functional food'; lactic-acid is used for the production of desinfectants and solvents and in a variety of food stuffs to act as an acidity regulator; more importantly it can be used as a polymer precursor from which biodegradable plastics can be made.
  2. the resulting biomass is then used as a biogas feedstock; the biogas will be purified to natural gas quality (90% methane content). The CO2 released during this process is recaptured by the new grass grown in the following cycle, making the process carbon neutral. The purified biogas will then be fed directly into the natural gas grid and used for the production of green electricity and heat, and later on as a transport fuel if advances in the use of Compressed Biogas continue - Austria is experimenting with this.
  3. in a final step, the sludge that remains after both chemical compounds and energy is extracted from the biomass, will be used as an organic fertilizer (on the new grass stands). This closes the cycle.
Non-genetically altered bioproducts
According to project leader Horst Steinmüller (Energie-Institut, University of Linz), there is a global market for the amino-acids and lactic acid produced by the biorefinery, because they are entirely based on non-genetically altered feedstocks. In the US, both compounds are extracted from GM-soja and from hormone treated animal sources. Several markets, especially the Japanese and European market, have banned these compounds. The grass-based alternative is entirely safe, and in the longterm Steinmüller thinks that even bioplastics with a "no-GM" label will catch the competitive advantage.

The €4,6 million project is part of an ambitious bioenergy R&D program launched by Austria in 2000 and which is aimed at lowering the country's dependence on imported fossil fuels. The technologies used in the biorefinery were developed by Joanneum Research (an established authority on bioenergy R&D) and Bio-RefSys, a bioenergy firm, within the framework of a research program called "Factories of the Future". Since 1994, Austria's national industrial R&D agency, the BMVIT, has been working on biorefinery concepts and on processes to feed biogas into the natural gas grid. Up to this day, some €3 million have been invested in over 1,000 projects within the context of the "Factories for the Future" program. The biorefinery is the result of this effort.
This innovative pilot plant is another important step in our energy future and will strengthen our leadership in the sector of renewable energies. With this biorefinery, we also want to launch an offensive aimed at boosting research and development efforts for the production of environmentally friendly solvents and biopolymers. The time has come to take the pole position in this field. - Rudi Anschober, minister for the environment.
The project is financed by the national and regional governments of Austria and of Oberösterreich, as well as by a series of industrial partners. The implementation and management of the project is carried out by two state-owned energy companies, Oberösterreichische Ferngas AG and Oberösterreichische Energie AG:
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At a press conference, Eduard Mainoni, Austria's minister for Science and Technology, pointed out that "the technologies and processes used in the biorefinery have been proved to work in the laboratory. Now it is time to test them to see whether they will work on a large-scale and continuously. After two years, we will assess the socio-economics of the project and if viable, we will launch an initiative to promote the technology internationally to strengthen our environmental leadership." If successful, the project will be replicated and bring employment opportunities in a series of sectors.

Regenerating agriculture
The minister for agriculture, Dr. Josef Stockinger: "With this biorefinery we have a chance to revive the stagnant rural economy. Grasses are the raw materials; when they're harvested, the meadows are left to regenerate by themselves." With a decline in meat and milk production, Austria has seen its grasslands becoming unproductive. Studies estimate the hectarage of unused pastures to be between 100,000 and 150,000ha.

Some 500 farmers from the region will harvest grass on 15,000 hectares of land for the production of the two biochemical compounds in ten processing centres.

Towards energy independence
The innovative biorefinery has attracted considerable interest from utilities and energy companies alike, who are reacting to stronger calls from Austrian consumers for clean, renewable bioenergy. "Biogas is a very important renewable energy carrier for the production of heat and electricity, but also for use as a transport fuel. We support the development of technologies that make this energy carrier more competitive", so says Dr Leo Windter, CEO of the Oberösterreichische Energie AG. Both vice-directors of the Oberösterreichische Ferngas AG, Dr Johann Grünberger and Dr. Gerhard Siegl in unison: "Locally produced energy from biomass has a lot of potential. Upper-Austria is literally pumping the gas pedal here."

Austria's state secretary of science and technology thinks the country can aim for energy independence over the long term. "In the coming years, we will strengthen our commitment and increase our funding for research into renewable energies. This is the only way new technologies will be created that might allow us to become independent of foreign energy resources." Mainoni adds: "The use of biogas is a perfect example of this: with increased efforts it will be possible to create our own gas reserves. By feeding biogas into the natural gas grid we will be able to control our own gas consumption and cover our own supplies."

More information:
Oekonews: Grüne Bioraffinerie in OÖ: Österreichische Forschungsergebnisse werden in weltweit erster Pilotanlage umgesetzt - Nov. 21, 2006
Nachrichten: Weltpremiere in Utzenaich: Biogas aus Gras - Nov. 21, 2006
Nachrichten: Gas aus Gras: Biomasse ersetzt Erdöl - Nov. 21, 2006

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