"Plants for power in place of nuclear power plants" - a look at the International Green Week

The International Green Week (IGW) kicked off yesterday in Berlin. The EU sponsored event, hosted by the German EU presidency, is Europe's largest food and agriculture exhibition.

The IGW opened within a new context, now that the European Union has set an ambitious goal to reduce its dependence on fossil fuels and given its farmers ample financial incentives to reach those goals. The new proposal sets a target of 20% for renewables in EU energy consumption by 2020, and 10% minimum target for biofuels in transport fuel by the same date. This objective is said to be feasible without creating unmanageable tensions between food and non-food production (earlier post).

At the opening of the event, some interesting announcements and perspectives on bioenergy were presented. Not in the least those on subsidies and financial incentives.

EU Agriculture Commissioner Mariann Fischer Boel said: "This is an excellent opportunity for European agriculture to play a part in one of the greatest challenges facing the European Union today. Our CAP (Common Agriculture Policy) reforms have already given biofuel production a major push – now I want to build on this further."

The CAP was changed in 2003 to encourage European farmers to grow energy crops. It decoupled direct payments from production so farmers could base planting decisions more on market signals. The 2003 CAP reform introduced a €45 per hectare ($143 per acre) aid for land used for energy crop production, a measure that was extended recently to the new EU member-states (earlier post). Countries are also allowed to grant national aid of up to 50% of the costs of establishing permanent crops on areas on which an application for the energy crop aid has been made. In short, just like the US, the EU offers lavish amounts of subsidies to its future energy farmers.

According to Boel, getting 'up to speed in the production of bioenergy' could create up to 300,000 new jobs throughout Europe, many of which will be in rural districts.

On CAP reform, José Manuel Barroso, President of the European Commission, said: "It is already encouraging farmers to grow energy crops by measures such as decoupling direct aid, the specific energy crops scheme and the possibility of using set-aside for the cultivation of non-food crops. Bioenergy could prove to be a strong card for the future of European farmers. It provides them with an opportunity to produce with an eye to the market."

And, interestingly, he added that "If for instance a German farmer can earn more today by selling the maize he produces for processing into bio-gas than for traditional feed production, we should see this as opening up fresh opportunities for a new generation of farmer-entrepreneurs."

Gerd Sonnleitner, President of the German Farmers' Association, says renewable energy now meets almost 7% of Germany's requirements for electricity, heating and fuel. The earlier target - 12.5% of the country's electricity needs from renewable sources by 2010 - has almost been reached. "Bio-energy is experiencing a genuine boom and has evolved into one of the largest growth sectors on the German renewable energy market," says Sonnleitner. "65,000 jobs have been created, and this figure is set to double by 2010:
ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: energy :: sustainability :: subsidies :: Common Agricultural Policy :: EU ::



"Our farmers are now producing bio-energy and renewable raw materials on an area measuring some 4 million acres compared with just 2 million acres five years ago," says Sonnleitner. "This now amounts to 13% of the total cultivated area in Germany, making us the leaders in this field in Europe. An increase in the area under cultivation to as much as 7.5 million acres is being forecast.

A large part of the GreenWeek exhibit hall is dedicated to bioenergy under the title, "Plants for power in place of nuclear power plants."

A major congress organised by the German Federal Ministry of Food, Agriculture and Consumer Protection convenes this weekend under the title "Agriculture and Bioenergy – the Lights will go out without Agriculture" [*pdf].

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U.S. coalition to fight American biofuel subsidies

Oil companies, meat and dairy groups and nutrition advocates are likely to form a coalition to oppose higher renewable-fuel mandates and tax breaks for alternative energy in the farm bill, said Charles Stenholm, a lobbyist and former House Agriculture Committee member.

Stenholm said the coalition would support research, particularly on cellulosic ethanol, but in other aspects of alternative energy urge Congress to "be careful about the way the government subsidizes it" and "let the market be the determinant as much as is humanly possible."

If indeed the market were to be allowed to work in a genuine and truly global way, the developing world would get a major boost, because it can produce biofuels much more competitively than U.S. farmers. In this sense, we hope the American anti-subsidy coalition succeeds in its mission (as far as tax breaks are concerned). A recent report by the Global Subsidies Initiative showed that uncompetitive and energy inefficient biofuels ("lobby fuels") made in the U.S. receive billions in subsidies via hundreds of schemes, without which they would never survive (earlier post). The subsidies have created a market for ethanol and biodiesel in the U.S. - mission accomplished. But it is now time to abandon them and allow more efficient and competitive producers in.

U.S. agricultural subsidies have a global effect, and were the cause of the collapse of the World Trade Organisation's Doha Round, last year. Trade specialists however see the development of a global biofuels industry as an opportunity to revive the talks and close a deal on Doha. If biofuels create a viable global market for farmers, then the need for subsidies would disappear and the dispute could be partly resolved (earlier post).

But things will not be that easy. There are signs that the U.S. administration will pump even more billions worth of subsidies into the sector.

Stenholm, who is a senior government affairs adviser at a large law firm, said he has been hired by the American Petroleum Institute to protect its interests in the renewable-energy debate and that his clients also include the International Dairy Foods Association, the National Pork Producers Council and the Livestock Marketing Association:
ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: energy :: sustainability :: subsidies :: corn :: developing world :: WTO :: Doha :: bioenergy trade ::

Oil companies have long argued that government intervention favorable to renewable fuels is unfair. Stenholm said meat and dairy groups are concerned that increased use of corn for ethanol is leading to higher feed prices while nutrition advocates are concerned that food prices may rise, making it harder for poor people to afford food. As a veteran of farm bill debates in Congress, Stenholm said, "Until you get the nutrition community behind your overall (bill), you can't pass it."

Agriculture Department Chief Economist Keith Collins said at a Farm Bureau session Sunday that the use of ethanol has so far not increased food costs because producers and processors have made their decisions based on past years' supply and demand, but that the demand for corn for ethanol could increase food costs in future years.

Stenholm said he believes the basic commodity programs that subsidize crops such as wheat and cotton will be reauthorized. The high prices for corn, soybeans and wheat, Stenholm said, means the Congressional Budget Office will project that subsidies for those commodities won't be high.

He said Congress does need to deal with a World Trade Organization ruling that a farm bill provision banning the planting of fruits and vegetables on land that receives subsidies means that that a direct payment program that the United States has classified as non-trade distorting is trade-distorting.

But he added, "I'd be surprised there's any real opposition (in the commodity title) that can't be compromised into a winning position. ...You know the ingenuity of the agriculture committee."

Stenholm represented the 17th District of Texas until the Republican-controlled Legislature reconfigured the boundaries of the district. He lost a race for re-election in 2004.

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Statoil's ethanol sales in Sweden grow 270% in 2006; imports from Brazil

Sweden is one of Europe's leaders when it comes to getting green cars on the road. This is due to the fact that all stakeholders have consistently pulled the same rope: the government, car manufacturers, petroleum companies, and the consumer.

Imports from Brazil
The number of E85 filling stations in Sweden has increased very rapidly over the past few years, partly due to strong and sustained supplies of competitive Brazilian ethanol. Around 25% of the ethanol used in Sweden comes from three Swedish plants. The other 75% comes from Brazil, which produces over 30 billion litres of ethanol per year, primarily from sugar cane. Over 15,000 farmers cultivate the sugar, while 350 factories distill these crops into alcohol, part of which is exported. The Brazil-Sweden connection is an example of the kind of relationships Biopact hopes to help establish between European countries and Africa.

The largest players on the Swedish ethanol distribution market include Statoil, Shell and OKQ8. In 2005 (overview), Statoil had around 55 E85 filling station pumps in operation. By the end of 2006 this number was expected to have increased to 120. But the success of the product beat expectations and Svenska Statoil now has 170 stations across the country.

Sales of Statoil's E85 biofuel grew by 270% in Sweden last year compared with 2005, and the product is due to be available at 260 Swedish service stations by the end of 2007. "Our commitment to renewable motor fuels is long term and an increasingly important part of our product portfolio,” says Helena Fornstedt, public affairs head at Svenska Statoil. “As a result, we’ll be continuing to expand the number of sites with this fuel, which contains 85% ethanol and 15% petrol.”

Svenska Statoil’s stations sold 19.5 million litres of E85 in 2006 at 170 sites. Another 90 outlets will be added over the coming year. “E85 achieved its breakthrough here in Sweden during 2006, allowing us to increase our sales threefold,” affirms Ms Fornstedt. “Continued expansion during the coming year depends on the price picture for this fuel compared with conventional petrol and whether even more Swedes buy ‘environmental’ cars.”

Green car sales boom
Conventional vehicles cannot run on E85, which requires an engine specially designed for flexible-fuel operation. A total of 36,711 of these environmental cars were purchased in Sweden during 2006, an increase of 156% from the year before and 13.5% of all newly-registered cars in the country. Sales of the Saab 95 Biopower were especially successful and set a new global sales record. The car captured 30% of the green car market, with 11,000 units sold in Sweden in 2006 (earlier post).

Other ethanol capable cars and models currently available on the Swedish market are: Ford Focus FFV, Ford Focus C-Max FFV, US Ford Taurus FFV, Volvo S40 FFV and Volvo V50 FFV. The increase in sales reflects the benefits offered to drivers of flex-fuel vehicles. These include lower excise duties, free parking spaces and the waiving of road tolls.

Sweden also has the largest number of buses running on ethanol: in 2006 the number was 400. This means that around 25% of the Swedish buses are running on biofuels. By 2011 this percentage will have increased to 50%:
ethanol :: biomass :: bioenergy :: biofuels :: energy :: sustainability :: sugarcane :: filling stations :: E85 :: flex-fuel :: Sweden ::


“We want filling up with biofuel to remain an advantage, and hope the government will work to get the protective European toll on ethanol lifted as soon as possible,” says Ms Fornstedt. The EU currently has a 6.5% ad valorem duty on all imported ethanol (more info at the European Union of Ethanol Producers).

Ethanol is a renewable fuel, and significantly reduces carbon dioxide emissions when used instead of petrol. Five per cent of it is added to all 95 octane petrol sold in Sweden today. “A low blend like this is the most efficient way of cutting carbon emissions,” says Ms Fornstedt. “We’ll accordingly increase the ethanol content in our petrol to 10% as quickly as we can.”

Sweden's progress has been steady. In one year (October 2004-2005) Statoil has seen its sales of E85 increase by a staggering 750%. In April 2005 OKQ8 was the market leader with 77 pumps and a market share of 50%. By november 2005, the company operated 109 pumps.

Sweden's success with ethanol is in large part due to the Saab 95 Biopower, which is a real flexi-fuel vehicle that runs well on E85. The car has a 2-litre turbo engine and, according to automotive journalists, gives a powerful performance. Even more amazing, the bioethanol provides an extra 30pk of power compared to normal car. The Biopower accelerates from zero to 100 km/hr in 9.7 seconds.

More information:

Senternovem: OKQ8 market leader for ethanol filling stations in Sweden, Nov. 24, 2005
Statoil: Swedish record for biofuel, Jan. 20, 2007.

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