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    PolyOne Corporation, the US supplier of specialised polymer materials, has opened a new colour concentrates manufacturing plant in Kutno, Poland. Located in central Poland, the new plant will produce colour products in the first instance, although the company says the facility can be expanded to handle other products. In March, the Ohio-based firm launched a range of of liquid colourants for use in bioplastics in biodegradable applications. The concentrates are European food contact compliant and can be used in polylactic acid (PLA) or starch-based blends. Plastics & Rubber Weekly - October 2, 2007.

    A turbo-charged, spray-guided direct-injection engine running on pure ethanol (E100) can achieve very high specific output, and shows “significant potential for aggressive engine downsizing for a dedicated or dual-fuel solution”, according to engineers at Orbital Corporation. GreenCarCongress - October 2, 2007.

    UK-based NiTech Solutions receives £800,000 in private funding to commercialize a cost-saving industrial mixing system, dubbed the Continuous Oscillatory Baffled Reactor (COBR), which can lower costs by 50 per cent and reduce process time by as much as 90 per cent during the manufacture of a range of commodities including chemicals, drugs and biofuels. Scotsman - October 2, 2007.

    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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Wednesday, October 03, 2007

Coal prices hit records too - time for biomass?

Record oil prices are receiving a lot of media attention, but a quarter of the world's primary energy demand is met by coal. The most climate-destructive fossil fuel is used to generate around 40 percent of all electricity. And like oil, coal too is now experiencing all time highs. Record prices and tight supplies are piling the pressure on electricity generators so much that several industry players predict some utilities may even be forced to scale down operations. Physical coal prices for delivery into Europe have risen by over 50 percent this year to hit records over $100 per tonne.

The coal market is highly opaque and prices are not straightforwardly correlated to those of other fossil fuels. Some analysts however argue that higher oil prices translate to higher coal prices, because higher oil tends to push up natural gas prices, which in turn drives coal prices. Coal must also adjust upward to reflect the costs of energy-intensive mining. Large miners consume millions of liters of diesel annually to run their heavy mining equipment. If the price of oil and petroleum products rises significantly, companies will face millions of dollars in added costs - an evolution already being felt by Peabody Energy, the largest coal producer in the U.S. Natural gas and coal prices are also correlated because of demand for electricity. Add high freight rates for coal importers and the picture looks even more grim.

The current situation has some analysts worried that utilities and cement producers, also big coal users, may even be forced to scale down operations. One coal producer, quoted by Reuters, said:
The market is having to adapt to coal prices, to freights, which we've never seen before. I do believe that before the end of the year it's possible that some generators in Asia will have to look at turning off their plants because they won't have enough coal.
Physical coal prices last week surged to a record $102.00 a tonne delivered into Europe, from $65.00 in the first quarter, because rampant demand in Asia has sucked in millions of tonnes originally destined for the Atlantic market. Power generators, Europe's biggest coal consumers by far, buy most of their coal on rolling long-term contracts from producers but usually purchase a small proportion from the spot market. Coal-fired generation is used most heavily during the winter months when it is usually the lowest-cost fuel.

Some European regions can switch from coal to biomass, hydro, wind or gas-fired, notably Scandinavia, Germany and Iberia, but most European utilities rely on at least some coal-fired generation. Germany's E.ON AG, Italy's Enel and Spain's Endesa are among the utilities currently seeking coal for Q4 and Q1, market sources said.

One European utility recently paid close to $115.00 a tonne CIF for a South African cargo which it bought to replace delayed shipments of other origins. European cement companies said they also recently bought at prices far higher than those indicated on the globalCOAL trading platform or by published weekly coal indices:
:: :: :: :: :: :: :: :: ::

Xstrata Plc, the world's largest thermal coal producer, recently settled 2008 thermal coal supply contracts with two Korean utilities at as high as $68.50 a tonne, two sources said last week. State-owned utilities Korea South East Power Co and Korea East West Power Co have agreed to buy coal from Xstrata's New Lands coal mine at $68.50 a tonne and $65.50 a tonne for coal from the Rolleston mine, they said.

Reuters quotes a trader as saying 'so many utilities and cement companies are looking. They will pay but they are desperate that nobody finds out.' In the coal sector it is not done to admit that one is 'looking'.

Consumers pay up
A large European industrial consumer of coal said his company had struggled recently to find enough coal of any acceptable origin and had no choice but to pay the price asked by the supplier. 'In Europe anyway, I think you will be able to find enough coal, but it won't be easy and you'll have to pay up,' a further trader said.

Consumers everywhere have had to adjust to paying prices higher than anybody imagined were ever achievable. Record freight rates have boosted delivered prices but free-on-board coal prices at origin have also hit records this year for Australian, Russian and Indonesian coal.

What everybody wants to know is when freights are going to fall, if they're going to fall or if we're just going to have to live with it, a major Indian trader said.
The acceptance of soaring prices by Indian end-users took many traders and producers by surprise. The same trader is quoted as saying:
We used to say India was totally a price-driven market and nobody would buy South African coal for more than $50 FOB but the consumers have had no choice this year," the Indian trader said. I think they will be paying $120 a tonne CIF by the end of the year - they'll have to or have no coal.
South African spot FOB prices are often taken as a good indicator of the cost of coal because its quality is acceptable to most consumers. Spot South African FOB prices are at about $65.00, having stayed at around $60.00 for most of the year but are expected by suppliers and consumers to reach $70.00 within weeks.

Biomass to play a role?
Record coal prices have made some utilities look at buying biomass to co-fire with coal, as 'opportunity fuels'. Some residues from agriculture and forestry - such as pelletized coffee husks or palm kernels - can be shipped efficiently over long distances because they have a relatively high energy density. However, the same high freight rates would apply.

Nonetheless, a working carbon market in Europe, with current prices at around $30 per tonne, may make the use of carbon-neutral biomass attractive for utilities. Supplies would come from the Global South, because they tend to be less costly than biomass produced in Europe.

One power generator in the Netherlands, Essent Energie, recently agreed to purchase several thousand tonnes of coffee husks from Brazilian coffee producers, to co-fire the biofuel in one of its large coal power plants in the Netherlands and to sell the electricity under a green label. However, it is not clear which factor was more important for Essent: the creation of a 'green' corporate image or the fact that biomass has become competitive with costly coal?

Even though international biomass trade is growing rapidly, as yet there is no formally established global market nor any robust trading mechanisms and market information. Moreover, the physical international trade in biomass from the South to the North competes with the potential to use this biomass locally as part of, for example, Clean Development Mechanism projects which result in carbon credits. However, many regions and millions of farmers on the planet produce vast streams of excess biomass that remains available, even when all local energy needs are met by bioenergy, which implies that the rationale for physical trade remains strong.

Reuters: Record coal prices hammer power generators - September 28, 2007.

Dow Jones: Rising Oil Prices Seen Pushing Costs Higher For Coal Miners - September 28, 2007.

Reuters: Xstrata fixes '08 coal contracts with Korean gencos - September 27, 2007.

Essent: World scoop: Green electricity from coffee husks - July 10, 2007.

globalCOAL, the world's largest coal trading floor.


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