Bioethanol - the green alternative

Posted 11 November 09

Fuel suppliers in Ireland will have to include around 4% of biofuels in their annual fuel sales

Posted 11 November 09

Fuel suppliers in Ireland will have to include around 4% of biofuels in their annual fuel sales from July 2010 in order to reduce CO2 emissions and increase energy security.

According to a statement from the government, the biofuels used must produce 35% less greenhouse gas than their fossil fuel comparators and must meet the EU Sustainability Criteria for biofuels. Furthermore they “cannot come from carbon sinks i.e. rainforests and savannahs” and strict reporting requirements on “social conditions i.e. water cannot be diverted from indigenous populations” will be in place.

Energy minister Eamon Ryan, who announced the Biofuels Obligation said “we do not have oil supplies of our own in Ireland but we can produce biofuels. We need an alternative to fossil fuels in order that we have a secure energy supply into the future. Biofuels can provide part of the answer. This Obligation will place responsibility on fuel suppliers to move towards low-carbon fuel”.

The Obligation “will be on the companies in question and at no cost to the taxpayer” and will be administered by the National Oil Reserves Agency.

To read the article in full please visit The Irish Times.

Wheat supplies set to meet ethanol demand

Posted 10 November 09

The world wheat market is looking more amply supplied to meet the growing demand from the milling and industrial sectors, which includes ethanol, said Keith Davis, managing director of Glencore Grain.

Speaking at a biofuels event in Paris, Mr Davis noted that for 2009/10 production is expected to reach 667 mln tonnes versus use of 643 mln tonnes, while 2008/09 also saw a surplus with production at 687 mln tonnes and use at 640 mln tonnes. This followed a marginal deficit in 2007/08 as production was 609 mln tonnes compared with consumption of 614 mln tonnes.

“A big swing factor will be Australia but this year it looks OK,” Mr Davis commented. The crop there is put at 23 mln tonnes, up from 21.4 mln tonnes in 2008/09 and the dismal 13 mln tonnes in 2007/08.

Mr Davis said output in Kazakhstan should hit 14.5 mln tonnes from 13 mln tonnes and Russia is set for 60 mln tonnes versus 63.7 mln tonnes.

“The Former Soviet Union has amazing potential to increase. In 1956/66 it sowed 70 mln hectares. Now it is just 55 mln hectares and has been as low as 40 mln hectares in 2004/05. This is a huge untapped area.”

EU production is expected to rise to 151.2 mln tonnes from 136.6 mln tonnes. But Mr Davis fears the EU could be left behind having traditionally driven yield gains. “Genetically modified wheat will happen in due course,” he said. “Along with stringent pesticide legislation that is due to come in, the EU’s reluctance on GM may slow the yield increase.”

As for 2009/10 consumption, the speaker said feed use was flat at around 100 mln tonnes, while the milling and industrial use (which includes ethanol) has grown strongly. The all-important ending stocks figure (which fell to 122 mln tonnes in 2007/08 and sparked strong price rises) was put at 186 mln tonnes for 2009/10, the highest since 2001/02. There was 166 mln tonnes in 2008/09.

Likewise, the stocks to use ratio should hit 29% from 26.3% in 2008/09 and the lowest ever level of 19.9% in 2007/08.

Concluding, Mr Davis told delegates there was plenty of scope to raise production to meet demand from ethanol makers and others, especially by using less fallow and/or set-aside in the EU and Former Soviet Union.

Source: F.O. Licht’s World Ethanol & Biofuels Report

DDGS gains ground as low cost feed option

Posted 9 November 09

Demand for distillers’ grains with solubles (DDGS) will continue to grow as livestock producers turn to the feed as a cheaper alternative to maize, Reuters reports.

The average price for distiller’s grain last week in Iowa was $116.25 per ton, compared with $126.25 a year ago, USDA said.

And with the ethanol industry gearing up for a better year in 2010, more distiller’s grain should be making its way into the US livestock sector.

The US Department of Agriculture forecast ethanol production to rise by 13.5% in the 2009 crop year that began September 1, while maize prices could continue to rise as fuel blenders compete for a larger share of a likely record US crop.

Meanwhile, US DDGS production is expected to increase this crop year to 28-30 mln tonnes, up from about 24-25 mln tonnes in the 2008/09 crop year.

Domestic demand for distiller’s grain is growing as US cattle and hog producers look to cut feed costs by boosting the amount of DDGS in feed formulations.

Overseas demand is also on the rise, with exports expected to increase to 6 mln tonnes from 5 mln tonnes this crop year, according to Dan Keefe, manager of international operations for DDGS at the U.S. Grains Council.

“DDGS has protein, fat and fiber, and it’s a good substitute for soy protein, canola protein, fish-meal, even bone-meal,” Keefe said. Distiller’s grain exports may continue to increase in the coming years as more importing countries learn of its benefits, he added.

Source: F.O. Licht’s World Ethanol & Biofuels Report

Grain defended as viable feedstock for ethanol

Posted 5 November 09

A key speaker on the second day of the FO Licht World Ethanol conference has challenged the notion that sugar crops should be considered to be superior to feed grains for the production of ethanol.

Bernard Chaud, director of biofuels projects at Tereos, which produces fuel from sugarcane, beet and grains, said that when the value of the vegetable protein co-products is factored in, grain ethanol can be comparable to sugar crops.

Mr Chaud showed four price principles that must be met for biofuels to work. The first was that currently the pre-tax price of ethanol is higher than petrol so government support is needed.

The second was that grain and sugar prices over the long-term are decreasing because of yield improvements, while crude oil is becoming costlier. “With the current trend, agricultural feedstocks will be more competitive than crude oil before the middle of the century. People ask at what crude oil price biofuels are competitive. Some say $100 a barrel, others something else. I prefer to say they are competitive when 20 bushels of wheat or 1000 pounds of sugar is equal to the cost of a barrel.”

His third price principle was intended to show that in the long term feed cereals should be considered as competitive as sugar crops to make ethanol so long as the value of the protein compensates the difference in processing cost between the two.

Mr Chaud was challenged on a lack of consideration of co-products for sugarcane ethanol such as bagasse for energy, but replied: “Of course the energy component must be taken into consideration and that is how you can get to some very high values for the energy from sugar crops… Cereals are not just energy and there is a growing need for vegetable protein that should not be underestimated. If we go for just energy crops where would the world be?”

He argued that consistency is the best feedstock, with some years sugar crops more competitive and others cereals.

Mr Chaud continued to say that these factors – including the fourth principle that sugar and ethanol prices can be connected – will affect profitability. As each is volatile – and the cumulative effect is even greater volatility – he concluded that the industry needs long-term commitments between shareholders and suppliers and consistent government policy.
If this can be achieved, Mr Chaud was upbeat for growth, saying: “There is no way that we can supersede petrol, but I think we can double or triple production [as is needed to provide a 10% share of the overall market].”

Source: F.O. Licht’s World Ethanol & Biofuels Report

Biofuels industry urged to unite against ‘common enemy’

Posted 5 November 09

The ethanol industry has faced tough times but the real crisis is the world’s slavish dependence on fossil fuels, according to Bob Dinneen, chief executive of the US Renewable Fuels Association.

“In just 25 years there will be 3bn cars as people in Indian and China want to drive like we do in the US and Europe. And these won’t be electric cars, these will be liquid fuels. These cars will use 120 mln barrels of fuel (per day) from 86 mln barrels currently,” Mr Dinneen told the FO Licht World Ethanol 2009 conference in Paris. “Mother Earth does not have this much oil. Even if it did we can’t afford to drill it. And even if we could our environment could not survive the onslaught.”

In his typically passionate style, Mr Dinneen called on delegates to join – wherever they are in the world or biofuels supply chain – to stamp out misinformation in biofuels.
The speaker noted that no nation has been able to build an ethanol industry without strong government support including tax breaks, subsidies and import protection. “It is important countries are allowed to build their own ethanol production with indigenous feedstocks,” he said. “We need to band together; stick together and move forward without cannibalising each others’ markets.”

He noted that the US has faced one of its worst ever economic crises ever but that 31 new ethanol plants were started up with the creation of around 250,000 jobs. The US can meet the rising requirement under the Renewable Fuels Standard (11.1 bln gallons of which 10.5 bln gallons is ethanol), but is constrained by the 10% blend wall.

“On December 1 the EPA decides whether a higher blend can be introduced in the US and to be frank I am not that confident of a 15% or 20% level,” said Mr Dinneen, explaining there was a lack of data on the effect on engines. However, 2% MTBE can be blended with 10% ethanol so Mr Dinneen was hopeful an interim measure would be introduced. “There is no way in the world the US ethanol industry should be held back by a capricious standard that limits use to 10%,” said Mr Dinneen.

The speaker said the biofuels industry must focus on the record-breaking yields farmers are harvesting, the return of by-products into the feed supply and the need for grain ethanol as a foundation for advanced technologies to take on the common threat of enemies.

Asked by The Public Ledger how the Environment Protection Agency might adapt the RFS to a lack of cellulosic ethanol (a 100 mln gallon requirement in 2010, rising to 250 mln gallons in 2001), Mr Dinneen said it was unlikely to be opened up to other advanced fuels, but should be maintained as an important structure for pioneering firms.

“The EPA has some flexibility after two years that the target is not met,” said Mr Dinneen. “It is critically important that cellulosic ethanol producers have a certain, identified market in order to attract investment capital.”

He explained that this was even more important given the failure of a guaranteed loans programme run by the Department of Energy to help cellulosic ethanol producers get hugely important credit. He hoped the failures would be resolved in the next few months and a similar programme by the USDA due out soon would help.

“If we get over these credit issues we can have the production of cellulosic ethanol required in the further out years,” he concluded. “But I don’t think the EPA necessarily needs to do anything in 2010.”

Source: F.O. Licht’s World Ethanol & Biofuels Report

EU set to clarify biofuel sustainability rules

Posted 4 November 09

The European Commission (EC) is getting close to providing clarity on how biofuels will meet sustainability and other criteria, according to Ron van Erck, policy officer at DG Energy and Transport.

The EU’s 27 member states must meet a target of 10% renewable fuels in transport by 2020, with national action plans due in June 2010, ahead of a December 6 2010 deadline to transcribe the EU policy to national legislation.

Mr van Erck told delegates at FO Licht’s World Ethanol in Paris that the onus is on economic operators to provide evidence that they comply with all the criteria if they want their biofuel to qualify for support and count toward targets/obligations.

The speaker admitted that many found parts of the system unclear but that guidance would be coming soon.

One of the hottest topics – indirect land use change – should become clearer in 2010, while there will be guides on how to interpret the directive and how to assess carbon stocks this year.

Voluntary sustainability schemes should be able to apply for EC approval later this month, which would mean then all companies could use them to show compliance with relevant parts of the legislation. “We’re almost there and this will provide economic operators one solution for all 27 member states,” he said.

On land use change and greenhouse gas savings, Mr van Erck said that there is no limit on the types of proof that could be provided, which means maps will be recognised.

However, he admitted the EC is not 100% sure how it will assess the viability of these maps.

Source: F.O. Licht’s World Ethanol & Biofuels Report

Climate Change summit urged to back biofuel growth

Posted 3 November 09

Delegates to next month’s UN Climate Change conference in Copenhagen have a ‘historic opportunity’ to recognise the benefits of biofuels, a leading industry body said today.

In a statement, the Global Renewable Fuels Alliance (GRFA) urged delegates to help develop strategies ‘to ensure that biofuels play an even greater role in meeting climate change objectives’.

Ahead of the conference, the GRFA has released an Industry Position Paper calling for greenhouse gas (GHG) reduction strategies in the transportation sector that ‘take advantage of the verifiable emission reductions available from biofuels’.

“With transportation responsible for 25% of the world’s GHG emissions and rising, it is critical that biofuels form the core of any future mitigation strategy in this important sector,” said Bliss Baker, spokesperson for the GRFA.

“Developing countries have an even greater opportunity with the adaptation of sustainable biofuels programs,” declared Mr. Baker. “Adopting sustainable biofuels programs can deliver real GHG reductions while reducing a crippling reliance on imported fossil fuels for many developing nations,” added Mr. Baker. “This is a unprecedented opportunity for those countries with abundant land mass.”

In order for biofuels to play a meaningful role in climate change strategies the GRFA said it is calling on all governments to adopt biofuels friendly policies, which should include binding targets ‘wherever appropriate’.

The GRFA is also calling on all governments and international bodies to take into account the increasing efficiency of global biofuels production in developing policies as opposed to relying on ‘out-of-date data and outdated arguments’.

Among the other recommendations made by the group is a call for aggressive R&D tax policies that encourage the direct investment in new biofuel technologies.

Source: F.O. Licht’s World Ethanol & Biofuels Report

Strong recovery seen in world ethanol outlook

Posted 3 November 09

The economic outlook for the world bioethanol industry has improved considerably over the second half of 2009, according to Dr Christoph Berg, Managing Director of F.O. Licht.
Speaking at the opening of the the Licht World Ethanol conference in Paris today, Berg said there were various reasons for the more optimistic outlook at present, after a couple of years of relative gloom.

He noted that grain prices were sharply lower, which meant cheaper feedstocks; issues of overcapacity had been addressed to some extent in surplus producing regions; world crude oil and gasoline values had made a substantial recovery, making biofuels more competitive again; and adverse weather conditions in Brazil had greatly reduced the supply of cane ethanol from that country.

The global fuel ethanol supply estimate for late 2009 is 68.5 bln litres, while demand is seen at 68.2 bln litres, leaving a world surplus of just 0.3 bln litres. The reduced surplus compared with previous years is mainly due to continuing tightness in Brazilian supply.

For 2010, assuming the current economic recovery continues, global ethanol supply is forecast to reach 77.1 bln litres, with demand at 76.4 bln litres, leaving a larger surplus of 0.7 bln litres. This assumes a recovery in Brazilian fuel ethanol supplies, based upon improved weather conditions.

The key United States market remains strong, with margins slowly improving despite economic difficulties.

US fuel ethanol capacity is seen at 10.5 bln gallons this year, rising to 11.1 bln gallons in 2010, easily meeting the Renewable Fuel Standard. In all, 31 new plants have come onstream over the past year, despite some closures.

Nevertheless, significant challenges remain, said Berg, notably on sustainability issues such as carbon savings and indirect land use, which could be a make or break for the sector.

“These are highly political issues that must be handled carefully,” he emphasised.

Berg noted that global fuel ethanol capacity growth was slower this year than at any time over the past decade. This grew at just 4% in 2009, sharply down from 34% last year.
In contrast, world fuel ethanol demand remains more buoyant, but growth is still only estimated at 14% this year, down from 33% last year.

Despite this, price corrections have improved margins in the US and EU, with crude prices down 38% year-on-year; corn prices 42% lower; and wheat down 55% on an annual basis.

By contrast, sugar prices have surged by 68% year-on-year, making sugar production much more profitable than ethanol in key producer Brazil.

Another key trend identified by Berg was the growing synergy between the oil and fuel ethanol industries, with Valero’s successful entry into the US sector this year through several plant acquisitions, followed by Sunoco.

Other key global energy players such as BP, Shell and ExxonMobil are now following this lead, particularly in cellulosic biofuels.

Source: F.O. Licht’s World Ethanol & Biofuels Report

UK could deliver up to 80% of biofuels from EU feedstocks, says REA

Posted 22 October 09

A peer review by Imperial College London of work carried out by the Renewable Energy Association (REA) shows that the UK and EU could deliver up to 80% of the greener road transport fuels which the government needs to fulfil its European obligations.

These fuels could be delivered through domestic production, using EU grown feedstocks without increasing the overall land area used for arable crops in the EU27.

In addition, there will be imports of sustainable feedstock and finished biofuels to make up the full UK obligation under the EU’s Renewable Energy Directive. This says that 10% of all energy used in road transport must come from renewable sources by the year 2020.

The REA conducted a modelling exercise to find out exactly where these fuels could come from, and the role of UK and EU producers. The results showed that, while new technologies such as electric vehicles and other fuels such as biogas will undoubtedly make a contribution, the vast majority of the renewable transport fuel will come from traditionally produced biofuels.

Clare Wenner, Head of Renewable Transport at the REA said: “The UK has signed up to the Renewable Energy Directive, and we need the right policies in place if we are to deliver the green fuels to meet its targets. The government should revise the Renewable Transport Fuels Obligation so that the proportion of biofuels increases steadily from 2010 up to the level required in 2020.

“Imperial College London has verified the results which show that these fuels can be produced in a sustainable way. With the right legislative framework, including the implementation of environmental rules under the Directive, it will be possible to limit indirect land use effects.

Land will always be used for food and fuel, and the overall balance of these impacts could be positive as far as food is concerned. In fact, it seems likely that wheat-based biofuels production will not affect the amount of wheat exported by the EU as a whole.”

Figures produced as part of the review show that there is a major opportunity for biofuels in the UK. There is the potential for bioethanol production in the UK to rise by 20 times its current level by 2020, and biodiesel to rise by three times, creating thousands of green jobs.

Clare Wenner said: “This review shows that biofuels can make a major contribution, without adversely affecting the environment or the food chain. However, we cannot afford to hang around if we are going to meet these targets by 2020, and make an effective contribution to combating climate change. There has been too much delay already.”

Source: F.O. Licht’s World Ethanol & Biofuels Report

Ethanol should drive EU biofuel expansion, says Frontier

Posted 14 October 09

Ethanol should be the main focus of European biofuel efforts, according to Richard Whitlock, head of business development at Frontier Agriculture.

Speaking at a biofuels conference in Brussels, Whitlock argued that, although biodiesel made up 79% of biofuel use in 2008, there is far greater potential in ethanol.
“There has been fanfare this year that we have reached 20 mln tonnes of rapeseed production for the first time but if we compare this with production of carbohydrate crops this is relatively small,” he said, noting wheat output was around 135 mln tonnes, sugar beet close to 110 mln tonnes and maize and barley both around 60 mln tonnes.

“Furthermore there are limits on husbandry such as how many times you can rotate the crop before it suffers from disease, while rapeseed is also a larger consumer of crop inputs. The focus should be on wheat and sugar beet, and perhaps to a smaller degree on barley and maize, and that means ethanol is the growth sector.” He acknowledged that there were constraints on the demand side and how the market was currently set up, adding that his view was from an agricultural input position.

As a member of the biofuels committee of the UK Renewable Energy Association, Whitlock released some headline figures from a study that is soon to be released following peer review.

These showed that the EU could increase production of ethanol by between 37 bln to 51 bln litres through a combination of better yields, improved farm technology and use of previously unused land including set-aside (though he noted that, as some non-food crops were already grown on set aside before compulsory set aside was abolished, this figure is not as large as some think).

By comparison, it is estimated that biodiesel production could only rise by 6.7 bln litres, meaning the REA believes it will play a far smaller role in meeting the 55 bln litres of biofuels that are likely to be needed to hit EU targets.

One area that has huge potential in supplying combinable crops is the former Soviet Union, which has seen a 20% or so fall in crop area since 1960. However, Mr Whitlock warned this would need continued political stability and vast improvements in infrastructure to make crop inputs that are taken for granted in Western Europe easily accessible.

Whitlock concluded that challenges remain for world agriculture if mankind wants to continue its lifestyle without population control, including rising prosperity and population, rising demand for food, feed and fuel, weather, global warming and a lack of water.

And to help meet these challenges, a stable political environment (that is not cowed by the “noise” of media and NGOs), prosperous economic infrastructure and aspirations to fast track science, including the use of genetically modified crops.

Source: F.O. Licht’s World Ethanol & Biofuels Report

Oil prices soar above $75 a barrel

Posted 14 October 09

Oil prices surged above $75 a barrel on Wednesday for the first time this year as the dollar remained weak and investors bet that global energy demand is poised to recover.

Crude for November delivery was up 73 cents to $74.88 a barrel. Oil topped $75.15 earlier in the session, reaching its highest level since October 2008.
The price of oil has traded in a range between $65 and $75 a barrel since May.

Wednesday’s advance came as the dollar slumped to a 14-month low on speculation that US interest rates will remain low for a longer-than-expected time.
The dollar index, which gauges the greenback’s value against a basket of rival currencies, slid to a low of 75.45, its weakest level since August 2008.
A softer greenback makes dollar-denominated commodities such as crude oil more appealing to investors using other currencies.

Oil prices were also supported by optimism about the global economic recovery and upbeat forecasts for energy demand next year.

US stock futures were signalling a strong opening for Wall Street as investors cheered strong earnings from JPMorgan Chase and chipmaker Intel Corp. Asian and European shares surged to their highest levels in a year.

On Tuesday, the Organization of the Petroleum Exporting Countries said a recovering world economy could boost crude demand by 700,000 barrels per day next year.

The improved outlook came after the US Energy Information Administration and the Paris-based International Energy Agency raised their 2010 demand forecasts last week.

Source: F.O. Licht’s World Ethanol & Biofuels Report

Higher ethanol blends increase engine efficiency

Posted 12 October 09

A new University of Nebraska study finds that higher ethanol blends increase engine efficiency.

The study, which was funded by the Nebraska Corn Board, found that high ethanol blends provide better energy conversion within an engine than other fuels, meaning less energy to travel further.

The report says that E85 improved energy conversion by 13, 9 and 14%, respectively when compared with E10, for the light, medium and heavy loaded vehicles tested.

Vehicles went through chassis dynamometer testing as part of the study. The dynamometer simulated different road and vehicle operating conditions, allowing researchers to fully measure a number of important data points to measure the performance of different ethanol blends.

Response of the NFU to the article in The Times yesterday

Posted 6 October 09

Letter sent to The Times by the NFU (National Farmers’ Union), following an inaccurate article of the newspaper on biofuels:

Sir

Robin Pagnamenta’s article (Hunger for biofuels will gobble up wheat surplus, The Times, October 5) must be put into context.

Despite this year’s wheat production being lower than in 2008, UK stocks are at double the levels of the five-year average – five million tonnes against the five-year average of 2.5mt. In fact, in the last ten years we have produced near 16 million tonnes four times and 12 million tonnes only once.

The long term prospects are positive with UK farmers able to produce more if the correct market and policy signals are in place. The 2009 harvest reflected falling cereal markets and higher crop input costs affecting production directly.

Biofuels are an efficient use of land producing both an important low carbon fuel to replace fossil fuels and also a high protein co-product that can help reduce our dependence on imported protein for animal feeds.

NFU President Peter Kendall

Furthermore:

- Given the large carryover of stocks, UK wheat prices are likely to remain low. In addition, bumper harvests in the rest of Europe are likely to ensure supply (and low prices) in the near future.

– The UK always imports wheat, including for bread, as this is part of normal trade.

- The wheat used in the wheat-to-bioethanol plant will be of the lowest grade and will not compete with high grade milling wheat, as the one used for bread.

- UK wheat is now the cheapest in the world – giving us a potential competitive advantage to produce biofuels from this feed stock.

Reuters: Analysis - Cheap wheat to help meet EU fuel demand

Posted 31 August 09

• EU capacity to make bioethanol from wheat set to rise

• Brazilian shipments to the EU decline

• EU producers must prove environmental credentials

By Nigel Hunt

LONDON, Aug 28 (Reuters) – A sharp decline in wheat prices driven by a supply glut is set to lead to more of the grain being turned into motor fuel in the European Union.

Demand for bioethanol, a renewable substitute for petrol normally made from either grains or sugar crops, is increasing in the EU. It is seen as a way to reduce emissions of the greenhouse gases believed to contribute to climate change.

Wheat is now in pole position to help meet the demand with the price of alternative feedstock sugar rising to the highest levels in nearly three decades earlier this month [ID:nLC585640] and sugar-derived bioethanol imports from Brazil on the wane.

“Those plants that are flexible in the processing could switch to wheat and get a very cheap feedstock,” said Rob Vierhout, secretary general of the European Bioethanol Fuel Association (eBio) in Brussels.

Wheat futures BL2c1 have fallen sharply to contract lows in Paris during the last few weeks, depressed by larger-than-expected harvests in both France and Germany.

To read full analysis please go to http://www.reuters.com/article/latestCrisis/idUSLS715067

Daily Telegraph - Bentley Continental Super Sports review, can biofuels still save the world?

Posted 9 August 09

We get a preview of the latest tarmac-ripping Bentley, which can run on plant-derived ethanol fuel.
By Andrew English
Published: 05 Aug 2009, Daily Telegraph.

If it’s your Bentley, then the falling needle might be dispiriting as it’ll soon be time to fill her up. If someone else is paying, then it simply means you are being indulged all the more. So grins all round, then, except for the omipresent guilt at burning such quantities of fossil fuel and speeding the greenhouse effect and its concomitant rising temperatures and sea levels.

Except this particular Bentley doesn’t burn fossil fuels, not all the time. This, the latest and meanest of the phenomenally successful Continental series, has the capability of running on bioethanol, which means that plants that make up the fuel have absorbed most of the carbon dioxide that the car then squirts out at a rate of 388g/km.

There is of course, the intriguing thought of Bentley owners queuing with the hoi polloi at Morrisons supermarket forecourts to fill up with E85 bioethanol, although it seems more likely that most Bentley owners will own enough land to grow their own bio petrol.

Nevertheless it is slightly mischievous to think that in overall well-to-wheels CO2 terms at least, owners of this latest Bentley road-ripper, all £163,000 of Continental Super Sports’ worth, will be door-to-door with the most right-on eco warrior in a Toyota Prius or Honda Insight.

The new car produces 621bhp and 656lb ft of torque. When running on 85 per cent bioethanol, the engine uses about 25 per cent more fuel because of its lower energy density. CO2 emissions decrease, too, as there is less carbon in the fuel. The higher octane rating of bioethanol means the engine could have been tuned to give 10 per cent more performance, but the company elected to keep output from the six-litre W12 engine the same whatever it burns. As that means 0-60mph in 3.7sec and a top speed of 204mph, it’s hard to see any one complaining.

Grabbing an early drive in the Super Sports also gave a chance to quiz chief engineer Ulrich Eichhorn on the credentials of his biofuels ideas (also those of Volkswagen’s research and development department, which Eichhorn used to run). Aren’t biofuels a busted flush? Palm oil-based biodiesels have been responsible for much rainforest depletion in Indonesia and Malaysia and maize-based ethanol has been shown to have little well-to-wheels CO2 advantage when grown in the US.

“Since we started on the Sunfuel/Synfuel project [VW’s names for bioethanol and its synthetic equivalents], the economics and environmental advantages of biofuels have got a lot better,” says Eichhorn. That’s not just the vaunted second-generation biofuels derived from household and agricultural waste products, but also the once reviled first-generation fuels.

“These fuels are no longer a village industry,” says Eichhorn. “Sugar cane and sugar beat are a lot better produced than they were. If you look at Brazil’s sugar cane-derived fuel, it is responsible for a 70 to 80 per cent fall in CO2 when used in cars.”

After so much misinformation on biofuels, it is refreshing to talk to such a clear-sighted engineer who approaches the business of reducing CO2 in first principles terms, even if it is from the driving seat of a 204mph luxury car.

“Last year the world produced more than 70 billion litres of biofuel,” he says. “Small scale compared to the oil industry but not negligible, either. Volkswagen’s analysis shows that to gain real well-to-wheels benefits in the immediate term there are two best solutions: biofuel ethanol used in a properly-developed engines, or battery-electric given good batteries which are charged with electricity generated from renewable resources.”

While battery-electric vehicles are a hot topic at the moment, they are not an unalloyed transport solution. As colleague David Millward has discovered testing the Zebra battery Smart, the disadvantages are a limited range and long recharge time as well as the high price.

Renewable electricity generation capacity such as wind, solar and wave power is strictly limited and there are a lot of calls on it already without transport muscling in. The Government has recently embraced the ‘big idea’ of the UK becoming a centre of excellence for battery car-making, but the biofuels targets it signed up to a couple of years ago are still in place. The Renewable Transport Fuels Obligation calls for five per cent of total UK fuel sales to be of biofuel by next year and the European Commission has proposed that 10 per cent of road fuels sold in Europe should be of biofuels by 2020.

Even though there are reasonable concerns about the environmental dangers of wholesale biofuel production, a European Environment Agency report suggests that there is more than enough potential to expand European production of biofuels in an environmentally compatible manner to about 295 million tonnes of oil equivalent by 2030, representing about 15-16 per cent of European primary energy requirements.

In other words, biofuels are by no means a busted flush even if it’s unlikely that they’re all going to be burned in Bentleys.

To read article in the Daily Telegraph – http://www.telegraph.co.uk/motoring/carreviews/5977704/Bentley-Continental-Super-Sports-review.html

Shell chief favours biofuels over electric cars

Posted 22 May 09

Royal Dutch Shell is assuming the economic downturn could last several years when assessing the outlook for oil prices and planning investment.

Chief executive Jeroen van der Veer also said on Tuesday that this year the company was focussing on growing its dividend and planned to keep investments at a relatively high level.
At the company’s annual meeting of shareholders, Van der Veer said he expected volatility in oil prices and downstream margins to continue.

“We have to plan on the basis that the downturn could last for several years,” Van der Veer said in a speech.

From a peak of near $150 (96.95 pounds) a barrel last July oil collapsed to around $30 a barrel last December. Since then it has doubled to around $60.

Van der Veer also said supplies of “easy oil” – that which is relatively easier to drill for and transport – will not match demand in the long term. Shell would focus its renewables efforts on developing biofuels in the next few years, he said.

The CEO of Shell, Jereoen van der Veer, has recently dismissed the idea of using electric cars. In an interview with the Associated Press in Germany yesterday he put down electric vehicles by saying, “My milkman used to drive around in electric cars a long time ago … What’s new?”

He then went on to suggest that an electric car infrastructure would be too difficult to establish and so EVs just don’t make sense.

Shell is also looking at investments in the biofuels sector in Brazil, and has reportedly contacted Cosan and several other major players.

Source: F.O. Licht’s World Ethanol & Biofuels Report, 19 May 2009

EU bioethanol producers see rising output to 2020

Posted 5 May 09

BRUSSELS (Reuters) – Europe is likely to pump out increasing amounts of bioethanol over the next 10 years, posting gradual annual output rises as an EU-imposed deadline nears for boosting renewable energy, an industry official said on Monday.

While wide discrepancies remain among the European Union’s 27 countries in terms of their bioethanol industries, overall production has jumped exponentially since the EU launched its first biofuels directive with renewables targets in 2003.

“Last year we saw a strong increase in output again, around 60 percent higher and mainly due to France and its very ambitious target,” said Rob Vierhout, secretary-general of EU bioethanol fuel association eBio, based in Brussels.

Last year, EU producers turned out 2.82 billion liters of bioethanol, up from 1.80 billion in 2007. Back in 2004, EU output was just 528 million liters, industry figures show.

To read article in full please visit Reuters page here.

Obama to form interagency biofuels group

Posted 5 May 09

NEW YORK, May 4 (Reuters) – President Barack Obama will direct the heads of three U.S. agencies to make the biofuels industry cleaner and encourage output of ethanol made from non-food crops, according to a draft memo obtained by Reuters on Monday.

The Biofuels Interagency Working Group, to be headed by the secretaries of the Environmental Protection Agency, the Department of Energy and the Department of Agriculture, will be asked to identify policies that would make biofuels more environmentally sound and encourage production of “flex-fuel” cars that can run on either gasoline or fuel that is mostly ethanol, according to the memo.

In addition, Obama will ask Agriculture Secretary Tom Vilsack to “immediately begin refinancing of existing investments in renewable fuels as needed to preserve jobs in ethanol and biodiesel plants, renewable electricity generation plants and supporting industries,” according to the memo.

To read article in full please visit The Guardian page here.

Shell says biofuel may make up 10% of fuel mix in ‘few decades’

Posted 1 April 09

Royal Dutch Shell, Europe’s largest oil company, said biofuels may account for as much as 10% of global transport fuel in the coming decades. “We believe biofuels could grow from just 1% of the world’s transport-fuel mix today to as much as 7-10% over the next few decades,” Chief Executive Officer Jeroen van der Veer said in a speech published on Shell’s Web site today, which he will deliver tomorrow at the Paris International Oil Summit. Shell, based in The Hague, said last month it will focus on biofuels instead of solar, hydrogen and wind energy for the next few years.

The company expanded a research agreement with the US’s Codexis in March to accelerate the commercialization of the next generation of biofuels, made from non-food crops. Energy producers around the world are investing in new fuels as governments push companies to trim greenhouse-gas output, blamed for global warming. The European Union ruled last year that at least 10% of land-transport energy in each member country must come from renewable sources, led by biofuels, in 2020. That’s part of a broader goal to more than double the overall share of renewables in the EU to an average 20%. “We think commercial volumes of next generation biofuels could be on the market in 5 to 10 years,” Van der Veer said. Shell distributed 6 billion liters of so-called first-generation biofuels last year, according to the CEO.

First-generation biofuels are made from sugar, starch, vegetable oil or animal fats using conventional technologies, while second-generation biofuels are made from lignocellulosic biomass feedstocks using advanced technical processes, according to a definition from the Rome based Food and Agriculture Organization of the United Nations.

In BLOOMBERG, April 1, 2009

Record grain supplies forecast for 2009/10

Posted 27 March 09

World grain supplies should reach an all time record in 2009/10, as increased stocks offset a small drop in production, the International Grains Council (IGC) said.

The world’s 2009-10 grain crop is expected to be the second largest crop on record, forecast at 1.725 billion tonnes, said the report.

This is around 3% lower than world grain production in 2008/09 as grain plantings fall slightly due to some switching to oilseeds, the IGC said.

“There are some indications of weakening grain demand, especially for animal feed, due to financial and economic difficulties in many countries,” said the report.

The IGC estimates world wheat production in 2009/10 at 651 mln tonnes, down 5% on 2008-09 output of 688 mln tonnes, with an expected 1% fall in plantings.

World wheat carry-over stocks in 2009/10 are expected to rise to 171 mln tonnes, from 160 mln tonnes in 2008/09.

“Winter wheat is developing well in Europe and the CIS (Commonwealth of Independent States) and rains in China and the U.S. southern Plains eased crop concerns there,” said the report.

From F.O. Licht’s World Ethanol & Biofuels Report

BP Global sticks to its alternative energy guns

Posted 20 March 09

Oil super-major BP has said that it will invest up to US$1 billion in solar, wind and biofuels projects this year, thus confirming it has no plans to abandon its alternative energy investment programme.

Announcing a new strategy for the renewables division at the UK-based company, CEO Tony Hayward said: “We will invest in a focused and disciplined way in the areas where we believe we can have the greatest competitive advantage.” “In 2009, we expect to invest between US$500 million and US$1 billion in alternative energy.”

- The money will fund the optimization of the company’s solar manufacturing operations. Last year, the company’s solar sales increased by more than 40% and an efficiency drive saw facilities in Sydney and Madrid closed down.

- The investment will also ensure the continued growth of BP’s wind power business in the US, where it has the third-largest wind farm portfolio in the country. “We have the most attractive opportunities in the US so we made a strategic decision to focus our portfolio there,” said Hayward.

- The energy giant is also keen to make progress on its bioethanol programme, which it began last year with a joint venture project in Brazil. It will also bring biobutanol to market and develop lignocellulosic conversion technology, which turns plant material into biofuels.

- Furthermore, BP said it would continue its investment in a joint venture with Al Masdar to fund a hydrogen energy scheme in Abu Dhabi. The project aims to demonstrate pre-combustion hydrogen power technology at a power plant that will also use carbon capture and storage (CCS).

Contrary to press speculation, BP will not abandon its renewables programme, Hayward said, adding that the alternative energy division was still a core part of BP’s growth strategy. “Despite the economic downturn, we believe that a disciplined approach to alternative energy continues to offer good opportunities,” he said.

BP is still on track to spend US$8 billion on renewables over 10 years – a plan that was announced in 2007. The alternative energy arm of BP was set up in 2005 as the renewables investment arm of the oil and gas company. Last year, investment from the division reached US$1.4 billion.

From Renewable Energy Monitor, NewsBase

Biofuel flows through Rotterdam up 80% last year

Posted 19 March 09

Flows of biofuels through the Dutch port of Rotterdam increased by about 80% in 2008 to 5.7 mln tonnes, the port authority said on Tuesday.

About 2.7 mln tonnes of biodiesel passed through Europe’s biggest port in 2008, up from 1.2 mln tonnes in 2007. Around 2.4 mln tonnes of bioethanol came through Rotterdam, up from 1.6 mln tonnes the previous year.

About 0.6 mln tonnes of the gasoline additive ETBE was also handled, double the amount seen in 2007.

In 2009, the port said it expected imports of biodiesel from the United States to decline as a result of the European Union’s decision to impose heavy import duties on US biodiesel.

On March 12, the EU said it would impose the duties on US imports while an investigation is held into allegations the US green fuel is sold cheaply in Europe with the help of subsidies.

Rotterdam port said the lower throughput of US biodiesel would be offset by an increase in intra-European flows.

From FO Licht’s World Ethanol & Biofuels Report

No conflict between crops for food and biofuels, says NFU

Posted 12 March 09

Speaking at an agricultural conference in London, Jonathan Scurlock, chief adviser on the environment and renewable energy to the National Farmers’ Union of England and Wales (NFU), said that the ‘food vs. fuel’ debate in the media is misleading.

“There is no conflict between food and fuel production – there has never been,” Scurlock told the Agra Europe Outlook 2009 conference on the future of agriculture.
“They are simply alternative uses of a resource. Agriculture needs to see this as an opportunity rather than a threat.”

With the global population predicted to reach 9 bln by 2050, food production needs to double – but Scurlock said biofuels production will not stand in the way of that goal by using up land needed to grow food crops.

“We’ve doubled world food production before, and we can do it again,” he claimed. “The world is not short of land, it is short of agricultural investment. There are many problems with the development of agriculture in developing countries.”

Challenges faced by developing world farmers included a lack of access to micro finance schemes, input costs, infrastructure to take products to market, and lack of information on market prices due to the unavailability of technology such as mobile phones and computers, Scurlock said.

Agricultural land can also be used for a number of purposes, Scurlock explained; for example producing food and fuel crops in rotation.

Factors driving the need for biofuels included climate change – which is set to cause extreme weather events, Scurlock said, and soaring oil prices.

We need to move from a culture of ‘embedded fossil carbon’ towards a sustainable resource-based economy, Scurlock emphasised.

Renewable energy technologies available to farmers now include anaerobic digestion, wind and solar power, and on-farm biodiesel manufacture.

An anaerobic digestion plant typically costs around GBP750,000, Scurlock said – and he believed farmers would be willing to make the investment as it was possible to begin to make a profit within five or six years.

From FO Licht’s World Ethanol & Biofuels Report

Sky Car featured in this weekend’s Mail on Sunday LIVE magazine

Posted 2 March 09

Follow the link below to see the long article on the Sky Car (sponsored by Ethanol Ventures and Future Capital Partners) featured in this weekend’s Mail on Sunday LIVE magazine.

http://www.mailonsunday.co.uk/home/moslive/article-1151059/The-car-believed-fly.html

Renewable Fuels Digest coverage of SkyCar’s trip to Timbuktu

Posted 24 February 09

Coverage of the SkyCar London-Timbuktu adventure has appeared this month in Renewable Fuels Agency’s newsletter, Renewable Fuels Digest. Ethanol Ventures and Future Capital Partners have sponsored this amazing adventure – for more info please see page 4 of Issue 7 in the following link:
http://www.renewablefuelsagency.org/reportsandpublications/renewablefuelsdigest.cfm

Brazilian ethanol exports set to fall

Posted 11 February 09

Brazilian ethanol exports are expected to fall in 2009 from 5.1 billion litres in 2008, according to Geraldine Kutas, international adviser to Brazil’s Cane Industry Association (UNICA).

“We don’t expect to export as much as we (Brazil) exported in 2008, mainly because of low oil prices,” she said in a question-and-answer session at the Kingsman Dubai sugar conference. She gave no figures.

At the same event, the head of agricultural consultant Datagro said he expected Brazilian ethanol exports to fall to 3.75 billion litres in 2009/10 from 5.05 billion in 2008/09 (crop year ending April 30 2009), Reuters reports.

From FO Licht’s World Ethanol & Biofuels Report

World fuel ethanol production seen rising to 166 bln litres by 2020

Posted 10 February 09

World fuel ethanol production will reach about 166 bln litres (44 bln gallons) by 2020 – a rise of about 155% as compared with 2008.

This is the forecast made in F.O. Licht’s important new market intelligence report, entitled ‘World Ethanol Markets – the outlook to 2020’.

The study predicts a significant rebound in ethanol consumption growth, after some correction this year – and also predicts only a very limited market emergence for ‘second generation’ non-agricultural crop-based biofuels by the end of the next decade.

The strongest increase will be recorded in the Americas where fuel ethanol production is expected to rise to around 142 bln litres (37.5 bln gallons) by 2020, up around 82 bln litres in the projection period.

Asia will also produce more, but as fuel ethanol programs there are in their infancy the rise will be much lower in absolute terms.

The continent is forecast to produce about 11 bln litres by 2020, the largest part of which in India, Thailand and China.

In Europe, a coherent biofuels policy will raise output strongly and the total increase in fuel ethanol production by 2020 may reach 11 bln litres.

But development in the other sectors of the ethanol market – industrial and beverage – will be much less dynamic, Licht claims.

The market for beverage alcohol in particular is a mature one, with negative growth rates recorded for some countries. The market for industrial alcohol, meanwhile, is growing in line with the Gross Domestic Product in many countries.

Licht forecasts that the growth curve for fuel ethanol should begin to flatten by around 2011 or 2012 as the traditional paradigm of the fermentation of agricultural feedstocks will by then have reached its limits.

But it can be expected that by then the introduction of new crop and industry technologies will extend the life-cycle of this product to at least 2020 if not beyond.

From FO Licht’s World Ethanol & Biofuels Report

Hype over biofuel impact on food prices was a red herring, says Fischer Boel

Posted 30 January 09

The recent evolution of food prices is clear proof that biofuels have only a marginal impact on food prices, according to EU Farm Commissioner Mariann Fischer Boel.

Speaking this week at the Konrad Adenauer Stiftung research centre in Germany, she highlighted that food prices have fallen away from recent peaks while biofuel production has remained constant.

Fischer Boel explained: “Now we see clearly that last year’s media storm about biofuels was something of a red herring: and thankfully, that red herring has swum away.

“There has been no U-turn in biofuel policy in the European Union, the US or other large production regions, and yet agricultural prices have fallen a long way. So biofuel production was not the main driver of higher prices.”

Fischer Boel indicated that this should mean no turning back on EU biofuels policy, constituting a crucial element in the EU’s environmental and fuel security goals.

December’s agreement on the EU Climate and Energy Package granted biofuels an important role in the EU energy mix, setting member states a target of drawing at least 10% of transport fuels from biofuels and other renewable sources by the year 2020.
Prices have halved
Worries about the impact of biofuels grew last year as food commodity prices hit major peaks, but Fischer Boel explained that prices have now halved for skimmed milk powder and soft wheat since spiking in 2007 and 2008.

While dismissing the biofuel factor, Fischer Boel highlighted the impact of other potentially distorting elements in the food market.

She acknowledged that energy and labour costs have major effects on the final prices of food, but reiterated her calls for vigilance in order to ensure drops in farm gate prices are passed on to consumers in the same way that increases in raw commodity prices are.

“There’s not much that the CAP can do about issues like this one,” she warned, recalling the recent food price roadmap launched by the Commission to encourage national competition authorities to crack down on anti-competitive actions in the food supply chain.

From FO Licht’s World Ethanol & Biofuels Report

Most biofuels sold in UK continue to be imported

Posted 19 January 09

The UK’s Renewable Fuels Agency (RFA) has released figures showing major fuel suppliers are continuing to fail government targets to supply biofuels that meet environmental standards.

Nine companies are performing below their targets, including BP, which managed to report just 4% of its biofuels as meeting standards recognised by the Agency.
Esso, Chevron, Murco, Prax and Topaz have failed to report any biofuels being supplied within UK transport fuel as meeting any environmental standards.

According to the figures, 670 mln litres of biofuel was supplied to the UK transport market in the first six months of the legal requirements coming into force.

From April to October 2008, just 20% of that biofuel met a recognised environmental standard.

The government has set a voluntary target for 30% of biofuels to meet environmental standards this year, rising to 50% next year and 80% in 2010/11.

The figures are more positive for biofuels made in the UK, 98% of which met an environmental standard. However, 8% of biofuels supplied to UK forecourts came from British production plants according to the figures.

“We believe that biofuels should be sustainable,” Nick Goodall, CEO of the Agency, says. “The first half year’s experience of the Renewable Fuels Transport Obligation (RTFO) in the UK and the good performance of several companies are demonstrating that the biofuels industry can meet sustainability standards. The challenge for us now is to raise performance across the board.”

The RTFO in figures:

20% met an environmental standard (target 30%)
47% greenhouse gas savings achieved (target 40%)
84% biodiesel; 16% ethanol
92% imported; 8% from the UK
98% of UK biofuels meet standards
670 mln litres of biofuels supplied

*First half 2008/9 figures

(From FO Licht’s World Ethanol & Biofuels Report)

Skycar leaves for epic journey, The Guardian

Posted 14 January 09

To see video of Skycar sponsored by Ethanol Ventures on Guardian’s website got to link:
http://www.guardian.co.uk/science/video/2009/jan/14/parajet-skycar

James Bond’s favourite inventor, Q, would probably approve of the Parajet Skycar, but even 007 might think twice about the hazardous mission that awaits it.

At 10am today the vehicle that can “drive like a car” and “fly like a plane” will begin a journey from the salubrious surroundings of Knightsbridge, London, to Timbuktu.

The trip of 6,000km (3,700 miles) will take the car – in plane mode – over the strait of Gibraltar, the Pyrenees, the Sahara and finally to the Malian city.

As well as natural barriers, the team has been warned about the threat of kidnap in volatile parts of Africa and the car will have to negotiate a minefield in Mauritania – “I might fly that one,” said 45-year-old expedition leader Neil Laughton.

When the need for flight arises – estimated to be for 40% of the journey – a ParaWing, a parachute of the type used by paragliders, will be dragged behind the modified off-road buggy and the propeller on the back of the vehicle will boost the Skycar down whatever happens to be serving as an improvised runway. When it reaches 45mph, enough lift should be generated to get the car airborne, its weight supported only by “a silk handkerchief, a large one at that”, said Laughton.

Emphasising that the journey would be the Skycar’s maiden voyage, the expedition leader admitted the car had not yet been tested to any “distance, heat or endurance” and that there was an element of “mad Brits” about the adventure.

Its inventor, Gideon Cardoso, 28, dubbed the “boy genius” by Laughton, will accompany the former SAS officer for part of the journey and a support team of up to 13 people will be at hand.

Cardoso has visions of the Skycar being sold to the public for “beating congestion … or providing a low-cost method of reaching remote regions”. But the expedition is not just about proving the viability of this unique vehicle.

The adventurers plan to raise more than £100,000 for a number of charities, including Alive and Kicking, which distributes footballs bearing health advice in Africa. The plan is for the flying car to descend on African villages and for the team to challenge the inhabitants to a game of football before flying out. “I can’t wait to see their face,” said Laughton.

Flying car takes to the skies, BBC News

Posted 13 January 09

The world’s first road-legal, bio-fuelled, flying car is about to embark on its maiden voyage.

Former British army officer Neil Laughton plans to journey from London to Timbuktu in the Skycar.

He described it as a type of dune-buggy that has been turned it into an aircraft with a parachute and propeller fan.

To see video of Skycar – running on biofuel and sponsored by Ethanol Ventures – please go to BBC’s page

Photos: From London to Timbuktu-in a flying car

Posted 13 January 09

To see photos of Skycar sponsored by Ethanol Ventures go to link:
http://news.cnet.com/2300-17938_105-10000234-1.html

British adventurer and pilot Neil Laughton poses in his Parajet Skycar in London on Tuesday. Laughton and his Parajet Skycar Expedition team are on Wednesday kicking off a 3,600-mile journey from London to Timbuktu in the vehicle, which is essentially a dune buggy with a fan motor and paragliding wing attached. Creators call it the “world’s first bio-fueled flying car.”

The prototype Skycar will travel by land and air through France, Spain, Morocco, the Western Sahara, Mauritania, and Mali, returning home via Senegal. Joining Laughton for part of the trip will be engineer Gilo Cardozo, the brain behind the Parajet Skycar. The pair has participated in past flying expeditions to the Himalayas, Alps, and Venezuela.

Photo credit: Zuma Wire West Photos

EU backs 10% renewable energy in transport, boosting biofuels

Posted 18 December 08

The European Union agreed to require at least 10% of energy for road and rail transport in 2020 to come from renewable sources led by biofuels while adding checks to prevent land damage and food shortages. The European Parliament’s vote today encourages the use of biofuels – made primarily from crops such as rapeseed, wheat, corn and sugar – and green electricity to fight climate change and reduce reliance on oil imports. The new law imposes the 10% target for renewable energy in land transport on each member country. The EU assembly approved bonuses for biofuels that don’t compete with food crops and included a review in 2014 to assess the impact of the 2020 target. Biofuels, the main renewable energy for transport, risk displacing food production unless a “second generation” of fuels from non-food sources like farm and industry waste is developed. “This is a milestone in our European energy policy,” said Claude Turmes, a Green member who steered the law through the 27-nation Parliament in Strasbourg, France. EU governments signaled support for the legislation in early December when they struck a compromise with Turmes, making final approval a formality in the coming weeks. Biofuels, which include ethanol and biodiesel, offer the prospect of reducing the use of fossil fuels blamed for global warming. They also help the EU diversify its energy mix and lessen dependency on oil- and natural gasproducing countries. The European Commission, the EU’s regulatory arm, proposed in January the 10% requirement for renewable energy in transport in 2020 on every member state.

BLOOMBERG, December 17 2008

EUROPE – EU’s 2020 vision

Posted 18 December 08

After prolonged negotiations, the European Parliament has finally approved the European Union’s climate change package, which aims to reduce carbon dioxide emissions by 20% by 2020. The package, agreed at a summit in Brussels on December 12, was passed into law by a majority of MEPs on December 17. However, while some are hailing the deal, others have criticised it for making too many compromises, which they say will water down its longterm impact. The so-called “20/20/20” climate agreement, which the EU hopes will become a model for other nations, commits member countries to cut carbon emissions by 20% by the year 2020 (compared to 1990 levels), and also to raise the use of renewable energy sources to 20% of the overall energy mix, and reduce total energy consumption by 20% by improved efficiency.

French President Nicolas Sarkozy dubbed the plans “historic,” while EC President Jose Manuel Barroso said they were “the most ambitious proposals anywhere in the world.” Before the wording of the agreement was fixed, however, a number of concessions and opt-outs were introduced to limit the deal’s negative effect on European heavy industries already struggling to cope with the current global economic crisis. Germany was concerned its cement and steel production would be badly affected by the EU’s Emissions Trading Scheme (EU ETS), which would have required those sectors to pay for all CO2 emissions permits as from 2013. They warned this could have persuaded companies to relocate and pollute outside the EU, a move dubbed “carbon leakage.” But in the revised deal, sectors “at serious risk” will be given permits free of charge. Around 90% of European manufacturing is thought to fall into this category, although to qualify they must also be seen to be using the cleanest technologies available for their industries. A separate compromise solution was offered to Poland, which produces around 90% of its energy needs from coal, and other Eastern European countries. The Poles had raised concerns that the cost of emissions permits there would lead to a sharp rise in electricity prices. Despite these opt-outs, EU leaders were quick to point out that the original 20/20/20 targets remained unaltered. “You will not find another continent that has given itself such binding rules,” said Sarkozy. “Europeans can say: ‘We delivered. We did it.’”

(Article extracted from Renewable Energy Monitor)

UN Conference Calls for Climate Change Targets

Posted 15 December 08

A segment on CNBC’s flagship ‘Squawkbox’ morning business programme, in which David Knibbs and the President of the European Renewable Energy Council are interviewed on their opinions on the climate change targets. To view video, please click the following link: http://www.cnbc.com/id/15840232?video=959454811&play=1

EU biofuel producers welcome affirmation of 10% binding target for 2020

Posted 9 December 08

The European Bioethanol Fuel Association (eBIO) has welcomed the political agreement reached between the EU Council of Ministers and the European Parliament on the biofuels part of the draft Renewable Energy Sources Directive and congratulates both the French Presidency and the European Commission with the achieved result.

“This Directive will assure that only those biofuels that comply with unprecedentedly strict environmental and social sustainability standards can be used. Those arguing that this is bad legislation are not serious and disqualify themselves,” said Ramón de Miguel, President of eBIO.

To read article from FO Licht’s World Ethanol & Biofuels Report in full, please download the PDF below:

• EU biofuel producers welcome affirmation of 10% binding target for 2020

Press coverage for Bear Gryll’s injury in Antarctica

Posted 8 December 08

Please visit diary on JourneyAntarctica2008 for more details.

You can download the PDF below for press coverage.

• Bear Gryll's - press coverage

EU Cereals for biofuels

Posted 8 December 08

Europe should not rely on imports from Brazil to help it to achieve targets on biofuels use, a report by Ethanol Ventures, the investment group, and Vireol, the bioethanol producer, argues. Cereal produced in the European Union can help it to ensure 10 per cent of transport fuel is provided from renewable sources by 2020.

The Times, 8 December 2008

‘Man vs. Wild’ host injured in Antarctic expedition (CNN)

Posted 7 December 08

Adventurer and TV show host Bear Grylls injured his shoulder in Antarctica during an expedition to raise money for an international charity, the Discovery Channel said Sunday. Grylls was injured Friday night after falling during the expedition, which was not for the Discovery Channel, according to the network’s statement. The statement said that Grylls is returning to the UK to receive medical attention. “Once he sees a doctor, we will have a better sense of the level of seriousness of his shoulder injury and the recovery time needed to get him back to his full physical activity,” according to the statement.

Grylls, 34, is the host of Discovery’s “Man vs. Wild” in which he demonstrates extreme measures – including eating snakes and insects – used to survive in harsh environmental conditions. In his blog, Grylls said the aim of his expedition in Antarctica – sponsored by Ethanol Ventures – is “to promote alternative energies and their potential.”

“We will be using lots of different forms of alternative power, including wind-powered kite-skiing, part bio-ethanol powered jetskis and inflatable boats, electric-powered paragliders,solar- and wind-powered base camps – and good old foot work,” Grylls wrote in a November 14 entry. Grylls is a former member of the British Special Forces and has broken his back in several places during his service. In his blog, he said he and his wife Shara are expecting their third child in January.

Vireol Sees Shortage of Biofuel to Meet EU Targets

Posted 4 December 08

By 2011-12, the European Union is going to be “incredibly short” of the biofuel needed to meet its targets, as tight credit markets will stunt the necessary production expansion, David Knibbs, commercial director at U.K. biofuel producer Vireol PLC, told Dow Jones Newswires Thursday.

“There’s an industry waiting to be financed,” said Knibbs.

Vireol, backed by private equity group Future Capital Partners, has plans for two wheat-based bioethanol plants in northern England, with its first plant due to begin production in 2011.

E.U. legislation is set to require 10% of transport fuels, which Knibbs estimates will equate to around 40 billion liters of biofuel, to be derived from renewable sources by 2020.

“If you look at where we need to be come 2020, I think we’re going to need something like 2.9 billion liters of ethanol (a year) in the U.K. to meet targets,” Knibbs said.

However, the three planned bioethanol projects in the U.K., including a joint venture between BP PLC (BP.LN), DuPont and Associated British Foods (ABF.LN), a separate plant by Ensus, as well as Vireol’s, will only have capacity for around 1 billion liters a year, said Knibbs.

“A combination of the credit crunch and uncertainty in the legislative environment has made it incredibly difficult for biofuel companies looking for finance,” said Knibbs.

The U.K. already has legislation in place requiring 2.5% of all road transport fuels to be derived from renewable sources, but earlier this year the government announced it would be taking a more cautious approach to the planned increase of the mandatory blend to 5%, following concerns about the environmental impact and sustainability of biofuels.

However, Knibbs said Vireol’s wheat-based ethanol would achieve greenhouse gas savings of 50% compared with fossil fuels, “with scope for improvement.”

Vireol is in the final stages of forging an agreement with a grain supplier to secure the 1 million tons of wheat it will need each year to operate its plants.

The wheat will not necessarily be sourced from within the U.K. and may come from other wheat-growing regions including the Black Sea, said Knibbs.

Biofuels have also raised alarm on their impact on land use, as countries have been criticized for clearing forests for palm oil plantations in particular – another biofuel feedstock.

Knibbs argues governments’ need to understand that some biofuel feedstocks are better than others for achieving environmental benefits and sustainability.

He explains these as; “Feedstocks that are grown in a sustainable mannner, from yield increases, not from land use change.

DOW JONES, 4 December 2008
Sarah McFarlane

EU negotiators approve 10% renewable energy in land transport

Posted 4 December 08

European Union negotiators agreed to require at least 10% of energy for road and rail transport in 2020 to come from renewable sources led by biofuels while adding checks to guard against land damage and food shortages. The accord among representatives of the European Parliament and EU national governments encourages the use of biofuels – made primarily from crops such as rapeseed, wheat, corn and sugar – and other renewable sources like green electricity in a bid to fight climate change and reduce reliance on oil imports. The negotiators added bonuses for biofuels that don’t compete with food crops and included a review in 2014 to assess the impact of the 2020 target. Biofuels, the main renewable energy for transport, risk displacing food production unless a “second generation” of fuels from non-food sources like farm and industry waste is developed. “This sends a huge, positive message,” Claude Turmes, the 27-nation Parliament’s lead negotiator on the law, said today after the deal in Brussels. The draft legislation, which would impose the 10% target for renewable energy in land transport on each member country, still needs to be approved by the full 785-seat assembly and European national governments.

BLOOMBERG, December 4 2008

Hopes for Renewable Energy Directive agreement by Christmas

Posted 3 December 08

European negotiations on renewable and low carbon energy legislation are continuing this week, with hopes of a resolution on measures including the Renewable Energy Directive before Christmas.

Two of the main issues to be discussed are expected to be biofuels sustainability and a proposed review of climate change targets set for 2020 in six years’ time.

MEPs are giving the European Union’s Climate and Energy Package a debate in Brussels today, while tomorrow the Parliament will debate the measures with the EU Commission and Council in attendance.

EU energy ministers will then sit down in Brussels to look at the package again on Tuesday (December 9). Europe’s Parliament is scheduled to vote on the measures on December 17 in Strasbourg.

Please download PDF below to read full article from NEW ENERGY FOCUS, 3 December 2008.

• New Energy Focus

Biofuel can be sustainable, says Vireol before Government findings on Gallagher

Posted 3 December 08

Bioethanol producer Vireol plc, which is building two plants in the north of England, is using a new report to educate UK and EU lawmakers from scratch on sustainable biofuels as they decide on green criteria for the sector in the next few days.

Vireol, whose identical Immingham and Teeside sites will produce 300,000 tonnes of sustainable wheat-based bioethanol per annum, says MPs, MEPs and EU government representatives still fail to distinguish between good and bad biofuels. These depend on how the feedstock is grown and the fuel is made.

EU talks on a new renewable energy directive have been dominated by the biofuels issue. Once sustainability criteria have been agreed, they could be included in a new fuel quality directive as soon as next week (w/c 8 December). MEPs are considering the impact of changes in land-use when calculating biofuels emssions.

Meanwhile, the UK government’s consultation period to consider this year’s Gallagher Review on biofuels will end on December 17. A key proposal was to slow the rate of increase of the Renewable Transport Fuel Obligation (RTFO) to reach 5pc of fuel use by 2013-14 rather than in 2010-11. The EU is aiming for a 10pc target by 2020.

The Vireol report, “Sustainable biofuels for us”, distinguishes between a range of ‘good’ biofuels, such as ethanol from EU cereal crops, and certain biodiesels which have greater environmental risks. In addition, biodiesel from palm oil, unlike its rape seed equivalents, does not yield co-products which may be used as high-protein animal feed.

Vireol director David Knibbs said: “Despite some important government decisions looming, both in the UK and the EU, we are very concerned about top-level ignorance about good and bad biofuels. EU cereal bioethanol has huge potential. Policies must give the market a strong signal to invest in increasing crop yield, so that both food and fuel security are achieved – sustainably.”

ENVIRONMENT MAGAZINE, 3 December 2008
Mark Williams

Vireol report

Posted 3 December 08

Bioethanol producer, Vireol Plc. which will be building the two plants in the north of England, is using a new report to educate UK and EU lawmakers on what constitutes a sustainable biofuel as EU countries and the European Parliament look to agree a new renewable energy directive over the next few days.

The Vireol report, “Sustainable biofuels for us”, distinguishes between a range of ‘good biofuels’, such as ethanol from EU cereal crops and certain biodiesels which have greater environmental risks. In addition, biodiesel from palm oil, unlike its rape seed equivalents, does not yield co-products which may be used as high-protein animal feed.

Vireol’s commercial director, David Knibbs said – “despite some important government decisions looming, both in the UK and the EU, we are very concerned about top-level ignorance about good and bad biofuels. EU cereal bioethanol has huge potential. Policies must give the market a strong signal to invest in increasing crop yield, so that both food and fuel security are achieved – sustainably.”

The attached Vireol report highlights four key areas:

1. No dilution of existing RTFO targets
2. Ensure petrol with minimum 5% bioethanol is available throughout Europe
3. Consider indirect land use change when calculating emissions
4. Work to ‘future proof’ vehicle fleets for a more sustainable fuel mix

Should you have any queries pertaining to the content of the report, please do not hesitate to contact any member of the project team.

• Vireol report

Daily Telegraph’s coverage of Bear Gryll’s Antarctica journey

Posted 3 December 08

Please find two articles in the PDF below.

• Daily Telegraph coverage

Journey Antarctica begins today

Posted 29 November 08

Ethanol Ventures are the proud sponsors of Bear Grylls’ coldest and most daring mission to date in the sub-zero wilderness of Antarctica.

Today is the launch of Ethanol Ventures Antarctica as Bear Grylls and his team of four climbers leave London for Antarctica in an audacious bid to scale one of the most remote, unclimbed peaks on earth and to explore part of the great continental ice-shelf by jetski and inflatable boat, partly powered by bioethanol, an almost entirely
carbon neutral fuel alternative.

As well as employing solar and wind powered base camps, the team will be using many different forms of alternative energy, including:
• wind powered kite-skis
• part bioethanol powered jetskis and inflatable boats
• electric powered paragliders
• … and good old foot work!

The expedition aims to promote the potential of alternative energies, such as bioethanol, as a sustainable source of energy for the future.

Time Line
• 25th Nov the team leave the UK for Cape Town. Logistics and transportation will be provided by White Desert.
• 29th Nov – leave for the Antarctic continent for approx two weeks. Weather dependent, the team will either head
for the coastal phase or the mountain phase first.
• Planned return Mid Dec.

We hope to show through this Antarctic adventure how bioethanol and other alternative energies have the potential to sustain our environment and provide a viable power source for the future. At the same time we aim to raise funds for Global Angels, an international children’s charity championing the needs of children around the world.
You can follow the expedition on the Ethanol Ventures Antarctica website ( www.journeyantarctica2008.com ), which Bear and his team will be updating regularly throughout their journey.

Ethanol Ventures re-thinks its financing strategy for two UK plants

Posted 27 November 08

Article from NEW ENERGY FINANCE can be downloaded in the PDF below.

• New Energy Finance, 27 November 2008

Bear Grylls’ Press Release before trip to Antarctica

Posted 18 November 08

As the world economies battle for air, all of us are facing challenging times. But what lies behind the crisis, and what about beyond it? Beneath the surface of world instability bubbles a much more fundamental issue. How are we going to face up to the earth’s energy crisis? And at what cost do we ignore that question?

When we are fighting for basic economic survival it is hard to look beyond our front door, but we must. If we are to have a world worth handing on to our children, we must have the courage to look beyond oil and conventional fossil fuelled power solutions.

We must also fight against the cynicism that questions global warming and we must fight against a lethargy that says it is too late or that it isn’t our problem. It is not someone else’s problem.

We all have a chance to make a difference to our struggling planet, and it is our generation’s time to stand up and be counted. I want to do exactly that. I want my children in the future to know that I didn’t stand back and observe, but rather I made steps, however small they were, to bring about change.

To read Bear Grylls’ text in full, please download the PDF below.

• Bear Grylls Press Release - November 2008

UK exceeds biofuels target

Posted 8 October 08

An interesting article on FO Licht’s World Ethanol & Biofuels Report today.

In summary:

• Overall, only 20% of biofuels supplied in the UK met qualifying environmental standards – meaning the voluntary target is being missed so far. The offending biofuels were mainly imported, with 97% of biofuels made from British feedstocks meeting the environmental standards.

• Commenting on the report, RFA chief executive Nick Goodall said: “These early figures demonstrate that some companies have risen to the challenge of sourcing biofuels that meet good sustainability standards.”

To read article in full, please download the PDF below.

• UK exceeds biofuels target

Britain increases biofuel consumption

Posted 29 September 08

Biofuels accounted for 2.92% of UK road fuel, compared with the Renewable Fuels Association (RTFO) target of 2.5% for the year, according to the latest RTFO report for the year up until June released this month.

This brings the running total for the year to 2.53%. The main biofuel supplied was biodiesel which accounted for 78% of biofuel usage, whilst bioethanol accounted for the remaining 22%. The findings indicate that the UK used no biogas.

The majority of feedstock was imported into the UK, with 29% of biodiesel being made from US soybeans and 78% of ethanol production coming from Brazilian sugarcane. Oilseed rape, sugarcane and tallow were the main feedstocks which went towards the production of biofuels used in the UK.

Overall 46% green house gas savings were achieved, compared with the government target of 40%, bringing the yearly running total to 44%.

The UK is the fourth biggest user of biofuels after the US, Germany and Brazil. Canada, Indonesia and Malaysia also remain significant players within the biofuel industry.

(FO Licht’s World Ethanol & Biofuels Report)

BP gets green light for Southampton bioethanol terminal

Posted 29 September 08

A multi-million pound plan to have more biofuels flowing through the UK’s filling station pumps has been given the go ahead.

As revealed by the Daily Echo, BP Oil UK is planning a massive development on the 56-acre Hamble site which will involve building three huge tanks for storing bio-ethanol – a petrol substitute for road transport vehicles.

Eastleigh councillors have given the green light for the development which could take up to 18 months.

Work will now get under way because the race is on to meet the Government’s 2010 target that 5% of all fuel sold on UK forecourts should come as a renewable source.
This will make major inroads into slashing CO2 emissions threatening to choke the environment. Blending bioethanol will help to extend the life of the UK’s diminishing oil supplies.

Terminal manager Mike Myden said: “Our friends in Hamble can be assured that we shall do everything we can to limit any nuisance.

(FO Licht’s World Ethanol & Biofuels Report)

Associated British Foods says worst inflation is over, in The Times today

Posted 9 September 08

One of Britain’s biggest food producers said yesterday that the worst of this year’s inflation in food prices could be over soon.

Associated British Foods (ABF), home to Silver Spoon sugar, Kingsmill bread and Twinings Tea, said that the price of global commodities such as corn oil, wheat and dairy had begun to level off or fall.

The group is poised to bring down the price of Mazola oil, one of its biggest-selling vegetable oils, for the first time for more than three years.

Corn oil prices in the United States have fallen from 90 cents a pound to 60 cents a pound in the past four months as experts predict an oversupply on the market. Soya prices have fallen in line with crude oil prices, while wheat prices dropped to year-lows on all three American futures exchanges last week.

To see article in full please check link in Times Online.

Libya and Iran urge Opec to curb oil supply, The Times

Posted 9 September 08

Senior officials from Iran and Libya have claimed that the global market for crude oil is oversupplied and have called on Opec to consider curbing production.

The oil producers’ cartel meets in Vienna tonight and will consider how to respond to a 27 per cent slide in the price of a barrel of crude since July 11, when it hit a record of more than $147.

Hardliners, such as Shokri Ghanem, chairman of Libya’s National Oil Corp, are pressing for Opec to lower production to put a floor under possible further price falls. “There is a lot of oil in the market, much more than demand,” he said yesterday. He said that this represented a supply “glut”.

His comments were echoed by Gholam Hossein Nozari, the Iranian Oil Minister, who said that Iran believed that the market was oversupplied.

To read article in full please visit page at Times Online.

London to Tombouctou

Posted 26 August 08

Future Capital Partners Ltd & Ethanol Ventures Ltd are the proud sponsors of the 2009 Sky Car Expedition. Neil Laughton and his team have developed the world’s first flying Parajet Skycar and after rigorous testing will travel from London across the Sahara to Tombouctou for the maiden voyage in Spring 2009. It will be the first high performance, road legal, carbon neutral flying car capable of providing sports and rally car performance on or off the road and light aircraft performance after just a few minutes of wing preparation.

The team at Vireol are working closely with Neil and his team to convert the engine to use our fuel for their expedition. Manufacture and combustion of this fuel is more efficient thereby helping to reduce emissions. For more details on this unique expedition see http://www.skycarexpedition.com/index.php

USDA increases world wheat and maize crop estimates

Posted 20 August 08

Published on FO Licht’s World Ethanol & Biofuels Report yesterday:

The United States Department of Agriculture (USDA) has raised its wheat and maize production estimates for 2008/09 to record levels this week.

In the latest monthly revision, USDA estimated world wheat production to be 6.5 mln tonnes higher than last month’s estimate, at a record 670.75 mln tonnes, compared with last year’s 610.5 mln tonnes. The revised figures are a result of expected increases in the FSU, India, EU-27 and Canada.

Maize production estimates were increased by 14.3 mln tonnes to 789.6 mln tonnes (last year’s record being 789.15 mln tonnes), dependent on ideal weather and excellent yield prospects in the US. Despite an increase in demand of 24.5 mln tonnes, final stocks are predicted to increase by 7 mln tonnes to 112.4 mln tonnes. USDA lowered it’s soybean production forecast by 0.4 mln tonnes to 237.4 mln tonnes, still resulting in an increase from last year of 19 mln tonnes, with reductions in the US and Brazil offsetting higher production in Argentina.

Total cereal production in the EU-27 is now seen at 299.7 mln tonnes for the ’08/09 season, an increase of 4 mln tonnes on last month’s estimate. This is well above the 256.1 mln tonnes grown in ’07/08. The increases are down to higher forecasts in western EU member states.

Wheat production is raised 2.2 mln tonnes to 133.9 mln tonnes, compared with 11.7 mln tonnes in ’07/08. The main increases are seen in France, Germany, Spain and the UK.

The raised world wheat and maize estimates should result in higher availability in ’08/09, and thus a bearish effect on prices.

World wheat prospects start to improve

Posted 1 August 08

World wheat production prospects have improved during the last month and a record crop of 662 mln tonnes is now forecast for 2008/09, the International Grains Council (IGC) said this week.
November 2008 LIFFE feedstock wheat was trading at £129/tonne today – same as the 5 year wheat price average we have in the equity model.

Full article (FO Licht’s World Ethanol & Biofuels Report) and graphical illustration showing the 3-year historical trend can be found in the PDF below.

• World wheat prospects start to improve

Statement from Bioethanol Partners LLP following publication of the Gallagher review

Posted 8 July 08

Ruth Kelly, Secretary of State for Transport, yesterday announced that the Government accepted the recommendations of the review of the indirect land use effects of biofuel production and as such would be extending the deadline by which all fuel supplied in the UK would have to have a minimum of 5% of fuel from sustainable sources from April 2010 to April 2013.

This move is disappointing in that it tars all biofuels with the same brush and does not recognise that bioethanol from locally sourced wheat already meets and even exceeds sustainability targets as presently spelt out in both the UK’s RTFO and the EU’s Renewable Energy Directive.

However the process of amending the RTFO and the subsequent actions to influence the EU targets (that remain significantly higher than the UK’s) has not yet begun and it is to be expected that Government consultation will allow for this issue to be discussed and weighed in objective terms. Bioethanol Partners expect to be a significant voice in those consultations.

The impact upon our project can be summarised as follows:

• The review supports our views on the importance of sustainability criteria (including the effects of indirect land use change) in the selection of suitable biofuels for the UK and EU markets. The proposals to introduce strict sustainability standards at the earliest opportunity are welcomed.

• The requirement in 2011 in the UK alone will be for 800,000 tonnes of bioethanol. Facilities in existence or planned will absorb around 700,000 tonnes. The minimum gap of 100,000 tonnes (growing within a year to 200,000 tonnes) can be covered by our Grimsby site with subsequent annual shortfalls being met by our planned Teesside Facility.

• The EU target remains unaffected by the UK proposed phasing and Northern European requirements are likely to require servicing from UK sources.

• The sustainability standards proposed to be adopted by the UK will be a significant barrier for imported bioethanol.

• The same standards may also act as a barrier to new facilities being built in the UK in the foreseeable future.

• The standards announced will be a significant hurdle for many biodiesel projects. Should fuel quality standards be amended (as we expect) to allow a higher bioethanol blend, it is possible that the expected 50:50/diesel:petrol ratio will be varied, increasing the demand for sustainable ethanol.

• It may be necessary to consider the siting of the planned Teesside facility in order to comply with and enhance the sustainability profile.

This is obviously a situation that will change over time and we will post updates as and when these are available.

Tim Levy
Future Capital Partners (FS) Ltd, Promoter

Key highlights from this week’s news

Posted 13 June 08

Private Equity House DGF has become the latest firm to start raising a fund that will invest in the country’s booming ethanol industry. To date, DGF of Sao Paulo has raised $75m out of a target $200m for its Terra Viva Equity Fund. It expects to have $100m by July. The firm is primarily targeting Brazilian players for its fund, which will invest in the entire ethanol chain including raw material producers, manufacturers and transport logistic operators during its 10 year life cycle. Closer to home, Ambienta SGR, an Italian private equity fund, whose investors include Intesa Sanpaolo, has raised €150m in its first year. The fund plans to buy stakes in renewable energy companies and businesses that cut pollution. Record oil prices have created ‘many opportunities’ in alternative energy that didn’t exist 5 years ago, CEO Nino Tronchetti Provera, said.

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Mexico’s declining crude oil production has forced the government to turn to renewables to shore up the country’s energy security. The Central American country’s biofuel potential has also sparked a wave of interest from investors. Mexico-based Biofields announced last month that it planned to invest US$850m over the next four years to build an algae-based ethanol plant in the Mexican desert. The facility is designed to produce around 1m kilolitres per year by 2012. The Mexican Agricultural secretary has said that the country will focus on using biofuels made from plants which have less impact on global food supplies. Crops to be used include sugarcane, jatropha, yucca and sorghum.

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Cutting edge technology developed in laboratories in the US by Amyris Biotechnologies, will be tested on an industrial scale in Brazil. Using what is called ‘synthetic biology’ the US-based company has developed micro-organisms which allow a fuel with exactly the same characteristics as diesel made from crude oil to be made from sugarcane juice. A barrel equivalent of this fuel could cost about $60 to make. This is considerably more than it costs to make ethanol, but given the present price of crude oil, is still extremely competitive.

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Global production of biofuels will rise rapidly over the next decade, helped by high government blending targets and subsidies, according to an OECD and FAO report. However, biofuels were not blamed directly for soaring world agricultural commodity prices and reduced food and feed availability, as they can also increase farmer’s revenues both in developing and wealthier economies. However, the problem seen was distortive policies in some large producing countries, which encouraged production of fuel-destined crops on land previously devoted to food.

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Global ethanol production was projected to reach about 125bn litres in 2017, twice the quantity produced last year. Ethanol prices were seen exceeding $55 per hl in 2007 due to rising crude oil prices, but should fall back to levels around $52-53 per hl in 2008-2017, as production capacity expanded. International ethanol trade was expected to grow rapidly to reach 6bn litres in 2010 and almost 10bn by 2017. Most of this trade would originate in Brazil and would be destined for markets in the EU and the US.

Renewable Energy Association briefing notes

Posted 9 June 08

General summary, the impact of biofuels on food prices and the impact of biofuels on land use. To read the briefing please download PDF below.

• REA briefing notes

Biofuels industry not the bad guy

Posted 5 June 08

As the attacks on biofuels continue, a leading research firm has concluded that biofuels play a “far from dominant” role in the global increase of food prices. Escalating oil prices, the weak US dollar, rising demand for food and energy and poorly designed policies are also to blame, said New Energy Finance of London in a report released in late May. In its research note, “Food Price Increases: Is It Fair To Blame Biofuels?” the consultant said that biofuels should not be singled out. New Energy found that expanding biofuels production had led to a maximum of 8% out of the 168% rise in grain prices, and at most 17% of the 136% rise in food oil prices since January 2004.

Biofuels, and the US’ subsidies especially for corn-based ethanol, have come under strong attack at this week’s special summit on the global food crisis in Rome, hosted by the UN Food and Agriculture Organisation (FAO). New Energy Finance researchers analysed price increases in staples like grains and food oils. Supply and demand was the largest factor in price rises. In China, for example, more people have been eating foods such as beef, which requires vast amounts of cereal to produce. The fast-rising price of crude was a major factor too, because of the knock-on effect on agriculture and food production. New Energy Finance did find that certain crops – such as corn in the US – were more expensive because of subsidies and mandates to produce biofuels.

Other key highlights from this week’s news:

Posted 5 June 08

The state of Sao Paulo, Brazil has suspended granting approval for the construction of ethanol mills while it carries out studies on the environmental impact of increasing sugar cane cultivation, official sources reported. The suspension will last 120 days and will enable the Government to review the consequences for the ecosystem of the growing expansion of sugarcane in the state. Additionally, it will also enable it to set new standards to preserve natural resources. The state environment department said the growing number of mills in the state, accounting for around 60% of Brazil’s sugar and ethanol output, calls for improvements in the screening process for new units.

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The United States Department of Agriculture (USDA) estimated that worldwide about 8.5m hectares were used for biofuels production in 2007, equivalent to 1.3% of all crop land used to produce grains, annual oilseeds and cotton. However, the USDA also said that the area devoted to biofuels production rose by around 4.5m hectares between 2004 and 2007, equivalent to 24% of the 18.2m hectare increase in the total area harvested during the same period.

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Ethanol manufacturers in Europe have come together to set up the ethanol REACH Association to enable joint submissions of high-quality dossiers in response to the legal obligation to register ethanol under the EU’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulation. The founding members of the association are Abengoa Bioenergy, CropEnergies, INEOS, Royal Nedalco and Tereos. The three European international trade associations, eBIO, IEA and UEPA, are also actively participating in the new association. The Ethanol REACH association will be open to all manufacturers (both EU and non-EU), importers, non-EU formulators, ethanol trade associations and others that have an interest in the registration of ethanol.

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The European Union proposed in its so-called Health Check to further modernise and simplify the Common Agricultural Policy (CAP) and remove remaining restrictions on farmers to help them respond to growing demand for food. The Commission proposes abolishing the requirement for farmers to leave 10% of their land (set-aside area) fallow to maximise their production potential. Additionally, the Commission is proposing to abolish the energy crop premium standing at €45 per hectare.

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German ethanol market leader, CropEnergies, explained its strong rise in trade with third-party products with the need to develop new markets before new capacity comes on line in Zeitz, Germany and Wanze, Belgium. In Zeitz, Südzucker will start operations at its 100m litre expansion in June 2008. The 300m litre plant in Belgium is due to come on line in late 2008. Total sales in 2007/08 rose to €186.8m against €146.8m the previous year. The operative result rose by 4.8% to €22m.

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BioCnergy Europa BV, a 60/40 joint venture between India’s Praj Industries and Aker Kvaerner of the Netherlands BV, the Dutch subsidiary of the Norwegian engineering and construction company, has won a contract for the supply of key equipment of Vivergo Fuels. Vivergo is a joint venture in which Associated British Foods has a stake of 45%, British Petroleum 45% and Dupont 10%. The companies plan to set up a wheat-based 420m litre ethanol plant in Saltend, Yorkshire. The plant is scheduled to start production in 2009. It is planned to add a biobutanol production line later.

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The food-versus-fuel debate has become a pressing political issue in New Delhi. Indian Prime Minister Manmohan Singh cited three threats that are hanging over India and other developing economies: soaring food prices, which are being exacerbated by the use of edible crops to make biofuel in developed countries; the meteoric rise in crude oil prices and the sub-prime crisis in US. The tri-pronged threat has forced India to revaluate its stance on the biofuel issue, with the use of Jatropha (as used in the Philippine biofuels model) being considered a likely solution. With millions of Indians living at or below the subsistence level, the federal and state governments cannot risk any punitive rises in food prices. It is considered that the social and political backlash would be severe, an important factor given impending elections in the country.

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The Thai government will have to urgently brainstorm with all stakeholders to prepare for an early launch of E85 gasohol in the local market. Previously, E85 – in which ethanol accounts for 85 per cent with the rest of the fuel being gasoline – was not expected to be available any time soon. However, the unrelenting rise of oil prices has led to a sudden policy shift for E85 to hit the market possibly in the third quarter or by the end of 2008.

Manipulation on bioethanol

Posted 4 June 08

The advertisement below was published as a full page ad in Financial Times today. The text focuses in the manipulating news about bioethanol and the current food crisis.

• Full page ad in FT 4 June 2008

World bioethanol leaders send letter to FAO chief, FO Licht’s World Ethanol & Biofuels Report

Posted 3 June 08

Leaders of the bioethanol fuel industries in the United States, Canada and Europe have sent a letter to UN Food and Agriculture Organization Director-General Dr. Jacques Diouf and those world leaders attending the Rome World Food Summit to discuss the food crisis we are experiencing today.

The industry urges them not to single out biofuels as the culprit whilst ignoring those factors that have played a much more significant role in driving up the price of food worldwide.

The letter calls into question the validity of findings in the Agricultural Outlook 2008-2017 on biofuels. It also underlines the much bigger impact on daily economic life and food prices of strongly increased oil and energy prices during the last 12 months.

Too often biofuels are emotionally criticized whereas they provide strong benefits in terms of greenhouse gas mitigation, energy security an rural development. For developing nations hardest hit by the present food and energy crisis biofuels can act as a double-edged sword by providing a new outlet for the farming communities and at the same time reducing fossil fuel import dependency.

Instead of blaming biofuels the International Community should promote the production and use of biofuels, eBIO, the US Renewable Fuels Association, and the Canadian Renewable Fuels Association said.

To read the letter please download the PDF below.

• World bioethanol leaders send letter to FAO chief

Latest grain forecasts, HGCA

Posted 3 June 08

German Planting Estimates

Latest IGC Estimates

Key highlights from this week’s news

Posted 2 June 08

The European Union’s target to increase biofuel usage should be lowered according to a European Parliament report. Claude Turmes, Luxembourg MEP for the European Greens and rapporteur for the Parliament’s Industry, Research and Energy Committee suggested that the target should be cut from 10% in 2020 to 8%. Whilst the Commission expressed a willingness to discuss the lowering of targets, they denied reports suggesting that there were plans to revise the targets, which were approved in March 2007. The Commission’s biofuels targets are conditional on sustainability criteria which aim to minimise competition between food and energy crops and are also designed to encourage the development of second generation biofuels. Turmes claimed that sufficient scientific breakthroughs for new non-food crop biofuels have not yet materialised, making it necessary to review the targets now and on a regular basis in the future. (Bloomberg, May 28 2008)

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Higher food prices may be here to stay as demand from developing countries and production costs rise, according to a report by the UN’s Food & Agricultural Organisation (FAO) and OECD. It said that the current spike was higher than previous records, partly due to bad weather ruining crops and although prices are likely to fall, they will only do so gradually. Factors such as rising biofuel demand will keep future costs high which may reduce the economic viability of biofuel production in many countries, despite strong public support and increasing fossil fuel prices. The report cites Brazil as being a possible exception to this trend, suggesting they may benefit the most from rapidly growing ethanol markets, with exports destined for the EU and US. (BBC, May 29 2008)

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The fallout from the US subprime crisis has begun to squeeze investment in potentially risky small-scale bioethanol and solar power projects. The trend is becoming particularly noticeable in China, where fears have also been raised that overcapacity could affect pricing power and profit margins in the alternative energy field. Concerns about the stability of food supplies and prices may also impede China’s aggressive plans to develop large-scale biofuel production. Beijing has begun to reassess its biofuels programme as global food prices rise, driven, in part, by increased competition for grains between food manufacturers and biofuel producers. Conversely, researchers in China are reporting a discovery that could turn rice straw into an inexpensive new renewable source of biofuel, boosting productivity by as much as 65%. Rice straw is the stem and leaves left behind after harvesting the grains. (Newsbase REM, May 29 2008)

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Three foreign investors from the US, Australia and South Korea have expressed an interest in building a biofuel plant with a capacity of 2 million kilolitres worth $500m in Gorontalo province, Indonesia. Authorities have granted a license to the foreign investors setting aside 500,000 hectares of land for Jatropha curcas, maize and oil palm plantations. (ANTARA, May 26 2008)

Page on FT today

Posted 29 May 08

The advert below was published as a full page in Financial Times today. The text focuses in the manipulating news about Bioethanol and food prices.

• Full page ad in FT 29 May 2008

eBIO welcomes balanced reports on EU food prices, FO Licht’s World Ethanol & Biofuels Report

Posted 29 May 08

The European Bioethanol Fuel Association (eBIO) welcomes two recent communications of the European Commission and the European Parliament which both adopt a balanced and informed position on the impact of biofuel production on rising food prices.
Both the “European Commission Communication setting out potential policy responses to mitigate the effects of rising food prices” of 20 May and the “European Parliament Resolution of 22 May on rising food prices in the EU and the developing countries” acknowledge that the increase in staple food commodites or food prices has multiple causes.
This logical conclusion rejects the convenient theory that has been widely propagated in the media and certain industry circles of late, namely that biofuels are the sole cause of global food price increase, reports eBIO.
Both reports recognize that biofuel production cannot be held responsible for price rises in staple food commodites or food prices in the last 18 months. The European Parliament Resolution “emphasizes in the strongest possible terms that only 2-3% of EU agricultural land is currently being used for this kind of production, and media reports blaming biofuels for the current food crisis are exaggerated as far as the EU is concerned.”

To read this article in full please download the PDF below.

• eBIO welcomes balanced reports on EU food prices

Biofuels not the primary cause of food price hikes says report, Biofuel Review

Posted 28 May 08

Biofuels are far from the dominant factor in the recent food price increases according to research published today (28th May) by New Energy Finance. While the report acknowledges that “increased biofuels production has been a meanigful driver of food price inflation” it points to increases in input costs “which have played a much larger role” in driving the prices.

New Energy Finance set about analyzing the food price increases following the outcry in the press after comments from Jean Zeigler, then UN Special Rapporteur on the Right to Food, in October last year when he said that it was “a crime against humanity to divert arable land to the production of crops which are then burned for biofuels”. For the report New Energy Finance says it has analyzed food price increases between January 2004 and April 2008, breaking them down into their constituent drivers and has come to the conclusion that they simply aren’t the dominant factor in food price hikes.

The report continued; “Furthermore, where biofuels have had significant impacts, this has been due to overly rapid application of support schemes and protectionism, rather than to the the impact of production on land use itself.”

In concluding New Energy Finance suggests that, in the short term, it is vital for policy makers to intervene early and forcefully to protect the vulnerable from the worst impact of food price increases, while in th longer term the price rises should be allowed trigger a growth in production in the agricultural sector.

The downside is very real, however, and the report stresses the need for the biofuel industry to act together to develop an understanding of the market and its role in providing renewable energy.

This article was written by Giles Clark and published in Biofuel Review website.

Key highlights from this week’s news

Posted 23 May 08

DuPont and Genencor have announced the formation of a new joint venture (DuPont Danisco Cellulosic Ethanol) to develop and commercialise low-cost technology solutions for the production of cellulosic ethanol, a next generation biofuel produced from non-food sources. The JV will receive an initial investment of $140m over three years and will license its technology package directly to ethanol producers for global deployment. The technology package can be used both as a ‘bolt-on’ to an existing ethanol plant – expanding its capacity to accept cellulosic feedstocks – or as the design basis for a stand-alone cellulosic ethanol facility. The JV expects to enable production of commercial volumes of cellulosic ethanol by 2012.

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“Oil prices would be 15% higher still if biofuel production was taken out” – Francisco Blanch (Global Commodity strategist at Merrill Lynch)

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“Global food prices could ease by up to 20% by 2010 if biofuel production is stopped completely across the world. If biofuel demand from food crops was abolished, prices of key food crops would drop significantly. By 2010, maize prices are expected to fall by 20%, wheat by 8% and sugar by 12%”, this is according to the International Food Policy Research Institute (IFPRI), an US-based think tank.

§

The Bush administration is defending its decision to push food-based biofuels as food costs rise around the world, saying that renewable fuels are only a small part of the problem. John McCain, supported by the Governor of Texas and a quarter of the Senate asked the Environmental Protection Agency to cut this year’s 9 bn gallon corn-based ethanol requirement by half. Agriculture Secretary Ed Schafer responded by saying that the ultimate benefit of reducing dependency on oil outweighs some small, short term costs associated with the biofuel industry sector.

§

The US Postal Service having bought more than 30,000 ethanol-capable trucks and minivans during the period 1999 to 2005 have found that the new vehicles achieve 29% fewer miles the gallon than a petroleum based equivalent. Despite their petrol consumption dropping by more than 1.5m gallons over this period, the agency is now considering buying electric vehicles instead.

§

Growth rates for ethanol production in 2008 remain strong. In the EU, 2008 ethanol output is forecast to be up to 4.5bn litres against 3.6bn in 2007. Most of the rise is due to the increase in the output of fuel alcohol which is forecast to grow to about 2.6bn litres from less than 1.9bn in 2007. Rising supplies of alcohol globally have meant that prices continue to weaken considerably year on year. Given the lack of current investment and uncertainty amongst policy makers, it is thought unlikely that the UK 5.75% consumption target set for 2010 will be achieved. If policy makers are serious about meeting the objectives, this would perforce mean opening the markets to imports. Brazil’s shipments to the EU are therefore expected to rise sharply in the coming years. It should be noted that the European Commission has concluded in a recent report that, on average, cane-ethanol achieves greenhouse gas savings of 74%. This compares with a cut off value of 35% which separates ‘good’ biofuels from ‘bad’ biofuels. (World Ethanol & Biofuels report).

“Biofuels not to blame for higher food prices” - FO Licht’s World Ethanol & Biofuels Report

Posted 19 May 08

Speakers at the F.O. Licht World Biofuels conference in Seville confirmed that biofuels are not a major contributor to rising food prices, and are in contrast boosting global agricultural production.

Plant-based biofuel production currently accounts for just 3% of world demand for grains. Josep Borrell, chairman of the European Parliament’s Development Committee, said demand was too small to explain a jump in rice prices, estimated at 76% between December 2007 and April 2008 by the UN Food and Agriculture Organisation.

“The biofuels industry cannot be a scapegoat for such brutal price rises,” Borrell said. He instead argued that high grain prices could actually make farming profitable for small producers in the developing world and halt migration to overcrowded cities.

Industry speakers said grain prices had risen due to a world-wide credit squeeze driving investment funds into commodities. “This is logically part of the market, but it is worth recalling that speculative positions in the Chicago maize market are today three times stocks for the end of the 2008/09 campaign, as forecast by the US Department of Agriculture,” said Javier Salgado, chairman of Abengoa Bioenergy, one of Europe’s leading biofuel makers.

To read article in full please download the PDF below.

• Biofuels not to blame for higher food prices

Bears begin to separate the wheat prices from the corn, article in FT today

Posted 16 May 08

Since last summer, cereals – in particular wheat and corn – have become synonymous with rising prices as the cost of both crops escalated to record highs.

But the bond between both cereals has broken in recent weeks.

“Wheat is divorcing from corn,” says Greg Grow, a broker at Archer Financial Services in Chicago. While corn prices are up nearly 53 per cent in the past six months, wheat prices have fallen almost 19 per cent in the same period.

The diverging trend could influence agricultural commodities – and global food inflation – in the following months. The question, says Abdolreza Abbassian, a grains expert at the UN’s Food and Agriculture Organisation in Rome, is whether a bearish outlook for wheat would override the bullish picture for corn or vice versa.

The link between them is the feeding industry: lower prices for wheat would encourage ranchers to purchase the grain for animal feeding, easing the tightness of the corn market. But that extra demand for wheat could, in turn, support its price.

For the moment, analysts are betting that wheat’s bearish outlook could prevail.

- To read Javier Blas’ article in full please visit Financial Times website.

• Corn and wheat prices - 2007/2008 graph

BP investing in bioethanol

Posted 29 April 08

BP has announced recently a US$60 million investment in a project that is looking to build two sugar cane to bioethanol refineries for a total cost of US$1 billion.

Please follow this link to see the Press Release of 24th April.

As the statement indicates, this is the latest of a series of investments made by BP in this area and they appear to be following a policy of having strategic supplies globally that are held directly in joint ventures with other producers.

It is important to note also that the sustainability argument is a key element of the investment. The facilities will use sugar cane as a feedstock and this will be planted and managed on acreage close to the site of the facilities. This is very much in line with the best facility design where maximum use is made of local sources of supply and by products (in this case electricity from burning the cane left after crushing, “bagasse”) in order to produce the lowest possible carbon footprint.

It is worth noting that under the criteria specified in the EU’s Renewable Energy Directive, the comparative carbon saving between sugar cane and oil based fuels shows a 76% advantage to the former. Using the same criteria, the Ethanol Ventures Facilities produce a 68% saving. Given the difference in base feedstock efficiencies, this is a good demonstration of how intelligent plant design makes our project “best in class”.

EU biofuel firms say not to blame for food prices, Guardian

Posted 25 April 08

European bioethanol production is not to blame for rising grain prices, a biofuels conference heard on Thursday.

Only 2.6 percent of Germany’s 40.9 million tonne grain harvest in 2007 was used to produce bioethanol, and only 1.5 percent of the European Union’s total 267 million tonne grain crop was used for bioethanol, said Doerte Bieler of Germany’s bioethanol industry association LAB.

“It cannot be that this level of grain use for bioethanol production can be responsible for the doubling of EU grains prices in the last year,” she told the Clean Moves Expo biofuels conference.

“Grain prices have risen because of other factors such as poor harvests and speculation,” she said. “Grain prices have fallen by 30 percent in the last few weeks, which is probably an indication that a huge volume of speculative money is currently moving in grains markets.”

To read article in full please download the PDF below.

• EU biofuel firms say not to blame for food prices

Biofuels and food prices, letter sent in response to article in The Times yesterday

Posted 24 April 08

The Downing St meeting on 21st April has highlighted concerns on food prices and in this debate, biofuels have a part to play.

It is important to understand however that wheat prices are primarily driven by supply and that recent high prices have been a function of low stocks and poor harvests, resulting in less supply being available. The response to low supply is in the ground. Globally, planting is up 6.5% in acreage and in the UK, over 20% more land is in use for wheat.

Both the current and future price of wheat is reflecting this increased supply potential and prices have fallen in the past few weeks by nearly 20%.

Bioethanol (a petrol extender) production absorbs around 2% of the European cereal crop (mainly wheat) annually. To suggest therefore that bioethanol production from wheat has an impact on global prices is overstating the position.

A strategy of using wheat for bioethanol also has the advantage of reducing pressure on high carbon stock land (rainforest and peatlands). Increasing wheat production in the EU by enough to meet the bioethanol production needed for a 10% blend target, requires some 4 million hectares. This comes from land previously in the “set aside” regime, now suspended, and historic land brought back into production. It also means that a similar amount of land used outside Europe for feedstocks, is no longer needed. This land can obviously be used for local food production.

Food security is also enhanced in that a co product from the process of making bioethanol is a high protein animal feed that is presently in deficit in Europe (in contrast to wheat that Europe exports). Meeting this expected animal protein deficit partly from increased bioethanol production mitigates the potential food insecurity in Europe.

The timetables for the introduction of bioethanol in the UK and the wider EU suit perfectly the demand/supply cycle for wheat and ties in with historic price spikes and responses.

Consequently the UK and EU energy target in biofuels for petrol, can be met with no increase in global land use, no impact on present or future prices of cereals and mitigate potential food insecurity.

Look north for the energy of the future, article in The Sunday Times

Posted 21 April 08

The similarities between the Gulf states and the isles of Orkney (population: 20,000) aren’t immediately obvious, but the Scottish archipelago has been branded the Saudi Arabia of the renewable energy world.

The 70 islands in the far northeast of Scotland, only 17 of which are inhabited, have the potential to provide up to 40% of Scotland’s energy demand – or 1m homes – through wind and marine power, according to Scottish Renewables, an industry forum. In turn, Scotland’s wave and tidal energy could eventually provide 10% of Europe’s total consumption.

The authorities in Orkney recently gave the go-ahead for one of the world’s biggest wave-energy projects, consisting of four 160-metre “sea snakes” across the Pentland Firth to harness its powerful tides. The project could provide about 3MW of electricity – enough to power 2,000 average homes by 2009-10.

As the oil price has marched towards a record $116 a barrel, the nascent wave-energy sector has been quietly approaching the stage where it becomes commercially viable and investors really start to make big money.

To read this text in full please check Kathryn Cooper’s article in TimesOnline.

NFU backs British biofuel production, World Ethanol & Biofuels Report

Posted 18 April 08

The ‘British Model’ of biofuel production yields genuine greenhouse gas savings, unlike biofuels produced elsewhere in the world where there are fewer environmental safeguards, the English National Farmers’ Union (NFU) claimed this
week.

The union took the opportunity of national Biofuels Day – when the Renewable Transport Fuels Obligation (RTFO) was introduced, requiring all fuel companies to replace 2.5% of their fossil fuel sales with biofuels – to highlight the environmental requirements under which British biofuel crop producers operate.

To read article in full please see PDF below.

• NFU backs British Biofuel Production, article in World Ethanol & Biofuels Report

Oil hits a record $116 a barrel, World Ethanol & Biofuels Report

Posted 18 April 08

Oil prices briefly hit a record $116 a barrel on the New York Mercantile Exchange on Friday, and gasoline hit yet another record high amid concerns about falling supplies and rising global demand.

A host of supply and demand concerns in the US and abroad, as well as the depreciating dollar, have pushed crude prices up more than 4% this week.

“In general, a weak US dollar … has some valuation effect on oil prices and other commodities,” said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney.

Investors have been buying oil contracts as a hedge against the weakening dollar, betting that rising commodity prices will offset dollar declines.

Merkel maintains food price rises are unrelated to biofuels, World Ethanol & Biofuels Report

Posted 18 April 08

Article in FO Licht’s World Ethanol & Biofuels Report:

German Chancellor Angela Merkel has said soaring prices for rice, milk and other staple foods are not related to global demand for biofuels, and can instead be ascribed to growing affluence in developing countries.
“Millions of people are becoming wealthy, and when 100 mln Chinese start drinking milk then that’s going to have an impact on food prices,” Merkel said yeterday in Freiberg, eastern Germany, during a visit to a biofuel plant run by Choren. “Those rising global food prices have nothing to do biofuels.”

Merkel’s view contrasts with that of Prime Minister Gordon Brown, who last week wrote to leaders of the Group of Eight nations to say the UK government is concerned biofuels made from foods such as sugar cane and corn are stimulating inflation and pushing up food prices around the world. His views have been tacitly backed by EU Trade Commissioner Gordon Brown, who said in a BBC radio interview today that policy must ensure that biofuels are emphatically from sustainable sources, and further hinted that the targets may be re-examined.

President Lula da Silva of Brazil, the world’s top sugar cane grower, has repeatedly rejected criticism of biofuel production. “Food is expensive because the world wasn’t prepared to see millions of Chinese people, millions of Indians and Africans eating three times a day,” Lula told reporters in Brasilia yesterday.

Merkel is scheduled to visit Brazil during a week-long trip to Latin America next month.

Merkel’s government aims for 20% of car fuel sold in Germany to comprise biofuels by 2020. To meet that goal, Germany will increase its use of two different forms of biofuel, pure ethanol and biodiesel. The European Union wants to power 10% of transportation in the region with biofuels by 2020.

The chancellor was joined in Freiberg by Daimler AG Chief Executive Dieter Zetsch and Volkswagen AG Chief Executive Officer Martin Winterkorn to discuss the opportunities for synthetic biofuels.

Synthetic, or second-generation, biofuel is made from plant waste, wood trimmings and straw, unlike ethanol which is distilled from maize or sugar cane and competes with the production of food stuffs for agricultural land.

The Indirect Effects of Biofuels, a submission to the RFA by HGCA

Posted 17 April 08

HGCA is part of a Statutory Levy-Body, charged with responsibility for improving the production and marketing of UK Cereals and Oilseeds. It has been involved with the preparations leading to the establishment of the RTFO and the EU Biofuels Directive. The HGCA role has been to establish needs and opportunities from market participants and then commission and publish relevant evidence-based material to assist decision-making in commerce and Government. It is in this role that we submit the following information. It is also important to acknowledge that the questions raised require both economic and scientific answers. The efficient allocation of resources is a key economic analysis that can be applied to the carbon economy as well as the money economy. The development of sustainable cropping is key, and must be done efficiently.

Addressing the Key RFA Questions

The questions on which the RFA is seeking evidence are as follows:

i. What are the key drivers of land use change and food insecurity and to what extent will increasing demand for biofuels affect these to 2020? What evidence is available on impacts upon areas of high conservation value and/or carbon stocks?

ii. How are GHG-savings of different biofuels affected by displaced agricultural activity and resulting land-use change? How may this be affected in the future by the introduction of advanced technologies, use of marginal land and other improvements in production?

iii. What are the relationships between demand for biofuel feedstock, commodity prices, land conversion and food insecurity? How might these be affected in the future by yield improvements and other factors?

To read all answers in Alastair Dickie’s document, please download the PDF below.

• The Indirect Effects of Biofuels, a submission to the RFA by HGCA

Argus biofuels, daily international market prices and commentary

Posted 15 April 08

Please refer to the PDF below.

• Argus Biofuels, Issue No. 44

Biofuels seen as both cure and curse, FT this morning

Posted 15 April 08

‘Drivers filling up at the petrol pump may be unaware of it, but a rising proportion of their fuel is likely to have started life as a plant.

From Tuesday, vehicle fuel suppliers must ensure that 2.5 per cent of the product they sell is biofuel – ethanol, made mostly from distilled grains, or diesel made from plants such as oilseed rape or soya. This will rise to 3.75 per cent by 2009 and 5 per cent by 2010.

But forecourts will be little changed by the rules. While it is possible to buy pure biofuels at a small number of outlets, most suppliers have chosen to meet the target by blending a proportion of these fuels with their standard petrol or diesel. Cars and vans can take up to about 10 per cent biofuel blends without requiring modifications to their engines.

Ministers said the Renewable Transport Fuel Obligation, which comes into force on Tuesday, would help to cut emissions because using some biofuels can result in two-thirds less greenhouse gas output than fossil fuels.’

To read Fiona Harvey & Jim Pickard article in full please visit Financial Times’ website.

European Union Defends Biofuel Targets As Food Prices Soar

Posted 14 April 08

Despite intense debate surrounding the growing global food crises, the European Union today defended expanding the use of biofuels in all 27 member countries. Part of the EU’s climate change package, the current proposal sets a target of meeting 10% of transportation fuel with biofuels by 2020.

As I reported last week, Europe’s EPA advised suspending the EU’s biofuel targets until a comprehensive environmental analysis could be completed. Barbara Helfferich, spokeswoman for EU Environment Commissioner Stavros Dimas, said no way is that going to happen:

“You can’t change a political objective without risking a debate on all the other objectives,” meaning that changing biofuels targets could lead to questioning the entire climate change package.

European Commission agriculture spokesman Michael Mann said the EU isn’t really concerned about using food-based biofuels to meet their targets. Instead, they’re betting on increasing crop yields and the availability of more arable land, both from new member states and a decrease in compulsory “set-aside” (fallow cropland).

To read Clayton B. Cornell’s article in full please visit Gas2.0 website.

US corn fed ethanol market

Posted 7 April 08

The Times reports today that US bioethanol producers are having a tough time due to the soaring price of corn. This is undoubtedly the case and is a demonstration of how the US policy in this area can cause the sort of problems that UK and EU policy makers have learnt from and have legislated to avoid.

In the USA, bioethanol production is concentrated in the corn belt and part of the policy was to provide farmers with an alternative market whilst bringing some fuel security benefits. There is a program of tax incentives to help the builders of plant, but at the moment limited statutory demand for the fuel.

The US farmers outside the corn belt are growing more soyabean with latest estimates (1st April) up some 15% from last year. Wheat planting is also up by 5% whilst corn/maize has reduced in planted acreage. This is broadly the pattern in Europe as well. (Source: HGCA Market report 1st April 2008).

Corn use for ethanol production has a direct and obvious “food or fuel” issue and the recent pressure on food prices is making bioethanol production from this source economically more difficult. Hence a focus on using wheat that would otherwise be part of the animal feed chain is looking to be an increasingly more sustainable alternative.

Wheat prices in Europe have reduced by over £10/tonne for immediate delivery in the last month. The long term futures price is down by close to £15/tonne. The markets have been reacting to increased planting news and also an outflow of funds from the futures market as financial speculators are finding calls for their cash elsewhere in the present turbulent markets. (Source:HGCA Analysis report 4th April 2008).

We believe that this recent report is verification of the economic and sustainable strategy of making bioethanol from wheat.

Futures Market Prices, by HGCA

Posted 4 April 08

An article from HGCA (Government funded body) which is worth a read:

‘The major North American futures markets, and the Chicago market in particular, have long been regarded as a barometer of international values for grains and oilseeds. Daily reports on these markets have provided an authoritative log of major developments that had, or at the time were considered likely to have, an impact on prices. The classic weather market during the growing season is the epitome of this.

In recent months outside money appears to have taken over the markets. And with little news to direct markets in what in winter is normally the quiet season, there has been totally unprecedented price volatility.

(…)

A rise in prices occasioned by an event of limited relevance to the production or consumption of grain might seem a fortuitous opportunity to sell. The reality for a farmer contemplating forward contracting is a concern that there is some yet to be disclosed cause for the rise. There is also a very wide gap between futures prices and what is being bid ex-farm. This is probably because of the extreme volatility and the inherent risk to brokers and merchants in offering forward pricing.’

To read article in full please visit HGCA’s website.

‘Biofuels from crops do reduce greenhouse gases’, letter in Financial Times

Posted 3 April 08

From a letter published today in Financial Times by Mr. Peter Kendall, President of the National Farmers’ Union:

‘(…) all the evidence we have indicates that biofuels manufactured from crops grown sustainably in the UK do deliver significant reductions in greenhouse gases compared with fossil fuels, measured over the full cycle of production and use. For biodiesel made from UK oilseed rape, the average saving, according to the Central Science Laboratory, is of the order of 53 per cent. For bio-ethanol, made from UK feed wheat, it is 64 per cent.

We must therefore part company with the Department for Environment, Food and Rural Affairs’ chief scientific adviser in his suggestion that the UK should delay implementing the Renewable Transport Fuel Obligation until a review of biofuels has been concluded. That would have the effect of deterring investment in the technology in the UK and mean that the demand for biofuels – which will be there in future, regardless of the RTFO, as fossil fuel supplies run down – will be met by fuels produced abroad with less concern for the environment than if they were grown in the UK subject to our protocols.’

To read letter in full please go to Financial Time’s website.

Biofuels and food – regaining a sense of proportion

Posted 2 April 08

Energy Commissioner (European Commission) Andris Piebalgs published a very interesting entry in his blog recently:

‘Biofuels, have become a scapegoat for recent commodity price increases that have other causes – poor harvests worldwide and growing food demand generated by increased standards of living in China and India. In Europe, we use less than 2 percent of our cereals production for biofuels, so they do not contribute significantly to higher food prices in the European context. Even if we reach our 10% biofuels target by 2020, the price impact will be small. Our modeling suggests that it will cause a 8 to 10% increase in rape seed prices and 3 to 6% increase in cereal prices. Increase in the price of the latest has very small influence on the cost of bread. It makes up around 4 per cent of the consumer price of a loaf. ‘

To read article in full please visit Andris Piebalgs’ blog.

‘Undercut and under fire: UK biofuel feels heat from all sides’, The Guardian today

Posted 1 April 08

It was barely 18 months ago that the British biofuels industry was surfing on a wave of euphoria. There were almost weekly announcements from companies big and small that they were going to invest heavily in a sector that promised to play an important role in the battle against global warming.

On April 15, the sector is to be given an even bigger boost when the government introduces its Renewable Transport Fuels Obligation (RTFO) that requires the station forecourt to supply at least 2.5% a first, later 5%, of its petrol and diesel from plant-based materials at a time when oil prices have soared.

- To read Terry Macalister’s article in full please visit this page in The Guardian website.

Plenty of Space for Biofuels in Europe - Article in Renewable Energy World

Posted 28 March 08

The REFUEL project, a report commissioned by the EU’s Intelligent Energy Europe program to examine the biofuels potential in Europe, concludes that EU biofuels targets can be met with conventional feedstocks and current technology without major agricultural land use changes or environmental consequences. The two-year REFUEL-project is coordinated by the Energy research Center of the Netherlands, and implemented by a consortium of seven European institutes with different disciplinary backgrounds.

- Read full article in Renewable Energy World website

UK 2008 Budget

Posted 17 March 08

UK Governments commitment to ‘clean’ Biofuels: Biofuels duty differentials removed by April 2010 replaced with 30p penalty

The Budget annouced on Wed 12th March announced that the present duty differential between fossil and bio- fuels would be removed by April 2010. This is presently worth 20p per litre and provides retailers an incentive to use biofuels as far as they can. This is a form of indirect Government support for all biofuels and as such is indiscriminate in which fuels it supports. The Renewable Transport Fuel Obligation (“RTFO”) has a minimum criteria for a fuel to qualify as being from a sustainable source and at the moment this requires that the carbon footprint is at least 35% better than fossil fuel production and use.

This minimum criteria can be expected to rise (the RTFO already includes suggestions as to the appropriate level) and as more supplies become available the cost to the Exchequer can be expected to rise. The Government will obviously collect less revenue if more biofuel is sold at the expense of fossil petrol or diesel. There are also some concerns that such support may be susceptible to challenge as being a form of “State Aid” for biofuels and perhaps contrary to EU regulation.

Consequently the RTFO has provisions that allow for the penalty to fuel retailers who do not meet a minimum blending requirement to be increased. This is presently 15p per litre and in the Budget report and supporting papers, it is proposed that as the reduced duty above falls away in April 2010, the penalty will increase to 30p per litre. This maintains the differential promised in the RTFO when launched in October 2007 and also paves the way for further RTFO elements as below.

The RTFO has always been clear in its intention to reward the “greenest” biofuel. It has always been the clear intention of EVG to provide the “greenest” bioethanol.

The above penalty will apply if fuel retailers are unable to prove that they have supplied a minimum level of blended fuel. This mechanism requires that the retailer acquires a minimum number of RTF Certificates in any given period. A retailer of bioethanol at the very best end of the carbon footprint may well qualify for more than one certificate per litre of bioethanol. A bioethanol producer with a less thrifty production method may qualify for fewer certificates or none at all.

Clearly the certificates will have a market value and the more you hold, the more valuable they become. The minimum initial price should be at or near the penalty value as above and being able to produce more than one per litre creates a potentially very valuable asset. EVG plan to be able to claim at least 2 certificates per litre under present criteria and perhaps closer to 3. Presently the project model has no value at all in the income line for such certificates.

Consequently, the changes in the Budget were anticipated and very much in line confirms with our business model.

It is hoped that future changes in criteria will be even more beneficial as EVG is at the very “green” end of the market and this is a key and clear commercial advantage for us.

• Budget 2008 Environmentally Sustainable

Biofuels and food shortages - letter to the Editor, The Times

Posted 12 March 08

Please refer to PDF below.

• Biofuels and food shortages

Launch speech

Posted 9 March 08

Renewable Energy Association response to Times article

Posted 9 March 08

Please refer to the PDF below.

• REA letter to The Times

Detailed article about Biofuels in The Sunday Times

Posted 9 March 08

You can view the article in www.timesonline.co.uk.

Ethanol Ventures’ eco fund in Professional Adviser

Posted 29 February 08

FUTURE Capital Partners has launched a renewable energy investment opportunity, focused on the construction and operation of two wheat-based bioethanol plants.

The vehicle, Bioethanol Partners LLP, aims to raise £135m of equity capital from investors and £195m of project debt, for an estimated total project cost of £330m.

Read full article in Professional Adviser’s website.

Investment Adviser covers new wheat-to-fuel venture Bioethanol Partners

Posted 28 February 08

The article includes extracts from an interview with Future Capital Partners’ (and promoter of the fund) CEO, Tim Levy.

“By about the end of April we will have all the elements in place – equity, debt from the banks, uptake contracts from petroleum companies, wheat supply contracts – and we will start construction on the first plant this summer.

“This is going to end up as a vertical integration play for the petroleum industry. As it makes sense for them to control bio-ethanol production, they will rapidly want to take over the plant.”

You can read integral text in the PDF below.

• Investment Adviser

Video

Posted 27 February 08

Climate change is one of the most urgent issues of our time. The first step towards tackling the problem is to make sure everyone understands exactly what the challenge is and what we all need to do to make a difference. To communicate about climate change successfully, it’s important that you understand the nature of the climate change challenge.

Bioethanol Partners in Bioenergy Business

Posted 27 February 08

One of the lead stories in Bioenergy Business is about Bioethanol Partners. Citation from the article: FCP chief executive Tim Levy said that private investors would receive some protection under UK capital allowance rules. They would own land and capital equipment and the capital allowances would protect 60% of their principal investment. For example, in the worst case scenario of a complete failure of the business, a high-rate UK taxpayer investing the minimum sum of £40,000 would in theory only lose £16,000, since the rest of the loss could be offset against their tax bill.

Please visit Bioenergy Business website to read whole article.

Investment Week’s article about Bioethanol Partners

Posted 26 February 08

Future Capital Partners has teamed up with Vireol to launch a green product offering investors exposure to wheat and bioethanol production facilities in the UK. Bioethanol Ventures, which goes live today, will target a return of 40% over a five year term. The group said the launch follows the demand for alternative fuels and growth driven by legislative and commercial demand.

You can read this article in Investment Week’s website.

Bioethanol Partners in FT

Posted 26 February 08

The Financial Times published an article about Bioethanol Partners:

Two planned biofuel plants will start to try to raise £135m from investors today as part of efforts to profit from the government’s race to shift away from petrol.

Future Capital hopes to secure money from wealthy private investors to support construction of wheat-to-ethanol refineries in Grimsby and on Teesside to produce more than 260m gallons a day – one third of anticipated British demand.

The project is part of a rush into production of ethanol – which can be mixed with petrol – after poor early returns from biodiesel, another alternative fuel. Britain’s biggest biodiesel plant, near the planned Teesside ethanol facility, cancelled its trading on Aim and was forced to restructure after it took on too much debt and suffered technical problems.

According to Future, the new plants together will supply more than a third of the forecast 1m tonnes of ethanol likely to be demanded once government rules come into effect. The rules will require 5 per cent biofuels by volume by 2010, with fuel suppliers forced to pay a penalty if they were to fail to meet the goal. Several big ethanol plants are planned, including a refinery being built by Ensus in Wilton and a British Sugar/BP joint venture to be constructed close to Hull.

For full text please refer to article in Financial Times.

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