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    Russian oil company Lukoil reportedly installed production facilities for obtaining biofuels in its refinery Neftochim in the coastal city of Bourgas. Lukoil has over 2500 oil stations in Europe, the largest number of which are located in Bulgaria, which joined the EU this year. Sofia Echo - April 22, 2007.

    The government of the Indian state of Haryana approves three small-scale (1MW) biomass gasification projects, while the Haryana Renewable Energy Development Agency (HAREDA) identifies seven industrial sectors it will help to adopt the biomass gasification technology to meet their captive thermal and electrical requirements. Economic Times - April 21, 2007.

    The Philippine Coconut Authority (PCA) is planning to build a coconut oil biodiesel plant in Ivisan, Capiz (a province in the Western Visayas region) by the middle of this year in response to the growing demand for biodiesel. News Today (Iloilo City) - April 20, 2007.

    Scientists working for Royal Nedalco (involved in cellulosic ethanol production), the Delft University of Technology and a firm called Bird Engineering have found a fungus in elephant dung that helped them produce a yeast strain which can efficiently ferment xylose into ethanol. The researchers consider this to be a breakthrough and see widespread application of the yeast within 5 years. More info to follow as details emerge. Scientific American - April 19, 2007.

    As part of its 'Le dessous des cartes' magazine, Europe's culture TV channel ARTE airs a documentary about the geopolitics of sustainable transport tonight, at 10.20 pm CET. Readers outside of Europe can catch it here. ARTE - April 18, 2007.

    Spain's diversified company the Ferry Group is investing €50 million into a biomass plantation in new EU-memberstate Bulgaria. The project will see the establishment of a 8000ha plantation of hybrid paulownia trees that will be used for the production of fuel pellets. Dnevnik, Bulgaria - April 18, 2007.

    Bioprocess Control signs agreement with Svensk Biogas and forms closer ties with Swedish Biogas International. Bioprocess Control develops high-tech applications that optimise the commercial production of biogas. It won Sweden's prestigious national clean-tech innovations competition MiljöInnovation 2007 for its 'Biogas Optimizer' that accelerates the biogas production process and ensures greater process stability. NewsDesk Sweden - April 17, 2007.

    A joint Bioenergy project of Purdue University and Archer Daniels Midland Company has been selected to receive funding by the U.S. Department of Energy to further the commercialization of highly-efficient yeast which converts cellulosic materials into ethanol through fermentation. ADM - April 17, 2007.

    Researchers at Iowa State University and the US Department of Agriculture's Agricultural Research Services (ARS) have found that glycerin, a biodiesel by-product, is as effective as conventional corn-soymeal diets for pigs. AllAboutFeed - April 16, 2007.

    U.S. demand for uranium may surge by a third amid a revival in atomic power projects, increasing concern that imports will increase and that limited supplies may push prices higher, the Nuclear Energy Institute says. Prices touched all time highs of US$113 a pound in an auction last week by a U.S producer amid plans by China and India to expand their nuclear power capacity. International Herald Tribune - April 16, 2007.

    Taiwan mandates a 1% biodiesel and ethanol blend for all diesel and gasoline sold in the country, to become effective next year. By 2010, the ratio will be increased to 2%. WisconsinAg Connection - April 16, 2007.

    Vietnam has won the prestigious EU-sponsored Energy Globe award for 2006 for a community biogas program, the Ministry of Agriculture and Rural Development announced. ThanhNien News - April 13, 2007.

    Given unstable fossil fuel prices and their negative effects on the economy, Tanzania envisages large-scale agriculture of energy crops Deputy Minister for Agriculture, Food Security and Cooperatives, Mr Christopher Chiza has said. A 600 hectare jatropha seed production effort is underway, with the seeds expected to be distributed to farmers during the 2009/2010 growing season. Daily News (Dar es Salaam) - April 12, 2007.

    Renault has announced it will launch a flex-fuel version of its Logan in Brazil in July. Brazilian autosales rose 28% to 1,834,581 in 2006 from 2004. GreenCarCongress - April 12, 2007.

    Chevron and Weyerhouser, one of the largest forest products companies, are joining forces to research next generation biofuels. The companies will focus on developing technology that can transform wood fiber and other nonfood sources of cellulose into economical, clean-burning biofuels for cars and trucks. PRNewswire - April 12, 2007.

    BioConversion Blog's C. Scott Miller discusses the publication of 'The BioTown Source Book', which offers a very accessible introduction to the many different bioconversion technologies currently driving the bioenergy sector. BioConversion Blog - April 11, 2007.

    China's State Forestry Administration (SFA) and the China National Cereals, Oils and Foodstuffs Import & Export Corp., Ltd. (COFCO) have signed a framework agreement over plans to cooperatively develop forest bioenergy resources, COFCO announced on its web site. Interfax China - April 11, 2007.

    The Ministry of Agriculture and Livestock of El Salvador is speeding up writing the country's biofuels law in order to take advantage of the US-Brazil cooperation agreement which identified the country as one where projects can be launched fairly quickly. The bill is expected to be presented to parliament in the coming weeks. El Porvenir - April 11, 2007.

    ConocoPhillips will establish an eight-year, $22.5 million research program at Iowa State University dedicated to developing technologies that produce biofuels. The grant is part of ConocoPhillips' plan to create joint research programs with major universities to produce viable solutions to diversify America's energy sources. Iowa State University - April 11, 2007.

    Interstate Power and Light has decided to utilize super-critical pulverized coal boiler technology at its large (600MW) new generation facility planned for Marshalltown, Iowa. The plant is designed to co-fire biomass and has a cogeneration component. The investment tops US$1billion. PRNewswire - April 10, 2007.

    One of India's largest sugar companies, the Birla group will invest 8 billion rupees (US$187 million) to expand sugar and biofuel ethanol output and produce renewable electricity from bagasse, to generate more revenue streams from its sugar business. Reuters India - April 9, 2007.

    An Iranian firm, Mashal Khazar Darya, is to build a cellulosic ethanol plant that will utilise switchgrass as its feedstock at a site it owns in Bosnia-Herzegovina. The investment is estimated to be worth €112/US$150 million. The plant's capacity will be 378 million liters (100 million gallons), supplied by switchgrass grown on 4400 hectares of land. PressTv (Iran) - April 9, 2007.

    The Africa Power & Electricity Congress and Exhibition, to take place from 16 - 20 April 2007, in the Sandton Convention Centre, Johannesburg, South Africa, will focus on bioenergy and biofuels. The Statesman - April 7, 2007.

    Petrobras and Petroecuador have signed a joint performance MOU for a technical, economic and legal viability study to develop joint projects in biofuel production and distribution in Ecuador. The project includes possible joint Petroecuador and Petrobras investments, in addition to qualifying the Ecuadorian staff that is directly involved in biofuel-related activities with the exchange of professionals and technical training. PetroBras - April 5, 2007.

    The Société de Transport de Montréal is to buy 8 biodiesel-electric hybrid buses that will use 20% less fuel and cut 330 tons of GHG emissions per annum. Courrier Ahuntsic - April 3, 2007.

    Thailand mandates B2, a mixture of 2% biodiesel and 98% diesel. According to Energy Minister Piyasvasti Amranand, the mandate comes into effect by April next year. Bangkok Post - April 3, 2007.

    In what is described as a defeat for the Bush administration, the U.S. Supreme Court ruled [*.pdf] today that environmental officials have the power to regulate greenhouse gas emissions that spur global warming. By a 5-4 vote, the nation's highest court told the U.S. Environmental Protection Agency to reconsider its refusal to regulate carbon dioxide and other emissions from new cars and trucks that contribute to climate change. Reuters - April 2, 2007.

    Goldman Sachs estimates that, in the absence of current trade barriers, Latin America could supply all the ethanol required in the US and Europe at a cost of $45 per barrel – just over half the cost of US-made ethanol. EuroToday - April 2, 2007.

    The Kauai Island Utility Cooperative signed a long-term purchase power agreement last week with Green Energy Team, LLC. The 20-year agreement enables KIUC to purchase power from Green Energy's proposed 6.4 megawatt biomass-to-energy facility, which will use agricultural waste to generate power. Honolulu Advertiser - April 2, 2007.

    The market trend to heavier, more powerful hybrids is eroding the fuel consumption advantage of hybrid technology, according to a study done by researchers at the University of British Columbia. GreenCarCongress - March 30, 2007.

    Hungarian privately-owned bio-ethanol project firm Mabio is planning to complete an €80-85 million ethanol plant in Southeast Hungary's Csabacsud by end-2008. Onet/Interfax - March 29, 2007.

    Energy and engineering group Abengoa announces it has applied for planning permission to build a bioethanol plant in north-east England with a capacity of about 400,000 tonnes a year. Reuters - March 29, 2007.

    The second European Summer School on Renewable Motor Fuels will be held in Warsaw, Poland, from 29 to 31 August 2007. The goal of the event is to disseminate the knowledge generated within the EU-funded RENEW (Renewable Fuels for Advanced Powertrains) project and present it to the European academic audience and stakeholders. Topics on the agenda include generation of synthetic gas from biomass and gas cleaning; transport fuel synthesis from synthetic gas; biofuel use in different motors; biomass potentials, supply and logistics, and technology, cost and life-cycle assessment of BtL pathways. Cordis News - March 27, 2007.

    Green Swedes want even more renewables, according to a study from Gothenburg University. Support for hydroelectricity and biofuels has increased, whereas three-quarters of people want Sweden to concentrate more on wind and solar too. Swedes still back the nuclear phase-out plans. The country is Europe's largest ethanol user. It imports 75% of the biofuel from Brazil. Sveriges Radio International - March 27, 2007.

    Fiat will launch its Brazilian-built flex-fuel Uno in South Africa later this year. The flex-fuel Uno, which can run on gasoline, ethanol or any combination of the two fuels, was displayed at the Durban Auto Show, and is set to become popular as South Africa enters the ethanol era. Automotive World - March 27, 2007.

    Siemens Power Generation (PG) is to supply two steam turbine gensets to a biomass-fired plant in Três Lagoas, 600 kilometers northwest of São Paulo. The order, valued at €22 million, was placed by the Brazilian company Pöyry Empreendimentos, part of VCP (Votorantim Celulose e Papel), one of the biggest cellulose producers in the Americas. PRDomain - March 25, 2007.

    Asia’s demand for oil will nearly double over the next 25 years and will account for 85% of the increased demand in 2007, Organization of Petroleum Exporting Countries (Opec) officials forecast yesterday at a Bangkok-hosted energy conference. Daily Times - March 24, 2007.

    Portugal's government expects total investment in biomass energy will reach €500 million in 2012, when its target of 250MW capacity is reached. By that date, biomass will reduce 700,000 tonnes of carbon emissions. By 2010, biomass will represent 5% of the country's energy production. Forbes - March 22, 2007.

    The Scottish Executive has announced a biomass action plan for Scotland, through which dozens of green energy projects across the region are set to benefit from an additional £3 million of funding. The plan includes greater use of the forestry and agriculture sectors, together with grant support to encourage greater use of biomass products. Energy Business Review Online - March 21, 2007.

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Monday, April 23, 2007

COHA recommends modifications to US tariffs on ethanol imports

The Council on Hemispheric Affairs (COHA) is one of the leading non-partisan think tanks in the Western Hemisphere aiming to raise public awareness of hemispheric issues and to encourage the formulation of rational political and economic US policies towards Latin America.

The COHA's long-standing and deep understanding of the geopolitical and socio-economic forces at work in the hemisphere allow it to make recommendations that policy makers take into account.

Last week, the organisation published its "Decision Memorandum to Members of the Congressional Brazil Caucus, Advocating Modifications to the US Tariffs on Ethanol Imports". In the document, COHA research associate Thomaz Alvares de Azevedo e Almeida analyses the political feasibility, effectiveness and economic impact of two options currently faced by lawmakers in the US: either to extend the tariff schedule for ethanol imports, or to modify it and refrain from extending it beyond 2009.

On this crucial issue, which will in part determine the pace at which biofuel production in Latin America expands, COHA recommends the second option:
In order for the administration and the Congress both to espouse policies that decrease this country’s oil-dependency in the most expeditious manner, and to immediately address public concerns over global warming, dramatic changes must be made to the U.S.’s current energy security strategy. Therefore, it is COHA’s recommendation that the leadership of the Congressional Brazil Caucus pursue, during 2008, Option 2: Not extending the Harmonized Tariff Schedule applied to ethanol imports past January 1st 2009.

In summary, lifting both the $0.54 cent import tariff and the 2.5% ad valorem tax on ethanol would effectively increase the availability of ethanol in the U.S. This greater supply may make a case for ending the ethanol’s share in the U.S. fuel market—currently below 4%—while not risking the displacement of the domestic ethanol industry. Furthermore, it would promote the use of a “green” energy source that could initially complement, but ultimately replace oil. It is COHA’s conclusion that legislation akin to the “Ethanol Import Fairness Act” (H.R. 5261) could lay the foundation on which an effective “green” energy security strategy could be built.
COHA's memorandum offers an interesting overview of the political and economic pros and cons of the different options. With permission, we reprint it in full:
:: :: :: :: :: :: :: :: ::

Problem Definition
In May 2006, the Climate Change Science Program—the U.S. government coordinating agency on global-warming, which has brought together America’s leading experts in the field—has recently acknowledged that there is “clear evidence of human influences on the climate system” (New York Times: May 24, 2006). Yet, even at this late date, the U.S. does not have an effective “green” energy security strategy. Washington thus needs a policy for detailing countermeasures regarding current fuel usage in powering domestically produced passenger cars and light trucks, that is, pickup trucks, minivans, and sport utility vehicles (CBO: 2002, VII-VIII).

The U.S. is the world’s largest producer of carbon dioxide (CO2) resulting from the consumption and flaring of fossil fuels; alone it accounts for 25% of the world’s CO2 emissions (EIA: International Energy Annual 2004). One way for the U.S. to decrease its unwelcomed contribution to global warming is to encourage the use of biofuels like ethanol, which are known to produce significantly less CO2 emissions in grams per gallon than gasoline (Argonne: Transportation Technology R&D Center, 2004). Replacing fossil fuels with ethanol has become a realistic possibility with the rising price of crude oil, which is projected to fluctuate between $55-60 a barrel for the next five years (NYMEX Market Data to 2012 ). Moreover, President Bush already has acknowledged that “extending hope and opportunity depends on a stable supply of energy that keeps America’s economy running and America’s environment clean”. He has proposed to “reduce gasoline usage in the United States by 20 percent in the next 10 years” (State of the Union Speech, 2007).

The U.S. has been searching for alternative sources of fuel for the past quarter-century, and by 1980, its incipient ethanol industry had managed to produce 175 million gallons. Today, the U.S. has grown to be the world’s largest ethanol producer, with 4.86 billion gallons in 2006 (RFA Press Release, March 5, 2007). This boom in domestic production of ethanol is, however, of recent vintage. In October 2004, President Bush signed into law H.R. 4520, which amended the Internal Revenue Code of 1986 by replacing the federal ethanol excise tax credit with a Volumetric Ethanol Excise Tax Credit (VEETC) that established a tax refund of $0.51 on each gallon of ethanol blended with gas until 2010 (GPO: American Jobs Creation Act of 2004, sec 6426). Two years later, in October 2006, the President signed into law H.R. 6 that set forth a phase-in for the replacement of gas by renewable fuels, mainly ethanol, from 2006 to 2012 (Energy Policy Act of 2005, sec 1501). As a result of these legislative measures, ethanol plants are breaking their production records with each passing year: In 2006, U.S. ethanol plants produced up to 24% more than they did in 2005, which in itself was 15% greater than in 2004. From 2000 to the present, the U.S. ethanol production has increase more than 188% (Federal Trade Commission: 2006). Yet ethanol—both domestically produced and imported —still only comprises 3.4% of all fuel consumption in the U.S. (Green Car Congress: August 30, 2006).

In December 2006, after having called on Congress to lift the import tariff on ethanol in May, President Bush signed into law H.R. 6111 that extended the $0.54 per gallon import tariff plus a 2.5% ad valorem tax mandated by the Harmonized Tariff Schedule on ethanol from 2007 to 2009 (White House: May 3, 2006 and GPO: Tax Relief and Health Care Act of 2006, sec 208). The issue now at hand is whether the 110th Congress should, in the course of 2008, extend these market protections beyond January 1st 2009. This memorandum evaluates two options with regard to promoting ethanol as a complement fuel, and as a possible replacement, to gasoline: (1) Extend once again the Harmonized Tariff Schedule with respect to ethanol imports or; (2) Do not extend the Harmonized Tariff Schedule with respect to ethanol imports, lifting both the $0.54 per gallon import tariff and the 2.5% ad valorem tax.


Option 1: Extend the Harmonized Tariff Schedule for Ethanol Imports
The first option is to stay the course, that is, to rely on current national subsidies of $0.51 per gallon until 2010 and on the import tariffs of $0.54 per gallon plus 2.5% ad valorem tax, possibly until 2011, as proposed by Representative Leonard L. Bosswell (D-IA) in his H.R. 5431.

Political Feasibility: The Renewable Fuels Association (RFA) is the main lobby for this option, and it has achieved moderate support from Republicans and strong support from Democrats in Congress, with the Congressional Biofuels Caucus endorsing its position. That means that 19 Democratic representatives, including the Speaker of the House Nancy Pelosi (D-CA), and 8 Democratic senators, as well as 18 Republican representatives and 1 Republican senator, favor this option. Another three Democratic senators, along with presidential candidate Barack Obama (D-IL), are publicly against lifting the import tariffs (Senate Records: May 10, 2006). Yet by maintaining a barrier to ethanol coming from abroad, this option does little to address both the President’s and the public’s desire to rapidly decrease oil-dependency. Thus, its political feasibility is rated as an “A-.”

: Shell International considers that “ethanol is the best alternative to partially replace oil derivates in the next decades” (Speeches & Webcasts: February 8, 2005). Yet, ethanol can be produced from different sources, carrying different properties. Corn is the main source used in the U.S., while sugarcane is used in tropical regions like Brazil. The key difference between them is that, given the same amount of input, sugarcane-based ethanol returns four times more energy than its corn-based counterpart, while its flaring produces less CO2 (World Watch Institute and Argonne). Since extending the tariff discourages the ingress of less polluting sugarcane ethanol in the U.S., while it only moderately increases the use of ethanol over gas; the effectiveness of this option is rated as a “B-.”

Economic Impact: In 2006, the U.S. ethanol industry spent $4.1 billion in corn and approximately $3.6 billion on goods and services in order to produce 4.86 billion gallons of ethanol. In addition, $410 million more was spent on transportation from the plant to the terminal where the ethanol was blended (LECG: 2007, 1-2). Clearly, then, the U.S. ethanol industry provides a significant contribution to the American economy. Nonetheless, the heavy expenditure on corn made by the ethanol industry also has registered negative impacts. The U.S.’s National Chicken Council reported that the ethanol’s demand for corn—around 14% of the country’s domestic production—raised the commodity’s price in such a way that the wholesale price of chicken increased by 6% per pound in January. Similarly, the National Cattlemen’s Association reported that the cattle industry expects to be less profitable in 2007 for the same reason (Department of Energy-EERE: March 07, 2007). Thus, the economic factors at play here produce a “B+” rating.

• Protect the U.S. ethanol industry, encouraging it to increase its current $7.1 billion expenditure on raw materials, transportation, goods and jobs

• Addresses neither energy security concerns nor contends with the negative impact of global warming in the most efficient way
• Sustains pressure on the price of beef and poultry due to its corn utilization

Option 2: Not Extend the Harmonized Tariff Schedule Concerning Ethanol Imports
This option represents an incremental change in course, relying on current national subsidies of $0.51 per gallon until, at least, 2010, but not to extend the import tariffs of $0.54 per gallon plus 2.5% ad valorem tax past January 1st 2009, as proposed by former Representative Jeb Bradley (R-NH) in his H.R. 5261.

Political Feasibility: The public is the main interest-group being appealed by this option. Lifting import tariffs on ethanol would increase the amount of ethanol fuel available in the U.S. market, rendering the competition between ethanol and gasoline more fierce. As a result, the price of fuel at the pump would be lower and oil-dependency would decrease, both outcomes that are expected to please the public. Nevertheless, Republican support for this option is only lukewarm, and it has attracted almost no Democratic backing. Thus, its political feasibility is rated as a “B-.”

Effectiveness: Lifting the import tariff on ethanol would make its imports from abroad cheaper, which arguably will increase the volume of ethanol imports. These imports are likely to come from Brazil, since it has enjoyed, in the last few years, a small surplus on its sugarcane ethanol production (data from UNICA). The effect of having U.S. production of ethanol complemented by ethanol from abroad is that the total ethanol supply which would be present in the U.S. market could be expected to increase. As a result of this larger stock, both the price of gas would go down and the trend of blending ethanol with gas would be encouraged. Furthermore, since sugarcane ethanol is cheaper to produce once the industry is in place ($0.83 per gallon vs. $1.14, data from ICONE), competition with countries that produce ethanol would encourage the U.S. ethanol industry to produce ethanol based on sugarcane rather than on corn—a viable option for at least sugarcane producing Hawaii, Louisiana and Florida. Thus, this option strongly favors increasing the use of ethanol over pure gas, as well as of less-polluting sugarcane ethanol over corn-based ethanol, and so its effectiveness is rated as an “A.”

Economic Impact: Increases in the ethanol supply would eventually lead to a decrease in the fuel price at the pump. It would also, on competitive grounds, decrease the price of corn, in turn lessening the pressure on the price of chicken and beef. On the other hand, due to the attractive cost of Brazilian ethanol, the increase in the import of ethanol would transfer a growing share of the revenues from the U.S. ethanol industries to Brazilian companies, potentially reducing their existing expenditure on goods and services. Thus, its economic impact is rated as a “B.”

• Encourages the production of a form of fuel that emits less CO2
• Reduces the pressure on the pump price of fuel for the general consumer

• Transfers a portion of the domestic ethanol production to other countries, which could lead to both reduced market share and domestic profits, if overall demand does not increase accordingly

Council on Hemispheric Affairs: Thomaz Alvares de Azevedo e Almeida, "Decision Memorandum to Members of the Congressional Brazil Caucus, Advocating Modifications to the U.S. Tariffs on Ethanol Imports", Tuesday, April 17th, 2007.

Reprinted with permission of the COHA.


rufus said...

Not a chance in the universe. Nada. None.

6:49 AM  
Biopact team said...

Well, there are some voices in the US calling for the abandonment of the tariff. Governor Jeb Bush and Senator Richard Lugar for example, are a staunch advocates of lifting it. But indeed, the corn lobby is probably too powerful in the US.


3:36 PM  

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