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    AltraBiofuels, a California-based producer of renewable biofuels, announced that it has secured an additional US$165.5 million of debt financing for the construction and completion of two plants located in Coshocton, Ohio and Cloverdale, Indiana. The Coshocton plant's capacity is anticipated to reach 60million gallons/year while the Cloverdale plant is expected to reach 100 million gallons/year. Business Wire - June 23, 2007.

    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

Latest Doha talks collapse again, agriculture remains stumbling block

Talks between trade powers to salvage global trade talks collapsed today, throwing the future of the World Trade Organisation's struggling 'Doha Development Round' deeper into doubt. The Doha round's original aim was to adjust the global trade regime in such a way that it helps lift millions out of poverty through more trade. Doha has faced problems from the start, mainly over agriculture, a highly sensitive political issue for both developing as well as wealthy nations.

Trade and agriculture ministers from the 'G4' - the EU and the US, representing rich nations, and India and Brazil, for the developing world - had been meeting in Germany to find a new breakthrough but talks collapsed and the parties blamed each other for the failure. Brazil and India said the EU and US did not offer enough concessions on agricultural subsidies and trade barriers. The EU and the US in turn blamed their counterparts for not going far enough on opening markets for manufactured goods. The wealthy countries try to secure export opportunities for their own corporations. However, the crux of the matter is that trade barriers and subsidies remain much higher for agriculture in the EU/US than for manufactured goods in the Global South. Also consider that 70 percent of people in developing countries depend directly or indirectly on agriculture, so they are the losers under the current trade regime.
  • The EU's latest offer was to eliminate export subsidies by 2013 and cut trade distorting domestic farm subsidies by more 70%.
  • EU officials told journalists the sort of tariff cuts being offered by Brazil in return would not have led to any additional exports from companies from the developed world.
  • the US offered to cap its overall spending on trade-distorting domestic support at $17 billion. But as leaders of the G20, the coalition of developing countries which also includes China and Argentina, India and Brazil are pushing for an annual US spending limit of no more than $15 billion.
The Doha round is seen by many as an opportunity for the developing world to gain access to agricultural markets in the West, while it would protect their markets from being flooded by heavily subsidized farm products. As such, a deal that cuts farm subsidies and trade barriers in the EU and the US would be important for the development of a global bioenergy industry in which the Global South would have clear competitive advantages that should be consilodated by classifying biofuels in a new way (an analysis of this complex matter).

Several people, including Nobel-prize winning economist Joseph Stiglitz (earlier post), Ted Turner (previous post) and C. Boyden Gray, ambassador to the EU (more), have even suggested that the global biofuel revolution may hold the key to revive the Doha talks. The latter said that continuing demand for corn for the production of ethanol could make it easier for the US to cut the enormous amount of subsidies US farmers receive. However, the idea met heavy resistance from Big Corn:
:: :: :: :: :: :: :: :: :: :: :: :: ::

In a recent essay, Stiglitz illustrated the Doha deadlock with the example of Brazilian ethanol, which can be produced far more efficiently than biofuels in the North:
Perhaps the most outrageous example is the US$0.14 per liter import tariff on ethanol in the US, whereas there is no tariff on oil, and only a US$0.13 per liter tax on gasoline. This contrasts with the US$0.13 per liter subsidy that US companies (a huge portion of which goes to a single firm) receive on ethanol. Thus, foreign producers can't compete unless their costs are US$0.27 per liter lower than those of US producers.
Sitglitz added that "Developing countries cannot, and should not, open up their markets fully to the US' agricultural goods unless US subsidies are fully eliminated. To compete on a level playing field would force these countries to subsidize their farmers, diverting scarce funds that are needed for education, health, and infrastructure".

Now in Potsdam, Washington has demanded that any deal that significantly cuts US farm subsidies must open new export markets around the world in agriculture, manufacturing and services. But Brazil and India said Washington was not prepared to go far enough to warrant additional concessions on their part in manufacturing goods or in lowering barriers to imports of U.S. farm goods.

"If the round is to move forward, there will have to be a substantial attitude change," said India's Commerce and Industry Minister Kamal Nath.

In a letter to Schwab and Mandelson on Wednesday, leading U.S. and European manufacturers warned they could not support an agreement that did little to open developing countries to additional exports. This dashed hopes of a breakthrough.

Without an agreement between the four powers at this meeting in Potsdam, diplomats and trade officials had warned that it would be difficult for the full 150-member state WTO to strike a deal as hoped by the end of July.

Some non-governmental organisations, altermondialists and civil society groups think the collapse of Doha is not necessarily a bad thing. Such a crisis of the formal trading system would open a new era in which developing countries can push for a new model that benefits poor societies and the environment more than the current WTO regime does today.

More information:
World Trade Organisation: Statement from Director-General Lamy concerning Potsdam outcome - June 21, 2007.

BBC: Latest world trade talks collapse - June 21, 2007.

Reuters India: G4 talks collapse, throw trade round into doubt - June 21, 2007.

Bloomberg: WTO Talks Break Down; EU and U.S. Blame India, Brazil - June 21, 2007.

Biopact: Stiglitz explains reasons behind the demise of the Doha development round - August 15, 2006

Biopact: Discussion text: global biofuels trade and WTO's role - October 21, 2006.


rufus said...

Your article implies that the $0.51/gal tax credit applies only to domestically-produced ethanol, when, in reality, it applies to ALL ethanol. Also, you leave out that over Six Hundred Million Gallons of Ethanol will be imported into the U.S. free of the $0.52/gal secondary tariff.

10:03 PM  
rufus said...

That should have been that over six hundred million gallons will be imported duty free in 08'.

10:04 PM  
Jonas said...

That's true and Brazil is trying to find a way around the tariff (by exporting and re-exporting via a third, often Caribbean country).

But the ethanol tariff was just an example (why not simply slash it? it would also benefit US consumers).

The point is that entire system of agricultural subsidies and trade barriers is simply unfair to developing countries. Millions of people in the South depend on this and are kept out of the market in an artificial way.

Farm subsidies date back to the post-Second World War era, when food insecurity reigned in Europe. The system was not meant to last, definitely not in an era of an overabundance of food. Today, these subsidies really distort trade in a way that can obviously no longer be legitimized on the basis of protecting the food security of Europeans. We spend more on subsidies for European cows than on development aid.

Jonas VDB

2:52 AM  
rufus said...

Jonas, European Cows are much more important to "Europeans" than is Development Aid to, say, Zimbabwe.

We set up our tax credits for the blending of ethanol to help our own farmers, and to help get loose from our "dependence" on foreign energy.

In the long run it will work out fine for Brazil because we will, almost surely, create a larger market than our own producers can supply. In the short run, if we did away with the tariffs we would end up favoring foreign ethanol providers over our own small oil producers. It just ain't gonna happen.

6:11 PM  
Jonas said...

Well, it almost did.

"Sen. Judd Gregg, R-N.H., proposed Wednesday to repeal the 54-cent-a-gallon tariff, arguing that it was forcing East Coast motorists to pay more to gas up their cars.

“I would rather buy ethanol from Brazil than oil from Venezuela. It just makes a lot more geopolitical sense in how we protect ourselves,” Gregg said."


In the end, the Senators did reject the proposal.

Rufus, the strange thing is that you seem to be willing to favor a handful of farmers over millions of Americans. Why?

9:18 PM  
rufus said...

First off, I AM NOT a Farmer, nor, do I have any financial interest in the Ag industry. In fact, I am a Retired Businessman, and News Junkie.

I would like to see my Grand-Child's country be energy independent. This is going to be difficult to accomplish. Big Oil is dead set against this. They are incredibly powerful. Ethanol will have to have powerful Political support, and go garner this support we have to bring to bear the most powerful political block in the country. FARMERS.

If the Farmers don't benefit we can't get the support for ethanol that will be needed to fight the big oil money. Remember, Exxon, Citgo, Chevron, Valero, etc. own the distribution network. Saudi Arabia, and the Gulf States have Resources that are virtually unimagineable to the average person.

In the long run it will all be worth it. The United States will lead the world into a Carbohydrate Economy. Brazil will benefit; the Congo will benefit, and Europe will benefit. The Senate, yesterday, committed to 36 BILLION GALLONS/YR by 2020 (I think it was.) Europe is doing some neat stuff with biogas. We're doing some pretty good work with gene-splicing, and other research.

Don't worry about "next year." Look at where this is going in the next 30 years. The American Farmer will do his part to get it started. BTW, an honest analysis would probably ask, "which is more energy efficient - An American farmer with a tractor using 10 gallons of Biodiesel/acre, or 50 Brazilians with machetes.

The answer might surprise you.

1:09 AM  
Jonas said...

Fair points, Rufus, but consider this:

-why do you want energy independence? Because dependence has become risky, it has turned the USA into a bully that grabs oil where it can, installs dictators, then removes them, etc... America's oil dependence may have had less nasty side-effects in the past, but today you are at a point where you see the negatives outweighing the benefits: from war to terrorism

-the problem is that the new utopia of total energy independence may end up getting the US in equally nasty situations; there's already a great deal of criticism about it using so much corn - a foodstuff on which millions of the poor depend. Don't forget that poverty and underdevelopment are some of the main reasons fuelling terrorist sympathies and hatred of the West;

-we think there is no contradiction between mutually beneficial energy inter-dependence. A compromise is possible. Biofuels offer an ideal route towards such a relationship: it can be sourced from many places, this diversity of supply means lower risk; and production of biofuels can boost development

-if you look at things globally, you see that it is possible to help many developing countries getting out of poverty by opening our agricultural markets for their products. Biofuels allow you to combine things: help in the fight against poverty and help secure energy supplies for our own markets. It's a win-win situation.

-I'm not saying the US should abandon all its subsidies for its corn farmers, but I think it may be wiser to spread some of that money into a broader range of sectors: in fundamental R&D in general and in cooperation with developing countries, who need the help with the transition to sustainable energy perhaps more than us.
Obviously it is crucial to create a domestic market for ethanol first, else the developing countries cannot export anything to us, and here subsidies might help. But they should not become an eternal handout.

The ethanol cooperation agreement between Brazil and the US is a good start, showing that both parties are willing to exchange knowledge. But opening markets by abandoning tariffs and creating a more level playing field by getting rid of subsidies would fuel competition and stimulate non-subsidized development of new biofuels. That counts too.

2:10 AM  
rufus said...

Jonas, I appreciate that your heart is in the right place, but I'm not sure you are fully cognizant of the difficulties of bringing the car manufacturers, the distributors, the farmers, the investors, and the consumers all on board, simultaneously, for a new fuel during a time of non-crisis.

We were getting, more or less, nowhere with the project prior to the $0.51 tax credit. That gave the investors confidence that the oil companies wouldn't be able to easily crush them once they got started. This, in turn, reassured the car companies that they could make a little extra investment, and the same went for the independent gasoline distributors.

BUT, here's the rub; They could have never gotten the tax credit through absent the secondary tariff. The legislators could justify giving the ethanol distributors/investors/farmers a little help at the expense of exxon; but, they could NEVER justify favoring the Brazilian Sugar Cane Producer at the disfavor of the small midwestern/western oil and gas producer.

We did, however, leave the back door cracked for the Brazilians with the 10% of prior year's allowance Rule. This allowed foreigner, predominantly Brazil, to import over 400 Million Gallons of ethanol into the U.S. duty free last year. What other country can say that?

Look, we're going to create a very, very large market. It's almost a sure thing that we will import quite a large amount of biofuels as we go along. Probably much more at a later date, after we've done away with the tax credit and the tariff. You're probably looking another five or six years for that. You see, there will be no way to keep the tax credit after the tariff is gone, and there is no chance of keeping them both forever. In a few years the ethanol business will be solidly enough entrenched that we can safely send it out on it's own.

In the meantime there's enough work to keep us all busy. That Brazilian firm just made a nice breakthrough on bioplastics, and Dupont and BP is still working on Biobutanol, and there's no telling what SE Asia, and the Pacific Islands will end up doing.

I think you're overthinking the oil thing. It's just a fact that when you talk oil you're talking Venezuela, Iran, Nigeria, the Straits of Hormuz, and Russia. Bad, bad cess.

And, about corn: There is no end to the amount of corn the world can grow. Good Lord, Almighty. Fifty Billion Bushels? A Hundred Billion? Easy. The problem has never been being able to raise all you could possibly want. The problem is most of the world is too poor to buy it. Today, corn was selling for about $0.06 lb. By the fall we'll probably be back to four and a half or five cents/lb.

By the way, the U.S. got to be the most successful economy on earth by having the Lowest "Import" tariffs. If the Brazils, and Senegals of the world want prosperity the surest path is NOT to convince the U.S. to lower our import tariffs, but, to lower their own. Jes Sayin.

It's been a pleasure chatting with you Jonas. It will all work out very well, I think. Remember, half of all the Scientists that ever lived will be going to the office monday morning. I'm optimistic.

6:33 AM  
Jonas said...

Well, Rufus, I for one share your optimism.

And I agree that poverty is the main driver of food insecurity.

It's just that we think biofuels offer a unique opportunity - only one of many - to help alleviate some of that poverty in the South.

The US would be a very lucrative market and will open up in a few years time, as you say (the tariff was supposed to expire in 2007, but Congress extended it to 2009).

Likewise, we know there is a vast untapped potential to produce biofuels (even though critics only see short term shocks and price increases). So it's not a question of lack of resources, it's a question of a lack of investment.

Finally, developing countries should first think of producing for themselves, to reduce their oil import bills.

So all in all, I'm on the same line as you, but it's just that little tariff and tax break that should go... Same for the EU, by the way. ;-)

In the end, there will be more than enough work and business for all of us, and many countries in the South will attract investment in agriculture once peak oil proves to have arrived. When it has, biofuel producers with a large potential will benefit spontanously from their competitive advantages; their fuels will be in high demand simply because they're cheaper than petroleum.

Brazil already is attracting massive investments. Other developing countries are waiting in line. When oil prices reach a certain level, investors will even take the risk of pouring money into future biofuel 'superpowers' that don't look very investor-friendly today.


1:16 PM  
rufus said...

Agreed, Cheers

6:39 PM  

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