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    Brazil and the Dominican Republic have inked a biofuel cooperation agreement aimed at alleviating poverty and creating economic opportunity. The agreement initially focuses on the production of biodiesel in the Dominican Republic. Dominican Today - June 21, 2007.

    Malaysian company Ecofuture Bhd makes renewable products from palm oil residues such as empty fruit bunches and fibers (more here). It expects the revenue contribution of these products to grow by 10% this year, due to growing overseas demand, says executive chairman Jang Lim Kuang. 95% of the group's export earnings come from these products which include natural oil palm fibre strands and biodegradable mulching and soil erosion geotextile mats. Bernama - June 20, 2007.

    Argent Energy, a British producer of waste-oil based biodiesel, announced its intention to seek a listing on London's AIM via a placing of new and existing ordinary shares with institutional investors. Argent plans to use the proceeds to construct the first phase of its proposed 150,000 tonnes (170 million litres) plant at Ellesmere Port, near Chester, and to develop further plans for a 75,000 tonnes (85 million litres) plant in New Zealand. Argent Energy - June 20, 2007.

    The first conference of the European Biomass Co-firing Network will be held in Budapest, Hungary, from 2 to 4 July 2007. The purpose of the conference is to bring together scientists, engineers and members of public institutions to present the current state-of-the-art on biomass co-firing. Participants will also discuss future trends and directions in order to promote awareness of this technology as a sustainable energy supply, which could decrease the dependency on fossil fuels and guarantee a decentralised source of energy in Europe. The conference is supported by the EU-funded NETBIOCOF (Integrated European Network for Biomass Co-firing) project. NetBioCof - June 19, 2007.

    Green Energy Resources predicts US$50 per ton biomass woodchip prices within the next twelve months. The current US price level is between $25-32 per ton. Demand caused by the 25-30 new power plants planned in New England by 2010 does not include industry, institutions, universities, hospitals or conversions from natural gas, or cellulostic ethanol. Procurement of woodchips will be based on the delivery capacity of suppliers not local prices for the first time in history. Green Energy has been positioning in New England with rail and port locations to meet the anticipated sector expansion. MarketWire - June 19, 2007.

    In the first major initiative in the US to build a grassroots communications network for the advancement of biofuels adoption, a new national association called The American Biofuels Council (ABC) has been formed. American Biofuels Council - June 19, 2007.

    The Novi Sad-based Jerković Group, in partnership with the Austrian Christof Group, are to invest about €48 million (US$64.3m) in a biodiesel plant in Serbia. Property Xpress - June 19, 2007.

    Biodiesel producer D1 Oils, known for its vast jatropha plantations in Africa and Asia, is to invest CNY 500 to 700 million (€48.9-68.4 / US$65.5-91.7) to build a refinery in Guangxi Zhuang autonomous region, in what is expected to be the first biodiesel plant in the country using jatropha oil as a feedstock. South China Morning Post - June 18, 2007.

    After Brazil announced a record sugar crop for this year, with a decline in both ethanol and sugar prices as a result, India too is now preparing for a bumper harvest, a senior economist with the International Sugar Organization said. Raw sugar prices could fall further towards 8 cents per lb in coming months, after their 30% drop so far this year. Converting the global surplus, estimated to be 4 million tonnes, into ethanol may offer a way out of the downward trend. Economic Times India - June 18, 2007.

    After Brazil announced a record sugar crop for this year, with a decline in both ethanol and sugar prices as a result, India too is now preparing for a bumper harvest, a senior economist with the International Sugar Organization said. Raw sugar prices could fall further towards 8 cents per lb in coming months, after their 30% drop so far this year. Converting the global surplus, estimated to be 4 million tonnes, into ethanol may offer a way out of the downward trend. Economic Times India - June 18, 2007.

    A report from the US Department of Agriculture Foreign Agricultural Services (USDA FAS) estimates that the production of ethanol in China will reach 1.45 million tonnes (484 million gallons US) in 2007, up 12% from 1.3 million tonnes in 2006. Plans are to increase ethanol feedstocks from non-arable lands making the use of tuber crops such as cassava and sweet sorghum. USDA-FAS - June 17, 2007.

    The Iowa State University's Extension Bioeconomy Task Force carried out a round of discussions on the bioeconomy with citizens of the state. Results indicate most people see a bright future for the new economy, others are cautious and take on a distanced, more objective view. The potential for jobs and economic development were the most important opportunities identified by the panels. Iowa is the leading producer of corn based ethanol in the US. Iowa State University - June 16, 2007.

    Biofuel producer D1 Oils Plc, known for establishing large jatropha plantations on (degraded land) in Africa and Asia, said it was in advanced talks with an unnamed party regarding a strategic collaboration, sending its shares up 7 percent, after press reports linking it with BP. Firms like BP and other large petroleum companies are keen to secure a supply of biofuel to meet UK government regulations that 5 percent of automotive fuel must be made up of biofuels by 2010. Reuters UK - June 15, 2007.

    Jean Ziegler, a U.N. special rapporteur on the right to food, told a news briefing held on the sidelines of the U.N. Human Rights Council that "there is a great danger for the right to food by the development of biofuels". His comments contradict a report published earlier by a consortium of UN agencies, which said biofuels could boost the food security of the poor. Reuters - June 15, 2007.

    The county of Chicheng in China's Hebei Province recently signed a cooperative contract with the Australian investment and advisory firm Babcock & Brown to invest RMB480 million (€47.2/US$62.9 million) in a biomass power project, state media reported today. Interfax China - June 14, 2007.

    A new two-stroke ICE engine developed by NEVIS Engine Company Ltd. may nearly double fuel efficiency and lower emissions. Moreover, the engine's versatile design means it can be configured to be fuelled not only by gasoline but also by diesel, hydrogen and biofuels. PRWeb - June 14, 2007.

    Houston-based Gulf Ethanol Corp., announced it will develop sorghum as an alternative feedstock for the production of cellulosic ethanol. Scientists have developed drought tolerant, high-yield varieties of the crop that would grow well in the drier parts of the U.S. and reduce reliance on corn. Business Wire - June 14, 2007.

    Bulgaria's Rompetrol Rafinare is to start delivering Euro 4 grade diesel fuel with a 2% biodiesel content to its domestic market starting June 25, 2007. The same company recently started to distributing Super Ethanol E85 from its own brand and Dyneff brand filling stations in France. It is building a 2500 ton/month, €13.5/US$18 million biodiesel facility at its Petromidia refinery. BBJ - June 13, 2007.

    San Diego Gas & Electric (SDG&E), a utility serving 3.4 million customers, announced it has signed a supply contract with Envirepel Energy, Inc. for renewable biomass energy that will be online by October 2007. Bioenergy is part of a 300MW fraction of SDG&E's portfolio of renewable resources. San Diego Gas & Electric - June 13, 2007.

    Cycleenergy, an Austrian bioenergy group, closed €6.7 million in equity financing for expansion of its biomass and biogas power plant activities in Central and Eastern Europe. The company is currently completing construction of a 5.5 MW (nominal) woodchip fired biomass facility in northern Austria and has a total of over 150 MW of biomass and biogas combined heat and power (CHP) projects across Central Europe in the pipeline. Cycleenergy Biopower [*.pdf] - June 12, 2007.

    The government of Taiwan unveils its plan to promote green energy, with all government vehicles in Taipei switching to E3 ethanol gasoline by September and biofuel expected to be available at all gas stations nationwide by 2011. Taipei Times - June 12, 2007.

    A large-scale biogas production project is on scheme in Vienna. 17,000 tonnes of organic municipal waste will be converted into biogas that will save up to 3000 tonnes of CO2. 1.7 million cubic meters of biogas will be generated that will be converted into 11.200 MWh of electricity per year in a CHP plant, the heat of which will be used by 600 Viennese households. The €13 million project will come online later this year. Wien Magazine [*German] - June 11, 2007.

    The annual biodiesel market in Bulgaria may grow to 400 000 tons in two to three years, a report by the Oxford Business Group says. The figure would represent a 300-per cent increase compared to 2006 when 140 000 tons of biodiesel were produced in Bulgaria. This also means that biofuel usage in Bulgaria will account for 5.75 per cent of all fuel consumption by 2010, as required by the European Commission. A total of 25 biofuel producing plants operate in Bulgaria at present. Sofia Echo - June 11, 2007.

    The Jordan Biogas Company in Ruseifa is currently conducting negotiations with the government of Finland to sell CER's under the UN's Clean Development Mechanism obtained from biogas generated at the Ruseifa landfill. Mena FN - June 11, 2007.

    Major European bank BNP Paribas will launch an investment company called Agrinvest this month to tap into the increased global demand for biofuels and rising consumption in Asia and emerging Europe. CityWire - June 8, 2007.

    Malaysian particleboard maker HeveaBoard Bhd expects to save some 12 million ringgit (€2.6/US$3.4 million) a year on fuel as its second plant is set to utilise biomass energy instead of fossil fuel. This would help improve operating margins, group managing director Tenson Yoong Tein Seng said. HeveaBoard, which commissioned the second plant last October, expects capacity utilisation to reach 70% by end of this year. The Star - June 8, 2007.

    Japan's Itochu Corp will team up with Brazilian state-run oil firm Petroleo Brasileiro SA to produce sugar cane-based bioethanol for biofuels, with plans to start exporting the biofuel to Japan around 2010. Itochu and Petrobras will grow sugarcane as well as build five to seven refineries in the northeastern state of Pernambuco. The two aim to produce 270 million liters (71.3 million gallons) of bioethanol a year, and target sales of around 130 billion yen (€800million / US$1billion) from exports of the products to Japan. Forbes - June 8, 2007.

    Italian refining group Saras is building one of Spain's largest flexible biodiesel plants. The 200,000 ton per year factory in Cartagena can handle a variety of vegetable oils. The plant is due to start up in 2008 and will rely on European as well as imported feedstocks such as palm oil. Reuters - June 7, 2007.

    The University of New Hampshire's Biodiesel Group is to test a fully automated process to convert waste vegetable oil into biodiesel. It has partnered with MPB Bioenergy, whose small-scale processor will be used in the trials. UNH Biodiesel Group - June 7, 2007.

    According to the Barbados Agricultural Management Company (BAMC), the Caribbean island state has a large enough potential to meet both its domestic ethanol needs (E10) and to export to international markets. BAMC is working with state actors to develop an entirely green biofuel production process based on bagasse and biomass. The Barbados Advocate - June 6, 2007.

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Thursday, June 21, 2007

EU eases OPEC's fears of biofuels at 4th EU-OPEC Energy Dialogue

The 4th ministerial-level meeting of the energy dialogue between the European Union (EU) and the Organization of the Petroleum Exporting Countries (OPEC) was held in Vienna today. Ahead of the meeting the EU tried to ease fears by the OPEC on the rise of alternative energy sources in Europe. The EU-OPEC Energy dialogue, established in 2004, focused on OPEC's work on carbon-dioxide capture and storage, energy policy but also on the impact of financial markets on oil prices as well as improving market transparency and predictability. Biofuels remained a key point of debate.

German Economics Minister Michael Glos, serving as president of the EU Energy Council at the high-level meeting, said before the summit that burning of fossil fuels must be restricted for climate reasons. However, he reassured OPEC biofuels would be "introduced as a supplement" to fossil fuels. "We do not want to restrict OPEC," he told journalists at the outset of the meeting.

Earlier this year, the European Commission set out its strategy to turn the EU into a low carbon economy. It contains the ambitious target to source 20% of its overall energy mix from renewable energy by 2020. The European Council later translated this in an agreement amongst EU member states to set a 10% minimum target on the use of biofuels in transport by 2020 (earlier post).

OPEC warned earlier that in case of a long-term boom in biofuels it could cut down on investment in oil production, and that in turn a fuel shortage could be the result if biofuels ran into supply problems. The announcement was immediately countered by the chief of the International Energy Agency, who stressed that oil is in no way threatened by biofuels (earlier post).

EU experts reiterated ahead of the meeting that even if biofuels were increasingly used in Europe in the next years, the demand for oil would remain stable. Around 40 per cent of the EU's oil imports come from OPEC countries, and this share will only grow.

Crude oil prices have been hovering below the 70-dollar barrier for a while. Analysts believe that if this barrier is breached prices can climb a lot higher, into the mid-80s range. Glos warned that current prices were "the upper level of what will be tolerable for consumer countries," adding the OPEC had a shared interest in avoiding a global economic slowdown.

El-Bardri indicated earlier this week that OPEC was not considering raising its output at the moment. One reason is that increased input would go into stockpiles, as there is not enough refining capacity, OPEC argued:
:: :: :: :: :: :: :: :: ::

Among the participants in the meeting were EU Energy Commissioner Andris Piebalgs, Mohamed bin Dhaen AL Hamli, President of the OPEC conference, Abdalla Selem El-Badri, OPEC Secretary General and Michael Glos, German Minister of Economics.

The EU and OPEC representatives welcomed the progress that had been made since the third meeting of the energy dialogue in Brussels, Belgium, on 7 June 2006. This included: a roundtable on carbon dioxide capture and storage (CCS), held in Riyadh, Saudi Arabia, in September 2006; a workshop on the impact of financial markets on oil price and volatility, held in Vienna in December 2006; a roundtable on energy policies, held in Brussels last month; the launch of a joint study on refining; and other meetings and discussions. The representatives expressed their appreciation for the constructive exchanges of views in all these activities.

The first session of today’s meeting featured presentations by the EU on its recently adopted energy policy and by OPEC on oil market developments and prospects.

The EU presented the energy policy and action plan adopted in March 2007 by the European Council, focusing on sustainability, security of supply and competitiveness. This policy aims to enhance cooperation with key energy producers, transiting countries and major consumers, and calls for further development of bilateral and multilateral energy negotiations and agreements on energy. In addition, climate change is a key driver of the intimately combined EU energy and environment policy. And finally, energy technology becomes increasingly instrumental in improving efficiency and renewable energy sources for addressing climate change, by promoting clean fossil fuel and carbon capture and storage (CCS) technologies. With regard to oil market situation, the EU expressed its concern about expected seasonal increase in demand coupled with possible supply disruptions over the next few months which could lead to tightening in the oil market.

OPEC reiterated in its presentation that the present oil market remains well supplied, with commercial crude oil stocks above five-year average and an increasing level of upstream spare capacity. However, in addition to geopolitical constraints, tightness in the refining sector, which has been recognised as a matter for concern since the second EU-OPEC meeting in December 2005, continues to increase volatility and exert pressure on crude and product prices, in particular, on gasoline prices. OPEC reaffirmed its longstanding commitment to ensuring sound supply fundamentals at all times, and to offering an adequate level of spare capacity, for the benefit of the world at large.

Both sides emphasized the importance of continuously monitoring oil market developments and taking appropriate actions if necessary.

Participants expressed once again their mutual interest in stable, transparent and predictable oil markets, with reasonable prices that are consistent with the need for healthy world economic growth and steady revenue streams for producing countries, and that are conducive to the expansion of capacity to meet rising oil demand. They recognised the importance of secure future demand for crude and products in spurring timely investment both upstream and downstream, thus contributing to greater security of supply.

The two parties believed that the world is becoming increasingly interdependent, with a complex energy system that is steadily developing into a more global and interconnected one, through physical infrastructures and markets. Dialogue, partnerships and transparency were, therefore, considered essential in addressing the world’s energy needs, in a predictable, stable and harmonious manner.

In this connection, they reaffirmed their recognition of the reciprocal nature of energy security, with security of supply and security of demand being two faces of the same coin. It was, furthermore, emphasised that every effort should be made to minimise uncertainties along the supply chain, in order to reduce investment risks and support long-term market stability.

In noting that oil will remain the world’s leading energy source for the foreseeable future, the meeting agreed that, in the long run, on the basis of present information, there are enough conventional and non-conventional oil resources globally to meet the expected significant growth in demand. At the same time, however, both parties welcomed the growing diversity in the energy mix, including renewables. With regard to biofuels specifically, their sustainability was discussed, especially the many potential impacts of their large-scale trade and use for energy purposes. The EU highlighted the scope to tackle such problems through an appropriate policy framework.

The meeting also addressed the current shortages in skilled labour, equipment and services, both upstream and downstream, and rapidly rising costs, which the industry is currently facing, as well as the issue of human resources. A shortage of skilled labour for drilling, engineering, procurement, construction and other services and a downturn in the number of students in energy fields were seen as hampering the industry’s orderly expansion, and thus constituting a serious reason for concern. The meeting, therefore, decided to address this issue in the energy dialogue. It also reiterated the importance of energy technology and its decision to set-up a task force for examining the establishment of an EU-OPEC energy technology centre.

The two parties noted the big contribution that the EU-OPEC energy dialogue could make to broader-based challenges facing mankind, notably environmental harmony, sustainable development and the eradication of poverty. They agreed that cleaner fossil fuel technologies should be promoted, to help foster economic growth and social progress, while contributing to the protection of the environment. They stressed, in particular, the need for the further development and deployment of CCS technology, since this would have a key role in reducing net emissions of greenhouse gases. Both sides recognised once again the essential nature of the Millennium Development Goals and the fact that access by the poor to modern energy services facilitated the achievement of these goals.

Accordingly, they agreed upon the following specific joint actions:
  • A workshop on the oil refining sector, including the implications of biofuels, to take place in Brussels end 2007 or early 2008.
  • A study on the impact of financial markets on the oil price and volatility, with the terms of reference to be developed jointly in the coming months.
  • An enhanced discussion on CCS cooperation, leading up to a roundtable in the first quarter of 2008.
  • The development by the task force of the concept and operations of an EU-OPEC Energy Technology Centre, including the cooperative framework on education and training in the energy sector, with a report to be presented to the next annual meeting of the EU-OPEC Energy Dialogue.
The fifth meeting of the EU-OPEC Energy Dialogue will be held in Brussels, Belgium, in June 2008.

More information:
EU-OPEC Joint Statement: Further significant developments in the EU-OPEC Energy Dialogue - June 21, 2007.

EUX.TV: EU to ease OPEC fears of alternative fuels - June 21, 2007.

Petroleumworld: OPEC might not increase production in coming months: Badri - June 21, 2007.

EurActiv dossier: Geopolitics of EU energy supply - updated June 19, 2007.


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