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    Spanish company Ferry Group is to invest €42/US$55.2 million in a project for the production of biomass fuel pellets in Bulgaria. The 3-year project consists of establishing plantations of paulownia trees near the city of Tran. Paulownia is a fast-growing tree used for the commercial production of fuel pellets. Dnevnik - Feb. 20, 2007.

    Hungary's BHD Hõerõmû Zrt. is to build a 35 billion Forint (€138/US$182 million) commercial biomass-fired power plant with a maximum output of 49.9 MW in Szerencs (northeast Hungary). Portfolio.hu - Feb. 20, 2007.

    Tonight at 9pm, BBC Two will be showing a program on geo-engineering techniques to 'save' the planet from global warming. Five of the world's top scientists propose five radical scientific inventions which could stop climate change dead in its tracks. The ideas include: a giant sunshade in space to filter out the sun's rays and help cool us down; forests of artificial trees that would breath in carbon dioxide and stop the green house effect and a fleet futuristic yachts that will shoot salt water into the clouds thickening them and cooling the planet. BBC News - Feb. 19, 2007.

    Archer Daniels Midland, the largest U.S. ethanol producer, is planning to open a biodiesel plant in Indonesia with Wilmar International Ltd. this year and a wholly owned biodiesel plant in Brazil before July, the Wall Street Journal reported on Thursday. The Brazil plant is expected to be the nation's largest, the paper said. Worldwide, the company projects a fourfold rise in biodiesel production over the next five years. ADM was not immediately available to comment. Reuters - Feb. 16, 2007.

    Finnish engineering firm Pöyry Oyj has been awarded contracts by San Carlos Bioenergy Inc. to provide services for the first bioethanol plant in the Philippines. The aggregate contract value is EUR 10 million. The plant is to be build in the Province of San Carlos on the north-eastern tip of Negros Island. The plant is expected to deliver 120,000 liters/day of bioethanol and 4 MW of excess power to the grid. Kauppalehti Online - Feb. 15, 2007.

    In order to reduce fuel costs, a Mukono-based flower farm which exports to Europe, is building its own biodiesel plant, based on using Jatropha curcas seeds. It estimates the fuel will cut production costs by up to 20%. New Vision (Kampala, Uganda) - Feb. 12, 2007.

    The Tokyo Metropolitan Government has decided to use 10% biodiesel in its fleet of public buses. The world's largest city is served by the Toei Bus System, which is used by some 570,000 people daily. Digital World Tokyo - Feb. 12, 2007.

    Fearing lack of electricity supply in South Africa and a price tag on CO2, WSP Group SA is investing in a biomass power plant that will replace coal in the Letaba Citrus juicing plant which is located in Tzaneen. Mining Weekly - Feb. 8, 2007.

    In what it calls an important addition to its global R&D capabilities, Archer Daniels Midland (ADM) is to build a new bioenergy research center in Hamburg, Germany. World Grain - Feb. 5, 2007.

    EthaBlog's Henrique Oliveira interviews leading Brazilian biofuels consultant Marcelo Coelho who offers insights into the (foreign) investment dynamics in the sector, the history of Brazilian ethanol and the relationship between oil price trends and biofuels. EthaBlog - Feb. 2, 2007.

    The government of Taiwan has announced its renewable energy target: 12% of all energy should come from renewables by 2020. The plan is expected to revitalise Taiwan's agricultural sector and to boost its nascent biomass industry. China Post - Feb. 2, 2007.

    Production at Cantarell, the world's second biggest oil field, declined by 500,000 barrels or 25% last year. This virtual collapse is unfolding much faster than projections from Mexico's state-run oil giant Petroleos Mexicanos. Wall Street Journal - Jan. 30, 2007.

    Dubai-based and AIM listed Teejori Ltd. has entered into an agreement to invest €6 million to acquire a 16.7% interest in Bekon, which developed two proprietary technologies enabling dry-fermentation of biomass. Both technologies allow it to design, establish and operate biogas plants in a highly efficient way. Dry-Fermentation offers significant advantages to the existing widely used wet fermentation process of converting biomass to biogas. Ame Info - Jan. 22, 2007.

    Hindustan Petroleum Corporation Limited is to build a biofuel production plant in the tribal belt of Banswara, Rajasthan, India. The petroleum company has acquired 20,000 hectares of low value land in the district, which it plans to commit to growing jatropha and other biofuel crops. The company's chairman said HPCL was also looking for similar wasteland in the state of Chhattisgarh. Zee News - Jan. 15, 2007.

    The Zimbabwean national police begins planting jatropha for a pilot project that must result in a daily production of 1000 liters of biodiesel. The Herald (Harare), Via AllAfrica - Jan. 12, 2007.

    In order to meet its Kyoto obligations and to cut dependence on oil, Japan has started importing biofuels from Brazil and elsewhere. And even though the country has limited local bioenergy potential, its Agriculture Ministry will begin a search for natural resources, including farm products and their residues, that can be used to make biofuels in Japan. To this end, studies will be conducted at 900 locations nationwide over a three-year period. The Japan Times - Jan. 12, 2007.

    Chrysler's chief economist Van Jolissaint has launched an arrogant attack on "quasi-hysterical Europeans" and their attitudes to global warming, calling the Stern Review 'dubious'. The remarks illustrate the yawning gap between opinions on climate change among Europeans and Americans, but they also strengthen the view that announcements by US car makers and legislators about the development of green vehicles are nothing more than window dressing. Today, the EU announced its comprehensive energy policy for the 21st century, with climate change at the center of it. BBC News - Jan. 10, 2007.

    The new Canadian government is investing $840,000 into BioMatera Inc. a biotech company that develops industrial biopolymers (such as PHA) that have wide-scale applications in the plastics, farmaceutical and cosmetics industries. Plant-based biopolymers such as PHA are biodegradable and renewable. Government of Canada - Jan. 9, 2007.

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Sunday, January 28, 2007

Plantation companies rush to secure land to grow the bioeconomy

Because of high fossil fuel prices, the world is steadily shifting away from the petroleum era and into a new dawn, that of the bioeconomy. Most natural gas and petroleum-based products - from fuels and fertilizers to polymers and plastics - can nowadays be replaced by climate-neutral, plant-based alternatives, some of which are already cheaper than their fossil fuel rivals.

The most basic asset driving this emerging bioeconomy is one that had completely fallen off the radar during the petroleum era, namely land. Asian plantation companies can't find enough of it at home, a reality that is fundamentally changing the way these companies plan future expansion. In the process, countries which still have arable land in plenty - in Africa, South-East Asia and South America - are benefiting massively.

Strong demand, high prices, alternatives to oil
The rush to get trees that yield biofuel and bioproduct feedstocks into the ground as quick as possible began a few years ago but is accelerating now as commodity prices are at levels unseen in years or even decades in some cases. With oil prices hovering above US$50 a barrel, and the development of a global market for carbon, palm oil's potential as a biofuel or as a carbon sink has greatly expanded the scope for its use. Natural rubber supply, meanwhile, is expected to see a deficit in the next 6-10 years on record growth of the Indian and Chinese economies.

Demand for other commodities, such as sugar cane and corn which are linked to biofuels and bioplastics, has also risen with the run-up in oil prices. Palm oil prices are currently around MYR2,000 a metric ton, the highest level since 1998 when prices averaged MYR2,377. Natural rubber futures, meanwhile, rallied to a 26-year high in July during a supply crunch. While some of those gains have been surrendered since then, a widely expected supply deficit for the next 6-10 years will keep its prospects buoyant, analysts say.

To capitalize on these favorable trends, plantation companies need to find and develop land quickly, but this is becoming increasingly difficult at home. Land suitable to grow rubber and oil palm, for example, is either saturated, as in China, coveted by real estate developers, or fragmented into small holdings, as in Malaysia, making consolidation into economic holdings difficult.

That has forced investors to look at countries so far considered risky investment destinations. "The big problem is that the belt in which rubber grows is politically unstable," said industry veteran George Sulkowsky, managing director of Centrotrade, a rubber dealer with offices in Europe, the US and Southeast Asia.

Decades of isolation brought about by wars in Cambodia and Africa, autarchy in Myanmar and political upheavals in Indonesia and the Philippines have until recently kept most investors away from the plantation sector in these countries. But that has also left these countries with "a lot of land ripe for outside investors," said Steven Schipani, a consultant to the Asian Development Bank:
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Land rush
Hidde Smit, secretary general of the International Rubber Study Group, says "The Chinese, the Vietnamese, the Thais, the Malaysians are all interested in planting (rubber) in other countries, because land is not available in their own countries."

China's Hainan State Farms, for example, have established a rubber nursery in Myanmar as a first step and plans to develop 300,000 hectares of rubber plantations in Laos and Myanmar in less than ten years, with a total rubber output estimated around 500,000 tons.

In November, the state-owned Vietnam Rubber Group said it would lease 50,000 hectares of land in Cambodia to grow rubber, starting 2007. That area could be doubled in four years.

This follows upon another investment in Cambodia in April by Hainan State Farms, which leased 62,659 hectares of land, at a cost of CNY1 billion ($12 7 million), to grow rubber.

In the Philippines, two provincial governments from China plan to develop 200,000 hectares of land for rice and corn cultivation and another 40,000 hectares for a bio-fuel crop such as cassava or sugar cane. And in Indonesia, Malaysia's Sime Darby, now in the process of merging with two other state-owned palm oil giants, is working to double its land bank to 200,000 hectares by 2008.

"The biggest reason Malaysian companies come to Indonesia is land," said Witjaksana Darmosarokoro, director of the Indonesian Palm Oil Research Institute.

What began as a trickle is now a steady flow, expected to continue for years given the rising demand for these commodities.

While observers say it is difficult to foresee the scope and speed of this outward investment, none doubt the growth of foreign-owned plantations will boost output in general while shifting a significant proportion of production to lower-cost countries.

New investments to ease supply shortages
The explosion of new investments by Asian plantation companies in neighbouring countries could help ease future shortages of palm oil and rubber, and by doing so, keep prices at levels that don't force consumers such as tire makers and energy users to seek substitutes.

According to IRSG's Smit, the new investments in rubber plantations might increase output by 1 million tons in the next 10 years, from around 9 million tons expected to be produced this year.

Similarly, palm oil's use as a biofuel has begun putting a strain on edible oil supplies, and Indonesia's vast potential to expand production offers some relief, said Dorab E. Mistry, director of Godrej International Ltd., part of India's Godrej Group.

While oilseeds have to compete for land with other crops in most parts of the world, "the one area where production does not face such competition is Indonesia," said Mistry.

Risky business
But the prospect is not without risks. Overproduction is the greatest danger presented by this new expansion, analysts said.

Consider as well that these investments may be converting rainforest into monoculture plantations, or transforming farmers into laborers. There is also the issue of immigrant labor.

Following Chinese and Vietnamese investment to Laos, Cambodia and perhaps Myanmar will likely be immigrant farmers. NGOs in Laos say northern Laos is already under significant Chinese influence and that process will intensify once newly planted rubber trees are ready to be tapped in about six years from now.

"The government of Laos, lacking any sort of tools to analyze the rubber phenomena, has not even thought about this issue, said David Bluhm, an agro-forestry consultant, who co-authored a study on Laos' rubber industry for the German non-governmental organization GTZ. "(At) some point I think the government will have to ask itself some tough questions about rubber and social demographics."

More information:
DJ Newswire (via Egoli): Plantation Companies Rush Abroad To Secure Land - Jan. 8, 2007

Article continues

Uganda: vanilla growers turn to biofuel crops

Vanilla farmers in Uganda's Mukono region have embraced the vice president, Prof. Gilbert Bukenya's call to grow and earn big from the Jatropha curcas tree (locally known as 'ekiroowa') with open hands.

On a recent tour of Mukono, Bukenya urged farmers to exploit the oil bearing shrub. "I was worried about the falling prices for vanilla. However, we can still earn a small income from vanilla and also sell jatropha to boost our earnings," Bukenya told farmers. He added that because of high fuel prices in the world, India has turned to jatropha as an alternative source of fuel. Bukenya, however, did not divulge details of the potential buyers, exporters as well as the price of the crop.

Falling vanilla prices
"My colleagues destroyed their vanilla plantations after the price fell. I am lucky not to have followed their footsteps. I will earn from both the vanilla and jatropha seeds," says Salif Kityo, a farmer in Ngogwe.

Because of a drastic fall in the price of vanilla, many farmers shunned growing the crop, with some even cutting down their plantations out of frustration. But Bukenya discouraged the farmers from destroying their vanilla plantations.

Herbert Kayizi, a farmer in Kyampisi sub-county says: "The extraction of fuel from jatropha is the only good news I have received regarding vanilla this year." Kasasa, a vanilla farmer in Buikwe sub-county urged the Government to ensure that vanilla prices increase again.

Combining crops
A survey by The New Vision showed that over 60% of the farmers who didn't destroy their vanilla plantations are benefiting from jatropha, a drought-tolerant perennial crop:
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Research has shown that jatropha, a potential support plant for vanilla, produces seeds with oil content of 37%. The oil can be combusted as fuel without being refined. It produces high quality fuel with similar properties to petroleum. The jatropha seed-oil can also be used as a biodiesel feedstock.

The plant is easy to establish and grows fast, producing seeds that can be harvested for up to 50 years. It also grows well in marginal or poor soils. By-products of the processed seeds include pressed cake, a good organic fertiliser that can also make insecticide.

Mohan distillers, an Indian company which makes biodiesel from jatropha seed, has already expressed interest in establishing a fuel extracting factory in Uganda.

Crop diversification and income security
The example of Uganda's vanilla farmers shows that biofuel crops offer an opportunity to break the dangerous trap which consists of investing in a single cash crop. In the developing world, millions of farmers speculate on planting one crop at a time prices are high, but a collapse of course means a tragedy for these farmers. Intercropping and combining biofuel with non-energy crops, offers a chance for diversification, which spreads the risk.

Those who say biofuel farming in the South will impact the food security of rural populations apparently do not understand this logic. They seem to be unaware of the fact that millions already grow one single non-food crop, aimed at exports. With the profits they earn from it, they buy food. If these farmers invest in biofuel crops and diversify their portfolio, their incomes and thus their food security is increased.

The idea, held by some NGOs who are critical of the biofuels opportunity, that farmers in the South should be self-sufficient food farmers, has no bearing on reality whatsoever. Even in the South, farmers trade their non-food products, and buy food with the profits. Just like in the developed world, they don't have to be farmers who grow their own food. Developing country farmers actively participate on markets and it would be dangerous to represent them as a group of people who should rely on some flawed ideology of autarky - which is what some NGOs are doing.

The vanilla farmers of Uganda - fully connected to the globalised market - are well aware of the biofuels opportunity. It is crucial, however, for them to have more access to market intelligence, so they can refrain from drastically switching from one cash crop (vanilla) to another (jatropha). But one thing is certain: if well informed, developing country cash croppers can benefit from growing biofuel crops, which boost their incomes and consequently their food security.

More information:
New Vision (via AllAfrica): Uganda: Mukono Vanilla Growers Turn to Jatropha - Jan. 23, 2007

Article continues

Thailand steps up efforts to boost biodiesel consumption

In an attempt to boost consumption of alternative energy which could reduce oil imports, the Energy Ministry of Thailand has set a revised biodiesel consumption target on consumption at 500,000 litres per day this year with at least another 300 service stations to be set up nationwide.

Energy Minister Piyasvasti Amaranand told the Thai News Agency his ministry would encourage more consumption of biodiesel this year. Daily consumption has been set at 500,000 litres while two companies - PTT Pcl. and Bang Chak Petroleum Pcl. - will establish more than 300 service stations for biodiesel distribution throughout the country.

Furthermore the ministry has set a target to increase biodiesel demand at four million litres daily by the end of 2011 which could save as much as 7% of diesel consumption. This projected amount of diesel saving, added with the use of ethanol and natural gas for vehicles (NGVs), could help the country save a total of 18% on consumption of gasoline and diesel:
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Regarding plans to use the state oil fund to help lower the retail price of biodiesel at service stations by more than 0.5 baht per litre against diesel price in order to encourage more motorists to switch to using the alternative fuel, Mr. Piyasvasti said his ministry is considering adjusting the price of B100 biodiesel in order to reflect prices of raw palm oil, ethanol and production costs.

The new prices will be jointly fixed by oil trading firms, biodiesel manufacturing companies and the Ministry of Energy.

Article continues