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    TMO Renewables Limited, a producer of ethanol from biomass, has licensed the ERGO bioinformatics software developed and maintained by Integrated Genomics. TMO will utilize the genome analysis tools for gene annotation, metabolic reconstruction and enzyme data-mining as well as comparative genomics. The platform will enable the company to further understand and exploit its thermophilic strains used for the conversion of biomass into fuel. CheckBiotech - May 25, 2007.

    Melbourne-based Plantic Technologies Ltd., a company that makes biodegradable plastics from plants, said 20 million pounds (€29/US$39 million) it raised by selling shares on London's AIM will help pay for its first production line in Europe. Plantic Technologies [*.pdf] - May 25, 2007.

    Shell Hydrogen LLC and Virent Energy Systems have announced a five-year joint development agreement to develop further and commercialize Virent's BioForming technology platform for the production of hydrogen from biomass. Virent Energy Systems [*.pdf] - May 24, 2007.

    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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Friday, May 25, 2007

The poverty-reducing power of ethanol

A refreshing piece on how ethanol can reduce global poverty appeared recently in the New West Network. Granting countries from the South tariff-free access to the US and EU biofuel markets would reduce illegal immigration, benefit the environment, help the poor (in the South and in the North), make both fuel and food less costly, and reduce the West's dependence on imported oil, he says. This a line of argumentation that comes closes to that of the Biopact.

Ethanol expansion may boost prices for poor farmers in the developing world (in Africa, more than 50% of all people make a living in agriculture). The author gives the example of prices for coffee beans that have been low for years. Efforts like 'fair trade' coffee that guarantee smallholders a better price have been modestly successful but haven't changed the fundamental problem, namely that of overproduction and low world prices. By diversifying into energy crops, these prices may at last improve and lift small farmers out of poverty:
Expanding worldwide demand for ethanol has caused Brazil to rapidly increase ethanol production. Land previously used for coffee and other crops has been transferred to sugar cane to meet ethanol demand. As any socially conscious coffee drinker knows, coffee growers are often confined to poverty because of low coffee prices. The Economist has frequently pointed out that coffee prices are low because of a worldwide glut of coffee beans. Reduction in coffee bean supply in Brazil, which is the world’s largest coffee producer, would improve worldwide coffee prices, and with it, the lot of coffee growers.
The exercise could be repeated for a whole range of other cash crops, on which so many in the South are dependent.

Expanding ethanol supplies would impact worldwide petroleum prices as well. The Brazilian Government estimates that it can easily produce ethanol equivalent to about 10% of worldwide petroleum consumption. Some experts have even shown that the country could replace all global gasoline demand (earier post). In Africa, the potential is equally large, if not bigger (see projections). The effect would be lower fuel prices, which is of major benefit to the poor, because they spend a higher proportion of their small budgets on energy than wealthier people:
To put this in perspective, about 5% of the world’s petroleum comes from Iran. Oil and gasoline prices are profoundly sensitive to changes in supply and demand. This is why cartels from Standard Oil to OPEC and the Texas Railroad Commission have worked hard to limit worldwide oil production. A surge in worldwide fuel supply would likely reduce gas prices in the United States. High energy prices disproportionally hurt the poor, and lower in gasoline prices would be most helpful to the poor. This is true in the United States and other countries. The vast majority of the world’s poor countries are net oil importers. Money spent on oil is unavailable for food and other necessities.
Brazil is not the only Latin American country with the potential to produce ethanol. The vast majority of Latin American and sub-Saharan African countries are located in the (sub)tropics, which give them a natural competitive advantage for the production of biofuels. The creation of an ethanol industry there can curb the dramatic problem of illegal immigration, because such an industry is relatively labor intensive and may create a large number of jobs:
Countries from Peru to Mexico could eventually be major ethanol producers. The most painless and least controversial way to reduce illegal immigration is the creation of jobs in Latin America. In Brazil alone, it is estimated that 1 million people work in the ethanol industry.
For Europe, the same logic holds. If a biofuel industry were created in Africa, the massive and dramatic influx of illegal immigrants, who risk and often lose their lives in their attempts to reach the EU, could be reduced (Senegal's president, Abdoulaye Wade, has been promoting biofuels with this perspective in mind, see here).

Lifting tariffs on Latin American ethanol would offer a broad range of benefits, he thinks:
The poor in the U.S. and Latin America would benefit from lower corn prices, jobs, cheaper fuel and higher cash crop prices. Energy security would improve if fuel came from friendly countries like Colombia and Brazil instead of the Middle East, Russia and Venezuela. Lower oil prices would weaken defiant anti-American leaders in Iran, Venezuela and elsewhere.
This is not to say that ethanol production in Brazil is without problems. Sugar cane cutters are only required for a few months out of the year. Increased ethanol production may speed deforestation. However, the best defense against deforestation is prosperity. According to a Finnish study described in the Economist and published in the Proceedings of the National Academy of Sciences, forest density is increasing in every country with a gross domestic product per capita of over 4,600 dollars per year:
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But on the US tariff and subsidies to corn farmers in Iowa, the author is very clear: you can't win presidential elections:
The best explanation for the persistence of the ethanol tariff is that Iowa is a very important state in Presidential politics. Iowa receives more farm subsidies per capita than any other state. Conveniently, the Iowa State Caucus is the first binding contest in the race for the Presidential nomination. Iowa is also one of the tightest swing states in the general presidential election. In 2000, Al Gore carried Iowa. With the help of generous expansions in farm subsidies, George Bush carried Iowa in 2004. In each of these contests, the margin of victory was well under 1%. Anyone aspiring to become or be re-elected as President would be unwise to upset Iowans.
Tariff-free access to the U.S. market would be a carrot for reform throughout Latin America. Basic poverty-fighting measures like women’s rights, property rights for the poor and transparent, democratic government could all be prerequisites to dropping the current ethanol tariff. In Europe, the hope of access to the common market of the European Union helped democratic, transparent governments spread throughout former Communist states. Ethanol markets could have a similar impact on Latin America.

Brazil is a good US neighbor, the author says. Brazil’s center-left President, Lula da Silva has committed to paying Brazil’s international debt, helping the poor and being a responsible member of the international community. Brazil has contributed thousands of soldiers to the U.N. stabilization mission in Haiti. Other Latin American countries, including Colombia, Honduras, and El Salvador have been staunch U.S. allies in recent years.

Granting these countries tariff-free access to the U.S. ethanol market would reduce illegal immigration, benefit the environment, help the poor and reduce our dependence on imported oil. President Bush will never face another Presidential election or Iowa Caucus.

For all of these reasons, the author thinks, it is time to begin phasing out ethanol tariffs.

Image: a Rwandan coffee farmers, struggling against low prices for his product. A global switch to biofuels would allow farmers to diversify their crops and to access the new market, which would prop up prices for their cash-crops.


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