Opinion Piece Defends Palm Oil Biodiesel

14/12/2010 (Domestic Fuel) - A decision by Hawaiian Electric Co. (HECO) to build a biodiesel plant that will convert palm oil into biodiesel to be used by the utility to produce electricity has garnered the ire of some environmentalists, who decry the use of palm oil for the green fuel.

But this opinion piece in the Honolulu Star Advertiser defends the plant. Tom Tanton, president of California-based T2 & Associates, an energy technology and economic development firm, points out that the palm oil will come from Malaysia, a country that has committed to conserving 50 percent of its forests … much more than the 10 percent average under United Nations agreements:

Contrary to claims from the German environmental group leading the campaign against the HECO plan, palm oil is the most sustainable biofuel on the planet. More fuel can be produced on a smaller footprint from the oil palm than alternative biofuels such as corn-based ethanol or German rapeseed oil.

Palm oil is a perennial crop that can be converted to biodiesel, while other vegetable crops like soya that can create biodiesel are annual. Palm oil requires less tillage, resulting in much fewer greenhouse gases released into the atmosphere. It also requires considerably fewer energy inputs to grow and maintain.

In a recent statement, HECO correctly stated “biofuels are a part of Hawaii’s clean energy future. Biofuels allow us to switch from ‘black’ to ‘green’ fuel in our existing generators, reducing dependence on and vulnerability to imported oil.”

Of all possible biofuels, palm oil is king for its affordability, efficiency and eco-friendliness. Denying the HECO agreement would hamper wider adoption of sustainable practices worldwide.

The piece goes on to point out that some domestic sources of biodiesel feedstock, such as jatropha, aren’t scalable for a plant like this one. And, right now, Hawaii doesn’t have enough other renewable energy sources, such as wind, solar and geothermal, to be cost-effective. Tanton concludes that this palm-to-biodiesel plant will help the Aloha State meet its energy needs, while providing jobs for an impoverished part of Malaysia.

Malaysia

Firm vegetable oil prices, including palm oil, seen in H1 2011

KUALA LUMPUR: Global vegetable oil prices, including that of crude palm oil (CPO), are expected to remain firm in the first two quarters of 2011 should soybean production from South America stays flat due to stagnating planted a areas, said Malaysian Palm Oil Council (MPOC) chief executive officer Tan Sri Dr Yusof Basiron.

Soybean production in South America next year would be the main factor in determining the price direction of vegetable oils in the first half of next year.

“At this point of time, the projected lower soybean production may further deteriorate as dry spell remain a teething factor for the output,” Yusof said.

He said this in his summary after presenting a paperwork on Glimpse of 2011 – Pointers for 2011 on Global Oils and Fats Trade at the 3rd International Palm Oil Trade and Seminar yesterday.

In addition, an increase in soyoil application for biodiesel production in South America was expected to reduce the availability of soyoil traded globally.

However, CPO production from major producers Malaysia and Indonesia next year may rise substantially due to the delay in potential yield this year as a result of El Nino and La Nina effects, he added.

Palm oil was also expected to continue to be the growth leader in output, with Malaysia and Indonesia as the main supplier for 2011.

For 2010, Yusof said the average CPO price was projected to stay above RM2,600 per tonne, given the firm crude mineral oil price, which had supported the palm oil price so far, “is expected to last for the rest of this year.”

While demand is projected to increase by 4.3 million tonnes this year, the performance of oils and fats production in the last quarter would determine whether there will be any changes in production volume projected in 2010.

He said: “The United States, the European Union (EU) and China are on the radar as their major oil crops are due for harvesting and entering the market at this period.

“The estimated production remains intact and this has been factored into the current CPO price trading at above RM2,700 per tonne.”

Yusof said price would also be supported by the greater role of palm oil in satisfying global demand this year. In addition, the La Nina effect on palm oil production in the second half of this year could likely increase palm fruit moisture content and lower extraction rates, thus reducing harvesting rounds.

Based on OilWorld estimate, La Nina phenomenon would likely reduce Malaysia’s palm oil production by 200,000 tonnes.

US-based Green Earth Fuels LLC executive vice-president (government and regulatory affairs) Jeffrey M. Trucksess said palm biodiesel (palm methyl ester – PME) had made significant inroads in the US biodiesel market in recent years and had tremendous potential.

“However, significant political, regulatory and public relation issues can derail this future,” he said.

PME producers from Malaysia must proactively manage the public perception on palm oil in the United States and Europe by providing more education to policymakers there, actively participate in regulatory bodies and promote sustainability standards.

The problem with palm

Mother Nature Network (MNN)

Using palm oil to make biodiesel may cause more trouble than it prevents.

21/04/2009 (Mother Nature Network (MNN)) - As fears of global warming continue to rise with gas prices, both corporations and environmentalists are looking into alternative fuel sources. Now, businesses abroad plan to make biodiesel from palm oil, a substance found in common household items like cookies, shampoo, and margarine. Toyota Motor Corp. announced in May that it will partner with Japan’s Nippon Oil Corp. to develop biodiesel from palm oil, and the Malaysian government approved 54 projects this year alone to create B100, a biodiesel based from 100 percent palm oil, the country’s main export.

But while biofuels are cleaner-burning and produce fewer greenhouse gas emissions than regular fuel, some environmentalists believe the costs of palm oil-based biodiesel may outweigh the benefits.

The problem in Malaysia and Indonesia, where more than 80 percent of the world’s palm oil is produced, is that in most cases, rainforest areas are completely cleared to create oil palm plantations. According to a 2005 Friends of the Earth report, oil palm plantations have been responsible for about 87 percent of the rainforest deforestation in Malaysia.

Not only does this practice wreak havoc on the countries’ megafauna (such as orangutans, Sumatran rhinos and tigers, Asian elephants, gibbons, and tapirs), it also causes significant pollution. The United Nations’ Food and Agriculture Organization estimates that 25 to 30 percent of the greenhouse gases released into the atmosphere each year (about 1.6 billion tons) comes from deforestation.

“When you turn a product into a world commodity, you get corporations involved,” says Tim Keating, executive director of Rainforest Relief. “Originally palm oil was collected by hand, but once you get corporations involved, you end up having forest clearing and mass plantations.”

Corporations first clear the land for its lucrative timber. Then they burn everything that’s left on the land, such as shrubs, stumps, and peat soil, which can smolder for three to four months before it’s finally extinguished, says Michelle Desilets, director of the Borneo Orangutan Survival Foundation, UK. Tree-felling combined with the burning creates a haze above the forest and releases tons of carbon dioxide into the atmosphere, contributing to the same global warming that biofuels are supposed to reduce.

Since Indonesian and Malaysian rainforests are some of the most diverse ecosystems on the planet, clearing these areas poses serious threat to countless species of plants and animals. Right now palm oil is mostly used in food products. But if the demand for palm oil-based biodiesel increases, the oil palm business will certainly expand, creating more deforestation and species destruction.

But despite the huge environmental impact palm oil-based biodiesel has, businesses interested in bottom-line dollars see a market for it.

“Palm oil is the cheapest source for biofuel, and, as we know, in the marketplace the cheapest wins,” said Shannon Coughlin, program director for Rainforest Action Network, in an e-mail.

Leland Tong, an advisor to the National Biodiesel Board, says though palm oil is not grown domestically and will not lessen dependence on foreign fuel sources, it does offer some perks as far as biofuels go. It has a higher freezing point than regular fuel alone; it’s renewable; and it’s similar in efficiency to other biofuel sources such as soybean oil.

Rainforest advocates suggest some more environmentally responsible alternatives to making biodiesel from palm oil. Desilets asserts that if there must be palm oil plantations, then they should be planted on already degraded land (such as rainforest that has been logged, but not cleared) to protect other high-conservation areas. Keating insists that the only solution is to lessen our dependence on fuel. And Coughlin suggests making ethanol from agricultural waste and switchgrass so that no land has to be cleared. But all agree that the current method of producing palm oil-based biodiesel is not the answer to our energy needs.

“We know that an increased market for palm oil imports will accelerate rather than stop climate change,” said Coughlin in an e-mail. “It’s crazy. We need to break the addiction rather than keep feeding it.”

New Zealand: budget 2009 provides biodiesel boost

In a PR, the Energy and Resources Minister of New Zealand said that a new grants programme for bio-diesel production will kick-start the bio-diesel industry in New Zealand, US Fed News reports.

As part of Budget 2009, $36 million will be allocated to the programme over three years. The grants will be available from July 1, 2009 and will be available to domestic bio-diesel producers selling their product for a range of end uses.

Some bio-diesel is already produced in New Zealand from waste cooking oil, tallow (and oil seed rape.

The Minister said the initiative fulfilled the government's pre-election promise of providing incentives for bio-diesel producers, in recognition of the advantage that bio-ethanol already enjoys. (19 May 2009)

Australia- “1st integrated soybean processing and bio-diesel plant”

The go ahead has been given for a $243 million soybean processing and bio-diesel production facility at Port Kembla, ABC News reports.

New South Wales’ Minister for Lands, said: "This is the first integrated soybean processing and bio-diesel production facility in Australia and is a major boost to the Illawarra.

The project is expected to generate $977 million in revenue and in addition to the 235 new permanent full-time jobs, will provide approximately 725 jobs in related industries and a further 500 jobs during construction of the facility.

The plant will produce 288 million litres of bio-diesel a year; along with 850,000 tonnes of soy bean meal for poultry and livestock feed”.

"In July 2007 the NSW Government implemented legislation to mandate the blending of all diesel fuel blended with 2% bio-diesel, the mandate will increase from two per cent to five per cent in 2011," he added. (19 May 2009)

Brazil – Petrobras aims to be global bio-fuels player

Petrobras aims to be a global player in bio-fuels, in which it plans to invest $3.3 billion between 2009 and 2013, said the Petrobras Biocombustíveis director, AE Brazil- Financial and Corporate News reports.

Of that total, 80% will be invested in ethanol. According to him, Petrobras is getting ready for "a world without oil" and the company aims to be among the top-five global bio-fuel leaders by the end of 2020. He also said Petrobras has been in talks for a bio-diesel production project in Africa and noted the company has ethanol projects under development in some Latin American countries.

"Petrobras' strategy is to be a global player, with a relevant role in the world markets for bio-diesel and ethanol," said the executive. (19 May 2009)

US - ASA refutes EPA's proposed ILUC rules

In a news release, the American Soybean Association submitted its comments to the House Agriculture Subcommittee on Conservation, Credit, Energy and Research regarding the impact of the indirect land use and renewable biomass provisions in the EPA’s RFS-2. There are numerous factors that ASA believes refute the possibility that significant international indirect land use change would result from the relatively small increase in US bio-diesel production called for under the RFS-2. These comments are available at: www.SoyGrowers.com/policy/indirect.pdf.

The EPA's conclusions that US corn and soy-based bio-fuel production is significantly less environmentally friendly than previously believed drew sharp criticism from Democratic and Republican lawmakers in a Tuesday hearing, Dow Jones Newswires reports.

The EPA's decision to include "indirect land use" when calculating how much ethanol and bio-diesel reduce green house gas emissions would effectively guarantee that soy-based fuels would not qualify for government production mandates, the US Department of Agriculture Chief Economist said. Soy-based bio-diesel "shows a very large decrease in green house gas emissions," he added, but when the EPA adds in the indirect land use calculation, "it doesn't meet the criteria." The renewable fuel standard calls for 500 million gallons of bio-diesel production in 2009 and 1 billion gallons by 2012. To be eligible for that mandate, soy-based bio-diesel would have to show a 50% reduction in green house gases from petroleum-based diesel. The EPA calculation, though, shows the reduction at only about 20%.

The House Agriculture Committee chairman said the Obama administration’s GHG proposals would “kill off the biofuels industry before it even gets started” and he will not support any climate change bills, making him the first committee chairman to voice opposition to climate change legislation, Reuters reports. He told Agriculture Department and EPA officials at a hearing on ethanol's impact on land use and greenhouse gases that it was “in bed with the oil industry”.

He and other Committee members also said the 2007 law and Renewable Fuel Standard is flawed because it wrongly excludes or limits "a majority of the country's woody biomass" and/or switchgrass from being counted as feedstock. A White House deputy advisor on climate change responded that the Obama Administration “is committed to renewable fuels” and only this week has requested data from scientists on how to calculate whether biofuels increase or reduce GHGs, as part of a draft rule aimed at making corn ethanol production more efficient and to increase production of advanced biofuels.

Two recent studies suggest 9 million acres (22 million ha) of additional land will be needed if US ethanol output expands by 13.25 billion gallons (51 billion liters), according to the USDA chief economist, which is less than half the new-crop area projected in a 2008 analysis. He also says there is “little question that increased biofuel production will have effects on land use in the US and the rest of the world” while the question was over the magnitude.

Inside EPA Weekly adds that the Agriculture Committee Chairman was joined by numerous other Democrats and Republicans on the committee in opposing aspects of EPA's RFS proposal.

HydroGenetics, has announced that on May 4th 2009 Buffalo Bio-diesel Inc, a wholly owned subsidiary of HydroGenetics, entered into a delivery contract of 1,000,000 lbs of high quality recycled bio-diesel feedstock with one of the largest bio-diesel producers in the North East. BBD completed the first contract of 750,000 lbs of high quality recycled bio-diesel feedstock in April, Market Wire reports. The contract requires BBD to deliver 1MM lbs of high quality recycled bio-diesel feedstock per month in May. It will gross BBD in excess of $220,000.

California regulators have approved new rules that ban storing certain types of bio-diesel in underground fuel tanks in order to avoid the risk of water pollution, San Jose Mercury News reports. By a 3-1 vote, the State Water Resources Control Board said that gas stations, fleet yards and others who bio-diesel distributors can only store bio-diesel blends of up to 20 percent in underground tanks, even if the tanks are double-walled. (07 May 2009)

Indonesia biodiesel firms await subsidy, fair prices

08/05/2009 (Reuters), Jakarta - Indonesia's palm-based biodiesel firms, which have mostly stopped operations, are awaiting a fair price formula and government subsidies to survive as they feel the pinch of surging palm oil prices, an industry official said.

The fledgling industry is expected to play a key role in absorbing growing palm output in world's top producer, but as feedstock prices become more expensive than fossil oils, it is difficult for the industry to expand without government support.

The government had planned to subsidize biofuel for transportation and a price formula had recently been agreed by the industry but these have yet to take effect despite the implementation of a mandatory biofuel policy since January.

As a result, the industry has been reluctant to supply biodiesel because prices offered by PT Pertamina, which blends the product, are below commercial prices, said Paulus Tjakrawan, secretary general of the Association of Indonesian Biofuel Producers.

"We can ensure supply sustainability only if prices are right. If you make a loss for a few months, of course you would have to stop selling," Tjakrawan told Reuters in an interview.

He said biofuels firms have received purchase orders from Pertamina but they have been delaying deliveries, or just stopped supplying the state-run fuel distributor.

Indonesian palm-based biodiesel firms could process up to 2.5 million tons of palm oil a year, or about 14 percent of the country's palm output, if they run at full capacity.

But they could lose about 2,000 rupiah ($0.193) per liter for selling their product to Pertamina on par to subsidized mineral-based diesel, which is now priced at 4,500 rupiah per liter, Tjakrawan said.

The outperformance of crude palm oil prices against mineral oil, which has made biodiesel relatively more expensive, has forced six out of 11 Indonesian palm-based biodiesel firms to halt operations with the remaining five firms running below 5 percent of their capacity.

Oil has dropped 60 percent from a record peak above $147 a barrel last July, outpacing palm oil's decline of 40 percent from a record 4,486 ringgit a ton hit in March last year.

Tjakrawan said the government should not delay implementing the price formula as it is deemed to be fair enough for the industry.

"Last time we heard the government wanted to implement the formula on May 1 but it did not happen. So we don't know when it will happen," he said.

According to the formula, the selling price for palm-based biodiesel is a combination of Indonesia's biodiesel price issued by London-based Argus Media Ltd and the monthly palm oil base export price issued by the trade ministry, divided by two.

For bioethanol, the government will use a combination of bioethanol benchmark prices issued by Argus and bioethanol prices from the country's bioethanol producers association.

The government has said it will pay subsidy of 1,000 rupiah per liter on average if prices of biofuel products for transportation are higher than mineral fuels but until now the plan has not been approved by the parliament's budget commission.

Under the subsidy plan, the government has estimated that Pertamina may blend 194,444 kilolitres of bioethanol and 580,025 kilolitres of palm-based biodiesel or about 522,000 tons, in 2009, a government document showed.

Indonesia – Bio-diesel exports to rise 20%

Indonesia’s exports of crude palm oil-based bio-diesel in 2009 are projected to rise around 20% from 490,000 mt in 2008, Asia Pulse reports.

The second deputy chairman of the Indonesia Palm Oil Council (DMSI) said: "exports will rise because demand will also rise as oil supply will probably drop quite a bit." He said the export rise needed to be supported by improving port infrastructure and in view of that he called on the government to immediately provide special pipe network for the distribution of the commodity. "The distribution network of palm oil-based biodiesel must be made exclusively because it could not mix with that for distributing CPO or coconut oil," he said. (18 May 2009)

Brazil – Bio-diesel blending may sharply cut soy oil exports

A vegetable oils analyst said Brazil's plans to increase blending of local bio-diesel with diesel to 4% from 3% in July will sharply reduce its exports of soy oil, Dow Jones reports. He said price prospects for the soy complex are more bullish than palm oil. "If the new (biodiesel) mandate is confirmed and implemented, it will rule out any further exports of soy oil from Brazil during the second half of 2009," the head of vegetable oil purchasing at Indian conglomerate Godrej International said.

Brazil and Japan will cooperate in bio-fuel research, renewable energy and environmental issues, the Japanese Government said last week as it signed various bilateral agreements with Brazil, ADP News reports. Japan will provide technology for bio-ethanol development, surveys on carbon dioxide cycles in the Amazon rainforest, food security and others. The plan developed by the two countries will be carried out through to March 2011. EFE adds that Japan will contribute its knowledge and technology on bio-fuels made without using food as feedstock. (18 May 2009)

US - Baystate Biofuels to start construction of a bio-diesel terminal

In Massachusetts, Baystate Biofuels announced that construction of its biodiesel terminal in North Andover begin by end of this month with product ready to sell by summer’s end, BioFuels Digest reports.

Baystate Biofuels’ North Andover terminal will be the first full-scale commercial facility dedicated to bio-diesel distribution in Massachusetts, and will distribute bio-diesel to oil companies to blend with petroleum diesel as required by the state’s Clean Energy Biofuels Act of 2008.

Leaders of the House Agriculture Committee say they want changes to the RFS to stop what they say are unfair EPA measurements of ethanol's greenhouse gas emissions and ease limits on sources of biomass used to make renewable fuels, Environment & Energy Daily reports. A bill, which they introduced last week, revises the definition of lifecycle to exclude assessment of indirect land use changes and also puts the Energy and Agriculture Departments, rather than EPA, in charge of assessing lifecycle emissions.

Additionally, the bill changes the 2007 energy law’s definition of renewable biomass and replaces it with a far less restrictive definition lifted from the 2008 farm bill.

In Florida, PetroAlgae said that it believes it is the closest company to commercialization of micro crops as a bio-fuel, as it will complete its microcrop demonstration farm in Florida and will commence booking revenues from technology licenses this year, BioFuels Digest reports. The company said that it is in discussions with customers in China, India, Japan, Italy, Portugal, Spain, Germany, the UK, Singapore, Finland and the US. In March, the company announced that GTB Power had signed to use or sublicense PetroAlgae technology to construct and operate ten facilities in the China, Taiwan, and the Japanese island of Yonaguni.

Buffalo Biodiesel entered into a delivery contract for 1,000,000 lbs of high quality recycled bio-diesel feedstock in July with one of the largest bio-diesel producers in the North East, Market Wire reports. The contract will gross BBD in excess of $220,000. BBD completed the first contract of 750,000 lbs of high quality recycled bio-diesel feedstock in April and is in the process of fulfilling the second contract 1,000,000 lbs of high quality recycled bio-diesel feedstock in May. US commissioners will discuss applying for federal stimulus dollars to buy more public transit buses for the city and Kansas University, Lawrence Journal-World reports. Staff members recommend the city and university apply for $2.875 million in funding from the $100 million federal Transit Investments for Greenhouse Gas and Energy Reduction program.

The city wants $625,000 to buy five medium-duty bio-diesel/electric hybrid transit buses. Kansas University is seeking $2.25 million for six 40-foot bio-diesel transit buses. (18 May 2009)

US- Activists claim RFS exaggerates bio-fuels' benefits

Activists say EPA's recently proposed renewable fuels standard (RFS-2) exaggerates bio-fuels' greenhouse gas (GHG) lifecycle benefits by including key factors -- such as higher crop yields or greater facility efficiency -- that may occur by 2022, rather than calculating actual emissions of today's bio-fuels production process, Inside EPA Weekly Report reports.

Environmentalists say this approach could overestimate the climate benefits of today's bio-fuels by assuming higher yields and greater facility efficiency that is actually being achieved today. If EPA had not used these projections, it is possible that some fuels would not meet the GHG reductions mandated by the RFS, the environmentalist says.

In addition, environmentalists are also concerned about the inclusion of a so-called discount rate that discounts the benefits of taking action to reduce GHG emissions now by considering the likely decreased cost of taking action later.

Activists are likely to urge EPA to use actual emission data in its final GHG lifecycle analysis for bio-fuels, the source says. Bio-diesel producer World Energy Alternatives announced late today it has sold its only operating bio-diesel plant, an 18-mln gal/yr facility in Lakeland, Florida, Biodiesel Magazine reports. The sale to Orlando-based Clean Fuel Lakeland LLC was completed on April 15, World Energy noted. "This move is an important step in World Energy's plan to reposition itself to adjust to the changing U.S. bio-fuels landscape," said World Energy President and CEO.

New Generation Bio-fuels Holdings Inc announced that its renewable fuels will be used within the asphalt industry sub-segment, ADP News reports. The company has secured a fuel sales deal with Baltimore-based asbestos-free asphalt and related products manufacturer Seabord Asphalt Products. The value and other terms of the deal were not revealed. New Generation Bio-fuels expects to work with its contractor in full capacity, the company's CEO said commenting on the deal.

Researchers at Argonne National Laboratory in Chicago have published results of a well-to-wheels (WTW) lifecycle analysis of petroleum energy use and GHG emissions of plug-in hybrid electric vehicles employing gasoline, diesel, E85 and hydrogen (fuel cell) fuels, Greencarcongress reports. PHEVs fueled by E85 offered a 70-90% reduction in petroleum energy use and a 40-80% reduction in GHG emissions. PHEVs equipped with hydrogen fuel cells offered a more than 90% reduction in petroleum energy. (15 May 2009)

Australia- Jatoil cancels JV with PT Biodiesel AustIndo

The joint venture saw Jatoil acquiring a 50% ownership of Indonesian company PT Biodiesel AustIndo, in exchange for 20 mln shares in Jatoil worth USD 4 mln (€2 mln) at the time, Biofuels International reports.

The initial venture included ownership of an Indonesian jatropha plantation, giving Biodiesel Austindo access to a total of more than 600,000 hectares of land for jatropha cultivation.

Under an arrangement with growers, local farmers provided their land and then picked and defruited the jatropha seeds. In return, Biodiesel Austindo provided the farmers with seed and other farming inputs, training and technical support. (15 May 2009)

US – Innovation Fuels Sells Biodiesel from Milwaukee Terminal

Innovation Fuels has announced it has begun selling bio-diesel to customers from its Midwestern renewable fuels hub at the Port of Milwaukee terminal, RenewableEnergyWorld.com reports.

The 312,000 barrel (45,000 mt) capacity terminal located on ten acres is the first in the country that is totally dedicated for the sale and distribution of renewable fuels.

The US Department of Agriculture Secretary said he is pleased there will be an independent review of an Environmental Protection Agency conclusion that U.S. corn and soy-based bio-fuels do not reduce green house gasses as much as previously believed, Dow Jones reports.

"I think it's very, very important and it's something that we urged from USDA," he said about the review.

The EPA's calculations that most corn-based ethanol only cut greenhouse gas emissions by about 16% and soy-based bio-diesel by about 22%. And that would assure that no ethanol from new production facilities or bio-diesel from any facilities would qualify for government production mandates.

Congress ordered that all ethanol from plants either built or being built as of December 2007 would qualify for the mandates.

There is no such grandfather clause for bio-diesel. New Generation Biofuels Holdings, Inc announced that it has signed a renewable fuel sales contract with Baltimore-based Seaboard Asphalt Products Company ("Seaboard Asphalt"), PR Newswire reports.

In Iowa, Renewable Energy Group will acquire the 30 Mmgy Western Iowa Energy plant at Wall Lake, the 30 Mmgy Central Iowa Energy biodiesel plant at Newton and the 45 Mmgy Blackhawk Biofuels plant in Danville, Illinois, BioFuels Digest reports. The four companies will be consolidated into a new entity, Renewable Energy Group, in a transaction that is expected to close this summer. Terms of the deal were not disclosed, but Renewable Energy Group management said that the consolidation will allow the consolidated company to compete more effectively as the demand for bio-diesel grows.

Despite the highest inventories of crude oil since before the Great Depression, around 375 million barrels, prices are rising to the puzzlement of the US Energy Information Administration, Biodiesel Magazine reports. “Prices are at $50 or $60 per barrel, when they should be at around $35 per barrel according to the fundamentals of supply and demand,” an EIA source said.

Diesel market trends are following crude oil’s suit. “The trucking industry, which buys more diesel than any other sector, has lost 30% of its business in a single year, and the major areas of diesel demand are also performing poorly,” the EIA said.

ConocoPhillips said it has halted its collaboration with Tyson Foods Inc to make diesel fuel from animal fat, Dow Jones reports. The company said it idled the project in the fall after federal tax credits that helped fund the project were cut in half.

Tyson supplied ConocoPhillips with animal fat from its meat-processing operations, which the energy company processed into bio-fuel at its Borger, Texas, refinery. The company's chief operating officer said production could resume if government incentives are reinstated.

The announcement reinforces the notion that major oil companies - which have been trying to boost their profiles as producers of cleaner fuels - won't hesitate to reduce their bio-fuels initiatives if projects become less profitable amid the economic downturn and changing legislation.

Tyson is still going forward with the construction of a bio-fuels plant near Baton Rouge that is expected to start up in early 2010 and will have a capacity of 75 Mmgy. The project is a joint venture with Syntroleum Corp, but since it doesn't involve "co-processing," it still qualifies for the $1-a-gallon tax credit.

In Minnesota, Honeywell Aerospace said that it will move into a second-phase test of bio-fuels testing this summer by testing bio-fuels in auxiliary power units (APUs) and business jet engines, BioFuels Digest reports.

The company declined to name the business jet involved, but confirmed that algae and jatropha oils will be among those tested.

GreenFuel Technologies, one of the first companies to enter the algae bio-fuels business, is shutting down after running out of money, CNET News.com reports. Investor of Polaris Venture Partners confirmed GreenFuel Technologies' demise, saying that the company is a "victim of the economy." He said investors, who have raised more than $70 million for GreenFuel Technologies since 2001, are exploring ways to sell the company's intellectual property and assets.

Bio Blend Fuels Inc began operating its 2.6 Mmgy bio-diesel plant at a new location in Manitowoc, Wisconsin, using animal fats as its feedstock, Biodiesel Magazine reports. (14 May 2009)

EU –Dutch bio-diesel plants cease production

The seven bio-diesel plants located in the Netherlands have been more or less idle since last year, Gave News reports.

The plants have a combined production capacity of 500,000 mt, but only 80,000 mt of this was actually used, according to the secretary of the VNBI (Dutch association for the bio-diesel industry). Verbio said that sales of bio-diesel at German petrol stations have come to a virtual halt, Reuters reports.

Bio-diesel is currently more expensive than fossil diesel in Germany following a further tax rise on green fuels this year and a fall in crude oil prices. "Tax increases in combination with the falling prices for fossil diesel have brought the B-100 (petrol station) market to a virtual standstill," Verbio said.

Ad-hoc News adds that Verbio’s Q1 results show sales of Euro 122.0 million, compared to 125.1 million in Q1/2008, with the interim consolidated operating result at Euro -12.0 million (Q1/2008: EUR 0.7 million), mainly strained by high material costs, Ad hoc news reports.

Manufacturing costs based on the contracted raw material basis could be only partially passed on due to the price decline in fuel prices. In the first quarter of the current fiscal year, 42,788 tons (Q1/2008: 13,560 tons) of bioethanol were produced, with sales of Euro 31.2 million (up on Q1/2008, Euro 22.7 million).

Utilization of biodiesel was below same period last year, with 78,866 tons of biodiesel (Q1/2008: 93,907 tons) produced and revenues of EUR 83.9 million (Q1/2008: EUR 92.6 million). Verbio said that “current cyclical and economical general conditions do not allow a concrete (business) outlook for fiscal year 2009”.

But “a sustainable and explicit improvement of the situation of the biofuel industry and the business of Verbio is expected by the Management Board with the coming into force of the sustainability ordinance” because Verbio is already well prepared according to the expected required greenhouse gas reduction specifications.

The European Commission President said on Wednesday that eradicating GHGs from power stations and cars, trucks and aviation must be Europe's next policy move to tackle climate change, and Europe needs to come up “concrete policies to decarbonise our electricity supply and transport fuels and to transform the grid" Reuters reports. He said that was the task of the next Commission (due to take office later this year) “but it is not too early to be thinking about this”. The comments followed talks with UK economist Nicholas Stern and the chairman of the United Nations climate panel, on the chances for a global climate deal at Copenhagen in December. Fast growing emissions from transport are one of Europe's biggest challenges in the fight against climate change, a European Commission environment directorate chief also told the conference.

French oil and gas major Total has raised its annual budget for R&D in the renewable energy sector to EUR 30 million (USD 40.7m) from EUR 2 million, La Tribune reports. The company plans to invest in solar energy, carbon dioxide storage solutions and bio-fuels. (14 May 2009)

Indonesia - State plantations to build bio-diesel plant

According to a senior government official, three Indonesian state plantation firms plan to build a bio-diesel factory with a capacity to produce up to 400,000 mt of palm-based bio-diesel a year, Reuters reports.

State plantation firm PT Perkebunan Nusantara (PTPN) III and its sister companies plan to set up the bio-diesel plant in northern Sumatra, said the deputy for agriculture. "The bio-diesel industry is new for state plantation firms. The plantation firms also plan to venture into bioethanol," he told reporters, adding that certain state enterprises will co-operate to build a bioethanol facility to produce 800,000 tonnes of bioethanol.

This year, 11 state plantation firms are expected to produce a total of 3 million tonnes of crude palm oil, or 15 percent of Indonesia's total palm oil production, up from 2.9 million tonnes in 2008, he said.

China and Japan have expressed interest in developing Indonesia's biofuel and renewable energy sources, and see the country as a potential producer, the chairman of the Indonesian Cooperatives Council (Dekopin) said, Antara reports. He said that Chinese and Japanese delegations would soon visit Indonesia to explore the possibilities of investing in the sector. (6 March 2009)



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Malaysia - CPO may stay at MYR1,800-MYR2,000/mt

Suggesting that the market has bottomed out, Malaysia’s Minister for Plantation Industries and Commodities said in an interview that crude palm oil prices may stay firm around MYR1,800-MYR2,000 a mt for the next few months, after rising almost 43%, Dow Jones reports. Prices will be steady due to a slowdown in production, decline in inventories and an increase in its use for making bio-diesel, the minister said, adding that output is now expected to be lesser than what was initially projected. He didn't rule out a possibility of CPO prices rising above MYR2,000/mt if crude oil recovers and there is speculative buying. Still, many investors may not take such a risk at a time of volatility and the recession, he said. He added that rising demand for palm oil in countries such as India and Pakistan is likely to support prices.

An ongoing oil palm replantation program, heavy rains and floods, may ensure Malaysia's palm oil production in 2009 is little changed or even slightly lower than last year's 17.8 million tons, he said. Further, he expected between 150,000 tons and 200,000 tons of CPO to be turned into bio-diesel for 5% blending with diesel in 2009, though reaching the target of consuming 500,000 tons would not happen anytime soon because logistics, including a distribution network, needs to be established.

Separately, according to the Minister, Malaysia is likely to consume 150,000-200,000 metric tons of palm-based bio-diesel in 2009, but bio-diesel is unlikely to be used in commercial and private vehicles for a year. Finnish refiner Neste Oil said its S$1.2 billion ($776 million) renewable diesel plant in Singapore is on track to be completed by June 2010 and production will start in Q3, Reuters reports. The 800,000 mt per year NExBTL plant will use feedstock such as animal fat, palm oil and other types of vegetable oils. The firm plans to hire up to 60 people by the end of this year for the Singapore plant, rising to a total of 100 people by mid-2010. (6 March 2009)

EU- Repsol to freeze EUR 100m bio-diesel investment

Spanish oil and gas company Repsol YPF has decided to freeze a EUR 100 million construction of a bio-diesel plant in Tarragona, southwestern Catalonia region, Cinco Días reports. The decision was attributed to excessive bio-diesel supply, as well as to the current economic crisis.

Repsol announced the construction of the plant in 2007 and said it would be completed in a term of three years. Its annual output capacity was estimated at 150,000 mt.

Ireland’s foremost expert in energy crops has welcomed the decision of the EU to increase tariffs on the import of cheap subsidised bio-fuel from the US which has been causing havoc to the development of the sector in Europe, Irish Times reports. He said the imposition of import and anti-dumping duties on bio-diesel from the US would help stimulate interest in growing fuel crops. “But we are not at the stage where it is possible to grow fuel crops profitably. “The import of this bio-fuel was not helping us get the industry off the ground here, and it was a major barrier because it was not only subsidised at the rate of 20 cent per litre by US subsidies, but also benefited from the 37 cent per litre excise relief here,” he said.

Ireland has four pure plant oil units operating and a major bio-diesel plant in New Ross, Co Wexford. There has been a steady growth in wood pellet, elephant grass and willow production and the Irish Farmers’ Association has said 10,000 rural jobs could be created in the sector if it received full Government backing. (6 March 2009)

Singapore – Bio-diesel supply contract

Natural Fuel said it has signed a 12 month contract with a European-based oil and gas commodities trading company to supply up to 50,000 mt of bio-diesel per month, from its Jurong bio-diesel Facility in Singapore, Proactiveinvestors reports.

With the contract, the company's facility will be at full capacity this year. Natural Fuel aims to be a leading global player in supply of quality bio-diesel and kosher grade glycerine, with capacity to produce 600,000 mt of bio-diesel and 60,000 mt of refined glycerine per annum. (23 January 2009)

Australia – Imported bio-fuel a risk to wildlife

Australia is contributing directly to the widespread destruction of tropical rainforests in Indonesia and Malaysia by importing millions of mt of taxpayer-subsidised bio-diesel made from palm oil, the Australian reports.

Imports of the fuel are rising, undermining the Government's $200 million commitment to reduce deforestation in the region -- a problem that globally contributes to 20% of the world's carbon emissions. Without action, the problem will only get worse, with demand for bio-diesel imports likely to rise sharply when NSW legislates to introduce Australia's first bio-diesel mandate – 2% this year, rising to 5% when sufficient supplies become available. But the Government is likely to come under pressure to follow the lead of other Western nations in banning imports of palm oil-based bio-diesel. Bio-diesel manufacturers in Australia use primarily tallow from abattoirs and recycled cooking oil. (27 January 2009)