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    AthenaWeb, the EU's science media portal, is online with new functionalities and expanded video libraries. Check it out for video summaries of the latest European research activities in the fields of energy, the environment, renewables, biotech and much more. AthenaWeb - July 04, 2007.

    Biopact was invited to attend a European Union high-level meeting on international biofuels trade, to take place on Thursday and Friday in Brussels. Leaders from China, India, Africa and Brazil will discuss the opportunities and challenges arising in the emerging global biofuels sector. EU Commissioners for external relations, trade, energy, development & humanitarian aid as well as the directors of international organisations like the IEA, the FAO and the IFPRI will be present. Civil society and environmental NGOs complete the panorama of participants. Check back for exclusive stories from Friday onwards. Biopact - July 04, 2007.

    China's state-owned grain group COFCO says Beijing has stopped approving new fuel ethanol projects regardless of the raw materials, which has put a brake on its plan to build a sweet potato-based plant in Hebei. The Standard (Hong Kong) - July 03, 2007.

    Blue Diamond Ventures and the University of Texas A&M have formed a biofuels research alliance. The University will assist Blue Diamond with the production and conversion of non-food crops for manufacturing second-generation biofuels. MarketWire - July 03, 2007.

    African Union leaders are to discuss the idea of a single pan-African government, on the second day of their summit in Accra, Ghana. Libya's Colonel Muammar Gaddafi is championing the idea, but many African leaders are wary of the proposal. BBC - July 02, 2007.

    Triple Point Technology, a supplier of cross-industry software platforms for the supply, trading, marketing and movement of commodities, announced today the release and general availability of Commodity XL for Biofuels™. The software platform is engineered to address the rapidly escalating global market for renewable energy fuels and their feedstocks. Business Wire - July 02, 2007.

    Latin America's largest construction and engineering firm, Constructora Norberto Odebrecht SA, announced plans to invest some US$2.6 billion (€1.9 billion) to get into Brazil's booming ethanol business. It aims to reach a crushing capacity of 30 million to 40 million metric tons (33 million to 44 million tons) of cane per harvest over the next eight years. More soon. International Herald Tribune - June 30, 2007.

    QuestAir Technologies announces it has received an order valued at US$2.85 million for an M-3100 system to upgrade biogas created from organic waste to pipeline quality methane. QuestAir's multi-unit M-3100 system was purchased by Phase 3 Developments & Investments, LLC of Ohio, a developer of renewable energy projects in the agricultural sector. The plant is expected to be fully operational in the spring of 2008. Market Wire - June 30, 2007.

    Siemens Energy & Automation, Inc. and the U.S. National Corn-to-Ethanol Research Center (NCERC) today announced a partnership to speed the growth of alternative fuel technology. The 10-year agreement between the center and Siemens represents transfers of equipment, software and on-site simulation training. The NCERC facilitates the commercialization of new technologies for producing ethanol more effectively and plays a key role in the Bio-Fuels Industry for Workforce Training to assist in the growing need for qualified personnel to operate and manage bio-fuel refineries across the country. Business Wire - June 29, 2007.

    A paper published in the latest issue of the Journal of the American Ceramic Society proposes a new method of producing hydrogen for portable fuel cells that can work steadily for 10-20 times the length of equivalently sized Lithium-ion batteries. Zhen-Yan Deng, lead author, found that modified aluminum powder can be used to react with water to produce hydrogen at room temperature and under normal atmospheric pressure. The result is a cost-efficient method for powering fuel cells that can be used in portable applications and hybrid vehicles. More soon. Blackwell Publishing - June 29, 2007.

    An NGO called Grains publishes a report that highlights some of the potentially negative effects associated with the global biofuels sector. The findings are a bit one-sided because based uniquely on negative news stories. Moreover, the report does not show much of a long-term vision on the world's energy crisis, climate change, North-South relations, and the unique role biofuels can play in addressing these issues. Grain - June 29, 2007.

    Researchers at the Universidad de Tarapacá in Arica plan to grow Jatropha curcas in the arid north of Chile. The trial in the desert, is carried out to test the drought-tolerance of the biodiesel crop, and to see whether it can utilize the desert's scarce water resources which contain high amounts of salt minerals and boron, lethal to other crops. Santiago Times - June 28, 2007.

    India and Thailand sign a Memorandum of Understanding (MoU) that envisages cooperation through joint research and development and exchange of information in areas of renewable sources of energy like, biogas, solar-thermal, small hydro, wind and biomass energy. Daily India - June 28, 2007.

    Portucel - Empresa Produtora de Pasta e Papel SA said it plans to install biomass plants with an expected production capacity of 200,000 megawatt hours per year at its paper factories in Setubal and Cacia. The European Commission gave the green light for state aid totaling €46.5 million, contributing to Portucel's plans to extend and modernise its plants. Forbes - June 28, 2007.

    Petro-Canada and GreenField Ethanol have inked a long-term deal that makes Petro-Canada the exclusive purchaser of all ethanol produced at GreenField Ethanol's new facility in Varennes, Quebec. The ethanol will be blended with gasoline destined for Petro-Canada retail sites in the Greater Montreal Area. Petro-Canada - June 27, 2007.

    According to a study by the Korean Energy Economics Institute, biodiesel produced in Korea will become cheaper than light crude oil from 2011 onwards (678 won/liter versus 717.2 won/liter). The study "Prospects on the Economic Feasibility of Biodiesel and Improving the Support System", advises to keep biodiesel tax-free until 2010, after which it can compete with oil. Dong-A Ilbo - June 27, 2007.

    Kreido Biofuels announced today that it has entered into a marketing and distribution agreement with Eco-Energy, an energy and chemical marketing and trading company. Eco-Energy will purchase Kreido Biofuels’ biodiesel output from Wilmington, North Carolina, and Argo, Illinois, for a minimum of 3 years at current commercial market prices, as well as provide Kreido transportation and logistics services. Business Wire - June 27, 2007.

    Beijing Tiandi Riyue Biomass Technology Corp. Ltd. has started construction on its new fuel ethanol project in the county of Naiman in Inner Mongolia Autonomous Region's Chifeng City, the company's president told Interfax today. Interfax China - June 26, 2007.

    W2 Energy Inc. announces it will begin development of biobutanol from biomass. The biofuel will be manufactured from syngas derived from non-food biomass and waste products using the company's plasma reactor system. Market Wire - June 26, 2007.

    Finland based Metso Corporation, a global engineering firm has received an order worth €60 million to supply two biomass-fired power boilers to Portugal's EDP Producao - Bioeléctrica, S.A. The first boiler (83 MWth) will be installed at Celbi’s Figueira da Foz pulp mill and the second boiler (35 MWth) at Caima’s pulp mill near the city of Constância. Both power plants will mainly use biomass, like eucalyptus bark and forest residues, as fuel to produce together approximately 40 MWe electricity to the national grid. Both boilers utilize bubbling fluidized bed technology. Metso Corporation - June 26, 2007.

    Canada's New Government is investing more than $416,000 in three southern Alberta projects to help the emerging biofuels industry. The communities of Lethbridge, Drumheller and Coalhurst will benefit from the projects. Through the Biofuels Opportunities for Producers Initiative (BOPI), the three firms will receive funding to prepare feasibility studies and business plans to study the suitability of biofuels production according to location and needs in the industry. MarketWire - June 26, 2007.

    U.S. Energy Secretary Samuel Bodman is expected to announce today that Michigan State and other universities have been selected to share $375 million in federal funding to develop new bioenergy centers for research on cellulosic ethanol and biomass plants. More info soon. Detroit Free Press - June 26, 2007.

    A Kerala based NGO has won an Ashden Award for installing biogas plants in the state to convert organic waste into a clean and renewable source of energy at the household level. Former US vice president Al Gore gave away the award - cash prize of 30,000 pounds - to Biotech chief A. Saji at a ceremony in London on Friday. New Kerala - June 25, 2007.

    AltraBiofuels, a California-based producer of renewable biofuels, announced that it has secured an additional US$165.5 million of debt financing for the construction and completion of two plants located in Coshocton, Ohio and Cloverdale, Indiana. The Coshocton plant's capacity is anticipated to reach 60million gallons/year while the Cloverdale plant is expected to reach 100 million gallons/year. Business Wire - June 23, 2007.

    Brazil and the Dominican Republic have inked a biofuel cooperation agreement aimed at alleviating poverty and creating economic opportunity. The agreement initially focuses on the production of biodiesel in the Dominican Republic. Dominican Today - June 21, 2007.

    Malaysian company Ecofuture Bhd makes renewable products from palm oil residues such as empty fruit bunches and fibers (more here). It expects the revenue contribution of these products to grow by 10% this year, due to growing overseas demand, says executive chairman Jang Lim Kuang. 95% of the group's export earnings come from these products which include natural oil palm fibre strands and biodegradable mulching and soil erosion geotextile mats. Bernama - June 20, 2007.

    Argent Energy, a British producer of waste-oil based biodiesel, announced its intention to seek a listing on London's AIM via a placing of new and existing ordinary shares with institutional investors. Argent plans to use the proceeds to construct the first phase of its proposed 150,000 tonnes (170 million litres) plant at Ellesmere Port, near Chester, and to develop further plans for a 75,000 tonnes (85 million litres) plant in New Zealand. Argent Energy - June 20, 2007.


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Wednesday, July 04, 2007

OECD-FAO Outlook: growing biofuel demand underpinning higher agriculture prices

Increased demand for biofuels driven by high oil prices is causing fundamental changes to agricultural markets that could drive up world prices for many farm products, according to the new Agricultural Outlook published by the OECD and the United Nations’ Food and Agriculture Organisation (FAO). Continued high petroleum prices thus imply the era of cheap food may be over.

The OECD-FAO Agricultural Outlook 2007-2016 [*.pdf] says current hikes in farm commodity prices were not caused by biofuels, but by temporary factors such as droughts in wheat-growing regions and low stocks. But when the focus turns to the longer term, structural changes are underway which could well maintain relatively high nominal prices for many agricultural products over the coming decade (graph, click to enlarge).

Reduced crop surpluses and a decline in export subsidies are also contributing to these long-term changes in markets. But more important is the growing use of cereals, sugar, oilseed and vegetable oils to produce the fossil fuel substitutes, ethanol and biodiesel. This is underpinning crop prices and, indirectly through higher animal feed costs, also the prices for livestock products.

In the United States, annual maize-based ethanol output is expected to double between 2006 and 2016. In the European Union the amount of oilseeds (mainly rapeseed) used for bio-fuels is set to grow from just over 10 million tonnes to 21 million tonnes over the same period. In Brazil, annual ethanol production is projected to reach some 44 billion litres by 2016 from around 21 billion today. Chinese ethanol output is expected to rise to an annual 3.8 billion litres, a 2 billion-litre increase from current levels.

Other findings and projections include:
:: :: :: :: :: :: :: :: :: :: ::

The expectation that world market prices have attained a higher plateau may facilitate further policy reform away from price support. This would reduce the need for border protection and would provide flexibility for tariff reductions.

Given that in most temperate zone countries ethanol and biodiesel production are not
economically viable without government support, a different combination of production technologies, biofuel policies and crude oil prices than is assumed in the Outlook could to lead to lower prices than are projected.

The report points out that higher commodity prices are a particular concern for net food importing countries as well as the urban poor. And while higher feedstock prices caused by increased biofuel production benefits feedstock producers, it means extra costs and lower incomes for farmers who need the feedstock to provide animal feed.

Changing trade patterns
The Outlook also says trade patterns are changing. Production and consumption of agricultural products in general will grow faster in the developing countries than in the developed economies - especially for beef, pork, butter, skimmed milk powder and sugar. OECD countries are expected to lose export shares for nearly all the main farm commodities. Nevertheless, they continue to dominate exports for wheat, coarse grains and dairy products.

World agricultural trade, measured by global imports, is expected to grow for all the main commodities covered in the Outlook, but less rapidly than for non-agricultural trade as import protection is assumed to continue to limit expansion. Nevertheless, trade in beef, pork and whole milk powder is expected grow by more than 50% over the next 10 years, coarse grains trade by 13% and wheat by 17%. Trade in vegetable oils is projected to increase by nearly 70%.

The growing presence on export markets of Argentina and Brazil is staggering. While Brazil’s growth is mostly concentrated in sugar, oilseeds and meats, Argentina’s export performance also covers cereals and many dairy products. Other growing exporters in the developing and transition economies include Russia and the Ukraine for coarse grains, Vietnam and Thailand for rice, Indonesia and Thailand for vegetable oils, and Thailand, Malaysia, India and China for poultry.

Import growth is much more widely spread across countries. However, China’s dominance of oilseeds and oilseed products trade is striking. By 2016, China will have become the world’s largest importer of oilseed meals and it will have further consolidated its leading position in imports of oils and oilseeds. For the latter product, its share in global imports will have risen to almost 50%.

References:
Biopact: Growing biofuel demand underpinning higher agriculture prices, says joint OECD-FAO report - July 04, 2007.

OECD, FAO: Agricultural Outlook 2007-2016 - July 2007.

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China announces 'Agricultural Biofuel Industry Plan': new crops, higher targets

China's Ministry of Agriculture has announced its 'Agricultural Biofuel Industry Plan' which forms the basis for the development of a number of new crop bases to provide sufficient biomass resources to meet the country's growing demand for biofuels. The plan implements the shift away from food grains to non-food crops, as it was announced earlier.

The People's Republic's biofuel targets have now been raised: instead of 12 million tons of ethanol by 2020, the new goal is to produce 6 million tons by 2010 and 15 million tons by 2020. For biodiesel, a target of 5 million tons has been set (more on the previous targets). Under the new vision, bioenergy will make up almost 25% of the nation's energy consumption.

According to the Agricultural Biofuel Industry Plan, released yesterday, the new crop bases will consist of sugarcane, sweet sorghum, cassava and rapeseed for use in the production of both ethanol and biodiesel. The plan rules out the expansion of grain-based ethanol production, in particular corn and potato-based fuels, to avoid any detrimental impact on the food sector. For biodiesel, the shift to non-food crops is easier to implement.

According to the ambitious plan:
The total production of biomass energy from non-grain crops will grow to 500 million tons of coal equivalent, worth some 3 trillion yuan [€290/$385 billion], which will account for 24 percent of the nation's total energy consumption.
Of all the non-grain ethanol resources, sweet sorghum is the favorite among agricultural experts due to its low cost, low needs for inputs and the fact it can be grown on non-arable land. Under the plan, a total of 3.8 million tons of ethanol will be produced annually from the stalks of the sweet sorghum. The plan proposes to integrate sweet-sorghum-based ethanol products into the current oil sales system, a privilege so far reserved for grain-based ethanol products:
:: :: :: :: :: :: :: :: :: :: :: ::

Nine provinces - Heilongjiang, Jilin, Liaoning, Jiangsu, Shandong, Henan, Anhui, Hubei and Hebei - currently have gas stations that offer fuel mixed with 10 percent ethanol. The number of provinces is expected to grow this year as ethanol output is increased.

The country's four existing State-approved ethanol plants, which produce some 1.2 million tons per year, are located in the corn and maize production centers of Heilongjiang, Jilin, Anhui and Henan. Like the many unlicensed producers, the plants mostly use corn.

However, the rapid expansion of corn-based production has had a serious impact on corn prices and last year spurred fears of possible food shortages.

"The new investment is likely to be in plants that produce ethanol without competing with grain supplies or taking up arable land," Zhou Dadi, former director of the energy research institute of the National Development and Reform Commission, said.

Four non-grain-based ethanol plants are currently under construction in the autonomous regions of Inner Mogolia and Guangxi Zhuang and the provinces of Hebei and Shandong, which boast ample supplies of cassava and other biomaterials. It is hoped they can help strike a better balance between ethanol demand and food supply.

With the growth in the production of non-grain based ethanol, the proportion of corn used in the process will fall from the present 90 percent to 70 percent after 2009, Cao Zhi, a market analysis on ethanol production, said.

However, some experts say the country lacks sufficient support policies to ensure the development of non-grain ethanol production.

Non-grain-based biofuels are currently not allowed to enter the market and their producers do not enjoy the same government subsidies as grain-based product manufacturers, Cao said.

References:
China Daily: Crop bases to feed biofuel production - July 4, 2007.

Biopact: Researchers look at key drivers of China's bioenergy strategy - April 10, 2007

Biopact: An in-depth look at China's ambitious biofuels program - August 12, 2006

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Scandinavian groups to build region's largest rapeseed crushing plant

Scandinavian groups AarhusKarlshamn (AAK) and Lantmännen Energi have signed an agreement to invest in a new rapeseed oil crushing plant, in a move designed to meet the growing demands of the food and biofuels industries.

According to fat and oil manufacturer AAK, the new facility will be the largest in any of the Nordic countries. The new plant will have a capacity sufficient to crush and refine all Swedish rapeseed. The joint venture is expected to satisfy the increased demand for rapeseed based products for both foodstuffs and biofuels.

The 400 million Swedish Kronor (€44/US$59 million) investment will significantly increase AAK's current rapeseed capacity. The new plant will be placed within AAK's plant in Karlsham (picture), where Lantmännen's biodiesel production is also placed.

The jointly owned crushing plant is scheduled to come on line in the second half of 2009 and is expected to generate profits from the end of 2009.

Biofuels have become an increasingly hot topic in the food and drink industry over the past few years. In 2003 the EU introduced a directive calling on member states to increase the share of biofuels in the energy used for transport to two per cent by 2005 and to 5.75 per cent by 2010. A new energy strategy, announced on 10 January 2007, establishes that biofuels should make up at least 10 per cent of the energy used for transport in each country.

And as the food and drink industry increasingly competes with the biofuel sector for the same raw materials, food and drink operators are facing increased prices in a number of sectors:
:: :: :: :: :: :: :: :: ::

Earlier this year, the EU's food and drink industry called on the bloc's governments to take action on halting price rises for their supplies, as more crops are diverted for biofuel production.

The Confederation of the Food and Drink Industries of the EU (CIAA) said it was concerned about the impact of the EU's 10 per cent legally binding target will have on the supply of agricultural raw materials in terms of both availability and price.

AAK and Lantmännen said the addition of their new facility will go some way to responding to a surge in demand for rapeseed oil resulting from the increased use of vegetable oils in the energy sector.

AAK, which was unavailable for immediate comment, said in a statement issued today that the plant will use the most modern technology available to industry today, making it one of the most efficient plants in the world.

"We are striving for a growing proportion of high value added products, and a jointly-owned company for the crushing of rapeseed oil is an important step in the right direction," said Jerker Hartwall, AAK's President and CEO.

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Brazilian government frees sugarcane debt 'slaves'

Despite attempts by the Brazilian government to 'humanise' the sugarcane industry, the exploitation of workers continues. The Mobile Verification Task Force, a body created to screen working conditions in agriculture, has discovered a sugarcane plantation near Ulianopolis where more than 1,000 labourers were forced to work in inhumane conditions. This reopens the debate about the social sustainability of biofuels (earlier post, here and here).

Human rights and labour organisations believe that of the 700,000 sugarcane workers, between 25,000 to 40,000 people could be working in conditions akin to debt slavery.

The plantation where the abuse was discovered was located about 250 km (155 miles) from the mouth of the Amazon river near the town of Ulianopolis. The company which runs the plantation denies the charges against it and said that the workers were paid good wages by Brazilian standards.

Labour ministry officials and prosecutors who found the more than 1,100 workers, said they were working 13 hours a day and living in conditions described as 'appalling'. Officials said that the labourers lived in overcrowded conditions with no proper sanitation facilities. There were no provisions for them to store food either.

Many workers in Brazil are thought to fall into debt slavery by paying for transportation to work far from where they live and by buying overpriced tools and food. Farmers in the Amazon region who incur debts are forced to work virtually for free in order to repay the money they owe:
:: :: :: :: :: :: :: :: :: ::

The government's anti-slavery team, the Mobile Verification Task Force, which conducted the raid on the plantation, was founded in 1995 by the Labour Ministry and claims to have freed more than 21,000 workers from debt slave conditions at more than 1,600 farms across Brazil. The latest is the largest such raid in Brazil, a country beset by the problem of slave labour.

Recently, President Luiz Inacio Lula da Silva pledged to bring industry leaders and workers together to "to discuss the humanisation of the sugar cane sector in this country".

He was acting after being criticised for calling Brazil's ethanol producers "national and world heroes", despite critics accusing producers of exploiting workers in the sugar cane and ethanol industry. The Roman Catholic Church estimates there are some 25,000 workers living in slave-like conditions throughout Brazil, most of them in the Amazon.

Ethanol sells in Brazil at half the price for conventional petrol. The vast bulk of the sugarcane from which the fuel is made, is grown in the south-central state of São Paulo.

But even if all forms of 'slavery' were to be rooted out in the sector, the tragedy is far from over. The growing trend towards the mechanisation of the sugarcane harvesting process threatens to push the seasonal labourers who enjoy better working conditions into poverty for good. This situation of workers being caught between backbreaking work and unemployment, can only be solved when profits from the sugarcane industry are distributed more fairly.

In 2004, the Brazilian government launched the ProBiodiesel program, with the explicit aim of producing the biofuel in conditions that benefit small farmers. For biodiesel, a special policy called 'Social Fuel' was created, which guarantees ownership by small farmers (earlier post). But for the sugarcane and ethanol industry there is no such framework.

References:
BBC: 'Slave' labourers freed in Brazil - July 3.


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