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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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Monday, December 04, 2006

ASEAN to cut dependence on conventional fuels, boost biofuels

The Association of South-East Asian Nations (ASEAN), which unites ten rapidly growing economies, will be holding its 12th Summit in Cebu, Philippines next week, with leaders from 'dialogue partners' (China, India, Japan, South Korea, Australia and New Zealand) expected to attend as well in the context of the second East Asian Summit, which is taking place simultaneously.

According to details of a draft pact obtained by the media ahead of the summit, ASEAN countries will be cooperating to reduce their dependence on conventional fuels and explore stockpiling oil as part of a sweeping energy programme. The draft is to be signed by the 10 ASEAN leaders and their dialogue partners.

The leaders will pledge to work closely to limit dependence on "conventional fuels through intensified energy efficiency programs, expansion of renewable energy systems and biofuel production and utilization." ASEAN energy ministers earlier this year called for greater cooperation to boost renewable energy so as to minimise the impact of soaring oil prices which cast a shadow over one of the world's most dynamic regions.

The pact will also call for a greater effort to minimise greenhouse gas emissions from the region, and to "harmonize standards for biofuels", the draft says:
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Furthermore, the summit will call on oil-rich countries to use the dollars they earn from rising world oil prices for "equity investment and long-term, low interest loan facilities" for developing countries that import energy.

The inaugural East Asian summit held in Kuala Lumpur last year expressed "grave concern" over the negative impact of a prolonged increase in oil prices on the region's growth prospects.

At the Asia-Pacific Economic Cooperation summit, another regional initiative held recently in Vietnam, South-East and East Asian countries agreed to create a Biofuels Taskforce aimed at studying and implementing bioenergy projects across Asia (earlier post).

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Tycoon Tchenguiz has seen the future - it's green and African

Vincent Tchenguiz, the Iranian-born property tycoon turned green energy investor, is planning to launch billions of dollars worth of clean technology funds in dozens of countries, starting in Africa. This way, he joins the ranks of Bill Gates, the Google Boys, Richard Branson, Vinod Khosla and George Soros who are all investing in biofuels, either in the US, Europe or in the Global South.

The Independent has an interesting overview of Tchenguiz's approach to the sector. The investor's business vehicle, Consensus Business Group (CBG), will announce early next year Africa's first green energy fund, called Inspire. It will be based in South Africa and have €105/$140 million to invest in environmentally friendly technologies in the continent.

Tchenguiz revealed he has already invested at least $250m in more than 100 start-up companies and funds in this sector. The colourful Iranian-born tycoon has a penchant for fast cars and planes - a model of the QSST supersonic jet, being developed by Lockheed Martin, sits prominently on his boardroom table. Yet he is making investment in green energy, once the preserve of the well-meaning brown-sandal brigade, fashionable:
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The Natural History Museum in Kensington, central London, was the venue for a glitzy party he hosted last month to launch CBG's first clean technology fund, a venture being undertaken with the Middle Eastern oil state of Abu Dhabi.

Malcolm Brinded, the head of exploration and production at Shell, a partner in the project, gave a speech. The former Tory ministers David Mellor, Norman Lamont (a business associate of Tchenguiz and his brother, Robert) and Tim Yeo were also there, sipping champagne from flute glasses among the bankers and Arab princes.

So why is Tchenguiz, who made his fortune with his brother buying property, going green? And as companies fall over themselves to prove their environmentally friendly credentials and look for something - and in some cases anything - appropriate to invest in, are these investments safe?

But before he explains his green conversion (and why he expects it to make him even wealthier), Tchenguiz has a confession to make. Under the terms of the lease, the landlord of his Hyde Park offices does not allow him to switch off the ceiling lights at night. "They're on all the time," he says. The irony is not lost on him.

A booming sector
Over the past year or so, Tchenguiz's CBG has spent about $250m buying stakes in 100 or so early-stage and later-stage technology companies, as well as environmental funds. They range from businesses involved in solar power (Solar World) and wave energy (Ocean Power Delivery) to Econergy, which makes wood-chip boilers. Most are loss-making and privately owned (sometimes with university or government backing, such as the Carbon Trust). A few, such as the bio-fuels company D1 Oils and the boiler maker Ceres Power, are listed on AIM.

Tchenguiz has also been systematically buying up as much intellectual property from universities as he can lay his hands on. "Some areas might do very well, some might do very badly, but you've got to be across all of them." He jokes that he doesn't understand the technology, but by investing widely enough, he believes he is bound to pick some winners, even if some companies fall by the wayside.

He is not alone. According to Venture Business Research, a specialist in this sector, total investment in energy technology is set to quadruple this year compared with 2004, with almost $2bn invested in the first 10 months of 2006 in Europe and North America. Companies developing biofuels, solar power, electricity storage batteries and wind farms are attracting the biggest amount of cash.

Carbon - a commodity with a future
What is attracting investors such as Tchenguiz to green energy is the emergence of a new commodity - carbon (or more specifically, licences to emit it). As governments look to tax producers of carbon (the biggest contributor to climate change) and cap their emissions, technologies that reduce emissions - for example, by generating power without using carbon-emitting fossil fuels - are in demand. Corporations can also choose to invest in clean energy projects such as wind farms or forests if they think this is cheaper than cutting their own emissions. This is slowly stimulating a market for carbon where licences to pollute can be bought and sold like any other financial derivative or commodity. The carbon market is still immature and largely unregulated, but Tchenguiz believes this will change.

He wants to apply the financial engineering he used to build up his property empire to his green investments in a radical way. Typically, he would buy property using mostly debt raised by using future rental income as security. Now, he is looking to raise debt to fund acquisitions in the green energy sector by using the income generated by these companies selling their carbon credits as security.

For example, Tchenguiz says he could buy a piece of land to plant a forest, raising the money up front to do this from other companies looking to offset their carbon emissions by buying credits that will be created by the forest. He admits the market is not sufficiently sophisticated yet to securitise carbon credits in the way that rent is securitised, but he is already planning his first such transactions when the market is ready.

Rather than being on a mission to save the planet from climate change, Tchenguiz seems more like a canny investor spotting a market trend. He admits he has no plans to put a wind turbine on his roof and looks aghast when it is suggested that people should fly less. But he is convinced that awareness of climate change and the need to combat it is not a passing fad.

His brother-in-law, he says, has a beachfront home near his own house in South Africa, in an area where beaches are disappearing due to rising sea levels. "My house is way on top above his, and I'll probably see his slippers on my porch one day," he laughs good-naturedly.

There is no doubt that, as more money chases a limited number of green energy companies, the choice and quality of investments suffer. One banker working for an investment banking boutique specialising in raising finance for technology companies reports that the phone has not stopped ringing since the publication in September of the Stern report on climate change. Many proposals are closer to fantasy than commercial viability.

Douglas Lloyd, director and founder of Venture Business Research, says the cost of investing in green energy has risen as a result of higher demand. "This 'buzz' means that management teams are demanding high valuations for their businesses in the knowledge that more investors than ever are eager to invest. And since there are many more institutional investors trawling the sector, investors have to be extremely careful."

Tchenguiz, who is spending $20m a month on new investments, agrees that some areas of the clean energy market resemble the froth of the dot-com era. He admits that if oil prices fall below $35 per barrel, a lot of investments will no longer be viable, and that continued government subsidy is essential to support the sector. He laughs when he is described as a "green" Bill Gates. But if his myriad of investments come off, in a few years he'll be laughing all the way to the bank.

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Indian engineers get contracts in Belgium for development of ethanol complex

Quicknote bioenergy economics
Fears of a one-way traffic whereby European and American companies go South to capture the biofuels market and its related opportunities, are unfounded. Reality even shows the opposite, with more and more specialised companies from emerging economies (such as India and Brazil, or even Malaysia and Indonesia) going North to invest in or to capture lucrative contracts in the booming bioenergy sector (earlier we reported on Malaysian biofuel investments in Rotterdam).

One example: Praj Industries Ltd, an Indian provider of technology and equipment solutions for alcohol and fuel ethanol, announced it has tied up with Biowanze SA, a major biofuel investor, to provide technology for a proposed bioethanol complex in Belgium. Biowanze is pouring some €200 million into the complex, one of Europe's largest, which will bring economic opportunities to 10,000 farmers. Praj's first order, which only covers the designing phase of the complex, is worth around € 2 million.

In a filing on the Bombay Stock Exchange, Praj said it would provide licence and engineering services for the core bioethanol process plant in areas such as liquefaction, fermentation, multi-pressure distillation, dehydration and vinasse evaporation for the bio-ethanol complex at Wanze in Belgium, estimated to have a capacity of 300,000 cubic meters per annum. By using Praj's technology, wheat and beet syrup to be used as feedstock at the proposed facility is expected to go on stream during the second half of 2008, it added.

Biowanze SA is a subsidiary of CropEnergies AG, a leading producer of bioethanol in Europe. CropEnergies AG is owned by the Suedzucker Group, having interests in 44 sugar and ethanol factories spread across Europe and major biofuel investments outside the EU (earlier post) [entry ends here].
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Universities vying to get BP's $500 million bioenergy R&D fund

Major oil companies are starting to invest heavily in biofuels, with Total committing over €1 billion in research, production and infrastructures in Europe, whereas BP has recently announced it is creating a US$ 500 million R&D fund for bioenergy research in the US or the UK (earlier post).

A research consortium at the University of California at Berkeley is among a handful of applicants vying to become the home of this planned biofuels research center. The consortium, led by the California Institute for Quantitative Biomedical Research, or QB3, includes the Department of Energy's Lawrence Berkeley Lab in Berkeley and the US Department of Energy's Joint Genome Institute in Walnut Creek as well as the University of Illinois, which will provide agricultural expertise.

In June, BP said it will spend $500 million over the next 10 years to establish the BP Energy Biosciences Institute, which it described as the "first facility of its kind in the world." The facility will be a dedicated biosciences energy research laboratory attached to a major academic center in the United States or the United Kingdom.

"In terms of impact, anyone who looks at what BP wants to do can assess very quickly that this will be industry-changing for wherever this lands," said Diane Leite, deputy director of QB3. "It's a significant investment in bioenergy and wherever this lands its going to be a hub for this type of research and this type of industry development around it." Leite would not discuss specifics of the application, but said she was part of a delegation that was scheduled to present the UC Berkeley application to BP the week of December 4:
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The UC Berkeley proposal is believed to be one of five being made to BP, which initiated talks with several leading academic institutions over hosting the proposed Energy Biosciences Institute. Other institutions expected to submit applications include the University of California at San Diego, the Massachusetts Institute of Technology, Cambridge University and Imperial College. BP has said it aims to launch early research programs by the end of 2007.

The institute is expected to focus on developing new biofuel components and improving the efficiency and flexibility of those blended with transport fuels. It will also develop new technologies to enhance and accelerate the conversion of organic matter to biofuels with the aim of increasing the proportion of a crop that can be used to produce feedstock. It will also use modern plant science to develop species that produce a higher yield of energy molecules and can be grown on land not suitable for food production.

Scientists from the host university and other academic institutions would staff the institute, along with a handful of specialists from BP.

"The world needs new technologies to maintain adequate supplies of energy for the future," BP CEO John Browne said in June. "Bioscience is already transforming modern medicine and we believe it can bring immense benefits to the energy sector."

BP wants the facility to not only perform research, but to train a new generation of interdisciplinary scientists to marry biotechnology with energy production. It is also expected the institute will be a point for collaboration with leading biotechnology companies focusing on applying biotechnology to energy production.

Should UC capture the institute, it could solidify the Bay Area's leadership as a center for biofuel research. It would join Department of Energy labs, biotechnology companies such as Genencor International and Amyris Biotechnologies and leading research universities already working in the area.

"It's rare that a private company will put resources on this scale into a kind of university-based investment," said Sean Randolph, president and CEO of the Bay Area Economic Forum. "It's an opportunity for the Bay Area and it plays to our strengths because of the very high and sophisticated research that is being done here and now into all kinds of alternative energy and energy-efficient technologies."

Such an agreement at UC Berkeley could reignite a public debate over the relationship between the university and industry. A controversy erupted at the campus in 1998 over a five-year, $25 million research collaboration made by Novartis around plant genomics. However, QB3 was established by the state of California with the specific mission of working with industry to the benefit of the California economy. Already QB3 has fostered several collaborations with industry including such companies as General Electric, Genentech and Nikon.

QB3's Leite said despite the size and scope of the BP proposal, she did not believe an agreement with the company would create controversy because QB3 has established several agreements with industry to date.

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E.ON Ruhrgas builds 150 motorway NG filling stations, adds 10% biogas

We have stressed many times that biogas makes for a very interesting transport fuel. In fact, according to a major European well-to-wheel study, biogas is the least polluting and most carbon-neutral of over 70 different fuels and fuel paths (earlier post). Moreover, biogas can also be produced on a massive scale, using dedicated energy crops. One German industry leader even thinks it can replace all natural gas imports from Russia by 2030 (earlier post). The German Biogas Association is equally optimistic about its longterm potential (earlier post).

Biogas can be produced from municipal, industrial or agricultural waste, but also from a range of dedicated crops such as grass species (like sorghum, sudan grass or hybrids) or specially bred 'super' biogas maize. This makes it interesting for the developing world. Production of the carbon-neutral gas can be integrated in next-generation biorefineries that yield green specialty chemicals (for such a pilot project, see here). The green gas can be mixed in existing natural gas infrastructures, with a country like India considering to do this on a large scale (earlier post).

As an automotive fuel, biogas is compressed and used in the same way as Compressed Natural Gas (CNG). Some developing countries have already done great efforts to build a CNG infrastructure, with Pakistan getting over 1 million CNG-capable cars on the road in under two years time (earlier post). Compressed Biogas (CBG) could be added to this CNG with no major investments. In the West, Sweden leads the biogas-as-transport-fuel revolution.

Now E.ON Ruhrgas, a major German energy company that earlier committed to producing natural gas grade biogas, has announced that it will follow these examples: in the next two years it will set up about 150 filling stations on German motorways for natural gas vehicles (NGVs), and add 10% biogas to the fossil fuel. This means that there will soon be a nation-wide system of CNG/CBG filling stations in Germany. At present, natural gas as a motor fuel is available at roughly 750 filling stations throughout the country. The new measure will considerably improve the availability of this motor fuel.

For this purpose, E.ON Ruhrgas is establishing a new subsidiary known as E.ON Gas Mobil. It will build the new stations in proven cooperation with leading petroleum companies in Germany. In 2007, initially 60-70 new filling stations are to be set up. Another 60 to 70 stations are to follow in 2008. E.ON Ruhrgas is spending a total of up to €36million on this expansion of the system of NGV filling stations:
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"Natural gas has great potential as a motor fuel. It is not only considerably cheaper than petrol and diesel, but is also very favourable for the environment," said Dr. Bernhard Reutersberg, member of the E.ON Ruhrgas AG Board of Management and Chairman of the E.ON Gas Mobil Supervisory Board. "By establishing E.ON Gas Mobil we are sending a clear signal for the further development of this market. At the same time we continue to cooperate with German car makers offering attractive models."

The environmental advantages of natural gas as a motor fuel are to be enhanced further by the use of biogas. The latter is obtained and processed from renewable resources. In a voluntary commitment, the gas industry has pledged to add up to 10 % of biogas to the natural gas volumes provided for the motor fuel market up to 2010. It is thus making a significant contribution towards the reduction of CO2 emissions caused by road traffic. Biogas is suitable as a motor fuel for NGVs without any restrictions. In 2020, enough biogas could be available to fuel over four million NGVs in Germany.

Mr. Reutersberg stressed that the spending on the system of NGV filling stations would benefit almost entirely construction companies, architects and engineering firms in Germany. "With the present investments and the subsequent maintenance and repair activities, we are also making a positive contribution to the labour market."

These technological and infrastructural developments offer an interesting opportunity for the developing world as well, where biogas can be produced relatively easily. India is already looking into the idea of using biogas as a transport fuel (earlier post), and other countries will no doubt follow when projects in Europe prove to be a success.

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