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    Royal Dutch Shell Plc is expanding its fuel distribution infrastructure in Thailand by buying local petrol stations. The company will continue to provide premium petrol until market demand for gasohol (an petrol-ethanol mixture) climbs to 70-90%, which will prove customers are willing to switch to the biofuel. "What we focus on now is proving that our biofuel production technology is very friendly to engines", a company spokesman said. Bangkok Post - June 5, 2007.

    Abraaj, a Dubai-based firm, has bought the company Egyptian Fertilizers in order to benefit from rising demand for crops used to make biofuels. The Abraaj acquisition of all the shares of Egyptian Fertilizers values the company based in Suez at US$1.41 billion. Egyptian Fertilizers produces about 1.25 million tons a year of urea, a nitrogen-rich crystal used to enrich soils. The company plans to expand its production capacity by as much as 20 percent in the next two years on the expected global growth in biofuel production. International Herald Tribune - June 4, 2007.

    China and the US will soon sign a biofuel cooperation agreement involving second-generation fuels, a senior government official said. Ma Kai, director of the National Development and Reform Commission, said at a media briefing that vice premier Wu Yi discussed the pact with US Secretary of Energy Samuel Bodman and other US officials during the strategic economic dialogue last month. Forbes - June 4, 2007.

    German biogas company Schmack Biogas AG reports a 372% increase in revenue for the first quarter of the year, demonstrating its fast growth. Part of it is derived from takeovers. Solarserver [*German] - June 3, 2007.

    Anglo-Dutch oil giant Royal Dutch Shell PLC has suspended the export of 150,000 barrels per day of crude oil because of community unrest in southern Nigeria, a company spokesman said. Villagers from K-Dere in the restive Ogoniland had stormed the facility that feeds the Bonny export terminal, disrupting supply of crude. It was the second seizure in two weeks. Shell reported on May 15 that protesters occupied the same facility, causing a daily output loss of 170,000 barrels. Rigzone - June 2, 2007.

    Heathrow Airport has won approval to plan for the construction of a new 'green terminal', the buildings of which will be powered, heated and cooled by biomass. The new terminal, Heathrow East, should be completed in time for the 2012 London Olympics. The new buildings form part of operator BAA's £6.2bn 10-year investment programme to upgrade Heathrow. Transport Briefing - June 1, 2007.

    A new algae-biofuel company called LiveFuels Inc. secures US$10 million in series A financing. LiveFuels is a privately-backed company working towards the goal of creating commercially competitive biocrude oil from algae by 2010. PRNewswire - June 1, 2007.

    Covanta Holding Corp., a developer and operator of large-scale renewable energy projects, has agreed to purchase two biomass energy facilities and a biomass energy fuel management business from The AES Corp. According to the companies, the facilities are located in California's Central Valley and will add 75 MW to Covanta's portfolio of renewable energy plants. Alternative Energy Retailer - May 31, 2007.

    Two members of Iowa’s congressional delegation are proposing a study designed to increase the availability of ethanol across the country. Rep. Leonard Boswell, D-Ia., held a news conference Tuesday to announce that he has introduced a bill in the U.S. House, asking for a US$2 million study of the feasibility of transporting ethanol by pipeline. Sen. Tom Harkin, D-Ia., has introduced a similar bill in the Senate. Des Moines Register - May 30, 2007.

    A new market study by Frost & Sullivan Green Energy shows that the renewables industry in the EU is expanding at an extraordinary rate. Today biofuels and other renewables represent about 2.1 per cent of the EU's gross domestic product and account for 3.5 million jobs. The study forecasts that revenues from renewables in the world's largest economy are set to double, triple or increase even more over the next few years. Engineer Live - May 29, 2007.

    A project to evaluate barley’s potential in Canada’s rapidly evolving biofuels industry has received funding of $262,000 from the Biofuels Opportunities for Producers Initiative (BOPI). Western Barley Growers Association [*.pdf] - May 27, 2007.

    PNOC-Alternative Fuels Corporation (PNOC-AFC), the biofuel unit of Philippine National Oil Company, is planning to undertake an initial public offering next year or in 2009 so it can have its own cash and no longer rely on its parent for funding of biofuels projects. Manila Bulletin - May 27, 2007.

    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.

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Wednesday, June 06, 2007

Soros invests US$900 million in Brazilian biofuels, calls on US, EU to end tariffs

Investment tycoon George Soros said Tuesday at the first Ethanol Summit in São Paulo, that he is investing US$900 (€666) million in the production of ethanol in Brazil, and demanded that the US and EU open their markets for biofuels produced in the South American country.

Putting an end to barriers in developed nations would help eliminate a 'paradox' that leaves an excess supply of ethanol in Brazil and a "hunger for biofuels across the world," he said at the Summit, organised by UNICA (and earlier post). The seminar at which the billionaire participated was aimed at studying the global market for alternative fuels. The United States produces ethanol from corn, while Brazil makes its variant from sugar cane which is many times more efficient.

Regardless of the potential market risks, Soros said ethanol is "competitive with gasoline" as it's much more environment-friendly, and that he plans to continue investing in its production. Brazil "has the capacity to increase its ethanol production ten-fold", but there are problems to overcome, Soros said. The Brazilian market for ethanol is almost saturated, so exports are essential for industry growth. But trade barriers from other countries dampen exports, the investor said.

The Hungarian-born investor is putting around US$900 million in a 150,000 hectare (370,500 acres) ethanol production project in Mato Grosso do Sul, which will be one of the largest mill complexes in Brazil. Soros' Adeco Agropecuaria Brasil will build three ethanol refineries in a first stage.

Soros accused Washington of protecting US corn producers with its tariffs on ethanol, regardless of efficiency in terms of energy. He noted that the energy balance of corn ethanol very weak, whereas that of sugar cane is eight to ten times better. Consequently, the greenhouse gas balance of the Brazilian variant is much stronger too (earlier post):
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The United States and the European Union levy high tariffs on Brazil's ethanol, which makes it expensive. The question is "how to open up the market in the USA, Europe and Japan," and how "to create an environment with stable prices," Soros said. He believes that politicians in the US and Europe will eventually reduce or eliminate the tariffs that make Brazilian ethanol exports expensive as the world turns increasingly to biofuels over fossil fuels. He said he hopes the issue of tariffs is solved, "to make investment in ethanol really viable."

The United States, Brazil's largest foreign buyer of its ethanol, imposes a 54 cent per gallon tariff on direct Brazilian ethanol imports, roughly equivalent to the production costs of the Brazilian biofuel. The European Union levies a tariff of around 19 eurocents

When U.S. President George W. Bush visited Brazil in March, Brazilian President Luiz Inacio Lula da Silva appealed to him to reduce the tariff. Bush replied that it was a matter for Congress to decide.

Nonetheless, well over half of the 1.8 billion liters of ethanol shipped to the U.S. market from Brazil entered directly in 2006 because of the fuel's relatively low price in Brazil.

"Civilization's dependence on petroleum gives rise to problems. We are discovering less oil than we are using and there is a real tightness in the market, which requires finding alternatives," Soros said.

Former Brazilian President Fernando Henrique Cardoso, who headed the panel on global warming in which Soros spoke, said Brazil has begun to revise its position on global warming.

"We are all today responsible. In the past, Brazil's position was that the developed world was to blame for warming -- why should we pay?" said Cardoso. "And it was a common attitude of the past to see pollution as a sign of development."

"We are in the process of reconstituting the basis of civilization, which until now has worked under the premise that existing energy sources were permanent," he said.

More information:
BBJ Hungary: George Soros to invest $900 million in Brazilian ethanol - extended - June 6, 2007.

Reuters: Soros says he is a speculator in Brazilian ethanol - June 5, 2007.

Bloomberg: Ethanol Tariffs Create Brazil Oversupply, Soros Says (Update2) - June 5, 2007.


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