Wednesday Edition

03.19.08

GLOBAL

The Renewable Energy 2007 Global Status Report says that renewable energy is developing rapidly in terms of investment and energy production worldwide, with global production of ethanol and biodiesel topping an estimated 14 billion gallons in 2007, up 43% from 2005.

Global consulting companies Syngenta and McKinsey say that worldwide production of cellulosic ethanol will reach 16 billion gallons in 2020, if targets set in the United States, China, Europe, Japan and Brazil are achieved. The US would account for 65% of the market, while the EU and China would account for about 10% each. This scenario assumes that cellulosic ethanol will gain momentum as of 2015, and the overall biofuels market will grow at 14% per year.

NORTH AMERICA

High soybean oil prices are having an impact on domestic use of soybean oil for biodiesel production, according to US Census Bureau data. The Bureau reports that soybean oil use for biodiesel reached about 470 million pounds in August 2007, and then declined for five consecutive months to about 320 million pounds in January 2008. Soybean oil used for biodiesel production accounted for 23% of total domestic consumption in August, but only 12% in January 2008.

Biodiesel producer Renewable Energy Group’s withdrawal of its initial public offering underscored “the difficult environment for biofuels," according to the market analyst firm Raymond James. When REG filed to go public last July, “the price of soybean oil was about 38¢/lb. Since then, it has soared to more than 60¢/lb. Current cash margins for soybean oil-based biodiesel producers are zero to negative vs. ethanol margins that remain positive, albeit slim. In this environment, a biodiesel company's access to cheaper feedstock (palm oil, animal fats, etc.) is essential for profitability," Raymond James said. They noted that Imperium Renewables, another major biodiesel company, withdrew its IPO in January.

The state of Montana has began reimbursing farmers to plant the oilseed crop Camelina, which crop research shows to be promising as feedstock for biodiesel. For the 2007 crop year, over 22,000 acres of Camelina were planted in the state, and over 20,000 acres were harvested. Camelina was the second largest oilseed crop in Montana last year (after Safflower) amounting to 12 million pounds.

PetroSun says its commercial algae-to-biofuels farm is scheduled to begin operations on April 1, 2008. The 1,100 acre salt water open pond system is located near Harlingen, TX. The company will extract the algal oil on-site and transport the raw product by barge, rail, or truck to company-owned or joint venture biodiesel plants.

The Energy Biosciences Institute at the University of California (Berkeley), funded by British Petroleum to conduct biofuels research and development, says that 15 of it 49 R&D projects and programs focus on the social, environmental and economic impact of biofuel production and use.

US states participating in the Regional Greenhouse Gas Initiative (RGGI), an agreement among the Governors of ten Northeastern and Mid-Atlantic states to reduce greenhouse gases from power plants, announced that the first CO2 allowance auction in the US for a mandatory emissions reduction program will take place on September 10, 2008. The second quarterly auction is scheduled for December 17, 2008

SOUTH AMERICA

Brazil’s National Council for Energy Policy published a resolution to increase the mandatory biodiesel blend in diesel from 2% to 3% as of July 1, 2008. This increase, which would bring total consumption to 317 million gallons, reflects a rapid increase in biodiesel production in the country, according to the Council. A mandatory 5% blend is currently set for 2013, but there have been a variety of official indications this goal may be accelerated.

Japanese trading company Marubeni Corporation says it has started producing biodiesel at its new plant in Brazil in Mato Grosso state, built by a joint venture with Dutch grain trader Agrenco Group. Marubeni and its partner plan to bring two more plants online in Brazil this year in Mato Grosso do Sul and Parana, aiming to produce a total of 380 million tons of biodiesel annually.

Royal Dutch Shell has held talks with ethanol producers in South America and is researching ethanol projects together with the State University of Campinas in Sao Paulo, according to media reports. Shell is said to be studying how to produce ethanol from sugarcane, wood scraps and tree bark. Brazil's state-run oil firm Petrobras is also said to be positioning itself to move into ethanol production.

EUROPE

German biodiesel producer Petrotec says it plans to build two new 100,000 mt biodiesel plants, one in the UK and one in the US, using waste chip fat and cooking oil as feedstock. Petrotec currently produces about 85,000 mt of biodiesel annually for export to the UK, the Netherlands and Belgium at it Borken plant in north Germany, and says it will start up its second 100,000 mt biodiesel plant in the North Sea port of Emden in April.

The UK’s Transport Minister said a “significant proportion” of the biodiesel sold there in 2006 and 2007 was imported from the US, where there are no sustainability requirements. He said the UK government had expressed its concerns to the EU Commission about this “at the highest level.”

France’s Farm Minister said numerous studies show that French biofuels have a positive impact on the environment, and that the economic, environmental, agricultural and energy advantages justify the government’s support of the biofuels industry. As France has no gas or petrol of its own, he said, it is essential to diversify energy sources, and domestic feedstock production would only require 7% of French crop land.

Increased capacity and a clearer regulatory framework may lead to higher biofuels output in Italy this year. Although Fox Petroli has put plans on hold to raise its plant's capacity by 100,000 mt by the end of the year, Marseglia group says it will increase capacity at its Bari plant to 360,000 mt a year in two years, and Alchemia says it will double its capacity to 24,000 mt annually by the end of 2008, then add 100,000 mt more in 2009, subject to market and regulatory conditions.

ASIA / PACIFIC

India has banned exports of all cooking oils for a year to improve domestic supplies, a commerce ministry statement said. India exports some cooking oils like groundnut in small quantities, and is one of the world's leading edible oil buyers. The ban was issued by the Directorate General of Foreign Trade.

Pure Biodiesel in Thailand, a subsidiary of Rayong Purifier (RPC), is scheduled to start running its new 95,000 mt per year biodiesel plant in July. The company said the plant would run at half capacity in 2007, and reach 75% capacity in 2008.

AUSTRALIA & NEW ZEALAND

Australia's government has committed $930,000,000 for development, commercialization and deployment of various renewable and low-emission energy technology initiatives. Half the money will go toward renewable energy technologies, with the balance spent on developing clean energy technologies. As the country's electricity generation is mostly based on coal, there is strong interest on reducing greenhouse gas emissions.

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