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    Mongabay, a leading resource for news and perspectives on environmental and conservation issues related to the tropics, has launched Tropical Conservation Science - a new, open access academic e-journal. It will cover a wide variety of scientific and social studies on tropical ecosystems, their biodiversity and the threats posed to them. Tropical Conservation Science - March 8, 2008.

    At the 148th Meeting of the OPEC Conference, the oil exporting cartel decided to leave its production level unchanged, sending crude prices spiralling to new records (above $104). OPEC "observed that the market is well-supplied, with current commercial oil stocks standing above their five-year average. The Conference further noted, with concern, that the current price environment does not reflect market fundamentals, as crude oil prices are being strongly influenced by the weakness in the US dollar, rising inflation and significant flow of funds into the commodities market." OPEC - March 5, 2008.

    Kyushu University (Japan) is establishing what it says will be the world’s first graduate program in hydrogen energy technologies. The new master’s program for hydrogen engineering is to be offered at the university’s new Ito campus in Fukuoka Prefecture. Lectures will cover such topics as hydrogen energy and developing the fuel cells needed to convert hydrogen into heat or electricity. Of all the renewable pathways to produce hydrogen, bio-hydrogen based on the gasification of biomass is by far both the most efficient, cost-effective and cleanest. Fuel Cell Works - March 3, 2008.

    An entrepreneur in Ivory Coast has developed a project to establish a network of Miscanthus giganteus farms aimed at producing biomass for use in power generation. In a first phase, the goal is to grow the crop on 200 hectares, after which expansion will start. The project is in an advanced stage, but the entrepreneur still seeks partners and investors. The plantation is to be located in an agro-ecological zone qualified as highly suitable for the grass species. Contact us - March 3, 2008.

    A 7.1MW biomass power plant to be built on the Haiwaiian island of Kaua‘i has received approval from the local Planning Commission. The plant, owned and operated by Green Energy Hawaii, will use albizia trees, a hardy species that grows in poor soil on rainfall alone. The renewable power plant will meet 10 percent of the island's energy needs. Kauai World - February 27, 2008.

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Tuesday, June 17, 2008

Wageningen UR: biofuels not to blame for high food prices; decline in world food prices to continue

According to a new study by experts from the world's leading agronomic and agricultural economics research institution - the Wageningen University & Research Centre - neither speculation nor biofuels are to blame for the current high food prices. Instead, and despite some people's attempts to focus excessively on these factors, a complex set of many other forces is at play. Wageningen UR also projects world food prices to decline again, continuing the historic long term trend towards ever lower prices for food. What is more, compared with all other commodities, food prices have increased far less dramatically.

Wageningen UR asked a number of its experts to contribute to the national and international discussion by offering analysis from different perspectives. A first memorandum on the analysis of the recent price increases, titled Why Are Current World Food Prices So High? [*.pdf], has already been presented. Given Wageningen UR's undisputed authority in all matters relating to the analysis of world agricultural markets, the memorandum carries a lot of weight.

Influence on price formation

The long-term trend of world food prices shows a continued decline (figure 1, click to enlarge). This is happening because, among other things, technological developments are pushing up the production per hectare and that, in turn, is pushing the prices down, the researchers argue. Now and then brief peaks occur in food prices. It seems that the current wave of price surges is such a peak. The current peaks in the prices are lower than the peak in the food prices in the 1970s, which was the result of the oil crisis. Of course, the trend can change, but the expectation is that the response to the current, high prices - increased, large investments in agriculture - will again cause a decline.

Compared with the index for all other commodities and for oil, the food price index has remained well below the recent upward trend, remaining fairly stable over the long term, and increasing far less rapidly than the other indices (figure 2, click to enlarge).

The effects of speculative investments in food crops should not be overestimated, the researchers say. On the one hand, they can lead to a quick increase in prices. However, on the other hand, if a decrease in prices starts, the same investments will lead to a quick fall in prices.

According to the experts, the demand for agricultural products for the production of biofuels has a small effect: only 5 per cent of the oilseeds goes to biodiesel or directly to the transport sector; 4.5 per cent of the grain production is used for ethanol. Although this is a marginal demand, it still has a slight influence on the development of prices on the world market because the supply of food products on the world market is relatively small compared to what is consumed and produced locally. Countries heavily dependent on imported food may feel some effect (more than 90 per cent of all rice is produced and consumed locally; the same is true for maize and wheat, of which more than 75% is grown and consumed locally).

If neither speculation nor biofuels are having more than marginal effects on world food prices, then which are the factors influencing the current price developments? The experts list the following forces and events:
  • Poor harvests have caused low wheat and barley yields in Australia, the Ukraine and Europe - the key production areas. The stores of these grains are running out, and the current barley and wheat prices are therefor high.
  • High maize yields led to a world-wide increase of the total grain harvest in 2007. Because of this, maize prices remained relatively low. Only very recently have increases in maize prices been detected.
  • High energy prices lead to high costs for artificial fertilizers and fuel, among other things. Higher transport costs lead to price effects for transport over long distances (note: this is why, counter-intuitively, biofuels can help lower food prices).
  • Argentina, Kazakhstan, India, Vietnam and Egypt have levied export taxes to protect their own food supply. This has pushed up prices on the world market.
  • The production limitations for food products in the EU have pushed up prices.
  • In the past, the low prices for food production were not an incentive to invest in technology that increased production.
  • The demand in Europe and North America is stable, but the demand is growing rapidly in Asian countries as a result of income developments and changes in diet (especially the trend towards increased meat consumption).
Towards ever lower prices
In the opinion of the Wageningen UR experts, a number of developments will appear in response to the high prices. These developments will, most likely, cause a downward push:
:: :: :: :: :: :: :: :: :: :: :: ::
  • The high prices will lead to the use of agricultural land that is currently not in production. Huge potential exists particularly in Brazil and Russia. In other countries, production will be intensified, and this will lead to a decrease in prices.
  • Because of the high prices, investments in R & D and technology will again become profitable, after many years of neglect.
  • To dampen price instability, strategic stocks are indispensable.
  • The influence of the biofuel directives on the development of world food prices is relative and depends on the technological developments around the production of biobased commodities. The investments in second generation biobased production are important because the production of second generation biobased products does not use the direct food product but the whole plant.
The development of the oil price is significant in predicting the demand from the biofuel sector. In the current price relation between oil and biofuels, most biofuels are not profitable (except for fuels based on tropical crops, such as sugarcane based ethanol). With this price relation, the volume of the biofuel market will be limited to the commitments in the biofuel EU's directive. However, with a relatively high oil price, biofuels can become competitive: the food and fuel markets will then be further integrated and the food prices will be determined, to a greater extent, by the oil price.

Problems remain
Unpredictable movements in food prices can still provide problems in the future. With high prices, the consequences in terms of hunger or malnutrition especially in poor urban areas will surface. But with low prices, the consequence for poor farmers will be large. Until recently, hundreds of millions of farmers could not lift themselves out of poverty because of low food prices. Seventy-five percent of the world's hungry people are still living in rural areas and are dependent on agriculture for their livelihoods. Over time, high prices should benefit them.

In poorer urban areas of the world, the expenditure for food makes up, on average, about 50 per cent of an individual's disposable income. As such, price increases in these regions have dramatic effects. This percentage climbs to 65 per cent if the food prices rise by 30 per cent. In the wealthy lands, these effects, on the other hand, will be limited to 1 to 2 per cent of an individual's income.

Apart from this, the researchers state in their report that the hunger issue is, however, only partially attributable to the demand for biofuels and is much more attributable to bad policy and the poor performance of the markets.

All figures courtesty of Wageningen UR.

M. Banse, P. Nowicki, H. van Meijl, Why Are Current World Food Prices So High? [*.pdf], Wageningen University and Research Centre, Den Haag, LEI, Rapport 2008-040 - June 2008.

AlphaGalileo: Several factors influence world food prices - June 17, 2008.

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UK approves 65MW biomass power plant - to power 100,000 homes

Energy Minster Malcolm Wicks announced today the British government has approved Helius Energy's plan to build a 65MW energy crop and wood-burning power station in Lincolnshire. Initially waste wood will be used as fuel, with energy crops and waste from a biodiesel and ethanol factory - for which planning permission has been granted as well - being future feedstocks. The US$390.5 million biomass plant is one of a growing number of large-scale bioenergy projects in the UK.

The power station is the first phase of an integrated bioenergy development on a 36 hectare site 4km from the port of Immingham. It will produce enough renewable electricity for around 100,000 homes; most of North East Lincolnshire. The plant will save approximately 450,000 tonnes of carbon dioxide a year compared with a similarly sized coal-fired power station. Options to use the heat produced by the plant either on site or locally are also being considered.
Not only does [the plant] help tackle climate change and increase secure supplies of energy, but the building and running of this biomass plant will also provide jobs in Lincolnshire. This announcement takes us closer to achieving our proposed renewable energy targets. We have doubled the amount of renewable electricity to 5% over the last few years and later this month we will be launching our consultation on how we can drive this forward even further. - British Energy Minister Malcolm Wicks
Construction of Phase I, the biomass energy plant, costing circa £200 (€251.8/US$390.5) million, is expected to start later this year and to be operational by 2011. The biomass power plant will require around 430,000 tonnes of sustainably sourced feedstock each year. The power station will initially be fuelled by waste wood, specially grown crops and the leftovers from timber processing activities sourced from the UK and Europe:
:: :: :: :: :: :: :: :: :: :: ::

The biomass power station is expected to provide approximately 267 full time jobs during the construction phase and 75 permanent full time jobs working a shift pattern when the plant is running.

Planning permission has also been granted to build an additional biomass processing facility and bioethanol and biodiesel refinery. The intention is that spent grains from the bioethanol plant and glycerol from the biodiesel plant will eventually be used as the fuel feedstock for the power station.

The development will also include an area of approximately 20 hectares specifically set aside as a conservation area for birds and water voles.

Helius Energy is also developing a range of smaller scale (5 to 10 MW) combined heat-and-power biomass plants, coupled to food processing facilities.

The United Kingdom is lagging behind most of Europe when it comes to renewables, especially bioenergy, which is used on a large scale on the continent. However, several biomass power plants have been approved and are in various phases of construction or have been completed.

Late last year, the UK approved the construction of the world's biggest biomass plant in Port Talbot. The 350MW facility will power half of all homes in Wales and supply electricity for approximately 1.5 million people in a renewable and carbon-neutral way. When completed, the plant will produce about 70% of the Welsh Assembly Government's entire 2010 renewable energy target. This makes it Wales' single strongest weapon in the fight against climate change.

Renewable energy company Eco2 Biomass recently submitted a planning application to the North Kesteven District Council in Linconlshire to develop a new 40 MW straw fired renewable energy plant near the town of Sleaford.

E.ON's Steven's Croft biomass power station in Scotland, which is already operational, utilizes dedicated energy crops like fast growing willow. It powers 70,000 homes.

Another 25 MW plant is planned by E.ON in Sheffield. It will generate electricity for 40,000 homes and uses as fuel a combination of recycled wood and specially grown energy crops such as willow or tropical elephant grass (Pennisetum purpureum).

Last year, Sembcorp Industries (Sembcorp) officially opened the UK's first large scale biomass power plant. The 30MW station is the first to produce renewable energy using naturally sustainable biomass without any input of fossil fuels. The plant, located at the Wilton International manufacturing site in Teesside in the Northeast of England, powers around 30,000 households.

Besides dedicated biomass power plants, several of the UK's coal-fired power stations have begun co-firing biomass, reducing their carbon emissions gradually (previous post).


Department for Business, Enterprise and Regulatory Reform (BERR): Biomass power station to be built in Lincolnshire - June 16, 2008.

Helius Energy: Consent Granted for North East Biomass Power Plant - June 16, 2008.

Biopact: UK approves world's biggest (350MW) biomass plant: will power half of all homes in Wales - November 21, 2007

Biopact: Eco2 Biomass to build 40MW biomass power plant in the UK - November 16, 2007

Biopact: UK's largest biomass plant approved, biomass task force created - June 16, 2007

Biopact: E.ON UK submits application for 25MW biomass plant - July 20, 2007

Biopact: UK opens first large scale 30MW biomass power station - November 13, 2007

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