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    Spanish company Ferry Group is to invest €42/US$55.2 million in a project for the production of biomass fuel pellets in Bulgaria. The 3-year project consists of establishing plantations of paulownia trees near the city of Tran. Paulownia is a fast-growing tree used for the commercial production of fuel pellets. Dnevnik - Feb. 20, 2007.

    Hungary's BHD Hõerõmû Zrt. is to build a 35 billion Forint (€138/US$182 million) commercial biomass-fired power plant with a maximum output of 49.9 MW in Szerencs (northeast Hungary). Portfolio.hu - Feb. 20, 2007.

    Tonight at 9pm, BBC Two will be showing a program on geo-engineering techniques to 'save' the planet from global warming. Five of the world's top scientists propose five radical scientific inventions which could stop climate change dead in its tracks. The ideas include: a giant sunshade in space to filter out the sun's rays and help cool us down; forests of artificial trees that would breath in carbon dioxide and stop the green house effect and a fleet futuristic yachts that will shoot salt water into the clouds thickening them and cooling the planet. BBC News - Feb. 19, 2007.

    Archer Daniels Midland, the largest U.S. ethanol producer, is planning to open a biodiesel plant in Indonesia with Wilmar International Ltd. this year and a wholly owned biodiesel plant in Brazil before July, the Wall Street Journal reported on Thursday. The Brazil plant is expected to be the nation's largest, the paper said. Worldwide, the company projects a fourfold rise in biodiesel production over the next five years. ADM was not immediately available to comment. Reuters - Feb. 16, 2007.

    Finnish engineering firm Pöyry Oyj has been awarded contracts by San Carlos Bioenergy Inc. to provide services for the first bioethanol plant in the Philippines. The aggregate contract value is EUR 10 million. The plant is to be build in the Province of San Carlos on the north-eastern tip of Negros Island. The plant is expected to deliver 120,000 liters/day of bioethanol and 4 MW of excess power to the grid. Kauppalehti Online - Feb. 15, 2007.

    In order to reduce fuel costs, a Mukono-based flower farm which exports to Europe, is building its own biodiesel plant, based on using Jatropha curcas seeds. It estimates the fuel will cut production costs by up to 20%. New Vision (Kampala, Uganda) - Feb. 12, 2007.

    The Tokyo Metropolitan Government has decided to use 10% biodiesel in its fleet of public buses. The world's largest city is served by the Toei Bus System, which is used by some 570,000 people daily. Digital World Tokyo - Feb. 12, 2007.

    Fearing lack of electricity supply in South Africa and a price tag on CO2, WSP Group SA is investing in a biomass power plant that will replace coal in the Letaba Citrus juicing plant which is located in Tzaneen. Mining Weekly - Feb. 8, 2007.

    In what it calls an important addition to its global R&D capabilities, Archer Daniels Midland (ADM) is to build a new bioenergy research center in Hamburg, Germany. World Grain - Feb. 5, 2007.

    EthaBlog's Henrique Oliveira interviews leading Brazilian biofuels consultant Marcelo Coelho who offers insights into the (foreign) investment dynamics in the sector, the history of Brazilian ethanol and the relationship between oil price trends and biofuels. EthaBlog - Feb. 2, 2007.

    The government of Taiwan has announced its renewable energy target: 12% of all energy should come from renewables by 2020. The plan is expected to revitalise Taiwan's agricultural sector and to boost its nascent biomass industry. China Post - Feb. 2, 2007.

    Production at Cantarell, the world's second biggest oil field, declined by 500,000 barrels or 25% last year. This virtual collapse is unfolding much faster than projections from Mexico's state-run oil giant Petroleos Mexicanos. Wall Street Journal - Jan. 30, 2007.

    Dubai-based and AIM listed Teejori Ltd. has entered into an agreement to invest €6 million to acquire a 16.7% interest in Bekon, which developed two proprietary technologies enabling dry-fermentation of biomass. Both technologies allow it to design, establish and operate biogas plants in a highly efficient way. Dry-Fermentation offers significant advantages to the existing widely used wet fermentation process of converting biomass to biogas. Ame Info - Jan. 22, 2007.

    Hindustan Petroleum Corporation Limited is to build a biofuel production plant in the tribal belt of Banswara, Rajasthan, India. The petroleum company has acquired 20,000 hectares of low value land in the district, which it plans to commit to growing jatropha and other biofuel crops. The company's chairman said HPCL was also looking for similar wasteland in the state of Chhattisgarh. Zee News - Jan. 15, 2007.

    The Zimbabwean national police begins planting jatropha for a pilot project that must result in a daily production of 1000 liters of biodiesel. The Herald (Harare), Via AllAfrica - Jan. 12, 2007.

    In order to meet its Kyoto obligations and to cut dependence on oil, Japan has started importing biofuels from Brazil and elsewhere. And even though the country has limited local bioenergy potential, its Agriculture Ministry will begin a search for natural resources, including farm products and their residues, that can be used to make biofuels in Japan. To this end, studies will be conducted at 900 locations nationwide over a three-year period. The Japan Times - Jan. 12, 2007.

    Chrysler's chief economist Van Jolissaint has launched an arrogant attack on "quasi-hysterical Europeans" and their attitudes to global warming, calling the Stern Review 'dubious'. The remarks illustrate the yawning gap between opinions on climate change among Europeans and Americans, but they also strengthen the view that announcements by US car makers and legislators about the development of green vehicles are nothing more than window dressing. Today, the EU announced its comprehensive energy policy for the 21st century, with climate change at the center of it. BBC News - Jan. 10, 2007.

    The new Canadian government is investing $840,000 into BioMatera Inc. a biotech company that develops industrial biopolymers (such as PHA) that have wide-scale applications in the plastics, farmaceutical and cosmetics industries. Plant-based biopolymers such as PHA are biodegradable and renewable. Government of Canada - Jan. 9, 2007.

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Thursday, January 25, 2007

Brazil accuses US and EU of 'hypocrisy' on biofuels

A day after President Bush delivered his State of the Union address in which he calls for a large increase in the use of biofuels, Brazil accuses both the United States and the European Union of not talking straight. Their positions on biofuels and climate change are 'hypocritical' as long as both blocks impose barriers on biofuel imports from the South. On the other hand, the EU is investing in African ethanol production and gives out signals that it might be interested in tapping the continent's large potential.

Both the US (earlier post) and the EU (earlier post) recently announced ambitious new plans to increase the use of biofuels in order to strengthen energy security and fight climate change.

But a high representative at Brazil's Ministry of Commerce and Trade states that the tariffs imposed on Brazilian ethanol allow ethanol producers in the North to make fuels that make no sense, neither from the perspective of reducing carbon dioxide emissions, nor from a commercial point of view. Biofuels such as ethanol made from sugarcane are far more climate friendly and energy efficient than biofuels made from crops like corn.

According to Otaviano Canuto, Brazil's representative at the World Bank, the doublespeak of the US and the EU is based on the fact that Western governments cannot admit to their consumers that biofuels from the South are competitive without subsidies and when oil is above US$40 per barrel. The governments of the EU and the US are afraid to upset their energy farmers, whose fuels can only survive when oil stands at US$60-80. According to the Interamerican Development Bank, Brazil produces ethanol at a cost of approximately US$0.83 per gallon.

The undeniable competitive advantage of the South is being blacked out by a barrage of subsidies, tariffs and so-called nonmarket barriers.

Tariffs and subsidies
The United States impose a tariff of US$0.51 per gallon of ethanol produced in Brazil. The U.S. Congress recently extended the tariff until 2009. According to the World Bank, the European tariffs are even higher.

When it comes to subsidies, the picture looks even worse: in its recently published report (earlier post) entitled “Biofuels: At What Cost? Government Support to Ethanol and Biodiesel in the United States”, the Geneva-based Global Subsidies Initiative calculated that American corn ethanol, received a whopping US$6.8 billions worth of subsidies in 2006 via hundreds of schemes (this is $1.87 per gasoline gallon equivalent or “gge”). The annualised estimate for 2007-2012 is even higher at $8.7 billion (or $1.96 per gge):
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Brazilian experts argue that Midwestern corn farmers in the U.S. would not survive market competition without the protectionist tariff, not even after receiving billions worth of subsidies each year. In Europe, the lobbying work mainly comes from producers in Spain, France and Sweden. The EU too recently extended its energy crop subsidies to €45 per hectare.

Until now, Brazil succeeded in exporting US$600 million worth of ethanol in 2005, mainly to Japan and Sweden, two countries committed to fulfilling their Kyoto obligations.

United States interested, but in the grip of lobbyists
Despite the tariff, there are some signs that the U.S. is interested in importing ethanol from the South. Jeb Bush, President Bush's brother and governor of Florida, recently created the Interamerican Ethanol Commission which aims to lift the tariff and raise the consciousness of the American consumer about tropical biofuels.

The U.S. Department of Energy recently calculated that American ethanol producers might never attain the efficiency and productivity levels of their Brazilian counterparts, not even when socalled 'second-generation' production methods are used. This is why imports must be considered.

But this is also why a large and powerful machinery of lobbyists is fighting to the death to keep its subsidies in place.

Contradictory voices in Europe
On the one hand, the EU has imposed barriers on imported ethanol, but on the other, it recognises the importance of the production potential in the South.

More specifically, and according to diplomatic sources, the government of the United Kingdom is looking into producing ethanol in Africa, most notably Mozambique, in order diversify its import portfolio.

"The objective is to create an African ethanol industry very fast, with the objective of first supplying the South-American market. The UK provides the funds", confirms a high representative of the British Department of Agriculture (DEFRA).

According to the British ambassador in Brazil, Peter Collecott "the idea is to produce ethanol for the African market, after which it will be easier to make it a truly global commodity." Collecott confirmed that "the project is currently being analysed".


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