Global News Summary

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North America MASSACHUSETTS SUSPENDS BIODIESEL MANDATE Massachusetts has s...

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North America BP ATTEMPTS AGAIN TO SHUT GULF OIL WELL BP’s planned attempt ...

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News of the Day

01.16.08

NORTH AMERICA

The chairman of the US House Agriculture Committee said that the US is 10 years away from producing commercially viable cellulosic ethanol. Collin Peterson (D-Minn) said, "I'm not sure cellulosic ethanol will ever get off the ground," adding that his chief concern is suitable feedstocks in sufficient quantities.

In Illinois, the CEO of the National Biodiesel Board Joe Jobe said there would be a "cooling off period" in US biodiesel capacity development following a period of "irrational exuberance". He cited fast-rising feedstock prices as the problem, saying they have reduced biodiesel margins to an average of minus 30 cents a gallon. Soybean oil rose to 54 cents a pound this week, more than double the price in 2005. He said 100 new plants have been built in the US in the past two years, bringing total industry production to 450 million gallons in 2007, up from 25 million in 2004.

The acting US Agriculture Secretary said the USDA is not ready to allow conservation reserve land to be released for crop growing. Although he admitted that he expects the 2008 crop year to be ‘extremely tight’, he explained that he did not view this land as a tool to manage supply and demand.

The Ecological Society of America said the US is rushing toward using biofuels as a replacement for petroleum without fully studying environmental sustainability. More-intensive cultivation of crops for fuel may accelerate soil erosion and damage wildlife habitats and water quality, the society said.

Gas stations in nine counties in Northwest Oregon are now required to sell gasoline blended with 10% ethanol. The rest of the state will join them over the next nine months. The renewable fuel standard for ethanol kicked in when Oregon's ethanol production reached 40 million gallons a year last summer.

SOUTH AMERICA

California-based Pure Biofuels announced an agreement to acquire 14,000 hectares of deforested land in central Peru near the city of Pucallpa for cultivation of African Palm to produce palm oil for its biodiesel production facilities near Lima. This is in addition to the 60,000 hectares of land in the same region secured by Pure in March 2007.

Brazil's state energy company, Petrobras, plans to start producing biodiesel around mid-year and expects current low prices to rise soon, leaving enough margin for producers. Petrobras says it expects no biofuel supply problems as the country introduces a compulsory 2% blend of biodiesel this year. Petrobras plans to open three biodiesel plants by June with a total annual capacity of over 40 million gallons, and is working on plans to build an 80-100 million gallon plant in northeastern Brazil by early 2010.

EUROPE

Germany's biodiesel industry is only producing at about 10% of capacity due to a biofuels tax increase on Jan 1, 2008 that hugely cut sales, according to the German renewable fuels industry association. In November 2007, capacity was estimated at 20%, and many companies were facing closure.

A spokesman for the EU Energy Commission told a press conference that the Commission would stick to the 10% EU biofuel target despite reservations among colleagues.

The director of the UK’s Environmental Industries Commission, which represents political parties and biofuel producers, has written to the EU Energy Commission saying that failing to set tough minimum standards for biofuels ‘would damage our brand’ and could drain public support and vital subsidies from the fuels.

In the UK, D1 Oils Plc says it can make money on jatropha if crude oil is at $60-$65 a barrel. The breakeven figure of a $60-65 a barrel of oil is substantially higher than estimates made by Goldman Sachs early last year for a breakeven point for jatropha of around $40 a barrel of crude oil. The company expects its first significant jatropha fruits harvest to be in the second half of 2008.

Polish News Bulletin reports that Portuguese company Prio Biopaliwa is planning to build a $22 million, 600,000mt biodiesel plant in the Kostrzyn-Slubice Special Economic Zone (KSSSE) by 2010.

Neste Oil said it hopes to boost margins in its biodiesel business by mixing less expensive feedstock, such as animal fats with more expensive edible oils. In a few years time, the company says it expects to use more non-food material such as wood pulp, algae, and yeast as biodiesel feedstock.

ASIA / PACIFIC

In Indonesia, police were forced to clear the streets after food riots broke out over rising soybean prices. Increasing demand in China reduced US capacity as more farmers plant corn for ethanol, and poor harvests in Brazil and Argentina are said to underlie the price increases. The riot was characterized as the largest since Mexican protests of rising tortilla prices last year. The Indonesian government says it will continue with its planned 10% biofuel mandate target by 2010 despite high crude palm oil prices, and will rely more on ethanol than biodiesel to meet the target.

Thailand will import 30,000 metric tons of palm oil over the next month to ease domestic supply, the Commerce Minister announced. Worries over a possible shortage had led to calls for Thailand to ban exports of palm oil to ensure enough supply for domestic cooking oil as well as its growing use as an ingredient in biodiesel. The minister has rejected calls for a ban on exports.


Analysts say Asian palm-based biodiesel exports to the US and Europe could slow this year because of increased exports from Argentina and record high palm oil prices. Physical trading of palm-based biodiesel in Malaysia and Indonesia has slowed to a trickle in recent weeks as US buyers are finding it more attractive to purchase soy-based fuel from Argentina. Malaysia's palm oil exports to the EU fell 20% between January and November 2007, according to the Malaysian Palm Oil Board.

The Indian government may soon announce a biofuel policy that proposes minimum prices for biofuel crops such as jatropha or karanja seeds, and a 10% biofuels mandate to be reached by 2012.

NEW ZEALAND

Saying it is determined to avoid problems that Europe and other countries are now experiencing, New Zealand’s government is working to ensure that biofuels used in the country are produced from sustainable sources. Biofuel legislation now before the Parliament enables environmental sustainability standards to be developed and certain biofuels to be banned.

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