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    Spanish company Ferry Group is to invest €42/US$55.2 million in a project for the production of biomass fuel pellets in Bulgaria. The 3-year project consists of establishing plantations of paulownia trees near the city of Tran. Paulownia is a fast-growing tree used for the commercial production of fuel pellets. Dnevnik - Feb. 20, 2007.

    Hungary's BHD Hõerõmû Zrt. is to build a 35 billion Forint (€138/US$182 million) commercial biomass-fired power plant with a maximum output of 49.9 MW in Szerencs (northeast Hungary). Portfolio.hu - Feb. 20, 2007.

    Tonight at 9pm, BBC Two will be showing a program on geo-engineering techniques to 'save' the planet from global warming. Five of the world's top scientists propose five radical scientific inventions which could stop climate change dead in its tracks. The ideas include: a giant sunshade in space to filter out the sun's rays and help cool us down; forests of artificial trees that would breath in carbon dioxide and stop the green house effect and a fleet futuristic yachts that will shoot salt water into the clouds thickening them and cooling the planet. BBC News - Feb. 19, 2007.

    Archer Daniels Midland, the largest U.S. ethanol producer, is planning to open a biodiesel plant in Indonesia with Wilmar International Ltd. this year and a wholly owned biodiesel plant in Brazil before July, the Wall Street Journal reported on Thursday. The Brazil plant is expected to be the nation's largest, the paper said. Worldwide, the company projects a fourfold rise in biodiesel production over the next five years. ADM was not immediately available to comment. Reuters - Feb. 16, 2007.

    Finnish engineering firm Pöyry Oyj has been awarded contracts by San Carlos Bioenergy Inc. to provide services for the first bioethanol plant in the Philippines. The aggregate contract value is EUR 10 million. The plant is to be build in the Province of San Carlos on the north-eastern tip of Negros Island. The plant is expected to deliver 120,000 liters/day of bioethanol and 4 MW of excess power to the grid. Kauppalehti Online - Feb. 15, 2007.

    In order to reduce fuel costs, a Mukono-based flower farm which exports to Europe, is building its own biodiesel plant, based on using Jatropha curcas seeds. It estimates the fuel will cut production costs by up to 20%. New Vision (Kampala, Uganda) - Feb. 12, 2007.

    The Tokyo Metropolitan Government has decided to use 10% biodiesel in its fleet of public buses. The world's largest city is served by the Toei Bus System, which is used by some 570,000 people daily. Digital World Tokyo - Feb. 12, 2007.

    Fearing lack of electricity supply in South Africa and a price tag on CO2, WSP Group SA is investing in a biomass power plant that will replace coal in the Letaba Citrus juicing plant which is located in Tzaneen. Mining Weekly - Feb. 8, 2007.

    In what it calls an important addition to its global R&D capabilities, Archer Daniels Midland (ADM) is to build a new bioenergy research center in Hamburg, Germany. World Grain - Feb. 5, 2007.

    EthaBlog's Henrique Oliveira interviews leading Brazilian biofuels consultant Marcelo Coelho who offers insights into the (foreign) investment dynamics in the sector, the history of Brazilian ethanol and the relationship between oil price trends and biofuels. EthaBlog - Feb. 2, 2007.

    The government of Taiwan has announced its renewable energy target: 12% of all energy should come from renewables by 2020. The plan is expected to revitalise Taiwan's agricultural sector and to boost its nascent biomass industry. China Post - Feb. 2, 2007.

    Production at Cantarell, the world's second biggest oil field, declined by 500,000 barrels or 25% last year. This virtual collapse is unfolding much faster than projections from Mexico's state-run oil giant Petroleos Mexicanos. Wall Street Journal - Jan. 30, 2007.

    Dubai-based and AIM listed Teejori Ltd. has entered into an agreement to invest €6 million to acquire a 16.7% interest in Bekon, which developed two proprietary technologies enabling dry-fermentation of biomass. Both technologies allow it to design, establish and operate biogas plants in a highly efficient way. Dry-Fermentation offers significant advantages to the existing widely used wet fermentation process of converting biomass to biogas. Ame Info - Jan. 22, 2007.

    Hindustan Petroleum Corporation Limited is to build a biofuel production plant in the tribal belt of Banswara, Rajasthan, India. The petroleum company has acquired 20,000 hectares of low value land in the district, which it plans to commit to growing jatropha and other biofuel crops. The company's chairman said HPCL was also looking for similar wasteland in the state of Chhattisgarh. Zee News - Jan. 15, 2007.

    The Zimbabwean national police begins planting jatropha for a pilot project that must result in a daily production of 1000 liters of biodiesel. The Herald (Harare), Via AllAfrica - Jan. 12, 2007.

    In order to meet its Kyoto obligations and to cut dependence on oil, Japan has started importing biofuels from Brazil and elsewhere. And even though the country has limited local bioenergy potential, its Agriculture Ministry will begin a search for natural resources, including farm products and their residues, that can be used to make biofuels in Japan. To this end, studies will be conducted at 900 locations nationwide over a three-year period. The Japan Times - Jan. 12, 2007.

    Chrysler's chief economist Van Jolissaint has launched an arrogant attack on "quasi-hysterical Europeans" and their attitudes to global warming, calling the Stern Review 'dubious'. The remarks illustrate the yawning gap between opinions on climate change among Europeans and Americans, but they also strengthen the view that announcements by US car makers and legislators about the development of green vehicles are nothing more than window dressing. Today, the EU announced its comprehensive energy policy for the 21st century, with climate change at the center of it. BBC News - Jan. 10, 2007.

    The new Canadian government is investing $840,000 into BioMatera Inc. a biotech company that develops industrial biopolymers (such as PHA) that have wide-scale applications in the plastics, farmaceutical and cosmetics industries. Plant-based biopolymers such as PHA are biodegradable and renewable. Government of Canada - Jan. 9, 2007.


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Wednesday, September 20, 2006

U.S. subsidies put Chinese ethanol in Americans' gas tanks

Quicknote bioenergy economics
Americans are accustomed to buying sneakers, toys and even American flags from the People’s Republic of China (PRC), but now, thanks to the combined policies of the PRC’s 10th Five-Year Plan and the Republican Party’s energy plan, U.S. drivers are filling their cars with Chinese fuel—specifically, Chinese ethanol (earlier post).

Ethanol is part of the Bush Administration’s effort to end America's "addiction to oil." There are many reasons to doubt that ethanol made from corn in the US is environmentally friendly, but now its claim to be domestic comes into question. Keith Collins, top economist at the Department of Agriculture, told a Senate committee September 6 that U.S. farmers would need to plant 10 million more acres of corn by 2010 to meet demand for ethanol, food and animal feed. The demand for ethanol, however, is artificial. Congress in 2005 passed an energy bill mandating ethanol use, and the EPA’s proposed regulations would require that 3.71% of all fuel sold in the U.S. be 'renewable', of which ethanol is the most abundant. This summer, ethanol demand outpaced supply, so ethanol policy had the effect of driving up gas prices.

Collins told Congress: "There will be some costs [to rising ethanol production], there is no question about that. But it can be manageable given the objective of reducing foreign oil imports."

How China bypasses the U.S. tariff
On September 4, however, Reuters reported that China would export from 500,000 to 900,000 tons of ethanol. "Most of the ethanol cargoes go directly or indirectly to the United States", Reuters reported, citing ethanol traders.

The U.S. charges a 54-cent tariff on each gallon of imported ethanol. But foreign sellers can still take advantage of U.S. subsidies for ethanol. Under the Caribbean Basin Initiative signed by President Clinton in 2000, a certain amount of ethanol processed in CBI countries can enter the U.S. duty-free. Some Chinese ethanol exports, reported Reuters, "are dehydrated in Caribbean countries for use in the U.S." Unlike imports of most Chinese consumer goods, which occur in a more-or-less free market on the U.S. end, ethanol imports are heavily subsidized by U.S. taxpayers.

'Communist Fuel'
In the U.S. many state governments are subsidizing construction of ethanol distilleries and pumps. On top of the federal ethanol mandate, federal law grants a 50-cent tax credit for each gallon of ethanol a blender (typically a gas station or distributor) buys. Both domestic and imported ethanol qualify for these subsidies. Chinese ethanol, however, benefits from one additional U.S. subsidy. In 2004, the Export-Import Bank of the United States (Ex-Im), a federal agency that finances the exports of U.S. companies, subsidized construction of an "ethanol dehydration facility" in Trinidad and Tobago—exactly the sort of facility through which foreign ethanol passes duty-free into the U.S.

Increased ethanol production was a plank in the PRC’s 10th Five-Year Plan, running from 2001 to 2005. China exported more than 125 million gallons of ethanol in 2005, according to Reuters, more than triple its 2004 rate. China is currently the largest exporter of ethanol after Brazil and the U.S. The PRC’s chief obstacle to expanded ethanol exports is its current crop shortage. To supply the raw material for its ethanol, the Chicago Tribune reports, the PRC is helping Cuba revitalize its sugar industry.

Mr. Carney is the author of "The Big Ripoff: How Big Business and Big Government Steal Your Money," published by John J. Wiley & Sons. He is the Warren T. Brookes Journalism Fellow at the Competitive Enterprise Institute. [Entry ends here].
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