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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, December 20, 2006

The bioeconomy at work: France's BioHub project

Earlier this month, the European Commission approved France's BioHub research project, allowing the French state to fund it. Initiated by the Agence d'Innovation Industrielle (AII), the R&D project [overview *.pdf] will result in the construction of a large biorefinery that will transform starch-rich grains into green specialty chemicals. These chemical building blocks - which can be seen as the environmentally friendly variant of the so-called 'platform chemicals' from the petrochemical industry - will then serve as feedstocks for a variety of commonly used and innovative products, most notably biopolymers, biosolvents, bioplasticizers, biocomplexing agents and active ingredients.

The biorefinery will transform an estimated 1.3 million tonnes of maize and grain crops grown on 160,000 hectares per year into green platform chemicals. Research will include the development of new crops with special properties beneficial to their conversion into particular products. Since the materials derived from the biorefinery will all be plant based and thus renewable, the project is seen as an important step forward in mitigating climate change in the chemical sector. Moreover, if the model proves to be successful and scaleable, it will cut Europe's dependence on foreign oil.

According to the AII, the biorefinery and the R&D program will create some 600 non-science jobs, and 75 places for researchers and scientists in the green chemistry sector. Funds for BioHub stand at €98 million (US$129mio), of which €41.8 million (US$55mio) will be granted by the French state now that it received the approval of the European Commission. The remainder is made up by a European private sector and academic constortium, consisting of some of the continent's top research organisations:
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Roquette Frères, a global starch manufacturer, who operates as the coordinator together with Metabolic Explorer, one of France's most promising biotech companies ; major European green chemistry companies are involved, such as Arkéma (France), Solvay (France), Tergal Fibres (France), DSM (The Netherlands), Cognis (Germany). Eurovia (France) and engineering firm Sidel (France) participate as well.

French top-laboratories are involved in BioHub: the laboratories of the CNRS based at the INSA in Lyon, the INSA in Rouen et and the 'Institute of Molecules and Condensed Materials' (l’Institut des molécules et de la Matière Condensée) in Lille.

But BioHub has a genuine European dimension, with the participation of the Technical University of Eindhoven (Netherlands) and the Kluyver Centre for Genomics in Delft.

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China restricts expansion of grain based biofuels, switches to biomass and alternative crops

China's very ambitious bioenergy plans that are targeted to result in the production of 12 million tonnes of biofuels for transport in 2020 (earlier post), are being adapted to new market circumstances and technologies (earlier post). In a latest development, State media reported that the People's Republic will restrict the use of corn and other edible grains for producing biofuel, noting concerns over surging livestock feed prices despite expectations for yet another bumper harvest. The Ministry of Agriculture (MOA) is piloting production of biofuel derived from non-grain crops instead.

"We have a principle with regard to biofuel: it should neither impact the people's grain consumption, nor should it compete with grain crops for cultivated land," said Yang Jian, director of the development planning department under the Agriculture Ministry.

Yang emphasized that his ministry opposes using edible grains as raw material for biofuel. He noted that the government was therefor encouraging farmers to grow sweet sorghum, cassava and other non-grain crops on marginal land to supply biofuel processors.

East Asia's limited potential
Even though China's biofuel plans contain ambitious targets, compared to other regions, East Asia has a relatively low bioenergy production potential - mainly because of its large population. Research indicates that under the most optimal circumstances, the region as a whole can produce a maximum of 188 Exajoules of bioenergy (this is roughly 84.4 millions barrels of oil equivalent energy per day) (earlier post). This technical potential assumes efficient technologies and high yielding energy crops. Corn and many other grain crops used in low-tech first-generation biofuels are very inefficient for the production of bioenergy. Over the long run, they will have to be replaced by biomass to be used in next-generation conversion technologies:
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Competition between food and fuel processors for grains needed to make biofuels is not limited to China. Worldwide, surging demand for grain crops has been a godsend for many farmers, but is pinching consumers as higher prices hit the industrial food chain, particularly the livestock sector:

China's economic planners have made increasing production of ethanol, a key biofuel, a goal in the country's five-year economic plan, to help curb pollution and reduce reliance on fossil fuels.

But protecting arable land and ensuring adequate food supplies is the top priority, the reports said. "In China, the first thing is to provide food for its 1.3 billion people, and after that, we will support biofuel production," the People's Daily quoted Wang Xiaobing, an official at the Agriculture Ministry's crops cultivation department, as saying.

China has begun auctioning some of its wheat reserves to help control a surge in prices in local markets, despite reports that the grain crop is expected to hit a record 490 million tons this year, the third straight year of bumper harvests.

Wheat prices are at their highest level in a decade, due to severe droughts in the U.S. and Australia, and corn prices have also surged by up to 20 percent in local markets.

Prices for edible oils, meat and other products have also jumped, drawing complaints from consumers.

China can supply nearly 100 percent of grain demand locally, and despite the country's relatively scarce land and water government policy supports maintaining basic self-sufficiency for the sake of national security.

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Investments in renewables top $100 billion in 2006

We're nearing the end of the year, and it's been a busy one for us. Since going online, we have been reporting on quite a number of projects and investments in the bioenergy sector in the developing world. But now it's time to get a more global overview. How much money did the green energy sector as a whole attract this year? Which countries and sectors were most active? And what does next year have in store? New Energy Finance helps us find out.

According to this specialist provider of financial information and research on investment in the sector, clean energy and low-carbon technology industries are on course to set a new record [*.pdf] of more than $100bn worth of financing transactions over the course of 2006. Bioenergy and biofuels were by far the fastest growing sectors, attracting ten times more money in 2006 than in the previous year.

It is estimated that total deal volume for the full year will be around $100bn. Of this, $70.9bn will be new investment, an increase of 43% on 2005, while $29.5bn will consist of M&A activity, leveraged buyouts and refinancings of assets.

The biggest growth has been in public markets and venture capital/private equity investment activity, which increased by 141% and 167%, respectively. Asset financings grew at a more sedate 22.9%. Public market fund-raisings for clean energy companies will breach the $10bn mark for the first time in 2006, reaching $10.3bn, up from $4.3bn in 2005 and $0.7bn in 2004.

Interest in clean energy-related IPOs was exceptionally strong in the first four months of the year, following President George W Bush’s “Addicted to Oil” remarks in his State of the Union Speech. This fell away following the market correction in May, only to return during Q4, to coincide with the publication of the Stern Review, which highlighted the relative economic returns from acting to prevent climate change, and the US elections, which signalled a change of heart towards the sector.

Going into the final week of the year, the WilderHill New Energy Global Innovation Index (NEX), the quoted index which charts the value of more than 80 of the world’s leading quoted clean energy companies, is up more than 30% on the start of the year:
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Qua volume, the leading sector of the industry for investment on the public markets during 2006 was solar, attracting $4.4bn – more than double the $1.7bn in 2005.
Biofuels and bioenergy were the fastest growing sector with $2.5bn, which was more than 10 times the amount raised in 2005. Wind was relatively static, raising just $1.2bn worldwide on the public markets, against $1.1bn in 2005.

Specialist carbon market service providers, such as brokers and carbon fund managers, were the big losers in terms of public market fundings, raising only $67m in 2006, compared with $465m in 2005. Reasons range from the crash in the European carbon prices in April to the limited time before the Kyoto Protocol falls away in 2012 and the entry of large commodity and banking players into the market. Despite the lack of interest among public equity investors, the volume of money in specialist carbon funds powered ahead during the year, reaching more than $7bn by year end.

The hottest geographical market of the year was Frankfurt, where a total of 15 clean energy deals raised $2.6bn, including the $1.5bn IPO of Wacker Chemie, one of the global leaders in the production of solar silicon, a bottleneck commodity. NASDAQ registered 21 deals and $1.7bn in funds raised, while London’s AIM remained the favourite among smaller companies, attracting 29 clean energy deals worth a total of $1.2bn.

New Energy Finance has identified a healthy pipeline of IPOs for early 2007, with a record number of companies having filed registration papers or in discussions with advisors, suggesting that momentum will be strong into the New Year. Biofuels, solar and wind companies look set to continue to dominate the volume.

Venture capital and private equity investment looks set to top $7.0bn for the full year 2006, an impressive 167% increase on 2005. Growth was concentrated in private equity for expansion which soared in 2006 to $2.6bn, almost triple the $874m seen in 2005, with the cash mainly flowing into biofuels capacity.

There was significant growth in later stage venture capital deals, particularly series C, as investors chased exceptional returns. Over-the-counter and private investment in public equity (PIPE) deals showed similar growth. Early stage venture capital investment, including seed and Series A and B deals remained weak, however.

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New EU member states to receive subsidies for energy crops

We have written profusely on the hundreds of subsidy schemes and tax incentives for US energy farmers, which make American ethanol the world's most expensive and least competitive fuel (earlier post). But many other states, including the Chinese (earlier post) are supporting their nascent bioenergy sector too. The EU is of course no exception.

Yesterday, EU agriculture ministers decided to extend the energy crop premium introduced by the 2003 Common Agricultural Policy reform to the new Member States which currently do not benefit from it. The decision will give farmers in Bulgaria, the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland, Romania and Slovakia the chance to receive €45 per hectare (US$24/acre) for growing energy crops.

The Commission will extend the maximum area which can benefit from this aid to 2 million hectares from 1.5 million hectares at the moment.

In a further push to encourage the production of feedstocks for renewable energy production, the decision will also allow the Member States to grant national aid of up to 50 percent of the costs of establishing permanent crops on areas on which an application for the energy crop aid has been made.

The provision of renewable energy is a growing priority for the European Union. Farming can play a major role in providing the raw materials for bioethanol and biodiesel. The energy crop scheme has made a good start. Now it’s only fair that we give farmers in all Member States the chance to benefit from it. I am confident that this market can go from strength to strength.” Mariann Fischer Boel, Commissioner for Agriculture and Rural Development.
Some background on the EU aid for energy crops and its productive effects:
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* The €45/hectare aid for energy crops was applied for the first time in 2004 to provide an incentive for farmers to grow the raw materials for biofuels. The area for which the direct payment for energy crops was claimed was between 1.2 and 1.3 million hectares in 2006, close to the limit of 1.5 m ha.

* The data on the development of bioethanol and biodiesel production as well as recently constructed capacities show a dramatic increase in the demand for energy crops within the next few years.

* The aid for energy crops is an incentive for farmers to produce crops for energy purposes rather than for food. Currently, 8 of the 10 "new Member States" (the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland, and Slovakia) which apply the SAPS are excluded from this aid for energy crops, while Malta and Slovenia may receive this aid up to the "phasing-in" level only.

* The review of the energy crops scheme has shown that it is appropriate to extend the aid for energy crops to all Member States as from 2007 and under the same conditions. Therefore the maximum guaranteed area should be increased proportionally.

* To strengthen the role of multiannual energy crops, the Member States will be entitled to grant national aid up to 50 % of the costs associated with establishing permanent crops for the areas which have been subject to an application for the aid for energy crops

In February, the Commission adopted an ambitious EU Strategy for Biofuels. Increased use of biofuels is expected to bring numerous benefits, by reducing Europe’s dependence on fossil fuel imports, reducing greenhouse gas emissions, providing new outlets for farmers and opening up new economic possibilities in several developing countries.

More information:
European Commission: Renewable energy: Commission welcomes Council agreement on extension of energy crop aid scheme to all Member States - Dec. 19, 2006
Planet Ark: EU New Joiners to Get Biofuel Crop Cash from 2007 - Dec. 20, 2006

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Farmer-to-farmer biomass power in Punjab

Some interesting details have emerged on the biomass projects underway in the state of Punjab, India. So far, four biomass power plants with a 28 MW capacity each been completed and six more projects of 87 MW capacity are under implementation in India's most productive agricultural state (earlier post).

Punjabi minister of New and Renewable Energy, Vilas Muttemwar, now unveiled the foundation stone of a path-breaking project for the generation of power from rice straw and other farm wastes at village Ghanaur in Patiala District.

The new 12 MW Biomass power project will be the first out of nine similar projects to be set up in rural Punjab. The plant, which runs entirely on renewable biomass, will become operational within two years followed by other similar units which will come up within four years, generating a total of 108 MW of electricity.

The projects are seen as unique 'farmer to farmer' initiatives, all located in rural areas to provide electricity in a decentralised manner. Even though they aren't run co-operatively in the legal sense of the term, they are managed collectively:
  • the farmers are left to organise and train themselves, so they can operate and maintain the facility themselves (contrary to the image of Indian bureaucratic sclerosis, red tape, and a Nanny-state allure, the country has been advocating a policy of 'self-organisation' and 'bottom-up' development for quite a long time, especially in rural areas)
  • the plant will not only provide valuable extra electricity to farmers, but the project will provide them with additional incomes, which are kept within the community; some 10,000 to 15,000 farmers located around each project area, will sell their waste biomass to the communally operated facility
  • for each 5MW of power, the project will generate an estimated 100,000 mandays of work, showing the employment opportunity brought by it
The biomass project is seen as a major milestone on the path towards sustainability and climate change mitigation, for three reasons:
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Firstly, it will convert agricultural waste into valuable energy, thereby reducing dependence on fossil fuels. Secondly, it will reduce the release of carbon dioxide and greenhouse gas emissions caused by the burning of over 100,000 tons of these wastes. Lastly, the plants work 100% on renewable biomass, without the input of any fossil fuels, which is why they will earn valuable Carbon Credits.

"Biomass-based power projects will get fiscal incentives like accelerated depreciation, tax holidays for 10 years and interest subsidy on term loans," the minister said in Baghaura village.

In addition, customs and excise duty exemption for equipment and machinery would be made available for such power projects in the future.

The project has been a major thrust area for the Punjab Government, the Punjab State Electricity Board, the Department of Science & Technology and other state government organizations who have all worked to develop this project.

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