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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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Sunday, February 10, 2008

Analysts predict coal prices to double - would open the gate for biomass

A surge in global demand for coal, a persisting power crisis in South Africa, ever lower inventories in China and supply constraints in key producing areas (Australia, Indonesia) have ignited prices, with some analysts now predicting coal prices to double over the coming two years. If that happens, biomass - which in some cases is already competitive with thermal coal today - would gradually shift from being an opportunity fuel to a young competitor.

The coal sector was shocked on rumours that an Asian steel company had recently paid US$275 a tonne for hard coking coal, almost triple last year's price. But record prices for thermal coal were observed too, with some European importers paying more than US$130 on the spot market. Last week, the Asian thermal coal price index broke the psychological barrier of US$100 for the first time ever.
Spot thermal coal prices have soared in the past few weeks in response to severe coal production and transportation constraints in Australia, China and South Africa at a time when power utilities are holding critically low inventories of coal. [...] We believe that the factors that have driven thermal coal prices higher in recent weeks will have a profound impact on 2008/09 contract negotiations. - Malcolm Southwood, Goldman Sachs JBWere's resource analyst
Our analysis points to a continued tightness in seaborne thermal markets extending to 2010. - Alan Heap, lead author, coal price outlook, Citigroup
Leading analysts now predict a 50% increase up to a doubling of prices, for the coming years. Note that coal markets are complex and prices reflect regional realities, so the following are mere indicators of a trend, mainly focused on the Asian market:
  • Most conservative is UBS AG, Europe's biggest bank by assets, which issued a report in which it increased its price forecasts for coal used in power plants in 2008 and 2009 as China's demand rises and supplies from Australia face disruptions. Thermal coal will average $100 a metric ton this year, and $130 a ton in 2009, up from previous estimates of $90 and $110.
  • JP Morgan has forecast 2008 thermal coal contract prices between Australian miners and Japanese utilities will jump by over 60 percent, citing Indian coal demand and global infrastructure constraints. It raised its contract price forecast to $90 a tonne, a 61.7 percent increase from last year's agreed price of $55.65 and a 28.5 percent increase from its earlier forecast of $70.
  • Citigroup also revised its outlook upwards to $100 a tonne and said strong demand from India, which will depend on coal-fired power generation to power its economic growth, will soak up supplies from Indonesia.
  • Goldman Sachs raised its contract price forecast for thermal coal to $110 a tonne, a 98 percent increase from last year's agreed price of $55.65 and up 22 percent from its earlier prediction of $90.
  • Barlow Jonker, a leading international coal market analysis company, went further and predicts a doubling of the price of Australian coal. Analyst Marion Hookham says that price rises across the board should drive more expansion in the coal industry and a big increase in government royalties, currently worth one and a half billion dollars.
  • Finally, a spokesman at Indonesia's largest coal miner, PT Bumi Resources Tbk, said record high coal prices could still rise almost 50 percent to as much as $150 a tonne due to a global supply squeeze. Indonesia is the world's largest thermal coal exporter.
Currently, biomass is traded in limited amounts as an opportunity fuel. Low prices for plantation residues, such as palm kernel shells or densified coffee husks, which can be readily co-fired with coal, have attracted attention of some power utilities. However, international biomass trade remains in its infancy, because the market is still too fragmented, undeveloped and inefficient to pose a real threat to coal markets:
:: :: :: :: :: :: :: :: :: :: :: :: :: ::

Nonetheless, with a new benchmark for thermal coal prices ranging between $125 and $150, that could change relatively quickly with investors waiting to enter the sector receiving a clear signal that the time to do so has come.

Good opportunities exist in several areas that already have an established biomass resource that can be brought to market readily. One example would be found in Namibia, where a huge amount of biomass comes in the form of invader bush. Researchers from the VTT have estimated that the overgrowth of bush greatly affects an area of about 10 million hectares in northern parts of central and eastern Namibia, of which a total of 125 million tonnes can be harvested commercially and sustainably.

This equates to around 500 TWh worth of energy. Total consumption of energy in Namibia is less than one twentieth of that, much of it derived from imported coal. The researchers found that local use of this densified biomass, replacing coal in a medium sized power plant (in Windhoek) , was competitive with 2006/2007 coal prices.

A thermal coal price twice as high would probably make it possible to export this biomass in a densified form. The invador bush would be harvested and densified in a decentralised manner, then brought to the railway that transects this region and brings it to port (Swakopmund) (map, click to enlarge; map shows density of bush per zone).

Over the medium term, dedicated biomass plantations could be established with high yielding tropical crops like eucalyptus and acacia, or short rotation crops. Recent analyses by a EU project into green steel production, show that there is vast potential for the creation of such plantations to generate wood that can replace coking coal (after pyrolysis). An estimate suggests that some 46 million hectares of land are suitable in Central Africa alone. In Brazil, another 46 million hectares are suitable. The land in question can sustain eucalyptus plantations without any major negative environmental footprint (previous post).

Besides dedicated biomass plantations, a more likely form of trade is to emerge from relationships established directly between power producers in the North and biomass producers in the South. One example comes from the Netherlands, where Essent Energie recently agreed to purchase several thousand tonnes of coffee husks from Brazilian coffee producers, to co-fire the biofuel in one of its large coal power plants in the Netherlands and to sell the electricity under a green label (previous post). However, it is not clear which factor was more important for Essent: the creation of a 'green' corporate image or the fact that biomass has become competitive with costly coal?

Making supply chains more efficient, creating market instruments for biomass trade and establishing sustainability criteria remain major stumbling blocks to the emergence of a global biomass market.


ABC Rural: Coal price set to double - February 7, 2008.

Reuters: Goldman, Citigroup raise coal price forecasts - February 5, 2008.

Daily Reckoning: New Bull Market for Coal - February 7, 2008.

Reuters: JP Morgan raises 2008 coal price forecast - January 29, 2008.

Bloomberg: UBS Raises Coal Price Forecasts on Shortages in China - February 1, 2008.

Forbes: Asia coal price index jumps to record above $100/T - January 29, 2008.

Biopact: Coal's deep trouble makes biomass highly attractive - January 25, 2008

Biopact: Green steel made from tropical biomass - European project - February 08, 2007

Biopact: World first: fair trade founders team up with Brazilian farmers to sell coffee husk pellets to Dutch energy company - October 26, 2007


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