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    South Korea plans to invest 20 billion won (€14.8/$21.8 million) by 2010 on securing technologies to develop synthetic fuels from biomass, coal and natural gas, as well as biobutanol. 29 private companies, research institutes and universities will join this first stage of the "next-generation clean energy development project" led by South Korea's Ministry of Commerce, Industry and Energy. Korea Times - November 19, 2007.

    OPEC leaders began a summit today with Venezuelan President Hugo Chavez issuing a chilling warning that crude prices could double to US$200 from their already-record level if the United States attacked Iran or Venezuela. He urged assembled leaders from the OPEC, meeting for only the third time in the cartel's 47-year history, to club together for geopolitical reasons. But the cartel is split between an 'anti-US' block including Venezuela, Iran, and soon to return ex-member Ecuador, and a 'neutral' group comprising most Gulf States. France24 - November 17, 2007.

    The article "Biofuels: What a Biopact between North and South could achieve" published in the scientific journal Energy Policy (Volume 35, Issue 7, 1 July 2007, Pages 3550-3570) ranks number 1 in the 'Top 25 hottest articles'. The article was written by professor John A. Mathews, Macquarie University (Sydney, Autralia), and presents a case for a win-win bioenergy relationship between the industrialised and the developing world. Mathews holds the Chair of Strategic Management at the university, and is a leading expert in the analysis of the evolution and emergence of disruptive technologies and their global strategic management. ScienceDirect - November 16, 2007.

    Timber products company China Grand Forestry Resources Group announced that it would acquire Yunnan Shenyu New Energy, a biofuels research group, for €560/$822 million. Yunnan Shenyu New Energy has developed an entire industrial biofuel production chain, from a fully active energy crop seedling nursery to a biorefinery. Cleantech - November 16, 2007.

    Northern European countries launch the Nordic Bioenergy Project - "Opportunities and consequences of an expanding bio energy market in the Nordic countries" - with the aim to help coordinate bioenergy activities in the Nordic countries and improve the visibility of existing and future Nordic solutions in the complex field of bioenergy, energy security, competing uses of resources and land, regional development and environmental impacts. A wealth of data, analyses and cases will be presented on a new website - Nordic Energy - along with announcements of workshops during the duration of project. Nordic Energy - November 14, 2007.

    Global Partners has announced that it is planning to increase its refined products and biofuels storage capacity in Providence, Rhode Island by 474,000 barrels. The partnership has entered into agreements with New England Petroleum Terminal, at a deepwater marine terminal located at the Port of Providence. PRInside - November 14, 2007.

    The Intergovernmental Panel on Climate Change (IPCC) kicks off the meeting in Valencia, Spain, which will result in the production of the Synthesis Report on climate change. The report will summarize the core findings of the three volumes published earlier by the separate working groups. IPCC - November 12, 2007.

    Biopact's Laurens Rademakers is interviewed by Mongabay on the risks of large-scale bioenergy with carbon storage (BECS) proposals. Even though Biopact remains positive about BECS, because it offers one of the few safe systems to mitigate climate change in a drastic way, care must be take to avoid negative impacts on tropical forests. Mongabay - November 10, 2007.

    According to the latest annual ranking produced by The Scientist, Belgium is the world's best country for academic research, followed by the U.S. and Canada. Belgium's top position is especially relevant for plant, biology, biotechnology and bioenergy research, as these are amongst the science fields on which it scores best. The Scientist - November 8, 2007.

    Mascoma Corporation, a cellulosic ethanol company, today announced the acquisition of Celsys BioFuels, Inc. Celsys BioFuels was formed in 2006 to commercialize cellulosic ethanol production technology developed in the Laboratory of Renewable Resources Engineering at Purdue University. The Celsys technology is based on proprietary pretreatment processes for multiple biomass feedstocks, including corn fiber and distiller grains. The technology was developed by Dr. Michael Ladisch, an internationally known leader in the field of renewable fuels and cellulosic biofuels. He will be taking a two-year leave of absence from Purdue University to join Mascoma as the company’s Chief Technology Officer. Business Wire - November 7, 2007.

    Bemis Company, Inc. announced today that it will partner with Plantic Technologies Limited, an Australian company specializing in starch-based biopolymers, to develop and sell renewably resourced flexible films using patented Plantic technology. Bemis - November 7, 2007.

    Hungary's Kalocsa Hõerõmû Kft is to build a HUF 40 billion (€158.2 million) straw-fired biomass power plant with a maximum capacity of 49.9 megawatts near Kalocsa in southern Hungary. Portfolio Hungary - November 7, 2007.

    Canada's Gemini Corporation has received approval to proceed into the detailed engineering, fabrication and construction phases of a biogas cogeneration facility located in the Lethbridge, Alberta area, the first of its kind whereby biogas production is enhanced through the use of Thermal Hydrolysis technology, a high temperature, high pressure process for the safe destruction of SRM material from the beef industry. The technology enables a facility to redirect waste material, previously shipped to landfills, into a valuable feedstock for the generation of electricity and thermal energy. This eliminates the release of methane into the environment and the resultant solids are approved for use as a land amendment rather than re-entering the waste stream. In addition, it enhances the biogas production process by more than 25%. Market Wire - November 7, 2007.

    A new Agency to manage Britain's commitment to biofuels was established today by Transport Secretary Ruth Kelly. The Renewable Fuels Agency will be responsible for the day to day running of the Renewable Transport Fuels Obligation, coming into force in April next year. By 2010, the Obligation will mean that 5% of all the fuels sold in the UK should come from biofuels, which could save 2.6m to 3m tonnes of carbon dioxide a year. eGov Monitor - November 5, 2007.

    Prices for prompt loading South African coal cargoes reached a new record last week with a trade at $85.00 a tonne free-on-board (FOB) for a February cargo. Strong Indian demand and tight supply has pushed South African prices up to record levels from around $47.00 at the beginning of the year. European DES/CIF ARA coal prices have remained fairly stable over the past few days, having traded up to a record $130.00 a tonne DES ARA late last week. Fair value is probably just below $130.00 a tonne, traders said. At this price, some forms of biomass become directly competitive with coal. Reuters Africa - November 4, 2007.

    The government of India's Harayana state has decided to promote biomass power projects based on gasification in a move to help rural communities replace costly diesel and furnace oil. The news was announced during a meeting of the Haryana Renewable Energy Development Agency (HAREDA). Six pilot plants have demonstrated the efficiency and practicability of small-scale biomass gasification. Capital subsidies will now be made available to similar projects at the rate of Rs 2.5 lakh (€4400) per 100 KW for electrical applications and Rs 2 lakh (€3500) per 300 KW for thermal applications. New Kerala - November 1, 2007.

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Tuesday, November 20, 2007

European Commission initiates 'health check' of Common Agricultural Policy - implications for bioenergy

The European Commission today unveiled its blueprint for streamlining and further modernising the European Union's Common Agricultural Policy (CAP). The so-called 'Health Check' of the CAP, presented by Agriculture Commissioner Mariann Fischer Boel, will build on the approach which began with the 2003 reforms, improve the way the policy operates based on the experience gathered since 2003 and make it fit for the new challenges and opportunities in an EU of 27 Member States in 2007. The CAP determines, amongst many other things, the amount of subsidies European farmers receive for biofuel feedstock production and how much land will be set-aside.

CAP reform is one of the major causes for political dispute amongst EU member states that are large recipients of farm aid (France, Spain, Germany), and those that aren't. Likewise, given that support has mainly benefited large farmers, their smaller collegues have been advocating a review of the policy.

The previous reforms have modernised the CAP, but the Health Check represents the opportunity to take the policy review further. It will ask three main questions:
  1. how to make the direct aid system more effective and simpler
  2. how to make market support instruments, originally conceived for a Community of Six, relevant in the world we live in now
  3. and how to confront new challenges, from climate change, to biofuels, water management and the protection of biodiversity
Today's communication is designed to kick off a wide-ranging six-month consultation. Next spring, the Commission will return with legislative proposals, which it hopes will be adopted by agriculture ministers by the end of 2008 and could come into effect immediately. During 2007 and 2008 the Commission will develop its approach to the budgetary review 2008/2009. The Health Check constitutes a preparatory action within this framework, without prejudging the outcome of this review. It fine-tunes the 2003 reforms and contributes to the discussion on future priorities in the field of agriculture.
Does the fact that we are conducting a Health Check imply that the patient is sick? Certainly not: but it's quite normal for perfectly healthy people to visit their doctor to see whether they need to do anything different to ensure they stay in good shape. In the same way, we need to look at whether we need to adjust the CAP for an EU of 27 and a rapidly changing world. The changes I propose will make a real difference for farmers, consumers and taxpayers. - Mariann Fischer Boel, Commissioner for Agriculture and Rural Development
A key reform measure is to simplify the Single Payment Scheme which was introduced in 2003, with the aim to replace the subsidies linked to the amount of food a farmer produced, a change described as "decoupling". The Commission now suggests further measures for simplication of the payment system:
  • moving away from payments based on historical receipts towards a "flatter rate" system
  • increasing the rate of "decoupling" in those countries which opted in a number of farm sectors to maintain the link between subsidy and production, although coupled support may still play a role in regions where production is small-scale but of particular economic or environmental importance.
  • gradually reducing the support level as overall payments to big farmers increase, starting from a level of, for example, €100,000 per year. This would have to differentiate between multiple-owner farms with many workers and single-owner farms with just a few.
  • increasing the amount of land a farmer has to own before he qualifies for EU support from the current level of 0.3 hectares.
  • reviewing the Cross Compliance standards which farmers are obliged to respect to receive their support from Brussels. This could mean stripping out unnecessary obligations, but also adding new ones to deal with new challenges like improving water management and mitigating climate change.
Concretely, the direct payment received by farmers would be capped according to the amount of aid they receive, in the following way:
  • up to 100,000 euros - unaffected
  • 100-200,000 euros -10% cap
  • 200-300,000 euros - 25% cap
  • above 300,000 euros - 45% cap
Such a system would naturally target the larger landowners and the commissioner says it would have to differentiate between multiple-owner farms with many workers and single-owner farms with just a few. At the other end of the scale, a minimum level of payments could be set before aid kicks in, although the commissioner says it would not affect "real farmers" (as opposed to mere landowners):
:: :: :: :: :: :: :: :: :: ::

Another major goal of the reform effort is to adjust market support instruments to make them relevant for an EU of 27 in our modern day and age. The Communication asks critical questions:
  • should intervention revert to its original purpose as a real safety net – particularly as market prices today are in such good shape?
  • could intervention for most cereals be set at zero while maintaining intervention for a single cereal (bread-making wheat)?
  • should set-aside not be abolished, while finding new ways of preserving the environmental benefits it has brought?
  • milk quotas are already programmed to disappear in 2015, but should there not be a gradual increase in quotas between now and then to allow a 'soft landing' for the sector? This must look at possible measures to help dairy farmers in those regions of the EU – like mountain areas – which depend heavily on dairy production.
Agriculture Commissioner Fischer-Boel recently announced her intention to submit to the Commission a proposal to set at 0% the obligatory set-aside rate for autumn 2007 and spring 2008 sowings, in response to the increasingly tight situation on the cereals market, which is a development related to biofuels production (previous post).

New challenges
Finally, the Commission wants reform so that European agriculture can responding to new challenges. These include: managing risk, fighting climate change, managing water more effectively, making the most of the opportunities offered by bioenergy and preserving biodiversity.

Climate change and water management objectives could be met through Cross Compliance, There should be incentives to improve action in these areas but this will cost money, the communication says. The best way to finance the necessary new measures is through Rural Development policy.

The communication therefor proposes increasing the rate of 'modulation', i.e. the reduction of direct payments to all farms receiving more than €5,000 per year and the transfer of the money into the Rural Development budget. This would be increased gradually from 5 percent now to 13 percent in 2013.

Finally, the Commission states that it must also be examined whether the energy crop premium is still necessary given new incentives for biofuel production such as the compulsory bioenergy targets and high prices.

Fischer Boel recently announced that she will proppose a scale back of the special aid scheme aimed at developing Europe's energy crop sector, after it emerged that farmers have already massively shifted production towards biofuels, overshooting a two million hectare target. The amount of land for which farmers up to now received a subsidy of €45 per hectare (US$26/acre) in exchange for planting energy crops (such as rapeseed or sugar beet that can be processed into biofuels for cars or biomass for heating or electricity) will thus be reduced after the scheme proved too popular (previous post).

More information:
European Commission: Agriculture: Health Check to streamline Common Agricultural Policy and address new challenges - November 20, 2007.

European Commission, Agriculture and Rural Development: CAP Health Check.

Biopact: EU to free up set-aside land to ease cereal prices - July 30, 2007

Biopact: EU cuts back on energy crop subsidies - October 18, 2007


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