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    According to the Barbados Agricultural Management Company (BAMC), the Caribbean island state has a large enough potential to meet both its domestic ethanol needs (E10) and to export to international markets. BAMC is working with state actors to develop an entirely green biofuel production process based on bagasse and biomass. The Barbados Advocate - June 6, 2007.

    Energea, BioDiesel International and the Christof Group - three biodiesel producers from Austria - are negotiating with a number of Indonesian agribusiness companies to cooperate on biodiesel production, Austrian Commercial Counselor Raymund Gradt says. The three Austrian companies are leading technology solution providers for biodiesel production and currently produce a total of 440,000 tons of biodiesel per annum in Austria, more than half of their country’s annual demand of around 700,000-800,000 tons. In order to meet EU targets, they want to produce biodiesel abroad, where feedstocks and production is more competitive. BBJ - June 6, 2007.

    China will develop 200 million mu (13.3 million hectares) of forests by 2020 in order to supply the raw materials necessary for producing 6 million tons of biodiesel and biomass per year, state media reported today. InterFax China - June 6, 2007.

    British Petroleum is planning a biofuel production project in Indonesia. The plan is at an early stage, but will involve the establishment of an ethanol or biodiesel plant based on sugarcane or jatropha. The company is currently in talks with state-owned plantation and trading firm Rajawali Nusantara Indonesia (RNI) as its potential local partner for the project. Antara - June 6, 2007.

    A pilot project to produce biodiesel from used domestic vegetable oil is underway at the Canary Technological Institute in Gran Canaria. Marta Rodrigo, the woman heading up the team, said the project is part of the EU-wide Eramac scheme to encourage energy saving and the use of renewable energy. Tenerife News - June 6, 2007.

    Royal Dutch Shell Plc is expanding its fuel distribution infrastructure in Thailand by buying local petrol stations. The company will continue to provide premium petrol until market demand for gasohol (an petrol-ethanol mixture) climbs to 70-90%, which will prove customers are willing to switch to the biofuel. "What we focus on now is proving that our biofuel production technology is very friendly to engines", a company spokesman said. Bangkok Post - June 5, 2007.

    Abraaj, a Dubai-based firm, has bought the company Egyptian Fertilizers in order to benefit from rising demand for crops used to make biofuels. The Abraaj acquisition of all the shares of Egyptian Fertilizers values the company based in Suez at US$1.41 billion. Egyptian Fertilizers produces about 1.25 million tons a year of urea, a nitrogen-rich crystal used to enrich soils. The company plans to expand its production capacity by as much as 20 percent in the next two years on the expected global growth in biofuel production. International Herald Tribune - June 4, 2007.

    China and the US will soon sign a biofuel cooperation agreement involving second-generation fuels, a senior government official said. Ma Kai, director of the National Development and Reform Commission, said at a media briefing that vice premier Wu Yi discussed the pact with US Secretary of Energy Samuel Bodman and other US officials during the strategic economic dialogue last month. Forbes - June 4, 2007.

    German biogas company Schmack Biogas AG reports a 372% increase in revenue for the first quarter of the year, demonstrating its fast growth. Part of it is derived from takeovers. Solarserver [*German] - June 3, 2007.

    Anglo-Dutch oil giant Royal Dutch Shell PLC has suspended the export of 150,000 barrels per day of crude oil because of community unrest in southern Nigeria, a company spokesman said. Villagers from K-Dere in the restive Ogoniland had stormed the facility that feeds the Bonny export terminal, disrupting supply of crude. It was the second seizure in two weeks. Shell reported on May 15 that protesters occupied the same facility, causing a daily output loss of 170,000 barrels. Rigzone - June 2, 2007.

    Heathrow Airport has won approval to plan for the construction of a new 'green terminal', the buildings of which will be powered, heated and cooled by biomass. The new terminal, Heathrow East, should be completed in time for the 2012 London Olympics. The new buildings form part of operator BAA's £6.2bn 10-year investment programme to upgrade Heathrow. Transport Briefing - June 1, 2007.

    A new algae-biofuel company called LiveFuels Inc. secures US$10 million in series A financing. LiveFuels is a privately-backed company working towards the goal of creating commercially competitive biocrude oil from algae by 2010. PRNewswire - June 1, 2007.

    Covanta Holding Corp., a developer and operator of large-scale renewable energy projects, has agreed to purchase two biomass energy facilities and a biomass energy fuel management business from The AES Corp. According to the companies, the facilities are located in California's Central Valley and will add 75 MW to Covanta's portfolio of renewable energy plants. Alternative Energy Retailer - May 31, 2007.

    Two members of Iowa’s congressional delegation are proposing a study designed to increase the availability of ethanol across the country. Rep. Leonard Boswell, D-Ia., held a news conference Tuesday to announce that he has introduced a bill in the U.S. House, asking for a US$2 million study of the feasibility of transporting ethanol by pipeline. Sen. Tom Harkin, D-Ia., has introduced a similar bill in the Senate. Des Moines Register - May 30, 2007.

    A new market study by Frost & Sullivan Green Energy shows that the renewables industry in the EU is expanding at an extraordinary rate. Today biofuels and other renewables represent about 2.1 per cent of the EU's gross domestic product and account for 3.5 million jobs. The study forecasts that revenues from renewables in the world's largest economy are set to double, triple or increase even more over the next few years. Engineer Live - May 29, 2007.

    A project to evaluate barley’s potential in Canada’s rapidly evolving biofuels industry has received funding of $262,000 from the Biofuels Opportunities for Producers Initiative (BOPI). Western Barley Growers Association [*.pdf] - May 27, 2007.

    PNOC-Alternative Fuels Corporation (PNOC-AFC), the biofuel unit of Philippine National Oil Company, is planning to undertake an initial public offering next year or in 2009 so it can have its own cash and no longer rely on its parent for funding of biofuels projects. Manila Bulletin - May 27, 2007.

    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.

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Wednesday, June 06, 2007

Dirty snow may warm Arctic as much as greenhouse gases - cleaner fuels needed

The global warming debate has focused on carbon dioxide emissions, but scientists at UC Irvine have determined that a lesser-known mechanism – dirty snow – can explain one-third or more of the Arctic warming primarily attributed to greenhouse gases.

Snow becomes dirty when soot from fossil fuel burning and forest fires enters the atmosphere and falls to the ground. Soot-infused snow is darker than natural snow. Dark surfaces absorb sunlight and cause warming, while bright surfaces reflect heat back into space and cause cooling, a process known as the albedo effect. Burning cleaner fuels would be a ready solution to brighten snow and thus lower temperatures, the scientists say.

Because of their emission profiles, biofuels may contribute to solving part of the problem:
  • Both first-generation biodiesel and ultra-clean synthetic biofuels show dramatic reductions in particulate matter and soot emissions compared to fossil fuels.
  • Likewise, the co-combustion of biomass with coal in power plants shifts particle size distribution from fine particles to coarse particles, which can be captured by dust collection systems, thus preventing soot and particulate matter emissions.
  • Moreover, around 2 billion people in the developing world rely on primitive biomass for energy (basically burning wood or dung on open fires). Introducing modern, clean biofuels amongst this vast mass of people would reduce soot and particulate matter emissions drastically.
  • Finally, burning of field residues in agriculture releases vast amounts of soot and fine particles. If these resources were used for power generation and to offset fossil fuels, once again the build up dirty snow could be reduced (see an example from Egypt).
On the other hand, if biofuel production were to imply the burning of forests or field based residues in the open air, they may actually worsen the situation.

The study, appearing this week in the Journal of Geophysical Research, shows dirty snow has had a significant impact on climate warming since the Industrial Revolution. In the past 200 years, the Earth has warmed about 0.8 degree Celsius. Charlie Zender, associate professor of Earth system science at UCI, graduate student Mark Flanner, and their colleagues calculated that dirty snow caused the Earth’s temperature to rise 0.1 to 0.15 degree, or up to 19 percent of the total warming.

In the past two centuries, the Arctic has warmed about 1.6 degrees. Dirty snow caused 0.5 to 1.5 degrees of warming, or up to 94 percent of the observed change, the scientists determined (map, click to enlarge).

The amount of warming by dirty snow varied from year to year, with higher temperatures in years with many forest fires. Greenhouse gases, which trap outgoing energy, are primarily responsible for the remaining temperature increase and are considered the Earth’s most important overall climate changing mechanism. Other human influences on Arctic climate change are particles in the atmosphere, including soot; clouds; and land use:
:: :: :: :: :: :: :: :: :: :: :: :: :: ::

Humans create the majority of airborne soot through industry and fuel combustion, while forest and open-field fires account for the rest. Because of human activity, greenhouse gas levels have increased by one-third in the last two centuries.

"A one-third change in concentration is huge, yet the Earth has only warmed about 0.8 degrees because the effect is distributed globally," Zender said. "A small amount of snow impurities in the Arctic have caused a significant temperature response there."

Previous studies have analyzed dirty snow’s effect on climate, but this is the first to take into account realistic emissions from forest fires in the Northern Hemisphere and how warming affects the thickness of the snow pack.

In some polar areas, impurities in the snow have caused enough melting to expose underlying sea ice or soil that is significantly darker than the snow. The darker surfaces absorb sunlight more rapidly than snow, causing additional warming. This cycle causes temperatures in the polar regions to rise as much as 3 degrees Celsius during some seasons, the scientists say.

"Once the snow is gone, the soot that caused the snow to melt continues to have an effect because the ground surface is darker and retains more heat," Zender said.

Dirty snow is prevalent in East Asia, Northern Europe and Northeastern United States.

Zender believes policymakers could use these research results to develop regulations to mitigate global warming. Limiting industrial soot emissions and switching to cleaner-burning fuels would leave snow brighter, he says. New snow falls each year, and if it contained fewer impurities, the ground would brighten and temperatures would cool. Carbon dioxide lives in the atmosphere for a century, so cutting back on emissions can prevent further warming but does not produce immediate cooling.

UCI scientist James Randerson and Philip Rasch, a scientist at the National Center for Atmospheric Research in Boulder, Colo., also worked on the study. The National Science Foundation and NASA funded this research.

Image: Map showing the annual mean temperature change due to dirty snow in degrees Celsius.

More information:
Mark G. Flanner, Charles S. Zender, James T. Randerson, Philip J. Rasch, "Present-day climate forcing and response from black carbon in snow", Journal of Geophysical Research, Vol. 112, D11202, doi:10.1029/2006JD008003, 2007

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Pesticides block nature's pathway to produce nitrogen for crops

Many farmers applying pesticides to boost crop yields may instead be contributing to growth problems, scientists report in a new study. According to years of research both in the test tube and, now, with real plants, the team found that artificial chemicals in pesticides – through application or exposure to crops through runoff – disrupt natural nitrogen-fixing communications between crops and soil bacteria. The disruption results in lower yields or significantly delayed growth.

The research is important in light of the long-term sustainability of world agriculture, which will not only feed rapidly growing populations but also produce fuels that have to replace declining oil resources. If food and fuel production can rely less on pesticides, this is obviously a major environmental benefit.

In their open access paper appearing online this week ahead of the regular publication by the Proceedings of the National Academy of Sciences (PNAS), the five-member team reports that agrichemicals bind to and block connections to specific receptors (NodD) inside rhizobia bacteria living in root nodules in the soil. Rotation legume crops such as alfalfa and soybeans require such interaction to naturally replace nitrogen levels that, in turn, benefit primary market crops like corn grown after legume rotations.
"Agrichemicals are blocking the host plant's phytochemical recruitment signal. In essence, the agrichemicals are cutting the lines of communication between the host plant and symbiotic bacteria. This is the mechanism by which these chemicals reduce symbiosis and nitrogen fixation." - Jennifer E. Fox, lead author, postdoctoral researcher at the Center for Ecology and Evolutionary Biology at the University of Oregon.
Legume plants secrete chemical signals that recruit the friendly bacteria, which work with the plants to convert atmospheric nitrogen into ammonia that, then, is used as fertilizer by the plants:
:: :: :: :: :: :: :: :: ::

Fox began the project as a doctoral student with John A. McLachlan, director of the Center for Bioenvironmental Research at Tulane University. She is working at the University of Oregon as a National Institutes of Health and National Research Service Award postdoctoral fellow under Joe Thornton, a professor of biology who focuses on phylogenomics and nuclear receptor genes.

Fox and colleagues began detailing their findings in the journal Nature (2001) and Environmental Health Perspectives (2004), testing more than 50 chemicals, including pentachlorophenol (PCP), in in-vitro assays. The paper in PNAS reports their in-vivo findings using real plants and bacteria.

None of the chemicals used in the research, including PCP, proved to be toxic to either the plants or bacteria, Fox says, "but PCP was unique in that it inhibited both seed germination and nitrogen fixation." More than 20 commonly used agricultural chemicals shared the same mechanism of action as PCP, but with varying amounts of signal disruption.

Fox, McLachlan and colleagues, in their PNAS paper, pointed to two published studies from 2000 that had found significant declines in both crop yield per unit of synthetic nitrogen fertilizer added and also a significant decline in overall symbiotic nitrogen fixation (image, click to enlarge).

The most common explanation for the observations is an overuse of agrichemicals applied to legume crops. That practice sets up "a vicious cycle," Fox said, because it reduces a legume crop's natural need for nitrogen fixation but leaves a shortage of natural nitrogen in the soil for the next year's crop to utilize. Thus, she said, there is the need for yet more fertilizer.

Other reasons, Fox said, have been poor soil quality due to overuse, which strips nutrients such as nitrogen and phosphorous from the soil, and to tillage, which interrupts root structures and disturbs the nitrogen-fixing bacteria when soil is turned.

"Our research provides another explanation for declining crop yields," Fox said. "We showed that by applying pesticides that interfere with symbiotic signaling, the overall amount of symbiotic nitrogen fixation is reduced. If this natural fertilizer source is not replaced by increased application of synthetic nitrogen fertilizer, then crop yields are reduced and/or more growing time is needed for these crops to reach the yields obtained by untreated crops. We feel that this is a previously unforeseen factor contributing to declining crop yields."

The researchers say that field-wide experiments now are needed, in addition to tests to determine the exact elements of pesticides that inhibit natural plant-bacteria interaction.

Image: Treatment groups pictured are (from left to right) alfalfa inoculated with S. melioti (bacteria) and treated with pentachlorophenol (pesticide), alfalfa that were not inoculated with S. melioti but were treated with pentachlorophenol, alfalfa inoculated with S. melioti and not treated with any chemicals,and alfalfa that were not inoculated with S. melioti and not treated with any chemicals. Pentachlorophenol treatment significantly reduced plant yield, both when plants were inoculated with S. melioti or left uninoculated.

More information:
Jennifer E. Fox, Jay Gulledge, Erika Engelhaupt, Matthew E. Burow, and John A. McLachlan, "Pesticides reduce symbiotic efficiency of nitrogen-fixing rhizobia and host plants", Proceedings of the National Academy of Sciences, June 4, 2007, DOI: 10.1073/pnas.0611710104

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India's Praj Industries launches biofuel operations in Brazil

Praj Industries Ltd, one of India's leading engineering, technology and equipment providers for alcohol and fuel ethanol plants, announces it is setting up a full-fledged marketing office in Brazil next month to tap the growing global demand for fuel ethanol that is expected to cross 90 billion litres by 2010 from the current 59 billion litres. The company hopes to expand in Brazil via acquisitions. Serial biofuel entrepreneur Vinod Khosla - who is investing in Brazilian biofuels himself - is one of the backers of Praj Industries.

A joint-venture with European company Aker Kvaerner, in which Praj has a majority stake, also becomes operational next month in Brazil, with the 10 per cent blending mandate of the European Union acting as a main driver of growth, Mr Pramod Chaudhari, Chairman, Praj Industries, said (earlier post).

Among the company's other initiatives outlined at the shareholders' annual general meeting were its focus on biotechnology, efforts to improve the existing biofuel production technology and development of "sustainability metrics", a framework that will take into account "earth and people" while chalking out its own evolution and earnings:
:: :: :: :: :: :: :: :: :: ::

On the business road map for the next five years, Mr Chaudhari said, "We are working on a blue print that will be guided by our vision to be a powerhouse in industrial biotechnology and continue to work towards environmental protection."

Earlier this fiscal, Praj introduced biodiesel technology besides its existing ethanol operations and plants as a new line of business and expects to consolidate it. Mr Chaudhari said that with per capita beer consumption expected to double over the next five years, the brewery business was poised for a major upswing as well.

Praj Industries recently obtained a major contract to design and build a bioethanol complex for Biowanze SA, in Belgium. Biowanze is pouring some €200 million into the complex, one of Europe's largest, which will bring economic opportunities to 10,000 farmers. Praj's first order, which only covers the designing phase of the complex, is worth around €2 million (ealier post).

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Japanese citizens 'keen' on using ethanol to tackle climate change - poll

Japan's Yomiuri Shimbun recently carried out a survey on global warming, biofuels and the environment.

Among other findings, the poll shows that:
  • 71% of respondents cited global warming as their chief worry regarding changes to the environment
  • 72% percent of respondents said they were concerned about the deterioration of the environment due to such phenomena as heat waves, floods and cold snaps, which have become more pronounced in recent years
  • 67% of respondents said they "want" or were "quite keen" to use bioethanol as automobile fuel
The survey covered 3,000 eligible voters in interviews at 250 locations nationwide on May 19 and 20. Of them, 1,803 people, or 60.1 percent, responded.

A similar survey from 1989 showed the ratio of respondents who cited global warming as a chief worry was only 34 percent. But the figure has continued to rise in subsequent surveys, reaching 62 percent in the previous survey, taken in 2004:
:: :: :: :: :: :: ::

The latest survey shows that an increasing number of people are worried about global warming and its link to increases in carbon dioxide emissions from the consumption of oil and coal, with changes in the climate being felt in Japan in extreme summer heat and an unusually warm winter.

Respondents were allowed to give multiple answers. Besides global warming, the depletion of ozone layer by chlorofluorocarbons was cited by 47 percent of respondents. This was followed by environmental contamination by dioxins and other chemical at 43 percent, and the contamination of rivers, lakes and oceans by household wastewater, industrial waste and tankers at 41 percent.

Asked if Japan should step up diplomatic pressure on China and the United States, which are the world's largest carbon dioxide emitting nations, 92 percent of respondents said yes.

The ratio of those who cited global warming as what they are particularly concerned about was high among those in their 30s and 40s, with their ratios at 77 percent and 78 percent, respectively.

On the environmental impact of global warming, 52 percent of respondents cited worries about the deterioration in living environments by decreases in agricultural products due to more frequent regional heavy rain and droughts. Fifty-one percent said they were concerned about rising sea levels, while 41 percent were worried that the fisheries industry would be adversely affected with changes in the marine ecosystem. This was followed by 39 percent who cited concerns about changes in farming areas due to desertification.

Compared with the previous poll from October 2004, the ratio of those who cited desertification rose by nine percentage points, while those who cited rising sea levels and changes in the marine ecosystem also rose significantly, by eight percentage points each.

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PZERO launches biogas fuel cell initiative in EU

Earlier we reported on the growing interest in biogas powered solid oxide (SOFC) and molten carbonate (MCFC) fuel cells, which offer energy systems with unparalleled efficiency and ultra-low carbon emissions (here, here and here). PZERO Limited, a UK-based green service company now launches a biogas initiative that will assist companies to create low-carbon electricity at the point of use, both reducing their emissions footprint and delivering energy security, by relying on such fuel cells.

PZERO offers a free biogas cogeneration suitability evaluation to EU companies to demonstrate how waste biogas can cost effectively be converted to low-carbon electricity and heat using fuel cell CHP (combined heat and power) technology.

Biogas is a methane rich gas created from decomposing organic mater. It naturally occurs where organic waste breaks down; in sewage farms, waste disposal sites (landfill tips), in breweries and from animal waste, and is hence regarded as 100% renewable. All too often, this greenhouse gas that is 21 times more potent than carbon dioxide (CO2), escapes unchecked into the atmosphere or is flared off for safety.

The PZERO evaluation methodology is based upon recent work PZERO conducted on behalf of water utility companies that specified fuel cell solutions compatible with sewage anaerobic digesters, which output biogas. PZERO believes the compelling results should be made widely available, particularly to local authorities, waste management companies, water utilities, farm cooperatives and breweries:
:: :: :: :: :: :: :: :: ::

"Where there's muck there's low carbon fuel," said Richard Bennett, CEO. "Biogas is a 100% renewable fuel that can be processed by a fuel cell to create low-carbon heat and electricity - reducing emissions footprints and delivering energy security."

PZERO expects to identify biogas opportunities that are suitable for onsite cogeneration. PZERO will further offer to purchase, install and operate the biogas fuel cell plant, and enter into local agreements to supply low-carbon heat and electricity at competitive rates.

Approximately 30% of greenhouse emissions come from the farming sector and a further 30% from electricity production. It is widely argued that distributed cogeneration solutions will genuinely reduce greenhouse gas emissions and deliver localised energy security. UK Government energy white papers have repeatedly called for an increase in cogeneration plants to help combat global warming and provide security of electricity supply.

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Soros invests US$900 million in Brazilian biofuels, calls on US, EU to end tariffs

Investment tycoon George Soros said Tuesday at the first Ethanol Summit in São Paulo, that he is investing US$900 (€666) million in the production of ethanol in Brazil, and demanded that the US and EU open their markets for biofuels produced in the South American country.

Putting an end to barriers in developed nations would help eliminate a 'paradox' that leaves an excess supply of ethanol in Brazil and a "hunger for biofuels across the world," he said at the Summit, organised by UNICA (and earlier post). The seminar at which the billionaire participated was aimed at studying the global market for alternative fuels. The United States produces ethanol from corn, while Brazil makes its variant from sugar cane which is many times more efficient.

Regardless of the potential market risks, Soros said ethanol is "competitive with gasoline" as it's much more environment-friendly, and that he plans to continue investing in its production. Brazil "has the capacity to increase its ethanol production ten-fold", but there are problems to overcome, Soros said. The Brazilian market for ethanol is almost saturated, so exports are essential for industry growth. But trade barriers from other countries dampen exports, the investor said.

The Hungarian-born investor is putting around US$900 million in a 150,000 hectare (370,500 acres) ethanol production project in Mato Grosso do Sul, which will be one of the largest mill complexes in Brazil. Soros' Adeco Agropecuaria Brasil will build three ethanol refineries in a first stage.

Soros accused Washington of protecting US corn producers with its tariffs on ethanol, regardless of efficiency in terms of energy. He noted that the energy balance of corn ethanol very weak, whereas that of sugar cane is eight to ten times better. Consequently, the greenhouse gas balance of the Brazilian variant is much stronger too (earlier post):
:: :: :: :: :: :: :: :: ::

The United States and the European Union levy high tariffs on Brazil's ethanol, which makes it expensive. The question is "how to open up the market in the USA, Europe and Japan," and how "to create an environment with stable prices," Soros said. He believes that politicians in the US and Europe will eventually reduce or eliminate the tariffs that make Brazilian ethanol exports expensive as the world turns increasingly to biofuels over fossil fuels. He said he hopes the issue of tariffs is solved, "to make investment in ethanol really viable."

The United States, Brazil's largest foreign buyer of its ethanol, imposes a 54 cent per gallon tariff on direct Brazilian ethanol imports, roughly equivalent to the production costs of the Brazilian biofuel. The European Union levies a tariff of around 19 eurocents

When U.S. President George W. Bush visited Brazil in March, Brazilian President Luiz Inacio Lula da Silva appealed to him to reduce the tariff. Bush replied that it was a matter for Congress to decide.

Nonetheless, well over half of the 1.8 billion liters of ethanol shipped to the U.S. market from Brazil entered directly in 2006 because of the fuel's relatively low price in Brazil.

"Civilization's dependence on petroleum gives rise to problems. We are discovering less oil than we are using and there is a real tightness in the market, which requires finding alternatives," Soros said.

Former Brazilian President Fernando Henrique Cardoso, who headed the panel on global warming in which Soros spoke, said Brazil has begun to revise its position on global warming.

"We are all today responsible. In the past, Brazil's position was that the developed world was to blame for warming -- why should we pay?" said Cardoso. "And it was a common attitude of the past to see pollution as a sign of development."

"We are in the process of reconstituting the basis of civilization, which until now has worked under the premise that existing energy sources were permanent," he said.

More information:
BBJ Hungary: George Soros to invest $900 million in Brazilian ethanol - extended - June 6, 2007.

Reuters: Soros says he is a speculator in Brazilian ethanol - June 5, 2007.

Bloomberg: Ethanol Tariffs Create Brazil Oversupply, Soros Says (Update2) - June 5, 2007.

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OPEC feels threatened by biofuels

A few years ago, energy experts and OPEC members alike would have laughed away the prospect for biofuels to replace oil. Today, they are becoming increasingly worried about their position as investments in the renewable and clean fuels continue on an unprecedented, global scale. In two different interviews ahead of the G8 summit, OPEC secretary-general Abdalla El-Badri contradicts himself: in the first, he says biofuels threaten oil investments and may cause petroleum prices to go "through the roof", whereas in the other, he says the cartel does not feel threatened by climate change measures aimed at reducing carbon dioxide emissions, of which biofuels are an important part.

Biofuels becoming a 'threat'
Ahead of the G8 Summit in Heiligendamm, Germany, where industrialised nations gather to discuss environmental issues including biofuels which are central to the attempts of many G8 countries to cut their carbon emissions, the chief of the OPEC oil cartel warns that these global investments could push oil prices "through the roof". OPEC secretary-general Abdalla El-Badri said moves to use biofuels would make his members consider cutting investment in new oil production.

Both he EU and the US, as well as several rapidly growing developing countries have set ambitious targets for the bio-based fuels. The US will cut petrol use by 20% in 10 years, partly through increased use of renewable green fuels, whereas the EU has set a target of 10% biofuels by 2020.

OPEC members control about 40% of the world's oil production. Mr El-Badri said that while OPEC members had so far maintained their investment plans, he added: "If we are unable to see a security of demand... we may revisit investment in the long term."

Opec has previously expressed scepticism about alternative energy but Mr El-Badri’s comments mark the first clear threat that the cartel might act to safeguard its interests in the face of a shift towards biofuels:
:: :: :: :: :: :: :: :: ::

"They are really concerned" says Julian Lee of the Centre for Global Energy Studies in London. "Opec will continue investing, but with biofuels on the horizon, they may not invest enough."

"It is a difficult situation for Opec. On one hand they are asked to produce more, on the other one, Washington and Brussels are telling the cartel 'we are betting on biofuels and we don’t want to rely on you [Opec]'."

Climate change no worry
However, in another interview, the same secretary-general says climate change measures will not hurt big oil exporting countries, which instead will cash in on rising energy demand. al-Badri spoke ahead of the G8 summit, where climate change too is high on the agenda.

German Chancellor Angela Merkel has pressed the G8 nations to back a halving of greenhouse gas emissions by mid-century and has succeeded in securing a first-ever U.S. commitment to discuss a global, emissions-cutting goal.

The prospect of such policies left OPEC unworried about the impact on demand for its oil.

"We're not feeling threatened at all. We don't see it as a threat to consumption," Badri said on Tuesday at the Reuters Global Energy Summit.

"The demand for oil will rise steadily," he added. "There's no magic alternative to oil. Fossil fuels will be the dominant energy for the forseeable future, for more than decades."

Burning fossil fuels like coal and oil to produce energy is the biggest source of man-made carbon dioxide, which is the main cause of global warming, scientists say.

"The situation is very serious," Badri said, regarding the global warming threat. "The environment is a concern, we're living on the same planet."

'Clean oil'
He advocated burying carbon dioxide emissions from burning oil and gas, using a so far unproven technology that is being tested on so-called "clean coal" power plants.

The onus was on developed countries, which had historically contributed most to global warming, to develop the technology, he added.

"Our member countries didn't contribute to this. Why not have improved technology? We should look at clean oil, if we're looking at clean coal." The world's energy needs will rise 50 percent between now and 2030, and the world will invest US$8 trillion in oil and gas production to keep up, he estimated. The demand for oil would rise annually by 1.3 million to 1.5 million barrels per day, to 118 million barrels per day by 2030, he added.

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