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    Austrian bioenergy group Cycleenergy acquired controlling interest in Greenpower Projektentwicklungs GmbH, expanding its biomass operational portfolio by 16 MW to a total of 22 MW. In the transaction Cycleenergy took over 51% of the company and thereby formed a joint venture with Porr Infrastruktur GmbH, a subsidiary of Austrian construction company Porr AG. Greenpower operates two wood chip CHP facilities in Upper and Lower Austria, each with an electric capacity of 2 MW. The plants have been in operation since the middle of last year and consume more than 30,000 tonnes of wood chips and are expected to generate over €5 million in additional revenue. Cycleenergy - February 6, 2007.

    The 2008 edition of Bioenergy World Europe will take place in Verona, Italy, from 7 to 10 February. Gathering a broad range of international exhibitors covering gaseous, liquid and solid bioenergy, the event aims to offer participants the possibility of developing their business through meetings with professionals, thematic study tours and an international forum focusing on market and regulatory issues, as well as industry expertise. Bioenergy World Europe - February 5, 2007.

    The World GTL Summit will take place between 12 – 14th May 2008 in London. Key topics to be discussed include: the true value of Gas-to-Liquids (GTL) projects, well-to-wheels analyses of the GTL value chain; construction, logistics and procurement challenges; the future for small-scale Fischer-Tropsch (FT) projects; Technology, economics, politics and logistics of Coal-to-Liquids (CTL); latest Biomass-to-Liquids (BTL) commercialisation initiatives. CWC Exhibitions - February 4, 2007.

    The 4th Annual Brussels Climate Change Conference is announced for 26 - 27 February 2008. This joint CEPS/Epsilon conference will explore the key issues for a post-Kyoto agreement on climate change. The conference focuses on EU and global issues relating to global warming, and in particular looks at the following issues: - Post-2012 after Bali and before the Hokkaido G8 summit; Progress of EU integrated energy and climate package, burden-sharing renewables and technology; EU Emissions Trading Review with a focus on investment; Transport Climatepolicy.eu - January 28, 2007.

    Japan's Marubeni Corp. plans to begin importing a bioethanol compound from Brazil for use in biogasoline sold by petroleum wholesalers in Japan. The trading firm will import ETBE, which is synthesized from petroleum products and ethanol derived from sugar cane. The compound will be purchased from Brazilian petrochemical company Companhia Petroquimica do Sul and in February, Marubeni will supply 6,500 kilolitres of the ETBE, worth around US$7 million, to a biogasoline group made up of petroleum wholesalers. Wholesalers have been introducing biofuels since last April by mixing 7 per cent ETBE into gasoline. Plans call for 840 million liters of ETBE to be procured annually from domestic and foreign suppliers by 2010. Trading Markets - January 24, 2007.

    Toyota Tsusho Corp., Ohta Oil Mill Co. and Toyota Chemical Engineering Co., say it and two other firms have jointly developed a technology to produce biodiesel fuel at lower cost. Biodiesel is made by blending methanol into plant-derived oil. The new technology requires smaller amounts of methanol and alkali catalysts than conventional technologies. In addition, the new technology makes water removal facilities unnecessary. JCN Network - January 22, 2007.

    Finland's Metso Paper and SWISS COMBI - W. Kunz dryTec A.G. have entered a licence agreement for the SWISS COMBI belt dryer KUVO, which allows biomass to be dried in a low temperature environment and at high capacity, both for pulp & paper and bioenergy applications. Kauppalehti - January 22, 2007.

    Record warm summers cause extreme ice melt in Greenland: an international team of scientists, led by Dr Edward Hanna at the University of Sheffield, has found that recent warm summers have caused the most extreme Greenland ice melting in 50 years. The new research provides further evidence of a key impact of global warming and helps scientists place recent satellite observations of Greenland´s shrinking ice mass in a longer-term climatic context. Findings are published in the 15 January 2008 issue of Journal of Climate. University of Sheffield - January 15, 2007.

    Japan's Tsukishima Kikai Co. and Marubeni Corp. have together clinched an order from Oenon Holdings Inc. for a plant that will make bioethanol from rice. The Oenon group will invest around 4.4 billion yen (US$40.17 million) in the project, half of which will be covered by a subsidy from the Ministry of Agriculture, Forestry and Fisheries. The plant will initially produce bioethanol from imported rice, with plans to use Hokkaido-grown rice in the future. It will produce 5 million liters per year starting in 2009, increasing output to 15m liters in 2011. The facility will be able to produce as much as 50,000 liters of bioethanol from 125 tons of rice each day. Trading Markets - January 11, 2007.

    PetroSun, Inc. announced today that its subsidiary, PetroSun BioFuels Refining, has entered into a JV to construct and operate a biodiesel refinery near Coolidge, Arizona. The feedstock for the refinery will be algal oil produced by PetroSun BioFuels at algae farms to be located in Arizona. The refinery will have a capacity of thirty million gallons and will produce 100% renewable biodiesel. PetroSun BioFuels will process the residual algae biomass into ethanol. MarketWire - January 10, 2007.

    BlueFire Ethanol Fuels Inc, which develops and operates carbohydrate-based transportation fuel production facilities, has secured capital liquidity for corporate overhead and continued project development in the value of US$15 million with Quercus, an environmentally focused trust. BlueFire Ethanol Fuels - January 09, 2007.

    Some $170 billion in new technology development projects, infrastructure equipment and construction, and biofuel refineries will result from the ethanol production standards contained the new U.S. Energy Bill, says BIO, the global Biotechnology Industry Organization. According to Brent Erickson, BIO's executive vice president "Such a new energy infrastructure has not occurred in more than 100 years. We are at the point where we were in the 1850s when kerosene was first distilled and began to replace whale oil. This technology will be coming so fast that what we say today won't be true in two years." Chemical & Engineering News - January 07, 2007.

    Scottish and Southern Energy plc, the UK's second largest power company, has completed the acquisition of Slough Heat and Power Ltd from SEGRO plc for a total cash consideration of £49.25m. The 101MW CHP plant is the UK’s largest dedicated biomass energy facility fueled by wood chips, biomass and waste paper. Part of the plant is contracted under the Non Fossil Fuel Obligation and part of it produces over 200GWH of output qualifying for Renewable Obligation Certificates (ROCs), which is equivalent to around 90MW of wind generation. Scottish & Southern Energy - January 2, 2007.

    PetroChina Co Ltd, the country's largest oil and gas producer, plans to invest 800 million yuan to build an ethanol plant in Nanchong, in the southwestern province of Sichuan, its parent China National Petroleum Corp said. The ethanol plant has a designed annual capacity of 100,000 tons. ABCMoneyNews - December 21, 2007.

    Mexico passed legislation to promote biofuels last week, offering unspecified support to farmers that grow crops for the production of any renewable fuel. Agriculture Minister Alberto Cardenas said Mexico could expand biodiesel faster than ethanol. More soon. Reuters - December 20, 2007.

    Oxford Catalysts has placed an order worth approximately €700,000 (US$1 million) with the German company Amtec for the purchase of two Spider16 high throughput screening reactors. The first will be used to speed up the development of catalysts for hydrodesulphurisation (HDS). The second will be used to further the development of catalysts for use in gas to liquid (GTL) and Fischer-Tropsch processes which can be applied to next generation biofuels. AlphaGalileo - December 18, 2007.

    According to the Instituto Brasileiro de Geografia e Estatística (IBGE), Brazil's production of sugarcane will increase from 514,1 million tonnes this season, to a record 561,8 million tonnes in the 2008/09 cyclus - an increase of 9.3%. New numbers are also out for the 2007 harvest in Brazil's main sugarcane growing region, the Central-South: a record 425 million tonnes compared to 372,7 million tonnes in 2006, or a 14% increase. The estimate was provided by Unica – the União da Indústria de Cana-de-Açúcar. Jornal Cana - December 16, 2007.

    The University of East Anglia and the UK Met Office's Hadley Centre have today released preliminary global temperature figures for 2007, which show the top 11 warmest years all occurring in the last 13 years. The provisional global figure for 2007 using data from January to November, currently places the year as the seventh warmest on records dating back to 1850. The announcement comes as the Secretary-General of the World Meteorological Organization (WMO), Michel Jarraud, speaks at the Conference of the Parties (COP) in Bali. Eurekalert - December 13, 2007.

    The Royal Society of Chemistry has announced it will launch a new journal in summer 2008, Energy & Environmental Science, which will distinctly address both energy and environmental issues. In recognition of the importance of research in this subject, and the need for knowledge transfer between scientists throughout the world, from launch the RSC will make issues of Energy & Environmental Science available free of charge to readers via its website, for the first 18 months of publication. This journal will highlight the important role that the chemical sciences have in solving the energy problems we are facing today. It will link all aspects of energy and the environment by publishing research relating to energy conversion and storage, alternative fuel technologies, and environmental science. AlphaGalileo - December 10, 2007.

    Dutch researcher Bas Bougie has developed a laser system to investigate soot development in diesel engines. Small soot particles are not retained by a soot filter but are, however, more harmful than larger soot particles. Therefore, soot development needs to be tackled at the source. Laser Induced Incandescence is a technique that reveals exactly where soot is generated and can be used by project partners to develop cleaner diesel engines. Terry Meyer, an Iowa State University assistant professor of mechanical engineering, is using similar laser technology to develop advanced sensors capable of screening the combustion behavior and soot characteristics specifically of biofuels. Eurekalert - December 7, 2007.

    Lithuania's first dedicated biofuel terminal has started operating in Klaipeda port. At the end of November 2007, the stevedoring company Vakaru krova (VK) started activities to manage transshipments. The infrastructure of the biodiesel complex allows for storage of up to 4000 cubic meters of products. During the first year, the terminal plans to transship about 70.000 tonnes of methyl ether, after that the capacities of the terminal would be increased. Investments to the project totaled €2.3 million. Agrimarket - December 5, 2007.

    New Holland supports the use of B100 biodiesel in all equipment with New Holland-manufactured diesel engines, including electronic injection engines with common rail technology. Overall, nearly 80 percent of the tractor and equipment manufacturer's New Holland-branded products with diesel engines are now available to operate on B100 biodiesel. Tractor and equipment maker John Deere meanwhile clarified its position for customers that want to use biodiesel blends up to B20. Grainnet - December 5, 2007.

    According to Wetlands International, an NGO, the Kyoto Protocol as it currently stands does not take into account possible emissions from palm oil grown on a particular type of land found in Indonesia and Malaysia, namely peatlands. Mongabay - December 5, 2007.

    Malaysia's oil & gas giant Petronas considers entering the biofuels sector. Zamri Jusoh, senior manager of Petronas' petroleum development management unit told reporters "of course our focus is on oil and gas, but I think as we move into the future we cannot ignore the importance of biofuels." AFP - December 5, 2007.

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Thursday, November 29, 2007

Scientists find ocean fertilization won't work - final blow to controversial geoengineering option

Scientists have revealed an important discovery that raises serious doubts concerning the viability of plans to fertilize the ocean to solve global warming, a projected $100 billion 'geoengineering' venture that has attracted a lot of criticism from environmentalists, climate scientists, civil society and oceanographers who think the scheme may destroy marine environments. The concept was recently deemed 'not scientifically justified' by the International Maritime Organisation (IMO) (earlier post). The bioenergy community for its part is opposed to the idea, because it distracts attention from a much safer solution to global warming, namely the production of negative emissions from bioenergy. But now scientists deal the final blow to the controversial concept, saying it simply won't work.

Ocean fertilization, the process of adding iron or other nutrients to the ocean to cause large algal blooms, has been proposed as a possible 'geoengineering' solution to global warming because the growing algae absorb carbon dioxide as they grow. But research performed at Stanford University, the Carnegie Institution of Washington and Oregon State University, published in the Journal of Geophysical Research, now concludes that ocean fertilization is not an effective method of reducing CO2 in the atmosphere because of the seasonal dynamics of the way in which algae sink to the bottom of the ocean.

This technique of ocean fertilization, which is analogous to adding fertilizer to a lawn to help the grass grow, only reduces carbon dioxide in the atmosphere if the carbon incorporated into the algae sinks to deeper waters. This process, which scientists call the 'Biological Pump' (image, click to enlarge), has been thought to be dependent on the abundance of algae in the top layers of the ocean. The more algae in a bloom, the more carbon is transported, or 'pumped', from the atmosphere to the deep ocean.

To test this theory, researchers compared the abundance of algae in the surface waters of the world's oceans with the amount of carbon actually sinking to deep water. They found clear seasonal patterns in both algal abundance and carbon sinking rates. However, the relationship between the two was surprising: less carbon was transported to deep water during a summertime bloom than during the rest of the year. This analysis has never been done before and required designing specialized mathematical algorithms. By jumping a mathematical hurdle the scientists found a new globally synchronous signal.
This discovery is very surprising. If, during natural plankton blooms, less carbon actually sinks to deep water than during the rest of the year, then it suggests that the Biological Pump leaks. More material is recycled in shallow water and less sinks to depth, which makes sense if you consider how this ecosystem has evolved in a way to minimize loss. Ocean fertilization schemes, which resemble an artificial summer, may not remove as much carbon dioxide from the atmosphere as has been suggested because they ignore the natural processes revealed by this research. - Dr. Michael Lutz, lead author, University of Miami's Rosenstiel School of Marine and Atmospheric Science
The global study of Dr. Lutz and colleagues suggests that greatly enhanced carbon sequestration should not be expected no matter the location or duration of proposed large-scale ocean fertilization experiments.

According to the researchers, the limited duration of previous ocean fertilization experiments may not be why carbon sequestration wasn't found during those artificial blooms. This apparent puzzle could actually reflect how marine ecosystems naturally handle blooms and agrees with our findings. A bloom is like ringing the marine ecosystem dinner bell. The microbial and food web dinner guests appear and consume most of the fresh algal food:
:: :: :: :: :: :: :: :: :: :: :: ::

The study highlights the need to understand natural ecosystem processes, especially in a world where change is occurring so rapidly, concluded Dr. Lutz.

This study closely follows a September Ocean Iron Fertilization symposium at the Woods Hole Oceanographic Institution (WHOI) attended by leading scientists, international lawyers, policy makers, and concerned representatives from government, business, academia and environmental organizations.

Topics discussed included potential environmental dangers, economic implications, and the uncertain effectiveness of ocean fertilization. To date none of the major ocean fertilization experiments have verified that a significant amount of deep ocean carbon sequestration occurs:

Some scientists have suggested that verification may require more massive and more permanent experiments. Together with commercial operators they plan to go ahead with large-scale and more permanent ocean fertilization experiments and note that potential negative environmental consequences must be balanced against the harm expected due to ignoring climate change.

During the Ocean Iron Fertilization meeting Dr. Hauke Kite-Powell, of the Marine Policy Center at WHOI, estimated the possible future value of ocean fertilization at $100 billion of the emerging international carbon trading market, which has the goal of mitigating global warming. However, according to Professor Rosemary Rayfuse, an expert in International Law and the Law of the Sea at the University of New South Wales, Australia, who also attended the Woods Hole meeting, ocean fertilization projects are not currently approved under any carbon credit regulatory scheme and the sale of offsets or credits from ocean fertilization on the unregulated voluntary markets is basically nothing short of fraudulent.
There are too many scientific uncertainties relating both to the efficacy of ocean fertilization and its possible environmental side effects that need to be resolved before even larger experiments should be considered, let alone the process commercialized. All States have an obligation to protect and preserve the marine environment and to ensure that all activities carried out under their jurisdiction and control, including marine scientific research and commercial ocean fertilization activities do not cause pollution. Ocean fertilization is 'dumping' which is essentially prohibited under the law of the sea. There is no point trying to ameliorate the effects of climate change by destroying the oceans - the very cradle of life on earth. Simply doing more and bigger of that which has already been demonstrated to be ineffective and potentially more harmful than good is counter-intuitive at best. - Professor Rosemary Rayfuse, University of New South Wales
The findings of Dr. Lutz and colleagues coincide with and affirm this month's decision of the London Convention (the International Maritime Organization body that oversees the dumping of wastes and other matter at sea) to regulate controversial commercial ocean fertilization schemes. This gathering of international maritime parties advised that such schemes are currently not scientifically justified.

Strategies to sequester atmospheric carbon dioxide, including the enhancement of biological sinks through processes such as ocean fertilization, will be considered by international governmental representatives during the thirteenth United Nations Framework Convention on Climate Change conference in Bali next month.

Virtually all of the radical geoengineering options proposed so far have been rejected for being too risky. These include emulating volcanoes' cooling effects by pumping sulphur into the atmosphere (debunked as outright dangerous to the planet - earlier post), creating a giant space mirror (which would be prohibitively costly), or generating highly reflective clouds (more here). Most of these proposals have been simulated and some have been shown to be full of uncertainties and hence generate a high number of risks (previous post). Other, safer proposals have been found to be too costly (a recent example).

One of the only geoengineering proposals seen as economically viable, environmentally safe and efficient, is the production of carbon-negative bioenergy. By planting biomass (trees, energy crops), and utilising them as feedstocks for energy production to replace fossil fuels, a 'carbon-neutral' form of energy is obtained. But when the CO2 that is released into the atmosphere during this process is captured and locked up - either in geological formations or in soils - then carbon-negative energy and fuels can be generated. Scientists have found that, when implemented on a planetary scale (hence 'geoengineering'), such negative emissions energy systems can take us back to pre-industrial atmospheric CO2 levels by mid century (previous post, here and here).

These 'bio-energy with carbon storage' (BECS) systems are currently becoming the object of more attention in the energy and climate change community. With these systems it becomes possible to take historic CO2 emissions back out of the atmosphere. Other renewables, like wind or solar energy, are 'carbon neutral' at best (schematic, click to enlarge). That is, they do not add new emissions to the atmosphere. But BECS systems go much further: they actually take carbon dioxide emissions from the past out of the carbon cycle, thus radically tackling the main cause of climate change. Now that we are facing the potential doom scenario of 'abrupt climate change', negative emissions bioenergy will have to be promoted.

Michael J. Lutz, Ken Caldeira, Robert B. Dunbar, Michael J. Behrenfeld, "Seasonal rhythms of net primary production and particulate organic carbon flux to depth describe the efficiency of biological pump in the global ocean", Journal of Geophysical Research, Vol. 112, 2007, C10011, doi:10.1029/2006JC003706.

Eurekalert: New research discredits $100B global warming 'fix' - November 29, 2007.

Biopact: International maritime body rejects risky ocean geoengineering - November 09, 2007

Biopact: The end of a utopian idea: iron-seeding the oceans to capture carbon won't work - April 26, 2007

Biopact: WWF condemns Planktos Inc. iron-seeding plan in the Galapagos - June 27, 2007

Bioapct: Scientists propose new geoengineering option: increasing ocean's alkalinity to soak up more carbon dioxide - November 19, 2007

Biopact: IPCC to warn of 'abrupt' climate change: emergency case for carbon-negative biofuels kicks in - November 16, 2007

Biopact: Scientists propose artificial trees to scrub CO2 out of the atmosphere - but the real thing could be smarter - October 04, 2007

Biopact: A quick look at 'fourth generation' biofuels - October 08, 2007

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Africa-centered biofuel and oil company Energem lists on the AIM

Canada's Energem Resources Inc announced that it has been listed on the London Stock Exchange's Alternative Investment Market (AIM) and is trading under the symbol ENM. Energem is an energy and biofuels company primarily engaged in the African energy sector, with several concrete biofuel projects being implemented. Energem produces ethanol from molasses in Kenya, while the energy crop of choice for a large biodiesel project in Mozambique is jatropha curcas, the hardy shrub that yields inedible oil. Energem disposed of certain non-core mining and up-stream oil and gas assets, to focus increasingly on renewable fuels.

The company now identifies the following as its core markets:
  • Mid-Stream Oil - refined oil product distribution and sales, storage and infrastructure development: operations in Nigeria and Malawi and a methanol blended fuel manufacturing and sales project in Beijing, China.
  • Biofuels - production, sale and distribution of crude and refined biofuels, including: ethanol production in Kenya and a jatropha-based biodiesel development project in Mozambique (previous post)
  • Trading and Logistics - procurement, supply and logistics management to industry in sub-Saharan Africa.
Energem believes that demand and growth potential in its target markets is strong and that the group is well placed in terms of its African expertise and experience to become a significant player in these markets.

Oil prices are expected to remain high whilst, at the same time, the pressure to reduce dependency on carbon-based and non-renewable sources of energy is likely to increase. This pressure is expected to develop the biofuels market in which the group is now focussed, with African countries acting as both consumers (Kenya) and exporters (Mozambique).


Energem has initiated its first jatropha curcas farming project in the Bilene District of the Gaza province in Mozambique. The project operations are conducted through the ventures wholly owned Mozambican subsidiary, Energem Renewable Energy.

The initial land allocated to the project (1000 ha) will be scaled up dramatically over the life of the project and it is anticipated that by the time this project reaches maturity the land size of the farming operations will be anything from 60,000 hectares to 200,000 hectares:
:: :: :: :: :: :: :: :: :: :: :: ::

The project enjoys the full support at all government and provincial levels and employs anything from 200 – 300 people, with this figure is set to increase.

It is intended that the commercial crop of jatropha seed harvested from the farming operations will be processed to produce a crude biodiesel which will be exported to the projects target market, in the European Union. Initial testing of research crops and oils produced therefrom fall within the EU specification for biodiesel.

Jatropha curcas has been specifically chosen as the projects principal feedstock crop. Jatropha is a hardy, inedible plant, whose seed produces a relatively high yield of oil when pressed. The cost of producing crude biodiesel from Jatropha is low when compared to current palm oil and rapeseed feedstock. The land on which the project is farming does not compete with ordinary feed crop land.

Energem is the controlling shareholder in the Spectre International Ltd, which manages the Kisumu ethanol plant in Kenya. The molasses-based plant was initiated in the late 1970’s as a state-owned project that was subsequently mothballed in the eighties. It was acquired by Spectre in 2003, who immediately commenced with a rehabilitation project that resulted in the commissioning of the plant in 2004. The yeast plant was completed in 2006.

Energem is the controlling shareholder in Spectre with a 55% share. A local partner, with manufacturing and distribution experience in the region owns 40% while a development trust holds 5% for the benefit of the local community.

Independent valuation and an engineering report completed in March 2004 placed plant pre-commissioning value at US$24 million. The plant replacement value estimated at approx US$100 million, with Energem’s 55% interest included at the book value of US$24 million.

Currently a daily output of 60,000 litres has been achieved whilst Energem focuses on increasing the yeast production and maximizing the usage of natural by products. Production output of up to 120,000 litres per day can be achieved with a marginal investment.

Current products include industrial ethanol for blending with liquid (bio-fuels), potable alcohol for beverages and chemical industries, and yeast.

Besides having access to the water supplied by Lake Victoria the plant is located in the center of a sugar cane growing region where it’s most important raw material, molasses, is readily available.

The plant is well positioned to supply ethanol as a fuel additive to Kenya, Uganda and other nearby countries and this strategy is in line with local governmental aspiration and also complimentary to mid-stream oil activities of the Energem Group.

Through the introduction to the AIM the directors are seeking access to London's capital markets and a broader investor base: no new money is being raised at this stage and no existing shares are being sold by the current shareholders. Major shareholders include the Board, who in aggregate own approximately 28% of the shares in issue, RAB Special Situations (Master) Fund Limited, which holds approximately 17% of the shares in issue and RAB Energy Fund Limited, which holds approximately 8% the shares in issue. Canaccord Adams Limited is acting as Nominated Adviser (NOMAD) and broker to Energem.

Energem: Energem Resources Inc - Announces listing on the London Stock Exchange - Alternative Investment Market (AIM) [*.pdf] - November 26, 2007.

Biopact: Energem acquires jatropha biodiesel project in Mozambique - August 02, 2007

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Russia's Tambov region to export ethanol to the EU - Putin reiterates Russia's biofuel potential

A large project to produce bioethanol from sugar beet processing waste is currently under review by the Tambov region's administration, in South-West Russia. The plan is to establish a production unit with an annual capacity of 250,000 tons per annum (317.5 million liters/83.9 million gallons). The output will be entirely destined for export to Europe, because high Russian taxes on alcohol and alcohol-containing liquids make the use of the fuel in a domestic context not cost-effective.

The Tambov oblast government is studying an initial investment of €200 million for the project, to be located in the capital city Tambov, around 450km South-East of Moscow. Residues from sugar beet processing will be the feedstock. Sugar beet pulp is an abundant waste stream, usually used as low value animal feed or disposed of at additional cost. In 2007, gross production of sugar beet in the Tambov region totaled 2.7 million tons.

On November 27, Russian president Vladimir Putin and Minister of Agriculture Alexey Gordeev told media that, even though Russia is an oil and gas giant, it will actively pursue opportunities to participate in the growing global bioenergy market. The Russian President has requested Gordeev to look into enhancing the business climate for expansion in bioethanol production in the country. Putin said Russia, being the world's largest country with enormous forest resources, has a very important, currently untapped potential for both solid and liquid biofuels.

He cited the Tambov project as a first example of the emergence of an export oriented bio-industry. Gordeev added that Russia has already launched a bioethanol plant in Omsk oblast, with another rapeseed crushing facility in Tatarstan now under construction. Gordeev referred to the fact the EU will need to cultivate biomass on one third of its farm land to meet the region's biofuel targets. Russia could help meet these by exporting fuels to the Union.

Putin reiterated his statement of last month, when he said he sees no objections to Russians "who work in the countryside to take some of the market share of our petroleum and gas producers", effectively encouraging those with plans in the bioenergy sector to go forward:
:: :: :: :: :: :: :: :: :: ::

Recent projections by researchers working for the IEA's Bioenergy Task 40 show the Commonwealth of Independent States (former Soviet Union) together with the Baltics have a combined sustainable bioenergy capacity of maximum 199 Exajoules by 2050 (earlier post), or roughly 32.6 billion barrels of oil equivalent energy per year. This comes down to 89 million barrels per day, or roughly the same amount as the world's total current oil consumption.

Earlier this year, Russia's agriculture minister Alexej Gordejev estimated the country has 20 million hectares of low value land available immediately for bioenergy. A short term goal would be to produce a whopping 1 billion tons of biomass for exports, roughly the equivalent of 15 Ej of energy, or 2.4 billion barrels of oil equivalent per year (earlier post). That is around 6.7 million barrels of oil per day; Russia currently produces some 9.1 million bpd of fossil oil.

Russia has also been cooperating with Germany to study future biomass and bioenergy production opportunities. First results of these exchanges emerged, when two German companies, PPM Technologie Gruppe and Prokon pledged to spend about US$25 million and US$29 million, respectively, to build a 100,000-tonne (110,000-ton) biofuel plant and a 50,000-tonne (55,000-ton) rapeseed processing facility in Krasnodar, Russia.

Siberian financial and economic information: Tambov Region Set to Export Biofuel - November 29, 2007.

Energy Current: Russia steps up biofuel chase - November 2007.

Biopact: Putin encourages farmers to produce biofuels: Russia as a green energy giant - October 21, 2007

Biopact: Green giant Russia to produce 1 billion tons of biomass for exports - February 03, 2007

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VeraSun Energy and US BioEnergy announce merger agreement: combined ethanol capacity of more than 1.6 billion gallons

VeraSun Energy Corp. and US BioEnergy Corp. today announced they have entered into a definitive merger agreement, which has been unanimously approved by the board of directors of each company. The merger is expected to create a stronger business platform by improving access to capital and allowing the combined company to leverage technology and operating experience across its entire plant fleet. The merger is also expected to be accretive to VeraSun’s earnings in the first full fiscal year of combined operations, and the combined company is projected to have a market capitalization of approximately $1.5 billion.

Upon completion of the merger, the combined company will have nine ethanol production facilities in operation and seven additional facilities under construction (table, click to enlarge). By the end of 2008, the company is expected to have a total production capacity of more than 1.6 billion gallons (6.057 billion liters) per year, or roughy 73,000 barrels of oil equivalent per day, as well as 16 facilities constructed by Fagen, Inc. and utilizing ICM process technology. Through the merger, the employees of both companies will be integrated into a combined work force.

The merger is expected to close during the first quarter of 2008, pending shareholder approval, anti-trust regulatory clearance and the completion of other customary conditions. Under the merger agreement, 0.81 share of VeraSun common stock will be issued for each outstanding share of US BioEnergy common stock, representing a premium of approximately 11 percent based on November 23, 2007, closing prices. The existing VeraSun shares will remain outstanding and will represent approximately 60 percent of the shares outstanding after the merger:
:: :: :: :: :: :: :: ::
VeraSun Chairman, CEO and President Donald L. Endres will remain CEO of the combined company, and US BioEnergy President and CEO Gordon Ommen will serve as chairman following the closing of the merger. VeraSun Senior Vice President and Chief Financial Officer Danny C. Herron will become president of the combined company. The combined entity will retain the VeraSun name and trade under VeraSun’s existing NYSE ticker symbol, VSE.
This merger is an opportunity for two leading companies in the renewable fuels industry to capitalize on synergies and provide value for shareholders. It also underscores the commitment of each company to execute on its growth strategy to become a large-scale, low-cost ethanol producer. We are pleased with the opportunity to build a very unique industry platform. - Donald L. Endres, VeraSun Chairman, CEO and President
We’re excited about the merger because it brings together two talented and high-performing teams whose passion is to reduce our nation’s dependence on foreign oil through the production of clean renewable biofuels. By harnessing the collective strength of both organizations, we expect to reach 1.6 billion gallons of ethanol production capacity by the end of 2008, making us a global leader in ethanol production. - Gordon Ommen, US BioEnergy President and CEO
In connection with the merger, holders of a significant percentage of the outstanding shares of each company have agreed to vote in favor of the transaction.

Morgan Stanley & Co. Incorporated is serving as financial adviser, and Cravath, Swaine & Moore LLP is acting as legal counsel for VeraSun in the transaction. UBS Securities LLC is serving as financial adviser, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel for US BioEnergy in the transaction.

VeraSun Energy Corporation, headquartered in Brookings, SD, is a leading producer of renewable fuel. Founded in 2001, the company has 560 million gallons per year (MMGY) of production capacity through five operating ethanol production facilities in Aurora, SD, Fort Dodge, IA, Charles City, IA, Linden, IN and Albion, NE. Four facilities are currently either under construction or development in Hartley, IA, Welcome, MN, Reynolds, IN, and Bloomingburg, OH. Upon completion of the new facilities, VeraSun will have an annual production capacity of approximately one billion gallons. The company also has plans to extract oil from dried distillers grains, a co-product of the ethanol process, for use in biodiesel production.

The company markets E85, a blend of 85 percent ethanol and 15 percent gasoline for use in Flexible Fuel Vehicles (FFVs), directly to fuel retailers under the brand VE85. VeraSun now has approximately 150 VE85 retail locations under contract in over a dozen states and Washington, D.C.

US BioEnergy Corporation, based in St. Paul, Minn., is a producer and marketer of ethanol and distillers grains. Founded in 2004, the company currently owns and operates four ethanol plants in Albert City, IA, Ord, NE, Platte Valley, NE, and Woodbury, MI. Four additional ethanol plants are currently under construction in Marion; SD, Hankinson, ND, Dyersville, IA, and Janesville, MN. Upon completion of these initiatives, the company will own and operate eight plants with combined expected ethanol production capacity of 750 million gallons.


VeraSun Energy: VeraSun Energy and US BioEnergy Announce Merger Agreement - November 29, 2007.

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European Commission proposes suspension of import duties on most cereals - opens opportunities for developing countries

The European Commission has proposed the suspension of import duties on all cereals except oats for the current marketing year - which ends on June 30, 2008. This is a reaction to the exceptionally tight situation on the world and EU cereals markets and the record price levels. Although the current levels of border protection for cereals are rather low, import duties are still applied for certain types of grains that are relevant for the balance of the EU market. The proposal won unanimous support from EU farm ministers, but will have to be approved by the Council of Ministers at its meeting starting on 18 December. The move comes after a recent decision to reduce the subsidy for energy crops, after it emerged that farmers had already surpassed the target for which the original aid scheme was intended, much sooner than expected (previous post).

The European Union has traditionally been a major cereals exporter, and has been accused of dumping its heavily subsidised grains on the markets of developing countries, thereby destroying the productive capacity of millions of smaller farmers. Import duties and non-tariff barriers kept them out of the market as well. Now, the situation is being reversed - an almost historic event. With the increase in biofuel production in both the EU and the US, this could be the first sign of a new trend that offers hope to the millions of poor farmers in the Global South. Some analysts have predicted that the bioenergy revolution will at last transform global agriculture, with a major shift of investments towards developing countries - precisely what is needed to boost economic development there.

In the near future, the EU might well have to abandon its import duties not only on cereals but on biofuels permanently, and thus one of the critical factors needed for a 'Biopact' to emerge would fall into place. Such a win-win pact would benefit African, South American and South East Asian farmers.
I hope this proposal will help facilitate cereals imports from outside the EU and reduce tensions on European grains markets. We have seen a modest harvest in Europe and high prices both at home and on world markets. Border protection for cereals is relatively low, but import duties still apply to certain cereals which are key to assuring EU market balance. - Mariann Fischer Boel, Commissioner for Agriculture and Rural Development
Cereals market situation
At the start of the 2007/08 marketing year in July, total stocks (private + intervention) were 13.2 million tonnes below levels at the same time the previous year. This is the result of the modest harvest in 2006/07 and significant withdrawals from EU intervention stocks. In 2007, unfavourable weather conditions reduced the harvest and overall EU production is estimated at 256 million tonnes, a fall of10 million tonnes or 3.5 % on the already modest 2006/07 harvest. Output is declining at a time when EU stocks are already low. As a result, the EU will need more imports in 2007/08 than in 2006/07. Traditionally a net exporter, in 2007/08 the EU has become a net importer since 1st July 2007 (5.2 million tonnes by 20th November).

European cereals markets have seen a spectacular upsurge in prices since the start of 2007/08. There are tensions on the small-grain cereals and maize markets, as a result of reduced stocks of common wheat and maize, poorer than forecast quality, and the exhaustion of intervention stocks (currently down to 0.5 million tonnes):
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Since the start of the new marketing year, the price of milling wheat in Rouen has risen from €179 per tonne to almost €300 per tonne at the start of September 2007. In Germany bread-making wheat was selling at 70% higher than the previous year by mid-August. Market prices for feed barley have increased in the wake of rising wheat prices. On the French market, feed barley has more than doubled over the summer 2006 rate, listing at up to €270 per tonne in Rouen at the end of September 2007. The high price of barley has triggered a rise in demand for maize for animal feed. French maize prices in Bayonne followed the same trend, rising from €183 per tonne at the start of the new marketing year on 2 July 2007 to a peak of €255 per tonne in mid-September 2007.

Background on import duties

The EU has bound tariffs for all cereals set under the GATT agreement. However, applied rates are different. The system originates in the Blair House Agreement between the US and the EU and involves setting tariffs on the basis of separate world reference prices for clearly defined cereals types. The duty is fixed on the basis of the difference between the effective EU intervention price for cereals including monthly increments, multiplied by 1.55 and a representative CIF import price for cereals at Rotterdam.

The resulting duty is currently set at 0 for durum wheat, high quality soft wheat, rye and sorghum. The duty for maize has fluctuated since the beginning of the current marketing year, from a peak of €16.21 per tonne to 0 since 1 October 2007. Outside these quotas, a maximum duty of €93 and €95 per tonne respectively applies.

Tariff rate quotas were introduced in 2003 on barley and low and medium quality wheat in response to large imports from Community of Independent States countries.

For medium and low quality soft wheat, annual Tariff Rate Quota of 2,989,240 tonnes is open, including a country-specific quota of 572,000 tonnes earmarked for imports originating in the United States and 38,853 tonnes for Canada. The remaining 2,378,387 million tonnes is split into four equal tranches of 594,597 tonnes, one of which is open each quarter to other third countries. The duty payable on imports under the quota is set at €12/tonne.

For barley, annual Tariff Rate Quota of 306,215 tonnes is open with €16/tonne duty payable. There is another quota of 50,000 tonnes of malting barley at a duty of €8/tonne.

A duty-free quota of 242,074 tonnes of maize was introduced in 2006 which is split into two equal tranches open to all third countries. This quota has been entirely used for 2007.

For maize and sorghum imported into Spain and Portugal, there are reduced tariff import quotas since Spain and Portugal’s accession to the EU.

For oats, the import tariff is €89/tonne.


European Commission: Commission proposes suspension of import duties on most cereals - November 26, 2007.

Biopact: EU cuts back on energy crop subsidies - October 18, 2007

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Scientists see limited supply of corn stover for cellulosic biofuels in the US, urge more research into new biomass crops

The United States has embarked on an ambitious program to develop technology and infrastructure to economically and sustainably produce ethanol from biomass. Corn stover, the above-ground material left in fields after corn grain harvest, has been identified as one of the primary potential feedstocks. But scientists from the USDA's Agricultural Research Service (ARS) say part of this 'trash' or a waste needs to be returned to the land to control erosion, replenish soil organic matter, and improve soil quality. They critically evaluate the amount of corn stover that would be available for biofuels under such optimal conditions and conclude that more comprehensive assessments are needed. At the same time, they urge more research into new biomass crops and cropping systems to expand the biomass supply while maintaining soil organic matter.

Organic matter in the soil retains and recycles nutrients and improves soil structure, aeration, and water exchange characteristics. In addition, organic matter is the energy source for the soil ecosystem. Most estimates of the amount of crop residue that can be sustainably harvested consider only erosion as a constraining factor, without considering the need to maintain soil organic matter. Recently Jane Johnson and her coworkers at the USDA-ARS North Central Soil Conservation Research Laboratory at Morris, MN, reported estimates of the minimum biomass input needed to maintain soil organic matter.

Wally Wilhelm, USDA-ARS scientist with the Agroecosystems Management Research Unit, Lincoln, NE, and his team compared the amount of stover needed to replenish soil organic matter and control water and wind erosion under a limited number of production conditions—continuous corn and corn produced in rotation with soybean with moldboard plow or conservation tillage practices. The amount of stover needed to replenish soil organic matter was greater than that required to control either water or wind erosion in the ten counties (in nine of the top eleven corn production states in the U.S.) investigated. This outcome emphasizes the need to further evaluate the validity of widely circulated estimates of U.S. cropland capacity to sustainably supply feedstock for the emerging cellulosic ethanol industry.

The authors conclude that there is a critical need to gather additional high-quality replicated field data from multiple locations to confirm their calculations and to expand the computations to a broader range of cropping systems before major decisions are made about the percent of stover that can designated for biomass energy production. In addition, they state that an extensive effort is needed to expand development of existing crops, discover and develop unconventional crops, and create and deploy advanced cropping systems that exploit the potential of all crops so that biomass production can be greatly expand to provide a sustainable supply of cellulosic feedstock without reducing soil organic matter, thus undermining the productive capacity of the soil:
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Sustainable biofuel production will require that the functions of organic matter in the soil be addressed before crop residue is removed from the land, stated Doug Karlen, USDA-ARS soil scientist at the National Soil Tilth Laboratory at Ames, IA.

Dave Lightle, USDA-NRCS agronomist with the National Soil Survey Center in Lincoln, NE added that to date, projected sustainable harvest levels have been calculated by reducing total stover production by amounts needed to keep soil erosion losses within accepted limits.

The article appears in the November-December 2007 issue of Agronomy Journal and was the basis of a poster presentation titled "Soil Carbon Needs Limit Biomass Ethanol Feedstock Supply" at the 2007 American Society of Agronomy meetings in New Orleans in November 2007. This research contributes to the USDA-ARS Renewable Energy Assessment Project (REAP) goals and was funded by the USDA-ARS and USDA-NRCS agencies.

Biopact would, with some care, deduce that this research may indicate that the genuinely sustainable biomass supplty for next-generation biofuels in the U.S. is more limited than often estimated. If all corn stover were to be left in the field, the US would have to expand its arable land base to grow dedicated energy crops. But the US (like Europe) already utilizes most of its potential arable land: out of 354 million hectares of land estimated to be 'potentially arable' (FAO Terrastat), around 269 million hectares are seen as 'equivalent arable land' (land that can actually be converted to grow crops). Of this amount, the US already utilizes around 175 million hectares (latest data from the FAO Aquastat database).

In short, the scope for dedicated biomass production in the US appears to be rather limited. This would be in line with assessments by scientists from the International Energy Agency's Bioenergy task forces, who estimate North America's total sustainable bioenergy potential in 2050 to be between 38 and 102EJ per year maximum. This potential is far smaller than that found in South America and Africa.

If the US wants a substantial amount of bioenergy to be part of its future energy mix, it might have to look at imports from Africa and South America where the potential is many times greater. Europe, with its even smaller domestic land potential, acknowledges that imports from the South will have to play a critical role to ensure a more sustainable bioenergy supply and to meet its renewable energy targets.

On another note, the researchers do not hint at the biochar option. This technique consists of coupling carbon negative biofuel production to the production of charcoal which can be sequestered into soils to perform functions similar to biomass residues, but in a more efficient way. Moreover, biochar amended soils could act as a carbon sequestration method and yield carbon credits. Research into the technical and economic feasibility of biochar is ongoing (more here and references in that text).

W. W. Wilhelma, Jane M. F. Johnsonb, Douglas L. Karlenc and David T. Lightle, "Corn Stover to Sustain Soil Organic Carbon Further Constrains Biomass Supply", Agronomy Journal, 99:1665-1667 (2007), Published online 6 November 2007, DOI: 10.2134/agronj2007.015

Edward M.W. Smeets, André P.C. Faaij, Iris M. Lewandowski and Wim C. Turkenburg, "A bottom-up assessment and review of global bio-energy potentials to 2050", Progress in Energy and Combustion Science, Volume 33, Issue 1, February 2007, Pages 56-106, doi:10.1016/j.pecs.2006.08.001

Biopact: IEA report: bioenergy can meet 20 to 50% of world's future energy demand - September 12, 2007

Biopact: Towards carbon-negative bioenergy: U.S. Senator introduces biochar legislation - October 07, 2007

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