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    Spanish energy and engineering group Abengoa will spend more than €1 billion (US$1.35 billion) over the next three years to boost its bioethanol production, Chairman Javier Salgado said on Tuesday. The firm is studying building four new plants in Europe and another four in the United States. Reuters - May 23, 2007.

    According to The Nikkei, Toyota is about to introduce flex-fuel cars in Brazil, at a time when 8 out of 10 new cars sold in the country are already flex fuel. Brazilians prefer ethanol because it is about half the price of gasoline. Forbes - May 22, 2007.

    Virgin Trains is conducting biodiesel tests with one of its diesel engines and will be running a Voyager train on a 20 percent biodiesel blend in the summer. Virgin Trains Media Room - May 22, 2007.

    Australian mining and earthmoving contractor Piacentini & Son will use biodiesel from South Perth's Australian Renewable Fuels across its entire fleet, with plans to purchase up to 8 million litres from the company in the next 12 months. Tests with B20 began in October 2006 and Piacentinis reports very positive results for economy, power and maintenance. Western Australia Business News - May 22, 2007.

    Malaysia's Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui announces he will head a delegation to the EU in June, "to counter European anti-palm oil activists on their own home ground". The South East Asian palm oil industry is seen by many European civil society organisations and policy makers as unsustainable and responsible for heavy deforestation. Malaysia Star - May 20, 2007.

    Paraguay and Brazil kick off a top-level seminar on biofuels, cooperation on which they see as 'strategic' from an energy security perspective. 'Biocombustiveis Paraguai-Brasil: Integração, Produção e Oportunidade de Negócios' is a top-level meeting bringing together the leaders of both countries as well as energy and agricultural experts. The aim is to internationalise the biofuels industry and to use it as a tool to strengthen regional integration and South-South cooperation. PanoramaBrasil [*Portuguese] - May 19, 2007.

    Portugal's Galp Energia SGPS and Petrobras SA have signed a memorandum of understanding to set up a biofuels joint venture. The joint venture will undertake technical and financial feasibility studies to set up a plant in Brazil to export biofuels to Portugal. Forbes - May 19, 2007.

    The Cypriot parliament has rejected an amendment by President Papadopoulos on the law regarding the use of biofuels that contain genetically modified substances. The amendment called for an alteration in the law that currently did not allow the import or use of biofuels that had been produced using GM substances, something that goes against a recent EU Directive on GMOs. Cyprus Mail - May 18, 2007.

    According to Salvador Rivas, the director for Non-Conventional Energy at the Dominican Republic's Industry and Commerce Ministry, a group of companies from Brazil wants to invest more than 100 million dollars to produce ethanol in the country, both for local consumption and export to the United States. Dominican Today - May 16, 2007.

    EWE AG, a German multi-service energy company, has started construction on a plant aimed at purifying biogas so that it can be fed into the natural gas grid. Before the end of the year, EWE AG will be selling the biogas to end users via its subsidiary EWE Naturwatt. Solarthemen [*German] - May 16, 2007.

    Scania will introduce an ethanol-fueled hybrid bus concept at the UITP public transport congress in Helsinki 21-24 May 2007. The full-size low-floor city bus is designed to cut fossil CO2 emissions by up to 90% when running on the ethanol blend and reduce fuel consumption by at least 25%. GreenCarCongress - May 16, 2007.

    A report by the NGO Christian Aid predicts there may be 1 billion climate refugees and migrants by 2050. It shows the effects of conflicts on populations in poor countries and draws parallels with the situation as it could develop because of climate change. Christian Aid - May 14, 2007.

    Dutch multinational oil group Rompetrol, also known as TRG, has entered the biofuel market in France in conjunction with its French subsidiary Dyneff. It hopes to equip approximately 30 filling stations to provide superethanol E85 distribution to French consumers by the end of 2007. Energy Business Review - May 13, 2007.

    A group of British organisations launches the National Forum on Bio-Methane as a Road Transport Fuel. Bio-methane or biogas is widely regarded as the cleanest of all transport fuels, even cleaner than hydrogen or electric vehicles. Several EU projects across the Union have shown its viability. The UK forum was lauched at the Naturally Gas conference on 1st May 2007 in Loughborough, which was hosted by Cenex in partnership with the NSCA and the Natural Gas Vehicle Association. NSCA - May 11, 2007.

    We reported earlier on Dynamotive and Tecna SA's initiative to build 6 bio-oil plants in the Argentinian province of Corrientes (here). Dynamotive has now officially confirmed this news. Dynamotive - May 11, 2007.

    Nigeria launches a national biofuels feasibility study that will look at the potential to link the agricultural sector to the automotive fuels sector. Tim Gbugu, project leader, said "if we are able to link agriculture, we will have large employment opportunity for the sustenance of this country, we have vast land that can be utilised". This Day Onlin (Lagos) - May 9, 2007.

    Brazilian President Luiz Inácio Lula da Silva meets with the CEO of Portuguese energy company Galp Energia, which will sign a biofuel cooperation agreement with Brazilian state-owned oil company Petrobras. GP1 (*Portuguese) - May 9, 2007.

    The BBC has an interesting story on how biodiesel made from coconut oil is taking the pacific island of Bougainville by storm. Small refineries turn the oil into an affordable fuel that replaces costly imported petroleum products. BBC - May 8, 2007.

    Indian car manufacturer Mahindra & Mahindra is set to launch its first B100-powered vehicles for commercial use by this year-end. The company is confident of fitting the new engines in all its existing models. Sify - May 8, 2007.

    The Biofuels Act of the Philippines has come into effect today. The law requires all oil firms in the country to blend 2% biodiesel (most often coconut-methyl ester) in their diesel products. AHN - May 7, 2007.

    Successful tests based on EU-criteria result in approval of 5 new maize hybrids that were developed as dedicated biogas crops [*German]. Veredlungsproduktion - May 6, 2007.

    With funding from the U.S. Department of Labor Workforce Innovation for Regional Economic Development (WIRED), Michigan State University intends to open a training facility dedicated to students and workers who want to start a career in the State's growing bioeconomy. Michigan State University - May 4, 2007.

    Researchers from the Texas A&M University have presented a "giant" sorghum variety for the production of ethanol. The crop is drought-tolerant and yields high amounts of ethanol. Texas A & M - May 3, 2007.

    C-Tran, the public transportation system serving Southwest Washington and parts of Portland, has converted its 97-bus fleet and other diesel vehicles to run on a blend of 20% biodiesel beginning 1 May from its current fleet-wide use of B5. Automotive World - May 3, 2007.

    The Institut Français du Pétrole (IFP) and France's largest research organisation, the CNRS, have signed a framework-agreement to cooperate on the development of new energy technologies, including research into biomass based fuels and products, as well as carbon capture and storage technologies. CNRS - April 30, 2007.

    One of India's largest state-owned bus companies, the Andra Pradesh State Road Transport Corporation is to use biodiesel in one depot of each of the 23 districts of the state. The company operates some 22,000 buses that use 330 million liters of diesel per year. Times of India - April 30, 2007.

    Indian sugar producers face surpluses after a bumper harvest and low prices. Diverting excess sugar into the ethanol industry now becomes more attractive. India is the world's second largest sugar producer. NDTVProfit - April 30, 2007.

    Brazilian President Luiz Inacio Lula da Silva and his Chilean counterpart Michelle Bachelet on Thursday signed a biofuel cooperation agreement designed to share Brazil's experience in ethanol production and help Chile develop biofuels and fuel which Lula seeks to promote in other countries. More info to follow. People's Daily Online - April 27, 2007.

    Italy's Benetton plans to build a €61 million wood processing and biomass pellet production factory Nagyatád (southwest Hungary). The plant will be powered by biogas. Budapest Sun - April 27, 2007.

    Cargill is to build an ethanol plant in the Magdeburger Börde, located on the river Elbe, Germany. The facility, which will be integrated into existing starch processing plant, will have an annual capacity of 100,000 cubic meters and use grain as its feedstock. FIF - April 26, 2007.

    Wärtsilä Corporation was awarded a contract by the Belgian independent power producer Renogen S.A. to supply a second biomass-fuelled combined heat and power plant in the municipality of Amel in the Ardennes, Belgium. The new plant will have a net electrical power output of 3.29 MWe, and a thermal output of up to 10 MWth for district heating. The electrical output in condensing operation is 5.3 MWe. Kauppalehti - April 25, 2007.

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Thursday, May 24, 2007

Biofuels and renewables 'Country Attractiveness Indices' for Q1 2007

Ernst & Young recently released its Q1 2007 Renewable Energy Country Attractiveness Indices [*.pdf], a series of indices that rank countries on their commercial attractiveness with regards to alternative energy growth and development. These indices provide yardsticks for investors who want to know which markets offer the best near and long term alternative energy growth prospects.

The indices provide scores for national renewable energy markets, renewable energy infrastructures and their suitability for individual technologies. They take a generic view and different sponsor/financier requirements will clearly affect how countries are rated. Moreover, the indices were compiled from a purely commercial point of view, keeping in line with the current status quo of the globalised economy.

In the case of the Biofuels Country Attractiveness Indices, they say nothing about trade injustices or the politics of subsidies, which are so crucial for a debate about the potential drawbacks of biofuels. Neither do they keep in mind the efficiency of the biofuels in question or their effectiveness at mitigating climate change. The economy and its investors do not automatically mind the social and environmental sustainability of their ventures.
The Biofuels Country Attractiveness Indices rank the attractiveness of the top 15 global markets for investment in biologically derived renewable fuels incorporating both ethanol, and biodiesel. The Q1 2007 edition includes individual scores for bioethanol, biodiesel, and infrastructure, plus a combined score making up the All Biofuels Index.
As such, the Index may be handy for investors, but for policy makers, environmentalists or energy analysts they are of less use. The top 15 stack up as follows on the All Biofuels Index (click to enlarge):

Referring to the recent investment boom in biofuels, the report says that:
Growing optimism in the sector has not been lost on investors who are showing an appetite to take advantage of the growth potential and capital requirement of the market with over US$400m invested in 2006 and analysts predicting a compound annual growth rate for the industry of 30% in the medium term.
Germany tops the Biodiesel Index with a long history of governmental and financial support for the industry but its score would have been higher were it not for last year’s reduction in excise tax incentives, in favour of blending targets, leading to concerns that the market is reaching overcapacity.

France is in second place with an established biodiesel industry currently supported by excise tax exemptions, but with EU blending targets to be met in the future. For example, Diester has announced an expansion programme for four plants ranging from 100,000 to 250,000 tonnes per annum (ktpa) by 2008.

The United States and Brazil both benefit from high diesel demand and the necessary arable land to grow feedstocks such as soy. EU markets that are large fossil fuel consumers such as Spain, where Grupo Natura have just inaugurated a 105ktpa plant and the UK with AIM listed producers D1 Oils and Biofuels Corporation, benefit most in the Index. Below them are the smaller economies – Sweden with its attractive offtake regimes; Italy with established biodiesel production and Austria whose industry grew up very much in line with Germany’s. Canada has some regulatory support and is located next to the large US market:
:: :: :: :: :: :: :: :: :: :: ::

Biodiesel demand in China is expected to rise significantly in the future and ChinaAgri, who floated on the Hong Kong Stock Exchange this quarter, and CNOOC are both investing in capacity. However, regulatory support has been inconsistent and relatively little foreign investment has been attracted. Thailand, Malaysia and Indonesia have strong listed plantation investors such as Golden Hope and PTAsianAgri who produce biodiesel, and the regulatory regimes are now recognising this potential. Ethical concerns continue over agronomy practises in the region however. India has the potential to grow the high yielding feedstock jatropha and a large domestic fuel market but little biodiesel production at present.

Brazil and the US are joint top of the Ethanol Index (click to enlarge). Brazil enjoys a high yielding feedstock, sugar cane, high blending targets, various tax incentives, and a large production capacity. This is attracting foreign investment such as from AIM listed vehicles Infinity Bio-energy and Clean Energy Brazil. The US produced more ethanol that Brazil for the first time during 2006. Investment in the US is flowing from developers such as NYSE listed Aventine Renewables as well as through global corporations entering the business such as Virgin Fuels with their investment in Cilion and joint venture with NTR’s Bioverda. In addition, the Federal grants for second generation, or cellulosic, ethanol have encouraged the market. High corn prices are expected to soften following record levels of planting this season by US farmers.

Europe continues to be a relatively modest producer of ethanol with its largest producer, Germany, producing just a fraction of the United States’ production during 2006. Belgium's score suffers due to its low gasoline consumption and Italy's as a result of its low installed capacity. Q1 2007 alone has seen the financial close of the 400 milllion liters per year Ensus plant in the UK, Raffinerie Tirlemontoise’s 300 million liters/year plant in Belgium and Abengoa’s 200 million liters per year French facility.

Australia sits in the top ten thanks to some state level mandatory blending legislation and availability of the high yielding feedstock sugarcane. China too is piloting cellulosic technology due to a lack of grain. Investment today is at both ends of the value chain from state-owned grain trader COFCO and the nation’s largest oil producer CNPC. India produces significant levels of ethanol and will need to satisfy high future oil demands. Other South East Asian economies, such as Thailand and the Philippines, are implementing blending targets and should benefit from their proximity to China, India, South Korea and Japan for export purposes.

Biofuels Infrastructure Index
The Biofuels Infrastructure Index is an assessment by country of the general regulatory infrastructure for biofuels. On a weighted basis, the index considers:
  • Market regulatory risk – 29%: The score in this category depends on how strongly the general regulatory, political and economic environment in the respective market encourages the production, distribution and use of biofuels
  • Supporting infrastructure – 42%: A market with sufficient arable land available to cultivate, an established and widespread distribution network and R&D activity will score well
  • Access to finance – 29%: Markets with a sound financial industry, proven financial track record of financing biofuels projects, listed companies operating in the biofuels sector and strong appetite by foreign and domestic investors score highly
Fuel Specific Indices
This comprises two indices providing fuel specific assessments for each country, namely ethanol and biodiesel. Some markets may appear in one of these Fuel Specific Indices but not in the All Biofuels Index since certain markets have a particular bias toward one fuel type but not the other (hence the combined score is reduced). Each of the indices consider, on a weighted basis, the following:
  • Offtake incentives – 25%: This includes the level of mandatory blending targets, tax breaks on fuel excise duty and tax credits awarded to biofuels producers
  • Tax climate – 8%: Countries that create a favourable tax climate such as enhanced capital allowances or corporation tax holidays will score highly
  • Grants and soft loans – 8%: Comprises grants and soft loans for investment in biofuels production
  • Current installed base – 11%: Existing production capacity installed in a country
  • Domestic market growth potential – 15%: Gasoline/petrol or diesel consumption of a country is used to determine the ultimate growth potential for alternative fuels
  • Export potential – 15%: A market’s score is determined by its geographical location and any free trade agreements it is a party to
  • Feedstock – 10%: Takes into account the energy yield, sustainability and price volatility of a country’s main biofuels feedstocks
  • Project size – 8%: Large projects provide economies of scale which facilitates project development
Wind, Solar, Biomass
The All Renewables Index which includes onshore and offshore wind, solar and biomass looks as follows (click to enlarge):

More information:
Ernst & Young, Renewable Energy Group: Q1 2007 Biofuels Country Attractiveness Indices [*.pdf] - May 2007.

Ernst & Young, Renewable Energy Group: Q1 2007 Renewable Energy Country Attractiveness Indices [*.pdf] - May 2007.


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