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    A group of Spanish investors is building a new bioethanol plant in the western region of Extremadura that should be producing fuel from maize in 2009. Alcoholes Biocarburantes de Extremadura (Albiex) has already started work on the site near Badajoz and expects to spend €42/$59 million on the plant in the next two years. It will produce 110 million litres a year of bioethanol and 87 million kg of grain byproduct that can be used for animal feed. Europapress - September 28, 2007.

    Portuguese fuel company Prio SA and UK based FCL Biofuels have joined forces to launch the Portuguese consumer biodiesel brand, PrioBio, in the UK. PrioBio is scheduled to be available in the UK from 1st November. By the end of this year (2007), says FCL Biofuel, the partnership’s two biodiesel refineries will have a total capacity of 200,000 tonnes which will is set to grow to 400,000 tonnes by the end of 2010. Biofuel Review - September 27, 2007.

    According to Tarja Halonen, the Finnish president, one third of the value of all of Finland's exports consists of environmentally friendly technologies. Finland has invested in climate and energy technologies, particularly in combined heat and power production from biomass, bioenergy and wind power, the president said at the UN secretary-general's high-level event on climate change. Newroom Finland - September 25, 2007.

    Spanish engineering and energy company Abengoa says it had suspended bioethanol production at the biggest of its three Spanish plants because it was unprofitable. It cited high grain prices and uncertainty about the national market for ethanol. Earlier this year, the plant, located in Salamanca, ceased production for similar reasons. To Biopact this is yet another indication that biofuel production in the EU/US does not make sense and must be relocated to the Global South, where the biofuel can be produced competitively and sustainably, without relying on food crops. Reuters - September 24, 2007.

    The Midlands Consortium, comprised of the universities of Birmingham, Loughborough and Nottingham, is chosen to host Britain's new Energy Technologies Institute, a £1 billion national organisation which will aim to develop cleaner energies. University of Nottingham - September 21, 2007.

    The EGGER group, one of the leading European manufacturers of chipboard, MDF and OSB boards has begun work on installing a 50MW biomass boiler for its production site in Rion. The new furnace will recycle 60,000 tonnes of offcuts to be used in the new combined heat and power (CHP) station as an ecological fuel. The facility will reduce consumption of natural gas by 75%. IHB Network - September 21, 2007.

    Analysts fear that record oil prices will fuel general inflation in Kenya, particularly hitting the poorest hard. They call for the development of new policies and strategies to cope with sustained high oil prices. Such policies include alternative fuels like biofuels, conservation measures, and more investments in oil and gas exploration. The poor in Kenya are hit hardest by the sharp increase, because they spend most of their budget on fuel and transport. Furthermore, in oil intensive economies like Kenya, high oil prices push up prices for food and most other basic goods. All Africa - September 20, 2007.

    Finland's Metso Power has won an order to supply Kalmar Energi Värme AB with a biomass-fired power boiler for the company’s new combined heat and power plant in Kalmar on the east coast of Sweden. Start-up for the plant is scheduled for the end of 2009. The value of the order is approximately EUR 55 million. The power boiler (90 MWth) will utilize bubbling fluidized bed technology and will burn biomass replacing old district heating boilers and reducing the consumption of oil. The delivery will also include a flue gas condensing system to increase plant's district heat production. Metso Corporation - September 19, 2007.

    Jo-Carroll Energy announced today its plan to build an 80 megawatt, biomass-fueled, renewable energy center in Illinois. The US$ 140 million plant will be fueled by various types of renewable biomass, such as clean waste wood, corn stover and switchgrass. Jo-Carroll Energy - September 18, 2007.

    Beihai Gofar Marine Biological Industry Co Ltd, in China's southern region of Guangxi, plans to build a 100,000 tonne-per-year fuel ethanol plant using cassava as feedstock. The Shanghai-listed company plans to raise about 560 million yuan ($74.5 million) in a share placement to finance the project and boost its cash flow. Reuters - September 18, 2007.

    The oil-dependent island state of Fiji has requested US company Avalor Capital, LLC, to invest in biodiesel and ethanol. The Fiji government has urged the company to move its $250million 'Fiji Biofuels Project' forward at the earliest possible date. Fiji Live - September 18, 2007.

    The Bowen Group, one of Ireland's biggest construction groups has announced a strategic move into the biomass energy sector. It is planning a €25 million investment over the next five years to fund up to 100 projects that will create electricity from biomass. Its ambition is to install up to 135 megawatts of biomass-fuelled heat from local forestry sources, which is equal to 50 million litres or about €25m worth of imported oil. Irish Examiner - September 16, 2007.

    According to Dr Niphon Poapongsakorn, dean of Economics at Thammasat University in Thailand, cassava-based ethanol is competitive when oil is above $40 per barrel. Thailand is the world's largest producer and exporter of cassava for industrial use. Bangkok Post - September 14, 2007.

    German biogas and biodiesel developer BKN BioKraftstoff Nord AG has generated gross proceeds totaling €5.5 million as part of its capital increase from authorized capital. Ad Hoc News - September 13, 2007.

    NewGen Technologies, Inc. announced that it and Titan Global Holdings, Inc. completed a definitive Biofuels Supply Agreement which will become effective upon Titan’s acquisition of Appalachian Oil Company. Given APPCO’s current distribution of over 225 million gallons of fuel products per year, the initial expected ethanol supply to APPCO should exceed 1 million gallons a month. Charlotte dBusinessNews - September 13, 2007.

    Oil prices reach record highs as the U.S. Energy Information Agency releases a report that showed crude oil inventories fell by more than seven million barrels last week. The rise comes despite a decision by the international oil cartel, OPEC, to raise its output quota by 500,000 barrels. Reuters - September 12, 2007.

    OPEC decided today to increase the volume of crude supplied to the market by Member Countries (excluding Angola and Iraq) by 500,000 b/d, effective 1 November 2007. The decision comes after oil reached near record-highs and after Saudi Aramco announced that last year's crude oil production declined by 1.7 percent, while exports declined by 3.1 percent. OPEC - September 11, 2007.

    GreenField Ethanol and Monsanto Canada launch the 'Gro-ethanol' program which invites Ontario's farmers to grow corn seed containing Monsanto traits, specifically for the ethanol market. The corn hybrids eligible for the program include Monsanto traits that produce higher yielding corn for ethanol production. MarketWire - September 11, 2007.

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Friday, September 21, 2007

Scientists discover new anaerobic bacteria that feed on natural gas

A German-American research team of biologists and geochemists has discovered hitherto unknown anaerobic bacteria in marine sediments which need only propane or butane for growth, as reported by the scientific journal Nature in its current online issue.

The hydrocarbons ethane, propane and butane - as well as the main component, methane - are the major constituents of natural gas. Biological processes may lead to the degradation of these hydrocarbons in underground petroleum reservoirs and other geological habitats.
The bacteria isolated here for the first time from marine sediments use sulphate instead of oxygen for respiration and utilize propane and butane as their sole source of carbon and energy. These organisms are tough specialists that have become adapted to strictly utilising only these and no other substrates. - Heinz Wilkes, biogeochemist at GeoForschungsZentrum Potsdam
The investigations showed that the bacteria employ an unprecedented biochemical mechanism for transforming what are essentially unreactive hydrocarbons into reactive metabolites which may then be further oxidised to carbon dioxide. The findings concerning this reaction mechanism are an important step in designing new synthetic methods for selectively producing chemicals from hydrocarbons:
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The researchers report the enrichment of sulphate-reducing bacteria (SRB) with the capacity to utilizate short-chain hydrocarbons in an anaerobic environment. The organisms are found in marine hydrocarbon seep areas.

Propane or n-butane as the sole growth substrate led to sediment-free sulphate-reducing enrichment cultures growing at 12, 28 or 60 °C. With ethane, a slower enrichment with residual sediment was obtained at 12 °C.

Isolation experiments resulted in a mesophilic pure culture (strain BuS5) that used only propane and n-butane (methane, isobutane, alcohols or carboxylic acids did not support growth). Complete hydrocarbon oxidation to CO2 and the preferential oxidation of 12C-enriched alkanes were observed with strain BuS5 and other cultures.

Metabolites of propane included iso- and n-propylsuccinate, indicating a subterminal as well as an unprecedented terminal alkane activation with involvement of fumarate.

According to RNA analyses, strain BuS5 affiliates with Desulfosarcina/Desulfococcus, a cluster of widespread marine SRB. An enrichment culture with propane growing at 60 °C was dominated by Desulfotomaculum-like SRB. Our results suggest that diverse SRB are able to thrive in seep areas and gas reservoirs on propane and butane, thus altering the gas composition and contributing to sulphide production.

Olaf Kniemeyer, et. al. "Anaerobic oxidation of short-chain hydrocarbons by marine sulphate-reducing bacteria", Nature advance online publication 19 September 2007, doi:10.1038/nature06200

Eurekalert: Natural gas inhabited by unusual specialists - September 21, 2007.

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Royal Society report: UK’s separated plutonium stockpile poses severe risks, enough for 17,000 nuclear bombs

Despite a global effort to push nuclear power as a 'safe' and 'clean' energy option, the risks posed by existing nuclear waste are so severe that, without urgent action, they might make the sector completely unacceptable in the future. This is the warning contained in a report published today by the Royal Society, the UK's national academy of science, in which it says that the potential consequences of a major security breach or accident involving the UK's stockpile of separated plutonium are so great that the British government must develop and implement a strategy for its long term use or disposal today.

The scientists propose a cap on all further separated plutonium production in the UK until existing legally binding contracts for safe disposal and reprocessing have been fulfilled. Of all European nations, the UK has the largest stockpile of weapons-usable civilian separated plutonium (graph shows amount for 2004, click to enlarge).

According to the Strategy options for the UK's separated plutonium [*.pdf] the UK's civil stockpile of separated plutonium is now over 100 tonnes - enough to make 17,000 nuclear bombs - and has almost doubled in the last 10 years. The UK's stockpile is largely the by-product of commercial reprocessing of spent fuel from UK power plants.

Plutonium is highly toxic. It is the primary component in most nuclear weapons and could be made into a crude nuclear bomb by a well-informed and equipped terrorist group.
The status quo of continuing to stockpile separated plutonium without any long term strategy for its use or disposal is not an acceptable option. The Royal Society initially raised concerns about the security risks nine years ago and we have not seen any progress towards a management strategy. Furthermore, the stockpile has grown whilst international nuclear proliferation and terrorist threats have increased. - Professor Geoffrey Boulton, chair of the report's working group
Just over 6kg of plutonium was used in the bomb which devastated Nagasaki and the UK has many thousands of times that amount. Professor Boulton stresses that Britain must take measures to ensure that this extremely dangerous material does not fall into the wrong hands.

The report analyses the security, health and environmental risks associated with the large stockpile. Of these, the risk for major security breaches is the most worrying:
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Security risks
The UK stockpile of separated plutonium poses three types of security risk:
  • proliferation of nuclear weapons to other States through theft or illicit transfer of separated plutonium;
  • construction of nuclear or radiological explosive devices by terrorists following the theft of separated plutonium;
  • terrorist attacks on storage sites to disperse contained materials.
The first and second are both remote risks as agents of potential proliferating States or terrorist groups would have to steal plutonium from the well-guarded Sellafield site. Separated plutonium stores in some other countries are less secure and would be much easier to divert. It would appear that all of the separated plutonium at Sellafield is of reactor-grade, which poses design problems if used in stockpiled nuclear weapons.

The third probably offers the greatest risk to the current storage arrangements, provided precise knowledge of the location of the materials is available. Plutonium poses a toxic threat if dispersed in a fire or explosion, particularly whilst it remains in a powder form.

Although a direct or indirect attack with explosives or aircraft on the plutonium store at Sellafield could release separated plutonium into the atmosphere, a precise attack or a large explosion would be required to disperse the material. It will remain a potential but remote risk as long as the material remains in its current powdered form and location, and no long-term policy for its disposition is agreed.
The risks of terrorist attack or theft are difficult to estimate but they must be taken with the utmost seriousness.

The potential consequences of a major security breach are severe, and justify a strong and sustained policy to minimise risks.

Health risks
Plutonium emits alpha radiation making inhalation the most important pathway of occupational exposure. Lungs, bone and liver receive the largest doses from inhaled plutonium for both humans and animals. The dose to the lung following deposition depends on the physical and chemical properties of the plutonium compounds that have been inhaled. These properties determine how long the plutonium stays in the lung before it clears and is transferred to the blood.

Once in the bloodstream it is preferentially deposited in the liver and on bone surfaces and eventually in the volume of the bone. Animal experiments show that plutonium can cause cancers of the lung, liver and bone. It may also cause leukaemia but the evidence is less clear. Strict precautions against the possibility of accidents that could cause exposure, particularly via inhalation, must be enforced at all stages of plutonium handling. These are implemented through relevant UK regulation.

On the basis of laboratory data, the International Commission on Radiological Protection (ICRP) has drawn up protection guidelines for radiation workers. They are based on the best available data and are calculated using mathematical models of the behaviour of radioactive isotopes in the body. New guidelines will be issued by ICRP in 2007 but they will not affect the situation with regard to plutonium.

Plutonium can be handled safely wherever it is possible to maintain appropriate control of air quality and strict safety procedures are followed, as in most industrial operations. Under such conditions, human exposure to this potential radiation hazard to workers or the general population has been insignificant. However, if plutonium is released as a powder or vaporised it would constitute a major health hazard.

Human health impacts on plutonium workers can be summarized as follows:
Although many epidemiological studies have been carried out on humans exposed to radiation from plutonium most of them have not been robust enough to give useful quantitative information. There have been a number of studies examining cancer rates and radiation exposures, including Pu239, for workers at the Sellafield plant, UK Atomic Weapons Establishment, UK Atomic Energy Authority, as well as the Los Alamos Laboratory and Rocky Flats reprocessing plant in USA. They show no evidence of radiation-induced cancer of the lung or liver but the level of exposure of these workers was relatively low.

Recently data have become available on the health impacts due to plutonium exposure of workers at the Russian Mayak plant in the South Urals. This was a reprocessing facility for the Soviet nuclear weapons programme. Poor working conditions posed severe health hazards.

Although studies are still in progress, some preliminary conclusions are available. Risk estimates for lung and liver cancers are in good agreement with those derived for exposure to external radiation. The results are consistent with a linear relationship between dose and the occurrence of lung cancer. The results are also consistent with previous estimates of risk from earlier studies. There is also an elevated risk of both liver and bone cancer at body burdens greater than 7.4kBq but sufficiently reliable estimates of doses to these workers are not yet available and it is not possible to calculate risk estimates for these cancers.
Environmental risks
Relevant data for estimating the environmental effects of a catastrophic event at the separated plutonium store at Sellafield is likely to be found in studies of the Windscale fire in 1958; Chernobyl; and the potential effects on the local population of discharges from the reprocessing plants at Sellafield and, to a lesser extent, at Dounreay. Discharges to the air consist of gaseous and some volatile fission products and fine dust particles. Dilute washing liquids from the chemical processes are up to 1000 times more radioactive than discharges to the air. These liquids are discharged into the sea, where more than 90% of the plutonium discharge is incorporated into sediments close to the point of release.

Plutonium and other actinides are converted to insoluble forms, which are precipitated or deposited on suspended solid material. These insoluble plutonium compounds are slow to disperse and could be deposited on salt marshes or sea-washed pastures, or dispersed in marine sediment during storms. It is unlikely that anyone will receive a radiation dose greater than 1mSv per annum (the limit set for public exposure) from this source but the monitoring of relevant coastal regions will have to be continued.

Soluble radioactive isotopes, such as caesium, are dispersed in the sea and have been found in low concentrations throughout the Irish Sea and beyond.

The report recommends that a strategy to manage the UK's separated plutonium must be considered as an integral part of the energy and radioactive waste policies that are currently being developed.

According to the Royal Society's report, the best option is to convert the plutonium into the most stable and secure form spent nuclear fuel by turning it into Mixed Oxide (MOX) and using as fuel in nuclear reactors. This would make it more difficult to steal because spent fuel is more radioactive and therefore harder to handle than plutonium and more difficult to use in nuclear weapons because it would need to be reprocessed first.

If the British overnment decides to build a new generation of nuclear power stations then the entire stockpile could be burnt as MOX fuel in these new reactors.

If there is no new nuclear build, at least some of the stockpile could be transformed into spent fuel by modifying Sizewell B to burn MOX fuel. However because of the limited life time of Sizewell B, not all the stockpile could be burned. The report recommends that the remaining separated plutonium should be converted and stored as MOX fuel pellets. These pellets would make the plutonium more secure than it is currently, but less safe than spent fuel.

In the long term the best method of disposing of the UK's separated plutonium stockpile will be to bury it deep underground in the form of spent fuel, or, less ideally, MOX pellets. It is essential that the British government's strategy for developing such a repository for nuclear waste includes an option for the disposal of separated plutonium and materials derived from it.

However the report stresses the urgency of the government developing a strategy for dealing with separated plutonium in the meantime since, according to the Nuclear Decommissioning Authority, disposal sites for high-level waste may not be ready until around 2075.

Graph: National Stocks of Weapons and Separated Civilian Plutonium. By the end of 2004, the global stockpile of separated plutonium was about 500 tons. This was divided approximately equally between weapons and civilian stocks. Numbers for military stocks are estimates. All separated plutonium can be used for the production of nuclear weapons. Credit: International Panel on Fissile Materials.

The Royal Society: Strategy options for the UK’s separated plutonium [*.pdf]- September 21, 2007.

The Royal Society: UK’s separated plutonium stockpile poses severe risks warns Royal Society - September 21, 2007.

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Inflation in Brazil decreased more than expected on lower ethanol, food prices

Quicknote biofuels and the economy
Brazil's main inflation indicator slowed more than expected from mid-August to mid-September, with ethanol's lower price being a key driver of the downward move. Prices for gasoline and phone calls fell slightly, while the growth rate in the cost of major food products eased, government data show.

The IPCA-15 inflation index [*Portuguese] published by the Instituto Brasileiro de Geografia e Estatística, rose 0.29 percent in the month to mid-September, slowing from a 0.42 percent increase in the month through mid-August.

The inflation figure was lower than the 0.41 percent median forecast of 30 economists surveyed. The estimates ranged from 0.32 percent to 0.47 percent.

Food prices, a nagging pressure on inflation the past several months, contributed strongy to the slowdown in the IPCA index, the IBGE said, rising 0.87 percent compared with a 1.61 percent gain in the previous month.

Ethanol dropped 2.08 percent and phone rates fell 0.92 percent, also helping slow the inflation rate. Gasoline prices fell 0.86 percent:
:: :: :: :: :: :: :: ::

In the 12-month period through mid-September the IPCA index rose 4.2 percent compared with a 3.95 percent increase in the year through mid-August, the IBGE said.

Amongst the regional indices, the greatest rise in the IPCA-15 was for Recife (+0,69%), where the price for a liter of the gasoline rose by 7.66%. Goiânia (-0,08%) noted the sharpest drop in September.

The so-called IPCA-15 tracks prices from around the 15th of one month to the 15th of the next. The central bank, which has an inflation target this year of 4.5 percent, uses the IPCA as a guide when setting interest rates:

Instituto Brasileiro de Geografia e Estatística: IPCA-15 fica em 0,29% em setembro - September 21, 2007.

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Study: some first-generation biofuels could contribute to global warming because of N2O emissions

Yet another argument in favor of a Biopact with the South. A new study led by Paul Crutzen, winner of a Nobel Prize in Chemistry in 1995 for work on the formation and decomposition of ozone in the atmosphere, re-examines [*.pdf] the total emission of nitrous oxide (N2O) from crop production and concludes that growing and burning first-generation biofuel crops like corn and rapeseed may actually raise, rather than lower, net greenhouse gas emissions. Crops grown in the South, like sugarcane and other grasses, retain their climate change reducing potential and are a positive alternative to conventional fuels.

N2O is a by-product of fixed nitrogen application in agriculture and is a greenhouse gas with a global warming potential (GWP) 296 times larger than an equal mass of CO2.

Crutzen and his colleagues calculated that growing the most commonly used biofuel crops - rapeseed and corn - releases around twice the amount of N2O than previously thought, thereby wiping out any benefits from not using fossil fuels and potentially contributing to global warming. Crops like sugarcane and grasses have a far better balance (table, click to enlarge).

Note that Crutzen did not take into account the production of carbon-negative biofuels based on the geosequestration of CO2 - but this concept is in an experimental stage and has not yet reached broader scientific circles (earlier post and here for a feasibility study). Still, the findings are important for future life cycle analyses of biofuels:
When the extra N2O emission from biofuel production is calculated in “CO2-equivalent” global warming terms, and compared with the quasi-cooling effect of “saving” emissions of fossil fuel derived CO2, the outcome is that the production of commonly used biofuels, such as biodiesel from rapeseed and bioethanol from corn (maize), can contribute as much or more to global warming by N2O emissions than cooling by fossil fuel savings. Crops with less N demand, such as grasses and woody coppice species have more favourable climate impacts. This analysis only considers the conversion of biomass to biofuel. It does not take into account the use of fossil fuel on the farms and for fertilizer and pesticide production, but it also neglects the production of useful co-products. Both factors partially compensate each other. This needs to be analyzed in a full life cycle assessment. - P. J. Crutzen
The significance of it is that the supposed benefits of biofuels are even more disputable than had been thought hitherto. What we are saying is that growing many biofuels is probably of no benefit and in fact is actually making the climate issue worse. - Keith Smith, co-author, atmospheric scientist from the University of Edinburgh
The work is currently subject to open review in the journal Atmospheric Chemistry and Physics. Crutzen has declined to comment until that process is completed. The paper suggests that microbes convert much more of the nitrogen in fertilizer to nitrous oxide than previously thought—3 to 5 percent, compared to the widely accepted figure of 2 percent used by the International Panel on Climate Change (IPCC) to calculate the impact of fertilizers on climate change:
:: :: :: :: :: :: :: :: :: :: ::

For rapeseed biodiesel, which accounts for about 80 percent of the biofuel production in Europe, the relative warming due to nitrous oxide emissions is estimated at 1 to 1.7 times larger than the relative cooling effect due to saved fossil CO2 emissions. For corn bioethanol, dominant in the US, the figure is 0.9 to 1.5. Only sugarcane bioethanol—with a relative warming of 0.5 to 0.9—looks like a better alternative to conventional fuels.
As release of N2O affects climate and stratospheric ozone chemistry by the production of biofuels, much more research on the sources of N2O and the nitrogen cycle is urgently needed...Here we concentrated on the climate effects due only to required N fertilization in biomass production and we have shown that, depending on N content, the use of several agricultural crops for energy production can readily lead to N2O emissions large enough to cause climate warming instead of cooling by “saved fossil CO2”. What we have discussed is one important step in a life cycle analysis, i.e. the emissions of N2O, which must be considered in addition to the fossil fuel input and co-production of useful chemicals in biofuel production.

We have also shown that the replacement of fossil fuels by biofuels may not bring the intended climate cooling due to the accompanying emissions of N2O. There are also other factors to consider in connection with the introduction of biofuels. We have not yet considered the extent to which the high percentage of N-fertilizer which is not taken up by the plants, and the organic nitrogen in the harvested plant material, may stimulate CO2 uptake from the atmosphere; estimates for this effect are very uncertain. We conclude, however, that the relatively large emission of N2O exacerbates the already huge challenge of getting global warming under control. - P. J. Crutzen et al.

P. J. Crutzen, A. R. Mosier, K. A. Smith, and W. Winiwarter. "N2O release from agro-biofuel production negates global warming reduction by replacing fossil fuels" Atmos. Chem. Phys. Discuss., 7, 11191-11205, 2007.

AlphaGalileo: Biofuels could increase global warming with laughing gas, says Nobel prize-winning chemist - September 21, 2007

Biopact: A closer look at the revolutionary coal+biomass-to-liquids with carbon storage project - September 13, 2007

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Experts: Brazil victim of its own biofuels success, as ethanol price collapses

Can ultra-cheap fuel be a problem when the rest of the world suffers under record oil prices? It seems so. As consumers across the world feel the pinch when filling up their tanks with expensive gasoline, in Brazil experts are worried that ethanol is becoming too cheap too quickly. Record low sugar and ethanol prices are the result of overproduction and have been fueling the debate on how this will affect future investments and growth in the country's biofuels industry.

Sugar and ethanol prices have fallen around 35 percent since the beginning of the record 2007/08 cane crop and output is set to grow further with tens of new projects being implemented. For Brazil, there is only one way out: international exports. This requires the creation of a global ethanol market and an abandonment of current tariffs and non-tariff trade barriers. But governments in both the US and the EU prefer to protect their own farmers and refuse to give their consumers access to more sustainable and far cheaper fuels. Brazil now faces a catch-22: the local market is saturated, and an international market does not yet exist. Experts convened in Sertaozinho to debate the crisis.
I think there still isn't any international ethanol market. We're all working irrationally. There isn't any strategy either from the private sector or from the government. How much ethanol do we want to produce? Nobody knows. But the potential market is huge. - Roberto Rodrigues, director for the Inter-American Ethanol Commission
According to professor Luis Cortez (State University of Campinas), in theory, Brazil can replace all the world's current gasoline needs with ethanol, but this requires massive investments (earlier post and map, click to enlarge). The problem is that these investments are flowing in, but are putting the Brazilian ethanol sector on a faster growth track than is commercially reasonable, with collapsing prices as a consequence, says Plinio Nastari, president of Datagra consultancy. Projected investments in new mills are estimated to be around 17 billion reais (€6.5/US$9.1 billion), but the market suffers from poor regulatory structure and a lack of long-term planning to cope with this rush.

With expected demand for 720 million tonnes of cane by 2013/14, the sector should not grow more than 7.3 percent per year to avoid worsening the current oversupply, Nastari said. But Brazil's cane crop has risen an average of 9.9 percent each year since 2000, boosted by increasing ethanol demand.

Datagro projected demand for cane is currently higher than predicted by the consultancy a few years ago, but investments in new mills have surpassed what was forecast even more and are at an excruciatingly high level. There are 138 new ethanol projects on the table in Brazil. 79 of these are highly likely to be build, for 30 construction is moderately probable, while only 29 will not likely go beyond the planning stage:
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Sugar and ethanol prices have fallen around 35 percent since the beginning of the 2007/08 cane crop, and the drop's effect on the industry is raising concerns also in government.

Manuel Bertone, Production and Agroenergy Secretary in the Agriculture Ministry, said the disorganized way the market is growing will not be in line with the rise in demand, which could lead to even lower prices.
The market will not grow if we do not organize all parts of the production chain a way to keep security and stability (in supply). Besides that, if we do not have a regulatory basis, possibly no country will buy ethanol from us. - Manuel Bertone, Production and Agroenergy Secretary in the Agriculture Ministry
Bertone ruled out intervention in the sector but defended a dialogue between producers and the government. In order to develop the market Brazil needs to increase output faster than demand. But this will come at a heavy cost, already seen today: low prices. Bertone added that the biofuels market abroad is an extremely controlled market that would be hard to enter.

The launch of flex fuel vehicles in 2003 made it harder for analysts and producers to make demand projections, as consumption in this case depends totally on the relation between ethanol and gasoline prices. Normally, if the biofuel is 30 to 40 percent cheaper at the pump than gasoline, ethanol is a better option for flex-fuel car owners.

CheckBiotech: Brazil ethanol sector fears 'delirious' growth - September 20, 2007.

Biopact: World sugar prices keep falling, despite ethanol boom - July 22, 2007

Biopact: Brazilian biofuels can meet world's total gasoline needs - expert - May 21, 2007

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Report: U.S. ethanol sector does not need subsidies

The ethanol industry in the United States is booming and has achieved an impressive scale over the past two years. However, many critics have said this growth has come at a high cost for the American tax payer: the cost of all the tax breaks, direct subsidies and other benefits for corn-derived ethanol was estimated to total at least $5.1 billion last year (earlier post). Moreover, the sector is proteced by import tariffs on cheaper and more sustainable ethanol made in the developing world. Recently, a paper written for the 'OECD Roundtable on Sustainable Biofuels' (not affiliated with the OECD) warned that these subsidies are not effective, and that trade barriers prevent more sustainable and competitive biofuels from reaching the market (more here).

However, a new study by Dr Thomas Elam, agricultural economist for consulting firm FarmEcon, now shows that this heavy federal support is in fact not needed. The report titled "Fuel Ethanol Subsidies: An Economic Perspective" [*.pdf], states that with current oil prices, even America's corn-based ethanol, which is amongst the most costly biofuels, can survive without subsidies.
Ethanol is one of the most profitable enterprises in the United States today, but unfortunately a high percentage of those current profits come not from the marketplace, but from the federal treasury. Increased energy prices make it possible for the ethanol industry to thrive on its own. - Dr Thomas Elam, agricultural economist

In the chart above (click to enlarge) the breakeven ethanol value of corn is calculated based on the energy value of ethanol, current ethanol production costs, current ethanol yields and the current relationship between corn prices and distiller's dried grains with solubles (DDGS) prices. The chart uses the historic relationship between crude oil and U.S. wholesale gasoline prices to relate the value of gasoline to the value of crude oil.

At current crude oil and gasoline price levels coupled with the Federal subsidy the ethanol industry can afford to pay about twice the 2003-2005 average price of corn. As long as oil remains above $55 per barrel, and more importantly wholesale gasoline above about $1.90 per gallon, ethanol producers can pay more than 2003-2005 corn prices. If crude oil were to go to $90 per barrel corn would be affordable to ethanol producers at up to $6.00 per bushel, including the Federal subsidy.

According to the report, this shows clearly that the case can be made that the subsidy for ethanol, if there is to be one at all, should be based on gasoline prices, not a flat amount per gallon of ethanol used for fuel. In fact, if oil prices go high enough the government should consider taxing ethanol used for fuel to alleviate the effects of ethanol demand on food prices:
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According to Elam's study, federal supports, when fully implemented, will drive up the cost of corn and other grains by $34 billion per year. The ethanol boom is driving up the cost of food production, and could eventually cost a family of four about $460 a year in higher food costs.

Federal supports are severely distorting crop prices while adding little, if anything, to the stated goals of the renewable energy program, Elam said. The ethanol program is also increasing the federal outlays and has very little impact on U.S. dependence on foreign oil, the report says.

The study also contends that increased ethanol production will do little to reduce domestic dependence on foreign oil:
On a net energy basis, ethanol will not make a significant contribution to overall U.S. energy production/ If the ethanol industry achieves 100 percent E10 market share in the United States, it would take about 200 million tons of corn annually. This is equal to a 10 percent reduction in the current global grain supply. - Dr Thomas Elam, agricultural economist
The 51 cents per gallon tax credit given to fuel blenders who add ethanol to gasoline has caused significant increases in food costs and distorting farmer planting incentives, the report says.
Ethanol producers can easily afford to compete with U.S. livestock and poultry producers for corn. Even without subsidies, ethanol production would be expanding at a significant rate due to high gasoline prices and the improvements in ethanol production technology in recent years. - Dr Thomas Elam, agricultural economist
The American Meat Institute, National Chicken Council and National Turkey Federation commissioned Elam's study.

Elam, Thomas, "Fuel Ethanol Subsidies: An Economic Perspective" [*.pdf], Report commissioned by The National Turkey Federation, National Chicken Council, American Meat Institute - September 19, 2007.

Biopact: Subsidies for uncompetitive U.S. biofuels cost taxpayers billions - report - October 26, 2006

Biopact: Paper warns against subsidies for inefficient biofuels in the North, calls for liberalisation of market - major boost to idea of 'Biopact' - September 11, 2007

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University of Tennessee and Mascoma team up to build cellulosic ethanol biorefinery

The University of Tennessee and Mascoma Corporation plan [*.pdf] to jointly build and operate a 5 million gallon per year cellulosic ethanol biorefinery in Monroe County.

The principal product of the facility will be cellulosic ethanol derived from non-food biomass, like grasses such as switchgrass, wood chips and other cellulosic materials.

Because it does not compete with food or feed uses, using dedicated energy crops like switchgrass to produce cellulosic biofuels on marginal crop land is widely seen as the answer to producing affordable, domestic, renewable fuel without raising food or feed costs.

When operating at full capacity, the facility will require 170 tons per day of switchgrass and other agricultural and forest biomass. An $8 million farmer incentive program is under development to encourage local production of this new energy crop, switchgrass.

The comprehensive switchgrass program includes direct payments to farmers in advance of an established market for switchgrass. Participating farmers will receive high quality switchgrass seed for planting, as well as research and technical support related to switchgrass production.

Consolidated bioprocessing

Mascoma's focus is on genetically engineering thermophilic ethanol-producing bacteria in order to facilitate the transition of cellulose ethanol processing to a Consolidated Bioprocessing (CBP) configuration. CBP comes down to reducing the number of biologically mediated bioconversion steps into a single process. It is widely recognized as the simplest, lowest cost configuration for producing cellulosic ethanol.

Mascoma’s lead organism for thermophilic 'Simultaneous Saccarification and Fermentation' (tSSF) is Thermoanaerobacterium saccharolyticum. This organism has been modified to produce stoichiometric quantities of ethanol from a xylose feed. This strain is attractive for use in a tSSF configuration as the elevated fermentation temperature can substantially reduce cellulase requirements in an industrial processing operation:
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Location and logistics
The planned biorefinery will be located 35 miles south of Knoxville in the Niles Ferry Industrial Park in Vonore. Pending a successful permitting process, construction is expected to begin by the end of 2007 and the facility will be operational in 2009.

A key in the selection of the Monroe County site was the economic and agricultural development potential in the area, reflecting the agriculture-based Biofuels Initiative's goal of using ethanol production as an economic driver throughout the state, especially in rural communities.

The site sits in the heart of a productive farming region where the agricultural community has shown interest in the biofuels effort, says Dr. Kelly Tiller, director of external operations for the UT Office of Bioenergy Programs. An economist with the UT Institute of Agriculture, Tiller is also one of the authors of the business model for the Biofuels Initiative.

The Niles Ferry site also has all needed infrastructure to support the facility, and is close enough to Knoxville and Oak Ridge to allow easy movement by researchers and students to and from the site, Tiller explained.

The plant will be about one-tenth the size of a commercial production facility. This will allow researchers to fine-tune the operations and process used in order to create a system that can be expanded to larger plants across the state in coming years.

University of Tennessee Biofuels Initiative
The business partnership and plans for the facility are a result of the UT Biofuels Initiative [*.pdf], a research and business model designed to reduce dependence on foreign oil and provide significant economic and environmental benefits for Tennessee’s farmers and communities.

Tennessee is an ideal partner for Mascoma as the first state committed to producing switchgrass as an energy crop, said Bruce A. Jamerson, Mascoma's chief executive officer.

The demonstration scale research facility is also a complement to research efforts at the Oak Ridge National Laboratory, another key partner in the state's biofuels strategy. In June, the Oak Ridge National Laboratory was awarded $125 million from the U.S. Department of Energy to fund the Bioenergy Science Center, a research collaborative to address fundamental science and technology challenges to commercially producing cellulosic ethanol.

The Tennessee Biofuels Initiative, through the management operations of the demonstration biorefinery, will work with investigators at Oak Ridge National Laboratory to test and validate discoveries that could lead to enhanced efficiency in the conversion of cellulose to ethanol. The project teams view the biorefinery as a laboratory for large-scale chemistry experiments in cellulosic conversion to ethanol.

It is expected that eventually Tennessee could produce over 1 billion gallons of cellulosic ethanol a year, which could offset up to one-third of the state’s petroleum usage.

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IEA: China and India to continue to exert pressure on dwindling oil supplies

According to latest estimates of the International Energy Agency (IEA) to appear in the World Energy Outlook 2007 (WEO-2007) focusing this time on China and India, these rapidly expanding economies will continue to put pressure on tightening global oil supplies next year as they are projected to suck even more imported oil to feed their industries and meet transportation needs. This means sustained high oil prices, with grave consequences for developing countries as well as for India and China's poorer populations.

This year, the demand for oil in China is expected to increase by 5.9 per cent to 7.6 million barrels per day. In 2008, the demand will rise 5.7 per cent to eight million barrels, the Paris-based agency says.

The IEA expects oil demand in India to rise 4.3 per cent this year to almost 2.8 million barrels, but growth should slow down to 2.3 per cent in 2008, given the resumption of naphtha's structural decline.
The strength of gasoline sales [in India] is directly related to the country's rising vehicle fleet, which is expanding at some 15 per cent per year and is poised to exceed two million vehicles by the end of the decade, compared with 1.3 million in 2006. - IEA, WEO-2007, China and India Insights
China imports about 40 per cent of its crude oil requirements, while India imports around 76 per cent of its overall crude needs.

The IEA, which acts as an energy policy advisor to 26 member countries, last week revised downward its 2007 forecast for global oil product demand to 85.9 million barrels a day, largely as a result of high prices and poor weather in countries comprising the Organisation for Economic Cooperation and Development (OECD).

However, the IEA said global oil prices are unlikely to see a drastic fall in the near term as tight fundamentals and renewed geopolitical concerns outweigh worries of an economic downturn:
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Crude oil futures in the US surged to a record high of $81.90 this week.

The IEA's report, available in November, presents new and more detailed models for both China and India to allow a more comprehensive analysis of different future energy paths.

WEO-2007 analyses the impact of rising energy use in these countries on:
- international energy prices;
- investment needs and financing arrangements;
- energy-related greenhouse gas and other emissions; and
- energy and non-energy international trade flows.

The prospects for coal use, the role of nuclear, renewables, energy-efficiency improvements and urban and rural energy poverty in these two countries are all examined in depth. The work rests on close collaboration with public authorities and private organisations in China and India, as well as with key international organisations.

The energy challenges for China and India are enormous. How they meet those challenges will have farreaching consequences for the rest of the world. With extensive data, detailed projections and in-depth analysis, WEO-2007 provides invaluable insights into the prospects for these two emerging energy giants and the consequences of their choices for the global economy.

We will present a more in-depth analysis of the findings as soon as the report is released.

Gulf News: India and China expected to exert pressure on dwindling oil supplies - September 21, 2007.

IEA: World Energy Outlook 2007 - China and India Insights - to be released on November 7, 2007.

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Volvo opens world's first carbon-neutral vehicle factory: biomass, wind, solar

The Volvo Group today opened the first vehicle plant in the world that is completely free from carbon dioxide (CO2): Volvo Trucks’ plant in Ghent, Belgium. The Volvo Group’s efforts pertaining to CO2-free plants are fully in line with EU’s goal for reducing carbon-dioxide emissions by 20% in Europe by 2020. A combination of biomass, wind, solar and bio-oil provides the renewable energy to manufacture around 35,000 trucks per year.
Our ambition is to make all our plants CO2-free plants and Ghent is the first. It is not an easy undertaking, but we are prepared to try different alternatives to achieve our goal for CO2-free production in our plants. - Leif Johansson, Volvo CEO
The Volvo Trucks website has a handy tool that allows you to calculate the energy needed to manufacture a truck and the emissions that go with it. It takes around 103MWh of energy to make one, with CO2 emissions ranging between 14 and 15 tonnes, depending on the model.

Already in 2005, the Volvo Group decided to transform the Volvo Trucks plant in Tuve, Sweden into a CO2-free vehicle plant and work is currently in progress on the completion of the local planning and an application for environmental permits has been prepared. The Volvo Trucks plant in Umeå, Sweden is also undergoing transformation to become CO2-free.

For Ghent, the switch implied investments in biofuels and wind power to provide the plant with electricity and heat that does not add any carbon dioxide to the atmosphere.

The Ghent factory decided to construct a new pellet-fired biomass plant which supplies 70% of the heating requirements. Energy for the combustion process is provided by solar cells on the roof. Three wind turbines on the site cover half of the facility’s electricity requirements. 30% is provided by an oil-fired boiler that was converted to burn bio-oil. The remaining electricity consists of certified green energy supplied by Belgium's leading energy company, Electrabel:
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The Ghent plant has an annual production of 35,000 trucks. It employs around 2,500 people.

Volvo is leading a transition to cleaner energy, both in the production of cars and trucks, as well as in the fuels they utilize. Recently the Volvo Group released results of an extensive well-to-wheel analysis of seven different biofuels for use in demonstration trucks that run 100% on the renewable fuel without emitting any environmentally harmful carbon dioxide.

The carbon-neutral trucks were equipped with diesel engines that have been modified to operate with renewable liquid and gaseous fuels: biodiesel, biogas combined with biodiesel, ethanol/methanol, DME, synthetic diesel and hydrogen gas combined with biogas (earlier post).

The group is also developing hybrid trucks that promise to reduce fuel consumption by 35 per cent.

Volvo Trucks Global: presentation of the carbon-neutral plant in Ghent, Belgium.

Volvo Trucks Global: Environmental Product Declaration, an interactive tool showing the lifecycle emissions for different trucks.

Biopact: Volvo releases comprehensive analysis of seven biofuels for use in carbon-neutral trucks - August 29, 2007

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