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    TMO Renewables Limited, a producer of ethanol from biomass, has licensed the ERGO bioinformatics software developed and maintained by Integrated Genomics. TMO will utilize the genome analysis tools for gene annotation, metabolic reconstruction and enzyme data-mining as well as comparative genomics. The platform will enable the company to further understand and exploit its thermophilic strains used for the conversion of biomass into fuel. CheckBiotech - May 25, 2007.

    Melbourne-based Plantic Technologies Ltd., a company that makes biodegradable plastics from plants, said 20 million pounds (€29/US$39 million) it raised by selling shares on London's AIM will help pay for its first production line in Europe. Plantic Technologies [*.pdf] - May 25, 2007.

    Shell Hydrogen LLC and Virent Energy Systems have announced a five-year joint development agreement to develop further and commercialize Virent's BioForming technology platform for the production of hydrogen from biomass. Virent Energy Systems [*.pdf] - May 24, 2007.

    Spanish energy and engineering group Abengoa will spend more than €1 billion (US$1.35 billion) over the next three years to boost its bioethanol production, Chairman Javier Salgado said on Tuesday. The firm is studying building four new plants in Europe and another four in the United States. Reuters - May 23, 2007.

    According to The Nikkei, Toyota is about to introduce flex-fuel cars in Brazil, at a time when 8 out of 10 new cars sold in the country are already flex fuel. Brazilians prefer ethanol because it is about half the price of gasoline. Forbes - May 22, 2007.

    Virgin Trains is conducting biodiesel tests with one of its diesel engines and will be running a Voyager train on a 20 percent biodiesel blend in the summer. Virgin Trains Media Room - May 22, 2007.

    Australian mining and earthmoving contractor Piacentini & Son will use biodiesel from South Perth's Australian Renewable Fuels across its entire fleet, with plans to purchase up to 8 million litres from the company in the next 12 months. Tests with B20 began in October 2006 and Piacentinis reports very positive results for economy, power and maintenance. Western Australia Business News - May 22, 2007.

    Malaysia's Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui announces he will head a delegation to the EU in June, "to counter European anti-palm oil activists on their own home ground". The South East Asian palm oil industry is seen by many European civil society organisations and policy makers as unsustainable and responsible for heavy deforestation. Malaysia Star - May 20, 2007.

    Paraguay and Brazil kick off a top-level seminar on biofuels, cooperation on which they see as 'strategic' from an energy security perspective. 'Biocombustiveis Paraguai-Brasil: Integração, Produção e Oportunidade de Negócios' is a top-level meeting bringing together the leaders of both countries as well as energy and agricultural experts. The aim is to internationalise the biofuels industry and to use it as a tool to strengthen regional integration and South-South cooperation. PanoramaBrasil [*Portuguese] - May 19, 2007.

    Portugal's Galp Energia SGPS and Petrobras SA have signed a memorandum of understanding to set up a biofuels joint venture. The joint venture will undertake technical and financial feasibility studies to set up a plant in Brazil to export biofuels to Portugal. Forbes - May 19, 2007.

    The Cypriot parliament has rejected an amendment by President Papadopoulos on the law regarding the use of biofuels that contain genetically modified substances. The amendment called for an alteration in the law that currently did not allow the import or use of biofuels that had been produced using GM substances, something that goes against a recent EU Directive on GMOs. Cyprus Mail - May 18, 2007.

    According to Salvador Rivas, the director for Non-Conventional Energy at the Dominican Republic's Industry and Commerce Ministry, a group of companies from Brazil wants to invest more than 100 million dollars to produce ethanol in the country, both for local consumption and export to the United States. Dominican Today - May 16, 2007.

    EWE AG, a German multi-service energy company, has started construction on a plant aimed at purifying biogas so that it can be fed into the natural gas grid. Before the end of the year, EWE AG will be selling the biogas to end users via its subsidiary EWE Naturwatt. Solarthemen [*German] - May 16, 2007.

    Scania will introduce an ethanol-fueled hybrid bus concept at the UITP public transport congress in Helsinki 21-24 May 2007. The full-size low-floor city bus is designed to cut fossil CO2 emissions by up to 90% when running on the ethanol blend and reduce fuel consumption by at least 25%. GreenCarCongress - May 16, 2007.

    A report by the NGO Christian Aid predicts there may be 1 billion climate refugees and migrants by 2050. It shows the effects of conflicts on populations in poor countries and draws parallels with the situation as it could develop because of climate change. Christian Aid - May 14, 2007.

    Dutch multinational oil group Rompetrol, also known as TRG, has entered the biofuel market in France in conjunction with its French subsidiary Dyneff. It hopes to equip approximately 30 filling stations to provide superethanol E85 distribution to French consumers by the end of 2007. Energy Business Review - May 13, 2007.

    A group of British organisations launches the National Forum on Bio-Methane as a Road Transport Fuel. Bio-methane or biogas is widely regarded as the cleanest of all transport fuels, even cleaner than hydrogen or electric vehicles. Several EU projects across the Union have shown its viability. The UK forum was lauched at the Naturally Gas conference on 1st May 2007 in Loughborough, which was hosted by Cenex in partnership with the NSCA and the Natural Gas Vehicle Association. NSCA - May 11, 2007.

    We reported earlier on Dynamotive and Tecna SA's initiative to build 6 bio-oil plants in the Argentinian province of Corrientes (here). Dynamotive has now officially confirmed this news. Dynamotive - May 11, 2007.

    Nigeria launches a national biofuels feasibility study that will look at the potential to link the agricultural sector to the automotive fuels sector. Tim Gbugu, project leader, said "if we are able to link agriculture, we will have large employment opportunity for the sustenance of this country, we have vast land that can be utilised". This Day Onlin (Lagos) - May 9, 2007.

    Brazilian President Luiz Inácio Lula da Silva meets with the CEO of Portuguese energy company Galp Energia, which will sign a biofuel cooperation agreement with Brazilian state-owned oil company Petrobras. GP1 (*Portuguese) - May 9, 2007.

    The BBC has an interesting story on how biodiesel made from coconut oil is taking the pacific island of Bougainville by storm. Small refineries turn the oil into an affordable fuel that replaces costly imported petroleum products. BBC - May 8, 2007.

    Indian car manufacturer Mahindra & Mahindra is set to launch its first B100-powered vehicles for commercial use by this year-end. The company is confident of fitting the new engines in all its existing models. Sify - May 8, 2007.

    The Biofuels Act of the Philippines has come into effect today. The law requires all oil firms in the country to blend 2% biodiesel (most often coconut-methyl ester) in their diesel products. AHN - May 7, 2007.

    Successful tests based on EU-criteria result in approval of 5 new maize hybrids that were developed as dedicated biogas crops [*German]. Veredlungsproduktion - May 6, 2007.

    With funding from the U.S. Department of Labor Workforce Innovation for Regional Economic Development (WIRED), Michigan State University intends to open a training facility dedicated to students and workers who want to start a career in the State's growing bioeconomy. Michigan State University - May 4, 2007.

    Researchers from the Texas A&M University have presented a "giant" sorghum variety for the production of ethanol. The crop is drought-tolerant and yields high amounts of ethanol. Texas A & M - May 3, 2007.

    C-Tran, the public transportation system serving Southwest Washington and parts of Portland, has converted its 97-bus fleet and other diesel vehicles to run on a blend of 20% biodiesel beginning 1 May from its current fleet-wide use of B5. Automotive World - May 3, 2007.

    The Institut Français du Pétrole (IFP) and France's largest research organisation, the CNRS, have signed a framework-agreement to cooperate on the development of new energy technologies, including research into biomass based fuels and products, as well as carbon capture and storage technologies. CNRS - April 30, 2007.

    One of India's largest state-owned bus companies, the Andra Pradesh State Road Transport Corporation is to use biodiesel in one depot of each of the 23 districts of the state. The company operates some 22,000 buses that use 330 million liters of diesel per year. Times of India - April 30, 2007.

    Indian sugar producers face surpluses after a bumper harvest and low prices. Diverting excess sugar into the ethanol industry now becomes more attractive. India is the world's second largest sugar producer. NDTVProfit - April 30, 2007.

    Brazilian President Luiz Inacio Lula da Silva and his Chilean counterpart Michelle Bachelet on Thursday signed a biofuel cooperation agreement designed to share Brazil's experience in ethanol production and help Chile develop biofuels and fuel which Lula seeks to promote in other countries. More info to follow. People's Daily Online - April 27, 2007.

    Italy's Benetton plans to build a €61 million wood processing and biomass pellet production factory Nagyatád (southwest Hungary). The plant will be powered by biogas. Budapest Sun - April 27, 2007.

    Cargill is to build an ethanol plant in the Magdeburger Börde, located on the river Elbe, Germany. The facility, which will be integrated into existing starch processing plant, will have an annual capacity of 100,000 cubic meters and use grain as its feedstock. FIF - April 26, 2007.

    Wärtsilä Corporation was awarded a contract by the Belgian independent power producer Renogen S.A. to supply a second biomass-fuelled combined heat and power plant in the municipality of Amel in the Ardennes, Belgium. The new plant will have a net electrical power output of 3.29 MWe, and a thermal output of up to 10 MWth for district heating. The electrical output in condensing operation is 5.3 MWe. Kauppalehti - April 25, 2007.

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Wednesday, May 23, 2007

Engineers to burn manure as fuel to power an ethanol plant

To calculate the greenhouse gas balance of a biofuel, all the energy inputs of its entire production chain must be taken into account. If an ethanol plant uses coal or natural gas to power its operations (as is the case in the US and the EU), then the fuel will not be that clean. If however it uses renewable and climate friendly biomass (as is the case in Brazil where bagasse powers the refineries), then a much greener fuel can be obtained.

Engineers from the Texas Cooperative Extension have understood this and are now working with feedyard owners to help them look at the manure produced by their animals as a valuable biofuel that will be used to power an ethanol plant. Besides ethanol, the refinery will produce a byproduct known as distillers' dried grain, which is a prime feed for the cattle that produce the manure. If collected and treated well, the manure has a heating value almost similar to that of Texas lignite coal. The main difference is that the first fuel source has a low carbon dioxide footprint, whereas coal is extremely climate destructive.

Dr. Brent Auvermann, the expert developing the manure combustion process, recently hosted a seminar titled "Producing High-Value Manure for BioFuels and Fertilizer", in Hereford, where Panda Energy International will use the biomass in its ethanol facility. The meeting outlined work by Texas Agricultural Experiment Station researchers to determine best management practices for scraping manure from the feed pens.

"We're doing something that has never been done before," says Arles Graham, Panda Energy International's general manager for the Hereford plant, who spoke at the event. "We're using your manure as an energy source," he told feedyard owners. "It's a very complex process."

After starting up the plant with natural gas as the boiler fuel, Panda Energy will eventually use manure as a fuel source when producing ethanol for an E10 fuel blend, Graham said. The plant will initially process corn for ethanol, although the company is looking at alternative sources of starch to make the ethanol, and it will produce distiller's grains as a by-product. "But manure is our future," Graham said, estimating each plant will use 1,500 tons a day. Jim Adams, Panda Energy vice president-fuels, said the plant will begin asking yards in June to sign up for a percentage of their manure.

The past winter was a wake-up call, Adams said. Sometimes when the weather is too wet, manure can't be harvested from the pens. Manure will be used by this fall, so they have to start stockpiling now to ensure a steady supply. Adams said the plant will use manure on a six-day basis, requiring 70 to 80 truckloads per day. Panda's contractor will collect from the pens when they are dry enough, but will need to pull from stockpiles when pen surfaces are too wet.

Manure quality key
Quality is the biggest issue, Auvermann said. The manure needs to burn at a minimum rate of 2,758 British thermal units per pound of manure. That number changes according to the amount of pollutants – moisture and dirt – included when the pen is scraped:
:: :: :: :: :: :: :: :: :: ::

If all the water and contaminants were removed from the manure, the highest quality would be 8,500 Btu, "but we can't do that, because we can't take the ash out completely," he said.

Manure from soil-surfaced pens may not always meet the minimum heating value on an as-received basis, Auvermann said. Feedyard operators will have to take some steps to improve it. The timeliness of collection and depth of scraping will be key to keeping dirt content below 60 percent and moisture content below 20 percent, he said. "Paving the pens with a crushed ash or a fly-ash material (from coal-fired power plants) will end up returning to you in the form of heating value – big time," Auvermann said.

Partially composted manure from paved pens can have a heating value almost equivalent to that generated by burning Texas lignite coal, he said.

Feedyard owners should consider the process as "harvesting manure" rather than cleaning pens, Auvermann said. The ultimate goal is to have a hard, smooth, well-drained corral surface. Implementing good practices will pay at the bottom line, he said. Conscientious manure harvesting can result in higher fuel and fertilizer values, reduced feed requirements for cattle, improved pen drainage, and reduced odor, dust and flies.

Image 1: Dr. Brent Auvermann, Texas Cooperative Extension engineering specialist, advises feedyard operators to pay close attention to blade depth when harvesting manure from corral surfaces as a boiler fuel source. (Texas Cooperative Extension photo by Sharon Preece).

Image 2: Cleaning manure from feed pens is a common practice, but one that will have to be done more carefully in the future if the harvested product is to be used as a fuel source, according to Dr. Brent Auvermann, Texas Cooperative Extension engineering specialist. (Texas Cooperative Extension photo by Sharon Preece).

More information:

AgNews, Texas A&M University: Cleaner Manure Burns Hotter in Ethanol Processing - May 23, 2007.

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Boost to biohydrogen: high yield production from starch by synthetic enzymes

In what is a breakthrough for the hydrogen economy, scientists from Virginia Tech, Oak Ridge National Laboratory (ORNL), and the University of Georgia announce they have developed a biohydrogen production technique that tackles most of the problems traditionally associated with the production, storage and distribution of hydrogen. Their concept implies we may soon be filling our tanks with dry starch, the powdery stuff sold in grocery stores. Synthetic enzymes will do the rest.

This development gives new hope to the hydrogen economy. As part of what can be called the larger 'carbohydrate economy' the gas will be produced efficiently from starch and sugar-rich biomass instead of expensive and dirty alternatives like coal and natural gas. The new biohydrogen production method is also more efficient and cost-competitive than making the gas from water, which is based on using expensive electricity obtained from nuclear, wind or solar to power the electrolysis process.

According to experts, for hydrogen to penetrate the market for transportation, advances are needed in four areas: production, storage, distribution, and fuel cells. Most industrial hydrogen currently comes from natural gas, which has become expensive and contributes to climate change. Storing and moving the gas, whatever its source, is costly and cumbersome, and even dangerous. And there is little infrastructure for refueling a vehicle.

Synthetic enzymes

The researchers have now come up with a bioconversion process that overcomes these barriers (diagram, click to enlarge). Using synthetic biology approaches, Zhang and colleagues Barbara R. Evans and Jonathan R. Mielenz of ORNL, and Robert C. Hopkins and Michael W.W. Adams of the University of Georgia, are using a combination of 13 enzymes never found together in nature to completely convert polysaccharides (C6H10O5) and water into hydrogen when and where that form of energy is needed. This “synthetic enzymatic pathway” research appears in the May 23 issue of the open access journal Public Library of Science ONE.

Polysaccharides like starch and cellulose are used by plants for energy storage and building blocks and are very stable until exposed to enzymes. Just add enzymes to a mixture of starch and water and “the enzymes use the energy in the starch to break up water into only carbon dioxide and hydrogen,” says Y.H. Percival Zhang, assistant professor of biological systems engineering at Virginia Tech.

Starch in our tanks
A membrane bleeds off the carbon dioxide and the hydrogen is used by the fuel cell to create electricity. Water, a product of that fuel cell process, will be recycled for the starch-water reactor. Laboratory tests confirm that it all takes place at low temperature - about 86 degrees F - and atmospheric pressure.

The vision is for the ingredients to be mixed in the fuel tank of your car, for instance. A car with an approximately 12-gallon tank could hold 27 kilograms (kg) of starch, which is the equivalent of 4 kg of hydrogen. The range would be more than 300 miles, Zhang estimates. One kg of starch will produce the same energy output as 1.12 kg (0.38 gallons) of gasoline.

Since hydrogen is gaseous, hydrogen storage is the largest obstacle to large-scale use of hydrogen fuel. The American Department of Energy’s long-term goal for hydrogen storage was 12 mass percent, or 0.12 kg of hydrogen per one kg of container or storage material, but such technology is not available, said Zhang. Using polysaccharides as the hydrogen storage carrier, the research team achieved hydrogen storage capacity as high as 14.8 mass percent, they report in the PLOS article:
:: :: :: :: :: :: :: :: :: :: :: ::

The idea began as a theory. The research was based on Zhang’s previous work pertaining to cellulosic ethanol production and the ORNL and University of Georgia researchers’ work with enzymatic hydrogen production. UGA Distinguished Professor Adams is co-author of the first enzymatic hydrogen paper in Nature Biotechnology in 1996. The researchers were certain they could put the processes together in one pot. They tested the theory using Oak Ridge’s hydrogen detectors and documented that hydrogen is produced as they predicted.

Mielenz, who heads the Bioconversion Group in ORNL's Biosciences Division, attributed the successful research to a unique collaborative working relationship between scientists, lab divisions, and universities.

"Pairing our biomass conversion capabilities with facilities for studying renewable hydrogen production in the lab's Chemical Sciences Division was a key to this project," Mielenz said. "This also shows the value of partnerships with universities such as Virginia Tech and the University of Georgia."

It is a new process that aims to release hydrogen from water and carbohydrate by using multiple enzymes as a catalyst, Zhang said. “In nature, most hydrogen is produced from anaerobic fermentation. But hydrogen, along with acetic acid, is a co-product and the hydrogen yield is pretty low--only four molecules per molecule of glucose. In our process, hydrogen is the main product and hydrogen yields are three-times higher, and the likely production costs are low--about $1 per pound of hydrogen.

Over the years, many substances have been proposed as “hydrogen carriers,” such as methanol, ethanol, hydrocarbons, or ammonia - all of which require special storage and distribution. Also, the thermochemical reforming systems require high temperatures and are complicated and bulky. Starch, on the other hand, can be distributed by grocery stores, Zhang points out.

“So it is environmentally friendly, energy efficient, requires no special infrastructure, and is extremely safe. We have killed three birds with one stone,” he said. “We have hydrogen production with a mild reaction and low cost. We have hydrogen storage and transport in the form of starch or syrups. And no special infrastructure is needed.”

“The next R&D step will be to increase reaction rates and reduce enzyme costs,” Zhang said. “We envision that in the future we will drive vehicles powered by carbohydrate, or energy stored in solid carbohydrate form, with hydrogen production from carbohydrate and water, and electricity production via hydrogen-fuel cells.

“What is more important, the energy conversion efficiency from the sugar-hydrogen-fuel cell system is extremely high--greater than three times higher than a sugar-ethanol-internal combustion engine,” Zhang said. “It means that if about 30 percent of transportation fuel can be replaced by ethanol from biomass as the DOE proposed, the same amount of biomass will be sufficient to provide 100 percent of vehicle transportation fuel through this technology.”

In addition, the use of carbohydrates from biomass as transportation fuels will produce zero net carbon dioxide emissions and bring benefits to national energy security and the economy, Zhang said.

Interest to the South
The 'carbohydrate economy' is set to benefit those countries that can readily supply large quantities of industrial starch, sugar and cellulose. The developing world is a world leader in this respect and has a tremendous potential to grow.

If it ever becomes feasible to apply the technique developed by the researchers - just putting a starch and water solution in your tank - the main fuel will have to be processed starch. Theoretically it will be possible to extract the sugars from cellulose, but this would require additional processing steps.

Countries with the largest production potential for industrial starch can all be found in the tropics and the subtropics, where crops such as cassava, maize, sago and sweet potatoes grow that yield high quantities of the product (see our previous text, titled "Sweet potatoes and the carbohydrate economy").

Image: potato starch - soon powering our cars?

More information:
Zhang YP, Evans BR, Mielenz JR, Hopkins RC, Adams MW, High-Yield Hydrogen Production from Starch and Water by a Synthetic Enzymatic Pathway. PLoS ONE 2(5): e456, 2007, doi:10.1371/journal.pone.0000456

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Expanding US ethanol market provokes food price surge - report

Citizens in the United States are paying a very heavy price for their locally produced, inefficient biofuels: first they spend billions on subsidies that are handed out to a select group of corn farmers and corn ethanol producers who produce a fuel that is energy inefficient and that does not help mitigate climate change. Then, to make things worse, they have to incur rising food prices because of the expansion of this industry.

All the while, they are being denied access to biofuels that are competitive and that effectively help reduce climate change. The US denies its citizens this access by imposing tariffs on efficiently produced imported ethanol. The question is: how much longer will Americans accept this state of affairs?

Maybe they will start to question things when they read that soaring corn prices due to the expanding US ethanol market have already driven US retail food prices up by US$14 billion over the last year. The Iowa State University Center for Agriculture and Rural Development calculated this in its study "Emerging Biofuels: Outlook of Effects on US Grain, Oilseed, and Livestock Markets" [*.pdf]. The report's outlook for US food prices is bleak. It confirms that greater US ethanol production will mean more competition for land and grain, and will subsequently cause long-run crop price increases.

The report suggests that this rise in US retail food prices is likely to get worse and that they could be pushed even higher - to an annual increase of US$20 billion. Crude oil prices could increase from US$65 to US$70 per barrel and US corn prices to US$4.42 per bushel, compared to US$2 per bushel in mid-August 2006. In response to higher feed costs, livestock farmgate prices and therefore retail prices for meat, eggs and dairy will also increase (graph, click to enlarge).

The magnitude of US ethanol market will depend on the price of oil - which is unlikely to decrease much from current levels - and the future makeup of the US automobile fleet. If Americans show sufficient demand for E-85 (a fuel that typically contains a mixture of up to 85 percent ethanol and 15 percent gasoline), corn-based ethanol production will increase to over 30 billion gallons per year, claims the study.

This would cause the US corn acreage to increase to more than 110 million acres, largely at the expense of soybean and wheat acres. Equilibrium corn prices would then rise to more than US$4.40 per bushel:
:: :: :: :: :: :: :: :: :: :: :: ::

The direct effect of higher feed costs would be to push up beef, pork and poultry prices by more than 4 percent, and to send egg prices rocketing by about 8 percent.

Corn will remain the primary raw material for biofuels in the Corn Belt, ahead of cellulosic ethanol from switchgrass and biodiesel from soybeans, because these crops are less economically viable, says the study.

The Grocery Manufacturers Association (GMA) recently urged a full report into the effect the growing use of corn for biofuels could have on the US food industry.

"We support policies that will permit an increase in biofuels production without hampering the ability of the food industry to provide consumers - both in the US and around the world - with a reliable and affordable supply of food," said Cal Dooley, GMA president and chief executive officer.

US President George Bush earlier this month signed an executive order directing federal agencies to draw up regulations that will "cut gasoline consumption and greenhouse gas emissions from motor vehicles".

These regulations, which he wants in place by the end of 2008, are expected to boost domestic ethanol production and could cause food prices to rise even higher than current forecasts.

Americans need a 'biopact'

There is only one alternative to the dreadful evolution of the U.S. biofuel market: to demand lower subsidies for corn growers, and to reduce or lift the trade barriers imposed on imported ethanol.

Biofuels produced in the subtropics and the tropics - like sugarcane ethanol - have a much better energy balance as well as a stronger greenhouse gas (GHG) reduction balance. This means that their use is energy efficient and helps fight climate change. This cannot be said of corn based ethanol, which, some scientists found, takes almost as much energy to make, as you get out of it. Its GHG balance is very weak as well.

By allowing biofuels from the South to be imported, American citizens can both enjoy lower fuel prices (sugar cane ethanol is competitive with oil at around US$35-40 per barrel), as well as lower food prices. Moreover, they would be helping farmers in the South, and would indirectly help alleviate poverty in the developing world.

At the Biopact, we understand that such a scenario is wishful thinking, because the corn lobby in the U.S. is extremely powerful. But still, the message must be repeated, so that eventually change becomes possible. It's in the hands of the American electorate. But voters should not feel alone: they are being supported by a small but growing group of law makers and politicians with green credentials, who are in favor of the abandonment of the tariff. Amongst them are Governor Arnold Schwarzenegger, Senator Richard Lugar, and former Governor Jeb Bush.

More information:
Simla Tokgoz, et al., Emerging Biofuels: Outlook of Effects on U.S. Grain, Oilseed, and Livestock Markets, Staff Report 07-SR 101, Center for Agricultural and Rural Development Iowa State University, May 2007.

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Philippines in US$1.3 billion biofuel project with UK's NRG

The Philippines signed a US$1.3 billion (€966 million) deal with UK-based NRG Chemical Engineering today to build biofuel refineries and plantations, in one of the biggest foreign investments into the Southeast Asian country. The news comes at a time when another British biofuel company, D1 Oils, is expanding its plantation base in the Mindanao region.

State-owned Philippine National Oil Co. (PNOC) said its biofuels unit would form a joint venture with NRG, whose billion dollar investment, spread over five years, is a big boost for Manila's ambitions to become a major source of alternative fuels.

Chris de Lavigne, corporate adviser of NRG Chemical, said the company decided to invest in the Philippines because of its location, climate and the government's pro-active efforts in promoting biofuels. Peter Abaya, president of PNOC-Alternative Fuels (PNOC-AFC), told reporters he had been in negotiations with the company, which also has offices in Singapore, for 9 months.

The two groups have made the following plans:
  • to build a large 3.5 million metric tonne biorefinery, at a cost of around US$450 million, within three years. The refinery will initially use coconut and vegetable oil as feedstock until the planned jatropha plantation can start commercial production.
  • to create a jatropha plantation larger than 1 million hectares (2.471 million acres) to grow the biodiesel feedstock. The plantation will cost US$600 million (€446 million).
  • to build two 300,000 metric tonne bioethanol plants, at a cost of $200 million each; feedstock will be sweet sorghum.
The 3.5 million ton biorefinery would become one of South East Asia's largest plants. Jatropha, known locally as 'tuba tuba' yields anywhere between 1 and 2 tons of inedible oil seeds per hectare. At average processing efficiencies, from each ton around 200 liters of biodiesel can be extracted. A 1 million hectare plantation would thus represent a 'biofuel reserve' of between 1.25 and 2.5 million barrels of oil equivalent energy per annum (between 3440 - 6900 boe/day; the island state's daily oil consumption stands at 342,000 bpd, so the jatropha plantation could cover between 1 and 2% of this demand). The productive life of jatropha shrubs is between 30 and 50 years.

Interestingly, the ethanol plants will rely on sweet sorghum for their feedstock. It is not clear whether the joint venture will be planting or sourcing the new high yield and drought tolerant hybrids that contain higher levels of sugar in their stalks, as they were developed by the ICRISAT (earlier post). This is likely, since the Philippine government has expressed interest in these new varieties.

The joint venture between PNOC and NRG would be 70 percent owned by the latter:
:: :: :: :: :: :: :: :: :: ::

President Gloria Macapagal Arroyo is determined to reduce the Philippines' dependence on imported crude oil in favour of alternative fuels produced from locally grown crops, such as sugar cane, coconut and jatropha.

A new law requiring a mandatory 1 percent coconut blend in diesel was introduced earlier this month and by 2009 gasoline will contain a 5 percent mix of ethanol to reduce the Philippines' US$6 billion plus oil import bill.

The government has courted foreign investment to boost biofuel local production and earlier this year signed agreements for five possible ethanol projects with China.

But NRG's investment is the biggest yet into the biofuels sector and a boost for the country's low levels of foreign direct investment, which have failed to match buoyant portfolio inflows from overseas amid high power costs and concerns over corruption. Manila is hoping its English-speaking workforce and abundant natural resources will attract more FDI.

D1 Oils expands
The news of the joint venture comes at a time when British AIM-listed D1 Oils expands its jatropha plantations in the Philippines. The company is going around Mindanao to entice farmers to cultivate tuba tuba with the hope to plant 10,000 hectares in the near term.

Recto Doctor, country agronomist of D1 Oils Asia Pacific Inc., a subsidiary of D1 Oils UK, said the company would provide planting materials, technical assistance and a marketing agreement to farmers willing to grow the crop.

"Farmers can pay us upon harvest," he said. Doctor said the firm is aggressive in its jatropha project now that the country is implementing the Biofuels Act, which was signed into law only last January 17.

He noted that the firm prefers unutilized lands than converting existing farmlands grown with crops like corn and rice to jatropha plantations. Jatropha, Doctor pointed out, would help alleviate poverty in the countryside and can help in the protection of the environment since it can prevent soil erosion.

The crop could be harvested seven months from planting and has a life span of 30 years, he said, adding that for the first year, a hectare could yield between P15,000 to P20,000 and grows bigger to P30,000 as the plant matures. D1 Oils Asia is working out a financing window for farmers through the Land Bank of the Philippines, he disclosed, details of which Doctor did not discussed.

The firm has plans to establish a refinery in the country but only after the desired number of hectares will be planted with jatropha, Doctor said. With 500 to 1,000 hectares, it would be enough to put up an extracting plant, he added.

More information:
Sun Star (Manila): British firm lures Minda farmers to grow jatropha - May 21, 2007
Sun Star (Manila): RP, NRG Chemical of Britain sign US$1.3 billion biodiesel project - May 22, 2007.

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