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    Saudi Aramco in its Annual Review 2006 said that last year the company's crude oil production declined by 1.7 percent, while exports declined by 3.1 percent, compared with the previous year. Crude oil production in 2006 averaged 8.9 million barrels of oil a day (b/d) and exports 6.9 million b/d. Saudi Aramco - September 9, 2007.

    Chinese packaging manufacturer Livan Biodegradable Product Co. Ltd. will build plants in Alsozsolca and Edeleny in eastern Hungary at a combined cost of €18 million by 2009, the Hungarian economics ministry says. The plants, which will employ 800 people, are planned to produce initially 50, 000 metric tons a year of environmentally-friendly packaging material, and double that amount by a later date. Livan will use corn to manufacture biodegradable packaging boxes with similar properties to petroleum-based plastic boxes used in the food industry. Dow Jones Newswires - September 7, 2007.

    South Korea aims to raise biodiesel content in domestic diesel to 3 percent from the current 0.5 percent by 2012, Seoul's energy ministry said today. The government was initially set last year to impose a mandatory 5 percent blend, in line with the level targeted by the European Union by 2010, but the country's powerful refining lobby opposed the move, forcing it to push back the target, according to market sources. Reuters - September 7, 2007.

    Virent Energy Systems, Inc. announced today that it has closed a US$21 million second round of venture financing. Investor interest in Virent was driven in large part by the Company’s continued development of its innovative BioForming process beyond its traditional hydrogen and fuel gas applications and toward the production of bio-based gasoline, diesel, and jet fuels. Virent Energy Systems - September 6, 2007.

    The U.S. National Ethanol Vehicle Coalition (NEVC) announces that 31 models of motor vehicles will be offered in the U.S. with an E85 capable engine in 2008. Chrysler, Ford, General Motors, Nissan and Mercedes Benz will all offer flexible fuel vehicles (FFVs) in the coming year. The NEVC expects 750,000 such FFVs will be produced in 2008. National Ethanol Vehicle Coalition - September 5, 2007.

    GreenHunter BioFuels, Inc., has begun commercial operations with the start-up of a 1,500 barrel per day methanol distillation system. Methanol is an alcohol used to transesterify vegetable oils into biodiesel. The methanol production facility is a key element of GreenHunter's 105 million gallon per year biodiesel refinery, the largest in the U.S., slated for initial operations during the first quarter of 2008. PRNewswire - September 5, 2007.

    GreenHunter BioFuels, Inc., has begun commercial operations with the start-up of a 1,500 barrel per day methanol distillation system. Methanol is an alcohol used to transesterify vegetable oils into biodiesel. The methanol production facility is a key element of GreenHunter's 105 million gallon per year biodiesel refinery, the largest in the U.S., slated for initial operations during the first quarter of 2008. PRNewswire - September 5, 2007.

    Spanish renewables group Abengoa released its results for the first half of 2007 financial year in which its consolidated sales were €1,393.6 million, which is a 27.9 percent increase on the previous year. Earnings after tax were €54.9 million, an 18.6 percent increase on the previous year's figure of 46.3 million euro. Abengoa is active in the bioenergy, solar and environmental services sector. Abengoa - September 4, 2007.

    Canadian hydro power developer Run of River Power Inc. has reached an agreement to buy privately owned Western Biomass Power Corp. in a $2.2 million share swap deal that could help finance development of new green sources of electricity in British Columbia. The Canadian Press - September 4, 2007.

    As of Sept. 1, a biodiesel blending mandate has come into force in the Czech Republic, requiring diesel suppliers to mix 2 per cent biodiesel into the fuel. The same rule will be obligatory for gasoline starting next year. In 2009 the biofuel ratio will grow to 3.5 percent in gasoline and 4.5 percent in diesel oil. CBW - September 3, 2007.

    Budapest's first biofuel station opens on Monday near the Pesterzsébet (District XX) Tesco hypermarket. This is the third station selling the E85 fuel containing bioethanol in Hungary, as two other stations are encouraging eco-friendly driving in Bábolna and Győr. Caboodle - September 3, 2007.

    Canadian forest products company Tembec announced that it has completed the acquisition of the assets of Chapleau Cogeneration Limited located in Chapleau, Ontario. The transaction includes a biomass fired boiler and steam turbine with an installed capacity of 7.2 megawatts. Consideration for the assets consists of a series of future annual payments to 2022, with a present value of approximately $1 million. Tembec - September 1, 2007.

    Innovative internet and cable/satellite channel CurrentTV is producing a documentary on Brazil's biofuel revolution. Biopact collegues and friends Marcelo Coelho (EthanolBrasil Blog), Henrique Oliveira (Ethablog) and Marcelo Alioti (E-Machine) provided consulting on the technical, economic, environmental and social aspects of Brazil's energy transformation. ProCana - August 31, 2007.

    Oil major BP Plc and Associated British Foods Plc won competition clearance from the European Commission on to build a plant to make transport fuel from wheat in Hull, northeast England. U.S. chemical company DuPont is also involved. Reuters UK - August 31, 2007.

    The government of the Indian state of Orissa announced its policy for biofuel production which includes a slew of incentives as well as measures to promote the establishment of energy plantations. The state aims to bring 600,000 hectares of barren and fallow land under Jatropha and Karanj. At least 2 million hectares degraded land are available in the State. The new policy's other objectives are to provide a platform for investors and entrepreneurs, market linkages and quality control measures. Newindpress - August 29, 2007.

    Brazil's state-run oil company Petrobras said today it expects to reach large scale cellulosic ethanol production in 2015, with the first plant entering operations as early as 2011. Lignocellulosic biomass is the most abundant biological material on the planet, making up the bulk of the structure of wood and plants. In a first phase, Petrobras intends to use bagasse as a feedstock. Reuters / MacauHub- August 29, 2007.

    Seattle based Propel Biofuels, is announcing a $4.75 million first round of capital from @Ventures and Nth Power. The money will be used to help Propel set up and manage biodiesel fueling stations. BusinessWire - August 29, 2007.

    BioEnergy International, a science and technology company committed to developing biorefineries to produce fuels and specialty chemicals from renewable resources, announced today the closing of a major US$61.6 million investment that will provide funding for the Company’s three strategic initiatives: generating secure cash flow from its conventional ethanol platform, product diversification through the introduction of novel biocatalysts for the manufacture of green chemicals and biopolymers and the integration of its cellulose technology. BusinessWire - August 28, 2007.

    German company Verbio Vereinigte BioEnergie, the biggest biofuels producer in Europe, says it is considering plans to invest up to €100/US$136.5 million in a biofuel production facility in Bulgaria. The company wants the new facility to be located close to a port and Bulgaria's city of Varna on the Black Sea is one of the options under consideration. If Verbio goes through with the plan, it would produce both biodiesel and bioethanol, making Bulgaria a major source of biofuels in southeastern Europe. Verbi currently produces around 700,000 tonnes of biofuels per year. Sofia News Agency - August 27, 2007.

    Czech brown-coal-fired power plant Elektrárna Tisová (ETI), a unit of the energy producer ČEZ, could co-fire up to 40,000 tons of biomass this year, the biggest amount in the company’s history, said Martin Sobotka, ČEZ spokesman for West Bohemia. ETI burned more than 19,000 tons of biomass in the first half of 2007. The company’s plan reckoned with biomass consumption of up to 35,000 tons a year. Czech Business Weekly - August 27, 2007.

    PetroSun, Incorporated announced recently that it has formed PetroSun BioFuels Mexico to establish algae-to-biofuel operations in the State of Sonora, Mexico. PetroSun BioFuels Mexico will enter into joint venture agreements to develop algae cultivation farms and extraction plants in Sonora and southern Arizona that will produce algal oil, algae biomass products and excess electricity for the Mexican and U.S. markets. MarketWire - August 27, 2007.

    China's Yunnan Province hopes to reach an annual output of 2 million tons (approx. 417 million gallons) of fuel ethanol by 2010, according to the province's fuel ethanol industry development plan released recently by the Yunnan Economic and Trade Commission, state media report. Interfax China - August 23, 2007.

    Seven companies have teamed up to create Kazakhstan's first Biofuel Association. Its aim is to integrate interested parties for creating favorable conditions to have the country’s biofuel industry developed. An initiator and coordinator of the Association is the National Holding KazAgro, the Agriculture Ministry’s press service informs. KazInform - August 23, 2007.

    Canadian forest products company Tembec today announced that it has completed the acquisition of the assets of Chapleau Cogeneration Limited located in Chapleau, Ontario. The transaction closed on August 15 and includes a biomass fired boiler and steam turbine with an installed capacity of 7.2 megawatts. Consideration for the assets consists of a series of future annual payments to 2022, with a present value of approximately $1 million. Newswire Canada - August 22, 2007.

    Taiwan's representative to Brazil, Chou Shu-yeh, is urging Taiwan's government and private enterprises to invest in Brazil's biomass energy sector. Chou was speaking at a workshop on global investment and trade opportunities in Taipei. RTi - August 22, 2007.

    An algae-to-biofuels startup by the name of Inventure Chemical has raised about $1.5 million to continue its development of a chemical process that turns algae into biodiesel and ethanol. One of the biggest backers of the company is Imperium Renewables, a biodiesel producer. Seattle Post Intelligencer - August 22, 2007.

    The government of India's Karnataka state has approved the blending of six million litres of ethanol with diesel for use as fuel in State Road Transport Corporation (KSRTC) vehicles. Automotive World - August 21, 2007.

    VeraSun Energy Corporation, one of America's largest ethanol producers, announced that it closed on its acquisition with ASAlliances Biofuels, LLC for three ethanol plants with a combined annual production capacity of approximately 330 million gallons (1.25 billion liters) per year. VeraSun - August 21, 2007.

    Fujitsu develops a biodegradable laptop chassis from corn-starch bioplastic. The material reduces carbon dioxide emissions by 15% compared to a chassis made from petroleum-based plastics. CNET Asia - August 20, 2007.

    India's Rana Sugars Ltd has decided to set up a new plant for producing ethanol in Uttar Pradesh with an estimated investment of €9 to 10.9 (US$12.2 to 14.7). The facility will have a capacity of 180,000 liters per year and will generate, besides ethanol, 26MW of carbon-neutral power from bagasse. Economic Times India - August 20, 2007.

    Prominent pro-democracy activists staged a rare protest in Myanmar's biggest city Sunday, marching against a massive recent fuel price hike. "We are staging this performance to reflect the hardship our people are facing due to the government's fuel price hike," said Min Ko Naing, a leader of the 88 Generation Students' Group. Myanmar's ruling military junta imposed a surprise 100 percent hike on fuel at state-owned gas stations on Wednesday. The move was followed by increases in bus fares and commodity prices. The Star - August 19, 2007.

    Canada's Cavendish Farms, one of the country's largest food processing companies is to build a biogas plant to recycle spent cooking oils, starch and sludge from its waste-water plant to fuel its potato processing operation. Use of the carbon-neutral biofuel will limit the amount of bunker C fuel oil currently in use by the company. The plant, expected to be ready for operation by next fall, has received a $14-million loan from the Province of Prince Edward Island. CBC - August 18, 2007.

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Saturday, August 11, 2007

Germany considers opening natural gas network to biogas - major boost to sector

Germany's Federal Ministry for the Economy and Technology is considering [*German] opening the country's natural gas network to feed in biogas. Under the proposal made by minister Michael Glos, gas network operators will be mandated to blend a certain percentage of bio-based methane into the pipelines. Interestingly the new policy will break with the current renewable energy law, which gives producers of green power a fixed price. The biogas mandate instead will be based on real market prices. The sector sees Glos' proposal as a major boost.

According to the ministry, by 2030, locally produced natural gas from biomass would supply up to 10 percent of Germany's total gas consumption and reduce, without extra costs, around 22 million tons of carbon dioxide. This comes down to around 2.5 per cent of Germany's projected greenhouse gas emissions for that year.

The ministry will instruct natural gas network operators "to give biogas producers priority access to the network as well as to feed in biogas", even though a target has not been disclosed. If needed, compensations for the effort will be paid at actual market prices.

Such a policy would differ from Germany's current Renewable Energy Law ('Erneuerbare-Energien-Gesetz' - EEG), which applies to electricity generated from renewables such as biomass, solar, hydro and wind power. Under this current system, producers of green electricity receive a fixed price which is set each year and which often is well above prevailing market prices. It is basically a subsidy. Last year, this subsidy ran up to a net sum of €3,2 billion. The costs are carried by the consumer. From an environmental perspective, the EEG can be called successful because it has brought the share of renewable electricity in Germany to 13 per cent - one of the highest shares in the industrialized world:
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Currently, biogas is Germany's fastest growing renewables sector, and energy from biomass has taken the second largest overall share of the renewables mix (22%, against 4% for solar; wind remains by far the largest player). According to a recently released Eurobarometer for biogas, the country is Europe's largest producer, generating approximately 40% of all biogas produced in the Union in 2006 (more here).

Biogas is currently being fed into the natural gas mains in Germany only on a trial basis. But feasibility studies show that the technical barriers to couple purified biogas to natural gas networks can be overcome. A European Union funded project has made this clear (previous post).

The total energy potential for biogas has been the subject of several projections and scenarios, with the most optimal setting it at a total replacement of all European natural gas imports from Russia by 2020 (more here).

The Federal Ministry's proposal is welcomed by the German biogas sector which sees it as a major boost.

Markenpost: Glos will Einspeisung von Biogas ins Erdgasnetz - August 10, 2007.

Biopact: Study: Biogas can replace all EU imports of Russian gas by 2020 - February 10, 2007

Biopact: Study: EU biogas production grew 13.6% in 2006, holds large potential - July 24, 2007

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Petrobras reaffirms its biofuels and energy partnership in Mozambique

Executives of Brazil's state-owned oil company Petrobras have visited Mozambique to reaffirm their commitment to cooperate with the country on energy and biofuels. International Area director, Nestor Cervero, and executive manager for Business Development, Luis Carlos Moreira da Silva, were received, last week, by Mozambican President Armando Emílio Guebuza. The courtesy visit reiterates Petrobras' willingness to work jointly with Mozambican companies in oil and gas prospecting and in the biofuel area.

The executives visited Mozambique's Ministry of Energy and its National Oil Company. During the meeting, the possible partnership between Petrobras and Petromoc, the Mozambican company equivalent to Petrobras Distribuidora in Brazil, was reaffirmed. The idea is to operate in the Mozambican biofuel market and, possibly, in fuel exports.

President Guebuza is expected to visit Brazil next September, when he will meet his Brazilian counterpart, president Luiz Inácio Lula da Silva, and Petrobras' president José Sergio Gabrielli de Azevedo, to sign an agreement between the two governments in the energy area.

Petrobras is already in business in Mozambique with the Empresa Nacional de Hidrocarbonetos (ENH), that country's national oil company, since last year. A memorandum of understandings was signed on that occasion for oil and natural gas exploration and for biofuel research and production in Mozambican territory (earlier post). The company also has a partnership with Petronas, from Malaysia, to work in an exploration block in the mouth of River Zambezi, in Mozambique.

Mozambique is receiving considerable interest from biofuel investors, because of its stable economy, attractive investment climate and above all, its major technical biofuel production potential:
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Experts working for the International Energy Agency estimate that Mozambique alone can produce nearly 7 Exajoules worth of liquid biofuels for exports, without threatening food supplies for its rapidly growing population or biodiversity and protected conservation areas (more here).

This amount is roughly equal to a production of 3 million barrels of oil equivalent per day (and given its renewability, this 'green reserve' lasts for decades). In order to actualise the potential, the country does need an influx of investments in agronomic knowledge and skills, logistical infrastructures and biofuel production plants. On all these fronts, the Lusophone world is offering assistance, either trilaterally or bilaterally, in purely private or in public-private ventures.

Mozambique's Minister of Energy, Salvador Namburete, has frequently pointed out that the country vast potential to cultivate first generation biofuels based on oilseed, sugar and starch crops in an initial phase, whereas when technologies mature, it can become a major producer of biomass.

Besides investors from Brazil, several initiatives from Europe, India and China have been launched in the country's biofuels sector (earlier post and here). Amongst them is a typical South-North-South exchange which sees Italy and Brazil cooperating on biofuels in Mozambique.

Petrobras: Petrobras reaffirms its partnership in Mozambique - August 8, 2007.

Biopact: Mozambique-India partnership: biofuels for poverty alleviation - July 03, 2007

Biopact: Lusophone world and China join forces to produce biofuels in Mozambique - May 19, 2007

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Sweden calls for international biofuels trade

Sweden is seen by many as a European leader in efforts to tackle climate change and to transit towards a low-carbon, post-oil economy. The country is a staunch advocate of internationally traded biofuels, because they allow developing countries to participate as producers in a new market that offers major opportunities for economic and social development. Sweden's minister of foreign trade Sten Tolgfors writes a piece for Project Syndicate in which he explains why trading biofuels between the North and the South is the way forward.

There is rightly growing concern among the public and policymakers about climate change and its consequences, Tolgfors writes. Combating climate change is an enormous and truly global challenge, requiring local, national and international action. We must tackle it both effectively and urgently.

A key part of meeting our climate objectives is to minimize the harmful effects of transport on the environment. So-called "biofuels" such as bioethanol and biodiesel, as well as developing the next generation of biofuels, must play a part in this. After all, every liter of petrol that is replaced with biofuel benefits the environment.

Many countries around the world are producers or are emerging as producers of biofuels. Global production is rapidly increasing. World production of bioethanol, for example, doubled between 2000 and 2004. A further doubling is expected by 2010.

As output of biofuels increases, policymakers must ensure that global supplies are allocated effectively and smoothly between countries that produce and consume them. Free and open conditions for international trade are the most efficient way to allocate global resources, fully exploiting individual countries' comparative advantages. This principle also holds true for the emerging biofuels market.

Today, however, trade in biofuels is limited. According to the UN Conference on Trade and Development, global trade in bioethanol accounted for less than 10 percent of global production in 2004, suggesting the existence of a large untapped trade potential. Part of the explanation no doubt lies in the presence of significant trade barriers.

For example, high tariffs are often placed on biofuels and biofuel feedstock -- in some cases as high as 55 percent for bioethanol. At the same time, subsidies are widely used to encourage domestic production. Tax incentives are employed to stimulate use, as are mandatory blending requirements. In addition, different standards and certification requirements are applied.

While many of these measures are implemented for legitimate environmental policy reasons, they do pose challenges for trade in biofuels. As a first step toward eliminating unnecessary barriers, we must deepen our understanding of the effects on trade in biofuels of measures to promote their production and use.

Sweden and the Netherlands recently took the initiative in further analysis of this issue by the Organization for Economic Cooperation and Development. Sweden's starting point is the conviction that a more liberal trade regime, coupled with global standards, is needed. As a first measure, Sweden argues for the elimination of all tariffs on ethanol:
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Apart from environmental considerations, there are other important benefits of expanding world trade in biofuels. Generally, international trade is a strong instrument for development. Several developing nations have a comparative advantage in producing ethanol - and other biofuels, for that matter. Brazil, which is now the world's largest producer and exporter of ethanol, is a case in point.

But there are other developing countries that are exporters of biofuels, and still others that view it as an important source of future income. Trade policy should support, not undermine, these countries' ambitions.

Of course, some have raised concerns about the possible economic, social and ecological repercussions of a strong increase in demand for biofuels, and not least in developing countries. For example, diverting too much land from food production to biofuel crops would risk sharp increases in food prices, while adequate environmental standards must accompany large-scale production use of biofuels.

Such concerns also matter to consumers of biofuels, who will ultimately determine the demand for them. Appropriate national policies, as well as strong international cooperation, will be necessary to minimize the risks and exploit the benefits that biofuels markets imply for developing countries.

Creating an efficient market to expand world trade in biofuels is a policy for the future, one that is good for the environment and good for development. Increased trade, protection of the environment, and poverty reduction can, and must, go hand in hand.

Sten Tolgfors is the Swedish minister for foreign trade.

Copyright Project Syndicate.

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