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    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.

    Ethanol Statistics, a new industry information resource, reports that U.S. petroleum refiners Citgo and Valero are the top 2 ethanol importing companies in the United States in the first 6 months of 2007. Overall imports were up 7.64% compared to the same period in 2006, from 193,620 gallons to 208,404 gallons. Chevron imported 43% less, whereas Noble and ConocoPhilips' imports were up 255% and 372% respectively. Data are reported in 'The United States Ethanol Market 2007’, which also provides a breakdown of U.S. ethanol production costs and a detailed analysis of U.S. consumption and production. Ethanol Statistics - September 10, 2007.

    The government of British Columbia launches a $100,000 study into the production of biogas, heat, power and clean water from household waste streams. Raw sewage water can be cleaned by microbial fuel cells that deliver electricity as they clean the water; other technologies include classic anaerobic fermentation. Canada.com - September 10, 2007.

    Saudi Aramco in its Annual Review 2006 said that last year the company's crude oil production declined by 1.7 percent, while exports declined by 3.1 percent, compared with the previous year. Crude oil production in 2006 averaged 8.9 million barrels of oil a day (b/d) and exports 6.9 million b/d. Saudi Aramco - September 9, 2007.

    Chinese packaging manufacturer Livan Biodegradable Product Co. Ltd. will build plants in Alsozsolca and Edeleny in eastern Hungary at a combined cost of €18 million by 2009, the Hungarian economics ministry says. The plants, which will employ 800 people, are planned to produce initially 50, 000 metric tons a year of environmentally-friendly packaging material, and double that amount by a later date. Livan will use corn to manufacture biodegradable packaging boxes with similar properties to petroleum-based plastic boxes used in the food industry. Dow Jones Newswires - September 7, 2007.

    South Korea aims to raise biodiesel content in domestic diesel to 3 percent from the current 0.5 percent by 2012, Seoul's energy ministry said today. The government was initially set last year to impose a mandatory 5 percent blend, in line with the level targeted by the European Union by 2010, but the country's powerful refining lobby opposed the move, forcing it to push back the target, according to market sources. Reuters - September 7, 2007.

    Virent Energy Systems, Inc. announced today that it has closed a US$21 million second round of venture financing. Investor interest in Virent was driven in large part by the Company’s continued development of its innovative BioForming process beyond its traditional hydrogen and fuel gas applications and toward the production of bio-based gasoline, diesel, and jet fuels. Virent Energy Systems - September 6, 2007.

    The U.S. National Ethanol Vehicle Coalition (NEVC) announces that 31 models of motor vehicles will be offered in the U.S. with an E85 capable engine in 2008. Chrysler, Ford, General Motors, Nissan and Mercedes Benz will all offer flexible fuel vehicles (FFVs) in the coming year. The NEVC expects 750,000 such FFVs will be produced in 2008. National Ethanol Vehicle Coalition - September 5, 2007.

    GreenHunter BioFuels, Inc., has begun commercial operations with the start-up of a 1,500 barrel per day methanol distillation system. Methanol is an alcohol used to transesterify vegetable oils into biodiesel. The methanol production facility is a key element of GreenHunter's 105 million gallon per year biodiesel refinery, the largest in the U.S., slated for initial operations during the first quarter of 2008. PRNewswire - September 5, 2007.

    GreenHunter BioFuels, Inc., has begun commercial operations with the start-up of a 1,500 barrel per day methanol distillation system. Methanol is an alcohol used to transesterify vegetable oils into biodiesel. The methanol production facility is a key element of GreenHunter's 105 million gallon per year biodiesel refinery, the largest in the U.S., slated for initial operations during the first quarter of 2008. PRNewswire - September 5, 2007.

    Spanish renewables group Abengoa released its results for the first half of 2007 financial year in which its consolidated sales were €1,393.6 million, which is a 27.9 percent increase on the previous year. Earnings after tax were €54.9 million, an 18.6 percent increase on the previous year's figure of 46.3 million euro. Abengoa is active in the bioenergy, solar and environmental services sector. Abengoa - September 4, 2007.

    Canadian hydro power developer Run of River Power Inc. has reached an agreement to buy privately owned Western Biomass Power Corp. in a $2.2 million share swap deal that could help finance development of new green sources of electricity in British Columbia. The Canadian Press - September 4, 2007.

    As of Sept. 1, a biodiesel blending mandate has come into force in the Czech Republic, requiring diesel suppliers to mix 2 per cent biodiesel into the fuel. The same rule will be obligatory for gasoline starting next year. In 2009 the biofuel ratio will grow to 3.5 percent in gasoline and 4.5 percent in diesel oil. CBW - September 3, 2007.

    Budapest's first biofuel station opens on Monday near the Pesterzsébet (District XX) Tesco hypermarket. This is the third station selling the E85 fuel containing bioethanol in Hungary, as two other stations are encouraging eco-friendly driving in Bábolna and Győr. Caboodle - September 3, 2007.

    Canadian forest products company Tembec announced that it has completed the acquisition of the assets of Chapleau Cogeneration Limited located in Chapleau, Ontario. The transaction includes a biomass fired boiler and steam turbine with an installed capacity of 7.2 megawatts. Consideration for the assets consists of a series of future annual payments to 2022, with a present value of approximately $1 million. Tembec - September 1, 2007.

    Innovative internet and cable/satellite channel CurrentTV is producing a documentary on Brazil's biofuel revolution. Biopact collegues and friends Marcelo Coelho (EthanolBrasil Blog), Henrique Oliveira (Ethablog) and Marcelo Alioti (E-Machine) provided consulting on the technical, economic, environmental and social aspects of Brazil's energy transformation. ProCana - August 31, 2007.

    Oil major BP Plc and Associated British Foods Plc won competition clearance from the European Commission on to build a plant to make transport fuel from wheat in Hull, northeast England. U.S. chemical company DuPont is also involved. Reuters UK - August 31, 2007.

    The government of the Indian state of Orissa announced its policy for biofuel production which includes a slew of incentives as well as measures to promote the establishment of energy plantations. The state aims to bring 600,000 hectares of barren and fallow land under Jatropha and Karanj. At least 2 million hectares degraded land are available in the State. The new policy's other objectives are to provide a platform for investors and entrepreneurs, market linkages and quality control measures. Newindpress - August 29, 2007.

    Brazil's state-run oil company Petrobras said today it expects to reach large scale cellulosic ethanol production in 2015, with the first plant entering operations as early as 2011. Lignocellulosic biomass is the most abundant biological material on the planet, making up the bulk of the structure of wood and plants. In a first phase, Petrobras intends to use bagasse as a feedstock. Reuters / MacauHub- August 29, 2007.

    Seattle based Propel Biofuels, is announcing a $4.75 million first round of capital from @Ventures and Nth Power. The money will be used to help Propel set up and manage biodiesel fueling stations. BusinessWire - August 29, 2007.

    BioEnergy International, a science and technology company committed to developing biorefineries to produce fuels and specialty chemicals from renewable resources, announced today the closing of a major US$61.6 million investment that will provide funding for the Company’s three strategic initiatives: generating secure cash flow from its conventional ethanol platform, product diversification through the introduction of novel biocatalysts for the manufacture of green chemicals and biopolymers and the integration of its cellulose technology. BusinessWire - August 28, 2007.

    German company Verbio Vereinigte BioEnergie, the biggest biofuels producer in Europe, says it is considering plans to invest up to €100/US$136.5 million in a biofuel production facility in Bulgaria. The company wants the new facility to be located close to a port and Bulgaria's city of Varna on the Black Sea is one of the options under consideration. If Verbio goes through with the plan, it would produce both biodiesel and bioethanol, making Bulgaria a major source of biofuels in southeastern Europe. Verbi currently produces around 700,000 tonnes of biofuels per year. Sofia News Agency - August 27, 2007.

    Czech brown-coal-fired power plant Elektrárna Tisová (ETI), a unit of the energy producer ČEZ, could co-fire up to 40,000 tons of biomass this year, the biggest amount in the company’s history, said Martin Sobotka, ČEZ spokesman for West Bohemia. ETI burned more than 19,000 tons of biomass in the first half of 2007. The company’s plan reckoned with biomass consumption of up to 35,000 tons a year. Czech Business Weekly - August 27, 2007.

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Tuesday, September 18, 2007

US tops Biofuels Country Attractiveness Indices for Q2 2007

The US is the fastest expanding market in the world for biobased renewable fuels, according to Ernst & Young’s second quarterly 'Biofuels Country Attractiveness Indices' [*.pdf] (earlier post on Q1 rankings, and for definitions of the indices, which are made up of factors ranging from infrastructure to market regulations).

Some interesting changes can be observed compared to the previous rankings. Germany's lower biodiesel ranking is the most obvious one. The world's largest biodiesel market has seen a tax exemption on the fuel being removed, with the consequence that producers can no longer compete with much cheaper imports.

Brazil loses its top spot on the ethanol ranking because it is a victim of its own success: the country sees mounting pressure to stimulate further export potential, as the headroom in the domestic market is reaching its limits following record sugarcane harvest and production outputs resulting in plummeting ethanol prices (previous post). For this reason, Brazil's leaders have been touring the globe to promote Brazilian biofuels and to create export markets (more here, here and especially here).

A new entrant is The Netherlands, which wants to become a European trading hub for biofuels. Suitable infrastructures are expected to attract large investments there (see our extensive coverage of the Bioport concept). Likewise the Philippines are taken up in the Index, as it continues to receive interest from overseas investors who are starting biofuel projects with the aim to export (earlier post and here, here and here).

According to the Indices the attractiveness of the US for investment in biofuels was given a further boost last month by the US House of Representatives, which announced that it plans to provide billions of dollars of tax breaks and incentives for renewable energy (earlier post).

Overall ranking
Investment in the US biofuels industry shows no sign of abating. The increased investment in biofuels in the US is being driven by its attractive regulatory environment, support mechanisms, and project pipelines, which are unrivalled.

The US has a strong development pipeline in ethanol production and the world’s largest project pipeline for biodiesel, which should produce 450 million gallons by 2008, compared to 136.5 million gallons in 2006. The sheer size of the pipeline provides investors with a greater choice in both operating assets and project development opportunities.

In addition, recently proposed legislation would require US refineries to blend a mandatory minimum of 1.25 billion gallons of biodiesel per year by 2012, and although not passed, it sends a very positive message to investors about future demand for biofuels in the US.

These factors have strengthened the US’s position at the top of the All Biofuels Index (table 1, click to enlarge) and given the US a significant four-point lead over its closest rival Brazil.

Germany maintains its position, but is seeing significant difficulties in its biodiesel industry as producers are now running at 50% capacity. This is expected to worsen as higher local feedstock prices, rising fuel excise levies, and cheap imports are making it impossible for German producers to compete:
:: :: :: :: :: :: :: :: :: ::

Spain’s score has risen closer to that of France and Germany as its newly instated mandatory blending targets of 1.9% biofuel content by 2008, 3.4% by 2009 and 5.83% by 2010 are expected to increase demand, prompting investment in new production capacity.

Behind them Sweden has moved into sixth place, principally due to the rapidly growing national demand for ethanol which is set to step up further as the next phase of the distribution obligation will take effect this year. The UK score remained steady with further ethanol production capacity expansion announced, but concerns over the lengthy pollution prevention and control permit procedures are expected to slow development.

China’s overall score remains the same despite the drop in its ethanol score, caused by the fact that no more grain-based ethanol sites will be granted permits in response to continuing rises in food crop prices.

The Netherlands is a new entrant into the All Biofuels Index top 15 with its position as Europe’s fuel hub expected to help it add over 1.2 million tons per annum (mtpa) of production capacity over the next two to three years. India drops one place as newly implemented support mechanisms are insufficient to stimulate significant growth in either biofuels technology.

Australia drops by five points over doubts surrounding the government’s ability to enforce blending targets and the vulnerability of the agricultural sector to droughts. Actual biofuels production was 13 million liters per year in 2006 against a target of 82–124 million liters per year.

The US has moved ahead of Brazil to take the top spot in the Ethanol Index at Q2 2007. The US has a strong development pipeline and further support mechanisms currently being progressed are encouraging. Continuing high levels of transaction activity and investment in established production sites as well as cellulosic technology can be expected.

Brazil’s score decreases by two points despite increased domestic blending targets from 23% to 25%; this will be insufficient to absorb the expected output increase of 13.5% this year compared to 2006. Brazil needs to compensate for this with more export agreements such as the one currently being negotiated with Japan for 3.5bLpa from 2011.

Germany’s ethanol industry sees only moderate demand increases but planned expansion of the nationwide network for E85 sales is encouraging.

Spain has overtaken France and Canada to claim fourth spot in the Indices as a result of new mandatory blending targets expected to increase demand. The positive trend in the US market is expected to aid the Canadian industry although it still lags some way behind.

Sweden’s score has risen by two points as the obligation on fuel stations resulted in almost double the level of sales of the fuel in the last year. This should increase further as the obligation will now extend to smaller retailers too. Sweden imports most of its ethanol from Brazil.

In the UK, despite recent announcements of new production capacity, the industry has raised concerns over the time taken for facilities to obtain environmental licenses.

China has dropped one point after an announcement by the government that only production facilities processing noncereal-based feedstock will be permitted, in order to relieve price pressures on food production. This is expected to limit new capacity until commercial scale cellulosic technology will become available.

With the introduction of mandatory blending targets and its favourable position as a fuel hub for Europe, The Netherlands will see a large number of new projects being constructed and moves into twelfth position.

Australia loses six points and falls four places, as the government is failing to enforce blending targets and concerns are raised over Australia’s ability going forward to grow enough grain and sugar cane given the current extended drought conditions.

India loses two points as the 5% mandated ethanol blend has to be implemented only if economically viable. This is not envisaged to be the case in the immediate future and casts significant doubts over the likelihood of developing the 560 million liters per year production capacity required to meet the target.

Indonesia enters the Ethanol Index as foreign investment is expected to continue flowing into the market from its Asian neighbours taking advantage of the high-yielding feedstock and low production costs.

The US moved up to first place in the Biodiesel Index seeing its score rise by one point. Increased incentives and rising blending targets have been reinforced by the recently proposed legislation that would require US refineries to blend a minimum of 1.25b gallons of biodiesel per year by 2012.

The US also has the largest project pipeline in the world and with the proposal starting at a mandated volume of 450m gallons in 2008, compared to production of 136.5m gallons in 2006, this should grow further.

France loses one point but remains in second place. The country has not increased the production quota exempt from excise duty, despite narrowing domestic headroom and falling demand in Germany, France’s largest export market, which may cause the market to stall.

Brazil has moved up to third place in the ranking as a result of new project announcements and a number of direct supply agreements between producers and domestic industry players with high fuel consumption. With further positive uptake of biodiesel by different national industries (e.g., mining, public transport) expected, there is still headroom for increased capacity expansion.

Germany loses the top spot and falls to joint fourth, losing nine points. Despite having the largest production capacity globally and establishing an EU biofuels target of 10% for 2020 under its EU presidency, the annually increasing tax duty on biodiesel is placing unsustainable pressure on the industry. Resultant falling demand means prices have dropped by almost 5% in Q2 while feedstock prices rose by around 10% and are now higher than at the beginning of the year. Tightening margins are predicted to force production below 50% of capacity by the year-end as the market is severely tested in the run up to the next scheduled tax increase in January 2008.

Spain should see its biodiesel production increase to more than 400ktpa by 2008 (compared to 125ktpa in 2006) due to newly introduced mandated blending targets.

Thailand remains in ninth place as the government’s 10% mandated blending target for 2011 encourages announcements of a number of further plant developments.

The Netherlands enters the Biodiesel Index as a result of a good project pipeline driven by its domestic blending regime and exploitation of key European logistical hubs Rotterdam, Eemshaven, and Terneuzen.

Indonesia sees continued foreign investment from its regional neighbors driving the industry and is in joint eleventh place.

China lacks any consistent regulatory approach to the biodiesel industry but persistent shortage of conventional diesel in the high-growth market still provides continued expansion potential.

The Philippines is a new entrant with a 1% blending target mandatory since May 2007 and foreign companies, particularly Japanese and Chinese, continuing to build capacity for export.

India dropped out of the top 15 biodiesel nations in Q2 2007 as an official price regime is not expected to cover production costs. The uncertainty over government intentions is causing small producers to negotiate individual supply contracts, thereby slowing down expansion.

Malaysia was removed from the top 15 as high prices for palm oil are likely to delay current production and further development of the industry.

UK pioneers carbon and sustainability reporting

The UK score in the All Biofuels Index remained steady at seventh position, but until the implementation of the Renewable Transport Fuels Obligation (RTFO) in 2008, current incentives, which provide tax breaks on capital expenditure and a GBP 0.20 reduction in fuel duty, are not sufficient to develop the UK biofuels market beyond niche supply.

With the recent launch of the Carbon & Sustainability (C&S) consultation on the RTFO, the UK government has taken a lead globally in pioneering a mechanism that from 2011 could differentiate incentives received by different biofuels. In the initial phase of the RTFO (2008 – 2011), only data will be collected and the incentives received shall remain unaffected.

The UK Government’s objective with the consultation is laudable, as it’s likely to bring greater rewards for biofuels suppliers who can improve the efficiency of their biofuels production, but this should not act as a barrier to rapid deployment of biofuels capacity.

Next-generation biofuels
According to the report, overall the biofuels industry faces many challenges from the rising demand for agricultural commodities. However, investment in second generation biofuels is the future. Second generation biofuels are derived from by-products that we cannot eat such as switchgrass, corn and wood chips, and are less exposed to the price fluctuations of the first generation biofuels, which are derived from food crops.

Ernst & Young: Biofuels Country Attractiveness Indices, Q2, 2007 [*.pdf] - September 2007.

Biopact: Biofuels and renewables 'Country Attractiveness Indices' for Q1 2007 - May 24, 2007

Biopact: Ethanol prices in Brazil plummet, government considers increasing blend from 23 to 25% - May 30, 2007

Biopact: U.S. House passes Energy Bill: boost to biofuels, CCS and renewables - August 06, 2007

Biopact: How Brazil convinced the EU on biofuels - Lula's speech - July 06, 2007

Biopact: The Netherlands aims to become a 'bioport' for global biomass trading - report - February 12, 2007


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