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    Brasil Ecodiesel, the leading Brazilian biodiesel producer company, recorded an increase of 57.7% in sales in the third quarter of the current year, in comparison with the previous three months. Sales volume stood at 53,000 cubic metres from August until September, against 34,000 cubic metres of the biofuel between April and June. The company is also concluding negotiations to export between 1,000 to 2,000 tonnes of glycerine per month to the Asian market. ANBA - October 4, 2007.

    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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Monday, March 26, 2007

Scientists develop biodegradable fuel cell that runs on sugar and has higher energy density than lithium ion batteries

A very exciting bit of news for those of us who track the rapid developments in the bioeconomy: researchers at Saint Louis University in the U.S. have developed a fuel cell battery that runs on virtually any sugar source - from soft drinks to tree sap - and has the potential to operate three to four times longer on a single charge than conventional lithium ion batteries.

For consumers, the 'biobattery' could mean significantly longer time to talk and play music on their iPods, cell phones and laptops. For the world's farmers, this means the carbohydrate economy gets another boost. Our post-petroleum economy is becoming an ever sweeter one...

Like other biofuel cells, the sugar battery contains enzymes that convert fuel - in this case, sugar - into electricity, leaving behind water as a main byproduct. But unlike other fuel cells, all of the materials used to build the sugar battery are biodegradable. This gives it a huge advantage over the millions of common batteries used in electronics, which are becoming a big waste problem.

The new battery could eventually replace lithium ion batteries in many portable electronic applications, including computers, the scientists say. Their findings were described today at the 233rd national meeting of the American Chemical Society in Chicago.

"This study shows that renewable fuels can be directly employed in batteries at room temperature to lead to more energy-efficient battery technology than metal-based approaches," said study leader Shelley Minteer, Ph.D., an electrochemist at Saint Louis University (picture). "It demonstrates that by bridging biology and chemistry, we can build a better battery that's also cleaner for the environment."

Using sugar for fuel is not a new concept: sugar in the form of glucose supplies the energy needs of all living things. While nature has figured out how to harness this energy efficiently, scientists only recently have learned how to unleash the energy-dense power of sugar to produce electricity, Minteer said.

A few other researchers also have developed fuel cell batteries that run on sugar, but Minteer claims that her version is the longest-lasting and most powerful of its type to date. As proof of concept, she has used a small prototype of the battery (about the size of a postage stamp) to successfully run a handheld calculator. If the battery continues to show promise during further testing and refinement, it could be ready for commercialization in three to five years, she estimates:
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Consumers aren't the only ones who stand to benefit from this new technology. The military is interested in using the sugar battery to charge portable electronic equipment on the battlefield and in emergency situations where access to electricity is limited. These devices include remote sensors for detecting biological and chemical weapons. Devices could be instantly recharged by adding virtually any convenient sugar source, including plant sap, Minteer said.

So far, Minteer has run the batteries on glucose, flat sodas, sweetened drink mixes and tree sap, with promising results. She also tested carbonated beverages, but carbonation appears to weaken the fuel cell. The best fuel source tested so far is ordinary table sugar (sucrose) dissolved in water, she said.

One of the first applications Minteer envisions for the sugar fuel cell is using it as a portable cell phone recharger, similar to the quick rechargers already on the market that allow users to instantly charge their cell phones while 'on the go.' Ideally, these rechargers would contain special cartridges that are pre-filled with a sugar solution.

These cartridges then could be replaced when they're used up. Ultimately, she hopes that the sugar battery can be used as a stand-alone battery replacement in a wide range of portable electronic devices.

Future work includes modifying the battery's performance for varying environmental conditions, including high temperatures, and extending the life of the battery, Minteer said. Funding for this study was provided by the U.S. Department of Defense.

A chemistry professor at Saint Louis University, Minteer already has invented a biobattery than can run on alcohol and natural enzymes. She formed a start-up company with a former graduate student to develop commercial applications for the invention. The company has secured millions of dollars in venture capital and other investments.

The Saint Louis University scientist says her long-term goal is to create a rechargeable battery that not only lasts longer, but also is also friendly to the environment.

For her groundbreaking research, Minteer earned the 2005 Innovation Award from the Academy of Science of St. Louis. From freshmen to graduate assistants, Saint Louis University students at all levels work in her lab.

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Microfossils unravel climate history of tropical Africa, offer clues for future

Scientists from the Royal Netherlands Institute for Sea Research obtained for the first time a detailed temperature record for tropical central Africa over the past 25,000 years. They did this in cooperation with a German colleague from the University of Bremen. The scientists developed an entirely new method to reconstruct the history of land temperatures based on the molecular fossils of soil bacteria.

They applied the method to a marine sediment core taken in the outflow of the Congo River (picture, click to enlarge). This core contained eroded land material and microfossils from marine algae. The results show that the land environment of tropical Africa was cooled more than the adjacent Atlantic Ocean during the last ice-age. This large temperature difference between land and ocean surface resulted in drier conditions compared to the current situation, which favours the growth of a lush rainforest.

These findings provide further insight in natural variations in climate and the possible consequences of a warming earth on precipitation in central Africa. The results [*abstract] were published in this week's issue of Science.

One of the techniques currently used to estimate past sea surface temperatures, is based on organic molecules from algae growing in the surface layer of the Ocean. These organisms adapt the molecular composition of their cell membranes to ambient temperature to maintain constant physiological properties. When such molecules sink to the sea floor and are buried in sediments where oxygen does not penetrate, they can be preserved for thousands of years. The ratios between the different molecules from the algal cell membrane can be used to approximate the past temperature of the sea surface. These techniques are therefore called 'proxies'.

New method to measure soil temperatures
Reconstructing continental temperature history is more difficult than for the oceans, because soils on the continent do not form a continuous archive but are often eroded. The researchers developed an entirely new proxy for the annual mean air temperature on land, based on molecules from the cell membrane of soil inhabiting bacteria. They analysed eroded soil material in a sediment core in the outflow area of the river Congo in the South Atlantic Ocean at a depth of almost 1000m. Since the Congo River drains a large part of tropical central Africa, the land derived material gives an integrated signal for a very large area.

Cool tropical Africa
The new proxy was used in this sediment core to obtain both a continental and a sea surface temperature record. A comparison of both records shows that ocean surface and land temperatures behaved differently during the past 25,000 years:
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During the last ice age, temperatures over tropical Africa were 21°C, about 4°C lower than today, whereas the tropical Atlantic Ocean was only about 2.5°C colder. By comparing this temperature difference with existing records of continental rainfall variability, lead author Johan Weijers and his colleagues concluded that the land-sea temperature difference has by far the largest influence on continental rainfall.

This can be explained by the strong relationship of air pressure to temperature. When the temperature of the sea surface is higher than that of the continent, stronger offshore winds reduce the flow of moist sea air onto the African continent. This occurred during the last ice age and, as a consequence, the land climate in tropical Africa was drier than it is in today's world, where it favours the growth of a lush rainforest. These results provide further insight into the natural variation of climate and the possible consequences of a warming earth on precipitation in central Africa.

This research project was funded by the division of Earth and Life Sciences of the Netherlands Organisation for Scientific Research (NWO-ALW).

Image: Overview of the drainage area of the river Congo in central Africa (area within the white outline) and the geographical postion of sediment core GeoB 6518, which was taken at a depth of 962m. A: Digitalelevation map (source: NASA Jet Propulsion Laboratory, California Inst. of Technol.); B: map with current annual mean air temperatures in Africa. Courtesy:
Royal Netherlands Institute for Sea Research.

More information:
Johan W. H. Weijers, Enno Schefuß, Stefan Schouten, Jaap S. Sinninghe Damsté, Coupled Thermal and Hydrological Evolution of Tropical Africa over the Last Deglaciation [*abstract], Science 23 March 2007: Vol. 315. no. 5819, pp. 1701 - 1704, DOI: 10.1126/science.1138131

Royal Netherlands Institute for Sea Research: Microfossils unravel Africa’s climate history - March 22, 2007.

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Sao Martinho announces 30 year ethanol export contract with the Mitsubishi Corporation

Sao Martinho S.A. through its subsidiary Usina Boa Vista S.A., today announced the execution of an Ethanol Purchase and Sale Agreement with Japan's largest trade group, the Mitsubishi Corporation, by means of which Usina Boa Vista S.A., which will be initially crushing up to 3.0 million tonnes of sugarcane per year, producing around 286,000 cubic meters of ethanol, agrees to sell Mitsubishi 30% of its total output in the form of industrial ethanol.

The contract will last for 30 years and envisages tracking the productive process in order to ascertain details of production from cane planting through to the final distillation of ethanol. Supply will begin in the 2008/09 harvest. Japan is the main market, but other external markets may be considered should the opportunity arise. Prices will be based on prevailing market conditions during the supply period.

Brazil and Japan are closely working together on export agreements, which, according to some estimates, will attract investments of between US$6 to 8 billion over the coming years. Japanese investors want to acquire minority stakes in 40 ethanol plants across Brazil. Earlier, Japan's Mitsui & Co Ltd signed supply agreements with state-run oil firm Petrobras, and is collaborating on building a dedicated ethanol pipeline from Brazil's sugarcane producing regions in the Center-South of the country to Atlantic ports (earlier post), whereas Japan's National Development Bank announced it will invest in distilleries (earlier post). The Japan Bank for International Cooperation too has signed a biofuel cooperation agreement with Brazilian ministeries, to collaborate on exporting the green fuels (earlier post).

Of all regions, the Japanese islands have the lowest bioenergy production potential (earlier post). However, the Japanese government has mandated an ethanol blend of 3%, which is expected to be increased to 10% from 2008-2010 onwards (earlier post). Anticipating this decision, the nation is looking to Brazil and South East Asia for biofuel supplies:
:: :: :: :: :: :: :: ::

Back to the agreement between Sao Martinho and Mitshubishi: the Brazilian company also signed a Share Purchase Agreement, by means of which it agreed to sell 10% of its holdings in Usina Boa Vista S.A., whose capital currently comprises 71,726,267 Reais, to the Mitsubishi Corporation of Japan. The aim of the sale is to strengthen relations between the Company and Mitsubishi, given the long-term ethanol supply contract entered into by both parties.

Joao Carvalho do Val, Sao Martinho's CFO and IRO, declared, "Mitsubishi already acquires our Ribonucleic Acid Sodium Salt output and this new contract strengthens our long-term ties even further, as well as reinforcing Sao Martinho's determination to continue investing in the growth of its activities."

Sao Martinho S.A. is one of the largest producers of sugar and ethanol in Brazil. The company purchases, cultivates, harvest and crushes sugarcane - the main raw material used in its sugar and ethanol operations. The company's current crushing capacity is 10.3 million tonnes/year.

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Crisis in European biodiesel industry, as Brazil and Argentina produce at full capacity

The European biodiesel industry is going through a deep crisis. In several countries, including in biodiesel leader Germany, generous tax exemptions are being lifted and the green fuel now has to compete on the free market with petro-diesel. None of the major biodiesel producers on the continent succeeds in producing an affordable fuel. The result: demand has dropped considerably and plants are operating well below their capacity. Some are warning the industry faces collapse.

At the same time, Brazil and Argentina are going full steam ahead in producing plant-based diesel substitutes that are cheaper than the fossil fuel variant. And obviously much less costly to make than European biodiesel. Argentina can make biodiesel for US$0.22 a liter, according to Argentine agribusiness consulting firm Abaceb. Petro-diesel before taxes currently costs around US$0.42 per liter in Europe. Biodiesel made from rapeseed - the most commonly used feedstock - before taxes but with agricultural subsidies comes at around US$0.70.

In Europe, many new biodiesel plants have been built in recent years, but many of them have hardly any markets in which to sell, as several countries have been slow to implement promises to increase biofuel use. "We have been promised a market but it is not yet there," said Raffaello Garofalo, secretary general of the European Biodiesel Board, an industry association. "It will come, but in the short term we have to go through a desert."

Much of the European biodiesel industry is working under its capacity, Garofalo said, although no precise figures are available. Biodiesel sales in the biggest consuming country, Germany, have fallen dramatically this year after Berlin actually started taxing biofuels at a time when the EU wants to promote green fuel consumption. An overview of the crisis as it affects producers across Europe:
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Medium-term prospects appeared excellent following the decision by EU leaders on March 9 for a strategic cut in greenhouse gases by using more renewable energy.

But several important countries including Britain, Italy and Spain have not fully implemented past promises to raise biofuel use, Garofalo said. Germany's biofuel tax showed the country was putting financial considerations above the environment, he added.

"Biodiesel is suffering from overcapacity because it is much easier to build production plants than it is to pass legislation," Garofalo said. "If there is no legislative support on taxation or binding targets, there is no real market for biodiesel."

In Europe, biodiesel is more expensive to produce than diesel from fossil fuels, and it needs tax breaks or a legal requirement to blend it with fossil fuels at oil refineries to encourage its use.

Germany's biodiesel industry is facing a crisis, with sales at gas pumps down by about 30 to 40 percent compared with last December, said Petra Sprick, chief executive of the biofuels industry association Verband Deutscher Betoningenieure, or VDB. "Sales in the petrol station market have collapsed this year," she said. "Our price attraction has gone."

Germany is the EU's largest biodiesel producer, with production capacity rising to 3.2 million tons in 2006 from 2 million tons in 2005.

But the German government said it could not afford the loss of revenues as drivers switched from regular diesel, which is heavily taxed, and Berlin started taxing biodiesel in August 2006. For a time, high fossil fuel prices cushioned the effect of the new tax, but falling fossil fuel prices mean drivers now have no incentive to buy biodiesel.

Because vehicles consume more biodiesel than fossil fuels and need more engine overhauls, biodiesel must be cheaper, she said. "If the government further raises taxes on biodiesel in 2008 as it plans, the whole industry will close down," she said. "This would be a tragedy at a time we need biofuels to cut greenhouse gas."

High prices for rapeseed oil, the main component of biodiesel in Germany, mean that biodiesel is being produced at a loss, she said. Germany had introduced compulsory blending of biodiesel with fossil fuels from January, but this is only expected to generate demand for 1.5 million tons annually.

German production is being cut and the first biodiesel refinery in the country, BioWerk Kleisthohe, has actually stopped production at its 6,500-ton-a- year plant.

"We just cannot sell any biodiesel this year," said BioWerk's chief executive, Thomas Vahle. "The new tax means it is just not competitive." "I just do not understand the politicians," he added. "They say it is so important to stop global warming and then introduce a tax to stop me selling my biodiesel, which protects the environment."

Shares in German biodiesel companies have fallen this year as the problems became apparent. One producer, Verbio, issued a profit warning on Monday because of low sales and high costs, causing its share price to fall 40 percent at one point.

On Thursday, Verbio's shares closed up 12 cents, or 1.7 percent, at €7.04, or $9.38. The shares were issued in October at €14.50.

Biodiesel producers in Britain also have problems. The largest British producer, Biofuels, announced this month that due to unfavorable market conditions it had restricted production to 25 percent of capacity in January and February and output would remain low for the immediate future.

The company, which operates a 250,000-ton-a-year plant in north England, has seen its stock price fall to around 15 pence, or $.30, compared with more than 200 pence in May last year.

Another key producer, D1 Oils, has also said it is operating below capacity due to difficult market conditions.

Many in the sector were disappointed that Gordon Brown, the British chancellor of the Exchequer, did not improve incentives in a budget introduced Wednesday.

Britain is phasing in a rule mandating that from April 2008, biofuels must make up at least 2.5 percent of oil company sales.

Brazil and Argentina
On the other side of the Atlantic, a crisis is in the making on tax and trade barriers as well, between Argentina and Brazil. But here it is precisely because biodiesel can be produced in a competitive way.

Brazil soy oil is the number one ingredient used in making biodiesel. Soy oil companies think Argentina's cheaper costs will cut them out of the market, especially the export markets.

"We're going to convince the government that they have to gun for Argentina on this issue, play tough," said Carlo Lovatelli, president of the Brazilian Vegetable Oils Industry Association, or Abiove.

"Biodiesel investments are heading to Argentina and not Brazil because it makes more sense to produce it there than here because of tax and trade incentives. We can be importing biodiesel from Argentina very soon," Lovatelli said.

Brazil wants to become the world's hub for biofuels. It's already the world's leading sugarcane ethanol producer and just entered into a partnership with the U.S. to promote world ethanol use. Brazil President Luiz Inacio Lula da Silva has said repeatedly that Brazil's agricultural revolution depends on a future where "we plant and harvest fuel."

While Brazil's ethanol program is mature and growing, the biodiesel segment is "crawling," Lovatelli said, adding that major companies such as Bunge prefer to invest in Argentina and are leaving Brazil behind. Miguel Biegai, a biodiesel analyst for Safras & Mercado, an agribusiness consulting firm, said Lovatelli has a point.
"Brazil can import from Argentina. I'm sure they can make biodiesel for less," Biegai said.

Brazil produces biodiesel at roughly $0.50 a liter, or 1.40 Brazilian reals on the low end, according to Safras & Mercado. Production costs can be as high as BLR1.60 a liter. Argentina can make it for $0.22 a liter, according to Argentine agribusiness consulting firm Abaceb.

In early February, Argentine President Nestor Kirchner signed an executive order to create a national biofuel law designed to make Argentina a biodiesel exporter. Kirchner put a low 5% export tax on biofuels, compared with a 24% export tax on soyoil. That makes it more beneficial for soyoil companies to sell their soyoil to fuel refineries for export than it does to export pure soybean oil for human consumption, Lovatelli said.

Domestic demand is also assured as Argentina's Biofuels Act mandates a 5% content of biodiesel or ethanol in the nation's fuel by 2010. The measure also provides tax breaks for companies investing in the sector. Santa Fe Province, which dominates soybean production and processing, has also offered a host of tax breaks to stimulate biofuel production.

But analysts here say Argentina is much more interested in exporting. Argentina wants to export biodiesel to the European and U.S. biofuels market, while its rival to the north is worried that Argentina's cheaper product will simply cut Brazil out of the export market and surely make investing difficult.

"We are only now realizing that there are a lot of opportunities to export biodiesel, but this is not ethanol. This is a very young segment and investments are being made contrary to what competing interests say," said Oswaldo Oliva Neto, chief of the Strategic Planning Department of the Presidential Palace.

Archer Daniels Midland is building a biodiesel plant in Mato Grosso state and state oil firm Petrobras is investing millions in a fuel called H-Bio, which is a blend of refined soyoil with diesel (earlier post).

Lovatelli, who also has ties to Brazil-based oilseed and biodiesel giant, Bunge, said Abiove would be lobbying Lula's office and the Foreign Relations Ministry on making biodiesel more attractive for corporate investors. Current investments aren't enough.
Brazil's current biodiesel program was designed as a social program. It gives benefits to biodiesel makers who buy raw materials from poor family farmers from the north east. The benefits of this 'Social Fuel Seal' policy include complete tax exemption on all biodiesel made from oilseeds purchased on family farms in that region (earlier post).

Brazil law will require a 2% mixture of biofuels in all diesel by 2008, or 850 million liters. Most of that biodiesel will be made from soyoil, a product Brazil and Argentina have in abundance.

"As a biodiesel producer, Argentina simply has the benefits of better logistics, better policies, and increased capacity," said Biegai.

Other market players suggest that some companies contracted by Brazil's National Petroleum Agency, or ANP, to produce and sell biodiesel will be unable to supply the tax-free oils to make biodiesel. Companies that participate in the ANP biodiesel auctions are required to sell biodiesel made from oilseeds purchased from family farmers.

If companies have to declare they are making the fuel from soyoil, most of it produced on large commercial farms, they'd have to pay a tax, raising their costs. Those costs would be passed on to the consumer and could make biodiesel as expensive as diesel fuel.

Should those companies be unable to meet the ANP requirements, Argentina would likely be called in to fill in the gaps.

Nevertheless, Brazil is expected to supply the 850 million liters required by 2008. The years beyond are anybody's guess.

Neto said the government has no plans on changing the current tax structure for biodiesel production. Whether the industry can convince Brasilia to go after Argentina, however, will be known in the months ahead.

Given the Argentine strategy to become a biofuels exporter, it is unlikely Brasilia negotiators will get very far with Kirchner.

More information:

International Herald Tribune (Paris): EU biodiesel firms blame politicians as demand falls - Politicians blamed for not delivering promised tax relief - March 22, 2007.

Market Watch: Brazil soy industryprepares for biodiesel war with Argentina - March 25, 2007.

Biopact: Brazil to quadruple biodiesel output by 2008, aiming to reduce rural poverty - August 16, 2006

Biopact: An in-depth look at Brazil's "Social Fuel Seal" - March 23, 2007

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Orang utan faces extinction in five years - illegal logging, palm oil blamed

Global demand for tropical hardwood and palm oil, illegal hunting and the trade in exotic animals are driving the Orang utan to the brink of extinction. In a session titled 'Globalization and Great Apes' the United Nations Environment Program (UNEP) earlier last month presented the report The Last Stand of the Orangutan - State of emergency: illegal logging, fire and palm oil in Indonesia's national parks.

The report says that natural rainforests of Sumatra and Borneo are being cleared so rapidly (map, click to enlarge) that up to 98% may be destroyed by 2022 without urgent action. The rate of loss, which has accelerated in the past five years, outstrips a previous UNEP report released in 2002 at the World Summit for Sustainable Development (WSSD). Back then, experts estimated that most of the suitable orangutan habitat would be lost by 2032.

Forest fire and deforestation in Indonesia are also resulting in substantial emissions of carbon dioxide, in addition to the decrease in habitat for Orangutan and other keystone species of the rain forests of Borneo and Sumatra. The smoke from the burning forests are spreading over Southeast Asia in the summers. As burnt forest areas are left open, they are commonly claimed for rubber and palm oil plantations, thus permanently reducing the available habitat.

Illegal logging has recently taken place in 37 of 41 surveyed national parks in Indonesia, with some also seriously affected by mining and oil palm plantation development. The use of bribery or armed force by logging companies is commonly reported. Timber from the Indonesian rain forests are exported to the international markets, primarily other locations in Asia, such as China and Japan, but also Europe and North America (map, click to enlarge).

In the export process, the illegal timber often undergoes re-labeling, in a way similar to money-laundering - the point of origin is changed and also the species - to avoid export restrictions. A cubic metre of prime hardwoods can amass over USD$ 1000 on the international markets:
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New satellite imagery reveals that the illegal logging is now entering a new critical phase: As the demands grow, the industry and international market are running out of cheap illegal timber and are now entering the national parks where the only remaining timber available in commercial amounts is found.

Satellite images confirm, together with data from the Indonesian Government, that illegal logging is now taking place in 37 out of 41 national parks, and likely growing. “At current rates of intrusions, it is likely that some parks may become severely degraded in as little as three to five years, that is by 2012”, says the new study “The last stand of the orangutan: State of emergency.”

Overall the report is concluding that loss of orangutan habitat is happening at a rate up to 30% higher than previously thought. The report, compiled by a wide range of experts, is being launched at UNEP’s 24th Governing Council/Global Ministerial Environment Forum. Here, close to 100 environmental ministers and state secretaries are meeting under the theme of globalization – environmental risks and opportunities

Indonesia is active in fighting illegal logging and has worked with a series of international programmes and initiatives to reduce the logging. However, says the report, while many of these initiatives are valuable, they require the assistance of the international community to stop the demands for illegal timber, and they are also mainly long/term in effect. In response, the Indonesian government has on several occasions in recent years directly used support from the Navy and Army to arrest, confiscate timber and drive companies out of the parks.

Recently, the Indonesian government has launched perhaps one of the most promising initiatives in recent years, namely the training of specially equipped ranger units (SPORC) to protect the parks.

Achim Steiner, UN Under Secretary General and UNEP Executive Director, said: “Globalization is generating unprecedented wealth and lifting millions out of poverty. But in this case, the illegal logging is destroying the livelihoods of many local people dependent upon the forests while it is also draining the natural wealth of Indonesian forest resources by unsustainable practices. The logging at these scales is not done by individual impoverished people, but by well-organized elusive commercial networks“.

“National Parks form a cornerstone in the 2010 target to reduce the rate of biodiversity loss and are also so valuable for eco-tourism and in generating new livelihoods. Their protection is vital to these international goals and to the entire concept of protected areas”.

He called on governments and the international community to assist the Indonesian authorities with the equipment, training and particularly funding needed to enforce and patrol their national parks from illegal loggers.

H. E. Rachmat Witoelar, Indonesia’s environment minister and outgoing president of UNEP’s Governing Council, said; “We are currently in an unequal struggle over illegal logging, which in the medium to long-term could be won through certification processes. Such processes can help global consumers choose between sustainably produced wood and palm-oil products and those produced illegally and unsustainably”.

He said that the government was acting in the short term with counter measures including through the development of Ranger Quick response Units to counter illegal forest destruction. “However, the challenge of policing and enforcing Indonesia’s vast parks is immense and rangers have currently little access to ground vehicles, boats, arms, communications or aerial surveillance such as planes or helicopters. In 35 of our national parks we have over 2000 rangers but they have to patrol an area of over 100,000 km2”

The scale of illegal logging, including into national parks is likely to increase not only in Indonesia, but also in other parts of Asia, Africa and Latin-America. “The situation is now acute”, says Christian Nellemann, leader of the Response team. “The recent Indonesian initiatives on law enforcement will require the necessary scale, financial and logistical support in order to stop the extent of this illegal logging. If successful, the Indonesian experiences gained in the coming years may substantially improve our ability to protect national parks and fight illegal logging in other parts of the World“.

The authors conclude that the enforcement regime for protected areas on Borneo and Sumatra needs to be strengthened to curb these illegal activities. The Indonesian initiative of better training and equipment of park rangers, including the development of Ranger Quick Response Units (SPORC – Satuan Khusus Polisi Kehutanan Reaksi Cepat) is a promising countermeasure, but requires substantial strengthening to deal with the scale of the immediate problem.

The Last Stand of the Orangutan was prepared by a Rapid Response Team headed by Christian Nellemann of UNEP/GRID-Arendal. The team consisted of experts from UNEP/GRID-Arendal and UNEP World Conservation Monitoring Centre as a broad collaborative effort, involving contributors from the Ministry of Environment and Ministry of Forestry, Indonesia, and partners of the Great Apes Survival Project (GRASP).

Image 1: The distribution of Orangutan on Borneo is rapidly decreasing, as mankind is reducing the available habitat for the apes. The loss of forest, through logging, clearing and burning, means reduced opportunities for hiding and food collection. In addition, orangutans are hunted for food and to be held in captivity. Orangutan distribution on Borneo (Indonesia, Malaysia) The distribution of Orangutan on Borneo is rapidly decreasing, as mankind is reducing the available habitat for the apes. The loss of forest, through logging, clearing and burning, means reduced opportunities for hiding and food collection. In addition, orangutans are hunted for food and to be held in captivity. Source: Radday, M. 2007. 'Borneo Maps'. Cartographer/Designer, Hugo Ahlenius, UNEP/GRID-Arendal.

Image 2: Exports of wood products from Indonesia, with final destinations such as China, Japan and North America. Almost three quarters of the wood end in destinations in Asia. In the black market, with illegal timber, the products are known to change country of origin and their labeling and classification as they are smuggled. Schroeder-Wildberg, E. Carius A. 2003. Illegal Logging, Conflict and the Business Sector in Indonesia. InWEnt-Capcity Building International. Cartographer/Designer Hugo Ahlenius, UNEP/GRID-Arendal.

More information:
UNEP: Nellemann, C. Miles, L. Kaltenborn, B. P. Virtue, M. Ahlenius, H. (eds) (2007) The Last Stand of the Orangutan - State of emergency: illegal logging, fire and palm oil in Indonesia's national parks[*.pdf], UNEP/GRID-Arendal, Arendal, Norway.

The GLOBIO programme on biodiversity and human impacts (contributed with biodiversity scenario maps for Borneo and Sumatra) - this web-site also features the 2002 report Great Apes - the road head.

Great Apes Survival Project (GRASP) - a joint project with UNEP and UNESCO

World Atlas of Great Apes (from UNEP-WCMC)

Great Apes at UNEP-WCMC

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