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    During a session of Kazakhstan's republican party congress, President Nursultan Nazarbayev announced plans to construct two large ethanol plants with the aim to produce biofuels for exports to Europe. Company 'KazAgro' and the 'akimats' (administrative units) of grain-growing regions will be charged to develop biodiesel, bioethanol and bioproducts. KazInform - March 6, 2007.

    Saab will introduce its BioPower flex-fuel options to its entire 9-3 range, including Sport Sedan, SportCombi and Convertible bodystyles, at the Geneva auto show. GreenCarCongress - March 2, 2007.

    British oil giant BP plans to invest around US$50 million in Indonesia's biofuel industry, using jatropha oil as feedstock. BP will build biofuel plants with an annual capacity of 350,000 tons for which it will need to set up jatropha curcas plantations covering 100,000 hectares of land, to guarantee supply of feedstock, an official said. Antara [*cache] - March 2, 2007.

    The government of Taiwan has decided to increase the acreage dedicated to biofuel crops -- soybean, rape, sunflower, and sweet potato -- from 1,721 hectares in 2006 to 4,550 hectares this year, the Council of Agriculture said. China Post - March 2, 2007.

    Kinder Morgan Energy Partners has announced plans to invest up to €76/US$100 million to expand its terminal facilities to help serve the growing biodiesel market. KMP has entered into long-term agreements with Green Earth Fuels, LLC to build up to 1.3 million barrels of tankage that will handle approximately 8 million barrels of biodiesel production at KMP's terminals on the Houston Ship Channel, the Port of New Orleans and in New York Harbor. PRNewswire - March 1, 2007.

    A project to build a 130 million euro ($172 million) plant to produce 200,000 cubic metres of bioethanol annually was announced by three German groups on Tuesday. The plant will consume about 600,000 tonnes of wheat annually and when operational in the first half of 2009 should provide about a third of Germany's estimated bioethanol requirements. Reuters - Feb. 27, 2007.

    Taiwan's Ministry of Economic Affairs has announced that government vehicles in Taipei City will begin using E3 fuel, composed of 97% gasoline and 3% ethanol, on a trial basis in 2007. Automotive World - Feb. 27, 2007.

    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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Tuesday, March 06, 2007

IEA chief economist: EU, US should scrap tariffs and subsidies, import biofuels from the South

President Bush visits Brazil this week and is expected to hear President Lula lobbying him to end American ethanol tariffs. Brazil's push is now receiving the support from an unlikely quarter - the authoritative International Energy Agency (IEA), the independent energy adviser to 26 of the most industrialized nations.

The IEA understands its case: it has been studying all aspects of biofuels and bioenergy in-depth for years now, with dedicated scientific Task Forces (see IEA Bioenergy), which unite top experts in the field. Bioenergy Task 40 - which analyses the potential for sustainable international trade in biofuels - has made the case very clearly: a large amount of green fuels can be produced in a sustainable manner, without threatening the food security of people and without threatening ecosystems and biodiversity, in the Global South and exported efficiently to world markets (earlier post). Other Bioenergy Task forces come to the same conclusion. Europe and America do not have this capacity.

Earlier we reported on how the IEA's very chief, Claude Mandil, knowing the science, called on Europe and the United States to end their trade distorting subsidies for biofuels that can not compete in the market. He also urged the large consumers to import green fuels from the developing world instead (earlier post).

Now the IEA's Chief Economist, Fatih Birol, is joining this position: biofuels made in the EU and the US, using food grains, make no economic sense. They are inefficient and cannot compete against biofuels made in the South, where good agro-ecological conditions and suitable crops result in efficient fuels. Moreover, inefficient biofuels made in the US and the EU do not really contribute to reducing greenhouse gases, whereas those made in the developing world do.

For all these reasons, Birol says "the U.S. and Europe should scrap import duties on developing countries and in the longer term reconsider all subsidies."

The case for a 'Biopact' of sorts (see our Biofuels Manifesto) is increasingly being strengthened by scientists, economists, and energy experts alike.

The recent dip in oil prices proves the point: the EU/US government policy-fuelled rush to produce biofuels is backfiring as it pushes up costs and makes their domestic biofuels far less competitive. A looming biofuels glut plus falling rival crude oil prices, down a fifth on last summer's highs, mean producers can less easily pass on their spiraling costs. The present dip will last until demand rebounds, perhaps as far off as the end of the decade. Falling oil prices are hurting sales of biofuel which was barely competitive before, pricking European and U.S. euphoria built on subsidies and ambitious targets.

Profits are still to be had but a continuing scramble for raw materials like corn, soy and wheat will knock margins as producers re-negotiate more pricey supply contracts.

Still thriving, however, is biofuels pioneer Brazil - the symbol for the fact that biofuels made in the South make sense -, which has a booming domestic market where more than two-thirds of all new cars can run on either gasoline or ethanol:
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Biofuels costs will likely fall and demand and prices rise in Europe and the U.S. as better infrastructure and economies of scale kick in over the next two to three years, analysts say.

U.S. Democrats last week proposed a $15 billion energy plan, including boosting the country's network of ethanol service stations, for example.

But biofuels future also depends on oil prices, and analysts cannot guarantee crude oil will stay above the $60-$65 where it is trading now and undercutting biofuels - excluding subsidies - outside Brazil, according to the IEA.

Another factor is input cost: but sugar, corn, grain and palm oil prices are all seen holding or rising in the near term.

A new generation of biofuels made from waste like straw and wood chips would ease input shortages, but is not expected to be commercially available before 2009 and possibly much later.

In the United States soaring demand is expected to beat farmers' efforts to keep up, with high corn prices likely in the near-term, not least after Bush in January asked Congress to back a near 5-fold increase in the use of biofuels by 2017.

The biofuels craze is risking a surplus in the United States and elsewhere.

Investors F&C, with 155 billion euros ($204.9 billion) under management, says it has exited investments including the second biggest U.S. ethanol producer VeraSun, because of the prospective over-supply and margin squeeze.

A glut is also expected in parts of Europe, where biofuels support is switching from tax credits to blending targets, and notably Germany where higher taxes have knocked sales by as much as a third this year so far.

"In the very short-term we have far too much production capacity," said the EBB's Garofalo.

Elsewhere, Spanish energy firm Abengoa is mulling suspending output at its biggest ethanol plant, partly on higher grain prices and partly because the domestic market is saturated under present blending labeling rules.

Oil major Total has put on hold a biodiesel project with Finnish refiner Neste Oil, while prospective British ethanol producer Ensus postponed last December plans to list on London's Alternative Investment Market.


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