PLN says it welcomes waste to energy projects

20/04/2009 (The Jakarta Post) - The state-owned electricity company PT PLN has welcomed the International Finance Corporation (IFC)-initiated biomass power plant projects using palm oil wastes and rice husks, an official says.

PT Perusahaan Listrik Negara vice president Rudiantara said that PLN was ready to buy the electricity generated from such power plant projects, as it was in line with the company's objective to boost the use of renewable energy.

"We've always been encouraging the use of such renewable energy. We're ready to deal with them on the purchase of their electricity," Rudiantara told The Jakarta Post over the weekend.

The first phase of the IFC program is targeting the waste from palm oil and rice milling to be used as fuel to generate power.

According to the IFC, by implementing these projects these industries are not only able to reduce their production costs by up to 30 percent, but also to help preserve the environment by substituting for the use of oil and diesel.

Rudiantara noted that the business deals would be under the electricity excess supply provisions, by which PLN can buy available excess power generated from these plants, under the independent power producer scheme.

"Our deals will be based on the prices they offer, while the nearness to our electricity grid will also be taken into consideration," he added.

Indonesia last year produced about 19 million tons of crude palm oil and about 60 million tons of rice. Amid the rising demand for electricity but slow growth of supply using mostly fuel oil, diesel fuel and coal, this huge amount of agricultural wastes has great potential for generating electricity and to help to re-green the environment.

Electricity analyst Fabby Tumiwa noted that based on a study conducted in 2006, when palm oil production reached 15 million tons, the biomass produced (of roughly the same amount) could be used to generate a total of 4.2 million megawatt hours of (MW) electricity.

"With such abundant palm oil wastes currently, I think we could produce electricity from such wastes up to about 5 percent of the total PLN's production capacity of 120 terawatt hours (TWH)," he said.

He said that there were about 371 palm oil mills in Indonesia with most of them operating in Sumatra. Also there are thousands of rice mills operating in the country, mostly in remote areas in Java and Sumatra. Palm oil factories often need between 3 to 10 MW electricity on average to support their production activities while rice mills are often smaller in Indonesia, and need smaller power units.

Palm oil, rice waste huge potential for generating electricity

17/04/2009 (The Jakarta Post) - It's the world's largest producer of crude palm oil and fourth largest producer of rice, Indonesia has huge potential for generating electricity from the tens of millions tons of waste from the two industries.

Speaking at a workshop on an energy efficiency program workshop organized recently by the International Finance Corporation, (IFC) a private arm of the World Bank, Lars Moller, a consultant with the IFC green energy project said Indonesia should seize the momentum and play a greater role in "green" energy development.

Moller said that by using simple but effective technology at relatively low cost, one ton of wastes of empty fruit bunches from palm oil mills or of rice husks from rice mills can generate 0.8 megawatts (MW) of electricity.

"No matter whether you use the empty fruit bunch or rice husks, every ton of these can generate roughly 0.8 megawatts (MW) of electricity. With millions of tons of such wastes available in Indonesia, imagine how huge is the country's potential," he said on the sidelines of the workshop.

Indonesia last year produced about 19 million tons of crude palm oil and about 60 million tons of rice. After being processed in oil palm mills, the oil palm fruit bunches will produce biomass waste roughly of equal amount of about 19 million tons of empty fruit bunches.

The total of 60 million tons of rice produced will result in roughly 20 percent of waste, or about 12 million tons of rice husks.

Amid the rising demand for electricity but slow growth of supply using mostly fuel oil, diesel fuel and coal, this huge amount of agricultural wastes has great potential for generating electricity and to help to re-green the environment.

According to Moller, who had conducted a study on the wastes in Indonesia, the cost of generating electricity by using biomass from such wastes is about 5 US cents per kilowatt hour (KWH).

In comparison, the state electricity company PT PLN currently sells electricity at an average of 6 US cent per KWH.

"Its cheaper and greener. Rather than using fuel oil, or coal, which are not clean and produce CO2 emission hazardous to the environment, it is better for companies, especially the medium and small scale ones, to generate electricity by using these wastes as the feedstocks to their own power plants," he said.

The IFC's Energy Efficiency Program Manager Tom Moyes said that IFC would help companies interested in the program by providing technical expertise and by arranging consortium with other banks to help with project financing.

"We target the small and medium scale companies in Indonesia. And I think it's good for businesses as they can cut their energy costs by up to 30 percent, and also good for the banking sector as the projects are bankable," he said.

Based on the IFC's data, there are about 42 million small and medium companies operating in Indonesia.

Almost all of the small and medium firms use either fuel oil or diesel fuel to generate their power plants or production machines, and they contribute significantly to the CO2 gas emissions.

Data collected by the International Energy Agency shows that from 1994 to 2004, CO2 emissions per capita from fossil fuel combustion grew faster in Indonesia than in China and India.

"This growth will increase substantially as energy intensity increases and fossil fuel emissions rise with GDP, unless mitigating actions are taken," said Brigit S. Helms, the advisory services head of IFC Indonesia.

To help the Indonesian industries in reducing the greenhouse gas emissions and producing green products, IFC had initiated the Indonesian Sustainable Energy Finance Project.

Under the project, IFC has commissioned the International Research Group of the Phillipines to conduct a study in the palm oil and rice milling industries to enable IFC to identify sustainable energy opportunities in the two industries.

The group is also tasked to design a sustainable energy financing project to be pursued in cooperation with commercial banks, industries, energy management companies, and IFC.

Brigit pointed out that by adopting the energy efficiency program, companies can produce greener products in a more efficient way.

She pointed out that by adopting the energy efficiency program, companies can produce greener products.

"In the future only greener products will become the winners in the international market."

Catch 22 for sustainably grown oil palm

COMMENT By TAN SRI DR YUSOF BASIRON

EVEN as European economies scramble to regain their foothold from the economic and financial quagmire, palm oil exports to the EU remains a Catch 22 for Malaysia’s palm oil industry as sustainably grown and certified sustainable oil palm remains a target for lawmakers in the EU.

Hastily shaped and rigorous sustainability standards specifically aimed at palm oil appear to be designed to shrink the import of the vegetable oil into Europe.

Malaysia’s palm oil industry, already inundated with onerous sustainability standards and requirements, has to recognise that the path to the large and growing EU market may prove a tougher challenge this year.

For instance, in trying to live up to their commitment to sustainable planting practices, top palm oil producers have found that the take-up rate and demand for sustainably produced palm oil have not met expectations.

This is despite going through the rigorous planting and accreditation processes that the planters have painstakingly adopted and adhered to.

Assuming the 27 oil mills have been given the go-ahead by the Roundtable on Sustainable Palm Oil (RSP0), the certification body, annual production of this premium crude palm oil and palm kernel oil can potentially approach 1.3 million tonnes.

However, these green credentials have yet to entice buyers which include top-end large retailers.

Although biofuel represents a small portion of sales of palm oil in Europe, nonetheless it is an important aspect which must be protected in the wake of the potential legislative threats.

Rubber-stamped last month, the 27 EU member states are working vigorously to produce the final text of the “climate and energy package” which includes a target of 20% reduction in greenhouse gas (GHG) emissions and 20% share of renewable energy in total energy consumption by 2020 and also a 10% target for renewable energy in the transport energy consumption.

Brussels is also determined to go ahead with its Renewable Energies Directive (RED), and the Fuel Quality Directive (FQD) which includes a set of sustainability criteria for biofuels, again placing palm oil in an unfavourable position.

The ongoing work on technical details of the sustainability criteria, which include indirect land use change (ILUC) and default values for GHG emissions savings for palm oil, would also pose a challenge for palm-based biofuels in gaining entry into the European market.

A default value for palm oil at 19% is clearly to discredit the vegetable crop in comparison to the 35% threshold level while the ILUC imposes a heavy penalty on palm grown on forest-converted land.

During implementation, some countries may favour national industries with better incentives and subsidies, which may place demand for palm oil at a disadvantage.

Challenges are probably going to be many-fold for Malaysia in the coming months. For one, Malaysia has to continue to address concerns over sustainability of palm oil, be it for biofuel or non-biofuel use.

In their clean energy pursuit, EU officials have been quick to say that the new policies would not constitute a trade barrier although it is hard not to construe it as such.

The placing of cleverly disguised trade barriers through the imposition of unduly onerous biodiesel standards such as the cold-flow-plug-point (CFPP) standard could have kept out palm oil. Fortunately, for Malaysia, a timely new technology introduced overcame the CFPP problem.

The popularity of palm oil usage in consumer products has also raised the ire of many European-based non-governmental organisations and calls are becoming louder for consumers to switch to non-palm oil based products.

With only 15% of palm oil buyers across the globe signing up as members of the RSPO, there is very little Malaysian palm oil producers can do.

Certification can mean an additional US$50 per tonne for palm oil in the market, but few are willing to fork that out, given the deepening economic crisis in Europe.

For sure, more scorecards will roll out to check the flow of the palm oil despite its traceability.

This would only mean that producers with serious intent of expanding their palm oil trade in Europe may find themselves still at the inner gates of the market, waiting for the lights to change.

Despite the tough stance on palm oil, the EU is actually a major net importer of oils and fats – even before embarking on an ambitious biodiesel development target. EU’s demand can only be met by palm oil from Malaysia and Indonesia as both countries are the only major net exporters of oils and fats.

Traditional soybean oil exporters such as the United States and Brazil are fast becoming net importers of oils and fats due to local biodiesel consumption. To increase soybean oil supply, 10 times more forest land would have to be opened for cultivation compared to palm oil.

Oil palm grown on legitimate agricultural and non-forested land in a sustainable manner will ultimately help to avoid deforestation – due to growing low-yield soybean – to meet world chronic shortages of oils and fats.

The upshot of this is that Malaysia is a net importer of EU finished goods and products. The country, therefore, requires market access for its exports if Malaysia is to continue to be a valued trading partner. Surely fair trade practices and World Trade Organisation rules call for that!

·Dr Yusof is chief executive officer of the Malaysian Palm Oil Council

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)

Malaysia - Favours research with EU on bio-fuel norms

Malaysia plans to propose joint research with the European Union to formulate standards for using palm oil to produce bio-fuels, according to the Malaysian Palm Oil Board Chairman, Dow Jones reports.

The EU has set targets for use of 10% renewable energy for the transport industry by 2020 which, according to industry estimates, is likely to create a market for at least 23 mln metric tons of bio-fuels annually, and to be eligible for producing these supplies, it is crucial for Malaysia to meet EU standards.

The Chairman is likely to visit the European Commission's Joint Research Centre in Ispra, Italy to discuss the standards. The JRC provides scientific and technical support for the EU's policies on a wide range of issues. (15 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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World- Oil majors invest in bio-fuels

A review by international auditor KPMG has found that 14 large oil companies have begun to invest in renewable energy, and while the top picks are solar and wind energy, biomass and bio-fuels have attracted the interest of most of the companies in the survey, ADP News reports.

A KMPG partner said bio-fuels are seen as the logical and natural extension of the traditional oil companies, although noting that the weight of alternative energy diversification is still insignificant in financial terms.

It could take more than seven years for sales of cars to return to 2007 levels of 69 million units, the president-executive of Nissan said, Reuters reports. He said the credit crisis and currency volatility are worsening the impact of the recession.

World food production needs to double in the next four decades to head off mass hunger, the head of the UN's Food and Agriculture Organisation said on Monday at the start of a two-day international conference in Madrid, AFP reports. He said the credit crunch, combined with lower prices for farm goods, could lead to a drop in investments in the agriculture sector which would threaten further FAO's goal to halve the number of people who live in hunger by 2015.

Separately, a report by the British international affairs think-tank Chatham House says that recent falls in food prices are a temporary reprieve and are set to resume their upward trend once the world emerges from the economic downturn, M2 Presswire reports. The report, called ‘The Feeding of the Nine Billion: Global Food Security for the 21st Century’ says food supply will have to grow by 50% by 2030 to meet projected demand but climate change, water scarcity and competition for land will make it much harder to achieve. (26 January 2009)