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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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Sunday, December 03, 2006

UNCTAD assesses the impact of rising energy prices on African economies, biofuel alternatives

Experts attending a United Nations conference on biofuels say alternative sources of energy could counter the rising price of fossil fuels, which is especially burdensome for developing nations. Growing concerns about petroleum price fluctuations, energy independence, access to commercial energy and the climate change impacts of fossil fuel use have drawn substantial attention to biofuels – fuels derived from biomass – as an alternative to meeting the world’s growing energy demand and as tools to stimulate rural development in the South and provide new end-markets for agricultural products.

Uganda's ambassador to the U.N. offices in Geneva, Arsene Balihuta, says the development of biofuels has many advantages for developing countries. They may lead to lower oil prices, to better energy security and diversification of energy sources.
"Their development may lead to the contribution of the development of rural areas, especially in the Least Developed Countries. What was interesting in one of the presentations was that bio-fuels are likely to be produced in the equatorial belt of the world, where most of the bio-mass can sustainably grow. And most of the Least Developed Countries are actually found in this belt."
The U.N. Conference on Trade and Development (UNCTAD), which sponsored the three-day meeting, reports world production of ethanol from sugar cane, maize and sugar beet doubled to 40 billion liters in five years. This represents the equivalent of around three percent of global use of gasoline. Some analysts estimate biofuels such as ethanol and biodiesel could make up 20 percent of fuels consumed worldwide by 2020.

Zambian Minister of Energy Felix Mutati noted that high fuel prices keep people impoverished, despite debt forgiveness and increases in international development assistance:
"Whereas, we have had debt relief; whereas we have had an increase in the volume of aid, this has been eroded because of the increasing price of importation of fuel. In the particular case of Zambia, the annual debt relief is in the order of $150 million. The impact of the increases in price are greater than $150 million."
Impact of rising energy prices on African economies
In an earlier document prepared by the UNCTAD, entitled The Exposure of Arican Governments to the Volatility of International Oil Prices, the UN agency showed that African countries, whether oil importers or exporters, are severely affected by the volatility of international oil prices. Governments see their budget revenue and expenditure fluctuate greatly. Projects started when oil prices were high are abandoned when funds dry up, because of price falls. Oil consumers, such as transport companies, are often squeezed between the pressure of higher prices, and the potential discontent of their clients if they raise tariffs.

Farmers see their terms of trade deteriorate when transport costs increase. Managing this risk exposure is no mean task. Trying to forecast prices is to no avail: the margin of error in price forecasts is so large that they cannot legitimately be used as a planning or budgeting tool. So how should Governments deal with this large risk exposure? Traditional tools such as domestic stabilization funds have amply demonstrated their weaknesses. Compensatory finance, from the IMF or the World Bank, has rarely been available, and if provided has fallen short and come late. Other measures such as privatizing oil trade and adapting tax levels eliminate the risks for Governments, but not for their populations:
:: :: :: :: :: :: :: :: :: :: :: :: :: :: :: ::

More innovative market-based tools, such as futures, options, swaps and commodity-pricelinked loans, also have their limitations, but by and large, perform well. Access to these tools has much improved, particularly for Governments that can now use multilateral facilities. Developing country Governments and African banks and oil companies should learn about these instruments, and explore how they can be used to mitigate the negative effects of oil price fluctuations on their economies and populations.

But the most radical change - a shift from a petroleum-based to a bio-based economy - offers most opportunities for African countries in the long run.

Opportunities for the developing world and the role of international trade

The budding biofuels market presents many opportunities for developing countries where biofuels may be produced most easily and cheaply, although different countries will enjoy different opportunities and biofuels may not be the most appropriate option for all of them. International trade in biofuels and feedstocks may provide win-win solutions:

* For several importing countries it is a necessary precondition for meeting the domestic blending targets

* For exporting countries, especially small- and medium-sized developing countries, export markets are necessary to augment local demand while initiating their industries.

Nevertheless, biofuels face significant tariff and non-tariff measures that offset lower production costs, hamper international trade and have negative repercussions on investments. The biofuels market is also distorted by subsidies, loans, direct payments and grants, tax breaks and incentives. Moreover, the biofuels market is distorted by the fact that the agricultural sector in many developed countries is the largest recipient of governments´ subsidy programmes.

Potential risks and downsides
But, there are downsides and risks to producing biofuels. For example, UNCTAD says, if undertaken uncarefully, the use of land for energy crops may be done at the expense of food crops. It also may be using scarce water resources. It says growing energy crops could reduce biodiversity. Thus the overall environmental costs of biofuels have to be weighed against the environmental advantages.

Small producers´ involvement and a dearth of technological capacity are additional factors that will require careful study, effective policies and strategic assistance in order to pave a sustainable path towards bioenergy development goals.

More information
UNCTAD: Trade, development and regulatory aspects of the biofuels option

UNCTAD: The impact of high energy prices on trade and development

UNCTAD: Emerging Biofuels Market: Regulatory, Trade and Development Implications [*.pdf]

UNCTAD: Potential uses of structured finance techniques [*.pdf]

UNCTAD: Challenges and opportunities for developing countries in producing biofuels [*.pdf]

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