<body> --------------
Contact Us       Consulting       Projects       Our Goals       About Us
home / Archive
Nature Blog Network

    PetroChina, one of China's biggest oil companies, aims to invest RMB 300 million (€28.7/US$39.6m) in biofuel production development plans. A special fund is also going to be jointly set up by PetroChina and the Ministry of Forestry to reduce carbon emissions. Two thirds of the total investment will be channeled into forestry and biofuel projects in the provinces of Sichuan, Yunnan and Hebei, the remainder goes to creating a China Green Carbon Foundation, jointly managed by PetroChina and the State Forestry Administration. China Knowledge - July 19, 2007.

    Netherlands-based oil, gas, power and chemical industries service group Bateman Litwin N.V. announces it has signed an agreement to acquire Delta-T Corporation, a leading US-based bioethanol technology provider, with a fast growing engineering, procurement and construction division for a total consideration of US$45 million in cash and 11.8 million new ordinary shares in Bateman Litwin. Bateman Litwin - July 18, 2007.

    TexCom, Inc. announced today that it has signed a letter of intent to acquire Biodiesel International Corp. (BIC), and is developing a plan to build an integrated oilseed crushing and biodiesel production facility in Paraguay. The facility, as it is currently contemplated, would process 2,000 metric tons of oil seeds per day, yielding approximately 136,000 metric tons (approximately 39 Million Gallons) of biodiesel and 560,000 metric tons of soy meal pellets per year. Initial feedstock will consist mainly of soybeans that are grown in the immediate area of the proposed production plant in the Provinces of Itapua and Alto Parana. MarketWire - July 18, 2007.

    Spanish power company Elecnor announced that it will build Spain's biggest biodiesel production plant for €70 million (US$96.48 million). The plant, in the port of Gijon in northern Spain, will be ready in 22 months and will produce up to 500,000 tonnes of biodiesel a year from vegetable oil. The plant will be one of the world's biggest. Spain has decided to impose mandatory blending of biofuels with conventional fossil fuels as part of European Union efforts to curb greenhouse gas emissions. Elecnor [*Spanish] - July 18, 2007.

    The University of North Dakota Energy & Environmental Research Center (EERC) conducted a feasibility study to determine the most economical solutions to provide biomass energy to the isolated Chugachmiut Tribal Community in the village of Port Graham, Alaska, located on the Kenai Peninsula about 180 miles southwest of Anchorage. The village is only accessible by air or water, making traditional fossil fuel sources expensive to deliver and alternative forms of energy difficult to implement. The case study based on decentralised bioenergy offers interesting parallels to what would be needed to provide energy to the developing world's huge population that lives in similarly isolated conditions. EERC - July 18, 2007.

    According to a basic market report by Global Industries Inc., world biodiesel sales are expected to exceed 4.7 billion gallons (17.8 billion liters) by 2010. Though Europe, with a share estimated at 84.16% in 2006, constitutes the largest market, and will continue to do so for the coming years, major growth is expected to emanate from the United States. The automobile applications market for biodiesel, with an estimated share of 55.73% in 2006 constitutes the largest as well as the fastest growing end use application. Other applications independently analyzed include the Mining Applications market and the Marine Applications market. PRWeb - July 18, 2007.

    O2Diesel Corporation announced that it has received the regulatory approvals necessary to start delivering its proprietary diesel ethanol blended fuel, O2Diesel, in the French market. The approvals pave the way for O2Diesel to move forward into the next stage of its European market development strategy by commencing deliveries to a number of targeted fleets in France. MarketWire - July 17, 2007.

    The BBC World Service is hosting a series of programmes on the global obesity pandemic. Over the coming two weeks a range of documentaries and discussions will be held on the obesity time-bomb that is growing all over the West, but also in the developing world. In North America, a quarter of people are now morbidly obese, 60% is overweight, and one in three children will become obese. The epidemic is spreading rapidly to China and India. BBC World Service - July 16, 2007.

    A new report from Oregon State University shows the biofuels industry is on track to be a $2.5 billion chunk of the state's economy within 20 years. The study identifies 80 potential biodiesel, ethanol and biomass facilities which could produce a combined 400 million gallons (1.5 billion liters) per year of ethanol and another 315 million gallons (1.2 billion liters) of biodiesel. On an oil equivalent basis, this comes down to around 38,000 barrels per day. Oregon State University - July 16, 2007.

    Jatropha biodiesel manufacturer D1 Oils has appointed a leading plant scientist to its board of directors. Professor Christopher Leaver, Sibthorpian professor of plant science and head of the plant sciences department at Oxford University, has joined the Teesside company as a non-executive director. Professor Leaver, who was awarded a CBE in 2000, is a leading expert in the molecular and biochemical basis of plant growth and differentiation. D1Oils Plc - July 16, 2007.

    Panama and South Africa are set to cooperate on biofuels. A delegation consisting of vice-minister of Foreign Affairs Azis Pahad, of Finance, Jubulai Moreketi and of Finance, met with Panama's vice-chancellor Ricardo Durán to discuss joint biodiesel and ethanol production and distribution. Panama's goal is to become a hub for internationally traded bioenergy, making use of the strategic position of the Canal. La Prensa Gráfica [*Spanish] - July 14, 2007.

    Spanish investors are studying the opportunity to invest in agro-industrial projects in Morocco aimed at producing biofuel from the Jatropha plant. Morocco’s Minister for Energy and Mines, Mohammed Boutaleb, said Moroccan authorities are willing to provide the necessary land available to them, provided that the land is not agricultural, is located in semi-arid regions, and that the investors agree to use water-saving agricultural techniques, such as drip-feed irrigation. Magharebia - July 14, 2007.

    Philippine Basic Petroleum Corp. plans to raise as much as 2.8 billion pesos (€44.4/US$61.2 million) through a follow-on offering and loans to finance a 200,000 liter per day bio-ethanol plant in the province of Zamboanga del Norte. The move into biofuels comes in anticipation of the implementation of RA 9367 or the Philippines biofuels law. RA 9367 mandates five percent bioethanol blending into gasoline by 2009, and 10 percent by 2011. Manila Bulletin - July 14, 2007.

    The Michigan Economic Development Corporation last week awarded a $3.4 million grant to redevelop the former Pfizer research facility in Holland into a bioeconomy research and commercialization center. Michigan State University will use the facility to develop technologies that derive alternative energy from agri-based renewable resources. Michigan.org - July 13, 2007.

    Fuel prices increased three times in Mozambique this year due to high import costs. For this reason, the country is looking into biofuels as an alternative. Mozambique's ministries of agriculture and energy presented a study showing that more than five million hectares of land can be used sustainably in the production of crops that would produce biodiesel fuels. The first phase of a biofuel implementation plan was also presented, identifying the provinces of Inhambane, Zambezia, Nampula and Cabo Delgado as the first to benefit. News24 (Capetown) - July 12, 2007.

    The Malaysian Oleochemical Manufacturers Group (MOMG) has urged the government for incentives and grants to companies to encourage the development of new uses and applications for glycerine, the most important byproduct of biodiesel. Global production of glycerine is currently about one million tonnes. For every 10 tonnes of oil processed into biodiesel, one tonne of glycerine emerges as a by-product. Bernama - July 12, 2007.

    BioDiesel International AG has acquired 70 per cent of the shares in Lignosol, a Salzburg based company that is making promising progress in Biomass-to-Liquids conversion techniques. The purchase price is in the single-digit million Euro range. ACN - July 10, 2007.

    Gay & Robinson Inc. and Pacific West Energy LLC announced today a partnership to develop an ethanol plant in Hawaii based on sugarcane feedstocks. The plant's capacity is around 12 million gallons (45 million liters) per year. The partnership called Gay & Robinson Ag-Energy LLC, will also ensure the continuation of the Gay & Robinson agricultural enterprise, one of the oldest in Hawaii. Approximately 230 jobs will be preserved, and a large area of West Kauai will be maintained in sustainable agriculture. Business Wire - July 10, 2007.

    Water for Asian Cities (WAC), part of UN-Habitat, is extending partial financial support for the construction of several biogas plants across the Kathmandu valley and develop them as models for municipal waste management. The first biogas plants will be built in Khokna, Godavari, Kalimati, Patan, Tribhuvan University premises, Amrit Science College premises and Thimi. The Himalayan Times - July 09, 2007.

    EnviTec Biogas's planned initial public offering has roused 'enormous' interest among investors and the shares have been oversubscribed, according to sources. EnviTec has set the IPO price range at €42-52 a share, with the subscription period running until Wednesday. EnviTec last year generated sales of €100.7 million, with earnings before interest and tax of €18.5 million. Forbes - July 09, 2007.

    AthenaWeb, the EU's science media portal, is online with new functionalities and expanded video libraries. Check it out for video summaries of the latest European research activities in the fields of energy, the environment, renewables, biotech and much more. AthenaWeb - July 04, 2007.

    Biopact was invited to attend a European Union high-level meeting on international biofuels trade, to take place on Thursday and Friday in Brussels. Leaders from China, India, Africa and Brazil will discuss the opportunities and challenges arising in the emerging global biofuels sector. EU Commissioners for external relations, trade, energy, development & humanitarian aid as well as the directors of international organisations like the IEA, the FAO and the IFPRI will be present. Civil society and environmental NGOs complete the panorama of participants. Check back for exclusive stories from Friday onwards. Biopact - July 04, 2007.

    China's state-owned grain group COFCO says Beijing has stopped approving new fuel ethanol projects regardless of the raw materials, which has put a brake on its plan to build a sweet potato-based plant in Hebei. The Standard (Hong Kong) - July 03, 2007.

    Blue Diamond Ventures and the University of Texas A&M have formed a biofuels research alliance. The University will assist Blue Diamond with the production and conversion of non-food crops for manufacturing second-generation biofuels. MarketWire - July 03, 2007.

    African Union leaders are to discuss the idea of a single pan-African government, on the second day of their summit in Accra, Ghana. Libya's Colonel Muammar Gaddafi is championing the idea, but many African leaders are wary of the proposal. BBC - July 02, 2007.

    Triple Point Technology, a supplier of cross-industry software platforms for the supply, trading, marketing and movement of commodities, announced today the release and general availability of Commodity XL for Biofuels™. The software platform is engineered to address the rapidly escalating global market for renewable energy fuels and their feedstocks. Business Wire - July 02, 2007.

    Latin America's largest construction and engineering firm, Constructora Norberto Odebrecht SA, announced plans to invest some US$2.6 billion (€1.9 billion) to get into Brazil's booming ethanol business. It aims to reach a crushing capacity of 30 million to 40 million metric tons (33 million to 44 million tons) of cane per harvest over the next eight years. More soon. International Herald Tribune - June 30, 2007.

    QuestAir Technologies announces it has received an order valued at US$2.85 million for an M-3100 system to upgrade biogas created from organic waste to pipeline quality methane. QuestAir's multi-unit M-3100 system was purchased by Phase 3 Developments & Investments, LLC of Ohio, a developer of renewable energy projects in the agricultural sector. The plant is expected to be fully operational in the spring of 2008. Market Wire - June 30, 2007.

    Siemens Energy & Automation, Inc. and the U.S. National Corn-to-Ethanol Research Center (NCERC) today announced a partnership to speed the growth of alternative fuel technology. The 10-year agreement between the center and Siemens represents transfers of equipment, software and on-site simulation training. The NCERC facilitates the commercialization of new technologies for producing ethanol more effectively and plays a key role in the Bio-Fuels Industry for Workforce Training to assist in the growing need for qualified personnel to operate and manage bio-fuel refineries across the country. Business Wire - June 29, 2007.

    A paper published in the latest issue of the Journal of the American Ceramic Society proposes a new method of producing hydrogen for portable fuel cells that can work steadily for 10-20 times the length of equivalently sized Lithium-ion batteries. Zhen-Yan Deng, lead author, found that modified aluminum powder can be used to react with water to produce hydrogen at room temperature and under normal atmospheric pressure. The result is a cost-efficient method for powering fuel cells that can be used in portable applications and hybrid vehicles. More soon. Blackwell Publishing - June 29, 2007.

Creative Commons License

Thursday, July 19, 2007

UNCTAD: poorest countries need investments in science and technology

The United Nations Conference on Trade and Development (UNCTAD) today released its annual Least Developed Countries Report 2007 [*.pdf], in which it calls for a boost in investments in science, technology and innovation (STI) in the poorest countries. After years of focusing attention on market reform and economic liberalization (1990s) and then on 'good governance' (2000s), the least developed countries (LDCs) now need more knowledge-based development if they want to escape the poverty trap. LDCs are defined as the 50 poorest countries - the majority of them in Africa - whose combined population totals 767 million.

Over the past 25 years, STI projects and knowledge-based development initiatives have received marginal funds from the major international development agencies (e.g. in 2003–2005 'good governance' received $1.3 billion, agricultural extension a meagre $12 million...). Now, the UNCTAD sees investments in technology, science and learning environments as crucial for poverty reduction strategies.

Comparison of the capability of countries to innovate: a huge gap between highly developed and least developed countries (click to enlarge).

The overal argument of the UNCTAD's analysis is that:
unless the LDCs adopt policies to stimulate technological catch-up with the rest of the world, they will continue to fall behind other countries technologically and face deepening marginalization in the global economy. Moreover, the focus of those policies should be on proactive technological learning by domestic enterprises rather than on conventionally understood technological transfer, and on commercial innovation rather than on pure scientific research.
The report also stresses that sheer economic liberalization - long the mantra of development agencies - is no guarantee for successful development, on the contrary:
Since the 1990s most LDCs have undertaken rapid and deep trade and investment liberalization. Liberalization without technological learning will result, in the end, in increased marginalization.
The report contains many interesting observations that can directly be linked to the biofuels and bioenergy industry that is emerging in LDCs. Such an industry holds the potential to boost local development, but a precondition is that the sector becomes knowledge and technology-driven instead of merely relying on static comparative advantages of LDCs.

The subject of knowledge, technological learning and innovation is a large one, and the important UNCTAD report is the first to address the issue in the context of the least developed countries. It focuses on five issues:
  • the extent to which the development of technological capabilities is occurring in LDCs through international market linkages, particularly through international trade, foreign direct investments and licensing
  • the way in which STI issues are currently treated within LDCs and how STI policies geared towards technological catch-up could be integrated into the development strategies of LDCs
  • current controversies about how stringent intellectual property rights regimes affect technological development processes in LDCs and policy options for improving their learning environment
  • the extent of loss of skilled human resources through emigration and policy options for dealing with that issue
  • how overseas development aid is supporting technological learning and innovation in the LDCs and ways to improve it
Technological change in LDCs
So what kind of strategies does the UNCTAD recommend, in order to boost STI and knowledge-based development? First of all, it is important to look at how technological change happens in LDCs, because the process differs considerably from that in highly developed countries:
:: :: :: :: :: :: :: :: :: :: ::

Processes of technological change in rich countries, where firms are innovating by pushing the knowledge frontier further, are fundamentally different from such processes in developing countries. There, innovation primarily takes place through enterprises learning to master, adapt and improve technologies that already exist in more technologically advanced countries:
The central issue is not acquisition of the capability to invent products and processes. Rather, policies to promote technological change in LDCs, as in all developing countries, should be geared to achieving catch-up with more technologically advanced countries. That is, they are concerned with learning about and learning to master ways of doing things that are used in more technologically advanced countries.
It can hardly be expected that an LDC is already knocking at the frontiers of technological breakthroughs. Creative technological innovation also occurs when products and processes that are new to a country or an individual enterprise are commercially introduced, whether or not they are new to the world, the report says.
In short, innovation occurs through "creative imitation", as well as in the more conventional sense of the commercialization of inventions.
Different economic sectors are based on unique processes of technology adoption. For agriculture, the type of technological effort that is required is influenced by agriculture's high degree of sensitivity to the physical environment (circumstantial sensitivity). The strong interaction between the environment and biological material makes the productivity of agricultural techniques, which are largely embodied in reproducible material inputs, highly dependent on local soil, climatic and ecological characteristics. This means that there are considerable limits to the agricultural development which can occur simply through the importation of seeds, plants, animals and machinery (agricultural technology) that are new to the country.
What is required is experimental agricultural research stations to conduct tests and, beyond that, indigenous research and development capacity to undertake the inventive adaptation of prototype technology which exists abroad – for example, local breeding of plant and animal varieties to meet local ecological conditions. Without such inventive adaptation capabilities, knowledge and techniques from elsewhere are locally of limited use.
For industry and services, such circumstantial sensitivity is less important, but nevertheless technological effort is required because technology is not simply technological means (such as machinery and equipment) and technological information (such as instructions and blueprints), but also technological understanding (know-how). The latter is tacit and depends on learning through training, experience and watching.

The development of firm-level capabilities and support systems is vital for successful assimilation of foreign technology. There's a difference between 'core competences', 'dynamic capabilities', and 'technological capabilities':

Core competences
Core competences refer to the knowledge, skills and information to operate established facilities or use existing agricultural land, including production management, quality control, repair and maintenance of physical capital, and marketing.

Dynamic capabilities
Dynamic capabilities refer to the ability to build and reconfigure competences to increase productivity, competitiveness and profitability and to address a changing external environment in terms of supply and demand conditions.

Technological capabilities
Technological capabilities as such are particularly important for the process of innovation. The effective absorption (or assimilation) of foreign technologies depends on the development of such dynamic technological capabilities. R&D can be part of those capabilities, but only a part. Design and engineering capabilities are particularly important for establishing new facilities and upgrading them.

Beyond this, production processes involve various complex organizational processes related to the organization of work, management, control and coordination, and the valorization of output requires logistic and marketing skills. All these can be understood as part of “technological learning” in a broad sense.

Context: policy, institutional framework
The enterprise (firm or farm) is the locus of innovation and technological learning. But firms and farms are embedded within a broader set of institutions which play a major role in these processes. In advanced countries, national innovation systems have been established to promote R&D and link it more effectively to processes of innovation. In LDCs, what matters in particular are the domestic knowledge systems which enable (or constrain) the creation, accumulation, use and sharing of knowledge.

Those systems should support effective acquisition, diffusion and improvement of foreign technologies. In short, there is a need to increase the absorptive capacity (or assimilation capacity) of domestic firms and the domestic knowledge systems in which they are embedded.

1. Building technological capacilities through international market linkages
The level of development of technological capabilities in LDCs is very weak, the report notes. Indicators to show this are scarce and not wholly appropriate. But an examination of where LDCs stand on some of the key indices reveals a dismal performance from an international comparative perspective.

The domestic knowledge systems in the LDCs are very weak and the level of technological capabilities of domestic enterprises is very low. Initiating a sustainable process of knowledge accumulation that could accelerate the development of productive capacities in the LDCs will not be a simple task, because classic recipes have failed:
Technological assimilation and absorption in LDCs through market mechanisms are taking place only to a very limited degree, as reflected in the weak development of technological capabilities and productive capacities. For some channels, notably capital goods imports, the scale of interaction in relation to GDP is much too low. For other channels, notably FDI and exports, the scale of interaction is actually high, but the learning effects of those channels are low. Thus, the growing integration of LDCs into international trade and investment flows since the 1980s has not prevented their marginalization from technology flows.
But the task is not impossible either. According to the UNCTAD, a strategy for catch-up needs to focus on the following fields:
  • building of an endogenous knowledge base, which takes into account informal knowledge systems as they develop in the informal economy (including such things as creative repair, reprocessing and recycling of artefacts, including in some cases complex technologies)
  • traditional knowledge plays a crucial role in various sectors, including agriculture, health and creative industries.
  • learning through international linkages. This latter option is seen as vital by the UNCTAD.

So how can poor countries tap these international knowledge and technology pools?

The report looks at different options, including (1) imports of capital goods, (2) learning by exporting, (3) foreign direct investment, and (4) licensing.

Imports of capital goods
By far the most important source of technological innovation in LDCs, as perceived by firms themselves, is new machinery or equipment. Most of the machinery and equipment operated in LDCs is imported, and therefore imports of capital goods, and their effective use, are overall the main source of innovation for firms in LDCs.

But capital good imports by LDCs have lost momentum over the last 25 years. They have been hampered by their premature de-industrialization process, the slow progression of the investment rate, the composition of their fixed capital formation (with a low share of machinery and equipment) and balance-of-payments restrictions. The sluggishness of those imports means that domestic firms are upgrading their processes and products only marginally. Importing relatively few capital goods implies that LDC firms are forgoing the potential technological learning and adaptive innovation associated with a greater volume of imports of technology embodied in those goods.

Different countries often limit their imports of capital goods to develop the most obvious sectors (a country with mining potential imports mining machines, oil rich countries import oil processing tools, etc...). But, interestingly, when it comes to agriculture and ICT - crucial for all countries, regardless of their other natural resources - the report notes:
As a group LDCs imported relatively little agricultural machinery and ICT capital goods. This indicates, on the one hand, the low level of technological development of those countries’ agriculture and, on the other hand, the still incipient penetration by the recent wave of ICT and ICT-based innovation.

Exports and the role of global value chains
The report suggests that LDC firms can develop their technological capabilities through the market linkages they develop with their downstream customers, including in particular the foreign ones. Integration into global value chains (GVCs) often represents one of the very few options for LDC firms and suppliers to secure access to international markets and innovative technologies, and to learn by exporting.

However, the upgrading process is fraught with difficulties and obstacles, which are particularly great for LDC firms. International value chains are increasingly driven by buyers and downstream lead firms. The latter have the power to set the standards (technical, quality, environmental) that must be met in order to participate in the chain. Chain leaders, however, rarely help producers to upgrade their technological capabilities so that they are able to fulfil those requirements. Barriers to integrate such global value chains are therefore becoming higher.
In most cases LDCs have increased their specialization in relatively basic products at a low stage of processing. Those export patterns indicate that little technological upgrading has taken place recently among LDC firms, irrespective of their participation in GVCs.

Foreign direct investment
It is generally contended that the arrival of transnational corporations leads to technological upgrading of domestic firms through technological spillovers via imitation, competition, training, labour mobility, backward and forward linkages, and exports (which entail exposure to the technology frontier). Those spillover effects have the potential to increase the productivity of other firms.

However, the materialization of the potential positive impacts of FDI on knowledge accumulation in host countries hinges on a large number of conditions, including their structural characteristics, the type of insertion of transnational corporations in host economies, their job-generating impact, and the direct consequence of their entry for domestic firms.

The report notes that foreign direct investments in the LDCs have sped up markedly over the past few years, but as such this is not sufficient to guarantee technology spill-overs to local firms:
There is little evidence of a significant contribution by FDI to technological capability accumulation in LDCs. This is not due to those countries’ insufficient 'opening' to foreign investors, given the policy changes that they have enacted since the 1980s and the substantial growth of FDI penetration since the 1990s. Rather, its limited contribution is due to the type of integration of transnational corporations into host countries’ economies, the sectoral composition of FDI, the priorities of policies enacted by LDCs and the low absorptive capacity of those countries.
Biopact notes that the biofuels and bioenergy potential in many LCDs is large and that part of it may be tapped by foreign companies, which could boost tech transfers via spill-over effects. But in this context, the report issues an interesting warning about what is needed for this to succeed. The lesson, from which parallels to a future biofuels industry can be drawn, comes from the African mining sector:
In African LDCs typically the mineral extraction activities of TNCs are capital-intensive, have little impact on employment, are highly concentrated geographically, have high import content and result in exports of their output as unprocessed raw materials. Most of those operations are wholly owned by foreign investors (rather than joint ventures) and a large share of their foreign exchange earnings is retained abroad. Those operations tend to operate as enclaves since they are weakly integrated into domestic economies, as they have few forward and backward linkages in host economies.
Currently, some of the main channels for potential knowledge circulation between TNCs and domestic firms are largely absent, namely linkages, joint ventures and labour turnover.

The use of licensing as a channel for accessing the international knowledge pool (through imports of disembodied technology) is directly related to the income level and technological sophistication of economies. Licensing should therefore be less relevant to LDCs than to other developing countries as a channel for foreign technology diffusion

In conclusion, the report notes that learning associated with international transactions does not occur automatically. Consequently, measures to increase the volume of exports or FDI inflows do not guarantee any increase in learning.
Instead, the learning intensity of such transactions is variable, and the key policy issue is to raise that "learning intensity" – that is, to increase the magnitude of knowledge and skill acquired “per unit” of exports, imports or inward FDI. It is on the learning potential of international linkages that policy – at national, regional and international levels – should focus.

2. National policies to promote technological learning and innovation
The report notes that in current development and poverty alleviation discourses, the need for improved technology and science policies receives little attention.

Partly to blame are the so-called 'structural adjustment programmes', which have been particularly intensely implemented within the LDCs. These programmes, pushed by the World Bank and the IMF and mainly aimed at economic liberalisation, show great omissions of technology issues.

However, the UNCTAD notes that this presents a paradox, because these very institutions have always stressed that promoting technological change is as a key source of economic growth: technological progress is at the heart of efforts by the OECD to promote growth in its own member countries.
The broad revival of interest in policies to promote technological change, partly inspired by the East Asian success, is indicative of wide dissatisfaction with current policies. There is a desire to find a new, post-Washington Consensus policy model, as well as the intuition that it is in this area – promoting technological change – that it is possible to find more effective policies to promote growth and poverty reduction. If LDCs do not participate in this policy trend they will be increasingly marginalized in the global economy, where competition increasingly depends on knowledge rather than on natural-resource-based static comparative advantage.

Policy suggestions
The UNCTAD gives some suggestions as to how LDCs can embed attention for science and technology into their national development strategies. Laying the foundations of such an integrated policy would consist of the following steps.

  1. Technological catch-up in LDCs will require the co-evolution of improvement in physical infrastructure, human capital and financial systems, together with improved technological capabilities within enterprises and more effective knowledge systems supporting the supply of knowledge and linkages between creators and users of knowledge.
  2. It will also require a pro-growth macroeconomic framework which can ensure adequate resources for sustained technological learning and innovation, as well as a pro-investment climate which stimulates demand for investment.
  3. Improving physical infrastructure, human capital and financial systems is absolutely vital because many LDCs are right at the start of the catch-up process and have major deficiencies in each of those areas. Without an improvement in these foundations for development, it is difficult to see how technological change will occur.

These are the foundations. But the report goes further and has identified six major strategic priorities for LDCs at the start and the early stages of catch-up:
  1. Increasing agricultural productivity in basic staples, in particular by promoting a new Green Revolution
  2. Promoting the formation and growth of domestic business firms
  3. Increasing the absorptive capacity of domestic knowledge systems
  4. Leveraging more learning from international trade and FDI
  5. Fostering diversification through agricultural growth linkages and natural resource-based production clusters (the bioenergy sector can become such a web of diversification)
  6. Upgrading export activities
The UNCTAD thinks a systems-approach is needed to get these priorities on track, not so much a simple linear model of innovation processes. This requires measures which go beyond those that are traditionally identified with S&T policies, particularly supporting scientific research, expanding universities and setting up research institutes.

Such a systematic approach should include:
  • measures to stimulate the supply side of technology development, but also measures to stimulate the demand for technology development
  • measures to lubricate the links between supply and demand, and measures that address framework conditions
  • these measures should influence all the interrelated factors that affect the ability and propensity of enterprises (both firms and farms) to innovate.

The relevant STI policy tools thus include explicit measures which are concerned with S&T human resource development, public S&T infrastructure and policies to affect technology imports.

But beyond this they include a number of implicit measures, such as public physical infrastructure investment; financial and fiscal policies which increase the incentive for investment and innovation; trade policy and competition policy; public enterprises and public procurement; and regulation, notably in relation to intellectual property rights and other innovation incentive mechanisms.

Most importantly:
There is above all a need for improved coherence between macro- and microeconomic objectives. Excessive pursuit of macroeconomic stabilization objectives can undermine the development of conditions necessary for productive investment and innovation. In the past the instruments of STI policy were articulated through an oldstyle industrial policy which involved protection and subsidies for selected sectors. Those instruments should now be articulated within the framework of a new industrial policy which is based on a mixed, market-based model, with private entrepreneurship and government working closely together in order to create strategic complementarities between public and private sector investment.

Role of the State
Within such a new industrial policy, the State should act as a facilitator of learning and entrepreneurial experimentation. The private sector is the main agent of change. However, the relevant institutions and cost structures are not given but need to be discovered. The State should facilitate this process and play a catalytic role in stimulating market forces; and it should perform a coordinating function based on an agreed strategic vision of country-level priorities for technological development.

There are significant private sector risks in undertaking pioneer investments which involve setting up activities that are new to a country. Moreover, there are significant spillover effects which are beneficial to the country but which the private entrepreneur cannot capture. This implies the need for a partnership and synergies with the public sector to socialize risks and promote positive externalities. The State stimulates and coordinates private investment through market-based incentives aimed at reducing risks and sharing benefits.

STI governance

The major trend of the past few years in development thinking stressed 'good governance' and ways to strengthen State capacities. And indeed, it could be argued that the suggested STI policies will never work in LDCs because State capacities there are simply too weak.

UNCTAD notes however that policies and projects introduced during the 'good governance' years, were just as complex as those aimed at promoting STI:
There are major deficiencies in governmental capacity in LDCs, particularly with regard to long-neglected STI issues. However, the problem of State capacity needs to be seen in dynamic rather than static terms. Just as firms learn over time by doing, Governments also learn by doing. The key to developing State capacity in relation to STI issues is therefore to develop such capacity through policy practice.
According to the report, States need some room to experiment with these STI policies, in line with countries’ development objectives. For successful catch-up experiences it is important that the Government does not act as an omniscient central planner. Instead, success and good governance for creating technology learning environments will depend on:

  • the State formulating and implementing policy through a network of institutions which link government to business.
  • the establishment of intermediary government–business institutions
  • policies should never favour or protect special interest groups, or support particular firms (“cronyism”)
  • the State apparatus itself should undergo the necessary organizational restructuring because technological learning and innovation is naturally cross-sectoral. Merely establishing Science & Technology Ministries won't suffice and can even lead to an overemphasis on science and an underemphasis on innovation at the enterprise level. The appropriate organizational structure for integrating technological development issues into policy processes needs careful consideration.

3. Intellectual property rights
The UNCTAD report contains an interesting chapter on how intellectual property rights (IPRs) can contribute to technology learning. But for this lever to bear fruit, players have to go through several complex stages. For the time being, IPRs won't play that much of a role in the least developed countries:
IPRs are unlikely to play a significant role in promoting local learning and innovation in the initiation stage, the point in the catch-up process where most LDCs are now located. Moreover, technology transfer through licensing is unlikely to provide great benefits for LDCs. Even if under certain conditions IPRs were to positively encourage technology transfer through licensing, LDCs are unlikely to become significant recipients of licensed technology. The low technical capacity of local enterprises constrains their ability to license in technology, while the low GDP per capita in LDCs is not likely to stimulate potential transferors to engage in such arrangements. IPRs, particularly patents, promote innovation only where profitable markets exist and where firms possess the required capital, human resources and managerial capabilities.
4. International migration of skilled labor
For biofuels and bioenergy to benefit local communities and LDC economies, it is crucial that local expertise is used, or that it is created. If scientists, engineers and management are recruited from abroad, chances are that knowledge and technology capabilities will not spill-over to local actors. On the other hand, a brain drain of biotechnologists, agronomists and engineers from LDCs to developed countries, jeapordizes the establishment of science and technology-based bioeconomies.

The UNCTAD report sees the importance of these movements of 'brain drain' and 'brain gain', and their impacts on the knowledge stock of LDCs.

International migration of skilled persons in principle contributes to building the recipient countries’ skills endowment, while entailing a loss in the origin country’s stock of human capital. The most important issue for countries’ long-term development is the net effect of migratory flows. LDCs have a low skill endowment. Therefore, the international migration of skilled persons from and to those countries can have a strong impact on their human capital stock.
The human capital endowment of an economy is a fundamental determinant of its long-term growth performance, its absorptive capacity and its performance in technological learning. It is also a requirement for the effective working of trade, FDI, licensing and other channels as means of technology diffusion. In LDCs the major migratory flow of qualified professionals is that of skilled people settling mainly in developed countries.
The costs of emigration can in principle be (partly) offset by other developments, including higher enrolment in tertiary education, an increase in remittances and the eventual brain gain through the return of emigrants, brain circulation by means of temporary return, and creation of business and knowledge linkages between emigrants and home countries (leading to technology flows, investment, etc.). These increased flows in knowledge, investment and trade are more likely to occur in the case of industries producing tradable products than those producing non-tradables.

But the UNCTAD warns that these positive effects of 'brain circulation' are not likely to occur in LDCs, for clear reasons:
Many of those positive effects, however, occur only once countries have reached a certain level of development and income growth. That implies the existence of considerably improved economic conditions in home countries, which provide incentives for temporary or permanent return of emigrants and for the establishment of stronger knowledge and economic flows. Moreover, an improved domestic environment entails lower out-migration pressure. That situation is obviously not the one prevailing in LDCs. Those countries are therefore the most likely to suffer from brain drain, rather than benefiting from brain circulation, brain gain or the other positive effects possibly associated with emigration.

For the LCDs, three main features of skilled emigration have been observed since the 1990s:
  • Emigration rates were generally high among tertiary-educated persons by international standards, with an unweighted mean for LDCs of 21 per cent in 2000 (much higher than for all all lower-middle-income and low-income countries)
  • There was considerable variation in the total rates of emigration among tertiary–educated persons by and within country groups among the LDCs. They were close to 25 per cent (unweighted) in the island LDCs, West Africa and East Africa, and lowest in the generally more populated Asian LDCs (6 per cent), with Central Africa falling in between (14 per cent).
  • Out-migration among tertiary-educated persons from LDCs to OECD countries has accelerated over the last 15 years. The unweighted mean emigration rate rose from 16 per cent in 1990 to 21 per cent 10 years later. That intensification of emigration among skilled persons was much stronger than among all emigrants from LDCs.
The top-educated persons (with more than basic tertiary training) emigrate in far greater numbers than for the tertiary-educated population as a whole. It is estimated that as many as 30–50 per cent of the developing world’s population trained in science and technology (including those from LDCs) live in the developed world. This has a direct impact on those countries’ skills base, their absorptive capacity and their technological catch-up possibilities.

The UNCTAD formulates policy recommendations on how best to deal with these migration flows, in such a way that they limit the impact on the knowledge-base of the LDCs.

5. 'Knowledge aid'
The classic saying goes that it's better to teach a man how to fish, than to throw him a fish whenever he's hungry. Likewise, the justification for foreign aid is often articulated only on the basis of pressing economic, social and political objectives (e.g. food aid, with less attention for teaching people how to grow more food).

So more fundamentally, aid can help to build up the knowledge resources and knowledge systems of LDCs. This is particularly important for the LDCs because their level of technological development is so low and technological learning through international market linkages is currently weak.
Aid can play an important role in developing a minimum threshold level of competences and learning capacities which will enable LDCs to rectify that situation. Indeed, the provision of more knowledge aid, if directed towards the right areas and appropriate modalities, may be the key to aid effectiveness.
The UNCTAD defines 'knowledge aid' as aid that supports knowledge accumulation within partner countries.

Knowledge aid can be provided in two ways:
  • either through supplier executed services, where, for example, donors provide consultants who advise on, or design and develop, projects, programmes and strategies
  • or through strengthening the knowledge resources and knowledge systems of the partners themselves, a process which may be called 'partner learning'
In either case, those activities might be designed to increase knowledge resources for institutional, regulatory and policy development, or to support the development of productive capacities through technological learning.

Aid to build STI capacities
Aid to build science, technology and innovation capacity is a particular form of knowledge aid and should support:
  • the development of productive capacities through building up domestic knowledge resources and domestic knowledge systems
  • the development of governmental capacities to design and implement STI policies
The report estimates that such aid to STI has been a low priority amongst donors, when it comes to funding efforts in LDCs: reported aid disbursements for research and the development of advanced and/or specific human skills (including agricultural education and extension), constituted only 3 per cent of total aid disbursements during the period 2003–2005, with 90 per cent allocated to building human skills, particularly higher education.

A brief overview of the numbers for 2003-2005 for all LDCs combined show that knowledge aid has captured a marginal share of the overall aid budgets:
  • aid for agricultural research equal to only $22 million per year
  • only $62 million for vocational training
  • a meagre $12 million per year for agricultural education and training
  • $9 million per year for agricultural extension
  • development of advanced technical and managerial skills received only $18 million per year
  • disbursements for what is described in the reporting system as “technological research anddevelopment” – which covers industrial standards, quality management, metrology, testing, accreditation and certification – received only $5 million per year during 2003–2005.
Clearly, STI has not been a priority for donors. But most startlingly, for the one STI area that is
emphasized in the routine poverty alleviation programmes, namely agricultural research and extension, aid commitments to LDCs have actually fallen rather than risen since the late 1990s. Compare this with the annual technical cooperation commitments to improve 'governance' (in the widest sense). In 2003–2005 these were $1.3 billion. Agricultural extension received $12 million...

As the UNCTAD report simply notes: it will be impossible to ensure 'good governance' if States don't have a productive and viable economy to build on and to draw incomes from.

The authors make some policy recommendations that could help deal with the problem of the lack of aid going to knowledge, technology and science. The recommendations are offered per sector:

Agricultural R&D
Although agriculture is the major livelihood in the LDCs, the current agricultural research intensity – expenditure on agricultural research as a share of agricultural GDP – is only 0.47 per cent. That compares with 1.7 per cent in other developing countries. The LDC agricultural research intensity is far below the 1.5 to 2 per cent recommended by some international agencies. Moreover, the low level reflects a serious decline in the agricultural research intensity in the LDCs since the late 1980s, when the figure stood at 1.2 per cent.

Non-agricultural technological learning and innovation
Agriculture is still the major source of employment and livelihood in the LDCs, but the employment transition which they are undergoing means that this position is not tenable if development partners wish to reduce poverty sustainably and substantially.

One important recommendation for the non-agricultural sector is that donor-supported physical infrastructure projects should all include components use the construction process to develop domestic design and engineering capabilities.

In addition, there is a need for public support for enterprise-based technological learning, which should be in the form of grants or soft loans for investment in the relevant types of knowledge assets. Such support should be undertaken as a costsharing public–private partnership for creating public goods, particularly in relation to the development of design and engineering skill through enterprise-based practice. These STI capacity-building activities could be particularly useful if they are linked to value chain development schemes, FDI linkage development and the facilitation of South–South cooperation.

“Aid for Trade”
There is widespread support for scaling up this kind of aid amongst LDCs. Experiences show that technological learning and innovation are central to successful cases of trade development. However, technological learning and innovation have been conspicuously absent from past efforts to provide Aid for Trade. They are neglected within current attempts to define the scope of the subject.

It is recommended that aid for technological learning and innovation for tradable sectors be a key component of Aid for Trade, and LDC development partners should adopt best practices which are evident from successful cases of trade development, such as palm oil in Malaysia and Nile perch in Uganda. Note that environmentalists have condemned precisely these two examples as cases of how trade development can destroy the most basic foundations of sustainability.

By way of conclusion, we can say that many insights and recommendations from the UNCTAD report can be readily applied to the development of strategies with which LDCs can approach the opportunities of the emerging bio-economy. Such an new, green economy holds the potential to boost local development and allows poor countries to leapfrog beyond the fossil fuel era. But in order to transit towards this sustainable, biobased economy, investments in knowledge and technology are urgently needed. The sector is highly competitive, and mere comparative advantages (agro-ecological resources) won't suffice for these countries to participate in it in a meaningful way.

Biopact readers know that we have often stressed the need for appropriate tech transfer strategies in the biofuels sector. Brazil has gone some way in this respect, and has forged South-South collaboration efforts by linking its own expert agricultural research organisations with those of poor countries. There's also France's bioenergy knowledge-exchange initiative, which couples students from the country to collegues in developing countries. But overall, these initiatives remain marginal. A much more urgent and broader effort is needed to create robust ways for the North to help the South strengthen its capacities to boost investments in STI.

For example, policies in LDCs must ensure that when foreign companies from highly developed countries enter the sector in poor countries, technology and knowledge transfers as well as opportunities for joint-ventures occur that allow local players to acquire expertise and technological capabilities. Else, biofuels may become just another 'resource grab'.

On the other hand, States need to craft policies and infrastructures that make it possible for local players to 'absorb' knowledge (it's a two-way process). Finally, as we have stressed earlier, national and international policy frameworks and investments in STI in developing countries are crucial for the bioenergy sector to flourish in a genuinely sustainable way.

Professor John Mathews, an expert on STI and knowledge-driven industrial development strategies has writen in-depth analyses on the subject as it relates to the biofuels sector in developing countries (for an example, see 'A Biofuels Manifesto').

On an ending note, consider this. Those of us who understand the complex and multi-dimensional concept of 'sustainable development' will admit that such an understanding requires study, exchanges between thinkers, scientists and policy makers. Don't we all want the people in the South - who are often merely the passive subjects of such concepts - to acquire the capacities needed to develop their own notions of sustainability and the skills to implement them?

UNCTAD: The Least Developed Countries Report, 2007. Knowledge, technical learning and innovation for development [*.pdf, full report] - July 2007.

UNCTAD: The Least Developed Countries Report, 2007 [*.pdf, summary] - July 19, 2007.

UNCTAD: The Least Developed Countries Report, 2007, Highlights - July 19, 2007.

John Mathews, A Biofuels Manifesto: Why Biofuels Industry Creation Should be 'Priority Number One' for the World Bank and for Developing Countries [*.pdf] - September 2006.

Article continues

ScottishPower announces UK's largest energy crop plan

ScottishPower announced it is looking to contract Scottish farmers to produce 250,000 tonnes of energy crops to be burned at Scotland’s two coal fired power stations, Cockenzie and Longannet. The energy crop will displace coal burned in the stations.

Energy crops provide carbon neutral fuel as the CO2 that is released when the crop is burned is equal to the CO2 that is captured as the plant is grown. ScottishPower already burn carbon neutral biomass such as wood at the coal fired power stations as part of their renewable programme.

The project will use about 12% of Scotland’s total agricultural land – roughly 35,000 hectares - with 5 % of the company’s coal requirement displaced by energy crops by 2013.

The energy crops will be a mix of crop types including cereal crops and short rotation coppice (SRC) such as willow. ScottishPower, part of the Iberdrola group, plans to maximize the use of set aside land, and minimize the effect on land used for food crops.

SRC consists of densely planted, high-yielding varieties of either willow or poplar, harvested on a 2 to 5 year cycle, although commonly every 3 years. SRC is a woody, perennial crop, the rootstock or stools remaining in the ground after harvest with new shoots emerging the following spring.

A plantation could be viable for up to 30 years before re-planting becomes necessary, although this depends on the productivity of the stools. In the UK, yields achievable from willow SRC at first harvest are expected to be in the range 7 to 12 oven dry tonnes per hectare per year depending on site and efficiency of establishment. New varieties are expected to greatly increase yields:
:: :: :: :: :: :: :: :: :: ::

ScottishPower is already the UK’s largest generator and developer and operator of on-shore wind energy and this is the latest strategic initiative toward reduced carbon emissions.

Frank Mitchell, ScottishPower’s Generation Director, said: “This is a significant step in our renewable energy programme ultimately displacing 300,000 tonnes of carbon emissions per year. However, it is also an excellent opportunity for farmers with ScottishPower offering support for the Scottish agricultural community”.

In the UK, support for renewables is provided through the Renewables Obligation (RO) that requires suppliers to source 10% of their electricity from renewable sources by 2010, rising to 15.4% by 2015.

The UK Government announced new support for biomass in March 2006 under the revised Climate Change Programme and in May of the same year the Scottish Executive pledged funding of £20 million for biomass, marine, hydrogen and fuel cell projects and microrenewables.

More recently, the UK's Department for Environment, Food and Rural Affairs, the Department of Trade and Industry and the Department of Transport released their joint Biomass Strategy for the UK, which shows considerable potential for locally produced biofuels. However, it also considers imports (earlier post).

Picture: short rotation willow coppice. Credit: Defra Energy Crops.

ScottishPower: ScottishPower Announces UK's Largest Energy Crop Plan - July 19, 2007.

U.K.'s Forestry Research service: Information about short rotation coppice for growers, researchers and the bio-energy industry.

Article continues

First conference dedicated to biomass co-firing held in Budapest ends

The first Conference of the European Biomass Co-firing Network was held in Budapest from the 2nd to the 4th July. Over 60 European experts gathered to discuss the prospects for co-firing and future technological advances, including recommendations for future research, defining the research fields and policies that need to be strengthened in order to extend the application of the biomass co-firing technologies in Europe. This has been the first-ever specific event entirely dedicated to biomass co-firing.
Biomass co-firing is the most cost-effective means of producing energy from biomass as it can be added to an existing coal-fired power plant with only small modifications of the entire system. - Conference chairman Dr Schories from TTZ Bremerhaven in Germany.
Indeed, co-firing is a near term, low-cost option for efficiently and cleanly converting biomass to electricity by adding biomass as a partial substitute fuel in high-efficiency coal boilers. It has been demonstrated, tested, and proved in all boiler types commonly used by electric utilities with little or no loss in total boiler efficiency. Co-firing offers a stepping stone towards full biomass-fired power plants.

According to the global database maintained by the IEA's Bioenergy Task 32 on Biomass Combustion and Cofiring, over 150 initiatives world-wide currently cofire biomass in boilers that use different types of coal as the main fuel. The biomass is obtained either from dedicated energy crops, or from (internationally traded) agricultural and forestry residues. In 2005, the EU witnessed a 16% growth of electricity produced from biomass (earlier post).

During three days, the conference in Budapest enabled the discussion and exchange of experiences among researchers, policy makers and end users on the latest advances, the barriers to overcome in the next years and the role this renewable energy it has to play in the future.

The Conference has been prepared in the framework of NETBIOCOF, (Integrated European Network for Biomass Co-firing), a coordination action funded under the Sixth Framework Program for Research and Development of the European Commission. For two years it has gathered most of the important universities, research institutes and European associations in the field of biomass co-firing.

The consortium has studied the current status of biomass co-firing in Europe and proposes measures for the wider implementation of this technology for renewable energy in the years to come. The partners have studied the situation from the technical, legal, economical and social point of view to provide answers to all the relevant groups of actors involved in the decision making process:
:: :: :: :: :: :: :: :: :: :: ::

Moreover, the project has included in its studies not only the EU-15, but also the Central and Eastern European Countries, which present a huge potential for future scientific cooperation and joint trade opportunities. Facing this scenario, NETBIOCOF gathers experts from 19 countries with long experience in every stage in this field: from biomass production, supply and preparation to the different co-firing technologies.

The work in these two years has enabled the establishment of a biomass co-firing research co-ordination network that will promote European co-operation between research organisations devoted to biomass co-firing, promoting the uptake of innovative technologies to expand the use of biomass co-firing in new and existing power plants with emphasis towards the New Member States.

The network plans its 2nd conference in 2008 with a proactive outreach to end-users, such as utilities and potential investors to promote the broader implementation of biomass co-firing.

NETBIOCOF has also a strong component on dissemination of the latest findings in co-firing and information exchange among the partners and the scientific community. The project launched a public on-line database on its web page where the reports produced as a result of each task and other relevant information are uploaded and made available to the general public. This database has proven successful; showing a high number of downloads in the documents available so far.

Image: A view inside a step grate boiler. Credit: IEA Bioenergy Task 32.

Informationsdienst Wissenschaft: First-ever biomass-cofiring dedicated conference held at Budapest - July 19, 2007.

NETBIOCOF: Integrated European Network for Biomass Co-firing.

IEA Bioenergy Task 32: Biomass Combustion and Co-firing.

IEA Bioenergy Task 32: Biomass Combustion and Co-firing: An Overview [*.pdf] - s.d.

Article continues

Dow and Crystalsev to make polyethylene from sugar cane in Brazil

The Dow Chemical Company, the world's largest producer of polyethylene, and Crystalsev, one of Brazil's largest ethanol players have announced plans for a world-scale facility to manufacture polyethylene from sugar cane. The news comes after Braskem, a leading Brazilian chemical company, recently succeeded in making the ubiquitous product from cane based ethanol (earlier post).

Polyethylene is the most widely used of all plastics and can be found in all kinds of everyday products, from food packaging, milk jugs and plastic containers to pipes and liners. The bioeconomy is based on making plant based alternatives to the pertochemical plastics and polymers, in efficient biorefineries. This new, green economy is making steady progress: we now have a bio-based alternative most of the commonly used plastics (more here). By using renewable resources for the production of biomaterials, both the carbon footprint and the environmental impact of the products are significantly reduced. With record oil prices, finding a crop-based substitute becomes even more attractive.

Under the terms of a memorandum of understanding agreed by Dow and Crystalsev, the two companies will form a joint venture in Brazil to design and build the first integrated facility of its scale in the world. It is expected to start production in 2011 and will have a capacity of 350,000 metric tons. The venture will combine Dow's leading position in polyethylene with Crystalsev's know-how and experience in ethanol to meet the needs of Dow's customers in Brazil and what will likely be international interest.

The new facility will use ethanol derived from sugar cane, an annually renewable resource, to produce ethylene - the raw material required to make polyethylene, the world's most widely-used plastic. Ethylene is traditionally produced using either naphtha or natural gas liquids, both of which are petroleum products. It is estimated that the new process will produce significantly less CO2 compared to the traditional polyethylene manufacturing process.

The companies have already begun conducting a feasibility study to assess various aspects of the project, including engineering design, location, infrastructure needs, supply chain logistics, energy and economics. The study, which is expected to take one year, will also look at the possibility of receiving approval for the project and the process as a Clean Development Mechanism (CDM). The CDM was developed by the United Nations to help companies manage their carbon credits from emerging market projects:
:: :: :: :: :: :: :: :: :: ::

The areas being considered as potential sites for the new facility are currently being used for low-density cattle grazing and are not near any rain forests. Both companies have underscored their commitment to ensuring that the plant is located in a sustainable environment.

The new facility will use Dow's proprietary Solution technology to manufacture DOWLEXT polyethylene resins - the world's leading linear low density polyethylene, which combines toughness and puncture resistance with high performance and processability. The material offers significant advantages in a range of different applications, including pipes, films, membranes, and food and specialty packaging.

At a molecular level, the joint venture's product will be identical to the DOWLEXT polyethylene resins manufactured at other Dow facilities. The advantage of this material versus most renewable resource-based plastics is that customers will be using a drop-in replacement made with a renewable resource not a different polymer altogether. Also, like the traditional PE product, the sugar cane-based polyethylene would be fully recyclable using existing infrastructure.

Dow has operated in Brazil since 1956 when it established a Latin America headquarters in São Paulo. As Dow has expanded, so has its presence in Brazil with 21 locations, including manufacturing plants, business centers and research and development facilities. Dow has 2,100 employees in Brazil.

Crystalsev is a 100% Brazilian group that commercializes products made from sugar cane through three areas: providing of services to mills; commercialization of sugar and alcohol; and trading - purchase, resale and management of assets. The Group produces 1.8 million tons of sugar, which corresponds to 8% of all sugar manufactured in Brazil, and employs 30,000 people. Crystalsev operates in several regions in the country through 13 companies that, together, form the second major producer of sugar cane in Brazil. Its management system is used as a model in the sugar & alcohol industry.

Sugarcane remains key and is only gradually beginning to reveal its potential to yield products other than liquid biofuels. The humble crop is a goldmine of potential green chemistry products, ranging from bioplastics, detergents, tinctures, drugs, glues, gels, biopolymers and a whole range of molecules and platform chemicals. Major science organisations and companies are now investing in the production of bioplastics from sugarcane (amongst them the University of Queensland, the Korea Advanced Institute of Science and Technology and Metabolix.)

The good thing is that the crop thrives in developing countries, who know they now have a resource in hand that allows them to leapfrog beyond the petroleum era. In the future, they will rely on highly integrated biorefineries that convert biomass into a wealth of fuels, green chemicals and energy. A glimpse of this future in developing countries already comes from the tiny island state of Réunion, where scarce research resources are being invested in sugarcane based green chemistry and biorefineries (earlier post).


Dow Chemical: Dow and Crystalsev Announce Plans to Make Polyethylene from Sugar Cane in Brazil - July 19, 2007.

Biopact: The bioeconomy at work: Braskem develops polyethylene from sugarcane ethanol - June 25, 2007.

Biopact: Notes on biopolymers in the Global South - March 11, 2007

Article continues

Gevo receives funding from Virgin Fuels and Khosla Ventures to make biobutanol

Pasadena-based Gevo, a California Institute of Technology spinoff that will produce advanced biofuels, including butanol, to help the world end its addiction to oil, announced today that Virgin Fuels has joined founding investor Khosla Ventures in a Series B venture round and will join the Gevo Board. In addition, Gevo announced that Patrick Gruber has joined the company as CEO. Gruber is a 20-year veteran of the bioscience industry and companies including Cargill and NatureWorks.

Gevo intends to produce biobutanol from different types of biomass, including sugar cane, corn byproducts and grasses. Its bioprocessing technology uses fermentation to convert plants to alcohol-based fuels. Initially, the company intends to make butanol variants for automobiles, trucks and jets using the same basic technologies. It will explore next-generation biofuels as well, such as bio-based isobutanol.

Most money invested in biofuels has been targeted at first and second-generation ethanol. But butanol, which today is often used as a paint thinner, can be produced as a fuel with clear advantages. Butanol has a higher energy density than ethanol, but it does not absorb water, which means it can't be effectively distributed through pipelines. However, there are still technical hurdles to be overcome for biobutanol production to be scaled up. (More on biobutanol here, here and here).
Gevo aims to represent not only a step toward true energy diversity for the country, but yet another cost-effective alternative to fossil fuels. Major credit should be given to the founders of Gevo and the Caltech team for their groundbreaking work with biological systems toward new developments in alternative energy. - Vinod Khosla, managing partner of Khosla Ventures.
Khosla recently told biotechnology industry representatives that he believes biofuels could someday replace 100% of fossil fuels. With Khosla Ventures the investor is funding a range of bioenergy and green chemistry startups, including in a vast project in Brazil (previous post).

Sir Richard Branson formed Virgin Fuels last year to make investments in renewable energy companies, in part to produce fuels for his fleet of airplanes (more here and here).
Mitigating the effects of climate change will require incredible efforts around the globe. Through Virgin Fuels, we look for investments in companies - such as Gevo, Inc. - that will help to significantly reduce net greenhouse gas emissions, improve management of scarce resources, and have a long term positive impact on our society. - Richard Branson, Virgin Fuels
Gevo has exclusively licensed technology in the field of biofuels developed in the labs of Frances Arnold at Caltech and other prominent labs:
:: :: :: :: :: :: :: :: ::

Gevo will take the best of the scientific world, combined with top business practices, to succeed in replacing existing technologies with new, more environmentally sound alternatives. I am excited to have the chance to make a difference through our institution's work with Gevo. - Frances Arnold, company founder and professor of chemical engineering and biochemistry at Caltech.
Gruber joins Gevo from Outlast Technologies, where he served as President and CEO. Prior to this, he was a founder and CTO of Cargill Dow/NatureWorks LLC, the first company to develop and successfully commercialize the renewable resource-based PLA (Polylactic Acid) to replace petrochemical plastics. While at Cargill, Gruber held a number of executive positions that included Director of Technology Development for Cargill’s bio-products areas and Technical Director of Cargill’s BioScience division. He was the Leader and later the General Manager of Cargill’s Renewable Bioplastics project.
Gevo is at the forefront of turning biomass into products like butanol, making this break-through process a commercial and affordable reality. Gevo is well-positioned to become the world’s leading advanced biofuels company, and I’m very pleased to be a part of it. - Patrick Gruber, CEO Gevo Inc.
Founded in 2005, Gevo, Inc. is working on new methods for the production of alternative fuels. Gevo is based upon technology developed at the California Institute of Technology by Gevo founders Frances Arnold, Matthew Peters, and Peter Meinhold and is funded by Khosla Ventures and Virgin Fuels. Gevo is based in Pasadena, California.

Khosla Ventures offers venture assistance, strategic advice and capital to entrepreneurs. The firm helps entrepreneurs extend the potential of the Internet to new markets such as mobile and supports breakthrough scientific work such as bio refineries. Vinod Khosla founded the firm in 2004. Vinod has been labeled the #1 VC by Forbes and Fortune recently labeled him as one of the nation's most influential ethanol advocates, noting "there are venture capitalists, and then there's Vinod Khosla." The firm's capital comes entirely from its own partners and a portion of all profits are donated to charitable causes, with an emphasis on micro-finance, education, and the environment. Khosla Ventures is based in Menlo Park, California.

Virgin Fuels has been established to invest up to $400mn in companies in the renewable energy and resource efficiency sectors in the US and Europe. Virgin Fuels is a sector-focused, multi-stage investment firm investing primarily in expansion/growth capital opportunities with an allocation to venture capital.

Article continues

Report: the future of biofuels is not in corn, better alternatives available

A new report released today by Food & Water Watch, the Network for New Energy Choices, and the Vermont Law School Institute for Energy and the Environment shows that of all possible biofuels, corn based ethanol scores worst when it comes to environmental impacts, consumer benefits, and greenhouse gas emission reductions. The corn ethanol refinery industry, the beneficiary of new renewable fuel targets in the proposed energy legislation as well as proposed loan guarantee subsidies in America's 2007 Farm Bill, will not significantly offset U.S. fossil fuel consumption without unacceptable environmental and economic consequences, the report finds.

The findings do not come as a surprise to Biopact and other energy experts (such as Claude Mandil or Fatih Birol from the IEA). American consumers should know that there is a sound alternative to the subsidised 'lobby fuels' they are now forced to pay for. They could import fuels that do benefit the environment, have a positive energy balance, reduce greenhouse gas emissions, are far less costly and that may benefit poor countries in the developing world. Ethanol made from sugarcane would be an example (earlier post), biofuels made from cassava (more here) or sweet sorghum another. But these good biofuels are currently blocked out from the U.S. consumer market because of a $54 cent per gallon import tariff, put in place to protect corn ethanol, which costs 76% more to make than sugarcane ethanol.

The European Union has recently admitted that imported biofuels are much better for all of us. Trade chief Peter Mandelson has said biofuel subsidies for farmers in the wealthy West can no longer be defended (here). And Sweden has even become a staunch advocate of a 'biopact' of sorts, explicitly fighting for trade distortions to be removed (earlier post). It is time the U.S. follows the example.

Food & Water Watch Executive Director Wenonah Hauter says that the new Farm Bill which supports corn ethanol in the U.S. benefits only a specific group of people: "Rural communities won't benefit from the Farm Bill becoming a fuel bill. In the long run, family farmers and the environment will be losers, while agribusiness, whose political contributions are fueling the ethanol frenzy, will become the winners".
Rising oil prices, energy security, and global warming concerns have led to today's 'go yellow' hype over corn ethanol. But all biofuels are not equal. Expansion of the corn ethanol industry will lead to more water and air pollution and soil erosion of America's farm belt, while failing to significantly offset fossil fuel use or combat global warming. - Scott Cullen, Senior Policy Advisor for the Network for New Energy Choices.
The report, The Rush to Ethanol: Not all BioFuels are Equal [*.pdf], is a comprehensive review of the literature on the environmental and economic implications of pinning America's hopes on corn ethanol to reduce dependency on fossil fuels. Report findings include the following:
  • Not all biofuels are equal. Corn - now used to produce 95 percent of U.S. ethanol and the only commercially viable ethanol feedstock prepared to capitalize on refinery subsidies in the Farm Bill - is the least sustainable biofuel feedstock of all raw materials commonly used.
  • The capacity of corn ethanol to offset U.S. fossil fuel use is extremely limited. Dedicating the entire U.S. corn crop to ethanol production would only offset 15 percent of gasoline demand. Conversely, modest increases in auto fuel efficiency standards of even one mile per gallon for all cars and light trucks, such as those passed by the Senate last month could cut petroleum consumption by more than all alternative fuels and replacement fuels combined.
  • Corn ethanol is the wrong biofuel for combating global warming. The most favorable estimates show that corn ethanol could reduce greenhouse gas emissions by 18 percent to 28 percent, while cellulosic ethanol is estimated to offer a reduction of 87 percent compared to gasoline. [Note, first-generation sugarcane ethanol reduces GHGs by 80 to 90 percent]
  • Ethanol is not the solution to revitalizing rural America. While higher commodity prices and cooperatively owned ethanol refineries could be a boon to independent farmers, unregulated ethanol industry growth will further concentrate agribusiness, threatening the livelihood of rural communities.
Michael Dworkin, of the Vermont Law School Institute for Energy and the Environment, says that "as long as we spend more on subsidizing energy suppliers than we do on investments in energy efficiency, we are on a path to pain. We are already subsidizing corn-ethanol with more money than we spend on high-mileage cars or on quality mass-transit. That's good for some companies and some politicians, but it"s bad for our nation and our world."

Both the farm and energy legislation being debated in Congress contain provisions that will set biofuels policy for years to come. While the politicians promise that America will be driving on switchgrass-based ethanol instead of gasoline in the next decade, the majority of the subsidies will go to corn-based ethanol refiners in the near term:
:: :: :: :: :: :: :: :: :: :: :: ::

The groups made recommendations on U.S. biofuels policy including the following proposed reforms to ethanol provisions of the 2007 Farm Bill:
  • Biofuels promotion policies should be tied to a sustainable fuel standard that ensures best management practices of land, water, and soil use, and other measures to reduce impacts on wildlife and natural ecosystems.
  • Any ethanol funding in the U.S. Farm Bill should focus on research and development of cellulosic ethanol. There is sufficient private investment in corn ethanol development and refining already. Because cellulosic ethanol is not ready for market, any subsidies for refining in this year's bill will only lock U.S. ethanol production even more tightly to corn.
  • No coal-fired ethanol refineries should be eligible for federal subsidies. Instead, small scale ethanol refineries should be encouraged to use lignin, a cellulosic byproduct, as fuel.
  • Loan guarantees for refineries should be directed to locally owned facilities that benefit farmers and rural communities. The farm bill should include measures similar to those in place in Minnesota to ensure that subsidies are only provided to refinery operations that are farmer majority-owned.
Biopact welcomes this report, but has some small additional remarks:

(1) of course, energy efficiency and smart conservation are always the single biggest priority whereas policies that stimulate life-style changes are important too (e.g. promoting more public transport, which is far more efficient, or healthy mobility options); biofuels clearly come in at the bottom of a long list of priorities.

But (2) if biofuels are introduced, U.S. consumers should have the right to import fuels that are much better than corn ethanol. They should be allowed to choose biofuels made elsewhere that can be demonstrated to effecively reduce GHGs, and that benefit small, poor farmers and rural communities in the developing world. Unlike corn ethanol, these fuels might be competitive without subsidies. Brazilian ethanol costs 76% less to make than U.S. corn ethanol.

(3) A set of social and environmental sustainability criteria should be introduced, which shows consumers which biofuels have what kind of impacts. This allows them to make informed decisions, that go beyond the non-choice they now face.

(4) For a win-win scenario to materialise - importing good biofuels from the Global South - both subsidies for Big Corn must be removed, and the $54 cent per gallon import tariff on imported ethanol must be scrapped.

(5) Finally, subsidies are not bad in themselves, provided they are temporary and distributed in a fair way. Subsidies can be used to kickstart the establishment of a biofuel distribution infrastructure in the U.S. and to help refiners to invest in production capacity. It is important that such an infrastructure is in place, for imported biofuels to make a chance in the U.S.

However, the subsidies and trade distortions as they exist today to support the corn ethanol industry are both unjust, cost the consumer dearly (both in the U.S. and in corn importing nations), is bad for the environment and for the economy as a whole.

Americans have a choice: they can pick good biofuels, or bad biofuels. Ultimately, they have the political power to decide on the matter. If they want to make the right choice, all they have to do is to vote for the right Congressmen. Some suggestions: Jeb Bush, Richard Lugar or Michael Bloomberg. All have called for the $54 cent import tariff on Brazilian ethanol to be scrapped. On the other hand, the political system in the U.S. is such that even the most rational politicians, once elected, have the tendency to fall prey to the irrational demands of the mighty agribusiness lobby.

The Network for New Energy Choices promotes safe, clean, and environmentally responsible energy solutions. We advocate for energy conservation, energy efficiency and renewable energy as the solutions to our energy crisis and we work to educate the public about the way we produce, distribute and consume energy.

Food & Water Watch is a nonprofit consumer organization that works to ensure clean water and safe food in the United States and around the world. We challenge the corporate control and abuse of our food and water resources by empowering people to take action and by transforming the public consciousness about what we eat and drink.

The Vermont Law School Institute for Energy and the Environment distributes scholarly, technical and practical publications; provides forums and conferences for professional education and issue development; and serves as a center for graduate research on energy issues, with an environmental awareness.

New Energy Choices: The Rush to Ethanol: Not All Biofuels are Equal [*.pdf] - July 2007.

Eurekalert: The future of biofuels is not in corn - New, comprehensive analysis shows how ethanol is being oversold - July 19, 2007.

Article continues