IEA chief economist: EU, US should scrap tariffs and subsidies, import biofuels from the South

The IEA understands its case: it has been studying all aspects of biofuels and bioenergy in-depth for years now, with dedicated scientific Task Forces (see IEA Bioenergy), which unite top experts in the field. Bioenergy Task 40 - which analyses the potential for sustainable international trade in biofuels - has made the case very clearly: a large amount of green fuels can be produced in a sustainable manner, without threatening the food security of people and without threatening ecosystems and biodiversity, in the Global South and exported efficiently to world markets (earlier post). Other Bioenergy Task forces come to the same conclusion. Europe and America do not have this capacity.
Earlier we reported on how the IEA's very chief, Claude Mandil, knowing the science, called on Europe and the United States to end their trade distorting subsidies for biofuels that can not compete in the market. He also urged the large consumers to import green fuels from the developing world instead (earlier post).
Now the IEA's Chief Economist, Fatih Birol, is joining this position: biofuels made in the EU and the US, using food grains, make no economic sense. They are inefficient and cannot compete against biofuels made in the South, where good agro-ecological conditions and suitable crops result in efficient fuels. Moreover, inefficient biofuels made in the US and the EU do not really contribute to reducing greenhouse gases, whereas those made in the developing world do.
For all these reasons, Birol says "the U.S. and Europe should scrap import duties on developing countries and in the longer term reconsider all subsidies."
The case for a 'Biopact' of sorts (see our Biofuels Manifesto) is increasingly being strengthened by scientists, economists, and energy experts alike.
The recent dip in oil prices proves the point: the EU/US government policy-fuelled rush to produce biofuels is backfiring as it pushes up costs and makes their domestic biofuels far less competitive. A looming biofuels glut plus falling rival crude oil prices, down a fifth on last summer's highs, mean producers can less easily pass on their spiraling costs. The present dip will last until demand rebounds, perhaps as far off as the end of the decade. Falling oil prices are hurting sales of biofuel which was barely competitive before, pricking European and U.S. euphoria built on subsidies and ambitious targets.
Profits are still to be had but a continuing scramble for raw materials like corn, soy and wheat will knock margins as producers re-negotiate more pricey supply contracts.
Still thriving, however, is biofuels pioneer Brazil - the symbol for the fact that biofuels made in the South make sense -, which has a booming domestic market where more than two-thirds of all new cars can run on either gasoline or ethanol:

Biofuels costs will likely fall and demand and prices rise in Europe and the U.S. as better infrastructure and economies of scale kick in over the next two to three years, analysts say.
U.S. Democrats last week proposed a $15 billion energy plan, including boosting the country's network of ethanol service stations, for example.
But biofuels future also depends on oil prices, and analysts cannot guarantee crude oil will stay above the $60-$65 where it is trading now and undercutting biofuels - excluding subsidies - outside Brazil, according to the IEA.
Another factor is input cost: but sugar, corn, grain and palm oil prices are all seen holding or rising in the near term.
A new generation of biofuels made from waste like straw and wood chips would ease input shortages, but is not expected to be commercially available before 2009 and possibly much later.
In the United States soaring demand is expected to beat farmers' efforts to keep up, with high corn prices likely in the near-term, not least after Bush in January asked Congress to back a near 5-fold increase in the use of biofuels by 2017.
The biofuels craze is risking a surplus in the United States and elsewhere.
Investors F&C, with 155 billion euros ($204.9 billion) under management, says it has exited investments including the second biggest U.S. ethanol producer VeraSun, because of the prospective over-supply and margin squeeze.
A glut is also expected in parts of Europe, where biofuels support is switching from tax credits to blending targets, and notably Germany where higher taxes have knocked sales by as much as a third this year so far.
"In the very short-term we have far too much production capacity," said the EBB's Garofalo.
Elsewhere, Spanish energy firm Abengoa is mulling suspending output at its biggest ethanol plant, partly on higher grain prices and partly because the domestic market is saturated under present blending labeling rules.
Oil major Total has put on hold a biodiesel project with Finnish refiner Neste Oil, while prospective British ethanol producer Ensus postponed last December plans to list on London's Alternative Investment Market.
Article continues
Tuesday, March 06, 2007
The bioeconomy at work: new success in engineering plant oils, replacing petrochemicals
Researchers at the U.S. Department of Energy's Brookhaven National Laboratory, collaborating with scientists from the Georg-August University of Göttingen (Germany), have made another contribution to achieving this goal: using genetic manipulation to modify the activity of a plant enzyme, they succeeded in converting an unsaturated oil in the seeds of a temperate plant to the more saturated kind usually found in tropical plants, such as palm oil. The technique may yield materials that can replace petrochemicals. Interestingly, the process works in reverse: tropical oil-bearing plants can be triggered to deliver oils with a higher ratio of unsaturated fatty acids.
Potentially, the technique allows for a finetuned 'economy' of engineered oils, in which the metabolism of the seeds of oil bearing plants and the biosynthesis of the enzymes they rely on, is managed in such a way that it yields the ideal type of oil suited for the production of a particular product, be it biofuels with specific properties (cold tolerance, cloud point, melting point), green lubricants and resins, or bioplastics and biopolymers.
The research has been published online by the Proceedings of the National Academy of Sciences (PNAS):
While conversion of an unsaturated oil to an oil with increased saturated fatty acid levels may not sound like a boon to those conscious about consuming unsaturated fats, "the development of new plant seed oils has several potential biotechnological applications," says Brookhaven biochemist John Shanklin, lead author on the paper.
For one thing, the new tropical-like oil has properties more like margarine than do temperate oils, but without the trans fatty acids commonly found in margarine products. Furthermore, engineered oils could be used to produce feedstocks for industrial processes in place of those currently obtained from petrochemicals. Shanklin also suggests that the genetic manipulation could work in the reverse to allow scientists to engineer more heart-healthy food oils.
"Scientists have known for a long time that the ratio of saturated to unsaturated fatty acids plays a key role in plants' ability to adapt to different climates, but to change this ratio specifically in seed oils without changing the climate is an interesting challenge," remarked Shanklin. "Our group sought to gain a better understanding of the enzymes and metabolic pathways that produce these oils to find ways to manipulate the accumulation of fats using genetic techniques."
The researchers focused on an enzyme known as KASII that normally elongates fatty acid chains by adding two carbon atoms. The longer 18-carbon chains are more likely to be acted on by enzymes that desaturate the fat. So the scientists hypothesized that if they could prevent the chain lengthening by reducing the levels of KASII, they could decrease the likelihood of desaturation and increase the level of saturated fats in the plant seeds.
Their hypothesis was supported by the fact that scientists had previously identified a plant with a mutated KASII that showed reduced enzyme activity, and these plants were able to accumulate more saturated fats than was normal. So the Brookhaven team set out to reduce KASII activity with the use of RNA-interference (RNAi) to see if they could further increase the level of saturation in plant seed oils.
The Brookhaven scientists performed their experiments on Arabidopsis, a plant commonly used in research. Like other plants from temperate climates (e.g., canola, soybean, and sunflower), Arabidopsis contains predominantly 18-carbon unsaturated fatty acids in its seed oil. Tropical plants, in contrast (e.g. palm), contain higher proportions (approximately 50 percent) of 16-carbon saturated fatty acids.
The results were surprising. The genetic manipulations that reduced KASII activity resulted in a seven-fold increase in 16-carbon unsaturated fatty acids - up to an unprecedented 53 percent - in the temperate Arabidopsis plant seed oils.
"These results demonstrate that manipulation of a single enzyme's activity is sufficient to convert the seed oil composition of Arabidopsis from that of a typical temperate pant to that of a tropical palm-like oil," Shanklin said. "It is fascinating - and potentially very useful - to know that we can change the oil composition so drastically by simple specific changes in seed oil metabolism, and that this process can occur independently from the adaptation to either tropical or temperate climates."
For example, such a technique could lead to the engineering of temperate crop plants to produce saturated oils as renewable feedstocks for industrial processes. Such renewable resources could help reduce dependence on petroleum.
Conversely, methods to increase the activity of KASII, and therefore the production of 18-carbon desaturated plant oils, may provide a useful strategy to limit the accumulation of saturated fatty acids in edible oils, leading to more healthful nutrition.
Picture: Arabidopsis seeds viewed through a fluorescence microscope. Two show the fluorescent markers used to track inserted genes; the third is an unmodified, wild type seed, which appears dark. Courtesy: BNL Media & Communications Office
More information:
Mark S. Pidkowich, Huu Tam Nguyen, Ingo Heilmann, Till Ischebeck, and John Shanklin, Modulating seed {beta}-ketoacyl-acyl carrier protein synthase II level converts the composition of a temperate seed oil to that of a palm-like tropical oil, [*abstract] Proc. Natl. Acad. Sci. USA, 10.1073/pnas.0611141104, March 5, 2007
Article continues
posted by Biopact team at 3:26 PM 0 comments links to this post