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    A group of Spanish investors is building a new bioethanol plant in the western region of Extremadura that should be producing fuel from maize in 2009. Alcoholes Biocarburantes de Extremadura (Albiex) has already started work on the site near Badajoz and expects to spend €42/$59 million on the plant in the next two years. It will produce 110 million litres a year of bioethanol and 87 million kg of grain byproduct that can be used for animal feed. Europapress - September 28, 2007.

    Portuguese fuel company Prio SA and UK based FCL Biofuels have joined forces to launch the Portuguese consumer biodiesel brand, PrioBio, in the UK. PrioBio is scheduled to be available in the UK from 1st November. By the end of this year (2007), says FCL Biofuel, the partnership’s two biodiesel refineries will have a total capacity of 200,000 tonnes which will is set to grow to 400,000 tonnes by the end of 2010. Biofuel Review - September 27, 2007.

    According to Tarja Halonen, the Finnish president, one third of the value of all of Finland's exports consists of environmentally friendly technologies. Finland has invested in climate and energy technologies, particularly in combined heat and power production from biomass, bioenergy and wind power, the president said at the UN secretary-general's high-level event on climate change. Newroom Finland - September 25, 2007.

    Spanish engineering and energy company Abengoa says it had suspended bioethanol production at the biggest of its three Spanish plants because it was unprofitable. It cited high grain prices and uncertainty about the national market for ethanol. Earlier this year, the plant, located in Salamanca, ceased production for similar reasons. To Biopact this is yet another indication that biofuel production in the EU/US does not make sense and must be relocated to the Global South, where the biofuel can be produced competitively and sustainably, without relying on food crops. Reuters - September 24, 2007.

    The Midlands Consortium, comprised of the universities of Birmingham, Loughborough and Nottingham, is chosen to host Britain's new Energy Technologies Institute, a £1 billion national organisation which will aim to develop cleaner energies. University of Nottingham - September 21, 2007.

    The EGGER group, one of the leading European manufacturers of chipboard, MDF and OSB boards has begun work on installing a 50MW biomass boiler for its production site in Rion. The new furnace will recycle 60,000 tonnes of offcuts to be used in the new combined heat and power (CHP) station as an ecological fuel. The facility will reduce consumption of natural gas by 75%. IHB Network - September 21, 2007.

    Analysts fear that record oil prices will fuel general inflation in Kenya, particularly hitting the poorest hard. They call for the development of new policies and strategies to cope with sustained high oil prices. Such policies include alternative fuels like biofuels, conservation measures, and more investments in oil and gas exploration. The poor in Kenya are hit hardest by the sharp increase, because they spend most of their budget on fuel and transport. Furthermore, in oil intensive economies like Kenya, high oil prices push up prices for food and most other basic goods. All Africa - September 20, 2007.

    Finland's Metso Power has won an order to supply Kalmar Energi Värme AB with a biomass-fired power boiler for the company’s new combined heat and power plant in Kalmar on the east coast of Sweden. Start-up for the plant is scheduled for the end of 2009. The value of the order is approximately EUR 55 million. The power boiler (90 MWth) will utilize bubbling fluidized bed technology and will burn biomass replacing old district heating boilers and reducing the consumption of oil. The delivery will also include a flue gas condensing system to increase plant's district heat production. Metso Corporation - September 19, 2007.

    Jo-Carroll Energy announced today its plan to build an 80 megawatt, biomass-fueled, renewable energy center in Illinois. The US$ 140 million plant will be fueled by various types of renewable biomass, such as clean waste wood, corn stover and switchgrass. Jo-Carroll Energy - September 18, 2007.

    Beihai Gofar Marine Biological Industry Co Ltd, in China's southern region of Guangxi, plans to build a 100,000 tonne-per-year fuel ethanol plant using cassava as feedstock. The Shanghai-listed company plans to raise about 560 million yuan ($74.5 million) in a share placement to finance the project and boost its cash flow. Reuters - September 18, 2007.

    The oil-dependent island state of Fiji has requested US company Avalor Capital, LLC, to invest in biodiesel and ethanol. The Fiji government has urged the company to move its $250million 'Fiji Biofuels Project' forward at the earliest possible date. Fiji Live - September 18, 2007.

    The Bowen Group, one of Ireland's biggest construction groups has announced a strategic move into the biomass energy sector. It is planning a €25 million investment over the next five years to fund up to 100 projects that will create electricity from biomass. Its ambition is to install up to 135 megawatts of biomass-fuelled heat from local forestry sources, which is equal to 50 million litres or about €25m worth of imported oil. Irish Examiner - September 16, 2007.

    According to Dr Niphon Poapongsakorn, dean of Economics at Thammasat University in Thailand, cassava-based ethanol is competitive when oil is above $40 per barrel. Thailand is the world's largest producer and exporter of cassava for industrial use. Bangkok Post - September 14, 2007.

    German biogas and biodiesel developer BKN BioKraftstoff Nord AG has generated gross proceeds totaling €5.5 million as part of its capital increase from authorized capital. Ad Hoc News - September 13, 2007.

    NewGen Technologies, Inc. announced that it and Titan Global Holdings, Inc. completed a definitive Biofuels Supply Agreement which will become effective upon Titan’s acquisition of Appalachian Oil Company. Given APPCO’s current distribution of over 225 million gallons of fuel products per year, the initial expected ethanol supply to APPCO should exceed 1 million gallons a month. Charlotte dBusinessNews - September 13, 2007.

    Oil prices reach record highs as the U.S. Energy Information Agency releases a report that showed crude oil inventories fell by more than seven million barrels last week. The rise comes despite a decision by the international oil cartel, OPEC, to raise its output quota by 500,000 barrels. Reuters - September 12, 2007.

    OPEC decided today to increase the volume of crude supplied to the market by Member Countries (excluding Angola and Iraq) by 500,000 b/d, effective 1 November 2007. The decision comes after oil reached near record-highs and after Saudi Aramco announced that last year's crude oil production declined by 1.7 percent, while exports declined by 3.1 percent. OPEC - September 11, 2007.

    GreenField Ethanol and Monsanto Canada launch the 'Gro-ethanol' program which invites Ontario's farmers to grow corn seed containing Monsanto traits, specifically for the ethanol market. The corn hybrids eligible for the program include Monsanto traits that produce higher yielding corn for ethanol production. MarketWire - September 11, 2007.

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Saturday, September 29, 2007

Malaysia to trial jatropha in Sabah - replicating palm oil's poverty reduction power?

The palm oil industry is a corner stone of Malaysia's economy, generating export revenues only surpassed by oil and gas. It has become politically incorrect to say this, but over the past decades the sector has brought unprecedented wealth to hundreds of thousands of small farmers. Small holders retain a 41% share of the hectarage in the sector. The incidence of small holder poverty has dropped from 30% in the 1970s to nearly zero today, a stronger reduction than observed in any other agricultural segment. According to an analysis of the sector presented to an UNCTAD workshop:
the government of Malaysia, though its poverty redressal programs, in particular the organized smallholder programs involving oil palm, has been able to enhance the incomes of agricultural smallholders and lifted them from the vicious cycle of poverty.
Today, these strong social arguments in favor of palm oil have been clouded by environmental worries. Deforestation resulting from expanding plantations could carry a cost higher than the direct social and economic benefits from palm oil. Environmental economists are still studying the matter, but as things stand today, it may be more sensible to keep forests intact as carbon sinks, and compensate the farmers for doing so. However, the threat of ever rising oil prices may make this proposition untenable in the long run. With oil at a record $80 per barrel and rising, palm based biofuels may become more commercially attractive than the carbon value of forests.

Recently, two scientists writing in Nature urged conservationists to forget the idea of compensated reduction - which is a top-down, bureaucratic scheme unlikely to reach the small holders who need the money most - and instead suggested they should become palm oil farmers themselves. With the profits made from the plantations, conservationists could then buy forests to keep them intact (earlier post). To some the idea sounded bizarre ('join the enemy, to beat him') but it clearly illustrates the tension between direct socio-economic benefits from palm oil and more abstact benefits from environmental goods and services embodied in intact forests.

Malaysia is accutely aware of this tension, which has prompted it to show interest in diversifying its portfolio of biofuel crops by looking into Jatropha curcas. The shrub has been touted as an alternative to the large oil crops because it can be grown on poor soils, with limited inputs, away from forests.

The country's Plantation Industries and Commodities Ministry will therefor launch a pilot project in Kota Marudu in northern Sabah (map, click to enlarge) to cultivate jatropha, whose seeds contain up to 40 percent oil. Should the project prove to be viable, commercial cultivation of the plant will be carried out in the state, minister Datuk Peter Chin Fah Kui says.

But despite the environmental arguments in favor of jatropha, the same social logic which drove the government's efforts in the palm oil industry is still at work. After a dialogue with small holders in the region, the minister said:
We need to study the suitability of the [jatropha] crop in terms of soil and weather, and we chose Kota Marudu for the pilot project on the request of its MP, Datuk Dr Maximus Ongkili, as the area is among the least developed in Sabah, and we must do something to improve the lot of the people in the constituency.
Could jatropha replicate the poverty alleviating power of palm oil, while at the same time avoiding the environmental problems associated with palms?
:: :: :: :: :: :: :: :: :: ::

Chin thinks so and hopes smallholders, especially those in Kota Marudu, will participate in the cultivation "as it is sure to provide good returns". The ministry regards jatropha as an alternative crop that could contribute to the production of biodiesel in Malaysia with the potential to become a full-blown commercial crop.

However, the question remains on what type of land the jatropha will be grown and what its effects will be on land competition and on indirect pressures on forests.

If the crop is planned on land that would be suitable for palm oil, it will be difficult to convince farmers to grow it, since jatropha can't compete qua productivity and is extremely labor intensive (earlier post). On the other hand, of marginal interest may be the role jatropha could play in crop diversification. Small farmers who produce for a market that is heavily dependent on global market forces often face strong price fluctuations, and thus often stand to benefit from a diversified crop portfolio.

The strongest arguments in favor of jatropha - the fact that it can be grown on marginal soils and in semi-arid environments requiring little inputs of water - probably don't make sensee in Sabah. After all, Sabah is a heavily forested, lush green region in Borneo, the largest island in the humid tropics. The extent of 'marginal' soils there is probably limited.

On oil palm cultivation in Sabah, Chin added the federal government will continue to support the sector in the state with the use of new methods including quality seedlings. And here too, the support schemes are directed at small holders, the traditional recipients of financial and agro-technical aid:
We want to ensure that it is not only the large plantations that benefit from the latest methods but also the smallholders, which is why we have the quality seedlings aid scheme
In recent years, improved palms have been developed with some cultivars showing a 30% increase in yield. In order to arrive at a more sustainable palm oil sector, it is crucial for small holders to have access to these cultivars, so that replanting opens a cycle of higher productivity.

In another development, Chin said his ministry will introduce a new system that saves time for rubber tappers. If the smallholders use the new method, which involves gas and chemical extraction techniques, they will only need to tap 11 days a month, but the latex they collect will be equivalent to the amount from tapping daily, he explained.

Some environmentalists from the West have done their best to discredit Malaysia's plantation sector as a whole. One of their strategies has been to focus on the large estates as if they are the only actors in the industry. Too often they gloss over the fact that millions of people derive their livelihoods from the sector and that it has had profoundly beneficial social effects for Malaysia's rural population. If managed well, the biofuel market is set to bring more wealth to the small holders once again.


Bernama: Biofuel Crop Jatropha To Be Cultivated In Sabah - September 28, 2007.

Arif Simeh, "The Case Study on the Malaysian Palm Oil" [*.pdf], Regional workshop on commodity export diversification and poverty reductionin South and South-East Asia (Bangkok, 2001), UNCTAD.

Biopact: Jobs per joule: how much employment does each energy sector generate? - September 01, 2006

Biopact: Towards a truce: environmentalists should use palm oil as a lever for conservation - September 03, 2007


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