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    Researchers at eTEC Business Development Ltd., a biofuels research company based in Vienna, Austria, have devised mobile facilities that successfully convert the biodiesel by-product glycerin into electricity. The facilities, according to researchers, will provide substantial economic growth for biodiesel plants while turning glycerin into productive renewable energy. Biodiesel Magazine - March 16, 2007.

    Ethanol Africa, which plans to build eight biofuel plants in the maize belt, had secured funding of €83/US$110 million (825 million Rand) for the first facility in Bothaville, its principal shareholder announced. Business Report - March 16, 2007.

    A joint venture between Energias de Portugal SGPS and Altri SGPS will be awarded licences to build five 100 MW biomass power stations in Portugal's eastern Castelo Branco region. EDP's EDP Bioelectrica unit and Altri's Celulose de Caima plan to fuel the power stations with forestry waste material. Total investment on the programme is projected at €250/US$333 million with 800 jobs being created. Forbes - March 16, 2007.

    Indian bioprocess engineering firm Praj wins €11/US$14.5 million contract for the construction of the wheat and beet based bio-ethanol plant for Biowanze SA in Belgium, a subsidiary of CropEnergies AG (a Sudzucker Group Company). The plant has an ethanol production capacity of 300,000 tons per year. IndiaPRWire - March 15, 2007.

    Shimadzu Scientific Instruments announced the availability of its new white paper, “Overview of Biofuels and the Analytical Processes Used in their Manufacture.” The paper is available for free download at the company’s website. The paper offers an overview of the rapidly expanding global biofuel market with specific focus on ethanol and biodiesel used in auto transportation. It provides context for these products within the fuel market and explains raw materials and manufacturing. Most important, the paper describes the analytical processes and equipment used for QA testing of raw materials, in-process materials, and end products. BusinessWire - March 15, 2007.

    Côte d'Ivoire's agriculture minister Amadou Gon has visited the biofuels section of the Salon de l'Agriculture in Paris, one of the largest fairs of its kind. According to his communication office, the minister is looking into drafting a plan for the introduction of biofuels in the West African country. AllAfrica [*French] - March 13, 2007.

    Biofuels and bioenergy producers in Ireland, a country which just recently passed bioenergy legislation, are allocated excise relief for imported biomass. Unison Ireland (subscription req'd). - March 13, 2007.

    EDF Energies Nouvelles, a subsidiary of energy giant Electricité de France, has announced a move into biofuels, by sealing a preliminary agreement with Alcofinance SA of Belgium. Upon completion of a reserved issue of shares for €23 million, EDF Energies Nouvelles will own 25% of a newly formed company housing Belgium-based Alcofinance's ethanol production and distribution activities. Alcofinance's projects are located in the Ghent Bioenergy Valley. BusinessWire - March 13, 2007.

    Fuel Tech, Inc., today announced a demonstration order for its 'Targeted In-Furnace Injection' program, part of a set of technologies aimed at controlling slagging, fouling, corrosion, opacity and acid plume problems in utility scale boilers. The order was placed by an electric generating facility located in Italy, and will be conducted on two biomass units burning a combination of wood chips and olive husks. BusinessWire - March 9, 2007.

    At a biofuels conference ahead of the EU's Summit on energy and climate change, Total's chief of agricultural affairs says building environmentally friendly 'flexible-fuel' cars only cost an additional €200 (US$263) a vehicle and that, overall, ethanol is cheaper than gasoline. MarketWatch - March 8, 2007.

    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.

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Friday, March 16, 2007

Leading investors create major biofuel company in Brazil, as bagasse-based cellulosic ethanol advances

A while ago we referred to a small note published in a Brazilian newspaper, saying that a conglomerate of American and Brazilian investors will be creating the country's largest bio-ethanol company with an expected investment of not less than US$2 billion and a goal to produce 3.8 billion liters (1 billion gallons) of sugarcane based ethanol per year. One of the financiers of the new company supposedly was Vinod Khosla, founder of Sun Microsystems and investor in cellulosic ethanol in the U.S (previous post).

We can now confirm that this enterprise is indeed in the making. What's more, not only Khosla is involved, but some of the world's most successful entrepreneurs are so as well: supermarket magnate Ron Burkle, ex-World Bank President James Wolfensohn, and the co-founder of AOL, Steve Case, are investors. The firm will be managed by Philippe Reichstul, the ex-president of Brazil's state-owned oil company Petrobras SA.

The new Brazil-focused ethanol company is called 'Brazilian Renewable Energy Company Ltd.', or 'Brenco', and raised US$200 million in a first private placement of its common shares this week. Goldman Sachs is the exclusive placement agent for the new company. "This US$200 million that was raised is just an initial placement; US$2 billion is the target," said a source, adding that the placement was very well received.

Brenco's goal over the next 10 years is to reach an annual output of 3.8 billion liters (1 billion gallons), or the equivalent of around 46,000 barrels of oil equivalent per day. This would make it the world's largest biofuel company. By comparison, the country's largest miller to date, Cosan SA, which accounts for under 10% of Brazil's total ethanol output, produced 1.27 billion liters in the 2006-07 season.

Samir Kaul, a general partner of Khosla Ventures, the venture fund founded by Vinod Khosla, indicates that corn ethanol is out of the loop because it is inefficient and can never compete with its sugarcane based rival:
"We are obviously very bullish on biofuels and using sugarcane to make ethanol. It's a cheaper process, it's more favorable for the environment, and they have their costs well below a dollar a gallon in Brazil. So it makes it much more competitive given that corn is high."
Progress on bagasse-based cellulosic ethanol
Sugarcane based ethanol of the 'first generation' currently has an average energy balance of around 1-to-8 up to 1-to-10 (earlier post), meaning that for each unit of energy invested in producing the fuel (growing, harvesting and processing the crops), 8 to 10 units of net energy are obtained. This makes it the most efficient biofuel currently available. By comparison, ethanol made from corn has a marginal energy balance, slightly higher than 1, while some scientists say it can even be negative (earlier post). Biodiesel made from rapeseed has a balance of around 1.5 to 2, whereas cellulosic ethanol based on crops grown in temperate climates is expected to have a balance of 2 to 4.

When sugarcane stems are crushed, a fibrous biomass residue known as bagasse is left over. In Brazil's bioenergy industry, this abundant resource is currently burned for the production of power and heat, which is used by mills and ethanol processing plants, whereas excess electricity is fed into the grid. But the residue can also be converted efficiently into next-generation green fuels, such as synthetic biofuels via a biomass-to-liquids process based on gasification and Fischer-Tropsch synthesis (earlier post), or into cellulosic ethanol via a biochemical conversion process (using enzymes to break down the biomass). If this effort is pursued on a large scale, the energy balance of sugarcane based biofuels would become extremely high and may reach a ratio of around 1-to-12. This comes close to the energy balance of petroleum-based fuels.

The news of the creation of Brenco comes precisely at a time when Brazilian biofuel companies are beginning to achieve their first positive results in the utilisation of this biomass for the production of next-generation fuels.

Dedini SA announced it has already begun producing cellulose ethanol in small amounts from the fibrous waste stream. Operations Vice-President Jose Luiz Oliverio said Dedini is making 100 liters per day of cellulose ethanol from bagasse in a pilot plant, for about 25 cents per liter, the same as ethanol made from cane juice. The company aims to start building commercial cellulose mills with a capacity of 50,000 liters per day in five years.

Likewise, Petrobras today announced it is investing in a pilot cellulosic ethanol plant at its headquarters in Rio de Janeiro, where the same resource, bagasse, will be converted into liquid fuel using the biochemical pathway:
:: :: :: :: :: :: :: :: :: :: ::

Similar energy yields and cost scenarios may be expected for biofuels made from other tropical crops, such as sweet sorghum, cassava or sweet potatoes. One thing is clear, though, biofuels produced in temperate climates can never compete with 'tropical biofuels', giving the developing world an inalienable competitive advantage over the North.

It is because of these facts that Brenco was founded. Other key investors in the new company include film producer Steven Bing, and local investors Tarpon All Equities LLC and Grupo Semco. Brenco is incorporated in Bermuda, but has headquarters in Sao Paulo, according to sources.

Brazil is the world's leading sugar producer and exporter. It is also the world's leading ethanol exporter and shipped out a record 3.4 billion liters of ethanol in 2006, or about a fifth of the country's total production of some 17 billion liters. Global interest in Brazil's cheap cane-based ethanol has boomed in recent months due to high world oil prices and growing climate change concerns among other factors.

An influx of private equity money into the Brazilian sugarcane sector has followed, including U.S. investment company Kidd & Co., which helped finance young, bioenergy company Infinity Bio-Energy.

Infinity Bio-Energy, which listed on the London stock exchange's junior market, or AIM, last May, now owns four operational Brazilian sugarcane mills that are set to crush 5.5 million tons of cane in the 2007-08 season.

In addition, there is the Cayman Island-incorporated Bioenergy Development Fund, which has financing from France's third-largest bank, Societe Generale, but has yet to announce any acquisitions in the sector.

Another recently formed company, Clean Energy Brazil, which raised GBP100 million on AIM in December, is planning to invest in three mills in Parana in coming months. Local press reports had originally put Brenco's capital holdings as $2 billion.


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